Hunter v. State
Annotate this Case
Hunter v. State (2003-013); 177 Vt. 339; 865 A.2d 381
2004 VT 108
[Filed 22-Oct=2004]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
2004 VT 108
No. 2003-013
Susann Hunter, Robin Gagne and Supreme Court
Jane Doe
On Appeal from
v. Washington Superior Court
State of Vermont, M. Jane Kitchel and January Term, 2004
Eileen Elliott
Mary Miles Teachout, J.
John J. McCullough III and Mark Loevy-Reyes of Vermont Legal Aid, Inc.,
Montpelier, for Plaintiffs-Appellants.
William H. Sorrell, Attorney General, Montpelier, and Susan R. Harritt,
Assistant Attorney General, Waterbury, for Defendants-Appellees.
PRESENT: Amestoy, C.J. (FN1), Dooley, Johnson, Skoglund and Reiber, JJ.
¶ 1. DOOLEY, J. The principal question presented is whether,
consistent with the separation-of-powers provision of the Vermont
Constitution, the General Assembly validly delegated to the Secretary of
Administration and the Joint Fiscal Committee the authority to prepare and
implement a deficit-prevention plan to address a revenue shortfall while
the Legislature was not in session. A subsidiary question is whether the
Department of Prevention, Assistance, Transition and Health Access (PATH)
complied with emergency rulemaking procedures in implementing the
reductions called for in the deficit-prevention plan. Plaintiffs
challenged the plan, and the superior court ruled that the plan did not
violate the separation-of-powers doctrine, but that PATH had failed to
provide proper notice and hearing before adopting the emergency rule. We
affirm the court's ruling that the delegation of authority was
constitutionally permissible, and reverse the superior court determination
that the emergency rule violated the Administrative Procedures Act, finding
instead that PATH complied with the requisite rulemaking procedures.
¶ 2. The facts are briefly summarized as follows, although
additional material facts are provided in the discussion. The Fiscal Year
2003 Appropriations Act (Act), enacted at the conclusion of the 2002
legislative session, contained a final section directing the Secretary of
Administration (Secretary)-in consultation with the legislative leadership
and "relevant committee chairs"-to prepare and present to the legislative
branch Joint Fiscal Committee (JFC) a "deficit prevention plan" in the
event that: (1) the official state revenue estimates of the emergency board
for the general fund, the transportation fund, or federal funds were
reduced by two percent or more from the estimates adopted by the board on
January 15, 2002; (FN2) (2) the General Assembly was not in session; and
(3) the plan was "necessary to ensure a balanced budget in the general fund
or transportation fund." 2001, No. 142 (Adj. Sess.), § 324(a), (d). The
JFC could accept, reject or amend the plan, and the Secretary was then
empowered to implement the plan as approved. Id. § 324(d).
¶ 3. The Legislature adjourned in late June 2002. After
adjournment, the chairs of the House and Senate Appropriations Committees
prepared and signed a "Statement of Intent to the Budget Act." That
statement provided that § 324 was intended to provide temporary rescission
authority to address revenue shortfalls. It further stated that it was the
intent of the appropriation act conferees that PATH could invoke emergency
rulemaking procedures to implement any program change "where it is
necessitated by the imminent peril to public welfare posed by the revenue
shortfall and the need through prompt exercise of rescission authority to
avert or mitigate a state budget deficit." Statement of Legislative
Intent, Omnibus Appropriations Act, 2001, No. 142 (Adj. Sess.), available
at Joint Fiscal Office.
¶ 4. In July, the emergency board predicted a revenue reduction in
excess of four percent of the general fund from the January 2002 estimate,
thereby triggering the Act's deficit-prevention provision. The Secretary,
in response, developed a deficit-prevention plan and presented it to the
JFC, as the Act required, on August 12. The plan recommended reductions in
excess of $23 million, including cuts below the appropriation to PATH of
nearly $4 million. The proposed reductions to PATH's budget included the
elimination of adult chiropractic coverage for Medicaid and Vermont Health
Access Plan (VHAP) recipients, suspension of denture coverage for Medicaid
recipients, and the elimination of VHAP coverage for elective inpatient
hospital admissions. (FN3) After several meetings, the JFC adopted the
plan on August 23. On September 5, PATH filed an emergency rule to
implement the budget reductions articulated in the plan, to become
effective on October 1. PATH refiled the emergency rule on October 16, to
reflect an amended implementation date of November 1.
¶ 5. In late October, plaintiffs-three individuals affected by
PATH's proposed reductions-filed a complaint against the State, Agency of
Human Services Secretary Kitchel, and PATH Commissioner Elliott in superior
court, seeking to enjoin implementation of the plan. Plaintiffs claimed
that the proposed reductions and implementing regulations were invalid
because: (1) the deficit-prevention section of the Act impermissibly
delegated an essential legislative function to the executive branch and
legislative committee, in violation of the separation-of-powers provision
of the Vermont Constitution; (2) PATH's implementation of the reductions
violated certain requirements of the Administrative Procedure Act (APA), 3
V.S.A. §§ 800-849; (3) the elimination of coverage for dentures and
chiropractic services violated § 148(g), (i) of the Act; (4) the
elimination of chiropractic coverage violated Vermont's health insurance
law; and (5) the elimination of denture services violated federal Medicaid
law.
¶ 6. The trial court heard arguments on plaintiffs' motion for a
preliminary injunction, and issued a written decision on November 22. The
court rejected plaintiffs' separation-of-powers claim, concluding that the
Constitution allowed such overlapping institutional arrangements as a means
to accomplish the Legislature's limited objective of responding to a
financial emergency during a period when the General Assembly was not in
session. The court also rejected plaintiffs' claims that the reductions
violated § 148 of the Appropriations Act, or state health insurance and
federal Medicaid law. Finally, the court determined that PATH had failed
to provide adequate notice and hearing in connection with the emergency
rule, in violation of the APA. The court granted the preliminary
injunction as a remedy for the APA violation, but stayed its effect until
December 31, 2002, to afford PATH an opportunity to comply with the notice
and hearing requirements and, after it complied, to move to vacate the
order granting the preliminary injunction. On December 27, the court
granted defendants' motion to vacate the preliminary injunction, and also
granted plaintiffs' motion for permission to take an interlocutory appeal,
which this Court accepted. The court's order granting interlocutory appeal
specified two issues for review: (1) whether the court erred in concluding
that plaintiffs had failed to show a likelihood of success on their claim
that § 324 of the Act violated the separation-of-powers doctrine; and (2)
whether the court erred in staying issuance of a preliminary injunction
after finding that PATH had failed to comply with the notice and hearing
requirements of the APA.
I.
¶ 7. We first address plaintiffs' claim that § 324 of the Act
violates the Vermont Constitution's separation-of-powers provision by
delegating the Legislature's appropriations power to the executive branch
and the JFC. Because the Act authorizes the Secretary to prepare and
implement a deficit-prevention plan, subject to JFC approval or amendment,
plaintiffs argue that it effectively empowers the executive and a small
legislative body to make budgetary decisions properly exercised only by the
Legislature as a whole. See Bowsher v. Synar, 478 U.S. 714, 763 (1986)
("appropriating funds is a peculiarly legislative function"); Vt. Home
Mortgage Credit Agency v. Montpelier Nat'l Bank, 128 Vt. 272, 279, 262 A.2d 445, 450 (1970) (Legislature may not delegate power to act as lawmaker).
The defendants argue, in response, that the Act represents a
constitutionally permissible delegation of limited authority within the
bounds of the necessarily overlapping budgetary powers of the executive and
legislative branches. As explained below, we find the defendants' position
to be the more persuasive.
¶ 8. We start with a more detailed explanation of the statute
under attack, the context in which it was enacted, and the relevant
constitutional provisions. The Act requires three specific conditions
before the Secretary is required to undertake emergency budgetary planning
actions. First, official state revenue estimates of the emergency board
for one of the funds must have been reduced by two percent or more from the
previous estimate; second, the General Assembly must not have been in
session; and third, a deficit-prevention plan must have been "necessary to
ensure a balanced budget in either the general fund or the transportation
fund." 2001, No. 142 (Adj. Sess.), § 324(a)(3). When all of these
circumstances coexisted, the Secretary was required to prepare a
deficit-prevention plan "in consultation with legislative leadership and
relevant committee chairs, and . . . file the plan with the joint fiscal
committee." Id. § 324(d). The time period within which the Secretary was
authorized to act was also limited, dating from the Legislature's
adjournment in June 2002 to the end of September: "The secretary shall have
no authority to file a plan under this section after September 30, 2002."
Id. The Act further required the Secretary to report to the General
Assembly by November 15, 2002, "describing in detail the manner in which
any deficit prevention plan has been implemented, including a discussion of
the impact of any funding reductions." Id.
¶ 9. The Secretary's plan was, in effect, only a recommendation to
the JFC, which could approve, modify or reject it in whole or in part, as
long as it acted within certain designated time limits. Id. The JFC is
made up of ten legislators, five from each the House of Representatives and
the Senate. 2 V.S.A. § 501(a). In addition, the Act provided certain
legislative guidelines or priorities to guide the Secretary and the JFC.
Specifically, any deficit-prevention plan was to "be designed to minimize
any negative effects on the delivery of services and on local budgets,
including the delivery of tobacco fund supported youth substance abuse
education and prevention services," and generally was "to reflect the
priorities established by the general assembly in the fiscal year 2003
appropriations act." 2001, No. 142 (Adj. Sess.), § 324(b).
¶ 10. The plan could use a number of methods to prevent a deficit
including "program and funding reductions" and "reductions in force
consistent with the state's contractual obligations." Id. § 324(c)(1),
(2). There were, however, some restrictions based on the source of funds
used for deficit prevention. For example, any transfers from the tobacco
settlement fund were to "be used to support grants and services for the
benefit of clients of the agency of human services," and some reserve funds
were not to be reduced below certain specified levels. Id. § 324(c)(4),
(5).
¶ 11. The Act's provisions are consistent with a general provision
on "Interim budget and appropriation adjustments" adopted in Title 32.
This section, enacted in 1996, allows a similar process of expenditure
reduction by the Secretary of Administration, with approval in certain
circumstances by the JFC. 32 V.S.A. § 704. The Secretary alone may reduce
expenditures to prevent a deficit where the revenues for the general fund,
transportation fund or federal funds will fall short of the official
revenue estimates by less than one percent, provided that: "reductions to
any individual appropriation do not exceed five percent of the
appropriation's amount for personal services, operating expenses, grants
and other categories;" the plan "is designed to minimize any negative
effects on the delivery of services to the public;" and it does not "have
an unduly disproportionate effect on any single function, program, service,
or benefit." Id. § 704(b)(2). If the revenue shortfall will be greater,
or the Secretary proposes spending reductions not within the above limits,
reductions can be implemented with the approval of the JFC. Id. §
704(b)(1), (f).
¶ 12. Prior to the 1996 enactment, the statutes contained general
authority for the Governor to determine what portion of appropriations
would be expended:
The final decision as to what portion of any appropriation is
necessary to be expended for the purposes of the appropriation
shall be that of the governor, who may review the work of each
department, board, commission, agency or officer in such manner as
he shall determine. If the governor shall determine in any case
that a lesser amount than that appropriated is required, he shall
notify the department, board, commission, agency, or officer
affected and thereafter no expenditure in excess of the amount
determined by the governor to be necessary shall be made.
32 V.S.A. § 708, repealed by 1995, No. 178 (Adj. Sess.), § 283a. This
authority was enacted in 1960 pursuant to the general policy that only so
much of an appropriation shall be expended "as is necessary for the
purposes for which the sums are appropriated." Id. § 707. Although this
specific authorization was repealed in 1996, the legislation did
acknowledge the power to manage spending in the executive branch:
The executive branch is authorized and encouraged to take
such actions as are necessary and desirable to manage and
administer state programs and agencies in an efficient, effective,
and fiscally prudent manner, and to such ends may accomplish
savings and reduce spending in such programs and agencies,
provided that the legislative purposes for which sums are
appropriated are substantially accomplished.
32 V.S.A. § 704a(b).
¶ 13. We turn to the relevant constitutional provisions. No
provision explicitly addresses the questions before us. Chapter II gives
the Legislature "powers necessary for the Legislature of a free and
sovereign State," but provides little specificity on the nature of the
powers. Vt. Const. ch. II, § 6. Section 2 provides that "[t]he supreme
legislative power shall be exercised by a Senate and a House of
Representatives." Id. § 2. Section 20 provides that the Governor "may
draw upon the Treasury for such sums as may be appropriated by the General
Assembly" and must "take care that the laws be faithfully executed." Id. §
20. Section 27 specifically addresses expenditure of funds, providing that
"No money shall be drawn out of the Treasury, unless first appropriated by
act of legislation." Id. § 27. Finally, the Constitution contains a
separation-of-powers provision: "The Legislative, Executive, and Judiciary
departments, shall be separate and distinct, so that neither exercise the
powers properly belonging to the others." Id. § 5.
¶ 14. Our decisions on separation of powers are discussed below.
Other than those decisions, we have only rarely considered the relevant
constitutional provisions. Probably the most instructive are the early
decisions on the power of the emergency board. See, e.g., State Highway
Bd. v. Gates, 110 Vt. 67, 1 A.2d 825 (1938); Grout v. Gates, 97 Vt. 434,
124 A. 76 (1924). The emergency board had five members: the Governor and
the chairs of the major financial committees of the House of
Representatives and Senate. (FN4) See Grout, 97 Vt. at 446, 124 A. at 77.
Its purpose was to provide funding for emergency needs when the Legislature
was out of session. Id. In Grout, the board used part of the $100,000
appropriated to it to provide funding to the Secretary of State to meet an
unexpected workload increase in registering automobiles, but the Auditor of
Accounts refused to issue warrants for the expenditures. Id. at 447, 124 A. at 77. In resolving the dispute, this Court made clear that the "making
of expenditures and appropriating public money are different things." Id.
at 448, 124 A. at 78. It held that, under the statute, the emergency board
could make emergency expenditures, but it was responsible for the
expenditures so it could not "appropriate or set apart money to some
department or officer of the state to be so expended." Id. Because the
board attempted to appropriate and set apart funds to the Secretary of
State, the Court refused to order the Auditor to issue his accounts. Id.
at 453, 124 A. at 81-82. The Court agreed that when an emergency existed,
the emergency board could step in and make expenditures to respond to that
emergency. Id.
¶ 15. In State Highway Board, the expenditure by the emergency
board met the requirements of the applicable statute, but the Auditor of
Accounts refused to implement it because he asserted that the power of the
Legislature was unconstitutionally delegated to the board. 110 Vt. at 71,
1 A.2d at 827. The Court disagreed because the funds were appropriated to
the board, and the board was acting to expend appropriated money and not to
appropriate it. Id. at 79, 1 A.2d at 831. In reaching its conclusion, the
Court relied on federal law allowing Congress to delegate certain
implementation functions as long as it creates appropriate standards. Id.
at 76-77, 1 A.2d at 829.
¶ 16. Before we reach the separation-of-powers and delegation issues
raised by the parties, we find it helpful to analyze where the powers
involved in the statute fall in the constitutional scheme. As State
Highway Board recognized, only the Legislature has the power to appropriate
funds for the support of governmental programs. The Governor is required
by Chapter II, § 20 to faithfully execute the laws that are enacted by the
Legislature. See 32 V.S.A. § 704a(a). In plaintiffs' view, the
combination of these responsibilities means that the Governor is required
to spend all appropriated funds for the purposes that the Legislature
intended.
¶ 17. We agree with plaintiffs' position up to a point. The
Constitution provides that the Governor "may draw upon the Treasury for
such sums as may be appropriated by the General Assembly." Vt. Const. ch.
II, § 20 (emphasis added). The language suggests that the Governor has
some discretion in deciding whether to expend appropriated funds.
Nevertheless, we recognize that appropriations necessarily represent
legislative determinations of policy, by deciding which programs and
activities to support financially and therefore who obtains intended public
benefits. If the Governor has a free hand to refuse to spend any
appropriated funds, he or she can totally negate a legislative policy
decision that lies at the core of the legislative function.
¶ 18. The balance point between a legislature's law-making power
and a governor's power to manage spending is best explained in Opinion of
the Justices, 376 N.E.2d 1217 (Mass. 1978). The decision is an advisory
opinion to the Massachusetts Senate on the constitutionality of a bill that
would prohibit the impoundment of appropriated funds without legislative
approval. Id. at 1218. The Massachusetts court started with the
proposition that appropriation of funds is exclusively a legislative power
and "it is for the Legislature, and not for the executive branch, to
determine finally which social objectives or programs are worthy of
pursuit." Id. at 1221. Thus, once a law has been enacted, the "Governor
is obligated to execute the law as it has emerged from the legislative
process" and "is not free to circumvent that process by withholding funds
or otherwise failing to execute the law on the basis of his views regarding
the social utility or wisdom of the law." Id. at 1221-22.
¶ 19. On the other hand, "the activity of spending is essentially an
executive task." Id. at 1222. As the court explained,
Inasmuch as it is the function of the executive branch to expend
funds, it must be implied that the "supreme executive magistrate,"
as head of one of the three coequal branches of government, is not
obliged to spend money foolishly or needlessly. The executive
branch is the organ of government charged with the responsibility
of, and is normally the only branch capable of, having detailed
and contemporaneous knowledge regarding spending decisions. The
constitutional separation of powers and responsibilities,
therefore, contemplates that the Governor be allowed some
discretion to exercise his judgment not to spend money in a
wasteful fashion, provided that he has determined reasonably that
such a decision will not compromise the achievement of underlying
legislative purposes and goals.
Id. at 1222-23. Thus, the court answered the first question put to
it-whether the Governor "has the constitutional prerogative to spend less
than the full amount of an appropriation"-in the affirmative. Id. at 1223.
It responded that the proposed bill would be unconstitutional to the extent
that it always requires that a full appropriation amount be spent without
legislative approval. Id. at 1224.
¶ 20. Other courts have relied on Opinion of the Justices in
defining the relative powers of the executive and legislative branches in
appropriation and spending decisions. See Colorado Gen. Assembly v. Lamm,
700 P.2d 508, 521 (Colo. 1985) (stating that whatever inherent power the
Governor has over administering the state budget, it does not extend to
contradicting major legislative determinations); State ex rel. Schwartz v.
Johnson, 907 P.2d 1001, 1002 (N.M. 1995) ("[A]bsent a proper delegation of
authority from the state legislature, the executive branch is precluded
from exercising any control over the expenditure of appropriated money in a
manner that would affect the legislature's choice of purpose."); Common
Cause v. Commonwealth, 668 A.2d 190, 206 (Pa. Commw. Ct. 1995) (although
legislature can determine purposes for which appropriation is made, it
cannot "micro-manage the executive's power to administer appropriated
funds"); see also In re Opinion of the Justices, 2004 WL 693431, at *3
(Ala. March 31, 2004) (not yet released for publication) (holding in
advisory opinion that legislature could remove governor's power to transfer
appropriations between programs); State ex rel. Condon v. Hodges, 562 S.E.2d 623, 630 (S.C. 2002) (executive branch encroached on legislative
power by inducing recipient of appropriation to return part of it for
reallocation by the Governor). Although the state constitutional
provisions bearing on these disputes are somewhat different, the essential
structures are the same and, thus, the general principles of these
decisions are applicable in virtually any state. There are no substantial
differences between the Vermont constitutional provisions and those of
Massachusetts. Thus, we adopt the reasoning of the Opinion of the
Justices, 376 N.E.2d 217, for purposes of our analysis in this case.
¶ 21. Having examined the constitutional powers of the branches on
appropriation and spending matters, we turn to the constitutional
requirement of separation of powers. Our most extensive discussion of the
separation-of-powers requirement in Chapter II, § 5 of our Constitution is
in In re D.L., 164 Vt. 223, 228-29, 669 A.2d 1172, 1176-77 (1995). We
there explained that "[t]he division of [governmental] power serves to
create a structure resistant to the forces of tyranny." Id. at 228, 669 A.2d at 1176. Indeed, consolidation of power in any one agency of
government represented-in the framers' view-"the very definition of
tyranny." Id. To apply the requirement "we must determine the powers of
each of the branches and ensure no one exercises powers belonging to
another." Id. In this process, however, we recognize that "there must be
a certain amount of overlapping or blending of the powers exercised by the
different departments," Trybulski v. Bellows Falls Hydro-Elec. Corp., 112
Vt. 1, 6, 20 A.2d 117, 119 (1995), and that we must construe the
constitutional command consistent with efficient and effective governmental
structures that are able to respond to the complex challenges and problems
faced by today's state government. We explained this process in more
detail in In re D.L.:
Our decisions reflect . . . that more difficult issues and choices
lie under the surface of separation of powers questions. Thus, we
have emphasized that separation of powers doctrine does not
contemplate an absolute division of authority among the three
branches such that each branch is hermetically sealed from the
others. Practical realities of daily government require that
there must be a certain amount of overlapping and blending of the
powers exercised by the different departments. Moreover, there
are many powers and functions of government that defy simple or
obvious classification. The focus of a separation of powers
inquiry is not whether one branch of government is exercising
certain powers that may in some way pertain to another branch, but
whether the power exercised so encroaches upon another branch's
power as to usurp from that branch its constitutionally defined
function. As stated by James Madison, "where the whole power of
one department is exercised by the same hands which possess the
whole power of another department, the fundamental principles of a
free Constitution are subverted."
164 Vt. at 228-29, 669 A.2d at 1176 (internal quotations and citations
omitted). We have described our separation-of-powers requirement as "a
relatively forgiving standard . . . , tolerant of such overlapping
institutional arrangements short of one branch virtually 'usurp[ing]' from
another its constitutionally defined function." State v. Nelson, 170 Vt.
125, 128, 742 A.2d 1248, 1250 (1999) (quoting In re D.L., 164 Vt. at 229,
669 A.2d at 1176); see also North Dakota Council of School Adm'rs v.
Sinner, 458 N.W.2d 280, 285 (N.D. 1990) (adopting "more relaxed"
application of separation-of-powers doctrine to allow delegation in broad
and general terms in a complex area).
¶ 22. Although they have not phrased them this way, plaintiffs have
actually made two related separation-of-powers arguments here: (1)
empowering the Secretary of Administration to cut spending below
appropriated amounts is an unconstitutional encroachment on the legislative
branch's power of appropriation; and (2) delegating power to the JFC to
approve the spending reductions is an improper delegation of a decision
that can be made only by the full Legislature. (FN5) We consider the
arguments in this order.
¶ 23. Plaintiffs' first argument is largely premised on the fact
that both appropriation and spending are legislative powers. As our
foregoing discussion reflects, appropriation is a legislative power, but
spending is an executive power. Rather than dealing with one branch's
clear encroachment on another's core function, we are instead dealing here
with the area in which the powers of the branches overlap.
¶ 24. The need for the legislation before us is clear and
compelling. The Legislature is ordinarily in session for only part of the
year. It adopts appropriations acts based on a projection of the revenues
that will be available. Projecting revenues is hardly an exact science.
Indeed, many of the revenue sources are volatile, largely in response to
economic cycles. A revenue estimate that is accurate at one point in time
can turn out to be very inaccurate because of unforeseen circumstances. A
deficit may make a slowing of spending unavoidable. The deficit will
affect the fiscal health of the state and the ability to borrow needed
funds, and its cost. In short, this is a case that involves the "practical
realities" that we recognized in In re D.L., and these realities have been
reflected in some form of delegation statute, at least since 1960. If it
also involved core and exclusive functions of a branch of government, we
would be required to enforce the constitutional command despite those
realities. See Vill. of Waterbury v. Melendy, 109 Vt. 441, 450, 199 A. 236, 240 (1938) (concluding that a "delegation of authority must not
encroach upon the strictly legislative functions of the legislature").
Where it instead involves shared powers at the intersection of the branches
of government, we find no constitutional violation.
¶ 25. In reaching this decision, we have consulted the decisions
from other states and find that they almost uniformly support the
conclusion that we reach. In University of Connecticut Chapter AAUP v.
Governor, 512 A.2d 152, 159 (Conn. 1986), for example, the Supreme Court of
Connecticut upheld legislation authorizing the Governor to reduce budgetary
allotments by up to five percent when, due to decreases in anticipated
state revenues, it was necessary to prevent a deficit. The court held that
such authority did "not delegate a strictly legislative function," did "not
delegate the legislative authority to appropriate" and was not inconsistent
with the executive's traditional control over budgetary expenditures. Id.
at 158. Similarly, in New England Division of the American Cancer Society
v. Commisioner of Administration, 769 N.E.2d 1248 (Mass. 2002), the
plaintiffs challenged the constitutionality of a statute under which the
executive branch, in response to revenue shortfalls, reduced allotments
for expenditures on certain specific appropriations in the legislature's
general appropriations act. The court rejected the challenge, noting that
the statute comported with the general principle that "the spending [of]
money is essentially an executive task," id. at 1256, reflected a pragmatic
recognition of the executive's superior ability to make "necessary
reductions . . . on an expedited basis," id. at 1257, and represented the
legislature's considered judgment "that the Commonwealth's need to remain
solvent overrides particular statements of social policy contained in those
appropriat[ed] items." Id. The Court also stressed that the potential for
executive abuse was limited because the statute authorized such reductions
only "in a time of true financial emergency," and restricted reductions to
an "amount equal to such [revenue] deficiency." Id. Other decisions
respond similarly to the argument that the executive has encroached on the
power of the legislature. See Opinion of the Justices, 2004 WL 693431, at
*3 (stating that legislature may grant governor discretion on how to spend
appropriated funds); State v. Fairbanks N. Star Borough, 736 P.2d 1140,
1142 (Alaska 1987) (explaining that legislature can delegate to executive
branch the discretion to spend or not spend appropriated funds as long as
there are standards for the exercise of discretion); Chiles v. Children
A,B,C,D,E, and F, 589 So. 2d 260, 268 (Fla. 1991) (observing that
legislature can delegate power to executive to reduce spending in case of a
budget crisis as long as there are adequate standards); Legislative
Research Comm'n v. Brown, 664 S.W.2d 907, 926 (Ky. 1984) (concluding that
legislature can delegate to executive power to cut budgets to avoid a
deficit); North Dakota Council of School Adm'rs, 458 N.W.2d at 286
(explaining that statute allowing state Office of Management and Budget
Director to reduce budgets uniformly in response to predicted deficit
grants "only the authority to execute the law within the parameters
established by the Legislature" and is not unconstitutional delegation of
legislative power to executive branch); but see County of Cook v. Ogilvie,
280 N.E.2d 224, 227 (Ill. 1972) (holding that legislature cannot delegate
to the governor power to transfer funds from one appropriations account to
another).
¶ 26. Plaintiffs argue, however, that even an otherwise valid
legislative delegation cannot be made without limiting standards for the
exercise of discretion and no standards exist here. The Secretary's
authority to implement a deficit reduction plan under § 324 is limited in
the following respects: (1) the official revenue estimate for the general,
transportation or federal fund must have declined by 2% or more from that
in effect on January 15, 2002; (2) the Legislature must not be in session;
(3) the plan must be necessary to ensure a balanced budget in the general
or transportation funds; (4) the plan must be "designed to minimize any
negative effects on the delivery of services and on local budgets,
including the delivery of tobacco fund supported youth substance abuse
education and prevention services;" and (5) the plan must "reflect the
priorities established by the general assembly in the fiscal year 2003
appropriations act." (FN6) 2001, No. 142 (Adj. Sess.) § 324. We agree with
plaintiffs that any delegation must be in accordance with appropriate
standards. Thus, the issue is whether the above limits provide the needed
standards.
¶ 27. The purpose of standards is to avoid delegation of the
law-making function. Thus, "[a] distinction is consequently drawn between
a delegation of the power to make the law which necessarily includes a
discretion as to what it shall be and the conferring of authority or
discretion as to its execution." Melendy, 109 Vt. at 452, 199 A. at 240.
The discretion conferred can be "wide . . . in the manner and method for
the execution of statutes validly adopted." Vermont Educ. Bldgs. Fin.
Agency v. Mann, 127 Vt. 262, 267, 247 A.2d 68, 72 (1968). Although the
purpose of the agency in Mann was to issue revenue bonds to finance
construction projects for higher education institutions, and the agency had
the discretion to determine which projects to support, the Court held that
the power conferred did not include the power to appropriate public funds.
Id. at 268, 247 A.2d at 72. Instead, the power delegated was "to enter
contracts to achieve a valid public purpose" and such power "of necessity,
involves a wide discretion on the part of the Agency." Id. Because the
authority was "confined within ascertainable and reasonable boundaries,"
the Court found there were "sufficient and adequate standards to guide and
direct the action of the board within the dimensions of constitutional
requirements." Id. Indeed, we have found the delegation standards
inadequate only in Melendy where we found no standards at all. 109 Vt. at
453, 199 A. at 241.
¶ 28. The overriding difference between deficit-prevention schemes
of the type before us that have been upheld, and those that have been
struck down, lies in whether there are any standards for the exercise of
implementation discretion. Thus, in Chiles, the Florida Supreme Court
found that the Legislature's responsibility was "totally abandoned" because
"the power to reduce, nullify or change [the Legislature's] priorities is
given over to the total discretion of another branch of government." 589 So. 2d at 265. In striking down the statutory scheme, the court explained:
This is not to say that the legislature cannot permit another
branch or agency to respond to a budget crisis caused by
unexpected events between legislative sessions. The legislature
can delegate functions so long as there are sufficient guidelines
to assure that the legislative intent is clearly established and
can be directly followed in the event of a budget shortfall.
Carefully crafted legislation establishing, among other things,
the extent to which appropriations may be reduced, coupled with a
recitation of reduction priorities and provisions for legislative
oversight, might pass facial constitutional muster.
Id. at 268. Similarly, in Fairbanks North Star Borough, the Alaska Supreme
Court struck down the delegation because the "legislature ha[d] articulated
no principles, intelligible or otherwise, to guide the executive" so that
the Governor could make any cut in any program for any purpose. 736 P.2d
at 1143.
¶ 29. The closest example of standards held adequate for a
delegation of legislative powers over fiscal matters is State ex rel.
Schneider v. Bennett, 564 P.2d 1281 (Kan. 1977). That case considered the
constitutionality of the delegation of certain spending powers to a
committee made up of legislators, a delegation that had earlier been struck
down for lack of standards in State ex rel. Schneider v. Bennett, 547 P.2d 786 (Kan. 1976). After the court's earlier decision, the legislature
continued the powers in the committee and added the following standards:
(1) the requested action must not have been rejected in the last
legislative session, (2) it must not be contrary to known legislative
policy, (3) it must assist the state agency in attaining an objective or
goal that bears a valid relationship to its powers and functions, and (4)
it must involve an unforeseeable occurrence or unascertainable effects of a
foreseeable occurrence that characterizes the need for it, and waiting for
the next legislative session would not accomplish (3) above. Id. at 1286.
Noting that standards must "canalize" the delegated power so that "the
exercise of the delegated power must be restrained by banks in a definitely
defined channel," the court held that the standards met that requirement
and upheld the delegation. Id. at 1289.
¶ 30. The Connecticut Supreme Court upheld even less specific
standards in University of Connecticut Chapter AAUP, 512 A.2d at 159.
There, the governor could make reductions in allotments if "due to a change
in circumstances since the budget was adopted," reductions should be made;
estimated budget resources will be insufficient to pay all appropriations
in full; reductions are made to the extent that the governor deems
necessary; and the reduction is limited to no more than 3% in any fund and
5% in any appropriation account. Id. at 158-59. The court held these
standards to be sufficient because they were as definite as was reasonably
practicable under the circumstances. Id. at 159.
¶ 31. We begin with an assumption that the legislation is
constitutional. Benning v. State, 161 Vt. 472, 481, 641 A.2d 757, 762
(1994). We hold that, under our precedents and those from other courts,
the standards § 348 imposes are sufficient for the exercise of the powers
of the Secretary and the JFC. They are exactly the kind of standards
suggested in Chiles and upheld in Schneider. We agree with the Connecticut
court that the standards must be tailored to the circumstances. It would
be difficult here to create more detailed, narrow or explicit standards.
Indeed, flexibility is required to implement reductions in a way that
minimizes the harm to the public generally and the beneficiaries of state
programs.
¶ 32. Plaintiffs' second argument is that the Legislature cannot
delegate its power over appropriation to the JFC, the designated
decisionmaker under the statute. For this argument, plaintiffs invoke the
Chapter II, § 2 requirement that "the supreme legislative power shall be
exercised by a Senate and a House of Representatives" as well as the
separation-of-powers requirement. Plaintiffs argue that legislative powers
cannot be exercised by a committee of legislators on behalf of the House
and Senate.
¶ 33. We have never directly addressed whether the Legislature can
delegate powers to committees that are made up of legislators and are part
of the legislative branch of government. At least impliedly, we upheld the
validity of such a delegation in State Highway Board v. Gates, although the
defendant in that case did not rely particularly on the fact that the
emergency board was composed primarily of legislators. 110 Vt. at 73, 1 A.2d at 828. As in that case, we are talking here about actions that
invoke the constitutional responsibilities of both the executive and
legislative branches. Although plaintiffs argue otherwise, we are not
addressing a situation where the Legislature is trying to delegate one of
its unique powers to one of its committees. For this reason, we do not
find a violation of § 2.
¶ 34. Other courts have upheld the involvement of a committee of
the legislature in similar financial management decisions, see, e.g.,
Bennett, 564 P.2d at 1288, and the Florida Supreme Court in Chiles, 589 So. 2d at 268, suggested that legislative involvement in this fashion may be a
constitutional necessity. If we are to be tolerant of "overlapping
institutional arrangements" where one branch is not virtually usurping the
function of another, see State v. Nelson, 170 Vt. at 128, 742 A.2d at 1250,
we believe we must uphold the decision-making power of the JFC in the
statutory scheme before us. It enables the Legislature to delegate needed
responsibilities to meet fiscal emergencies when it is not in session
without ceding total control to the executive branch. As we held above,
the delegation contains sufficient standards to ensure that the spending
priorities of the full Legislature are respected. In short, the practical
realities of effective governance strongly support the JFC's role in
creating a deficit-prevention plan and outweigh any commingling of
functions that might be seen as inconsistent with the principle of
separation of powers.
II.
¶ 35. We turn next to the trial court's ruling that, although the
deficit-prevention section of the Act was constitutionally valid, PATH
nevertheless provided inadequate notice and opportunity for comment prior
to its adoption of an emergency rule implementing the planned budgetary
reductions. On this issue, plaintiffs contend that the court abused it
discretion by staying the issuance of a preliminary injunction despite its
finding that the emergency rule was procedurally invalid and by allowing
PATH to correct the deficiency. PATH responds that it properly dispensed
with additional notice and hearings under its statutory authority and the
circumstances presented, and that even if it did not, the court correctly
declined to enjoin immediate implementation of the emergency rule under its
broad equitable authority.
¶ 36. An understanding of the competing claims requires a careful
review of the steps leading up to the adoption of the emergency rule. As
noted above, the Secretary filed a deficit-prevention plan with the JFC on
August 12, 2002. The JFC met and reviewed the plan on August 12, 15, and
23, and voted to adopt the plan on August 23. That same week, the plan was
presented to the Medicaid Advisory Board, comprised of Medicaid consumers,
providers, and advocates. On August 26, Agency of Human Services Secretary
Kitchel and PATH Commissioner Elliott met with the Health Access Oversight
Committee of the Legislature to review the proposed reductions to the
Agency's budget. See 1995, No. 14, § 13(a) (creating a health access
oversight committee of ten legislators "to monitor the development,
implementation, and ongoing operation of the health access program"). The
oversight committee addressed each of the proposed reductions at issue
here, focusing particularly on the elimination of coverage for elective
inpatient surgery under VHAP. Secretary Kitchel informed the committee
that the Medicaid Advisory Board had also inquired about this particular
reduction, answered questions about its anticipated impact on VHAP
beneficiaries and providers in a number of hypothetical circumstances, and
underscored the fiscal constraints driving the proposal.
¶ 37. On September 3, one week after the oversight committee
hearing, PATH published a notice of emergency rulemaking in the Burlington
Free Press, a newspaper with statewide circulation. The notice outlined
the changes to VHAP and Medicaid coverage of adult chiropractic,
elective-surgery, and denture services effective October 1, and explained
that although comments would not be received in connection with the
emergency rule, the public would be afforded an opportunity to comment on
an identical non-emergency rule to be filed on the same date. Two days
later, on September 5, PATH filed with the Secretary of State and the
Legislative Committee on Administrative Rules (LCAR) both the emergency
rule and an identical non-emergency rule subject to the normal rulemaking
procedures. See 3 V.S.A. § 844(c) (requiring emergency rules to be filed
with the Secretary of State and LCAR).
¶ 38. The emergency rule was accompanied by a "Statement of
Emergency" prepared by Secretary Kitchel, as required by statute. Id. §
844(d)(2) (requiring emergency rules to include a "statement by the
adopting agency explaining the nature of the imminent peril to the public
health, safety or welfare"). In her statement, Secretary Kitchel explained
that the coverage to be eliminated had been "selected, after careful
analysis, to avoid reductions in services required by the most needy
Vermonters," that the benefits cuts, while "unfortunate, achieve the
necessary savings 'most conducive to the public weal,' " and that
"emergency rulemaking is essential by October 1, 2002 in order to avert
irretrievable economic loss, ensure the overall integrity of the health
care programs, and maintain the well being of the public at-large."
(Quoting Vt. Const. ch. I, art. 7.)
¶ 39. On September 25, LCAR conducted a public hearing to consider
the emergency rule. See 3 V.S.A. § 842(a) (outlining that committee may
object to rule within thirty days it is first placed on committee's agenda
but no later than forty-five days after filing of final proposal); § 844(e)
(allowing committee objection to emergency rule, on majority vote, on
grounds that it is beyond authority of agency, contrary to intent of
Legislature, arbitrary, or not necessitated by imminent peril sufficient to
justify adoption of emergency rule). Members of the public, including
plaintiffs' representatives, commented on the emergency rule. After a
series of votes, the committee neither approved nor objected to the rule,
and it eventually went into effect on November 1. The one month delay in
the effective date occurred when, after the LCAR hearing, PATH realized
that the savings anticipated by the deficit-prevention plan were based on
the later date.
¶ 40. An agency is statutorily authorized to adopt an emergency
rule when it "believes that there exists an imminent peril to public
health, safety or welfare." Id. § 844(a). An emergency rule may be
"adopted after whatever notice and hearing that the agency finds to be
practicable under the circumstances." Id. Although plaintiffs argued
below that the emergency rule PATH promulgated was not necessitated by a
genuine "imminent peril" to the public welfare, the superior court
concluded otherwise, finding that Secretary Kitchel "had a valid basis to
invoke emergency rulemaking" to achieve the projected savings, preserve
existing health care programs, and avoid a fiscal crisis. Plaintiffs have
not challenged this conclusion on appeal. They do, however, contend the
court erred by declining to enjoin implementation of the rule
notwithstanding its further conclusion that PATH violated the statute by
failing "to provide persons affected with as much notice and hearing for
public input as was practicable under the circumstances."
¶ 41. Although the court referred to inadequate "notice," we take
that reference as applying to notice of the availability of public
participation in the rulemaking process, not notice of the emergency rule.
Indeed, PATH gave almost a month's notice of the rule, which turned into
two months when its implementation was delayed. There was no challenge
that PATH failed to comply with the mandate of the statute to "ensure that
emergency rules are known to persons who may be affected by them." Id. §
844(a). Because the health care coverage at issue was largely elective,
the notice may have allowed some recipients to obtain needed care before
the new rule went into effect. (FN7)
¶ 42. The court's conclusion that PATH failed to provide adequate
notice and hearing was based on two predicate determinations. First, it
found that even in the case of a legitimate and imminent peril requiring
emergency rulemaking, an agency is required under the statute to provide
the maximum notice and hearing practicable under the circumstances.
Second, the court rejected the claim that the extent of the notice and
hearing to be provided was "entirely within the discretion of the agency."
Applying these principles, the court found that PATH knew as of August
23-the day the JFC approved the plan-of the need to proceed with emergency
rulemaking. Further, the court found that this left more than a
month-measured to the planned implementation date of October 1-to schedule
and hold a public hearing, and that the record did not, therefore, support
Secretary Kitchel's decision that a public hearing was impracticable under
the circumstances.
¶ 43. We find no fault with the court's conclusion that an agency
adopting an emergency rule should strive to provide as much notice and
opportunity for public input as is "practicable under the circumstances."
Id. This is clearly consistent with the legislative purpose of the public
comment period. See, e.g., Philadelphia Citizens in Action v. Schweiker,
669 F.2d 877, 881 (3d Cir. 1982) ("[T]he public interest is served by a
careful and open review of proposed administrative rules and
regulations."); In re Dep't of Pub. Serv., 161 Vt. 97, 100, 632 A.2d 1373,1375 (1993) (noting that " '[i]nformed changes and distinctions are
the very raison d'etre of the notice-and-comment period' " (quoting
Rybachek v. Envtl. Prot. Agency, 904 F.2d 1276, 1288 (9th Cir. 1990)));
Salmon Brook Convalescent Home, Inc. v. Comm'n on Hosps. & Health Care, 417 A.2d 358, 364 (Conn. 1979) (observing that one purpose of
notice-and-comment period is to enable agency promulgating rule to educate
itself before establishing regulations that substantially affect public).
¶ 44. Although, as discussed below, we disagree with the standard
of review that the superior court employed, we agree that the decision to
adopt the emergency rule without any hearing or opportunity for public
comment was reviewable. As we have noted in the past, the Vermont
Administrative Procedure Act is derived, in part, from the Revised 1961
Model State Administrative Procedure Act. See Unif. Adm. Proc., 15 U.L.A.
174, 182 (2000); Barnet Hydro Co. v. Pub. Serv. Bd., 174 Vt. 464, 466, 807 A.2d 347, 349 (2002) (mem.). The authorization for emergency rulemaking
found in 3 V.S.A. § 844(a) is taken in part from § 3(b) of the Model Act,
but the language on notice and hearing for emergency rules differs
somewhat. The Model Act states that for emergency rules the agency "may
proceed without prior notice or hearing or upon any abbreviated notice and
hearing that it finds practicable." Unif. Adm. Proc. § 3(b), 15 U.L.A. 213
(2000). The wording of the Model Act suggests that the agency has
unlimited discretion to decide whether any prior notice and hearing will be
available.
¶ 45. Although the difference in language is not great, the Vermont
statutory language is inconsistent with an interpretation that gives total
discretion to the agency and prevents judicial oversight. The statute
allows an emergency rule to be adopted "after whatever notice and hearing
that the agency finds to be practicable under the circumstances." 3 V.S.A.
§ 844(a). Courts have generally found that administrative determinations
concerning whether the standards for emergency rulemaking were met are
reviewable, although these standards are typically phrased in subjective
terms. See Melton v. Rowe, 619 A.2d 483, 485 (Conn. Super. Ct. 1992)
(collecting cases). Our statute provides that the "court may fashion
appropriate relief" for procedural violations of a rulemaking process. 3
V.S.A. § 846(c). We conclude that we can review an agency decision that
notice and hearing is not practicable under the circumstances.
¶ 46. We do not, however, believe that a court is free to
substitute its judgment as to what is "practicable under the circumstances"
for that of the agency. Courts generally presume that an agency's action
is valid, Vt. Ass'n of Realtors v. State, 156 Vt. 525, 530, 593 A.2d 462,
465 (1991), and will defer to the agency's judgment in applying a statute
that it is charged to execute, Lemieux v. Tri-State Lotto Comm., 164 Vt.
110, 112-13, 666 A.2d 1170, 1172 (1995). Thus, in the context of emergency
rulemaking, courts have held that an agency's initial decision to adopt an
emergency rule is subject to an abuse of discretion standard. See, e.g.,
Philadelphia Citizens in Action, 669 F.2d at 886 (upholding agency's
decision that standards for emergency rulemaking are met unless arbitrary,
capricious or abuse of discretion); Doe v. Wilson, 67 Cal. Rptr. 2d 187, 194
(Cal. Ct. App. 1997) ("[A] court is not necessarily bound by an agency's
determination of the existence of an emergency, but the court must accord
substantial deference to the agency findings, and may only overturn such an
emergency finding if it constitutes an abuse of discretion by the
agency."); Berrios v. Dep't of Pub. Welfare, 583 N.E.2d 856, 861 (Mass.
1992) (holding that Department of Public Welfare decision to adopt
emergency regulations eliminating certain benefits was entitled to "every
presumption in its favor and is not subject to question in judicial
proceedings unless palpably wrong" (internal citation omitted)); Delaware
Bay Waterman's Ass'n v. New Jersey Dep't of Env. Prot., 697 A.2d 957, 960
(N.J. Super. Ct. App. Div. 1997) (agency decision that emergency exists for
rulemaking must be upheld unless arbitrary, capricious, unreasonable or not
supported by substantial credible evidence in the record as a whole). Once
it has invoked its emergency rulemaking authority, an agency's subsequent
decision concerning the extent of notice and hearing to be provided has
similarly been held to be "entitled to considerable deference by a
reviewing court." Philadelphia Citizens in Action, 669 F.2d at 885-86
(upholding Department of Health and Human Services' decision that comment
period prior to enactment of emergency regulations was "impracticable"
under federal rule); see also Petry v. Block, 737 F.2d 1193, 1201-02 (D.C.
Cir. 1984) (In light of "extremely limited time given by Congress" for
agency to adopt emergency regulation reducing expenditures, court cannot
find that agency decision to dispense with normal comment period "was
unreasonable.").
¶ 47. In light of these standards, we are unable to conclude that
PATH abused its discretion in determining that a public hearing on the
emergency rule was impracticable under the circumstances. Four main
reasons cause us to differ with the superior court in this regard.
¶ 48. First, PATH was operating under exacting time constraints.
The JFC approved the deficit-prevention plan on August 23, 2002, and it was
the understanding of defendants Kitchel and Elliott that the reductions
requiring a rule change had to become effective on October 1 to achieve the
needed savings. (FN8) Thus, PATH had about thirty-eight days to present the
specific VHAP and Medicaid reductions to the Health Access Oversight
Committee, draft and file an emergency rule implementing the changes,
notify and appear before LCAR, and notify recipients, providers and PATH
staff of the new rules and how they would work. The record shows that
defendants moved with dispatch, presenting the proposed health care
reductions to the Health Access Oversight Committee on August 26, the
Monday following the vote of the JFC, filing the emergency rule with the
Secretary of State and the Rules Committee on September 5 of the following
week, and scheduling a meeting with Rules Committee-while the Legislature
was out of session-within three weeks thereafter, on September 25, less
than one week before the emergency rule was to take effect.
¶ 49. The trial court found that, despite these constraints, PATH
should have held a public hearing prior to the Rules Committee meeting on
September 25, in order to receive and incorporate comments from program
beneficiaries. Even a minimal two-week notice-and-comment period, however,
would not have permitted such a hearing before September 19, two weeks from
September 5, when the rule was filed with the Committee. This would have
left less than one week for PATH to incorporate any changes that resulted
from the hearing and comments, submit a final proposal to the staff or
chair of the Rules Committee, and distribute it to the members before the
September 25 hearing. It is conceivable that all of this could have been
accomplished within the time available, but it is also quite possible that
the attempt would have resulted in delays that could have jeopardized a
timely implementation of the rule, contributing to the State's
deteriorating financial situation and undermining the very purpose of the
expedited procedure. As one court in similar circumstances aptly observed:
"The Secretary is not to be held to a standard of perfection, but merely to
a standard of good faith." Robinson v. Sec'y of Admin., 425 N.E.2d 772,
778 (Mass. App. Ct. 1981) (upholding agency's decision that adoption of
emergency regulation without notice and hearing was necessary to avoid
irretrievable loss of State revenue).
¶ 50. Second, although we find the decision not to go forward with a
hearing-and-comment period reviewable, we also find our review role to be
very limited. The primary protection of public participation lies in the
narrow standard for allowing emergency rulemaking, that there exists "an
imminent peril to public health, safety or welfare." 3 V.S.A. § 844(a).
The primacy of this protection is demonstrated by the absence of a role for
LCAR in reviewing the opportunity for public input on emergency rules.
Thus, although LCAR may object to a regular rule because the "agency did
not adhere to the strategy for maximizing public input prescribed by the
interagency committee on administrative rules," id. § 842(b)(4), there is
no similar ground for objecting to an emergency rule, id. § 844(e). The
only comparable ground is that invocation of emergency procedures is "not
necessitated by an imminent peril to public health, safety or welfare."
Id. § 844(e)(4).
¶ 51. The superior court found that the standard for emergency
rulemaking was met, a decision not appealed. The statute assumes that if
the standard for emergency rulemaking is met, a reduction in public
participation will necessarily occur. Moreover, because emergency rules
are of only limited duration-not more that 120 days, id. § 844(b)-public
participation will often be available in connection with a permanent rule.
Thus, the record in this case shows that PATH proposed a permanent,
identical rule to take effect after the expiration of the emergency rule
and held a public hearing on November 12, 2002. The wording of the statute
clearly grants broad discretion to the agency to define the nature and
extent of public participation in emergency rulemaking, if any. Only in
cases of very clear error should we intervene in an agency's decision
determining the level of that public participation.
¶ 52. Third, there were other opportunities for public participation
in shaping the policy implemented by the emergency rule. The critical
decision to eliminate the VHAP and Medicaid coverage in the
deficit-prevention plan was made by the JFC, a body of legislators who
routinely must respond to constituent comments. State officials took the
plan to the advisory body that represents consumers and providers, and to
the legislative committee with jurisdiction over health access issues.
¶ 53. Fourth, PATH had very little discretion in fashioning its
rule. It had no discretion to determine whether to cut the Medicaid and
VHAP coverage elements specified in the deficit-prevention plan; that
decision had been made by the JFC. We recognize that issues could arise in
determining how to implement the policy decision of the Secretary of
Administration and the JFC. We consider this factor only because it
narrowed the extent to which public participation could be meaningful and
effective.
¶ 54. There is no question, on the record before us, that
defendants' decision to forego a formal public comment period was exercised
reasonably and in good faith in light of the statutory imperative to
identify budgetary reductions under the deficit-prevention plan, and the
pressing and inflexible time constraints on PATH. Accordingly, we cannot
conclude that the process utilized by defendants for the adoption of the
emergency rule in this case was an abuse of discretion. That portion of
the judgment holding to the contrary must, therefore, be reversed.
That portion of the superior court decision invalidating the emergency
rule as violative of the requirements of the Administrative Procedure Act
is reversed. In all other respects, the judgment is affirmed.
FOR THE COURT:
_______________________________________
Associate Justice
------------------------------------------------------------------------------
Footnotes
FN1. Chief Justice Amestoy sat for oral argument but did not participate in
this decision.
FN2. Under 32 V.S.A. § 305a, the emergency board is required to
periodically determine official state revenue estimates.
FN3. Section 148(g) of the Act provided that PATH was not authorized to
amend the rules governing the Medicaid program "to eliminate coverage for
dentures for adults, [or] . . . to modify the scope of services for dental
services." Section 148(i) stated that PATH was not authorized to amend the
rules governing either the Medicaid or VHAP program "to eliminate coverage
for chiropractic services for adults." Plaintiffs argued to the superior
court that the Secretary's deficit-prevention plan violated both those
provisions. The superior court ruled that the reductions referenced in
those subsections could be included in the deficit-prevention plan under §
324, despite the language of the subsections. That ruling is not before
us.
FN4. Its composition remains the same. 32 V.S.A. § 131.
FN5. Interspersed with plaintiffs' separation-of-powers arguments are
references to the spending decisionmakers-the Secretary of Administration
and the JFC-as unaccountable to the citizens of Vermont, and the
legislation as offensive to "the democratic process." We do not read these
comments as making a separate and different legal argument. In any event,
we would reject it. The authorization and direction we are considering was
enacted as legislation by the full Legislature. The Secretary of
Administration is a direct appointee of the Governor who acts at the
Governor's direction. The JFC members are all elected legislators.
However we might construct the legal principles that plaintiffs invoke, we
cannot see how the circumstances before us would violate those principles.
FN6. There are also limitations applicable to possible specific elements of
the plan. For example, the plan could include transfers of funds from
certain reserve funds as long as they were left at a specified level.
Transfers from the tobacco settlement fund have to be used for grants or
services to benefit clients of the Agency of Human Services. Reductions
cannot be made in funds "to fulfill the state's debt obligations" or for
"salaries of elected officers of the executive department." 32 V.S.A. §
704(e)(1), (3).
FN7. Two of the plaintiffs addressed the question of obtaining care before
the rule went into effect in affidavits to show irreparable harm. Susann
Hunter said that she first learned that VHAP elective surgery would be
eliminated on October 11, 2002, too late to schedule needed hip replacement
surgery. Jane Doe stated that she needed an adjustment in her lower
denture but could not get to her dentist for that purpose until after
November 1, 2002. By affidavit of Paul Wallace-Brodeur, Director of the
Office of Vermont Health Access within PATH, defendants suggested
alternative ways that these two plaintiffs might obtain at least partial
benefits to cover their needs, and as to the third plaintiff, suggested
that the delay in implementation had made it possible for him to receive
all benefits under the prior policy. None of these factual questions were
resolved by the trial court.
FN8. We do not believe that the mistake in determining when the emergency
rule had to be effective changes our decision. In hindsight, if defendants
knew that they had almost two months to make the program reductions
effective, they could have done so through normal, or near normal,
procedures. However, they determined in good faith that they had
additional time only after they had gone through the emergency rulemaking
procedure. Thus, they would have faced similar constraints in scheduling a
comment period and public hearing before the deadline.
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