When a North Carolina sheriff seizes drug-related cash and the U.S. Attorney pursues federal forfeiture and shares the money back, must the cash go to the county school board under the state constitution?

Plain-English summary

In the late 1980s, federal "equitable sharing" of drug forfeitures was reshaping local law enforcement budgets. A North Carolina sheriff who seized $500,000 in drug-trafficking cash could send the case to the U.S. Attorney for federal forfeiture and then receive up to 80% of the proceeds back as "shared" funds. The catch was the North Carolina Constitution: Article IX, Section 7 of the state constitution requires that the "clear proceeds" of penalties and forfeitures collected for breaches of state penal law go to the county school board, not to law enforcement. If the federally shared funds were treated as state forfeitures, they had to go to the schools.

Franklin County's attorney Aubrey Tomlinson asked the AG three related questions. Associate Attorney General Harold M. White, Jr. answered:

(1) Does the county have legal standing to challenge a U.S. Attorney's decision to take a forfeiture federally even though all the investigation, arrest, and prosecution were done by state officials under state law? Answer: No. Federal law (21 U.S.C. § 881 and 19 U.S.C. § 1616, plus the customs adoption authority) lets the federal government adopt any seizure made by any person for forfeiture if the property was used in violation of federal law. Federal courts have held that this "adoption" is retroactively equivalent to an original federal seizure (United States v. One Ford Coupe Automobile). The county is not a party with cognizable injury, and the federal forfeiture moves forward whether the county likes it or not.

(2) Does it change anything if federal agents participated in the investigation, arrest, or seizure? Answer: No. The federal adoption authority does not depend on federal-agent involvement; it depends on whether the property was used in violation of federal law. Federal-agent participation makes the equitable sharing slightly easier procedurally (the U.S. Attorney's Guidelines call it "joint forfeiture" rather than "adoptive forfeiture") but does not give the county any additional standing to contest the federal action.

(3) If the U.S. Attorney shares part of the federally forfeited property back with local law enforcement, must those funds go to the school board under Article IX, Section 7? Answer: No. The state constitution's clause covers forfeitures for "breach of the penal laws of the state." A federal forfeiture is a federal-law action. Title to the property vests in the United States on the date of the underlying act under § 881(h), so the property never legally becomes North Carolina forfeiture property. The funds the U.S. Attorney shares back are a federal grant or transfer to a participating agency, not the "clear proceeds" of a state-law forfeiture.

The opinion grounds this in three legal pillars:

First, the Supremacy Clause (Art. IV, cl. 2 of the U.S. Constitution). The federal forfeiture statutes are valid acts of Congress under the federal commerce and necessary-and-proper powers, and they apply notwithstanding any state law to the contrary.

Second, exclusive federal jurisdiction over federal forfeitures (28 U.S.C. § 1355). State courts have no jurisdiction to enforce a federal forfeiture; only federal district courts do.

Third, conflict preemption under Ray v. Atlantic Richfield. A state rule that would force federally shared funds into the school fund (in defiance of the federal sharing program's congressional purpose of funding state and local law enforcement) would be an obstacle to the accomplishment of Congress's purpose and would be void to that extent.

The opinion identifies two state statutes that authorize the local agencies to receive the federal funds: N.C.G.S. § 147-83 covers state agencies, and N.C.G.S. § 160A-17.1 covers cities and counties. The sheriff, as a constitutional officer under Art. VII, § 2, has the authority to accept federal grant funds.

The opinion ends with a notable caution. Even though the law permits federal adoption, the AG warned that state and local law enforcement should not rush to send cases to the U.S. Attorney without first checking with departmental legal staff or district attorneys. Property seized as evidence in a state criminal case may be needed for the state prosecution under N.C.G.S. § 15-11.1. The U.S. Attorney's Guidelines also require federal decision-makers to consult with state counterparts in cases where related proceedings exist. Photographic or other preservation of seized assets normally lets the state case proceed without the physical property; but the AG's caveat acknowledges that bad coordination between state and federal authorities could damage the state prosecution.

Currency note

This opinion was issued in 1988. 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 federal equitable sharing program continues to operate but has been modified several times (including DOJ-imposed limitations during 2015-2017, since partially reversed) and the U.S. Attorney's Guidelines have been replaced by current DOJ Asset Forfeiture Policy Manual provisions. North Carolina has separately enacted statutory restrictions on state asset forfeiture that affect how state-only forfeitures interact with the federal sharing program. The Article IX, Section 7 clause still exists and still applies to state-law forfeitures; the question of which forfeitures count as "federal" versus "state" has been litigated extensively in subsequent decades. Any current researcher should consult current DOJ asset forfeiture policy, the current text of 21 U.S.C. § 881, and any 21st-century North Carolina cases interpreting Article IX, Section 7.

Background and statutory framework

This opinion sits at the intersection of three legal frameworks: the federal drug forfeiture statute (21 U.S.C. § 881), the federal customs forfeiture procedures (19 U.S.C. § 1616) incorporated by § 881(d), and the North Carolina constitutional school-fund clause (Art. IX, Section 7).

21 U.S.C. § 881(a) makes a broad list of property subject to forfeiture: drugs themselves, raw materials, equipment used to manufacture, money and proceeds traceable to drug exchanges, and conveyances used to facilitate violations. § 881(e) lets the Attorney General transfer forfeited property to any state or local law enforcement agency that "directly participated in the acts which led to the seizure or forfeiture." § 881(h) is the critical timing rule: title vests in the United States "upon commission of the act giving rise to forfeiture," meaning the moment of the drug crime, not the moment of seizure. That timing rule is what defeats the state-fund argument: the property was never legally state forfeiture property because federal title vested before the state seizure happened.

The federal "adoption" doctrine traces to One Ford Coupe Automobile from 1926. If a state officer seizes property that turns out to have been used in violation of federal law, the federal government can adopt the seizure and treat it as if federal officers had made it. The state-law authority for the original seizure is borrowed; the federal forfeiture proceeds on federal law.

Banco Cafetero Panama and One Mercedes Benz are cited for two related propositions important to federal forfeiture practice. First, the government does not need to prove the seized property is linked to a particular transaction; tracing to drug activity generally is enough. Second, the lack of a criminal conviction is not a defense to the civil forfeiture; the burden and the proceeding are independent of any prosecution.

North Carolina's Article IX, Section 7 reflects a constitutional choice made when the state's penal code was a primary funding source for schools. The "clear proceeds" of all penalties and forfeitures collected for breach of state penal law go to the county school board. The opinion accepts that this clause would apply to a North Carolina forfeiture proceeding (for example, a forfeiture of the same drug cash under the state version of § 881). It does not apply when the forfeiture is federal, because the trigger ("breach of the penal laws of the state") is not met.

The Supremacy Clause analysis is the constitutional backbone. Federal supremacy is hierarchical: a valid federal statute defeats an inconsistent state law, including a state constitutional provision. The opinion does not say the school-fund clause is invalid; it says the clause does not reach federal forfeitures, and to the extent state law tried to redirect federally shared funds into the school fund (against the purpose of the federal program), state law would be preempted.

N.C.G.S. § 147-83 and § 160A-17.1 are the receiving-authority statutes. Together they let state agencies and local governments accept federal grants. The sheriff is a constitutional officer, and the AG concludes that a sheriff can also accept the shared funds in the sheriff's official capacity.

The closing caution about state-federal coordination is notable. The 1987 federal AG Guidelines (52 Fed. Reg. 46855) themselves emphasize coordination with state and local authorities. The North Carolina AG cited this to remind state law enforcement that the choice to send a case federal is not just a budgetary choice; it can affect whether state criminal charges can proceed (because the property may be needed as evidence).

Common questions

Does the share have to be earmarked for law enforcement only?

The federal program requires the share to be "credited to the budget of the state or local agency that directly participated in the seizure or forfeiture, resulting in an increase of law enforcement resources for that specific State or local agency." So yes, the share is earmarked for law enforcement at the participating agency. The agency cannot move the funds to the general county fund, and the funds are not subject to displacement by the state legislature.

What if the underlying drug crime was also a state crime?

It typically is; most drug-trafficking conduct violates both federal and state law. The opinion's analysis still applies. The federal forfeiture is a federal-law action even if the same conduct could have supported a state forfeiture. Once the U.S. Attorney adopts the seizure and the federal forfeiture is final, the state has no claim on the proceeds for school-fund purposes. The state could in theory have proceeded under its own forfeiture statute (and the school fund would have applied), but it did not.

Does the sheriff have to apply for the share, or is it automatic?

Under § 881(e) and the AG Guidelines, the sheriff (or other participating agency) files a request for equitable sharing with the U.S. Attorney. The U.S. Attorney evaluates participation and other criteria. Sharing is discretionary in form, though heavily favored when criteria are met.

Can a county school board sue to get a piece of the federally shared funds?

Based on the AG's analysis, no. The school board is not a party to the federal forfeiture; the constitutional school-fund clause does not reach federal forfeitures; and there is no other mechanism that would entitle the school board to a share. The school board could only claim funds from a state forfeiture.

What if local agents seized cash that turned out not to be drug-related?

If the federal adoption is invalid (because the property cannot be linked to a federal drug violation), the federal forfeiture would fail. The property would have to be returned to its owner, or in some cases to the state under state forfeiture procedures (and the school-fund clause would apply). The opinion's reasoning depends on the property actually being subject to federal forfeiture.

Source

• Landing page: https://ncdoj.gov/opinions/status-of-funds-seized-by-local-law-enforcement-authorities/

Citations

• 21 U.S.C. § 881(a)(6), (d), (e), (h)
• 19 U.S.C. § 1616
• 28 U.S.C. § 1355
• U.S. Constitution Art. IV, cl. 2 (Supremacy Clause)
• N.C. Constitution Art. IX, Section 7 (school-fund clause)
• N.C. Constitution Art. VII, § 2 (sheriff)
• N.C.G.S. § 147-83
• N.C.G.S. § 160A-17.1
• N.C.G.S. § 15-11.1
• Banco Cafetero Panama, 797 F.2d at 1160
• United States v. One Mercedes Benz, 660 F.Supp. 410 (S.D.N.Y. 1987)
• United States v. One Ford Coupe Automobile, 272 U.S. 321 (1926)
• Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978)
• Attorney General's Guidelines on Seized and Forfeited Property, 52 Fed. Reg. 46855 (Dec. 10, 1987)

Original opinion text

Requested By: Aubrey S. Tomlinson, Jr Attorney for Franklin County

Questions: (1)

• Does the county have legal standing to contest the action of the U.S. Attorney in confiscating drug related property where all aspects of the investigation, search, arrest and seizure are handled by state law enforcement officials and all criminal charges are in state court?"
• (2)
• Where federal agents participate in the investigation, arrest or seizure?
• (3)
• If federal authorities confiscate drug related property and thereafter return a part of it to local authorities for law enforcement purposes, do the N.C. Constitution and laws require these funds to go to the local school board as forfeited property or may it be used by local law enforcement?

Conclusions: (1)

• The county does not have a sound legal basis for contesting the action of the U.S. Attorney under the posited circumstances.
• (2)
• No.
• (3)
• Federally shared funds may be used by local law enforcement since the provision contained in the North Carolina Constitution applies only to forfeitures resulting from a breach of the penal laws of North Carolina, and has no application to forfeitures proceeding from a breach of any federal law.

The following federal law is our guidance in answer to the first question above. Title 21, U.S.C. 881(e) and Title 19, U.S.C. 1616, as made applicable by 21 U.S.C. 881(d) and other statutes, authorize the United States Department of Justice to transfer forfeited property to any state or local law enforcement agency that directly participated in the acts which led to the seizure or forfeiture. 21 U.S.C. 881 states that [(a)(6)] "All moneys . . . or other things of value furnished . . . in exchange for a controlled substance in violation of this title, all proceeds traceable to such an exchange, and all moneys . . . used . . . to facilitate any violation of this title . . . [(a)] shall be subject to forfeiture to the United States and no property right shall exist in them . . . ." Further, 21 U.S.C. 881(h) states that "All right, title, and interest in property described in [2] U.S.C. 881(a)] shall vest in the United States upon commission of the act giving rise to forfeiture under this section."

Federal courts have held that the government need not link the property to a particular unlawful transaction [Banco Cafetero Panama, 797 F.2d at 1160] and that "the lack of a criminal conviction on [federal] charges relating to the incident giving rise to the forfeiture is not a valid defense" to the forfeiture [United States v. One Mercedes Benz, 660 F.Supp. 410, 414 (S.D.N.Y. 1987)]. Further, it has long been well-settled that the United States may adopt seizures of property made by any person for forfeiture to the government where the property was used in violation of federal law. In United States v. One Ford Coupe Automobile, 272 U.S. 321, 325 (1926), the Supreme Court held:

If it [the government] adopts the acts of the party, and proceeds to enforce this forfeiture by legal process, this is a sufficient recognition and confirmation of the seizure, and is of equal validity in law, with an original authority to make the seizure. The confirmation acts retroactively, and is equivalent to a command.

All of the foregoing is equally relevant to the situation posited in the second question, which adds to the first question the additional fact of the participation of federal agents in the investigation, arrest, or seizure.

The foregoing is also relevant to the third question, which is prompted by the fact that under the North Carolina Constitution [Article IX, Section 7] the clear proceeds of all penalties and forfeitures and of all fines collected for any breach of the penal laws of the state must go to the county board of education.

For the reasons stated above in response to the first question, and for the following reasons, it is our opinion that the provision contained in the North Carolina Constitution applies only to forfeitures resulting from a breach of the penal laws of North Carolina, and has absolutely no application to forfeitures proceeding from a breach of any federal law, and that local law enforcement may share in the proceeds of federal forfeitures.

Article IV, clause 2, of the United States Constitution states that "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."

28 U.S.C. 1355 states that the federal district courts "have original jurisdiction, exclusive of the courts of the States, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress, . . ."

The Supreme Court of the United States stated in Ray v. Atlantic Richfield Co., 435 U.S. 151, 158 (1978), that "Even if Congress has not completely foreclosed state legislation in a particular area, a state statute is void to the extent that it actually conflicts with a valid federal statute; and a conflict will be found where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to accomplishment and execution of the full purposes and objectives of Congress."

Under federal law, local sheriffs and police departments have an independent right to request federal adoption of a seizure made pursuant to state law. According to the "Attorney General's Guidelines on Seized and Forfeited Property" [52 Fed. Reg. 46855, December 10, 1987], issued pursuant to 21 U.S.C. 881, "Any . . . State, or local law enforcement agency that participates in the acts leading to a seizure or forfeiture may file a request for an equitable transfer of the property (to the requesting agency). " [52 Fed. Reg. (III-D-2a) at 46857] Such equitable sharing can only occur if the agency is a law enforcement agency, if the agency directly participated in any of the acts which led to the seizure or forfeiture, and if "the tangible property or cash will be credited to the budget of the state or local agency that directly participated in the seizure or forfeiture, resulting in an increase of law enforcement resources for that specific State or local agency." [52 Fed. Reg. (III-D-3e) at 46857]

Further, we construe the provisions of N.C. General Statutes, Chapter 147-83 and Chapter 160A17.1, to authorize the city and county governments and the county sheriff, who is a constitutional officer in North Carolina [N.C. Constitution, Art. VII, § 2] to accept and receive such grants from the federal government. Therefore, should any state or local law enforcement agency be so fortunate to have the U.S. Attorney recommend that a part of a forfeiture go to it, it is our opinion that the laws and constitution of North Carolina do not stand in the way of such generosity.

Finally, this opinion should not be construed to encourage law enforcement agencies in North Carolina to seek federal administrative adoption of seized assets prior to seeking competent legal advise from departmental legal staff or district attorneys concerning the relevance or vitality of such seized assets in pending criminal actions under state law. [See G.S. 15-11.1] The preservation of such evidence through photographic or other means usually will not significantly delay federal forfeiture proceedings and may sometimes be pivotal in state criminal proceedings. Indeed, the U.S. Attorney General's Guidelines [52 Fed. Reg. (III-D-5f) at 46859] indicates that "Decision-makers should consult each other in situations where inconsistent decisions are possible in factually related forfeiture proceedings that might jeopardize relations between Federal agencies and State or local law enforcement agencies."

Nevertheless, once a federal proceeding has been instituted, whether through Federal or local initiative, "A decision to forego a Federal judicial forfeiture proceeding against any seized asset in favor of a State or local forfeiture proceeding requires the personal approval of the United States Attorney after review of the evaluation and recommendation of the concerned Department investigative bureau." [52 Fed. Reg. (V-A-1) at 46861]

While it is to be anticipated that the U.S. Attorney would cooperate in preserving evidence to protect the integrity and vitality of state criminal proceedings, nothing in the federal statutes or regulations requires the federal government to forego its forfeiture actions in favor of state or local law.

Lacy H. Thornburg Attorney General

Harold M. White, Jr. Associate Attorney General