Fee-for-Service Contractors Are Not FOIL “Agencies” Absent Governmental Control

1. Introduction

Matter of Ryan v Watershed Agric. Council of the N.Y. City Watersheds, Inc. (2026 NY Slip Op 03853 [3d Dept June 18, 2026]) addresses when a private, nonprofit entity that administers a public program under contract becomes an “agency” subject to New York’s Freedom of Information Law (“FOIL”).

The petitioner, Colm P. Ryan, is a farm owner participating in programs administered by the respondent, the Watershed Agricultural Council of the New York City Watersheds, Inc. (“WAC”), a charitable not-for-profit environmental corporation operating in the New York City watershed region. WAC contracts with the New York City Department of Environmental Protection (“DEP”) to manage and administer the Watershed Agricultural and Forestry Program, which provides voluntary incentives to landowners to reduce water contamination risks.

Ryan submitted records requests to WAC under FOIL and under WAC’s own transparency policy. WAC denied that it was subject to FOIL, processed the request under its transparency policy, and offered production (with some denials/redactions) conditioned on payment of approximately $2,600 for estimated staff time. Ryan then brought a CPLR article 78 proceeding seeking a declaration that WAC is a FOIL “agency,” an order compelling unredacted production, and costs/attorneys’ fees. He also moved for disclosure under CPLR 408.

The central issues on appeal were: (1) whether WAC is an “agency” under FOIL (Public Officers Law § 86[3]); and (2) whether Supreme Court properly denied discovery in this special proceeding.

2. Summary of the Opinion

The Third Department affirmed dismissal of the petition. It held that WAC is not an “agency” within the meaning of FOIL despite performing work aligned with DEP’s mission and receiving approximately 95% of its revenue through the DEP contract. The court emphasized the absence of governmental control over WAC’s governance, budgeting, staffing, and operations, and characterized WAC’s relationship with DEP as a fee-for-service contract rather than governmental control of an instrumentality.

The court also affirmed denial of discovery under CPLR 408, finding the request speculative, overbroad, and inconsistent with the summary nature of article 78 proceedings—particularly because additional evidence of DEP oversight of contract performance would not change the FOIL “agency” analysis on the record presented.

In a significant practical note, the court stated that its holding does not preclude the petitioner from seeking records from DEP under FOIL, with the inquiry then focusing on whether documents held by WAC are within DEP’s control as records “kept, held, filed, produced or reproduced by, with or for an agency” (Public Officers Law § 86[4]).

3. Analysis

A. Precedents Cited

FOIL’s purpose and disclosure presumption

  • Matter of Hepps v New York State Dept. of Health, 183 AD3d 283 (3d Dept 2020), lv dismissed & denied 37 NY3d 1001 (2021): cited for FOIL’s core aim—transparency in governmental operations so governmental decision-making can be scrutinized.
  • Matter of Suhr v New York State Dept. of Civil Serv., 193 AD3d 129 (3d Dept 2021), lv denied 37 NY3d 907 (2021): reinforces FOIL’s transparency purpose.
  • Matter of Police Benevolent Assn. of N.Y. State, Inc. v State of New York, 165 AD3d 1434 (3d Dept 2018): cited for the presumption of access to “agency records” absent a statutory exemption.
  • Matter of Williamson v Fischer, 116 AD3d 1169 (3d Dept 2014), lv denied 24 NY3d 904 (2014): similarly supports the presumption of disclosure unless an exemption applies.

Defining “agency” for FOIL and liberal construction

  • Matter of Buffalo News v Buffalo Enter. Dev. Corp., 84 NY2d 488 (1994): the leading Court of Appeals authority used here for two propositions: (1) “agency” must be liberally construed to serve FOIL’s purpose; and (2) a nonprofit may be subject to FOIL where governmental officials control it and it has sufficient governmental attributes while carrying out a governmental purpose.

Multi-factor test for private entities and the “fee-for-service” line

  • Matter of Justice v King, 60 AD3d 1452 (4th Dept 2009), appeal dismissed 12 NY3d 908 (2009), cert denied 558 US 994 (2009): supplies the commonly used factor set for assessing whether a nongovernmental entity is a FOIL “agency” (e.g., budget disclosure requirements, public offices, government control over hiring, board composition, creation by government, self-description as government agent). The Ryan court relies on this framework and also cites it for the principle that a fee-for-service contractor is not thereby a FOIL agency.
  • Matter of Ervin v Southern Tier Economic Dev., Inc., 26 AD3d 633 (3d Dept 2006): supports the point that performing a governmental function under contract, without more, does not make a private entity a FOIL agency.
  • Matter of Farms First v Saratoga Economic Dev. Corp., 222 AD2d 861 (3d Dept 1995): emphasized for the “much as any other independent business entity might” fee-for-service distinction; contracting with a governmental body does not convert the contractor into a FOIL agency.
  • Matter of Outhouse v Cortlandt Community Volunteer Ambulance Corps, Inc., 171 AD3d 1071 (2d Dept 2019): applied as a comparator where a volunteer ambulance corps was not treated as a FOIL agency in the absence of sufficient governmental attributes/control.
  • Matter of Rumore v Board of Educ. of City Sch. Dist. of Buffalo, 35 AD3d 1178 (4th Dept 2006), lv denied 8 NY3d 810 (2007): cited as supporting authority that certain private entities, even when connected to public functions, are not necessarily FOIL agencies absent the requisite governmental characteristics.
  • Matter of Metropolitan Museum Historic Dist. Coalition v De Montebello, 20 AD3d 28 (1st Dept 2005): cited for the distinction between contractors/independent entities and governmental entities for FOIL coverage purposes.

Nonbinding status of Committee on Open Government opinions

  • Comm on Open Govt FOIL-AO-17944 [2009]: petitioner relied on this advisory opinion to argue WAC should be deemed a FOIL agency; the court declined to treat it as controlling.
  • Matter of John P. v Whalen, 54 NY2d 89 (1981): cited for the principle that such advisory opinions are not binding or entitled to particular deference.
  • Matter of Town of Waterford v New York State Dept. of Envtl. Conservation, 77 AD3d 224 (3d Dept 2010), mod 18 NY3d 652 (2012): similarly cited to underscore the nonbinding nature of advisory opinions, particularly where they do not analyze all relevant factors.

Discovery standards in CPLR article 78 proceedings

  • Matter of Cotazino v New York State Adirondack Park Agency, 214 AD3d 1137 (3d Dept 2023): cited for the rule that disclosure in special proceedings requires leave of court and is discretionary.
  • Matter of Town of Pleasant Val. v New York State Bd. of Real Prop. Servs., 253 AD2d 8 (2d Dept 1999): quoted for the principle that discovery is disfavored because it undermines the summary nature of special proceedings, and should be granted only upon a demonstrated need.
  • Matter of City of Troy v Assessor of the Town of Brunswick, 145 AD3d 1241 (3d Dept 2016) and Matter of Lally v Johnson City Cent. School Dist., 105 AD3d 1129 (3d Dept 2013): cited as examples reinforcing restrained use of discovery in article 78 practice.
  • Matter of Suit-Kote Corp. v Rivera, 137 AD3d 1361 (3d Dept 2016), appeal dismissed & lv denied 27 NY3d 1054 (2016), and Matter of Entergy Nuclear Indian Point 2, LLC v New York State Dept. of State, 130 AD3d 1190 (3d Dept 2015): used to support affirmance where discovery requests are overbroad or unnecessary given an adequate administrative record and the nature of the proceeding.

FOIL requests directed to the government agency as record “controller”

  • Matter of DeWolf v Wirenius, 229 AD3d 929 (3d Dept 2024): cited in the footnote to highlight a separate, practical avenue—seeking documents from the governmental agency if the contractor-created/held materials are within the agency’s FOIL reach as records “kept, held, filed, produced or reproduced by, with or for an agency.”

B. Legal Reasoning

The court begins with FOIL’s pro-disclosure orientation but stresses that this presumption applies only to agency records—making the “agency” threshold decisive. Using the multi-factor framework drawn from Matter of Justice v King and related cases, the court evaluates whether WAC has “sufficient governmental attributes” or is “controlled by governmental officials” such that it should be treated as a FOIL agency.

Key operational facts drove the outcome:

  • Board control and composition: WAC has 15–19 directors; only one is a DEP representative, and the rest are private stakeholders (farmers, forest landowners, agribusiness/forest industry representatives). The board elects members by majority vote, and the DEP representative has no enhanced voting authority.
  • Budget autonomy: WAC sets its own annual budget, not subject to public hearing or comment.
  • Personnel autonomy: WAC hires/fires its employees and subcontractors; they are not under DEP control or management.
  • Operational independence: WAC maintains its own liability and workers’ compensation insurance, has not been provided space in a DEP building, and does not provide governmental benefits to employees—facts used as practical indicators that WAC is not integrated into government operations.
  • Contract characterization: DEP’s contract defines scope of work “on a fee-for-service basis,” aligning WAC with an independent contractor model rather than an entity exercising delegated governmental authority under governmental control.

The court acknowledges WAC “arguably performs a governmental function” by reducing pollution in the watershed, but it treats that as insufficient standing alone. The core doctrinal move is to separate function from control/attributes: a private entity can advance a governmental goal without becoming a governmental entity for FOIL.

The court also rejects the idea that heavy public funding (approximately 95% of WAC revenue) is determinative, noting WAC also has nonpublic revenue and, more importantly, that funding does not substitute for governmental control in the “agency” analysis.

On the request for discovery, the court applies CPLR 408’s discretionary standard and emphasizes that discovery in article 78 is exceptional. Petitioner’s theory—that discovery might show DEP exercised control over quality of WAC’s contract performance—was deemed speculative; and the court added that even if confirmed, it would not change the result on these facts. The requests (depositions of top officials; all board and executive committee minutes; all corrective-action/monitoring materials) were characterized as “palpably overbroad” and likely to cause delay inconsistent with the summary proceeding.

C. Impact

1) Reinforcement of the contractor/control boundary. The decision strengthens and operationalizes the “fee-for-service” line: even where the contractor performs work closely aligned with a governmental mission and is largely publicly funded, FOIL “agency” status still turns on structural and operational indicia of governmental control (governance, budgeting, hiring, integration into government facilities/benefits, etc.).

2) Litigation strategy shift toward FOIL requests to the government. The court’s footnote is practically significant: requesters denied by contractors may pursue the records via FOIL requests to the contracting agency (here, DEP), reframing the dispute as whether the contractor materials are “information kept, held, filed, produced or reproduced by, with or for an agency” (Public Officers Law § 86[4]). This encourages future litigants to develop “control” theories directed at the governmental agency’s possession, right-to-obtain, or practical control over contractor records rather than trying to reclassify the contractor as a FOIL agency.

3) Advisory opinions remain persuasive at most. By expressly rejecting deference to Comm on Open Govt FOIL-AO-17944 [2009] on the ground that it is nonbinding and incomplete, the decision signals that litigants should treat Committee on Open Government opinions as advocacy tools—not substitutes for a full factor-based record.

4) Tightening of article 78 discovery. The decision underscores a pragmatic approach: where the alleged missing facts would not alter the legal classification, discovery will be denied—particularly when requests are broad and would delay resolution.

4. Complex Concepts Simplified

  • FOIL “agency” (Public Officers Law § 86[3]): FOIL applies to “governmental entities” and certain non-governmental entities only when they effectively function like government—typically through governmental control or governmental attributes (e.g., government-dominated board, government control over staff/budget, public-office integration).
  • “Fee-for-service” contractor: An entity paid to deliver defined services under a contract, while retaining independent control over its internal governance and operations. Under the case law relied on here, that relationship alone does not make the contractor a FOIL agency.
  • Governmental function vs. governmental control: Doing work that benefits the public (like protecting drinking water) is not the same as being part of government. FOIL agency status generally requires control/structure showing the entity is effectively operating as a governmental arm.
  • CPLR article 78: A streamlined procedure to challenge certain governmental or quasi-governmental determinations. Its “summary” nature is why discovery is limited.
  • CPLR 408 discovery: Discovery in special proceedings happens only with court permission and only when truly needed; courts avoid it when it is speculative or would delay what should be a prompt adjudication.
  • FOIL records “with or for an agency” (Public Officers Law § 86[4]): Even if a contractor is not a FOIL agency, records created/held by that contractor may still be reachable through the governmental agency if they are kept/held/produced “with or for” the agency—often turning on the agency’s control, possession, or right to obtain them.

5. Conclusion

Matter of Ryan v Watershed Agric. Council of the N.Y. City Watersheds, Inc. confirms that a private nonprofit administering an important public program under a heavily funded government contract is not, for that reason alone, a FOIL “agency.” The decisive inquiry remains whether the entity has sufficient governmental attributes and is controlled by governmental officials—an inquiry the court answered “no” based on WAC’s independent governance, budgeting, staffing, and operations.

The decision’s broader significance lies in its practical roadmap: when a contractor is not a FOIL agency, requesters may still pursue access by directing FOIL requests to the governmental contracting agency and litigating whether the contractor materials are records “kept, held, filed, produced or reproduced by, with or for an agency,” while recognizing that discovery in article 78 proceedings will be tightly constrained absent a concrete, outcome-determinative need.