Critical Mass Energy Project v. Nuclear Regulatory Com'n

• Citation: 975 F.2d 871
• Decision Date: 21 August 1992
• Docket Number: No. 90-5120,90-5120
• Parties: Nuclear Reg. Rep. P 20,558, 298 U.S.App.D.C. 8, 61 USLW 2122, 22 Envtl. L. Rep. 21,373, 39 Cont.Cas.Fed. (CCH) P 76,602 CRITICAL MASS ENERGY PROJECT, Appellant, v. NUCLEAR REGULATORY COMMISSION, et al. District of Columbia Circuit
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 871

975 F.2d 871

Nuclear Reg. Rep. P 20,558, 298 U.S.App.D.C. 8,

61 USLW 2122,

22 Envtl. L. Rep. 21,373,

39 Cont.Cas.Fed. (CCH) P 76,602

CRITICAL MASS ENERGY PROJECT, Appellant, v. NUCLEAR REGULATORY COMMISSION, et al.

No. 90-5120.

United States Court of Appeals,District of Columbia Circuit.

Argued En Banc Jan. 29, 1992.

Decided Aug. 21, 1992.

Paul R.Q. Wolfson, Coral Gables, Fla., with whom David C. Vladeck, Alan B. Morrison, and Eric R. Glitzenstein, Washington, D.C., were on the brief, for appellant.

Peter R. Maier, Atty., U.S. Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Leonard Schaitman, Atty., U.S. Dept. of Justice, and John F. Cordes, Sol., Nuclear Regulatory Com'n, Washington, D.C., were on the brief, for federal appellee. Carolyn F. Evans, Atty., Nuclear Regulatory Com'n, Washington, D.C., also entered an appearance for federal appellee.

James D. Miller, with whom Deborah J. Andrews, Washington, D.C., was on the brief, for appellee Institute of Nuclear Power Operations.

Janet L. McDavid, Washington, D.C., was on the brief for amicus curiae Business Roundtable, urging affirmance.

Before MIKVA, Chief Judge, and WALD, EDWARDS, RUTH BADER GINSBURG, SILBERMAN, BUCKLEY, WILLIAMS, D.H. GINSBURG, SENTELLE, HENDERSON, and RANDOLPH, Circuit Judges.

Opinion for the court en banc filed by Circuit Judge BUCKLEY, in which Circuit Judges SILBERMAN, WILLIAMS, D.H. GINSBURG, SENTELLE, HENDERSON, and RANDOLPH join.

Concurring opinion filed by Circuit Judge RANDOLPH, in which Circuit Judges SILBERMAN and SENTELLE join.

Dissenting opinion filed by Circuit Judge RUTH BADER GINSBURG, in which Chief Judge MIKVA and Circuit Judges WALD and HARRY T. EDWARDS join.

BUCKLEY, Circuit Judge, with whom SILBERMAN, STEPHEN F. WILLIAMS, D.H. GINSBURG, SENTELLE, KAREN LeCRAFT HENDERSON, and RANDOLPH, Circuit Judges, join:

Appellant seeks the release of certain reports that have been provided to the Nuclear Regulatory Commission by the Institute of Nuclear Power Operations on the understanding that they will be treated as confidential. In granting the petition to rehear the case en banc, we agreed to reconsider a seventeen-year-old decision, National Parks and Conservation Ass'n v. Morton, 498 F.2d 765 (D.C.Cir.1974), in which we established a two-part test for determining when financial or commercial information in the Government's possession is to be treated as confidential under Exemption 4 of the Freedom of Information Act. We reaffirm the test but confine it to information that persons are required to provide the Government. We hold that where, as here, the information sought is given to the Government voluntarily, it will be treated as confidential under Exemption 4 if it is of a kind that the provider would not customarily make available to the public.

I. BACKGROUND

A. Legal Framework

When Congress enacted the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552 (1988), it "set[ ] forth a policy of broad disclosure of Government documents in order to ensure 'an informed citizenry, vital to the functioning of a democratic society.' " FBI v. Abramson, 456 U.S. 615, 621, 102 S.Ct. 2054, 2059, 72 L.Ed.2d 376 (1982) (citation omitted). At the same time, however, "Congress realized that legitimate governmental and private interests could be harmed by release of certain types of information." Id. Balancing these private and public interests, Congress enacted nine exemptions to FOIA. Exemption 4, the provision at issue here, shields from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4).

In the years immediately following the enactment of FOIA, we had frequent occasion to put flesh on the exemption. See, e.g., Sterling Drug, Inc. v. FTC, 450 F.2d 698 (D.C.Cir.1971); Soucie v. David, 448 F.2d 1067, 1078 (D.C.Cir.1971); Grumman Aircraft Engineering Corp. v. The Renegotiation Board, 425 F.2d 578, 580-81 (D.C.Cir.1970); Bristol-Myers Co. v. FTC, 424 F.2d 935, 938-39 (D.C.Cir.), cert. denied, 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 52 (1970). In Sterling Drug, we considered a FOIA request for records submitted to the Federal Trade Commission. In order to determine the purpose of Exemption 4, we examined the following passage from a Senate committee report:

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.

Sterling Drug, 450 F.2d at 709 (quoting S.Rep. No. 813, 89th Cong., 2d Sess. 9 (1964) U.S.Code Cong. & Admin.News 1966, p. 2418 ("Senate Report")). We then concluded that the requested information was protected by the exemption because it was of "the type 'which would customarily not be released to the public by the person from whom it was obtained.' " Id.

Three years later, we decided National Parks. The plaintiff in that case sought disclosure of audits and other financial materials that the National Park Service required its concessioners to submit. We reversed the district court's grant of summary judgment in favor of the agency based on Exemption 4. After observing that the statute did not define "confidential," we noted that we had been guided, in earlier decisions, by the "would customarily not be released to the public" passage from the Senate Report. National Parks, 498 F.2d at 766. We found, however, that whether the person providing the information would customarily not have released it "is not the only relevant inquiry in determining whether that information is 'confidential.' ... A court must also be satisfied that non-disclosure is justified by the legislative purpose which underlies the exemption." Id. at 767. We then stated that "[i]n general, the various [FOIA] exemptions ... serve two interests--that of the Government in efficient operation and that of persons supplying certain kinds of information in maintaining its secrecy." Id.

We determined that Exemption 4 serves both of these purposes. As to the governmental interest, we noted that "[u]nless persons having necessary information can be assured that it will remain confidential, they may decline to cooperate with officials[,] and the ability of the Government to make intelligent, well informed decisions will be impaired." Id. After discussing the legislative history, we concluded that "[t]his exemption is intended to encourage individuals to provide certain kinds of confidential information to the Government[.]" Id. at 768 (quoting Soucie, 448 F.2d at 1078).

Turning to the private interests, we noted that the exemption "protects persons who submit financial or commercial data to government agencies from the competitive disadvantages which would result from its publication." Id. We also recognized

a twofold justification for the exemption of commercial material: (1) encouraging cooperation by those who are not obliged to provide information to the government and (2) protecting the rights of those who must.

Id. at 769. We concluded that the legislative history "firmly supports the inference that section 552(b)(4) is intended for the benefit of persons who supply information as well as the agencies which gather it." Id. at 770. We then offered what has come to be known as the National Parks "two-part test":

[C]ommercial or financial matter is "confidential" ... if disclosure of the information is likely ... either ... (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.

Id. at 770 (footnote omitted). At the same time, we reserved the question whether the impairment of other governmental interests might be implicated in the exemption. See id. at 770 n. 17 ("We express no opinion as to whether other governmental interests are embodied in this exemption.").

On the facts of National Parks, we determined that, although the information being sought was customarily withheld from the public, "the Government ha[d] no apparent interest in preventing disclosure of the matter" as it was "supplied to the Park Service pursuant to statute." Id. at 770. We then held that

"[s]ince the concessioners are required to provide this financial information to the government, there is presumably no danger that public disclosure will impair the ability of the Government to obtain this information in the future[,]" id. (emphasis in original), and remanded for further findings on the question of competitive harm. See id. at 770-71.

B. Facts and Proceedings Below

This case involves a dispute between Critical Mass Energy Project ("CMEP") and the Nuclear Regulatory Commission ("NRC") over access to safety reports prepared by the Institute for Nuclear Power Operations ("INPO") and voluntarily transmitted to the NRC on the condition that the agency will not release the information to other parties without INPO's consent. INPO was formed after the 1979 Three Mile Island accident to promote safety and reliability in the operation of nuclear power plants. INPO is a nonprofit corporation whose membership includes all operators of nuclear power plants in the United States.

One of INPO's principal programs is the Significant Event Evaluation and Information Network ("SEE-IN"), a system for collecting, analyzing, and distributing information concerning the construction and operation of nuclear facilities. Compilation of these reports requires the solicitation of candid comments and evaluations from nuclear power plant employees. The reports are distributed on a voluntary basis to INPO members, certain other participants in the nuclear industry, and the NRC pursuant to the explicit understanding that they are not to be disclosed to additional persons without INPO's consent.

In 1984, CMEP asked...