Issue:

Discussion:

The presumption in Section 13.03, subdivision 1, establishes a decision-making process in which, unless federal law provides otherwise, legislative approval must be sought and granted if a government entity wishes to classify its data as anything other than public. This is true even in the case of a temporary classification granted by the Commissioner. Although data which are the subject of an application for temporary classification become not public upon the filing of the application, the Legislature has reserved for itself the final decisions regarding temporary classifications approved by the Commissioner. The Legislature has two legislative sessions in which to adopt the language. If the Legislature fails to act, the data affected by the temporary classification revert to a classification of public. (See Minnesota Statutes Section 13.06, subdivisions 6 and 7.) Requiring that the Legislature make determinations to close off public access to certain government data ensures those decisions will be debated, openly and thoughtfully, and the rights of privacy of citizens and the need for confidentiality in a variety of institutions will be weighed against the need, in a democratic society, for the openness of governmental operations.

One exception to the general rule that all data are public is Minnesota Statutes Section 13.37, subdivision 2, which classifies trade secret data as not public. The question raised by Moorhead which led to this Commissioner's Advisory Opinion is whether certain information regarding Envirosys contained in a financial feasibility study and a financial statement (both of which were prepared by Deloitte-Touche), is classified as not public data because it fits the definition of trade secret data in Chapter 13. Subdivision 1 (b) of Section 13.37 contains the definition of trade secret data:

From the language in Section 13.37, is it clear that data can be classified as trade secret only if the data meet all of the criteria set out in the definition.

Many different kinds of information constitute the data which are in dispute. For instance, the 1994 Financial Statements include information gathered for general accounting purposes, e.g. Envirosys' assets, liabilities, long term investments, long term debt, equity, income statement, and statement of cash flows. The information displayed on the specified pages of the Financial Feasibility Study includes figures comprising forecasted balance sheets; a summary of significant forecast assumptions including a project description, a facility description, a project timeline; figures comprising the forecasted schedule of maximum annual cast debt service coverage for 4 years; a description of forecasted net operating revenues; a description of forecasted expenses; and a market assessment including, trends, analysis of demand, competitive assessment, process equipment availability, freight cost competitiveness, and Envirosys' marketing strategy.

To determine if the data in dispute are trade secret, it is necessary to evaluate those data in relation to the criteria set forth in Section 13.37. First, are the data regarding Envirosys government data, including a formula, pattern, compilation, program, device, method, technique or process? It appears an argument could be made that some of the data claimed by Envirosys to be trade secret do, in fact, constitute a compilation, method, technique, or process.

The second requirement set forth in Section 13.37 is that the data must have been supplied by the affected individual or organization, i.e. the individual or organization that would be affected by the disclosure. Since all the data were supplied by Envirosys, it does appear that all the data in dispute meet the second criterion.

The third requirement outlined in Section 13.37 is that the data be the subject of efforts by the individual or organization that are reasonable under the circumstances to maintain its secrecy. In this situation, it does appear that Envirosys has made reasonable attempts to maintain the secrecy of the data in dispute. For instance, Mr. Stigen's January 27, 1995, letter to Mr. Gemberling indicates that Envirosys has taken measures to ensure the confidentiality of the data, ...Our company takes great care in maintaining the secrecy of the financial feasibility study and certain other information that we deem to be trade secret. For example, anyone who obtains a copy of our financial feasibility study is required to sign a confidentiality agreement... In addition, the very reason for the issuance of this opinion is Envirosys' contention that certain data are not public. The fact that those data were not included with the original opinion request further illustrates Envirosys' concern regarding the secrecy of the data. Because it appears that Envirosys has reasonably attempted to maintain the secrecy of the data, it seems that the data do meet the third criterion set forth in Section 13.37.

The fourth requirement set forth in Section 13.37 is that the data must derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. It is in the evaluation of this fourth criterion that Envirosys' characterization of the data as trade secret becomes problematic. First, a reasonable argument could be made that most of the information in the Summary of Significant Forecast Assumptions and in the Market Assessment sections of the Financial Feasibility Study is readily ascertainable by proper means by other individuals. For example, Envirosys' description of its egg carton production process is quite general. It does not delve into specific details describing the quantities of the various ingredients involved in creating the molded pulp. Given that other companies appear to be manufacturing egg cartons from molded pulp, it would be difficult to argue that a general description of the process used to produce egg cartons would not be readily ascertainable by other persons.

Details relating to the capacity of the pulp-making machines would be readily ascertainable by making inquiries to the companies that manufacture those particular machines. Furthermore, after an individual had conducted market research regarding the need for egg cartons, s/he would be able to compile forecasted operating revenues and expenses. In addition, the Market Assessment section contains information relating to recycling trends, an analysis of demand for molded pulp egg cartons, a competitive assessment, process equipment availability, freight cost competitiveness, and marketing strategy. It seems that all of this information is readily ascertainable by proper means by persons who would obtain economic value from its disclosure or use and therefore, is not trade secret.

In addition, in evaluating the 1994 Financial Statements, it appears difficult to construct a reasonable argument that numbers compiled as part of a regular or routine financial analysis derive some sort of independent economic value from not being generally known to persons who could obtain economic value from the disclosure of those numerical figures.

Given the strong presumption in Minnesota law that government data are generally classified as public and that reasonable arguments can be made to support the position that much of the information about Envirosys does not appear to fit all of the criteria set forth in Section 13.37, the Commissioner must conclude that the data are not trade secret.

It must be noted, however, that one additional factor contributed significantly to the outcome of this opinion. A close examination of Minnesota Statutes Sections 13.671 and 13.76 reveals that both sections classify, as not public, certain data which relate to businesses that have requested financial assistance from the government. Sections 13.671 and 13.76 began as temporary classifications of data and were subsequently enacted into law by the Legislature. Section 13.671 classifies data collected by the Iron Range Resources and Rehabilitation Board (IRRRB):

Section 13.76 classifies certain data collected by the Minnesota Department of Trade and Economic Development:

What is relevant about these sections in relation to the data Envirosys has provided to Moorhead? First, the existence of these sections indicates the Legislature has, in the past, dealt with the issue of classification of data submitted by a private business seeking financial assistance from the government. It is reasonable to conclude that if the Legislature determined this type of data fit more appropriately under the trade secret exemption in Section 13.37, there would have been no need to adopt the provisions in 13.671 and 13.76.

Second, the existence of these sections also indicates that the Legislature and the Commissioner (in the granting of temporary classifications) have not been adverse to classifying, as not public, certain data relating to businesses seeking financial assistance from the government. Since Moorhead has not applied for a temporary classification for the Envirosys data, it would be appropriate for Moorhead to exercise that option. The policy is clear, however, that much of the data classified as not public during the application process, must become public upon approval of a business' application for assistance. This point is vital to the discussion about Envirosys' data. If Moorhead were to classify Envirosys' data as not public under Section 13.37, Envirosys would receive a confidentiality protection not available to other companies that may be receiving financial assistance from the government. Such an inconsistent result is one that the Commissioner cannot support.

Opinion:

Signed:

Elaine S. Hansen
Commissioner

Dated: April 13, 1995