Court of Appeal Holds That Legislature Has No Power To Set Aside Final Decisions

In a fascinating opinion that discusses a number of interesting state constitutional issues, the Court of Appeal has held that the Legislature has no power to set aside final agency quasi-judicial decisions. In California School Board Ass'n v. State of California (here), the Legislature had commanded the Commission on State Mandates, which implements Article XIII B, Section 6, to reconsider or set aside several final agency decisions. The court held that this legislative directive violated the separation of powers clause of the California Constitution, Article III, Section 3.

The court's logic is curious and, I think, flawed. The court first held--correctly--that the Legislature has no power to set aside final judicial decisions, citing Mandel v. Myers, 29 Cal. 3d 531 (1981). The court then held that the Legislature had created the Commission as a "quasi-judicial body" to resolve claims for reimbursement of state-mandated local costs. This seems both right and wrong--the Commission acts in a "quasi-judicial" function when it applies legal principles to a set of retrospective facts, but it's hard to see how a body that is not a court can exercise "judicial" power, "quasi" or not. The court then seemed to hold that the Legislature was trampling on the Commission's judicial (or "quasi-judicial") power when it directed the Commission to set aside prior decisions. In my view, this confuses the kind of task that the Commission performs--which is quasi-judicial rather than quasi-legislative--with the kind of power that it exercises.

There is, I think, a more defensible route to the same result, but it's only inherent in the court's opinion. The court did point out that only the judiciary can set aside the Commission's decisions, through judicial review. So one could argue that the Legislature's directive to the Commission to set aside and/or reconsider prior decisions violated the judicial power of the courts to review final agency decisions, rather than the "judicial" power of this plainly non-judicial agency.

On balance, though, I find this unconvincing. Like most administrative agencies, the Commission is a creature of statute--the Legislature created it and the Legislature can dissolve it. These statutes define the Commission's powers and, among other things, define when and how the Commission's orders are subject to review. Suppose the Legislature had said, up front, that no Commission decision shall be final for a period of six months after rendition, during which time the Legislature could pass a statute nullifying the decision. Would that violate the separation of powers? I suspect not. Now the only difference between that hypothetical and this case is that in CSBA the Commission's decisions had become "final." But, at least as far as administrative agencies are concerned, "finality" is a creature of statute and the common law; there is nothing "constitutional" about it. So I think the better argument is that the Legislature can do what it wants to with the decisions of administrative agencies. Now in some instances there might be a due process limit on the power of the Legislature to set aside "final" agency decisions. But here that's not a limit, because only public agencies were involved and a subordinate political body has no federal due process rights against the state that created it.

There are other interesting rulings in this case, too, in particular whether the state-mandated cost reimbursement requirement, which applies to mandates imposed by the "Legislature" applies to mandates imposed by a state initiative. The court said "no," but it had to do a certain amount of fancy footwork to get around the California Supreme Court's decision in Independent Energy Producers Assn. v. McPherson, 43 Cal. 4th 1188 (2006), which had held that a constitutional provision giving the "Legislature" plenary power to add to the jurisdiction of the Public Utilities Commission did not preclude an initiative from doing the same thing.

I think this case is a good candidate for review by the California Supreme Court. It raises lots of interesting issues, and there is at the very least a fair amount of tension between it and the Supreme Court 1997 decision in Carmel Valley Fire Protection Dist. v. State of California. Stay tuned.