fidential and privileged information." This amendment would permit public disclosure of all safety and effectiveness data submitted in support of an IND or NDA but would preserve the confidentiality of other information, such as manufacturing processes and production and sales data, which traditionally and appropriately have been regarded as trade secrets. The Panel's report on FDA's trade secrets policy (Appendix Vol. IB) offers additional, detailed recommendations to facilitate the implementation of this amendment. These recommendations address the practical problems involved in releasing data which: 1) contain matters of personal privacy; 2) are often voluminous, and; 3) usually are collected in a piecemeal fashion. 30 It is plain that the protection of incentives to invest in drug research and development is a legitimate concern. Such protection, however, must strike a balance between encouraging openness and competition and preserving the drug industry's incentive to invest. Protection should not be afforded at the expense of withholding from the public critical information about the safety and effectiveness of new drugs. At present, not enough is known about the extent to which FDA's trade secrets policy is necessary to promote drug innovation. Therefore, the Panel recommends that Congress commence a study of drug innovation in the United States to determine ways in which drug research and development may be encouraged without resorting to the suppression of scientific data or the stifling of competition among pharmaceutical companies. Recognizing that this study may require several years to compete, the Panel suggests that, as an interim measure, some minimal protection be accorded the pharmaceutical industry. Specifically, Congress should provide that safety and effectiveness data may not be used by a sponsor's competitors to support an IND or NDA without the express permission of the sponsor for a specified period following either approval of the drug or enactment of the amendment, whichever is later. While this amendment might reduce current levels of protection by unveiling companies' research activities, it still would prevent a competing company from marketing "me-to" drugs without permission for a specified number of years after the innovator's own products have been approved by FDA. [Exhibit 4] EXCERPT FROM COUNCIL ON ENVIRONMENTAL QUALITY TOXIC (Federal Register, Nov. 4, 1977) The work plan for the interagency Toxic Substances Strategy Committee is published here for public comment. This committee was established in response to the President's request, in his Environmental Message of May 23, 1977, that the Council on Environmental Quality develop an interagency program to eliminate overlaps and fill gaps in the collection of toxic chemicals data and to coordinate research and regulatory activities affecting them. This committee will serve at the principal forum for the development of Administration initiatives with respect to government-wide toxic substances strategy and policy . . . II. INFORMATION AND DATA ACTIVITIES (CEQ LEAD) The research, recordkeeping, and reporting requirements specified in the Toxic Substances Control Act of 1976 and in related authorities are extensive. These data requirements include information on production, testing, characterization, adverse reactions, exports, employment effects, health effects, and environmental effects. The production of these data involves the responsibilities of more than 32 Federal agencies. Moreover, enactment of TSCA has raised the expection that now the many diverse Federal activities under various legislation can be coordinated in a comprehensive program. If timely and accurate data are to be collected with the least possible burden on business, industry, and the public, steps must be taken to coordinate the plan Similar provisions are contained in other federal health and safety legislation. See, e.g.. Clean Air Act § 114(c), 42 U.S.C. §§ 1857f-6(b) (1976), providing for disclosure of "emission data;" Federal Water Pollution Control Act Amendments of 1972, § 308, 33 U.S.C. 1318(b) (1976) providing for disclosure of "effluent data ;" and Toxic Substances Control Act 14 (b), 21 U.S.C. § 2613(b) (1976), providing for release of "health and safety studies." 30 Trade Secrets report, supra note 19, at 47-54. ning and activities of the major Federal producers and users of chemical data. This coordination will require a comprehensive inventory of what agencies are producing what data, by what means, and for what purposes. In addition, attention must be given to barriers that can impede interagency efforts and exchanges of information. Among those barriers are confidentiality provisions that protect identity and trade secrets; the lack of a standard method for classifying chemical substances and uses; and a lack of standard formats for reporting such items as the results of toxicological and epidemiological research. Task IIA. Review of options paper on trade secrecy and confidentiality of trade secrets data. This task will be carried out for the Committee by a subcommittee on trade secrets and confidentiality (formerly a part of the Ad Hoc Interagency Toxic Substances Data Committee). Current laws and practices restricting release of information by Federal agencies to other agencies and to the public and are not uniform. The subcommittee, assisted by CEQ staff, will prepare a report evaluating these laws and practices and presenting options for needed improvements, which will be the basis for the full Committee's actions and recommendations in this area. Issues to be addressed include the current ambiguities inherent in existing laws on the definition of trade secret or confidential material, the need for uniform and fair criminal sanctions for disclosure of such information, and the implications of removing certain restrictions on interagency exchange of information. Task IIB. Assessment of mechanisms for addressing information needs and their impacts (Strategy Committee lead, with input from Data Committee, IRLG and Commerce). The Strategy Committee will have the benefit of a report by the Ad Hoc Interagency Toxic Substances Data Committee (or its successor) concerning the needs of Federal agencies for various types of chemicals-related data; the adequacy of existing Federal data systems to meet those needs, and methods and policies for improved exchange of information among Federal agencies. The IRLG will study the area of reporting and recordkeeping requirements and will make recommendations for necessary follow-up; it will also be working on development of compatible testing standards and guidelines. Following review of these reports and activities, the Strategy Committee (with the special assistance of Commerce) will evaluate the adequacy of current efforts relating to chemicals information. The Committee will also look at the impacts on industry, environmental groups, and other interest groups of the various information requirements and programs. [Exhibit 6] SCHIFFER LETTER ON CONSULTATION WITH REQUESTER Senator JAMES ABOUREZK, CENTER FOR LAW AND SOCIAL POLICY, Subcommittee on Administrative Practice and Procedure, Washington, D.C. DEAR SENATOR ABOUREZK: I want to thank you again for the invitation to testify at the hearings of September 15, 1977, held by the Senate Subcommittee on Administrative Practice and Procedure regarding the Freedom of Information Act. I enjoyed the opportunity to present views from the point of view of those seeking information under the Act. In the course of the hearing, you asked whether agency officials should consult with information providers in making decisions about disclosability, and I indicated that such consultation seemed appropriate so that a complete agency record could be made. I then urged that review of the agency decision should be made on the basis of the agency record, rather than de nova. What I neglected to mention, but believe to be equally important, is that the agency should consult with the information requester as well before making decisions about disclosability, at least in those instances where an information provider is seeking to bar release. Only by such consultation can the agency assure that it has a full range of views and evidence to consider in making the decision. Again, thank you for the opportunity to testify. Sincerely yours, LOIS J. SCHIFFER. [Exhibit 7] MACHINERY & ALLIED PRODUCTS INSTITUTE COMMENTS ON DEFENSE DEPARTMENT PROPOSED FOIA REGULATIONS MACHINERY & ALLIED PRODUCTS INSTITUTE, Washington, D.C., September 2, 1977. (Bulletin No. 5624) FREEDOM OF INFORMATION ACT-GOVERNMENT CONTRACTS PROPOSED NEW DEPARTMENT OF DEFENSE FREEDOM-OF-INFORMATION-ACT REGULATIONS The Department of Defense announced in the Federal Register of August 10 proposed regulations which would revise existing procedures and guidelines for (1) DOD Components handling public requests under the Freedom of Information Act (FOIA), and (2) the public in obtaining records under the Act. Although comments are invited, it is expected that the final regulations will vary from those proposed only in technical detail. The Institute believes these regulations will be of considerable interest to companies engaged in government contract activity. Accordingly, as a matter of information this letter sketches the more important procedural changes which the proposal would accomplish. Because of their length, the regulations themselves are not included. We assume that most member companies have access to the August 10 issue of the Federal Register. If not, MAPI will be pleased to supply a copy of the proposed regulations upon request. The intrinsic importance of these regulations would seem to be heightened both by the recent action of the Attorney General in announcing his intention to further the sweeping disclosure policy of FOIA by reducing the Justice Department's defense of cases arising under the Act (see MAPI Bulletin No. 5588) and by announcement of FOIA oversight hearings in both the Senate and the House. MAPI will appear at least on the Senate side. In the Federal Register announcement comments on this proposal are requested by September 9. However, because of the importance of these regulations and because of their publication during the congressional recess and the height of the vacation season, the Institute requested and was granted an extension to September 26 for comments. Having in mind the possibility of an Institute statement, we would appreciate receiving comments of interested member companies, including copies of statements filed directly with the Department of Defense. The review of the proposed regulations which follows is not intended to be exhaustive, but focuses upon those aspects that are of particular interest to MAPI member companies. Summary The proposed regulations, which if adopted would supersede present DOD regulations published in February 1975, would, among other things: Provide more detailed guidance for FOIA requesters and DOD units processing FOIA requests; codify the DOD administrative practice of encouraging requesters to file "non-FOIA requests"; not require persons to invoke FOIA as a condition of obtaining DOD records; modify Exemption 3 (the exemption for other statutes) treatment to reflect the 1976 Sunshine Act amendment; modify DOD interpretation of Exemption 4 (confidential business information) statutory language "obtained from a person" and "confidential"; provide that release will not be delayed beyond statutory time limits as a result of an information supplier's objections absent a court order; and provide that information suppliers be informed of court action challenging agency decision not to disclose. MAPI Comment More detailed guidance for FOIA requesters and DOD units processing FOIA requests. It is our understanding that the purpose of the proposed FOIA regulation is to provide more detailed guidance for FOIA requesters and DOD units processing FOIA requests rather than effecting a substantive overhaul of DOD FOIA procedures. In most instances the proposed regulation either promulgates a previously informal DOD practice or effects technical refinements that reflect recent statutory changes and case law developments. Codify DOD administrative practice of encouraging requesters to file "nonFOIA requests."-Section 286.6 (a) (2) (ii) of the proposed regulation outlines a so-called "best approach" of achieving DOD's objectives of maximum disclosure consistent with legitimate public and private interests. This section would codify an informal DOD practice of distinguishing between requests for DOD records made under FOIA and other requests for DOD information. Only "FOIA requests," whether or not specifically identified as such, would be subject to FOIA requirements, including that Act's stringent time limits. A "FOIA request" is defined by § 286.6(a)(3) as “[a] request for DOD records made by a member of the public who either explicitly or implicitly invokes the Freedom of Information Act, this Part, this section, or Component supplementing regulations." Present administrative practice and the proposed regulations-but not present regulations-distinguish between FOIA requests and non-FOIA requests. Under one interpretation this distinction could be at odds with the applicable FOIA statutory language which states” * * * each agency, upon any request for records ** * shall make the records promptly available [subject, of course, to statutory exemptions] to any person." (Emphasis added.) FOIA need not be invoked as a condition of obtaining DOD records. In a new statement of DOD policy, § 286.3 (b) of the proposed regulation provides that DOD shall "[n]ot require a requester who complies with reasonable rules set forth by a Component to invoke the FOIA in order to obtain records from DoD." Modification of Exemption 3 to reflect the 1976 Sunshine Act amendment.— Exemption 3 was amended in 1976 by the Government in the Sunshine Act, P.L. 94-409, § 5b. As amended it protects information "specifically exempted from disclosure by statute *** provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld." Previously Exemption 3-without limitation or qualification-covered information "specifically exempted from disclosure by statute." The proposed regulation under Exemption 3 reflects this recent statutory revision. By its terms this exemption, unlike other statutory exemptions to FOIA, is mandatory. Of particular importance to business is whether 18 U.S.C. § 1805 qualifies an Exemption 3 statute. 18 U.S.C. § 1905 makes it a criminal offense for a federal employee to make disclosures "not authorized by law" of trade secrets and other confidential business information obtained during the course of his employment. If 18 U.S.C. § 1905 qualifies as an Exemption 3 statute, a supplier of the types of information described therein would have sufficient grounds to request the enjoining of disclosure thereof because Exemption 3 would protect such information from required FOIA disclosure and 18 U.S.C. § 1905 would preclude voluntary agency disclosure thereof. The present regulation lists 18 U.S.C. § 1905 as an Exemption 3 statute. The proposed regulation, consistent with the report of the House Committee on Government Operations on the Sunshine Act, omits 18 U.S.C. § 1905 from its examples of Exemption 3 statutes. However, we have been informally advised that DOD is not taking an official position on this point. In addition, the pertinent language in the House Committee Report is somewhat qualified and there is also a "legislative history" question as to whether the Report language is controlling. Modification of DOD interpretation of Exemption 4 (confidential business information) language “obtained from a person" and "confidential.”—FOIA Exemption 4 relates to "trade secrets and commercial or financial information obtained from a person and privileged or confidential." The proposed DOD regulation differs from the present regulation in its interpretation of the Exemption 4 statutory language "obtained from a person" and "confidential." Under the proposed regulation information "obtained from a person" is that "which a Component receives from a source outside the Component," while under the present regulation information “obtained from a person" is that which a Component "receives from a person." However, the great majority of cases bearing on this issue hold that information "obtained from a person" is that obtained from a person outside of government rather than merely "from a source outside the Component [from which the information is requested]." Both the proposed and present regulations apply the National Parks' test of confidentiality with an addition which may be subject to legal question. In order 2 See MAPI Memorandum G-89 at pp. 18-20 and 40-42. 3 This test was first applied in National Parks and Conservation Association v. Morton, 498 F. 2d 765 (D.C. Cir. 1974). See MAPI Memorandum G-89 at p. 25. to be deemed confidential and qualify for Exemption 4 protection under the National Parks test, disclosure of requested commercial or financial information would either have to cause substantial competitive harm to its supplier or impair the government's ability to obtain necessary information in the future. Both the proposed and present regulations provide an alternative mode of qualification not mentioned in the FOIA statutory language and applicable case law. More specifically, information would qualify if its disclosure would "impair some other legitimate governmental interest." The proposed regulation states that exempt records are "only those" which fall within one of the three alternatives cited above. The present regulation does not contain such language. It would seem that under both present and proposed regulations the National Parks test as modified is applicable to "trade secrets" as well as "commercial or financial information." The test devised by the leading case of National Parks is only applicable to "commercial or financial information" and not "trade secrets." In practice, however, given the inherently sensitive nature of trade secrets, their disclosure would almost always cause substantial competitive harm to their supplier. Release will not be delayed beyond statutory time limits as a result of an information supplier's objections absent a court order obtained by the supplier.— Both the present and proposed regulations require the prompt notification of suppliers of information where there is a request for such information and where " ... there is reason to believe that the source may object to release and may have an enforceable right to prevent release. . . .” In addition the proposed regulation provides that "[i]f the source seeks a restraining order or other court order to prevent release, release shall be delayed until either the court order is obtained or until the expiration of the statutory time limits, whichever is sooner." (Emphasis added.) The requirement of a court order for an extension of FOIA time limits in such instance is implicit in the FOIA statutory language in any case. FOIA subsection (a) (6) (B) lists the "unusual circumstances" permitting an agency on its own initiative to extend applicable FOIA time limits. The filing of a suit to prevent disclosure by an information supplier is not one of them. Besides conforming the DOD regulation to the law pertaining to FOIA time limits, this revision is, according to DOD personnel, intended to make information suppliers support their objections to FOIA disclosure and do so promptly. In the past, some information suppliers have objected to disclosure by DOD, promising that the detailed proof necessary to legally justify FOIA nondisclosure would be shortly forthcoming. This puts the agency in a bad position under FOIA's stringent time limits. In some cases information suppliers would subsequently fail to provide any justification for nondisclosure or provide an unsatisfactory justification. On the other hand, counsel for companies confronted with demands for such evidence point out that submission of acceptable proof of competitive harm-which is difficult under the best of circumstances-becomes very nearly impossible in some cases under FOIA time limits governing an agency's response to a request for information. Information suppliers to be notified of court action challenging agencies' decision not to disclose. The proposed regulation requires that a supplier of requested records be notified of any court action challenging an agency decision not to disclose. Furthermore, "[w]hen the source advises that it is seeking court action to prevent release, the Component shall defer answering or otherwise pleading to the complaint as long as permitted by the court or until a decision is rendered in the source's court action, whichever is sooner." MAPI will continue to treat FOIA as a priority project and welcomes comments from interested MAPI companies. 21-656 0 - 78 - 16 |