Month: May 2016

AG Opinion Validates Act 21 Limits on Agency Authority

Posted on by Hamilton

On May 10, 2016, Attorney General Brad Schimel issued a formal opinion finding that 2011 WI Act 21requires explicit delegation of authorities to agencies, making it clear that regulatory mandates may no longer arise from implied authority.

Whether enacting rules, imposing permit conditions, or exercising public trust authority, the Department of Natural Resources (DNR) and other agencies must point to explicit statutory delegations or their actions are legally void and unenforceable.

Key excerpts from the 23-page opinion include:

  • “Act 21 makes clear that permit conditions and rulemaking may no longer be premised on implied agency authority.”[1]
  • Given the lack of explicit authority in the statutes, “a monitoring well condition on a high capacity well permit is prohibited and unenforceable.”[2] Similarly, DNR lacks authority to require cumulative impact analysis as a well permit condition.
  • “[M]uch of the [Wisconsin Supreme] Court’s reasoning in Lake Beulah, including the breadth of the DNR’s public trust authority. . . , is no longer controlling.”[3]

The AG Opinion is significant, but also is consistent with prior positions taken by the AG’s Office, DNR, and by the court in the New Chester case[4]. One issue clarified by Schimel was that a key Act 21 provision, Wis. Stat. § 227.10 (2m), is not retroactive. Act 21’s effective date is June 8, 2011. Thus, any standard, requirement, or threshold, including permit terms, issued on or after June 8, 2011, must be tethered to explicit statutory or rule language. And draft rules submitted to the Legislative Council (before the public hearing) on or after that date must also arise from explicit statutory authority.

Hamilton Consulting represented several clients in advancing Act 21. Through the Great Lakes Legal Foundation, some of us were attorneys of record for business associations on the leading cases, including Lake Beulah[5], Rock-Koshkonong Lake Dist.[6], and New Chester.

For more on this issue, consider WMC’s June 22 Symposium: Act 21: The Demise of Implied Agency Authority.

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[1] OAG-01-16 (May 10, 2016), p. 15, ¶29.

[2]Id. p. 22, ¶50.

[3] Id. P. 8, ¶16

[4] New Chester Dairy v. DNR, No. 14CV1055 (Wis. Cir. Ct. Outagamie Cty. Dec. 2, 2015).

[5] Lake Beulah Management District v. Department of Natural Resources, 2011 WI 54, 3355 Wis. 2d. 47 (2011).

[6] Rock-Koshkonong Lake Dist. V. DNR, 2013 WI 74, 350 Wis. 2d 45 (2013)

Supreme Court Upholds Independence of State Superintendent of Public Instruction

Posted on by Hamilton

In a split opinion, the Wisconsin Supreme Court upheld lower court decisions that 2011 Wisconsin Act 21 (Act 21) is unconstitutional as applied to the Superintendent of Public Instruction (SPI) and the Department of Public Instruction (DPI).

Act 21 amended various provisions in the statutes that set forth procedures agencies must follow when promulgating administrative rules. The provisions the court found problematic related to the governor’s ability to withhold approval of SPI and DPI rules.

The May 18 decision was written by Justice Michael J. Gableman and rests on the constitutional provision that gives supervisory powers to the Superintendent of Public Instruction and other officers of public instruction. According to the opinion, “Act 21 does not allow SPI and DPI to proceed with their duties of supervision without the Governor’s, and in some circumstances the Secretary of the Administration’s approval [which] unconstitutionally vests the Governor. and the Secretary of Administration with the supervision of public instruction in violation of the [Constitution].”

Chief Justice Pat Roggensack wrote the dissent, joined by justices Annette Ziegler and Rebecca Bradley. The dissenting justices found that Act 21 provided constitutional procedural safeguards to be employed in rulemaking by DPI and other administrative agencies. Ziegler wrote a separate dissenting opinion. Justices David Prosser and Shirley Abrahamson wrote separate concurring opinions.

Given the numerous separate opinions, some believe the decision has little precedential value. Regardless, the opinion only affects Act 21 as it relates to SPI and DPI. Act 21 provisions relating to gubernatorial approval and the requirement that agency regulatory authorities be “explicitly” set forth in the statutes are not affected as they relate to all other agencies. (See article on AG’s opinion on Act 21 and DNR)

Court of Appeals Puts a Hold on Dane County Right to Work Decision

Posted on by Hamilton

On May 24, a state court of appeals reversed Dane County Circuit Judge William Faust’s ruling not to grant a stay of his controversial decision that the state’s new right-to-work law was unconstitutional. The appeals court decision allows the right-to-work law to be in effect and enforceable pending appeal of Faust’s underlying decision.

Wisconsin became the 25th right to work state last year. Right-to-work laws bar businesses and unions from reaching labor agreements that force workers to pay fees to the union. Various state unions challenged the constitutionality of the law.

On April 15, 2016, Faust granted the unions’ request for summary judgment, concluding that the right-to-work law effects an unconstitutional taking of private property of Wisconsin’s labor organizations. As a result, the Dane County court enjoined the state and the attorney general from enforcing the statute.

The decision by the Wisconsin Court of Appeals District 3, based in Wausau, does not directly go to the merits of the case. But presiding judge Lisa K. Stark rested her decision on the finding that the law was presumed constitutional and that the state established “there is sufficient likelihood of success on appeal to warrant the grant of the stay.”

Attorney General Brad Schimel had initially requested Faust stay his own decision during the pendency of the appeal. Faust refused to do that, which moved that request to the court of appeal. The attorney general filed a memorandum in support of the stay on April 29, 2016. Wisconsin Manufacturers and Commerce (WMC) and the National Federation of Independent Business Small Business Legal Center also filed briefs in support of the state.

The bulk of the attorney general’s brief focuses on his argument that the state is “extremely likely to succeed on the merits.” Schimel issued a May 24 press release lauding the Court of Appeals decision and expressing his confidence “the law will ultimately be found constitutional.” WMC also issued a press release praising the decision.

Obama Doubles Overtime Exemption Level to $47,476

Posted on by Hamilton

The Obama Administration’s new overtime rule will double the salary threshold for “white collar” workers to $47,476. The current exemption, set in 2004, is $23,660. The new threshold that will impact 4.2 million salaried workers goes into effect on December 1, 2016. Under the new rule, the threshold will automatically increase every three years.

Business groups say the new rule will force millions of salaried professionals to be reclassified as hourly wage workers. They argue that small businesses, nonprofits, and public sector employers will be specially hurt. The U.S Department of Labor estimates businesses will end up paying workers an additional $1.3 billion a year.

The final overtime rule was published on May 23 by the U.S. Department of Labor.

Under the final rule, an automatic escalator to the salary threshold will occur every three years, beginning on January 1, 2020. The benchmark for the salary adjustment is the 40th percentile of full-time salaried workers in the lowest-wage census region, which is currently in the south. Based on that formula, the Department of Labor estimates the new threshold will be $51,168 in 2020.

The rule also updates the total annual compensation level above which most white-collar workers will be ineligible for overtime. That level is set to the 90th percentile of full-time salaried workers nationally, or from the current $100,000 to $134,004 per year.

For workers with salaries above the new threshold, employers will continue to use the same duties test to determine whether or not the workers are entitled to overtime pay.

In its fact sheet explaining the rule, Labor provides businesses a “choice” under the new rule:

  1. Increase their employees’ salaries to the $47,476 threshold.
  2. Pay workers the time-and-a-half overtime premium for every hour beyond 40 per week.
  3. Limit workers to a 40-hour work week.

Some groups assert that market considerations over time will prove the paycheck benefits an illusion. To curb costs, some businesses will simply forbid employees from working over 40 hours. They may also have to cut back other expenses such as non-cash benefits or suppress the base pay itself.

Beyond frustrating ambitious individuals willing to tackle longer hours in efforts to rise into management ranks, the rule will “force millions of workers into time-clock or hourly-tracking arrangements even if they themselves prefer the freedom and perks of salary status.” See The High Cost of Obama’s Overtime Edict, Cato Institute, May 20, 2016.

The US Chamber of Commerce issued the following statement on the new rule:

Despite the modifications, the dramatic escalation of the salary threshold, below which employees must be paid overtime for working more than 40 hours a week, will mean millions of employees who are salaried professionals will have to be reclassified to hourly wage workers. Small businesses, nonprofits, and public sector employers will be especially impacted as they will have the hardest time finding more income to cover the increased labor costs, even if they will have a longer time to implement the new requirement. Furthermore because the threshold will increase every three years, the impact on these employers will continue to ratchet up. This will result in charities providing fewer services to those in need, local governments having to reduce services and raise taxes, and small businesses having to curtail operations or plans to expand. The Department of Labor failed to accurately assess the impact this regulation would have on these, and other, employers.

Also see comments by WMC’s Director of Health and Human Resources Policy Chris Reader.

11 Applicants Vie for Open Wisconsin Supreme Court Seat

Posted on by Hamilton

Eleven applications have been submitted to Gov. Scott Walker to replace Wisconsin Supreme Court Justice Prosser, who announced his retirement in early May. The seat opens on July 31 after Prosser’s resignation takes effect.

The applicant selected by Walker will hold the seat until it opens for an April 2020 election. Many consider this to be a legacy appointment by Walker considering some of the younger applicants may sit on the state’s highest bench for over three decades.

Notable applicants of interest to those in the lobbying business include:

  • Judge Mark Gundrum, Wisconsin District II Court of Appeals, appointed by Walker in 2011. Served as Waukesha circuit court judge from 2010 to 2011 and was a state representative from 1998 to 2010.
  • Judge Brian Hagedorn, District II Court of Appeals, appointed by Walker in July 2015. Also served as chief legal counsel for the governor and was an assistant attorney general at the Wisconsin Department of Justice.
  • Public Service Commission Chairperson Ellen Nowak, appointed by Walker in 2011. Also previously served as chief of staff to Waukesha County Executive Dan Vrakas and legal counsel and chief of staff to the Speaker of the Assembly.

Other applicants include:

  • Attorney Andrew Brown of River Falls.
  • Attorney Claude Covelli of Madison, a former candidate for Wisconsin Supreme Court in 2015.
  • Judge Thomas Hruz, Wisconsin District III Court of Appeals, appointed by Walker in 2014.
  • Judge Randy Koschnick, Jefferson County Circuit Court. Koschnick served as a public defender prior to his election to the Jefferson County Circuit Court, and ran against Wisconsin Supreme Court Justice Shirley Abrahamson in 2009.
  • Judge James Morrison, Marinette County Circuit Court.
  • Attorney Paul Scoptur of Milwaukee.
  • Judge James Troupis, Dane County Circuit Court, appointed by Walker in May 2015. Also served as Prosser’s legal counsel during the 2011 election recount.

The eleventh candidate requested confidentiality.

AG Schimel Sues EPA over New Ozone Standard

Posted on by Hamilton

Wisconsin joined a coalition of states and industry groups challenging EPA’s new ozone standard. The new standard was released on October 26, 2015, and lowers the ozone standard to 70 parts per billion (ppb).

The states filed their brief in the United States Court of Appeals for the District of Columbia on April 22, 2016. Industry groups, including the US Chamber of Commerce and the National Association of Manufacturers, also filed briefs attempting to overturn the new standard.

This is EPA’s fourth ozone standard, which was initially set in 1979. The previous standard, set at 75 ppb, was issued in 2008. Arguments against the standard focus on the inability of states to reduce ozone levels approaching background levels and primarily caused by sources outside of the state. According to Attorney General Schimel, “Wisconsin’s expected to take impossible measures, like controlling the weather, under the new NAAQS.”

Wisconsin also argues that EPA’s interpretation of the Clean Air Act results in an unconstitutional delegation of legislative authority. For Wisconsin industry’s perspective on the new ozone standard, see Wisconsin Manufacturers & Commerce March 17, 2015, comments on the draft rule.

Attorney General Appeals Ruling on Right to Work

Posted on by Hamilton

Friday, April 8, Dane County Circuit Court Judge C. William Foust struck down 2015 Wisconsin Act 1, Wisconsin’s right-to-work law, concluding that labor unions have a property right to a portion of a worker’s wages. Under 2015 Wisconsin Act 1,

No person may require, as a condition of obtaining or continuing employment, an individual to do any of the following:
  1. Refrain or resign from membership in, voluntary affiliation with, or voluntary financial support of a labor organization.
  2. Become or remain a member of a labor organization.
  3. Pay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value, to a labor organization.
  4. Pay to any 3rd party an amount that is in place of, equivalent to, or any portion of dues, fees, assessments, or other charges or expenses required of members of, or employees represented by, a labor organization.”

    Wis. Stat. s.  111.04 (3).

Attorney General Brad Schimel has filed an appeal with the Wisconsin Court of Appeals, District III, and is seeking a stay of Judge Foust’s decision.  A stay, if granted, would allow Act 1 to remain in effect during the appeal.

In his filing, because the State has made a strong showing that it is likely to succeed on appeal, Attorney General Schimel asked for expedited consideration of his motion seeking a stay. He noted 26 states have enacted right-to-work laws and, similar to these other states, Wisconsin’s law will ultimately be upheld as constitutional.

Read Attorney General Schimel’s memorandum in support of his motion to stay Judge Foust’s judgment.

New Vacancy on State Supreme Court

Posted on by Hamilton

Wisconsin Supreme Court Justice David T. Prosser Jr. has announced he will retire from the highest court in Wisconsin later this summer with four years left in his term.

In his letter of resignation Justice Prosser said, “Public service was the career I chose at an early age. The goal has been fulfilled… For me, the time has come to step down, pass the torch, and begin a new chapter in my life.”

Gov. Scott Walker will accept applications for an appointment to fill the seat through mid-May, and the appointee will hold the seat until elections are held in April 2020.

Justice Prosser was appointed to the Wisconsin Supreme Court in 1998 by Gov. Tommy Thompson and then won reelection in 2001 and 2011. Prior to serving on the Wisconsin Supreme Court, Justice Prosser was an appointee during the Thompson administration. He also served in the Assembly from 1979 to 1997 and spent two years as speaker.

Since the application process for the appointment was announced, the following have reported their intention to apply for the appointment:

Judge Mark Gundrum previously served as circuit court judge for Waukesha County before being appointed to his current positon to the District 2 Court of Appeals in 2011. Gundrum also served in the Wisconsin State Assembly as a Republican.

Judge Randy Koschnick currently serves on the Jefferson County Circuit Court. He has been a judge in Wisconsin for 17 years. He ran for the Wisconsin Supreme Court in 2009 and lost to Justice Shirley Abrahamson.

Judge Jim Troupis was appointed by Gov. Walker to the Dane County Circuit Court in May 2015. Judge Troupis also served as Justice Prosser’s legal counsel during the 2011 election recount.