The Michigan Constitution has a number of provisions that appear potentially relevant to this issue: (1) Const 1963, art 1, § 17 - fair and just treatment in executive hearings; (2) Const 1963, art 3, § 2 — separation of powers; (3) Const 1963, art 4, § 1 — legislative power vested in senate and house; (4) Const 1963, art 4, § 37 — suspension of administrative rules between regular legislative sessions; (5) Const 1963, art 5, § 2 — setting principal executive departments; (6) Const 1963, art 5, § 8 — governor shall take care that laws are faithfully executed; (7) Const 1963, art 6, § 1 — judicial power vested in one court of justice; and (8) Const 1963, art 6, § 28 — court review of agency action. An examination of the Address to the People and the Constitutional Convention debates indicates that only Const 1963, art 4, § 37 and Const 1963, art 6, § 28 provide any guidance about administrative agencies.
It should be noted at the outset that constitutional debate over agencies' rulemaking and formal adjudications was bifurcated. Separate committees had jurisdiction over these two agency functions at the constitutional convention.[11] Art 4, § 37 was meant to limit an agency's rulemaking power between legislative sessions. While the delegates believed that the Legislature had a sufficient check on improper rules by being able to counteract them with superseding legislation, they remained concerned about rules that were issued when the Legislature was out of session and that the Legislature was therefore temporarily unable to override.
The courts' ability to review formal adjudications was covered in art 6, § 28. As will be seen later, the constitutional convention delegates clearly were seeking to limit agency power. The debates show that at the very least, the delegates wanted a factual review of agency adjudications. Discussions of legal review, though infrequent, indicated that courts could review agency legal determinations. There is absolutely nothing in the constitutional convention debates that indicates that Michigan's courts would defer to agency legal interpretations. Given the fairly frequent statements displaying hostility toward agencies, such a standard of deference would likely have been rejected by the delegates.
In Studier v Michigan Pub Sch Employees' Ret Bd, 472 Mich 642 (2005), this Court discussed the role of Constitutional Convention delegate statements in the common-understanding analysis:
[A]lthough this Court has continually recognized that constitutional convention debates are relevant to determining the meaning of a particular provision, Lapeer Co Clerk v Lapeer Circuit Court, 469 Mich 146, 156 (2003); People v Nash, 418 Mich 196, 209 (1983) (opinion by Brickley, J.), we take this opportunity to clarify that, when necessary, the proper objective in consulting constitutional convention debates is not to discern the intent of the framers in proposing or supporting a specific provision, but to determine the intent of the ratifiers in adopting the provision. [People v Nutt, 469 Mich 565, 574 (2004)].13 We highlighted this distinction in Univ of Michigan Regents v Michigan, 395 Mich 52, 59-60 (1975), in which we stated:
The debates must be placed in perspective. They are individual expressions of concepts as the speakers perceive them (or make an effort to explain them). Although they are sometimes illuminating, affording a sense of direction, they are not decisive as to the intent of the general convention (or of the people) in adopting the measures.
Therefore, we will turn to the committee debates only in the absence of guidance in the constitutional language ... or when we find in the debates a recurring thread of explanation binding together the whole of a constitutional concept.
13 "Constitutional Convention debates and the Address to the People are certainly relevant as aids in determining the intent of the ratifiers." (Emphasis added.)
Id. at 655-56.
The debates about Const 1963, art 1, § 17[12] did not deal in any manner with the scope of executive power or the standard of review. Nor did the Address to the People add anything of note.
Each of Michigan's four constitutions has had a separation-of-powers provision. Const 1963, art 3, § 2; Const 1908, art 4, §§ 1-2; Const 1850, art 3, §§ 1-2; and Const 1835, art 3, § 1. The current version states: "The powers of government are divided into three branches: legislative, executive and judicial. No person exercising powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution." Const 1963, art 3, § 2.
The committee report from the 1961-62 Constitutional Convention indicated that these provisions were based on Montesquieu's political theories. The basic concept was: "Desirous of protecting a free people, their [the framers']idea was that if, somehow, the powers of government could be divided, it could not grow so large as to enslave them."[13] 1 Official Record, Constitutional Convention 1961, at 601. During the short debate on this provision, a delegate asked about its impact on administrative agencies. Id. at 602. He was informed that other committees were working on "this problem of administrative law." Id. The Address to the People adds nothing of significance.
There was nothing in the debates about Const 1963, art 4, § 1[14] concerning executive agencies or the standard of review. There was no mention of either in the Address to the People.
Const 1963, art 4, § 37 states:
The legislature may by concurrent resolution empower a joint committee of the legislature, acting between sessions, to suspend any rule or regulation promulgated by an administrative agency subsequent to the adjournment of the last preceding regular legislative session. Such suspension shall continue no longer than the end of the next regular legislative session.
Id.
The majority of the debate surrounding Const 1963, art 4, § 37 related to 2 OAG, 1958, No 3352, (October 8, 1958), wherein the attorney general opined that a statute permitting a legislative veto of rules promulgated by agencies was unconstitutional. The opinion indicated the only way the legislature could affect a rule it did not like was to pass a law contrary to it. Some delegates at the convention were concerned about rules enacted while the legislature was out of session, since the legislature could not enact any legislation then. This new provision set up a process that allowed the legislature to suspend some rules until a new legislative session convened and the legislature could review the possibility of nullifying the rules altogether.
The Address to the People accurately reflects the debates surrounding Const 1963, art 4, § 37:
This is a new section permitting the legislature to set up a joint committee to act between sessions and to suspend until the end of the next regular legislative session any rule or regulation of an administrative agency promulgated when the legislature is not in regular session.
It provides a legislative check on the rule-making authority of administrative agencies when the legislature is not in regular session.
2 Official Record, Constitutional Convention 1961, p 3376.
There was nothing in the convention debates regarding Const 1963, art 5, § 2,[15] Const 1963, art 5, § 8,[16] or Const 1963, art 6, § 1[17] that is illuminating. Nor does the Address to the People contain anything that would assist in determining the proper standard of review.
Const 1963, art 6, § 28 states:
All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record. Findings of fact in workmen's compensation proceedings shall be conclusive in the absence of fraud unless otherwise provided by law.
In the absence of fraud, error of law or the adoption of wrong principles, no appeal may be taken to any court from any final agency provided for the administration of property tax laws from any decision relating to valuation or allocation.
The initial committee recommendation did not include anything about either workmen's compensation or property taxes. 1 Official Record, Constitutional Convention 1961, at 1440. The committee report that accompanied that recommendation noted that since the 1908 constitution, "the field of administrative law has assumed a more significant position in the jurisprudence of our state." Id. Art 6, § 28 was "designed, in the main, to afford a full and adequate method of review of administrative agency decisions consistent with established principles of sound administrative practice." Id.
Most of the course of the constitutional convention debates focused on three issues: the quantum of evidence necessary to sustain an agency decision; this new provision's impact on workmen's compensation; and the value of adding administrative decisions involving licenses to the proposal. But a consistent undercurrent of the convention debates was mistrust of agencies. Delegate Iverson indicated that members of the judiciary committee were "familiar with the growth of the administrative law over the years and perhaps more with its abuse in some instances." Id. at 1444. He noted the committee proposal "is a safeguard, if you please, against bureaucratic action by an administrative agency which might, so to speak, get the bit in its teeth and run with it." Id. Delegates Gover, King, and Boothby did not want individuals judged and prosecuted by the same body. Id. at 1444, 1447, 1451. Delegate Lawrence stated he was for anything that "would clip the wings of these administrative agencies and give some rights to the individual citizens." Id. at 1451. Delegate Shackleton discussed "autocratic," "paradoxical" bureaucrats who engage in their "whims and fancies." Id. at 1466.
There were some discussions of legal, as opposed to factual, review. Delegate Leibrand, a judge, indicated that the committee proposal "provides for review, both as to the facts and the law on the transcript." Id. at 1445. He lamented that administrative agencies who "are transferring thousands and millions of dollars worth of property every year . . . are almost totally removed from judicial review." Id. Delegate Nord, who was generally more comfortable with agency action, stated that even without art 6, § 28, appeals for legal errors were guaranteed:
The present system we have, without Committee Proposal 95 [the genesis of art 6, § 28], does guarantee government according to law, even in administrative tribunals. They cannot get away with violating the law. If they depart from the statutory authority, there can always be an appeal on that. That is one of the grounds for appeal, always has been, and always will be. . . . Therefore, if there is a violation of the law that is always appealable and always has been appealable; that will be without the committee proposal.
The question that we have to consider is not whether an administrative tribunal is going to break the law. They can't.
Id. at 1468. Delegate Nord believed the only pertinent issue was who was going to determine facts and what standard of review would apply to that determination. Id. Delegate Pugsley stated that the "authorized by law" language was meant to cover legal errors: "[T]he appeal court is called upon first to determine as a minimum whether the decisions, findings, and orders are authorized by law. In other words, did the tribunal make a mistake in its interpretation of the law?" Id. at 1477. Delegate Lawrence indicated the proposal meant that legal errors and scope-of-authority errors could be reviewed:
All that second sentence says is that the review that is to be exercised by the court, as a minimum, shall determine first whether the decision of that administrative tribunal is authorized by law. In other words, did it exceed the law? Did it get into a field it shouldn't have gotten into, that it wasn't authorized to get into?
Id. at 1478.
The committee proposal went to style and drafting without either the workmen's compensation or tax language included. Id. at 1487. When the proposal returned, the convention modified the evidentiary standard from "reliable" and "probative" to its current "competent, material and substantial," which was borrowed from the Michigan Administrative Procedures Act. 2 Official Record, Constitutional Convention 1961, at 2714. An amendment to exempt workmen's compensation passed 58-57. Id. at 2715-16. A later amendment added the "unless otherwise provided by law" language to give the Legislature room to change the law and increase oversight of workmen's compensation decisions. Id. at 2717.[18]
After the draft constitution was returned from the committee on style and drafting, more amendments were put forth. One was to add the tax valuation language to art 6, § 28. The proponents sought to exempt tax assessor valuations. The debate on this amendment was limited to 10 minutes. Id. at 3241. The amendment stated:
No appeal may be taken from any court from a decision of the state tax commission fixing the value of described property for property tax purposes or determining an appeal from a decision of the county tax allocation board.
Id. The amendment was adopted. Id. at 3242. An amendment to strike all of art 6, § 28 was defeated. In arguing against that amendment, Delegate King rhetorically asked, "Do we believe that the rulings of administrative agencies need not be in accordance with the law? . . ." Id. at 3243.
The committee on style and drafting considered all of the late changes. It recommended changing the above paragraph to its current language, which reads:
In the absence of fraud, error of law or the adoption of wrong principles, no appeal may be taken to any court from any final agency provided for the administration of property tax laws from any decision relating to valuation or allocation.
There was no explanation of the need for this, and the change was considered en masse with a number of other style and drafting changes. Id. at 3291-93. The changes passed 136 to 5. Id. at 3293.
In reviewing the history and meaning of art 6, § 28, Dean LeDuc questions whether the courts should be able to review legal errors under art 6, § 28. He contends that because the framers used the "authorized by law" language at the beginning of the provision and the "error of law" language at the end that they must be different. LeDuc, Michigan Administrative Law (2nd ed 2000), § 9:07, pp 610-11. Dean LeDuc would limit constitutionally mandated judicial review to the question of whether "the decision was within the authority of the agency; that is, within its power to act or its jurisdiction." Id. at § 9:05, p 607.
Given the history cited above, reliance on this distinction between "authorized by law" and "error of law" is dubious. The addition of the "error of law" language was made by the committee on style and drafting and was part of a last-minute vote that essentially tied up loose ends. The history of the debates does not indicate that the delegates sought to limit judicial review of agency legal errors. Rather, the debates indicate that the delegates sought judicial review over arbitrary agency action and that they singled out the administrative procedures that they wanted to protect from this review.
The Court of Appeals has held that "authorized by law" allows for review of all legal errors. In Ross v Blue Care Network of Michigan, 271 Mich App 358 (2006), the Court of Appeals stated:
An administrative decision is unauthorized by law if it is: (1) in violation of a statute or the Constitution, (2) in excess of the statutory authority or jurisdiction of the agency, (3) made upon unlawful procedures resulting in material prejudice, or (4) arbitrary and capricious.
Id. at 379.
The Address to the People stated:
This is a new section recognizing the increased significance assumed by administrative law in the legal system of the state in recent years. It provides that decisions, findings, rulings and orders of administrative officers or agencies which affect public rights be subject to judicial review.
Excepted in this section are findings of fact in workmen's compensation proceedings. These findings would be conclusive in the absence of fraud, unless otherwise provided by law. Also excepted are appeals of certain decisions of agencies dealing with the administration of property tax laws.
2 Official Record, Constitutional Convention 1961, p 3389.
The Michigan Constitution supports a holding that this Court should not afford binding deference to an agency in its interpretation of a statute within its purview. The case is particularly strong for not doing so in the formal adjudication setting. As Dean LeDuc notes, no Michigan Supreme Court decision has adopted the federal Bell Aerospace Co decision holding that "rules" may be made in formal adjudications. LeDuc, Michigan Administrative Law (2nd ed 2000), § 4:17, p 186. Thus this Court could enter the fairly narrow holding that no deference is owed to administrative determinations made in the process of a formal adjudication and leave to another day whether deference would be proper for notice-and-comment rulemaking. Moreover, the Michigan courts have not allowed unlimited delegations to agencies, a fact that lessens the need for judicial deference, since wide-ranging policy questions are not handed to the agencies in the first place. These narrower delegations thus prevent the courts from having to substitute their policy preferences for those of the agencies.
To the extent that this Court extends any deference to an agency interpretation of a statute under the agency's purview, that deference should be the equivalent of Skidmore deference. In other words, the agency's view should be respectfully considered as potentially persuasive, but in no means binding on the courts.
[11] The legislative committee was primarily responsible for art 4, § 37 and the judiciary committee was primarily responsible for art 6, § 28.
[12] Const 1963, art 1, § 17 states:
No person shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty or property, without due process of law. The right of all individuals, firms, corporations and voluntary associations to fair and just treatment in the course of legislative and executive investigations and hearings shall not be infringed.
[13] Unmentioned were other political theorists whose writings have been used to challenge the administrative state. For instance, John Locke indicated in his Second Treatise of Government that delegation of legislative power was improper:
The legislative cannot transfer the power of making laws to any other hands: for it being but a delegated power from the people, they who have it cannot pass it over to others. . . . The power of the legislative, being derived from the people by a positive voluntary grant and institution, can be no other than what that positive grant conveyed, which being only to make laws, and not to make legislators, the legislative can have no power to transfer their authority of making laws and place it in other hands.
Locke, The Second Treatise of Government (Thomas P Peardon ed, Library of Liberal Arts 1952), § 141, p 81. Also unmentioned was James Madison's Federalist No. 62, which discussed the Senate and indicated that difficulty in creating laws could be a virtue:
Another advantage accruing from this ingredient in the constitution of the Senate is, the additional impediment it must prove against improper acts of legislation. No law or resolution can now be passed without the concurrence, first, of a majority of the people, and then, of a majority of the States. It must be acknowledged that this complicated check on legislation may in some instances be injurious as well as beneficial. . . . But . . . as the faculty and excess of law-making seem to be the diseases to which our governments are most liable, it is not impossible that this part of the Constitution may be more convenient in practice than it appears to many in contemplation.
The Federalist No 62, at 376 (James Madison) (Clinton Rossiber ed, Signet Classics 1999). But, while interesting, both of these quotes argue against any delegation of rulemaking, some of which is presumably proper in Michigan due to implications from Const 1963, art 4, § 37.
[14] Const 1963, art 4, § 1 states: "The legislative power of the State of Michigan is vested in a senate and a house of representatives."
[15] Const 1963, art 5, § 2 states:
All executive and administrative offices, agencies and instrumentalities of the executive branch of state government and their respective functions, powers and duties, except for the office of governor and lieutenant governor and the governing bodies of institutions of higher education provided for in this constitution, shall be allocated by law among and within not more than 20 principal departments. They shall be grouped as far as practicable according to major purposes.
Subsequent to the initial allocation, the governor may make changes in the organization of the executive branch or in the assignment of functions among its units which he considers necessary for efficient administration. Where these changes require the force of law, they shall be set forth in executive orders and submitted to the legislature. Thereafter the legislature shall have 60 calendar days of a regular session, or a full regular session if of shorter duration, to disapprove each executive order. Unless disapproved in both houses by a resolution concurred in by a majority of the members elected to and serving in each house, each order shall become effective at a date thereafter to be designated by the governor.
[16] Const 1963, art 5, § 8, in pertinent part, states "Each principal department shall be under the supervision of the governor unless otherwise provided by this constitution. The governor shall take care that the laws be faithfully executed."
[17] Const 1963, art 6, § 1 states:
The judicial power of the state is vested exclusively in one court of justice which shall be divided into one supreme court, one court of appeals, one trial court of general jurisdiction known as the circuit court, one probate court, and courts of limited jurisdiction that the legislature may establish by a two-thirds vote of the members elected to and serving in each house.
[18] So, in essence, art 6, § 28 just sets a default position for workmen's compensation claims that the Legislature is free to change.
