RELIABLE CONTRACTING COMPANY, INC. v. MARYLAND UNDERGROUND FACILITIES DAMAGE PREVENTION AUTHORITY.
No. 47, Sept. Term, 2015.
Court of Appeals of Maryland.
March 28, 2016.
133 A.3d 1112
McDONALD, J.
Paul M. Finamore (Rachel M. Severance, Niles, Barton & Wilmer, LLP, Bowie, MD), on brief, for Respondent.
Argued before: BARBERA, C.J., BATTAGLIA, GREENE, ADKINS, McDONALD, WATTS, and LAWRENCE F. RODOWSKY (Retired, Specially Assigned), JJ.
McDONALD, J.
Underground infrastructure, such as the cables and pipes that distribute water, gas, electricity, and other substances essential to modern life, is susceptible to damage during excavations. To prevent such incidents, State law has established a “one-call system,” sometimes referred to as “Miss Utility.”
This case arose when the Authority cited Petitioner Reliable Contracting Company, Inc., (“Reliable Contracting“) for violating the statute and imposed a civil monetary penalty. Reliable Contracting challenges the constitutionality of the statutory provisions that empower the Authority to adjudicate violations and assess penalties. It argues that the statutory scheme violates the separation of powers set forth in the Maryland Constitution because it vests judicial power in a non-judicial body—the Authority. Reliable Contracting also contends that the statute fails to provide adequate guidance to the Authority for the assessment of penalties, which would also
We hold that the statutes that govern the Authority suffer from neither constitutional defect. Like many other administrative agencies, the Authority‘s quasi-judicial powers are limited and subject to judicial review. It is true that the statute authorizing the Authority to impose civil penalties does not itself specify the criteria for the Authority to consider in setting the amount of a civil monetary penalty. However, the General Assembly has enacted a general statute providing criteria for assessment of civil penalties by State administrative agencies when no other statute or regulation does so. Although the Authority itself questions whether that statute applies to it, we agree with the Court of Special Appeals that it does.
I
Background
A. Statutory Framework
One-Call System to Protect Underground Facilities
In the modern world, electricity, gas, oil, water, sewage, and other substances are transmitted underground via pipes, ca-bles, and accessories that are subsumed under the generic statutory phrase “underground facilities.”1 Damage or dislocation of underground facilities can result in death or injury to individuals, damage to property, and the loss of essential public services.2 To protect underground facilities, the General Assembly has enacted a comprehensive statutory scheme for regulating excavation or demolition that could damage them.
The statute creates a one-call system, colloquially known as “Miss Utility,” which notifies owners of underground facilities of a planned demolition or excavation that may affect those facilities.
The Authority
The statute creates the Authority to carry out certain enforcement and public education facets of the one-call system. The Authority consists of nine members appointed by the Governor from lists submitted by organizations representing various types of stakeholders.
In carrying out its functions under the statute, the Authority is authorized to conduct hearings, at which testimony is to be given under oath and recorded.
To the extent that the Authority requires funding to carry out its responsibilities, the General Assembly has directed the Authority not to look to appropriations in the State budget, but rather to obtains funds from “(1) a federal or State grant; (2) filing fees and administrative fees for complaints heard by the Authority ...; and (3) any other source.”
Enforcement of the One-Call System by the Authority
The Authority is charged with enforcing compliance with the notice provisions of the one-call system. It conducts hearings on complaints of violations, may assess a civil penalty when a violation is found, and may also enter into settlements in lieu of assessing a civil penalty.
In addition to its enforcement function, the Authority also administers a special, non-lapsing fund devoted to public education and the development of safety procedures.
B. Facts and Procedural History
In February 2013, a local utility notified the Authority that Reliable Contracting had violated the statute by undertaking an excavation without using the one-call system and, as a result, had damaged the utility‘s facilities. On April 16, 2013, after an investigation, the Authority notified Reliable Contracting that it would assess a civil monetary penalty of $2,000 for a violation of
Reliable Contracting requested a hearing. At the hearing in September 2013, it did not contest any of the Authority‘s findings; instead, it challenged the constitutionality of the Authority‘s enabling statute. Specifically, Reliable Contracting asserted that, in permitting the Authority to adjudicate violations and assess civil penalties, the statute conferred judicial power on a non-judicial body and thereby violated the separation of powers required by the State Constitution. Reliable Contracting also asserted that the statute failed to provide adequate guidance to the Authority for assessment of such penalties. On September 16, 2013, the Authority issued a written decision that confirmed its earlier finding of violations and imposition of penalties, and that notified Reliable Contracting of its right to seek judicial review. The Authority did not explicitly address Reliable Contracting‘s constitutional arguments.
Reliable Contracting petitioned for judicial review in the Circuit Court for Anne Arundel County, reiterating the constitutional argument it had made to the Authority. On June 9, 2014, the Circuit Court issued a memorandum opinion and order rejecting those arguments and upholding the Authority‘s decision.7 The Circuit Court held that the Legislature could confer quasi-judicial adjudicatory
Reliable Contracting then appealed its constitutional claims to the Court of Special Appeals, which affirmed the Circuit Court. 222 Md.App. 683, 114 A.3d 303 (2015). The intermediate appellate court agreed with the Circuit Court that, “because the court has the opportunity to review the Authority‘s decision and render a final decision, the delegation of quasi-judicial adjudicatory power to the Authority is not unconstitutional.” 222 Md.App. at 697, 114 A.3d 303. However, in contrast to the Circuit Court, the Court of Special Appeals did not decide whether “the statute‘s limitation on the circumstances in which the Authority has discretion to impose a civil penalty, along with the availability of judicial review of the Authority‘s decisions, would lead to the conclusion that the discretion given to the Authority is constitutional.” Id. at 700, 114 A.3d 303. Instead, the Court of Special Appeals held that
II
Discussion
The material facts in this case are undisputed and the only issues concern the alleged constitutional defects in the Authority‘s enabling statute. Accordingly, we consider the merits of the lower courts’ resolution of those issues without deference. See Schisler v. State, 394 Md. 519, 535, 907 A.2d 175 (2006). We consider first the contention that the Authority‘s statute violates separation of powers in delegating judicial power to a non-judicial body. Second, we consider the argument that the statute fails to provide adequate guidance for the imposition of civil penalties.
A. Whether the Authority‘s Enabling Act is Unconstitutional
Article IV, § 1, of the Maryland Constitution provides, in pertinent part, “The Judicial power of this State is vested in a Court of Appeals, such intermediate courts of appeal as the General Assembly may create by law, Circuit Courts, Orphans’ Courts, and a District Court.” This is the Judicial Vesting Clause of the Maryland Constitution, analogous to Article III, Section 1, of the federal Constitution. Article 8 of the Maryland Declaration of Rights states “That the Legislative, Executive
The Judicial Vesting Clause, together with the Separation of Powers Clause, “forbids any power in the Legislature to clothe administrative boards with any judicial authority.” Dal Maso v. Board of County Commissioners, 182 Md. 200, 34 A.2d 464 (1943). However, administrative bodies may exercise quasi-judicial authority, which essentially consists of deciding questions of fact and law subject to judicial review. Heaps v. Cobb, 185 Md. 372, 378-79, 45 A.2d 73 (1945). “[T]he existence of [separation of powers] does not itself inhibit the delegation to an administrative agency of a blend of executive or legislative powers with powers judicial in nature; the determining factor is not so much the specific powers granted to the administrative agency, but rather the relationship of the courts to the exercise of that power.” County Council for Montgomery County v. Investors Funding Corp., 270 Md. 403, 436, 312 A.2d 225 (1973). The availability of judicial review is key because “the dangers inherent in government by administrative bodies lie[s] not in the blending of powers in a single body but in permitting that body‘s power to be beyond check or review.” Insurance Commissioner v. National Bureau of Casualty Underwriters, 248 Md. 292, 299, 236 A.2d 282 (1967).
The parties agree that the Investors Funding case provides a useful point of comparison. That case concerned Chapter 93A of the Montgomery County Code, entitled “Fair Landlord-Tenant Relations,” which created a Commission on Landlord-Tenant Affairs (“Commission“) that had the authority to enforce the provisions of Chapter 93A through any appropriate means, including powers:
- to impose a civil penalty not exceeding $1,000;
- to award money damages not exceeding $1,000;
- to award payments for temporary substitute housing;
- to terminate leases;
- to order repairs;
- to order the return of security deposits and rental monies paid.
Investors Funding, 270 Md. at 426-27, 312 A.2d 225. A number of landlords in the County, including Investors Funding Corporation, sought a declaratory judgment that the ordinance was unconstitutional. The landlords alleged that Chapter 93A “vest[ed] in an administrative body judicial powers reserved exclusively to the courts by Article IV, § 1 of the Maryland Constitution.” Id. Because prior cases had allowed for an administrative agency to adjudicate cases as long as the courts had the power to review the agency‘s decisions, the landlords suggested five additional considerations that might serve as indicia of judicial power: “(1) the power to make a
This Court responded to those arguments as follows: (1) the Commission had no power to make a final determination because its decisions were subject to judicial review; (2) the Commission had no power to make binding judgments because litigants must go to court to enforce compliance with the Commission‘s orders; (3) the power to affect the personal or property rights of private persons was delegated based on a legislative finding of public interest in landlord-tenant relations; (4) the exercise of power formerly held by a court was not dispositive; and (5) the Commission‘s power to fashion remedies was incidental to its regulatory powers. Id. at 437-41, 312 A.2d 225.
The Court‘s analysis of these five points in Investors Funding underscores the core rule arising out of the Court‘s prior cases: an administrative agency, as part of its administrative functions, may decide cases within the area delegated to it by the legislature as long as its decisions are subject to judicial review. See Maryland Aggregates Ass‘n v. State, 337 Md. 658, 675-79, 655 A.2d 886 (1995). Hence, in this case, the Authority‘s ability to hold hearings and impose monetary penalties is not an unconstitutional vesting of judicial power in a non-judicial body. The Authority may decide individual cases, but its decisions are subject to judicial review.
Reliable Contracting argues that the Authority‘s power is wholly judicial rather than quasi-judicial, even though the Authority‘s decisions are subject to judicial review, because the Authority does nothing but issue and decide citations. That is, the Authority‘s power to fashion remedies is not incidental to its regulatory powers, because it has no other regulatory functions.11 It merely decides cases.
This contention is not entirely accurate. The legislative history of the Authority‘s enabling statute indicates that it was created to serve certain educational functions as well. Although the statutory one-call system has existed since 1974,12 the Authority was not established until 2010. Chapter 635, Laws of Maryland 2010. That 2010 amendment was intended to satisfy standards for federal grants set forth in the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006,
Even if Reliable Contracting‘s description of the Authority‘s function were accurate, the Authority‘s power would still be quasi-judicial. The essence of quasi-judicial power is not that it is accompanied by other powers; it is that it is limited and initial, rather than plenary and ultimate in its sphere. The Maryland judiciary has general jurisdiction, and its final decisions are final; it may decide all cases of State law, and no other adjudicative body may reverse its judgments on the basis of State law. By contrast, the Authority‘s jurisdiction is sharply limited by statute, and its decisions are subject to affirmation or reversal by the courts. Thus, the Authority has quasi-judicial, rather than judicial, power, and the delegation of quasi-judicial authority does not violate Article IV, § 1 of the Maryland Constitution or Article 8 of the Maryland Declaration of Rights.
B. Whether There are Guidelines for Exercise of the Authority‘s Discretion
Because agencies with quasi-judicial authority must be subject to judicial review, the Investors Funding decision held that an agency with the power to impose a civil penalty up to a specified amount must be given guidelines for determining the penalty. Without such guidelines, there is no way for a reviewing court to determine whether the agency assessed a proper penalty. Investors Funding, 270 Md. at 441, 312 A.2d 225.13
Reliable Contracting contends that the statute creating the Authority has no such guidelines.14 The Authority responds that there are detailed provisions specifying the circumstances when a penalty may be assessed, which is accurate but beside the point. The question in this case is not whether the statute provides adequate notice of the conduct that might subject an entity to a penalty, but whether the statute provides adequate guidance to the Authority and a reviewing court in order for the court to review the Authority‘s assessment of that penalty.
1. SG § 10-1001
As noted above, the Court of Special Appeals held that the necessary guidelines are to be found in
To decide whether the Authority‘s discretion is guided by
A few examples are instructive. In Moberly v. Herboldsheimer, 276 Md. 211, 345 A.2d 855 (1975), this Court considered whether the Board of Governors of the Memorial Hospital of Cumberland (“Hospital“), was a private corporation or an agency of the City of Cumberland within the scope of the Public Information Act. The Court concluded that the Hospital was a City agency because: as a medical facility, the Hospital served a public purpose; two City officials, the Mayor and the President of the Board of Commissioners of Allegany County, served ex officio on the seven-member Board of Governors for the Hospital; and the Hospital was, by statute, exempt from tort liability for the negligent operation of the Hospital. Id. at 223-25, 345 A.2d 855.
In Mezzanote, this Court considered whether the Maryland Insurance Guaranty Association (“MIGA“) was an agency or instrumentality of the State, also for purposes of the Public Information Act. The Court concluded that MIGA was a State agency because: it served a public purpose, namely “protect[ing] claimants, policyholders, and ... the public, by preventing member insurer insolvency and paying claimants on covered claims against an insolvent member insurer“; a public official, the State Insurance Commissioner, appointed the Board of Directors; the acts of the Board of Directors were generally subject to the State Insurance Commissioner‘s amendment and approval; and, by statute, it was exempt from State and local taxes other than property taxes, and from liability for actions taken in the performance of its duties. Mezzanote, 297 Md. at 37-39, 464 A.2d 1068.
A statement in enabling legislation that disclaims an entity‘s connection to State government is not conclusive as to whether it is an agency or instrumentality of the State for certain purposes. For example, in Napata v. Univ. of Maryland Med. Sys. Corp., 417 Md. 724, 12 A.3d 144 (2011) a statute stated that the University of Maryland Medical System (“UMMS“) was not “a State agency, political subdivision, public body, public corporation, or municipal corporation.”
Similarly, in Central Collection Unit v. DLD Associates LP, supra, the Court of Special Appeals considered whether the Injured Workers’ Insurance Fund
These cases indicate that some of the relevant factors include: the purpose of the entity (public or private); the degree of control exercised by the government over the membership and decision-making of the entity; and any special immunities from tax or tort liability granted the entity. Neither a disclaimer of agency status nor funding outside the budget process necessarily precludes status as a State agency or instrumentality. The goal of the analysis is to examine the relationship between the State and the entity, so these factors are not necessarily exhaustive.
3. Application to the Authority
Public Purpose
Here, the Authority was created by statute to serve a public purpose, namely maintaining public safety in underground facilities. To carry out that purpose, the Authority exercises governmental powers—e.g., it issues subpoenas, conducts contested case hearings, imposes civil penalties, requires individuals and entities to undergo training and adopt safety measures, and oversees a special fund established by law. Its decisions in contested cases are reviewable in the same manner as those of most other administrative agencies in the executive branch.17 The Authority‘s officials and employees are designated as “State personnel.”
State Control
It is argued that the Authority is not subject to the control of other State officials or entities. In the first place, it is worth noting that the State need not exercise complete control over the Authority in order that the Authority be a State agency. See Mezzanote, 297 Md. at 37, 464 A.2d 1068. Hence, even if the State does not exercise complete control over the Authority at every moment and in every respect, that is not dispositive. The State still oversees the Authority and retains essential control over major actions of the Authority, because the Governor appoints and removes members of the Authority, the Authority‘s decisions are subject to judicial review, and the Authority‘s existence depends on the Legislature.
There is no question that the Authority is a somewhat unusual entity. For example, it is at least somewhat financially independent. It is the expressly declared intent of the General Assembly that the Authority “not be funded by appropriations from the State budget.”
Moreover, even if the Authority were completely financially independent, there can be independently funded government agencies. As noted above, IWIF was not funded through the State budget. The hospital in Moberly was effectively financially independent: if the Hospital ran a budget deficit in a year, the City of Cumberland was empowered, but not required, to cover the gap. See Moberly, 276 Md. at 224, 345 A.2d 855.
For another example of the Authority‘s unusual nature, the Governor appoints and removes members of the Authority, but the Governor‘s discretion is constrained. Appointment must be from lists submitted by stakeholders.
Appointment by the Governor from a list or nomination originating with another entity is not unprecedented. See, e.g.,
A statute that provides for removal of a public official for cause by the Governor on the recommendation of someone else is unusual, but again it is not unprecedented for removal of a member of a State agency to be initiated by someone other than the appointing authority. See, e.g.,
Thus, the unusual, though not unprecedented budgetary, appointment, and removal provisions in the Authority‘s statute do not eliminate State control over the Authority. On the contrary, the State maintains considerable control over the composition and actions of the Authority.
Immunities
As noted above, the Authority‘s officials and employees have been designated as “State personnel” in
Consistency with the Purpose Underlying SG § 10-1001
A final consideration is that we are deciding whether the Authority is a State agency under
Summary
In short, the Authority is a State agency for the purposes of
Although we agree with the Court of Special Appeals that, in assessing a civil monetary penalty, the Authority is to apply the criteria in
III
Conclusion
For the reasons set forth above, we hold:
1—The Authority is an administrative agency that exercises quasi-judicial powers that are subject to judicial review. Accordingly, its enabling law is not contrary to either the Judicial Vesting Clause of Article IV, § 1, of the Maryland Constitution or the Separation of Powers Clause of Article 8 of the Maryland Declaration of Rights.
2—Because the Authority is an administrative agency in the executive branch of State government,
JUDGMENT OF THE COURT OF SPECIAL APPEALS VACATED AND CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REMAND THE CASE TO THE CIRCUIT COURT FOR ANNE ARUNDEL COUNTY WITH INSTRUCTIONS FOR THAT COURT TO REMAND THE CASE TO THE MARYLAND UNDERGROUND DAMAGE PREVENTION AUTHORITY FOR REASSESSMENT OF THE CIVIL MONETARY PENALTY CONSISTENT WITH THIS OPINION. COSTS TO BE PAID BY PETITIONER.
Notes
(1) ... personal property that is buried or submerged for:
(i) use in connection with the storage or conveyance of water, sewage, oil, gas, or other substances; or
(ii) transmission or conveyance of electronic, telephonic, or telegraphic communications or electricity.
(2) “Underground facility” includes pipes, sewers, conduits, cables, valves, lines, wires, manholes, attachments, and those portions of poles below ground.
(3) “Underground facility” does not include a stormwater drain.
The nine members shall be appointed as follows:
- one member from a list submitted to the Governor by the Associated Utility Contractors of Maryland;
- one member from a list submitted to the Governor by the Public Works Contractors Association of Maryland;
- two underground facility owners that are members of a one-call system from a list submitted to the Governor by the Maryland members of the Maryland/DC Subscribers Committee;
- one member from a list submitted to the Governor by the one-call centers operating in the State;
- one member who represents the State‘s underground utility locator community from a list submitted to the Governor by the Maryland members of the Maryland/ DC Damage Prevention Committee;
- one member who has experience in the field of underground utilities from a list submitted to the Governor by the Maryland Association of Counties;
- one member who has experience in the field of underground utilities from a list submitted to the Governor by the Maryland Municipal League; and
- one member of the general public from a list submitted to the Governor by the other appointed and qualified members of the Authority.
(a) In this section, “unit” means an officer or other entity in the Executive Branch.
(b) Unless otherwise provided by statute or regulation, a unit of State government authorized by law to impose a civil penalty up to a specific dollar amount for violation of any statute or regulation shall consider the following in setting the amount of the penalty:
(1) the severity of the violation for which the penalty is to be assessed;
(2) the good faith of the violator; and
(3) any history of prior violations.