Key Industries Threatened by Court Decision

Being surrounded by two Great Lakes, including the largest freshwater lake in the world, we in Wisconsin often take for granted the availability of water.

Water is vitally important to many key industries in our state including breweries, crop production, livestock growers, dairy producers, food processors, power plants, paper mills and numerous manufacturers.

Unfortunately, the availability of water from high capacity wells, including those used for municipal drinking water, is under threat because of a 2011 Wisconsin Supreme Court decision that promotes uncertainty in the permitting process.

The case, known as Lake Beulah Management District v. DNR, involved a high capacity well permit to provide drinking water for the Village of East Troy. The controversy involved speculation that siting a well would have adverse impacts on water levels at nearby Lake Beulah.

Although the well was ultimately permitted, and the concerns about lake levels proved to be completely unfounded, the Supreme Court decision ultimately wrapped a shroud of uncertainty around the process for obtaining a high capacity well permit.

Environmental groups intervening in the case argued that the Department of Natural Resources (DNR) must consider the impact of groundwater withdrawals on lakes, rivers and other waters of the state, despite the fact the Legislature never granted the DNR authority to do so. They also argued the constitutional “public trust doctrine” extends to permits involving groundwater withdrawals.

The Great Lakes Legal Foundation filed a brief on behalf of WMC and other business groups making the argument that the Legislature created a very specific permitting framework for these wells that did not authorize or require the DNR to analyze groundwater impacts on surface waters. Because the public trust doctrine is a legislative delegation to the DNR, the Legislature’s decision to not grant the DNR this authority means public trust considerations are not triggered in the groundwater permitting process.

In an activist decision authored by Justice Patrick Crooks, the Supreme Court held that the Legislature gave the DNR authority, under limited circumstances, to consider the impact of proposed high capacity wells on surface waters. However, the Court did not articulate a clear delineation of when circumstances trigger that authority, noting only they are a “highly fact-specific matter.”

The poorly-reasoned decision left farmers, municipalities, manufacturers and the dairy industry with a groundwater permitting process that is as clear as mud.

The legal and regulatory uncertainty resulting from the Supreme Court’s decision had an immediate impact on businesses.

Heartland Farms, one of the largest potato growers in the Midwest, notified suppliers that the Lake Beulah case will cause the company to suspend future investment in irrigated lands in Wisconsin. Heartland CEO Richard Pavelski noted the risk and threat to agriculture arising from the decision left the company with no other logical course of action.

In addition, activist environmental groups have used the court decision to challenge permits needed for expansions in the dairy industry. For example, a groundwater approval needed for a $40 million dairy project in Adams County has been delayed because the Lake Beulah case opened the door to litigation. If successful, environmental groups are likely to use this same type of lawsuit to block future economic development projects in our state.

Wisconsin is a national leader in water-dependent industries like agriculture, manufacturing and food processing. If we truly want Wisconsin to be “open for business,” the Legislature must act decisively to remove the legal uncertainty created by the Lake Beulah decision, and take steps to more clearly define the manner in which they choose to delegate authority to the DNR under the constitutional public trust doctrine.

The viability of future growth and investment in these key industries will depend upon the Legislature’s willingness to clarify the law.

By Scott Manley, WMC Vice President of Government Relations
Follow Scott on Twitter @ManleyWMC