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July/August 2018 Issue

Also in this issue: Court of Appeals Rules for City in Town’s Challenge to Annexation Ordinance     |     U.S. Supreme Court Decision Impacts Public Safety Union’s Dues Deductions     |     Wisconsin Supreme Court Extends Building Permit Rule to Land     |     Court of Appeals Clears the Way for Badger Coulee Project

The End of Deference to Agency Interpretations of Law in Wisconsin

The underlying question the Wisconsin Supreme Court faced in Tetra Tech EC, Inc. v. Wisconsin Department of Revenue, 2018 WI 75, was certainly not earth-shattering: whether separating river sediment as part of environmental remediation efforts constituted “processing” as that term was used in Wisconsin Statutes, such that the Department of Revenue properly imposed a sales tax for those activities. But the Court seized the opportunity in that case to transform principles of agency review in a way that will dramatically affect municipalities and everyone involved in agency decisionmaking.

Before Tetra Tech, Wisconsin courts applied varying levels of deference — “great weight,” “due weight,” or no deference at all — depending on the “the comparative institutional qualifications and capabilities of the court and the administrative agency.” Racine Harley-Davidson, Inc. v. State Div. of Hearings & Appeals, 2006 WI 86, ¶ 13. That approach largely comported with federal principles of agency deference that the Supreme Court endorsed in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). But five Justices in Tetra Tech broke new ground by ending that practice, requiring instead that courts review de novo every conclusion of law. Tetra Tech, 2018 WI 75, ¶ 3.

Two Justices (Daniel Kelly and Rebecca Bradley) embedded their decision in the separation-of-powers principle inherent in the Wisconsin Constitution, reasoning that deference to agency interpretations violated the maxim first announced in Marbury v. Madison that “[i]t is emphatically the province and duty of the judicial department to say what the law is.” 5 U.S. 137, 177 (1803). See Tetra Tech, 2018 WI 75, ¶ 50. Those two Justices also concluded that agency deference “deprives the non-governmental party of an independent and impartial tribunal.” Id., ¶ 67. Three other Justices (Annette Ziegler, Patience Roggensack, and Michael Gableman) avoided the constitutional question and instead arrived at the same result based on the Court’s power to overrule court-created doctrine. See id., ¶¶ 135, 159.

Although it is clear from the Tetra Tech decision that Wisconsin courts may no longer defer to agency conclusions of law, it is difficult to predict what the practical implications of the decision will be in administrative review cases, and the guidance is particularly muddied by the fractured nature of the ruling. For example, the Court stated that courts must continue to give “due weight” to the experience, technical competence, and specialized knowledge of an administrative agency, as required by Wis. Stat. § 227.57(10). See id., ¶ 3. But the lead opinion stripped from that concept “the patina of ‘deference’ with which our cases have covered it,” id., ¶ 71, reducing the concept of ‘due weight’ to a “matter of persuasion, not deference.” It is also murky what effect that the Court’s decision will have on the decades of court rulings that relied on the deference doctrine. See id., ¶ 139 (Ziegler, J., concurring). Nevertheless, municipalities along with all other participants in agency decisionmaking should expect that after the Tetra Tech decision, courts will now approach cases of agency review in a dramatically different fashion than they have done so before.

— Barry J. Blonien

This newsletter is published and distributed for informational pur- poses only. It does not offer legal advice with respect to particular situations, and does not purport to be a complete treatment of the legal issues surrounding any topic. Because your situation may differ from those described in this Newsletter, you should not rely solely on this information in making legal decisions.

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