FOIL Appeal Determination for 08-22-0B (Grace Kurdian, August 18, 2008)
August 18, 2008
New York State Department of Environmental Conservation
Office of General Counsel, 14th Floor
625 Broadway, Albany, New York 12233-1500
PHONE: (518) 402-9522 FAX: (518) 402-9018 or (518) 402-9019
CERTIFIED MAIL, RETURN RECEIPT REQUESTED
August 18, 2008
McCarter & English, LLP
245 Park Avenue
New York, New York 10167
Re: Freedom of Information Law ("FOIL") Appeal No. 08-22-0B; FOIL Request No. 08-890 Appeal Determination
Dear Ms. Kurdian:
This is in response to your appeal, pursuant to the New York State Freedom of Information Law ("FOIL", codified at §§ 84-90 of the Public Officers Law ["POL"]), from the denial of access to certain records pertaining to the Manhattan Beer Distributors, specifically the annual reports filed by Manhattan Beer Distributors.
In accordance with the Department's FOIL appeal procedures, I requested copies of the records that were withheld from disclosure by the Department's Central Office. These records were referenced in Department staff's letter to you dated July 2, 2008. On this appeal, I conducted a de novo review of those records.
On May 2, 2008 you submitted an application for Access of Records to our FOIL email address seeking "annual reports filed by Manhattan Beer Distributors (MBD) with NY DEC from 1995 through present concerning beer deposits initiated and redeemed pursuant to 6 NYCRR §367.11."
Your FOIL request was assigned FOIL No. 08-890 by the Department's Records Access Officer in Albany. By letter dated May 12, 2008, Ruth Earl, Records Access Officer, acknowledged receipt of your FOIL request and was obtaining the requested documents from the appropriate divisions. On July 2, 2008 Department staff indicated that based on POL §87(2)(d) the requested materials would not be released in that such information "may divulge competitive business information." POL §87(2)(d) states "an agency shall release to the public all records except those records that (d) are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise" (emphasis added).
By letter dated July 31, 2008, you filed this appeal from the denial of access to the withheld records referenced in Department staff's July 2, 2008 letter to you with the Department's Office of Hearings and Mediation Services. Within my August 5, 2008 letter to you, I advised you that the Office of Hearings and Mediation Services was no longer hearing FOIL Appeals as I have been delegated the authority as the new FOIL Appeals Officer for the New York State Department of Environmental Conservation. Thus, my de novo review of the records follows:
The records withheld are "Form 1, Deposits Initiated and Redeemed" reports for the time period of 1995 through present of Manhattan Beer Distributor consisting of 18 pages. The records relate to the deposits on returnable beverage containers. Information on these records includes the dollar amounts of deposits charged or collected, the deposits redeemed, and the handling fees paid. This information is reported for refillable and nonrefillable beer containers and for refillable and nonrefillable soda containers.
The information on the forms reveals sales data of the company which submitted the form. The information can be used to calculated the company's income from several sources: sales of categories of beverages, any net income due to initiating more deposits than are redeemed, and handling fees. The forms also include identification of the counties in which the company conducts business.
Discussion with the Department staff indicated that the information on these forms is information which beverage dealers and distributors have been reluctant to provide to the Department, partly out of an interest in protecting their competitive positions. The Department has consistently withheld this information in responding to previous FOIL requests. The form itself offers the reporting entity the option of requesting that the information on the form remain confidential. Manhattan Beer Distributor did make such a request in regards to these records. Furthermore, according to the Department staff, the information on the forms themselves can be used with information available elsewhere in order to estimate profits and market share.
In interpreting the New York State Freedom of Information Law's reference to substantial competitive injury, the Court of Appeals looked for guidance to the federal cases interpreting an analogous provision in the federal Freedom of Information Act (Encore College Bookstores v. Auxiliary Service Corporation, 87 N.Y.2d 407 (1995)). Information similar to the forms in question here has been treated as confidential in federal cases (see, Sterling Drug, Inc. v. Federal Trade Commission, 450 F.2d 698 (DC Cir. 1971)). The latter case stated that the "trade secret and commercial or financial information obtained from a person" or business is confidential (Id. at 708). "This exception is necessary to protect the confidentiality of information which is obtained by the Government through questionnaires or other inquires, but which would customarily not be released to the public by the person from whom it was obtained. This would include business sales statistics..." (Id. at 709). This case also discussed the need of government policy makers to have access to commercial and financial data that might not be provided unless the persons who have it can be assured that it will remain confidential (Id. at 709).
In your July 31, 2008 appeal letter you stated that "[t]he mere characterization of a record as proprietary or confidential does not itself provide protection from disclosure absent a provision of law that supports such protection." However, such information contained within Form 1 is confidential as such information if released could give a competitive advantage to those who do not know or have access to such information. You further argued that the categories of information contained within the form are so general as to not warrant such protection, as the Form does not contain the actual products sold. However, the information contained within the Form, if released to the public, would give a competitor the information necessary to take advantage of the business' enterprise and success. Knowing the aggregate amount of beverages sold, bottles returned and handling fees could give a competitor enough information to undercut the business by creating strategies to sell, collect and cut handling fees of their own. You are correct in that the aggregate information of the Form 1 is posted on the Department's website, however, this information is a culmination of every distributor in New York State that is required to submit a Form 1. Such cumulative information, as posted, would not reveal a single or a few distributors business practice or undermine a competitive edge.
In the Encore College Bookstores (87 N.Y.2d 410 (1995)) decision, the court did not require that the keeper of the records establish actual competitive harm to the company whose information was being requested. The court stated, "[r]ather, '[a]ctual competition and the likelihood of substantial competitive injury is all that need be shown" (Gulf & W. Indus. v. United States, 615 F.2d 527, 530 [DC Cir])." There is sufficient basis in the present situation to treat the deposit reports or Form 1 reports as trade secrets or information that, if disclosed, would cause substantial injury to the competitive position of the subject enterprise (POL §87(2)(d)). Thus, based on the review of the records and discussion above, your appeal is denied.
This letter is the final determination of the Department of Environmental Conservation with respect to your appeal. You have the right to seek review of this determination pursuant to Article 78 of the New York Civil Practice Law and Rules, and Public Officers Law §89(4)(b). In any further correspondence relating to this appeal, please refer to FOIL Appeal No. 08-22-0B.
Dena Putnick, Esq.
FOIL Appeals Officer
cc: Robert Freeman, Executive Director
Committee on Open Government
Ruth Earl, Records Access Officer