April 8, 2015. In North Carolina, most environmental regulations are adopted by commissions; the members serve on a voluntary basis and receive only travel expenses and a minimal per diem. Serving on a commission is like jury duty — for four years and with homework. Of the major environmental commissions, the Environmental Management Commission (EMC) adopts air quality, water quality, solid waste and hazardous waste regulations; the Coastal Resources Commission regulates coastal development; and the Mining and Energy Commission regulates mining and onshore energy exploration and development. The Department of Environment and Natural Resources (DENR) provides staff support to the commissions, but the commissions act independently in adopting environmental rules. DENR itself has very limited rulemaking authority.
The Governor and legislative leaders are currently battling for control of the commissions. For decades, laws creating boards and commissions either gave the Governor exclusive power to appoint the members or gave the Governor a majority of appointments and divided remaining appointments between the state House and Senate. Since 2010, the General Assembly has moved to increase legislative influence over the commissions. In the last three years, several laws creating new commissions have given the legislature a majority of the appointments. Reflecting both legislative interest and emerging issues, the new environment commissions have responsibilities at the crossroads of environmental regulation and energy development.
In 2012, the General Assembly created the Mining and Energy Commission to develop hydraulic fracturing rules. The commission has eight legislative appointees, three ex officio members (who serve by virtue of holding a specific position — such as the chair of N.C. State University’s Minerals Research Laboratory Advisory Committee) and only four Governor’s appointees. In 2014, the General Assembly continued the practice in creating the Coal Ash Management Commission to address coal ash contamination; an Oil and Gas Commission to regulate onshore and offshore energy production; and a newly constituted Mining Commission. All three of the new commissions are dominated by legislative appointees.
Late last year, Republican Governor Pat McCrory filed suit to challenge the constitutionality of provisions in the Coal Ash Management Act of 2014 (creating the Coal Ash Management Commission) and the Energy Modernization Act of 2014 (creating the Oil and Gas Commission and Mining Commission). Two former governors, Republican Jim Martin and Democrat Jim Hunt, joined as plaintiffs. In part, the case challenged the legislature’s authority to appoint a majority of the members serving on executive branch commissions as an unconstitutional violation of separation of powers. The lawsuit also raised some lesser separation of powers issues that I won’t go into here.
On March 16, 2015, a special three-judge panel of Superior Court judges ruled in the governors’ favor in a far-reaching decision that has implications for all of the commissions involved in environmental policy. A copy of the court’s order in McCrory v. Berger can be found here. Several things to note about the decision:
1. Although the lawsuit challenged the constitutionality of legislators appointing a majority of the members of a commission with administrative responsibilities, the decision goes further and concludes that it is unconstitutional for the General Assembly to appoint any members of a commission that exercises “executive” authority.
2. The decision has broader implications than even the judges recognized. First, the judges assumed that the Governor appointed all EMC members until 2013; in reality, the legislature had appointed at least one-third of the EMC members for decades. The judges also mistakenly concluded that authority to regulate energy development and mining had rested entirely in the Governor’s appointees to the old Mining Commission and DENR officials until 2014. In fact, a 2012 law gave most regulatory authority over onshore energy development and mining to a Mining and Energy Commission also composed largely of legislative appointees. Those errors caused the judges to mistakenly conclude that appointees of the Governor controlled implementation of laws governing coal ash disposal, energy exploration and development, and mining until very recently.
The judges’ misunderstanding of the reality before 2013-2014 suggests they may not have fully appreciated the impact of their decision. The practice of making legislative appointments to the environment commissions has been longstanding and well-entrenched. Calling into question the constitutionality of commissions with legislative appointees has implications far beyond three commissions too recently created to have taken any significant action. Which leads to the next problem–
3. The judges did not discuss how the ruling might affect the validity of actions taken by an unconstitutionally appointed commission. Of the three commissions directly at issue in the case, two (the Oil and Gas Commission and the new Mining Commission) do not officially come into being until July 1 2015. The Coal Ash Management Commission began meeting in 2014, but has not taken any action beyond submitting preliminary reports to the General Assembly. But a number of other commissions with legislative appointees have made significant regulatory decisions for years.
In January, Southern Environmental Law Center filed a lawsuit on behalf of the Haw River Assembly and an individual Lee County property owner separately challenging the constitutionality of the Mining and Energy Commission on separation of powers grounds. The lawsuit explicitly asked the court to void hydraulic fracturing rules adopted by the MEC based on the constitutional violation. That case is still pending. The EMC, which has had legislatively appointed members for decades, has been responsible for the entire body of state air quality and water quality rules.
One note– When the N.C. Supreme Court decided in Wallace v. Bone (1982) that the N.C. Constitution did not allow sitting legislators to also serve on the Environmental Management Commission, the court did not void EMC actions in which legislative members had participated. There is probably an inverse relationship between the number of past actions potentially affected and the likelihood that a court will void past actions based on a separation of powers violation.
4. The most immediate impact of the ruling may be on implementation of the Coal Ash Management Act. The General Assembly gave the Coal Ash Management Commission the power to make critical decisions about closure of coal ash impoundments. Under the law, the commission –rather than DENR — will make final decisions prioritizing coal ash impoundments for closure and approving closure plans. Those decisions will affect both the pace of closure and the environmental impacts. Because of the ruling in McCrory v. Berger, the Coal Ash Management Commission canceled a planned meeting for March and finds itself in limbo.
The next critical point in implementation of the Coal Ash Management Act will come in early 2016 when the Coal Ash Management Commission should receive DENR’s recommendations on prioritizing coal ash impoundments for closure. Timelines in the law anticipate a final decision by the commission within 60 days after receiving the DENR recommendations. It isn’t clear that the legal issues surrounding the commission will be resolved by then. One immediate question will be how to keep moving forward on implementation of the Coal Ash Management Act until those issues have been settled.
Next steps — Legislative leaders have appealed the decision in McCrory v. Berger to the N.C. Court of Appeals.