Title: Applegate-Bader Farm, LLC v. Wisconsin Department of Revenue

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2021 WI 26 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2018AP1239 
 
 
 
COMPLETE TITLE: 
Applegate-Bader Farm, LLC, 
          Plaintiff-Respondent-Cross-Appellant-
Petitioner, 
     v. 
Wisconsin Department of Revenue and Richard 
Chandler in his capacity as Secretary of the 
Department of Revenue, 
          Defendants-Appellants-Cross-
Respondents. 
 
 
 
 
 
REVIEW OF DECISION OF THE COURT OF APPEALS 
Reported at 390 Wis. 2d 708,940 N.W.2d 725 
PDC No:2020 WI App 7 - Published 
 
 
OPINION FILED: 
March 16, 2021   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
November 9, 2020   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Green   
 
JUDGE: 
Thomas J. Vale   
 
 
 
JUSTICES: 
 
ROGGENSACK, C.J., delivered the majority opinion of the Court, 
in which ANN WALSH BRADLEY, REBECCA GRASSL BRADLEY, DALLET, and 
KAROFSKY, JJ., joined. HAGEDORN, J., filed a dissenting opinion.  
NOT PARTICIPATING: 
ZIEGLER, J., did not participate.      
 
 
 
ATTORNEYS: 
 
For 
the 
plaintiff-respondent-cross-appellant-petitioner, 
there were briefs filed by Ryan L. Woody, Catherine Dowie, and 
Matthiesen, Wickert & Lehrer, S.C., Hartford. There was an oral 
argument by Ryan L. Woody. 
 
For the defendants-appellants-cross-respondents, there was 
a brief filed by Anthony D. Russomanno, assistant attorney 
general; with whom on the brief was Joshua L. Kaul, attorney 
general. There was an oral argument by Anthony D. Russomanno. 
 
 
2 
 
An amicus curiae brief was filed on behalf of Midwest 
Environmental Advocates, Madison, by Adam Voskuil, and Clean 
Wisconsin, 
Madison, 
by 
Evan 
Feinauer. 
 
 
2021 WI 26 
 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2018AP1239 
(L.C. No. 
2016CV48) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Applegate-Bader Farm, LLC, 
 
          Plaintiff-Respondent-Cross-Appellant-
 
Petitioner, 
 
     v. 
 
Wisconsin Department of Revenue and  
Richard Chandler in his capacity as  
Secretary of the Department of Revenue, 
 
          Defendants-Appellants-Cross-
 
Respondents. 
FILED 
 
MAR 16, 2021 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
ROGGENSACK, C.J., delivered the majority opinion of the Court, 
in which ANN WALSH BRADLEY, REBECCA GRASSL BRADLEY, DALLET, and 
KAROFSKY, JJ., joined.  HAGEDORN, J., filed a dissenting 
opinion. 
 
ZIEGLER, J., did not participate.  
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded.   
¶1 
PATIENCE DRAKE ROGGENSACK, C.J.   We review a decision 
of the court appeals1 that affirmed the circuit court's2 grant of 
                                                 
1 Applegate-Bader Farm, LLC v. DOR, 2020 WI App 7, 390 
Wis. 2d 708, 940 N.W.2d 725.  
2 The Honorable Thomas J. Vale of Green County presided. 
No. 
2018AP1239   
 
2 
 
summary judgment to the Department of Revenue (the Department) 
against Applegate-Bader Farm, LLC (Applegate).  As it relates to 
this appeal, the circuit court and the court of appeals 
determined that Applegate did not raise a claim that triggered 
judicial review of the Department's decision not to prepare an 
Environmental 
Impact 
Statement 
(EIS) 
under 
the 
Wisconsin 
Environmental 
Policy 
Act 
(WEPA) 
when 
it 
promulgated 
the 
administrative 
rule 
set 
out 
in 
Wis. 
Admin. 
Code 
§ Tax 
18.05(1)(d) (2015-16) ("the rule").3   
¶2 
The circuit court held that Applegate had not made a 
threshold showing that there was an environmental injury.  The 
court of appeals affirmed and held that Applegate had not raised 
a bona fide claim because it alleged only indirect environmental 
effects.  
¶3 
We conclude that administrative agencies must consider 
indirect, as well as direct, environmental effects of their 
proposed rules when deciding whether to prepare an EIS.  
Therefore, Applegate met its threshold burden even though it 
alleged only indirect environmental effects of the rule.  On 
review of the Department's decision not to prepare an EIS, we 
conclude that the Department failed to develop a reviewable 
record 
that 
demonstrates 
that 
it 
made 
a 
preliminary 
investigation and reached a reasonable conclusion about the 
environmental consequences of its action.  Therefore, the 
                                                 
3 All subsequent references to the Wisconsin Administrative 
Code are to the 2015-16 version unless otherwise indicated.     
No. 
2018AP1239   
 
3 
 
Department failed to comply with WEPA.  Accordingly, we reverse 
the court of appeals' decision that concludes to the contrary.  
We remand the WEPA claim to the circuit court with instructions 
to remand the WEPA matter to the Department for further actions 
consistent with this decision.  Additionally, we stay the 
enforcement of Wis. Admin. Code § Tax 18.05(1)(d).  
I.  BACKGROUND 
¶4 
Applegate operates a farm in southern Wisconsin on 
approximately 11,000 acres of land.  Roughly 2,000 of those 
acres are enrolled in a federal Wetland Reserve Easement 
("easement") through the Agricultural Conservation Easement 
Program.  Applegate's easement is permanent, and therefore it is 
unable to use the land subject to the easement for agricultural 
purposes.  This action arises out of a 2015 revision of Wis. 
Admin. Code § Tax 18.05(1)(d) and the effect that that revision 
had on landowners with certain conservation easements.   
A.  Wisconsin Admin. Code § Tax 18.05(1)(d) 
¶5 
The Wisconsin Constitution provides that land must be 
taxed uniformly.  Wis. Const. art VIII, § 1.  Generally, this 
requires that real property is taxed according to its fair 
market value.  Wis. Stat. § 70.32(1) (2019-20).4  However, 
"[t]axation of agricultural land and undeveloped land, both as 
defined by law, need not be uniform with the taxation of each 
other nor with the taxation of other real property."  Wis. 
                                                 
4 All subsequent references to the Wisconsin Statutes are to 
the 2019-20 version unless otherwise indicated. 
No. 
2018AP1239   
 
4 
 
Const. art. VIII, § 1.  Accordingly, agricultural land is 
assessed "according to the income that could be generated from 
its rental for agricultural use."  Wis. Stat. § 70.32(2r).  This 
is generally referred to as the land's "use value."  Non-
agricultural, undeveloped land is assessed at "50 percent of its 
full value, as determined under [§ 70.32](1)."  § 70.32(4). 
¶6 
Pursuant to Wis. Stat. § 70.32(2)(c)1i., "agricultural 
use" is "defined by the department of revenue by rule and 
includes the growing of short rotation woody crops, including 
poplars and willows, using agronomic practices."  The Department 
defines agricultural use in Wis. Admin. Code § Tax 18.05(1).  As 
it relates to this appeal, paragraph (d) states as follows: 
(d)  Land 
without 
improvements 
subject 
to 
a 
federal or state easement or enrolled in a federal or 
state program if all of the following apply: 
1.  The land was in agricultural use under par. 
(a), (b), or (c) when it was entered into the 
qualifying easement or program, and  
2.  Qualifying 
easements 
and 
programs 
shall 
adhere to standards and practices provided under the 
January 31, 2014 No. 697 version of s. ATCP 50.04, 
50.06, 50.71, 50.72, 50.83, 50.88, 50.91, 50.96, or 
50.98.  The Wisconsin Property Assessment Manual, 
authorized under [Wis. Stat. §] 73.03(2a), shall list 
the qualifying easements and programs according to the 
ATCP provisions, and 
3. a.  The terms of the temporary easement or 
program do not restrict the return of the land to 
agricultural use under par. (a), (b), or (c) after the 
easement or program is satisfactorily completed, or  
b.  The 
terms 
of 
the 
easement, 
contract, 
compatible use agreement, or conservation plan for 
that specific parcel authorized an agricultural use, 
No. 
2018AP1239   
 
5 
 
as defined in par. (a), (b), or (c), for that parcel 
in the prior year.  
Wis. Admin. Code § Tax 18.05(1)(d).  The Department adopted this 
version of the rule in 2015. 
¶7 
Prior to the above quoted definition, the Department 
listed easements by name that qualified for agricultural use 
taxation.  See Wis. Admin. Code § Tax 18.05(e) (1997).  Several 
of the previously named state and federal easement programs are 
no longer in existence.  Accordingly, the Department first 
revised the agricultural use rule in 2000.  See Wis. Admin. Code 
§ Tax 18.05(1)(d) and (e) (2000).  And, in 2013, the Department 
undertook 
revising 
the 
rule 
again. 
 
According 
to 
the 
Department's 2013 statement of scope:  
The proposed rule will address changes in the 
listed programs that have occurred since the rule was 
enacted and will also identify general criteria for 
determining what land that is in federal and state 
pollution control and soil erosion programs qualifies 
for agricultural use under the subchapter.  This will 
provide consistency and clear standards for property 
owners and assessors.  
691B Wis. Admin. Reg. SS 084-13 (July 31, 2013). 
¶8 
A draft of the 2013 rule included temporary and 
permanent easements at both the state and federal level.  696B 
Wis. 
Admin. 
Reg. 
 
CR 
13-102 
(Paragraph 
(e) 
explained 
agricultural use as follows:  "Commencing with the January 1, 
2015 
assessment, 
land 
without 
improvements 
subject 
to 
a 
permanent federal or state easement or enrolled in a permanent 
federal or state program if that land was in agricultural use 
under par. (a), (b), or (c) when it was entered into the 
No. 
2018AP1239   
 
6 
 
easement or program.").  During the comment period, the 
Department received feedback from several entities, Applegate 
included.  Some entities, including Applegate, supported the 
broader definition that the proposed rule provided.  However, 
some entities opposed that broad definition; they argued that 
those who permanently removed their lands from agricultural use 
should not be permitted to take advantage of that agricultural 
use definition.   
¶9 
The final rule appears to permit permanent state or 
federal easement holders to claim agricultural use for taxation 
only when the terms of an easement "authorized an agricultural 
use, as defined in par. (a), (b), or (c), for that parcel in the 
prior year."  Wis. Admin. Code § Tax 18.05(1)(d)3.b. 
B.  This Litigation 
¶10 In 2016, and after the Department issued the final 
version 
of 
the 
rule, 
Applegate 
initiated 
this 
lawsuit.  
Applegate's amended complaint raised nine claims for relief, two 
of which were subject to appeal and one of which, the WEPA 
claim, is now before us in this case.5   
¶11 As it relates to Applegate's WEPA claim, Applegate 
alleged the following:   
206.  The final rule order excluded wetlands 
covered by the ACEP and WRE and completely removed 
agricultural 
use 
value 
assessment 
from 
wetlands 
enrolled in the Stream Bank Protection program under 
[Wis. 
Stat. 
§ 23.094]; 
the 
Conservation 
Reserve 
                                                 
5 The outstanding claims for relief remain pending in the 
circuit court.  
No. 
2018AP1239   
 
7 
 
Enhancement program under [Wis. Stat. § 93.70], and 
the Non-point Source Water Pollution Abatement program 
under [Wis. Stat. § 281.65]. 
207.  The Department ignored and/or failed to 
consider 
evidence 
in 
its 
possession 
from 
the 
Department of Natural Resources that the exclusion and 
removal 
of 
wetlands 
in 
agricultural 
conservation 
easements 
from 
Tax 
18.05(1)'s 
definition 
of 
"agricultural use" causes farmers to destroy sensitive 
wetlands by placing cows within the wetlands to 
achieve use value assessment. 
208.  The 
Department 
further 
ignored 
and/or 
failed to consider evidence in its possession from the 
[Department of] Natural Resources that the exclusion 
of WRP/WRE easements from Tax 18.05(1) is causing 
property owners to not enroll their wetlands into the 
federal program. 
209.  The 
removal 
and 
exclusion 
of 
wetlands 
conserved in agricultural easements from agricultural 
use value will result in the further destruction, 
degradation and loss of wetlands in this State. 
210.  The 
exclusion 
and 
removal 
of 
wetlands 
conserved in agricultural easements from agricultural 
use value has and will continue to have a significant 
effect 
upon 
the 
environment, 
thus, 
necessitating 
compliance with WEPA, Wis. Stat. [§] 1.11. 
. . . . 
212.  WEPA is procedural in nature and does not 
control agency decision making.  Rather, it requires 
that agencies consider and evaluate the environmental 
consequences of alternatives available to them and 
undertake that consideration in the framework provided 
by [Wis. Stat. §] 1.11. 
. . . . 
215.  The Defendants failed to fulfill their 
independent duties under WEPA, Wis. Stat. § 1.11, to 
evaluate 
the 
environmental 
impact 
of 
excluding 
permanent conservation easements from Tax 18.05(1)(d) 
and failed to consider [the] full range of reasonable 
alternatives to minimize adverse social, economic and 
No. 
2018AP1239   
 
8 
 
environmental 
impacts 
to 
the 
Plaintiff, 
state 
taxpayers, the effect on the State's wetlands and 
associated wildlife. 
216.  The final decisions (and non-decisions) of 
the 
Defendants 
relative 
to 
the 
passage 
of 
Tax 
18.05(1)(d) were arbitrary, capricious, erroneous and 
contrary to law under WEPA, Wis. Stat. § 1.11, and as 
a result the Rule is void ab initio and must be set 
aside or remanded with directions. 
¶12 The parties filed cross motions for summary judgment.  
The circuit court granted Applegate's motion for summary 
judgment on the Wis. Stat. ch. 227 claim concluding that the 
Department "failed to follow proper rulemaking procedures."  The 
court granted the Department's motion for summary judgment on 
the WEPA claim, holding that Applegate failed to allege facts 
that supported its claim of environmental effect of the rule.   
Based on its decision that the Department violated rulemaking 
procedures of ch. 227, the circuit court vacated the rule.  
However, the court stayed its judgment pending appeal. 
¶13 Both parties appealed the circuit court's summary 
judgment decisions against them, and the court of appeals ruled 
in favor of the Department on both claims.  As it relates to 
Applegate's cross-appeal, the court of appeals affirmed the 
circuit court's decision against Applegate.  The court of 
appeals read our decision in Wisconsin's Environmental Decade, 
Inc. v. DNR, 115 Wis. 2d 381, 340 N.W.2d 722 (1983) (WED IV) to 
obviate the need for an EIS for indirect environmental effects.  
Applegate-Bader Farm, LLC v. DOR, 2020 WI App 7, ¶86, 390 
Wis. 2d 708.  Because Applegate's claims of environmental harm 
were all indirect, the court held that it had not raised a bona 
No. 
2018AP1239   
 
9 
 
fide WEPA claim.  Id., ¶93.  The court of appeals remanded the 
case to the circuit court to consider the remaining claims for 
relief.  Id., ¶96. 
¶14 Applegate filed a petition for review seeking review 
of only the WEPA claim, and we granted review.  As explained 
below, we conclude that agencies are required to consider 
indirect environmental effects when determining whether to 
prepare an EIS.  We also conclude that the Department did not 
satisfy its WEPA requirements because it did not base its 
decision not to prepare an EIS (the negative-EIS decision) on a 
reviewable record as is required in Wisconsin's Environmental 
Decade, Inc. v. Public Service Commission, 79 Wis. 2d 409, 256 
N.W.2d 149 (1977) (WED III).   
II.  DISCUSSION 
A.  Standard of Review  
¶15 This case is before us on appeal of a grant of summary 
judgment to the Department.  We independently review decisions 
granting summary judgment.  Sands v. Menard, 2017 WI 110, ¶28, 
379 Wis. 2d 1, 904 N.W.2d 789.  In so doing, we apply the same 
methodology employed by the circuit court, while benefitting 
from its discussion and that of the court of appeals.  Id.  
Summary judgment is appropriate where there is no genuine issue 
of material fact and the decision turns on a question of law.  
Wis. Stat. § 802.08(2).   
No. 
2018AP1239   
 
10 
 
B.  The Negative-EIS Decision 
¶16 When we review a challenge to an agency's negative-EIS 
decision,6 our review is a two-step inquiry that tests the 
reasonableness of the agency's decision: 
First, has the agency developed a reviewable record 
reflecting 
a 
preliminary 
factual 
investigation 
covering the relevant areas of environmental concern 
in sufficient depth to permit a reasonably informed 
preliminary judgment of the environmental consequences 
of the action proposed; second, giving due regard to 
the agency's expertise where it appears actually to 
have been applied, does the agency's determination 
that the action is not a major action significantly 
affecting the quality of the human environment follow 
from the results of the agency's investigation in a 
manner consistent with the exercise of reasonable 
judgment by an agency committed to compliance with 
WEPA's obligations? 
WED III, 79 Wis. 2d at 425.   
¶17 If the Department developed a reviewable record and 
its negative-EIS decision is reasonable based on that record, we 
will uphold its decision.  However, before reaching whether the 
Department's decision was reviewable, we address the court of 
appeals' conclusion that Applegate failed to allege a bona fide 
WEPA claim because it alleged that the rule had only indirect 
                                                 
6 Compare Wisconsin's Env't Decade, Inc. v. Pub. Serv. 
Comm'n, 79 Wis. 2d 409, 424, 256 N.W.2d 149 (1977) (WED III) 
(testing an agency's negative-EIS decision for whether there is 
a reviewable record and, whether based on that record the 
decision not to prepare an EIS is a reasonable exercise of its 
judgment) with Clean Wisconsin, Inc. v. Pub. Serv. Comm'n, 2005 
WI 93, ¶190, 282 Wis. 2d 250, 700 N.W.2d 768 ("[I]t is not our 
role to evaluate the adequacy of the EIS; we instead evaluate 
whether the [agency's] determination that the EIS was adequate 
was reasonable."). 
No. 
2018AP1239   
 
11 
 
environmental effects.  The court of appeals was incorrect.  As 
we have consistently held, agencies must consider both direct 
and indirect environmental effects of their major actions to 
determine whether those effects will have a significant effect 
on the human environment.  Accordingly, we conclude that 
Applegate met its threshold burden under WED III, and we 
therefore 
address 
the 
record 
underlying 
the 
Department's 
negative-EIS decision.7 
                                                 
7 The 
Department 
makes 
the 
additional 
argument 
that 
Applegate lacks standing to challenge the Department's negative-
EIS 
decision. 
 
A 
party 
has 
standing 
to 
challenge 
an 
administrative decision when "the decision of an agency directly 
causes injury to the interest of the petitioner" and if the 
"interest asserted is recognized by law."  Fox v. DHS, 112 
Wis. 2d 514, 524, 334 N.W.2d 532 (1983) (internal quotation 
marks omitted).  An alleged injury may be sufficiently direct 
for the petitioner even when it is "remote in time or which will 
[occur only] as an end result of a sequence of events set in 
motion by the agency action challenged."  Wisconsin's Env't 
Decade, Inc. v. Pub. Serv. Comm'n, 69 Wis. 2d 1, 14, 230 N.W.2d 
243 (1975) (WED I).  Such injuries "must show a direct causal 
relationship to a proposed change in the physical environment."  
Fox, 112 Wis. 2d at 528.  "An allegation of injury in fact 
to . . . conservational and recreational interests has been 
readily accepted as sufficient to confer standing."  WED I, 69 
Wis. 2d at 10.  However, a WEPA petitioner must "resid[e] in the 
area most likely to be affected by an agency action [to] have a 
legally protected interest in the quality of their environment."  
Fox, 112 Wis. 2d at 531. 
"[S]tanding in Wisconsin should not be construed narrowly 
or restrictively."  WED I, 69 Wis. 2d at 13.  We conclude that 
Applegate has standing to challenge the Department's negative-
EIS decision.  Applegate has alleged an injury to its 
conservational interests based on a sequence of events caused by 
the Department including certain conservation easements and 
excluding others in the definition of agricultural use.  If we 
accept these allegations as true, Applegate has an injury in 
fact to its legally protected conservational interest.  See WED 
I, 69 Wis. 2d at 17 (taking the alleged facts as true to 
No. 
2018AP1239   
 
12 
 
1.  Indirect Environmental Effects 
¶18 "The purpose of WEPA is to insure that agencies 
consider environmental impacts during decision making."  State 
ex rel. Boehm v. DNR, 174 Wis. 2d 657, 665, 497 N.W.2d 445 
(1993).  In turn, "[t]he purpose of the EIS is to enable 
agencies to take a 'hard look' at the environmental consequences 
of a proposed action."  Clean Wisconsin v. Pub. Serv. Comm'n, 
2005 WI 93, ¶189, 282 Wis. 2d 250, 700 N.W.2d 768.  Accordingly, 
WEPA, which is set out in Wis. Stat. § 1.11, "constitutes a 
clear legislative declaration that protection of the environment 
is among the 'essential considerations of state policy,' and as 
such, is an essential part of the mandate of every state 
agency."  WED III, 79 Wis. 2d at 416.  WEPA directs that "to the 
fullest extent possible," agencies shall include a "detailed 
statement" for all "major actions significantly impacting the 
human environment."  §§ 1.11(1) and (2)(c).8  Significant effects 
                                                                                                                                                             
determine 
whether 
Wisconsin's 
Environmental 
Decade 
had 
standing). 
8 Wisconsin Stat. § 1.11(2)(c) provides in full: 
[All agencies of the state shall:] 
(c)  Include in every recommendation or report on 
proposals for legislation and other major actions 
significantly affecting the quality of the human 
environment, 
a 
detailed 
statement, 
substantially 
following the guidelines issued by the Unites States 
council on environmental quality under P.L. 91-190, 42 
USC 4331, by the responsible official on: 
1.  The environmental impact of the proposed 
action;  
No. 
2018AP1239   
 
13 
 
may include both negative effects and beneficial effects of a 
proposed action.  See § 1.11(2)(c)6.; see also WED III, 79 
Wis. 2d at 429 n.17 (quoting 40 C.F.R. § 1500.6). 
¶19 To 
comply 
with 
WEPA's 
directive, 
agencies 
must 
consider 
direct 
and 
indirect 
environmental 
effects 
when 
determining whether to prepare an EIS.  We explicitly so 
concluded 
in 
WED 
III. 
 
There, 
we 
"reject[ed] 
any 
intimation . . . that 
because 
the 
environmental 
effects . . . are 'indirect' they need not be considered under 
WEPA.  There is nothing in the Act to suggest that only direct 
environmental consequences need be considered."  Id. at 428.  In 
so concluding, we reasoned that a construction that limited the 
Act to direct environmental effects would be contrary to the 
statute's plain meaning.  Id. at 430.   
¶20 As 
WEPA 
is 
based 
principally 
on 
the 
National 
Environmental Policy Act (NEPA), we may look to federal law in 
                                                                                                                                                             
2.  Any 
adverse 
environmental 
effects 
which 
cannot be avoided should the proposal be implemented; 
3.  Alternatives to the proposed action; 
4.  The relationship between local short-term 
uses of the human environment and the maintenance and 
enhancement of long-term productivity; 
5.  Any 
irreversible 
and 
irretrievable 
commitments of resources that would be involved in the 
proposed action should it be implemented; and  
6.  Such statement shall also contain details of 
the beneficial aspects of the proposed project, both 
short term and long term, and the economic advantages 
and disadvantages of the proposal. 
No. 
2018AP1239   
 
14 
 
our quest to interpret WEPA's requirements.  See id. at 419-24.  
Under NEPA, "effects" include both direct and indirect effects, 
and indirect effects are defined as those that "are caused by 
the action and are later in time or farther removed in distance, 
but are still reasonably foreseeable."  40 C.F.R. § 1508.8(b) 
(2021).  Especially pertinent to this case, "[i]ndirect effects 
may include growth inducing effects and other effects related to 
induced changes in the pattern of land use, population density 
or growth rate, and related effects on air and water and other 
natural 
systems, 
including 
ecosystems."  § 1508.8(b).  
Similarly, federal courts have long held that federal agencies 
must consider both direct and indirect environmental effects of 
major agency actions when determining whether to prepare an EIS.  
See, e.g., Sierra Club v. Marsh, 769 F.2d 868, 878 (1st Cir. 
1985) (stating that agencies must consider indirect "secondary 
impacts").9   
                                                 
9 See also Colorado Env't Coal. v. Dombeck, 185 F.3d 1162, 
1176 (10th Cir. 1999) (citing the former regulation, which 
mandated an examination of indirect effects); Friends of 
Boundary Waters Wilderness v. Dombeck, 164 F.3d 1115, 1128 (8th 
Cir. 1999) (explaining that NEPA requires a detailed statement 
"from which a court can determine whether the agency has made a 
good faith effort to consider the values NEPA seeks to 
protect"); Nat. Res. Defense Council, Inc. v. F.A.A., 564 F.3d 
549, 558 (2d Cir. 2009) (stating that "[i]n determining the 
scope of an EIS, the agency 'shall consider . . . 3 types of 
impacts':  direct, indirect, and cumulative."); Citizens for 
Smart Growth v. Sec'y of Dep't of Transp., 669 F.3d 1203, 1214 
(11th Cir. 2012) (discussing the indirect effects of state 
action on wetlands).  
No. 
2018AP1239   
 
15 
 
¶21 Despite what we thought was clear direction, the court 
of appeals read part of our decision in WED IV, 115 Wis. 2d 381, 
as requiring a WEPA petitioner, such as Applegate, to allege 
that an agency action must have direct environmental effects in 
order to raise a bona fide WEPA claim.  Applegate, 390 Wis. 2d 
708, ¶86.  Specifically, the court of appeals concluded that 
"Applying WED [IV] here, it is clear that [Applegate's] theory 
of indirect effects of [Wis. Admin. Code] § Tax 18.05(1)(d) on 
how farmers use easement program lands cannot, on its own, give 
rise to a bona fide claim under WEPA."  Id.  The court of 
appeals misread WED IV.  
¶22 In WED IV, the issue we were tasked with deciding was 
"whether the DNR has an obligation to [prepare] an EIS for a 
project when investigation, research and public hearing reveal 
that the project will have minor impacts on the environment, but 
will have possible socioeconomic impacts."  WED IV, 115 Wis. 2d 
at 395.  With that context, our statement on "indirect secondary 
effects" becomes more clear.   
¶23 We were not referring to indirect environmental 
effects, but rather, we were referring to indirect, non-
environmental effects.  Namely, we were determining whether the 
socioeconomic effects surrounding the DNR's issuance of certain 
permits that facilitated the development of a mall necessitated 
an EIS when there were only minor, insignificant environmental 
effects.  We held that, alone, the alleged non-environmental 
effects of the project did not necessitate an EIS.  However, 
that holding does not undermine the principle that indirect 
No. 
2018AP1239   
 
16 
 
environmental effects may on their own become "significant" and 
necessitate an EIS.  See id. at 415 (Bablitch, J., dissenting) 
(agreeing with the majority "that in making its determination, 
the DNR must review the direct and indirect environmental 
effects of the project" and reiterating that "[i]t is clear that 
all of the law surrounding WEPA requires that both direct and 
indirect 
effects 
on 
the 
physical 
environment 
must 
be 
considered . . . in an EIS decision"). 
¶24 We again consider federal regulations to aid in our 
explanation.  Similar to Wis. Stat. § 1.11(2)(c), 40 C.F.R. 
§ 1502.16 (2021) describes the required contents of an EIS.  The 
first requirement is that the discussion shall include "[t]he 
environmental impacts of the proposed action and reasonable 
alternatives to the proposed action and the significance of 
those impacts."  40 C.F.R. § 1502.16(a)(1).  Notably, the 
federal regulations do not prioritize between direct and 
indirect environmental effects.  Subsection (b) relates to 
indirect (non-environmental) effects.  It states: 
Economic or social effects by themselves do not 
require 
preparation 
of 
an 
environmental 
impact 
statement.  However, when the agency determines that 
economic 
or 
social 
and 
natural 
or 
physical 
environmental 
effects 
are 
interrelated, 
the 
environmental impact statement shall discuss and give 
appropriate consideration to these effects on the 
human environment. 
40 C.F.R. § 1502.16(b).  Subsection (b) is consistent with what 
we stated in WED IV.  Again, at issue there was whether the DNR 
erred as a matter of law in not preparing an EIS despite a 
No. 
2018AP1239   
 
17 
 
showing of indirect, non-environmental effects coupled with 
minor, insignificant, environmental effects.  Id. at 395.  The 
effects in WED IV were socioeconomic in nature.  Id.  The DNR 
determined that the environmental effects were not significant, 
and therefore, no EIS was necessary; the non-environmental 
effects alone could not have changed that determination.  
¶25 Read in context, our statement in WED IV does not 
change the requirement of all state agencies to consider direct 
and indirect environmental effects of their major actions.  
Further, our statement in WED IV does not create a threshold 
requirement 
that 
WEPA 
petitioners 
must 
allege 
direct 
environmental 
effects 
to 
trigger 
judicial 
WEPA 
review.  
Petitioners may, as Applegate did, argue that an agency 
abdicated its WEPA obligations by failing to consider indirect 
environmental effects in its negative-EIS decision. 
¶26 Before reaching our conclusion on the foundation for 
this departmental decision, we determine whether Applegate has 
alleged facts "constituting a bona fide challenge."  See WED 
III, 79 Wis. 2d at 424.  "[A]llegations of environmental effect 
which are patently trivial or frivolous [should not] subject the 
agency decision to searching judicial review."  Id.  It is true 
that "there may be cases where it will be obvious to agency and 
court alike on the basis of facts that no EIS need be prepared."  
Id.  However, we are not persuaded that this is a case where it 
is "obvious" that an EIS was not necessary.  Rather, we conclude 
that Applegate has alleged "issues of arguably significant 
No. 
2018AP1239   
 
18 
 
environmental import" and therefore, "the agency must show 
justification for its negative-EIS decision."  Id. 
¶27 In 
its 
complaint, 
Applegate 
alleged 
several 
environmental effects of the new rule.  See ¶11, supra.  For 
example, Applegate alleged that "the exclusion and removal of 
wetlands in agricultural conservation easements from [Wis. 
Admin. Code §] Tax 18.05(1)'s definition of 'agricultural use' 
causes farmers to destroy sensitive wetlands by placing cows 
within the wetlands to achieve use value assessment."  Applegate 
further alleged that "the exclusion of the WRP/WRE easements 
from Tax 18.05(1) is causing property owners not to enroll their 
wetlands into the federal program," which in turn "will result 
in the further destruction, degradation and loss of wetlands in 
this State."    
¶28 We conclude that Applegate's allegations describe 
reasonably foreseeable consequences of the rule classifying 
lands in a certain manner.10  Accordingly, Applegate has alleged 
facts constituting a bona fide claim to trigger the Department's 
actions under WEPA.   
2.  Reviewable Record 
                                                 
10 Once again, the federal guidelines cited above are 
informative.  Lest there be any doubt, we conclude that indirect 
environmental effects such as "effects related to induced 
changes in the pattern of land use, population density or growth 
rate, and related effects on air and water and other natural 
systems, including ecosystems" may be of a significant nature to 
trigger a WEPA analysis.  40 C.F.R. § 1508.8(b). Therefore, 
petitioners may allege such effects when challenging a negative-
EIS decision.   
No. 
2018AP1239   
 
19 
 
¶29 Having confirmed that indirect environmental effects 
are to be considered in deciding whether to prepare an EIS and 
that Applegate has made sufficient allegations to constitute a 
bona fide WEPA challenge, we now consider the two-step review 
that we apply to negative-EIS decisions.  Once again, the steps 
are:  (1) whether the agency has developed a reviewable record, 
and 
(2) 
whether 
the 
record 
reveals 
that 
the 
agency's 
determination not to prepare an EIS was reasonable.  We conclude 
that, for the reasons discussed below, the Department failed the 
first step of this analysis.  It did not develop a record from 
which we may conclude that its negative-EIS decision was 
reasonable.  
¶30 For a negative-EIS decision, an agency must "develop[] 
a 
reviewable 
record 
reflecting 
a 
preliminary 
factual 
investigation covering the relevant areas of environmental 
concern in sufficient depth to permit a reasonably informed 
preliminary judgment of the environmental consequences of the 
action proposed."  WED III, 79 Wis. 2d at 425.  Although an 
agency's record "need not follow any particular form," the 
record that is produced "must reveal in a form susceptible of 
meaningful evaluation by a court the nature and results of the 
agency's investigation and the reasoning and basis of its 
conclusion."  Id. at 425 n.15.  We agree with the Department 
that in some circumstances the rulemaking record may be 
sufficient to complete the first step of the test.  See City of 
New Richmond v. DNR, 145 Wis. 2d 535, 547-48, 428 N.W.2d 279 
No. 
2018AP1239   
 
20 
 
(Ct. App. 1988).  However, in order for an administrative record 
to be sufficient, it must satisfy WED III's requirements. 
¶31 We have, on several occasions, concluded that an 
agency's record was satisfactory despite the record not having 
the specific information or investigation that the petitioner 
would have preferred.  See WED IV, 115 Wis. 2d at 398-402; 
Larsen v. Munz Corp., 167 Wis. 2d 583, 605, 482 N.W.2d 332 
(1992); Boehm, 174 Wis. 2d at 666-68.  However, in each of those 
cases, the record revealed that the respective agency's decision 
was well reasoned and considered both the relevant environmental 
effects and the consequences of those effects.  WED IV, 115 
Wis. 2d at 398-402 (examining the record); Larsen, 167 Wis. 2d 
at 607 ("The procedure followed in this case resulted in a 
reviewable record . . . ."); Boehm, 174 Wis. 2d at 667 ("There 
was more than adequate documentation in the record reflecting a 
good faith investigation into each of the environmental concerns 
relevant to this project.").  Such a record was not developed 
here.   
¶32 The Department's rulemaking record spans just over 800 
pages.  The Department argues that this record is sufficient to 
permit judicial review of its negative-EIS decision.  We 
disagree.  Upon a review of the record we notice documents and 
information that would signal to an agency that its action may 
have environmental effects and that it may need to take a "hard 
look" at those potential effects.11  See Clean Wisconsin, 282 
                                                 
11 For 
example, 
the 
Department 
received 
comment 
and 
testimony regarding support for the Wetland Restoration Program 
No. 
2018AP1239   
 
21 
 
Wis. 2d 250, ¶189.  However, what is not present within this 
administrative 
record 
is 
any 
agency 
discussion 
of 
the 
environmental effects of the rule.  Nor is there any discussion, 
memoranda, e-mail, transcript or other documentation that 
explains the Department's rationale behind its negative-EIS 
decision.  Without anything in the record that demonstrates the 
Department's reasoning for its negative-EIS decision, we are 
unable to conclude that the Department satisfied the first step 
of our required review.   
¶33 The Department argues that we may infer that, based on 
its record, its negative-EIS decision was reasonable.  The 
Department cites Larsen for its argument that its rulemaking 
record may reveal such implicit conclusions.  See Larsen, 167 
Wis. 2d at 600-01 ("The DOA's actions reveal an implicit 
determination that this lease/purchase technique was not a Type 
I action for which an EIS was required.").  We are unpersuaded.  
The portion of our Larsen opinion that the Department cites is 
wholly inapposite to our decision today.  
¶34 It 
is 
true 
that 
at 
issue 
in 
Larsen 
was 
the 
reasonableness of the Department of Administration's (DOA) 
negative-EIS decision.  Larsen, 167 Wis. 2d at 598.  However, we 
divided that issue into several sub-issues.  Id.  The first sub-
                                                                                                                                                             
(WRP) (now Wetland Reserve Easements) being included in the 
agricultural use definition under the rule.  Many of these 
comments centered on the environmental benefits of the WRP.  
These comments alone should have alerted the Department that it 
may need to consider the environmental effects of its rule, 
regardless of whether those effects be positive or negative.   
No. 
2018AP1239   
 
22 
 
issue was whether the DOA's determination that its action was 
not a "Type I" action was reasonable.  Id.  Under DOA rules, 
certain actions will always require an EIS (Type I), certain 
actions will never require an EIS (Type III), and some may or 
may not require an EIS (Type II).  Wis. Admin. Code § Adm 60.03.  
The DOA concluded that its action was not a Type I action, and 
therefore, it was not automatically required to conduct an EIS.  
Id. at 595.  Rather, the DOA determined that its action was a 
Type II action.  Id.  Accordingly, the DOA conducted an 
Environmental Assessment (EA) and subsequently determined that 
an EIS was not necessary.  Id.   
¶35 Insofar as we held that an agency's rulemaking record 
may reveal implicit conclusions, we concluded that an explicit 
statement from the DOA that the action that the DOA undertook 
was not a "Type I" action would "exalt form over substance."  
Id. at 600-01.  We concluded that the DOA's record implicitly 
demonstrated that the action was not a Type I and that an EIS 
was not automatically required.  Id.  However, when we arrived 
at the third sub-issue, whether the DOA's negative-EIS decision 
was reasonable, we made no mention of implicit determinations.  
Instead, we stated: 
We conclude the process followed in the instant 
case sufficiently satisfied [WEPA] requirements.  The 
record reveals the agency decision in this case not to 
prepare an EIS for this project was informed and 
reasonable. 
 
It 
was 
based 
on 
the 
[Preliminary 
Environmental Impact Assessment] and the subsequent 
EA.  We assume without deciding that the EA was 
adequate.  Once an agency has made its fully informed 
and well-considered decision, a reviewing court may 
No. 
2018AP1239   
 
23 
 
not interfere with agency discretion choosing the 
action to be taken, or as in this case, the decision 
not to prepare an EIS. 
Id. at 606-07.  It is clear that the record in Larsen, which 
included an EA, was satisfactory. 
¶36 Larsen does not inform our decision here.  We are not 
deciding whether an unprecedented agency action falls within 
certain environmental gatekeeping criteria that an agency has 
set for itself.  We are therefore unpersuaded that we may simply 
infer that the Department's decision was "fully informed and 
well-considered."  Additionally, even if an agency's record 
could reveal an implicit conclusion that a negative-EIS decision 
was reasonable, here, unlike Larsen, we do not have the benefit 
of an EA or any similar analysis in the record that reveals that 
the Department considered the magnitude of the environmental 
effects of the rule.  Rather, other than the environmental 
issues raised by others, there is nothing in the record that 
demonstrates any agency consideration of those issues. 
¶37 WEPA is a procedural statute.  WED III, 79 Wis. 2d at 
416.  It is not intended to control agency decision making.  Id.  
We continue to stand by that general understanding, and it may 
be the case that on remand that the Department may conclude that 
an EIS is unnecessary.  However, we conclude that the record 
before us is insufficient to support the Department's negative-
EIS decision.   
C.  Remedy 
¶38 Applegate brought this challenge as a declaratory 
judgment action under Wis. Stat. § 227.40.  Section 227.40 is 
No. 
2018AP1239   
 
24 
 
ordinarily the "exclusive means of judicial review of the 
validity of a rule."  § 227.40(1).  However, because Applegate 
is challenging an agency's decision under WEPA, we are not 
confined to the declaratory judgment action requirements of 
§ 227.40.  Rather, we may review the Department's action under 
Wis. Stat. § 227.57.  See Wisconsin's Env't Decade, Inc. v. PSC, 
69 Wis. 2d 1, 230 N.W.2d 243 (1975) (WED I) (applying the 
standing principles of the predecessor statutes to Wis. Stat. 
§§ 227.52 and 227.53 to a WEPA challenge); see also Wisconsin's 
Env't Decade, Inc. v. PSC, 98 Wis. 2d 682, 298 N.W.2d 205 (Ct. 
App. 1980) (finding "little difference" between WED III's 
reasonableness standard of review and the predecessor statute to 
§ 227.57 and reviewing the adequacy of an EIS under that 
statute).   
¶39 Wisconsin Stat. §  227.57(2) commands that "[u]nless 
the court finds a ground for setting aide, modifying, remanding 
or ordering agency action or ancillary relief under a specified 
provision of this section, it shall affirm the agency's action."  
§ 227.57(2).  However, "[t]he court shall reverse or remand the 
case to the agency if it finds that the agency's exercise of 
discretion 
is . . . in 
violation 
of 
a 
constitutional 
or 
statutory provision."  § 227.57(8).  Thereafter, a court may 
"make such interlocutory order as it finds necessary to preserve 
the 
interests 
of 
any 
party 
and 
the 
public 
pending 
further . . . agency action."  § 227.57(9). 
¶40 As discussed above, we have concluded that the 
Department failed to comply with WEPA's requirements in regard 
No. 
2018AP1239   
 
25 
 
to its negative-EIS decision.  Therefore, the Department has 
violated its obligation to follow the law.  Wis. Stat. 
§ 227.57(8).  Accordingly, we remand to the circuit court with 
instruction to remand to the Department to determine whether an 
EIS is necessary and to develop a record from which a court 
could determine whether its decision is reasonable.  See 
Milwaukee Brewers Baseball Club v. DHSS, 130 Wis. 2d 56, 76, 387 
N.W.2d 245 (1986) (remanding the cause to the circuit court to 
remand to the agency); see also WED III, 79 Wis. 2d at 442-43 
(remanding the matter to the Public Service Commission).  
Additionally, we stay the enforcement of Wis. Admin. Code § Tax 
18.05(1)(d) to preserve the interests of Applegate and the 
public 
pending 
further 
agency 
action. 
 
§ 227.57(9); 
see 
Milwaukee Brewers Baseball Club, 130 Wis. 2d at 76 (enjoining 
further construction of a prison pending the agency's completion 
of an adequate EIS).  
III.  CONCLUSION 
¶41 We conclude that administrative agencies must consider 
indirect, as well as direct, environmental effects of their 
proposed rules when deciding whether to prepare an EIS.  
Therefore, Applegate met its threshold burden even though it 
alleged only indirect environmental effects of the rule.  On 
review of the Department's decision not to prepare an EIS, we 
conclude that the Department failed to develop a reviewable 
record 
that 
demonstrates 
that 
it 
made 
a 
preliminary 
investigation and reached a reasonable conclusion about the 
environmental consequences of its action.  Therefore, the 
No. 
2018AP1239   
 
26 
 
Department failed to comply with WEPA.  Accordingly, we reverse 
the court of appeals' decision that concludes to the contrary.  
We remand the WEPA claim to the circuit court with instructions 
to remand the WEPA matter to the Department for further actions 
consistent with this decision.  Additionally, we stay the 
enforcement 
of 
Wis. 
Admin. 
§ Tax 18.05(1)(d) 
pending 
the 
Department's compliance with WEPA. 
By the Court.—The decision of the court of appeals is 
reversed and the cause remanded to the circuit court with 
instructions. 
¶42 ANNETTE KINGSLAND ZIEGLER, J., did not participate.   
No.  2018AP1239.bh 
 
1 
 
¶43 BRIAN 
HAGEDORN, 
J.   (dissenting). 
 
The 
majority 
concludes administrative agencies must consider both direct and 
indirect environmental effects when deciding whether to prepare 
an Environmental Impact Statement (EIS) under the Wisconsin 
Environmental Protection Act (WEPA).  Wis. Stat. § 1.11(2)(c) 
(2019-20).1  I agree.  I part ways with the majority, however, 
because Applegate-Bader Farm, LLC (Applegate) did not assert a 
bona fide challenge, and therefore the Department of Revenue 
(DOR) was not required to prepare an EIS. 
¶44 To raise a bona fide challenge, Applegate must 
credibly allege that the rule change would significantly affect 
the environment's status quo prior to the change.  Applegate's 
allegations do not come close to credibly alleging that the 
policy under the new rule as compared to the old rule would 
cause significant environmental impact.  I respectfully dissent 
because I conclude that the rule amendment was not promulgated 
in violation of WEPA. 
 
I.  ANALYSIS UNDER WEPA 
¶45 Applegate's WEPA claim is rooted in a statutory 
procedural requirement imposed on agencies before they take 
certain actions that significantly affect the environment.  
Wisconsin Stat. § 1.11(2)(c) provides the statutory command 
relevant to this case.  It requires that "[a]ll agencies of the 
state" 
                                                 
1 All subsequent references to the Wisconsin Statutes are to 
the 2019-20 version. 
No.  2018AP1239.bh 
 
2 
 
[i]nclude 
in 
every 
recommendation 
or 
report 
on 
proposals for legislation and other major actions 
significantly affecting the quality of the human 
environment, 
a 
detailed 
statement, 
substantially 
following the guidelines issued by the United States 
council on environmental quality . . . . 
§ 1.11(2)(c).  In this case, everyone agrees that promulgating 
the 2014 amendment to Wis. Admin. Code § Tax 18.05(1) (July 
2018)2 was a major action under this statute.  The disagreement 
here is whether the rule amendment was one "significantly 
affecting the quality of the human environment."  If the rule 
amendment met this standard, WEPA required the agency, as part 
of its rulemaking process, to prepare "a detailed statement" 
discussing the action's environmental impact, adverse effects, 
alternatives, commitment of resources, and benefits, among other 
factors.  § 1.11(2)(c)1.-6. 
¶46 But how is the judiciary to determine when an action 
might have a significant effect on the environment such that an 
EIS is required?  State and federal courts analyzing this kind 
of language have understood this statutory call to leave 
significant room for agency discretion.  To that end, this court 
adopted the following approach for so-called negative-EIS 
determinations: 
We are of the opinion that the test of reasonableness 
should be applied to review a negative threshold 
decision under WEPA.  Complete de novo review would be 
akin to treating the entire question of significant 
environmental effect as one of law.  Where a question 
of law is presented, the reviewing court of course 
will determine the question independently regardless 
                                                 
2 All subsequent references to the Wisconsin Administrative 
Code ch. Tax 18 are to the July 2018 register date unless 
otherwise indicated. 
No.  2018AP1239.bh 
 
3 
 
of the standard by which the agency's overall decision 
is to be tested.  However, the question whether there 
is 
present 
in 
a 
given 
case 
a 
major 
action 
significantly 
affecting 
the 
environment 
will 
in 
general be a matter of both law and fact. . . . 
[Wis. Stat. § 1.11(2)(c)] contemplates the exercise of 
judgment by the agency, but that judgment must be 
reasonably exercised within the limits imposed by the 
Act. 
Wisconsin's Env't Decade, Inc. v. PSC, 79 Wis. 2d 409, 423-24, 
256 N.W.2d 149 (1977) (WED III) (citation omitted).  This 
reasonableness standard has governed review of WEPA claims ever 
since.3  E.g., Wisconsin's Env't Decade, Inc. v. DNR, 115 
Wis. 2d 381, 391, 340 N.W.2d 722 (1983); Larsen v. Munz Corp., 
167 Wis. 2d 583, 600, 482 N.W.2d 332 (1992). 
¶47 Moving beyond the statutory command, we went further 
in WED III and mandated a process for the express purpose of 
enabling judicial review.  Namely, an agency must create "a 
reviewable record reflecting a preliminary factual investigation 
covering the relevant areas of environmental concern."  WED III, 
79 Wis. 2d at 425 (footnote omitted).  We then review that 
                                                 
3 In the years since our adoption of the reasonableness 
standard of review for WEPA challenges, federal litigation under 
the National Environmental Policy Act (NEPA) shifted its focus 
from whether the agency's decision was reasonable to whether it 
was "arbitrary and capricious."  In Marsh v. Oregon Natural 
Resources Council, the Supreme Court explicitly rejected the 
reasonableness standard and held that as long as an agency's 
decision not to prepare a supplemental impact statement "was not 
'arbitrary or capricious,' it should not be set aside."  490 
U.S. 360, 377 & n.23 (1989).  In most contexts, federal courts 
now review an agency's negative threshold determination under 
the arbitrary and capricious standard.  See Daniel R. Mandelker 
et al., NEPA Law & Litigation § 8:7 (2020 ed.).  Neither 
Applegate nor DOR asks us to revisit our standard of review in 
light of this federal development. 
No.  2018AP1239.bh 
 
4 
 
record to determine whether the agency made a "reasonable 
judgment" that no EIS is needed.  Id.  This court recognized, 
however, that an agency need not undertake a preliminary 
investigation for every single major agency action.  We observed 
that some alleged environmental challenges would be so "patently 
trivial or frivolous" that an agency may reasonably conclude no 
preliminary investigation is required to pass them over; 
searching 
judicial 
review 
in 
that 
circumstance 
would 
be 
inappropriate.  Id. at 424.  We explained that where it is clear 
that an action will not significantly affect the quality of the 
human environment, no bona fide challenge is made and an agency 
may reasonably decide not to conduct any further investigation.  
Id. at 425. 
¶48 DOR has not challenged this framework here, and I 
accept these basic principles.  Nonetheless, it is worth 
candidly 
observing 
that 
the 
preliminary 
investigation 
requirement is a judicial creation, not a statutory mandate.  
While the desire for courts to have something to work with is 
understandable, and perhaps necessary, this judicially-imposed 
preliminary procedure is a means to review compliance with 
actual statutory commands, and should be understood in that 
light. 
¶49 This case raises the question of whether a bona fide 
claim was made, thus requiring a preliminary investigation.  In 
my view, the majority's approach to this requirement is too 
strict, and insufficiently attentive to the fact that we're a 
judicially-created step removed from the statutory requirement 
No.  2018AP1239.bh 
 
5 
 
itself.  Again, WEPA requires an EIS for major actions 
significantly impacting the environment, not a preliminary 
investigation into whether an EIS is required. 
¶50 This can be seen more clearly when understanding our 
two points of comparison.  A bona fide challenge must credibly 
allege some difference between the baseline environmental 
condition before the agency acts and the changed environmental 
condition after the agency acts.  Analyzing identical text in 
the National Environmental Policy Act (NEPA), the Ninth Circuit 
aptly explained:  "Discretionary agency action that does not 
alter the status quo does not require an EIS.  In other words, 
an EIS is not required in order to leave nature alone."  Pit 
River Tribe v. U.S. Forest Serv., 469 F.3d 768, 784 (9th Cir. 
2006) (cleaned up).  One highly regarded treatise elaborated on 
the point this way: 
In 
order 
to 
determine 
whether 
an 
action 
is 
significant, an agency or a court must have a point of 
comparison or "baseline."  A new highway, for example, 
brings noise and other intrusions into the surrounding 
environment. 
 
If 
the 
environmental 
baseline 
is 
unspoiled, the impact of the new highway on the 
existing environmental baseline can be dramatic.  An 
example of this is a highway in a native forest.  If 
the environmental baseline is degraded, the impact of 
a new highway will be less severe.  An example of this 
is a highway in an area substantially developed for 
commercial and industrial uses. 
Daniel R. Mandelker et al., NEPA Law & Litigation § 8:38 (2020 
ed.).  Put simply, a bona fide challenge is one that alleges 
that the agency action caused some significant change from the 
environmental baseline, not merely maintained that condition.  
No.  2018AP1239.bh 
 
6 
 
If it were otherwise, even renumbering an administrative code 
provision could be enough to trigger WEPA procedures. 
¶51 Additionally, as a matter of consistency with the 
statute, a bona fide challenge should also demonstrate that the 
agency 
knew 
or 
should 
have 
known 
of 
the 
significant 
environmental effect at the time it considered the major action.  
Unless the agency is presented the information during the 
rulemaking process, it may not learn of the alleged effect until 
long after the rule has been promulgated.  WEPA does not require 
invalidation of already-promulgated rules based on information 
about the environment that was not known, constructively or 
otherwise, before the rule was adopted.  Therefore, the bona 
fide challenge requirement should demand credible allegations 
that the agency knew or should have known of the particular and 
potentially significant environmental effects alleged in the 
challenger's complaint. 
 
II.  APPLIED HERE 
¶52 In 
this 
case, 
Applegate's 
complaint 
references 
documents found in the rulemaking record, but it nevertheless 
falls short of stating a bona fide challenge.  Even assuming DOR 
knew of Applegate's allegations during the rulemaking process, 
these allegations, as articulated in the majority's citation to 
Applegate's complaint, do not rise to the level where DOR needed 
to prepare an EIS or even investigate further. 
¶53 In ¶206 of its complaint, Applegate points to the 
difference between DOR's initially proposed rule and the rule 
No.  2018AP1239.bh 
 
7 
 
DOR ultimately adopted, noting that the final version excluded 
certain lands included in the proposed rule (but not the 
original rule).  This makes no reference to the baseline 
environmental condition, only a proposed rule that was never in 
effect. 
¶54 In ¶207, Applegate alleges that "the exclusion and 
removal of wetlands in agricultural easements" from the rule 
"causes farmers to destroy sensitive wetlands."  This also 
compares the amended rule to the proposed rule and not to the 
baseline environmental condition. 
¶55 In ¶208, Applegate alleges that the prior (and 
possibly current) version of Wis. Admin. Code § Tax 18.05(1) "is 
causing" environmental harm.  This merely alleges a baseline 
environmental condition, without saying anything about the 2014 
rule amendment's effect on that baseline condition. 
¶56 In ¶209, Applegate again discusses the baseline 
environmental condition without identifying a change to it, 
stating that both the old and amended versions of the rule 
"result in the further destruction, degradation and loss of 
wetlands." 
¶57 Finally, 
in 
¶210, 
Applegate 
alleges 
that 
the 
"exclusion and removal of wetlands conserved in the agricultural 
easements from agricultural use value has and will continue to 
have a significant effect."  This paragraph seems to undercut 
any challenge that the rule amendment caused a significant 
change to the baseline environmental condition because it 
alleges a continuous effect under both the old and amended 
No.  2018AP1239.bh 
 
8 
 
versions of the rule.  Again, no effort is made to show how the 
2014 amendment caused a significant change in the preexisting 
baseline condition. 
¶58 These allegations at most support the proposition that 
promulgating the old version of Wis. Admin Code § Tax 18.05(1) 
might have had some significant effect on the environment.  And 
perhaps it did.  But promulgation of the old version of § Tax 
18.05 is not the challenged action; the 2014 amendment to that 
rule is.  The environmental condition under the old version of 
§ Tax 18.05 is the baseline condition against which the 2014 
amendment's effect must be compared.  Nowhere does Applegate 
explain how the 2014 amendment to § Tax 18.05 altered that 
baseline environmental condition (or for that matter how DOR 
should have evaluated such an effect).  Therefore, I conclude 
Applegate failed to state a bona fide WEPA challenge.4 
                                                 
4 A review of DOR's rulemaking record confirms that DOR 
reasonably declined to conduct a preliminary investigation into 
the environmental effect Applegate now alleges.  Applegate 
points us to two studies in the record detailing how the old 
version of Wis. Admin. Code § Tax 18.05(1) caused property taxes 
on agricultural wetlands to increase.  The first, published on 
April 11, 2000, explained that the taxation scheme of the former 
§ Tax 18.05(1) incentivized farming rather than preservation of 
wetlands. 
 
The 
second, 
prepared 
by 
Wisconsin 
Wetlands 
Association, listed the percentage of wetlands assessed as 
agricultural land in five counties, ranging from 38.27 percent 
to 88.86 percent.  From these, Applegate argues that § Tax 
18.05(1)'s exclusion of certain lands from favorable tax 
treatment available for other lands must significantly affect 
the environment because it incentivizes farming of wetlands 
rather than enrolling them in certain preservation programs.  
But as with the allegations in Applegate's complaint, these 
studies also fall short of stating a bona fide challenge because 
they do not show that the agency action——the 2014 rule 
amendment——caused any significant change from the environmental 
baseline. 
No.  2018AP1239.bh 
 
9 
 
 
III.  CONCLUSION 
¶59 I agree with much of the majority opinion.  Its 
conclusion that indirect environmental effects may trigger 
WEPA's EIS requirement is a correct statement of law.  However, 
Applegate failed to assert a bona fide challenge because it did 
not compare the effect of the previous version of the rule to 
the amended rule.  Therefore the rule amendment was not 
promulgated in violation of WEPA.5 
                                                 
5 While I need not address the remedy Applegate is entitled 
to, I nonetheless harbor some skepticism of the majority's 
decision to remand to the circuit court with directions to 
remand to DOR to develop a reviewable record.  The 2014 
amendment to Wis. Admin. Code § Tax 18.05(1) was promulgated——
and its rulemaking record closed——more than six years ago.  Our 
statutes explain that once a rule is promulgated, "the exclusive 
means of judicial review of the validity of a rule . . . shall 
be by an action for declaratory judgment as to the validity of 
the rule."  Wis. Stat. § 227.40(1) (emphasis added).  The 
Uniform Declaratory Judgments Act defines the scope of our 
declaratory power "to declare rights, status, and other legal 
relations." 
 
Wis. 
Stat. 
§ 806.04(1). 
 
It's 
perplexing, 
therefore, that the majority does not issue a declaration, but 
instead orders a stay and a remand to DOR.  If there is a 
justification for the majority's approach, it is not presented 
in the court's opinion or in its citations to authority.  So far 
as I can tell, no court has done what the majority does here. 
No.  2018AP1239.bh 
 
10 
 
                                                                                                                                                             
It's also unclear what the majority thinks DOR will 
accomplish on remand.  Ordering development of a reviewable 
record of a negative-EIS determination made more than six years 
ago risks impermissible post hoc rationalization of agency 
action.  See Dept. of Homeland Sec. v. Regents of the Univ. of 
Cal., 140 S. Ct. 1891, 1909 (2020) (noting that justifications 
provided after the agency has acted "can be viewed only as 
impermissible post hoc rationalizations and thus are not 
properly before us"); see also Flung v. LIRC, 2017 WI 72, ¶105, 
376 Wis. 2d 571, 898 N.W.2d 91 (A.W. Bradley, J., dissenting) 
(referring to the rule against post hoc rationalization as 
"well-established precedent on administrative agency review").  
I suspect DOR will simply compile some relevant documents and 
conclude no EIS was required using largely the reasoning 
presented to us in briefing.  If this is all WEPA requires, so 
be it.  But I find this an odd approach to ensuring an agency 
made a reasonable determination that no EIS was required years 
earlier. 
No.  2018AP1239.bh 
 
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