As discussed above, there is tension in the case law regarding the standard of review for MPSC actions. This is likely due to the competing policy concerns about, on the one hand, allowing the courts to micromanage legislative and agency decisions, and on the other hand, allowing unelected agencies to make policy decisions insulated from democratic controls. One school of thought holds that the courts should defer to agency action as long as the Legislature provides intelligible principles for the agency to follow. But a second school of thought holds that when these so-called "intelligible principles" are vague, new due-process and separation-of-powers issues arise. Under this view, agencies should not be exercising what are in effect legislative prerogatives to fill statutory gaps left by vague or ambiguous legislative language. Legislatures are not in fact constitutionally permitted to delegate their fundamental legislative powers.

The nondelegation doctrine was discussed at length in Taylor v Smithkline Beecham Corp, 468 Mich 1; 658 NW2d 127 (2003), where this Court wrote:

A simple statement of this doctrine is found in Field v Clark, 143 US 649, 692; 12 S Ct 495; 36 L Ed 294 (1892), in which the United States Supreme Court explained that "the integrity and maintenance of the system of government ordained by the Constitution" precludes Congress from delegating its legislative power to either the executive branch or the judicial branch. This concept has its roots in the separation of powers principle underlying our tripartite system of government. Yet, the United States Supreme Court, as well as this Court, has also recognized "that the separation of powers principle, and the nondelegation doctrine in particular, do not prevent Congress [or our Legislature] from obtaining the assistance of the coordinate Branches." Mistretta v United States, 488 US 361, 371; 109 S Ct 647; 102 L Ed2d 714 (1989).

Id. at 8 (footnotes omitted). The Michigan Supreme Court explained that there are two general types of nondelegation claims. One type was the claim at issue in Taylor, where the Legislature premised government action on findings by an independent body (in that case, the U.S. Food and Drug Administration). Id. at 10.[1] The second type of nondelegation claim occurs when a delegation of legislative power has been made to a state agency or department. Assuming this Court determined that the CCERA could allow the MPSC to create the 5 cent per-meter per-month customer tax, the second type of delegation would be at issue here.

Federal law is more developed than Michigan law regarding the question of nondelegation to executive agencies, and this federal jurisprudence highlights pitfalls that Michigan should avoid. The latest United States Supreme Court decision that discussed the nondelegation doctrine was Whitman v Am Trucking Ass’n, Inc, 531 US 457, 472; 121 SCt 903 (2001). There, the Supreme Court held that Congress cannot delegate legislative powers to executive agencies, but can constitutionally delegate rule-making authority to an executive agency if Congress sets forth an "intelligible principle" to which that agency must conform. Id. In the federal model, the provision of an "intelligible principle" theoretically strips rule-making of its legislative characteristics.

Yet under the intelligible-principle test, the Supreme Court has not overturned a federal statute since 1935. This result suggests that the "intelligible-principle" test is toothless.

In Whitman, there were two judicial opinions relevant to the instant case. In one, Justices Stevens and Souter acknowledged that there really is no clear difference between legislating and rule-making, because even where intelligible principles are provided, rule-making is often the functional equivalent of legislative power. 531 US at 488-489 (Stevens, J., concurring). Despite this conclusion, the two justices would allow most delegations.

Justice Thomas, on the other hand, expressed doubt about the propriety of the intelligible-principle doctrine:

"I am not convinced that the intelligible principle doctrine serves to prevent all cessions of legislative power. I believe that there are cases in which the principle is intelligible and yet the significance of the delegated decision is simply too great for the decision to be called anything other than ‘legislative.’"

Id. at 487 (Thomas, J., concurring). Justice Thomas expressed a willingness "to address the question whether our delegation jurisprudence has strayed too far from our Founders’ understanding of separation of powers." Id.

In the federal scheme, the courts generally defer to an administrative agency’s interpretation whenever a delegation statute is ambiguous. Chevron USA, Inc v Natural Resources Defense Council, Inc, 467 US 837; 104 SCt 2778; 81 LEd2d 694 (1984). Under the traditional Chevron analysis, when construing an agency regulation, the courts must consider two issues: (1) whether Congress’ intent was clear, since Congress’ clear intent must be given effect; and (2) whether, in cases where Congress’ intent was not clear, the agency’s interpretation is based on a permissible construction of the statute. 467 US at 842-43. The courts will defer to the agency’s determination whenever an agency must fill a statutory gap. Id. at 843-44.

    This Court recently summarized Chevron deference:

The concept of Chevron deference . . . is a doctrine that is in the nature of a standard of review, applied by the judiciary in reviewing an agency’s reasonable construction of an ambiguous statute, which recognizes that any necessary policy determinations in interpreting a federal statute are more properly left to the agency responsible for administering the particular statute.

Office Planning Group, Inc v Baraga-Houghton-Keweenaw Child Development Bd, 472 Mich 479, 492 n 23; 697 NW2d 871 (2005).

While federal courts generally defer to agency decisions when a statute is ambiguous, the United States Supreme Court recently announced an exception to this practice when an agency’s rule nears a boundary of Congress’ power (i.e., the boundary of a legislative power). Solid Waste Agency of N Cook County v United States Army Corps of Eng’rs, 531 US 159; 121 S Ct 675; 148 LEd2d 576 (2001) (SWANCC). The Supreme Court stated:

Where an administrative interpretation of a statute invokes the outer limits of Congress’ power, we expect a clear indication that Congress intended that result. SeeEdward J DeBartolo Corp v Florida Gulf Coast Building & Constr. Trades Council, 485 US 568, 575, 99 LEd2d 645, 108 SCt 1392 (1988). This requirement stems from our prudential desire not to needlessly reach constitutional issues and our assumption that Congress does not casually authorize administrative agencies to interpret a statute to push the limit of congressional authority. See ibid. . . . Thus, "where an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress." DeBartolo, 485 US at 575.

531 US at 172-73.

Michigan law concerning judicial review of agency action is not as well-settled. In DPG York, LLC v State, 474 Mich 987; 707 NW2d 596 (2005), vacated __Mich__; 708 NW2d 375 (2006), this Court ordered the Michigan Court of Appeals to analyze a nondelegation issue involving a state agency under Westervelt v Natural Resources Comm, 402 Mich 412; 263 NW2d 564 (1978). Westervelt was a 3-3 opinion. In Westervelt, all six participating justices held that the delegation was not improper. The three-justice lead opinion stated that the delegation challenge has both a separation-of-powers component and a due-process component, while the remaining three justices indicated that the sole test was the "standards test" — i.e., only the separation-of-powers component. This Court has not authoritatively resolved the Westervelt split.

Since the Westervelt concurring opinion is basically the pre-SWANCC federal intelligible-principle model, there are at least three constitutional models that could apply in the instant case: (1) the Westervelt lead-opinion model; (2) the pre-SWANCC-federal model; or (3) the post-SWANCC-federal model. Alternatively, this Court might find some other test to be controlling.

If this Court were to follow the post-SWANCC federal model, the MPSC’s actions would implicate a number of constitutional legislative powers. Const 1963, art 4, § 1 declares, "The legislative power of the State of Michigan is vested in a senate and a house of representatives." Const 1963, art 3, § 2 states, "The powers of government are divided into three branches; legislative, executive and judicial. No person exercising powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution." Const 1963, art 1, § 17 states in part, "No person shall be . . . deprived of life, liberty or property, without due process of law." Const 1963, art 4, § 32 states, "Every law which imposes, continues or revives a tax shall distinctly state the tax." Const 1963, art 9, § 2 states, "the power of taxation shall never be surrendered, suspended or contracted away." Const 1963, art 9, § 17 mandates, "No money shall be paid out of the state treasury except in pursuance of appropriations made by law."

Applying some of these constitutional commands, this Court has clearly held that policy determinations are fundamentally a legislative function. In Blank v Dep’t of Corrections, 462 Mich 103; 611 NW2d 530 (2000), this Court discussed the constitutionality of the Joint Committee on Administrative Rules (JCAR), a legislative committee. JCAR was created to ensure that the Legislature approved of all rules being promulgated by the agencies. Unless approved by JCAR or the Legislature itself, the rules in question could not be implemented. The lead opinion in Blank, which was authored by Justice Kelly and signed by Justices Corrigan and Young, described the question presented:

The Legislature’s statutory delegation of authority to executive branch agencies to adopt rules and regulations consistent with the purpose of the statute does not violate the separation of powers provision. The issue here is whether the Legislature, upon delegating such authority, may retain the right to approve or disapprove rules proposed by executive branch agencies [without enacting new legislation].

Id. at 113. The lead opinion stated that where JCAR does not approve a rule, it is making a policy determination, and "Policy determinations are fundamentally a legislative function." Id. at 116. Thus, the lead opinion, while finding JCAR to be constitutionally impermissible, did not question the initial delegation of rule-making authority to an executive agency.

Justice Weaver, in contrast, joined the lead opinion, but chose to "leave to another case the question of the constitutionality of the delegation of rulemaking authority to agencies." Id. at 130 (Weaver, J. concurring). Thus, one justice — Justice Weaver — has explicitly acknowledged the possibility that almost all agency rule-making is constitutionally suspect. Moreover, four justices have agreed to the proposition that policy determinations are fundamentally a legislative function.

As noted above, supra at p. 12, when the renewable-energy suppliers sought relief from the MPSC, they made fundamental policy arguments to the MPSC, stressing the economic and environmental benefits of wind power. In turn, the MPSC discussed policy arguments in favor of renewable-energy programs when it ordered the tax. Such arguments are properly the domain of the Legislature, not an administrative agency.

As noted earlier, the 5 cent per-meter per-month charge is in fact a tax. Further, the money that the MPSC proposes to pay Consumers from the renewable-energy fund can be seen as an appropriation "paid out of the state treasury."

Therefore, if this Court were to find that the CCERA is ambiguous and might allow the MPSC to enact its 5 cent per-meter per-month tax, serious constitutional issues would arise. Amicus curiae believes that this Court should deny leave to appeal and affirm the Court of Appeals decision. If, however, this Court were to grant leave to appeal, this case is ideal for determining the standards of judicial review of delegations of legislative power. Thus, in that case, this Court should request briefing on both the proper standard of review and the constitutional issues surrounding the purported delegation at issue here.

[1] In Taylor, the plaintiffs claimed that MCL 600.2946(5), which prohibits product liability lawsuits where the U.S. Food and Drug Administration (FDA) has approved the drug, impermissibly delegated legislative authority to the FDA. The Michigan Supreme Court rejected this claim.