Did Tennessee's 2012 overhaul of the Tennessee Regulatory Authority abolish the agency, and how do its new appointment rules work?

Subject

Opinion No. 12-71, Tennessee Regulatory Authority, July 13, 2012

Plain-English summary

Representative Craig Fitzhugh asked the Tennessee AG four questions about the impact of Chapter 1070 of the 2012 Tennessee Public Acts on the Tennessee Regulatory Authority (TRA), which regulates public utilities in Tennessee. The 2012 act extensively reworked TRA membership and procedures effective July 1, 2012. The questions: (1) was the TRA effectively abolished and re-created? (2) is General Assembly confirmation required as a precondition to TRA service? (3) which director positions are new and how are they filled? (4) are decisions made between July 1, 2012, and the January 2013 legislative session subject to challenge?

The AG's answers:

1. The TRA was not abolished. It continues as the same legal entity originally created in 1995 (1995 Tenn. Pub. Acts ch. 305), reorganized but not eliminated.
2. Confirmation is not required for the two currently-serving directors whose terms run to June 30, 2014. New directors begin service on appointment but must be confirmed within 30 days of appointment, or, if the General Assembly is not in session, within 30 days after it reconvenes.
3. The director position previously appointed by the Governor (now vacant) and the two new jointly-appointed positions described in § 65-1-101(h)(3) must be filled as vacancies. Confirmation will be required for those appointees.
4. Decisions made by properly-appointed directors between July 1, 2012, and January 2013 are not subject to challenge based solely on the director's authority to hold office. The directors serve as both de facto and de jure officers (State ex rel. Newsom v. Biggers).

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical background and statutory framework

History of the TRA

In 1995 the General Assembly abolished the Tennessee Public Service Commission and created the TRA to assume many of its functions (1995 Tenn. Pub. Acts ch. 305). The original TRA had three directors appointed individually by the Governor, the Speaker of the Senate, and the Speaker of the House. In 2002, the General Assembly added a fourth director jointly appointed by the Governor and both Speakers (2002 Tenn. Pub. Acts ch. 826). Unlike the 1995 act, which clearly abolished the old commission, the 2002 amendment did not create a new agency; it modified the existing TRA.

What Chapter 1070 did

Chapter 1070 of 2012 Tenn. Pub. Acts substantially changed the composition, compensation, qualifications, and duties of the TRA directors, created an executive director position, and required an annual report to designated legislative and executive officials. But it did not abolish the existing TRA. The act reconstituted appointment methods rather than starting fresh.

Section 65-1-101(h) (added by Chapter 1070) establishes terms for five part-time directors after July 1, 2012:

• Subsections (h)(1) and (2): the two existing Speaker-appointed directors continue until June 30, 2014 (a continuity provision indicating the previous TRA is still the same entity).
• Subsection (h)(3): two new directors jointly appointed by the Governor and Speakers, with "terms commencing on July 1, 2012" (described as entirely new positions).

Who must be confirmed and when

For currently-serving directors continuing under § 65-1-101(h)(1), confirmation is not required for their existing terms. Confirmation will be required when their terms expire in 2014 or if any vacancies arise.

For appointments made in session, § 65-1-101(f) requires confirmation "by joint resolution adopted by each house of the general assembly within thirty (30) days after the appointment."

For vacancies that arise when the General Assembly is out of session, § 65-1-101(g) requires the appointing authority to fill the vacancy by appointment. The appointee "shall serve the unexpired term, unless the appointment is not confirmed within thirty (30) days after the general assembly convenes following the appointment to fill such vacancy."

Validity of interim decisions

The TRA position formerly filled by the Governor (now vacant) and the two new joint-appointment positions must be filled as vacancies under § 65-1-101(g). Once an appointee takes office while the General Assembly is out of session, the appointee "shall serve the unexpired term" pending confirmation. Section 65-1-101(g) gives the appointee full statutory authority to act unless and until the appointment fails to be confirmed.

The opinion cites State ex rel. Newsom v. Biggers (Tenn. 1995) for the proposition that interim appointees awaiting confirmation are TRA directors both de facto and de jure with full powers. Their decisions are not subject to legal challenge solely because they hold their offices pending confirmation. A decision could be challenged on other grounds (substantive merits, procedural defects), but the bare fact of pre-confirmation appointment does not invalidate it.

Common questions

Did the TRA actually become a different agency on July 1, 2012?

According to this opinion, no. Chapter 1070 reorganized the TRA but did not abolish and re-create it. The TRA continues as the same legal entity originally created in 1995, with reconstituted membership.

Can the two existing Speaker-appointed directors keep serving without going through reconfirmation?

Yes, until their terms expire on June 30, 2014. The transition provisions in § 65-1-101(h)(1) and (2) preserve their continuing terms.

What happens if a new joint appointee is not confirmed by the General Assembly?

The appointee serves until the confirmation vote fails. Under § 65-1-101(g), failure to confirm within 30 days after the General Assembly convenes following the appointment ends the appointee's authority. Until that point, the appointee's decisions are valid.

Could a regulated utility challenge a TRA order issued between July 1, 2012, and January 2013 by arguing the directors weren't yet confirmed?

According to this opinion, no, not based solely on the pre-confirmation status. The directors hold office de facto and de jure under State ex rel. Newsom v. Biggers, and their official decisions are valid pending confirmation.

Does this opinion affect the TRA's underlying regulatory authority over utilities?

Not directly. Chapter 1070 left the TRA's core regulatory duties (under Tenn. Code Ann. § 65-1-113 and related provisions) essentially intact. The 2012 changes focused on TRA governance and appointment, not regulatory scope.

Is this opinion still applicable to TRA appointments today?

The opinion analyzed the 2012 statutory framework. Any later amendments to Title 65, Chapter 1, would require fresh analysis. Verify current law and any later AG opinions before relying on this analysis.

Citations

• Tenn. Code Ann. § 65-1-101(f) (in-session confirmation)
• Tenn. Code Ann. § 65-1-101(g) (vacancies, post-recess confirmation)
• Tenn. Code Ann. § 65-1-101(h) (Chapter 1070 transition)
• Tenn. Code Ann. § 65-1-113 (TRA duties)
• 1995 Tenn. Pub. Acts, ch. 305 (creating TRA, abolishing PSC)
• 2002 Tenn. Pub. Acts, ch. 826 (fourth director)
• 2012 Tenn. Pub. Acts, ch. 1070 (Chapter 1070 reorganization)
• State ex rel. Newsom v. Biggers, 911 S.W.2d 715 (Tenn. 1995)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-071.pdf

Original opinion text

July 13, 2012
Opinion No. 12-71
Tennessee Regulatory Authority

QUESTIONS

1. Is the Tennessee Regulatory Authority ("TRA") a self-perpetuating legal entity, or do the extensive changes to the TRA's authority under Chapter 1070 of 2012 Tennessee Public Acts ("Chapter 1070") equate to the creation of an entirely new Authority?

2. Is the confirmation of each director by the General Assembly required by Chapter 1070 as a condition which must be met prior to serving as a TRA director?

3. Are the directors described in Tenn. Code Ann. § 65-1-101(h)(2) & (3), as amended by Chapter 1070 effective July 1, 2012, considered new appointments and, if so, could these positions be filled as vacancies pursuant to Tenn. Code Ann. § 65-1-101(g)? If the positions cannot be filled as vacancies, how would this impact any decisions the directors render between July 1, 2012, and January 2013?

4. If the positions can be filled as vacancies, and the directors described in Tenn. Code Ann. § 65-1-101(h)(2) & (3) are not confirmed by the General Assembly when they go back into session, would the decisions the directors render between July 1, 2012, and January 2013 be subject to challenge?

OPINIONS

1. The TRA, first created by 1995 Tenn. Pub. Acts, ch. 305, was not abolished by 2012 Tenn. Pub. Acts, ch. 1070, and is thus a continuing legal entity of Tennessee government.

2. No. Confirmation by the General Assembly is not required for the two current TRA directors whose terms continue until June 30, 2014. A director appointed after Chapter 1070 takes effect will begin service of his or her term upon appointment but ultimately must be confirmed within thirty days of appointment or, if the General Assembly is not in session at that time, within thirty days after the General Assembly convenes following the appointment.

3. The director position described in Tenn. Code Ann. § 65-1-101(h)(2) is not new. Because the position is currently vacant, it will be filled as a vacancy. The positions described in Tenn. Code Ann. § 65-1-101(h)(3) are new positions and thus must be filled as vacancies. Because all positions described in Tenn. Code Ann. § 65-1-101(h)(2) and (3) will be filled as vacancies, confirmation will be required for those appointees. Decisions made between July 1, 2012, and January 2013 by any directors properly appointed after July 1, 2012, will be valid. Such decisions will not be subject to challenge solely on the basis that a director appointed and serving between July 1, 2012, and January 2013 was appointed subject to confirmation after the General Assembly convenes in January 2013, even if such a director fails to be confirmed.

4. The decisions made by any director properly appointed between July 1, 2012, and January 2013 will not be subject to a legal challenge based solely on the director's authority to hold office.

ANALYSIS

1. & 2. In 1995 the General Assembly abolished the Tennessee Public Service Commission and created the Tennessee Regulatory Authority to assume many of the Commission's functions. See 1995 Tenn. Pub. Acts, ch. 305. The TRA originally had three directors appointed individually by the Governor, the Speaker of the Senate, and the Speaker of the House of Representatives. Id. §§ 4 & 5.

In 2002 the General Assembly amended the TRA's originating statute to add a fourth director appointed jointly by the Governor and the two Speakers. 2002 Tenn. Pub. Acts, ch. 826. Unlike the 1995 legislation, which clearly indicated that the old Public Service Commission was being abolished, the 2002 legislation did not abolish the original TRA and create a new agency.

In 2012, the General Assembly enacted Chapter 1070, which became effective on July 1, 2012. 2012 Tenn. Pub. Acts, ch. 1070. This enactment makes substantial changes in the composition, compensation, qualifications, and duties of the TRA directors. Id.

Like the 2002 legislation, this enactment does not indicate any intent by the General Assembly to abolish the existing TRA and create a new agency; rather Chapter 1070 reconstitutes the method of appointment of the directors, creates an executive director of the TRA, and requires the filing of an annual report by the TRA with certain designated legislative and executive officials. See id. §§ 1-11. Nor does Chapter 1070 change the key duties performed by the TRA, which remain essentially the same as before passage of Chapter 1070. See Tenn. Code Ann. § 65-1-113.

Chapter 1070 added Tenn. Code Ann. § 65-1-101(h), which establishes the terms of the five part-time directors who will head the TRA after July 1, 2012. 2012 Tenn. Pub. Acts, ch. 1070, § 1. Subsections (h)(1) and (2) declare that the existing directors appointed by the two Speakers and the Governor will continue to serve as two of the five part-time directors until June 30, 2014, which is a further indication that the previously-constituted TRA will continue to exist. Id. Subsection (h)(3) provides for the terms for the two directors who will be appointed jointly by the Governor and Speakers. Id. The single jointly-appointed director position that existed under the 2002 law is currently vacant. The new law indicates that the two positions to be appointed jointly are to be considered entirely new, given they are referred to not as "existing" directors but rather as directors with "terms commencing on July 1, 2012." 2012 Tenn. Pub. Acts, ch. 1070, § 1. See also Tenn. Code Ann. § 65-1-101(h)(3).

In sum, currently two directors are in office, a director appointed in 2008 by the Speaker of the House and a director appointed in 2009 by the Speaker of the Senate to complete the unexpired term of a director appointed in 2008. Tenn. Code Ann. § 65-1-101(h)(1) reflects this situation. The position appointed by the Governor is vacant. Accordingly, that position and the two positions filled by joint appointment are currently vacant and need to be filled.

Chapter 1070 provides for the continuation in office, without reappointment, of the two currently-serving directors. 2012 Tenn. Pub. Acts, ch. 1070 § 1. See also Tenn. Code Ann. § 65-1-101(h)(1). Confirmation is not required for those two individuals. Id. Upon expiration of their terms on June 30, 2014, or should a vacancy occur in the normal course of events, confirmation will be required for the Speakers' subsequent appointments. See Tenn. Code Ann. § 65-1-101(g).

3. & 4. Since the position of the "existing director appointed by the governor" is vacant, it will be filled as a vacancy in accordance with the new law, as will the positions appointed jointly. Thus, all positions except those currently held by the two directors previously appointed by the two Speakers will be filled as vacancies, and all such appointments will require confirmation.

If an appointment is made while the General Assembly is in session, Tenn. Code Ann. § 65-1-101(f) provides that it "shall be confirmed by joint resolution adopted by each house of the general assembly within thirty (30) days after the appointment." Subsection (g) further provides:

Any vacancy on the authority shall be filled by the original appointing authority for such position to serve the unexpired term and each appointment shall be confirmed in the same manner as the original appointment. If, however, the general assembly is not in session and a vacancy occurs, the appropriate authority shall fill such vacancy by appointment and the appointee shall serve the unexpired term, unless the appointment is not confirmed within thirty (30) days after the general assembly convenes following the appointment to fill such vacancy.

Tenn. Code Ann. § 65-1-101(g) provides for the filling of any vacancies between July 1, 2012, and the reconvening of the General Assembly in January 2013 and contemplates the possibility that an appointee could fail to win confirmation, either within thirty days of the appointment or thirty days of the reconvening of the General Assembly following the appointment.

Tenn. Code Ann. § 65-1-101(g) states that any director appointed while the General Assembly is out of session "shall serve the unexpired term," thus permitting an appointee to serve until he or she fails to be confirmed. Given the statute cloaks these directors with full authority to perform their statutory responsibilities until and unless they fail to be confirmed, any actions such directors take while in office will not be subject to legal challenge on the basis that the directors are not authorized to hold office.

As to the two new directors who will be jointly appointed to complete the terms beginning on July 1, 2012, their appointments while the General Assembly is not in session must be filled as vacancies under Tenn. Code Ann. § 65-1-101(g). These appointees awaiting confirmation will be TRA directors both de facto and de jure, and they will have the full powers of that office. See State ex rel. Newsom v. Biggers, 911 S.W.2d 715, 718 (Tenn. 1995). Accordingly, any official decisions rendered by such properly-appointed directors awaiting confirmation will be valid.

ROBERT E. COOPER, JR.
Attorney General

WILLIAM E. YOUNG
Solicitor General

JONATHAN N. WIKE
Senior Counsel

Requested by:
The Honorable Craig Fitzhugh
State Representative
33 Legislative Plaza
Nashville, Tennessee 37243