BOARD OF TRUSTEES OF THE JUDICIAL FORM RETIREMENT SYSTEM V. ATTORNEY GENERAL OF THE COMMONWEALTH OF KENTUCKY AND BOARD OF TRUSTEES OF THE KENTUCKY RETIREMENT SYSTEM V ATTORNEY GENERAL OF THE COMMONWEALTH OF KENTUCKY
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2002-SC-0699-DG
BOARD OF TRUSTEES OF THE
JUDICIAL FORM RETIREMENT SYSTEM
V.
D
D
ON REVIEW FROM COURT OF APPEALS
2001-CA-1292
FRANKLIN CIRCUIT COURT NO . 00-CI-851
APPELLEE
ATTORNEY GENERAL OF THE
COMMONWEALTH OF KENTUCKY
AND
2002-SC-0700-DG
APPELLANT
BOARD OF TRUSTEES OF THE
KENTUCKY RETIREMENT SYSTEM
V
_:~- ap -oLi
ON REVIEW FROM COURT OF APPEALS
2001-CA-1292
FRANKLIN CIRCUIT COURT NO. 00-CI-851
APPELLEE
ATTORNEY GENERAL OF THE
COMMONWEALTH OF KENTUCKY
OPINION OF THE COURT BY JUSTICE COOPER
AFFIRMING
This appeal involves the validity of House Bill (HB) 389(4) which amended a
provision of the Judicial Retirement Act, KRS 21 .450(3) . It presents three questions :
(1) whether the amendment fails because of the legislature's failure to obtain an
actuarial analysis to accompany the amendment in accordance with KRS 6 .350 ; (2)
whether the amendment is unintelligible and thus void for vagueness ; and (3) whether
by virtue of its vagueness, the amendment constitutes an unconstitutional delegation of
legislative power to the executive branch . While not in violation of KRS 6.350, the
amendment's vagueness is fatal under the latter two questions .
As amended, KRS 21 .450 now reads (amendatory language emphasized):
The benefits provided by KRS 21 .350 to 21 .510 to be paid shall be
funded through contract with a reputable life insurance company
authorized to do business in this state, or through investment and
reinvestment of funds in securities which, at the time of making the
investment, are by law permitted for the investment of funds by
fiduciaries in this state, or through a combination of such methods .
To the extent that funding is provided through insurance contract,
no contributions, payments or premiums shall be subject to any tax
on insurance premiums or annuity considerations. The investment
committee for the judicial retirement fund shall be trustee of any
and all funds contributed or appropriated to the retirement system,
and shall have sole authority to make insurance contracts or
investments .
(2)
The board members or any investment adviser shall discharge their
duties with respect to the funds of the retirement system solely in
the interest of the members and beneficiaries and :
For the exclusive purposes of providing benefits to members
(a)
and their beneficiaries and defraying reasonable expenses
of administering the plan;
(b)
With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims; and
(c)
In accordance with the laws, regulations and other
instruments governing funds.
(3)
Any accrual of benefits provided under this or any other applicable
statute shall be no less than the benefit adiustment provided for in
KRS 21 .405(4) from the date of the last establishment of that
benefit.
The "benefit adjustment provided for in KRS 21 .405(4)" is an annual cost-of-living
increase of judicial retirement benefits based on the Consumer Price Index (CPI), not to
exceed five percent . Since KRS 21 .450 does not contain an "accrual of benefits"
provision, the "benefit adjustment" must refer to benefits awarded under "any other
applicable statute ." That "applicable statute" could not be a statute similar to KRS
21 .450 because there is no statute pertaining to the funding of retirement benefits or the
duties of a retirement board of trustees or investment adviser that contains an "accrual
of benefits" provision . See KRS 21 .440; KRS 21 .530; KRS 21 .540; KRS 21 .550; KRS
21 .560 ; KRS 61 .570 ; KRS 61 .645 ; KRS 61 .650 ; KRS 61 .660 .
The Board of Trustees of the Judicial Form Retirement System (JFRS)
administers both the Judicial Retirement Plan described in KRS 21 .345, et. seq., and
the Legislators' Retirement Plan, KRS 6 .500, et seq . KRS 21 .530 provides :
For administrative purposes only , as hereinafter provided, the Legislators'
Retirement Plan and the Judicial Retirement Plan shall be coordinated
under the name, Judicial Form Retirement System, but each of the plans
shall maintain its separate identity .
(Emphasis added .)
However, "any other applicable statute" providing an "accrual of benefits" could
not refer to a statute pertaining to actual judicial or legislative retirement benefits
because KRS 21 .405(4) and KRS 6 .521(2) already apply annual CPI increases to those
benefits . Instead, Appellant asserts that the "other applicable statute" is KRS
61 .510(13), a section of the Kentucky Employees Retirement System (KERS) which
does not purport to provide for an "accrual of benefits" but only defines "creditable
compensation" of KERS members as "salary, tips . . . and fees" for purposes of
calculating their retirement benefits under KRS 61 .595, et seq . , and "for members of the
General Assembly, it [creditable compensation] shall mean an assumed salary of
twenty-seven thousand-five hundred dollars ($27,500) per annum . . . . .. Appellant
claims this "assumed salary" is the "accrual of benefits" to which the CPI increases in
HB 389(4) apply - retroactively to 1982, "the date of the last establishment of the
assumed salary and prospectively after July 14, 2000, the effective date of HB 389(4) .
Retroactive application of CPI increases from 1982 through 1999 would increase the
"assumed salary" by 72% from $27,500.00 to $47,308 .00.
The significance of KRS 61 .510(13) is that KRS 6.520(1) calculates a legislator's
initial retirement benefit by multiplying 3.5% of the legislator's "final compensation" times
the legislator's years of service and defines "final compensation" as the "creditable
compensation" defined in KRS 61 .510(13) . A 72% increase in the "assumed salary"
would, therefore, translate into a concomitant 72% increase in a legislator's retirement
benefits . For example, a legislator earning $27,500 .00 and retiring after twenty years of
service would be entitled to an annual retirement benefit of $19,250.00 before HB
389(4) (3 .5% X $27,500 .00 X 20 years) but an annual retirement benefit of $33,115.60
after HB 389(4) (3 .5% X $47,308.00 X 20 years) even though the legislator never
earned a salary in excess of $27,500 .00 .
This theory that the amendment of KRS 21 .450 actually amended KRS
61 .510(13) has three immediately apparent flaws . First, HB 389(4) refers to an "accrual
of benefits provided under . . . any . . . applicable statute ." (Emphasis added .)
However, no "accrual of benefits" is "provided under" KRS 61 .510(13) ; it merely
identifies a legislator's "creditable compensation," which is but one factor used in
calculating that legislator's initial retirement benefit . Second, the theory misapplies
accrual of benefits to creditable compensation . "Accrual of benefits" means, in a
defined benefit plan,' "the process of accumulating pension credits for years of credited
service, expressed in the form of an annual benefit to begin payment at normal
retirement age ." Employment Benefit Plans: A Glossary of Terms, supra note 1, at 1 .
Applying that definition, "accrual of benefits" pertains not to the retiree's "creditable
compensation" but to the retiree's "service credits," i .e., the retiree's years of creditable
service, KRS 6.515, yet another factor used in calculating the initial retirement benefit .
Clearly, annual CPI increases do not apply to allow the accumulation of additional
"service credits ." A third flaw in the theory is that HB 389(4) refers to the "last
establishment of that benefit," and "creditable compensation," in the case of a legislator,
is an assumed "salary," not a benefit .
I. LEGISLATIVE HISTORY OF KRS 21 .450(3) .
Senate Bill 349.
On March 13, 2000, Senate Bill (SB) 349 was introduced and read on the Senate
floor. 2000 Sen. J . 1544. As written, Section 1(13) of SB 349 would have read as
follows :
[F]or members of the General Assembly who retire under Section 12 of
this Act, or who die in office, "final compensation" shall be forty-five
thousand dollars ($45,000) . The assumed salary for legislators in this
subsection shall be adjusted annually . . . to reflect changes in the current
purchasing power of the dollar . The maximum possible compensation for
legislators under this subsection shall be based precisely upon the
' The Legislators' Retirement Plan is a defined benefit plan because retired legislators
are entitled to receive benefits based on a formula from a general retirement fund with
no ownership right to an individually maintained retirement account . See KRS 6 .520(1)
(setting forth the formula for calculation of benefits incorporating years of service). See
also Employment Benefit Plans : A Glossary of Terms (Int'I Found . of Employment
Benefit Plans 2000) 1 (describing "defined benefit plan" as involving "a definite formula
by which the employees' benefits will be measured") .
consumer price index formula approved in Matthews v. Allen, Ky., 360
S .W .2d 139 (1962) .
Thus, its sponsor clearly intended for SB 349 to increase the "assumed salary" of
legislators from $27,500 .00 to $45,000.00 and to provide for CPI increases of the
assumed salary on an annual basis thereafter. An actuarial analysis dated March 10,
2000, presumably obtained in compliance with KRS 6.350, indicates that the increase of
the "assumed salary" to $45,000.00 would have required $725,000 .00 per year of
additional funding for the JFRS . Letter from Gagel to Early of 3/10/00, at 3. When the
tenor of the floor debate indicated that the proposed increases would fail, SB 349 was
withdrawn and replaced by a committee substitute that retained the $27,500.00
"assumed salary" and did not provide for future annual CPI increases . 2000 Sen . J .
1590. The committee substitute then passed the Senate and was sent to the House
where it was reported and received its first reading on March 24, 2000. 2000 House J.
4622 . On March 27, 2000, a House floor amendment to SB 349 (committee substitute)
was introduced that would have reinstated the amendments deleted by the Senate, i .e . ,
immediate increase of "assumed salary" to $45,000 .00 with annual CPI increases
thereafter. 2000 House J. 4909 . The bill was never called to a vote and was
recommitted to the appropriations committee from which it did not re-emerge. Id . at
5297.
House Bill 389 .
Meanwhile, on March 13, 2000, the same day the original version of SB 349 was
debated and withdrawn, HB 389 was passed by the House and sent to the Senate .
This bill, as passed by the House, would have amended various unrelated provisions of
the Legislators' and Judicial Retirement Plans, but not KRS 21 .450 . 2000 House J .
3359 . It was first referred to the Senate Appropriations Committee, 2000 Sen . J. 2090,
then to the State and Local Government Committee . Id. at 2926 . On March 23, 2000,
the latter committee adopted and added to the consent calendar by voice vote a
committee substitute for HB 389 that deleted several sections and added a new section
(4). Minutes, Sen . Comm. on State & Local Gov't (15th meeting, March 23, 2000) . The
Legislative Research Commission then requested that the executive director of the
JFRS provide an actuarial analysis of all four sections of HB 389 (committee substitute) .
On March 27, 2000, the executive director responded that the impact of Sections 1 and
2 would be "zero," the impact of Section 3 would be "negligible," and "I am unable to
determine the fiscal impact, if any, of Section 4." Letter from Early to Dutton of 3/27/00 .
On March 29, 2000, HB 389 (committee substitute) passed the Senate without
debate as part of the consent calendar. 2000 Sen. J . 3366 . Later that same day, the
House concurred with the Senate's committee substitute for HB 389 with only this
comment by the House sponsor :
Section 4 was added . . . and I have a report here . . . from the retirement
system . . . that says . . . "I am unable to determine the fiscal impact, if
any, of Section 4 ."
Videotape : House Floor Debate (3/29/2000) ; 2000 House J . 5229.
II . PROCEDURAL BACKGROUND.
Unable to decipher what effect, if any, HB 389(4) might have on the JFRS, the
executive director of the JFRS requested a formal opinion from the Attorney General,
pursuant to KRS 15.025(1) as to the bill's proper interpretation and effect with respect to
the following potential issues :
1.
Does the amendment to KRS 21 .450 require that the assumed
salary in the Legislat[ors'] Retirement Plan be annually increased
by the CPI?
2.
If the amendment to KRS 21 .450 provides that the assumed salary
under the Legislat[ors'] Retirement Plan is to be annually increased
by the CPI, is the increase retroactive?
3.
If the amendment to KRS 21 .450 provides that the assumed salary
under the Legislat[ors'] Retirement Plan is to be annually increased
by the CPI, at what date is the increase to be first applied?
4.
Does the amendment to KRS 21 .450 provide that in a year in which
a judicial salary increase falls below the CPI, will the salary be
adjusted by the CPI? If the amendment requires that a judicial
salary be adjusted by the CPI, is the increase retroactive? If the
amendment requires that a judicial salary be adjusted by the CPI,
at what date is the increase to be first applied?
5.
Is the legislator or judge required to make personal contributions on
the additional assumed salary or salary on which the benefits
ultimately will be calculated?
6.
To whom does the amendment apply - members, retirees, or both?
OAG 00-5, at 2 (quoting the questions posed by the executive director of the
JFRS).
In the course of drafting his response, the Attorney General requested that
Senator Robinson, chair of the Senate State and Local Government Committee, provide
any research or documentation utilized in drafting the committee substitute for HB
389(4) . Letter from Sen . Robinson to Carrico, 5/18/00, at 1 (referring to Attorney
General's information request) . By letter dated May 18, 2000, Senator Robinson
responded that no such documents existed and gratuitously added that the intent of the
bill was to increase legislators' retirement benefits by applying annual CPI increases to
the "assumed salary" of legislators retroactive to 1982 . He further explained :
Since it was our intent to not make the provision of the amendment so
visible; and based on staff's proposal, we decided to place the substance
of our proposal on one of the judicial statutes that are identified with KRS
6 .525 . Therefore, we chose to peg our proposal to KRS 21 .450 .
Id . On June 13, 2000, the Attorney General rendered his opinion that HB 389(4) was
void because it (1) was enacted without obtaining the actuarial analysis required by
KRS 6.350 ; (2) is so vague as to be unintelligible ; and (3) violates the "nondelegation
doctrine" by delegating legislative authority to an administrative agency. OAG 00-5 .
The Board of Trustees of the JFRS filed this action in the Franklin Circuit Court
for a declaratory judgment pursuant to KRS 418.040, requesting that the court declare
HB 389(4) valid and judicially construe its meaning. The Franklin Circuit Court accepted
the theory that the amendment of KRS 21 .450 actually amended KRS 61 .510(13) and
that its effect was to increase the "assumed salary" of legislators to $47,308 .00 as of
July 14, 2000, and to apply CPI increases to the assumed salary on an annual basis
thereafter. The circuit court further concluded that HB 389(4) was unintelligible only to
laypersons but understandable to pension law specialists (despite the fact that the
executive director of the JFRS was unable to comprehend its meaning). The circuit
court did not address the nondelegation doctrine despite conceding that only an expert
could decipher the bill's meaning. Finally, the circuit court found substantial compliance
with KRS 6 .350 because the General Assembly had made an unsuccessful attempt to
obtain an actuarial analysis from the executive director of the JFRS. KRS 6.350
provides, inter alia :
A bill which would increase the benefits . . . of any public retirement
system . . . shall not be reported from a legislative committee of either
house of the General Assembly . . . unless the bill is accompanied by an
actuarial analysis . . . show[ing] the economic effect of the bill on the
public retirement system, including a projection of the annual cost to the
system of implementing the legislation for at least ten (10) years . . .
prepared by an actuary who is a fellow of the Society of Actuaries, a
member of the American Academy of Actuaries, or an enrolled actuary
9
under the Employees' Retirement Income Security Act of 1974.
The Court of Appeals reversed the Franklin Circuit Court without addressing the
vagueness and nondelegation issues, deeming KRS 6 .350 mandatory and, thus, the
failure to obtain the actuarial analysis fatal. Having granted discretionary review, we
disagree with the Court of Appeals that the General Assembly's noncompliance with
KRS 6.350 invalidates HB 389(4) . However, we also disagree with the Franklin Circuit
Court and find HB 389(4) unconstitutional because it is void for vagueness in that it is
unintelligible and because it violates the nondelegation doctrine .
III. ACTUARIAL ANALYSIS .
The Court of Appeals declared HB 389(4) invalid because the General Assembly
failed to comply with KRS 6.350. However, that statute is procedural in nature and has
no constitutional implications . Section 39 of our Constitution authorizes the General
Assembly to establish rules governing its own proceedings . So long as those rules do
not violate some other provision of the Constitution, it is not within our prerogative to
approve, disapprove, or enforce them. Cf. Philpot v. Patton , Ky., 837 S .W .2d 491, 494
(1992) ("While it would be a violation of the separation of powers doctrine in the
Kentucky Constitution, Sections 27 and 28, for our Court to tell the General Assembly
what to do, i.e., what system or rules to enact, it is our constitutional responsibility to tell
them whether the system in place complies with or violates a constitutional mandate,
and, if it violates the constitutional mandate, to tell them what is the constitutional
'minimum."'). While we have not previously addressed the issue, other courts that have
done so have uniformly held that a statute enacted in contravention of a legislative
procedural rule is not invalid per se.
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It is entirely the prerogative of the legislature, however, to make, interpret,
and enforce its own procedural rules, and the judiciary cannot compel the
legislature to act in accordance with its own procedural rules so long as
constitutional questions are not implicated . Furthermore, the legislature
has complete control and discretion whether it shall observe, enforce,
waive, suspend, or disregard its own rules of procedure, and violations of
such rules are not grounds for the voiding of legislation .
Des Moines Register & Tribune Co. v. Dwyer, 542 N.W .2d 491, 496 (Iowa 1996)
(citations omitted) . See also Abood v. League of Women Voters , 743 P.2d 333, 336-37
(Alaska 1987) (review of the legislature's adherence to its own procedural rules
constitutes a nonjusticiable political question solely within the legislature's province, and
non-adherence to rules does not implicate constitutional rights); State v. Gray, 60 So.2d
466, 468 (La. 1952) (legislature's failure to observe procedural rules does not invalidate
legislation) . The result is the same even when the procedural rule is, as here, codified
in a statute . Moffitt v. Willis, 459 So.2d 1018, 1021-22 (Fla . 1984) .
In State ex. rel . La Follette v. Stiff, 338 N.W .2d 684 (Wis . 1983), the Wisconsin
legislature enacted debt legislation in contravention of Wis . Stat. § 13.49(5) which
required referral of such proposed legislation to a joint survey committee on debt
management before passage . Id . at 686-87. The statute further provided that "[t]he
proposal shall not be considered further by either house until the committee has
submitted a report, in writing, setting forth an opinion on the fiscal effect upon the state
or local government . . . ." Id. at 686 (quoting Wis. Stat . § 13 .49(5)) . This language, of
course, closely resembles the mandatory language in KRS 6.350 . In upholding the debt
legislation, the Wisconsin Supreme Court noted :
Courts are reluctant to inquire into whether the legislature has complied
with legislatively prescribed formalities in enacting a statute . This
reluctance stems from separation of power and comity concepts, plus the
need for finality and certainty regarding the status of a statute . Baker v.
Carr, 369 U .S. 186, 215, 82 S.Ct. 691, 709, 7 L.Ed .2d 663 (1962) .
Although since Marbury v. Madison, 5 U .S . (1 Cranch) 137, 2 L.Ed . 60
(1803) courts have had the authority to review acts of the legislature for
any conflict with the constitution, courts generally consider that the
legislature's adherence to the rules or statutes prescribing procedure is a
matter entirely within legislative control and discretion, not subject to
judicial review unless the legislative procedure is mandated by the
constitution . 73 Am .Jur.2d Statutes, sec. 49, p. 296 . If the legislature fails
to follow self-adopted procedural rules in enacting legislation, and such
rules are not mandated by the constitution, courts will not intervene to
declare the legislation invalid . The rationale is that the failure to follow
such procedural rules amounts to an implied ad hoc repeal of such rules .
Id. at 687 . Furthermore, since the asserted interpretation of HB 389(4) so closely
adheres to the language of failed SB 349, the actuarial analysis obtained with respect to
SB 349 supports the Franklin Circuit Court's finding of substantial compliance with KRS
6 .350 with respect to HB 389.
IV. UNINTELLIGIBILITY .
The void-for-vagueness doctrine is most often applied in the context of the First
Amendment, the criminal law, and punitive civil laws . See, e.g_ Martin v.
Commonwealth , Ky., 96 S .W.3d 38, 59-60 (2003) (First Amendment) ; Jones v.
Commonwealth , Ky., 830 S.W .2d 877, 880 (1992) (criminal law); Vill . of Hoffman
Estates v. Flipside, 455 U .S . 489, 499-500, 102 S.Ct. 1186, 1193-94, 71 L.Ed .2d 362
(1982) (civil penalties) . However, while statutes affecting those areas should receive
the most rigorous review and are most commonly held void for vagueness, non-punitive
civil, regulatory, or spending statutes are also invalid if they are so unintelligible as to be
incapable of judicial interpretation . In that circumstance, the statute often is declared
void for "unintelligibility" or "uncertainty" as opposed to "vagueness."
The most oft-cited expression of this doctrine in Kentucky is Folks v. Barren
County , 313 Ky. 515, 232 S.W .2d 1010 (1950), in which our predecessor court was
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asked to interpret a statute allowing boards of education to finance new school buildings
through direct appeals to voters . The Court noted the following proposition of law:
It is not for us to say the Legislature does not have the right to be indirect
where it could be direct, or to be obscure and confusing where it could be
clear and simple . But where the law-making body, in framing the law, has
not expressed its intent intelligibly, or in language that the people upon
whom it is designed to operate or whom it affects can understand, or from
which the courts can deduce the legislative will , the statute will be
declared to be inoperative and void.
Id . a t 1013 (emphasis added) . The United States Court of Appeals for the Sixth Circuit,
citing Folks , noted that "Kentucky's highest court has clearly and unwaiveringly [sic]"
held that unintelligible statutes will be declared invalid . Bostic v. E. Constr. Co . , 497
F .2d 712, 715 (6th Cir. 1974) . The Sixth Circuit held in Bostic, a tort case for damages
caused by fire, that a safety regulation promulgated pursuant to KRS 227.300 was "so
vague and confusing as to be unenforceable and invalid." Id . at 714. It "simply [did] not
possess that degree of clarity necessary for validity . . . ... Id . at 716.
Folks recognized but did not create this rule . Our predecessor court had
previously applied the rule to hold "void for uncertainty" a statute that allowed the local
board of trustees of a pension plan to award a pension to a firefighter with twenty years
of experience "if his [retirement] application is granted ." Schmid v. Bd . of Trustees , 146
Ky. 335, 142 S .W. 688, 689 (1912) . Even earlier, the Court voided a statute pertaining
to the terms of court for the twenty-fourth judicial district, noting that "[t]he bill is so
carelessly drawn that it is impossible to determine just what its author intended . . . . ..
Litteral v. Blair, 139 Ky. 196, 129 S.W . 573, 575 (1910) . The Court found that the
statute was "inoperative and void" "because its provisions were indefinite and uncertain
. . . . " Id . See also Sullivan v. Brawner, 237 Ky. 730, 36 S .W.2d 364, 367 (1931) (voidfor-vagueness doctrine only applies "with greater emphasis" to criminal statutes) ; cf.
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Moore v. N . Ky. Indep . Food Dealers , 286 Ky. 24,149 S .W.2d 755, 758 (1941) (statute
should not be invalidated "unless the intention, object and purpose of the legislature
was so vaguely presented as to be incapable of intelligent interpretation and correct
application") .
Many other examples of our adherence to the Folks rule exist. Our predecessor
court invalidated former KRS 119 .070(4), applicable to the nomination of judicial
candidates, because "the intent of the subsection in question is so obscure that any
effort to ascribe some rational meaning to it would be based solely on conjecture."
Burke v. Stephenson , Ky., 305 S .W .2d 926, 929 (1957) . The Court also invalidated a
statute providing that the "prevailing wage" should be paid in public works projects,
citing Folks and noting "the rule that where the intention of the legislature is so obscure
as to defy a rational meaning, the law cannot be given effect ." Kerth v. Hopkins County
Bd . of Ed . , Ky., 346 S .W.2d 737, 741 (1961) . The Court applied the rule later to
invalidate a law that purported to tell a sheriff when a prisoner convicted of a
misdemeanor was eligible for parole . Murphy v. Cranfill , Ky., 416 S .W.2d 363 (1967) .
Although this statute obviously related to criminal law, the Court did not invalidate it for
failure to fairly notify potential offenders of punishable conduct or even the type of
punishment for such conduct, but because it was unintelligible .
All parties have assumed this to be a valid law unless it violates some
specific provision of the Kentucky Constitution, but there is another ground
upon which we may declare this enactment ineffective as a law. That is
the lack of intelligibility . In other words, if the language of the law is so
ambiguous as to completely obscure the legislative intent and to defy
rational meaning, it is simply inoperative as a law.
Id . at 364 . Citing Kerth and Folks, the Court found that the relevant words in the statute
were "meaningless;" thus, it deemed the statute "an abortive effort" and "a nullity." Id . at
366 .
Kentucky is not alone in requiring that statutes be facially intelligible . In Spinelli
v. Immanuel Lutheran Evangelical Congregation, Inc. , 515 N.E.2d 1222 (III . 1987), the
Supreme Court of Illinois invalidated a statute permitting teachers to inspect some, but
not all, of the documents in their personnel files because that statute was so vague that
it was impossible for school districts to discern which documents were subject to
disclosure. Id . at 1228. It noted the rule that :
While it is the duty of the courts to ascertain the meaning of and to give
effect to every valid act of the legislature, yet they cannot supply
omissions or remedy defects in matters committed to the legislature. A
legislative act which is so vague, indefinite and uncertain that the courts
are unable, by accepted rules of construction , to determine, with any
reasonable degree of certainty, what the legislature intended, or which is
so incomplete or conflicting and inconsistent in its provisions that it cannot
be executed, will be declared to be inoperative and void .
Id . at 1228 (emphasis added, internal quotations and citations omitted) . (Thus, as also
suggested in Folks , supra, at 1013, it is insufficient that a pension plan expert might be
able to interpret HB 389(4) if a Court could not interpret it by the application of accepted
rules of construction .). See also Opinion By The Justices , 30 So .2d 14, 17-18 (Ala .
1947) (invalidating statute authorizing state to contribute to life insurance premiums for
state officers and employees because statute "lacks in reasonable precision, and is so
uncertain and indefinite as to render it inoperative") ;
Mo . Pac . R.R. Co. v. Morris , 345
S .W .2d 52, 57, 59 (Mo. 1961) (en banc) (invalidating excise tax law where words were
"vague, indefinite and uncertain," and noting the rules that "where the statutory terms
are of such uncertain meaning, or so confused, that the courts cannot discern with
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reasonable certainty what is intended, they will pronounce the enactment void," and "a
mere collection of words can not constitute a law; otherwise the dictionary can be
transformed into a statute by the proper legislative formula .").
Section 4 of HB 389 is worse than all of the invalidated laws described supra
because it is intentionally incomprehensible as stated by Senator Robinson in his May
18, 2000, letter to the Attorney General :
Since it was our intent to not make the provision of the amendment so
visible . . . .
Letter from Sen . Robinson to Carrico, supra, at 1 .
The Framers of the present Kentucky Constitution were so concerned about
surreptitious legislation that they enacted Section 51 . See Martinez v. Commonwealth ,
Ky., 72 S.W.3d 581, 584 (2002) (the purpose of Section 51 "is to prevent surreptitious
legislation, and to prevent surprise and fraud upon the members of the General
Assembly and other interested parties") . While Section 51 is not at issue here, it
provides structural support for the fundamental common-law proscription against
intentionally obscure statutes . One commentator has addressed the perniciousness of
this kind of legislative strategy in the context of tax legislation:
Certain [tax] provisions meant to favor a powerful special interest are
intentionally written in obscure styles . The obscurity not only limits the
benefit of such provisions to the narrow interest group, it also makes it
less likely that the public at large will discover, understand and criticize the
favor.
Edward J . McCaffery, The Holy Grail of Tax Simplification , 1990 Wis. L. Rev . 1267,
1284-85 (1990) . That concern is magnified when the special interest group favored by
the disguised benefit is the legislature, itself. Our Constitution is clearly wary of selfserving legislation, providing in Section 57 that "[a] member who has a personal or
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private interest in any measure or bill . . . shall disclose the fact . . . ," and in Section 235
that "[t]he salaries of public officers shall not be changed during the terms for which they
were elected ." Again, the Attorney General does not allege a violation of either Section
57 or Section 235, but it would contradict the constitutional rationale behind those
Sections to validate a deliberately surreptitious attempt by the General Assembly to
increase its own retirement benefits.
Appellants correctly assert that only constitutional infirmities can void legislation .
Ky. Const. § 27 (providing for separation of powers among the three branches of
government); Ky. Const . § 28 (forbidding any department from "exercis[ing] any power
properly belonging to either of the others, except in the instances hereinafter expressly
directed or permitted") ; Ky. Const. § 29 (vesting legislative power in the General
Assembly) . In the context of laws that constrain speech, the constitutional foundation of
the void-for-vagueness doctrine is the First Amendment . In the context of criminal law,
the constitutional foundation is the Due Process Clause of the Fifth and Fourteenth
Amendments . So where is the constitutional foundation for the Folks unintelligibility
rule? Despite language in Murphy v. Cranfill , supra , at 364, suggesting that no
constitutional foundation is required, the unintelligibility rule has its foundation in the
constitutional requirement of separation of powers. Miller v. Covington Dev. Auth . , Ky.,
539 S.W .2d 1, 4-5 (1976) (invalidating a statute because it so "lacked legislative criteria"
as to impermissibly delegate lawmaking power to the executive) . In that respect, the
unintelligibility rule intersects with the nondelegation doctrine discussed infra . If the
legislature empowers the executive branch with authority to implement a statute without
sufficient guidelines, it effectively delegates lawmaking to the executive branch . Without
guidelines contained in the statute, itself, the executive branch must guess at the intent
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of the legislature and is thereby transformed from implementer of the law into maker of
the law.
The same is true when the judicial branch is asked to interpret an unintelligible
statute . Sullivan v. Brawner, supra, suggested that separation of powers is the reason
the Court must invalidate unintelligible statutes. When faced with unintelligibility, "the
court can do nothing but conjecture, and in doing so it would allocate to itself legislative
functions, but which is everywhere conceded it has no right to do ." 36 S .W.2d at 368.
Stated differently, it is impossible to interpret language that is unintelligible . Thus, when
faced with such language, the court has only two options . It may legislate by saying,
"this unintelligible language means X," or, it may declare the law invalid and give the
General Assembly an opportunity to write an intelligible statute. In fact, if the General
Assembly did intend for HB 389(4) to amend KRS 61 .510(13), the withdrawn version of
SB 349 exemplified how it could draft such an amendment in an intelligible fashion .
Section 29 of the Kentucky Constitution provides another constitutional
foundation for the Folks rule :
The legislative power shall be vested in . . . the "General Assembly of the
Commonwealth of Kentucky ."
Obviously, an attempted exercise of legislative power is simply ineffective if the
legislative product is unintelligible . In that event, no legislative power has been
exercised . See Murphy v. Cranfill , supra, at 366 (unintelligible statute was an
"abortive effort" and a "nullity").
V. NONDELEGATION DOCTRINE .
The United States Supreme Court has expressed concern with respect to
improper delegation of legislative authority . In short, the nondelegation doctrine
-18-
recognizes that the Constitution vests the legislative power exclusively in Congress,
U .S . Const. art. I, § 1, and under the doctrine of separation of powers, Congress must
exercise that power rather than delegate it to the executive or judicial branches .
Nevertheless, given the realities of modern rule-making, Congress has neither the time
nor the expertise to do it all; it must have help . Mistretta v. United States , 488 U.S. 361,
372, 109 S .Ct. 647, 655, 102 L .Ed .2d 714 (1989) ("[O]ur jurisprudence has been driven
by a practical understanding that in our increasingly complex society, replete with ever
changing and more technical problems, Congress simply cannot do its job absent an
ability to delegate power under broad general directives .").
The compromise developed by the Court is that Congress must "lay down by
legislative act an intelligible principle to which the person or body authorized to [act] is
directed to conform ." J .W . Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409, 48
S .Ct. 348, 352, 72 L.Ed . 624 (1928) (emphasis added).
The intelligible-principle rule seeks to enforce the understanding that
Congress may not delegate the power to make laws and so may delegate
no more than the authority to make policies and rules that implement its
statutes.
Lovinq v. United States , 517 U.S . 748, 771, 116 S .Ct. 1737, 1750, 135 L.Ed .2d 36
(1996) . Nevertheless, the Court has been notoriously lax in reviewing delegations
unaccompanied by intelligible principles. Indeed, the Court conceded in a recent
opinion:
In the history of the Court we have found the requisite "intelligible
principle" lacking in only two statutes, one of which provided literally no
guidance for the exercise of discretion, and the other of which conferred
authority to regulate the entire economy on the basis of no more precise a
standard than stimulating the economy by assuring "fair competition ." See
Panama Refining Co. v. Ryan , 293 U .S . 388, 55 S .Ct. 241, 79 L.Ed . 446
(1935) ; A .L.A. Schechter Poultry Corp . v. United States , 295 U .S . 495, 55
S .Ct. 837, 79 L.Ed . 1570 (1935) .
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Whitman v. Am . Trucking Ass'ns , 531 U .S . 457, 474,121 S.Ct. 903, 913,149 L.Ed .2d 1
(2001).
Kentucky holds to a higher standard . Our predecessor court noted that Kentucky
is more "restrictive of powers granted" than the federal Constitution because the federal
Constitution does not have a "provision expressly forbidding the Congress to delegate
its legislative powers," as do Sections 27, 28, 29, and 60 of the Kentucky Constitution .
Bloemer v. Turner, 281 Ky. 832, 137 S.W .2d 387, 390-91 (1939) . Thus, federal
decisions do not have "the usual persuasive force" when it comes to delegation issues .
Id. at 391 . Indeed, in the area of nondelegation, Kentucky may be unsurpassed by any
state in the Union .
Perhaps no state forming a part of the national government of the United
States has a Constitution whose language more emphatically separates
and perpetuates what might be termed the American tripod form of
government than does our Constitution . . . .
Sibert v. Garrett , 197 Ky . 17, 246 S .W . 455, 457 (1922) . See also Diemer v.
Commonwealth , Ky., 786 S .W .2d 861, 864 (1990) ("Kentucky is a strict adherent to the
separation of powers doctrine .").
Like the federal "intelligible-principle rule" articulated in J.W . Hampton , supra,
Kentucky law mandates that "the legislature must lay down policies and establish
standards ." Bloemer, supra , at 391 . However, our rule has not been as toothless as
the "intelligible-principle rule." In Miller v. Covington Development Authority , supra, we
declared unconstitutional the former Local Development Authority Act, KRS 99.610.680, which created and delegated to a local agency broad power to preserve and
restore historically or economically "significant local areas ." 539 S .W.2d at 2 . These
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powers were granted without "legislative criteria," thus, we held that the statute was an
impermissible delegation . Id . at 4-5.
In Fawbush v. Bond , Ky., 613 S.W .2d 414 (1981), we invalidated former KRS
67.045, which delegated to the district court the responsibility to evaluate proposed
redistricting plans and to establish new boundaries in the event such proposals were
disapproved . We held that while the General Assembly could delegate the power to
review a redistricting proposal with statutory guidelines, KRS 67 .045 "provide[d] no
criteria whatever for such a review ." Id . a t 415 .
In Legislative Research Commission v. Brown , Ky., 664 S.W . 2d 907 (1984), we
invalidated a statute delegating legislative power to the Legislative Research
Commission during periods of legislative adjournment because, inter alia , the delegation
lacked "standards controlling the exercise of administrative discretion ." Id. at 915 . Most
recently, we held that KRS 177 .863, which charged the Transportation Cabinet with
limiting the proliferation of moving or flashing lighted signs, violated the nondelegation
doctrine because it gave "no guidance" to the Cabinet in interpreting crucial provisions
of the statute . Flying J Travel Plaza v. Commonwealth, Ky., 928 S.W .2d 344, 350
(1996). Cf. Preston v. Clements, 313 Ky. 479, 232 S .W.2d 85, 89 (1950) (upholding
delegation for purposes of building new Capitol Annex when it provided "an adequate
standard" to govern the State Property and Buildings Commission) ; Young v. Willis, 305
Ky. 201, 203 S .W .2d 5, 8 (1947) (upholding statute that stated "the subject, nature and
extent" of the delegation, "declar[ing] its policy and prescrib[ing] standards for the
guidance of the administrative agency") .
Three cases applying the nondelegation doctrine illustrate the possible
confluence of that doctrine with the Folks unintelligibility rule discussed supra . That
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confluence was explicitly recognized in Kerth v. Hopkins County Board of Education ,
supra , wherein the Court wrote that it did not need to reach the nondelegation question
because the statute was so obscure that it was invalid under the Folks rule alone . 346
S.W .2d at 742. However, Kerth observed in dicta that the statute's vagueness also
necessarily meant that it would fail to pass muster under the nondelegation doctrine . Id .
Recognizing the rule that "it is fundamental that the legislature must prescribe some
standard governing the scope of administrative action," id . at 741, Kerth noted that in
the delegation to the Wage Board:
There is simply nothing in this legislation which offers any clue to what the
legislature intended should guide and control the Board's determination of
proper "prevailing wage" rates . Not only is the Board left completely adrift
. . . but no one, including this court, is furnished any criteria by which to
determine whether the Board is carrying out the assumed legislative policy
as the legislature intended . . . .
Id . Thus, while Kerth could have invoked the nondelegation doctrine to void the statute,
the fundamental obscurity of the law provided sufficient grounds for invalidation, making
the nondelegation approach "unnecessary ." Id. (The above-quoted passage from
Kerth applies equally to HB 389(4) .)
The second example of the confluence between the unintelligibility rule and the
nondelegation doctrine appears in Diemer v. Commonwealth , supra, in which the
Kentucky Billboard Act, former KRS 177.830-.890, was challenged as being void for
vagueness and an unconstitutional delegation to the Secretary of Transportation . We
addressed both issues, finding first that the Billboard Act, which regulated billboard
signs more than 660 feet from an "urban area," 786 S.W.2d at 864, was "confusing to
the point of being unintelligible" so that it "fail[ed] to put a particular property owner on
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notice as to whether his property is or is not within an urban area ." Id . at 865.2 Second,
we found that the delegation to the Transportation Secretary did not cure the confusion
because the statute did not contain "sufficient standards controlling the exercise of that
discretion . . . ." Id . (quotation omitted) . Thus, we deemed the statute an
unconstitutional delegation . Id . at 866.
Finally, our predecessor court voided the pension law in Schmid v. Board of
Trustees , supra, because that law gave the local Board of Trustees virtually unfettered
discretion to decide when a firefighter's retirement application would be granted for
purposes of collecting his pension . 142 S.W. at 690 . Recall that, as discussed supra ,
the statute allowed a firefighter with twenty years' experience to collect his pension "if
his application is granted ." Id . at 689 . The Court found this statute "void for uncertainty"
precisely because "the whole matter seems to have been intentionally left to the
discretion of the board without any standard to guide it." Id . at 690 . Thus, in an early
articulation of the nondelegation doctrine, Schmid held :
The Legislature cannot confer upon its creature [the Board of Trustees]
arbitrary power to use this fund as it may see proper . In authorizing the
board to grant a pension, the Legislature must define the persons who are
to receive the pension, so that the board will have a standard to guide it . It
cannot leave the board to grant or refuse a pension at its whim or
pleasure .
Id . As in Schmid , HB 389(4) left its purpose to the conjecture of the Board of Trustees .
If the legislative intent in amending KRS 21 .450 was, instead, to amend KRS
2 Diemer , unlike the other cited cases, arguably involved the First Amendment because
it prohibited the erection of billboards in certain circumstances . Thus, it is
distinguishable from those cases that apply the void-for-vagueness doctrine (or some
version thereof) outside the context of the First Amendment, the criminal law, and those
civil laws with punitive provisions. It is cited here only for its precedential value to the
nondelegation question and the light it sheds on the confluence between the two
doctrines.
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61 .510(13), that fact is certainly not apparent, or even vaguely discernible, from the
language of the bill. The bill contains no clue as to where to look for an "applicable
statute" that provides an "accrual of benefits." Certainly, one would not expect to look to
KRS 61 .510(13), which defines "creditable compensation" and does not provide an
"accrual of benefits."
Kentucky's strong stance against vague delegations also protects the rights of
Kentucky voters . Professor John Hart Ely argues that the worst delegations often occur
because "our representatives quite shrewdly prefer not to have to stand up and be
counted but rather to let some executive branch bureaucrat . . . take the inevitable
political heat." John Hart Ely, Democracy & Distrust : A Theory of Judicial Review, 132
(Harvard University Press 1980) (quotation omitted) . The "intelligible principle"
requirement of the nondelegation doctrine is designed to prevent legislators from
deliberately passing vaguely worded special interest (or self-interested) legislation and
acting surprised when the true nature of the legislation comes to light. Professor Ely
quotes Congressman Flowers's remarks about this tactic:
"[T]hen we stand back and say when our constituents are aggrieved or
oppressed by various rules and regulations, 'Hey, it's not me. We didn't
mean that . We passed this well-meaning legislation, and we intended for
those people out there . . . to do exactly what we meant, and they didn't do
it.
Id . Ely argues that the feeble enforcement of the intelligible principle rule by the United
States Supreme Court has allowed "legislators [to] escap[e] the sort of accountability
that is crucial to the intelligible functioning of a democratic republic." Id . Not so in
Kentucky.
Under our precedents, HB 389(4) is clearly an unconstitutional delegation . Put
simply, this unintelligible statute has neither "an intelligible principle," J.W . Hampton ,
-24-
supra , at 409, nor "standards controlling the exercise of administrative discretion."
Legislative Research Comm'n v. Brown, supra, at 915 . A review of the questions posed
to the Attorney General by the executive director of the JFRS exemplifies the confusion
generated by a statute so unintelligible as to defy comprehension by those charged with
its implementation . In fact, this statute is so unintelligible that we, unlike the Franklin
Circuit Court, are unconvinced that even an expert in the field of pension benefits could,
absent Senator Robinson's proffered advice of his legislative intent, discern that the
intent of this statute was to amend KRS 61 .510(13) and thereby effectuate a 72%
increase in legislative pensions . Regardless, the citizens of this Commonwealth are
entitled to legislation that is "written in nontechnical language and in a clear and
coherent manner using words with common and everyday meanings," KRS 446.015, so
that it can be reasonably understood by those charged with its implementation (and
those charged with its judicial construction) without resort to "expert" opinion. HB
389(4) simply does not give sufficient guidance of its meaning and intent to its
"creature," the Board of Trustees, Schmid, supra, at 690, and thus fails to pass muster
under both the unintelligibility rule and the nondelegation doctrine.
VI. PAROL EVIDENCE AND STATUTORY CONSTRUCTION.
For the reasons discussed supra, we conclude that HB 389(4) is facially
unintelligible and incapable of interpretation by application of normal rules of
construction .
[A]ny effort to ascribe some rational meaning to it would be based solely
on conjecture .
Burke v. Stephenson , 305 S.W.2d at 929. While we have a duty to, "if possible, sustain
the validity of the act and expound it," perhaps by "judicial construction," Folks , 232
-25-
S.W.2d at 1013, that duty does not permit us to become legislators and assign meaning
where none is apparent . Sullivan , 36 S.W .2d at 368 ("Under such conditions [of
unintelligibility] the court can do nothing but conjecture, and in doing so it would allocate
to itself legislative functions, but which is everywhere conceded it has no right to do.").
The only legislative history of relevance is that the original version of SIB 349,
which stated with clarity an intent to increase the "assumed salary" in KRS 61 .510(13),
was withdrawn when it became obvious that it would not pass . 2000 Sen. J . 1959 .
From that fact, one would logically assume that KRS 389(4) was not intended to
increase the "assumed salary" in KRS 61 .510(13) . Certainly, no debate occurred with
respect to HB 389(4) as it had with respect to SIB 349. Of course, if HB 389(4) was
intended to accomplish precisely what had caused the withdrawal from consideration of
original SIB 349, any such debate would have foiled the drafter's expressed intent to
disguise the true nature of the bill .
Thus, we are left with Senator Robinson's own ex post interpretation of HB
389(4) and the opinion letter of William P . Hanes, deputy commissioner of the Kentucky
Retirement Systems . The interpretations submitted by Senator Robinson and Hanes
are contained in separate letters mailed to the Attorney General on the same date, May
18, 2000 . Hanes's letter appears to have been written after consultation with Senator
Robinson and to simply defer to his interpretation (which is apparently joined by two
House members) :
Although the language used in the amendment is less than clear, the
objectives stated by Senator Robinson and Representatives Arnold and
Gray certainly appear to be a reasonable construction of the language
used in the provision .
Letter from Hanes to Carrico of 5/18/00, at 4 (emphasis added).
- 26-
It is a basic principle of statutory construction that legislative intent may not be
garnered from parol evidence, especially parol evidence furnished by a member of the
legislature, itself .
The sources from which such intention and purpose are to be gathered
are primarily the words employed, and, if they are ambiguous, or even
apparently contradictory, resort may be had to the title of the statute,
which is an index to the subject-matter to be dealt with, and, in case of a
constitutional provision, the subject-matter under consideration by the
convention that framed it may likewise be taken into consideration . Also in
both constitutional provisions and statutes the intention and purpose of the
body creating them may in such doubtful contingencies be arrived at by
consulting the journals of their proceedings and thereby ascertain the
thoughts and expressed intention of the numbers [sic] of the body when
the involved matter was under consideration. Of course, the purpose and
intention above referred to may not be established by parol testimony or
other evidence de hors the journals containing the proceedings of the
body that brought into existence the particular law under consideration .
Wheeler v. Bd . of Comm'rs, 245 Ky. 388, 53 S .W.2d 740, 742 (1932) (emphasis added).
See also Decker v. Russell , Ky., 357 S .W.2d 886, 888 (1962) (rejecting testimony of two
members of the enacting General Assembly as to the intent of the act); 2A Norman J .
Singer, Sutherland Statutory Construction § 48 .16, at 478-79 (6th ed . 2000) ("In
construing a statute the courts refuse to consider testimony about the intent of the
legislature by members of the legislature which enacted it ."). Compare the United
States Court of Appeals for the Third Circuit's treatment of a similar attempt by the
sponsor to explain ex post an amendment to the Civil Rights Act:
As the amendment's sponsor, Senator Bennett's understanding of the
amendment might have been entitled to some weight if it had been
expressed contemporaneously with the passage of the legislation .
Coming one year after the Bennett Amendment was enacted, however,
the statement at best reflects what was on Senator Bennett's mind when
he introduced the amendment and is entitled to no weight . . . . If Senator
Bennett's "clarifying" statement has any significance it must be as
evidence that the amendment was ambiguous on its face and that its
contemporaneous legislative history was not enlightening.
- 2 7-
Int'I Union of Elec., Radio & Mach . Workers v. Westinghouse Elec. Corp., 631 F.2d
1094, 1104 (3d Cir. 1980) (emphasis added). The rule against accepting after-theenactment interpretations by individual legislators has more urgency when the
legislation is self-serving and the legislator in question admits to having deliberately
obscured the bill's meaning . Cf. Brown v. Thompson , 252 F.Supp .2d 312, 316 (E .D. Va.
2003) ("Resort to legislative history . . . must be undertaken with caution in those
instances where lawmakers deliberately insert an ambiguity to mask a political
disagreement and then paper the legislative history record with advocacy statements.") .
Nor is Hanes's opinion letter entitled to the type of deference afforded an
administrative agency's construction of a statute that it is charged with implementing .
See Chevron, U.S.A., Inc . v. Natural Res. Def. Council, Inc . , 467 U .S . 837, 844-45, 104
S.Ct. 2778, 2782-83, 81 L.Ed .2d 694 (1984) . In the first place, Hanes is not charged
with implementing the JFRS . See KRS 61 .645(1) (Board of Trustees of Kentucky
Retirement Systems administers County Employees Retirement System, Kentucky
Employees Retirement System, and State Police Retirement System). That function is
vested in the Board of Trustees of the JFRS . KRS 21 .540 . Secondly, Chevron -style
deference is normally granted only when the agency interpretation is in the form of an
adopted regulation or formal adjudication . Christenson v. Harris County , 529 U.S. 576,
587, 120 S .Ct. 1655, 1662, 146 L.Ed .2d 621 (2000) ("Interpretations such as those in
opinion letters - like interpretations contained in policy statements, agency manuals,
and enforcement guidelines, all of which lack the force of law - do not warrant Chevronstyle deference ."); Mid-American Care Found . v. N .L.R.B . , 148 F .3d 638, 642 (6th Cir.
1998) (" Chevron deference is limited in application to those situations in which the
administrative agency has formally adopted a particular interpretation of a statute .");
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Johnson City Med. Ctr. v. United States , 999 F.2d 973, 976 (6th Cir. 1993) ("[A] revenue
ruling, as opposed to a legislative regulation, is not entitled to the deference accorded a
statute .") (quotation omitted) . For the same reason, we decline to defer to the
interpretation advanced in the Appellant's brief filed on behalf of the JFRS .
Rather than accept at face value the lengthy and somewhat convoluted attempts
by Senator Robinson and Mr. Hanes to explain how an amendment of KRS 21 .450
actually amended KRS 61 .510(13), we conclude, as did the Third Circuit in International
Union of Elec., Radio & Mach. Workers v. Westinghouse Elec . Corp. , supra , that if their
attempted explanations have any significance, "it must be as evidence that the
amendment was ambiguous on its face and that its contemporaneous legislative history
was not enlightening ." Id . at 1104 . In fact, Hanes's five-page, single-spaced opinion
letter attempting to interpret the one sentence (34 words) contained in HB 389(4) merely
exemplifies how this statute violates the nondelegation doctrine .
We conclude that HB 389(4), subsequently codified at KRS 21 .450(3), is
unconstitutional because it is unintelligible and violates the nondelegation doctrine
embodied in Sections 27, 28, 29 and 60 of our Constitution. Accordingly, the decision
of the Court of Appeals is affirmed, though on different grounds than expressed in its
opinion .
Graves, Johnstone, Keller and Stumbo, JJ ., concur. Wintersheimer, J ., concurs
by separate opinion. Lambert, C.J., not sitting .
COUNSEL FOR APPELLANT BOARD OF TRUSTEES OF THE JUDICIAL FORM
RETIREMENT SYSTEM (2002-SC-0699-DG) :
James T. Gilbert
Coy, Gilbert & Gilbert
212 North Second Street
Richmond, KY 40475
COUNSEL FOR APPELLANT BOARD OF TRUSTEES OF THE KENTUCKY
RETIREMENT SYSTEM (2002-SC-0700-DG) :
William P. Hanes
J . Eric Wampler
James Dodrill
Kentucky Retirement Systems
Perimeter Park West
1260 Louisville Road
Frankfort, KY 40601
COUNSEL FOR APPELLEE ATTORNEY GENERAL OF THE COMMONWEALTH OF
KENTUCKY (2002-SC-0699-DG AND 2002-SC-0700-DG)
A. B . Chandler, III
Attorney General
State Capitol
Frankfort, KY 40601
D. Brent Irvin
Assistant Attorney General
Civil & Environmental Law Division
Office of the Attorney General
P .O. Box 2000
Frankfort, KY 40602-2000
Jennifer L. Carrico
Assistant Attorney General
Criminal Appellate Division
Office of the Attorney General
1024 Capital Center Drive
Frankfort, KY 40601-8204
RENDERED: OCTOBER 23, 2003
TO BE PUBLISHED
2002-SC-0699-DG
BOARD OF TRUSTEES OF THE
JUDICIAL FORM RETIREMENT SYSTEM
V.
ON REVIEW FROM COURT OF APPEALS
2001-CA-1292
FRANKLIN CIRCUIT COURT NO . 00-CI-851
ATTORNEY GENERAL OF THE
COMMONWEALTH OF KENTUCKY
AND
APPELLEE
2002-SC-0700-DG
BOARD OF TRUSTEES OF THE
KENTUCKY RETIREMENT SYSTEM
V
APPELLANT
APPELLANT
ON REVIEW FROM COURT OF APPEALS
2001-CA-1292
FRANKLIN CIRCUIT COURT NO . 00-CI-851
ATTORNEY GENERAL OF THE
COMMONWEALTH OF KENTUCKY
APPELLEE
CONCURRING OPINION BY JUSTICE WINTERSHEIMER
I concur with the result achieved by the majority opinion, but I do not agree with
much of its reasoning . As correctly determined by the Court of Appeals, KRS 6 .350
requires an actuarial analysis for any legislation which would increase the benefits or
change the financial liability of any public retirement system before the legislation
leaves committee for consideration by the full legislative body and that the actuarial
analysis must accompany the legislation . The statute clearly states that an analysis
must be prepared by an actuary who is a fellow of the Society of Actuaries, a member
of the American Academy of Actuaries or an enrolled actuary under the Employees'
Retirement Income Security Act of 1974. The analysis must indicate the economic
effect of the bill on a public retirement system, project the cost of increased benefits
and describe assumptions and methods of computation .
It is beyond question that KRS 6.350 relates to an important benefit in
connection with the provisions of KRS 21 .450. It is a matter of significant public
interest. In these days of financial flexibility and dramatic shifts in economic status, it
cannot be said that an increase in benefits to one segment of the retirement community
could not ultimately impact vested pension benefits of retired employees in other
classifications . In this case, it appears that the only information that the members of
the General Assembly had in regard to the amendment of KRS 21 .450 was to the effect
that there was a report from the executive director of the retirement system that says, "I
am unable to determine the fiscal impact, if any, of Section 4."
The argument made by the Board and accepted by the majority opinion that the
statute only requires that a request be made to constitute sufficient compliance is totally
without merit . As previously noted, KRS 6.350 mandates that the study be set out in
detail and attached to the legislation for consideration before it can be enacted .
Although the circuit court properly found that this was not accomplished, it nevertheless
improperly concluded that the only requirement was that the request be made and that
there was substantial compliance with the statute.
The Court of Appeals correctly found that the failure to comply with the clear
requirements of the statute render the amendment to KRS 21 .450 void with respect to
HB 389. The analysis by the Court of Appeals regarding the plain language of the
statute is beyond question . KRS 6.350(1) provides that a pension bill "shall not be
reported from a legislative committee of either house of the General Assembly for
consideration by the full membership of that house unless the bill is accompanied by an
actuarial analysis ." The word "shall" is mandatory and not permissive . See KRS
446 .010(29) .
My greatest difficultly with the rationale presented by the majority is the reference
to what it considers merely procedural matters as distinguished from substantive law.
Substantive law is that part of the law which creates, defines and regulates rights and
duties. Procedural law is an apparatus provided by statute or rule which prescribes a
method of legislative operation in enacting substantive provisions . The distinction
between substantive and procedural law is that substantive law relates to the rights and
duties giving rise to a cause of action while procedural law is the mechanism used for
carrying out a practical method of operation . Here, KRS 6.350 defines the
responsibility of the General Assembly when amending the pension statutes. The
legislature cannot simply ignore the existing statute .
The statute here is not procedural but gives a clear direction as to how the
particular law is to be adopted and what conditions must be satisfied . This is not a
matter of parliamentary procedure which would be clearly within the realm of the
General Assembly, but something that applies to people outside of the legislative body
in that it may affect the vested pension benefits of other retired employees .
There is no question that Section 39 of the Kentucky Constitution vests the
General Assembly with authority to determine the rules of its own proceedings . See
Philpot v. Haviland , Ky., 880 S .W .2d 550 (1994) . As noted in my dissent in Philpot v.
Patton , Ky., 837 S.W.2d 491 (1992), I firmly believe that this Court cannot tell either
house of the General Assembly what system or rules it can enact. In other words, the
legislature is free to enact its own legislative and procedural rules and that such action
cannot be challenged because of their propriety and wisdom. However, because this is
a departure from procedural practice and clearly a substantive provision of the law, the
failure to comply with KRS 6.350 is fatal.
It has been held, except that in legislation involving contract rights, that each
legislature is entirely independent of its predecessor and is vested with complete
authority to amend or repeal existing laws at its pleasure . City of Mt. Sterling v. King,
126 Ky. 526, 104 S .W. 322 (1907). Here, the retirement plan in question is a legal
contract . KRS 6 .525 relates to the governance of such plan and expressly adopts KRS
21 .480, which in pertinent part refers to the pension system as an inviolate contract in
which the rights and benefits provided therein shall not be subject to reduction or
impairment by alteration, amendment or repeal . The constitution of Kentucky in Section
19, protects state pensioners from the General Assembly unilaterally amending statutes
that impact the pension system . The constitution provides that no law impairing the
obligation of contracts shall be enacted . See also 16B. Am. Jur.2d Constitutional Law
§721 (1998) .
When the interpretation of a statute affects persons other than current members
of the General Assembly, the question presented is of necessity a judicial one. See
United States v. Smith , 286 U .S . 6, 52 S .Ct. 475, 76 L .Ed . 954 (1932) . Here, it is
entirely possible that the increase in the pension benefits, although totally justified,
could potentially jeopardize pension benefits for retired legislators or other state
employees . Cf. Valdes v. Cory, 139 Cal .App .3d 773, 189 Cal . Rptr. 212 (Cal.
Ct.App.1983), which indicates that the California legislature was not free to randomly
and unilaterally act without actuarial input from the board overseeing the public
retirement system. Many other state courts agree . See Dadisman v. Moore , 384
S.E .2d 816 (W .Va. 1989), citing cases . The action of the legislature here, which
ignores the statute largely without debate or an informed vote by the entire General
Assembly, violates many sections of the Kentucky Constitution, including Section Two,
which states absolute and arbitrary power does not exist anywhere in the Republic, not
even in the largest majority . See also Kentucky Constitution §§19 and 25.
This Court declined to extend or apply the holding of Valdes, supra, in Jones v.
Bd. of Trustees . Ky. Retirement Systems , Ky., 910 S .W .2d 710 (1995). However,
Jones , supra, is distinguishable because here, the General Assembly chose to ignore
statutes requiring the actuarial analysis before increasing benefits. In Jones , it was
argued that the system had independence to set contribution rates.
I doubt if anyone would seriously challenge the proposition that the General
Assembly is not above the law. The law as commonly defined includes statutes as well
as constitutional provisions . It is the responsibility of this Court to decide in a proper
case, whether the actions of the General Assembly comply with the Constitution of
Kentucky, or the laws of this Commonwealth . Certainly, there is a procedure for
changing statutes and it is well known and regularly and routinely used by the General
Assembly in reaching a different conclusion from the effect of a statute originally
enacted . Simply stated, it is repeal by direct action of previous legislative
pronouncements .
Moreover, there is the opportunity to permit the people of Kentucky to amend the
constitution if the General Assembly so chooses . Respectfully, I do not believe that the
General Assembly can repeal an existing statute by implication . "Repeal by implication
finds no favor within the courts." See Caterpillar, Inc. v. Brock, Ky., 915 S .W.2d 751,
753 (1996).
I do concur with the view expressed by the majority that the amendment of KRS
21 .450 by Section 4 of the House Bill is unconstitutionally vague and impermissibly
delegates the legislative authority to an administrative agency without sufficient
guidance . See Folks v. Barren County, 313 Ky . 515, 232 S.W.2d 1010 (1950), and
many other cases as cited by the majority.
There is a vast difference between substantial compliance and no compliance .
Here, the legislature failed to follow the clear and unambiguous language of the statute .
The statute is mandatory and not directory . The legislature simply made a mistake in
approaching the pressing problem of pension modification. The problem is easily
corrected by an appropriate legislative enactment.
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