January 31, 2014
In a highly anticipated decision, the New Jersey Supreme Court rejected Governor Chris Christie’s attempt to reform the Council on Affordable Housing (“COAH”), holding that the Reorganization Act did not authorize the Governor “to abolish independent agencies that were created by legislative action.”1 Since its creation in 1984, COAH has governed the state’s housing policy and set the criteria for municipal compliance with the Fair Housing Act.2
The Supreme Court overturned the Governor’s attempt to dissolve the agency, holding that COAH, as a quasi-independent agency created “in but not of” the executive branch, was beyond the scope of his authority under the Reorganization Act. Justice Anne Patterson dissented, concluding that “the Act was and is intended to authorize the abolition and reorganization of COAH and other agencies that are similarly treated by our laws.”3
I. Council on Affordable Housing
Beginning in 1975, a series of cases known as the Mount Laurel decisions established a municipal constitutional obligation to provide for a “realistic opportunity for the construction of [their] fair share” of affordable housing.4 In 1985 the New Jersey Legislature responded by passing the Fair Housing Act, which codified COAH as the agency tasked with ensuring municipal compliance with the Mount Laurel doctrine.5
In February 2010, the Governor issued an executive order creating a task force to study “the continued existence of COAH” among other questions. The Legislature similarly embarked on an effort to abolish COAH. The legislative solution broke down after a bill that would have eliminated COAH was conditionally vetoed by the Governor and the Legislature failed to pass a bill incorporating the proposed amendments.6 In January 2011, the Governor issued a second executive order, dissolving the agency and placing its powers and responsibilities under the authority of the Department of Community Affairs (“DCA”), according to the authority of the Reorganization Act.7
II. Appellate Court Decision
Following Governor Christie’s executive order, the move to dissolve COAH was challenged by the Fair Share Housing Center, a housing advocacy group, which argued that because the agency was “in but not of” the executive branch, it was not subject to the Reorganization Act.8
The appellate court agreed with the Fair Share Housing Center, and held that the Reorganization Act did not apply to agencies which were “in but not of” the executive branch. The court considered the definition of “agency” under the Act, which includes: “[a]ny division, bureau, board, commission, agency, office, authority or institution of the executive branch created by law,” and concluded that the absence of an express mention of “in but not of” agencies suggested an intent that they not be included.9 The court also noted that COAH’s enabling legislation as a whole represented “a carefully crafted statutory scheme” which, in the court’s estimation, suggested that the Legislature would not likely have intended to subject the agency to the Reorganization Act.10
Finally, the court raised separation of powers concerns regarding the Reorganization Act. It noted that the initial decision upholding the constitutionality of the Act, Brown v. Heymann,11 “relied primarily” on the fact that similar legislation had been upheld at the federal level. Interestingly, the court emphasized testimony by then-Assistant Attorney General Antonin Scalia, who had objected to the “legislative veto” in the federal law specifically because it would have allowed just one legislative house to block a reorganization plan. Since the New Jersey Act provided for a bicameral legislative veto, his concern presumably would not apply. Nevertheless, the court suggested that the subsequent amendments that excluded independent agencies from the federal law might call the application of the Reorganization Act to “in but not of” agencies into question.12
III. Supreme Court Opinion
The New Jersey Supreme Court upheld the appellate court’s decision primarily on statutory grounds: “At the heart of this case is a question of statutory interpretation: whether an independent agency like COAH is subject to the Reorganization Act.” And in analyzing the scope of “agency” as defined under the Act, the court focused specifically on the choice of pronoun. Emphasizing that the Act covers “any . . . agency . . . of the executive branch,” the court deemed “of” to be a “term of art” to which the court was “required to give meaning.”13
The court also focused considerable attention on the question of whether the Reorganization Act had ever been applied to an “in but not of” agency. The court seemed to acknowledge the prior application of the Act to independent agencies, but emphasized that there has been no cited example “of a Chief Executive relying on the Reorganization Act to abolish an independent agency.”14 Though the Court did not cite anything from the statute itself that would suggest the scope of the Act would differ according to the function being authorized, it appeared to draw a line between the application of the Reorganization Act to transfer or modify an “in but not of” agency, and abolishing such an agency.
Although the court wrote that it was deciding the case on statutory grounds, that line-drawing was likely informed by the court’s concerns over separation of powers doctrine and the Presentment Clause. The court noted that it had previously upheld the constitutionality of the Reorganization Act in reliance on the constitutionality of existing federal law, and “did not anticipate or address the changes to federal law made years later in response to constitutional concerns.” To that point, the court cited the appellate opinion invoking of then-Assistant Attorney General Antonin Scalia’s concerns regarding the legislative veto and the subsequent amendments to the federal law which limited its application to independent agencies. It also emphasized that Brown upheld the application of the Reorganization act to the rearranging and not to the abolition of an “in but not of” agency.15
Justice Anne Patterson dissented, joined by Justice Helen Hoens. Justice Patterson disputed the majority’s reliance on the simple use of the preposition “of” to carry the burden of legislative intent, and argued it was unlikely the Legislature would seek to express itself in such “oblique” fashion rather than simply exempting the class of agencies explicitly in the definition section.”16 Justice Patterson also argued that the history of the Reorganization Act included numerous instances of the Act being applied to agencies that were “in but not of” the executive branch. She noted that the first case brought under the Act involved the reorganization of the Public Employment Relations Commission (“PERC”), an “in but not of” agency, and yet there was no indication either from legislative history of the Act or from the opinion in Brown that the Reorganization Act did not apply due to PERC’s status.17 Justice Patterson further argued that the Act has since been used on numerous occasions to abolish or reorganize “in but not of” agencies without having been challenged by the Legislature and without suggestion that its application to that special class of agency exceeded the authority of the Act.18
IV. Significance of the Case
Most immediately, the decision seems to clear the way for a return to Mount Laurel-based methodologies. In a decision issued just two months after In re Plan for Abolition of COAH, the New Jersey Supreme Court rejected the latest round of COAH regulations and ordered the agency to issue new guidelines within the next five months based on previous COAH methodologies. Not only has COAH been reinstated, this most recent decision seems to confirm that any significant change in the way COAH regulates municipal housing policy must begin in the legislature.19
*Alida Kass is Chief Counsel at the New Jersey Civil Justice Institute.
1 In re Plan for Abolition of Council on Affordable Housing, No. 070426, 2013 WL 3717751, at *1 (N.J. Jul. 10, 2013).
2 Id. at *3.
3 Id. at *20 (Patterson, J., dissenting).
4 Id. at *2.
6 Id. at *1.
8 The “in but not of” language has been used by New Jersey courts to reconcile the requirement under the New Jersey Constitution that all agencies be housed within one of the 20 executive departments with the attempt to give some agencies quasi-independent status. New Jersey Turnpike Authority v. Parsons, 3 N.J. 235 (1949).
9 N.J. Stat. Ann. § 52:14C-3(a).
10 In re Plan for Abolition of Council on Affordable Housing, 424 N.J.Super. 419, 425 (N.J. App. Div. 2012).
11 62 N.J. 1, 297 A.2d 572 (1972).
12 424 N.J. Super at 430.
13 In re Plan for Abolition of Council on Affordable Housing, No. 070426, 2013 WL 3717751, at *14 (N.J. Jul. 10, 2013) (emphasis added).
14 Id. at *16 (emphasis added).
15 Id. at *19.
16 Id. at *23 (Patterson, J., dissenting).
17 Id. at *29 (Patterson, J., dissenting).
18 Id. at *27 (Patterson, J. dissenting).
19 In re Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, No. 067126, 2013 WL 53568707 (N.J. Sept. 26, 2013).