Northern States Power Co. v. North Dakota Public Service Com'n
| Decision Date | 18 June 1993 |
| Docket Number | No. 920315,920315 |
| Parties | , Util. L. Rep. P 26,321 NORTHERN STATES POWER COMPANY, Appellant, v. NORTH DAKOTA PUBLIC SERVICE COMMISSION and Cass County Electric Cooperative, Appellees. Civ. |
| Court | North Dakota Supreme Court |
Daniel S. Kuntz (argued), of Zuger Kirmis & Smith, Bismarck, and Gene Sommers (appearance), Northern States Power Co., Minneapolis, MN, for appellant.
Charles E. Johnson (argued), Asst. Atty. Gen., Public Service Com'n, State Capitol, Bismarck, for appellee North Dakota Public Service Com'n.
John D. Kelly (argued), of Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, for appellee Cass County Elec. Co-op.
Northern States Power Company [NSP] appeals from a district court judgment affirming orders by the Public Service Commission [PSC] that deny trade secret protection for information in contracts that NSP was required to file with the PSC. We affirm the PSC's denial of trade secret protection.
NSP operates and maintains a natural gas distribution system in eastern North Dakota and, since the mid-1980s, has offered interruptible transportation service to large volume customers of natural gas. Under its filed tariff for this service, NSP individually negotiates the price term of each gas transportation contract with an interruptible transportation customer. Part of NSP's tariff, its North Dakota Gas Rate Book Sheet No. G 15.1, states the general terms and conditions of its interruptible transportation service. The rate is a monthly fixed charge for the cost of billing and a meter in place, plus a price negotiated between NSP and the customer for the volumes transported over NSP's distribution system.
Each contract that is negotiated by NSP requires it and the customer to maintain the confidentiality of the price and volume information. That information usually consists of: (1) the total delivered price to a customer's facilities per thousand cubic feet of gas; (2) the number of cents per thousand cubic feet of gas for the minimum delivered cost and volume charge that NSP must recover, or otherwise be allowed to interrupt deliveries to the customer if natural gas prices rise; (3) the maximum number of thousand cubic feet of gas the customer expects to use daily; and (4) the average number of thousand cubic feet of gas the customer expects to use daily.
As directed by the PSC, NSP's Gas Rate Book Sheet No. G 15.1 requires that each "Gas Transportation Agreement" must be filed at the PSC within 20 days of the effective date of the agreement, and each agreement is deemed accepted by the PSC unless rejected within 20 days of filing. The filing requirement allows the PSC to determine if the contracted rates meet or exceed NSP's cost of the interruptible transportation service to the customer. When it files each agreement, NSP habitually deletes the price and volume data from the publicly filed copy and also applies to the PSC for trade secret protection to restrict public disclosure of that data.
In September 1991, NSP filed, at the PSC, gas transportation agreements with RDO Foods Company and the University of North Dakota. At the same time, NSP requested the PSC to issue protective orders to prevent unrestricted public disclosure of the price and volume information in those agreements. As it had routinely done in the past, the PSC issued orders granting trade secret protection and setting forth the procedure to follow if persons wished to view the information or disagreed with the PSC's orders of nondisclosure.
An NSP residential customer, who has since withdrawn from the case, contested the PSC's authority to issue protective orders for this information, and Cass County Electric Cooperative, an energy competitor in part of NSP's service area, intervened for a like purpose. After a hearing, the hearing officer recommended findings, conclusions, and an order that the price and volume data should be protected as a trade secret.
The PSC agreed with the hearing officer that the price and volume data in the NSP contracts was a trade secret under NDCC Chapter 47-25.1, the Uniform Trade Secrets Act. The PSC concluded, however, that it could not protect the information because it did not fit within any specific exception to North Dakota's constitutional and statutory open-records law. The PSC ruled that the information filed was not "evidence" in a "proceeding," but was "rate information for insertion into NSP's gas tariff." The PSC reasoned:
The Commission has authority to grant trade secret protection in its formal administrative proceedings, in appropriate circumstances. We may recognize the privileges provided by the North Dakota Rules of Evidence when we are engaged in a formal hearing or proceeding. Some information filed with the Commission may meet the definition of a trade secret under N.D.C.C. Chapter 47-25.1 and thus qualify for protection, in appropriate circumstances, under the Rules of Evidence. However, a finding that information is a trade secret does not automatically provide an exception to our open records requirement. If protection is not available through the Rules of Evidence, information meeting the definition of a trade secret is still information subject to open records.
Using the same rationale, the PSC denied several other applications by NSP for trade secret protection of the price and volume data in similar gas transportation contracts. NSP appealed the PSC's denial of eight applications for trade secret protection to the district court. The district court affirmed, agreeing with the PSC that, although it constituted a trade secret, the price and volume data did not fall within a specific exception to our open-records law. NSP appeals to this court.
When an administrative agency decision is appealed to a district court and then to this court, we review the decision of the agency and look to the record compiled before the agency. Schultz v. North Dakota Dept. of Human Services, 372 N.W.2d 888, 890 (N.D.1985). Our review of an agency decision is governed by NDCC 28-32-19, which requires us to affirm: (1) if the findings of fact are supported by a preponderance of the evidence; (2) if the conclusions of law are sustained by the findings of fact; (3) if the agency decision is supported by the conclusions of law; and (4) if the decision is in accordance with the law.
NSP asserts that our open records law 1 is not violated by giving trade secret protection to the price and volume data contained in its filed contracts because the legislature has specifically excepted that information from the open-records law by enacting NDCC 28-32-06(2), which incorporates the NDREv 507 evidentiary privilege against disclosing trade secrets "at all stages of an administrative proceeding." 2 We reject this argument.
The Uniform Trade Secrets Act broadly defines a trade secret.
"Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
NDCC 47-25.1-01(4). See also Advanced Business Tel. v. Prof. Data Processing, 359 N.W.2d 365, 366 (N.D.1984). This definition is broad enough to include the price and volume data in NSP's gas transportation contracts.
Price information and related data may constitute a trade secret under some circumstances, it has been held. See Agricultural Labor v. Richard A. Glass Co., 175 Cal.App.3d 703, 221 Cal.Rptr. 63, 70 (1985); Carbonic Fire Extinguishers v. Heath, 190 Ill.App.3d 948, 138 Ill.Dec. 508, 510, 547 N.E.2d 675, 677 (1989). Compare Aristocrat Window Co. v. Randell, 56 Ill.App.2d 413, 206 N.E.2d 545, 553 (1965) []; Apollo Stationery Co. v. Pilmar, 11 Misc.2d 263, 265, 268, 173 N.Y.S.2d 854, 857 (1958) [].
Here, the PSC found that the "price and volume data contained in NSP's filings derives independent economic value from not being generally known to and not being readily ascertainable by proper means by providers of alternative fuel," that this data "is kept confidential by NSP," and that, therefore, this data constitutes a trade secret under the Uniform Trade Secrets Act. There is evidence in the record that supports these findings. Given the fact that the PSC had routinely granted trade secret protection for this type of data in the past, we conclude that the PSC reasonably determined that these factual conclusions were proved by the weight of the evidence from the entire record.
We agree with the PSC, however, that finding the price and volume data a trade secret for purposes of the Uniform Trade Secrets Act does not automatically except that information from our open-records law. NDCC 44-04-18, which restates and implements Article XI, Section 6 of the North Dakota Constitution, says that all governmental records are open to the public "[e]xcept as otherwise specifically provided by law." Thus, "for an exception to the open-records law to exist under our constitutional and statutory provisions, it must be specific, i.e., the Legislature must directly address the status of the record in question, for a specific exception, by the plain terms of those provisions, may not be implied." Hovet v. Hebron Public School Dist., 419 N.W.2d 189, 191 (N.D.1988). See also Grand Forks Herald v. Lyons, 101 N.W.2d 543 (N.D.1960). There is no specific, legislated exception to the open-records law for public utility contracts that are required by law to be publicly filed with a regulatory agency.
The price and volume information here is a public record because it is required by...
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