Larry L. Harless
Cottageville, West Virginia
Attorney for the Appellant
Darrell V. McGraw, Jr.
Attorney General
Katherine A. Schultz
Senior Deputy Attorney General
Stephen Stockton
Senior Assistant Attorney General
Jennifer Lea Stollings
Assistant Attorney General
Charleston, West Virginia
Attorneys for the Appellees
G. Nicholas Casey
Richard L. Gottlieb
Webster J. Arceneaux, III
Lewis Glasser Casey & Rollins, PLLC
Charleston, West Virginia
Attorneys for the Intervenor,
Kanawha County Commission
Rosemary J. Humway-Warmuth
Wheeling, West Virginia
Joanna I. Tabit
Steptoe & Johnson, PLLC
Wheeling, West Virginia
Attorneys for the City of Wheeling,
Amicus Curiae
Robert M. Bastress
Morgantown, West Virginia
Attorney for American Civil Liberties Union
of West Virginia, Amicus Curiae
Vincent Trivelli
Stuart Calwell
Law Offices of Stuart Calwell, PLLC
Charleston, West Virginia
Attorneys for The Affiliated Construction Trades
Foundation, Amicus Curiae
Webster J. Arceneaux, III
Richard L. Gottlieb
Lewis, Glasser, Casey & Rollins, PLLC
Attorneys for Marshall University Research
Corporation; Our Jobs, Our Children, Our
Future, Inc. d/b/a The Huntington Area
Development Council; Tri-State Transit
Authority and Metropolitan Huntington, LLC;
Advantage Valley Partners, LLC; Putnam
County Development Authority; and Putnam
County Commission, Amicus Curiae
JUSTICE ALBRIGHT delivered the Opinion of the Court.
CHIEF JUSTICE STARCHER concurs and reserves the right to file a concurring opinion.
JUSTICE MAYNARD dissents and reserves the right to file a dissenting opinion.
JUSTICE McGRAW concurs in part and dissents in part and reserves the right to file a separate opinion.
1. Article V, section 1 of the Constitution of West Virginia which prohibits any one department of our state government from exercising the powers of the others, is not merely a suggestion; it is part of the fundamental law of our State and, as such, it must be strictly construed and closely followed. Syl. Pt. 1, State ex rel. Barker v. Manchin, 167 W.Va. 155, 279 S.E.2d 622 (1981).
2. Due to the resulting encroachment on the executive power of appointment, the provisions of West Virginia Code § 29-22-18a(d)(3) (Supp. 2002) that direct the presiding officers of each house of the Legislature to submit a list of prospective candidates to the Governor for the chief executive's selection of certain members of the West Virginia Economic Grant Committee are in violation of the separation of powers provision found in article five, section one of the West Virginia Constitution.
3. The provisions of West Virginia Code § 29-22-18a(d)(3) (Supp. 2002) that direct the Legislature's involvement in the appointment process of the members of the West Virginia Economic Grant Committee are in violation of the appointments provision found in article seven, section eight of the West Virginia Constitution.
4. As a general rule the Legislature, in delegating discretionary power to an administrative agency, such as a board or a commission, must prescribe adequate standards expressed in the statute or inherent in its subject matter and such standards must be sufficient to guide such agency in the exercise of the power conferred upon it. Syl. Pt. 3, Quesenberry v. Estep, 142 W.Va. 426, 95 S.E.2d 832 (1956).
5. When an enabling statute such as West Virginia Code § 29-22-18a(d)(3) (Supp. 2002) extends discretion to the executive branch in contemplation of an expenditure of public funds with only a broad statement of legislative intent and insufficient legislative guidance for the execution of that legislative intent, the Legislature has wrongfully delegated its powers to legislate in violation of article six, section one of the West Virginia Constitution.
6. The Legislature may not designate funds that will be used to liquidate a revenue bond issue out of a current tax source that flows into the general revenue fund. If this practice were permitted, then a debt would be created that would burden the existing general revenue fund in violation of Section 4 of Article X of the West Virginia Constitution. Syl. Pt. 2, State ex rel. Marockie v. Wagoner, 190 W.Va. 467, 438 S.E.2d 810 (1993), overruled on other grounds by State ex rel. W. Va. Regl. Jail Auth. v. W.Va. Inv. Mgt. Bd., 203 W.Va. 413, 421, 508 S.E.2d 130, 138 (1998).
7. This method of funding the School Building Authority's revenue bonds does not violate section 4 of article X of the West Virginia Constitution since the monies allocated to the school building debt service fund are a new revenue source and since the legislature specifically provided in W.Va. Code, 29-22-18 [1990 and 1994] that the net profits from the West Virginia Lottery are not to be treated as part of the general revenue of the State. Syl. Pt. 3, in part, State ex rel. Marockie v. Wagoner, 191 W.Va. 458, 446 S.E.2d 680 (1994).
8. A legislative declaration of purpose, while not conclusive, is entitled not
only to respect but to a prima facie acceptance of its correctness. Syl. Pt. 6, State ex rel. W.
Va. Hous. Dev. Fund v. Waterhouse, 158 W.Va. 196, 212 S.E.2d 724 (1974).
Albright, Justice:
The West Virginia Citizen Action Group
(See footnote 1)
(hereinafter referred to as CAG)
appeals from the January 21, 2003, order of the Circuit Court of Kanawha County upholding
the constitutionality of portions of West Virginia Code § 29-22-18a(d)(3) (Supp. 2002),
specifically as it pertains to the manner in which the members of the Appellee West Virginia
Economic Grant Committee
(See footnote 2)
(hereinafter referred to as the Grant Committee or the
Committee) are appointed and the process by which the Grant Committee selects and
approves grant applicants. The challenged legislation involves a mechanism previously
approved by this Court
(See footnote 3)
in the context of school bonds whereby revenue bonds are issued,
without a vote of the state's citizenry, and repaid from an account within the West Virginia
Lottery Fund designated as the state excess lottery revenue fund.
(See footnote 4)
While no such bonds
have been issued due to the litigation at hand, the bonds contemplated by the subject
legislation would be dedicated to a host of projects chosen by the Grant Committee for the
express objective of advanc[ing] the business prosperity of this state and the economic
welfare of the citizens of this state.
(See footnote 5)
W.Va. Code § 29-22-18a(d)(3). The involvement of the Legislature in identifying the list
of potential committee members has sparked weighty challenges to this statute based on
concerns rooted in the separation of powers provision of our state constitution.
(See footnote 6)
Pursuant to this statutory authorization, such a Grant Committee was selected and at its first meeting, the committee adopted a draft procedural rule delineating the criteria for considering the various submitted grant applications. The four-part standard upon which the projects were to be evaluated was: (1) the ability of the project to leverage other sources of financing; (2) job creation and retention; (3) promotion of economic development in the region; and (4) whether the project is in the public interest of the State. The enabling legislation provides that once the Grant Committee selects and certifies a list of projects, the list is not subject to alteration other than by legislative enactment. See W.Va. Code § 29-22- 18a(d)(3).
During various meetings, the Grant Committee considered 197 submitted projects. Public hearings (See footnote 7) were held, as required by statute, in connection with the grant applications. See W.Va. Code § 29-22-18a(d)(3). While all 197 projects were reviewed during the period between April 25, 2002, and July 31, 2002, the Grant Committee approved the first grant recipient -- the Wheeling Project (See footnote 8) -- on May 8, 2002. The Grant Committee conditionally agreed to provide the Wheeling Project with seventy million dollars, provided that certain terms outlined in a May 13, 2002, award letter were met. (See footnote 9) An additional thirty-five projects were approved by the Grant Committee at two meetings held on October 17, 2002, and November 12, 2002.
CAG filed a petition with this Court on September 3, 2002, seeking writs of mandamus and prohibition in connection with the Wheeling Project's approval and other activities undertaken by the Grant Committee. (See footnote 10) This Court issued a rule returnable to the Circuit Court of Kanawha County to permit development of a record and to address the issues raised in an expeditious manner. (See footnote 11) Following various hearings on this matter, the circuit court issued its memorandum order on January 21, 2003, through which the trial court ruled that the Grant Committee's singular consideration and approval of the Wheeling Project resulted in a flawed certification of that project for failure to meet an implied statutory requirement that multiple grant applications should be comparatively evaluated. (See footnote 12)
The circuit court found no constitutional infirmities with regard to the appointment process for the Grant Committee or the legislation authorizing the Committee's actions.
CAG appeals from the decision of the circuit court, seeking a ruling of unconstitutionality with regard to both West Virginia Code § 29-22-18a(d)(3) and the actions undertaken by the Grant Committee pursuant to such statutory authorization. The Appellant asserts error on various constitutional grounds, including separation of powers; improper delegation of legislative power; usurpation of the governor's appointment power; violation of the debt clause; and improper extension of the state's credit. Upon our review of the matter, we conclude that the appointment mechanism for the Grant Committee violates the separation of powers provision of the state constitution, (See footnote 13) and the appointments provision of the state constitution. (See footnote 14) Due to the insufficiency of the statutory guidance provided for the Grant Committee's use in selecting recipients for state funds, we determine that the Legislature has wrongfully delegated its powers in violation of the state constitution. (See footnote 15) With regard to the statutory challenges concerning alleged violations of the constitutional provisions governing debt and credit, and the statute's lack of a valid public purpose, we find no constitutional infirmities.
Although we have determined that West Virginia Code § 29-22-18a(d)(3)
contains several constitutional deficiencies, we wish to make clear first, that we find no
constitutional infirmities with regard to the overall legislative plan for seeking economic
development with the aid of the Grant Committee. Second, and perhaps most importantly,
we wish to point out that the Legislature, in our view, may easily correct the defects noted
in this opinion and, further, that the necessary statutory amendments can be effected in a
timely manner, should the Legislature decide to amend those limited provisions which we
have determined to be constitutionally deficient. While we are mindful of the
implementational delays with regard to previously approved projects, this Court's obligation
to uphold the Constitution of this state compelled the result reached in this case.
W.Va. Const. art. V, § 1. By creating the list from which the Grant Committee members are
chosen, CAG argues that the Legislature, acting through its house speaker and senate
president, has crossed a clearly demarcated line intended to separate the executive branch
from the legislative branch of state government.
Interwoven with its separation of powers argument is the corollary contention
that the provisions of West Virginia Code § 29-22-18a(d)(3) violate the governor's
constitutionally delineated powers of appointment. See W.Va. Const. art. VII, § 8.
(See footnote 16)
Based
on the legislative involvement in the committee selection process, CAG maintains that the
subject legislation improperly authorizes the Legislature to invade the province of the
executive branch of government.
'This separation is deemed to be of the greatest importance;
absolutely essential to the existence of a just and free
government. This is not, however, such a separation as to make
these departments wholly independent; but only so that one
department shall not exercise the power nor perform the
functions of another. They are mutually dependent, and could
not subsist without the aid and co-operation of each other.
Under the constitutions, the legislature is empowered to make
laws; it has that power exclusively; the executive has the power
to carry them by all executive acts into effect, and the judiciary
has the exclusive power to expound them as the law of the land
between suitors in the administration of justice. The legislature
can do no executive acts, but it can legislate to regulate the
executive office, prescribe laws to the executive which that
department, and every grade of its officers, must obey. The
legislature cannot decide cases, but it can pass laws which will
furnish the basis of decisions, and the courts are bound to obey
them. The functions of each branch are as distinct as the
stomach and lungs in our bodies. They are intended to
co-operate; not to be antagonistic; they are functions in the same
system; when each functionary does its appropriate work no
interference or conflict is possible.'
State v. Harden, 62 W.Va. 313, 371-72, 58 S.E. 715, 739 (1907) (quoting Lewis' Suth. Stat.
Cons. § 2).
The United States Supreme Court in O'Donoghue v. United States, 289 U.S. 516 (1933), articulated that the objective of separating the powers of government into three distinct branches was to preclude a commingling of these essentially different powers of government in the same hands. Id. at 530. Expounding further on our tripartite form of government, the high Court reasoned:
If it be important thus to separate the several departments
of government and restrict them to the exercise of their
appointed powers, it follows, as a logical corollary, equally
important, that each department should be kept completely
independent of the others--independent not in the sense that
they shall not cooperate to the common end of carrying into
effect the purposes of the Constitution, but in the sense that the
acts of each shall never be controlled by, or subjected, directly
or indirectly, to, the coercive influence of either of the other
departments. James Wilson, one of the framers of the
Constitution and a justice of this court, in one of his law
lectures said that the independence of each department required
that its proceedings should be free from the remotest influence,
direct or indirect, of either of the other two powers. 1
Andrews, The Works of James Wilson (1896), Vol. l, p. 367.
And the importance of such independence was similarly
recognized by Mr. Justice Story when he said that in reference
to each other, neither of the departments ought to possess,
directly or indirectly, an overruling influence in the
administration of their respective powers. 1 Story on the
Constitution, 4th ed. s 530. To the same effect, The Federalist
(Madison) No. 48. And see Massachusetts v. Mellon, 262 U.S.
447, 488.
289 U.S. at 530-31; accord Kilbourn v. Thompson, 103 U.S. 168, 191 (1880) (It is . . .
essential to the successful working of this system that the persons intrusted with power in
any one of these branches shall not be permitted to encroach upon the powers confided to
the others, but that each shall by the law of its creation be limited to the exercise of the
powers appropriate to its own department and no other.).
Addressing this state's separation of powers provision, we recognized in
syllabus point one of State ex rel. Barker v. Manchin, 167 W.Va. 155, 279 S.E.2d 622
(1981), that
Article V, section 1 of the Constitution of West Virginia
which prohibits any one department of our state government
from exercising the powers of the others, is not merely a
suggestion; it is part of the fundamental law of our State and, as
such, it must be strictly construed and closely followed.
As we acknowledged in Sims v. Fisher, 125 W.Va. 512, 25 S.E.2d 216 (1943), this Court
has expressed a policy of strong adherence to the several constitutional provisions relating
to the separation of powers. Id. at 524, 25 S.E.2d at 222.
Similarly beyond dispute is the fact that the Legislature can play no role in the
implementation of the laws it enacts. This Court's decision in Manchin squarely confronted
the issue of legislative encroachment into powers reserved for the executive branch. The
Legislature had sought to create for itself a mechanism for legislative review of executive
action by conferring on a legislative committee the power to veto proposed agency rules.
167 W.Va. at 173, 279 S.E.2d at 633. In striking this mechanism as violative of the
separation of powers, we observed that this 'extra-legislative control device' [wrongly] .
. . permits the Legislature to act as something other than a legislative body to control the
actions of the other branches. Id. at 173, 279 S.E.2d at 633; accord State ex rel. Meadows
v. Hechler, 195 W.Va. 11, 462 S.E.2d 586 (1995) (finding separation of powers violation
in legislation that sanctioned veto of agency regulations from committee inaction).
Underlying any encroachment of power by one branch of government is the
paramount concern that such action will impermissibly foster[] . . . dominance and
expansion of power.
(See footnote 18)
Manchin, 167 W.Va. at 177, 279 S.E.2d at 635-36. Applying that
concern to the facts presented in Manchin, we observed that: In effect, the executive
exercise of discretion is replaced by committee exercise of discretion, increasing the role of
the legislature at the expense of the executive. 167 W.Va. at 177, 279 S.E.2d at 636. In
addition to upsetting the balance of powers between the branches, we identified the risk that
maximization of self-interest could result where the normal limits on discretionary power
are no longer in place due to legislative involvement in an executive function. Id. at 178,
279 S.E.2d at 636.
To support its position, CAG relies primarily on authority that bans various state Legislatures from appointing legislative members to serve on executive agencies, boards, or commissions. See Greer v. State of Georgia, 212 S.E.2d 836 (Ga. 1975) (declaring legislation unconstitutional that named certain legislators to governing body of World Congress Authority); Alexander v. State of Miss. ex rel. Allain, 441 So.2d 1329 (Miss. 1983) (striking various statutes naming legislative members to executive offices including Board of Economic Development); State of N.C. ex rel. Wallace v. Bone, 286 S.E.2d 79 (N.C. 1982) (striking legislation that authorized four legislators to serve on legislatively created Environmental Management Commission as violative of separation of powers); State ex rel. State Bldg. Commn. v. Bailey, 151 W.Va. 79, 150 S.E.2d 449 (1966) (finding separation of powers violation in legislation naming four legislative officers to State Building Commission); see also Metro. Wash. Airports Auth. v. Citizens for Abatement of Aircraft Noise, 501 U.S. 252 (1991) (striking legislation permitting Congress to place its members on board of review having veto power over airport authority's decisions).
While the law is clear that legislators themselves cannot hold positions on executive agencies, boards, or commissions, the law is less clear as to what role a state legislature can play in compiling a list of prospective appointees for an executive appointment. CAG relies heavily on the decision reached by the Kentucky Supreme Court in Legislative Research Commission ex rel. Prather v. Brown, 664 S.W.2d 907 (Ky. 1984). Among the holdings in Brown was a ruling finding several statutes unconstitutional on separation of powers grounds that directed the governor to make appointments for executive positions from lists submitted by the Legislative Research Commission, a small group of office-holding legislators. The Kentucky Supreme Court concluded that [t]he General Assembly has attempted to do indirectly what it cannot do directly. Id. at 923-24. CAG contends that the Brown decision is apposite and that this Court should follow the result reached in that case.
The Grant Committee rejects Brown as analogous authority, arguing that a separation of powers violation does not occur in the instant case based on the simple fact that the governor, despite a legislatively prepared slate of prospective appointees, retains and exercises the constitutional right of appointment. Focusing on the fact that the governor chooses from the names submitted to him by the house speaker and senate president and emphasizing that the governor has the implied right to reject each name on a submitted list and to continue to do so until a list of suitable names appears, the Grant Committee maintains that the statutory appointment process does not run afoul of the separation of powers provision.
In its attempt to distinguish Brown from the case sub judice, the Grant Committee states that the Kentucky governor brought the lawsuit challenging the various statutes at issue in that case; notes that the decision was issued in a highly charged political climate, (See footnote 19) and suggests that the precedential value of that decision has been called into doubt based on recent decisions issued by that same court. Citing Prater v.Commonwealth of Kentucky, 82 S.W.3d 898 (Ky. 2002), the Grant Committee contends that, under a legal scenario similar to Brown, the Kentucky Supreme Court concluded that the [l]egislature has not attempted to appoint administrative officers, nor has it completely denied the appointive function of the Executive. (See footnote 20) Id. at 909. The Grant Committee's reliance on Prater, however, is not only misplaced but, upon careful reading, Prater clearly supports the position of CAG, rather than that of the Grant Committee.
In contrast to the issues presented in Brown, Prater did not involve separation of powers violations flowing from legislative involvement in the executive appointment process. Instead, the issue in Prater was whether a statute establishing a prerelease probation program impermissibly conferred the executive power of parole upon the judiciary, thus violating the state's separation of powers provisions. 82 S.W.3d at 898. After rejecting the argument that the executive branch's 'participation' in the trial court's prerelease probation decision in the form of eligibility determinations somehow served to eliminate the separation of powers issue being considered, the Kentucky appellate court referred, for analytical purposes, to its prior case law addressing the constitutionality of legislative involvement in the executive's appointment authority. Id. at 907.
Distinguishing the situation presented in Brown where both direct and indirect
legislative appointments were held unconstitutional, the court in Prater cited two decisions
upholding gubernatorial appointment to administrative bodies from lists of persons
submitted by third parties with an interest in the composition of those bodies. Id. at 908.
Significantly, neither of those two cases, Kentucky Association of Realtors, Inc. v.
Musselman
(See footnote 21)
and Elrod v. Willis,
(See footnote 22)
involved the troubling and more serious issue of
legislative involvement in the appointment process. Both of those cases concerned entities
other than the state legislature submitting lists of prospective board members. When the
legislature confines itself to the permissible function of establishing the parameters of
executive appointment without injecting itself directly in the process, as the court in Prater
explained, there is no encroachment upon the exercise [of] the executive power of
appointment. 82 S.W.3d at 909.
Crystalizing that it is the legislative involvement in the appointment process
which prevents a challenged statutory method of appointment from passing constitutional
muster, the court in Prater observed:
[T]here is a fundamental and critical difference between
the statutes held constitutionally flawed in LRC v. Brown and
the statutes proved as constitutionally valid in Elrod v. Willis.
. . . The statutes in LRC v. Brown granted the General Assembly
continuing power, either directly through its leadership or
indirectly through the LRC (which we recognized was not an
independent agency but an arm of the legislature), to require the
Governor to appoint to specified commissions persons who
were nominees of the legislature. This transgressed the mandate
in Section 27 of our Kentucky Constitution that each
department of government shall be confined to a separate body
of magistracy, and in Section 28 that [n]o . . . persons, being
of one of those departments, shall exercise any power properly
belonging to either of the others. But the statute presently in
question, as in the Elrod . . . case[], gives the General Assembly
no voice in the selection of committee members; its reach
extends solely to providing a method of selection with
reasonable criteria to generate commission members qualified
for the position through participation of an organization, the
Kentucky Association of Realtors, which is independent of
legislative control.
82 S.W.3d at 908 (quoting Musselman, 817 S.W.2d at 216-17) (emphasis supplied).
In seeking to bolster its position, the Grant Committee erroneously attributes a statement to Prater that, in actuality, emanates from Elrod. See 203 S.W.2d 18. Elrod involved a statute authorizing the Kentucky governor's appointment of individuals to the Disabled Ex-Servicemen's Board from a list submitted by the American Legion. The reason the Kentucky Supreme Court was able to declare in Elrod that the legislature had not attempted to appoint administrative officers, nor has it completely denied the appointive function of the Executive can be found in the very next sentence of that opinion. 203 S.W.2d at 20. It has simply limited the Governor's selection to a list of men named by an organization which is not affected by the limitation of section 27 [separation of powers].
Id. Rather than abandoning its ruling in Brown concerning the unconstitutionality of legislatively prepared lists for executive appointments, (See footnote 23) the Court in Prater was merely clarifying that a separation of powers violation is not implicated when the list preparation at issue is not performed by legislators. See 82 S.W.3d at 908.
The West Virginia Legislature, (See footnote 24) under authority of West Virginia Code § 29- 22-18a(d)(3), played an active role in identifying which individuals should be appointed to the Grant Committee. Through its designation of these individuals for the governor's selection, the Legislature wrongly injected itself into the appointment process--a function indisputably reserved to the executive branch of government. The danger of this type of an encroachment is the possibility that such action could conceivably result in the expansion of the legislative power beyond its constitutionally confined role. Washington Airports Auth., 501 U.S. at 277. While we do not wish to ascribe any improper assertion of control by the Legislature over the actions of the Grant Committee, we would be skirting our obligation to uphold the constitution of this state if we failed to recognize that the appointment mechanism established by the subject legislation does indeed set in place a device by which the Legislature may assert post-enactment control over executive branch decisions. See Manchin, 167 W.Va. at 173, 279 S.E.2d at 633.
In clear recognition of this Court's responsibility to enforce the constitutional
constraints imposed upon the separate branches of government and in adherence to our
longstanding practice of strictly construing the separation of powers provision, we hold that,
due to the resulting encroachment on the executive power of appointment, the provisions
of West Virginia Code § 29-22-18a(d)(3) that direct the presiding officers of each house of
the Legislature to submit a list of prospective candidates to the Governor for the chief
executive's selection of certain members of the West Virginia Economic Grant Committee
are in violation of the separation of powers provision found in article five, section one of the
West Virginia Constitution.
Finding the reasoning employed in Craig v. O'Rear, 251 S.W. 828 (Ky. 1923), to be persuasive, the lower court determined that the Grant Committee members were not officers of the state. At issue in Craig was legislation that created an eight-person commission whose members were selected by legislative officers for the limited purpose of selecting sites for two schools. In addressing a separation of powers issue, the Court in Craig observed: [P]ractically all of the courts hold that mere temporary agents appointed to perform a particular task, who serve without term and without pay, and whose functions cease when the purpose is accomplished, may be appointed by the Legislature itself, or in any manner that it may provide. . . . Id. at 831. Relying on these factors, the trial court and the Committee conclude that the Grant Committee members are merely temporary agents and not officers of the state. As support for this position, they cite to the fact that under the subject statute, as it pertains to the Grant Committee, there is no salary; no specified term of appointment; no bond posting requirement; and no oath-taking requirement. (See footnote 25) See W.Va. Code § 29-22-18a(d)(3).
What both the trial court and the Committee overlook in characterizing the
Grant Committee members as temporary agents is the discerning consideration of whether
those members are cloaked with authority to exercise the sovereign power of the state.
(See footnote 26)
In
State ex rel. Key v. Bond, 94 W.Va. 255, 118 S.E. 276 (1923), we recognized that
[a]s a general rule it may be stated that a position is a public
office when it is created by law, with duties cast on the
incumbent which involve an exercise of some portion of the
sovereign power and in the performance of which the public is
concerned, and which are continuing in their nature and not
occasional or intermittent. But one who merely performs the
duties required of him by persons employing him under an
express or implied contract, though such persons themselves be
public officers, and though the employment be in or about
public work or business, is a mere employee.
Id. at 260, 118 S.E. at 279 (emphasis supplied).
By limiting its analysis to circumstances such as salary, appointment length, oath taking, and bond requirements, the lower court failed to fully analyze this issue. Two additional factors that we discussed in concluding that the chief clerk employed by the Secretary of State in Bond was not a public officer were the absence of job duties prescribed by law and the employee's lack of independent power or authority over the exercise of her job duties. 94 W.Va. at 260-61, 118 S.E. at 279. Despite the absence of certain indicia of public office, the Grant Committee members are clearly vested with authority to exercise independent judgment and discretion. The issuance of revenue bonds as a result of the Committee's actions illustrates the fact that the Grant Committee is acting on behalf of the state in performing its duties. Further evidence that the Committee has been given authority to make critical decisions invoking the sovereign power of the state is gleaned from the fact that once the Committee certifies its list identifying the selected projects, those projects are not subject to alteration. See W.Va. Code § 29-22-18a(d)(3). Given the independent judgment and discretion of the Committee combined with the cloak of finality that the Legislature has placed upon the actions of the Grant Committee, there can be no doubt that the Committee's decisions necessarily implicate an exercise of the sovereign power of the state. See Hall v. Pizzino, 164 W.Va. 331, 334, 263 S.E.2d 886, 887 (1980) (stating that county superintendent of schools 'came within the definition of a public officer in that he was authorized to exercise some of the sovereign powers of the state') (quoting County Court v. Nicely, 121 W.Va. 767, 6 S.E.2d 485 (1939)).
In view of the fact that the Grant Committee members do have statutorily-
prescribed job duties; their job description necessarily reposes the members with
independent decision- making authority and discretion; and through the exercise of their job
description the members are permitted to make financial decisions that consequently have
an effect on the availability of both present and future state lottery funds, we are compelled
to conclude that the Committee members are indeed officers of the state. To find otherwise,
would be to ignore the realities of the decision-making power of the Grant Committee and
the impact of its decisions on the financial resources of this state. Accordingly, we hold that
the provisions of West Virginia Code § 29-22-18a(d)(3) that direct the Legislature's
involvement in the appointment process of the members of the Grant Committee are in
violation of the appointments provision found in article seven, section eight of the West
Virginia Constitution.
Looking first to State ex rel. West Virginia Housing Development Fund v.
Copenhaver, 153 W.Va. 636, 171 S.E.2d 545 (1969), the trial court noted that this Court
upheld a broad grant of discretion to the Housing Development Fund concerning
discretionary determinations of who should receive loans designated for persons and
families of low and moderate income. After recognizing that '[t]he delegation by the
legislature of broad discretionary powers to an administrative body, accompanied by fitting
standards for their exercise, is not of itself unconstitutional,' we rejected the constitutional
challenge to the subject legislation. Id. at 649, 171 S.E.2d at 553 (quoting Syl. Pt. 8,
Chapman v. Huntington, W. Va., Hous. Auth., 121 W.Va. 319, 3 S.E.2d 502 (1939)). In
explanation of our holding, we stated:
The legislature enacted the law here in question and has not
delegated to the Fund any purely legislative authority. It has,
perhaps as a matter of absolute necessity, clothed the Fund with
a power and duty, in a limited area, to exercise a degree of
discretion or judgment in determining who are 'persons and
families of low and moderate income.' The legislature has not
failed to set forth guidelines or standards to guide the Fund in
the exercise of its judgment or discretion in this limited area.
We note that the phrase 'low and moderate income' is used
conjunctively rather than disjunctively. By legislative definition
'persons and families of low and moderate income' are
encompassed in a single definition embraced in Section 3(8) .
. . . (See footnote 31)
153 W.Va. at 650, 171 S.E.2d at 553 (emphasis supplied and footnote added).
When the Housing Development Fund Act was amended in 1973, the Act was again challenged on grounds of improper legislative delegation. See State ex rel. W. Va. Hous. Dev. Fund v. Waterhouse, 158 W.Va. 196, 212 S.E.2d 724 (1974). Based on a new definition of persons qualifying for housing assistance, we were asked in Waterhouse to determine whether the Legislature had failed to provide proper guidance for identifying which persons qualified for housing assistance. (See footnote 32) Noting that great leeway is allowed the legislature in setting forth guidelines or standards, we found the following definition of eligibility adequate to guide the Housing Fund in its deliberations and [to] suppl[y] the necessary standards: 'Persons who because of age or physical disability are found and determined by the housing development fund, by resolution, to require residential housing of a special location or design in order to provide them with sanitary, decent and safe residential housing.' Id. at 213-14, 212 S.E.2d at 734 (quoting W.Va. Code § 31-18-3(3)(c) (1973)). In upholding the standards for eligibility against the claim of wrongful delegation, we observed: The powers delegated by the legislature, not being purely legislative in nature but rather being discretionary authority to carry out the well defined purpose of the Act, do not constitute an improper delegation of powers. 158 W.Va. at 214, 212 S.E.2d at 734.
In the third West Virginia case that the trial court considered, State ex rel. Marockie v. Wagoner (Wagoner II), 191 W.Va. 458, 446 S.E.2d 680 (1994), we examined whether the Legislature set forth adequate standards in giving the school building authority discretion to issue bonds and to choose which projects should be funded. Id. at 469, 446 S.E.2d at 691. Likening the discretion at issue to that considered in Copenhaver, we held that the legislature out of necessity gave the SBA certain discretionary powers and provided sufficient guidelines to guide the SBA in its exercise of discretion. Id. Without identifying a specific provision of the legislation at issue, West Virginia Code §§ 18-9D-1 et seq., we found the necessary legislative guidance had been provided in the cumulative provisions of the subject statutes to reject a finding of wrongful delegation of legislative powers. (See footnote 33)
The circuit court rejected the two cases relied upon by CAG as analogous authority, finding those decisions to be inapposite given the delegations of broad statutory authority extended in those decisions. See Douglas v. Judge, 568 P.2d 530 (Mont. 1977); In re Initiative Petition No. 332, 776 P.2d 556 (Okla. 1989). In Douglas, the Montana Supreme Court found constitutionally deficient a legislative standard that based the distribution of loan funds to farmers and ranchers for any worthwhile project for the conservation, management, utilization, development, or preservation of the land, water, fish, wildlife, recreational and other renewable resources in the state. 568 P.2d at 534 (emphasis supplied). Observing that the only limit on the power to loan money for a certain project is the Board of Natural Resources and Conservation's subjective determination of whether a project is worthwhile, the Court concluded that the statute at issue failed to comply with its previously stated test for judging the sufficiency of guidelines laid down by legislative enactments. Id. at 534-35. Those guidelines included the following parameters:
'[I]t is essential that the Legislature shall fix some standard by
which the officer or board to whom the power is delegated may
be governed, and not left to be controlled by caprice.'
We agree with this statement of the law and go further by
saying that the standard must not be so broad that the officer or
board will have unascertainable limits within which to act.
Id. at 534 (quoting Bacus v. Lake County, 354 P.2d 1056, 1062 (1960) and State v. Stark,
52 P.2d 890, 892 (1935)).
At issue in the Oklahoma decision of In re Initiative was proposed legislation that gave the Lottery Commission total discretion to transfer funds to the 'proper state accounts' to benefit . . . broad public purpose categories. 776 P.2d at 557. Other than identifying the public purposes in general fashion as 'education, economic development and job creation, programs for the elderly, the handicapped and the needy,' there was no legislative specification as to which agencies and which programs specifically would benefit and to what extent. Id. Concluding that the subject legislation constituted fiscal policy making in its most basic form, the Court struck the legislation as being a wrongful delegation of legislative function. Id.
In determining that the West Virginia Legislature had set forth sufficient guidelines to withstand a constitutional challenge on wrongful delegation grounds, the trial court looked to the statement of purpose provided in the statute:
The Legislature finds and declares that in order to attract
new business, commerce and industry to this state, to retain
existing business and industry providing the citizens of this
state with economic security and to advance the business
prosperity of this state and the economic welfare of the citizens
of this state, it is necessary to provide public financial support
for constructing, equipping, improving and maintaining
economic development projects, capital improvement projects
and infrastructure which promote economic development in this
state.
W.Va. Code § 29-22-18a(d).
Based on this statutory language, the trial court found that the Grant
Committee selects the recipients of public monies based on statutory criteria, while
acknowledging that those recipients are chosen on the basis of somewhat broad statutory
prescriptions. Likening the statutory grant of discretion as similar to that at issue in
Wagoner II, the circuit court concluded that the statutory guidelines were not so broad as
to constitute unbridled discretion. Noting additionally that the four-pronged criteria
adopted by the Grant Committee appear directed toward determining whether or not a
project will contribute to economic development, the trial court found that the evaluation
criteria constitute[d] a valid exercise of its discretion.
As a general rule the Legislature, in delegating
discretionary power to an administrative agency, such as a
board or a commission, must prescribe adequate standards
expressed in the statute or inherent in its subject matter and such
standards must be sufficient to guide such agency in the
exercise of the power conferred upon it.
In comparison to the statutory guidance given to the school building authority in Wagoner
II, we cannot concur with the trial court's ruling that the statutory guidelines provided in
West Virginia Code § 29-22-18a(d)(3) are sufficient to withstand a challenge predicated on
wrongful delegation of legislative powers. See W.Va. Const. art. VI, § 1. The following
statutory guidance was provided for selecting among the various entities competing for
school construction funds in Wagoner II:
(a) It is the intent of the Legislature to empower the
school building authority to facilitate and provide state funds
for the construction and maintenance of school facilities so as
to meet the educational needs of the people of this state in an
efficient and economical manner. The authority shall make
funding determinations in accordance with the provisions of
this article and shall assess existing school facilities and each
facility's plan in relation to the needs of the individual student,
the general school population, the communities served by the
facilities and facility needs statewide.
W.Va. Code § 18-9D-15(a) (1993).
Whereas the statute in Wagoner II gave a comprehensive listing of funding standards along with a clear statement of legislative intent, thereby avoiding the concern raised in Douglas that caprice would control the decision making process in the absence of clear guidelines, the statute currently under scrutiny contains no comparable guidance. See 568 P.2d at 534. And, unlike the specificity included in that statute at issue in Wagoner II, (See footnote 34) the State Lottery Act provisions at issue here contain only the broadest statement of legislative intent and fail to include even a hint of standards for the Grant Committee's use in exercising its statutorily specified duties. See W.Va. Code § 29-22-18a(d). The Committee had no measuring stick, other than its self-created criteria, to rely upon in attempting to fulfill the legislative objective of economic development. Critically, the evaluative criteria adopted by the committee itself cannot constitute the legislative guidance necessary to withstand a wrongful delegation of powers challenge.
To be clear, we do not imply a need to return to the days when courts sometimes imposed onerous requirements on the legislative and executive departments, thereby limiting the legislative branch's capacity to assign functions to the executive branch with only broad directives for implementing public policy. Nonetheless, the Legislature must articulate with sufficient clarity its public policy objectives to permit the executive department to effectuate those policy objectives and to educate the public as to the legislature's intentions. (See footnote 35) We made clear in Polan that the Legislature cannot grant . . . unbridled authority in the exercise of the power conferred upon . . . [an administrative agency]. Syl. Pt. 2, in part, 190 W.Va. at 277, 438 S.E.2d at 309.
At the core of CAG's contention is the fact that the Committee is authorized to select largely undefined projects without the benefit of any legislative guidance and that such projects, while required to serve a public purpose, in some instances clearly appear to also involve private undertakings or interests. Add to this concern, the fact that the legislatively approved expenditure of 215 million dollars of public funds involves borrowing _ through the sale of bonds _ and that the repayment of such public moneys is secured only by the excess profits of the state lottery over a lengthy period of time. Of further concern to those objecting to this economic development plan is the fact that the funds at issue will be largely extended by means of grants, rather than loans, and that little, if any, of such funds may be required to be repaid. (See footnote 36)
All of these validly raised objections serve to further underscore this Court's grave responsibility to carefully evaluate the constitutional imperatives implicated by the legislative plan to effect economic development through the statutory mechanism outlined in West Virginia Code § 29-22-18a(d)(3). Cognizant of our constitutional duties, we recognize that the power extended to the Grant Committee by the Legislature to exclusively select which projects may benefit from receipt of state funds must be exercised in conjunction with definitively announced legislative standards by which the Committee can appropriately evaluate the submitted projects for purposes of assuring that the selected projects will meet the legislated public purpose of economic development.
In this Court's opinion, the legislation at issue has conferred uncontrolled discretion upon the Grant Committee by virtue of the lack of legislative guidance provided for determining the bases by which the grant applications should be considered. See Polan, 190 W.Va. at 280, 438 S.E.2d at 312. Accordingly, we hold that when an enabling statute such as West Virginia Code § 29-22-18a(d)(3) extends discretion to the executive branch in contemplation of an expenditure of public funds with only a broad statement of legislative intent and insufficient legislative guidance for the execution of that legislative intent, the Legislature has wrongfully delegated its powers to legislate in violation of article six, section one of the state constitution. See W.Va. Const. art. VI, § 1. Before the Grant Committee, upon its reconstitution, proceeds to implement the statute at issue, the Legislature is required to amend the subject legislation to provide the necessary standards that the Committee must apply in identifying and certifying projects selected for receipt of state funds pursuant to West Virginia Code § 29-22-18a(d).
While we do not intend to identify what those standards should be _ as that is
a legislative determination _ we emphasize that to withstand constitutional scrutiny the
Legislature must provide the Committee with sufficient guidance so that the Committee's
allocation decisions can be made with a clear understanding of the type of contemplated
economic development it should be seeking to fund. As it stands now, the Legislature has
failed to instruct the Committee even as to the general nature of projects which are
encompassed within the statutory purview of economic development.
(See footnote 37)
In short, suitable
legislative standards for achieving the laudable goal of economic development have simply
not been provided.
Focusing on the distinction between an involuntary tax which is paid under compulsion and the voluntary payment of fees or costs, we upheld legislation authorizing a portion of proceeds from the sale of alcoholic beverages to pay off bonds issued to finance buildings utilized by certain state agencies and departments. See State ex rel. State Bldg. Commn. v. Moore, 155 W.Va. 212, 234, 184 S.E.2d 94, 107 (1971). As in O'Brien, the constitutional provision proscribing debt was avoided because the bonds at issue were not being paid for through imposition of a tax, but instead from the action of the members of the public who, on a wholly voluntary basis, purchase alcoholic liquors from the state. Id. at 234, 184 S.E.2d at 107.
Both Moore and O'Brien fall into that category of cases, referred to as the
'special fund doctrine' decisions, where challenged legislation has been determined not
to be violative of article ten, section four based on the non-involvement of the state's general
tax revenues. State ex rel. Hall v. Taylor, 154 W.Va. 659, 670, 178 S.E.2d 48, 55 (1971),
overruled on other grounds by State ex rel. Resource Recovery_Solid Waste Disposal Auth.
v. Gill, 174 W.Va. 109, 111, 323 S.E.2d 590, 592-593 (1984). In explaining this doctrine,
we stated:
[I]t has generally been held that an obligation payable from a
special fund created by the imposition of fees, penalties, or
excise taxes, and for the payment of which the general credit of
the state is not pledged and resort may not be had to property
taxation, is not a debt within the meaning of constitutional debt
limitations. Such a limitation applies solely to that arising from
a general levy and not excise taxes.
Id. at 670-71, 178 S.E.2d at 55 (quoting 49 Am.Jur. States, Territories, and Dependencies,
§ 67). Acknowledging that a precise definition of the special or separate fund doctrine
is difficult, we observed in Taylor that it is
uniformly held, however, that the doctrine cannot be applied to
a fund which is created and maintained, in whole or in part, by
general tax revenues, for the reason that such would clearly
violate the purpose and intent of constitutional provisions such
as that involved in this case [art. X, § 4]. The basic intent and
purpose of such constitutional provisions is to prohibit any
legislative act which would bind subsequent legislatures to
make appropriations of moneys in subsequent fiscal years.
154 W.Va. at 672-73, 178 S.E.2d at 56.
In upholding the subject legislation with regard to the inhibitory debt
provisions of section four of article ten, the circuit court looked to this Court's rulings in
State ex rel. Marockie v. Wagoner (Wagoner I), 190 W.Va. 467, 438 S.E.2d 810 (1993),
overruled on other grounds by State ex rel. W. Va. Regl. Jail Auth. v. W.Va. Inv. Mgt. Bd.,
203 W.Va. 413, 421, 508 S.E.2d 130, 138 (1998). Wagoner I concerned the
constitutionality of issuing revenue bonds for school building fund purposes to be paid from
a portion of the previously established consumer sales tax receipts. Through that decision,
we confirmed the well-established principle that '[s]ection 4 of Article X of the West
Virginia Constitution . . . does . . . [not] preclude the issuance of revenue bonds which are
to be redeemed from a special fund.' Id. at 468, 438 S.E.2d at 811, syl. pt. 1, in part
(quoting Syl. Pt. 6, Winkler v. State of W. Va. Sch. Bldg. Auth., 189 W.Va. 748, 434 S.E.2d
420 (1993)). In striking down the designated special revenue fund created from consumer
sales tax revenues in Wagoner I, we clarified that:
The Legislature may not designate funds that will be
used to liquidate a revenue bond issue out of a current tax
source that flows into the general revenue fund. If this practice
were permitted, then a debt would be created that would burden
the existing general revenue fund in violation of Section 4 of
Article X of the West Virginia Constitution.
Syl. Pt. 2, Wagoner I, 190 W.Va. at 468, 438 S.E.2d at 811.
The Legislature responded to the constitutional impediment recognized by the
Wagoner I ruling and amended West Virginia Code § 18-9D-6(b) (1993) to create a special
fund known as the school building debt service fund that consists of moneys allocated from
the net profits of the West Virginia Lottery. See W.Va. Code § 29-22-18(h) (1994). In
upholding this funding mechanism, we held that:
This method of funding the School Building Authority's
revenue bonds does not violate section 4 of article X of the
West Virginia Constitution since the monies allocated to the
school building debt service fund are a new revenue source and
since the legislature specifically provided in W.Va. Code, 29-
22-18 [1990 and 1994] that the net profits from the West
Virginia Lottery are not to be treated as part of the general
revenue of the State.
Syl. Pt. 3, in part, Wagoner II, 191 W.Va. at 462, 446 S.E.2d at 684 . (See footnote 39) We noted that while the lottery profits were initially made part of the general revenue fund, beginning in 1990 those funds were specifically designated for specified purposes and the Legislature expressly mandated that the lottery revenues shall not be treated . . . as part of the general revenue of the state. Id. at 465-66, 446 S.E.2d at 687-88 (quoting W.Va. Code § 29-22-18(g) (1990)).
In concluding that the subject legislation does not violate article ten, section 4, the circuit court applied the principles discussed in the Wagoner decisions, as well as our earlier decisions in O'Brien, Taylor, and Moore. To reach its ultimate determination that the State's general revenues are not implicated by the subject legislation, the circuit court first examined whether the special revenue fund doctrine would apply. Looking to the statutory provisions at issue, the lower court determined that West Virginia Code § 29-22- 18a(a) clearly created a special revenue fund within the State Lottery Fund, and then concluded that the Economic Development Project Fund, although not denominated a special fund, clearly is one. The lower court, while correct in its conclusion, overlooked the statutory language that expressly designates the Economic Development Project Fund as a special revenue fund. W.Va. Code § 29-22-18a(d)(2). In addition, the lower court found significant the fact that the bonds shall be payable solely from the special fund provided in this section for the payment. W.Va. Code § 29-22-18a(d)(1). As further support for the Legislature's intention that the general revenues of this state never be called upon to pay off the subject bonds, the circuit court noted that the statute expressly contemplates the possibility of insufficient funds in a given month to cover the allocated one tenth of the projected annual principal, interest and coverage requirements. In such event, the deficiency shall be added to the amount transferred in the next succeeding month in which revenues are available to transfer the deficiency. W.Va. Code § 29-22-18a(g).
Based on all of these factors, we are convinced that the financing mechanism
established for payment of the revenue bonds that will be issued in connection with the
selected grant projects properly comes within the special revenue fund doctrine. Given
the Legislature's carefully constructed financing mechanism, we do not find any basis for
concluding that the bond repayment schema under consideration can negatively affect the
fiscal integrity of the state.
(See footnote 40)
We reach this conclusion based on the fact that the bonds will
not be satisfied out of general revenue appropriations. Accordingly, the concerns underlying
the provisions of article ten, section four are not implicated by the subject legislation.
The objective of section six of article ten, like that of section four of that same article, is to protect the fiscal integrity of the state through the stated means of restricting the Legislature's ability to create long-term debt. Winkler, 189 W.Va. at 755, 434 S.E.2d at 427 (citing Gill, 174 W.Va. at 111, 323 S.E.2d at 592-593). For essentially the same reasons the subject legislation does not implicate the concerns at issue in section four of article ten, it fails to invoke the credit or debt concerns at the center of section six. As the circuit court aptly determined: Since the bonds are required to be repaid from the Economic Development Project Fund, a special revenue fund, and not out of compulsory tax payments, the credit of the State is not implicated. The bond financing and repayment provisions delineated in West Virginia Code § 29-22-18a(d) do not create a lien against the general revenue of the state because the bonds are to be repaid solely from a special revenue source _ excess lottery funds that are not part of the general revenue of the state. As the provisions of the subject legislation make clear, there is no assumption by the state of any debt or liability of any political subdivision, county, city, township, corporation, or person.
In arguing that article ten, section six is violated based almost entirely on whether the legislation at issue serves a public purpose, CAG overlooks the provision's primary objective of securing the state's fiscal integrity. While it is axiomatic that legislative appropriations must serve a public purpose, (See footnote 42) that is not the constitutional concern, as discussed above, which article ten, section six is aimed at safeguarding. Nonetheless, the law is well established with regard to the public purpose doctrine: A legislative declaration of purpose, while not conclusive, is entitled not only to respect but to a prima facie acceptance of its correctness. Syl. Pt. 6, Waterhouse, 158 W.Va. at 197, 212 S.E.2d at 726. Moreover, [a] legislative determination of what is a public purpose will not be interfered with by the courts unless the judicial mind conceives it to be without reasonable relation to the public interest. Gainer, 149 W.Va. at 750, 143 S.E.2d at 359.
The Legislature has provided a clear statement of the public purpose which it
seeks to serve through the provisions of West Virginia Code § 29-22-18a(d). The intended
object of the subject legislation is economic development and the anticipated benefit of
utilizing the grant moneys for such development is both to retain existing business and
industry [and thereby provide] the citizens of this state with economic security and to
attract new business, commerce and industry. Id. While CAG vigorously challenges the
Legislature's objective of advancing the economic interests of this state through commercial
development,
(See footnote 43)
this Court recognized the worth of commercial development more than
twenty years ago in State ex rel. Ohio County Commission v. Samol, 165 W.Va. 714, 275
S.E.2d 2 (1980), stating:
It does not require any lengthy discussion to realize that the
renovation, expansion or creation of existing or new
commercial projects gives much the same economic benefit to
a community as would comparable activities in the industrial
area. Each serves to create or maintain employment and
enhance tax revenues, and thereby operates to benefit the
community and public in general.
Id. at 718, 275 S.E.2d at 4.
Rather than being static in nature, the public purpose doctrine, because of its
inherent responsiveness to societal needs and demands, is ever changing: What constitutes
a public purpose varies with changing conceptions of the scope and function of government.
As governmental activities increase by reason of the growing complexity of various phases
of society, the concept of 'public purpose' expands proportionately. Waterhouse, 158
W.Va. at 215, 212 S.E.2d at 735. Addressing both the fluidity of the public purpose
doctrine and how economic development fits into that doctrine, the South Carolina Supreme
Court articulated:
Times change. The wants and necessities of the people
change . . . On the one hand, what could not be deemed a public
use a century ago may, because of changed economic and
industrial conditions, be such today.
The consensus of modern legislative and judicial
thinking is to broaden the scope of activities which may be
classed as involving a public purpose. 37 Am.Jur., Municipal
Corporations, Sec. 132. It reaches perhaps its broadest extent
under the view that economic welfare is one of the main
concerns of the city, state and the federal governments.
[Emphasis supplied].
Nichols v. S.C. Research Auth., 351 S.E.2d 155, 161 (S.C. 1986) (additional citations
omitted); see also State ex rel. Brown v. City of Warr Acres, 946 P.2d 1140, 1146 (Okla.
1997) (Summers and Watt, J., concurring) (observing that [w]hether a sufficient public
purpose exists behind a city's expenditure of a public money for an economic development
plan should be measured by contemporary economic challenges faced by municipalities).
While legislative action is required to serve the public, rather than private
interests, the realization of incidental benefits by private entities as a result of legislative
efforts does not render the legislation unconstitutional for lack of a public purpose. As the
Oklahoma Supreme Court remarked in Warr Acres:
Municipalities today compete on a nation-wide level to
attract new industry into their locality. A city cannot compete
with other cities or even other states if other cities and states are
competing with inducements devised under contemporary
economic development plans. . . . This has been recognized in
other states, as courts have construed public purpose
requirements for the expenditure of public funds to encompass
ever changing public needs and adapt to the ever increasing
competition for industry development. Economic development
plans devised to provide gainful employment, improve living
conditions, attract industry and advance the economy, like the
plan at issue here, in which the public benefits greatly outweigh
the incidental benefit to a private person or corporation have
been upheld.
Id. at 1148 and cases cited therein (Summers and Watt, J., concurring) (emphasis supplied).
Many years ago this Court addressed the broad sphere of permissible
governmental activity in areas where the Legislature determines that government action is
a necessary supplement to private enterprise to alleviate social problems. State ex rel. City
of Charleston v. Coghill, 156 W.Va. 877, 881, 207 S.E.2d 113, 116 (1973). In ruling upon
enabling legislation authorizing the City of Charleston to determine the amount of space in
a public parking facility which would be leased to a private enterprise, this Court upheld
public parking as a validly declared public purpose where the statement of legislative intent
included the objective of 'fostering the development of commerce and business within
municipalities.' Id. at 880, 207 S.E.2d at 116 (quoting West Virginia Code § 8-16-4a(a)).
Acknowledging that private interests might be affected through this legislation, we stated,
although a parking facility designed for an acknowledged
public purpose is constitutional, even though it confers ancillary
and incidental benefits upon private persons, a parking facility
which has as its primary and dominant purpose the conferring
of private benefits, with only ancillary public benefits, would be
an unconstitutional use of authority. . . .
156 W.Va. at 884, 207 S.E.2d at 118. This Court has similarly upheld various legislative
acts against public purpose challenges despite the existence of incidental benefits to private
interests. See Copenhaver, 153 W.Va. at 650, 171 S.E.2d at 554 (upholding West Virginia
Housing Development Fund legislation enacted to provide public housing assistance);
Gainer, 149 W.Va. 740, 143 S.E.2d 351 (upholding statute authorizing reimbursement of
public utilities for relocation costs necessitated by highway construction on public purpose
grounds against challenge of unconstitutionally extending state's credit); State ex rel. County
Court of Marion Co. v. Demus, 148 W.Va. 398, 135 S.E.2d 352 (1964) (upholding
Industrial Development Bond Act providing for issuance of self-liquidating bonds against
challenge that legislation constituted an indirect granting of credit to private corporation);
State ex rel. W.Va. Bd. of Educ. v. Sims, 139 W.Va. 802, 81 S.E.2d 665 (1954) (upholding
legislation granting paid sabbatical leave to faculty of state educational institutions on public
purpose grounds, while recognizing incidental personal benefit to faculty); State ex rel. Bd.
of Govs. of W.Va. Univ. v. Sims, 134 W.Va. 428, 59 S.E.2d 705 (1950) (directing state
auditor to pay medical costs of injuries incurred by student athlete in intercollegiate contest
and finding public purpose in statute authorizing discretionary payment of such costs); State
ex rel. Bd. of Govs. of W.Va. Univ. v. Sims, 133 W.Va. 239, 55 S.E.2d 505 (1949)
(upholding legislation authorizing government pensions, finding that public benefit
outweighed any ancillary private benefit).
In ruling on the public purpose of the economic development at issue, the
circuit court opined:
The legislature apparently believes that downtown
redevelopment districts will promote the vitality of retail
business areas within municipalities, serve as an effective
means for restoring and promoting retail and other business
activity within said districts, will benefit municipalities by
increasing the tax base within said downtown redevelopment
district and will stimulate economic growth and job creation.
While the Court cannot say that all of the anticipated results will
necessarily flow from the creation of downtown redevelopment
districts, it can be said that all of these stated purposes serve
legitimate public purposes. (citation omitted)
Like the circuit court, we find that the Legislatively declared objective of economic
development is a valid public purpose, deserving of both judicial respect and occasion for
the desired economic development to take place. Accordingly, we find no basis for
interfering with the subject legislation on public purpose grounds.
Through the record developed below, the circuit court found that the projects
selected by the Grant Committee were properly chosen pursuant to the evaluative criteria
adopted by the Committee. Because we have found a constitutional basis for requiring the
reconstitution of the Committee, as well as a need for statutory inclusion of legislative
standards for use in evaluating submitted projects, a newly comprised Committee will have
to reconsider those previously approved projects and those submitted, but unapproved,
applications against such standards upon their adoption.
(See footnote 44)
Given the need to individually
reconsider the grant applications,
(See footnote 45)
it would be imprudent for this Court to comment on the
merits of any of those projects. We do note, however, that each of the projects, barring one,
had a governmental partner, thereby underscoring the public purpose of such projects. In
addition, we further perceive that the Legislature's reposition of broad discretion in the
Committee for selecting the list of economic development projects deserving of public
funding will meet with increased public acceptance and, therefore, a decreased incidence
of challenge and consequent delays in implementing the projects, if the Committee opts to
make a full record of its proceedings and decisions for the purpose of evidencing that its
actions are in accord with the public purpose objectives of the subject legislation and the
enunciated legislative standards.
Based on the foregoing, we conclude that the appointment mechanism for the
Grant Committee contained in West Virginia Code § 29-22-18a(d)(3) violates the separation
of powers provision of the state constitution found in article five, section one and the
appointments provision found in article seven, section eight. We further determine that,
based upon the lack of sufficient standards provided for the Committee's use in evaluating
the submitted grant projects pursuant to the provisions of West Virginia Code § 29-22-
18a(d)(3), the Legislature has wrongfully delegated its powers in violation of article six,
section one of our state constitution. Due to these constitutional infirmities, the actions
previously taken by the Committee with regard to approving various grant applications are
of no force and effect. Accordingly, the decision of the Circuit Court of Kanawha County
is hereby affirmed with regard to the lower court's upholding of the statutory provisions
which govern the bond issuance and repayment mechanisms, but reversed as to the lower
court's findings regarding the constitutionality of the appointment process and delegation
of legislative power.
Assuming that the Legislature desires to proceed with this statutory approach
of encouraging economic development, it is incumbent upon the Legislature to amend the
subject legislation to provide for the executive appointment of the members of the Grant
Committee without use of a submitted list of nominees from the presiding officers of the two
houses of the Legislature and to further provide the necessary guidance in the form of
legislative standards that will enable the Committee to perform its statutory task of
reviewing and selecting among the submitted project applications in accord with the
announced legislative objective of economic development.
Given the need for legislative action to effect the amendments necessary to
correct the constitutional infirmities recognized in this opinion, we hereby direct the entry
of the necessary
order
and the issuance of the
mandate
pertaining to this decision forthwith.
Affirmed, in part,
Reversed, in part.
'Persons and families of low and moderate income' means
persons and families, irrespective of race, creed, national origin
or sex, determined by the housing development fund to require
such assistance as is made available by this article on account of
personal or family income not sufficient to afford sanitary,
decent and safe housing, and to be eligible or potentially
eligible to occupy residential housing constructed and financed,
wholly or in part, with federally insured construction loans,
federally insured mortgages, federal mortgages or with other
public or private assistance, and in making such determination
the fund shall take into account the following: (a) The amount
of the total income of such persons and families available for
housing needs, (b) the size of the family, (c) the cost and
condition of housing facilities available, (d) the eligibility of
such persons and families for federal housing assistance of any
type predicated upon a low or moderate income basis, and (e)
the ability of such persons and families to compete successfully
in the normal housing market and to pay the amounts at which
private enterprise is providing sanitary, decent and safe
housing[.]
153 W.Va. at 650-51, 171 S.E.2d at 553-54 (quoting W.Va. Code § 31-18-3(14)).
Implicit in that decision is the fact that additional funding
would have to be created in order to fund those projects which
had been previously funded by revenue which would be going
to the special revenue fund. O'Brien makes it clear that the
important question is whether the funding for the bonds creates
an unconstitutional debt, not how will other projects originally
funded by the special fund continue to be funded.
191 W.Va. at 465, 446 S.E.2d at 687 (citation omitted).
When our Constitution of 1872 was formed, the experience of
the mother state with debts contracted by her, and with suits to
compel payment, were fresh in the minds of the framers of that
Constitution. Numerous suits ending in heavy judgments and
costs had been prosecuted against the commonwealth; illiberal
contracts and guaranties of enterprises had been made by
governmental agencies detrimental to her interests; public
officers and agencies had not been always zealous and careful
in the conduct of public affairs; and juries leaned toward the
individual as against the commonwealth.
Id. at 188-89, 153 S.E. at 306-07.
While we find no constitutional impediment to the statute under consideration
based on sections four and six of article ten of our state constitution given long standing
precedent governing the use of the special revenue source of funding, the historical
underpinnings of these sections nonetheless maintain an illuminating degree of relevance
with regard to the favoritism concerns raised by CAG in this action. We cannot but note that
the admonitions of our forefathers concerning the potential unfairness involved through the
support of some internal improvements to the exclusion of others, still have continuing
merit today.