Courtesy of James R. Touchstone, Esq.
In Cal. Pub. Records Research, Inc. v. Cnty. of Alameda, the California First District Court of Appeal held that a county could consider a wide range of indirect costs under Government Code section 27366. In reaching its conclusion, the Court found that the County’s ordinance charging $3.50 per page for copies of official records was not unreasonable.
The County of Alameda’s Clerk-Recorder’s Office processes and maintains the County’s public records. Government Code section 27366 addresses a county’s exercise of its statutorily delegated discretion to set fees for copies of official records. Section 27366 provides that the fee “shall be set … in an amount necessary to recover the direct and indirect costs of providing the product or service.”
In June 2010, the County’s Board of Supervisors (the “County”) adopted an ordinance charging $3.50 per page for copies of official records from the Clerk-Recorder’s Office. There are a number of costs associated with this service, including the costs of storage and maintenance of recorded documents on microfilm, and the costs associated with digitalization, salaries and benefits of employees. In setting its new fee structure for providing copies, the County relied on fee studies conducted in 2009 and 2010 that assessed direct and indirect costs of copying records as components of the total cost of duplicating each page.
The County based its calculation of direct costs on the salary and benefits of the specific job role that most commonly performed the functions to provide copies of official record documents, including retrieving print requests, inputting data, and retrieving the document from the microfiche. The average direct salary cost to the County to make copies on a per page basis was calculated to be $1.42. The County also factored in the cost of paying benefits to these employees.
The indirect costs of providing copies included the salaries and benefits of administrative staff and management, services and supplies for the Clerk-Recorder’s Office, and “‘County Indirects,’” which included “costs to the Clerk-Recorder’s Office arising from other County departments.” Other indirect costs included the costs of “equipment maintenance, modular furniture, other professional services, data processing services and supplies, systems development supplies, alarm services, mail/postage charges, messenger services, county facility use charges, intra fund, and indirect costs from the county wide cost plan.” The County also included the cost of regular paper. Based on these direct and indirect costs, the County determined in 2010 that the total cost to copy a recorded document was calculated at $4.08 per page, or 58 cents more than the amount the County decided to charge for copies. Comparing fees charged by neighboring counties, which “ranged from $1.00 per page to $7.00 per page, the County’s determined that its $3.50 proposed rate fell “squarely within this range.”
In 2014, a non-profit that described itself as “seeking to reduce the costs of government and to provide education and information regarding governmental activities” filed a petition for a writ of mandate under Code of Civil Procedure section 1085. This organization, California Public Records Research, Inc. (“CPRR”), alleged the County’s $3.50 per page fee violated Section 27366 by not limiting fees for copies to an amount not exceeding direct and indirect costs.
In 2017, the trial court granted CPRR’s petition, finding the County’s fee of $3.50 per page was unlawful under Section 27366 as “arbitrary, capricious, or entirely lacking in evidentiary support.” The court statedthe County “did not exercise its discretion under a proper interpretation” of Section 27366. According to the court, the County’s indirect costs were “over inclusive” and did not “fairly reflect the county’s cost of providing the copies.” The County appealed.
The California First District Court of Appeal explained that “[t]he arbitrary and capricious standard of review employed under Code of Civil Procedure section 1085 is more deferential to agency decisionmaking than the substantial evidence standard. … We use the arbitrary and capricious standard to review quasi-legislative decisions resulting from an agency’s exercise of its statutorily delegated policymaking discretion.” (American Coatings Assn. v. South Coast Air Quality Management Dist. (2012) 54 Cal.4th 446, 461–462.) On appeal, the County contended that it “did not abuse its discretion by enacting a fee schedule encompassing indirect costs authorized by Government Code section 27366.”
The First District explained that the key question here was what the Legislature meant by “indirect costs” in Section 27366. The First District explained that ‘“our fundamental task is ‘to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute.’”‘ [Citation.]” (Apple Inc. v. Superior Court (2013) 56 Cal.4th 128, 135.) “‘“We first examine the statutory language, giving it a plain and commonsense meaning.”‘” (City of San Jose v. Superior Court (2017) 2 Cal.5th 608, 616.) “‘“If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute’s purpose, legislative history, and public policy.”‘” (Id. at pp. 616–617.) “‘When a statute is capable of more than one construction, “‘[w]e must … give the provision a reasonable and commonsense interpretation consistent with the apparent purpose and intention of the lawmakers … .’”‘” (Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567.)
The Court noted that published Court of Appeal decisions differed on the meaning of “indirect costs.” In California Public Records Research, Inc. v. County of Stanislaus, the Fifth District Court of Appeal determined that the meaning of “indirect costs” should be determined “by a general test that requires such costs to be reasonably attributed to (i.e., reasonably related to) providing copies and excludes costs that cannot be reasonably attributed to the service of providing copies.” However, the Third District Court of Appeal interpreted “indirect costs” more generously in California Public Records Research, Inc. v. County of Yolo. The Third District held that “the term ‘indirect costs’ has an established and generally accepted meaning in the context of governmental accounting and fee setting legislation, and includes overhead and operating costs not specifically associated with the production of copies.” (Id. at p. 174.)
The trial court here determined the narrower Stanislaus standard applied, i.e., “a county’s copying fees must fairly reflect the county’s cost of providing the copies.” Based on this standard, the trial court found the County’s determination of indirect costs unreasonably “over inclusive” and not fairly reflective of the county’s cost of providing the copies.
Enacted in 1947, Section 27366 was amended in 1993 to repeal provisions which set certain recorder fees which would thereby allow county recorder fees to be directly proportional to the cost of providing the service. In their legislative deliberations during the amendment process, the California Senate and Assembly considered Section 27366’s similar language to Government Code section 54985. Section 54985 provides in part that “a county board of supervisors shall have the authority to increase or decrease the fee or charge, that is otherwise authorized to be levied by another provision of law, in the amount reasonably necessary to recover the cost of providing any product or service or the cost of enforcing any regulation for which the fee or charge is levied. The fee or charge may reflect the average cost of providing any product or service or enforcing any regulation. Indirect costs that may be reflected in the cost of providing any product or service or the cost of enforcing any regulation shall be limited to those items that are included in the federal Office of Management and Budget Circular A-87 on January 1, 1984.” (Section 54985 (a), italics added.)
Ultimately, the Legislature amended the language of Section 27366 in 1993. Like Section 54985, Section 27366 now provides the board of supervisors shall set the fee for copiesof official records “in an amount necessary to recover the direct and indirect costs of providing the product or service or the cost of enforcing any regulation for which the fee or charge is levied.” However, the First District explained that it was significant that the Legislature did not in the amended version of Section 27366 carry over the provision that limited indirect costs to those items that included in the OMB Circular, in contrast to the text of Section 54985(a).
The First District explained that “[w]here the Legislature omits a particular provision in a later enactment related to the same subject matter, such deliberate omission indicates a different intention which may not be supplanted in the process of judicial construction.” (Kaiser Steel Corp. v. County of Solano (1979) 90 Cal.App.3d 662, 667.) The Court concluded that by omitting any reference to the OMB Circular in the amended version of Section 27366, the Legislature intended to allow counties to recover “indirect costs” that were not limited to the items listed in the OMB Circular.
Therefore, the First District agreed with the Yolo court that “[S]ection 27366 authorizes …
to consider a wider range of indirect costs than [S]ection 54985. … [T]he overall statutory scheme suggests the Legislature intended to give boards of supervisors greater flexibility in identifying indirect costs associated with the production of copies.” (Yolo, supra, 4 Cal.App.5th at p. 173.) Applying this interpretation of Section 27366 and based on this understanding of the section’s legislative history, the First District concluded that it was reasonable for the County to charge a fee for copies of official records that sought to recover costs beyond those directly associated with making copies.
CPRR argued that the County used the OMB Circular to calculate indirect costs. The First District explained that if the County’s calculation of indirect costs complied with this more restrictive federal standard, the County’s ordinance did not violate Section 27366. The Legislature gave counties flexibility to go beyond indirect costs as defined in the Circular, but counties were not required to do so; they had the choice. Thus, the First District found that CPRR had failed to establish that the County’s calculation of indirect costs violated Section 27366.
The Court also found that the County’s ordinance charging $3.50 per page was not “arbitrary, capricious, or entirely lacking in evidentiary support” because the County demonstrated that it complied with applicable accounting standards and that it based its decision on fee studies and the average length of documents requested, which indicated that the fees charged to customers using both methods were comparable.
Accordingly, the California First District Court of Appeal reversed the order granting the petition.
HOW THIS AFFECTS YOUR AGENCY
This case suggests that counties have some flexibility in charging fees to realistically address the ongoing costs of providing copies of public records. Specifically, the Court’s decision in Alameda provides additional authority to seek recovery of the significant indirect costs associated with providing copies of public records. This is particularly noteworthy in consideration of the staggering costs that public agencies are incurring in response to request for records pursuant to SB 1421 and now AB 748. With the First and Third District Courts of Appeal in agreement, and the Third District of Appeal in Stanislaus disagreeing, the California Supreme Court will ultimately have to weigh in on this issue to resolve this appellate district split and determine the proper scope of cost recovery for costs associated with responding to California Public Records Act requests.
As always, if you wish to discuss this matter in greater detail, please feel free to contact James R. Touchstone at (714) 446–1400 or via email at firstname.lastname@example.org.
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 2019 Cal. App. LEXIS 662 (1st Dist. July 22, 2019).
 246 Cal.App.4th 1432, 1455-1456 (5th Dist. 2016).
 4 Cal.App.5th 150 (3rd Dist. 2016).