Is an NC state employee using a privately owned vehicle on official state business entitled to mileage reimbursement at the statutory IRS-business-standard rate (29 cents per mile in 1994) for every mile traveled regardless of distance, as the 1975 AG opinion concluded? Or does the Department of Administration have authority to cap that statutory rate for longer trips by requiring use of a state vehicle?

Plain-English summary

David C. Worth, counsel to the Savings Institution Division of the NC Department of Commerce, asked the AG about the mileage reimbursement rate for state employees using privately owned vehicles on official state business under N.C. Gen. Stat. § 138-6(a)(1). The Savings Institution Division was a non-appropriated agency: it collected fees from regulated industries, deposited them with the State Treasurer, and operated from those funds. Worth attached a 1975 AG opinion that had concluded state employees were entitled to reimbursement at the then-statutory 15-cents-per-mile rate "regardless of the number of miles traveled."

Chief Deputy AG Andrew A. Vanore, Jr., and Senior Deputy AG Ann Reed said the 1975 opinion had to be qualified. Department of Administration rules promulgated in the intervening years had layered new limits on top of the statutory rate, and those limits were valid under the Department's rulemaking authority.

The statute. N.C. Gen. Stat. § 138-6(a)(1), as amended by 1993 Sess. Laws, ch. 321, § 4, provided that travel on official business by officers and employees of state departments, institutions, and agencies that operate from funds deposited with the State Treasurer "shall be reimbursed . . . [f]or transportation by privately owned automobiles, the business standard mileage rate set by the Internal Revenue Service per mile of travel . . . ." The IRS business standard mileage rate effective January 1, 1994 was 29 cents per mile (per Rev. Proc. 93-51, I.R.B. 1993-42).

The rulemaking authority. N.C. Gen. Stat. § 143-341(8)i.7 authorized the Department of Administration to adopt, with the Governor's approval, "reasonable rules regulating the use of private motor vehicles upon State business by the officers and employees of State agencies, and to enforce those rules." Under that authority the Department had promulgated rules in 1 NCAC 38 .0500 et seq.

The rules. The Administrative Code overlay was structured this way:

• 1 NCAC 38 .0502(a) — statutory reimbursement rates (the IRS-based rate per § 138-6(a)(1)) apply to trips of 60 miles or less.
• 1 NCAC 38 .0502(b) — for trips exceeding 60 miles, a state vehicle must be used if one is available within the Raleigh servicing area.
• 1 NCAC 38 .0502(c) — when use of a private vehicle is "in the best interest of the state and results from the particular requirements of the employee's duties," statutory rates may be paid even on longer trips.

The AG noted that the rules did not specify who decides whether private-vehicle use is in the best interest of the state for purposes of subsection (c), but inferred that the Department of Administration (which promulgated the rules) is the decision-maker.

The conclusion. The reimbursement rate under § 138-6(a)(1) is subject to the limits in 1 NCAC 38 .0500 et seq. To the extent the 1975 opinion (which had not addressed the later-adopted rules) implied otherwise, it is superseded.

The opinion is short and pragmatic. It confirms that statutory mileage reimbursement is not absolute: an authorized administrative rule can layer a state-vehicle preference on top of the statutory rate for longer trips. The state's financial interest in centralized vehicle ownership and the operating cost benefits of state vehicles are presumed to justify the 60-mile cap; the "best interest" exception preserves flexibility for special situations.

Currency note

This opinion was issued in 1994. 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 IRS business standard mileage rate changes annually (it is no longer 29 cents per mile). The state-employee travel reimbursement statute in G.S. § 138-6 has been amended multiple times since 1994, and the Department of Administration rules in 1 NCAC 38 .0500 et seq. have also been revised. The current Office of the State Controller travel policy is the operational authority for most state employee travel reimbursement questions. The general legal principle that an authorized administrative rule can layer reasonable limits on top of statutory reimbursement rates is still good law in NC. Any current question about a specific reimbursement should be checked against the current statute, current rules, and current Office of the State Controller travel policy guidance.

Common questions

Q: Why does the statute tie reimbursement to the IRS business standard mileage rate?
A: The IRS rate reflects the IRS's annual estimate of the average per-mile cost of operating a personal vehicle for business purposes (fuel, depreciation, insurance, maintenance). Tying state reimbursement to the IRS rate keeps state policy aligned with a nationally maintained, regularly updated cost estimate, and avoids the General Assembly having to revisit the per-mile number every year as gasoline prices and vehicle costs change.

Q: Why does the Department of Administration get to add a 60-mile cap?
A: Because G.S. § 143-341(8)i.7 expressly authorizes the Department to adopt rules regulating the use of private motor vehicles by state officers and employees on state business. The cap and the state-vehicle preference are reasonable rules within that authority. They do not contradict the statutory rate; they layer a usage rule on top of it.

Q: What is the 'best interest of the state' exception in 1 NCAC 38 .0502(c)?
A: A safety valve for situations where the state-vehicle requirement would not actually serve the state. For example, an employee whose duties require frequent multi-stop travel across many sites in a day might be more efficient (and cheaper for the state) using a personal vehicle than picking up and returning a state vehicle to a central pool. The rule defers to the Department of Administration to make the call.

Q: What is the 'Raleigh servicing area' for state vehicles?
A: The geographic area within which state-vehicle pools can practically provide a vehicle to a Raleigh-based employee on the day the employee needs it. The rule's structure assumes that for trips over 60 miles, a Raleigh-based employee can usually pick up a state vehicle from a Raleigh pool rather than driving a personal vehicle and seeking reimbursement. Field offices or employees outside the Raleigh area may have different default rules.

Q: Why was the 1975 opinion superseded?
A: Because the regulatory landscape changed. In 1975, the Department of Administration had not yet adopted the 1 NCAC 38 .0500 series with the 60-mile cap. The 1975 opinion read § 138-6 in isolation and concluded that reimbursement applied at the statutory rate without distance limit. After the Department adopted its rules, that reading became wrong: § 138-6 had to be read together with the rules. The 1994 opinion corrects the prior reading rather than challenging it on its own terms.

Q: Does this affect how a state employee should file for mileage reimbursement?
A: Yes, indirectly. An employee planning a trip over 60 miles in a privately owned vehicle should verify (with the agency's travel coordinator and the Department of Administration's rules) whether a state vehicle is available. If one is and the employee uses a personal vehicle without falling into the "best interest" exception, the reimbursement claim may be denied or reduced. The 60-mile cap is the operational benchmark.

Background and statutory framework

NC's state-employee travel reimbursement framework reflects a long-running tension between flexibility (employees should be able to choose how to travel without arbitrary obstacles) and cost control (the state has financial reasons to prefer state vehicles for longer trips because per-mile costs are lower). The statutory IRS-rate reimbursement sets the default; the administrative rules carve out the state-vehicle preference for longer trips; the "best interest" exception preserves flexibility for special cases.

The Department of Administration's rulemaking authority under § 143-341(8)i.7 covers a broad swath of state-government operational matters (motor vehicles, building maintenance, real estate, surplus property). The Department uses that authority to standardize practices across agencies and capture economies of scale.

The 1994 opinion is a useful primer on how administrative rules can refine statutory authority without contradicting it. The statute sets the rate; the rule sets the conditions under which the rate is paid. The two work together as long as the rule fits within the statutory delegation of authority. The opinion is also a good reminder that AG opinions can be superseded by later regulatory or statutory changes; what the AG said in 1975 was right then but had to be qualified by the 1994 update.

Citations

• N.C. Gen. Stat. § 138-6 (state employee travel reimbursement)
• N.C. Gen. Stat. § 138-6(a)(1) (privately owned automobile reimbursement at IRS business standard mileage rate)
• N.C. Gen. Stat. § 143-341(8)i.7 (Department of Administration authority to adopt rules regulating use of private motor vehicles on state business)
• 1 NCAC 38 .0500 et seq. (Department of Administration rules on state travel by private motor vehicle)
• 1 NCAC 38 .0502(a) (statutory rate applies to trips of 60 miles or less)
• 1 NCAC 38 .0502(b) (state vehicle must be used for trips over 60 miles if available in Raleigh servicing area)
• 1 NCAC 38 .0502(c) (statutory rates may apply when private-vehicle use is in best interest of state)
• 1993 Sess. Laws, ch. 321, § 4 (amendment to § 138-6(a)(1))
• Rev. Proc. 93-51, I.R.B. 1993-42 (IRS business standard mileage rate effective January 1, 1994: 29 cents per mile)
• AG Opinion dated December 10, 1975 (concluded statutory rate applies regardless of mileage; superseded to extent of conflict)

Source

• Landing page: https://ncdoj.gov/opinions/mileage-reimbursement/

Original opinion text

September 27, 1994

Mr. David C. Worth
Counsel, Savings Institution Division
North Carolina Department of Commerce
1110 Navaho Drive, Suite 3001
Raleigh, NC 27609

Re: Advisory Opinion — Mileage Reimbursement Pursuant to N. C. Gen. Stat. § 138-6

Dear Mr. Worth:

This will respond to your request for an opinion on the mileage reimbursement rate to which a state employee is entitled for use of a privately owned vehicle pursuant to N. C. Gen. Stat. § 138-6(a)(1). You indicated that the Savings Institution Division is an agency which collects fees from its regulated industries, deposits those monies with the State Treasurer and utilizes those funds with which to operate. Your agency does not receive an appropriation from the General Assembly.

Together with your request, you include a copy of a 10 December 1975 opinion from this office which concludes that "… State officers and employees are entitled to reimbursement at a rate of fifteen cents (15¢) per mile [the rate in effect at that time] traveled when privately owned automobiles are used in pursuance of official state business, regardless of the number of miles traveled." For the reason set forth below, this opinion must now be qualified by Department of Administration rules promulgated in recent years.

DISCUSSION OF THE LAW

N. C. Gen. Stat. § 138-6(a)(1), as recently amended by the General Assembly, 1993 Sess. Laws, c. 321, s. 4, provides for reimbursement for transportation by privately owned automobiles as follows:

"[T]ravel on official business by the officers and employees of State departments, institutions and agencies which operate from funds deposited with the State Treasurer shall be reimbursed. . . [f]or transportation by privately owned automobiles, the business standard mileage rate set by the Internal Revenue Service per mile of travel . . . ."

The rate set by the Internal Revenue Service, effective January 1, 1994, is .29¢ per mile. See, Rev. Proc. 93-51, I.R.B. 1993-42. The foregoing statute is, in our opinion, subject to rules promulgated by the Department of Administration pursuant to N.C. Gen. Stat. § 143-341(8)i.7. The latter provision of law authorizes the Department "… to adopt, with the approval of the Governor, reasonable rules regulating the use of private motor vehicles upon State business by the officers and employees of State agencies, and to enforce those rules."

Under this authority, the Department of Administration has promulgated rules which limit statutory reimbursement rates to trips not exceeding sixty miles. 1 NCAC 38 .0502(a). For trips exceeding sixty miles, the rules provide that a state vehicle must be used if one is available within the Raleigh servicing area. 1 NCAC 38 .0502(b). The rules do, however, provide that ". . . when use of a private vehicle is in the best interest of the state and results from the particular requirements of the employee's duties, statutory rates may be paid." 1 NCAC 38 .0502(c). The latter rule does not clarify who will determine whether or not it would be in the best interest of the state for an employee to use a private vehicle, but as these rules are promulgated by the Department of Administration, it would appear to be that Department's decision.

CONCLUSION

In summary, it is our conclusion that the reimbursement rate provided at N. C. Gen. Stat. § 138-6(a)(1) is subject to the limitations prescribed in the Administrative Code, 1 NCAC 38 .0500 et. seq. To the extent that this opinion is in conflict with the opinion of 1975, that opinion is hereby superseded.

We trust this that this adequately addresses your questions to us. Please let us know if we may be of further assistance.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

Ann Reed
Senior Deputy Attorney General