You have requested my official opinion concerning the applicability of the Fair and Open Grants Act of 1993 ("FOGA"), O.C.G.A. § 28-5-120 et seq., to funds appropriated to the Department of Transportation.

You are familiar with earlier opinions of this office answering various questions about FOGA, 1993 Op. Att'y Gen. 93-13 to Honorable Werner Rogers, State Superintendent of Schools (July 9, 1993), and 1993 Op. Att'y Gen. 93-19 to Mr. Jim Higdon, Commissioner of Community Affairs (August 12, 1993). In particular, the former opinion is relevant to the questions asked in your letter, as it states that the term "grant" must be understood according to its ordinary meaning, i.e., a disbursement in the form of gift or aid for a particular purpose. Consequently, in analyzing whether an expenditure is a grant under FOGA, it is the nature of the disbursement, not the source of funding, which controls.

As suggested in your letter, the majority of disbursements of funds by the Department of Transportation are made pursuant to the Department's power to contract, O.C.G.A. § 32-2-2(a)(5), for the accomplishment of the Department's primary public responsibility: to "plan, designate, improve, manage, control, construct, and maintain a state highway system and . . . [to] have control of and responsibility for all construction,

maintenance, or any other work upon the state highway system and all other work which may be designated to be done by the department . . . ." O.C.G.A. § 32-2-2(a)(1). Unquestionably, where these duties of the Department are to be accomplished through a contract between the Department and a private entity, the disbursement of funds as consideration for the contract is clearly not a grant and therefore not covered by FOGA.

Under O.C.G.A. § 32-2-2(a)(2) and O.C.G.A. § 32-5-21, and the various appropriations acts, the Department is also authorized to expend state funds for public road work on roads not on the state highway system. The decision concerning funding of projects for construction or maintenance of roads not on the state highway system is made through a process of evaluating requests for such projects submitted by local governments in Georgia. The disbursement of funds in this context is a disbursement in the form of aid for a particular purpose and therefore comes within the scope of FOGA.

Your letter suggests that FOGA might not be applicable to such grants because of O.C.G.A. § 28-5-121(1)(D), which states that grants shall not include the disbursement of funds from "[c]ommon object classes." I have been unable to find any definition in the Official Code of Georgia of the term "common object classes." This term is defined in the Appropriations Act for State Fiscal Year 1994, 1993 Ga. Laws 1819, and in earlier appropriations acts. Section 78(b.)(1.) of the Appropriations Act states: "For purposes of this section, the term 'common object classes' shall include only Personal Services, Regular Operating Expenses, Travel, Motor Vehicle Equipment Purchases, Postage, Equipment Purchases, Computer Charges, Real Estate Rentals and Telecommunications." 1993 Ga. Laws 1819, 1894.

This definition specifically applies only to the use of the term "common object classes" in Section 78 of the Appropriations Act, but I am unaware of any other legislative definition of this term which would suggest that other object classes in the Appropriations Act are included in the definition of the term "common object classes." As this definition does not include the object class "capital outlay," I do not believe that the exemption provided by O.C.G.A. § 28-5-121(1)(D) applies to grants made to local governments by the Department for the construction, maintenance or improvement of public roads within their jurisdiction merely because the funds used by the Department for such grants are appropriated in the "capital outlay" object class.

Your letter also asks whether funds appropriated to the Department in the object class "Harbor Maintenance/ Intra-Coastal Waterways Maintenance and Operations," when disbursed, come within the scope of FOGA. The Department's authority to disburse such funds is found in O.C.G.A. § 32-2-2(a)(18). The language of this Code Section suggests that it permits the Department to disburse funds in the form of aid to "municipalities, counties, authorities, and state agencies" for a particular purpose - "clearing, dredging, or maintaining free from obstructions and . . . the widening, deepening, and improvement of the ports, seaports, or harbors of this state." By law, only the Department of Transportation, O.C.G.A. § 32-2-2(a)(18)(C), the Georgia Ports Authority, O.C.G.A. § 52-2-9(16) & (17), and Chatham County, pursuant to authority contained in the River and Harbor Act of 1965, Pub. L. No. 89-298, 79 Stat. 1089, 1090, are authorized by law to perform harbor maintenance work. Of the three, the General Assembly may only appropriate funds to the Department of Transportation for this work. 1983 Ga. Const., Art. III, Sec. IX, Para. III; 1975 Op. Att'y Gen. 75-40. The Department has entered into an intergovernmental contract authorized by 1983 Ga. Const., Art. IX, Sec. III, Para. I(a), with Chatham County whereby the Department has agreed to expend the aforementioned appropriated funds in the performance of those duties required of Chatham County as the local assurer under the River and Harbor Act of 1965.

Where the requirements for an intergovernmental contract specified in 1983 Ga. Const., Art. IX, Sec. III, Para. I(a) are met - where "such contracts . . . deal with activities, services, or facilities which the contracting parties are authorized by law to undertake or provide" - the transaction does not possess the characteristics of a grant: it is not a disbursement in the form of gift or aid. Here, each party legally might perform the activities or services covered by the intergovernmental contract, but, by this contract, the parties have provided that such services are to be performed by one party only. The appropriation of funds to the Department is to compensate the Department for the performance of the duties that Chatham County would otherwise have to perform as local assurer. There is no disbursement of funds to another public agency.

For these reasons, it is my official opinion that the Fair and Open Grants Act of 1993 does not apply to disbursements made by the Department of Transportation pursuant to contracts entered into with private entities, nor to the intergovernmental contract with Chatham County for harbor maintenance of the Savannah Harbor; but it is my official opinion that the Fair and Open Grants Act of 1993 does apply where funds are disbursed by the Department of Transportation on an unrestricted basis to, or for the benefit of, local governments for public road and other transportation purposes.

Prepared by:

Senior Assistant Attorney General