§ 1504.203 - Factors governing designation of information as “sensitive”.

(a) National Security. While relatively rare, the first type of “sensitive” information to be protected by the OFI is “classified” information. Through a formal U.S.-Canadian exchange of diplomatic notes establishing reciprocal procedures to administer procurement oversight, the OFI is required to maintain the “confidentiality” of certain information disclosed by the Northern Pipeline Agency. Such information would constitute “foreign government information” and as such would be classified as “confidential” under Executive Order 12065. During the limited period of the procurement process, while this information continues to be “confidential,” the OFI will deny public access under FOIA exemption (b)(1), that is, information properly classified under Executive Order as “in the interest of national defense or foreign policy.” (See § 1504.317(a)(1) of subpart C of this part).

(b) Trade Secrets. Trade secrets are the core of the “sensitive” category:

(1) The ANGTS sponsors might have to contract for some highly specialized, technical, and secret process or mechanism instrumental to the design or construction effort.

(2) Public disclosure of the process itself—as contrasted to what was produced by use of the process—would cause the contractor severe economic and competitive loss. Disclosure of such trade secrets is not in the public interest, for it could both hamper proj-ect expedition and also escalate construction costs.

(3) The OFI will resist any FOIA request for such information, as well as discourage requests from other agencies or Congressional committees, unless adequate protections are provided. FOIA exemption b(4)—while broader than just trade secrets—will be employed. (See § 1504.317(a)(4) of subpart C of this part). So too, the Trade Secrets Act prohibition against unauthorized disclosure applies primarily to information like these trade secrets.

(4) While the term “trade secret” has varying connotations depending on the legal context, the OFI will use the following criteria to discern if information is a trade secret, solely for the purpose of bringing it within the “sensitive” category:

(i) The cost of developing the information;

(ii) The value of the information to the owner and competitor, i.e., the extent of the competitive advantage it provides;

(iii) The extent to which the information is not independently known or available to others; and

(iv) The extent to which the owner has maintained its confidentiality.

(c) Secrecy agreements. The OFI will scrutinize information under secrecy agreements from a narrow perspective similar to that employed for trade secrets. These secrecy agreements could well be insisted upon by the trade secret owner contracting with the ANGTS sponsor. The OFI will closely review such secrecy agreements to assure that they are:

(1) Necessary, in terms of the sponsor being able to gain possession of the information on reasonable conditions;

(2) Enforceable against the submitter, i.e., through civil damages; and

(3) Not formed to circumvent the OFI's regulations limiting special treatment for “sensitive” information.

(d) Critical Procurement. Critical procurement information will be protected through the FOIA (b)(4) exemption, and includes primarily tentative bids (price vendor, and conditions), disclosure of which before completion of the process could skew the procurement, leading to delay and/or cost escalation. Critical procurement information of the ANGTS sponsors will also retain the “sensitive” designation subsequent to the award of a contract.