The DOR then goes on to say that it no longer wishes to define ag use by program, but by ag use, with criteria that show sufficient nexus with ag production to justify defining it as ag use. (p. 693). The revised rule then sets criteria, not
based on present use, and not based on whether an easement presently
benefits ag production land, but whether the land may be returned to ag production in the future, or whether an agreement allows compatible uses like haying and grazing during the term of the agreement.
The Plaintiff notes in its Response Brief that because the revised rule effectively removed permanent easements from its scope, it would affect the state Department of Agriculture ( DATCP) Soil and Water Resource Management (SWRM) easements. DATCP then inserted a blanket compatible use authorization in its easements to work around the problem. (Plaintiff’s Response Brief at pages 2and 3, citing to P-App. 218-221, Second Woody Aff. P. 3), The DOR subsequently took the position that owners with compatible use authorization don’t have to actually perform haying or grazing, simply having the authorization qualified the land for use-value assessment.
The DOR knew at the outset of this process that the WRE land was already in permanent easements that didn’t allow compatible uses but that preserving wetlands benefitted agricultural production land. After stating an expressed intent to include this WRE land, it appears the final rule accomplishes the exact opposite with language apparently intended to exclude the WRE land and special work around rules the allow land under state programs to qualify. The final rule appears to bear little resemblance to the rule as proposed.
The draft of Tax 18.05(1) was changed in a significant way after the public hearing. The DOR may be able to justify the content and substance of the new rule, but it cannot justify violating the rulemaking process and eliminating public comment on a rule that was significantly changed from the proposed rule after a public hearing.
A new public hearing was required where the final rule bore little resemblance to the original rule and the DOR did not seek additional public comment. Another public hearing would be required in any event because of the significant changes which created a need for a new Statement of Scope.
Claim IX – The Defendant was Required to Prepare an Environmental Impact Statement for Rule 18.05
The Plaintiff contends that the DOR failed to comply with the Wisconsin Environmental Protection Act’s requirement for the preparation of an environmental impact statement. Wis. Stat. §1.11(2)(c) requires that all state agencies prepare an environmental impact statement (EIS) for “every recommendation or report on proposals for legislation and other major actions significantly affecting the quality of the human environment....” Wis. Stat. §1.11(2)(c). The Wisconsin Supreme Court ruled in Wisconsin's Environmental Decade, Inc. v. PSC, that “it will be obvious to [the] agency and [the] court alike on the basis of facts that no EIS need be prepared,” Wisconsin’s Environmental Decade, Inc. v. PSC, 79 Wis. 2d 409, 424, 256 N.W.2d 149, and an agency is not obligated to make an explicit determination that an action will or will not require an EIS. The Court of Appeals decided this same issue in an unpublished opinion involving a similar lawsuit brought against Tax 18.05 by a landowner in Dodge County, Multerer v. Wisconsin Department of Revenue, 2017 WI App 71. While an unpublished, nonbinding opinion, the court’s analysis is helpful. Citing Wisconsin’s Environmental Decade, the court reasoned that an agency is required to show justification for its negative-EIS decision only “where issues of arguably significant environmental import are raised”, and allegations of environmental effect ‘which are patently trivial or frivolous’ are not sufficient to trigger judicial review. Wisconsin's Environmental Decade, Inc., 79 Wis. 2d at 424. The Court of Appeals held that the circuit court in that case did not err in granting summary judgment on the issue, as the appellants do not provide any information on the amount of land that is potentially affected by Tax 18.05(1)(d), or any evidence other than speculation that lands will not be set aside for the purposes discussed. Without such facts, it would be impossible to say whether there is a genuine challenge, and that allegations of a significant environmental impact are not patently trivial or frivolous. Multerer v. Wisconsin Department of Revenue, 2017 WI App 71at ¶ 30. The Plaintiff notes in its brief in response to the Defendant’s motion that a five county study completed by the Wisconsin Wetlands Association, showed that wetlands were not uniformly assessed as agricultural land. In some counties less than 50% of the wetland was assessed agricultural, while in Manitowoc over 88% was. Some farmers apparently had been grazing wetlands to qualify for ag use, even though that is not allowed under the WRE rules. That certainly shows the need for more clarity and uniform application of the rules. But those facts do not show the potential environmental impact of a change.
How many acres are enrolled now? How many acres will be withdrawn? There is no evidence presented that landowners can and will remove land already enrolled the federal programs because of a change in the tax rule. Anticipating a reduction in new enrollments is only speculation. There are simply not facts supporting this claim and it fails for that reason.
Claim under Wis. Stat. 227.114
The Plaintiff also raised an argument under Wis. Stat. 227.114 Rule making; considerations for small businesses, in its brief in support of a motion for summary judgment. However, this claim was not pled in the Amended Complaint, nor does it appear to allow the court to grant the proposed relief, declaring the rule invalid.
Order
After reviewing the record and the briefs of the parties, the court finds that Tax 18.05 was promulgated without compliance with statutory rulemaking procedures. After the Department chose to make a significant change, it was required to prepare and obtain approval of a revised Statement of Scope and it did not. It was required to prepare a revised Economic Impact analysis and it did not. It should have held a second public hearing and it did not.
1. Pursuant to Wis.Stat. 227.40(4)(a), administrative rule Tax 18.05 (1)(d) is declared invalid because the Department of Revenue failed to follow proper rulemaking procedures.
2. The court will stay the order for 60 days to allow for a notice of appeal to be filed. If an appeal is filed, a motion may be filed to stay the order pending appeal.
3. Either party may file a motion to delay the effective date of the order if no appeal is filed.
4. No costs or attorney fees are awarded, each party shall pay their own costs and fees.
5. This court will provide notice to the Legislative Reference Bureau pursuant to Wis. Stat. 227. 40(6).
Dated this _________ day of June , 2018.
________________________________________
Thomas J. Vale, Green County
Circuit Court Judge, Branch 2
