Making State Agencies More Accountable

My colleague at the Mackinac Center, Russ Harding, the former chief of Michigan state parks, recently started a vigorous debate by suggesting that Michigan should sell off 14 of its 97 state parks. Some legislators and others opposed to such a sale were surprised to discover that under current law the Department of Natural Resources could implement Harding’s idea without any legislative input.

Not coincidentally, legislation has recently passed the state Senate that generally would limit the DNR’s ability to sell anything but parcels of land less than 100 acres in size. While this legislation may impede the sale of unnecessary park land, it nonetheless represents a welcome recognition that important public questions should be decided by the people’s elected representatives. Hopefully, the Legislature will not limit itself to land sales within the DNR, and instead will begin a systematic review of the powers being exercised by all administrative agencies.

Currently, Michigan law allows the DNR to sell "surplus land." Three of the criteria the DNR must consider are so general that they provide virtually no constraint on the discretion available to the department. First, the sale is not supposed to "diminish the quality or utility of other state land." Second, the sale must be "in the best interest of the state." Third, the land may only be sold if "it is not needed to meet a department objective." The sole objective criterion is that any land to be sold must have been in the system for the preceding five years.

Too often, the Legislature has given other agencies similarly unrestricted power to act on important matters. Agencies and commissions have become so used to having free rein that they broadly construe their mission even where the Legislature only gives a particular agency or commission a limited task.

Consider the Michigan Public Service Commission’s decision to charge every customer of Consumers Energy 5 cents per meter per month to help fund renewable energy projects. Ostensibly, the MPSC did this pursuant to the Customer Choice and Electric Reliability Act, which was enacted in 2000. This act was intended to give consumers a choice in electrical providers and to allow market forces to shape the electricity industry. The act also created an educational program that would inform electrical customers what percentage of their power came from fossil fuels, nuclear plants, and renewable-energy sources.

The hope was that this information would spur more consumers to choose renewable energy. Originally, the MPSC started with a program whereby customers who wanted to support renewable energy would pay a voluntary surcharge. But the commission changed course after two renewable-energy firms complained that the low participation rates stymied their attempts to obtain financing for new plants.

Ignoring the very market forces that CCERA was enacted to stimulate, the MPSC unilaterally decided that the development of new renewable-energy sources was an important societal goal worthy of subsidies. The commission further claimed that the statutory authorization for an educational program about renewable energy gave it the power to tax every Consumers customer 5 cents per meter per month to subsidize renewable energy. This money was to be placed into a fund that would facilitate private firms’ attempts to obtain financing for renewable-energy projects.

The Michigan Court of Appeals recently held that the MPSC’s actions were improper. But the MPSC has appealed the case to the Michigan Supreme Court.

The MPSC’s actions highlight some typical problems with administrative agencies. First, agencies often have difficulty understanding and weighing factors outside their area of expertise, usually because its employees enthusiastically support an agency’s mission. In the Consumers Energy case, there is no indication that the MPSC seriously considered the economic burden on families and businesses of its renewable-energy tax. Secondly, agencies often favor their regulated industries over the general public, as was evidenced with the MPSC levying a tax on every Consumers customer in order to help renewable-energy providers build new facilities. Finally, agencies are unelected and relatively unresponsive to public pressure, even from legislators who have been historically reluctant to trim the budgets of agencies in response to administrative overreach.

Unfortunately, neither the MPSC’s actions nor the DNR’s wide discretion are anomalies. Representative and electoral accountability are important principles in our system of government. The Legislature should not limit its assessment of bureaucratic discretion to the DNR; rather it should review and modify the powers that are being exercised by each agency.


Patrick J. Wright is senior legal analyst at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

Summary The Michigan Senate recently passed legislation that would restrict the DNR's power to sell park land. The Legislature should take this opportunity to review the powers that have been given to all administrative agencies and should make certain that important public policy decisions are being made by the people's elected representatives and not by unelected and largely unaccountable agency employees. Main Text Word Count: 734