Chester Water Auth, Aplt. v. Pa. DCED ( 2021 )

[J-75A-2020 and J-75B-2020] [MO: Saylor, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
EASTERN DISTRICT
CHESTER WATER AUTHORITY, : No. 44 EAP 2019
:
Appellant : Appeal from the Order of the
: Commonwealth Court entered on
: 4/25/2019 at No. 801 CD 2018
v. : affirming the Order of the Office of
: Open Records entered on 5/14/2018
: at No. AP 2018-0194.
PENNSYLVANIA DEPARTMENT OF :
COMMUNITY AND ECONOMIC : ARGUED: September 16, 2020
DEVELOPMENT, :
:
Appellee :
CHESTER WATER AUTHORITY, : No. 45 EAP 2019
:
Appellant : Appeal from the Order of the
: Commonwealth Court entered on
: 4/25/2019 at No. 1090 CD 2018
v. : affirming the Order entered on
: 7/11/2018 of the Office of Open
: Records at No. AP 2018-0247.
PENNSYLVANIA DEPARTMENT OF :
COMMUNITY AND ECONOMIC : ARGUED: September 16, 2020
DEVELOPMENT, :
:
Appellee :
DISSENTING OPINION
JUSTICE WECHT DECIDED: April 29, 2021
The Majority concludes that “communications exchanged between a
Commonwealth agency and a private consultant” cannot be shielded from disclosure
under the Right-to-Know Law’s (“RTKL”)1 predecisional deliberations exception. Maj. Op.
1 65 P.S. §§ 67.101-67.3104.
at 12. I disagree. The Commonwealth Court struck the proper balance between an
agency’s confidential pursuit of expert advice in furtherance of its governmental functions
and the public’s interest in government transparency. Because the frank exchange of
ideas on complex issues is crucial to the smooth operations of government, I do not
believe that the RTKL requires an agency to reveal its confidential communications with,
or the proprietary work product of, consultants with whom it contracts for professional
services under the particular circumstances before us.
Section 708 of the RTKL exempts from disclosure, inter alia, any “record that
reflects . . . [t]he internal, predecisional deliberations of an agency, its members,
employees or officials or predecisional deliberations between” the same, and those of
“another agency, including . . . any research, memos or other documents used in the
predecisional deliberations.” 65 P.S. § 67.708(b)(10)(i)(A). By its plain terms, the
exemption would appear to cover the work product and communications of Econsult
Solutions, Inc., and its legal and financial subcontractors under the “other documents
used” catch-all. Indeed, these “other documents”—consisting of legal and financial
analyses and recommendations—were central to the Department of Community and
Economic Development’s (“the Department”) confidential, predecisional deliberations
regarding the City of Chester’s recovery pursuant to the Financially Distressed
Municipalities Act (“Act 47”).2 Although the pertinent provision of the RTKL requires that
a record must reflect the “internal” deliberations of an agency in order for the exemption
to apply, it does not explicitly exclude from its protections records that were generated by
an external actor under contract with the agency or communications between the two,
2 53 Pa.C.S. §§ 11701.101-11701.712.
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like those at issue here. In fact, the General Assembly expressly contemplated that
records possessed by “a party with whom the agency has contracted to perform a
government function on behalf of the agency . . . shall be considered a public record of
the agency” subject to disclosure unless otherwise exempt under the Act. 65 P.S.
§ 67.506(d).
While the Department urges this Court to adopt a more expansive reading of the
exemption, the Chester Water Authority urges a far narrower construction, by which a
record cannot be deemed reflective of “internal” deliberations if it was generated—or at
any point possessed—by a non-governmental entity. Given the reasonableness of the
parties’ dueling textual interpretations, I find the statute’s contemplation of exemptions for
records reflecting “internal” deliberations to be ambiguous.
To discern the General Assembly’s intent, we may benefit by looking to the
abundant federal authority interpreting the Freedom of Information Act (“FOIA”), the
federal analogue from which the RTKL draws its inspiration. In Department of the Interior
v. Klamath Water Users Protective Association, 532 U.S. 1 (2001), the United States
Supreme Court analyzed the reach of FOIA’s “Exemption 5,” which protects from
disclosure “inter-agency or intra-agency memorandums or letters which would not be
available by law to a party other than an agency in litigation with the agency.” 5 U.S.C.
§ 552(b)(5). To qualify for the exemption, a record must satisfy two conditions: “its source
must be a Government agency, and it must fall within the ambit of a privilege against
discovery under judicial standards that would govern litigation against the agency that
holds it.” Klamath, 532 U.S. at 8. Exemption 5, like Subsection 708(b)(10)(i)(A) of the
RTKL, codifies the deliberative process privilege, which encompasses “documents
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 3
reflecting advisory opinions, recommendations and deliberations comprising part of a
process by which governmental decisions and policies are formulated.” Nat’l Lab.
Relations Bd. v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975).
Although the High Court in Klamath acknowledged that the plain language of
Exemption 5 was silent about communications with non-governmental entities, it
recognized that several of the federal Courts of Appeals have held that, in some
circumstances, documents prepared by individuals outside of the Government might
qualify as “intra-agency” for purposes of the exemption. The Court cited Justice Scalia’s
dissent in Department of Justice v. Julian, 486 U.S. 1 (1988), the facts of which are not
relevant here. In Julian, Justice Scalia, joined by Justices White and O’Connor, explained
that “the most natural meaning of the phrase ‘intra-agency memorandum’” in Exemption 5
“is a memorandum that is addressed both to and from employees of a single agency—as
opposed to an ‘inter-agency memorandum,’ which would be a memorandum between
employees of two different agencies.” Id. at 18 n.1 (Scalia, J., dissenting). He cautioned,
however, that “[t]he problem with this interpretation is that it excludes many situations
where Exemption 5’s purpose of protecting the Government’s deliberative process is
plainly applicable.” Id.“Consequently,” Justice Scalia observed, “the Courts of Appeals have uniformly
rejected” requests to limit the exemption solely to those records that are generated by,
and kept within, a federal agency. Id. (citing Ryan v. Dep’t of Justice, 617 F.2d 781, 789-
91 (D.C. Cir. 1980) (applying the exemption to information furnished by Senators to the
Attorney General concerning judicial nominations); Gov’t Land Bank v. Gen. Servs.
Admin., 671 F.2d 663, 665 (1st Cir. 1982) (applying the exemption to reports prepared by
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 4
outside consultants)). Pertinently, the Julian dissenters considered lower court decisions
extending Exemption 5 to outside consultants’ work product to be “supported by a
permissible and desirable reading of the statute.” Id. Justice Scalia explained:
It is textually possible and much more in accord with the purpose of
[Exemption 5], to regard as an intra-agency memorandum one that has
been received by an agency, to assist it in the performance of its own
functions, from a person acting in a governmentally conferred capacity other
than on behalf of another agency—e.g., in a capacity as employee or
consultant to the agency, or as employee or officer of another governmental
unit (not an agency) that is authorized or required to provide advice to the
agency.
Id.In support of the lower courts’ view “that the exemption extends to communications
between Government agencies and outside consultants hired by them,” the Klamath
Court noted that “the records submitted by outside consultants in such cases played
essentially the same part in an agency’s process of deliberation as documents prepared
by agency personnel might have done.” Klamath, 532 U.S. at 10. Although the Court
acknowledged that, as independent contractors, the consultants at issue “were not
assumed to be subject to the degree of control that agency employment could have
entailed,” the Court declined to interpret those decisions “as necessarily assuming that
an outside consultant must be devoid of a definite point of view when the agency contracts
for its services.” Id. Rather, the Court found significant the fact that consultants in typical
cases do not represent their own interests or those of any other client when advising an
agency. See id. at 11 (“Its only obligations are to truth and its sense of what good
judgment calls for, and in those respects the consultant functions just as an employee
would be expected to do.”); id. at 12 (“Consultants whose communications have typically
been held exempt have not been communicating with the Government in their own
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 5
interest or on behalf of any person or group whose interests might be affected by the
Government action addressed by the consultant. In that regard, consultants may be
enough like the agency’s own personnel to justify calling their communications ‘intra-
agency.’”)).
Because the result in Klamath did not turn on the consultant-employee analogy,
the Court simply assumed that consultant reports might qualify as intra-agency records
for purposes of the deliberative process exemption. But in leaving it to the lower courts
to hash out whether to extend the exemption to non-governmental parties, the Court
admonished against “draining” Exemption 5’s first condition—i.e., “that the
communication be ‘intra-agency or inter-agency’”—“of its independent vitality.” Id. at 12.
The federal appellate courts largely, though not universally, have continued to extend the
deliberative process privilege to the work of outside consultants who contract with
governmental agencies. See, e.g., Gov’t Land Bank, 671 F.2d 663; Am. Mgmt. Servs.,
LLC v. Dep’t of the Army, 703 F.3d 724 (4th Cir. 2013); Nat’l Inst. of Military Justice v.
Dep’t of Justice, 512 F.3d 677 (D.C. Cir. 2008); Hoover v. Dep’t of the Interior, 611 F.2d
1132 (5th Cir. 1980); Lead Indus. Ass’n, Inc. v. Occupational Safety & Health Admin., 610
F.2d 70 (2d Cir. 1979). But see Lucaj v. Fed. Bureau of Investigation, 852 F.3d 541 (6th
Cir. 2017) (declining to apply Exception 5 to letters and memoranda shared with federal
agencies by foreign governments). Only the United States Court of Appeals for the Ninth
Circuit explicitly has rejected the so-called “consultant corollary,” though that recent
decision was vacated by a grant of reargument en banc. See Rojas v. Fed. Aviation
Admin., 927 F.3d 1046, 1058 (9th Cir. 2019), rehearing en banc granted, 948 F.3d 952(Jan. 30, 2020).
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 6
I find Justice Scalia’s dissent in Julian, and the consistent rationales relied upon
by the federal courts, to be persuasive. Accordingly, I would apply that reasoning to the
circumstances here to deny the compelled disclosure of the responsive records held by
the Department, insofar as those documents reflect predecisional deliberations between
the Department and the consultants with whom they have contracted for professional
services.
In its initial prospectus, which was incorporated into a professional services
contract with the Department, Econsult specifically identified—and appended a budget
allotting payment for the services of—a financial consulting firm (Fairmount Capital
Advisors, Inc.) and legal counsel (McNees, Wallace & Nurick, LLC) that would act
collectively with Econsult as the Act 47 Coordinator for the City of Chester. In assenting
to the contract, the Department tasked the team with using its considerable expertise to
create a recovery plan for the City involving a blend of both financial and legal analysis.
Although the team was to operate independently, it also was obliged to provide the
Department with progress reports and recommendations as part of the agency’s
confidential deliberations over the City’s path toward long-term solvency. Moreover,
according to the Department’s Open Records Officer, Econsult’s final report “was created
solely for” the Department, and the Department did not “share the [Econsult]
Report . . . with outside parties.” Agency Affirmation of Jennifer Fogarty, 2/14/2018, at 2
¶ 6.
The consultants also agreed not to enter into any additional contracts without the
Department’s approval. For all intents and purposes, then, Econsult, Fairmount, and
McNees were exclusive agents of the Department throughout the deliberative stages of
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 7
the Act 47 recovery process. Assuming that the responsive records appropriately
reflected the Department’s “predecisional deliberations,” there is little doubt that they
would be exempt from disclosure under Subsection 708(b)(10)(i)(A) but for the Act 47
Coordinator’s designation as an agency “consultant.”
The Majority acknowledges the necessity of weighing the costs and benefits of
“promot[ing] the free exchange of deliberative communications against the [RTKL’s]
overarching policy of openness.” Maj. Op. at 11. But in rejecting the Department’s plea
for a narrowly-tailored “consultant corollary,” the Majority short shrives the consequences
of full disclosure. As reflected in the present dispute, the need for such an exemption
may be especially acute in the Act 47 context, where the Department must make difficult
choices from a range of likely unpopular, even contentious, options to facilitate the
recovery of financially distressed municipalities. To force the release of expert advice
relied upon by the Department in making such fraught decisions undoubtedly would have
a chilling effect on its earnest efforts to satisfy its statutory mandate moving forward. And
to do so while deliberations over aspects of the recovery process remain ongoing would
be doubly pernicious given the risks that such disclosures might pose to the strategies
being contemplated.
More broadly, consultants might self-censor or decline to render their services at
all in light of reasonable concerns that their contracted-for confidentiality during the
deliberative process no longer can be guaranteed by an agency under the RTKL in light
of today’s decision. This Court should not overlook the deleterious effects of deterring
agency professionals from seeking the unvarnished advice of non-governmental experts.
The cost to taxpayers—particularly those denizens who reside in financially distressed
[J-75A-2020 and J-75B-2020] [MO: Saylor, J.] - 8
municipalities—from the loss of this expertise might not be trivial in the long run. On
balance, I do not believe that the General Assembly intended this result. For these
reasons, I respectfully dissent.
Chief Justice Baer joins this dissenting opinion.
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