Court Opinion

ID: 9671431
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:36:28.721087+00
Date Added: 2024-06-11T18:16:10.081322
License: Public Domain

Weaver, J.
(dissenting). The majority holds that, to the extent that they establish departmental policy and standards for group home care, the guidelines and standard contract utilized by the Department of Mental Health when contracting with group home providers constitute “rules” that must be promulgated pursuant to the Administrative Procedures Act, MCL 24.201 et seq.] MSA 3.560(101) et seq. I write separately to dissent because I would hold that the guidelines and the standard contract do not constitute rules or rule making, and thus are exempt from the formal adoption requirements of the apa. Because the Department of Mental Health’s decision to contract with group home providers is a permissive exercise of statutory power, and the guidelines do not directly affect the rights of the general public, I would reverse the appellate court’s holding1 that the guidelines and standard contract revisions constitute rules under the APA.
I
The Department of Mental Health’s authority for rule making is derived from the Michigan Constitution, which states that both the physical and mental2 *17health of its citizenry are of paramount importance.* 3 The Mental Health Code was adopted in furtherance of this constitutional mandate to provide legislation to protect and promote the public health of the people of Michigan. MCL 330.1116 et seq.\ MSA 14.800(116) et seq. This legislation grants authority to the Department of Mental Health to contract for services for mentally handicapped residents of the state. Pertinent powers and duties of the department include:
(b) It may provide, on a residential or nonresidential basis, any type of patient or client service including but not limited to prevention, diagnosis, treatment, care, education, training, and rehabilitation.
(d) It may operate directly or through contractual arrangement the facilities that are necessary or appropriate.
(g) It shall endeavor to develop and establish arrangements and procedures for the effective coordination and integration of all public mental health services, and for effective cooperation between public and nonpublic services, for the purpose of providing a unified system of statewide mental health care.
*18(j) It may enter into any agreement, contract, or arrangement with any public or nonpublic entity that is necessary or appropriate to fulfill those duties or exercise those powers that have by statute been given to the department.
(1) It shall have the powers necessary or appropriate to fulfill those duties and exercise those powers that have by statute been given to the department and which 'are not otherwise prohibited by law.
In conformity with its grant of statutory authority, the department utilizes a standard form contract (the DMH-3800B contract) for the purpose of obtaining services in provider homes for developmentally disabled persons. Once a provider agrees to enter into a contract with the department, the department guidelines also become applicable.4 These guidelines have no legal force or effect, however, until a provider agrees to be bound by the terms of its individual contract with the department.
n
The majority maintains that the department must comply with the notice and comment provisions of the apa because the proposed guidelines and contract revisions constitute rales that must be promulgated pursuant to the specific procedures of the APA. I disagree. Section 7 of the apa defines a “rale” as follows:
“Rule” means an agency regulation, statement, standard, policy, ruling, or instruction of general applicability that *19implements or applies law enforced or administered by the agency, or that prescribes the organization, procedure, or practice of the agency, including the amendment, suspension, or rescission thereof ....
Relevant exceptions to the statutory definition of a “rule” include:
(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.
G) A decision by an agency to exercise or not to exercise a permissive statutory power, although private rights or interests are affected. [MCL 24.207; MSA 3.560(107).]
The revised guidelines and standard form contract used by the department are excused from the apa’s rule-making procedures by virtue of these two exclusions. The guidelines do not affect the rights of the general public, but only the rights of the parties who voluntarily enter into a contractual relation with the department. Furthermore, the standard contract itself is the means and manifestation of the department’s exercise of permissive statutory authority. Because the department’s decision to contract with private providers is a permissive exercise of statutory power, and the guidelines do not affect the public under MCL 24.207Q); MSA 3.560(107)0), the standard contract and guidelines are not rules. Thus, I would hold that the revisions of the guidelines and standard contract do not constitute rule making, but fall under the list of statutory exceptions to the apa definition of a rule.
*20m
The apa defines the term “guideline” to mean:
an agency statement or declaration of policy which the agency intends to follow, which does not have the force or effect of law, and which binds the agency but does not bind any other person.151
In Clonlara, Inc v State Bd of Ed, 442 Mich 230; 501 NW2d 88 (1993), this Court determined that compliance procedures are not rules and need not be promulgated in conformity with APA rule-making requirements even when the compliance procedures are communicated to the public.6 As we stated in Clonlara:
Communication to the public does not convert an interpretive statement into an independently enforceable rule. Rather, informing the public is one of the purposes of interpretive “rules.” “Interpretive rules are statements as to what the agency thinks a statute or regulation means; they are statements issued to advise the public of the agency’s construction of the law it administers.”
Further, the fact that persons may conform their behavior to the interpretations does not mean that the interpretations are legislative rules. The “pragmatic consequences” of interpretive “rules” is that they are published as “declara*21tion[s] of the proper interpretation of the law, and those affected will normally conform . . . [Id. at 243-244 (citations omitted). ][71
Likewise, in the instant case, the act of supplying guidelines to those private mental health providers who choose to enter into a contractual arrangement with the department does not convert the guidelines into legislative8 rules. Rather, the guidelines are interpretive9 rules that inform providers of the standards the department expects and demands from its providers.
I would further find that the use of a standard form contract, and the revisions the department chose to make to that contract by virtue of the revised guidelines, is an exercise of permissive authority that is expressly excused from the apa’s definition of rule. MCL 24.207Q); MSA 3.560(107)0). Indeed, the Legislature has granted the department permissive statutory power to contract with any public, or nonpublic entity to provide residential services for mentally disabled persons. As a public entity, the department could choose to provide these constitutionally and statutorily mandated services itself, or it could exercise its permissive authority to contract these services out. Similarly, none of the potential providers *22are bound to provide services to the department, nor are they prohibited from “hard bargaining” for terms different from those offered in the standard contract.10 Contrary to the majority’s assertions, modifications to the standard contract are authorized pursuant to provisions within the guidelines.* 11
rv
This Court has, in the past, discussed the highway department’s use of standard specifications in highway construction contracts. Greenfield Construction Co v State Hwy Dep’t, 402 Mich 172; 261 NW2d 718 (1978).12 Justice Coleman’s concurrence expressed her concerns with some of her brethren advocating an abandonment of standard specifications for state contracts:
[A]nalysis would force state agencies either to discard standard specifications or move to adopt them as rales under the APA. The former is inefficient, costly in both time and money. The latter is cumbersome and would subject *23the 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. [Id. at 199.]
In the instant case, the majority’s finding, that the guidelines and standard contract are rule making, subjects literally thousands of present and future contracts with the state to an unnecessarily burdensome process.13 As this Court recently recognized, agency action statutorily exempted from the apa definition of a “rule” represents the Legislature’s best effort to balance the need for adequate procedural protections for rule adoption with “the conflicting need for workable, efficient, economical, and effective government on *24the other.” Detroit Base Coalition for the Human Rights of the Handicapped v Social Services Dep’t, 431 Mich 172, 184; 428 NW2d 335 (1988), citing Bon-field, State Administrative Rule Making, p 399.
v
Contrary to the majority’s finding, the revised guidelines and standard form contract do not constitute “rules” within the definition of the apa. Defendant Department of Mental Health’s choice of whom to contract with is a permissive exercise of its statutory power. Should plaintiffs seek such a contractual relationship, they are free within the parameters of bargaining to change or accept any of the terms of the proposed contract, and, upon acceptance and receipt of the contract, the terms of the guidelines. Because the guidelines and standard contract do not constitute “rules” and are exempt from the formal adoption requirements of the APA, I dissent and would reverse the decision of the Court of Appeals.
Brickley, C.J., and Riley, J., concurred with Weaver, J.

 206 Mich App 382; 522 NW2d 657 (1994). While the Court of Appeals found the department’s decision to contract with private providers to be a permissive exercise of statutory authority, it nevertheless held that the revisions of the guidelines and standard contract still constituted a “rule,” according to the APA’s definition, that requires promulgation pursuant to APA procedures. Id. at 389 (opinion of Jansen, J., joined by R. L. Ziolkowsh, J., concurring).

 Institutions, programs and services for the care, treatment, education or rehabilitation of those inhabitants who are physically, *17mentally or otherwise seriously handicapped shall always be fostered and supported. [Const 1963, art 8, § 8.]

 The public health and general welfare of the people of the state are hereby declared to be matters of primary public concern. The legislature shall pass suitable laws for the protection and promotion of the public health. [Const 1963, art 4, § 51.]

 The “Summary” portion of the guidelines evidence their limited application by providing: “This subject specifies the conditions governing the purchase of specialized residential mental health services from private or public providers when utilizing the DMH-3800B contract . . . .” Guideline m-C-001-0004.

 MCL 24.203(6); MSA 3.560(103)(6).

 In Clonlara, a case ignored by all parties in the instant action, this Court overturned a Court of Appeals decision that held compliance procedures for home-schooling students were void because they violated the promulgation requirements of the APA. Though Clonlara involved an agency (the State Board of Education) without statutory power to promulgate rules, the dispositive issue was whether “interpretive statements might become rules with the force of law on the false premise that they were promulgated in accordance with the APA procedures.” Id. at 243. The plaintiff-parents of home schoolers in Clonlara argued that because the compliance procedures, i.e., interpretive statements, were given to the public, the procedures were removed from exception § 7(g) of the APA.

 In Clonlam, supra, this Court also noted that persons who did not comply with the Department of Education’s 180 days of school requirement risked enforcement proceedings for noncompliance by the department. In fact, the Department of Education initiated proceedings to enforce its inteipretation of the statute. The instant case does not present this risk of enforcement. Both the Department of Mental Health and the potential providers have the right to choose or refuse a contractual arrangement.

 Id. at 239-241.

 Id.

 As the dissenting Court of Appeals judge states:
Standard contract language is binding on no one, neither the DMH nor anyone else, until someone agrees to be bound by the language. Even taking a position that no deviation from the language will be permitted is simply hard bargaining: parties seeking to contract with the DMH are free to counteroffer with any language they wish. [206 Mich App 390.]

 The language of the guideline requires approval of the director of the department for modifications or deletions. See Guideline, III-C-001-0004, part (V)(B), P 3.

 Though the dispositive issue in Greenfield involved jurisdictional questions between the Court of Claims and the circuit court, a component of the argument and analysis concerned the highway department’s use of standard specifications in highway construction contracts. The Court in Greenfield affirmed the appellate court with regard to the lack of jurisdiction in the circuit court, by a 3-2-1 decision, with five justices writing separately and Justice Moody not participating.

 For example, the result of the majority’s finding that the guidelines and contract constitute “rules,” is that the department must complete each stage of the following process before making any changes to its standard DMH-3008B contract:
1. Publish the proposed rule in the Michigan register. MCL 24.208(l)(d); MSA 3.560(108)(l)(d).
2. Provide notice in the Michigan register and at least three newspapers that a public hearing will be held to solicit views concerning the proposed rule. MCL 24.241(1), 24.242(1), (3); MSA 3.560(141)(1), 3.560(142)(1), (3).
3. Conduct a public hearing. MCL 24.241(4), (5); MSA 3.560(141)(4), (5).
4. Prepare a small business economic impact statement. MCL 24.207a(2), 24.240(1); MSA 3.560(107a)(2), 3.560(140)(1).
5. File copies of the rule with the Secretary of State. MCL 24.246(1); MSA 3.560(146)(1).
This process, as applied to revisions of the performance guidelines and standard contract language, will be extremely cumbersome and defeat the flexibility in negotiating contract terms with private mental health service providers that the Legislature intended.