The Texas Supreme Court’s decision in Boeing Company v. Paxton, 466 S.W.3d 831 (Tex. 2015), changed the interpretation of the Texas Public Information Act (the “Act”), Tex. Government Code §§ 552.001-.353, by reading the plain language of the Act to permit private entities doing business with governmental entities to invoke Section 552.104’s disclosure exception for “information that, if released, would give advantage to a competitor or bidder.” Tex. Gov’t Code Ann. § 552.104 (West 2012). Prior to Boeing, the Texas Attorney General had consistently interpreted section 552.104 to apply only to a governmental entity’s interest in remaining competitive in the marketplace. See Tex. Att’y Gen. ORD-592 (1991). The Attorney General had previously only applied the exception when it was raised by a governmental entity, not when a private company whose information was the subject of a request tried to assert the exception. As a result of Boeing, however, the Texas Attorney General’s Office has issued hundreds of letter rulings exempting from disclosure documents provided by private companies to governmental entities on grounds that knowledge of the company’s information would provide an advantage to a competitor. See, e.g., Tex. Att’y Gen. ORL-2016-27878 (2016). Essentially, under the current interpretation of existing law, private companies may withhold certain information from public disclosure by showing that disclosure would provide an advantage to another private entity without the necessity of providing specific factual evidence of harm.
In response to outcries from governmental transparency advocates, Texas legislators have introduced five bills in the 85th Texas Legislative Session that aim to close what transparency advocates have termed the “loophole” created by the Boeing decision. The most far-reaching of those are H.B. 792, introduced by Rep. Capriglione, and the identical S.B. 407, introduced by Sen. Watson. Tex. H.B. 407, 85th Leg., R.S. (2017); Tex. S.B. 792, 85th Leg., R.S. (2017). Those bills would amend section 552.104(a) to limit the exception to the demonstration by a governmental entity that release of the requested information would harm the governmental entity’s interests in a specific competitive situation. Id. They also specify that the exception would no longer apply to bids or proposals once a governmental entity enters into the contract to which the bids or proposals relate. Id. H.B. 792 and S.B. 407 would also amend section 552.305(a) of the Act, which lists the exemptions that may permit a governmental entity to withhold information affecting a person’s “privacy or property interests,” by removing 552.104 from the list. Id.
The impact of H.B. 792 and S.B. 407 would be to allow public disclosure of all bids and proposals related to executed contracts with a governmental entity, and other information regarding governmental contracting and spending, unless the information falls under a different disclosure exception in the Act. If enacted, these bills will put private companies back in their pre-Boeing position with respect to resisting disclosure. That would mean private companies would have to rely primarily upon the exception for trade secrets and commercial or financial information found in section 552.110, which requires a much more rigorous showing that (i) the requested information satisfies some or all of the six factors in the trade secret analysis, Tex. Att’y Gen. ORD No. 669 (2000), or (ii) there is specific factual evidence that disclosure would lead to substantial competitive harm, Tex. Att’y Gen. ORD No. 661 (1999).
A competing set of bills, H.B. 839, introduced by Rep. Ortega, and its identical companion S.B. 425, sponsored by Sen. Rodriguez, would similarly amend section 552.104 to specify that bids and proposals submitted to a governmental entity are no longer exempted from disclosure after the governmental entity enters into a contract related to the bids or proposals. Tex. H.B. 839, 85th Leg., R.S. (2017); Tex. S.B. 425, 85th Leg., R.S. (2017). These bills are less restrictive than H.B. 792 and S.B. 407, however, in that they would not limit the assertion of section 552.104’s protections to governmental entities or tie the exception to the competitive position of governmental, rather than private, entities. See id. Thus, if enacted, H.B. 839 and S.B. 425, unlike H.B. 792 and S.B. 407, would not prevent private companies from asserting the 552.104 exception to disclosure.
A fifth bill, H.B. 349, introduced by Rep. Canales, specifies that Section 552.104 would not apply to information related to a governmental body’s receipt or expenditure of funds for an event open to the general public and paid for at least in part by public funds. H.B. 349 would also void any contract provision that would attempt to make such information confidential. Tex. H.B. 349, 85th Leg., R.S. (2017).
S.B. 407 and S.B. 425 have been referred to the Business and Commerce Committee. The other bills are currently in the introduced stage. To be enacted, they must go through both House and Senate committees, be passed by both the House and the Senate, and be signed by the governor. If passed, the legislation would likely go into effect on September 1, 2017, and apply to requests under the Act made after that date. We will continue to monitor the legislation and provide an update and further analysis if any of the bills become law.