Can the East Tennessee Regional Agribusiness Marketing Authority lease its 76-acre I-81 property to non-agribusiness, non-wastewater tenants to bring in any kind of jobs?

Plain-English summary

ETRAMA owns 76 acres at the intersection of I-81 and US 25-E with several graded sites that look attractive to manufacturers, distributors, and other businesses unrelated to agribusiness or wastewater. Sen. Steve Southerland asked AG Slatery whether the authority could open up that land to general industrial development.

The answer is no. ETRAMA is a creature of statute, and its statute gives it only two purposes:

(1) "Establish and operate a market for agricultural products of the region through a food distribution center, to provide farmers of the region with a ready market for agricultural products and to provide the citizens of the region and other buyers a convenient place to purchase these products." Tenn. Code Ann. § 64-10-101(c)(1).

(2) "Further the economy and growth of the region served by [ETRAMA] by planning, acquiring, constructing, improving, extending, furnishing, equipping, financing, owning, operating and maintaining a system or systems within the region served by [ETRAMA] as provided in this part." Tenn. Code Ann. § 64-10-101(c)(2). Read together with the related statutes, this "system or systems" language refers to wastewater systems.

ETRAMA also has a catch-all power in Tenn. Code Ann. § 64-10-106(d) to "do all other things that are necessary or appropriate for carrying out the purposes of this part that are not prohibited to it by law or this part." That is broad, but it is tied to the two statutory purposes. Anything done under this catch-all has to support the agricultural market or the wastewater system.

The senator's question explicitly asked about development "for use in other than the agribusiness or wastewater systems sectors." That puts the proposal outside the only two purposes ETRAMA has been given. The catch-all does not save it. Because the answer to question 1 is no, question 2 (whether long-term leases or lease-to-own contracts are available) doesn't matter; the authority to enter such contracts depends on having statutory authority to engage in the underlying activity.

Whether any specific development at the 76-acre site is in fact within ETRAMA's statutory purposes is a fact-specific question. A tenant whose business actually furthers the agricultural market function (for example, a food processor that handles produce moving through the distribution center) might fit. A tenant unrelated to either purpose would not.

Currency note

This opinion was issued in 2018. 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.

If the General Assembly has expanded ETRAMA's statutory purposes since 2018 (for example, to include general industrial recruitment or economic development), the answer would change. Check the current Tenn. Code Ann. ch. 64-10 before acting.

Common questions

Q: What does the "necessary or appropriate" catch-all in § 64-10-106(d) actually allow?
A: It allows ETRAMA to do things that genuinely support its statutory purposes even if those things are not specifically listed. For instance, hiring staff, leasing equipment, or building infrastructure to support the food distribution center is "necessary or appropriate" to operating the agricultural market. What it does not allow is creating new programmatic purposes that the statute does not authorize.

Q: ETRAMA already has two tenants. Are those tenants automatically improper?
A: This opinion does not evaluate any specific existing lease. The opinion answers a categorical question: ETRAMA cannot develop property for purposes "other than the agribusiness or wastewater systems sectors." Whether a current tenant fits within the agribusiness or wastewater purposes is a factual question that the Board has to evaluate.

Q: What is the practical effect of this opinion on the 76-acre site?
A: Under the opinion, ETRAMA may develop or lease the site only for uses that fit one of its two statutory purposes. A use outside the agribusiness or wastewater sectors exceeds ETRAMA's authority, so those graded sites cannot be opened to general industrial tenants unless the statutory purposes themselves are met.

Q: How strict is the ultra vires doctrine in Tennessee for state authorities?
A: Tennessee statutory authorities have only the powers given them by their enabling statute, plus those reasonably implied to carry out the granted powers. Acts beyond statutory authority are ultra vires and unenforceable. This is why the catch-all in § 64-10-106(d) cannot expand ETRAMA's purposes; it can only support them.

Background and statutory framework

ETRAMA was established under Tenn. Code Ann. §§ 64-10-101 through 64-10-124 to "further the economy and growth of the agricultural industry of the [East Tennessee] region." § 64-10-101(b). The Board is structured around two specific functional purposes set in § 64-10-101(c). The structure mirrors how the General Assembly has historically constrained regional authorities: a list of permitted purposes plus a catch-all clause to allow incidental administrative actions.

Section 64-10-106(d) is the catch-all: "do all other things that are necessary or appropriate for carrying out the purposes of this part that are not prohibited to it by law or this part." Under standard administrative law canons, that clause is read to authorize support activities for the listed purposes, not to create new purposes.

The opinion follows a long line of Tennessee AG analysis on quasi-public corporations and authorities. When the question is "may we do X," the answer turns on whether X can be tied back to a listed statutory purpose or its reasonable implications.

Citations

• Tenn. Code Ann. §§ 64-10-101 through 64-10-124
• Tenn. Code Ann. § 64-10-101(b), (c)(1)-(2)
• Tenn. Code Ann. § 64-10-106(d)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2018/op18-19.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
April 12, 2018
Opinion No. 18-19

East Tennessee Agribusiness Marketing Authority

Question 1
Does the East Tennessee Regional Agribusiness Marketing Authority ("ETRAMA") have statutory authority under Tenn. Code Ann. §§ 64-10-101 through 64-10-124 to develop ETRAMA property for use other than the agribusiness or wastewater systems sectors?

Opinion 1
No. ETRAMA has the authority to develop property only if the development is necessary or appropriate for carrying out at least one of ETRAMA's statutory purposes, i.e., (1) the operation and development of wastewater treatment systems, or (2) the development and maintenance of a market for agricultural products, and if the development is not otherwise prohibited to it by law.

Question 2
If the answer to Question 1 is in the affirmative, does ETRAMA have the authority to enter into long term leases or lease-to-purchase contracts with businesses that wish to locate on the ETRAMA campus?

Opinion 2
See Opinion 1.

ANALYSIS

According to the request for this opinion, ETRAMA owns 76 acres at the intersection of Interstate 81 and US Hwy 25-E. The property, which currently has two tenants, has several graded sites that would be excellent locations for new businesses and industries that would create jobs for citizens of the region. The question is whether ETRAMA has the statutory authority to develop this property for use in other than the agribusiness or wastewater treatment sectors.

ETRAMA, which was established "to further the economy and growth of the agricultural industry of the [East Tennessee] region," Tenn. Code Ann. § 64-10-101(b), is governed by Tenn. Code Ann. §§ 64-10-101 through 64-10-124. None of these statutory provisions explicitly addresses ETRAMA's authority to develop its property for non-wastewater or non-agribusiness purposes. But the ETRAMA board does have discretion generally to "do all other things that are necessary or appropriate for carrying out the purposes of this part that are not prohibited to it by law or this part." Tenn. Code Ann. § 64-10-106(d).

Those "purposes" are to:

(1) [e]stablish and operate a market for agricultural products of the region through a food distribution center, to provide farmers of the region with a ready market for agricultural products and to provide the citizens of the region and other buyers a convenient place to purchase these products; and

(2) [f]urther the economy and growth of the region served by [ETRAMA] by planning, acquiring, constructing, improving, extending, furnishing, equipping, financing, owning, operating and maintaining a system or systems within the region served by [ETRAMA] as provided in this part.

Tenn. Code Ann. § 64-10-101(c)(1)-(2).

Thus, when the development of ETRAMA property is necessary or appropriate for carrying out at least one of the two purposes as specified in § 64-10-101(c)(1)-(2), and is not otherwise prohibited by law, the development could be within the scope of ETRAMA's statutory authority. Of course, whether any given development is in fact within the scope of that authority, i.e., comports with the specified "purposes," will depend on the totality of the facts and circumstances of each particular case.

Here, however, the question posed specifically states that the proposed development or use of the property will be for some purpose "other than the agribusiness or wastewater systems sectors." (Emphasis added.) Since "agribusiness" and "wastewater systems" are the only two statutorily authorized purposes, use or development of property for some "other" purpose or "other" sector would exceed the statutory authority of ETRAMA and its board.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE S. BLUMSTEIN
Solicitor General

ALEXANDER S. RIEGER
Deputy Attorney General

Requested by:
The Honorable Steve Southerland
State Senator
722 Cordell Hull Building
Nashville, Tennessee 37243