Can members of the Nassau County Rent Guidelines Board, who set local rent caps under the Emergency Tenant Protection Act, get free defense and indemnification from the State of New York under Public Officers Law § 17 when sued for their official acts?

Plain-English summary

DHCR's counsel asked the AG whether members of the Nassau County Rent Guidelines Board could be defended and indemnified by the State under Public Officers Law § 17 when sued in their official capacities. The County had said it would defend the members but would not indemnify them against money judgments. The AG concluded the State must do both, because the members are State "employees" within § 17's definition.

How POL § 17 works. § 17 covers any person "holding a position by election, appointment or employment in the service of the state, . . . whether or not compensated, or a volunteer expressly authorized to participate in a state-sponsored volunteer program," excluding independent contractors. § 17(1)(a). For covered employees, the State must (a) provide a defense in any civil action arising from official acts within the scope of employment (§ 17(2)(a)), and (b) indemnify any judgment or settlement that arose from acts within scope, absent intentional wrongdoing (§ 17(3)(a)). The eligibility test for defense and for indemnification is the same.

Why NCRGB members are "in the service of the state." Two structural features matter:
1. State-officer appointment. Each board member is appointed by the state Commissioner of Housing and Community Renewal (with recommendations from the county legislature). The Commissioner can remove members for cause. The AG cited two prior opinions where state-officer appointment was decisive: Op. Att'y Gen. No. 96-F9 (regional emergency medical services council members appointed by Commissioner of Health, covered) and No. 89-F2 (local emergency planning committee members appointed by Executive Department, covered).
2. Integral role in a state program. NCRGB sits inside the state's Emergency Tenant Protection Act framework. Local rent guidelines boards set the annual rent-increase caps; DHCR enforces them, processes overcharge complaints, and conducts service-reduction adjustments. The board's expertise is drawn into the state's rent-regulation system. That kind of state-program participation is the "service of the state" the statute contemplates.

Why the Great Neck Plaza precedent doesn't change the result. Inc. Vill. of Great Neck Plaza v. Nassau Co. Rent Guidelines Bd., 69 A.D.2d 528 (2d Dep't 1979), held that NCRGB is not a "state agency" for purposes of the State Administrative Procedure Act and the Open Meetings Law. The AG distinguished:
- "State agency" and "state officer" are defined differently than § 17's "employee." § 17 is broader and reaches anyone serving the state, even with locality-limited jurisdiction.
- The AG had previously found regional and local actors to be § 17 employees even when they were not "state officers" or "state agencies" for other statutes (e.g., 96-F9 and 89-F2 cited above).
- Op. Att'y Gen. No. 97-F11 explicitly noted that members of the NY State Independent Living Council were "state officers" under POL § 2 but not § 17 "employees": showing the analyses are different. The same logic, run the other direction, gives the result here.

Bottom line. When NCRGB members face suits over their rate-setting work, the AG's office is the defense and the State pays any judgment or settlement, subject to the standard § 17 limits (not intentional wrongdoing, claims by/on behalf of the State excluded from defense duty).

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Does this apply to the rent guidelines boards in Westchester and Rockland Counties?
The opinion is limited by its facts to Nassau, but the reasoning extends: the Commissioner appoints those boards too, and they play the same role under ETPA. The opinion footnoted that the conclusions are limited to the boards covered by ETPA, excluding the New York City Rent Guidelines Board (which is governed by additional rent regulation statutes).

Why doesn't Nassau County have to cover its rent board members?
Local indemnification statutes may exist (and the County here was willing to defend but not indemnify), but POL § 17 reaches members because the State appoints them. The State's obligation does not turn on whether a county happens to be willing.

What if a member acts outside the scope of board duties?
§ 17(2)(a) only covers acts within the scope of the employee's public employment. A member sued for intentional wrongdoing or activities outside the board's authority would not receive defense and indemnification.

Could a member be sued by the State and still get defense?
No. § 17(2)(a) expressly excludes "civil action or proceeding . . . brought by or on behalf of the [S]tate" from the defense duty.

Does this opinion cover counsel fees and costs in unsuccessful appeals?
The opinion does not address procedural details. § 17 has standard provisions about timely notice and cooperation, which board members would need to follow.

Background and statutory framework

Emergency Tenant Protection Act of 1974. L. 1974, ch. 576, § 4. Allows cities, towns, and villages in Nassau, Westchester, and Rockland Counties to declare housing emergencies (when vacancy rates fall to 5% or less) and triggers a rent-regulation regime. DHCR administers; local rent guidelines boards set annual increase caps.

Local rent guidelines board structure. ETPA § 4(a). Nine members: two tenant representatives, two owner representatives, five public members (each with 5+ years' experience in finance, economics, or housing). Commissioner appoints and selects the chair; chair cannot hold other public office. Members get a per diem (up to 20 days per member, 30 days per chair) but no salary.

DHCR's enforcement role. ETPA §§ 6(a), 6(d) (overcharge enforcement and individual adjustments); § 7(a) (service-reduction adjustments); § 12(a)(1) (treble overcharge penalty); § 12-a (annual filing and certification).

Public Officers Law § 17. Coverage statute for state employees in civil litigation. § 17(1)(a) defines "employee" broadly. § 17(2)(a) creates the defense duty. § 17(3)(a) creates the indemnification duty.

Prior AG opinions distinguishing state-officer status from § 17 employee status. Op. Att'y Gen. No. 84-F11 (county rent guidelines board members are local officers for ethics-law purposes); No. 96-F9 (regional EMS council members are § 17 employees); No. 89-F2 (local emergency planning committee members are § 17 employees); No. 97-F11 (Independent Living Council members are state officers under POL § 2 but not § 17 employees).

Citations

• Public Officers Law § 2 (state and local officer definitions).
• Public Officers Law § 17 (state defense and indemnification); § 17(1)(a) (employee definition); § 17(2)(a) (defense duty); § 17(3)(a) (indemnification duty).
• Emergency Tenant Protection Act of 1974 § 3(a) (housing emergency declaration); § 4, § 4(a), (b) (local rent guidelines board appointment and rate-setting); § 6(a), (d) (rent overcharge and individual adjustments); § 7(a) (service reductions); § 8(a) (DHCR administrative role); § 10(a) (DHCR regulations); § 12(a)(1) (treble damages); § 12-a(a), (f) (owner reporting).
• Matter of O'Brien v. Spitzer, 7 N.Y.3d 239 (2006) (§ 17 framework).
• Inc. Vill. of Great Neck Plaza v. Nassau Co. Rent Guidelines Bd., 69 A.D.2d 528 (2d Dep't 1979) (NCRGB not state agency for SAPA/OML purposes).
• Op. Att'y Gen. No. 96-F9 (regional EMS council members covered by § 17).
• Op. Att'y Gen. No. 89-F2 (local emergency planning committee members covered).
• Op. Att'y Gen. No. 97-F11 (Council members not § 17 employees despite being state officers).
• Op. Att'y Gen. No. 84-F11 (rent board members are local officers under POL § 2).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/2009-F1_pw.pdf

Original opinion text

Public Officers Law §§ 2, 17, 17(1)(a), 17(2)(a), 17(3)(a); Emergency Tenant Protection Act of 1974
§§ 3(a), 4, 4(a), 4(b), 6(a), 6(d), 7(a), 8(a), 10(a), 12(a)(1), 12-a(a), 12-a(f)

The members of the Nassau County Rent Guidelines Board are eligible for State-provided defense and indemnification pursuant to Public Officers Law § 17.

November 24, 2009

Gary R. Connor
Counsel
Division of Housing &
Community Renewal
25 Beaver Street
New York, New York 10004

Formal Opinion
No. 2009-F1

Dear Mr. Connor:

You have requested our opinion regarding whether members of the Nassau County Rent Guidelines Board, a local rent guidelines board established pursuant to the Emergency Tenant Protection Act of 1974, are eligible for State-provided indemnification pursuant to Public Officers Law § 17. For reasons that follow, we answer that question in the affirmative.

I. Statutory Background

A. Emergency Tenant Protection Act of 1974

The Emergency Tenant Protection Act ("EPTA") of 1974 (L. 1974, ch. 576, § 4, as amended) established a mechanism for controlling rent increases in municipalities in Nassau, Westchester, and Rockland Counties (hereinafter "covered county" or "covered counties"). The Division of Housing and Community Renewal ("DHCR") is the administrative agency designated to administer the regulation of rent as provided by ETPA and is authorized to promulgate regulations to implement ETPA. ETPA §§ 8(a), 10(a), codified at McKinney's Unconsol. Laws §§ 8628(a), 8630(a). As described below, DHCR administers rent regulation with the assistance of local rent guidelines boards ("LRGB") appointed by the Commissioner of Housing and Community Renewal (hereinafter "the Commissioner").

When the vacancy rate of rental residential housing or a class of such housing is 5% or less in a city, town, or village, the local legislative body of the city, town, or village (hereinafter "local government" or "local governments") within a covered county may declare a housing emergency that requires the regulation of residential rents. ETPA § 3(a), codified at McKinney's Unconsol. Laws § 8623(a). Upon an initial declaration of a housing emergency, the Commissioner appoints nine members to a LRGB. Id. § 4(a), codified at McKinney's Unconsol. Laws § 8624(a). These appointments are made upon the recommendation of the legislature of the covered county in which the local government that has the emergency is located. Id. Two members of the LRGB must be representative of tenants, two must be representative of owners of property, and five must be public members, each of whom must have at least five years experience in finance, economics, or housing. Id. The Commissioner designates one of the public members to serve as chairperson of the board; the chairperson may not hold any other public office. Id. The Commissioner may remove members for cause after a hearing. Id.

The LRGB annually establishes guidelines for rent adjustments that set forth the maximum rates at which rents may be increased. Id. § 4(b), codified at McKinney's Unconsol. Laws § 8624(b). Once established, the LRGB has jurisdiction not only over the local government that first declared a housing emergency, but also over any other local government within the covered county that likewise declares a housing emergency. The LRGB may, in its sole discretion, establish guidelines that differ for the various entities subject to its jurisdiction or it may establish standards applicable across the entire county. Id. EPTA provides factors that the board must consider in setting the guidelines, such as the economic condition of the residential real estate industry in the affected area, including real estate taxes, sewer and water rates, operating maintenance costs, and costs and availability of financing. Id. The LRGB must file its findings and guidelines with DHCR, which provides staff assistance to the LRGB. Id. § 4(a), (b), codified at McKinney's Unconsol. Laws § 8624(a), (b).

DHCR enforces the guidelines established by the LRGB. Owners of properties for which rents are regulated generally may not charge or collect any rent in excess of that authorized by the guidelines. ETPA § 6(a), codified at McKinney's Unconsol. Laws § 8626(a). Owners may, however, apply to DHCR for individual adjustments of rents when certain criteria are met. Id. § 6(d), codified at McKinney's Unconsol. Laws § 8626(d). If DHCR determines that an owner has charged more than an authorized rent, the owner is liable to the tenant for a penalty equal to three times the amount of the overcharge. Id. § 12(a)(1), codified at McKinney's Unconsol. Laws § 8632(a)(1).

Owners of housing accommodations subject to ETPA must file an annual statement with DHCR that describes the rent charged and the services the owner provides to renters. Id. § 12-a(a), (f), codified at McKinney's Unconsol. Laws § 8632-a(a), (f). Owners must also certify to DHCR that they maintain and will continue to maintain all of the services required by law in order to be authorized to increase rents the amount authorized by the guidelines. Id. § 7(a), codified at McKinney's Unconsol. Laws § 8627(a). Upon application by a tenant, DHCR can reduce the tenant's rent by the most recent adjustment if it finds that the owner has not maintained these services. Id.

Members of the LRGB receive no salary. They receive a per diem for no more than 20 days per year for members or 30 days per year for the chair. ETPA § 4(a), codified at McKinney's Unconsol. Laws § 8624(a). DHCR pays the members' per diem and the cost of assistance provided by DHCR staff, and then is reimbursed by the local government that declared the housing emergency. Id. §§ 4, 8(a), codified at McKinney's Unconsol. Laws §§ 8624, 8628(a).

B. Public Officers Law § 17

Public Officers Law § 17 provides authority for the defense and indemnification of an employee of the State. Matter of O'Brien v. Spitzer, 7 N.Y.3d 239 (2006). "Employee" is a term of art defined in subdivision (1)(a) of section 17 as any person "holding a position by election, appointment or employment in the service of the state, . . . whether or not compensated, or a volunteer expressly authorized to participate in a state-sponsored volunteer program, but shall not include an independent contractor." Public Officers Law § 17(1)(a). Under section 17, upon compliance by the employee with certain specified procedural requirements,

the state shall provide for the defense of the employee in any civil action or proceeding in any state or federal court arising out of any alleged act or omission which occurred or is alleged in the complaint to have occurred while the employee was acting within the scope of his public employment or duties . . . . This duty to provide for a defense shall not arise where such civil action or proceeding is brought by or on behalf of the [S]tate.

Id. § 17(2)(a). The statute provides for indemnification in the amount of any judgment obtained against the employee in any state or federal court or in the amount of any settlement of a claim, if the act or omission from which the judgment or settlement arose occurred while the employee was acting within the scope of his or her employment and not from intentional wrongdoing. Id. § 17(3)(a).

II. Analysis

You have advised that Nassau County is willing to defend the members of the Nassau County Rent Guidelines Board ("NCRGB") in litigation but is unwilling to indemnify the members in the event a monetary judgment is entered against them. For purposes of Public Officers Law § 17, however, the determination that an individual is eligible for indemnification by the State is identical to the determination that he or she is eligible for a defense provided by the State. The crucial factor is whether the individual is an "employee" of the State within the meaning of section 17. If so, then such individual is eligible for indemnification by the State, in addition to a defense.

Central to the question of whether NCRGB's members are eligible for State-provided defense and indemnification is the determination of whether NCRGB members are "employees" under Public Officers Law § 17. And that question distills to whether the members "hold[ ] a position by election, appointment or employment in the service of the state . . . whether or not compensated." Id. § 17(1)(a).

In our opinion, NCRGB's members are in "the service of the state" and thus are "employees" for purposes of section 17. Significantly, each and every member is appointed by a state officer, the Commissioner of Housing and Community Renewal, a factor that we have found relevant to section 17 determinations in the past. See Op. Att'y Gen. No. 96-F9 (members of regional service councils who were designated by Commissioner of Health covered by section 17); Op. Att'y Gen. No. 89-F2 (members of local emergency committees appointed by Executive Department covered by section 17).

Additionally, NCRGB serves a discrete but integral function in the implementation of the State's program of rent regulation. NCRGB is composed of local representatives with diverse backgrounds and expertise relevant to rental housing. The State thus draws upon and uses NCRGB's expertise and experience to develop guidelines reflecting what rents local conditions require and will bear. Once the guidelines are promulgated, rent regulation in local communities pursuant to ETPA is administered and implemented by DHCR, which, of course, is a state entity.

Inc. Vill. of Great Neck Plaza v. Nassau Co. Rent Guidelines Bd., 69 A.D.2d 528 (2d Dep't 1979) does not compel the conclusion that NCRGB's members are not entitled to a State-provided defense and indemnification in appropriate cases. At issue in Great Neck Plaza was whether NCRGB was a "state agency" subject to the State Administrative Procedure Act and the Open Meetings Law. The court held that it was not, based on the definitions of "state agency" and "state officer" applicable to those statutes. 69 A.D.2d at 534-35; see also Op. Att'y Gen. No. 84-F11 (state law governing local officers' ethics applied to member of county rent guidelines board, applying definitions of "state officer" and "local officer" in Public Officers Law § 2). The definition of state "employee" for purposes of Public Officers Law § 17 is different from the definitions in the statutes considered in Great Neck Plaza, and includes persons providing "service" on behalf of the State even if the jurisdiction in which that service is exercised is limited to a locality or region. See Op. Att'y Gen. No. 96-F9 (members of regional emergency medical services councils and regional emergency medical advisory committees are covered by section 17); Op. Att'y Gen. No. 89-F2 (members of local emergency planning committees, with countywide jurisdiction, are covered by section 17). Application of the definition of "employee" for purposes of section 17 requires a distinct analysis and may result in conclusions that differ from those compelled by other statutes. See Op. Att'y Gen. No. 97-F11 (members of New York State Independent Living Council were state officers under Public Officers Law § 2 (definitions of "state officer" and "local officer") but were not state "employees" for purposes of defense and indemnification).

In sum, then, we are of the opinion that the members of NCRGB are eligible for State-provided defense and indemnification pursuant to Public Officers Law § 17.

Very truly yours,

ANDREW M. CUOMO
Attorney General