Chapter §13.2 Specific PRA Business-Related Exemptions

• Jurisdiction: Washington

§13.2 SPECIFIC PRA BUSINESS-RELATED EXEMPTIONS

The PRA does not define common terms used throughout the statute that exempt "financial, commercial and proprietary information" from disclosure. RCW 42.56.270 refers to "financial information," "financial and commercial information," "valuable formulas," and "trade secrets," leaving to the agency the responsibility to analyze on a case-by-case basis whether an exemption might apply to a requested record. Many times, an agency will refer that analysis to the party that submitted the requested records containing financial and commercial information or trade secrets. The agency can do this pursuant to statutory authority that permits, but does not require, notice to a party that may be affected by a public records request. See RCW 42.56.540. When providing notice to third parties, the agency typically states that it intends to disclose the records at issue on a specified future date, unless the third party seeks a court injunction to prevent disclosure. See WAC 44-14-04003(12). By providing notice to third parties of a request for financial and commercial information or trade secret information, the agency then puts the burden of preventing disclosure upon the third party/owner of the requested record information. The process for obtaining this protection is discussed in §13.5, below, and in more detail in Chapter 17, Reverse PRA Action (Private Party Seeking to Prevent Disclosure), of this deskbook.

Implicit in the statutory right to seek court protection of records is a recognition that the agency may temporarily delay disclosure for the purpose of providing third-party notice. Confed. Tribes of Chehalis Res. v. Johnson, 135 Wn.2d 734, 757, 958 P.2d 260 (1998). The practice of most agencies is to delay disclosure for 10 business days to provide an opportunity for the third party to seek a court order preventing disclosure. See WAC 44-14-04003(12). If the third party does not seek a court order preventing release of the information, the agency will disclose the records. If the third party successfully enjoins disclosure of the records or unsuccessfully pursues a court action to prevent release, the agency will not be liable for any per-day penalties or attorney fees under the PRA. Confed. Tribes, 135 Wn.2d at 757. In addition, an agency should not face any liability for any loss or damage based upon the good-faith release of a public record. RCW 42.56.060.

Many exemptions apply to financial, commercial, and proprietary information contained in public records. They can be categorized into the topic areas discussed below. Numerous industry-specific exemptions are scattered throughout the RCW, and the practitioner is advised to review the statutes that govern the specific business or industry at issue to see if specific exemptions apply. See, e.g., RCW 21.20.855, 21.30.170 (information obtained by the Department of Financial Institutions); RCW 30.04.075(1) (information obtained from bank examinations); RCW 39.10.470(2) (trade secrets and proprietary information from contractors under alternative public works). (See Chapter 15, Exemptions Outside of Public Records Act, and Appendix of this deskbook.)

(1) RCW 42.56.270: the largest depository of specific financial exemptions

The exemptions in RCW 42.56.270 cover financial information that companies or individuals are required to provide to the government in its role as vendor, purchaser, investor, licensor, grantor, or promoter of economic development. The first exemption in RCW 42.56.270 is the "valuable formulae" exemption. RCW 42.56.270(1). This exemption will be discussed in greater detail in §13.2(2), below. Nearly 30 other specific financial exemptions follow RCW 42.56.270(1):

(1)	RCW 42.56.270(2): information provided to qualify for ferry system or highway construction improvement or repair
(2)	RCW 42.56.270(3): information provided in connection with export trading companies and the state agricultural market development program.
(3)	RCW 42.56.270(4): information provided in connection with obtaining loans or services under several legislative initiatives regarding economic development. See CLEAN v. City of Spokane, 133 Wn.2d 455, 475, 947 P.2d 1169 (1997), cert denied, 525 U.S. 812 (1998), in which the Supreme Court affirmed withholding under RCW 42.56.270(4) a report prepared for the City of Spokane for a HUD loan in connection with downtown redevelopment, as long as the loan was pending. Accord Spokane Research & Def. Fund v. City of Spokane (Spokane Research I), 96 Wn.App. 568, 575, 983 P.2d 676 (1999), review denied 140 Wn.2d 1001 (2000) (construing RCW 42.56.270(4)).
(4)	RCW 42.56.270(5): information regarding corporations organized or seeking certification as a state industrial development corporation.
(5)	RCW 42.56.270(6): information supplied to the state investment board relating to investment of public trust or retirement funds.
(6)	RCW 42.56.270(8): financial information submitted to the Clean Washington Center regarding the marketing of recycled products.
(7)	RCW 42.56.270(9): information to be provided to a public stadium authority for the release or use of a stadium or exhibition center.
(8)	RCW 42.56.270(10): financial information, including, but not limited to, account numbers and values, and other identification numbers supplied by or on behalf of a person, firm, corporation, limited liability company, partnership, or other entity related to an application for a horse racing license submitted pursuant to RCW 67.16.260(1)(b), liquor license, gambling license, or lottery retail license. Dragonslayer, Inc. v. State Gambling Comm'n, 139 Wn.App. 433, 446-47, 161 P.3d 428 (2007) (interpreting RCW 42.56.270(10) exemption). The Dragonslayer court addressed the applicability of a 2007 amendment (RCW 42.56.270(10)(b)) that exempted certain documents, including financial statements, submitted by tribes with an approved tribal/state compact for Class 3 gambling. The court held that this amendment would not apply retroactively to exempt the requested records.
(9)	RCW 42.56.270(11): "[p]roprietary data, trade secrets, or other information that relates to: (a) Avendor's unique methods of conducting business; (b) data unique to the product or services of the vendor; or (c) determining prices or rates to be charged for services, submitted by any vendor to the department of social and health services or the health care authority for ... state purchased health care." In Robbins, Geller, Rudman & Dowd, LLP v. State, 179 Wn.App. 711, 328 P.3d 905 (2014), the Court of Appeals found that each subpart is an independent clause. Under this reading, the exemption is not limited to information submitted to the Department of Social and Health Services (DSHS) but applies to information submitted to any agency if it satisfies the criteria of RCW 42.56.270(11)(a) or (b).

Comment: Parties should be cautious in relying on Robbins Geller's interpretation of RCW 42.56.270(11), which is dicta and difficult to reconcile with the statute's history and the PRA generally. The exemption was enacted as part of a bill entitled "An ACT Relating to the protection of proprietary or confidential information acquired through state health services purchasing," Laws of 2003, ch. 277. This suggests that the qualifying limitation in RCW 42.56.270(11)(c) ("submitted by any vendor to [DSHS] for ... state purchased heath care") was intended to limit all three subsections of the statute. Robbins Geller's broader reading of RCW 42.56.270(11)(a) and (b) is contrary to the dictates that exemptions should be construed narrowly, and would make the numerous other exemptions that cover proprietary information superfluous.

(10)	RCW 42.56.270(12): financial and proprietary information provided to the Department of Commerce for purposes of promoting community and economic development, such as might be considered for the siting, relocation, or expansion of a business.
(11)	RCW 42.56.270(13): financial and proprietary information submitted to the Department of Ecology to implement electronic product recycling.
(12)	RCW 42.56.270(14): financial, commercial, operations, and technical and research information and data submitted to or obtained by the life sciences discovery fund authority in applications for, or delivery of, grants under

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