Progressives threaten the heart of the REINS Act

News analysis

In 2017, conservatives across the state cheered the passage of the so-called REINS Act (Regulations from the Executive in Need of Scrutiny), a law that made administrative rule-making much harder and gave the legislature active oversight of executive branch rule promulgation.

Now that new-found oversight power is teetering on the edge, as the state Supreme Court, led by a 4-3 progressive majority, has agreed to take up an original action challenging the law’s constitutionality.

The REINS Act included several important reforms of the rule-making process. One provision requires state agencies to perform fiscal impact statements for each proposed rule and, if the implementation and compliance costs exceed $10 million over two years, the agency must stop promulgation of the rule until it modifies the rule to meet the threshold or until the legislature passes and the governor signs a bill authorizing promulgation to move forward.

Most recently, the DNR announced it could not move forward with PFAS rules because of the dollar threshold, and, over time, the public and the media have considered the $10-million line in the sand to be the most important component of the law.

However, what has proved to be more significant in thwarting rule promulgation is a provision allowing the legislative joint rules review committee (JCRAR) to indefinitely object to any rule, whether it costs $10 million or not. That sweeps major policy rules into REINS jurisdiction, in addition to more industry-oriented regulations that more often impact business costs. 

When the JCRAR issues an indefinite objection, the rule may not be promulgated or otherwise take effect unless a bill authorizing such promulgation is enacted into law. That creates an active legislative approval process for any rule the legislature wishes to apply it to, and it’s a far cry from the passive review process the legislature operated under prior to the REINS Act enactment. 

In those days, the JCRAR could object to a rule, but, in that case, the rule was suspended, and the Legislature had to introduce legislation that would prohibit the rule from promulgation. If it did not do so, or if the bill wasn’t enacted, the suspension lapsed at the end of the legislative session and the agency could promulgate the rule. 

That passive process gave state agencies the upper hand in rule-making, especially with a Democratic governor, who would likely veto any bill passed to kill an executive branch rule. 

The flip from passive review to the need for active approval created a new day in state rulemaking. Among other actions, using the indefinite objection provision, the JCRAR blocked a revision of the state’s commercial building code, and it also flexed its muscle when it threw out a rule by the Marriage and Family Therapy, Professional Counseling, and Social Work Examining Board that banned conversion therapy, that is, counseling to change a person’s sexual orientation or gender identity.

Night follows day

Now, that legislative oversight is being seriously challenged. In October, in an unsigned order, state Supreme Court justices said they would take up a challenge to the indefinite objection, which was raised by Gov. Tony Evers in a lawsuit filed by attorney general Josh Kaul against the state legislature in 2023.

That lawsuit challenged three aspects of legislative oversight of executive branch departments. The first was the Joint Finance Committee’s ability to overturn DNR spending decisions for the state’s Stewardship program. In July, the court, after granting original action, ruled in favor of Evers on that question, saying the JFC’s power was unconstitutional. 

At the time, the court held the two other issues in abeyance.

Then, in October, the justices dismissed one of the two remaining issues — an objection to the legislature’s employment relations committee’s delay in approving pay raises for UW employees —but agreed to take up the third outstanding matter, the indefinite objection.

In the petition for original action, the Evers administration pointed out that, under various statutory provisions, the Department of Safety and Professional Services (DSPS)] is charged with promulgating rules relating to commercial building safety, accessibility, and energy efficiency, while the Marriage and Family Therapy, Professional Counseling, and Social Work Examining Board is responsible for developing ethics standards for social workers, marriage and family therapists, and professional counselors. 

“Courts have broadly recognized that blocking executive branch agencies’ rules violates bicameralism and presentment procedures and infringes on executive and judicial authority,” the petition stated. “[State statutes] authorize the Joint Committee for Review of Administrative Rules, a 10-member legislative committee, to veto administrative rules.”

And so, the Evers administration asked: Do those veto provisions violate the separation of powers by allowing the committee to block executive agency rulemaking or, at minimum, DSPS’s and the Board’s rulemaking authority over commercial building standards and ethics standards for social workers, marriage and family therapists, and professional counselors?

The legislature’s position

In its order, the Supreme Court gave the parties 30 days to file a brief, which has expired, and now response briefs are being prepared. As of this writing, the legislature has not yet filed its brief; however, its arguments can be anticipated by its original brief in the lawsuit, filed in October 2023, in which it addressed all three issues.

For one thing, the brief by attorney Misha Tseytlin argued, the Evers administration was seeking to transform how state government had worked for decades.

“Wisconsin courts have long understood this state’s separation of powers to not only allow but also require legislative oversight of agency actions,” the brief stated. “Indeed, for over 40 years, beginning with the Court of Appeals’ decision in Ahern and continuing with this court’s decision in Martinez, Wisconsin’s jurisprudence has acknowledged a system of shared powers between the branches, including legislative authority to review and oversee agency actions.”

In Ahern, Tseytlin explained, the constitutionality of the State Building Commission — a legislative committee comprising “three assemblymen, three senators, the governor, and a citizen appointee of the governor” — was challenged “as violating the separation of powers under the Wisconsin Constitution.”

The Building Commission’s authority to select sites for public buildings, to actually construct the buildings, to lease the buildings, and to waive competitive bidding requirements on construction projects were all “executive powers” that only the executive branch could exercise, Tseytlin summarized the challengers’ arguments. 

But, she continued, the Court of Appeals rejected what Tseytlin labeled a “rigid understanding” of Wisconsin’s doctrine of implied separation of powers. In Wisconsin, the court reasoned, the state constitution envisioned a “pragmatic approach” that “permits a blending or sharing of powers among the three branches of government,” only “subject to the limitation against ‘unchecked power.’”

“Because the governor could also exercise a veto to stop a construction project the legislative members of the Building Commission wanted to approve, the Court of Appeals held that this statutory framework was a ‘cooperative venture between the two governmental branches’ that did not violate the separation of powers,” she wrote.

In Martinez, Tseytlin continued, JCRAR amended a Department of Industry, Labor and Human Relations (DILHR) rule by shortening a probationary employment period for a new category of employees.

“DILHR advised employers to ignore JCRAR’s changes and stated that DILHR would not take action against employers who complied with the initial, now-suspended rule and, after being sued by migrant workers affected by the rule, argued that the statute permitting JCRAR to review agency promulgations violated bicameralism, the presentment clause, and separation of powers,” she wrote.

The Supreme Court saw it otherwise, Tseytlin wrote.

“[T]his Court held that JCRAR’s authority to suspend a promulgated rule for specific reasons was constitutional because ‘[i]t is appropriate for the legislature to delegate rule-making authority to an agency while retaining the right to review any rules promulgated under the delegated power,’” she wrote. “Indeed, this court held that ‘it is a legitimate practice for the legislature, through JCRAR, to retain the ability to suspend a rule which is promulgated in derogation of the delegated authority.’”

What’s more, Tseytlin wrote, the court recently upheld Martinez’s holding on that point, unanimously reaffirming the conclusion that the Legislature maintains the constitutional authority to review agency rulemaking and suspend rules after the agency promulgates them.

The bottom line was, the attorney asserted, “the Legislature, governors, and the people have all relied upon Ahern’s and Martinez’s understanding of the separation of powers and the authority of legislative committees for decades to effectively govern in the state, developing and expanding numerous legislative committees to serve the state productively.”

Legislative committees

Tseytlin’s brief reviewed the standing authority of the JFC and Joint Committee on Employment Relations, but for purposes of the indefinite objections it also addressed the authority of the JCRAR, which was the committee involved in Martinez and is a bipartisan statutory standing committee of five senators and five representatives.

“JCRAR oversees the administrative rulemaking process through a variety of mechanisms, including directing an agency to hold a preliminary hearing on a proposed rule within 10 days of the publication of a scope statement, requesting an independent economic impact analysis of a proposed or existing rule, objecting to or requesting modification of a proposed rule, and suspending an existing rule,” she wrote.

In general, Tseytlin wrote, proposed agency rules are referred to JCRAR for a 30-day review period, during which JCRAR may request modifications to a rule and may object to all or part of a proposed rule for certain statutorily defined reasons.

“An objection bars the relevant agency from promulgating the rule until the Legislature either fails to enact a bill supporting the objection, or enacts a bill authorizing promulgation,” she wrote. “JCRAR may also suspend an existing agency rule. A suspension requires JCRAR to introduce a bill to repeal the suspended rule, which both houses of the Legislature must enact, lest the rule remain in effect.”

The original brief addressed questions beyond the merits of the challenge, specifically, whether there were sufficient grounds for an original action bypassing lower courts, but it also addressed the legislature’s belief that petitioners’ claims risked creating serious separation-of-powers concerns themselves.

Indeed, Tseytlin wrote, Wisconsin’s “separation of powers doctrine is implicitly created by the constitution,” which, as Martinez states, vests “‘[t]he legislative power . . . in a senate and assembly’; ‘[t]he executive power . . . in a governor’; and ‘[t]he judicial power . . . in a unified court system.’”

“The courts have long viewed ‘[t]he constitutional powers of each branch of government’ as falling into one of ‘two categories: exclusive powers and shared powers,’” she wrote. “In the realm of core powers, ‘the legislature is tasked with the enactment of laws,’ while the governor is instructed to ‘take care that the laws be faithfully executed.’ Because ‘the constitution says the legislature is vested with legislative power, the inference is that core legislative power may not be placed elsewhere, by the legislature or otherwise.’”

Thus, Tseytlin wrote, while the Legislature’s core lawmaking power cannot be delegated to any other branch or entity, the Legislature may delegate “to administrative agencies . . . the power to promulgate rules within the boundaries of enabling statutes passed by the legislature.” 

In sum, Tseytlin argued, Ahern and Martinez thus held that the separation of powers does not require rigid boundaries between the branches and that the Legislature can maintain some authority to review agency actions. 

“Unlike under certain other States’ constitutions, the Wisconsin Constitution ‘permits a blending or sharing of powers among the three branches of government,’ ‘subject to the limitation against unchecked power,’” she wrote.

And, Tseytlin wrote, that means the Legislature and Governor can engage in “cooperative venture[s] between the two governmental branches,” even if doing so allows the Legislature to, at times, “exercise executive powers to the exclusion of the executive branch.” 

“To that end, Wisconsin’s separation of powers operates to allow ‘the legislature to delegate rule-making authority to an agency while retaining the right to review any rules promulgated under the delegated power,’ and so ‘it is a legitimate practice for the legislature, through JCRAR, to retain the ability to suspend a rule which is promulgated in derogation of the delegated authority,’” she wrote.

Now hold on

In an opening brief by attorney general Josh Kaul on behalf of the Evers administration, filed after the court said it would take the petition on indefinite objections, the Evers administration is arguing that the case involves another effort by the legislature to control the executive branch through legislative committee vetoes. 

“Here, the Legislature has empowered the Joint Committee for Review of Administrative Rules (JCRAR) to veto administrative rules proposed and promulgated by executive agencies,” Kaul wrote in the brief. “Just as in Evers I, that legislative veto violates the Wisconsin Constitution.”

Kaul observed that JCRAR blocked the update of commercial building standards, which would last forever unless a bill was enacted allowing the rule, and he observed that the conversion ban block was deemed a temporary veto but ended up lasting 3.5 years.

Those attempts to veto such administrative rules were facially unconstitutional, Kaul argued, not least because they violate constitutional bicameralism and presentment requirements. 

“When the legislative branch alters the legal rights and duties of others, it must pass a bill through both houses and present it to the governor,” he wrote. “JCRAR’s vetoes have that exact effect, since they alter the legal rights and duties of those outside the legislative branch. Even Martinez v. DILHR recognized as much. JCRAR’s ‘indefinite’ vetoes, which are never accompanied by constitutional lawmaking procedures, are unconstitutional even under Martinez.”

As to JCRAR’s ‘temporary’ vetoes, the brief argues, “Martinez erred by holding that such vetoes are constitutionally permissible, and its unsound analysis, which excused departures from lawmaking procedures, should be overruled.”

Second, Kaul argued, JCRAR’s vetoes intrude on executive authority.

“When the Legislature enacts a statute that grants rulemaking authority to an executive agency, the agency exercises core executive power in carrying out that statute,” he wrote. “JCRAR’s ability to block this core law-execution power is invalid.”

Even if rulemaking were instead viewed as a shared power, Kaul continued, the legislature still cannot act through a committee outside its lawmaking function, and it cannot block the executive branch from acting.

“That is exactly what JCRAR’s vetoes do,” he asserted. “If this Court declines to facially invalidate JCRAR’s rulemaking vetoes, it should still hold that they were unconstitutional as applied to the rules at issue here. Under any test, blocking the building code rule indefinitely and the conversion therapy rule for three-and-a-half years goes too far.”

Put simply, the attorney general argues that JCRAR’s indefinite objections trigger bicameralism and presentment—that is a bill to sustain the objection must be passed by both the Assembly and Senate and presented to the governor—because the objection changes the legal rights and duties of the executive officials with statutory rulemaking authority.

“In other words, when JCRAR vetoes a proposed rule, it effectively amends the statute under which the executive agency proposed that rule—it ‘withdraws executive power previously conferred’ (or ‘prohibits executive action which is currently legitimate’), …” he wrote. “The agency had statutory authority to promulgate the rule; after JCRAR’s veto, it does not.”

The conversion therapy rule illustrates this point, Kaul argued.

“Under [state law], the Legislature required the Board to ‘promulgate rules establishing a code of ethics to govern the professional conduct of certificate holders and licensees,’” he wrote. “By proposing the conversion therapy rule, the Board exercised that statutory authority. By objecting to that rule, JCRAR effectively withdrew a share of the statutory authority the Legislature had granted to the Board. It is as if JCRAR amended [the law] to allow the Board to ‘promulgate rules establishing a code of ethics to govern the professional conduct of certificate holders and licensees,’ but not one barring conversion therapy.”

JCRAR does not have that power, only the full Legislature does, Kaul argues. 

And, Kaul argues, JCRAR’s vetoes are invalid for an independent reason: they unconstitutionally intrude on executive power. 

“That is true whether the executive function of promulgating rules is seen as a core or a shared power,” he wrote. “Either way, JCRAR cannot block executive agencies from executing statutes the Legislature has enacted.”

The bottom line is, Kaul argues, executing statutes that authorize agencies to promulgate rules is a core executive function, and so all JCRAR’s rulemaking vetoes are facially invalid.

The executive branch’s core power is to “take care that the laws be faithfully executed,” Kaul wrote, and those core powers “are not for sharing,” and “any exercise” of one branch’s core power by another “is unconstitutional.” 

“When an agency promulgates administrative rules pursuant to statutory authorization, that is an aspect of the core executive power to exercise discretion in executing the law,” he wrote. “ … Virtually all laws require discretion and interpretation in their enforcement. When the executive branch exercises that discretion by interpreting and applying the law in individual cases, there is no doubt that is core executive power.”

The answer should be no different when the executive branch regularizes its discretion and enforcement decisions through an administrative rule, Kaul concluded.

“Of course, the executive branch’s power to make rules is limited by the Legislature’s grant of statutory power: the Legislature can, by statute, determine the kinds of rules the executive can enact,” he wrote. “But once an agency has such statutory power, it is its core executive function to execute that statute.”

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.