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Freedom of Information And Open GovernmentThomas M. SusmanSantiago, Chile – November 6, 2007

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Tokyo, Japan

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Freedom of Information Affects Public, Government, and Businesses

• Benefits of open government– To the public, including businesses

– To the government

• Impact on business—– Public disclosure of information submitted

to government by businesses

– Disclosure of agency information to businesses

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Benefits to Public, Including Businesses

• More effective participation in policy formulation by government

• Improved ability to comply with laws

• Commercial, scientific, and environmental benefits

• More competitive procurement and contracting

• More efficient resource allocation

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Benefits to Government

• Higher quality of decision-making

• Improved compliance with laws and regulations

• Greater public confidence in government

• Greater accountability of officials and thus less potential for corruption

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History of U.S. FOIA

• Before the Freedom of Information Act (“FOIA”): principles of transparency respected, but no rights– Constitutional history; democratic ideals– Information disclosed that government

wanted to release– Requester must show particular interest

• Brief history in U.S.– FOIA enacted in 1966, 5 U.S.C. § 552– Subsequent amendments

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Government Disclosure of Business Information Under FOIA

• FOIA legislative history reflects little consideration given by Congress to disclosure of business information

• Text of statute: FOIA disclosure mandate does not apply to—

trade secrets and commercial or financial information obtained from a person and privileged or confidential

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Meaning of FOIA Exemption for Confidential Business Information

• Scope and meaning of exemption unclear on its face

• Courts have interpreted and given substance through many litigated cases

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Meaning of FOIA Exemption for Confidential Business Information

• Commercial information is protected

from disclosure if it is either —– Submitted to the government under

compulsion, when release would cause substantial competitive harm or impair the government’s ability to obtain information; or

– Submitted to the government voluntarily when the information would not customarily be released by the submitter to the public.

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Comparison to Proposed Legislation in Chile and Elsewhere

• Every access-to-information law or regulation respects need for confidentiality of some business information

• Most often identifies “trade secrets” (although the term may have multiple meanings)

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Comparison to Proposed Legislation in Chile and Elsewhere

• Chile’s draft access to government-held information bill would not apply where—

(b) [disclosure] may harm commercial or other economic rights, whether public or private . . . .

(d) [the information] has been obtained from a third party as confidential information. . . .

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Submitter Must be Given Notice Before Disclosure

• Executive Order 12600, issued in 1987, requires notice to submitter and opportunity to comment to agency when request made for information designated by submitter as “confidential”

• Agency has ultimate authority over decision to disclose

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No Balancing or Public Interest Override for Business Information• If information qualifies as trade secret or

confidential commercial information, it must be withheld (through interaction of Trade Secret Act’s confidentiality requirement)

• FOIA has no balancing of benefits to public from disclosure; no matter how great, benefits do not override nondisclosure requirement

• Chile’s proposed law allows withholding only if the “risk of danger outweighs the public interest promoting…disclosure”

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“Reverse-FOIA” Action

• Suit may be brought by submitter against agency to prevent disclosure under FOIA

• Suit under Administrative Procedure Act, not FOIA (therefore burden of proof is on the submitter to justify nondisclosure)

• Court may enjoin agency from disclosing trade secret or confidential commercial information

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When Is FOIA Used by Businesses?

• Public policy advocacy or oversight • Firms under investigation• In litigation with an agency (or private

litigation)• For commercial (competitive)

advantage • Contracting with the government• Rulemakings affecting business• Government benefits, plans, activities

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Business-Use Examples: Discovery of Agency “Secret Law”

• Internal Revenue Service memoranda reflecting agency’s positions to guide personnel

• National Labor Relations Board general counsel memoranda reflecting decisions not to file complaints

• Monetary policy directives by Federal Reserve Board

• Antitrust Division and other government guidance manuals for staff

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Business-Use Examples: Responding to Regulation or Enforcement Activities

• Medical and pharmacological reviews prepared in the course of agency review of new drug applications

• Scientific studies on potential dangers of gasoline additive

• Memoranda reflecting reasons why Federal Trade Commission (FTC) supported staff request for subpoena

• Files of closed customs and antitrust investigations

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Business-Use Examples: Litigation with Agency or with Third-Party

• Use in whistleblower case to obtain company Food & Drug Administration (FDA) filings

• Use in case by Indian tribes against energy companies alleging fraud

• Use by government contractor to obtain investigative report of accident

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Business-Use Examples: Obtaining Information about Competitors

• Reports filed by competing contractors disclosing numbers of employees and types of positions

• Prices and terms contained in government contracts

• Internal efficiency studies• Securities & Exchange Commission (SEC)

and FTC investigative files• FDA, Agriculture Department, and Product

Safety Commission records on products

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Attitude of Businesses Has Changed

• For much of first two decades under FOIA, businesses were hostile toward the law– No required notice or consultation (until 1987)

– Example of mistaken release by Environmental Protection Agency (EPA) of Monsanto’s valuable pesticide formula (1982)

– No distinction between information voluntarily submitted and required to be submitted (until 1992)

– Right to challenge disclosure in court not recognized (until 1979)

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Businesses Now See Value in FOIA

• Businesses and their representatives are now the # 1 users of FOIA

• Agencies afford reasonably predictable protection for trade secrets and confidential information

• Agencies listen to business arguments for nondisclosure

• Businesses in 2007 supported congressional amendments to strengthen disclosure under FOIA

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Also: Government-Required Disclosure by Companies and Individuals

• Many U.S. laws require persons and companies to disclose information to the public

• Information disclosure used to combat business corruption or as regulatory tool; examples include—– SEC (corporate information), FDA (food

and drug research), EPA (pollutants) – Ethics in Government Act (financial

disclosure)

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QUESTIONS?

Thomas M. SusmanRopes & Gray LLP700 Twelfth Street, NWSuite 900Washington, DC 20005011-202-508-4620Thomas.Susman@ropesgray.com

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