Michigan Office of Administrative Hearings and Rules  
Administrative Rules Division (ARD)  
MOAHR-Rules@michigan.gov  
REQUEST FOR RULEMAKING (RFR)  
1. Department:  
Licensing and Regulatory Affairs  
2. Bureau:  
Liquor Control Commission  
3. Promulgation type:  
MCL 24.244 (1)  
4. Title of proposed rule set:  
Liquor Control Commission General Rules  
5. Rule numbers or rule set range of numbers:  
R 436.1012  
6. Estimated time frame:  
3 months  
Name of person filling out RFR:  
David Marvin  
Email of person filling out RFR:  
MarvinD@michigan.gov  
Phone number of person filling out RFR:  
517-582-3289  
Address of person filling out RFR:  
7109 W Saginaw Hwy, Lansing, MI 48917  
7. Describe the general purpose of these rules, including any problems the changes are intended  
to address.  
The general purpose of R 436.1012 is to address situations when a liquor licensed business is no  
longer in good standing as a corporation, limited liability company, or limited partnership. The Liquor  
Control Commission wishes to rescind R 436.1012 in its entirety, because it fails to provide due  
process, conflicts with other laws, and is being misused and misapplied.  
8. Please cite the specific promulgation authority for the rules (i.e., department director,  
commission, board, etc.).  
General rulemaking authority is conferred on the Michigan Liquor Control Commission by Section  
215(1) of 1998 PA 58, MCL 436.1215(1)., and Executive Reorganization Order No. 2011-4, MCL  
445.2030.  
A. Please list all applicable statutory references (MCLs, Executive Orders, etc.).  
Section 40 of article IV of the state constitution of 1963, section 201 of the Michigan liquor  
control code of 1998, 1998 PA 58, MCL 436.1201, section 215(1) of the Michigan liquor control  
code of 1998, 1998 PA 58, MCL 436.1215(1) of 1998 PA 58, MCL 436.1215(1), and Executive  
Reorganization Order No. 2011-4, MCL 445.2030.  
B. Are the rules mandated by any applicable constitutional or statutory provision? If so,  
please explain.  
Article IV, Section 40, of the Michigan Constitution (1963), permits the legislature to establish a  
Liquor Control Commission, which shall exercise complete control of the alcoholic beverage  
traffic within this state, including the retail sales thereof, subject to statutory limitations. MCL  
436.1201(2) provides the Commission with the sole right, power, and duty to control the  
alcoholic beverage traffic and traffic in other alcoholic liquor within this state, including the  
MCL 24.239  
RFR-Page 2  
manufacture, importation, possession, transportation, and sale thereof and MCL 436.1215(1)  
provides the Commission with general rulemaking authority.  
9. Please describe the extent to which the rules conflict with or duplicate similar rules,  
compliance requirements, or other standards adopted at the state, regional, or federal level.  
The rule fails to formally provide adequate due process in that it summarily suspends a liquor license  
when the entity is not in good standing. Due process requires an opportunity to be heard at a  
meaningful time and a meaningful place. See Van Slooten v Larsen, 410 Mich 21, 53 (1980). The rule  
also sidesteps the Commission's established hearings and appeals administrative rules which require  
a violation report to be generated following an investigation. After a violation report is submitted, the  
Attorney General's office determines if sufficient evidence exists to support drafting a complaint. The  
rule eliminates this process. Further, the rule conflicts with other statutes that allow a business that is  
not in good standing to continue to operate such as the Michigan Limited Liability Company Act, MCL  
450.4207a(3).  
The rule also contains parts that are unnecessary and confusing. First, the rule fails to define any of  
its key terms. This creates confusion with regulators and licensees alike. For example, the rule fails to  
define what is meant by a "revoked" business. Further, the rules do not specify whether "expired"  
refers to the articles of incorporation, certificate of good standing, or some other shortfall by the  
business.  
The rule confuses what statutes allow. For example, a business entity may renew its existence or  
otherwise be reconstituted in a retroactive manner. If a corporation renews its corporate existence,  
the corporation's rights are as though the expiration had not happened, and the contracts entered into  
during an interval of expiration are valid. MCL 450.1817. Corporations also continue in existence  
even after they are in a dissolved state. Under MCL 450.1833, corporations remain in existence even  
after dissolution so they can wind down their affairs. Additionally, pursuant to MCL 450.1922, a  
corporation has two years and six months to come back into good standing before any dissolution  
occurs.  
10. Is the subject matter of the rules currently contained in any guideline, handbook, manual,  
instructional bulletin, form with instructions, or operational memoranda?  
No.  
11. Are the rules listed on the department’s annual regulatory plan as rules to be processed for  
the current year?  
No.  
12. Will the proposed rules be promulgated under Section 44 of the administrative procedures act  
of 1969, 1969 PA 306, MCL 24.244, or under the full rulemaking process?  
MCL 24.244 (1)  
A. Explain why the rules are being promulgated under 24.244.  
R 436.1012 is obsolete and superseded by section 207a(3) of the Michigan limited liability  
company act, 1992 PA 23, MCL 450.4207a(3) and sections 817, 833, and 922 of the business  
corporation act, 1972 PA 284, MCL 450.1817, MCL 450.1833, and MCL 450.1922, and the  
rescission of R 436.1012 is for the solely formal purpose of removing the conflicts with statutes.  
Based on the information provided in this RFR, MOAHR concludes that there are sufficient policy and legal  
bases for approving the RFR. The RFR satisfies the requirements of the administrative procedures act of  
1969, 1969 PA 306, MCL 24.201 to 24.328, and Executive Reorganization Order No. 2019-1, MCL 324.99923.  
MCL 24.239  
;