Court Opinion

ID: 8894122
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:41:08.895574+00
Date Added: 2024-06-11T17:07:22.718041
License: Public Domain

LUMBARD, Circuit Judge:
Claiming that the Food and Drug Administration (FDA) was unlawfully withholding material to which it was entitled under the Freedom of Information Act, 5 U.S.C. § 552, by charging unlawful fees, Diapulse Corporation of America instituted this action in the Eastern District of New York on September 4, 1973. On September 17, Judge Dooling granted the FDA’s motion for summary judgment on the ground that there had *76been no improper refusal of access to records which the Act requires be disclosed. Since we find that the fees the FDA required of Diapulse were not authorized, we vacate and remand.
I.
This appeal brings before us yet another skirmish between Diapulse and the FDA over Diapulse’s marketing of a diathermy unit. Previously we have upheld a condemnation order entered against the device under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-392, after a jury had found that the device was mislabeled and that 49 claims made for it were misleading. United States v. Diapulse Manufacturing Corp. of America, 389 F.2d 612 (2d Cir.), cert. denied, 392 U.S. 907, 88 S.Ct. 2059, 20 L.Ed.2d 1365 (1968). Later we affirmed preliminary and permanent injunctions against shipment of the device in interstate commerce unless the FDA approved the labeling for the machine. United States v. Diapulse Corp. of America, 457 F.2d 25 (2d Cir. 1972); United States v. Diapulse Corp. of America, 485 F.2d 677 (2d Cir. 1973) (affirmed without opinion), cert. denied, 416 U.S. 938, 94 S.Ct. 1938, 40 L.Ed.2d 288 (1974). Finally the government has brought criminal contempt charges, which were scheduled to go to trial in April against Diapulse for violating both injunctions. According to Diapulse’s complaint, it hopes that the material it seeks will show that the FDA has engaged in a wide range of discriminatory enforcement activities against it.
The facts surrounding Diapulse’s efforts to gain access to material in the FDA’s files are not disputed. On June 11, 1973, Jesse Ross, the president of Diapulse, sent a letter to the Acting Commissioner of the FDA which demanded in eight paragraphs a broad range of FDA documents which referred to Diapulse. Although the regulations of the Department of Health, Education, and Welfare (HEW), of which the FDA is an operating agency, say that it is the Department’s policy that requests for information be answered within ten days, 45 C.F.R. § 5.51(c) (1973), Ross had to write two follow-up letters, before he received a reply on July 27 from David M. Link, the Director of the FDA’s Office of Medical Devices. Link stated that thousands of documents, not all subject to disclosure under the Freedom of Information Act, would have to be searched to answer Ross’ request and, therefore, Link asked that Ross narrow his request. To aid Ross, Link enclosed a copy of the FDA’s proposed public information regulations, 37 Fed.Reg. 9128 (1972); and suggested Ross contact Robert Kennedy of the Officer of Medical Devices for assistance in gathering material. Link also said that search fees would depend on who had to do the search and that Diapulse might have to pay the salary of the person who did the searching.
On August 7, Ross telephoned Kennedy and said that he would like to start by examining the “factory jackets” relating to the Diapulse device and Dia-pulse Corporation. The factory jackets are the records the FDA has concerning a particular company and they contain a wide variety of documents including inspection reports, letters of inquiry and answers, and various internal memoran-da. Kennedy told Ross that he would have to collect and remove from the factory jackets any material not subject to disclosure under the Act prior to Ross’ examination. Kennedy also told Ross that the inspection would take from four to six days and a fee of $103.60 per day would be charged as reimbursement for the agency’s cost. He also said that a letter of intent to pay the fee was necessary before they could proceed. When Ross objected to paying the fee, Kennedy suggested that he discuss the matter with Ruth Cockerham, the FDA’s Freedom of Information Officer. In a letter to Cockerham dated August 7, Ross requested a waiver of the payment requirement on the ground that Diapulse could not afford to pay. On August 22 Charles H. Dick, the FDA’s Assistant Commissioner for Pub-*77lie Affairs, in reply to Ross’ request said that the FDA’s proposed regulations provided for a waiver of search and copying fees upon adequate showing that the person making the request was indigent and that there was a strong public interest justification for disclosure. Dick concluded by saying that more complete information concerning Diapulse’s financial status would be necessary before a decision concerning its waiver request could be made.
Instead of responding to this letter by sending financial information concerning Diapulse, Ross on August 30 sent a letter to Alexander M. Schmidt, the Commissioner of the FDA, requesting more material in addition to that previously demanded. Schmidt replied under date of September 4, the same day Diapulse instituted this case. He maintained that the FDA had acted properly in its enforcement efforts against Dia-pulse. Concerning Ross’ request for information, Schmidt, referred to the proposed regulations already sent, the proposals contained in Link’s letter, and the statement in Dick’s letter regarding waiver of fees, saying the letters and regulations “need no further comment.”
II.
The issue before us is whether the FDA could lawfully charge Diapulse a fee of $103.60 a day for the cost of Kennedy examining the material in the factory jackets and deleting material exempt from the disclosure requirements of the Freedom of Information Act. Not before us is a question of whether any of the material Ross and Diapulse sought is actually subject to disclosure under the Act. See generally EPA v. Mink, 410 U.S. 73, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973); Rose v. Department of Air Force, 495 F.2d 261 (2d Cir. 1974). Thus far, the FDA has not actually refused to let Ross examine any particular document.
We must first consider the FDA’s claim that Diapulse is barred from raising the issue because of a failure to exhaust administrative remedies. The Department of Health, Education, and Welfare has promulgated regulations which provide for administrative review of denials of requests *for information, 45 C.F.R. §§ 5.80-.85 (1973). Under these regulations a person whose request for information has been denied has thirty days to seek review. In this case the review would be by the Commissioner of the FDA, as head of an operating agency. Under amendments to 45 C.F.R. § 5.82, effective August 17, 1973, the Assistant Secretary of HEW for Public Affairs must concur in any decision on review which denies a request for information.
It is clear that Diapulse has not sought formal review of the validity of the fees by the Commissioner of the FDA. It is also clear, however, by his letter of September 4 that the Commissioner supported the position his subordinates had taken on this issue, but there is no indication that the Assistant Secretary for Public Affairs has approved FDA’s stand on fees. We are thus faced with the question of whether Diapulse’s failure to exhaust administrative remedies within HEW bars judicial review at this time.
We have little doubt that as a general matter persons requesting information should exhaust administrative remedies prior to seeking judicial review. See Tuchinsky v. Selective Service System, 418 F.2d 155, 158 (7th Cir. 1969); cf. Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974). See generally Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638 (1938). But the doctrine of exhaustion of administrative remedies is subject to exceptions, and “ [application of the doctrine to specific cases requires an understanding of its purposes and of the particular administrative scheme involved.” McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969). Among the purposes for the doctrine that the Supreme Court recited in McKart are avoiding premature interruption of the administrative *78process, allowing the agency to develop the necessary factual record, giving the agency the first opportunity to exercise its discretion or to apply its expertise, and promoting efficiency by letting the administrative process carry through to its conclusion. Id. at 193-194.
Here, of course, there is no administrative proceeding to interrupt since Diapulse has chosen not to seek administrative review of the validity of the fees the FDA staff proposed. Since the issue here is whether the proposed fees were legally authorized, there is no need for the agency to develop a detailed factual record for purposes of decision, nor is there any area for the exercise of discretion. And, on this legal question of authorization, agency expertise is of little help to a reviewing court. See Mc-Kart, supra, 395 U.S. at 197-198.
Allowing judicial review here will not unduly disrupt the scheme of administrative review that HEW has promulgated. The plan was undoubtedly designed to deal with the general sort of Freedom of Information Act problem arising from the refusal of the agency staff to allow a member of the public to examine material. Such cases often combine factual and legal questions. While many of the usual reasons for requiring exhaustion may not be present, since review in the district courts under 5 U.S.C. § 552(a)(3) is de novo, courts nevertheless should allow agencies the opportunity to review denials of requests and to correct their errors prior to allowing judicial review.
Here, however, we are presented with a legal question on which the Commissioner of the FDA has already issued his opinion. There is no chance, therefore, that the FDA will correct any possible error in denying Diapulse access to the factory jackets unless the fees are paid. Whether the Assistant Secretary for Public Affairs of HEW would support the FDA position on this matter is problematic, but that officer was added as a reviewing authority only by recent amendments. It seems likely that neither of the parties to this case were aware of the amendments since counsel for the FDA quotes from the unamended regulations. To require exhaustion of a source of review which neither side knew about when judicial review has proceeded this far would be overly harsh and wasteful. We, therefore, conclude that on the facts of this particular case exhaustion of administrative remedies was not necessary.1
III.
Turning to the merits, we think that it is clear that an attempt to condition Ross’ examination upon payment of unlawful fees would be the sort of improper withholding of material that 5 U.S.C. § 552(a)(3) gives the district courts jurisdiction to enjoin. Section 552(a)(3) allows agencies to charge “fees to the extent authorized by statute” in making records available to persons under that provision. The House Report accompanying the Act makes it clear that 31 U.S.C. § 483a (then 5 U.S. C. § 140) was authority for agencies to charge search and copying fees where information is requested. H.R.Rep.No. 1497, 89th Cong., 2d Sess. (1966), in 2 [1966] U.S.Code Cong. & Admin.News, pp. 2418, 2425-2426. See also Reinoehl v. Hershey, 426 F.2d 815 (9th Cir. 1970); Attorney General's Memorandum on the Public Information Section of the Administrative Procedure Act, in 20 Ad.L.Rev. 263, 293-95 (1968). Section 483a provides that it is the sense of Congress that the furnishing of documents and other services to those not en*79gaged in government business should be self-sustaining to the fullest extent possible. Heads of agencies are authorized to prescribe “by regulation” fees for such services after taking into account the direct and indirect cost to the government, value to the recipient, the public interest served, and other pertinent considerations. The issue here is whether the FDA has promulgated regulations which authorize the $103.60 a day charge that FDA officials attempted to charge Diapulse.
It is noteworthy that the FDA staff in its correspondence with Ross only cited the FDA’s proposed regulations. Those regulations authorize, among others, the following fees:
Search for records and deletion of nondisclosable data: $4 per hour. Where a substantial amount of time is spent by higher salaried professional, managerial, or program personnel in searching for or producing requested documents or in deleting non-disclosa-ble data and information, special rates not to exceed the cost to the agency of such services will be determined and charged ....
37 Fed.Reg. 9132. On the other hand, the regulations then in effect provide:
(a) Certain routine information is provided to the general public at no charge; however, special informational services involving more than routine investigation and allocation of staff time are subject to fees as necessary to recover costs to the Government.
(b) Charges for special services regarding Food and Drug Administration records are as follows:
(1) Search for records: $3 per hour . . .-.
21 C.F.R. § 2.115 (1973).
For different reasons, both parties agree that the $3 per hour search fee authorized by § 2.115(b)(1) is not applicable to this case. The fee sought to be charged in this case was not a fee for searching for the factory jackets in the sense of finding them, rather the fee was for (in the words of the proposed regulation) “deletion of nondisclosable data.” We think that this is a reasonable distinction and we see no reason to quarrel with the agency’s interpretation of its regulation.
The FDA, however, argues that the fee for deletion of material it tried to charge was authorized by 21 C.F.R. § 2.-115(a), quoted above. We disagree. That provision is most naturally read as a statement of a general policy that fees will be charged for special services; § 2.115(b) authorizes fees for these services. The FDA’s interpretation of § 2.-115(a) would turn it into general authority to charge any fee for any service it renders to a private citizen. We think that the requirement of 31 U.S.C. § 483a that fees be authorized by regulation requires that the regulations be more specific than this. Similarly, we think the HEW regulation, 45 C.F.R. § 5.60 (1973), is too vague to support the fees at issue here. We, therefore, conclude that the fees the FDA attempted to charge were not authorized.2
Accordingly, the judgment of the district court is vacated and the case is remanded for further proceedings consistent with this opinion including directing that the FDA furnish material to which ' Diapulse is entitled under the Freedom of Information Act without charging unauthorized fees for the segregation of nondisclosable material.

. It might also be contended that judicial review should be barred since Diapulse did not pursue the possibility that the FDA would waive the fees. As noted above, one requirement for waiver was indigency. It seems unlikely that Diapulse would meet the FDA’s standard for indigency since it has apparently been able to pay the costs of litigating the instant case. Furthermore, there is no reason why Diapulse should be required to disclose its financial affairs to the FDA for the purpose of gaining a waiver of the fees prior to being allowed to challenge the validity of the fees.

. Since we have determined that the fees sought to be charged for deletion of material exempt from disclosure were not authorized, we do not have to pass upon Diapulse’s argument that no agency can charge a fee for deletion of such material.