Confusion in the courts

For journalists seeking records, judicial rulings on privatization can leave more questions than answers.

In Ohio, a corporation that solicits donations for a university is subject to the state public records law. So is a nonprofit association that leases and runs a once-public hospital, according to the state’s highest court.

But a nonprofit that provides mental health services for an Ohio county and receives more than nine-tenths of its money from taxpayers? Its records are closed. So is a company that runs a halfway house and receives a similar percentage of support from the public.

When members of the press or the public seek access to quasi-public agencies or organizations with government contracts, they often find that the issues are governed by a murky and inconsistent body of law.

Part of the problem is that few states clearly lay out in their statutes what entities are bound by open meetings and public records laws. Because of the lack of clarity, that responsibility has been left largely to the courts, which have come up with myriad and often confusing ways to decide the issues.

Craig Feiser, a professor at Florida Coastal School of Law, divided every state’s judicial approaches to privatization and public access into categories for a 1999 law review article he wrote. But he often found it difficult to find out what the courts meant by their decisions.

“I don’t think they’re very clear at all,” Feiser said. “When I wrote the article, I had a hard time figuring out just from reading the case what the court is looking for...You kind of have to read between the lines in some cases.”

Many state legislatures, in passing their public records and open meeting laws, completely ignore the issue of privatization. Others statutes include only a vague or passing reference to contractors or quasi-public agencies.

Still others might address one type of privatization but not another. For instance, many state laws are patterned after the federal Freedom of Information Act, which depends on a definition of “agency” to determine whether records should be public. Included as an agency are any “Government corporation” or “Government controlled corporation.”

Courts have interpreted that definition to apply to quasi-public entities such as the Federal Home Loan Mortgage Corp., which does not receive federal tax money for its operating expenses but was created by congressional charter.

But that limited “agency” definition can make it difficult for a FOIA requester to prove that a private company with a government contract or grant is an “agency,” even if the private group has some publicly important role.

For instance, in 1980, the U.S. Supreme Court ruled 7-2 that the raw data collected by a group of private physicians as part of a controversial government-funded diabetes study that influenced public policy were not “agency records” under FOIA.

“Grants of federal funds generally do not...convert the acts of the recipient from private acts to governmental acts absent extensive, detailed and virtually day-to-day supervision,” Justice William Rehnquist wrote for the court.

Many questions

The vagueness of public records laws leads to difficulties for the courts charged with interpreting the laws. When statutes are unclear, courts often fashion tests to provide guidance to lower courts and to citizens and agencies struggling to understand the laws.

In adapting these laws to quasi-public bodies, the courts typically establish multipart tests meant to determine whether an agency is public. But the tests can be difficult to use in predicting whether records will be public because of the many questions they raise.

Does an agency have to meet all of the parts of the test? Most of them? Some of them? Do all the parts count equally, or is one factor weighed more than the others?

Even within each prong of the test, there can be questions. If one requirement is the level of public funding, does that mean that any agency that receives 51 percent of its money meets that part of the test? Is 49 percent enough? Or does it have to be 90 percent?

In contrast to these complicated, multipart legal tests, some courts have more straightforward tests using just one factor, most commonly the level of public funding. Those tests are often based on text from a public records statute such as Michigan’s, which applies to any body that is “primarily funded by state or local authority.”

These tests have benefits. It is often easier for a media outlet to determine whether a contractor is subject to a public records law without resorting to a potentially costly and time-consuming lawsuit.

But a funding-based approach raises its own questions. What counts as public funding? Is it actual cash in the agency’s bank account, or does indirect support such as providing a rent-free building count? What if funding varies year to year?

Under a straightforward funding test, many quasi-governmental entities — such as the nonprofit economic development corporations that receive limited public money but have considerable power and may have public officials as their board members — would be excluded. These tests could also make public the records of a corporation created to run a single juvenile detention center. But it could keep private all the documents of a national company with a state contract to run 10 juvenile prisons if that money makes up a small part of the company’s revenue to run hundreds of prisons nationwide.

Changing court philosophies

In the absence of legislative direction, some courts have come up with interpretations that provide access to many quasi-public agencies, said Charles Davis, a journalism professor at the University of Missouri at Columbia and director of the National Freedom of Information Coalition. Other courts have “annihilated” good public records laws with their decisions, Davis said.

A court’s treatment of public access in a privatized world may be subject to frequent change, as evidenced by Ohio’s evolving jurisprudence.

In 1988, the state’s high court ruled in favor of an Ohio newspaper in saying a hospital association was subject to the public records act because it had a lease to run the hospital as a public general hospital, did not pay rent to the city, and provided a “public service” to residents as the only public hospital in the city.

In subsequent years, the court also established access to a publicly funded nonprofit county ombudsman office, a nonprofit foundation that raised money for the University of Toledo but paid the university rent and other expenses, and a nonprofit with contracts to provide firefighting services to municipalities.

But last year, a divided Ohio Supreme Court threw out the old test emphasizing whether an entity was performing a public service and receiving taxpayer dollars. It created a new, less inclusive test that considers whether an organization is performing a governmental function, the amount of public funding, the amount of government involvement, and whether the organization was created by the government or to evade the public records law.

The court ruled 4-3 that a nonprofit that ran a halfway house under a state contract did not have to turn over personnel records, despite meeting two parts of the test by administering a prison and by receiving 88 percent of its revenue from taxpayers. Two months later, it used the new test in ruling against The (Canton) Repository, which sought access to the records of a contractor that provided mental health services for one county.

The turnaround may be a function of the court’s changing membership.

Attorney Richard Panza, who represented the Repository, said the court has grown increasingly conservative since the first major public records case in the 1980s, and its public records decisions have been “watered down” accordingly as the court changed.
“This is a very different court with very different philosophies,” he said.

For instance, Chief Justice Thomas Moyer took the more conservative track in a 1988 privatization case, rejecting an approach by two justices that advocated broader access. Less than two decades later, Moyer was on the dissenting side, writing for the justices who said the court was taking an overly restrictive approach to public records.

In the halfway house decision, Moyer suggested the legislature should clarify the law.

“Our long line of cases and the majority opinion in this case should convince the General Assembly that it, rather than this court, should define the terms in a manner that would settle the policy issues that are determined each time a court applies the broad statutory language to the facts in individual cases,” he wrote.

The ideal solution?

The best way for courts to handle privatization and access issues is still up for debate. Harry Hammitt, publisher of the newsletter Access Reports, likes an approach used by states such as Ohio and Connecticut, in which the courts consider whether a contractor or quasi-public agency is acting as the “functional equivalent” of the government.

That distinguishes an organization providing a government service, such as the American Red Cross’ coordination of blood donations, from a traditional government function such as running jails, Hammitt said.

“These can be fact specific, but I think there’s a commonsensical way of performing whether they’re providing a function of government as opposed to a service,” Hammitt said.

Feiser prefers an approach used by some courts that considers the nature of the records being sought and whether the records are relevant to government.

Focusing on the records, he said, distinguishes between “a record that reflects what government or public monies are being used for...as opposed to a private board meeting about the running of the company.”