Amendment JR1 SSA1-SB8

LRBs0049/1

GMM&PJH:all:ph

January 2011 Special Session

2011 - 2012 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO SENATE BILL 8

January 28, 2011 - Offered by Senator Hopper.

SB8-SSA1,2,10 An Act to repeal 227.137 (1), 227.137 (2) (a), 227.137 (2) (b), 227.137 (5), 227.138 (title) and (1), 227.138 (4) and 227.19 (5) (b) 3.; to renumber 227.138 (2) (b), 227.138 (2) (c), 227.138 (2) (d) and 227.24 (1) (e) 1.; to renumber and amend 227.11 (2) (a), 227.137 (2) (intro.), 227.138 (2) (intro.), 227.138 (2) (a) and 227.138 (3); to amend 227.135 (2), 227.135 (3), 227.137 (title), 227.137 (3) (intro.), 227.137 (3) (a), 227.137 (3) (b), 227.137 (3) (c), 227.137 (4), 227.14 (2) (a) 6., 227.15 (1), 227.19 (2), 227.19 (3) (intro.), 227.19 (4) (b) 1. (intro.), 227.19 (4) (b) 2., 227.19 (4) (b) 2m., 227.19 (4) (b) 3., 227.19 (4) (b) 3m., 227.19 (4) (b) 5., 227.19 (4) (b) 6., 227.19 (4) (c), 227.19 (4) (d) (intro.), 227.19 (5) (a), 227.19 (5) (b) 1. (intro.), 227.19 (5) (b) 2., 227.19 (5) (b) 4., 227.19 (5) (c), 227.19 (5) (d), 227.19 (5) (e), 227.19 (5) (f), 227.19 (5) (g) (intro.), 227.19 (6) (a) 1., 227.19 (6) (a) 4., 227.40 (1) and 801.50 (3); to repeal and recreate 227.135 (4) and 227.19 (4) (e); and to create 227.10 (2m), 227.11 (2) (a) 1. to 3., 227.137 (3) (d), 227.137 (3) (e), 227.15 (1m) (bm), 227.17 (3) (em), 227.185, 227.19 (4) (b) 1m., 227.19 (5) (b) 1m., 227.24 (1) (e) 1d. and 227.24 (1) (e) 1g. of the statutes; relating to: the authority of a state agency to promulgate rules interpreting the provisions of a statute enforced or administered by the agency and to implement or enforce any standard, requirement, or threshold as a term or condition of a license issued by the state agency; gubernatorial approval of proposed rules; economic impact analyses of proposed rules; legislative review of proposed rules; and venue in a declaratory judgment action seeking judicial review of the validity of an administrative rule and in an action in which the sole defendant is the state.

Analysis by the Legislative Reference Bureau

Introduction

This substitute amendment makes various changes relating to: 1) the authority of a state agency (agency) to promulgate administrative rules (rules) interpreting the provisions of a statute enforced or administered by the agency and to implement or enforce any standard, requirement, or threshold as a term or condition of a license issued by the agency; 2) gubernatorial approval of proposed rules; 3) economic impact analyses for proposed rules; 4) legislative review of proposed rules; and 5) venue in declaratory judgment actions seeking judicial review of the validity of a rule and in actions in which the sole defendant is the state.

Agency authority to promulgate rules and implement standards

Under current law, an agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute, except that a rule is not valid if the rule exceeds the bounds of correct interpretation.

This substitute amendment provides that all of the following apply to the promulgation of a rule interpreting the provisions of a statute enforced or administered by an agency:

1. A statutory or nonstatutory provision containing a statement or declaration of legislative intent, purpose, findings, or policy does not confer rule-making authority on the agency or augment the agency's rule-making authority beyond the rule-making authority that is expressly conferred on the agency by the legislature.

2. A statutory provision describing the agency's general powers or duties does not confer rule-making authority on the agency or augment the agency's rule-making authority beyond the rule-making authority that is expressly conferred on the agency by the legislature.

3. A statutory provision containing a specific standard, requirement, or threshold does not confer on the agency the authority to promulgate, enforce, or administer a rule that contains a standard, requirement, or threshold that is more restrictive than the standard, requirement, or threshold contained in the statutory provision.

The substitute amendment also prohibits an agency from implementing or enforcing any standard, requirement, or threshold as a term or condition of any license issued by the agency unless such implementation and enforcement is expressly required or permitted by statute or by a rule that has been promulgated in accordance with statutory rule-making procedures. In addition, the substitute amendment permits the governor, by executive order, to prescribe standards to ensure that rules are promulgated in compliance with the subchapter of the statutes governing rule making.

Gubernatorial approval of proposed rules

Current law requires an agency that is planning to promulgate a rule to prepare a statement of the scope of the proposed rule (statement of scope), present the statement of scope to the individual or body with policy-making powers over the subject matter of the proposed rule (policy-making individual or body) for approval, and send the statement of scope to the Legislative Reference Bureau (LRB) for publication in the Wisconsin Administrative Register (register). Currently, the policy-making individual or body may not approve a statement of scope until at least tenth days after publication of the statement of scope in the register. Current law also provides that if the policy-making individual or body does not disapprove the statement of scope within 30 days after it is presented to that individual or body, or by the eleventh day after its publication in the register, whichever is later, the statement is considered to be approved. Finally, current law prohibits a state employee or official from performing any activity in connection with the drafting of a proposed rule, except for an activity necessary to prepare the statement of scope, until the policy-making individual or body approves the statement of scope.

This substitute amendment makes the following changes with respect to statements of scope:

1. Requires a statement of scope to be approved by the governor as well as by the policy-making individual or body before the statement of scope may be sent to the LRB for publication in the register and prohibits a state employee or official from performing any activity in connection with the drafting of a proposed rule, except for an activity necessary to prepare the statement of scope, until the governor as well as the policy-making individual or body approves the statement of scope.

2. Eliminates automatic approval of a statement of scope if the policy-making individual or body does not disapprove the statement of scope within 30 days after it is presented to that individual or body, or by the eleventh day after its publication in the register, whichever is later.

3. Requires an agency to prepare and obtain approval of a revised statement of scope if after a statement of scope is approved the agency changes the scope of the proposed rule in any meaningful or measurable way.

4. Requires an agency to prepare and obtain approval of a statement of scope for a proposed emergency rule in the same manner as a statement of scope is prepared and approved for a nonemergency rule. A statement of scope for a proposed emergency rule must be published at the same time that the emergency rule is published. If the agency changes the scope of a proposed emergency rule, the agency must prepare and obtain approval of a revised statement of scope for the proposed emergency rule in the same manner as a revised statement of scope is prepared and approved for a nonemergency rule.

In addition, the substitute amendment requires an agency to submit a proposed rule in final draft form to the governor for approval before the rule may be submitted to the legislature for review and to submit a proposed emergency rule in final draft form to the governor for approval before the emergency rule may be filed with the LRB for publication.

Economic impact analyses for proposed rules

Under current law, before the Department of Agriculture, Trade and Consumer Protection (DATCP), the Department of Commerce (Commerce), the Department of Natural Resources (DNR), the Department of Transportation (DOT), or the Department of Workforce Development (DWD) may submit a proposed rule to the legislature for review, a municipality, an association that represents a farm, labor, business, or professional group, or five or more persons that would be affected by the proposed rule may submit a petition to the Department of Administration (DOA) requesting the secretary of administration (secretary) to direct DATCP, Commerce, DNR, DOT, or DWD to prepare an economic impact report for the proposed rule. The secretary may direct the preparation of an economic impact report in any case and must direct the preparation of such a report if: 1) the proposed rule would cost affected persons $20,000,000 or more during each of the first five years after the rule's implementation to comply with the rule; or 2) the rule would adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. An economic impact report, however, is not required for an emergency rule.

An economic impact report must contain information on the effect of the proposed rule on specific businesses, business sectors, and the state's economy and must include all of the following: 1) an analysis and quantification of the problem, including any risks to public health or the environment, that the rule is intending to address; 2) an analysis and quantification of the economic impact of the rule, including costs reasonably expected to be incurred by the state, governmental units, associations, businesses, and affected individuals; and 3) an analysis of benefits of the rule, including how the rule reduces the risks and addresses the problems that the rule is intended to address. The agency must submit the economic impact report to the legislative council staff and DOA and may not submit the proposed rule to the legislature until DOA has issued a report on the proposed rule and the secretary has approved the proposed rule.

This substitute amendment requires any state agency to prepare an economic impact analysis, rather than a report, before the agency may submit any proposed rule to the legislative council staff for review, which must be done before a public hearing is held on the proposed rule or, if no public hearing is held, before the proposed rule is submitted to the legislature for review.

The substitute amendment also requires certain additional information to be included in an economic impact analysis. Specifically, in addition to the information that must be included in an economic impact report under current law, an economic impact analysis must also include:

1. Information on the effect of a proposed rule on public utility ratepayers and local governmental units.

2. An analysis of alternative to the proposed rule, including the alternative of not promulgating the rule.

3. A determination made in consultation with the businesses, local governmental units, and individuals that may be affected by the proposed rule as to whether the proposed rule would adversely affect in a material way the economy, a sector of the economy, productivity, jobs, or the overall economic competitiveness of this state.

4. Comparisons with the approaches used by the federal government and by Illinois, Iowa, Michigan, and Minnesota to address the policy problem that the proposed rule is intending to address and, if the approach chosen by the agency to address that policy problem is different from those approaches, a statement as to why the agency chose a different approach.

5. An assessment of how effective the proposed rule will be in addressing the policy problem that the rule is intended to address.

In addition, the substitute amendment requires all of the following:

1. An agency to submit an economic impact statement not only to the legislative council staff and DOA as under current law but also to the governor and to the chief clerk of each house of the legislature for distribution to the presiding officers of each house, the chairpersons of the appropriate standing committees of each house, and the cochairpersons of the Joint Committee for Review of Administrative Rules (JCRAR).

2. DOA to issue a report on a proposed rule, and the secretary to approve a proposed rule, if the economic impact analysis indicates that a total of $20,000,000 or more in implementation and compliance costs are reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals as a result of the proposed rule.

3. An agency to prepare a revised economic impact analysis if a proposed rule is modified after the original economic impact analysis is submitted so as to significantly change the economic impact of the proposed rule.

4. The legislative council staff to provide on its Internet site an economic impact analysis submitted to the legislative council staff or a link to that analysis.

5. A notice of a public hearing on a proposed rule to include the economic impact analysis for the proposed rule and any report on the proposed rule prepared by DOA, or a summary of that analysis and report and a description of how the full analysis and report may be obtained from the agency at no charge.

Legislative review of proposed rules

Under current law, when a proposed rule is in final form, the agency must notify the legislature as to that fact and the presiding officer of each house of the legislature must then direct the proposed rule to be referred to one standing committee of his or her house. If that notice is received on or after September 1 of an even-numbered year, the notice is considered received on the first day of the next regular session of the legislature, which means that legislative review of the proposed rule is deferred to the next legislature. A standing committee to which a proposed rule is referred then has 30 days after referral within which to review the proposed rule (committee review period). During the committee review period, a standing committee may request modifications to the proposed rule, waive its jurisdiction over the proposed rule, or object to the proposed rule.

If a standing committee objects to a proposed rule, the proposed rule and objection are referred to JCRAR, which also has a 30-day committee review period within which JCRAR must meet in executive session to take action on the standing committee's objections, which actions include requesting modifications to the proposed rule, nonconcurring in the standing committee's objection to the proposed rule, or objecting to the proposed rule. If JCRAR nonconcurs in the standing committee's objection, the agency may promulgate the rule. If JCRAR objects to the proposed rule, JCRAR must introduce bills in each house of the legislature to prevent promulgation of the rule and the agency may not promulgate the rule until those bills fail to be enacted.

This substitute amendment changes the date by which a proposed rule must be submitted to the legislature in order for the proposed rule to be reviewed by the current legislature, from September 1 of an even-numbered year to the last day of the legislature's final general-business floorperiod of the biennial session. The substitute amendment, however, permits the presiding officers of both houses of the legislature to refer a proposed rule submitted to the legislature after that date for review by the standing committees and JCRAR of the current legislature. For a proposed rule referred for review after that date, the committee review period extends to the day on which the next legislature convenes. Also, for such a proposed rule, the substitute amendment permits JCRAR to meet and take action in executive session. Under the substitute amendment, if JCRAR does meet in executive session with respect to a proposed rule or a part of a proposed rule to which a standing committee has objected, JCRAR must take action with respect to the standing committees objections.

In addition, the substitute amendment requires all proposed rules reviewed by a standing committee to be referred to JCRAR, regardless of whether a standing committee has objected to the proposed rule or part of the proposed rule. The substitute amendment also provides that the committee review period for JCRAR extends for 30 days after the last referral of a proposed rule to JCRAR. In addition, the substitute amendment permits JCRAR to meet and take action in executive session with respect to a rule or a part of a rule to which no standing committee has objected. Moreover, the substitute amendment permits JCRAR to request modifications to a proposed rule, nonconcur in a standing committee's objection to a proposed rule, concur in a standing committee's approval of a proposed rule, otherwise approve a proposed rule, waive its jurisdiction over a proposed rule, or object to a proposed rule in whole or in part.

Venue in judicial review actions and in actions against state

Under current law, subject to certain exceptions, the exclusive means of judicial review of the validity of a rule is by an action for declaratory judgment as to the validity of the rule brought in the circuit court for Dane County. This substitute amendment permits a declaratory judgment action seeking judicial review of the validity of a rule to be brought in the county where the party asserting the invalidity of the rule resides or has its principal place of business.

Under current law, any civil action or special proceeding in which the state, a state board or commission, or a state officer, employee, or agent acting in his or her official capacity is the sole defendant, is venued in Dane County. Under the substitute amendment, those actions are venued in the county where the plaintiff resides unless a different venue is specifically authorized by law. Under the substitute amendment, if a plaintiff is not a resident of the state or is not a natural person, the action is venued in the county where the dispute arose.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB8-SSA1, s. 1 Section 1. 227.10 (2m) of the statutes is created to read:

SB8-SSA1,7,7 227.10 (2m) No agency may implement or enforce any standard, requirement, or threshold as a term or condition of any license issued by the agency unless such implementation and enforcement is expressly required or permitted by statute or by a rule that has been promulgated in accordance with this subchapter. The governor, by executive order, may prescribe standards to ensure that rules are promulgated in compliance with this subchapter.

SB8-SSA1, s. 2 Section 2. 227.11 (2) (a) of the statutes is renumbered 227.11 (2) (a) (intro.) and amended to read:

SB8-SSA1,8,6 227.11 (2) (a) (intro.) Each agency may promulgate rules interpreting the provisions of any statute enforced or administered by it the agency, if the agency considers it necessary to effectuate the purpose of the statute, but a rule is not valid if it the rule exceeds the bounds of correct interpretation. All of the following apply to the promulgation of a rule interpreting the provisions of a statute enforced or administered by an agency:

SB8-SSA1, s. 3 Section 3. 227.11 (2) (a) 1. to 3. of the statutes are created to read:

SB8-SSA1,8,12 227.11 (2) (a) 1. A statutory or nonstatutory provision containing a statement or declaration of legislative intent, purpose, findings, or policy does not confer rule-making authority on the agency or augment the agency's rule-making authority beyond the rule-making authority that is expressly conferred on the agency by the legislature.

SB8-SSA1,8,16 2. A statutory provision describing the agency's general powers or duties does not confer rule-making authority on the agency or augment the agency's rule-making authority beyond the rule-making authority that is expressly conferred on the agency by the legislature.

SB8-SSA1,8,21 3. A statutory provision containing a specific standard, requirement, or threshold does not confer on the agency the authority to promulgate, enforce, or administer a rule that contains a standard, requirement, or threshold that is more restrictive than the standard, requirement, or threshold contained in the statutory provision.

SB8-SSA1, s. 4 Section 4. 227.135 (2) of the statutes is amended to read:

SB8-SSA1,9,16 227.135 (2) Until An agency that has prepared a statement of the scope of the proposed rule shall present the statement to the governor and to the individual or body with policy-making powers over the subject matter of a the proposed rule approves a statement of the scope of the proposed rule, a state employee or official may not perform any activity in connection with drafting the proposed rule except for an activity necessary to prepare the statement for approval. The agency may not send the statement to the legislative reference bureau for publication under sub. (3) until the governor issues a written notice of approval of the statement. The individual or body with policy-making powers may not approve a the statement until at least 10 days after publication of the statement in the register as required under sub. (3). If the individual or body with policy-making powers does not disapprove the statement within 30 days after the statement is presented to the individual or body, or by the 11th day after publication of the statement in the register, whichever is later, the statement is considered to be approved No state employee or official may perform any activity in connection with the drafting of a proposed rule except for an activity necessary to prepare the statement of the scope of the proposed rule until the governor and the individual or body with policy-making powers over the subject matter of the proposed rule approves the statement.

SB8-SSA1, s. 5 Section 5. 227.135 (3) of the statutes is amended to read:

SB8-SSA1,9,22 227.135 (3) The agency shall send the If the governor approves a statement of the scope of a proposed rule under sub. (2), the agency shall send the statement to the legislative reference bureau for publication in the register. On the same day that the agency sends the statement to the legislative reference bureau, the agency shall send a copy of the statement to the secretary of administration.

SB8-SSA1, s. 6 Section 6. 227.135 (4) of the statutes is repealed and recreated to read:

SB8-SSA1,9,25 227.135 (4) If at any time after a statement of the scope of a proposed rule is approved under sub. (2) the agency changes the scope of the proposed rule in any meaningful or measurable way, including changing the scope of the proposed rule so as to include in the scope any activity, business, material, or product that is not specifically included in the original scope of the proposed rule, the agency shall prepare and obtain approval of a revised statement of the scope of the proposed rule in the same manner as the original statement was prepared and approved under subs. (1) and (2). No state employee or official may perform any activity in connection with the drafting of the proposed rule except for an activity necessary to prepare the revised statement of the scope of the proposed rule until the revised statement is so approved.

SB8-SSA1, s. 7 Section 7. 227.137 (title) of the statutes is amended to read:

SB8-SSA1,10,11 227.137 (title) Economic impact reports analyses of proposed rules.

SB8-SSA1, s. 8 Section 8. 227.137 (1) of the statutes is repealed.

SB8-SSA1, s. 9 Section 9. 227.137 (2) (intro.) of the statutes is renumbered 227.137 (2) and amended to read:

SB8-SSA1,11,5 227.137 (2) After an agency publishes a statement of the scope of a proposed rule under s. 227.135, and before the agency submits the proposed rule to the legislature for review under s. 227.19 (2), a municipality, an association that represents a farm, labor, business, or professional group, or 5 or more persons that would be directly and uniquely affected by the proposed rule may submit a petition to the department of administration asking that the secretary of administration direct the agency to prepare an economic impact report for the proposed rule. The An agency shall prepare an economic impact report analysis for a proposed rule before submitting the proposed rule to the legislature for review under s. 227.19 (2) if the secretary of administration directs the agency to prepare that report. The secretary of administration may direct the agency to prepare an economic impact report for the proposed rule before submitting the proposed rule to the legislature for review under s. 227.19 (2). The secretary of administration shall direct the agency to prepare an economic impact report for the proposed rule before submitting the proposed rule to the legislature for review under s. 227.19 (2) if the secretary determines that all of the following apply: legislative council staff under s. 227.15.

SB8-SSA1, s. 10 Section 10. 227.137 (2) (a) of the statutes is repealed.

SB8-SSA1, s. 11 Section 11. 227.137 (2) (b) of the statutes is repealed.

SB8-SSA1, s. 12 Section 12. 227.137 (3) (intro.) of the statutes is amended to read:

SB8-SSA1,11,21 227.137 (3) (intro.) An economic impact report analysis of a proposed rule shall contain information on the economic effect of the proposed rule on specific businesses, business sectors, public utility ratepayers, local governmental units, and the state's economy as a whole. When preparing the report analysis, the agency shall solicit information and advice from the department of commerce, and from governmental units, associations, businesses, associations representing businesses, local governmental units, and individuals that may be affected by the proposed rule. The agency shall prepare the economic impact analysis in coordination with local governmental units that may be affected by the proposed rule. The agency may request information that is reasonably necessary for the preparation of an economic impact report analysis from other state agencies, governmental units, associations, businesses, associations, local governmental units, and individuals and from other agencies. The economic impact report analysis shall include all of the following:

SB8-SSA1, s. 13 Section 13. 227.137 (3) (a) of the statutes is amended to read:

SB8-SSA1,12,3 227.137 (3) (a) An analysis and quantification of the policy problem, including any risks to public health or the environment, that the proposed rule is intending to address, including comparisons with the approaches used by the federal government and by Illinois, Iowa, Michigan, and Minnesota to address that policy problem and, if the approach chosen by the agency to address that policy problem is different from those approaches, a statement as to why the agency chose a different approach.

SB8-SSA1, s. 14 Section 14. 227.137 (3) (b) of the statutes is amended to read: