As the State begins the process of creating rules for the medical marijuana industry, recent amendments to the rulemaking process will give the Michigan Legislature greater influence over the outcome.
The Administrative Procedures Act (APA) governs the process by which state agencies promulgate rules. The APA spells out numerous steps to create rules, beginning with a request for rule-making to the Office of Performance and Transformation (OPT) and ending when the rules take effect upon filing with the Secretary of State.
Toward the end of the rulemaking process, proposed rules must be submitted to the Legislature’s Joint Committee on Administrative Rules (JCAR). JCAR may object to proposed rules, but may only do so on specific grounds, such as the agency lacks statutory authority for the rules, the rules are arbitrary or capricious, or the rules are unduly burdensome to the public or to a licensee. Until recent amendments to the APA, if a notice of objection was approved by a majority of JCAR, JCAR’s option was to introduce legislation to rescind the offending rules. However, the bill to rescind offending rules had to be approved within 15 session days, or else the agency’s proposed rules would nevertheless go into effect.
Public Act 513 of 2016, signed by Governor Snyder last month and effective on January 9, 2017, gives JCAR two more options in the rulemaking process: (1) to suggest changes to the proposed rules, or (2) to propose a legislative alternative, and delay the proposed rules for 9 months.
First, upon reviewing proposed rules, JCAR may now recommend that the agency make changes. If the agency agrees to do so, it must withdraw the rules and submit the new revised rules to OPT. OPT will then analyze whether the new rules are less burdensome than the original proposal. If so, some APA requirements for further analysis are waived. In any event, though, the revised rules will again go before JCAR, causing some delays in the process. If the agency does not agree to change its proposed rules, JCAR may proceed to file a notice of objections.
Second, JCAR may now decide to introduce legislation to enact the subject of the proposed rules into law. In other words, JCAR can propose a legislative alternative. Practically speaking, if the agency declines to change proposed rules upon a request from JCAR, it can be expected that JCAR will submit such legislation. If JCAR introduces a bill in the Legislature, then the Secretary of State may not file the agency’s proposed rules for 270 days. If the proposed legislation is defeated in either the Senate or the House, then the agency’s proposed rules may be filed.
The net effect of Public Act 513 is that JCAR can significantly delay the effective date of new regulations and rules if JCAR does not agree with their contents. If JCAR asks the agency to change its rule and the agency agrees, OPT will have to evaluate the costs of the new rule, which will take time. Moreover, there is nothing in Public Act 513 preventing JCAR from asking the agency to change the rule again, lengthening the process further. In addition, JCAR now has more authority to introduce legislation, which could also lengthen the rulemaking process. Previously, JCAR could only introduce legislation after it filed an objection, which can only be done in certain circumstances. In contrast, under Public Act 513, JCAR can now introduce legislation without limitations. Further, JCAR’s bill could be in the legislature for up to 270 days, rather than the 15 session days under the previous law.
As new rules are proposed for the Marijuana industry, the administration will need to be more conscious of JCAR’s preferences for rules. Failing to account for JCAR’s views could make it impossible for rules to take effect in time for license applicants to file for licensees this year.