END OF AN AGE: Courts halt deference to agencies’ conclusions of law

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By Barret Van Sicklen

For decades, Wisconsin courts have deferred to administrative agencies’ interpretations of law. In a recent decision – Tetra Tech EC, Inc. v. DOR, the Wisconsin Supreme Court effectively ended this practice: “We have also decided to end our practice of deferring to administrative agencies’ conclusions of law.” In short, the Tetra Tech decision leaves judging up to the judges and not administrative agencies, which may lead to more challenges of agency decisions in the future.

In Wisconsin, the practice had long been for courts to afford agency interpretations of the law with one of three levels of deference: great weight, due weight, or no weight. Which level of deference was appropriate depended on certain factors, such as the institutional capabilities and qualifications of the court and agency in question.

An agency interpretation was given “great weight deference” when the following four conditions were met: (1) the agency was charged by the legislature with the duty of administering the statute; (2) the interpretation of the agency was long-standing; (3) the agency employed its expertise or specialized knowledge in forming its interpretation; and (4) the agency’s interpretation would provide uniformity and consistency in its application. If those factors were met and the agency’s interpretation was reasonable, Wisconsin courts would defer to the agency. In such a case, the court would allow an agency’s statutory interpretation to stand even if the court was presented with or found a more reasonable interpretation.

Under the “due weight” standard, “a court need not defer to an agency’s interpretation which, while reasonable, is not the interpretation which the court considers best and most reasonable.” Harnischfeger Corp. v. LIRC, 196 Wis.2d 650, 660 n.4, 539 N.W.2d 98 (1995). Due weight deference was appropriate when an agency had some experience in an area, but had not developed the expertise which necessarily places it in a better position to make judgments regarding the interpretation of a statute than a court. Although the Wisconsin Supreme Court noted that due-weight deference and no deference “are similar,” the doctrine of due-weight deference still required courts to defer “even when an alternative statutory interpretation is equally reasonable to the interpretation of an agency.”  Racine Harley-Davidson, Inc. v. Div. of Hearings & Appeals, 2006 WI 86, ¶ 20, 292 Wis. 2d 549, 717 N.W.2d 184.

Over the years some of the justices were skeptical of the deference framework. When the Wisconsin Supreme Court granted review in Tetra Tech EC, Inc. v. DOR, the parties were directed to take up deference (an issue not raised in any of the underlying proceedings) and consider whether “the practice of deferring to agency interpretations of statutes comport[s] with Article VII, Section 2 of the Wisconsin Constitution.”

Tetra Tech argued that granting deference to an agency’s interpretation of a statute abdicates the judicial power and duty vested by Article VII, Section 2 of the Wisconsin Constitution in the courts of this state. Article VII, Section 2 of the Wisconsin Constitution, Tetra Tech stated, grants the judicial power to the unified courts of this state, not to administrative agencies. Thus, Tetra Tech urged the Wisconsin Supreme Court to declare that all agency interpretations of law be subjected to independent (de novo) review. Although the state agreed with Tetra Tech that “great weight” deference was not constitutional, it argued that “due weight” deference was constitutional and should be kept.

The lead opinion in Tetra Tech is puzzling because it includes 15 separate sections, each of which was supported by different combinations of the justices. Thus, it can be difficult to decipher which section is actually the law. However, the central section (Section III), which does have enough votes to carry the force of law, unequivocally states: “We have also decided to end our practice of deferring to administrative agencies’ conclusions of law. However, pursuant to Wis. Stat. §227.57(10), we will give “due weight” to the experience, technical competence, and specialized knowledge of an administrative agency as we consider its arguments.” Therefore, that is the new law in Wisconsin.

What sort of difference this change will make will become evident in the coming years. One possibility is that we may see more challenges of agency decisions as litigants perhaps come to believe they have a better chance now that agency conclusions of law are subject to de novo review.

Barret Van Sicklen is a litigation partner at DeWitt Ross & Stevens specializing primarily in complex business disputes and labor and employment litigation.