Opinion ID: 437220
Heading Depth: 1
Heading Rank: 2

Heading: methodology of review

Text: 19 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 4 68 and to a lesser extent by Exemption 6. 69 20 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. 21 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 decisions 72 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.
22 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. 23 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.
24 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 25 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 acknowledged 89 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. 26 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. 27 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. 28
29 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 us 105 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. 30 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 31 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 32 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 33 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 documentation 124 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. 34 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 factfinding 129 in the only way possible without change in the agency's procedures responsive to the principles I have explicated. 35 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 36 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. 37 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.