Did South Carolina agricultural commodity boards have to follow the state procurement code?

View original AG opinion (PDF)

Plain-English summary

The state agriculture commissioner asked whether agricultural commodity boards were subject to South Carolina's general procurement code when spending assessments collected from farmers. The 2016 AG concluded that the boards were exempt. It read the specific Agricultural Commodities Marketing Act as prevailing over the general procurement rules for these board functions.

The opinion emphasized that boards existed through affected farmers' consent and were funded by assessments tied to their commodities. It treated the statute's detailed marketing scheme as letting boards determine how and when those funds were spent. The AG called the answer a prediction of how a court would read the statutes and noted that the legislature could clarify the matter.

Currency note

This opinion was issued in 2016. 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.

Common questions

Q: Did the AG apply the general procurement code to commodity-board spending?
A: No. It concluded that the more specific marketing statute controlled the use of farmer assessments.

Q: Who decided how the assessments were spent under the opinion?
A: The AG said the commodity boards had authority to determine the timing and use of those assessments.

Q: Was the opinion a binding exemption ruling by a court?
A: No. The AG described its conclusion as an opinion on how a court would likely interpret the statutes.

Background and statutory framework

The opinion compared the Agricultural Commodities Marketing Act with the Consolidated Procurement Code. It viewed the marketing statute's specific purpose and financing as controlling the boards' use of assessments. It also discussed a prior opinion in which a statutory spending scheme prevailed over general procurement requirements.

Citations and references

• The AG wrote: “the specific provisions of the Marketing Act prevail over the general terms of the Procurement Code.”
• The conclusion said commodity boards “have the authority to determine how and when assessments collected from farmers” are spent.
• Source: South Carolina Attorney General, April 28, 2016.

Official title

Regarding whether commodity boards are exempt from the South Carolina Consolidated Procurement Code.

Requester

The Honorable Hugh E. Weathers, South Carolina Department of Agriculture.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/april-28-2016/
• Original PDF: https://www.scag.gov/wp-content/uploads/2016/05/Weathers-H.-OS-9973-FINAL-Opinion-4-28-2016-00979361xD2C78.pdf

Original opinion text

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Alan Wilson
ATTORNEY GENERAL

April 28. 2016

The Honorable Hugh E. Weathers
South Carolina Department of Agriculture
PO Box 11280

Columbia. SC 29211
Dear Commissioner Weathers:

We have received your opinion request inquiring whether commodity boards are exempt from the South Carolina Consolidated Procurement Code ("Procurement Code"). S.C. Code Ann. §

11-35-10 et sec/. (1976 Code, as amended).

Specifically, you ask whether the Agricultural

Commodities Marketing Act ("Marketing Act"), S.C. Code Ann. § 46-17-10 el seq. (1976 Code, as amended), authorizes commodity boards to determine how and when assessments collected from farmers are spent.

In your opinion request letter, you provide a thorough analysis of the

Marketing Act:

[tjhe South Carolina Department of Agriculture (SCDA). on behalf of all Agricultural Commodity Boards operating in South Carolina,

needs an opinion from the Attorney General in regards to the powers of boards created under the Code of Laws governing the Marketing Act.

The South Carolina Commodities Marketing Act (Act) was passed by the General Assembly in the South Carolina Code of Laws in

1976, under Title 46, Agriculture, Chapter 17. The Act created the Agriculture Commission of South Carolina and charged it to oversee all aspects of Agricultural Commodity Boards.

Duties

assigned to the Agriculture Commission included a broad scope of responsibilities - managing legal requirements for individual board creation, hearings, referendums. election of directors, collections of assessments, and general oversight of board activities.

These

duties were to ensure that all business by the Commodity Boards was conducted as outlined under the Act and the by-laws of each individual board.

Commodity

Board

policy

and

procedure

development

goes

through a rigorous process involving all producers affected. In the Rembert C. Dennis Building

•

Post Office Box 1 1 549

. Columbia, SC 2921 l-l 549

. Telephone 803-734-3970

. Facsimile 803-253-6283

The Honorable Hugh E. Weathers
Page 2
April 28, 2016

case of determining producer interest in a marketing order for a

particular crop, a referendum must be held for producers of that Marketing orders

crop.

are thus

created

for each specific

commodity per the wishes and voluntary financial commitment of impacted farmers.

The sole purpose of marketing orders for all

crops is to fund specific activities in promotion, research, and education through a farmer paid assessment. Decisions regarding these funds are granted to boards and board members as outlined in Section 46-17-290 and stated in by-laws of each commodity board.

They are also provided specific powers in Section 46-17-260 and are also clearly provided the powers and authority conferred by law upon corporations.

The

Agriculture

Commodity

Commission

Board and

collects

SCDA provides

assessments
financial

for

the

accounting

services in holding funds in individual accounts and dispersing as

directed by the Board of Directors. These are not state funds and they are never co-mingled with state funds. Neither the SCDA nor the State of South Carolina can expend, transfer, or use any of these funds, except as expressed under the Act and by-laws of each commodity board under the specific direction of the Commodity

Boards.

Upon passage of the Act in

1976 and the creation of the

Agriculture Commission, Commodity Boards were considered exempt from State Procurement Codes, as all money collected was from

farm

producer

assessments

with

no

public

dollars

appropriated to support individual commodities. Again, these are

grower funded and managed commodity boards, and are provided specific powers under the Act. The Commodities Boards are also audited annually.

In the mid 1980's legislation was enacted to govern how state agencies managed funds under specific, transparent guidelines outlined under state procurement codes. At that time a proviso to the budget was passed to exempt commodity boards from procurement codes. That proviso remained in force until 2012, when it was deleted from the state budget. As a result, Commodity Boards are now treated like a state agency in terms of how they can direct the farmers'

dollars.

Given the responsibility of

stewardship of these funds, board members from all seven active

The Honorable Hugh E. Weathers
Page 3

April 28, 2016

Commodity Boards have taken exception to the procurement rule. Rightfully so, they say it usurps their authority as outlined under the Act, and are seeking an opinion on the matter. In hindsight,

it appears that the original proviso exempting

Commodity Boards from procurement rules was not necessary, as

they were already exempt when the Act was passed.

However,

with that proviso no longer in effect, the State Procurement Office and State Auditor do not consider them exempt.

Growers are

adamant that these are not state dollars, and that they are provided specific powers, with checks and balances in place outlined in the

Act, to ensure transparency and compliance with their by-laws. SCDA requests a review of the Code

of Laws,

Title 46,

Agriculture, Chapter 17, pertaining to the powers provided to

Commodity Boards and their Directors. Please provide an opinion regarding an individual commodity board's authority to determine

how and when assessment dollars are spent in the conduct of

business.

SCDA agrees that the Boards should be exempt from

state procurement guidelines when they are not dealing with state dollars.

SCDA has discussed with members of the General

Assembly and need clarification to resolve the matter.
LAW/ANALYSIS:

We begin our analysis with a brief background on statutory interpretation. In prior opinions, we have discussed the principles of statutory construction and they are: "[t]he cardinal rule of statutory construction is to ascertain and effectuate the intent of the legislature." Hodges v. Rainev. 341 S.C. 79, 86, 533 S.E.2d 578, 581 (2000) . . . "[CJourts will reject a statutory interpretation that would lead to an absurd result not intended by the legislature or that would defeat plain legislative intention." State v. Johnson. 396 S.C. 182, 189, 720 S.E.2d 516, 520 (Ct. App. 201 1). . . . On. S.C. Attv, Gen.. September 18, 2013 (2013 WL 5494616). Our Office has also determined that:

'[sjections which are part of the same statutory law of the State must be construed together. In construing statutory language, the

The Honorable Hugh E. Weathers
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April 28, 2016

statute must be read as a whole and sections which are part of the same general statutory law must be construed together and each one given effect, if it can be done by any reasonable construction.

Statutes pertaining to the same subject matter must be harmonized if at all possible.' In Interest of Doe. 318 S.C. 527, 531-32, 458

S.E.2d 556, 559 (Ct. App. 1995) (citations omitted). However, '[wjhere there is one statute addressing an issue in general terms and another statute dealing with the identical issue in a more specific and definite manner, the more specific statute will be considered an exception to, or a qualifier of, the general statute and given such effect.' Capco of Summerville. Inc. v. J.H. Gavle Constr. Co. Inc.. 368 S.C. 137,142, 628 S.E.2d 38, 41 (2006). Op. S.C. Attv. Gen.. July 28, 2014 (2014 WL 3886690) (quoting Op. S.C. Attv. Gen.. July 11, 2008 (2008 WL 3198122)). We stated more succinctly in Op. S.C. Attv. Gen.. March 20, 2006 (2006 WL 981695) (citing Criterion Insurance Company v. Hoffman. 258 S.C. 282, 188 S.E.2d 459 (1972); Op. Atty. Gen. dated August 5, 1986) that "[i]t is a rule of statutory construction that general and specific statutes should be harmonized if possible. However to the extent of any

conflict between the two, the special statute usually prevails."

We will now review the language of the Procurement Code and the Marketing Act.

The
pertinent section of the Procurement Code describes its application. Section 1 1-35-40(2) states:

[t]his code applies to every procurement or expenditure of funds by this State under contract acting through a governmental body as herein defined irrespective of the source of the funds, including federal assistance monies, except as specified in Section 11-35-

40(3) (Compliance with Federal Requirements) and except that this code does not apply to gifts, to the issuance of grants, or to contracts between public procurement units, except as provided in Article 19 (Intergovernmental Relations). It also shall apply to the disposal of state supplies as provided in Article 15 (Supply Management). . . . S.C. Code Ann. § 1 1-35-40(2) (1976 Code, as amended).

The purpose and policy of the Marketing Act are described in sections 46-17-20 and 46-17-30. Section 46-17-20 states:

[i]t is declared to be the purpose of this chapter to promote the general welfare of the State by enabling producers of agricultural

The Honorable Hugh E. Weathers
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April 28, 2016

commodities1 to help themselves in establishing orderly, fair, sound,

efficient,

and

unhampered

marketing,

grading

and

standardizing of the commodities they produce and in promoting and increasing the sale and proper use of such commodities S.C. Code Ann. § 46-17-20 (1976 Code, as amended). Section 46-17-30(b) provides:
[i]t is hereby declared to be the policy of this chapter: (b) To enable agricultural producers of this State, with the aid of

the State:
(l)To

develop,

and

engage

in

research

and

educational programs to develop better and more
efficient marketing and utilization of agricultural
products;
(2)To establish orderly marketing of agricultural
commodities;
(3)To provide

for uniform grading and

proper

preparation of agricultural commodities for market;
(4)To provide methods and means including, but
not limited to, public relations and promotion for

the maintenance of present markets and for the

development of new or larger markets, both
domestic and foreign, for agricultural commodities
produced within this State and for the prevention,

modification, or elimination of trade barriers which

obstruct the free flow
commodities to market;

of

such

agricultural

(5)To eliminate or reduce economic waste in the
marketing or use of agricultural commodities;

(6) To restore and maintain adequate purchasing
power for agricultural producers.

"'Agricultural commodity' means a distinctive type of agricultural, horticultural, viticultural, floricultural, aquacultural, vegetable, or animal product, either in its natural or processed state. . (1976 Code, as amended).

S.C. Code Ann. § 46-17-40

The Honorable Hugh E. Weathers
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April 28, 2016

S.C. Code Ann. § 46-17-30 (1976 Code, as amended).
We have also reviewed the powers provided to commodity boards under the Marketing Act. The Marketing Act is to be administered under the direct control and supervision of the Agriculture Commission, including such administrative requirements of marketing orders and agreements

not specifically assigned to commodity boards.
amended).

See S.C. Code Ann. § 46-17-50 (1976 Code, as

However, the Marketing Act grants commodity boards many powers.

Commodity

boards can exercise the powers and authority conferred by law upon corporations.2 S.C. Code Ann. § 46-17-260 (1976 Code, as amended).

Commodity boards have the powers assigned to

them by marketing orders and agreements, such as preparing and enforcing plans for promoting and advertising the sale of agricultural commodities; establishing research programs for control

of insects or disease, economic causes and effects, harvesting, storing, transporting, handling, processing, or any other research which would benefit a commodity; and establishing educational programs designed to acquaint producers, handlers, processors, and other interested persons with the results of research. See S.C. Code Ann. § 46-17-270 (1976 Code, as amended); S.C. Code Ann. § 46-17-290 (1976 Code, as amended).

Commodity boards can appoint or

utilize committees and individuals to advise them or the Agriculture Commission and can fix the

compensation for such services, which may be paid from the funds of the board. S.C. Code Ann.
§ 46-17-250 (1976 Code, as amended).

It should be noted that commodity boards and the Agriculture Commission can only use the assessments collected from farmers to pay the expenses and costs arising in connection with the administration, amendment or termination of the marketing orders and agreements. S.C. Code Ann. § 46-17-340 (1976 Code, as amended). Additionally, both the commodity boards and the

Agriculture Commission are required to keep accurate records of all assessments, collections, receipts, deposits, withdrawals, disbursements, paid-outs, monies, and other financial

2 Under the South Carolina Business Corporation Act of 1988, S.C. Code Ann. § 33-1-101 el seq. (1976 Code, as amended), corporations have the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation power to. . . (4) purchase, receive, lease, or otherwise acquire and own. hold, improve, use. and otherwise deal with real or personal property, or any legal or equitable interest in property, wherever located. . .

(7) make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds, and other obligations (which may be convertible into or include the option to purchase other securities of the corporation), and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income. .

(15) make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation. S.C. Code Ann. § 33-3-102 (1976 Code, as amended).

The Honorable Hugh E. Weathers
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April 28, 2016

transactions made pursuant to an order or agreement, and the records must be audited at least annually in accordance with generally accepted auditing standards. S.C. Code Ann. § 46-17-380 (1976 Code, as amended). In a prior opinion of our Office, one of the issues was whether it was a violation of the State Procurement Code for section 23-9-430 for the South Carolina State Firemen's Association to

receive a percentage of money received from the one percent tax on fire insurance for the purpose of the betterment and maintenance of skillful and efficient fire departments within the county. We determined that:
[i]t is the opinion of this Office that the State Procurement Code is

inapplicable in this situation.

The Legislature has mandated that

the funds are to be spent through the use of the [Firemen's] Association by virtue of creating the statutory provisions that

allowed the S.C. State Firemen's Association to spend the money as instructed in Title 23, Chapter 9, Article 3. The Legislature has precisely determined what must be done and specified in the statutes guidelines for how the money should be allocated. e.g., S.C. Code § 23-9-430.

See.

Therefore, no bidding process is

necessary. One legislature is not bound by another.
Op. S.C. Attv. Gen.. May 5, 201 1 (201 1 WL 2214073).
In that opinion, we also stated that "the Legislature, pursuant to its plenary powers, may

expressly authorize the [Firemen's] Association's duties and powers, irrespective of other statutes, such as the State Procurement Code

" Id.

The Legislature may exempt certain functions from the Procurement Code and we believe that the Legislature intended for commodity boards to be exempt. In sections 46-17-20 and 46-17 30, the Legislature makes it clear that the purpose and policy of the Marketing Act is to enable

fanners, or to give them the power3, to help themselves with the aid of the State and its agencies with the marketing and sale of agricultural products. The Marketing Act is unique in that it is the

farmers, and not the State, who benefit.

Farmers of a specific agricultural product are only

assessed and commodity boards only exist due to the consent and voluntary financial commitment of the farmers.

See S.C. Code Ann. § 46-17-70 (1976 Code, as amended); S.C.

Code Ann. § 46-17-190 (1976 Code, as amended).
In a prior opinion, we further explained how commodity boards and the assessments are unique:

3 "Enable" means "to make able; give power, means, competence, or ability to; authorize." See dictionary.com at http://www.dictionary.com/browse/enable

The Honorable Hugh E. Weathers
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April 28, 2016

[t]he unusual nature of a commodity board and its intended activities is borne out by the unusual nature of the commodity

board assessments, in that, unlike other funds which flow into the state treasury through any of the State's boards, departments or

institutions, these funds are not paid by the public-at-large in the

form of a general income or sales tax nor are they collected from the recipients of various forms of government regulatory services such as the purchasers of permits or licenses. In fact, the

commodity levy is assessed against a group of citizens engaged in a particular occupation who have by their voluntary expression of support elected to contribute to a fund established to help themselves to develop, expand and improve the market for their

product.
As further evidence of the non-public nature of the funds, the General Assembly in 1968 directed the Agriculture Commission through Section 46-17-370 to deposit all monies collected pursuant to the Agricultural Commodities Marketing Act in separate accounts. This direction to handle these funds in a specific manner is bolstered by a direction in Section 46-17-350 that any funds remaining after the termination of a marketing order be withdrawn from the approved depository and then paid into the state treasury.

A third, but equally important, indication of the unique character of the collected assessments is found in the fact that a peanut producer may, as authorized by Section 46-17-350 and Regulation 5-164(5), apply for and receive a complete refund of all assessments which have been paid to the Commission and the commodity board during any marketing season.

It can be concluded on the basis of these statements of policy and other indicators of characteristics that the activities which the Peanut and other commodity boards could reasonably be expected to engage in are unique when compared with other types of activities ordinarily encountered in the course of the operations of the State government and, therefore, that the General Assembly intended that only specifically provided restraints be placed on the use of any collected commodity board assessments.

The Honorable Hugh E. Weathers
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April 28, 2016

Op. S.C. Attv. Gen.. May 20. 1978 (1978 WL 22577)'1.
Furthermore, the Legislature has in our opinion granted the commodity boards the authority to spend the assessments by giving them the powers of a corporation to purchase, make payments, and make contracts as well as the power to pay the expenses and costs arising in connection with the marketing orders and agreements. The fact that the commodity boards are required to keep

financial records and be audited also indicates that the Legislative intent was for the commodity boards to have control of the assessments.

We therefore concur with our May 5. 201 1 opinion

that the bidding process of the Procurement Code is not necessary when the Legislature imbues a particular group with the authority to expend money.

We also agree with your opinion request

letter that the proviso to the budget exempting commodity boards from procurement codes was not necessary, as they were already exempt under the Marketing Act.

CONCLUSION:

Our opinion is that the specific provisions of the Marketing Act prevail over the general terms of the Procurement Code.

Therefore, commodity boards are exempt from the Procurement Code

and have the authority to determine how and when assessments collected from farmers arc spent.

Please be aware that this is only an opinion as to how this Office believes a court would inteipret the law in this matter and that the Legislature may wish to clarify this matter.

Sincerely,

CtCcL
Elinor V. Lister
Assistant Attorney General

REVIEWED AND APPROVED BY:

'

Robert D. Cook
Solicitor General

JThis opinion was published prior to the enactment of the Procurement Code.