The Wilderness Society South Australia Inc. and Department of the Environment (Freedom of information)

[2016] AATA 653

The Wilderness Society South Australia Inc. and Department of the Environment (Freedom of information) [2016] AATA 653 (30 August 2016)

Division	FREEDOM OF INFORMATION DIVISION
File Number	2015/6617
Re	The Wilderness Society South Australia Inc.
APPLICANT
And	Department of the Environment
RESPONDENT

Appeal from             [2015] AICmr 76

DECISION

Tribunal	Deputy President K Bean
Date	30 August 2016
Place	Adelaide

The decision under review is affirmed.

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Deputy President K Bean

CATCHWORDS

FREEDOM OF INFORMATION – Access – Exemptions – Documents disclosing trade secrets or commercially valuable information – Decision under review affirmed.

LEGISLATION

Freedom of Information Act 1982, ss 3, 11, 11A, 15, 47, 47G

CASES

Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) 36 FCR 111

Lansing Linde Ltd v Kerr (1990) 21 IPR 529

Re Organon (Australia) Pty Ltd and Department of Community Services and Health; Public Interest Advocacy Centre (party joined) (1987) 13 ALD 588

SECONDARY MATERIALS

Office of the Australian Information Commissioner, Guidelines issued by the Australian Information Commissioner under s 93A of the Freedom of Information Act 1982

REASONS FOR DECISION

Deputy President K Bean

30 August 2016

1. On 14 March 2014, the applicant, The Wilderness Society South Australia Inc. (the Wilderness Society), made an application under the Freedom of Information Act 1982 (FOI Act) for access to documents relating to a referral by BP Developments Australia Pty Ltd (BP) under the Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) in respect of a proposed offshore exploratory drilling program in the Great Australian Bight.

2. Of the 23 documents identified as falling within the Wilderness Society’s request, the respondent, the Department of the Environment (the Department), granted access to 22 documents, and part of the remaining document (Document 7). However, the Department refused access to certain parts of Document 7 on the basis that those parts were exempt under subs 47(1)(a) of the FOI Act, i.e. their disclosure would disclose trade secrets. The redacted information relevantly consists of graphs and dot points relating to oil spill modelling.

3. On 21 August 2014, the Wilderness Society sought an internal review of that decision, which was ultimately affirmed on 3 October 2014. That decision-maker found that, in addition to disclosing trade secrets, disclosure of the relevant parts of Document 7 would also disclose information having a commercial value that would be, or could reasonably be expected to be, destroyed or diminished, pursuant to subs 47(1)(b) of the FOI Act.

4. On 6 November 2014, the Wilderness Society applied to the Information Commissioner for review of the respondent’s decision dated 3 October 2014. The Information Commissioner affirmed that decision on 1 December 2015, and on 21 December 2015, the Wilderness Society sought a review of the Information Commissioner’s decision by this Tribunal.

5. On 21 March 2016, the Tribunal wrote to BP inviting it to become a party to the application. However, on 8 April 2016, BP confirmed that it did not wish to become a party.

   STATUTORY FRAMEWORK

6. Section 3 of the FOI Act sets out the general objects of the Act as follows:

   (1)  The objects of this Act are to give the Australian community access to information held by the Government of the Commonwealth, by:

   (a)  requiring agencies to publish the information; and

   (b)  providing for a right of access to documents.

   (2)  The Parliament intends, by these objects, to promote Australia’s representative democracy by contributing towards the following:

   (a)  increasing public participation in Government processes, with a view to promoting better-informed decision-making;

   (b)  increasing scrutiny, discussion, comment and review of the Government’s activities.

   (3)  The Parliament also intends, by these objects, to increase recognition that information held by the Government is to be managed for public purposes, and is a national resource.

   (4)  The Parliament also intends that functions and powers given by this Act are to be performed and exercised, as far as possible, to facilitate and promote public access to information, promptly and at the lowest reasonable cost.

7. Section 15 of the FOI Act provides in effect that a person who wishes to obtain access to a document of an agency may request access to the document in writing. Access must be given unless the document is an exempt document.[1]

   [1]     See ss 11 and 11A.

8. Section 47 relevantly provides:

   47  Documents disclosing trade secrets or commercially valuable information

   (1)  A document is an exempt document if its disclosure under this Act would disclose:

   (a)  trade secrets; or

   (b)  any other information having a commercial value that would be, or could reasonably be expected to be, destroyed or diminished if the information were disclosed.

9. Section 47G of the FOI Act relevantly provides as follows:

   47G  Public interest conditional exemptions—business

   (1)  A document is conditionally exempt if its disclosure under this Act would disclose information concerning a person in respect of his or her business or professional affairs or concerning the business, commercial or financial affairs of an organisation or undertaking, in a case in which the disclosure of the information:

   (a)  would, or could reasonably be expected to, unreasonably affect that person adversely in respect of his or her lawful business or professional affairs or that organisation or undertaking in respect of its lawful business, commercial or financial affairs; or

   (b)  could reasonably be expected to prejudice the future supply of information to the Commonwealth or an agency for the purpose of the administration of a law of the Commonwealth or of a Territory or the administration of matters administered by an agency.

   (2)  Subsection (1) does not apply to trade secrets or other information to which section 47 applies.

10. I note that the Information Commissioner has also issued Guidelines under s 93A of the FOI Act, which I am obliged to have regard to. In respect of subs 47(1)(b) in particular, the Guidelines relevantly provide (omitting citations):

    Information having a commercial value

    5.188 To be exempt under s 47(1)(b) a document must satisfy two criteria:

    ·the document must contain information that has a commercial value either to an agency or to another person or body, and

    ·the commercial value of the information would be, or could reasonably be expected to be, destroyed or diminished if it were disclosed.

    5.189 It is a question of fact whether information has commercial value, and whether disclosure would destroy or diminish that value. The commercial value may relate, for example, to the profitability or viability of a continuing business operation or commercial activity in which an agency or person is involved. The information need not necessarily have ‘exchange value’, in the sense that it can be sold as a trade secret or intellectual property. The following factors may assist in deciding in a particular case whether information has commercial value:

    ·whether the information is known only to the agency or person for whom it has value or, if it is known to others, to what extent that detracts from its intrinsic commercial value

    ·whether the information confers a competitive advantage on the agency or person to whom it relates — for example, if it lowers the cost of production or allows access to markets not available to competitors

    ·whether a genuine ‘arm’s-length’ buyer would be prepared to pay to obtain that information

    ·whether the information is still current or out of date (out of date information may no longer have any value)

    ·whether disclosing the information would reduce the value of a business operation or commercial activity — reflected, perhaps, in a lower share price.

    5.190 The time and money invested in generating information will not necessarily mean that it has commercial value. Information that is costly to produce will not necessarily have intrinsic commercial value.

    5.191 The second requirement of s 47(1)(b) — that it could reasonably be expected that disclosure of the information would destroy or diminish its value — must be established separately by satisfactory evidence. It should not be assumed that confidential commercial information will necessarily lose some of its value if it becomes more widely known. Nor is it sufficient to establish that an agency or person would be adversely affected by disclosure — for example, by encountering criticism or embarrassment. It must be established that the disclosure would destroy or diminish the commercial value of the information.

    ISSUES

11. It follows that the issues for my consideration are:

    (a)Whether the exemption contained in subss 47(1)(a) and/or (b) applies to those parts of Document 7 to which access has been refused; and

    (b)If not, whether the conditional exemption in s 47G applies.

12. I will first set out and consider the parties’ contentions with respect to s 47.

    PARTIES’ CONTENTIONS REGARDING THE APPLICATION OF SECTION 47 OF THE FOI ACT

    Applicant’s contentions

    Trade secrets

13. Mr McDonald, who appeared as counsel for the Wilderness Society at the hearing, referred me to a passage from Lansing Linde Ltd v Kerr (1990) 21 IPR 529, cited by the Full Federal Court in Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) 36 FCR 111, where Staughton LJ said (at 536):

    It appears to me that the problem is one of definition: what are trade secrets, and how do they differ (if at all) from confidential information? Mr Poulton suggested that a trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret. I would add, first, that it must be information used in a trade or business, and, secondly, that the owner must limit the dissemination of it or at least not encourage or permit widespread publication.

14. Mr McDonald submitted that information (such as data) produced as a consequence of a trade secret (i.e. methodology/modelling used by BP) is not necessarily itself a trade secret, and referred to the example of Google’s search engine, noting that while the algorithm is a trade secret, the search results generated by application of that algorithm are not.

15. Mr McDonald also pointed to the fact that the redacted information is a ‘tiny extract’ of the results obtained by BP through its complex modelling/methodology and would not necessarily disclose information about the whole permit area or the whole of BP’s resource. Accordingly, he queried whether information about one particular part of an area would be useful to BP’s competitors or would diminish the value of that information to BP.

    Commercial value

16. In respect of the application of subs 47(1)(b), Mr McDonald referred to the Guidelines and the factors to be considered, and submitted as follows:

    (a)The Wilderness Society accepts the information is not known to others outside of BP;

    (b)As to whether the redacted information confers a competitive advantage on BP, Mr McDonald noted that BP has the exclusive statutory right to exploration in the relevant area;

    (c)There is no evidence as to whether an ‘arm’s-length’ buyer would be prepared to pay for the information. Further, it is not clear that an ‘arm’s-length’ buyer would be prepared to pay for such a small amount of information;

    (d)The redacted information is likely to be supplanted by more accurate information in the very near future, when BP embarks on drilling wells;

    (e)As to whether disclosure would reduce the value of a business operation or commercial activity, Mr McDonald reiterated that close regard must be had to what information would actually be released, noting that it did not necessarily follow that more information could be extrapolated from that which is contained in the dot points and graphs, and that no attempts had been made by BP to substantiate its claim that it could;

    (f)The amount of expenditure by BP on modelling is not to be equated with the value of the output produced by that modelling; and

    (g)With respect to whether disclosure of the redacted information would destroy or diminish its commercial value, Mr McDonald pointed to the scarcity of evidence on this issue, aside from assertions made by a director of BP in a letter to the Office of the Australian Information Commissioner dated 2 April 2015,[2] and reiterated that the Guidelines require this factor to be “established separately by satisfactory evidence”.

    [2]     Exhibit 1, ST1.

    Respondent’s contentions

17. Mr Holcombe, who appeared on behalf of the Department at the hearing, referred me to the decision of Re Organon (Australia) Pty Ltd and Department of Community Services and Health; Public Interest Advocacy Centre (party joined) (1987) 13 ALD 588 at 593-594, in which the factors relevant to determining the existence of trade secrets for the purpose of the FOI Act were described as follows:

    (a)whether the information is of a technical character (although Searle subsequently clarified that information does not need to be of a technical character for it to amount to a trade secret—it must, however, be “capable of being put to advantageous use by someone involved in an identifiable trade”);[3]

    (b)the extent to which the information is known outside the business of the owner of that information;

    (c)the extent to which the information is known by persons engaged in the owner's business;

    (d)measures taken by the owner to guard the secrecy of the information;

    (e)the value of the information to the owner and to his competitors;

    (f)the effort and money spent by the owner in developing the information; and

    (g)the ease or difficulty with which others might acquire or duplicate the secret.

    [3]     Respondent’s Statement of Facts, Issues and Contentions dated 27 May 2016, [43].

18. Mr Holcombe submitted that the data contained in the redacted information has not been made public, and is in fact confidential even within BP and not available to all employees. He noted that the information is valuable both to BP and to its competitors, in the sense that competitors who hold a permit in a neighbouring area may be interested in the overall quality of the identified resource, or the information may be relevant to a resource which another permit holder has but has not yet assessed. The information is therefore also highly tradable and has commercial value, as it can be used by BP to obtain reciprocal access to information about competitors’ areas, and assess opportunities for cooperation and joint pipelines.[4] However, if that information was freely released, it would lose its tradability.

    [4]     Exhibit 1, ST1/207.

19. Mr Holcombe further submitted that if given access to the data, competitors may be able to duplicate the data and extrapolate more information about the type of resource which BP has. He pointed out that in its letter to the Information Commissioner, BP wrote:

    [The information] … can … be used by competitors to draw inferential conclusions about BP’s view on the porosity, permeability, net reservoir and bulk rock volumes in the area, whilst the fluid parameters given in each modelled scenario reflect BP’s prognosis of the oil and/or gas composition believed to be present.[5]

    [5]     Exhibit 1, ST1/206.

20. In response to Mr McDonald’s contention that the redacted information is likely to be supplanted by more accurate information when the exploratory drilling is undertaken by BP, Mr Holcombe submitted that the information is not likely to be overtaken or become outdated, but “may be refined”, although it was currently the most relevant information available.

    CONSIDERATION

21. I will first address the issue of whether the information has commercial value which could reasonably be expected to be diminished if it is disclosed, within the meaning of subs 47(1)(b), by reference to the Guidelines.

    Is the information exempt pursuant to subs 47(1)(b)?

22. With respect to the matters referred to in the Guidelines, my conclusions are as follows.

    Extent to which the information is known

    (a)As conceded by the applicant, I am satisfied that the information is not known to others outside of BP.

    Competitive Advantage

    (b)No clear contention has been made that the information confers a competitive advantage on BP, and I am not satisfied that it does.

    Tradability

    (c)BP and the respondent have asserted that the information is ‘tradable’, as other petroleum companies also exploring the Great Australian Bight (in adjacent permit areas) would be prepared to trade similar information relating to other permit areas for access to the information. I accept that the only ‘evidence’ before me as to this is a letter to the Information Commissioner dated 2 April 2015 from Mr Peter Metcalfe, BP’s “Director, Upstream External Affairs”. The assertions contained in this letter are not supported by any additional evidence, however, nor is there any evidence to the contrary. Further, once it is accepted that the information gives an indication of flow rates and resource composition at the relevant sites, and that there are other companies exploring in adjacent areas, I consider it inherently plausible that those companies would be interested in the information and willing to trade other information for it. I should add that having considered the redacted information, which was provided to the Tribunal pursuant to subs 64(1A) of the FOI Act, I accept that it contains information which is likely to be of interest to adjacent permit holders, and from which it may be possible to extrapolate information relating to adjacent permit areas. As there is no reason for me to conclude that the information contained in BP’s letter relating to the tradability of the redacted information is inaccurate or misleading, I am accordingly satisfied, on the basis of that information and my examination of the redacted information, that another company exploring in the Bight would be willing to trade information of value to BP for that information.

    Currency

    (d)I note that the document containing the redacted information is now almost three years old[6], and that it indicated that the relevant seismic data was still being interpreted, with a view to finalising the proposed site for the first well in 2014.[7] This suggests that BP is by now likely to have further and more refined information about its reserve. However, it does not follow that the redacted information has been completely overtaken, and I note Mr Metcalf’s letter was written in April 2015. On the basis of the limited material before me, I am satisfied on balance that the redacted information retains sufficient accuracy and currency to be of interest to adjacent permit holders.

    Impact on BP’s business

    (e)No clear contention has been made by BP or the respondent that disclosure of the information would reduce the value of a business operation or commercial activity, although Mr Metcalfe asserts in his letter that the conclusions reflected in the information are “potentially market sensitive”. I infer that information as to the richness of the resource within BP’s permit area could potentially have some impact on BP’s share price. However, on the basis of the very limited information I have, I am not satisfied on balance that disclosure of the information ‘would’ reduce the value of any commercial activity or business operation, in the sense of reducing the income or profits likely to be derived from that activity. As the applicant has pointed out, BP is the exclusive titleholder for the relevant area and the income that is ultimately able to be derived from this resource is unlikely to be affected by details of the resource being disclosed to others.

    Cost of acquisition

    (f)The applicant does not dispute, and I also accept, that the information has been expensive for BP to acquire.[8] However, I also accept the applicant’s submission that the cost to BP of acquiring the information does not necessarily reflect its commercial value. In my view, the commercial value of the information is more accurately assessed by reference to its tradability than what it cost to produce.

    [6]     See Exhibit 1, T6/32.

    [7]     See Exhibit 1, T6/33.

    [8]     Exhibit 1, ST1/207.

    Reduction in the value of the information

    (g)As I am satisfied that the information is tradable to other companies, it follows that if the information were to be publicly available, it would cease to be tradable and its value to BP would be reduced.

1. For completeness, having regard to BP’s decision not to become a party to this application, I have also considered whether the contentions and information put forward by BP, in particular in Mr Metcalfe’s letter, should be accorded less weight than would otherwise be the case. Ultimately, however, I have concluded that it would be inappropriate to draw any inference from BP’s non-participation in this matter, and I am obliged to determine the matter on the material before me.

2. I have accordingly concluded that as the information has commercial value to BP, which could reasonably be expected to be diminished if it is disclosed, the information is exempt pursuant to subs 47(1)(b) of the FOI Act, and it is unnecessary for me to proceed to consider whether it is also exempt for another reason.

3. I am therefore obliged to affirm the decision under review.

   DECISION

4. The decision under review is affirmed.

I certify that the preceding 26 (twenty -six) paragraphs are a true copy of the reasons for the decision herein of Deputy President K Bean

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Associate

Dated 30 August 2016

Date of hearing

12 July 2016

Counsel for the Applicant

Mr S McDonald

Solicitors for the Applicant

Ms M Ballantyne
Environmental Defenders Office (SA) Inc.

Solicitors for the Respondent

Mr L Holcombe

HWL Ebsworth Lawyers