Westinghouse Elec. Corp. v. U.S. Nuclear Regulatory Commission
| Decision Date | 22 March 1977 |
| Docket Number | No. 76-1611,76-1611 |
| Citation | 555 F.2d 82 |
| Parties | WESTINGHOUSE ELECTRIC CORPORATION, Petitioner, v. UNITED STATES NUCLEAR REGULATORY COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Third Circuit |
Frank L. Seamans, John H. Morgan, Barton Z. Cowan, Daniel A. Toole, Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa., for petitioner; Elliot S. Katz, Westinghouse Elec. Corp., Law Dept., Pittsburgh, Pa., of counsel.
Peter L. Strauss, Gen. Counsel, Stephen F. Eilperin, Asst. Gen. Counsel, Stephen S. Ostrach, Atty., U.S. Nuclear Regulatory Com'n, Washington, D.C., Rex. E. Lee, Asst. Atty. Gen., Morton Hollander, Chief, Appellate Section, U.S. Dept. of Justice, Washington, D.C., for respondent.
Before GIBBONS and GARTH, Circuit Judges, and COHEN, * District Judge.
We here consider a petition to review a final order 1 of the United States Nuclear Regulatory Commission (NRC), which in a rulemaking proceeding amended its rules of practice relating to public inspection of documents containing proprietary information. 10 CFR § 2.790. We have jurisdiction by virtue of § 189 of the Atomic Energy Act of 1954 as amended, 42 U.S.C. § 2239 (1970) and the Administrative Orders Review Act of 1950, 28 U.S.C. § 2341 et seq. (Supp.1974). The petitioner, Westinghouse Electric Corporation (Westinghouse), contends that NRC lacked authority to promulgate the amended rules. It seeks to have the order set aside because the rules as amended may result in public disclosure of Westinghouse's proprietary information. We deny relief.
NRC, the successor to the Atomic Energy Commission, conducts licensing, regulatory, and enforcement functions pursuant to the Atomic Energy Act of 1954 as amended, 2 and the Energy Reorganization Act of 1974. 3 Under these statutes various licenses are required for the possession, distribution or use of nuclear materials. 4 NRC also is authorized to issue construction permits for facilities utilizing nuclear materials. 5 Applicants for licenses or construction permits must submit extensive documentation relating to design of the facility and its equipment, to financial qualifications of the applicant, to the effect of the facility on the environment, and, for antitrust considerations to the applicant's competitive position in the industry. 6 Much of the information submitted by applicants is not in the public domain and is considered proprietary by both NRC and the applicants. The Atomic Energy Act (the "Act") also authorizes NRC to conduct rulemaking proceedings for the purpose of establishing generic rules appropriate to its licensing and regulatory responsibilities. 7 NRC has conducted rulemaking proceedings involving such matters as acceptable design criteria for reactor cooling systems, reactor effluents, and the like. In those proceedings it has received technical, commercial and financial information from private parties such as equipment manufacturers, architects, engineers, and owners of facilities. Much of this information is proprietary. NRC also engages in inspection and enforcement activities in which it becomes privy to similar proprietary information.
Westinghouse has as a principal business activity the manufacture and sale of equipment and components for electric power generation and transmission, including nuclear steam generating systems. In connection with various license applications, Westinghouse submits to the NRC extensive proprietary technical information. Westinghouse also participates in NRC rulemaking proceedings, and often submits similar proprietary information in such proceedings. The information which it regards as proprietary, Westinghouse claims, gives it a competitive economic advantage over other manufacturers which would be lost by public disclosure.
In order to promote the development, use and control of atomic energy, Section 161(p) of the Act, 42 U.S.C. § 2201(p), provides:
In the performance of its functions the Commission is authorized to . . . (p) make, promulgate, issue, rescind, and amend such rules and regulations as may be necessary to carry out the purposes of this chapter.
Acting under this broad grant of rulemaking authority, the Atomic Energy Commission, as early as 1956 promulgated a rule, 10 CFR § 2.790, 8 dealing with the treatment of proprietary information. The 1956 version of 10 CFR § 2.790 provided that all matters of official record in all proceedings, including licensing and rulemaking, would be available for public inspection. The Commission was authorized, however, to withhold any document from public inspection "if disclosure of its contents is not required in the public interest and would adversely affect the interest of a person concerned." 9 In 1972 § 2.790 was amended to read that in deciding whether or not to withhold information from public disclosure ". . . it is the policy of the Commission to achieve an effective balance between legitimate concerns for protection of competitive positions and the right of the public to be fully apprised as to the basis for and effects of proposed licensing actions." 10 In 1973 the NRC's predecessor agency published a notice in the Federal Register that it was contemplating possible changes in the treatment of proprietary information. 11 The notice listed five alternatives under consideration 12 and invited comments. After considering the comments received, the NRC issued a proposed amendment and invited further comments. 13 After considering the comments received in response to the November 22, 1974 notice the NRC promulgated the present § 2.790, the relevant parts of which are quoted in the margin. 14 This petition for review followed.
The amended rule carries forward the basic policy decision of the 1956 and 1972 version, that disclosure of information in NRC files shall be the rule, and nondisclosure the exception; an exception involving "a balancing of interests of the person or agency urging nondisclosure and the public interest in disclosure." 15 The procedure by which NRC strikes that balance, however, differs depending on whether the information is submitted in connection with a license application or a rulemaking proceeding. 16
Initially, regardless of the nature of the proceeding, a person who proposes that a document or a part be withheld from public disclosure on the ground that it contains proprietary information must submit an application for such withholding supported by an affidavit setting forth the basis of the claim that disclosure should be withheld. 17 The affidavit must address five considerations which NRC must take into account in ruling on the application. 18 On the basis of the affidavit NRC determines whether the information "(i) is a trade secret or confidential or privileged communication; and (ii) if so, should be withheld from public disclosure." 19 In deciding whether trade secrets or privileged or confidential commercial or financial information should be withheld from public disclosure the NRC must determine:
(i) whether the right of the public to be fully apprised as to the bases for and effects of the proposed action outweighs the demonstrated concern for protection of a competitive position and (ii) whether the information should be withheld from public disclosure pursuant to this paragraph. 20
If NRC acts favorably on the application for withholding information there are provisions for limited use of the information under a protective agreement or protective order. 21 If the application is denied, NRC must notify the applicant with a statement of reasons for the denial, and must specify a time, not less than thirty days after the date of the notice, when the information will be placed in the "Public Document Room." 22 Prior to that specified time the applicant may request return of the document, and if he does so ". . . the document will not be placed in the Public Document Room and will be returned to the applicant . . .." 23
Thus an applicant requesting confidentiality has the absolute right to demand the return of any document claimed to contain proprietary information in all NRC proceedings 24 with one exception. As to rulemaking proceedings there is a proviso to the regulation requiring return of the document upon request:
(I)nformation submitted in a rulemaking proceeding which subsequently forms the basis for the final rule will not be withheld from public disclosure by the Commission and will not be returned to the applicant after denial of any application for withholding submitted in connection with that information. 25
The proviso is a significant departure from the prior rule. Heretofore NRC claimed the right to balance competing interests on an ad hoc basis in all proceedings. It has now concluded that in rulemaking the public interest in knowing the basis for a final rule always outweighs private interests and requires disclosure. 26
Westinghouse makes three statutory and three constitutional arguments in support of its contention that § 2.790 in its present form is invalid. We will consider these arguments seriatim.
(1) § 103(b)(3) of the Atomic Energy Act.
The first statutory argument is based upon the provisions of the Atomic Energy Act. Acknowledging that § 161(p) of the Act, quoted above, gives the NRC general rulemaking authority, Westinghouse argues that such authority is circumscribed by the general rule of administrative law that the regulation must be reasonably related to the purpose of the legislation. 27 Specifically, Westinghouse urges that even though NRC has general rulemaking power the promulgation of a rule providing for public disclosure of proprietary information is not reasonably related to the purposes of the Atomic Energy Act. Such an argument is specious in light of the necessity for the NRC to adopt some regulations for...
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