General Elec. Co. v. U.S. Nuclear Regulatory Com'n

Decision Date21 December 1984
Docket NumberNo. 84-2066,84-2066
Citation750 F.2d 1394
Parties15 Envtl. L. Rep. 20,088 GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, v. UNITED STATES NUCLEAR REGULATORY COMMISSION, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

George L. Edgar, Newman & Holtzinger, Washington, D.C., for plaintiff-appellant.

Douglas Letter, Appellate Staff, Civil Div., Dept. of Justice, Washington, D.C., for defendants-appellees.

Before POSNER, Circuit Judge, SWYGERT, Senior Circuit Judge, and DUPREE, Senior District Judge. *

POSNER, Circuit Judge.

The Nuclear Regulatory Commission decided to make public a set of internal documents of the General Electric Company known as the "Reed Report," and General Electric brought this suit to enjoin the Commission from doing so. The district judge upheld the Commission's decision and General Electric has appealed, raising a number of questions, substantive and procedural, under a variety of statutes and regulations.

The Reed Report is a compilation, made in 1975, of several hundred pages of studies of General Electric's "boiling water" nuclear reactor, which is used to generate electrical power. The report contains a number of criticisms of the design of the reactor, including criticisms of its safety. The existence of the report became known when employees of General Electric mentioned it in congressional hearings in 1976 and 1977 on the safety of nuclear reactors. Although the report or parts of it were shown to certain government officials around the same time, General Electric did not make the report public. Then in 1978, in a proceeding before the Commission's Atomic Safety and Licensing Board on whether to license a nuclear electrical generating plant called "Black Fox" which was to be powered by General Electric boiling-water reactors, an intervenor asked to be allowed to use the Reed Report to cross-examine some witnesses from General Electric. The Board issued a subpoena to General Electric to produce the report. General Electric moved the Board to quash the subpoena; but before the motion was acted on, the controversy over the subpoena was settled by the company's agreeing to excerpt parts of the report for the lawyers (and their technical consultants) in the licensing proceeding, subject to a protective order, and to make the whole report available to the Board in confidence. The Board used the report to frame questions that were asked at in camera hearings in the licensing proceeding.

While that proceeding was moving along in the usual leisurely fashion, the Commission was being asked, mainly by citizens' groups hostile to nuclear power, to release the Reed Report under the Freedom of Information Act, 5 U.S.C. Sec. 552. General Electric not only opposed these requests but asked the Commission to withhold the report under a regulation ("Rule 790") which provides that if the Commission determines that a document submitted to it "contains trade secrets or privileged or confidential commercial or financial information," it can withhold the document from the public. 10 C.F.R. Sec. 2.790(b)(5). The Commission asked a staff economist, Messier, to review the Reed Report to see whether it contained material that should be withheld. Messier concluded in a brief memo that it did not. General Electric had earlier submitted contrary affidavits.

The Commission handed down its decision on October 9, 1980. In a brief opinion, the Commission stated that the Reed Report was an "agency record," and therefore within the scope of the Freedom of Information Act. See 5 U.S.C. Sec. 552(a)(3), (4)(B). On whether the report contained any confidential information, the Commission said that "the staff [had] advised the Commission that it did not have an adequate basis to conclude that release of the Report would cause substantial harm to GE's competitive position," and that the Commission--which at the time had only four members--was evenly split on whether disclosure of the report would make it harder for the Commission to obtain similar information in the future. Nevertheless the decision was to release the report.

The next day, General Electric moved the Commission under 10 C.F.R. Sec. 2.790(c) to return the Reed Report to the company. This section of the regulation provides (with an immaterial exception) that the Commission will give anyone whose request to withhold a document under section 2.790(b) is denied 30 days to withdraw the document before it is made public. Nevertheless the Commission summarily denied General Electric's request; the Commission considers subsection (c) inoperative if a Freedom of Information Act request is pending when the request to withdraw is made. The company then brought this suit in federal district court. In 1983, while the suit was pending, the application to license "Black Fox" was withdrawn (see Note, Public Utilities: The Black Fox Nuclear Project Cancellation Dilemma: Of Judicial Review and Reform of Oklahoma's Administrative Process, 36 Okla.L.Rev. 190, 192-94 (1983)), ending the licensing proceeding without a decision on the merits.

The Commission's terse orders--the first denying in a brief opinion General Electric's request to withhold the Reed Report from public inspection and granting the Freedom of Information Act requests, the second denying without opinion General Electric's request to withdraw the report--do not explicate the Commission's grounds. The key to understanding them (so far as it is possible to do so) lies in the interplay between the Freedom of Information Act and Rule 790. The Act contemplates that each agency subject to it will promulgate regulations implementing the Act. See 5 U.S.C. Sec. 552(a)(3). The Commission has done this in 10 C.F.R. Secs. 9.3-9.16 (see id. Secs. 9.1-9.1a), but these regulations are not involved in this case. Rule 790 is an earlier regulation dealing with public access to Commission records. Its history is recounted in Westinghouse Electric Corp. v. NRC, 555 F.2d 82, 85-93 (3d Cir.1977). It long predates the Freedom of Information Act but was overhauled some time after the Act was passed, in order to conform to the Act, see 41 Fed.Reg. 11808, 11809 (March 22, 1976), and in its present form it tracks the Act closely. The Commission seems, indeed, to consider the rule and the Act substantively identical. See (besides the decision under review, where that view is implicit) 37 Fed.Reg. 15127 (July 28, 1972); Wisconsin Electric Power Co., 15 N.R.C. 281, 287 (Atomic Safety & Licensing Bd. 1982); Pacific Gas & Elec. Co., 5 N.R.C. 1398, 1402 n. 10 (Atomic Safety & Licensing Bd. 1977); Kansas Gas & Electric Co., 3 N.R.C. 408, 415 (Atomic Safety & Licensing Bd. 1976). The rule could not grant the public less access to the Commission's records than the Act does, because the Commission admits to being fully subject to the Act. But the rule could be broader. The Atomic Energy Act--the Commission's organic statute--could authorize or even require the Commission to disclose more information than the Freedom of Information Act requires it to disclose. Hence the need perceived by the Commission (see 39 Fed.Reg. 40960, 40961 (Nov. 22, 1974)) for a regulation such as Rule 790 that establishes a policy on disclosure, as distinct from merely implementing the Freedom of Information Act--a statute that requires some, but as we shall see does not forbid any, disclosure.

Only agency records must be disclosed either under the Freedom of Information Act or under Rule 790(a), which differs in this respect only in substituting, apparently without intending a substantive change, see Kansas Gas & Elec. Co., supra, 3 N.R.C. at 415, the words "final NRC records and documents" for the statutory term "agency ... records," and which, as we have said, could not be narrower than the Act. So when faced with requests under the Act for the Reed Report, the Commission had first to decide whether the report was indeed an agency record. Having decided it was, the Commission had next to consider whether the report might be exempt from disclosure. The only exemption the Commission discussed was the one for "trade secrets and commercial or financial information obtained from a person and privileged or confidential," which appears in the Act at 5 U.S.C. Sec. 552(b)(4), and, in the identical words, in the regulation at 10 C.F.R. Sec. 2.790(a)(4), being known in both places as "exemption 4." Read literally, exemption 4 would shield virtually every document that a company chose not to make public; but the cases interpreting the provision have narrowed it considerably by holding that information that is not a traditional type of trade secret (of the secret-formula variety) is within exemption 4 only if disclosure would either inflict substantial competitive harm on the owner of the information or make it difficult for the agency to induce people to submit similar information to it in the future. See, e.g., National Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C.Cir.1974). These were the two criteria that the Commission addressed in its opinion of October 9, 1980. The first appears in Rule 790 itself as whether public disclosure "is likely to cause substantial harm to the competitive position of the owner of the information." 10 C.F.R. Sec. 2.790(b)(4)(v). The second (effect on information flow to agency) does not appear in the regulation but the Commission uses it anyway--illustrating our earlier point about the convergence of Rule 790 with the Freedom of Information Act. Although the Commission split evenly on whether the Reed Report met the second criterion, the consequence was to order disclosure. Why the tie should go to the requester and not to the owner of the information requested is not apparent to us, but as General Electric does not question the Commission's practice, neither shall we.

If the Commission had decided that the Reed Report was within exemption 4 and so had...

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