Worthington Compressors, Inc. v. Costle
| Citation | 662 F.2d 45,213 U.S.App.D.C. 200 |
| Decision Date | 20 August 1981 |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeals from the United States District Court for the District of Columbia (D.C. Civil Action Nos. 78-1865, 78-1866, 78-2341 & 78-2378).
Richard H. Gimer, Washington, D. C., with whom Richard G. White and Nicky Calio, Washington, D. C., were on the brief for appellants.
Robert C. Seldon, Asst. U.S. Atty., Washington, D. C., with whom Charles F. C. Ruff, U.S. Atty., and John A. Terry and John W. Polk, Asst. U.S. Attys., Washington, D. C., were on the brief for appellees. Michael J. Ryan, Asst. U.S. Atty., Washington, D. C., also entered an appearance for appellees.
Before PECK *, Senior Circuit Judge, United States Court of Appeals for the Sixth Circuit, and WILKEY and GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
Four manufacturers of portable air compressors 1 submitted reports describing their products to the Environmental Protection Agency (EPA). They now appeal from the district court's grant of summary judgment upholding EPA's decision to disclose that information under the Freedom of Information Act (FOIA). 2 Appellants assert that summary judgment was inappropriate because material facts are in dispute. They further contend that the Noise Control Act of 1972, 3 which requires the submission of these reports to EPA, also precludes their disclosure. 4 Relying on the Noise Control Act and FOIA Exemptions 3 5 and 4, 6 appellants claim a right to compel nondisclosure of documents which are purportedly confidential. Finally, appellants challenge the adequacy of the procedures EPA used in reaching its decision. EPA has promulgated elaborate "confidentiality" regulations, but here it invoked a summary procedure to dispose of the confidentiality claim. 7 It notified the submitters that it would disclose the information in the absence of a legal action for a preliminary injunction. Appellants filed such an action in the district court on 6 October 1978, but that court summarily upheld the agency. 8
We find that the district court erred in granting summary judgment, and we reverse and remand for further proceedings.
Silencing loud machinery such as air compressors is a prime method of abating noise pollution. "(T)o promote an environment for all Americans free from noise that jeopardizes their health or welfare," 9 Congress authorized EPA's Administrator to prescribe maximum noise levels for certain types of equipment. 10 The Administrator issued regulations requiring, in part, that manufacturers of this equipment verify that their new products comply with EPA's maximum noise standards before the products can be sold. 11 This reporting requirement compelled appellants to submit to EPA the test results and design specifications of their products in "production verification" reports. Appellants submitted each report under a claim of confidentiality. 12
The first in a succession of FOIA requests was filed with EPA on 19 July 1978 by a competing manufacturer of air compressors. The requesters generally sought all production verification and quality control reports submitted by other manufacturers, including four appellants. 13
In considering FOIA requests for information submitted under a claim of confidentiality, EPA is required by its regulations to determine initially whether the information "may be entitled to confidential treatment" or whether it "clearly is not entitled to confidential treatment." If EPA finds the information "may be entitled to confidential treatment," the request is initially denied and a notice and comment proceeding is initiated to give the submitter an opportunity to explain why the information should not be disclosed. 14 If EPA finds the information "clearly is not entitled to confidential treatment," however, the submitter's claims are summarily rejected. 15
In this case EPA invoked the summary procedure and informed appellants by letter that their claims of confidentiality were summarily denied. 16 The decision rested on the conclusion that the requested information could be duplicated by anyone with access to their air compressors. "It is a simple matter," said the Director of EPA's Noise Enforcement Division, "to obtain a new compressor by buying it or renting it from a firm that leases such equipment." 17 Since the noise test procedure was repeatable, "anyone could procure a particular manufacturer's compressor and ascertain the noise level of the compressor." 18 This meant the test results were already available to the public. Similarly, the compressor design and engineering specifications could be discovered through "reverse engineering," whereby "(a) manufacturer's developmental engineers ... dismantle a compressor to examine the specific engineering features." 19 Thus, the information submitted in the reports was found "clearly ... not entitled to confidential treatment" because competitors could obtain it through private testing and reverse engineering.
To forestall EPA from releasing the reports, appellants initiated an action for judicial review in the district court. 20 Appellants contended in their complaint that the production verification information constituted trade secrets and confidential commercial information within the meaning of FOIA's Exemption 4, the Noise Control Act, and the Trade Secrets Act. They also argued that the Noise Control Act was a withholding statute within the meaning of FOIA's Exemption 3 and therefore specifically prohibited EPA from disclosing the information in question. Finally, appellants submitted that EPA's decision to disclose was founded on the erroneous assumption that private testing and reverse engineering were feasible means of acquiring accurate information and was reached in violation of the agency's own regulations.
Treating EPA's motion to dismiss as a motion for summary judgment, the district court first rejected the FOIA, Trade Secrets Act, and Noise Control Act claims, holding that the Administrative Procedure Act 21 provided the proper standard of review. 22 The court then found that the agency's determination that the reports were clearly not entitled to confidential treatment was not "arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law." 23 The dispositive fact for the district court, as for the agency, was the availability of private testing and reverse engineering. The Court wrote:
(A)ll of the plaintiffs' claims suffer from the defective assumption that this material cannot easily be duplicated. The compressors are sold in commerce; anyone can but or rent them; 3 and by means of reverse engineering anyone can duplicate the tests and therefore the product verification reports. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476, 94 S.Ct. 1879, 1883, 40 L.Ed.2d 315 (1974).
Since EPA's finding that appellants had no right to confidential treatment was thus "not incorrect," the court upheld the agency's use of the summary procedure and granted summary judgment. 25
We agree with the district court that the APA provides appellants' only basis for judicial review. We hold, however, that summary judgment was inappropriate because of the disputed and unresolved matter of the commercial feasibility of reverse engineering and private testing. That these techniques are theoretically possible does not inevitably thwart a "reverse-FOIA" suit such as this one. We leave to the district court the question whether to return the case to EPA or to resolve the disputed factual and legal questions itself. To assist the court we conclude our opinion with a discussion of the relevant issues on remand.
Appellants assert that the Noise Control Act provides them with a private right of action to enjoin disclosure that would violate section 13(b)(1) of the Act. The district court rejected this claim, ruling that EPA's action was reviewable only under the APA. The court ruled that Chrysler Corp. v. Brown, 26 which held that no private right of action exists under FOIA or the Trade Secrets Act, applied as well to the Noise Control Act because the latter "simply incorporates the Trade Secrets Act." 27
We affirm the district court's ruling on this issue. 28 It is true, as appellants assert, that rights of action are more frequently implied in civil statutes such as the Noise Control Act than in criminal statutes such as the Trade Secrets Act. But appellants have failed to offer any positive justification for implying a right of action here. As the Supreme Court has recently held, "(t)he key to the inquiry is the intent of the legislature." 29 The statutory language itself provides no support for appellants' claim; it refers only to the Trade Secrets Act, which contains no express or implied right of action. Moreover, appellants were unable to direct us to any indication in the legislative history that a private right of action was intended.
Most important, review is available under the APA to determine whether EPA's action was "arbitrary, capricious, an abuse of discretion, or otherwise not in...
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