ORDER NO. 96-330

ENTERED DEC 19 1996

This is an electronic copy. Attachments/Appendices may not be included.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

AR 318

DISPOSITION: RULES ADOPTED

PROCEDURAL HISTORY

The Commission initiated this rulemaking proceeding pursuant to the legislative mandate set forth in ORS 759.060, which provides:

The Public Utility Commission, by rule, shall specify information submitted to the commission by local exchange telecommunications utilities or cooperatives that is exempt from disclosure under ORS 192.410 to 192.505 as provided in this section. In adopting rules, the Commission shall consider, among other matters:

Whether the information is of the type that could potentially be used to the competitive disadvantage of a local telecommunications utility or cooperative.

Whether the information concerns matters of a nature personal to an employee or stockholder of a local exchange telecommunications utility or an employee or member of a cooperative.

Whether the information is otherwise publicly available.

Information specified under subsection (1) of this section is exempt from disclosure unless the public interest requires disclosure in the particular instance.

Nothing in subsection (1) of this section limits the exemptions granted to a local exchange telecommunications utility or cooperative under ORS 192.410 to 192.505.

On August 14, 1996, the Commission filed with the Secretary of State a Notice of Proposed Rulemaking Hearing, along with a Statement of Need, Statutory Authority, Principle Documents Relied Upon, and Economic and Fiscal Impact. The Commission also served notices and other documents on its combined service list for rulemaking proceedings.

On October 1, 1996, Michael Grant, an Administrative Law Judge (ALJ) for the Commission, convened a status conference in this matter in Salem, Oregon. The purpose of the conference was to identify, evaluate, and attempt to resolve issues relating to the proposed rulemaking prior to hearing. After consultation with industry representatives and other interested persons, Staff submitted a revised proposed rule for consideration.

On October 16, 1996, ALJ Grant held a public rulemaking hearing in Salem, Oregon. On November 1, 1996, and November 15, 1996, interested persons filed written comments on Staff’s proposed rule.

At its December 17, 1996, Public Meeting, the Commission approved the proposed rules as attached to this order in Appendix A.

DISCUSSION

Proposed Rule

In consultation with interested persons, including local exchange telecommunications utilities and cooperatives, the Commission Staff (Staff) proposed the following rule to designate the following information as exempt from disclosure under the public record laws, ORS 192.410 to ORS 192.505:

Confidential Information Submitted by Local Exchange Telecommunications

Utilities and Cooperatives

OAR 860-032-0070. (1) Except as provided in paragraph (2), the following information, submitted or filed with the Commission by a local exchange telecommunications utility or cooperative, in any form including magnetic, electronic and paper media, is exempt from disclosure because the Commission has determined that such information could potentially be used to the competitive disadvantage of the utility or cooperative:

Company-specific costs studies and traffic studies and Form I, except the income statement and the rate base summary of that form;

Detailed company-specific and service-specific information:

Annual charge factors;

Demand data, including minutes of use; and

Market segment data.

Company-specific and service-specific forecasts submitted in support of price listed services;

Company-specific cost and price data related to unregulated services;

Income tax returns and supporting information;

Affiliated companies’ financial results of operations that are not otherwise available to the public.

Customer opinion surveys that are company-specific or that have been purchased by a telecommunications utility or cooperative;

Market studies and plans that are company-specific or that have been purchased by a telecommunications utility or cooperative;

Bid, vendor or contract information that contains specific cost and price information;

Facility-maps, engineering diagrams and other technical information describing a telecommunications utility’s or cooperative network, system and facilities;

The Commission may determine, on a case-by-case basis, whether information, of a type not listed in paragraph (1), submitted or filed with the Commission by a local exchange telecommunications utility or cooperative, in any form including magnetic, electronic and paper media, is exempt from disclosure if such information could potentially be used to the competitive disadvantage of the utility or cooperative.

Except as provided in paragraph (4), the following information, submitted or filed with the Commission by a local exchange telecommunications utility or cooperative, in any form including magnetic, electronic and paper media, is exempt from disclosure because the Commission has determined that such information concerns matters of a personal nature to an employee or stockholder of the utility or an employee or member of the cooperative:

Information exempt from disclosure under ORS 192.502(2).

The Commission may determine, on a case-by-case basis, whether information, of a type not listed in paragraph (1), submitted or filed with the Commission by a local exchange telecommunications utility or cooperative, in any form including magnetic, electronic and paper media, is exempt from disclosure if such information concerns matters of a personal nature to an employee or stockholder of the utility or an employee or member of the cooperative.

Comments by Interested Parties

Staff states that the proposed rule is the result of extensive negotiations with the Oregon Independent Telephone Association (OITA). Staff believes that the rule is consistent with the intent of the legislation that spawned this rulemaking docket and recommends it be adopted.

OITA supports the proposed rule with one exception. OITA contends that the rule should be expanded to also exempt from disclosure salaries and benefits of employees, officers and directors of local telecommunications exchange utilities and cooperatives. OITA argues that the compensation one receives is "of a nature personal to an employee or stockholder" under ORS 759.060(1)(b) and should be confidential. Absent some compelling reason for disclosure, OITA argues that the amount of employee, officer and director compensation and benefits should remain private.

GTE Northwest, Inc. (GTE) also supports the proposed rule, but suggests it be clarified to address market sensitive pricing information furnished to the Commission as part of the affiliated interest contract requirements. GTE notes that information required to be filed in support of such contracts often includes market sensitive and pricing information of affiliates. GTE contends that the nondisclosure of such information is important as it provides information related to internal cost structures and affiliate pricing. Accordingly, GTE recommends, and Staff does not oppose, that subsections (1)(f) and (i) be amended as follows:

Affiliated companies financial results of operations, including pricing information, that are not otherwise available to the public;

* * * * * *

Bid, vendor, or contract information, including affiliated interest contracts, that contain specific cost or price information.

U S WEST Communications, Inc. (USWC) generally supports the proposed rule, but does not believe it goes far enough. USWC argues that, in an increasingly competitive environment, it is absolutely imperative that local exchange companies and cooperatives be afforded the highest degree of protection possible for confidential business information that is obligated to be disclosed to public bodies. To accomplish this, USWC contends that the utility or cooperative should, as the owner of the information, have ultimate discretion to choose what is confidential. At the very least, USWC argues that the following type of information should be included as exempt from disclosure under the proposed rule: (1) compensation information; (2) customer specific information, including customer contracts; (3) employee and stockholder information; (4) customer proprietary network information and usage data; (5) service results; (6) affiliated company information; (7) monthly corporate results; (8) selected Form O and Form I information; (9) budgets; (10) long range views; and (11) construction budgets.

Disposition

The Oregon Public Records Law, ORS 192.410 to 192.505, codifies the state’s policy that the public is entitled to know how the public’s business is conducted. Those provisions provide that the written record of the conduct of the public’s business is, with some important exceptions, available to any citizen.

The public’s business had traditionally included this Commission’s regulation over telecommunication utilities and cooperatives. Because these entities have been monopoly providers, we have been charged with the responsibility to request information from these companies to establish an acceptable rate of return and/or monitor various activities.

As noted above, the Legislature recently passed ORS 759.060, which requires this Commission to specify information submitted by local exchange telecommunication utilities and cooperatives that is exempt from disclosure under the public record laws. In adopting such rules, we must consider, among other matters: (1) whether the information is of the type that could potentially be used to the competitive disadvantage of a local telecommunications utility or cooperative; (2) whether the information concerns matters of a nature personal to an employee or stockholder of a local exchange telecommunications utility or an employee or member of a cooperative; and (3) whether the information is otherwise publicly available.

After consideration, the Commission concludes that Staff’s proposed rule, with the amendments proposed by GTE, reasonably identifies what information submitted by telecommunication utilities and cooperatives should be exempt from disclosure. The type of information listed in subsection (1) is proprietary in nature, generally consisting of trade secrets or other confidential research, development, or commercial information. Such information has historically been exempt from disclosure under the public records law.

Subsection (3) exempts information identified in ORS 192.502, which includes "information of a personal nature such as but not limited to that kept in a personal, medical or similar file, if the public disclosure thereof would constitute an unreasonable invasion of privacy[.]" Long standing public policy dictates that this type of information should remain private.

The Commission does not agree with OITA’s argument that subsection (3) should be expanded to also exempt salaries and benefits of employees, officers and directors of local telecommunications exchange utilities and cooperatives. While the telecommunications industry is moving toward competition, the vast majority of ratepayers are still served by monopoly providers and, as a consequence, have no choice but to pay rates that include the salaries and benefits of employees, officers and directors of their serving utilities. Customers should have the right to know all the expenses and investments which make up their rates.

In making this decision, the Commission acknowledges that, in certain cases, a telecommunications utility or cooperative may have sufficient reasons to justify the confidentiality of an officer’s or employee’s salary. If such circumstances arise, we note that subsection (2) or (4) allows this Commission to consider such arguments on a case-by-case basis.

The Commission further rejects USWC’s argument to adopt a rule that would allow a telecommunications utility or cooperative to self-designate what information is exempt from disclosure. In enacting ORS 759.060, the Legislature directed this Commission to adopt a rule that recognizes the need for local exchange telecommunications utilities and cooperatives to protect information that could be used to their competitive disadvantage. The goal of this rulemaking proceeding, therefore, is to determine what information falls into that category; it is not to adopt a rule that simply gives these companies the ultimate discretion to choose what is or is not confidential.

Moreover, the Commission is not persuaded that the proposed rule should be expanded to exempt the additional items listed by USWC. First, USWC provides no argument to support the exemption of the additional items. Second, some items, such as customer specific information and long range views, are already protected by other statutory provisions. Furthermore, others are too broad for a blanket presumption of exclusion.

ORDER

IT IS ORDERED that the proposed rule OAR 860-032-0070, as shown in Appendix A, is adopted. The rule shall become effective on filing with the Secretary of State.

Made, entered, and effective ___________________________.

A person may petition the Commission for the amendment or repeal of a rule pursuant to ORS 183.390. A person may petition the Court of Appeals to determine the validity of a rule pursuant to ORS 183.400.