The Governor; Executive Orders; Rulemaking Power; Separation of Powers

Subject:

The Governor; Executive Orders; Rulemaking Power; Separation of Powers

Requested By:

Rufus L. Edmisten, Secretary of State; Edward Renfrow, State Auditor; Harlan E. Boyles, State Treasurer; Bob R. Etheridge, Superintendent of Public Instruction; James A. Graham, Commissioner of Agriculture; John C. Brooks, Commissioner of Labor and James E. Long, Commissioner of Insurance

Question:

Are Council of State appointees to boards and commissions that either exercise a portion of the sovereign power of the State or are advisory only required to comply with the terms of Executive Order No. 1?

Conclusion:

No. Executive Order No. 1, through the amendment in Executive Order No. 127, became a law of general application. The Governor has usurped executive power allocated to other constitutionally established general civil executive offices of the State. Additionally, by its promulgation, the Governor has attempted to enact a statute and violated the Separation of Powers Clause of the Constitution of North Carolina.

The issue is whether under the State Constitution the Governor may mandate the filing of financial disclosure statements by and prescribe rules of ethical conduct for members of boards, commissions and councils appointed by other constitutionally established officers. Not at issue is the wisdom of imposing such standards on all appointees to public boards and commissions.

Executive Order No. 1, issued on January 31, 1985, established the Board of Ethics, set ethical standards for all gubernatorial appointees, and required the Governor’s appointees to file Statements of Economic Interest. The Board of Ethics, inter alia, provides advice to the Governor on ethical issues and conflicts of interest. It also recommends to the Governor or other elected appointing authority remedial action when investigations reveal ethical problems or violations of Executive Order No. 1. The question presented was addressed to the Attorney General by seven other members of the Council of State. They asked whether the Governor exceeded his powers when he amended Executive Order No. 1 to include persons appointed to office by other members of the Council of State.

The Governor issued the questioned amendment to Executive Order No. 1 on October 29, 1990. The amendment, Executive Order No. 127, enlarges the scope of Executive Order No. 1 from members of boards, commissions and councils appointed by the Governor to "all members of boards, commissions, and councils within the executive branch that exercise the sovereignty of the State and/or advise the heads of principal departments, irrespective of appointing authority." n1 The amendment forbids appointees from participating "in any official matters until he or she has filed a Statement of Economic Interest with the North Carolina Board of Ethics." n2

n1 Under the General Statutes, the term "Principal departments" includes all state agencies, without regard to independence from the Governor under the Constitution. G.S. 143A-11 and

G.S. 143B-6.

n2 Executive Order No. 128, issued on November 1, 1990, extended the time for compliance with Executive Order No. 127 until ninety days after November 1, 1990. During the intervening period, affected appointees may continue to execute the duties of their office.

(1) Executive Authority Incidental to Removal Power

The executive branch of government for the State of North Carolina is established in Article III of the Constitution of North Carolina. It consists of three primary components: n3 (1) the Governor, (2) and the nine other constitutionally created statewide officers n4 (3) which, as a body, compose the Council of State. n5 The division of responsibility and executive power within the executive branch is reflected in the three chapters of the General Statutes which more fully define the scope of these constitutionally created offices; Chapter 143A, the Executive Act of 1971; Chapter 143B, the Executive Organization Act of 1973; and Chapter 147, State Officers. In common parlance, the agencies in Chapter 143A are the Council of State agencies and the agencies in Chapter 143B are the Cabinet agencies.

n3 G.S. 147-4; Martin v. Thornburg, 320 N.C. 533, 359 S.E. 2d 472 (1987).

n4 The Lieutenant Governor, the Secretary of State, the Auditor, the Treasurer, the Superintendent of Public Instruction, the Attorney General, the Commissioner of Agriculture, the Commissioner of Labor, and the Commission of Insurance.

n5 The ten offices created in Article III of the Constitution of North Carolina are the members of the Council of State. Article III, Sec. 8.

The Constitution and statutes generally vest the executive power of the State in the Governor. Article III, Sec. 1; G.S. 147-12; G.S. 143A-4; G.S. 143B-4. The cited provisions contain broad declarations regarding the executive power of the Governor. The courts of this State have considered these sweeping statements vis-a-vis the other constitutionally established general civil executive offices of the State. The Constitution has been interpreted and applied to preserve the independence of those offices from the Governor’s exercise of his executive power. In fact, the courts have recognized a potential for conflict between the offices. Martin v. Thornburg, supra, ftn. 3; Tice v. Department of Transportation, 67 N.C. App. 48, 312 S.E. 2d 241 (1984).

In Tice, the court refused a power to the Attorney General which "could be abused by exercise in a manner effectively derogative of the Governor’s constitutional duties to exercise executive power and to supervise the official conduct of all executive officers" in agencies or departments under the supervision of the Governor. Ibid, 67 N.C. App at 55. The principles of law which determined the result of Tice require the same answer to the question here presented. The Governor exceeded his authority and usurped executive power vested in other members of the Council of State. Moreover, Executive Order No. 1, as amended on October 29, 1990, violates the Separation of Powers clause of the Constitution of North Carolina. Article I, Sec. 6. As an order applicable to persons other than those subject to removal by the Governor, it is a law of general application. Thus, it unconstitutionally invades the province of the General Assembly. Accord, Rapp v. Carey, 44 N.Y. 2d 157, 404 N.Y.S. 2d 565, 375 N.E. 2d 745 (1978). n6

n6 This New York case involved the same legal issues presented herein. It is the leading case in the country on the Governor’s power to issue executive orders controlling appointees by other constitutionally established offices.

Executive Order No. 1, before it was amended, had as its primary purpose the discharge by the Governor of his duty to prevent misfeasance and malfeasance by his appointees. It is clear that the power to appoint other members of the executive branch is not exclusively vested in the Governor by the Constitution. State ex rel Martin v. Melott, 320 N.C. 510, 359 S.E. 2d 783 (1987); Cunningham v. Sprinkle, 124 N.C. 638, 33 S.E. 138 (1899). The General Assembly may reserve the power of appointment to itself, or delegate it to another whether within the executive branch or the judicial branch. Martin v. Melott, supra,; State ex rel Salisbury v. Croom, 167 N.C. 223, 83 S.E. 354 (1914). The Court of Appeals held in N.C. State Bar v. Frazier, 62 N.C. App. 172, 302 S.E. 2d 648, rev. den., 308 N.C. 677, 383 S.E. 2d 546 (1983), that a legislative act conferring separate appointment powers to an administrative agency on the Governor, the Lieutenant Governor and the Speaker did not violate the separation of powers principle. Such holding is consistent with the general rule of law enunciated by the Supreme Court in 1944: "The distribution of the power of government in any state is a political privilege. Where the written Constitution does not otherwise direct, the Legislature may distribute these powers and functions as it may deem proper for the best interests of the public. . ." Belk’s Dept. Store, Inc. v. Guilford Co., 222 N.C. 441, 448, 23 S.E. 2d 897 (1943).

G.S. 147-12(3) vests in the Governor the power to make appointments not otherwise provided for in all departments. A further comparison of Chapters 143A and 143B removes any doubt as to the several sources of power to appoint members of boards and commissions. The Governor appoints the heads of Cabinet agencies. G.S. 143A-9. Within the Council of State agencies, the general power of appointment is reposed in the Constitutional officer heading the agency. The heads of both Council of State and Cabinet principal departments are authorized to create and appoint committees or councils to consult with and advise their departments. See, G.S. 147-16.2 and G.S. 143B-10(d), respectively.

The Constitution does not address removal of appointed officers. As a general principle, the power to remove an appointed official is vested in the appointing authority. However, as with the power of appointment, the Legislature may assign the power of removal or reserve it to itself: ". . . the power of appointment includes by implication that of removal, the application of which is necessarily limited by Constitutional or statutory provisions." Caldwell v. Wilson, 121 N.C. 425, 467, 28 S.E. 554 (1897). The Governor, by statute, has the power to remove any members of a board or commission, created by or under the authority of the Executive Organization Act of 1973 (which deals with Cabinet departments, the heads of which are appointed by the Governor) for misfeasance, malfeasance, and nonfeasance. G.S. 143B-13(d); -16.

The Caldwell case involved an issue similar to the question presented. The Legislature appointed Railroad Commissioners but gave the Governor the power to suspend commission members pending a final decision on removal by the General Assembly. The Supreme Court found that division of powers to be lawful:

It comes rather under the generally recognized rule that, in the absence of any constitutional restriction expressed or necessarily implied on the power of the Legislature, it may provide by statute for the suspension of a public officer by some other officer or board. (Emphasis in original). Caldwell v. Wilson, supra, 121 N.C. at 467.

In a 1979 opinion, the Court of Appeals reviewed the power of the Governor to remove an individual appointed by the Governor to the North Carolina Cemetery Commission. James v. Hunt, 43 N.C. App. 109, 258 S.E. 2d 481 (1979), cert. denied, 299 N.C. 121, 262 S.E. 2d 6 (1979). The matter arose when the member refused the Governor’s request that he resign because his "legal representation of thirteen cemeteries and Cemetery Funds of North Carolina, Inc. erodes the public’s confidence in the ability of the Cemetery Commission to represent the people in matters which the Commission considers." Ibid, 43 N.C. App. at 110. The Governor then issued an order which enumerated seven reasons for his removal and suspended the member from the Commission pending final determination of his removal from the Commission.

Chief Judge Naomi Morris authored the opinion which affirmed that the Cemetery Commission, in the discharge of its power and duty to adopt rules, "must act with entire impartiality." Ibid, 43

N.C. App. at 117. The Court also held that removal by the Governor must be for cause. Otherwise, the power of removal could have a coercive influence that threatened the independence of commissions. The Court quoted extensively from a United States Supreme Court opinion regarding the independence of commissions, entities "not only wholly disconnected from the executive department, but which, as already fully appears, (were) created by Congress as a means of carrying into operation legislative and judicial powers, and as an agency of the legislative and judicial departments." Humphrey’s Executor v. United States, 295

U.S. 602, at 630, 79 L.Ed. 1611, at 1620, 55 S.Ct. 869, at 875 (1935). The General Statutes contain a similar, general limitation on the Governor in G.S. 143B-14(b):

Except as otherwise provided in the Executive Organization Act of 1973, in G.S. 120-30.28 [now repealed], or in G.S. 150B-11(3), the powers, duties, and functions of a commission (including but not limited to rule making, regulation, licensing, and promulgation of rules, rates, regulations, and standards, and the rendering of findings, orders, and adjudications) shall not be subject to the approval, review, or control of the head of the department or of the Governor.

The Governor issued Executive Order No. 1 and established the Board of Ethics consistent with his duty to administer G.S. 143B-13. See, State v. Frinks, 284 N.C. 472, 201 S.E. 2d 858 (1974). n7 The requirement for filing statements of Economic Interest, the promulgation of ethical standards, and review by the Board of Ethics of ethical complaints are consistent with the Governor’s duty to guard against misfeasance and malfeasance by members of the executive department that he is authorized to remove. See, Rapp v. Carey, supra; Ill. State Employees Assoc. v. Walker, 57 Ill. 2d 512, 315 N.E. 2d 9, cert., den., 419 U.S. 1058, 42 L.Ed. 2d 656, 95 S.Ct. 642 (1974); Kenny v. Byrne, 164 N.J. Supp. 243, 365 A. 2d 211, aff’d., 75 N.J. 458, 783 A. 2d 428 (1976). In each of these cases, the Governor had limited the Executive Order’s application to persons appointed by and subject to removal by the Governor. This Office finds the cited authorities compel the conclusion that the Governor, by Executive Order, cannot establish ethical standards and financial disclosure requirements for persons subject to appointment or removal by other Constitutional officers or entities. That power, absent Legislative authority to the contrary, is vested exclusively in those other Constitutional officers.

n7 When a duty is imposed upon a public agency, there arises an implication that adequate power is bestowed upon the agency to perform the duty in accord with the Federal and State Constitutions. See also, General Motors Corp. v. Kinlaw, 78 N.C. App. 521, 338 S.E. 2d 114 (1985).

(2) Separation of Powers

Our Supreme Court has issued numerous opinions which shape and define Article I, Section 6 of the Constitution of North Carolina, the Separation of Powers Clause. A similar clause has always been included in each of the successively adopted State Constitutions. State ex rel Wallace v. Bone, 304 N.C. 591, 286 S.E. 2d 79 (1982). The principle of separation of powers is the cornerstone of the state government. Ibid; Bayard v. Singleton, 1 N.C. 5 (1787). "The right to make laws is vested in the General Assembly. The right to decide what the law is and what it was is vested in the Supreme Court." Houston v. Bogle, 32 N.C. 496, at 503 (1849). The executive branch has the right to administer or execute the laws. Wallace v. Bone, supra. "The legislative authority is the authority to make or enact laws; that is, the authority to establish rules and regulations governing the conduct of the people, their rights, duties and procedures, and to prescribe the consequences of certain activities." State ex rel Lanier v. Vines, 274 N.C. 486, 164

S.E. 2d 161 (1968).

An executive branch agency may only promulgate standards governing the conduct of the people when the Legislature has lawfully conferred on that agency the power to promulgate standards. If the agency exceeds the conferred power, its act is unlawful. State ex rel Utilities Commission v. General Telephone Co. of Southeast, 281 N.C. 318, 189 S.E. 2d 705 (1972). The Legislature must first declare the policy of the State, establish a framework of the law, and denominate the framework of the law to be followed before an executive branch agency may promulgate rules to be followed under the law. In re Nowell, 293 N.C. 235, 237 S.E. 2d 246 (1977). The Governor has no more authority to determine the policy of the State through the enactment of laws in the guise of executive orders than he, or any other executive agency has the power to refuse to comply with a law he determines to be unconstitutional. Coca-Cola v. Coble, Sec. of Revenue, 293 N.C. 565, 238 S.E. 2d 780 (1977); Bickett v. State Tax Commission, 177 N.C. 433, 99 S.E. 415 (1919). When an executive agency expands upon the statutory requirements for qualification or expands those persons regulated by the agency through a rule or regulation it is "legislating rather than regulating." States Rights Democratic Party v. State Board of Elections, 229 N.C. 179, at 187, 49 S.E. 2d 779 (1948); Utilities Comm’n v. Telephone Co., supra; State ex rel Commissioner of Ins. v. North Carolina Rate Bureau, 300 N.C. 381, 269 S.E. 2d 547, rehearing denied 301 N.C. 107, 273 S.E. 2d 300 (1980).

The same principles limit the Governor in the use of his authority to issue executive orders. Executive Order No. 127 violates both principles. It purports to alter the minimum qualifications of non-gubernatorial appointees for service on boards, commissions and councils; n8 and it purports to extend the power of the Governor to protect against misfeasance and malfeasance by appointed officials to persons the Governor cannot remove from office.

n8 G.S. 143B-13(a) sets the general standards for appointment to boards,commissions and councils. It is limited to Cabinet agencies.

The Governor has ample power over his own appointees to promulgate ethical standards. Assuming, without deciding, that Executive Order No. 1 is exempt from the definition of "rule" as a statement of internal management under G.S. 150B-2(8a)a., the appointees of the Governor and others within G.S. 143B agencies that he has the power to remove are lawfully required to comply with Executive Order No. 1 and the "rules" of the Board of Ethics. The Governor exceeded his constitutional and statutory powers to the extent Executive Order No. 127 requires compliance with Executive Order No. 1 by appointees to boards, commissions and councils who are neither appointed by nor removed by the Governor.

LACY H. THORNBURG Attorney General