New Law Shields Oil Companies and Their “Trade Secrets” from Public Record Review

Tuesday, September 23, 2014

When Governor Jerry Brown signed Senate Bill 1300 over the weekend, he attached a short statement (pdf) that vaguely acknowledged there were problems with the oil refinery legislation’s public disclosure requirements that should be cleaned up in the future.

Peter Scheer at the First Amendment Coalition clarified the governor’s words: “If you were trying to sabotage California’s open records law, you couldn’t do much better than SB 1300.”

The law, authored by Senator Loni Hancock (D-Berkeley), requires oil refinery operators to give state regulators information on scheduled shutdowns called “turnarounds,” the potentially dangerous process that occurs when a plant partially or fully closes for repairs, maintenance or reformulation of its products.

But amendments to the bill gave oil companies almost total control over what information could be made public. The bill allows the companies to designate virtually any information as “trade secrets,” compelling state agencies to deny inquiries made through the state Public Records Act (PRA).

That “will establish a toxic precedent for other regulated industries and interest groups to keep the public permanently in the dark about their activities,” Scheer warned.

The law also changes the process that allows a refinery to block a PRA request by making the person seeking information liable for a lawsuit. Scheer describes the new vulnerability thusly:

“Under SB 1300, if I file a PRA request for information submitted to the state by a refinery, the refinery will have the option of filing suit to block disclosure (irrespective of whether the agency wishes to disclose the records), in which case the refinery must file its suit against me, the requester, not just the state agency. This forces me  . . . to hire my own lawyer and defend the PRA request in court.”

That’s probably not going to happen. “I think it’s safe to say that no one will ever file a PRA request for refinery information, once it becomes known that a mere request may thrust the requester involuntarily into a costly legal battle against oil companies,” Scheer wrote.

Brown kind of warned about the bad things in his signing statement, but figured lawmakers would do in the future what they refused to do now: “This law does not require any information to be reported to the Division of Occupational Safety and Health until September 15, 2015, which provides time to make the necessary changes.”

Complaints about a lack of public disclosure plagued passage last year of California’s first-ever bill to regulate oil and gas well stimulation techniques, like fracking. The law lets drillers preserve their “trade secrets” by keeping mum about some of the toxic and problematic materials used to blast into wells using pressurized water and stashed in the ground afterward.

Senator Hancock says on her website that critics are wringing their hands over nothing. The legislation does not change existing law about trade secrets, she said, and in the opinion of the state Department of Industrial Relations, “a member of the public will have no financial or legal liability when making a public records claim.” 

Trade secrets are generating quite the buzz these days as corporations aggressively seek to throw off the yoke of government regulation that compels them to tell the public what they are doing to the environment. 

According to Eric Goldman at Forbes, the fight over trade secrets is migrating from states, where most governing statutes on the subject are generated, to the federal government. Forty-seven states have adopted some form of the Uniform Trade Secret Act (pdf) but competing bills in the House and Senate strive to unify the law.

Goldman said both bills would allow corporations to protect their trade secrets in either state or federal court, choosing the law that works best for them. “The net consequence is that trade secret owners will win more cases,” he wrote.

–Ken Broder


To Learn More:

Kafkaesque Bill Lets Refineries Sue Citizens (by Steven Greenhut, U-T San Diego)

Gov Brown, Veto SB 1300. Ostensibly about Oil Refineries, SB 1300 Threatens Public Access Rights (by Peter Scheer, First Amendment Coalition)

Congress Is Considering A New Federal Trade Secret Law. Why? (by Eric Goldman, Forbes)

Statement by Senator Hancock on the Oil Refinery Safety Bill, SB 1300

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