This article appeared in the March 2019 issue of MiMfg Magazine. Read the full issue and find past issues online.

Michigan’s regulatory agencies have held significant and growing power through the writing of administrative rules and regulations. This authority is a power delegated by the legislature; it is not inherent in the Constitution. An MMA-led bill sponsored by Representative Triston Cole (R-Mancelona) and signed into law in December 2018 by Governor Rick Snyder will significantly constrain that authority and set Michigan on a new trajectory of regulatory competitiveness.

For many years, criticisms were lodged about Michigan’s business climate. It was called bureaucratic red tape, regulatory overreach, unreasonable barriers to competitiveness, and an overabundance of regulatory barriers. When Michigan imposes regulations more stringent than federal standards, this increases the cost of doing business in the state; reducing a company’s ability to compete with businesses in other states that do not impose regulations beyond federal standards. The regulations become a competitive disadvantage for Michigan businesses.

The system has been broken for a long time. Over several decades, the legislature drafted laws and routinely delegated broad authority to agencies to write new regulations in the form of administrative rules. The legislature felt comfortable handing this significant regulatory power to the executive branch knowing they retained the authority to later reject any specific proposed rule through an oversight committee known as the Joint Committee on the Administrative Rules (JCAR). Retaining veto power over the agency’s proposed rules kept a check on the balance of power between government branches. However, in the late 1990s, the Michigan Supreme Court ruled the veto power utilized by the legislative JCAR committee was unconstitutional. Consequently, the legislature’s JCAR has been unable to veto agency-proposed rules for nearly 20 years. Agencies have held the advantage in the governmental balance of power as most statutes still delegate broad rule authority.

Over the last few years, MMA has encouraged the state to reduce agency-created regulations by over 3,000. While each new rule may have been well-intentioned, their aggregate weight hindered Michigan’s business climate, slowing economic growth to a crawl.

Eliminating unnecessary regulations is important; but if new regulations fill the void, not much gets accomplished. Representative Cole’s bill, originally House Bill 4205 and now Public Act 602 of 2018, will change the trajectory of Michigan’s regulatory environment. The bill establishes a policy blocking the creation of new regulations by administrative agencies that exceed federal standards. Limiting regulations to federal standards helps ensure Michigan does not increase regulatory costs on employers beyond what exists in other states. This sets a more level competitive playing field for Michigan manufacturers.

The legislation respects the need to protect human health and the environment by requiring the agency director to provide clear and convincing evidence that the proposed regulation exceeding federal standards is needed in Michigan. The process transparently explores whether the additional regulation is fully justified against the cost of new regulation and the potential impact on Michigan’s business climate. Such open discussion will be good for Michigan.

MMA thanks Representative Cole for championing this policy in Michigan. It will help reestablish an appropriate check on the broad authority delegated long ago to regulatory agencies and limit the growth of unreasonable and expensive regulations that harm Michigan’s economy.

The Association believes this new law is one of the most important laws passed in many years. It stands as a critical barrier against the proliferation of unnecessary and burdensome regulations, restores the appropriate balance of power over new regulations, and improves the long-term competitiveness of Michigan’s business climate.

About the Author

Mike Johnston is MMA’s vice president of government affairs. He may be reached at 517-487-8554 or johnston@mimfg.org.