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April 28, 2016Client Alert

Wisconsin Permittees: Act 21 is Alive and Well

When Governor Walker was elected in the fall of 2010, regulatory reform was high on the Administration’s agenda. The Republican-controlled Legislature moved quickly to enact reforms to several public funding measures, the mandatory membership in labor unions and the administrative rulemaking process. One very important reform adopted by the Legislature and signed into law by Governor Walker is a measure designed to reign in administrative agencies’ unfettered discretion and reassert the Legislature’s power over bureaucracy. The principle underlying this reform is that elected representatives of the people should determine the fate of Wisconsin families and businesses and not unelected, unchecked bureaucrats.

2011 Wisconsin Act 21 (Act 21) was enacted on May 23, 2011 and was key to advancing that important principle. Although it is now five years post-enactment, the measure has been largely ignored and its application is only now being upheld (and tested further) in court, only after regulated entities pushed hard for its recognition. Wisconsin’s regulated community should keep this important reform in mind as they work with the agencies that regulate them.

Anyone who owns or operates a business or facility in Wisconsin understands the importance - and reach of administrative agencies. Administrative agencies, such as the Wisconsin Departments of Revenue, Safety & Professional Services, Transportation, Natural Resources, and Agriculture, Trade & Consumer Protection to name a few, impact thousands of Wisconsin businesses and by extension, the Wisconsin families that own, operate and are employed by them. Administrative agencies are creatures of statute. They have only the powers or authorities that are granted to them by the Legislature and have no inherent authority under the Wisconsin Constitution. As such, the Legislature can giveth and taketh away.

Act 21’s specific reform is straightforward. It created new Section 227.10(2m) of the Wisconsin Statutes which states that an agency may not implement or enforce a standard, threshold or requirement, including as a term or condition of a permit, unless that requirement is either explicitly required or explicitly authorized by statute or properly promulgated administrative rule. The message is loud and clear: agencies have long regulated Wisconsin businesses based on “implied authority” or justified permit conditions based on broad grants of general regulatory authority rather than specific delegations of requirements or authorizations from the peoples’ representatives: the Legislature.

As noted above, although we are five years post-enactment, this important reform is only now being implemented and tested in the courts. There are three cases where Act 21 had an important role to play and our Firm represented the permittee in each. In one case, the DNR attempted to condition the issuance of a high-capacity water well permit on a requirement to install monitoring wells and collect water elevation data during the operation of the new well. The well owner sued DNR in court and a circuit court vacated the DNR imposed condition holding that according to Section 227.10(2m), the agency could point to no explicit requirement or authorization to include the permit condition in the approval. The decision was not appealed by any party, including interveners involved in the case.

Shortly thereafter in another case, the DNR ultimately agreed with a permit holder’s argument that DNR lacked authority to implement a cap on the number of animals as a permit condition for a large livestock operation or to require that monitoring wells be installed off of the operation’s property. In that case, one with a convoluted procedural history beyond the scope of this article, the DNR intended to modify a dairy farm’s Wisconsin Pollutant Discharge Elimination System (WPDES) Permit after a now-retired administrative law judge (ALJ) concluded in violation of Act 21 that the permit should include such a cap on growth and off-site monitoring. On behalf of the farm, we asked the DNR Secretary to reconsider the ALJ’s conclusion citing the limitations imposed by Act 21 and pointing out that nothing in current law authorized or required DNR to implement such an animal unit cap. Although the DNR initially refused to upset the ALJ’s ruling, after seeking legal advice from the Wisconsin Department of Justice (DOJ), the DNR Secretary reconsidered that earlier decision and ordered that the permit not be modified to include the cap. The ALJ also ordered that monitoring wells be installed off-site of the regulated farm facility and that requirement met the same fate pursuant to Section 227.10(2m) via the stroke of the Secretary’s pen. Intervening activist groups are now appealing the Secretary’s decision to abide by Act 21.

In the third case, also involving a large dairy and also involving an animal unit cap, the DNR modified a WPDES permit to include an animal unit maximum cap after two contested case hearings were held on both the farm’s WPDES and high-capacity well permits. Here, intervener activists argued that the DNR failed to follow the ruling of the ALJ when it modified the permit to include the cap. The farm argued that the animal unit cap must suffer the same fate as the one in the case where the DNR Secretary obtained DOJ’s legal advice. This case trails the prior two cases procedurally and is currently pending an administrative hearing granted on the issue of whether the animal unit imposed in the modified permit complies with the ALJ’s order and the DNR’s authority under law. Importantly, in granting the request for the administrative appeal, the DNR wrote:

Since the ALJ WPDES Order, the Department has received information from DOJ indicating that animal unit limits in permits, such as the one appearing in Section 1.3.4., are unlawful because they are not explicitly authorized by ch. NR 243, Wis. Adm. Code. Any resolution of whether DNR complied with the ALJ WPDES Order must also include consideration of DNR’s authority in light of s. 227.10(2m), Stats., as it applies to animal unit limits.

So what is the upshot of all of this? As Wisconsinites grapple with regulatory agencies, as permits are issued, renewed and processed, as regulatory determinations are made that impact your business or operations, ask the following question: Is there a statute or rule that explicitly authorizes or requires the agency to impose the requirement? The answer may be “none.” As all change takes time, be advised that the limitations of Act 21 are alive and well, but only if the regulated community demands adherence to the law.


 

[i] New Chester Dairy, LLC v. WDNR, Outagamie County Circuit Court Case No. 14-CV-1055

[ii] Clean Wis. V. WDNR, Dane County Circuit Case No. 15-CV-2633

[iii] Pleasant Lake Management District v. WDNR, Dane County Circuit Court Case No. 16-CV-989, and related contested cases

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