MADISON, Wis. — Wisconsin environmental officials have agreed to settle a dairy industry lawsuit alleging the agency is over-regulating large livestock farms.

The Dairy Business Association filed the lawsuit in Green Bay in July. It alleged the state Department of Natural Resources has stopped allowing concentrated animal feeding operations to pass runoff through vegetation patches to filter pollution without going through the administrative rule-making process.

The department also had assumed oversight of calf hutches — where baby calves are housed on dairy farms — without going through the rule-making steps and has been illegally requiring the operations to get pollution discharge permits regardless of whether they actually pollute Wisconsin waters. That requirement violates state statutes which declare state pollution rules can't be tougher than federal law, which requires a permit only for actual pollution, according to the lawsuit.

Under a settlement reached Wednesday, the state agency agreed that vegetation patches are valid pollution control-systems and to stop regulating calf hutches. In exchange the dairy association agreed to drop its claim that the department is illegally requiring pollution permits.

DNR spokesman James Dick said Thursday that the settlement doesn't change any current environmental protections. Pollution that makes it through the vegetation patches into navigable waters will still be regulated under state and federal law and comply with state water quality and groundwater standards, he said. The settlement also reaffirms the DNR has the authority to regulate concentrated feeding operations, he said.

"The DNR feels the settlement is an efficient and balanced resolution of (a) complicated case," he said.

The dairy association, which represents dairy farmers, milk processors, vendors and supporting businesses in the dairy industry, issued a news release Thursday declaring the organization won on its central claims that the state agency illegally changed the rules for managing pollution from rainwater.

"The DNR or other state agencies can't make up the rules as they go along," the organization's president, Mike North, said in the release. "Farmers' investments will be protected by this victory."

The lawsuit comes as conservationists are calling for tougher pollution standards for concentrated feeding operations.

State auditors last year found that the department wasn't following its own policies for policing pollution from large livestock farms and wastewater treatment plants. The audit also found a permit backlog for large farms as state employees didn't have enough time to closely monitor the farms' operations.

The settlement marks the first major action by new DNR Secretary Dan Meyer. Republican Gov. Scott Walker appointed Meyer, a former GOP legislator who served with Walker in the state Assembly, to replace Cathy Stepp last month.

Stepp left the post to join the U.S. Environmental Protection Agency under President Donald Trump's administration.