Michigan Administrative Procedure Act

History: 1969, Act 306, Eff. July 1, 1970; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1993, Act 7, Imd. Eff. Mar. 18, 1993; Am. 1999, Act 262, Eff. Apr. 1, 2000.

Popular name: Act 306

History: 1969, Act 306, Eff. July 1, 1970.

Compiler's note: For transfer of powers and duties of office of regulatory reform from the executive office of the governor to the department of management and budget, see E.R.O. No. 2002-7, compiled at MCL 10.153 of the Michigan Compiled Laws.For the transfer of powers and duties of the office of performance and transformation under the administrative procedures act of 1969, 1969 PA 306, to the Michigan office of administrative hearings and rules, and abolishment of the Michigan administrative hearings system, office of regulatory reinvention, and office of performance and transformation, see E.R.O. 2019-1, compiled at 324.99923.

Popular Name: Act 306

(1) "Adoption of a rule" means that step in the processing of a rule consisting of the formal action of an agency establishing a rule before its promulgation.

(2) "Agency" means a state department, bureau, division, section, board, commission, trustee, authority or officer, created by the constitution, statute, or agency action. Agency does not include an agency in the legislative or judicial branch of state government, the governor, an agency having direct governing control over an institution of higher education, the state civil service commission, or an association of insurers created under the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302, or other association or facility formed under that act as a nonprofit organization of insurer members.

(3) "Contested case" means a proceeding, including rate-making, price-fixing, and licensing, in which a determination of the legal rights, duties, or privileges of a named party is required by law to be made by an agency after an opportunity for an evidentiary hearing. When a hearing is held before an agency and an appeal from its decision is taken to another agency, the hearing and the appeal are considered a continuous proceeding as though before a single agency.

(4) "Committee" means the joint committee on administrative rules.

(5) "Court" means the circuit court.

(6) "Decision record" means, in regard to a request for rule-making where an agency receives recommendations or comments by an advisory committee or other advisory entity created by statute, both of the following:

(a) The minutes of all meetings related to the request for rule-making.

(b) The votes of members.

(7) "Guideline" means an agency statement or declaration of policy that the agency intends to follow, that does not have the force or effect of law, and that binds the agency but does not bind any other person.

History: 1969, Act 306, Eff. July 1, 1970 ;-- Am. 1970, Act 40, Imd. Eff. July 1, 1970 ;-- Am. 1977, Act 108, Eff. Jan. 1, 1978 ;-- Am. 1988, Act 277, Imd. Eff. July 27, 1988 ;-- Am. 2011, Act 239, Imd. Eff. Dec. 1, 2011

Compiler's note: Section 2 of Act 277 of 1988 provides:

(a) "License" includes the whole or part of an agency permit, certificate, approval, registration, charter, or similar form of permission required by law. License does not include a license required solely for revenue purposes or a license or registration issued under the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923.

(b) "Licensing" includes agency activity involving the grant, denial, renewal, suspension, revocation, annulment, withdrawal, recall, cancellation, or amendment of a license.

(c) "Michigan register" means the publication described in section 8.

(d) "Notice" means a written or electronic record that informs a person of past or future action of the person generating the record.

(e) "Notice of objection" means the record adopted by the committee that indicates the committee's formal objection to a proposed rule.

(f) "Office" means, unless expressly stated otherwise, the office of performance and transformation.

(g) "Office of regulatory reform", "state office of administrative hearings and rules", and "office of regulatory reinvention" mean the office.

(h) "Party" means a person or agency named, admitted, or properly seeking and entitled of right to be admitted, as a party in a contested case. In a contested case regarding an application for a license, party includes the applicant for the license.

(i) "Person" means an individual, partnership, association, corporation, limited liability company, limited liability partnership, governmental subdivision, or public or private organization of any kind other than the agency engaged in the particular processing of a rule, declaratory ruling, or contested case.

(j) "Processing of a rule" means the action required or authorized by this act regarding a rule that is to be promulgated, including the rule's adoption, and ending with the rule's promulgation.

(k) "Promulgation of a rule" means that step in the processing of a rule consisting of the filing of the rule with the secretary of state.

(l) "Record" means information that is inscribed on a paper or electronic medium.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2006, Act 460, Imd. Eff. Dec. 20, 2006; Am. 2016, Act 513, Imd. Eff. Jan. 9, 2017.

Compiler's note: Enacting section 1 of Act 460 of 2006 provides:

(a) A resolution or order of the state administrative board.

(b) A formal opinion of the attorney general.

(c) A rule or order establishing or fixing rates or tariffs.

(d) A rule or order pertaining to game and fish and promulgated under parts 401, 411, and 487 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.40101 to 324.40120, 324.41101 to 324.41105, and 324.48701 to 324.48740.

(e) A rule relating to the use of streets or highways, the substance of which is indicated to the public by means of signs or signals.

(f) A determination, decision, or order in a contested case.

(g) An intergovernmental, interagency, or intra-agency memorandum, directive, or communication that does not affect the rights of, or procedures and practices available to, the public.

(h) A form with instructions, an interpretive statement, a guideline, an informational pamphlet, or other material that in itself does not have the force and effect of law but is merely explanatory.

(i) A declaratory ruling or other disposition of a particular matter as applied to a specific set of facts involved.

(j) A decision by an agency to exercise or not to exercise a permissive statutory power, although private rights or interests are affected.

(k) Unless another statute requires a rule to be promulgated under this act, a rule or policy that only concerns the inmates of a state correctional facility and does not directly affect other members of the public, except that a rule that only concerns inmates that was promulgated before December 4, 1986, is a rule and remains in effect until rescinded but shall not be amended. As used in this subdivision, "state correctional facility" means a facility or institution that houses an inmate population under the jurisdiction of the department of corrections.

(l) A rule establishing special local watercraft controls promulgated under former 1967 PA 303. A rule described in this subdivision may be rescinded as provided in section 80113(2) of the natural resources and environmental protection act, 1994 PA 451, MCL 324.80113.

(m) All of the following, after final approval by the certificate of need commission under section 22215 of the public health code, 1978 PA 368, MCL 333.22215, or the statewide health coordinating council under former section 22217 of the public health code, 1978 PA 368:

(i) The designation, deletion, or revision of covered medical equipment and covered clinical services.

(ii) Certificate of need review standards.

(iii) Data reporting requirements and criteria for determining health facility viability.

(iv) Standards used by the department of health and human services in designating a regional certificate of need review agency.

(v) The modification of the 100 licensed bed limitation for extended care services programs set forth in section 22210 of the public health code, 1978 PA 368, MCL 333.22210.

(n) A policy developed by the department of health and human services under section 6(3) of the social welfare act, 1939 PA 280, MCL 400.6, setting income and asset limits, types of income and assets to be considered for eligibility, and payment standards for administration of assistance programs under that act.

(o) A policy developed by the department of health and human services under section 6(4) of the social welfare act, 1939 PA 280, MCL 400.6, to implement requirements that are mandated by federal statute or regulations as a condition of receipt of federal funds.

(p) The provisions of an agency's contract with a public or private entity including, but not limited to, the provisions of an agency's standard form contract.

(q) A policy developed by the department of health and human services under the authority granted in section 111a of the social welfare act, 1939 PA 280, MCL 400.111a, to implement policies and procedures necessary to operate its health care programs in accordance with an approved state plan or in compliance with state statute.

(r) A minimum standard approved or established under authority granted by the Michigan indigent defense commission act, 2013 PA 93, MCL 780.981 to 780.1003.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1986, Act 243, Imd. Eff. Dec. 4, 1986; Am. 1988, Act 333, Imd. Eff. Sept. 30, 1988; Am. 1988, Act 363, Imd. Eff. Dec. 16, 1988; Am. 1989, Act 288, Imd. Eff. Dec. 26, 1989; Am. 1995, Act 224, Eff. Mar. 28, 1996; Am. 1996, Act 489, Eff. Mar. 31, 1997; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2000, Act 216, Imd. Eff. June 27, 2000;Am. 2011, Act 52, Imd. Eff. June 8, 2011; Am. 2016, Act 444, Imd. Eff. Jan. 4, 2017.

The Michigan register shall contain all of the following:

(a) Executive orders and executive reorganization orders.

(b) On a cumulative basis, the numbers and subject matter of the enrolled senate and house bills signed into law by the governor during the calendar year and the corresponding public act numbers.

(c) On a cumulative basis, the numbers and subject matter of the enrolled senate and house bills vetoed by the governor during the calendar year.

(d) Proposed administrative rules.

(e) Notices of public hearings on proposed administrative rules.

(f) Administrative rules filed with the secretary of state.

(g) Emergency rules filed with the secretary of state.

(h) Notice of proposed and adopted agency guidelines.

(i) Other official information considered necessary or appropriate by the office of regulatory reform.

(j) Attorney general opinions.

(k) All of the items listed in section 7(m) after final approval by the certificate of need commission under section 22215 of the public health code, 1978 PA 368, MCL 333.22215.

(2) The office of regulatory reform shall publish a cumulative index for the Michigan register.

(3) The Michigan register shall be available for public subscription at a fee reasonably calculated to cover publication and distribution costs.

(4) If publication of an agency's proposed rule or guideline or an item described in subsection (1)(k) would be unreasonably expensive or lengthy, the office of regulatory reform may publish a brief synopsis of the proposed rule or guideline or item described in subsection (1)(k), including information on how to obtain a complete copy of the proposed rule or guideline or item described in subsection (1)(k) from the agency at no cost.

(5) An agency shall electronically transmit a copy of the proposed rules and notice of public hearing to the office of regulatory reform for publication in the Michigan register.

(2) The notice required by subsection (1) shall include all of the following:

(a) A statement of the terms or substance of the proposed guideline, a description of the subjects and issues involved, and the proposed effective date of the guideline.

(b) A statement that the addressee may express any views or arguments regarding the proposed guideline or the guideline's effect on a person.

(c) The address to which written comments may be sent and the date by which comments shall be mailed or electronically transmitted, which date shall not be less than 35 days from the date of the mailing or electronic transmittal of the notice.

(d) A reference to the specific statutory provision about which the proposed guideline states a policy.

History: Add. 1977, Act 108, Eff. Jan. 1, 1978; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2004, Act 491, Eff. Jan. 12, 2005.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(2) A proceeding to contest a guideline on the grounds of noncompliance with sections 24, 25, and 26 shall be commenced within 2 years after the effective date of the guideline.

(2) The electronic notice required by subsection (1) shall include all of the following:

(a) A statement of the terms of substance of the proposed standard form contract or policy, a description of the subjects and issues involved, and the proposed effective date of the standard form contract or policy.

(b) A statement that the addressee may express any views or arguments regarding the proposed standard form contract or policy or the standard form contract's or policy's effect on a person.

(c) The address to which comments may be sent and the date by which the comments shall be mailed or electronically transmitted, which date shall not be less than 35 days from the date of the mailing or electronic transmittal of the notice.

(d) A reference to the specific statutory provision under which the standard form contract or policy is issued.

(3) If the value of a proposed standard form contract exempt from rule-making under section 7(p) is $10,000,000.00 or more, the electronic notice required under subsection (1) shall include an electronic copy of the proposed standard form contract. If the value of the proposed standard form contract exempt from rule-making under section 7(p) is less than $10,000,000.00, the agency shall provide an electronic or paper copy of the proposed standard form contract or policy to any legislator requesting a copy.

(2) When a law authorizing or directing an agency to promulgate rules is repealed and substantially the same rule-making power or duty is vested in the same or a successor agency by a new provision of law or the function of the agency to which the rules are related is transferred to another agency, by law or executive order, the existing rules of the original agency relating thereto continue in effect until amended or rescinded, and the agency or successor agency may rescind any rule relating to the function. When a law creating an agency or authorizing or directing it to promulgate rules is repealed or the agency is abolished and substantially the same rule-making power or duty is not vested in the same or a successor agency by a new provision of law and the function of the agency to which the rules are related is not transferred to another agency, the existing applicable rules of the original agency are automatically rescinded as of the effective date of the repeal of such law or the abolition of the agency.

(3) The rescission of a rule does not revive a rule which was previously rescinded.

(4) The amendment or rescission of a valid rule does not defeat or impair a right accrued, or affect a penalty incurred, under the rule.

(5) Except in the case of the amendment of rules concerning inmates as described in section 7(k), a rule may be amended or rescinded by another rule which constitutes the whole or a part of a filing of rules or as a result of an act of the legislature.

(2) A rule or exception to a rule shall not discriminate in favor of or against any person. A person affected by a rule is entitled to the same benefits as any other person under the same or similar circumstances.

(3) The violation of a rule is a crime when so provided by statute. A rule shall not make an act or omission to act a crime or prescribe a criminal penalty for violation of a rule.

(4) An agency may adopt, by reference in its rules and without publishing the adopted matter in full, all or any part of a code, standard or regulation that has been adopted by an agency of the United States or by a nationally recognized organization or association. The reference shall fully identify the adopted matter by date and otherwise. The reference shall not cover any later amendments and editions of the adopted matter, but if the agency wishes to incorporate them in its rule it shall amend the rule or promulgate a new rule therefor. The agency shall have available copies of the adopted matter for inspection and distribution to the public at cost and the rules shall state where copies of the adopted matter are available from the agency and the agency of the United States or the national organization or association and the cost of a copy as of the time the rule is adopted.

(5) A guideline, operational memorandum, bulletin, interpretive statement, or form with instructions is not enforceable by an agency, is considered merely advisory, and shall not be given the force and effect of law. An agency shall not rely upon a guideline, operational memorandum, bulletin, interpretive statement, or form with instructions to support the agency's decision to act or refuse to act if that decision is subject to judicial review. A court shall not rely upon a guideline, operational memorandum, bulletin, interpretive statement, or form with instructions to uphold an agency decision to act or refuse to act.

(6) Where a statute provides that an agency may proceed by rule-making or by order and an agency proceeds by order in lieu of rule-making, the order shall not be given general applicability to persons who were not parties to the proceeding or contested case before the issuance of the order, unless the order was issued after public notice and a public hearing.

(7) A rule shall not exceed the rule-making delegation contained in the statute authorizing the rule-making.

(8) Except for an emergency rule promulgated under section 48, and subject to subsection (10), if the federal government has mandated that this state promulgate rules, an agency shall not adopt or promulgate a rule more stringent than the applicable federally mandated standard unless the director of the agency determines that there is a clear and convincing need to exceed the applicable federal standard.

(9) Except for an emergency rule promulgated under section 48, and subject to subsection (10), if the federal government has not mandated that this state promulgate rules, an agency shall not adopt or promulgate a rule more stringent than an applicable federal standard unless specifically authorized by a statute of this state or unless the director of the agency determines that there is a clear and convincing need to exceed the applicable federal standard.

(10) Subsections (8) and (9) do not apply to the amendment of the special education programs and services rules, R 340.1701 to R 340.1862 of the Michigan Administrative Code. However, subsections (8) and (9) do apply to the promulgation of new rules relating to special education with the rescission of R 340.1701 to R 340.1862 of the Michigan Administrative Code.

(2) An agency shall promulgate rules prescribing its procedures available to the public and the methods by which the public may obtain information and submit requests.

(3) An agency may promulgate rules prescribing procedures for contested cases. The rules must be consistent with this act and other applicable statutes.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2018, Act 267, Imd. Eff. June 29, 2018.

(2) In addition to any other powers and duties described in subsection (1), the office of regulatory reform shall review proposed rules, coordinate processing of rules by agencies, work with the agencies to streamline the rule-making process, and consider efforts designed to improve public access to the rule-making process.

History: Add. 1999, Act 262, Eff. Apr. 1, 2000.

(2) The committee may hire staff to assist the committee under this act. However, the supervision of staff, budgeting, procurement, and related functions of the committee shall be performed by the council administrator under section 104a of the legislative council act, 1986 PA 268, MCL 4.1104a.

(a) The state or federal statutory or regulatory basis for the rule.

(b) The problem the rule intends to address.

(c) An assessment of the significance of the problem.

(d) If applicable, the decision record.

(2) If an agency receives recommendations or comments by any advisory committee or other advisory entity created by statute regarding a request for rule-making, the advisory committee or entity shall issue to the agency a decision record.

(3) An agency shall not proceed with the processing of a rule outlined in this chapter unless the office of regulatory reinvention has approved the request for rule-making. The office of regulatory reinvention is not required to approve a request for rule-making and shall do so only after it has indicated in its response to the request for rule-making submitted by an agency that there are appropriate and necessary policy and legal bases for approving the request for rule-making.

(4) The office of regulatory reinvention shall record the receipt of all requests for rule-making on the internet and shall make electronic or paper copies of approved requests for rule-making available to members of the general public. The office of regulatory reinvention shall issue a written or electronic response to the request for rule-making that specifically addresses whether the request has appropriate and necessary policy and legal bases for approving the request for rule-making.

(5) The office of regulatory reinvention shall immediately make available to the committee electronic copies of the request for rule-making submitted to the office of regulatory reinvention. On a weekly basis, the office of regulatory reinvention shall electronically provide to the committee a listing of all requests for rule-making approved or denied during the previous week. The committee shall electronically provide a copy of the approved and denied requests for rule-making, not later than the next business day after receipt of the notice from the office of regulatory reinvention, to members of the committee and to members of the standing committees of the senate and house of representatives that deal with the subject matter of the proposed rule.

(2) After a grant of approval to hold a public hearing by the office under subsection (1), the office shall immediately provide a copy of the proposed rules to the committee. The committee shall provide a copy of the proposed rules, not later than the next business day after receipt of the notice from the office, to members of the committee and to members of the standing committees of the senate and house of representatives that deal with the subject matter of the proposed rule.

(a) Identify and estimate the number of small businesses affected by the proposed rule and its probable effect on small businesses.

(b) Establish differing compliance or reporting requirements or timetables for small businesses under the rule after projecting the required reporting, record-keeping, and other administrative costs.

(c) Consolidate, simplify, or eliminate the compliance and reporting requirements for small businesses under the rule and identify the skills necessary to comply with the reporting requirements.

(d) Establish performance standards to replace design or operational standards required in the proposed rule.

(2) The factors described in subsection (1)(a) to (d) shall be specifically addressed in the small business impact statement.

(3) In reducing the disproportionate economic impact on small business of a rule as provided in subsection (1), an agency shall use the following classifications of small business:

(a) 0-9 full-time employees.

(b) 10-49 full-time employees.

(c) 50-249 full-time employees.

(4) For purposes of subsection (3), an agency may include a small business with a greater number of full-time employees in a classification that applies to a business with fewer full-time employees.

(5) This section and section 45(3) do not apply to a rule that is required by federal law and that an agency promulgates without imposing standards more stringent than those required by the federal law.

(2) The notice described in subsection (1) must include all of the following:

(a) A reference to the statutory authority under which the action is proposed.

(b) The time and place of the public hearing and a statement of the manner in which data, views, questions, and arguments may be submitted by a person to the agency at other times.

(c) A statement of the terms or substance of the proposed rule, a description of the subjects and issues involved, and the proposed effective date of the rule.

(3) The agency, or the office acting on behalf of an agency, shall transmit copies of the notice described in subsection (1) to each person who requested the agency in writing or electronically for advance notice of proposed action that may affect the person. If requested, the notice must be by mail, in writing, or electronically to the last address specified by the person.

(4) The public hearing must comply with any applicable statute, but is not subject to the provisions governing a contested case.

(5) The head of the promulgating agency or 1 or more persons designated by the head of the agency who have knowledge of the subject matter of the proposed rule shall be present at the public hearing and shall participate in the discussion of the proposed rule.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1977, Act 108, Eff. Jan. 1, 1978; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1989, Act 288, Imd. Eff. Dec. 26, 1989; Am. 1993, Act 141, Imd. Eff. Aug. 4, 1993; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2004, Act 491, Eff. Jan. 12, 2005; Am. 2018, Act 267, Imd. Eff. June 29, 2018.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(2) Additional methods that may be employed to provide notice of the public hearing include publication in trade, industry, governmental, or professional publications or posting on the website of the agency or the office.

(3) In addition to the requirements of subsection (1) and except as provided in section 66, the agency shall electronically submit a copy of the notice of public hearing to the office for publication in the Michigan Register. If the office submitted the notice of public hearing on behalf of the agency, the office shall publish the notice of public hearing in the Michigan Register. An agency's notice must be published in the Michigan Register before the public hearing and the agency shall electronically file a copy of the notice of public hearing with the office. Within 7 days after receipt of the notice of public hearing and before the public hearing, the office shall do all of the following:

(a) Electronically transmit a copy of the notice of public hearing to the committee.

(b) Provide notice electronically through publicly accessible internet media.

(4) After the office electronically transmits a copy of the notice of public hearing to the committee, the committee shall electronically transmit copies of the notice of public hearing, not later than the next business day after receipt of the notice from the office, to each member of the committee and to the members of the standing committees of the senate and house of representatives that deal with the subject matter of the proposed rule.

(5) After receipt of the notice of public hearing filed under subsection (3), the committee may meet to consider the proposed rule, take testimony, and provide the agency with the committee's informal response to the rule.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1986, Act 292, Imd. Eff. Dec. 22, 1986; Am. 1989, Act 288, Imd. Eff. Dec. 26, 1989; Am. 1993, Act 141, Imd. Eff. Aug. 4, 1993; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2004, Act 491, Eff. Jan. 12, 2005; Am. 2018, Act 267, Imd. Eff. June 29, 2018.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(2) A proceeding to contest a rule on the ground of noncompliance with the requirements of sections 41 and 42 or section 66 must be commenced within 2 years after the effective date of the rule.

(2) Sections 41 and 42 do not apply to a rule that is promulgated under the Michigan occupational safety and health act, 1974 PA 154, MCL 408.1001 to 408.1094, that is substantially similar to an existing federal standard that has been adopted or promulgated under the occupational safety and health act of 1970, Public Law 91-596. However, notice of the proposed rule must be published in the Michigan Register at least 35 days before the rule is filed with the secretary of state under section 46(1). A reasonable period, not to exceed 21 days, must be provided for the submission of written or electronic comments and views following publication in the Michigan Register.

(3) Sections 41 and 42 do not apply to a change to a proposed rule by an agency during processing of the rule if the office determines under section 45c(3) that the regulatory impact and impact on small businesses of the changed proposed rule are not more burdensome than the regulatory impact and impact on small businesses of the original proposed rule.

(4) For purposes of subsection (2), "substantially similar" means identical, with the exception of style or format differences needed to conform to this or other state laws, as determined by the office.

(2) Except as provided in subsection (6), after notice is given as provided in this act and before the agency proposing the rule has formally adopted the rule, the agency shall prepare an agency report containing a synopsis of the comments contained in the public hearing record, a copy of the request for rule-making, and the regulatory impact statement required under subsection (3). In the report, the agency shall describe any changes in the proposed rules that were made by the agency after the public hearing. The office shall transmit by notice of transmittal to the committee copies of the rule, the agency reports containing the request for rule-making, a copy of the regulatory impact statement, and certificates of approval from the legislative service bureau and the office. The office shall also electronically submit to the committee a copy of the rule, any agency reports required under this subsection, any regulatory impact statements required under subsection (3), and any certificates of approval required under subsection (1). The agency shall electronically transmit to the committee the records described in this subsection within 1 year after the date of the last public hearing on the proposed rule.

(3) Except as provided in subsection (6), an agency shall prepare and include with a notice of transmittal under subsection (2) the request for rule-making and the response from the office, a small business impact statement prepared under section 40, and a regulatory impact statement. The regulatory impact statement must contain all of the following information:

(a) A comparison of the proposed rule to parallel federal rules or standards set by a state or national licensing agency or accreditation association, if any exist.

(b) If section 32(8) applies and the proposed rule is more stringent than the applicable federally mandated standard, a statement of the specific facts that establish the clear and convincing need to adopt the more stringent rule and an explanation of the exceptional circumstances that necessitate the more stringent standard.

(c) If section 32(9) applies and the proposed rule is more stringent than the applicable federal standard, either the statute that specifically authorizes the more stringent rule or a statement of the specific facts that establish the clear and convincing need to adopt the more stringent rule and an explanation of the exceptional circumstances that necessitate the more stringent standard.

(d) If requested by the office or the committee, a comparison of the proposed rule to standards in similarly situated states, based on geographic location, topography, natural resources, commonalities, or economic similarities.

(e) An identification of the behavior and frequency of behavior that the rule is designed to alter.

(f) An identification of the harm resulting from the behavior that the rule is designed to alter and the likelihood that the harm will occur in the absence of the rule.

(g) An estimate of the change in the frequency of the targeted behavior expected from the rule.

(h) An identification of the businesses, groups, or individuals who will be directly affected by, bear the cost of, or directly benefit from the rule.

(i) An identification of any reasonable alternatives to regulation under the proposed rule that would achieve the same or similar goals.

(j) A discussion of the feasibility of establishing a regulatory program similar to that proposed in the rule that would operate through market-based mechanisms.

(k) An estimate of the cost of rule imposition on the agency promulgating the rule.

(l) An estimate of the actual statewide compliance costs of the proposed rule on individuals.

(m) A demonstration that the proposed rule is necessary and suitable to achieve its purpose in proportion to the burdens it places on individuals.

(n) An estimate of the actual statewide compliance costs of the proposed rule on businesses and other groups.

(o) An identification of any disproportionate impact the proposed rule may have on small businesses because of their size.

(p) An identification of the nature of any report required and the estimated cost of its preparation by small businesses required to comply with the proposed rule.

(q) An analysis of the costs of compliance for all small businesses affected by the proposed rule, including costs of equipment, supplies, labor, and increased administrative costs.

(r) An identification of the nature and estimated cost of any legal consulting and accounting services that small businesses would incur in complying with the proposed rule.

(s) An estimate of the ability of small businesses to absorb the costs estimated under subdivisions (p) to (r) without suffering economic harm and without adversely affecting competition in the marketplace.

(t) An estimate of the cost, if any, to the agency of administering or enforcing a rule that exempts or sets lesser standards for compliance by small businesses.

(u) An identification of the impact on the public interest of exempting or setting lesser standards of compliance for small businesses.

(v) A statement describing the manner in which the agency reduced the economic impact of the rule on small businesses or a statement describing the reasons such a reduction was not feasible.

(w) A statement describing how the agency has involved small businesses in the development of the rule.

(x) An estimate of the primary and direct benefits of the rule.

(y) An estimate of any cost reductions to businesses, individuals, groups of individuals, or governmental units as a result of the rule.

(z) An estimate of any increase in revenues to state or local governmental units as a result of the rule.

(aa) An estimate of any secondary or indirect benefits of the rule.

(bb) An identification of the sources the agency relied on in compiling the regulatory impact statement, including the methodology used in determining the existence and extent of the impact of a proposed rule and a cost-benefit analysis of the proposed rule.

(cc) A detailed recitation of the efforts of the agency to comply with the mandate to reduce the disproportionate impact of the rule on small businesses as described in section 40(1)(a) to (d).

(dd) Any other information required by the office.

(4) An agency shall electronically transmit the regulatory impact statement required under subsection (3) to the office at least 28 days before the public hearing required under section 41. The agency shall not hold the public hearing until the regulatory impact statement has been reviewed and approved by the office. The agency shall also electronically transmit a copy of the regulatory impact statement to the committee before the public hearing and the agency shall make copies available to the public at the public hearing. The agency shall publish the regulatory impact statement on its website at least 10 days before the date of the public hearing.

(5) The committee shall electronically transmit to the senate fiscal agency and the house fiscal agency a copy of each rule and regulatory impact statement filed with the committee and a copy of the agenda identifying the proposed rules to be considered by the committee. The senate fiscal agency and the house fiscal agency shall analyze each proposed rule for possible fiscal implications that, if the rule were adopted, would result in additional appropriations in the current fiscal year or commit the legislature to an appropriation in a future fiscal year. The senate fiscal agency and the house fiscal agency shall electronically report their findings to the senate and house appropriations committees and to the committee before the date of consideration of the proposed rule by the committee.

(6) Subsections (2), (3), and (4) do not apply to a rule that is promulgated under section 33 or 48 or a rule to which sections 41 and 42 do not apply as provided in section 44.

History: 1969, Act 306, Eff. July 1, 1970 ;-- Am. 1971, Act 171, Imd. Eff. Dec. 2, 1971 ;-- Am. 1977, Act 108, Eff. Jan. 1, 1978 ;-- Am. 1978, Act 243, Imd. Eff. June 19, 1978 ;-- Am. 1980, Act 455, Imd. Eff. Jan. 15, 1981 ;-- Am. 1982, Act 413, Eff. Jan. 1, 1984 ;-- Am. 1983, Act 202, Imd. Eff. Nov. 10, 1983 ;-- Am. 1984, Act 273, Eff. Mar. 29, 1985 ;-- Am. 1986, Act 292, Imd. Eff. Dec. 22, 1986 ;-- Am. 1987, Act 13, Imd. Eff. Apr. 6, 1987 ;-- Am. 1989, Act 288, Imd. Eff. Dec. 26, 1989 ;-- Am. 1990, Act 38, Imd. Eff. Mar. 28, 1990 ;-- Am. 1993, Act 141, Imd. Eff. Aug. 4, 1993 ;-- Am. 1999, Act 262, Eff. Apr. 1, 2000 ;-- Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004 ;-- Am. 2004, Act 491, Eff. Jan. 12, 2005 ;-- Am. 2011, Act 242, Imd. Eff. Dec. 8, 2011 ;-- Am. 2013, Act 200, Eff. Mar. 19, 2014 ;-- Am. 2016, Act 513, Imd. Eff. Jan. 9, 2017 ;-- Am. 2018, Act 602, Eff. Jan. 1, 2019

Constitutionality: In separate opinions, the Michigan Supreme Court held that Section 45(8), (9), (10), and (12) and the second sentence of Section 46(1) (“An agency shall not file a rule ... until at least 10 days after the date of the certificate of approval by the committee or after the legislature adopts a concurrent resolution approving the rule.”) of the Administrative Procedures Act of 1969, in providing for the Legislature's reservation of authority to approve or disapprove rules proposed by executive branch agencies, did not comply with the enactment and presentment requirements of Const 1963, art 4, and violated the separation of powers provision of Const 1963, art 3, and, therefore, were unconstitutional. These specified portions were declared to be severable with the remaining portions remaining effective. Blank v Department of Corrections, 462 Mich 103; 611 NW2d 530 (2000).

(a) Object to the rule by approving a notice of objection under subsection (2) and filing the notice with the office.

(b) Propose that the rule be changed. If the committee proposes that a rule be changed under this subdivision, section 45c applies.

(c) Decide to introduce bills under subsection (5) to enact the subject of the rule into law.

(d) Waive any remaining session days. If the committee waives the remaining session days, the clerk of the committee shall promptly notify the office of the waiver by electronic transmission.

(2) To approve a notice of objection under subsection (1)(a), a concurrent majority of the committee, as provided in section 35, must affirmatively determine that 1 or more of the following conditions exist:

(a) The agency lacks statutory authority for the rule.

(b) The agency is exceeding the statutory scope of its rule-making authority.

(c) There exists an emergency relating to the public health, safety, and welfare that would warrant disapproval of the rule.

(d) The rule conflicts with state law.

(e) A substantial change in circumstances has occurred since enactment of the law on which the proposed rule is based.

(f) The rule is arbitrary or capricious.

(g) The rule is unduly burdensome to the public or to a licensee licensed under the rule.

(3) If the committee does not approve a notice of objection, propose that the rule be changed, or decide to introduce bills under subsection (5) within the time period prescribed in subsection (1), or if the committee waives the remaining session days under subsection (1), the office may immediately file the rule, with the certificate of approval required under section 45(1), with the secretary of state. The rule takes effect immediately on being filed with the secretary of state unless a later date is indicated in the rule.

(4) If the committee files a notice of objection under subsection (1)(a), the committee chair, the alternate chair, or any member of the committee shall introduce bills in both houses of the legislature, simultaneously to the extent practicable. Each house shall place the bill or bills directly on its calendar. The bills must contain 1 or more of the following:

(a) A rescission of a rule upon its effective date.

(b) A repeal of the statutory provision under which the rule was authorized.

(c) A bill staying the effective date of the proposed rule for up to 1 year.

(5) If the committee decides to proceed under this subsection as provided in subsection (1)(c), the committee chair and the alternate chair shall, as soon as the bills have been prepared, introduce or cause to be introduced in both houses of the legislature bills to enact into law the subject of the proposed rule. The language of a bill introduced under this subsection is not required to be identical to the language of the proposed rule. The legislative service bureau shall give priority to the preparation of the bills.

(6) The office shall not file with the secretary of state a rule as to which the committee has filed a notice of objection under subsection (1)(a) until after whichever of the following applies:

(a) Unless subdivision (b) applies, 15 session days after the date the notice is filed.

(b) The date of a rescission of the notice of objection as provided in this subdivision. The committee may rescind a notice of objection filed under subsection (1)(a). If the committee rescinds a notice of objection under this subdivision, the clerk of the committee shall promptly notify the office by electronic transmission of the rescission.

(7) If the committee decides to introduce bills under subsection (5) with respect to the subject of a rule, the office shall not file the rule with the secretary of state until 270 days after the bills were introduced.

(8) If legislation introduced under subsection (4) or (5) is defeated in either house and if the vote by which the legislation failed to pass is not reconsidered in compliance with the rules of that house, or if legislation introduced under subsection (4) or (5) is not adopted by both houses within the applicable period specified in subsection (6) or (7), the office may file the rule with the secretary of state. The rule takes effect immediately on being filed with the secretary of state unless a later date is specified in the rule.

(9) If legislation introduced under subsection (4) or (5) is enacted by the legislature and presented to the governor within the 15-session-day period under subsection (6) or before the expiration of 270 days under subsection (7), the rule does not take effect unless the legislation is vetoed by the governor as provided by law. If the governor vetoes the legislation, the office may file the rule with the secretary of state immediately. The rule takes effect 7 days after the date it is filed with the secretary of state unless a later effective date is indicated in the rule.

(10) An agency may withdraw a proposed rule under the following conditions:

(a) With permission of the committee chair and alternate chair, the agency may withdraw the rule to change the rule and resubmit it as changed. If permission to withdraw is granted, the 15-session-day period described in subsection (1) is tolled until the rule is resubmitted. However, the committee must have at least 6 session days after resubmission to consider the resubmitted rule, and if necessary, the period under subsection (1) is extended to give the committee the 6 days.

(b) Without permission of the committee chair and alternate chair, the agency may withdraw the rule to change the rule and resubmit it as changed. If permission to withdraw is not granted, a new and untolled 15-session-day time period described in subsection (1) begins on resubmission of the rule to the committee for consideration.

(11) This section does not apply to rules adopted under section 33 or 48 or a rule to which sections 41 and 42 do not apply as provided in section 44(1) or (2).

(12) An agency shall withdraw any rule pending before the committee at the final adjournment of a regular session held in an even-numbered year and resubmit the rule. A new and untolled 15-session-day period described in subsection (1) begins on resubmission of the rule to the committee for consideration.

(13) As used in this section only, "session day" means a day in which both the house of representatives and the senate convene in session and a quorum is recorded.

History: Add. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2004, Act 491, Eff. Jan. 12, 2005; Am. 2011, Act 245, Imd. Eff. Dec. 8, 2011; Am. 2016, Act 513, Imd. Eff. Jan. 9, 2017.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(a) The regulatory impact statement required under section 45(3).

(b) Instructions on any existing administrative remedies or appeals available to the public.

(c) Instructions regarding the method of complying with the rules, if available.

(d) Any rules filed with the secretary of state and the effective date of those rules.

(2) The office of regulatory reinvention shall facilitate linking the information posted under subsection (1) to the department or agency website.

(a) Decide to change the rule and, within the 30 days, resubmit the rule, as changed, to the committee. If the agency decides to change the rule, subsections (2) to (5) apply.

(b) Decide to not change the rule. If the agency decides to not change the rule, subsection (6) applies.

(2) If an agency decides to change a proposed rule under subsection (1), the agency shall withdraw the rule. A withdrawal under this subsection is a withdrawal with permission under section 45a(10). After withdrawing the rule under this subsection, the agency shall give notice to the office for publication of the proposed rule, as changed, under section 8. The notice must include the text of the rule as changed.

(3) After receiving the text of a proposed rule as changed under subsection (2), the office shall review the rule as changed and determine whether the regulatory impact or the impact on small businesses of the rule as changed would be more burdensome than the regulatory impact or the impact on small businesses of the rule as originally proposed. If the language of the rule as changed is identical to the language of the corresponding rule promulgated and in effect at the time of the review, the regulatory impact and impact on small businesses of the rule as changed are not more burdensome. The office shall notify the agency of its determination under this subsection.

(4) If the office's determination under subsection (3) is that the regulatory impact and the impact on small businesses of the rule as changed would not be more burdensome, the agency is not required to prepare a new agency report under section 45(2) or conduct a new public hearing on the rule as changed. If the determination is that the regulatory impact and the impact on small businesses of the rule as changed would be more burdensome, the agency shall prepare a new agency report under section 45(2) and conduct a new public hearing.

(5) After receiving the office's determination under subsection (3), the agency shall submit a supplement to the agency report under section 45(2) that includes all of the following:

(a) A statement of the determination of the office under subsection (3) and whether a new agency report under section 45(2) and public hearing are required.

(b) An explanation for the proposed changed rule.

(6) If an agency decides to not change a rule under subsection (1), the agency shall within the 30-day period under subsection (1) notify the committee of the decision and the reasons for the decision and file the notice with the office. After the notice is filed, the committee has 15 session days in which to consider the agency's decision and take 1 of the actions listed in section 45a(1).

(2) The secretary of state shall endorse the date and hour of filing of rules on the 3 copies of the filing bearing the certificates and shall maintain a file containing 1 copy for public inspection.

(3) The secretary of state, as often as he or she considers it advisable, shall cause to be arranged and bound in a substantial manner the rules hereafter filed in his or her office with their attached certificates and published in a supplement to the Michigan administrative code. The secretary of state shall certify under his or her hand and seal of the state on the frontispiece of each volume that it contains all of the rules filed and published for a specified period. The rules, when so bound and certified, shall be kept in the office of the secretary of state and no further record of the rules is required to be kept. The bound rules are subject to public inspection.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1971, Act 171, Imd. Eff. Dec. 2, 1971; Am. 1977, Act 108, Eff. Jan. 1, 1978; Am. 1993, Act 141, Imd. Eff. Aug. 4, 1993; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2006, Act 247, Imd. Eff. July 3, 2006.

(2) Except for a rule processed under section 48 or 66, an agency may withdraw a promulgated rule that has not become effective by filing a written request stating reasons for withdrawal to the secretary of state on or before the last day for filing rules for the interim period in which the rules were first filed, or by filing a written request for withdrawal to the secretary of state and the office, within a reasonable time, as determined by the office, after the last day for filing and before publication of the rule in the next supplement to the code. In any other circumstances, an agency may abrogate its rule only by rescission. If an agency has withdrawn a promulgated rule, it shall give notice, stating reasons, to the committee that the rule has been withdrawn.

(3) Sections 45 and 45a apply to rules for which a public hearing has not been held by April 1, 2000.

(2) If the director of the department of health and human services determines that an imminent danger to the health or lives of individuals in this state can be prevented or controlled by scheduling a substance as a controlled substance under section 2251(4) of the public health code, 1978 PA 368, MCL 333.2251, and the administrator determines that the substance should be scheduled or rescheduled as a controlled substance, the department of licensing and regulatory affairs may dispense with all or part of the procedures required by sections 41 and 42 and file in the office of the secretary of state the copies prescribed by section 46 endorsed as an emergency rule, to 3 of which copies must be attached the certificate of approval and the director of the department of health and human services's notification under section 2251(4) of the public health code, 1978 PA 368, MCL 333.2251. The office shall submit the emergency rule draft language to the legislative service bureau for its formal certification within 7 business days after receipt from the department of licensing and regulatory affairs. The legislative service bureau shall issue a certificate of approval indicating whether the proposed rule is proper as to all matters of form, classification, and arrangement within 7 business days after receiving the submission and return the rule to the office. If the legislative service bureau fails to issue a certificate of approval within 7 business days after receipt of the submission for formal certification, the office may issue a certificate of approval. If the legislative service bureau returns the submission to the office before the expiration of the 7-business-day time period, the 7-business-day time period is tolled until the rule is returned by the office. The legislative service bureau has the remainder of the 7-business-day time period to consider the formal certification of the rule. On receipt from the legislative service bureau, the office shall, within 7 business days, approve the proposed rule if it considers the proposed rule to be legal and appropriate.

An emergency rule adopted under this subsection remains in effect until the earlier date of the following:

(a) An identical or similar rule is promulgated.

(b) An identical or similar bill is enacted into law.

(c) The administrator determines that the emergency rule is no longer necessary.

(d) Six months after the date of its filing, which may be extended for not more than 6 months by the administrator on filing a certificate of extension with the office of the secretary of state before the expiration of 6 months after the date of its filing.

(3) An emergency rule must not be numbered and must not be compiled in the Michigan Administrative Code, but must be noted in the annual supplement to the code. The emergency rule must be published in the Michigan register under section 8.

(4) If the agency desires to promulgate an identical or similar rule with an effectiveness beyond the final effective date of an emergency rule, the agency shall comply with the procedures prescribed by this act for the processing of a rule that is not an emergency rule. The rule must be published in the Michigan register and in the code.

(5) As used in this section, "administrator" means that term as defined in section 7103 of the public health code, 1978 PA 368, MCL 333.7103.

(a) To the secretary of the committee and the state office of administrative hearings and rules, a paper copy upon which the day and hour of that filing have been endorsed.

(b) To the secretary of the senate and the clerk of the house of representatives, an electronic copy for distribution or transmittal by them to each member of the senate and the house of representatives. When the legislature is not in session, or is in session but will not meet for more than 10 days after the secretary and clerk have received the rules, the secretary and clerk shall mail or electronically transmit 1 copy to each member of the legislature at his or her home address.

(2) The secretary of the senate and clerk of the house of representatives shall present the rules to the senate and the house of representatives.

(2) The chair or a designated member of the standing committee should be present at the hearing, but his or her absence does not affect the validity of the hearing.

History: 1969, Act 306, Eff. July 1, 1970; Am. 2004, Act 491, Eff. Jan. 12, 2005.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(2) The committee shall electronically notify the agency promulgating the rule, the secretary of state, and the office of regulatory reform of any rule or part of a rule the committee suspends. A rule or part of a rule suspended under this section shall not be published in the Michigan register or in the Michigan administrative code while suspended.

(3) A rule suspended by the committee continues to be suspended not longer than the end of the next regular legislative session.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1982, Act 413, Eff. Jan. 1, 1984; Am. 1999, Act 262, Eff. Apr. 1, 2000; Am. 2004, Act 23, Imd. Eff. Mar. 10, 2004; Am. 2004, Act 491, Eff. Jan. 12, 2005.

Compiler's note: Enacting section 2 of Act 491 of 2004 provides:

(2) In completing the annual regulatory plan required by this section, the agency shall identify the rules the agency expects to review under subsection (4) in the next year, the rules it reasonably expects to process in the next year, the mandatory statutory rule authority it has not exercised, and the rules it expects to rescind in the next year.

(3) The annual regulatory plans completed under this section are advisory only and do not otherwise bind the agency or in any way prevent additional action.

(4) In completing a review of rules pursuant to the annual regulatory plans under this section, first priority shall be given to those rules that directly affect the greatest number of businesses, groups, and individuals and those rules that have the greatest actual statewide compliance costs for businesses, groups, and individuals. A review of rules under this subsection shall state the following:

(a) Whether there is a continued need for the rules.

(b) A summary of any complaints or comments received from the public concerning the rules.

(c) The complexity of complying with the rules.

(d) Whether the rules conflict with or duplicate similar rules or regulations adopted by the federal government or local units of government.

(e) The date of the last evaluation of the rules and the degree, if any, to which technology, economic conditions, or other factors have changed regulatory activity covered by the rules.

(5) Annual regulatory plans completed under subsection (1) shall be electronically filed with the office of regulatory reinvention by July 1 of each year. After the office of regulatory reinvention approves the plan for review, the office of regulatory reinvention shall electronically provide a copy of the plan of review to the committee. The committee shall electronically provide a copy of each agency plan of review, not later than the next business day after receipt of the plan of review from the office of regulatory reinvention, to members of the committee and to members of the standing committees of the senate and house of representatives that deal with the subject matter of rules the agency may propose.

(6) Each agency shall provide on its website a link to the website of the office of regulatory reinvention.

(2) An annual supplement to the Michigan administrative code shall be published at the earliest practicable date.

(2) The cost of publishing and distributing annual supplements to the Michigan administrative code and proposed rules, notices of public hearings on proposed rules, rules and emergency rules filed with the secretary of state, notices of proposed and adopted agency guidelines, and the items listed in section 7(l) in the Michigan register may be prorated by the office of regulatory reform on the basis of the volume of these materials published for each agency in the Michigan register and annual supplement to the Michigan administrative code, and the cost of publishing and distribution shall be paid out of appropriations to the agencies.

(2) The Michigan administrative code may be arranged and printed to make convenient the publication electronically or in separate pamphlets of the parts of the Michigan administrative code relating to different agencies. Agencies may order the separate pamphlets, and the cost of the pamphlets shall be paid out of appropriations to the agencies.

(2) The official Michigan administrative code is that published or made available on the office of regulatory reform's internet website free of charge.

(2) The publication of a rule in the Michigan register, the Michigan administrative code, or in an annual supplement to the code raises a rebuttable presumption that:

(a) The rule was adopted, filed with the secretary of state, and made available for public inspection as required by this act.

(b) The rule printed in the publication is a true and correct copy of the promulgated rule.

(c) All requirements of this act relative to the rule have been complied with.

(3) The courts shall take judicial notice of a rule which becomes effective under this act.

History: 1969, Act 306, Eff. July 1, 1970.

(2) The environmental rules review committee consists of the director of the department of environmental quality, or his or her designee, the director of the department of health and human services, or his or her designee, the director of the department of agriculture and rural development, or his or her designee, and the director of the department of natural resources, or his or her designee, all of whom serve as nonvoting members, and the following voting members appointed by the governor by and with the advice and consent of the senate:

(a) One individual who represents the solid waste management industry.

(b) One individual who represents a statewide manufacturing organization.

(c) One individual who represents a statewide organization that represents small businesses.

(d) One individual who represents public utilities that engage in the generation, transmission, or distribution of electricity.

(e) One individual who represents a statewide environmental organization.

(f) One individual who represents the oil and gas industry.

(g) One individual who represents a statewide agricultural organization.

(h) One individual who represents local governments.

(i) One individual who represents a statewide land conservancy organization.

(j) Two individuals who represent the general public.

(k) One individual who is a public health professional.

(3) A voting member of the environmental rules review committee must possess knowledge, experience, or education that qualifies him or her to represent the represented constituency.

(4) An individual may not serve as a voting member of the environmental rules review committee if any of the following apply:

(a) The individual is an employee of any office, department, or agency of this state.

(b) The individual is a party to 1 or more contracts with the department of environmental quality and the compensation paid under those contracts in any of the preceding 3 years represented more than 5% of the individual's annual gross income in that preceding year.

(c) The individual is employed by a person that is a party to 1 or more contracts with the department of environmental quality and the compensation paid to the individual's employer under those contracts in any of the preceding 3 years represented more than 5% of the employer's annual gross revenue in that preceding year.

(d) The individual was employed by the department of environmental quality within the preceding 3 years.

(5) An individual who is a lobbyist agent under 1978 PA 472, MCL 4.411 to 4.431, may serve as a member of the environmental rules review committee only if the individual does not simultaneously receive compensation or reimbursement of actual expenses for lobbying from more than 1 person while serving as a member of the environmental rules review committee.

(6) Not more than 6 of the voting members of the environmental rules review committee may be members of the same political party.

(7) Subject to subsection (8), a voting member of the environmental rules review committee shall serve a term of 4 years, except that of the members first appointed, 4 shall each serve a term of 4 years, 4 shall each serve a term of 3 years, and 4 shall each serve a term of 2 years. A voting member of the environmental rules review committee must not be appointed to serve more than 3 consecutive 4-year terms but may be appointed again after not serving on the environmental rules review committee for 1 full term.

(8) The term of a voting member of the environmental rules review committee continues until a successor is appointed.

(9) The governor may remove a voting member of the environmental rules review committee for cause. Cause includes, but is not limited to, repeated failure to attend meetings.

(10) The governor shall appoint, by and with the advice and consent of the senate, a member to fill a vacancy in the voting membership of the environmental rules review committee created by either of the following:

(a) The death, resignation, or removal of a member before the member's term has expired. A member appointed under this subdivision shall serve for the remainder of the unexpired term.

(b) The expiration of a member's term.

(11) The environmental rules review committee shall not conduct any business or perform any duties while there is a vacancy in the voting membership of the environmental rules review committee, except as follows:

(a) If the vacancy is created by death, resignation, or removal, the environmental rules review committee may continue to conduct business and perform duties unless the governor does not appoint an individual to fill the vacancy within 90 days. If the governor does not appoint an individual to fill the vacancy within 90 days, the environmental rules review committee shall not conduct any business or perform any duties until the governor appoints an individual to fill the vacancy.

(b) If the vacancy is created by the senate's disapproval of an appointment under section 6 of article V of the state constitution of 1963, the environmental rules review committee may continue to conduct business and perform duties unless the governor does not appoint an individual to fill the vacancy within 90 days. If the governor does not appoint an individual to fill the vacancy within 90 days, the environmental rules review committee shall not conduct any business or perform any duties until the governor appoints an individual to fill the vacancy.

(12) The voting members of the environmental rules review committee shall serve without compensation but may be reimbursed by the department of environmental quality for actual and necessary expenses incurred in the performance of their official duties as members.

(13) The director of the department of environmental quality and the director of the department of health and human services shall each select a science advisor to participate in meetings of the environmental rules review committee and provide expert advice to environmental rules review committee members on relevant science-based issues that come before the environmental rules review committee. To serve as an environmental rules review committee science advisor, an individual must possess the proper educational credentials and background to provide science-based expert advice. An individual may not serve as a science advisor if he or she is a state employee or contract employee of this state.

(14) The business that the environmental rules review committee may perform must be conducted at a public meeting of the environmental rules review committee held in compliance with the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.

(15) Nine voting members of the environmental rules review committee constitute a quorum. A quorum must be present to transact any business at a meeting of the environmental rules review committee. Decisions by the environmental rules review committee at a meeting must be made by a majority vote of the members present at the meeting.

(16) The environmental rules review committee shall select a chairperson and vice-chairperson from its voting members. The chairperson shall preside over all meetings of the environmental rules review committee and ensure that the decisions of the environmental rules review committee are implemented. The vice-chairperson shall perform the duties of the chairperson in the chairperson's absence. The chairperson and vice-chairperson shall serve for a term of 2 years and may be selected to serve for additional terms.

(17) The chairperson or a majority of the members of the environmental rules review committee may call a meeting of the environmental rules review committee. However, a meeting may not be called on less than 10 days' notice unless all the voting members of the environmental rules review committee agree in writing or by electronic means to a shorter notice period.

(18) The environmental rules review committee may engage administrative, technical, or legal consultants, in addition to advisors selected under subsection (13), to assist the environmental rules review committee in the performance of its duties. If requested by the environmental rules review committee, a department, agency, or office of this state may provide administrative, technical, or legal staff, in addition to advisors selected under subsection (13), to assist the environmental rules review committee in the performance of its duties.

(19) The purpose of the environmental rules review committee is to oversee all rule-making of the department of environmental quality as provided in this act. For purposes of this act, the department of environmental quality includes any department, agency, commission, or other person to whom the rule-making authority of the department of environmental quality on the effective date of the amendatory act that added this section is transferred after the effective date of the amendatory act that added this section.

(2) Within 14 days after the environmental rules review committee receives a request for rule-making, the chairperson and vice-chairperson may determine and notify the other members of the environmental rules review committee that no further review of the rule-making should be required under this section. Within 14 days after receiving this notice, 3 members of the environmental rules review committee may request a vote on the determination. If 7 or more members vote to override the determination of the chairperson and vice-chairperson, the rule-making must proceed under subsections (3) to (12). If fewer than 7 members vote to override the determination of the chairperson and vice-chairperson, the request for rule-making must not proceed under subsections (3) to (12), but must proceed under the otherwise applicable sections of this act.

(3) The department of environmental quality shall provide copies of draft proposed rules and a draft regulatory impact statement to the office and the environmental rules review committee.

(4) After receiving draft proposed rules under subsection (3), the environmental rules review committee shall meet 1 or more times to consider whether the draft proposed rules meet all of the following criteria:

(a) The office has certified that the draft proposed rules do not exceed the rule-making delegation contained in the statute authorizing the rule-making.

(b) The draft proposed rules reasonably implement and apply the statute authorizing the rule-making and are consistent with all other applicable law.

(c) The draft proposed rules are necessary and suitable to achieve their purposes in proportion to the burdens they place on individuals and businesses.

(d) The draft proposed rules are as clear and unambiguous as reasonably appropriate considering the subject matter of the proposed rules and the individuals and businesses that will be required to comply with the proposed rules.

(e) The draft proposed rules are based on sound and objective scientific reasoning.

(5) Within 35 days after receiving draft proposed rules under subsection (3), the environmental rules review committee shall make 1 of the following determinations:

(a) By a vote of 9 voting members of the environmental rules review committee, a determination that the request for rule-making must not proceed any further under this section, but must proceed under the otherwise applicable sections of this act.

(b) By a majority vote of the voting members of the environmental rules review committee, a determination that the draft proposed rules meet the criteria in subsection (4) and may proceed to a public hearing under subsection (7)(a).

(c) By a majority vote of the voting members of the environmental rules review committee, either a determination that the draft proposed rules do not meet the criteria in subsection (4) or that additional review is needed to determine whether the draft proposed rules meet the criteria in subsection (4). If the environmental rules review committee makes a determination under this subdivision, the draft proposed rules must not proceed to a public hearing under sections 41 and 42 but rather must follow the process in subsection (6).

(6) If the environmental rules review committee makes a determination under subsection (5)(c), the environmental rules review committee shall notify the department of environmental quality in writing of the determination, including an explanation as to either why the draft proposed rules do not meet the criteria in subsection (4) or why additional review is needed. The department of environmental quality shall then attempt to address the environmental rules review committee's determination by taking actions that may include, but are not limited to, convening meetings with stakeholders or groups of stakeholders, providing further information to the environmental rules review committee, or revising the draft proposed rules.

(7) The department of environmental quality shall hold a public hearing under sections 41 and 42 only if 1 of the following occurs:

(a) The environmental rules review committee makes the determination under subsection (5)(b).

(b) The environmental rules review committee determines that the draft proposed rules or any revised draft proposed rules submitted by the department of environmental quality meet the criteria in subsection (4).

(c) Within 90 days after the department of environmental quality receives a notice under subsection (6), which deadline may be extended by up to 2 additional 90-day periods by a majority of the voting members of the environmental rules review committee, the environmental rules review committee has not determined that the draft proposed rules or any revised draft proposed rules submitted by the department of environmental quality meet the criteria in subsection (4).

(d) The environmental rules review committee fails to make a determination under subsection (5) within 35 days after receiving the draft proposed rules under subsection (3).

(8) Within 120 days after a public hearing conducted by the department of environmental quality under subsection (7), the department of environmental quality shall prepare and submit to the environmental rules review committee an agency report containing a synopsis of the comments made at and received in connection with the public hearing and a description of any changes that are suggested by the department of environmental quality to the draft proposed rules. If the department of environmental quality fails to submit an agency report to the environmental rules review committee within 120 days after the public hearing, the department of environmental quality shall withdraw the rule request.

(9) After the receipt of an agency report under subsection (8), the environmental rules review committee shall meet 1 or more times to discuss the report and comments made and testimony given at the public hearing and approve the draft proposed rules with modifications, approve the draft proposed rules, or reject the draft proposed rules. If the environmental rules review committee fails to make a determination within 120 days after receiving an agency report under subsection (8), the draft proposed rules must proceed under subsection (12).

(10) If the environmental rules review committee approves the draft proposed rules under subsection (9), the draft proposed rules must proceed under subsection (12). If the environmental rules review committee either approves the draft proposed rules with modifications or rejects the draft proposed rules, the draft proposed rules must proceed under subsection (11).

(11) If within the time period set forth in subsection (9), the environmental rules review committee approves the draft proposed rules with modifications or rejects the draft proposed rules, the environmental rules review committee shall submit a notice of objection to the director of the department of environmental quality and the governor that includes an explanation of its decision. The department of environmental quality shall then attempt to resolve any issues with the environmental rules review committee, which resolution may include submitting revised draft proposed rules. If the environmental rules review committee and the department of environmental quality resolve all issues, the draft proposed rules must proceed under subsection (12). If all issues are not resolved before 11 months after the date of the last public hearing on the draft proposed rules, the department of environmental quality shall submit a written finding to the governor on its final position on the draft proposed rules or revised draft proposed rules. If the governor concurs with the department of environmental quality's finding, the governor shall direct the director of the department of environmental quality to proceed with the draft proposed rules under subsection (12). If the governor does not concur with the department of environmental quality's finding, the governor shall direct the department of environmental quality to withdraw the draft rules.

(12) If draft proposed rules proceed under this subsection as provided in this section, the office shall transmit by notice of transmittal to the committee copies of the rules, the request for rule-making, the synopsis of the comments contained in the public hearing record, a description of any revisions to the proposed rules that were made after the public hearing, and certificates of approval from the legislative service bureau and the office. The office shall also electronically submit to the environmental rules review committee a copy of the rule and any certificates of approval from the legislative service bureau and the office. The office shall electronically transmit to the environmental rules review committee the information described in this subsection within 1 year after the date of the last public hearing.

(2) The parties shall be given a reasonable notice of the hearing, which notice shall include:

(a) A statement of the date, hour, place, and nature of the hearing. Unless otherwise specified in the notice the hearing shall be held at the principal office of the agency.

(b) A statement of the legal authority and jurisdiction under which the hearing is to be held.

(c) A reference to the particular sections of the statutes and rules involved.

(d) A short and plain statement of the matters asserted. If the agency or other party is unable to state the matters in detail at the time the notice is given, the initial notice may state the issues involved. Thereafter on application the agency or other party shall furnish a more definite and detailed statement on the issues.

(3) A member of the legislature shall not be privileged from service of notice or other process pursuant to this chapter except on a day on which there is a scheduled meeting of the house of which he or she is a member. However, a member of the legislature shall not be privileged from service of notice or other process pursuant to this chapter on a day on which there is a scheduled meeting of the house of which he or she is a member, if such service of notice or process is executed by certified mail, return receipt requested.

History: 1969, Act 306, Eff. July 1, 1970; Am. 1984, Act 28, Imd. Eff. Mar. 12, 1984.

(2) A party who has been served with a notice of hearing may file a written answer before the date set for hearing.

(3) The parties shall be given an opportunity to present oral and written arguments on issues of law and policy and an opportunity to present evidence and argument on issues of fact.

(4) A party may cross-examine a witness, including the author of a document prepared by, on behalf of, or for use of the agency and offered in evidence. A party may submit rebuttal evidence.

(2) An agency that relies on a witness in a contested case, whether or not an agency employee, who has made prior statements or reports with respect to the subject matter of his testimony, shall make such statements or reports available to opposing parties for use on cross-examination. On a request for identifiable agency records, with respect to disputed material facts involved in a contested case, except records related solely to the internal procedures of the agency or which are exempt from disclosure by law, an agency shall make such records promptly available to a party.

(a) “Developmental disability” means that term as defined in section 100a of the mental health code, 1974 PA 258, MCL 330.1100a except that, for the purposes of implementing this section, developmental disability includes only a condition that is attributable to a mental impairment or to a combination of mental and physical impairments, and does not include a condition attributable to a physical impairment unaccompanied by a mental impairment.

(b) “Witness” means an alleged victim under subsection (2) who is either of the following:

(i) A person under 16 years of age.

(ii) A person 16 years of age or older with a developmental disability.

(2) This section only applies to a contested case in which a witness testifies as an alleged victim of sexual, physical, or psychological abuse. As used in this subsection, “psychological abuse” means an injury to the witness's mental condition or welfare that is not necessarily permanent but results in substantial and protracted, visibly demonstrable manifestations of mental distress.

(3) If pertinent, the witness shall be permitted the use of dolls or mannequins, including, but not limited to, anatomically correct dolls or mannequins, to assist the witness in testifying on direct and cross-examination.

(4) A witness who is called upon to testify shall be permitted to have a support person sit with, accompany, or be in close proximity to the witness during his or her testimony. A notice of intent to use a support person shall name the support person, identify the relationship the support person has with the witness, and give notice to all parties to the proceeding that the witness may request that the named support person sit with the witness when the witness is called upon to testify during any stage of the proceeding. The notice of intent to use a named support person shall be served upon all parties to the proceeding. The agency shall rule on any objection to the use of a named support person prior to the date at which the witness desires to use the support person.

(5) In a hearing under this section, all persons not necessary to the proceeding shall be excluded during the witness's testimony.

(6) This section is in addition to other protections or procedures afforded to a witness by law or court rule.

(2) Except as otherwise provided by law, disposition may be made of a contested case by stipulation, agreed settlement, consent order, waiver, default or other method agreed upon by the parties.

(a) Administer oaths and affirmations.

(b) Sign and issue subpoenas in the name of the agency, requiring attendance and giving of testimony by witnesses and the production of books, papers, and other documentary evidence.

(c) Provide for the taking of testimony by deposition.

(d) Regulate the course of the hearings, set the time and place for continued hearings, and fix the time for filing of briefs and other documents.

(e) Direct the parties to appear and confer to consider simplification of the issues by consent of the parties.

(f) Act upon an application for an award of costs and fees under sections 121 to 127.

(2) In order to assure adequate representation for the people of this state, when the presiding officer knows that a party in a contested case is a member of the legislature of this state, and the legislature is in session, the contested case shall be continued by the presiding officer to a nonmeeting day.

(3) In order to assure adequate representation for the people of this state, when the presiding officer knows that a party to a contested case is a member of the legislature of this state who serves on a legislative committee, subcommittee, commission, or council that is scheduled to meet during the legislative session while the legislature is temporarily adjourned, or that is scheduled to meet during the interim between legislative sessions after the legislature has adjourned sine die, or when the partisan caucus of which the legislator is a member is scheduled to meet, the contested case shall be continued to a nonmeeting day.

(4) In order to assure adequate representation for the people of this state, when the presiding officer knows that a witness in a contested case is a member of the legislature of this state, and the legislature is in session, or the member is serving on a legislative committee, subcommittee, commission, or council that is scheduled to meet during the legislative session while the legislature is temporarily adjourned or during the interim between legislative sessions after the legislature has adjourned sine die, or when the partisan caucus of which the legislator is a member is scheduled to meet the contested case need not be continued, but the taking of the legislator's testimony, as a witness shall be postponed to the earliest practicable nonmeeting day.

(5) The presiding officer shall notify all parties to the contested case, and their attorneys, of any continuance granted pursuant to this section.

(6) As used in this section, “nonmeeting day” means a day on which there is not a scheduled meeting of the house of which the party or witness is a member, nor a legislative committee meeting or public hearing scheduled by a committee, subcommittee, commission, or council of which he or she is a member, nor a scheduled partisan caucus of the members of the house of which he or she is a member.

(2) The proposal for decision shall contain a statement of the reasons therefor and of each issue of fact and law necessary to the proposed decision, prepared by a person who conducted the hearing or who has read the record.

(3) The decision, without further proceedings, shall become the final decision of the agency in the absence of the filing of exceptions or review by action of the agency within the time provided by rule. On appeal from or review of a proposal of decision the agency, except as it may limit the issue upon notice or by rule, shall have all the powers which it would have if it had presided at the hearing.

(4) The parties, by written stipulation or at the hearing, may waive compliance with this section.

(a) Notices, pleadings, motions and intermediate rulings.

(b) Questions and offers of proof, objections and rulings thereon.

(c) Evidence presented.

(d) Matters officially noticed, except matters so obvious that a statement of them would serve no useful purpose.

(e) Proposed findings and exceptions.

(f) Any decision, opinion, order or report by the officer presiding at the hearing and by the agency.

(2) Oral proceedings at which evidence is presented shall be recorded, but need not be transcribed unless requested by a party who shall pay for the transcription of the portion requested except as otherwise provided by law.

(2) Where for justifiable reasons the record of testimony made at the hearing is found by the agency to be inadequate for purposes of judicial review, the agency on its own motion or on request of a party shall order a rehearing.

(3) A request for a rehearing shall be filed within the time fixed by this act for instituting proceedings for judicial review. A rehearing shall be noticed and conducted in the same manner as an original hearing. The evidence received at the rehearing shall be included in the record for agency reconsideration and for judicial review. A decision or order may be amended or vacated after the rehearing.

(2) When a licensee makes timely and sufficient application for renewal of a license or a new license with reference to activity of a continuing nature, the existing license does not expire until a decision on the application is finally made by the agency, and if the application is denied or the terms of the new license are limited, until the last day for applying for judicial review of the agency order or a later date fixed by order of the reviewing court. This subsection does not affect valid agency action then in effect summarily suspending such license under section 92.

(a) The support and parenting time enforcement act, 1982 PA 295, MCL 552.601 to 552.650.

(b) The regulated occupation support enforcement act, 1996 PA 236, MCL 338.3431 to 338.3436.

(c) Section 41309 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.41309.

(2) If the agency finds that the public health, safety or welfare requires emergency action and incorporates this finding in its order, summary suspension of a license may be ordered effective on the date specified in the order or on service of a certified copy of the order on the licensee, whichever is later, and effective during the proceedings. The proceedings shall be promptly commenced and determined.

(2) As used in this subsection, “adoptee” means a child who is to be or who is adopted. In the case of an appeal from a final determination of the office of youth services within the department of social services regarding an adoption subsidy, a petition for review shall be filed:

(a) For an adoptee residing in this state, in the probate court for the county in which the petition for adoption was filed or in which the adoptee was found.

(b) For an adoptee not residing in this state, in the probate court for the county in which the petition for adoption was filed.

(3) A petition for review shall contain a concise statement of:

(a) The nature of the proceedings as to which review is sought.

(b) The facts on which venue is based.

(c) The grounds on which relief is sought.

(d) The relief sought.

(4) The petitioner shall attach to the petition, as an exhibit, a copy of the agency decision or order of which review is sought.

(2) Within 60 days after service of the petition, or within such further time as the court allows, the agency shall transmit to the court the original or certified copy of the entire record of the proceedings, unless parties to the proceedings for judicial review stipulate that the record be shortened. A party unreasonably refusing to so stipulate may be taxed by the court for the additional costs. The court may permit subsequent corrections to the record.

(3) The review shall be conducted by the court without a jury and shall be confined to the record. In a case of alleged irregularity in procedure before the agency, not shown in the record, proof thereof may be taken by the court. The court, on request, shall hear oral arguments and receive written briefs.

(a) In violation of the constitution or a statute.

(b) In excess of the statutory authority or jurisdiction of the agency.

(c) Made upon unlawful procedure resulting in material prejudice to a party.

(d) Not supported by competent, material and substantial evidence on the whole record.

(e) Arbitrary, capricious or clearly an abuse or unwarranted exercise of discretion.

(f) Affected by other substantial and material error of law.

(2) The court, as appropriate, may affirm, reverse or modify the decision or order or remand the case for further proceedings.

(2) Chapters 4 and 8 do not apply to a hearing conducted by the department of corrections pursuant to chapter IIIA of Act No. 232 of the Public Acts of 1953, being sections 791.251 to 791.256 of the Michigan Compiled Laws.

(3) Chapter 8 does not apply to any of the following:

(a) A contested case or other proceeding regarding the granting or renewing of an operator's or chauffeur's license by the secretary of state.

(b) Proceedings conducted by the Michigan employment relations commission.

(c) Worker's disability compensation proceedings under Act No. 317 of the Public Acts of 1969.

(d) Unemployment compensation hearings under the Michigan employment security act, Act No. 1 of the Public Acts of the Extra Session of 1936, being sections 421.1 to 421.75 of the Michigan Compiled Laws.

(e) Family independence agency public assistance hearings under section 9 of the social welfare act, Act No. 280 of the Public Acts of 1939, being section 400.9 of the Michigan Compiled Laws.

(4) Chapter 6 does not apply to final decisions or orders rendered under article 15 of the public health code, Act No. 368 of the Public Acts of 1978, being sections 333.16101 to 333.18838 of the Michigan Compiled Laws.

(5) Chapters 2, 3, and 5 do not apply to the municipal employees retirement system and retirement board created by the municipal employees retirement act of 1984, Act No. 427 of the Public Acts of 1984, being sections 38.1501 to 38.1555 of the Michigan Compiled Laws, on and after August 15, 1996.

(6) Until the expiration of 12 months after the effective date of the amendatory act that added this subsection, chapters 2, 3, and 5 do not apply to the establishment, implementation, administration, operation, investment, or distribution of a Tier 2 retirement plan established pursuant to section 401(k) of the internal revenue code under the state employees' retirement act, Act No. 240 of the Public Acts of 1943, being sections 38.1 to 38.69 of the Michigan Compiled Laws. Upon the expiration of 12 months after the effective date of the amendatory act that added this subsection, rules and guidelines promulgated or processed under this subsection are not effective and binding unless promulgated and processed in accordance with this act.

(7) Until the expiration of 12 months after the effective date of the amendatory act that added this subsection, chapters 2, 3, and 5 do not apply to the establishment, implementation, administration, operation, investment, or distribution of a Tier 2 retirement plan established pursuant to section 403(b) of the internal revenue code under the public school employees retirement act of 1979, Act No. 300 of the Public Acts of 1980, being sections 38.1301 to 38.1437 of the Michigan Compiled Laws. Upon the expiration of 12 months after the effective date of the amendatory act that added this subsection, rules and guidelines promulgated or processed under this subsection are not effective and binding unless promulgated and processed in accordance with this act.

(8) Until the expiration of 12 months after the effective date of the amendatory act that added this subsection, chapters 2, 3, and 5 do not apply to the establishment, implementation, administration, operation, investment, or distribution of a Tier 2 retirement plan established pursuant to the internal revenue code under the Michigan legislative retirement system act, Act No. 261 of the Public Acts of 1957, being sections 38.1001 to 38.1080 of the Michigan Compiled Laws. Upon the expiration of 12 months after the effective date of the amendatory act that added this subsection, rules and guidelines promulgated or processed under this subsection are not effective and binding unless promulgated and processed in accordance with this act.

History: Add. 1970, Act 40, Imd. Eff. July 1, 1970; Am. 1979, Act 139, Imd. Eff. Nov. 7, 1979; Am. 1984, Act 196, Imd. Eff. July 3, 1984; Am. 1988, Act 85, Imd. Eff. Mar. 29, 1988; Am. 1993, Act 83, Eff. Apr. 1, 1994; Am. 1996, Act 222, Eff. Aug. 15, 1996; Am. 1996, Act 489, Eff. Mar. 31, 1997.

(2) "Costs and fees" means the normal costs incurred, after a party has received notice of an initial hearing under section 71, in being a party in a contested case under this act and include all of the following:

(a) The reasonable and necessary expenses of expert witnesses as determined by the presiding officer.

(b) The reasonable cost of any study, analysis, engineering report, test, or project that is determined by the presiding officer to have been necessary for the preparation of a party's case.

(c) Reasonable and necessary attorney or agent fees including those for purposes of appeal.

(3) "Party" means a party as defined in section 5, but does not include any of the following:

(a) An individual whose net worth was more than $500,000.00 at the time the contested case was initiated.

(b) The sole owner of an unincorporated business or any partnership, corporation, association, or organization whose net worth exceeded $3,000,000.00 at the time the contested case was initiated and that is not either exempt from taxation pursuant to section 501(c)(3) of the internal revenue code, 26 USC 501, or a cooperative association as defined in section 15(a) of the agricultural marketing act, 12 USC 1141j(a).

(c) The sole owner of an unincorporated business or any partnership, corporation, association, or organization that had more than 250 full-time equivalent employees, as determined by the total number of employees multiplied by their working hours divided by 40, at the time the contested case was initiated.

(d) As used in this subsection "net worth" means the amount remaining after the deduction of liabilities from assets as determined according to generally accepted accounting principles.

(4) "Presiding officer" means an agency, 1 or more members of the agency, a person designated by statute to conduct a contested case, or a hearing officer designated and authorized by the agency to conduct a contested case.

(5) "Prevailing party" means either of the following, as applicable:

(a) In an action involving several remedies, or issues or counts that state different causes of actions or defenses, the party prevailing as to each remedy, issue, or count.

(b) In an action involving only 1 issue or count stating only 1 cause of action or defense, the party prevailing on the entire record.

(a) The agency's primary purpose in initiating the action was to harass, embarrass, or injure the prevailing party.

(b) The agency had no reasonable basis to believe that the facts underlying its legal position were in fact true.

(c) The agency's legal position was devoid of arguable legal merit.

(2) If the parties to a contested case do not agree on the awarding of costs and fees under this section, a hearing shall be held if requested by a party, regarding the awarding of costs and fees and the amount thereof. The party seeking an award of costs and fees shall present evidence establishing all of the following:

(a) That the position of the agency was frivolous.

(b) That the party is a prevailing party.

(c) The amount of costs and fees sought including an itemized statement from any attorney, agent, or expert witness who represented the party showing the rate at which the costs and fees were computed.

(d) That the party is eligible to receive an award under this section. Financial records of a party shall be exempt from public disclosure if requested by the party at the time the records are submitted pursuant to this section.

(e) That a final order not subject to further appeal other than for the judicial review of costs and fees provided for in section 125 has been entered in the contested case regarding the subject matter of the contested case.

(3) The presiding officer may reduce the amount of the costs and fees to be awarded, or deny an award, to the extent that the party seeking the award engaged in conduct which unduly and unreasonably protracted the contested case.

(4) The final action taken by the presiding officer under this section in regard to costs and fees shall include written findings as to that action and the basis for the findings.

(5) Subject to subsection (6), the amount of costs and fees awarded under this section shall include those reasonable and necessary costs actually incurred by the party and any costs allowed by law or by a rule promulgated under this act. Subject to subsection (6), the amount of fees awarded under this section shall be based upon the prevailing market rate for the kind and quality of the services furnished, subject to the following:

(a) The expenses paid for an expert witness shall be reasonable and necessary as determined by the presiding officer.

(b) An attorney or agent fee shall not be awarded at a rate of more than $75.00 per hour unless the presiding officer determines that special circumstances existed justifying a higher rate or an applicable rule promulgated by the agency provides for the payment of a higher rate because of special circumstances.

(6) The costs and fees awarded under this section shall only be awarded to the extent and amount that the agency caused the prevailing party to incur those costs and fees.

(7) This section does not apply to any agency in its role of hearing or adjudicating a case. Unless an agency has discretion to proceed, this section does not apply to an agency acting ex rel on the information and at the instigation of a nonagency person who has a private interest in the matter nor to an agency required by law to commence a case upon the action or request of another nonagency person.

(8) This section does not apply to an agency that has such a minor role as a party in the case in comparison to other nonprevailing parties so as to make its liability for costs and fees under this section unreasonable, unjust, or unfair.

(2) The court reviewing the final action of a presiding officer pursuant to subsection (1) may modify that action only if the court finds that the failure to make an award or the making of an award was an abuse of discretion, or that the calculation of the amount of the award was not based on substantial evidence.

(3) An award of costs and fees made by a court under this section shall only be made pursuant to section 2421d of Act No. 236 of the Public Acts of 1961, being section 600.2421d of the Michigan Compiled Laws.

(2) If costs and fees are awarded under this chapter to a prevailing party, the agency or agencies over which the party prevailed shall pay those costs and fees.