Amendment SSA1-SB15

LRBs0058/2

MED:ahe

2017 - 2018 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO SENATE BILL 15

April 24, 2017 - Offered by Senator LeMahieu.

SB15-SSA1,1,10 An Act to repeal 227.137 (6) and (7) and 227.17 (3) (em); to renumber and amend 227.137 (3) (b) and 227.16 (6); to amend 227.12 (4), 227.135 (2), 227.135 (3), 227.137 (3) (intro.) and (a), 227.14 (4m), 227.15 (1), 227.15 (1m) (bm), 227.16 (1), 227.17 (1) (intro.), 227.185, 227.19 (3) (intro.), 227.19 (3) (c), 227.19 (4) (b) 1. (intro.), 227.19 (5) (b) 1. (intro.), 227.19 (5) (d), 227.19 (5) (dm), 227.19 (5) (em), 227.19 (5) (f) (title), 227.19 (5) (fm), 227.19 (6) (b), 227.24 (1) (a), 227.24 (1) (e) 1d. and 227.24 (4); and to create 35.93 (2) (b) 3. bm., 227.136, 227.137 (3) (b) 1. and 2., 227.137 (4m), 227.139, 227.14 (2) (a) 3m., 227.17 (3) (eg) and 227.19 (5) (b) 3. of the statutes; relating to: various changes regarding administrative rules and rule-making procedures.

Analysis by the Legislative Reference Bureau

This substitute amendment 1) requires scope statements for proposed administrative rules to be reviewed by the Department of Administration for a determination of an agency's authority to promulgate a rule; 2) requires agencies to hold preliminary public hearings and comment periods on scope statements for rules if directed to do so by the Joint Committee for Review of Administrative Rules (JCRAR); 3) requires the passage of a bill in order for an agency to promulgate a rule that would result in implementation and compliance costs of $10 million over any two-year period, subject to certain exceptions; 4) allows either a cochairperson of JCRAR or JCRAR as a whole, at certain steps in the rule-making process, to request the preparation of an independent economic impact analysis for a proposed rule; and 5) allows JCRAR to make an indefinite objection to a proposed rule to prevent the agency from promulgating the rule.

Current law

Current law sets forth the procedure for promulgating administrative rules. Generally, that procedure consists of the following steps:

1. The agency planning to promulgate the rule prepares a statement of the scope of the proposed rule (scope statement), which must be approved by the governor and the agency head before any state employee or official may perform any activity in connection with the drafting of the proposed rule.

2. The agency drafts the proposed rule, together with an economic impact analysis, plain-language analysis, and fiscal estimate for the proposed rule, and submits those materials to the Legislative Council Staff for review.

3. Subject to certain exceptions, the agency holds a public hearing on the proposed rule.

4. The final draft of the proposed rule is submitted to the governor for approval who, in his or her discretion, may approve or reject the proposed rule.

5. The final draft of the proposed rule, together with a report including certain information, is submitted to the legislature for review by one standing committee in each house and by JCRAR.

6. The proposed rule is filed with the Legislative Reference Bureau (LRB) for publication in the Wisconsin Administrative Register (register), and, subject to certain exceptions, the rule becomes effective on the first day of the first month beginning after publication of the rule changes in the Wisconsin Administrative Code.

An agency may also promulgate rules as emergency rules if preservation of the public peace, health, safety, or welfare necessitates putting the rule into effect prior to the time it would take effect if the agency complied with the requirements for permanent rules. The emergency rules procedure varies from the procedure for permanent rules in a number of ways and includes exemptions from some of the steps required for permanent rules. Emergency rules may generally remain in effect for up to 150 days, but may be extended for up to an additional 120 days by JCRAR.

The substitute amendment

The substitute amendment makes various changes regarding the rule-making procedures established under current law. Significant changes regarding those procedures are described below.

Submission statements of scope to DOA

The substitute amendment requires scope statements for proposed rules to be submitted to DOA instead of to the governor. Following the submission, the substitute amendment requires DOA to make a determination as to whether the agency has the explicit authority to promulgate the proposed rule and report its determination to the governor, who may then approve or reject the statement of scope as under current law.

Preliminary public hearings and comment periods on scope statements

The substitute amendment requires an agency, following approval of a scope statement by the governor, to hold a preliminary public hearing and comment period on a scope statement if directed to do so by a cochairperson of JCRAR. Following such a directive, the agency must submit to the LRB a notice of the hearing and comment period to allow for public comment and feedback on the scope statement. The agency must hold the preliminary public hearing no sooner than the third day after publication of the notice in the register and submit all comments and feedback received to the agency head. A preliminary public hearing and comment period under the substitute amendment is in addition to the public hearing required under current law for certain rules.

Passage of bill required for certain rules

The substitute amendment provides that if an economic impact analysis, a revised economic impact analysis, or an independent economic impact analysis for a proposed rule indicates that $10 million or more in implementation and compliance costs are reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals over any two-year period as a result of the proposed rule, the agency proposing the rule must stop work on the proposed rule and may not continue to promulgate the rule except as follows:

1. The agency may resume the rule-making procedure for the proposed rule upon enactment of a bill that authorizes its promulgation.

2. The agency may modify the proposed rule to address the implementation and compliance costs of the proposed rule. If a revised economic impact analysis prepared by an agency and any independent economic impact analysis prepared following the modification all indicate that $10 million or more in implementation and compliance costs are not reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals over a two-year period as a result of the proposed rule, the agency may then resume the rule-making procedure for the proposed rule.

The substitute amendment exempts from these provisions certain proposed rules of the Department of Natural Resources relating to air quality that are necessary to comply with an explicit call for a state implementation plan by the federal Environmental Protection Agency under the federal Clean Air Act.

Independent economic impact analyses

The substitute amendment allows a cochairperson of JCRAR, after an agency submits a copy of an economic impact analysis for a proposed rule to the legislature, but before the proposed rule is submitted for final approval by the governor, to request that an independent economic impact analysis be prepared for the proposed rule. In that case, the cochairperson must contract for the preparation of the independent economic impact analysis. The person preparing the independent economic impact analysis must complete the independent economic impact analysis within 60 days and must include most of the same information and analysis that is required for an economic impact analysis prepared by an agency. If an independent economic impact analysis is requested for a proposed rule, an agency may not submit the proposed rule to the governor for final approval until the agency receives the completed independent economic impact analysis. The substitute amendment specifies circumstances under which either the agency or the legislature must pay the costs of the independent economic impact analysis or, for certain independent economic impact analyses, requires the Joint Committee on Finance to specify the funding source for the costs.

In addition, the substitute amendment allows JCRAR, when a proposed rule is before JCRAR for final review, to request an independent economic impact analysis for the proposed rule. If JCRAR requests an independent economic impact analysis at that time, the analysis must similarly be completed within 60 days and JCRAR's review period is extended to the tenth working day following receipt by JCRAR of the completed analysis.

Indefinite objections to proposed rules

Under current law, when a proposed administrative rule is in final draft form following its approval by the governor, the agency proposing the rule must submit the rule for review by one standing committee in each house of the legislature. A standing committee to which a rule is referred may take certain actions with respect to the proposed rule, including objecting to the proposed rule. Following review by the standing committees, the rule is then referred to JCRAR, which may also object to the proposed rule, regardless of any standing committee objection. Subject to an exception for certain rules promulgated by the Department of Safety and Professional Services, if JCRAR objects to a proposed rule, JCRAR must introduce bills to support the objection in each house of the legislature. The objection, however, is temporary in that unless one of those bills is enacted, the agency may promulgate the proposed rule or part of the proposed rule that was objected to. A temporary objection may be made only for one of several specified reasons.

Under the exception, however, an objection to a DSPS rule that would increase the cost of home construction or remodeling by more than $1,000 is indefinite in that if JCRAR objects to the proposed rule, DSPS may not promulgate the proposed rule unless a bill that authorizes its promulgation is enacted. Such a bill may be introduced by any member of the legislature.

This substitute amendment expands the exception described above so that JCRAR may make an indefinite objection to any proposed rule, thereby requiring the enactment of a bill in order for the proposed rule to be promulgated. The substitute amendment allows an indefinite objection to be made for any of the reasons specified for temporary objections. Under the substitute amendment, therefore, JCRAR may make either a temporary or an indefinite objection to a proposed rule and must, when making an objection to a proposed rule, specify which type of objection it is making.

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

SB15-SSA1,1 Section 1. 35.93 (2) (b) 3. bm. of the statutes is created to read:

SB15-SSA1,5,3 35.93 (2) (b) 3. bm. Notices of preliminary public hearings and comment periods under s. 227.136.

SB15-SSA1,2 Section 2. 227.12 (4) of the statutes is amended to read:

SB15-SSA1,6,2 227.12 (4) If a petition to the department of revenue establishes that the department has established a standard by which it is construing a state tax statute, but has not promulgated a rule to adopt the standard or published the standard in a manner that is available to the public, the department shall, as provided under s. 227.135, submit a statement of the scope of the proposed rule to the governor department of administration no later than 90 days after receiving the petition. No later than 270 days after the statement is approved by the governor, the department shall submit the proposed rule in final draft form to the governor for the governor's approval, as provided under s. 227.185. At the department's request, the governor or the department of administration may, at any time prior to the expiration of any deadline specified in this subsection, extend the time for submitting the statement or proposed rule in draft form for any period not to exceed 60 days. The governor or the department of administration may grant more than one extension under this subsection, but the total period for all such extensions may not exceed 120 days. The rule need not adhere to the standard established by the department, but shall address the same circumstances as the standard addresses. If the department fails to comply with this subsection, any of the petitioners may commence an action in circuit court to compel the department's compliance. If an action is commenced under this subsection, the court may compel the department to provide information to the court related to the degree to which the department is enforcing the standard, except that the information provided by the department shall not disclose the identity of any person who is not a party to the action.

SB15-SSA1,3 Section 3. 227.135 (2) of the statutes is amended to read:

SB15-SSA1,6,23 227.135 (2) 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 the proposed rule for approval department of administration, which shall make a determination as to whether the agency has the explicit authority to promulgate the rule as proposed in the statement of scope and shall report the statement of scope and its determination to the governor who, in his or her discretion, may approve or reject the statement of scope. 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 agency shall also present the statement to the individual or body with policy-making powers over the subject matter of the proposed rule for approval. The individual or body with policy-making powers may not approve the statement until at least 10 days after publication of the statement under sub. (3) and, if a preliminary public hearing and comment period are held by the agency under s. 227.136, until the individual or body has received and reviewed any public comments and feedback received from the agency under s. 227.136 (5). 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 approve the statement.

SB15-SSA1,4 Section 4. 227.135 (3) of the statutes is amended to read:

SB15-SSA1,7,13 227.135 (3) If the governor approves a statement of the scope of a proposed rule under sub. (2), the agency shall send an electronic copy of the statement to the legislative reference bureau, in a format approved by 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 and to the chief clerks of each house of the legislature, who shall distribute the statement to the cochairpersons of the joint committee for review of administrative rules. The agency shall include with any statement of scope sent to the legislative reference bureau the date of the governor's approval of the statement of scope. The legislative reference bureau shall assign a discrete identifying number to each statement of scope and shall include that number and the date of the governor's approval in the publication of the statement of scope in the register.

SB15-SSA1,5 Section 5. 227.136 of the statutes is created to read:

SB15-SSA1,7,20 227.136 Preliminary public hearing and comment period. (1) Within 10 days after publication of a statement of the scope of a proposed rule under s. 227.135 (3), either cochairperson of the joint committee for the review of administrative rules may submit a written directive to the agency that prepared the statement for the agency to hold a preliminary public hearing and comment period on the statement of scope as provided in this section.

SB15-SSA1,8,5 (2) If the agency is directed to hold a preliminary public hearing and comment period on a statement of scope as provided in sub. (1) or if the agency otherwise opts to do so on its own initiative, the agency shall submit to the legislative reference bureau, in a format approved by the legislative reference bureau, a notice of a preliminary public hearing and comment period to allow for public comment and feedback on the statement of scope. The agency may also take any other action it considers necessary to provide notice of the preliminary public hearing and comment period to other interested persons. The notice shall be approved by the individual or body with policy-making powers over the subject matter of the proposed rule and shall include all of the following:

SB15-SSA1,8,6 (a) A statement of the date, time, and place of the preliminary public hearing.

SB15-SSA1,8,8 (b) The place where comments on the statement of scope should be submitted and the deadline for submitting those comments.

SB15-SSA1,8,11 (3) The agency shall hold the preliminary public hearing and comment period in accordance with the notice required under sub. (2), but may not hold the hearing sooner than the 3rd day after publication of the notice in the register.

SB15-SSA1,8,13 (4) The agency shall conduct a hearing under this section in accordance with s. 227.18.

SB15-SSA1,8,17 (5) The agency shall report all public comments and feedback on the statement of scope of the proposed rule that the agency receives at the preliminary public hearing and comment period to the individual or body with policy-making powers over the subject matter of the proposed rule.

SB15-SSA1,8,20 (6) Failure of any person to receive notice of a preliminary public hearing as provided in this section is not grounds for invalidating any resulting rule if notice of the hearing was published in the register in accordance with s. 35.93 (2) (b) 3. bm.

SB15-SSA1,6 Section 6 . 227.137 (3) (intro.) and (a) of the statutes are amended to read:

SB15-SSA1,9,8 227.137 (3) (intro.) An economic impact 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 The agency or person preparing the analysis, the agency shall solicit information and advice from businesses, associations representing businesses, local governmental units, and individuals that may be affected by the proposed rule. The agency or person shall prepare the economic impact analysis in coordination with local governmental units that may be affected by the proposed rule. The agency or person may also request information that is reasonably necessary for the preparation of an economic impact analysis from other businesses, associations, local governmental units, and individuals and from other agencies. The economic impact analysis shall include all of the following:

SB15-SSA1,9,15 (a) An analysis and quantification of the policy problem 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. If the approach chosen by the agency to address that policy problem is different from those approaches, an economic impact analysis prepared by an agency shall include a statement as to why the agency chose a different approach.

SB15-SSA1,7 Section 7. 227.137 (3) (b) of the statutes is renumbered 227.137 (3) (b) (intro.) and amended to read:

SB15-SSA1,9,22 227.137 (3) (b) (intro.) An analysis and detailed quantification of the economic impact of the proposed rule, including the implementation and compliance costs that are reasonably expected to be incurred by or passed along to the businesses, local governmental units, and individuals that may be affected by the proposed rule., specifically including all of the following:

SB15-SSA1,8 Section 8. 227.137 (3) (b) 1. and 2. of the statutes are created to read:

SB15-SSA1,9,25 227.137 (3) (b) 1. An estimate of the total implementation and compliance costs that are reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals as a result of the proposed rule, expressed as a single dollar figure. With respect to an independent economic impact analysis prepared under sub. (4m) or s. 227.19 (5) (b) 3., the person preparing the analysis shall provide a detailed explanation of any variance from the agency's estimate under this subdivision.

SB15-SSA1,10,10 2. A determination, for purposes of the requirement under s. 227.139, as to whether $10,000,000 or more in implementation and compliance costs are reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals over any 2-year period as a result of the proposed rule.

SB15-SSA1,9 Section 9 . 227.137 (4m) of the statutes is created to read:

SB15-SSA1,10,16 227.137 (4m) (a) After an agency submits an economic impact analysis for a proposed rule to the legislature under sub. (4), but before the agency submits the proposed rule for approval under s. 227.185, either cochairperson of the joint committee for review of administrative rules may request an independent economic impact analysis to be prepared for the proposed rule.

SB15-SSA1,10,20 (b) 1. If a cochairperson of the joint committee for review of administrative rules requests an independent economic impact analysis under par. (a), the cochairperson shall notify the agency proposing the proposed rule and shall contract with a person that is not an agency to prepare the independent economic impact analysis.

SB15-SSA1,10,22 2. Costs of completing an independent economic impact analysis shall be paid as follows:

SB15-SSA1,11,3 a. If the estimate in the independent economic impact analysis of total implementation and compliance costs under sub. (3) (b) 1. varies from the agency's estimate by 15 percent or more or varies from the agency's determination that there will be no implementation or compliance costs, the cochairperson shall assess the agency that is proposing the proposed rule for the costs of completing the independent economic impact analysis.

SB15-SSA1,11,10 b. If the estimate in the independent economic impact analysis of total implementation and compliance costs under sub. (3) (b) 1. does not vary from the agency's estimate by 15 percent or more or is in accord with the agency's determination that there will be no implementation and compliance costs, the costs of completing the independent economic impact analysis shall be paid from the appropriation account that corresponds to his or her house of the legislature under s. 20.765 (1) (a) or (b).

SB15-SSA1,11,21 c. Notwithstanding subd. 2. a. and b., if the maximum potential obligation under the contract for completing the independent economic impact analysis exceeds $50,000, the cochairperson of the joint committee for review of administrative rules who is requesting the independent economic impact analysis shall submit the proposed contract to the joint committee on finance for the purpose of determining the funding source for the costs of completing the independent economic impact analysis, and the costs of completing the independent economic impact analysis shall be paid as provided by the joint committee on finance. If the joint committee on finance does not act to determine the funding source within 90 days, the costs of completing the independent economic impact analysis shall be paid as provided in subd. 2. a. and b.

SB15-SSA1,11,23 (c) A person preparing an independent economic impact analysis under par. (b) shall do all of the following:

SB15-SSA1,11,24 1. Include in the analysis the information that is required under sub. (3).

SB15-SSA1,12,6 2. Upon completion of the analysis, submit the analysis to the agency, to the department of administration, to the governor, and to the chief clerks of each house of the legislature, who shall distribute the analysis to the presiding officers of their respective houses, to the chairpersons of the appropriate standing committees of their respective houses, as designated by those presiding officers, and to the cochairpersons of the joint committee for review of administrative rules.

SB15-SSA1,12,8 3. Complete the independent economic impact analysis within 60 days after contracting to prepare the analysis.