Tetra Tech EC, Inc. v. Wisconsin Department of Revenue, 914 N.W.2d 21

EPA ordered remediation of PCB-contaminated Fox River sediment; LFR Remediation hired Tetra Tech, which subcontracted dredging and sediment handling to Stuyvesant Dredging (SDI). SDI used mechanical processes (screens, thickeners, filter presses) to separate dredged sediment into water, reusable sand, and PCB-containing sludge.
Wisconsin Department of Revenue audited and assessed sales and use taxes, treating SDI's work as a taxable service under Wis. Stat. § 77.52(2)(a)11. ("processing") and alternatively under § 77.52(2)(a)10.
Taxpayers (Tetra Tech and LFR Remediation) lost at the Tax Appeals Commission, the circuit court, and the court of appeals; they petitioned the Wisconsin Supreme Court.
The Supreme Court considered two principal legal questions: (1) whether SDI’s separation of sediment qualified as "processing" under § 77.52(2)(a)11., and (2) whether Wisconsin courts must defer to administrative agencies' legal interpretations (the state deference doctrine) consistent with the Wisconsin Constitution.
The Court held that SDI’s mechanical separation of sediment is "processing" within the meaning of § 77.52(2)(a)11., and (critically) abolished the court-made practice of deferring to administrative agencies' conclusions of law, directing courts to review agency legal conclusions de novo while still giving agencies’ expertise "due weight" under Wis. Stat. § 227.57(10).

Issue	Plaintiff's Argument (Tetra Tech / LFR)	Defendant's Argument (DOR / Commission)	Held
Whether SDI's separation of river sediment into sand, sludge, and water is "processing" under Wis. Stat. § 77.52(2)(a)11.	Petitioners: "Processing" should be narrower; separation is not manufacturing, fabrication, or production and thus not taxable as "processing."	DOR/Commission: "Processing" includes subjecting tangible personal property to a mechanical or chemical operation (e.g., separation); SDI was paid to process sediment and thus tax applies.	Held: Yes. Court adopts a meaning of "processing" covering mechanical operations that treat or separate tangible personal property without creating a new product; SDI's work is taxable "processing."
Whether Wisconsin courts must defer to administrative agencies' legal interpretations (the Harnischfeger deference framework) consistent with Wis. Const. art. VII, § 2 (judicial vesting).	Petitioners: Implicitly urged rejection of agency deference (argued agency interpretation was wrong).	DOR/Commission: Urged courts to continue deference (great weight/due weight tiers) to agency interpretations.	Held: Court ends mandatory deference. Legal conclusions of agencies are reviewed de novo; courts must give "due weight" (persuasive consideration) to agency expertise under § 227.57(10) but will not cede adjudicative authority to agencies.

Harnischfeger Corp. v. LIRC, 196 Wis.2d 650 (Wis. 1995) (articulated Wisconsin three-tier deference framework: great weight, due weight, no deference)
Pabst v. Wisconsin Dep't of Taxation, 19 Wis.2d 313 (Wis. 1963) (discussed analytical vs. practical approaches to judicial review of agency action)
Bucyrus-Erie Co. v. DILHR, 90 Wis.2d 408 (Wis. 1979) (applied deference where a rational basis for agency interpretation exists)
Racine Harley-Davidson, Inc. v. Wis. Div. of Hearings & Appeals, 292 Wis.2d 549 (Wis. 2006) (explained limits and application of "great weight" deference)
Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (U.S. 1984) (federal framework for judicial deference to administrative interpretations of statutes)
Marbury v. Madison, 5 U.S. (1 Cranch) 137 (U.S. 1803) (established judiciary's duty to "say what the law is")
Borgnis v. Falk Co., 147 Wis. 327 (Wis. 1911) (recognized agencies act quasi-judicially but are not vested with constitutional judicial power)
Perez v. Mortgage Bankers Ass'n, 135 S. Ct. 1199 (U.S. 2015) (discussed limits on deference; agencies must provide persuasive reasons for interpretations)