Guest Perspective by Robert Fassbender and Corydon Fish
The Legislature v. Palm decision fundamentally altered the scope of government power in Wisconsin by turning back the unrelenting, all-encompassing advance of the administrative state over the past century. Clocking in at 161 pages with 33,000 words arising from seven opinions, just one word makes this a watershed decision on reining in the administrative state. That word: Explicit.
To appreciate the significance of the term explicit, it helps to put yourself in the room where it happened. But first, some context is in order.
Administrative agencies reside in the executive branch but can only create rules when the legislature delegates authority to them. When exercising properly delegated lawmaking authority, agencies must do so through rulemaking.
This decision was a significant victory for the regulated community and all citizens in a time when agency rulemaking avoidance and overreach is becoming ubiquitous at both the federal and state levels.
A rule is in essence a law created by a state agency. The rulemaking process is the only way in which an administrative agency can “create” law. Rulemaking procedures set forth in Chapter 227 of Wisconsin Statutes were created by the legislature to ensure that when unelected government officials were wielding policymaking authority, they did so in a standardized, transparent, and accountable manner. In short, rulemaking, when properly conducted, promotes the rule of law. For those being regulated – from large manufacturers to barbershops and churchgoers – rulemaking provides clear, advance notice of permissible and impermissible conduct; it is the due process of law individuals living in a democracy expect and deserve. It also gives the public an opportunity to submit comments on a proposed rule and provides the legislature, governor, and courts with oversight mechanisms.
In Legislature v. Palm, because Wisconsin Department of Health Services (DHS) Secretary Designee Andrea Palm’s “Safer at Home” order met the definition of a rule, the Court held “the procedural requirements of [Chapter 227] must be followed because they safeguard all people.” The Court also found that DHS must have “explicit” authority from the legislature to implement its policy choices; and for the most part, it did not in this instance. This decision was a significant victory for the regulated community and all citizens in a time when agency rulemaking avoidance and overreach is becoming ubiquitous at both the federal and state levels.Just one word makes Legislature v Palm a watershed decision on reining in the administrative state. That word: Explicit. Click To Tweet
To fully understand the blow struck in favor of individual liberty, the rule of law, and transparent and accountable government, we need to go back to the early days of the Walker Administration when 2011 Wisconsin Act 21 (Act 21) was created.
Being in the Room: The Legislative History of Act 21
Act 21 fundamentally altered Wisconsin administrative law relating to agency power by requiring “explicit” delegations of authority from the legislature to state agencies. It is important that we understand the history of this concept.
The essence of Act 21 is putting the people of Wisconsin and their elected officials, not unelected state employees, back in the driver’s seat of policymaking.
It began on January 18, 2011, when Special Session Assembly Bill 8 was introduced by the Committee on Assembly Organization, by request of Governor Scott Walker and Representative Tom Tiffany (now Congressman Tiffany). This special session was convened by Walker immediately after his inauguration to help reinvigorate Wisconsin’s economy (and fiscal health) at the tail end of the Great Recession. Importantly, Walker deemed regulatory reform so crucial to Wisconsin’s economic health he included this effort in his special session. The essence of Act 21 is putting the people of Wisconsin and their elected officials, not unelected state employees, back in the driver’s seat of policymaking.
Specifically, Walker used Act 21 to eliminate the judicially created doctrine of “express and implied authority” in Wisconsin. Under this concept, administrative agencies were able to reach power beyond the words found in Wisconsin statutes to powers implied from the statutes. In his announcement of the legislation, Walker noted one specific – and absurd – example of an agency using this “implied” authority to rewrite the law.Walker used Act 21 to eliminate the judicially created doctrine of “express and implied authority” in Wisconsin. Under this concept, administrative agencies were able to reach power beyond the words found in Wisconsin statutes to… Click To Tweet
In that case, a Wisconsin appellate court ignored a clear legislative limit on state agency power to mandate apartment building sprinkler systems. The law dictated that the Department of Commerce’s (DOC) could only require sprinkler systems for buildings with more than 20 apartments. DOC ignored this limit and instead issued a rule requiring sprinkler systems for all buildings with more than eight apartments. The appellate court sided with the DOC, finding the agency had implied authority to rewrite “more than 20” to mean “more than eight” based on non-specific preamble language in the statutes that did not mention sprinklers at all.
Commenting on this practice, Walker noted:
Laws are created by the elected officials in the legislature who have been empowered by the taxpayers, not employees of the State of Wisconsin. The practice of creating rules without explicit legislative authority is a constitutionally questionable practice that grants power to individuals who are not accountable to Wisconsin citizens.
The explicit authority concept was always the fundamental objective of Act 21. But as introduced, AB 8 used the word “expressly” instead of “explicitly” because the Legislative Reference Bureau (the agency that writes the legal language in bills) found the term “expressly” more comfortable given its prior usage in the statutes. Of course, the whole point of the explicit authority provision was to make it distinct from – and more narrow than – the prior standards of “express” and “implied” authorities because courts found these delegations everywhere.
To effectuate this goal, the Senate amended the bill to replace “expressly” with “explicitly.” When going back to the Assembly for concurrence, Representative Tiffany explained on the floor the import of the Senate change:
The primary change that was made to [the assembly bill] in the Senate was changing the term ‘expressly’ to ‘explicitly.’ The courts have interpreted expressly very broadly, and in order for our legislation that comes out of this body today to reflect the intent that we want, it was important to change the word to explicitly and that was the primary change that was made to the bill in the Senate.
Not often does a floor amendment target one word. Clearly, that word – explicit – had the meaning found in any dictionary: not implied. With this vital change, the legislature passed, and Governor Walker signed, Act 21 into law. However, special interest groups that had long benefited from state agencies taking more power than they were given were not about to roll over.
Attorney General Schimel “Lays Down the Law”
Perhaps unsurprisingly, agencies did not abide by Act 21 reforms. At worst, agencies continued to act as though Act 21 was never signed into law and, at best, they slammed on the brakes on any regulatory approval, sending the regulated community into chaos and confusion.
This inaction came to a head at the Department of Natural Resources (DNR) when its high capacity well program was frozen. Needless uncertainty at DNR arose from court decisions that were no longer applicable. The agricultural industry was particularly hard hit by the paralysis, as it is virtually impossible to grow crops in the Wisconsin central sands region without well water. In response, Assembly Speaker Robin Vos asked Attorney General Brad Schimel for clarification as to the meaning of Act 21 and its effect on DNR’s high capacity well permitting program. In the February 2016 request, the Assembly Committee on Organization offered their view of Act 21’s explicit authority requirement:
It is the [l]egislature’s prerogative whether to delegate its public trust authorities, rather than agencies asserting delegation is implied in broad prefatory clauses. Delegation of public trust authority requires ‘clear and unmistakable language and cannot be implied.’ (Citations omitted)
This ‘clear and unmistakable’ standard is in essence the definition of the term ‘explicit,’ which is the requirement for a delegation under [Act 21]. Requiring any public trust delegation be explicit is consistent with the clear language of, and intent behind, [Act 21].
In his May 10, 2016, formal opinion sent to Speaker Vos, Attorney General Schimel concurred:
Although [in prior cases] the court found that DNR had broad implied authority to impose permit conditions, that holding directly conflicts with Act 21. I conclude that through [Act 21], the Legislature has limited DNR’s authority to regulate high capacity wells only as explicitly enumerated through statute or rule. DNR cannot premise such authority on broad statements of policy or general duty, such as those found in [DNR’s preamble provisions].
With the governor, legislature, and attorney general in agreement, you would think this would be the logical end of the story. However, agency recalcitrance stalling through the 2018 election created new hope for those attempting to cast aside Act 21. It took a health crisis causing an unprecedented breakdown of the separation of powers to get the Wisconsin Supreme Court to validate Act 21.
Legislature v. Palm
In mid-May, the Wisconsin Supreme Court released its much anticipated ruling in the legislature’s challenge to Governor Tony Evers’ shelter in place – “Safer at Home” – order. Emergency Order 28, issued by DHS Secretary Palm to extend the Evers Administration’s effort to bend the curve of COVID-19 infections in Wisconsin, included significant restrictions on the healthy and sick alike, prohibited non-essential travel, shut down whole industry sectors, and “quarantined” healthy individuals in their homes. The Legislature’s lawsuit, at its heart, revolved around the applicability of rulemaking and Act 21. Specifically, whether DHS had the statutory authority to issue all the order’s restrictions and whether the order was an administrative rule requiring DHS to promulgate it through the Chapter 227 rulemaking process.
The administrative leviathan can no longer feed on implied powers; their powers must be set forth explicitly in the details of legislatively enacted regulatory schemes.
The Court ultimately held that the order was “unlawful, invalid, and unenforceable.” The Court found Secretary Palm lacked statutory authority for key parts of her order and that the order was a rule requiring promulgation as such. What makes this case remarkable is that, for the first time, the Court used the legislatively mandated standard – the explicit authority requirement – of Act 21 to narrowly construe the scope of agency authority.
In the majority opinion, Chief Justice Roggensack affirmed that the enactment of Act 21 changed the reach of agency power. She stated, “[T]he Legislature concluded that this theory [of agencies having implied powers] did not match reality. Therefore, under 2011 Wis. Act 21, the Legislature significantly altered our administrative law jurisprudence by imposing an ‘explicit authority requirement’ on our interpretations of agency powers.”
The Court went further by writing, “[Act 21] prevent[s] agencies from circumventing this new ‘explicit authority’ requirement by simply utilizing broad statutes describing the agency’s general duties or legislative purpose as a blank check for regulatory authority.” No longer will agencies be able to use broad aspirational language to give themselves power the people – through their elected officials – never conveyed upon them. In other words, the administrative leviathan can no longer feed on implied powers; their powers must be set forth explicitly in the details of legislatively enacted regulatory schemes.No longer will agencies be able to use broad aspirational language to give themselves power the people never conveyed upon them. The administrative leviathan can no longer feed on implied powers; their powers must be set forth… Click To Tweet
Reading Tea Leaves
If you got this far, you might think this debate is over. The explicit authority language is clear. The intent behind that provision is clear. And the Wisconsin Supreme Court ratified the explicit authority requirement in the Palm decision. However, there are multiple cases before the court –still this term and next term – where opponents of Act 21 will assuredly attempt to invalidate the law.
These opponents include Attorney General Josh Kaul, who on May 1, 2020, days before the Palm decision was handed down, withdrew the Schimel opinion in an attempt to damage the validity of Act 21. While the Court in Palm paid the Attorney General’s actions no heed, we expect Attorney General Kaul, environmentalist groups, and state agencies themselves to seek to invalidate Act 21 in other upcoming cases such as Clean Wisconsin v. Department of Natural Resources.
Because of procedural delays, the Clean Wisconsin case likely will not be heard until the next term. At that point, Justice Kelly will be off the bench, replaced by liberal Jill Karofsky, who is unlikely to be a fan of Walker-era reforms like Act 21. Further, Justice Hagedorn’s dissent narrowly construing the scope of rulemaking, which is disconcerting, was silent on Act 21. However, these concerns should not overshadow the scope of the victory in Palm.
The Wisconsin Supreme Court struck a historic blow in favor of individual liberty and transparent and accountable government by cementing Act 21 as the law of the land. The Court made it clear that when assessing statutory authority, Wisconsin agencies and courts must find it in plain sight. Wisconsinites will have to remain vigilant about unelected bureaucrats trying to end run the strictures of Act 21 – and of judges who aid and abet this conduct – but all said, Wisconsinites are now more free and their government more accountable.
Robert Fassbender is the president and general counsel of the Great Lakes Legal Foundation. The Foundation promotes Act 21’s explicit authority requirement through litigation and other writings. Corydon Fish is general counsel at Wisconsin Manufacturers and Commerce, the state’s chamber of commerce and manufacturers association. WMC advocates before the legislature to ensure Wisconsin’s administrative state is transparent, accountable, and fair. Fassbender and Fish submitted a brief in the Palm case for WMC and the Wisconsin Dairy Alliance in support of the legislature’s position.