Disposition of Surplus State Property by a Council of Government

Re: Advisory Opinion: Disposition of surplus state property
by a Council of Government (COG); 42 USC 3000 et. seq,
45 CFR Part 92

Dear Representative Goodwin:

Pursuant to the Older Americans Act (42 U.S.C. 3000, et seq.), the State of North Carolina has named the Division of Aging as the state’s sole agency for aging programs. The Division has established regional programs, among them the Pee Dee COG, to serve aging persons across the state. The Division made a subgrant to the Pee Dee COG, which was used in part, to buy equipment for use in the aging program. The funds used to purchase the equipment in question were awarded to the Division of Aging pursuant to Subchapter III of the Older Americans Act (42 USC 3021, et seq.) You have requested our opinion concerning the disposition of surplus state property in the possession of the Pee Dee COG now that the Pee Dee COG is being dissolved and no longer has need for the property.

We have reviewed both the federal and state statutes and regulations which apply to the property at the Pee Dee COG.

45 CFR Part 92 is the federal regulation which ensures uniform administration of grants and cooperative agreements entered into by state governments and the U.S. Department of Health and Human Services (USDHHS). 45 CFR 92.32 controls the use, management, and disposition of equipment purchased with grant money awarded to the Division by USDHHS. With regard to equipment acquired under a grant to a State, 45 CFR 92.32(b) provides in relevant part:

States. A state will use, manage, and dispose of equipment acquired under a grant by the State in accordance with State law Representative Wayne Goodwin March 14, 2001 page 2

and procedures. Other grantees and subgrantees will follow paragraphs (c) through (e) of this section. 45 CFR 92.32(b) (Emphasis added.)

45 CFR 92.32 (e)(1) provides as follows:

Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the property will be made as follows: … (1) Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency. (Emphasis added.)

The Division of Aging contends that the disposition instructions of 45 CFR 92.32(b) apply and that the property should be disposed of in accordance with state law and procedure. The Executive Director of Pee Dee contends that the disposition instructions of 45 CFR 92.32(e)(1) apply, and therefore the Pee Dee COG should be allowed to buy the equipment from the Division of Aging. In the instant situation, a grant was made by the USDHHS to the State ( the Division of Aging). Because the federal grant was made to the State and the State made its own award to Pee Dee, we are of the opinion that the state surplus property rules apply pursuant to 45 CFR 92.32(b).

Even if 45 CFR 92.32(e)(1) did apply to this equipment, it appears the predicate for disposition of property under this regulation is missing. This disposition instruction only applies when the equipment is “no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency.” In other words, the disposition instruction applies only where there is no eligible agency with a need for the equipment.

In this case, the Division of Aging has indicated a need for the property. Assuming the Division does need the property, the predicate for Pee Dee COG retaining the property would not exist. It is noted that even if the aging program did not need the equipment, a determination would have to be made as to whether or not there are other state or local programs currently or previously supported by federal money that could make use of the equipment.

Representative Wayne Goodwin March 14, 2001 page 3

We express no opinion as to whether the equipment is needed for any other Federal programs or as to the value of the equipment in question.

Very truly yours,

Reginald L. Watkins
Senior Deputy Attorney General

Roy A. Giles, Jr.
Special Deputy Attorney General

Richard Slipsky
Special Deputy Attorney General

Teresa L. White
Assistant Attorney General

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