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July 31, 2014

Wisconsin Governor Walker Signs Regulatory Reform Bill into Law

On May 23, 2011, Governor Scott Walker signed legislation making important changes to the administrative rulemaking process.  This measure, which became 2011 Wisconsin Act 21 (and became effective June 8, 2011), changes State agency authority to promulgate rules, provides for gubernatorial approval of proposed rules, makes revisions to the requirement of an economic impact analysis for proposed rules and changes venue in the process of judicial review of agency rules. 

Key changes to the law made in Act 21 include:

  1. Agency Authority to Promulgate Rules Must Be Explicit: Act 21 restricts State agencies from promulgating administrative rules unless rulemaking authority is "explicitly conferred" on the agency by the Legislature.
  2. Agency Authority to Implement Standards or Enforce Licenses/Permits Restricted: Under Act 21 "[n]o agency may implement or enforce any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement or threshold is explicitly required or explicitly permitted by statute or by rule".  These restrictions, codified at Section 227.10(2m) of the Wisconsin Statutes, will have a significant impact on the authority of a State agency to enforce license or permit terms or other standards or requirements unless such license or permit terms, standards or other requirements are "explicitly" required or permitted by statute or administrative rule. 
  3. Governor Must Approve Rules Before Promulgation, Including Emergency Rules, and Has Authority to Prescribe Guidelines: Act 21 requires the Governor's approval before an agency proposes an administrative rule for Legislative review.  In addition, the Governor must approve the issuance of emergency administrative rules by a State agency.  Further, the Governor "by executive order, may prescribe guidelines to insure that rules are promulgated in compliance" with the law. 
  4. Economic Impact Analyses: Act 21 requires a State agency to provide an economic impact analysis for each proposed rule, except for emergency rules.  Under Act 21, such economic impact analyses must contain information on the economic effect of the proposed rule on specific businesses, business sectors, local governmental units, public utility ratepayers and the State's economy as a whole.  In addition, the agency must solicit information and advice from businesses, associations representing businesses, local governmental units and individuals that may be affected by the proposed rule.
  5. Change in Venue in Actions to Review Validity of Administrative Rules: Act 21 provides that the exclusive means of judicial review of the validity of an administrative rule must now be brought "in the circuit court for the county where the party asserting the invalidity of the rule resides or has its principal place of business, or, if that party is a non-resident or does not have its principal place of business in this state, in the circuit court for the county where the dispute arose."  Previously, such actions were required to be brought in Dane County.
© MICHAEL BEST & FRIEDRICH LLP

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