Rep. Nate Gustafson said his bill would implement a “net zero” rule process. (Photo by Baylor Spears/Wisconsin Examiner)

Wisconsin Republican lawmakers are introducing bills to review every statewide administrative rule and impose new limits on the rulemaking process, saying there are too many regulations currently and they put operational obstacles and financial burdens on businesses.

GOP Lawmakers have raised objections to agencies’ administrative rulemaking process — and the power of the executive branch — for many years and have taken action to exert more control over the process and to limit the authority of state agencies and the governor. The REINS Act, signed into law by former Gov. Scott Walker in 2017, for example, required lawmakers’ approval for regulations that might cost more than $10 million over a two-year period.

“A lot of what’s been done in the past has looked at when you’re implementing new rules — what is the process? Who is writing the rules?” Rep. Adam Neylon (R-Pewaukee), who introduced the bill that became 2017 Wisconsin Act 57, said at a press conference last week.

“What [the] REINS Act is not able to do is go back and reset it all,” Neylon added. “We’re looking at the stack of rules that have accumulated over the years that are piling up… We need a reset.”

One of four GOP bills would require agencies to make cuts to offset the cost associated with new regulations. 

Under the bill, coauthored by Rep. Nate Gustafson (R-Fox Crossing) and Sen. Julian Bradley (R-New Berlin), agencies with a new rule proposal would have to stop work on the process until they’ve figured out how to eliminate the cost of a new regulation, or, alternatively, until a different rule reduces the costs to businesses, local governmental units and individuals over any two-year period.

Gustafson calls it a “net zero” rule process. “So if there’s an existing regulation or rule output that is of equal cost or greater, you’re going to have to cut that rule if you want to implement a new one.”

Another of the four bills — coauthored by Neylon and Sen. Steve Nass — would put an expiration date on every administrative rule seven years after implementation. Currently, administrative rules are in effect indefinitely unless repealed, amended by the agency or suspended by the Joint Committee for Review of Administrative Rules (JCRAR).

JCRAR is a 10-member committee responsible for reviewing proposed administrative rules to ensure they align with state law. Lawmakers on the committee have the ability to approve, suspend, or request modifications to proposed rules.

Under the new measure, the year before a rule expires an agency would need to send notice to JCRAR about its intention to readopt the rule. If there is no objection by a lawmaker on the committee, then the rule would be considered readopted, but if there is an objection, then the rule would expire unless the agency goes through the rulemaking process again.

Neylon said the point is to create a more modern process and do away with “outdated or duplicative rules, creating unnecessary burdens on businesses.” 

Another bill — coauthored by Sen. Rob Hutton and Reps. Dan Knodl (R-Germantown) and Amanda Nedweski (R-Pleasant Prairie) — would limit scope statements, the first step in the rulemaking process, so they could only be used for one proposed rule and would set a six month expiration date when a scope statement can be used for an emergency rule.

Currently, people can challenge the validity of an administrative rule in court. The final bill — coauthored by Rep. Ron Tusler (R-Harrison) and Sen. Eric Wimberger (R-Oconto) — would award people who challenge a rule attorney fees and costs if a court declares a rule invalid. 

The bill package is based on a report from the right-wing Wisconsin Institute for Law & Liberty (WILL), which also launched a webpage about the effort to cut “red tape” on Wednesday.

WILL states in the report that Wisconsin is the 13th most regulated state in the country and lays out proposals similar to the new GOP bills. WILL said the actions would build off steps taken in other states, including Idaho, Ohio, Nebraska and Oklahoma, to reduce regulations.

Neylon said WILL provided research and worked with lawmakers’ offices on the legislation. But, he added, “these are issues that we’ve all worked on for a lot of years, issues that we care deeply about. This is our initiative… and nobody else’s.”

Economist on the potential flaws 

Economist Michael Rosen told the Examiner that the bills come out of Republicans’ “national playbook,” and that the research from WILL is based on the idea that “any regulation impedes economic growth.”

“It has been a cornerstone of Republican policy since the election of Ronald Reagan to deregulate, get rid of regulation, and [to insist] that getting rid of regulation promotes economic growth,” Rosen said. He calls that theory “nonsense.” 

Rosen points out that some of the most heavily regulated states — including California and New York — are also the most prosperous. He noted that the majority of the states cited in WILL’ s research are those with Republican-dominated government.

“All regulations really are the rules under which the market operates,” Rosen said, adding, “there have to be rules that govern the behavior of the buyers and sellers. That’s what regulation is. It’s very simple, and what they’re arguing is to get rid of them.”

Rosen challenges broad assertions in WILL’s research, including WILL’s finding that a 36% cut to regulations across the board in Wisconsin could grow the economy by 1 percentage point annually.

That analysis fails to take into account “negative externalities,” Rosen says — actions by companies that impose a cost on people who are not directly involved. He pointed to environmental regulations as an example of how these costs are paid by the public. 

“In economic terms, companies that pollute… part of the cost of production should be disposing of the waste that a company produces…. If there aren’t any rules, the cheapest way to dispose of your waste is to release it into the atmosphere or release it into the rivers and streams,” Rosen said. “That’s what we had in this country at the beginning of the 20th century, when we didn’t have any environmental regulations, and rivers, like the Milwaukee River, and streams and lakes were polluted by manufacturers because that was the cheapest way for them to dispose of their waste.”

Rosen said that some might argue that rules meant to protect the environment impede growth because they impose an additional cost on a company, however, he said that rules can ensure they aren’t passing on that cost to the public. 

Since passage in 2017, the REINS Act has posed an obstacle to proposed environmental protection rules in Wisconsin.

Without the regulations, Rosen said, people would have “no assurance” about the products they buy — “whether it’s a can of tuna fish, whether it’s an automobile, whether it’s a ride on an airplane.” 

“Is it impeding economic growth that we have regulations on air travel? No, because if we didn’t have the regulation of the airline industry, we would have far more accidents and many fewer people would want to travel on airplanes,” Rosen said. “These are all regulations that we take for granted,” but assure people they can trust the products and services they purchase, “and we won’t crash and die.” 

A better way to address onerous or outdated rules, Rosen said, is to take them up one at a time, rather than through the sweeping anti-regulatory bill package Wisconsin Republicans are proposing. 

“Are there some regulations that maybe are antiquated? I’m not going to sit here and tell you there might not be,” Rosen said. “But rather than pass sweeping legislation, which is ideologically driven and could have catastrophic consequences, people should raise the particular regulation.”

What’s next for the bills

Rep. Amanda Nedweski (R-Pleasant Prairie) said that she is excited for the bills to go through the Assembly Government Operations, Accountability and Transparency (GOAT) committee, which she chairs. The committee was created this session, inspired by billionaire Elon Musk’s Department of Government Efficiency project, which has sought to remake the federal government by unilaterally firing employees and making deep cuts to federal agencies. 

“Excessive regulations have serious economic consequences. They slow economic growth. They increase costs for businesses and consumers and they stifle innovation, all while the compliance costs put the greatest burden on our small businesses and working families,” Nedweski said. 

Senate Minority Leader Dianne Hesselbein (D-Middleton) said the bills are another action from the “tired Republican playbook” and compared them to the actions being taken by President Donald Trump and Elon Musk. 

“These bills are an attempt at a power grab, akin to what we are seeing from the Trump-Musk administration,” Hesselbein said. “The bills would, among other things, undermine the fundamental democratic principle of separation of powers. They are unnecessary, anti-democratic, and wholly wrong for Wisconsin.”

Republicans in the Senate and Assembly, who hold majorities, could pass the bills without support from Democratic lawmakers, however, they would need Democratic Gov. Tony Evers’ sign-off to become law. Neylon conceded that it’s unlikely Evers will support them. 

“Unfortunately Gov. Evers makes a lot of mistakes,” Neylon said. “He’s showing to be a failure as a governor, and I’m not optimistic he’ll make the right decision here, but I think that we’re doing the best we can to try to reform the regulatory process, and we think that it’s time for a reset.” 

Evers’ office hasn’t responded to a request for comment.

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