Oregon Advisory Opinions January 01, 1989: OP 8197

Advisory Opinion Text

No. 8197 January 31, 1989 The Honorable Mae Yih State Senator

FIRST QUESTION PRESENTED

May Oregon's Commission for Child Care (commission) award grants to newly established child care information and referral services in communities where an existing agency provides such services?

ANSWER GIVEN

Yes.

SECOND QUESTION PRESENTED

If the answer to the first question is yes, what findings must the commission make concerning available services?

ANSWER GIVEN

The commission need not make any specific findings on that issue. See discussion.

THIRD QUESTION PRESENTED

How does the commission establish standards to be met by a contrac­tor, and determine whether a contractor meets those standards?

ANSWER GIVEN

The commission must establish standards by rulemaking. It has very broad discretion concerning the content of those standards. The commis­sion must determine whether a contractor meets those standards by applying those standards to the facts disclosed by a grant application and any investigation pursuant to an application.

FOURTH QUESTION PRESENTED

Do the current composition and functions of the commission violate Article HI, section 1, of the Oregon Constitution?

ANSWER GIVEN

Yes. The duties of the commission to award grants and establish standards constitute the exercise of governmental powers allocated to the Executive Department. In performing these duties, the legislative members of the commission perform functions of the Executive Department and thereby violate Article HI, section 1.

In the body of the opinion we discuss how this violation may be remedied. We also conclude that, pursuant to the de facto officer doctrine, the parties that have received grants from the commission may keep those grants.

INTRODUCTION

This opinion first summarizes the statutory scheme and the commission's role (Part I). In the course of analyzing the first three questions, which were presented by the requestor, we perceived a serious separation of powers question arising from the composition and functions of the Commission for Child Care. Our analysis led us to conclude that the legislative members of the commission lawfully may not perform certain functions of the commission (Part II). Because that conclusion undermines the current structure of the commis­sion, our analysis on that point became the primary focus of this opinion. As noted below, the constitutional violation may be remedied by legislation (Part 11(C)). In Part III, we discuss the legal consequences of the constitutional violation.

Any new legislation regarding the commission might alter the commission's powers and duties, or create new legal standards under which the commission must act. For that reason, we have answered the first three questions presented in only general terms (Part IV).

DISCUSSION

I. The Statutory Scheme and the Role of the Commission Before discussing the constitutional problem, we summarize the statutory scheme and describe the commission's role. The commission was created by Oregon Laws 1985, chapter 753. Its membership consists of 21 persons, including three members of the Legislative Assembly. The President of the Senate appoints one of these members and the Speaker of the House of Representatives appoints the other two. The remaining eighteen people represent specified interests, with eight of them being appointed by the Governor, and five each by the President of the Senate and the Speaker of the House of Representatives. Or Laws 1985, ch 753, Sec. 2.

The reason for creation of the commission and its functions were set out in Oregon Laws 1985, chapter 753, section 1 as follows:

(1) The Commission for Child Care is created to address the issues, problems and alternative solutions that are critical to the development of accessible, affordable and quality day care services.

(2) The commission shall submit to the Governor at the commencement of each biennium a report containing the concerns and issues which have been identified pursuant to the terms of this Act and further identifying the programs, projects and activities which the commission will undertake regarding those issues.

Under the 1985 legislation, the commission is to identify programs, projects and activities that the commission will undertake.

The legislative history of the 1985 law reveals an intent to create an advisory body. Representative Kopetski, the primary sponsor of the bill, stated in his floor speech to the House of Representatives on June 20, 1985, that [t]he functions of the commission would be to brainstorm on child care solutions, to inform the Governor and the Legislature concerning state participation in the solution to the child care crises.

In 1987, the Legislative Assembly added to the commission's power. The 1987 legislation authorized the commission to establish a grant program to assist community-based public and private child care information and referral agencies, and to assist in establishing such agencies in communities that did not have them. The law requires the commission to set standards for applicant agencies and pass upon eligibility for a grant. Or Laws 1987, ch 585, Sec. 1. The commission was appropriated $100,000 for the 1987-89 biennium for the purpose of making such grants. Or Laws 1987, ch 585, Sec. 3.

II. Separation of Powers

The membership of three representatives from the Legislative Assembly on the commission raises what we previously have termed a "dual exercise" issue under Article III, section 1, of the Oregon Constitution, the separation of powers provision.

Article III, section 1, provides:

The powers of the Government shall be divided into three seperate (sic) departments, the Legislative, the Executive, including the administrative, and the Judicial; and no person charged with official duties under one of these departments, shall exercise any of the Junctions of another, except as in this Constitution expressly provided.

(Emphasis added.) This provision divides the powers of government into three separate departments. The chief purpose for the provision is to preclude a commingling of essential powers of government in the same hands. See 43 Op Atty Gen 205, 206-09 (1983).

In our 1983 opinion, we noted that the emphasized portion of Article III, section 1, quoted above, "explicitly prohibits the dual exercise of departmental functions." 43 Op Atty Gen at 108. That is, a member of one branch of state government may not exercise any of the functions of another branch of government except as expressly provided in the Oregon Constitution. See also Letter of Advice dated February 6, 1987, to Kathleen Bogan, Executive Director, Oregon Criminal Justice Council (OP-6075), at 3-4. A dual exercise issue turns on two questions: (1) Whether the function constitutes the exercise of governmental power, and (2) if so, to which branch of government that function is allocated. 43 Op Atty Gen at 208; OP-6075, supra, at 4.

A. The Exercise of Governmental Power In determining whether an action constitutes a governmental function, the "principal inquiry must be whether the action in question is integral to the movement of the government in an area where the sovereign has the power and authority to act." 43 Op Atty Gen at 209. We previously have concluded that the promulgation of mandatory sentencing guidelines constitutes the exercise of governmental power. OP-6075, supra, at 5 (State Sentencing Guideline Board). So, too, are the control and development of real properties and buildings that house and are the sites of the operation of government. 43 Op Atty Gen at 211 (Capitol Planning Commission).

As we stated above, under the 1985 legislation, the commission was purely an advisory body to the Governor and the Legislative Assembly. In 43 Op Atty Gen at 208, we said, "[T]he acts of advising and making recommendations to one or more branches of the government do not constitute the exercise of the power of government." See also OP-6075, supra, at 4. Therefore, if the commission had only those functions delegated to it by the 1985 legislation, there would be no separation of powers issue.

The 1987 legislation, however, gave the commission the additional powers to establish a grant program, to establish standards for applicant agencies, and to pass upon grant eligibility. Or Laws 1987, ch 585, Sec. 1. Under the applicable legal principles set forth above, these new functions constitute the exercise of governmental power.

B. Allocation of the Governmental Power The exercise of "judgment and discretion in order to execute a law enacted by the legislature" is a function of the Executive Department. 43 Op Atty Gen at 211. "The legislative function is that of enacting laws, not executing laws." Id. at 211-12. In that opinion, we concluded that the Capitol Planning Commission exercised executive powers. Later, in OP-6075, supra, we concluded that the "power to adopt sentencing guidelines within broad legislatively stated standards" is also an executive power. Id. at 2. We reachthe same conclusion concerning the Commission on Child Care. That commission must exercise judgment and discretion to execute a law enacted by the legislature and, therefore, exercises governmental power within the Executive Department of state government.

C. Dual Exercise Problem and Remedy Although the commission now exercises governmental power in the Executive Department, the commission includes members drawn from the Legislative Assembly. Its structure and function, therefore, necessarily interact to violate Article III, section 1, of the Oregon Constitution. That is, the members of the commission who also are legislators perform executive functions, contrary to the Oregon Constitution.

This defect can be remedied readily by the legislature in at least three ways. First, the legislature could amend Oregon Laws 1985, chapter 753, section 2 to delete from the law the provisions that place three members of the Legislative Assembly on the commission. Alternatively, the legislature may amend Oregon Laws 1987, chapter 585, sections 1 and 3 to place the authority to award grants and establish standards in an independent Executive Department agency or commission. As a third option, the legislature could allow legislators to remain on the commission, but without a vote on the award of grants or adoption of standards. Any of these alternatives would remove legislators from the exercise of governmental power in the Executive Department. In the meantime, the commission must cease all attempts to exercise governmental powers: That is, the establishment of a grant program, the adoption of standards for applicants, and the awarding of grants pursuant to Oregon Laws 1987, chapter 585. The commission's remaining duties under Oregon Laws 1985, chapter 753 are advisory in nature and do not involve the exercise of governmental power. Hence, as long as the commission functions in a purely advisory manner, no constitutional barrier prevents the commission from continuing to perform those functions with its current makeup. III. Disposition of Grants Already Disbursed Because the commission is unconstitutionally structured, it may not continue to exercise authority, with its current makeup, to award grants to community-based public and private child care information and referral agencies or to establish standards for these agencies. For the reasons that follow, however, we conclude that under the de facto officer doctrine, the parties that previously have received grants from the commission may keep those grants.

Since Oregon was a territory, its courts have accepted and applied the de facto officer doctrine. See Smith v. Jefferson, 75 Or 179, 186-87, 146 P 809 (1915); State v. Holman, 73 Or 18, 26-27, 144 P 429 (1914); Graham v. School District, 33 Or 263, 269-70, 54 P 185 (1898); Hamlin v. Kassafer, 15 Or 456, 458-60 (1887); Territory v. Pyle, 1 Or 149, 150 (1854) (opinion of Deady, J.). A de facto officer "is one who has the possession of an office and performs the duties thereof under color of right, without being actually qualified in law so to act." Smith v. Jefferson, supra, 75 Or at 187. The official acts of de facto officers are valid as to third persons and the public, and may not be collaterally attacked. Id. at 186; Hamlin v. Kassafer, supra, 15 Or at 460. In Hamlin v. Kassafer, Chief Justice Lord, writing for the court, explained the policy underlying this rule:

The reason of the rule is apparent. It would be as unjust as unreasonable to require every individual doing business with such officer to investigate and determine at his peril the title of such officer. * * * Besides, it is against the policy of the law to allow a suit between private individuals to determine the title to an office. Such judgment could only bind the parties, and would be of no effect as against the public.

Id. at 460.

The definition of "de facto officer" plainly includes the legislator-members of the Commission on Child Care purporting to exercise the Executive Department functions of the commission. That is, those members act as members of the commission under color of right — their appointments by the Senate President and Speaker of the House — but are constitutionally disabled by Article III, section 1 from performing certain duties of the office. Therefore, those legislator-members' votes on grants and standards are valid under the rule stated, and the recipients of those grants are entitled to keep them.

This conclusion is supported by a line of analogous cases from other states. Several states have applied the de facto officer rule where a person holding one office accepted an office deemed incompatible either by statute or common law. For instance, in Gryzik v. State, 380 So2d 1102 (Fla App), rev den 388 So2d 1113 (1980), the court first held that, under Florida law, acceptance of the incompatible office resulted in a vacancy of the first office. The court then heldthat, as to the first office, the officer was a de facto officer whose official acts were valid as to third parties and the public. 380 So2d at 1104. The courts reached similar results in Trimble Cty., Etc. v. Trimble Cty. Bd. of H., 587 SW2d 276, 281 (Ky App 1979); In re F. C., 484 SW2d 21, 24 (Mo App 1972); Oliver v. Mayor, Etc., of Jersey City, 63 NJL 634, 44 A 709, 711-12 (1899); and Attorney General v. Marston, 66 NH 485, 22 A 560, 561 (1891). The reasoning of those cases applies here. Regarding the office the functions of which the officer could not perform lawfully, that officer was a de facto officer whose official acts were valid as to third parties. Finally on this subject, we caution that this opinion should not be viewed as authority for disregarding the Article III, section 1 prohibition against the exercise of functions of one branch of government by a person charged with official duties under another branch. See 29 Op Atty Gen 145, 146. Because a de facto officer derives authority from reputation rather than legal right, the public issuance of this opinion raises substantial questions about whether any future exercise of executive department functions of the commission by legislator-members would be protected by the de facto officer doctrine.

IV. Commission Grants and Standards We now turn to the first three questions presented. Those questions concern the commission's powers and duties under Oregon Laws 1987, chapter 585, section 1, which provides:

(1) The Commission for Child Care shall establish a grant program to assist community-based public and private child care information and referral agencies and to assist in establishing such agencies in communities which are not served.

(2) The Commission for Child Care shall set standards for the agencies described in subsection (1) of this section that the agencies supply information to assist:

(a) Parents in locating available and appropriate child day care;

(b) Parents of handicapped children in locating appropriate child day care;

(C) Providers in acquiring appropriate clients for their services;

(d) Providers in upgrading the quality of service offered and business operations; and (e) Communities in assessing and recruiting for underserved needs.

(3) In order to be eligible for a grant under this section, the agency described in subsection (1) of this section must meet the standards authorized by subsection (2) of this section, must demonstrate a willingness and an ability to share information with other such agencies and must be able to match the grant funds with an equal amount of financial support.

A. Award of Grants to Newly Established Child Care Information and Referral Agencies The first question is whether the commission may award grants to newly established child care information and referral agencies in communities where an existing agency provides information and referral services. From the plain language of the statutory authorization to "assist community-based public and private child care information and referral agencies," we conclude that the commission may do so.

The only basis in the statute for a contrary conclusion is the statement of the commission's authority "to assist in establishing such agencies in communi­ties which are not served." That language, however, only suggests that the commission may not assist in establishing a new agency in a community already served. The statute does not impliedly prohibit assisting an agency that is newly established, where another agency already serves the community. Our construction is necessary to give effect to the statutory distinction between assisting agencies and assisting in establishing agencies. See ORS 174.010. B. Findings on Available Services

As noted above, the existence of an agency currently providing services in the community does not resolve whether the commission may assist another agency in that community. The only determination the commission must make before deciding whether to award a grant to assist an agency is whether the agency satisfies the requirements of Oregon Laws 1987, chapter 585, section 1(3), including any standards adopted by the commission under section 1(2).

In making that determination, the commission is not required to make formal "findings" in the sense that an agency deciding a contested case must make findings of fact, see ORS 183.470(2). A commission decision on an application for a grant would be an order in other than a contested case, see Pen-Nor, Inc. v. Oregon Dept. Higher Ed., 84 Or App 502, 734 P2d 395 (1987); Linnton Plywood Assoc. v. DEQ, 68 Or App 412, 681 P2d 1180, rev den 297 Or 824 (1984), as to which the commission would have no duty to make formal written findings of fact.

C. Establishment of Standards

Oregon Laws 1987, chapter 585, section 1(2) requires the commission to "set standards" for child care information and referral agencies on supplying information to assist various individuals and entities. These standards would satisfy the definition of "rule" in ORS 183.310(8) and, therefore, would have to be adopted pursuant to APA rulemaking procedures. Because the statutory language is mandatory, the commission must adopt such rules. In developing those rules, the commission would have broad discretion, limited only by the generally expressed legislative policy of the law "to address the issues, problems and alternative solutions that are critical to the development of accessible, affordable and quality day care services." Or Laws 1985, ch 753, Sec. 1(D.

The commission would determine whether an agency meets those standards by applying those standards to the facts disclosed by a grant application or revealed in an investigation of the application.

V. Conclusion

The performance of the Executive Department functions of the commission by the commission's legislator-members violates Article III, section 1, of the Oregon Constitution. Those members immediately must cease carrying out those functions. The legislature should cure the separation of powers problem, either by amending the law to eliminate legislators from membership on the commission, by making them non-voting members on standards and grant awards, or by placing the authority to award grants and establish standards in an independent executive agency or commission.

Under the de facto officer rule, the agencies that previously have received grants from the commission may keep those grants.

DAVE FROHNMAYER Attorney General

DF:DH:LRY:RWM:RDW

One of the gubernatorial appointees shall be a "person who is qualified by education or expertise to render an opinion with regard to the tax and legal issues concerning child care." Or Laws 1985, ch 753, Sec. 2(l)(c). That appointee may not provide legal advice to the commission. See ORS 180.220 (Department of Justice has full control over the state's legal business).

This office will be available to assist in redrafting the commission's enabling legislation to cure the constitutional defects discussed in this opinion.

It might be argued that the appointment by the Senate President and the Speaker of the House of thirteen of the 21 commission members also violates Article III, section 1, on the theory that the appointment of members of the Executive Department is an executive power exclusively vested in the Governor. That theory, however, was rejected by the Oregon Supreme Court nearly 100 years ago. See 39 Op Atty Gen 608, 610-12 (1970) (citing Biggs v. McBride, 17 Or 640 (1889); Eddy v. Kincaid, 28 Or 237, 41 P 157 (1895); and State v. Compson, 34 Or 25, 54 P 349 (1898). Moreover, because the commission members are appointed for definite terms, Oregon Laws 1985, chapter 753, section 2(2), and are thus removable only for cause, the opportunity for legislative influence on the commission members is attenuated.

In Thompson v. Clatskanie Peoples PUD, 35 Or App 843, 585 P2d 26 (1978), the court held that an officer holding two lucrative offices simultaneously in violation of Article II, section 10, of the Oregon Constitution may not receive the salaries for both offices even if, as to one office, the officer is a de facto officer. 35 Or App at 848.

We express no opinion on whether the doctrine of implied resignation would apply to the legislator-members of the commission. Oregon law on that subject is unclear. Compare State ex rel Hoyden v. Hill, 181 Or 585, 600-01, 184 P2d 366 (1947) with State ex rel O'Hara v. Appling, 215 Or 303, 311-12, 334 P2d 482 (1959).

The commission has broad discretion to decide how to allocate the limited resources available to it. For example, it may choose to prefer awards to functioning agencies over awards to agencies just being established, or vice versa. If the commission chooses to adopt such a generally applicable policy, it would have to do so through Administrative Procedure Act (APA) rulemaking proceedings. See ORS 183.310(8) (defining "rule"); 183.335 - 183.355 (setting forth required procedures).

The term "community" in the statute is very flexible. We construe that term in the statutory context to have a functional meaning that takes into account local conditions. It may refer not only to political boundaries, but also to social or ethnic communities that may have specific needs requiring special expertise to serve. Thus, a single geographic area may be comprised of several "communities" within the meaning of the law. An agency providing services in that geographic area, therefore, is not necessarily serving all of the communities in that area.

It may be helpful for the commission to establish guidelines concerning how it will determine what constitutes a "community." These guidelines also would be "rules" that would have to be enacted in compliance with the APA.

Some existing community programs may offer some, but not all, of the services contemplated under Oregon Laws 1987, chapter 585, section 1(2). Because a question may arise over whether a community is "served," the commission may wish to establish rules under the APA concerning how it will determine whether a community is "served."

A "rule" is "any agency directive, standard, regulation or statement of general applicability that implements, interprets or prescribes law or policy, or describes the procedure or practice requirements of any agency." ORS 183.310(8).