Opinion ID: 1993394
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Heading Rank: 2

Heading: Constitutionality of the Delegation of Power

Text: The appellants contend that the legislative delegation of power under the Act is unconstitutional and invalid because no adequate standards are provided in respect of the selection of the hospitals to which the bonds are to be issued and the determination of the amount each hospital shall receive. Their arguments in their brief go to the adequacy of the standards set forth in the Act to guide the Commission in approving or disapproving loans requested by hospitals. However, the chief contention of the appellants is that the only power of the Commission is to process the loans and make recommendations to the Board, which has the final authority to grant any loan under the Act, and that, under the Act, the Board has unlimited discretion to approve or disapprove an application for a loan, without any standards for its guidance (except as to the relation of the amount of the loan to the cost of the proposed facilities) and that this uncontrolled discretion in the Board makes the entire Act unconstitutional and void. In the argument before us, counsel for the appellants, while criticizing certain of the standards set forth in the Act in respect of the Commission's approval or disapproval, conceded that, if the Commission had the power to decide as to the granting of loans, the standards would be adequate. [3] We agree. The modern tendency of the courts is toward greater liberality in permitting grants of discretion to administrative officials in order to facilitate the administration of the laws as the complexity of governmental and economic conditions increases. Pressman v. Barnes, 209 Md. 544, 555, 121 A.2d 816 (1956). In the field of public health, still more flexible standards are permitted. The concept of public health is more definite than that of general welfare, and there is a practical necessity for expert interpretation in its application to concrete situations. Givner v. Commissioner of Health, 207 Md. 184, 191, 113 A.2d 899 (1955) and cases therein cited. See also Cohen, Some Aspects of Maryland Administrative Law, 24 Md. L. Rev. 1, 3-8 (1964). We find the standards set forth in the Act to guide the Commission's discretion in approving or disapproving a loan sufficiently definite. The contention that the Act is invalid because it gives uncontrolled discretion to the Board has a deeper thrust. The answer of the appellees is that Article XII, Section 1 of the Maryland Constitution creates the Board and provides that it shall hear and determine such matters as the General Assembly may confer upon them the power to decide, and that pursuant to this provision Code (1965 Repl. Vol.) Art. 78A, Sec. 1 grants to the Board such powers and duties as may be delegated to it from time to time in regard to the creation of State debt   . The delegation to the Board under the Act, the appellees contend, is within the confines of the Constitutional provision, as effectuated by Article 78A. The question, however, in our opinion, involves other legal issues. Article 78A imposes a number of specific restrictions, not here pertinent, upon the authority of the Board when acting in an executive capacity. But the final authority entrusted to the Board under the Act is administrative in nature. The choice among applications for loans and the fixing of the sums to be awarded the hospitals whose applications are approved, within the statutory limitations, are determinations characteristic of the functions of administrative agencies. See Hyson v. Montgomery County, 242 Md. 55, 217 A.2d 578 (1966) and authorities therein cited. That one member of the Board is the Governor of the State and another the Comptroller, both elected by the people, does not exclude the Board, in such functions as are here involved, from the operation of the legal principles applicable to administrative agencies. The title of the governmental officers cannot obscure the real nature of the governmental function they are performing. The Supreme Court has held that the principles of administrative law are to be applied to actions administrative in nature, even though the carrying out of the particular function has been delegated by Congress to the President of the United States. Panama Refining Co. v. Ryan, 293 U.S. 388 (1935). The same principle has been applied by this Court to lower governmental echelons. Hyson, supra ; County Comm'rs v. Northwest Cemetery Co., 160 Md. 653, 154 Atl. 452 (1931); Farmers & Planters Co. v. Mayor & Council of Salisbury, 136 Md. 617, 111, Atl. 112 (1920); Mayor & City Council of Baltimore v. Radecke, 49 Md. 217 (1878). The failure to provide any standards for the exercise of administrative discretion has been held to render the delegation of authority to the agency invalid. Maryland Theatrical Corp. v. Brennan, 180 Md. 377, 24 A.2d 911 (1942); Northwest Cemetery Co., supra . However, the statutory criterion of public interest, convenience or necessity has been held not too indefinite. New York Central Securities Corp. v. United States, 287 U.S. 12 (1932) and Federal Communications Comm'n v. RCA Communications, Inc., 346 U.S. 86, 90 (1953). See also Fahey v. Mallonee, 332 U.S. 245 (1947), Pressman v. Barnes, supra and Cohen, supra; but see Friendly, Federal Administrative Agencies: The Need for Better Definitions of Standards, 75 Harv. L. Rev. 863, 1055, 1263 (1962). Viewed within the framework of these principles, a serious constitutional question might arise if the delegation of power to the Board under Article 78A, Section 1 were to be construed as authorizing the General Assembly to delegate power to the Board when it is to act as an administrative agency without the imposition of any standards to canalize its discretion. Further, an unrestricted authorization to the Board to select the hospitals to which loans are to be granted might well have a vital bearing upon the question under the establishment clause of the First Amendment, to be hereinafter considered, of whether the Act constitutes valid State action to promote the general welfare of its citizens, even though religious interests may be indirectly benefited. We do not reach the question of the effect of the delegation, if it were unconstitutional, for we find implicit in the Act adequate guides for the exercise of the Board's discretion. The history of a legislative enactment often sheds light upon its intent and may be of aid in construing its terms. Pressman v. Barnes, supra, 209 Md. at 558-59. In 1962, the General Assembly passed Joint Resolution No. 22 requesting the Committee on Medical Care of the State Planning Commission to study and make recommendations concerning the creation of a Statewide authority to be concerned with the planning and financing of the construction of hospital facilities. The preamble to the resolution recites, inter alia, that: the health and economic well being of communities is dependent on hospitals which serve as general resources,       the absence of adequate hospital facilities to support community medical care is detrimental to the development of the community;       these health care needs should be met with a Statewide plan assuring equal concern for all communities and not by special consideration;    Laws of Md., 1962 Joint Resolution No. 22 (H.J.R. 25). The report of the Medical Care Committee is dated January 31, 1963 and was filed with the Chairman of the State Planning Commission on February 15, 1963. This report adopted and emphasized the principles set forth in the preamble to the Joint Resolution and stated: that expansion of the voluntary nonprofit system into all areas and locations appropriate to it, and consistent with coordinated planning on a Statewide basis, is desirable in the public interest, both health-wise and from a viewpoint of economy in State fiscal management. The Act was passed in the session following the Committee's report. The terms of the Act indicate the realization expressed in the 1962 Joint Resolution and in the report of the Medical Care Committee that the State's primary purpose in providing for loans to voluntary nonprofit hospitals is the expansion of hospital facilities in the State for the welfare of its citizens. It is true that subsection (a) of Section 568B of the Act provides that any approval or disapproval or recommendation of the Commission are only for the consideration of the Board and are not binding upon it and that subsection (c) provides that final authority for the granting of any State loan funds to any applicant is vested in the Board. However, subsection (b) provides that in the performance of its duties, the Commission shall study the plans and needs concerning the adequacy of hospital facilities throughout the State. The implication seems inevitable that in giving final authority to the Board in the following subsection the Legislature intended that in exercising its discretion as to the granting or refusal of a loan, the Board, like the Commission, should be guided by the same broad criteria for the public welfare. This implication is emphasized by Section 568G, which, for all the purposes of the Act, defines a voluntary nonprofit hospital as one operated for general medical and surgical treatment available to the general public. That the standards spelt out for the guidance of the Commission were not made applicable to the Board does not mean that the Board's discretion was intended to be absolute. The approval of a master plan by a planning commission is a guide to County Commissions sitting as a regional zoning council but is not binding upon them; nevertheless, the action of the Commissioners cannot be arbitrary, unreasonable or capricious. Bd. of County Comm'rs v. Edmonds, 240 Md. 680, 215 A.2d 209 (1965). That, in the delegation of authority to the Board, there is no express statutory provision that its decisions cannot be arbitrary or unreasonable is immaterial. Such a limitation is implied as a necessary condition of the validity of the delegation. [4] This Court has consistently exercised its inherent power to review actions of administrative agencies alleged to be arbitrary or capricious even if there is no express statutory authority for such review. State Dep't of Health v. Walker, 238 Md. 512, 522-23, 209 A.2d 555 (1965); England v. Mayor & Council of Rockville, 230 Md. 43, 45, 185 A.2d 378 (1962); Hecht v. Crook, 184 Md. 271, 277-81, 40 A.2d 673 (1945). [5] We find that there are implied limitations upon the exercise of the Board's authority under the Act that its decisions should be made in consideration of the adequacy of hospital facilities throughout the State, that the recommendations of the Commission, while not binding upon the Board, are to be taken as a guide to it in its determinations, and that its decisions are not to be arbitrary or capricious but to be made in the public interest. So limited, we hold the delegation of authority under the Act to be valid and consistent with an interpretation of the Act as State action to promote the general welfare of its citizens.