Docket No. 79-2304

SECRETARY OF LABOR,
Complainant,

v.

CHICAGO ZOOLOGICAL SOCIETY,
Respondent.

OSHRC Docket No. 79-2304

DECISION

Before: BUCKLEY, Chairman; RADER and WALL, Commissioners.
BY THE COMMISSION:

This case is before the Occupational Safety and Health Review Commission under 29 U.S.C. з 661(i), section 12(j) of the Occupational Safety and Health Act of 1970, 29 U.S.C. зз 651-678 ("the Act"). The Commission is an adjudicatory agency, independent of the Department of Labor and the Occupational Safety and Health Administration. It was established to resolve disputes arising out of enforcement actions brought by the Secretary of Labor under the Act and has no regulatory functions. See section 10(c) of the Act, 29 U.S.C. з 659(c).

The Chicago Zoological Society ("the Society") operates the Brookfield Zoo located in the Forest Preserve District of Cook County, Illinois ("the District"). The Society is a not-for-profit corporation classified as an exempt organization for purposes of federal taxation under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. з 501(c)(3). The issue before the Commission is whether, as Administrative Law Judge Sidney J. Goldstein held, the Society is an "employer" subject to the Act. The Society contends that it is a "political subdivision" of Illinois and is therefore excluded by section 3(5) from the requirements of the Act.[[1]]

To determine whether the Society is a political subdivision, it is necessary to understand how the Society was created, the source of its operating authority, and its relationship to the Cook County governing authorities. The Society was created following the Conveyance in 1920 by the McCormick family of a large tract of land to the Forest Preserve District, a municipal corporation created by popular vote by the citizens of Cook County. The deed provided that the property was to be used in perpetuity as a "zoological park" by the District. The President of the Cook County Board of Commissioners, who was also the President of the District Board of Commissioners, created two committees, one composed of fellow Commissioners and the other of prominent citizens, to survey the way in which zoological institutions were administered and controlled. The two committees subsequently applied to the state for a charter as "The Chicago Zoological Society." The charter, which was granted in 1921, described the purpose of the Society as the "founding, maintenance and control of zoological parks." Management was vested in a 25-member Board of Trustees. According to the Society's by-laws, the trustees choose a president, other officers, and an executive committee; they also elect the 240-member Governing Board, which is charged with choosing 25 of its members to be trustees.[[2]]

In 1923 the Illinois legislature gave the District and certain other forest preserve districts the authority, among other things, to contract "with the directors or trustees of any zoological society on such terms and conditions as may to such corporate authorities seem best, relative to the erection, operation and maintenance of a zoological park and the collection and display of such animals within such forest preserve . . . ." In the same act, the Illinois legislature authorized the forest preserve districts to levy a property tax for the purpose of constructing and operating zoological parks.

Under the authority granted to the District by the Illinois legislature, the District entered into an agreement with the Society in 1926.[[3]] This contract sets apart the tract of land conveyed to the District by the McCormick family for a zoological park and gives to the Society "the entire control and management of said park." The Society is also given the authority to employ, direct and remove employees of the zoo and to fix their salaries. Among other things, the Society is required to submit annually to the District a detailed budget setting forth the costs of the items in connection with which the Society desires to spend money during the succeeding year, and the District must levy and collect annually such tax as is needed for the park. Other sections of the contract prohibit the Society from mortgaging or encumbering any zoo building, or selling or removing zoo buildings or cages without the written consent of the District. In addition, the contract specifies the amount for admission fees and requires approval by the District of all zoo concessions and their rates. The contract also provides that the Society's books shall be audited annually by the District and open to inspection at all times by the District. The Society must seek District approval for the cutting down of live trees, and permit the District to have access to zoo property. Moreover, pursuant to the agreement, "[all] property purchased by the Society with funds provided by the said District shall be the property of said District . . . ."

II.

With these facts in mind we turn to the question of whether the Society is a political subdivision and exempt from the requirements of the Act. The Act does not define "political subdivision." However, there is considerable case law interpreting a provision of the National Labor Relations Act, 29 U.S.C. з 151 et seq. ("NLRA"), similar to section 3(5).[[4]] Under the NLRA, a "political subdivision" is an entity either (1) created directly by the state, so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate. See NLRB v. Natural Gas Utility District of Hawkins County, Tennessee, 402 U.S. 600, 603 (1971) ("Hawkins"). The Commission has previously recognized that the NLRA test is relevant in determining whether an organization is a "political subdivision" within the meaning of section 3(5) of the Act. University of Pittsburgh, 80 OSAHRC 79/E4, 7 BNA OSHC 2211, 1980 CCH OSHD (P) 24,240 (No. 77-1290, 1980). Moreover, the Secretary has promulgated a regulation at 29 C.F.R. з 1975.5(b) which is essentially identical to the NLRA test. The NLRA case law is therefore apposite to the determination of whether the Society is a "political subdivision" under the OSH Act.

As described above, the Society was not created directly by the State of Illinois and is clearly not a "political subdivision" within the first part of the test. The question is therefore whether the Society's relationship to the Forest Preserve District, which is a governmental unit, is such that the Society can be said to be responsible to either the District or the general electorate.

Case law under the NLRA establishes that many factors are relevant to a determination of whether the individuals who administer an organization are responsible to public officials or the general electorate. Two key factors evidencing the requisite degree of responsibility are dependence by the organization on public funds and approval of the organization's budget by a public agency. Jefferson County Community Center v. NLRB, 732 F.2d 122 (10th Cir. 1984); Museum Associates v. NLRB, 688 F.2d 1278 (9th Cir. 1982); Rosenberg Library Association, 269 N.L.R.B. No. 197, 116 LRRM 1051 (1984); Jervis Public Library Association, 262 N.L.R.B. No. 145, 110 LRRM 1453 (1982); Northampton Center for Children & Families, Inc., 257 N.L.R.B. 114, 108 LRRM 1008 (1981); New York Institute for the Blind, 254 N.L.R.B. 85, 106 LRRM 1113 (1981). Other relevant factors are whether the organization possesses certain powers associated with public entities, such as the power of eminent domain or the power to issue tax-free bonds, Hawkins, 402 U.S. at 608; Lewiston Orchards Irrigation District, 186 N.L.R.B. No. 121, 75 LRRM 1430 (1970)); and whether the organization's employees have the same pay scale or other employment rights and benefits as public employees. Denver Post of the National Society of the Volunteers of America v. NLRB, 732 F.2d 769, 774 (10th Cir. 1984); NLRB v. Howard Johnson Co., 317 F.2d 1 (3d Cir. 1963). Finally, if the power to appoint or remove the individuals who administer the organization resides in public officials, that is strong evidence that the organization is responsible to those officials. Hawkins, 402 U.S. at 607-08; NLRB v. Highview, Inc., 590 F.2d 174, 177 (5th Cir. 1979); Founders Society, Detroit Institute of Arts, 271 N.L.R.B. No. 41, 116 LRRM 1376 (1984).

Applying these factors, we conclude that the Society is a political subdivision under the second part of the test. Although the Society is a separate entity, the record establishes that, throughout its history, the Society has been closely linked to, and its basic operations have been either directly or indirectly controlled by the District. As Dr. Rabb, the zoo director testified, the Society acts as an agent for the District, and cannot operate the zoo on its own. Although the contract between the Society and the District gives the Society management of the zoo, fundamental control over the existence and operation of the zoo resides in the District. Indeed, the District has access to the grounds and the Society's books at all times and retains ownership of funds, property, animals, facilities and zoo premises.

It is particularly significant that the Society is primarily dependent on the District with respect to its financial affairs. The record establishes that 85-90% of the Society's operating capital is made available through either State statute or agreement with the District. In recent years, the Society has received approximately 60% of its income for operating expenses from the District's tax levy. In past years when the Society was unable to meet its expenses, the District imposed an additional tax levy to offset the accumulated deficits. The Society also receives funds for capital improvements through bonds sold by the District. Further, the District has control over many of the zoo's other sources of revenue, since the District must approve all fees and charges for admission, parking, amusements, refreshments and other concessions. Moreover, funds received by the Society through a grant from the Illinois Department of Conservation and the State Capital Development Board were obtained because of the Society's relationship to the District.

In addition to its financial dependence on the District, the Society is also answerable to the District for its expenditures. According to the evidence, the Society is required to obtain District approval for such wide-ranging activities as removal of a tree and entering into a construction contract.[[5]] Its books are also subject to an annual audit by the District. Even more importantly, however, the Society is required to submit to the District a line-item budget "setting out the particular purposes for and an estimate, properly itemized, of the actual costs, . . . [for] which the Society desires to expend money during the succeeding year. . . ." The detailed nature of the Society's budget is indicated by the inclusion in the 1983 budget of $5,000 items for a "Sloth Bear Maternity Den" and "Giraffe/Pachyderm Heaters" out of a total budget of 12 million dollars. The budget also includes a separate line for each kind of employee position, along with the annual cost for it. E.g., "computer operator . . . 1 . . . 8.55 [dollars per hour] . . . 15,561.00 [dollars per year]." Although its contract with the District permits the Society to exercise some discretion in the expenditure of funds from sources other than the District, these funds are considered in the budgeting process; are included in the annual audit as are expenditures from tax revenues; by practice have with limited exception been commingled for operation purposes with monies derived from the District; [[6]] and in the case of dissolution of the Society, are ultimately the property of the District. It is therefore apparent that the District exercises significant control over all operations of the Society through the budgeting process and its independent approval of certain zoo activities.

The Society's officers and trustees are not directly appointed by or subject to direct removal by public officials. However, consistent with several cases decided under the NLRA, we conclude that an organization properly is considered a political subdivision, despite such independence of its governing body, if its finances and its basic operations are largely under the control of governmental officials or the electorate. See Rosenberg Library Association, Northampton Center for Children & Families, and New York Institute for the Blind. The Society's employees also are not public employees for purposes of their wages and benefits. However, in light of the District's control over the Society's finances, including its authority to approve or deny budgeted amounts for wages and benefits, we consider the non-governmental status of the Society's employees to be relatively unimportant.

Further, although the Society is not a department or administrative arm of a governmental body, its purpose and some of its basic operations are characteristic of a political subdivision. Like many government agencies, the Society exists to fulfill a public purpose: the operation of a zoological park. The Society also has been given a certain public power appropriate to its functions; pursuant to an act passed by the Illinois legislature, the District granted police powers to the zoo's security force. The zoo also has its own building code and its vehicles have municipal license plates. The Secretary points out that the Society lacks certain other governmental powers, such as the power of eminent domain and the power to issue revenue bonds. However, legislatures do not typically endow government agencies with all possible powers but delegate only those powers necessary for agencies to fulfill their functions. Moreover, the District, which as a practical matter controls the fiscal policy of the Society, does issue bonds. Therefore, we do not find it persuasive that the Society is unable to issue revenue bonds, or exercise the power of eminent domain.

On balance, we conclude that the Society is a "political subdivision" within the meaning of section 3(5) of the Act.[[7]] The judge's decision is reversed and the citation is vacated.

FOR THE COMMISSION

Ray H. Darling, Jr.
Executive Secretary

DATED: MAR 21 1986

BUCKLEY, Chairman, dissenting:

In my opinion, the Chicago Zoological Society does not meet the criteria established by case law to be considered a "political subdivision" of the State of Illinois. I would therefore affirm the judge's decision finding that the Society is an "employer" within the meaning of section 3(5) of the Occupational Safety and Health Act of 1970 ("the OSH Act").

The Chicago Zoo was created under the auspices of the Cook County Board of Commissioners. Following the McCormick family's offer of land to the County to be used as a zoo, the president of the Cook County Board of Commissioners, Peter Reinberg, formed committees to determine how the zoo should be established and organized. It was ultimately decided that the zoo should be run by a private organization rather than directly by the government. The reason for this decision was explained by Mr. Reinberg:

Above all, this project must be supervised by a non-political board of most suitable members, and an executive staff of utmost expertness. Politics, which though many of its phases are admirable, has others that, when its functions are misused, are very undesirable, must not be allowed to dictate in this.

Chicago Zoological Society Year Book (1927), at p. 52. Thus, the impetus for the Society's creation as a private, nonprofit corporation was to avoid having the zoo operated by Cook County or an agency of the County. The Society has, since its inception, operated the zoo under contract to the Forest Preserve District of Cook County, but has always maintained its identity as an organization distinct from the District.

The issue in this case is whether the Society is a "political subdivision" of Illinois within the meaning of section 3(5) of the OSH Act. The Act's legislative history contains no explicit explanation for the exclusion of States and their political subdivisions from the class of employers subject to the Act, nor does it suggest how "political subdivision" should be defined. However, as the lead opinion points out, the National Labor Relations Act ("NLRA") also contains a definition of "employer" that excludes states and their political subdivisions. That provision of the NLRA has its basis in Tenth Amendment considerations of state sovereignty and the Eleventh Amendment grant of judicial immunity to the states. Crestline Memorial Hospital Association v. NLRB, 668 F.2d 243, 245 n. 1 (6th Cir. 1982). Because Congress included similar definitions of "employer" in both the NLRA and the OSH Act, it is reasonable to infer that Congress had the same considerations in mind in excluding states and their political subdivisions from the operation of both statutes. Hence, it is appropriate to apply the definition of "political subdivision" under the OSH Act that has been developed through the case law under the NLRA.

As the lead opinion points out, a two-pronged test has been developed to determine whether an organization is a "political subdivision" under the NLRA. Under the first prong of the test, an entity is a political subdivision if it is created directly by the state so as to constitute a department or administrative arm of the government. The lead opinion concludes that the Society does not meet this criterion, and I agree. As noted above, the Society was organized as a private corporation for the express purpose of avoiding the zoo's management by a government agency. Moreover, an organization is a political subdivision under this prong of the test only if it is not organizationally distinct from a governmental unit or is administered by public officials, conditions clearly not met by the Society. See Jervis Public Library Association, 262 N.L.R.B. No. 145, 110 LRRM 1453 (1982) (organization had been member of University of State of New York for 85 years); Northampton Center for Children and Families, 257 N.L.R.B. No. 114, 108 LRRM 1008 (1981)(organization was part of Massachusetts Department of Mental Health when created; it later became a private nonprofit corporation in order to qualify for federal funds but continued to operate as an arm of the state); New York Institute for the Blind, 254 N.L.R.B. No. 85, 106 LRRM 1113 (1981)(organization was created by act of the New York Legislature and operated under supervision of New York's Board of Regents); Camden-Clark Memorial Hospital, 221 N.L.R.B. No. 160, 91 LRRM 1024 (1975)(organization was created by city ordinance and had no separate status as a legal entity apart from the city).

An organization is exempt under the second part of the NLRA test if it is administered by individuals who are responsible to public officials or to the general electorate. The critical factor in applying this test is whether the individuals who administer the organization are appointed or are subject to removal by public officials. In NLRB v. Natural Gas Utility District of Hawkins County, Tennessee, 402 U.S. 600 (1971), the Supreme Court found the organization was responsible to public officials because the commissioners were appointed by an elected county judge and were subject to removal under Tennessee law providing for the removal of public officials. See also Rosenberg Library Association, 269 N.L.R.B. No. 197, 116 LRRM 1051 (1984) (library that was headquarters for county library system and which had the same board of directors and librarian as county library system found to be a political subdivision); Founder Society, Detroit Institute of Arts, 271 N.L.R.B. No. 41, 116 LRRM 1376 (1984) (nonprofit corporation found to be a political subdivision when executive director was appointed with and served at the pleasure of the Mayor); Jefferson County Community Center v. NLRB, 732 F.2d 122 (10th Cir. 1984) (nonprofit corporation which provided education and vocational services under contract with state is not political subdivision; 7 of 15 board members are appointed by public agencies, but majority is neither appointed by nor subject to removal by public agencies); Crestline Memorial Hospital Association v. NLRB, 668 F.2d at 245 (non-profit corporation that operates hospital under lease from city is not political subdivision when public officials "have no right to interfere with the management of the facility"); Truman Medical Center v. NLRB, 641 F.2d 570 (8th Cir. 1981) (nonprofit corporation that contracted with governmental units for services such as care of indigents was not a political subdivision when 31 of 49 members of the board of directors were not appointed by or subject to removal by public officials); Museum Associates v. NLRB, 688 F.2d 1278 (9th Cir. 1982) (nonprofit corporation that operates Los Angeles County Museum of Art under contract with government is not a political subdivision); NLRB v. Highview, Inc., 590 F.2d 174 (5th Cir. 1979) (nonprofit corporation providing nursing care to the elderly on county-owned facilities is not political subdivision; organization was incorporated by private individuals and the county cannot influence the selection of the organization's directors or affect their decisions); University of Pittsburgh, 80 OSAHRC 79/E4, 7 BNA OSHC 2211, 1980 CCH OSHD (p) 24,240 (No. 77-1290, 1980) (state-related university not a political sub-division: two-thirds of university's board of trustees are not state-appointed or controlled).

In this case, public officials neither select nor have the power of removal over a majority of the persons who administer the Society. None of the Society's 240-member Governing Board, and only one member of the Society's 25-member Board of Trustees. is a public official. The Society's officers are chosen by its Board of Trustees and are not subject to removal by public officials, nor can they be removed under a state law governing removal of public officials. The officers manage the zoo free of day-to-day oversight or control by public officials. The independence of the persons who administer, the Society from political control strongly mitigates against finding it to be a political subdivision within the second prong of the NLRA test.

Certain factors tend to suggest that the Society is a political subdivision. The authority to operate its own police force and to use municipal license plates for its vehicles indicates that the Society is to some extent an arm of the government. Moreover, although the Society's officers manage the zoo free of day-to-day oversight by the District, the District nevertheless exerts considerable influence over the Society's operations by providing funds for the zoo's operations and by overseeing and approving the Society's budget. However, strict fiscal accountability to a public agency does not convert an otherwise private organization into a political subdivision. A government's decision to provide a public service through grant or contract with an organization in the private sector does not alter the fundamental nature of the recipient private organization. Jefferson County Community Center v. NLRB; Crestline Memorial Hospital Association v. NLRB; Truman Medical Center v. NLRB; Museum Associates v. NLRB; NLRB v. Highview, Inc.

This is a close case. On balance, however, I am persuaded that the Society is not a political subdivision. The Society was created for the express purpose of removing the zoo's operations from the political arena. There is no indication that the State of Illinois ever decided to override that original purpose and place the zoo's operations under government control. I would therefore affirm the judge's decision.

SECRETARY OF LABOR,
CompIainant,

CHICAGO ZOOLOGICAL SOCIETY,
a Corporation,
Respondent.

OSHRC DOCKET NO. 79-2304

DECISION

This is an action by the Secretary of Labor to affirm a Citation issued by the Occupational Safety and Health Administration to the Chicago Zoological Society for the alleged violation of two regulations promulgated under the Occupational Safety and Health Act of 1970. The Citation and subsequent Complaint charge that the Zoo failed to guard a floor hole into which persons could accidentally walk and failed to protect a worker on a platform against falling.

The matter arose after a Compliance Officer for the Administration inspected the Society's Brookfield Zoo, concluded that it was in violation of the regulations, and recommended that the Citation be issued with a penalty of $1,000 for each offense. The Zoo disagreed with the Administration and filed a Notice of Contest to the Citation and an Answer to the Complaint.

Proceedings before the Review Commission were then delayed pending the disposition of ancillary issues by the U.S. District Court. The parties now agree that the sole issue remaining is whether or not the Chicago Zoological Society is a political subdivision of the State of Illinois. If it is, the Administration has no jurisdiction in this matter, and the Citation is to be vacated. On the other hand, if the Society is not a political subdivision of the State, the Citation and attendant penalty are to be affirmed.

Documents in the record disclose that in 1920 Edith Rockefeller McCormick and her husband conveyed to the Forest Preserve District of Cook County, Illinois a tract of land on condition that the property be used as a zoological garden. In the following year a citizen group organized the Chicago Zoological Society and obtained its not-for-profit charter from the State of Illinois. As indicated in the certificate, the purpose of the corporation was:

For the founding, maintenance and control of Zoological Parks, Gardens, or other collections, for the promotion of Zoology and kindred subjects and for the instruction and recreation of the people. To collect, hold and expend funds for Zoological research and publication, for the protection of Wild Animal life and for kindred purposes.

The corporate charter provides that the management and direction of the society is vested in a Board of 25 Directors or Trustees, including the President and three Commissioners of the Forest Preserve District of Cook County. The four classes of members are designated as Governing, Honorary, Life, and Annual, but Governing members only have the right to vote for or be eligible to the Office of Trustee. The Executive Committee has full control of the affairs of the Society under the general direction of the Board of Trustees.

Two years after the corporate not-for-profit charter was issued, in 1923, the Illinois legislature authorized the Forest Preserve District to contract with the directors or trustees of any zoological society on such terms and conditions as may to such corporate authorities seem best, relative to the erection, operation, and maintenance of a zoological park.

Thereafter the Forest Preserve District entered into an agreement with the Chicago Zoological Society whereby on the specified land and at the expense of the District the Society was to establish, maintain, and operate the zoological park and to select and provide all animals, equipment, materials, and supplies. Under the contract, the Society has the entire control and management of the park, including personnel. The District levys and collects annually a tax as needed for zoological purposes. Each year the Society submits a budget to the District, but the Society is under no obligation to obtain the approval of the District, for expenditures of monies derived from sources other than the District.

At the hearing the testimony was to the effect that the Respondent's Board of Trustees selects the Director of the Zoo who is responsible for the overall administration of its operations. He considers the Society to be the District's agent to carry on zoo purposes. The District owns all the zoo property, but the Society manages zoo affairs.

Society funds are obtained from tax receipts, sales of food and merchandise, admission and parking fees, contributions, memberships, and gifts. It receives additional funds from Federal and State grants, generally for specific projects, which activities do not require prior approval of the District. For the years 1978 through 1981 tax revenue was $15,903,668. Gross receipts from admissions, merchandise sales and miscellaneous sources were $18,636,055.

Some animals and foods cross State lines. The Society has no taxing or eminent domain powers and cannot sell Its own bonds. It engages in no lobbying activities but may provide information to legislators. Zoo employees are not under the jurisdiction of any Cook County subdivision or covered by civil service regulations. The Society is a member of local municipal organization groups.

By special statute the Zoo is authorized a police department which is also commissioned by the villages of Brookfield and Riverside. Its staff generally confines activities to zoo property only. They carry arms and have arrest authority. Members of the police department receive their training through an agency available to municipalities and other political subdivisions. Vehicles are equipped with M license plates.

The Society is exempt from federal income tax. For the year 1982, it filed Form 990, Return of Organization Exempt from Income Tax, with the Internal Revenue Service. This document indicated a variety of reasons for claiming exemption from federal income tax. The Society's auditors checked on the form that it was exempt from income tax because it was an organization which normally receives a substantial part of its support from a governmental unit or from the general public.

On the basis of the foregoing record, the Respondent asserts that it is a political subdivision of the State of Illinois and therefore exempt by virtue of Section 3(5) of the Act which provides:

The term "employer" means a person engaged in a business affecting commerce who has employees, but does not include the United States or any State or political subdivision of a State.

Although the term "political subdivision" is not defined in the statute, the regulation found at 29 CFR 1975.5 details a number of elements to be considered in the application of this section of the law.

First, the regulation provides the initial consideration as follows:

(b) Tests. Any entity which has been (1) created directly by the State, so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are controlled by public officials and responsible to such officials or to the general electorate, shall be deemed to be a "State or political subdivision thereof" under section 3(5) of the Act and, therefore, not within the definition of employer, and, consequently, not subject to the Act as an employer.

Second, the regulation suggests factors for meeting the tests. In this connection, a number of questions are advanced, and the applicable ones include:

(a) Are the individuals who administer the entity appointed by a public official or elected by the general electorate?

(b) Who may dismiss such individuals and under what procedures?

(c) Are the powers of the entity usually characteristic of a government rather than a private instrumentality, like the power of eminent domain?

(d) Are the entity's bonds, if any, tax exempt?

(e) Are the entity's employees regarded like employees of other State and political subdivisions?

(f) How do fringe benefits, rights, obligations, and restrictions of the entity's employees compare to those of the employees of other State and local departments and agencies?

Third, another subsection of the regulation includes examples of the types of entities:

(a) Normally regarded as not being employers under Section 3(5) of the Act;

(b) Probably excluded as employers under Section 3(5) of the Act; and

In the application of the facts in this case to the three broad measurements to be considered in claims for exemption under Section 3(5) of the Act, I find,

First, there is no evidence in the record to indicate that the Chicago Zoological Society was created directly by the State so as to constitute a department or administrative arm of the government. The record discloses that the Society applied for and received from the State of Illinois a not-for-profit charter as a private corporation. Indeed, about two years elapsed between the time the Respondent received its corporate charter and the date it entered into a relationship with the Forest Preserve District of Cook County.

Nor is the Society administered by individuals who are controlled by public officials and responsible to such officials or to the general electorate. By virtue of its charter, the Society is controlled by its Board of Directors or Board of Trustees consisting of twenty-five members. Inasmuch as only the President of the District's Board of Commissioners and three other Commissioners serve as Governing members of the Society, these four public officials cannot control a twenty-five member Board of Trustees. None of the Society's Trustees is elected by the voters of the County or is responsible to the general electorate. Finally, the contract between the District and the Society provides that the Society is in complete control of its activities, including personnel.

Since the Respondent is not a department or administrative arm of the State; and since it is not administered by individuals controlled by public officials and responsible to such officials or to the general electorate, the Society fails to meet the regulation tests authorizing its exemption from the statute.

Second, the record is clear that the administrator of the Society is not appointed by a public official or selected by the general electorate. In fact the Director of the Society is appointed by the Board of Trustees, 21 of 25 of whom are private citizens. The Director is subject to dismissal by the appointing authority, not by any public officials. Also the powers of the Society are characteristic of a private instrumentality rather than a government agency in that it has no power of eminent domain or authority to issue tax-exempt bonds. Again, its staff is not regarded like employees of other State and political subdivisions. They do not enjoy the fringe benefits and rights or have the obligations and restrictions of public employees; and they are not under the jurisdiction of the Cook County civil service system. Thus, the Respondent fails to meet any of the important considerations outlined in the regulation to qualify for exemption under the statute.

Third, as previously indicated, the regulation provides examples of entities (a) normally regarded as not being employers under Section 3(5) of the Act; (b) probably excluded as employers under that section of the Act; and (c) normally not regarded as a State or political subdivision of a State.

Group (a) includes entities such as State Department of Labor and Industry, law enforcement agencies, judicial bodies, and public libraries. The (b) class encompasses employers such as harbor districts, port authorities and State and County hospitals. Category (c) refers to businesses which, under agreement, perform certain functions for the State.

In the comparison of the facts in this case to the three subdivisions, it is apparent the Respondent most closely resembles an entity which performs certain functions for the County. The Respondent's contractual relations with an exempt political subdivision does not transform it from a private not-for-profit corporation into a political subdivision of the State.

Indeed, the Respondent itself considered itself as a private corporation rather than a governmental entity. When it filed its Form 990, Internal Revenue Service, Return of Organization Exempt from Income Tax, the Society listed as its reason for exemption as "an organization that normally receives a substantial part of its support from a governmental unit or from the general public." While true, the Society could have, but did not indicate on the form that it was "A Federal, State, or local government or governmental unit."

In its brief the Respondent reviewed a number of cases in which an employing unit was held to be a political subdivision of a State, but none is similar to the case at bar. Thus, in Prairie Home Cemetery, 266 NLRB 107, the members of the Board were appointed by the mayor and confirmed by the city's common council, and employees participated in the Wisconsin Retirement Fund; in Crilly v. South Eastern Pennsylvania Transportation Authority, 529 F 2d 1355, the entity was created by the legislature and was governed by a board of directors appointed by public officials; in Popkin v. N. Y. State Health and Mental Hygiene Facilities Improvement Corp., 547 F 2d 18, the unit was created directly by the State, and its directors were the Commissioner of Health, Commissioner of Mental Hygiene, and three persons appointed by the Governor with the advice and consent of the Senate.

Further, in Commissioner of Internal Revenue v. Shamberg's Estate, 144 F 2d 998, the question was whether interest received by Shamberg on bonds of the Port of New York and New Jersey was subject to income tax. The court held that the body politic was owned by two States, operating with twelve Commissioners, six from each State, with veto power in the Governor. In Abad v.Puerto Rico Communications Authority, 88 F. Supp. 34, the entity was controlled by public officials, and the insular telegraph system always was owned and operated as an integral part of the Government.

Thus, in each of these decisions, the ruling members of the employing unit were either appointed by, or reported to, public officials. Those cases are therefore not determinative of the issues in the present controversy.

Other cases advanced by the Respondent have no relationship to the question before the Commission. For example, Hybud Equipment Corp. v. City of Akron, 654 F 2d 1187, merely upheld the authority of the local government to monopolize and control garbage collection; and in Secretary of Labor v Usery, 426 U. S. 833, the Court did not permit Congress to regulate directly the activities of States as public employers with respect to minimum wage and maximum hour requirements.

In summary, none of the cases urged by the Respondent supports its position that it is a political subdivision of a State.

In the one matter before the Review Commission involving Section 3(5) of the Act - Secretary of Labor v. University of Pittsburgh, OSHRC Docket No. 77-1290, CCH OSHD 24,240 - the issue was whether or not the University was a political subdivision of the Commonwealth of Pennsylvania and thus excluded from OSHA jurisdiction. In that case the University was originally chartered as a private educational institution and later became a part of the Commonwealth system of higher education. Its enabling act declared that the University was an instrumentality of the Commonwealth. The record also disclosed that approximately one-third of the operating budget was supplied by the State; that its bonds were tax exempt; that it reported to the legislature; and that its library was designated as a State library.

On appeal, the Review Commission decided that the University was not a department or administrative arm of the Government and was not administered by individuals who were controlled by public officials. The Commission observed that the University's Board of Trustees, not the State, was vested with the entire management, control and conduct of University affairs. Control of the employment relationship was held to be of paramount significance, especially since there was no State involvement in the working conditions of the University employees.

As in the University of Pittsburgh case, the Respondent was chartered as a private institution and not created pursuant to statutory authority. Parallel with the University case, the Society cannot pledge the credit or taxing power of the State or any political subdivision of the State. The Society is not controlled by the Forest Preserve District, but, as stated in its charter:

The management of the aforesaid The Chicago Zoological Society shall be vested in a Board of twenty-five (25) Directors.

On the authority of the University of Pittsburgh case, I conclude that the Respondent is not a political subdivision of a State, is not exempt from the Occupational Safety and Health Act by virtue of Section 3(5) thereof, and is subject to the jurisdiction of the Occupational Safety and Health Administration.

Inasmuch as there are no other issues in this proceeding, the Citation and suggested penalties are affirmed.

Sidney Goldstein
Judge, OSHRC

Dated: March 9, 1984

FOOTNOTES:

[[1]] Section 3(5) of the Act defines "employer" as a "person engaged in a business affecting commerce who has employees, but does not include the United States or any State or political subdivision of a State."

[[2]] According to the testimony, only the chairman of the Cook County Board who is also the chairman of the Board of the Forest Preserve District is a member of the Society's Board of Trustees. None of the Society's governing members, however, are members of the Board of the Forest Preserve District.

[[3]] An ordinance by the District, made part of the most recent version of the agreement states in part:
The District hereby sets aside and allots to the Chicago Zoological Society for the maintenance and operation of a zoological park, by said Society, a tract of land belonging to the District and situated in Cook County, Illinois and particularly described in the following section.

The President and Secretary of this Board are hereby authorized, empowered and directed to execute, on behalf of the Forest Preserve District of Cook County, an agreement between it and the Chicago Zoological Society, a corporation not for pecuniary profit, organized under the laws of the State of Illinois for the purpose of maintaining, and operating a zoological park, making collections of animals and promoting zoology and kindred subjects and for the instruction and recreation of the people.

[[4]] The provision of the National Labor Relations Act, 29 U.S.C. з 152(2), reads in part as follows:
The term "employer" includes any person acting as an agent of an employer, directly or indirectly, but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof . . . .

[[5]] Such approval is not always given. For example, the Society was unable to erect lodging and an addition to the round house because it failed to obtain District approval for these projects. In addition, the District has not always agreed to the Society's request to increase admission fees.

[[6]] Restricted funds, which are not commingled with District funds, are generally from private contributions and designated for scientific research and animal welfare.

[[7]] In the University of Pittsburgh case, the Commission held that, the University of Pittsburgh, a state-related institution under the University of Pittsburgh- Commonwealth Act, Act of of July 28 1966, 24 P.8. з 2510-201 et seq., is not a political subdivision for purposes of the Act. That case is distinguishable, however, since the state's involvement in the University's affairs is limited. The two most critical factors present in this case in support of concluding that the Society is a political subdivision are lacking in the Pittsburgh case. Public funds comprise only about one-third of the University's operating budget and state control is limited to this amount. Moreover, there is no indication that the state's involvement in academic affairs extends beyond requiring the University to report on those matters. Finally, the University of Pittsburgh was originally chartered as a private institution in 1787 and only became a state-related institution through state legislation in 1966. Such legislation altered the University's tuition rate schedules and the method of financial management and accountability but the University retained its fundamental characteristic as a private institution of higher learning. In contrast, the management of the zoo by the Society derives from and is controlled by the Society's contractual relationship with the District, which in turn rests upon the special legislation enacted by Illinois in 1923. Hence, the source of the Society's authority with respect to the zoo derives ultimately from state statute.