The issue in that case involved a guy who wanted to hunt in the City of Saginaw. (That's right, a City.)
The city had a "no discharge" ordinance, banning the discharge of weapons. The court ruled that the local government ordinance COULD be overruled by the DNR. However, the DNR's rules applied only to Townships, not cities. In essence, the DNR simply needed to do its job and fix its own rules.
Here's the opinion:
http://courts.michigan.gov/supremecourt/Clerk/12-06/130672/130672-Opinion.pdf