Cameron v. Ball

• Docket Number: 2022-CA-1419-MR,2022-CA-1490-MR
• Decision Date: 01 December 2023
• Parties: DANIEL CAMERON, IN HIS OFFICIAL CAPACITY AS KENTUCKY ATTORNEY GENERAL APPELLANT v. ALLISON BALL, IN HER OFFICIAL CAPACITY AS KENTUCKY STATE TREASURER; ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE & ADMINISTRATION CABINET; LEGISLATIVE RESEARCH COMMISSION; MATTHEW KOCH, IN HIS OFFICIAL CAPACITY AS CO- CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE; AND STEPHEN MEREDITH, IN HIS OFFICIAL CAPACITY AS CO-CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE APPELLEES AND ALLISON BALL, IN HER OFFICIAL CAPACITY AS KENTUCKY STATE TREASURER APPELLANT v. ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY; DANIEL CAMERON, IN HIS OFFICIAL CAPACITY AS KENTUCKY ATTORNEY GENERAL; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE & ADMINISTRATION CABINET; LEGISLATIVE RESEARCH COMMISSION; MATTHEW KOCH, IN HIS OFFICIAL CAPACITY AS CO- CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE; AND STEPHEN MEREDITH, IN HIS OFFICIAL CAPACITY AS CO-CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE APPELLEES
• Court: Kentucky Court of Appeals

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DANIEL CAMERON, IN HIS OFFICIAL CAPACITY AS KENTUCKY ATTORNEY GENERAL APPELLANT v. ALLISON BALL, IN HER OFFICIAL CAPACITY AS KENTUCKY STATE TREASURER; ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE & ADMINISTRATION CABINET; LEGISLATIVE RESEARCH COMMISSION; MATTHEW KOCH, IN HIS OFFICIAL CAPACITY AS CO- CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE; AND STEPHEN MEREDITH, IN HIS OFFICIAL CAPACITY AS CO-CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE APPELLEES AND ALLISON BALL, IN HER OFFICIAL CAPACITY AS KENTUCKY STATE TREASURER APPELLANT v. ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY; DANIEL CAMERON, IN HIS OFFICIAL CAPACITY AS KENTUCKY ATTORNEY GENERAL; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE & ADMINISTRATION CABINET; LEGISLATIVE RESEARCH COMMISSION; MATTHEW KOCH, IN HIS OFFICIAL CAPACITY AS CO- CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE; AND STEPHEN MEREDITH, IN HIS OFFICIAL CAPACITY AS CO-CHAIR OF THE LEGISLATIVE RESEARCH COMMISSION'S GOVERNMENT CONTRACT REVIEW COMMITTEE APPELLEES

Nos. 2022-CA-1419-MR, 2022-CA-1490-MR

Court of Appeals of Kentucky

December 1, 2023

NOT TO BE PUBLISHED

APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE THOMAS D. WINGATE JUDGE ACTION NO. 22-CI-00298

BRIEFS FOR APPELLANT DANIEL CAMERON: Matthew F. Kuhn Frankfort Kentucky Alexander Y. Magera Frankfort, Kentucky Harrison Gray Kilgore Frankfort, Kentucky

BRIEF FOR APPELLANT ALLISON BALL: Brittany J. Warford Frankfort Kentucky REPLY BREIF FOR APPELLANT ALLISON BALL: Lorran Hart Ferguson Frankfort, Kentucky

BRIEF FOR APPELLEE ANDY BESHEAR: S. Travis Mayo Frankfort, Kentucky Taylor Payne Frankfort, Kentucky Laura C. Tipton Frankfort Kentucky

BRIEF FOR APPELLEE HOLLY M. JOHNSON: Brian C. Thomas Frankfort, Kentucky Mitchel T. Denham Louisville, Kentucky

BEFORE: COMBS, JONES, AND MCNEILL, JUDGES.

OPINION

COMBS, JUDGE

Attorney General Daniel Cameron and State Treasurer Allison Ball appeal the summary judgment of the Franklin Circuit Court entered on November 10, 2022, in favor of Governor Andy Beshear and Finance Secretary Holly McCoy Johnson. We affirm in part and vacate and dismiss in part after our review.

During its 2022 Regular Session, the Kentucky General Assembly passed House Bill 248 and House Bill 388. These two statutory enactments are the subject of this appeal.

House Bill (HB) 248^[1] created a new section of KRS^[2] Chapter 48 concerning the administration of the state budget. The provision prohibits constitutional officers elected statewide (except the Attorney General) and any state official, employee, or agency (except the Department of Public Advocacy in a criminal matter) from expending appropriated funds to challenge or to support a challenge to the constitutionality of any legislative act or resolution of the General Assembly. Because an emergency was declared to exist, the provision was to take effect immediately upon its becoming law and was to apply retroactively from January 1, 2022.

The provisions of HB 388^[3] addressed Kentucky's Model Procurement Code (KRS Chapter 45A) and amended those portions of the Kentucky Model Procurement Act related to review of executive branch contracts. HB 388 repealed and reenacted provisions of KRS 45A.705 to give the State Treasurer a role in the contract review process. Once again, an emergency was declared to exist, and the provision was to take effect immediately upon becoming law. Governor Beshear vetoed each bill in its entirety. The General Assembly overrode the vetoes, and the bills became law.

Governor Beshear and Finance Secretary Johnson filed a declaratory judgment action in Franklin Circuit Court. Attorney General Cameron, State Treasurer Ball, and others were named as defendants. Governor Beshear and the Finance Secretary alleged that the measures: unconstitutionally usurped the Governor's executive authority; unlawfully blocked access to the courts; and wrongfully interfered with the function and authority of the Court of Justice. They sought a temporary restraining order and a declaration that the measures were unconstitutional.

On April 18, 2022, the Franklin Circuit Court entered an order temporarily restraining the Attorney General and State Treasurer from implementing the measures. After the parties filed their briefs and appeared for oral argument, the circuit court concluded that the challenged provisions were indeed unconstitutional. By order entered on November 10, 2022, the circuit court granted summary judgment to Governor Beshear and to Finance Secretary Johnson and issued a permanent injunction. This timely appeal followed.

On appeal, Attorney General Cameron challenges the trial court's decision with respect to HB 248. He argues that the trial court erred by failing to recognize that the challenged enactment is a proper exercise of the General Assembly's absolute power of the purse. Therefore, he contends that the measure does not violate provisions of the Kentucky Constitution.

With respect to the trial court's decision regarding HB 388, Attorney General Cameron and State Treasurer Ball contend that the issue was rendered moot by the passage of HB 329^[4] during the General Assembly's 2023 legislative session. With HB 329, the legislature again amended the process of review for executive branch contracts as set out in KRS 45A.705. They argue that the new statutory scheme addressed and overhauled key provisions that had been contested in the litigation below. Thus, they submit that our review of the prior legislation would result in our impermissibly rendering an advisory opinion as to issues that are now moot.

We agree that the new legislation rendered moot the issue decided by the circuit court in its judgment entered on November 10, 2022. We address the decision with respect to HB 388 first in our review.

HB 388

The Kentucky Model Procurement Code governs the disposition of state property and applies to every expenditure of public funds by the Commonwealth (and every payment by contingency fee) under all contracts -except those between the Commonwealth and its political subdivisions or other governments. KRS 45A.020. It imposes a host of requirements for state contracting. The Finance Secretary is empowered to adopt necessary administrative regulations and is expressly directed to "consider and decide matters of policy with regard to state procurement." KRS 45A.035. However, the General Assembly exercises some degree of oversight of state contracting through the Government Contract Review Committee (GCRC), a permanent committee of the Legislative Research Commission (LRC). KRS 45A.695.

Prior to 2021, whenever the GCRC determined that a contract was not needed or was inappropriate, it forwarded a "written notation of the reasons for its disapproval or objection" to the Finance Secretary. KRS 45A.705(5) (2009). The Finance Secretary then considered whether the contract should: (i) be revised "to comply with the objections of the committee," (ii) be cancelled, or (iii) remain effective as originally approved. KRS 45A.705(6) (2009).

In 2021, the General Assembly modified the contract review process pertaining to personal service contracts, tax incentive agreements, and memoranda of agreement. With Senate Bill (SB) 165,^[5] a critical function of the Finance Secretary was replaced by the State Treasurer. The Finance Secretary had previously determined whether a particular contract to which the GCRC objected should be revised canceled, or continued. Pursuant to the new statute, the "final determination" would instead be made by the State Treasurer. SB 165 §3 (6)(c).

The constitutionality of SB 165 was immediately challenged in Franklin Circuit Court, and the circuit court declared it invalid on procedural grounds. The court held that the General Assembly had violated the three-readings clause of Section 46 of the Kentucky Constitution. The General Assembly acted quickly to correct the procedural defect and then passed HB 388 in its 2022 legislative session. Subsequently, State Treasurer Ball's first appeal to this Court was dismissed as moot by our order entered August 19, 2022.

HB 388 reiterated and enacted the same changes as had SB 165. It designated the State Treasurer (instead of the Finance Secretary) to be the reviewer of the GCRC's determination as to whether a contract should be revised, canceled, or continued. Since the prior procedural defect was no longer at issue, this litigation challenged HB 388 on its merits. The circuit court determined that HB 388 was unconstitutional as an unlawful usurpation of the executive powers of the Governor.

The circuit court relied upon the reasoning of the Supreme Court of Kentucky in Legislative Research Commission by Prather v. Brown, 664 S.W.2d 907 (Ky. 1984). The Brown Court held a statute unconstitutional where it permitted the Administrative Regulation Review Subcommittee (a subcommittee of the LRC) to veto administrative regulations adopted by the executive branch. Prior to the enactment of the challenged statute, the subcommittee had merely made recommendations with respect to adopted regulations. The court observed that "[t]he adoption of administrative regulations necessary to implement and carry out the purpose of legislative enactments is executive in nature and is ordinarily within the constitutional [provision] of the executive branch of government." Id. at 919. Consequently, the court concluded that the enactment constituted an unlawful legislative encroachment upon the authority of the...