October 16, 1996

In re: The Courier-Journal/Transportation Cabinet

Open Records Decision

This matter comes to the Attorney General on appeal from the Transportation Cabinet's partial denial of Courier-Journal Bureau Chief Tom Loftus's September 5, 1996, request for “copies of that section of the bid-qualification applications filed by certain contractors [identified in his request] in which the contractor discloses the names of officers and owners of corporations seeking to be qualified.” On September 13, 1996, Ed Roberts, Commissioner of the Cabinet's Department of Administrative Services and Custodian of Records, partially denied Mr. Loftus's request. Relying on KRS 61.878(1)(c), [1] he indicated that the Transportation Cabinet had redacted “the ownership section,” which the Cabinet “consider[s] . . . proprietary.”

In a follow-up letter to this office, Richard H. Deters, general counsel, elaborated on the Cabinet's position. Mr. Deters explained:

The documents requested by the Courier Journal are part of a prequalification package which the contractors are required to submit by [sic] the Cabinet for prequalification to bid on highway projects. KRS 176.130 through 176.160 require that the Cabinet ascertain the financial and technical abilities of a contractor before prequalifying the contractor. This documentation is submitted by the contractor with the understanding that it shall remain confidential. KRS 176.140(1) authorizes the Cabinet to promulgate regulations with regard to the prequalification process. Pursuant to that authority the Cabinet has promulgated 603 KAR 2:015.

Section 3(3) Paragraph 3, of this regulation requires submission of a description of plant and equipment. Section 3(4) requires a balance sheet and financial statement prepared as of the close of the last fiscal year or to reflect the current financial status of a newly established contractor. Section 4 of the regulation prohibits disclosure of the information required by Section 3(3) and (4). The documents requested by the Courier Journal are a part of the information required by Paragraph 4, and is [sic] protected. The information regarding principal officers is public information that can be found in corporate filings with the Secretary of State, so that information was provided. However, the Cabinet believes that the redacted information is not subject to public disclosure.

For these reasons, the Cabinet reaffirmed its partial denial of the request.

We are asked to determine if the Transportation Cabinet properly relied on KRS 61.878(1)(c)1. in denying that portion of Mr. Loftus's request relating to “the ownership section” of the bid-qualification applications. Based on the authorities cited, we conclude that the Cabinet's reliance on the cited exception was misplaced, and that it erred in withholding the information.

The General Assembly has declared “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. . . .” KRS 61.871. Consistent with this policy, the General Assembly has assigned the burden of proof to the public agency in an open records appeal to this office or the circuit court. KRS 61.880(2)(c); KRS 61.882(3). The Attorney General is thus bound by a rule of strict construction in interpreting the exceptions to the Open Records Act, and all doubts must be resolved in favor of disclosure.

KRS 61.878(1)(c)1. excludes from public inspection:

Upon and after July 15, 1992, records 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[.]

To successfully raise this exception, a public agency must establish that the disputed records: (1) are confidentially disclosed to the agency or required by the agency to be disclosed to it; (2) are generally recognized as confidential or proprietary; and (3) if openly disclosed would permit an unfair commercial advantage to competitors. Although the disputed portions of the records satisfy the first part of this three part test, insofar as the Cabinet requires their disclosure, we do not believe that the Cabinet has, or for that matter can, established that those portions of the records are generally recognized as confidential or proprietary, and that their disclosure would permit an unfair commercial advantage to competitors. While the principal stockholders may prefer the shroud of confidentiality which the Cabinet apparently wishes to extend to them, we are aware of no precedent supporting nondisclosure of their identities. [2] Conversely, we believe that a broad public interest is served by disclosure of such information to the extent that it reveals the identities of individuals who have an ownership interest in corporations with which the state does business. For these reasons, we believe that the Transportation Cabinet improperly relied on KRS 61.878(1)(c)1. in partially denying Mr. Loftus's request. Simply stated, the Cabinet has not made the requisite showing under that exception.

Our conclusions are not altered by 603 KAR 2:015. That regulation, by which the Cabinet determines the eligibility of bidders for construction contracts, requires the submission of a description of plant and equipment, a balance sheet, and financial statement. 603 KAR 2:015 Section 3(3) and (4). Section 4 of the regulation provides:

In order to comply with KRS 61.878(1)(b) [now codified as KRS 61.878(1)(c)1.] and KRS 176.210 [3] the department [of highways] shall not make available to the public information required in Section 3(3) and (4) of this administrative regulation.

Assuming arguendo that the regulation applies to the identities of owners of corporations seeking to be qualified, we believe that it is invalid. [4] As this office noted in 95-ORD-84, p. 2:

An administrative agency cannot, by its rules and regulations, amend, alter, enlarge, or limit the terms of a legislative enactment. Curtis v Belden Electronic Wire and Cable, Ky. App., 760 S.W.2d 97, 99 (1988).

The language of KRS 61.878(1)(c) is precatory. By its regulation, the Transportation Cabinet attempts to make it mandatory. There is no express statutory language mandating that the “ownership section” of the applications be treated as confidential. Thus, the Cabinet cannot properly rely on the regulation to authorize nondisclosure.

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 KRS61.880(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.

A. B. Chandler III

Attorney General

Amye L. Bensenhaver

Assistant Attorney General


Distributed to:

Tom Loftus

The Courier-Journal

Frankfort Bureau

614-B Shelby Street

Frankfort KY 40601

Ed Roberts

Commissioner, Department of Administrative Services and Custodian of Records

Transportation Cabinet

State Office Building

Frankfort KY 40601

Richard H. Deters

General Counsel

Transportation Cabinet

State Office Building

Frankfort KY 40601


[1] Commissioner Roberts cited KRS 61.878(1)(c). That provision contains two subparts, KRS 61.878(1)(c)1. and KRS 61.878(1)(c)2. Based on his argument, we assume that he intended to rely on KRS 61.878(1)(c)1.

[2] Compare, Marina Management Services v Cabinet for Tourism, Ky., 906 S.W.2d 318, 319 (1995) (holding that audited financial reports of a privately owned corporation including information on asset values, rental amounts on houseboats, profit margins, net earnings, and capital income, may be withheld pursuant to KRS 61.878(1)(c) since disclosure would unfairly advantage competing operators by permitting them “to ascertain the economic status of the entities without the hurdles systematically associated with acquisition of such information about privately owned organizations,”); Hoy v Kentucky Industrial Revitalization Authority, Ky., 907 S.W.2d 766, 768 (1995) (holding that financial information submitted by private corporation to the Authority, including financial history, financial statements, and a detailed description of the company's productivity, efficiency, and financial stability, may be withheld pursuant to KRS 61.878(1)(c)(2) since “such information concerning the inner workings of a corporation is generally recognized as confidential or proprietary,”).

[3] Permitting publication “from time to time [of] lists of qualified bidders.” KRS 176.210 further provides that the lists “shall be general in character and shall not indicate the size of the contracts with respect to which the bidders have qualified.” The statute does not speak to disclosure of the identities of individuals who have an ownership interest in corporations seeking to be qualified.

[4] In 95-ORD-84, this office held that the Kentucky State Police violated the Open Records Act by refusing to disclose background investigation reports to an applicant on the basis of 502 KAR 45.065 Section 5, making such investigation reports confidential. At page 3 of that decision, we reasoned:The agency's reliance on its regulation making the reports confidential is misplaced. The regulation cannot enlarge the general terms of the legislature's grant of authority to the commissioner and the state police personnel board to promulgate regulations to make the background investigation reports confidential. To constitute a statutory exemption from disclosure requires express and clear direction fro the legislature. There is no such express statutory direction in KRS Chapter 16 to make the reports exempt under KRS 61.[878(1)].