Using FOIA for Competitive Advantage

February 25, 2003

Introduction

Although freedom of information laws have existed since 1766, when Sweden passed its
Freedom of the Press Act, the last 10 years saw an unprecedented number of states
adopting access to information legislation.

The (US) Freedom of Information Act (FOIA) was enacted in 1966, and took effect on
July 4, 1967. The FOIA firmly established an effective statutory right of public access to
executive branch information in the federal government.1

Since that time all US federal, state, county and city government agencies have enacted
similar legislation.

In the last decade, governments around the world have become increasingly more
transparent. Over 48 countries now have comprehensive laws to facilitate access to state
records; over 30 more are in the process of enacting such legislation.2

FOIA allows any person or organization, regardless of citizenship or country of origin, to

ask for records held by federal government agencies. Agencies include executive and
military departments, government corporations and other entities, which perform
government functions except for Congress, the courts or the President’s immediate staff
at the White House, including the National Security Council. Government agencies must
respond in 20 working days.3

This paper will address the use of FOIA to gain competitive advantage in the chemical,
petrochemical and energy marketplace.

US Government Agencies of Interest

The following US agencies (including their subsidiary divisions) hold information of

interest to the chemical, petrochemical and energy industries:

Federal Level

Chemical Safety and Hazard Investigation Board (CSB)

Commodity Futures Trading Commission (CFTC)
Defense Nuclear Facilities Safety Board (DNFSB)
Department of Agriculture (USDA)

1
US Department of Justice: http://www.usdoj.gov/oip/introduc.htm
2
http://www.freedominfo.org/survey/
3
Freedom of Information and Access to Government Records Around the World
http://www.freedominfo.org/survey/survey.pdf

1
Department of Defense (DOD)
Department of Energy (DOE)
Department of the Interior (DOI)
Department of Justice (DOJ)
Department of Labor (DOL)
Department of Transportation (DOT)
Environmental Protection Agency (EPA)
Federal Emergency Management Agency (FEMA)
Federal Energy Regulatory Commission (FERC)
Federal Trade Commission (FTC)
International Trade Commission (USITC)
National Oceanic and Atmospheric Administration (NOAA)
National Transportation Safety Board (NTSB)
Nuclear Regulatory Commission (NRC)
Securities Exchange Commission (SEC)
Tennessee Valley Authority (TVA)
U.S. Federal Courts
U.S. Federal Maritime Commission (FMC)

Most federal agencies maintain only high-level files; many of their regional offices have
more information.

State Level

All 50 states, particularly the:

Department of Natural Resources Oil and Gas Commission

Department of Health State Courts
Emergency Management Services
and more

County and City Level

Various

All of these agencies have information that can be useful as competitive intelligence. As
an example, your competitors are required to file the same information your company
files.

In the US, most agencies allow companies to hold certain information as “company
confidential” and held outside of FOIA access. However, most companies are either not
aware of this or simply neglect to exercise their right to hold information confidential.

Once information has been filed with a government agency and not declared
“confidential”, it is available through a FOIA request.

2
Secondly, agencies cannot manipulate the information. FOIA requires only that the
agency provide the requester access to the file. The agency cannot combine documents
from several company filings to create a new document.

US FOIA Exclusions

The FOIA does exclude a limited amount of information from being accessed.

The following are the nine FOIA exemptions and the information they cover4:

1. Classified national defense and foreign relations information

2. Internal agency personnel rules and practices
3. Material prohibited from disclosure by another law
4. Trade secrets and other confidential business information
5. Certain inter-agency, or intra-agency communications
6. Personnel, medical, and other files involving personal privacy
7. Certain records compiled for law enforcement purposes
8. Matters relating to the supervision of financial institutions
9. Geological information on oil wells.

Non-US Countries with FOIA Laws

Several countries have FOIA laws similar to the US. Varying degrees of competitive
information can be obtained using the country laws available.

In some cases, a citizen of that country is required to collect the information and must
show cause for the request. Several countries also have a limited time window for access
to the information.

The following is a list of countries with some degree of FOIA in place as of 20025:

4
US Department of the Interior – Bureau of Land Management
http://www.blm.gov/nhp/faqs/faqs3.htm
5
Freedom of Information and Access to Government Records Around the World - 2002
http://www.freedominfo.org/survey/survey.pdf

3
Albania Estonia Latvia Spain
Australia Finland Lithuania Sweden
Austria France Mexico Thailand
Belgium Georgia Moldova Trinidad and
Belize Greece Netherlands Tobago
Bosnia and Hungary New Zealand Ukraine
Herzegovina Iceland Norway United Kingdom
Bulgaria Ireland Philippines Scotland
Canada Israel Portugal Wales
Colombia Italy Romania Uzbekistan
Czech Republic Japan Slovakia Zimbabwe
Denmark South Korea South Africa

The FOIA Process – Why You Should Not Do It

Utilizing the FOIA to collect competitive intelligence is often a tedious process. The
learning curve is steep and the time involved can be lengthy. There are special forms and
procedures required by each agency. Continuous follow-up contact with government
personnel is required.

1. Every state and country has slightly different FOIA requirements.

2. Often agencies require the person (or their agent) making the request be present to
review the files. Agencies will not conduct searches for specific information, so
your choice is the whole file or none at all.

3. The main reason for not conducting your own FOIA request is that the request
itself becomes a public record. Therefore, anyone requesting information about
“who has requested information” will discover that you or your company had
collected certain documents.

An integral part of competitive intelligence is learning what your competitor knows about
your company. Companies often have “reverse” FOIA requests run to see who has
collected information within a government entity about their company. This allows them
to know which competitor has collected what information, i.e. “what does their
competitor need to know about them.”

Remember, discovering the question your competitor is asking about your company is
valuable competitive intelligence in itself. In competitive intelligence work, the question
is often as valuable as the answer.

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.

4
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 the
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.

The requesting company was able to quickly make the changes in their process to protect
against the same type of explosion at their facility.

5
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 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.

6
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:

7
(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

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

Because of the concern expressed in the Patriot Act, several US government agencies
have restricted access to formerly available information. This includes certain
information about nuclear facilities, pipelines and chemical facilities. In particular,
access to the Risk Management Plans for facilities is no longer available using FOIA.

Summary

The Freedom of Information Act, properly executed at the appropriate government level
will reveal competitive information of great value.

The process of filing a FOIA creates a public document and can be considered
competitive intelligence in itself.

The process is complicated and expensive to learn and should be handled by those
familiar with the laws and with the appropriate government agencies.

Information collected using a FOIA is not illegal and does not violate the Economic
Espionage Act or the Patriot Act.

6
http://www.tscm.com/USC18_90.html
7
http://fpc.state.gov/documents/organization/10091.pdf

8
W. R. Crowley
President

Competitive Analysis Technologies

11702-B Grant Road, #333
Cypress, TX 77429

Phone: 281-370-1444
Fax: 281-376-6231
E-mail: compete@catsites.com
www.catsites.com

Competitive Analysis Technologies (CAT) has been conducting FOIA requests on the
behalf of clients for ten years. All work is conducted on a confidential basis and the true
client’s name is never revealed.

Competitive Analysis Technologies is a member of the Society of Competitive

Intelligence Professionals (SCIP) and the Association of Independent Information
Professionals (AIIP). CAT utilizes its own resources in most FOIA work, or calls on
selected members of these organizations to assist in FOIA related work in other countries.

9
 William R. Crowley

Bill Crowley has more than 35 years experience in the oil and gas industry.

He spent 14 years with a division of Amoco Corporation until its divestment in 1993. His duties
included the management of the sales, marketing and R&D efforts worldwide for Amoco’s
Process Chemicals. He was also the International Sales Manager for the upstream and
downstream chemical market segments and lived in Norway as an expatriate working in the
Norwegian North Sea as Sales Manager.

Prior to joining Amoco Chemicals, Crowley spent 6 years with Nalco Chemical as the Product
Manager, Finished Product Additives. He started his energy career with Shell Chemical in R&D.

He is a retired Lieutenant Colonel in the U.S. Army Reserve, where he was in charge of Public
Affairs for the Texas Gulf Coast region. His active duty career included assignments with the
Army Signal Corps in Vietnam where he carried a Top Secret-Crypto security clearance.

Crowley has a BS in Chemistry and graduate work in Geology from Lamar University in
Beaumont, TX.

In 1993, he started Competitive Analysis Technologies, a competitive intelligence and publishing

concern in the energy industry. The company has been conducting FOIA searches on behalf of
clients since 1994.

He is the Contributing Editor for the column HP on the Internet for Hydrocarbon Processing
Magazine and author of Gulf Publishing’s “Oil & Gas on the Internet”, “Organic &
Petrochemicals on the Internet” and “Inorganic Chemicals and Minerals on the Internet”.
Crowley has written articles concerning the search for information in several industry journals.
He was recently the Chairman of the Texas Gulf Coast chapter of the Society of Competitive
Intelligence Professionals and a member of the American Association of Petroleum Geologists.
He is a currently a member of the Association of Independent Information Professionals, the
Special Librarians Association and The Energy Council.

In March 1999, he was a guest speaker for the National Collegiate Conference of the Association
of Information Technology Professionals in Arlington, Texas.

In March 2000, he was the luncheon speaker at PriceWaterHouseCoopers conference on “E-

commerce in the Downstream Industry” – Houston, Texas.

Recent talks:
“Finding Oil and Gas on the Internet “- SPE Petro-Tech Study Group, May 10, 2002 monthly
meeting
“Energy Information in the Hidden Web” – Special Librarians Association, June 2002 Annual
Conference
“Internet Resources for the Division Order Analyst” – Houston Association of Division Order
Analysts, July 11, 2002
“Finding Oil and Gas on the Hidden Web” – Liquid Storage Operators Group, August 15, 2002
“Finding Energy Resources in the Hidden Web” - Houston Area Law Librarians, September 11,
2002
“Finding Oil and Gas on the Hidden Web” - Desk and Derrick Club on September 17, 2002

10
W. R. Crowley Publications List

Multi-client study - “1993 U.S. Fuel Terminals Survey” Competitive Analysis Technologies

Multi-client study - “Upgrading Heavy Hydrocarbon Imports - 1994” Competitive Analysis

Technologies

Article - Upgrading Heavy Hydrocarbon Imports Supply Profiles Newsletter, February 1995

Book - Oil and Gas on the Internet Gulf Publishing Company, February 1996

Article - Drilling for Oil and Gas on the Internet Database Magazine, Volume 19, Number 5 -
October 1996

Book - Organic Chemicals and Petrochemicals on the Internet Gulf Publishing Company,
March 1997

Article - Organic Chemicals on the Internet Business Information Alert Newsletter, March 1997

Book - Inorganic Chemicals and Minerals on the Internet Gulf Publishing Company, May 1997

Article - Know X (Review of Public Records Search Engine) Business Information Alert
Newsletter, July 1997

Interview - Competitive Intelligence in the Oil Patch infoAlert Newsletter, November 1997

Interview - Top Internet Sources in the Energy Industry Business Information Alert Newsletter,
January 1998

Article – Brazilian Information on the Internet Bibliodata – The CyberSkeptics Guide

Newsletter, February 1999

Article - SageMaker's Vortal -- The Future of Information Management E-Commerce

Magazine, March 2000

Article – Finding Oil and Gas on the Internet Oil and Gas North Africa Magazine,
November/December 2000

Article – Commodity Pricing Business Information Alert Newsletter, December 2001

Book Review – “The Invisible Web-Uncovering Information Sources Search Engines Can’t
See”, Business Information Alert Newsletter February 2002

Crowley is the Editor of Competitive Analysis Technologies’ widely used databases for industry
Intranets:

Oil and Gas on the Internet – Upstream

Oil and Gas on the Internet – Downstream
Power Utilities on the Internet

11