The recent extraordinary legislative session in Wisconsin included significant reforms to the administrative-rule-making process. Lost among the objections from some (allegations that the current Republican government is kneecapping the incoming Democratic administration) is a simple reality: The reforms are but the culmination of eight years of thoughtful efforts on the part of the governor and legislative leaders to recalibrate the constitutionally mandated separation of powers. Other states, and even Congress, should take note of what Wisconsin reformers have accomplished.
Normally, arguments about the proper role of executive agencies play out at the national level. Particularly controversial are the Supreme Court cases Chevron and Auer, which give federal agencies wide latitude to interpret statutes and regulations as they see fit without interference from the courts. But as with many legal and policy questions, the states, our laboratories of democracy, are better positioned to serve as the tip of the spear on this issue. And as a proud Wisconsin guy, I like to think on all issues all roads lead to Wisconsin.
In 2011, much attention was given Act 10, Governor Walker’s signature reform to public-sector collective bargaining. Less well-known was Act 21, which can rightly be considered the beginning of an administrative-law revolution in Wisconsin. In 2017, Acts 39, 57, and 108 added to those reform efforts. And this past summer, the Wisconsin supreme court issued a significant decision in Tetra Tech v. Department of Revenue, creating a stricter framework for courts to apply when considering the amount of deference to provide agency interpretations.
Much of what we now consider the standard rule-making process in Wisconsin was first set out in 2011 Act 21. At its core, Act 21 provides that no agency may implement or enforce any standard, requirement, or threshold (including as a term or condition of any license it issues) unless such action is explicitly required or permitted by statute or rule. Gone are the days of implied or perceived authority.
Additionally, for each proposed rule, the act required agencies to submit a “statement of scope” to the governor for review and prepare an economic-impact analysis relating to specific businesses, business sectors, public-utility ratepayers, local governmental units, and the state’s economy as a whole.
Six years later, Act 39 addressed concerns over the lengthy periods of time that agencies were given to promulgate rules. An agency must now submit a proposed rule to the legislature before a scope statement expires, resulting in a 30-month deadline. This requirement adds certainty to the process for the regulated community.
Act 57 is the state version of the federal REINS Act, which several Congresses have considered but none have passed. Wisconsin is the only state thus far to adopt such a reform. Wisconsin agencies must now determine whether a proposed rule will impose $10 million or more in implementation and compliance costs over a two-year period. If there is such a finding, an agency may not promulgate the rule absent authorizing legislation or germane modification to the proposed rule to reduce the costs below the $10 million threshold. In addition, the Department of Administration must review an agency’s scope statement prior to presentation to the governor to ensure an agency has explicit authority to promulgate a given rule (note the connection to Act 21).
Act 108 created an expedited process for the repeal of certain “unauthorized rules.” (If the law that authorized a rule’s promulgation has since been repealed or amended, the rule is considered “unauthorized” — again, note the connection to Act 21.) Any such rules, in addition to rules that are obsolete, duplicative, superseded, or economically burdensome, must be included in a biennial report to the legislature’s Joint Committee for the Review of Administrative Rules. The report must also describe any actions taken by an agency, if any, to address each of the problematic rules listed.
Cumulatively, these four acts have provided for much greater oversight by the legislature (and even the governor) of the rule-making process. But what happens when an agency must interpret statutes or administrative provisions? That has changed in Wisconsin as well.
This June, the state supreme court issued Tetra Tech v. Wisconsin Department of Revenue. In an opinion authored by Justice Daniel Kelly (Governor Walker’s recent appointee), the court decided to end its “practice of deferring to administrative agencies’ conclusions of law.”
In dispatching with its previous three-tiered deference structure — in which agencies’ conclusions could be given “great weight,” “due weight,” or “no weight,” depending on various factors — the court explained that “allowing an administrative agency to authoritatively interpret the law raises the possibility that our deference doctrine has allowed some part of the state’s judicial power to take up residence in the executive branch of government.” Looking to Federalist 47 and 48, Justice Joseph Story, Montesquieu’s 1748 The Spirit of Laws, and Marbury v. Madison, the Court explained that it must “be assiduous in patrolling the borders between the branches,” adding: “This is not just a practical matter of efficient and effective government. We maintain this separation because it provides structural protection against depredations on our liberties.”
The Court summarized its findings on the exclusive nature of judicial power emphatically: “We conclude that only the judiciary may authoritatively interpret and apply the law in cases before our courts. The executive may not intrude on this duty, and the judiciary may not cede it. If our deference doctrine allows either, we must reject it.”
If all this weren’t enough, in passing Senate Bill 884 this month, the legislature advanced one final series of reforms. First, the bill essentially adopts the Tetra Tech analysis, prohibiting courts from affording deference to an agency’s interpretation of law and agencies from seeking deference based on their interpretation of any law in any proceeding.
The bill also attempts to address “sue and settle” tactics, whereby a party — often an activist group — will sue a sympathetic agency, and the agency in turn will settle the lawsuit by changing its regulations. This avoids the usual rule-making process because the agency can claim the lawsuit forced it to make the adjustments. Under the bill, by contrast, if an action is for injunctive relief or a proposed consent decree is included, the Joint Finance Committee will have the opportunity to “passively review” the agreement: The committee could simply do nothing for 14 days and let the settlement proceed; or, it could schedule a meeting to review the agreement, after which point the attorney general could proceed only with the approval of the committee.
The bill further requires that all agency guidance documents must be posted online for the public to view, and that a public hearing must be held to receive public comment. While certain agencies under Governor Walker had already adopted this requirement for guidance, it was important to demand it administration-wide.
Finally, the bill allows the Joint Committee for the Review of Administrative Rules to suspend a rule multiple times. Previously, if JCRAR acted to suspend a rule by introducing bills to repeal it in each house of the legislature, it could not do so again if the effort failed.
Together, these reforms represent a return to founding principles. One of the core principles infused throughout the Constitution is separation of powers — the principle that the powers among the three branches of government are separate and distinct, but most significantly equal.
Governor Walker adhered to this principle throughout his two terms, even if that meant supporting legislation that limited the reach of agencies managed by “his” team. The Wisconsin legislature served as a valuable partner in recalibrating the balance of governing power. And the Wisconsin supreme court boldly questioned how much deference courts must give agency interpretations of code or regulations.
The roadmap to reforming federal and state administrative agencies has already been drawn for others to follow. And it runs through Wisconsin.