[nfbmi-talk] wow another oma violation

Tue Aug 31 13:39:48 UTC 2010

Friends,

Here Barbara Schmidt called that A.G. opinion "priveledged". Clearly it is not and the Board did the right thing in not holding a closed session on the matter. Shoot Attorney General opinions are posted on the Attorney General's web site for crying out loud!

This should go to the lawyer handling the OMA case as it shows a "pattern and practice" of violations by Barbara Schmidt:
+-----Original Message-----
From: Zanger, Connie (DELEG) 
Sent: Friday, November 06, 2009 4:51 PM
To: Duthie, Patrick (DELEG); Edmonds, Lucy (DELEG); Hull, James (DELEG); McEntee, John (DELEG); Pelle, Joe (DELEG); Robinson, David (DELEG); Wallace, Judy (DELEG); resolutioncomm at sbcglobal.net; sjx3 at sbcglobal.net; garsvend at comcast.net; 'Bill Lozier'; mjcbiz at charter.net; rutherford_beard at yahoo.com; 'toccosam at gmail.com'; keathleygreg at yahoo.com; jrvending87 at yahoo.com; mjcbiz at charter.net
Cc: Heibeck, Cheryl (DELEG)
Subject: Catering in State buildings

Good afternoon, Colleagues;

Director Cannon has requested I advance the document below to you.

Regards,

Constance Zanger

Business Enterprise Program Manager

Michigan Commission for the Blind

Department of Labor and Economic Growth

517/335.3639

517/335.5140 (fax)

Cc:  Matilda Steele

Dear Commissioners,

At the Commission’s March 2008 meeting, Business Enterprise Program (B E P) staff presented a recommended decision of an Administrative Law Judge (A L J) regarding to violation of Public Act (P A) 260 in state government facilities.  

The operator complaint stated the Commission is not sufficiently enforcing P A 260; and the State Office of Retirement Services (O R S) violated the laws by selling food products for one of its fundraising initiatives.  The operator’s resolution to the complaint requested compensation for lost revenue and also requested the Office of Retirement Services (specifically) cease the sale of food products. 

The ALJ agreed that any sale of food products in state government facilities other than by a licensed BEP operator does violate PA 260.   The recommended decision, in part, reads as follows:  The Commission, in collaboration with the State Attorney General, develop a position paper on fundraising efforts which violate the law and clarify that the sale of food products in state facilities is a priority of the BEP program.   Commission staff supported the recommended decision and the Commission Board unanimously supported the decision.

In accordance with the decision, Commission staff developed a draft position paper, Enclosure B.  The draft was forwarded to the Elected Committee for their review.  The draft was also forwarded to the Attorney General’s Labor Division for their review.  While the Committee fairly quickly reviewed the document and shared their comments with the agency, the Attorney General’s review took somewhat longer.  

The agency recently received the Attorney General Labor Division’s opinion in the matter.  Enclosure A is that opinion in full.  The opinion is transmitted as an Attorney Confidential Communication.   While you may certainly discuss the opinion with other Commissioners or with me, this communication between attorney and client absolutely may not be discussed with anyone else.  If the Commission desires to discuss the privileged advice, they can vote to go into closed session at the 
December 11, 2009 meeting.  Or, a special meeting may be scheduled.  Barbara Schmidt, Assistant Attorney General for the Labor Division will be available for that purpose.

Briefly, the opinion states Public Act 260 (also called the Act) does not grant exclusive authority to blind persons operating a concession in a State building.  Also, the administrative rule purporting to require that catering, coffee service and other services be exclusively performed by such persons exceeds the statutory authority granted to the Commission in the Act.  

The opinion goes on to say the Act only permits the Commission to limit or control operations in the state that fall within the definition of concessions.  If an activity is not a concession, then it is not an activity regulated under the Act.  The terms of the Act defining concession focus on either the equipment or the location where items may be sold.  Clearly, catering services cannot be considered either equipment or location.  Neither can catering services be considered as a vending facility.  The Act defines vending facility as an automatic vending machine, cafeteria, snack bar, cart service, shelter, counter or any other approximate auxiliary equipment [prescribed by rule] as being necessary for the sale of articles or services described in the act.  So, not only does catering not fall within the definition of concession, it also does not fall within the definition of vending facilities.  In summary, the 2004 amendment of the rule which adds “catering” and “services” to the definition of vending facility exceeds the scope of the rule-making authority given to the Commission under the Act.

The opinion also says “coffee clubs” are not concessions as that word is defined in the Act.  And, the amended rule adding the term “coffee service” is not valid for reasons similar to those detailed in the paragraph above.  Coffee sold and served from a cart, however, may be covered under the Act because “cart service” is included in the statutory and rule definition of “vending facility”.

Finally, the opinion discusses the periodic sale of food or beverage for fundraising activities and events.  Under the Act, blind persons are licensed to operate concessions by way of a vending facility on state owned or occupied buildings.  This right to sell certain food and other items through a vending facility is exclusive, but does not necessarily encompass every item that is sold within a building.  

To be in violation of the Act, the sales at issue must constitute a concession as that word is defined.  Thus equipment such as vending machines carts or counters; or locations such as cafeteria, snack bars or shelters; must be used for the retail sale of the individual items of merchandise or wrapped or packaged food items.  Generally, fund-raising is an occasional activity.  It is not a continuous, ongoing operation.  And, it does not involve the sale of an individual item directly to the end-consumer.  The proceeds are not kept as profit to the individual who procure and distributes the orders.

Fund-raising is not an ongoing sale of a variety of items by means of an ongoing business from a fixed location, unless the activity falls within the definition of concession.  Generally speaking, fund-raising activity is not a concession as defined by the Act.

Now that you’ve heard the gist of the opinion, I’m sure you wonder what is the next step to be taken.  Because the Commission adopted the recommended decision of the A L J, and the position paper has been written and reviewed for legality, the Commission needs to take action on it.  Commissioners can deliberate on the issues and vote on a proposed position which can be reduced to writing for adoption at the following meeting.  You may do this at the regularly scheduled December meeting, or you may call a special meeting for this purpose.  

Best always,

Pat Cannon, State Director

Michigan Commission for the Blind

Cc:  Barbara Schmidt

Enclosure A

DEPARTMENT OF 

ATTORNEY GENERAL

MEMORANDUM

September 16, 2009

Attorney Confidential Communication

to:  Patrick Cannon Director Michigan Commission for the Blind

From:   Barbara A. Schmidt   Section Head      

Regulatory Section Labor Division

re:  Proposed Position Paper - Concessions under the Michigan Blind and Visually Disabled Persons Act

You asked this Office to review a position paper prepared by your staff and the Elected Operators Committee. You request advice on whether the Michigan Blind and Visually Disabled Persons Act, Act 260 of 178 (the Act)1 gives a blind person licensed under the Act the exclusive right to operate concessions in a state building, thus prohibiting employee-arranged catering using outside vendors; periodic fund raising activities; and coffee clubs. The Act does not grant such exclusive authority to blind persons operating a concession in a State building. Moreover, the amended administrative rule purporting to require that catering, coffee service, and other services be exclusively performed by such persons exceeds the statutory authority granted to the Michigan Commission for the Blind (MCB).

I.         Introduction

The MCB was created under the Act2 and falls under the umbrella of the Michigan Department of Energy, Labor, and Economic Growth (DELEG). The Act was passed to provide services, education, training, and other assistance to blind persons in Michigan. The Act provides for the operation by blind persons of concessions in state owned or occupied property.3 MCB regulates the licensing of blind persons for these concessions under a program called the Business Enterprise Program (BEP).

MCB has promulgated an extensive network of administrative rules that governs the management and operation of the BEP on state owned or occupied property. The rules include a contested case grievance procedure for concession licensees (licensee or operator).

MCB asks this division to review and comment on a draft position paper entitled "Fundraising Activities in State Owned and Occupied Buildings."   An administrative law judge (ALJ) recommended that the paper be generated, and the MCB adopted this recommendation at its March 2008 meeting, as part of the resolution of a contested case hearing.5 The contested case involved a dispute between a concession licensee at the state's General Office Building and the state employees who work there. The licensee operated a cafeteria in the building. At the same time, employees who work in the building were raising money for employee activities by selling on a continual basis, many of the items sold by the licensee such as candy bars, potato chips, pop, and coffee. The employees displayed these items on a counter and expected payment through an honor system. At the hearing on the grievance, the licensee argued that the employees' fundraising activity violated the terms of the Act because only licensees had the exclusive right to sell those items in the building.

The ALJ determined that the fund-raising was in violation of the Act because the employees repeatedly sold these products from a counter and thus, operated a "concession" as defined by the Act. The Act only permitted blind licensees to operate such concessions. The ALJ recommended that a position paper be written for distribution to state departments, boards, commissions, agencies, and offices addressing various activities, such as employee catering and fundraising in state buildings - functions that this ALJ considered violations of the Act. The MCB adopted the recommendation as the final agency decision.

Subsequently, MCB staff and the Elected Operators Committee (EOC) jointly wrote the position paper. The EOC is a committee of licensees that actively participates with the MCB in making policy, and administrative and program decisions involving the state's vending facility program.6

The ALJ had also recommended that the Attorney General assist the MCB in developing the position paper. However, the Attorney General staff did not participate in the grievance hearing and had no knowledge of the ALJ's recommendation and the MCB's adoption of the recommendation, until after MCB staff submitted the proposed paper for the Labor Division's review.

II.       Relevant statutory language and administrative rule

A.        The Act

The Act contains four provisions that are pertinent to this Division's legal opinion.

 1.        "A concession in a building or on property owned or occupied by this state shall be operated by a blind person, regardless of race, creed, color, sex, marital status, or religious preference, except in cases provided for in section 10." [MCL 393.359],7

 2.        "'Concession' means equipment or location which is being used, or may be used to sell retail confections, tobaccos, papers, periodicals, and other like merchandise, coffee, milk, soft drinks, wrapped ice cream, wrapped sandwiches, wrapped baked goods, packaged salads and other similar food items. Concession includes the operation of 'quickie lunch counters' for the dispensing of prepared foods in state buildings and vending facilities." [MCL 393.351(c)].

 3.        '"Vending facility' means an automatic vending machine, cafeteria, snack bar, cart service, shelter, counter, or any other appropriate auxiliary equipment as the commission may prescribe as being necessary for the sale of articles or services described in this act and which may be operated by a blind licensee." [MCL 393.351(f)].

 4.       The commission shall...

 (f) Regulate concessions reserved for operation by blind persons pursuant to this act.

 (g) Promulgate rules pursuant to [the Administrative Procedures

Act] for the implementation and administration of this act. [MCL 393.355].

B.        Administrative Rule

In 2004, the MCB adopted by administrative rule a different definition of 'vending facility' than the definition in the Act.

'Vending facility' means an automatic vending machine, cafeteria, snack bar, cart service, catering, coffee service, shelter, counter or any other appropriate auxiliary service or equipment as the commission may prescribe by rule as being necessary for the sale of articles or services described in 1978 PA 260, as amended, being §393.351 et seq of the Michigan Compiled Laws and which may be operated by a blind licensee. [R 393.1(jj)].

III.     Legal Analysis

The premise of the position paper under review is that blind individuals have the exclusive right to operate concessions in the buildings covered by the Act. And, by implication, that right prohibits employee-arranged catering using outside vendors; fund raising activities; and coffee clubs.

The Act provides that concessions in state owned or occupied buildings shall be operated by a blind person.8 The Act also charges the MCB with regulating concessions reserved for operation by blind persons. But the Act only permits the MCB to limit or control operations in the State that fall within the definition of concession. Thus, the salient point of analysis is whether the activity at issue is a "concession" as defined in the Act. If the activity is not a concession, then it is not an activity regulated under the Act.

A.       Catering for various events paid for with state monies.

1. The Act does not include catering services within the definition of concession.

This analysis requires determining whether the Act includes catering service within its definition of the term "concession." In interpreting a statute, the Michigan courts focus on the express terms of the statute:

The fundamental task of a court is to 'discern and give effect to the Legislature's intent as expressed in the words of the statute.' Where the plain and ordinary meaning of the statutory language is clear, further judicial construction is unwarranted...

We accord to every word or phrase of a statute its plain and ordinary meaning, unless a term has a special, technical meaning or is defined in the statute. In ascertaining the plain and ordinary meaning of undefined statutory terms, we may rely on dictionary definitions. [Guardian Environmental Services, Inc v Bureau of Construction Codes, 279 Mich App 1, 7 755 NW2d 556 (2008) (Citations omitted.)].

The Act defines "concession" as "equipment or location which is being used, or may be used to sell retail confections, tobaccos, papers, periodicals, and other like merchandise, coffee, milk, soft drinks, wrapped ice cream, wrapped sandwiches, wrapped baked goods, packaged salads and other similar food items. Concession includes the operation of 'quickie lunch counters' for the dispensing of prepared foods in state buildings and vending facilities." [MCL 393.351(c)] (Emphasis supplied.) The express terms of the Act in defining concession focuses on either the equipment or the location where items may be sold. Clearly, catering services cannot be considered either equipment or location.

Catering services also cannot be considered as "vending facilities" where "quickie lunch counters" operate. The Act lists what are considered "vending facilities." Catering services cannot be considered "auxiliary equipment" within that list:

automatic vending machine, cafeteria, snack bar, cart service, shelter, counter, or any other appropriate auxiliary equipment [prescribed by rule] as being necessary

MCL 393.359.

for the sale of articles or services described in this act... [MCL 393.351(f) (Emphasis supplied.)].

So, not only does catering not fall within the definition of concession, it also does not fall within the statutory definition of "vending facilities."

Another question is whether catering services can be considered a "retail sale." The Act contemplates that the concession be used for the "retail sale" of the certain listed items but does not define these terms. The dictionary defines "retail" as "the sale of goods to ultimate consumers, usu. in small quantities (opposed to wholesale)." [Random House Webster's College Dictionary, 2nd ed. (1997).] The statute lists the items subject to retail sales: candy bars, newspapers, magazines, drinks, wrapped food items, and other "like merchandise."

"Cater" means "to provide food, service, etc., as for a party or wedding." [Random House Webster's College Dictionary, 2nd ed. (1997).] The type of catering service provided in state buildings generally involves the provision of prepared meals with food and beverage delivered to a conference room or other type of meeting room. It includes full-service set up with all necessary utensils, place setting, and serving pieces, and subsequent clean up. And, payment is made by the sponsoring agency. Thus, catering is not the retail sale of individual items directly to the consumer, such as candy bars, newspapers, or wrapped food items.

Moreover, catering services cannot be considered a "quickie lunch counter." The Act defines concession as including '"quickie lunch counters' for the dispensing of prepared foods in state buildings and vending facilities." [MCL 393.351(c)] The word "dispense" means "1, to deal out; distribute." Random House Webster's College Dictionary. 2nd ed. (1997). Further, a "counter" is defined as:

 1. a table or display case on which goods can be shown, business transacted, etc.

 2. (in restaurants, luncheonettes, etc.) a long, narrow table with stools or chairs along one side for the patrons, behind which food is prepared and served... [Random House Webster's College Dictionary. 2nd ed. (1997)]

Considering these definitions and the context of the use of the term "quickie lunch counter" in the Act, a lunch counter is equipment in a fixed location from which prepared foods are distributed and served to patrons on a retail basis. It is not catering, which involves a preplanned provision of meals for attendees of a seminar or other event, with attendant set-up and take-down in a meeting or conference room, and paid for by the sponsoring agency.

In light of the above, licensees under the Act have the exclusive right to operate a concession in a state building, but catering is not a concession. Thus, licensees do not have the exclusive right to engage in catering activity in state owned or occupied buildings.

  2. The addition of the term "catering" in the 2004 amended administrative rule definition of vending facilities exceeds the statutory authority granted to the MCB and thus, is invalid.

It is well-established that the validity of a rule adopted by an administrative agency is determined by application of a three-part test: (1) whether the rule is within the subject matter of the enabling statute; (2) if so, whether the rule complies with legislative intent underlying the enabling statute; and (3) if the rule meets the first two requirements, whether the rule is arbitrary and capricious (Luttrell/Dykstra test).9

Before 2004, the MCB adopted a rule defining "vending facility. The definition was virtually identical to the definition in the Act. In 2004, the MCB made substantial changes to the rule by adding the terms "catering", "coffee service" and "service":

'Vending facility' means an automatic vending machine, cafeteria, snack bar, cart service, catering, coffee service, shelter, counter or any other appropriate auxiliary service or equipment as the commission may prescribe by rule as being necessary for the sale of articles or services described in 1978 PA 260, as amended, being §393.351 et seq of the Michigan Compiled Laws and which may be operated by a blind licensee. [R 393.l(jj) (Added terms emphasized.)].

The amendment of the administrative rule definition significantly broadened what is provided in the statutory definition of vending facility.

Considering the first prong of the Luttrell/Dykstra test used to analyze the validity of an agency's rule, the activity of catering is not within the subject matter of the Act. First, catering is neither "equipment" nor a "location" as reflected in the statutory definition of "concession" or "vending facility." Moreover, as stated above, catering services cannot be considered to be retail sales of items directly to the ultimate consumer and do not fall within the items listed in the definition of a "concession." Listed items include wrapped and packaged food items, which are not the type of foods envisioned by the catering services at issue. And, as stated above, catering is not the dispensing of food from a "quickie lunch counter." Therefore, the addition of catering in the rule's definition of vending facility is not within the subject matter covered by the Act because it does not fall within the statutory definition of "concession," which is the operative regulated activity.

As to the second prong of the test, the amended rule does not comply with the legislative intent as ascertained by the plain language of the Act. The meaning of statutory terms may be deduced from their context or setting, under the principle of noscitur a sociis10 And, words grouped in a list are given a related meaning. ''

Here, the Act gives the MCB the authority to promulgate rules "for the implementation and administration of the act." And, the Act's definition of vending facility provides that rules may prescribe, "any other appropriate auxiliary equipment as necessary for the sale of articles or services described in the] act and which may be operated by a blind licensee." [MCL 393.351 (Emphasis supplied)]. The MCB's original rule defined vending facility as substantially identical to the statutory definition and thus, complied with the legislative intent.

The MCB, however, amended the rule by adding the terms "catering" and "services." But, the Act focuses only on "equipment" or "location," and not "services." By adding these terms, the MCB did not comply with the legislative intent. The statutory definition of vending facility provides a list of means by which a concession can operate. These are "automatic vending machine, cafeteria, snack bar, cart service, shelter, counter, or any other appropriate auxiliary equipment [prescribed by rule] as necessary for the sale of articles or services described in this act." [MCL 393.351(f)]. The MCB's authority to promulgate rules does not include the authority to add services that are not encompassed within the definition of concession, or to add anything to the rule definition of vending facility aside from "other appropriate auxiliary equipment."

Thus, relative to the second prong of the test, catering does not comply with the legislative intent as ascertained by the plain language of the statute.12

Lastly, the third prong of the Luttrell/Dykstra test is whether the rule is arbitrary and capricious. But, the third prong applies only if the first 2 are met. Here, the amended rule does not meet the first two requirements. The addition of catering to the definition of vending facility is not within the subject matter of the Act; and it does not comply with the underlying legislative intent. Therefore, the third prong is not applicable.

Significantly, in July, 2005, after MCB amended its rule, the DELEG Director, with approval of the MCB staff, sent a letter to all department directors announcing the availability of catering and coffee service for office meetings and special events through BEP licensees. (Attachment 3). The letter did not indicate that use of the BEP program to meet these needs was mandatory, only that BEP operators "should be approached first for any department or office sponsored functions..."

Similarly, and again with MCB staff approval, on October 26, 2005, a memorandum regarding catering was distributed to all agency administrative officers from the Director of Tenant Services Division, Department of Management and Budget, Office of Facilities. (Attachment 4). The memo outlines the process for arranging catering services through the concession operators. It is not couched in mandatory terms, but rather states that the first contact for catering "should" be the "local operator." The memo also states in part:

 a)        "If your local operator is unable to meet your needs, they may refer you to another operator, or may refer you to the [BEP] central administrative office."

 b)       "If your local operator or BEP is unable to fulfill your catering needs, an outside service can be contacted."

 c)        "If you feel that you have received a non-competitive price quote from your local operator, please contact [the BEP administrator or assistant administrator]."

Thus, even after the rule was amended, the use of BEP operators for catering in a state building was not considered mandatory by the two state agencies' directors charged with overseeing these facilities and functions. These positions are consistent with the conclusion that "catering" is not a "concession" mandated by the Act.

In sum, the 2004 amendment of Administrative Rule 393.1(jj), which adds "catering" and "services" to the definition of vending facility, exceeds the scope of the rule-making authority given to the MCB under the Act.

B.        Periodic sale of food or beverage for fundraising activities and events does not fall within the auspices of the Act.

Under the Act, blind persons are licensed to operate concessions by way of a vending facility on state owned or occupied buildings. This right to sell certain food and other items through a vending facility is exclusive, but does not necessarily encompass every item that is sold elsewhere within the building. In the Act, concession means "equipment or location which is being used to sell retail.. ."13 And, through the definition of vending facility, the Act provides that concessions occur through use of equipment or locations, such as vending machines, snack bars, counters, and cafeterias.14

The subject of the contested case hearing that resulted in the drafting of the position paper at issue was the ongoing and continuous sale by employees of candy, chips, and other items from a counter at the office. Payment was made through an honor box and the proceeds were used to fund employee activities. The ALJ declared that this ongoing concern constituted a concession because it was a specific location that was being used on a continuing basis for the retail sale of many of the items listed in the Act's definition of concession.

To be in violation of the Act, the sales at issue must constitute a concession as that word is defined. Thus, equipment such as vending machines, carts or counters; or locations such as cafeterias, snack bars or shelters, must be used for the retail sale of the individual items of merchandise or wrapped or packaged food items. Generally, fund-raising is an occasional activity that is done by taking orders from individuals for various items such as boxes of packaged microwave popcorn, boxes of cookies, pizza kits, chocolate bars, etc. The orders are then brought in and distributed accordingly. It is not a continuous, ongoing operation. And, it does not involve the sale of an individual item directly to the end-consumer. The proceeds are not kept as profit to the individual who procures and distributes the orders. The purchase price, including the profit, is given to the sponsoring organization, such as Girl Scouts, school programs, or other nonprofit entities. This reasoning is also applicable to fund-raising lunches where hot dogs or similar items are offered.

Fund-raising is not an ongoing sale of a variety of items by means of an ongoing business from a fixed location, unless the activity falls within the definition of concession, as it did in the case which led to the production of the position paper under consideration here. Thus, generally speaking, fund-raising activity is not a concession as defined in the Act.

C. Coffee clubs are not concessions as defined in the Act.

Coffee and coffee-related products used by a group of employees who make coffee for the office from a common coffee maker are purchased outside the workplace and are brought in for that purpose. Money to pay for the products is generally collected by the purchaser before or after the product is brought in. Sometimes coffee for the machine is brought in by employees on a rotating list or some other method without the actual pooling of money. At times, there are dishes that serve as a receptacle for a donation from the occasional person who wishes a cup of coffee but is not part of the core coffee group.

This arrangement does not consist of the selling of retail sale of coffee. It does not involve the sale of individual cups of coffee from a seller to the end consumer. Either there is no profit involved, or any token profit is put into the fund for future purchase of the coffee and related items. The majority of the coffee is made and consumed by the individuals who purchased the items necessary to produce the coffee for their personal use.

As such, "coffee clubs" are not concessions as that word is defined in the Act. Moreover, the amended rule adding the term "coffee service" is not valid for reasons similar to those outlined in Section 111(A)(2) above. Coffee sold and served from a cart, however, may be covered under the Act because "cart service" is included in the statutory and rule definition of "vending facility." The Random House Webster's College Dictionary, 2nd ed. (1997) defines "cart" as "any small vehicle pushed or pulled by hand." Depending upon the facts of a particular situation, a concession could include a rolling cart in a building from which "concession items," such as coffee and pastries, are sold.

Conclusion

The purpose of the Act is to offer blind persons the exclusive right to operate concessions, as that word is statutorily defined, in state owned or occupied buildings. The purpose is not to regulate other activities, or to create a monopoly over the sale of each and every food item brought into the buildings. Nor is the purpose to dictate that employees must arrange through a licensee each and every activity that involves the sale, distribution, or purchase of food items. The legislature, through the language of the Act, did not intend to impinge upon the right of state employees to engage in fundraising activities, to form coffee clubs, or to hire caterers for meetings or special events. There is only one exclusive right given under the Act, and that is for blind persons to operate concessions within the parameters of Act, and in accordance with properly promulgated administrative rules.

The opinions reflected in this memorandum are those of the Labor Division and not the opinion of the Attorney General.

c:        Ray Cardew

Susan Przekop-Shaw

FOOTNOTES

1 MCL 393.351 et seq.

2 MCL 393.352.

3 MCL 393.359.

4 Position Paper, Attachment 1.

5 Recommended Decision of the Administrative Law Judge, Docket No. 2007-1639, Attachment 2.

6 R 393.52.

7 The exceptions in section 10 are not relevant for purposes of this memo.

9 Mich Ass'n of Home Builders v Dir of Dep't of Labor & Econ Growth, 276 Mich App 467, 474; 741 NW2d 531 (2007); affm 'd, 481 Mich 496, 501; 750 NW2d 593 (2008) quoting Dykstra v Dep't of Natural Resources, 198 Mich App 482, 484; 499 NW2d 367 (1993), citing Luttrell v Dep't of Corrections, 421 Mich 93, 100; 365 NW2d 74 (1984) {Luttrell/Dykstra test).

10         Bloomfield Estates Improvement Ass'n, Inc v City of Birmingham, 479 Mich 206, 215; 737 NW2d 670 (2007).

11         Manuel v Gill, 481 Mich 637, 650; 753 NW2d 48 (2008).

12         For similar reasons, the addition of the term "services" does not comply with the legislative intent where the plain language in the statute is limited to identifying "equipment."

Enclosure B

POSITION PAPER

FUNDRAISING ACTIVITIES IN

STATE OWNED AND OCCUPIED BUILDINGS

Draft:  2008 July 9

Many State of Michigan departments and agencies engage in fund-raising activities for charitable purposes.  Commonly these fund-raising activities are also called activity funds.  Such activity funds have created a venue for potluck lunches, charitable functions and other celebrations. These activities also provide a sense of companionship and camaraderie among State employees. A popular method of fund-raising is selling snacks including coffee, beverages and prepared food products.  

The mission of the Michigan Commission for the Blind’s Business Enterprise Program (BEP) is to provide blind persons with remunerative employment in food service.  The program is further charged with the responsibility of enlarging the economic opportunities of the blind and stimulating the blind to greater efforts to make them more self-sufficient.  The foundation of Michigan’s Business Enterprise Program is two-fold:  the Federal legislation, i.e., the Randolph-Sheppard Act of 1936; and state legislation, i.e., Public Act 260 of 1978.  The fund-raising activities described above detract from the mission and goals of the Commission for the Blind’s Business Enterprise Program.  Such activities, although they may be well intentioned, are a clear violation of Public Act 260.  And, in some cases, may be at odds with the State’s Code of Conduct.  

The Commission for the Blind is responsible for administering Michigan’s vending facility program for the state’s blind citizens.  Prior to being licensed in the vending facility program, operators must graduate from an extensive training program and successfully complete the ServeSafe (i.e., sanitation) certification program.  Once licensed by the Commission, BEP licensees (or operators) become independent entrepreneurs, leaving the ranks of the 70% of unemployed blind persons.  The new entrepreneurs are responsible for managing all aspects of their food service business, including responsibility for all associated taxes and insurances as well as the costs of maintaining any employees.  In complying with the program’s guidelines, licensees are expected to meet a certain level of profitability, and return 10% of their proceeds to the program for the maintenance and purchase of equipment.  

Public Act 260 authorized the Commission’s Business Enterprise Program to sell retail confections, tobaccos, papers, periodicals, and other like merchandise, coffee, milk, soft drinks, wrapped ice cream, wrapped sandwiches, wrapped baked goods, packaged salads and other similar food items.  The Act also gives the commission the final authority relative to the location of concessions and food sales in state owned and occupied buildings.  Rule 4(2) of the Conduct on State Property further states, in part:   person or organization is not permitted in State buildings or State grounds for the purpose of solicitation of funds or the sale of any article, except that charitable organizations may solicit funds if written authorization is obtained and if such conduct is confined to the entrances and lobby areas of State buildings.

Department and agency sponsored fund-raising activities involving food sales severely affect the livelihood of Michigan’s blind entrepreneurs in BEP.  Department and agency sponsored fund-raising activities involving food sales are detrimental to the program’s mission as established by the law.  Department and agency sponsored fund-raising activities involving food sales may be in violation of state health regulations and state sales tax laws.  And, Department and agency sponsored fund-raising activities involving food sales violate Public Act 260 as well as the Code of Conduct on State Property.  

On October 1, 2004, the Business Enterprise Program’s promulgated rules expanded the definition of food service to include catering and coffee service.  Based on this rule change, in July of 2005 the Director of the Department of Labor and Economic Growth issued a letter advising all state departments and agencies that BEP operators should be approached first for any department or office sponsored functions where catering and coffee services are to be provided.  In support of the Program’s promulgated rules, earlier this year, the State Office of Administrative Hearings and Rules issued a recommended decision, supported by the Commission Board.  The decision recognized these activity funds and fund-raisers as a clear violation of Public Act 260.         

The following examples are provided to illustrate those types of functions or activities not permitted under state law:  

*       Food and beverages purchased in state owned or occupied facilities must be purchased only from the established BEP facility (i.e., vending machines, snack bar, café or cafeteria)

*       Additionally, any event providing food and or beverage service funded with state monies must procure the food and beverage service from an established BEP facility.  State funds include service times where state employees are paid to participate or provide service, i.e. non-break times.  

*       While coffee clubs are not encouraged in state owned or occupied buildings, any products coffee related products used in these clubs must be purchased from the BEP facility.  Funds are collected are not to exceed the cost for the products purchased.  

*       No revenues can be generated from the sale of any food or beverage (i.e., concessions) in state owned or occupied buildings outside of the licensed BEP facility.  

Public Act 260 was developed to give Michigan’s blind citizens the opportunity to earn a living permitting them to support themselves and their family.  Public Act 260 was not meant to discourage state employees from personal choice in the concessions they enjoy.  Certainly, state employees may purchase any foods outside of their facility from any source they like provided they are purchased with personal funds.  Correspondingly, a group of employees may order foods together without exclusively using the BEP facility so long as personal funds are used.  Pot luck meals are permitted in state buildings as long as no donations are gathered.  These examples are not meant to be an all inclusive list, but rather serve as a guideline to assist state employees in complying with Public Act 260.  

If you have any questions or require further information, you are encouraged to contact either the licensed BEP operator in your building or contact the Business Enterprise Program at (800)292-4200 or at BEPe-mail at michigan.gov.

A clear knowledge of Public Act 260 is essential. The outcome of events using food concessions directly affects the livelihood of our BEP operators.  It also creates a reduction in the set aside fund, which in turn helps to pay for the program. Understanding PA 260 will not only help the Commission for the Blind operate the program, but it will give State buildings the food service venues that they deserve. 

Patrick D. Cannon

State Director

Michigan Commission for the Blind

Department of Energy, Labor and Economic Growth

201. N. Washington Square

P.O. Box 30652

Lansing, MI  48909

517-335-4265  phone

517-335-5140  fax

cannonp at michigan.gov

michigan.gov/mcb

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