September 5, 2003

Dear Mr. Recktenwald:

We are responding to the August 29, 2003, public hearing and request for comments on the Department of Commerce and Consumers Affairs (DCCA) Plan for Public, Education, and Government (PEG) Access cable television providers.

We wish to address specifically DCCA Issue Number 10: whether Haw. Rev. Stat. Chapter 92F ("Uniform Information Practices Act") does and should apply to PEG access providers.

As you know, on September 6, 2002., the State Office of Information Practices ("OIP") issued a formal opinion ("OIP Opinion") on this question. OIP concluded that Haw. Rev. Stat. Chapter 92F did apply to PEG access providers. While the OIP opinion it is not a judicial determination (and therefore not binding as a matter of law), OIP opinions are often given considerable weight by government officials and by the Attorney General's Office.

This OIP Opinion, however, deserves little or no weight for it is based upon strained analogies and false assumptions. Moreover, even if the conclusions in the OIP Opinion were sound, there are compelling public policy reasons why DCCA should consider changes in the law or in practices to override the OIP Opinion.

There is an appropriate level of openness for every undertaking. Not all are the same. The Chapter 92F requirements attempt to strike a balance for government agencies established by statute, funded by tax dollars, and carrying out statutory duties. But PEG access providers are privately

Mark Recktenwald, Esq.

Director, DCCA

September 5, 2003

Page 2

created, independently funded, governed by a board of directors, and tasked with contractual obligations. Not every enterprise functions in the same fashion.

Different levels of openness can be accomplished by different means. Strict statutory structures are not always the best answer and sometimes the wrong one. Blind application of Chapter 92F involves a freight train of government baggage and government bureaucracy.

The PEG access providers were established as flexible vehicles outside the government processes for good reasons. Treating them as part of government effectively collapses the experiment, and creates another government agency, instead of a flexible and vibrant enterprise that can respond quickly to changing market conditions and community needs.

PEG access providers have not acted like nor been viewed as government agencies. Any effort to do so now is fundamentally ill advised and contrary to the underlying reason for their existence. The OIP opinion was over-reaching when it sought to characterize PEG providers as "agencies" of the government and unaware of the real world meaning of such a decision.

A. PEG ACCESS PROVIDERS ARE NOT STATE "BOARDS" OR "AGENCIES" FOR PURPOSES OF HAW. REV. STAT. CHAPTER 92F

The most far reaching aspect of the QIP Opinion is the conclusion that PEG cable access stations are "agencies" of the State of Hawaii for purposes of Haw. Rev. Stat. Chapter 92F. But PEG access providers have never and do not now conduct themselves as state agencies.

1 PEG boards of directors do not conduct business as a "board" for purposes of Hawaii's Public Agency Meeting law under Haw. Rev. Stat. § 92-2 (2001)

2. PEG providers do not conduct business as an "agency" for purposes of Hawaii's Administrative Procedures Act ("APA"), Haw. Rev. Stat. Chapter 91.

a. In particular, PEG providers have never proposed and promulgated rules after public hearings and the governors

Mark Recktenwald, Esq.

Director,DCCA

September 5, 2003

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approval. Such rules would be subject to the prior review and approval of the Attorney General's office.

b. PEG access providers do not hold contested case hearings as provided under Haw. Rev. Stat. Chapter 91 in which persons adversely affected may appeal rulings to the State Circuit Court.

3. PEG access providers have never been "agencies" of the State and therefore a part of the Executive Branch required to seek legislative appropriations, meet budgetary requirements, including the right of the Governor to control, restrict, and veto funds and budgets.

4. PEG access providers are not subject to the civil service and labor laws that are applicable to other state agencies.

5. The State Procurement Law, Haw. Rev. Stat. Chapter 103D does not apply. Contracting is not governed by the Department of Accounting and Government Services.

6. PEGs provide service for a fee and State agencies are not set up to do fee-for-service contracts with and for private individuals.

7. No government official exercises day to day control over the operation of PEG providers.

8. The PEG providers were created and organized as private corporations with boards of directors, not through legislation or executive branch authority.

9. PEG providers and government officials have the normal relationships that arise in any contractual arrangements, but such relations do not make the PEG providers government employees.

The Hawai'i Legislature has specifically defined "boards" under Hawai'i's Public Agency Meeting Law, Haw. Rev. Stat. § 92-2 and "agencies" under Hawaii's Uniform Information Practices Act, Haw. Rev. Stat. § 92-2.

Mark Recktenwald, Esq.

Director, DCCA

September 5, 2003

Page 4

Haw. Rev. Stat. § 92-2, Public Agency Meetings and Records, Part I Meetings, defines a "board" for purposes of open public meeting requirements as:

(1)... any agency, board, commission, authority, or committee of the State or its political subdivisions which is created by constitution₁statute, rule, or executive order, to have supervision, control, jurisdiction or advisory power over specific matters and which is required to conduct meetings and to take official actions.

The open meeting requirements of Chapter 92 do not apply unless an entity is a "board" within the meaning of Haw. Rev. Stat. § 92-2.

Haw. Rev. Stat. § 92F-3, Uniform Information Practices Act, defines the term "agency" for purpose of disclosing public information and public records as:

any unit of government in this State, any county, or any combination of counties; department; institution; board; commission; district; council; bureau; office; governing authority; other instrumentality of state or county government; or corporation or other establishment owned, operated, or managed by or on behalf of this State or any county, but does not include the non-administrative functions of the courts of this State.

The government open records requirements of Chapter 92F do not apply unless an entity is an "agency" with the meaning of Haw. Rev. Stat.

§ 92F-3.

In the past, OIP has considered four (4) factors in determining whether an entity is an "agency" under Chapter 92F: (1) whether the entity was created by the government; (2) the level of government funding (the source of funding is not part of the Hawai'i statutory definition, but was taken from a

Mark Recktenwald, Esq.

Director, DCCA

September 5, 2003

Page 5

Connecticut Supreme Court decision¹); (3) the extent of government involvement or regulation; and (4) whether the entity performs a governmental function.²

OIP uses five (5) factors to determine whether an entity is a "board" under Chapter 92F: (1) whether the entity is an agency₁board, commission, authority, or committee of the State or its political subdivisions; (2) which is created by constitution, statute, rule, or executive order; (3) to have supervision, control, jurisdiction, or advisory power over specific matter; (4) which is required to conduct meetings; and (5) which is required to take official actions.

As OIP has already indicated, these determinations are fact intensive and must be made on a case by case basis after looking at the totality of circumstances.³There are many private entities that carry out "public interests," but that does not mean that the entity is engaged in "governmental functions" that in turn make them public "boards" or "agencies."

Under these tests, Olelo is neither a "board" nor an ~

1. PEG ACCESS PROVIDERS ARE NOT AGENCIES, BOARDS, COMMISSIONS, AUTHORITIES, OR COMMITTEES OF THE STATE OF ITS POLITICAL SUBDIVISIONS NOR ARE THEY A "UNIT" OF GOVERNMENT

'Olelo is an independent legal entity separate from the State of Hawai'i and its political subdivisions. It was organized as a not-for-profit corporation under Hawai'i's Nonprofit Corporation Act, Haw. Rev. Stat.

1 OIP Op. Ltr. No.90-31 at 8 (October 25,1990) cited the Connecticut Supreme Court's decision in Board of Trustees V. Freedom of In formation Commissioner, 436 A.2d 266 (Conn. 1980) as authority for the proposition that the source of funding should be considered in deciding if an entity is an "agency" for purposes of Haw. Rev. Stat. § 92F-3. The Hawaii Supreme Court has not ruled on the issue. PEG access providers are private "fee for service" contractors.

2 ~ Opinion Letter No. 90-31 at 14 (October 25,1990).

Id.

Mark Recktenwald, Esq.

Director, DCCA

September 5, 2003

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Chapter 41 SB. It is governed by a Board of Directors consisting of private individuals. Neither the State nor 'Olelo represents to the private or public that 'OIeIo is affiliated with the State as an agency, board, commission, authority or committee of the State. 'Olelo has no authority to bind the State of Hawai'i in any legal manner; the State, conversely, cannot bind 'Olelo. 'Olelo has independent legal counsel and is not represented by the State in any legal matters.

2. 'OLELO WAS NOT CREATED BY THE STATE OF HAWAII

CONSTITUTION₁STATUTE, RULE, EXECUTIVE ORDER, BY

COUNTY CHARTER OR ORDINANCE, OR ANY OTHER

GOVERNMENT AUTHORITY

Individuals filed 'Olelo's Articles of Incorporation to create a nonprofit corporation.⁴No state constitutional provision, state statute, county charter provision, ordinance, administrative rule, or executive order "created" 'Olelo or "enables" it to exist.⁵

'Olelo was not "created" by any State or county legislative or executive enactment or appointing authority. It is unlike the Natural Energy Laboratory of Hawai'i Authority,⁶the Aloha Tower Authority,⁷or the Hawai'i Community Development Corporation⁸that were adopted through enabling

4 See 'Olelo's Articles of Incorporation on file with the State Department of Commerce and Consumer Affairs, Division of Business Registration.

5 'Olelo is not to be confused with Hawaii Public Television. Hawaii's Legislature has adopted specific statutory provisions to promote a community based system of public television. That system is different than 'Olelo. The Hawai'i Public Broadcasting Authority, Haw. Rev. Stat. Chapter 314, was repealed in 1999 and the assets and license transferred to the Hawai'i Public Television Foundation effective July 1, 2000. Hawai'i Laws 1999, c 63, § 7, effective July 2, 2000.

6 Haw. Rev. Stat. Chapter 227D.

Haw. Rev. Stat. Chapter 206J. 8 Haw. Rev. Stat. Chapter 206E.

Mark Recktenwald, Esq.

Director, DCCA

September 5, 2003

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legislation. The PEG stations are not like Honolulu's Neighborhood Boards which were specifically organized under the City Charter.⁹Nor is 'Olelo like the Honolulu "vision teams" organized by the Mayor of Honolulu to establish neighborhood priorities for publicly funded public works projects which are then incorporated into the administration's capital budget and program bills.¹⁰

Hawai'i's state and county governments know how to create quasi-public corporations or entities to carry out government functions like those noted above. But no government action was taken to create 'Olelo or any other PEG access provider. There is no enabling legislation "creating" them. Unless every company in the state organized under Hawai'i's general incorporation law is going to be deemed a "government board" or "agency," the mere fact of incorporation does "create" a public body. Thus, PEG providers cannot be considered a board or agency merely because it is incorporated under general law. Such a reading would render meaningless the concept and the distinction between public and private organizations.

Moreover, if there are going to be government bodies that constitute "boards" or "agencies" within the meaning of Chapters 92 or 92F, there must be some definition of their official existence and official functions. There is no state statute, charter, or rule creating or establishing PEG providers' existence, or defining any official functions or duties.¹¹

3. THE STATE DOES NOT HAVE SUPERVISION, CONTROL,

JURISDICTION OR ADVISORY POWER OVER SPECIFIC MATTERS RELATING TO THE PEG PROVIDERS

Neither the State of Hawai'i nor any county has any ownership interest in the PEG providers. They are privately held and owned nonprofit corporation operated by private employees who are neither civil servants nor "public employees" under State law.

For example, on January 19,1990, 'Olelo and Department of Commerce and Consumer Affairs ("DCCA") entered into a contractual

9 Revised Charter of the City and County of Honolulu, §14-101(1973).

10 See QIP Op. Ltr. No.01-01 at 6-7 (April 9, 2001).

Hawaii Attorney General's Opinion No.90-7 (1990).

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Director,DCCA

September 51 2003

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relationship and agreement ("DCCA Agreement'¹) whereby 'Olelo agreed to be responsible for the following activities with regard to public₁educational and governmental ("PEG") access: (1) management of the channels; (2) provision of facilities and equipment for the production of programming; (3) training of govemmental₁educational and community organizations; (4) marketing and promotion of 'Olelo and the channels; and (5) provision of support services to users.

'Olelo and DCCA entered into a subsequent agreement dated June 24,1991 which essentially amended the January 1911990 Agreement by including 'Olelo's management of the PEG fees paid by Chronicle Cablevision of Hawai'i, Hawai'i Kai Area Franchise. 'Olelo's responsibilities remain the same as the January 19,1990 Agreement.

In December 24,1998, 'Olelo and DCCA entered into an Agreement ("DCCA Agreement") which superseded the January 19, 1990 and June 24, 1991 Agreements. Under the prior agreements, 'Olelo continued its management of the PEG channels and facilities and equipment.

Nothing in either Agreements between DCCA and 'Olelo or the Decision and Orders issued by DCCA permit DCCA to dictate how 'Olelo manages the channels under its control, assert any editorial power over the content of the programming broadcast on the channels, or impose any requirements on the operations of 'Olelo. 'Olelo's operations are conducted entirely by private parties under guidelines established by '0-lelo.¹²Neither the State nor DCCA offer an administrative support.¹³While 'Olelo, like any corporation is subject to the State's general police powers, the State does not control, oversee, manage, or supervise 'Olelo's operations. 'Olelo is simply a ¹¹fee for service" contractor.

'Olelo prepares reports required by its contract, but has no obligation to prepare reports or respond to generalized governmental inquiries.

12 'Olelo hires its own employees who are not subject to civil service or collective bargaining arrangements.

13 OIP found that the City and County of Honolulu's administrative support for Neighborhood Boards and the mayors visioning teams were important factors in rendering them "boards." OIP Op. Ltr. No.01-01 at 8 and

15.

Mark Recktenwald, Esq.

Director,DCCA

September 5, 2003

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Last year Hawai'i's Senate adopted a resolution requesting a financial and management audit of Olelo. Olelo's Board of Directors rejected the request as improper and did not do the audits. Nothing further occurred.

4. PEG PROVIDERS ARE NOT REQUIRED TO CONDUCT MEETINGS IN ACCORDANCE WITH STATE LAW TO TAKE OFFICIAL GOVERNMENTAL ACTIONS

PEG providers are not required by any law or order to conduct public meetings in any way different from any nonprofit corporation under Hawai'i law or by contractual agreement.

There is nothing in 'Olelo's Bylaws or in any state or county law, rule or order that requires 'Olelo to recommend or take any action that directly affects government or government spending₁apart from what by contract 'Olelo has agreed to do. 'Olelo neither makes nor recommends formal rules or policies to the government that are intended to affect government policy nor issues rules or enforces any law on behalf of the State. Because 'Olelo was not "created" by the government, it does not take "official" government action.

5. PEG PROVIDERS RECEIVE NO STATE OR FEDERAL FUNDS

PEG providers receive no funds from DCCA, the State of Hawai'i, or the federal government. They receive no taxpayer or appropriated revenues. PEGs are not part of the Stale budgetary process. They do not remit any money to the State.

The fact that the cable franchisee is obliged to fund the public access channels --in a manner analogous to the way a developer must fund the creation and maintenance of a roadway or parks within a subdivision -- has no bearing on the PEG provider's status as a state agency.

6. PEG PROVIDERS DO NOT PERFORM ANY GOVERNMENTAL FUNCTIONS

In OIP Opinion Letter No.93-18 (October 20,1993), your office concluded that Akaku-Maui Community Television was not a "public agency." The Opinion found that while providing "public" broadcasting can be considered a "governmental function" under section 314-8(1), Hawai'i Revised Statute

Mark Recktenwald, Esq.

Director,DCCA

September 51 2003

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(repealed 1999), '¹community" broadcasting is not a required function of any government agency.

Although we believe that Akaku, by providing community broadcasting on Maui₁is performing a public service that benefits the public interest, we do not believe that it is performing a government function. We note that "public broadcasting" may be considered a government function under chapter 314, Hawai'i Revised Statutes. . however, our research has not revealed any section of Hawai'i Revised Statutes that requires a government agency to provide "community¹¹broadcasting. Nor are we aware of any legal authority that has found community broadcasting to constitute a governmental f~nction.¹⁴

This opinion was reaffirmed by OIP in QIP Op. Lt. No.94-23 (December 13, 1994) which held that Ho'ike was not an "agency" for purposes of section 92F-3.

The federal government does not require community broadcasting, although Congress has authorized states to designate channel capacity on local cable franchises in order to provide for PEG uses.⁵No provision in Hawai'i Revised Statutes requires the government to provide "community broadcasting." Moreover, community broadcasting is not supported by taxpayer's fund~; but by the payments made by cable franchisee~ The State does not manage 'Olelo's funds.

The State has no editorial or content control over the broadcasting. Indeed, the very goal of providing open community access to cable channels without government restriction or interference is at odds with the notion that 'Olelo should l)e part of the internal government processes.. management, and review.

14 OIP Op. Ltr. No.93-18 (October 20,1993)..

15 The Cable Communications Policy Act of 1984, Pub. L. 98-549 (Oct. 30,1984), 90 Stat. 2780,47 U.S.C. 521, 531 ("Cable Act").

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Director, DCCA

September 5, 2003

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By contrast,"public" broadcasting is administered by State law under Haw. Rev. Stat. Chapter 314 (repealed effective July 2, 2000).16 In 1999, the Legislature debated the potential value of Hawai'i Public Television and 'OIelo merging DCCA itself acknowledged that no merger could possibly occur unless Hawai'i Public Television itself became a private entity since the Legislature has no authority over Olelo as a private entity. The Hawai'i Legislature adopted Act 63,1999 Session Laws of Hawai'i 83, which provided for the transfer of assets from Hawai'i Public Television to the Hawai'i Public Television Foundation, a non-profit tax exempt organization under Section 501(c) (3) of the Internal Revenue Code. 'Olelo has not sought nor agreed to any merger with the Hawai'i Public Television Foundation.

Furthermore, PEG providers have not been delegated any power to enforce public laws (unlike OIP's finding with regard to the Hawai'i Humane Society¹⁷), recommend or advise on public works CIP funding priorities,¹⁸or otherwise shape governmental process.

B. NEITHER THE STATE NOR DCCA MAINTAINS ADMINISTRATIVE CONTROL OVER PEG PROVIDERS

'OIeIo's Bylaws and the November 30,1988 Decision and Order No.135, as amended,¹⁹both provide for nine (9) Board members: six (6) appointed by the Director of the Department of Commerce and Consumer Affairs ("DCCA Director"); three (3) appointed by the President of Oceanic.

Under the Bylaws, the only qualifications to be a Board member are that an individual must be: (a) a resident of the State of Hawai'i; (b) not be

16 See note 6 above.

17 OIP Op. Ltr. No.90-31 (October 25,1990) (Hawai'i Humane Society enforced laws enacted by the State and county for the health, safety and welfare of the public).

18 OIP Op. Ltr. No.01-01 (April 9, 2001).

19 D&O Nos. 135 and 137 have subsequently been amended by D&O Nos. 154, 156,158 and 261 (for Oahu), and 243,174, 241 and 245 (for Maui, Molokai, and Lanai), and 173,185, 242 and 244 (for Hawai'i) (collectively referred to as "D&Os").

Mark Recktenwald, Esq.

Director₁DCCA

September 5, 2003

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an 'Olelo employee or a direct relative of an Olelo employee; and (c) not be a city₁state or federal elected official. Board members are not required to have any government connection, do not represent the State, and act as individuals with fiduciary duties to 'Olelo. The individuals are to be selected on the basis of their ability to bring a wide range of community perspective to the Board. Although the DCCA Director has the ability to select six of the nine Board members, since 1989 the Board has nominated its own successors and in every instance those nominated by the Board have been selected.

Under the Bylaws, neither the State nor DCCA has the authority or any power to appoint or remove PEG Board members.

C. PEG PROVIDERS ARE FUNDED THROUGH PEG FEES

PEG providers receive no funds from DCCA, the State of Hawai'i, or the federal government. Instead, all of their funding comes from fees provided by a private franchisee.

1. LEGAL BASIS FOR FRANCHISE FEE

a. Federal Law

Under the Cable Act, franchising authorities are permitted to impose requirements for cable-related facilities and equipment. Section 611 of the Cable Act permits franchising authorities to require channel capacity to be designated for PEG use. Section 622 also permits franchising authorities to assess a fee up to five percent (5%) of the annual gross revenues, any portion of which may be used for PEG access.

b. State Law

The State of Hawai'i, as the franchising authority, has elected to impose requirements on cable operators, cable-related facilities and PEG access through Hawai'i Revised Statutes Chapter 440G, Cable Television Systems.

On November 30,1988 and December30, 1988, the Director issued D&O No.1 35 and No.137 granting Oceanic a cable franchise subject to certain terms and conditions.

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Director,DCCA

September 51 2003

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Under the D&Os, Oceanic is obligated to pay to the Director or the Director's designee (1) an amount equal to three percent (3%) of Oceanic's annual gross revenues ("Access Fees") and (2) capital funds for facilities and equipment ("Equipment and Facilities Fund"). These fees are specifically designated for PEG use (Access Fees and Equipment and Facilities Fund are hereinafter sometimes collectively referred to as "PEG Fees").

2. PAYMENT OF PEG FEES TO PEG PROVIDERS

PEG providers are not the sole recipient of the PEG Fees. According to D&O No.261 issued August 11, 2000, the PEG stations, as the State¹s designee must distribute twenty-five percent (25%) of the Access Fees to a consortium of public and private accredited educational institutions. Therefore, although 'Olelo is collecting the PEG Fees from Oceanic, the station is not the sole beneficiary of these fees.

3. USE OF PEG FEES BY PEG PROVIDERS

PEG providers are required to maintain the Access Fees and Equipment and Facilities Fund in two separate accounts. The PEG providers' portion of the Access Fees is used for the provider's operations. The Equipment and Facilities Fund is maintained for PEG access facilities and equipment.

Although the PEG providers submit general financial and activity reports to DCCA, DCCA does not exercise any control over the operations of the PEG station. The provider has sole authority to (1) manage the PEG access facilities and channels; (2) provide training to the public for access to the facilities and equipment; (3) conduct its own marketing and promotions; and (4) provide support services to PEG access users. Each PEG provider has established its own guidelines and policies on the content of its programming.

D. PEG STATIONS DO NOT PERFORM A "GOVERNMENT FUNCTION"

As discussed previously in the Akaku and Ho'ike opinions, OIP already opined that '¹community" broadcasting is not a ¹¹government function" and that neither Akaku nor Ho'ike are "agencies¹¹of the State. 'Olelo is similar to Maui's Akaku in that 'Olelo engages in community broadcasting and is not an ¹¹agency" of the State because:

Mark Recktenwald, Esq.

Director,DCCA

September 5, 2003

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· The State is not involved in 'Olelo's operations.

· The State does not manage or provide administrative support to 'Olelo.

· 'Olelo is funded by PEG fees paid by a private cable franchisee.

· 'Olelo is not supported by taxpayer's funds.

· 'Olelo does not enforce any State or county law.

· 'Olelo does not advise, make, or recommend any State or county public policy for government to implement.

We are not aware of any facts that would alter the conclusions of these opinions.

E. CONCLUSION

For the reasons stated above, we recommend that DCCA reject OIP's recent opinion and propose legislation to exclude PEG access cable TV stations from the definition of an "agency" or a "board" for any purposes and specifically for purposes of Haw. Rev. Stat. Chapters 91 or 92F.

We would be glad to discuss this with you further at your convenience.

Very truly yours,

Paul Alston

William M. Tam

WMT:lc