Request By:
[NO REQUESTBY IN ORIGINAL]
Opinion
Opinion By: Albert B. Chandler III, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Public Protection and Regulation Cabinet, responding on behalf of the Kentucky Racing Commission, violated the Open Records Act in denying Lexington Herald-Leader reporter Janet Patton's October 4, 1999, request for copies of applications "for 2000 racing licenses and 2000 racing dates for all Kentucky racetracks . . . including all financial filings that the commission requires accompany these requests." For the reasons that follow we conclude that although the applications do not qualify for exclusion under KRS 61.878(1)(i), the Cabinet is justified in withholding portions of the applications on the basis of KRS 61.878(1)(c)2.d. upon a showing that those portions were confidentially disclosed to the Kentucky Racing Commission, are generally recognized as confidential or proprietary, and were compiled and maintained for the grant or review of a license to do business. This decision should not be interpreted to authorize wholesale nondisclosure of the applications, or to require final and favorable action by the Commission on the application prior to disclosure.
In a response dated October 7, 1999, the Cabinet's general counsel, Joseph W. O'Reilly, denied Ms. Patton's request. Relying on KRS 61.878(1)(i), the Cabinet argued that the requested records "constitute [] preliminary correspondence from applicants." Noting the Racing Commission had not yet had an opportunity to review the applications, the Cabinet maintained that "at such time as the Commission enters a final decision . . ., this exemption to the Open Records Law will no longer exist." In addition, the Cabinet asserted:
The applications include financial information, such as income tax returns, which are exempt from disclosure pursuant to KRS 61.878(1)(l) and KRS 230.300(2)(c). The tendered applications also include information which has been disclosed for purposes of obtaining a license from the Commission which is proprietary in nature such as bank accounts which is excluded from disclosure per KRS 61.878(1)(c)2.d., as well as information such as social security numbers, dates of birth, and drivers licenses numbers which are excluded from disclosure per KRS 61.878(1)(a) because it is personal in nature and its disclosure would constitute an unwarranted invasion of personal privacy. 1
Shortly after receiving the Cabinet's response, The Herald-Leader initiated this open records appeal.
On appeal, The Herald-Leader challenges the Cabinet's reliance on KRS 61.878(1)(i) to support its denial of Ms. Patton's request. "The primary issue," the newspaper maintains:
is whether, as a general matter, an application [footnote omitted] and supporting documentation submitted to the Racing Commission to procure a license to operate a horse race track and obtain racing dates is exempted from the Open Records Act by KRS 61.878(1)(i) as "preliminary drafts, notes, correspondence with private individuals which is intended to give notice of final action of a public agency. "
Thenewspaper argues that the applications submitted by individuals and entities seeking to operate public racing facilities under authority of KRS 230.300 clearly cannot be characterized as "preliminary drafts" or "notes." Neither, the newspaper asserts, do the applications "constitute correspondence with private individuals as contemplated by the Open Records Act. " The Herald-Leader maintains:
The Attorney General has consistently recognized that not all writings from individuals to a government agency can be considered as "correspondence with private citizens." See OAG 90-142 at 6 and 97-ORD-1 at 2. Specifically, the Attorney General has held that when an agency is expected to take some final action on the writing, it is not considered correspondence. See id. The difficulty is that the Attorney General has qualified this statement by holding that such writings are open to public inspection only after the government action is taken. See id.; see also OAG 87-58 at 2-3 and 93-ORD-22 at 4. It is this qualification with which we disagree and which we believe to be without support in the text or spirit of the Open Records Act.
By opining that writings from private citizens are not considered correspondence where an agency is expected to take some action, the Attorney General has implicitly recognized that KRS 61.878(1)(i) has no application to such records. That is because that exception, by its own express language, only applies when the record is (1) "correspondence" and (2) when that correspondence is not intended to give notice of final action. Since the Attorney General has consistently held that applications are not correspondence , the second part of the test becomes moot. If a record is not correspondence to begin with, then it is irrelevant whether it is intended to give notice of final action. Therefore, unless some other unrelated exception applies, the applications are open to public inspection once they are submitted into the agency's possession.
The Herald-Leader then proceeds to dismantle each of the Cabinet's arguments, including those arguments based on KRS 61.878(1)(l), incorporating KRS 230.300(2)(c), to authorize nondisclosure of any financial record other than federal and state tax returns, KRS 61.878(1)(c)2.d. to authorize nondisclosure of "information that is proprietary, such as bank accounts," and KRS 61.878(1)(a) to authorize nondisclosure of any personal information other than social security numbers, dates of birth, and drivers license numbers. 2
In a supplemental response directed to this office, the Cabinet elaborated on its position. Noting that Ms. Patton had expressed particular interest in one application, the Cabinet observed:
At the time of the request, the Commission itself had not had an opportunity to see and review the applications. Ms. Patton was advised that there may be a committee meeting to review the applications and there would be a full Commission meeting on Nov. 1, that these meetings were open to the public and that when the Commission made a decision, the preliminary exemption would not longer exist. In fact the Commission did not grant the license which Ms. Patton indicated she was particularly interested in.
As required by KRS 61.880, Mr. O'Reilly provided the reasons for the nonproduction along with a brief explanation of how the particular exceptions to the law applied. Mr. O'Reilly specifically cited the following sections of the KRS: 61.878(1)(a), (1)(c)2.d., 61.878(1)(l) and 230.300(2)(c). The information requested was, in part personal, which the appellant is not contesting at this time. The information was clearly being provided as part of an application for a license, and would not have been furnished otherwise. The appellant is well aware of the information requested in the form as it has appended it as an exhibit to its appeal. The information requested involves the make up and structure of the applicant, financial, legal, historical and investor data. Were the applicants successful in obtaining a license, much of this information would be relevant and subject to public disclosure. When the information is furnished preliminarily and a license is not granted, the situation is different and the Legislature has provided for exceptions to the open records law. The situation is similar to that of an unsuccessful applicant for a state job. It is well established that person's application is private and not subject to disclosure. If the application were granted that would not be the case.
The application in question was not granted. The appellant had the same right of any citizen to come to the public meetings of the Commission to hear the application discussed and decided upon. This is not a process that went on in private. At the point that the appellant demanded the information it was preliminary under KRS 878(1)(i) [sic] in addition being exempt in part as an unwarranted invasion of personal privacy ((1)(a) and as proprietary information submitted as part of a license application ((c)2.d.).
In closing, the Cabinet reiterated that tax returns were properly withheld pursuant to KRS 230.300, and that "the other proprietary information is covered by KRS 61.878(1)(c)2.d."
We do not, in general, find the arguments advanced by the Cabinet persuasive. 3 Instead, we concur with The Lexington Herald-Leader in its view that the disputed applications to operate racing facilities under KRS 230.300 cannot properly be characterized as correspondence with private individuals within the meaning of KRS 61.878(1)(i). This being the case, we find that disclosure of the applications is not contingent upon final and favorable agency action, that the applications must be made available for inspection upon request. We further find that nondisclosure of any portion of the application must be justified, in detail and with particularity, in terms of the requirements of one or more of the exceptions to public inspection. Edmondson v. Alig, Ky.App., 926 S.W.2d 856, 858 (1996). To the extent that prior decisions of this office dealing with applications for licenses to do business in the Commonwealth are inconsistent with this position, they are hereby modified. Nevertheless, our decision is confined to applications for business licenses. We leave for a later day the issue of whether this holding extends to applications submitted for other purposes.
KRS 61.878(1)(i)authorizes the nondisclosure of:
Preliminary drafts, notes, correspondence with private individuals other than correspondence which is intended to give notice of final action of a public agency [.]
The parties apparently agree that applications to operate racing facilities cannot properly be characterized as "preliminary drafts" or "notes." Accordingly, unless they qualify for exclusion as correspondence with private individuals, they are subject to public inspection upon request, unless exempted by one or more of the other exceptions codified at KRS 61.878(1)(a) through (l). Although tendered by private entities or individuals, these applications cannot be considered "correspondence with private individuals," as contemplated by KRS 61.878(1)(i), because they are submitted with the expectation that the Racing Commission will rely upon them to take some action, either approval or denial of a license. As we observed in OAG 90-142:
In OAG 90-7 we said a contractor lost any character he had as a private individual when he corresponded with a public agency regarding administration of his contract with that agency, and thus correspondence from the contractor was not exempt from disclosure. We reasoned that one who contracts with a governmental agency must accept certain necessary consequences of involvement in public affairs, including the risk of closer public scrutiny. In OAGs 90-13 and 79-69 we . . . distinguished voluntary surveys given to government agencies, which did not have to be disclosed, as private correspondence, from involuntary reports, which must be available for inspection. In OAG 89-31 we said bids on government contracts cannot be considered correspondence with private individuals.
These cases and opinions demonstrate that not all writings from individuals to a government agency can be considered correspondence with private individuals. Writings from private citizens to government agencies are not considered correspondence from private citizens where an agency is expected to rely on the correspondence to take some action, such as take a disciplinary action against a licensee, or enter into a government contract based on bids. In each instance disclosure is mandatory upon request[.]
OAG 90-142, p. 6. This position finds support in at least three other open records decisions. See OAG 80-144 (application for bank charter filed with Department of Banking and Securities is open to public inspection prior to approval by the Department); OAG 81-51 (application for beer distributor's license submitted to state ABC Board must be disclosed, and policy which does not allow inspection until after application is approved or denied is improper): 99-ORD-207 (application for entertainment permit filed with city clerk of Calvert City must be disclosed even though city had not yet taken action on it).
Confusion has arisen as a consequence of the language found in the final clause of the final sentence in the material from OAG 90-142 quoted above. We refer to the statement that disclosure is mandatory upon request " after the final governmental action ." (Emphasis added.) If, as The Herald-Leader suggests, a disputed record cannot be characterized as correspondence with a private individual, the question of whether final action has been taken by the agency becomes irrelevant. With respect to an application for a license to do business in the Commonwealth, we agree. Simple stated, we do not reach the second part of the KRS 61.878(1)(i) analysis, requiring final action of a public agency, if the first part of the analysis, requiring that the disputed record consist of correspondence, is not met. Such an application becomes an open record upon submission, and all or any portion of the application can properly be withheld only upon a showing by the agency that it qualifies for exclusion under one or more of the other exceptions to public inspection. As noted, and in view of the unforeseeable consequences which might flow from such a holding, we decline to extend this reasoning to other documents which might be characterized as "applications" inasmuch as these issues are not before us in the present appeal.
Having concluded that applications to operate racing facilities under KRS 230.300 could not be withheld pursuant to KRS 61.878(1)(i) as correspondence with private individuals until final and favorable action was taken upon them by the Racing Commission, we turn to the question of whether any portion of the applications were properly withheld pursuant to KRS 61.878(1)(c)2.d. or KRS 61.878(1)(a). We focus first on KRS 61.878(1)(c)2.d., which authorizes the nondisclosure of:
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 . . . for the grant or review of a license to do business[.]
To successfully raise this exception, a public agency must establish that the records in dispute (1) are confidentially disclosed to the agency or required by the agency to be disclosed to it; (2) are generally recognized as confidential or proprietary; and (3) are compiled and maintained for the grant or review of a license to do business. Accord, 95-ORD-107. It is apparent that the applications at issue in this appeal satisfy the first and third parts of this three part test in that they are required by the Racing Commission to be disclosed to it for the grant or review of a license to operate racing facilities in the Commonwealth of Kentucky. The remaining question is whether the records withheld are generally recognized as confidential or proprietary. In analyzing this question we are guided by the knowledge that pursuant to KRS 61.880(2)(c) the General Assembly has assigned the burden of proof to the public agency, here the Public Protection and Regulation Cabinet, and that the exceptions to public inspection must be "strictly construed, even though [it] may cause inconvenience or embarrassment to public officials or others." In light of the paucity of proof submitted by the Cabinet, and our own review of the application and accompanying materials, as described in KRS 230.300(2)(c) through (e), we cannot affirm the Cabinet's blanket denial of Ms. Patton's request on the basis of KRS 61.878(1)(c)2.d.
The thirteen page applications at issue in this appeal consist of general information pertaining to the applicants, information pertaining to relatives of the applicants employed by the State of Kentucky, employment information pertaining to the applicants, military information pertaining to the applicants, the applicants' criminal history, the applicants' participation in any civil actions, the applicants' ownership interests and a business organization chart, financial information pertaining to the applicants, and information pertaining to individuals retained to represent the applicants' interests. Along with the application, applicants are required to submit:
(a) For a new license applicant, a financial statement prepared and attested to by a certified public accountant in accordance with generally accepted accounting principles, showing the following;
KRS 230.300(2)(a) through (e).
In an attempt to justify its nondisclosure of the application and accompanying materials, the Cabinet maintains:
The information was clearly provided as part of an application for a license, and would not have been furnished otherwise. The appellant is well aware of the information requested in the form as it has appended it as an exhibit to its appeal. The information requested involves the make up and structure of the applicant, financial, legal, historical and investor data.
In its original response, the Cabinet asserted that requested records contain information that is exempt pursuant to KRS 61.878(1)(c)2.d. because it is "proprietary in nature such as bank accounts." This is the only "proof" submitted by the Cabinet to support its position that the applications contain proprietary information and could properly be withheld. In our view, this "proof" is insufficient to support the claim.
Nevertheless, we are reluctant to state that the Cabinet is obligated to disclose the applications in their entirety. "Despite the undeniable deficiencies in [the Cabinet's] response," Kentucky's courts have disapproved "the remedy of disclosure. " Edmondson at 859. The Cabinet's "error cannot be remedied by committing another [namely, releasing materials intended to be protected from public scrutiny] and thus compounding mistakes at the possible expense of due process." Id. In Hoy v. Kentucky Industrial Revitalization Authority, Ky., 907 S.W.2d 766 (1995), the Kentucky Supreme Court dealt with an analogous situation involving access to records of a private entity which had applied for tax credits from the state. Analyzing the applicability of KRS 61.878(1)(c)(2) to these records, the Court observed:
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). As we stated in Commonwealth v. Shivley, Ky., 814 S.W.2d 572, 573 (1991), "under the rule of liberal construction, the words employed in the statute must be given their ordinary meaning."
Hoy , at 768.
It is our opinion that pursuant to KRS 61.878(1)(c)2.d., the Cabinet may only withhold those portions of the application and accompanying materials that concern "the inner workings" of any businesses in which the individual applicant has an ownership interest, or the inner workings of a corporate applicant which are "generally recognized as confidential or proprietary . . . ." Id. We do not believe that KRS 61.878(1)(c)2.d. is sufficiently broad in its scope to encompass all information involving "the makeup and structure of the applicant [and] financial, legal, historical and investor data." The burden of proof rests with the Cabinet to establish which of the information withheld qualifies for exclusion under KRS 61.878(1)(c)2.d. as information that is generally recognized as confidential or proprietary. The remaining portions of the applications must be disclosed.
We next turn to the question of the applicability of KRS 61.878(1)(a) to the personal information withheld. Under that exception, the Cabinet refused to disclose social security numbers, dates of birth, and drivers license numbers that appeared on the applications. The Herald-Leader did not object to nondisclosure of these items of information. The Herald-Leader did, however, object to nondisclosure of any other information appearing on the application for which the exception was not claimed. Inasmuch as the Cabinet has not invoked KRS 61.878(1)(a) to support its denial of access to any other information, we must assume that it will disclose all remaining portions of the applications for which it cannot successfully establish the applicability of KRS 61.878(1)(c)(2.)(d).
Anticipating that this may not be the case, we remind the Cabinet that "a corollary of public regulation is public accountability through records access. . . ." 95-ORD-107, p. 7. KRS 230.215(1) and (2) provide, in part:
It is the policy of the Commonwealth of Kentucky, in furtherance of its responsibility to foster and to encourage legitimate occupations and industries in the Commonwealth and to promote and to conserve the public health, safety, and welfare, and it is hereby declared the intent of the Commonwealth to foster and to encourage the horse breeding industry within the Commonwealth and to encourage the improvement of the breeds of horses. Further, it is the policy and intent of the Commonwealth to foster and to encourage the business of legitimate horse racing with pari-mutuel wagering thereon in the Commonwealth on the highest possible plane. Further, it hereby is declared the policy and intent of the Commonwealth that all racing not licensed under this chapter is a public nuisance and may be enjoined as such. Further, it is hereby declared the policy and intent of the Commonwealth that the conduct of horse racing, or the participation in any way in horse racing, or the entrance to or presence where horse racing is conducted, is a privilege and not a personal right; and that this privilege may be granted or denied by the commission or its duly approved representatives acting in its behalf.
It is hereby declared the purpose and intent of this chapter in the interest of the public health, safety, and welfare, to vest in the commission forceful control of horse racing in the Commonwealth with plenary power to promulgate administrative regulations prescribing conditions under which all legitimate horse racing and wagering thereon is conducted in the Commonwealth so as to encourage the improvement of the breeds of horses in the Commonwealth, to regulate and maintain horse racing at horse race meetings in the Commonwealth of the highest quality and free of any corrupt, incompetent, dishonest, or unprincipled horse racing practices, and to regulate and maintain horse racing at race meetings in the Commonwealth so as to dissipate any cloud of association with the undesirable and maintain the appearance as well as the fact of complete honesty and integrity of horse racing in the Commonwealth.
Given the strong language of this statute, and its clear mandate, it is apparent that the public's interest in disclosure of information which has a direct bearing on the issue of whether the applicants satisfy the requirements for licensure is weighty indeed, and the privacy interests of the applicants correspondingly reduced. The Public Protection and Regulation Cabinet should bear this observation in mind before it attempts to justify nondisclosure of any other information appearing on the applications on the basis of KRS 61.878(1)(a).
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.
Footnotes
Footnotes