Opinion
December 15, 2008, August 26, 2010
RAYMOND P. TAFFORA Deputy Attorney General
Mr. Mark B. Hazelbaker Corporation Counsel Juneau County
3555 University Avenue Madison, WI 53705
Attorney General J.B. Van Hollen
114 East State Capitol Madison, WI 53707-7857 Re: Request for Formal Opinion
Dear Mr. Hazelbaker:
¶ 1. You indicate that during the course of Juneau County's comprehensive planning process questions have arisen as to whether local units of government can require local licensure of contractors who obtain building permits to perform work on one and two family dwellings in which they have no legal or equitable interest. You note that in Wis. Stat. § 101.654 the Legislature has prescribed detailed financial responsibility requirements for dwelling contractors. You also note that 2005 Wisconsin Act 200 added a six-hour minimum annual continuing education requirement for dwelling contractor qualifiers to Wis. Stat. § 101.654 and that the minimum continuing education requirement was changed to twelve hours biennially in 2007 Wisconsin Act 14.
Hereafter, the term "dwelling contractors" refers to persons who obtain building permits to perform work on one and two family dwellings in which they have no legal or equitable interest.
BACKGROUND
¶ 2. You indicate that you have become aware of cities in Wisconsin outside of Juneau County that require local licensure of dwelling contractors. One such city ordinance requires a "general contractor" to have either four years of apprenticeship plus four years as a journeyman, eight years working for a general contractor in the construction industry, or four years of architectural or engineering education and one year of on-the-job training. Passage of an examination is required in order to obtain a local "general contractor" license. The same ordinance requires a "carpentry contractor" to have four years of apprenticeship, plus two years working as a journeyman in the residential trade, or six years experience in the construction industry. Passage of an examination is required in order to obtain a local "carpentry contractor" license. In order to obtain a building permit to perform work on one and two family dwellings, the ordinance appears to require that a dwelling contractor have at least one locally-licensed "general contractor" or "carpentry contractor" on staff. An ordinance enacted by another city seems to require a minimum of four years of experience and passage of an examination in order to obtain a local contractor's license. Under that ordinance, at least one such license is apparently required in order to obtain a building permit to perform work on one and two family dwellings in that city. Neither city ordinance appears to impose financial responsibility or continuing education requirements. You apparently are concerned that local units of government in Juneau County may attempt to enact ordinances similar to the two ordinances described.
QUESTION PRESENTED AND BRIEF ANSWER
¶ 3. You ask whether the local ordinances requiring local licensure of dwelling contractors are preempted by the "ONE-AND-2-FAMILY DWELLING CODE," Wis. Stat. ch. 101, subch. II (the "Dwelling Code").
¶ 4. A particular municipal licensure requirement may be preempted if that requirement logically conflicts with, defeats the purpose of, or violates the spirit of state contractor financial responsibility and continuing education requirements. In my opinion, ordinances requiring local licensure are preempted if they impose on persons seeking a building permit for one-or 2-family dwellings greater financial responsibility, education, or examination requirements than required by state law.
ANALYSIS
¶ 5. To ascertain whether a municipality may license dwelling contractors, it is first necessary to examine structure of the Dwelling Code.
¶ 6. The Legislature's stated purpose in enacting the Dwelling Code was to "establish statewide construction standards and inspection procedures" for such dwellings and "promote interstate uniformity in construction standards[.]" Wis. Stat § 101.60.
¶ 7. To that end, the Dwelling Code vests in the Department of Commerce the power to adopt rules establishing uniform standards for construction and inspection of one-and 2-family dwellings. Wis. Stat. § 101.63(1). The standards are to be nationally recognized, when feasible. Id. In addition to other powers, the Department of Commerce is given rulemaking authority over the certification of inspectors and the certification of dwelling contractors. Wis. Stat. §§ 101.63(2), (2m), 101.654. The certification of dwelling contractors includes education and financial responsibility components. Wis. Stat. § 101.654(lm), (2). The Department of Commerce must also develop a standard building permit form for all new one-and 2-family dwellings. Wis. Stat. § 101.63(7).
¶ 8. Municipal powers are also established in the Dwelling Code. Wis. Stat. § 101.65. The municipal powers provisions are set forth as things municipalities may do, things municipalities may not do, and things municipalities must do. In the first category, municipalities may "[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances, provided such ordinances meet the requirements of the one-and 2-family dwelling code adopted in accordance with this subchapter." Wis. Stat. § 101.65(l)(a). These municipalities may also collect fees to defray the costs of jurisdiction, and may also by ordinance provide for remedies and penalties for violations of ordinances passed to enforce the Dwelling Code. Wis. Stat. § 101.65(l)(c), (d).
¶ 9. In the second category, municipalities may not issue building permits to individuals who are not in compliance with the education and financial responsibility certification requirements in Wis. Stat. § 101.654, so long as those requirements apply. Wis. Stat. § 101.65(lm).
For example, the certification requirements do not apply to the owner of a dwelling who resides or will reside in the dwelling. Wis. Stat. § 101.654(l)(b).
¶ 10. In the third category, municipalities must use the Department of Commerce's standard building permit for new dwellings. Wis. Stat. § 101.65(3). They must also require an owner who applies for a building permit to sign a statement acknowledging certain liabilities if the owner hires a contractor who is not bonded or insured as required by Wis. Stat. § 101.654(2)(a) to perform work. Wis. Stat. § 101.65(lr).
¶ 11. Absent from the provisions delineating a municipality's powers under the Dwelling Code is any reference to a municipal power to license or certify contractors. Curiously, however, Wis. Stat. § 101.63(2) — which otherwise governs the state certification of inspectors and not contractors — provides that "[t]he department [of commerce] may not adopt any rule which prohibits any city, village, town or county from licensing persons for performing work on a dwelling in which the licensed person has no legal or equitable interest." This language, which appears to prevent the Department of Commerce from preventing local licensure of dwelling contractors, was added to Wis. Stat. § 101.63(2) in ch. 221, sec. 545, Laws of 1979.
While the remainder of Wis. Stat. § 101.63(2) addresses inspectors, as opposed to contractors, the placement of this provision in this subsection does not overcome the plain reading that dwelling contractors, and not inspectors, are the subject of the limitation on the Department of Commerce's power to prohibit licensure. The phrase "performing work on" contemplates building, not inspecting. The phrase "inspecting" is used elsewhere in Wis. Stat. § 101.63(2), indicating the Legislature was not referring to inspectors and inspecting when it chose the phrase "performing work on" in the last sentence of Wis. Stat. § 101.63(2).
¶ 12. In construing the meaning of this language, `"It must be presumed that the legislature did not intend to legislate in vain, and that it had a specific purpose in mind.'" Haas v. Welch, 207 Wis. 84, 86, 240 N.W. 789 (1932), quoting Harris v. Halverson, 192 Wis. 71, 76, 211 N.W. 295 (1927). "When the legislature enacts a statute, it is presumed to act with full knowledge of the existing laws, including statutes." Mack v. Joint School District No. 3, 92 Wis. 2d 476, 489, 285 N.W.2d 604 (1979). The Legislature is presumed to know the meaning of the words it selects, and to `"cho[o]se its terms carefully and precisely to express its meaning'" Johnson v. City of Edgerton, 207 Wis. 2d 343, 351, 558 N.W.2d 653 (Ct. App. 1996), quoting Ball v. District No. 4, Area Board, 117 Wis. 2d 529, 539, 345 N.W.2d 389 (1984). "It should never be presumed that any part, much less all, of a statute is meaningless." 73 Op. Att'y Gen. 120, 121 (1984), citing Associated Hospital Service v. Milwaukee, 13 Wis. 2d 447, 109 N.W.2d 271 (1961). Accord State v. Wisconsin Telephone Co., 91 Wis. 2d 702, 714-15, 284 N.W.2d 41 (1979). Although the last sentence of Wis. Stat. § 101.63(2) does not itself grant authority to local units of government to require local licensure of dwelling contractors, it appears that when the language was enacted the Legislature must have been of the view that cities, villages, towns, and counties did possess the authority to require local licensure of dwelling contractors. If that were not the case, there was no apparent purpose for the enactment of that language.
¶ 13. When ch. 221, sec. 545, Laws of 1979 was enacted, the only possible source of authority to justify the Legislature's view that all four principal local units of government — cities, villages, towns, and counties — may require local licensure of dwelling contractors was Wis. Stat. § 101.65(1) (1979). That subsection authorized all four local units of government to "[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances, provided such ordinances meet the requirements of the one-and 2-family dwelling code. . . ." In Town of Clearfield v. Cushman, 150 Wis. 2d 10, 20-21, 440 N.W.2d 777 (1989), the court held that "[f]rom its statutorily assigned responsibilities, the Town has implicit power to require building permits." The court reasoned that `"[W]hen specific duties are intrusted to [towns] and made obligatory on their part, it must be assumed that it was the legislative intent to give them ample authority to carry out those duties.'" Cushman, 150 Wis. 2d at 21. In light of the enactment of the last sentence of Wis. Stat. § 101.63(2), the Legislature must have been of the view that the language in Wis. Stat. § 101.65(1) (1979) authorizing cities, villages, towns, and counties to "[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances . . ." constituted an implied legislative grant of authority to require local licensure of dwelling contractors.
Cities and villages possess both constitutional and statutory home rule authority. Wis. Const. art. XI, § 3( 1); Wis. Stat. §§ 62.11(5) and 61.34(1). Counties have only statutory administrative home rule powers. Wis. Stat. § 59.03(1). Towns do not have home rule powers. In 1979, existing legal authority was to the effect that even those towns that possessed village powers could not exercise those statutory powers granted villages under Wis. Stat. § 61.34(1) because "[t]he attempted exercise by towns of the general home rule power is inherently inconsistent with the constitutional rule requiring one system of uniform town government." 66 Op. Att'y Gen. 58, 59 (1977). Compare Town ofBeloit v. County of Rock, 2003 WI 8, ¶ 23, 259 Wis. 2d 37, 657 N.W.2d 344. In 1979, the county administrative home rule statutes had not yet been enacted. 77 Op. Att'y Gen. 113,116 (1988) subsequently concluded that county administrative home rule statutes "expand upon and `fill the gaps' in the organizational and administrative structure which is already in place[.]" Also see Jackson County v. State, 2006 WI 96, ¶ 17, 293 Wis. 2d 497, 717 N.W.2d 713 (holding that a county's power to rescind a tax deed "must be found in a statute or necessarily be implied from a statute [other than the county administrative home rule statutes], in order for that power to exist.").
¶ 14. Although the Legislature appears to have implicitly acknowledged the ability of municipalities to license dwelling contractors and prohibited the Department of Commerce from promulgating a rule that prohibits all licensure, that does not make every local licensure scheme valid. Indeed, as explained above, the implied source of statutory authority for cities, villages, towns, and counties to license dwelling contractors arose from their statutory power to "[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances. . . ." Wis. Stat. § 101.65(l)(a). But this exercise of jurisdiction is expressly limited to "such ordinances meet the requirements of the one-and 2-family dwelling code adopted in accordance with this subchapter." Id. As shown below, licensure requirements that impose financial responsibility, education, and examination requirements beyond those required by state law are not permitted because they would not meet the requirements of the Dwelling Code.
¶ 15. After the enactment of ch. 221, sec. 545, Laws of 1979, the Legislature amended the Dwelling Code to provide for the certification of dwelling contractors. In order to obtain a building permit, a person who does not own and live in (or intend to live in) a dwelling must annually obtain from the Department of Commerce a certificate of financial responsibility. Wis. Stat. § 101.654. In order to obtain a certificate of financial responsibility from the Department of Commerce to perform work estimated to cost $25,000 or more, a dwelling contractor must have obtained either a surety bond of not less than $25,000 or a general liability insurance policy of at least $250,000 per occurrence, see Wis. Stat. § 101.654(2)(a) and (2m); must have obtained any worker's compensation insurance that is required under Wis. Stat. § 102.28(2)(a) and (b), see Wis. Stat. § 101.654(2)(b); and must have demonstrated that all required state and federal unemployment taxes were paid, see Wis. Stat. § 101.654(2)(c). The Department of Commerce may deny, suspend, or revoke the certification of a dwelling contractor who fails to comply with state financial responsibility requirements. See Wis. Admin. Code § Comm 5.10(l)(a). While the statute uses the term "certificate," because a person (other than a home owner) is required to hold the certificate to obtain a building permit, the state certificate is effectively a license.
¶ 16. In 2006, the Legislature added education and examination requirements to the state's certification requirements necessary to obtain a building permit. 2005 Wisconsin Act 200, sees. 11-13; Wis. Stat. § 101.654 (2005). The Dwelling Code now requires that persons seeking to obtain a building permit, with certain exceptions, must complete continuing education requirements and provide proof that those requirements have been completed. Wis. Stat. § 101.654(l)(a). As amended by 2007 Wisconsin Act 14, these education requirements now include 12 hours of education relevant to the professional area of expertise every 2 years and also attendance at one or more professional meetings or educational seminars designed for both building contractors and building inspectors. Wis. Stat. § 101.654(lm)(b). Persons newly wishing to be certified — i.e., those who did not hold a certificate of financial responsibility on April 11, 2006 (the day after the date 2005 Wisconsin Act 200 was published) — must also successfully complete an examination developed by the Department of Commerce. Wis. Stat. § 101.654(lm)(b)3.
Exempted from this provision are owners who reside or intend to reside in the dwelling for which he or she is seeking a permit and persons who hold a current license as defined in Wis. Stat. § 101.02(21)(a), so long as the work to be performed is work for which the license is held. Wis. Stat. § 101.654(l)(b), (c).
¶ 17. In 2005 Wisconsin Act 200, the Legislature also created the "contractor certification council," which replaced the "contractor financial responsibility council" and expanded on its powers. 2005 Wisconsin Act 200, sec. 3. The new council is comprised of members appointed by the Secretary of Commerce who are involved in or have demonstrated an interest in continuing education for contractors. Wis. Stat. § 15.157(5). It is charged with recommending to the Department of Commerce rules for certifying financial responsibility of contractors and recommending to the Department of Commerce for its approval courses that meet continuing education requirements. Wis. Stat § 101.625(1), (2). In addition, the contractor certification council is required to advise the Department of Commerce on the development of course examination for those individuals who are required to pass examinations. Wis. Stat. § 101.625(3).
¶ 18. The Department of Commerce has promulgated rules to administer the continuing education requirements in the Dwelling Code. The rules create a "dwelling contractor qualifier certification" that is issued by the Department of Commerce, which serves as proof required under Wis. Stat. § 101.654(l)(a) that a person has completed his or her education requirements. Wis, Admin. Code § Comm 5.315(1). The rules also require that to obtain the "dwelling contractor qualifier certification," an applicant must, among other requirements, show that he or she completed 12 hours of an approved education course, which must include instruction and an examination concerning construction laws, construction codes, and construction business practices. Wis. Admin. Code § Comm 5.315(2)(c)l.a.-c. A dwelling contractor may renew a certification by obtaining additional hours of approved continuing education during the applicable 2-year time period. Wis. Admin. Code § Comm 5.315(3).
Certain individuals who had held or applied for a certificate of financial responsibility between April 11 and 14, 2006 were not required to take these classes and examinations to obtain dwelling contractor certification qualifier, but must meet specified continuing education requirements to obtain a renewal. Wis. Admin. Code § Comm 5.315(2)(c)2., (3); see also Wis. Stat. § 101.654(lm)(c), (d) (stating that the rules promulgated under Wis. Stat. § 101.654(lm) shall not require a person holding a certificate of financial responsibility on April 11, 2006 to pass an examination on continuing education courses and permitting different course requirements for persons who held a certificate of financial responsibility on April 11, 2006 and for those who did not).
¶ 19. The Department of Commerce may deny, suspend, or revoke the certification of a dwelling contractor qualifier who fails to comply with state continuing education requirements. See Wis. Stat. § 101.654(5)(a); Wis. Admin. Code § Comm 5.10(l)(a).
¶ 20. A municipal ordinance is preempted if: "(1) the legislature has expressly withdrawn the power of municipalities to act; (2) it logically conflicts with state legislation; (3) it defeats the purpose of state legislation; or (4) it violates the spirit of state legislation." DeRosso Landfill Co. v. City of Oak Creek, 200 Wis. 2d 642, 651-52, 547 N.W.2d 770 (1996) (footnotes omitted).
¶ 21. The Legislature has not expressly withdrawn the authority of municipalities to regulate the local licensure of dwelling contractors. Wisconsin Stat. § 101.65(1) continues to authorize municipalities to "[e]xercise jurisdiction over the construction and inspection of new dwellings by passage of ordinances. . . ." and Wis. Stat. § 101.63(2) also continues to provide that the Department of Commerce "may not adopt any rule which prohibits any city, village, town or county from licensing persons for performing work on a dwelling in which the licensed person has no legal or equitable interest."
¶ 22. A municipal licensure provision may nevertheless logically conflict with, defeat the purpose of, or violate the spirit of state legislation. The validity of local licensure requirements must therefore be decided by determining whether the individual local licensure requirement can reasonably coexist with the state requirements with which dwelling contractors and dwelling contractor qualifiers must comply.
¶ 23. With respect to any municipal license requirements that impose additional financial responsibility requirements or educational qualifications beyond those required by state law on those seeking a building permit involving construction of dwellings covered by the Dwelling Code, it is my opinion that such municipal ordinances logically conflict with state law and also frustrate its purpose and spirit, and are therefore preempted.
Any lesser financial responsibility or education requirement required by a local ordinance is expressly prohibited, as municipalities are prohibited from issuing building permits that those who have not complied with the financial responsibility and education requirements in Wis. Stat. § 101.65(lm).
¶ 24. The Dwelling Code is not designed to set minimal requirements that can be exceeded by local ordinance. Instead, the stated purpose of the Dwelling Code is to promote uniformity with respect to the construction and inspection of one-and 2-family dwellings. Wis. Stat. § 101.60. As demonstrated above, the Legislature's implicit recognition in 1979 that municipalities have licensure authority stems from the Dwelling Code's grant of authority to the municipalities to exercise jurisdiction "over the construction and inspection of new dwellings[.]" Wis. Stat. § 101.65(l)(a). But that exercise must "meet the requirements of the one-and 2-family dwelling code[.]" Id.
¶ 25. The Dwelling Code expressly creates state requirements relating to the financial responsibility and education of those applying for building permits. Wis. Stat. § 101.654. The Legislature's education requirements addressed both those who were qualified to obtain building permits when education requirements were enacted — continuing education but not examination — as well as those wishing to be newly qualified to obtain a permit — education and examination. Wis. Stat. § 101.654(c); Wis. Stat. § 101.654(lm)(b)3. Thus, the state education requirements speak to not only continuing education, but also the education requirements for those who wish to enter the field. Id.; compare also Wis. Stat. § 101.625(2) to Wis. Stat. § 101.625(3) (distinguishing dwelling contractor certification council's duties to recommend to the Department of Commerce those courses appropriate for continuing education and those examination requirements that would be required for new dwelling contractors). In sum, for a municipality's jurisdiction to "meet the requirements" of the Dwelling Code, it may not impose additional certification or licensure requirements with respect to the financial capability, education, and examination requirements of those seeking to obtain building permits. To do so would logically conflict with the Dwelling Code, defeat its purpose, and violate its spirit.
¶ 26. The fact that Wisconsin law restricts the ability of the Department of Commerce to prohibit local licensure by rule does not undermine my conclusion. Wisconsin Stat. § 101.63(2) limits only the authority of the Department of Commerce to adopt certain rules, it does not (and cannot) prevent subsequently enacted state law from doing so. The acts creating the state's certification criteria for dwelling contractors with respect to financial responsibility, education, and examination requirements were passed after the Legislature enacted Wis. Stat. § 101.63(2). It is these acts, not an agency rule, that give rise to preemption in the context addressed in this opinion.
CONCLUSION
¶ 27. A particular municipal licensure requirement may be preempted if that requirement logically conflicts with, defeats the purpose of, or violates the spirit of state contractor financial responsibility and continuing education requirements. In my opinion, ordinances requiring local licensure are preempted if they impose on persons seeking a building permit for one-or 2-family dwellings greater financial responsibility, education, or examination requirements than required by state law.
Sincerely,
J.B.VANHOLLEN Attorney General
JBVH:KMS:cla
Dear General Van Hollen:
I write in my capacity as the Corporation Counsel for Juneau County to request the formal opinion of your office. The County is involved in comprehensive planning, which we anticipate will encourage more communities in Juneau County to adopt zoning and local enforcement of building codes. As communities do so, questions are being raised as to the authority of local communities to require local certifications or licensing of contractors. In my opinion, the Wisconsin Statutes pertaining to contractor certification are matters of statewide concern such that supplemental local regulations are unlawful. In this letter, 1 will explain the basis for my opinion.
History
As recently as 35 years ago, building codes and the regulation of the construction trades were fragmented and inconsistent among the local units of government of Wisconsin. There were differing building codes in each community. Some codes were written deliberately to exclude manufactured housing. There were questions of the relative safety of various codes in use. Variations among the codes were not always understandable. Because each community had its own code, it also issued its own licenses for the construction trades. For that reason, plumbers, electricians, heating contractors and carpenters often could work in just a few communities — and had limited competition within those jurisdictions. The construction industry was highly fragmented as the result of widely varying local regulations.
This changed in 1975 when the Legislature adopted the Uniform Dwelling Code, Chapter 404, Laws of 1975. That law created Subchapter II of Chapter 101, Wis. Stats. The Chapter 404 enacted sec. 101.60, Wis. Stats., which continues to provide:
101.60 Purpose. The purpose of this subchapter is to establish statewide construction standards and inspection procedures for one-and 2-family dwellings and to promote interstate uniformity in construction standards by authorizing the department to enter into reciprocal agreements with other states which have equivalent standards.
State Certification of Contractors
Since 1975, the Legislature has significantly expanded the scope of the one and two family code regulation system provided by Subchapter II. Most notably for the purposes of this request, in 1993 Wisconsin Act 126 the Legislature adopted sec. 101.654, Wis. Stats. The statute was originally adopted under the title "Contractor financial responsibility certification." Its original purpose was to require one-and two-family dwelling contractors to establish through state registration that the contractor was financially capable of constructing dwellings.
The contractor regulations were subsequently modified and augmented. 1995 Wisconsin Act 392 modified the law to provide that its applicability was limited to dwellings constructed on or after December 1, 1978. 1997 Wisconsin Act 39 made changes in the statute related to assuring that contractors complied with unemployment compensation contribution requirements. 2005 Wisconsin Act 200 made a major expansion of the statute to include continuing education requirements for contractors. 2007 Wisconsin Act 14 amended the statute to increase the biennial continuing education requirements from 6 to 12 hours.
The current language of the statute provides as follows:
101.654 Contractor certification; education.
(l)(a) Subject to par, (b), no person may obtain a building permit unless the person annually obtains from the department a certificate of financial responsibility showing that the person is in compliance with sub. (2).
(b) Paragraph (a) does not apply to an owner of a dwelling who resides or will reside in the dwelling and who applies for a building permit to perform work on that dwelling.
(c) 1. In this paragraph, "license" has the meaning given in s. 101.02 (21) (a).
2. The continuing education requirements under par. (a) and the rules promulgated by the department under sub. (lm) do not apply to any person who holds a current license issued by the department at the time that the person obtains a building permit if the work the person does under the permit is work for which the person is licensed.
(lm) (a) The department shall promulgate rules establishing continuing education requirements for persons seeking to obtain a building permit under sub. (1) (a).
(b) The rules promulgated under this subsection shall require all of the following:
1. Completion every 2 years of at least 12 hours of continuing education relevant to the professional area of expertise of the person seeking to obtain a building permit, approved by the department.
2. Attendance at one or more professional meetings or educational seminars designed for both building contractors and building inspectors.
3. For a person who does not hold a certificate of financial responsibility on April 11, 2006, successful completion of an examination developed by the department on the continuing education courses required under this subsection.
(c) The rules promulgated under this subsection may not require a person who holds a certificate of financial responsibility on April 11, 2006, to take an examination on the continuing education courses required under this subsection.
(cm) The rules promulgated under this subsection may not require a person to take continuing education courses, or to take an examination on continuing education courses, that are not relevant to that person's professional area of expertise.
(d) Subject to the continuing education requirements under pars. (b) and (c), the rules promulgated under par. (a) may specify different continuing education course requirements for persons who hold a certificate of financial responsibility on April 11, 2006, and for persons who do not hold a certificate of financial responsibility on April 11, 2006.
(e) The continuing education approved by the department under par. (b) 1. shall include courses offered by private organizations with whom the department contracts under s. 101.657. The department may approve courses that are offered by other states.
(2) An applicant for a certificate of financial responsibility shall provide to the satisfaction of the department proof of all of the following:
(a) That the applicant has in force one of the following:
1. A bond endorsed by a surety company authorized to do business in this state of not less than $5,000, conditioned upon the applicant complying with all applicable provisions of the one-and 2-family dwelling code and any ordinance enacted under s. 101.65 (1) (a).
2. A policy of general liability insurance issued by an insurer authorized to do business in this state insuring the applicant in the amount of at least $250,000 per occurrence because of bodily injury to or death of others or because of damage to the property of others.
(b) If the applicant is required under s. 102.28 (2) (a) to have in force a policy of worker's compensation insurance or if the applicant is self-insured in accordance with s. 102.28 (2) (b), that the applicant has in force a policy of worker's compensation insurance issued by an insurer authorized to do business in this state or is self-insured in accordance with s. 102.28 (2) (b).
(c) If the applicant is required to make state unemployment insurance contributions under ch. 108 or is required to pay federal unemployment compensation taxes under 26 USC 3301 to 3311, that the applicant is making those contributions or paying those taxes as required.
(2m) If an applicant wishes to use a bond under sub. (2) (a) 1. of less than $25,000 to comply with sub. (2) (a), the applicant shall agree not to perform any work on a dwelling for which the estimated cost of completion is greater than the amount of the bond. The department shall indicate any restriction under this subsection on the certificate of financial responsibility issued under sub. (3).
(3) Upon receipt of the proof required under sub. (2) and the fee required by rules promulgated under s. 101.63 (2m), the department shall issue to the applicant a certificate of financial responsibility. A certificate of financial responsibility issued under this subsection is valid for one year after the date of issuance, unless sooner suspended or revoked.
(4) (a) A bond or insurance policy required under sub. (2) may not be canceled by the person insured under the bond or policy or by the surety company or insurer except on 30 days' prior written notice served on the department in person or by 1st class mail or, if the cancellation is for nonpayment of premiums to the insurer, on 10 days' prior written notice served on the department in person or by 1st class mail. The person insured under the bond or policy shall file with the department proof to the satisfaction of the department of a replacement bond or replacement insurance within the 30-day notice period or 10-day notice period, whichever is applicable, and before the expiration of the bond or policy. The department shall suspend without prior notice or hearing the certificate of financial responsibility of a person who does not file satisfactory proof of a replacement bond or replacement insurance as required by this subsection.
(b) A bond under sub. (2) (a) 1. shall be executed in the name of the state for the benefit of any person who sustains a loss as a result of the person insured under the bond not complying with an applicable provision of the one-and 2-family dwelling code or any ordinance enacted under s. 101.65 (1) (a), except that the aggregate liability of the surety to all persons may not exceed the amount of the bond.
(5) The department may revoke or suspend a certificate of financial responsibility if any of the following apply:
(a) The holder fails to comply with the continuing education requirements specified under subs. (1) and (lm).
(b) The holder engages in the construction of a dwelling without a permit required under this chapter.
(c) The holder is convicted of a crime related to the construction of a dwelling.
(d) The holder has been adjudged bankrupt on 2 or more occasions.
A review of the statute's provisions shows that it operates to forbid anyone from doing work on a one-or two-family dwelling (other than one they occupy) unless the person has a certificate issued by the Department of Commerce. The statutes prescribe the only requirements in the statutes for being certified as a contractor. These are validated by obtaining a certificate establishing one is qualified to operate as a contractor. To do so, the statute requires the contractor to have proof of financial capacity, have workers' compensation coverage, be current in unemployment compensation contributions, and comply with continuing education. The continuing education requirements are carefully integrated with parallel provisions governing skilled trades which have their own continuing education requirements, see, subsec. 101.654 (l)(c) 1., Wis. Stats., The cross-reference in that subdivision is to sec. s. 101.02 (21) (a)., Wis. Stats., which enumerates the specific trades and occupations licensed under the other provisions of Ch. 101, Wis. Stats. These other statutes create separate continuing education requirements.
Home Rule Versus Statewide Concerns
The issue presented is whether counties, cities, villages or towns may require contractors certified by the State to obtain a local certification or license to operate within the local unit's jurisdiction.
In the case of counties, the question is whether there is statutory authority to require certification or licenses. Counties have only those functional powers which the Legislature has conferred upon them, State ex rel. Sell v. Milwaukee County, 65 Wis.2d 219, 224, 222 N.W.2d 592, 594 — 595 (1974). The local control granted to counties may not be exercised in a manner which conflicts with state law, Jackson County v. State, Dept. of Natural Resources, 293 Wis.2d 497, 518-519, 717 N.W.2d 713, 724 (2006). The statutes empower counties to license a few enumerated occupations such as transient merchants, secondhand car dealers or peddlers, sec. 59.55 (3) — (5), Wis. Stats. There appears to be no grant of authority permitting counties to regulate contractors. Since counties lack functional home rule, the analysis ends there.
In the case of cities, villages and towns exercising village powers, the question is whether their home rule authority authorizes them to enact ordinances providing for local licensing of contractors, or imposing additional requirements beyond those of sec. 101.654, Wis. Stats.
The Wisconsin Constitution authorizes local units of government to exercise plenary legislative discretion:
Section 3. (1) Cities and villages organized pursuant to state law may determine their local affairs and government, subject only to this constitution and to such enactments of the legislature of statewide concern as with uniformity shall affect every city or every village. The method of such determination shall be prescribed by the legislature.
Wisconsin Constitution, Art. 11, § 3
Since the adoption of constitutional home rule, there has been an ongoing tension between the role of the State in assuring uniformity and that of local communities in meeting unique needs arid circumstances. The delineation of state and local roles has emerged through case law over the decades.
Often tensions arise where, as here, some state regulation exists and a city or village would like to enacts supplemental rules. It has been held that the existence of some state regulation does not necessarily preclude local regulation, Wisconsin Ass'n of Food Dealers v. City of Madison, 89 Wis.2d 311, 278 N.W.2d 481 (Ct.App. 1979).
In the Food Dealers case, the City of Madison adopted an ordinance mandating that all retailers selling milk in containers of one gallon or more in size make it available in both returnable as well as non-returnable containers. The plaintiffs sued seeking an injunction against the ordinance on the ground that it purported to regulate an industry which state law comprehensively regulated. The Court of Appeals agreed that where the Legislature has adopted an enactment of statewide concern, the municipality may not act on the basis of its constitutional home rule authority:
As the statewide concern is paramount, the power of the municipality to adopt an ordinance in this area must come from a source other than art. XI, sec. 3, of the Wisconsin Constitution. Wis. Environmental Decade, Inc. v. DNR, 85 Wis.2d 518, 530-531, 271 N.W.2d 69 (1978); State ex rel. Michalek v. LeGrand, 77 Wis.2d 520, 529, 253 N.W.2d 505 (1977). "The Constitutional authority of cities only extends to local affairs and does not cover matters of statewide concern." Plymouth v. Eisner, 28 Wis.2d 102, 106, 135 N.W.2d 799, 801 (1965).
Food Dealers, 89 Wis.2d 311, 316-317, 278 N.W.2d 481, 484 (Wis.App., 1979)
The Food Dealers court went on to conclude that while the City was barred form exercising its constitutional home rule power, the City was authorized to adopt the ordinance pursuant to the City's statutory power to regulate industry, contained in sec. 62.11 (5), Wis. Stats., which reads:
(5) Powers. Except as elsewhere in the statutes specifically provided, the council shall have the management and control of the city property, finances, highways, navigable waters, and the public service, and shall have power to act for the government and good order of the city, for its commercial benefit, and for the health, safety, and welfare of the public, and may carry out its powers by license, regulation, suppression, borrowing of money, tax levy, appropriation, fine, imprisonment, confiscation, and other necessary or convenient means. The powers hereby conferred shall be in addition to all other grants, and shall be limited only by express language.
Where there is statutory authority for local action, the city or village may rely on that grant of authority unless the exercise of that power is inconsistent with state law. Food Dealers, 89 Wis.2d 311, 317, 278 N.W.2d 481, 484 (Ct.App., 1979).
For that reason, one of your predecessors has held that the grant of power in sec. 62.11 (5) allowing cities to issue licenses does not allow local units to enact ordinances providing for supplemental regulation of real estate professionals, 44 Op.Atty.Gen. 146 (1955). Municipalities may not rely on their statutory powers to vary from the state scheme for alcohol regulation, State ex rel. Martin v. Barrett, 248 Wis. 621, 628, 22 N.W.2d 663, 667 (1946).
It has also been held that the state's authority to authorize application of chemical weed-killing treatments of lakes cannot be overridden by contrary local ordinances, Wisconsin's Environmental Decade, Inc. v. Department of Natural Resources, 85 Wis.2d 518, 271 N.W.2d 69 (1978). In the Environmental Decade case, the City of Madison adopted local ordinances which purported to forbid application of lake treatments that the DNR had explicitly permitted. Rejecting the City ordinance, the Wisconsin Supreme Court stated:
Further, it should be noted that pursuant to sec. 144.025(2)(i), Stats., the legislature has expressly sanctioned the chemical treatment of aquatic nuisances under the control of the DNR. A city cannot "`. . . lawfully forbid what the legislature has expressly licensed, authorized or required, or authorize what the legislature has expressly forbidden.'" Fox v. Racine, 225 Wis. 542, 545, 275 N.W. 513, 514 (1937). Therefore, not only is sec. 144.025(2)(i) specific authority for the proposition that the DNR possesses the power to issue chemical treatment permits over the objections of the City of Madison, it is also persuasive evidence for the view that Madison may not legitimately forbid these legislatively authorized treatments in any case, regardless of the extent of the DNR's control.
Wisconsin's Environmental Decade, 85 Wis.2d 518, 529, 271 N.W.2d 69, 74 (1978).
In 1984, the Wisconsin Supreme Court reviewed the issue of the tension between home rule and uniform state regulation. The Court laid out a framework for analyzing these issues in Anchor Sav. Loan Ass'n v. Equal Opportunities Com'n, 120 Wis.2d 391, 355 N.W.2d 234 (1984).
In the Anchor Savings Loan case, the City of Madison's local equal opportunity commission found that the plaintiff financial institution had discriminated against a loan applicant on the basis of marital status, in violation of the City's non-discrimination ordinance. The Supreme Court began by reviewing the allocation of power between the state and its local governments:
This court considered the issue of the respective powers of the state and municipalities on the subject of legislative enactment in State ex rel. Michalek v. LeGrand, 11 Wis.2d 520, 527, 253 N.W.2d 505 (1977), and held that three areas have been outlined as: "(1) Those that are `exclusively of statewide concern'; (2) those that `may be fairly classified as entirely of local character'; and (3) those which `it is not possible to fit . . . exclusively into one or the other of these two categories.'" (Footnotes omitted.) Madison EOC and the city concede that the regulation of credit is a matter of statewide concern, as well as local concern.
Anchor Sav. Loan, 120 Wis.2d 391, 394-395, 355 N.W.2d 234, 236-237 (1984)
Reviewing the case at bar, the Supreme Court concluded that the question of lending practices by financial institutions fell into the first category, one of exclusively statewide significance. State statutes governing financial institutions demonstrated a comprehensive approach to regulation of those institutions. For that reason, the Supreme Court held:
The regulation and control of Anchor's lending practices has been preempted by the state of Wisconsin in ch. 215, Stats., by establishing a comprehensive and all-encompassing scheme regarding savings and loan association practices, and therefore the Madison EOC was without authority to review the refusal of Anchor to grant a loan to Roy U. Schenk on the basis of marital status discrimination.
Anchor Sav. Loan, 120 Wis.2d 391, 401-402, 355 N.W.2d 234, 240 (1984)
The Anchor Savings and Loan case established a four-criteria test to analyze whether local units of government may exercise their home rule power once a matter has been determined to be state-wide concerns:
(1) whether the legislature has expressly withdrawn the power of municipalities to act;
(2) whether the ordinance logically conflicts with the state legislation;
(3) whether the ordinance defeats the purpose of the state legislation; or
(4) whether the ordinance goes against the spirit of the state legislation.
Anchor Savings Loan, 120 Wis. 2d at 397, 355 N.W.2d at 238 (1984).
Applying these criteria, the Court of Appeals held in 1987 that cities could not use their home-rule powers to create a position of public safety officer which combined the authority of fire fighters and police officers, Local Union No. 487, IAFF AFL-CIO v. City of Eau Claire, 141 Wis.2d 437, 443-446, 415 N.W.2d 543, 545-546 (Ct.App. 1987).
Analysis Of Contractor Certification Statute And Home Rule
Local supplemental regulation of contractors is invalid because the Legislature has withdrawn the power of communities to act, it logically conflicts with state legislation, defeats the purpose and spirit of the state legislation and purports to prohibit what the state has authorized. Local regulations represent a return to the pre-1975 era of fragmented and inconsistent local regulations of the building industry.
First, it is clear that the statutes make the one-and two-family dwelling code a matter of statewide concern. Section 101.60, Wis. Stats, tells us that the purpose of Subchapter II of Chapter 101 is "The purpose of this subchapter is to establish statewide construction standards and inspection procedures for one-and 2-family dwellings and to promote interstate uniformity in construction standards by authorizing the department to enter into reciprocal agreements with other states which have equivalent standards." The statute plainly provides for statewide uniformity, identifying the regulations in the Subchapter as a matter of statewide concern. The statute even provides that the Department of Commerce is to promote uniformity not only within Wisconsin, but with other states.
If the Legislature intended that Wisconsin achieve regulation of the construction industry which would be uniform even with other states, it certainly is logical to assume the Legislature has directed that there be one set of rules within the State. For that reason, the plain language of sec. 101.60, Wis. Stats., establishes that the dwelling code is a matter of statewide concern. It would appear, therefore, that the Legislature has acted to withdraw the general home rule power of localities to regulate contractors. Section 101.654, Wis. Stats., provides for state certification and continuing education requirements for contractors. Under these requirements, no person may apply for a building permit unless they meet the requirements of the statute.
If a local unit of government adopts a supplemental licensing scheme, that local unit frustrates the intent of the Legislature that there be a statewide regulatory scheme for the construction of one-and two-family dwellings. Contractors who meet all the qualifications required by the State will be denied the right to build within localities which adopt supplemental regulations The State will return to the era in which local units can adopt inconsistent local regulations which restrict access to the local market-and competition.
For that reason, supplemental regulation of contractors conflicts with the specific provisions of the statutes and the broader purpose enumerated in sec. 101.60, Wis. Stats. The Legislature specified the limits of municipal regulation by enacting a provision in Subchapter II, sec. 101.65, Wis. Stats. That section provides, in pertinent part:
101.65 Municipal authority. Except as provided by s. 101.651 , cities, villages, towns and counties: (. . .) (lm) May not issue a building permit to a person who is required to be certified under s. 101.654 unless that person, on applying for a building permit, produces a certificate of financial responsibility issued by the department showing that the person is in compliance with s. 101.654.
This section relates to the authority of small municipalities and is not material to this analysis.
This section relates to the authority of small municipalities and is not material to this analysis.
Local regulation of contractors would take Wisconsin back to an era which the Legislature has sought wisely to put behind us. If it is in the public interest to adopt further regulations on contractors, that decision must be made by the Legislature through amendment of sec. 101.654, Wis. Stats., or by the Department of Commerce through the exercise of its rule-making authority.
I appreciate your guidance in this important matter.
Very truly yours,
Mark B. Hazelbaker Juneau County Corporation Counsel
cc: County Board Chairperson Alan K. Peterson