In response to an emergency order that extended coronavirus lockdowns, issued by the DHS Secretary Designee Andrea Palm, the Wisconsin Legislature filed suit arguing DHS lack authority and that emergency rulemaking procedures were not followed. We filed an amicus brief on behalf of Wisconsin Manufactures & Commerce and Wisconsin Dairy Alliance.
On May 13, 2020, the Wisconsin Supreme Court ruled in favor of the legislature and held that DHS’s emergency orders needed to go through emergency rulemaking. The court also held that even assuming that rulemaking under the Wisconsin Administrative Procedures Act was not required, DHS exceeded the explicit boundaries of its enabling legislation with the orders.
Why This Case Is Important
- Agencies Have Only that Authority Explicitly Delegated to Them by the Legislature. The Wisconsin Legislature v. Palm decision fundamentally altered the scope of government power in Wisconsin with the supreme court introducing for the first time the 2011 Wis. Act 21 requirement that agencies operate within the boundaries of explicit legislative delegations set forth in their enabling legislation.
- Clocking in at 161 pages, with 33,000 words arising from seven opinions, just one word makes this a watershed administrative law decision. That word: Explicit.
- Agencies Must Go Through Rulemaking — Even In Times of Emergency. Only statutory rulemaking procedures provide due process, political accountability, and adequate judicial oversight for agency action. But agencies increasingly avoid these requirements by regulating through un-promulgated guidance, bulletins, or other unlawful edicts.
- The primary focus of our brief was DHS’s attempt to regulate Wisconsin businesses and citizens through regulatory fiat rather than through formal rulemaking.
- The court agreed with us and found that the DHS order met the definition of a rule, and thus, the “the procedural requirements of [Chapter 227] must be followed because they safeguard all people.”
- On July 30, 2020, Gov. Evers issued a new coronavirus emergency declaration, Executive Order #82, accompanied by Emergency Order #1, requiring masks to be worn indoors starting on August 1.
- See GLLF Perspective where we opine that Evers’ recent order is not likely to be challenged; or if so, not successfully.
The Wisconsin Legislature filed a declaratory judgment action against the Department of Health Services (DHS) for not promulgating the COVID-19 related emergency orders as rules and for exceeding the boundaries of DHS’s explicit authority.
In early 2020, the COVID-19 pandemic caused states all over the country to issue stay-at-home orders. Wisconsin Governor Tony Evers followed suit by declaring a state of emergency and issuing his own “Safer at Home” order.
As that original declaration came close to expiring (the authorizing statute allows for 60 days unless extended by the legislature), DHS issued Emergency Order (EO) #28 to unilaterally extend the stay-at-home order for another month. Days after, Palm issued another order, outlining the plan for re-opening the state, which allowed for the possibility of an indefinite extension of EO #28.
EO #28 imposed significant statewide restrictions on the healthy and sick alike, prohibited non-essential travel, shut down whole industry sectors, and “quarantined” healthy individuals in their homes. Businesses considered “essential” by DHS could remain open, while “nonessential” business were shut down. Among other points, we argued these distinctions were arbitrary and capricious.
Emergency Rulemaking Holding
A rule is in essence a law created by a state agency. The rulemaking process is the only way in which an administrative agency can “create” law. Rulemaking procedures set forth in Chapter 227 of the Wisconsin statutes were created by the legislature to ensure that when unelected government officials were wielding policymaking authority, they did so in a standardized, transparent, and accountable manner.
We began our argument on rulemaking by setting forth the standard for determining when an agency action must be promulgated:
A rule consists of five elements: “(1) a regulation, standard, statement of policy or general order; (2) of general application; (3) having the effect of law; (4) issued by an agency; (5) to implement, interpret or make specific legislation enforced or administered by such agency.” Citizens for Sensible Zoning, Inc. v. Dep’t of Nat. Res, 90 Wis.2d 804, 814, 280 N.W.2d 702 (1979) (citing Wis. Stat. § 227.01(13)).GLLF Brief, Pp. 11-12.
Courts have done little to clarify these rulemaking elements, so it was encouraging that, even in dissent, Justice Hagedorn started his opinion on rulemaking by mirroring our brief with respect these “five separate criteria.” Palm, ¶198.
DHS asserted its order was not a general order of general application–element #2 of a “rule”–because it responds to a specific situation. As noted by the court, “the Legislature focuses the relevant inquiry on to whom the order applies; not why or how it applies.” Palm, ¶17. The court agreed with the legislature:
We conclude that Order 28 is a “general order of general application.” The order regulates all persons in Wisconsin at the time it was issued and it regulates all who will come into Wisconsin in the future. If we were to read the definition of “Rule” as Palm suggests, one person, Palm, an unelected official, could create law applicable to all people during the course of COVID-19 and subject people to imprisonment when they disobeyed her order.Palm, ¶ 24.
Statutory Authority — the Explicit Authority Doctrine is Born.
2011 Wis. Act 21 fundamentally altered Wisconsin administrative law relating to agency power by requiring “explicit” delegations of authority from the legislature. But before Palm, the Wisconsin Supreme Court had yet to recognize this essential directive by the legislature on how to assess the boundaries of their delegations to agencies. We explained:
The dispositive language in Wis. Stat. § 227.10(2m) is the term “explicitly.” It was purposely chosen to heighten what had become a very low delegation threshold upon a finding of authorities that were either “expressly or necessarily implied.” The operative meaning of “explicit” is “leaving nothing implied.”GLLF BRIEF, PP. 17.
The Chief Justice, speaking for the court, fully committed to the new “explicit authority requirement.”
Therefore, under 2011 Wis. Act 21, the Legislature significantly altered our administrative law jurisprudence by imposing an “explicit authority requirement” on our interpretations of agency powers.PALM, ¶ 51.
Noteworthy was the Chief Justice’s reliance on a University of Wisconsin (UW) Law review article — Kirsten Koschnick, Comment, Making “Explicit Authority” Explicit Deciphering Wis. Act 21’s Prescriptions for Agency Rulemaking Authority, 2019 Wis. L. Rev. 993, 997, cited at Palm ¶51. (Kirsten was a GLLF legal intern while at UW Law.)
Confirming that the court was abandoning its “expressly or necessarily implied” doctrine, the Chief Justice informs:
In opposition to Palm’s claims, the Legislature raised legislatively-imposed directives that courts are to follow when interpreting the scope of agency authority. To place this contention in context, the reader should note that there is history underlying how courts have interpreted administrative agency powers. Formerly, court decisions permitted Wisconsin administrative agency powers to be implied. See Wis. Citizens Concerned for Cranes & Doves v. DNR, 2004 WI 40, ¶14, 270 Wis. 2d 318, 677 N.W.2d 612. In theory, “any reasonable doubt pertaining to an agency’s implied powers” was resolved “against the agency.” Wis. Builders Ass’n v. DOT, 2005 WI App 160, ¶9, 285 Wis. 2d 472, 702 N.W.2d 433.PALM, ¶ 51. emphasis added.
And some additional clarity by the court of the new explicit authority requirement:
The explicit authority requirement is codified at Wis. Stat. § 227.10(2m), which provides: “No agency may implement or enforce any standard, requirement, or threshold, . . . unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with this subchapter[.]” Furthermore, Wis. Stat. § 227.11(2)(a)1.—3., as summarized by a recent comment in the Wisconsin Law Review, “prevent[s] agencies from circumventing this new ‘explicit authority’ requirement by simply utilizing broad statutes describing the agency’s general duties or legislative purpose as a blank check for regulatory authority.” Koschnick, Making “Explicit Authority” Explicit, at 996. The explicit authority requirement is, in effect, a legislatively-imposed canon of construction that requires us to narrowly construe imprecise delegations of power to administrative agencies. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 225 (2012) (“Interpretive-Direction Canon”: “interpretation clauses are to be carefully followed.”).PALM, ¶ 52.
The court found no such explicit statutory authority that would provide DHS the power to impose the dictates of EO #28. And with that, Wisconsin launched a new era for the courts that require they narrowly limit agency delegations to the clear bounds set by elected officials in the legislature, the only branch with constitutional authority to create and delegate lawmaking power to the administrative state.
Epilogue: On July 9, 2020, the Wisconsin Supreme Court in Kathleen Papa v. DHS unanimously held DHS Medicaid auditing and claw-back policies exceeded DHS’s explicit recoupment authority. The decision provided a huge win for the regulated community as the court reaffirmed Act 21’s explicit authority requirement as the first hurdle an agency must clear before imposing regulatory mandates. See GLLF Press Release.
Statutory Construction and Legislative History
We set forth the rules of statutory interpretation in our brief as arising out of a seminal Wisconsin Supreme Court opinion written by the Justice Diane Sykes:
Under Wisconsin law, statutory interpretation begins with the statute and gives statutory language “its common, ordinary and accepted meaning.” State ex rel. Kalal v. Circuit Court for Dane Cty, 2004 WI 58, ¶ 45, 271 Wis.2d, 681 N.W.2d 110. “Context is important to meaning. So, too, is the structure of the statute in which the operative language appears.” Id. ¶ 46. “[L]egislative history need not be and is not consulted except to resolve an ambiguity in the statutory language, although legislative history is sometimes consulted to confirm or verify a plain-meaning interpretation.” Id.GLLF BRIEF, PP. 15.
While judicial textualists mostly avoid looking at extrinsic documents such as legislative history to discern intent, we believed the legislative history of those provisions at issue would be helpful to the court when assessing DHS’s authority:
The drafting file includes drafting instructions from DHS predecessor agency that states that the changes were “basically technical changes designed to bring the statute into concordance with the current public health and epidemiologic thought and terminology.”GLLF Brief, Pp. 16.
We also noted that the Legislative Reference Bureau, the nonpartisan legislative service agency that drafts all bills, “did not describe these changes as providing additional DHS authorities.” We concluded by asserting that “there is nothing in its legislative history to suggest that the 1981 revisions provide DHS with any additional authority.” GLLF Brief, Pp. 16.
Our brief was the only one of countless briefs filed in the case that provided the court with such background on the laws at issue. That proved invaluable, as the Chief Justice relied upon our brief for her majority opinion:
We note that the legislative history underlying Wis. Stat. § 252.02 confirms our understanding that the drafters of the language on which Palm relies did not contemplate expanding DHS’s authority, nor did DHS understand the amendment to do so. . . In the “Explanatory Notes” DHS stated that the bill is “basically technical changes designed to bring the statute into concordance with the current public health and epidemiologic thought and terminology.”Palm, ¶ 26.
. . .
And finally, the Legislative Reference Bureau never described the added language as changing DHS’s authority.
While we are mostly textualists here, that the court is looking to legislative history “to confirm or verify a plain meaning interpretation” is of vital import in our pending cases at the Wisconsin Supreme Court, which will similarly turn on the meaning of the word “explicit.” See Clean Wisconsin v. DNR.
Wisconsin Legislature v. Palm involved one of the most significant issues of our time: the life and liberty challenges arising from the coronavirus pandemic. It is remarkable how the court navigated to the calm waters of Wisconsin’s Administrative Procedures Act rather than the frothy seas of constitutional separation of powers arguments. It’s also satisfying that our amicus brief was so closely tracked by the court in this landmark decision.
Supreme Court Opinion (May 13, 2020)
Amicus Brief & Supporting Appendix GLLF (April 29, 2020)
Reply Brief Wisconsin Legislature (April 30, 2020)
Response Brief DOJ (April 28, 2020)
Petition for Original Action Wisconsin Legislature (April 28, 2020)