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Recent Wisconsin Court of Appeals Decision Highlights the Legal Cost of Regulation to Business in Wisconsin

by Attorney Peter Andrews

Regulation can be a political football, and many Packerland businesses would like to see Mason Crosby kick the costs of it off of their balance sheet. Agencies tend to have established policies and practices which are not as flexible as businesses want or need. It is not uncommon for a small business to find itself in a situation where a regulation or a rule feels like it should not apply to them, but does.

Consider a recent decision of the Wisconsin Court of Appeals over a costly zoning fight that delayed a recycling plant from rebuilding after a fire, Sanimax USA LLC v. Village of DeForest Board of Zoning Appeals. [1] Volumes of paper were devoted to answering the question of whether the business or the regulator had the best interpretation of the word “waste”. Sanimax, the business looking to rebuild, processed grease and cooking oil that local restaurants had used. It then turned that processed product into something used in animal feed. Sanimax perhaps thought it was obvious that something they used for profit could not be called “waste”. The regulator evidently disagreed, and after spending what was undoubtedly thousands of dollars, Sanimax successfully fought through the zoning administrator, the board of zoning appeals, the circuit court, and the court of appeals.

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I have little doubt that Sanimax was getting the best legal advice available, but the situation shines a light on how navigating regulation can be a wasteful endeavor. As an attorney, I look at a lot of these situations. Sometimes it makes sense to consult with counsel and pay for a quality opinion on a regulatory issue. But too often businesses fail to consider the regulatory issues they confront and wind up throwing their money away. Losing a license or paying a significant fine can be troubling, but an accumulating legal bills is just as problematic. Small businesses can manage these risks and the costs of regulation by taking the time to consider their approach to regulatory issues before they become a problem.

Wisconsin’s business lawyers have written extensively on some of the ways businesses can tackle regulation specific to them. Experts in the field have written about topics like breweries[2], drones[3], crowdfunding[4], and many others. Articles like these can help you identify the right questions to ask. They can also help you determine when you are in a situation which calls for legal expertise. Whether you are starting a business, looking to expand, or worried about a scary letter from the DNR, a good first step is to see if an attorney has already written an article or blog post about the hurdles you are confronting.

Understanding regulatory pitfalls does not require a business to have an in-depth knowledge of the nuances of statutes or code provisions. Instead, it is important for the business to understand where the pitfalls are, and what strategies they might take to avoid them. Sometimes this means taking preventative steps like reviewing contracts or making sure the right policies are in place. Other times this means navigating the politics of an agency or preparing to go to court. Any business that has taken the time to consider its approach to the regulatory issues it faces will be in strong position to avoid an unnecessary and unwanted legal expense when the regulator comes knocking. These recommendations are not a substitute for legal advice, but hopefully they are useful in confronting the challenges of today’s regulatory landscape.

[1] https://www.wicourts.gov/ca/opinion/DisplayDocument.pdf?content=pdf&seqNo=182297

[2] http://www.wisbar.org/NewsPublications/WisconsinLawyer/Pages/Article.aspx?Volume=89&Issue=3&ArticleID=24672

[3] http://www.wisbar.org/newspublications/insidetrack/pages/article.aspx?Volume=89&Issue=8&ArticleID=25060

[4] http://www.wisbar.org/NewsPublications/InsideTrack/Pages/Article.aspx?Volume=8&Issue=10&ArticleID=24838