NC Supreme Court: NC Railroad, owned by state, can keep records secret

The North Carolina Railroad Company, which the state of North Carolina owns, doesn’t have to provide records to the public under the state’s open records law, a divided state Supreme Court ruled Friday.

The decision, in Southern Environmental Law Center v. N.C. Railroad, upheld a lower court’s ruling.

The railroad is a private corporation chartered in 1849, largely with funding from state government. Since 2006 state government has been the company’s sole shareholder, and the company is run by a board appointed by the governor and General Assembly leadership.

It owns 317 miles of track from Charlotte to Morehead City.

SELC sued the railroad for records in 2019 after a passenger rail project between Durham and Orange County fell apart despite some $160 million spent. The case worked its way up to the Supreme Court earlier this year, and on Friday the court released an opinion from Justice Sam Ervin, who wrote for the majority.

“We determine that the Railroad has been an independent, private corporation since it was chartered in 1849 and that, while the State does exert a considerable degree of control over the Railroad, it primarily exercises this authority in its capacity as the Railroad’s sole shareholder rather than in its capacity as a sovereign,” Ervin wrote.

Because the legislature and other governmental entities have “consistently treated the Railroad as a private corporation,” the justices said it’s not subject to the state’s open records act.

Justice Anita Earls wrote a dissenting opinion, which Justice Robin Hudson joined.

“The legislature’s intent was for the Public Records Act to make more, not less, of our government’s activities and operations available for public examination,” Earls wrote.

“This case presents a single question," Earls wrote. "Can a corporate entity, wholly owned by the State of North Carolina, directed by a board whose members are appointed by state elected officials, wielding the power of eminent domain, and comprised of assets that will escheat to the State in the event of dissolution, evade public scrutiny under the Public Records Act? The majority says yes. Because this holding runs contrary to the purpose of the Act and privileges the form of the corporation over the public nature of its governance and activities, I respectfully dissent.”

https://appellate.nccourts.org/opinions/?c=1&pdf=40600