STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6414

January 7, 1987

ENERGY CONSERVATION:

MANAGEMENT AND BUDGET, STATE DEPARTMENT OF:

Improvements to state facilities

Energy conservation improvements

The Legislature has not authorized the Department of Management and Budget to enter into long-term contracts for energy conservation improvements to state facilities to be paid for from the avoided operating costs for utility service or fuel produced by the improvements.

Robert H. Naftaly

Director

Department of Management and Budget

Lewis Cass Building

Lansing, Michigan 48909

You have requested my opinion on whether the Department of Management and Budget is empowered to enter into long-term contracts for energy conservation capital improvements to state facilities, which would be paid for from the avoided operating costs for utility service or fuel produced by the improvements.

In 1984 the Legislature enacted the Management and Budget Act, 1984 PA 431, MCL 18.1101 et seq; MSA 3.516(101) et seq, which prescribes the power and duties of the Department of Management and Budget (Department). The same Legislature also enacted legislation which authorize counties, 1984 PA 400, MCL 46.11c; MSA 5.332(2), cities, 1984 PA 401, MCL 117.5f; MSA 5.2084(6), certain villages, 1984 PA 402, MCL 68.36; MSA 5.1370(6), townships, 1984 PA 403, MCL 41.75b; MSA 5.67(2), and other villages, 1984 PA 404, MCL 78.24b; MSA 5.1534(2), to contract for energy conservation capital improvements to municipal facilities and to pay for these improvements from energy conservation savings.

The provisions of the Management and Budget Act applicable to the construction, improvement and remodeling of state facilities, as defined in MCL 18.1114; MSA 3.516(114), are found in sections 237 through 249, MCL 18.1237-18.1249; MSA 3.516(237)-3.516(249). A significant number of these provisions apply only to construction, improvement and remodeling of facilities financed by capital outlay appropriations, general fund appropriations or by the State Building Authority. Other provisions which are relevant to the improvement and remodeling of state facilities are set forth hereinbelow.

MCL 18.1237; MSA 3.516(237), provides, in pertinent part:

MCL 18.1239; MSA 3.516(239), provides, in pertinent part:

MCL 18.1241(1); MSA 3.516(241)(1), provides, in pertinent part:

None of the above-quoted provisions specifically authorize the Department of Management and Budget to enter into long-term contracts for energy conservation capital improvements to state facilities which would be paid for from the avoided operating costs. The Department of Management and Budget has issued no directive or bidding procedures approved by the State Administrative Board specifically concerning such contracts.

The Department is a creature of the Legislature and it is a basic principle of statutory construction that when the Legislature enumerates the powers granted by statute to its creature, the powers not enumerated must be deemed to be withheld. Sebewaing Industries, Inc v Village of Sebewaing, 337 Mich 530, 545; 60 NW2d 444 (1953). The Management and Budget Act does not authorize the Department to enter into long-term contracts for energy conservation capital improvements to state facilities which would be paid for from the avoided operating costs for fuel or utility service produced by the improvements as 1984 PA 400, 401, 402, 403 and 404, enacted at the same time as the Management and Budget Act, do for municipal corporations.

It is assumed that the Legislature in framing and passing 1984 PA 431, the Management and Budget Act, 1984 PA 400, supra, 1984 PA 401, supra, 1984 PA 402, supra, 1984 PA 403, supra, and 1984 PA 404, supra, "had full knowledge of the provisions of each." Reichert v Peoples State Bank for Savings, 265 Mich 668, 672; 252 NW 484 (1934). It must be concluded that the Legislature has not seen fit to confer such authority upon the Department.

It is not possible from the information provided, and in the absence of a statute proporting to confer such authority in the Department, to determine whether this "new financing strategy" would constitute a long term debt in violation of Const 1963, art 9, Sec. 15. However, the Department of Management and Budget's standard practice of including a nonappropriation clause in long-term contracts is normally sufficient to avoid a violation of Const 1963, art 9, Sec. 15. The nonappropriation clause provides for the termination of the long-term contract and the state's liability for future payments, when the Legislature does not appropriate funds for such payments or specifically prohibits the use of appropriated funds for such payments in a future appropriation act. With this provision, the monthly payments are not an unconditional obligation constituting debt in violation of Const 1963, art 9, Sec. 15.

It is noted that the capital outlay appropriation act, 1984 PA 245, Sec. 1, contains an appropriation of $1,000,000 for energy conservation projects in state buildings and facilities. Thus, the Legislature intended that these improvements be made with appropriated funds only.

It is my opinion, therefore, that the Legislature has not authorized the Department of Management and Budget to enter into long-term contracts for energy conservation capital improvements to state facilities, which are to be paid for from the avoid operating costs for utility service or fuel produced by the improvements.

Frank J. Kelley

Attorney General