National Parks and Conservation Ass'n v. Morton, 73-1033.

• Decision Date: 24 April 1974
• Docket Number: No. 73-1033.,73-1033.
• Citation: 498 F.2d 765
• Parties: NATIONAL PARKS AND CONSERVATION ASSOCIATION, Appellant, v. Rogers C. B. MORTON, Secretary, Department of the Interior, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

498 F.2d 765 (1974)

NATIONAL PARKS AND CONSERVATION ASSOCIATION, Appellant, v. Rogers C. B. MORTON, Secretary, Department of the Interior, et al.

No. 73-1033.

United States Court of Appeals, District of Columbia Circuit.

Argued January 16, 1974.

Decided April 24, 1974.

Rehearing denied June 7, 1974.

Richard B. Wolf, Washington, D. C., with whom Victor H. Kramer and John F. Dienelt, Washington D. C., were on the brief for appellant.

Lawrence H. Wechsler, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty. at the time the brief was filed, John A. Terry and Arnold T. Aikens, Asst. U. S. Attys., were on the brief for appellees. Earl J. Silbert, Washington, D. C., also entered an appearance for appellees.

Before BAZELON, Chief Judge, and WRIGHT and TAMM, Circuit Judges.

TAMM, Circuit Judge:

Appellant brought this action under the Freedom of Information Act, 5 U.S.C. § 552 (1970), seeking to enjoin officials of the Department of the Interior from refusing to permit inspection and copying of certain agency records concerning concessions operated in the national parks. The district court granted summary judgment for the defendant on the ground that the information sought is exempt from disclosure under section 552(b) (4) of the Act which states:

(b) This section does not apply to matters that are—

. . . .

(4) trade secrets and commercial or financial information obtained from a person and privileged or confidential . . . .

In order to bring a matter (other than a trade secret) within this exemption, it must be shown that the information is (a) commercial or financial, (b) obtained from a person, and (c) privileged or confidential. Getman v. NLRB, 146 U.S.App.D.C. 209, 450 F.2d 670, 673 (1971), quoting Consumers Union of United States, Inc. v. Veterans Administration, 301 F.Supp. 796, 802 (S.D.N.Y. 1969), appeal dismissed, 436 F.2d 1363 (2d Cir. 1971). Since the parties agree that the matter in question is financial information obtained from a person and that it is not privileged, the only issue on appeal is whether the information is "confidential" within the meaning of the exemption.

I.

Unfortunately, the statute contains no definition of the word "confidential." In the past, our decisions concerning this exemption have been guided by the following passage from the Senate Report, particularly the italicized portion:

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.

S.Rep.No. 813, 89th Cong., 1st Sess. 9 (1965) (emphasis added), cited in Sterling Drug, Inc. v. FTC, 146 U.S.App.D. C. 237, 450 F.2d 698, 709 (1971); Grumman Aircraft Engineering Corp. v. Renegotiation Board, 138 U.S.App.D.C. 147, 425 F.2d 578, 582 (1970). We have made it clear, however, that the test for confidentiality is an objective one. Bristol-Myers Co. v. FTC, 138 U.S.App. D.C. 22, 424 F.2d 935, 938, cert. denied, 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 52 (1970); cf. Benson v. General Services Administration, 289 F.Supp. 590, 594 (W.D.Wash.1968), aff'd, 415 F.2d 878 (9th Cir. 1969). Whether particular information would customarily be disclosed to the public by the person from whom it was obtained is not the only relevant inquiry in determining whether that information is "confidential" for purposes of section 552(b) (4). A court must also be satisfied that non-disclosure is justified by the legislative purpose which underlies the exemption. Our first task, therefore, is to ascertain the ends which Congress sought to attain in enacting the exemption for "commercial or financial" information.

In general, the various exemptions included in the statute serve two interests—that of the Government in efficient operation and that of persons supplying certain kinds of information in maintaining its secrecy. The Senate Report acknowledges both of these legislative goals:

At the same time that a broad philosophy of "freedom of information" is enacted into law, it is necessary to protect certain equally important rights of privacy with respect to certain information in Government files, such as medical and personnel records. It is also necessary for the very operation of our Government to allow it to keep confidential certain material, such as the investigatory files of the Federal Bureau of Investigation.

S.Rep.No. 813, 89th Cong., 1st Sess. 3 (1965). Some of the exemptions serve only one or the other of the two interests. The exemption for "inter-agency or intra-agency memorandums" is an example of an exemption intended to protect the orderly conduct of official business.¹ On the other hand, the exemption for "personnel and medical files and similar files, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy" is clearly intended for the benefit of the individual from whom information is obtained.² The exemption with which we are presently concerned has a dual purpose. It is intended to protect interests of both the Government and the individual.

The "financial information" exemption recognizes the need of government policymakers to have access to commercial and financial data. Unless 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. This concern finds expression in the legislative history as well as the case law. During debate on a predecessor to the bill which was ultimately enacted, Senator Humphrey pointed out that sources of information relied upon by the Bureau of Labor Statistics would be "seriously jeopardized" unless the information collected by the Bureau was exempt from disclosure.³ He was assured that such information was fully protected under the exemption as it then appeared.⁴ Although the exemption now contains the additional qualifying words "commercial or financial" the purpose of protecting government access to necessary data remains. As the Senate Report explains:

This exception is necessary to protect the confidentiality of information which is obtained by the Government through questionnaires or other inquiries. . . .

S.Rep.No. 813, 89th Cong., 1st Sess. 9 (1965) (emphasis added). The House Report states with respect to section 552(b)(4):

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.

H.Rep.No. 1497, 89th Cong., 2d Sess. 10 (1966), U.S.Code Cong. & Admin.News 1966 at 2427. This court has formulated a similar definition of the governmental interest protected by the exemption:

This exemption is intended to encourage individuals to provide certain kinds of confidential information to the Government, and it must be read narrowly in accordance with that purpose.

Soucie v. David, 145 U.S.App.D.C. 144, 448 F.2d 1067, 1078 (1971).

Apart from encouraging cooperation with the Government by persons having information useful to officials, section 552(b) (4) serves another distinct but equally important purpose. It protects persons who submit financial or commercial data to government agencies from the competitive disadvantages which would result from its publication. The need for such protection was raised several times during hearings on S. 1666,⁵ the predecessor of the bill which became law. As introduced, this bill contained no exemption for trade secrets or commercial or financial information. Among the witnesses who pointed out this deficiency was a representative of the National Association of Broadcasters who testified that broadcasters are required to file business information with the Federal Communications Commission which, if not exempt from public disclosure, could be exploited by competitors.⁶ A member of the subcommittee which conducted the hearings raised the issue again with respect to Small Business Administration loan applications:

I am thinking of a situation, for example, where the company couldn\'t qualify for funds, and they have exposed their predicament to the world and it might give competitors unfair advantage to know their weak condition at that time. I wonder if there might be some cases where it might be in the public interest if all the facts about a company were not made public.⁷

A representative of the Treasury Department added similar comments:

We can see no reason for changing the ground rules of American business so that any person can force the Government to reveal information which relates to the business activities of his competitor.⁸

In each of these instances it was suggested that an exemption for "trade secrets" would avert the danger that valuable business information would be made public by agencies which had obtained it pursuant to statute or regulation.⁹ A representative of the Department of Justice endorsed this idea at length:

A second problem area lies in the large body of the Government\'s information involving private business data and trade secrets, the disclosure of which could severely damage individual enterprise and cause widespread disruption of the channels of commerce. Much of this information is volunteered by employers, merchants, manufacturers, carriers, exporters, and other businessmen and professional people for purposes of market news services, labor and wage statistics, commercial reports, and other Government services which are considered useful to the cooperating reporters, the public and the agencies. Perhaps the greater part of such information is exacted, by statute, in the course of necessary regulatory or other governmental functions.

Again, not only as a matter of fairness, but

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