Opinion ID: 591123
Heading Depth: 2
Heading Rank: 1

Heading: National Parks Reexamined

Text: 29 In challenging the definition of confidential presented in National Parks, the NRC and INPO ask us to set aside circuit precedent of almost twenty years' standing. In obedience to the principle of stare decisis, we reaffirm the definition but correct some misunderstandings as to its scope and application.
30 [T]he doctrine of stare decisis is of fundamental importance to the rule of law. Welch v. Texas Dep't of Highways and Public Transportation, 483 U.S. 468, 494, 107 S.Ct. 2941, 2957, 97 L.Ed.2d 389 (1987). The Supreme Court has held that any departure from the doctrine ... demands special justification. Arizona v. Rumsey, 467 U.S. 203, 212, 104 S.Ct. 2305, 2310, 81 L.Ed.2d 164 (1984). Furthermore, the burden borne by the party advocating the abandonment of an established precedent is greater where the Court is asked to overrule a point of statutory construction ... [f]or here, unlike in the context of constitutional interpretation, ... Congress remains free to alter what we have done. Patterson v. McLean Credit Union, 491 U.S. 164, 172-73, 109 S.Ct. 2363, 2370, 105 L.Ed.2d 132 (1989) (citations omitted). 31 In Patterson, the Supreme Court articulated in some detail the circumstances in which it may find sufficient justification for overturning a statutory precedent: 32 In cases where statutory precedents have been overruled, the primary reason for the Court's shift in position has been the intervening development of the law, through either the growth of judicial doctrine or further action taken by Congress. Where such changes have removed or weakened the conceptual underpinnings from the prior decision, or where the later law has rendered the decision irreconcilable with competing legal doctrines or policies, the Court has not hesitated to overrule an earlier decision.... 33 Another traditional justification for overruling a prior case is that a precedent may be a positive detriment to coherence and consistency in the law, either because of inherent confusion created by an unworkable decision, or because the decision poses a direct obstacle to the realization of important objectives embodied in other laws. 34 Id. at 173, 109 S.Ct. at 2370-71 (citations omitted). 35 Circuit courts of appeal, of course, play a different role in the federal system than the Supreme Court, and this is reflected in certain differences in the manner in which the principle of stare decisis is applied to circuit precedent. See United States v. Aguon, 851 F.2d 1158, 1172-76 (9th Cir.1988) (Reinhardt, J., concurring). Circuit courts do not establish the ultimate judicial precedent for the application of a federal statute; and because there are thirteen of them, they will at times interpret the same statute in different ways. Moreover, circuit precedent is generally established by the majority vote of just three circuit judges. Their decisions, nevertheless, bind the circuit unless and until overturned by the court en banc or by Higher Authority. Save Our Cumberland Mountains, Inc. v. Hodel, 826 F.2d 43, 54 (D.C.Cir.1987) (Ginsburg, Ruth B., J., concurring). 36 Thus, in addition to considering the factors outlined in Patterson, a circuit court may reexamine its own established interpretation of a statute if it finds that other circuits have persuasively argued a contrary construction. An en banc court may also set aside its own precedent if, on reexamination of an earlier decision, it decides that the panel's holding on an important question of law was fundamentally flawed. For example, in Save Our Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516 (D.C.Cir.1988) (en banc ), we overturned a four-year-old precedent because we concluded that the rule established in that case was inconsistent with the intent of Congress and that the panel had misapplied a Supreme Court decision. Id. at 1524. See also Groves v. Ring Screw Works, Ferndale Fastener Div., 498 U.S. 168, 172 n. 8, 111 S.Ct. 498, 501 n. 8, 112 L.Ed.2d 508 (1990) (given intercircuit conflict and panel's doubt about correctness of circuit precedent, it might have been appropriate for the panel to request a rehearing en banc ); Aguon, 851 F.2d at 1160-72 (en banc ) (overruling circuit precedent in light of conflict with subsequent Second Circuit opinion). 37 Appellees NRC and INPO have failed to demonstrate any of the considerations that would justify our overturning the National Parks test. We note, first, the widespread acceptance of National Parks by other circuits. To date, seven have adopted its test of confidentiality; none has rejected it. See, e.g., 9 to 5 Org. for Women Office Workers v. Bd. of Governors of the Fed. Res. System, 721 F.2d 1, 7-10 (1st Cir.1983); American Airlines, Inc. v. Nat'l Mediation Bd., 588 F.2d 863, 871 (2d Cir.1978); Acumenics Research & Technology v. Dep't of Justice, 843 F.2d 800, 807 (4th Cir.1988); Sharyland Water Supply Corp. v. Block, 755 F.2d 397, 399 (5th Cir.), cert. denied, 471 U.S. 1137, 105 S.Ct. 2678, 86 L.Ed.2d 697 (1985); General Elec. Co. v. NRC, 750 F.2d 1394, 1402-03 (7th Cir.1984); Pacific Architects and Engineers Inc. v. Dep't of State, 906 F.2d 1345, 1347 (9th Cir.1990); Anderson v. HHS, 907 F.2d 936, 946 (10th Cir.1990). Far from being overtaken by the tide of recent judicial developments, National Parks, it seems, has ridden its crest. 38 Nor have appellees pointed to any subsequent action in Congress that would tend to remove[ ] or weaken[ ] the conceptual underpinnings of National Parks. Patterson, 491 U.S. at 173, 109 S.Ct. at 2370. To the contrary, Congress has taken cognizance of the case in enacting subsequent legislation. See, e.g., CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1153 n. 146 (D.C.Cir.1987) ([W]hen both Houses of Congress provided an exemption [to the Government in the Sunshine Act] ... they accepted the National Parks standard as appropriate.), cert. denied, 485 U.S. 977, 108 S.Ct. 1270, 99 L.Ed.2d 481 (1988). 39 Finally, we find that National Parks has not proven so unworkable in practice as to constitute a positive detriment to coherence and consistency in the law or a direct obstacle to the realization of important objectives embodied in other laws. Patterson, 491 U.S. at 173, 109 S.Ct. at 2371. Nor has there been a showing that the test, as applied in National Parks, will frustrate Congress's purposes in enacting Exemption 4. Appellees argue, nevertheless, that the decision has proven unworkable in its everyday application by agencies and the courts. They suggest that the impracticability of the governmental impairment prong is evidenced by the history of this case. They claim similar difficulties with the competitive injury prong. See, e.g., Greenberg v. Food & Drug Admin., 803 F.2d 1213 (D.C.Cir.1986) (reversing summary judgment for further proceedings on the economic effectiveness of other means of compiling private customer lists); Worthington Compressors, Inc. v. Costle, 662 F.2d 45 (D.C.Cir.1981) (reversing summary judgment for further proceedings on question of discoverability of secret information sought by reverse engineering). 40 While these decisions illustrate the difficulties that can arise wherever judicial lines are drawn, they fall short of demonstrating that National Parks is so flawed that we would be justified in setting it aside. Moreover, we believe that the categorical rule we announce today will greatly simplify the application of Exemption 4 in a significant number of cases. 41 Having examined these and other arguments in favor of overturning National Parks, we conclude that none justifies the abandonment of so well established a precedent. Whatever our individual opinions as to the merits of its two-part test, we accept the wisdom of Justice Brandeis's observation, some sixty years ago, that [s]tare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than that it be settled right. Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406, 52 S.Ct. 443, 447, 76 L.Ed. 815 (1932) (Brandeis, J., dissenting).
42 The National Parks two-part test was presented as a summary of its discussion of Exemption 4. See National Parks, 498 F.2d at 770 (To summarize....). The test must therefore be read in a manner consistent with the observations and conclusions that preceded it. We quote the most pertinent of these: 43 [O]ur decisions concerning this exemption have been guided by the following passage from the Senate Report, particularly the italicized portion: 44 This exception is necessary to protect the confidentiality of information which is obtained by the Government ..., but which would customarily not be released to the public by the person from whom it was obtained. 45 Id. at 766 (emphasis in original). 46 The financial information exemption recognizes the need of government policymakers to have access to commercial and financial data. Unless persons having necessary information can be assured that it will remain confidential, they may decline to cooperate with officials and the ability of the Government to make intelligent, well informed decisions will be impaired. 47 Id. at 767 (emphasis added). 48 Apart from encouraging cooperation with the Government by persons having information useful to officials, [Exemption 4] serves another distinct but equally important purpose. It protects persons who submit financial or commercial data to government agencies from the competitive disadvantages which would result from its publication. 49 Id. at 768 (emphasis added). 50 [There is] a twofold justification for the exemption of commercial material: (1) encouraging cooperation by those who are not obliged to provide information to the government and (2) protecting the rights of those who must. 51 Id. at 769 (emphasis added). 52 In summarizing these various purposes and justifications, we formulated the now familiar two-part test that defined as confidential any financial or commercial information whose disclosure would be 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 (footnote omitted). In applying this test to the facts of National Parks, we held that because 53 the concessioners [were] required to provide this financial information ..., there is presumably no danger that public disclosure will impair the ability of the Government to obtain this information in the future. 54 Id. (emphasis in original). Then, because the record was incomplete as to the competitive harm that might be suffered by the concessioners on the release of the information, we remanded for further findings on that question. 55 While we indicated that the governmental interest is unlikely to be implicated where the production of information is compelled, we have since pointed out that there are circumstances in which disclosure could affect the reliability of such data. See Washington Post Co. v. HHS, 690 F.2d 252, 268-69 (D.C.Cir.1982) (possible effect of disclosure on accuracy of statements filed by consultants). Thus, when dealing with a FOIA request for information the provider is required to supply, the governmental impact inquiry will focus on the possible effect of disclosure on its quality. 56 When a FOIA request is made for information that is furnished on a voluntary basis, however, we have identified a different aspect of the governmental interest in securing confidential information. As is apparent from the language we have italicized in the passages quoted above, the purpose served by the exemption in such instances is that of encouraging cooperation with the Government by persons having information useful to officials, National Parks, 498 F.2d at 768. Moreover, we have taken note of the probable consequences of a breach of confidence by the Government: 57 Unless persons having necessary information can be assured that it will remain confidential, they may decline to cooperate with officials[,] and the ability of the Government to make intelligent, well informed decisions will be impaired. 58 Id. at 767. Thus, when information is obtained under duress, the Government's interest is in ensuring its continued reliability; when that information is volunteered, the Government's interest is in ensuring its continued availability. 59 A distinction between voluntary and compelled information must also be made when applying the competitive injury prong. In the latter case, there is a presumption that the Government's interest is not threatened by disclosure because it secures the information by mandate; and as the harm to the private interest (commercial disadvantage) is the only factor weighing against FOIA's presumption of disclosure, that interest must be significant. Where, however, the information is provided to the Government voluntarily, the presumption is that its interest will be threatened by disclosure as the persons whose confidences have been betrayed will, in all likelihood, refuse further cooperation. In those cases, the private interest served by Exemption 4 is the protection of information that, for whatever reason, would customarily not be released to the public by the person from whom it was obtained--to use the formulation adopted by this court in Sterling Drug, 450 F.2d at 709 (quoting Senate Report at 9). Because Critical Mass I failed to take these distinctions into account, its holding would frustrate Congress's purpose of encouraging cooperation with the Government by persons having information useful to officials, National Parks, 498 F.2d at 768. See Critical Mass I, 830 F.2d at 288 (Buckley, J., concurring in part and dissenting in part); Critical Mass II, 931 F.2d at 948 (Randolph, J., concurring). 60 It should be evident from this review that the two interests identified in the National Parks test are not exclusive. Although we overrule our decision in Critical Mass I, we note that the panel there adopted the First Circuit's conclusion that the exemption also protects a governmental interest in administrative efficiency and effectiveness. See Critical Mass I, 830 F.2d at 286 (citing 9 to 5 Org. for Women Office Workers, 721 F.2d at 11). And today, of course, we recognize a private interest in preserving the confidentiality of information that is provided the Government on a voluntary basis. We offer no opinion as to whether any other governmental or private interest might also fall within the exemption's protection. 61