Opinion
363601
02-01-2024
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN, also known as ABC OF MICHIGAN, Plaintiff-Appellant, v. DEPARTMENT OF TECHNOLOGY, MANAGEMENT, AND BUDGET, Defendant-Appellee, and MICHIGAN BUILDING AND CONSTRUCTION TRADES COUNCIL, Intervening Defendant-Appellee.
Court of Claims LC No. 22-000111-MZ
Before: RIORDAN, P.J., and MURRAY and M.J. KELLY, JJ.
MURRAY, J.
Plaintiff, Associated Builders and Contractors of Michigan (ABC), appeals as of right the Court of Claims order granting defendant, the Department of Technology, Management, and Budget (DTMB), and intervening defendant, Michigan Building and Construction Trades Council (the MBCTC), summary disposition under MCR 2.116(C)(8). On appeal, ABC contends that the Court of Claims erred when it granted DTMB and the MBCTC summary disposition after it determined that DTMB's exercise of authority under The Management and Budget Act, MCL 18.1101 et seq., to enact a prevailing-wage requirement did not run afoul of the nondelegation doctrine and the Administrative Procedures Act of 1969 (APA), MCL 24.201 et seq. We affirm.
Whether business entities that contract with the state must provide workers with a set prevailing wage has been the subject of much debate in the Legislature. The prevailing wage act (PWA), MCL 408.551 et seq, provided, in relevant part, as follows:
Every contract executed between a contracting agent and a successful bidder as contractor and entered into pursuant to advertisement and invitation to bid for a state project which requires or involves the employment of construction mechanics . . . and which is sponsored or financed in whole or in part by the state shall contain an express term that the rates of wages and fringe benefits to be paid to each class of mechanics by the bidder and all of his subcontractors, shall be not less than the wage and fringe benefit rates prevailing in the locality in which the work is to be performed. [MCL 408.552, repealed by 2018 PA 171.]Violation of the PWA was penalized by a criminal misdemeanor. MCL 408.557, repealed by 2018 PA 171.
However, in 2018 the Legislature was presented with a voter-initiated petition under Const 1963, art 2, § 9 that would repeal the PWA. Upon its receipt, the Legislature adopted the petition, without amendment, that contained the following language: "1965 PA 166, MCL 408.551 to 408.558, is repealed." 2018 PA 171. The remainder of the repealer appropriated certain funds toward informing the public of the repeal of the PWA and listed a severability clause. 2018 PA 171.
"Any law proposed by initiative petition shall be either enacted or rejected by the legislature without change or amendment within 40 session days from the time such petition is received by the legislature." Const 1963, art 2, § 9.
Three years later, the Governor announced that the state would require contractors and subcontractors bidding on DTMB construction projects costing more than $50,000 to pay a prevailing wage in the region. Her announcement noted that the repeal of the PWA "eliminated the state's prevailing wage requirement, but left the door open for DTMB to require a prevailing wage under its authority to develop the terms of state contracts." After this announcement, DTMB issued the following administrative guide citation, effective March 1, 2022:
Governor Gretchen Whitmer, Gov. Whitmer to Reinstate Prevailing Wage for State Construction Projects <https://www.michigan.gov/whitmer/news/press-releases/2021/10/07/gov--whitmer-to-reinstate-prevailing-wage-for-state-construction-projects> (accessed October 20, 2023).
With the exception of lease build-outs, if a project greater than $50,000 involves employing construction mechanics . . . and is sponsored or financed in whole or in part by State funds, state contractors must pay prevailing wage.
DTMB, Administrative Guide Citation-Effective March 1, 2022 <https://www.michigan.gov/dtmb/procurement/design-and-construction/prevailing-wage-information> (accessed October 20, 2023).
This new policy differed from the PWA in that the new policy did not contain a criminal penalty for violations of its provision. Instead, a violation of the requirement was a breach of contract that may result in contract termination.
ABC, which describes itself as a "trade association representing more than 900 construction and construction-related firms through the State of Michigan and in bordering states," brought an action against DTMB in the Court of Claims seeking declaratory and injunctive relief. Relevant to this appeal, ABC asserted that DTMB's prevailing-wage policy violated the separation-of-powers doctrine and that the prevailing-wage policy was not enacted in compliance with the APA. DTMB and the MBCTC brought concurring motions for summary disposition under MCR 2.116(C)(4) and MCR 2.116(C)(8). The Court of Claims granted these motions in part under MCR 2.116(C)(8), holding that ABC's claims were justiciable, but that DTMB did not violate the separation-of-powers doctrine or the APA because the prevailing-wage policy was a proper exercise of discretionary authority under The Management and Budget Act. Likewise, the Court of Claims rejected ABC's argument that the prevailing-wage policy conflicted with the repeal of the PWA and prohibitions outlined in the Fair and Open Competition in Governmental Construction Act (FOCGC), MCL 408.871 et seq.
ABC now appeals.
I. JUSTICIABILITY
As a preliminary matter, DTMB and the MBCTC contend that ABC lacks standing to pursue this matter because it is a disappointed bidder and does not have a cognizable injury.
"This Court reviews de novo a trial court's decision on a motion for summary disposition, as well as questions of statutory interpretation and the construction and application of court rules." Dextrom v Wexford Co, 287 Mich.App. 406, 416; 789 N.W.2d 211 (2010) (citations omitted). Likewise, we determine de novo whether we have jurisdiction over an appeal, Wardell v Hincka, 297 Mich.App. 127, 131; 822 N.W.2d 278 (2012), or whether an appeal is moot, Flynn v Ottawa Co Dep't of Public Health, ___ Mich. App___, ___; ___ N.W.2d ___ (2022) (Docket No. 359774); slip op at 3-4.
"Summary disposition under MCR 2.116(C)(4) is proper when a 'court lacks jurisdiction of the subject matter.'" Wells Fargo Rail Corp v Dep't of Treasury, ___ Mich. App___, ___; ___ N.W.2d ___ (2023) (Docket No. 359399); slip op at 3, quoting MCR 2.116(C)(4). "For jurisdictional questions under MCR 2.116(C)(4), this Court determines whether the affidavits, together with the pleadings, depositions, admissions, and documentary evidence, demonstrate a lack of subject matter jurisdiction." Wells Fargo Rail Corp, ___ Mich.App. at ___; slip op at 3 (quotation marks and citation omitted).
First, we address the disappointed-bidder doctrine. "Michigan jurisprudence has never recognized that a disappointed bidder . . . has the right to challenge the bidding process," Groves v Dep't of Corrections, 295 Mich.App. 1, 5; 811 N.W.2d 563 (2011) (collecting cases), because "competitive bidding on public contracts is designed for the benefit of taxpayers and not those seeking the contract," id. at 7. The Groves Court explained that "[l]itigation aimed at second-guessing the exercise of discretion by the appropriate public officials in awarding a public contract will not further the public interest; it will only add uncertainty, delay, and expense to fulfilling the contract." Id.
As explained by the Court of Claims, the disappointed-bidder doctrine is not applicable here because the doctrine only applies when a disappointed bidder challenges a state contract after it was made. See, e.g., Cedroni Assoc, Inc v Tomblinson, Harburn Assoc, Architects &Planners, Inc, 492 Mich. 40, 43-54; 821 N.W.2d 1 (2012) (affirming dismissal of a complaint for tortious interference of lowest bidder in a government agency contract when the contract was awarded to the second-lowest bidder); MCNA Ins Co v Dep't of Tech, Mgt &Budget, 326 Mich.App. 740, 741742, 746; 929 N.W.2d 817 (2019) (reversing and dismissing a petitioner's challenge for lack of standing when the petitioner's proposal in response to the state's request was rejected for another proposal). ABC has not challenged the grant of a state contract to a competitor, but, instead, challenges the authority of DTMB to condition state contracts on a prevailing-wage requirement. Therefore, the disappointed-bidder doctrine does not preclude ABC's challenge.
Second, we also reject the argument that ABC lacks standing to challenge the prevailing-wage policy by requesting declaratory relief because none of its members lost a bid under the prevailing-wage policy. The general rule regarding standing is that:
[A] litigant has standing whenever there is a legal cause of action. Further, whenever a litigant meets the requirements of MCR 2.605, it is sufficient to establish standing to seek a declaratory judgment. Where a cause of action is not provided at law, then a court should, in its discretion, determine whether a litigant has standing. A litigant may have standing in this context if the litigant has a special injury or right, or substantial interest, that will be detrimentally affected in a manner different from the citizenry at large or if the statutory scheme implies that the Legislature intended to confer standing on the litigant. [Lansing Sch Ed Ass'n v Lansing Bd of Ed, 487 Mich. 349, 372; 792 N.W.2d 686 (2010).]
"In a case of actual controversy within its jurisdiction, a Michigan court of record may declare the rights and other legal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." MCR 2.605(A)(1). "MCR 2.605 does not limit or expand the subject-matter jurisdiction of the courts, but instead incorporates the doctrines of standing, ripeness, and mootness." UAW v Central Mich. Univ Trustees, 295 Mich.App. 486, 495; 815 N.W.2d 132 (2012). An actual controversy under MCR 2.605 "exists when a declaratory judgment is necessary to guide a plaintiff's future conduct in order to preserve legal rights." Id. This requirement prevents courts from deciding hypothetical issues. Id. "However, by granting declaratory relief in order to guide or direct future conduct, courts are not precluded from reaching issues before actual injuries or losses have occurred." Id.
We agree with the Court of Claims that UAW is analogous. In that case, Central Michigan University adopted a policy regarding employees who run for public office. Id. at 489-490. The United Auto Workers union petitioned the trial court on behalf of its university members requesting that the court enjoin the university from implementing the policy. Id. at 492. This Court held that the union had standing to assert a claim for declaratory judgment despite that none of its members were running for political office under the new university policy. Id. at 496. In support of its holding, this Court explained that "[t]here is an actual controversy between the parties because the CMU officials promulgated a policy that is allegedly at odds with a state statute." Id. Further, "it is appropriate for the Union to seek an adjudication of its members' rights and responsibilities before the candidacy policy causes actual injury or ripens into a violation of the law by interfering with the employees' ability to engage in off-duty political activity." Id. at 497. Finally, this Court determined that the union members, as university employees, had an interest unique from the public. Id.
As in UAW, ABC does not assert that any of its members were denied a contract under the prevailing-wage policy. Also similar to UAW, ABC sought declaratory relief against a policy that it asserted was in contravention of state law. ABC's injury is not hypothetical because its members will need to change their wage practices to meet DTMB's prevailing-wage policy. ABC seeks a determination that its members have a legal right to bid on, and be considered for, contracts on state projects without compliance with the prevailing-wage requirement. Further, ABC's injury is more particularized than the general public because ABC's members are bidders on state contracts. Therefore, ABC has standing to sue for declaratory relief.
Third, DTMB and the MBCTC contend that this appeal is moot because the Legislature enacted a new prevailing wage statute effective in March 2024. See 2023 PA 10. An issue is moot when an event occurs that renders it impossible for the reviewing court to grant relief. C D Barnes Assoc, Inc v Star Heaven, LLC, 300 Mich.App. 389, 406; 834 N.W.2d 878 (2013). With limited exceptions, this Court does not consider matters that have become moot. See Driver v Naini, 287 Mich.App. 339, 355; 788 N.W.2d 848 (2010), aff'd in part and rev'd in part on other grounds 490 Mich. 239 (2011). This statute is not yet in effect, and DTMB has not ceased its prevailing-wage policy. If we were to agree with ABC and reverse the Court of Claims grant of summary disposition, that judgment will still have a practical legal effect on the existing controversy through March 2024. This appeal is not moot.
II. NONDELEGATION
Turning to the merits, ABC contends that DTMB's exercise of authority under The Management and Budget Act to enact a prevailing-wage requirement ran afoul of the nondelegation doctrine. Additionally, ABC contends that DTMB's prevailing-wage requirement both conflicts with prohibitions outlined in the FOCGC and violates the electorate's intent behind the repeal of the PWA, 2018 PA 171.
This issue arose from a motion filed pursuant to MCR 2.116(C)(8). "A motion brought under MCR 2.116(C)(8) should be granted only when the complaint is so legally deficient that recovery would be impossible even if all well-pleaded facts were true and construed in the light most favorable to the nonmoving party." Rodriguez v Hirshberg Acceptance Corp, 341 Mich.App. 349, 356; 991 N.W.2d 217 (2022). "Only the pleadings may be considered when deciding a motion under MCR 2.116(C)(8)." Id.
We review de novo questions of law that arise in a declaratory-judgment action, Detroit City Council v Detroit Mayor, 283 Mich.App. 442, 449; 770 N.W.2d 117 (2009), as well as the question whether the separation-of-powers doctrine applies, Harbor Telegraph 2103, LLC v Oakland Co Bd of Comm'rs, 253 Mich.App. 40, 50; 654 N.W.2d 633 (2002). Likewise, we review the meaning of a statute de novo. Oade v Jackson Nat'l Life Ins Co of Mich, 465 Mich. 244, 250; 632 N.W.2d 126 (2001). 632 N.W.2d 126 (2001). "When interpreting a statute, the primary rule of construction is to discern and give effect to the Legislature's intent, the most reliable indicator of which is the clear and unambiguous language of the statute." Perkovic v Zurich American Ins Co, 500 Mich. 44, 49; 893 N.W.2d 322 (2017). Such language must be enforced as written, "giving effect to every word, phrase, and clause." Id.
Because ABC asserts that DTMB exceeded its authority as an administrative agency by imposing a prevailing wage requirement in certain state contracts, when the Legislature had seen fit to repeal such a requirement, the nondelegation doctrine comes into play. The main source of the nondelegation doctrine is the constitution-based separation-of-powers principle. Taylor v Smithkline Beecham Corp, 468 Mich. 1, 8; 658 N.W.2d 127 (2003). And, unlike the federal constitution, our state constitution has a specific separation of powers clause. Under that clause, "[t]he 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 3 § 2. With respect to the law-making function of state government, the Constitution also declares that, "the legislative power of the State of Michigan is vested in a senate and a house of representatives." Const 1963, art 4, § 1.
The nondelegation doctrine seeks to enforce our constitutional system of separate branches of government, which as it pertains to the Legislature, means ensuring that the Legislature makes the law. Westervelt v Natural Resources Comm, 402 Mich. 412, 427-428; 263 N.W.2d 564 (1978). The Legislature, of course, has "the power 'to regulate public concerns, and to make law for the benefit and welfare of the state." 46th Circuit Trial Court v Crawford Co, 476 Mich. 131, 141; 719 N.W.2d 553 (2006), quoting Cooley, Constitutional Limitations (1886), p. 92. See also T &V Assoc, Inc v Dir of Health and Human Servs, ___ Mich. App___, ___; ___N.W.2d ___ (2023) (Docket No. 361727); slip op at 9. Because of this," '[t]he power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority.'" Id., quoting In re Certified Questions from United States Dist Court, W Dist of Mich, S Div v Governor of Mich. (In re Certified Questions), 506 Mich. 332, 358; 958 N.W.2d 1 (2020).
Although the doctrine "precludes Congress from delegating its legislative power to either the executive branch or the judicial branch," it does "not prevent Congress [or our Legislature] from obtaining the assistance of the coordinate Branches." Taylor, 468 Mich. at 8-9 (quotation marks and citations omitted; alteration in original). Therefore, the Legislature cannot delegate to the executive branch its legislative power to make laws, but the Legislature may delegate an administrative task to an executive agency if the Legislature provides "sufficient standards" to guide the agency in implementing the law. Id. at 10 n 9.
"Statutes that grant power to administrative agencies are strictly construed and the authority granted the administrative agency must be plainly granted." Mich State Employees Ass'n v Dep't of Corrections, 275 Mich.App. 474, 486; 737 N.W. N.W.2d 835 (2007). "[T]he act in question must be read as a whole; the provision in question should not be isolated but must be construed with reference to the entire act." State Conservation Dep't v Seaman, 396 Mich. 299, 309; 240 N.W.2d 206 (1976).
The standard by which this Court considers whether the Legislature has granted the executive sufficient standards within the delegation of authority was recently described as follows:
We have explained that "[c]hallenges of unconstitutional delegation of legislative power are generally framed in terms of the adequacy of the standards fashioned by the Legislature to channel the agency's or individual's exercise of the delegated power." Blue Cross &Blue Shield of Mich. v Milliken, 422 Mich. 1, 51; 367 N.W.2d 1 (1985). "The preciseness required of the standards will depend on the complexity of the subject." Id. "In making this determination whether the statute contains sufficient limits or standards we must be mindful of the fact that such standards must be sufficiently broad to permit efficient administration in order to properly carry out the policy of the Legislature but not so broad as to leave the people unprotected from uncontrolled, arbitrary power in the hands of administrative officials." [Seaman, 396 Mich. at 308-309]. "[T]he standards prescribed for guidance [must be] as reasonably precise as the subject-matter requires or permits." Osius v St Clair Shores, 344 Mich. 693, 698; 75 N.W.2d 25 (1956). [In re Certified Questions, 506 Mich. at 359.]
With respect to the standards for reviewing delegations from the Legislature, courts have recognized that the need for precision in the delegation of authority to administrative agencies is about at its peak when the agency delves into significant economic and legislative policy matters. Whether denoted as the "major questions doctrine," West Virginia v EPA, 597 U.S. 697, 723; 142 S.Ct. 2587, 2609; ___ L.Ed.2d ___ (2022), or considered a form of statutory construction when statutes are ambiguous, West Virginia, 597 U.S. at 742 n 3 (GORSUCH, J., concurring), this doctrine "refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted," id., at 724. Because courts "presume that 'Congress intends to make major policy decisions itself, not leave those decisions to agencies,'" id. at 723, quoting US Telecom Ass'n v FCC, 855 F.3d 381, 419 (CADC, 2017) (KAVANAUGH, J., dissenting from denial of rehearing en banc), the Court requires that statutes contain "clear congressional authorization" for the power to adopt the regulation at issue, id. Anchored in "separation of powers principles and [the need for] a practical understanding of legislative intent[, the doctrine] make[s] us 'reluctant to read into ambiguous statutory text' the delegation claimed to be lurking there." West Virginia, 597 U.S. at 723.
DTMB argues that we should not "adopt" the "major questions doctrine," which received its name from then-Judge Stephen Breyer's inclusion of the term in a 1986 law review article, where he wrote that before deferring to an agency's statutory interpretation, courts should "ask whether the legal question is an important one." Stephen G. Breyer, Judicial Review of Questions of Law and Policy, 38 Admin L Rev 363 (1986). But Michigan's nondelegation doctrine has always essentially paralleled the federal doctrine, see Taylor, 468 Mich. at 10 and In re Certified Questions, 506 Mich. at 359 n 17, and this "doctrine" is closely aligned with, if not a part of, the nondelegation doctrine that is applied in extraordinary cases involving executive actions on significant economic or political matters, see West Virginia, 597 U.S. at 721-722 (describing the major questions test and purpose); Biden v Nebraska, 600 US___, ___; 143 S.Ct. 2355, 2374; 216 L.Ed.2d 1063 (2023) (recognizing that although the label "major questions doctrine" is relatively new, the precedent containing those principles is not); Nat'l Fed of Indep Business v Dep't of Labor, 595 U.S. 109, 124-125; 142 S.Ct. 661, 665; 211 L.Ed.2d 448 (2022) (GORSUCH, J., concurring) (noting the close interrelation between the two doctrines that serve the same purpose). But see Biden, 143 S.Ct. at 2376 (BARRETT, J., concurring) (arguing that the major question doctrine is simply "a tool for discerning ... the text's most natural interpretation"). No matter its origin, cases applying this principle simply require more exacting statutory language in a delegation purporting to give the executive the power to act on matters considered to be within the exclusive province of the Legislature. See Utility Air Regulatory Group v EPA, 573 U.S. 302, 324; 134 S.Ct. 2427; 189 L.Ed.2d 372 (2014) ("We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.' "). See also FDA v Brown & Williamson Tobacco Corp, 529 U.S. 120, 160; 120 S.Ct. 1291; 146 L.Ed.2d 121 (2000); MCI Telecommunications Corp v American Telephone & Telegraph Co, 512 U S 218, 231; 114 S.Ct. 2223; 129 L.Ed.2d 182 (1994); Industrial Union Dep't, AFL-CIO v American Petroleum Institute, 448 U.S. 607, 645-646; 100 S.Ct. 2844; 65 L.Ed.2d 1010 (1980) (plurality opinion). This is quite similar to what our courts require under the nondelegation doctrine. See In re Certified Questions, 506 Mich. at 360-361 (" 'When the scope increases to immense proportions . . . the standards must be correspondingly more precise.' ") (citation omitted) & 361-362 ("In other words, it is one thing if a statute confers a great degree of discretion, i.e., power, over a narrow subject; it is quite another if that power can be brought to bear on something as 'immense' as an entire economy.").
Thus, a higher level of precision in the statutory delegation is required
when an agency claims the power to resolve a matter of great "political significance," or end an "earnest and profound debate across the [state]." . . . Relatedly, [the Supreme Court] has found it telling when Congress has "considered and rejected" bills authorizing something akin to the agency's proposed course of action. That too may be a sign that an agency is attempting to "work [a]round" the legislative process to resolve for itself a question of great political significance. [Id. at 743 (GORSUCH, J., concurring) (citations and quotation marks omitted).]See also In re Certified Questions, 506 Mich. at 360-361.
Invoking the nondelegation doctrine, ABC contends that the Legislature's directive to DTMB under The Management and Budget Act is not accompanied by sufficiently precise standards, particularly when the Legislature repealed the long-existing statutory prevailing wage requirement just a few years before. In that act, among other powers, the Legislature granted DTMB authority regarding the procurement of state contracts: "The department shall make all discretionary decisions concerning the solicitation, award, amendment, cancellation, and appeal of state contracts." MCL 18.1261(2) (emphasis added). The Management and Budget Act also provides:
Except for the contracts permitted in section 240, a contract shall not be awarded for the construction, repair, remodeling, or demolition of a facility unless
the contract is let pursuant to a bidding procedure that is approved by the board. The department shall issue directives prescribing procedures to be used to implement this section. The procedures shall require a competitive solicitation in the award of any contract for construction, repair, remodeling, or demolition of a facility. [MCL 18.1241(1).]Further,
Subject to subsection (3), for projects funded in whole or part with state funds, the construction contract award shall be made to the responsive and responsible best value bidder. As used in this subsection, "responsive and responsible best value bidder" means a bidder who meets all the following:
(a) A bidder who complies with all bid specifications and requirements.
(b) A bidder who has been determined by the department to be responsible by the following criteria:
(i) The bidder's financial resources.
(ii) The bidder's technical capabilities.
(iii) The bidder's professional experience.
(iv) The bidder's past performance.
(v) The bidder's insurance and bonding capacity.
(vi) The bidder's business integrity.
(c) A bidder who has been selected by the department through a selection process that evaluates the bid on both price and qualitative components to determine what is the best value for this state. Qualitative components may include, but are not limited to, all of the following:
(i) Technical design.
(ii) Technical approach.
(iii) Quality of proposed personnel.
(iv) Management plans. [MCL 18.1241(4).]
ABC asserts that although DTMB was provided with broad power in the contracting area, the absence of a specific delegation to DTMB to decide whether the state will require a prevailing wage in most state contracts, means that DTMB went beyond its delegated authority.
We first address whether DTMB's actions in requiring certain state contracts contain a prevailing wage requirement is one of the extraordinary matters that require a heightened legislative delegation. This is a close call, as one factor considered by the courts lends support for applying a more stringent standard, while the other does not on this record. Ultimately, because the record does not support a conclusion that the DTMB policy has a significant economic impact across the state, we conclude that this case does not present a major question.
First, we acknowledge that the issue of prevailing wage has always been, until DTMB's actions here, a legislative matter. And that is precisely because the issue invokes a myriad of economic and political issues that are constitutionally left to the Legislature to resolve. The matter of imposing a prevailing wage requirement on state contractors involves substantial political concerns. Indeed, that specific legislatively-declared policy was embodied in state statute from the 1960s until 2018, when it was repealed. The social and economic concerns implicated by a mandatory prevailing wage requirement go to the very heart of legislative policy-making, a point well-made by our former Chief Judge, William Whitbeck:
It may well be that the Michigan prevailing wage act has reduced employment opportunities for African-Americans in this state. It may well be that the prevailing wage act's reliance on collective bargaining agreements as determinative of prevailing wages in a locality is misplaced. It may well be that the overall effect of the prevailing wage act is to increase the cost to the government for public works construction projects over what they would cost in the open market. It may well be that each of these factors is an "affront" to Michigan citizens and taxpayers.
Unquestionably, however, these are public policy questions. Equally unquestionably, there is nothing in our judicial commission that empowers us, as compared to the Michigan Legislature, to address them. Our legal training makes us no more qualified to resolve these public policy issues than teachers or truck drivers, no more able to sense and act upon the public will than funeral directors or fire fighters, no wiser in charting a course for sound labor policy in the state than plumbers or physicians. If the prevailing wage act should be reconstituted or even repealed, then it is the Michigan Legislature-popularly elected by teachers and truck drivers, funeral directors and fire fighters, plumbers and physicians, and the rest of our diverse society to address precisely these types of public policy questions-that must undertake this task.
* * *
If arguments that a statute needs change, or even repeal, should be addressed to the Legislature, then it most certainly follows that the courts should not step in to do what the Legislature has not done. And, as the attached chart shows, since 1972 there have been thirteen proposed amendments to exempt certain projects from the prevailing wage act. During the same period there have been ten attempts to repeal the act. However, no proposed amendment, or repeal, of the act has passed. In essence, the Saginaw ABC invites us to do what the Legislature has refused to do: repeal the prevailing wage act. As is clear from the majority opinion, today we have declined that invitation. [Associated Builders &Contractors,
Saginaw Valley Area Chapter v Dir, Dep't of Consumer &Indus Servs, 267 Mich.App. 386, 407-409; 705 N.W.2d 509 (2005) (Whitbeck, CJ, concurring).]
As recounted by Chief Judge Whitbeck, the Legislature has repeatedly dealt with the issue, though usually attempts at amending or repealing the law failed. Id. And, it was under that prior law that DTMB had for decades required state contracts to contain a prevailing wage. Thus, much like the situations in West Virginia and Biden, we find it hard to believe that after repealing the prevailing wage law the Legislature believed it had left "to [the executive's] discretion the decision of" whether a prevailing wage law should be re-implemented into state contracts. West Virginia, 597 U.S. at 729 (quotation marks omitted); see Biden, 143 S.Ct. at 2373 ("[T]he Secretary's assertion of administrative authority has 'conveniently enabled [him] to enact a program' that Congress has chosen not to enact itself."); NFIB, 595 U.S. at 122 (GORSUCH, J., concurring) (noting that Congress had implemented numerous pieces of legislation addressing COVID-19, but never gave OSHA the power to issue a vaccine mandate, and in fact the Senate had disproved OSHA's rule; thus, the rule was stayed as it likely violated the major questions doctrine). Were this the only consideration, we would require a more clear statutory delegation of authority to support the executive's implementation of a prevailing wage requirement than what is required under traditional nondelegation cases.
That the Legislature did not add into 2018 PA 171 a provision that affirmatively precluded a prevailing wage provision in state contracts is of no moment. The relevant point is that the Legislature has legislated in this area for decades, evidencing the policy-making branch's understanding that this is a political issue within its constitutional wheelhouse. Also supporting this point is the Legislature's enactment of a new prevailing wage law, set to become law in March 2024. See 2023 PA 10.
But in addressing this issue courts also consider how significant the executive action is on an economic scale, and how vast the impact of the policy is on the state. See, e.g., West Virginia, 597 U.S. at 728-730 (absent a clear legislative delegation, the EPA did not have power to decide American energy policy for decades to come); NFIB, 595 U.S. at 117 (Secretary's vaccine mandate would affect 84 million Americans); Biden, 600 U.S. at ___; 143 S.Ct. at 2373 (President's loan forgiveness plan needed a clear legislative delegation because it could cost between $469 and $519 billion, and could affect most federal loan holders).
See also Haase, et. al. v Cameron Mitchell Restaurants, ___F Supp 3d ___ (SD Oh, 2024); slip op at 1 (declining to invoke the major questions doctrine because the size of the economic impact and impact on the economy was not as large as in the leading Supreme Court cases) and Restaurant Law Center v U.S. Dept of Labor, ___ F.Supp.3d ___ (WD Tx, 2023); slip op at 13 (economic impact of the labor rule was minimal in comparison to Supreme Court decisions and rule did not invoke any new power or substantially restructure market); Fed of Americans for Consumer Choice, Inc v U.S. Dep't of Labor, ___ F.Supp.3d ___ (ND Tx, 2023); slip op at 15 (rejecting use of the major questions doctrine in part because "the economic impact of the New Interpretation is unclear").
Here, we do not have any record evidence about the potential or actual cost of the prevailing wage requirement. No evidence was presented to show how much the state spends in contracts over $50,000, how many of those contracts are awarded annually, how many companies bid on affected contracts, and other such figures. These are important factors in determining whether a more specific legislative delegation is required because the executive action has a significant impact on the state economy, and in the absence of such evidence, we must conclude that this is not a major questions case.
Turning back to the traditional cases, what constitutes sufficient standards varies by the context of the delegation. The standard must "permit efficient administration in order to properly carry out the policy of the Legislature but not so broad as to leave the people unprotected from uncontrolled, arbitrary power in the hands of administrative officials." In re Certified Questions, 506 Mich. at 359 (quotation marks and citation omitted). Here, DTMB is acting as a market participant, and the Legislature gave it full discretion to, amongst other things, solicit and award state contracts. This delegation of full discretionary power grants broad power to DTMB so as to not impinge upon the state's ability to enter individual construction contracts in the course of business. And even with that wider discretionary authority, the Legislature gave DTMB sufficient standards in guiding DTMB as to what are acceptable bids by setting out criteria for the bids that it may accept from responsive and responsible best-value bidders. See MCL 18.1241(4)(a)-(c). Therefore, the standards provided were not so general as to amount to a delegation of legislative powers. See id.
III. CONFLICT WITH FOCGC
Beyond its nondelegation argument, ABC also contends that DTMB's interpretation of its powers under The Management and Budget Act conflicts with certain prohibitions outlined in the FOCGC. Implicit in this argument is the notion that violating the FOCGC is also a violation of the separation-of-powers doctrine. We disagree that DTMB's conduct violated the FOCGC.
The purpose of the FOCGC is "to provide for more economical, nondiscriminatory, neutral, and efficient procurement of construction-related goods and services by this state and political subdivisions of this state as market participants, and providing for fair and open competition best effectuates this intent." MCL 408.872. ABC points to the following statutory provision for its assertion that the prevailing-wage policy violates this act by giving preference to bidders who entered into collective-bargaining agreements:
The United States Court of Appeals for the Sixth Circuit has concluded that the FOCGC is proprietary, as opposed to regulatory, in nature. Mich Bldg & Constr Trades Council v Snyder, 729 F.3d 572, 577 (CA 6, 2013).
Subject to [MCL 408.878], a governmental unit awarding a contract on or after the effective date of the amendatory act that added section 2 for the construction, repair, remodeling, or demolition of a facility and any construction manager acting on its behalf shall not, in any bid specifications, project agreements, or other controlling documents:
(a) Require or prohibit a bidder, offeror, contractor, or subcontractor from entering into or adhering to an agreement with 1 or more labor organizations in regard to that project or a related construction project.
(b) Otherwise discriminate against a bidder, offeror, contractor, or subcontractor for becoming or remaining or refusing to become or remain a signatory to, or for adhering or refusing to adhere to, an agreement with 1 or more labor organizations in regard to that project or a related construction project. [MCL 408.875.]
In support of its argument that DTMB violated MCL 408.875(b), ABC points to a Michigan Department of Labor and Economic Opportunity (LEO) survey entitled "DTMB Prevailing Wage Commercial Survey," used by DTMB to set prevailing-wage rates. ABC asserts that this document demonstrates an improper preference for unions because it explicitly states that only wage rates from collective-bargaining agreements are included in the survey. The document reads:
Please provide prevailing wages and fringe benefits currently in effect under the applicable collective bargaining agreement, and under any applicable understandings associated with the agreement. List rates separately for each geographic area and, if applicable, for each size of project for which there are different rates in effect.
On each rate sheet you complete, if there is only one pay rate in effect for a job classification, list that rate as the prevailing wage. If there is more than one pay rate in effect, list as the prevailing wage the one that has been the most frequently or commonly paid during the 60 days prior to completing this Survey. In determining the most common or frequent wage, include the pay rates in effect in the area even if a collective bargaining agreement or understanding excludes those rates from prevailing wage projects.
It is critical that you provide a copy of the pertinent collective bargaining agreement and the applicable understanding or understandings, if any, for each listed rate, and that you indicate the page numbers where all information is found as requested on the form. Rates cannot be included in the state prevailing wage schedules if they are not submitted with a current collective bargaining agreement or understanding.
LEO, DTMB Prevailing Wage Commercial Survey (June 2022), available at <https://www.michigan.gov/leo/-/media/Project/Websites/leo/Documents/DTMB-PW-Fillable-Survey--6-27- 2022.pdf?rev=f0ea7c9ac7d1496ea70156229bc36950&hash=9E811270F7A30F65FCBBC0BC65 401A10> (accessed October 20, 2023).
Read together, the language of this survey does not constitute a "bid specification," a "project agreement," or another "controlling document" under MCL 408.875. Instead, as explained by DTMB, the survey is a means of compiling prevailing-wage rates. DTMB says as much in its Informational Sheet: Prevailing Wages on DTMB Projects document:
Prevailing rates are compiled from the rates contained in collectively bargained agreements which cover the locations of the state projects. While the DTMB prevailing wage rates are compiled though surveys of collectively bargained agreements, a collective bargaining agreement is not required for contractors to be on or be awarded state projects.
State of Michigan, Informational Sheet: Prevailing Wages on DTMB Projects (February 2022), available at <https://www.michigan.gov/leo/-/media/Project/Websites/leo/Documents/WAGE-HOUR/WHD-99xx-Information-Sheets/WHD-9918-PW-REQUIREMENTS-INFO-SHEET/WHD-9918-DTMB-PW-rates-1-31-2022_ad- jf_.pdf?rev=c57b0d340ff949628e047b97ad0ec7e8&hash=7EB99D633A319BF2F786BAE24E6 0396E> (accessed October 20, 2023).
The survey alone does not establish DTMB's intent to favor bidders in collective-bargaining agreements over other bidders. Instead, the survey is a means for DTMB to compile prevailing-wage rates. A bidder does not need to enter a collective-bargaining agreement to be considered for a state project. Therefore, the survey is not a bid specification, project agreement, or other controlling document that favors collective-bargaining agreements in contravention of MCL 408.875.
IV. PLAIN MEANING OF 2018 PA 171
ABC next contends that even if the prevailing-wage requirement did not violate the nondelegation doctrine, the Court of Claims erred when it determined that the repeal of the PWA, 2018 PA 171, did not prohibit DTMB from adopting a prevailing-wage policy.
When interpreting a statute that was the result of a voter initiative:
[T]he intent of the electors governs the interpretation of voter-initiated statutes, just as the intent of the Legislature governs the interpretation of legislatively enacted statutes. A statute's plain language provides the most reliable evidence of . . . intent .... If the statutory language is unambiguous, . . . [n]o further judicial construction is required or permitted because we must conclude that the electors intended the meaning clearly expressed. [People v Bylsma, 493 Mich. 17, 26; 825 N.W.2d 543 (2012) (quotation marks and citations omitted; alterations in original).]
The Court of Claims held that the plain language of 2018 PA 171 only repealed the PWA. The act did not take the additional step to also prohibit executive agencies from adopting a prevailing-wage policy. The language of the repeal supports this holding: "1965 PA 166, MCL 408.551 to 408.558, is repealed." 2018 PA 171. Outside of additional provisions for appropriation of funds to communicate the repeal to the public and a severability clause, no mention is made of a prohibition against executive agencies adopting a prevailing-wage policy. To add additional meaning to this statute adds meaning beyond the clear and unambiguous language of the statute. See Perkovic, 500 Mich. at 49. We agree with the Court of Claims, as we cannot infer a negative from the express written language. As written, nothing about the voter-initiated statute suggests that the electorate intended to repeal a portion of The Management and Budget Act or prevent executive agencies from establishing prevailing-wage policies as permitted.
V. THE APA
ABC contends that the Court of Claims erred when it held that DTMB did not comply with the rulemaking procedures of the APA when it enacted a prevailing-wage policy. In support of this, ABC argues that because DTMB acted outside of its statutory authority under The Management and Budget Act when it enacted the prevailing-wage policy, it implemented a formal rule without following proper procedure.
We review de novo whether an agency policy is invalid because it was not promulgated as a rule under the APA. In re PSC for Transactions Between Affiliates, 252 Mich.App. 254, 263; 652 N.W.2d 1 (2002). "[I]n order to reflect the APA's preference for policy determinations pursuant to rules, the definition of 'rule' is to be broadly construed, while the exceptions are to be narrowly construed." AFSCME v Dep't of Mental Health, 452 Mich. 1, 10; 550 N.W.2d 190 (1996).
The APA governs the promulgation of administrative rules. Slis v State, 332 Mich.App. 312, 319; 956 N.W.2d 569 (2020). The APA defines a "rule" as:
an agency regulation, statement, standard, policy, ruling, or instruction of general applicability that implements 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 of the law enforced or administered by the agency. [MCL 24.207.]When issuing a rule, it "must be promulgated in accordance with the procedures set forth in the APA, and are not valid if those procedures are not followed." Clonlara, Inc v State Bd of Ed, 442 Mich. 230, 239; 501 N.W.2d 88 (1993). The APA provides exceptions to the definition of a rule for which the rulemaking provisions of the APA do not apply. See MCL 24.207(a)-(s). Relevant to this appeal, the APA provides the following exception to the definition of a rule: "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(j). This Court has explained that "[i]f an agency policy follows from its statutory authority, the policy is an exercise of permissive statutory power and not a rule requiring formal adoption." Pyke v Dep't of Social Servs, 182 Mich.App. 619, 630; 453 N.W.2d 274 (1990). Another relevant exception to the definition of a rule is, "[t]he provisions of an agency's contract with a public or private entity including, but not limited to, the provisions of an agency's standard form contract." MCL 24.207(p). An agency may not avoid the rulemaking requirements by issuing directives under different labels. AFSCME, 452 Mich. at 9.
The Court of Claims explained that The Management and Budget Act granted DTMB broad discretionary power when awarding state construction contracts, but limited that power by requiring DTMB to consider certain criteria revolving around awarding responsive and responsible best-value bidders. As explained earlier, DTMB's decision to apply a prevailing-wage policy to state construction contracts valued over $50,000 is permitted by its discretionary power established in MCL 18.1241 and MCL 18.1261(2). Therefore, the policy is an exception to the definition of a rule under MCL 24.207(j). Likewise, the prevailing-wage policy is a contract term that contract bidders enter into with DTMB. Thus, the policy also meets the exception to the definition of a rule under MCL 24.207(p). Given that it meets at least one exception to the definition of a rule under the APA, DTMB was not required to follow the APA's formal rulemaking procedure when enacting its prevailing-wage policy.
Affirmed.
Christopher M. Murray, Michael J. Riordan, Michael J. Kelly, JJ.