Court Opinion

ID: 9425595
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:15:10.353639+00
Date Added: 2024-06-11T17:22:56.395468
License: Public Domain

Mr. Justice Douglas,
with whom Mr. Justice Stewart, Mr. Justice Marshall, and Mr. Justice Powell concur, dissenting.
The Court reverses the Court of Appeals, saying that respondent-contractors had not exhausted their administrative remedies. At issue is whether data in possession of the Renegotiation Board and relevant to the controversy between respondents and that Board should be disclosed to respondents. That raises a question under the Freedom of Information Act. It is, I submit, clear that respondents had exhausted every known way to obtain those data through administrative channels. Nothing remained to be done at that level. The District Court is the enforcement arm of the FOIA. Today’s decision, however, says that court cannot act. Hence respondents are without remedy. The end result is to make the FOIA a dead letter in this area. Hence my dissent.
The nature of the so-called administrative law aspects of the problems under the Renegotiation Act is unique. The aim, of course, is the elimination of excessive profits of contractors and subcontractors in the national defense program, 50 U. S. C. App. § 1211. Detailed financial information must be filed with the Re*27negotiation Board, id., § 1215 (e)(1). If on the basis of those data the Board decides to proceed, it refers the case to a Regional Renegotiation Board which determines tentatively the amount of excessive profits, 32 CFR § 1472.3 (e).1 A conference with the contractor is then arranged. It may agree with the Regional Board's determination or contest it. If the latter, a second conference is held with a panel of the Regional Board which hears the arguments of the contractor and submits its recommendations to the Regional Board which may be for a greater or lesser amount than the original tentative determination, id., §§ 1472.3 (f), (h), (i). Thereupon the Regional Board makes its recommendation, id., § 1472.3 (i). If the contractor is still dissatisfied, it can appeal to the Renegotiation Board itself. In that event the case is assigned to a division of the Board which is not bound by or limited to any finding or determination of the Regional Board, id., § 1472.4 (b). The division studies the case de novo and makes a recommendation to the Board which then makes a determination greater than, equal to, or less than any of the prior determinations, id., § 1472.4 (d). Even then the renegotiation process continues, the Board seeking to obtain the contractor’s voluntary agreement. Only if that effort fails is a final order determining the amount of excessive profits made, ibid.
That is the end of the administrative road; but the contractor still has an appeal to the Court of Claims which may redetermine de novo what the excessive profits are, 50 U. S. C. App. § 1218 (1970 ed., Supp. II); and from the Court of Claims certiorari may be sought here, id., § 1218a (1970 ed., Supp. II).
*28The history of the Act makes plain what can be inferred from the nature of the administrative process just described — that Congress chose negotiation, not confrontation or traditional adjudication, as the desirable route. The Act requires the Board to “endeavor to make an agreement with the contractor or subcontractor with respect to the elimination of excessive profits,” id., § 1215 (a). The pressure is on the contractor to settle, as at each successive step in the procedure its liability may be increased. The standards are rather vague and imprecise, §§ 1213 (e)(1)-(6),2 the regulations stating that “[reasonable profits will be determined in every case by over-all evaluation of the particular factors present and not by the application of any fixed formula with *29respect to rate of profit, or otherwise,” 32 CFR § 1460.8. The vagueness of the standards and the risk of an increase in liability at every level of the administrative process have a powerful coercive influence. Approximately 88% of the Board’s cases are ended by voluntary agreement, coercive orders being entered in only 12% of the cases. See Fifteenth Annual Report, Renegotiation Board 13 (1970).
In the three cases involved in this litigation the District Court entered its stay orders before the contractors had run the gantlet of the administrative process in the limited sense that each of them had another opportunity to negotiate a lower settlement with the Board, not counting a de novo hearing before the Court of Claims.
The documents which the contractors want are in possession of the Board. These documents, it is said, will reveal the strength or weakness of the Board’s case against the contractors and the facts or assumptions on which the Board relies in assessing liability. Without those documents, it is said, any meaningful negotiation, envisioned by the Act, is difficult or impossible. Future de novo review is not meaningful, it is said, since the contractors are completely in the dark as to the practical considerations which could end the dispute, if the documents were made available. Disclosure of the documents aids negotiation, which is the aim of the Act, and disclosure is necessary and appropriate to carry out the purposes of the Act.
The Court properly holds that the Renegotiation Board is an “agency” within the meaning of the Freedom of Information Act, 5 U. S. C. §552 (a). The Court also properly holds that §552 (a)(3), which grants the district court jurisdiction “to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant,” makes that court the en*30forcement arm of the FOIA. But it denies relief here on the ground that these contractors are obliged to pursue their “administrative remedy” before going to court for an enforcement order.
The Court relies on Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U. S. 752, and other decisions of that vintage which established a judicial “hands off” policy in renegotiation cases until the case had reached the Tax Court (now the Court of Claims) stage. But those cases antedated the FOIA. That Act, contrary to what the Court says, had as one of its purposes “discovery for litigation purposes.” Congress was concerned not only with the press and the general public when it lifted the veil of secrecy surrounding federal agencies but also with litigants. According to the Senate Report, the new FOIA was designed in part to “prevent a citizen from losing a controversy with an agency because of some obscure and hidden order or opinion which the agency knows about but which has been unavailable to the citizen simply because he had no way in which to discover it,” S. Rep. No. 813, 89th Cong., 1st Sess., 7.
The FOIA deals with problems of discovery, to use a lawyer’s term, and it does not leave the formulation of precise rules of discovery exclusively to the agencies themselves but, as noted, makes the district court the enforcement arm of the Act.
Exhaustion of administrative remedies has skeins of various colors, McKart v. United States, 395 U. S. 185, 193-194. Ordinarily courts do not interfere until the agency has completed its action, id., at 194, “or else has clearly exceeded its jurisdiction,” ibid. The present case does not entail supplanting administrative expertise on the merits. The issues tendered concern only administrative procedure.
The court errs in saying that the contractors did not exhaust their administrative'remedies. They strenuously *31sought the information mandated by the FOIA and exhausted all administrative procedure for obtaining it. That right to full disclosure, if not granted now, is forever lost. For as these contractors seek relief at a higher tier of the administrative process, the reviewing body will not consider whether the contractors could have negotiated settlements of a lesser amount if they had had access to the documents whose discovery is involved here. As Judge J. Skelly Wright said below:
“[I]t should be apparent here that if the contractors are to be granted relief at all they must have it now before the administrative momentum carries their cases beyond the point where the harm can be undone. If we take Congress’ declaration of purpose seriously, then the parties are supposed to negotiate over excess profits at the lower administrative levels. The seemingly endless de novo reviews were intended to make the negotiating process work, not to provide a substitute for negotiation. If the negotiating process fails to occur, the opportunity is lost forever. To say that compulsory awards imposed by the Board or the Court of Claims at the end of the process provide an adequate remedy is to ignore the difference between an agreement freely arrived at, as preferred by Congress, and a judgment imposed by a court of law.” 151 U. S. App. D. C. 174, 186, 466 F. 2d 345, 357.
The proceeding in the Court of Claims proscribes review of the Board. Title 50 U. S. C. App. § 1218 (1970 ed., Supp. II) states:
“A proceeding before the Court of Claims to finally determine the amount, if any, of excessive profits shall not be treated as a proceeding to review the determination of the Board, but shall be *32treated as a proceeding de novo.” (Emphasis added.)
There is no power, as I see it, for the Court of Claims to remand the case to the Board to cure any irregularity in its procedures. If these contractors are to have the remedy of full disclosure, it is now or never.
A procedure that accelerates settlements furthers the policy of the Renegotiation Act. The Board judges the profits of the contractors involved in the present case with the profits of other contractors in determining whether their profits are excessive. The relative prices, costs, and profits of those other companies are germane to the ultimate issue to be resolved. One oi these contractors has a low “front office” overhead, as the executive officer is the president who has only a secretary. The rest of the employees are engaged in production. The contractor who has a low “front office” expense is penalized for efficiency, if its profits are reduced to the scale allowed contractors who have a high “front office” expense. The Board in its Regulations under the FOIA makes “available for public inspection and copying summaries of facts and reasons issued by the Board,” 32 CFR § 1480.5 (a). But an agency making decisions has no right to make secret the basis of those decisions,3 if the FOIA is to have any real meaning in the *33activities of the Renegotiation Board. If a contractor does not know the reasons why the Board or any of its agencies cuts the profits of a contractor 95%, it has no meaningful criteria to determine whether it should settle with the Board or continue to pursue its remedies up the escalator of the hierarchy. It is as if a court could rule for the plaintiff or for the defendant without ever having to disclose its reasons.
The result of today’s decision is to put the citizen, in a game of “blind man’s buff” with the Renegotiation Board. Enforcement of the policy of full disclosure under the FOIA is no intrusion in the determination of the merits of the controversy before the Board. The expertise of the Board does not relate to the FOIA but only to the Renegotiation Act. The FOIA merely describes some of the procedure to be followed by the Board. Aircraft concerned the intrusion of the judiciary into the administrative process by a suit to declare the whole renegotiating procedure unconstitutional prior to any adjudication of the merits of the contractor’s claim. Granting the relief asked in that case would have gutted the statutes. Granting the relief here would merely make the rules of discovery, established by Congress, applicable to the Renegotiation Board. Denial of the relief establishes a regime of secrecy when Congress has demanded disclosure and gives the Renegotiation Board a degree of administrative absolution4 at war with the philosophy of the FOIA.
*34The trend at the federal level has been the evolution of administrative agencies as principalities of power. The Administrative Procedure Act, 60 Stat. 237, was passed as an antidote to that development. It contained a provision in § 3, 5 U. S. C. § 1002 (1964 ed.), for disclosure of information by the agencies. But it was soon criticized because it was “full of loopholes which allow agencies to deny legitimate information to the public. It has been shown innumerable times that information is often withheld only to cover up embarrassing mistakes or irregularities and justified by such phrases . . . as — 'requiring secrecy in the public interest,’ 'required for good cause to be held confidential,’ and 'properly and directly concerned.’ ” S. Rep. No. 1219, 88th Cong., 2d Sess., 8. As the House Report stated in support of supplanting § 3 of the Administrative Procedure Act with the FOIA “Government agencies whose mistakes cannot bear public scrutiny have found good cause’ for secrecy.” 5 H. R. Rep. No. 1497, 89th Cong., 2d Sess., 6. As respects the role of the courts the House Report stated:
“The proceedings are to be de novo so that the court can consider the propriety of the withholding instead of being restricted to judicial sanctioning of agency discretion. The Court will have authority whenever it considers such action equitable and appropriate to enjoin the agency from withholding its records and to order the production of agency records improperly withheld. The burden of proof is placed upon the agency which is the only party able to justify the withholding. A private citizen *35cannot be asked to prove that an agency has withheld information improperly because he will not know the reasons for the agency action.” Id., at 9.
The reluctance of the Court to require this administrative agency to live under the law calls to mind the admonition of Mr. Justice Stone speaking for the Court in United States v. Morgan, 307 U. S. 183, 191:
“Court and agency are the means adopted to attain the prescribed end, and so far as their duties are defined by the words of the statute, those words should be construed so as to attain that end through coordinated action. Neither body should repeat in this day the mistake made by the courts of law when equity was struggling for recognition as an ameliorating system of justice; neither can rightly be regarded by the other as an alien intruder, to be tolerated if must be, but never to be encouraged or aided by the other in the attainment of the common aim.”
I would affirm the judgment below.

 The CFR citations throughout this opinion are to the regulations which were in effect in 1970. The regulations were substantially amended in the fall of 1972.

 Section 1213 (e) provides: "In determining excessive profits favorable recognition must be given to the efficiency of the contractor or subcontractor, with particular regard to attainment of quantity and quality production, reduction of costs, and economy in the use of materials, facilities, and manpower; and in addition, there shall be taken into consideration the following factors:
“(1) Reasonableness of costs and profits, with particular regard to volume of production, normal earnings, and comparison of war and peacetime products;
“(2) The net worth, with particular regard to the amount and source of public and private capital employed;
“(3) Extent of risk assumed, including the risk incident to reasonable pricing policies;
“(4) Nature and extent of contribution to the defense effort, including inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance;
“(5) Character of business, including source and nature of materials, complexity of manufacturing technique, character and extent of subcontracting, and rate of turn-over;
“(6) Such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted.”

 The Board in its Regulations also provides:
“When a Regional Board has made ... a final recommendation in a Class A case, . . . and the contractor is unable to decide whether to enter into an agreement for the refund of excessive profits so determined or recommended, the Regional Board or the Board, as the case may be, will furnish the contractor a written summary of the facts and reasons upon which such final determination or recommendation is based in order to assist the contractor in determining whether or not it will enter into an agreement-: Provided, That the contractor requests such a statement within a reasonable time after it has been advised of such final determina*33tion or recommendation, and states that it has submitted all the evidence which it believes to be relevant to the renegotiation proceedings.” 32 CFR § 1477.3. (Emphasis added.)

 The hygienic effect of the Administrative Procedure Act is absent here because the Renegotiation Board is excluded from that Act by reason of 50 U. S. C. App. § 1221, the only exception being found in 5 U. S. C. § 552, at issue in this case.

 For an account of the operation of the FOIA between 196,7 and 1971 see Archibald, Access to Government Information — The Right Before First Amendment, in The First Amendment and the News Media, Final Report, Annual Warren Conference on Advocacy in the United States, June 8-9,1973, p. 64.