Request By:
[NO REQUESTBY IN ORIGINAL]
Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether Gordon-Darby, Inc., a privately owned corporation which has the contract to administer the vehicle emission testing program ("VET") in Jefferson County Kentucky, is a public agency for purposes of the Open Records Act and thus obligated to disclose certain of its records, including the salaries of its employees.
By letter dated January 19, 1999, Mike Neely, Assistant News Director, WLKY-TV, submitted an open records request to Gordon-Darby, Inc. requesting the following information:
. the total amount of money paid to Gordon-Darby, Inc. through Jefferson County's vehicle emission testing program, for the past three years.
. the current costs for emissions testing at the other V.E.T. centers operated by Gordon-Darby, Inc.
. the yearly salaries (current) for the three highest ranking directors at Gordon-Darby, Inc., as well as the salary earned last year by Jay Gordon.
By letter dated January 25, 1999, Jay Gordon, on behalf of Gordon-Darby, Inc., responded to Mr. Neelly's request. He indicated that the company was neither a government agency nor a publicly traded company and, thus, was not subject to an open records request. Notwithstanding this fact, Mr. Gordon provided Mr. Neelly with much of the information he requested. However, he denied his request for the salaries of Gordon-Darby's top employees on the basis that it was confidential information of a privately held company.
By letter dated February 2, 1999, Timothy H. Napier, Weber & Rose, counsel for WLKY-TV, responded to Mr. Gordon's letter, stating in part:
According to KRS 61.870(1)(h), any body which derives at least 25% of its funds expended in the Commonwealth of Kentucky from state or local authority funds is deemed a "public agency" for purposes of the open records law. Your letter mentions that less than 10% of Gordon-Darby's revenue is from the Louisville VET Program. Nevertheless, it seems more probable than not that your company derives at least 25% of that 10% from state or local authority funds, namely in the form of VET testing fees.
Based on this argument, Mr. Napier asked Mr. Gordon to reconsider Mr. McNeelly's request for information.
By letter dated February 16, 1999, Jefferson K. Streepey, with Boehl, Stopher & Graves, counsel for Gordon-Darby, Inc., responded to Mr. Napier's letter advising him that it had reviewed the matter and concluded the company's position that it was not a public agency and was not subject to an open records request was correct. In support of this position, Mr. Streepey stated:
Gordon-Darby, Inc. is a privately owned corporation. None of its officers or directors is appointed by a public agency. If Gordon-Darby is found to be a public agency, it must be as the result of the application of KRS 61.870(1)(h). That section, however, is inapplicable. Until 1999, Gordon-Darby received no "state or local authority funds," its Kentucky revenues coming only from test fees collected at the time of inspection of a vehicle. Since January 1, 1999, Gordon-Darby has received 32 cents per test from the county, pending a test fee increase. Various rulings of the Attorney General have held that "authority" means a "government agency which administers a project." See OAG 93-78 and OAG 94-ORD-13. Under the rulings, Gordon-Darby is not receiving funds from a government agency, except the 32 cents per test, and that sum does not cover 25% of Gordon-Darby's expenditures in Kentucky.
Even if Gordon-Darby were subject to an open records request, the information requested which has not been furnished is exempt.
KRS 61.870(2) provides that "public record" does not include records of a body referred to in KRS 61.870(1)(h) "not related to functions, activities, programs, or operations funded by state or local authority. " As you know Gordon-Darby's revenue from the Louisville VET Program is less than ten percent of its total revenues. Questions concerning the salaries of directors and officers and other expenses of Gordon-Darby do not relate to the matters described in KRS 61.870(2). Moreover, these matters are a function of Gordon-Darby's total revenues. Further, matters of salary are of a personal nature and are exempt under KRS 61.878(1)(a). Matters of salary and expense are confidential and proprietary and their disclosure would permit an unfair commercial advantage to Gordon-Darby's competitors. Under such circumstances, they are exempt under KRS 61.878(1)(c).
In his letter of appeal, Mr. Napier states that Gordon-Darby is clearly a "public agency" as that term is defined in KRS 61.870. He argues that virtually all of its Kentucky revenue comes test fees collected from vehicle exhaust testing and, because the inspection fees are mandatory, they constitute "state or local funds." In support of this argument, he states:
Given that the taxpayers of this Commonwealth are compelled to pay Gordon-Darby these fees by law, it cannot shield itself from public scrutiny by choosing to do business in other states. We submit that the spirit of KRS 61.870(2) is to shield an agency or body from requests that are completely irrelevant to the state or local funded operations and activities. That is not the case here. If Gordon-Darby is deriving its Kentucky revenue from the mandatory VET testing fees, it ought to be compelled to disclose - at a minimum - its profit margin, particularly in the form of salaries, for this activity. Again, Gordon-Darby has the benefit of a legally protected stream of revenue which makes it manifestly unfair for it to be treated as any other "private" company.
The sole issue presented in this appeal is whether Gordon-Darby, Inc., is a public agency within the meaning of KRS 61.870(1), and is therefore subject to the Open Records Act.
This Office has consistently recognized that a private corporation comes within the purview of the Open Records Act only if it "derives at least twenty-five percent of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds." KRS 61.870(1)(h). OAG 81-377; OAG 82-216; OAG 84-237; OAG 88-61; 93-ORD-79; 93-ORD-96; 93-ORD-127; 94-ORD-1.
From the record before us, Gordon-Darby, Inc., is a privately owned corporation that has the contract for providing vehicle exhaust testing in Jefferson County under the Jefferson County Vehicle Emission Testing Program (VET). In response to his original request, Gordon-Darby provided Mr. Neelly with its total revenue from the Jefferson County VET Program for each of the past three years. It also provided the current cost for emissions testing at the other VET centers operated by Gordon-Darby. However, it denied Mr. Neelly's request for the yearly salaries of its three highest ranking directors and Jay Gordon.
The company indicated that, although the company was based in Louisville, neither the 10% of its annual revenue from the Jefferson County VET Program nor the recent $ .32 cents it has been receiving from the County since January 1, 1999, amount to at least "25% of the funds expended in the Commonwealth of Kentucky derived from state or local authority funds," and, therefore, is not a "public agency, " as defined in KRS 61.870(1). It further indicated that the company had 120 employees in Jefferson County. About 100 of them are directly involved in the Jefferson County VET Program and the balance are corporate administration, technical support, and systems development.
Mr. Napier argues that, more probable than not, Gordon-Darby derives at least 25% of its funds expended in Kentucky from the 10% of its annual revenue from the Jefferson County VET Program and thus would qualify as a "public agency" for purposes of the Open Records Act.
We remind the parties of this Office's limitations in resolving open records disputes, which were discussed at page 10 of 93-ORD-90. There we observed:
Given the limited role for the Attorney General contemplated by the statutes and the office's limited resources, the Attorney General cannot truly be a "judge" in the sense of reviewing volumes of documents, listening to testimony, considering briefs, etc. In the final analysis, the application and meaning of the Open Records Act can only be determined by a court of law.
In the record before us, Gordon-Darby does not establish what percentage of the funds it expends in the Commonwealth were derived from the Jefferson County VET Program. Thus, it has failed to substantiate that it is not a "public agency, " as defined in KRS 61.870(1)(h), and exempt from application of the Open Records Act.
However, assuming that the company is a "public agency" for purposes of the records at issue in this appeal, those reflecting the salaries of its three highest ranking directors and Jay Gordon, we have sufficient information to address the issue under the standards of KRS 61.870(1)(h) and KRS 61.870(2).
KRS 61.870(2), in relevant part provides:
"Public record" shall not include any records owned or maintained by or for a body referred to in subsection (1)(h) of this section that are not related to functions, activities, programs, or operations funded by state or local authority.
The requested salary records are not directly related to the vehicle testing service which Gordon-Darby performs in Jefferson County. They are financial records of a private corporation which reveal the affairs of the business, such as profits, taxes, deductions, etc. We conclude that the salary records would be exempt under KRS 61.870(2).
We therefore conclude that Gordon-Darby, Inc., even if ultimately found to be a "public agency" within the meaning of KRS 61.870(1), would not be required to release its salary records under authority of KRS 61.870(2).
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.