Private Company Check Register Held Subject to Public Information Act

Greater Houston Partnership v Gregg Abbott, Texas Attorney General

This is a Public Information Act (PIA) case, but not your typical case.  The Court of Appeals was asked to determine if a private contractor who had a contract with the City of Houston qualified as a “governmental body” for PIA purposes, solely because of the contract.  The Court held that it was subject to the PIA.

GHP is a Texas nonprofit corporation that describes itself as being akin to a chamber of commerce for a ten-county area centered around the City of Houston. Its purpose, as set forth in its articles of  incorporation, is “the promotion of the economic stability and growth.” According to GHP, it has an annual operating budget of approximately $11.7 million, the bulk of which comes from its 2,100 member companies, but it also receives public funds “to provide research, advertising, and economic development services to the City of Houston, Harris County, Port of Houston Authority, and The Woodlands.” Under the terms of its contract with the City of Houston, GHP received $1.67 million for services of assisting with economic development.

A requestor submitted a PIA request to GHP asking for their entire check register for 2007, which was not limited to the public funds. GHP objected, but the Texas AG issued an opinion that it was a governmental entity and all of its records are open to the public. GHP sought a declaration in district court that it was not a governmental entity subject to the PIA. The trial court ruled that due to a host of factors including a common economic development purpose and an “agency-type” relationship, the GHP was a governmental entity subject to the PIA.

“Governmental body,” is defined in part as “the part, section, or portion of an organization, corporation, commission, committee, institution, or agency that spends or that is supported in whole or in part by public funds.” See Tex. Gov’t Code § 552.003(1)(A)(xii).  The Court of Appeals focused on the definition of “support” and incorporated the 5th Circuit’s Kneeland test to determine when a private corporation is subject to the PIA. Kneeland v. National Collegiate Athletic Ass’n, 850 F.2d 224 (5th Cir. 1988).  Under this test, the Court of Appeals determined that CHP was a governmental entity subject to the PIA and that its check registry must be released to the public.  One of the biggest considerations under the test was that CHP was not in a typical arms-length contract where a transaction was compensated with a set amount, every time. GHP is paid the same amount on a quarterly basis regardless of whether or how much it does in furtherance of the contract’s goals. To that extent the “overall impression is that GHP’s obligations under the contract with the City of Houston lack a definite structure. This is in contrast, for example, to a contract that requires an entity to provide measurable services, such as to clean state offices or provide office supplies to the governmental body in exchange for a certain amount of money.” Further, the City and GHP had a common purpose of stimulating economic development.

This case has a dissent which held that the Kneeland test was not appropriate and suggested a “purpose” test so that a private entity is only a “governmental body” if it is carrying out some governmental function as its primary purpose. However, the majority disagreed and adopted the Kneeland test in its entirety.

So, the important thing to get out of this case is your contractors may start asking  for specific contractual provisions which incorporate definitive structure, specific compensation and services, and other Kneeland factors to avoid being subject to the PIA. So don’t take it personal if they start asking for that, and in some cases, your cities may suggest it.

If you wish to read this case please click here.