Can Idaho Correctional Industries sell its prison-made goods to a private retailer or wholesaler that just wants to use the goods itself, instead of reselling them to the public?
Plain-English summary
The Director of the Idaho Department of Correction asked whether Idaho Correctional Industries (ICI) could sell its products to private retailers or wholesalers that (a) did not normally sell that kind of product or (b) did not intend to resell what they bought from ICI. The AG said no.
Idaho Code § 20-413 lets ICI sell to "retail or wholesale establishments within the state." Idaho Code § 20-414 then provides that ICI products "shall be solely and exclusively for public or nonprofit organization use," with one carve-out for the § 20-413 sales channel. Read literally, "retail or wholesale establishment" might cover any business that happens to be a retailer or wholesaler, even when the purchase has nothing to do with that side of its operation. But that reading would let private businesses buy ICI goods for their own end use, which the AG concluded could not have been the legislative intent.
The history confirmed it. The original 1974 statute said ICI could contract "to sell products manufactured by correctional industries to retail establishments within the state for resale to the general public." The 1978 Senate Bill 1405 added "or wholesale" to "retail" and removed "for resale to the general public." But the Statement of Purpose and the committee testimony made clear the only point of the 1978 change was to let ICI deal with wholesalers (who would then sell to retailers) rather than only with retailers. Nothing suggested an intent to authorize private end-use purchases.
The conclusion: ICI products may be sold to retail or wholesale establishments only when the purchaser intends to resell them. Sales to retail or wholesale buyers who do not stock that line of product, or who plan to use the items themselves, are not authorized.
Currency note
This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
The Correctional Industries Act has been amended periodically since 2001. Anyone administering ICI sales channels today should consult the current versions of Idaho Code §§ 20-413 and 20-414, and confirm whether the resale-to-public requirement reflected in this opinion is still the operative reading.
Common questions
Q: Why does Correctional Industries exist as a regulated channel at all?
A: Prison industries programs put inmates to work making goods for state and local government use, charitable organizations, and certain private channels, while limiting the scope to avoid undercutting private-sector employers. Idaho's framework, like most states', restricts where the goods can flow. The general rule is public/nonprofit use, with a narrow exception for sales through retailers and wholesalers to the general public.
Q: What was the absurd-result problem?
A: A literal reading of "retail or wholesale establishment" would let a hardware store buy ICI desks for its own breakroom, or a wholesaler buy ICI license plates for use by its own delivery trucks. There is no apparent reason why retailers and wholesalers, but no other private buyers, should be allowed to purchase ICI goods for their own use. The only sensible reading is that "retail or wholesale establishment" is shorthand for the resale channel.
Q: Are there other exceptions?
A: Yes. Idaho Code § 20-414 also allows by-products and surpluses of agricultural and animal husbandry enterprises (run by the Department of Correction's farm operations) to be sold to private persons at private sale, under rules prescribed by the Board of Correction. That exception is on the face of the statute and is unaffected by this opinion.
Q: How does this opinion bind Correctional Industries?
A: AG opinions are persuasive but not binding precedent. ICI was free to follow this reading or to seek a clarifying amendment from the Legislature. As of the opinion's date, ICI was effectively guided to refuse sales to private retail or wholesale buyers who would not resell.
Background and statutory framework
The Correctional Industries Act, Idaho Code §§ 20-401 et seq., authorizes the Idaho Board of Correction to put inmates to work producing goods and services. Idaho Code § 20-413 limits the customer base: government agencies, nonprofits, public uses, the federal government, and "retail or wholesale establishments within the state." Idaho Code § 20-414 reinforces that limit by providing that ICI products "shall be solely and exclusively for public or nonprofit organization use," with the § 20-413 channel as the only exception for non-public purchasers (other than the agricultural by-products carve-out).
The 1978 amendment that opened sales to wholesalers, Senate Bill 1405, was a narrow technical change. The committee minutes and Statement of Purpose described the bill as letting ICI deal with wholesalers in addition to retailers, not as opening the products to any retail or wholesale buyer for any purpose.
Citations and references
Statutes: Idaho Code §§ 20-401 et seq., 20-413, 20-414.
Idaho cases: Corder v. Idaho Farmway, Inc., 133 Idaho 353, 986 P.2d 1019 (Ct. App. 1999); George W. Watkins Family v. Messenger, 118 Idaho 537, 797 P.2d 1385 (1990); Hartman v. Meier, 39 Idaho 261, 227 P. 25 (1924); Smith v. Smith, 131 Idaho 800, 964 P.2d 667 (Ct. App. 1998); Struhs v. Protection Technologies, Inc., 133 Idaho 715, 992 P.2d 164 (1999).
Other authorities: Minutes of House State Affairs Committee, March 4, 1978; Minutes of Senate State Affairs Committee, January 19, 1978; Minutes of Senate Commerce and Labor Committee, February 1, 1978.
Source
- Landing page: https://www.ag.idaho.gov/office-resources/opinions/
- Original PDF: https://ag.idaho.gov/content/uploads/2018/04/Op01-01.pdf
Original opinion text
ATTORNEY GENERAL OPINION NO. 01-1
To: James Spalding
Director, Idaho Department of Correction
1299 N. Orchard, Suite 110
P.O. Box 83720
Boise, ID 83720-0018
Per Request for Attorney General's Opinion
You have requested an Attorney General's Opinion concerning the kinds of sales that Correctional Industries is permitted to make. This opinion addresses the question you have presented.
QUESTION PRESENTED
May Correctional Industries sell a prison-made product to a retail or wholesale establishment within the state that:
(1) is not engaged in the business of selling or servicing the same kind of product that it purchases from Correctional Industries; or
(2) does not intend to resell the prison-made product?
CONCLUSION
Correctional Industries may sell its products to retail or wholesale establishments within the state only where it is intended that the products will eventually be offered for resale to the general public. Therefore, Correctional Industries products may not be sold to retail or wholesale establishments that: (1) are not in the business of selling such products, or (2) do not intend to sell the Correctional Industries products.
ANALYSIS
The operations of Correctional Industries are controlled by the Correctional Industries Act, Idaho Code §§ 20-401, et seq. The controlling statutes here are Idaho Code §§ 20-413 and 20-414, which are as follows:
20-413. Goods and services for government, nonprofit organizations, and public use. Contracts. The board is hereby authorized and empowered to cause the inmates in the state prison to be employed in the rendering of such services and in the production and manufacture of such articles, materials, and supplies as are now or may hereafter be needed by any public institution or agency of the state or any political subdivision thereof, including but not limited to counties, districts, municipalities, schools, nonprofit organizations, and other public use. The board may cause the inmates to be employed in rendering such services or producing and manufacturing such articles, materials, and supplies as are now or may hereafter be needed for use by the federal government for any department, agency or corporation thereof. The board may contract to sell products manufactured by correctional industries to retail or wholesale establishments within the state. The board or its designated agent may enter into contracts for the purposes of this article.
The board may contract with other state and federal penal institutions and with out-of-state governmental entities for the production, manufacture, exchange, sale, or purchase of goods, wares and merchandise manufactured or produced wholly or in part by inmates of the Idaho state penitentiary or of any state or federal penal institution.
20-414. Disposition of products. All articles, materials, and supplies, produced or manufactured under the provisions of this act, shall be solely and exclusively for public or nonprofit organization use and no article, material, or supplies, produced or manufactured under the provisions of this chapter shall ever be sold, supplied, furnished, and exchanged, or given away for any private use or profit, except as allowed by the preceding section. However, by-products and surpluses of agricultural and animal husbandry enterprises may be sold to private persons, at private sale, under rules prescribed by the board of correction.
(Emphasis added.)
Thus, with the exception of the agricultural and husbandry by-products and surpluses referred to in Idaho Code § 20-414, Correctional Industries products may be supplied to government agencies and non-profit organizations, and may also be sold to "retail or wholesale establishments within the state." All other distribution of such products is prohibited.
The answer to the question presented depends upon the meaning of "retail or wholesale establishments" in the context of these statutes. In construing legislative acts, we must ascertain, from a reading of the entire act, the purpose and intent of the legislature. George W. Watkins Family v. Messenger, 118 Idaho 537, 539, 797 P.2d 1385 (1990). The plain meaning of a statute will prevail unless clearly expressed legislative intent is contrary or unless plain meaning leads to absurd results. Corder v. Idaho Farmway, Inc., 133 Idaho 353, 358, 986 P.2d 1019 (Ct. App. 1999). We should aim to give statutes a sensible construction that will effectuate the legislative intent and, if possible, avoid an absurd conclusion. Hartman v. Meier, 39 Idaho 261, 266, 227 P. 25 (1924); Smith v. Smith, 131 Idaho 800, 802, 964 P.2d. 667 (Ct. App. 1998). Where a statute is ambiguous, the legislative intent should be ascertained by examining factors such as the statute's language, the reasonableness of a proposed interpretation, and the policy underlying the statute. Struhs v. Protection Technologies, Inc., 133 Idaho 715, 718, 992 P.2d 164 (1999).
Applying these principles to the statutory language in question here leads to the conclusion that Correctional Industries products may be sold to retail or wholesale establishments only where it is intended that the products will be resold by those establishments. A super-literal reading of the language of Idaho Code § 20-413 might lead to the conclusion that a Correctional Industries product may be sold to a retail or wholesale establishment for any purpose whatever, even if that establishment is the ultimate consumer of the product. This, however, would appear to be an absurd result that is entirely inconsistent with the purpose of the relevant statutes. One of the purposes of Idaho Code §§ 20-413 and 20-414 is to limit the transfers or sales of Correctional Industries products. There is no apparent reason for allowing only retail and wholesale establishments, as opposed to all other private businesses or individuals, to purchase such items directly from Correctional Industries for their own use. On the other hand, it would be reasonable and consistent with the purpose of the statutes to allow retail and wholesale establishments to purchase Correctional Industries products for the purpose of resale. This would allow at least a portion of the private sector to share in the profits from the ultimate sale of such products to the general public.
This interpretation of the statute is supported by the legislative history. The statutes in question were originally enacted in 1974 as part of the Correctional Industries Act. 1974 Idaho Sess. Laws 1096, 1100-01. As then adopted, Idaho Code § 20-413 provided in part, "The [correctional industries] commission may contract to sell products manufactured by correctional industries to retail establishments within the state for resale to the general public." (Emphasis added.) 1974 Idaho Sess. Laws 1100. Thus, it was clear that the original legislative intent was to allow the sale of Correctional Industries products only where the products would be resold to the general public.
In 1978, the legislature adopted Senate Bill No. 1405, which added the words "or wholesale" following the word "retail," and which struck the words "for resale to the general public." The Statement of Purpose accompanying the bill was as follows:
The purpose of this act is to amend Section 20-413 to allow the Correctional Industries Commission to contract with wholesalers within the state for the sale of products manufactured by Correctional Industries. Present law allows the Commission to contract only with retailers.
The testimony offered in committee in support of the bill was to the same effect. For instance, the minutes of the hearing on the bill before the House State Affairs Committee state:
Don Erickson [of the Department of Correction] spoke to the committee on this bill and said the purpose of this act is to amend Section 20-413 to allow the Correctional Industries Commission to contract with wholesalers within the state for the sale of products manufactured by Correctional Industries. He said present law allows the Commission to contract only with retailers. He further stated benefits would be attained by allowing the Correctional Industries Commission to deal with wholesalers as well as retailers.
Minutes of House State Affairs Committee, March 4, 1978; see also, Minutes of Senate State Affairs Committee, January 19, 1978; Minutes of Senate Commerce and Labor Committee, February 1, 1978.
Since the only purpose underlying Senate Bill 1405 was to allow for the sale of Correctional Industries products to wholesalers, it follows that the language "for resale to the general public" was dropped simply to allow those wholesalers to resell the products to retailers. Nothing in the legislative history suggests that the deleted language was dropped in order to permit retail and wholesale establishments to apply the products to their own use. Therefore, it must be concluded that the legislative intent remained to allow the sale of Correctional Industries products to private businesses only for ultimate resale to the general public.
Applying this conclusion to the specific question you have asked, it is our opinion that Correctional Industries products may not be sold to businesses that are not engaged in the wholesale or retail selling of such products, or that do not intend to resell the products.
DATED this 12th day of January, 2001.
ALAN G. LANCE
Attorney General
Analysis by:
MICHAEL A. HENDERSON
Deputy Attorney General
Chief, Criminal Law Division