(c) Under section 10 of the Federal Trade Commission Act, any officer or employee of the Commission who shall make public any information obtained by the Commission, without its authority, unless directed by a court, shall be deemed guilty of a misdemeanor, and upon conviction thereof, may be punished by a fine not exceeding five thousand dollars ($5,000), or by imprisonment not exceeding 1 year, or by fine and imprisonment, in the discretion of the court [38 FR 1731, Jan. 18, 1973; as amended at 39 FR 4661, Feb. 6, 1974; 40 FR 7629, Feb. 21, 1975; 40 FR 23278, May 29, 1975] LEGISLATIVE HISTORY [Exhibit 32] EXCERPT FROM HOUSE REPORT No. 1497 ON FOIA, 4. Trade secrets and commercial or financial information obtained from any person and privileged or confidential: This exemption would assure the confidentiality of information obtained by the Government through questionnaires or through material submitted and disclosures made in procedures such as the mediation of labor-management controversies. It exempts such material if it would not customarily be made public by the person from whom it was obtained by the Government. The exemption would include business sales statistics, inventories, customer lists, scientific or manufacturing processes or developments, and negotiation positions or requirements in the case of labor-management mediations. It would include information customarily subject to the doctor-patient, lawyerclient, or lender-borrower privileges such as technical or financial data submitted by an applicant to a Government lending or loan guarantee agency. It would also include information which is given to an agency in confidence, since a citizen must be able to confide in his Government. Moreover, where the Government has obligated itself in good faith not to disclose documents or information which it receives, it should be able to honor such obligations. [Exhibit 33] EXCERPT FROM SENATE REPORT No. 813 ON FOIA, 89TH CONGRESS, 1ST SESSION, OCTOBER 4, 1965 Exemption No. 4 is for "trade secrets and commercial or financial information obtained from any person and privileged or confidential." This exception is necessary to protect the confidentiality of information which is obtained by the Government through questionnaires or other inquiries, but which would customarily not be released to the public by the person from whom it was obtained. This would include business sales statistics, inventories, customer lists, and manufacturing processes. It would also include information customarily subject to the doctor-patient, lawyer-client, lender-borrower, and other such privileges. Specifically it would include any commercial, technical, and financial data, submitted by an applicant or a borrower to a lending agency in connection with any loan application or loan. [Exhibit 34] EXCERPT FROM ATTORNEY GENERAL'S MEMORANDUM ON THE PUBLIC INFORMATION SECTION OF THE ADMINISTRATIVE PROCEDURE ACT, JUNE 1967 (4) INFORMATION GIVEN IN CONFIDENCE The scope of this exemption is particularly difficult to determine. The terms used are general and undefined. Moreover, the sentence structure makes it susceptible of several readings, none of which is entirely satisfactory. The exemption can be read, for example, as covering three kinds of matters: i.e., "matters that are *** [a] trade secrets and [b] commercial or financial information obtained from any person and [c] privileged or confidential." (bracketed initials added). Alternatively, clause [c] can be read as modifying clause [b]. Or, from a strictly grammatical standpoint, it could even be argued that all three clauses have to be satisfied for the exemption to apply. In view of the uncertain meaning of the statutory language, a detailed review of the legislative history of the provision is important. Exemption (4) first appeared in the bill (S. 1666) following full committee consideration by the Senate Committee on the Judiciary in the second session of the 88th Congress. It then provided for the exemption of "trade secrets and other information obtained from the public and customarily privileged or confidential." The Senate report explained the addition of exemption (4) as follows: "This exception is necessary to protect the confidentiality of information which is obtained by the Government through questionnaires or other inquiries, but which would customarily not be released to the public by the person from whom it was obtained. This would include business sales statistics, inventories, customer lists, and manufacturing processes. It would also include information customarily subject to the doctor-patient, lawyer-client, and other such privileges." (S. Rept., 88th Cong., 6). When S. 1160 was introduced in the 89th Congress, exemption (4) differed in two respects from the previous version. The words "commercial or financial” had been substituted for the word "other," and the word "customarily" had been deleted. While the first of these two changes could be read as narrowing the exemption, a comparison of the Senate reports in the 88th and 89th Congress indicates, rather, that it was intended to make sure that commercial and financial data submitted with loan applications would come within the exemption. The description of exemption 4 at page 9 of the Senate report in the 89th Congress is the same as that quoted above from the report in the 88th Congress, except that reference to the "lender-borrower privilege" is inserted and the following sentence is added: "Specifically it would include any commercial, technical, and financial data, submitted by an applicant or a borrower to a lending agency in connection with any loan application or loan." The Senate report in the 89th Congress thus treats the change as expanding rather than contracting the coverage of the exemption, since it not only adds the above language, but also continues to refer to the doctor-patient and lawyerclient privileges, which certainly are not "commercial or financial," and all the other material referred to as exempt in the previous report. Deletion of the word "customarily" apparently had a different basis. While at first glance the reach of "privileged" might be considered extended by removal of the modifying word "customarily," the change also serves a narrowing function by negating the possibility of a privilege created simply by agency custom. The word "customarily" is still used in the report, but with examples of the kinds of privileges which are protected by the exemption. The House report on this exemption generally parallels the Senate language with several additions, including such matters as disclosures or negotiation positions in labor-management mediations, and scientific or manufacturing processes or developments. The report states at page 10: "This exemption would assure the confidentiality of information obtained by the Government through questionnaires or through material submitted and disclosures made in procedures such as the mediation of labor-management controversies. It exempts such material if it would not customarily be made public by the person from whom it was obtained by the Government. The exemption would include business sales statistics, inventorics, customer lists, scientific or manufacturing processes or developments, and negotiation positions or requirements in the case of labor-management mediations. It would include information customarily subject to the doctor-patient, lawyer-client, or lender-borrower privileges such as technical or financial data submitted by an applicant to a Government lending or loan guarantee agency. It would also include information which is given to an agency in confidence, since a citizen must be able to confide in his Government. Moreover, where the Government has obligated itself in good faith not to disclose documents or information which it receives, it should be able to honor such obligations." The last two sentences, in particular, underline the protection afforded by this exemption to information given to the Government in confidence, whether or not involving commerce or finance. It seems obvious from these committee reports that Congress neither intended to exempt all commercial and financial information on the one hand, nor to require disclosure of all other privileged or confidential information on the other. Agencies should seek to follow the congressional intention as expressed in the committee reports. In view of the specific statements in both the Senate and House reports that technical data submitted by an applicant for a loan would be covered, and the House report's inclusion of "scientific or manufacturing processes or developments," it seems reasonable to construe this exemption as covering technical or scientific data or other information submitted in or with an application for a research grant or in or with a report while research is in progress. Lists of applicants, however, would not necessarily be covered. In view of the statements in both committee reports that the exemption covers material which would customarily not be released to the public by the person from whom the Government obtained it, there may be instances when agencies will find it appropriate to consult with the person who provided the information before deciding whether the exemption applies. One change was made in exemption (4) by the Senate committee in the 89th Congress: the phrase "information obtained from the public" was amended by substituting the words "any person" for "the public." It seems clear that applicability of this exemption should not depend upon whether the agency obtains the information from the public at large, from a particular person, or from within the agency. The Treasury Department, for instance, must be able to withhold the secret formulae developed by its personnel for inks and paper used in making currency. An important consideration should be noted as to formulae, designs, drawings, research data, etc., which, although set forth on pieces of paper, are significant not as records but as items of valuable property. These may have been developed by or for the Government at great expense. There is no indication anywhere in the consideration of this legislation that the Congress intended, by subsection (c), to give away such property to every citizen or alien who is willing or pay the price of making a copy. Where similar property in private hands would be held in confidence, such property in the hands of the United States should be covered under exemption (e) (4). [Exhibit 35] EXCERPT FROM HOUSE REPORT No. 94-880 PT. 1, PP. 22, 23, ON SUNSHINE ACT, MARCH 8, 1976 SECTION 5 Section 5(b) amends exemption (3) of the Freedom of Information Act, 5 U.S.C. § 552, to conform it to exemption (3) of the open meeting provisions of this bill and to overrule the decision of the Supreme Court in Administrator, FAA v. Robertson, 422 U.S. 255 (1972). Robertson held that exemption (3), which exempts from the coverage of the Freedom of Information Act any information "specifically exempted from disclosure by statute," includes within its ambit section 1104 of the Federal Aviation Act of 1958 (49 U.S.C. § 1504), which allows the FAA Administrator to withhold from the public any FAA material when he believes that "a disclosure of such information*** is not required in the interest of the public." Believing that the decision misconceives the intent of exemption (3), the committee recommends that the exemption be amended to exempt only material required to be withheld from the public by any statute establishing particular criteria or referring to particular types of information. The committee is of the opinion that this change would eliminate the gap created in the Freedom of Information Act by the Robertson case without in any way endangering statutes such as the Atomic Energy Act of 1954, 42 U.S.C. §§ 3161-66, which provides explicitly for the protection of certain nuclear data. Under the amendment, the provision of the Federal Aviation Act of 1958 that was the subject of Robertson, and which affords the FAA Administrator cart blanche to withhold any information he pleases, would not come within exemption 3. Similarly, the Trade Secrets Act, 18 U.S.C. § 1905, which relates only to the disclosure of information where disclosure is "not authorized by law," would not permit the withholding of information otherwise required to be disclosed by the Freedom of Information Act, since the disclosure is there authorized by law. Thus, for example, if material did not come within the broad trade secrets exemp tion contained in the Freedom of Information Act, section 1905 would not justify withholding; on the other hand, if material is within the trade secrets exemption of the Freedom of Information Act and therefore subject to disclosure if the agency determines that disclosure is in the public interest, section 1905 must be considered to ascertain whether the agency is forbidden from disclosing the information. See Charles River Park "A", Inc. v. Dept. of Housing and Urban Development, 519 F.2d 935, 941 n. 7 (D.C. Cir. 1975), and cases there cited. Examples of statutes that could justify withholding under the amended exemption (3) includes sections 706(b) and 709(e) of the Civil Rights Act of 1964, as amended (42 U.S.C. §§ 2000e-5(b), 2000e-8(e)) and section 314(a)(3) of the Federal Election Campaign Act (2 U.S.C. § 437g(a) (3)), which require the Equal Employment Opportunity Commission and the Federal Election Commission, respectively, to withhold certain information relating to informal conciliation and enforcement efforts, and section 801 of the Federal Aviation Act of 1958 (49 U.S.C. § 1461), which prohibits the Civil Aeronautics Board from publishing certain information relating to a foreign air route application prior to its submission to the President for his decision on the route award. |