United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 6, 1999 Decided June 25, 1999
No. 98-5251
McDonnell Douglas Corporation,
Appellant
v.
National Aeronautics and Space Administration,
Appellee
Appeal from the United States District Court
for the District of Columbia
(96cv02611)
Peter L. Wellington argued the cause for appellant. With
him on the briefs was Jerald S. Howe, Jr.
Michael J. Ryan, Assistant United States Attorney, argued
the cause for appellee. With him on the brief were Wilma A.
Lewis, United States Attorney, and R. Craig Lawrence, As-
sistant United States Attorney.
Before: Silberman, Williams, and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Silberman.
Silberman, Circuit Judge: McDonnell Douglas Corporation
appeals from the district court's grant of summary judgment
in favor of the National Aeronautics and Space Administra-
tion's (NASA) decision to release certain contract line item
prices under the Freedom of Information Act. We reverse.
I.
In this reverse FOIA action, McDonnell Douglas seeks to
prevent NASA from releasing satellite launch pricing infor-
mation contained in a contract between the two, under which
the company has agreed to provide medium-light expendable
launch vehicle services. In NASA's solicitation of bids for the
contract, the agency requested the submission of proposed
prices for certain contract line items, including prices for
several launch missions and various other launch-related ser-
vices. McDonnell Douglas responded with a bid based on its
Delta launch vehicle. No other contractors submitted pro-
posals for the contract, and after further negotiations on
prices and terms--including an agreement to eliminate a
clause stating that pricing information in the contract was
considered to be in the public domain--NASA awarded the
contract to McDonnell Douglas.
Several months later, "FOIA Group, Inc." submitted a
FOIA request to NASA, seeking a copy of the contract.
NASA notified McDonnell Douglas of the request, and of the
company's opportunity to file objections within five days,
pursuant to its regulations. See 14 C.F.R. s 1206.610(b)-(d)
(1999). The company objected to the release of certain
information in the contract--including launch service prices,
cost figures for specific launch service components and over-
head, labor rates, and profit figures and percentages--on the
ground that it was protected under FOIA Exemption 4 as
confidential commercial or financial information.
Exemption 4 provides that an agency is not obliged to
disclose information consisting of "trade secrets and commer-
cial or financial information obtained from a person and
privileged or confidential." 5 U.S.C. s 552(b)(4) (1994).
Whether such information is protected turns in part on
whether it was provided to the government voluntarily or
under compulsion: if the financial or commercial information
was disclosed to the government voluntarily, it will be consid-
ered confidential for purposes of Exemption 4 if it is the kind
of information "that would customarily not be released to the
public by the person from whom it was obtained." Critical
Mass Energy Project v. Nuclear Regulatory Comm'n, 975
F.2d 871, 879 (D.C. Cir. 1992) (en banc). If the information
was required, however, it will be considered confidential only
if disclosure would be likely either (1) to impair the govern-
ment's ability to obtain necessary information in the future;
or (2) to cause substantial harm to the competitive position of
the person from whom the information was obtained. See id.
at 878-80 (reaffirming test of National Parks & Conservation
Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974), but
confining it to cases of compelled disclosure). Although if the
information falls within Exemption 4, the agency is not pre-
cluded from disclosing it under FOIA (an exemption simply
means that the government is not compelled to disclose it),
see Chrysler Corp. v. Brown, 441 U.S. 281, 290-95 (1979);
CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1133 n.1 (D.C.
Cir. 1987), we have held that the Trade Secrets Act, 18 U.S.C.
s 1905 (1994), "is at least coextensive with that of Exemption
4 of FOIA," id. at 1151. Accordingly, when a person can
show that information falls within Exemption 4, then the
government is precluded from releasing it under the Trade
Secrets Act. See McDonnell Douglas Corp. v. Widnall, 57
F.3d 1162, 1164 (D.C. Cir. 1995).
McDonnell Douglas claimed that since its decision to enter
into the contract was voluntary, providing bid information as
part of that contract was also voluntary. Therefore, Critical
Mass governs, and Exemption 4 applies because bid informa-
tion is not the kind of information that it would customarily
release to the public. Alternatively, the company argued
that, even if it were obliged to provide the information to
NASA, the information fell within Exemption 4 under Na-
tional Parks because disclosure would likely impair the gov-
ernment's ability to obtain such information in the future and
would likely cause substantial harm to McDonnell Douglas'
competitive position. Since the information falls under Ex-
emption 4--either under Critical Mass or National Parks--
the company asserted that the Trade Secrets Act precludes
the agency from releasing it.
NASA rejected these arguments and issued a Notice of
Intent to release the contract's line item pricing information.
NASA determined that the company was obliged to provide
the information in the contract, therefore, National Parks
and not Critical Mass was the controlling standard. Al-
though NASA determined that the disclosure of certain infor-
mation--labor rates, overhead factors, profit information, and
launch service cost figures--was likely to cause substantial
competitive harm to McDonnell Douglas and would not be
released, NASA regarded the line item pricing information
differently; it rejected the contention that competitive harm
was likely, reasoning that release of pricing information
would not allow competitors to underbid McDonnell Douglas,
nor would it allow the company's commercial customers to
negotiate more effectively and thereby "ratchet down"
McDonnell Douglas' prices.
The company filed this reverse FOIA suit, alleging that
NASA's decision to release the line item pricing information
was unlawful under the APA. On cross motions for summary
judgment, the district court granted summary judgment for
the agency. See McDonnell Douglas Corp. v. NASA, 981
F. Supp. 12, 13 (D.D.C. 1997).
II.
The company not only argues that Critical Mass applies--
that its submission of bidding information is part and parcel
of the voluntary act of submitting a bid--but it claims that
the administration, through the Justice Department, is unlaw-
fully seeking to nullify our recent Critical Mass decision by
taking an unduly restrictive interpretation of "voluntary"
submissions, and by instructing agencies to operate as if
Critical Mass had never been decided and only National
Parks governed Exemption 4 cases. If the government will
not make a good faith effort to distinguish the submission of
Exemption 4-type information that is voluntary from that
which is required, it is argued we should use the Critical
Mass test alone to determine whether information is confi-
dential under Exemption 4 and the Trade Secrets Act. Ac-
cordingly, appellant goes so far as to ask us (presumably
through another en banc rehearing) to flatly overrule Nation-
al Parks.
Although it seems somewhat troubling that Justice, in 1993,
instructed the agencies that they "should" treat "most" infor-
mation given to the government as "required," without any
serious effort analytically to distinguish voluntarily supplied
information from that which is required within the meaning of
Critical Mass, we do not think it is even necessary in this
case to decide whether appellant's bidding information was
voluntarily submitted--still less whether we should, as a full
court, reconsider overruling National Parks. That is so
because assuming arguendo that National Parks applies--
that the bidding information was not voluntarily submitted--
we believe the disputed line item price information is confi-
dential commercial or financial information under the Nation-
al Parks test.
It is undisputed that the total price of the contract may be
made public. But the government does not claim that it or
NASA has any independent legal authority to release line
item pricing information. It does point out that NASA has a
long and consistent practice of doing so. That is of no
consequence. If commercial or financial information is likely
to cause substantial competitive harm to the person who
supplied it, that is the end of the matter, for the disclosure
would violate the Trade Secrets Act. To be sure, we noted in
a previous case that "it appeared passing strange" that the
prices charged to the government for specific goods could be
confidential, McDonnell Douglas v. Widnall, 57 F.3d at 1167,
but we did not address the competitive harm issue in that
case.
Appellant claimed the release of line item pricing informa-
tion would cause it competitive harm for two reasons: it
would permit its commercial customers to bargain down
("ratchet down") its prices more effectively, and it would help
its domestic and international competitors to underbid it (the
company claimed that disclosure of the line item pricing data
would allow competitors to calculate its actual costs with a
high degree of precision).
NASA's response to appellant's concern that its customers'
bargaining leverage will be enhanced is rather mystifying.
The agency said that publication of line item prices is the
"price of doing business" with the government, which either
assumes the conclusion, or else assumes a legal duty or
authority on the government to publicize these prices, which,
as we have noted, the government does not assert. NASA
did recognize that if disclosure enabled competitors to under-
bid McDonnell Douglas that would constitute competitive
harm. See Gulf & Western Indus., Inc. v. United States, 615
F.2d 527, 530 (D.C. Cir. 1979). But the agency "reasoned"
that underbidding due to the disclosure would not occur
because price is only one of the many factors used by the
government in awarding contracts. That response seems too
silly to do other than to state it, and pass on.
Perhaps the most convoluted--even astonishing--reason
given by NASA for claiming appellant would not be likely to
suffer competitive harm is that "it is [McDonnell Douglas']
competitors who have suffered competitive harm in failing to
learn the prices for [McDonnell Douglas'] domestic launch
vehicles" since their line item prices have become public.
(Emphasis added.)1 As should be obvious, by so stating,
NASA implicitly recognized that it would be to the competi-
tor's advantage to receive McDonnell Douglas' line item price
information. Of course, it follows that appellant will be
competitively harmed by that disclosure. That appellant's
__________
1 NASA also argued, inconsistently, that disclosure would not be
harmful to the company's competitive position because competitors
can underbid McDonnell Douglas now with information already
available.
competitors have not attempted to stop the disclosure of their
line item prices is of no significance in determining the issue
before us.2
* * * *
NASA's decision could either be seen as not in accordance
with law because relesing the information would be contrary
to the Trade Secrets Act, or as arbitrary and capricious for
its illogical application of the competitive harm test. Under
either rubric, the decision must be set aside. Both of the
reasons McDonnell Douglas advanced for claiming its line
item prices were confidential commercial or financial informa-
tion are indisputable. McDonnell Douglas has shown--as
much as anyone can show before the event--that it is likely to
suffer substantial competitive harm. And under present law,
whatever may be the desirable policy course, appellant has
every right to insist that its line item prices be withheld as
confidential.
__________
2 We need not address McDonnell Douglas' alternative argument
that disclosure of its pricing information would also satisfy the
impairment prong of National Parks. Though we do note that one
circuit has held that a submitter cannot even raise the government's
interests on behalf of the agency in a reverse FOIA case. See
Hercules, Inc. v. Marsh, 839 F.2d 1027, 1030 (4th Cir. 1988).