Opinion
Opinion By: Jack Conway, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Records Decision
At issue in this appeal is whether Abel Construction Company, Inc. violated the Kentucky Open Records Act in denying John Rogers' September 30, 2011, request for "a list of expenditures of your company, including check number, date, amount and payee for all checks written from January 1, 2011 to August 31, 2011[, including but not limited to], checks written to consultants, salaried individuals and organizations." 1 More precisely, the question presented is whether Abel, a private, for profit corporation (according to public information accessible on the Kentucky Secretary of State's website) , the shareholders, directors, and officers of which are not "Kentucky state or local government agenc[ies] or appointee [s]," is a "public agency" within the meaning of KRS 61.870(1). Resolution of this determinative question turns on the application of KRS 61.870(1)(h), as reinterpreted in 09-ORD-033 (copy enclosed), to Abel. Because no evidence has been presented to refute the affidavit of its Vice President and Chief Financial Officer, confirming that Abel derived less than twenty-five percent (25%) of the funds it expended in the Commonwealth of Kentucky during 2010, and 2011 to date, from state or local authority funds, or to suggest that Abel otherwise meets the definition of "public agency" codified at KRS 61.870(1), the Attorney General concludes that Abel is not a "public agency" for purposes of the Open Records Act; thus, Abel cannot be said to have violated the Act in denying Mr. Rogers' request.
"Public agency" is broadly defined at KRS 61.870(1) 2 in eleven different ways codified at subsections (a)-(k). Despite the expansive language of KRS 61.870(1), its companion, KRS 61.870(2) (broadly defining "public records" ), 3 and the clearly expressed legislative intent that the Open Records Act must be strictly construed so as to ensure the broadest possible access to public records, 4 the Attorney General has recognized, on a number of occasions, that a private corporation, whether not-for-profit or for profit, is not a public agency for purposes of the Open Records Act unless it "derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds." See KRS 61.870(1) as construed in 92-ORD-1114; 94-ORD-98; 97-ORD-114; 99-ORD-65; 05-ORD-012; 06-ORD-162; 09-ORD-033; 09-ORD-042; 09-ORD-083; 11-ORD-021; 11-ORD-040; 11-ORD-142; 11-ORD-143. No evidence has been presented to suggest that Abel would qualify as a public agency under KRS 61.870(1)(a) , (b), (c), (d), (e), (f), (g), (j), or (k); 5 likewise, 61.870(1)(i) is facially inapplicable given that its governing body is apparently not appointed by a public agency. KRS 61.870(1)(h) is the only subsection that is potentially applicable.
In 09-ORD-033 (Deborah H. Patterson/M.A. Mortenson Company, issued February 19, 2009), the Open Records Decision which culminated in William H. Chilton, III v. M.A. Mortenson Company , 09-CI-02749 (Jefferson Circuit Court-Division Thirteen, November 24, 2009)(holding that KRS 61.870(1)(h) is unconstitutional), 6 this office was asked to determine whether Mortenson, the "Construction Manager-at-Risk" for the Louisville Arena Authority, was a "public agency" within the meaning of KRS 61.870(1)(h). This office adopted the interpretation of KRS 61.878(1)(h) set forth by the appellant, which admittedly represented "a significant departure from prior decisions in which the 'expended by it in the Commonwealth' language was not meaningfully applied." 7 09-ORD-033, p. 6. Reversing "that line of decisions in which this office did not effectively analyze what percentage of state or local authority funds the 'body' expended in the Commonwealth," the Attorney General reasoned, in relevant part, that prior to 1992, KRS 61.870(1) "limited the pertinent analysis to 'bodies' which derived at least twenty-five percent of their funds from state or local authority funds." Since July 15, 1994, the Attorney General noted, "KRS 61.870(1)(h) has defined 'public agency' as '[a]ny body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds.' (Emphasis added.) The General Assembly altered the language of KRS 61.870(1)(h) by expanding its language to encompass any 'body' receiving any state or local funding so long as that funding represents at least twenty-five percent of the total funds it expends in the Commonwealth." 09-ORD-033, p. 7 (emphasis in original).
In that appeal, the Attorney General acknowledged that KRS 61.870(1)(h) "lacks specific parameters for analysis, and that this office lacks authority to compel disclosure of documents from 'bodies' disputing their status as public agencies, " ultimately concluding, based on the affidavit of Mortenson's Chief Financial Officer, which the appellant presented "insufficient probative evidence to refute, " that Mortenson was not a "public agency" within the meaning of KRS 61.870(1)(h). This office was recently asked to apply KRS 61.870(1)(h) relative to Dismas Charities, Inc. on several occasions, including 09-ORD-085, in which our decision was based upon the unrefuted affidavit of Stephen B. Clark, Vice President of Finance and Chief Financial Officer of Dismas, who advised that "for the most recent year in which the percentage of state or local authority funds expended in the Commonwealth could be calculated, to wit, the year ending December 31, 2008, [footnote omitted] only 21.8% of the funds Dismas expended in the Commonwealth were derived from state or local authorities. " Id., p. 2. Shortly thereafter, this office affirmed 09-ORD-085 in 09-ORD-096. The following year, Dismas again provided this office with an affidavit from its VP/CFO in support of its position regarding KRS 61.870(1)(h). Because he again determined that less than 25% of the funds it expended in the Commonwealth was derived from state or local authorities during the relevant time frame, the Attorney General affirmed the denial by Dismas as in the prior appeals. 8 10-ORD-113, p. 3; see also 11-ORD-109.
Similarly, in 09-ORD-083, this office held that Pathways, Inc. was not a "public agency" within the meaning of KRS 61.870(1)(h), relying upon evidence in the form of an affidavit from its CFO confirming that only "17% of funds expended by Pathways, Inc. in Kentucky were derived from state and/or local authority funds" absent "objective proof to the contrary" or any basis to question the accuracy of his figures or calculation. Id., p. 5. More recently, this office held that South Central Rural Telephone Cooperative Corporation, Inc. was not a "public agency" within the meaning of KRS 61.870(1)(h), in the absence of any evidence to refute a statement by its legal counsel advising that none of his client's funding was derived from state or local authorities. 11-ORD-142, p. 6; see also 06-ORD-162. 9 In responding to Mr. Rogers' request, Abel merely advised that "Kentucky Statute [sic] does not allow such requests for privately held corporations." However, in responding to Mr. Rogers' appeal on behalf of his client, C. Michael Shull III provided this office with an affidavit from its VP/CFO, Jeff Nuttall, advising that in the course of his responsibilities, he is "familiar with the books and records of the company . . . [and] specifically familiar with the records that show revenues and expenses of the company."
During 2010, and 2011 to date, Mr. Nuttall observed, "Abel derived less than 25% of its revenues from Kentucky state or local government authorities." For each year, he continued, "less than 25% of the expenditures that Abel has made in Kentucky were derived from Kentucky state or local government funds." Mr. Nuttall also confirmed that "[n]one of the shareholders, directors or officers of Abel . . . is a Kentucky state or local government agency or appointee. " The record on appeal contains no evidence to refute Mr. Nuttall's assertion(s). Consistent with prior decisions applying KRS 61.870(1)(h), as reinterpreted in 09-ORD-033, "the Attorney General finds that [Abel] is not a 'public agency' within the meaning of KRS 61.870(1)(h), and its records are not accessible under the Open Records Act, inasmuch as [it] apparently does not derive at least '25% of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds.'" 09-ORD-033, p. 10. Consideration of the substantive arguments raised in support of its denial is therefore unwarranted.
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.
Distributed to:
John RogersJeff NuttallC. Michael Shull III
Footnotes
Footnotes
1 This office has long recognized that a "public agency" is not statutorily required to create a record or compile a list in order to comply with a request under the Act; however, in lieu of doing so a "public agency" must provide the requester with an opportunity to inspect existing non-exempt records which may contain the information being sought. See 09-ORD-145, pp. 8-9. Generally speaking, however, the financial and operational records of a "public agency" are open for inspection. 05-ORD-065, p. 9. See OAG 76-648 (holding that "wherever public funds go, public interest follows"); OAG 82-169 (holding that "the contracts, vouchers, and other business records of a public agency are open to public inspection under the Kentucky Open Records Law"); OAG 90-30 (holding that "amounts paid from public coffers are perhaps of uniquely public concern"); OAG 91-7 (holding that "records of bills paid, payroll check stubs or cancelled checks, and all other records which show funds received and disbursed are public records" ). See also 10-ORD-140.
2 KRS 61.870(1) defines "public agency" to include:
(a) Every state or local government officer;
(b) Every state or local government department, division, bureau, board, commission, and authority;
(c) Every state or local legislative board, commission, committee, and officer;
(d) Every county and city governing body, council, school district board, special district board, and municipal corporation;
(e) Every state or local court or judicial agency;
(f) Every state or local government agency, including the policy-making board of an institution of education, created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act;
(g) Any body created by state or local authority in any branch of government;
(h) Any body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds;
(i) Any entity where the majority of its governing body is appointed by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j), or (k), of this subsection; by a member or employee of such a public agency; or by any combination thereof;
(j) Any board, commission, committee, subcommittee, ad hoc committee, advisory committee, council, or agency, except for a committee of a hospital medical staff, established, created, and controlled by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (k) of this subsection; and
(k) Any interagency body of two (2) or more public agencies where each public agency is defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (j) of this subsection[.]
3 KRS 61.870(2) defines "Public record" to mean:
. . . all books, papers, maps, photographs, cards, tapes, discs, diskettes, recordings, software, or other documentation regardless of physical form or characteristics, which are prepared, owned, used, in the possession of or retained by a public agency. "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 [.]
4 KRS 61.871.
5 Though not dispositive standing alone, information publicly available on the Secretary of State's website reveals that Abel is a "Profit" (as opposed to "Non-Profit") Kentucky corporation, with "Active" status, which is currently in "Good" standing. Its principal office is located in Louisville, Kentucky. In addition to having officers, Abel files annual reports and has a registered agent. By all conventional indicia, in other words, Abel is a private corporation that is not subject to the Open Records Act unless it satisfies the KRS 61.870(1)(h)threshold. See 11-ORD-040; 11-ORD-142.
6 It is noteworthy that in that in University Health Care, Inc. v. The Courier-Journal , No. 10-CI-04753 (Jefferson Circuit Court-Division Twelve, March 11, 2011), another Division of Jefferson Circuit Court acknowledged the holding of William W. Chilton v. M.A. Mortenson Company , above, but went on to find "that, while deference is, of course, given to the decisions of its brothers and sisters on the Bench, those determinations in no way affect the conclusions of this Court." Having done so, the Court ultimately held that KRS 61.870(1)(h) "is not unconstitutionally vague, ambiguous or unintelligible." University Health Care, above, at p. 7.
These conflicting opinions from different divisions of the same circuit amply illustrate why this office has taken the approach of continuing to follow existing precedent, both in general, and specifically in relation to KRS 61.870(1)(h), until a published opinion by either the Supreme Court or the Court of Appeals to the contrary is rendered and, relative to KRS 61.870(1)(h) in particular, why this office is compelled to apply it as written until such time as the General Assembly amends it or one of those Courts expressly finds it unconstitutional in a published opinion.
7 In so doing, this office reminded the parties that in Commonwealth v. Chestnut, 250 S.W.3d 655, 663 (Ky. 2008), the Kentucky Supreme Court expressly recognized the prerogative of the Attorney General to depart from precedent, declaring that the "Attorney General was permitted to reexamine -- and even reject -- its former interpretation of the law." Significantly, the Court went on to find that "any shock the [agency] suffered when the Attorney General changed course certainly caused the [agency] to suffer no lasting prejudice, . . . because the [agency] had the right, which it obviously exercised, to appeal the Attorney General's" decision to circuit court. Id.
8 In each instance, Dismas expressly advised that its determination was made in conformance with how this office has interpreted KRS 61.870(1)(h) since 09-ORD-033, and offered the affidavit confirming that it remained below the 25% threshold of that provision to the extent prior decisions affirming its non-public status may not have adequately taken into account the "expended by it in the Commonwealth of Kentucky" language found therein.
9 On each of these occasions, the Attorney General noted that in 09-ORD-033, this office recognized that his "authority under KRS 61.880(2) 'to request additional documentation' extends to agencies, not to bodies that dispute their status as such," and that said limitation "puts the Attorney General in an untenable position relative to compulsory disclosure of supporting documentation. " This office expressed concern that "[a]lthough KRS 61.880(2)(c) assigns the burden of proof to public agencies resisting disclosure of records, where, as here, the 'body' disputes its status as a 'public agency, ' that body cannot properly be assigned the statutory burden of proof. " Id. at 10.