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 President Pro Tempore of the North Carolina Senate asked whether the General Assembly could let the Administrative Rules Review Commission (ARRC) delay an agency rule indefinitely when the commission thought it exceeded statutory authority. Two draft bills were under review. Under one, an objected-to rule would expire at a specified adjournment of the General Assembly unless legislation established authority for it. Under the other, its effective date would wait for the agency to obtain a declaratory judgment.

The AG concluded that both bills would likely be held unconstitutional. Determining the limits of a statutory grant to an agency is a judicial function, the opinion explained. It also reasoned that agency rulemaking implements statutes, while overriding an executive agency's rulemaking power requires legislation. A commission appointed by the General Assembly could not exercise the reserved judicial and supreme legislative powers the drafts would confer on it.

The opinion says existing law limited the ARRC to a 90-day delay, arising from a need to investigate and negotiate over challenged rules. It did not decide whether that existing delay was constitutional or identify a constitutional maximum duration. Its answer addressed the proposed indefinite powers.

Currency note

This opinion evaluates two proposals and the law as described in 1991. Check current statutes and decisions before relying on it for a present rule review.

Background and statutory framework

The opinion reports that the ARRC had eight members appointed by the General Assembly. It discussed the judicial function of interpreting statutory limits and the legislature's power to control execution of statutes through new legislation. It also examined whether the ARRC would be treated as a legislative agency for constitutional purposes despite a statutory designation placing it in the executive branch. A Pennsylvania ruling about a rule review commission informed that discussion. The AG concluded that the proposed powers would probably violate separation of powers.

The existing 90-day authority appears in the opinion as background and a comparison to the proposed indefinite delay. The AG did not announce that the existing system passed a constitutional test.

Common questions

What did the proposed bills allow?

Both would delay rules the ARRC deemed beyond statutory authority for an indefinite period. One linked expiration to a later legislative adjournment unless the General Assembly enacted authority for the rule. The other delayed effectiveness until the adopting agency obtained a declaratory judgment.

Did the AG say the existing 90-day delay was constitutional?

No. The opinion says current law limited the ARRC's delay to 90 days and describes investigation and negotiation as its purpose. Its constitutional conclusion concerned the two proposed bills.

Why did the AG object to the proposals?

The AG reasoned that deciding the limits of an agency's statutory authority is reserved to courts and that an executive agency's rulemaking cannot be overridden by a legislative agency exercising powers reserved to the General Assembly. The opinion predicted both drafts would face substantial constitutional problems.

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. Administrative Hearing Commission, 641 S.W.2d 69 (Mo. 1982)
• Immigration and Naturalization Service 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