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Mr. NORTON. Well, I am not yet prepared to say that it is better at present. I am not terribly optimistic about the prospect for a more precise definition that eliminates litigation. I do not think we will ever get to that point. You might be able to single out certain kinds of information or documents that will be presumptively regarded as privileged or protected under that exemption.

A further problem in the application is that, whatever the courts : have said, business tends to view everything that is not required to be made public by law—or that it does not choose to make public—as confidential. So, there is a tension right at the outset; it is understandable, perhaps. But you have a narrow standard and a broad interest in maintaining confidentiality that will persist under almost any standard.

The biggest category of cases that we have or instances in which we have to apply the act involves documents that we have obtained from a companies in the course of economic or law enforcement investigations. The Commission has regarded these as subject to the act unless they are covered by the exemption. Some questions have arisen in? recent cases as to whether that is a proper interpretation of the act 4 and whether a third party's documents which happen to be in the possession of an agency should be subject to FOIA requests. If that? category of documents were not covered by the act, our problems? would be greatly eased.

Senator ABOUREZK. There would be nothing left to request.

Mr. NORTON. Well, that is not true. We get a lot of information! through questionnaires and other types of inquiries which very often is very confidential and which is also a matter of comparable concern to the companies and is also the subject of requests. It would not wholly eliminate this category of information from potential access; but in terms of the magnitude of the problem for the Commission, it would simply ease it tremendously.

Because of the possibility that documents that they have not yet submitted to the Commission might be released, increasingly we find that companies we are trying to get documents from are resisting voluntary requests and are requiring that we go to court. They are trying to raise all sorts of questions in the courts to obtain protective orders.

Ultimately we end up winning most of these suits and we get the documents, but only at a cost of not only the litigation expense but great delay. I think this is a direct consequence of the availability of these documents under the act. In addition to that, we get preenforcement suits, where a company does not wait to litigate the question when we go to enforce the process, but goes off to some other court and sues ns first. We get involved in multiple litigation in different courts. It has been a tremendous problem in the last couple of years.

Senator ABOUREZK. I think the biggest problem with the reverse lawsuits you just talked about is forum shopping. Do vou have any recommendations as to how that situation can be stabilized ?

Mr. Norton. Right now we have direct experience with that. We have a request for documents made in connection with a rulemaking proceeding that is ongoing concerning the mobile home industry. The Commission determined that we should release certain documents which had been submitted by a number of different companiesessentially the same kind of documents.


Pursuant to our confidentiality procedures, which are another direct result of the FOIA, in which we guarantee 10 days prior notice before releasing information that the company has asserted is confidential, some five or six of the companies sued us. Some sued here in Washington. One sued in Dallas. One sued in Los Angeles. They all raised the same question.

We have tried to get the other suits transferred here. The courts have denied our request. Now we are litigating the identical questions in three different courts under different schedules and different U.S. attorneys offices; it is multiple, duplicative litigation.

One of the problems in these cases is that, not only can there be difficult litigation because of the test, but the party requesting documents is not required to join or to assist in the litigation. So, we are in the middle as a stakeholder. We have these documents. Someone wants them, and someone else does not want us to give them out.

We have to defend the reverse suit and also defend-if we do not give them out—against the requester's suit. The result in the one suit does not necessarily bind the other party.

One possibility would be to specify a venue where any such suit would have to be brought.

Senator ABOUREZK. Where should that be, in your view?

Mr. NORTON. For us the most sensible place would be here, where the agency is located and where, in most cases, the documents are located.

Senator ABOUREZK. There is another part to that.

If Congress were to require that the party asking for the information in the reverse suits become a party to the suit, would the District of Columbia venue still be a good place to continue such an action?

Mr. NORTON. From our standpoint, I suppose it depends on the extent to which we had to litigate the case. If you end up having a fight between the requester and the submitter—in which we do not have any particular interest—venue would be less of a concern for us.

Senator ABOUREZK. But you would be a party obviously, as well.
Mr. NORTON. We would under the present situation.
There is another-
Senator ABOUREZK. Let me ask one other thing before you go on.

Where are the people located who request the documents? Do they come to Washington ? Are they mostly Washington-based groups?

Mr. NORTON. It is always done by letter. I would say the vast majority are Washington. A lot of them are Washington law firms representing people involved in litigation with the agency.

Senator ABOUREZK. Would it make sense to hear those kinds of suits in Washington ?

Mr. NORTON. It would be in the great number of cases. But you do, also, have the problem of some requests coming from people who are not big law firms or big organizations; they are all over the country. It could be an inhibiting factor if they had to litigate in the District.

Senator ABOUREZK. Do you think it would be advisable to, by statute, set the venue in Washington but allow the court, in its discretion, to make an exception if the party making the request is based elsewhere and is not using a Washington group or law firm ? 1 See p. 347 of the appendix.

Mr. NORTON. I think, from our standpoint, that might be desirable. But, from a requester's standpoint, that still means that, if you are just a person with limited means or a small company elsewhere, you have to get a lawyer in Washington. There could still be some inhibiting factor with that.

Senator ABOUREZK. In your view, what is the best solution?

Mr. NORTON. Maybe some provision that would require that similar lawsuits be consolidated if they involve the same questions. The requester would also have to be bound by the results. If there is only one request and one lawsuit, the fact that it might be filed someplace else is less important to us because it does not present the same problems.

There is another measure that might alleviate the reverse lawsuit problem. A lot of the companies have argued that, if something is covered by the exemption, then the agency's authority to release it is limited. So, if the Commission, for example, decides that a particular document or information is not confidential, commercial or financial information, as construed by the courts and if the Commission is wrong, the companies claim they are entitled to enjoin us. Or if the Commission decides as a matter of discretion to release information, the companies say that the act permits them to block that.

Now, the Commission has very broad authority under section 6 of the FTC Act to make public any information it gets. So it is in a situation that maybe some other agencies are not. But, if it were clear that the FOIA does not limit an agency's authority to make information public, a basis for many of these reverse suits would be eliminated. Then you would be left with whatever other restrictions might exist with respect to the release of information.

Senator ABOUREZK. Most exemptions are premissive; they are not mandatory. It applies to all agencies.

Mr. Norton. That is what the agencies say, and that is what some of the courts have said. But other courts have suggested that, if you are within the exemption, that is a mandatory restriction on disclosure.3

We think that is wrong and that a better view is that it is simply a permissive authorization.

Senator ABOUREZK. Mr. Gardner, do you have an observation on the venue question in reverse cases?

Mr. GARDNER. I think that that is the kind of problem that would pose difficulties for a number who request information from our agency. Requesters typically-safety and effectiveness information for new drugs, for example—are individuals or consumer groups who are concerned with the impact on public health and safety and want access to that sort of information or other kinds of information.

Those groups typically are not well funded, although they might be located here in Washington. So, selecting and centralizing where those suits could be brought would be one issue. But, even if that were held in Washington, it would still raise a problem for the requesters, to be able to fund their participation in litigating that sort of a suit.

1 See exhibit 21, p. 324 of the appendix.

2 See Chrysler Corp. v. Schlesinger, No. 76–1970, Slip Op. at 25–29 (3d Cir., Sept. 26, 1977) ; Pennzoil Co. v. FPC, 534 F. 2d 627, 630 (5th Cir., 1976); Charles River Park "A" v. HUD, 519 F. 2d 935, 941 (CD.C. Cir., 1975); $. Rept. No. 93-854, 93d Cong., 2d sess. 6 (1974).

3 See Westinghouse Electric Corp. v. Schlesinger, 542 F. 2d 1190 (4th Cir., 1976), cert. denied sub nom Brown v. Westinghouse Electric Corp., 45 USLW 3574 (May 15, 1977).


I think that would present a number of them a great deal of difficulty. We have a petition before us for more general funding of consumer groups participating in agency procedures, apart from freedom of information matters. It is that sort of background and information that leads me to speculate that we would raise the same sort of problems in this matter that we are dealing with.

Senator ABOUREZK. You do not have any answers as to where venue should be?

Mr. GARDNER. I do not have an answer as to where. But I think that we get requests from Washington and from other places in the country. I am simply pointing out that the people who request very frequently are not able to fund participation in the suit. So, the place might make it more difficult for some of them. Regardless of that, it would still present a funding problem for most of them.

Senator ABOUREZK. Mr. Norton ?

Mr. NORTON. I have one observation about the regular FOIA suit that is somewhat related conversely to the problem I just discussed before.

At present there is no obligation on the person that submitted the confidential information or assertedly confidential information to participate in the litigation if the agency decides to withhold it and is then sued by the requester. We had one case recently in which there were some documents that had been submitted as part of an investigation. I believe they related to General Motors. Applying the standards based on information we had, we concluded that they were exempt and were sued by the requester.

General Motors sat on its hands, and we had to litigate to try, in effect, to defend its interests. As it turned out, we lost and had to turn over the information. I gather it was not any great problem for them ultimately.

Some requirement that the person whose documents or information is in issue has to participate or try to defend the assertion of the exemption might well be useful. If they fail to do so, the exemption could be deemed waived. That might ease some of these problems.

Finally, Mr. Chairman, I would like to make one brief observation about a particular instance mentioned in your opening statement about FTC's response to a Federal Power Commission information form. It has been the subject of some misinformation in press stories that I have seen. It might be useful just to clarify what happened in that instance, 1

The Power Commission has required utilities to file form 423 every month. which sets forth information about their fuel costs and identifies suppliers, prices, and other information. A question was raised by the utilities whether this form should be continued or whether the information should continue to be made public; it is all made public. In cominenting on that form, the Commission took the position that it should be continued and that the information was useful, and that the information should continue to be made available to Government agencies which are interested in this information even for law enforcement, antitrust, or rate regulations, or whatever purposes. But, at least in

1 See pp. 315 and 123 of the appendix and p. 2 of hearing text.

some instances, it should not all be made immediately public because this kind of very specific current information about prices to particular customers from particular suppliers could be used in an anticompetitive fashion by the suppliers, suppressing price competition. Any effort to cut prices would immediately be evidence to the competitors. They could either take retaliatory action or whatever other actions that they might be inspired to consider.

That is the limited nature of the Commission's suggestion that at least some of the information ought not to be made immediately public with all of the details, although we did suggest average cost information could still be made public. Perhaps the Power Commission could determine that, as to particular suppliers, there was no risk of this possibility and that there would be no problem with immediate publication.

I have no further comment.

Senator ABOUREZK. I do not want to spend very much time on this particular issue, but that strikes me as being very strange. By maintaining the secrecy of those reports, what you are doing is allowing some utilities to buy higher priced fuel. I do not see where the competitive issue enters into it. Utilities pass on the costs they have to the customer. If they make arrangements to buy cheaper fuel from some companies, from fuel suppliers, would not it be to the advantage of the consumer to have all the fuel at that same low price, if it is indeed lower?

What you are doing is protecting the supplier by keeping this information secret. You are protecting the supplier who might be charging more to one utility than he is to the other.

So, it seems that this argument favors the maintaining of higher prices in some cases.

Mr. NORTON. I suppose sometimes there is a tension between what is in the interest of antitrust enforcement and what may be in the interest of other public policies. But the ready availability of information about current prices to specific customers has been held by the Supreme Court to be a serious potential problem under the Sherman Act. It is this interest that we were reflecting as an antitrust enforcement agency.

If our mission were to monitor prices to the consumers, a different perspective might well be justified.

Senator ABOUREZK. I would think so.
Do you have anything more on this?
Senator ABOUREZK. Thank you very much.
Your entire prepared statement will be inserted into the record.
[The prepared statement of Mr. Norton follows:]

PREPARED STATEMENT OF GERALD P. Norton I am Gerald P. Norton. Deputy General Counsel of the Federal Trade Commission, and I appreciate this opportunity to discuss with the subcommittee the problem posed for the Commission by exemption 4 of the Freedom of Information Act. The views I express, however, do not necessarily reflect the views of the Commission or of any Commissioner.

As you know, that section exempts from the act's mandatory disclosure re. quirements matters that are "trade secrets" or "commercial or financial information obtained from a person that is privileged or confidential." The trade secrets

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