HB-6033, As Passed House, December 3, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 6033

A bill to amend 1968 PA 251, entitled

"Cemetery regulation act,"

by amending the title and sections 2, 2a, 8, 9, 10, 12, 12a, 13,

15, 16, 18, 19, and 21 (MCL 456.522, 456.522a, 456.528, 456.529,

456.530, 456.532, 456.532a, 456.533, 456.535, 456.536, 456.538,

456.539, and 456.541), the title and sections 2, 8, 9, 10, 12, 12a,

13, 15, 16, 18, 19, and 21 as amended by 2004 PA 22 and section 2a

as added by 1982 PA 132, and by adding sections 9a, 9b, 9c, and

16b; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to regulate the creation, ownership, and management of

cemeteries; to provide for a cemetery commissioner , and to

prescribe the powers and duties of the commissioner; to require the

registration, investigation, and audit of cemeteries and licensure

of cemetery owners; to provide for long-term care of certain

cemeteries; to regulate persons selling burial, entombment, or

columbarium rights and certain merchandise; to provide for immunity

and indemnification to certain persons under certain circumstances;

and to prescribe civil and administrative remedies and penalties.

Sec. 2. As used in this act:

(a) "Cemetery" means 1 or a combination of more than 1 of the

following:

(i) A burial ground for earth interments.

(ii) A mausoleum for crypt entombments.

(iii) A crematory for the cremation for human remains.

(iv) A columbarium for the inurnment of cremated remains.

(b) "Interment" means the disposition of human remains by

earth interment, entombment, or inurnment.

(d) "Entombment right" means the right of crypt entombment in

a mausoleum or in an aboveground vault.

(e) "Columbarium right" means the right of inurnment in a

columbarium for cremated remains.

(f) "Mausoleum" means a building or other aboveground

structure that is affixed to land and is a permanent repository for

human remains.

(g) "Crypt" means a chamber in a mausoleum of sufficient size

to entomb the uncremated remains of a deceased person.

(h) "Columbarium" means a building or other aboveground

structure that is affixed to land and is a permanent repository for

cremated human remains.

(i) "Crematory" means a building or structure, within which

the remains of deceased persons are or are intended to be cremated.

(j) "Cremation" means the incineration of the body of the

deceased person.

(k) "Cemetery commissioner" or "commissioner" means the

director of the department of labor and economic growth or a

designee of the director.

(l) "Municipal corporation" means ~~that term as defined in~~

~~section 1 of 1927 PA 10, MCL 456.181~~ a county, city, village, or

township.

(m) "Person" means an individual, group of individuals, sole

proprietorship, partnership, limited liability company,

association, corporation, government agency, cemetery, or a

combination of these legal entities.

(n) "Endowment care" and "perpetual care" mean all general

work necessary to keep the cemetery property in a presentable

condition at all times, including, but not limited to, the cutting

of grass at reasonable intervals; raking, cleaning, filling,

seeding, and sodding of graves; replacement, pruning, or removal of

shrubs and trees in order to assure access to interment rights; and

the repair and maintenance of enclosures, buildings, drives, walks,

and the various memorial gardens.

(o) "Good moral character" means that term as defined and

determined under 1974 PA 381, MCL 338.41 to 338.47.

(p) "Licensee" means a person licensed under this act.

(q) "Cemetery owner" or "owner" means the person who has title

to the cemetery.

(r) "A person directly or indirectly controlling the cemetery

owner" means any of the following:

(i) A person, an officer of a person, a partner of a person, or

a member or manager of a limited liability company, who holds more

than 50% voting rights in a cemetery owner.

(ii) A person who is a member of the board of directors of a

cemetery owner, a partner in a cemetery owner, or a member or

manager of a limited liability company that is a cemetery owner.

(iii) An administrative official of the cemetery owner or the

person described in subparagraph (i), comparable to a chief

administrative officer, chief executive officer, or chief financial

officer.

Sec. 2a. The cemetery commissioner, or the commissioner's

spouse or child, shall not have a direct or indirect financial

interest in a cemetery, cemetery operations, a supplier of cemetery

services or cemetery memorials, or a funeral establishment as

defined in section 1801 of ~~Act No. 299 of the Public Acts of 1980,~~

~~being section 339.1801 of the Michigan Compiled Laws~~ the

occupational code, 1980 PA 299, MCL 339.1801.

Sec. 8. The commissioner may promulgate rules ~~in accordance~~

~~with and subject to~~ under the administrative procedures act of

1969, 1969 PA 306, MCL 24.201 to 24.328, to implement and

administer this act, including, but not limited to, rules regarding

all of the following:

(a) The maintenance of records relative to the financial

aspects of cemeteries.

(b) Requirements for applications for the granting of

licenses, permits, and registrations required under this act,

including, but not limited to, the good moral character and

financial security and stability, and responsibility, of the actual

or proposed person directly or indirectly controlling the cemetery

owner.

of contested cases under this act before the commissioner or an

~~authorized~~ a hearing officer designated by the commissioner.

(d) Requirements for trust agreements under this act.

(e) The establishment, control, record keeping, and auditing

of endowment care trust or perpetual care trust funds under this

act, merchandise trust accounts, merchandise escrow accounts,

special construction trust funds, cemetery development funds, and

funds regulated under the prepaid funeral and cemetery sales act,

1986 PA 255, MCL 328.211 to 328.235.

(f) The provision of perpetual care.

Sec. 9. (1) The commissioner may hold hearings, conduct

investigations, administer oaths, take testimony under oath, and

request in writing the appearance and testimony of witnesses,

including the production of books and records. ~~Upon the refusal of~~

~~a witness to appear, testify, or submit books and records after a~~

~~written request, the commissioner or a party to a contested case~~

~~may apply to the circuit court for Ingham county for a subpoena or~~

~~a subpoena duces tecum. The court shall issue a subpoena when~~

~~reasonable grounds are shown.~~

(2) In furtherance of the commissioner's investigative powers,

the commissioner may petition the Ingham county circuit court or

another court of competent jurisdiction to issue a subpoena or

subpoena duces tecum requiring a person to appear before the

commissioner, or a designee, in reference to a matter within the

scope of an investigation. The commissioner may further petition

the court for an order to compel compliance or an order of contempt

or any other appropriate order in connection with any person's

refusal or neglect to comply with a subpoena.

(3) In furtherance of a hearing or other administrative

proceeding held under this act, the commissioner may issue a

subpoena to require a person to appear or testify or produce

relevant documentary material for examination at the hearing or

proceeding. The commissioner may petition the Ingham county circuit

court or another court of competent jurisdiction for an order to

compel compliance or any other appropriate order in connection with

any person’s refusal or neglect to appear at the hearing or

proceeding after being subpoenaed. If a person fails to appear,

refuses to testify, or refuses to produce documents after an order

is entered by the court, any failure to obey the order may be

punishable by the court as contempt.

(4) The commissioner may do the following:

(a) Conduct investigations reasonable and necessary to

determine whether any person has violated or is about to violate

any provision of this act or any rule promulgated or order issued

under this act.

(b) Require or allow a person to file a statement in writing,

under oath or otherwise as the commissioner determines, as to the

facts and circumstances concerning the matter investigated.

(5) The commissioner shall have the authority to control,

manage, and dispose of or transfer an abandoned cemetery, or to

require acceptance of responsibility for an abandoned cemetery,

according to law. The commissioner may promulgate rules that are

necessary to carry out his or her powers and duties under this

subsection.

(6) For the purpose of any investigation or proceeding under

this act, an authorized employee or agent of the department, who is

an attorney, may represent the commissioner or the department in

such investigation or proceeding brought under this act.

(7) Any person required by this act to take any oath or

affirmation and who makes any false oath or affirmation is

considered to have committed perjury.

(8) ~~(2)~~ When it reasonably appears to the commissioner that a

person ~~or registrant~~ has ~~violated~~ engaged in, or is about to engage

in, any act or practice constituting a violation of this act or a

rule promulgated or order issued under this act, the commissioner

may do 1 or more of the following:

(a) Issue a cease and desist order. A person ordered to cease

and desist is entitled to a hearing before the commissioner or a

hearing officer designated by the commissioner if a written request

for a hearing is filed within 30 days after the effective date of

the order. At the option of the affected person, the hearing shall

be held within 30 days after the written request.

(b) After an investigation, issue a formal complaint or an

order, placing a limitation on the use of a license, registration

or permit.

violation.

(d) ~~(c)~~ Bring an action in the circuit court for the county in

which the person resides or has its principal place of business, or

in the circuit court for the county of Ingham, to enforce

compliance with this act or a rule promulgated or order issued

under this act.

(e) Assess administrative fines under section 18 after a

contested case hearing is held resulting in findings of a violation

of this act or a rule promulgated or order issued under this act.

(f) Issue an order to replenish a deficit in trust fund

accounts.

(g) Issue an order prohibiting the withdrawal or transfer of

any trust fund money.

(9) In connection with subsection (8)(b), (e), (f), or (g),

the commissioner shall provide the respondent with an opportunity

to meet and confer with a designated department employee to allow

the respondent to show compliance with this act or a rule

promulgated or order issued under this act prior to a contested

case hearing. The respondent must elect and request a conference

within 15 days after the issuance of an order or a notice of intent

to conduct a contested case hearing. Settlement discussions may

take place at a conference subject to final approval of the

commissioner.

(10) ~~(3) Upon a proper showing regarding~~ In connection with an

action brought under subsection ~~(2)(c), a permanent or temporary~~

~~injunction or a restraining order may be granted and~~ (8)(d), the

court may grant injunctive relief and may appoint a receiver or

conservator ~~may be appointed by the court~~ over a cemetery, cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order and who is the

subject of the action. Notwithstanding the provision of any other

statute to the contrary, the qualifications of the receiver or

conservator shall be determined by the court after recommendations

by the commissioner. A receiver or conservator appointed by the

court may operate the cemetery and take possession of the assets,

including all trust accounts of the cemetery, cemetery owner, or

other person who actively participated in, and benefited from, the

violation of this act, rule, or order and who is the subject of the

action, and may sell, assign, transfer, or convey the assets of a

cemetery, ~~including a cemetery in receivership on the July 26, 2002~~

~~date of the amendatory act that amended this subsection,~~ cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order, and who is the

subject of the action, to a municipal corporation or other person

other than the holder of a license for the practice of mortuary

science or a person who owns, manages, supervises, operates, or

maintains, either directly or indirectly, a funeral establishment,

under conditions prescribed by the court, in order to discharge

outstanding contractual obligations. A receiver or conservator

appointed under this section has all the powers, authority, and

remedies of an assignee for the benefit of creditors under chapter

52 of the revised judicature act of 1961, 1961 PA 236, MCL 600.5201

to 600.5265. The court may allow the receiver or conservator to

file for protection under the bankruptcy code. A receiver or

conservator appointed by the court may be an employee of the state

or may be some other competent and disinterested person and shall

receive compensation from the cemetery as determined by the court.

All expenses of a conservatorship shall be paid out of the assets

of the cemetery or cemetery entity upon approval by the

commissioner. The expenses shall be a first charge upon the assets

of the cemetery or cemetery entity and shall be fully paid before

any final distribution or payment of dividends is made to creditors

or shareholders. All compensation and expenses required to be

reimbursed to the commissioner in connection with a conservatorship

and all expenses for state supervision of conservatorships under

this act shall be deposited in the state treasury in a designated

fund for the administration of this act.

(11) Subject to court approval, a receiver or conservator

appointed under this act may do any of the following:

(a) Take possession of the books, records, and assets of the

cemetery, cemetery owner, or other person who actively participated

in, and benefited from, the violation of this act, rule, or order

and who is the subject of an action under subsection (8)(d).

(b) Employ employees and agents, legal counsel, actuaries,

accountants, appraisers, consultants, and such other personnel as

he or she considers necessary.

legal counsel, actuaries, accountants, appraisers, and consultants.

(d) Collect all debts and money due or claims belonging to the

cemetery, cemetery owner, or other person who actively participated

in, and benefited from, the violation of this act, rule, or order

and who is the subject of an action under subsection (8)(d).

(e) Sue, defend, compromise, and settle all debts and money

due or claims involving the cemetery, cemetery owner, or other

person who actively participated in, and benefited from, the

violation of this act, rule, or order and who is the subject of an

action under subsection (8)(d).

(f) Sell any and all real and personal property.

(g) Borrow money on the security of the assets of the

cemetery, cemetery owner, or other person who actively participated

in, and benefited from, the violation of this act, rule, or order

and who is the subject of the action under subsection (8)(d) or

borrow money without security and execute and deliver all documents

necessary for that transaction.

(h) Exercise all fiduciary functions of the cemetery, cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order and who is the

subject of the action under subsection (8)(d) as of the date of the

commencement of the receivership or conservatorship.

(i) Exercise other powers and duties as may be provided by the

court under the laws of this state applicable to the appointment of

receivers or conservators.

(j) Pay all expenses of the receivership or conservatorship,

including any expenses incurred by the state of Michigan, which

expenses shall be a first charge upon the assets of the cemetery,

cemetery owner, or other person who actively participated in, and

benefited from, the violation of this act, rule, or order and who

is the subject of the action under subsection (8)(d), and be fully

paid before any final distribution or payment to creditors,

shareholders, or investors.

(k) Pay pro rata any and all debts of the cemetery, cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order and who is the

subject of the action under subsection (8)(d), except that debts

not exceeding $50.00 in amount may be paid in full, without

interest.

(l) Borrow money as necessary or expedient in aiding the

liquidation of the cemetery, cemetery owner, or other person who

actively participated in, and benefited from, the violation of this

act, rule, or order and who is the subject of the action under

subsection (8)(d), and secure the borrowings by the pledge,

hypothecation, or mortgage of assets of the cemetery, cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order and who is the

subject of the action under subsection (8)(d).

(m) Use assets of the cemetery, cemetery owner, or other

person who actively participated in, and benefited from, the

violation of this act, rule, or order and who is the subject of the

action pursuant to subsection (8)(d) under a liquidation order to

transfer obligations.

(n) Enter into contracts necessary to carry out the order to

liquidate and affirm or disavow any contracts to which the

cemetery, cemetery owner, or other person who actively participated

in, and benefited from, the violation of this act, rule, or order

and who is the subject of the action is a party.

(o) Delay the sale of the assets of the cemetery, cemetery

owner, or other person who actively participated in, and benefited

from, the violation of this act, rule, or order and who is the

subject of the action under subsection (8)(d) if the receiver or

conservator determines a delay in the sale would be prudent in

order to obtain a more favorable rate of return on the sale of the

assets.

(p) Report to the commissioner at time intervals requested by

the commissioner with respect to all of his or her acts and

proceedings in connection with the receivership or conservatorship.

(q) Other reasonable and necessary actions and powers

permitted by law.

(12) ~~(4)~~ In the order of sale of the cemetery, the court shall

make provision for notice to creditors and the filing of claims

against the receivership or conservatorship. ~~Any remaining funds~~

Funds held by in trust or escrow for the cemetery ~~in escrow under~~

~~this act belong to the contract buyers or beneficiaries of the~~

~~contract buyers and~~ by the cemetery owner, trustee, or custodian of

those funds shall not be distributed to the general creditors of

the cemetery owner. This section does not prohibit the court from

allowing the sale of the cemetery to a person other than the holder

of a license for the practice of mortuary science or a person who

owns, manages, supervises, operates, or maintains, either directly

or indirectly, a funeral establishment, or from allowing the sale

of the cemetery to a municipal corporation.

(13) ~~(5)~~ In addition to an action taken under this section,

the commissioner may deny an application or may suspend or revoke a

license, permit, or registration after a an administrative hearing

as ~~set forth~~ provided for in ~~this act~~ section 19.

(14) If it appears from an audit or other investigation made

by the commissioner under this act, or from a report made to the

commissioner, that a crime has been committed in violation of a

provision of this act or other law of the state, the commissioner

shall immediately report the crime to the attorney general or the

proper prosecuting attorney in writing, and the attorney general or

prosecuting attorney shall take such action on the report as the

facts warrant.

Sec. 9a. All departments, state agencies, public bodies

corporate, committees, commissioners, or officers of this state,

and any political subdivision of this state, so far as is

compatible with their duties, shall give the commissioner or his or

her designee any necessary assistance required by the commissioner

in the performance of the duties of the commissioner. All

departments, state agencies, public bodies corporate, committees,

commissioners, or officers of this state, and any political

subdivision of this state, shall provide the commissioner free

access to any book, record, or document in their custody relating

to the matters within the scope of the commissioner in the

performance of his or her duties.

Sec. 9b. (1) The commissioner may appoint deputy commissioners

or assistants to perform any duty, act, or function or to take

charge during the commissioner's absence, including the following

distinct activities:

(a) Audit.

(b) Legal affairs.

(d) Investigation.

(2) The commissioner may appoint and employ accountants,

auditors, appraisers, and other necessary assistants or support

staff. The commissioner may designate special deputies from

available personnel to perform specified duties, including

supervision of office operations during the absence of the

commissioner and deputy commissioners.

(3) The commissioner may enter into contracts to accomplish

requirements under this act, including for the engagement of

consultants.

(4) The commissioner may select and appoint a receiver or

conservator in the manner provided for in section 9(10), subject to

approval by a court of competent jurisdiction.

(5) The commissioner may revoke appointments, designations,

and delegations of authority made pursuant to this section, at his

or her discretion. Appointees and designees provided for in this

section shall be paid in the manner prescribed by law or civil

service classification.

Sec. 9c. (1) The commissioner or his or her representatives

are immune from civil liability, both personally and

professionally, for any of their acts or omissions if the following

conditions are met:

(a) The commissioner or his or her representatives acted, or

reasonably believed he or she acted, within the scope of his or her

authority.

(b) The commissioner's or his or her representatives' conduct

did not amount to gross negligence that was the proximate cause of

the injury or damages suffered.

(2) The commissioner or his or her representatives shall not

be personally liable for the acts or omissions of others, unless

the conditions contained in subsection (1) are not met.

(3) Except as otherwise provided in this section, defense and

indemnification of the commissioner or his or her representatives

for an act or omission under this act shall be conducted in

accordance with 1964 PA 170, MCL 691.1401 to 691.1419.

(4) If a claim is made or a civil action is commenced against

the commissioner or his or her representatives, either personally

or professionally, for an act or omission occurring within the

course of employment as it pertains to this act, or any successor

act, legal representation shall be provided by the attorney general

or a special assistant attorney general appointed to provide such

representation, unless the conditions contained in subsection (1)

are not met.

(5) If a judgment is awarded or a settlement is entered into

in a civil action against the commissioner or his or her

representatives for an act or omission pertaining to this act, or

any successor act, the state shall indemnify the commissioner or

his or her representatives, unless the conditions contained in

subsection (1) are not met.

(6) This section does not apply to those persons appointed on

a contractual basis as a conservator, receiver, consultant,

attorney, or appraiser, or acting as the commissioner's agent

pursuant to a contractual agreement.

(7) As used in this section:

(a) "Gross negligence" means conduct so reckless as to

demonstrate substantial lack of concern for whether injury results.

(b) "Representative" means any employee assigned by, or under

the supervision of, the commissioner or any person exercising power

delegated by the commissioner in accordance with this act, but does

not include accountants, consultants, conservators, receivers,

appraisers, or attorneys retained as independent contractors and

acting in their professional capacity.

Sec. 10. (1) The commissioner shall institute and maintain a

system of auditing trust funds required by this act, of licensing

cemetery owners, and of registering each cemetery authorized to be

created, maintained, and operated ~~under 1869 PA 12, MCL 456.101 to~~

~~456.119, and 1855 PA 87, MCL 456.1 to 456.36~~ in this state, and

conducting sales under the prepaid funeral and cemetery sales act,

1986 PA 255, MCL 328.211 to 328.235, as well as any other cemetery

operating under state law or local ordinance. A cemetery owned and

operated by a municipal corporation, church, or religious

institution is exempt from this act. However, a municipal

corporation may pass ordinances necessary for regulating that

municipal corporation's cemeteries.

(2) A cemetery for earth interment of 10 acres or less in

size, which is owned and operated entirely and exclusively by an

existing nonprofit entity and in which a burial has taken place

before September 15, 1968, is exempt from the fee provisions of

this act, shall have the trust fund required by this act audited at

the discretion of the commissioner, and is exempt from the

endowment care trust fund requirements of section 16, except for

the report requirements if the cemetery maintains endowment or

perpetual care ~~or memorial~~ trust funds.

Sec. 12. (1) A person shall not establish a cemetery without a

valid permit ~~or operate~~ and shall not own an existing cemetery

except under a valid ~~registration~~ license issued under this act and

a registration for each cemetery.

(2) If a person proposes to purchase or otherwise acquire a

controlling interest in regarding an existing cemetery ~~company~~ or

cemetery owner, that person shall first apply to the commissioner

for a certificate of approval of a proposed change of control ~~of a~~

~~cemetery company~~ or approval as a successor before acquiring a

controlling interest in an existing cemetery or cemetery owner and

before purchasing or otherwise acquiring a cemetery or cemetery

owner. The application shall be in a form approved by the

commissioner and contain the following:

(a) The name and address of the proposed new owner. or

~~operator and~~

(b) The name and address of the proposed successor.

liabilities related to the cemetery, including all trust accounts

and the value of the trust accounts.

(d) Sworn statements from both the seller and the purchaser

stating who will assume the assets and liabilities related to the

cemetery.

(e) A sworn statement from the purchaser that the principal

from the endowment care trust or perpetual care trust accounts will

be held in escrow for 6 months from the later of the following:

(i) The commissioner's approval of the application.

(ii) The close of the sale of a controlling interest in the

cemetery owner or the sale of a substantial portion of the assets

of the cemetery owner.

(iii) The transfer of title of the cemetery.

(f) Proof that the proposed new owner has, or will have, title

to the cemetery or, if leased pursuant to section 2 of 1855 PA 87,

MCL 456.2, a copy of the lease.

(g) The name and address of the trustees and consent to

service of process for the trustees.

(h) A $1,500.00 nonrefundable processing and investigation

fee.

(i) Any other information as the commissioner requires.

(3) The commissioner shall issue a certificate of approval for

a change of control or the issuance of a license to a successor

only after he or she is satisfied that the proposed new owner or

successor is qualified by good moral character, experience, and

financial security and stability, and responsibility to control and

operate the cemetery in a legal and proper manner, and that the

interest of the public generally will not be jeopardized by the

proposed change in ownership and management. ~~The application for a~~

~~purchase or change of control must be accompanied by an initial~~

~~filing or investigation fee of $500.00.~~

(4) if the applicant is not an individual, the investigation

described in subsection (3) may be made of any person directly or

indirectly controlling the cemetery owner. The investigation

described in subsection (3) may be made of any proposed trustees of

funds regulated under this act for the purpose of determining past

criminal activity and compliance with this act, related acts, rule,

or order and any similar relevant information.

(5) ~~If a person fails to comply with this section, the~~

~~commissioner shall order that an administrative hearing be held.~~ If

a transfer of controlling interest is found to have taken place

without prior commissioner approval, the commissioner may ~~suspend~~

do any of the following:

(a) Suspend or revoke the license of the cemetery owner or

registration of the cemetery, or ~~take~~ both.

(b) Issue a cease and desist order or other order requiring a

person to immediately take curative or remedial action.

competent jurisdiction.

(d) Take other appropriate action ~~until it demonstrates~~

~~compliance with this section~~ authorized under this act.

(6) ~~(3)~~ As used in this section, "controlling interest" means

the capability to decide the operating and financial policies of

the cemetery ~~company~~ owner or to select the officers or directors

with majority control of the cemetery ~~company~~ owner.

Sec. 12a. (1) The commissioner or an examiner, investigator,

or other person the commissioner may appoint, may visit and examine

the affairs of any of the following:

(a) A cemetery or ~~person required to register under~~ cemetery

owner subject to this act. ~~and~~

(b) Trustees of funds regulated under this act as they pertain

to cemetery trust funds.

(2) The commissioner shall have free access to the books,

papers, records, and documents that relate to the business of the

cemetery ~~corporation,~~ or cemetery owner or person, or agent, or

trustee acting on its behalf for matters related to this act.

~~(2)~~ The books, papers, records, and documents shall be

available for inspection or audit at any time during regular

business hours with reasonable notice. One or more qualified

persons designated by the commissioner shall conduct the audit,

whose services shall be charged to and paid by the cemetery owner

at the rate ~~of $10.00 per hour, but not more than $1,000.00 total~~

determined by the commissioner, not to exceed the actual cost of

the inspection or audit.

Sec. 13. (1) Any person desiring to establish a cemetery shall

file with the commissioner, on forms furnished by the commissioner,

an application for a permit to establish a cemetery. The

application shall be accompanied by an a nonrefundable

investigation fee of ~~$500.00~~ $1,500.00.

(2) After a receipt of an application, the commissioner shall

conduct an investigation pertaining to the physical plans, the

community need for the planned cemetery, and pertinent information

pertaining to the applicant's experience, financial ~~stability,~~

security and stability, responsibility, ability, ~~and~~ integrity, and

good moral character, and the source, nature, and amount of

consideration to be used in the purchase of the cemetery. If the

applicant is not ~~a natural person~~ an individual, the same

investigation shall be made of ~~the general manager and principal~~

~~owners~~ any person directly or indirectly controlling the cemetery

owner. An investigation may be made of any proposed trustees of

funds regulated under this act for the purpose of determining past

criminal activity and compliance with this act, related act, rule,

or order, and any similar relevant information.

Sec. 15. (1) Each ~~person operating a cemetery~~ licensee shall

a registration application ~~before June 2 of each year,~~ on a form

furnished by the commissioner , and accompanied by the registration

fee. ~~A registration expires on July 1 of each year.~~

~~(2) If the commissioner intends to deny registration, the~~

~~procedure set forth in section 19 shall be followed. The~~

~~commissioner may impose a late penalty filing fee of $10.00 per day~~

~~on a person which filed a registration application after June 1.~~

(2) A license and registration issued under this act expires

on July 1 of each year and shall be renewed annually unless the

commissioner determines that, under the provisions of this act, the

cemetery owner does not qualify for licensure or that the cemetery

does not qualify for registration.

(3) The commissioner shall charge an annual fee of $100.00 per

year for each cemetery registered. Not less than 90 days before the

expiration date of the license and registration, the commissioner

shall mail a renewal application to each licensee, together with a

notice advising of the time and procedures for renewal of the

license and registration. The commissioner may impose a late

penalty filing fee of $25.00 per day on a licensee which filed a

renewal application after June 1.

(4) If the name of the cemetery is different from the name of

the cemetery owner, the cemetery shall submit a copy of the

certificate of assumed name to the commissioner. A cemetery owner

may transact business under an assumed name after the certificate

has been filed with the appropriate filing official and a copy

submitted to the commissioner.

Sec. 16. (1) ~~The commissioner shall require each~~ Each cemetery

to owner shall establish and maintain an irrevocable endowment care

trust fund or perpetual care trust fund ~~as required by section 35a~~

~~of 1855 PA 87, MCL 456.35a, or section 7a of 1869 PA 12, MCL~~

~~456.107a, and to~~ for each cemetery under its ownership or control,

the income or proceeds from which shall be perpetually devoted for

endowment care or perpetual care of that particular cemetery. Each

cemetery owner shall report annually before July 1 of each year, on

forms approved and furnished by the commissioner, care fund

information required to be reported to the commissioner by this

act, other statutes, and information regarding the funds as the

commissioner considers pertinent in the public interest. ~~A cemetery~~

~~applying to the commissioner as authorized by other statutes for a~~

~~care fund deposit modification or waiver shall be assessed the~~

~~actual expenses for an examination or investigation by the~~

~~commissioner. The commissioner shall require each~~ The report shall

be certified to by the cemetery owner and the trustees of funds.

Financial information for the cemetery owner or trustees not

related to the cemetery or cemetery operations is exempt from

disclosure under the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246.

(2) All records pertinent to the maintenance, establishment,

and reporting of a cemetery owner’s required trust funds shall be

available for inspection by the commissioner at the cemetery

owner’s registered office in Michigan or at another Michigan

location on file with the department. The commissioner shall be

immediately notified of any change in the location of the records.

(3) An irrevocable endowment care trust fund or perpetual care

trust fund shall be created by the deposit of at least $75,000.00

into the fund before any sale of burial rights, entombment rights,

or columbarium rights is made.

(4) Each month, the cemetery owner shall add to the endowment

care trust or perpetual care trust fund for each cemetery by

payment of not less than 15% of all proceeds received during the

previous month from the sales of burial rights, entombment rights,

or columbarium rights. No total deposit for a single adult burial

right sale or assignment shall be less than $20.00. Excess sums on

deposit in the fund can be applied by a cemetery owner against

future deposits, but shall not be withdrawn.

(5) Each person engaged as agent or seller, as a means of

livelihood either part time or full time, in the selling of burial

rights, entombment rights, or columbarium rights owned by a party

other than a cemetery owner or ~~corporation~~ other person subject to

the irrevocable endowment care or perpetual care trust fund

requirements of this act and other laws, to shall deposit 15% of

all gross proceeds received from the sales of those rights into the

irrevocable endowment care or perpetual care trust fund of the

cemetery in which the rights are located if an irrevocable

endowment care or perpetual care trust fund exists for that

cemetery. ~~Excess sums on deposit in the fund can be applied by a~~

~~cemetery against future deposits.~~ The total deposit for a single

adult burial, entombment, or columbarium right sale or assignment

shall be not less than $20.00.

(6) Notwithstanding the minimum amount required to be paid

into the irrevocable endowment care trust or perpetual care trust

fund from the proceeds of sales of lots or burial rights, the owner

of any cemetery that has an irrevocable endowment care trust or

perpetual care trust fund of more than $750,000.00 and exceeding

$60,000.00 per acre of the developed portion of the cemetery may

apply to the commissioner for a waiver of the 15% or $20.00 minimum

requirement for future contributions. A cemetery owner applying to

the commissioner as authorized by this act and other statutes for

an irrevocable endowment care trust or perpetual care trust fund

deposit modification or waiver shall be assessed the actual

expenses for an examination or investigation by the commissioner.

The commissioner, or his or her designee, may take testimony and

investigate as he or she considers advisable pursuant to the

application for modification or waiver.

(7) A deposit required to be made ~~by those persons~~ pursuant to

subsection (4) shall be modified or waived if the cemetery owner

has received an irrevocable endowment care trust or perpetual care

trust fund deposit modification or waiver approved by the

commissioner. ~~The total deposit for a single adult burial right~~

~~sale or assignment shall not be less than $20.00.~~

(8) ~~(2)~~ Subject to subsection ~~(8)~~ (14), a cemetery ~~which is~~

owner required to ~~register~~ be licensed pursuant to this act ~~and an~~

~~agent which is authorized by a cemetery or acting on its behalf~~

~~under an agreement or sales contract to sell cemetery merchandise~~

~~or cemetery services~~ shall establish a merchandise trust account

for each cemetery and deposit a percentage of the gross proceeds

received from the sales as determined by the commissioner. The

merchandise trust account shall be maintained exclusively for the

deposit of the money into a state or national bank, a state or

federally chartered savings and loan association, or a trust

company under the terms of a written trust agreement approved by

the commissioner. ~~It shall be the responsibility of each registrant~~

~~under this act to assure that documents relating to the merchandise~~

~~trust account are provided to the commissioner upon request. If a~~

~~subpoena is issued to obtain these documents, the registrant shall~~

~~pay all costs related to obtaining the documents regardless of the~~

~~$100.00 charge limitation contained in section 12a(2). The funds~~

~~shall be deposited not later than the month following their~~

~~receipt.~~

(9) ~~(3)~~ Subject to subsection ~~(8)~~ (14), the total deposits to

a merchandise trust for the sale of cemetery burial vaults or other

outside containers, other than crypts installed underground and

sold as part of a cemetery lot, shall at all times be not less than

the greater of $100.00 per vault or outside container or 130% of

the total costs of the containers covered by the trust. Money

deposited in connection with a sale shall be repaid within 30 days

upon written demand of purchaser. A burial vault shall be installed

only at need or by separate written authorization of the purchaser.

The cemetery shall have the right to withdraw the amount on deposit

for the delivered vault or outside container.

(10) ~~(4)~~ Subject to subsection ~~(8)~~ (14), a contract or

agreement made with a purchaser of cemetery merchandise and

cemetery services shall contain a complete description of the

cemetery merchandise purchased and of the cemetery services to be

rendered.

(11) ~~(5) The commissioner shall require each~~ Each cemetery or

~~agent authorized by it acting on its behalf to~~ owner shall report

annually before July 1 of each year on forms provided by the

commissioner. The reports shall contain information as the

commissioner considers necessary to ascertain that the licensee is

complying with this act ~~is being implemented~~ and rules promulgated

under this act. Individual reports shall be submitted for each

cemetery. All documents, reports, and records regarding any trust

accounts required under this act shall be kept at the cemetery

owner’s registered office in Michigan or at another Michigan

location on file with the department. The cemetery owner shall

immediately notify the commissioner of any change in the location

of the records. It is the responsibility of each cemetery owner

required to be licensed under this act to assure that documents

relating to any accounts required under this act are provided to

the commissioner upon request. If a subpoena is issued to obtain

these documents, the cemetery owner shall pay all costs related to

obtaining the documents.

(12) ~~(6)~~ If, after an audit by the commissioner's staff, a

deficit in the amount of required deposits to the trust funds is

found, the commissioner may assess a penalty ~~not to exceed 10% of~~

up to the amount ~~of the deficit~~ allowed under this act. The

cemetery ~~or entity of a cemetery~~ owner may request an

administrative hearing before the commissioner or a hearing officer

designated by the commissioner within 30 days after being notified

~~of a deficit~~ by the commissioner. If, following the administrative

hearing, the commissioner determines that a deficit does exist, an

additional penalty not to exceed 1.5% may be assessed each month on

the unpaid monthly balance until the deficit is paid in full.

(13) ~~(7)~~ All fees, charges, and penalties, or other money from

any source, collected under this act, other than fines prescribed

in section 21, shall be paid to the commissioner and deposited into

the cemetery regulation fund created within the state treasury.

Upon receipt of funds, the commissioner shall remit the funds

~~received~~ to the department of treasury for deposit in the ~~general~~

fund. ~~of the state.~~ The fund shall be used solely by the

commissioner in carrying out requirements of this act. Money

remaining at the end of the fiscal year shall be carried forward to

the next fiscal year and shall not revert to the general fund. Any

interest or earnings from the fund shall be credited to the fund.

The state treasurer shall direct the investment of the fund. The

department of energy, labor, and economic growth shall be the

administrator of the fund for auditing purposes.

(14) ~~(8)~~ Any preneed contracts for cemetery merchandise or

services entered into on or after January 1, 2005 are subject to

the prepaid funeral and cemetery sales act, 1986 PA 255, MCL

328.211 to 328.235.

~~(9) As used in this section, "endowment care" means all~~

~~general work necessary to keep the cemetery property in a~~

~~presentable condition at all times, including, but not limited to,~~

~~the cutting of grass at reasonable intervals; raking, cleaning,~~

~~filling, seeding, and sodding of graves; replacement, pruning, or~~

~~removal of shrubs and trees in order to assure access to interment~~

~~rights; and the repair and maintenance of enclosures, buildings,~~

~~drives, walks, and the various memorial gardens.~~

(15) No portion of the irrevocable endowment care trust or

perpetual care trust funds or merchandise trust funds required to

be set aside under this section shall be used directly or

indirectly for salaries of a person who is a member of the board of

directors of a cemetery owner, a partner in a cemetery owner, or a

member or manager of a limited liability company that is a cemetery

owner, and only the earnings from endowment care trust or perpetual

care trust funds shall be used for endowment care or perpetual

care.

(16) Each trust fund required under this act shall be under

the control of at least 2 trustees. At least 1 of the trustees

shall be a resident of Michigan, and at least 1 of the trustees

shall be licensed in the state of Michigan as a certified public

accountant, attorney, investment advisor, or securities broker or

dealer.

(17) For the purposes of the statutory authorization required

by section 1105(2)(e) of the banking code of 1999, 1999 PA 276, MCL

487.11105, to act as a fiduciary in this state, if the commissioner

approves a profit or nonprofit corporation organized under the laws

of this state or formed in another jurisdiction with a certificate

of authority to transact business in this state to serve in a

fiduciary capacity under this act, the nonbanking corporation is

authorized to act in that fiduciary capacity. The authorization

under this subsection confers the fiduciary capacity only to the

extent necessary regarding the particular approved cemetery and

trust funds and is not a general grant of fiduciary authority. A

nonbanking corporation is not authorized to act in any other

fiduciary capacity.

(18) The commissioner may approve trustees, notwithstanding

the requirements of subsection (16), if an approved surety bond is

placed on file with the commissioner equal to, or greater than, the

sum of the trust money required, or if the total trust money does

not exceed $150,000.00. The commissioner or the attorney general

may prosecute any claim against the bond on behalf of the trust.

(19) The investment of trust assets is subject to the Michigan

prudent investment rule as set forth in sections 1501 to 1511 and

7302 of the estates and protected individuals code, 1998 PA 386,

MCL 700.1501 to 700.1511 and 700.7302, except that an agreement

shall not be amended or modified, as allowed under sections 1502(2)

and 7302 of the estates and protected individuals code, 1998 PA

386, MCL 700.1502 and 700.7302, to provide less than the standard

of care in the prudent investor rule.

Sec. 16b. (1) Bundling of funds held in trust or escrow, for

each cemetery or among cemeteries with common ownership, is

permissible only under the following circumstances:

(a) Each cemetery maintains separate trust and escrow account

records pursuant to statutory and rule requirements for endowed

care, merchandise, or prepaid funeral and cemetery sales.

(b) A cemetery, or cemeteries with common ownership, has all

its trust or escrow accounts on deposit with 1 or more regulated

financial institutions with trust powers in this state.

title in the name of each individual trust or escrow account for

that trust or escrow account assets and the assets are promptly

settled back to the individual accounts by the trustee in the

ordinary course of business.

(2) Notwithstanding subsection (1), other comparable methods

of bundling or pooling of trust or escrow funds for investment

purposes may be permissible upon terms and conditions approved in

writing by the commissioner and only after the commissioner is

reasonably satisfied that the title to, character of, and

accounting for funds held in trust or escrow is preserved.

Sec. 18. (1) The commissioner may deny an application filed

under this act and refuse to issue or renew a permit, license, or

registration, or may suspend or revoke a permit, license, or

registration, or may reprimand, place on probation, or take other

disciplinary action against the applicant if the commissioner's

investigation reveals facts which, with reference to the

establishment of a cemetery, show inappropriate physical plans;

lack of community need; inadequate experience, financial stability,

or integrity to protect the public welfare; or when the

commissioner finds that the applicant or licensee or its officers,

owners, directors, members, or general manager has done 1 or more

of the following:

(a) Made a false statement of a material fact in the

application.

(b) Not complied with this act.

connection with selling or otherwise dealing in cemetery lots and

burial rights regulated by this act or funeral or cemetery

merchandise and services regulated by the prepaid funeral and

cemetery sales act, 1986 PA 255, MCL 328.211 to 328.235.

(d) ~~Been guilty in the judgment of the commissioner of other~~

Demonstrated a lack of good moral character or engaged in conduct,

whether of the same or different character than specified in this

act, ~~which~~ that constitutes dishonest and unfair dealing.

(e) Violated article 18 of the occupational code, 1980 PA 299,

MCL 339.1801 to 339.1812.

(f) Violated the terms of an assurance of discontinuance

entered into with the commissioner pursuant to section ~~9(2)~~ 9(6).

(g) Violated the prepaid funeral and cemetery sales act, 1986

PA 255, MCL 328.211 to 328.235.

(h) Failed to comply with section 2080 of the insurance code

of 1956, 1956 PA 218, MCL 500.2080.

(i) Adopted, enforced, or attempted to enforce a regulation of

the cemetery that prohibits the installation of a grave memorial or

burial vault unless the grave memorial or burial vault was

purchased from the cemetery. This subdivision does not prohibit a

~~cemetery~~ licensee from adopting and enforcing consistent rules and

regulations to be followed by both the cemetery and outside vendors

as to the quality, size, shape, type, installation, and maintenance

of the grave memorial or burial vault.

(2) If the commissioner denies an application for a permit,

license, or registration, or suspends or revokes an existing

permit, license, or registration required by this act, the denial,

revocation, or suspension shall ~~revoke~~ prohibit the ~~cemetery~~

~~operation as to~~ applicant or licensee from conducting cemetery

operations including, but not limited to, the sale or assignment of

burial rights, entombment rights, or columbarium rights, cemetery

merchandise, or cemetery services after the date of the suspension,

revocation, or denial except to the extent expressly permitted in

the order of denial, suspension, or revocation. The ~~corporation~~

cemetery owner shall fulfill all contractual obligations and

agreements entered into before the date of the suspension,

revocation, or denial, and shall make required interments for the

owners of burial rights, entombment rights, or columbarium rights

purchased before the date of suspension, revocation, or denial.

(3) The commissioner may impose an administrative fine of not

more than ~~$5,000.00~~ $10,000.00 for each separate violation of this

act.

Sec. 19. If the commissioner intends to deny, suspend, or

revoke an application for a permit, ~~to establish a cemetery, to~~

~~refuse registration of an existing cemetery, or to suspend or~~

~~revoke a registration~~ license, or registration, the commissioner

shall give written notice to the person involved of that intent.

The notice shall state a time and a place for hearing before the

commissioner or a designated hearing officer, and a summary

statement of the reasons for the proposed action. The notice of

intent shall be mailed by certified mail to the applicant,

licensee, permittee, or registrant at least 15 days before the

scheduled hearing date. The ~~commissioner~~ hearing shall ~~hold a~~

~~hearing~~ be held pursuant to ~~the notice in the manner required by~~

the administrative procedures act of 1969, 1969 PA 306, MCL 24.201

to 24.328, and the rules of procedure adopted by the commissioner.

The commissioner shall issue a written decision.

Sec. 21. (1) A Except as otherwise provided for in subsections

(2) and (3), a person who violates this act is guilty of a

misdemeanor ~~, and, if a natural person, the first offense shall be~~

punishable by a fine of not more than ~~$100.00 or imprisonment for~~

~~not more than 90 days, and a second offense shall be punishable by~~

~~a fine of not more than $500.00 or imprisonment for not more than 1~~

~~year, or both~~ $10,000.00.

(2) If the violator is ~~other than a natural person~~ an

individual, the ~~first~~ offense ~~shall be~~ is punishable by a fine of

not more than ~~$100.00~~ $10,000.00 and ~~the second offense shall be~~

~~punishable by a fine of not more than $1,000.00~~ imprisonment for

not more than 1 year, or both.

(3) A violation of section 18 involving the misuse of trust

accounts is subject to section 180a of the Michigan penal code,

1931 PA 328, MCL 750.180a.

Enacting section 1. Section 11 of the cemetery regulation act,