February 1, 2016. On January 29, 2016, the N.C. Supreme Court issued a decision in McCrory v. Berger — a lawsuit filed by Governor Pat McCrory to challenge the constitutionality of two recent state laws that created new executive branch commissions dominated by legislative appointees. The ruling in the Governor’s favor means the three commissions cannot act until the General Assembly changes the statutes governing commission appointments.
Background. The lawsuit concerned appointments to the Coal Ash Management Commission, the Oil and Gas Commission, and the Mining Commission. The Coal Ash Management Act of 2014 gave the Coal Ash Management Commission authority to (among other things) make final decisions on closure of coal ash impoundments. The 2014 Energy Modernization Act eliminated the Mining and Energy Commission (created in 2012) and divided its regulatory responsibilities between a new Oil and Gas Commission and a reconstituted Mining Commission. In each case, the legislature gave itself the power to appoint a majority of the commission members.
The lawsuit filed by Gov. McCrory argued the legislative appointments violated the N.C. Constitution. In March of 2015, a special panel of three superior court judges ruled in the Governor’s favor, concluding that the N.C. Constitution bars legislative appointments to commissions that have executive authority. “Executive authority” generally means authority to implement existing laws as distinct from legislative authority to adopt new laws. See an earlier post on the superior court decision.
N.C. Supreme Court opinion. The N.C. Supreme Court opinion disagrees with the superior court decision on one key point — the Supreme Court ruled that the N.C. Constitution does not entirely bar the legislature from making appointments to executive branch commissions. The court interpreted the Constitution’s “appointments clause” to allow the legislature to make appointments to statutorily-created offices including commission seats. The court ruled, however, that legislative appointments to the Coal Ash Management Commission, Oil and Gas Commission and Mining Commission violated the separation of powers clause in Art. I, § 6 of the N.C. Constitution, which requires that “[t]he legislative, executive, and supreme judicial powers of the State government shall be forever separate and distinct from each other.”
The court concluded that the appointments scheme for the three executive branch commissions interfered with the Governor’s constitutional duty to insure that state laws are faithfully executed:
In light of the final executive authority that these three commissions possess, the Governor must have enough control over them to perform his constitutional duty. The degree of control that the Governor has over the three commissions depends on his ability to appoint the commissioners, to supervise their day-to-day activities, and to remove them from office.
The court pointed to three factors that combined to create an unconstitutional legislative interference with the Governor’s executive powers and responsibilities:
1. Each commission has authority to take final executive action (i.e., the Coal Ash Management Commission has the final authority to prioritize coal ash ponds for closure and approve final closure plans);
2. The legislature appointed a majority of the members to each commission; and
3. The legislature limited the Governor’s ability to remove commission members by allowing removal only for cause (such as misconduct).
The implication of the decision is that a separation of powers violation has occurred when all three conditions exist. The court included a footnote specifically suggesting that the outcome may be different with respect to a body like the Rules Review Commission that exercises a different kind of authority.
The court refused to address another separation of powers issue raised in the case. The Governor argued that the legislature also violated separation of powers by statutorily directing the Coal Ash Management Commission (CAMC) to operate “independently” of the executive department where it is housed. (Legislation creating the CAMC placed the commission under the Department of Public Safety.) The Supreme Court held the issue had been mooted by the portion of its decision ruling appointments to the CAMC unconstitutional. The issue could come up again if the legislature changes the appointments statute in response to the court’s decision, but leaves the “independence” provision in place.
Implications. The three commissions directly named in the case cannot act until the legislature changes the unconstitutional appointment provisions and new appointments are made. The Coal Ash Management Commission (CAMC) began meeting in 2014, but has not met since the March 2015 superior court decision that first ruled appointments to the CAMC unconstitutional. In the meantime, other pieces of the Coal Ash Management Act have moved forward; a newly appointed CAMC will need to catch up. The Oil and Gas Commission took over implementation of state laws on oil and gas development from the Mining and Energy Commission, so the court’s ruling could delay decisions related to hydraulic fracturing.
Two other pending lawsuits raising similar separation of powers issues may be affected by the McCrory v. Berger decision. The N.C. State Board of Education sued to challenge Rules Review Commission authority over rules adopted by the Board. The Board of Education raises several constitutional issues, including a separation of powers violation based on the fact that all Rules Review Commission members are legislative appointees. The McCrory v. Berger footnote about the Rules Review Commission seems to caution against assuming the court would also find RRC appointments to violate separation of powers. The footnote suggests that the Rules Review Commission’s specific function — to review and object to rules adopted by executive branch agencies — may put it in a different category than the commissions addressed in McCrory v. Berger.
Another pending separation of powers case in Wake County Superior Court challenges the constitutionality of appointments to the Mining and Energy Commission (MEC). The MEC seems to fit the McCrory v. Berger template: the commission had authority to take executive actions; the legislature made a majority of commission appointments; and the Governor only had the power to remove a commission member for cause. But the case also presents an additional question: Are actions taken by an unconstitutionally appointed commission void? Over a two-year period, the MEC developed and adopted state rules for hydraulic fracturing. Plaintiffs in the MEC case (Haw River Assembly and a Lee County property owner) have asked the Wake County judge to rule appointments to the MEC unconstitutional and void the rulemaking actions already taken by the commission. The superior court judge had delayed hearing the MEC case until the N.C. Supreme Court issued a decision in McCrory v. Berger. While the Supreme Court decision now provides a roadmap for addressing the separation of powers issue, it doesn’t provide any guidance on how a separation of powers violation affects past commission actions.