Supreme Court’s ‘constitutional revolution’ unleashes wave of new regulations, new costs
Housing costs are already stratospheric.
And building something bigger than a single-family house in Wisconsin is going to get even more complex and expensive in a little over a month as state bureaucrats impose a sweeping revision to the commercial building code.
How much more expensive? That’s hard to tell: Builders tell the Badger Institute they haven’t yet seen the exact code they must obey as of Oct. 1.
But to take one small known element, a new requirement to hire a “special inspector” to be on hand during construction — independent of the designer, the contractor or the government issuing a building permit — will add an estimated $20,000 to any store, school, office, factory or apartment building in the state.
And that’s just one of many new mandates that go well beyond housing – the tip of a titanic regulatory iceberg dead ahead.
The agency that suddenly announced in July that the commercial building code would be updated still claims that its action will have no costs to the public – a claim that left builders incredulous.
It was not the first time Department of Safety and Professional Services, or DSPS, tried to impose the revision. The zero-cost claim and protests from builders and businesses led the Legislature’s chief regulatory watchdog — the Joint Committee for Review of Administrative Rules, or JCRAR — to block the new rules the first time in 2023.
But the Wisconsin Supreme Court this summer took away the watchdog’s teeth, overturning the JCRAR’s power to stop regulations — a ruling that a dissenting justice, Annette Ziegler, said “pulls the rug out from under the Legislature.”
As a result, the revised building code will take effect Oct. 1 along with approximately 27 other sets of regulations governing matters ranging from occupational licenses to elk hunting to milk trucks. Imposed by agencies, some will have gotten no review by lawmakers at all.
The impact is direct. Mike Duffek, whose Waukesha construction company builds apartments and commercial buildings, noted that home affordability is a widespread concern. “The adoption of this code is not going to help that situation,” he said. “It’s going to exacerbate that situation.”
One example: The last Wisconsin code update, in 2018, changed rules about insulation, suddenly requiring more on building corners, where extra layers of structural wood already thickened walls. The change resulted in walls too thick for any siding nails on the market to sufficiently penetrate into studs, or for nail guns to work. It meant hand-nailing instead, inflating costs and time to finish.
The new code, he said, threatens to repeat that sort of process in unpredictable and unknown ways.
Builders reject claims there are no costs to new regulations.
The insulation issue and new heating rules last time, Duffek said, meant that a project about to break ground as the revision hit — a new building into which a family-owned company’s founders were sinking their life savings — had to be redesigned, with $90,000 in added costs that the clients had to scrape up.
Yet the DSPS’ economic impact analysis, required to estimate the latest revision’s cost of “implementation and compliance to businesses, local governmental units and individuals,” filled in the blank with “$0.”
The agency quoted four environmentalist groups and an insulation manufacturer trade group to suggest that mandating more insulation and fancier HVAC systems would save energy — maybe 9 percent, maybe 30 percent; the sources were at odds — so it all comes out in the wash.
But it doesn’t, not in the cost of the building that buyers pay up front, say builders.
“They’re like, ‘It nets out.’ Nets out? How does it net out?” asked John Schulze of the Associated Builders and Contracts of Wisconsin. “You’re adding a bunch of more regulations. By definition it’s going to cost more,” starting with having to buy costly new code books, right up through the estimated 15 percent that energy efficiency rules will add to the cost of prefabricated metal buildings, according to testimony the JCRAR found convincing in 2023.
The economic impact analysis’ zero-cost estimate was the first thing cited by the committee’s co-chairs when they stopped bureaucrats from imposing the revision in 2023. Their memo called it “one of the most deficient EIAs” they’d seen. When they asked the agency to improve it, the DSPS refused.
“They’re looking the public in the eye and saying that with a straight face,” said Evan Umpir, who directs legal affairs for Wisconsin Manufacturers and Commerce, the state’s chamber of commerce.
“It is a trust issue, because, sure, there will be increased costs to this,” he said.
It’s not just the building code. The Legislature no longer has oversight: It may review new regulations, but it has no power to alter or stop them.
In his instruction to agencies this month, Evers noted, “There no longer remains any statutory requirement to wait for legislative committee review before promulgating a rule once I have approved it.”
That’s because, as dissenting justices noted, the July decision called Marklein II really did shift power from the Legislature to bureaucracies when it overturned a review process dating back to the 1960s — “nothing less than a constitutional revolution,” as Justice Brian Hagedorn termed it.
Like statutes, regulations have the force of law and are “essentially legislating done by the executive branch,” as Ziegler noted. But unlike statutes, which must pass both houses of the Legislature and be signed by the governor, regulations follow a different path.
Agencies — run by a governor’s appointees — draft regulations, hold a hearing, and eventually get the governor’s approval. Then, the rule goes to the legislative committee concerned with the rule’s subject matter. That committee can ask the bureaucrats to change the rule, but the agency can refuse. If the committee objects to the rule, that doesn’t kill it — it just sends it to the JCRAR. This far, this process is unchanged.
That joint committee couldn’t kill a rule, either, but before the decision in July, it could delay it indefinitely. Now, it can’t do that either.
Now, if a state agency answerable to the governor passes a regulation approved by the governor, all the Legislature can do to stop it is to pass a law that would have to be signed by the governor whose regulation is being stopped.
The decision, wrote Justice Rebecca Bradley in dissent, will “take power from the people’s elected representatives in the Legislature and bestow it on the executive branch, empowering unelected bureaucrats to rule over the people.” Instead of regulations being imposed only if two branches of the government agree, now they can be prevented only if two branches agree.
Both chambers’ Republican majorities acted Friday to prevent the Legislative Reference Bureau from taking a clerical step advancing governor-approved regulations to standing committees for review. This may stop about half of Evers’ wave of regulations.
Longer term, the restoration of effective legislative oversight may require a constitutional amendment, said Madison insiders, a process that takes several years and involves a referendum.
Patrick McIlheran is the Director of Policy at the Badger Institute.
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