FOIA Post (2003): Agencies Rely on Wide Range of Exemption 3 Statutes

September 3, 2003

Agencies Rely on Wide Range of Exemption 3 Statutes

One of the many amendments made to the Freedom of Information Act by the Electronic Freedom of Information Act Amendments of 1996 was the addition of a requirement that each federal agency list, in its annual FOIA report, all of the statutes on which it relied to withhold information under Exemption 3 of the FOIA. See 5 U.S.C. § 552(e)(1)(B)(ii) (2000) (also requiring citation of applicable case precedents upholding such statutes as Exemption 3 statutes); see also FOIA Update, Vol. XVIII, No. 3, at 5 ("OIP Guidance: Guidelines for Agency Preparation and Submission of Annual FOIA Reports"). A review of the annual lists that are prepared in implementation of this requirement shows that agencies across the executive branch rely on a wide range of Exemption 3 statutes. Some such statutes apply to commonly held types of information and are relied on by many agencies, while others are designed more specifically for use by a few agencies or by one agency alone.

Exemption 3 of the FOIA incorporates nondisclosure provisions that are found in other federal statutes; it allows agencies to withhold information under the FOIA that is specifically prohibited from disclosure by those statutes. See generally "Exemption 3" Section of the "Justice Department Guide to the Freedom of Information Act." Information may be withheld pursuant to an Exemption 3 statute when that statute either "(A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld." 5 U.S.C. § 552(b)(3).

Based on the information now provided by all federal agencies in their annual FOIA reports -- most recently, their reports for the 2002 fiscal year, see FOIA Post, "Summary of Annual FOIA Reports for Fiscal Year 2002" (posted 9/3/03) -- the most commonly relied-on Exemption 3 statute is a seven-year-old government contract-related statute that is codified at 41 U.S.C. § 253b(m) (2000). This statute prohibits the release of contractor proposals submitted to an agency during the course of federal procurements of property or services, insofar as it applies to any proposal "submitted by a contractor in response to the requirements of a solicitation for a competitive proposal" except when the proposal "is set forth or incorporated by reference in a contract entered into between the agency and the contractor that submitted the proposal." Id.

The protections of this statute are two-fold. First, "it provides blanket protection for the proposals submitted by unsuccessful offerors in response to a solicitation" because, by definition, such proposals would not be "incorporated by reference in a contract" between the offeror and an agency. FOIA Update, Vol. XVIII, No. 1, at 2. Second, the statute provides protection to successful proposals to the extent that such a proposal is not "set forth or incorporated by reference in" the actual contract. See id.

This statute (together with a companion statute for armed services acquisitions that is found at 10 U.S.C. § 2305(g)) greatly reduces the administrative burden on federal agencies, which now rely on this statute and Exemption 3 to avoid the complicated and time-consuming document analysis and submitter-notice process that otherwise would be required for such records under Exemption 4. Twenty-one different agencies -- including the Department of Agriculture, the Department of Commerce, the Department of Energy, the Department of the Interior, and the Department of Justice -- regularly withhold records in reliance on this statutory provision.

Likewise, many federal agencies rely on Federal Rule of Criminal Procedure 6(e) to protect matters pertaining to federal grand jury activity. This provision of law might seem to be unusual as an Exemption 3 "statute," because it first and foremost is a federal litigation rule, but it was specially enacted also as a statute in 1977, not long after the 1974 FOIA amendments required greater particularity in the withholding of law enforcement records. See Fund for Constitutional Gov't v. Nat'l Archives & Records Serv., 656 F.2d 856, 867 (D.C. Cir. 1981). Law enforcement agencies such as the Department of Justice, the Department of Agriculture, the Department of Labor, and the Department of the Treasury (not to mention the newly created Department of Homeland Security) regularly rely on this statute in their administration of the FOIA.

Many agencies also commonly rely on the statute codified at 26 U.S.C. § 6103(a) (2000), which provides protection for tax return information. This section of the Internal Revenue Code, which was sharply strengthened by Congress in the midst of "Watergate-era" privacy concerns, provides that no federal employee or officer "shall disclose any return or return information obtained by [the IRS] in any manner in connection with his service as such an officer or an employee." Id. It has been relied on by such agencies as the Department of the Treasury (which includes the Internal Revenue Service), the Department of Agriculture, the Department of Energy, and the Department of Justice, and it is applied very broadly in conjunction with Exemption 3. The Supreme Court, in a non-FOIA case named Church of Scientology v. IRS, 484 U.S. 9, 11 (1987), upheld the IRS's broad application of this law and further held that the "mere redaction" of identifying data does not take tax documents out of the ambit of its confidentiality requirements.

The Department of the Treasury and the Department of Health and Human Services, among other agencies, regularly employ the Ethics in Government Act, 5 U.S.C. app. 4 § 107(a)(2) (2000), under Exemption 3. This statute provides a measure of protection for the personal information that is submitted pursuant to the financial disclosure requirements that are applicable to high-level federal personnel. In Meyerhoff v. EPA, 958 F.2d 1498, 1500-02 (9th Cir. 1992), the Ninth Circuit Court of Appeals held that the Ethics in Government Act qualifies as a withholding statute under Exemption 3 because it leaves no discretion to the agency to determine whether reports are to be disclosed pursuant to the FOIA, as opposed to through an alternative disclosure mechanism.

In the national security realm, the Department of Defense, the Department of Justice, and the Central Intelligence Agency all routinely rely on the nondisclosure provisions of the National Security Act of 1947 and the Central Intelligence Agency Act of 1949. The National Security Act of 1947 protects from disclosure all national security intelligence sources and methods. See 50 U.S.C. § 403-3(c)(7),as amended by Pub. L. No. 107-56, 115 Stat. 272, § 901 (2001). The Central Intelligence Agency Act of 1949 protects certain enumerated categories of CIA information such as its organization, functions, names, official titles, salaries, and numbers of personnel employed by it. See 50 U.S.C. § 403g (2000). Over the years, many courts have upheld these two statutory provisions as Exemption 3 statutes. See, e.g., CIA v. Sims, 471 U.S. 159, 167 (1985); Minier v. CIA, 88 F.3d 796, 801 (9th Cir. 1996).

The Department of Veterans Affairs, by comparison, has its own Exemption 3 statutes on which no other agency relies. It invokes Exemption 3 in conjunction with several separate sections of title 38 of the United States Code. Section 5701 provides that the names and addresses of present or former members of the armed forces and their dependents "shall be confidential and privileged, and no disclosure thereof shall be made." 38 U.S.C. § 5701(a) (2000). Section 5705 of this same title protects from disclosure records and documents created by the Department of Veterans Affairs as part of its confidential medical quality-assurance program. See 38 U.S.C. § 5705(a) (2000). Section 7332 provides that records of the identity, diagnosis, or treatment of any patient relating to drug abuse, alcoholism or alcohol abuse, infection with the HIV virus, or sickle cell anemia shall be confidential. See 38 U.S.C. § 7332 (2000). Courts have upheld each of these as Exemption 3 statutes. See, e.g., Ashton v. VA, No. 99-6018, 1999 WL 753331, at *1 (2d Cir. Sept. 3, 1999) (upholding 38 U.S.C. § 5701);Schulte & Sun-Sentinel Co. v. VA, No. 86-6251, slip op. at 9-12 (S.D. Fla. Feb. 2, 1996) (upholding 38 U.S.C. § 5705);Palmer v. Derwinski, No. 91-197, slip op. at 3-4 (E.D. Ky. June 10, 1992) (upholding 38 U.S.C. § 7332).

Like the Department of Veterans Affairs, the Department of Agriculture has Exemption 3 statutes on which no other agency relies. These various sections of title 7 protect store records regarding food-stamp applications; tobacco and peanut production information; electronic benefit transactions; names, addresses, and telephone numbers of food-stamp recipients; reports on certain administration and enforcement activities; honey research, promotion, and related consumer information; and watermelon research and promotion information. See 7 U.S.C. §§ 1373, 2016, 2018, 4601, 4901, et seq. (2000).

Also relied on by only one agency is a section of the Federal Trade Commission Act, codified at 15 U.S.C. § 46(f) (2000), which prohibits the FTC from disclosing "any trade secrets or any commercial or financial information which is obtained from any person and which is privileged or confidential." Its use as an Exemption 3 statute was first upheld more than two decades ago, in Doherty v. FTC, 2 Gov't Disclosure Serv. (P-H) ¶ 81,241, at 81,667 (D.D.C. 1981). Another section of this same statute, found at 15 U.S.C. § 57b-2(b) (2000), prohibits the disclosure of any materials received by the FTC pursuant to compulsory process in a law enforcement investigation. Like section 46(f), this provision has been relied on by only the FTC and long has been upheld as an Exemption 3 statute in court. See Dairymen, Inc. v. FTC, 1 Gov't Disclosure Serv. (P-H) ¶ 80,159, at 80,378 (D.D.C. 1980).

Likewise, the Department of the Interior now relies on a provision of the National Park Omnibus Management Act of 1998, 16 U.S.C. § 5937 (2000), a relatively new Exemption 3 statute. It very specifically provides that information regarding endangered species located within the National Park System "may be withheld from the public in response to a [FOIA] request." Its status as an Exemption 3 statute was upheld last year in Southwest Center for Biological Diversity v. USDA, 314 F.3d 1060, 1060-62 (9th Cir. 2002), a case in which this statute also was given retroactive effect so as to apply even to a FOIA request (for records identifying nest sites of the northern goshawk) that was filed prior to its enactment. See also FOIA Update, Vol. XVIII, No. 1, at 5 (discussing the agency's inability to protect endangered species nest locations under Exemption 2, the legislative response to which was enactment of a remedial statute triggering Exemption 3).

This latter statute illustrates that there is some variability in the language that is chosen by Congress in enacting a statutory nondisclosure provision intended to operate in conjunction with Exemption 3. In a growing trend, some such statutes enacted in recent years contain disclosure prohibitions that are not general in nature but rather are specifically directed toward disclosure under the FOIA in particular. The most common form of such a law directs that certain particular information, often information that is provided to or received by an agency pursuant to that statute, "shall be exempt from disclosure" under 5 U.S.C. § 552. For instance, a provision of the Antitrust Civil Process Act states that "[a]ny documentary material, answers to written interrogatories, or transcripts of oral testimony provided pursuant to any demand issued under this Act shall be exempt from disclosure under section 552 of title 5, United States Code." 15 U.S.C. § 1314(g) (2000) (emphasis added). In Fiscal Year 2002, the Department of Justice relied on this statute, as well as on a similarly worded Exemption 3 statute found at 31 U.S.C. § 3729(d) (2000), in its administration of the FOIA. Such language also can be found in section 214 of the Homeland Security Act of 2002, Public Law 107-296, which protects critical infrastructure information that is voluntarily submitted to the federal government for homeland security purposes by providing that it "shall be exempt from disclosure" under the FOIA. Pub. L. No. 107-296, 116 Stat. 2135, § 214(a)(1)(A) (to be codified at 6 U.S.C. § 133(a)(1)(A));see also FOIA Post, "Homeland Security Law Contains New Exemption 3 Statute" (posted 1/27/03).

Other examples of agency reliance on similarly worded such statutes include the Environmental Protection Agency's use of 42 U.S.C. § 7412 (2000), the FTC's use of 15 U.S.C. § 57b-2(f) (2000), and the Department of Defense's use of 5 U.S.C. § 574(j) (2000). Additionally, the Department of the Treasury has relied on an Exemption 3 statute containing language that is somewhat different than, but has a similar affect as, "shall be exempt." It employed 31 U.S.C. § 5319 (2000), which provides that reports and records filed with the agency under 31 U.S.C. §§ 5311, et seq., "are exempt from disclosure under section 552 of title 5." And the Department of Veterans Affairs has relied on a statute specifying that information collected by Veterans Affairs personnel in surveys of rates of compensation for nurses and certain other healthcare professionals "is not subject to disclosure under section 552 of title 5." 38 U.S.C. § 7451 (2000 & Supp. 2001).

Another more direct statutory approach increasingly used by Congress is where the law directs that "no information shall be disclosed" or that "information shall not be disclosed" under certain circumstances. For instance, 42 U.S.C. § 300hh-12 (2000), which the Department of Health and Human Services has relied on under Exemption 3, states that "[n]o Federal agency shall disclose under section 552, any information identifying the location at which materials in the stockpile under subsection (a) of this section are stored." Similarly, 41 U.S.C. § 254b(d)(2)(C) (2000), also relied on by HHS, states that "[a] statement that any information received relating to commercial items that is exempt from disclosure under section 552(b) of Title 5 shall not be disclosed by the Federal Government."

A closely related but somewhat different form of statutory protection can be found in special FOIA provisions that Congress has enacted to cover the "operational files" of individual intelligence agencies. Just this past year, as part of the National Defense Authorization Act for Fiscal Year 2004, signed into law on November 24, 2003, Congress enacted such a statute for the operational files of the National Security Agency. Section 922 of that Act adds a new section to the National Security Act of 1947 that now provides that "[t]he Director of the National Security Agency, in coordination with the Director of Central Intelligence, may exempt operational files of the National Security Agency from the provisions of [the FOIA], which require publication, disclosure, search, or review in connection therewith." Pub. L. No. 108-136, § 922. It specifies that "operational files" are those files of NSA's Signals Intelligence Directorate or its Research Associate Directorate "that document the means by which foreign intelligence or counterintelligence is collected through technical systems." Id.

This special statutory protection is quite similar to counterpart Exemption 3 provisions that have been relied on by such other intelligence agencies as the CIA, the National Reconnaissance Office, and the National Geospatial-Intelligence Agency (formerly the National Imaging and Mapping Agency) for many years. See 50 U.S.C. §§ 403-5b, 403-5d (2000). In fact, it was nearly twenty years ago that the CIA first obtained such special FOIA treatment, through the Central Intelligence Agency Information Act of 1984, 50 U.S.C. § 431 (2000), for its "operational files." See FOIA Update, Vol. V, No. 4, at 1-2.

In sum, federal agencies relied on more than 140 different Exemption 3 statutes during Fiscal Year 2002, as reflected in their annual reports. As can be seen, Congress has been increasingly active in enacting such statutory provisions, including disclosure prohibitions that in one form or another are directed at the administration of the FOIA in particular. As part of its governmentwide FOIA responsibilities, the Office of Information and Privacy regularly reviews prospective Exemption 3 statutes for legal sufficiency wherever possible, most often at the request of agencies that propose them, see, e.g., FOIA Update, Vol. IX, No. 1, at 1-2, and it will continue to do so as this area of the law continues to evolve.

This FOIA Post article was prepared by Office of Information and Privacy law clerk Jennifer Wittmeyer, with assistance from OIP law clerk Thomas Hitter.   (posted 12/16/03)

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