Federal Trade Commission v. Owens-Corning Fiberglas Corporation v. Michael Pertschuk Federal Trade Commission v. Owens-Corning Fiberglas Corporation

Opinion for the court filed by Circuit Judge TAMM.

Opinion concurring in part and dissenting in part filed by Circuit Judge WALD.

TAMM, Circuit Judge:

This case comes before us on cross-appeals from an order of the United States District Court for the District of Columbia that enforced, subject to certain conditions, three subpoenas duces tecum issued by the Federal Trade Commission. The appellants, respondents in the enforcement action, seek further protections against public disclosure of trade secrets that they assert appear in the documents under subpoena. The Commission disagrees and, in addition, argues that the district court exceeded its authority by attaching conditions to the subpoenas beyond those appearing in the Commission’s original orders. We conclude that the issues presented by the appellant are either meritless or not yet ripe for review and that the protective conditions added by the district court are unwarranted. We therefore affirm the order insofar as it enforces the subpoenas as issued, and we vacate those portions of the order that impose further restrictions.

I. BACKGROUND

The facts in this case are straightforward. As part of a nonpublic antitrust investigation of the insulation industry, the Commission staff in July of 1977 issued virtually identical subpoenas duces tecum to *969Owens-Corning Fiberglas Corporation, Johns-Manville Corporation, and Certain-Teed Corporation, the appellants herein. The subpoenas asked for various documents containing technical, business, and financial information about the thrée companies. After meetings with members of the Commission staff produced mutually satisfactory modifications, the appellants submitted nonconfidential documents to the Commission. They refused, however, to turn over certain other documents that they claimed contain trade secrets.1

The Commission agreed to afford the withheld documents confidential treatment under its customary procedures for handling such information.2 Specifically, it committed itself to giving the company that submitted a document ten days’ notice before disclosing its contents to anyone outside the Commission. The Commission nevertheless excepted from this procedure official requests from courts or arms of Congress. In these instances, it promised “ten days’ prior notice where possible, and in any event as much notice as can reasonably be given.” Joint Appendix (J.A.) at 233, 237, 311, 315 (letters from the Commission staff to appellants’ counsel). Subsequently, the appellants tendered additional documents, but they still refused to surrender the rest without further assurances of confidentiality.

On October 23,1978, the Commission filed a petition in the district court for an order to enforce the subpoenas under section 9 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 49 (1976). The appellants, respondents in the district court, filed substantially identical counterclaims asking for a declaration that the documents contain trade secrets within the meaning of the Trade Secrets Act, 18 U.S.C. § 1905 (1976),3 and section 6(f) of the FTC Act, 15 U.S.C. § 46(f) (1976),4 and that the documents are exempt from release under the Freedom of Information Act (FOIA), 5 U.S.C. § 552 (1976). They also sought a protective order that would provide additional guarantees of confidentiality.5

*970On January 31,1979, the court entered an order dismissing the counterclaims and enforcing the subpoenas subject to the Commission’s promised procedures regarding confidentiality, with two additions. First, the order requires the Commission in the case of a congressional or a judicial request “immediately, forthwith upon receipt by it of such a request, [to] advise the respondent which had furnished the document, by telephone and by a written communication, that the request has been made and indicate the nature and extent of the request.” FTC v. Owens-Coming Fiberglas Corp., Misc. No. 78-313, at 2 (D.D.C. Jan. 31,1979) (order enforcing subpoenas), reprinted in J.A. at 11, 12. Second, in the case of congressional requests the order obliges the Commission to “verif[y] that the request is made in accordance with the controlling congressional rule, and [to advise] the requestor that the respondent has claimed that the document contains confidential trade secrets.” Id. This order is now before us on cross-appeals, the appellants contending that the district court did not go far enough and the Commission that it went too far.

II. COMMISSION DISCLOSURE OF CONFIDENTIAL INFORMATION

Before embarking on an analysis of the particular arguments raised by the parties, we believe it useful to recapitulate in general terms the law governing Commission disclosure of information contained in confidential documents it has obtained under subpoena. Specifically, appellants are troubled by requests from two sources, Congress and the general public.6 We therefore shall review the Commission’s formal release of secret information to these groups, either voluntarily or pursuant to some request that by law it must grant.

A. Congressional Requests

Recently this court has had several occasions to discuss congressional requests for confidential documents in the hands of the Commission. In particular, we have held explicitly that the Commission may not deny Congress access to confidential documents, including those that contain trade secrets. E. g., Exxon Corp. v. FTC, 589 F.2d 582, 585-86 (D.C. Cir. 1978), cert. denied, 441 U.S. 943, 99 S.Ct. 2160, 60 L.Ed.2d 1044 (1979); Ashland Oil, Inc. v. FTC, 548 F.2d 977, 979 (D.C. Cir. 1976). Release to a congressional requestor is not a public disclosure forbidden by section 6(f) of the FTC Act. Exxon Corp. v. FTC, 589 F.2d at 589; Ashland Oil, Inc. v. FTC, 548 F.2d at 979. Moreover, courts may not require the Commission to delay surrendering documents to Congress to notify affected parties in advance, for the judiciary must refrain from slowing or otherwise interfering with the legitimate investigatory functions of Congress. FTC v. Anderson, No. 78-1032 (D.C.Cir. Sept. 17, 1979); Exxon Corp. v. FTC, 589 F.2d at 588-89. Once documents are in congressional hands, “courts must presume that the committees of Congress will exercise their powers responsibly and with due regard for the rights of affected parties.” Id. at 589 (citing Ashland Oil, Inc. v. FTC, 548 F.2d at 979).7 A court may not block disclosure of information in Congress’s possession, at least when the disclosure would serve a valid legislative purpose. Doe v. McMillan, 412 U.S. 306, 93 S.Ct. 2018, 36 L.Ed.2d 912 (1973) (construing the speech and debate clause, U.S.Const. art. I, § 6, cl. I).8

B. Public Requests Under the FOIA

Members of the public also may obtain information from agency “records” *971under the Freedom of Information Act. See 5 U.S.C. § 552(a)(3) (1976).9 An agency must release the material sought unless it falls within an exemption found in the statute. See id. § 552(b)-(c). The fourth such exemption permits an agency to withhold “trade secrets and commercial or financial information obtained from a person and privileged or confidential. . . .” Id. § 552(b)(4). The exceptions listed in the FOIA do not prohibit an agency from releasing material sought; they only allow the agency to deny access. Chrysler Corp. v. Brown, 441 U.S. 281, 293, 99 S.Ct. 1705, 1713, 60 L.Ed.2d 208 (1979). Nevertheless, the Trade Secrets Act10 expressly forbids an agency to release trade secrets or other confidential information in its possession, except as authorized by law. See id. at 290-94, 99 S.Ct. at 1712-14.

Upon receiving a request for a document in its possession, the agency itself decides in the first instance whether it includes trade secrets or other confidential information. If the agency concludes that the document is not confidential, it must release the information. The party that submitted the document, however, may challenge in court the agency’s evaluation and decision to release as “agency action not in accordance with law” under 5 U.S.C. § 706(2)(A) (1976), because release of protected information would violate the Trade Secrets Act. Chrysler Corp. v. Brown, 441 U.S. at 318, 99 S.Ct. at 1726.11 On the other hand, if the agency believes it should withhold the document as confidential, the public requestor may file an action in a federal district court to compel its disclosure under 5 U.S.C. § 552(a)(4) (1976). Thus, no matter what conclusion the agency reaches concerning the confidential status of the information, the losing party may seek judicial review of this decision.

III. PRESENT DETERMINATION OF THE DOCUMENTS’ STATUS AS TRADE SECRETS

The appellants argue first that we should require the Commission to determine now, in advance of any request for information, whether the documents contain any trade secrets. The appellants believe that such a determination would carry more *972weight with members of Congress and their staffs and thus would deter release once in congressional hands. Even assuming this hypothesis is true, it does not follow that the Commission must give its advice to Congress. Courts do not render advisory opinions, and we see no reason to require an agency to do so. The Commission has promised to notify the affected appellant of any congressional request, in advance of the documents’ transfer when possible, and to inform the recipient that the appellant regards the information as confidential and needing protection. Thus, the appellants will be able to seek confidential treatment from the requestor itself usually before it receives the information but in any event soon thereafter. In the meantime, we must assume that arms of Congress will act discreetly, with due regard for the documents’ sensitive nature. See p. 970 supra.12

IV. RIPENESS

The appellants also present several arguments concerning the documents' status as trade secrets or Commission “records” and the Commission’s treatment of them at the end of its investigation. Specifically, the appellants ask us to order the Commission to return the documents upon completion of its investigation or any subsequent litigation, to hold that the Commission’s definitions of “trade secrets” is too narrow, and to declare that the documents are not Commission “records” under the FOIA. The Commission counters that these claims are not yet ripe for review. In evaluating arguments of ripeness, we must ask whether the issues have been presented in a form appropriate for judicial resolution and what hardships the parties would face by a delay in consideration of their claims. Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967); Gardner v. Toilet Goods Association, 387 U.S. 158, 162, 87 S.Ct. 1520, 1523, 18 L.Ed.2d 697 (1967). Applying this analysis to the questions raised by the appellants, we conclude that they are not yet ripe for our consideration.

We may dismiss quickly the appellants’ contention that, at the present time, we should order the Commission to return the documents at the end of its investigation. An order compelling return would become appropriate only if the Commission were to withhold the documents unlawfully at some point in the future. The Commission has listed several situations in which it might have legitimate reasons to retain the documents beyond the completion of its in*973vestigation of the appellants.13 At the mo ment, we do not know when the investigation will end, whether the Commission will attempt to retain the documents, or what justification it might have if it does, if any is required at all. Our refusal to act now in no way prevents the appellants from seeking judicial relief should the Commission act unlawfully in the future.

We turn now to the questions concerning the documents’ status as trade secrets and Commission “records.” So far, no one has requested information from the documents. Should it receive a request from a member of the public under the FOIA,14 the Commission will be fully capable then to make its determination, in the context of a particular document. Until that time, any evaluation of the Commission’s views on trade secrets will focus on abstract principles instead of the contents of a specific document. Given the rapid pace of technological change — today’s trade secret easily can become tomorrow’s common knowledge — a ruling unrelated to particular pieces of information is of little value. Deferring consideration of the documents’ status as trade secrets and Commission “records” helps ensure the full factual development of the case. See FTC v. Anderson, at -. Moreover, any decision that this court or the Commission might make would not necessarily bind a requestor appearing later, for he would not have been a party to this case. Thus, we believe the issues have yet to crystallize into a form that permits judicial resolution.

Furthermore, little hardship will befall the appellants by delaying consideration of these questions until a request actually occurs. In the first place, the Commission has indicated that in practice it refuses FOIA requests for documents accorded confidential treatment even if they do not contain trade secrets. See note 12 supra. Should the Commission change its policy and decide to release information contained in the documents, the appellant affected will receive ten days’ notice and be able to enter court then to challenge the release as an abuse of discretion or as Commission action not in accordance with law.15 If, on the other hand, the Commission denies the request, the party seeking the information can file its own action to force disclosure. In either event, the status of the documents, both as trade secrets or confidential information and as Commission “records,” will be subject to full judicial evaluation at that time. See FTC v. Anderson, at-.

V. THE PROTECTIVE ORDER

Both the appellants and the Commission challenge the district court’s final protective order. The appellants contend that the district court abused its discretion in not adding further protections to ensure nondisclosure of information in the documents. The Commission argues that the promises of protection in its original subpoena order and letters according confidential treatment were within its discretion and thus the district court exceeded its authority in imposing additional safeguards. Because we believe the Commission did not abuse its discretion, we must vacate the portions of the district court’s order imposing further conditions on the Commission and refuse to add the protections sought by the appellants.

Section 9 of the FTC Act, 15 U.S.C. § 49 (1976), gives the district courts jurisdiction to enforce subpoenas issued by the *974Commission. Although leaving this power in the courts rather than the Commission indicates that judges should not simply rubber-stamp Commission subpoenas, see generally SEC v. Arthur Young & Co., 584 F.2d 1018, 1032-33 (D.C. Cir. 1978), cert. denied, 439 U.S. 1071, 99 S.Ct. 841, 59 L.Ed.2d 37 (1979), their role is limited to determining “if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant,” United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 369, 94 L.Ed. 401 (1950), quoted in FTC v. Anderson, at 369 slip op. at 5. With regard to protective conditions, the court asks whether the agency has abused its discretion in providing safeguards. See FCC v. Schreiber, 381 U.S. 279, 291, 85 S.Ct. 1459, 1468, 14 L.Ed.2d 383 (1965); FTC v. Texaco, Inc., 555 F.2d 862, 884 n.62 (D.C. Cir.) (en banc) (“it is the agencies, not the courts, which should, in the first instance, establish the procedures for safeguarding confidentiality”), cert. denied, 431 U.S. 974, 97 S.Ct. 2939, 53 L.Ed.2d 1072 (1977).

The district court’s additions in this case apparently are designed to ensure the fastest possible notice to the affected appellant if a court or an arm of Congress seeks a subpoenaed document. These procedures very well may be reasonable ones. The question before us, however, is “whether the exercise of discretion by the Commission was within permissible limits, not whether the District Judge’s substituted judgment was reasonable.” FCC v. Schreiber, 381 U.S. at 291, 85 S.Ct. at 1468 (emphasis in original). Here, the Commission has promised to give as much notice as it reasonably can once it determines that it must honor a congressional or a judicial request. It has pointed out that historically it has been able to provide the full ten days’ notice in almost every case. J.A. at 783 (affidavit of Barry R. Rubin). The Commission also has agreed to inform the requestor that the appellant believes the information sought is confidential. These guarantees appear sufficient to safeguard the appellants’ interests. The incremental protection afforded by the district court’s additions is speculative and minimal, and the changes would only burden the Commission by forcing it to halt other activities to contact the appellant affected immediately upon receipt of a request.

The court’s order also requires the Commission to verify that a request purportedly coming from Congress has been made in accordance with applicable rules. The Commission, in conferring confidential treatment on the documents, has excepted from its commitment to ten days’ notice only “official” congressional requests. Implicitly , then, it makes some effort to screen out unofficial ones.16 Again, the district court’s additions contribute little, if any, protection beyond what the Commission has volunteered to provide. Indeed, in this instance, they may embroil the Commission in needless disputes with members and committees of Congress over the propriety of their requests. See generally Murphy v. Department of the Army, 613 F.2d at 1157 (D.C. Cir. 1979).

The Commission has promised to give as much notice as it reasonably can *975once it has determined that it must honor a congressional or a judicial request. It has agreed to inform the requestor that the appellant that submitted the information sought regards it as confidential. Agencies are free to determine their own procedures, as long as they do not violate constitutional or statutory safeguards. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519, 543-44, 98 S.Ct. 1197, 1121-22, 55 L.Ed.2d 460 (1978); FCC v. Schreiber, 381 U.S. at 290, 85 S.Ct. at 1467. See Exxon Corp. v. FTC, 589 F.2d at 587. Moreover, until evidence appears to the contrary, agencies are entitled to a presumption of administrative regularity and good faith. See, e. g., Association of National Advertisers v. FTC, 627 F.2d 1151 at 1174 (D.C.Cir. 1979); Hercules, Inc. v. EPA, 598 F.2d 91, 123 (D.C. Cir. 1978). With no indication that the Commission will act cavalierly or in bad faith, its promises of advance notice and release only pursuant to official requests adequately protect the appellants’ interests and thus fall within its discretion. The district court thus erred in imposing further terms on the subpoenas as issued.17

VI. CONCLUSION

The Commission has ample tools at its disposal to ensure confidential treatment for the documents under subpoena while those documents are in its control. Likewise, we must assume until shown otherwise that any congressional committee or subcommittee obtaining them will act with due regard for the appellants’ rights. With no actual request for the information before us and with no present demonstration that the Commission will mishandle the documents once it possesses them, we must affirm the district court’s order insofar as it enforces the Commission’s subpoenas subject to the conditions the Commission imposed on itself, and we must vacate the portions of the order that impose additional restrictions on the Commission’s future conduct.

It is so ordered.

. Specifically, the appellants contend that the documents contain detailed information concerning costs, sales, profits, customers, markets, business plans and strategies, plants and equipment, research and development, and new and secret processes.

. The Commission’s general procedures regarding confidentiality and access appear in the FTC Operating Manual, ch. 15, reprinted in Joint Appendix (J.A.) at 715-42.

. This statute provides:

Whoever, being an officer or employee of the United States or of any department or agency thereof, publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, or return, report or record made to or filed with, such department or agency or officer or employee thereof, which information concerns or relates to the trade secrets, processes, operations, style of work, or apparatus, or to the identity, confidential statistical data, amount or source of any income, profits, losses, or expenditures of any person, firm, partnership, corporation, or association; or permits any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; shall be fined not more than $1,000, or imprisoned not more than one year, or both; and shall be removed from office or employment.

18 U.S.C. § 1905 (1976).

. This section provides in relevant part that the Commission shall have the power “[t]o make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest . . . .” FTC Act § 6(f), 15 U.S.C. § 46(f) (1976) (emphasis added).

. In particular, the appellants asked the district court to enter an order compelling the Commission (1) not to disclose the documents to persons outside the Commission except pursuant to a formally authorized request from Congress or compulsory process from a court, (2) to notify the appellants immediately in case of such a request, (3) to inform any congressional requestor that the documents contain trade secrets the Commission is prohibited from disclosing publicly, (4) to seek from any judicial requestor in camera treatment of any documents surrendered, and (5) to return the documents, together with all copies, notes, abstracts, or other working materials, to the appellants within 30 days of the conclusion of the investigation or any resulting litigation.

. Appellants do not appear concerned with thefts or “leaks” from the Commission. We note that any officer or employee of the Commission who releases information without authorization may be fined up to $5,000 and imprisoned up to one year. FTC Act § 10, 15 U.S.C. § 50 (1976).

. Language in some cases indicates that courts may be able to order an agency not to deliver documents when it is “evident” that the congressional requestor intends to divulge trade secrets without good cause. See Exxon Corp. v. FTC, 589 F.2d at 589; Ashland Oil, Inc. v. FTC, 548 F.2d at 979.

. The Supreme Court in McMillan held that members of Congress and their staffs were absolutely immune from civil liability for circulating among persons involved in the legislative process confidential information on the performance of identified children in the District *971of Columbia school system. 412 U.S. at 312, 93 S.Ct. at 2024. Nevertheless, the Court also held that the children could recover damages from government officials who executed Congress’s order to publish this information to the general public. Id at 315-16, 93 S.Ct. at 2026. The Court reasoned that the speech and debate clause protects only acts taken in furtherance of legislative functions. Dissemination of information to members of Congress and their aides, even if accessible by the press and the public, is part of the lawmaking process; general, public distribution of information beyond Congress and its functionaries serves no legitimate legislative purpose and thus receives no constitutional protection. Id. at 317, 324, 93 S.Ct. at 2027, 2030. Cf. Hutchinson v. Proxmire, 443 U.S. 111, 99 S.Ct. 2675, 61 L.Ed.2d 411 (1979) (members of Congress not immune from libel actions based on statements in newsletters and press releases).

. This section provides that “each agency, upon any request for records which (A) reasonably describes such records and (B) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person.” 5 U.S.C. § 552(a)(3) (1976). The FOIA does not define what constitutes an agency “record,” Forsham v. Harris, 445 U.S. 169, 100 S.Ct. 978, 979, 63 L.Ed.2d 293 (1980), but “an agency must first either create or obtain a record as a prerequisite to it becoming an ‘agency record’ within the meaning of the FOIA.” Id. 445 U.S. at 170, 100 S.Ct. at 979. The usual test for a document not originated in the agency looks to “whether under all the facts of the case the document has passed from the control of [its originator] and become property subject to the free disposition of the agency with which the document resides.” Goland v. CIA, 607 F.2d 339, 347 (D.C. Cir. 1978), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980). Accord, Ryan v. Department of Justice, 617 F.2d 781 at 785 (D.C. Cir. 1980).

. For text, see note 3 supra.

. Because the Trade Secrets Act forbids disclosure only to the “extent not authorized by law,” 18 U.S.C. § 1905 (1976), one can argue that releasing any information other than trade secrets or the names of customers is permissible; § 6(f) expressly authorizes release of all information outside these two categories. See note 4 supra. We intimate no view on this issue.

. The appellants also argue that in the absence of a determination now by the Commission they are deprived of property without due process of law. This argument is devoid of any merit. First, if the request comes from Congress, surrendering the information is not a public disclosure and thus not a taking of property. Exxon Corp. v. FTC, 589 F.2d at 589. Second, if a member of the public requests information from the documents under the FOIA, the Commission has indicated, both in its brief, see Brief of Commission at 22, and at oral argument, that its standard practice is to deny the request as falling under the exemption for confidential information. Any deviation from that practice may be challenged at that time.

The appellants try to salvage this argument by asserting that the increased possibility of disclosure caused simply by the documents’ leaving their exclusive control reduces the value of the information as trade secrets and thus amounts to a present taking. We do not agree. The appellants have demonstrated no interference with their ability to use their trade secrets; they have presented only self-serving speculation that the subpoenas reduce their present market value. This scenario, featuring as it does only a hypothetical disclosure, falls far short of what the Constitution requires to demonstrate a taking. See generally Penn. Cent. Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).

Appellants also assert that a present determination is necessary to permit judicial review before they are deprived of their property. In the first place, if surrendering the documents to the Commission does not amount to a taking, there is no due process right to judicial review. As we already have noted, the appellants will have adequate opportunity to attack any disclosure made under the FOIA, and courts can do little to prevent the transfer of documents to congressional hands or to protect them once there. Moreover, asking us to command a Commission determination simply to permit us to review it not only is circular but also in effect would have us lay the foundation for rendering an advisory opinion ourselves should the Commission’s ruling be appealed.

. For example, the Commission may require the information in another investigative proceeding, in rulemaking, or in compiling information for reports it must make under § 6(d) and (f) of the FTC Act, 15 U.S.C. § 46(d), (f) (1976).

. The documents’ status as trade secrets or Commission “records” becomes material only if a request comes from a member of the public under the FOIA, for the Commission must surrender the documents if sought by a congressional source. See p. 970 supra.

. We intimate no view on whether the Commission, by indicating that in practice it denies FOIA requests for information it has accorded confidential treatment, is bound by that representation or would be abusing its discretion simply by abandoning that practice in the future.

. The Commission has stated that in practice it treats requests from individual members of Congress, as opposed to from committees or subcommittees, as public requests under the FOIA. See Reply Brief of Commission at 6; J.A. at 782-83 (affidavit of Barry R. Rubin). Since this case was argued, a different panel of this court has concluded in another context that there is “no basis in the statute or in public policy for distinguishing for FOIA purposes between a congressional committee and a single Member acting in an official capacity.” Murphy v. Department of the Army, 613 F.2d 1151 at 1157 (D.C. Cir. 1979). If Murphy applies here, the Commission could not lawfully withhold information sought by a member of Congress regardless of whether he complied with applicable committee or subcommittee rules, at least when he requests the information pursuant to his legislative duties and not “in a purely private or personal capacity,” id. at 613 F.2d at 1157. The verification required by the district court thus may be irrelevant in most instances.

Of course, a request purportedly coming from some arm or member of Congress simply may be a hoax. A single telephone call could discover this fact, and the Commission would not have to surrender the document.

. Our determination that the Commission acted within the bounds of its discretion requires us also to reject any additional protections sought by the appellants. We do not believe that this result in any way conflicts with our decision in Exxon Corp. v. FTC, for in that case we enforced subpoenas issued with protections similar to those the Commission has granted here and without any court-imposed conditions. See 589 F.2d at 594 (affirming district court’s enforcement order “in its entirety”).