Executive Summary

The standard that courts use to review administrative agencies' actions is critical to limiting the power of unelected administrative officials. The Mackinac Center's brief urges the Michigan Supreme Court to reject the federal model of judicial deference to administrative agencies and instead adopt a less deferential standard that is more consistent with Michigan's state law and history.

Federal courts generally allow agencies to create rules in two ways: (1) through formal adjudication of specific disputes, as in the current disagreement between SBC and the household in question; and (2) through the "notice-and-comment" rulemaking process of the Administrative Procedures Act. Historically, courts were sometimes reluctant to defer to rules created through adjudication, finding those rules less well-considered than those created in the rulemaking process. Since the seminal case of Chevron USA, Inc v Natural Resources Defense Council, Inc, 467 US 837 (1984), however, federal courts have accorded a high degree of deference ("Chevron deference") to both kinds of rules.

Significant differences between federal and Michigan administrative law and history require Michigan courts to adopt a much less deferential standard of judicial review. Chevron deference is partly a product of the intelligible-principle doctrine, in which Congress is given wide discretion to delegate important policy questions to administrative agencies. In Chevron, the United States Supreme Court justified its deference to agency rules in part by noting that federal agencies are subject to greater democratic control than federal courts are, making agencies more accountable arbiters of important policy determinations.

Michigan courts, in contrast, do not follow the intelligible-principle doctrine. Properly construed, Michigan law prohibits legislative delegation to administrative agencies. Before the legislature may delegate an issue to an agency, meaningful standards and effective safeguards must be established to prevent arbitrary agency action. More importantly, policy determinations are considered purely legislative and cannot be delegated. Since policy determinations stay in the legislature, statutes that are ambiguous about the legislature's central intent would never be interpreted by agencies and would be struck down by the judiciary for unconstitutionally delegating legislative power (statutory ambiguities unrelated to central policy would be interpreted by the courts acting in their traditional role, not by agencies). Consequently, the federal justification for Chevron deference does not apply in Michigan.

In addition, the Michigan Constitution and the debates surrounding its ratification further indicate that no deference should be granted to agency interpretations of ambiguous statutes. Michigan's constitution contains both an explicit separation-of-powers clause and a separate provision allowing judicial review of agency actions to determine whether they are "authorized by law." The constitutional convention debates clearly indicate that the delegates were wary of agency power and attempted to limit rather than expand it.

The Mackinac Center's brief urges the Michigan Supreme Court to hold that the judiciary need not defer to administrative agencies' interpretations of ambiguous statutes. Alternatively, because Michigan courts (unlike federal courts) have not determined that agency rules created through formal adjudication are equivalent to rules created through notice-and-comment rulemaking, the Court could hold simply that there is no judicial deference to rules created through adjudication, leaving aside the question of deference to notice-and-comment rules.