Discussion:

The Open Meeting Law, Minnesota Statutes, Chapter 13D, governs the operation of state executive branch entities as well as the governing bodies of public bodies such as school districts, counties, cities, towns or an unorganized territory. See Minnesota Statutes, section 13D.01. The question to be resolved in this advisory opinion is whether the board of the Plan is an entity that must conform to the requirements of Chapter 13D.

A description of the operation of the Plan is helpful in understanding the outcome of this opinion. The Plan is a reinsurance arrangement among property and casualty insurance companies to insure property for which property and liability insurance cannot be obtained through regular means. Minnesota Statutes, section 65A.32 (6). It is an organization formed by insurers to assist applicants for insurance and to administer the Plan. Minnesota Statutes, section 65A.33, subdivision 4. Any insurer who writes property or liability insurance policies in Minnesota must belong to the Plan. Minnesota Statutes, section 65A.35, subdivision 1. Insurance company participants elect five members of the nine member board of directors. The remaining four members of the board are appointed by the Commissioner of Commerce. Minnesota Statutes, section 65A.35, subdivision 5 (1).

The statute creating the Plan is silent on the applicability of the Open Meeting Law to the Plan's board. Chapter 13D does not contain a definition of public body that could assist with the analysis. There is one case from the Minnesota Supreme Court that appears to provide guidance in this analysis. The case is Southern Minnesota Municipal Power Agency v. Boyne, 578 N.W. 2d 362 (Minn. 1998) (referred to as SMMPA). The SMMPA case involves municipal power agencies and whether they must meet the requirements of the Open Meeting Law. The Commissioner will describe the case and then compare the Plan and its Board to the principles from the case.

In SMMPA, the Supreme Court found that municipal power agencies were formed by cities who agreed to produce power cooperatively for the benefit of the member cities and their customers. The enabling legislation says that the municipal power agency is a municipal corporation, a political subdivision, and is to operate as a business. Specifically, the enabling legislation used the phrase private corporation and the Supreme Court found that SMMPA had behaved like a private corporation, its bylaws provided that some meetings and records could be closed and it was not covered by the Open Meeting Law. In 2000, the Legislature required that corporations formed by political subdivisions follow the requirements of the Open Meeting Law. See Minnesota Statutes, section 465.719. Municipal power agencies were specifically excluded from this new provision. Minnesota Statutes, section 465.719, subdivisions 1(b)(1).

In the case before the Commissioner, the Plan's enabling legislation does not use the same terminology as is used for municipal power agencies. However, section 65A.33, subdivision 4 says that the Plan is formed by insurers to assist applicants in getting property or liability insurance. All property and liability insurers who want to sell property, liability or multiperil insurance in Minnesota must participate in the plan. The Plan members fund a reinsurance arrangement where property that cannot otherwise be insured in the normal property/liability market can be insured. In other words, except for the appointment of a minority of the members of the Board by the Commissioner of Commerce, no government body participates in the funding or operation of the Plan. Minnesota Statutes, section 65A.35, subdivision 6.

When the municipal power agency and Plan situations are compared, it is a reasonable conclusion that if the Southern Minnesota Municipal Power Agency was not subject to the Open Meeting Law, then the Plan is not either. The Southern Minnesota Municipal Power Agency was formed by public bodies for the benefit of the public who purchased electric power. The Plan, in contrast, is formed by private parties (insurers) and administered by representatives of these private parties for the benefit of private parties.

As a final point, the Open Meeting Law was enacted so that citizens could watch their government at work. As the public bodies covered by the Open Meeting Law are spending citizen tax dollars and making decisions that affect citizens, it is essential in our system of representative democracy that those decisions be made in the open, where all citizens can monitor what is done. The Plan is a privately funded and operated organization that provides a very specific service to individuals and businesses in need of property and liability insurance. The Plan makes decisions on a case-by-case basis for specific insurance needs.

While the SMMPA case does not provide direct guidance for the Plan's board, the fact that the Plan operates more like a private corporation and the language that is in place in the enabling legislation does not give an indication that the Open Meeting Law should apply, it is reasonable to conclude that the Plan is not subject to the Open Meeting Law.

Opinion:

Based on the facts and information provided, my opinion on the issue raised by Mr. McKasy is as follows:

Signed:

Brian J. Lamb
Commissioner

Dated: January 9, 2004