Request By:
Sarah O. Hernandez, Esq.
Office of General Counsel
Natural Resources and Environmental
Protection Cabinet
Fifth Floor, Capital Plaza Tower
Frankfort, Kentucky 40601
Opinion
Opinion By: David L. Armstrong, Attorney General; Thomas R. Emerson, Assistant Attorney General
Thomas J. FitzGerald, Esq., has appealed to the Attorney General pursuant to KRS 61.880 the partial denial by the Director of the Division of Air Pollution Control of his request to inspect certain records in that Division's custody. Mr. FitzGerald described the records in question as those pertaining to the permit application file of McKesson Envirosystems, Inc. for an air pollution permit pursuant to KRS Chapter 224; specifically those concerning the "Appendix B material and other information relating to the qualitative and quantitative nature of the hazardous waste fuel burned in the industrial boiler at the McKesson plant, contained in the McKesson Envirosystems permit application file . . . ."
On May 20, 1986, Mr. FitzGerald filed a request to inspect the permit application file of McKesson Envirosystems, Inc., for an air pollution permit. In a letter dated May 23, 1986, Mr. Roger B. McCann, the Director of the Division of Air Pollution Control, advised Mr. FitzGerald as to the specific documents which were not being made available for public inspection. Among the documents not made available was a part of the air permit application designated as "Appendix B - Chemical Based Fuel Characterization." Mr. McCann withheld this document pursuant to the provisions of KRS 61.878(1)(b) and (j) and KRS 224.035. He stated this material was submitted by the company as confidential business information and it was designated as trade secrets by the Cabinet pursuant to KRS 224.035.
In his letter of appeal to this office Mr. FitzGerald states that the information he seeks access to pertains to ambient emissions from the burning of hazardous waste fuel in an industrial boiler at the McKesson plant site. He states that KRS 224.035 provides that emission or effluent data is not to be held in confidence or designated as a trade secret. In the past the Cabinet has provided only the quantitative amount of "volatile organic chemicals" or "VOC" which is proposed to be emitted. This statistic is meaningless "in attempting to determine the toxicity and lethality of the emissions, since it does not reflect other emission constituents nor does it adequately identify the qualitative constituent elements of the VOC 'family' which are being emitted. "
Mr. FitzGerald further maintains that the Cabinet has no mechanism for independently evaluating the legitimacy of an applicant's request for trade secret status or confidentiality of information and merely "rubber stamps" an applicant's request.
In your letter of June 11, 1986, addressed to the undersigned Assistant Attorney General, you state that "Appendix B" was submitted by the company as part of its air construction permit application. The applicant requested that one page of "Appendix B" be treated as confidential. That page consisted of a description and analysis of chemical based fuels. Pursuant to the provisions of KRS 224.035 and KRS 61.878(1)(b) and (j) the Cabinet designated the material in question as confidential business information or trade secrets.
You further state that the Cabinet has not withheld any emission data concerning the facility in question. The composition of the chemical based fuels which have been designated as confidential does not constitute emission data within the meaning of KRS 224.035. There are no emission standards or rates in the statutes or regulations to govern these fuels.
You also maintain that the Cabinet does not "rubber stamp" an applicant's request for a document to be classified as confidential and a trade secret. The statute authorizes the Cabinet to examine and designate certain kinds of documents as confidential upon a proper showing by the owner or operator.
OPINION OF THE ATTORNEY GENERAL
KRS 61.878(1)(a) through (j) set forth those public records which may be excluded from public inspection in the absence of a court order authorizing inspection. Included among those records which may be excluded from public inspection are those mentioned in KRS 61.878(1)(b):
"Records confidentially disclosed to an agency and compiled and maintained for scientific research, in conjunction with an application for a loan, 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 and which are generally recognized as confidential, or for the grant or review of a license to do business and if openly disclosed would permit an unfair advantage to competitors of the subject enterprise. This exemption shall not, however, apply to records the disclosure or publication of which is directed by other statute."
Note particularly the last sentence of the above-quoted provision that the exemption does not apply to those records where disclosure is directed by another statute.
KRS 224.035 states in part as follows:
"Any record or other information furnished to or obtained by the Cabinet shall be open to reasonable public inspection except that any record or information, not relating to emission or effluent data, which constitutes a trade secret and is designated as such by the Cabinet, upon a satisfactory showing by the owner or operator in accordance with the rules and regulations of the Cabinet shall be confidential and for the use only of the Cabinet and other departments, agencies and officers of the Commonwealth in the performance of their duties . . . ." (Emphasis supplied).
The Cabinet has also cited, in connection with KRS 224.035, KRS 61.878(1)(j) which requires a public agency to withhold from public inspection those records, the disclosure of which is prohibited or otherwise confidential by an enactment of the General Assembly.
The key statute in all this is KRS 224.035. The statute begins with a section stating that all acquired information is open to public inspection. It then sets forth the exception to public inspection: records or information constituting trade secrets which have been so designated by the Cabinet upon a satisfactory showing by the company in accordance with rules and regulations adopted by the Cabinet. The utilization of this statute relative to an exception to public inspection involves a three part process. The Cabinet designates the records in question as a trade secret. The designation is made after a satisfactory showing by the company and the showing by the company is made pursuant to rules and regulations of the Cabinet.
The total of the statutory requirements is the sum of the component parts of the statute. The statute must be read in its entirety and all of the component parts must be followed. In determining the General Assembly's intent and when engaged in the process of statutory construction the entire statute must be considered. See, for example, Henry v. Commonwealth, 312 Ky. 491, 228 S.W.2d 32 (1950); Johnson v. Frankfort & Cincinnati R.R., 303 Ky. 256, 197 S.W.2d 432 (1946); Kentucky Tax Commission v. Sandman, 300 Ky. 423, 189 S.W.2d 407 (1945); Commonwealth v. Trousdale, 297 Ky. 724, 181 S.W.2d 254 (1944).
One of the statutory requirements is that the exemption process be conducted in accordance with rules and regulations of the Cabinet. While everything else may have been properly done by the Cabinet, the fact remains, as asserted by the requesting party and not denied by the Cabinet, that the Cabinet has never adopted any regulations pursuant to the statutory mandate.
In 73 C.J.S. Public Administrative Law and Procedure § 91 the following appears relative to the duty to adopt regulations:
"Under some statutory provisions, a public administrative body has the duty of making rules and regulations in order to carry out the details of the enactment, and to establish standards by which a particular law is to be applied. Whether it is mandatory on a public administrative body to adopt regulations with respect to certain matters depends on the intent of the legislature as expressed in the statute, and, under some statutes, before such a body may take action with respect to certain matters, it may be necessary for it to adopt rules and regulations with respect to such matters, including rules of procedure . . ."
As this office construes KRS 224.035 the enactment of regulations by the Cabinet is a required part of the statutory procedure involving the designation of material as a trade secret. Since a regulation is necessary an administrative regulation pursuant to KRS Chapter 13A is required. Note particularly KRS 13A.100 pertaining to matters which must be prescribed by administrative regulations. Designation of material as trade secrets cannot be handled on an ad hoc basis and once administrative regulations have been adopted all parties seeking to utilize the statutory provisions should adhere to the applicable regulations.
Neither the existence of nor the adequate of the Cabinet's regulations was presented as an issue by either party in OAG 86-1, copy enclosed, which also dealt with KRS 224.035. The writer of that opinion proceeded on the understanding that the documents involved had been designated as trade secrets by the Cabinet pursuant to the Cabinet's rules and regulations. The different conclusions reached in that opinion and in this opinion are explainable primarily on that basis.
It is, therefore, the opinion of the Attorney General that the Cabinet's withholding of records from public inspection as trade secrets was improper because the Cabinet's position largely depends upon the proper application of KRS 224.035 and the Cabinet has not fulfilled the statutorily imposed duty of enacting administrative regulations as a part of the process by which records are designated by the Cabinet as trade secrets.
As required by statute a copy of this opinion is being sent to the requesting party, Thomas J. FitzGerald, Esq. If the Cabinet decides not to comply with the provisions of this opinion, proceedings challenging it may be instituted in circuit court pursuant to KRS 61.880(5).