FOI Advisory Council Opinion AO-08-18

AO-08-18

May 21, 2018

Timothy R. Johnson
Berryville, Virginia

The staff of the Freedom of Information Advisory Council is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the information presented in your electronic mail messages dated February 15, 2018.

Dear Mr. Johnson:

You have asked for a formal advisory opinion regarding whether the Virginia Department of Agriculture and Consumer Services (VDACS) properly withheld records concerning an agriculture development project located in Clarke County pursuant to various exemptions of the Freedom of Information Act (FOIA). As background, you provided the original letter to VDACS requesting the documents and the response received from VDACS, as well as details regarding your own familiarity with documents received by other public bodies and your thoughts on the use of the exemptions.

Questions Presented

Whether VDACS violated FOIA when it elected to withhold records concerning grants related to an agriculture development project located in Clarke County pursuant to subdivision 3 of § 2.2-3705.6 and subdivision 2 of § 2.2-3705.7.

Factual Background

On January 9, 2018, your client sent a request for records pursuant to FOIA to VDACS. In that request, he asked for "[a]ny and all records . . . between the VDACS, any employees, representatives or agents of VDACS and the following individuals and/or entities and their agents, officers, subsidiaries, successor, surrogates or representatives." He then went on to list various entities and organizations, including various departments of the Clarke County government. VDACS provided a written response dated January 29, 2018, stating that the records requested were exempt from disclosure under FOIA and that they would not be released.

VDACS listed three separate groups of records that were being withheld in their entirety and provided a corresponding exemption in FOIA. The first category was described as the project file for an Agriculture and Forestry Industries Development (AFID) project with Clarke County. VDACS cited subdivision 3 of § 2.2-3705.6 as the exemption used to withhold the records and stated that disclosure of the records contained in the AFID project file would adversely affect the financial interest of the Commonwealth of Virginia, including its localities, by revealing information from or regarding a potential AFID client or project. The second category was records pertaining to monthly AFID Fund reports and weekly AFID project pipeline reports requested by the Secretary of Agriculture and Forestry. The third category was records pertaining to the Weekly Report requested by the Secretary of Agriculture and Forestry. VDACS cited subdivision 2 of § 2.2-3705.7 as the exemption used to withhold records in the latter two categories.

You also stated that similar requests were made to Clarke County and the Virginia Economic Development Partnership. Both of those public bodies responded to the request with over 600 pages of relevant communications, with some portions of the records redacted. You stated that after reviewing documents you found no evidence of a promise of confidentiality, no indication that any other business beneficiary is actually or prospectively competing with the current business beneficiary, and no indication that bargaining was involved. Furthermore, you stated that generally no competition or bargaining occurs in relation to AFID grant projects.

Applicable Law and Discussion

Subdivision 3 of § 2.2-3705.6

Your first question is whether VDACS as a public body can withhold the specified records pursuant to subdivision 3 of § 2.2-3705.6.¹ The exemption allows public bodies to withhold two types of records. The first relates to proprietary information provided by a private business to a public body. In order to qualify for this portion of the exemption, the records must contain (1) proprietary information that was (2) voluntarily provided by private business, (3) pursuant to a promise of confidentiality from a public body, and (4) used by the public body for business, trade, and tourism development or retention. The second portion of the exemption allows a public body to withhold (a) memoranda, working papers, or other information (b) related to businesses that are considering locating or expanding in Virginia, (c) prepared by a public body, (d) where competition or bargaining is involved and (e) where disclosure of such information would adversely affect the financial interest of the public body. For either of these types of records, each element must be present in order for a public body to withhold records pursuant to the exemption.

First, let us look at the portion of the exemption relating to proprietary information. On the basis of the information you provided, we assume that you do not dispute that the records contain proprietary information, voluntarily provided by a private business, that is to be used by the public body for business, trade, and tourism development or retention. Your contention is that the records requested contained no promise of confidentiality pursuant to the third requirement of this portion of the exemption. You stated that you reviewed over 600 documents received from other public bodies and that no formal agreement was ever provided or assurance given that the information would be maintained as confidential. Furthermore, you asserted that no emails from VDACS that you reviewed contained a "confidentiality clause." You also allege that the records should be redacted in a way that provides proof of the promise of confidentiality.

It is true that if there was no promise of confidentiality, this portion of the exemption would not apply. FOIA is silent, however, on the particular format of such a promise. While it is best practice for a public body to record such a promise, there is no requirement in FOIA that the promise be in writing or that each communication contain a confidentiality clause. A one-time verbal promise from a representative of the public body would therefore be sufficient. In such a case, there may be no record of the promise for the public body to provide if it is not written or recorded.² Under the given facts, it is unclear if that is the case, but if there was some form of promise given, VDACS would have met this requirement of the exemption to withhold the specified records. If there were a promise in writing, it would be subject to disclosure as a public record assuming there was no other exemption for withholding it, as it would likely not be considered proprietary information and subject to this exemption.³ Additionally, the exemption is subject to the redaction requirements § of 2.2-3704.01, which means that any information not subject to an exclusion would need to be provided by the public body. 

Now, we must look at the second portion of the exemption as it relates to memoranda, working papers, or other information. On the basis of the information you provided, you are not contesting the first three elements of this portion of the exemption.⁴ Instead, you assert that there is no competition or bargaining involved in the AFID process and that the financial interest of the public body (VDACS) is not affected. If either one of those assertions were true, then VDACS could not withhold the records pursuant to this portion of the exemption.

AFID provides either grants or loans to political subdivisions in order to attract new and expanding agriculture and forestry processing/value-added facilities using Virginia-grown products.⁵ The posted guidelines for the program state that the grants are discretionary and are based on numerous factors.⁶ You stated that there was no evidence in the documents you reviewed that another entity was competing for the grants. The fact that the program is discretionary and involves a ranking system suggests that a certain level of competition occurs in the process, even if multiple entities are not pursuing a grant in the same location at the same time. The AFID guidelines state that "ranking criteria" are used to determine what entity receives a grant award as well as the amount.⁷ Some examples of ranking criteria include: the percentage of Virginia-grown agricultural and forestry products used in a project, anticipated additional state tax revenue, a return on investment analysis, the number of jobs created, as well as the projected impact on agricultural and forestal producers. ⁸The process, as described in the AFID guidelines, therefore appears to involve competition throughout in the determination of which projects are selected and how funds are allocated. Additionally, note that the exemption requires either competition or bargaining. It also seems possible that the process described above allows the opportunity for an entity to bargain for better funding through these various criteria and the discretionary allocation of funds.

We finally turn to whether disclosure of the information would adversely affect the financial interest of the public body, which in this case is VDACS. The General Assembly created the fund to be used by the Governor to attract new and expanding agriculture and forestry processing/value-added facilities using Virginia-grown products.⁹ VDACS is to provide consultation with the Secretary of Agriculture and Forestry to assist the Governor in developing guidelines and criteria used in awarding grants through the fund.¹⁰ Additionally, there are numerous powers granted to VDACS in the Code of Virginia, including advising the Governor on promoting the development of the agricultural industry, encouraging development of the industry, formulating plans for developing new markets for the Commonwealth's farm products, and numerous others.¹¹ Looking at the powers and duties of VDACS alone therefore shows that the financial interest of VDACS is inextricably linked to the promotion and development of the Commonwealth's agricultural industry. 

In the response to your client's FOIA request, VDACS stated that disclosing the information would adversely affect the financial interest of the Commonwealth of Virginia, including its localities, by revealing information from or regarding a potential AFID client or project. As stated above, one of the determining factors in awarding grants is the anticipated additional state tax revenue expected to accrue to the state as a result of the capital investment and jobs created. As a state agency, VDACS would also have a financial interest in the broader effects of bringing more jobs to the Commonwealth on the state and state agencies. Because of this and the powers and duties given to VDACS, as well as the purpose of the AFID program, it would appear that the information requested could in fact adversely affect the financial interests of VDACS, and withholding of the records would therefore be allowed.¹²

If either use of the exemption is challenged, the public body would have the burden by a preponderance of the evidence to establish the exemption before a court of law in accordance with subsection E of § 2.2-3713. Additionally, you are correct that if the records contain both information subject to an exclusion and information that must be released, the public body has a duty to withhold only those portions of the record subject to an exclusion pursuant to § 2.2-3704.01.

Subdivision 2 of § 2.2-3705.7

Your second and third questions are whether it was appropriate for VDACS to withhold certain records pursuant to subdivision 2 of § 2.2-3705.7. That subdivision allows a public body to withhold "[w]orking papers and correspondence of the Office of the Governor." "Office of the Governor" is defined in that section to include Cabinet Secretaries. Furthermore, "working papers" is defined as "those records prepared by or for a public official identified in this subdivision for his personal or deliberative use." 

This office has previously analyzed the working papers exclusion and has concluded that one should consider the following three factors when analyzing application of the exemption:

1. The purpose for which the record was created;

2. The person for whom the record was created;

3. Whether the official who holds the exemption has disclosed the record to others and, if so, whether that disclosure was (i) necessary or desirable to further the official's own deliberative process or (ii) dissemination beyond the personal or deliberative use of the official who holds the exemption.¹³

We must now apply this analysis to the given facts. The two categories of records that were withheld pursuant to this exemption were records pertaining to monthly AFID Fund reports and weekly AFID project pipeline reports requested by the Secretary of Agriculture and Forestry. By wording the descriptions of both sets of records as "reports requested by the Secretary of Agriculture and Forestry" and utilizing this particular exemption, it would appear that the records were created for the Secretary of Agriculture and Forestry (Cabinet Secretary) for his personal or deliberative use at his request. Additionally, there is nothing in the given facts indicating otherwise, and there is also nothing in the given facts indicating that those specific records were further disseminated beyond the Secretary's personal or deliberative use.

You are correct in surmising that if the records were not created for the Secretary of Agriculture and Forestry for his personal or deliberative use, then the exemption would not apply. For example, if the records are generated for use in VDACS and can be requested or used by other organizations, then this exemption would not apply. While the wording used by VDACS to explain the types of records could potentially be confusing, it appears that they have complied with the requirements for a response under FOIA under the given facts.¹⁴ In this instance as well, we do not have the withheld records before us. If a factual dispute about the content or purpose of the records exists, a court of law is the appropriate place to make any necessary determinations of fact. The public body would have the burden by a preponderance of the evidence to establish the exemption in accordance with subsection E of § 2.2-3713.

Conclusion

Under the first portion of subdivision 3 of § 2.2-3705.6, there must be a promise of confidentiality from a public body to a private business providing proprietary information in order for the public body to withhold records pursuant to the exemption. Although it is best practice for a public body to record such a promise of confidentiality, FOIA does not require that the promise be in a specific format, and it could therefore be a verbal promise. Under the second portion of the same subdivision pertaining to memoranda, working papers, or other information prepared by a public body, there must be competition or bargaining involved, and disclosure of the information must also adversely affect the financial interest of the public body. The process of awarding AFID grants appears to contain elements of competition, as various factors are examined in awarding the discretionary grants and amounts. Additionally, VDACS appears to have a financial interest as a state agency in bringing new jobs and tax revenues to the state, which the AFID was created to help do. Furthermore, the enumerated powers and duties of VDACS include promoting the development of the agricultural industry and markets. It therefore appears that the information requested could in fact adversely affect the financial interest of VDACS and that withholding of the records would be proper.

Under subdivision 2 of § 2.2-3705.7, a public body may withhold records that are prepared for the personal or deliberative use of an official who holds the exemption, including a Cabinet Secretary, which appears to be the case in the given facts. If the records were not prepared for that purpose or were further disclosed in a manner that was not necessary to further the personal and deliberative use of the particular official, then the exemption would not apply. There is no information in the given facts that indicates that further disclosure occurred. 

Both sections are subject to redaction in accordance with § 2.2-3704.01. Therefore, if records contain both information subject to an exclusion and information that must be released, the public body has a duty to withhold only those portions of the record subject to an exclusion. Additionally, since we do not have the records before us, if there is a factual dispute regarding the records or creation of the records, a court of law would be the appropriate place to make any necessary determinations of fact. If challenged, a public body bears the burden of proof by a preponderance of the evidence to establish the exemption in accordance with subsection E of § 2.2-3713.

Thank you for contacting this office. We hope that we have been of assistance.

Sincerely,

Chad M. Ayers
Attorney 

Alan Gernhardt
Executive Director

¹As a state agency, VDACS is clearly a public body pursuant to § 2.2-3701, and there appears to be no dispute that the records in question are public records pursuant to § 2.2-3701.
²See § 2.2-3701 (defining "public record").
³Id.
⁴On the basis of the information you provided, it appears that the records in question are memoranda, working papers, or other information related to businesses that are considering locating or expanding in Virginia, prepared by VDACS.
⁵Governor's Agriculture and Forestry Industries Development Fund Guidelines 1 www.vdacs.virginia.gov/pdf/afid-guidelines.pdf (last visited August 6, 2018). 
⁶Id.
⁷Id. at 1 and 13.
⁸Id. at 5. 
⁹§ 3.2-304.
¹⁰§ 3.2-305. 
¹¹See §§ 3.2-102 (detailing the general powers and duties of the Commission of Agriculture and Consumer Services) and 3.2-111 (detailing the general powers and duties of the Board of Agriculture and Consumer Services).
¹²See Freedom of Information Advisory Opinion 01 (2014) (examining a similar records request to the Virginia Economic Development Partnership and denial of the request pursuant to subdivision 3 of § 2.2-3705.6).
¹³Freedom of Information Advisory Opinions 01 (2016) and 02 (2015). 
¹⁴ See § 2.2-3704 (outlining the requirements for a public body's response to a FOIA request for public records).