Are leases of buildings on the North Carolina State Fair grounds, including year-round leases to flea-market vendors, exempt from the statutory ban on government competition with private enterprise (G.S. 66-58), or does the exemption apply only during the nine-day October fair?
Plain-English summary
Governor James B. Hunt, Jr., and the Council of State asked the AG whether year-round leases of buildings on the State Fair grounds (specifically flea-market subleases to individual vendors) were exempt from G.S. 66-58, the statute that generally prohibits government competition with private enterprise.
The AG answered yes. "The North Carolina State Fair" in G.S. 66-58(b)(12) refers to the year-round operation of the State Fair, not just the nine-day event held in October. The exemption covers leases of fair properties and buildings at any time.
The reasoning rests on three foundations:
Legislative enactments. In 1959, the General Assembly rewrote G.S. 106-503 (Session Laws 1959, c. 1186, s. 3) to provide: "All actions heretofore taken by the Manager of the North Carolina State Fair in the operation of projects on the fair grounds at times other than the annual dates of the State Fair are confirmed, ratified and validated." The emphasis on validating non-Fair-week operations signals legislative recognition of year-round use.
Annual State budget treatment. For at least 20 years before the opinion, the General Assembly had funded the Department of Agriculture's budget under the heading "Department of Agriculture, North Carolina State Fair (Special Fund)" with line items for year-round building use. The legislature funded year-round operations because it understood the Fair to operate year-round.
Administrative practice. The State Fair Manager and the Department of Agriculture had treated the buildings as year-round assets for decades. Contracts and leases used "N.C. State Fair" as the lessor without distinguishing fair-week from off-season operations. The Premium Book published by the Department of Agriculture described year-round use of facilities.
Judicial deference to administrative interpretation. North Carolina courts give weight to administrative interpretations of statutes. MacPherson v. Asheville, 283 N.C. 299, 196 S.E.2d 200 (1973), framed the principle. With the Department of Agriculture's long-running interpretation of the State Fair statutes as covering year-round operations, the courts would defer absent compelling contrary indicators.
Conclusion: all leases and rentals of fair properties and buildings, at whatever time, are exempt from G.S. 66-58.
Currency note
This opinion was issued in 1983. 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 State Fair management framework has been refined and the State Fair has expanded its year-round event calendar substantially since 1983. G.S. 66-58 has been amended several times. The basic exemption framework (statutory exceptions to the government-competition ban) survives, but specific application should be checked against current law. North Carolina's general approach to public property used for commercial activities has continued to evolve.
Historical context: what the AG concluded
The opinion does the following:
It treats the legislative budget as authority. Budget appropriations are statutes too, and a 20-year pattern of budgeting under a "year-round operations" structure carries interpretive weight. The AG uses the budget pattern as confirmation that the legislature understands the State Fair to operate year-round.
It uses the 1959 ratification statute as a structural anchor. Session Laws 1959 c. 1186 s. 3 expressly validated non-Fair-week actions by the State Fair Manager. That validation only makes sense if non-Fair-week actions were intended to be authorized. The 1983 opinion treats the 1959 ratification as a strong signal of the General Assembly's understanding.
It applies administrative-interpretation deference. MacPherson v. Asheville is invoked for the proposition that courts respect long-standing administrative interpretations. The Department of Agriculture had interpreted G.S. 66-58(b)(12) as covering year-round operations for many years; that interpretation gets judicial weight.
It addresses the specific flea-market question. The Governor's request specifically asked about flea-market leases. The AG answers categorically: any commercial use of State Fair buildings is within the exemption, including flea markets. The opinion does not narrow the answer.
Background and statutory framework
The North Carolina State Fair has operated since 1853, with an interruption during the Civil War and another during the 1930s Depression. The State took over operation from a private association in the 1930s, placing the Fair within the Department of Agriculture.
G.S. 66-58 is the general statute prohibiting government competition with private enterprise. The statute lists specific exemptions, including the State Fair in subsection (b)(12). The exemption recognizes that the Fair, as a state institution, may engage in commercial activities (selling food, charging admission, leasing space to vendors) that would otherwise conflict with the general ban.
By 1983, the State Fair was a substantial state operation. Buildings on the fairgrounds had been built with state appropriations and were used year-round for trade shows, conferences, the State Fair itself (October), and various other events. Some buildings were leased to vendors who operated flea markets and sold goods on a year-round basis.
The Governor's question reflects a tension. The State Fair was clearly authorized to operate during October. The exemption from G.S. 66-58 was clearly available for fair-week activities. But the year-round leases to flea-market vendors involved private commercial actors using state buildings on a continuous basis. Was that within the exemption?
The AG's analysis points to the consistent legislative, budgetary, and administrative treatment of the State Fair as a year-round operation. The exemption from G.S. 66-58 follows the Fair's year-round footprint, not a narrow nine-day window.
Common questions
Does this open the door to broad state competition with private retail?
No, the opinion's reasoning is specific to the State Fair under its specific statutory framework. The exemption in G.S. 66-58(b)(12) is by its terms an exception, not a general rule. Other state agencies cannot bootstrap into the same exemption.
Could a private flea market operator challenge the State Fair's flea market leases?
The opinion says the leases are exempt from G.S. 66-58. A private operator's challenge under that statute would fail. Challenges under other theories (antitrust, equal protection, due process) would be analyzed separately and were not the subject of the 1983 opinion.
What about events on State Fair property held by third parties?
The exemption covers leases and rentals by the State Fair (as lessor). Third-party events held on State Fair property, where the State Fair leases space to a third party who then operates the event, are within the exemption. Subleases by the third-party tenant to ultimate vendors are also within the framework the opinion describes.
What was the Council of State's role?
The Council of State (consisting of the Governor and other elected statewide officials) has approval authority over certain state actions including some major property transactions. The question came from the Governor and the Council of State together because the underlying flea-market lease decisions were within Council of State purview.
Was this a controversial conclusion?
The 1983 opinion appears settled in the legal community. The Department of Agriculture had been operating year-round leases for years before the formal AG opinion. The opinion ratifies long-standing practice rather than announcing a new rule. The political context (the Governor seeking confirmation that the practice was lawful) suggests there was some concern about the underlying authority, but the legal answer was straightforward given the statutory framework.
Source
Citations
- N.C.G.S. § 66-58
- N.C.G.S. § 66-58(b)(12)
- N.C.G.S. § 106-503
- N.C.G.S. § 106-503.1
- Session Laws 1959, c. 1186, s. 3
- MacPherson v. Asheville, 283 N.C. 299, 196 S.E.2d 200 (1973)
Original opinion text
Subject:
Requested By: Governor James B. Hunt, Jr., and the Council of State
Conclusion: Yes, based on legislative enactments relating to the fairgrounds, annual budgets contained in the State budget and administrative interpretation of various statutes discussed herein.
The buildings under current lease and the two proposed to be leased are and would be respectively subleased to individuals to offer for sale and sell to the general public various goods, wares and merchandise. Such a commercial operation is generally referred to as a "flea market."
A brief review of the history of the North Carolina State Fair appears appropriate. The following are excerpts from a publication of the North Carolina Department of Agriculture, entitled N.C. State Fair — 1983 — Premium Book, pp. 12-14, entitled "North Carolina State Fair History"
[. . .]
Most of the funds for capital improvements mentioned above were appropriated by the General Assembly. It is self-evident that these buildings were designed for and have been used since their construction for year-round use, not just during the nine-day fair.
The crucial question to be resolved is whether "The North Carolina State Fair" as worded in G.S. 66-58(b)(12) is limited to the nine-day event held in October of each year. Clearly, as quoted above, the administrators of the Fair and the Department of Agriculture, responsible for its publication, think not. Legislation enacted during the past several years supports this conclusion.
The budget for the Department of Agriculture, enacted by the General Assembly, has for at least 20 years, been entitled "Department of Agriculture, North Carolina State Fair (Special Fund)" and contains numerous line items for the yearly use of buildings on the fairgrounds.
In 1959, the General Assembly in a rewrite of G.S. 106-503 (S.L. 1186, s. 3) provided: "All actions heretofore taken by the Manager of the North Carolina State Fair in the operation of projects on the fair grounds at times other than the annual dates of the State Fair are confirmed, ratified and validated." (Emphasis added).
For many years all contracts and leases used by the State Fair have referred to the "N.C. State Fair" as the lessor or contracting party. No distinction is made between the nine day fair and the year-round operation of the facilities.
It is clear from the above-described administrative actions of the Department of Agriculture and laws enacted by the General Assembly that year-round use of the Fair's buildings and grounds was intended by the repeated use of the term "State Fair".
Finally, our courts give weight to the interpretation of statutes by an administrative agency. Strong's Index, 3rd Ed., Statutes, s. 5.7, citing MacPherson v. Asheville, 283 N.C. 299, 196 S.E.2d 200 (1973).
We conclude therefore that all leases and rentals of fair properties and buildings, at whatever time, are exempt from G.S. 66-58.
Rufus L. Edmisten
Attorney General
Millard R. Rich, Jr.
Deputy Attorney General