[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16424-16432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9240]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 0
[GC Docket No. 96-55, FCC 96-109]
Examination of Current Policy Concerning the Treatment of
Confidential Information Submitted to the Commission
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission has adopted a Notice of Inquiry and a Notice of
Proposed Rulemaking to begin a proceeding to evaluate its practices and
policies concerning the treatment of competitively sensitive
information that has been provided to the Commission. The Commission's
objective is to develop a policy that will guide it in evaluating an
increasing number of requests that it afford confidential treatment to
information that has been provided to it by regulated entities and
others. The central issue that confronts the Commission is how to avoid
unnecessary competitive harm that could be caused by the disclosures of
such information and still fulfill its regulatory duties in a manner
that is efficient and fair to the parties and members of the public who
have an interest in its proceedings.
DATES: Comments are due on or before June 14, 1996 and Reply comments
are due on or before July 15, 1996.
FOR FURTHER INFORMATION CONTACT: Joel Kaufman, Office of General
Counsel, (202) 418-1720.
SUPPLEMENTARY INFORMATION: The complete text of this Notice of Inquiry
and Notice of Proposed Rulemaking is available for inspection and
copying during normal business hours in the FCC Reference Center (room
239), 1919 M Street, NW., Washington, DC, and also may be purchased
from the Commission's copy contractor, International Transcription
Service at (202) 857-3800, 2100 M Street, NW., Suite 140, Washington,
DC 20037.
Synopsis
I. Background
A. Authority To Disclose and Withhold Competitively Sensitive
Information
1. Freedom of Information Act
1. Under the Freedom of Information Act (FOIA), 5 U.S.C. 552, the
Commission is required to disclose reasonably described agency records
requested by any person, unless the records contain information that
fits within one or more of the nine exemptions from disclosure provided
in the Act. For the purposes of this proceeding, the most important of
the FOIA exemptions is commonly referred to Exemption 4. Exemption 4
provides that the government need not disclose ``trade secrets and
commercial or financial information obtained from a person and
privileged or confidential.'' 5 U.S.C. Sec. 552(b)(4).
2. For many years, the applicable standard for whether commercial
or financial information was ``confidential'' under Exemption 4 of FOIA
was set forth in National Parks and Conservation Association v. Morton,
498 F.2d 765 (D.C. Cir. 1974). In National Parks, the Court set forth a
two-part test, stating that ``[c]ommercial or financial matter is
`confidential' * * * if disclosure of the information is likely * * *
either * * * (1) to impair the Government'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.'' Id. at 770. In Critical Mass Energy Project v. Nuclear
Regulatory Commission, 975 F.2d 871 (D.C. Cir. 1992), cert. denied, 113
S.Ct. 1579 (1993), the court limited National Parks to situations where
a party must submit information to a federal agency. Under Critical
Mass, ``financial or commercial information provided to the Government
on a voluntary basis is `confidential' for the purpose of Exemption 4
if it is of a kind that would customarily not be released to the public
by the person from whom it was obtained.'' Id. at 879.
2. The Trade Secrets Act and Commission Authority To Disclose Exemption
4 Records
3. While FOIA Exemption 4 allows an agency to withhold business
competitive information from public disclosure, the Trade Secrets Act,
18 U.S.C. 1905, acts as an affirmative restraint on an agency's ability
to release such information. It states:
Whoever, being an officer or employee of the United States or of
any department or
[[Page 16425]]
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 * *
* [that] concerns or relates to the trade secrets, processes,
operations, style of work, or apparatus * * * shall be fined not
more than $1000, or imprisoned not more than one year, or both; and
shall be removed from office or employment.
18 U.S.C. 1905 (emphasis added).
4. In Chrysler Corp. v. Brown, 441 U.S. 281 (1979), the Supreme
Court discussed the relationship between the Trade Secrets Act and
Exemption 4 as follows:
Although there is a theoretical possibility that material might
be outside Exemption 4 yet within the substantive provisions of [the
Trade Secrets Act] * * * that possibility is at most of limited
practical significance in view of the similarity of language between
Exemption 4 and the substantive provisions of [the Trade Secrets
Act].
Id. at 319 n. 49. Thus, if information may be withheld under Exemption
4, the agency is barred from disclosing it by the terms of the Trade
Secrets Act unless the disclosure is otherwise authorized by law.
5. Sections 0.457(d)(1) and 0.457(d)(2)(i) of the Commission's
rules, 47 CFR Secs. 0.457(d)(1), 0.457(d)(2)(i), constitute the
requisite legal authorization for disclosure of competitively sensitive
information under the Trade Secrets Act. These rules permit disclosure
of trade secrets and commercial or financial information upon a
``persuasive showing'' of the reasons in favor of the information's
release.
5. The Commission's legal authority to adopt a rule that permits
disclosure of materials covered by the Trade Secrets Act is grounded in
Section 4(j) of the Communications Act, 47 U.S.C. Sec. 4(j). In Federal
Communications Commission v. Schreiber, 381 U.S. 279, 291-92 (1965),
the Supreme Court expressly addressed the Commission's authority under
that Section, noting: ``Grants of agency authority comparable in scope
to Sec. 4(j) [of the Communications Act] have been held to authorize
public disclosure of information, or receipt of data in confidence, as
the agency may determine to be proper upon a balancing of the public
and private interests involved.''
B. Review of Commission's Policies Governing Disclosure
1. Commission Rules and Procedures
6. The Commission has adopted general rules to implement the
provisions of the FOIA. Section 0.457(d) of the Commission's Rules, 47
CFR Sec. 0.457(d), implements FOIA Exemption 4. Quoting Exemption 4, it
provides that records not routinely available for public inspection
include ``[t]rade secrets and commercial or financial information
obtained from any person and privileged or confidential.'' Section
0.457 of the Commission's rules also provides that certain categories
materials listed therein are deemed to be within Exemption 4 and
therefore are ``not routinely available for public inspection.'' Such
Exemption 4 materials may not be disclosed by Commission employees
unless an appropriate request for inspection is made and, after
weighing the considerations favoring disclosure and non-disclosure, the
Commission determines that a ``persuasive showing'' has been made to
warrant disclosure. 47 CFR Secs. 0.451(b)(5), 0.457(d)(1);
0.457(d)(2)(i); 0.461(f)(4).
7. Any person submitting information or materials to the Commission
not falling within the specific categories set forth in Section 0.457
may also request on an ad hoc basis that such information not be made
routinely available for public inspection under Exemption 4. Each such
request must contain a statement of the reasons for withholding the
materials from inspection and of the facts upon which those reasons are
based. A request that information not be made routinely available for
public inspection will be granted if it presents by a preponderance of
the evidence a case for non-disclosure consistent with the provisions
of FOIA. 47 CFR Sec. 0.459(b). If a request that materials not be
routinely available for public inspection is granted, the material will
be treated the same as those categories of information presumed not
routinely available for public disclosure. 47 CFR Sec. 0.459(h). The
Commission's rules also contain procedures to protect the
confidentiality of information until administrative and judicial
appeals procedures have been completed. 47 CFR Sec. 0.459(g).
2. General Policies Regarding Disclosure of Exemption 4 Records
8. As indicated above, the Commission's rules provide for the
disclosure of Exemption 4 material if a ``persuasive showing is made.''
The Commission generally has exercised its discretion to release FOIA
Exemption 4 information only in very limited circumstances such as
where a party placed its financial condition at issue in a Commission
proceeding or where the Commission has identified a compelling public
interest in disclosure. See e.g., The Western Union Telegraph Company,
2 FCC Rcd 4485, 4487 (1987) (citing Kannapolis Television Co., 80 FCC
2d 307 (1980)); MCI Telecommunications Corporation, 58 RR 2d 187
(1985). In determining whether a public interest in the privacy of
proprietary business data exists, the Commission has adhered to a
policy whereby it ``will not authorize the disclosure of confidential
financial information on the mere chance that it might be helpful, but
insists upon a showing that the information is a necessary link in a
chain of evidence that will resolve a public interest issue.'' E.g.,
Classical Radio for Connecticut, Inc., 69 FCC 2d 1517, 1520 n.4 (1978).
3. The Protective Order Approach
9. In recent years, the Commission also has increasingly relied on
special remedies such as redaction,1 aggregated data or
summaries,2 and protective orders 3 to balance the interests
in disclosure and the interests in preserving the confidentiality of
competitively sensitive materials. In particular, the Commission has
refined the manner in which it releases confidential information by
relying more frequently on protective orders or agreements. Protective
orders or agreements essentially require parties to whom confidential
information is made available to limit the persons who will have access
to the information and the purposes for which the information will be
used. Disclosure under a protective order or agreement may serve the
dual purpose of protecting competitively
[[Page 16426]]
valuable information while still permitting limited disclosure for a
specific public purpose. Cincinnati, 10 FCC Rcd at 10575; Hawaii, 10
FCC Rcd at 2366. While protective orders permit the Commission to make
confidential information available on a limited basis while minimizing
the competitive harm that might ensue from widespread disclosure, the
Commission is mindful of the fact that extensive reliance on protective
orders may also impose burdens on the public and the Commission. See
e.g., Motorola Satellite Communications Inc., 7 FCC Rcd 5062, 5064
(1992) (quoting Letter of Thomas P Stanley, Chief Engineer (June 3,
1992)).
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\1\ Allnet Communications Services, Inc., 8 FCC Rcd 5629, 5630
(1993) (withholding from public release some redacted material
provided to the parties under a protective order, but releasing
other redacted material that did not contain confidential
information).
\2\ Id. (finding certain averaged data not to be competitively
sensitive); Bellsouth Corp., 8 FCC Rcd 8129, 8130 (1993) (releasing
summary of audit findings despite claim of confidentiality since
summary nature of information significantly diminished the
likelihood of competitive harm).
\3\ See, e.g., Cincinnati Bell Telephone Co. (``Cincinnati''),
10 FCC Rcd 10574 (Com. Car. Bur. 1995); Petition of Public Utilities
Commission, State of Hawaii, for Authority to Extend its Rate
Regulation of Commercial Mobile Radio Services in the State of
Hawaii (``Hawaii''), 10 FCC Rcd 2359 and 10 FCC Rcd 2881 (Wireless
Bur. 1995); In re Applications of Craig O. McCaw, Transferor, and
American Telephone and Telegraph Company, Transferee, for Consent to
the Transfer of Control of McCaw Cellular Communications, Inc. and
its Subsidiaries, 9 FCC Rcd 2610 (Com. Car. Bur. 1994); Commission
Requirements for Cost Support Material to be Filed with Open Network
Architecture Access Tariffs (``Open Network Architecture''), 7 FCC
Rcd 1526 (Com. Car. Bur. 1992), aff'd, 9 FCC Rcd 180 (1993);
Motorola Satellite Communications, Inc. Request for Pioneer's
Preference to Establish a Low-Earth Orbit Satellite System in the
1610-1626.5 MHz Band (``Motorola''), 7 FCC Rcd 5062 (1992).
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II. Issues for Comment
A. General Issues
10. The Commission's policies implementing its rules governing
confidentiality affect both the competitive nature of the
telecommunications industry and performance of the Commission's public
responsibilities. The Commission has long been sensitive to the concern
that fulfillment of its regulatory responsibilities does not result in
unnecessary disclosure of confidential information that places
Commission regulatees at an unfair competitive disadvantage. In that
respect, we recognize that the ``private'' interests of regulatees in
ensuring their own competitive vitality generally coincide with the
public interest in promoting a robust and competitive
telecommunications market. Further, allowing confidential submission
increases the willingness of holders of confidential information to
provide that information to the Commission and, even where submission
is mandatory, often avoids the burden and delay of invoking such
mandatory means. For these reasons, the Commission's policy has been to
avoid disclosures of confidential information except where necessary to
the effective performance of its regulatory duties and to employ
protective orders where appropriate.
11. At the same time, allowing confidential submission necessarily
decreases the amount of information publicly available to facilitate
public participation in the regulatory process. Public participation in
Commission proceedings cannot be effective unless meaningful
information is made available to the interested persons. As noted, in
recent years, the Commission also has relied more frequently on
protective orders and agreements. Protective orders and agreements have
the advantage of permitting the release--albeit on a limited basis--of
more information than would be possible without them, given our
obligations to protect trade secrets and commercial or financial
information. On the other hand, protective orders are inconvenient and
sometimes cumbersome and increase the administrative burdens on the
Commission and those subject to them. In addition, protective orders
may make it less likely that the Commission will receive a diversity of
public comment on the protected materials. Given the Commission's
obligation to balance these concerns, we therefore seek comment whether
the Commission should adopt additional policies or rules governing the
treatment of information submitted to the Commission in confidence.
12. Specifically, we seek comment on the standard in the
Commission's current rules that permits disclosure of trade secrets and
confidential commercial or financial information upon a ``persuasive
showing'' of the reasons in favor of the information's release. See 47
CFR Sec. 0.457(d)(1), (d)(2)(i). We ask commenters to address whether
this continues to be the appropriate standard or whether the Commission
should adopt some other standard. Assuming we retain this standard, we
seek comment on what should constitute a ``persuasive showing'' of the
reasons in favor of the information's release. As discussed in more
detail below, we also ask comment on standards that should apply in
particular types of Commission proceedings.
13. We also seek comment on whether the Commission's current
approach to the use of protective orders is the appropriate approach or
whether the Commission should adopt some other approach. Advantages and
disadvantages of the current approach should be discussed. We
specifically request comment on any problems or burdens that commenters
perceive with the current protective order approach and ways in which
these problems or burdens might be minimized. Commenters should also
address whether the Commission's willingness to release confidential
information subject to a protective order reduces submitters
willingness to voluntarily submit information to the Commission. And,
we seek comment on whether the use of protective orders unduly
interferes with the Commission's ability to obtain public comment or
with the public's right to know what actions the Commission is taking
and why it is taking them.
14. As a related matter, we note that a recent D.C. Circuit opinion
suggests that the Commission may have the option of releasing all or
part of an order under seal. SBC Communications, Inc. v. FCC, 56 F.3d
1484, 1492 (D.C. Cir. 1995). We seek comment whether it is appropriate
for the Commission to draft a decision that relies on confidential data
(or data disclosed pursuant to protective order) without publicly
revealing the information. If the Commission determines that the data
is necessary to support the order, should the Commission place the
relevant order under seal or should the information lose protected
status at this point?
15. Commenters also are invited to address and comment on any other
issues relating to the Commission's policies and rules governing
confidential treatment of information submitted to the Commission.
B. Model Protective Order
16. As discussed, release of confidential information under a
protective order or agreement can often serve to resolve the conflict
between safeguarding competitively sensitive information and allowing
interested parties the opportunity to fully respond to assertions put
forth by the submitter of confidential information. We seek comment as
to whether it would be helpful for the Commission to develop a standard
form protective order that could then be modified as appropriate to fit
the circumstances of particular cases. We have supplied, as an
Attachment to this Notice of Proposed Rulemaking, a draft model
protective order. We look forward to receiving comments on this draft
order, and in particular what modifications need to be made to make it
suitable to the varied types of Commission proceedings in which issues
of confidentiality arise.
17. We also seek comment on what procedures the Commission should
use to resolve disputes about the issuance and content of protective
orders and how to ensure compliance with them. We are especially
interested in whether commenters believe that our rules should be
amended to address such issues directly.
C. Issues That Arise With Respect to Specific Types of FCC Proceedings
18. As indicated above, we also seek comment on whether different
standards should apply for various categories of proceedings with
respect to (i) what constitutes a ``persuasive showing'' of the reasons
in favor of confidential information's release and (ii) what, if any,
protective conditions we should place upon released material and
whether this should vary depending on the nature of a proceeding.
[[Page 16427]]
Specifically, we seek comment on whether the Commission should apply
different disclosure policies to rulemakings, licensing proceedings,
tariff proceedings and perhaps other categories of proceedings. For
example, we seek comment on whether the Commission should require
public disclosure of information without protective orders in some
types of Commission proceedings even though that information is within
FOIA Exemption 4. Specific issues that arise in connection with various
types of proceedings are discussed below. In addition, we request
comments on whether special disclosure policies should apply to other
categories of proceedings, not specifically mentioned below, and, if
so, what those procedures should be.
1. Title III Licensing Proceedings
19. Section 309 of the Communications Act provides that the
Commission must allow at least 30 days following issuance of a public
notice of certain radio license applications for interested parties to
file petitions to deny an application. 47 U.S.C. 309(b), (d)(1).
Section 309 thus contemplates that interested members of the public
will have a full opportunity to challenge the grant of license
applications. In addition, relevant case law indicates generally that
petitioners to deny must be afforded access to all information
submitted by licensees that bear upon their applications. See, e.g.,
Bilingual Bicultural Coalition on Mass Media, Inc. v. FCC, 595 F.2d
621, 634 (D.C. Cir. 1978) (en banc).
20. We seek comment on whether the fact that the statutory scheme
expressly contemplates public participation in Title III license
application proceedings makes it inappropriate to withhold information
filed in such proceedings from routine public disclosure. In this
regard, we note that Commission rules currently specify that broadcast
and other Title III license applications are routinely available for
public inspection. See 47 CFR Secs. 0.453, 0.455. Nevertheless,
applicants do sometimes request confidential treatment pursuant to
Section 0.459 of our rules for information submitted with their
applications in both contested and uncontested application proceedings.
In light of the special issues regarding public participation that
arise in Section 309 proceedings, we therefore seek comment on whether
our general policy should be to discourage submission of confidential
information in the application context but still to leave the
Commission some discretion to use protective orders where it seems
warranted. Or, is it appropriate to adopt a general policy with regard
to licensing proceedings, permitting disclosure of trade secrets and
commercial or financial information only pursuant to protective orders?
21. If the Commission were to adopt a policy favoring the use of
protective orders in licensing proceedings, we assume that petitioners
would be given an opportunity to supplement their petitions to deny
after reviewing the protected material. We also seek comment on whether
members of the public should be afforded access to such protected
material (pursuant to protective orders) in order to enable them to
determine whether they wish to file petitions to deny. Would such
policies tend to unduly delay Commission action on license
applications? We also seek comment on whether it is ever appropriate to
withhold from release entirely some Exemption 4 information, as has
sometimes been done in the context of licensing proceedings and if so
what standard should be used. See e.g., Application of Mobile
Communications Holdings, Inc. for Authority to Construct the ELLIPSO
Elliptical Orbit Mobile Satellite System, 10 FCC Rcd 1547, 1548 (Int'l
Bur. 1994) (declining to release, even under protective order, detailed
cost and pricing information of applicant for a license). Finally, we
seek comment on whether different policies apply to different
categories of material. For example, commenters should address whether
our policy would be to use protective orders in licensing proceedings
only in instances in which the material in question satisfies the trade
secrets or ``substantial competitive harm'' prongs of Exemption 4 and
to require public disclosure in all other cases in which the Exemption
is invoked.
2. Tariff Proceedings
22. Section 203 of the Communications Act, 47 U.S.C. 203, requires
that common carriers file and maintain tariffs with the Commission.
Section 204, 47 U.S.C. 204, gives the Commission the authority to
review tariffs for lawfulness, which involves, among other things, a
determination of whether the tariff is just and reasonable pursuant to
Section 201(b), 47 U.S.C. 201(b), and is not unjustly discriminatory
pursuant to Section 202, 47 U.S.C. 202. The Commission has adopted
rules specifying what support materials carriers must file to enable it
to carry out its tariff review authority. See 47 CFR Secs. 61.38,
61.49. Pursuant to Section 0.455(b)(11) of the Commission's rules, 47
CFR Sec. 0.455(b)(11), cost support data are routinely available for
public inspection.
23. The Commission has generally made tariff support material
publicly available. See, e.g., Cincinnati, 10 FCC Rcd at 10575. It has
departed from this policy only in a few limited circumstances, for
example, to protect third-party vendor data where the data were made
available subject to a protective agreement. See Letter from Kathleen
M.H. Wallman to Jonathan E. Canis, et al., 9 FCC Rcd 6495 (Com. Car.
Bur. 1994) (denying unrestricted access to cost support data filed in
connection with virtual collocation tariff, but allowing access
pursuant to protective order), application for review pending.
Recently, a number of carriers have filed requests for confidential
treatment of their cost support data with their tariff transmittals.
This presents a number of problems during the tariff review process.
The maximum period for tariff review is defined by statute. The
Commission has a maximum of one hundred and twenty days to determine
the lawfulness of the tariff transmittal. See 47 U.S.C. 203(b)(2); 47
CFR Sec. 61.58(a)(2). The tariff goes into effect on its effective date
unless the Commission issues an order rejecting or suspending and
investigating the tariff. 47 U.S.C. 204. Section 402(b) of the
Telecommunications Act of 1996 provides that, effective one year after
enactment, a local exchange carrier may file charges, classifications,
regulations or practices on a streamlined basis, which shall be
effective 7 days (in the case of a reduction in rates) or 15 days (in
the case of an increase in rates) after the date on which they are
filed unless the Commission takes action before the end of the period.
24. A request for confidential treatment may not be resolved within
the 120 day statutory time frame established for the tariff review
process under current law, especially if a ruling is appealed. A
request for confidentiality is unlikely to be resolved under the 7 or
15 day time frame that is to become effective for streamlined local
exchange carrier filings under the Telecommunications Act of 1996. We
therefore seek comment on how to resolve a request for confidentiality
made in the context of the tariff review process. One possibility that
takes account of the statutory time frame for the tariff review process
is to require that carriers file any confidential information first,
independent of the filing of the tariff transmittal. Under this
alternative, the tariff filing could not be made until the request for
confidentiality was resolved.
[[Page 16428]]
Commenters should also address whether we should continue to make
exceptions to the Commission's rule requiring such data to be made
publicly available. In this regard, we seek comment on how petitioners
will be able to formulate meaningful objections to the proposed tariff
rates, terms and conditions, often a critical part of the tariff review
process, if they are unable to review all support material prior to the
date that petitions are due. One possible solution is to develop a
generic protective agreement that parties can use to protect the
information during the tariff review process.
25. Commenters also should address whether different disclosure
policies should apply to different phases of the tariff review process.
Specifically, should different disclosure policies be applied to the
tariff review and tariff investigation stages? Actions denying
petitions to suspend or reject tariffs, thereby allowing a tariff to go
into effect, are considered non-final, non-judicially reviewable
actions because a party can seek further redress by filing a formal
complaint pursuant to Section 208 of the Act. In contrast, a tariff set
for investigation is assigned a docket number and a pleading cycle is
established providing for direct cases, comments and replies. At the
conclusion of the investigation, the Commission issues an order which
is subject to judicial review. Therefore since decisions to allow
tariffs to go into effect are non-reviewable, non-final orders, should
the Commission's policies focus on the need for disclosure to
petitioners (whether or not pursuant to protective orders) primarily in
instances in which a particular tariff has been set for investigation?
3. Rulemaking Proceedings
26. Section 553(b) of the Administrative Procedure Act (APA), 5
U.S.C. 551 et seq., generally requires notice and an opportunity to
comment before promulgation of a final agency rule. An agency's
decision to withhold information in the context of a rulemaking can
have a significant impact on whether meaningful notice and opportunity
to comment on the bases of an agency's decision have been given. In
addition, issues arise to the extent that an agency relies on
information that has not been made available to commenters. For these
reasons, the Commission generally has not afforded confidential
treatment to material submitted in rulemakings, although it has on rare
occasions utilized protective orders or agreements in the context of
rulemakings. Rulemakings also may create special problems for use of
protective orders, however, because a large number of commenters may be
involved. On the other hand, a blanket refusal to apply protective
orders in the context of rulemakings might cause the Commission to have
access to less information than if it used protective orders. We seek
comment on these issues as well as the general issue of whether it is
ever appropriate to withhold competitively sensitive information filed
in rulemaking proceedings from routine public disclosure. We note that
the Commission has the option of refusing to consider information in a
rulemaking that is submitted along with a request for confidentiality.
4. Requests for Special Relief and Waivers
27. Parties affected by our rules have the right to seek special
relief from the rules' scope or waiver of these rules. In certain
cases, parties may base their request for relief upon--or otherwise put
into issue--information that is confidential. This information may
include financial information explaining cash flow, profitability, or
bankruptcy problems, or corporate or partnership structure designed to
demonstrate insulation from control or interest. For example, in
various cable television special relief proceedings, a party may seek
relief based on severe financial difficulties, or upon corporate or
partnership structure and insulation from control. See 47 CFR
Sec. 76.7(a) (cable petitions for special relief). We seek comment on
whether and under what circumstances it is appropriate to withhold
information filed in such proceedings from routine public disclosure,
particularly when the information is potentially decisional to a point
placed in issue by the party seeking to withhold such information and
may have precedential value for future cases.
5. Formal Complaints
28. Section 208 of the Communications Act, 47 U.S.C. Sec. 208,
permits any party to bring before the Commission a complaint against a
common carrier for acts or omissions in violation of either the Act or
a Commission rule or order. Our rules, in turn, establish both informal
and formal procedures for handling such complaints. 47 CFR Sec. 1.711
et seq. Confidentiality issues frequently arise in formal complaint
proceedings, especially in connection with discovery. See 47 CFR
Sec. 1.731; see also Amendment of Rules Governing Procedures to Be
Followed When Formal Complaints Are Filed Against Common Carriers, 58
FR 25569 (1993), 8 FCC Rcd 2614, 2621-22 (1993).
29. We ask commenters to consider the most effective means of
balancing our sometimes conflicting obligations to ensure protection of
proprietary business data, to prevent undue delay in resolving formal
complaints, and to produce decisions that adequately explain, by
reference to a specific record, the basis for our disposition of a
complaint. For instance, in some cases, a factually and legally sound
decision cannot be drafted without referring to information subject to
a claim of confidentiality. The particular information deemed by the
staff as necessary for resolution may be only a small portion of
voluminous materials that are subject to a protective order and
provided to the Commission in confidence. Thus, considerable time might
be necessary for the staff to examine all materials subject to claims
of confidentiality and rule on those claims. If the staff were to rule
on the confidentiality of only the particular information determined to
be decisionally significant, however, this ruling might prematurely
indicate to the parties the staff's recommendation for Commission or
Bureau disposition of the complaint. In either instance, the complaint
process could be delayed by administrative and judicial appeals of a
confidentiality ruling. We ask commenters to consider whether any such
delays and burden on Commission resources could or should be mitigated
by issuing parts of adjudicatory decisions that rely on confidential
information under seal. We seek comment on whether such a procedure
would serve the public interest, given that complaint cases--although
adjudications of disputes between particular parties--may result in
rulings that indirectly, through the establishment of precedent,
determine the legality of the practices of non-parties. We welcome
suggestions as to how we can preserve the broad utility of the formal
complaint process to elucidate the Commission's judgments regarding
carrier conduct without either compromising sensitive business data or
miring complaint proceedings in protracted peripheral disputes
involving confidentiality.
6. Audits
30. The Commission has a statutory right of access to all accounts,
records and memoranda, including all documents, papers, and
correspondence kept or required to be kept by common carriers. 47
U.S.C. 220(c). The detailed financial and commercial information
[[Page 16429]]
inspected during an audit is generally sensitive in nature and is not
customarily released to the public. This fact is highlighted by section
Sec. 220(f) of the Communications Act, 47 U.S.C. Sec. 220(f), which
expressly prohibits the release of information gathered during an audit
absent a Commission or court order. The Commission has held that the
public disclosure of data gathered in an audit is likely to impair its
future ability to obtain such data because while the Commission could
rely on compulsory measures to obtain the desired materials, such
measures would involve significant expense and delay. J. David Stoner,
5 FCC Rcd 6458, 6459 (1990); Martha H. Platt, 5 FCC Rcd 5742, 5743
(1990); Scott J Rafferty, 5 FCC Rcd 4138, 4138 (1990); Western Union
Telegraph Co., 2 FCC Rcd 4485, 4486 (1987).
31. The Commission has departed from its general policy and
publicly released audit reports only in extraordinary circumstances
when (i) the summary nature of the data contained in a particular
report is not likely to cause the providing carrier substantial
competitive injury, (ii) the release of the summary data and
information is not likely to impair our ability to obtain information
in future audits and (iii) overriding public interest concerns favor
release of the report. See Bell Telephone Operating Companies, FCC 94-
418 (released Oct. 17, 1995); see also, e.g., Bell Communications
Research, Inc, 7 FCC Rcd 891 (1992); BellSouth Corp., 8 FCC Rcd 8129,
8130 (1990). In the past, we have normally allowed submitters to
request confidentiality for such data and have dealt with such requests
on a case-by-case basis, consistent with the applicable standards in
FOIA. See id. We seek comment on whether we should continue to follow
this policy and on whether and in what circumstances information
gathered during an audit should be released even under a protective
order.
7. Surveys and Studies.
32. The Commission has authority to conduct studies and surveys
needed to fulfill its regulatory functions. See, e.g., 47 U.S.C. 403.
Unlike information submitted in support of a specific regulatory action
involving the submitting entity, surveys may request information from a
broad category of regulated entities who are only submitting data
because they were selected as part of a survey sample. Because these
studies may involve the submission of information deemed competitively
sensitive by responding entities, we seek comment on standards that
should be applied to protect the confidentiality of information
submitted in this context. We also seek comment regarding the treatment
of such information when the information is used ultimately in the
development of Commission rules or policies.
D. Scope of Materials Not Routinely Available for Public Inspection
33. The need for and burdens associated with protective orders are
necessarily affected by the amount of information eligible for
protected status. Accordingly, we seek comment on several issues raised
by our current rules on materials not routinely available for public
release.
34. Categories of Materials that are not Routinely Available for
Public Inspection. Section 0.457(d) of our rules, 47 CFR Sec. 0.457(d),
contains a list of categories of materials that are not routinely
available for public inspection and as such do not require a request
for such treatment under Section 0.459, 47 CFR Sec. 0.459. To the
extent it is possible to define broad categories of information that
should not be routinely available for public inspection, we can reduce
administrative burdens on the Commission and submitters. On the other
hand, over-inclusive categories would not be consistent with the
presumption FOIA creates in favor of disclosure. We seek comment
whether the current list of materials that are not routinely available
for public inspection is appropriate or whether the list ought to be
expanded or contracted.
35. Substantiating Confidentiality Claims. Section 0.461(a) of the
Commission's confidentiality regulations, 47 CFR Sec. 0.461(a),
provides that a person submitting information or materials to the
Commission may request that the information not be made routinely
available to the public. Section 0.461(b), 47 CFR Sec. 0.461(b),
requires that each such request contain a statement of the reasons for
withholding the materials from inspection and of the facts upon which
those reasons are based. Because the Commission sometimes receives
frivolous or unsubstantiated requests for confidentiality, we seek
comment on whether the Commission should establish a policy or rule
specifying more explicitly types of information that should be provided
to comply with Section 0.461(b).
36. Information that the submitter could be required to provide to
substantiate requests for confidentiality might include:
(1) What portion of the information the submitter believes is
entitled to confidential treatment;
(2) The length of time for which confidential treatment is desired;
(3) Measures taken by the business to prevent undesired disclosure
to others;
(4) The extent to which the information has already been disclosed
to others;
(5) Specific information showing the degree to which the
information concerns a service that is subject to competition; and
(6) Specific information concerning why disclosure would result in
substantial harmful effects to the business' competitive position.
37. Establishing a policy specifying what types of information
should be provided to comply with Section 0.461(b) might be beneficial
for several reasons. First, it would enable the Commission to deal in a
more efficient fashion with requests that materials not be made
routinely available to the public and with requests to release
materials not made routinely available to the public. For example, even
though our rules provide for seeking confidential treatment for only
portions of documents when other portions of documents are
nonconfidential, 47 CFR Sec. 0.459(a), submitters frequently assert an
entire submission as confidential, even though many documents are not
composed entirely of confidential business information. When the
Commission is dealing with masses of data from multiple submitters,
uncertainty as to what specific confidentiality claims are being
asserted can be a significant barrier to efficient action. In addition,
a policy specifying what types of information should be provided to
comply with Section 0.461(b) might help reduce those confidentiality
claims made as a matter of course and induce submitters to be more
selective in their confidentiality claims. We seek comment on these
benefits and on whether more precise substantiation requirements might
burden a submitter's assertion of a claim for information which is
truly entitled to confidential treatment. We also seek comment on what
measures might be appropriate to deter frivolous requests for
confidential treatment.
38. Aggregated or Sanitized Information. The Commission sometimes
finds it beneficial to disclose to the public non-confidential
information derived from data supplied by businesses and claimed as
confidential. Such releases might take the form of industry-wide data
aggregated into a non-confidential figure, or sanitized documents where
all information that could identify the submitters has been removed. We
seek comment on procedures the
[[Page 16430]]
Commission could use to ensure that the portions of the sanitized or
aggregated documents which are disclosed do not contain information
claimed as confidential and whether the rules should be amended to
incorporate such procedures.
E. Proposed Clarifications to Commission Rules
39. Any person submitting information or materials to the
Commission that do not fall within the specific categories of
information not subject to routine disclosure may also request, on an
ad hoc basis, that such information not be made routinely available for
public inspection under Exemption 4. 47 CFR Sec. 0.459(a). The
Commission is considering amending Section 0.459 of its rules to make
express in the rules an existing practice whereby the Commission
sometimes defers acting on a request for confidentiality if no request
for inspection has been made. This practice conserves Commission
resources because Exemption 4 determinations are often complex and
require substantial Commission analysis. In such instances, the party
submitting the information for which confidentiality is claimed is not
harmed because the information is not available for public inspection
pending Commission action on the confidentiality request. Likewise, the
public is not harmed, because, under the FOIA, the Commission would be
required to rule on any request that the information be disclosed. We
seek comment on codifying this practice of deferring action on requests
for confidentiality in the absence of a FOIA or other request for the
information.
40. The Commission also proposes a clarifying amendment to the
title of Section 0.457(d) of its rules, 47 CFR Sec. 0.457(d), to better
describe the Section's contents. The amended title would read:
``Certain trade secrets and commercial or financial information
obtained from any person and privileged or confidential--categories of
materials not routinely available for public inspection.''
Administrative Matters
Initial Regulatory Flexibility Act Analysis
41. Pursuant to Section 603 of the Regulatory Flexibility Act, the
Commission has prepared the following initial regulatory flexibility
analysis (IRFA) of the expected impact of these proposed policies and
rules on small entities. Written public comments are requested on the
IRFA. These comments must be filed in accordance with the same filing
deadlines as comments on the rest of the Notice of Proposed Rulemaking,
but they must have a separate and distinct heading designating them as
responses to the regulatory flexibility analysis. The Secretary shall
cause a copy of the Notice of Proposed Rulemaking, including the
initial regulatory flexibility analysis, to be sent to the Chief
Counsel for Advocacy of the Small Business Administration in accordance
with Section 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-
354, 94 Stat. 1164, 5 U.S.C. Section 601 et seq. (1981).
Reason for Action
42. The Communications Act of 1934 and the Commission's rules
require the Commission to balance various factors in determining
whether and under what conditions to withhold or to disclose
competitively sensitive information that has been submitted to the
Commission and that is not required to be publicly disclosed under the
Freedom of Information Act. This Notice of Proposed Rulemaking proposes
to examine the Commission's regulations and policies to determine
whether the Commission should modify its existing disclosure policies
and rules.
Objectives
43. To implement the Communications Act of 1934 and the Freedom of
Information Act and to develop a policy that will guide the Commission
in evaluating the increasing number of requests that it afford
confidential treatment to information that has been provided to it by
regulated entities and others.
Legal Basis. Action as proposed for this rulemaking is contained in
Sections 4(i), 4(j), 303(r) and 403 of the Communications Act of 1934,
as amended.
Description, Potential Impact and Number of Small Entities Affected
44. The Commission's policies and rules regarding the disclosure of
confidential commercial and financial information affects small
entities that are regulated by the Commission and small entities that
participate in Commission proceedings. We are presently unable to
estimate the
Reporting, Record Keeping and Other Compliance Requirements
45. None.
Federal Rules Which Overlap, Duplicate or Conflict With This Rule
46. None.
Any Significant Alternatives Minimizing Impact on Small Entities and
Consistent with Stated Objectives
47. None.
Paperwork Reduction Act
48. The requirements proposed herein have been analyzed with
respect to the Paperwork Reduction Act of 1995 and found to impose no
new or modified information collection requirement on the public.
Procedural Provisions
49. This Notice of Inquiry and Notice of Proposed Rulemaking is
issued pursuant to authority contained in Sections 4(i), 4(j), 303(r)
and 403 of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 154(j), 303(r) and 403. Pursuant to applicable procedures set
forth in Sections 1.415, 1.419 and 1.430 of the Commission's Rules, 47
CFR Secs. 1.415, 1.419 and 1.430, interested parties may file comments
on or before June 14, 1996, and reply comments on or before July 15,
1996. To file formally in this proceeding, participants must file an
original and four copies of all comments, reply comments and supporting
comments. If participants want each Commissioner to receive a personal
copy of their comments, an original plus ten copies must be filed.
Comments and reply comments should be sent to the Office of the
Secretary, Federal Communications Commission, Washington, DC 20554.
Comments and reply comments will be available for public inspection
during regular business hours in the FCC Reference Center (Room 239) of
the Federal Communications Commission, 1919 M Street, NW., Washington,
DC 20554.
50. Ex parte Rules--Non-Restricted Proceeding. This is a non-
restricted notice and comment rulemaking proceeding. Ex parte
presentations are permitted, except during the Sunshine Agenda period,
provided that they are disclosed as provided in Commission rules. See
generally 47 CFR Sections 1.1202, 1.1203, and 1.1206(a).
Ordering Clauses
51. It is ordered that, pursuant to Sections 4(i), 4(j), 303(r) and
403 of the Communications Act of 1934, 47 U.S.C. Secs. 154 (i), 154
(j), 303(r) and 403, notice is hereby given of proposed amendments to
Part 0, in accordance with the proposals and discussions, in this
Notice of Proposed Rulemaking, and that comment is sought regarding
such proposals, discussion, and statement of issues.
52. It is further ordered that, the Secretary shall send a copy of
this
[[Page 16431]]
Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration in accordance with paragraph 603(a) of the
Regulatory Flexibility Act. Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.
601 et seq. (1981).
List of Subjects in 47 CFR Part 0
Freedom of information, Public information and inspection of
records.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Not to be published in the Code of Federal Regulations.
Attachment--Model Protective Order and Declaration
Before the Federal Communications Commission, Washington, DC 20554
In the Matter of [Name of Proceeding], Docket No. ______.
Protective Order
This Protective Order is a device to facilitate and expedite the
review of documents containing trade secrets and commercial or
financial information obtained from a person and privileged or
confidential. It reflects the manner in which ``Confidential
Information,'' as that term is defined herein, is to be treated. The
Order is not intended to constitute a resolution of the merits
concerning whether any Confidential Information would be released
publicly by the Commission upon a proper request under the Freedom
of Information Act or otherwise.
1. For purposes of this Order, ``Confidential Information''
shall in the first instance mean either (i) information submitted to
the Commission by the Submitting Party that has been so designated
by the Submitting Party and which the Submitting Party has
determined in good faith constitutes trade secrets and commercial or
financial information which is privileged or confidential within the
meaning of Exemption 4 of the Freedom of Information Act, 5 U.S.C.
Sec. 552(b)(4) or (ii) information submitted to the Commission by
the Submitting Party that has been so designated by the Submitting
Party and which the Submitting Party has determined in good faith
falls within the terms of [cite Commission order designating items
for treatment as Confidential Information]. Confidential Information
shall be deemed to include additional copies of and information
derived from Confidential Information.
2. The Commission may sua sponte or upon petition determine that
all or part of the information claimed as ``Confidential
Information'' is not entitled to such treatment.
3. Confidential Information submitted to the Commission shall
bear on the front page in bold print, ``CONTAINS PRIVILEGED AND
CONFIDENTIAL INFORMATION--DO NOT RELEASE.'' Confidential Information
shall be segregated by the Submitting Party from all non-
confidential information submitted to the Commission. To the extent
a document contains both Confidential Information and non-
confidential information, the submitting party shall designate the
specific portions of the document claimed to contain Confidential
Information and shall, where feasible, also submit a redacted
version not containing Confidential Information.
4. The Secretary of the Commission or other Commission staff to
whom Confidential Information is submitted shall place the
Confidential Information in a non-public file. In the event that any
person requests that Confidential Information be released publicly,
the Commission will treat the request pursuant to 47 CFR Sec. 0.461.
5. Confidential Information shall only be made available to
Commission staff, Commission consultants and to counsel to the
Reviewing Parties or if a Reviewing Party has no counsel to a person
designated by the Reviewing Party. Reviewing Party shall mean a
party to a Commission proceeding or any person or entity filing a
pleading in a Commission proceeding. Before counsel to a Reviewing
Party or such other designated person may obtain access to
Confidential Information, counsel or such other designated person
must execute the attached Declaration.
6. Counsel to a Reviewing Party or such other person designated
pursuant to Paragraph 5 may disclose Confidential Information to
other Authorized Representatives to whom disclosure is permitted
under the terms of paragraph 7 of this Protective Order only after
advising such Authorized Representatives of the terms and
obligations of the Order. In addition, before Authorized
Representatives may obtain access to Confidential Information,
Authorized Representatives must execute the attached Declaration.
7. Authorized Representatives shall be limited to:
a. Counsel for the Reviewing Parties to this proceeding
including in-house counsel actively engaged in the conduct of this
proceeding and their associated attorneys, paralegals, clerical
staff and other employees, to the extent reasonably necessary to
render professional services in this proceeding, provided that such
persons are not representing or advising or otherwise assisting * *
*;
b. Specified persons, including employees of the Reviewing
Parties, requested by counsel to furnish technical or other expert
advice or service, or otherwise engaged to prepare material for the
express purpose of formulating filings in this proceeding except
that disclosure to persons in a position to use this information for
competitive commercial or business purposes shall require the
approval of the Commission; or
c. Any person designated by the Commission in the public
interest, upon such terms as the Commission may deem proper.
8. Confidential Information shall be maintained by a Submitting
Party for inspection in at least two locations, one of which shall
be in Washington, D.C. Inspection shall be carried out by Authorized
Representatives by appointment during normal business hours. The
Submitting Party shall provide copies of the Confidential Material
to Authorized Representatives upon request and may charge a
reasonable copying fee not to exceed twenty five cents per page.
9. Authorized Representatives may make additional copies of
Confidential Information but only to the extent required and solely
for the preparation and use in this proceeding, and provided further
that the original copy and all other copies of the Confidential
Information shall remain in the care and control of Authorized
Representatives at all times and shall not pass to any other persons
except as provided herein.
10. Counsel for Reviewing Parties shall provide to the
Submitting Party and the Commission with a copy of the attached
Declaration for each Authorized Representative within five (5)
business days after the attached Declaration is executed, or by any
other deadline prescribed by the Commission.
11. Confidential Information shall not be used by any person
granted access under this Protective Order for any purpose other
than for use in this proceeding (including any subsequent
administrative or judicial review), shall not be used for
competitive business purposes, and shall not be disclosed except in
accordance with this Order. This shall not preclude the use of any
material or information that is in the public domain or has been
developed independently by any other person who has not had access
to the Confidential Information nor otherwise learned of its
contents.
12. Reviewing Parties may, in any pleadings that they file in
this proceeding, reference the Confidential Information, but only if
they comply with the following procedures:
a. Any portions of the pleadings that contain or disclose
Confidential Information must be physically segregated from the
remainder of the pleadings;
b. The portions containing or disclosing Confidential
Information must be covered by a separate letter referencing this
Protective Order;
c. Each page of any Party's filing that contains or discloses
Confidential Information subject to this Order must be clearly
marked: ``Confidential Information included pursuant to Protective
Order, [cite proceeding];'' and
d. The confidential portion(s) of the pleading shall be served
upon the Secretary of the Commission, the Submitting Party, and
those Reviewing Parties that have signed the attached Declaration.
Such confidential portions shall be served under seal, and shall not
be placed in the Commission's Public File unless the Commission
directs otherwise (with notice to the Submitting Party and an
opportunity to comment on such proposed disclosure). A Reviewing
Party filing a pleading containing Confidential Information shall
also file a redacted copy of the pleading containing no Confidential
Information, which copy shall be placed in the Commission's public
files. Reviewing Parties may provide courtesy copies of pleadings
containing Confidential Information to Commission staff.
13. Should a Reviewing Party that has properly obtained access
to Confidential
[[Page 16432]]
Information under this Protective Order violate any of its terms, it
shall immediately convey that fact to the Commission and to the
Submitting Party. Further, should such violation consist of improper
disclosure of Confidential Information, the violating party shall
take all necessary steps to remedy the improper disclosure. The
Commission retains its full authority to fashion appropriate
sanctions for violations of this Protective Order, including but not
limited to denial of further access to Confidential Information in
this proceeding.
14. Within two weeks after final resolution of this proceeding
(which includes any administrative or judicial appeals), Authorized
Representatives of Reviewing Parties shall destroy all Confidential
Information as well as all copies and derivative materials made, and
shall certify that no material whatsoever derived from such
Confidential Information has been retained by any person having
access thereto, except that counsel to a Reviewing Party may retain
two copies of pleadings submitted on behalf of the Reviewing Party.
15. Disclosure of Confidential Information as provided herein
shall not be deemed a waiver by the Submitting Party of any
privilege or entitlement to confidential treatment of such
Confidential Information. Reviewing Parties, by viewing these
materials: (a) agree not to assert any such waiver; (b) agree not to
use information derived from any confidential materials to seek
disclosure in any other proceeding; and (c) agree that accidental
disclosure of privileged information shall not be deemed a waiver of
the privilege.
16. The entry of this Protective Order is without prejudice to
the rights of the Submitting Party to apply for additional or
different protection where it is deemed necessary or to the rights
of Reviewing Parties to request further or renewed disclosure of
Confidential Information. Moreover, it in no way precludes the
Commission from disclosing any Confidential Information where it
determines the public interest so requires.
17. This Protective Order is issued pursuant to Section 4(i) of
the Communications Act as amended, 47 U.S.C. Sec. 154(i) and 47 CFR
Sec. 0.457(d).
18. As used in this Order, the term ``Commission'' shall also
include any arm of the Commission acting pursuant to delegated
authority.
Declaration
[Cite Proceeding]
I, __________, hereby declare under penalty of perjury that I
have read the foregoing Protective Order that has been entered by
the Commission in this proceeding, and that I agree that I will be
bound by its terms pertaining to the treatment of Confidential
Information submitted by parties to this proceeding. I understand
that the Confidential Information shall not be disclosed to anyone
except in accordance with the terms of the Protective Order and
shall be used only for purposes of the proceedings in this matter. I
acknowledge that a violation of the Protective Order is a violation
of an order of the Federal Communications Commission.
(signed)---------------------------------------------------------------
(printed name)---------------------------------------------------------
(title)----------------------------------------------------------------
(affiliation)----------------------------------------------------------
(address)--------------------------------------------------------------
----------------------------------------------------------------------
(phone)----------------------------------------------------------------
(date)-----------------------------------------------------------------
[FR Doc. 96-9240 Filed 4-12-96; 8:45 am]
BILLING CODE 6712-01-P
