Amicus Curiae Brief — Dow Chemical Co. v. United States

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No. 84.1259 ~—

In The

Supreme Court of the United S

October Term, 1984

tt

A

THE DOW CHEMICAL CO.,

Petitioner,

v.

UNITED STATES OF AMERICA BY AND

THROUGH ADMINISTRATOR, ENVIRONMENTAL

PROTECTION AGENCY,

Respondent.

tY

—

ON PETITION FOR CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

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BRIEF AMICI CURIAE OF MOUNTAIN STATES

LEGAL FOUNDATION AND CHAMBER OF

COMMERCE OF THE UNITED STATES

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K. Preston Oape Rostn 8S. Conrap

Counsel of Record Counsel for the

Constance E. Brooks Chamber of Commerce

Mountain States of the United States

Legal Foundation National Chamber

1200 Lincoln Street, Suite 600 Litigation Center, Inc.

Denver, Colorado 80203 1615 H Street, N.W.

(303) 861-0244 Washington, D.C. 20062

(202) 463-5337

—

meen

COCKLE LAW BRIEF PRINTING CO., (800) 835-7427 Ext. 333

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES li

INTEREST OF AMICI CURIAE 1

SUMMARY OF REASONS FOR GRANTING THE

WRIT 3

ARGUMENT 5

INTRODUCTION 5

I. EPA Should Not Be Exempted From Hav-

ing To Obtain A Search Warrant For Over-

flights. mila 7

Il. The Decision Below Conflicts In Principle With

Decisions Of The Seventh And Ninth Circuits

By Refusing To Apply sisliieti Protection ‘lo

Commercial Areas. ............. 20 oS a

Ill. The Sixth Cireuit’s Decision Conflicts With Com-

mon Law Expectations Of Privacy Under The

Fourth Amendment. 22sec 10

IV. EPA Aerial Surveillance Conflicts With Expec-

tations Of Privacy Recognized By The Fifth Cir-

euit in E. J. duPont deNemours & Co. v. Chris-

topher. ~ 12

CONCLUSION 14

‘i

TABLE OF AUTHORITIES

Cases: Page

Camara v. Municipal Court, 387 U.S. 523 (1967) Ss 4

Care v. United States, 231 F.2d 22 (10th Cir. 1956) 8

Donovan v. Dewey, 452 U.S. 594 (1980) 7

Dow Chemical Co. v. Umited States, 749 F.2d 307

(6th Cir. 1984) 4, 6, 9,10

E.1I. duPont deNemours & Co. v. Christopher, 431

F.2d 1012 (5th Cir. 1970), cert. denied, 400 U.S.

1024 (1971), reh’g. denied, 401 U.S. 967 6, 12

G. M. Leasing Corp. v. United States, 429 U.S. 338

(1977) 4

Katz v. United States, 389 U.S. 347 (1967) 12

Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470

(1974) 13, 14

Marshall v. Barlow’s Inc., 436 U.S. 307 (1978) 4

Oliver v. Uinted States, 104 S.Ct. 1735 (1984) 3, 10

Ruckelshaus v. Monsanto Co., 104 S.Ct. 2862 (1984) 5

United States v. FMC Corp., 428 F. Supp. 615

(W.D.N.Y. 1977) 9

United States v. Swart, 679 F.2d 698 (7th Cir. 1982). 9

Wattenourg v. United States, 388 F.2d 853 (9th

Cir. 1968) 9

STaTUTEs :

Clean Air Act, 42 U.S.C. 4 7414 8

Clean Water Act, 33 U.S.C. § 1318 8

Freedom of Information Act, 5 U.S.C. § 552 4,13

Resource Conservation and Recovery Act, 42 U.S.C.

§ 6927 8

Toxie Substances Control Act, 15 U.S.C. § 2610.000-.—isé8

iii

TABLE OF AUTHORITIES—Continued

Page

MISCELLANEOUS:

Peters and Timmerhaus, Plant Design and Eco-

nomics for Chemical Engineers, McGraw Hill

(3d ed. 1980) 5

)

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No. 84-1259

ray

a

In The

Supreme Court of the United States

October Term, 1984

r=

THE DOW CHEMICAL CO.,

Petitioner,

V.

UNITED STATES OF AMERICA BY AND

THROUGH ADMINISTRATOR, ENVIRONMENTAL

PROTECTION AGENCY,

Respondent.

ry

ON PETITION FOR CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

Ly.

BRIEF AMICI CURIAE OF MOUNTAIN STATES

LEGAL FOUNDATION AND CHAMBER OF

COMMERCE OF THE UNITED STATES

sy

— ae

With the written consent of all parties, the Mountain

States Legal Foundation (MSLF or Foundation) and the

Chamber of Commerce of the United States (Chamber)

respectfully submit this brief as amici curiae on behalf

of their members. Amici have filed the consents of the

parties with the Clerk of the Court.

ry

—

INTEREST OF AMICI CURIAE

MSLF is a nonprofit, membership, public interest law

foundation dedicated to bringing before the courts those

issues vital to the defense and preservation of individual

1

2

liberties, private property rights, and the free enterprise

system. The Foundation seeks to protect the liberty and

property rights of its individual and corporate members,

including their rights of privacy in the protection of their

commercial interests.

The Chamber of Commerce of the United States is

the largest association of business and professional or-

ganizations in the United States. Chamber membership

exceeds 184,000 business firms and individuals, including

more than 180,000 corporations, partnerships, and pro-

prietorships, more than 3,900 trade associations, and state

and local chambers of commerce. The Chamber regularly

represents the interests of its members in the litigation

of issues of national concern to the American business

community.

The issue before this Court is whether the Environ-

mental Protection Agency (EPA) violates the Fourth

Amendment rights of the nation’s manufacturing concerns

when it conducts warrantless overflights of the open air but

enclosed plant sites using special aerial cameras that

expose manufacturing processes otherwise protected

as trade secrets. The nature of the chemical manufac-

turing industry requires that key parts of the facility

be unroofed for reasons of safety, cost, and practi-

eality. It is essential to the financial success of Foun-

dation and Chamber members’ businesses that they be

able to protect trade secrets and realize their expectations

of privacy within the perimeter of their manufacturing

plants. So long as overflights are warrantless, the com-

panies have no way of knowing that photographs have

been taken, and if so, whether the photographs require

trade secret designation to prevent their dissemination.

3

SUMMARY OF REASONS FOR

GRANTING THE WRIT

The United States Court of Appeals for the Sixth

Circuit held that Dow Chemical Co. (Dow) has no privacy

rights under the Fourth Amendment to prevent the taking

of aerial photographs of the enclosed but open air parts of

the Midland plant. The Court of Appeals reasoned that

society did not recognize a right of privacy, since the in-

terior parts of the plant could be seen from the air, like

open fields. [Petitioner’s Appendix A, p. A-9.]

The court’s conclusion conflicts with long established

expectations of privacy that protect valuable trade secrets

from intrusion. If a competitor of Dow had done what

EPA did, there is no question that Dow could have sued

the competitor for violation of its valuable trade secrets.

The Sixth Cireuit held that the curtilage doctrine

did not apply to commercial areas, especially those so

large as the areas occupied by Dow’s outdoor manufac-

turing processes. [Petitioner’s Appendix A, p. A-11.]

This holding conflicts with decisions in the Courts of Ap-

peals for the Seventh and Ninth Cireuits. The Sixth

Circuit also misapplies this Court’s holding in Oliver

v. United States, 104 S. Ct. 1735 (1984) by extending the

open fields doctrine to open air manufacturing processes

that are an integral part of the plant’s structures. The

court’s decision also makes no sense. If the Fourth

Amendment protects the buildings to which the integral

manufacturing components are attached, it is illogical to

deny the pipes, wires, and smoke stacks the same protec-

tion solely because they can be seen by special aerial cam-

eras.

The application of the open fields doctrine to a fully

enclosed and secured commercial plant threatens the long

standing privacy rights traditionally afforded to busi-

nesses.' So long as EPA’s actions are deemed lawful, it

is impossible for the chemical industry to effectively pro-

tect its trade secrets because a competitor can lawfully ac-

quire this information from EPA under the Freedom of

Information Act, 5 U.S.C. § 552 (1980), before it has been

designated as a trade secret.

No public good is accomplished by expanding the open

fields doctrine to the fully developed and secured but un-

roofed confines of a manufacturing plant. None of the

photographs revealed violations of the Clean Air Act. The

overflight was merely an effort to obtain information with-

out probable cause. There is no justification for the con-

tinuation of these overflights on that basis.

EPA has advanced no convincing reason to jus-

tify its exemption from the rule that a warrant is required

for an administrative search. Exceptions to the require-

ment of a warran reflect the exigencies and practicalities

of law enforcement. However, no such exigencies justify

EPA’s warrantless overflights of the Dow plant because

Dow could not hide any violation of the Clean Air Act

by shutting down its plant for a few days solely to avoid

EPA photography.

‘This Court has-—unequivocally recognized that Fourth

Amendment protection extends to commercial areas. Camara

v. Municipal Court, 387 U.S. 523, 528-29 (1967) (warrant is

necessary for an administrative search of business premises);

Marshall v. Barlow’s Inc., 436 U.S. 307 (1978) (warrant is neces-

sary for search under OSHA); and G. M. Leasing Corp. v.

United States, 429 U.S. 338, 348 (1977) (recognizing a civil

claim against the IRS for violation of privacy rights in bitnes

premises).

5

ARGUMENT

Introduction

The Sixth Circuit’s decision in Dow Chemical Co. v.

United States, 749 F.2d 307 (6th Cir. 1984) has far reaching

consequences for all manufacturing industries regulated

by the EPA. By necessity, key protected processes used

by these industries are located in the interior but un-

roofed parts of a plant. It is an accepted fact that, with

the exception of specialty chemicals, most manufacturing

plants must install critical aspects of their facilities out-

of-doors. As a result, the Sixth Cireuit’s holding will

affect petroleum refineries and petro-chemical manufac-

turers, as well as the chemical manufacturing industry, all

of which locate key parts of their plants outside the build-

ings.

The law protects Dow’s proprietary interest in these

integral manufacturing components because, in the context

of the entire plant, they are a blue print that shows how

these chemical products are made.? The typical chemi-

cal plant covers hundreds to thousands of acres on

which numerous buildings are located. See generaily

Peters and Timmerhaus, Plant Design and Economics for

2This Court has held that a trade secret is a property right

and its loss is compensable under the Fifth Amendment. in

Ruckelshaus v. Monsanto Co., 104 S.Ct. 2862, 2878 (1984), this

Court explained the reasons for trade secret protection.

Because of the intangible nature of a trade secret, the

extent of the property right therein is defined by the ex-

tent to which the owner of the secret protects his interest

from disclosure to others. . . . Information that is public

knowledge or that is generally known in an industry can-

not be a trade secret. . . . If an individual discloses his

trade secret to others who are under no obligation to

protect the confidentiality of the information, or other-

wise publicly discloses the secret, his property right is

extinguished. (Citations omitted.)

6

Chemicals Engineers, McGraw Hill (3d ed. 1980). These

buildings are interconnected by pipes, wires, and smoke

stacks that are an integral part of the manufacturing proc-

ess.!

Aerial photographs, like those taken of the Midland

plant, reveal the shape of the buildings plus the location

anc type of products that are unloaded and stored. The

apperently random configuration of the buildings, and the

external structures tell the experienced chemical engineer

not only the product that is manufactured, but how it is

done. The damage is multiplied when these trade secrets

are memorialized in detailed photographs that can be care-

fully studied. For this reason, the chemical manufacturing

industry zealously guards against any breach of its se-

curity. Dow Chemical Co. v. United States, 536 F. Supp.

1355, 1364-65 (D. Mich. 1982). [Petitioner’s Appendix B,

pp. 1319-21.]

Dow’s plant, like those of other manufacturers, is en-

tirely fenced to prevent even casual observation. The

companies employ round-the-clock security guards who re-

strict entrance to employees and authorized visitors.

Sophisticated surveillance systems are also installed to

monitor all activities inside the plant. As an additional

precaution against industrial espionage, the security

guards, as well as employees, are told to keep an eye out

for suspicious looking aircraft overhead. Cf. HE. I. duPont

deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir.

1970), cert. denied, 400 U.S. 1024 (1971), reh’g. denied, 401

U.S. 967.

3The Sixth Circuit incorrectly treats the areas between the

buildings as if they were unoccupied like an open field. Dow

Chemical Co. v. United States, 749 F.2d 307, 313 (6th Cir.

(Continued on the next page)

7

I. EPA Should Not Be Exervted From Having

To Obtain A Search Warrant For Overflights.

The Sixth Cireuit’s decision threatens the ability of

America’s manufacturing industries to protect their trade

secrets from dissemination under the Freedom of Informa-

tion Act. Moreover, no public policy is advanced by ex-

tending the open fields doctrine to outdoor manufacturing

facilities.

EPA has never established any reason that it

should not be required to obtain a warrant in these cir-

cumstances. Exceptions to the presumption of law that

any search requires a warrant are built around the prac-

ticalities and exigencies of law enforcement.* The smoke

stacks that were allegedly the focus of EPA surveil-

lance are not contraband nor are they moveable. Dow

could not evade environmental law enforcement by chang-

ing the building’s structure or closing the plant, because

it would cost thousands of dollars to do so. This case in-

volves a type of administrative search that should never

be conducted without a warrant.

The facts in the record substantiate the absence of any

legitimate reason for EPA to engage in these warrantless

aerial searches. Dow had cooperated with EPA on its first

inspection of the plant. Dow objected to the request for

(Continued from the previous page)

1984) [Petitioner's Appendix, p. A-10]. The open air processes

for which Dow seeks protection under the Fourth Amendment

fully occupy the spaces between these buildings. These pipes,

wires, and smoke stacks cover many acres and for reasons of

safety, cost, and practicality, cannot be roofed to avoid aerial

surveillance. ;

‘This Court has upheld warrantless administrative searches

in industries that have a history of pervasive regulation, like

liquor and firearms. Donovan v. Dewey, 452 U.S. 594 (1980).

8

permission to take photographs because EPA gave nu rea-

son nor placed any limits on what it wanted to photo-

graph. There were other means to obtain evidence that

the Midland plant was not in compliance. This kind of

investigation is neither authorized under the Clean Air

Act nor supported by the Constitution.

The Sixth Circuit’s conclusion that Section 114 of the

Clean Air Act, 42 U.S.C. § 7414, impliedly authorizes war-

rantless aerial surveillance legislates by judicial decision

the very authority that Congress declined to give the

EPA. Section 114 was the product of extensive Congres-

sional debate and negotiation. The courts should not be

permitted to imply powers of enforcement that Congress

chose not to grant.

-II.-The Decision Below Conflicts In Principle With De-

cisions Of The Seventh And Ninth Circuits By Re-

fusing To Apply Curtilage Protection To Commercial

Areas.

The Sixth Circuit’s conclusion that a business has no

Fourth Amendment protection for its curtilage conflicts

with decisions in the Seventh and Ninth Circuits. The

portions of the Dow plant that the petitioner seeks to pro-

tect clearly fall within the common law notion of curtilage.°

However, the Sixth Circuit stated that:

SSection 114 provisions appear in virtually identical form

in the Clean Water Act, 33 U.S.C. § 1318, the Resource Con-

servation and Recovery Act, 42 U.S.C. § 6927, and the Toxic

Substances Control Act, 15 U.S.C. § 2610. Therefore, the Sixth

Circuit’s expansion of EPA’s authority goes far beyond the

facts of this case.

‘The curtilage is the area adjacent to a structure that is

protected by the Fourth Amendment, because its proximity and

relationship to the structure also entitles it to protection. Care

v. United States, 231 F.2d 22 (10th Cir. 1956).

9

Dow’s reasonable privacy interest in the interior of

its buildings does not extend into the areas between

the buildings because, unlike the home setting, there

is no compelling reason in terms of privacy to justify

this extension. After a diligent search we have found

no cases applying the curtilage concept to the com-

mercial setting. Although there may be some places

for research and development or employee interaction

which justify an extension of the concept, we hold that

the common law curtilage doctrine does not apply to

this particular manufacturing setting.

Dow Chemical Co., 749 F.2d at 313 [Petitioner’s Appendix

A, p. A-12].

In contrast to the Sixth Circuit, the Seventh and Ninth

Circuits have applied the curtilag: doctrine to commercial

settings. In United States v. Swart, 679 F.2d 698 (7th

Cir. 1982), the court rejected evidence of the registration

numbers of cars parked in the lot of a closed repair shop

because :

First, Katz would preclude an absolute rule that any-

thing beyond a specifie distance from a dwelling or

business is in an area unprotected by the Fourth

Amendment. Second, in the instant case, there were

sheds near the garage and the affidavit supporting

the search warrant said the cars were in the area sur-

rounding the sheds and garage. Therefore, the cars

may have beer within the curtilage of the business

buildings.

Id. at 702. The curtilage doctrine also extended Fourth

Amendment protection to fir trees stacked in an open lot

behind a motel in Wattenburg v. United States, 388 F.2d

853, 857 (9th Cir. 1968). See also, United States v. FMC

Corp., 428 F. Supp. 615 (W.D.N.Y. 1977) (recognizing

right of privacy in fenced lagoon located on industrial

plant site).

10

The integral manufacturing components adjacent to

the Midland plant buildings are within the curtilage.’ The

outdoor manufacturing processes are connected to the

buildings and are an integral part of the buildings’ funce-

tions. As an extension of the buildings already protected

by the Fourth Amendment, they are also entitled to

Fourth Amendment protection.®

III. The Sixth Circuit’s Decision Conflicts With Common

Law Expectations Of Privacy Under The Fourth

Amendment.

The extension of the open fields doctrine to a manu-

facturing plant distorts the public interest objectives of

the open fields exception and is out of line with the law

of the Fourth Amendment. Only last year in Oliver v.

United States, 104 S.Ct. 1735 (1984), this Court affirmed

the long standing rights of privacy in a business setting.

“The Fourth Amendment’s protection of offices and com-

mercial buildings, in which there may be legitimate expec-

tations of privacy, is also based upon societal expectations

that have deep roots in the history of the Amendment.”

Id. at 1740, n. 8.

The open fields doctrine has generally been limited to

just that—an open field. This Court recognized the limits

of its holding in Oliver when it stated:

The Sixth Circuit conceded that Dow was entitled to

Fourth Amendment protection of the interior of the buildings.

a ieee Co., 749 F.2d at 312 [Petitioner’s Appendix A,

p. A-12].

8lronically, the Sixth Circuit was troubled by the large area

covered by the outdoor manufacturing components. However,

expanse alone should not preclude the application of the curti-

lage doctrine. Indeed, as has been argued here, expanse is

the main reason that Dow could not roof the sensitive portions

of the plant.

11

Moreover, as a practical matter these lands usually

are accessible to the public and the police in ways that

a home, an office, or commercial structure would not

be. It is not generally true that fences or no tres-

passing signs effectively bar the public from viewing

open fields in rural areas. . . . the asserted expecta-

tion of privacy in open fields is not an expectation

that society recognizes as reasonable.

Id. at 1740.

The open fields doctrine is also limited to undevel-

oped and unoccupied areas. This Court wrote:

It is clear, however, that the term “open fields” may

include any unoccupied or undeveloped area outside of

the curtilage. An open field need be neither “open”

nor a “field” as those terms are used in common

speech. For example, contrary to respondent Thorn-

ton’s suggestion, Tr. of Oral Arg. 21-22, a thickly

wooded area nonetheless may be an open field as that

term is used in construing the Fourth Amendment.

(Citations omitted.)

Id. at 1741, n. 11.

The Sixth Circuit’s application of the open field doc-

trine to a developed site goes far beyond its scope and,

as a result, diminishes the recognized privacy rights

of the manufacturing industry. The areas that Dow

objects to being photographed were not open spaces

as described by the Sixth Circuit. The ground was cov-

ered with pipes and wires. If the Midland plant is an

open field, then there is little land in the nation that is

not an open field.

12

IV. EPA Aerial Surveillance Conflicts With Expec-

tations Of Privacy Recognized By The Fifth Cir-

cuit In E. I. duPont deNemours & Co. v. Chris-

topher.

The Sixth Cireuit’s decision establishes a public policy

that interferes with a business’ right and ability to protect

its trade secrets. The Sixth Cireuit concluded that society

did not recognize an expectation of privacy because Dow

had failed to roof the expanse of land covered by the

manufacturing components for which Dow claims trade

secret protection.’ This conclusion flies in the face of the

common law that would recognize a right of privacy by

according Dow a claim against any third party that might

attempt to take photographs of the facility. As estab-

listed in E. I. duPont deNemours & Co. v. Christopher,

431 F.2d 1012 (5th Cir. 1970), cert. denied, 400 U.S. 1024

(1971), reh’g. denied, 401 U.S. 967, the fact that parts of

the plant can be seen from the air does not make the sur-

veillance any less unlawful. The court specifically held

that:

The question remaining is whether aerial photog-

raphy of plant construction is an improper means of

obtaining another’s trade secret. We conclude that

it is and that the Texas courts would so hold.

One may use his competitor’s secret process if he dis-

covers the process by reverse engineering applied to

the fini.ned product; one may use a competitor’s proc-

ess if he discovers it by his own independent research ;

°The Sixth Circuit used the test enunciated in Justice Har-

lan’s concurring opinion in Katz v. United States, 389 U.S.

347, 361 (1967) that defines the parameters of the Fourth

Amendment as follows. “[T]here is a twofold requirement,

first that a person have exhibited an actual (subjective) expec-

tation of privacy and, second, that the expectation be one that

society is prepared to recognize as ‘reasonable.’ ”

13

but one may not avoid these labors by taking the

process from the discoverer without his permission at

a time when he is taking reasonable precautions to

maintain its secrecy. To obtain knowledge of a process

without spending the time and money to discover it

independently is improper unless the holder voluntar-

ily discloses it or fails to take reasonable precautions

to ensure its secrecy.

Id. at 1015-16. (Emphasis in original.) '°

Many other amici member companies have been sub-

jected to EPA surveillance. Counsel for Allied Chemical

Corporation reported that in 1980 he filed a request

for aerial photographs under the Freedom of Information

Act (FOTIA), 5 U.S.C. §552 (1980). EPA responded by

sending dozens of photographs of chemical plants, sev-

eral of which depicted his own company’s plants. Until

Allied received the photos under FIA, the company had

no inkling that EPA had conducted the overflights."'

EPA’s cavalier attitude in the handling of pho-

tographs in the Dow case and the incident described above

10This Court has disapproved the acquisition of trade secrets

by aerial surveillance. “The law also protects the holder of a

trade secret against disclosure or use when the knowledge is

gained, not by the owner’s volition, but by some ‘improper

means’. Restatement of Torts, § 757(a), which may include

theft, wiretapping, or even aerial surveillance.” Kewanee Oil

Co. v. Bicron Corp., 416 U.S. 470, 475-76 (1974).

‘1A company can ask for trade secret designation in order

to limit further dissemination under FOIA. However, unless the

company knows about the overflights and sees the photos, it

has no way to insist on trade secret protection from EPA.

14

has been repeated with alarming frequency over the last

five years. If the companies had some right to notice of

overflight, such as being served with a warrant, then they

could ask that EPA protect this information. With-

out the requirement of a warrant, these companies face

the loss of their trade secrets without any recourse against

EPA or a competitor.”

ra’

ws

CONCLUSION

The Sixth Cireuit’s decision has far reaching impli-

cations for not only the chemical industry but for all in-

dustries subject to administrative inspections. For these

reasons, the Mountain States Legal Foundation and the

Chamber of Commerce of the United States respectfully

request that this Court issue a writ of certiorari to the

Court of Appeals for the Sixth Circuit.

Respectfully submitted,

K. Preston OaprE

Counsel of Record

Constance E. Brooks

Mountain States Legal Foundation

1200 Lincoln Street, Suite 600

Denver, Colorado 80203

(303) 861-0244

Rosin 8. Conrap

Counsel for the Chamber of

Commerce of the United States

National Chamber Litigation

Center, Inc.

1615 H St., N.W.

Washington, D. C. 20062

(202) 463-5337

“The common law only protects a trade secret if it is

obtained unlawfully or through unauthorized disclosure. Ke-

wanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).