FOIA Update: OIP Guidance: Discretionary Disclosure and Exemption 4

January 1, 1985
FOIA Update
Vol. VI, No. 3

OIP Guidance

Discretionary Disclosure and Exemption 4

It is well known that federal agencies generally have discretion under the Freedom of Information Act to decide whether to invoke applicable FOIA exemptions. As the Supreme Court held in Chrysler Corp. v. Brown, 441 U.S. 281, 293 (1979), FOIA exemptions are not "mandatory bars to disclosure." However, in the case of "business" information, such a disclosure prohibition does exist independently in the form of the Trade Secrets Act, 18 U.S.C. § 1905, a statute which establishes criminal penalties for disclosure of the same sort of information covered by Exemption 4.

Additionally, any contemplated agency disclosure of information that would arguably be in violation of § 1905 can form the basis for a "reverse" FOIA lawsuit, because such a disclosure would not be "in accordance with law" within the meaning of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A) (1976), see Chrysler, 441 U.S. at 318, and would "constitute a serious abuse of agency discretion," NOW v. Social Security Administration, 736 F.2d 727, 743 (D.C. Cir. 1984) (Robinson, J., concurring). Therefore, it is essential that agencies carefully consider the prohibitive effect of § 1905 when processing FOIA requests for business information.

The Logical Scope of § 1905

The scope of the Trade Secrets Act has always been somewhat unclear. By its express terms, it prohibits agency employees from disclosing, unless otherwise "authorized by law" to do so, any information which "concerns or relates to the trade secrets, processes, operations, style of work, or apparatus, or to the identity, . . . amount or source of any income, profits, losses or expenditures of any person, firm, partnership, corporation, or association." 18 U.S.C. § 1905. As one court has observed, this language, if "[b]roadly read, . . . could include all information relating to the activities of all persons and business associations." Burnside-Ott Aviation Training Center, Inc. v. United States, Civil No. 82-0105, slip op. at 10-11 (S.D. Fla. June 26, 1985). Such a broad reading of § 1905, however, could easily "vitiate" the FOIA, because it would mean that "[n]o government agency could disclose any [business] data whatever despite the provisions of the FOIA, for fear of violating § 1905."Id. at 11. That exact result was specifically rejected in Canal Refining Co. v. Carrallo, Civil No. 85-1461, slip op. at 15 (D.D.C. July 1, 1985), where it was recently held that "Exemption 4 criteria define the outer scope" of the reach of § 1905.See also Burnside-Ott, slip op. at 11.

Although the Supreme Court in Chrysler expressly declined to "determine the relative ambits of Exemption 4 and § 1905," it did find that any "theoretical" difference was of "limited practical significance" in view of the similar scope of the two provisions. 441 U.S. at 319 n.49. Indeed, virtually every other court to consider the issue has found that § 1905 and Exemption 4 are "the same" or "coextensive." See, e.g., General Electric Co. v. NRC, 750 F.2d 1394, 1402 (7th Cir. 1984) ("[I]f the [information] is not protected by exemption 4, even more clearly is it not protected by section 1905 either."); General Motors Corp. v. Marshall, 654 F.2d 294, 297 (4th Cir. 1981); Dynalectran Corp. v. Department of the Air Force, Civil No. 83-3399, slip op. at 6 (D.D.C. Oct. 30, 1984).

Moreover, it must be remembered that § 1905 prohibits only the disclosure of confidential information that an agency is not otherwise "authorized by law" to release. Several courts have logically observed that even if the scope of § 1905 were to be regarded as broader than that of Exemption 4, when information does not fall within an exemption, the FOIA itself operates as the necessary "authorization by law." See, e.g., Chrysler, 441 U.S. at 319 n.49; Worthington Compressors, Inc. v. Costle, 662 F.2d 45, 55 n.59 (D.C. Cir. 1981).

Discretionary Disclosure

Therefore, when considering disclosure of information which is arguably encompassed within the seemingly broad language of § 1905, an agency must first determine whether the information falls within Exemption 4. If the requested material does not fall within Exemption 4, "disclosure will not violate section 1905." 9 to 5 Organization for Women Office Workers v. Board of Governors of the Federal Reserve System, 721 F.2d 1, 12 (1st Cir. 1983).

Of course, where Exemption 4 does apply to the information in question, "section 1905 must be considered to ascertain whether the agency is forbidden from disclosing the information." H.R. Rep. No 880, 94th Cong., 2d Sess., pt. 1, at 23, reprinted in 1976 U.S. Code Cong. & Ad. News 2183, 2205. The FOIA itself cannot be the "authorization by law" to release exempt information because by its very terms, the FOIA "does not apply" to material encompassed within its exemptions. 5 U.S.C. § 552(b);see Chrysler, 441 U.S. at 303-04. For such information, one must took elsewhere for the necessary "authorization by law" to remove § 1905's disclosure prohibition if a discretionary disclosure is to be possible. Compare, e.g., Parkridge Hospital, Inc. v. Califano, 625 F.2d 719 (6th Cir. 1980) with, e.g., J.H. Lawrence Co. v. Smith, 545 F. Supp. 421 (D. Md. 1982).


In sum, agencies should be aware that § 1905 stands as a potent barrier to the disclosure of any information that falls within the protection of Exemption 4.(*) A discretionary release of such information should not be undertaken unless it is determined that the disclosure is "authorized by law" under the standards of Chrysler and its progeny.


* In those instances where Exemption 4 could be invoked to protect solely the interests of the government -- for example, where disclosure would impair an agency's ability to obtain such information in the future, see National Parks & Conservation Ass'n v. Morton, 497 F.2d 765, 770 (D.C. Cir. 1974), or would affect its "program effectiveness," id. at 770 n.17, it is not at all clear that § 1905 should logically stand in the way of a discretionary agency disclosure. Similarly, as a matter of sound policy, information that could be withheld on the basis of its "intrinsic value," see FOIA Update, Winter 1985, at 3-4, should not now be regarded as automatically falling within the ambit of § 1905. If an agency wishes to consider making a discretionary release of such atypical Exemption 4 information, it should consult with the Department of Justice's Criminal Division, which has previously issued a prosecutorial policy regarding § 1905.See FOIA Update, Winter 1980, at 6.

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