Governor Christie made the overhaul of the Council on Affordable Housing (“COAH”) one of his top campaign priorities in 2009.  Once elected, he formed a task force to evaluate COAH’s effectiveness.  After he vetoed S1, the legislatures proposed overhaul of COAH, he unilaterally abolished COAH and transferred all of its powers to the Department of Community Affairs (“DCA”).  The Governor’s action was challenged by Fair Share Housing Center (“FSHC”) as soon as it took effect.  The Appellate Division agreed with FSHC and invalidated the Governor’s action.  In In re Plan for the Abolition of the Council on Affordable Housing, (A-127-11, decided July 10, 2013), the Supreme Court upheld the Appellate Division.

The challenge to the Governor was based on the legal authority used to justify the action.  The Governor relied upon the Reorganization Act, N.J.S.A. 52:14C-1 et. seq. (the “Act”), to give the DCA the powers provided to COAH by the Fair Housing Act (“FHA”).  The Act authorizes the Governor to examine the organization of all agencies “of” the executive branch to determine what changes are needed to promote effective management and increased efficiency.  The Act requires the Governor to prepare a Reorganization Plan and submit it to the Legislature.  If the Legislature does not disapprove of the Plan within sixty days, it becomes effective.  Under the Act, however, the Governor’s powers are limited to rearranging what already exists.  He cannot create a new principal department or abolish an existing department.

The Court looked to language of the FHA, which created COAH, to determine whether the Governor’s power under the Act applied to COAH.  The FHA established COAH “in, but not of” the DCA.  Such language complies with the Constitutional requirement that all agencies be allocated within principal departments of State government.  The Court pointed out that the “in, but not of” language has previously been used by the Legislature to make an agency independent of the executive branch.  The Court had previously upheld the independence of agencies established in this manner. The Court stated that the intent to keep COAH independent of the executive branch was further evidenced by the statutory structure of the COAH board.  The statute specifically defines the background, including the political party affiliation, of members of the COAH board and allows for removal of a board member only “for cause.”  The Court held that the proposed reorganization would alter this structure by replacing the COAH Board with a cabinet member and giving the governor plenary power over its operation.  Thus, the balance of the board established by the FHA would not survive under the Reorganization Plan.

The Court held that the Reorganization Act does not allow the Governor to abolish an agency that is “in, but not of” the executive branch.  It held that Reorganization Plan No. 001-2011 is outside of the scope of the Governor’s power and invalidated the Plan.  It stated that COAH can only be reorganized by a new law adopted consistent with the Constitution.  COAH is to remain as established under the FHA and continue to be an independent agency within the executive branch.