IN RE: INLAND LAKES AND STREAMS ACT APPEAL
OF PORTAGE AND BASE LAKE OWNERS ASSOCIATION
ON THE PERMIT OF LEABU ASSOCIATES, INC.

File No. 88-13-0005

The Natural Resources Commission, having considered the Proposal for Decision dated May 11, 1989, of the Administrative Law Judge, and the files, pleadings, briefs, and oral argument in this matter, hereby determines and orders that:

The Proposal for Decision is approved, except that the recommendation that the slips be increased from 25 to 32 is rejected. The Proposal for Decision is further incorporated into this final decision by reference and is adopted by the Commission with the above-noted provision as its findings of fact and conclusions of law. (See Proposal for Decision, File No. 88-13-0005, dated May 11, 1989, attached hereto.)

Raymond Poupore, Chairman
Natural Resources Commission

Portage and Base Lake owners Association v. Leabu Associates
No. 88-13-0005
Proposal for Decision

This matter involves a hearing under §11(2) of the Inland Lakes and Streams Act, Act No. 346, P.A. of 1972, as amended, and §17(2) of the Goemaere-Anderson Wetland Protection Act, Act No. 203, P.A. of 1979. Under the nearly identical provisions of these statutes, a person "aggrieved" by "any action" of the Department of Natural Resources or Natural Resources Commission may request a hearing, and that hearing must be conducted pursuant to the contested case provisions of the Michigan Administrative Procedures Act. §11 of the Inland Lakes and Streams Act (ILSA) provides:

If a person is aggrieved by any action or inaction of the department, he/she may request a formal hearing on the matter involved. The hearing shall be conducted by the commission in accordance with the provisions for contested cases in Act No. 306 of the Public Acts of 1969, as amended.

§17 of the Wetland Protection Act (WPA) contains a very similar provision:

If a person is aggrieved by any action or inaction of the department, the person may request a formal hearing on the matter involved. The hearing shall be conducted by the department pursuant to Act No. 306 of the Public Acts of 1969, as amended.

There is no substantive difference between these passages.

In this situation, the Department of Natural Resources (the Department or DNR) issued a permit to Leabu Associates (Leabu or the Applicant) to construct a marina and 25 boatslips on the Huron River on a site located in a wetland abutting an inland stream. The permit was issued with conditions, including those on the size of the marina and the number of slips. A request for a contested case hearing was filed by the Portage and Base Lake Owners Association (the Association), apparently under both ILSA and the WPA. The thrust of the Association's position was that the Department erred in granting the permit. Leabu, which had originally accepted the Department's conditions, challenged the limitation on the size of the marina and the number of boat slips.

A lengthy hearing was in fact held in which both the Association and Leabu presented several witnesses. The Department presented no witnesses of its own, although its personnel testified. In the course of the hearing, the Association submitted 10 exhibits, Leabu submitted 16 exhibits, and the Department submitted 5 exhibits, including its entire file in the matter.

The parties basically agree that the focus is upon the Department's decisions under §7 of ILSA, including Rule 4 (R 281.814) promulgated in regard to §7, and upon §9 of WPA. Insofar as other provisions of these or other acts may be argued, I find that the record does not raise any substantial issue of merit. I confine my analysis of this case to §7 of the ILSA and §9 of the WPA and conclude that the Association has not demonstrated that the Department violated any other provisions of law.

The Association is a non-profit organization of landowners who own property on lakes connected by the Huron River or channels from the Huron River. The lakes are part of a "chain of lakes" which are connected by the Huron and lie downriver from the property owned by Leabu which is targeted for development. The Association members are riparians on their respective lakes and arguably on the Huron. Leabu is a riparian on the Huron River.

There is no question that the Association qualifies as a "person" as defined in each of the acts (§2(i) of ILSA; §2(f) of WPA). The Association alleged that the project of Leabu, as approved by the Department, would interfere with their rights as riparians on Portage and Base Lakes by adding to the pollution in the lakes and by adding to the congested boating conditions on those lakes. They also allege that the development of the wetlands was improper, but it is unclear how that would "aggrieve" them. For purposes of analysis, I assume that the Association's position is that the alteration of the wetlands would reduce its capacity to filter impurities due to additional run-off from this project, thereby causing pollutants to enter the Huron and travel downstream into their lakes. Thus, I accept their position that they are aggrieved under the relevant sections of both ILSA and WPA.

Since the Association qualifies for a contested case hearing, the issue becomes "hearing as to what?" Neither of the acts in question provide any direction regarding what it is that the hearing is supposed to be about, or who it is that is supposed to prove what. The Department has promulgated no rules to cover this gap in the acts.

Accordingly, one must attempt to discern, from the language of the act, what the focus of this hearing should be. Once the purpose or focus of the hearing is fixed, one must then determine who has the burden of proof.

Without further clarifying language in the statutes, I conclude that the only rational basis for the hearing provisions is to give persons affected by the decisions of the Department an opportunity to state their positions in regard to the action taken or refused by the agency. In this setting, the Department has responded directly to the developer - Leabu - by granting, with conditions, the permit necessary under both acts. The hearing provisions, which would allow the applicant to directly challenge a denial of a permit, allow others the right to challenge the action.

Do these others stand in the same position as those denied a permit? I think not. The two acts are primarily aimed at regulating the actions of applicants for permits (or those who should apply for permits when they take actions affecting the resources protected by the two acts). The focus is on the rights of the applicants and the effects on protected interests in the acts - lakes, streams, and wetlands. Under §7 of ILSA, the Department is to consider the interests of riparians and the public trust; under §9 of the WPA, the Department is to consider the public interest, but no special class like riparians is specifically denoted for protection.

Do the hearing provisions require that the Department completely vindicate its position by producing sufficient proof to justify its decision in all particulars? Again, I think not. What the act seems to require is that the persons aggrieved be given a chance to establish that legal interests of their own have not been sufficiently considered or protected by the Department's action. I conclude that this imposes on those seeking the hearing the burden of proof that the action of the agency was contrary to an interest they possess, which was entitled to protection under the statute.

Under ILSA, the statute definitely requires of the agency that it consider the riparian rights of others, which includes the riparians who compose the Association. The project in this matter will give access to Portage and Base Lakes to the users of the facilities approved in the permit. Identifying the rights of the Association under WPA is more elusive. In theory, at least, the lakes are indirectly affected by an alteration to a wetland which diminishes that wetland system's ability to filter pollutants. If the reduced filtering capacity leads to an increased discharge of pollutants into an inland stream and thence into their lakes, there is at least an arguable interest protected under the wetlands act. Also, the argument can be made that the wetland violation is incorporated into the protections of the ILSA.

Thus, I do not conclude that the right to hearing encompasses the right to a wholesale review of the Department's action in general; it only encompasses the right to review those aspects of the action which relate to interests of the aggrieved persons identified or protected by the two acts.

The final aspect of this analysis requires that the burden of proof be fixed. Since this is a challenge to the propriety of a decision already made, the Association (and others acting under the right to hearing provisions in these acts) should bear the burden of proof. They are the proponents of the proposed action - in this case that the agency's decision be set aside and that the requested permit be denied. Accordingly, I conclude that the Department is not required to justify every aspect of its decision, but must only prevail on those issues legitimately raised by the challenging aggrieved person. Further, on each point raised in the challenge, the burden of proof - which is to establish the facts by the preponderance of evidence--is on the challenger.

In its closing argument, submitted in writing after the close of the hearing, the Association has set forth its various challenges to the Department's action. These arguments fix the limits of the scope of this hearing and will be addressed in the balance of this opinion.

Leabu has, in turn, raised one issue challenging the Department's decision - that the condition imposed on the project was improper under the circumstances. Both the Department and the Association argue that the condition should remain in place, with the obvious consideration that the Association urges that the permit should not have been issued at all.

The Applicant, Leabu Associates, submitted its application for a permit to the Department on January 5, 1988. The underlying development associated with this project proposes a subdivision of 32 single family lots, located on slightly over 40 acres of land with 1600 feet of frontage on the Huron River and 675 feet of frontage on Little Whitewood Lake. The property includes approximately 17 acres of wetland and 23 acres of upland. The river and lake are part of a chain of lakes, which includes the lakes on which the Association members reside. The developer owns an adjoining parcel consisting of slightly more than 20 acres with approximately 450 feet of frontage on Little Whitewood Lake. Mr. Leabu, one of the developers, conveyed the property under development to Leabu Associates.

Unless found otherwise, all legal requirements connected to the project have been met. The property is zoned for planned unit development (P.U.D).

The plan is a well-conceived use of the land, designed to provide development of the uplands and to minimize intrusion into the wetland area. The lots to be sold are located on the uplands above the flood plain elevation and outside the wetlands. The area in the wetland and along the river and lake frontage will remain common area and will have only the development discussed in these findings. The plan calls for the construction of an inlet from the Huron River to a boat basin or marina on the property, which will be located in the wetland. The plan also calls for the construction of a permanent access road connecting the upland residential sites to the marina and a parking area near the marina, as well as a temporary construction road to be used during the development.

The marina was designed to have one boat slip per residence, limiting the access to the river to a maximum of 32 boats on a permanent or mooring basis. The Department conditioned the permit by limiting the number of slips to 25, a point of contention in this review. In order to accommodate the additional slips, Leabu seeks to increase the size of the basin by 30 feet over the limitation imposed in the conditional approval. The subdivision plan and restrictions are such that the boat basin and the wetlands will not be further developed.

The Association's Position - During the hearing the Association has set forth the following grounds for its position that the approval of the permit with conditions was improper:

1. That the construction of the basin and access road will result in the loss of between two and three acres of wetlands. The road will also divide the wetland into two separate wetland areas, neither of which will be as effective as the single wetland system in controlling pollution or as habitat.

2. That the effluent drainage system for the uplands will drain into this wetland through a water level control structure, requiring that the wetland operate as a filter for the upland pollutants, and that the system proposed will not be effective.

3. That there was no finding that this permit was in the public interest except that it will result in economic value to the developer; that the Department ignored the requirements of the Environmental Protection Act in regard to pollution; and that the pollution will flow downstream, affecting the Association's interests and those of its members.

4. That the project will increase the traffic on the Huron River chain of lakes, affecting the riparian interests of the Association and its members.

5. That the Department failed to determine sufficiently the nature and extent of the wetlands in question.

6. That the Leabu's riparian rights in this property were severed by previous action in 1966, when the property in the upland was transferred to Leabu's predecessor without shoreline frontage.

The Association called seven witnesses in support of their contentions, including both Mr. Leabu's, an expert of their choosing, two Department employees involved in the approval, and two members of the Association who reside on the lakes. The Applicant, Leabu, also presented testimony of both Leabu's (in addition to that already presented in the Association's case), and called its own expert. I will review the testimony regarding each of the points raised by the Association.

1. That the construction of the basin and access road will result in the loss of between two and three acres of wetlands. The road will also divide the wetland into two separate wetland areas, neither of which will be as effective as the single wetland system in controlling pollution or as habitat.

2. That the effluent drainage system for the uplands will drain into this wetland through a water level control structure, requiring that the wetland operate as a filter for the upland pollutants, and that the system proposed will not be effective.

3. That there was no finding that this permit was in the public interest, except that it will result in economic value to the developer; that the Department ignored the requirements of the Environmental Protection Act in regard to pollution; and that the pollution will flow downstream, affecting the Association's interests and those of its members.

5. That the Department failed to determine sufficiently the nature and extent of the wetlands in question.

These paragraphs relate to the wetland aspect of this project. The testimony and exhibits establish that the impact on the wetands in this project has been carefully considered and that the Department of Natural Resources was involved in the planning and development of the project.

The only testimony to the contrary was offered by the Association's expert, Dr. Humphries. Dr. Humphries visited the site once and made no specific investigations of the type he referred to as "ground truthing." He obviously is opposed to any development in a wetland. His testimony establishes that there will be some effect, since the access road and the basin will alter the surface condition of the wetlands This aspect is confirmed by the testimony of the other witnesses regarding the wetlands.

However, Dr. Humphries' testimony about the approach taken on this project, including the construction methods of the access road, the design of the housing in the uplands and the marina in the wetlands the use of water control devices, and the nature of the septic systems involved, focused on the hypothetical potential for failure. He was unfamiliar with the road construction technique and spoke only generally about the other dangers. His discussion of the potential impact on the wetlands did not address specific problems he found on the site, but focused generally on the noise and human intrusion aspects. Nor did he describe substantial intrusions or effects.

On the other hand, the two Department personnel who testified both found the project to be the most feasible and prudent alternative for development in this wetland. Mr. Harrington worked with the Applicant prior to submission. He believed that the owners and developers were riparians with the right to access to the river. He felt that the project design minimized water pollution potential. He described the site as a complex area of marine and forested wetland and upland. He felt that the project laudably clumped the intrusion and introduced minimal change to the wetlands

The area was obviously wetland in his view, making any formal survey unnecessary.

Mr. Harrington strongly endorsed the use of the geotextile road system in this project. He stated that it was in use by the Department and by the Department of Highways as an alternative in poor load-bearing situations. The military also use it. In regard to its contribution to ponding, since it acts to some degree as a dam, Mr. Harrington testified that water can pass beneath the road. He also said that not all ponding was bad.

The septic system looked adequate to him and would still be subject to local approval.

In sum, Mr. Harrington characterized this as "one of the better sites." He checked the computer and found no indication of rare or endangered species. He concluded that there was minimal impact on the wetland and that the project met the legal criteria. He testified that the creation of the boat basin or marina was not the destruction of wetlands but a change of the wetland to another form - marine.

Mr. Rick Schramm was the employee responsible for the review and approval of this project. He testified that he had been on the site 3 or 4 times and that he had worked with the Leabu's in the development of the project. The project was substantially modified through his efforts and the cooperation of the Applicant. Among the changes made were the deletion of a boat ramp (to limit access to the river), the elimination of a beach, the introduction of a water control system and the reduction of the number of boat slips in the basin.

He testified that he felt that on balancing the environmental and beneficial characteristics of the project, it should be approved. He felt that this was an orderly waterfront development and that it would enhance the local tax base.

The access road was the best alternative. There had to be a concern for public safety, so a boardwalk would not suffice. The road size and its location were the best alternatives; the size of the road was minimal.

The water control device was the same kind as that used by the Department in waterfowl flooding areas. It presented no unreasonable risk of failure, which could occur only if the pipe were blocked.

The basin was a better alternative than stringing docks along the river.

He also felt that the wetland characteristics of the property were obvious. This wetland contained no rare or endangered species.

Dr. Donald L. Tilton testified as the expert for Leabu. He was well-qualified and presented a thorough review of the environmental concerns in the wetland area. His testimony supported that of the Department's employees. His observations included a review of the work completed prior to the request for hearing, all of which he found to be environmentally-sound. He supported the use of the geotextile road, the use of silt screens in the construction, the location of the access road through a small portion of the wetland as the best alternative, the water management controls selected, and the presence of the construction road as a safety alternative.

He felt that the wetland would serve well as a pollution control device. The type of wetland was quite resistant to pollution, in his view. It would improve the quality of the water and the wetland was large enough to handle the excess water. Further, the upland soils would handle the septic system suitably and were such that there would be little run-off from the upland area.

The basin was a superior alternative to docks along the river. The impact on the wildlife, including animals, fish, and aquatic insects would be minimal.

Overall, Dr. Tilton felt that the project presented the best use of the property, and that it was the least damaging alternative. The most valuable habitat suffered the least encroachment.

The testimony in behalf of the Applicant on these four points is overwhelmingly in its favor. Although the burden here falls on the Association, I find that the proofs clearly support the Applicant. There is simply little to support the position that the project was not factually consistent with the requirements of the Wetlands Act. The record does not establish that there is a substantial threat that the project will increase the pollution of the river, leading in turn to pollution of the downstream lakes. Nor is there any evidence that the Department did not consider the public interest in this project in making its decision.

The next point raised by the Association is:

4. That the project will increase the traffic on the Huron River chain of lakes, affecting the riparian interests of the Association and its members.

I agree that the project will affect the amount of traffic on the Huron River chain of lakes and thereby affect the interests of the riparians who constitute the Association. The issue is whether this effect is adverse and violates ILSA.

The testimony regarding this aspect of the case was that of two members of the Association, Mr. Doug Smith and Mr. Willis Tupper, with some testimony also from Dr. Humphries. I found the case made by the Association to be unpersuasive. Dr. Humphries' testimony was, at best, general and not specific to the situation on Portage and Base Lakes. Both the Association members testified that they owned three boats, more than will be permitted to moor at the project's boat basin. Mr. Smith testified that Portage Lake is polluted now, due to the failure of septic systems on the lake and on the many canals constructed on the two lakes. Further, he testified that there is already public access to Portage Lake.

Mr. Harrington and Mr. Schramm both testified that the Department has no rules for establishing the number of boats per lot or residence for its projects. They use 1.5 as a rule of thumb. The record clearly establishes that the density of boat usage for this project is below that usually found on Michigan lakes and streams and that it is well below that of the current members of the Association.

This project is located on the Huron River and the owners of the homes in this project will be riparians. They are entitled to use the river for boating. The rights of the Association members to use the lake and the river are certainly no different from those of the Leabu's or their purchasers, and they are assuredly not superior. The actions of the Department in approving this project were not unmindful of the riparian rights of the Applicants, future riparian owners, or the downstream riparians on this system.

The final point raised by the Association is:

6. That the Leabu's riparian rights in this property were severed by previous action in 1966, when the property in the upland was transferred to Leabu's predecessor without shoreline frontage.

This position is closely related to that set forth regarding the riparian interests of the Association. The Department's witness, Mr. Schramm, testified that the Department inquired in regard to the riparian rights of Leabu. Leabu supplied an opinion letter from an attorney, Mr. Thomas K. Ellis, concluding that the riparian rights were established (Department Exhibit 5). The Department relied on that letter, according to Mr. Schramm, in its determination that the Applicant had riparian rights.

The record contains no evidence to the contrary. No expert testimony or evidence regarding the riparian interests was specifically introduced. The only basis for the position taken is the interpretation of the exhibits made by the Association.

I find that the Department properly assessed whether the Applicant had riparian rights. There was an adequate factual basis in the file for the determination.

The Applicant's Position - During the course of the proceedings, the Applicant decided to request the restoration of the 7 slips eliminated by the Department in its approval of the project. Although the Department has formally opposed this request during the hearing, that opposition has not been vigorous. The Association, of course, opposes the original approval, so its opposition to the additional slips is obvious.

The testimony has already been reviewed in part. Mr. Harrington testified that the Department has no standards for approving the number of boats allowed. It has no rules for guidance in this regard. He stated that the Department uses a working standard of reasonableness, and agreed that it is not unreasonable to determine that the average riparian owner has three boats. Mr. Harrington testified that no restrictions are imposed on the number of boats for seasonal docks.

Mr. Schramm testified that the Department had no rules, but that it used a "rule of thumb" of 1.5 boats per lot. He set the limit on the number of slips in part through the application of this rule of thumb. He did so by making a computation of the number of lots on the river and the number of lots on the lake and multiplying by a factor of 1.5. He then subtracted the number of lots which remained for development on the portion of Mr. Leabu's retained property, as I understand his testimony. This reduced the approved number of slips from 31 to 25. The removal of the ramp eliminated the potential for uncontrolled access.

The two association members, Mr. Smith and Mr. Tupper, each testified that they owned three boats. Mr. Tupper estimated that three was the average number per site on Portage Lake.

I find that the Department has unnecessarily conditioned the permit under the facts. The purpose was sound - to minimize the impact of this project on riparian owners. The premise was slightly flawed. When Mr. Schramm computed the number, he ignored the actual number of lots for this development. There will be 32 lots. The plan for the project meets all local and state restrictions on lot size. There was no basis in fact upon which Mr. Schramm could do the conceptualized determination of the number of lots. Further, I see no factual reason to consider the future development of the remaining property when issuing this permit. Should that property be developed later, there may be no demand for access or riparian rights. If there is, the request should be considered on its own merits.

I also find the logic of one lot-one slip overwhelming. The restrictions imposed already make this project less permissive than the rule of thumb, since it is below the 1. 5 number. And the testimony clearly establishes that the number allowed is only one- third that of the nearby and downstream users.

Since the Department stated its position in fixing the number of boats as one of reasonableness, I find that under the facts the most reasonable number would be one slip per lot or 32 slips. The record establishes that any additional impact by increasing the size of the basin by the 30 feet necessary to allow the 7 extra slips would be minimal. The testimony does not evidence that there will be any substantial harm from adding 30 feet to the basin.

In the initial pages of this opinion I set forth my conclusions regarding the scope of this hearing and the burden of proof. I reiterate here that the hearing is shaped by the issues raised by the Association. It is not necessary for the Department to justify every phase of its decision to issue the conditioned permit.

Further, I have found, in the fact-finding portion of this opinion, that the Association has not met its burden of proof in any aspect of its challenge. Since it has not prevailed on the facts, there is no occasion to revisit the sections of the Inland Lakes and Streams Act and the rules thereunder or the sections of the Wetland Protection Act which control the Department's decisions when permits are sought.

Accordingly, I make no specific conclusions regarding the application of the two controlling sections of those acts. However, the record establishes that the Department met the requirements of both ILSA and WPA in its approval, with the exception of its condition on the number of slips. I conclude that the Department unreasonably conditioned the permit, when it did not allow the project to include one slip per lot.

In regard to the Michigan Environmental Protection Act (MEPA), I conclude that the Department's decision met all requirements imposed upon it under than act. I found that there was in fact no basis to conclude that there would be pollution of the river or the downstream lakes, based on this record. The project is environmentally sound. I adopt the conclusions regarding the MEPA submitted as proposed conclusions by Leabu as my own in this regard (see pages 21-25).

I conclude that the Association has not established any failure on the part of the Department to satisfy the requirements of the law in its approval of the permit issued to Leabu. I further conclude that the record shows that the Department's conditions on the permit were unreasonably restrictive insofar as they limit the slips to 25. I conclude that under the law and the Department's own practices, the most reasonable number of slips is 32 for the 32 lots.

I recommend that the Commission uphold the Department's approval of this application for permit. I recommend that the Commission remove the condition included with the permit which limits the number of slips to 25 and allow the permit to issue with a limit of 32 slips. I also recommend that the basin be extended by an additional 30 feet to accommodate the 7 slips which will be added.
 

Date
Don LeDuc
Administrative Law Judge

LIST OF EXHIBITS
Plaintiff's Exhibits

No. 1 Rivendell Site Plan (6-16-88)
No. 2 Photograph
No. 3 Photograph
No. 4 Photograph
No. 5 Photograph
No. 6 Photograph
No. 7 Rivendell Brochure
No. 8 Application for Permit (1-5-88)
No. 9 Permit (6-20-88)
No. 10 Excerpt--Livingston County Soil Survey (1974)

Defendant's Exhibits

No. 1 Topographic Map--Hamburg Triangle, U.S. Department of the Interior Geological survey
No. 2 Rivendell Site Drawing
No. 3 Rivendell Site Plan (6-16-88)
No. 4 Rivendell Site Analysis (10-21-87)
No. 5 Rivendell Plat (10-28-88)
No. 6 Quit Claim Deed (9-1-88)
No. 7 Declaration of Conservation Easement and Restrictive Covenants  (7-11-88)
No. 8 Sample Keyhole Ordinance--Michigan Townships Association
No. 9 Dexter Twp. Keyhole Ordinance
No. 10 Putnam Twp. Keyhole Ordinance
No. 11 Webster Twp. Keyhole Ordinance
No. 12 Videotape Displaying Site
No. 13 Hamburg Twp. Planning Commission Meeting Minutes (7-6-88)
No. 14 Memorandum of D. Wartman to Hamburg Twp. Planning Commission (11-2-87)
No. 15 Boat Allocation Analysis--Leabu Associates
No. 16 Chronology of Events--Leabu Associates

State Exhibits

No. 1 Aerial Photograph--MDNR 417-364-46 (6-10-88)
No. 2 Aerial Photograph--MDNR 417-363-133 (6-10-88)
No. 3 Aerial Photograph--MDNR 443-365-61 (7-1-88)
No. 4 Color-Enhanced Aerial Photograph with Attachment
No. 5 DNR File