In December 2018, the Republican-controlled Wisconsin Legislature made national headlines when it enacted three bills¹ during an extraordinary session that curtailed the powers of newly elected Democratic Gov. Tony Evers and Attorney General Josh Kaul. Outgoing Republican Gov. Scott Walker signed the legislation into law on Dec. 14, 2018.

This article focuses on the major provisions in the extraordinary session laws that specifically affect the powers of the two executive officers. The article also discusses the lawsuits challenging the new laws.

Agency Rulemaking

The Wisconsin Legislature made a number of changes to Wisconsin laws regarding administrative rulemaking. The two biggest areas addressed by the new laws are agency rulemaking authority and specific changes to a number of state agencies.

Over the past eight years, the Republican-controlled legislature and Gov. Walker enacted significant changes to the administrative rulemaking process, including placing limits on state agencies.² In addition, the Wisconsin Supreme Court recently issued a decision, Tetra Tech EC Inc. v. Wisconsin Department of Revenue,³ that held that a state court reviewing an agency’s decision must not accord deference to the agency’s interpretation of the law.

Building on these administrative law changes and the Tetra Tech decision, the legislature passed other administrative law modifications during the extraordinary session on Dec. 6, 2018. In 2017 Wis. Act 369, the legislature made the following statutory changes to agency rulemaking in Wisconsin.

Agency Deference. Before the Wisconsin Supreme Court’s decision in Tetra Tech, Wisconsin courts were required to accord “due weight” deference to the experience, technical competence, and specialized knowledge of any state agency interpreting the law. In Tetra Tech, the court ruled that Wisconsin courts must not accord any deference to state agencies. The legislation enacted by the Wisconsin Legislature codifies the Wisconsin Supreme Court’s decision into statute.⁴ The new law provides that “no agency may seek deference in any proceeding based on the agency’s interpretation of any law.”⁵

Guidance Documents. Wisconsin administrative agencies, like many state and federal agencies, issue guidance documents that provide interpretations of administrative rules or statutes. In some instances, however, these guidance documents contain new interpretations that operate essentially as administrative rules but without going through the proper rulemaking process.

To prevent state agencies from continuing this practice, the Wisconsin Legislature added new statutory language defining what constitutes a “guidance document.”⁶ The new law asserts that a guidance document can neither be an administrative rule nor have the same effect as a rule. In addition, the new law requires a comprehensive review before an agency may issue the guidance, including requiring the agency to post the guidance document on its website and allow public comment.⁷

The new law also permits private parties to petition an agency to promulgate a rule in place of the guidance document. Most notably, Act 369 provides that “any guidance document that has not been adopted in accordance” with the new procedures “shall be considered rescinded.”⁸ This provision will force state agencies to reissue existing guidance documents and follow the new guidance document procedures.

Act 369 also requires a state agency to provide a statutory or administrative rule citation for any statement or interpretation of law the agency provides in its informational materials.⁹

Suspension of Administrative Rules. Before passage of Act 369, the Joint Committee for Review of Administrative Reviews (JCRAR) could suspend administrative rules. If the JCRAR suspended a rule, the committee was required to introduce separate bills in each house of the legislature to make the suspension permanent. If neither bill was enacted, the rule remained in effect and the JCRAR could not suspend the rule again. Act 369 allows the JCRAR to suspend a rule multiple times, thereby stopping the rule from going into effect until it is approved by the JCRAR.¹⁰ This provision gives the JCRAR considerable power over the rulemaking process and state agencies.

Changes to State Agency Authorities

In addition to the changes to administrative rulemaking noted above, the extraordinary session laws placed specific limits on certain state agencies.

Wisconsin Economic Development Corporation. The Wisconsin Economic Development Corporation (WEDC) is a public-private agency whose mission is to improve the state’s economy by providing resources and support to businesses. Previously, the WEDC board consisted of 12 voting members: six members appointed by the governor, three members appointed by the assembly speaker, and three members appointed by the senate majority leader.

Under Act 369, the WEDC board will now consist of 16 voting members¹¹ appointed as follows: the assembly speaker and the senate majority leader each appoint four members to the board, and the minority leader of each house appoints one member to the board. The number of members appointed by the governor remains unchanged at six.

Before passage of Act 369, the governor appointed the WEDC’s chief executive officer (CEO). Act 369 provides that the first CEO of WEDC will be appointed by the board and serve at the pleasure of the board. Beginning in September 2019, the governor will once again have the authority to appoint CEOs.¹²

Act 369 allows the JCRAR to suspend a rule multiple times, thereby stopping the rule from going into effect until it is approved by the JCRAR.

Department of Children and Families. In 2017 Wis. Act 370, the legislature eliminated the Department of Children and Families secretary’s authority to approve plans to reallocate funds from federal money received under the Temporary Assistance for Needy Families (TANF) block grant program. Instead, the Joint Finance Committee must approve the reallocation of TANF funds.¹³

Department of Workforce Development. Act 370 also eliminated the authority of the Department of Workforce Development (DWD) to establish waivers from work search and registration requirements for eligibility for unemployment insurance¹⁴ and codified the current waivers contained in the DWD’s rules.¹⁵ The new law also codified the requirement that a claimant provide verification of having complied with work search and registration requirements.¹⁶

Department of Health Services. Act 370 requires the Department of Health Services (DHS) to implement the BadgerCare reform waiver as it relates to childless adults as approved by the federal Department of Health and Human Services (DHHS).¹⁷

Under the new law, the DHS must require demonstration project recipients who are between the ages of 19 and 50 and who do not have minor children to participate in and report 80 hours per month of community engagement activities, unless they are permanently exempt or have a temporary exemption for good cause. Qualifying community engagement activities are specified in the law and include working for money, goods, or services or as a volunteer or participating in a program such as the FoodShare employment and training program or Wisconsin Works.

The DHS must require a recipient, as a condition of eligibility, to complete a health-risk assessment. If the recipient’s household income exceeds 50 percent of the federal poverty line, the recipient must pay a monthly premium with some limited exceptions. The household premium is reduced if a recipient does not endorse engaging in certain health-risk behaviors or reports actively managing certain unhealthy behaviors.

The DHS must disenroll a recipient for six months if the recipient fails to pay the required premium or, if the recipient is not exempt, does not participate for 48 aggregate months in a community engagement activity. The agency must charge recipients an $8 copayment for nonemergency use of a hospital emergency department and must comply with other requirements imposed by the DHHS in its waiver approval effective Oct. 31, 2018. Finally, Act 370 requires the DHS to implement the BadgerCare reform waiver for adults without minor children by Nov. 1, 2019.¹⁸

The new law did not remove the attorney general’s authority to continue to represent the state; however, the Joint Committee on Legislative Organization may also intervene in any case involving the state and obtain legal counsel.

FoodShare Employment and Training Requirements. Act 370 incorporated into the Wisconsin Statutes the provisions of Wis. Admin. Code chapter DHS 38.¹⁹ The 2015-16 budget bill, 2015 Wis. Act 55, required the DHS to promulgate rules to develop and implement a screening, testing, and treatment policy, and then to screen and test for illegal use of a controlled substance and treat for substance abuse all able-bodied adults who seek to participate in the FoodShare program’s employment and training program (known as FSET). The DHS promulgated these requirements in Wis. Admin. Code chapter DHS 38.

Act 370 incorporates the specifications and requirements of that DHS rule into the statutes and requires implementation of the screening, testing, and treatment by Oct. 1, 2019. The new law also requires the DHS to follow requirements in Act 370 as if the screening, testing, and treatment is an approved waiver.²⁰

The provisions of the rule and Act 370 require an agency that administers the FSET program to require able-bodied adults who are subject to a work requirement to participate in FoodShare. Also, in certain circumstances, those who participate in the FSET program must undergo screening for use of a controlled substance without a prescription and testing for use of a controlled substance. Finally, any person who tests positive for a controlled substance might have to go through treatment for use of the controlled substance to be eligible to participate in the FSET program.

Medical Assistance. The legislature also made changes to the state’s medical assistance program. Specifically, Act 370 requires a 14-day Joint Finance Committee passive review process if the DHS seeks to amend the state’s medical assistance plan, change the reimbursement rate, or make a supplemental payment to a provider under the medical assistance program and the amendment, rate change, or payment has an expected fiscal effect of more than $7.5 million from all revenue sources over a 12-month period.²¹

New Limits on Wisconsin Attorney General

Perhaps the most significant provisions in the extraordinary session legislation affected the state attorney general’s powers. The changes are summarized below.

Settlement Funds. Under the 2017-18 budget bill, the legislature placed new restrictions on the attorney general’s authority to expend settlement funds. Act 369 removes the attorney general’s authority to expend any settlement funds and instead automatically deposits all settlement funds directly into the state’s general fund.²²

Legislature as Intervenor. Before passage of Act 369, the attorney general had the authority to appear for the state and defend or prosecute all actions and proceedings. The new law did not remove the attorney general’s authority to continue to represent the state; however, the Joint Committee on Legislative Organization may also intervene in any case involving the state and obtain legal counsel.²³

Oversight of Attorney General Settlement Authority. Pre-Act 369, the attorney general had the authority to compromise or discontinue, with the governor’s approval, a civil action the Wisconsin Department of Justice (DOJ) was prosecuting. Act 369 shifted the authority to approve the compromise or discontinuance of a state civil action from the governor to the Joint Finance Committee.²⁴

Also before passage of Act 369, the attorney general had broad authority to settle and compromise actions in which the state was the defendant. Under Act 369, the attorney general must submit the settlement or compromise plan to the Joint Finance Committee for review for any action involving injunctive relief or a proposed consent decree. If the Joint Finance Committee does not schedule a meeting to review the plan within 14 days, the attorney general may proceed. However, if the Joint Finance Committee does hold a meeting, the attorney general may proceed only with the committee’s approval.²⁵

Act 369 imposes service requirements in certain situations. A party that alleges that a statute is unconstitutional or in violation of or preempted by federal law must serve the assembly speaker, the senate president, and the senate majority leader with a copy of the proceeding.²⁶ In addition, Act 369 provides that the Assembly, Senate, and Joint Committees on Legislative Organization may intervene in the case to represent the legislature and the state.²⁷

Act 369 prohibits the attorney general from submitting a proposed settlement plan to the Joint Finance Committee in which the attorney general concedes the unconstitutionality or other invalidity of a statute without the approval of the Joint Committee on Legislative Organization.²⁸

Solicitor General Office. In 2015, the legislature created a solicitor general and three deputy solicitor general positions that were appointed by the attorney general and served at will. Act 369 repealed the solicitor general and deputy solicitor general positions and funding for the solicitor general office.²⁹

Changes to Election and Tax Laws

The extraordinary session laws also made numerous changes to Wisconsin’s election and tax laws. A few of the most significant changes related to election and tax laws are discussed below.

Act 369 implemented new voter identification (voter ID) requirements, limited the amount of time for in-person absentee voting, and modified voting procedures for military and overseas electors to comply with the federal Uniformed and Overseas Citizens Absentee Voting Act.³⁰

Act 368 also amended the Wisconsin Statutes to allow pass-through entities to elect to be taxed at the entity level for purposes of the state’s income and franchise taxes.³¹ Act 368 also amended Wisconsin’s sales tax laws to comply with a recent U.S. Supreme Court decision, South Dakota v. Wayfair Inc., which overruled precedent that prevented a state from collecting sales and use tax from out-of-state sellers that did not have a physical presence in the state.³²

 Lawsuits Challenging Extraordinary Session Laws

As expected, several groups have filed lawsuits challenging the extraordinary session laws, on both procedural and substantive grounds. Each lawsuit is discussed below.

League of Women Voters of Wisconsin v. Knudson. The first lawsuit was filed by the League of Women Voters, Disability Rights Wisconsin, and Black Leaders Organizing for Communities and challenges the procedural nature in which the legislature enacted the laws.

Specifically, the plaintiffs argue that the legislature lacked authority to enact the legislation in an extraordinary session. The plaintiffs argue the only lawful type of legislative session, other than the regular session, is a “special session” convened by the governor under article IV, section 11 and article V, section 4 of the Wisconsin Constitution. Because the extraordinary session was called by the legislative leaders, not the governor, the plaintiffs contend that the legislature lacked the authority to convene and conduct an extraordinary session, and therefore the laws enacted during the extraordinary session are null and void.

The defendants respond that nothing in article IV, section 11 supports the plaintiffs’ claim. According to the defendants, section 11 merely provides that the “legislature shall meet at the seat of government at such time as shall be provided by law.” On Jan. 3, 2017, the Wisconsin Legislature “met” for the first time for the 2017-18 biennial session and did not stop “meeting” until Jan. 7, 2019. According to the defendants, the joint resolution adopted by the Assembly and Senate at the beginning of the legislative session set the prescheduled floor periods and interim nonfloor periods.

The defendants further argue that the joint resolution also allowed the legislature to schedule non-prescheduled floor days, commonly referred to as “extraordinary sessions.” The defendants contend that nothing in the constitution’s text or history limits when the legislature can choose to meet in a floor period.

Moreover, the defendants note that this has been a common practice for four decades, and that if these laws are struck down, then any previous laws enacted during past extraordinary sessions are equally susceptible to being struck down, a situation that could have significant ramifications for the state.

Dane County Circuit Court Judge Richard Niess struck down all of the laws as unconstitutional. The Court of Appeals, District III, subsequently stayed Judge Niess’s order pending the appeal process. The case was later appealed to the Wisconsin Supreme Court, which has accepted the case and will likely issue a decision soon.

Under Act 369, the attorney general must submit the settlement or compromise plan to the Joint Finance Committee for review for any action involving injunctive relief or a proposed consent decree.

Service Employees International Union v. Vos. Another lawsuit, filed by the Service Employees International Union, Wisconsin Federation of Nurses and Health Professionals, American Federation of Teachers-Wisconsin, and Milwaukee Area Service and Hospitality Workers, alleges that the extraordinary session laws are an unconstitutional violation of the separation-of-powers doctrine.

According to the plaintiffs, article V of the Wisconsin Constitution gives the governor the power and duty to “take care that the laws be faithfully executed,” and one branch of government may not unduly burden or substantially interfere with the other branch’s “essential role and powers.”³³

The plaintiffs claim that certain sections of Act 369 are unconstitutional, including requiring the legislature’s approval before civil litigation may be settled or discontinued, permitting the legislature to intervene in any action challenging the construction or validity of a statute, allowing for legislative overrides of executive action, requiring legislative approval before executive action can be taken, and controlling and directing agency guidance and deference.

The plaintiffs also allege that the provisions that allow the JCRAR to suspend an administrative rule issued by a state agency, without an opportunity for the governor to veto the committee’s action, further violate the Wisconsin Constitution. According to the plaintiffs, the Wisconsin Supreme Court in Martinez v. Department of Industry, Labor & Human Relations upheld the use of legislative committees to set aside agency action, but only when there is “full involvement of both houses of the legislature and the governor.”³⁴

In response, Vos and other defendants assert that the Wisconsin Constitution explicitly states that the “powers, duties and compensation of the … attorney general shall be prescribed by law.”³⁵ The defendants argue that the Martinez decision cited by the plaintiffs bolsters the legislature’s plain reading of the constitution. In Martinez, the Wisconsin Supreme Court stated that “the attorney general’s powers are prescribed only by statutory law.”³⁶

Further relying on Martinez, the defendants argue that the Wisconsin Supreme Court has interpreted the Wisconsin Constitution as requiring “shared and merged powers of the branches of government, rather than an absolute, rigid and segregated political design.”³⁷ Based on this interpretation, the defendants argue that the legislature has the power to have direct oversight over the rulemaking process.

Dane County Circuit Court Judge Frank Remington struck down some of the new laws, while upholding others. On its own initiative, the supreme court took this case on April 19, 2019, bypassing the court of appeals.

Democratic Party of Wisconsin  v. Vos. A lawsuit filed in the U.S. District Court for the Western District of Wisconsin alleges that Acts 369 and 370 violate the U.S. Constitution. Specifically, the plaintiffs allege the acts violate the Guarantee Clause, the First Amendment, and the Equal Protection Clause.

Vos and other defendants respond that the plaintiffs in the case lack Article III standing to bring the case. Moreover, the defendants argue that the plaintiffs’ legal claims – that the legislature has taken too much power from certain officers – is a nonjusticiable political question.

One Wisconsin Institute Inc. v. Thomsen. In 2016, the U.S. District Court for the Western District of Wisconsin held that a previous law³⁸ that limited the time for in-person absentee voting to 10 days violated the First and Fourteenth Amendments.³⁹ The plaintiffs in One Wisconsin Institute sought an injunction from the same court to enjoin the state from enforcing the new limits on in-person absentee voting in the extraordinary session law. On Jan. 17, 2019, the Western District court granted the plaintiffs’ motion and issued an order⁴⁰ to enforce the court’s previous injunction and prohibit the state from enforcing the new in-person absentee voting timeframe.

Conclusion

The recent extraordinary session laws were the latest set of laws limiting state agency rulemaking. The legislature also curtailed the powers of the newly elected attorney general and gave the legislative branch more oversight of cases handled by the DOJ. With numerous legal challenges pending in state and federal courts, it remains unknown which of the new laws will survive.

Endnotes

¹ 2017 Wis. Act 368; 2017 Wis. Act 369; 2017 Wis. Act 370.

² See 2011 Wis. Act 21; 2017 Wis. Act 57; 2017 Wis. Act 108.

³ 2018 WI 75, 382 Wis. 2d 496, 914 N.W.2d 21.

⁴ See Wis. Stat. §§ 227.10(2g), 227.57(11); 2017 Wis. Act 369, §§ 35, 80.

⁵ Wis. Stat. § 227.10(2g).

⁶ See Wis. Stat. § 227.01(3m); 2017 Wis. Act 369, § 31.

⁷ See Wis. Stat. § 227.112; 2017 Wis. Act 369, § 38.

⁸ Wis. Stat. § 227.112(7)(a).

⁹ See Wis. Stat. § 227.05; 2017 Wis. Act 369, § 33.

¹⁰ See Wis. Stat. § 227.26(2)(im); 2017 Wis. Act 369, § 64.

¹¹ See Wis. Stat. § 238.02(1); 2017 Wis. Act 369, § 82m.

¹² See 2017 Wis. Act 369, § 102(2v).

¹³ See Wis. Stat. § 49.175(2)(a); 2017 Wis. Act 370, § 11.

¹⁴ See Wis. Stat. § 108.04(2)(bd); 2017 Wis. Act 370, § 36 (clarifying DWD can only amend waivers by rule to comply with federal law).

¹⁵ See Wis. Stat. § 108.04(2); 2017 Wis. Act 370, §§ 27-37.

¹⁶ See Wis. Stat. § 108.04(2)(bm); 2017 Wis. Act 370, § 37.

¹⁷ See Wis. Stat. § 49.45(23b); 2017 Wis. Act 370, § 14.

¹⁸ 2017 Wis. Act 370, § 44(3)(a).

¹⁹ See Wis. Stat. § 49.791; 2017 Wis. Act 370, § 17.

²⁰ 2017 Wis. Act 370, § 44(5).

²¹ See Wis. Stat. § 49.45(2t); 2017 Wis. Act 370, § 13.

²² See Wis. Stat. § 165.10; 2017 Wis. Act 369, § 27.

²³ See Wis. Stat. § 165.25(1)-(1m); 2017 Wis. Act 369, §§ 28, 29.

²⁴ See Wis. Stat. § 165.08(1); 2017 Wis. Act 369, § 26.

²⁵ See Wis. Stat. § 165.25(6)(a)1.; 2017 Wis. Act 369, § 30.

²⁶ See Wis. Stat. §§ 806.04(11), 893.825(2); 2017 Wis. Act 369, §§ 98, 101.

²⁷ See Wis. Stat. §§ 13.365, 803.09(2m); 2017 Wis. Act 369, §§ 5, 97.

²⁸ See Wis. Stat. §§ 165.08(1), 165.25(6)(a)1.; 2017 Wis. Act 369, §§ 26, 30.

²⁹ 2017 Wis. Act 369, § 103(2).

³⁰ 2017 Wis. Act 369, §§ 1-1ng, 91-95.

³¹ 2017 Wis. Act 368, §§ 1-12.

³² 2017 Wis. Act 368, §§ 13-16.

³³ Citing State v. Unnamed Defendant, 150 Wis. 2d 352, 360, 441 N.W.2d 696 (1989).

³⁴ 165 Wis. 2d 687, 700, 479 N.W.2d 582 (1992).

³⁵ Wis. Const. art. VI, § 3.

³⁶ State v. City of Oak Creek, 2000 WI 9, 232 Wis. 2d 612, 605 N.W.2d 526.

³⁷ Martinez, 165 Wis. 2d at 696.

³⁸ 2011 Wis. Act 23; 2013 Wis. Act 146.

³⁹ One Wis. Inst. Inc. v. Thomsen, 198 F. Supp. 3d 896, 964 (W.D. Wis. 2016).

⁴⁰ One Wis. Inst. v. Thomsen, No. 15-cv-324-jdp, order (W.D. Wis. Jan. 17, 2019).