¶ 13. When ch. 221, sec. 545, Laws of 1979 was enacted, the only possible source of authority to justify the Legislature’s view that all four principal local units of government—cities, villages, towns, and counties—may require local licensure of dwelling contractors was Wis. Stat. § 101.65(1) (1979). That subsection authorized all four local units of government to “[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances, provided such ordinances meet the requirements of the one- and 2-family dwelling code . . . .” In Town of Clearfield v. Cushman, 150 Wis. 2d 10, 2021, 440 N.W.2d 777 (1989), the court held that “[f]rom its statutorily assigned responsibilities, the Town has implicit power to require building permits.” The court reasoned that “‘[W]hen specific duties are intrusted to [towns] and made obligatory on their part, it must be assumed that it was the legislative intent to give them ample authority to carry out those duties.’” Cushman, 150 Wis. 2d at 21. In light of the enactment of the last sentence of Wis. Stat. § 101.63(2), the Legislature must have been of the view that the language in Wis. Stat. § 101.65(1) (1979) authorizing cities, villages, towns, and counties to “[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances . . .” constituted an implied legislative grant of authority to require local licensure of dwelling contractors. ¶ 14. Although the Legislature appears to have implicitly acknowledged the ability of municipalities to license dwelling contractors and prohibited the Department of Commerce from promulgating a rule that prohibits all licensure, that does not make every local licensure scheme valid. Indeed, as explained above, the implied source of statutory authority for cities, villages, towns, and counties to license dwelling contractors arose from their statutory power to “[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances . . . .” Wis. Stat. § 101.65(1)(a). But this exercise of jurisdiction is expressly limited to “such ordinances meet the requirements of the one- and 2-family dwelling code adopted in accordance with this subchapter.” Id. As shown below, licensure requirements that impose financial responsibility, education, and examination requirements beyond those required by state law are not permitted because they would not meet the requirements of the Dwelling Code.
¶ 15. After the enactment of ch. 221, sec. 545, Laws of 1979, the Legislature amended the Dwelling Code to provide for the certification of dwelling contractors. In order to obtain a building permit, a person who does not own and live in (or intend to live in) a dwelling must annually obtain from the Department of Commerce a certificate of financial responsibility. Wis. Stat. § 101.654. In order to obtain a certificate of financial responsibility from the Department of Commerce to perform work estimated to cost $25,000 or more, a dwelling contractor must have obtained either a surety bond of not less than $25,000 or a general liability insurance policy of at least $250,000 per occurrence, see Wis. Stat. § 101.654(2)(a) and (2m); must have obtained any worker’s compensation insurance that is required under Wis. Stat. § 102.28(2)(a) and (b), see Wis. Stat. § 101.654(2)(b); and must have demonstrated that all required state and federal unemployment taxes were paid, see Wis. Stat. § 101.654(2)(c). The Department of Commerce may deny, suspend, or revoke the certification of a dwelling contractor who fails to comply with state financial responsibility requirements. See Wis. Admin. Code § Comm 5.10(1)(a). While the statute uses the term “certificate,” because a person (other than a home owner) is required to hold the certificate to obtain a building permit, the state certificate is effectively a license. ¶ 16. In 2006, the Legislature added education and examination requirements to the state’s certification requirements necessary to obtain a building permit. 2005 Wisconsin Act 200, secs. 11-13; Wis. Stat. § 101.654 (2005). The Dwelling Code now requires that persons seeking to obtain a building permit, with certain exceptions, must complete continuing education requirements and provide proof that those requirements have been completed. Wis. Stat. § 101.654(1)(a). As amended by 2007 Wisconsin Act 14, these education requirements now include 12 hours of education relevant to the professional area of expertise every 2 years and also attendance at one or more professional meetings or educational seminars designed for both building contractors and building inspectors. Wis. Stat. § 101.654(1m)(b). Persons newly wishing to be certified—i.e., those who did not hold a certificate of financial responsibility on April 11, 2006 (the day after the date 2005 Wisconsin Act 200 was published)—must also successfully complete an examination developed by the Department of Commerce. Wis. Stat. § 101.654(1m)(b)3. ¶ 17. In 2005 Wisconsin Act 200, the Legislature also created the “contractor certification council,” which replaced the “contractor financial responsibility council” and expanded on its powers. 2005 Wisconsin Act 200, sec. 3. The new council is comprised of members appointed by the Secretary of Commerce who are involved in or have demonstrated an interest in continuing education for contractors. Wis. Stat. § 15.157(5). It is charged with recommending to the Department of Commerce rules for certifying financial responsibility of contractors and recommending to the Department of Commerce for its approval courses that meet continuing education requirements. Wis. Stat § 101.625(1), (2). In addition, the contractor certification council is required to advise the Department of Commerce on the development of course examination for those individuals who are required to pass examinations. Wis. Stat. § 101.625(3). ¶ 18. The Department of Commerce has promulgated rules to administer the continuing education requirements in the Dwelling Code. The rules create a “dwelling contractor qualifier certification” that is issued by the Department of Commerce, which serves as proof required under Wis. Stat. § 101.654(1)(a) that a person has completed his or her education requirements. Wis. Admin. Code § Comm 5.315(1). The rules also require that to obtain the “dwelling contractor qualifier certification,” an applicant must, among other requirements, show that he or she completed 12 hours of an approved education course, which must include instruction and an examination concerning construction laws, construction codes, and construction business practices. Wis. Admin. Code § Comm 5.315(2)(c)1.a.-c. A dwelling contractor may renew a certification by obtaining additional hours of approved continuing education during the applicable 2-year time period. Wis. Admin. Code § Comm 5.315(3).
¶ 19. The Department of Commerce may deny, suspend, or revoke the certification of a dwelling contractor qualifier who fails to comply with state continuing education requirements. See Wis. Stat. § 101.654(5)(a); Wis. Admin. Code § Comm 5.10(1)(a). ¶ 20. A municipal ordinance is preempted if: “(1) the legislature has expressly withdrawn the power of municipalities to act; (2) it logically conflicts with state legislation; (3) it defeats the purpose of state legislation; or (4) it violates the spirit of state legislation.” DeRosso Landfill Co. v. City of Oak Creek, 200 Wis. 2d 642, 651-52, 547 N.W.2d 770 (1996) (footnotes omitted). ¶ 21. The Legislature has not expressly withdrawn the authority of municipalities to regulate the local licensure of dwelling contractors. Wisconsin Stat. § 101.65(1) continues to authorize municipalities to “[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances . . . .” and Wis. Stat. § 101.63(2) also continues to provide that the Department of Commerce “may not adopt any rule which prohibits any city, village, town or county from licensing persons for performing work on a dwelling in which the licensed person has no legal or equitable interest.” ¶ 22. A municipal licensure provision may nevertheless logically conflict with, defeat the purpose of, or violate the spirit of state legislation. The validity of local licensure requirements must therefore be decided by determining whether the individual local licensure requirement can reasonably coexist with the state requirements with which dwelling contractors and dwelling contractor qualifiers must comply.
¶ 23. With respect to any municipal license requirements that impose additional financial responsibility requirements or educational qualifications beyond those required by state law on those seeking a building permit involving construction of dwellings covered by the Dwelling Code, it is my opinion that such municipal ordinances logically conflict with state law and also frustrate its purpose and spirit, and are therefore preempted.
¶ 24. The Dwelling Code is not designed to set minimal requirements that can be exceeded by local ordinance. Instead, the stated purpose of the Dwelling Code is to promote uniformity with respect to the construction and inspection of one- and 2-family dwellings. Wis. Stat. § 101.60. As demonstrated above, the Legislature’s implicit recognition in 1979 that municipalities have licensure authority stems from the Dwelling Code’s grant of authority to the municipalities to exercise jurisdiction “over the construction and inspection of new dwellings[.]” Wis. Stat. § 101.65(1)(a). But that exercise must “meet the requirements of the one- and 2-family dwelling code[.]” Id.
¶ 25. The Dwelling Code expressly creates state requirements relating to the financial responsibility and education of those applying for building permits. Wis. Stat. § 101.654. The Legislature’s education requirements addressed both those who were qualified to obtain building permits when education requirements were enacted—continuing education but not examination—as well as those wishing to be newly qualified to obtain a permit—education and examination. Wis. Stat. § 101.654(c); Wis. Stat. § 101.654(1m)(b)3. Thus, the state education requirements speak to not only continuing education, but also the education requirements for those who wish to enter the field. Id.; compare also Wis. Stat. § 101.625(2) to Wis. Stat. § 101.625(3) (distinguishing dwelling contractor certification council’s duties to recommend to the Department of Commerce those courses appropriate for continuing education and those examination requirements that would be required for new dwelling contractors). In sum, for a municipality’s jurisdiction to “meet the requirements” of the Dwelling Code, it may not impose additional certification or licensure requirements with respect to the financial capability, education, and examination requirements of those seeking to obtain building permits. To do so would logically conflict with the Dwelling Code, defeat its purpose, and violate its spirit.
¶ 26. The fact that Wisconsin law restricts the ability of the Department of Commerce to prohibit local licensure by rule does not undermine my conclusion. Wisconsin Stat. § 101.63(2) limits only the authority of the Department of Commerce to adopt certain rules, it does not (and cannot) prevent subsequently enacted state law from doing so. The acts creating the state’s certification criteria for dwelling contractors with respect to financial responsibility, education, and examination requirements were passed after the Legislature enacted Wis. Stat. § 101.63(2). It is these acts, not an agency rule, that give rise to preemption in the context addressed in this opinion.
CONCLUSION
¶ 27. A particular municipal licensure requirement may be preempted if that requirement logically conflicts with, defeats the purpose of, or violates the spirit of state contractor financial responsibility and continuing education requirements. In my opinion, ordinances requiring local licensure are preempted if they impose on persons seeking a building permit for one- or 2-family dwellings greater financial responsibility, education, or examination requirements than required by state law.
Sincerely,
J.B. VAN HOLLEN
Attorney General
JBVH:KMS:cla