Does Virginia's International Trade Corporation legally exist, and can the Governor appoint its board even though it has no funding?

Plain-English summary

Delegate Landes asked the AG whether the Virginia International Trade Corporation legally existed and whether the Governor could appoint its Board members. The Corporation had been created by H.B. 858 (2016 Va. Acts ch. 749), which Delegate Landes himself had chief-patroned. After enactment, the Corporation was created as an Executive Branch agency to "promote international trade in the Commonwealth," with a 17-member Board (5 ex officio cabinet secretaries plus 12 nonlegislative citizen members appointed by the Governor and confirmed by the General Assembly).

The bill had a layered effective-date structure. The portion creating the Corporation and providing for Board appointment took effect December 1, 2016. The portion creating the Corporation's substantive powers and authorizing grants took effect April 1, 2017. There was no reenactment clause, no expiration date, and no contingency on funding.

Then the budget shifted. The original 2016 budget had transferred funds from the Virginia Economic Development Partnership to the Corporation. The 2017 Session reversed that transfer and removed all proposed funding. By the time of the inquiry, the Corporation had zero appropriation.

Attorney General Mark R. Herring's answer was structural: legal existence and funding are distinct. H.B. 858 was not repealed or amended by the 2017 Session; only its appropriation was zeroed out. Under basic statutory-interpretation principles (Cuccinelli v. Rector & Visitors of the Univ. of Va., 283 Va. 420, 425 (2012); Williams v. Commonwealth, 265 Va. 268, 271 (2003); Alger v. Commonwealth, 267 Va. 255, 261 (2004)), the General Assembly's clear intent governs, and the words of H.B. 858 establish legal existence as of December 1, 2016 and gubernatorial appointment authority as of the same date.

But the absence of any appropriation has practical effect. The Corporation has no operating expenses, no staff, and no funded positions. The Governor can lawfully appoint Board members, but those members would have nothing to administer. The legal existence is real; the practical function is empty.

The AG flagged the disconnect bluntly: "while the Corporation does have legal existence, as an abstract legal matter, and the Governor has legal authority to appoint the members of its Board, the absence of any appropriation for the Corporation would make it impossible for the Board to perform any of its statutory functions, if appointed and confirmed, as a practical matter."

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, deadline, or remedy mentioned here.

The funding status of the Virginia International Trade Corporation has been revisited in subsequent General Assembly sessions. Check current Title 2.2 provisions and the current state budget for the entity's current status.

Background and statutory framework

The Virginia International Trade Corporation was established by H.B. 858, enacted as 2016 Va. Acts ch. 749 and codified primarily at Va. Code Ann. §§ 2.2-2738 to 2.2-2743. Under § 2.2-2738(A), the Corporation is "an agency of the Executive Branch of state government" with the purpose of promoting international trade in the Commonwealth. The Board (§ 2.2-2738(B)) consists of 17 members: five secretaries (Agriculture and Forestry, Commerce and Trade, Finance, Technology, and Transportation) or their designees as voting ex officio members, plus 12 nonlegislative citizen members appointed by the Governor and confirmed by the General Assembly. Appointees must have senior management or leadership experience in agriculture, finance, development, international business, manufacturing, and trade, with at least two having background specific to agriculture.

H.B. 858 used a delayed-effective-date structure. The portion of the bill creating the Corporation and Board (governing the constitutional/structural elements) was delayed to December 1, 2016 (cl. 2). The portion creating substantive powers (§§ 2.2-2740 and 2.2-2741) and authorizing grants was delayed to April 1, 2017 (cl. 3). The bill had no reenactment clause, no expiration date, and made no element of the Corporation's legal existence or appointment authority contingent on funding.

The 2017 Session left H.B. 858 untouched as a matter of substantive law but reversed the planned appropriation transfer from the Virginia Economic Development Partnership and zeroed out further funding proposals (including a $7.2 million / 24-position FY 2018 package). The Corporation, as of the November 2017 opinion, had no money.

The AG's analysis rested on plain-language statutory interpretation. Williams v. Commonwealth, 265 Va. 268, 271 (2003): the General Assembly's intent is determined from the words it used. Alger v. Commonwealth, 267 Va. 255, 261 (2004): courts assume "the legislature chose, with care, the words it used when it enacted the relevant statute." H.B. 858's effective dates speak directly to existence and appointment authority. Nothing in the appropriation reversal repealed or amended H.B. 858 itself.

The opinion makes a distinction that matters in practice: statutory existence is a binary question (the entity exists or it doesn't), while ability to function is a continuum tied to appropriations. The Corporation legally exists. Its capacity to exercise its statutory functions is zero given the funding situation. The Governor retains appointment authority but, as the AG put it, "there would be no practical point in doing so" without funding.

Common questions

Q: Does the Virginia International Trade Corporation legally exist?
A: The AG concluded yes, since December 1, 2016. The 2017 reversal of funding did not repeal or amend the enabling statute.

Q: Can the Governor appoint Board members?
A: Yes. The Governor's appointment authority took effect December 1, 2016 and was not contingent on funding.

Q: What can the Board do without funding?
A: As a practical matter, nothing of substance. The AG framed this directly: appointments would be a legal formality without a functional outcome.

Q: Did the General Assembly repeal the Corporation?
A: No. The 2017 Session left the enabling statute untouched. It only zeroed out the appropriation.

Q: Can the Corporation contract with private parties or accept grants?
A: The opinion doesn't analyze those scenarios. The substantive-powers provisions (§§ 2.2-2740 and 2.2-2741) took effect April 1, 2017. Whether the Corporation could exercise those powers without staff or appropriation is a separate question.

Q: Why would the General Assembly create an entity and then defund it?
A: That's a political question the opinion does not address. It is not uncommon in Virginia for statutory bodies to exist on paper but lack appropriation.

Citations and references

Virginia statutes:

• Va. Code Ann. §§ 2.2-2738 to 2.2-2743 (Virginia International Trade Corporation)
• Va. Code Ann. § 2.2-2738 (creation and Board composition)
• Va. Code Ann. § 2.2-2740 (powers; effective April 1, 2017)
• Va. Code Ann. § 2.2-2741 (grants; effective April 1, 2017)
• Va. Code Ann. § 2.2-505 (AG advisory opinion authority)
• 2016 Va. Acts ch. 749 (enacting H.B. 858)

Cases:

• Cuccinelli v. Rector & Visitors of the Univ. of Va., 283 Va. 420 (2012)
• Commonwealth v. Amerson, 281 Va. 414 (2011)
• Williams v. Commonwealth, 265 Va. 268 (2003)
• Vaughn, Inc. v. Beck, 262 Va. 673 (2001)
• Thomas v. Commonwealth, 256 Va. 38 (1998)
• Alger v. Commonwealth, 267 Va. 255 (2004)
• Barr v. Town & Country Props., Inc., 240 Va. 292 (1990)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2017/17-008-Landes---Va.-Intl-Trade-Corp.---ISSUED.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

November 16, 2017

The Honorable R. Steven Landes
Member, House of Delegates
Post Office Box 12
Verona, Virginia 24482

Dear Delegate Landes:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the statute creating the Virginia International Trade Corporation is in current effect, and whether the Governor may appoint members to its Board.

Background

The 2016 Session of the General Assembly enacted a bill, H.B. 858,[1] creating a new entity, the Virginia International Trade Corporation (the "Corporation"). Upon enactment, the bill was signed by the Governor.[2] As stated in the bill, the Corporation is created as an agency of the Executive Branch of state government, and its purpose is "to promote international trade in the Commonwealth."[3] Further, the Corporation is to be governed by a Board of Directors (the "Board") composed of 17 members, as follows:

the Secretaries of Agriculture and Forestry, Commerce and Trade, Finance, Technology, and Transportation, or their designees, serving ex officio with voting privileges, and 12 nonlegislative citizen members appointed by the Governor, subject to confirmation by the General Assembly. The members appointed by the Governor shall have experience as senior management personnel or leaders in the areas of agriculture, finance, development, international business, manufacturing, and trade with at least two having background and experience specific to agriculture. Ex officio members of the Board shall serve terms coincident with their terms of office. Appointments to fill vacancies, other than by expiration of a term, shall be for the unexpired terms. After the initial staggering of terms, nonlegislative citizen members shall be appointed for a term of six years. Nonlegislative citizen members shall be citizens of the Commonwealth.[4]

The relevant portion of the bill creating the Corporation and providing for appointment of the Board had a delayed effective date of December 1, 2016.[5] The portions of the bill creating the powers and duties of the Corporation and authorizing the Commonwealth to make grants to it were made effective April 1, 2017.[6] There was no reenactment clause or expiration date attached to the bill, nor was the legal existence of the Corporation or the powers of appointment to the Board made contingent on funding, or other conditions.[7]

While H.B. 858 was neither repealed nor amended in any way by the 2017 Session, the appropriation that was originally intended to be transferred to the Corporation from the Virginia Economic Development Partnership was later reversed.[8] Under the present budget, there is no funding whatsoever for the operating expenses or staff of the Corporation.

Applicable Law and Discussion

"When construing a statute, [the] primary objective is 'to ascertain and give effect to legislative intent,' as expressed by the language [of] the statute."[9] "Under basic rules of statutory construction, we determine the General Assembly's intent from the words contained in the statute."[10] Moreover, "[w]e 'assume that the legislature chose, with care, the words it used when it enacted the relevant statute.'"[11]

Here, when the 2016 Session created the Corporation by enacting H.B. 858, it did so in a clear and straightforward fashion, establishing the Corporation's legal existence as effective December 1, 2016, and it provided authorization for appointments to the Board, as of that same date. The ability of the corporation to exercise its powers, and the ability of the Commonwealth to make grants to it, do have a later effective date, April 1, 2017. However, this later date affects only the exercise of powers and the awarding of grants. It does not affect either the legal existence of the Corporation or the Governor's authority to appoint Board members, which became effective by the express terms of H.B. 858 on December 1, 2016.

Thus, while the Corporation does have legal existence, as an abstract legal matter, and the Governor has legal authority to appoint the members of its Board, the absence of any appropriation for the Corporation would make it impossible for the Board to perform any of its statutory functions, if appointed and confirmed, as a practical matter.

Conclusion

For the foregoing reasons, it is my opinion that, while the Virginia International Trade Corporation has had legal existence since December 1, 2016, and the Governor has the authority to appoint members of the Board, the total lack of any appropriation for the Corporation at the present time means there would be no practical point in doing so.

With kindest regards, I am

Very truly yours,

Mark R. Herring
Attorney General

[1] You were the Chief Patron.

[2] See 2016 Va. Acts ch. 749. The primary provisions of the Act with respect to the Corporation are codified at VA. CODE ANN. §§ 2.2-2738 to -2743 (2017).

[3] Section 2.2-2738(A).

[4] Id., subsection B.

[5] See 2016 Va. Acts ch. 749, cl. 2.

[6] Id., cl. 3, affecting §§ 2.2-2740 and 2.2-2741.

[7] See 2016 Va. Acts ch. 749.

[8] See 2017 Reverse Transfer of Funding to Virginia International Trade Corporation, available at http://budget.lis.virginia.gov/amendment/2017/1/HB1500/Introduced/CR/125/3c/ (last visited Nov. 16, 2017). Further, another proposal was for funding of approximately $7.2 million, which would have allowed creation of twenty-four positions in FY 2018. The duly enacted Budget Bill reduced this funding to zero. See Session, Budget Amendments, HB 1500 (Conference Report): Reverse Funding to Create Virginia International Trade Corporation, available at http://budget.lis.virginia.gov/amendment/2017/1/HB1500/Introduced/CR/125.10/1c/ (last visited Nov. 16, 2017). See also Reverse Funding for Virginia International Trade Corporation CEO, available at http://budget.lis.virginia.gov/amendment/2017/1/HB1500/Introduced/CR/105/2c/ (last visited Nov. 16, 2017).

[9] Cuccinelli v. Rector & Visitors of the Univ. of Va., 283 Va. 420, 425 (2012) (quoting Commonwealth v. Amerson, 281 Va. 414, 418 (2011)).

[10] Williams v. Commonwealth, 265 Va. 268, 271 (2003) (citing Vaughn, Inc. v. Beck, 262 Va. 673, 677 (2001); Thomas v. Commonwealth, 256 Va. 38, 41 (1998)).

[11] Alger v. Commonwealth, 267 Va. 255, 261 (2004) (quoting Barr v. Town & Country Props., Inc., 240 Va. 292, 295 (1990)).