7. Application of the Westervelt Lead Opinion Test to 2004 PA 326

2004 PA 326 is unconstitutional under both the separation-of-powers component and the due-process component of the Westervelt lead opinion’s test.

The act does not satisfy the separation-of-powers component because the legislative language fails to provide a single binding standard to guide either the SAB’s or the DMB’s conduct. The statute merely says that the SAB and the DMB “may consider the highest return and best value to the state,” not that they must consider these factors. If they do decide to consider the “highest return and best value for the state,” one potential consideration is “the best interests of the state.” This unlimited range of options directly violates the test set forth by the Westervelt lead opinion, which held that rulemaking is different from legislating because the agency’s universe of potential choices is limited by the Legislature. PA 2004 326 provides no such limitation, and the Legislature says so explicitly in the language of the act. The SAB can sell the property to anyone for any price as long as the agency’s officials can conjure up some rationale that the sale is in the best interests of the State.

This ability to adjudge the state’s best interests without restraint from legislatively mandated standards is by definition a policy determination. And as the Michigan Supreme Court said in Blank, “Policy determinations are fundamentally a legislative function.” 462 Mich at 116. Therefore, 2004 PA 326 provides insufficient standards to the relevant executive agencies (the SAB and the DMB), and the act violates the separation-of-powers component of the Westervelt lead opinion.

Even assuming that the bare minimum of legislative standards were provided under 2004 PA 326, the act does not contain the safeguards required under Westervelt to prevent arbitrary determinations that violate citizens’ rights to due process. Indeed, far from discouraging administrative favoritism, 2004 PA 326 is an open invitation to it. Unlike the act’s predecessor, 2002 PA 671, 2004 PA 326 does not require the state to obtain the highest price — a bright-line, objective test that tends to discourage administrative cronyism. 2004 PA 326 also allowed the DMB to negotiate with a single entity, thereby removing the open and competitive bidding process that was established in 2002 PA 671, a framework that promoted public scrutiny of questionable decisions that could have violated due process. In fact, the language in 2004 PA 326 is a textbook example of the type of statute the Westervelt lead opinion warned against when it stated that an ordinance with a lack of safeguards “becomes an open door to favoritism and discrimination, a ready tool for the suppression of competition through granting of authority to one and the withholding from another.” 402 Mich at 434 (internal citations omitted).

True, the Legislature clearly retains the power to include considerations other than the highest price in the sale of state land and to recommend negotiated bidding in its delegations of legislative power. Such legislative determinations do not necessarily violate due-process rights.

Nevertheless, in the instant case, which does not involve rule-making, there are no Administrative Procedures Act protections. DMB was legislatively permitted to negotiate privately with Toyota, and DMB did so. The SAB was then free to approve the sale once an agreement had been reached. Both bodies were able to take these steps free from legislative checks, the Administrative Procedures Act, or other due-process safeguards. This failure in the administrative process prevented Toyota’s competitors, including DPG York, from receiving due-process protections, an outcome that renders 2004 PA 326 unconstitutional.

The unfettered administrative powers at issue in the instant case call to mind footnote 20 of the Westervelt lead opinion — the footnote cited by the Michigan Supreme Court in the remand order for the instant case:

The non-delegation doctrine can and should be altered to turn it into an effective and useful judicial tool. Its purpose should no longer be either to prevent delegation of legislative power or to require meaningful statutory standards; its purpose should be the much deeper one of protecting against unnecessary and uncontrolled discretionary power. The focus should no longer be exclusively on standards; it should be on the totality of protections against arbitrariness, including both safeguards and standards. The key should no longer be statutory words; it should be the protections the administrators in fact provide, irrespective of what the statutes say or fail to say. Davis, Administrative Law Treatise, 1970 Supplement, pp 40-41.

402 Mich at 442 n. 20 (emphasis added). Indeed, if the actions of the DMB and the SAB are not those targeted in footnote 20 of the Westervelt lead opinion, what administrative actions would ever fail that test? Footnote 20 is dispositive, and 2004 PA 326 fails the due-process component.

For the reasons related above, 2004 PA 326 is unconstitutional under both the separation-of-powers component and the due-process component of the Westervelt lead opinion’s two-part test.