November 4, 1993







IN RE: Mark J. Smith/Revenue Cabinet






This appeal originated in a request for records submitted by Mr. Mark J. Smith to the Revenue Cabinet on March 2, 1993. Mr. Smith is an attorney representing Ms. Joan Peters McQuillan, "a surface co-owner of land in Martin County, Kentucky." Mr. Smith requested copies of "any documents and/or records, including production data, relating to . . ." certain gas wells located on or near his client's property in Martin County.


Mr. Billy W. Whitaker, Deputy Commissioner of the Department of Property Taxation, denied Mr. Smith's request in a letter dated March 8, 1993. Mr. Whittaker explained:


First, all information received by the Revenue Cabinet on oil and gas production is taken from returns filed by either the owner, operator, producer and purchaser. Under KRS 131.190, the Revenue Cabinet shall not divulge any information acquired by it through tax schedules, returns or reports required to be filed with the Department. Since the information which you are asking for came to the Department in the form of a report, the Cabinet objects to giving any information on oil and gas production to anyone except the person who owns an interest in the well. This means you must have working interest or a royalty interest. In your letter you did not show

that you own such interest. From your letter it did appear that at least some of these wells were not even on the property which your client owns or has a legal interest in.


In addition, Mr. Whittaker noted that the Revenue Cabinet does not have the requested records "listed by coordinates and, therefore, cannot locate these properties in question."


In his letter of appeal to this Office, Mr. Smith indicates that Joan McQuillan owns tracts of land in Martin County, and that the gas wells identified in his request "are either on or adjacent to her property boundary." Mr. Smith submitted the request for gas production data because she has been paid no royalties. It is his position that Ms. McQuillan is entitled to royalties for gas extracted from these wells.


We are asked to determine if the Revenue Cabinet properly denied Mr. Smith's request for documents, including production data, relating to certain gas wells located on his client's property. For the reasons set forth below, we conclude that although the Cabinet's response was procedurally deficient, Mr. Whittaker's denial of Mr. Smith's request was substantively correct.


KRS 61.880(1) sets forth procedural guidelines for agency response to an open records request. That statute provides:


Each public agency, upon any request for records made under KRS 61.870 to 61.884, shall determine within three (3) days, excepting Saturdays, Sundays, and legal holidays, after the receipt of any such request whether to comply with the request and shall notify in writing the person making the request, within the three (3) day period, of its decision. 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. The response shall be issued by the official custodian or under

his authority, and it shall constitute final action.


Mr. Whittaker's response to Mr. Smith's request was procedurally deficient to the extent that he failed to cite the specific exception to the Open Records Act, codified at KRS 61.878(1)(a) through (k), which authorized the withholding of the record. This deficiency is mitigated by the fact that he cited a separate statutory provision mandating confidentiality, and provided a lengthy explanation of how that provision applied to the records withheld. Mr. Whittaker should review KRS 61.880(1) to insure that future responses conform to the Open Records Act.


Turning to the substantive issue raised in this appeal, we find that the Revenue Cabinet properly denied Mr. Smith's request for documents relating to certain gas wells on or adjacent to his client's property in the absence of evidence that Mr. Smith's client owns an interest in those wells. KRS 131.190(1) provides:


No present or former secretary or employee of the revenue cabinet, member of a county board of assessment appeals, property valuation administrator or employee thereof, or any other person, shall divulge any information acquired by him of the affairs of any person, or information regarding the tax schedules, returns or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business. This prohibition does not extend to information required in prosecutions for making false reports or returns of property for taxation, or any other infraction of the tax laws, nor does it extend to any matter properly entered upon any assessment record, or in any way made a matter of public record, nor does it preclude furnishing any taxpayer or his properly authorized agent with information respecting his own return.


This provision is incorporated into the Open Records Act by operation of KRS 61.878(1)(k), authorizing the nonrelease of:


Public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly.


Although KRS 131.190(1) has been the subject of a number of past open records opinions, this Office has not had occasion to address the specific question raised in this appeal. We have, however, "consistently recognized that much but not all of the material generated in the administration of tax statutes and ordinances is privileged and not subject to public inspection." OAG 86-11, at p. 3. Records pertaining to the affairs of the business of a particular gas company, such as the amount of taxes paid or the amount of gas extracted, can only be released to the company or its properly authorized agent.


In OAG 83-78, this Office upheld the Revenue Cabinet's denial of a request for the adjusted cost reports filed by the group self-insureds operating in the state. We affirmed the Cabinet's argument that KRS 131.190(1) makes tax records and reports to the Cabinet concerning taxes confidential. We noted that the Cabinet "is not only allowed a policy of keeping such records confidential but is mandated by a statute with penal provisions to keep such records confidential. KRS 131.190(1); 131.990(3)." See also, OAG 89-50.


On the other hand, this Office has recognized that the identity of companies legally obligated to pay taxes and whether those taxes are being paid is a matter of legitimate public concern, and such information cannot be withheld under KRS 131.190(1). OAG 83-263; OAG 86-11. This information does not reveal the affairs of the business within the contemplation of KRS 131.190(1).


We believe that this appeal is more closely analogous to the first line of decision in that Mr. Smith sought production data, information which is directly related to the affairs of the subject businesses. Accordingly, we find that, in the absence of evidence that Mr. Smith's client owns an interest in the wells, the Revenue Cabinet properly denied his request. Because we believe that KRS 61.878(1)(k) and KRS 131.190(1) authorize the nondisclosure of the requested records, we see no need to address Mr. Whittaker's argument that the Cabinet cannot locate the properties in question

because it "does not have the information listed by coordinates."


Mr. Smith and the Revenue Cabinet may challenge this decision by initiating action in the appropriate circuit court. Although the Attorney General should be notified of any actions filed against the Revenue Cabinet pursuant to KRS 61.880(3), he should not be named as a party in the circuit court action or in any subsequent proceedings.














Distributed to:


Mark Joseph Smith

Napier & Napier

Attorneys At Law

1800 Waterfront Plaza

325 West Main Street

Louisville, KY 40202


Mr. Billy W. Whittaker

Deputy Commissioner

Department of Property Taxation

Revenue Cabinet

Frankfort, KY 40620