Saying No to the Public Info Act Just Got Easier

The Texas Public Information Act, or PIA, guarantees access to Texas records. The law is similar to the Freedom of Information Act (FOIA) at the federal level, and aims to provide Texans with sweeping access to information in the interest of open government. If a question arises about whether information should be released, the law should be “liberally construed in favor of granting a request for information.”

However, about 60 exceptions allow the state to withhold information. One exception protects material that, if released to the public, would give an advantage to a competitor or bidder. Historically, this exception was interpreted to protect the government’s interests in withholding information, but not a private party’s.

No longer! A significant Texas Supreme Court ruling involving San Antonio entities expanded private party rights to deny the release of allegedly sensitive information to the public.

The PIA has long been used by businesses to obtain competitor information, often regarding the details of bidders on state contracts. The process typically works like this: 1) a requestor asks a state agency for information; 2) the agency examines internal information for anything confidential or protected and, if the request encompasses private party data, notifies the private party of the request; 3) the agency or private party is given an opportunity to explain to the Attorney General why information shouldn’t be released; and 4) if the Attorney General disagrees or no response is received, the information is released. Litigation can ensue if a disagreement arises over the release of the information.

Private parties commonly seek to block information they consider confidential or a trade secret. For example, The Coca-Cola Company would argue against releasing information on its secret formula if it had a contract with the state to provide soft-drink syrup (arguably, even if the formula was part of the materials submitted to the state). Understandably, that’s a long-held secret and a key to Coke’s success. But what about the rent you pay your landlord?

Until recently, it’s hard to see how lease rates could be protected against release, particularly when renting from a government agency. However, in a recent Texas Supreme Court case, this is precisely what Boeing asserted: its lease pricing and overhead costs at the Port of San Antonio should be considered confidential.

Boeing argued, if its competitors got the information, they could easily underbid Boeing on government airplane contracts. Boeing also argued publicizing the Port’s lease rates would allow other airport or base entities like the Port to undercut the rent charged there. Boeing’s work for the federal government is continually re-bid, according to the case, and Boeing claimed contracts have been lost to competitors over as little as one percent difference in pricing. Boeing alleged only a dozen of its 165,000 employees have access to information like its rental rates and lease incentives.

A lower court wasn’t convinced and ruled the lease terms were not Boeing’s proprietary information. The court explained Boeing couldn’t rely on the competitive bid exception because that exception could only be invoked by the state. The lower court said contracts should be open to the public to avoid corruption and overpricing. An intermediate appeals court agreed.

On appeal to the Texas Supreme Court, Boeing noted the PIA doesn’t expressly limit use of the bidding exception to governmental entities. Boeing argued its Port lease contained financial information that, if disclosed, would put Boeing at a competitive disadvantage when bidding on future government contracts. The Texas Supreme Court agreed, saying, “a private party may assert the [competitive bid] exception to protect its competitively sensitive information.” The crux of the appeal and opinion was about the bid exception, and the Supreme Court didn’t address whether the information was a trade secret. Despite the fact the Port does disclose gross rents received by Boeing, the Supreme Court effectively equated Boeing’s lease data with pricing information, something protected from release under FOIA.

The Boeing case has provided private companies with a new way to challenge the sweeping provisions of the PIA, and as the Texas Attorney General predicted in its arguments against Boeing, several companies have already used this precedent to withhold information.

In light of the Boeing case, companies doing business with the state should consider expanding the items they mark as “confidential” when submitted. At an initial glance, this signals the state to consider the privacy of the information and helps initially bolster the argument the data is protected. Further, businesses should be more mindful of incoming PIA requests and consider broader challenges to the release of information with the Attorney General.

On the other hand, businesses accustomed to using the PIA for competitive data should be prepared for increasing challenges to the release of materials. What was previously an inexpensive way to obtain basic competitive information may now be an expensive endeavor.

For the time being, private companies have an advantage in this ruling. The decision – making lease rates with a government entity potentially private – understandably ruffled the feathers of those who advocate for freedom of information. It remains to be seen how this ruling will affect the Texas Public Information Act long-term.

If you need legal advice, schedule a meeting with Tiwari + Bell PLLC through our website or by calling (210) 417-4167.