Request By:
Representative Gregory D. Stumbo
House Majority Floor Leader
Opinion
Opinion By: Albert B. Chandler III, Attorney General; Janet M. Graham, Assistant Attorney General; Jennifer L. Carrico, Assistant Attorney General
Opinion of the Attorney General
Introduction
In 1997, the General Assembly made a policy decision to transfer control of the University of Kentucky Community College System from the University of Kentucky Board of Trustees ("Board of Trustees" ) to the Board of Regents of the Kentucky Community and Technical College System ("KCTCS"). The General Assembly accomplished this transfer by enacting a compromise bill. The bill provided that the University of Kentucky would yield control over the community colleges but would still confer degrees to community college students so long as accreditation was not endangered. If accreditation was endangered, the General Assembly delegated power to the Board of Trustees and Board of Regents to resolve the accreditation problem.
During the transfer of control, the accrediting authority notified the University of Kentucky and KCTCS that accreditation would be problematic if the University of Kentucky conferred degrees on community college students when it no longer controlled the community college system. To resolve these accreditation concerns, the Board of Trustees and Board of Regents executed a Memorandum of Understanding regarding how degrees would be conferred. An opinion has been requested regarding whether the Memorandum of Understanding is beyond the scope of the delegated power.
However, the Memorandum of Understanding constitutes a valid exercise of delegated power. This delegation contains sufficient safeguards to prevent the administrative agencies from engaging in arbitrary action. Finally, this delegation comports with the mandates of the Delegation Doctrine and is consistent with basic canons of statutory construction.
Admonitions
Before addressing the legal analysis in this case, several caveats are necessary. First, it is not the Attorney General's duty nor the duty of the courts to judge the wisdom or expediency of a legislative enactment. That is a matter for the legislative branch of our government. See Commonwealth Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873 (1994), cert. denied , 513 U.S. 1000 (1994). Therefore, this Opinion will not address the wisdom of transferring control of the community college system from the Board of Trustees to the KCTCS Board of Regents. That decision has already been made through the enactment of the Kentucky Postsecondary Education Act of 1997 (House Bill 1). Instead, this Opinion will address only whether the delegation of powers contained in the statute is constitutionally valid.
Additionally, as with any opinion request, this Office cannot predict with certainty how a court will rule in any particular case. The primary legal issue in this case, the Delegation Doctrine, is itself subject to differing views as to its continued viability. Therefore, this Opinion should properly be interpreted as a prediction of how a court may address the legal principles involved; it is not intended to forecast with certainty how a specific court may rule on these issues.
Factual Summary
In May of 1997, the Kentucky General Assembly enacted the Kentucky Postsecondary Education Improvement Act of 1997. This Act transferred 1 the governance of Kentucky community colleges from the University of Kentucky Board of Trustees to the newly created KCTCS. However, as part of the legislation which was finally enacted, the Board of Trustees retained the authority to confer degrees on community college students. Specifically, KRS 164.580(4) provides that "degrees shall be conferred upon community college students and their diplomas awarded by the University of Kentucky board of trustees. " The statute qualifies this, however, by providing that if the accrediting agency determines that the organizational structure for KCTCS does not meet the requirements for the granting of degrees, then the KCTCS Board of Regents and the Board of Trustees shall initiate "corrective action. "
On November 15, 1997, the accrediting authority, the Southern Association of Colleges and Schools, ("SACS") issued a Report on the Substantive Change Process submitted by the University of Kentucky Community College System ("UKCCS"). In this Report, SACS notified KCTCS, the University of Kentucky and UKCCS that accreditation would be problematic if the University of Kentucky granted degrees to students for programs that it did not supervise or control. In this report, SACS questioned how KCTCS could be the governing board of UKCCS while the University of Kentucky still granted the degrees. Specifically, the Report stated:
House Bill 1 seems to establish the KCTCS Board as the governing board of the UKCCS; however, the UK Board of Trustees retain degree granting authority. The Committee questions how a board can be the governing board of the community colleges when a separate board has the authority to award the degrees to students completing course work in those community colleges. Until this issue is resolved, the Committee does not believe the Institutions . . . can comply with [Accreditation] Condition of Eligibility 3 . . . and Section 4.2.3 that states, "the governing board must be responsible for approving the number and types of degrees ."
(emphasis added).
Following the receipt of this Report, on September 15, 1998, the Board of Trustees and the KCTCS Board of Regents executed a Memorandum of Understanding. In this document, the Board of Trustees agreed that it would confer degrees on students who are enrolled by June 30, 1998, and who complete their degrees by June 30, 2004. Future students will have their degrees awarded by the Board of Regents of the KCTCS. Representative Stumbo has requested an opinion regarding whether this Memorandum of Understanding is contrary to the intent and requirements of KRS 164.580.
History of House Bill 1
The Kentucky Postsecondary Education Act of 1997 divested control of UKCCS from the Board of Trustees to KCTCS. The residual responsibility allotted to the Trustees in the Act is incidental to the complete transfer of authority over UKCCS to a new, independent and autonomous community college system and board of regents. The points of conflict that arose during the legislative process involved the transfer of UKCCS management authority to KCTCS and the authority to issue degrees.
House Bill 1 was introduced in the House of Representatives on May 12, 1997. Legislators in both the House and Senate offered several amendments regarding the governing authority of UKCCS that ultimately were rejected. These proposals included leaving the community college governance system untouched (House Floor Amendments ("HFA") 42, 45, 46 Barrows, HFA 59 Cave, Senate Floor Amendments ("SFA") 34, 35 Freeman, SFA 40 Harris, SFA 50 Scorsone) and granting the community college board of directors the option to stay part of UKCCS or be independent within KCTCS (HFA 52 Anderson).
Similarly, several amendments regarding degree programs were rejected on the floor of the House and Senate. The proposals included deleting language permitting the University of Kentucky to issue degrees to the community college students and allowing students to elect to receive a diploma from a state university offering a similar program (HFA 14 Crall), making the KCTCS board of regents responsible for reviewing and approving diploma and associate degree programs instead of the Council on Postsecondary Education (HFA 82 Palumbo, SFA 38 Harris, SFA 50 Scorsone), and eliminating Council approval of certain degree programs (SFA 38 Harris).
Because agreement could not be reached in the Conference Committee, a Free Conference Committee was appointed to consider the bill on May 29, 1997. The Free Conference Committee reported House Bill 1, and it was signed into law by the Governor on May 30, 1997.
Statement of the Issue
The issue in this case is whether the Memorandum of Understanding conflicts with the intent and spirit of KRS 164.580, or whether it is merely the exercise of a valid delegation of authority by the Board of Trustees and the Board of Regents.
The issue arises because the Memorandum of Understanding appears at first blush to be in contravention to KRS 164.580. In order to understand the issue, one must examine the degree-granting provisions of the statute which are contained in KRS 164.580(3) and (4). KRS 164.580(3)(a)-(d) provides:
(3) Students attending the University of Kentucky Community College System under the administration of the board of regents for the Kentucky Community and Technical College System may pursue four (4) kinds of degree programs:
(a) Associate degree programs approved by the board of trustees as of the effective date of the transfer of the management responsibilities of the University of KentuckyCommunity College System to the Kentucky Community and Technical College System. These programs shall be periodically reviewed by a process established by the board of trustees of the University of Kentucky. A report shall be forwarded to the chancellor of the University of Kentucky Community College System, the board of regents, and the board of trustees. If the board of trustees finds that a degree program does not meet its prescribed standards of quality and the institution does not correct the deficiencies within a two (2) year period, the board of trustees may recommend to the Council on Postsecondary Education that the program no longer bear the name of the University of Kentucky. The board of trustees of the University of Kentucky shall confer degrees and award diplomas for these programs;
(b) New associate degree programs to be awarded in the name of the University of Kentucky. These degree programs shall be reviewed and approved by the board of regents prior to submission to the University of Kentucky board of trustees for approval. The programs shall be offered only after the approval of the Council on Postsecondary Education. The board of trustees shall confer degrees and award diplomas for these programs;
(c) Associate degree programs developed by the Kentucky Community and Technical College System, approved by the board of regents and the Council on Postsecondary Education. The board of regents shall confer degrees and award diplomas for the approved programs; and
(d) Joint degree programs developed between the University of Kentucky Community College System and the Technical Institutions' Branch or other institutions.
(emphasis added). Following this section is KRS 164.580(4), the crucial section at issue in this opinion, which states:
(4) Degrees shall be conferred upon community college students and their diplomas awarded by the University of Kentucky board of trustees. If the regional accrediting agency for the community colleges in the process of completing its substantive change process review determines that the organizational structure of the Kentucky Community and Technical College System and its board of regents does not meet the requirements for accrediting individual community colleges and for granting of degrees by the University of Kentucky board of trustees, then the Kentucky Community and Technical College board of regents and the board of trustees shall initiate corrective actions within thirty (30) days of notification from the accrediting agency or within the time table specified by the accrediting agency to alleviate the problem .
(emphasis added).
The Memorandum of Understanding appears to alter the terms of the statute in KRS 164.580(3). Under KRS 164.580(3), both existing degree programs and new degree programs approved by the Board of Trustees as of the effective date of the transfer shall be conferred by the Board of Trustees. Associate degree programs developed by KCTCS would be awarded by the KCTCS Board of Regents. However, the Memorandum of Understanding provides that the Board of Regents will confer degrees for all existing and new degree programs:
To address the accreditation concerns expressed by COC/SACS relating to the provisions of KRS 164.580(3)(a), KCTCS has determined that all existing and new associate degree programs in the UKCCS will be offered pursuant to KRS 164.580(3)(c) and that the KCTCS Board of Regents will confer degrees and award diplomas for those programs.
Additionally, the Memorandum of Understanding states:
UKCCS students who were officially enrolled on or before June 30, 1999, in associate degree programs approved by the Board of Trustees of the University of Kentucky and who complete the associate degree program on or before June 30, 2004, shall have their degrees conferred by the University of Kentucky Board of Trustees. The degrees for all other students enrolled in UKCCS programs shall be awarded by the Board of Regents of the Kentucky Community and Technical College System, not the Board of Trustees of the University of Kentucky.
In the sections below, this Opinion analyzes the Memorandum of Understanding in relation to the structure of KRS 164.580(4).
Analysis of the Structure of the Statute
Before proceeding with an analysis of the general principles of the delegation doctrine, one must first discuss some statutory construction principles and comment on the basic structure of KRS 164.580(4). The structure of KRS 164.580(4) is written in the form of a general directive which is followed by a subsequent proviso which limits and qualifies this general directive. A proviso is defined as follows:
The natural and appropriate office of a proviso is to create a condition precedent; to except something from the enacting clause; to limit, restrict or qualify the statute in whole or in part; or to exclude from the scope of the statute that which otherwise would be within its terms.
73 Am.Jur.2d Statutes , § 318 (1974) (emphasis added). KRS 164.580(4) contains a general directive which states that the University of Kentucky will confer degrees for the community colleges. However, this is followed by a specific qualifying proviso which provides an exception if accreditation will be endangered.
The interpretation of the proviso is crucial to the proper construction of the statute. In construing the statute, one must determine whether the proviso is limited to the specific section in which it occurs, or whether it should be applied to all of the sections dealing with the granting of degrees. The proper interpretation of this proviso is to construe it so that it applies to qualify all of the prior provisions in KRS 164.580 dealing with the granting of degrees. This is in line with the case of Dalton v. State Property and Buildings Comm'n, Ky., 304 S.W.2d 342 (1957) in which the Court made a similar interpretation, stating:
The common and accepted doctrine is that the operation of a proviso is usually confined to the clause of the provision immediately preceding it, and it will be so applied, unless, in effecting the legislative intent, it is necessary to apply it to the other provisions of the act or to the entire act.
Id. at 353-354, quoting Newport Benev. Burial Ass'n v. Clay, 170 Ky. 633, 186 S.W. 658, 663 (1916) (emphasis added). See also Lawrence Oil Corp. v. Metcalfe, 241 Ky. 353, 43 S.W.2d 986 (1931) (holding that a proviso should be construed together with the enacting clause to give effect to each and to carry out the intention of the legislature as manifested in the entire act.)
In accordance with Dawson , the appropriate way to construe KRS 164.580(3) and (4) is to hold that the proviso contained in section (4) applies not only to section (4), but also to sections (3)(a-c). In other words, the degree granting provisions contained in sections 3(a-c) are qualified by the proviso contained in section 4. Interpreting the proviso in this fashion harmonizes sections 3 and 4 of KRS 164.580 and gives effect to both provisions. This is the Court's duty if there is the appearance of a conflict between the sections. See Commonwealth v. Halsell, Ky., 934 S.W.2d 552 (1996).
This interpretation complies with the primary rule of statutory construction which is to ascertain and give effect to the intention of the Legislature. Commonwealth v. Nunnally, Ky., 920 S.W.2d 523 (1996). The legislative intent of this statute was to divest control of the community colleges from the Board of Trustees and place it in the hands of a newly created agency, KCTCS, with the stated goal of improving postsecondary education in Kentucky. Nowhere does there appear to be an intention by the General Assembly to risk the loss of accreditation in order to allow the University of Kentucky to place its name on community college diplomas. If this were the case, there would be no reason for the General Assembly to have placed the proviso in the statute.
Additionally, in construing statutory provisions, courts presume that the legislature did not intend an absurd result. Commonwealth Cent. State Hospital v. Gray, Ky., 880 S.W.2d 557 (1994). It is absurd to presume that the legislature would, on the one hand, enact a sweeping reform of postsecondary education in which the University of Kentucky was stripped of control of the community colleges, but on the other hand let the accreditation of the community colleges be contingent upon the University of Kentucky conferring degrees over the very programs which it no longer controls. This is particularly absurd when one considers that without accreditation, the reforms set forth in the statute would be a nullity.
The Delegation Doctrine
With the statutory construction principles as a backdrop, one must next examine the Delegation Doctrine. The Delegation Doctrine is an applied aspect of the constitutional doctrine of the separation of powers. It has been described as follows:
Administrative agencies derive their power and authority from other sources. They are agents of those principals and cannot act beyond the intended grant of authority. Generally, the authority comes from a delegation by the legislative branch or from a delegation by the executive to perform some duty assigned to it by the legislature, and hence agencies have only such authority as is delegated by the legislature. From this, we derive a basic concept that an agency cannot act outside its delegated authority.
Koch, Administrative Law & Practice § 12.13, p. 170 (2d ed. 1997).
Courts developed the "Delegation Doctrine" 2 to ensure that administrative agencies do not become arbitrary super-legislatures which are not answerable to any constituency. The Kentucky Supreme Court has held that the purpose of the doctrine should be "protecting against unnecessary and uncontrolled discretionary power." Miller v. Covington Development Authority, Ky., 539 S.W.2d 1, 5 fn. 9 (1976) quoting Davis, Administrative Law Text § 2.08 (3d ed. 1972) (emphasis in original). The Delegation Doctrine also keeps the lawmaking power close to the people, and it facilitates the identification of the actual lawmakers so that constituents can hold them responsible. Sutherland, Statutory Construction , Vol. 1, p. 122 (1992-1994).
The Delegation Doctrine in the Federal Courts
During the earlier part of this century, the United States Supreme Court used the Delegation Doctrine to invalidate legislation. Two specific instances of this occurred with respect to legislation involving the New Deal and the economic recovery efforts during the Great Depression. See A.L.A. Schecter Poultry Corp. v. United States, 295 U.S. 495 (1935) and Panama Refining Co. v. Ryan, 293 U.S. 388 (1935). However, in the recent era, the federal courts rarely have used the delegation doctrine to strike down legislation, and instead have used the doctrine as a mere canon of statutory interpretation. See Indus. Union Dept. AFL-CIO v. American Petroleum Institute, 448 U.S. 607, 685 (1980); see generally Aman & Mayton, Administrative Law 24-25 (1993).
The Delegation Doctrine in Kentucky Courts
The Kentucky courts have not been as deferential toward administrative agency power as have the federal courts and have struck down legislative delegations as recently as 1996. See Flying J Travel Plaza v. Commonwealth Transportation Cabinet, Ky., 928 S.W.2d 344 (1996). Probably the reason for the continued viability of the Delegation Doctrine in Kentucky is due to the fact that unlike the federal Constitution, the Kentucky Constitution 3 contains specific directives in Sections 27, 28 and 29 relating to the separation of powers. 4 Also, Kentucky courts have adopted a strict view on separation of powers questions. In LRC v. Brown, Ky., 664 S.W.2d 907 (1984), the Court invalidated several acts relating to the Legislative Research Commission ("LRC") which attempted to give the LRC powers which encroached upon the executive branch. The Court noted that it was impermissible for the LRC to make legislative decisions which should be made by the entire General Assembly. Id. at 930. In this case, the court set forth the standard of review for interpreting Sections 27 and 28 of the Constitution, stating: "Moreover, it has been our view, in interpreting Sections 27 and 28, that the separation of powers doctrine is fundamental to Kentucky's tripartite system of government and must be 'strictly construed.'" Id. at 912, quoting Arnett v. Meredith, 275 Ky. 223, 121 S.W.2d 36, 38 (1938). See also Brown v. Barkley, Ky., 628 S.W.2d 616 (1982) (discussing Section 69 of the Constitution relating to the executive branch powers).
In reviewing legislative delegations, one commentator has noted that Kentucky courts have proceeded through three phases with respect to delegation theory, with each successive phase becoming a bit more lenient. See Ziegler, Legitimizing the Administrative State: the Judicial Development of the Nondelegation Doctrine in Kentucky , 4 Northern Kentucky Law Review 87, 117 (1977). During the initial phase, the Court attempted to make an illusory distinction between "administrative" powers versus "legislative powers" in an attempt to validate agency delegation. Id. During the next phase, the courts upheld delegations of power if the legislature had articulated "adequate standards." The commentator denoted the final phase as the "general safeguards" test which has been propounded by Professor Davis in his treatise on administrative law and which was first adopted in Kentucky in the case of Butler v. United Cerebral Palsy of Northern Ky, Inc., Ky., 352 S.W.2d 203 (1961).
The safeguards test outlined in Butler still appears to be the approach used by the Kentucky courts to adjudicate delegation cases. However, interestingly, the Butler case has not been cited by the Kentucky Supreme Court in a majority opinion since 1984. See LRC v. Brown, Ky., 664 S.W.2d 907 (1984). (The Butler safeguards test has been cited more recently by the Kentucky Court of Appeals in Coppage v. Ohio County Board of Educ., Ky. App., 860 S.W.2d 779 (1992)). Following Butler , the Kentucky Supreme Court drifted from the strict use of the safeguards approach and now appears to address delegation questions by using a pragmatic, case by case approach. The Court has even acknowledged that these cases are somewhat fact sensitive: "The principle that the Constitution does not prohibit some delegation of legislative power is well settled. . . It is all a matter of degree to be determined in the light of specific facts and circumstances." Hopkins v. Ford, 534 S.W.2d 792, 795 (1976). See Miller v. Covington Development Authority, Ky. 539 S.W.2d 1, 4 (1976) (stating "each new application comes down to a matter of degree and calls for a value judgment.") However, since Butler is still good law and is the last definitive standard set forth by the Court, this opinion will analyze the delegation using the "safeguards" test before commenting on some of the more recent opinions from the Kentucky Supreme Court.
The "safeguards" approach
Kentucky adopted the "safeguards" approach to delegation questions in the case of Butler v. United Cerebral Palsy of Northern Ky., Inc., Ky., 352 S.W.2d 203 (1961). In this case, the General Assembly enacted public aid to private institutions for the education of "exceptional children." The Act failed to define "exceptional children, but instead, it gave broad authority to the State Board of Education to approve money for these facilities. The Court addressed whether the Act was an attempt to delegate legislative power to an administrative agency in violation of Kentucky Constitution Sections 27 and 28. Id. at 205. The Court also addressed the question of whether the legislature over-delegated its powers in failing to prescribe more definite standards to be observed by the administrative agency in regulating this area. Id. at 207.
The Court stated that it would examine the law "in terms of the practical needs of effective government, and in terms of safeguards against abuse and injustice." See Hohnke v. Commonwealth, Ky., 451 S.W.2d 162, 165 (1970) (stating "many of the cases advert to the necessity for 'standards' when the real need is not for standards but for safeguards. ") Id. at 207. The Court in Butler next held that the Board of Education is better qualified than the legislature to establish and carry out the policies and procedures that may be desirable and is one of the most responsible and long-established agencies of the state government. Id.
The Butler case examined two primary factors in determining whether a delegation was valid: the longevity of the agency to which the power has been delegated, and the nature of the subject matter, i.e., whether it involves expertise which would be beyond the knowledge of the legislature. Beginning with the longevity factor, there are three public agencies to which power has been delegated: the Board of Trustees, the KCTCS Board of Regents, and the Council on Postsecondary Education. The Board of Trustees is a long-standing entity, having been in existence since approximately 1918. In fact, the Court has upheld delegations of power to the Board of Trustees on prior occasions. See Commonwealth ex rel Meredith v. Johnson, 292 Ky. 288, 166 S.W.2d 409 (1942). The other established entity is the Council on Postsecondary Education. Under its current nomenclature, the Council has been in existence since 1992. However, it is the successor entity to the Council on Public Higher Education which has been in existence since approximately 1934. Therefore, as a successor entity, it is probable that a Court would give deference to its longstanding existence. The only new entity to which power has been delegated is the KCTCS Board of Regents. It certainly is a new, untested entity, having been created in May of 1997. However, the statute has given final approval on any corrective action to the Council on Postsecondary Education which is a sufficient safeguard.
As noted above, Butler next addressed agency expertise in assessing the adequacy of safeguards. The Court specifically noted that the Board of Education was better qualified than the legislature to determine the policies and procedures that may be desirable in the area of education. The Court in Butler impliedly indicated that the area of education is a specialized area requiring expertise in administration. Other cases have also supported the view that the legislature needs the skill of educational agencies and administrators with expertise in this area. See Coppage v. Ohio County Board of Educ., Ky.App., 860 S.W.2d 779 (1992). If expertise is needed in administering primary education, it is also needed in administering the postsecondary education system in Kentucky.
Although the Kentucky Supreme Court has upheld delegations of power, it has not been timid in striking down statutes when the agency is newly created or the area does not involve an area of expertise. In Miller v. Covington Development Authority, Ky., 539 S.W.2d 1 (1976), the Kentucky Supreme Court declared two acts of the General Assembly to be invalid on the grounds of improper delegation. The first statute created an independent local agency to establish a development plan and gave it the power to acquire land, construct residential housing, and sell property. None of these acts required approval from the municipal body. The Court invalidated the statute, holding:
In other instances too numerous to recount, delegations of authority have been upheld on the theory that the legislative body has prescribed standards or safeguards that so confine the administrative body's powers that it can be said that they do not exceed the scope of mere details in the execution. In our judgment they are not so confined here, nor do we have the safeguard of a long-established administrative agency such as a state highway department or department of education, with a track record of experience and expertise in a well-recognized field. Nor, indeed, are the powers delegated to the LDA confined to matters so involved or so beyond the technical competence of a legislative body that it would be unrealistic not to vest them in an administrative agency .
Id. at 4 (emphasis added). In this case, the Court looked with disfavor upon a new agency which had little experience in the administrative realm.
Additionally, the Court based its decision in this case on the fact that there was no practical reason for putting the decision-making power on the agency rather than having the municipal officers make the decision as to what parts of the city would be renovated. The Court noted that there are two basic reasons for having an agency make decisions rather than a legislative body: 1. the matters are "details" which are not sufficiently important to occupy the legislature's time; or 2. some practical reason impedes the legislature being able to handle the matter itself. Id. at 4-5.
In this case, awarding diplomas does not constitute a "detail" which is not sufficiently important for the legislature to address. However, there is a practical reason for allowing the agency to handle this matter. Since the legislature meets only once every two years, matters of accreditation may arise during the times that the legislature is not in session. Therefore, it may not be possible to address these matters in the timely fashion necessary to assure that there is no loss of accreditation.
Although the cases have addressed the constitution of the agency and agency expertise, the area which has received the least attention from the case law is the area of "statutory safeguards" which prevent the exercise of arbitrary power. KRS 164.580(4) itself contains checks and balances which cut against the exercise of arbitrary power. For example, in order to initiate the corrective action outlined in KRS 164.580(4), both the Board of Trustees and the Board of Regents must agree. Thus, no one entity has complete discretion to control the corrective action. In addition, should these agencies attempt to arbitrarily exercise this power, then the Council on Postsecondary Education can overrule their actions. KRS 164.580(4); KRS 164.5807(8).
Not only are there safeguards contained in the specific section of the statute which provides for the corrective action, the statute contains additional safeguards in the selection of the Council on Postsecondary Education and the Nominating Committee of the Council. KRS 164.011; 164.005. The statute requires that the Governor take into account parity with respect to geographical representation, political party affiliation, and gender. KRS 164.005(2)(b); KRS 164.011(2). Additionally, both of these boards are set up for staggered terms. These safeguards ensure that one political party or geographic area will not exercise arbitrary power in the decision-making process.
The statute includes another statutory safeguard due to the contextual setting of the phrase "corrective action. " The fact that the phrase "corrective action" is placed within the section on the conferring of degrees indicates that the corrective action should relate to this and not be a broad-based exercise of power which is unrelated to that particular topic. This comports with long-standing case law that words and phrases in statutes must be construed in accordance with the context in which they are used. See Saulsberry v. North American Refractories, Co., 278 Ky. 808, 129 S.W.2d 525 (1939).
The Intelligibility Principle
Although it is difficult to make broad generalizations regarding the method that the Kentucky Supreme Court has employed in handling delegation cases, it does seem clear that the Court is more inclined to invalidate a delegation if the language of the statute is vague or overly broad. This is sometimes referred to as the intelligibility principle. As delineated by the Kentucky Supreme Court, this is defined as follows:
Where the law-making body, in framing the law, has not expressed its intent intelligibly, or in language that the people upon whom it is designed to operate or whom it affects can understand, or from which the courts can deduce the legislative will, the statute will be declared to be inoperative and void.
Folks v. Barren County, 313 Ky. 515, 232 S.W.2d 1010, 1013 (1950). 5 This principle has been applied in delegation cases such as Kerth v. Hopkins County Board of Education, Ky., 346 S.W.2d 737 (1961). In that case, the Court invalidated a provision of the prevailing wage law on the ground that the agency did not have sufficient guidance to establish the prevailing wage, stating:
The question is not whether the legislature illegally delegated its powers but whether it failed to delegate any power in this respect by failing to prescribe the manner of its exercise. In other words, we have no more than a general indication of legislative policy without implementation which would enable the administrative agency to function according to law.
Id. at 741.
One recent case which invalidated a delegation of power also seems to rely upon the intelligibility principle without ever stating it expressly. In Diemer v. Commonwealth Transportation Cabinet, Ky., 786 S.W.2d 861 (1990), the Court invalidated a portion of the Billboard Act which delegated power to the Secretary of Transportation to determine what constituted an "urban area." Id. at 866. This case is troubling since a Kentucky statute actually defined the phrase "urban area." Id. at 864. However, the Court held that this was not a sufficient safeguard for the exercise of delegation, nor was the statute's directive that the Secretary must not act in contravention to the federal statute which also defined urban area. The Court specifically noted the principle that it was the "nondelegable duty of the legislative department to define statutory terms sufficiently so that persons of ordinary intelligence do not have to guess at their meaning." Id. at 864. The troubling aspect of this case is that there was a defined standard for the agency, and yet the Court still found this to be an insufficient safeguard.
One could argue that KRS 164.580 is lacking in intelligibility in failing to define the phrase "corrective action" and narrowing this phrase to a specific set of actions which could be taken by the boards. However, in interpreting the phrase "corrective action, " several statutory construction principles again illustrate that this standard is intelligible. First, Kentucky cases are clear that in interpreting a statute, a court must construe all words and phrases according to their ordinary meaning. Hoy v. Kentucky Indus. Revitalization Authority, Ky., 907 S.W.2d 766 (1995);Lynch v. Commonwealth, Ky., 902 S.W.2d 813 (1995). The phrase "corrective action" occurs in approximately 32 different statutes in the KRS. These statutes vary from the Code of Legislative Ethics (KRS 6.930) to provisions on Motor Vehicles (KRS 186A.240) to environmental protection (KRS 224.01-405.). Interestingly, the phrase is defined in very few of the statutes in which it occurs. Although this can be interpreted in various ways, the better interpretation is that this phrase is a broad, commonly-used phrase which gives the administrative agency leeway to address the day to day situations that arise. Additionally, as previously noted, the "corrective action" provision is placed in the context of the degree granting authority which arguably limits the corrective action to addressing only this subject.
Delegations of Power to Private Entities
Not only is it necessary to examine the nature of the public entities in this case, but one must also examine the role that the private entity SACS plays in this delegation. There are basically two concerns in any delegation analysis involving a private entity. First, one must examine whether legislative power has been delegated to a private entity which is in derogation of Sections 27, 28 and 29 of the Kentucky Constitution. Kentucky cases have held that delegations of legislative power to private persons or corporations is unconstitutional. See Baughn v. Gorrell & Riley, 311 Ky. 537, 224 S.W.2d 436, 438 (1949) (stating "Neither the Legislature nor any political subdivision possessing legislative power may delegate the exercise of such power to private persons or corporations."); Klein v. City of Louisville, 224 Ky. 624, 6 S.W.2d 1104, 1110 (1928). Secondly, one must determine whether a law takes effect upon the approval of a third party entity 6. Both of these issues will be discussed below.
First, the General Assembly has not delegated power to the private entity, SACS. Instead, it has merely recognized that SACS is the accrediting authority for KCTCS. The statute is clear that SACS does not determine the corrective action that is to be taken by the administrative bodies. Instead, the various boards and/or the Council on Postsecondary Education determine the corrective action to be taken. One could argue that SACS has been delegated "de facto" power by the General Assembly because it is the entity that will decide whether the corrective action taken by the agencies is sufficient for accreditation purposes. However, this is distinct from a generalized grant of power to a private entity.
The second aspect of the private entity examination is whether the statute at issue "takes effect on approval of other authority than the General Assembly" which is a violation of Kentucky Constitution Section 60. The case of Young v. Willis, 305 Ky. 201, 203 S.W.2d 5 (1947) helps interpret this section of the Kentucky Constitution. In Young , a drycleaner challenged the constitutionality of the Wage and Hour Law as it applied to women and minors. Id. at 6. In this case, the statute provided that the Commissioner of Industrial Relations could investigate the wages being paid to women and minors. If he believed that women and minors were being underpaid, he was required to request the Governor to appoint a Wage Board to establish fair wages. The Court examined whether this was an invalid delegation, stating:
we admitted the difficulty of discerning the distinction between . . . the power to make laws and the power to make regulations within the scope of legitimate delegated authority. We stated the true distinction to be: "The legislature cannot delegate its power to make a law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend."
Id. at 7, quoting Bloemer v. Turner, 281 Ky. 832, 137 S.W.2d 387, 391 (1939). In this case, the legislature has not delegated the power to make a law. Instead, it has delegated the power to determine a fact upon which the law makes its own action depend, i.e., it has delegated the power to determine if the corrective action provision has been triggered.
Was the proviso triggered in this case?
One must next address whether the provision providing for corrective action was triggered. This inquiry has less to do with the law than it does with a pragmatic view of accreditation and a review of SACS' materials relating to the accreditation procedure. From a review of SACS materials on accreditation, it is obvious that it had major problems with the Board of Trustees granting degrees while not having control over the educational curriculum. SACS accreditation documents support the view that corrective action was necessary. In SACS Criteria for Accreditation, this document states: "Statements throughout the Criteria for Accreditation using the word 'must' (or similar imperatives) are interpreted to mean that institutions are required to meet those specific criteria ." Under its Conditions of Eligibility in Section 1.4 SACS provides in Condition 3:
The institution must have a governing board of at least five members, which has the authority and duty to ensure that the mission of the institution is implemented. The governing board is the legal body responsible for the institution. Evidence must be provided that the board is an active policy-making body for the institution.
(emphasis in original). Additionally, Section 4.2.3 in the Criteria for Accreditation as follows: "The governing board must be responsible for approving the number and types of degrees; . . ."
The requirements at issue in this case were mandatory and basic threshold requirements that had to be met in order for accreditation to occur. Not only does an institution have to establish compliance with these basic requirements, but it also must demonstrate compliance with the Criteria for Accreditation. 7 The Conditions of Eligibility are basic qualifications that an institution of higher education must meet to be accredited by the Commission on Colleges. They establish a threshold of development required of an institution seeking initial or continued accreditation by the Commission and reflect the Commission's basic expectations of candidate and member institutions. Compliance with the institutions must also demonstrate compliance with the Criteria for Accreditation which holds institutions to appropriately higher standards of quality. The Conditions of Eligibility can be found in Section 1.4 of the Criteria for Accreditation . Thus, these were not minor infractions, but basic threshold requirements.
One could argue that section 4 has not been triggered because the boards took proactive steps before the triggering event occurred. However, the better view is that the proviso was triggered, and the actions of the Board of Trustees and the Board of Regents support this view. The proviso was triggered because it does not require that the boards wait until accreditation is lost before they are required to take corrective action. KRS 164.580(4) provides:
If the regional accrediting agency for the community colleges in the process of completing its substantive change process review determines that the organizational structure of the Kentucky Community and Technical College System and its board of regents does not meet the requirements for accrediting individual community colleges and for granting of degrees by the University of Kentucky board of trustees, then the Kentucky Community and Technical College board of regents and the board of trustees shall initiate corrective actions within thirty (30) days of notification from the accrediting agency or within the time table specified by the accrediting agency to alleviate the problem.
(emphasis added). As previously noted, the statute does not require the agencies to wait until accreditation is lost before addressing the problem. Instead, the statute requires the boards to act swiftly if SACS, during this process , finds that "the organizational structure of . . .KCTCS and its board of regents does not meet the requirements for accrediting individual community colleges and for granting of degrees by the University of Kentucky board of trustees. " The provision was triggered, and the action of the boards in executing the Memorandum of Understanding supports this view.
In determining whether the proviso provision has been triggered, the boards are actually engaged in determining a legislative fact. The question of how to characterize whether this determination involves an adjudicative fact or a legislative fact is important since adjudicative facts implicate different due process concerns than do legislative facts. In Professor Davis' Administrative Law Treatise , he explains the difference in these two types of determinations and also delves into the due process considerations, stating:
An individual has a constitutional right to be heard only with respect to . . . adjudicative facts. . .; adjudicative facts are roughly the kind of facts that go to a jury in a jury case. . . . Legislative facts do not describe the individual who is uniquely affected by the government action or that individual's past conduct. Rather, legislative facts are the general facts that help a government institution decide questions of law, policy, and discretion.
1. K. Davis, Administrative Law Treatise , § 9.2, p. 7 (1994). See McKinstry v. Wells, Ky. App., 548 S.W.2d 169, 173 (1977) (holding that a legislative body is not governed by judicial standards in making findings of legislative facts.)
One finally must address whether agencies are permitted to determine these legislative facts. Kentucky courts have indeed permitted agencies to make these determinations. In Commonwealth ex rel Meredith v. Johnson, 166 S.W.2d 409, 292 Ky. 288 (1942), the Court specifically addressed whether administrative bodies could be given the power to determine legislative facts. The Court held that this was proper, stating:
This court has heretofore recognized the right of the legislative branch of the government to delegate to executive officers the power to determine some fact upon which the act of the Legislature made or intended to make its own action to depend, . . . and that is all the Legislature has done in the Act under consideration.
Id. at 415.
Interestingly, in Johnson , one of the specific provisions which was upheld was the power of the University of Kentucky Board of Trustees to determine the needs and requirements of the University and to make capital expenditures. Id. at 415-16. Arguably, if the Board of Trustees has been granted the right to determine needs for capital expenditures it would also be entitled to determine whether corrective action should be taken for accreditation purposes. See also Young v. Willis, Ky., 203 S.W.2d 5, 305 Ky. 201 (1947) (holding that the Commission of Industrial Relations could determine the triggering event for requesting the Governor to appoint a Wage Board).
Conclusion
The Memorandum of Understanding is a valid exercise of delegated power which does not contravene the Kentucky Constitution. This delegation of power contains sufficient safeguards to prevent the administrative agencies from engaging in arbitrary action. Finally, this delegation comports with the mandates of the Delegation Doctrine and basic principles of statutory construction.
Footnotes
Footnotes
1 The effective date of the transfer was July 1, 1998.
2 The Delegation Doctrine is also referred to as the Nondelegation Doctrine.
3 Section 2 of the Kentucky Constitution also prohibits arbitrary power.
4 Section 27 of the Kentucky Constitution provides:
The powers of the government of the Commonwealth of Kentucky shall be divided into three distinct departments, and each of them be confined to a separate body of magistracy, to wit: Those which are legislative, to one; those which are executive, to another; and those which are judicial, to another.
Section 28 of the Kentucky Constitution provides:
No person or collection of persons, being of one of those departments, shall exercise any power properly belonging to either of the others, except in the instances hereinafter expressly directed or permitted.
Section 29 of the Kentucky Constitution provides:
The legislative power shall be vested in a House of Representatives and a Senate, which, together, shall be styled the "General Assembly of the Commonwealth of Kentucky.
5 It should be noted that the lack of intelligibility principle is generally stated in cases relying upon the "standards" approach to administrative delegation questions, rather than the safeguards approach.
6 The statute concerning the awarding of diplomas in KRS 164.580(4) contains a contingency provision which is that if the accreditation agency ("SACS") notifies the boards that UK cannot give diplomas and keep its accreditation that the boards are required to take corrective action within 30 days. It first should be noted that legislatures may enact provisions of statutes which only come into effect upon the happening of a contingency. According to 73 Am.Jur.2d Statutes § 366 (1974 and Supp. 1998), "The rule is well settled that while the legislature may not delegate its power to make a law, it may make a law to become operative on the happening of a certain contingency or future event." See United States v. Bishop, 555 F.2d 771 (10th Cir. 1977) (holding that Congress may predicate the operation of a statute upon a presidential determination of a national emergency).
7 The Accreditation Procedures document from SACS states: "Any institution seeking authorization of a Candidacy Committee must document its compliance with each of the thirteen Conditions of Eligibility and provide evidence that it employs a faculty which complies with credentialing requirements of the Criteria for Accreditation ."