The Wisconsin Supreme Court has decided to hear a case that will determine whether the Wisconsin Department of Natural Resources is required, when making water level decisions on impounded lakes, to consider evidence of the water level’s effect on property values.

The DNR argues that it is not required to consider the economic effects on property values and business income in surrounding areas when making water level determinations, and that its decision should be accorded great weight deference. The landowners (appellants), however, argue that the DNR’s decision should be granted no deference.

On July 21, 2011, the Court of Appeals, Dist. IV issued its decision in Rock-Koshkonong Lake Dist. et al. v. DNR (2008AP1523), siding with the DNR. The court ruled that DNR is not required to consider the potential economic effects on residential property values, business income, or tax revenues, when setting water levels.

The court further held that the DNR did not exceed its scope of authority when it considered the potential effects of proposed water levels on private, non-navigable wetlands. The court ruled that the DNR did not exceed its scope of authority when it considered wetland water quality standards when setting water levels.

The case stems from a dispute between the Rock-Koshkonong Lake District and the DNR over the water levels set by DNR for Lake Koshkonong. Wisconsin law grants DNR the authority to set water levels “in the interest of the public rights in navigable waters or to promote safety and protect life, health and property.”

The Lake District argues that the “protect property” provision requires DNR to consider potential economic effects of setting the water levels. The agency rejects this reading of the statute; however, it argued it must consider the potential effects of the proposed water levels on private, non-navigable wetlands. The DNR further argues that it must consider the wetland water quality standards under the Administrative Code (NR 103) in setting the water levels for the lake.

This post, authored by Andrew Cook, originally appeared on the Great Lakes Legal Foundation’s Regulatory Watch blog.