Can a North Carolina regional airport authority member, who runs a PR firm, contract with another company that is currently providing services to the same airport authority?
Plain-English summary
The Asheville Regional Airport Authority's attorney brought a structural conflict-of-interest question to the AG. One of the Authority's seven members was the president of a public relations firm. The Authority had two existing contracts with a separate company, Directional Media Associates, for advertising services. Directional Media wanted to retain the Authority member's PR firm to provide public relations services (news releases and so on), some of which would presumably relate to Directional Media's work for the Authority.
The Authority member therefore stood in a position where his own PR firm would be paid by Directional Media for work related to the Authority. Was that a violation of the criminal self-dealing statute, N.C.G.S. § 14-234(a)?
Assistant Attorney General Thomas H. Davis, Jr. answered: yes, a conflict may exist, and the member would have to choose between staying on the Authority or having the firm do the work.
The Authority was created in 1979 by Buncombe County and the City of Asheville under Article 20 of Chapter 160A (the interlocal cooperation framework). Three members were appointed by the County Board of Commissioners, three by the Asheville City Council, and those six selected the seventh.
The AG noted that the construction, maintenance, and operation of a regional airport are both city and county governmental functions, and a person exercising those functions is a public officer. The opinion cited an earlier AG opinion (52 NCAG 49 (1982)) confirming that airport authority members are public officers within the meaning of conflict-of-interest statutes.
N.C.G.S. § 14-234(a) makes it a misdemeanor when "any person appointed or elected a commissioner or director to discharge any trust wherein the State or any county, city or town may be in any manner interested" becomes "an undertaker, or may make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another."
The "in any manner concerned or interested" language is the trap. The statute does not require a direct contract between the public officer and the public entity. It catches indirect arrangements where the officer benefits through a third party.
Applying this to the Asheville arrangement: the Authority had contracts with Directional Media. Directional Media wanted to contract with the Authority member's PR firm. Some of the Authority member's PR firm work would be related to Directional Media's work for the Authority. So the Authority member would be benefiting from contracts to which the Authority was a party, even though the formal contract chain was Authority → Directional Media → Authority member's PR firm.
The AG concluded that this arrangement "would appear to be a violation of G.S. 14-234(a)." The remedy the AG identified was either (1) the Authority member resigning from the Authority, or (2) Directional Media terminating its business relationship with the Authority. Either move would break the chain.
The opinion cited a 1980 AG opinion (49 NCAG 108) to a Sampson County DSS attorney as analogous authority for the same broad reading of § 14-234(a).
Currency note
This opinion was issued in 1987. 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. N.C.G.S. § 14-234 has been amended multiple times since 1987. The current version is broader and more detailed than the 1987 version, with specific subdivisions addressing direct benefits, indirect benefits, and recusal procedures, and with civil penalties added alongside the criminal misdemeanor. The "in any manner concerned or interested" language has been retained in spirit. Modern researchers should consult the current statute text and the State Ethics Commission's interpretive guidance for active conflict-of-interest questions.
Background and statutory framework
N.C.G.S. § 14-234 was the historic core of North Carolina's public-officer conflict-of-interest law. It originated in the nineteenth century as a misdemeanor statute and remained largely intact (with periodic amendments) into the late twentieth century. The statute reflects a doctrine deeply embedded in American government: a public officer cannot use the office for private financial benefit.
The "in any manner concerned or interested" language is what gives the statute its reach beyond direct self-contracts. A school board member cannot vote on a contract with a company they own. That much is obvious. § 14-234(a) extends the rule to indirect benefits: the school board member also cannot arrange for their company to be a subcontractor under the prime contractor's contract with the school board. The chain is too short.
The Asheville arrangement was one step further removed than the classic subcontractor scenario. The Authority member's firm was not subcontracting under Directional Media's contract with the Authority; it was being retained by Directional Media to provide PR services that touched the Authority work. But the AG read the statute broadly enough to catch this arrangement too, especially given that some of the PR firm work would relate to Directional Media's Authority contracts.
This broad reading is consistent with the statute's purpose. A narrow reading (only direct contracts between officer and entity) would invite officials to launder their financial interests through one or two intermediate companies. Once the chain is short enough that the official is "concerned or interested" in the public entity's contract, § 14-234(a) applies.
The interlocal-cooperation structure of the Authority is also doctrinally important. The Authority is not a single city or county agency; it is a joint creation of two political subdivisions under Article 20 of Chapter 160A. Some early arguments tried to claim that interlocal-cooperation entities were neither city nor county and therefore outside § 14-234. The AG's prior opinion (52 NCAG 49 (1982)) had rejected that, holding that public-purpose functions performed through interlocal cooperation still bind their officers to the conflict-of-interest law.
Common questions
Could the Authority member abstain from any vote involving Directional Media instead of resigning?
Abstention is not enough under § 14-234(a) as written. The statute creates criminal liability for being "concerned or interested" in the contract, not just for voting on it. A member who recuses from a vote but still benefits from the underlying contract is still in violation. The 1987 statute did not contain a safe-harbor recusal procedure that could cure the conflict for purely financial interests; the official had to either disentangle the financial interest or leave the office.
What if the Authority member's PR firm did completely unrelated PR work for Directional Media (work that had nothing to do with the Authority)?
The opinion focuses on PR services related to Directional Media's Authority contracts. PR work for Directional Media that was completely unrelated to the Authority would be a different fact pattern. The "concerned or interested" language probably would not reach a completely unrelated contract between two private companies. But the line is fact-specific; a Authority member with significant ongoing financial ties to a major Authority vendor should be cautious even with nominally unrelated work.
What about other Authority members who have any vendor relationships?
The opinion is not exhaustive. § 14-234(a) applies to all public officers covered by the statute, and the AG's analysis should be applied to each member's individual situation. Any Authority member with a financial relationship to a current or prospective Authority vendor needs to consider whether the relationship makes them "concerned or interested" in any Authority contract.
Could the Authority simply terminate the Directional Media contracts and then let the Authority member's PR firm contract with Directional Media?
That would solve the conflict, but the timing and arms-length nature would matter. The Authority cannot terminate the Directional Media contracts for the purpose of facilitating the Authority member's side deal; that would be its own ethical problem. Termination would have to be for legitimate reasons.
Are city council or county commissioner members of the Authority subject to a higher conflict-of-interest standard?
Possibly. Members who hold concurrent elected office (city council, county commissioner) are subject to additional conflict-of-interest provisions in N.C.G.S. § 14-234 and in their own governing-body statutes (e.g., § 160A-75 for city council). The 1987 opinion focused on the Authority membership; concurrent office could create additional layered obligations.
Source
Citations
- N.C.G.S. § 14-234(a) (public officer self-dealing misdemeanor)
- Article 20 of Chapter 160A (interlocal cooperation)
- Opinion of the Attorney General to A. Dumay Gorham, Jr., 52 NCAG 49 (1982)
- Opinion of the Attorney General to Timothy W. Howard, 49 NCAG 108 (1980)
Original opinion text
Requested By: Victor W. Buchanan, Attorney for the Asheville Regional Airport Authority
Question: Does a prohibited conflict of interest arise when an Authority member, the president of a public relations firm, enters into a contract with another company providing public relations services to the Asheville Regional Airport?
Conclusion: A conflict of interest may exist, within the purview of N.C.G.S. 14-234(a), if a contract is made under the fact stated.
The Asheville Regional Airport Authority ("Authority") was formed in 1979 by the County of Buncombe and the City of Asheville pursuant to the provisions of Article 20 of Chapter 160A of the General Statutes of North Carolina. The purpose of forming the Asheville Regional Airport Authority was to maintain, operate, regulate and improve the Asheville Regional Airport.
Three members of the Airport Authority are appointed by the Buncombe County Board of Commissioners. Three members of the Authority are appointed by the Asheville City Council. These six individual Authority members then appoint the seventh member.
One of the seven current members of the Asheville Regional Airport Authority is the president of a public relations firm which is now contemplating entering into a contract with another company known as Directional Media Associates, Inc. It is contemplated that the Airport Authority members firm would provide to Directional Media public relations services such as news releases.
Directional Media presently has two contracts with the Asheville Regional Airport Authority relating to advertising, and it is contemplated that the Airport Authority members corporation may be involved with providing public relations services relative to these contracts with the Airport Authority.
In pertinent part, N.C.G.S. 14-234(a) states:
"If any person appointed or elected a commissioner or director to discharge any trust wherein the State or any county, city or town may be in any manner interested, shall become an undertaker, or may make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another, he shall be guilty of a misdemeanor. . ."
The Asheville Regional Airport Authority has been created by interlocal cooperation between the City of Asheville and the County of Buncombe. The construction, maintenance and operation of the Asheville Regional Airport are public in governmental functions which are both city and county functions and purposes, and a person who exercises these functions is a public officer. See Opinion of Attorney General to Mr. A. Dumay Gorham, Jr., Attorney for New Hanover Memorial Hospital, Inc., 52 NCAG 49 (1982).
The facts as presented show that the Authority member would directly benefit from contracts engaged in between the Authority and Directional Media which would appear to be a violation of
G.S. 14-234(a) of the General Statutes of North Carolina. The Authority members public relations firm could only contract with Directional Media Associates if the Authority member resigned his position with the Authority or if Directional Media Associates terminated its business relationship with the Authority.
Also of benefit to this inquiry is the Opinion of the Attorney General to Timothy W. Howard, Attorney for Sampson County Department of Social Services, 49 NCAG 108 (1980).
Lacy H. Thornburg Attorney General
Thomas H. Davis, Jr. Assistant Attorney General