By: Nicholas Mastracci

     The Court of Appeals of Maryland held that the Maryland Underground Facilities Damage Prevention Authority enabling act does not violate the Judicial Vesting Clause of the Maryland Constitution or the Separation of Powers Clause of the Maryland Declaration of Rights.  Reliable Contracting Co. v. Md. Underground Facilities Damage Prevention Auth., 446 Md. 707, 729, 133 A.3d 1112, 1125 (2016).  The court also ruled that the Authority was a state agency based on the relationship between the Authority and the State of Maryland.  Id. at 729, 133 A.3d at 1124-1125.  As such, section 10-1001 of the State Government Article provides guidelines when assessing civil penalties.  Id.

     In February 2013, a local utility notified the Maryland Underground Facilities Damage Prevention Authority (the “Authority”) that Reliable Contracting Company (“Reliable”) began an excavation project without permission.  Reliable’s conduct was in violation of section 12-101 of the Public Utilities Article (“PU”), which establishes the one-call system.  As a result, Reliable caused damage to the local utility’s facilities.  On April 16, 2013, after an investigation, the Authority assessed a civil penalty of $2,000 for excavating without notifying the one-call system, and a $1,000 penalty that could be waived if Reliable completed training offered by the Authority.

     At a hearing in September 2013, Reliable challenged the constitutionality of the Authority’s enabling statute.  Reliable argued that permitting the Authority to adjudicate violations and impose civil penalties gave judicial power to a non-judicial body.  Additionally, Reliable argued that the statute gave no guidelines to the Authority when imposing penalties.  Therefore, Reliable asserted the Authority had no basis in their discretion for the penalties issued.  The Authority issued a written decision confirming their original finding as well as the associated penalties against Reliable.  They also notified Reliable of its right to judicial review.

     Reliable petitioned for judicial review in the Circuit Court for Anne Arundel County.  On June 9, 2014, the circuit court rejected Reliable’s constitutional arguments and upheld the Authority’s decision.  The circuit court held that the legislature could confer quasi-judicial adjudicatory power on a non-judicial body if there remained an opportunity for judicial review, which the Authority’s statute provided.  The circuit court also held that the Authority could assess civil monetary penalties without detailed guidance.

     Reliable appealed its constitutional claims to the Court of Special Appeals of Maryland, which affirmed the circuit court’s decision.  However, the court of special appeals held that section 10-1001 of the State Government Article (“section 10-1001”) provided guidelines for the Authority’s discretion when imposing penalties.  The Court of Appeals of Maryland granted certiorari to determine whether the Authority’s enabling act was constitutional, and whether there are guidelines for the Authority’s discretion when imposing penalties.

     The Court of Appeals of Maryland began its analysis by reviewing the constitutionality of the Authority’s enabling statute.  Reliable, 446 Md. at 716, 133 A.3d at 1117.  The Judicial Vesting Clause of Article IV, section 1, of the Maryland Constitution, and the Separation of Powers Clause of Article 8 of the Maryland Declaration of Rights, forbid legislative agencies to have judicial authority.  Id. at 717, 133 A.3d at 1118 (citing Dal Maso v. Board of County Commissioners, 182 Md. 200, 34 A.2d 464 (1943)).  However, administrative agencies can have powers that are judicial in nature as long as their decisions are subject to judicial review.  Reliable, 446 Md. at 717, 133 A.3d at 1118 (citing Heaps v. Cobb, 185 Md. 372, 378-379, 45 A.2d 73, 76 (1945)).  Therefore, the Authority can hold hearings and impose monetary penalties on cases delegated to them by the legislature, because these decisions are subject to judicial review.  Reliable, 446 Md. at 719, 133 A.3d at 1119 (citing PU § 12-113(e)).

     The court also looked at the legislative history of the Authority’s enabling act.  Reliable, 446 Md. at 720, 133 A.3d at 1119.  The history showed that the Authority was established to serve certain educational functions.  Id.  The Authority administers a special fund for public education that authorizes them to mitigate violators’ penalties by attending training or adopting safety procedures.  Id. at 720, 133 A.3d at 1120.  This allows the Authority to issue penalties for any violators of their enabling act, as all of their decisions are subjected to judicial review by the courts.  Id.  The court held that the Authority has quasi-judicial powers that do not violate the Judicial Vesting Clause or the Separation of Powers Clause.  Id. at 721, 133 A.3d at 1120.

     Next, the court analyzed whether the Authority is a state agency in order to determine their discretion for issuing civil monetary penalties.  Reliable, 446 Md. at 721-22, 133 A.3d at 1120-21.  Determinations regarding the issuance of civil monetary penalties would be guided by section 10-1001, which only applies to state agencies.  Id. at 721-722, 133 A.3d at 1120.  Although there is no single test for determining whether a statutorily created entity is a state agency, some relevant factors to examine are: (1) whether the purpose of the entity is public or private; (2) the degree of control exercised by the government over the entity’s decision-making; and (3) any special immunities from tax or tort liability granted to the entity.  Reliable, 446 Md. at 724, 133 A.3d at 1122.  In addition, the court will examine the entire relationship between the state and the entity.  Id.

     The Authority was created for the purpose of maintaining public safety in underground facilities by exercising government powers.  Reliable, 446 Md. at 724-725, 133 A.3d at 1122.  Officials and employees of the Authority are considered “state personnel,” which the court determined is a strong indication that the Authority is a government agency.  Id. at 725, 133 A.3d at 1122.  In addition, the Governor appoints and removes Authority board members, its decisions are subject to judicial review, and its existence depends on the legislature.  Id. at 725, 133 A.3d at 1123.  Furthermore, Authority officials and employees being labeled as “state personnel” gives them immunity from tort liability linked with the state.  Id. at 727-728, 133 A.3d at 1124.

     Lastly, the Court of Appeals of Maryland looked at the legislative history of section 10-1001.  Reliable, 446 Md. at 728, 133 A.3d at 1124.  This legislation was created to be a state agency’s guideline for assessing monetary penalties in the absence of their own.  Id.  The court ultimately concluded that the Authority was a state agency and that section 10-1001 provided guidelines for exercising their discretion in assessing civil penalties.  Id.  The court vacated the judgment of the court of special appeals and remanded the case back to the circuit court with instructions to reassess the civil monetary penalty consistent with their opinion.  Id. at 729-730, 133 A.3d at 1125.

     In Reliable Contracting, the Court of Appeals of Maryland held that the Authority’s enabling act was constitutional, because the Authority exercised quasi-judicial powers that were subject to judicial review.  The court also held that the Authority was a state agency, therefore section 10-1001 provided guidelines for assessing civil penalties.  Other state agencies must follow these guidelines when assessing civil penalties. Section 10-1001 also provides the court and judges with guidelines when deciding if an agency abused its discretion or issued a correct penalty.  These guidelines will make it difficult for Maryland practitioners to argue abuse of discretion.  Agencies merely have to show they incorporated aspects of the state’s guidelines into their decision to avoid a finding of abuse of discretion.

 

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