Extraordinary Session Policy Items Flying Under the Radar

 In General Commentary (Blog), Uncategorized, WILL News

Administrative law reforms, transparency and oversight, and key tax reforms

The Legislature is meeting to consider hundreds of pages of reforms. These reforms are moving quick. Both the Assembly and the Senate intend to vote today. A lot has been written about the process being used as well as some of the bigger issues, such as moving the presidential primary. But the proposals are filled with public policy that can help advance the conservative agenda – in addition to a few red flags.

Here’s some things to watch for today and tomorrow (note this is not an exhaustive review):

The Good

These proposals have quite a bit of good in them, and continue a nearly decade-long effort by the Legislature to rebalance power in state government. Most notably, the bills make a number of administrative law reforms that increase transparency and oversight, key tax reforms, and a number of other structural reforms that will make state government more transparent and accountable.

Standing up for the separation of powers by limiting administrative law-making

Limiting agency deference: The bills codify a key holding form the state Supreme Court last year (Tetra Tech) that significantly limited how much deference state agency decisions get. That ruling has helped level the playing field, and ensures that bureaucrats do not get special treatment from courts when interpreting their own powers. That’s a big deal; it shifts power in court from government to the people.

Heightened transparency: The bills include some significant transparency reforms related to agency guidance documents. Put simply, guidance documents are ways state agencies implement state law without going through the rule-making process. Sometimes this is illegal, but even when it is permissible, state agencies too often make it hard for the public to follow what guidance documents have been issued.

Fortunately, the legislation includes a provision that shines a giant light on these documents by requiring them to be published, posted online, and requires agencies to take comments from the public. Importantly, the bill also makes clear that these guidance documents do not have the force of law and agencies are required to cite to state law or a duly promulgated administrative rule whenever making a statement or interpretation of law in such documents. These are big reforms which will help shine light on the inner workings of government.

Ending “sue” and “settle”: Finally, the last major administrative law change here is that the legislation makes clear that settlement agreements cannot confer any rulemaking authority. This key reform ends the practice of “sue and settle” whereby special interests file lawsuits and state agencies simply settle them out by agreeing to promulgate whatever rules the special interests were seeking. This change will reinforce the rule of law, making it clear, yet again, that agencies get their powers from the Legislature – not from special interest litigation.

It is important to repeat that these proposals are a continuation of a nearly decade-long effort by Republican legislatures in the Walker era to attempt to limit the administrative state. The REINS Act and a number of related bills from the past eight years all limited administrative power at a time when Governor Walker controlled those agencies.

Improving Wisconsin’s tax environment

Another area this legislation makes some very positive reforms is taxation. In that area, this legislation proposes to amend state law to make certain that any new monies collected as a result of taxing out-of-state goods go directly to income tax relief – that’s welcome news. Additionally, the legislature has proposed to put in statute the DOR Wayfair carve out for certain out-of-state small businesses that WILL wrote about as being legally troubling a few months ago. This change removes all questions and ensures that DOR’s actions in this area are absolutely within their statutory authority. Kudos to these lawmakers for recognizing these issues and providing a fix.

This legislation also makes some significant tax changes for pass-through entities. While this may not look all that exciting, it is an added option that will help businesses in Wisconsin remain competitive.

Good government

The bills increase the use of “passive review” in key areas, requiring the executive branch to provide notice to the legislature before taking certain actions. That’s a welcome reform that helps shine a light on what government is up to. Similarly, the bills require agencies to submit a list of all fees charged by the agency with their agency budget request every biennium. That’s a reform that will help people track the growth of government.

The proposal also includes a change that will end DOJ’s “slush fund” by requiring all settlement monies to be deposited into the state’s general fund. That’s welcome news, and will help ensure that all dollars sent to state government are spent appropriately and transparently.

Enshrine certain Walker actions into law

The Walker Administration issued several waivers and orders that could be easily reversed by governor-elect Evers. Fortunately, this legislation protects certain federal waivers that Wisconsin has obtained. Specifically, the bill requires additional legislative oversight and approvals for any change to such a waiver program. The bills also codify and require the state to implement some of the already obtained waivers including the BadgerCare work requirement and the Wisconsin Healthcare Stability Plan. This will ensure these reforms continue to be effective going forward.

Finally, this legislation codifies key rules that were put in place to ensure the efficient issuance of identification cards for voting purposes. That’s welcome news and will help ensure that Wisconsin’s Voter I.D. laws stay on the books and enforceable.

The Bad

Not every bill is perfect. And anything as large as this package will certainly include few head scratchers. Conservatives should be wary about the following.

Empowering DPI

Most egregiously, the proposal originally exempted the Department of Public Instruction from certain administrative rulemaking requirements. Citing the flawed Coyne v. Walker state Supreme Court decision, the proposal says this is necessary. That is simply untrue. Coyne produced no majority opinion and its viability is currently before the Court in Koschkee v. Evers Exempting any state agency from added oversight and transparency is simply bad public policy.  My WILL colleagues have more on that here.

Fortunately, the Joint Finance committee voted to remove this provision from the bill last night before it made it to the full Legislature. That is welcome news, and hopefully it does not return.

Let agencies cite to federal law in regulations?

Under current law, state agencies must cite to state law to justify the writing of a rule. However, part of the legislation seems to imply that somehow an agency may be able to draft rules based upon federal law. That cannot be, as it would confer significant new rulemaking powers on state bureaucrats. It would also take power away from state government and transfer it to the federal government.

A provision should be added to the bill that would make clear that no rulemaking powers can be conferred by federal law.

Making it easier for bureaucrats to enact “emergency rules”

State law permits agencies to enact emergency regulations in very limited situations – when “preservation of the public peace, health, safety, or welfare necessitates” them. That makes sense given that emergency rules, which have the force of law, are subjected to less oversight and hearings than normal rules.

That is why it’s strange that a provision in the legislation would make it clear that agencies can use a single scope statement to promulgate emergency rules and permanent rules. But emergency rules go through a different promulgation process. Agencies should have to file a separate scope statement when they promulgate emergency rules and permanent rules. Allowing them to use a single scope does not make sense.

Conclusion

Both the Assembly and the Senate intend to vote on these proposals today, and they could change further. We will continue to monitor this legislation and keep you updated as appropriate.

 

Lucas Vebber is the Deputy Counsel and Director of Regulatory Reform and Federalism at WILL

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