HCG Guide to the Wisconsin Administrative Rules Process

Wisconsin has been a national leader in reforming its administration rules process, creating a stable and predictable regulatory environment for Wisconsin businesses. Changes since 2011 have refined how agencies can enforce requirements and have given the governor and legislature more oversight in the rule-making process. The extraordinary session legislation recently signed by Gov. Scott Walker includes provisions requiring further transparency and oversight of agency processes. Below is an overview of Wisconsin’s administrative rules procedures, codified in Chapter 227, noting significant reforms enacted in the extraordinary session and in the past seven years.

 

Definition of a Rule and Rule-Making Authority

2011 Act 21 was the beginning of Wisconsin’s rule-making reforms. Act 21 passed as part of the special session on jobs called by Gov. Walker in his first Executive Order. The legislation clarified that agencies may not enforce requirements unless explicitly permitted by statute or properly promulgated rule[1] and further refined what an agency may consider “rule-making authority.”[2] For example, Act 21 specified that statements of legislative intent and statutory provisions describing an agency’s powers and duties do not confer rule-making authority to an agency. Furthermore, agencies do not have authority to establish requirements more restrictive than statutory provisions.

The recently signed extraordinary session legislation, 2017 Act 369, further clarifies what confers “rule-making authority” on an agency.[3] Act 369 states that neither compliance plans submitted to the federal government nor settlement agreements, consent decrees, or court orders constitute agency rule-making authority.

Act 369 also narrowed agency authority by adding to Chapter 227 restrictions on the use of “guidance documents.” Agencies use guidance documents to provide further information and interpretations regarding administrative rules or statutes; however, these guidance documents can contain new interpretations that act essentially as a new, improperly promulgated administrative rule.

Act 369 defines “guidance document,”[4] and specifically states that guidance documents do not have the force of law.[5] The Act also requires agencies to hold public comment periods on guidance documents and publish all guidance documents on their websites.

Furthermore, under Act 369, agencies must cite the statutory or administrative code provisions supporting any published interpretation of law they provide.[6]

 

Before the Rule-making Process Begins

The rule-making process may begin in several ways. An agency can decide on its own that it wants to promulgate a rule. A municipality, professional group, or five or more people with an interest in a rule may also petition an agency to request it promulgate a rule.[7] The legislature’s Joint Committee on Review of Administrative Rules (JCRAR) also has the authority to request an agency promulgate a rule in some cases.[8]

Once the agency has decided it will begin the rule-making process, the agency may form an optional advisory committee[9] or hold an optional public hearing on the general subject matter of a potential rule.[10]

 

Scope Statements

 Before beginning work on the rule, the agency must prepare a scope statement describing the objective of the rule, its statutory authority to promulgate the rule, and other preliminary information. Act 21 instituted the requirement that scope statements must be approved by the governor. In the 2017-18 legislative session, Gov. Walker signed the Regulations from the Executive in Need of Scrutiny (REINS) Act (2017 Act 57), which requires the Department of Administration (DOA) to determine whether the scope statement is within the agency’s authority before the governor approves it.[11] After DOA and governor approval, the agency sends the approved scope statement to the state’s Legislative Reference Bureau (LRB) service agency for publication, as well as the legislature and DOA secretary.

Also in the 2017-18 session, Gov. Walker signed 2017 Act 39, which provides that scope statements expire after 30 months. A proposed rule is considered withdrawn and must start the process over if it has not been submitted to the legislature by the scope statement expiration date.[12]

 

Preliminary Public Comment Period[13]

The REINS Act also provided more opportunity for transparency and public input during the rule-making process by creating an optional preliminary public comment period on scope statements. Within 10 days of publication of the scope statement, either co-chairperson of JCRAR may request a preliminary public hearing and comment period on the statement of scope. The agency can also hold the preliminary comment period on its own initiative. Notice of preliminary public hearings and comments periods are published by LRB.

 

Economic Impact Analysis[14]

 Act 21 required that agencies prepare an economic impact analysis (EIA) for every proposed rule, analyzing how the rule will affect businesses, public utility ratepayers, local governments, and the state’s economy as a whole. The REINS Act furthered the importance of the EIA, instituting that if a proposed rule has an economic impact greater than $10 million over a two-year period, the agency must stop work on the rule. Then, the legislature must enact a bill granting explicit agency authority to promulgate the rule.[15]  Otherwise, the agency can modify the rule so that the revised EIA is reduced to less than $10 million over a two-year period, then continue promulgation.

The REINS Act also gives JCRAR co-chairs the authority to request an independent economic impact analysis any time between submittal of the proposed rule to Legislative Council and governor approval of the final draft of the rule.

 

Submitting a Proposed Rule to Legislative Council

Once the proposed rule and EIA have been prepared, the agency submits the proposed rule to the state’s Legislative Council service agency. Included with the submittal to Legislative Council are the EIA, a fiscal estimate,[16] and a housing impact analysis[17] (if applicable). On the day of submittal, the agency must submit the proposed rule to the Small Business Regulatory Review Board, which will prepare its own report.[18]

Within 20 working days of submittal, Legislative Council reviews the proposed rule and provides a written report.[19]

The proposed rule is considered withdrawn on Dec. 31 of the fourth year after submittal, if it has not yet been approved by the legislature.

 

Promulgation Without Public Hearing[20]

No hearing is required if a) the proposed rule brings rules into conformity with a new statute or judicial decision; b) the rule is being promulgated under direction of JCRAR; or c) the agency opts to use the 30-day notice procedure.

Under the 30-day notice procedure, the agency sends LRB the rule as submitted to Legislative Council with notice that the rule will be promulgated without public hearing. If 25 people affected by the rule, a municipality affected by the rule, or a professional group affected by the rule send a petition for a public hearing to the agency within 30 days, the agency must hold a public hearing. If no petition is filed, the agency need not hold a public hearing.

 

Promulgation With Public Hearing

The standard promulgation process requires a public hearing after the Legislative Council report. The agency sends notice of the hearing to LRB to publish in the register and to the DOA secretary at least 10 days before the hearing.[21] The notice must contain an initial regulatory flexibility analysis if the proposed rule will have an impact on small businesses. [22]  The public hearing is conducted in accordance with Wis. Stat. § 227.18.

 

Governor Approval of Final Draft Rule

Once the hearing has occurred (if applicable), Act 21 requires[23] the governor to approve the final draft of a rule.

 

Legislative Review[24]

After the governor approves the final draft rule, the rule is submitted to the legislature and referred to standing committees. The legislature also receives the EIA, housing impact analysis, fiscal estimate, an energy impact report (if applicable), final regulatory flexibility analysis (if applicable), and the agency’s responses to the Small Business Regulatory Review Board report (if applicable).

Standing committees have 30 days to review the rule. The committee review period extends if:

  • The committee requests to meet with the agency or gives notice they will hold a hearing. In this case, the review period extends an additional 30 days after the original 30 day period expires.
  • The committee votes to request modifications. If the agency agrees to modifications, the review period extends to the 10th working day after the committee receives the modified proposed rule. There is no limit to the modifications that can be made or to how long the agency takes to make the modifications.
  • The committee requests an energy impact report from the Public Service Commission. This extends the review period an additional 10 working days.
  • The agency submits germane modifications to the committees. If the modifications are made within the last 10 days of the review period, the review period extends 10 more working days.

During their review period, committees have the option to waive their jurisdiction, approve the rule, or object to the rule. If a committee objects to the rule, the committee in the other house must cease action on the rule (unless the action is to also object to the rule).

After the committee review period, JCRAR takes over jurisdiction of the rule. The JCRAR review period lasts 30 days after it receives both standing committees’ reports. JCRAR must take action on any parts of a proposed rule to which a committee objected, and may take action on other parts of the rule.

Similar to the committee review process, the JCRAR review period extends if:

  • JCRAR requests to meet with the agency or gives notice they will hold a hearing. In this case, the review period extends an additional 30 days after the original 30 day period expires.
  • JCRAR votes to request modifications. If the agency agrees to modifications, the review period extends to the 10th working day after JCRAR receives the modified proposed rule. There is no limit to the modifications that can be made or to how long the agency takes to make the modifications.
  • JCRAR requests an independent EIA. The REINS Act gives JCRAR this authority, upon approval of the Senate and Assembly Committees on Organization. In this case, the review period extends to the 10th working day after receiving the report.

If JCRAR does not object to the rule, the agency may promulgate it.

The REINS Act provides that JCRAR can indefinitely object to a proposed rule, thus preventing the agency from promulgating it. If JCRAR objects to a rule, JCRAR must take executive action to introduce bill to prevent promulgation within 30 days of the objections, then introduce the bill in both the Senate and Assembly within 5 days of the executive action. The bills go to committees, which have 40 days to recommend them, otherwise they are reported without recommendation and placed on the next calendar. If the bills ultimately fail, the agency can promulgate the rule. If one of the bills is enacted, the agency may not promulgate the rule.

Any legislator can also introduce a bill to authorize promulgation. If the bill is enacted, the agency can promulgate the rule. If the bill fails, the agency may not promulgate the rule.

 

Filing Rules

 Once the rule has been approved by the legislature’s review process, the agency must file the rule with LRB.[25] The rule is effective the first day of the month following the date of publication (unless otherwise specified). If the rule has a significant small business impact, it is effective the 3rd month following the date of publication.[26]

 

Review of Published Rules

After rules are published in the Wisconsin Administrative Code, Chapter 227 provides several other avenues for legislative, public, and agency review.

JCRAR is the legislature’s main tool for reviewing administrative rules. Wis. Stat. § 227.26 allows JCRAR to review and suspend rules after holding a public hearing. After suspending the rule, JCRAR has 30 days to take executive action to introduce a bill to support suspension. If the bill passes, the rule is repealed and cannot be implemented again without specific statutory authority. If the bill fails, the rule remains in effect. Act 369 allows JCRAR to suspend rules multiple times.[27]

 2017 Act 108, signed into law by Gov. Walker, creates additional oversight measures including:

  • Allowing JCRAR to request retrospective economic impact analyses on published rules.[28]
  • Requiring the chief of LRB to, in even-numbered years, provide JCRAR a report on rules possibly needing revision.[29]
  • A separate, expedited process for agencies to repeal rules that they deem (with the authorization of JCRAR) as “unauthorized” (i.e. they do not have the authority to promulgate them). [30]
  • Requiring agencies to submit reports to JCRAR in each odd-numbered year, including unauthorized rules, obsolete/unnecessary rules, and economically burdensome rules. Agencies must describe their actions and the status of each of the listed rules, then take action on unauthorized rules within 30 days of the report.[31]
  • Requiring agencies to review all new enactments to determine any effects on their rules.[32]

 

Judicial Challenges to Validity of Administrative Rules & Administrative Review Appeals

Chapter 227 also provides a process for challenging the validity of administrative rules in the courts. Act 21 provides that the exclusive means for judicial review of a rule is declaratory judgment in circuit court. Act 21 named the venue of such actions as the circuit court where the challenging party is located or where the dispute arose. 2011 Act 61 further clarified venue requirements, stating that actions where the sole defendant is the state shall be venued in the circuit court designated by the plaintiff.[33] Together, these venue requirements enhance Wisconsin businesses’ potential for receiving balanced consideration by the courts when challenging state administrative agency decisions.

Previously, in these types of administrative rule challenges, Wisconsin courts deferred to regulatory agencies when interpreting statutory provisions that ultimately define agencies’ own power and reach. However, a recent Wisconsin Supreme Court decision Tetra Tech v. Wisconsin Department of Revenue (2018 WI 75) ended the practice of agency deference in the courts. Act 369 codified the Tetra Tech decision.[34]

Act 369 also allowings the Joint Committee on Legislative Organization, at the request of JCRAR, to intervene in declaratory judgment proceedings challenging administrative rules.[35]

 

[1] Wis. Stat. § 227.10(2m)

[2] Wis. Stat. § 227.11(2)(a)1. to 3.

[3] Wis. Stat. § 227.11(3); 2017 Act 369 s. 37.

[4] Wis. Stat. § 227.01(3m); 2017 Act 369 s. 31.

[5] Wis. Stat. § 227.112(3); 2017 Act 369 s. 38.

[6] Wis. Stat. § 227.05; 2017 Act 369 s. 33.

[7] Wis. Stat. § 227.12

[8] Wis. Stat. § 227.26(2)(b)

[9] Wis. Stat. § 227.13

[10] Wis. Stat. § 227.136(7)

[11] Wis. Stat. § 227.135(2)

[12] Wis. Stat. §§ 227.135(5), 227.14(6)(c)1.a.

[13] Wis. Stat. § 227.136

[14] Wis. Stat. § 227.137

[15] Wis. Stat. § 227.139. This legislative oversight created by the REINS Act is weakened by a provision (Wis. Stat. § 227.139(4)(a)) exempting federal Environmental Protection Agency air quality rules, including the Clean Power Plan.

[16] Wis. Stat. § 227.14(4)

[17] Wis. Stat. § 227.115

[18] Wis. Stat. § 227.14(2g)

[19] Wis. Stat. § 227.15(1)

[20] Wis. Stat. § 227.16(2)

[21] Wis. Stat. § 227.17

[22] The legislature can also request an energy impact report from the Public Service Commission up to 30 days after the hearing. (Wis. Stat. § 227.117)

[23] Wis. Stat. § 227.185

[24] Wis. Stat. § 227.19

[25] Wis. Stat. § 227.20

[26] Wis. Stat. § 227.22

[27] Wis. Stat. § 227.26(2)(im); Act 369 s. 64.

[28] Wis. Stat. § 227.138

[29] Wis. Stat. § 13.92(2)(jg)

[30] Wis. Stat. § 227.26(4)

[31] Wis. Stat. § 227.29

[32] Wis. Stat. § 227.29

[33] Act 61 was recently reaffirmed by the Wisconsin Supreme Court decision DNR v. District IV Court of Appeals 2018 WI  25.

[34] Wis. Stat. § 227.10(2g); 2017 Act 369 s. 35.

[35] Wis. Stat. § 13.56(2); 2017 Act 369 s. 7.

 

  • RT : To help our network providers on the front lines combating COVID-19, Centene has created an online portal with reso… https://t.co/CvW5mUNIBU