736 F. 2d 727 - National Organization for Women Washington Dc Chapter v. Social Security Administration of Department of Health and Human Services

Opinion filed by Chief Judge SPOTTSWOOD W. ROBINSON, III, concurring in affirmance.

Opinion filed by Circuit Judge MIKVA and Senior Circuit Judge McGOWAN concurring in affirmance.

The judgment of the District Court is affirmed. Chief Judge Robinson concurs for the reasons set forth in his opinion. Circuit Judge Mikva and Senior Circuit Judge McGowan concur for the reasons set forth in their opinion. The case is remanded to the District Court for further proceedings in accordance with instructions set forth in the opinion of Circuit Judge Mikva and Senior Circuit Judge McGowan.

A federal regulatory agency ruled that documentary matter collected from regulatees is subject to public examination pursuant to the Freedom of Information Act (FOIA).1 The District Court, after reviewing the agency's decision de novo, issued a preliminary injunction barring release of much of the material.2 In that court's view, there is a substantial probability that the data thus impounded are removed from FOIA's disclosure mandate by Exemptions 4 and 6,3 and that the proscriptions of the Trade Secrets Act4 would brand voluntary agency divulgence an abuse of discretion.5 We are asked to dissolve the court's injunction.

I would hold that de novo review on questions of exemption by FOIA was proper in the context in which it occurred,6 and would leave undisturbed the District Court's determinations on the scope of the FOIA exemptions involved and the reach of the Trade Secrets Act.7 I would conclude, however, that the court should not have undertaken to gauge, without prior assessment by the agency itself, the propriety of voluntary disclosure of items ostensibly exempted from FOIA's purview and left unprotected by the Trade Secrets Act.8 I thus would remand for further proceedings.

The three major insurance companies litigating here9 are contractors with the Federal Government. As such, the companies are subject to Executive Order 11246,10 which requires the Secretary of Labor to ensure that contractors' workforces are free from employment discrimination based on race, sex, religion or national origin. The Secretary has delegated this responsibility to the Office of Federal Contract Compliance Programs (OFCCP).11 When the cases at bar germinated, a number of federal entities served as "compliance agencies" monitoring equal employment opportunity within various geographical areas and industrial classifications. The unit so designated for the insurance industry was the Insurance Compliance Staff (ICS) of the Social Security Administration.12

OFCCP rules require government contractors to file annual statements, known as EEO-1 reports,13 detailing the number of women and minority-group members working in specified job categories.14 Additionally, each contractor must prepare an affirmative action plan projecting the employment of women and minorities, and establishing goals and timetables for correcting deficiencies.15 Each contractor's affirmative action program is audited periodically, and on-site reviews are conducted when the contractor's submission is deemed unsatisfactory.16 The results of these audits and reviews are then compiled in compliance review reports.17

The Department of Labor has promulgated regulations on disclosure of data obtained or generated pursuant to Executive Order 11246.18 These rules instruct OFCCP to release such information voluntarily upon request--unless legally forbidden, but notwithstanding the availability of a FOIA exemption from mandatory release--whenever doing so would further the public interest and would not impede the agency's functions.19 If, however, these two preconditions are not met, the agency must withhold FOIA-exempt portions of affirmative action plans, such as goals and timetables, constituting confidential commercial or financial information "because they indicate, and only to the extent that they indicate, that a contractor plans major shifts or changes in his personnel requirements and he has not made this information available to the public."20 Also to be withheld, absent satisfaction of the two preconditions, is FOIA-exempt information on staffing patterns and pay scales in affirmative action plans, but only insofar as divulgence "would injure the business or financial position of the contractor, would constitute a release of confidential financial information of an employee or would constitute an unwarranted invasion of the privacy of an employee."21

With these and other limited exceptions,22 the regulations thus favor voluntary disclosure of contract-compliance information--even that which, because exempt under FOIA, OFCCP is not compelled to reveal. Recognizing, however, that submitters of EEO-1 reports and affirmative action plans may have a justifiable interest in maintaining the confidentiality of particular data, the regulations also provide a process by which a contractor may solicit protection.23 An administrative determination on applicability of a FOIA exemption, or on discretionary release of exempt information, thus may arise either from a third-party demand for disclosure or a contractor's request for nondisclosure.

Metropolitan Life Insurance Company presented to ICS a statement seeking to preserve the confidentiality of portions of its affirmative action plans,24 and ICS began to proceed under the regulations.25 Shortly thereafter, the District of Columbia Chapter of the National Organization for Women (NOW) requested all EEO-1 reports, current affirmative action plans and compliance review reports pertaining to four insurance companies, including Metropolitan.26

ICS notified the companies of NOW's application and offered each an opportunity to demonstrate that, under the guidelines supplied by the regulations, the information sought should not be revealed. At the same time, ICS asked NOW for clarification of the scope of its demand.27 NOW treated this response as the equivalent of a denial and instituted an administrative appeal,28 but ICS continued to consider NOW's bid along with oppositions presented by the companies. Somewhat later, ICS, addressing the companies' challenges, informed them of its decision to release most of the data requested.29

Resorting both to FOIA and the OFCCP regulations, ICS believed that a few items in the affirmative action plans should be excluded from NOW's inspection because public availability would cause competitive harm.30 ICS also felt that additional items should be withheld because their release conceivably could result in unwarranted invasions of personal privacy.31 As to the remainder, however, ICS rejected company arguments that particular FOIA exemptions applied, and ordered disclosure.32 The companies appealed to the Director of OFCCP,33 who substantially affirmed ICS' decision.34

While its efforts at the agency level continued, Metropolitan instituted an action in the District Court for the Southern District of New York, and sought a temporary restraining order blocking release of its affirmative action statistics until administrative remedies could be exhausted.35 Counsel for the Government36 stipulated that no disclosure would take place until five days after full resort through those channels, and the other companies were subsequently assured of similar treatment.37 Resultantly, though Metropolitan's lawsuit remained pending, its request for the restraining order was withdrawn.38

Several months later, after pursuing its own administrative remedies, NOW initiated a separate action in the District Court for the District of Columbia39 to compel ICS officials to reveal the data in dispute.40 After a contest over venue, the two cases were consolidated in the District of Columbia.41 Only after both suits commenced did ICS resolve to unveil substantial portions of the material sought by NOW.42 Following affirmance of this decision on administrative appeal, the companies applied to the District Court in the consolidated litigation for a temporary restraining order barring release pending a hearing on a motion for a preliminary injunction.43

The restraining order issued, and the court heard evidence on the matter of interim injunctive relief.44 The court later handed down its order granting a partial preliminary injunction.45 The court agreed with the agency that FOIA Exemptions 346 and 747 did not apply,48 but rejected agency arguments that Exemptions 449 and 650 were likewise inoperative.51 The court perceived a substantial likelihood that the companies ultimately would prevail on the merits of some of their exemption claims, finding that release of workforce analyses, department lists, and statistical and narrative data on projected promotions could seriously endanger competitive positions by subjecting the companies to increased risks of employee "raiding" and adverse effects on productivity.52 The court was also impressed by the companies' contention that divulgence of various other items could trespass upon personal privacy because of the possibility that these data could be connected to particular individuals.53 The court took live testimony as well as the agency record into account,54 and its findings were independent determinations.

Because information exempted by FOIA from mandatory disclosure may nevertheless remain open to discretionary revelation by an agency,55 the District Court went on to consider whether the data-releasing decisions made administratively impinged upon the Trade Secrets Act or otherwise amounted to an abuse of agency discretion, and answered both aspects of that question in the affirmative.56 Concluding that the companies had shown a substantial probability of successfully resisting disclosure, the court weighed other factors bearing on the propriety of preliminary injunctive relief--injury to the parties, respectively, and pertinent facets of the public interest57--and held that relief of that character was warranted.58

The injunction issued accordingly. In practical effect, it precludes release of the bulk of the affirmative action plans, and the compliance review reports to the extent that the latter incorporate data contained in the plans.59 The District Court held that the disclosures permitted "should be sufficient to foster [the] goals" of equal opportunity.60 NOW contends, however, that the material made available will be of little if any value without the portions withheld.61

The parties have tendered for our consideration a number of problems, most of which are beyond the range of our proper function. The appeals before us emanate, not from a final disposition of the controversy by the District Court, but from a preliminary injunction designed to preserve the status quo pending that court's decision on the merits,62 and the scope of review is correspondingly limited. We have hitherto observed that "[w]hile the probability of success on the merits is a factor to be considered on a motion for preliminary injunction, such an application 'does not involve a final determination of the merits,' but rather 'the exercise of a sound judicial discretion' on the need for interim relief."63 It is for this reason that we have frequently reminded that we "will not set aside the action of [the] District Court in either denying or granting an application for a preliminary injunction unless the action of the District Court was in clear error or in [sic ] abuse of discretion,"64 and that we ordinarily "do not consider the merits of the case further than necessary to determine whether that discretion was abused."65 These constraints limit the issue properly before us to relatively few.

In disposing of the companies' injunctive motion, the District Court convened a hearing, at which it admitted evidence on the effects that public release of the companies' data would have on their business operations.66 The court weighed that evidence, and freely substituted its factual assessments for those previously made administratively.67 Then, to the factual situation so constructed, the court applied legal principles as it perceived them, and held that, as a matter of substantial probability, the information sought by NOW largely would be insulated from mandatory disclosure, primarily by FOIA Exemption 468 and to a lesser extent by Exemption 6.69

These determinations, in their factual as well as their legal components, thus were made de novo,70 and that, it is contended, was error. The claim is that, in deciding whether particular material fell within a FOIA exemption, the District Court should have confined itself to the record as developed administratively, and should have upheld the agency rulings unless they reflected some abuse of discretion or some mistake of law. Consequently, so the argument goes, the District Court went astray when it took new evidence into account, and again when it made factual findings of its own.

It is true that "in cases where Congress has simply provided for review, without setting forth the standards to be used or the procedures to be followed, ... consideration is to be confined to the administrative record and ... no de novo proceeding may be held."71 It is also true that support for the theory espoused by the companies' opponents can be found in judicial decisions72 and legal commentary.73 I think, however, that Congress has specified the procedure appropriate for the situation here, and that, in the circumstances presented, the District Court's technique was eminently correct.

I begin my analysis by sharply defining the problem. The companies' right to judicial review of OFCCP's disclosure decision rests wholly on Section 10 of the Administrative Procedure Act (APA).74 It follows necessarily that Section 10 dictates the terms upon which the review was to be conducted, and, when that section is examined, any uncertainty as to the propriety of independent legal rulings by the court is immediately eliminated. Section 10 provides that "[t]o the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law [and] interpret ... statutory provisions...."75 This directive accords with the traditional understanding that questions of law,76 and statutory meanings as questions of law,77 are for courts, not agencies. While on legal inquiries,78 including typically those of statutory construction, courts yield agencies varying degrees of deference, it is the court, not the agency, that has the final say.79 And while the law-fact distinction has blurred considerably of late,80 that much of the judicial role remains substantial and vital,81 and clearly so where, as here, it is statutorily mandated.

The District Court's function extended, then, to resolution of legal problems incidental to determining the applicability of claimed exemptions to the information in suit.82 The issue thus is reduced to whether, in passing on exemption questions, the court similarly was free to redetermine the facts upon which its rulings were to be predicated.83 I must emphasize that the inquiry at this point concerns the District Court's methodology for ascertaining whether information in dispute was exempt from FOIA's mandatory release requirement, not whether the agency, in an exercise of its discretion, could have released it despite its exempt status. With respect to this particular phase of the litigation, and in view of the caliber of factfinding procedures afforded at the agency level, I conclude that the court was authorized to amplify the administrative record through the admission of new evidence, and to make its own findings of fact.

The District Court explained why it chose de novo review as the procedural route to ascertainment of the extent to which the documentary matter in controversy might have been intercepted by one or more of FOIA's exemptions:In a reverse-FOIA case the threshold question is whether the documents sought are subject to mandatory disclosure or fall within an exemption to the Act. If the documents sought are subject to mandatory disclosure, the lawsuit is at an end. If the documents, or portions thereof, fall within an exemption to mandatory disclosure, the Act does not apply and the agency's decision to disclose the documents is subject to reversal only for an abuse of discretion. In determining whether any exemptions apply to the information which the agency intends to disclose, the Court is not confined to reviewing the agency record. Even under APA review, the Court must hold a hearing and determine de novo whether an exemption applies just as if the suit were one brought to compel disclosure.84

That, undeniably, was the procedure we outlined some years ago in Charles River Park "A," Inc. v. HUD.85 There we theorized that judicial exploration into whether submitted information was exempt did not amount to review of agency action, but was merely inquiry as to whether the submitter had any cause of action for restraint of a contemplated public release.86 Subsequently, however, in Chrysler Corp. v. Brown,87 the Supreme Court made clear that the submitter's sole entree into court is an action for review of the agency's disclosure decision under the APA.88 NOW and the Government emphasize this point, arguing that in consequence the review is to be conducted solely on the administrative record, and that the agency's outcome on applicability of exemptions is to be tested exclusively by an abuse-of-discretion standard. We recently acknowledged89 that Chrysler poses the question of continued viability of our holding in Charles River Park "A" on de novo review of exemption rulings.90 Squarely addressing that question, and accepting the APA's pilotage on procedure, I believe de novo reconsideration of the exemption claims was entirely proper here.

I start from the premise that attempts to enjoin agency disclosure of information constitute review of agency action, and then turn to the APA's Section 10, the wellspring of the information-submitter's right to sue. It directs a reviewing court to "hold unlawful and set aside agency action, findings, and conclusions" falling within any of six different categories,91 including any administrative rulings found to be "unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court."92 This provision, as construed by the Supreme Court, is narrow in scope, and authorizes de novo factfinding in only two instances.93 One of these is "when the action is adjudicatory in nature and the agency factfinding procedures are inadequate,"94 and that, in my view, is the situation here.

Indubitably, the proceedings culminating in the administrative decisions to release company-submitted data were adjudicatory in character.95 Confronting the agency were the questions whether any of the material was immunized from mandatory divulgence by one or more FOIA exemptions and, to the extent that it was, whether the agency could and should nonetheless disclose it. The first of these questions, and the only one certainly decided at the administrative level,96 called for an assessment of the harm, if any, that disclosure likely would visit upon the submitter's competitive position in the insurance industry.97 The facts vital to that inquiry were "the facts of the particular case"98--those "pertaining to the parties and their businesses and activities"99--and the process by which they were to be ascertained from the evidence was distinctly adjudicative.100 The critical question, then, is whether the agency's factfinding mechanism was equal to the task.

C. The Adequacy of Agency Factfinding Procedures

As noted earlier, regulations of the Department of Labor inform the administrative handling of requests for either confidentiality or disclosure of data obtained from government contractors.101 These materials, the regulations warn, are subject to FOIA's public inspection and copying mandates.102 Contractors are permitted, however, to identify information in their affirmative action programs and included workforce analyses which they deem exempt from compulsory release under FOIA, and to specify reasons for nondisclosure.103 An agency officer must pass on a contractor's claim within ten days and, should the contractor appeal from an adverse ruling, the agency's director must make the final determination within another ten-day period.104 That was the methodology employed in the cases now before us105 and, so far as we are advised, is the sum total of the procedure the agency affords for resolution of even the most complex of the variegated factual issues that FOIA exemptions can and frequently do present.

The caselaw offers little guidance for determinations on whether agency factfinding procedures are adequate within the meaning of Section 10 of the APA, as interpreted by the Supreme Court.106 I perceive no occasion, however, for any general exploration or dissertation on that subject. For whatever "adequacy" at its broadest may require, it is clear enough to me that in one critical respect it was lacking here, and accordingly that the District Court was empowered by the APA to engage de novo in such factfinding as a preliminary assessment of the companies' exemption claims necessitated.107

I start with the "fundamental proposition of administrative law that interested parties must have an effective chance to respond to crucial facts."108 This precept finds expression in the familiar requirement of notice of contemplated agency action and opportunity to be heard,109 and its reach extends to a demand for suitable means of addressing not only the opponent's case but the agency's concerns as well.110 As the Supreme Court has declared, "where governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue."111 Beyond that, "[a] party is entitled ... to know the issues on which decision will turn and to be apprised of the factual material on which the agency relies for decision so that he may rebut it."112 And "[t]hose who are brought into contest with the Government in a quasi-judicial proceeding aimed at the control of their activities are entitled to be fairly advised of what the Government proposes and to be heard upon its proposals before it issues its final command."113 The opportunity for response must come, of course, " 'at a meaningful time and in a meaningful manner.' "114

These principles, so essential to fairness of the proceeding and accuracy of the factfinding process, have already achieved recognition by this court. As far back as 1974, we announced that "[a]n agency may not validly take action against an individual without a hearing unless its notice to the individual of the adverse action proposed to be taken against him specifies the nature of the facts and evidence on which the agency proposes to take action."115 The reason, we said, is that "[s]uch notice enables the affected party to prepare an informed response which places all the relevant data before the agency."116 Much more recently, we affirmed, without comment,117 a District Court ruling articulating the proposition that "[w]here no 'hearing' of any type is required by statute, procedural fairness demands that plaintiffs be informed of the [agency's] position on [an] issue and have an opportunity to respond to [the agency's] contentions before the issuance of a final determination on the issue."118 Other decisions of the court are of similar effect.119

In the litigation at bar, the principal question before OFCCP was the applicability of FOIA's Exemption 4, which ushered in centrally a test distinctly factual in nature: whether disclosure of the sought-after data likely would beget substantial harm to the companies' competitive positions.120 The agency's regulations confined the companies, in their efforts to establish just such a threat, to written specifications of reasons for confidential treatment.121 The companies put forward lengthy and detailed written statements in support of their position,122 only to learn in the end that overwhelmingly their efforts were unsuccessful.123 Neither the agency's regulations nor its procedures offered the companies any guidance in focusing their presentations or documentation124 and, for much of the material implicated, the companies became aware of the agency's objections to their claims only after the agency's final decision to disclose.125 Indeed, in two of the three cases at bar, the second-level administrative decisionmaker not only denied the companies' confidentiality requests but also, in several instances, decreed the release of data which the first-level decisionmaker had ordered withheld.126 And while, of course, the findings and reasons advanced in support of the first-level administrative decision are open to attack on administrative appeal, OFCCP regulations provide no mechanism for combatting the findings and reasons assigned in an adverse second-level decision--the all-important "final determination" of the agency.127 Put another way, the companies had no opportunity whatsoever to learn the final decisionmaker's concerns, much less to address them.

I would hold, then, that the factfinding procedures in vogue when OFCCP undertook to resolve the companies' FOIA-exemption claims were too meager to survive the test of adequacy. It follows that the District Court, in assessing those claims provisionally on the companies' preliminary injunctive motion, did not err when it engaged in de novo factfinding. With the agency's own factfinding methodology inadequate, that course was fully authorized by the APA;128 more importantly, it ensured fulfillment of the statutory pledge of adequate factfinding129 in the only way possible without change in the agency's procedures responsive to the principles I have explicated.

It does not follow, however, that the same course is indicated ineluctably when the District Court reaches these cases on the merits. An adequate factfinding process must, of course, be afforded at some point, but, with the agency's factfinding machinery sufficiently improved, that could be done at the administrative level; and in that event de novo judicial review of the agency's exemption-related factual determinations would lose the legal foundation it now has.130 Judicial review would then be confined to the administrative record,131 and the agency's exemption rulings would be vulnerable only if arbitrary, capricious, abusive of discretion or otherwise contrary to law.132

So, whether the factfinding essential on exemption claims properly is to take place before the agency or the court depends upon the caliber of the procedures the agency is prepared to extend. And just what an agency will offer in this regard is basically a matter of policy--kgenerically legislative, but usually administrative--which is neither a court's function nor prerogative to prescribe.133 Congress has, of course, established a policy for cases generally by providing for de novo judicial review in those instances where agency adjudicative factfinding procedures are entirely lacking or seriously infirm.134 But an agency can totally eliminate the alternative of de novo review by providing adequate factfinding mechanisms, or elevating those it may have to a legally acceptable level.

It may well be more desirable, from the perspective of both the administrative process and the judicial system, for the agency, rather than the court, to function as the primary factfinder in reverse-FOIA cases. Not the least of the considerations relevant is that Congress has not specifically designated the forum for such factfinding,135 and there is reason to doubt that, were it ever to do so, its designee would be the court.136 At any rate, the choice presently is one for the agency to make--it is a by-product of the agency's power to set policy on the methodology of its factfinding--and one I am loathe to foreclose. I think an opportunity for an upgrading of OFCCP's factfinding procedures should be afforded before the District Court continues on with de novo exemption-factfinding in its consideration of the merits.

All parties claim error of some kind in the District Court's holdings on the effect of FOIA's exemptions on the parties' respective requests for confidentiality or disclosure of particular items of information. NOW and the Government also contest the court's conclusion that voluntary agency release of FOIA-exempted materials would pervert agency discretion.137 I now address these contentions, mindful that the single subject of the appeals before us is an order disposing of a motion for a preliminary injunction, and advertent to the legal principles thus brought into play. In ruling on a motion for relief of that character, a court does not reach final determinations on the merits, but "exercise[s] its discretion 'upon the basis of a series of estimates:' "138 whether the movant likely will prevail on the merits, whether he will suffer irreparable harm without interim relief, whether others will be injured by an award of such relief, and whether the public interest will be advanced or disserved by grant or denial of the motion.139 Thus, absent improper procedure or an erroneous application of the law, the decision respecting a preliminary injunction lies within the sound discretion of the trial court, and will be reversed on appeal only for abuse of that discretion.140

Applying this obviously narrow standard of review, I perceive no basis for upsetting the various assessments, as matters of probability, underlying the District Court's rulings that particular informational items probably would ultimately be found exempt from mandatory disclosure while others would not be. Much less is there ground for disturbing the weights the court assigned to the presence or absence of harm from the grant or denial of injunctive relief.141 Indeed, I view only one challenge as worthy of discussion: that the court erred in holding that voluntary agency release of information the court thought likely to be FOIA-exempt would constitute an abuse of discretion. Because that thesis questions the procedure the court followed in settling on that aspect of the injunction, it merits attention at this stage of the litigation.

After concluding that the companies had demonstrated a substantial probability of prevailing on the merits of some of their exemption claim, the District Court correctly observed that, so far as FOIA is concerned, exempt data might nevertheless be divulged in the sound exercise of agency discretion.142 The court then proceeded, however, to consider whether in any instance OFCCP had abused that discretion by deciding to unveil such material, and concluded that it had.143 NOW and the Government assail this approach as a usurpation of the agency's prerogative to make determinations on voluntary release in the first instance.

The District Court based its abuse-of-discretion rulings on two grounds. First, it held that voluntary disclosure of much of the information which the court deemed probably exempt from mandatory disclosure under FOIA would constitute a criminal offense under the Trade Secrets Act.144 Second, though perceiving that OFCCP "never reached the question of discretionary disclosure of the data,"145 the court felt that "failure to exercise any discretion, and the resulting failure to engage in any meaningful consideration of this question, constitutes an abuse of that discretion."146

The District Court was right in its conclusion that any voluntary agency disclosure of information exempted by FOIA but intercepted by the Trade Secrets Act would constitute a serious abuse of agency discretion.147 I cannot say that the court exceeded the bounds of its own discretion in estimating that some FOIA-exempt material which OFCCP proposed to release fell within the purview of the Trade Secrets Act.148 There were, however, exempt items beyond the reach of that legislation,149 and I cannot approve the decisional course the court took with respect to them.

As the District Court divined, OFCCP apparently found all data it planned to divulge to be subject to compulsory release under FOIA. Consequently, it seems that OFCCP never reached the question whether material neither exempted by FOIA nor protected by the Trade Secrets Act should be unveiled in the public interest. An agency need never ponder the propriety of voluntarily disclosing information it believes to be mandatorily disclosable under FOIA;150 only if it is first determined that the information is FOIA-exempt is there any occasion to consider whether release nonetheless is appropriate as a matter of agency policy or discretion.

Furthermore, not until the agency passes on voluntary disclosure, or improperly refuses to do so, should the court act.151 Questions of voluntary administrative action, by definition, are for the agency, not the court, at least in the first instance; the role of the court is merely to ensure that the agency action was not arbitrary or otherwise contrary to law.152 Moreover, that determination, we have said, ordinarily is to be made solely on the administrative record,153 and here there was none on voluntary release. The District Court shoudl not have undertaken any adjudication on that subject before the agency entrusted with policymaking and decisionmaking powers in the area had occasion to do so.

For the reasons stated, I would remand the appealed phases of these cases to the District Court with instructions to remand in turn to OFCCP the question of release of information exempt under FOIA but unaffected by the Trade Secrets Act. I would further instruct the court to afford OFCCP an opportunity to revise its fact-finding procedures in such manner as it may desire. I would affirm the District Court's rulings in all other respects, and let the preliminary injunction remain in force subject to the court's further order. This disposition of these appeals, of course, would leave the parties at liberty to litigate the merits fully, free of any preclusion or limitation by the determinations leading to that injunction.154

MIKVA, Circuit Judge, and McGOWAN, Senior Circuit Judge, concurring:

We concur in the result in this case, namely, affirmance of the preliminary injunction and remand to the District Court with instructions for further proceedings. We do not agree, however, with Chief Judge Robinson's reasons for affirming the preliminary injunction, and we see differently what should transpire upon remand to the District Court. In our view, de novo review in the District Court was inappropriate upon motion for preliminary injunction; such review also would be inappropriate at the trial on the merits; and no new or different procedures should be required of the agency. We uphold the preliminary injunction on other grounds, however, and our instructions to the District Court differ somewhat from those of the Chief Judge.

FOIA provides for de novo review by the district court of the question of statutory exemption from disclosure, but the FOIA right of action extends only to those who request disclosure. See 5 U.S.C. Sec. 552(a)(4)(B) (1982). Because the submitter of information has no right of action under FOIA to enjoin disclosure, see Chrysler Corp. v. Brown, 441 U.S. 281, 290-94, 99 S.Ct. 1705, 1711-13, 60 L.Ed.2d 208 (1979), the de novo review section of that act is not available to submitters. Indeed, when the Administrative Conference of the United States surveyed the law regarding submitters' rights, it concluded that it would take an amendment of current law for submitters ever to have de novo review available to them, and the Conference recommended that Congress enact such amendments. See 1 C.F.R. Sec. 305.82-1 (1983) (ACUS recommendation regarding submitters' rights under FOIA).

Chrysler Corp. v. Brown, 441 U.S. at 317-18, 99 S.Ct. at 1725-26, makes it clear that an information-submitter's right to judicial review of an agency's decision to disclose submitted records arises under the APA. Upon this point we are in agreement with Chief Judge Robinson. We differ as to the nature of the APA review available in this case.

In all cases challenging agency action under the APA, the "action must be set aside if the action was 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law' or if the action failed to meet statutory, procedural, or constitutional requirements." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 822, 28 L.Ed.2d 136 (1971) (quoting 5 U.S.C. Sec. 706(2)(A) and citing id. Sec. 706(2)(B)-(D)). The "focal point for judicial review" in such cases "should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973) (per curiam). See also United States v. Carlo Bianchi & Co., 373 U.S. 709, 715, 83 S.Ct. 1409, 1413, 10 L.Ed.2d 652 (1963) ("in cases where Congress has simply provided for review, without setting forth the standards to be used or the procedures to be followed, ... consideration is to be confined to the administrative record and ... no de novo proceeding may be held").

The APA contemplates de novo review of agency action only when "the facts are subject to trial de novo by the reviewing court," 5 U.S.C. Sec. 706(2)(F) (1982). It would appear, therefore, that something other than the APA must make the facts "subject to trial de novo," but the Supreme Court has interpreted section 706(2)(F) to allow a reviewing court to create its own record when the agency's factfinding procedures are inadequate. See Camp v. Pitts, 411 U.S. at 141-42, 93 S.Ct. at 1243-44; Overton Park, 401 U.S. at 415, 91 S.Ct. at 823. See also Doraiswamy v. Secretary of Labor, 555 F.2d 832, 839 n. 39 (noting exception), 839-42 (rejecting de novo review) (D.C.Cir.1976) (Robinson, J.). Chief Judge Robinson finds that OFCCP's procedures were inadequate, and he rests his conclusions in part II of his opinion on that finding. We cannot agree.

The two seminal Supreme Court cases do not tell us what would make agency procedures inadequate; in neither Camp v. Pitts nor Overton Park were inadequacies found. Chief Judge Robinson has cited only one case holding agency factfinding procedures so deficient that de novo review under section 706(2)(F) was warranted, see Porter v. Califano, 592 F.2d 770, 782-83 (5th Cir.1979), cited supra at 738 n. 106, and that case involved substantial bias in an agency disciplinary proceeding. We have found no others. We can only conclude that the procedures must be severely defective before a court proceeding under the APA can substitute de novo review for review of the agency's record. Cf. Upjohn Manufacturing Co. v. Schweiker, 681 F.2d 480, 483 (6th Cir.1982) (if not provided by statute, de novo review "is the exception rather than the rule"). This is not such a case.

Under the regulations we are reviewing, the submitter is informed that his materials may be disclosed if he makes no claim of exemption. He is told to whom to claim exemption, he is allowed to submit any materials he wishes to support that claim, and he is allowed to appeal the initial decision, again with extensive documentation and written argument. See 41 C.F.R. Secs. 60-40.3(a), 60-60.4(d) (1983). These procedures were followed in this case, and they provide notice and the opportunity to present relevant evidence at a relevant time to responsible agency officials. Moreover, although the regulations require prompt administrative action, the time limits were stretched in this case. That circumstance, and the fact that both administrative tiers produced lengthy decisions, suggest that the decision makers were not totally oblivious of the companies' objections.

Chief Judge Robinson argues that "[n]either the agency's regulations nor its procedures offered the companies any guidance in focusing their presentations or documentation," supra at 740. The first-level decision maker, however, wrote at length to support his conclusion that most of the materials are exempt from disclosure. Surely that explanation provided some focus for the companies' appeal to the second-level decision maker.

He is also troubled by the fact that the second tier of review found additional materials non-exempt and that there was no administrative appeal from that decision available. See supra at 741. This hardly proves the procedures to be inadequate. Agency adjudication must become final at some point, and after that point aggrieved parties can resort to the courts. If the agency has not rationally supported its decision or has exceeded its lawful authority, the court can remand for further proceedings or reverse the agency outright. If the administrative record is inadequate for judicial review, the court can require supplementation by the agency in a variety of ways. See Camp v. Pitts, 411 U.S. at 142-43, 93 S.Ct. at 1244; Overton Park, 401 U.S. at 420-21, 91 S.Ct. at 825-26.

Finally, although an oral hearing might have facilitated the companies' presentations, the absence of such a hearing does not render the procedures inadequate, for the procedures in Camp v. Pitts were found adequate without having provided such a hearing, see 411 U.S. at 138-40, 93 S.Ct. at 1243. See also, e.g., P & B Services, Inc. v. Cardenas, 525 F.Supp. 1289, 1292-93 & n. 16 (D.D.C.1981) (no oral hearing, but procedures adequate).

In short, although we might not describe the agency's procedures as being the most effective or open, they were not closed, unfair, or otherwise inadequate to the task of developing a factual record, as well as a record of submitters' objections, based upon which one could decide rationally whether material is exempt from disclosure. Cf. Upjohn, 681 F.2d at 483 (prescribed procedures were followed and adequate, even if informal). For this reason, we disagree with Chief Judge Robinson's conclusion that de novo review was proper here under the APA.

Our conclusion that the District Court erred in not conducting its review based solely on the record that was before the OFCCP normally would lead us to vacate the court's actions and remand to the District Court. Under the circumstances of this case, however, we find it appropriate to affirm the preliminary injunction. Our own review of the administrative record convinces us that it would have been well within the discretion of the District Court for it to have granted preliminary relief even had it confined its review to that record. Rather than delay further by remanding for the District Court to rehash the issues of a preliminary injunction, we will affirm the injunction and remand for further proceedings.

Because we find the agency's factfinding procedures to have been adequate, our conception of the proceedings that should take place upon remand differs from Chief Judge Robinson's. First, it is not necessary for the agency to develop new procedures before this case is allowed to progress. Second, we would leave to the District Court's discretion the timing of any remand to OFCCP.

For example, the court may find it most appropriate to proceed to consider the merits of whether these materials are exempt. To do so, it may need to require OFCCP to supplement the administrative record. See Camp v. Pitts, 411 U.S. at 142-43, 93 S.Ct. at 1244; Overton Park, 401 U.S. 420-21, 91 S.Ct. at 825-26. Once the District Court has a proper record, if it finds that some or all of the materials are exempt from disclosure, the concerns expressed in part III of Chief Judge Robinson's opinion would become acute. The District Court then would have to remand to OFCCP for the agency to exercise its discretion, with a statement of reasons, regarding disclosure of the material despite exemption.

Of course, upon remand the District Court is also free to proceed in any other manner it sees fit, consistent with both this opinion and the Supreme Court's decisions in Camp v. Pitts and Overton Park. We have written separately to emphasize these points: (1) de novo review was inappropriate at the preliminary injunction stage (2) the proper standard of review--at the preliminary stage, when treating the merits of whether the materials are exempt, and when evaluating any agency decision to disclose exempt materials--is provided by 5 U.S.C. Sec. 706(2)(A)-(D) (1982); (3) new agency procedures are not necessary; (4) the District Court may require OFCCP to supplement the record if the record does not now provide a sufficient basis for judicial review.