posted on Jun, 29 2004 @ 10:01 AM
I noticed that exemption and it always struck me as odd. Here's a couple of snippets I found while researching it that help explain the policy
reasons behind it:
Found this in the Kansas Journal of Law and Public Policy Spring, 2003. "ACCESS TO RECORDS" VERSUS "ACCESS TO EVIL:" SHOULD DISCLOSURE LAWS
CONSIDER MOTIVES AS A BARRIER TO RECORDS RELEASE? James T. O'Reilly. fn 6.
'The legislative history and contemporaneous press coverage of FOIA shows virtually no business commentary to exemption (b)(4), but one business
group obviously carved out its own protection in exemption (b)(9) for "oil and gas wells."'
and also this, taken from Ashland Oil, Inc. v. F. T. C.
409 F.Supp. 297, (D.C.D.C. 1976).
To begin with, it must be recognized that a natural gas company's reserve data, much like a patent or trade secret, constitutes a valuable and
closely guarded asset. Making this asset available to competitors, without due compensation, would most certainly be inimical to competition,
especially in highly competitive areas, as the comments of Ashland Oil, Inc. illustrate:
* * * Ashland Oil, Inc. has obtained leases in Federal off-shore areas by payments to the United States Government of large bonuses. Unleased acreage
adjoins and offsets certain of these leases. If significant reserves are discovered and if the reserves extend into unleased areas, Ashland would not
disclose the results of such exploration until an opportunity is available to bid in a drainage sale of the offsetting acreage. The information
developed on such leases is highly confidential and proprietary in nature and disclosure of such information prior to the drainage sale would destroy
Ashland's competitive advantage in bidding at such sale by making available to other companies the results of Ashland's exploration efforts made at
great expense of it.
Similarly determining such reserve data to constitute 'valuable property' in Reliability of Electric and Gas Service, 49 F.P.C. 1428, 1429 (1973),
the FPC discussed the underpinnings of its holding as follows:
The policy reasons underlying our assurance of confidentiality are obvious. In a period when the gas supply shortage is most acute, disclosure of
detailed reserve data would undoubtedly inhibit future exploration for new gas reserves since speculators and competitors could equally benefit from
the geological and geophysical expenditures of other companies. A competitor would particularly benefit from knowledge of another producer's
uncommitted reserves for particular locations, especially in highly competitive areas. In addition, it would be extremely unfair to sellers of gas to
disclose such data to potential buyers with whom they negotiate for the sale of gas. Furthermore, we believe that certain reserve data constitutes a
valuable property right which should not be taken without due process and just compensation. (Emphasis added).
The federal courts have also acknowledged that detailed competitive information of the type here in issue constitutes trade secrets entitled to
protection from public disclosure.
In Abbott v. United States, 239 F.2d 310, 314 (5th Cir. 1956), the Court found the geophysical surveys underlying a company's reserve estimates to be
of 'almost inestimable practical value in the essential program of continuous exploration and development of mineral resources which is the life
blood of an oil producing company.' Moreover, once disclosed, such data possesses 'a 'negative' value' in the hands of a competitor who can use
it to 'undertake development, procure leases, and impede or thwart the company's plans.'
[edit on 29-6-2004 by koji_K]
[edit on 29-6-2004 by koji_K]