In our latest NC Chamber Legal Institute Sidebar, we’re reviewing two cases that involve the future of how water quality standards and other environmental benchmarks will be set in North Carolina.

Way back in April 2022, the NC Rules Review Commission (RRC) rejected a rule proposed by the Environmental Management Commission (EMC) setting a water quality standard for 1,4-dioxane. Their objections revolved mostly around the absence of a fiscal note, an analysis required by the North Carolina Administrative Procedures Act for proposed rules with significant fiscal impacts.

The RRC rejection of the proposed 1,4-dioxane standard was challenged by the EMC in March 2023. That suit was voluntarily dismissed but was refiled by the EMC in November of 2023.

In the meantime, during this past legislative session, the General Assembly passed Senate Bill 512, entitled “Greater Accountability for Boards and Commissions.” The Governor vetoed the bill, one of the 19 vetoes from the 2023 session that was overridden by the General Assembly. Among other things, S512 made changes to the composition of the EMC. For many years, at least one member of the EMC was required to, at the time of appointment, “be actively connected with or have had experience in agriculture.” After S512, that member will now be appointed by the Commissioner of Agriculture, an executive branch official elected statewide in North Carolina, as will another member who will serve “at large.”

The Governor retained seven appointments, the Speaker of the House three, the President Pro Tempore of the Senate three, and the two referenced above that would now be controlled by the Commissioner of Agriculture. Additionally, the authority to appoint the chair of the EMC would now belong to the Commission itself – as opposed to being tapped by the Governor directly.

In October 2023, Governor Cooper filed a separate suit against the President Pro Tempore, the Speaker of the House, and the General Assembly in a case captioned Cooper v. Berger. The Governor claimed the changes to his appointment authority made by S512 were an unconstitutional violation of the separation of powers doctrine.

A three-judge panel denied the Governor’s motion for a temporary restraining order and preliminary injunction to prevent the appointment of the new commissioners to the EMC on the basis that the claim of unconstitutionality was not likely to succeed on the merits. Notably, the three-judge panel did grant the Governor’s motion as it pertained to appointments to the Board of Transportation, Economic Investment Committee, and the Public Health Commission, all three of which were also altered by S512.

By the end of 2023, neither EMC v. RRC nor Cooper v. Berger had yet been heard on the merits, but that was hardly an impediment to the wranglings that followed.

On January 11, 2024, the newly-composed EMC, now with only seven gubernatorial appointees and a new chairperson, voted 8-7 in open session to voluntarily withdraw its lawsuit against the RRC. The EMC vote directed the EMC Counsel, a lawyer with the NC Department of Justice, to dismiss the EMC v. RRC lawsuit. That dismissal filing did not occur. A timely-filed dismissal would have been the end of EMC v. RRC.

But, moments after the EMC vote to dismiss, lawyers for the Governor filed a motion in Cooper v. Berger to restrain the EMC from taking a dismissal in EMC v. RRC. The Governor asked a judge in one case to prevent the parties in a separate case from voluntarily dismissing their suit. The basis of the argument was that the action by the newly-constituted EMC was unconstitutional as applied. That is, unconstitutional, but on a slightly different basis than their prior claim, undoubtedly in the hopes that an as applied challenge would be heard by a single Superior Court judge and avoid the now nearly decade old three judge panel process which requires the Chief Justice to appoint three Superior Court judges to hear facial challenges to the constitutionality of acts of the General Assembly.

On January 11, less than 5 hours after the vote to dismiss by the EMC, a Superior Court judge issued the Temporary Restraining Order sought by the Governor via Cooper v. Berger. A hearing for a preliminary injunction would follow.

Then, on January 17, 2024, EMC counsel filed a Memorandum in Opposition to the Preliminary Injunction. The timeline provided in this Memorandum failed to mention the timing of the EMC decision to dismiss in EMC v. RRC and the filing of the Motion for Temporary Restraining Order in Cooper v. Berger.

A reader of this chronology might understandably be confused. In short:

• The post-S512 EMC seeks to abandon a lawsuit filed by the prior EMC.
• Legal machinations ensue.
• The attempt to dismiss the lawsuit is thwarted by the filing of an action in a different lawsuit with different parties, because the judge in that different lawsuit grants an order restraining the EMC from filing its dismissal in its own suit.

Keep the popcorn handy. It gets better.

The latest, but not the last, chapter in this legal melodrama was a hearing on January 25, 2024. That hearing was on the previously filed motion for a preliminary injunction (in Cooper v. Berger) to prevent the filing of the dismissal (in EMC v. RRC). Counsel for the Governor argued that the claim of unconstitutionality of the EMC’s attempt to dismiss was distinguishable from the claim of unconstitutionality of S512 in its entirety. The judge considered the argument of the Governor’s counsel but was unpersuaded. The essence of the Governor’s argument was that the Governor has constitutional veto power over any action by the EMC, pre- or post-S512. More on this later.

But there is a surprise ending. The judge deemed this to be a repackaged assertion by the Governor that S512 was unconstitutional as written, and that such an assertion must be heard by a three-judge panel. Thus, the judge, by rejecting the Governor’s argument in Cooper v. Berger, decided himself out of jurisdiction. He had no power to rule on the lawfulness of the temporary restraining order or the preliminary injunction. That will now have to be decided by a three-judge panel. Ironically, the temporary restraining order remains in place. The Governor prevailed by losing.

In addition to observing that these cases present an instance of state government suing itself and then winning by losing, what else does a major North Carolina employer need to know about this litigation (which is merely in its infancy)? The bottom line here is no different than it was when I reflected on a COA opinion back in November with the following:

You will be hearing a lot about administrative rulemaking authority in the coming months. It seems there are lots of opinions about just how far executive branch bodies can go in creating new law, who can be appointed to those bodies, and even over who is allowed to appoint the members of those bodies. But make no mistake, the debate isn’t over who will sit in the seats, it’s about what the rules will ultimately be. Policy debates masquerading as legal arguments.

Do not miss this. Both EMC v. RRC and especially Cooper v. Berger are a clear manifestation of deep-seated wrangling over the future of how certain water quality standards – and other environmental benchmarks, including standards for PFAS – will be set. Governor Cooper has taken the position that without the power to appoint a majority of the EMC, he cannot control it, and therefore any actions it takes that are contrary to his wishes manifest a clear violation of the principles of separation of powers enunciated in McCrory v. Berger. The General Assembly has and will likely again point out that the Executive Branch of state government – the Governor and the Commissioner of Agriculture – still appoint a majority of the members of the Commission. They might also argue that the history of the creation of the EMC, too tedious to explore here, suggests that it was actually designed to be free from the purely ideological influence of any branch of government, given the technical expertise and qualifications required for so many of its members.

This much is clear. Without regard to where these debates begin, the last word will be uttered by the courts. That’s precisely why your NC Chamber has a Legal Institute, why we are closely watching these cases, and why we will be there to represent our members’ interests when the time comes to do so.

Stay tuned.  There’s another hearing this coming Friday.