The Oregon Court of Appeals recently issued a decision addressing the question of whether a wholesale power purchase agreement between a municipal utility and a private corporation is exempt from disclosure under Oregon’s public records laws. The Court determined that, although certain confidential terms of the contract may be redacted, the contract as a whole is not categorically exempt from disclosure. The case serves as a reminder, both for government agencies and for private companies doing business with government entities, that writing a confidentiality provision in an agreement does not necessarily protect such document from public disclosure.
The Oregon case involved an agreement between a municipal utility and one of its industrial retail customers. After the utility agreed to purchase output from its customer’s cogeneration facility, the local newspaper filed a public records request asking for a copy of the contract. The utility and its customer denied the public records request on the grounds that the agreement was exempt from disclosure, under a statutory provision applicable to sensitive business, commercial or financial information. However, following the procedure set forth in Oregon law, the matter was referred to the local district attorney’s office, which determined that the agreement must be disclosed.
The utility and its customers then brought a legal action in state court seeking injunctive and declaratory relief that the agreement is exempt from disclosure. The litigants each pointed to differing statutory provisions, one exempting sensitive business information from disclosure, and the other requiring the public entity to separate exempt from nonexempt information.
The trial court agreed with the utility and its customer, granting summary judgment on the issue that the entire agreement is exempt from disclosure. The trial court specifically found that the utility was contractually obligated not to disclose the agreement, and that it had diligently complied with that obligation. The trial court also reasoned that compelling disclosure of such confidential power purchase agreements could have a chilling effect on future wholesale power sellers or purchasers — to the detriment of the utility’s retail ratepayers.
On review, however, the Court of Appeals reversed the trial court’s summary judgment decision. The way that the question was framed for the Court of Appeals was not whether the agreement included certain confidential information that may be exempt from disclosure — but whether the agreement as a whole is categorically exempt from disclosure because it contains confidential information. The Court of Appeals rejected the argument that because the agreement contains confidential business information, the agreement as a whole is exempt from disclosure. The Court noted that although certain other statutory exemptions applied to entire documents containing protected information, the exemption applicable to confidential business information applied only to the information itself.
While the Oregon Court of Appeals decision turns on a careful parsing of Oregon statutory provisions, it also is relevant to entities in other jurisdictions. In the energy industry, contracts between public and private entities are commonplace. In such cases, the Oregon Court of Appeals decision serves as a reminder that the parties cannot simply contract out of statutory public records obligations. Therefore, in any contract involving a government entity, both parties should have a like understanding — a “meeting of the minds,” if you will — concerning the applicability of the public records laws to the terms and conditions of the contract.
In my experience, consumer-owned utilities that are subject to public records laws usually start with the assumption that everything is a public record that is potentially discoverable. That is to say, such entities typically err on the side of public disclosure of their records, even when an exemption may otherwise apply. On the other hand, private companies sometimes can underestimate the applicability and scope of public records laws. They may incorrectly assume, for example, that just because a contract is designated as “confidential,” that it will be exempt from disclosure under public records laws.
The truth usually lies somewhere in the middle, as the Oregon Court of Appeals decision indicates. A likely outcome to any contested request for public records is that a certain amount of the information may be exempt from disclosure, depending on the facts of the case, even if the document as a whole is not exempt.
The best way to ensure that contracting parties have a mutual understanding of their respective confidentiality rights and obligations, is to include a well-crafted confidentiality provision. Such a provision should accomplish the following:
When one of the parties to the contract is a government entity, additional provisions may be necessary to specifically address that party’s obligations under the applicable public records laws.
These may include: