David R. Maier and Barrett MacDougall, August 21, 1986

              DAVE FROHNMAYER
t.n\lUH'Y l:.,:p.n:U.AL
lOT.aTf.()f0it£GON • ...
DEPARTMENT OF JUSTICE
I David R. Maier.·
Attorney at Law
Suite 750 Pacwest Center
1211 sw Fifth Avenue
Portland, Oregon 97204
Justice Building
Salem. Oregon 97 310
Tolepbonc: !5031378-4400
August 21, 1986
Barrett MacDougall, Finance Officer
Economic Development Department
595 Cottage Street NE
Salem, Oregon 97310
WlLUAiol F. CAllY
Re: Request for Disclosure of Economic Development Department
Records Concerning VanRich casting Loan
Dear Messrs. Maier and MacDougall:
This letter constitutes the Attorney General's order on
Mr. Maier's petition for disclosure of Oregon Economic
Development Department records relating to Oregon Business
Development Fund Loan No. 42 to the VanRich Casting Corporation
(Varicast). The petition was filed pursuant to the Oregon
Public Records Law, and received by the Department of Justice on
July 31, 1986. Mr. Maier courteously agreed to an extension of
time until August 21, !986, for final action on the petition.
The petition for an order of disclosure is allowed in part
and denied in part. We have reviewed the Economic Development
Department's file documents that are the subject of the disclo­sure
request, and we have considered Mr~ Maier's legal memoran­dum,
as well as statements by company and legal representatives
of the loan applicant vanRich Casting Corporation. We conclude
that certain documents are not exempt from disclosure, but that
other documents, in either their entirety or in certain por­tions,
are exempt from disclosure under the Public Recorda Law.
We outline below the reasons for this order, and we describe the
documents and information which should and which need not be
disclosed.
Mr. Maier previously asked the Economic Development
Department to disclose to him its file on Oregon Business
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Two
Development Fund Loan No. 42 to VanRich Casting Corporation.
That file contains VanRich Casting's application for a loan,
documents prepared by the applicant, and documents prepared by
the Economic Development Department. The department agreed to
make the loan file available to Mr. Maier for inspection, but
withheld disclosure of certain documents which it deemed con­fidential.
The department itemized and described the withheld
documents as follows:
''Item Number of
l 1
2 l
3 7
4 2
5 6
6 2
7 14
8 4
9 4
10 76
ll 2
12 13
13 l
14 1
15 8
16 5
17 6
18 15
19 2
Pages Material
Loan Summary
Short Form Pro forma
Consolidated Financial Statement
Month EndinQ 1-12-86
Northwest Foundry Operating Income
Spread Sheet
Business confidential OBDF Factors
Company History
Review + ~l~~u~~~on of Sales
Varicast's Position in the Market
Market Strategy
1983, 1984 and 1985 VanRich Financial
Statements
Fred Meikle Personal Financial Statement
Interim Financial Statements 1-26-86
and 10-27-85
Interim Financial Statements Projected
through 6-30-86
Customer/Market Composition
Pro Forma Financial Statistics
Loan Summary - Staff Report
Precis of Company Operations
Equipment List Appraisal
Collateral"
The department concluded that all of the above-listed items
were exempt from disclosure under both ORS 192.500(l)(b), as
trade secrets, and ORS 192.500(2)(c), as information submitted
to a public body in confidence. The department determined that
Item No. 11, the personal financial statement of Fred Meikle,
was also exempt under the personal privacy exemption, ORS
l92.500(2)(b). The department further concluded that Items No.
1 {loan summary), 5 (spread sheet) and 16 {loan summary-staff
David R. Maier
Barrett MacDougall, Finance Officor
August 21, 1986
Page Three
report) also were exempt under the internal agency communication
exemption, ORS 192.500(2)(a).
Opon review, we conclude that Item No. 11, the personal finan­cial
statement of Fred Meikel, is exempt from disclosure under
the personal privacy exemption from the Public Records
Disclosure Law. ORS l92.500(2)(b) exempts from disclosure
information of a personal nature if public disclosure thereof
would constitute an unreasonable invasion of privacy, unless the
public interest, by clear and convincing evidence, requires
disclosure in the particular instance. The party seeking
disclosure of personal information has the burden to show that
public disclosure would not constitute an unreasonable invasion
of privacy.
The financial statement at issue here is an individual
financial statement of the president of the corporate loan
applicant. Such an individual, as opposed to corporate, finan­cial
statement is personal in nature because the information
normally would not be shared with strangers. Furthermore, we
have been presented with no evidence that clearly and convin­cingly
demonstrates that the public interest requires disclosure
in this particular instance, nor have we been shown that public
disclosure of the information would not constitute an unreaso­nable
invasion of privacy. Disclosure of Item No. 11 correctly
was denied.
We conclude, however, that Item No. 1, a loan summary docu­ment
prepared for the Economic Development Finance Committee by
Economic Development staff is, at this time, not exempt from
disclosure under the agency internal advisory communications
exemption, ORS l92.500(2)(a). This exemption does not apply in
instances where the public interest in encouraging frank com­munication
between government officials clearly is outweighed by
the public interest in disclosure. Although the loan summary
was prepared by agency staff for consideration by the Finance
Committee, it was available for inspection by persons in atten­dance
at a public meeting of the committee. Consequently, the
public interest in encouraging frank communication between offi­cials
of the Economic Development Department would not be served
by denying disclosure of Item No. 1, in this particular instance
at this particular point in time.
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Four
Item No. 1 should be disclosed. The same loan summary
document appears as page 1 of Item No. 5, and therefore that
part-of Item No. 5 should be disclosed, although the balance of
Item No. 5, i.e. spread sheet financial information which also
appears as rrem-No. 16 (loan summary-staff report), partially
should be withheld from disclosure for reasons discussed below.
We conclude that the trade secrets exemption from the
public disclosure law, ORS l92.500(l)(b) is too narrow to
justify a blanket denial of access to the above-listed items.
Analysis of the trade secret exemption, however, informs our
decision to deny disclosure of substantial amounts of infor­mation
under the exemption for information submitted to a public
body in confidence, ORS l92.500(2)(c).
The trade secrets exemption applies only to commercially
valuable information which is unpatented and unknown to but a
limited number of individuals within a commercial concern, and
which gives its user an opportunity to obtain a business advan­taqe
over competitors who do not know the information or u~u ~~.
Ainy of the above-listed documents contain customer~specific
information, as well as data relating to, and discussions of,
marketing and pricing strategy that could be used by the loan
applicant to secure a business advantage over its competitors.
However, the sensitivity of Economic Development loan applicants
to the disclosure of these types of information and itemized
business financial information stems from a concern that the
applicant's competitors will use the information to gain an
otherwise unattainable business advantage over the applicant.
This concern raises public and private interests such as those
that come into play in the analysis of the exemption from public
disclosure of information submitted to a public body in con­fidence,
ORS 192.500(2)(c).
The Economic Development Department correctly identified
ORS 192.500(2)(c) as an applicable basis for denying complete
disclosure of its file in Loan No. 42. That law exempts from
disclosure:
"Information submitted to a public body
in confidence and not otherwise required by
law to be submitted, where such information
should reasonably be considered confidential,
the public body has obliged itself in good
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Five
faith not to disclose the information, and
when the public interest would suffer by the
disclosure •••• "
The purpose of this exemption is to encourage citizens
voluntarily to provide relevant information to governmental
agencies with some assurance that the information will be kept
confidential. Much of the information sought to be disclosed
meets the tests of this exemption.
First, the loan applicant was not required to submit, as
part of the loan application process, the detailed customer,
marketing and financial statements now sought to be disclosed.
Although this detailed information was submitted in conjunction
with a loan application and other required documentation, the
loan applicant nonetheless voluntarily submitted the more
detailed information to facilitate and inform Economic
Development Department decisionmaking.
Second, because customer, marketing, pricing and relative
financia-l strength information can be used by an applicant's
competitors to gain a business advantage over an applicant, it
is reasonable to conclude that such information was of a con­fidential
nature.
Third, it appears that the Economic Development Department
obliged itself in good faith not to disclose the information
submitted by the applicant or compiled by the agency from the
applicant's submissions. A then-applicable agency rule stated
the department's policy to keep loan information confidential
insofar as permitted by the public records law; agency forms and
correspondence utilized at the time the information was sub­mitted
contained statements about the agency's policy of con­fidentiality.
Fourth, disclosure would harm the public interest. The
purpose of the Oregon Business Development Fund Loan Program,
ORS 280.520 through 280.585, is to provide a public source of
money, complementary to private financial sources, for economic
development and, more specifically, for business development
projects that will promote industries such as manufacturing and
thus maintain and create employment opportunities. The Economic
Development Department has determined that disclosure of VanRich
Casting Corporation's confidential disclosures adversely would
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Six
affect its business interests in relation to its competitors and
that disclosure of confidential information in this case would
discourage other applicants from ~roviding confidential infor­mation
in the future, and thus jeopardize the Business
Development Loan Program.
We agree with the department's assessment of the situation.
We also note that a public disclosure that places a business
development loan applicant at a distinct disadvantage with its
competitors has the potential to jeopardize the applicant's
ability to repay the loan and the public interest in repayment
of loaned public money. On the other hand, however, the public
has a strong interest in knowing that a state-funded loan
program is being administered responsibly. We therefore
conclude that the confidential information exemption, ORS
l92.500(2)(c), does not authorize wholesale withholding of the
above-listed documents and the information contained therein.
In our view, ORS l92.500(2)(c) appropriately applies to
voluntarily submitted loan information, the disclosure of which
would give the dpp~lcant's competitors a business advantage over
the applicant. Pursuant ·to ORS 192.500(3), other information is
not exempt and must be separated and disclosed.
Accordingly, we issue the following public records orders
to the Economic Development Department:
Item No. 1 "Loan Summary.• This summary document, prepared
by department staft tor the Finance Committee and specifi­cally
described and discussed above, should be disclosed at
this time.
Item No. 2 "Short Form Pro Forma." This one-page statement
of proJected f1nanc1al statistics should be partiallt
disclosed, but some portions may be withheld. Speci ic
liabilities and the working line recap may be withheld from
disclosure as competitor-sensitive confidential infor­mation.
Item No. 3 "Consolidated Financial Statement." This seven­page
financial statement includes a Condensed Statement of
Profit and Loss for the month ending February 23, 1986, and
the year to that date; a Condensed Balance Sheet for the
same monthly period and a Consolidated Statement of Changes
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Seven
in Working Capital for the year to date: a Statement of
Profit and Loss for the applicant's Vancouver operotion for
the same monthly periOdl a two-page Consolidated Balance
Sheet for Portland and Vancouver operations: a Statement of
Profit and Loss; a supplement to Profit and Loss Statements:
and a two-page Supplement to Profit and Loss Statements for
the same monthly period for the Portland plant and the
Vancouver plant. These documents artia11 should be
disclosed, but substantia ortions ma be w1thhe d as
comeetitor-sensitive confidentia information. The infor­matlon
that may be Wlthheld can be descr1bed here only in
general, illustrative terms. That information specifically
is indicated on marked and excised copies submitted to the
Economic Development Department with this order. That
information includes separate itemizations for the two
plants, itemization of cost of sales, itemizations of fixed
assets, detailed itemization of liabilities (but not total
liabilities), itemization of applications of working capi­tal,
and other details of current assets and company liabi­lities.
Item No. 4 "Northwest Foundry Operating Income." These two
October 21, l985 statements of the operat1ng 1ncome of the
Northwest f'oundry acquired by VanRich Casting Corporation
should be partially disclosed. Figures for cost of goods
sold, gross prof1ts, G&A and sales may be withheld as
competitor-sensitive confidential information.
Item No. 5" Spread Sheet." The first page of this six-page
ltem is the loan summary described and discussed above
under Item No. 1. It should be disclosed. The balance
of this item consists of documents worked up by department
staff from information submitted by the applicant: a two­page
Spread Sheet for fiscal years '82 through '85; a Form
Spread Sheet Ratio Analysis (February 27 1 1986); a
Financial Worksheet (March 11, 1986): and a Summary of
Credit. These documents artia11 should be disclosed, but
substantia ort1ons rna e w1t e d as com etltor­sensltlve
confidentla 1nformation. The informat1on that
may be withheld can be described here only in general,
illustrative terms. That information specifically is indi­cated
on marked and excised copies submitted to the depart­ment
with this order. That information includes details,
but not the totals, of current assets, liabilities, net worth
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Eight
and a profit after taxes: details of operating cycle and
ratio analysis; details of debt service; and references to
specific debts.
Item No. 6 "Business Confidential OBDF Factors." This item
is the first two pages of a December 5, 1985 narrative
discussion of the applicant's situation in the casting
industry, the industry's situation, the company's proposed
consolidation, and its financing. This document partially
should be disclosed, but significant portlons, marked on
cop1es subm1tted with this order, may be withheld as
com etitor-sensitive confidential information. More speci­lca
y, th1s 1n ormation lS a narratlve ana ysis of infor­mation
itemized on accounting documents previously
discussed and withheld.
/Review and Discussion of Sales."
This item inc udes a January, 1986 memo discussing the
applicant's 1983-85 sales and profit and loss, and a July
28, 1983 memo rev1ewing sale~ =~~ ~~cfit and loss for the
prior 5 years. These documents artiall should be
disclosed, but substantial portions may be w t e d as
indicated on marked and excised copies submitted with this
order. The information that may be withheld includes
narrative discussions and a graph of detailed financial
information exempt !rom disclosure as competitor-sensitive
confidential information. Also withheld are discussions of
details of operations relating to market share, market
power, labor strategies and pricing strategies~ exempt from
disclosure as trade secrets and competitor-sensitive con•
fidential information.
Item No. 8 "Varicast's Position in the Market.'' This four­page
ltem is a narrat1ve discussion of geographic con­siderations
and effect on foundry size; the status of
competition in the region; a comparison of the applicant's
business: and how the applicant arrived at its position in
its market. These documents partially should be disclosed,
but substantial ortions rna be withheld as indicated on
marked an exc1sed copies submitte w1th this order. The
information that may be withheld refers to specific custo­mers
of the applicant, its marketing strategy and its
pricing strategy. This information is exempt from disclo­sure
as trade secret and competitor-sensitive confidential
information.
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Nine
Item No. 9 •Market Strategy." This four-page discussion of
the appl1cant's "Present and Near Term Market Strategyu and
its "Longer Term Market Strategy" totally may be withheld
from disclosure. The discussion of production capabili­ties,
marketing targets, and competitive advantages is
exempt as trade secret and competitor-sensitive confiden­tial
information.
Item No. 10 "1983, 1984 and 1985 VanRich Financial
Statements." This 76-page item includes three Annual
Consolidated Financial Statements, each of which includes a
president's report, a report of a certified public accoun­tant,
financial statements and additional information such
as consolidating balance sheets, statements of operations,
net sales and cost of sales, applied expenses and con­solidating
operating general and administrative expenses.
These documents artiall should be disclosed, but substan­tla!
port1ons may be Wlth e as indicated on mar ed and
excised copies submitted with this order. The information
that may be Withheld generally may bo ~~~~~jbed as the same
type of information withheld from Item No. 3, discussed
above.
Item No. 11 "Fred MeiKle Personal Financial Statement."
This individual, as opposed to corporate, financial state­ment
ma be withheld from disclosure in its entiret • The
informat1on 1s exempt f~om persona 1 private
information.
Item No. 12 "Interim Financial Statements 1-26-86 and
l0-27-BS." These two financial statements utilize the for­mat
employed in the Consolidated Financial Statement that
is Item No. 3, discussed above. For the same reasons and
subject to the same limitations stated in the discussion of
Item No. 3, the documents in Item No. 12 partially should
be disclosed, but substantial portions may be withheld, as
indicated on marKed and excised copies submitted with this
order, because the withheld information is exempt from
disclosure as competitor-sensitive confidential information.
Item No. 13 "Interim Financial Statements Pro·ected throu h
6- " This one-page, item1zed Operating P an and
Income Statement for the year 1986 contains a detailed
accounting of projections for sales, costs, gross margin,
David R. Maier
Barrett MacDougall, Finance Officer
August 21, 1986
Page Ten
expenses and income before tax for the applicant's Portland
and Vancouver operations. These portions of the document
may be withheld from disclosure, as ind1cated on marked and
excised cop1es subm1tted with this order, but these docu­ments
otherwise should be partially disclosed to reveal
consolidated income before tax, added depreciation, added
good will, period cash tlow from operations and cumulative
cash flow from operations. The information that may be
withheld is detailed financial information exempt from
disclosure as competitor-sensitive confidential infor­mation.
"Customer Market Com osition." This document
au d e d1sc osed, ut substantial port1ons may
as indicated on marked and excised copies sub­mltted
with this order. The information to be withheld is
a customer and market specific listing of sales and percen­tages
of sales by industry category. That information may
be withheld as trade secret and competitor-sensitive con­fidential
information.
Item No. 15 "Pro Forma Financial Statistics." This eight­page
1tem includes a cover memorandum discussing and
setting out detailed financial information contained in the
following seven pages of the Operating Plan. Page 2 of
this item is the same document referred to above and
discussed as Item No. 13; the eighth page of this item is
the same document referred to above and discussed as Item
No. 2. for the reasons set out and discussed under Items
No. 2 and No. 13, the documents in Item No. 15 partially
should be disclosed, but substantial portions rna be with-e
d as compet1tor sens1t1ve con 1 entta 1n ormat1on. e
information to be Wtthheld is specifically indicated on
marked and excised copies of the cover memo and the
Operating Plan income statements, cash flow statements,
balance sheet statements, and short form pro forma finan­cial
statistics.
David R. Maier
Barrett MacDougall
August 21, 1986
Page Eleven
Item No. 17 "Precis of Company Operations." Two three-page
memos constitute this item. The memos discuss the feasibi­lity
of the applicant's acquisition of Northwest Foundry.
These documents, artiall should be disclosed, but substan­tial
portions may be wlthhe d as trade secret and
compet1tor-sens1t1ve confidential Information. On copies
of these documents, we have marked out and excised infor­mation
relating to management strategy, specific plant pro­duction
details, specific marketing and pricing strategies
and information that relates to profit margins and par­ticular
customer groups.
Item No. 18 "Equipment List Appraisal." This fifteen-page
appra1sal document should be disclosed. The loan applicant
does not contend that the document contains trade secrot or
competitor-sensitive confidential information.
Item No. 19 "Collateral." As with Item No. 18, the listing
of the loan applicant's properties in Item No. l9 shoulry ~~
· ~- · Jisclosed because the applicant does not contend that trade
secret or competitor-sensitive information would be
revealed.
We have gone to great lengths in this order to set forth
our rationale and to identify exempt and non-exempt information.
As we repeatedly mentioned above, we have furnished the depart­ment's
representative, Mr. MacDougall, with document copies
indicating our separations of exempt and non-exempt material.
We understand that the petitioner and Mr. MacDougall may have
questions and comments about this order. I would be more than
willing to discuss this order by phone and to attend when the
non-exempt material is made available for inspection.
JEM:cm
Very truly yours,
~~~~·~
~MES E. MOUNTAIN, JR.
Special Counsel to the
Attorney General
cc: Jim Gardner, Attorney at Law
Benny Won, Assistant Attorney General