Could the North Carolina General Assembly give a legislative oversight commission the power to indefinitely delay the effective date of any agency rule it considered to exceed statutory authority?

Plain-English summary

The Senate's President Pro Tempore was reviewing two draft bills that would have expanded the Administrative Rules Review Commission's authority. The ARRC, established under N.C.G.S. § 143B-30.1, has eight members appointed by the General Assembly and is the legislative branch's primary mechanism for overseeing agency rulemaking. In 1991, its statutory authority topped out at a 90-day delay of agency rules under § 143B-30.2 (just long enough for the ARRC to investigate and negotiate with the adopting agency).

Both drafts would have let the ARRC delay rules indefinitely. Alternative 1 made the delay run until the next sine die adjournment of the General Assembly (at least 60 days after the ARRC's objection), with the rule expiring unless the General Assembly enacted legislation establishing the statutory authority for it. Alternative 2 made the delay run until the agency obtained a declaratory judgment under a proposed new statute. Either way, the ARRC could keep a duly adopted agency rule from ever taking effect simply by objecting.

Special Deputy Attorney General Daniel F. McLawhorn answered that both drafts would likely be unconstitutional. The reasoning had three layers.

Layer 1: The drafts vested judicial power in a non-judicial body. Determining whether an agency rule exceeds statutory authority is the kind of statutory interpretation question that the courts decide. The AG quoted In re Broad and Gales Creek Community Ass'n: "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." The ARRC, whose only mission would be making that determination, would effectively be a court created in violation of Article IV, Section 1 of the North Carolina Constitution. The Missouri Supreme Court reached the same conclusion in State Tax Com'r v. Administrative Hearing Commission, striking down a similar Missouri statute that put rule-rejection authority in the Administrative Hearing Commission.

Layer 2: The drafts let the General Assembly control executive action without using the legislative process. Adopting administrative rules is an executive function. The General Assembly sets policy through statute; the executive branch implements through rules. Once a statute is enacted, the General Assembly's involvement is over, unless it wants to pass new legislation. INS v. Chadha and Bowsher v. Synar at the federal level stand for the same proposition: "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." North Carolina followed the same principle in State ex rel Wallace v. Bone. The drafts would let the ARRC (and through it, the legislature that appointed its members) keep killing agency rules without passing actual legislation, an end run around the constitutional lawmaking process.

Layer 3: The ARRC functions as a legislative agency, not an executive one. The legislature declared the ARRC to be within the executive branch in 1988, but the AG noted that the courts make their own determination of which branch an agency belongs to for constitutional purposes. The Pennsylvania Supreme Court's Jubelirer decision is the closest analog: Pennsylvania's Independent Regulatory Review Commission (four of five members appointed by legislative leaders, one by the Governor) was held to be a legislative agency under the Mistretta v. United States test, and an act giving it rule-stay authority was struck down. The North Carolina ARRC has all eight members appointed by the General Assembly, which makes its legislative character even clearer. Putting it inside the executive branch by legislative declaration does not change its functional reality.

The AG also looked at California as a counter-example. California has a similar review system, but the review power is vested in the Office of Administrative Law (an executive agency under a director appointed by the Governor, with the Governor able to override disapprovals). California's structure has not been challenged in the appellate courts, but the AG suggested it would still fail the judicial-power analysis if applied to North Carolina.

The bottom line: both drafts presented substantial constitutional questions and were unlikely to survive a separation-of-powers challenge.

Currency note

This opinion was issued in 1991. 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. North Carolina has revisited the ARRC framework multiple times since 1991, and federal separation-of-powers doctrine has continued to evolve. The general framework the AG laid out (courts decide statutory limits; the legislature acts through legislation, not through legislative-appointed agencies vetoing executive action) remains the controlling analytical framework, but the specifics of the ARRC's authority and the boundaries of permissible legislative oversight have been adjusted by subsequent legislation and judicial decisions.

Background and statutory framework

The ARRC was created in the late 1980s as part of North Carolina's reaction to the explosive growth of agency rulemaking under the Administrative Procedures Act. State agencies were producing rules in unprecedented volume, and legislators worried that the rules were drifting from what the underlying statutes had actually authorized. The ARRC was the legislative response: a small body that could review newly adopted rules and flag those that overstepped statutory authority.

The original 90-day delay authority was a workable compromise. It gave the ARRC time to investigate, negotiate with the agency, and (in most cases) reach agreement on the rule's scope. Rules the agency would not modify typically went forward after 90 days, leaving any further fight for the courts. That structure respected the constitutional boundaries: the ARRC could flag issues, but it could not block rules indefinitely.

The proposed expansion would have changed the equilibrium fundamentally. An indefinite delay (until the General Assembly affirmatively legislated, or until the agency won a court fight under the declaratory judgment alternative) would shift the burden of inertia. Under the existing 90-day system, the agency's rule took effect unless the ARRC could persuade the agency to change. Under the proposed system, the rule would never take effect unless the ARRC's objection was overridden by formal action. That shift is what made the proposals constitutionally vulnerable.

The legislative veto cases at the federal level (Chadha being the clearest) established the principle that a legislative body cannot reach back and undo executive action without going through bicameralism and presentment, the full constitutional process for making law. The state-level analog runs into the same wall: a legislative agency that can effectively repeal agency rules has acquired a quasi-legislative authority that bypasses the constitutional process for actual legislation.

The opinion's reliance on Pennsylvania's Jubelirer decision is significant. Jubelirer was decided in 1989 and applied the Mistretta v. United States framework to evaluate the Pennsylvania IRRC. North Carolina's analytical approach often tracks Pennsylvania's, and the Jubelirer reasoning could easily be applied to invalidate North Carolina's ARRC if its powers were expanded as proposed.

Common questions

What was the ARRC's authority under the existing law in 1991?

A 90-day delay of agency rules under § 143B-30.2, which gave the Commission time to investigate and negotiate with the adopting agency. The 90-day cap was designed to keep the Commission's power within constitutional bounds.

Would the proposed declaratory judgment alternative (Alternative 2) have been more defensible than Alternative 1?

The AG treated both as substantially problematic. Alternative 2 still let the ARRC delay a rule until the agency obtained court approval, which kept the ARRC in the position of forcing executive action through a quasi-judicial review the Commission was not constitutionally allowed to conduct.

Did the AG's analysis mean the ARRC was unconstitutional as it then existed?

No. The opinion focused on the proposed expansion to indefinite delay. The existing 90-day system survived because the ARRC's role was investigative and negotiating, not adjudicatory or rule-killing in a permanent sense.

What was the relevant constitutional text?

Article IV, Section 1 vests judicial power in the courts. Article II, Section 1 vests legislative power in the General Assembly. Article I, Section 6 separates the powers among the branches. Article IV, Section 3 permits a limited delegation of legislative and judicial authority to administrative agencies, but only as reasonably necessary to discharge the agency's functions.

Did the General Assembly act on the draft bills?

The opinion was advisory on the constitutional question; the legislative outcome was a matter for the General Assembly. The historical record shows that subsequent ARRC reforms in North Carolina took a more incremental path that did not test the constitutional outer limits the way these drafts would have.

Citations

• N.C.G.S. § 143B-30.1, 143B-30.2 (ARRC structure and authority)
• N.C. Constitution, Article I, Sec. 6; Article II, Sec. 1; Article IV, Secs. 1, 3
• In re Appeal from Civil Penalty, 324 N.C. 373 (1989)
• Adams v. Dept. of Natural and Economic Resources, 295 N.C. 683 (1978)
• State v. Matthews, 270 N.C. 35 (1967)
• In re Broad and Gales Creek Community Ass'n, 300 N.C. 267 (1980)
• State ex rel Edmisten v. Tucker, 312 N.C. 326 (1984)
• State Tax Com'r v. Admin. Hearing Comm'n, 641 S.W.2d 69 (Mo. 1982)
• INS v. Chadha, 462 U.S. 919 (1983)
• Bowsher v. Synar, 478 U.S. 714 (1986)
• State ex rel Wallace v. Bone, 304 N.C. 591 (1982)
• Commonwealth v. Jubelirer, 567 A.2d 741 (Pa. Commw. 1989)
• Mistretta v. United States, 488 U.S. 361 (1989)
• In re Separation of Powers, 305 N.C. 767 (1982)

Source

• Landing page: https://ncdoj.gov/opinions/separation-of-powers-powers-of-judicial-department-administrative-agencies/

Original opinion text

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, 488 U.S. 361, 109 S.Ct. 647, 102 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