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Fall 2003 • page 32 CROWLEY Using FOIA for Competitive Advantage Therefore, all FOIA requests should be filed using a “third-party blind”, a consulting company or legal office that does not reveal the identity of the original requesting entity. This protects the requester from reverse FOIA requests. SOME FOIA EXAMPLES A. Chemical company with cost advantage A chemical company’s competitor was cutting price in the market for organic sulfonates. The client needed to know which process the price cutter was using to make organic sulfonates (there are three processes) to determine if the price–cutting could be sustained. A FOIA request at the state Department of Natural Resources produced a copy of the Title V application for the price cutter’s facility. In reviewing the application, the process used was revealed in detail (flow diagrams, process description, etc.). During the review, it was also discovered that the facility was literally sitting on its source of raw material. The facility was mining rich sulfate deposits with tractors as raw material for the sulfonation process. Additionally, the Title V application listed all the products made at the facility and included the raw materials, batch recipes, etc. This information was not required in the Title V application and should have been held confidential. It was not and provided rich, additional competitive intelligence for the original company. B. Chemical plant explosion It was public knowledge, in fact in the news, that an explosion had occurred on a specific unit of a chemical manufacturing plant. Another company with the same type of process needed details of the explosion, so that they could engineer safety precautions in order to prevent the same occurrence at their plant. A FOIA submitted at the regional office of the Occupational Safety & Health Administration (OSHA) produced the complete details of the explosion, including a hand written note by the operator who was injured concerning exactly what he was doing when the explosion occurred. Business & Finance Division Bulletin • number 124 The requesting company was able to quickly make the changes in their process to protect against the same type of explosion at their facility. C. Refinery processes a new crude oil A petroleum refining company formed a joint venture with a crude oil supplier to process their very heavy and low quality crude oil. This would allow the refiner to process a much less expensive crude oil. A competitor considering the purchase of the same crude oil needed to know what physical changes needed to be made within the refinery to accommodate this new crude oil. A FOIA submitted at the state Department of Natural Resources revealed construction permits and changes to existing permits for each unit in the refinery affected by the change in crude oil. This included changes in metallurgy, pressures, temperatures, etc. The refiner considering the purchase of this crude oil now had all the physical requirements needed to process the cheaper raw material in its refinery without undergoing lengthy and expensive research and development work. D. Petroleum products marketing The marketing arm of a petroleum refining company needed to know which refineries in its marketing area would be able to meet the new EPA guidelines for low-sulfur petroleum products. Since the requirements to meet these new product specifications call for changes and additions to the refinery’s processing capabilities, a FOIA submitted at each state Department of Natural Resources (or equivalent) revealed which refineries in the marketing area were making the needed process changes. This allowed the marketing department to quickly determine which competitors in its area were going to market the newly mandated products. E. Fuel additive’s sales revenues A competing company in the fuel additives market needed to know how much of a new jet fuel additive was being marketed to the US
Business & Finance Division Bulletin • number 124 military around the world. A FOIA submitted to the Department of Defense’s Fuel Management agency produced government contracts with volumes and prices for these additive shipments to all US military locations around the world. It also contained information on the distributors used to get the product to foreign locations. It was then easy to determine the total volume and market value of this product. The requesting company’s market research was complete. F. Competitive product inventories All chemical companies must submit an annual SARA Tier Two report at the state level. These reports detail the name and amount of chemical stored at all locations within the state and provide approximate turnover rates. A FOIA at the state Department of Health reveals details on chemicals stored and turnover for all facilities, including warehouses and storage facilities, as well as the manufacturing plants. This information provides marketing intelligence for individual chemical products and usage patterns. G. Production line capacity In the carbon fibers industry, the product is produced on a moving assembly line operation. A company needed to know the production capacity of a competitor’s carbon fibers plant in order to determine their anticipated market penetration. A FOIA filed with the state Department of Natural Resources revealed the Title V application, which lists process details, flow diagrams, process descriptions, etc. However, this does not mean that the plant is actually operating at capacity. A second FOIA request for all state inspection reports of the facility revealed that the state inspector had taken photos during a recent inspection and had listed the speed of the production line for each phase of the process. Since these photos were in the agency files, copies were obtained using FOIA. This information revealed the actual plant production, as opposed to its design capacity. ECONOMIC ESPIONAGE ACT The Freedom of Information Act differs markedly from the Economic Espionage Act and should not be confused. The Economic Espionage Act states “In General.— Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly— (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret: (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret: (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization: (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (4),” 6 The information collected using FOIA is not confidential or stolen. It is information provided to the government agency and not held confidential by the submitting facility. Trade secrets are not filed with the government agencies. PATRIOT ACT Fall 2003 • page 33 CROWLEY Using FOIA for Competitive Advantage Congress passed the USA Patriot Act in response to the terrorists’ attacks of September 11, 2001. The Act gives federal officials greater authority to track and intercept communications, both for law enforcement and foreign intelligence gathering purposes. It vests the Secretary of the Treasury with regulatory powers to combat corruption of U.S. financial institutions for foreign money laundering purposes. It seeks to further close our borders to foreign terrorists and to detain and remove those within our borders. 7
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