established appeal procedures for a decision to disclose Those several agencies which do provide such

information.

1/

a right allow only a brief period of time in which the submitter may file, and the agency must rule on, such an appeal; and, further, the appeal is generally based on an inadequate agency record. Moreover, the agency appellate bodies to which such appeals can be taken often suffer from the same pro-disclosure bias which characterizes many agency staffs. Consequently, such appeals, even where afforded, are generally little more than a rubber stamp process and the submitter has little hope of overturning an adverse initial decision.

Even where a right of appeal is allowed, some agencies refuse to delay disclosure pending completion of the administrative appeal. Since, once disclosure occurs, the disclosability of the documents becomes a moot question, the refusal to delay disclosure ultimately has the effects of denying the submitter his right to an administrative appeal and of insulating the agency's disclosure decision from judicial scrutiny.

2/

1/ 999.

2/

n.

Reverse FOIA Suits, supra, 70 Northwestern U.L. Rev. at

Sears, Roebuck and Co. v. GSA, 384 F. Supp. 996, 1001 7 (D.D.C.), stay dissolved, 509 F.2d 527 (D.C.Cir. 1974).

E. Inadequate Opportunity to Seek Judicial Review

In response to an agency decision to disclose, a business may choose to vindicate its rights by commencing a reverse FOIA action. Yet, despite the fact that disclosure of the contested documents might moot the case, many if not most agencies refuse to delay disclosure pending the completion or even the commencement of judicial review. In contrast, Government agencies never disclose their own documents pending a requester's suit to 1/ compel disclosure.

Bills have been introduced in both Houses of Congress which would cure the substantive and procedural problems noted above and, equally important, eliminate the perception of governmental insensitivity to the need to maintain the confidentiality of business information submitted to federal agencies. The three principal bills

currently before Congress are H. R. 3928 (introduced by

Congressman Horton on June 16, 1981), H.R. 2021 (introduced by Congressman English on February 24, 1981), and S. 1247 (introduced by Senator Dole on May 21, 1981).

1/ Patten and Weinstein, supra, 29 Ad. L. Rev. at 204.

H.R. 2021 proposes changes on the procedural front, but does not address the substantive issues discussed above concerning the need for clarification of the "confidentiality" standard contained in Exemption 4 and for affirmation that Exemption 4 is mandatory in nature. On the procedural side, H.R. 2021 represents a move in the right direction but, unfotunately, one which does not go far enough. Thus, while the bill would formalize submitters' right to notice of, and an opportunity to object to, a disclosure request, it would continue the bias which now exists against submitters in FOIA proceedings both at the agency level and in court. For example, requesters would continue to be given a right to de novo review of an adverse agency disclosure decision, while submitters would be afforded only a more limited review based on the agency record; given the importance of submitters' rights and interest in the confidentiality of business information, this discrimination against submitters does not seem justifiable. The bill's preference

to the requester's choice of venue over the submitter's, when both parties have sued regarding the identical records, is equally unfair and unwarranted.

Finally, the

bill provides only ten days within which a submitter may file objections to disclosure and makes no provision for an oral hearing where requested and warranted by the

circumstances.

In contrast, S. 1247 does enlarge the time for

filing objections to disclosure, does make provision for an informal oral hearing where warranted by the circumstances, and does not discriminate against submitters with respect to either choice of venue or standard of review. More importantly, S.1247 tackles the substantive issues which are at the heart of this problem by declaring (1) that Exemption 4 shall apply to information which would not customarily be disclosed by the submitter (regardless of any showing of competitive injury), (2) that Exemption 4 shall be applied on a mandatory basis unless it is shown that withholding would cause substantial injury to an overriding public interest, and (3) that the Trade Secrets Act, 18 U.S.C. $1905, shall be deemed to be a statute described in Exemption 3 of the FOIA, 5 U.S.C. §552 (b) (3). S.1247 should be enacted. By accomplishing the substantive and procedural reforms described above, it would provide to submitters of confidential business information the protection which such information deserves, and eliminate the discrimination against submitters which the present Act embodies. Moreover, by erasing the perception that agencies will not preserve the confidentiality of business records, the bill would foster renewed cooperation by those persons upon whom agencies are dependent in obtaining information necessary for the effective performance of their regulatory functions. Finally, enactment of S. 1247 to resolve the many questions left unanswered by the Supreme Court in Chrysler Corp. v. Brown, questions which, in the final analysis, require a legislative rather than a judicial

solution.

Mr. RADER. Mr. Pulley.

STATEMENT OF JACK I. PULLEY, SENIOR ATTORNEY, DOW CORNING CORP., MIDLAND, MICH.

Mr. PULLEY. Thank you.

Dow Corning Corp. is a specialty chemical manufacturing firm headquartered in Midland, Mich. Our products are broadly referred to as silicones and are used in every major industry, including automotive, aerospace, medicine, and electronics.

Generally, I handle Dow Corning's environmental legal affairs; however, I am also responsible for insuring the protection of Dow Corning technology that has been submitted to various health and environmental agencies.

As you will see from my examples, I have had experience in responding to public requests for documents Dow Corning has submitted to the Government. Even though my comments today are somewhat critical of FOIA as it now exists, I must emphasize that we support the underlying public purpose of this act that is, an open government.

In a democracy, the public has a right to know how its government operates. However, this right must be balanced against the rights of those who have a vested interest in the information they have given the Government.

My basic point this morning is that there are serious ambiguities in the present statute which encourage those who would use FOIA to serve their own private economic interests, whether they be foreign or domestic.

This abuse adds unwarranted risks and costs to our business. Further, we believe these ambiguities can be legislatively corrected without undermining the basic purpose of FOIA.

The risk of losing proprietary information through FOIA abuse was clearly illustrated to me by two recent events. The first was a publication of an article entitled "The Freedom of Information Act; Strategic Opportunities and Threats," in the winter 1978 issue of the "Sloan Management Review."

In this article, the authors described how FOIA could be used to gain and I use their words-a differential competitive advantage. Here is one of America's most prestigious business journals teaching the world how FOIA can serve private economic interests. The second event which showed me the reality of this abuse was a series of four requests over a period of about 1 to 2 years for copies of all environmental permits and supporting documents for Dow Corning's two basic U.S. manufacturing facilities.

These documents not only described the character of the environmental discharges, but they also contained production capabilities, construction cost figures, and certain critical process operating details.

Initially, one may think these requests would be the ultimate public purpose-a citizen reviewing the Government's environmental decisions. However, three of the four requests were filed by large metropolitan law firms on behalf of an unknown client, and the fourth by an environmental consulting firm acting on behalf of an anonymous client reportedly in the same line of business as Dow Corning.