Trade secrets have always been confidential, but Attorney General Morales in 1996 expanded the trade secret exception (§552.110) by adding a new definition for "commercial or financial information" based on federal court decisions relating to the Freedom of Information Act (FOIA). ⁸⁴ Prior to that decision, the AG excepted from disclosure only information that met the state's common law standard for a "trade secret," because state courts have never created an additional standard for "commercial or financial information." ⁸⁵ While there is some consensus that trade secrets (ranging from secret manufacturing processes to client lists) should be confidential, the federal definition for "commercial or financial information" is broad and may significantly impede Texans' ability to oversee their government.

Federal law protects "trade secrets and commercial or financial information obtained from a person and privileged or confidential." ⁸⁶ One of the greatest weaknesses in the federal exception, noted by Texas attorneys as early as 1970, is its failure to set a standard for determining what is "privileged or confidential." ⁸⁷ Over many years, federal courts created a series of broad "tests" designed to balance the interests of regulators and the regulated, ⁸⁸ but not necessarily the public interest.

By contrast, §552.110 of the Public Information Act is more specific. It excepts from disclosure "a trade secret or commercial or financial information obtained from a person and privileged or confidential by statute or judicial decision" (emphasis added). In 1991, the Attorney General determined in ORD 592 that the qualifying phrase "by statute or judicial decision" means that commercial or financial information can be withheld from disclosure only if it is deemed confidential by Texas statute or Texas common law. However, Morales overturned that position in 1996 by deciding that federal court decisions construing the federal trade secret exception will be considered "judicial decisions" under §552.110. This erased any difference between the federal and state trade secret standards and significantly broadened the Texas exception.

Under the new Attorney General standard, business information is considered to be confidential "commercial or financial" information if disclosure will (1) impair the government's ability to obtain necessary information in the future or (2) cause substantial harm to the competitive position of the person from whom the information was obtained. ⁸⁹ If information is "voluntarily" submitted, it is categorically protected from disclosure, provided it is not "customarily" disclosed to the public. ⁹⁰

Video Tapes of Public Meetings Closed by Public Officials   In late 1996, the Attorney General investigated a complaint filed by a citizen denied access to videotapes of Krugerville City Council meetings. The city published a newsletter in September 1996 notifying residents that videotapes of council meetings could be checked out "for a small, but refundable, deposit." When Ken Ivy asked to see the videotape of the Sept. 26, 1996, meeting, the city denied the request. "Due to the extra man hours and added expense, it is not economically feasible for the City to provide this courtesy. A retraction will be printed in the October Council update," wrote Mayor Stanley A. Hempstead in an Oct. 2, 1996, letter. Two weeks later, Ivy, now requesting copies of two videotaped meetings, offered to provide blank tapes and even a recorder. "There will be no extra man hours or expense for the city," he wrote in an Oct. 16 letter to the city. "You can have a representative present while this is done." In a complaint filed Oct. 16 with the county district attorney, Ivy disclosed that the mayor had ejected him from the Sept. 26 council meeting, apparently for speaking out of turn. "I just wanted the tape to see how this all looked. It's funny that I am the only person prior to this request that has ever been denied a copy of a video of the meeting. In the past they couldn't wait to pass the tapes around. . . ." Unable to obtain the videotapes, Ivy on Oct. 28 lodged a complaint with the Texas Attorney General's Office. An AG investigator spoke with Mayor Hempstead on Nov. 1 regarding Ivy's complaint. The mayor stated that the videotapes "were not going to be made available for inspection because they were [the mayor's] personal tapes," according to the report filed by the investigator. The city determined it could not afford to buy a video camera, so "the only recordings that are being made of the city council meetings are those that [the mayor] and his wife make with their own video camera. Mayor Hempstead further stated that those recordings are his personal videos and are taped 'to cover his butt.'" The investigator then informed the mayor "that if the video recordings being made relate to official business of the city, and are being used by himself in the performance of his official duties," the tapes are public information. "Mayor Hempstead replied: 'Well, then I take it back. My wife tapes the meetings for her personal enjoyment. That takes care of that problem.'" On Nov. 4, the Krugerville city attorney added that the AG "would have to file a writ of mandamus against the city in order to ensure the release of the information Mr. Ivy seeks." As a result, the AG investigator recommended litigation, "as all other means of settling this dispute have been exhausted." No litigation ensued. In early 1997, Mayor Hempstead changed his story again, informing the AG that the council meeting had been taped by Joel Wingo (apparently a private citizen), who owned the video camera and videotape. "The only expense the City of Krugerville was out was the electricity used to operate the camera," the mayor wrote in a letter faxed to the AG on Jan. 15, 1997. "Several citizens are now videotaping the meetings and are using electricity paid for by the city." Based on that information, the AG notified Ivy on Jan. 27 that, "it appears the video tape you have requested is personal information rather than information subject to the Texas Open Records Act. Consequently, this office is unable to be of any further assistance on this matter."

The AG's decision to broaden the trade secret exception contravenes the intent of legislators who debated the open records legislation in 1973. A subcommittee of the Senate Committee on Jurisprudence added the trade secret exception to the original House bill after a lengthy public hearing at which Texas agency heads expressed their concerns with the legislation. When the subcommittee chair, Senator Bill Meier, presented the final subcommittee bill to the full committee, he explained that the trade secret exception and other exceptions added by state senators were designed to address the testimony presented by witnesses and should be construed narrowly.

"These exceptions are pointed at the lengthy and voluminous testimony that we had from various divisions of the state government and from other interested parties, and they are pointed at retaining as private information a limited type of information," said Senator Meier. "I've tried to be very explicit in these exceptions, and I trust that there is (pause) that the interpretation of the exceptions, which will be left to the Attorney General under the Act, will be such that they will not be used as loopholes to thwart the purpose of the Act, which is to make the records open and available for inspection." ⁹¹

Morales' adoption of the federal definition for the PIA's trade secret exception creates a loophole whose scope is only slowly becoming apparent. The federal "voluntary" submission test may reduce the public's access to records held by Texas government, as agencies begin to claim that all kinds of third-party information has been filed "voluntarily."

Agencies now exercise considerable discretion over access to public information. On November 5, 1996, the Center for Economic Justice requested information from the Texas Department of Insurance (TDI) regarding homeowners insurance rates and rate changes. ⁹² TDI sent the request to the Attorney General. Allstate, in a letter to the AG seeking to prevent disclosure, acknowledged that "TDI is mandated to gather this type of information" under the Texas Insurance Code. Indeed, articles 1.24. and 5.131 of the Insurance Code allow TDI to compel companies to submit this information.

Nonetheless, TDI argued that the information had been "provided voluntarily." TDI also suggested that an AG order to release the materials would impair the agency's ability to obtain such information in the future. ⁹³ The AG sided with the insurance department and ruled the information could be withheld. ⁹⁴ The "voluntary" test as it played out in this case allowed the agency to determine what information will be public by calling submissions "voluntary" even when it has clear authority to compel companies to file the information.

Private companies and government agencies sometimes claim that information was "voluntarily" submitted even when it clearly was not. A requester in 1997 asked Austin's Capital Metro for Longhorn Railway information relating to hazardous materials transport and residential safety, and correspondence related to Longhorn's escrow account. The AG determined in this case that the information was not "voluntarily" submitted because such information is required under the contract, and the requester was able to view the records. ⁹⁵

Information Related to Water District Elections Can Be hard to Unearth   Esteban Sosa sought the AG's help when the Bexar Metropolitan Water District ignored his request for information. Mr. Sosa was thinking of becoming a candidate in an upcoming water district board election, so he wanted the name and address of board members, district boundaries and terms of office, polling places for the last election, upcoming election dates, and the duties of the board. He mailed a letter on April 1, 1998, but received no response from the district. He sent a second letter by registered mail on April 29, only to be ignored again. "Not once did they give me the courtesy of acknowledging my letters, so I went to the Attorney General for help," he said. Mr. Sosa filed a complaint with the AG on June 1. On June 17, the Attorney General sent a letter to Thomas C. Moreno, the district's general manager. The AG urged Moreno to comply with the Public Information Act and release the information immediately. Mr. Sosa finally received the requested materials on July 19 - one month after the AG sent its letter and more than three months after Mr. Sosa first requested the information. Mr. Moreno did not apologize for the long delay, nor did he explain why he failed to comply with Act.

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