Reply to: LORINZO L. JOYNER INSURANCE SECTION
(919) 716-6610 Fax:(919) 716-6757
June 21, 1999
Sheila Stafford Pope General Counsel Secretary of State 300 N. Salisbury Street Raleigh, North Carolina 27603-5172
Re: Advisory Opinion; Authority of the Secretary of State to Apply for and Accept Federal Grants and Private Gifts; N.C. Gen. Stat. § 55A-1 et seq.
Dear Ms. Pope:
By letter dated May 17, 1999, you request an opinion as to whether a specific grant of authority to the Secretary of State is necessary for her to accept grants from governmental or private sources in the manner specified in House Bill 319. Such grants would be used to aid in the operation and development of nonprofit corporations pursuant to N.C. Gen. Stat. § 55A-1 et seq. It is our opinion that specific legislative authorization is not necessary for the Secretary of State to apply for and accept grants and gifts to be used to effectuate the purposes of the Nonprofit Corporation Act.
It should be noted that while the legislature has expressly conferred upon some agencies the authority to apply for and accept grants from governmental and private sources, the Secretary of State is among those agencies and offices which do not have that express grant of authority. It is, therefore, necessary to determine whether that authority is otherwise provided by law.
The general rule is that an administrative agency has only those powers expressly conferred upon it by statute or constitution, and such as are implied by its grant of authority. Implied powers are those that are reasonably necessary in order to carry out the powers expressly granted. The reason for implied powers is that the legislature cannot foresee all the problems incidental to carrying out the duties and responsibilities of the agency. Equipment Co. v. Hertz Corp. and Contractors, Inc. v. Hertz Corp., 256 N.C. 277, 123 S.E.2d 802 (1961). See also, 2 Am. Jur. 2d, Administrative Law, §§ 55, 62.
A review of the nature of the duties and responsibilities of the Secretary as they relate to the Nonprofit Corporation Act reveals that she is authorized to oversee nonprofit corporations to ensure that they are created and operated in conformity with the provisions of N.C. Gen. Stat. § 55A – 1 et seq. She may conduct investigations to determine if a nonprofit corporation is subject to or has complied with all the provisions of the Act and, under appropriate circumstances, may Sheila Stafford Pope June 21, 1999 Page 2
administratively dissolve or revoke a certificate of authority of a nonprofit corporation. See, Chapter 55A, Articles 14 and 15. Finally, the Secretary of State has the power reasonably necessary to perform the duties required of her by the Chapter. N.C. Gen. Stat. § 55A-1-30.
It is our opinion that the oversight responsibilities of the Secretary of State are clearly designed to further the purposes of the Act, i.e., to aid in the creation, development and continued operation of nonprofit corporations governed by Chapter 55A of the General Statutes. We further believe that the power to accept grants from federal and private entities may be deemed reasonably necessary to carry out those responsibilities.
A review of pertinent legislative appropriations bills suggests that the legislature intends that every agency have the authority to accept financial assistance from both federal and private sources. For instance, in 1935 the General Assembly ratified "An Act Authorizing The State of North Carolina, and Its Several Agencies and Commissions … to Accept and Receive Loans, Gifts and Other Assistance from the United States Government and Other Agencies." See 1935 Sess. Laws, c. 479. Section 2 of Chapter 479 of that Act is codified as N.C. Gen. Stat. § 143-163 and provides in pertinent part:
The State of North Carolina, and its several departments, institutions, agencies and commissions are hereby authorized to accept and receive loans, grants and other assistance from the United States government, departments and/or agencies thereof, for its use, and to receive like financial and other aid from other agencies in carrying out any undertaking which has been authorized by the Governor of North Carolina, with the approval of the Council of State.
The 1935 Act contemplates that such federal and private financial aid will be for purposes authorized by the Governor and approved by the Council of State. However, we have conducted an exhaustive review and have found no instance where this approval procedure has been utilized. Instead, there have been numerous legislative enactments subsequent to the 1935 Act which have as a necessary predicate an agency’s general authority to accept such aid so long as it is reasonably necessary to perform the duties and responsibilities conferred by statute. None of these subsequent acts mentions the procedure referenced in the 1935 Act.
For instance, it is the practice of the General Assembly to include a general provision in each appropriations bill which expressly recognizes that all agencies may receive gifts and grants that are unanticipated [by the General Assembly] and are for specific purposes. The provision typically excludes such gifts and grants from being used as a basis for decreasing the amounts allocated to such agencies from the General Fund. See, for example, the Continuation Budget Operations Appropriations Act of 1995, 1995 Sess. Laws, c. 324, s. 6.1 and the Current Operations and Capital Improvements Appropriations Act of 1997, 1997 Sess. Laws., c. 443, s. 7(a). It is worth noting that the 1997 Act amended N.C. Gen. Stat. § 143-34.2 to require that Sheila Stafford Pope June 21, 1999 Page 3
under certain circumstances, agencies must provide information related to their applications for nonstate funds (including federal funds) to the Office of State Budget and Management and the Advisory Budget Commission. Again, there is no requirement that the Governor or Council of State have approved the undertaking or purpose for which the aid is being requested.
It is our opinion that statutes enacted after the 1935 Act reflect an intent by the General Assembly to independently confer upon all State agencies the authority to accept federal grants and private gifts without obtaining the authorization of the Governor and approval of the Council of State. It may be appropriate for the General Assembly to clarify this issue by explicitly granting blanket authority to all State agencies to accept gifts and grants so long as they are reasonably necessary to effectuate an express power or duty. We do not believe, however, that its failure to do so is a bar to the Secretary’s acceptance of grants and gifts.
Finally, we note that the authority to accept grants and gifts when reasonably necessary to carry out duties and responsibilities conferred by statute is not without limits. Funds received from grantors, whether governmental or private entities, take on the character of State funds and are generally subject to restrictions applicable to state expenditures. The Secretary must comply with the terms, conditions, and limitations of grants applied for and accepted and must expend all such funds in compliance with the Executive Budget Act. Notably, the Secretary of State cannot accept grants under terms which are contrary to State law. See, generally, N.C. Gen. Stat. §§ 143-2, 143-83. Moreover, as prescribed by N.C. Gen. Stat. § 147-64.7(a)(4): "All contracts or grants entered into by State agencies … shall include, as a necessary part, a clause providing access [to persons and records by the State Auditor] …."
In sum, it is our opinion that the Secretary of State has the power, without further legislative authorization, to accept federal grants and private gifts to assist her in implementing her duties under the Nonprofit Corporation Act so long as those grants or gifts are not contrary to state law and so long as she complies with the applicable provisions of the Executive Budget Act.
We hope this response addresses your concerns.
Yours very truly,
Reginald L. Watkins Senior Deputy Attorney General
Lorinzo L. Joyner Special Deputy Attorney General DATE: June 21, 1999 REQUESTED BY: Sheila Stafford Pope, General Counsel, Secretary of State AUTHOR: Reginald L. Watkins
Lorinzo L. Joyner
SUMMARY: The Secretary of State has the power, without further legislative authorization, to accept federal grants and private gifts to assist her in implementing her duties under the Nonprofit Corporation Act so long as those grants or gifts are not contrary to state law and so long as she complies with the applicable provisions of the Executive Budget Act.