Opinion
Opinion By: Gregory D. Stumbo, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Meetings Decision
The question presented in this appeal is whether the Louisville Arena Task Force properly relied on KRS 61.810(1)(g) and KRS 61.810(1)(k) in conducting a closed session at its June 13, 2005, meeting to discuss the hiring of a consultant to aid the Task Force in the siting of a new arena in Louisville and whether the Task Force violated KRS 61.815(1)(c) in taking final action in the course of that closed session. For the reasons that follow, and based on the authorities cited, we find that the Task Force's reliance on KRS 61.810(1)(g) and KRS 61.810(1)(k) was misplaced. Further, we find that although the Task Fork contests the allegation that it took final action in closed session, and we are not equipped to resolve this factual dispute, its position that KRS 61.815(2) authorizes final action in a properly conducted closed session is without merit.
On June 16, 2005, Jon L. Fleischaker submitted a written complaint to Lieutenant Governor Stephen B. Pence 1 on behalf of his client, The Courier-Journal, in which he alleged that "[t]he Task Force cannot discuss, much less vote upon, the hiring of a consultant in a closed session under section (g) or any of the KRS 61.810 exceptions." Mr. Fleischaker asserted:
Under section (g), a meeting between a public agency and a representative of a business entity pertaining to a specific proposal can only be closed if an open and public discussion would jeopardize the locating of "the business" in the area. Id. (emphasis added); see 94-ORD-119. Here, the task force did not meet in closed session to discuss a specific proposal by a business entity interested in locating, retaining, expanding, or upgrading its business in Louisville. The only proposals before the task force were from vendors who want to be hired to give advice on the location of the arena, not businesses that are siting, expanding or upgrading. The matters discussed under KRS 61.810(1)(g) have never been used to close discussions between a vendor and a public agency concerning a proposal to perform work and cannot be expanded to do so here. The proposals themselves were presented to the task force in open session, and the discussion and voting upon the proposals must also be in open session.
Additionally, Mr. Fleischaker objected that the Task Force violated KRS 61.815(1)(c) "[b]y voting in closed session to recommend to the Commerce Cabinet that one of [the two groups submitting proposals, Pricewaterhouse Coopers or the Leib Group] should be hired as a consultant . . . ." As a means of remedying these violations, The Courier-Journal proposed, inter alia, that the Task Force discuss any proposals by, and recommendations for, the hiring of consultants in open session and that it disclose any minutes, recordings, and transcripts of the closed session.
On June 20, 2005, Lt. Governor Pence responded to The Courier-Journal's open meetings complaint, defending the June 13 closed session and explaining that "[h]ad the session been open to the public, including the consultants, negotiations would have been placed in jeopardy causing an unfair advantage to the competing bidders and possible expenditure of additional public funds." The Lt. Governor reasoned:
[The Courier's] letter of June 16 state[s] that KRS 61.810(1)(g) allows closure "if an open and public discussion would jeopardize the locating of ' the business' in the area. Id. (emphasis added); see 94-ORD-119." While such a rational was opined in the Opinion of the Attorney General that you speak of, it has done so "among other things." 94-ORD-119. The Attorney General clearly stated that that was not the only reason a session may be closed pursuant to KRS 61.810(1)(g). The clear language of the text states that a session may be closed "if open discussions would jeopardize the . . . retention . . . of the business." In the situation at issue, open discussions by the Louisville Arena Task Force concerning the specific proposals of both Pricewaterhouse Coopers and the Leib Group would have seriously jeopardized the retention of either of the two (2) businesses. Thus the Task Force made the decision to close that portion of the meeting pursuant to KRS 61.810(1)(g). Additionally, nowhere in the statute is there a requirement that discussions concerning a specific proposal must be open if the proposals themselves were presented in such a manner.
Responding to The Courier's allegation that KRS 61.815(1)(c) prohibits final action in closed session, Lt. Governor Pence invoked KRS 61.815(2) which "excepts subsection (g) of KRS 61.810(1) from the requirements of KRS 61.815(1)," concluding that the Task Force "would be well within its legal rights to take final action at a meeting that was closed per KRS 61.810(1)(g)."
Upon receipt of the Task Force's denial of The Courier's open meetings complaint, Mr. Fleischaker initiated this appeal asserting:
. that the Task Force has not met, and cannot meet, its burden of proof relative to the claim that open discussion would jeopardize retention of a consultant and provide an unfair advantage to the competing bidder inasmuch as their proposals were presented in open session and each has made clear its interest in securing the contract;
. that KRS 61.810(1)(g) does not apply to a situation in which a public agency is selecting a vendor to supply services to the agency at taxpayer cost, but to those situations in which a public agency is negotiating with a business entity whose "undisclosed" interest in siting, retention, expansion, or upgrading its business would be compromised by open discussion.
In closing, Mr. Fleischaker again objected to the Task Force's closed session final action relative to the selection of a consultant.
In supplemental correspondence directed to this office following commencement of The Courier's appeal, Ellen F. Benzing, counsel for the Louisville Arena Task Force, elaborated on the Task Force's position. She explained that the June 13 meeting was conducted for the purpose, inter alia, of "listen[ing] and discuss[ing] presentation from both Pricewaterhouse Coopers and the Leib Group . . . about their respective qualifications to consult with the Task Force, " and that "[f]or a brief portion of the meeting the Task Force conducted a closed session so that it could discuss the presentations put forth by the consultants without their ability to undermine the Task Force's mission to promote the economic development of the City of Louisville, the Greater Louisville Metropolitan Area, the University of Louisville, and the State of Kentucky." Ms. Benzing maintained that the Task Force properly relied on KRS 61.810(1)(g), observing:
Had that specific portion of the session been open to the public, including and especially the consultants, negotiations between and among the Task Force and the consultants would have been placed in serious jeopardy . . .[,] caus[ing] an unfair advantage to the competing bidders, a possible violation of procurement laws, and the probable expenditure of more public funds than would otherwise have occurred.
It was her position that the presence of the public, including the consultants, would have impeded "actual contract negotiations . . .[,] limiting the ability of the Commonwealth to retain either of the two business entities and to negotiate the best possible deal for the Commonwealth with the best evaluated bidder."
Noting that the full details of the proposals were not presented in open session "in accordance with procurement rules," Ms. Benzing explained that only the Scoring Committee is "privy to the actual proposal[s]" since it is the Committee "that determines which of the consultants will be hired." Continuing, she observed:
For illustration the Task Force points to KRS 45A, Kentucky's Model Procurement Code. KRS 45A.085 regards competitive negotiations. Specifically, KRS 45A.085(7) states:
KRS 45A.695(4), which further discusses competitive negotiations for personal service contracts, further states:
Per KRS 45A.085(7) and KRS 45A.695(4), the Committee was charged with meeting with Pricewaterhouse Coopers and The Leib Group. In order for the Task Force to make its recommendation on how the Committee should further negotiate per KRS 45A.085(7) and KRS 45A.695(4) with Pricewaterhouse Coopers and Leib, the respective merits and qualifications of each consultant had to be discussed. This discussion, if held in the open session where the competitive offerors were in attendance, would have divulged "information derived from proposals submitted by competitive offerors, " in direct contravention of the Model Procurement Code. The twenty (20) minutes that the Task force spent in the closed session were therefore necessary so that its members could comply with the Model Procurement Code and recommend to the Committee how to further negotiate the most advantageous contract for the Commonwealth of Kentucky.
For the first time, and on this basis, Ms. Benzing relied on KRS 61.810(1)(k), permitting public agencies to conduct closed "[m]eetings which federal or state law specifically require to be conducted in privacy."
With reference to The Courier's assertion that the Task Force is vested with final decision making authority relative to the proposals, Ms. Benzing commented:
While it is true that the two (2) consultants have answered the Request for Proposal publicized by the Finance and Administration Cabinet and thus have shown an interest in being hired by the Task Force, it is not true that the Task Force has control over their retention. Furthermore, the Task Force has absolutely no control over the acceptance of the proposals. As stated earlier, it is the Committee, based on a numerical formula, who does the hiring, the discussions of the Task Force only give strategic guidance to the Committee. What the Task Force absolutely does not want is for either of the two (2) consultants to be in possession of the strategy that will be used by the Committee in order to retain them, if possible, at the best possible terms for the citizens of Kentucky.
Turning to the issue in chief, namely, the application of KRS 61.810(1)(g) to discussions concerning the selection of a consultant to aid the Task Force in the siting of a new arena, she relied on 92-OMD-1735 in which "[t]he situation facing the Task Force was expressly approved . . . when [the Attorney General] stated that the exception 'concerns the siting, retention, expansion, or upgrading of a business entity. '" In sum, Ms. Benzing asserted:
The statute itself refers to open discussions that jeopardize the retention of the business by the public agency . . . . [N]either of the consultants had been retained by the Task Force as of the meeting on June 13, 2005, and there was a very real possibility that the discussions amongst the Task Force would jeopardize their retention if they were to know what had been said. Furthermore, the Attorney General emphasized that the legislature had changed the exception from its previous incarnation a "Meetings between public agencies and industrial prospects," to the current language regarding "siting, retention, expansion, or upgrading, " thus expanding the statute's purview greatly."
Citing 94-OMD-119.
In conclusion, Ms. Benzing denied that the Task Force took action in the closed session, but responded to the final allegation in The Courier's complaint/appeal. She maintained:
[T]he Task Force has validly invoked subsections (g) and (k). The citation to KRS 61.815(1)(c) is not correct because the beginning phrase of that subsection states, "Except as provided in subsection (2) of this section." Subsection (2) then states that "public agencies and activities of public agencies identified in paragraph . . . (g) [and] (k) . . . of subsection (1) of KRS 61.810 shall be excluded from the requirements of subsection (1) of this section." KRS 61.815(2) (Emphasis added.). Only if the invocation of subsections (g) and (k) was invalid does this not apply. However, because it is very much valid, there is no argument to be made against final action being taken.
We find the Task Force's arguments with regard to this issue, as well as all other issues in this appeal, unpersuasive.
To begin, this office has had repeated occasion to analyze the scope and application of KRS 61.810(1)(g), and its predecessor, KRS 61.810(7), to closed sessions of public agencies through the years. In an early opinion, this office recognized that "private businesses, when dealing with a public agency, must expect that the transaction will take place in the open where it is subject to public scrutiny." OAG 80-530, p. 3. Nevertheless, we have also "[r]ecogniz[ed] that there are extraordinary circumstances which may warrant a public agency in conducting its business in a closed session . . . ." 99-OMD-104, p. 5, citing 98-OMD-105, p. 3. Among the exceptions to this general rule of openness is the exception codified at KRS 61.810(1)(g). In strictly construing this exception per KRS 61.800, 2 the Attorney General has observed:
What formerly appeared among the exceptions to open and public meetings as KRS 61.810(7) was an exemption for "Meetings between public agencies and industrial prospects." As a result of the 1992 amendments to the Open Meetings Act (1992 Acts, Chapter 162, HB 16), KRS 61.810(7) was repealed and the phrase "industrial prospects" was stricken. What was substituted for KRS 61.810(7) is what now appears as KRS 61.810(1)(g) and which provides as one of the exceptions to open and public meetings:
Under the new provision a meeting between an agency and a representative of a business entity or a meeting of the agency pertaining to a specific proposal could only be closed if an open and public discussion would jeopardize, among other things, the locating of the business in the area.
94-OMD-119, p. 3. Whereas prior to 1992 proper invocation of the exception depended upon the presence of a representative of the industrial prospect (see, e.g., OAG 80-530), the amended KRS 61.810(1)(g) now includes "discussions concerning a specific proposal," with or without the representative (see, e.g., 94-OMD-119), but only if open discussion would jeopardize the business entity's undisclosed interest in siting, retention, expansion, and/or upgrading of the business. See, e.g., 92-OMD-1735 (KRS 61.810(1)(g) not properly invoked by hospital board to authorize closed session discussion of "business opportunities" relating to physician services); 94-OMD-119 (KRS 61.810(a)(g) not properly invoked where business involved had publicly announced at a ceremony attended by the Governor that it intended to locate in the area); 01-OMD-45 (KRS 61.810(1)(g) not properly invoked for discussion of cost estimates for remodeling a public building); 01-OMD-227 (KRS 61.810(1)(g) improperly invoked by Governor's Council of Economic Advisors to discuss "potential company plans relating to siting, retention, expansion or upgrading of seventeen business interests in light of existing economic conditions in Kentucky"); 03-OMD-089 (KRS 61.810(1)(g) improperly invoked by public hospital board as basis for closed session discussions relating to a change in its legal relationship with a private entity that might, as an unavoidable consequence, result in the expansion and upgrading of facilities). Common to each of these decisions was the recognition that the exceptions to the Open Meetings Act "must [be] narrowly construe[d] and appl[ied] . . . so as to avoid improper and unauthorized closed, executive, or secret meetings,"
Floyd County Board of Education v. Ratliff, Ky., 955 S.W.2d 921, 923 (1997), and that "[t]he purpose underlying KRS 61.810(1)(g), namely to promote and facilitate economic development by private [businesses] in the Commonwealth," 01-OMD-45, p. 8, was not served by the closed session discussions at issue. Compare, 99-OMD-104 (KRS 61.810(1)(g) properly invoked to conduct closed session discussion concerning corporation's undisclosed interest in expanding and upgrading its operations in county, and confidentiality was required to consummate the expansion project). We find that, under a strict construction of the exemption and in light of its underlying policy, KRS 61.810(1)(g) does not authorize closed session discussions relating to the selection of a consultant to provide consulting services to a public agency.
In 01-OMD-227, this office parsed the language of KRS 61.810(1)(g) for the purpose of establishing that the subject agency's reliance on the exception was misplaced. At page 7 we observed, "KRS 61.810(1)(g) applies to meetings between a public agency and a representative of a business entity, or a meeting of the agency to discuss a specific proposal, but in either case, only if open discussion could jeopardize the siting, retention, expansion, or upgrading of the business." There, we concluded that neither of the conditions for invocation of this exemption were met when the agency's 3 collective membership retired to executive session to discuss the "potential plans" of the companies they represented.
The Task Force's position in the instant appeal is similarly flawed. The Task Force did not engage in a closed session discussion with a representative of either consulting group. Nor, by its own admission, could it have discussed a specific proposal since only the Scoring Committee "is privy to the actual proposal[s]." Although the varying descriptions of the general nature of the business discussed in closed session are murky, the discussion may have focused on the consultants' qualifications and/or negotiation strategy. Neither of these topics qualify as a discussion of a specific proposal, and for this reason the closed session was unauthorized. KRS 61.810(1)(g) "does not embrace [closed session discussions of] everything tangential to the topic," OAG 80-530, p. 3, citing
Jefferson County Board of Education v. Courier-Journal, Ky. App., 551 S.W.2d 25 (1977) but is strictly confined to discussions concerning a specific proposal if open discussion would jeopardize the siting, retention, upgrading, or expansion of a business.
Moreover, this office has consistently held that an open discussion cannot jeopardize the siting, retention, expansion, or upgrading of a business entity if that entity has made public its intentions. In 99-OMD-104, this office affirmed the Marion City Council's reliance on KRS 61.810(1)(g) when the Council presented proof in the form of letters from the business entity's vice-president and the president of the county economic development corporation that the business's interest in expansion and upgrading was conditioned on the confidentiality of discussions of a specific proposal. In the appeal before us, neither Pricewaterhouse Coopers nor the Leib Group have made any secret of their interest in being selected as a consultant to the Task Force and open discussion of this fact therefore cannot jeopardize the selection process.
Finally, and perhaps most importantly, we believe that the Task Force's construction of the term "retention" finds no support in the exemption's linguistic content or in legal precedent construing it. As noted, this office has recognized on more than one occasion that "[t]he purpose underlying KRS 61.810(1)(g) . . . [is] to promote and facilitate economic development by private [businesses] in the Commonwealth" through discussions of specific proposals aimed at securing a business's commitment to "site," or locate, a new business in Kentucky, to "retain," or keep an existing business in Kentucky, and/or to "expand" or "upgrade" an existing business in Kentucky. This interpretation of the term is derived from the context of the exception in its entirety and not from the term in isolation. The term "retention" has never been construed in the alternative sense that the Task Force construes it here relative to the hiring or selection of a business that has submitted a proposal in response to an RFP. To the extent that any of the open meetings exemptions extends to "retention, " in the sense of hiring or selection, that exemption is found at KRS 61.810(1)(f) 4 and only applies to "individual" employees and members. None of the cited authorities involve a public agency's discussion of the hiring or selection of a business to supply a service to the agency. In sum, the Task Force's construction of the term "retention, " and thus its invocation of KRS 61.810(1)(g), reflect a liberal interpretation of that provision that is legally unsupportable in this context.
So too, the Task Force's reliance on KRS 61.810(1)(k) is misplaced. That exemption authorizes public agencies to conduct "[c]losed meetings which federal or sate law specifically require to be conducted in privacy[.]" In invoking this exemption, the Task Force relies on KRS 45A.085(7) and KRS 45A.695 of the Kentucky Model Procurement Code, both of which contain language restricting disclosure of information derived from proposals submitted by competitive (other) offerors in the course of discussions with an offeror. Neither provision, however, contains a specific requirement that meetings at which such discussions are held be conducted in private, only that those discussions not disclose information derived from proposals submitted by a competitor. Moreover, and as noted above, we are hard pressed to understand how the Task Force could disclose information derived from the proposals submitted by Pricewaterhouse Cooper or the Leib Group insofar as "only the Scoring Committee is privy to the actual proposal[s]." Assuming that members of the Scoring Committee also serve on the Task Force, it may be incumbent on those members, by virtue of the referenced provisions, to restrict disclosure of the details of the competing proposals in the public forum, but these provisions cannot otherwise be read to authorize closed session discussions of the public's business.
Finally, and with respect to the remaining issue The Courier-Journal raises, we find that the Task Force's interpretation of KRS 61.815(2) to permit public agencies to take final action in a closed session is inconsistent with a line of decisions of this office dating back to 1980 and therefore unpersuasive. KRS 61.815(1)(c) states that "[n]o final action may be taken at a closed session [.]" KRS 61.815(2) states:
Public agencies and activities of public agencies identified in paragraphs (a), (c), (d), (e), (f), but only so far as (f) relates to students, (g), (h), (i), (j), (k) and (l) of subsection (1) of KRS 61.810 shall be excluded from the requirements of subsection (1) of this section.
These provisions have existed in the law since its enactment, 5 and since its enactment the Attorney General has wrestled with an interpretation of KRS 61.815(2) that does not entirely defeat the purpose and intent of KRS 61.815(1). In OAG 80-248, we analyzed the language of KRS 61.815 in an attempt to resolve the "problem of statutory interpretation" it presents. OAG 80-248, p. 1. There, we observed:
Taken literally KRS 61.815(2) excludes from any formality concerning going into a closed session every exception listed in KRS 61.810 except (b), (e), and (f) as it relates to students -- acquisition or sale of real property, collective bargaining negotiations and personnel matters. Such a literal interpretation would mean that an agency could go into closed session without any of the formalities set forth in KRS 61.815 under the other eight exceptions listed. However, . . . we do not believe that the literal interpretation comports with the legislative intent. We believe that the legislative intent is that agencies, per se, which are exempt from complying with the Open Meetings Law, such as the Parole Board, juries, the Governor's cabinet, committees of the General Assembly and other agencies exempted by statute or by the Constitution do not have to go through the formalities set forth in KRS 61.815, and that agencies which are not exempt per se but which go in closed session to deal with an excepted subject matter must observe those formalities.
OAG 80-248, p. 2. Chief among the Attorney General's reasons for reaching this conclusion was practicality. We observed:
When a public agency which is generally required to hold open meetings finds it necessary to go into a closed session to deal with a particular excepted subject matter, the spirit of the Open Meetings Law and the concern of the public is best served by observing the steps set forth in KRS 61.815. For such an agency, convened in a regular or special meeting in accordance with KRS 61.820-61.825, to go into closed session without first giving notice in open session of the general nature of the business to be discussed and without first passing a motion in open session, would create doubt in the minds of members of the public as to whether the Open Meetings Law was being properly observed and could, in fact, lead to laxity in observing the law.
OAG 80-248, p. 2; accord, 94-OMD-78; 97-OMD-96; 01-OMD-181. So, too, would an agency's practice of taking final action in a closed session in contravention of KRS 61.815(1)(c). While we acknowledge that KRS 61.815(2) lends itself to conflicting interpretations, we are not prepared to depart from twenty-five years of interpretation of the law absent judicial repudiation of our position. The Louisville Arena Task Force is not exempt, per se, from complying with the Open Meeting Act, and we therefore conclude that it cannot take final action in a closed session. The Task Force denies that it took final action in the course of its June 13 meeting, and The Courier-Journal presents no clear evidence to the contrary. 6 Nevertheless, the Task Force's position relative to this issue is, once again, legally unsupportable and it should be guided by these observations in the conduct of future meetings.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.846(4)(a). 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 proceedings.
Footnotes
Footnotes
1 Chair of the Louisville Arena Task Force.
2 KRS 61.800 thus provides:
The General Assembly finds and declares that the basic policy of KRS 61.805 to 61.850 is that the formation of public policy is public business and shall not be conducted in secret and the exceptions provided for by KRS 61.810 or otherwise provided for by law shall be strictly construed.
(Emphasis added.)
3 The Governor's Council of Economic Advisors consisted of seventeen business entity representative members from the major industrial sectors of Kentucky's economy.
4 KRS 61.810(1)(f) authorizes public agency to conduct closed:
Discussions or hearings which might lead to the appointment, discipline, or dismissal of an individual employee, member, or student without restricting that employee's, member's, or student's right to a public hearing if requested. This exception shall not be interpreted to permit discussion of general personnel matters in secret.
(Emphasis added.)
5 KRS 61.815(1) and (2) have undergone minor statutory revisions over time, but these revisions do not alter our analysis.
6 If the Task Force voted in closed session to recommend one of the consultants to the Scoring Committee, that action was final as to the Task Force, notwithstanding its advisory nature, and therefore contravened KRS 61.815(1)(c).