Unanimous Court of Appeals rebukes governor over block grants

A decision Tuesday, Dec. 3, by the N.C. Court of Appeals rebuking Gov. Roy Cooper could have ramifications beyond the initial scope of the case, and it could influence a dispute over the Atlantic Coast Pipeline.

Tuesday, a unanimous three-judge panel affirmed a lower court’s ruling that the General Assembly has full control over the use of federal block grant funds. While the governor may have wanted to use the block grant funds one way, the General Assembly has the constitutionally backed power to use the money as it sees fit. 

Jeanette Doran, president of the N.C. Institute for Constitutional Law, said the ruling reaffirms the General Assembly’s power over the purse. 

“If it’s money in the public treasury, which is a much broader term than Cooper would like it to be, the General Assembly gets to control those appropriations,” Doran said. 

Doran said the court ruling extends to cases in which the governor has tried to take control of the money, including the ACP quagmire. 

In January 2018, Cooper announced the creation of a $57.8 million discretionary fund from ACP partners. About the same time, the Cooper administration granted the ACP a critical water-quality permit. The governor would control the fund.

Republican legislative leaders cried foul and took steps to take control of the money. Republican leaders launched an investigation into how Cooper handled the permitting process and expressed concerns over leaving lawmakers out of the process. The ACP project is on hold because of unrelated legal issues, and no money has been received.

N.C. Court of Appeals Judges Lucy Inman, Donna Stroud, and John Tyson presided over the block grants case, and Inman wrote the unanimous decision. 

Inman said the state constitution clearly states that money can be drawn from the state treasury only if the legislature appropriates it. 

“The federal laws governing the block grants identify the state as the beneficiary of the funds, and they do not prohibit their appropriation by our General Assembly — the branch that wields exclusive constitutional authority over the state’s purse,” Inman wrote. 

The N.C. Court of Appeals ruling can be linked to the ACP fund controversy, Doran says.

“The Court of Appeals recognized that the governor cannot receive funds outside the state treasury,” Doran said. “That would seem to preclude the governor from accepting funds in any kind of special fund, unless the fund is treated as part of the state treasury and subject to appropriation by the General Assembly only.”

Senate Republicans issued a news release drawing a connection between the court ruling and the dispute over the ACP fund. 

“Governor Cooper has a lengthy track record of violating the Constitution to obtain taxpayer funds under his exclusive control,” the news release read. “Most recently, independent investigators concluded that ‘criminal violations may have occurred’ and that Governor Cooper ‘improperly used his authority’ in extracting funds from Duke Energy during the permitting process for the Atlantic Coast Pipeline.”

Sen. Harry Brown, R-Onslow, slammed the governor. 

“Governor Cooper keeps trying to violate the Constitution to dole out taxpayer money to whomever he wants, and he keeps losing,” Brown said. “Today’s unanimous court ruling is another setback for the power-hungry governor.”

The lawsuit between Cooper and legislative leaders started in 2017, when the governor sued over control of the federal block grants. Cooper included in his budget proposal how to allocate the Community Development Block Grant, the Maternal and Child Health Block Grant, and the Substance Abuse Prevention and Treatment Block Grant. The General Assembly disagreed with how Cooper wanted to allocate the money and instead passed a budget with different allocations. 

The governor claimed the General Assembly interfered with his constitutional duty to faithfully execute the law. Cooper argued the federal funds weren’t in the General Assembly’s constitutional authority to control.

The court didn’t agree. 

Cooper tried to argue the federal block grant funds were an example of “custodial funds” not under the control of the General Assembly, but Doran said the court denounced this line of thinking. 

“It’s not merely that the federal block grant funds aren’t custodial funds, it’s that [custodial funds] don’t even exist,” Doran said.