January 7, 2013
FROM: Robert J. Freeman, Executive Director
The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the facts presented in your correspondence.
I have received your letter in which you requested an advisory opinion concerning the status of the New York Racing Association (NYRA) under the Freedom of Information Law (FOIL). As you may be aware, NYRA’s chair has indicated that NYRA will comply with both FOIL and the Open Meetings Law. Notwithstanding his statement, in an effort to offer a rationale for that conclusion, I offer the following comments.
FOIL is applicable to agency records, and section 86(3) of that statute defines the term “agency” to mean “any state or municipal department, board, bureau, division, commission, committee, public authority, public corporation, council, office or other governmental entity performing a governmental function for the state or any one or more municipalities thereof…” Although it had been advised in the past that NYRA, a not-for-profit corporation, falls beyond the coverage of FOIL, in consideration of recently enacted legislation and judicial precedent pertinent to the legislation, I believe that NYRA is now required to comply with FOIL.
Perhaps most significant is the clear direction found in the “New York State Racing Franchise Accountability and Transparency Act of 2012” (the Act). In a statement of “Legislative findings”, that statute created a “temporary reorganization board”, which “shall be under public control to ensure The New York Racing Association, Inc. works in the best interest of all stakeholders in horse racing including fans, owners and breeders by managing the state racing franchise with transparency and accountability” (emphasis added). The same provision directs that “In no later than three years, the state racing franchise shall be returned to private control, remaining in the form of a not-for-profit corporation.”
The phases highlighted above indicate that NYRA is under “public control” for up to three years, and ensuing provisions of the Act, now appearing as section 207(1)(a) of the Racing, Pari-Mutuel Wagering and Breeding Law state that:
“The Board of Directors, to be called the New York Racing Association Reorganization Board, shall consist of seventeen members, five of whom shall be elected by the present Class A directors of the New York Racing Association, Inc., eight to be appointed by the Governor, tow be appointed by the Temporary President of the Senate and two to be appointed by the Speaker of the Assembly.”
Based on the foregoing, for up to three years, the NYRA Board of Directors consists of seventeen members, twelve of whom are appointed by the Governor and leaders of the State Legislature, thereby evidencing “public control” of NYRA.
Section 207 also specifies that the Governor “shall nominate a person to serve as chair” and that, prior to its termination, the Board “shall propose…recommendations to the Governor and the State Legislature representing a statutory plan for the prospective not-for-profit governing structure of the New York Racing Association, Inc.” Those provisions also indicate governmental control and a statutory duty to carry out a specific function for the government of the State.
Although not-for-profit corporations typically are not governmental entities and, therefore, fall beyond the scope of FOIL, the courts have found that the incorporation status of those entities is, alone, not determinative of their coverage under that law. Rather, they have considered the extent to which there is governmental control over those corporations, as well as their functions, in determining whether they fall within the scope of the Freedom of Information Law.
In an early decision, Westchester-Rockland Newspapers v. Kimball [50 NY2d 575 (1980)], the issue involved access to records relating to a lottery conducted by a volunteer fire company, the Court of Appeals found that volunteer fire companies, despite their status as not-for-profit corporations, are "agencies" subject to the Freedom of Information Law. In so holding, the Court stated that:
"We begin by rejecting respondent's contention that, in applying the Freedom of Information Law, a distinction is to be made between a volunteer organization on which a local government relies for performance of an essential public service, as is true of the fire department here, and on the other hand, an organic arm of government, when that is the channel through which such services are delivered. Key is the Legislature's own unmistakably broad declaration that, '[a]s state and local government services increase and public problems become more sophisticated and complex and therefore harder to solve, and with the resultant increase in revenues and expenditures, it is incumbent upon the state and its localities to extend public accountability wherever and whenever feasible' (emphasis added; Public Officers Law, §84).
For the successful implementation of the policies motivating the enactment of the Freedom of Information Law centers on goals as broad as the achievement of a more informed electorate and a more responsible and responsive officialdom. By their very nature such objections cannot hope to be attained unless the measures taken to bring them about permeate the body politic to a point where they become the rule rather than the exception. The phrase 'public accountability wherever and whenever feasible' therefore merely punctuates with explicitness what in any event is implicit" (id. at 579].
In another decision rendered by the Court of Appeals, Buffalo News v. Buffalo Enterprise Development Corporation [84 NY 2d 488 (1994)], the Court found that a not-for-profit corporation, based on its relationship with an agency, the City of Buffalo, was itself an agency subject to the Freedom of Information Law. The decision indicates that:
"The BEDC principally pegs its argument for nondisclosure on the feature that an entity qualifies as an 'agency' only if there is substantial governmental control over its daily operations (see, e.g., Irwin Mem. Blood Bank of San Francisco Med. Socy. v American Natl. Red Cross, 640 F2d 1051; Rocap v Indiek, 519 F2d 174). The Buffalo News counters by arguing that the City of Buffalo is 'inextricably involved in the core planning and execution of the agency's [BEDC] program'; thus, the BEDC is a 'governmental entity' performing a governmental function for the City of Buffalo, within the statutory definition.
"...In sum, the constricted construction urged by appellant BEDC would contradict the expansive public policy dictates underpinning FOIL. Thus, we reject appellant's arguments," (id., 492-493).
Because NYRA’s governing body includes twelve members appointed by the Governor and the State Legislature out of a total of seventeen, I believe that the government of the State is “inextricably involved” in the development of policy and a plan for NYRA’s governing structure.
In a decision involving the City of Canandaigua and a not-for-profit corporation, the "CRDC", the court found that:’
"...The CRDC denies the City has a controlling interest in the corporation. Presently the Board has eleven members, all of whom were appointed by the City (see Resolution #99-083). The Board is empowered to fill any vacancies of six members not reserved for City appointment. Of those reserved to the City, two are paid City employees and the other three include the City mayor and council members. Formerly the Canandaigua City Manager was president of the CRDC. Additionally, the number of members may be reduced to nine by a board vote (see Amended Certificate of Incorporation Article V(a)). Thus the CRDC’s claim that the City lacks control is at best questionable.
"...As in Matter of Buffalo News, supra, the CRDC’s intimate relationship with the City and the fact that the CRDC is performing its function in place of the City necessitates a finding that it constitutes an agency of the City of Canandaigua within the meaning of the Public Officers Law and therefore is subject to the requirements of the Freedom of Information Law...[Canandaigua Messenger, Inc. v. Wharmby, Supreme Court, Ontario County, May 11, 2001, affirmed 292 AD2d 835 (2002)].
In the context of the instant situation, due to the composition of the Board, the government is performing functions in place of an entity that had been private. Because that is so, during the time in which the Board is under “public control”, in my opinion, it constitutes an “agency” required to comply with FOIL.
Lastly, I point out that the foregoing is not intended to suggest that all NYRA records must be disclosed to comply with FOIL. While that statute is based on a presumption of access, it states that all agency records must be disclosed, except those records or portions thereof that fall within one or more of the grounds for denial of access appearing in section 87(2).
I hope that I have been of assistance.
cc: David J. Skorton, Chair, New York Racing Association Reorganization Board
Bennett Liebman, Deputy Secretary to the Governor for Gaming and Racing