Businesses, child-care providers urge Legislature to rein in administrative rulemaking

Representatives of small-business groups, manufacturers and child-care operators told the Michigan House Rules Committee that the state’s administrative rule system imposes substantial costs and uncertainty on businesses and providers and asked the Legislature to tighten oversight and increase transparency.

Amanda Fisher, state director of the National Federation of Independent Business in Michigan, said rules crafted by agencies can carry large compliance costs and sometimes exceed legislators’ intent. She cited federal-study figures for context — “compliance cost just for federal regulations per employee across all sectors was about $12,800 per employee” and said small firms bear disproportionate costs. Fisher also described a Michigan example: a 2011 statute leading to Michigan Public Service Commission rules requiring more granular 9-1-1 location information for multiline phone systems; rules lowered a square-foot threshold during promulgation and created compliance and retrofit costs for some businesses before the Legislature intervened.

Jacob Manning, grassroots coordinator and policy advisor for the Small Business Association of Michigan (SBAM), and Lindsey Potter, owner of Bright Light Early Care and Education and chair of the Child Care Providers Association of Michigan, described overlapping requirements and frequent contact with multiple agencies. Potter said her center employs about 25 staff and serves roughly 75 families daily and outlined the operational burden of interacting with health departments, licensing agents, building inspectors and playground inspectors to open and maintain child-care facilities.

Mike Johnston (recorded in the transcript as both "Johnston" and "Johnson"), executive vice president for government affairs and workforce development at the Michigan Manufacturers Association, urged the committee to consider the balance of power between branches. He discussed the U.S. Supreme Court’s June decision ending Chevron deference, the state Supreme Court’s Blank v. Department of Corrections decision limiting the legislature’s past veto-style oversight of rules, and public act changes (noted in testimony as Public Act 104 of 02/2023) that removed the “no stricter-than-federal” policy. Johnston said the legislature should use statutory language to narrow agency rule authority going forward.

Michael Imo, senior director of legislative and external affairs for the Michigan Chamber of Commerce, and Peter Riddell, partner at the Hahnemieh Law Firm, urged reforms to the Administrative Procedures Act (APA). Riddell proposed a requirement for stakeholder engagement before an agency submits a request for rulemaking (RFR) to the Legislative Service Bureau, and warned that guidance documents and internal policies are being used to circumvent formal rulemaking when statutes limit agencies’ ability to issue rules.

Committee members asked witnesses for data that quantify changes in regulatory burden over time and to compare Michigan to other states; several witnesses offered to compile additional evidence and examples for the committee. The committee requested that organizations provide the written examples electronically for the committee’s comprehensive review.

Representative DeBoer moved to excuse absent members; the motion prevailed by unanimous consent. The committee adjourned after closing remarks.