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March 17, 2000

FOIL-AO-12000

The staff of the Committee on Open Government is authorized to issue advisory opinions.
The ensuing staff advisory opinion is based solely upon the information presented in your
correspondence.

Dear

I have received your letter February 7, as well as a variety of materials, including
three requests for records directed to the Town of Amherst. Having reviewed the
documentation, I offer the following comments.

The first involves a request for "the town's 1999 payroll in electronic format", and
you indicated that you had been seeking the record for some three months, and that the
Town's finance director said that the record includes individuals' social security numbers.
She later wrote with respect to the record originally requested, however, that

"…because of the layout of this report someone would have to
manually delete several fields from each employee records.
The Computer Services Manager estimates this would take
approximately sixteen to twenty-four man-hours. There is the
possibility that another report, used by the Personnel
Department, would have the information you require, and
would have the proper layout, which allows for easy deletion
of non-public information."

In this regard, for future reference, the Freedom of Information Law pertains to
existing records. Section 89(3) of the Law states in part that an agency need not create a
record in response to a request. It is also important to note, however, that §86(4) of the Law
defines the term "record" to include:

"any information kept, held, filed, produced, reproduced by,
with or for an agency or the state legislature, in any physical
form whatsoever including, but not limited to, reports,
statements, examinations, memoranda, opinions, folders, files,
books, manuals, pamphlets, forms, papers, designs, drawings,
maps, photos, letters, microfilms, computer tapes or discs,
rules, regulations or codes."

Based upon the language quoted above, if information is maintained in some physical form,
it would constitute a "record" subject to rights of access conferred by the Law. Further, the
definition of "record" includes specific reference to computer tapes and discs, and it was held
in the early days of the Freedom of Information Law that "[i]nformation is increasingly being
stored in computers and access to such data should not be restricted merely because it is not
in printed form" [Babigian v. Evans, 427 NYS 2d 688, 691 (1980); aff'd 97 AD 2d 992
(1983); see also, Szikszay v. Buelow, 436 NYS 2d 558 (1981)].

When information is maintained electronically, it has been advised that if the
information sought is available under the Freedom of Information Law and may be retrieved
by means of existing computer programs, an agency is required to disclose the information.
In that kind of situation, the agency would merely be retrieving data that it has the capacity
to retrieve. Disclosure may be accomplished either by printing out the data on paper or
perhaps by duplicating the data on another storage mechanism, such as a computer tape or
disk. On the other hand, if information sought can be retrieved from a computer or other
storage medium only by means of new programming or the alteration of existing programs,
those steps would be the equivalent of creating a new record. As stated earlier, since §89(3)
does not require an agency to create a record, an agency is not required to reprogram or
develop new programs to retrieve information that would otherwise be available [see
Guerrier v. Hernandez-Cuebas, 165 AD 2d 218 (1991)].

Often information stored electronically can be extracted by means of a few
keystrokes on a keyboard. While some have contended that those kinds of minimal steps
involve programming or reprogramming, and, therefore, creating a new record, so narrow a
construction would tend to defeat the purposes of the Freedom of Information Law,
particularly as information is increasingly being stored electronically. If electronic
information can be extracted or generated with reasonable effort, if that effort involves less
time and cost to the agency than engaging in manual deletions, it would seem that an agency
should follow the more reasonable and less costly and labor intensive course of action.

In my view, there is clearly a distinction between extracting information and creating
it. If an applicant knows that an agency's database consists of 10 items or "fields", asks for
items 1, 3 and 5, but the agency has never produced that combination of data, would it be
"creating" a new record? The answer is dependent on the nature of the agency's existing
computer programs; if the agency has the ability to retrieve or extract those items by means
of its existing programs, it would not be creating a new record; it would merely be retrieving
what it has the ability to retrieve in conjunction with its electronic filing system. An apt
analogy may be to a filing cabinet in which files are stored alphabetically and an applicant
seeks items "A", "L" and "X". Although the agency may never have retrieved that
combination of files in the past, it has the ability to do so, because the request was made in a
manner applicable to the agency's filing system.

In the context of your request, if the Town has the ability to generate the data of your
interest, if it has the capacity to segregate that data from items that need not be disclosed, and
if you are willing to pay the actual cost of reproduction as envisioned by §87(1)(b)(iii) of the
Freedom of Information Law, I believe that the an agency, such as the Town, would be
obliged to do so.

With respect to the fee for reproducing the data, the basis is the "actual cost of
reproduction." That standard was considered in detail in Schulz v. New York State Board of
Elections (Supreme Court, Albany County, September 7, 1995). The court determined the
issue by viewing both the Freedom of Information Law and sections of the Election Law,
stating that:

"The language of the Freedom of Information Law (Public
Officers Law, sec. 87(1)(b)(iii), which limits charges for
requested public records to ‘the actual cost of reproducing'
[emphasis added], is elucidating. ‘Actual cost' would
reasonably seem to mean more finite, direct and less inclusive
than ‘[indirect] cost', which is a concept as infinite and
expandable as the mind of man. ‘Reproducing' a record
certainly does not include ‘producing' a record in the first
place - i.e., compiling the information from which the record is
produced. The purpose and intention of the Freedom of
Information Law is to further the concept of open government.
For this reason charges for public records must be kept to a
minimum. In a sense the information compiled by counties
under election Law 5-602 and 5-604 is a part of that concept
and charges for that information must be kept to a minimum so
as to maximize access thereto."

Further, using the standard of "actual cost of reproduction", it was stated that:

"Where the record is a computerized record the charge shall be
limited to the cost of a diskette or other computerized tape and
a reasonable amount for the salary of the employee
downloading said diskette or tape during the time such diskette
or tape is being downloaded."

Another request involves "copies of any and all checks written by Todd Champlin or
his company, Sports Performance Center, to determine how much rent he has made for the
space he leased at the Amherst Pepsi Center", as well as "copies of the profit/loss statements
for the Pepsi Center" for certain months.

As I understand the matter, the Pepsi Center is a Town of Amherst facility. If that is
so, the application of the Freedom of Information Law with respect to the portion of your
request involving checks would, in my view, be dependent on the nature of the relationship
or agreement between Mr. Champlin and his company and the Town.

To reiterate a point made earlier, the Freedom of Information Law defines the term
"record" expansively and includes not only records kept by an agency, but also records kept
for an agency. Documents need not be in the physical possession of an agency to constitute
agency records; so long as they are produced, kept or filed for an agency, the courts have
held they constitute "agency records", even if they are maintained apart from an agency's
premises..

For instance, it has been found that records maintained by an attorney retained by an
industrial development agency were subject to the Freedom of Information Law, even though
an agency did not possess the records and the attorney's fees were paid by applicants before
the agency. The Court determined that the fees were generated in his capacity as counsel to
the agency, that the agency was his client, that "he comes under the authority of the
Industrial Development Agency" and that, therefore, records of payment in his possession
were subject to rights of access conferred by the Freedom of Information Law (see C.B.
Smith v. County of Rensselaer, Supreme Court, Rensselaer County, May 13, 1993).

Additionally, in a decision rendered by the Court of Appeals, the state's highest court,
it was found that materials received by a corporation providing services pursuant to a
contract for a branch of the State University that were kept on behalf of the University
constituted "records" falling with the coverage of the Freedom of Information Law. I point
out that the Court rejected "SUNY's contention that disclosure turns on whether the
requested information is in the physical possession of the agency", for such a view "ignores
the plain language of the FOIL definition of 'records' as information kept or held 'by, with or
for an agency'" [see Encore College Bookstores, Inc. v. Auxiliary Services Corporation of
the State University of New York at Farmingdale, 87 NY 2d 410. 417 (1995)].

In short, insofar as the records sought are maintained for the Town, I believe that the
Town would be required to direct the custodian of the records to disclose them in accordance
with the Freedom of Information Law, or obtain them in order to disclose them to you to the
extent required by law.

With respect to the "profit/loss statements", again, if the Pepsi Center is a Town
facility, it would appear that any such records would be available. As a general matter, the
Freedom of Information Law is based upon a presumption of access. Stated differently, all
records of an agency are available, except to the extent that records or portions thereof fall
within one or more grounds for denial appearing in §87(2)(a) through (i) of the Law.

The remainder of the correspondence pertains to access to requests for proposals
(RFP's). In my view, two of the grounds for denial may be significant to an analysis of
rights of access.

Of primary relevance is §87(2)(c), which enables agencies to withhold records to the
extent that disclosure "would impair present or imminent contract awards or collective
bargaining negotiations." In my view, the key word in the quoted provision is "impair", and
the question involves how disclosure would impair the process of awarding a contract.

Section 87(2)(c) often applies in situations in which agencies seek bids or RFP's.
While I am not an expert on the subject, I believe that bids and the processes relating to bids
and RFP's are different. In the traditional competitive bidding process, so long as the bids
meet the requisite specifications, an agency must accept the low bid and enter into a contract
with the submitter of the low bid. When an agency seeks proposals by means of RFP's, there
is no obligation to accept the proposal reflective of the lowest cost; rather, the agency may
engage in negotiations with the submitters regarding cost as well as the nature or design of
goods or services, or the nature of the project in accordance with the goal sought to be
accomplished. As such, the process of evaluating RFP's is generally more flexible and
discretionary than the process of awarding a contract following the submission of bids.

When an agency solicits bids, but the deadline for their submission has not been
reached, premature disclosure to another possible submitter might provide that person or firm
with an unfair advantage vis a vis those who already submitted bids. Further, disclosure of
the identities of bidders or the number of bidders might enable another potential bidder to
tailor his bid in a manner that provides him with an unfair advantage in the bidding process.
In such a situation, harm or "impairment" would likely be the result, and the records could
justifiably be denied. However, when the deadline for submission of bids has been reached,
all of the submitters are on an equal footing and, as suggested earlier, an agency is generally
obliged to accept the lowest appropriate bid. In that situation, the bids would, in my opinion,
be available, even before a contract has been signed.

In the case of RFP's, even though the deadline for submission of proposals might
have passed, an agency may engage in negotiations or evaluations with several of the
submitters resulting in alterations in proposals or costs. Whether disclosure at that juncture
would "impair" the process of awarding a contract is, in my view, a question of fact. In some
instances, disclosure might impair the process; in others, disclosure may have no harmful
effect or might encourage firms to be more competitive, thereby resulting in benefit to the
agency and the public generally.

Claims have been made that proposals and other records pertaining to the RFP
process may always be withheld prior to the final award of a contract. In general, I have
disagreed with those kinds of blanket assertions. Again, unlike the bid process in which an
agency essentially has no choice but to accept the low appropriate bid, in the RFP process,
the figures offered by submitters are subject to negotiation and change; they do not reflect
the "bottom line." In view of the flexibility of the process, it is difficult to envision how
disclosure of those figures would adversely affect an agency's ability to engage in the best
contractual arrangement on behalf of the taxpayers.

It has also been contended that the kinds of records at issue should be withheld
because the negotiations with the apparently successful submitter may not culminate in an
agreement or may be rejected by the ultimate decision maker, such as the Town in this
instance. It is my understanding that the RFP process is intended to encourage creativity on
the part of submitters so that they can offer the best possible solutions in terms of an agency's
needs or goals. That being so, and because proposals are subject to negotiation and
alteration, even if the apparently successful proposal is rejected or set aside for some reason,
the agency is not bound but rather is free to continue to attempt to engage in an optimal
agreement. If anything, disclosure might encourage submitters to better accommodate the
needs of the agency or propose what might be characterized as a better deal. Rather than
impairing the process, disclosure might enhance it.

The other provision of potential significance is §87(2)(d), which permits an agency to
withhold records or portions thereof that:

"are trade secrets or are submitted to an agency by a
commercial enterprise or derived from information obtained
from a commercial enterprise and which if disclosed would
cause substantial injury to the competitive position of the
subject enterprise..."

In my opinion, the question under §87(2)(d) involves the extent, if any, to which disclosure
would "cause substantial injury to the competitive position" of a commercial entity.

The concept and parameters of what might constitute a "trade secret" were discussed
in Kewanee Oil Co. v. Bicron Corp., which was decided by the United States Supreme Court
in 1973 (416 (U.S. 470). Central to the issue was a definition of "trade secret" upon which
reliance is often based. Specifically, the Court cited the Restatement of Torts, section 757,
comment b (1939), which states that:

"[a] trade secret may consist of any formula, pattern, device or
compilation of information which is used in one's business, and
which gives him an opportunity to obtain an advantage over
competitors who do not know or use it. It may be a formula
for a chemical compound, a process of manufacturing, treating
or preserving materials, a pattern for a machine or other device,
or a list of customers" (id. at 474, 475).

In its review of the definition, the court stated that "[T]he subject of a trade secret must be
secret, and must not be of public knowledge or of a general knowledge in the trade or
business" (id.). The phrase "trade secret" is more extensively defined in 104 NY Jur 2d 234
to mean:

"...a formula, process, device or compilation of information
used in one's business which confers a competitive advantage
over those in similar businesses who do not know it or use it.
A trade secret, like any other secret, is something known to
only one or a few and kept from the general public, and not
susceptible to general knowledge. Six factors are to be
considered in determining whether a trade secret exists: (1) the
extent to which the information is known outside the business;
(2) the extent to which it is known by a business' employees
and others involved in the business; (3) the extent of measures
taken by a business to guard the secrecy of the information; (4)
the value of the information to a business and to its
competitors; (5) the amount of effort or money expended by a
business in developing the information; and (6) the ease or
difficulty with which the information could be properly
acquired or duplicated by others. If there has been a voluntary
disclosure by the plaintiff, or if the facts pertaining to the
matter are a subject of general knowledge in the trade, then any
property right has evaporated."

From my perspective, the nature of record, the area of commerce in which a
commercial entity is involved and the presence of the conditions described above that must
be found to characterize records as trade secrets would be the factors used to determine the
extent to which disclosure would "cause substantial injury to the competitive position" of a
commercial enterprise. Therefore, the proper assertion of §87(2)(d) would be dependent
upon the facts and, again, the effect of disclosure upon the competitive position of the entity
to which the records relate.

Pertinent to the analysis is a decision rendered by the Court of Appeals, which, for
the first time, considered the phrase "substantial competitive injury" [(Encore College
Bookstores, Inc. v. Auxiliary Service Corporation of the State University of New York at
Farmingdale, 87 NY2d 410 (1995)]. In that decision, the Court reviewed the legislative
history of the Freedom of Information Law as it pertains to §87(2)(d), and due to the
analogous nature of equivalent exception in the federal Freedom of Information Act (5
U.S.C. §552), it relied in part upon federal judicial precedent.

In its discussion of the issue, the Court stated that:

"FOIL fails to define substantial competitive injury. Nor has
this Court previously interpreted the statutory phrase. FOIA,
however, contains a similar exemption for 'commercial or
financial information obtained from a person and privileged or
confidential' (see, 5 USC § 552[b][4]). Commercial
information, moreover, is 'confidential' if it would impair the
government's ability to obtain necessary information in the
future or cause 'substantial harm to the competitive position' of
the person from whom the information was obtained...

"As established in Worthington Compressors v Costle (662
F2d 45, 51 [DC Cir]), whether 'substantial competitive harm'
exists for purposes of FOIA's exemption for commercial
information turns on the commercial value of the requested
information to competitors and the cost of acquiring it through
other means. Because the submitting business can suffer
competitive harm only if the desired material has commercial
value to its competitors, courts must consider how valuable the
information will be to the competing business, as well as the
resultant damage to the submitting enterprise. Where FOIA
disclosure is the sole means by which competitors can obtain
the requested information, the inquiry ends here.

"Where, however, the material is available from other sources
at little or no cost, its disclosure is unlikely to cause
competitive damage to the submitting commercial enterprise.
On the other hand, as explained in Worthington:

Because competition in business turns on the
relative costs and opportunities faced by
members of the same industry, there is a
potential windfall for competitors to whom
valuable information is released under FOIA. If
those competitors are charged only minimal
FOIA retrieval costs for the information, rather
than the considerable costs of private
reproduction, they may be getting quite a
bargain. Such bargains could easily have
competitive consequences not contemplated as
part of FOIA's principal aim of promoting
openness in government (id., 419-420).

The Court also observed that the reasoning underlying these considerations is
consistent with the policy behind §87(2)(d) to protect businesses from the deleterious
consequences of disclosing confidential commercial information so as to further the state's
economic development efforts and attract business to New York (id.). In applying those
considerations to Encore's request, the Court concluded that the submitting enterprise was
not required to establish actual competitive harm; rather, it was required, in the words of
Gulf and Western Industries v. United States, 615 F.2d 527, 530 (D.C. Cir., 1979) to show
"actual competition and the likelihood of substantial competitive injury" (id., at 421).

Lastly, the Court of Appeals most recently expressed its general view of the intent of
the Freedom of Information Law in Gould v. New York City Police Department [87 NY2d
267 (1996)], stating that:

"To ensure maximum access to government records, the
'exemptions are to be narrowly construed, with the burden
resting on the agency to demonstrate that the requested
material indeed qualifies for exemption' (Matter of Hanig v.
State of New York Dept. of Motor Vehicles, 79 N.Y.2d 106,
109, 580 N.Y.S.2d 715, 588 N.E.2d 750 see, Public Officers
Law § 89[4][b]). As this Court has stated, '[o]nly where the
material requested falls squarely within the ambit of one of
these statutory exemptions may disclosure be withheld' (Matter
of Fink v. Lefkowitz, 47 N.Y.2d, 567, 571, 419 N.Y.S.2d 467,
393 N.E.2d 463)" (id., 275).

Just as significant, the Court in Gould repeatedly specified that a categorical denial of
access to records is inconsistent with the requirements of the Freedom of Information Law.
In that case, the Police Department contended that complaint follow up reports could be
withheld in their entirety on the ground that they fall within the exception regarding intra-
agency materials, §87(2)(g), an exception separate from those cited in response to your
request. The Court, however, wrote that: "Petitioners contend that because the complaint
follow-up reports contain factual data, the exemption does not justify complete nondisclosure
of the reports. We agree" (id., 276), and stated as a general principle that "blanket
exemptions for particular types of documents are inimical to FOIL's policy of open
government" (id., 275). The Court also offered guidance to agencies and lower courts in
determining rights of access and referred to several decisions it had previously rendered,
stating that:

"...to invoke one of the exemptions of section 87(2), the agency
must articulate 'particularized and specific justification' for not
disclosing requested documents (Matter of Fink vl. Lefkowitz,
supra, 47 N.Y.2d, at 571, 419 N.Y.S.2d 467, 393 N.E.2d 463).
If the court is unable to determine whether withheld documents
fall entirely within the scope of the asserted exemption, it
should conduct an in camera inspection of representative
documents and order disclosure of all nonexempt,
appropriately redacted material (see, Matter of Xerox Corp. v.
Town of Webster, 65 N.Y.2d 131, 133, 490 N.Y.S. 2d, 488, 480
N.E.2d 74; Matter of Farbman & Sons v. New York City
Health & Hosps. Corp., supra, 62 N.Y.2d, at 83, 476 N.Y.S.2d
69, 464 N.E.2d 437)" (id.).

In sum, I believe that a blanket denial of a request for RFP's would be inconsistent
with law.

In an effort to enhance compliance with and understanding of the Freedom of
Information Law, a copy of this opinion will be forwarded to Town officials.

I hope that I have been of assistance.

Sincerely,

 

Robert J. Freeman
Executive Director
RJF:jm

cc: Susan K. Jaros, Town Clerk
Town Attorney
Town Board
Maureen Cilano, Finance Director