Exxon Corp. v. F. T. C.

Citation589 F.2d 582
Decision Date19 December 1978
Docket NumberKERR-M,Nos. 77-1302,s. 77-1302
CourtU.S. Court of Appeals — District of Columbia Circuit

Page 582

589 F.2d 582
191 U.S.App.D.C. 59, 1978-2 Trade Cases 62,302
Nos. 77-1302 to 77-1304.
United States Court of Appeals,
District of Columbia Circuit.
Argued Feb. 13, 1978.
Decided Oct. 19, 1978.
Rehearing Denied Dec. 6, 1978.
As Amended Dec. 19, 1978.

Roberts B. Owen, Washington, D. C., for appellant Exxon Corp.; argued on behalf of all appellants.

J. Randolph Wilson and Steven S. Rosenthal, Washington, D. C., were on the brief, for appellant Kerr-McGee Corp.

James H. Wallace, Jr., and Thomas C. Arthur, Washington, D. C., were on the brief, for appellant Union Carbide Corp.

Gerald P. Norton, Acting Gen. Counsel, F. T. C., Washington, D. C., with whom Earl J. Silbert, U. S. Atty., John A. Terry and Joel S. Perwin, Asst. U. S. Attys., Jerold D. Cummins, Acting Asst. Gen. Counsel, and Arthur W. Adelberg, Atty., F. T. C., Washington, D. C., were on the brief, for appellees.

Michael R. Lemov, Washington, D. C., was on the brief, for amicus curiae, Congressman John E. Moss, urging affirmance.

Before ROBINSON, MacKINNON and ROBB, Circuit Judges.

Opinion for the court filed by Circuit Judge MacKINNON.

MacKINNON, Circuit Judge:

Exxon appeals from the district court's refusal to grant injunctive or declaratory relief and from its subsequent denial of a stay pending appeal. At issue is whether any protective measures should be imposed on the Federal Trade Commission (hereafter the "Commission" or the "FTC") with respect to the divulgence to Congress of "trade secrets" obtained by it under the compulsion of a subpoena. 1 The controlling statute provides:

The (Federal Trade) Commission shall also have power

(f) To make public from time to time such portions of the information obtained by it hereunder, Except trade secrets and names of customers, as it shall deem expedient in the public interest . . .

15 U.S.C. § 46(f) (emphasis added). The parties do not dispute, nor could they after our decision in Ashland Oil, Inc. v. FTC, 179 U.S.App.D.C. 22, 548 F.2d 977 (1976), that Congress has a right of access to such information,

Page 586

including trade secrets. The issue before us concerns solely the question of notice to parties prior to disclosure of their confidential information and of safeguards to ensure the continued confidentiality of such information once disclosed to the Congress.

In 1975, pursuant to a subpoena, Exxon, Kerr-McGee, and Union Carbide made available to the Commission information relating to their ownership, operation of, and future expectations for their uranium holdings. 2 It is undisputed that some of this material involved trade secrets, particularly the data concerning the production and projected yield of individual mines. In April of 1976, in the course of considering S. 489, 94th Cong., 1st Sess., which proposed prohibiting oil companies from owning interests in fuel reserves other than oil and gas, Senator Hart wrote to the Commission on official stationery of the Senate Judiciary Subcommittee on Antitrust and Monopoly requesting the Commission to make available all information it had concerning the coal and uranium holdings of the oil companies. 3 The F.T.C., because of the relationship of its functions to those of Congress, treats such congressional requests as compulsive, even though they lack the formal status of congressional subpoenas. However, the Commission had previously assured the companies in writing that in the event of any congressional request for confidential information (trade secrets), it would both advise the Members of Congress who submitted the request that the information should be considered confidential when received, and give the companies themselves ten days prior notice of disclosure, whenever such notice was "reasonably possible" (Government's Brief at 2-3).

In early May, the Commission notified appellants of the subcommittee's requests, and appellant Union Carbide quickly obtained a court order restraining the disclosure of the requested information until ten days after the decision in the then pending Ashland Oil, Inc. v. F.T.C. case. Shortly after the Union Carbide order was issued, the subcommittee forwarded a formal request for Immediate access to the information, and the Commission informed the parties that it would disclose the data requested the following day, except insofar as protected by the court order obtained by Union Carbide. At this point, Kerr-McGee and Exxon also succeeded, despite only 23 hours advance notice, in obtaining a preliminary injunction barring disclosure until the decision in Ashland Oil.

Some months later, in September, 1976, in Ashland Oil, Inc. v. F.T.C., 179 U.S.App.D.C. 22, 548 F.2d 977 (1976) this court decided that it was permissible for the Commission to disclose confidential information to Congress. 4 The district court thereupon dissolved the preliminary injunction granted to appellants, on the grounds that they were unlikely to succeed on the merits, as Ashland Oil had determined that disclosure to Congress did not constitute "public disclosure," and also that the companies were not threatened with irreparable injury. 5 The district court also denied appellants' request that the Commission be required to give ten days advance notice before revealing

Page 587

trade secrets to Congress. From this decision the appellants briefly obtained a stay pending appeal or until "further order of this Court," 6 but this stay too was later vacated in light of Ashland Oil. 7

Some of the information that the appellants sought to protect has already been disclosed, and this appeal is moot as to this material. 8 Other information, although vulnerable to disclosure whenever Congress may request it, remains undivulged. 9 As regards this information, and appellants' general request that the Commission be required to give ten days notice prior to disclosure, and that reasonable steps be required to ensure that Congress will keep such trade secrets confidential, the issues before us are not moot, and we resolve them here. 10

It should be noted, however, that a large part of the questions raised by appellant while not moot, represent an attempt to have this court virtually engage in rulemaking for the FTC. 11 Our situation is somewhat analogous to those in which expansive conceptions of standing and ripeness have occasioned adjudications in which the courts have been cast in the inappropriate, and possibly Ultra vires, role of attempting to resolve essentially abstract questions in reviewing agency regulations, See, e. g., ASARCO, Inc. v. EPA, 188 U.S.App.D.C. 77, 578 F.2d 319 (1978) (MacKinnon, J., concurring in part and dissenting in part). In this case, appellants request this court to assume the inappropriate and potentially overreaching role of promulgating confidentiality guidelines for the Commission. We have, however, explicitly restricted our judgment in a previous case dealing with similar issues to the facts of that case, eschewing establishing any broad principle limiting the Commission's actions, See FTC v. Texaco, Inc., 180 U.S.App.D.C. 390, 555 F.2d 862 (En banc ), Cert. denied, 431 U.S. 974, 97 S.Ct. 2940, 53 L.Ed.2d 1072 (1977) and we see no reason, nor any justification for doing otherwise in deciding this appeal.


Concerning appellants' prayer for a permanent injunction requiring ten days

Page 588

warning to affected parties before the FTC can disclose confidential data pursuant to congressional request, although we are very sympathetic to the need to protect the owners of valuable trade secrets, E. g., Underwater Storage, Inc. v. United States Rubber Co., 125 U.S.App.D.C. 297, 301, 371 F.2d 950, 954 (1966), Cert. denied, 386 U.S. 911, 87 S.Ct. 859, 17 L.Ed.2d 784 (1967), and would allow them to be disclosed only upon valid Formal requests of Congress or its committees, See part V, Infra we consider, given no more basis for such an injunction than what is presented here, that no basis exists for us to inject the courts into what is only an incipient controversy.

The authority of the subcommittee to make a proper request for information of the nature that appellants seek to protect is not questioned. The disclosure was not to be used as "exposure for exposure's sake," See Watkins v. United States, 354 U.S. 178, 77 S.Ct. 1173, 1 L.Ed.2d 1273 (1957), and the subject of the subcommittee's inquiry was one "on which legislation could be had" and thus was a proper topic of Congressional inquiry, McGrain v. Daugherty, 273 U.S. 135, 177, 47 S.Ct. 319, 71 L.Ed. 580 (1927); Braden v. United States, 272 F.2d 653 (5th Cir. 1959); Sacher v. United States, 102 U.S.App.D.C. 264, 252 F.2d 828, Rev'd on other grounds, 356 U.S. 576, 78 S.Ct. 842, 2 L.Ed.2d 987 (1958). The material that the FTC proposed to divulge, then, was fully within the scope of the legislature's legitimate investigatory powers.

For this court on a continuing basis to mandate an enforced delay on the legitimate investigations of Congress whenever these inquiries touched on trade secrets could seriously impede the vital investigatory powers of Congress and would be of highly questionable constitutionality. While normally reasonable advance notice can be required, in exigent circumstances Congress has full authority to issue forthwith subpoenas and formally request immediate disclosure. To impose a mandatory notice period would skirt dangerously close to being at least the temporary "equivalent to an order quashing (the official request or subpoena) which is generally an impermissible frustration of the congressional power to investigate . . ." United States v. American Tel. & Tel. Co., 179 U.S.App.D.C. 198, 202, 551 F.2d 384, 388 (1976), Citing Eastland v. United States Servicemen's Fund, 421 U.S. 491, 506, 95 S.Ct. 1813, 44...

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