Administrative Law

Rule-making Procedures – Scope Statements – Public Hearings – Economic Impact Analysis – Environmental Impact Statement

Applegate-Bader Farm LLC v. Wisconsin Dep’t of Revenue, 2020 WI App 7 (filed 30 Jan. 2020) (ordered published 26 Feb. 2020)

HOLDINGS: 1) The plaintiff did not rebut the statutory presumption that the Department of Revenue’s (DOR’s) promulgation of certain administrative rule amendments complied with the pertinent Wis. Stat. chapter 227 rule-making procedures. 2) The DOR did not violate the Wisconsin Environmental Protection Act (WEPA) when it did not prepare an environmental impact statement relating to the rule amendments.

SUMMARY: The DOR sought to amend Wis. Admin. Code section Tax 18.05(1)(d), which defines some of the property uses that qualify as “agricultural use” for property tax classification purposes. It prepared a scope statement regarding the rule change, secured the governor’s approval, published an initial draft of the rule with a fiscal estimate and economic impact analysis, and then held a public hearing. After the hearing, the department made substantive changes to the initial draft and then submitted them to the legislature and governor for final approval.

In this litigation the plaintiff, Applegate-Bader Farm LLC, sought to have the amended rule invalidated. It claimed that the department did not properly follow Wis. Stat. chapter 227 procedures because it did not undertake the additional rule-making steps of revising the scope statement, holding another public-comment hearing, or revising the economic impact analysis after making changes to the initial draft rule.

Applegate-Bader Farm also argued that the department violated the WEPA because it did not sufficiently investigate potential environmental effects of the rule before deciding not to prepare an environmental impact statement. The circuit court held that the department failed to comply with Wis. Stat. chapter 227 procedures and it invalidated the amended rule; it also concluded that the department did not violate the WEPA. In a decision authored by Judge Blanchard, the court of appeals affirmed in part and reversed in part.

Addressing the plaintiff’s Wis. Stat. chapter 227 claims, the court first concluded that the department did not violate rule-making procedure by failing to prepare a revised scope statement based on the changes to the draft rule (see ¶ 56). A rule-making agency must revise a scope statement “only when the draft rule under consideration meaningfully or measurably varies from the topics described in the [original] scope statement” (¶ 43) (emphasis added). See Wis. Stat. § 227.135(4). The plaintiff conceded that under this interpretation of the statute, no revised scope statement was required (see ¶ 39).

The court also concluded that a second public hearing was not required in this case “because interested parties were on notice that the Department could promulgate a draft rule resembling the one adopted” (¶ 58).

The court addressed whether a revised economic impact statement was required. Under Wis. Stat. section 227.137(4), “[i]f a proposed rule is modified after the economic impact analysis is submitted under this subsection so that the economic impact of the proposed rule is significantly changed, the agency shall prepare a revised economic impact analysis for the proposed rule as modified.” The court rejected the LLC’s economic impact statement challenge “based on a lack of factual development” (¶ 73).

“Summing up on all Wis. Stat. ch. 227 issues, we conclude that the LLC has failed to rebut the presumption that the Department complied with ch. 227 and, accordingly, we reverse the circuit court’s rulings to the contrary” (¶ 81).

Lastly, the court concluded that the department did not violate the WEPA. The plaintiff argued that the department failed to sufficiently investigate whether the draft rule, particularly in its changed form, would have indirect and adverse effects on the environment based on incentives that the rule creates for farmers who have land enrolled in conservation easements.

Said the court: “[U]nder controlling case law, we are obligated to reject the LLC’s WEPA claim because the LLC concedes that its allegations are premised on only alleged ‘indirect effects’ on the environment. See Wisconsin’s Envtl. Decade, Inc. v. DNR, 115 Wis. 2d 381, 394, 340 N.W.2d 722 (1983) (‘The presence of significant indirect effects or cumulative effects … alone does not require an EIS’)” (¶ 82).

Torts

Trespassers – Immunity

Stroede v. Society Ins., 2020 WI App 8 (filed 14 Jan. 2020) (ordered published 26 Feb. 2020)

HOLDINGS: A complaint failed to raise a claim for reckless conduct, and a restaurant patron was entitled to immunity as an “other lawful occupant” pursuant to Wis. Stat. section 895.529.

SUMMARY: Stroede allegedly became obnoxiously drunk at a bar, so the staff removed him from the premises. Stroede later reentered the bar. Tetting, a patron and off-duty bar employee, grabbed him by the shoulders and forced him back toward the door. Stroede fell down some stairs and suffered head injuries. Alleging excessive force, Stroede sued Tetting, his homeowner’s policy insurer, and the bar’s liability policy insurer.

The circuit court granted summary judgment to the bar and its insurer on grounds that Stroede was a trespasser. The judge also refused to permit Stroede to amend his complaint against the bar. It ruled, however, that Tetting was not a “lawful occupant” who was entitled to immunity under Wis. Stat. section 895.529 because bar patrons have no lawful authority to decide who could or could not enter the bar.

The court of appeals affirmed in part and reversed in part in an opinion authored by Judge Dugan. As to the bar, the plaintiff’s complaint alleged only a negligence claim, which failed because he was a trespasser. It did not allege recklessness, and the circuit court properly declined to let him amend the complaint (see ¶¶ 13, 16).

The court held that Tetting is entitled to immunity under Wis. Stat. section 895.529 as an “other lawful occupant” who owed no duty of care to a trespasser. The court held that the term “other lawful occupant” is unambiguous and that “anyone who is lawfully present on the premises at the time of the incident” is shielded by the statute (¶ 23).

Safe Place Statute – Construction Statute of Repose

Nooyen v. Wisconsin Elec. Power Co., 2020 WI App 9 (filed 22 Jan. 2020) (ordered published 26 Feb. 2019)

HOLDING: A claim that the plaintiff’s deceased family member’s lung cancer was caused by the defendants’ conduct in the 1970s was precluded by the construction statute of repose.

SUMMARY: Norbert Nooyen was a pipefitter who worked on construction projects for two nuclear power plants in the early 1970s. In December 2016 he was diagnosed with mesothelioma, and in February 2017, he sued various “utilities” for violating their duty under the safe-place statute in a variety of ways. In July 2018, he died from mesothelioma (see ¶ 5).

In October 2018, the utilities moved for summary judgment, arguing the safe-place claims were barred by the construction statute of repose. In December 2018, the circuit court granted the summary-judgment motion. The circuit court allowed a family member of Nooyen to file an amended complaint substituting herself as plaintiff in her capacity as special administrator of Nooyen’s estate. The court later entered a final judgment dismissing the estate’s claims against the utilities (see ¶¶ 6-7).

The circuit court granted summary judgment to the utilities on grounds that the claims were barred by Wis. Stat. section 893.89, the statute of repose for injuries resulting from improvements to real property (hereinafter, “the construction statute of repose”).

The court of appeals affirmed in an opinion authored by Judge Stark. The issue involved the “interplay” between the construction statute of repose and the safe place statute (see ¶ 10), specifically, whether the cancer was caused by a structural defect or by an unsafe condition associated with the structure (see ¶ 12). The court held that the undisputed facts established that the injury was caused by a structural defect; hence, the claim was barred by the statute of repose (see ¶ 15).

“[T]he presence of airborne asbestos during the original construction of the power plants was ‘a hazardous condition inherent in [those structures] by reason of [their] design or construction’” (¶ 16). Other cases involved airborne asbestos released during “repair or maintenance work,” not the original construction (¶¶ 17, 19) The legislature’s adoption of a latent-disease exception in product liability cases further undercut the plaintiff’s arguments because the construction statute of repose has no similar exception (¶ 20).

The court also rejected arguments that the circuit court had improperly applied the statute of repose retroactively (see ¶ 26) or had violated the plaintiff’s state constitutional right to a remedy (see ¶ 31).