Opinion
Opinion By: Jack Conway,Attorney General;Michelle D. Harrison,Assistant Attorney General
Open Records Decision
John McGill initiated this appeal challenging the partial denial by the Louisville Metro Air Pollution Control District (APCD) of his August 8, 2014 request 1 to inspect certain records pertaining to the Clariant Polypropylene Catalyst Production Unit (Clariant), specifically:
1) Air permit applications, and subsequent corresponding issued permits;
2) Title V Application, and subsequent issued Title V Permit (if applicable);
3) Consultant Engineering Reports (project description(s), diagrams, flow charts, oversized drawings, plot plans, whatever is available); correspondence between the [Kentucky Environmental and Public Protection Cabinet (EPPC)] and permitted facility; Air Emissions, [and/or] air emissions modelling, and "working applications["](applications which may still be under the KY [EPPC] Air Quality engineering review[)];
4) Hazardous Waste permit(s) applications and final permit; and
5) Waste Water Discharge application(s) and final permit as well as the Best Management Practices Plan, and other documentation required for facility's Storm water [and/or] NPDES Permit.
In a timely written response, Director Keith H. Talley, Sr. advised Mr. McGill that APCD was enclosing "non-exempt documents from our files responsive to your request for application materials, company submitted reports, correspondence exchanged between APCD and Clariant regarding the Catalyst Plant." However, APCD further advised that application material Clariant submitted to APCD "as confidential business information has been withheld pursuant to KRS 61.878(1)(c) and District Regulation 1.08, Section 6." Director Talley explained that a review of APCD files "for Clariant Catalyst Plant's Contingency Plan, Risk Management Plan (RMP), Waste Minimization Plan, or communications between APCD and KYDEP regarding the Clariant Catalyst Plant returned no documents or other materials. The final permit for this project has not been issued." On appeal Mr. McGill maintained that APCD should provide him with access to all of the information redacted from the "air permit application" provided in response to his request.
A public agency must follow the procedure codified at KRS 61.880(1) in responding to a request submitted pursuant to the Open Records Act. In relevant part, KRS 61.880(1) provides that an "agency response denying, in whole or in part, inspection of any record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld. " Accordingly, the Kentucky Court of Appeals has observed that "[t]he language of the statute directing agency action is exact. It requires the custodian of records to provide particular and detailed information in response to a request for documents."
Edmondson v. Alig, 926 S.W.2d 856, 858 (Ky. App. 1996). A "limited and perfunctory response," the Court emphasized, does not "even remotely compl[y] with the requirements of the Act . . . ." Id . APCD initially cited KRS 61.878(1)(c) but did not specify whether it was invoking subsection 1. or 2. nor did it provide any explanation of how either applied to the specific records being withheld. However, on appeal the agency cured this deficiency in establishing that responsive documents or portions thereof withheld in response to Mr. McGill's request were confidentially disclosed to it or required to be disclosed to it, generally recognized as confidential or proprietary, and of such a character that disclosure would provide competitors of Clariant with an unfair commercial advantage. Based upon the following, this office affirms the agency's denial as justified on appeal.
APCD ultimately elaborated upon its position as follows:
At APCD, CBI [confidential business information] comes up in the context of confidential company information that is submitted through the permitting application process. In order to operate equipment that releases air pollutants, a company must apply for an air permit with APCD. This application process often necessitates submission and disclosure to APCD of information the applicant considers proprietary or confidential. As a result, the applicant may submit a request for confidentiality pursuant to District Regulation 1.08, Section 6, along with adequate justification for such treatment as set forth in the ordinance. APCD will then review the request and submitted information to verify that it does not contain emission data, which is never deemed confidential (APCD follows federal law which requires emission data to be made public. See 40 CFR § 2.301).
Legal counsel for APCD advised that per the Regulation, a representative of Clariant advised APCD that specified information contained in the company's permit application contained CBI, and provided sufficient justification for APCD to make such a determination. APCD enclosed a copy of the March 31, 2014 letter from Clariant, 2 which requested an exemption pursuant to KRS 61.878 and Section 6.5 of Regulation 1.08, 3 as follows:
Clariant wishes to claim as confidential the following information on the basis that the information would assist competitors in identifying specific products that we produce, specific information about our processes/capacities and other proprietary information that provide us with a competitive advantage. In addition, some of the information would violate confidentiality agreements with our customers:
Based upon the foregoing, as well as its own review of the information, APCD advised on appeal, it determined that said information would be treated as confidential. Citing Hughes , above, in support of its position, APCD reiterated the justification offered by Clariant.
While APCD regulations do not further define CBI, the agency further observed, guidance can be found in similar agency ordinances. APCD noted, for example, that EPPC defines CBI at 400 KAR 1:060, Section 1(4) as:
Any record or other information . . . which is not of public knowledge or general knowledge in the trade or business, furnished to or obtained by the cabinet, the disclosure of which would be likely to have either of the following effects:
APCD advised that information withheld in this case "is not public knowledge; requiring the information to be released could impair the APCD"s ability to obtain certain information in the future; and the company has indicated disclosure would create an unfair advantage with its competitors. " Because APCD has otherwise adequately justified its denial on the basis of KRS 61.878(1)(c)1., and this regulation, although largely consistent with said exception, is not dispositive, further discussion of this regulation is unwarranted.
To successfully invoke KRS 61.878(1)(c)1., a public agency must establish that the public records in dispute are: 1) confidentially disclosed to the agency or required by the agency to be disclosed to it; 2) generally recognized as confidential or proprietary; and 3) of such a character that disclosure would permit an unfair commercial advantage to competitors of the entity that disclosed them. 03-ORD-064, p. 5. Citing the legislative declaration of policy found at KRS 61.871, and the mandatory language of KRS 61.880(2)(c), the Attorney General has consistently recognized that he is "bound by a rule of strict construction in interpreting the exceptions to the Open Records Act, and all doubts must be resolved in favor of disclosure. " 99-ORD-88, citing 96-ORD-221, p. 2; 11-ORD-076. In construing this provision, the courts have recognized that "if it is established that a document is confidential or proprietary, and that disclosure to competitors would give them substantially more than a trivial unfair advantage, the document should be protected from disclosure . . . ."
Southeastern United Medigroup, Inc. v. Hughes, 952 S.W.2d 195, 199 (Ky. 1997), abrogated in part on other grounds,
Hoskins v. Maricle, 150 S.W.3d 1 (Ky. 2004)).
On at least two prior occasions, the Kentucky Supreme Court analyzed KRS 61.878(1)(c), concluding that the public agencies which had invoked subsections (1) and (2), 4 respectively, on behalf of a private entity had satisfied their statutory burden of proof. In
Marina Management Services, Inc. v. Cabinet for Tourism, 906 S.W.2d 318 (Ky. 1995), the Supreme Court held that Tourism properly withheld audited financial statements of a privately owned corporation submitted to it pursuant to a license agreement. The Court reasoned that disclosure would provide an unfair advantage to competitors by allowing them to ascertain the economic status of the marina operators. In so doing, the Court observed:
These are records of privately owned marina operators, disclosure of which would unfairly advantage competing operators. The most obvious disadvantage may be the ability to ascertain the economic status of the entities without the hurdles systematically associated with acquisition of such information about privately owned organizations. Further, the facts on the record indicate that the audit statements were disclosed confidentially to Tourism and the Auditor's Office. On these facts alone, the exemption clearly applies.
Id. at 319. Similarly, in
Hoy v. Kentucky Industrial Revitalization Authority, 907 S.W.2d 766, 768 (Ky. 1995), 5 the Supreme Court affirmed the public agency's denial of access to General Electric's application for tax credits. The application contained financial information that included the corporation's financial history, the projected cost of the project, the specific amount and timing of capital investment, financial statements, and a "detailed description of the company's productivity, efficiency, and financial stability." Hoy at 768. "It does not take a degree in finance," the Court declared, "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)[.]" Id
The Attorney General has reached the same conclusion in a number of decisions. See 06-ORD-172 (finding that evidence of record, including a copy of the letter sent by the company to Department requesting that all information released to OSHA remain confidential and explaining how disclosure would permit an unfair commercial advantage to competitors, justified invocation of KRS 61.878(1)(c) 1.); 08-ORD-083; 10-ORD-191; compare 04-ORD-175; 11-ORD-076. KRS 61.878(1)(c)1. "'is aimed at protecting records of private entities which, by virtue of involvement in public affairs must disclose confidential or proprietary records to [the] public agenc[ies], if disclosure of those records would place the private entities at a competitive disadvantage. '" 11-ORD-086, pp. 7-8 (citation omitted). The information provided to APCD by Clariant, which APCD subsequently redacted from the documents provided to Mr. McGill, was confidentially submitted to APCD as part of Clariant's application for a construction permit. A degree in Clariant's particular field of expertise is not required to understand that information which consists of details regarding the "processes/capacities" or "inner workings" of Clariant, including descriptions, flow diagrams, production rates, and quantities used, etc. constitutes information that is generally recognized as confidential or proprietary. Disclosure of such information would provide competitors of Clariant with "more than a trivial unfair advantage" in addition to violating confidentiality agreements that Clariant has with existing customers. Based upon the foregoing, this office affirms the agency's ultimate disposition of Mr. McGill's request on the basis of KRS 61.878(1)(c)1.
Either party may appeal this decision by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Under 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 Although Mr. McGill identified his request as both a "Request to Inspect Public Records re: KRS Ch. 61" and a "Freedom of Information Request," our analysis proceeds under the Kentucky Open Records Act, codified at KRS Chapter 61 only, as FOIA "has no force as to state records, only the records of a federal agency." 96-ORD-244, citing OAG 91-56; 08-ORD-209; 10-ORD-159.
2 In 09-ORD-010, this office recognized that "in some instances the details of the confidential and proprietary nature of documents may not be readily available or recognizable to a public agency." Id., p. 6. Because the agency "is ultimately the party responsible for satisfying its burden of proof in excluding documents from inspection under KRS 61.878(1)(c)1.," in such instances "best practice would be for the agency to notify the entity most interesting in protecting the confidential nature of the document(s)." Id., pp. 6-7.
3 APCD did not enclose a copy of the Regulation. This office has consistently recognized that a public agency cannot, by ordinance or any other mechanism, regulate access to records in a manner which conflicts with the Open Records Act. See 01-ORD-63; 04-ORD-010. However, the cited Regulation is valid, if not dispositive, insofar as it does "not abrogate or supercede the mandatory disclosure provisions of the Open Records Act as construed" in prior decisions of this office. 04-ORD-010, p. 10 (citation omitted).
4 KRS 61.878(1)(c)2. provides:
Upon and after July 15, 1992, 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:
a. In conjunction with an application for or the administration of a loan or grant;
b. In conjunction with an application for or the administration of assessments, incentives, inducements, and tax credits as described in KRS Chapter 154;
c. In conjunction with the regulation of commercial enterprise, including mineral exploration records, unpatented, secret commercially valuable plans, appliances, formulae, or processes, which are used for the making, preparing, compounding, treating, or processing of articles or materials which are trade commodities obtained from a person; or
d. For the grant or review of a license to do business.