# Petition — Brown v. Westinghouse Electric Corp.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1349%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 431 U.S. 924

## Text

*

FILED &
cpr 28 1977

No. WICHAEL RODAK, JR., CLERK

cr

~

In the Supreme Court of the Gnited States

OcToBER TERM, 1976

76-1192

HaroLD Brown, SECRETARY
oF DEFENSE, ET AL., PETITIONERS

Vv.

WESTINGHOUSE ELECTRIC CORPORATION, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE FOURTH CIRCUIT

Danie, M. FRIEDMAN,
Acting Solicitor General,

BarBara ALLEN BaBoook,
Acting Assistant Attorney General,

SrePpHEN L. URBANCZYK,
Assistant to the Solicitor General,

LEONARD SCHAITMAN,
PavuL BLANKENSTEIN,
Attorneys,

Department of Justice,
Washington, D.C. 20530.

——————— TCC

INDEX

Pages
A ce ces cacccuecskseueutesenass 2
IN tas eUl ccd cuca ceobchagnusaekanes 2
I io 5 6065000 6 e sedans esecnnes 2
Statutes and regulations involved ............ 3
oe debe a eaeh ack hae ane eens 3
Reasons for granting the petition ............. 11
I ee dena he dhe Kaba Oe beKeRe ees 19
ee ie oge kas kde nekcehseb acne la
ee he hea ace ea ee eS o8a
NE sit nt Sate es 6onudadtevacneesuoees 70a
I eee oe a eee ie Poel 74a
re a re ie ey oad OC eae aa 8la
CITATIONS
Cases:
Administrator, Federal Aviation Adminis-
tration v. Robertson, 422 U.S. 255 ...... 16
Blair v. Oesterlein Company, 275 U.S. 220. . 16
Camp v. Pitts, 411 U.S. 188 .............. 17,18
Charles River Park ‘‘A’’, Inc. v. Depart-
ment of Housing and Urban Development,
sca cnshesseneeenendd 11-12, 13, 15
Citizens to Preserve Overton Park v. Volpe,
St EE us dcuceccnwsanneeekacueey 17,18
Consumers Union v. Cost of Living Council,
491 F.2d 1396, certiorari denied, sub nom.
Business Roundtable v. Consumers Union,
6 ives din 5eensksen tenner 16
Cort 0. Bah, Sie UT. & . wc cw ccccccccccces 19

i

il
Cases—Continued
Department of the Air Force v. Rose, 425
WR CE 5 50 ca keaee eure avedus eevkdas
Dunlop v. Bachowski, 421 U.S. 560 .......
Environmental Protection Agency v. Mink,
PO Se ree oe
Exchange National Bank v. Abramson, 295
Sf 8 PAPE OTT eer eee
Federal Communications Commission v.
Schreiber, 381 U.S. 279 ................
General Services Administration v. Benson,
EE 6 zu o w0%s00essucouns desea
Laughlin v. United States, 474 F.2d 444,
certiorari denied, 412 U.S. 941 .........
National Railroad Passenger Corp. v. Na-
tional Association of Railroad Passen-
ite, GO Wis Ge 0 0avbe nares 15
H.R. Rep. No. 94-1178, 94th Cong., 2d Sess.

ET ree eke lesen bes ibeadsenetotes 16

Office of Federal Contract Compliance Pro-
grams, Federal Contract Compliance
EE Disc esebichenncneee 6s 4

41 Op. Atty. Gen. 166 (1952) ............. 17

S. Rep. No. 813, 89th Cong., Ist Sess. (1965). 13

S. Rep. No. 93-854, 93d Cong., 2d Sess.
ERR RE ae ee ee ere ee 14, 15

In the Supreme Court of the Anited States

OcToBER TERM, 1976

No.

Haro_tp Brown, SECRETARY
OF DEFENSE, ET AL., PETITIONERS

v.

WESTINGHOUSE ELECTRIC CORPORATION, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE FOURTH CIRCUIT

The Solicitor General, on behalf of the Secretary of
Defense, the Director of the Defense Supply Agency,
the Director of the Office of Federal Contract Com-
pliance Programs, and the Secretary of Labor, peti-
tions for a writ of certiorari to review the judgments of

the United States Court of Appeals for the Fourth

Circuit in these cases.’

‘ Nine separate cases were decided in the single opinion of the
court of appeals: Westinghouse Electric Corporation, et al. v.
Schlesinger, et al., Nos. 74-1801, 74-1802, 74-1803, 74-2047, and 74-
2048 ; United States Steel Corporation v. Schlesinger, et al., Nos.
75-1268 and 75-1269; General Motors Corporation v. Schlesinger,
et al., Nos. 75-1270 and 75-1271. Judgments adverse to the federal
parties were entered in Nos. 74-1801, 74-2046, 75-1269, and 75-1271.
Review is hereby sought in the latter four cases.

(1)

SESS OT

2

OPINIONS BELOW

The opinion of the court of appeals (App. A, infra,
pp. la-57a) is reported at 542 F.2d 1190. The opinion
of the district court in Westinghouse Electric Corpora-
tion, et al. v. Schlesinger, et al. (App. B, infra, pp.
58a-69a) is reported at 392 F. Supp. 1246; the opinion
of the district court in the consolidated cases of United
States Steel Corporation v. Schlesinger, et al., and
General Motors Corporation v. Schlesinger, et al.
(App. C, infra, pp. 70a-73a) is unreported.

JURISDICTION

The judgments of the court of appeals (App. D,
infra, pp. 74a-80a) were entered on September 30,
1976. On December 22, 1976, the Chief Justice extended
the time for filing a petition for a writ of certiorari to
and including January 28, 1977, and on January 21,
1977, he further extended the time for filing a petition
to and including February 27, 1977 (a Sunday). The
jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

QUESTIONS PRESENTED

1. Whether the government, pursuant to regulations,
may disclose information that is exempt from manda-
tory disclosure under the Freedom of Information Act
and that is of the character described in 18 U.S.C. 1905.

2. Whether judicial review of an agency’s decision
to disclose information pursuant to the regulations is
limited to review of the administrative record for abuse
of discretion.

3

STATUTES AND REGULATIONS INVOLVED

The relevant provisions of the Freedom of Informa-
tion Act, 5 U.S.C. 552, as amended, as well as 18 U.S.C.
1905 and the pertinent regulations of the Office of
Wederal Contract Compliance Programs, 41 C.F.R.
Part 60-40, are set forth at App. E, infra, pp. 8la-87a.

STATEMENT

1. Respondents, Westinghouse Electric Corporation
(and its subsidiary, Fraser & Johnston Company),
United States Steel Corporation, and General Motors
Corporation, are government contractors.’ As a condi-
tion of doing business with the government, they are
required by executive order and regulations promul-
gated thereunder by the Secretary of Labor to employ
and treat all employees without regard to race, color,
religion, sex, or national origin, and to take affirmative
action to eliminate discriminatory employment prac-
tices. Executive Order 11246, 30 Fed. Reg. 12319, as
amended by Executive Order 11375, 32 Fed. Reg.
14303 (see 3 C.F.R. 169, 171-172) ; 41 C.F.R. 60-1.4. To
aid in monitoring compliance with these requirements,
every contractor and subcontractor with fifty or more
employees and a contract valued at $50,000 or more is
required by regulation to prepare and file an annual
Employer Information Report, known as an EEO-1
report. 41 C.F.R. 60-1.7(a). These reports contain
data on the number of women and members of minority
groups employed by the contractor. In addition, the

* The statement of facts, which are not in dispute, is based upon
the separate joint appendices in the court of appeals.

4

contractor or subcontractor must prepare and make
available for agency inspection an Affirmative Action
Program (‘‘AAP’’), in which the contractor is
required to provide detailed information on the past
and projected employment of women and minority
group members. 41 C.F.R. 60-1.40, 60-2.1, 60-60.2(a).°

The Secretary of Labor has delegated administrative
responsibility under these regulations to the Director
of the Office of Federal Contract Compliance Programs
(“*OFCCP’’). 41 C.F.R. 60-1.2.* In turn, the Director
has designated various federal agencies as ‘‘compliance
agencies’’ and has delegated to each of them primary
responsibility for assuring adherence to the equal em-
ployment opportunity program by contractors within
certain geographical areas or industrial classifications.
See 41 C.F.R. 60-1.6. See also OFCCP Compliance
Manual, § 2-202.

The regulations promulgated by the Secretary of
Labor contain rules providing for public access to in-
formation from records of the Oi'CCP or its various

* AAP’s must contain data pertinent to two general categories:
(1) a ‘‘utilization analysis,’’ which describes the occupational levels
of minority personnel employed by the company, and (2) the ‘‘es-
tablishment of goals and time tables’’ by which opportunities for
minority group members can be improved within the company. 41
C.F.R. 60-2.10. Failure of a contractor to develop an AAP, or to
make a good faith effort to adhere to the policy of equal opportunity
employment, can result in the cancellation, termination or suspen-
sion of the contract. 41 C.F.R. 60-1.24, 60-2.2.

*The OFCCP is the successor agency to the President’s Com-
mittee on Equal Employment Opportunity. In Executive Order
11246, the Committee was abolished and its functions’ transferred
to the Secretary of Labor. 30 Fed. Reg. 12319. The Secretary, in
turn, established the OFCCP to carry out his responsibilities. 30
Fed. Reg. 13441.

5

compliance agencies. 41 C.F.R. Part 60-40 (App. E,
infra, pp. 83a-87a). The regulations are designed ex-
plicitly to ‘‘implement * * * the Freedom of Informa-
tion Act’’ and to give effect to ‘‘the policy of the
OFCC[P] to disclose information to the public and to
cooperate with other public agencies as well as private
parties seeking to eliminate discrimination in employ-
ment.’’ 41 C.F.R. 60-40.1. As a general guideline for
the implementation of this policy, the regulations pro-
vide that ‘‘{u]pon the request of any person * * *
records shall be made available for inspection and
copying, notwithstanding the applicability of the ex-
emption from mandatory disclosure [under the Free-
dom of Information Act], if it is determined that the
requested inspection or copying furthers the public
interest and does not impede any of the functions of
the OFCC[P] or the Compliance Agencies except in
the case of records disclosure of which is prohibited by
law.’’ 41 C.F.R. 60-40.2(a).

Under this general guideline, the Secretary of Labor
has determined that, upon request, ‘‘* * * [EEO-1 re-
ports] which [are] submitted by contractors to
the OFCC[P] [or] a compliance agency * * * shall be
disclosed.’’ 41 C.F.R. 60-40.4. The Secretary also has
determined that affirmative action plans generally
‘‘must be disclosed.’’ 41 C.F.R. 60-40.2(b)(1). But
the regulations contain exceptions for two specified
portions of AAP’s, which ‘‘should be withheld if it is
determined that the requested inspection or copying
does not further the public interest and might impede
the discharge of any of [OFCCP’s or the compliance
agencies’] functions.’’ 41 C.F.R. 60-40.3(a). The por-

6

tions of AAP’s that are subject to withholding include
‘‘goals and timetables which would be confidential
commercial or financial information because they in-
dicate, :.nd only to the extent that they indicate, that a
contractor plans major shifts and changes in his per-
sonnel requirements and he has not made this informa-
tion available to the public’’ (41 C.F.R. 60-40.3(a) (1) )
and ‘‘information on staffing patterns and pay scales
but only to the extent that [its] release would [inter
alia] injure the business or financial position of the
contractor * * *’’ (41 C.F.R. 60-40.3(a)(2)). These
portions of AAP’s are to be withheld as provided in
the regulations, but ‘‘only after receiving verification
and a satisfactory explanation from the contractor that
the information should be withheld.’’ 41 C.F.R. 60-40.3
(a)(1).

2. The compliance agency for all of the respondents
here is the Defense Supply Agency (DSA), a com-
ponent of the Department of Defense. In 1973, DSA
received requests from various members of the public
for the disclosure of certain EEO-1’s and AAP’s sub-
mitted to the agency by respondents.’ The proceedings

*A request for the 1972 HEO-1 for respondent Westinghouse
Electric’s facility in East Pittsburgh, Pennsylvania, was filed by
Concerned Workers (a public interest group); a request for the
1972 AAP of respondent Fraser & Johnston Company, a wholly-
owned subsidiary of Westinghouse Electric, was submitted by the
Legal Aid Society of Alameda County. A disclosure request for
various AAP’s and EEO-1’s of respondent General Motors was
submitted by Reuben Robertson, III, and separate disclosure re-
quests for the EEO-1’s and AAP’s filed by respondent United
States Steel were made by the Commission for Human Relations
of Gary, Indiana, and by James Davis, Chairman, Civil Rights

7

with respect to each request followed the same general
pattern. Each respondent was advised that a request
for disclosure of its AAP’s and EEO-1’s had been
received and was given the opportunity to demonstrate,
prior to release, that any portion of the documents
should not be disclosed. DSA requested that respon-
dents submit detailed reasons to support any claim that
the information should be withheld.

Respondents submitted objections to disclosure, each
claiming essentially that the documents should be
withheld because they contained confidential corporate
proprietary information, the release of which would
adversely affect their business interests. After review-
ing respondents’ submissions, DSA concluded that dis-
closure of most of the information requested was war-
ranted under OFCCP’s disclosure regulations, 41
C.F.R. Part 60-40. Specifically, DSA determined that
disclosure of the EEO-1 reports was required by 41
C.F.R. 60-40.4 and that disclosure of substantial por-
tions of the AAP’s was required by 41 C.F.R. 60-40.2
(b)(1). DSA concluded, however, that certain por-
tions of the AAP’s should be withheld from disclosure
under 41 C.F.R. 60-40.3(a).°

Before any information was released, respondents
were given further opportunity to convince the agency

Commission, Local Union 1462, United Steelworkers Union, on
behalf of the Youngstown Urban League.

®In general, the proposed deletions concerned wage data, sal-
ary rates, promotion analyses that would identify individual em-
ployees, projections of hiring or lay-off rates that would indicate
substantial changes in business patterns, and the reasons for ter-
minating the employment of specific individuals,

eee eS

8

to withhold disclosure. After considering additional
submissions and, in some cases, meeting directly with
representatives of respondents, DSA made its final
determination to disclose.

3. Respondents thereupon filed separate suits in the
United States District Court for the Eastern District
of Virginia, seeking to enjoin the contemplated dis-
closure. The suits brought by respondents General
Motors and United States Steel were consolidated for
trial. The suit brought by respondent Westing-
house Electric proceeded independently. The claims
of all three respondents were virtually identical: that
disclosure was barred, inter alia, by exemptions 3 and
4 of the Freedom of Information Act (‘‘FOIA’’), 5
U.S.C. 552(b)(3) and (4),’ as well as by 18 U.S.C.
1905,* and that release of such documents would con-
stitute an abuse of discretion.’

In the Westinghouse Electric case, the district

* These exemptions provide that the requirement of mandatory
disclosure in the FOIA ‘‘does not apply to matters that are—* * *
(3) specifically exempted from disclosure by statute * * * [or to]
(4) trade secrets and commercial or financial information obtained
from a person and privileged or confidential * * *.’’ See App. E,
infra, p. 82a.

®18 U.S.C. 1905 provides that ‘‘[w]hoever, being an * * * em-
ployee of the United States * * * discloses * * * in any manner or
to any extent not authorized by law any information coming to him
* * * which information concerns or relates to the trade secrets,
processes, operations [ete.] * * * of any * * * firm * * * shall be fined
not more than $1,000, or imprisoned not more than one year, or both ;
and shall be removed from office or employment.’’ See App. E, infra,
pp. 82a-83a.

* Respondents also claimed that disclosure was barred by 42
U.S.C. 2000e-8(e). Respondents United States Steel and Westing-
house Electric additionally claimed that the documents were pro-
tected under exemption 7 of the FOIA.

9

court permanently enjoined petitioners from releasing
specific portions of the AAP’s and EEO-1’s at issue
(App. B, infra, p. 66a). Relying upon testimony taken
at a de novo trial, the district court found that certain
specified portions of the documents ‘‘contain com-
mercial or financial information which is confidential’’
(App. B, infra, p. 62a) and that ‘‘the disclosure of
{those portions] of the EEO-1[’s] and AAPj’s] is
prohibited by the exemption contained in 5 U.S.C.
502(b)(4) * * *’’ (App. B, infra, p. 62a). The court also
indicated that disclosure of portions of the documents
was prohibited by 18 U.S.C. 1905 and that respondents
could ‘‘invoke this statute to prevent the Government
from disclosing information to a third party * * *”’
(App. B, infra, p. 64a).”°

A few months after the decision of the district court
in Westinghouse Electric, judgment was entered in
the consolidated General Motors and United States
Steel cases. The district court in those cases adopted
‘fin toto’’ the opinion of the court in Westinghouse
Electric and, after viewing the documents in issue, held
that certain portions of them could not be disclosed
(App. C, infra, pp. 70a-73a).

On consolidated appeals by all parties, the court of
appeals affirmed (App. A, infra, p. 57a). The court
of appeals stated that ‘‘disclosure of * * * exempt infor-
mation is ordinarily discretionary with the agency
[b]Jut the exercise of this discretionary power is subject
to the restraints imposed by other ‘statutes * * *’ and to
any clear declarations of a legislative policy against

© The court rejected Westinghouse Electric’s claim that disclosure
of all parts of the documents was prohibited by exemption 7 (App.
B, infra, p. 65a).

SE ——EE—————

10

disclosure as reflected in an exemption of the [Free-
dom of Information] Act * * *’’ (App. A, imfra, p.
12a). The court held that under this general prin-
ciple respondents were entitled to an injunction bar-
ring any disclosure that would violate 18 U.S.C. 1905
(App. A, infra, p. 41a)." In the alternative, the court
of appeals held that exemption 4 provided the supplier
of confidential commercial or financial information
with an absolute right to have such information with-
held from the public, and that ‘‘the FOTIA itself * * *
confers on a supplier of private information, an im-
plied right to invoke the equity jurisdiction to enjoin
the disclosure of information within Exemption 4’’
(App. A, infra, pp. 41a-42a; emphasis in original).”
The court also ruled that respondents were entitled to
a trial de novo in the district court on the question
whether the information in question fell within either
18 U.S.C. 1905 or exemption 4 (App. A, infra, pp. 53a-
54a ; see id. at 50a-51a).”

On the merits, the court of appeals, without discus-
sing the OFCCP regulations that authorized disclosure,

‘1 The court was of the view that 18 U.S.C. 1905 was compre-
hended by exemption 3 of the FOIA, and thus that information
within its coverage was both exempt from mandatory disclosure
under the FOIA and nondisclosable (App. A, infra, pp. 14a, 26a).

12 The court stated that the standard of confidentiality of exemp-
tion 4 and Section 1905 were the ‘‘same’’ or ‘‘co-extensive’’ (App.
A, infra, pp. 27a, 36a). The standard of confidentiality adopted by
the court was whether disclosure was likely to cause respondents
substantial competitive injury (App. A, infra, p. 27a).

The court rejected the argument that respondents’ judicial
remedy was limited to the review provisions of the Adminis-
trative Procedure Act (APA), 5 U.S.C. 701 et seq., but the court
concluded that even if review were available only under the APA,
the procedure followed by the district courts here ‘‘was free from
error’’ (App. A, infra, p. 38a).

11

held that the findings of the district court that por-
tions of the EEO-1 reports and AAP’s in question
were within exemption 4 and 18 U.S.C. 1905 were not
clearly erroneous (App. A, infra, p. 57a). The court
sustained the injunctions against disclosure of those
portions of the reports (App. A, infra, p. 57a).

REASONS FOR GRANTING THE PETITION

These cases are representative of a steadily increas-
ing number of so-called ‘‘reverse FOLA”’ suits by pri-
vate parties seeking to enjoin the federal government
from complying with FOIA requests.” Such cases
raise important questions concerning the purpose of
the Freedom of Information Act, its use by private
parties to obtain judicial relief against the disclosure
of information, and the role of the executive branch in
discharging the legislative directive, affirmatively ex-
pressed in the Act, to permit the ‘‘fullest responsible
disclosure.’’ The court of appeals below, by disregard-
ing, and thereby implicitly rejecting, regulations au-
thorizing the disclosure of exempt materials, seriously
misconstrued the language and purpose of the Freedom
of Information Act. The court’s holding that the
executive branch lacks any power to disclose exemption
4 materials conflicts with Charles River Park “‘A,”’

** The court of appeals, however, rejected respondents’ conten-
tions that disclosure of their AAP’s and EEO-1’s, in their entirety,
was prohibited by 42 U.S.C. 2000e-8(e) (App. A, infra, pp. 16a-
17a), or that the documents were exempt from disclosure under ex-
emption 7 of the FOIA (App. A, infra, pp. 15a-16a, n. 20).

* During 1976, at least 78 reverse FOIA suits were brought
against the government.

ee

12

Inc. v. Department of Housing and Urban Develop-
ment, 519 F. 2d 935 (C.A.D.C.), and Pennzoil Co. v.
Federal Power Commission, 534 F.2d 627 (C.A. 5),
both of which recognized the existence of discretion to
disclose. Furthermore, in holding that the district
courts may appropriately conduct trials de novo to
review an agency’s determination to disclose, the court
of appeals erroneously departed from the settled rule,
often confirmed by this Court, that review of agency
action under the Administrative Procedure Act is to
be based upon the administrative record.

1. These cases originated with determinations by the
Director of the Defense Supply Agency to comply
with requests, made under the Freedom of Information
Act, for disclosure of certain equal employment op-
portunity reports and affirmative action plans sub-
mitted to it by respondents. Those determinations were
made pursuant to regulations specifically requiring
disclosure, in compliance with such requests, of EEO-1
reports and, upon a finding of nonconfidentiality,”* of
AAP’s as well. 41 C.F.R. 60-40.1 et seq. If, as we sub-
mit, those regulations are valid, the courts below would
have been required to affirm the decision to disclose
respondents’ EEO-1 reports, and their review of the
decision to disclose respondents’ AAP’s would have
been limited to a determination whether those materials
were exempt from mandatory disclosure under the

‘In the interest of brevity, we use the expression ‘‘finding of
nonconfidentiality’’ as a shorthand summarization of the deter-
minations with regard to the public interest, competitive injury,
confidentiality, ete., that must be made in connection with a de-
cision to disclose AAP’s. See pp. 5-6, supra.

13

FOIA and, if so, of the correctness of the agency’s
finding of nonconfidentiality.

The regulations authorizing disclosure of the mate-
rials at issue here are valid. The court of appeals did
not give explicit consideration to those regulations, but
its holding that the government may not disclose in-
formation within exemption 4 of the Freedom of In-
formation Act constitutes an implicit rejection of
them.”

The court’s holding in this regard reflects a mis-
understanding of the FOIA. The FOIA is a broadly
conceived statute whose ‘‘basic policy’’ and ‘‘dominant
objective’’ is ‘‘disclosure, not secrecy.’’ Department of
the Air Force v. Rose, 425 U.S. 352, 361. When Con-
gress enacted the Act, it was ‘‘plac[ing] emphasis on
the fullest responsible disclosure.’’ S. Rep. No. 813,
89th Cong., Ist Sess. 3 (1965). Thus the exemptions
under that Act only permit, they do not require, the
government to refuse disclosure of information.
Charles Rwer Park “‘A’’, Inc. v. Department of Hous-
ing and Urban Development, supra, 519 F. 2d at 941;
Pennzoil Co. v. Federal Power Commission, supra, 534
F. 2d at 629-631. The approach taken by the court
below therefore is inconsistent with that taken in simi-
lar reverse FOIA cases by the courts in Charles River
Park and Pennzoil.”

7 The court of appeals discussed a Department of Labor regula-
tion, 29 C.F.R. 70.21(a), which prohibits any employee of the De-
partment from disclosing certain records ‘‘in any manner or to
any extent not authorized by law’’ (App. A, infra, pp. 24a-25a).
But disclosure by the OFCCP of the documents at issue here was
made pursuant to the authority granted by 41 C.F.R. Part 60-40.
The court of appeals’ reliance upon 29 C.F.R. 70.21(a) as a
ground for enjoining disclosure therefore was misplaced.

** It is unclear, however, whether the decision below conflicts with

14

Furthermore, nothing in the FOIA forbids dis-
closure. The exemptions, while an important compo-
nent of the Act, merely describe ‘‘the types of informa-
tion that the Executive Branch must have the option
to keep confidential, if it so chooses.’’ Environmental
Protection Agency v. Mink, 410 U.S. 73, 80. Disclosure
of exempt material is left to the discretion of the of-
ficials administering the Act:

Congress did not intend the exemptions in the
FOIA to be used either to prohibit disclosure of
information or to justify automatic withholding of
information. Rather, they are only permissive.
They merely mark the outer limits of information
that may be withheld where the agency * * * deter-
min[es] * * * that the information should be with-
held. [S. Rep. No. 93-854, 93d Cong., 2d Sess. 6
(1974) ; emphasis in original. ]

Congress understood and intended that discretion to
disclose exempt materials could be exercised pursuant
to regulations such as those promulgated by the Sec-
retary of Labor authorizing disclosure here. In con-
sidering the 1974 amendments to the Act, Congress ex-
pressed approval of agency regulations that provide
for the discretionary disclosure of exempt information,
including commercial vr financial information within

Charles River Park and Pennzoil in final result. The courts in those
cases held that disclosure decisions could be reviewed for abuse of
discretion, and the court in Charles River Park indicated that, at
least in most circumstances, disclosure of material of the kind
described in 18 U.S.C. 1905 would be an abuse of discretion. 519
F. 2d at 542, 543 n. 10. However, there is no suggestion that the
court in Pennzoil would have barred disclosure here.

15

exemption 4. See S. Rep. No. 93-854, supra, at 6.”
The Senate Committee stated that ‘‘[t]his approach
was clearly intended by Congress in passing the
FOIA’’. Ibid. See also H.R. Rep. No. 93-876, 93d
Cong., 2d Sess. 4 (1974); H.R. Rep. No. 92-1419, 92d
Cong., 2d Sess. 7, 13-17 (1972). And see General Serv-
ices Administration v. Benson, 415 F. 2d 878 (C.A. 9).
Cf. Federal Communications Commission v. Schreiber,
381 U.S. 279; Utah Fuel Co. v. National Bituminous
Coal Commission, 306 U.S. 56. But see Charles River
Park “‘A’’, Inc. v. Department of Housing and Urban
Development, supra.

The controlling regulations here implement Con-
gress’ intention under the FOIA to afford ‘‘the fullest
responsible disclosure.’’ Under the regulations, dis-
closure generally is predicated upon a determination
that it would ‘‘further[] the public interest and * * *
not impede any of the functions of the OFCC[P] or
the Compliance Agencies * * *.’’ 41 C.F.R. 60-40.2(a).
But the regulations also give recognition to the com-
petitive interests of government contractors by requir-
ing the agency to determine whether ‘‘release would
injure the business or financial position of the con-
tractor * * *.’’ 41 C.F.R. 60-40.3(a) (2); see generally
41 C.F.R. 60-40.3(a). These regulations are reasonable
and should have been sustained by the court of appeals.

* The committee report commented favorably upon 43 C.F.R. 2.2
(Department of Interior), 45 C.F.R. 5.70 (Department of Health,
Education, and Welfare), 24 C.F.R. 15.21 (Department of Housing
and Urban Development), 49 C.F.R. 7.51 (Department of Transpor-
tation), all of which provide for the disclosure of exempt informa-
tion. See also, e.g., 28 C.F.R. 16.1(a) (Department of Justice) ; 10
C.F.R. 9.10(¢) (Nuclear Regulatory Commission) ; 40 C.F.R. 2.101
(Environmental Protection Agency).

16

Insofar as the decisions to disclose respondents’ EEO-1
reports and AAP’s were authorized by the regulations,
they also should have been sustained.

The court of appeals nevertheless held that disclosure
was barred by 18 U.S.C. 1905 (App. A, infra, p. 41a).
That criminal statute forbids disclosure by government
officials of certain documents ‘‘in any manner or to
any extent not authorized by law * * *’’ (see App. E,
infra, pp. 82a-83a).” But, unless the agency erred in its
finding of nonconfidentiality with regard to the AAP’s,
disclosure here was ‘‘authorized’’ by the Department
of Labor regulations. Since validly promulgated regu-
lations have the force of law (see Public Utilities Com-
mission of California v. United States, 355 U.S. 534,
542-543; ef. Service v. Dulles, 354 U.S. 363), they
satisfy the authorization requirement of 18 U.S.C. 1905.
Cf. Smith v. United States, 305 F. 2d 197, 201-202
(C.A. 9); Laughlin v. United States, 474 F. 2d 444, 453,
n. 12 (C.A. D.C.), certiorari denied, 412 U.S. 941.”

2° The disclosure of information that is not exempt from manda-
tory disclosure under the FOIA is ‘‘authorized’’ by the FOIA. The
court of appeals here held, however, that 18 U.S.C. 1905 is an ex-
emption 3 statute (see note 11, supra). See Administrator, Federal
Aviation Administration v. Robertson, 422 U.S. 255. But see H.R.
Rep. No. 94-1178, 94th Cong., 2d Sess. 14 (1976) ; National Parks
and Conservation Association v. Kleppe, No. 76-1044, decided No-
vember 15, 1976 (C.A.D.C.) (slip op. 26-28). As we argue immedi-
ately below, whether or not the materials here are exempt from man-
datory disclosure, disclosure of the information is ‘‘authorized’’ by
41 C.F.R. Part 60-40. Accordingly, the question whether 18 U.S.C.
1905 is an exemption 3 statute need not be reached in this case.

21 The term ‘‘authorized by law’’ in 18 U.S.C. 1905 and its prede-
cessor statutes (see 15 U.S.C. (1940 ed.) 176b; 19 U.S.C. (1940
ed.) 1335; 18 U.S.C. (1940 ed.) 216; R.S. 3167, 28 Stat. 557; 13
Stat. 238) has been broadly construed. See, e.g., Blair v. Oesterlein
Company, 275 U.S. 220, 227 ; United States v. Dickey, 268 U.S. 378;
Exchange National Bank v. Abramson, 295 F. Supp. 87 (D. Minn.) ;

17

Thus even if the materials at issue otherwise are of
the type described in 18 U.S.C. 1905, their disclosure is
not prohibited by that statute if it is permitted by
regulation.

2. Judicial review of adverse agency action taken
pursuant to a statutory or a regulatory standard nor-
mally is governed by the APA. See, e.g., Dunlop v.
Bachowski, 421 U.S. 560; Camp v. Pitts, 411 U.S. 138;
Citiens to Preserve Overton Park v. Volpe, 401 U.S.
402.”

But the scope of review provided under the APA for
eases such as this is narrow. Indeed, once it is deter-
mined that the regulations authorizing disclosure are
valid, the agency’s determination to disclose EEO-1
reports would be essentially unreviewable: the regula-
tions affirmatively require disclosure of all EEO-1 re-
ports upon request, and a reviewing court could do no
more than ascertain whether the materials to be dis-

ef. Consumers Union v. Cost of Living Council, 491 F. 2d 1396
(T.E.C.A.), certiorari denied sub nom. Business Roundtable v.
Consumers Union, 416 U.S. 984. While the early origins of the
statute have obscured its principal purpose, it was most likely
designed to prevent government officials from taking advantage of
their official position to sell or otherwise make public confidential
business data. We do not believe it was intended to operate to in-
hibit an agency from disclosing such information in connection with
valid program or policy objectives. See 41 Op. Atty. Gen. 166, 169
(1952) (‘‘authorized by law’’ includes ‘‘authorized in a general
way by law’’).

** The exceptions to judicial review (see 5 U.S.C. 701) do not ap-
pear to be applicable here. In the court of appeals, the government
argued that respondents’ suits were barred by sovereign immunity.
But Congress since has amended the APA to provide that its judi-
cial review provisions waive sovereign immunity in cases seeking
declaratory or injunctive relief. Pub. L. 94-574, 90 Stat. 2721.

Se

18

closed were in fact such reports. The scope of review
of a decision to disclose AAP’s would be only slightly
broader: the court would determine whether the
agency’s conclusion that the materials were disclosable
under the regulatory standard was ‘‘arbitrary, caprici-
ous, an abuse of discretion, or otherwise not in accord-
ance with law.’’ 5 U.S.C. 706(2) (A).

As a matter of course, such review would be on the
basis of the administrative record. ‘‘[T]he focal point
for judicial review should be the administrative record
already in existence, not some new record made initially
in the reviewing court.’’ Camp v. Pitts, supra, 411
U.S. at 142. See also Citizens to Preserve Overton
Park v. Volpe, supra, 401 U.S. at 415-416.

Respondents were notified of the FOIA requests for
the documents they had furnished in connection with
their government contracts, they were informed of the
exact documents subject to the request, and they were
afforded a full opportunity to submit materials in sup-
port of their claim that the documents should not be
disclosed. See pp. 6-8, supra. The record in these
eases thus provided an adequate basis upon which to
undertake an assessment of the agency’s determina-
tions to disclose. Accordingly, the court of appeals
plainly erred in approving the district court’s de novo
review of those determinations.”

7° The court of appeals approved de novo review on the theory
that respondents’ suits were based upon implied causes of action
under exemption 4 and 18 U.S.C. 1905. That theory fails for two
separate reasons. If, as we have argued, the disclosure regulations
here are valid, a fortiori respondents had no residual right to non-
disclosure under either exemption 4 or 18 U.S.C. 1905; in that event

19

CONCLUSION

The petition for a writ of certiorari should be
granted.

Respectfully submitted.

DANIEL M. FRIEDMAN,
Acting Solicitor General.

BARBARA ALLEN BABCOCK,
Acting Assistant Attorney General.

STEPHEN L. URBANCZYK,
Assistant to the Solicitor General.

LEONARD SCHAITMAN,
Pau. BLANKENSTEIN,
Attorneys.

FEBRUARY 1977.

respondents’ rights to nondisclosure are measured solely by the dis-
closure regulations, and review of a determination to disclose is
available only under the APA for the reasons discussed above. On
the other hand, if the disclosure regulations are invalid, it could
only be because respondents have a statutory right to nondisclosure
with which those regulations conflict ; in that event, a determination
to disclose would ‘‘ adversely affect or aggrieve’’ respondents within
the meaning of 5 U.S.C. 702, for that reason they would be entitled
to APA review of the agency determination, and therefore there
would be no need to infer an independent right of action under
some other statute. Cf. Cort v. Ash, 422 U.S. 66; Securities Investor
Protection Corp. v. Barbour, 421 U.S. 412; National Railroad
Passenger Corp. v. National Association of Railroad Passengers, 414
U.S. 453.

APPENDIX A

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 74-1801

WESTINGHOUSE ELectric Corp. AND Its SvUBSIDIARY,
FRASER & JOHNSTON CO? PANY, APPELLEES,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. S. DEPARTMENT
oF Derryse; Lt. Gen. WALLACE Ropinson, DIREcTOR,
DEFENSE SuppPLy AGENCY; Pump J. Davis, Director,
OFFICE OF FEDERAL CONTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR,
APPELLANTS,

CONCERNED WorKERS, Ropert Woo.ey, LecaL Am
SocrETy OF ALAMEDA CouUNTY, AND COUNCIL ON
ECONOMIC PRIORITIES, INTERVENOR-DEFENDANTS.

No. 74-1802
WESTINGHOUSE ELECTRIC CORPORATION AND Its Sus-
SIDIARY, FRASER & JOHNSTON CO., APPELLANTS,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. 8S. DEPARTMENT
oF DeFrense; Lt. GEN. WALLACE Rosrnson, DIrecror,
DEFENSE SuppLy AGENCY; PHiwr J. Davis, Director,

la

2a

OFFICE OF FEDERAL CONTRACT COMPLIANCE; PETER J.
BRENNAN, SECRETARY, DEPARTMENT OF LABOR; AND Con-
CERNED WorKERS, Ropert Woo.ey, LecaL Arp Society

or ALAMEDA Co., CouNciL ON Economic PRIORITIES,
APPELLEES.

No. 74-1803

WESTINGHOUSE ELECTRIC CORPORATION AND Its Sus-
SIDIARY, FRASER & JOHNSTON CO., APPELLEES,

—versus—

JAMES R. ScCHLESINGER, SECRETARY, U. 8S. DEPARTMENT
oF Drerense; Lt. Gen. WALLACE Roprnson, DIREcToR,
DrEFENSE SuppLy AGENcY; Puiuip J. Davis, Director,
OFFICE OF FEDERAL ConTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR,
DEFENDANTS,

CONCERNED WorKERS, Rospert Woo.Ley, LeaaL AID
Socrery or ALAMEDA CouNTY, AND COUNCIL ON
EconoMIc PRIORITIES, APPELLANTS.

No. 74-2047

WESTINGHOUSE ELectTRIC Corp. AND Its SUBSIDIARY,
FRASER & JOHNSTON COMPANY, APPELLEES,

—versus—

JAMES A. SCHLESSINGER, SECRETARY, U. S. DEPARTMENY
OF DEFENSE; WALLACE Roprnson, Director DEFENSE

3a

Suppty Agency; Pump J. Davis, Director, OFFICE
oF FEDERAL CONTRACT COMPLIANCE; PETER J. BRENNAN,
SECRETARY, DEPARTMENT OF LABOR, DEFENDANTS.

CONCERNED WorKERS, Rospert Woo.ey, LecaL Am
Socrety oF ALAMEDA Co., CouNcrIL ON EconoMICc
PRIORITIES, INTERVENORS-APPELLANTS.

No. 74-2048
WESTINGHOUSE ELEcTRIC Corp. AND Its SUBSIDIARY,
FRASER & JOHNSTON COMPANY, APPELLEES,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. S. DEPARTMENT
OF DEFENSE; WALLACE Rosrnson, DrrectoR DEFENSE
Suppty Agency; Pamir J. Davis, Drrector, OFFICE
oF FEDERAL CONTRACT COMPLIANCE; PETER J. BRENNAN,
SECRETARY, DEPARTMENT OF LABOR, APPELLANTS,

CONCERNED WorKERS, Rospert Woo.ey, LecaL AID
Society oF ALAMEDA Co., CouNcIL ON ECONOMIC
PRIORITIES, DEFENDANT-INTERVENORS.

Appeals from the United States District Court for the
Eastern District of Virginia, at Alexandria. Albert V.
Bryan, Jr., District Judge.

No. 75-1268

Unitep States STEEL CORPORATION, APPELLANT,
—versus—

JAMES R. ScHLESINGER, SECRETARY, UNITED STATES
DEPARTMENT OF DEFENSE; Lt. GEN, WALLACE ROBINSON,

ta

Drrector, DereNse Supp.ty AcEeNcy; Pump J. Davis,

Director, OFFICE OF FEDERAL CoNTRACT COMPLIANCE;

AND Perer J. BRENNAN, SECRETARY, UNITED STATES
DEPARTMENT OF LABOR, APPELLEES.

No. 75-1269
Unirep States STEEL CORPORATION, APPELLEE,
—versus—

James R. ScHLEsINGER, SECRETARY, UNITED STATES
DEPARTMENT OF DEFENSE; Lt. GEN. WALLACE ROBINSON,
Director, DEFENSE Suppty AceNcy; Purip J. Davis,
Director, OFFICE OF FrepERAL CONTRACT COMPLIANCE;
AND Perer J. BRENNAN, SECRETARY, UNITED STATES
DEPARTMENT OF LABOR, APPELLANTS.

No. 75-1270

GENERAL Motors CoOPORATION, APPELLANT,
—versus—

JameEs R. ScHLESINGER, SEcRETARY, U. S. DEPARTMENT
or DEFENSE; Lr. GEN. WALLACE Rosinson, Director,
DeEreNnsE SuppLy AGENCY; Pur J. Davis, Director,
OFFICE oF FepERAL ConTRACT COMPLIANCE; AND PETER

J. BRENNAN, SECRETARY, DEPARTMENT OF LABOR,
APPELLEES.

5a
No. 75-1271

GENERAL Motors CoRPORATION, APPELLEE,

—versus—

JAMES R. SCHLESINGER, SEcRETARY, U. S. DEPARTMENT
OF DEFENSE; Lt. Gen. Wa.LLAceE Rosinson, Director,
DereNnse SuppLy Acency; Pair J. Davis, Director,
OFFICE OF FEDERAL ConTRACT COMPLIANCE; AND PETER

J. BRENNAN, SECRETARY, DEPARTMENT OF LaBoR,
APPELLANTS.

Appeals from the United States District Court for the
Eastern District of Virginia, at Alexandria. Oren R.
Lewis, District Judge.

Argued: December 4, 1975. Decided: Sept. 30, 1976

Before RUSSELL and WIDENER, Circuit Judges,
and THOMSEN, Senior District Judge.*

RUSSELL, CIRCUIT JUDGE:

The plaintiffs in these three actions are government
contractors, seeking injunctive and declaratory relief
against the disclosure of certain information filed by
them with the Office of Federal Contract Compliance

* Sitting by designation.

6a

(OFCC), as required under regulations issued by the
Secretary of Labor pursuant to Executive Order
11,246,’ as amended by Executive Order 11,375." Two
of the actions were consolidated for trial in the District
Court,’ and heard by one judge; the third action pro-
ceeded independently in the same court and was heard
by another judge. In the three actions, however, plain-
tiffs were granted similar partial protection from dis-
closure of the information in question.‘ The defendants
appeal from the denial of the motions to dismiss and to
the grant of any relief herein; the plaintiffs cross-
appeal from the denial of protection from disclosure of
all the material filed by them under the requirements
of the Executive Orders. All three cases involve, so

The OFCC was given the authority to ‘‘adopt such rules and
regulations and issue such orders as * * * necessary and appro-
priate to achieve the purposes thereof.’’ § 201, Executive Order
11,246.

2 The text of Executive Order 11,246, as amended by Executive
Order 11,375, is set forth in 3 C.F.R. 169-177, (1974).

3 The action by General Motors against the defendants were con-
solidated and tried with United States Steel and any reference to the
United States Steel case covers the General Motors case as well.

* Westinghouse Electric Corporation v. Schlesinger (E.D. Va.
1974) 392 F. Supp. 1246; United States Steel Corp. v. Schlesinger
(E.D. Va. 1974) 34 Ad. L. 2d 790.

The two opinions, though, rendered by different judges of the
same court, were, for all practical purposes, identical and any
reference to ‘‘court’’ hereafter in the opinion is to the opinions and
decisions of both judges.

The cases themselves are reviewed in detail in O’Reilly, Govern-
ment Disclosure of Private Secrets Under the Freedom of Informa-
tion Act, 30 Bus. Lawyer 1125, 1139-41 (1975), and see, also, discus-
sion in Note, Developments Under the Freedom of Information
Act-1974, 1975 Duke L.J. 416 at 428-9.

7a

far as material, like facts and like legal issues. For
this reason, we have consolidated them on appeal and
dispose of them in this opinion.

We affirm.

The information, the disclosure of which is the sub-
ject of controversy, was supplied under the provisions
of an Executive Order, and the regulations issued
thereunder, which required a government contractor,
such as the plaintiffs, to file, with respect to any plant
or facility engaged in performing work under a govern-
ment contract, an Affirmative Action Program (AAP)
and an Equal Employment Opportunity Report
(EEO-1). These reports are to be filed with the con-
tracting agency having responsibility for the contract.
They are to include extensive information on staffing
patterns, pay scales, actual and expected shifts in em-
ployment, promotions, seniority and related matters
as well as forecasts of future employment, goals, time-
tables and future employment projections, promotion
and utilization of minorities and females. They em-
brace, also, an analysis of the employer’s success in
meeting such goals. All the plaintiffs filed such reports.
The reports of the plaintiff United States Steel covered
its Youngstown, Ohio plant, and the American Bridge
Division plant at Gary, Indiana; the reports of the
plaintiff General Motors dealt with its plants at
Danville, Illinois, and Bedford, Indiana; and the plain-
tiff Westinghouse filed reports with respect to its plant
at East Pittsburgh, Pennsylvania, and its Fraser &
Johnston Co. subsidiary plant at San Lorenzo, Cali-
fornia. In submitting such reports, all the plaintiffs
did so under a claim of confidentiality. The reports,

8a

prepared on Standard Form 100, bore the following
governmental promise or guarantee of confidentiality :
‘‘TA]ll reports and information obtained from in-
dividual reports will be kept confidential as required
by Section 709(e) of Title VII.’’*

Third parties made requests of the defendants for
disclosure under the Freedom of Information Act
(FOIA)* of the AAP’s and EEO-1’s filed with them
by the several plaintiffs. The defendants advised the
plaintiffs of the requests and of a preliminary determi-
nation that the FOIA’s and OFCC’s disclosure rules
required that the requested material, with certain
identified deletions, be made available, but that before

*In Legal Aid Society of Alameda County v. Shultz (N.D. Cal.
1972) 349 F. Supp. 771, 776, the Court held that ‘‘administrative
promises of confidentiality cannot extend the command of the
Freedom of Information Act that only matters ‘specifically ex-
empted from disclosure by statute’ are protected under § 552
(b)(3)’’ (Italies in opinion). Cf., however, 3A.19 Davis, Admims-
trative Law Treatise, pp. 150-1 (1970 Supp.).

In Robles v. Environmental Protection Agency (4th Cir. 1973)
484 F.2d 843, 846, we reached the same result as did the Court in the
Shultz Case.

Since Shultz, the defendants have conceded that their promise of
confidentiality is unavailing if the matter sought to be discovered
is not exempted from disclosure by the terms of § 552 itself. Sup-
pose, however, the material does fall within an exemption and that
disclosure under the particular exemption is discretionary with the
agency, has the agency by its promise of confidentiality foreclosed
itself from the exercise of any discretion to disclose and obligated
itself to respect the confidentiality? See Davis, The Information
Act: A Preliminary Analysis, 34 U.Chi.L.Rev. 761 at 787-92
(1967); Note, The Freedom of Information Act: A Seven-Year
Assessment, supra, 74 Colum. L.Rev. at 948-50. Since the District
Court, however, did not predicate its decision on any such point, we
see no occasion to consider this point.

°5 U.S.C. § 552.

9a

the information would be released, the plaintiffs would
be afforded an opportunity to present any claim that
the information requested was exempt from disclosure
under the FOIA and the appropriate administrative
regulations. The plaintiffs submitted their objections
to the disclosure, claiming that the requested informa-
tion was not disclosable under the terms of 5 U.S.C.
592(b)(3), (4), (6) and (7), 18 U.S.C. § 1905, and 42
U.S.C. § 2000e-8(e), as well as 41 C.F.R. 60-1.1, et seq.
of the Department of Labor’s own regulations.’ The
defendants responded by advising the plaintiffs that
under the FOLA and the regulations issued thereunder,
the defendants were obliged, absent judicial interven-
tion, to release the information, subject to certain speci-
fied deletions. These actions to enjoin, and for a declar-
atory judgment that the material was exempt under
the FOIA, and disclosure thereof forbidden under
applicable statutes and regulations, followed. The Dis-
trict Court, finding federal jurisdiction under § 1331,
28 U.S.C., granted injunctive relief but denied a declar-
atory judgment. In reaching its conclusion, the court
made, among others, this finding of fact:

‘*This Court finds from the evidence presented
that the AAPs and EEO-1s in question contained
confidential commercial or financial information

* Exemptions 3 and * which are the only exemptions later found
to be appropriate, are as follows:
‘*(b) This section does not apply to matters that are-
. * >

(3) specifically exempted from disclosure by statute ;
(4) trade secrets and commercial! or financial information ob-
tained from a person and privileged or confidential.’’

10a

which would not customarily be released to the
public by the corporate plaintiffs, and that such
information would be of substantial value to the
plaintiff’s competitors in performing cost-price
analyses of plaintiffs’ pricing practices, in moni-
toring plaintiffs’ development of new products and
processes, in identifying plaintiffs’ customers in
their consumption needs, in analyzing plaintiffs’
production by product line, and in developing com-
petitive bidding strategies to be used against the
plaintiffs; and that disclosure of this information
would both impair the Government’s ability to
obtain necessary information for its administra-
tion of the Executive Orders and Title 7 of the
Civil Rights Act and would cause substantial harm
to the competitive position of the plaintiffs.’’ *

The decision of the District Court enjoining disclo-
sure herein rests to a substantial extent on a construc-
tion of the FOIA.’ This statute mandates the release

® This finding was made in the cases of United States Steel and
General Motors v. Schlesinger, supra, but is similar to the finding
of fact made in the Westinghouse case.

* § 552, 5 U.S.C.

The construction of the Act is complicated not only by the lan-
guage of the Act itself but by its legislative history as well. Profes-
sor Levin, in his article, /n Camera Inspections Under the Freedom
of Information Act, 41 U. Chi. L. Rev. 557, ns. 9 and 10 (1974),
quotes ‘‘ Professor Kenneth Culp Davis, the Act’s most influential
commentator” to the effect that the Act is a ‘‘shabby product’’ and
adds that ‘‘{i]nterpretation of the Act is complicated by the fact
that the House and Senate committee reports on the Act contradict
each other in many particulars, and in some instances contradict the
statutory language itself.’’

This ambiguity in the language of the Act and in its legislative

lla

by public officials of information in their custody, sub-
ject to certain exemptions specifically enumerated in
the Act itself.° If the information sought to be dis-

history, the author points out, has been productive of much of the
litigation under the Act.

It has been stated that these exemptions ‘‘constitute in the
aggregate a substantial withdrawal of the public’s right of access to
information.’’ Note, The Freedom of Information Acts A Seven-
Year Assessment, 74 Colum. L. Rev. 895, 929 (1974).

The reason for including them in the Act was that, ‘‘in developing
a statute providing greater citizen access to agency information,
Congress recognized the necessity for protecting the confidentiality
of some agency information and the right of privacy of some in-
dividuals who are required to provide agencies with confidential
information. To protect these interests Congress exempted nine
eategories of information from mandatory disclosure.’’ Note,
Reverse-Freedom of Information Act Suits: Confidential Informa-
tion in Search of Protection, 70 Nw. U.L. Rev. 995 (1976).

In commenting on National Parks and Conservation Ass’n. v.
Morton (D.C.Cir. 1974) 498 F. 2d 765, which dealt with the exemp-
tions in the Act, the editor in 88 Hurv. L. Rev. 470 at 474 (1974),
said:

““* * * The Court found that the Act’s strong emphasis on
public disclosure was counterbalanced, in the nine exemptions,
by the public interest in efficient governmental operation and
by various interests of private informants in maintaining
secrecy.”’

It is often declared in the decisions construing the exemptions
that they are to be ‘‘narrowly construed.’’ Ethyl Corporation v.
Environmental Protection Agency (4th Cir. 1973) 478 F. 2d 47, 49.
But, as one writer has prudently observed, the Court, in following
this rule of construction, must ‘‘recognize that the public’s interest
in confining the breadth of the exemptions is not equally strong for
all nine provisions."’ Ibid., 41 U.Chi.L.Rev. at 564, n. 52. This
distinction is important when the request for information relates to
‘*the agency’s actions, plans, and policies’’ rather than when it re-
lates to information that has to do with the ‘‘actions, plans, and
policies’’ of private parties. Jbid., 41 U.Chi.L.Rev. at 565; Note,
A Review of the Fourth 7 csemption of the Freedom of Information
Act, 9 Akron L. R. 673, 694 (1976).

12a

closed under the Act ‘‘fall[s] within one of the Act’s
exempt categories, * * * the Act ‘does not apply’ to
such doeuments.’”’ NLRB v. Sears, Roebuck & Co.
(1975) 421 U. S. 132, 147-8; Charles River Park “A”’
Inc. v. Department of H. & U.D. (D.C.Cir. 1975) 519
F. 2d 935, 942." So far as exempt information is con-
cerned, the Act, in the ordinary situation ‘‘neither
authorizes [n]Jor prohibits the disclosure of such in-
formation,’’ and the disclosure of such exempt in-
formation is ordinarily discretionary with the agency.
But the exercise of this discretionary power is subject
to the restraints imposed by any other ‘‘statutes, rules,
and regulations’’”’ and to any clear declarations of a
legislative policy against disclosure as reflected in an
exemption of the Act itself, and, when review of an

The Act itself, § 552(b), 5 U.S.C., it would appear makes this
clear by the following provision :

‘*This section [of the FOIA] does not apply to matters that
are-’’ within the definitions of exemptions (1)-(9).

12 Moore-McCormack Lines, Inc. v. 1.7.0. Corp. of Balt. (4th Cir.
1974) 508 F. 2d 945, 950.

18 See, 70 Nw.U.L.Rev., supra, at 1011:

‘If a particular disclosure would be contrary to a policy of
the Act, [such as release in a particular case of material within
the fourth exemption] a court may properly find that an agency
‘abused its discretion’ in deciding to release the information-
an approach coupling the policy considerations of the FOIA
with the remedial provisions of the APA.’’

The editor in the Note, Protection from Government Disclosure-
The Reverse-FOIA Suit, 1976 Duke L.J. 330 at 340, expresses sub-
stantially the same thought:

‘*The cases suggest three specific approaches the reverse-FOIA
plaintiff might use once he has shown that the information in
question is FOIA exempt: he can allege (1) that disclosure of

13a

administrative decision to disclose is sought under the
APA, it is subject to reversal if arbitrary, capricious,
an abuse of discretion ‘‘or otherwise not in accordance
with law.’’"* The fact that a contrary statute will
prevent the exercise of any discretionary authority in
the agency to release exempt information follows
because it is settled that the FOLA does not repeal
directly or by implication any other statutes which may

the information in question would violate a statute; (2) that
disclosure would be contrary to agency regulations; or (3) that
disclosure would constitute an abuse of discretion.’’

In this connection, we would sharply distinguish between equit-
able jurisdiction invoked with reference to non-exempt and exempt
information. As the Court said in Freuhauf Corporation v. Internal
Revenue Service (6th Cir. 1975) 522 F. 2d 284, appeal pending,
‘‘we do not conceive that the traditional equitable powers of the
district court justify it or us in adding a tenth or eleventh exemp-
tion to the nine specifically enumerated in the Act * * *.’’ 522
F. 2d at 292. This in effect accords with our decisions in Wellman
Industries, Inc. v. N.L.R.B. (4th Cir. 1974) 490 F. 2d 427, 429,
cert. demed 419 U. S. 834 (1974), and Wellford v. Hardin (4th
Cir. 1971) 444 F. 2d 21, 25. And, as we understand Renegotiation
Board v. Bannercraft Co. (1974) 415 U.S. 1, discussed at length
infra, its reference to federal equity jurisdiction in this area is
concerned with exempt information under the FOIA. This, however,
is not the universal view. For a general discussion of the question,
see, Note, The Freedom of Information Act: A Seven-Year Assess-
ment, 74 Colum. L. Rev. 895, 911-20 (stating the case for general
equity jurisdiction for both exempt and non-exempt information) ;
Note, Developments Under the Freedom of Information Act-1974,
1975 Duke L.J. 416 at 418-27; Note, Developments Under the Free-
dom of Information Act-1975, 1976 Duke L.J. 366 at 370-2. While
not direct to this point, Department of the Air Force v. Rose (1976)
— U.S. —, might be considered as pointing in the direction that the
discretionary jurisdiction does not cover non-exempt information.

*§706(2)(A), 5 U.S.C.; Charles River Park ‘‘A’’, Ince. v.
Department of H. & U.D., supra, 519 F. 2d at 940-1; Note [bid.,
70 Nw.U.L.Rev. at 995 and 1011.

l4a

limit or restrict the disclosure of information by public
officials, and those other statutes remain in full force
and effect despite the enactment of the FOIA.” Thus
if there is some other statute or regulation which pro-
hibits the disclosure of the exempt information, there is
no agency discretion and ‘‘the [government] agencies
have no alternative but to follow the legislative man-
date’’ or agency regulation and to deny disclosure.”
This follows because, whenever disclosure of the in-
formation in question would be violative of some other

federal statute, both its exempt-character under the.

FOIA and its nondisclosability are thereby estab-
lished.” This conclusion reshlts from the Act’s own

1° FAA Administrator v. Robertson (1975) 422 U.S. 255, 265;
Moore-McCormack Lines, Inc. v. 1.7.0. Corp. of Balt. (4th Cir.
1974) 508 F. 2d 945, 950.

1® Note, Freedom of Information: The Statute and the Regula-
tion, 56 Geo.L.J. 18, 34 (1967).

Cf., also, EPA v. Mink (1973) 410 U.S. 73 at 95, note, (Stewart,
J., concurring) :

‘‘Similarly rigid is [exemption 3], which forbids dis-
closure of-materials that are ‘specifically exempted from
disclosure by statute.’ Here, * * * the only ‘matter’ to be
determined in a district court’s de novo inquiry is the
factual existence of such a statute, * * *.’’

1” Thid., 1976 Duke L.J. at 340.

In this article the editor correctly states that a FOIA-plaintiff
‘*need show only that disclosure would violate a particular federal
statute in order to prove both that the information is FOIA-exempt
and also that disclosure must be enjoined. Once it is determined
that a specific statute prohibits the disclosure of certain informa-
tion, the information is by definition exempt from mandatory dis-
closure under the statutory exemption of the FOIA. At the same
time, disclosure which would violate a statute may be enjoined
under the APA as agency action which is ‘not in accordance with
law.’ ’’

15a

exemption of all matters that are ‘‘specifically ex-
empted from disclosure by statute,’’” and from the
holding in FAA Administrator v. Robertson, supra,
422 U.S. at 265, discussed later, that the FOIA does
not repeal or modify any other statute which may
restrict disclosure.”

In these cases, the plaintiffs assert that both the
Civil Rights Act of 1964, Title VII, § 709(e), 42 U.S.C.,
§ 2000e-8(e), and § 1905, 18 U.S.C., which prohibit
under criminal penalty the disclosure by any federal
employee of confidential trade and financial informa-
tion supplied a federal agency, represent statutes em-
braced within exemption (h)(3) of the FOIA, and are
statutes which prohibit the release of much of the in-
formation in the two reports in question. They raised
this contention in thier objection to disclosure sub-
mitted administratively to the defendants. The de-
fendants, however, dismisSed the claim under both
statutes. They specifically found that § 2000e-8(e) did
‘‘not prohibit the release of information by officers or
employees of other Government agencies where such
information is obtained under other authority as E.O.
11246 which requires contractors having a contract,
containing provisions prescribed in Section 202 of said
E.O. to file Compliance Reports and furnish such in-
formation.’’ The same objections to disclosure, based
upon both § 1905 and § 709(e), were pressed in the
District Court.” That Court, is disposing of the claims,

*® § 552(b) (3).
1° 422 US. at 265.

2° The plaintiffs, also, claimed exemption under (b) (7), which
deals with investigatory files. The District Court found such a

l6a

stated that 709(e) of the Civil Rights Act of 1964 was
not applicable since the reports involved here were
filed, not under the provisions of the Civil Rights Act
of 1964, but under Executive Order 11,246. It did not
deal specifically with § 1905 as within the exemption of
(b)(3) of the Act but it did conclude that § 1905, taken
in conjunction with (b)(4), represented a clear pro-
hibition against disclosure of ‘‘confidential’’ material
as defined in (b)(4) of the Act and in § 1905. The
plaintiffs, by their cross-appeal, renew their conten-
tions under § 709(e).

So far as a claim under § 709(e) is concerned, we are
inclined to agree with the District Court that, despite
the persuasiveness of the argument to the contrary,
and the cogent reasoning advanced by Justice Douglas
in his opinion disposing of a request for a stay in
Chamber of Commerce v. Legal Aid Society (1975) 423
U.S. 1309, the information involved here cannot claim
immunity under § 709(e) as a statute forbidding dis-

claim without merit. The 1974 amendments to the Act, which are
applicable here, fully support this conclusion. See, Ibid., 1976
Duke L. J. at 399-401. Those amendments, the Court declared in
NLRB v. Sears, Roebuck & Co., supra, 421 U.S. at 164-5, extend
this exemption ‘‘only to * * * ‘the production of such records
[which] would interfere with enforcement proceedings, deprive a
person of a right to a fair trial or an impartial adjudication, [or]
constitute [an] * * * unwarranted invasion of personal privacy,
disclose the identity of an informer, or disclose investigative tech-
niques and procedures.’ ’’ Obviously, the information in question
cannot qualify under that standard and it is accordingly unneces-
sary to consider further this claim of the plaintiffs. See, Note,
Fuselier and Moeller, NLRB Investigatory Records: Disclosure
Under the Freedom of Information Act, 10 U.Rich.L.R. 541 (1976)

17a

closure of the information in question in these actions.”

The applicability of § 1905, upon which the District
Court rested its decision, is, however, considerably more
compelling. This is because of the recent decision in
FAA v. Robertson. There had been, prior to Robertson,
considerable contrariety in the decisions of the District
and Circuit Courts on the statutes properly within the
scope of Exemption 3. Some of those conflicting deci-
sions are cited by the Supreme Court in Robertson, 422
U.S. at 262-3, n. 6. Among those statutes about which
there has been such a difference of opinion is § 1905.
Thus, in the early case of Consumers Union of U. S.,
Inc. v. Veterans Admin. (S.D.N.Y. 1969) 301 F. Supp.
796, 801-2, appeal dismissed on other grounds, 436 F. 2d
1363, it was assumed that § 1905 was within the cover-
age of Exemption 3 but the Court found that the in-
formation there involved did ‘‘not appear to contain
trade secrets or other information mentioned in
§ 1905.’’** However, in a consistent line of cases, be-
ginning with Grumman Aircraft Engineer. Corp. v.
Renegotiation Bd. (D.C.Cir. 1970) 425 F. 2d 578, 580,
n. 5, and continuing up to Charles River Park “‘A’’,

21 See, Sears, Roebuck and Co. v. General Services Admin. (D.C.
Cir. 1974) 509 F.2d 527, 529; Huges Aircraft Company v. Schle-
singer (D.C. Cal. 1974) 384 F. Supp. 292, 295; Legai Aid Society
of Alameda County v. Shultz (N.D. Col. 1972) 349 F. Supp. 771,
775-6.

22 An interesting case, not listed in Robertson and which reached
a contrary result to that in the District of Columbia decisions, later
discussed, is Nichols v. United States (10th Cir. 1972) 460 F. 2d
671, 673, cert. denied 409 U. S. 966 (1972), involving items and
material connected with the assassination of President Kennedy.

23 To the same effect is Pleasant Hill Bank v. United States (W.D.
Mo. 1973) 58 F.R.D. 97, 98, n. 1.

18a

Inc. v. Department of H. & U.D. (D.C.Cir. 1975) 519
F. 2d 935, 941, n. 7, the District and Circuit Courts of
the District of Columbia have held that § 1905 is not
among the statutes referred to in § 552(b) (3).

In Grumman, the earliest of these cases, the rationale
for this holding was stated to be that ‘“‘section 1905
merely creates a criminal sanction for the release of
‘confidential information.’ Since this type of informa-
tion is already protected from disclosure under the Act
by 552(b) (4), section 1905 should not be read to expand
this exemption, especially because the Act requires that
exemptions be narrowly construed.’’ In other words,
§ 1905 was found under this reasoning to be ‘‘co-exten-
sive with exemption 4,’’ which itself constituted ‘‘a
separate ground for non-disclosure’ and accordingly
it was unnecessary to consider whether § 1905 fell
within the third exemption of the Act since the result
would be the same in any event.” In M. A. Schapiro &
Co. v. Securities and Exchange Com’nr. (D.C. D. 1972)
339 F. Supp. 467, 470, the Court found another reasen
for denial of inclusion of § 1905 within (b)(3). It said:

«“* * * There is nothing in 4 1905 of Title 18 that
prevents the operation of the Freedom of In-
formation Act. Moreover, the provision for docu-
‘aents specifically exempted from disclosure by
statute [5 U.S.C. §552(b)(3)] relates to those
other laws that restrict public access to specific
government records. It does not, as defendants
allege, relate to a statute [such as § 1905] that

* See Ditlow v. Volpe (D.C. D. 1973) 302 F. Supp. 1321, 1324,
rev. on other grounds 494 F.2d 1073.

19a

generally prohibits all disclosures of confidential
information.’’ *

Other cases from the District of Columbia have pro-
ceeded on this distinction between statutes which de-
scribed ‘‘specific’’ records as nondisclosable and those
which generally prohibited disclosure in finding § 1905
and like statutes not within (b)(3).”% This reasoning
was adopted in Robertson v. Butterfield (D.C. Cir.
1974) 498 F.2d 1031, 1033, n. 6, rev. sub nom. FAA Ad-
ministrator v. Robertson (1975) 422 U.S. 255, where,
in finding that nondisclosure under the authority of
§ 1504, 49 U.S.C., a statute which represented a general

*° The holding in this case was summarized in O'Reilly, ibid., p.
1135:

““* * * The district court held * * * that the general
nature of its prohibition prevented Section 1905’s applica-
tion to the FOIA exceptions for documents ‘specifically
exempted from disclosure by statute.’ ”’

The District Court of New York had reached a similar result in
Frankil v. Securities and Exchange Commission (S.D. N.Y. 1971)
336 F. Supp. 675, reversed without reference to this point, 460
F.2d 813, cert. denied 409 U.S. 889 (1972) but the later case of

Consumers Union, supra, from the same District, 301 F. Supp. 796,
seems to be contrary.

*° Other cases, echoing the reasoning on this point in Schapiro,
are Sears, Roebuck & Co. v. General Services Admin. (D.C. Cir.
1974) 509 F.2d 527, 529, and Neal-Cooper Grain Company v. Kis-

singer (D. D.C. 1974) 385 F. Supp. 769, 776. In Neal-Copper, the
Court said:

‘*The ‘ordinary meaning of the language of Exemption
(3) is that the statute therein referred to must itself
specify the documents or categories of documents it au-
thorizes to be withheld from public scrutiny.’ The law in
this Circuit, as stated supra, appears to be that 18 U.S.C.
§ 1905 is not sufficiently specific to come within Exemption
(3). No more need be said on that score.’”’

20a

prohibition of disclosure of confidential information
rather than of ‘‘specific’’ records, was not justified by
reference to Exemption 3, the Court said:

‘618 U.S.C. § 1905 is a criminal statute prohibiting
unauthorized disclosure of any information by a
federal employee. There is nothing in the section
which prevents the operation of the Information
Act. It does not fall within the ambit of Exemp-
tion (3),’’ citing Schapiro.

Whether the Court in Butterfield, by its reference
to the fact that § 1905 was a criminal statute, found in
this any reason for excluding it from the scope of Ex-
emption 3 is perhaps unclear. If it did, though, the
decision manifestly is at variance with the later deci-
sion from the same court in Parker v. Equal Employ-
ment Opportunity Commission (D.C. Cir. 1976) 534
F.2d 977, where the Court found, after stating that
‘“‘(t]he Supreme Court [in FAA Administrator v.
Robertson (1975) 422 U.S. 255] has extended that ex-
emption [i.e., (b)(3)] beyond what may have been its
narrowest compass,’’ found the statute involved there,
which was a criminal statute like § 1905, within Ex-
emption 3. And in both Tax Analysts d Advocates v.
].R.S. (D.C. Cir. 1974) 505 F.2d 350, and Freuhauf
Corporation v. Internal Revenue Service, supra, 522
F.2d 284, it was recognized that a criminal statute
(§ 7213, 26 U.S.C.) would qualify under Exemption 3.
There remain only two objections that (1) § 1905 does
not contain language which ‘‘ prevents the operation of
the FOIA” and (2) that it is a general prohibition on
disclosure rather than a prohibition against the dis-
closure of ‘‘specific’’ records. The Court in Charles

2la

River Park effectively answered the first objection”
and the Supreme Court in FAA v. Robertson, revers-
ing Robertson v. Butterfield, it seems manifest, disposes
finally and conclusively of both objections to § 1905 as
qualifying under Exemption 3.”

The Supreme Court in Robertson, focusing upon
Exemption 3, concluded (1) that it was not the intent
of Congress in enacting the FOIA to repeal or amend
in any way statutes then ‘‘extant’’ which restricted
access to especific government information but in-
tended that such statutes should remain in effect, and
(2) that the term ‘‘specific’’ in Exemption 3 does not
mean that such Exemption applies only to statutes re-
stricting access to named documents but applies to
statutes which generally direct government agencies to
withhold.” And it specifically rejected the construction

27 519 F.2d at 522.

The reasoning of Charles River Park on this point may be sum-
marized thus: Information ‘‘confidential’’ under the test stated in
National Parks and Conservation Ass’n. v. Morton, supra, 498
F.2d at 770, is necessarily both within Exemption 4 of the FOIA,
and the prohibition of § 1905. Since such information would be
exempt from disclosure under the FOIA, its disclosure is not ‘‘au-

thorized’’ under the FOIA and its disclosure is prohibited under
§ 1905.

** We had, to some extent at least, anticipated Robertson in our
decision in Sears v. Gottschalk (4th Cir. 1974) 502 F.2d 122 at
128-31.

See, also, Citizens for a Better Environ. v. Dept. of Com. (N.D.
Ill. 1976) 410 F. Supp. 1248, 1249-50.

2° 422 U.S. 264-66.
The Court said at pp. 265-66 :

‘‘* * * The term ‘specific’ as there used cannot be read as
meaning that the exemption applies only to documents speci-
fied, t.e., by naming them precisely or by describing the cate-

22a

of the Exemption as phrased in Schapiro.”
It is true that Robertson did not identify § 1905 as a

gory in which they fall. To require this interpretation would
be to ask of Congress a virtually impossible task. Such a con-
struction would also imply that Congress had undertaken to
reassess every delegation of authority to withhold information
which it had made before the passage of this legislation—a
task which the legislative history shows it clearly did not
undertake.

‘ is edicsn viel an

So. ee ee ee x.

6la

argument here does raise substantial questions. The
statute they invoke as specifically prohibiting disclos-
ure is §709(e) of the Civil Rights Act of 1964, 42
U.S.C. § 2000e-8(e). This statute created the Equal
Employment Opportunity Commission, and by its terms
applies only to that agency. The Joint Reporting Com-
mittee and the OFCC were created by regulations pro-
mulgated by the Secretary of Labor pursuant to Execu-
tive Order 11246, which, of course, mentions neither
a Joint Reporting Committee nor an OF CC. That order
purports, at least in part to effectuate the provisions of
42 U.S.C. § 2000e insofar as firms having contracts with
the Government are concerned. It is therefore arguable
that the ultimate authority for the Joint Reporting
Committee and OFCC is 42 U.S.C. § 2000e; that they
are alter egos of the EEOC; and that they should be
subject to the disclosure restriction of 42 U.S.C. § 2000e-
8(e).

Conciliation is the preferred policy for matters com-
ing within the jurisdiction of the EEOC, a policy which
is subverted by public disclosure. There would argu-
ably be a circumvention of that policy if defendants
were allowed, by virtue of an Executive Order grounded
on § 2000e, to set up separate agencies which collected
the same or similar data as the EEOC, but which were
not bound by restrictions against disclosure. Weighed
against this, of course, would be the policy of liberally
interpreting the FOLA in favor of disclosure and con-
sequently of narrowly interpreting statutory exemp-
tions. However, it is not at all clear that § 2000e was
the basis for Executive Order 11246. Moreover, the
existence of Executive Order 10925, 1961 U S. Code

62a

Cong. & Ad. News 1274, promulgated prior to passage
of § 2000e, lends support to the argument that Execu-
tive Order 11246 has a basis independent of § 2000e,
being grounded instead in another statute or in an in-
herent power of the Executive branch to choose the
terms of Government contracts. As stated, though, the
decision in this case is not based on the exemptions
found in § 2000e-8(e) and 5 U.S.C. § 552(b) (3), and
the Court need not decide those issues.

The Court concludes, however, that the disclosure
of the EEO-1 and AAP is prohibited by the exemption
contained in 5 U.S.C. § 552(b) (4) for matters that are
‘*(4) trade secrets and commercial or financial infor-
mation obtained from a person and privileged or con-
fidential. . . .”’ The Court finds here, from the testi-
mony of Professor Rutenberg, that the parts of the
AAP hereafter specified and the EEO-1 contain com-
mercial or financial information which is confidential.’
While he had not viewed the two documents sought by
the intervenors, he was in a position, from his familiar-
ity with the regulations which prescribed the contents
of the documents, to evaluate the effect of revelation of
those contents. His conclusion was that with this in-
formation a competitor could deduce labor costs of the
plaintiffs, the most difficult area for a competitor to
learn ir making strategic decisions. From this can be
extrapolated a company’s profit margin and resulting
vulnerability to price change. Moreover, viewing the
same documents over a period of time would enable a
competitor to obtain a forewarning on new products

? See attached Appendix.

eee

63a

and process changes being undertaken by the plaintifts.
Comparing this testimony with the EEO-1 and AAP
in question confirms the witness’s conclusion. The Court
relies on the testimony as well as on the nature of the
material, not the mere claim of the plaintiffs, in deter-
mining that confidentiality exists. In reaching the con-
clusion the Court has followed the purpose of the
exemption as set forth in Bristol-Myers Company v.
F. T. C., 424 F.2d 935, 938 (D. C. Cir. 1970):

This provision serves the important function of
protecting the privacy and the competitive position
of the citizen who offers information to assist gov-
ernment policy makers.

In Sterling Drug Inc. v. F. T. C., 450 F.2d 698, 709
(D. C. Cir. 1971), the court apparently adopted the
standard for coverage by the exemption which was
set forth in the Senate Report on the Freedom of In-
formation Act, namely:

This exception is necessary to protect the con-
fidentiality 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. This would include business sales
statistics, inventories, customer lists, and manu-
facturing processes.

S. Rep. No. 813, 89th Cong., 2d Sess. 9 (1964). The
House Reports add:

It would also include information which is con-
fidential, since a citizen must be able to confide in

64a

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.R. Rep. No. 1497, 89th Cong., 2d Sess. 10 (1964).

18 U.S.C. § 1905, which makes it a crime for a gov-
ernmental official to disclose information if ‘‘not au-
thorized by law”’ to do so, also supports the relief re-
quested by plaintiffs. It can be argued that reliance on
this statute begs the question where the Government
invokes it to prevent disclosure sought pursuant to
FOIA. However, such is not the case where the potenti-
ally injured party invokes this statute to prevent the
Government from disclosing information to a third
party, for this is the precise situation dealt with by
§ 1905. In view of the finding of confidentiality set
forth above, and the relation of the information con-
tained in the documents to processes, operations and
profit margins, the statute is clearly applicable here.
Cf. J. I. Case Co. v. Borak, supra.

The defendants argue that the FOIA is authority
only for disclosing information, not withholding it, and
consequently cannot be used as a vehicle to prevent
disclosure; that the exemptions are permissive only,
being categories of information which may be exempt
by an agency; and that this is a matter largely com-
mitted to agency discretion. The Court rejects thie
argument. It makes the statutory exemption meaning-
less and flies in the face of the protective purpose of
the exemption as enunciated in the Senate and House
Reports quoted above as well as in Bristol-Myers Co.

65a

v. F. T. C., supra. The Court recognizes that that case,
like most of the others arising under the FOLA, in-
volved an instance where a plaintiff sought and the
governmental agency contested disclosure. This does
not mean, however, that a plaintiff which the exemption
is designed to protect may not properly invoke that
exemption where disclosure is threatened.

Insofar as being committed to agency discretion is
concerned, the disclosure portion of the regulations
itself recognizes an exemption of confidential informa-
tion, with and without reference to the FOLA. 41 CFR
§ 60-40.3. The FOIA cannot permit agency discretion
to the extent that such discretion precludes de novo
determination by a court of the entitlement to an exemp-
tion under FOIA.

Plaintiffs also contend that the materials in question
are ‘investigatory files’’ within the meaning of 5 U.S.C.
§ 552(b) (7). However, the purpose of that exemption
is only “‘to prevent premature discovery by a defend-
ant in an enforcement proceeding,’ Wellford v.
Hardin, 444 F.2d 21, 23 (4th Cir. 1971), and it is in-
applicable to the facts of this case.

Nor does the Court conclude that the defendants are
bound by language of confidentiality which plaintiffs
read into the receipts for the AAPs signed by the Con-
tract Compliance Officers. These seem no more than
an attempt by plaintiffs to assert their ownership of
the documents, an attempt pursued at trial. The own-
ership of the documents, however, is not determinative
of the outcome of this case.

In view of the foregoing, reviewability of the
agencies’ action under the Administrative Procedure

66a

Act, 5 U.S.C. §701, et seq., and whether that action
ean stand under the standard of review of the Act
need not be considered.

The Court accordingly concludes that that part of
the EEO-1 (Exhibit A) filed by Westinghouse which
is under the heading ‘‘Section D—EMPLOYMENT
DATA” may not be disclosed and that only that part
of the AAP (Exhibit C) which appears in Exhibit B
may be disclosed.

Plaintiffs have requested a declaratory judgment
that disclosure of any EEO-1 reports or AAPS of
plaintiffs is prohibited. This is further relief than the
Court feels is warranted. The Court holds no more
here than that certain portions of two specific docu-
ments which the Court has had the opportunity to
examine must not be disclosed. The requested declara-
tory relief would necessarily cover information yet to
be prepared which may or may not be confidential in
nature.

A decree enjoining defendants from disclosure other
than in accordance with the foregoing should be pre-
pared by counsel for the plaintiffs and presented for
entry after submission to counsel for defendants and
intervenors for approval as to form.

ALBERT V. BRYAN
United States District Judge

Alexandria, Virginia
April 2nd, 1974

APPENDIX

“BY MR. DRIVER:

Q. Dr. Rutenberg, in referring to the EEO1 report,
if you would look at it, please, sir, and from the break-
down of that report are you able in your area of knowl-
edge to come up with opinions as to the work force and
corporate vulnerability of a company ?

A. Definitely, yes.

Q. All right.

A. With this information, this is the most—the area
of information is the most difficult to get in making
strategic decisions. This is the area of the cost, the
variable cost, which is primarily employee cost broken
down in a lot of detail. There are nine categories here.

Q. All right, sir. With that information, what might.
you in corporate planning or strategic deduce about a
company’s competitive position ?

A. Okay. From this information I can—with this
information, knowing where the facility is, I can get
the wage rates from competitive indices, from employ-
ment services and so on.

From this I can infer the labor cost of the facility.
Knowing the labor cost—the cost of the product is

based on the labor cost plus the material cost. If I
know that, and the material cost is gettable by what is
called volume analysis and purchasing and engineering
design. If I know those two components, I then know
the facility’s profit margin. I can get that information
fairly readily.

With the material in the affirmative action program,

67a

68a

I have such detail I can get a very precise fix on the
variable manufacturing cost per unit, and from this
the profit margin per unit of this facility.

If I am a competitor, I can then think through the
effect—and particularly if I am a dominant competi-
tor—I can think through the effect of a price change
on the existence of this facility. This is a competitive
vulnerability of this facility to a price change.

Q. Take, for example, over a period of years, if you
have had three or four such documents and you start
either a reduction or an increase in a certain employee’s
category and you could pick one based on that form,
tell the Court what that might indicate to you.

A. Let’s consider the question of professionals. In
the affirmative action program, this is broken down into
a lot of categories.

One that I was looking at has 23 categories. Another
has about 18.

If I can watch the number of senior design engineers
through time, and I can watch this buildup, I can then
get a very good clue that it is very likely that this
facility, they are developing new products or new proc-
esses—I don’t know which at this time.

If I watch a number of maintenance workers, then
I can get a very good idea, broken down, again, in fine
detail, in the affirmative action program, I can get a
good idea whether it is a new process they are working
on or new product development, and from this I can
get a good forewarning as to what a competitor, what
moves a competitor will be making.

If I am not engaged in similar kinds of research, I
can immediately start doing so, and this is a fairly

69a

common practice, to have—in essence, strive for some
forewarning of a competitor’s process, of a competitor’s
product.

If I can get that kind of information, I can embark
on my own catch-up research, and it is relatively easy ;
why, because it is possible to hire, to job interview
from the competitor, to hire a few people, to canvass

_ suppliers, to try to get a clue to what it is exactly that

they are buying that is unusual from their previous
buying patterns, and in this way my catch-up research
may even be cheaper than the first person’s research.”’

APPENDIX C

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

Unirep States STEEL CORPORATION, |

PLAINTIFF
v. henge Action
No. 183-74-A
James R. ScHLESINGER, Secretary,
etc. et all.,
DEFENDANTS
GENERAL Motors CoRPORATION, :
PLAINTIFF
v. Civil Action
"No. 195-74-A

JaMES R. ScHLESINGER, Secretary,
etc., et al.,

DEFENDANTS

MEMORANDUM OPINION

The law and facts here presented are identical for all
practical purposes with those presented to Judge Albert
V. Bryan, Jr. in Westinghouse Electric Corporation,
et al. versus James A. Schlesinger, et al., Civil Action
No. 118-74-A, this court. |

Had the undersigned known that Judge Bryan had
Westinghouse under consideration, he would not have
heard these cases—The judges of this division rarely

70a

7la

hear a case involving the same issues of law and fact
just heard and determined by the other resident judge.

Fortunately no harm has resulted from my hearing
and determining these cases—Although I did not read
Judge Bryan’s opinion in Westingho se until after I
had heard the testimony and argument of counsel in
these cases, I am pleased to announce that we have
reached the same conclusion. Judge Bryan’s memoran-
dum opinion in Westinghouse is adopted in toto and
made a part hereof by reference.

Section 552(b)(4) of the Freedom of Information
Act specifically exempts from disclosure trade secrets
and commercial or financial information obtained from
a person and privileged or confidential.

This Court finds from the evidence presented that
the AAPs and EEO-is in question contained confi-
dential commercial or financial information which
would not customarily be released to the public by the
corporate plaintiffs, and that such information would
be of substantial value to the pleintiff’s competitors in
performing cost-pricing analyses of plaintiffs’ pricing
practices, in monitoring plaintiffs’ development of new
products and processes, in identifying plaintiffs’ cus-
tomers in their consumption needs, in analyzing plain-
tiffs’ production by product line, and in developing
competitive bidding strategies to be used against the
plaintiffs ; and that disclosure of this information would
both impair the Government’s ability to obtain neces-
sary information for its administration of the Execu-
tive Orders and Title 7 of the Civil Rights Act and
would cause substantial harm to the competitive posi-
tion of the plaintiffs.

72a

The Government tacitly concedes that some of the
information in the plaintiffs’ AAPs and EEO-1 is not
disclosable because they have agreed to delete the names
of any particular employees—all wage data or salary
rates—any promotion analyses which tend to identify
an individual employee—any projections of hiring or
lay-off rates which indicate substantial changes in busi-
ness patterns—and any and all reasons for termination
which tend to identify individual employees.

They say, however, that the designated government
administrative officer has the sole responsibility under
the Freedom of Information Act of determining
whether the requested documents—AAPs and EEO-1s
or any portions thereof—are disclosable; that Court
review, if any, is limited to review for abuse of discre-
tion.

The courts not the Executive Branch have the last
word in such matters. See United States v. Nixon, etc.,
No. 73-1766 (July 24, 1974), —— U.S. ——.

The Government further says that the FOIA exemp-
tions are neither mandatory nor available to the plain-
tiffs in opposing disclosure—Only the Government may
use the exemptions to justify nondisclosure—They cite
no authorities to support these contentions. This argu-
ment is without merit.

Although the FOIA makes disclosure the rule and
secrecy the exception, the Fourth Circuit has long recog-
nized the specific exemptions mentioned therein. See
Sears versus Gottschalk, Commissioner of Patents, No.
73-1699, decided August 14, 1974, and the cases cited
therein on page fifteen.

Upon the record here made, this Court holds that the

73a

§ 552(b) (4) exemption of the Freedom of Information
Act bars disclosure of the confidential commercial or
financial information contained in the plaintiffs’ AAPs
and EEO-1s by the Defense Supply Agency or any
other branch of the United States government without
the consent of the plaintiffs first had and obtained.

If the parties cannot agree amongst themselves which
portions of the documents in question are non-disclos-
able under the findings here made, each should submit
to the Court within the next thirty days a copy of the
AAPs and EEO-1s so marked—The Court will then
determine which portions, if any, of the said documents
may be disclosed.

In the interim the Government may not release any
of the requested information.

The requested declaratory relief covering all past
and future AAPs and EEO-1s is not warranted—It will
be denied.

The Clerk will send a copy of this memorandum
opinion to all counsel of record.

OREN R. LEwis
United States Senior Judge

September 20, 1974

A True Copy: Teste:
W. Farley Powers, Jr., Clerk
By Doris R. Casey

Deputy Clerk

APPENDIX D

JUDGMENT

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 74-1801

WESTINGHOUSE ELEcTRIC Corp. AND Its SUBSIDIARY,
FRASER & JOHNSTON COMPANY, APPELLEES,

versus

JAMES R. ScHLESINGER, SECRETARY, U. 8S. DEPARTMENT
oF DrerensE; Lt. GEN. WALLACE Rosinson, DIREcTOR,
DEFENSE SuppLy AcENcY; Puiip J. Davis, DIREcTOR,
OFFICE OF FEDERAL CONTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR,
APPELLANTS,

CONCERNED WorkKERS, Ropert Woo.ry, LecaL AID
Society oF ALAMEDA CoUNTY, AND COUNCIL ON
EcoNOMIC PRIORITIES,

INTERVENOR-DEFENDANTS.

APPEAL FROM the United States District Court
for the Eastern District of Virginia.

THIS CAUSE came on to be heard on the record
from the United States District Court for the Eastern
District of Virginia, and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now
here ordered and adjudged by this Court that the judg-

74a

ane

_—

75a
ment of the said District Court appealed from, in this
cause, be, and the same is hereby, affirmed.
William K. Slate, IT
Clerk

FILED
SEP. 30, 1976

U.S. Court of Appeals
Fourth Circuit

JUDGMENT

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 74-2048

WESTINGHOUSE ELEctTRIC Corp. AND ITs SUBSIDIARY,
FRASER & JOHNSTON COMPANY, APPELLEES,

—versus—

JAMEs R. ScHLESINGER, U. S. DEPARTMENT OF DEFENSE;
Wa uace Rosinson, Director, DEFENSE SUPPLY
Acency; Pamir J. Davies, Director, OFFICE OF

FrepERAL ConTRACT COMPLIANCE; PETER J.
BRENNAN, SECRETARY, DEPARTMENT OF LABOR, ©
APPELLANTS,

CONCERNED WorKERS, Ropert Woo.ey, LecaL AID
SocreETY OF ALAMEDA Co., COUNCIL ON
EcoNnoMIC PRIORITIES,
DEFENDANT-INTERVENORS.

APPEAL FROM the United States District Court
for the Eastern District of Virginia.

THIS CAUSE came on to be heard on the record
from the United States District Court for the Eastern
District of Virginia, and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now
here ordered and adjudged by this Court that the

76a

77a

judgment of the said District Court appealed from, in
this cause, be, and the same is hereby, affirmed.

William K. Slate, IT
Clerk

FILED
SEP. 30, 1976

U.S. Court of Appeals
Fourth Circuit

JUDGMENT

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 75-1269

Unitep States STEEL CORPORATION, APPELLEE,
—versus—

JAMES R. SCHLESINGER, SECRETARY, UNITED STATES

DEPARTMENT OF DEFENSE; Lt. GEN. WALLACE ROBINSON,

Drrector, DEFENSE SuppLy AGENCY; Puuiip J. Davis,

DrreEcToR, OFFICE OF FEDERAL CONTRACT COMPLIANCE;

AND PeTrerR J. BRENNAN, SECRETARY, UNITED STATES
DEPARTMENT OF LABOR,

_ APPELLANTS,

NATIONAL ORGANIZATION FOR WOMEN AND CONSUMER
FEDERATION OF AMERICA,
Amicus CURIAE.

APPEAL FROM the United States District Court
for the Eastern District of Virginia.

THIS CAUSE came on to be heard on the record
from the United States District Court for the Eastern
District of Virginia, and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now
here ordered and adjudged by this Court that the

78a

79a

judgment of the said District Court appealed from, in
this cause, be, and the same is hereby, affirmed.

FILED
SEP. 30, 1976

U.S. Court of Appeals
Fourth Circuit

William K. Slate, IT
Clerk

JUDGMENT

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 75-1271

GENERAL Morors CORPORATION,
APPELLEE,

—versus—

James R. ScHLEsINGER, SECRETARY, UNITED STATES
DEPARTMENT OF DEFENSE; Lit. GEN. WALLACE RoBinson,
Director, DEFENSE SuPPLY AGENCY ; Puuuir J. Davis,
Director, OFFICE OF FEDERAL CONTRACT COMPLIANCE ;
anp PETER J. BRENNAN, SECRETARY, UNITED STATES

DEPARTMENT OF LABOR,
APPELLANTS.

NATIONAL ORGANIZATION FOR WomMEN AND CONSUMER

FEDERATION OF AMERICA,
Amicus CURIAE.

APPEAL FROM the United States District Court
for the Eastern District of Virginia.

THIS CAUSE came on to be heard on the record
from the United States District Court for the Eastern
District of Virginia, and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now
here ordered and adjudged by this Court that the
judgment of the said District Court appealed from, in
this cause, be, and the same is hereby, affirmed.

FILED
SEP. 30, 1976

U.S. Court of Appeals

Fourth Cireuit
William K. Slate, II
Clerk

APPENDIX E
STATUTES AND REGULATIONS

The Freedom of Information Act, 5 U.S.C. 552, as
amended by Pub. L. 93-502, 88 Stat. 1562, and Pub. L.
ot-408, 90 Stat. 1247, provides in pertinent part:

§ 552. Public information; agency rules, opinions, or-
ders, records, and proceedings.

(a) Each agency shall make available to the public
information as follows:

* * * * *

(3) ze * * each agency, upon any request for ree-
ords which (A) reasonably describes such records and
(B) is made in accordance with published rules stating
the time, place, fees (if any), and procedures to be
followed, shall make the records promptly available to
any person.

(4 )***

* * * * *

(B) On complaint, the district court of the United
States in the district in which the complainant resides
or has his principal place of business, or in which the
agency records are situated, or in the District of
Columbia, has jurisdiction to enjoin the agency from
withholding agency records and to order the production
of any agency records improperly withheld from the
complainant. In such a ease the court shall determine
the matter de novo, and may examine the contents of
such agency records in camera to determine whether

8la

82a

such records or any part thereof shall be withheld
under any of the exemptions set forth in subsection (b)
of this section, and the burden is on the agency to sus-
tain its action.

+ * * 7 *

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

(3) specifically exempted from disclosure by statute
(other than section 552b of this title), provided that
such statute (A) requires that the matters be withheld
from the public in such a manner as to leave no dis-
eretion on the issue, or (B) establishes particular
eriteria for withholding or refers to particular types
of matters to be withheld * * *;

(4) trade secrets and commercial or financial in-
formation obtained from a person and privileged or
confidential ;

7 a * * 7
18 U.S.C. 1905 provides :

Whoever, being an officer or employee of the United
States or of any department or agency thereof, pub-
lishes, divulges, discloses, or makes known in any
manner or to any extent not authorized by law any
information coming to him in the course of his em-
ployment or official duties or by reason of any examina-
tion or investigation made by, or return, report or
record made to or filed with, such department or agency
or officer or employee thereof, which information con-
cerns or relates to the trade secrets, processes, opera-
tions, style of work, or apparatus, or to the identity,
confidential statistical data, amount or source of any
income, profits, losses, or expenditures of any person,

83a

firm, partnership, corporation, or association; or per-
mits any income return or copy thereof or any book
containing any abstract or particulars thereof to be
seen or examined by any person except as provided by
law; shall be fined not more than $1,000, or imprisoned
not more than one year, or both; and shall be removed
from office or employment.

The OFCC disclosure regulations, 41 C.F.R. Part
60-40, provide in pertinent part:

Subpart A—General
§ 60-40.1 Purpose and scope.

This part contains the general rules of the OFCC
providing for public access to information from records
of the OFCC or its various compliance agencies. These
regulations implement 5 U.S.C. 552, the Freedom of
Information Act and supplement the policy and regu-
lations of the Department of Labor, 29 CFR Part 70.
It is the policy of the OFCC to disclose information to
the public and to cooperate with other public agencies
as well as private parties seeking to eliminate dis-
crimination in employment. This part sets forth gen-
erally the categories of records accessible to the public,
the types of records subject to prohibitions or restric-
tions on disclosure, and the places at which and the
procedures whereby members of the public may obtain
access to and inspect and copy information from rec-

ords in the custody of the OFCC and the compliance
agencies.

§ 60-40.2 Information available on request.
(a) Upon the request of any person for identifiable

84a

records obtained or generated pursuant to Executive
Order 11246 (as amended) such records shall be made
available for inspection and copying, notwithstanding
the applicability of the exemption from mandatory
disclosure set forth in 5 U.S.C. 552 subsection (b), if
it is determined that the requested inspection or copy-
ing furthers the public interest and does not impede
any of the functions of the OFCC or the Compliance
Agencies except in the case of records disclosure of
which is prohibited by law.

(b) Consistent with the above, all contract compli-
ance documents within the custody of the OFCC and
the Compliance Agencies shall be disclosed upon re-
quest unless specifically prohibited by law or as limited
elsewhere herein. The types of documents which if in
the custody of the OFCC or Compliance Agencies must
be disclosed include, but are not limited to, the fol-
lowing:

(1) Affirmative action plans, whether or not re-
viewed and finally accepted by the OFCC or the Com-
pliance Agencies except as limited in 41 CFR
60-40.3(a)(1).

(2) Imposed plans and hometown plans, pending
or approved.

(3) Text of final conciliation agreements.

(4) Validation studies of tests or other preemploy-
ment selection methods.

(5) Dates and times of scheduled compliance re-
views.

§ 60-10.3 Information exempt from compulsory dis-
closure and which may be withheld.

(a) The following documents or parts thereof are

85a

exempt from mandatory disclosure by the OFCC and
the compliance agencies, and should be withheld if it is
determined that the requested inspection or copying
does not further the public interest and might impede
the discharge of any of the functions of the OFCC or
the Compliance Agencies.

(1) These portions of affirmative action plans such
as goals and timetables which would be confidential
commercial or financial information because they in-
dicate, and only to the extent that they indicate, that a
contractor plans major shifts or changes in his per-
sonnel requirements and he has not made this informa-
tion available to the public. A determination by an
agency to withhold this type of information should be
made only after receiving verification and a satisfactory
explanation from the contractor that the information
should be withheld. .

(2) These portions of affirmative action plans which
constitute information on staffing patterns and pay
scales but only to the extent that their release would
injure the business or financial position of the con-
tractor, would constitute a release of confidential finan-
cial information of an employee or would constitute an
unwarranted invasion of the privacy of an employee.

(3) The names of individual complainants.

(4) The assignments to particular contractors of
named compliance officers if such disclosure would
subject the named compliance officers to undue harass-
ment or would affect the efficient enforcement of the
Executive order.

(5) Compliance investigation files including the
standard compliance review report and related docu-

86a

ments, during the course of the review to which they
pertain or while enforcement action against the con-
tractor is in progress or contemplated within a reason-
able time. Therefore, these reports and related files
shall not be disclosed only to the extent that informa-
tion contained therein constitutes trade secrets and
confidential commercial or financial information, inter-
agency or intra-agency memoranda or letters which
would not be available by law to a private party in
litigation with the agency, personnel and medical files
and similar files the disclosure of which would con-
stitute a clearly unwarranted invasion of personal
privacy, data which would be exempt from mandatory
disclosure pursuant to the ‘‘informants privilege’’ or
such information the disclosure of which is prohibited
by statute.

(6) Copies of preemployment selection tests used
by contractors.

(b) Other records may be withheld consistent with
the Freedom of Information Act on a case-by-case
basis, with the prior approval of the Director, OF CC.

§ 60-40.4 Information disclosure of which is prohibited
by law.

The Standard Form 109 (EEO-1) which is submitted
by contractors to the OFCC, a compliance agency or a
Joint Reporting Committee servicing both the OFCC
and the EEOC shall be disclosed pending further
instructions from the Director, OFCC. The statutory
prohibition on disclosure set forth in Section 709(e)

87a

of the Civil Rights Act of 1964 is limited by the terms of
that section to information obtained pursuant to the

authority of title VII of that Act and its disclosure by
employees of the EEOC.

vy U.S. Government Printing Office: 1977—229—490 /64

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1349%3A1. Public record. Not legal advice.