The Michigan Law Revision Commission first reported to the Legislature on a proposed Michigan Administrative Procedures Act (MAPA) in 1989. In that report, Professor Don LeDuc of Cooley Law School presented a proposal for revising MAPA. The LeDuc proposal was reduced to bill form and introduced in the Legislature, but no further action was taken.
The Commission renewed its study of MAPA in 1996. In its 1996 Annual Report, the Commission published a study report, The Proposed Administrative Procedures Act of 1997, prepared by Professor Steven Croley of the University of Michigan Law School. That study report proposes broad revisions of MAPA. The Commission received written comments on the proposed MAPA from several state agencies (the Departments of State, Consumer and Industry Services, Civil Rights, and Corrections), state bar association groups (the Standing Committee on Appellate Court Administration and the Administrative Law Section), and other interested persons.
The Commission held a public hearing at the Capitol on June 9, 1997, to receive testimony on the proposed MAPA. In addition to members of the Commission and Professor Croley, six persons appeared and gave testimony on the proposed MAPA, including representatives of the Department of State and of the Department of Consumer and Industry Services, a representative of the Administrative Law Section of the State Bar of Michigan, a representative of the Standing Committee on Appellate Court Administration, and two witnesses appearing in their personal capacity. The following summarizes the proceedings and testimony given at the June 9 hearing.
Richard McLellan, Commission Chairman, opened the hearing and introduced the first witness, Mr. Edward F. Rodgers, Director of Legal Services and Chief Administrative Law Judge, Department of Consumer and Industry Services (CIS). Mr. Rodgers began his testimony by noting that CIS conducts a wide range of contested-case hearings. The approximate number of such hearings conducted within CIS’s hearings division in fiscal year 1995 exceeded 20,000. This figure includes hearings before the Tax Tribunal, the Liquor Control Commission, the Insurance Bureau, and the Financial Institutions Bureau, and CIS hearings division responsible for wage and hour and MIOSHA complaints, but does not include workers’ compensation hearings. Mr. Rodgers estimates that the CIS Office of Legal Services alone will conduct between 2,000-2,500 hearings in 1997, many of which are multi-day, multi-party hearings.
In response to a question from Commissioner George Ward regarding the number of CIS administrative determinations that are appealed to the circuit court, Mr. Rodgers estimates that roughly 75 percent (15,000) of those determinations are appealed to circuit court.
Turning to the proposed MAPA, Mr. Rodgers stated that although he personally is pleased with the proposed MAPA, there are areas of concern that CIS has with the proposal. In addition to the recommendations listed in the Department’s letter to the Commission of January 15, 1997 (Attachment 2), Mr. Rodgers highlighted two items in the proposed MAPA that CIS would like to see modified.
First, in connection with the administrative procedure known as a “proposal for decision” or PFD, an administrative law judge (ALJ) conducts a hearing, at the conclusion of which the ALJ will prepare a proposal for decision that contains findings of fact and conclusions of law. The PFD is in turn forwarded to a supervisory Board or Commission that makes the final decision on the basis of the ALJ’s PFD. Section 405 of the proposed MAPA does not make clear that the PFD procedure remains in effect. Section 405 should be redrafted to make clear that the PFD procedure is valid and still may be used.
Second, transcripts of administrative hearings before an ALJ normally are not prepared in the ordinary course. That practice is universally followed when no exceptions are filed to the PFD. Transcripts will be prepared in three instances: (1) one of the parties requests it; (2) the hearing is a complex, multi-day proceeding, so that the ALJ will need to review a transcript to prepare the PFD; and (3) if the final decision is appealed and the reviewing court requests a transcript. However, in a recent Court of Appeals’ decision, Hicks v. Board of Medicine, the court stated that the complete record should include a transcript of the administrative proceedings, even though in Hicks no exceptions were filed to the PFD. Mr. Rodgers believes that if transcripts are required routinely, it will wreck the efficiencies in time and money of the current PFD process, which at present are completed within 90 days in 94 percent of all cases. The cost of preparing transcripts could run from $5-$10 million annually. If Hicks is not reversed, then the proposed MAPA needs to legislatively overrule it through an appropriate amendment to Section 405. Commissioner Maura Corrigan suggested that a way around Hicks is for the parties to stipulate that a transcript is not necessary at the appeals stage. Mr. Rodgers stated that CIS has requested the Attorney General to secure such stipulations on a routine basis.
The second witness was Ms. Nancy Lukey, chairperson of the Administrative Law Section of the State Bar of Michigan. The Administrative Law Section has a diverse membership of over 400 persons, many of whom are directly involved in administrative law practice for private-sector and public-sector employers. The Section has created an ad hoc committee charged with the task of reviewing the proposed MAPA and submitting comments and recommendations. The Section is delighted that the APA has been identified for revision, but has concerns about certain provisions in the proposed MAPA.
First, the Section believes that the rulemaking procedures appear to be too limited insofar as opportunities for active participation by interested persons is concerned. For example, affected businesses or affected classes of licensees might have concerns about a proposed rule, but might be unable to participate adequately in the rulemaking process under the proposed MAPA.
Second, the distinction made in the proposed MAPA between procedural and substantive rules, and the different rulemaking procedures that govern them, is a source of concern given the conceptual difficulty of distinguishing between the two categories of rules. Thus, for example, an agency could adopt a nominally procedural rule without notice and comment, and affect persons’ substantive rights in a profound way. In response to an observation from Professor Croley that an agency decision that a particular rule is procedural, rather than substantive, would be subject to judicial review for arbitrariness or capriciousness, Ms. Lukey noted that affording some kind of notice and an opportunity to comment on procedural rulemaking would be desirable. Recourse to the courts on these questions is not desirable because of the time and expense.
Third, the form and sufficiency of notice that is provided in the proposed MAPA for different types of rulemaking are of concern to the Section. For example, notice via the Internet as provided for in the proposed MAPA is desirable, but it must be recognized that not everyone has Internet access. In addition, the notice that is required for formal and informal hearings may not be adequate. Ms. Lukey stated that newspaper notice of agency rulemaking is preferable until Internet access becomes more widespread.
Ms. Lukey expects the ad hoc committee to have written comments and recommendations on the proposed MAPA completed by the end of the summer.
The third witness to testify before the Commission was Ms. Elaine Charney, Director of the Driver License Appeal Division, Department of State. Mr. Charney’s Division handles approximately 20,000 appeals annually. The Division also is responsible for handling another 6,000 annual driver license restoration appeals in the circuit court. The Hearings Division within the Department of State hears complaints about vehicle repairs and related motor vehicle complaints.
Ms. Charney’s major concern with the proposed MAPA is its failure to deal with so-called high-volume appeals in a timely and cost-efficient manner. Ms. Charney recommends a special section, in addition to Section 402(1) in the proposed MAPA, that deals with driver license decisions. Many of the decisions reached by Ms. Charney’s Division are ministerial in nature, being based on past convictions that were rendered in district or circuit court. To have 20,000 cases subject to the procedural formalities of the proposed MAPA, on top of the high volume of cases handled by the Family Independence Agency and the Michigan Employment Security Commission, would result in a crushing workload for the affected state agencies. In short, special provision should be made for high-volume cases that accommodates the due process rights of the individual and the interests of the agency in processing cases in an timely and cost-efficient manner.
Mr. McLellan invited agencies that handle high-volume cases to contact the Commission to explain to the Commission how the high-volume caseload process works and to share with the Commission problems that the proposed MAPA poses for them.
The fourth witness was Ms. Laurie Phillips, a private citizen interested in the work of the Commission. Ms. Phillips is a researcher. Her major concern is with a proliferation of administrative rules that may, in the end, be ignored by the agencies. Training of agency employees to familiarize them with their departmental and agency rules takes on added importantance.
The fifth witness was Mr. Terrence Haggerty, appearing on behalf of the Standing Committee on Appellate Court Administration, State Bar of Michigan. Mr. Haggerty stated that the Committee has a number of concerns with the proposed MAPA, but its overriding concern is with the proposal to place all judicial review of agency decisions in the Court of Appeals. The precise impact this proposal will have on the Court of Appeals’ workload is unknown, but in the last year in which statistics were available, the circuit courts heard 6,300 administrative agency appeals. On the basis of this figure, it can safely be predicted that the proposal, if adopted, would have an appreciable impact on the Court of Appeals.
Noting the inconsistent testimony regarding the number of administrative appeals to circuit court (approximately 15,000 appeals according to Mr. Rodgers, versus 6,300 administrative appeals according to Mr. Haggerty), Commissioners Corrigan and McLellan inquired as to the source of Mr. Haggerty’s statistics. Mr. Haggerty could not identify the source.
The Committee on Appellate Court Administration estimates that even if one-half of these 6,300 appeals were taken to the Court of Appeals, that would mean that 3,150 appeals would be taken to the Court of Appeals. In 1995, Mr. Haggerty noted, the Court of Appeals heard 187 appeals from the circuit courts involving administrative agency action. Mr. Haggerty is deeply concerned that the diligent effort that the Court of Appeals has made to eliminate its case backlog will be destroyed in one fell swoop if the judicial review provisions of the proposed MAPA are enacted. A 2 ½-year delay was reduced to one year. The Committee fears that the backlog that is under control will once again increase. The Committee prefers that appeals from administrative agencies not be in the Court of Appeals in the first instance. However, if they are, then the Legislature would have to provide additional funding for the Court of Appeals to handle the influx of new cases.
At least one additional problem Mr. Haggerty’s Committee has with the proposed MAPA is the lack of harmonization between language used in the proposed MAPA and language used in the corresponding court rules. For example, Section 501 of the proposed MAPA refers to a petition for review, whereas Michigan Court Rules use the term “claim of appeal.” These differences and inconsistencies would introduce unnecessary confusion for practitioners. They should be eliminated.
Commissioner Corrigan observed that it is important to have accurate statistics on the number of judicial appeals from administrative agency action within the state.
The sixth and final witness was Mr. Jeffrey Butler, an Assistant Attorney General appearing in his personal capacity. Mr. Butler echoed most of the concerns expressed by Mr. Haggerty. One of the strengths of the proposed MAPA are its well-articulated standards of review for various types of agency adjudication. An annual statistical supplement to the state court’s annual report contains statistics on court caseload. In 1994, according to that annual report, there were 6,540 new civil appeals filed in the circuit courts from administrative agencies. That statistic is probably underinclusive, according to Mr. Butler, because it does not include declaratory judgment actions brought to have an agency rule declared invalid. Commissioner Corrigan noted that statistic does not indicate what constitutes “an agency appeal.” For example, are high-volume cases included in this number? If so, what percentage of administrative agency appeals involve, for example, driver’s license appeals or other high-volume cases?
If anything, Mr. Butler believes that the 6,540 number is low. But using that number as the basis for estimating the increase in the Court of Appeals’ caseload, it would increase 50 percent from its current volume. A related issue is the one of how the Court of Appeals should spend its time and the State’s money. Under current law, the Court has the discretion to deny review of cases involving substantial money judgments, and yet under the proposed MAPA, review in the Court of Appeals of agency action would be as a matter of right.
Mr. Butler questioned the wisdom of using Court of Appeals’ resources to handle appeals from agency action in the first instance. Besides making demands on the time of three judges, the resources of legal and clerical support staff will also be expended. Mr. Butler estimated that the time of 12 persons working for and on the Court of Appeals would be devoted to every administrative agency appeal.
Finally, Mr. Butler was concerned that Section 505 of the proposed MAPA left no room for the operation of the harmless error rule.
Commissioner Corrigan stated that she remains adamantly opposed to any proposal that makes the Court of Appeals the court of first instance in administrative agency appeals.
Professor Croley and Michael Zimmer, Director of the Office of Regulatory Reform, conducted a survey of Michigan agencies to determine the frequency of agency rulemaking and judicial review of agency decisions and orders. The results of that survey are attached to this Report. The Commission also prepared a concordance that compares the 1997 Croley proposal, the 1989 LeDuc proposal, and the current version of MAPA. That concordance follows this Report. Work on the proposed MAPA continues. It is the intention of the Commission to have a bill introduced in 1998.