Request By:
[NO REQUESTBY IN ORIGINAL]
Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
This matter comes to the Attorney General on appeal from the Department of Local Government's denial of Daniel Gayheart's February 22, 1999 open records request, on behalf of Kentuckians For The Commonwealth (KFTC), for a copy of Trus Joist MacMillan's Community Block Grant application. In his letter of appeal, Mr. Gayheart states that the Democracy Resource Center (DRC) had requested the same application and received a similar denial and joined them in the appeal.
By letter dated February 23, 1999, Richard J. Ornstein, Attorney, Department of Local Government, issued a blanket denial of Mr. Gayheart's request, stating that the application was exempt from disclosure under authority of KRS 61.878(1)(c)(1) and KRS 61.878(1)(c)(2)(a).
In his letter of appeal, Mr. Gayheart argues that the application was public at the time of submittal, and therefore could not be considered as confidentially submitted or generally recognized as confidential. In support of this argument, he states that the Department's own Community Development Block Grant (CDBG) participation plan required that the application be made available to the public for review and comment.
As authorized by KRS 61.880(2) and 40 KAR 1:030, Section 2, Mr. Thomas M. Troth, Counsel for the Department, provided this office with a response to the issues raised in the appeal. In his response, Mr. Troth states in part:
As stated in the appeal, the Department for Local Government denied KFTC and DRC the right to examine the Trus Joist MacMillan application because the application contains financially sensitive documents relating to the corporation's internal processes. As part of the CDBG application process, the Department requires that the application be available to the public for review, with comments to be sent to the Department. However, the sensitive information included in the application was not disclosed.
. . .
The Department believes that the entire application is exempt from disclosure pursuant to the exceptions to the Open Records Act set forth in KRS 61.878(1)(c)1., and KRS 61.878(1)(c)2.a., when interpreted in light of the Hoy decision. However, if the Office of the Attorney General determines the Department should disclose a portion of the application, we strongly urge that pages 18, 19, and 20 be exempt from disclosure since they contain sensitive financial information of the company in question. As stated earlier, to the best of our knowledge, at no time have these pages been subject to public inspection or review.
To facilitate this office's review, we requested that the Department provide us with a copy of the record in question for an in camera review. That document was not disclosed to other parties, and has since been destroyed. KRS 61.880(2)(c); 40 KAR 1:030 Section 3.
We are asked to determine whether the Department's denial of access to the application was consistent with the Open Records Act. For the reasons that follow, we conclude the Department's blanket denial of the request was inconsistent with the Act, but conclude that it could properly redact that portion of the application which contained sensitive financial information, generally recognized as confidential or proprietary.
Mr. Gayheart argues and the Department acknowledged in its response that the CDBG application process requires that the application be available to the public for review, with comments to be sent to the Department. In 96-ORD-50, which involved a request to inspect certain records relating to a Community Development Block Grant, we noted:
We believe that disclosure of records relating to Community Development Block Grant funds is mandated by the Open Records Act. This office has, in general, recognized that "amounts paid from public coffers are perhaps uniquely of public concern . . . [and] the public is entitled to inspect records documenting exact amounts paid from public monies . . . ." OAG 90-30, p. 3. Stated alternatively, where public funds go, the public's interest follows.
Thus, we believe the Department improperly denied access to the application in its entirety. The Department's own CDBG participation plan requires that the application be made available to the public for review and comment. For example, the Public Hearing Notice on the CDBG application, published in the Hazard Herald-Voice on Thursday, July 29, 1993, stated:
A copy of the CDBG application will be on file in the Judge's office for citizen review and comment during the business hours from August 19, 1993 thru August 26, 1993. Comments on the proposed application may be submitted to the Perry County Judge's Office until Thursday, August 26, 1993.
In its response, the Department argues in the alternative that if it is required to disclose portions of the application, then it urges that the company's sensitive financial information be withheld from disclosure under authority of KRS 61.878(1)(c)1; KRS 61.878(1)(c)2.a.; and
Hoy v. Kentucky Industrial Revitalization Authority, Ky., 906 S.W.2d 766 (1995).
The Department argues that the application was compiled and maintained as an application for a CDBG and contains information, required to be disclosed by the Department, of a confidential and proprietary nature. If disclosed, this information would allow for an unfair commercial advantage to Trus Joist MacMillan competitors and thus is exempt under KRS 61.878(1)(c)1. and KRS 61.878(1)(c)2.a.
KRS 61.878(1)(c)1. excludes from disclosure:
Records confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records[.]
KRS 61.878(1)(c)2.a excludes from disclosure:
Records confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which are compiled and maintained:
Our in camera review of the grant application submitted by Trus Joist MacMillan revealed, for the most part, that information contained in the application did not fall within that category of information which is "generally recognized as confidential or proprietary. " KRS 61.878(1)(c)1., and KRS 61.878(1)(a)2.a. However, financial data contained on pages 18, 19, and 20 of the application does fall, in our view, within that class of financial information which is generally recognized as confidential and proprietary. These pages contain information such as various costs, profit and working capital summary, inventories, and cash flow information.
In
Hoy v. Kentucky Industrial Revitalization Authority, Ky., 906 S.W.2d 766 (1995), the Court found:
The financial information required to be submitted by GE in its application to KIRA detailed the company's business and revitalization project. Under administrative regulations adopted by KIRA, such information included a financial history of the corporation, projected cost of the project, the specific amount and timing of capital investment, copies of financial statements and a detailed description of the company's productivity, efficiency and financial stability. . . . It does not take a degree in finance to recognize that such information concerning the inner workings of a corporation is "generally recognized as confidential or proprietary" and falls within the wording of KRS 61.878(1)(c)(2).
In its responses, the Department maintains that, while the CDBG application process requires that the application be open to public inspection, "it is unaware of anything in the Federal law or regulation relating to the use of CDBG funds, including the publication requirements outlined in 24 CFR 570.486 et seq. , that requires the Department to disclose sensitive financial information in an application by a private manufacturing company when that information could be used by a competitor to gain a commercial advantage. "
The Department affirmatively represents in its responses that the financially sensitive information on pages 18, 19, and 20 relating to the corporation's internal processes, have never been subject to public inspection or review. Based on these facts, we conclude that the financial information on these three pages is information that was submitted in confidence, that the confidential character of the information was maintained throughout the application process, and it is information which is generally recognized as proprietary information and which the Department could properly withhold from disclosure, under authority of KRS 61.878(1)(c)1.; KRS 61.878(1)(c)2.a. and Hoy, supra. As in Hoy , "it does not take a degree in finance" to recognize the sensitive nature of this information.
KRS 61.878(4) provides:
If any public record contains material which is not excepted under this section, the public agency shall separate the excepted and make the nonexcepted material available for examination.
This provision applies to all public records in which exempt and nonexempt information is commingled, including those qualifying for partial exemption under KRS 61.878(1)(c)1. and KRS 61.878(1)(c)2.a. Accordingly, the Department may redact the excepted material on pages 18, 19, and 20 of the application, and make the remainder available for Mr. Gayheart's inspection.
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.