The Michigan Supreme Court has agreed to hear arguments in a crucial Oakland County wetlands case that public interest groups hope will re-affirm the state's authority to enforce environmental laws.

The Institute was among dozens of organizations that appealed to the Supreme Court to take up the case, known as K&K Construction vs. Department of Natural Resources. The case stems from a DNR decision nine years ago to prohibit the filling of wetlands on an 81-acre parcel in Waterford Township for a new restaurant, parking lot, and sports complex.

The owners and developers of the property asserted that in turning down the permit, the state had markedly devalued their property. They argued that by enforcing the wetland law, and restricting how their land could be developed, the DNR had seized, or "taken," their property. Under the Fifth Amendment to the Constitution, they argued, the government must pay "just compensation."

In 1992, the Court of Claims in Lansing issued a surprising decision, ruling in favor of the developers and awarding them $5.2 million. In June 1996, a three-judge Appellate panel affirmed the lower court ruling.

A key component of the case is the fact that the DNR's restrictions only applied to one third of the property, leaving the other two-thirds unrestricted for development. Legal experts say the Appellate Court ignored the fundamental principles of wetland and property rights law, which requires a full evaluation of feasible and prudent alternatives and a review of other potential uses of the property.

Amicus briefs in support of the appeal were filed by the U.S. Department of Justice, national environmental organizations and many state public interest groups.

In his motion to appeal the case, Attorney General Frank Kelley argued that state law has been clear since 1979, and that protecting wetlands is a legitimate exercise of the state's constitutional authority to protect natural resources.

Failing to overturn the lower court ruling, Mr. Kelley wrote, would be "essentially an open invitation to land speculators to purchase otherwise undevelopable wetlands, apply for permits to fill them, and then secure compensation for 'takings' resulting from enforcement of the Wetlands Protection Act."

Laws That Protect Wetlands

The federal Clean Water Act, administered by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers, is the nation's primary law for safeguarding wetlands. Michigan is one of just two states -- the other is New Jersey -- that assumed the responsibility to administer the federal wetland protection program in inland waters of the state. The EPA agreed to this procedure because

Michigan had in place several laws that accomplished the same goals as section 404 of the Clean Water Act. The backbone of these laws was the 1979 Goemaere-Anderson Wetland Protection Act, now known as Part 303 of Public Act 451. It establishes a policy to prevent wetland loss and requires permits for most activities in wetlands. The state law is enforced by the Michigan Department of Environmental Quality.

In the Great Lakes coastal areas, including some connecting waterways and major tributaries, wetland activities are regulated by both the state and the federal government. In these instances applicants must obtain a permit from the Corps of Engineers and the Michigan DEQ. The two agencies have developed a joint application form to eliminate permit duplication.

While the DEQ oversees the vast majority of Michigan's wetland applications, the EPA has the ultimate responsibility to ensure that the state is complying with the federal Clean Water Act. In some of the more prominent wetland cases, the EPA actively participates in the permit process. When there is disagreement, the federal government asserts its primary jurisdiction, and has the final authority.

Regulated Activities

The Department of Environmental Quality regulates all wetlands that are "contiguous" to a lake, stream, or pond, as well as the larger isolated wetlands, and wetlands determined to be "essential to the preservation of the natural resources of the state." Under state law, contiguous means the wetland is:

*In the proximity of a water body, or

*Hydrologically connected, that is, it protects groundwater that eventually flows into a lake or stream.

In Benzie County, where there is an abundance of fresh water, most of the wetlands are contiguous.

Unregulated Activities Not every human activity on a wetland is regulated, however. When the state and federal laws were estab- lished in the 1970s, some industries successfully lobbied for exemptions. For example, some forms of farming, ranching, and logging activities, and oil and gas development, are exempt from wetland laws.

State Permitting Process

State law requires landowners to acquire a permit for any of the following actions in a regulated wetland:

*Depositing or placing fill material.

*Dredging or removing soil or minerals.

*Constructing, operating, or maintaining any use or development.

*Draining surface water.

To receive a permit to alter a wetland, an applicant must satisfy the following requirements:

*The proposed wetland activity is in the public interest - that is, the DEQ must weigh the benefit to the applicant versus the potential loss to the public;

*The resulting disruption of the wetland will not create an unacceptable impact to aquatic resources; and

*There are no feasible and prudent alternatives, and the project will be done in a manner which is least disruptive to the wetland.