October 12, 1994
Dr. David H. Moreau Chairman, Environmental Management Commission
P. O. Box 27687 Raleigh, NC 27611
RE: Advisory Opinion: Fiscal Note Requirements for EMC Rule-making; G.S. 150B-21.4
Dear Dr. Moreau:
The Environmental Management Commission (EMC) has requested guidance from this office concerning the application of G.S. 150B-21.4 to a set of proposed rules modifications to 15A NCAC 2B and 2H, related to wetlands and §401 certification procedures. G.S. 150B-21.4(a) reads as follows:
(a) State Funds.-Before an agency publishes in the North Carolina Register the proposed text of a permanent rule change that would require the expenditure or distribution of funds subject to the Executive Budget Act, Article 1 of Chapter 143, it must submit the text of the proposed rule change and a fiscal note on the proposed rule change to the Director of the Budget and obtain certification from the Director that the funds that would be required by the proposed rule change are available. The fiscal note must state the amount of funds that would be expended or distributed as a result of the proposed rule change and explain how the amount was computed. The Director of the Budget must certify a proposed rule change if funds are available to cover the expenditure or distribution required by the proposed rule change.
For the wetland rules in question, the staff of the EMC has submitted the proposed rules and a fiscal note to the Director of the Budget, who has verbally advised that he is unable to certify that funds are available to the Department of Transportation to cover their expected expenses in complying with the rules modifications.
Questions Presented
- (1)
- Is the Director of the Budget required to obtain the approval of any other state agency before issuing the certification required by the statute?
- (2)
- Is it appropriate for the Director of the Budget to refuse to provide the required certification on the basis that a potentially affected state agency disagrees with the fiscal note calculations provided by the proposing agency?
- (3)
- If relevant sources (such as the Highway Trust Fund) are reasonably projected to include funds sufficient to cover the costs projected to be associated with a proposed rule change, is it appropriate for the Director of the Budget to refuse to provide the required certification on the basis that the potentially affected state agency objects to spending available funds in the fashion that would be required?
Conclusions 1) The Director of the Budget is not required by statute to obtain approvals from other state agencies before determining whether to issue the fiscal note certification, but may seek necessary financial and budgetary input from potentially affected agencies.
2) G.S. 150B-21.4 clearly provides that the Director of the Budget makes the certification determination, and neither the submitting agency nor a potentially affected agency can make the decision for him. He may consider data from any source, including the potentially affected agency.
3) While the Director of the Budget must determine that potentially affected agencies do have funds available to meet the requirements of the proposed rule, it is not legally supportable for the Director of the Budget to refuse a requested certification solely on the basis that a potentially affected agency objects to spending available funds.
Discussion
Our understanding of the facts surrounding these issues is as follows. The Division of Environmental Management (DEM), as staff to the EMC, prepared and submitted the required fiscal note to the Director of the Budget, noting inter alia a potential effect on the Department of Transportation (DOT). The Director of the Budget sought information related to funding from DOT, and received verbal objections to the note. At that point, the Director of the Budget requested DEM and DOT to discuss the note and present any revisions to him, and both agencies agreed to this process. The Director of the Budget has advised us that he is waiting for a resubmission and does not consider any matter presently pending before him. Please let us know if any of these facts are in error.
The Director of the Budget has no written rules on the fiscal note consideration process; thus, his responsibility is to make a reasonable administrative evaluation of the note submitted by DEM and determine independently whether to certify that funds are available for required state agency expenditures. The statute, G.S. 150B-21.4, is clear and unambiguous as to his responsibility for the decision and it would not be consistent with the statute to delegate that duty to an affected agency, in this case DOT. "It is elementary that in the construction of a statute words are to be given their plain and ordinary meaning…." State v. Wiggins, 272 NC 147, 153 (1967). The primary purpose of the fiscal note requirement is that the effect on state agency budgets be recognized by the body proposing a rules adoption or modification. It would not appear that the General Assembly further desired to give potentially affected agencies an opportunity to derail a rules package; thus the Director of the Budget was clearly given independent authority to consider the fiscal implications. "A construction which will defeat or impair the object of the statute must be avoided if that can reasonably be done without violence to the legislative language." In re Hardy, 294 NC 90, 96 (1977). On the other hand, it is within the authority of the Director of the Budget to seek input from DOT on matters related to the fiscal note and to its budget.
The questions posed imply that the Director of the Budget has, or will, cede his decision-making authority to DOT. However, there is nothing in the record that supports that implication. If, and when, the Director of the Budget receives contradictory information from the submitting agency and a potentially affected agency, the law is clear that it will be his responsibility to carefully consider the issue and make the final decision.
We hope this advisory opinion has clarified the process of decision-making in this matter. It would not be prudent at this point to further offer our opinions on what may or may not be a supportable call on the substantive issue of funds availability. However, we will be glad to further consult with you, DEM, DOT or the Director of the Budget on questions which may arise in the future.
Daniel C. Oakley Senior Deputy Attorney General
Frank W. Crawley
Special Deputy Attorney General