FOIA Update: OIP Guidance: The Critical Mass Distinction Under Exemption 4

January 1, 1993

FOIA Update,
Vol. XIV, No. 2
1993

OIP Guidance


The Critical Mass Distinction Under Exemption 4

Through its en banc decision in Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992), cert. denied, 113 S. Ct. 1579 (1993), the D.C. Circuit Court of Appeals has confined the reach of its longstanding decision in National Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974), and has established two distinct standards for determining whether information submitted to a federal agency is "confidential" under Exemption 4 of the Freedom of Information Act, 5 U.S.C. § 552(b)(4).See FOIA Update, Fall 1992, at 1-2.

Under the Critical Mass decision, one standard (the traditional National Parks tests) now applies to any information that a submitter "is required to supply," while a broader Exemption 4 standard (a new "customary treatment" test) applies to any information that is submitted to an agency "on a voluntary basis." 975 F.2d at 878-79. (See "Exemption 4 Under Critical Mass: Step-By-Step Decisionmaking," at pages 6-7, for discussions of these standards.)

A pivotal question under Critical Mass is therefore posed by its distinction between "required" and "voluntary" information submissions. Because the court articulated no definition of these two terms, the exact contour of this distinction might not be readily apparent. Specifically, there has existed considerable question as to whether "voluntariness" could possibly be determined by the nature of a submitter's overall participation in an underlying activity, such as in the area of government contracting. A review of the rationale of the decision, as well as several other indications of the court's intent, serves to resolve this question in the negative and to make the distinction more clear.

Underlying Interests

An understanding of the meaning of the terms "required" and "voluntary" in the D.C. Circuit's new Critical Mass distinction can be gained, first and foremost, through close attention to the decision's analytical rationale. The court formulated this Exemption 4 dichotomy based upon its analysis of the interests underlying the exemption, most particularly the government's differing interests in obtaining commercial or financial information under different circumstances. It found that those interests can differ quite significantly, depending upon the particular circumstances of an information submission.

In its analysis, the court examined information submissions that it characterized as either "voluntary" or "required." With respect to "voluntary" submissions of information, it found the governmental interest underlying Exemption 4 to be in "ensuring [the] continued availability" of that information. 975 F.2d at 878. Disclosure of such information under the FOIA, it stated, would likely lead submitters of the information to "refuse further cooperation" with the government. Id.

The court saw the situation as distinctly different for any information that a submitter "is required to supply." Id. It reasoned that in such situations, the government has an interest in ensuring the "continued reliability" of the submitted information. Id. In so doing, the court specifically explained that the government's interest in ensuring continued availability of information in such circumstances "is not threatened by disclosure because it secures the information by mandate." Id. It therefore found it appropriate to have two different Exemption 4 standards apply, one broader than the other, depending upon the circumstances under which information is submitted.

Focus on Information Submission

Thus, the court's entire analytical approach to Exemption 4 in Critical Mass is grounded upon the particular nature and circumstances of the information submission that is involved. This itself compels the conclusion that the distinction between "voluntary" and "required" information likewise should be drawn according to the circumstances of information submission, rather than according to the nature of the submitter's participation in any underlying activity.

For example, within the realm of the federal procurement process both potential and existing contractors submit a wide variety of information to federal agencies in their efforts to secure and maintain government contracts. To be sure, a potential contractor's choice to participate in the procurement process is a purely voluntary one. Once that choice is made, however, the pursuit of a federal contract necessarily involves the submission of information needed to meet the requirements of the procurement process. The "voluntariness" of one's overall participation in this process -- or in any like administrative process in which one participates voluntarily -- cannot alter the fact that information submissions are "required." Accord Washington Post Co. v. HHS, 865 F.2d 320, 323 (D.C. Cir. 1989) (distinguishing between information submitters' initial decisions to participate in voluntary activity and subsequent requirements imposed on those who choose to participate).

Moreover, to distinguish between information submissions according to the nature of the activity underlying them would be inconsistent with the very interests that formed the rationale for the court's decision. Because the court's rationale for applying a broader new Exemption 4 standard to "voluntary" information was the government's need to ensure the continued availability of that information, the designation of information as "voluntary" must necessarily be made with that interest in mind. It makes little sense to accord the broader protection of Critical Mass to any information that an agency in fact requires be submitted to it merely because that requirement is connected with an activity that is inherently voluntary to begin with. Simply put, information should not be deemed "voluntary" within the Critical Mass distinction unless it need be.

Additional Indications

These conclusions regarding the proper distinction between "voluntary" and "required" information are further compelled by an analysis of four additional indications of the court's intent that can be found in the Critical Mass decision.

First, there is the court's characterization of the particular information submissions that were involved in the National Parks case. The information at issue in National Parks was submitted to the National Park Service by park concessionaires who were serving as federal contractors. See 498 F.2d at 770. Nevertheless, the court in Critical Mass characterized these submissions as "required" ones within the framework of its new distinction. 975 F.2d at 878, 880. This in itself shows that parties engaged in such a voluntary activity as federal contracting can nonetheless make "required" submissions, a point strengthened further by the fact that the court expressly stated in Critical Mass that it does "not repudiate any part of [its] holding" in National Parks. 975 F.2d at 879.

Significantly, in National Parks it was found that those information submissions should be viewed as "required" regardless of whether they are "supplied pursuant to statute, regulation, or some less formal mandate, [because] it is clear that disclosure of this material to the Park Service is a mandatory condition of the concessionaires' right to operate in national parks." 498 F.2d at 770. This statement demonstrates that "required" submissions can be predicated on a broad range of legal authorities -- not merely statutes and regulations, but also "less formal mandates" that require information submissionas a condition of doing business with the government. Such mandates logically include contract solicitations that impose information-submission requirements on anyone seeking to obtain a government contract.

A second indication of the court's intent in Critical Mass is its flat statement (which is not disputed by the dissenting opinion filed in the case) that none of the D.C. Circuit's previous Exemption 4 cases "would have been decided differently" had its new Critical Mass test been applied in those cases. 975 F.2d at 879. A review of the D.C. Circuit's Exemption 4 case law reveals at least one major case that would have been decided differently under the Critical Mass analysis if the focus of that analysis were the nature of a submitter's participation in an activity rather than the circumstances of the information submission.

That case, Washington Post Co. v. HHS, 865 F.2d 320, 322 (D.C. Cir. 1989), involved the submission of "financial disclosure" forms by consultants to the National Institutes of Health. Those consultants were specifically described by the D.C. Circuit as persons "who volunteer to serve" on peer review committees, with their volunteer service contingent upon their completion of such forms. Id. In Washington Post, the D.C. Circuit refused to accord Exemption 4 protection to those forms and remanded the case instead. See id. at 328. However, if the voluntary nature of those consultants' activities were sufficient to render their submission of the forms "voluntary" under Critical Mass, then the personal financial information on those forms would have qualified for broad Critical Mass protection, the case would not have needed to be remanded, and it indeed would have been decided differently.

A third additional indication is the compilation of six lower court Exemption 4 precedents in the Critical Mass dissent (without contradiction in the majority opinion) as illustrations of cases in which "information was furnished to the Government voluntarily." 975 F.2d at 884. The information submissions in these six cases were: (1) a salary survey conducted by a private organization that was shared with the Federal Reserve Board, 9 to 5 Org. for Women Office Workers v. Board of Governors of the Fed. Reserve Sys., 721 F.2d 1, 3 (1st Cir. 1983); (2) notations of initial responses made by companies "not directly regulated" by the federal government who were asked whether they were interested in renting pavilion space at the Paris Air Show, Wiley Rein & Fielding v. United States Dep't of Commerce, 782 F. Supp. 675, 677 (D.D.C. 1992); (3) information relevant to a law enforcement investigation of a business entity that was provided by another company through "voluntary cooperation" without use of the agency's subpoena power, Durnan v. United States Dep't of Commerce, 777 F. Supp. 965, 967 (D.D.C. 1991); (4) comments received in response to a Federal Register notice which were conceded to have been "submitted voluntarily" in the absence of any agency ability to "mandate submission of such documents," Klayman & Gurley, P.C. v. United States Dep't of Commerce, No. 88-0783, slip op. at 4 (D.D.C. Apr. 17, 1990); (5) product research data that was submitted by a regulated manufacturer in response to an agency request made prior to the promulgation of any regulation requiring submission of such data, Teich v. FDA, 751 F. Supp. 243, 250 (D.D.C. 1990); and (6) an investigative report prepared by a contractor that was provided to an agency through its "voluntary disclosure program" in the absence of the agency's invocation of "any method of compulsory production" and where the contractor was under "no obligation" to submit the report "in order to do business with the government," ISC Group, Inc. v. DOD, No. 88-0631, slip op. at 8 (D.D.C. May 22, 1989).

The common element in the facts of these cases is that there was no statute or regulation requiring the submission of the information involved, nor was there even some "less formal mandate" that made submission a "mandatory condition" of doing business with the government. Instead, each case involved a purely optional submission. This further confirms that "voluntary" submissions, in contrast to "required" ones, are those that are made in the absence of any agency authority requiring them.

A fourth indication of what is and is not "voluntary" under Critical Mass is the court's application of its new distinction in the Critical Mass case itself. It had been found by the district court in the case that the submitter was "not regulated" by the agency and that it was "under no legal obligation" to submit any records to it. Critical Mass Energy Project v. NRC, 644 F. Supp. 344, 347 (D.D.C. 1986). The D.C. Circuit reached the conclusion that the records at issue in Critical Mass were "voluntary" ones and it did so by pointing specifically to this factual basis. See 975 F.2d at 880 (citing lower court). This stands as the best illustration from the court that a finding of "voluntariness" is based upon the absence of any submission requirement.

Significantly, though, the records in Critical Mass were found to have been voluntarily submitted despite the fact that the agency held the legal authority to require their submission through the adoption of a regulation or the issuance of a subpoena. See id. This occurred because the agency had not in fact exercised that authority and the D.C. Circuit flatly rejected the idea that an agency's unexercised "power to compel" the submission of information precludes such information from being deemed "voluntary." Id. In so ruling, the court stated that it would not "interfere" with an agency's "exercise of its own discretion in determining how it can best secure the information it needs." Id.

Case Law Under Critical Mass

The distinction between "voluntary" and "required" submissions has not been analyzed in any of the Exemption 4 cases decided subsequent to Critical Mass thus far. Three district court decisions, all involving government contract information, have treated pricing data submitted in response to contract solicitations as "voluntary" under Critical Mass. See Environmental Technology, Inc. v. EPA, No. 92cv363, slip op. at 5 (E.D. Va. Jan. 21, 1993), amended (E.D. Va. Mar. 19, 1993); McDonald Douglas Corp. v. Rice, No. 92-2211, transcript at 35 (D.D.C. Sept. 30, 1992) (motion for reconsideration pending); Cohen, Dunn & Sinclair, P.C. v. GSA, No. 92-0057-A, transcript at 28 (E.D. Va. Sept. 10, 1992). None of these decisions, however, contains any analysis of the Critical Mass distinction in relation to such information; rather, they no more than summarily declare such information "voluntary," despite all of the indications in Critical Mass to the contrary. Two other decisions have followed Critical Mass to find certain items of information "required," but they similarly fail to set forth any rationale whatsoever for doing so. See Africa Fund v. Mosbacher, No. 92-289, slip op. at 15-16 & n.3 (S.D.N.Y. May 26, 1993); Citizens Comm'n on Human Rights v. FDA, No. 92-5313, slip op. at 15 (C.D. Cal. May 10, 1993). Given the entirely perfunctory nature of the post-Critical Mass case law to date, the Critical Mass decision itself contains the best indications of its proper application.

Basic Critical Mass Principles

In sum, therefore, the following basic principles should be applied in distinguishing between "voluntary" and "required" information submissions under Critical Mass:

First: A submitter's voluntary participation in an activity does not determine whether any information submission made in connection with that activity is "voluntary." This should be so even where a submission is made prior to the point at which the submitter has established a formal relationship with the government -- such as with submissions that are made by offerors or bidders seeking government contracts, or by applicants seeking government licenses, loans, or grants.

Second: Critical Mass determinations should be made according to the circumstances of information submission. Rather than looking at the nature of a submitter's participation in an underlying activity, agencies should instead focus on whether the submission of information is required of those who choose to participate.

Third: Information submissions can be "required" by a range of legal authorities, including informal mandates that call for the submission of information as a condition of dealing with the government or of obtaining a government benefit. Fundamentally, federal agencies have broad legal authority to require the submission of information from those with whom they deal.

Fourth: The existence of agency authority to require an information submission does not automatically mean that that submission is "required." That authority must actually be exercised by the agency for the submission to be deemed "required" in a given case.

Conclusion

Although the terms "voluntary" and "required" are not expressly defined in the D.C. Circuit's Critical Mass opinion, there is a sound basis for distinguishing between these two types of information submissions when making Exemption 4 determinations under that decision. In doing so, agencies should find that most of the commercial or financial information submitted to them is required to be submitted and that it therefore remains subject to the strict Exemption 4 standards of National Parks. Only where information is submitted to an agency on a truly voluntary basis will the broader new protection of Critical Mass be warranted.

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