Can the Maryland Port Administration run its own port terminals and unionize its workers, instead of leasing everything to private operators?

Plain-English summary

A member of the House of Delegates asked whether the Maryland Port Administration (MPA), which normally leases State-owned port facilities to private companies to operate, could instead run port facilities itself and bargain collectively with a unionized workforce, or set up a separate corporation to do the same thing. The Attorney General concluded that the MPA's general statutory power to "operate port facilities" only kicks in as a backstop: the MPA may run a facility directly if private operators can't do it adequately and the public interest requires MPA operation, and in that narrow situation the MPA may also engage in collective bargaining if bargaining turns out to be essential to running the facility. Outside that narrow circumstance, the MPA has no authority to bind itself to a union contract. And because the MPA cannot hand off powers it doesn't have, any separate corporate entity the MPA might create to run facilities would be limited to exactly the same narrow authority.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the Maryland Port Administration operate a port terminal itself instead of leasing it to a private company?
Yes, but only in a limited situation. The opinion concluded the MPA could directly operate a supplementary port facility if private operation of that facility was inadequate and the public interest required the MPA to run it; the MPA's ordinary role under the statute was to act as landlord, leasing State-owned facilities to private businesses to operate.

Could the MPA sign a union contract with its dockworkers or other employees?
Only under the same narrow circumstances. The opinion found the MPA generally lacked authority to enter binding collective bargaining agreements, since Maryland law requires express legislative authorization before a state agency can bind itself that way, but that the MPA could bargain collectively if doing so was essential to its authorized direct operation of a port facility.

Could the MPA create a separate corporation to run port facilities and hire union labor, if the MPA itself couldn't?
No. The opinion concluded that the MPA cannot delegate to any entity it creates a power broader than the MPA itself possesses, so a spinoff corporation would be limited to operating facilities and bargaining with unions only in the same circumstances where the MPA could do so directly.

Did the opinion say the General Assembly could give the MPA broader authority to do this?
Yes, the opinion noted that the General Assembly could expand the MPA's authority to operate facilities or bargain collectively under other circumstances, or could itself create a separate entity with broader power to do so, but said whether to do that was a policy question outside the scope of the opinion.

Background and statutory framework

The opinion traced the MPA's predecessor, the Maryland Port Authority, to 1956 legislation aimed at improving the competitive position of Maryland's ports, and to a 1987 gubernatorial Special Committee on the Port of Baltimore that found the MPA was at a competitive disadvantage against port agencies operating as private or quasi-public organizations because it was bound by ordinary State budget, procurement, and personnel rules. The General Assembly responded with Chapter 541 of the Laws of Maryland 1988, which created a Maryland Port Commission as the MPA's policymaking body and gave the MPA more flexibility, including its own personnel system under TR §6-201.2.

Reading TR §6-204(i)'s grant of power to "operate port facilities" alongside the statement of legislative intent in TR §6-102, the opinion found the General Assembly meant the MPA's role to be a backstop to private industry, not a replacement for it: TR §6-102(d)(1) recites that Baltimore's port facilities have historically been provided by private enterprise and that the General Assembly's primary aim is to strengthen private operators, while TR §6-102(d)(2) allows the MPA to construct and, if necessary, operate supplementary facilities only when private facilities are inadequate or inadequately operated and operation is required in the public interest. Applying the general administrative-law principle that a statute's specified manner of exercising a power is a mandatory limitation on that power, the opinion concluded the MPA's authority to operate facilities directly is confined to that narrow trigger.

On collective bargaining, the opinion applied the established Maryland rule that a government agency cannot bind itself to collective bargaining agreements over wages, hours, or working conditions absent express legislative authorization, contrasting TR §6-201.2's broad personnel powers (which do not mention collective bargaining) with TR §7-601(b)'s express duty on the Mass Transit Administration to bargain collectively. But the opinion reasoned that the General Assembly, in authorizing the MPA to operate facilities competitively against private operators who traditionally engage in collective bargaining, must have intended the MPA to have whatever implied authority is essential to carrying out that specific, narrow operating power, since otherwise the grant of authority to operate at all could become "an exercise in futility." The opinion therefore concluded the MPA has implied authority to bargain collectively, but only if bargaining is essential to its direct operation of a facility, calling the question "not free from doubt" and inviting the General Assembly to clarify the scope of that authority by statute if it chose to.

On the fourth question, whether the MPA could set up a separate corporate entity to do what the MPA itself could do, the opinion applied the general nondelegation principle that an administrative agency cannot delegate its discretionary powers to another entity absent express authorization, and concluded that in any event an agency cannot delegate a power it does not itself possess. Since the General Assembly had not expressly authorized the MPA to create an entity with broader operating or bargaining power than the MPA has, any MPA-created entity would be limited to the same narrow circumstances. The opinion noted the General Assembly itself could create a broader-powered entity, or a wholly private corporation could independently be formed under general incorporation law to run port facilities, but said the Maryland Port Commission's statutory duty to report annually to the General Assembly on recommended legislative, funding, or flexibility changes meant further legal analysis of specific structural options was better addressed once the General Assembly had considered the Commission's own recommendations.

Citations and references

Statutes:

• TR §6-102
• TR §6-102(d)(1)
• TR §6-102(d)(2)
• TR §6-102(e)
• TR §6-204(i)
• TR §6-201.2
• TR §6-201.2(e)
• TR §7-501
• TR §7-601(b)
• Chapter 541, Laws of Maryland 1988
• Chapter 2, Laws of Maryland 1956 (Spec. Sess.)
• former Article 62B, §1(a)
• former Article 62B, §1(c)
• Article 10, §§45A to 45-O
• §2-101(a) of the Corporations and Associations Article

Cases:

• Holy Cross Hospital of Silver Spring v. Health Services Cost Review Commission, 283 Md. 677, 683, 393 A.2d 181 (1983)
• Huffman v. State Roads Commission, 152 Md. 566, 137 A. 358 (1927)
• Blumenthal v. Clerk of Circuit Court for Anne Arundel County, 278 Md. 398, 403, 365 A.2d 55 (1976)
• Office and Professional Employees International Union v. Mass Transit Administration, 295 Md. 88, 96, 453 A.2d 1191 (1982)
• Mugford v. City of Baltimore, 185 Md. 266, 270, 44 A.2d 745 (1945)
• Maryland Classified Employees Ass'n v. Anderson, 281 Md. 496, 380 A.2d 1032 (1977)
• Kaczorowski v. City of Baltimore, 309 Md. 505, 518, 525 A.2d 628 (1987)
• Sexton v. Mount Olivet Cemetery Association, 720 S.W.2nd 129, 137 (Tex. App. 1986)
• City of Columbia v. Board of Health, 355 S.E.2nd 536, 538 (S.C. 1987)
• Peoples Natural Gas Co. v. Minnesota Public Utilities Commission, 369 N.W.2nd 530, 534 (Minn. 1985)
• In re New Jersey District Water Supply Commission, 417 A.2d 1095, 1115 (N.J. Super App. Div. 1980)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

PORT ADMINISTRATION

Operation of Port Facilities—Collective Bargaining—Creation of Separate Corporate Entity.

November 7, 1988

The Honorable Eileen M. Rehrmann
Maryland House of Delegates

You have requested an opinion on the scope of the powers of the Maryland Port Commission and the Maryland Port Administration ("MPA"). Specifically, you ask whether, under present law, the MPA may (i) directly operate port facilities and, in that connection, employ and engage in collective bargaining with unionized labor; or (ii) establish a separate corporate entity to operate port facilities and to employ and engage in collective bargaining with unionized labor.
For the reasons given below, we conclude that the MPA may directly operate supplementary port facilities if private operation is inadequate and the public interest requires operation by the MPA. In general, the MPA may employ unionized labor and consult with its employees in determining the terms and conditions of their employment; however, the MPA may not engage in collective bargaining unless (i) it is required to operate a port facility and (ii) it cannot do so without engaging in collective bargaining. We also conclude that the MPA cannot confer on a separate entity any broader powers than the MPA itself has; therefore, any separate entity established by the MPA would be unable to perform any acts that the MPA may not perform directly.1

                                I
                          Background

The Maryland Port Authority, the predecessor of the MPA, was created in 1956 to improve the facilities and promote the use of the ports of Maryland, in recognition that "[a]ny improvement to those ports and harbors which increase their export and import commerce will benefit the people of the entire State of Maryland." Chapter 2, Laws of Maryland 1956, sec. 1 (Spec. Sess.) (enacting former Article 62B, §1(a)). Thus, the legislative goal in creating a port agency was to improve the competitive position of the ports of Maryland in relation to other nearby ports in order "to increase the water-borne commerce of the ports in the State, and thereby to benefit the people of the State of Maryland." Id. (enacting former Article 62B, §1(c)). That goal is still the underlying purpose of the MPA, as reflected in §6-102 of the Transportation Article ("TR" Article).

In 1987 the Governor established a Special Committee on the Port of Baltimore, noting that most of the competition in the port industry "is posed by port agencies that operate as private corporations or as quasi-public organizations" and that the General Assembly "has questioned the ability of the Maryland Port Administration to compete successfully against other port agencies while operating as a public agency ...." Executive Order 01.01.1987.16, 14:16 Md. R. 1751 (July 31, 1987).

The Special Committee similarly concluded that, as a State agency subject to State budget, procurement, and personnel regulations, the MPA was at a competitive disadvantage because it lacked the flexibility of port agencies that operate as private or quasi-public organizations. Report of Special Committee on the Port of Baltimore at 2 (October 30, 1987) ("Special Committee Report"). To address those concerns, while retaining the advantages that the MPA derives from its status as a State agency, the Special Committee recommended that a Maryland Port Commission be created as the policymaking body of the MPA and that the MPA be granted greater flexibility in making substantial expenditures from an operating contingency fund and be authorized to establish its own personnel system and its own procurement procedures. Special Committee Report at 10-11. Those proposals were enacted by Chapter 541 of the Laws of Maryland 1988.

In that Act, the General Assembly explicitly recognized that "[t]he maritime industry has become increasingly competitive due to deregulation on the federal level" and expressed its intent to increase the MPA's efficiency and effectiveness "to further strengthen and enhance the statewide resources of the ports of Maryland and their resulting economic benefit for all of the citizens of Maryland ...." Chapter 541, Laws of Maryland 1988, Preamble.

                                II
             Power of MPA to Operate Facilities

Agencies of the State, being creatures of statute, have only those powers expressly given to them by the General Assembly and those implied powers inherently necessary to carry out their express powers. Holy Cross Hospital of Silver Spring v. Health Services Cost Review Commission, 283 Md. 677, 683, 393 A.2d 181 (1983); Huffman v. State Roads Commission, 152 Md. 566, 137 A. 358 (1927). Therefore, the MPA may operate port facilities only if the statute under which it functions expressly gives it power to do so or if direct operation of port facilities is essential to carry out the MPA's function.
At present, the MPA acts as the landlord of State-owned port facilities. That is, those facilities are leased to private businesses and are operated by those businesses, rather than by the MPA.
However, TR §6-204(i) includes among the MPA's general powers authority to "acquire, construct, reconstruct, rehabilitate, improve, maintain, lease as lessor or as lessee, repair, and operate port facilities within its territorial jurisdiction ...." Thus, it is clear that the MPA has power to operate port facilities. Nonetheless, we do not believe that this provision can be regarded as an authorization for the MPA to operate port facilities under all circumstances.
The scope of TR §6-204(i) must be determined by reading it in conjunction with the statement of legislative intent in TR §6-102. See Blumenthal v. Clerk of Circuit Court for Anne Arundel County, 278 Md. 398, 403, 365 A.2d 55 (1976) (all provisions constituting general statutory scheme must be read together to ascertain legislative intent). TR §6-102(d)(1) states that, "[s]ince existing port and terminal facilities of Baltimore and other port areas have been provided mostly by private enterprise, the General Assembly seeks primarily to improve the facilities and strengthen the workings of the private operators." The General Assembly has thus clearly indicated that it did not intend the MPA to completely displace private enterprise in the operation of port facilities. TR §6-102(d)(2) more particularly specifies the purpose for which the MPA has been given authority to operate facilities and the circumstances under which the exercise of that authority is contemplated:

     However, the private operators in the port areas have a public responsibility to provide modern port and harbor facilities suited to the needs of the public that they serve. Therefore, ... while [the MPA] should assist and encourage the extension and improvement of privately operated port facilities, it also should have the power, if private facilities are inadequate or inadequately operated at any time, to construct, and if necessary, to operate any supplementary public facilities that it considers to be required in the public interest.

"[W]here a statute authorizes or permits a person or agency to take a certain type of action in a particular manner, such manner becomes a mandatory limitation, and the action must be taken in conformity with it." Office and Professional Employees International Union v. Mass Transit Administration, 295 Md. 88, 96, 453 A.2d 1191 (1982). Accordingly, the power granted to the MPA to operate supplementary port facilities may be exercised only if the MPA concludes that private operation of those supplementary facilities is inadequate and the public interest requires their operation by the MPA.2

                                      III
      Power of MPA to Engage in Collective Bargaining

A. General Principles
In general, "absent express legislative authority, a government agency cannot enter into binding arbitration or binding collective bargaining agreements establishing wages, hours, pension rights, or working conditions for public employees." Office and Professional Employees, 295 Md. at 97. To the extent that the terms and conditions of employment are covered by statutes or regulations, they cannot be altered by agreement between the agency and its employees; to the extent that those matters are left to the discretion of the agency, that discretion cannot be delegated or abdicated to another entity: "Any exercise of such discretion by the establishment of hours, wages or working conditions is at all times subject to change or revocation in the exercise of the same discretion." Mugford v. City of Baltimore, 185 Md. 266, 270, 44 A.2d 745 (1945) (dicta).3 See also 59 Opinions of the Attorney General 578, 583-84 (1974) (Police Commissioner of Baltimore City cannot enter into binding commitment regarding terms and conditions of employment.) Cf. 65 Opinions of the Attorney General 136 (1980) (charter county may adopt ordinance permitting or requiring collective bargaining that does not require adherence to terms of agreement or arbitrator's decision).

B. MPA's Personnel Powers
In Chapter 541 of the Laws of Maryland 1988, the General Assembly conferred upon the MPA broad discretion to establish its own personnel system, in provisions now codified at TR §6-201.2. Those provisions include power to "[d]etermine employee qualifications, appointment and removal procedures, terms of employment including compensation, benefits, holiday schedules, and leave policies, and any other matter concerning employees ...."
Despite its breadth, this grant of power does not expressly authorize the MPA to enter into binding collective bargaining agreements. Cf. TR §7-601(b) (duty of Mass Transit Administration to enter collective bargaining agreements). We conclude, accordingly, that the MPA, as a general matter, may not enter into any collective bargaining agreement that purports to bind the MPA regarding terms and conditions of employment.4

C. Collective Bargaining if Essential to MPA Port Operation
However, we do not think that the MPA is prohibited from engaging in binding collective bargaining under all circumstances. The purpose for which the MPA has been empowered to operate port facilities is to ensure the effectiveness of Maryland's ports. The MPA is clearly intended, under TR §6-102(d)(2), to operate port facilities in a commercially effective fashion when private operators fail to maintain the port's competitive posture. The nature of the work involved in port operations may require laborers with particular skills, and, under some circumstances, it may be essential to enter into collective bargaining agreements in order to engage the necessary labor. Hence, as a practical matter, operation of certain port facilities in the way required by the public interest and intended by the General Assembly might well be virtually impossible under some circumstances if the MPA could not engage in collective bargaining with unionized labor.
The General Assembly was undoubtedly aware of this practical aspect of the matter when it conferred on the MPA authority to operate port facilities if the public interest requires. It cannot reasonably be assumed that the General Assembly intended to effectively negate that authority by withholding from the MPA all authority to engage in collective bargaining, if collective bargaining proved to be essential to port operation. Cf. Kaczorowski v. City of Baltimore, 309 Md. 505, 518, 525 A.2d 628 (1987).
Our conclusion that the MPA may engage in collective bargaining under these narrow circumstances does not depart from general principles governing agency powers. We are not saying that agencies are empowered to engage in collective bargaining whenever they deem it necessary to carry out agency functions. Rather, in this instance, the General Assembly has expressly assigned to the MPA a unique responsibility, under exceptional circumstances, to operate port facilities competitively in lieu of private sector operators who, historically, have engaged in collective bargaining.
The General Assembly could not have intended to assign the MPA this task without the power to do, if necessary, what private operators have always found essential. As a Texas court put it in a recent case:

     It is axiomatic that [administrative] agencies are creatures of statute and have no inherent authority. They may, therefore, exercise only those specific powers conferred upon them by law in clear and express language and no additional authority will be implied by judicial construction. However, with respect to a power specifically granted the agency, the full extent of that power must be ascertained with due regard for the rule that the Legislature generally intends that an agency should have by implication such authority as may be necessary to carry out the specific power delegated, in order that the statutory purpose might be achieved .... The Legislature does not intend that agency functions be an exercise in futility.

Sexton v. Mount Olivet Cemetery Association, 720 S.W.2nd 129, 137 (Tex. App. 1986) (emphasis in original). See also City of Columbia v. Board of Health, 355 S.E.2nd 536, 538 (S.C. 1987). Cf. Peoples Natural Gas Co. v. Minnesota Public Utilities Commission, 369 N.W.2nd 530, 534 (Minn. 1985) (scope of power derived from express grant is determined by consideration of "the necessity and logic of the situation").
In sum, we think that the MPA has implied authority to engage in collective bargaining if, but only if, that is essential to its direct operation of port facilities. At the same time, we believe that the matter is not free from doubt. The General Assembly may wish to clarify the scope of authority of the MPA in this regard; whether that should be done and the form that any legislative change should take are questions of policy that we cannot address.

                               IV
  Establishment By MPA of Separate Corporate Entity

Your final question is whether the MPA may establish a separate corporate entity to operate port facilities and engage in collective bargaining with unionized labor.
It has been held that administrative agencies cannot, in the absence of express legislative authorization, delegate powers or functions, particularly those requiring the exercise of discretion or judgment, to others. In re New Jersey District Water Supply Commission, 417 A.2d 1095, 1115 (N.J. Super App. Div. 1980). See also 73 C.J.S. Public Administrative Law and Procedure §56 (1983). This nondelegation doctrine arises largely from concern for the loss of public accountability that would result from the relinquishment by an administrative agency of its powers and functions to a private entity. However, it is by no means clear that the establishment of a private or semi-public entity to operate MPA-owned port facilities would necessarily amount to an improper delegation of the MPA's authority. See In re North Jersey District Water Supply Commission, 417 A.2d at 1115-16 (no impermissible delegation where public agency shared ownership of water supply system with private entity and agency did not relinquish any statutory powers).

What is clear, however, is that the MPA cannot delegate any power that it does not itself have. Nor has the General Assembly expressly authorized the MPA to establish a private or semi-public entity with power to operate State-owned facilities under circumstances in which the MPA could not operate those facilities directly. Therefore, we believe that any entity established by the MPA could operate port facilities and engage in collective bargaining only under the circumstances in which the MPA could do so directly.
At the same time, the General Assembly unquestionably may establish a separate entity with general power to operate State-owned facilities and, in that connection, to engage in collective bargaining with unionized labor. The General Assembly has previously created corporate entities to carry out public purposes. See, e.g., Article 10, §§45A to 45-O (Maryland Legal Services Corporation).

It is also clear that a wholly private corporation could be formed under the general incorporation laws that would have as its corporate purpose the operation of State-owned port facilities, for corporations may be formed for any lawful purposes. §2-101(a) of the Corporations and Associations Article. However, as a State agency, the MPA may not discriminate in favor of any particular private corporation by granting it preferences in the operation of State-owned facilities.
The determination of whether to establish an entity separate from the MPA to operate State-owned port facilities, and which of the many possible forms the entity should take, requires consideration of a number of policy questions. We note that the Maryland Port Commission created by Chapter 541 is required to report to the General Assembly on its activities annually, and that report must include "any recommendations of the Commission for future changes in legislation, capital funding, or operational flexibility for consideration by the General Assembly." TR §6-201.2(e). In view of the wide variety of legal issues that might arise in connection with various policy decisions yet to be made, we believe that a detailed discussion of possible legal considerations will be most useful after the General Assembly has had an opportunity to consider the Commission's recommendations. We will at that time be happy to assist and advise you in any way that we can.

                               V
                          Conclusion

For the reasons given, we conclude that the MPA may directly operate supplementary port facilities if private operation is inadequate and the public interest requires operation by the MPA. In general, the MPA may employ unionized labor and consult with its employees in determining the terms and conditions of their employment; however, the MPA may not engage in collective bargaining unless (i) it is required to operate a port facility and (ii) it cannot do so without engaging in collective bargaining. We also conclude that the MPA cannot confer on a separate entity any broader powers than the MPA itself has; therefore, any separate entity established by the MPA would be unable to perform any acts that the MPA may not perform directly. Should the General Assembly determine, as a policy matter, that the MPA's powers should be expanded, additional legislation would be necessary.

        J. Joseph Curran, Jr., Attorney General
        C.J. Messerschmidt, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

1
A previous letter of advice conveyed essentially the same conclusions to you. Letter from Assistant Attorney General Donald A. Krach to Delegate Eileen M. Rehrmann (October 6, 1988).
2
If the MPA constructed a facility, it may also, "if necessary, operate these facilities ... if the immediate financial returns are not sufficient to attract private capital." TR §6-102(e). Of course, the General Assembly may amend the statute to authorize the MPA to operate port facilities under other circumstances. Cf. TR §7-501 (Mass Transit Administration may operate transit facilities under its control). Whether the statute should be amended in that way is a policy question that we cannot address.
3
Although the holding in Mugford concerned only whether the city had a right to deduct union dues from employees' wages, this statement of the Court's view was relied on in Office and Professional Employees and in Maryland Classified Employees Ass'n v. Anderson, 281 Md. 496, 380 A.2d 1032 (1977), both of which held that governmental entities may not enter into binding collective bargaining agreements without express authorization.
4
This is not to say, however, that the MPA may not employ members of a labor union and consult with its employees' representatives in determining the terms and conditions of employment. In Office and Professional Employees, 295 Md. at 97, the Court of Appeals held that State agencies may not enter into binding collective bargaining agreements without express authorization, but it did not hold that agencies may not consult with their employees. And, while disapproving a binding collective bargaining agreement in Mugford, the Court of Appeals at the same time pointed out that "it by no means follows that employees may not designate a representative or spokesman to present grievances." 185 Md. at 270. The Court of Appeals further noted in Mugford that, just as a governmental entity may not discriminate in favor of members of a labor union, so also "a citizen who is a member of a union cannot, by that fact alone, be barred from a position in the public service." Id. In 65 Opinions of the Attorney General at 160 n.10, this office suggested that the Court's comments may have been intended as tacit approval of legislative requirements that governmental entities consult with representatives of their employees regarding terms and conditions of employment. See Chapter 541, Laws of Maryland 1988, sec. 4 (uncodified).