Tetra Tech v. DOR – Courts’ Deference To Agency Interpretations of Law
Appeal No. 2015AP002019
A dispute about the statutory interpretation of the word “processing” led the courts to reconsider their practice of judicial deference to an agency’s interpretation of the law. The end result was that The Wisconsin Supreme Court ruled in favor of Tetra Tech and GLLF and eliminated all judicial deference to agency interpretation of law.
Why This Case is Important
- Judicial deference to agency interpretation of law causes courts to abandon their role as unbiased adjudicators by requiring them to side with the legal interpretation of one of the parties. It further violates the due process rights of individual litigants because when they take an agency to court, judicial deference requires the judge to accept their opponent’s reading of the law.
Case Summary
On June 26, 2018, the Wisconsin Supreme Court handed down its decision in Tetra Tech. In summary: the deference doctrine is dead. The courts will no longer give agencies any deference on interpretations of law.
In July 2017, GLLF filed an amicus brief on behalf of 11 business associations urging the Court to reject the current practice of deferring to an agency’s interpretation of the law. We asserted that beyond an abdication of the courts’ constitutional duty to interpret the law, such systematic bias that benefits the state as a party deprives those being regulated of due process. The court tracked our due process argument that was vital to their decision to eliminate all deference.
***
The case presented a question of law regarding the proper interpretation of a Wisconsin statute, namely Wis. Stat. § 77.52(2), the “services” sub-section of Wisconsin’s retail sales tax.
In 2007, the Environmental Protection Agency required several paper companies to remediate the environmental impact of harmful chemicals into the Fox River. The collective group of paper companies formed Fox River Remediation, which hired Tetra Tech to perform the remediation. Tetra Tech subsequently hired Stuyvesant Dredging, Inc. (SDI) as a subcontractor.
The Wisconsin Department of Revenue (DOR) audited the entities and found that Tetra Tech owed sales tax on the portion of its sale for services and that Fox River Remediation owed use tax on the purchase of remediation services from Tetra Tech on SDI’s activities. The entities filed petitions for redetermination with DOR, then with the Tax Appeals Commission. A Wisconsin circuit court and appeals court both upheld the commission’s ruling, giving great weight deference to DOR’s interpretation of tax statutes. The case was appealed to the Wisconsin Supreme Court and the earlier decisions affirmed.
However, the Wisconsin Supreme Court used the case to address the deference levels Wisconsin courts afford regulatory agencies when interpreting statutory provisions. Judicial review of administrative agency actions is the last line of defense against excessive discretionary power in the hands of executive branch regulators. But the courts undermined that protection when deferring to an agency’s interpretation of its governing law.
Under our state and federal constitutions, the core duty of judges is to say what the law is. Deferring to agencies on interpretation of law impermissibly encroaches on this exclusive authority and undermines separation of powers principles that are essential to our liberties.
In addition, GLLF presented a unique perspective in its brief by asserting that any deference afforded agencies to interpret the law compromises the courts’ duty to be impartial arbiters of the law. Such systematic bias that benefits one party, deprives other parties, such as Wisconsin businesses, of due process. There is no justifiable purpose in providing increasingly powerful administrative agencies such an opportunity to expand their power and reach.
GLLF also testified in support of 2017 SB 745 which sought to limit agency deference by the courts at the Feb. 6, 2018, legislative hearing.
Key Documents
Supreme Court Documents
Tetra Tech EC Inc. v. DOR: GLLF Amicus Brief (July 31, 2017)
Tetra Tech EC Inc. v. DOR: Wisconsin Utilities Association Amicus Brief (July 24, 2017)
Tetra Tech EC Inc. v. DOR: Reply Brief of Petitioners-Appellants-Petitioners (July 21, 2017)
Tetra Tech EC Inc. v. DOR: Motion to File Amicus Brief (July 24, 2017)
Tetra Tech EC Inc. v DOR: Response Brief of the Department of Revenue (July 10, 2017)
Tetra Tech EC Inc. v. DOR: Brief of Petitioner-Appellant (May 19, 2017)
Court of Appeals Documents
Tetra Tech EC Inc. v. DOR: Court of Appeals Opinion (Dec. 28, 2016)
Tetra Tech EC Inc. v. DOR: Court of Appeals Reply Brief of Petitioners-Appellants (Feb. 8, 2016)
Tetra Tech EC Inc. v. DOR: Court of Appeals DOR Response Brief (Jan. 21, 2016)
Tetra Tech EC Inc. v. DOR: Court of Appeals Initial Brief of Petitioners (Dec. 8, 2015)
Tetra Tech EC Inc. v. DOR: Tax Appeals Commission Decision (Dec. 30, 2014)
Miscellaneous Documents
Gabler v. Crime Victims Rights Board: Supreme Court Opinion (June 27, 2017)
WI DWD v. WI LIRC: Court of Appeals Opinion (March 8, 2017)
Operton v. LIRC and Walgreen Co. (May 4, 2017)
Gutierrez-Brizuela v. Lynch (Aug. 23, 2016)
Marquette Law Review: Elected to Decide: Is the Decision-Avoidance Doctrine of Great Weight Deference Appropriate in this Court of Last Resort? (Spring 2006)