State Agencies; Government-in-Business Act; Interagency Assistance

Subject:

State Agencies; Government-in-Business Act; Interagency Assistance

Requested By:

George E. Tatum, Register of Deeds Cumberland County

Question:

Does the TACIT program, offered by North Carolina State University’s Department of Urban Affairs to units of local government to educate employees with respect to selecting appropriate computer equipment, violate the provisions of N.C.G.S. § 66-58?

Conclusion:

No.

The Center for Urban Affairs and Community Services was created in 1966 by North Carolina State University to provide instruction, research and other educational services to federal, state and local government agencies and organizations. As a part of its role to educate and assist local government agencies, and in response to a growing need on the part of local government for assistance in determining the nature and types of computer systems needed, the Center established TACIT, a program designed to educate local government agencies with respect to identifying their needs and selecting appropriate computer and information processing systems. TACIT acts as a neutral consultant to train local government employees to evaluate the various systems available, to prepare requests for proposals, to make appropriate selections, and subsequently to do follow-up evaluations of their selections. TACIT does not make decisions for the agencies involved; its purpose is to educate the employees to make their own decisions with regard to selection of a system.

You have written, as Register of Deeds in a county which has contracted with TACIT for its services, and have asked whether the TACIT program violates the provisions of N.C.G.S. § 66

58.

N.C.G.S. § 66-58, commonly referred to as the "Umstead Act" has been described by the North Carolina Supreme Court as embodying the principle that "it is not the function of government to engage in private business." In Re University of North Carolina, 300 N.C. 563, 577, 268 S.E.2d 472, 480 (1980). The statute, in pertinent part, provides as follows:

Except as may be provided in this section, it shall be unlawful for any unit, department or agency of the State government, or any division or subdivision of any such unit, department or agency, or any individual employee or employees of any such unit, department or agency in his, or her, or their capacity as employee or employees thereof, to engage directly or indirectly in the sale of goods, wares or merchandise in competition with citizens of the State, . . . or to maintain service establishments for the rendering of services to the public ordinarily and customarily rendered by private enterprise, . . . or to purchase for or sell to any person, firm or corporation any article of merchandise in competition with private enterprise.

At the outset, we note that TACIT does not purport to "engage directly or indirectly in the sale of goods, wares or merchandise" nor to "purchase for or sell to any person, firm or corporation any article of merchandise." cf. Mullen v. Town of Louisburg, 225 N.C. 53, 33 S.E.2d 484 (1945) (purchase of electricity not purchase of "apparatus," "materials" or "equipment" since latter terms connote types of tangible personal property). Thus, TACIT violates the statute, if at all, only if it renders "services to the public ordinarily and customarily rendered by private enterprise."

N.C.G.S. § 66-58.

The guiding principle in construing the language of a statute is that "the intent of the legislature controls the interpretation" of the statute. Stevenson v. City of Durham, 281 N.C. 300, 303, 188 S.E.2d 281, 283 (1972); In Re Hardy, 294 N.C. 90, 240 S.E.2d 367 (1978). In order to ascertain the will of the legislature, due consideration must be given to "the language of the statute, the spirit of the act, and what the act seeks to accomplish." Stevenson v. City of Durham, 281 N.C. at 303, 188 S.E.2d at 283. Applying these well-established principles of statutory construction, we conclude that the program as set up by the Center for Urban Affairs does not come within the language or the spirit of the Umstead Act’s prohibitions. TACIT provides to units of local government the education and training necessary to permit employees to make intelligent decisions concerning their needs for and selection of computer systems. The program is designed to help local governments improve management and increase productivity. The Umstead Act, by its language, prohibits the extension of services to the public; it does not forbid the rendering of services to other units or agencies of government. Furthermore, a careful reading of the statute and its numerous exceptions reveals that the Act is intended to proscribe those activities of government which are not incidental to the legitimate function of the agency involved, but rather intrude upon those areas which have traditionally been associated with private enterprise. See In Re University of North Carolina, 300 N.C. 563, 268 S.E.2d 472. Under the Constitution, Article IX, §§ 8 and 9, and the statutes, N.C.G.S. §§ 116-1 and 11, education is in fact the "business" of the University of North Carolina and its constituent institutions. Where, as here, the activities involved are, in fact, themselves legitimate functions of the governmental agency, the Act has no application.

In conclusion, on the facts as presented, TACIT’s extension of consulting and educational services to units of local government constitutes a valid exercise of a governmental function and does not violate the provisions of the Umstead Act.

LACY H. THORNBURG ATTORNEY GENERAL

Laura E. Crumpler Assistant Attorney General