Pushing Past Red Tape

This article appeared in the February 2020 issue of MiMfg Magazine. Read the full issue and find past issues online.

Students are taught from an early age how bills become laws. During tours of the Capitol and in social studies classes, they are told about a bill moving through the Senate and the House and how, once passed, the Governor signs the legislation into law. Rarely, however, do people talk about another equally important element — the administrative rules process.

Because laws may not address the fine details of day-to-day implementation, these administrative rules are developed to clarify process and procedure and operate with the force and effect of law.

“In many ways, legislatively passed laws represent the skeleton of what manufacturers and everyday citizens need to follow; the rulemaking process is there to put flesh on the bone,” explained Mike Johnston, MMA vice president of government affairs. “But the process of rulemaking is a lot more complicated for MMA. We focus a great deal of attention on the rules process, working with state agencies to ensure the rules being developed remain fair, cost-effective and, ultimately, allow Michigan to compete effectively with other states and around the world.”

As with most everything in the American political system, both the Executive and Legislative branches of government have their own powers, advantages and limitations and will use the avenues available to them to achieve their goals. In Michigan, the Governor holds broad authority over rulemaking.

“One of the Governor’s strongest tools is the authority to promulgate rules,” said Johnston. “Ironically, that power was delegated to the executive branch by the Legislature. We frequently see regulations that the Legislature would likely reject, but does not currently have the authority to stop.”

Tens of thousands of rules exist in Michigan and plenty more are handed down at the federal level. Each regulation represents a restriction. Overly strict regulations can mean significant constraints on the economy by forcing Michigan manufacturers to deal with red tape, regulatory overreach, unreasonable barriers and an overabundance of restrictions that don’t exist in other states.

The Lost Check on Administrative Rulemaking Authority

When the Legislature originally shifted rulemaking authority to state agencies, they retained the authority to immediately reject any specific proposed rule through an oversight committee known as the Joint Committee on the Administrative Rules (JCAR). However, this check on the executive branch was significantly weakened when a 1990s Michigan Supreme Court ruling said the legislative JCAR committee’s veto power was unconstitutional. Consequently, JCAR has been unable to veto agency-proposed rules for over 20 years, leaving legislative bill passage as the sole path to a veto of overly onerous rules, which hasn’t happened a single time in those 20 years.

“MMA works diligently with our manufacturing members and regulatory agencies to impact the ultimate product of the rulemaking process,” Delaney McKinley, MMA senior director of government affairs and membership.

MMA and the ORR: Reducing Regulatory Red Tape

Former Governor Rick Snyder recognized the impact of unnecessarily burdensome regulations on manufacturing’s ability to thrive and that drove the creation of the Office of Regulatory Reinvention (ORR). Charged with ensuring Michigan’s regulatory climate was “fair, efficient and conducive to business growth and job creation,” the ORR created numerous Advisory Rules Committees tasked with locating and recommending the removal of rules and regulations that were duplicative, outdated or far exceeding federal standards. MMA represented the interests of manufacturers on several committees.

“The ability of MMA and its members to have an advisory role in the process was critical to the success of ORR’s efforts,” said McKinley. “We were able to ensure regulations that unfairly restricted manufacturers from creating jobs and investing in local Michigan communities were removed. Michigan now has a clearer and more credible administrative code and an overall more competitive business climate.”

MMA and the ORR successfully reduced the total number of rules imposed on Michigan by 2,319, before Governor Whitmer abolished the office in one of her first executive orders. The new Michigan Office of Administrative Hearings and Rules (MOAHR) was given all rulemaking functions.

MMA’s No Stricter Than Federal: Keeping Michigan Competitive

Recognizing the need to sharpen the tools at hand in the administrative rules process, MMA led an effort to pass legislation, sponsored by Representative Triston Cole (R-Mancelona), in December 2018 to further protect manufacturers from being forced to comply with rules more stringent than their out-of-state competition. This new law, Public Act 602 of 2018, is one of the most important laws passed in many years for blocking regulations that exceed federal standards without clear and convincing evidence.

“Limiting regulations to existing federal standards helps ensure our state remains attractive to current and new business investment,” explained Johnston. “By requiring clear and convincing evidence that a proposed regulation exceeding federal standards is needed, MMA was able to achieve a more level playing field for in-state job creators.”

Additional Constraints on Rules in Statute

The Environmental Rules Review Committee (ERRC) was created through an MMA-supported statutory change passed during the 2018 Lame Duck session. The ERRC provides an additional step of oversight to guard against exessive rule promulgation within the Department of Environment, Great Lakes and Energy (EGLE). MMA has been actively engaged in the rule sets going before the ERRC to ensure that rules meet all the statutorily enumerated criteria and that any rules that are promulgated do not overly burden or adversely impact our member companies.

“The greatest risk our members face during the administrative rules process is the risk of being ignored,” said Dave Greco, MMA director of regulatory and environmental affairs. “This extra level of protection through the ERRC, in addition to MMA always being available to participate in public hearings and to use our existing relationships with agency leadership, ensures that the potential negative impact of rules on manufacturers will be heard and considered.”

Stay Connected with MMA — More Vital than Ever

Because the administrative rules process allows for fewer tools at manufacturing’s disposal, it’s more important than ever to stay connected with MMA and our many policy committees.

“Staying informed is a tall task because the requirements for new or amended administrative rules are obscure and public comment typically has no impact on what rules the authorized agency will adopt,” said Stephen R. Gee, a labor & employment law attorney for MMA Premium Associate member Clark Hill PLC. “Staying in touch with the MMA’s Government Affairs team and reading member communications will enable a manufacturer to stay informed. MMA is also an appropriate place to voice concerns early on in the administrative rules process when the bulk of the actual rules are essentially ironed out.”

While you continue to work to innovate new products, create jobs and invest in local communities, MMA is on the front lines fighting to ensure every law, regulation and rule keeps your business competitive.

“MMA has developed strong working relationships with agency and department leaders and our reputation as a thought leader and issue expert is well recognized as the best in the state for manufacturing,” said Johnston. “As the voice for Michigan’s largest and most impactful economic sector, MMA can help influence the rule development and JCAR review processes.”

Again, in a world of divided government, those in power will utilize the authority they have to push forward policy priorities to the furthest extent it can. In 2020, topics like PFAS and the expansion of existing overtime rules will be among the many issues where MMA’s experience in the administrative rules process will become increasingly valuable to your future success.

Anti-Competitive Issues Laying in Wait

Manufacturers are juggling more responsibilities than ever — it’s simply not possible for them to get personally involved in every issue. That’s what makes a strong relationship with MMA so advantageous — we are in the weeds every day on the issues most likely to threaten your future. Your interests can be represented without having to be away from your daily operations.

While the idea of administrative rules can seem confusing and overwhelming, it is an integral part of a process that can directly impact your business in a big way, for better or worse. Currently, two key issues are winding their way through the process and, without MMA or manufacturers on alert, could fundamentally change your ability to compete.

MMA represents the tip of the spear on efforts relating to per- and polyfluoroalkyl substances (PFAS). The rulemaking process is how the state is working to impose new, strictest in the nation PFAS drinking water standards. While MMA worked with EGLE for years ahead of the agency’s release of new rules, the Association also participated in the public comment period by encouraging the state to use settled and established science as the foundation for rulemaking.

To meaningfully contribute to the rulemaking process, MMA commissioned an independent peer review report by leading PFAS researchers on the proposed rules which was submitted along with formal written comments. MMA believes this report will aid in the rulemaking process by providing credible scientific and technical information.

Also, of critical importance to manufacturers, is the Governor’s effort to expand overtime pay requirements to an additional 200,000 Michigan workers.

This effort has roots back to rules proposed by former President Barack Obama in 2014 to dramatically expand the population of workers eligible for overtime pay. Nationally, the business community fought back against the costly rule change and, ultimately, the proposal was upended by a lengthy court battle. President Donald Trump then scaled back the proposal and a new federal threshold of $35,568 went into effect on 1/1/20.

In her first year in office, Governor Whitmer issued a directive to the Michigan Department of Labor and Economic Opportunity to promulgate rules to increase the salary threshold and ensure more Michiganders are eligible for overtime pay. While the language of the proposed rule has not yet been released, Governor Whitmer is reportedly using the Obama plan as a starting point. With inflation, the proposal would equate to a threshold of $51,000 today.

“Imposing a state-specific overtime requirement threshold in excess of federal requirements would not only dramatically increase payroll costs and possibly cause disruptive staff restructuring but it would also put Michigan manufacturers at a competitive disadvantage to their counterparts across the state line and around the globe,” explained McKinley.

Get Involved

“The devil really is in the details and the administrative rules process can burden your business with countless regulations unless we are there to protect manufacturing’s ability to compete,” said Johnston. “You need to be engaged in 2020 and beyond. Participate in MMA Policy Committees. Register to attend MFG Legislative Day on 9/15/20. Subscribe to our weekly MFG Voice e-newsletter and connect regularly with your MMA Government Affairs team.”

For more information on rules and regulations affecting your competitiveness and how to get involved, contact the MMA Government Affairs team at 517-487-8552.

Download the full State of Michigan Rulemaking Process Summary for reference.