Opinion
Opinion By: Andy Beshear,Attorney General;Michelle D. Harrison,Assistant Attorney General
Open Records Decision
Reporter Marcus Green, WDRB News, initiated this Open Records Appeal by letter dated May 8, 2017, challenging the denial by the Kentucky Transportation Cabinet ("Cabinet") of his April 3, 2017, request for "access to and copies of the following records:"
. Documents related to and/or showing additional costs incurred by the Ohio River Bridges Project's joint board to assist with Kapsch TrafficCom achieving its project schedule, including but not limited to change orders in contracts. The existence of these additional costs is noted in a memo dated December 9, 2016 from Megan McLain and Clint Murphy to Chris Murray, President and CEO of Kapsch, and emailed from McLain to Murray on December 8, 2016.
. Documents related to and/or showing all payments by Kapsch reimbursing or covering the additional expenses incurred by the joint board.
The Cabinet advised Mr. Green that communications pertaining to "additional costs incurred due to Kapsch['s] delay, . . . exist only as preliminary communications currently under negotiation. Revealing these would potentially compromise our ability to collect reimbursement from Kapsch. KRS 61.878(1)(j)."
On appeal Mr. Green asserted, "That these payments have been made, and the scope of work increased for unnamed contractors on the project, is an indisputable fact, according to [the Cabinet's] own correspondence to Kapsch TrafficCom of December 9, 2016," a copy of which Mr. Green attached. 1 Upon receiving notification of Mr. Green's appeal, however, Deputy Executive Director Matthew D. Henderson explained:
[I]n this instance and at this time those expenditures are uncertain and are subject to negotiation. In providing its services, Kapsch has had significant and unreasonable delays. These delays have caused other vendors who are concurrently working on the project to incur additional costs. These vendors will ultimately pass on their additional costs to [the Cabinet] and the joint board, all of which will arguably be a result of Kapsch's delay. At this time, the only documents in the possession of [the Cabinet] related to these delay costs are email communications between Megan McLain, Clint [Murphy] (bridge project leads for Kentucky and Indiana) and the aforementioned third party vendors attempting to determine the extent of additional costs they have incurred. There are no official invoices as these matters are in very preliminary stages . There is a current rough estimate that these delay costs are in the area of $ 350,000.00. [The Cabinet] has a responsibility to manage the taxpayer resources involving in this project and part of that involves determining and recovering fair and reasonable damages from Kapsch. The negotiations over delay costs are dynamic and live between [the Cabinet] and the third party vendors at this time . If we were to reveal the details of these negotiations it could undermine our ability to then turn around and recover damages from Kapsch.
(Emphasis added.) The Cabinet advised that it "will gladly turn over documentation evidencing the amount and cause of the delay costs" when those costs have been finalized and the Cabinet "has assurance that it will be made whole for damages sustained."
Pursuant to KRS 61.880(2)(c) and 40 KAR 1:030, Section 3, and in order to facilitate a correct resolution of the instant appeal, this office asked the Cabinet to provide us with unredacted hard copies of the records in dispute for purposes of in camera review. This office also requested the Cabinet to "address Mr. Green's argument concerning the implications of the December 8, 2016, e-mail, including attachment." Mr. Henderson promptly complied. In addressing the December 8, 2016, e-mail, Mr. Henderson advised that it "was intended to put KAPSCH on notice that they were failing to meet their project milestones. It included language reserving our rights to charge liquidated damages or terminate the contract. It included a number for estimated damages." However, Mr. Henderson continued, "Cabinet damages due to KAPSCH delay are not certain and still under debate and determination and to make them public would compromise our ability to recover damages most effectively. There are no specific damage invoices at this time . It is absolutely imperative that these damage amounts remain confidential until a resolution is reached in this matter ." (Emphasis added.) With the exceptions of any recommendations and opinions contained in the Cabinet's internal communications, that were ultimately adopted, in whole or in part, 2 as the basis for the December 9, 2016, letter (official correspondence) to Kapsch, and which forfeited their preliminary character to that extent, our in camera review of the e-mails validated the Cabinet's position that all of the documents are preliminary drafts, recommendations and opinions exchanged in the process of negotiating with third-party vendors. Inasmuch as no final determination has been made regarding the nature or amount of damages incurred, nor, consequently, has the Cabinet issued any final invoices or expended public funds to reimburse the vendors for the additional costs incurred, those documents currently retain their preliminary character.
Both the courts and this office have applied the language of KRS 61.878(1)(i) and (j), commonly known as the "preliminary exceptions," in a variety of contexts. 3 See
City of Louisville v. Courier-Journal and Louisville Times Company, 637 S.W.2d 658 (Ky. App. 1982);
Kentucky State Board of Medical Licensure v. Courier-Journal and Louisville Times Company, 663 S.W.2d 953 (Ky. App. 1983) (recognizing that "documents defined in subsections [(i)] and [(j)] which become a part of the records adopted by the [agency] as the basis of its final action become releasable as public records . . ." but unless those documents are "so adopted and made a part of the [agency's] final action, such documents shall remain excluded under subsections [(i)] and [(j)] of the Act");
University of Kentucky v. Courier-Journal & Louisville Times Co., 830 S.W.2d 373, 378 (Ky. 1992);
Beckham v. Board of Education of Jefferson County, 873 S.W.2d 575, 577-578 (Ky. 1994);
Courier-Journal and Louisville Times Co. v. Jones, 895 S.W.2d 6-8 (Ky. App. 1995).
Palmer v. Driggers, 60 S.W.3d 591 (Ky. App. 2001); see 99-ORD-220; 11-ORD-052; 14-ORD-014; 16-ORD-167. The Kentucky Court of Appeals reaffirmed this controlling line of authority in
University of Louisville v. Sharp, 416 S.W.3d 313, 315 (Ky. 2013)(holding that e-mails between public employees prior to a scheduled meeting that was being held to discuss a matter still under negotiation qualified for protection under KRS 61.878(1)(i) and (j) as "piecemeal disclosure along the path of the decision making process is not mandatory"); see
Baker v. Jones, 199 S.W.3d 749 (Ky. App. 2006)(holding that "emails that were exchanged between the mayor and the city council members were preliminary discussions involving what course of action should be taken in regard to a controversy . . . [and therefore] preliminary recommendations, and preliminary memoranda in which opinions are expressed or policies formulated or recommended . . . [which] were not subject to disclosure"); 08-ORD-266; 14-ORD-024.
This office has recognized that "KRS 61.878(1)[(i) and (j)] have been interpreted to authorize the nondisclosure of both interagency and intra-agency drafts and memoranda, and are designed to encourage frank discussion of matters of concern to the public agency or agencies." 93-ORD-125, p. 4. That rationale is deemed "equally compelling regardless of whether the communications are within an agency or between agencies." 4 Id.; 14-ORD-230. Accordingly, this logic has been extended to reports and analyses prepared by outside agencies, as well as consultants, on behalf of a public agency, on numerous occasions. 5 This office sees no basis upon which to depart from this reasoning here as to communications documenting negotiations between Ms. McLain/Mr. Murphy and third party vendors, PARSONS, AECOM, and New West, regardless of whether the vendors' assessments or summaries may represent final actions by the vendors.
In 93-ORD-125, the Attorney General summarized the relevant decisions, affirming the denial by the Transit Authority of River City ("TARC") of a request for a report prepared by Coopers & Lybrand evaluating the performance of Yellow Enterprise under its agreement with TARC, as a preliminary record upon which the TARC had not taken final action. This office reasoned:
[I]n OAG 82-450, we held that a "Development Potential Analysis" prepared for Jefferson County by the Real Estate Research Corporation was exempt from public inspection under KRS 61.878(1)(j). At page 2 of that opinion we held:
93-ORD-125, p. 6; OAG 82-450; OAG 84-337; OAG 85-96. Significantly, this office engaged in the following analysis:
In OAG 90-97, we observed that the fact that the recommendations made, or memoranda prepared, are final as to the person making or preparing them is irrelevant . Most recommendations and memoranda are final in the sense that the person making or preparing them does not intend to make or prepare subsequent recommendations or memoranda. "The word 'preliminary' as used in KRS 61.878(1)[(j)] obviously refers to recommendations made [and memoranda prepared] by a person prior to a final decision or action being made by a state agency. It does not matter whether the recommendation [or memorandum] is the first, second or last recommendation [or memorandum] if the state agency has not yet taken final action. " OAG 90-97, at p. 4. See also, OAG 82-450, at p. 2.
93-ORD-125, pp. 4-5 (emphasis added). The Cabinet has not done so here.
"Final agency action" is understood as "when the ultimate issue to be decided [is] resolved."
University of Louisville v. Sharp at 315; OAG 91-21 (Letter of Intent is not final agency action, because the "incentive package" is subject to negotiation and change until such time as final agreement is reached among the parties). Because there are "no specific damage invoices at this time," and the "negotiations over delay costs are dynamic and live between KYTC and the third party vendors, " the preliminary drafts, recommendations, and opinions were properly withheld under KRS 61.878(1)(i) and (j) as construed in existing legal authorities, with the exceptions of those which the Cabinet relied upon (December 5-7, 2016, e-mails) , i.e. , incorporated or adopted, in drafting the December 9, 2016, letter, if a final draft of that letter was, in fact, issued. See 05-ORD-048 (affirming KHSAA's denial of a request for a non-final report); 12-ORD-217 (holding that final action would occur when the fiscal court approved the sale of the property, not upon its approval of a resolution declaring the intent to close the apartment complex); 15-ORD-087.
Either party may appeal this decision by initiating action in the appropriate circuit court per KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General must 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 The copy of record is marked "DRAFT"; however, the attached e-mail dated December 8, 2016, indicated finality in advising Kapsch to "please find the States' Parties' response to your most recent Project Schedule submission." Mr. Murphy and Ms. McLain advised Mr. Murray at Kapsch that "liquidated damages, as referenced in Section 4.10 of the Toll Services Agreement, are associated with missing the Tolling Readiness Deadlines for the Downtown and East End Crossings, the Pre-Toll Operations Deadline, and the Mobilization Readiness Deadlines." They further noted that Kapsch "has failed to maintain the schedule in its Recovery Plan submitted pursuant to Section 4.11 of the Agreement. . . . The Joint Board has been required to increase other contractors' scope of work to assist with the numerous unplanned activities and frequent schedule changes necessary to assist Kapsch in achieving an acceptable project schedule." Mr. Murphy and Ms. McLain advised that additional costs incurred by the Joint Board to date "are estimated to be greater than $ 350,000." In other words, the amount of the damages incurred remains uncertain and negotiations are ongoing.
2 It is not necessary that the record be explicitly adopted or incorporated by reference, so long as it constitutes the basis for the final agency action." 16-ORD-271, p. 4.
3 Among the public records that may be excluded from public inspection in the absence of a court order are documents identified at KRS 61.878(1)(i) and (j), respectively, as:
Preliminary drafts, notes, correspondence with private individuals other than correspondence which is intended to give notice of final action of a public agency.
Preliminary recommendations and preliminary memoranda in which opinions are expressed or policies formulated or recommended.