Business

NCSU: State law causing school to lose money, business

Posted July 3

— North Carolina State University ranks among the top schools in the nation for research and innovation. It's credited with numerous inventions, including the world's first heart stent, and has launched more than 100 startup companies, including Cree and SAS.

President Barack Obama even visited in January to announce that the school would host a new, multimillion-dollar manufacturing innovation institute.

But, despite those successes, university leaders say a state law has caused them to lose out on research contracts with dozens of private companies and millions of dollars in funding that often come with them.

"There's companies that just won't and can't work with us because we can't promise them we can protect their information," said N.C. State Vice Chancellor Terri Lomax, who leads the Office of Research, Innovation and Economic Development.

The reason that information can't be protected is because of North Carolina's public records law, which requires public agencies, including N.C. State, to disclose records to the public upon request. Private companies that choose to work with N.C. State give up some of their right to privacy because any information they share could be made public.

N.C. State leaders are hoping lawmakers will create an exemption to the law to shield the public from being able to see information that private businesses share during the course of their research. While some in the business and education community say they support the idea of protecting that information from public view, open government advocates are wary.

"This is something public universities all across the country have to deal with. It's part of the cost of doing business with the public – making yourself accountable to the public," said Jonathan Jones, director of the North Carolina Open Government Coalition. "If we're going to amend the law, we need to know more about who these companies are that are not willing to do business and why they're not willing to do business."

Vice chancellor: 'I can't really talk about everybody'

N.C. State leaders were hesitant to offer specifics about companies that have declined to work with them. They were also unable to provide an exact number of business partnerships they have lost due to the public records law.

"I can't give you a firm number," Lomax said. "We haven't really kept track of it."

The vice chancellor estimates that two or three companies decline to work with the school each year because of the law. It's a small number compared to the more than 1,000 private companies that do work with the university annually. But, Lomax says, those few businesses are typically big ones.

"I can't really talk about everybody, because it's really kind of confidential," she said.

When pressed for details, Lomax named two businesses – Quintiles and the North Carolina Railroad Company.

The potential project with Quintiles was from "a couple years ago," she said. The company wanted to work with N.C. State's College of Veterinary Medicine, but after researching the state's public records law, "they decided they just couldn't do it," according to Lomax.

Quintiles spokesman Phil Bridges said he was not aware of any discussions with N.C. State about working with the vet school.

"They're probably mistaken, or it's something I have no knowledge of," he said. "We haven't done pre-clinical work with animals in a long time – not within the last couple years."

Quintiles has, however, done research with other public agencies, including UNC Hospitals, Bridges said.

The North Carolina Railroad Company declined to comment about N.C. State. In an emailed statement, President Scott Saylor said: "It is not our policy to discuss contract negotiations."

WRAL News contacted the University of North Carolina at Chapel Hill to see if the public records law has affected its research. Spokeswoman Karen Moon said university officials "are familiar with the issue," but she wasn't able to track down any other information.

Company: 'You can manage the confidential info'

Eastman Chemical Company is one of the thousands of private businesses that work with N.C. State, despite the public records law. It decided to partner with the school in 2012 after looking at more than 200 universities across North America.

As part of its contract with the school, Eastman is investing $10 million over six years to conduct research with the university in chemistry and other areas of science. The company also created the Eastman Innovation Center, which is housed on N.C. State's Centennial Campus.

Stewart Witzeman, director of the innovation center, says his company "certainly looked at the public records law" but was not deterred by it.

"We've worked with other state institutions, and we know how to manage it," he said. "There's a lot of high-value work you can do with universities, and you can manage the confidential info."

One way the company manages that information is by being selective in the kinds of research and information it shares with professors.

"There are types of work we understand are not appropriate for a public university," Witzeman said.

Mike Tadych, a Raleigh attorney who specializes in open-government disputes, says companies can work around the public records law by not providing trade secrets to the university. By definition, trade secrets are usually not disclosed to third parties anyway, he said.

"It's probably not a trade secret if you're handing this over for research purposes," he said. "The lifeblood of most professors is sharing their research. That's part of their process."

N.C. State engineering professor Jayant Baliga, known as "one of the most prolific inventors" on campus, says the public records law has not been a problem for him.

"No, it has not affected me," he said. "It didn't impede anything I was doing."

Baliga has worked with dozens of private companies across the world and says his biggest hurdle is getting funding to file patents and build technology.

Faculty members aren't typically affected by the public records law, according to the vice chancellor. Staff members who negotiate contracts with private companies are the ones most familiar with it, she said.

What records are people requesting?

WRAL News asked N.C. State leaders if anyone had filed a public records request to get information about their research projects. The vice chancellor said she could not think of any.

"It's more the fear of (a request) than it has been the actual thing happening," Lomax said.

WRAL News reviewed a list of public records requests the university received in 2013 and found five requests that either mentioned research or appeared to be related:

  • The National Anti-Vivisection Society requested records related to the university's "invasive research" and "invasive procedures" performed on dogs.
  • An official with the North Carolina Administrative Office of the Courts requested copies of N.C. State's contract with Google.
  • A Bloomberg News reporter requested information about agricultural professors' financial relationships and research with private industries.
  • Food & Water Watch requested records of research grants the university received between 2000 and 2012.
  • A Triangle Business Journal reporter requested lease information between the university and Eastman Chemical Company.

'Where does it fall in the priority list?'

While N.C. State leaders appear to be in the beginning stages of pushing for a change to the state's public records law, the level of support seems to differ among university leaders.

N.C. State Chancellor Randy Woodson gave a presentation to the University of North Carolina system's Board of Governors in February. He told leaders that the law jeopardizes his school's ability to maintain confidential information and has caused them to lose industry-sponsored research opportunities.

Since that time, Woodson has declined to speak publicly about the issue again. A university spokesman said it "isn't on the top burner for him right now." Meanwhile, the vice chancellor says the issue is "very big."

"If we can't get this law changed in this legislative round, we have to really think about – do we do this as part of the university, or do we have to go out and form an outside nonprofit entity to get around this issue?" Lomax said.

The Board of Governors has not made the topic a part of its legislative agenda, but that could change.

BOG member Champ Mitchell says he would entertain "reasonable exemptions" to the public records law for research, but any discussions about that would have to come after the current legislative session.

"We will look at (the law) and try to come up with a solution that protects the public's right to know," Mitchell said. "I don't think there's a serious question that (the board) would support a reasonable exemption. The question is, where does it fall in the priority list?" 

30 Comments

This story is closed for comments. Comments on WRAL.com news stories are accepted and moderated between the hours of 8 a.m. and 8 p.m. Monday through Friday.

Oldest First
View all
  • wufpaker Jul 3, 7:24 p.m.

    As a Land Grant University, one of NCSU's missions/charters is to be a leader in research. It is important and necessary that they be able to partner with real world research partners. One of the reasons for Centennial Campus to be created- look at all those for-profit companies there that have a large research arm. This relationship benefits the universities, the companies, and most importantly, the students invoved in this research. To ask a company to make their proprietary research publicly available is unrealistic and damaging to all parties. Its funny how our legislature thinks it is ok for the fracking companies to keep their proprietary fracking formulas private, but yet "real" research findings need to be disclosed. Go figure!

  • rush Jul 3, 6:21 p.m.

    This is a great law and should not be changed, because if you do they will hid many things from... View More

    — Posted by Jump1

    Of course the funds don't lower the cost of attendance. That's not what the money is earmarked for. In many cases, it will fund plenty of scholarships and paid research assistant positions for grad students though.

  • Duff Dry Jul 3, 5:20 p.m.

    She has the vague.

    — Posted by Dethklok

    LOL.

    Oh yeah, State is really hurting. Not.

    The Board of Governors has not made the topic a part of its legislative agenda, but that could change.
    Read more at http://www.wral.com/ncsu-state-law-causing-school-to-lose-money-business/13750791/#zdZzjPW8xbecpkSC.99

    So this is a "really big" issue, but "isn't on the top burner for him [Woodson] right now.

    How about focusing on education and open research?

  • Smokin Jul 3, 3:35 p.m.

    If you are using, and rely upon, a public university to perform your research for you, then you... View More

    — Posted by

    And when someone gets a hold of said companies information and then uses it to compete against... View More

    — Posted by Ijaz Fahted

    Finally. Our state's public information laws have also cost us businesses. We're passed over and businesses locate in states that won't give all their information to competitors. And to say schools are not a business, maybe not, but companies contract with Universities because that's where those with cutting edge knowledge are.

  • Pensive01 Jul 3, 3:13 p.m.

    SAS was not launched by NCSU

    — Posted by A person

    Wikipedia would beg to differ:http://en.wikipedia.org/wiki/SAS_%28software%29

    — Posted by UpChuck

    SAS's own website backs up the Wikipedia article.
    http://www.sas.com/en_us/company-information.html#history

  • sweetlyght Jul 3, 3:11 p.m.

    If they do make an excemption some of the monies need to go toward student interest such as keeping tuition low. They can't get this excemption, open the doors and spend all the money and come back the next year for additional tax dolars for things they need funding for with no accountability.

  • SaysWhoNC Jul 3, 2:33 p.m.

    If the companies' desire for maximum secrecy is justified, which seems unlikely, then there are plenty of private universities they can work with.

    But if they want to gain the benefit of working with public universities supported by our tax dollars, then they have to accept the greater level of scrutiny that goes along with it.

    In the end, NCSU's Woodson and Lomax work for the people of North Carolina, and are accountable to them, as they should be.

    They should go howl at something else.

  • Dethklok Jul 3, 1:54 p.m.

    She has the vague.

  • dsdaughtry Jul 3, 1:38 p.m.

    This is a great law and should not be changed, because if you do they will hid many things from... View More

    — Posted by Jump1

    excellent point. Schools are not a business. It is fine to offer a student internships at companies. Seems like NCSU is more interested in being a business such as the vet school, ice creme manufacturing, golf center, centennial campus and other ventures. Perhaps if these were North Carolina businesses rather than university properties then there may be more potential jobs for students AFTER they leave college.

  • rushbot Jul 3, 1:32 p.m.

    i see no reason to change the law...if THIS legislature wants it done, they are up to no good...amazing that obama would make his announcement and now we find this out....

More...