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information request is denied, the applicant could seek review de novo (on a fresh record) in the Federal district courts, without being in any way bound by the agency decision. 5 U.S.C. 8 552(a) (4) (B).
The very reasons which motivated provisions for de novo reviero in the FOIA dictate that the information provider not be accorded review de novo when a decision to disclosure information has been made' by the agency. The usual procedure in reverse FOIA case is for the information provider to request confidential treatment of the documents by the agency; if the agency denies that request and determines to disclose the documents, the information provider then goes to court to block disclosure of the information. The review sought is from agency action (denial of a request for confidential treatment) which has been made on an agency record. This review-just like any other review of administrative agency action should be made under the Administrative Procedure Act provisions for review on the agency record. 5 U.S.C. $ 706 (2) (A). No special reasons to accord information providers review de novo in the district courts have been put forth, and none exist.
Nevertheless, most courts which have considered the matter held that the information provider has a right to de novo review in the district court just because the FOIA provides such a right to the information requester. See, e.g. Sears, Roebuck and Co. v. GSA, supra (opinion of April 1, 1977); Westinghouse Electric Corp. v. Schlesinger, supra. That procedure seriously delays review and causes extraordinary expense to both the information requester and the Government, which must go through a second evidentiary process. Congress should make clear that no reason exists for the information provider to have the extraordinary remedy of de novo review, and that review on the agency record is sufficient. Of course, the customary standards for sufficiency of the agency record and agency process applicable in all Administrative Procedure Act reviews would protect the information provider adequately.
2. Process for rulemaking. Many of the documents which information requesters seek are in a standard format regularly collected by Federal agencies. For example, in the case of D.C. NOW v. Social Security Administration, supra, some documents sought were the standard two-page EE0-1 forms. Agencies should be encouraged to promulgate regulations making determinations about the disclosability of such regularly-collected forms.
When determinations about disclosability are made on the basis of such agency-promulgated rules, information providers should have the right to seek review of the propriety of the rulemaking under the Administrative Procedure Act, 5 U.S.C. $ 706, only. Development of rules will help alleviate the need for case-by-case development of disclosure standards, and will provide fair guidelines to information providers about agency views of disclosability. In addition, such rules and review of the rules and the Administrative Procedure Act can help reduce the number and scope of reverse FOIA suits.
3. Provide for attorneys' fees in reverse-FOIA cases. To assure that information requesters can obtain information, Congress has provided in the FOIA for award of attorneys' fees to requesters. 5 U.S.C. $ 552(a) (4) (E). No such clear statutory provision permits award of attorneys' fees against the information provider which effectively precludes disclosure. Since in many reverse FOIA cases the Government has a similar (if not identical) position to the information requester regarding disclosure, the applicability of current FOIA provsions may be ambiguous. Some provision for award of attorneys' fees to the information requester who is forced to pursue information in the face of a reverse-FOIA suit would help further the original purposes of the attorneys' fees provision in the FOIA itself.
4. Clarification of the scope of 18 U.S.C. $ 1905 and its effect on the FOIA. A great deal of rererse FOIA litigation had focused on 18 U.S.C. $ 1.905. a statute which provides criminal sanctions against the Government officials disclosing trade secrets. The issue comes up in two ways: first, information providers argue that Congress intended to incorporate $ 1905 into exemption (h) (3) of the FOIA, which exempts from disclosure information otherwise exempted by statute. Although it seems fairly clear that Congress has not intended to include such a broad and general statute as $ 1905 in that exemption (sce H. Rep. No. 94–880, 94th Cong., 2nd Sess., Part I. 23 (1976)), a clarifying statement would be helpful.
Second, information providers argue that $ 1905 is a broad statute and encompasses a great deal of the information which is provided to the government. In fact, substantial evidence exists that $ 1905 was intended to be quite restrictive. A cogent argument for that view is made in Clement, "The Rights of Submitters
to Prevent Agency Disclosure of Confidential Business Information: The Reverse Freedom of Information Lawsuit”, 55 Texas Law Review 587 (March 1977), at 605-626. A clear restriction of g 1905 to its intended purpose would reduce much of the reverse FOIA litigation. Clarification to show that statistics on the EE0–1 form are not within the intended scope of 8 1905 would be particularly helpful to organizations like D.C. NOW. Further, it would help carry out the important national purposes of furthering equal employment opportunity.
5. Notice to information requesters that reverse FOIA suit has been filed. No systematic procedure exists for assuring that agencies notify information requesters when reverse-FOIA suits affecting their requests are filed. In the case of D.C. NOW v. Social Security Administration, supra, D.C. NOW was not notified during the pendency of its request when one of the companies about which it was seeking information filed a suit and a request for temporary restraining order in New York. Without such notice, a requester cannot assess its interests or determine whether to intervene in the suit or rely on the government to protect its interests. In short, such notice is essential to the inforination requester in its attempts to obtain the information. Provision should be made for such notice to be given by the agency holding the information.
Finally, a number of other issues arising in conjunction with reverse FOIA suits are explored in two thoughtful law review articles, to which we invite the attention of this subcommittee. The articles are Clement, “The Rights of Submitters”, supra, and Campbell, “The Reverse Freedom of Information Suit: The Need for Congressional Action” (to be published). Although we do not agree with every suggestion in each of the articles, they outline a number of provisions which, if incorporated into statutes, would alleviate the more serious delays and expense caused by reverse-FOIA cases, while preserving a fair opportunity for the information provider to protect any legitimate interest in document confidentiality.
Thank you for the opportunity to present testimony on this important subject, and for your attention. We would be pleased to provide any further information which the subcommittee would find helpful in its oversight of the Freedom of Information Act.
Senator ABOUREZK. The final witness of the day is Charles Stewart. I am sorry we kept you waiting so long.
Mr. STEWART. Mr. Chairman, I have cut through my prepared statement. I assume it will be put in the record.
Senator ABOUREZK. It certainly will, sir.
TESTIMONY OF CHARLES W. STEWART, PRESIDENT, MACHINERY
& ALLIED PRODUCTS INSTITUTE, ACCOMPANIED BY CHARLES I. DERR AND PAUL J. SEIDMAN
Mr. STEWART. Thank you, Mr. Chairman. I would like to have my prepared statement inserted into the record.
In addition, I would like to have in the record a letter which we addressed to the Attorney General, dated May 27, 1977, in connection with the matter of notice to the supplier of information when an FOIA request is made.2
I also have with me a limited analysis of the newly proposed DOD regulations amending prior regulations. I would like to have our memorandum on that in the record because I think it discusses some of the broader implications. Finally, when our statement to DOD is submitted as to its proposed amendments to their FOIA regulations, the MAPI commentary will be furnished for your record. +
1 See p.
45 of hearing text. · See p. 317 of the appendix. . See p. 223 of the appendix, • See p. 318 of the appendix.
Senator ABOUREZK. All of that material will be inserted in the record.
Mr. STEWART. My name is Charles Stewart. We represent the capital good industries of the United States.
I am joined by senior vice president, Charles Derr, and our staff attorney, Paul Seidman. Both of these men have worked extensively on FOIA.
I think it appropriate to point out that we can bring some objectivity to this table
Senator ABOUREZK. Are you saying there hasn't been any?
Mr. STEWART. No. I am in many hearings and frequently take a partisan position.
In this particular situation, it has already been pointed out that business is the principal-in terms of percentage-user of FOIA requests. We have companies, many of them, who are on either end of the FOIA situation. So, I see the picture and the problem from the standpoint of both the requester and the furnisher.
I would like to make a preliminary comment which is not intended at all to imply that we take exception to the broad objective and principle of the Freedom of Information Act.
The comment is this: In observing Government, including the Freedom of Information Act, but, more importantly, other aspects of our new philosophy of openness—for example, open congressional markup sessions - I think that at some point it would be well for the Congress to look at the question as to whether or not sunshine or openness may be carried too far from the standpoint of Government efficiency and burden.
I cannot conceive of a good tax bill coming out of a markup session which is an open meeting. It is too complex.
I look at the Freedom of Information Act, to some extent, as a part of that total proposition.
Returning to FOIA, this is a very interesting and almost mysterious statute. There are nine so-called exemptions, one of which clearly is considered to be mandatory: No. 3, which was recently amended. The balance, except for a controversy with regard to No. 4, are considered to be discretionary.
The affected party concerned with release of material that he has furnished voluntarily or otherwise does have a right to go to court on the grounds of abuse of discretion even though the exemption itself is permissive. I think that this is an interesting aspect of the situation. Our statement recommends, for example, that the Congress act to make exemption 4 mandatory as in exemption 3.
There is another aspect to it also, Mr. Chairman, that is interesting in terms of the structure of the law. Most of the nine exemptions relate to Federal documents as distinguished from documents supplied from private sources. I believe our statement ? suggests that, when a prominent member of the House was discussing this subject on the floor, when it was initially enacted some years ago, he was thinking in terms of Federal documents more than private documents.
I am not suggesting the law be changed on that point. But I think it is well to make the point.
1 See p. 45 of hearing text.
It has also been indicated—and I won't go into it beyond what we have to say in our statement—that there is an incipient quagmire developing in the case law. We have moved, for example, from an original judicial test-relying on clear language in the legislative history-of “customary release” to determine whether or not it is appropriate to have information released. Then the courts came up with a standard of substantial competitive harm. The Attorney General, apparently ignoring private interests, now talks about demonstrable harm to the public interest.
Incidentally, I am sure you will permit an addition to our letter to the Attorney General. I would like to see the record contain his May 5, 1977, memorandum of direction to the agencies, to which I will make brief reference.
Senator ABOUREZK. It will be inserted.2
Mr. STEWART. The recommendations that we have can be briefly stated to save the time of the committee.
We think that the customary release test should be reinstated as the appropriate test of confidentiality, as distinguished from being required to prove substantial competitive harm.
We feel that exemption 4 should be made mandatory. That is a controversial matter in the courts at the present time.
We think that the statutory time limit of 10 working days and I will use a strong word-is ridiculous. I recognize that there are certain provisions for extending the 10-day limit under certain rules laid down; so there is a certain amount of discretion of going beyond 10 working days. However, if you get into a high-technology area, which is characteristic of our industries, and the documents supplied relate directly to advanced technology, it is very difficult for anyone, no matter how well his case can be developed, to be able to meet the present burden of proof within such a strict time limit.
We are not prepared to urge any particular extension of time in terms of how long that ought to be--allowing for the discretion as presently in the act—but we do feel that the 10 days, in the type of situation particularly that I have described, is much too short.
As a matter of fact, in the most recent version of the case that was referred to as a landmark case here, National Parks 11,4 the opinion comments—which is a retreat from the prior No. 1 case-on the fact that it would be improper for the law to require the kind of detailed proof that would be involved in defining a market in an antitrust case or something of that sort. So, the courts really backed off from the original National Park I case.
We feel that there is a very serious burden placed on government by this law. I am sympathetic with what the Attorney General has said about it, but I do not agree with the medicine that he recommends. We are talking now about thousands of pieces of paper or files that may be subject to request followed by suit in some cases.
I think that the Congress has created what Charlie Schultze, in terms of our economy, calls an "elephant.” FOIA is a tremendous provision
1 See p. 213 of the appendix. 2 Ibid. 35 U.S.C. 552(a) (6) (A). * 547 F.2d 673 (D.C. Cir. 1976).
in the code. I am not objecting to its merits in general. But it creates a burden on Government that is very difficult for many agencies to handle effectively and fairly. The result is that I think there is an inclination on the part of departments and agencies, in some cases at least, to relieve themselves of that burden, partially, by disclosing where the disclosure might not be meritorious.
For example, the Securities and Exchange Commission has stated openly in a release announcing amendments to its FOIA regulations that it is concerned about the fact that, in order to comply with the FOI statute and any implementation thereof, private rights which are involved in the documentation that they are looking at cannot possibly be looked at fairly within the statutory time limits that they must satisfy and in view of the burden they are carrying.
This is a specific concession or statement on the part of the Securities and Exchange Commission.
So, we are really concerned that the sheer size of the problem we are talking about, the sheer burden that is placed on government, tempts bureaucratic people—I do not use the word invidiously—to try to find a way to reduce that burden. Therefore, they lean toward disclosure.
If you will read the Attorney General's letter of May 5 to agencies, which is referred to in our statement, as we read it, he starts from the premise that Justice has much too heavy a caseload defending FOIA cases. Something has to be done about this. Therefore, he urges the departments and the agencies to expedite disclosure. Reference is made to the thrust of the statute in terms of disclosure. But, if you read his memo carefully and read between the lines, what the Attorney General is saying is that we have too much work over here as a result of certain FOIA reverse cases which would be avoided, impliedly, by your disclosure.
He set up a procedure in this letter whereby the agency or department which was in doubt on the merits of a disclosure with reference to whatever standard you want to use could consult with a special committee set up within the Justice Department before denying disclosure.
I take the letter as a strong piece of evidence that he is encouraging disclosure and is not too much concerned about whether or not private rights are properly being protected.
We feel strongly that notice to suppliers of data or other materials should be mandated in the statute. I do not concur in the opinion of the previous witness to the effect that most agencies do it and therefore it is not a particular problem. I do not believe that decision should be left to the discretion of the agency.
I believe that, if the previous witness feels that there should be notification of a reverse FOIA suit, such notice being given to the requester, the other side of that coin is that there ought to be notice to the supplier of the information at the very earliest date.
This, of course, is in line with the Attorney General's request. One of the valid points he makes in this same document is that the agency should insist on adequate documentation to avoid frivolous-type requests. I agree with that completely.
1 See p. 213 of the appendir.