Can Tennessee enter into a private concession contract to redevelop and operate Fall Creek Falls State Park without violating a statute that limits when the parks department can contract for state-employee work?

Plain-English summary

In 2017 the state was preparing to award a concession contract to redevelop and run the hospitality side of Fall Creek Falls State Park: the inn, restaurant, gift shop, conference space, cabins, and golf course. A senator asked whether moving these services to a private concessionaire would run into Tenn. Code Ann. § 11-3-112(a), the statute giving the TDEC commissioner authority to purchase certain services for park operations without TDGS approval. That statute carries a notable carve-out: it does not authorize TDEC to contract on its own for services that have previously been or could be performed by state employees.

The AG concluded that § 11-3-112(a) did not apply at all to the Fall Creek Falls procurement, because TDEC was not contracting on its own. The deal was structured through the Department of General Services, with State Building Commission approval. Tenn. Code Ann. § 12-2-116(a)(1) gives TDGS independent authority, with State Building Commission approval, to enter into agreements for the "private development, redevelopment, construction and operation of facilities on lands owned by or under the control of the state."

The opinion ended with a textbook canon-of-construction note. To the extent any tension existed between § 11-3-112(a) and § 12-2-116(a)(1), the harmonious-reading canon applied: § 11-3-112(a) governs solo TDEC contracting, and § 12-2-116(a)(1) governs TDGS-led state-land utilization agreements. The two statutes operate side by side without conflict.

Currency note

This opinion was issued in 2017. 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 or process mentioned here.

Background and statutory framework

The Fall Creek Falls RFP was a high-profile public-private partnership procurement. TDGS, on behalf of TDEC's Division of State Parks, was seeking a single concessionaire to handle the design, demolition, and construction of a redeveloped lodge, the broader facilities-improvement plan for the park, and ongoing operation of the hospitality assets. The concessionaire would work through subcontractors, vendors, and its own employees. State employees who met the concessionaire's professional qualifications could be hired by the concessionaire, and the state reserved review rights on hiring procedures and set certain salary and benefit requirements.

The default procurement rule. Tenn. Code Ann. §§ 12-3-101 et seq. and § 12-2-105(a) put state agency purchasing under the jurisdiction of the Central Procurement Office and require state agencies to contract for supplies, materials, equipment, and services through TDGS. TDEC is bound by this rule like any other state agency.

§ 11-3-112(a) as an exception. The statute gives the TDEC commissioner authority, "notwithstanding any law to the contrary," to purchase services, raw materials, merchandise for resale, supplies, and equipment necessary for quality state park operations, without approval of any other state agency. But the last sentence carves out: this section "shall not be construed to allow the department to contract for services previously accomplished for the parks by state employees or for services that could reasonably be expected to be accomplished by state employees."

The AG read that last sentence carefully. It does not prohibit all contracts for services that could be done by state employees. It just blocks TDEC from doing such contracts on its own under § 11-3-112(a). If TDEC follows the normal procurement track through TDGS, the carve-out does not bite.

§ 12-2-116(a)(1) as the operative authority. This statute gives the TDGS commissioner, with State Building Commission approval, authority "in order to provide utilization of state-owned lands and facilities in the public interest, [to] enter into agreements for the private development, redevelopment, construction and operation of facilities on lands owned by or under the control of the state." That is exactly the structure of the Fall Creek Falls concession contract: TDGS-led, State Building Commission approved, for the private redevelopment and operation of state-owned park facilities.

Harmonious construction. Where statutes could potentially conflict, Tennessee courts apply the harmonious-reading canon, reading them together so neither is defeated when both can stand. Frazier v. E. Tenn. Baptist Hosp., 55 S.W.3d 925, 928 (Tenn. 2001); In re Akins, 87 S.W.3d 488, 493 (Tenn. 2002). Here, the AG had no trouble harmonizing: § 11-3-112(a) lets TDEC handle routine park purchasing on its own, with a carve-out for state-employee work; § 12-2-116(a)(1) gives TDGS its own track for larger land-utilization agreements like Fall Creek Falls. The two cover different terrain and do not collide.

Implications. The Fall Creek Falls concession could go forward. The opinion did not address employment-law questions about the state employees who might be hired by the concessionaire, or labor-relations issues around the transition; it was strictly about whether the procurement structure had statutory authorization.

Common questions

Q: Why didn't § 11-3-112(a)'s carve-out for state-employee work stop the contract?
A: Because § 11-3-112(a) only governs when TDEC contracts on its own without TDGS approval. The Fall Creek Falls contract was being handled through TDGS, so the carve-out did not apply.

Q: What gave TDGS authority to enter the contract?
A: Tenn. Code Ann. § 12-2-116(a)(1), which lets the TDGS commissioner, with State Building Commission approval, enter into agreements for the private development, redevelopment, construction, and operation of facilities on state-owned lands.

Q: Could TDEC have done the deal on its own under § 11-3-112(a)?
A: According to the opinion, no. The carve-out in § 11-3-112(a) blocks TDEC from contracting on its own for services that have been or could be done by state employees. Many hospitality and operations functions at Fall Creek Falls had historically been performed by state employees.

Q: Does this mean any state-park privatization is fine if it goes through TDGS?
A: The opinion did not blanket-approve privatization. It said this particular contract had statutory authority because of the TDGS/State Building Commission track and § 12-2-116(a)(1). A different structure could raise different questions.

Q: What's the State Building Commission's role here?
A: § 12-2-116(a)(1) requires State Building Commission approval and subjects the agreement to the commission's policies and procedures. That is the institutional check on TDGS's authority to enter these state-land utilization deals.

Citations and references

Statutes:

• Tenn. Code Ann. § 11-3-112 (TDEC commissioner purchasing authority)
• Tenn. Code Ann. § 11-3-112(a) (state park operations purchasing)
• Tenn. Code Ann. § 12-2-105(a) (general procurement through TDGS)
• Tenn. Code Ann. §§ 12-3-101 et seq. (central procurement)
• Tenn. Code Ann. § 12-2-116(a)(1) (state-owned land utilization agreements)

Cases:

• Frazier v. E. Tenn. Baptist Hosp., Inc., 55 S.W.3d 925 (Tenn. 2001)
• In re Akins, 87 S.W.3d 488 (Tenn. 2002)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2017/op17-016.pdf

Original opinion text

March 2, 2017
Opinion No. 17-16
Fall Creek Falls Concession Contract

Question
Would the Commissioner of the Tennessee Department of Environment and Conservation be in violation of Tenn. Code Ann. § 11-3-112 if he were to enter into an agreement with a concessionaire for the operation of Fall Creek Falls State Park as provided for in the Fall Creek Falls Concession Contract RFP (SBC Project No. 126/036-03-2016)?

Opinion
Tennessee Code Annotated § 11-3-112 is not applicable to the proposed transaction. But Tenn. Code Ann. § 12-2-116 is applicable and provides specific and separate authority for the Tennessee Department of General Services to enter into an agreement for the private redevelopment, construction, and operation of the facilities at Fall Creek Falls State Park.

ANALYSIS

Fall Creek Falls State Park is owned by the State of Tennessee. The Tennessee Department of General Services ("TDGS"), on behalf of the Tennessee Department of Environment and Conservation, Division of State Parks ("TDEC"), issued a Request for Proposals ("RFP") for a concession contract for the Redevelopment and Operation of Hospitality Facilities at Fall Creek Falls State Park ("Concession Contract"). It is anticipated that this procurement will be completed in May 2017. As stated in the RFP, the purpose is to engage a concessionaire with expertise in lodging redevelopment, private-sector-hospitality best-management practices, and service delivery for a public-private partnership consistent with the mission of the Tennessee State Parks.

The RFP asks for a redevelopment plan for the design, demolition, and construction of the redeveloped lodge; a facilities improvement plan for the redevelopment of the park including all proposed construction projects, curing of deferred maintenance, and overview of the replacement of personal property; and an operating plan for the operation of the park facilities. The Concession Contract grants the winning proposer ("Concessionaire") the right, privilege, and duty to develop, maintain, and operate all of the facilities located at Fall Creek Falls State Park, including but not limited to the inn, restaurant, gift shop, conference space, cabins, and golf course.

The Concessionaire will operate the park facilities through subcontractors, vendors, and Concessionaire employees. State employees who meet the professional qualifications of the Concessionaire may be hired to work for the Concessionaire. The State reserves the right to review the hiring procedures prior to implementation by the Concessionaire. The Concession Contract sets forth certain requirements for salary and benefits for the state employees who may be hired by the Concessionaire.

Purchases of goods and services for the State are generally made under the jurisdiction of the Central Procurement Office and are governed by Tenn. Code Ann. §§ 12-3-101 et seq. Departments, institutions, and agencies of the State are generally required to contract for the purchase of supplies, materials, equipment, and services through the Department of General Services. See Tenn. Code Ann. § 12-2-105(a).

TDEC is an agency of the State and, thus, is required to contract for the purchase of supplies, materials, equipment, and services through the Department of General Services. The Code section referenced in your opinion request, Tenn. Code Ann. § 11-3-112(a), authorizes an exception to this general requirement. It allows — but does not require — TDEC to make purchases for goods and services related to state park operations that would otherwise have to be made with the approval of and through the Department of General Services.

Notwithstanding any law to the contrary, the commissioner of environment and conservation has the authority to cause to be purchased and to develop the method for purchasing, without the approval of any other agency of state government, services, raw materials, merchandise or resale, supplies and equipment necessary for provision of quality services for state park operations. This section shall not be construed to allow the department to contract for services previously accomplished for the parks by state employees or for services that could reasonably be expected to be accomplished by state employees.

Tenn. Code Ann. § 11-3-112(a) (emphasis added).

The last, italicized, sentence of Tenn. Code Ann. § 11-3-112(a) clarifies that the purchasing authority given to the TDEC commissioner under Tenn. Code Ann. § 11-3-112 does not extend to allow TDEC to contract on its own and without approval of another state agency for services that have been or could be provided by State employees. In other words, if TDEC wants to contract for services previously accomplished for the parks by state employees or for services that could reasonably be expected to be accomplished by state employees, the § 112(a) exception does not apply, and TDEC must, for such a contract, go through the usual procurement process of contracting for such services through the Department of General Services.

Taken in context, then, the last sentence of Tenn. Code Ann. § 11-3-112(a) does not prohibit all contracts for services for state park operations that have been or could be performed by State employees; it just prohibits TDEC from entering into such contracts on its own outside the otherwise required procurement process through the Department of General Services. And it appears that with respect to the Concession Contract, TDEC will not be contracting on its own. Rather, as both the RFP and the Concession Contract indicate, TDEC would be contracting through the Department of General Services.

In short, because TDEC would not be contracting on its own without approval of any other state agency, but would be contracting through and with the approval of General Services, Tenn. Code Ann. § 11-3-112(a) does not apply to the RFP or the Concession Contract.

Moreover, there is separate statutory authority, namely Tenn. Code Ann. § 12-2-116(a)(1), that does apply and that specifically allows the TDGS commissioner, with the approval of the State Building Commission, to enter into agreements concerning state-owned or state-controlled lands and facilities, such as the proposed RFP and Concession Contract for the operation of Fall Creek Falls State Park.

Notwithstanding any other provisions of this part, the commissioner of general services, with the approval of the state building commission and subject to the policies and procedures of the commission, may in order to provide utilization of state-owned lands and facilities in the public interest, enter into agreements for the private development, redevelopment, construction and operation of facilities on lands owned by or under the control of the state.

Tenn. Code Ann. § 12-2-116(a)(1) (emphasis added).

Thus, the applicable statute is Tenn. Code Ann § 12-2-116(a)(1). It specifically authorizes TDGS to enter into an agreement, like the Concession Agreement, for the private redevelopment and operation of state-owned or state-controlled lands and facilities like Fall Creek Falls State Park.

To the extent that there may be any conflict between Tenn. Code Ann. § 11-3-112(a) and Tenn. Code Ann. § 12-2-116(a)(1), a court will apply the harmonious-reading cannon of statutory construction. That imperative instructs that statutory provisions should be interpreted in a way that renders them compatible, not contradictory; one section or part should not be allowed to defeat another if, by any reasonable construction, the two can be made to stand together. Courts will, as this opinion does, ultimately seek the most reasonable construction that avoids statutory conflict and provides for harmonious operation of the laws. Frazier v. E. Tenn. Baptist Hosp., Inc., 55 S.W.3d 925, 928, (Tenn. 2001); accord, In re Akins, 87 S.W.3d 488, 493 (Tenn. 2002).

In sum, since TDEC is the contracting through TDGS with regard to the RFP and the Concession Agreement, Tenn. Code Ann. § 12-2-116, not Tenn. Code Ann. § 11-3-112, is the applicable and controlling statute. And under the applicable statute, TDGS has statutory authority to enter into the RFP and Concession Contract.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

JANIE C. PORTER
Senior Counsel

Requested by:
The Honorable Janice Bowling
State Senator
310A War Memorial Building
Nashville, Tennessee 37243