Case Title: Lake Beulah Mgmt. Dist. v. Village of East Troy

Citation: 2011 WI 55

Docket Number: 2009AP002021

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2011-07-06T00:00:00Z

Document:
2011 WI 55 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2009AP2021 
COMPLETE TITLE: 
 
 
Lake Beulah Management District, 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
Village of East Troy, 
          Defendant-Respondent. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2010 WI App 127 
Reported at: 329 Wis.2d 641, 791 N.W. 2d 385 
(Ct. App. 2010 – Published) 
 
 
OPINION FILED: 
July 6, 2011   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
April 13, 2011 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
CIRCUIT COURT   
 
COUNTY: 
WALWORTH COUNTY   
 
JUDGE: 
ROBERT J. KENNEDY 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner there were briefs 
and oral argument by Dean P. Laing, and O’Neil, Cannon, Hollman, 
DeJong & Laing S.C. 
For the defendant-respondent there was a brief and oral 
argument by Paul G. Kent, Barbara A. Neider and Stafford 
Rosenbaum LLP. 
 
 
 
2011 WI 55
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2009AP2021 
(L.C. No. 
2008CV915) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Lake Beulah Management District, 
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
Village of East Troy, 
 
          Defendant-Respondent. 
 
 
 
FILED 
 
JUL 6, 2011 
 
A. John Voelker 
Acting Clerk of Supreme 
Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
N. PATRICK CROOKS, J.   This is a review of a 
published decision of the court of appeals1 concluding that Lake 
Beulah Management District's (LBMD) ordinance, purporting to 
regulate and require permits for certain wells that withdraw 
water from the area around Lake Beulah, was invalid as preempted 
by the legislature's grant of authority to the Department of 
Natural Resources (DNR) to regulate high capacity wells.  LBMD 
brought a declaratory judgment action seeking to enforce the 
                                                 
1 Lake Beulah Mgmt. Dist. v. Vill. of E. Troy, 2010 WI App 
127, 329 Wis. 2d 641, 791 N.W.2d 385. 
No. 
2009AP2021   
 
2 
 
ordinance in regard to a high capacity municipal well, Well No. 
7, for which the Village of East Troy (the Village) had obtained 
a permit from the DNR.  The Village moved the circuit court for 
summary judgment, asserting, as relevant to our review, that the 
ordinance was invalid as preempted by state law.  The circuit 
court granted the Village's motion for summary judgment and the 
court of appeals affirmed. 
¶2 
We conclude that the ordinance is invalid because it 
conflicts with, defeats the purpose of, and violates the spirit 
of the legislature's delegation of authority to the DNR to 
regulate high capacity wells in Wis. Stat. § 281.11 and § 281.12 
(2007-08)2 and its creation of a comprehensive permitting 
framework for high capacity wells in Wis. Stat. § 281.34 and 
§ 281.35.  Thus, the ordinance is preempted by state law. 
¶3 
Therefore, we affirm the decision of the court of 
appeals. 
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 
                                                 
2 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version unless otherwise indicated. 
No. 
2009AP2021   
 
3 
 
¶4 
The ordinance, while applicable to any diversion of 
surface water out of the Lake Beulah Hydrologic Basin,3 was 
adopted primarily in response to the Village of East Troy's 
plans to construct a high capacity municipal well, Well No. 7.  
Initially, LBMD unsuccessfully petitioned for judicial review of 
the DNR's decision to issue the 2003 permit for Well No. 7.4  
While continuing with its appeal of that decision and a 
challenge to the DNR's subsequent 2005 permit for Well No. 7, 
LBMD chose to pursue other methods to ensure that Well No. 7 did 
not impact Lake Beulah.   
¶5 
On December 11, 2006, LBMD adopted an ordinance that 
prohibits the diversion of water from the Lake Beulah Hydrologic 
                                                 
3 The ordinance defines the Lake Beulah Hydrologic Basin as 
"the geographic region or territory whose boundaries include all 
of the Lake Beulah Surface Water Drainage Basin and all of the 
Lake Beulah Groundwater Basin."  The Lake Beulah Surface Water 
Drainage Basin includes "[t]he geographic region or territory 
whose boundaries include all those lands and waters on which 
water deposited at the ground surface would, if prevented from 
infiltrating into the soil, flow by gravity to a point where it 
would enter into Lake Beulah."  The Lake Beulah Groundwater 
Basin includes "[t]he three dimensional region whose boundaries 
encompass that portion of the aquifer known variously as the 
shallow, unconsolidated, or sand and gravel aquifer, within 
which the groundwater, if it were unaffected by pumping or other 
artificial inducement, would flow into, beneath or within the 
Lake Beulah Surface Water Drainage Basin."  
4 For a detailed history of LBMD's legal challenges to the 
DNR's permits for Well No. 7, see our decision in the related 
case reviewing the DNR's decision to issue the 2005 permit for 
Well No. 7, Lake Beulah Management District v. Department of 
Natural Resources (DNR), 2011 WI 54, ¶¶8-21, __ Wis. 2d __, __ 
N.W.2d __, and the court of appeals decision in this case, Lake 
Beulah Management District v. Village of East Troy, 329 
Wis. 2d 641, ¶¶2-3.  
No. 
2009AP2021   
 
4 
 
Basin without a permit from LBMD.5  To obtain a permit pursuant 
to the ordinance, the applicant is required to explain the 
purpose of the proposed diversion and "include a thorough 
environmental study" emphasizing the potential impact of the 
diversion on Lake Beulah and its surrounding environment, 
including the groundwater aquifer.6  The ordinance further 
                                                 
5 The ordinance provides that the following are prohibited 
acts: 
It shall be unlawful and prohibited by this Ordinance 
for any person or entity to do any of the following 
unless such acts are authorized in advance by and 
performed in conformance with a valid permit issued by 
the District pursuant to this Ordinance: 
A. 
Divert or transfer surface water out of the Lake 
Beulah Surface Water Drainage Basin. 
B. 
Divert, transfer, or induce the diversion or 
transfer of groundwater out of the Lake Beulah 
Groundwater Basin. 
E. 
Withdraw groundwater from within the Lake Beulah 
Groundwater Basin and then divert or transfer said 
water out of the Lake Beulah Groundwater Basin.  
6 The portion of the ordinance describing the permit process 
provides in relevant part: 
No use or action may be initiated, undertaken or 
continued that would be in violation of this Ordinance 
except in accordance with a permit issued by the 
District.  A request for a permit for such use or 
action must be submitted to the Board of Commissioners 
for approval.  The petition, together with any 
documents or records that support the petition, must 
clearly state the grounds upon which the petitioner 
requests the permit including, at minimum, a concise 
statement of the purpose of the request, the annual 
volume of water to which the request applies and the 
number of years the petitioner seeks for the approval 
or permit to remain in effect.  In addition, said 
No. 
2009AP2021   
 
5 
 
provides that a permit may not be granted "if the net effect 
would be adverse to Lake Beulah or the public health, comfort, 
convenience, and welfare of the District."  Additionally, the 
ordinance does not allow LBMD to grant a permit for a diversion 
"unless a volume of water equal to at least 95% of the water 
actually diverted or transferred is returned to the Hydrologic 
Basin" in a manner that mitigates adverse effects. 
¶6 
The Village began constructing Well No. 7 in 2006 
after receiving the 2005 permit from the DNR.  The Village has 
been operating Well No. 7 since August 1, 2008.   
¶7 
The parties do not dispute that Well No. 7 is within 
the Lake Beulah Hydrologic Basin as that term is defined in the 
ordinance.  However, shortly after LBMD enacted the ordinance, 
the Village informed LBMD that the Village believed that LBMD 
lacked the legal authority to promulgate the ordinance and, in 
                                                                                                                                                             
petition must include a thorough environmental study 
of the proposed use or action with emphasis on the 
potential impacts of such use or action on the 
following: Lake Beulah; groundwater and surface water 
contributing to Lake Beulah; wetlands adjacent to Lake 
Beulah or any surface water tributary to Lake Beulah; 
private 
wells 
in 
the 
District; 
and 
groundwater 
supplying 
any 
private 
well 
in 
the 
District.  
Petitioner may request an opportunity to testify and 
present evidence at a hearing conducted by the Board 
of Commissioners.  The permit shall be granted only 
upon 
the 
majority 
decision 
of 
the 
Board 
of 
Commissioners 
based 
upon 
the 
[prescribed] 
procedure[s]. 
No. 
2009AP2021   
 
6 
 
any event, according to Wis. Stat. § 33.22(4),7 LBMD could not 
exercise its powers in an incorporated municipality such as the 
Village without the municipality's consent.   
¶8 
Given the Village's position, on July 22, 2008, LBMD 
sought a declaratory judgment in the Walworth County Circuit 
Court providing that the ordinance was valid and enforceable as 
to the Village.  The Village moved for summary judgment arguing 
that, under Wis. Stat. § 33.22, LBMD lacked the authority to 
enact an ordinance regulating the Village and also lacked the 
authority to exercise its powers extraterritorially.  Further, 
the Village argued that the ordinance was preempted by state 
law.  The Walworth County Circuit Court, the Honorable Robert J. 
Kennedy presiding, granted the Village's motion for summary 
judgment and declared the ordinance "void and unenforceable in 
that it conflicts with state law," and also "invalid as applied 
to the Village."   
¶9 
LBMD appealed, and the court of appeals affirmed on 
the basis that the ordinance is preempted by state law.  The 
court of appeals noted that the legislature granted the DNR 
broad authority to regulate waters of the state in Wis. Stat. 
                                                 
7 Wisconsin Stat. § 33.22(4) provides in relevant part: 
"Districts shall not exercise the town sanitary district powers 
authorized 
under 
sub. 
(3) 
within 
the 
boundaries 
of 
an 
incorporated municipality unless the governing body of the 
municipality consents." 
LBMD was originally a sanitary district encompassing the 
area around Lake Beulah, and in 1995 the Town of East Troy 
converted the sanitary district into a lake district, LBMD, 
pursuant to Wis. Stat. § 33.235(1m).  
No. 
2009AP2021   
 
7 
 
chs. 280 and 281.  Lake Beulah Mgmt. Dist. v. Vill. of E. Troy, 
2010 WI App 127, ¶¶12-13, 329 Wis. 2d 641, 791 N.W.2d 385.  The 
legislature explicitly stated that its goal was "to create a 
'comprehensive program under a single state agency for the 
enhancement of the quality management and protection of all 
waters of the state.'"  Id., ¶13 (quoting Wis. Stat. § 281.11).  
The court of appeals applied the test for preemption set forth 
in DeRosso Landfill Co., Inc. v. City of Oak Creek, 200 
Wis. 2d 642, 651-52, 547 N.W.2d 770 (1996), and concluded that 
"the Ordinance logically conflicts with, defeats the purpose of, 
and violates the spirit of the legislature's delegation of 
authority to the DNR," and thus is preempted.  Lake Beulah Mgmt. 
Dist. v. Vill. of E. Troy, 329 Wis. 2d 641, ¶17. 
¶10 LBMD petitioned this court for review, which we 
granted.  We review whether the ordinance is preempted by state 
law.8  
II. ANALYSIS 
¶11 "The 
question 
of 
whether 
a 
statute 
preempts 
a 
municipal ordinance raises a question of law which we review 
independently, benefitting from the analyses of the circuit 
court and the court of appeals."  DeRosso, 200 Wis. 2d at 652. 
 
¶12 LBMD's argument regarding preemption is related to the 
Village's argument in a related case before this court regarding 
                                                 
8 The parties also address LBMD's authority to enact the 
ordinance and enforce it as to the Village.  Because we conclude 
that the ordinance is preempted by state law, we do not address 
the arguments regarding LBMD's authority. 
No. 
2009AP2021   
 
8 
 
LBMD's challenge to the 2005 permit for Well No. 7.  See Lake 
Beulah Mgmt. Dist. v. Dep't of Natural Res. (DNR), 2011 WI 54, 
__ Wis. 2d __, __ N.W.2d __.  In that case, the Village argued 
that where no formal environmental review or findings are 
required, the DNR lacked the authority to consider the impact of 
a proposed high capacity well for which a permit is required 
under Wis. Stat. § 281.34(2).  Id., ¶28.  In this case, LBMD 
argues that if the DNR does not have the authority to consider 
the impact of a proposed well on Lake Beulah, then the ordinance 
cannot conflict with the DNR's regulatory authority for high 
capacity wells in Wis. Stat. ch. 281.  Significantly, LBMD 
conceded in its briefs, and at oral argument, that if the DNR 
does have the authority to consider the impact of a proposed 
high capacity well on waters of the state such as Lake Beulah, 
then the ordinance conflicts with the state statute providing 
such authority, Wis. Stat. ch. 281. 
 
¶13 The 
Village argues that the statutory framework 
directing the DNR to regulate and issue permits for high 
capacity wells precludes conflicting local regulation.  The 
Village asserts that the ordinance's permitting framework, which 
imposes requirements on wells authorized by the statute and the 
DNR, conflicts with and contravenes the statute.  For example, 
the Village notes that, according to its interpretation of the 
statute, the permitting framework requires environmental review 
only for three specific categories of wells with a capacity of 
between 100,000 and 2,000,000 gallons per day (gpd), and wells 
with a capacity of over 2,000,000 gpd, and the ordinance 
No. 
2009AP2021   
 
9 
 
purports to require environmental review for wells when that is 
not required by the statute.  The Village further argues that 
the 2005 permit for Well No. 7 provides a specific example of 
the ordinance's conflict with the statute because, while the DNR 
authorized Well No. 7, the ordinance purports to require an 
additional permit and would also prohibit the well as it 
currently operates because the Village does not return the water 
to Lake Beulah.  
¶14 We addressed the question of the DNR's authority and 
duty to consider the potential harm to waters of the state when 
evaluating an application for a proposed high capacity well in a 
related case in which LBMD challenged the DNR's decision to 
issue the 2005 permit for Well No. 7.  Lake Beulah Mgmt. Dist. 
v. DNR, __ Wis. 2d __, ¶¶1-5.  In that case, we held that "the 
DNR has the authority and a general duty to consider whether a 
proposed high capacity well may harm waters of the state."  Id., 
¶3 (footnote omitted).  Given our holding in Lake Beulah 
Management District v. DNR, and despite LBMD's concession noted 
herein that its ordinance, based on our holding, conflicts with 
and is preempted by Wis. Stat. ch. 281, we feel it is 
appropriate to examine independently the issue.  Is the 
ordinance preempted by the legislature's grant of authority to 
the DNR to regulate wells and manage and protect waters of the 
state pursuant to Wis. Stat. ch. 281?  
¶15 Local regulation is preempted by state law when "(1) 
the 
legislature 
has 
expressly 
withdrawn 
the 
power 
of 
municipalities to act; (2) it logically conflicts with state 
No. 
2009AP2021   
 
10 
 
legislation; (3) it defeats the purpose of state legislation; or 
(4) it violates the spirit of state legislation."  DeRosso, 200 
Wis. 2d at 651-52 (footnotes omitted).  Examining the ordinance 
in light of the legislature's delegation of authority to the DNR 
to regulate wells, we conclude that it is preempted based on the 
second, third, and fourth prongs of the DeRosso test.   
¶16 The 
ordinance 
logically 
conflicts 
with 
the 
legislature's framework directing the DNR to regulate high 
capacity wells and also granting the DNR the authority to manage 
waters of the state.  The legislature has chosen the DNR to 
"serve as the central unit of state government to protect, 
maintain and improve the quality and management of the waters of 
the state, ground and surface, public and private."  Wis. Stat. 
§ 281.11.  The legislature has further provided that the purpose 
of Wis. Stat. ch. 281 is "to organize a comprehensive program 
under a single state agency for the enhancement of the quality 
management and protection of all waters of the state."  Id.  The 
framework for the comprehensive program within which the DNR 
regulates high capacity wells is set forth in Wis. Stat. 
§ 281.34 and § 281.35.    
¶17 This case provides an example of how the ordinance 
runs counter to the state statute.  The DNR has issued a permit 
to the Village to operate Well No. 7 pursuant to Wis. Stat. 
§ 281.34(2).  The ordinance purports to require an additional 
permit from LBMD, which would require the submission of 
information in addition to what the Village was required to 
submit to the DNR, and would actually prohibit Well No. 7 from 
No. 
2009AP2021   
 
11 
 
operating as it currently does, because the Village does not 
return the water to the Lake Beulah Hydrologic Basin.   
¶18 For the same reason, the ordinance frustrates the 
legislature's purpose in creating a comprehensive regulatory 
scheme under the DNR.  As we have explained in a similar 
context, if a local ordinance prohibits what the DNR has 
authorized pursuant to the statutes, its rules, and its role as 
manager of water resources, that ordinance is preempted because 
it frustrates the purpose of the state law.  Wis. Envtl. Decade, 
Inc. v. Dep't of Natural Res., 85 Wis. 2d 518, 535-36, 271 
N.W.2d 69 (1978) ("Allowing the City of Madison to prevent 
treatment which the DNR has authorized, and thereby frustrate 
the [DNR's] program of water resource management, defeats clear 
legislative purpose to establish the [DNR] as 'the central unit 
of state government' with 'general supervision and control over 
the waters of the state.'"). 
¶19 The permitting scheme that the ordinance imposes in 
addition to the comprehensive permitting scheme in Wis. Stat. 
§ 281.34 and § 281.35 does not merely provide additional 
requirements, but as this case demonstrates, may prohibit the 
operation of a high capacity well that is authorized by the DNR 
under the statute.  Where the legislature has "adopted a complex 
and comprehensive statutory structure," an ordinance that runs 
counter to that structure violates the spirit of the legislation 
and is preempted.  DeRosso, 200 Wis. 2d at 652 n.8 (quoting 
Anchor Sav. & Loan Ass'n v. Equal Opportunities Comm'n, 120 
Wis. 2d 391, 397, 355 N.W.2d 234 (1984)).      
No. 
2009AP2021   
 
12 
 
III. CONCLUSION 
¶20 We conclude that the ordinance is invalid because it 
conflicts with, defeats the purpose of, and violates the spirit 
of the legislature's delegation of authority to the DNR to 
regulate high capacity wells in Wis. Stat. § 281.11 and § 281.12 
and its creation of a comprehensive permitting framework for 
high capacity wells in Wis. Stat. § 281.34 and § 281.35.  Thus, 
the ordinance is preempted by state law. 
¶21 Therefore, we affirm the decision of the court of 
appeals. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
No. 
2009AP2021   
 
 
 
1