Business Paranoia Threatens FOIA

The Freedom of Information Act (FOIA) this year celebrates its 20th Anniversary. For 20 years the Act has opened government records up to public scrutiny-millions of documents on waste, fraud and inaction have been ferreted out from the exhaustive files of the federal government. Much to the chagrin of the business community, the government's files on corporate records are also subject to public examination, and to the scrutiny of commercial competitors as well. Because of this, some government and corporate officials have chosen to mark the FOIA's 20th Anniversary by trying to clamp down on open dissemination of information.

These business and government critics charge that the FOIA has gone far beyond its intended purpose and is being used as a tool for commercial espionage. These critics of a broad FOIA say the Act is being abused by businesses seeking to gather information from the federal government about their competitors. Some government agencies estimate that over half of all the FOI requests they receive are made by companies or attorneys representing commercial clients. The Department of Health and Human Services has estimated that as many as 80 percent of its requests come from businesses.

Businesses have used the FOIA to monitor the market and locate new products, or new uses for old products, which their competitors may be testing or seeking to license. They have also gathered information about price structures, overhead rates, and other corporate data needed in contract negotiations. And they have obtained information about their competitors' labor force and the cost-effectiveness of competing operations.

The FOIA market has become so profitable in recent years that a cottage industry of information brokers has grown up around agencies like the Food and Drug Administration and the Environmental Protection Agency. For a hefty fee, these concerns submit requests for commercial data. Many companies have started making FOI requests merely to find out who is requesting federal information about them.

Some see this commercial merry-go-round as a subversion of the Act, clearly not what Congress intended. At many agencies the administrative burden of processing these commercial requests means extensive delays for all users of the FOIA.

Others argue, however, that restricting the rights of commercial entities to make FOIA requests violates the Act's long-standing tradition of making information available to "any person" without consideration of the purpose of the request. The twenty-year history of the act, they argue, has proven its value as a vehicle for exposing waste, fraud, and corruption in both business and government.

And they point out that through the FOIA the public has learned that:

• a government researcher was transferred abruptly when his preliminary research showed an increase in cancer among plutonium workers in a Hanford, Washington plutonium facility;
• anesthetic drugs given to women routinely during childbirth caused brain damage to their babies;
• a gaseous diffusion plant operated by the Goodyear Atomic Corporation in Piketown, Ohio, narrowly averted disaster when more than 10 tons of liquid uranium hexafluoride were released in March, 1978; and
• General Motors knowingly sold cars containing one or more faulty components.

Supporters of the FOIA in Congress include Rep. Gerald Kleczka (D-Wis.), a member of the House Subcommittee on Government Information and Rep. Glenn English (D-Okla.), subcommittee chairman. Last September, Kleczka introduced a bill which would improve FOIA processing procedures, discipline government agents who handle FOI requests arbitrarily, and increase public access to documents restricted by current FOIA exemptions.

Kleczka's bill would also establish uniform fees for FOIA searches, broaden the use of fee waivers for journalists, researchers and non-profit groups, and allow requesters to receive reimbursement for expenses incurred convincing an agency to release documents.

The bill, as expected, was coldly received by the business community. In early October, Rep. Thomas Kindness, (R-Ohio) ranking minority member on the subcommittee introduced a bill on business procedures that would increase government protection of business documents.

Late last year and early this year, Congressman English attempted to work out a consensus bill which would improve the use of the FOIA for all requestors. Working from both bills, English also solicited input from the justice Department.

Discussions finally broke down when a large number of federal agencies voiced opposition, principally to a provision in the draft establishing an expedited access process. With regret, English then introduced a version of the bill which dealt only with business procedures.

The current Freedom of Information Act already recognizes the commercial value in some of the information that businesses submit. Information exempted under the Act includes "trade secrets and commercial or financial information obtained from a person." As interpreted by the courts, this exemption authorizes agencies to withhold commercial or financial information whenever disclosure would `impair the government's ability to obtain necessary information in the future" (generally used to protect information voluntarily submitted to the government) or where disclosure would "cause substantial harm to the competitive position" of the person from whom the information was obtained. The Trade Secrets Act also makes it a crime for federal employees to release trade secret information.

But business interests claim that federal agencies are not as sensitive to commercial information as they should be. Yet opponents cite only two instances where agencies have released sensitive information. In one, an agency employee had prepared a redacted set of documents but released the original set instead. In the other, an ingredient of one of Monsanto's herbicides was accidentally released when an employee failed to fully black out the entry before copying the page.

The business community argues that the Act has also had an adverse impact on their economic interests. An American helicopter-maker, Sikorsky, is said to have pulled out its bid on a multi-million dollar contract with the Coast Guard when it was told that its technical specifications would be subject to disclosure under the FOIA. The Act also gives foreign companies access to information about their oompetitors. The British carmaker BL, for example, gained access to Detroit's car-test data; and Suzuki even acquired information about its fellow Japanese carmaker, Toyota.

Arguments like these have convinced some lawmakers that the release of information on U.S. businesses needs to be more strictly controlled within the Reagan administration. Support has also been growing for new procedures to allow businesses which submit documents to the federal government more control over the release of their information.

Employees of most federal agencies are allowed to confer with businesses when requests for potentially sensitive information are considered. Some have even set these procedures down in agency regulations. The EPA has asked businesses to designate information "confidential" at the time it is submitted, so that the agency can decide its status even before a FOI request has been made.

Other agencies review documents only after a request has been received, but solicit comments from the submitting business prior to making any release. The Food and Drug Administration does the same when agency personnel feel they need further information to determine the releasability of information.

The Supreme Court has held that businesses which submit information to the federal government have the right to go to court to stop the disclosure of information which they believe to be commercially sensitive. However, since that right has not been spelled out in the Freedom of Information Act, courts review only agency decisions regarding release of information. The court has the authority to make its own independent decision as to whether or not documents fall within one of the FOIA's exemptions and can reverse the agency's decision to disclose if it finds that decision to be arbitrary or capricious.

Defenders of full public access under the FOIA have opposed changes to give businesses further exemptions. Most have focused on the increased time which will be required to process requests under the new procedures. Like Rep. Kindness' bill, Rep. English's version establishes a 35-day waiting period from the time a request is received by an agency before it can release information which a business has designated as confidential. It also establishes government-wide procedures permitting businesses to receive notice of requests for their information and allows for an expedited review process where a substantial public interest in expedition can be shown.

Organizations which advocate increased public access to federal documents have acknowledged that business submitters are entitled to receive notice of agency disclosures, but they fear that necessary public access to business documents will be curtailed. They say that in the final analysis, unimpaired public access to information overrides commercial concerns.

Elaine English is director of the FOI Service Center, a project of the Reporters Committee for Freedom of the Press. She is also assistant managing editor of The News Media and the Law.