Title: Greenfield Const. Co. v. Hwy Dept.
Citation: 261 N.W.2d 718, 402 Mich. 172
Docket Number: 
State: Michigan
Issuer: Michigan Supreme Court
Date: January 25, 1978

Decided January 25, 1978. Schmier, Fealk & Ellis for plaintiff. Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Louis J. Caruso and Curtis G. Beck, Assistants Attorney General, for defendant. Decided January 25, 1978. Rehearing denied post, p 962. RYAN, J. In October of 1972 defendant, Michigan Department of State Highways, advertised for bids *185 on the construction of sewer outlet structures which would extend 2000 feet into Lake St. Clair. Plaintiff, Greenfield Construction Company, obtained copies of the project proposal, design plans, and specifications, submitted the low bid on the project and ultimately entered into a construction contract with defendant in December, 1972. Upon arrival at the site in March, 1973, Greenfield alleges it first discovered significant changes in the conditions at the work site from those indicated in the project proposal, design plans, and specifications. Specifically, the water level of Lake St. Clair was approximately 2 feet higher than the last elevation indicated in the project plans supplied by defendant. Greenfield thereupon notified defendant that it considered these developments to be "changed physical conditions", as that expression is defined in the contract documents, and claimed that under the contract it was entitled to compensation in excess of the contract price. In petitioning for extra compensation, Greenfield followed the informal procedures customarily employed in situations where there is disagreement between the highway department and contractors as to matters of performance or compensation.[1]*186 Ultimately, however, the Department of State Highways, in a letter dated June 6, 1973, advised plaintiff that the department would not award additional compensation. No record was made of the department proceedings which culminated in the June 6 letter. On July 17, 1973, Greenfield filed its two-count complaint in the Wayne Circuit Court. Count I alleged that the June 6 letter from the Department of State Highways was a "declaratory ruling" subject to judicial review under the Administrative Procedures Act of 1969, MCLA 24.201 et seq.; MSA 3.560(101) et seq. Plaintiff sought a reversal of the alleged "declaratory ruling" and, in addition, a declaratory judgment that there had been a material change in conditions under the contract. Count II alleged that certain construction delays were not the fault of plaintiff and that plaintiff asserted entitlement to a declaratory judgment to that effect and for a determination that plaintiff was entitled to an extension of the contractual construction period without suffering liability for liquidated damages. In response defendant filed a motion captioned "Motion for Accelerated or Summary Judgment". Defendant first asserted that the circuit court lacked subject matter jurisdiction because the matter complained of by plaintiff was not a "contested case" within the Administrative Procedures Act, and did not involve a "rule" within the purview of the act. Second, defendant contended that any alleged liability or other claims or demands arising out of a contract with the State of Michigan are within the exclusive jurisdiction of the Michigan Court of Claims. Finally, defendant contended that plaintiff had failed to state a claim upon which relief could be granted. *187 On September 11, 1973, after a hearing, the circuit court issued an opinion holding that the 1970 Standard Specifications for Highway Construction contract provisions in dispute were not "rules" subject to review under the Administrative Procedures Act, MCLA 24.263; MSA 3.560(163), and that consequently the court lacked subject-matter jurisdiction over Greenfield's claim. Plaintiff filed a motion to stay the entry of accelerated judgment in favor of defendant. A second hearing was held later and the court issued a second opinion, this time granting the declaratory relief requested by the contractor. The court again found, however, that the 1970 Standard Specifications for Highway Construction were not "rules" subject to review under the Administrative Procedures Act and found, in addition, that defendant had "not taken any steps for the promulgation of rules, regulations and procedures by which to issue declaratory rulings and that, therefore, the decision of June 6, 1973 amounts to no more than an administrative pronouncement". However, the court held the June 6 letter to be arbitrary and capricious and a deprivation of due process. It ruled that the Court of Claims lacked the requisite equitable jurisdiction to grant declaratory relief. Concluding that the plaintiff had supported its contentions on the merits, however, the court issued its declaratory judgment that a change of conditions had occurred. The issue of money damages was expressly left for later determination in the Court of Claims. The Court of Appeals reversed, holding that the circuit court lacked subject-matter jurisdiction over the dispute. 58 Mich App 49; 227 NW2d 223 (1975). We granted leave to appeal. 394 Mich 836 (1975). *188 Our resolution of the case turns upon the answers to two specific questions: 1) Is Section 1.04.03(c) of the 1970 Standard Specifications for Highway Construction a rule within the definition of the Administrative Procedures Act, and 2) Does the circuit court have jurisdiction in this case to issue a declaratory judgment binding upon the defendant State of Michigan. Our answer to both questions is no. I Section 63 of the Administrative Procedures Act, MCLA 24.201 et seq.; MSA 3.560(101) et seq., provides narrowly circumscribed authority in the circuit court to judicially review a declaratory ruling issued by an agency of state government, and provides that such review is conducted in the same manner as an agency final decision or order in a contested case.[2] Section 64 of the act confers upon the circuit court authority to issue a declaratory judgment concerning the validity or applicability of an agency rule, providing however the plaintiff has first "requested the agency for a declaratory ruling and the agency has denied the request or failed to act upon it expeditiously".[3] *189 Greenfield claims that Section 1.04.03(c) of the 1970 Standard Specifications for Highway Construction is a rule within the definition of the Administrative Procedures Act and that the highway department letter of June 6, 1973 was a declaratory ruling concerning the applicability of the claimed rule. We disagree on both points. A rule is defined in § 7 of the Administrative Procedures Act as follows: "`Rule' means an agency regulation, statement, standard, policy, ruling, or instruction of general applicability, which implements or applies law enforced or administered by the agency, or which prescribes the organization, procedure or practice of the agency * * * ." MCLA 24.207; MSA 3.560(107). Section 1.04.03(c) of the 1970 Standard Specifications for Highway Construction provides: "Changed Physical Conditions. Should the contractor encounter or the engineer discover, during the progress of the work, physical conditions at the site differing materially from those shown in the contract and included documents, or unknown physical conditions of a nature differing materially from those generally *190 recognized as work of the character provided for in the contract, the engineer will investigate the conditions. Unless the engineer finds that the work required materially changes the character of the work, the work will be paid for at the contract unit price. If the work required is of sufficient magnitude to affect the unit cost by 10% or more, an allowance will be made on such basis as is mutually agreed upon and authorized in advance of the performance of the work. If agreement cannot be reached as to the basis of payment for which the contractor deems compensation to be due him, the work shall proceed as provided under Disputed Claims for Extra Compensation, 1.05.12." The 1970 Standard Specifications for Highway Construction are found in a bound volume of 735 pages. The specifications include definitions of terms, allocation of duties between the contractor and the state, payment terms, and hundreds of pages of highly technical and detailed information concerning construction methods and techniques, soil composition requirements, metal heat treating methods, and technical details touching almost every conceivable aspect of highway construction work for which the State of Michigan might contract. Relevant portions of the standard specifications, including Section 1.04.03(c), are routinely incorporated by reference in the highway department construction contracts not only to avoid the cumbersome necessity of reproducing the highly detailed information in every separate contract, but to enable prospective bidders upon state construction contracts to know in advance the bid requirements and construction specifications which will apply if they bid upon a state-owned highway construction project. It is undisputed that no part of the 1970 Standard Specification for Highways Construction have ever been promulgated as agency rules within the *191 meaning of § 7 of the Administrative Procedures Act as is required by chapter 3 of the act, as a condition of their validity. It is likewise undisputed that the statutory steps preliminary to the adoption of agency rules, including publication of the proposed rule, and publication and transmission of notice of public hearing[4] were never undertaken with respect to Section 1.04.03(c) or any of the standard specifications. We agree with the trial court and the Court of Appeals that Section 1.04.03(c) of the 1970 Standard Specifications for Highway Construction is not an agency rule within the meaning of § 7 of the Administrative Procedures Act. It is, as its title suggests, one of hundreds of standard contract terms and specifications governing the contractual relationship between the state and contractors engaged in state highway work. It follows, therefore, *192 that the June 6, 1973 letter from the defendant's Central Office Adjustment Board, and the endorsement thereof by the Director of the Department of State Highways, refusing to allow extra compensation, did not constitute "a declaratory ruling as to the applicability * * * of a rule or order of the [defendant] agency" subject to circuit court judicial review under § 63 of the act. Similarly, there was no basis for a declaratory judgment concerning "the validity or application of a rule" under § 64 of the act. II In addition to the judicial review of administrative action sought in count I of its complaint, plaintiff prayed in count II for a declaratory judgment: "A. That the delays heretofore incurred have been on account of unusual conditions beyond the control of plaintiff. "B. That plaintiff is entitled to an extension of the contract time to compensate it for those days unavoidably lost by reason of said delays. "C. That said extension of time should be an additional compensatory working day during the normal working season on Lake St. Clair, April 1 through November 1, for each day lost by plaintiff as a result of: (1) Change of conditions at work site. (2) Stop Order issued by Army Corps of Engineers. The defendant claims the circuit court was without jurisdiction to entertain the complaint for declaratory relief and that the plaintiff's exclusive remedy is in the Court of Claims. We agree, but for reasons not fully addressed by either party. *193 This Court has long recognized the well established rule that a state cannot be sued without its consent, granted by legislative enactment. McNair v State Highway Department, 305 Mich 181, 187; 9 NW2d 52 (1943); Mead v Michigan Public Service Commission, 303 Mich 168, 173; 5 NW2d 740 (1942); Manion v State Highway Commissioner, 303 Mich 1, 19; 5 NW2d 527 (1942); cert den 317 US 677 (1942); McDowell v Warden of Michigan Reformatory at Ionia, 169 Mich 332, 337; 135 NW 265 (1912); Board of Supervisors of Sanilac County v Auditor General, 68 Mich 659; 36 NW 794 (1888); Michigan State Bank v Hastings, 1 Doug 225 (Mich, 1844). There is, of course, a distinction between sovereign immunity from suit and sovereign immunity from liability. Legislative waiver of a state's suit immunity merely establishes a remedy by which a claimant may enforce a valid claim against the state and subjects the state to the jurisdiction of the court. By waiving its immunity from liability, however, the state concedes responsibility for wrongs attributable to it and accepts liability in favor of a claimant. In so doing it may even create a cause of action in favor of the claimant which did not theretofore exist. Minty v Board of State Auditors, 336 Mich 370; 58 NW2d 106 (1953); Van Antwerp v State, 334 Mich 593; 55 NW2d 108 (1952). It was to various aspects of the issue of sovereign immunity from liability that this Court addressed itself repeatedly in the last decade, most recently upholding statutory state tort immunity in Thomas v Department of State Highways, 398 Mich 1; 247 NW2d 530 (1976), and abolishing judicially created tort immunity in Pittman v Taylor, 398 Mich 41; 247 NW2d 512 (1976). *194 We address today, however, the issue of sovereign immunity from suit. Broadly stated, the issue is whether the State of Michigan's sovereign immunity from suit has been waived to the extent that it may be sued in our courts of general jurisdiction upon a complaint for declaratory judgment. While it is clear that the circuit court has general original jurisdiction in matters of law and equity, including jurisdiction to issue declaratory judgments, its jurisdiction is not limitless. Article 6, § 13 of the Constitution of the State of Michigan provides in part: "The circuit court shall have original jurisdiction in all matters not prohibited by law." (Emphasis added.) MCLA 600.605; MSA 27 A. 605 provides: "Circuit courts have original jurisdiction to hear and determine all civil claims and remedies, except where exclusive jurisdiction is given in the constitution or by statute to some other court or where the circuit courts are denied jurisdiction by the constitution or statutes of this state." (Emphasis added.) To the foregoing emphasized exceptions this Court has earlier and repeatedly added those cases in which the defendant is by its sovereignty suit-immune. Lucking v People, 320 Mich 495; 31 NW2d 707 (1948); Manion v State Highway Commissioner, supra; Missouri Tie & Lumber Co v Sullivan, 275 Mich 26; 265 NW 779 (1936); McDowell v Warden of Reformatory, supra; People ex rel Ayres v Board of State Auditors, 42 Mich 422; 4 NW 274 (1880). Thus it is well settled that the circuit court is without jurisdiction to entertain an action against the State of Michigan unless that jurisdiction shall have been acquired by legislative consent. *195 In 1939, with enactment of the Court of Claims Act,[5] the Legislature, for the first time, adopted a comprehensive legislative scheme authorizing suit against the State of Michigan and its various agencies.[6] Prior to that time the Legislature had permitted suit only against a few selected state agencies and then only for limited periods.[7] Save for these scattered exceptions, until 1939 the state could not be sued because the requisite legislative consent had not been given. McDowell v Warden of Reformatory, supra. Today the Court of Claims Act[8] stands as this state's controlling legislative expression of waiver of the state's sovereign immunity from direct action suit against it and its agencies and of their submission to the jurisdiction of a court. It is controlling because in addition to authorizing suit against the state, the act also limits any prior legislative authorization which may be inconsistent with the act. Those scattered legislative expressions waiving the state's suit immunity which were enacted prior to the original Court of Claims Act must be construed within the terms and in light of the subsequent act. Such construction is mandated by the sweeping language of the act which clearly manifests the Legislature's intent to limit its authorization to suits in the Court *196 of Claims. So construed, the Court of Claims Act is both permissive and restrictive. This Court has heretofore applied this rationale to post-Court of Claims Act legislation waiving suit immunity by holding that the scope of any such authorization is limited by the terms and conditions of jurisdiction established in the Court of Claims Act. Hirych v State Fair Commission, 376 Mich 384, 390; 136 NW2d 910 (1965). It follows logically, therefore, that to the extent any pre-Court of Claims Act authorization of suit may exceed the jurisdictional limitations imposed by the Court of Claims Act, the former is superseded and limited by the latter. To the extent inconsistent with our opinion today, Hunt v State Highway Commissioner, 350 Mich 309; 86 NW2d 345 (1957), is expressly overruled.[9] *197 We have heretofore held that a statutory relinquishment of common-law sovereign immunity from suit must be strictly construed. Manion v State Highway Commissioner, supra, 19. Thus a cause of action brought pursuant to a waiver of suit immunity must be of a nature and in a forum permitted by the waiver. The Court of Claims Act is manifestly a narrowly limited waiver of suit immunity. It restricts by its terms the kinds of claims which may be brought, creates a previously nonexistent court of limited jurisdiction wherein such claims may be prosecuted, and declares the new forum to have exclusive jurisdiction to hear them. The pertinent section of the act provides: "(1) Except as provided in section 6440, the jurisdiction of the court of claims as conferred upon it by this chapter over claims and demands against the state or any of its departments, commissions, boards, institutions, arms or agencies, shall be exclusive. The state administrative board is hereby vested with discretionary authority upon the advice of the attorney general, to hear, consider, determine and allow any claim against the state in an amount less than $100.00. Any claim so allowed by the state administrative board shall be paid in the same manner as judgments are paid under section 6458 upon certification of the said allowed claim by the secretary of the state administrative board to the clerk of the court of claims. The court has power and jurisdiction: "(a) To hear and determine all claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state and any of its departments, commissions, boards, institutions, arms or agencies." (Emphasis added.) MCLA 600.6419; MSA 27 A. 6419. This Court has previously recognized the limited scope of the Court of Claims Act as a waiver of sovereign suit immunity, in holding that court to *198 be without "the broad and inherent powers of a constitutional court of general jurisdiction". Taylor v Auditor General, 360 Mich 146, 150; 103 NW2d 769 (1960).[10] In sharply restricting the causes of action which may be brought against the state and in creating a new court of limited and exclusive jurisdiction solely for that purpose, the Legislature indicated with ringing clarity that its waiver of sovereign suit immunity under the Court of Claims Act was limited to the prosecution of claims within the Court of Claims. We hold, for the foregoing reasons, that the circuit court was without jurisdiction to entertain the plaintiff's suit for judicial review and declaratory judgment under the Administrative Procedures Act, or declaratory judgment under GCR 1963, 521. The Court of Appeals is affirmed. COLEMAN and FITZGERALD, JJ., concurred with RYAN, J. COLEMAN, J. (concurring). I have signed Justice RYAN'S opinion because I agree "that § 1.04.03(c) of the 1970 Standard Specifications for Highway Construction *199 is not an agency rule within the meaning of § 7 of the Administrative Procedures Act". I also agree that "the circuit court was without jurisdiction to entertain the complaint for declaratory relief". Under the circumstances of this case, plaintiff's exclusive remedy is in the Court of Claims. I write to emphasize several points. First, there has been no showing that the highway department's use of standard specifications was an attempt to evade or circumvent the APA. Second, adopting Justice LEVIN'S analysis would permit plaintiffs to institute parallel actions against the state one in the circuit court, another in the Court of Claims. Recent experience has demonstrated how confusing and time consuming such a procedure can be. See In re Weldon, 397 Mich 225; 244 NW2d 827 (1976). Third, Justice LEVIN'S analysis would force state agencies either to discard standard specifications or move to adopt them as rules under the APA. The former is inefficient, costly in both time and money. The latter is cumbersome and would subject the policy and contract decisions of state agencies to frequent circuit court review. This last point is of great concern to me. Our decision cannot be limited to the highway department. It would apply to all the many agencies of state government. It would significantly increase the caseload of an already overburdened circuit court. Delay, confusion, frustration are predictable. It is not necessary to rely on the circuit courts for a proper forum in which to resolve disputes between contractors and a state department. The Legislature has provided a forum the Court of Claims. It has exclusive jurisdiction "[t]o hear and determine all claims and demands * * * against *200 the state and any of its departments". MCLA 600.6419; MSA 27 A. 6419. Greenfield is seeking a declaratory judgment on a contract dispute. The Court of Claims can provide such relief. Its "[p]ractice and procedure * * * shall be in accordance with the statutes and court rules prescribing the practice in the circuit courts". MCLA 600.6422; MSA 27 A. 6422. GCR 1963, 521 provides for declaratory judgments which Honigman and Hawkins say have "been used to good effect in Michigan in a wide range of cases involving matters such as the meaning and effect of a contract".[*] Since enactment of the Revised Judicature Act, there is nothing in the statutes to prevent the Court of Claims from giving such relief. Greenfield should be permitted to file its claim in the Court of Claims even if the statutory limitation period has run. It has acted in good faith. The circuit court did assume jurisdiction. Greenfield had no reason to believe it was in the wrong forum. Certainly the limitation period should be tolled while a disposition trial and appellate was made. FITZGERALD, J. (concurring). I am signing Justice RYAN'S opinion and concur that the contract specifications are not "rules" within the meaning of the Administrative Procedures Act of 1969, MCL 24.201 et seq.; MSA 3.560(101) et seq., that the circuit court erroneously asserted jurisdiction of this case; and that whether or not the Court of Claims has declaratory judgment power is not an issue in this case. I would add, in agreement with Justice COLEMAN, *201 and for the reasons she stated, that Greenfield should be permitted to file its claim in the Court of Claims even if the statutory limitation period has run. LEVIN, J. Greenfield Construction Company, Inc., was the successful bidder on a sewer outlet project extending some 2000' into Lake St. Clair. When construction commenced the water level was approximately 2' higher than at the time the plans were prepared by the Department of State Highways and .4' higher than the stated historic high water mark. Greenfield commenced this action in the circuit court asserting that the highway department's denial of its claim seeking additional compensation for changed physical conditions was subject to judicial review as a declaratory ruling under the Administrative Procedures Act.[1] The circuit court held that it was not empowered to review the denial under the APA but, acting under its general judicial power, entered a declaratory judgment that Greenfield is entitled to additional compensation, the amount to be determined in the Court of Claims. The Court of Appeals agreed that circuit court review was not available under the APA but reversed the declaratory judgment on the ground that the Court of Claims has exclusive subject matter jurisdiction of claims and demands against the state and its departments. Three of our colleagues would affirm the Court of Appeals decision that Greenfield is not entitled to judicial relief, in advance of performance of its contract with the highway department, in the circuit court, whether by review under the APA of *202 the department's denial of Greenfield's claim, or by original action for a declaratory judgment. A The opinion signed by three of our colleagues states that because the provisions invoked by Greenfield in seeking additional compensation for changed physical conditions are expressed as standard contract provisions and were not promulgated in the manner required by the APA they do not constitute a "rule" and therefore the department's denial of additional compensation was not a declaratory ruling under that act. We are of the opinion that the provisions invoked by Greenfield are nevertheless a "rule" and that the department's denial of Greenfield's claim for additional compensation was a declaratory ruling. We would remand to the circuit court for judicial review, pursuant to the APA, of the department's denial of Greenfield's claim. B Our colleagues' opinion further states that the circuit court erred in asserting jurisdiction, apart from the APA, to grant a declaratory judgment against a department of state government. We agree. We would place our concurrence in that result solely on the ground the basis of the Court of Appeals opinion on this issue that the Court of Claims, under its enabling act, has exclusive subject matter jurisdiction of an original action asserting a claim or demand against a department of state government.[2] Since this action for a declaratory *203 judgment asserts a claim against a department of state government, it cannot be maintained in the circuit court. We would, additionally, hold, however, that because of revisions of the statute and court rules regarding declaratory judgments after Taylor v Auditor General, 360 Mich 146; 103 NW2d 769 (1960), was decided, the Court of Claims has jurisdiction to render a declaratory judgment regarding a claim or demand against the state or a department of state government. This Court's action in vacating the declaratory judgment granted by the circuit court, based on the exclusivity of the jurisdiction of the Court of Claims of an original action[3] asserting a claim or demand against a department of state government, should be without prejudice to Greenfield's seeking a declaratory judgment in the Court of Claims,[4] subject to whatever limitations the doctrines of *204 exhaustion of administrative remedies, res judicata and related principles may impose. I Greenfield's claim to circuit court review under the APA is based primarily[5] on its contention that the highway department's denial of its claim for additional compensation was a declaratory ruling. The APA provides that on request of an "interested person, an agency may issue a declaratory ruling as to the applicability to an actual state of facts of a statute administered by the agency or of a rule or order of the agency", and that "[a] declaratory ruling is subject to judicial review in the same manner as an agency final decision or order in a contested case".[6] Greenfield's claim raises the following issues:[7] *205 I. Is the standard contract provision concerning claims for additional compensation for changed physical conditions a "rule" within the meaning of the APA? II. Was the decision of the highway department denying Greenfield's claim a "declaratory ruling"? If it was, shall the judicial review provided by the APA be in the circuit court or in the Court of Claims? The threshold issue is whether the invoked provisions of the standard specifications for highway construction contracts constitute a "rule" although those provisions are embodied in a contract and were not promulgated in accordance with the notice and comment procedures of the APA.[8] A An APA rule may be substantive or procedural or both. The act provides that a "regulation, statement, standard, policy, ruling or instruction" is a rule if either (i) it has "general applicability" and "implements or applies law enforced or administered by the agency", or (ii) it "prescribes the organization, procedure or practice of the agency". (See part B and fn 25, infra, for full text of the definition.) The standard contract provisions regarding claims for additional compensation for changed *206 physical conditions have both a substantive and a procedural content: They create a right and impose a duty to apply to the department, before commencement of the work, for an increase in compensation because of any asserted change in physical conditions the substantive element. They also establish a procedure by which the merits can be resolved. The provisions invoked by Greenfield state that should a contractor encounter "physical conditions at the site differing materially from those shown in the contract and included documents" increased compensation will be allowed if the engineer finds that "the work required materially changes the character of the work" and the work required is of sufficient magnitude to affect the unit cost by 10% or more.[9] It is further provided that failure of the contractor to notify the engineer of such a claim will generally be considered a waiver of claim for extra compensation.[10] The engineer's decision is appealable to the central office adjustment board, an informal panel that advises the director of the department on claims of contractors for additional compensation. The Attorney General states that these standard contract provisions embody the "procedures used by the department to process claims for extra compensation" and that in seeking additional compensation Greenfield "followed established procedures".[11]*207 It therefore appears that without regard to whether these provisions are seen as a substantive statement of "general applicability, which implements or applies law enforced or administered by the agency", they at least concern "procedure or practice of the agency" and therefore, on that basis alone, are within the APA's definition of the term "rule".[12] These standard contract provisions are additionally, however, a substantive statement of general applicability which "implements" law administered by the agency. The highway department is specifically[13] empowered *208 to adopt rules "to implement its powers and this act, in accordance with the provisions of" the APA.[14] It is thus empowered to adopt so-called legislative rules having the force of law.[15] The primary function of the highway department is to design, produce, maintain and operate highways and ancillary facilities.[16] The department's substantive decisions of general applicability regarding implementation of its powers and functions in the design and production of highways and ancillary facilities determine the highways and facilities that will be produced. Thus, while this agency of state government does not, in the ordinary sense, promulgate policies for the governance and guidance of the citizenry, it is nevertheless a policy maker, determining the design and manner of production, maintenance and operation of highways and ancillary facilities. The department's substantive decisions of general applicability, implementing the law it administers, are "rules" however or wherever expressed. The department's substantive decisions regarding the design and production of highways and ancillary facilities are expressed in elaborate detail in bound, printed volumes containing hundreds of pages,[17] one relating to the construction of *209 highways, another to bridges, and so forth.[18] Since those decisions apply to the design and production of all highways and ancillary facilities they are of general applicability. Unless the highway department enters the construction business it cannot build highways without contractors. Disparities between anticipated and actual physical conditions occur with sufficient frequency so that the department has adopted substantive policies and procedures regarding claims for changed physical conditions which provide a means of resolving disputes with contractors. Those policies and procedures are as fully binding on contractors as formal rules. While comparable provisions are not uncommon in private contracting it is the legislative judgment that when an agency of state government adopts substantive policies of general applicability that implement or apply law enforced or administered by it or establishes practice and procedure that the safeguards set forth in the APA are necessary for the protection of those affected by the agency's action. This legislative judgment recognizes that, although there are some private enterprises and institutions which may be able to fend for themselves, most persons confronted by agency action are relatively powerless. That imbalance between most agencies and most persons obtains whether the form in which the agency exerts its law-implementing *210 power is formal rule making, secret rule making or contracting. The Legislature in adopting the APA, the people in providing for judicial review of certain agency decisions (see fn 35 and accompanying text, infra), did not intend that the safeguards established for their protection could be readily avoided by ignoring the requirements for rule making and incorporating law-implementing decisions of general applicability in contracts with those who are affected by the agency's action. B Michigan's APA, modeled[19] on the uniform act,[20] in turn based on the Federal act,[21] does not, in contrast with the Federal act,[22] contain a contract exception exempting from the generality of the act's definition of the term "rule" expressions of agency policy, practice and procedure, otherwise within that definition, respecting governmental contracting. The absolute exemption in the Federal APA for expressions of policy respecting governmental contracting has been criticized as promoting insularity and irresponsibility of government agencies.[23] The Administrative Conference of the United States urged repeal of the contract exception. The conference saw, as did the ABA House of Delegates *211 subsequently, that the selection and wording of contract clauses have a significant impact on the public and on private enterprise.[24] The first part of the Michigan "rule" definition expresses its scope in broadly inclusive terms: "[A]n agency regulation, statement, standard, policy, ruling or instruction of general applicability, which implements or applies law enforced or administered by the agency, or which prescribes the organization, procedure or practice of the agency, including the amendment, suspension or rescission thereof * * * ." MCLA 24.207; MSA 3.560(107). The second part of the definition is a series of specific exclusions from the broader concept,[25] none of which are here pertinent. *212 The broad general definition with specific exceptions indicates that the definition is to be applied comprehensively. An agency statement within the first part of the definition and not excepted in the second part is a "rule". The Supreme Judicial Court of Massachusetts, which has an APA comparable to Michigan's, has not recognized a contract exception.[26] The generality of "statement" indicates that the form in which the pronouncement is made is without significance. Other states, applying similar definitions, have refused to allow the form of the pronouncement to defeat the breadth of the definition.[27] It is not dispositive that the agency does not call its statement a rule. "[T]he label that the particular agency puts upon its given exercise of administrative power is not, for our purposes, conclusive; rather, it is what the agency does in fact." Lewis-Mota v Secretary of Labor, 469 F2d 478, 481-482 (CA 2, 1972).[28] *213 The Attorney General states that "to the best of the appellee's knowledge, no state in the nation considers such specifications to be administrative rules and regulations or has promulgated said specifications as administrative rules and regulations". The Iowa State Highway Department, however, regards such specifications, including procedures for awarding additional compensation for changed physical conditions, as administrative rules and regulations requiring promulgation in conformity with Iowa's APA.[29] The omission in the uniform and Michigan acts of a contract exception appears to have been deliberate and indicates that there is no general exception for law-implementing agency statements merely because they are in the form of standard contract provisions. C All provisions of a governmental contract are not subject to the APA. APA requirements do not apply to contract provisions which are unrelated to the application or implementation of law enforced or administered by the agency or which do not prescribe agency practice and procedure. Rules have the effect of law because they are legislatively authorized expressions by the agency in the exercise of delegated power to apply or implement the law. A contract or contract provision relating to a commodity manufactured and produced without regard to the needs of the *214 agency or concerning a housekeeping matter affecting only in a subsidiary or ancillary manner the discharge of the agency's primary function and the law it administers would not ordinarily have that quality.[30] The standard contract provisions regarding claims for additional compensation for changed physical conditions provide a means of promptly resolving disputes with contractors which may otherwise impede timely completion of the work, and are closely related to implementation of the highway department's primary function of designing, producing, maintaining and operating highways and ancillary facilities. The APA seeks to bring law and order to agencies in the exercise of delegated power to enforce and implement statutory law. There is no reason to suppose that the Legislature intended that an agency which can express policy of general applicability applying or implementing statutory law it enforces or administers or its practice or procedure through contracting, rather than formal rule making subject to the requirements and safeguards of the APA, should be able thereby to exempt itself from those requirements and safeguards. The standard contract provisions regarding claims for additional compensation for changed physical conditions so closely relate to the primary function of the highway department that they are rules although incorporated as part of a contract. The APA provisions subjecting to judicial review declaratory rulings regarding the application of an agency rule to an actual state of facts[31] cannot be *215 avoided by stating an agency's substantive policy or its procedure and practice in the form of a standard contract provision. D While the APA provides that a rule is not valid unless promulgated in accordance with its notice and comment provisions,[32] that proscription merely bars an agency from attempting to enforce against a citizen a substantive or procedural expression, otherwise a rule, not so promulgated. It does not permit an agency to avoid altogether the operative effect of the APA by the simple expedient of ignoring the act and failing to promulgate such expressions in accordance with its provisions. The highway department's failure to promulgate expressions of agency policy, practice and procedure in accordance with the APA requirements does not preclude enforcement against the department.[33] A holding of this Court that only those substantive and procedural expressions which the agency chooses to promulgate in conformity with the APA are rules would, contrary to the purpose and spirit of the APA, encourage agencies not to promulgate as rules statements of policy structuring and limiting the scope of agency discretion except insofar as the agency must do so because it seeks to limit the future conduct of the citizenry and, because of the nature of the agency's functions, such a prospective limitation cannot be expressed contractually. The highway department promulgates its standard specifications with industry participation in a *216 manner paralleling the APA requirements for rule making. The Attorney General states: "Because of changing circumstances, new methods and materials and difficulties or disputes encountered by the highway department and contractors in carrying out previous projects, the standard specifications are periodically reviewed, updated and revised. Such review and revision is often accomplished by the appellee highway department in consultation with road building and contractor associations and groups" (emphasis supplied). The standard contract provisions were published, although not in the Administrative Code. See fn 17 and accompanying text, supra. The relevant public has been made aware of the policies and procedures followed by the highway department in deciding claims for additional compensation for changed physical conditions. See fn 11 and accompanying text, supra. The rule making and declaratory ruling provisions of the APA seek to provide public participation in policy formulation and external review of administrative action to avoid discriminatory and unreasonable enforcement. The act seeks to achieve those goals by requiring agencies to articulate and publish in advance their policies and by providing a measure of judicial review. Some agencies have steadfastly resisted implementation of those legislative goals, and have sought by one formulation or another to except themselves from the act. Since many APA safeguards apply only to governmental decisions denominated rules, agencies wishing to avoid the act may fail formally to promulgate rules reflecting policy decisions. *217 The highway department has not formally adopted and published in the Administrative Code any rules regarding the design, production, maintenance and operation of highways and ancillary facilities, or rules of procedure and practice.[34] It has been able to operate effectively without formal rule making, implementing its powers and functions in the administration of a budget of over three-quarters of a billion dollars a year, because it is able to effectuate so many of its essential policy decisions through contracting. If the department's claims are sustained then it will be effectively relieved of compliance with APA requirements in the exercise of the bulk of its law-implementing functions, and a precedent will be set for other agencies to emulate. In construing legislation we seek to serve the legislative purpose. Carving out from the broad general definition of "rule" a judge-made exception for contracting and statements of governmental policy not duly promulgated in compliance with the APA will not serve the legislative purpose. The Constitution provides that "[a]ll final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided *218 by law".[35] In denying Greenfield's claim the highway department effectively made a "final decision" that Greenfield would not obtain administrative relief before performing the contract. The disposition we would direct does not require that decision be rested on the constitutional provision. We advert to it because it indicates that in providing for judicial review of declaratory rulings the Legislature was responding to a concern expressed by the people. A "long line of Supreme Court decisions * * * hold [sic] that an agency may not violate rules which protect the interests of the protesting party * * * ".[36] This is true of both procedural and substantive rules.[37] Federal courts have held that an agency is bound by its policy declarations and practices not formally adopted under the Federal APA. The Court of Appeals for the Fourth Circuit reversed a conviction of violation of a tax law because an IRS agent failed to give the defendant warnings and advice required by IRS "instructions", not published in the Federal Register, circulated in a news release and reprinted in the CCH reporting service. United States v Heffner, 420 F2d 809, 812 (CA 4, 1969). *219 In Heffner the Fourth Circuit concluded on the authority of decisions of the United States Supreme Court that it was "of no significance that the procedures or instructions which the IRS has established are more generous than the Constitution requires".[38] The court continued: "Nor does it matter that these IRS instructions to Special Agents were not promulgated in something formally labeled a `Regulation' or adopted with strict regard to the Administrative Procedure Act; the *220 [United States ex rel] Accardi [v Shaughnessy, 347 US 260; 74 S Ct 499; 98 L Ed 681 (1954)] doctrine has a broader sweep. The Supreme Court in Vitarelli v Seaton [359 US 535; 79 S Ct 968; 3 L Ed 2d 1012 (1959)], applied it to a Department of the Interior `Order.' The Second Circuit has applied it to the Army's `Weekly Bulletin 42,' § 4(c) (Oct. 20, 1967). Smith v Resor, 406 F2d 141, 143-144 & fn 2, 146 (CA 2, 1969). The District of Columbia Circuit has applied the doctrine to a FCC `rule' which has not been formally promulgated but which the court found had been established by the FCC's `usual practice' of including the rule in its orders. Sangamon Valley Television Corp v United States, 106 US App DC 30; 269 F2d 221, 224-225 & fnn 8 & 9 (1959). See also McKay v Wahlenmaier, [96 US App DC 313] 226 F2d 35, 43 (1955) (alternative holding)." Id. (emphasis supplied). Similarly, see United States v Leahey, 434 F2d 7 (CA 1, 1970), and United States v Sourapas, 515 F2d 295 (CA 9, 1975). It is accordingly of no importance that the highway department is not obliged to provide contractors claiming increased compensation for changed physical conditions an administrative remedy supplementing the common-law remedy.[39] Having done so, the department cannot avoid the APA procedural safeguards designed to protect against discriminatory and unreasonable administration. Statements of substantive decisions of general applicability implemental of law enforced or administered by an agency or of its procedure and practice are, unless within a specific exception to the APA definition of the term "rule", binding on the agency although not promulgated in accordance with the requirements of the APA.[40] *221 II Just as we look to the substance of the matter in deciding whether an agency statement is a rule, so too we look to substance in deciding whether an agency has issued a declaratory ruling regarding the application to an actual state of facts of an agency rule. The Attorney General acknowledges that the highway department's letter of June 6, 1973 constituted "the department's final position". This "final position" was reached after consideration of Greenfield's claim by the central office adjustment bureau on appeal from the project engineer. We have already stated our view that these standard contract provisions constitute a rule. The asserted disparity between the water levels in the plans and those found upon commencement of construction is an actual state of fact. The final position of the director/central office adjustment board is, despite the highway department's failure to obey the command of the APA to prescribe by rule the form for requesting and the procedure for submission, consideration and disposition of a request for a declaratory ruling,[41] in substance a declaratory ruling. The right to judicial review does not depend on the agency's compliance with *222 the APA or its labeling its decision a declaratory ruling. The department's final position is, therefore, "subject to judicial review in the same manner as an agency final decision or order in a contested case". The Court of Claims Act does not establish an "applicable special statutory review proceeding"[42] and therefore judicial review may be obtained in the circuit court.[43] The Court of Claims Act establishes a procedure for commencement and adjudication of original actions against the state. The Court of Claims, a statutory court of limited jurisdiction, has no power of judicial review of administrative action. Judicial review of administrative action may be obtained only in the circuit court, the Court of Appeals and this Court.[44] *223 In providing in the APA applicable by its terms only to state agencies[45] and in other enactments[46] for circuit court review of administrative decisions and rulings, the Legislature manifested an intention to supplement the provisions of the Court of Claims Act[47] which, to the extent of the APA and those enactments, necessarily is no longer exclusive.[48] Since the right to judicial review of a declaratory ruling under the APA does not depend on the adequacy of alternative remedies, a contractor's right to proceed in the Court of Claims does not preclude exercise of the APA right to judicial review.[49] We have not addressed the merits of the controversy, and intimate no view on whether Greenfield is entitled to additional compensation because of changed physical conditions. We would remand to the circuit court for judicial review as a declaratory ruling the highway department's final position on Greenfield's claim. *224 III Our colleagues and we are in agreement that the circuit court erred in asserting that it has general judicial power apart from the review provisions of the APA and whether the standard contract provisions are a "rule" and the final position of the highway department is a "declaratory ruling" to grant a declaratory judgment against a department of state government. The opinion signed by three of our colleagues predicates that conclusion on the doctrine that the sovereign state is immune from suit unless it consents to be sued and on a construction of the Court of Claims Act. We conclude that the circuit court erred in rendering a declaratory judgment regarding Greenfield's claim against the highway department, not because of suit immunity, but because the Legislature has determined[50] that the circuit court is not the proper forum. Since the Court of Claims Act provides that "the jurisdiction of the court of claims as conferred upon it by this chapter over claims and demands against the state or any of its departments, commissions, boards, institutions, arms or agencies, shall be exclusive [emphasis supplied]",[51] it is necessary, in determining whether the circuit court erred in rendering a declaratory judgment regarding Greenfield's claim against the highway department, to decide whether the Court of Claims is empowered to render a declaratory judgment. If it is not so empowered, then unless we were to conclude that the Court of Claims has the "jurisdiction" but not the "power" to render a declaratory *225 judgment regarding a claim or demand against the state nothing in the Court of Claims Act would preclude the circuit court from exercising jurisdiction and rendering such a declaratory judgment. We turn to consideration of whether the Court of Claims is empowered to render a declaratory judgment. A To be sure, as expressed in Manion v State Highway Commissioner, 303 Mich 1, 19; 5 NW2d 527 (1942), "[t]here is a distinction between sovereign immunity from suit and sovereign immunity from liability" (emphasis supplied).[52] The common-law doctrine of sovereign immunity from liability has been effectively eliminated. In Pittman v City of Taylor, 398 Mich 41, 49; 247 NW2d 512 (1976), we held "that the traditional common-law judge-made immunity that the state and its instrumentalities heretofore enjoyed from its torts should be and it hereby is abrogated". This Court earlier ruled that "governmental immunity is not a defense to a claim against the State for contractual liability arising out of either governmental or proprietary operations". Zynda v *226 Aeronautics Commission, 372 Mich 285, 287; 125 NW2d 858 (1964).[53] While the state's judge-made sovereign immunity from suit may, as held in Manion, "be waived without a waiver of" the state's judge-made sovereign immunity from liability, the judge-made immunity from suit cannot survive the abrogation of the judge-made immunity from liability for torts and contracts. Abrogation of the immunity from liability would be pointless if the immunity from suit were retained. B Be that as it may, and even if it were thought that there are vestiges of the judge-made immunity from suit still extant, the consent to suit in the Court of Claims extends to rendition of a declaratory judgment. This Court declared in Taylor v Auditor General, 360 Mich 146, 150-151; 103 NW2d 769 (1960), that the Court of Claims "derives its powers only from the legislative act of its creation and does not possess the broad and inherent powers of a constitutional court of general jurisdiction", and concluded that the Court of Claims was without jurisdiction to grant a declaratory judgment. In so holding, this Court said that the declaratory judgment act[54] did "not authorize the rendition of declaratory judgments by any and all `courts of record'" but only those which had both an equity and a law side of the court. Since the Court of *227 Claims did not have an "equity side" it could not render a declaratory judgment.[55] The declaratory judgment act was repealed by the Revised Judicature Act,[56] and can no longer be regarded as expressing a legislative purpose to restrict the power to render declaratory judgments to only those courts which have both an "equity side" and a "law side". The new court rules abolish "procedural distinctions between law and equity. [Citations omitted.] Under the new rules the action for declaratory judgment is simply filed on the civil docket; it is not filed on the law or equity side of the docket".[57]*228 The absence of an "equity side" in the Court of Claims no longer precludes it from rendering a declaratory judgment. Nor does the Court of Claims Act evidence any purpose to deprive that court of the power to render a declaratory judgment. While it is a court of limited jurisdiction, its powers and jurisdiction subject to legislative control,[58] the act's generally worded statement that the court shall have "power and jurisdiction * * * [t]o hear and determine all claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state and any of its departments" does not exclude power and jurisdiction to render a declaratory judgment. The subject matter of declaratory judgments is now covered by a court rule, which provides that "[i]n a case of actual controversy within its jurisdiction, any circuit court of this state may declare the rights and other legal relations of any interested party". GCR 1963, 521.1. The Court of Claims Act provides that "[p]ractice and procedure in the court of claims shall be in accordance with the statutes and court rules prescribing the practice in the circuit courts of this state, except as herein otherwise provided. The supreme court shall have the power to make special rules for said court". Statutory and court rule provisions authorizing the rendition of declaratory judgments are regarded as matters of practice and procedure and are not jurisdictional.[59] *229 Pursuant to the statutorily conferred power to make special rules regarding the Court of Claims, this Court has promulgated rules for that court. Court of Claims Rule 4 provides that except as provided in the Court of Claims Act itself "[t]he practice and procedure of this court shall be in accordance with the rules prescribing the practice and procedure in the circuit courts of this state". It therefore appears from both the Court of Claims Act and the special rules promulgated by this Court for that court that the General Court Rules apply to the Court of Claims as well as to the circuit courts. GCR 1963, 521, concerning declaratory judgments, applies to the Court of Claims. It is not unusual to render, in the exercise of judicial discretion,[60] declaratory judgments regarding the constitutionality and construction of statutes in actions involving departments and agencies of state government.[61] There is often as much need to determine in advance of breach or performance of a governmental contract the rights and obligations of the parties as there is to make such a determination regarding a non-governmental contract or where there is no contract but enforcement of a statute is involved.[62] A declaration of *230 rights and obligations in advance of breach or performance does not enlarge the state's monetary exposure, it merely accelerates the determination of a "claim or demand ex contractu" to which the state has already submitted itself. We would hold that the Court of Claims is empowered to render a declaratory judgment concerning a claim or demand against the state or one of its departments. The Court of Claims, under its enabling act, has exclusive jurisdiction of an action asserting a claim or demand, ex contractu or ex delicto, against the state or one of its departments.[63] While an action for a declaratory judgment involving the state need not assert a claim or demand against it and if it does not it may, subject to other provisions of law, be brought in the circuit court[64] an action for a declaratory judgment asserting such a claim or demand is subject to the exclusive jurisdiction of the Court of Claims. The judgment rendered by the circuit court declared that Greenfield is entitled to additional compensation, the amount to be determined in the Court of Claims. The judgment so rendered adjudicated a claim ex contractu against a department of state government and hence could only be entered by the Court of Claims. We would affirm the decision of the Court of Appeals vacating the declaratory judgment rendered by the circuit court and remand to the *231 circuit court for review, pursuant to the APA provisions regarding declaratory rulings, of the denial of Greenfield's claim. KAVANAGH, C.J., concurred with LEVIN, J. WILLIAMS, J. (to reverse). This case concerns the Legislature's intention with respect to administrative and judicial protection of the affairs of citizens with state agencies. Basically I agree with Justice LEVIN that the Legislature intended procedures to determine citizen rights described in the State Highway Department's standard construction contract specifications to be treated as rules under the Administrative Procedures Act (MCLA 24.201 et seq.; MSA 3.560[101] et seq.), entitling the citizen to specified due process, including a declaratory ruling and judicial review in the circuit court. I therefore can concur with parts I and II of his opinion and with his order remanding count I to the circuit court for further proceedings. As to count II, I would be forced to remand it to the highway department to give plaintiff a due process hearing on his request for extension of contract time, pointing out that as of record the plaintiff has not yet made any request upon the State Highway Department to acquire the necessary permit to remove the Army Corps of Engineers' Stop Order. With respect to citizen suit against an agency of government for a declaratory judgment, I concur with my colleagues who hold that the circuit court has no jurisdiction. However, I disagree with my Brother LEVIN who would now hold that the Court of Claims has jurisdiction with respect to a declaratory judgment. I do so for essentially two reasons. First, that issue has both legal and administrative *232 ramifications which deserve full adversary argument before us. Second, my present belief is that the Legislature did not intend to remove immunity from suit in the nature of a declaratory judgment. This belief is premised upon the following four reasons. First, a declaratory judgment, as requested in this case, does not exactly fit the definition of Court of Claims jurisdiction for claims for compensation (although it can be argued the complaint is anticipatory of a claim). Second, and more importantly, the Legislature has specifically indicated in the Administrative Procedures Act how it intends such anticipatory action be handled; the act provides for due process review in the administrative agency, i.e., the tribunal most intimately concerned with the given subject matter. Third, I believe the Legislature's intention would be evaded if an aggrieved citizen were entitled to bring original suit for declaratory judgment in the Court of Claims, thereby by-passing the applicable procedures under the Administrative Procedures Act, because if an aggrieved citizen were to exhaust the Administrative Procedures Act's procedures, his action would ultimately be reviewed in the circuit court. Fourth, on the one hand, the Legislature, in the Administrative Procedures Act, intended to provide fair and appropriate procedures within administrative agencies, requiring agencies to act fairly and professionally; on the other hand, the Legislature did not intend the courts to be bogged down with the details of administration except on final review. As is apparent from MCLA 24.306; MSA 3.560(206), which defines the scope of court review under the Administrative Procedures Act, the Legislature did not intend courts to review these matters de novo and make administrative *233 decisions on a preponderance of the evidence, which is what the Court of Claims would be doing if we held it had jurisdiction to hear declaratory judgment suits (especially where the administrative process had not been completed, as is the case here). BLAIR MOODY, JR., J., took no part in the decision of this case.