The opinion of the court was delivered by: Frye, Justice.
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision of the Court of Appeals, 124 N.C. App. 542, 478 S.E.2d 28 (1996), affirming an order entered by Stephens (Donald W.), J., on 6 September 1995 in Superior Court, Wake County. Heard in the Supreme Court 10 September 1997.
Broughton, Wilkins, Webb & Sugg, P.A., by R. Palmer Sugg, for petitioner-appellee. Michael F. Easley, Attorney General, by Grayson G. Kelley, Special Deputy Attorney General, Robert O. Crawford, III, Assistant Attorney General, and Sarah Ann Lannom, Associate Attorney General, for respondent-appellant.
Both this case and a companion case, N.C. Dep't of Transp. v. Hodge, 559PA96 (opinions filed simultaneously), raise the issue of whether the Governor properly designated certain State employee positions as policymaking exempt under N.C.G.S. § 126-5.
The issue in this case is whether the position of Director of the Highway Beautification Program (HBP) in the Department of Transportation (DOT) may be designated by the Governor as policymaking exempt pursuant to N.C.G.S. § 126-5. We must determine whether the Court of Appeals was correct in affirming an order of the superior court sitting in review of a final decision of an administrative agency. We conclude that the Court of Appeals erred in affirming the superior court's order, which reversed the final decision of the State Personnel Commission (Commission).
The State Personnel Act (SPA) governs personnel administration for most employees of state agencies. N.C.G.S. §§ 126-1 to -5 (1995). The SPA provides certain protections for state employees subject to its provisions. However, some state employees are not protected by the SPA. Elected officials, public school superintendents, principals, teachers, and other public school employees, for example, are not subject to most of the provisions of the SPA. N.C.G.S. § 126-5(c2)(1).
In addition, N.C.G.S. § 126-5(d)(1), as it existed at all times relevant to this appeal, permits the Governor to designate up to 1.2% of the total number of full-time positions in the DOT as policymaking exempt. He may also request that additional policymaking positions be designated as exempt. N.C.G.S. § 126-5(d)(2). However, hearing officers, "by whatever title," may not be designated as policymaking exempt. N.C.G.S. § 126-5(d)(7). The statute defines a policymaking position as "a position delegated with the authority to impose the final decision as to a settled course of action to be followed within a department, agency, or division." N.C.G.S. § 126-5(b). No further guidance is given by the statute as to what is or is not a policymaking position, although a procedure is set forth for notification of the affected parties.
An employee whose position is designated policymaking exempt under the SPA is not left without options. The employee has priority consideration for other positions, as vacancies arise, for which he or she is qualified. N.C.G.S. § 126-5(e)(1); see also N.C. Dep't of Correction v. Hill, 313 N.C. 481, 485, 329 S.E.2d 377, 379 (1985) (interpreting "priority" in N.C.G.S. § 126-5(e) to mean the right to an automatic offer of a position which becomes available). Further, the statute provides that whether a position was properly designated policymaking exempt shall be investigated by the Office of State Personnel (OSP), and the dispute shall be resolved as provided in article 3 of chapter 150B of the North Carolina General Statutes. N.C.G.S. § 126-5(h). An employee who contends that his or her position was wrongly designated as policymaking exempt is entitled to a contested case hearing under the Administrative Procedure Act. N.C.G.S. § 150B-22 (1995).
Contested case hearings are conducted by the Office of Administrative Hearings (OAH) and are heard by an Administrative Law judge (ALJ). The ALJ makes a recommendation to the Commission, N.C.G.S. § 150B-34 (1995), and the Commission then makes a final decision based upon the record from the OAH, N.C.G.S. § 150B-36 (1995). If the employee or state agency is aggrieved by the Commission's final decision, either party may petition the superior court for judicial review, N.C.G.S. § 150B-43 (1995), as petitioner Powell did in this case. Review is then conducted in accordance with N.C.G.S. § 150B-51(b).
On 25 May 1993, Powell filed a petition for a contested case hearing in the OAH. She also requested that the OSP investigate the propriety of designating her position as policymaking exempt. In an investigation report dated 22 June 1993, the State Personnel Director notified the Secretary of the DOT that the position of Director of the HBP was properly designated as policymaking exempt.
A contested case hearing was held on 2 and 28 February 1994 before Senior Administrative Law Judge Fred G. Morrison, Jr. The ALJ made findings of fact and Conclusions of law and entered a recommended decision in which he recommended that the designation of Powell's position as exempt be affirmed. On 20 September 1994, the Commission rendered its final decision, adopting most of the ALJ's findings of fact as follows:
1. Governor James G. Martin, a Republican, served as Governor of North Carolina from January of 1985 to January of 1993. During those years, the position of Director of the Highway Beautification Programs in the Department of Transportation was not exempted from the provisions of the State Personnel Act.
2. Petitioner Betsy Johnson Powell, a Republican, began her employment with the State of North Carolina in February of 1989, at the Employment Security Commission. In August of 1989, she transferred to Respondent [(DOT)] to serve as Director of its Highway Beautification Programs. Her pay grade was 72. This is a professional position requiring minimum supervision for routine work. Review of initiatives or materials developed by the position is necessary. Progress is monitored through the Performance Management System. The individual in this position interfaces with DOT staff at all levels of the organization, local government officials, and the general public.
3. Ms. Powell's job responsibilities were broken down as follows:
A. (20%) Managing, organizing and directing the Beautification Programs staff responsibilities including the Adopt-A- Highway Program and support staff responsibilities.
B. (20%) Implementation of the North Carolina Department of Transportation Recycling Plan. This includes compliance with all federal and state laws now in place or planned for later implementation.
C. (20%) Training of department personnel in effective means of source reduction, recycling, and reuse of recycled products.
D. [10%] Keep abreast of federal and state legislation regarding mandate usage of recycled or solid waste materials. Will attend in-state and out-of-state recycling seminars/conventions and litter abatement in order to both develop and implement innovative solutions to recycling issues.
E. (10%) Maintain records of compliance and success of recycling efforts and prepare reports for federal, state, and litter prevention efforts and department use.
F. (10%) Liaison to local government beautification councils and community beautification organizations. G. (5%) Advise management changes and opportunities in the fields of recycling and litter abatement.
H. (5%) Liaison to Governor's Highway Beautification Council.
4. The Governor's Highway Beautification Council consists of members appointed by the Governor. During the Martin administration, the wife of former Lieutenant Governor James Gardner, a ...