Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Louisville-Jefferson County Metro Revenue Commission violated the Open Records Act in denying Larry Hujo's December 4, 2008, request for all "list[s] of independent contractors (IRS Form 1099) submitted to the Commission by year, for the past 6 years, for Star Drywall of Louisville, Inc." Mr. Hujo emphasized that he was not seeking "information regarding the independent subcontractors' tax status, income, or other information of a personal nature," and that he was "simply seeking a list of names and addresses of the independent subcontractors employed" by Star Drywall. For the reasons that follow, we affirm the Commission's reliance on KRS 131.190(1) and KRS 67.790(8) as well as KRS 61.878(1)(l), 1 incorporating these confidentiality provisions into the Open Records Act, to support nondisclosure of the disputed records.
In denying Mr. Hujo's request, the Commission maintained that "the names and addresses of subcontractors used by a business is information dealing with the internal workings and affairs of the taxpayer's business within the meaning of" the cited provisions. The Commission relied on 04-ORD-010 and 07-ORD-255 in support of its denial, arguing, in the alternative, that the requested information was exempted from public inspection by KRS 61.878(1)(c)1. insofar as it is generally recognized as confidential and proprietary, and, if openly disclosed, would permit an unfair advantage to competitors of the entity that disclosed the records. Because KRS 131.190(1) and KRS 67.790(8) preclude access to the information identified in Mr. Hujo's request, we do not address the Commission's alternative argument.
The Louisville-Jefferson County Metro Revenue Commission "is authorized by Louisville Ordinance No. 20, Series 1989 and by Ordinance No. 13, Series 1989 of the Jefferson County Fiscal Court 'to make and enforce bylaws, rules and regulations, not contrary to the law, for the conduct of the business of the [Commission]' and to 'do everything necessary to execute the duties and powers conferred upon them by law.'" Louisville/Jefferson County Metro Code of Ordinances, Section 110, effective July 1, 2008. Its function "is the collection of occupational license taxes on behalf of Louisville Metro (which includes all of Jefferson County) . . . [and] various other license fees . . . ." http://www.louisvilleky.gov/Revenue/. Disclosure of records identifying Star Drywall's subcontractors "would do little to further the citizens' right to know what [the Commission] is doing and would not in any real way subject [Commission] action to public scrutiny."
Zink v. Commonwealth, Department of Workers' Claims, 902 S.W.2d 825, 829 (Ky. App. 1994). Mr. Hujo expresses the view that "[d]isclosure would permit the public to ascertain if a contractor is competing as a legitimate business or if [it is] illegally gaining an unfair competitive advantage over other businesses in the industry." The Open Records Act, however, focuses on the public's interest in monitoring public agency conduct, here the Commission, not the conduct of a private entity, here Star Drywall. "While there may be some merit to [Mr. Hujo's] assertion that the broad public interest would be served by the dissemination [of information about how a contractor classifies employees], this cannot be said to further the principal purpose of the Open Records Act. " Zink at 829.
More importantly, because they are employed by the public agency charged with collecting occupational license taxes, the Commission's employees are strictly bound by the statutory prohibitions on disclosure of information that "may have to do with the affairs of the person's business" acquired in the discharge of their duties. KRS 131.190(1); KRS 67.790(8)(a), KRS 131.190(1) thus provides:
No present or former commissioner or employee of the Department of Revenue, present or former members of a county board of assessment appeals, present or former property valuation administrator or employee, present or former secretary or employee of the Finance and Administration Cabinet, former secretary or employee of the Revenue Cabinet, or any other person, shall intentionally and without authorization inspect or divulge any information acquired by him of the affairs of any person, or information regarding the tax schedules, returns, or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business. This prohibition does not extend to information . . . in any way made a matter of public record . . . .
(Emphasis added.) In applying this provision to business licensing records, this office has held:
Records disclosed to the City to obtain an occupational license or collect a license fee, such as social security number and federal identification numbers, remain confidential, and are exempt from public inspection. OAG 82-2; OAG 84-93. Information which reveals the affairs of the business, such as profits, taxes, deductions, and salaries, is also exempt. To the extent that disclosure of the amount of tax paid or owing, or the penalty assessed reveals the private details of the taxpayer's business, it is not subject to disclosure.
01-ORD-63, p. 3, citing, inter alia, 94-ORD-64; 96-ORD-96; 97-ORD-22; 00-ORD-117.
KRS 67.790(8)(a), a more recent enactment of the General Assembly, contains nearly identical language, providing:
No present or former employee of any tax district shall intentionally and without authorization inspect or divulge any information acquired by him or her of the affairs of any person, or information regarding the tax schedules, returns, or reports required to be filed with the tax district or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business. This prohibition does not extend to information . . . in any way made a matter of public record . . . .
Neither of these provisions have been construed to "erect an impenetrable barrier to disclosure of business licensing records." 07-ORD-255, p. 5. They are, however, aimed at restricting access to information that "'may have to do with the affairs of a person's business' and is not otherwise made a matter of public record. " Id. 2
The information to which Mr. Hujo requested access apparently appears on the IRS Form 1099 which Star Drywall is required to submit to the Commission. While the referenced confidentiality statutes have generally been construed to prohibit access to, inter alia, profits, taxes, deductions, and salaries, in 08-ORD-118 these exemptions were deemed applicable to records relating to a property tax exemption based on our general policy of according deference "to a public agency with regard to interpretation of confidentiality provisions which are binding upon it." See also 98-ORD-20 (deferring to the Revenue Cabinet's interpretation of KRS 131.190(1) relative to the names of recipients of all Kentucky pollution control tax exemption certificates); 04-ORD-042 (deferring to the Department of Revenue's interpretation of KRS 131.190(1) relative to the identities of vendors holding sales and use tax direct pay authorizations) ; 04-ORD-152 (deferring to the Department of Revenue's interpretation of KRS 131.190(1) relative to sales and use tax records of a named company). Here, as in the referenced open records decisions, the Commission interprets KRS 131.190(1) and KRS 67.790(8) to extend protection to the names of subcontractors appearing on IRS Form 1099 submitted to it by Star Drywall of Louisville, Inc., and we accord some deference to its position.
Star Drywall provides additional information supporting the Commission's position that disclosure of the company's subcontractors "ha[s] to do with the affairs of [its] business . . . ." 3 The company explains that "[t]he information requested by Mr. Hujo [namely, the identities of its subcontractors] could be used against Star Drywall by competitors to the point that [the company] would be unable to make successful job bids and be a profitable company at the same time." There can be little doubt that the pool of subcontractors with whom it chooses to do business directly relates to Star Drywall's business affairs. It is this type of information that KRS 131.190(1) and KRS 67.790(8) are aimed at protecting, and we therefore affirm the Commission's denial of Mr. Hujo's request. While we share Mr. Hujo's concern that some mechanism should exist for ensuring that subcontractors are properly registered and in compliance with all applicable laws, his open records request, as framed, is not the mechanism for doing so.
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
1 KRS 61.878(1)(l) authorizes agencies to withhold "[p]ublic records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly."
2 While some information relating to Star Drywall of Louisville, Inc. is a matter of public record in, for example, the Office of the Secretary of State, a record identifying the pool of subcontractors with which it elects to do business is not.
3 We are mindful of Mr. Hujo's view that Star Drywall should not have been notified that its records were the subject of an ongoing open records dispute. Although this office did not notify Star Drywall of the appeal, the Commission was not prohibited from doing so. In Beckham v. Jefferson County Board of Education, 873 S.W2d 575, 578 (Ky. 1994) the Kentucky Supreme Court recognized that parties affected by disclosure of public records "are entitled to be heard on their exclusion claims." See also Lexington-Fayette Urban County Government v. Lexington Herald Leader, 941 S.W.2d 469 (Ky. 1997). These cases notwithstanding, disputes arising under the Open Records Act are adjudicated by this office openly, transparently, and in such a way as to best insure due process. As noted, there is no statutory prohibition on agency notification to an affected party that an open records appeal has been filed from the agency's denial of access to records relating to the party. Nor is there any statutory prohibition on this office considering information furnished by the party in support of the agency's denial.