Source: https://www.wisbar.org/NewsPublications/WisconsinLawyer/Pages/Article.aspx?Volume=91&Issue=9&ArticleID=26622
Timestamp: 2019-04-22 12:40:47+00:00

Document:
In 2017, Wisconsin became the first state in the nation to adopt its own version of the REINS Act (hereinafter WI REINS Act), which requires legislative approval of any rule with compliance costs exceeding $10 million.6 It was followed by 2017 Wis. Act 108, which requires ongoing review of existing rules and allows for their expedited repeal under specific circumstances, including when the rules no longer are authorized by statute. Wisconsin enacted two more laws during the 2017 legislative session that establish time limits for the exercise of agency rulemaking authority.7 The constitutionality of these reforms and the power of lawmakers to limit delegated authority has been debated federally and in Wisconsin.
com jjensen gklaw Jodi E. Jensen, U.W. 1995, is an associate with Godfrey & Kahn S.C., Madison.
An agency must prepare and obtain approval of a revised scope statement if, at any point during the promulgation process, the scope of the proposal rule changes in any meaningful or measurable way.27 This includes the scope of any activity, business, material, or product that is not specifically included in the original scope statement. A Green County circuit court recently declared a Wisconsin Department of Revenue (DOR) administrative rule invalid because the DOR did not seek approval of a revised scope statement when rule revisions made after the agency public hearing changed the tax classification of an affected business.28 According to the court, a revised economic impact analysis and a second public hearing were also required under chapter 227. The DOR is appealing the decision.
In 2017, Wisconsin became the first state in the nation to adopt its own version of the REINS Act, which requires legislative approval of any rule with compliance costs exceeding $10 million.
Wisconsin courts have not considered whether legislative authority to prevent promulgation raises the same constitutional issues and, if it does, whether the REINS Act properly maintains the balance of shared power by requiring a legislative enactment to authorize promulgation in certain circumstances.
An objection to a rule’s promulgation, in whole or in part, may be made for any of six reasons, including a lack of statutory authority for the rule, its failure to comply with legislative intent, or a conflict with state law.43 The DOA’s determination that an agency had explicit authority to promulgate a rule as described in the scope statement might not apply to provisions included in the final draft rule.
The JCRAR may, by a majority vote of a quorum of the committee, object to and temporarily or indefinitely suspend promulgation of all or part of a proposed rule. When a temporary objection is made, the suspension becomes permanent only if legislation introduced by the JCRAR to codify the objection is enacted. If such legislation is not enacted, the agency may promulgate the rule.49 Under the WI REINS Act, when an indefinite objection is made, promulgation is suspended until the legislature enacts legislation authorizing promulgation.50 Any member of the legislature may introduce such legislation.
JCRAR may direct an agency to solicit comments and hold a public hearing on a scope statement for a proposed rule.
Promulgation of a proposed rule with implementation and compliance costs in excess of $10 million over a two-year period is permitted only if a bill is enacted authorizing the rule.
JCRAR may indefinitely block part or all of a proposed rule and an agency may proceed only if a bill authorizing promulgation is enacted into law.
JCRAR may request a retrospective economic impact analysis for any rule published in the Administrative Code.
An agency must review its rules every two years and initiate an expedited repeal of rules no longer authorized by statutes.
Agencies must begin the promulgation process within six months of enactment of a law requiring the amendment of an existing rule or adoption of a new one.
Since 2013, Wisconsin Assembly standing committees have reviewed more than 300 Administrative Code chapters and enacted legislation to directly modify or repeal a number of rules under the “Assembly’s Red Tape Review” initiative.55 Act 108 formalized this process by requiring ongoing agency review of the agencies’ own rules and establishing expedited procedures for repealing obsolete, unnecessary, unauthorized, and economically burdensome rules.
A rule is unauthorized when the law authorizing it is repealed or amended in such a way to alter or eliminate agency authority. The Legislative Council staff must submit a report to the JCRAR evaluating whether a rule identified by the agency is unauthorized. If the JCRAR approves the petition, the repeal is promulgated once filed with the Legislative Reference Bureau (LRB).58 If the JCRAR denies the petition, the agency may repeal or amend the rule pursuant to the general rule promulgation process.
Act 108 formalized this process by requiring ongoing agency review of the agencies’ own rules and establishing expedited procedures for repealing obsolete, unnecessary, unauthorized, and economically burdensome rules.
Under Act 108, the JCRAR also may direct an agency to prepare a retrospective EIA for any existing rule; this EIA must consider the same fiscal impacts and make findings similar to an original EIA.64 A retrospective EIA may be the basis for rule suspension or it may inform the committee’s consideration of an agency’s biennial report of existing rules required by Act 108.
Before issuing policies or providing general guidance to regulated individuals and entities and the public, a state agency must determine first, whether action being taken is a “rule” as defined under chapter 227 that requires promulgation and second, whether the agency has the statutory authority to promulgate such a rule. If an agency exceeds the authority granted to it by statutes, the legislature may temporarily or indefinitely block promulgation.
Recent reforms reinforce that an agency’s policy decisions, even when made in the public interest, must be statutorily authorized when they have the effect of law.65 Additional reforms are likely as Wisconsin policymakers continue debating the size of government and economic impact of rules.
The legislature considered but did not adopt two additional significant reforms during the 2017-18 legislative session.
The proposal, as amended by a committee, would have sunset each existing chapter of the Wisconsin Administrative Code between Jan. 1, 2021 and Jan. 1, 2030, according to a schedule developed by the JCRAR and the affected agency. An existing rule that was repealed and recreated before 2030 or a rule created after the effective date of the proposal would have expired on January 1 of the ninth year following its repeal and recreation or its creation. A rule that was readopted after expiration would have sunset on January 1 of the 10th year following an agency’s notice to readopt.
Two years before the sunset date, an agency would have had to provide notice to the chief clerk of each house of the legislature and to the JCRAR of whether it intended to readopt the expiring chapter, with or without changes, or whether it intended to let it expire. The notice would have had to describe the basis and purpose of the chapter, the statutory authority for the chapter, and whether revisions were required due to changes in state or federal law or other provisions under Wis. Stat. chapter 227, and it would have had to include a list of all agency guidance documents related to the chapter.
Each chief clerk would have to refer the notice to the appropriate standing committee within 10 working days. The review of the JCRAR and the standing committees would extend for 30 working days from the date of the agency notice, during which time any member of the three committees could object in writing to the chapter’s readoption. The JCRAR would have to vote on the objection within 30 days after the review period expired. If no objection were made or if the JCRAR did not concur in an objection, the chapter would be readopted with no further action. If the JCRAR did concur, the chapter would expire on the sunset date, unless the agency promulgated a new rule to readopt it. The scope statement for the new rule would have to indicate that it is a readoption and the economic impact analysis would have to compare actual costs of compliance with the chapter to any previous economic impact analysis. If a chapter expired before a new rule was promulgated, its provisions could not be enforced while no rule was in effect.
Under the proposal, a guidance document explains how an agency will implement a statute or rule or provides advice about how it is likely to apply a statute or rule to a class of persons similarly affected. Guidance documents include only formal or official documents or communications such as manuals, handbooks, directives, or informational bulletins. The agency secretary would have to sign the document before its issuance to affirm its compliance with chapter 227. Court briefs, declaratory rulings, private letter rulings, documents exempted from the public records law, and other communications exempted from rulemaking under chapter 227 would not be subject to the notice and comment requirements. Under the proposal, a guidance document would not have the force of law and would not provide authority for implementing or enforcing a standard, requirement, or threshold, including as a term or condition of any license. A person could petition an agency to promulgate a guidance document as a rule or seek judicial review of an agency’s action or inaction related to a guidance document.
An agency would have to publish the proposed guidance document on its website and in the Administrative Register. The comment period would extend for 21 days following publication in the register and the proposed guidance could not be finalized and issued until that time, unless the governor approved a shorter period. An agency would have to post all guidance documents on its internet site and permit continuing public comment on them.
What’s the best thing about practicing administrative law?
You have never seen it all. Laws and rules are always changing, and interpretations ebb and flow with the turnover in the state or federal executive branches. But even more so, business and industry are always changing. Innovation brings with it compliance challenges because a new product or service might not fit neatly into a regulatory category.
In some states or agencies, the default is to prohibit the new behavior, but in many others, it is to work cooperatively through compliance issues with a business or an entrepreneur. I am privileged to represent some incredibly bright and creative people who have been able to do remarkable things thanks in part to regulators whose philosophy is to foster innovation, within the confines of the law.
com jjensen gklaw Jodi E. Jensen, Godfrey & Kahn S.C., Madison.
1 Opinion of Wis. Att’y Gen. to Laura Gutiérrez, Secretary, Wis. Dep’t of Safety & Prof’l Servs., OAG 04-17, ¶ 13 (Dec. 8, 2017).
2 Opinion of Wis. Att’y Gen. to Hon. Robin Vos, Chairperson, Assembly Org. Comm., OAG 01-16, ¶ 52 (May 10, 2016).
3 Press Release, Sen. Devin LeMahieu & Rep. Adam Neylon, Sen. LeMahieu and Rep. Neylon Reintroduce “REINS Act” (Jan. 5, 2017); Press Release, Rep. Joan Ballweg, Sen. Stephen Nass & Sen. Alberta Darling, Legislators Introduce Legislation to Reform Administrative Rules (Apr. 28, 2017).
4 Terry Carter, Imbalance of Power: The Executive Branch Pushes the Boundaries of the Separation of Powers, 104 A.B.A. J. 38 (Apr. 2018); Exec. Order No. 13771 (Jan. 30, 2017), Reducing Regulation and Controlling Regulatory Costs, 82 Fed. Reg. 9339 (Feb. 3, 2017).
5 H.R. 26, 115th Cong. (2017).
6 2017 Wis. Act 57.
7 See 2017 Wis. Act 39. A scope statement is automatically withdrawn if a rule is not promulgated within 30 months. See also 2017 Wis. Act 158. The rulemaking authority of certain boards and commissions expires after 10 years if not exercised.
8 Wis. Stat. §§ 227.01(13), 227.10(1).
9 See Wisconsin Elec. Power Co. v. DNR, 93 Wis. 2d 222, 287 N.W. 2d 113 (1980); Schoolway Transp. Co. v. Division of Motor Vehicles, 72 Wis. 2d 223, 240 N.W.2d 403 (1976); Josam Mfg. Co. v. State Bd. of Health, 26 Wis. 2d 587, 133 N.W.2d 301 (1965); Frankenthal v. Wisconsin Real Estate Brokers’ Bd., 3 Wis. 2d 249, 88 N.W.2d 352 (1958); State ex rel. Clifton v. Young, 133 Wis. 2d 193, 394 N.W.2d 769 (Ct. App. 1986).
11 Wis. Stat. § 13.56. The committee is made up of five senators and five representatives.
12 Wis. Stat. § 227.26(2)(b).
13 Exec. Order No. 50, Relating to Guidelines for the Promulgation of Administrative Rules (Nov. 2, 2011).
14 Wis. Stat. § 227.40(4)(a).
15 While the promulgation process for an emergency rule is streamlined, it does not avoid review. The governor must approve both the scope statement and the final rule, and the agency must hold a public hearing within 45 days after its promulgation. Furthermore, an emergency rule is effective for only 150 days, and the JCRAR may grant only two 60-day extensions. See Wis. Stat. § 227.24(1)(e), (2), (4).
16 Wis. Stat. §§ 227.111, 227.135(5).
17 Wis. Stat. § 227.135(1), (2).
18 Wis. Stat. § 227.11(2).
19 Wis. Stat. § 227.111(1), (2).
20 Wis. Stat. § 227.10(2m).
21 Wis. Stat. § 227.11(2)(a)1.-2.
22 Lake Beulah Mgmt. Dist. v. DNR, 2011 WI 54, ¶ 39, 335 Wis. 2d 47, 799 N.W.2d 73.
23 OAG 01-16, supra note 2, ¶ 44.
24 Wis. Stat. § 227.135(2).
25 Wis. Stat. § 227.135(2).
26 2017 Wis. Act 39; supra note 2; Wis. Stat. § 227.135(5).
27 Wis. Stat. § 227.135(4).
28 See Applegate-Bader Farm LLC v. Wisconsin DNR, No. 16-CV-48 (Wis. Cir. Ct. Green Cty. June 5, 2018), appeal docketed, No. 2018AP1239 (Wis. Ct. App. June 28, 2018).
29 Wis. Stat. § 227.137(3)(e).
30 Wis. Stat. § 227.137(3); Exec. Order No. 50.
31 Wis. Stat § 227.137(4m)(a). The Assembly or Senate Organization Committee must approve the request.
32 Wis. Stat. § 227.139(1), (2), (4). Legislative authorization is generally not required for an air quality rule proposed by the DNR, regardless of cost, if it is for the purpose of complying with an explicit call for a state implementation plan by the U.S. Environmental Protection Agency.
33 Wis. Stat. § 227.15(2).
34 Wis. Stat. § 227.19(3).
35 Wis. Stat. § 227.16(1).
36 Wis. Stat. § 227.15(1).
37 Wis. Stat. § 227.17(2), (3)(b), (4).
38 Wis. Stat. § 227.135(4).
39 Wis. Stat. §§ 227.185, 227.19(2).
40 Wis. Stat. § 227.19(2).
41 Wis. Stat. § 227.19(4)(c).
42 Wis. Stat. § 227.19(4)(b)1., 1m, 2., 3., 6.
43 Wis. Stat. § 227.19(4)(d).
44 Wis. Stat. § 227.11(2)(a)3.
45 OAG 04-17, supra note 1, ¶ 20.
47 Wis. Stat. § 227.19(5)(a).
48 Wis. Stat. § 229.19(5)(b)1., 3.
49 Wis. Stat. § 229.19(5)(d), (e), (f).
50 Wis. Stat. § 229.19(5)(dm), (em), (fm).
51 Cameron Sholty, Wis. Inst. For Law & Liberty, WILL Policy Memo: State REINS Act is Still Constitutional, Letter from Richard M. Esenberg & Thomas C. Kamenick to Interested Parties Re: 2017 Amendment SSA1-SB15 – the REINS Act (May 1, 2017); Letter from Anna Henning, Sr. Staff Att’y, Wis. Legislative Council, to Rep. Jocasta Zamarripa Re: Potential Constitutional Consideration Regarding Certain Provisions of 2015 A.B. 251, Relating to Administrative Rules and Rule-Making Procedures (Jan. 26, 2016).
52 Martinez v. DILHR, 165 Wis. 2d 687, 478 N.W.2d 582 (1992).
53 Wis. Stat. § 227.01(13); see Thomson v. City of Racine, 242 Wis. 591, 9 N.W.2d 91 (1943).
54 Wis. Stat. §§ 227.14(6)(c)1.b., 227.15.
55 Supra note 3, Press Release, Representative Joan Ballweg, Senators Stephen Nass & Alberta Darling, Legislators Introduce Legislation to Reform Administrative Rules (Apr. 28, 2017); https://www.facebook.com/RedTapeReviewWI/.
56 Wis. Stat. § 227.29(4)(b).
57 Wis. Stat. §§ 227.29(4)(c)2., 227.26(4)(b).
58 Wis. Stat. § 227.26(4).
59 Wis. Stat. § 227.29(1).
60 Wis. Stat. § 227.29(3).
61 Wis. Stat. § 13.92(2)(jg).
62 Wis. Stat. § 227.26(2)(c), (d).
63 Wis. Stat. § 227.26(2)(j).
64 Wis. Stat. § 227.138(1).
65 Jonathan H. Adler, Placing ‘REINS’ on Regulations: Assessing the Proposed REINS Act, Case Legal Studies Research Paper No. 2012-33 (rev. Jan. 2017).
66 Fact Sheet, Governor Walker’s Small Business Agenda (Sept. 26, 2017).
67 State of Wisconsin Assemb. J., 103rd Reg. Sess. (Nov. 9, 2017), State of Wisconsin Senate Journal, 103rd Reg. Sess. (March 28, 2018).
68 See Tetra Tech EC Inc. v. Wisconsin Dep’t of Revenue, 2018 WI 75, 382 Wis. 2d 496, 914 N.W.2d 21.
69 See Jeffrey A. Mandell & Barbara A. Neider, Sea Change: No More Great Weight Deference to Administrative Agencies, WisBar InsideTrack, July 18, 2018.
70 State of Wisconsin Assemb. J., 103rd Reg. Sess. (March 28, 2018), State of Wisconsin Senate Journal, 103rd Reg. Sess. (March 28, 2018).

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