FOIA Update: Predisclosure Business Notification Procedures

In the spring of 1982, the Office of Information and Privacy conducted a survey of business submitter notification practices at 50 federal agencies, which revealed that while it was the prevailing practice to notify and consult with business information submitters before making a FOIA release of their data, many agencies had no regulations or even formal practices in this area. The survey was conducted in connection with the development and issuance of specific policy guidance on business submitters' rights by OIP, in coordination with the Presidential Task Force on Regulatory Relief. See FOIA Update, June 1982, at 3-5.

Recently, OIP resurveyed these agencies and found considerable progress in this area, as well as a continuing increase in the numbers of FOIA requests received for records containing business data.

For example, requests for business information were relatively rare 18 months ago at the Departments of Education and State. Over the past year, however, FOIA requests for data in contracts and bid proposals at the Department of Education have increased sharply, according to Richard S. Werksman of the Office of General Counsel at Education. Werksman says his agency is now planning to codify its business subrnitter notification procedures in new FOIA regulations. Business data requests are also up slightly at the Department of State, where FOIA legal advisor Dennis I. Foreman, increasingly sensitive to this area, finds himself consulting carefully with business submitters in connection with requests for their information.

As part of its overall revision and update of its FOIA and Privacy Act regulations, the Department of Justice has prepared a regulation that contains detailed business submitter notification procedures. This new regulation, see 28 C.F.R. § 16.7 (proposed), 48 Fed. Reg. 35896 (Aug. 8, 1983), codifies the Department's existing business information practices and also includes the following provisions:

• For business information submitted to the Department prior to Jan. 1, 1984, written notice to a submitter that there has been a request for his material is mandatory where information is less than 10 years old, where information was obtained under a promise of confidentiality, or where the agency has reason to believe that disclosure could result in commercial or financial harm to the business submitter.

• For information submitted after Jan. 1, 1984, written notice to the submitter is required if the submitter has specifically designated the information as "commercially or financially sensitive" or if the agency believes that disclosure could result in commercial or financial harm to the submitter.

• Exceptions to the notice provisions are made for information readily determined to be exempt, for information that either must be disclosed or must be withheld pursuant to another statute, for information that is already public, and for data compiled by a law enforcement component of the Department in the course of a lawful criminal investigation.

At least two agencies, the Federal Maritime Commission and the Office of Personnel Management, intend to adopt business notification regulations or procedures patterned after the Justice Department's new regulation.

Several other agencies, including the Department of Commerce, the Department of Transportation, the Federal Reserve Board, and the United States Postal Service, now have such new business submitter notification regulations in the works. At these agencies, such new regulations will serve to codify their existing predisclosure notification procedures.

Charles D. Hawley, assistant general counsel at the Postal Service, reports that "one of our priorities is to develop and to make rules to ensure the contacting of submitters . . . it will really be an effort to formalize our procedures."

Nonregulatory efforts are currently underway at other major agencies, such as HUD and Treasury, to formalize their practices in this area. Such measures include issuance of a directive to all components instructing program officers to consult submitters before processing any FOIA request for information that is commercial in nature. Indeed, agency officials now widely recognize the importance and value of such efforts. "There are times when you may think material has to be withheld and you go to the submitter and ask, and he doesn't mind a bit. The submitter is a really good resource." says one agency attorney.

As an example that the smaller agencies are not lagging behind in this area, the Pension Benefit Guaranty Corp. has already adopted as formal policy the Justice Department guidance to agencies published in the June 1982 FOIA Update.

One agency, the Food and Drug Administration, has been reluctant to adopt extensive business submitter notification practices because of their heavy burden and expense. As a general rule, FDA has provided notice to business submitters only where its staff believes that there is a "close call" as to whether requested data should be protected. However, in response to increasing expressions of concern from Congress and elsewhere about its business data practices, FDA has recently decided to modify its position to apply its "close call" approach more broadly. FDA says that this new practice, which should lead to greater notification, was chosen to afford that agency an opportunity at this time to gain more experience with notification "on a relatively small scale and at a minimum expense."

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