Environmental Impact Statement – WEPA – Statutory Interpretation

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WI Court of Appeals – District IV

Case Name: Applegate-Badger Farm, LLC, v. Wisconsin Department of Revenue, et al.

Case No.: 2018AP1239

Officials: Fitzpatrick, P.J., Blanchard, and Kloppenburg, JJ.

Focus: Environmental Impact Statement – WEPA – Statutory Interpretation

The appeal in this case involves the interpretation of statutes governing administrative rule-making in Wisconsin. The cross-appeal involves the application of case law addressing the Wisconsin Environmental Protection Act or “WEPA,” WIS. STAT. § 1.11 (2017-18). Both issues arise in the context of the challenge of property owner Applegate-Bader Farms, LLC (“the LLC”) to amendments to a rule promulgated by the Wisconsin Department of Revenue (“the Department”). The rule is WIS. ADMIN. CODE § Tax 18.05(1)(d) (through Dec. 2019), which defines some of the property uses that qualify as “agricultural use” for property tax classification purposes.

The circuit court granted the LLC’s motion for summary judgment on the grounds that the manner in which the Department promulgated the amended version of § Tax 18.05(1)(d)—after the Department made changes to an initial draft of the rule—failed to comply with three rule-making procedures in WIS. STAT. ch. 227. The court ruled that the Department should have prepared a revised scope statement, held a second public hearing, and prepared a revised economic impact analysis.

In the appeal, the Department argues that the LLC does not rebut the statutory presumption that the Department’s promulgation of the rule amendments complied with the pertinent WIS. STAT. ch. 227 rule-making procedures. We agree with the Department’s argument and accordingly we reverse that portion of the circuit court’s order.

In the cross-appeal, the LLC challenges the separate ruling of the circuit court that rejected an additional reason to invalidate § Tax 18.05(1)(d) as amended, based on WEPA. The LLC argues that the Department violated WEPA by failing to sufficiently investigate the potential environmental effects of amending the rule before deciding not to prepare an environmental impact statement. We conclude that the LLC’s challenge to the amendments to § Tax 18.05(1)(d) based on WEPA fails because the LLC alleges only “indirect” environmental effects, which under Wisconsin case law are not alone sufficient to trigger the Department’s duty to justify a decision not to prepare an environmental impact statement. Accordingly, we affirm that portion of the court’s order.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.