Opinion
Opinion By: Albert B. Chandler III, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Owensboro Riverport Authority violated the Open Records Act in the disposition of David A. Smith's May 5, 2003 request for reasonably described portions of the Authority's market analysis and "contracts, leases, or agreements between the [Authority] and its warehouse-only customers for the provision of warehouse space and/or warehouse services that have been in effect since January 1, 2002." For the reasons that follow, we find that the Authority's reliance on KRS 61.878(1)(c)1. as the basis for denying Mr. Smith's request was misplaced.
By way of background, we note that in 03-ORD-064 and 03-ORD-065 this office attempted to adjudicate the records access dispute between these parties relative to the Authority's market analysis and contracts. Based on the paucity of supporting evidence produced by the Authority, we determined that the agency failed to meet its statutory burden of proof under KRS 61.880(2)(c) in invoking KRS 61.878(1)(c)1. to sustain the denial of Mr. Smith's request and remanded the question to the Authority "with directions that it issue a new response to Mr. Smith's request . . . ." 03-ORD-64; 03-ORD-65.
By letter dated April 17, 2003, Port Director Maurice S. Owen formally responded on behalf of the Riverport. In light of this office's decisions, Mr. Owen expressed the Authority's willingness to permit Mr. Smith access to "information from its market analysis process that does not reveal any information that could permit an unfair commercial advantage to competitors of the company that disclosed this information." The market analysis, Mr. Owen advised:
is a series of various assessments performed by Riverport staff as an overall analysis regarding the feasibility to construct the subject warehouse. In other words, the market analysis should be understood to be more of a process than a single report - there does not exist one all-inclusive report that represents a market analysis.
As part of this process, the Riverport did discuss and receive information from third party customers regarding product that would likely be handled and stored by the Riverport at this new location. This information was discussed under a verbal agreement that any information discussed would remain confidential and it was also understood by each party that this information was also proprietary in nature. In addition, the Riverport used historical information from its customers as part of the market analysis process. This information is also deemed to be proprietary information due to the competitive nature of its content.
For example, Mr. Owen explained:
the information used by the Riverport would reveal the customer's absolute cost to handle and store material by product type (raw material and finished goods), the name and location of their suppliers, and the mode of transportation to ship goods into Owensboro. This information could be used to develop the customer's cost per unit by product, ingredient (raw material) type and supplier, supply-chain strategy, production levels by product, excess inventory levels by product, product mix and product mix production levels, and sales volume on an annual basis as well as seasonally.
With reference to Mr. Smith's request for copies of "contracts, leases, or agreements," Mr. Owen characterized these documents as "formal contracts entered into by and between the Owensboro Riverport and third party customers . . . consist[ing] of purchase orders that [the Authority has] with certain customers. " It was his position that the Authority was obligated to treat these records as confidential and proprietary by virtue of language found in the purchase orders, 1 and by virtue of the fact that disclosure "would permit an unfair commercial advantage to competitors of the entity that disclosed the records." Continuing, Mr. Owen observed:
These purchase orders were developed under a mutual agreement by and between each party that would cover a defined period of time. These rates were not established under typical third party warehouse practices wherein the rates are on a month-to-month, first come-first serve basis. In other words, we deem the rates in the agreements to be unique and different from any standard rates due to the long-term commitment of these customers. Consequently, it is our opinion that the prices developed under this arrangement provide a competitive commercial benefit of our customer (s) they would not receive under normal third party public warehousing. By providing the information in the purchase orders, our customers would be revealing a unique operational cost advantage that would disclose strategies that are important in developing operational advantages over their competition.
Following an exchange of correspondence in which Mr. Smith questioned the Authority's position and the Authority requested review of its position by this office, 2 the records access issue returned to us in the proper procedural posture when Mr. Smith submitted a revised request to the Authority on May 5 and, having received no response to that request, initiated this appeal to the Attorney General.
On June 2, 2003, this office requested copies of the records at issue, pursuant to KRS 61.880(2)(c), 3 in order to facilitate our review of the Authority's position. To date, this office's request has not been honored, or any supplemental correspondence from the Authority received, and we are to some extent hindered in our ability to conduct a meaningful review of the Authority's denial of Mr. Smith's revised request. Having said this, we proceed to an adjudication of this appeal, recognizing that an apparent lack of cooperation on the part of the public agency does not relieve the Attorney General of his statutory duty under KRS 61.880(2).
Having reviewed the arguments advanced by the parties following the issuance of 03-ORD-64 and 03-ORD-65, it is the opinion of this office that the Authority's reliance on KRS 61.878(1)(c)1. as the basis for denying Mr. Smith's request, in whole or in part, for copies of its market analysis, or series of documents comprising same, as well as his request for the Authority's "contracts, leases or agreements with its warehouse only customers, " was misplaced. In so holding, we remind the parties that the Attorney General is constrained by time and resources, as well as by the Authority's failure to produce the disputed records pursuant to KRS 61.880(2)(c), from conducting a thorough inquiry into this issue. To paraphrase an early opinion of this office involving a dispute arising under KRS 61.870, et seq. , "[g]iven the limited role for the Attorney General contemplated by the statutes and the office's limited resources, the Attorney General cannot truly be a 'judge' in the sense of reviewing volumes of documents, listening to testimony, considering briefs, etc." OAG 88-64, p. 1. On occasion, the application and meaning of the Open Records Act must be determined by a court of law, and that avenue remains open to the Authority if it disagrees with our decision.
Our decision that the Authority's reliance on KRS 61.878(1)(c)1. was misplaced finds support in this office's decisions in 97-ORD-66, 4 01-ORD-87, 5 01-ORD-143, 6 and 01-ORD-153. 7 In each of these decisions, the Attorney General determined that the cited exemption is inapplicable to records generated by a public agency as opposed to records confidentially disclosed to a public agency or required by the agency to be disclosed to it. 97-ORD-66, p. 13. KRS 61.878(1)(c)1. authorizes public agencies to withhold:
[R]ecords confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records[.]
In construing this provision, we have repeatedly observed:
[T]he burden of proving that the records withheld qualify for exclusion under KRS 61.878(1)(c) 1. rests with the public agency. That exception, as noted above, "is aimed at protecting records of private entities which, by virtue of involvement in public affairs, must disclose confidential or proprietary records to a public agency, if disclosure of those records would place the private entities at a competitive disadvantage." 97-ORD-66, p. 10 (emphasis added). It is, in general, inapplicable to records generated by or for a public agency. "The exemptions protection simply does not extend to the agency's own records."
01-ORD-87, p. 7, cited in 01-ORD-143 and 01-ORD-153. In sum, we have held that:
[T]o qualify for exclusion under KRS 61.878(1)(c)1., a public record must be:
See also 96-ORD-135; 97-ORD-66; 97-ORD-132; 01-ORD-143. [Unless] the disputed records . . . satisfy the first of these three requirements, KRS 61.878(1)(c) 1. is inapposite, and the [agency's] reliance upon it is misplaced.
01-ORD-153, pp. 5, 6. In each of these cases, we determined that the disputed records did not satisfy the first of the three requirements, and, applying the rule of strict statutory construction codified at KRS 61.871, 8 held that the agencies violated the Open Records Act in denying the subject requests.
The Owensboro Riverport Authority exists by virtue of enabling legislation located at KRS 65.520 and is purposed "to establish, maintain, operate, and expand necessary and proper riverport and river navigation facilities, and to acquire and develop property, or rights therein with the economic environs, the home county, or any county adjacent thereto, of the riverport or proposed riverport to attract directly or indirectly river-oriented industry." KRS 65.530(1). It does not enjoy statutory exemption from the requirements of public accountability codified at KRS 61.870, et seq. The records for which it seeks protection consist of "various assessments performed by Riverport staff as an overall analysis regarding the feasibility to construct the subject warehouse" (emphasis added), and "purchase orders that [the Authority has] with certain customers. " Accordingly, the disputed records are not records "confidentially disclosed to [the Authority] or required by [the Authority] to be disclosed to it," within the meaning of KRS 61.878(1)(c) 1., but are instead records generated by the Authority and thus the Authority's own records to which the protection afforded by KRS 61.878(1)(c)1. does not extend.
The fact that information obtained from its customers was ill-advisedly included in records for which no statutory exemption offers protection, thus placing the customers at the risk of competitive harm, is not sufficient to bring those records within the scope of KRS 61.878(1)(c)1. 01-ORD-87 (minutes of Plant Board meetings were subject to inspection notwithstanding the fact that comments were ill-advisedly made in the course of an open, public meeting that might create a risk of competitive harm). Nor does the fact that written assurances of confidentiality were extended to the Authority's customers. As we noted in 03-ORD-065, "A public agency cannot abrogate the mandatory provision of the Open Records Law by a promise of confidentiality which is not authorized by KRS 61.870 to 61.884 . . . [but can only] promise confidentiality as far as the exemptions permit . . . ." 03-ORD-065, p. 2, quoting OAG 83-256, p. 4; see also, OAG 90-7 and 95-ORD-14. If the Authority requires a private customer wishing to contract with the Authority to disclose records containing information that is generally recognized as confidential or proprietary, and the Authority can demonstrate that release of the records of that private customer would permit an unfair commercial advantage to the private customer's competitors, then the Authority could properly rely on KRS 61.878(1)(c)1. and extend assurances of confidentiality to the private customer relative to the customer's records. See 97-ORD-66. Simply put, the provision has no application to records generated by the Authority and thus the Authority's own records.
We therefore conclude that the Owensboro Riverport Authority improperly relied on KRS 61.878(1)(c)1. in denying Mr. Smith's May 5, 2003 open records request. In so holding, we attempt to strike a balance between the public's right to know that the Authority is fairly and uniformly discharging its statutory duties under KRS 65.530 and the private customers' interest in contracting with the Authority under terms that insure agency accountability without compromising their competitive status. With this goal in mind, the Authority may wish to reevaluate the information it includes in public records for which no statutory exemption exists.
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.
David SmithYeiser's Warehouse P.O. Box 865Owensboro, KY 42304
Maurice OwenOwensboro Riverport AuthorityP.O. Box 21955Owensboro, KY 42304
Charles KamufKamuf, Yewell & Pace221 West 2nd StreetOwensboro, KY 42303
Footnotes
Footnotes
1 Mr. Owen cited the language from one such purchase order:
"Unless specifically and comprehensively covered by the confidentiality, nondisclosure and non-use provisions of another document signed by Buyer and Seller: (a) all information furnished by Buyer or any other person acting on behalf of Buyer and all information learned or observed about Buyer or its operations through performing this Order is confidential and Seller shall not disclose any such information to any other person, or use such information for any purpose other than performing this order without Buyer's express written consent and (b) all information in tangible form, including drawings, samples, models, specifications, or other documents provided by Buyer or prepared by Seller for Buyer shall be returned to Buyer promptly upon request. Seller shall not publicize the fact that Buyer has contracted to purchase goods or services from Seller, nor shall any information relating to this order be disclosed without Buyer's written consent. Unless otherwise agreed in writing, no information disclosed by Seller to Buyer shall be deemed confidential and Seller shall have no rights against Buyer with respect to Buyer's use thereof."
2 By letter dated April 28, 2003, Assistant Attorney General James M. Ringo notified Messrs. Smith and Owen that this office could not render an advisory opinion on the Authority's position unless the question of the propriety of that position was raised in an open records appeal. In support, he cited KRS 61.880(1) and (2).
3 KRS 61.880(2)(c) provides:
(c) On the day that the Attorney General renders his decision, he shall mail a copy to the agency and a copy to the person who requested the record in question. The burden of proof in sustaining the action shall rest with the agency, and the Attorney General may request additional documentation from the agency for substantiation. The Attorney General may also request a copy of the records involved but they shall not be disclosed.
4 In 97-ORD-66, this office held that operational and financial records, as well as personnel files, created by Kentucky Employers' Mutual Insurance Authority in the normal course of business, do not qualify for exclusion under KRS 61.878(1)(c)1.
5 In 01-ORD-87, this office held that the minutes of the Princeton Electric Plant Board's meetings, and financial projections relating to expansion of existing services that were generated by or for it, did not fall within the parameters of KRS 61.878(1)(c)1. inasmuch as the records were not confidentially disclosed to the Plant Board or required by the Plant Board to be disclosed to it.
6 In 01-ORD-143, this office held that the University of Kentucky's reliance on KRS 61.878(1)(c)1. as the basis for denying an open records request for records compiled by its Livestock Disease Diagnostic Center relating to Mare Reproductive Loss Syndrome was misplaced as it related to necropsy reports prepared by the Center.
7 In 01-ORD-153, this office held that the Princeton Electric Plant Board improperly relied on KRS 61.878(1)(c)1. in denying a request for the minutes of its meetings and financial statements, which we characterized as "'the Board's own record' to which the exemption's protection does not extend." 01-ORD-153, p. 5.
8 KRS 61.871 thus provides:
The General Assembly finds and declares that the basic policy of KRS 61.870 to 61.884 is that free and open examination of public records is in the public interest and the exceptions provided for by KRS 61.878 or otherwise provided by law shall be strictly construed, even though such examination may cause inconvenience or embarrassment to public officials or others.
(Emphasis added.)