Page images
PDF
EPUB

Mr. RADER. One final question on that Washington Research

case.

What effect would it have on research by Government grantees? Dr. BONDURANT. This is another example, I think. It is sort of like Sherlock Holmes and the barking dog. We do not hear the dogs barking.

I cannot cite specific examples of a chilling or inhibiting effect of that or the consequences thereof. On the other hand, the information was widely circulated throughout the community. It comes at a time of great interest and emphasis on the commercial application of research advances by universities and their faculties. That is supported by Congress in many way.

There is no question that research grant applications are now being written against the background of the knowledge of that decision.

Beyond that, I cannot cite specific examples.

Mr. KEYES. If I could elaborate just briefly on that.

Mr. RADER. Please do.

Mr. KEYES. One reason why we are unable to cite specific examples-and I think we are very grateful that we are not-is because of the sensitive handling of the information by the employees and the administrators of the National Institutes of Health who have undertaken, more or less voluntarily, to notify the submitter of the information and to conduct this investigation if there is an objection to its release.

Our concern is that this process is not embedded in statute and there is no basis for submitters to enforce that process.

We are very concerned that a new symmetry be infused back into the law where the rights of the submitter receive equal treatment and have equal dignity with the rights of the requester of the information.

Mr. RADER. Thank you.

Mr. WHALE. Might I just make a brief comment?

Mr. RADER. Please do.

Mr. WHALE. I think the underlying thesis of the Washington Research case is further undermined by the flight of scientists and academicians from the universities setting up their own small companies in the recombinant DNA area.

Mr. RADER. Thank you. S. 1247 contains both procedural and substantive revisions to protect information covered by exemption 4. Our previous panel seemed to be most concerned with the substantive changes in exemption 4.

Would your confidential information, Mr. Whale and Mr. Virden, be adequately protected if only the procedural rights were strengthened by S. 1247 without changing the standard of the fourth exemption?

Mr. WHALE. They would certainly be protected to a large degree. I would hold great stock, however, in the changing of the test which I take to be a substantive aspect of the bill because of the virtual impossibility of the fair assessment of the test as presented now in the cases.

I would suggest that with the safety valve that Mr. Pulley referred to, the opportunity for the consumer groups to pursue infor

mason in a showing of legitimate clear and convincing need, the prociems of both groups would seem to be adequately served.

The need for addressing the prociems of the submitters of information. I think has been made clear by the imbalances that now exist and by the demonstrance of the overwhelming use of FOIA by requester groups not associated with the consumer interests. Mr RADER. Mr Virten, could you comment on whether the procedural changes alone would protect your vitally sensitive infor

[ocr errors]

Mr. Vincen. I agree they would be very helpful. I certainly believe that the key provision that we are seeking is to change the substantial competitive harm test and get us into a commerical situation, especially where we are dealing with the Government in the procurement process. In effect, it is a business type of relationship and we should return to the understanding of what trade secrets are all about in the commercial context.

In that regard. I would like to cite a portion of a Supreme Court case. Kewanee Or. Co. v. Bicron Corp:

Maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated polices behind trade secret law. The necessity of good faith and honest fair dealing is the very life and spirit of the commercial world.

When we return to honoring expectations and when we have a test that keeps trade secrets in the Government, where they would customarily be kept in the commercial world, this is a very, very important substantive change and one which we really need in order to protect our trade secrets adequately. We do need that. Mr. RADER. Thank you, Mr. Virden.

Finally, Mr. Viadeck mentioned that 18 U.S.C. 1905 provides a criminal penalty for disclosure of trade secrets. Are any of you aware of anyone being prosecuted thereunder for a Freedom of Information Act disclosure?

Mr. KEYES. Mr. Rader, it is my understanding that no one in history has ever been prosecuted for release of information under 1905. That may not be correct, but it is my understanding of the situation.

Furthermore, and more importantly, the improbability of that being a substantial disincentive at the present time is illustrated by the fact that the U.S. attorney's manual contains in it a provision which resulted from a Justice Department determination in 1979 which suspended the use of 1905 unless there has been a central Justice Department approval for the action.

Again, my information is that there has never been a Justice Department approval for such an action.

I think that the reality is that 1905 is no inhibition whatsoever to the release of information.

Mr. RADER. Mr. Whale, you had a comment.

Mr. WHALE. I would certainly agree. It is my independent understanding that there has been no action under that statute.

After all, when that statute is invoked, the secret is already out. What you are doing by invoking the statute is lashing a Federal employee from whom any kind of retribution is in no sense recompense for what has been lost.

Mr. RADER. Do any of you gentlemen have any final comments here?

Mr. VIRDEN. I would like to comment on 18 U.S.C. 1905.

In submitting documents in the procurement process, where there are trade secrets and confidential business information, we put a stamp on the data.

We not only reference that it is not to be disclosed pursuant to exemption B(4) of the Freedom of Information Act, but we also in our legends indicate that it is not to be disclosed outside the Government pursuant to 18 U.S.C. 1905.

We find this helpful. We also find it brings attention to the importance of the document to our company.

We find it helpful when we are responding and working with the agency with respect to requests for data which includes our confidential business information that there is very good language in 18 U.S.C. 1905 as to what cannot be released: "trade secrets, processes, operations, style of work or apparatus, or to the identity, confidential statistical data, amount or source of any income, profits, losses, or expenditures of any person, firm, partnership, corporation or association."

It is very helpful language. We tend to use that, as much of the information we are concerned about having released falls within the language of 18 U.S.C. 1905.

Mr. RADER. Gentlemen, we certainly appreciate the expertise you have brought to the subcommittee on the subject of business confidentiality.

Thank you all very much.

The subcommittee will be meeting again on July 31 to continue its hearings on the Freedom of Information Act.

Until then, we will stand adjourned.

Thank you.

[Whereupon, at 11:50 a.m., the subcommittee recessed, to reconvene on July 31, 1981.]

FREEDOM OF INFORMATION ACT

FRIDAY, JULY 31, 1981

U.S. SENATE,

SUBCOMMITTEE ON THE CONSTITUTION,

COMMITTEE ON THE JUDICIARY,

Washington, D.C.

The subcommittee met, pursuant to recess, at 9:40 a.m., in room 5110, Dirksen Senate Office Building, Senator Orrin G. Hatch (chairman of the subcommittee) presiding.

Present: Senators Hatch and DeConcini.

Staff present: Randall Rader, counsel; Steve Markman, general counsel; Peter Ormsby, professional staff assistant; Dickson Burton, law clerk; and Claire Greif, clerk.

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE OF UTAH, CHAIRMAN, SUBCOMMITTEE ON THE CONSTITUTION

Senator HATCH. The committee will come to order.

I apologize for being late, but I had one interview on top of another this morning and just could not get them completed.

Today we convene the third in a series of hearings on the Freedom of Information Act.

In the first two hearings, we have taken testimony that has reaffirmed my belief in the need for a strong Freedom of Information Act. A democratic society needs an informed public to hold Government accountable for its actions. However, we have not yet reached a proper balance between an open Government and performance of certain essential governmental functions.

Last week, we examined the fourth exemption of the Freedom of Information Act which Congress originally created to protect trade secrets and confidential business information.

The judicially created competitive harm standard leaves bureaucrats and judges to determine the market value of confidential information that might be of critical importance to a private busi

nessman.

Moreover, the Freedom of Information Act does not require that notice be given to submitters of information before their information is released to third parties, leaving submitters with no procedural remedies to adequately protect their secrets.

Our foreign intelligence capabilities have been significantly impaired as a result of the Freedom of Information Act. Foreign sources are more reluctant to supply critical information to our intelligence officers because of a widespread belief that the U.S. Government cannot protect its secrets.

« PreviousContinue »