Testimony: Wisconsin Senate Bill 277/Assembly Bill 274

To watch the testimony, please click here. To view the PDF, please click here.

Chairs Kapenga and Nedweski, Vice Chairs Jacque and Sortwell, and all members of the Senate
Committee on Licensing, Regulatory Reform, and Federal Affairs, and the Assembly Committee on
Government Operations, Accountability, and Transparency, on behalf of Americans for Prosperity,
the nation’s largest grassroots organization dedicated to breaking barriers to opportunity, thank you
for the opportunity to appear before you. It is an honor and pleasure to have the opportunity to
discuss with you today one of the most critical governmental issues of our time, yet one that is often
overlooked or forced to take a backseat position. That issue, of course, is regulatory process reform
broadly and, more specifically Senate Bill 277 and Assembly Bill 274. For the sake of clarity, I will
refer to this bill as S.B. 277 moving forward.

My name is Graham Owens and I am a Policy Fellow with Americans for Prosperity where my
portfolio covers, among other issues, advocating for policies that reduce the burden of outdated and
overly complex regulations that hinder business growth and economic development. My testimony
today is informed by my years of work as a regulatory attorney in D.C., where I have spent almost a
decade working in Congress and federal regulatory agencies, led regulatory policy matters for the
National Association of Manufacturers, and even spent years as the President of a small agricultural
processing company that I helped build.

Few would question the assertion that major projects require periodical reviews to ensure they are
on the right path and achieving the intended outcomes. Yet, few such effective processes exist for
regulations. They are promulgated and then stay on the books indefinitely with no mechanism for
efficient removal when necessary and with no retrospective review. Only the most controversial
regulations typically get reviewed or repealed—often only to be repromulgated by the next
Administration—which creates a “regulatory ping-pong” that is often no better than the bad
regulation itself.

As such, legislatures at the state and federal level must prioritize creating a mechanism for
periodically reviewing regulations to ensure they are achieving their intended goals, that the science
backing the regulation has held up, and that they are still necessary. While creating a retrospective
review process is fairly straightforward—require agencies to periodically look back on whether their
regulatory actions have achieved their intended missions and whether the data and assumptions the
regulatory actions were based upon held true—it rarely happens.

That is why S.B. 277 is so important. S.B. 277 would create such a process by requiring Wisconsin
regulatory agencies to review their regulations every seven years to determine whether the regulations
they oversee and enforce continue to be necessary and provide an efficient mechanism for those
agencies to allow unnecessary or outdated regulations to cease to be active. This process is otherwise
known “retrospective review” and “sunsetting,” respectively. Just as importantly, the bill would afford
this legislature—and the constituents who elect you—with an active oversight role in the agencies’
decision-making process by requiring each agency to submit to the appropriate standing committees
and the Joint Committee for Review of Administrative Rules (JCRAR) a notice of the agency’s intent
to readopt a chapter. Should no opposition to the readoption occur, the bill also provides for a
streamlined process for that regulation to remain on the books, while also affording the agencies an
opportunity to repromulgate said regulation even where there is opposition from the legislature.

In other words, this critical legislation would provide agencies with an efficient mechanism to review
and remove outdated or duplicative regulations, provide greater oversight of regulatory decisions by
elected officials, and provide a mechanism to claw back regulations deemed critical.

So, why is this legislation critical and why does Americans for Prosperity stand in full support? While,
admittedly, the vast majority of my work has focused on federal regulatory reform matters—and I do
not purport to be an expert on Wisconsin law—the underpinnings of why it is important to create
mechanisms for the retrospective review of regulations and efficient sunsetting where necessary
remain true at every level of government.

First, regulations are very costly, especially for business sectors critical to the Wisconsin economy such
as manufacturing and agriculture. According to a 2023 study by the National Association of
Manufacturers, the federal regulatory compliance cost-per-employee per year was $29,100 for
manufacturing firms, compared with $12,800 for all firms.

These costs are even greater for small businesses who have fewer resources to ensure regulatory
compliance and fewer employees to spread the costs across. According to that same study, the
regulatory compliance costs per employee per year for manufacturing firms with less than 50
employees was a staggering $50,100, compared with $14,700 for all firms of the same size.

Take a moment to let that sink in: small manufacturers are, on average, paying over $50,000 per year
simply on regulatory compliance costs. According to the Bureau of Labor Statistics, in 2023 the mean
annual wage for manufacturing in Wisconsin was $47,990.3 That means that small manufacturing firms
in Wisconsin are paying more, on average, to comply with regulations than they pay their employees.

And let me speak from experience. As President of a small agriculture processing business, I learned
firsthand how difficult it is to navigate the dizzying array of regulatory issues while still making
payroll—and I’m a D.C.-based regulatory attorney! If it was hard for me, I cannot imagine how other small
businesses manage. Having learned firsthand how difficult it is for small businesses to navigate the
regulatory environment, after leaving this firm I served as Regulatory and Oversight Counsel for the
Senate Small Business Committee under Senator Ernst to fight for small businesses nationwide.

Now, consider these statistics understanding that Wisconsin ranks as the thirteenth most regulated
state in the nation and the second most regulated state in the Midwest, with over 165,000 regulatory
restrictions in its administrative code—double the restrictions of neighboring states like Michigan. By
reducing the regulatory burden, S.B. 277 and the broader Red Tape Reset initiative will make
Wisconsin a magnet for businesses, entrepreneurs, and job creators.

This is not to say that there should be no regulations, but rather that it is vital that this body ensure
that only those regulations that are absolutely necessary remain active and let those regulations that
are no longer necessary fall by the wayside. This is particularly important because it benefits
responsible firms that comply with all regulatory responsibilities regardless of age or perceived
necessity. By removing outdated and unnecessary regulations, you can ensure these responsible firms
are not spending money on regulations this body no longer deems necessary. Given the high costs of
regulations, especially on small firms, this should be a clear priority.

This brings me to the second reason why bills such as S.B. 277 are so important—ensuring that the
cost-benefit analysis conducted when the regulation was first promulgated has held true. The nature
of public policy requires regulators to make assumptions as to the potential costs and benefits of a
given regulation. Yet, without a strong retrospective review process, these assumptions are rarely
questioned once hard data becomes available. Under S.B. 277, both the agency and the legislature
would be able to review hard data every seven years against the initial assumptions made to determine
whether the regulation is still necessary, necessary but in need of change, or outright unnecessary or
unjustifiable given the new cost-benefit analysis. In the event that a regulation is deemed necessary,
S.B. 277 also affords the agency an opportunity to repromulgate the regulation, perhaps this time
providing alternatives for small businesses that are less costly or incorporating emerging technologies
that can reduce the compliance costs.

Finally, proper legislative oversight of regulatory agencies cuts both ways and is policy neutral. Nothing
in S.B. 277 says which types of regulations will be deemed necessary or unnecessary, just that the
agencies should be required to review their regulations periodically to determine which are necessary
and which are not. Indeed, the legislation even allows for the joint committee to extend the expiration
date for a chapter for up to a year if more time is needed to make this determination. Further, as it
currently stands, Wisconsin regulatory agencies must spend roughly the same resources and time—all
at the taxpayers’ expense—to repeal an outdated regulation as it takes to issue a new one. I would
guess that many regulators would be happy to remove outdated regulations if these resource restrains
were removed. At the federal level, we hear this regularly from agencies.

There is no doubt that many legislators here today might believe this bill is meant to stifle regulation,
but I am fairly certain that those same legislators can imagine a time when an executive branch of the
opposite party was or will be in charge and you would be happy to have the opportunity to review
regulatory actions periodically.

On behalf of Americans for Prosperity, I thank you all for your continued leadership in ensuring
Wisconsin and the United States has the most competitive regulatory system in the world. I also
thank you for the opportunity to share my thoughts on the need for policy neutral retrospective
regulatory review and efficient sunsetting where necessary and I look forward to the opportunity to
answer each of your questions.

Graham Owens is a Administrative State Reform Policy Fellow at Americans for Prosperity.

For references used in testimony, please see the PDF of the testimony.