Separation of Powers; Powers of Judicial Department; Administrative Agencies

Subject:

Separation of Powers; Powers of Judicial Department; Administrative Agencies

Requested By:

Henson P. Barnes

President Pro Tempore, Senate

Question:

Would an act vesting in the Administrative Rules Review Commission (ARRC), a commission appointed by the General Assembly, the power to delay indefinitely the effective date of duly adopted agency rules which it deems in excess of statutory authority violate the Constitution of North Carolina?

Answer:

The proposed bills, if enacted, would likely be held to violate the Constitution by vesting the ARRC with judicial powers reserved to the courts and with supreme legislative powers reserved to the General Assembly.

The President Pro Tempore of the Senate requested advice on the constitutionality of two alternative draft bills reviewed by the Legislative Research Commission’s Study Commission on the Administrative Procedures Act. Both drafts give the ARRC the power to delay indefinitely the effective date of duly adopted rules which it deems in excess of statutory authority. Under alternative 1, the rule would expire "on the first sine die adjournment of the General Assembly that occurs at least 60 days after the Commission notified the agency of its objection to the rule unless the General Assembly enacted legislation establishing statutory authority for the rule." Under alternative 2, the effective date of the rule is delayed until the adopting agency obtains a declaratory judgment in accordance with proposed G.S. 143B-31.

The ARRC was established by the General Assembly with the primary purpose of overseeing rules promulgated by administrative agencies. G.S. 143B-30.1. The ARRC consists of eight members appointed by the General Assembly. Under current law, its power to delay the effective date of a rule is limited to 90 days and does not extend to an indefinite delay. G.S. 143B-30.2. The present authority to delay arises from the need to investigate and to negotiate with the adopting agency rules which are being challenged by the ARRC.

In 1989, the North Carolina Supreme Court affirmed the limited authority of the General Assembly to vest legislative and judicial powers in administrative agencies. Article IV, Sec. 3 of the Constitution of North Carolina; In the Matter of Appeal from Civil Penalty, 324 N.C. 373, 379 S.E. 2d 30 (1989); Adams v. Dept. of Natural and Economic Resources, 295 N.C. 683, 249 S.E. 402 (1978). When those powers are vested in administrative agencies, they are referred to as "quasi-legislative" and "quasi-judicial." The Legislature may not vest judicial powers reserved to the courts nor its supreme legislative powers in any agency which it creates. Adams v. DNR, supra; State v. Matthews, 270 N.C. 35, 153 S.E. 2d 791 (1967). For either draft bill to be found consistent with the Constitution, it must vest quasi-judicial authority in an administrative agency which is reasonably necessary to the discharge of its duties. In re Matter of Appeal from Civil Penalty, supra.

(1) Bills Will Vest Judicial Powers

An agency established for the sole purpose of determining the limits of statutory grants of authority to other agencies would invade the judicial power reserved to the courts under our Constitution. "Of course, the responsibility for determining the limits of statutory grants of authority to an administrative agency is a judicial function for the courts to perform". In Matter of Broad and Gales Creek Community Association, 300 N.C. 267, 280, 266 S.E. 2d 645 (1980). [emphasis supplied]. Accord, State ex rel Edmisten v. Tucker, 312 N.C. 326, 323 S.E. 2d 294 (1984).

When the legislature vests a power constitutionally reserved to the judiciary in an administrative agency, it creates a court in violation of Article IV, Sec. 1 of the Constitution. State v. Matthews, supra; Utilities Comm. v. Old Fort Finishing Plant, 264 N.C. 416, 142 S.E. 2d 8 (1965). The Missouri Supreme Court struck down an act similar to the draft bills in question for the same reason; it would have created an unauthorized court when it vested the reserved judicial power to interpret statutes and reject agency rules in the Administrative Hearing Commission. State Tax Com’r v. Administrative Hearing Commission, 641 S.W. 2d 69 (Mo. banc 1982)

(2) Supreme Legislative Power

The adoption of rules by an administrative agency is an executive function – the implementation or execution of the statutes. Through rules, it prescribes the details of a program or policy the legislature has established by legislation. Coastal Highway v. Turnpike Authority, 237 N.C. 52, 74 S.E. 2d 310 (1953). Goals and policies are set by the legislature for the administrative agency to apply in exercising its powers. In Matter of Broad and Gales Creek Community Ass’n., supra. However as Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed. 2d 317 (1983) makes clear, "once the Congress makes its choice enacting legislation, its participation ends. Congress can thereafter control the execution of its enactments only indirectly — by passing new legislation." Bowsher v. Synar, 478 U.S. 714, 734-35, 106 S.Ct. 3181, 3191, 92 L.Ed. 2d 583 (1986). Accord, State ex rel Wallace v. Bone, 304 NC 591, 608, 286 S.E. 2d 79 (1982).

State courts reached the same conclusion: "Nothing less than legislation may suffice to override the rulemaking powers of the EQB or any other executive agency." Commonwealth v. Jubelirer, et al, 567 A. 2d 741, 749, 130 Pa. C. 124 (1989) citing Commonwealth v. Sessoms, 532 A. 2d 775 (Pa. Sup. Ct. 1987). See also Holly Care Center v. State, 714 P. 2d 45, 110 Idaho 76 (1986); State ex rel Stephan v. Kansas House of Representatives, 236 Kan. 45, 687 P 2d 622, 635 (1984); General Assembly of New Jersey v. Byrne, 90 N.J. 376, 448 A.2d 438 (1982); State ex rel Barker

v. Manchin, 167 W. Va. 155, 279 S.E. 2d 622 (1981). For these reasons, the draft bills if enacted would likely be held inconsistent with Article II, Sec. 1 of the North Carolina Constitution n1 as a delegation of the supreme legislative power of the General Assembly. In re Separation of Powers, 305 N.C. 767, 295 S.E. 2d 589 (1982); Adams v. Dept. of Natural & Economic Resources, supra.

n1 Article II, Sec. 1. "Legislative Power. The legislative power of the State shall be vested in the General Assembly, which shall consist of a Senate and a House of Representatives."

(3) ARRC Is A Legislative Agency

The General Assembly declared the ARRC to be within the executive branch of government in 1988. G.S. 143B-30.1(c). While the courts accord deference to such legislative actions, the rule is firmly established in North Carolina that the appellate courts examine an agency to determine the branch of government to which it must be assigned for constitutional purposes. See, e.g. In re Separation of Powers, supra; Barber v. Minges, 223 N.C. 213, 25 S.E. 2d 837 (1943). The North Carolina Supreme Court focused on the executive branch functions being performed by legislators appointed to a state commission when it determined the appointing statute violated the separation of powers clause of our Constitution. The Court rejected more flexible approaches to the separation of powers doctrine applied by two states because "North Carolina, for more than 200 years, has strictly adhered to the principle of separation of powers." State ex rel Wallace v. Bone, supra, 599.

Pennsylvania enacted a system similar to that proposed in the draft bills. The Independent Regulatory Review Commission of Pennsylvania has five members; four appointed by leaders of the legislature and one appointed by the Governor. The IRRC was established to oversee rule adoptions, to report violations of legislative authority or intent to the legislature, and to stay the effect of rules to which it objects. The Commonwealth Court of Pennsylvania held the act unconstitutional for violation of separation of powers. Commonwealth v. Jubelirer, et al, supra. The Pennsylvania court, applying the tests enunciated in Mistretta v. United States, U.S. , 109 S.Ct. 647, 102 S.Ct. 1597, 101 L.Ed. 2d 569 (1988), held the functions and composition of the IRRC "leads to the conclusion that it is a legislative agency." "The IRRC, a body created to assist the General Assembly and empowered to perform preliminary oversight functions, is an agent of the legislature." Id., 749. See also Bowsher v. Synar, supra.

Among the states, California is the only other state we have identified with a law similar to the draft bills in question which continues to be enforced. CA. Gov’t. § 11340, et. seq. The authority to review rules in California is vested in the Office of Administrative Law, an executive agency led by a director appointed by the Governor. The Office is vested with the power to review rules and to prevent disapproved rules from being filed with the Secretary of State. If the Governor of California overrides the disapproval, the rule may be filed and become effective. California, therefore clearly placed the power in an executive branch agency. There are no reported appellate decisions examining the constitutionality of the system. The rationale in the section titled "Bills Will Vest Judicial Power" strongly suggests the California system would not be consistent with our Constitution.

If the proposed powers were conferred on the ARRC, the statutes would likely fall within the Pennsylvania court’s analysis and cause the ARRC to be considered a legislative agency. As such, an act conferring the legislative power to indefinitely delay executive agency rules and of quasijudicial or judicial powers on a legislative agency would probably be unconstitutional as a violation of the separation of powers clause. Art. I, Sec. 6, Constitution of North Carolina; In re Separation of Powers, supra.

For the foregoing reasons, it is concluded that both draft bills present substantial constitutional questions and that neither may survive a challenge.

LACY H. THORNBURG Attorney General

Daniel F. McLawhorn Special Deputy Attorney General