DNR’s High Capacity Well Application Review Process
On July 6, GLLF submitted comments on Wisconsin Department of Natural Resources’ (DNR) proposed guidance document listing its new high capacity well application review process. The process started on June 2nd when DNR announced a change in policies regarding its high capacity well program following a letter from Attorney General Josh Kaul withdrawing an earlier AG opinion. The announcement stated that—among other things—DNR intends to return to its earlier standard of reviewing high capacity well permits on a case-by-case basis in accord with “its duty to protect and preserve navigable waters under the public trust doctrine.” However, the letter from AG Kaul that DNR relied on for the change ignores binding case law, impending litigation before the Wisconsin Supreme Court, and the explicit language of DNR’s own statutory delegation. The change also didn’t go through rulemaking, but DNR did move to issue it as guidance.
Why This is Important
- Agencies Have Only that Authority Explicitly Delegated to Them by the Legislature. Administrative agencies’ ever-expanding power and reach must be constrained by requiring they operate within the four corners of their explicit statutory authorities. AG Kaul’s letter ignores the legislature’s explicit delegation of authority to DNR.
- Agency Policies are Unenforceable Unless Promulgated as Rules. An agency’s practices and policies are legally invalid and unenforceable unless formalized through the proper rulemaking process, which includes public hearings, along with legislative and gubernatorial oversight. If an agency changes its interpretation of the law, it must go through rulemaking. Here, DNR expressly changed its interpretation of its own authority but did not promulgate a rule.
The story starts in 2011 with 2011 Wis. Act 21. Under our constitutional structure, administrative agencies can only act when the legislature delegates legislative, law-making authority to them via an enabling statute. For many years in Wisconsin, courts accepted claims of “express or implied” delegations of legislative authority, meaning it read into enabling statute powers not actually stated if it found some reason to imply them.
To counter this, in 2011 the Wisconsin Legislature passed 2011 Wis. Act 21 (“Act 21”) which requires courts to look only to explicit delegations of authority. In other words, only those delegations found within the four corners of the enabling statute count.
Per its enabling statute, DNR regulates high capacity wells. Wis. Stat. § 281.34. Notably, in Wis. Stat. § 281.34(5) the Wisconsin Legislature addresses the specific standards and conditions a petitioner must meet for DNR to approve a high capacity well permit. These requirements include possible impacts on public water supply, groundwater protection areas, high water loss, and other things. The statute does not explicitly grant DNR authority to impose additional requirements outside the ones specified.
Less than a month after Act 21 went into effect, the Wisconsin Supreme Court ruled in Lake Beulah Management District v. DNR that “DNR was required to consider the environmental impact of a proposed high capacity well when presented with sufficient concrete, scientific evidence of potential harm to waters of the state.” And in a footnote added: “We agree with the parties that 2011 Wisconsin Act 21 does not affect our analysis in this case. Therefore, we do not address this statutory change any further.”
In 2016, the Wisconsin Legislature requested Wisconsin Attorney General Brad Schimel write an opinion pertaining to DNR’s statutory authority for its high capacity well permit program in light of Act 21 and the Lake Beulah decision.
The result, OAG–01–16, stated: “Act 21 makes clear that permit conditions and rulemaking may no longer be premised on implied agency authority.” Further:
Laws are created by the elected officials in the legislature who have been empowered by the taxpayers, not employees of the State of Wisconsin. The practice of creating rules without explicit legislative authority is a constitutionally questionable practice that grants power to individuals who are not accountable to Wisconsin citizens.
In recognition of OAG–01–16, DNR stopped imposing additional requirements on permit seekers. Clean Wisconsin, an environmental organization, then sued DNR for approving nine high-capacity well permits without taking into consideration environmental factors outside of Wis. Stat. § 281.34. (Effectually arguing the Wisconsin Legislature delegated a broader environmental responsibility to DNR then encapsulated in its explicit enabling legislation.) The circuit court ruled in favor of Clean Wisconsin.
Clean Wisconsin v. DNR (2018AP0059) (“Clean Wisconsin”), where GLLF is an intevenor, and its sister case, Clean Wisconsin v. DNR (“2016AP001688”) (“Kinnard Farms”), where GLLF is an amici, currently wait briefing before the Wisconsin Supreme Court. A threshold question in the case is the Lake Beulah court’s treatment of Act 21.
In the meantime, the Supreme Court has weighed in on Act 21. Consistent with GLLF’s amicus brief, the court in Wisconsin Legislature v. Palm stated: “[U]nder 2011 Wis. Act 21, the Legislature significantly altered our administrative law jurisprudence by imposing an ‘explicit authority requirement’ on our interpretations of agency powers.” It further noted, “The explicit authority requirement is, in effect, a legislatively-imposed canon of construction that requires us to narrowly construe imprecise delegations of power to administrative agencies.”
But at the beginning of May 2020, Attorney General Josh Kaul, AG Schimel’s successor, issued a letter withdrawing OAG–01–16 “in light of Lake Beulah Management District v. DNR” and the circuit court decision in Clean Wisconsin.
GLLF sent a letter to Kaul on May 11 questioning “the legal basis of [his] decision and the appropriateness of issuing such decision considering the pending Supreme Court cases on this matter.”
But on June 2, DNR responded to the AG letter by announcing it would no longer follow OAG–01–16 and would once again make “a fact-specific determination in each case and will consider environmental impacts when reviewing a proposed high capacity well application if presented with sufficient concrete, scientific evidence of potential harm.”
AG Kaul’s letter and DNR’s change in policy pose two problems: first, they runs counter to the explicit delegation requirement in Act 21 and second, the change occurred without rulemaking.
Act 21 Violation
Act 21 added two important provisions to the Wisconsin Administrative Procedure Act: Wis. Stat. § 227.10(2m) and Wis. Stat. §§ 227.11 (2)(a)1 and 2.
Wis. Stat. § 227.10(2m) states:
No agency may implement or enforce any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with this subchapter,
And Wis. Stat. §§ 227.11 (2)(a)1 and 2:
A statutory or nonstatutory provision containing a statement or declaration of legislative intent, purpose, findings, or policy does not confer rule-making authority on the agency or augment the agency’s rule-making authority beyond the rule-making authority that is explicitly conferred on the agency by the legislature.
A statutory provision describing the agency’s general powers or duties does not confer rule-making authority on the agency or augment the agency’s rule-making authority beyond the rule-making authority that is explicitly conferred on the agency by the legislature.
The word explicit clearly matters. But AG Kaul’s reading would diminish it to nothing—undermining the purpose of Act 21 and effectually demolishing the legislature’s decision to put clear boundaries around agencies’ use of legislative authority.
The Wisconsin Supreme Court has already upheld OAG–01–16’s understanding of Act 21. In Wisconsin Legislature v. Palm, the court stated three things about Act 21:
- First, it acknowledged that with Act 21 “the Legislature significantly altered our administrative law jurisprudence by imposing an “explicit authority requirement” on our interpretations of agency powers.”
- Second, it stated that Act 21’s “explicit authority requirement is, in effect, a legislatively-imposed canon of construction that requires us to narrowly construe imprecise delegations of power to administrative agencies.”
- And third, it noted that Act 21 “prevents agencies from circumventing this new ‘explicit authority’ requirement by simply utilizing broad statutes describing the agency’s general duties or legislative purpose as a blank check for regulatory authority.”
In other words, Act 21 significantly changed the law, narrowly construes delegated authority to administrative agencies, and prevents agencies from relying on broad, descriptive statutes for authority.
Compare these conclusions with how the attorney general approached the question in OAG–01–16.
- First, AG Schimel stated: “Act 21 restricts that authority by withdrawing DNR’s ability to implement or enforce any standard, requirement, or threshold, including as a term or condition of a permit issued by the agency, unless explicitly permitted in statute or rule.”
- Second, he looked to the statute and found “Neither Wis. Stat. § 281.11 nor § 281.12 explicitly allow DNR to require any term or condition on high capacity well permits.”
- And finally, he concluded that because the statutes do not explicitly allow DNR to act the way they did, they “do not give DNR the authority to require or impose any term or condition absent explicit statutory or rule-based language sanctioning that specific term or condition.”
Thus, far from throwing doubt on OAG–01–16’s legitimacy, the most recent and binding case law on Act 21 expressly affirms AG Schimel’s use of the statute to analyze DNR’s authority. AG Kaul cannot dismiss that with a letter.
The legislature specified the explicit boundaries of DNR’s high capacity well permit program, boundaries DNR now once again seeks to expand without a similar expansion in its enabling legislation. DNR claims it can add other environmental impact considerations since the legislature delegated authority through Wis. Stat. §§ 281.11 and .12: “Statement of policy and purpose” and “General department powers and duties.” But this argument goes against the clear language of Wis. Stat. §§ 227.11 (2)(a)1 and 2 which state that statements of policy and purpose as well as general descriptions of power do not confer authority.
AG Kaul cannot ignore the court’s interpretation and the clear language of Act 21.
Even if the Supreme Court affirmed AG Kaul’s understanding of DNR’s authority, DNR must still follow promulgate a rule for its new interpretation. Under Wisconsin law, agencies must “promulgate as a rule each statement of general policy and each interpretation of a statute which it specifically adopts to govern its enforcement or administration of that statute.” Wis. Stat. 227.10.
A change in interpretation requires rulemaking. Lamar Central Outdoor, LLC v. DHA clearly states that the rulemaking statute “describes only one pathway by which an agency can adopt a new interpretation of an ambiguous statute: The agency must adopt a rule.”
Rulemaking is vital in promoting fairness by providing notice, consistency, and opportunity to comment. The rulemaking process gives the regulated community the opportunity to engage with regulations before being legally bound. Rulemaking also provides necessary legislative and gubernatorial oversight. So, even assuming the Supreme Court concludes DNR has broad authorities and discretion in implementing its high capacity well permit program, to do so on the permit-by-permit basis rather than rulemaking would be inconsistent with the fundamental principles behind Wisconsin’s Administrative Procedures Act. It would violate Chapter 227.
DNR clearly stated its intentions to interpret its authority expansively and impose further obligations on those seeking high capacity well permits. It can only do so through the rulemaking process which it has failed to do.