Matter of New York Regional Interconnect Inc. v Oneida County Indus. Dev. Corp. |
2007 NY Slip Op 52567(U) [21 Misc 3d 1118(A)] |
Decided on February 28, 2007 |
Supreme Court, Oneida County |
Tormey, J. |
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
This opinion is uncorrected and will not be published in the printed Official Reports. |
In the Matter of the
Application of New York Regional Interconnect, Inc. and NEW YORK SUSQUEHANNA AND
WESTERN RAILWAY CORP., Petitioners,
against Oneida County Industrial Development Corporation, Respondent. |
In this Freedom of Information Law (hereinafter FOIL) (Public Officers Law, art
6, §§ 84-90) proceeding, the Court is presented with an issue of first impression
regarding the applicability of the exemption to disclosure under Public Officers Law § 87
(2) (d) to "vertical competition."
The present proceeding was commenced on October 19, 2006 by Order to Show Cause and Petition, wherein New York Regional Interconnect, Inc. (hereinafter NYRI) and New York Susquehanna and Western Railway Corp. (hereinafter NYS & W) (collectively, petitioners) sought to enjoin the Oneida County Industrial Development Agency (hereinafter OCIDA) from disclosing certain information in an Energy Transmission System Lease Agreement (hereinafter Lease) provided to it by NYS & W. By way of background, NYRI is a New York corporation with plans before the New York Public Service Commission to build a 190-mile, high voltage, direct current transmission line across the State of New York. The transmission line bisects Oneida County. This transmission line is to be placed in part in the NYS & W right-of-way that crosses Oneida County. OCIDA, a municipal industrial development agency created by Section 901 of the General Municipal Law and operating pursuant to Article 18-A of that statute, is the title holder of the lands on which the railroad facilities operated by NYS & W are located, and thus the property is tax exempt. Pursuant to the agreement between NYS & W and OCIDA, NYS & W makes a payment in lieu of taxes (PILOT) to OCIDA, and NYS & W is granted use of the OCIDA railroad property, including the ability to lease the railroad bed to utilities for telephone lines, fiber optic cables, gas transmission lines and electric power lines.
Pursuant to its authority with respect to the railroad beds, NYS & W entered into the subject Lease with Niagara Reinforcement, L.L.C on November 21, 2003. The Lease authorizes the lessee to use approximately 51.9 miles of the NYS & W railroad bed for a high voltage direct current transmission line in exchange for payments to NYS & W. The Lease also provides that the terms of the Lease will be kept confidential. In 2006 NYRI acquired the rights of Niagara Reinforcement, L.L.C. in the subject Lease.
In 2005 and 2006, NYS & W and OCIDA were engaged in negotiations for an extension of their PILOT agreement. In the course of those negotiations, OCIDA requested financial information from NYS & W, including the Lease with NYRI. NYS & W and OCIDA corresponded regarding the confidential nature of the material requested and the policy of OCIDA regarding confidential material. Despite having no assurances from OCIDA regarding confidentiality, NYS & W turned over a copy of the Lease to OCIDA on September 11, 2006.
On October 2, 2006, Tony Parrish, a reporter for The Observer-Dispatch (OD), submitted a
FOIL request to OCIDA requesting "copies of any document(s) related to [NYS & W's] tax relief
from OCIDA." On October 18, 2006, OCIDA advised NYS & W by e-mail that OCIDA [*2]would comply with the OD's FOIL request and disclose the Lease to
the OD on October 20, 2006 at 3:00 The petition sets forth two causes of action seeking an order enjoining OCIDA from
disclosing portions of the Lease to the OD. The first cause of action asserts that the Lease
constitutes records that are "trade secrets or are submitted to an agency by a commercial
enterprise ... and which if disclosed would cause substantial injury to the competitive position of
the subject enterprise" and are exempt from disclosure under Public Officers Law § 87 (2)
(d). With respect to that cause of action, the parties agree that nearly all of the Lease should be
provided to the OD. The petitioners have restricted their request in that cause of action to the
schedule in the Lease that sets forth the option and rental fees to be paid by NYRI to NYS & W
(hereinafter Option Fees).
The second cause of action asserts that the Lease includes records that "if disclosed would
constitute an unwarranted invasion of personal privacy" that are exempt from disclosure under
Public Officers Law § 87 (2) (b). With respect to that cause of action, the parties have
stipulated that the names of the parties executing the Lease can be disclosed and that the other
contact information for the signatories is not subject to disclosure and will be redacted from any
records disclosed by OCIDA. The second cause of action was withdrawn based upon this
agreement.
On the return date, October 23, 2006, the OD, by consent, was granted permission to
intervene (CPLR 1013). After hearing argument, the court adjourned the case to November 1,
2006 for the submission of further affidavits and memoranda of law. During that interim, a
request for further review of the determination to disclose the Lease was made by petitioners to
OCIDA and was rejected by the "head of the agency."
During argument on November 1, 2006, petitioners put forth the concept of "vertical
competition" as the basis for establishing substantial injury to its competitive position and its
entitlement to the exemption to disclosure set forth in Public Officers Law § 87 (2) (d).
Because of the lack of New York case law regarding this concept, and because the Court of
Appeals has looked to Federal law for guidance in construing FOIL (see Matter of College
Bookstores, Inc. v Auxiliary Serv. Corp., 87 NY2d 410, 414-422) [1995], the parties were
directed to submit additional memoranda addressing the issues under the Federal Freedom of
Information Act (hereinafter FOIA) (5 USCA § 522). Further argument on the Federal case
law was heard on December 20, 2006.
Before considering whether certain portions of the Lease are exempt from disclosure, the
Court will address the contention that petitioners lack standing to challenge OCIDA's
determination. Specifically, the OD argues that the exclusive basis for standing in a "reverse
FOIL" proceeding, such as this, is Public Officers Law § 89 (5) (a) (1) . Because this statute
is not applicable, the OD argues that the petitioners lack standing, and therefore the petition
should be dismissed.
Public Officers Law § 89 (5) (a) (1) permits an entity submitting information to "any
state agency" to request that the agency not disclose the information. The statute goes on
to provide that, if the state agency denies the request, then the submitting entity may seek judicial
review in an action pursuant to CPLR Article 78 (Public Officers Law § 89 [5] [d]). A "state
agency" is defined as "a state department, board, bureau, division, council, or office and any
[*3]public corporation the majority of whose members are
appointed by the governor" (Public Officers Law § 89 [5] [h]). OCIDA is not a state agency.
The OD argues that, because Public Officers Law § 89 (5) only permits an action
against state agencies, no reverse FOIL actions are permitted against local municipal entities. In
support of that position, the OD relies on an opinion of the Committee on Open Government
(hereinafter NYCOG) (N.Y.S. Committee on Open Government, Opinion No. FOIL-AO-15701,
December 20, 2005).
In that opinion NYCOG found that FOIL is permissive and that, even if an agency record
qualifies as exempt from disclosure, the agency may still choose to disclose the record (N.Y.S.
Committee on Open Government, Opinion No. FOIL-AO-15701, December 20, 2005, citing
Matter of Capital Newspapers Div. of Hearst Corp. v Burns, 67 NY2d 562 [1986]). In
light of the permissive nature of FOIL and the absence of a specific remedy such as that set forth
in Public Officers Law § 89 (5), NYCOG opined that entities have no standing to challenge
local government decisions to disclose records (N.Y.S. Committee on Open Government,
Opinion No. FOIL-AO-15701, December 20, 2005 ).
It was, however, acknowledged by NYCOG that its opinion was contrary to Verizon NY,
Inc. v Bradbury (10 Misc 3d 785 [Sup Ct, Westchester County 2005]). While not directly
addressing the issue of standing, the Court permitted the petitioner to maintain an action against
the Village of Rye Brook to prevent disclosure of records under FOIL (see Verizon NY, Inc.
v Bradbury, 10 Misc 3d at 787).
That opinion is also contradicted by the very case upon which it relies, (Matter of Capital
Newspapers Div. of Hearst Corp. v Burns (67 NY2d 562, supra). In that case, the newspaper
sought to obtain the sick time records of certain police officers from the City of Albany. One of
the police officers was granted permission to intervene. The intervenor-police officer then acted
as a litigant to prevent the disclosure of his records. The Court of Appeals allowed the matter to
proceed and did not even comment regarding the police officer's standing (Matter of Capital
Newspapers Div. of Hearst Corp. v Burns, 67 NY2d at 567).
Moreover, there is no question that petitioners have satisfied the traditional elements
involved in an analysis of standing. Petitioners have alleged an injury in fact that is concrete,
distinct from the general public, traceable to the actions of OCIDA and subject to redress by a
favorable decision (see, Friends of the Earth, Inc., v Laidlaw Envtl. Servs. (TOC), Inc.,
528 US 167 [2000]; Matter of Colella v Board of Assessors of County of Nassau, 95
NY2d 401 [2000]).
It is a long-standing rule of statutory construction that a private right of action for the
violation of a statute exists for the benefit of entities injured by that violation (see Pauley v
Steam Gauge & Lantern Co., 131 NY 90 [1892]). Whether a private "reverse FOIL" right of
action exists turns on what the Legislature intended. The general rule is and has long been that
"whether a statute gives a cause of action to a person injured by its violation, or whether it is
intended as a general police regulation, and the violation made punishable solely as a public
offense must to a great extent depend on the purview of the legislature in the particular statute
and the language which they have there employed" (Amberg v Kinley, 214 NY 531,
535-536 [1915]). Whether a private cause of action exists first depends upon whether the
plaintiff is "one of the class for whose especial benefit the statute was enacted" (Motyka v
City of Amsterdam, 15 NY2d 134, 139 [1965]). Morever, the Court must consider "what
indications there are in the [*4]statute or its legislative history of
an intent to create (or conversely to deny) such a remedy and, most importantly, the consistency
of doing so with the purposes underlying the legislative scheme" (Burns Jackson Miller
Summit & Spitzer v Lindner, 59 NY2d 314, 325 [1983]).
We begin the analysis with the statute itself. As noted above, FOIL specifically provides a
cause of action for entities to challenge disclosures by state entities (Public Officers Law §
89 [5] [a] [1]). In addition, Public Officers Law § 89 (5) (a) (1-a) authorizes an entity which
has provided documentation to "any agency," state or local, to maintain an action to challenge
disclosure of the documentation when the documentation may contain "critical infrastructure
information." FOIL contains, however, no explicit statement as to whether the Legislature
intended to create or deny a private cause of action generally with respect to local municipalities.
Examination of the history of FOIL leads this Court to conclude that it was intended to
establish a cause of action. FOIL sets forth a legislative policy strongly advocating disclosure
(Public Officers Law § 84). FOIL also sets statutory exemptions from that policy of
disclosure (Public Officers Law § 87 [2] [a-j]). Each of the exemptions from disclosure
represents a legislative policy decision. To argue that FOIL is permissive with regard to
municipal agencies is to eviscerate the Legislature's carefully crafted exemptions to disclosure
and the public policy behind those exemptions.
Here, the petitioners assert that the Lease falls within the exemption to disclosure for records
that are a "trade secret or are submitted to an agency by a commercial enterprise ... and which if
disclosed would cause substantial injury to the competitive position of the subject enterprise"
(Public Officers Law § 87 [d]). The legislative policy behind the exemption is stated in the
Legislative Memorandum issued upon the amendment to this exemption, as follows:
The present proceeding is exactly the circumstances involving a local "economic (industrial)
development agency" that the Legislature anticipated. In submitting their Lease to OCIDA,
petitioners expected that the confidential commercial information in the Lease met the statutory
exemption from disclosure, and that the Lease would not be disclosed by OCIDA to a
competitor. To deny petitioners standing to challenge in an Article 78 proceeding the OCIDA
determination that their records were not exempt from disclosure would violate the spirit and
language of the Freedom of Information Law. The OD's contention that petitioners lack standing
is therefore rejected.
Turning to the merits, petitioners contend that the financial information is exempt from
disclosure pursuant to Public Officers Law § 87 (2) (d) because they were trade secrets or
that their disclosure would substantially injure their competitive position. In addressing that
contention, one must always heed the Legislative Declaration that "government is the public's
business and that the public, individually and collectively and represented by a free press, should
have access to the records of government" (Public Officers Law § 84). Thus, all records of
an agency are presumptively available for public inspection unless specifically exempted
(Matter of [*5]M. Farbman & Sons v New York City Health
& Hosps. Corp., 62 NY2d 75, 79-80 [1984]; Matter of Encore College Bookstores, Inc. v
Auxiliary Serv. Corp., 87 NY2d at 416-417).
In light thereof, petitioners bear the burden of proving entitlement to non disclosure
(Matter of Capital Newspapers Div. of Hearst Corp. v Burns, 67 NY2d at 566; Matter of Bahnken v New York City Fire
Dept., 17 AD3d 228, 229 [2005], lv denied 6 NY3d 701 [2005]; Verizon
NY, Inc. v Bradbury, 10 Misc 3d at 791). Although FOIL sets forth ten statutory exemptions
from the presumption of disclosure (Public Officers Law §87 [2] [a-j]), the statutory
exemptions "are to be narrowly construed to provide maximum access" (Matter of Capital
Newspapers Div. of Hearst Corp. v Burns, 67 NY2d at 566; see Matter of Newsday, Inc.
v Sise, 71 NY2d 146, 150 [1987], cert denied 486 US 1056 [1988]).
Initially, petitioners contend that the Option Fees in the Lease are exempt from disclosure as
a "trade secret" under Public Officers Law § 87 (2) (d). A trade secret consists of any
formula, pattern, device or compilation of information which is used in one's business, and which
gives one an opportunity to obtain an advantage over competitors who do not know or use it
(see Ashland Mgt. v Janien, 82 NY2d 395, 407 [1993]; see e.g. Matter of Sunset
Energy Fleet, LLC v New York State Dept. of Envtl. Conservation, 285 AD2d 865, 867
[2001]; Matter of Markowitz v
Serio, 11 Misc 3d 439, 444 [2006]). Factors to be considered in determining whether
information constitutes a trade secret include: (1) the extent to which the information is known
outside of his business; (2) the extent to which it is known by employees and others involved in
his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4)
the value of the information to him and to his competitors; (5) the amount of effort or money
expended by him in developing the information; and (6) the ease or difficulty with which the
information could be properly acquired or duplicated by others (see Wiener v Lazard Freres
& Co., 241 AD2d 114, 123-124, [1998]; see also Restatement of Torts [1939],
Section 757, comment b).
In support of non disclosure, the petitioners assert that the Option Fees qualify as a trade
secret under the Restatement definition. Specifically, petitioners argue that: (1) the Option Fees
are not known outside of petitioners' respective businesses; (2) the confidentiality clause in the
Lease is evidence that the petitioners considered the Option Fees confidential; (3) the Option Fee
information is valuable to competitors and was developed after extensive negotiations between
the petitioners; and (4) the sole means by which petitioners' competitors could obtain the
information is through disclosure of the Lease under the OD's FOIL request.
This Court disagrees. First, the Option Fees may be estimated by dividing the cost of
property acquisition stated in NYRI's application to the Public Service Commission by the length
of the route. Second, this Court is not bound by a confidentiality agreement and must make its
own determination regarding disclosure (see Matter of Washington Post Co. v New York
State Ins. Dept., 61 NY2d 557 [1984]). Third, NYRI and NYS & W have not proven the
existence of competitors nor any value to them of the Option Fees. Fourth, and most importantly,
this Court finds that Option Fees, while negotiated, do not constitute "any formula, pattern,
device or compilation of information which is used in one's business" under the Restatement's
definition of "trade secret" (Ashland Mgt v Janien, 82 NY2d at 407).
The primary contention by petitioners is that the Option Fees in the Lease are exempt from
disclosure because they are records submitted by a commercial enterprise and which, if [*6]disclosed, would cause "substantial injury to the competitive
position of the petitioners" (Public Officers Law § 87 [2] [d]). There is no question that
NYRI and NYS & W are commercial enterprises. The sole question is whether petitioners have
demonstrated that disclosure would cause substantial injury to their competitive position.
What makes Petitioners' contention unique is that they rely on a concept they entitle "vertical
competition", rather than what they refer to as "horizontal competition", to establish substantial
injury to their competitive position. Horizontal competition is defined by petitioners as direct
competition. In the instant case, horizontal competition would be if NYRI or NYS & W were
competing with another power line company or railroad, respectively. In that vein, if NYRI was
racing with another power transmission company to build the proposed transmission line, that
competition would be "horizontal competition." Similarly, if NYS & W was competing against
another railroad to provide use of a right-of-way, that competition would be "horizontal
competition."
On the other hand, "vertical competition" involves tangential economic consequences arising
from the disclosure of the financial information. It is not competition with other power line
companies or railroads, but rather injury to its competitive position; vis-a-vis, companies it
contracts with for goods or services or provides services to, or other entities or individuals it will
be negotiating with to bring to fruition this or other projects. NYRI argues that it will be placed at
a competitive disadvantage with other landowners it must negotiate with for right-of-way for the
construction of this or other power transmission lines across the State, if the Option Fees
associated with this Lease are disclosed. Specifically, NYRI notes that it needs to acquire
rights-of-way across more than 625 parcels to complete the proposed route for this transmission
line. According to NYRI, disclosure of the Option Fees would hinder its ability to obtain the best
possible price and cause substantial injury to their competitive position. Simply put, it will cost
NYRI more money to acquire the property rights.
Similarly, NYS & W argues that it will sustain significant competitive injury if the Option
Fees are disclosed because the general public will know the cost of using the NYS & W
right-of-way. NYS & W's General Counsel and Executive Vice President asserts that:
Several New York cases construe the "competitive
position" exemption (Public Officers Law § 87 [2] [d]) (see e.g. Matter of Encore
College Bookstores, Inc. v Auxiliary Serv. Corp., 87 NY2d 410, supra; Matter of
Passino v Jefferson-Lewis, 277 AD2d 1028 [2000], lv denied 96 NY2d 709 [2001];
Matter of Sunset Energy Fleet, LLC v New York State Dept. of Envtl. Conservation, 285
AD2d 865, supra; Matter of Glens Falls Newspapers v Counties of Warren and
Washington Indus. Dev. Agency, 257 AD2d 948 [1999]; Verizon NY, Inc. v
Bradbury, 10 Misc 3d 785, supra).
The common denominator among all cases construing the "competitive position" exemption
is the existence of a competitor who will benefit from disclosure. In Encore, the
competitor is another bookstore. In Glens Falls and Sunset Energy, the
competitors are rival electrical utilities. In Passino, the competitors are other health
insurance providers. In Verizon, a rival cable television provider and competitor
Cablevision was the source of the FOIL request. In the instant case, neither NYRI nor NYS & W
have identified a competitor.
Petitioners contend, however, that the Court must consider not only direct competition
("horizontal competition"), but also the collateral economic effect on their overall business
enterprises arising from releasing the financial information, vis-a-vis, obtain other rights of way
(NYRI) or leasing their rights of way to others (NYS & W). No New York case has specifically
reviewed or upheld this contention.
Because of the petitioners' unique argument and because the Court of Appeals has sought
guidance in interpreting FOIL by consulting federal cases construing FOIA (see Matter of
Encore College Bookstores, Inc. v Auxiliary Serv. Corp., 87 NY2d at 419-421), this Court
directed counsel to brief relevant Federal cases.
Prior to New York's FOIL, the Federal FOIA (effective July 4, 1967) similarly sets forth a
policy of broad disclosure of government documents (5 USC § 552). Also, similarly to New
York's FOIL, FOIA makes provision for nine exemptions from disclosure (5 USC § 552
[b)]. Federal case law interpreting FOIA, much like New York case law interpreting FOIL,
establishes that the exemptions to disclosure are to be construed narrowly.
Relevant to this case is the FOIA exemption from disclosure for "commercial or financial
information" obtained from a person and privileged or confidential (5 USC § 552 [b] [4]).
Here, the Option Fees are unquestionably "commercial or financial information." Moreover, the
petitioners certainly qualify as "persons" within the meaning of the statute (see Nadler v
FDIC, 899 F Supp 158, 160 [SDNY 1995], affd 92 F3d 93 [2d Cir 1996], noting that
under the exemption a "person" is defined broadly to include individuals, partnerships,
corporations, associations, and private or public organizations other than government agencies).
Furthermore, no party herein asserts that the Option Fees are "privileged." Hence, the Court is
left to consider those cases interpreting the word "confidential" as it is used in Exemption 4 of
FOIA.
Federal courts have interpreted FOIA's "confidential" to mean that disclosure would impair
the government's ability to obtain necessary information in the future or cause "substantial harm
to the competitive position" of the person submitting the information (National Parks &
Conservation Assn. v Morton, 498 F2d 765, 770 [DC Cir 1974], affd in part and revd in
part sub nom. 547 F2d 673 [DC Cir 1976]; see also CNA Fin. Corp. v Donovan, 830
F2d 1132, 1152, n [*8]146 [DC Cir 1987], cert denied
485 US 977 [1988]).[FN1] This standard is identical to the language of
Public Officers Law § 87 [2][d]. The Federal case law and the New York FOIL statute both
refer to injury to "competitive position."
In support of their argument that FOIA's Exemption 4, and by analogy FOIL's §
87(2)(d), applies to "vertical competition" as well as "horizontal competition", the petitioners ask
the Court to consider Starkey v United States Dept. of Interior (238 F Supp 2d 1188 [SD
Cal 2002]). The plaintiff therein requested documents from the Bureau of Indian Affairs
(hereinafter BIA) including documents concerning sand mining operations conducted on tribal
land. The BIA withheld disclosure based on FOIA Exemption 4, and the plaintiff appealed the
decision to the federal courts. The court determined that the BIA correctly withheld disclosure.
The Court found that disclosure of information regarding "pricing, water and well resources, and
mining operations" would give "competitors unfair advantage in undercutting prices, structuring
their transactions, and marketing in the recruitment of customers" (Starkey v United States
Dept. of Interior, 238 F Supp 2d at 1195-1196, quoting from the affidavit of the CEO of the
mining operation). The Starkey case clearly involves competitors, i.e., other mining
companies. Using petitioners' phrasing, Starkey is not a case of "vertical competition" but
a case of "horizontal competition." Starkey does not support petitioners' arguments.
The petitioners also cite to Flathead Joint Bd. of Control v United States Dept. of
Interior, 309 F Supp 2d 1217 (D. Mont. 2004). In Flathead the Confederated Salish
and Kootenai Tribes (hereinafter CS & K Tribes) were entitled by Federal treaty to certain water
rights on the Flathead Reservation based upon the tribes' water usage. The CS & K Tribes, a local
irrigation board, and the State of Montana were engaged in an adjudication process to determine
each entity's rights to the Flathead Reservation water. The irrigation board, under FOIA,
requested records of CS & K Tribes' water usage from the BIA. The Court compared the request
to asking for information about a manufacturer's capacity to produce widgets (Flathead Joint
Bd. of Control v United States Dept. of Interior, 309 F Supp 2d at 1222). The Federal Court
held that the information was confidential and not subject to disclosure because it would
jeopardize the tribes' competitive position in the water rights negotiations (Flathead Joint Bd.
of Control v United States Dept. of Interior, 309 F Supp 2d at 1221-1223).
Clearly, the CS & K Tribes were directly competing with others, including the State of
Montana, for water rights. Although, the Flathead case involved negotiations, there was
direct head-to-head competition and not mere negotiation of a price. Again, in the phraseology of
the petitioners, Flathead is another "horizontal competition" case and not a "vertical
competition" case.
[*9] Finally, Nadler v FDIC (899 F Supp 158, 160
[SDNY 1995], affd 92 F3d 93 [2d Cir 1996], supra), relied upon by NYS & W,
does not support the claimed exemption. In that case, the FDIC, stepping into the shoes of an
insolvent bank, found itself a partner in a real estate joint venture agreement. The petitioner
sought disclosure of the agreement. The District Court specifically found that disclosure would
jeopardize FDIC's position in the joint venture and the solvency of the joint venture, "vis-a-vis
other New York City real estate developers" (Nadler v FDIC, 899 F Supp at 163). Again,
the Court was concerned with "horizontal competitive" harm.
No Federal or State cases have been submitted by petitioners that clearly support their
contention that tangential negative economic consequences (here, arising from their negotiation
of rights of way (NYRI) or the leasing of rights of way (NYS & W) to third parties on this or
other projects) can be used to establish substantial injury to one's competitive position, and the
court declines petitioners' request to adopt that concept of "vertical competition." To do so would
be to engraft another exemption to disclosure onto those statutorily provided. Moreover, because
any financial disclosures to those with whom a company does business or seeks to do business
can have a negative financial impact, the suggested vertical competition exemption would be
contrary to the statutory scheme of providing open public access to government records with very
limited and narrowly construed exemptions.
If the Court were to adopt the "vertical competition" argument advanced by the petitioners,
the petitioners' case would still fail. The exemption to disclosure applies only upon proof of
"substantial harm" to competitive position (Public Officers Law § 87 [2] [d]). The
petitioners have made only the most general allegations of potential harm to present and future
negotiations. Their allegations, even if accepted in full, do not amount to proof in dollars and
cents terms of substantial economic harm in their competitive position.
The Court also notes that the petitioners have not sought exemption under any other
provisions of FOIL. For example, Chapter 403 of the Laws of 2003 created an exemption from
disclosure for "critical infrastructure" information. Public Officers Law § 89 (5) (1-a)
permits an entity submitting records to an agency to identify the records as "critical infrastructure
information" not subject to disclosure under FOIL. The petitioners have not raised this
exemption, and the Court has not considered the relevance thereof. Likewise, the petitioners have
not asserted and the Court does not consider whether the Option Fees in the Lease should be
exempt from disclosure as records that "if disclosed would impair present or imminent contract
awards" (Public Officers Law § 87 [2] [c]).
In conclusion, the Court holds that the petitioners have failed to meet their burden of proof to
establish that the Option Fees of the subject Lease fall within FOIL's exemption for disclosure as
"trade secrets or are submitted to an agency by a commercial enterprise ... and which if disclosed
would cause substantial injury to the competitive position of the subject enterprise" (Public
Officers Law § 87 [2] [d]).
Accordingly, the petition is dismissed. Submit Order accordingly.
Honorable James C. Tormey, J.S.C.
"Certain forms of economic development are generally practiced in confidence. For
example, businesses often share confidential commercial information with an economic
development agency in order for the agency to perform its economic development services. This
information is provided to such agencies by businesses with the expectation that the information
will not be disclosed to a competitor" (1990 NY Sess.Laws Legislative Memoranda, p. 2441
[McKinney]).
"NYS & W as a part of its business enters into private negotiations with various
entities which wish to locate non-rail facilities on NYS & W's property. These facilities include
electric power lines, telephone lines, fiber optic lines, gas transmission lines, water and sewer
line[s] and the like. As these are all private transactions, the publication of the commercial terms,
particularly the compensation, paid by other[s] would substantially limit and harm NYS & W's
ability to negotiate the best rates possible with other third parties, and harm its competitive
position. Additionally, NYS & W competes with other property owners, including other
railroads, for many of these occupations; again, disclosure of NYS & W's charges to its
competitors would substantially harm NYS & W's ability to negotiate favorable rates. This is not
a hypothetical concern; I am currently negotiating with a third party regarding the possible siting
of an electric power transmission line on NYS & W's property at a location outside of Oneida
County." (NYS & W Affidavit in support of Petitioners' application, p 6)
Except for the general statements made by petitioners in support of their vertical
competition claim, no details are provided regarding any dollars and cents loss.
[*7]
SO ORDERED.
Enter:
[*10]
Dated: February ____, 2007.
Footnote 1: This Court also notes that a
minority of Federal cases have adopted a broader definition for confidentiality which includes
any record not normally released to the public (see Critical Mass Energy Project v Nuclear
Regulatory Commn., 975 F2d 871 [DC Cir 1992]). However, Critical Mass has not
been adopted by the Second Circuit, and has, in fact, been criticized (see NY Pub. Interest
Research Group v United States Envtl. Protection Agency, 294 F Supp 2d 327, 336 [SDNY
2003]). To the extent necessary for this opinion, this Court finds that the Critical Mass
standard is not the law in New York and is contrary to the basic spirit and purpose of open
government stated in New York's FOIL.