SB-0674, As Passed House, December 18, 2008

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 674

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, 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, and

456.541), the title and sections 2, 8, 9, 10, 12, 12a, 13, 15, 16,

18, and 21 as amended by 2004 PA 22 and section 2a as added by 1982

PA 132, and by adding sections 9a, 9b, and 13a; and to repeal acts

and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to regulate the creation and management of cemeteries;

to provide for a cemetery commissioner , and to prescribe the

powers and duties of the commissioner; to require the registration

and audit of cemeteries; to provide ~~for~~ standards regarding the

long-term care of certain cemeteries and trusting of certain funds;

to regulate persons selling burial, entombment, or columbarium

rights and certain merchandise; to provide for qualifications for

owners, operators, employees, and transferees of cemeteries under

certain circumstances; to allow the cemetery commissioner to

conduct certain investigations; and to prescribe administrative and

civil 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) "Endowment and perpetual 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; the raking, cleaning, filling, seeding,

and sodding of graves; the 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.

(m) "Merchandise trust" means trusts required by section 16,

composed of deposits made in connection with merchandise and

service sales made prior to January 1, 2005.

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

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

township.

(o) "Regulated financial institution" means a state or

nationally chartered bank, savings and loan association or savings

bank, credit union, trust company, or other state or federally

chartered lending institution or a regulated affiliate or regulated

subsidiary of any of these entities.

(p) ~~(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.

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

determined under 1974 PA 381, MCL 338.41 to 338.47.

(r) "Cemetery owner" means the person who has title to the

cemetery.

(s) "Operator" 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.

(t) "Affiliated person" means a person directly or indirectly

controlling the cemetery and includes all of the following:

(i) A person who holds at least a 50% interest in a cemetery.

(ii) A person who is a member of the board of directors or 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) A person who is an officer of the person who holds at

least a 10% interest in a cemetery corporation or other entity

having control of the cemetery.

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. (1) The commissioner ~~may~~ shall 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 permits

and registrations required under this act, including, but not

limited to, the good moral character and financial security,

responsibility, and stability of persons having an interest in the

cemetery and all persons with decision-making authority that are

employed by the applicant, registrant, or permittee.

of contested cases under this act before the commissioner or an

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

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

of endowment care trusts, merchandise trust accounts, and related

trust funds.

(e) Requirements for trust agreements, endowment care trusts,

and merchandise trust accounts.

(f) The full disclosure of the source, nature, and amount of

consideration to be used in the sale or transfer of a cemetery.

(g) Submission of annual reports in accordance with section

16(12) and (13), including requests for extensions.

(2) The commissioner shall update any existing rules that must

be changed due to the amendatory act that added this subsection

within 12 months after the effective date of the amendatory act

that added this subsection.

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~~ The commissioner ~~or a party to a contested~~

~~case may apply to~~ may petition the circuit court for Ingham county

for an order to issue, as part of the commissioner's general

investigative and enforcement authority, a subpoena or a subpoena

duces tecum relating to any person's appearance and testimony and

for the production, examination, or copying of books, papers, or

other documents pertaining to an investigation or hearing that is

within the scope of the commissioner's authority under this act.

The court shall issue ~~a subpoena~~ an order for the issuance of

subpoenas when reasonable grounds are shown.

(2) The commissioner has the authority to control, manage, and

dispose of or transfer abandoned cemeteries or to require

acceptance of responsibility for an abandoned cemetery according to

law. The commissioner may promulgate rules that are necessary for

the department to carry out its powers and duties under this

subsection.

(3) Failure to obey a subpoena issued to any person by the

commissioner through an order of the circuit court may subject the

person to punishment by the circuit court as a contempt of court.

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

affirmation and who knowingly makes any false oath or affirmation

is considered to have committed the crime of perjury.

(5) ~~(2)~~ When it 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.

(b) Accept an assurance of discontinuance of the violation.

which the person resides 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.

(6) ~~(3)~~ Upon a proper showing regarding an action brought

under subsection ~~(2)(c)~~ (5)(c), a permanent or temporary injunction

or a restraining order may be granted and a receiver or conservator

may be appointed by the court. A receiver or conservator appointed

Senate Bill No. 674 (H-2) as amended December 18, 2008

by the court shall receive compensation from the cemetery as

determined by the court. The receiver or conservator may operate

the cemetery and take possession of the assets. The receiver or

conservator shall have the rights and obligations of the cemetery

as to all trust and escrow accounts and may sell, assign, transfer,

or convey the cemetery ~~, including a cemetery in receivership on~~

~~the~~ ~~July 26, 2002~~ ~~date of the amendatory act that amended this~~

~~subsection,~~ and any of the assets 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 [or section 2926a of the revised

judicature act of 1961, 1961 PA 236, MCL 600.2926a,] 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.

(7) Subject to court approval, a receiver or conservator may

do any of the following:

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

cemetery or cemetery entity.

(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

with the court's approval.

(8) ~~(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~~

Money held by the cemetery in trust or in escrow ~~under this act~~

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

~~buyers and~~ shall not be distributed to the general creditors of the

cemetery. 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.

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

commissioner may deny an application or may suspend or revoke a

permit or registration after a an administrative hearing as ~~set~~

~~forth~~ provided for in this act.

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. The commissioner may enter into contracts to

accomplish requirements under this act, including for the

engagement of consultants. The commissioner may use an authorized

employee or agent, who is an attorney, to represent the

commissioner or the department in a contested case proceeding

brought under this act.

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

system of auditing trust funds required by this act 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, and conducting sales under the prepaid funeral~~

~~and cemetery sales act, 1986 PA 255, MCL 328.211 to 328.235~~ in this

state, 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 and

perpetual care ~~or memorial~~ trust funds.

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

valid permit or operate an existing cemetery except under a valid

registration issued under this act.

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

controlling interest in an existing cemetery company, that person

shall first apply to the commissioner for a certificate of approval

of a proposed change of control of a cemetery company. The

application shall contain all of the following:

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

operator. ~~and~~

(b) A sworn statement from the seller attesting to the assets

and liabilities related to the cemetery, including all trust

accounts and the value of those accounts.

stating who will assume the assets and liabilities related to the

cemetery.

(d) A sworn statement that the principal from the endowment

and 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.

(e) Any other information as the commissioner requires.

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

a change of control only after he or she is satisfied that the

proposed new cemetery owner or operator is qualified by good moral

character, experience, and financial stability, responsibility, and

security 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~~ $1,500.00.

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

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

may do any of the following if a transfer of controlling interest

is found to have taken place without prior commissioner approval: ,

~~the commissioner may suspend~~

(a) Suspend or revoke the registration of the cemetery. or

~~take~~

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

person to immediately take remedial action as prescribed by the

commissioner.

competent jurisdiction.

(d) Take other appropriate action until it the person

purchasing or otherwise acquiring a controlling interest in an

existing cemetery, purchasing an existing cemetery, or otherwise

acquiring the cemetery demonstrates compliance with this section or

divests itself of any interest or control of the cemetery.

(5) After the sale, transfer, purchase, or acquisition of a

controlling interest in a cemetery is completed, the endowment and

perpetual care trust fund for the cemetery shall be escrowed into

an account for the first 6 months of the new ownership. This

subsection shall not be construed to prevent or prohibit the

cemetery from receiving interest or income from the endowment and

perpetual care trust fund to maintain the cemetery.

(6) The endowment and perpetual care trust funds of a cemetery

being sold shall not be used by the new owner of an existing

cemetery in any manner to purchase or otherwise finance the

purchase of that cemetery from the previous owner.

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

the capability to decide the operating and financial policies of

the cemetery company or to select the officers or directors with

majority control of the cemetery company.

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

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

the affairs of any cemetery or person required to register under

this act and shall have free access to the books, papers, records,

and documents ~~that relate to the business~~ of the cemetery

corporation, person, affiliated person, or agent acting on its

behalf that relate to the business of the cemetery or person

required to register under 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. ~~at the~~

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

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 security,

responsibility, and stability, ability, and ~~integrity~~ 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, directors, officers,

partners, members, or any person occupying a similar status or

performing similar functions, or any affiliated person.

(3) A cemetery company shall immediately notify the

commissioner of any change in its directors, officers, partners,

members, affiliated persons, or any persons occupying a similar

status or performing similar functions. If after investigation the

commissioner determines that any new director, officer, partner,

member, affiliated person, or a person occupying a similar status

or performing a similar function does not have suitable experience,

financial security, responsibility, and stability, ability, and

good moral character, the commissioner shall order the cemetery

company to void the appointment of the director, officer, partner,

member, affiliated person, or any persons occupying a similar

status or performing a similar function.

Sec. 13a. (1) Notwithstanding any other provisions governing

eligibility as a cemetery owner, a person may be ineligible to

become a cemetery owner or hold a controlling interest in a

cemetery company if any of the following circumstances exist:

(a) The person has been convicted of a felony under the laws

of this state, any other state, or the United States.

(b) The person has been convicted of a misdemeanor involving

gambling, theft, dishonesty, or fraud in any state, or has been

convicted under a local ordinance in any state involving gambling,

dishonesty, theft, or fraud that substantially corresponds to a

misdemeanor in this state.

license under this act that contains false information.

(d) The person lacks the requisite character, experience, and

financial responsibility to control and operate the cemetery in a

legal and proper manner, as determined by the commissioner, and the

proposed ownership or change in ownership and management is likely

to jeopardize the public.

(2) In determining whether to allow a person to become a

cemetery owner, the commissioner shall also consider all of the

following:

(a) The past and present compliance of the person and its

affiliated person with cemetery or cemetery-related licensing

requirements, cemetery-related agreements, or compacts with the

state of Michigan or any other jurisdiction.

(b) Whether the person has been indicted, charged, arrested,

or convicted, has pleaded guilty or nolo contendere, or has

forfeited bail concerning any criminal offense under the laws of

any jurisdiction, either felony or misdemeanor, not including

traffic violations, unless the offense has been expunged, pardoned,

or reversed on appeal or otherwise nullified as determined by the

commissioner.

proceeding for bankruptcy or has ever been involved in any formal

process to adjust, defer, suspend, or otherwise work out the

payment of any debt.

(d) Whether the person has been served with a complaint or

other notice filed with any public body regarding a payment of any

tax required under federal, state, or local law that has been

delinquent for 1 or more years.

(e) The person has a history of noncompliance with any

regulatory requirements in this state, any other jurisdiction, or

the federal government.

Sec. 15. (1) Each person owning, managing, or operating a

cemetery shall register the cemetery by filing with the

commissioner 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.

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

establish and maintain an irrevocable endowment and 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~~ The amounts

deposited into an endowment and perpetual care trust fund pursuant

to subsection (5) shall be held in perpetuity by the trustee and

may only be distributed to the cemetery upon order of a court

following petition by the commissioner. Interest or income shall be

used only for endowment care. Except as otherwise provided in

subsection (2), money in the endowment and perpetual care trust

fund shall not be commingled with any other money or trust

accounts. The cemetery shall report annually before July 1 of each

year, on forms approved and furnished by the commissioner,

endowment and perpetual care trust fund information required to be

reported to the commissioner by 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 an endowment and perpetual care

trust fund deposit modification or waiver shall be assessed the

actual expenses for an examination or investigation by the

commissioner.

(2) Notwithstanding subsection (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.

(3) Notwithstanding subsection (2), 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.

(4) Not later than January 1, 2010, the irrevocable endowment

and perpetual care trust fund shall be established, or

reestablished, with 1 or more regulated financial institutions with

trust powers that shall be the trustee of the portion of the fund

allocated to it. The cemetery shall enter into agreements of

irrevocable trust agreements with each trustee. Those agreements

shall provide that the investing of the assets are subject to the

Michigan prudent investor 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 the

agreement shall not be modified or amended, 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. The cemetery

shall notify the commissioner, in writing, not later than 14 days

prior to the effective date of an appointment of a trustee. The

cemetery may remove and replace a trustee at any time, subject to

the consent of the commissioner, and subject to the terms of the

cemetery's agreement with the trustee. The fees and costs of the

trustee may, in accordance with the terms of the trust agreement,

be paid from the principal of the trust. A cemetery that

establishes its irrevocable endowment and perpetual care trust with

1 or more regulated financial institutions with trust powers, and

which cemetery does not reserve, retain, or otherwise exercise any

power of direction of specific investments, shall not be liable for

any deficiencies in the irrevocable endowment and perpetual care

trust caused by performance of the investments. A cemetery may

reserve the right to recommend, to a trustee, an investment

advisor, registered with the securities and exchange commission

under the investment advisers act of 1940, 15 USC 80b-1 to 80b-21,

or under the uniform securities act, 1964 PA 265, MCL 451.501 to

451.818, to advise the trustee in the trustee's decisions on asset

allocation, investment managers, and investments, except that a

trustee is not required to heed such advice. Alternatively, and

notwithstanding any other provisions of this section, and at all

times subject to the Michigan prudent investor rule, a cemetery may

direct the trustees to make certain investments, provided that the

trust is a named beneficiary of fiduciary liability insurance

covering the cemetery's or other fiduciaries' actions in an amount

equal to 100% of the amount so directed. Proof of such fiduciary

liability coverage shall be provided not less than annually to the

commissioner, in a form to be determined by the commissioner, prior

to any direction being given. The commissioner or the attorney

general may prosecute a claim against the fiduciary liability

insurance on behalf of the trust. The trustees shall not be liable,

or otherwise punishable, for complying with such direction of

investments except that the trustees shall retain custody of all

such investments.

(5) Beginning the effective date of the amendatory act that

added this subsection, an irrevocable endowment and perpetual care

trust fund shall be created by the deposit of at least $50,000.00

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

or columbarium rights is made.

(6) Each month, not less than 15% of all proceeds received

during the previous month from the sales of burial rights,

entombment rights, or columbarium rights shall be deposited with

the trustee for inclusion in the endowment and perpetual care trust

fund. No total deposit for a single burial right sale or assignment

shall be less than $20.00. A cemetery may apply to the commissioner

for a modification of the minimum deposit requirement. The

commissioner shall take testimony and investigate as he or she

considers necessary and if the commissioner determines that the

applicant's endowment and perpetual care trust fund will generate

sufficient income to meet all current costs of keeping the

applicant's cemetery in good condition, the commissioner may modify

the minimum deposit requirement. A cemetery applying to the

commissioner for a modification of the endowment and perpetual care

trust fund deposit requirements shall be assessed the actual costs

for the commissioner's examination and investigation. Excess sums

on deposit in the fund may be applied by a cemetery against future

deposits and shall be annually reported to the commissioner in a

manner prescribed by the commissioner.

(7) The commissioner shall require 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 or

corporation subject to the irrevocable endowment and perpetual care

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

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

the irrevocable endowment and perpetual care trust fund of the

cemetery in which the rights are located if an irrevocable

endowment and perpetual care trust fund exists for that cemetery.

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

~~against future deposits.~~ A deposit required to be made by those

persons shall be modified or waived if the cemetery has received an

irrevocable endowment and 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) Interest or income from the money in the endowment and

perpetual care trust fund shall be used exclusively for endowment

and perpetual care. No portion of the interest or income may be

used directly or indirectly for salaries or other payments to the

officers, directors, partners, members, or managers of the entity

owning the cemetery. Withdrawals of accumulated interest or income

from the endowment and perpetual care trust fund may be authorized

by the trustee, and such withdrawals shall be documented in the

manner provided by rule of the commissioner. A cemetery shall

maintain records showing that interest from the endowment and

perpetual care trust fund is used exclusively for endowment and

perpetual care. The trustees shall not be responsible for

ascertaining that such amounts paid over to the cemetery are

expended for the limited purposes permitted by this subsection.

(9) ~~(2)~~ Subject to subsection ~~(8)~~ (17), a cemetery ~~which~~ that

is required to register 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 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~~ regulated financial institution

under the terms of a written trust agreement approved by the

commissioner. All documents, reports, and records regarding the

trust shall be kept in this state. 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.

(10) ~~(3)~~ Subject to subsection ~~(8)~~ (17), 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.

(11) ~~(4)~~ Subject to subsection ~~(8)~~ (17), 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.

(12) ~~(5)~~ The commissioner shall require ~~each~~ the cemetery or

~~agent authorized by it acting on its behalf~~ owner or operator to

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 requirements

of this act is and rules promulgated under this act are being

implemented. Subject to approval of the department, the cemetery

owner or operator may ask for an extension not to exceed 90 days to

submit the report required by this subsection. All reports required

by this subsection and subsection (13) shall include a sworn

statement by the cemetery owner or operator that includes the

following:

(a) A certification that the signing cemetery owner or

operator has reviewed the report.

(b) Based on the operator's or owner's knowledge, that the

report does not contain any untrue statement of material fact

related to the financial condition of the endowment and perpetual

care trust fund or merchandise trust accounts.

report fairly presents all material information regarding the

financial condition of the endowment and perpetual care trust fund

or merchandise trust accounts.

(d) That the signing operators or owners are responsible for

establishing and maintaining internal controls; have designed those

internal controls to ensure the accuracy of material information

relating to the condition of the endowment and perpetual care trust

fund or merchandise trust accounts; have evaluated the

effectiveness of the internal controls within 90 days prior to the

issuance of the report; and have included information evaluating

the effectiveness of those internal controls.

(13) At a minimum, the commissioner shall require the

following information concerning the endowment and perpetual care

trust fund, the accuracy of which shall be certified by a certified

public accountant:

(a) Beginning and ending balances.

(b) Receipts from the sale of burial, entombment, and

columbarium rights.

(d) Itemized payments of interest or income.

(e) Documentation that interest was utilized solely for

endowment care.

(14) ~~(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~~

in the amount ~~of the deficit~~ allowed under this act. The cemetery

or entity ~~of a cemetery~~ 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.

(15) In addition to all other remedies at law or in equity,

the attorney general and the circuit court of the county in which

the cemetery is located shall have all the powers and jurisdiction

granted to the attorney general and court as to trusts covered by

1915 PA 280, MCL 554.351 to 554.353. The remedies granted include

all endowment and perpetual care trust funds without regard to

uncertainty or indefiniteness of beneficiaries.

(16) ~~(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. Upon receipt, the

commissioner shall remit funds received to the department of

treasury for deposit in the general fund of the state.

(17) ~~(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.~~

(18) Not less than 7 days before 30% of the endowment and

perpetual care or perpetual care funds established under this act

are moved from an account or otherwise engaged in some type of

financial transaction or investment, the cemetery owner or operator

shall notify the commissioner of the transaction on appropriate

forms that the commissioner shall authorize. The commissioner may

allow the submission of a notification up to 7 days after the

transaction, for good cause shown. Failure to comply with this

subsection is considered a violation of this act.

(19) The commissioner, upon finding after notice and an

opportunity for a hearing pursuant to the administrative procedures

act of 1969, 1969 PA 306, MCL 24.201 to 24.328, that a cemetery

owner or operator has failed to timely submit a report required

under subsections (12) and (13), regardless of whether he or she

acted alone or through an employee or agent, may impose an

administrative fine, payable to the commissioner, for the

enforcement of this act. If the commissioner finds that a violation

occurred despite the exercise of due care, the commissioner may

issue a warning instead of imposing an administrative fine.

(20) The commissioner shall advise the attorney general of the

failure of a person to pay an administrative fine imposed under

this section. The attorney general may bring an action in a court

of competent jurisdiction for the failure to pay an administrative

fine imposed under this section.

(21) Applicable provisions of the revised judicature act of

1961, 1961 PA 236, MCL 600.101 to 600.9948, apply to civil actions

filed pursuant to this section.

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

under this act and refuse to issue a permit or registration, or may

suspend or revoke a permit 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 cemetery owner,

operator, or applicant or ~~its~~ the officers, cemetery owners,

directors, members, affiliated persons, or general manager of those

entities 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.

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

conduct whether of the same or different character than specified

in this act which constitutes dishonest and unfair dealing or a

demonstration of lack of good moral character.

(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(5).

(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 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 or

registration, or suspends or revokes an existing permit or

registration required by this act, the denial, revocation, or

suspension shall revoke the cemetery operation as 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. The ~~corporation~~ cemetery

owner or operator 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 for each separate violation of this act.

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

(2), 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 and the second offense shall be punishable by~~

~~a fine of not more than $1,000.00~~ $10,000.00 or imprisonment for

not more than 1 year, or both.

Enacting section 1. (1) Sections 107 and 107a of 1869 PA 12,

MCL 456.107 and 456.107a, are repealed.

(2) Sections 35 and 35a of 1855 PA 87, MCL 456.35 and 456.35a,