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Administrative Agency Deference No More
June 28, 2018

In Tetra Tech EC, Inc. v. Wisconsin Department of Revenue, decided this last week , the Wisconsin Supreme Court changed the entire landscape of administrative law in the State of Wisconsin. If your business or municipality deals with administrative regulations—and it most assuredly does—be aware that the law now allows circuit courts to review agency’s legal interpretation de novo, or without any deference to that agency.

Tetra Tech revolved around the rather mundane interpretation of the word “processing” within a state statute. And while the entire Court agreed on that particular issue, the larger result came from the court-specified issue: “Does the practice of deferring to agency interpretations of statutes comport with Articles VII, Section 2 of the Wisconsin Constitution, which vests the judicial power in the unified court system.”

The Wisconsin Supreme Court decided this week that it would no longer give deference to a state agency’s legal interpretation, which the Court recognized as a “significant break” in precedent. Rather, it will simply give “due weight” to the administrative agency’s experience, technical competence, and specialized knowledge in considering its legal determinations, and will review that legal determination de novo, just as it does for circuit and appellate court legal determinations. Previously, Wisconsin courts were required to give some level of deference to the agency determination. No more.

Justice Kelly, joined by Justice R. Bradley, found that the Court’s previous deference to administrative agencies constituted an unconstitutional ceding of judicial power to the executive branch.

Justice Ziegler, joined by Chief Justice Roggensack, agreed with the result of the Court, but advocated for eliminating agency deference based upon it being a meritless court-created doctrine, not based upon its constitutionality.

Justice Gableman, joined by Chief Justice Roggensack, also agreed with the result of the Court, but would have applied “the doctrine of constitutional avoidance and eliminate deference by withdrawing language [from previous caselaw] that indicated deference is mandatory.”

Justice A.W. Bradley, joined by Justice Abrahamson, concurred only with respect to the definition of “processing.” She noted the lack of deference to stare decisis, and that this decision constitutes a “tectonic shift in the administrative law landscape.”

And it does. The Court substantially changed the face of administrative law within Wisconsin, requiring courts to only afford administrative agency decisions “due weight” based upon the agency’s experience, technical competence, and specialized knowledge.

Moreover, this decision also called into question the legitimacy of Chevron deference, the federal analog that calls for administrative agency deference to a federal agency’s reasonable legal interpretation. The Court’s references to Justices Scalia’s, Thomas’, and Gorsuch’s criticisms of Chevron within the opinion portend a future case at the United States Supreme Court. There can be no doubt that this case will serve as a blueprint for a future Chevron challenge.

Municipalities and businesses that work with administrative agencies should be aware that a state agency’s interpretation no longer will be given any imprimatur by Wisconsin courts, save “due weight.” Whether an entity likes or dislikes a statutory interpretation by a state agency, that decisional interpretation can now be subject to a de novo review by a Wisconsin court.

This decision opens the floodgate to litigation involving administrative legal determinations, allowing courts supervisory control over those legal decisions. If you have any questions about how best to proactively prepare your business in light of this decision, please contact your Davis & Kuelthau attorney, the author noted above or our Litigation Team Chair linked here.

 

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