Shell Oil Co. v. Dept. of Energy, Civ. A. No. 79-134.

• Decision Date: 17 August 1979
• Docket Number: Civ. A. No. 79-134.
• Court: U.S. District Court — District of Delaware
• Parties: SHELL OIL COMPANY, Texaco, Inc., Phillips Petroleum Company, Coastal States Gas Corporation and Gulf Oil Corporation, Plaintiffs, Mobil Corporation, Union Oil Company of California and Continental Oil Company, Intervenors-Plaintiffs, v. The DEPARTMENT OF ENERGY, James R. Schlesinger, Secretary, Department of Energy, the Energy Information Administration, Lincoln E. Moses, Administrator, Energy Information Administration, the Office of Management and Budget, James T. McIntyre, Jr., Director, Office of Management and Budget, Defendants.

477 F. Supp. 413

SHELL OIL COMPANY, Texaco, Inc., Phillips Petroleum Company, Coastal States Gas Corporation and Gulf Oil Corporation, Plaintiffs, Mobil Corporation, Union Oil Company of California and Continental Oil Company, Intervenors-Plaintiffs, v. The DEPARTMENT OF ENERGY, James R. Schlesinger, Secretary, Department of Energy, the Energy Information Administration, Lincoln E. Moses, Administrator, Energy Information Administration, the Office of Management and Budget, James T. McIntyre, Jr., Director, Office of Management and Budget, Defendants.

Civ. A. No. 79-134.

United States District Court, D. Delaware.

August 17, 1979.

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Stuart E. Schiffer, Acting Asst. Atty. Gen., C. Max Vassanelli, Mark C. Rutzick and Surell Brady, U.S. Dept. of Justice, William D. Luck, U.S. Dept. of Energy, Richard M. Irby, Washington, D.C., James W. Garvin, Jr., U.S. Atty., John X. Denney, Jr., Asst. U.S. Atty., Wilmington, Del., for defendants.

Thomas Herlihy, III, of Herlihy & Herlihy, Wilmington, Del., J. Wallace Adair, Roger C. Simmons, Stuart H. Harris and Marcia D. Welsch, of Howrey & Simon, Washington, D.C., for plaintiffs and intervenors-plaintiffs.

OPINION

STAPLETON, District Judge:

I. THE BACKGROUND.

This suit is a challenge by eight major energy-producing companies¹ to an order of the Administrator of the Energy Information Administration ("EIA") of the Department of Energy ("DOE") directing that a group of 27 such companies file Form EIA-28, a report on company financial and operational data for calendar years 1977 and 1978.² Form EIA-28 is the first phase of the Financial Reporting System ("FRS"), which was mandated by Congress in Section 205(h) of the Department of Energy Organization Act ("DOE Act"), 42 U.S.C. § 7135 (Supp.1977).

On June 16, 1978, after a lengthy period of development, pre-testing and consultation both within and outside the government, the EIA submitted to the Office of Management and Budget ("OMB") a proposed FRS report form. This submission was made pursuant to the Federal Reports Act, 44 U.S.C. § 3501, et seq. (1976). On July 17, 1978, the EIA and OMB held a joint public hearing on the subject of the proposed FRS report. See 43 Fed.Reg. 27056 (June 22, 1978). On October 10, 1978, OMB Director James T. McIntyre, Jr. issued his approval of the FRS report in a letter of that date to Secretary of Energy James R. Schlesinger. Administrative Record ("A.R."), Volume I, pp. 255-61. The approval was subject to a series of modifications and limitations and was limited to collection of FRS data for calendar years 1977 and 1978 only. Ibid.

Subsequent to that approval, the EIA distributed final copies of the approved FRS report to each of the 27 reporting companies on October 20, 1978. These forms were accompanied by a set of instructions and a statement indicating the criteria the EIA intended to use in disseminating data received on FRS reports. These criteria permit disclosures to the Department of Justice ("DOJ"), the Federal Trade Commission ("FTC"), the Secretary of the Interior, and the Comptroller General in accordance with the following "guidelines":

1. EIA will provide disaggregated i. e. company identifiable EIA-28 data to a named agency in response to a written request from it which meets the following conditions:

(a) Contains a statement that the data requested is necessary to the requesting agency in carrying out its lawful duties and responsibilities.

(b) contains an undertaking not to disseminate or disclose the disaggregated information provided by EIA outside the named agency except for disclosures determined by the named agency to be made (i) in connection with proceedings in which the named agency is or might be involved, (ii) in response to a Freedom of Information Act request, or (iii) in response to a written request from the General Accounting Office or from the Congress or any Committee of the Congress having jurisdiction.

(c) contains an undertaking that in responding to a Freedom of Information Act request encompassing disaggregated data obtained from EIA, the named agency (i) will not make a discretionary release of any disaggregated information obtained from EIA which is exempt from mandatory disclosure under the Freedom of Information Act and (ii) will consult with and give great deference to the views of EIA in determining whether any information obtained from EIA falls within the exemptions from mandatory disclosure; provided, however, that where the pertinent regulations of the named agency authorize the referral of Freedom of Information Act requests for records originating in another agency to that agency, the named agency shall refer any requests for EIA data to EIA for response.

(d) contains an undertaking that prior to disclosing any disaggregated data received from EIA in any manner outside the named agency, the named agency shall give EIA and the originator of such data ten days written notice of the proposed disclosure.

2. Prior to honoring a request from a named agency for access to disaggregated EIA-28 data, EIA will give the originator of such data ten days written notice before making the data available.

44 Fed.Reg. 2760 (January 12, 1979).

The report, instructions and guidelines were subsequently published in the Federal Register on January 12, 1979. 44 Fed.Reg. 2758. The original filing deadline for the 1977 FRS report was February 1, 1979, but at the request of the reporting companies that deadline was set back to April 1, 1979.

On March 15, 1979, plaintiffs filed this action. While many discrete claims are asserted in the complaint, its primary theme is that the development of the FRS report was improperly influenced by the Department of Justice and the Federal Trade Commission and that the end product is designed not for the primary purpose of securing data necessary for energy policy formulation but rather for the primary purpose of eliciting information useful to the DOJ and the FTC in fulfilling their responsibilities with respect to the antitrust laws.

The plaintiffs attack on three fronts. They challenge (1) the EIA's promulgation of the FRS report, (2) the OMB's clearance of the FRS report, and (3) the EIA's decision to share disaggregated FRS data with other federal agencies. The parties have filed cross-motions for summary judgment which encompass each of these attacks. Each will be analyzed in turn. A working knowledge of the patchwork pattern of relevant legislation is a necessary prerequisite to any such analysis, however.

II. THE STATUTORY SETTING.

A. Statutes of General Applicability.

1. The Trade Secrets Act, 18 U.S.C. § 1905.

This Act makes it a crime for any officer or employee of the United States to disclose any information relating to "trade secrets", "confidential statistical data", or other proprietary information,³ other than as "authorized by law". Read literally, the Act prohibits unauthorized disclosures within the government, as well as disclosures to the public. While a number of opinions of the Attorney General have suggested, largely based on practical considerations, that this section was not intended to apply to inter-agency transfers of proprietary information, no court appears to have so held.

2. The Federal Reports Act, 44 U.S.C. § 3501, et seq.

The Federal Reports Act, enacted in 1942, establishes a policy against duplication of information gathering efforts by federal agencies and, as a corollary, a policy in favor of inter-agency exchange of information. "Information" is defined for purposes of the Act as "facts obtained . . . by the use of . . . report forms, . . . questionnaires, or similar methods calling either for answers to identical questions from ten or more persons" or for answers to certain types of questions from federal employees. 44 U.S.C. § 3502. In furtherance of these policies, the Act requires clearance of governmental requests for information by either the OMB or the Comptroller General. The Act specifically directs "all agencies . . . to cooperate to the fullest practicable extent at all times in making information available to other agencies." 44 U.S.C. § 3507.

The Act expressly addresses the problem of inter-agency exchange of confidential information. 44 U.S.C. § 3508. First, it assures that confidential information will have no less protection in the hands of a receiving agency than it had in the hands of the forwarding agency by providing that officers and employees of the receiving agency shall be subject not only to any restrictions on disclosure applicable to their own agency, but also to any restrictions upon disclosure applicable to the forwarding agency. Among other things, this means that data immune from public disclosure in the hands of a federal agency acquiring data retains that protection in the hands of a receiving agency after an inter-agency transfer. 44 U.S.C. § 3508(a).

The Act goes on to establish standards governing certain inter-agency transfers of confidential information. Under Subsection 3508(b), a "Federal agency", as defined in the Act,⁴ retains discretion to pass on to any other "Federal agency" any information which, "at the time of collection" was not "declared . . . to be confidential" by it.⁵ Thus, if it seems to the acquiring agency that the advantages of cooperation with other agencies are outweighed by the risk of uncooperativeness on the part of those from whom the information will be sought, it may declare that the information will be received on a confidential basis. Otherwise, the Act imposes no restriction on the acquiring agency's power to disclose to another agency. Even where information is obtained on a confidential basis, it may still be disclosed to another federal agency under the Act, (a) in the form of statistical totals or summaries, (b) with the consent of the person from whom it was obtained, or (c) when the receiving agency is authorized to...