A presidential executive order has been promulgated to address the process by which federal agencies determine whether to disclose business information under the Freedom of Information Act.
Executive Order No. 12,600, issued on June 23, formally establishes a procedural structure for notifying those who submit business information to the government when that information becomes the subject of a FOIA request. It is based upon the principle that business submitters are entitled to such notification and an opportunity to object to disclosure before an agency makes a possible disclosure determination.
Implementing Regulations
Under Executive Order No. 12,600, all executive departments and agencies subject to the FOIA are directed to promulgate specific regulations by which they must afford these basic procedural protections to all persons or entities who submit "confidential commercial information" to them. That term is defined in the order as "records provided to the government by a submitter that arguably contain material exempt from release under Exemption 4 of the [FOIA], because disclosure could reasonably be expected to cause substantial competitive harm."
Each agency's regulations must establish procedures by which business submitters may designate their information as "confidential commercial information" at the time of its submission to the agency. These designations may be deemed to expire after the passage of a time period specified in an agency's regulations, but post-submission designations also are to be permitted.
As a general rule, once an agency receives a FOIA request encompassing designated information, it will be obligated under its regulations to notify the submitter and to afford "a reasonable period of time" in which the submitter may object to disclosure of any or all portions of the information. Such objections should be made in writing and must "state all grounds upon which disclosure is opposed." At the same time, the FOIA requester should be notified of this ongoing process.
Where an agency determines not to sustain a submitter's objection in any respect, it will be required to provide the submitter with a written statement explaining why it has determined to disclose, and it must do so "a reasonable number of days prior to a specified disclosure date." This affords the submitter an opportunity to seek possible court intervention in the matter -- in a "reverse" FOIA lawsuit -- if the submitter disagrees with the agency's disclosure decision. In such a case, the basis for judicial review is the administrative record that is created through the agency's submitter-notice process.
Executive Order No. 12,600 provides for these same procedures to be followed even in the absence of a designation, wherever an agency "has reason to believe" that disclosure could cause substantial competitive harm. By the same token, it recognizes exceptions to the basic submitter-notice requirements in cases of "obviously frivolous" designations, of pre-existing disclosures, or where disclosure is required by some other law. A major exception is provided also where an agency determines at the outset that the information should not be disclosed.
Agency Practice
The submitter-notice procedures now mandated by this executive order are essentially the same as those set forth as a matter of governmentwide FOIA policy several years ago. See FOIA Update, June 1982, at 3. Most federal agencies have long followed such practices, in many instances pursuant to formal guidelines or regulations. See FOIA Update, Fall 1983, at 1, 12. Dissatisfaction with some agency practices in this area, however, prompted business interest groups to seek the firm establishment of submitter-notice procedures through amendment of the FOIA, an effort which waned near the end of last year. The implementation of Executive Order No. 12,600 now should put such concerns to rest.
The full text of Exec. Order No. 12,600, 52 Fed. Reg. 23781 (1987), appears on pp. 2-3 of this issue.
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