PAC Finds that NDA for Development Project Was Not Exempt from FOIA

PAC Finds that NDA for Development Project Was Not Exempt from FOIA

  Thursday, December 14, 2023    Julie Tappendorf

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A reporter submitted a FOIA request to a municipality seeking a non-disclosure agreement between the city and a private company concerning a development project. The city denied the request citing FOIA exemption 7(1)(g). After the requestor submitted a request for review to the PAC, the PAC issued a binding opinion finding that the city violated FOIA when it withheld the NDA. PAC Op. 23-015.

Section 7(1)(g) of FOIA exempts certain records from disclosure that contain:

1. a trade secret, commercial, or financial information, 
2. that was obtained from a person or business where the trade secrets or commercial or financial information are furnished under a claim that they are either (a) proprietary, (b) privileged, or (c) confidential, and 
3. that disclosure of the trade secrets or commercial or financial information would cause competitive harm to the person or business.

The PAC found that the NDA satisfied the first two elements because the NDA contained commercial information relating to a commercial project and it contains a clause providing that the existence of the agreement is confidential. However, the PAC determined that the city and company failed to set forth specific facts or evidence to demonstrate how disclosure of the NDA could reasonably be expected to result in competitive harm to the company, much less that it would cause harm. The PAC found that the NDA primarily consisted of boilerplate language setting forth the parameters for confidentiality but did not reveal information about sensitive matters, including the company’s business strategies, expenses, or revenues, or details concerning plans for the proposed development project.

The PAC also determined that the fact that the company had customarily and actually treated commercial information in the NDA as private and confidential in the past did not provide an independent basis for the city to withhold the record under FOIA section 7(1)(g).

The city also argued that disclosing the NDA would deter businesses from entering into future public-private partnerships with the city because of the risk that competitors would use that information for their own competitive purposes. The PAC rejected that argument, finding that the potential for competitive harm on this basis was not present in this matter because the company had issued a public press release concerning the development nine days before the FOIA request was submitted, so release of the NDA would not have been the first disclosure of the existence of the development project. 

Post Authored by Eugene Bolotnikov, Ancel Glink