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September 7, 1999

Ms. Margaret Hoffman
Director
Environmental Law Division
Texas Natural Resource Conservation Commission
P.O. Box 13087
Austin, Texas 78711-3087

OR99-2486

Dear Ms. Hoffman:

You have asked whether certain information is subject to required public disclosure under chapter 552 of the Government Code. Your request was assigned ID# 127326.

The Texas Natural Resource Conservation Commission (the "commission") received a request for "a copy of the Nov. 9th, 1998 letter from Chaparral Steel to the [commission] regarding purchase of a buffer zone." You advise that the requested letter was claimed to be confidential by Chaparral Steel when it was submitted to the commission and that it involves information which might be excepted from disclosure. Pursuant to section 552.305 of the Government Code, this office notified Chaparral Steel of the request. Chaparral Steel has submitted arguments that the requested information is protected from disclosure by section 552.110.

Section 552.110 provides an exception for "[a] trade secret or commercial or financial information obtained from a person and privileged or confidential by statute or judicial decision." The Texas Supreme Court has adopted the definition of trade secret from section 757 of the Restatement of Torts. Hyde Copr. v. Huffines, 314 S.W.2d. 763 (Tex), cert. denied, 358 U.S. 898 (1958); see also Open Records Decision No. 552 at 2 (1990). Section 757 provides that a trade secret is

any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers. It differs from other secret information in a business . . . in that it is not simply information as to single or ephemeral events in the conduct of the business . . . . A trade secret is a process or device for continuous use in the operation of the business. . . . [It may] relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers, or a method of bookkeeping or other office management.

Restatement of Torts 757 cmt. B (1939) (emphasis added). In determining whether particular information constitutes a trade secret, this office considers the Restatement's definition of trade secret as well as the Restatement's list of six trade secret factors. Restatement of Torts 757 cmt. b (1939).(1)

In our opinion, Chaparral Steel has not demonstrated that the information at issue constitutes a trade secret. Therefore, the information may not be withheld under the trade secret branch of section 552.110.

Commercial or financial information made confidential by statute or judicial decision is excepted from disclosure under the second prong of section 552.110. A recent decision of the third court of appeals ruled that in order for information to be withheld under the commercial or financial information prong section 552.110, the information at issue must be shown to be protected by a specific statute or judicial decision. See Birnbaum v. Alliance of Am. Insurers, 994 S.W.2d 766, (Tex. App. - Austin, 1999, no pet. h.).(2)

In our opinion, Chaparral Steel has not demonstrated that the information at issue constitutes confidential commercial or financial information under the standard set out in the Birnbaum case. Therefore, the requested information may not be withheld under the commercial or financial information branch of the section 552.110 exception. The requested letter must be released.

We are resolving this matter with an informal letter ruling rather than with a published open records decision. This ruling is limited to the particular records at issue under the facts presented to us in this request and should not be relied upon as a previous determination regarding any other records. If you have questions about this ruling, please contact our office.

Sincerely,

William Walker
Assistant Attorney General
Open Records Division

WMW/ch

Ref: ID# 127326

Encl. Submitted documents

cc: Mr. Jim Schenbeck
707 Wilie
Cedar Hill, Texas 75104
(w/o enclosures)


 

Footnotes

1. These six factors are:

  • the extent to which the information is known outside of [the company's] business;


  • the extent to which it is known by employees and others involved in the [the company's] business;


  • the extent of measures taken by [the company] to guard the secrecy of the information;


  • the value of the information to [the company] and to [its] competitors;


  • the amount of effort or money expended by [the company] in developing this information; and


  • the ease or difficulty with which the information could be properly acquired or duplicated by others.

Restatement of Torts 757 cmt. b (1939); see also Open Records Decision No. 232 (1979).

2. Prior to Birnbaum, this office had followed the standard for confidentiality of commercial or financial information set out in National Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C.Cir. 1974). See Open Records Decision No. 639 (1996). It should be noted, too, that section 552.110 was amended by the Seventy-sixth Legislature, effective September 1, 1999. Act of May 25, 1999, Seventy-sixth Legislature, R.S., S.B. 1851, 7. Under the amendment, commercial or financial information will be excepted from disclosure if "it is demonstrated based on specific factual evidence that disclosure would cause substantial competitive harm to the person from whom the information was obtained." The amendment applies to requests for attorney general decisions made on or after September 1, 1999. Id. 36.
 

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