In a case pitting Wasco County, Oregon residents and a newspaper against the City of Dalles, Oregon, a court will decide whether a public interest exception in a state law will mandate the disclosure of potential trade secrets. After a reporter from The Oregonian inquired into Google’s water use, the City of Dalles (“Dalles”) filed a Complaint against both the reporter and the newspaper (the “Defendants”) seeking declaratory relief, requesting that the court declare Google’s water use a trade secret under Oregon’s Public Records Law, ORS 192.311 et seq, and the Oregon Uniform Trade Secrets Act, ORS 646.461 et seq. As described below, the issue is whether Google’s water use is a trade secret, and if so, if the public interest exception, which may permit public disclosure of trade secrets, applies.
According to the Complaint for Declaratory Relief filed last month, Google plans to build two new server farms in Dalles – a city in Wasco County, Oregon. To cool its data centers, Google needs water. The Complaint notes that Defendants submitted a FOIA Request in late September of 2021, seeking information relating to Google’s water consumption for 2020. The Complaint further noted that on the same day, Dalles denied the FOIA Request under Oregon Public Records Law, ORS 192.311 et seq. The Defendants subsequently petitioned the Wasco County District Attorney for review of Dalles’ denial of the FOIA request (the District Attorney has authority to review public records for disclosure). Both parties submitted to the Wasco County District Attorney memoranda of law in support of their respective positions, which, along with the petition, are attached to the Complaint. The Wasco County District Attorney decided that “water use” is not a trade secret as defined under either Oregon Public Records Law or the Oregon Uniform Trade Secrets Act and ordered Dalles to disclose all responsive records. It did not address the public interest in the decision. Dalles refused to produce the water use information pursuant to the conditional exemption under ORS 192.345(2) – that the extent of Google’s water use is a trade secret and the public interest does not require disclosure – and instead, Dalles filed its Complaint seeking declaratory relief.
Under the Oregon Public Records Law, ORS 192.345(2), absent a public interest requiring disclosure, public records are conditionally exempt if they contain trade secrets. The Public Records Law defines “trade secrets” to include “any formula, plan, pattern, process, tool, mechanism, compound, procedure, production data, or compilation of information which is not patented, which is known only to certain individuals within an organization and which is used in a business it conducts, having actual or potential commercial value, and which gives its user an opportunity to obtain a business advantage over competitors who do not know or use it.” Though the Oregon Uniform Trade Secrets Act, ORS 646.461(4), defines “trade secrets” similarly, it does not include a public interest exception that would require disclosure if a party can prove that the disclosure benefits the public interest.
According to Dalles, the volume of water Google uses to cool its data centers satisfies the requirements for trade secret protection under both the Public Records Law and the Oregon Trade Secrets Act, and is thus exempt from disclosure. Dalles claims that the water usage is not patented; the usage is relevant to operating the data centers and is only known to few people; the data centers are competitive in the global market and disclosing water usage could deprive Google of the value of its investment and know-how.
In the petition submitted to the Wasco County District Attorney, the Defendants claim that (1) Google’s water use is not a trade secret because its consumption in other states has already been disclosed and (2) the public interest favors disclosure. In the petition to the Wasco County District Attorney, the Defendants set forth their public interest arguments, noting that (i) Google will pay $28.5 million to upgrade Dalles’ public water system and receive “substantial tax breaks”; (ii) the upgrade will include an expansion to the water supply to accommodate Google’s water consumption; and (iii) because the water is a public resource from Dalles’ groundwater aquifer, the public has a right to know how much water Google has consumed and intends to consume following the expansion. Whether Defendants will make the same arguments in response to the Complaint that they made in the petition to the Wasco County District Attorney is unclear.
The Oregon Circuit Court will be required to determine whether the volume of Google’s water use is a trade secret within the meaning of Oregon’s Uniform Trade Secrets Act and Public Records Law. If it is, the Court will have to balance the potential public interest in disclosure versus the private interest in maintaining the trade secret as confidential commercial information. Under the Public Records Law’s public interest exception, if the defendants can show the trade secrets are in the public interest, the trade secrets could be subject to public disclosure.