Wisconsin Supreme Court Rules on DNR Authority Over Waterfront Property Rights

September 2013

Digital Edition:  Real Estate Magazine
Boundary Lines: Wisconsin Supreme Court Re-establishes Bright Line Between Private and Public Rights

By: Tom Larson

In Rock-Koshkonong Lake District v. Department of Natural Resources, 2013 WI 74, the Wisconsin Supreme Court issued an important ruling for waterfront property owners in Wisconsin. The ruling provides property owners with greater certainty regarding the regulatory limits of the Public Trust Doctrine, which is often used to define the boundary between where the rights of property owners begin and the rights of the public end. Moreover, the ruling limits the authority of the Wisconsin Department of Natural Resources (DNR) to lower lake water levels without considering the economic impact on waterfront property owners and businesses.

Background

The case involved a dispute about water levels on Lake Koshkonong, which is a shallow lake formed by a dam on the Rock River near Janesville. The dam, which was originally constructed in the 1850s, fell into disrepair and had difficulty maintaining consistent water levels. In 2002, the dam was repaired and the DNR lowered the water levels by approximately one foot to better protect wetlands located beneath the dam. The DNR maintained that it had the authority to reduce water levels in the lake under the Wisconsin Constitution’s Public Trust Doctrine, which provides that the waters of the state are held in trust by the state for the benefit of all. (The Public Trust Doctrine has been interpreted to mean that the state owns the navigable waters of the state and the land under navigable lakes as determined by the ordinary high water mark (OHWM)). As a result of the lowered water levels, the shorelines began to increase significantly, making it more difficult to access piers and use the lake for boating purposes due to the shallow water.

In 2003, a group of waterfront property owners and businesses petitioned the DNR to raise the water levels of Lake Koshkonong. The property owners contended that the lowering of the lake levels was contrary to “the public interest” because lower water levels on Lake Koshkonong led to severe restrictions on recreational boating, and in many cases, “piers must be extended far from shore to reach navigable water depths.” In addition, the property owners maintained that the DNR’s additional drawdown of lake levels during the winter months had a detrimental impact on shore erosion, plants and animal species. The DNR rejected the petition, and the DNR’s denial was upheld by the Rock County Circuit Court and by the court of appeals. The case was appealed to the Wisconsin Supreme Court.

Supreme court ruling

In a 4-3 decision, the Supreme Court found that the DNR inappropriately relied on the Public Trust Doctrine for its authority to protect land above the OHWM. In an opinion authored by Justice Prosser, the court stated, “[i]f the public trust were extended to cover wetlands that are not navigable, it would create significant questions about ownership of and trespass on private land, and it would be difficult to cabin expansion of the state’s new constitutionally based jurisdiction over private land.”

According to the court, any authority of the DNR to regulate wetlands or other lands above the OHWM must come specifically from the legislature. The DNR does not have authority under the Public Trust Doctrine to consider those impacts.

In addition, the court concluded that the DNR erroneously excluded testimony on the economic impact of lower water levels on the property owners, businesses and tax bases adjacent to and near Lake Koshkonong. During the proceeding, the property owners presented expert testimony about the negative impact of the lower lake levels on property values. According to the court, this evidence was relevant to the DNR’s decision-making and should have been considered by the DNR. Justice Prosser, who authored the majority opinion, wrote, “[t]he DNR’s exclusion of most economic evidence was inconsistent with its acceptance of competing economic evidence that helped sustain its water level decision.”

Why this case is important for REALTORS®

This case is significant for waterfront property owners and REALTORS® for several reasons. First, the court established a bright-line test for when the Public Trust Doctrine applies (land below the OHWM) and when it does not (land above the OHWM). Prior to the Lake Koshkonong case, the scope of the Public Trust Doctrine was somewhat unclear due to several recent court cases (such as Lake Beulah v. DNR) that appeared to expand the regulatory scope of the Public Trust Doctrine beyond navigable waterways. As a result, property owners and others were unclear whether activities on land near (but not in) navigable waterways could be regulated by the Public Trust Doctrine. This case, therefore, provides waterfront property owners with greater certainty about which activities near waterways are allowed and which activities are not. It is important to note that the court did not say that the DNR and other governmental entities do not have the authority to regulate activities above the OHWM. Rather, the court said that the DNR must have some specific authorization from the legislature to be able to do so.

Second, the case also establishes the importance of considering the economic impacts on waterfront property owners and businesses when the DNR or a lake management district adjusts the water levels in a lake. Given that Wisconsin has over 5,000 lakes with water levels controlled by dams, thousands of property owners and businesses are impacted by decisions to raise or lower water levels in a lake. Changes to water levels can directly impact the ability of waterfront homeowners and businesses to use their shorelines and access their piers. Studies have shown that lowering water levels by only a few inches can result in (a) a loss in the functional use of piers for swimming, fishing and boating, (b) the inability to access shorelines by boats, (c) a degradation of the shoreline’s appearance, and (d) a decline in property values by thousands of dollars. As a result of the court’s ruling in this case, the DNR will hopefully consider the impacts on waterfront property owners and businesses when determining whether to lower water levels in a lake.

The WRA, through its Legal Action program, filed an amicus brief in this case arguing that the DNR must consider the economic impacts on waterfront property owners and businesses under the law when deciding whether to lower water levels in a lake. For more information on the Lake Koshkonong case, please contact Tom Larson (tlarson@wra.org) at 608-240-8254.

Tom Larson is Vice President of Legal and Public Affairs for the WRA.

Published: September 06, 2013

source:  WRA - Real Estate Magazine

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