Opinion
Opinion By: Jack Conway, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether Camp Dresser & McKee, Inc., a private for-profit "Foreign Corporation" based in Cambridge, Massachusetts, violated the Kentucky Open Records Act in denying John Rogers' October 3, 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 CDM 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, to CDM.
CDM has expressly acknowledged that at least some of the funds it expends in the Commonwealth are derived from state or local authority funds; accordingly, the Attorney General finds that CDM is a "public agency" within the meaning of KRS 61.870(1)(h) if those funds constitute twenty-five percent (25%) or more of the funds it expends in the Commonwealth. CDM is accountable to the extent of that public funding, i.e. , funds derived from a contract(s) with a state or local authority or those otherwise derived from a state or local authority, which are, by definition, public records per KRS 61.870(2), notwithstanding its attempt to characterize funds derived from the Louisville Water Company, a "public agency" within the meaning of KRS 61.870(1), as non-public funds, and thus exclude such funds when calculating the relevant percentage under KRS 61.870(1)(h).
"Public agency" is broadly defined at KRS 61.870(1) 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" ), 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, 2 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 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. No evidence has been presented to suggest that Peel & Holland would qualify as a public agency under KRS 61.870(1)(a), (b), (c), (d), (e), (f), (g), (j), or (k); 3 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), 4 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." 5 09-ORD-033, p. 6. A copy of that decision is attached hereto and incorporated by reference.
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 reached the same conclusion based upon the unrefuted affidavit provided on behalf of the "body" whose status was in dispute on several recent occasions. See 09-ORD-083; 09-ORD-085; 09-ORD-096; 10-ORD-113; 11-ORD-109; 11-ORD-142. More recently, this office concluded that Abel Construction Company, Inc. is not a "public agency" within the meaning of KRS 61.870(1)(h) based upon the unrefuted affidavit of its Vice President and Chief Financial Officer, which confirmed that Abel did not satisfy the 25% threshold of that provision. 11-ORD-191 (In re: John Rogers/Abel Construction Company, Inc., issued November 15, 2011), p. 6. A copy of the latter decision is also enclosed for the parties' reference. See also 11-ORD-197 (In re: John Rogers/Peel & Holland, Inc., issued November 21, 2011); 11-ORD-203 (In re: John Rogers/Arnold Consulting Engineering Services, Inc., issued December 2, 2011); 11-ORD-204 (In re: John Rogers/Gresham, Smith and Partners, issued December 2, 2011); 11-ORD-206 (John Rogers/Sullivan & Cozart, Inc., issued December 7, 2011). Although CDM ultimately provided the necessary affidavit upon request here, it apparently excluded funds it received from the Louisville Water Company in calculating the relevant percentage thereby impeding our ability to conclusively determine whether it satisfies the statutory threshold.
In a timely written response, CDM denied Mr. Rogers' October 3 request, advising that it "is an employee-owned, engineering, construction and operations firm incorporated and based in Massachusetts, and is not a 'public agency' subject to the provisions of KRS 61.870(a)(h) [sic] and KRS 61.872." Mr. Rogers initiated this appeal shortly thereafter. Upon receiving notification of Mr. Rogers' appeal, neither the CDM Office of General Counsel nor its private legal counsel responded on its behalf. Unable to resolve the threshold issue of whether CDM is a "public agency" within the meaning of KRS 61.870(1)(h) given the scarcity of evidence presented, this office then advised CDM that it "must specifically determine whether CDM derives at least 25% of the funds it expends in the Commonwealth of Kentucky from state or local authority funds." To facilitate a correct resolution of this question, the Attorney General also requested, in accordance with KRS 61.880(2)(c) and 40 KAR 1:030, Section 3, that CDM "provide us with an affidavit and available documentation supporting its position that it is not a public agency as defined in KRS 61.870(1)(h) or any other provision of KRS 61.870(1)," on or before November 14, 2011.
Following a brief authorized extension, CDM provided this office with an affidavit from CDM Senior Vice President and Assistant General Counsel Mario J. Marcaccio who is "familiar with CDM's ownership structure and the services CDM provides to its clients." Having confirmed the nature of those services, and that CDM is "incorporated and based in Massachusetts," Mr. Marcaccio advised that CDM expended in excess of $ 2,000,000 in the Commonwealth from October 1, 2010, through September 30, 2011. Mr. Marcaccio further advised that "CDM derived less than $ 475,000 from the funds of state and local authorities in the Commonwealth" during that period of time. However, Mr. Marcaccio then asserted in a separate paragraph that "funds CDM received from the Louisville Water Company ("LWC") are not 'state or local authority funds' because LWC is not a state or local authority. " He referenced 93-ORD-90 (noting the "term 'state or local authority is not defined in the statute, nor has it been construed by this Office, but it is commonly understood to mean 'a government agency that administers a project' or 'a public agency or corporation with administrative powers in a specified field'") and 94-ORD-13 in support of this position. Quoting from
Phelps v. Louisville Water Company, 103 S.W.3d 45, 51 (Ky. 2003) (recognizing that City of Louisville "does not control the LWC" and the Board of Waterworks controls the daily affairs of the LWC), Mr. Marcaccio reasoned that because the Kentucky Supreme Court has "explicitly stated that LWC is not a government agency LWC is not a 'state or local authority' under KRS 61.870(1)(h)." According to Mr. Marcaccio, "CDM is not a 'public agency' as defined in KRS 61.870(1)."
Because it appeared that Mr. Marcaccio failed to include funds derived from the LWC in the relevant calculation, based upon the erroneous, if good-faith premise that LWC is not a state or local authority, i.e. , "public agency" in the relevant sense, merely because it is not an "agent" of the City of Louisville, this office asked its private legal counsel, by e-mail dated November 21, 2011, to please clarify whether Mr. Marcaccio "included funds derived from the [LWC] in calculating the relevant percentage." 6 As of this date, CDM has not provided any supplemental response or additional information. 7 Although this office is unable to conclusively resolve the dispositive question presented without clarification regarding the LWC funds that CDM received in the relevant time frame, CDM has acknowledged that nearly 25% of the funds it expended in the Commonwealth was derived from state or local authority funds ($ 475,000 of $ 2,000,000), excluding the LWC funds, and its attempt to distinguish between funds derived from LWC and those derived from other state or local authorities suggests that if the LWC funds were properly included, CDM would most likely meet or exceed the statutory threshold of 25%.
CDM correctly observed that in 93-ORD-90 this office acknowledged that "state or local authority" is not defined in the statute; however, that decision also expressly recognized that, consistent with KRS 446.080(4) ("[a]ll words and phrases shall be construed according to the common and approved uses of language . . . ."), "the term 'authority' must be construed to mean 'public agency. '" 93-ORD-90, p. 7. Because the Kentucky Association of Counties, among other bodies, had been deemed a public agency for purposes of the Open Records Act, this office determined that "funds derived from these sources must be calculated into the 25% threshold established in KRS 61.870(1)(h)." Additionally, in 94-ORD-13, this office unequivocally rejected the contrary argument "based on the specious distinction between the terms 'public agency' and 'state or local authority, " noting that "the all-encompassing term 'public agency' is defined as [e]very state or local government department, division, bureau, board, commission, and authority" at KRS 61.870(1)(b), and thus concluding that "the two terms are synonymous. " 94-ORD-13, p. 5.
Despite having multiple opportunities, LWC has not challenged its "public agency" status, but has implicitly acknowledged it for purposes of the Open Records Act in responding to requests and the appeals that followed without raising this argument, including after Phelps was rendered. See 04-ORD-169; 05-ORD-067; 06-ORD-004. It suffices to say that neither 93-ORD-90 nor 94-ORD-16 is contrary to Phelps . Rather, Phelps stands for the proposition that the City of Louisville and LWC "stand related merely as shareholder and corporate entity." Id. at 49-50. In other words, LWC is not an agent of the City. Id. at 50. However, this fact is not dispositive. A body can be a "public agency" within the meaning of KRS 61.870(1)(h) , and therefore subject to provisions of the Open Records Act by virtue of receiving sufficient public funds to satisfy the 25% threshold, and not be an "agent" or instrumentality of a City, etc. Because "state or local authority" and "public agency" are synonymous for purposes of the KRS 61.870(1)(h) inquiry, and LWC has not disputed its "public agency" status, the assertion by CDM that funds received from LWC cannot be properly characterized as "state or local authority funds" necessarily fails.
Based upon the foregoing, this office concludes that CDM is a "public agency" for purposes of the Open Records Act if the funds it receives in the form of payments for services rendered under contracts with state or local authorities, including LWC, or which it otherwise derives from state or local authority funds, constitute 25% of the funds it expends in the Commonwealth, notwithstanding its attempt to exclude LWC funds in calculating the relevant percentage. To the extent any existing records contain the requested information, and relate "to functions, activities, programs, or operations funded by state or local authority, " those records must be disclosed unless CDM cites the applicable statutory exception, if any, per KRS 61.880(1), and provides a brief explanation of how it applies to such records. KRS 61.870(2). Conversely, if CDM does not derive at least 25% of the funds it expends in the Commonwealth from such funds, it cannot be properly characterized as a "public agency" for purposes of the Open Records Act, nor can it be said to have violated the provisions thereof in denying Mr. Rogers' request. See 11-ORD-005.
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 RogersPatricia A. WilsonJason MakofskyEdward H. Stopher
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 61.871.
3 Though not dispositive standing alone, information publicly available on the Secretary of State's website reveals that CDM is a "Foreign Corporation," operated for "Profit" (as opposed to "Non-Profit"), with "Active" status, which is currently in "Good" standing. Its principal office is located in Cambridge, Massachusetts. In addition to having officers, CDM files annual reports and has a registered agent. By all conventional indicia, in other words, CDM 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; 11-ORD-191.
4 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.
5 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."
6 This office further observed that "93-ORD-96 ("authority" must be construed to mean "public agency" ) has not been overruled or modified and the holding of the Supreme Court opinion cited is not controlling inasmuch as LWC may not be a 'government agency' but has never contested its status as a 'public agency' for purposes of the Open Records Act [.]"
7 The undersigned Assistant Attorney General contacted legal counsel by e-mail on December 7, 2011, and was notified on the morning of December 8, 2011, by his assistant that he was not in the office that day but she would "make him aware of this email upon his return."