Opinion
Opinion By: Jack Conway, Attorney General; James M. Herrick, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Department of Financial Institutions properly relied on KRS 61.878(1)(l) and KRS 286.3-470 in denying LaMar Bryan's October 22, 2013, request for records relating to an administrative action involving the Hancock Bank & Trust Company in Hawesville, Kentucky. For the reasons that follow, we conclude that the Department did not violate the Open Records Act.
Mr. Bryan, a staff writer for The Messenger in Madisonville, addressed his October 22 request to records custodian Stephanie Dawson. He stated as follows:
On or about Aug. 5, 2013, Hancock Bank & Trust Co. waived its right to a hearing and entered into a consent order with the Kentucky Department of Financial Institutions and Federal Deposit Insurance Corp. This action is referred to as Consent Order FDIC-13-231b.
Under the Open Records Law, I seek a copy of any and all records, including investigative reports, concerns and memos, that were part of the resolution reached in the consent order.
On November 20, 2013, Ms. Dawson replied that "the Department is unable to release any responsive documents." She stated that the following records were withheld:
Reports of examination and correspondence that relates to the report of examination of a bank. These records are confidential and may not be disclosed pursuant to KRS 286.3-470, KRS 61.878(1)(c), 1 and KRS 61.878(1) [ sic ]. 2
At this point, we note that the Department's response was untimely under KRS 61.880(1), which requires a public agency to respond to an open records request within three days, exclusive of weekends and legal holidays. The Department's failure to do so was a procedural violation of the Open Records Act.
On November 22, 2013, Mr. Bryan made a renewed request for the records, adding:
I want to clarify that I am not limiting this request to reports of examination or correspondence relating to bank examination reports. Rather, this request includes all documents relating to the administrative action and investigation that resulted in the consent order -- referred to as Consent Order FDIC-13-231b.
This request also would include, but not be limited to, correspondence threatening or discussing the potential for administrative action or prosecution, documents relating to any settlement or proposed settlement, as well as pleadings and other official documentation relating to the administrative action.
Ms. Dawson replied on November 25, 2013:
The Department is unable to provide any responsive documents to that request. There was no administrative action taken outside of the Consent Order entered into by the FDIC and the Kentucky Department of Financial Institutions. The Department entered into this Consent Order under the authority granted to it by KRS 286.3-450(5) as a result of joint examinations and supervision with the FDIC. KRS 286.3-450(5) provides, in part, "Information produced or provided under this section shall be considered confidential as provided in KRS 286.3-470." As such, the Department is unable to provide any of the correspondence related to the joint Consent Order entered on August 5, 2013.
Mr. Bryan appealed to the Attorney General on December 20, 2013.
On January 7, 2014, General Counsel Jessica R. Sharpe responded to the appeal on behalf of the Department. She affirmed that "the only documents in [the Department's] possession were 'reports of examination and correspondence that relates to the report of examination of a bank,'" and commented:
Specifically, these records are exempt pursuant to KRS 61.878(1)(k) (disclosure of records which are prohibited by federal law or regulation) and KRS 61.878(1)(l) (disclosure of records which are made confidential by Kentucky law).
(Footnote omitted.) The federal regulations she cites in connection with KRS 61.878(1)(k) are 12 C.F.R. § 309.5(g)(8) and 12 C.F.R. § 309.6. 3 Ms. Sharpe also states that "there was no administrative action or investigation taken or engaged in by the Department concerning Hancock Bank & Trust Company other than the above-referenced Consent Order that was entered as a result of a joint examination conducted by the Department and the FDIC." There is no dispute that the Consent Order itself is open to public inspection, and we do not understand that document to be part of Mr. Bryan's request.
KRS 286.3-470(1) provides:
Reports of examination, and correspondence that relates to the report of examination, of a bank or trust company shall be considered confidential information. No officer or director of a bank or trust company, employee of the department, or employee of a state or federal regulatory authority shall release any information contained in the examination, except when:
(a) Required in a proper legal proceeding in which a subpoena and protective order insuring confidentiality has been issued by a court of competent jurisdiction; or
(b) The information is referred to an appropriate prosecuting attorney for possible criminal proceedings, to outside person providing professional services to the bank, or to outside persons for the purpose of evaluating the bank for possible acquisition.
(Emphasis added.) Furthermore, on the subject of joint actions between the Department and the FDIC, KRS 286.3-450(5) states in pertinent part:
The commissioner may enter into joint examinations or joint enforcement actions with other bank supervisory agencies having concurrent jurisdiction over any bank? Information produced or provided under this section shall be considered confidential as provided in KRS 286.3-470.
These statutes are deemed incorporated into the Open Records Act by KRS 61.878(1)(l), which excludes from inspection "[p]ublic records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly."
The Department represents that its records on the Hancock Bank & Trust Company consist exclusively of "[r]eports of examination, and correspondence that relates to the report of examination," which are precisely the types of records made confidential by KRS 286.3-470(1). Even if it were shown, however, that the Department possessed additional records relating to the bank, those would constitute "[i]nformation produced or provided" under a joint examination or joint enforcement action with the FDIC, and would thus be confidential under KRS 286.3-450(5).
We see no reason in this case to depart from our general rule of deference to a public agency in the interpretation of confidentiality provisions binding upon it, in the absence of contrary authority. See, e.g., 08-ORD-233. Thus, we find no substantive violation of the Open Records Act. 4
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 proceedings.
Distributed to:
Mr. LaMar BryanMs. Christina HaydenJessica R. Sharpe, Esq.
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