Ashland Oil, Inc. v. Federal Trade Commission

548 F.2d 977, 179 U.S. App. D.C. 22, 1976 U.S. App. LEXIS 7063

• Court: Court of Appeals for the D.C. Circuit
• Decided: September 20, 1976
• Docket: Nos. 76-1174, 76-1304
• Status: Published

Opinions

Opinion Per Curiam.

Dissenting opinion filed by Circuit Judge MacKINNON.

PER CURIAM:

This action was brought by Ashland Oil, Inc. to enjoin the Federal Trade Commission from transferring information obtained from Ashland to the House Subcommittee on Oversight and Investigation of the Committee on Interstate and Foreign Commerce. The Subcommittee Chairman, Rep. John E. Moss, intervened. The information in question consists of Ashland’s reserve estimates for all its natural gas leases and contracts on federal lands. All parties concede this information is a “trade secret” of great competitive value to Ash-land. It is also of great interest to the Subcommittee for whatever light it may cast on the causes of the current natural gas shortage. See generally FTC v. Texaco, 170 U.S.App.D.C. 323, 517 F.2d 137 (1975), vacated and rehearing en banc ordered (Feb. 6, 1976).

Judge Corcoran denied Ashland’s request for preliminary and permanent injunctive relief in a comprehensive opinion. 409 F.Supp. 297 (1976). Ashland’s central argument is that experience shows that if the information is made available to Congress, it will inevitably be “made public.” This in turn is alleged to violate the prohibition in 15 U.S.C. § 46(f) against the FTC’s “mak[ing] public” trade secrets.¹ Judge Corcoran rejected this argument on the grounds that “the courts must presume that the committees of Congress will exercise their powers responsibly and with due regard for the rights of affected parties,” 409 F.Supp. at 308. Concluding that Ashland’s showing was insufficient to overcome this presumption, the court held that no likelihood of irreparable injury warranting an injunction had been established, id., 309.

We affirm, essentially for the reasons stated in Judge Corcoran’s opinion.

I

No substantial showing was made that the materials in the possession of the FTC will necessarily be “made public” if turned over to Congress. Therefore, we need not decide what application, if any, 15 U.S.C. § 46(f) might have if it were evident that Congress intended to “make public” trade secrets. At a minimum, we think it is clear that absent such a showing, 15 U.S.C. § 46(f) does not preclude the FTC from transmitting trade secrets to Congress pursuant either to subpoena or formal request.²

II

Unlike the dissent, we find it unnecessary to decide whether the subpoena issued for the data was valid under House Rules. The FTC’s decision to turn over the materials in question was not based on — and in fact predated — issuance of the subpoena. On October 29, 1975, Congressman Moss, in his capacity as Subcommittee Chairman, wrote to the FTC requesting all data gathered by the Commission relating to extensions of oil and gas leases on federal lands. J.A. 36-37. On November 18, 1975, Chairman Engman of the FTC responded that “[t]he Commission has determined to grant your request” and “ . . . will deliver the information requested on November 28, 1975.” J.A. 38-39. By telephone and confirming letter of November 18, the FTC notified Ashland that the agency planned to release the requested information to the Subcommittee. J.A. 40. Subsequently Ashland filed this action, and on November 24, Judge Corcoran issued a temporary restraining order precluding the turnover. J.A. 49-50. Only then, on December 2, 1975, did the Subcommittee issue its subpoena. J.A. 52-53.

It is clear that but for the temporary restraining order, the FTC would have submitted Ashland’s data to the Subcommittee; indeed, on November 28, the FTC did deliver to the Subcommittee similar data from other companies, which had not challenged the release in court. J.A. 60. The dissent does not, and cannot deny that the FTC action challenged in this case was bottomed on a Congressional request for the data, not the subsequent subpoena. Nor does the dissent suggest that 15 U.S.C. § 46(f) must be read differently as a matter of law where a request, rather than a subpoena, is involved. The dissent’s entire discussion of the subpoena rests solely on an interpretation of statements made by Government counsel during oral argument.³ As the dissent interprets it, this exchange indicates that “the legal position of the United States before this Court is that any presently intended compliance is based solely on the subpoena, and on no other request.” Dissent, 5.

In our opinion, this is a strained reading of what was said at argument. Contrary to the dissent’s interpretation, government counsel never stated that the FTC had repudiated its prior position and that “any presently intended compliance is based solely on the subpoena.” Quite the contrary, the brief filed by the Department of Justice on behalf of the FTC clearly states that “whether or not the subcommittee subpoena is technically valid (and it is), 15 U.S.C. § 46(f) obligates the FTC to comply with these official Congressional requests for information.” Brief at 13. Counsel did urge that the court need not reach this back-up argument, since in his view the subpoena was valid: “We ask the court to confine its decision to the facts of this case, where there is a valid subpoena.” Tr., 29. But that is a long way from conceding that if the court rejected counsel’s opinion that the subpoena was valid (as the dissent does), it must ignore the grounds relied upon by the FTC when it acted originally, and upon which it still felt “obligated” to act.

The reason counsel asked the court to uphold the FTC based on the subpoena is clear from the colloquy. Counsel forthrightly acknowledged that there may be some latent disagreement between the Department of Justice and the FTC regarding the obligation of regulatory agencies to comply with mere Congressional requests for information.⁴ Thus, the dissent’s repeated insistence on a single, unitary “legal position of the United States” is belied by counsel’s explicit statement that the FTC and the Department of Justice may hold different views as to the correct interpretation of 15 U.S.C. § 46(f).⁵ Far from indicating that the United States had “abandoned” the view adopted by the FTC, counsel articulated the FTC’s position and then stated that the Department of Justice wished to “reserve” its own position on the matter. Tr., 30. In our view, counsel’s statements at oral argument meant no more and no less than what they said: that the Department of Justice felt it was “unnecessary to reach”, Tr., 29, the request because it maintained that the subpoena was valid.

Even if government counsel had attempted to disavow the basis on which the FTC acted — and it is clear from the foregoing that he did not — his statements could not bind the court to ignore the rationale on which the FTC’s decision was actually based. No principle of administrative law is more firmly established than that a court must review discretionary actions in terms of the rationale on which the agency acted, rather than “accept appellate counsel’s post hoc rationalizations,” Burlington Truck Lines v. United States, 371 U.S. 156, 169, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962); SEC v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 87 L.Ed. 626 (1943). Without citation of authority, the dissent would go far beyond merely accepting appellate counsel’s post hoc rationalizations and would hold that such rationalizations may actually preclude the court from considering the basis on which the agency in fact acted.⁶ There is no support for this novel doctrine. The analogy that comes closest is a confession of error by appellate counsel, but even there, it is settled that such a confession of error is not binding.⁷

Here, of course, the Department of Justice does not purport to “confess” that FTC committed legal error in deciding to turn over the materials to Congress; it merely “reserves” its own position on whether the FTC was obligated to do so.

Ill

Since we do not read the district court’s opinion as finding Congressman Moss ever broke a promise of confidentiality, we have no occasion to address the grounds of his separate appeal.

We extend the stay previously entered for a period of 15 days from the date hereof to enable the parties to seek a further stay from the Supreme Court of the United States, if they are so advised.

So ordered.

1 . The text of 15 U.S.C. § 46(f) (1970) is as follows:

The Commission shall also have power—

(f) To make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and . manner as may be best adapted for public information and use.

2 . At argument, Ashland’s counsel conceded that “the only question here is whether this [data] would be kept confidential by Mr. Moss’s committee [sic],” May 10, 1976, Tr., 7, and that if it would, the subcommittee was “entitled” to the information. Id.

3 . The text of the exchange in question was as follows:

GOVERNMENT COUNSEL: Chief Judge Bazelon, may it please the court, the central issue in this case is whether Section 46(f) of the Federal Trade Commission Act gives the Commission any legal basis or any discretion to refuse to comply with a valid Congressional subpoena for trade secret information in the Commission’s possession. Our position is two-fold: we submit there is no imminent threat of irreparable injury warranting an injunction and that on the merits neither Section 46(f) nor the Constitution prohibits the Commission from complying with a valid Congressional subpoena for trade secret information. I want to address the merits

JUDGE ROBB: Well, would it make any difference whether there was a subpoena or not, so long as the Subcommittee formally requested this material?

GOVERNMENT COUNSEL: We ask the court to confine its decision to the facts of this case, where there is a valid subpoena. Now, we ask the court to leave for another day any possible question concerning the Commission’s legal obligation with respect to Congressional requests, as opposed to subpoenas for information. .

JUDGE ROBB: 1 know you ask us to do that, but we’ve got a right to think about it, and I’m asking you for your opinion.

GOVERNMENT COUNSEL: We think that it’s unnecessary to reach the issue.

JUDGE ROBB: All right. All right, you don’t want to answer the question.

GOVERNMENT COUNSEL: The answer to your question is that the view of the Federal Trade Commission, that they have expressed, is that they feel obligated to comply with Congressional requests. The other independent. .

JUDGE ROBB: I take it you allow me to have my opinion on it.

GOVERNMENT COUNSEL: Yes, Your Honor. I hope to convince you that the subpoena here is clearly valid and that it’s unnecessary to reach that issue.

JUDGE ROBB: For your information, I can’t see that it makes any difference. Go ahead.

GOVERNMENT COUNSEL: Well, in the view of the .

JUDGE ROBB: No matter what the FTC thinks.

GOVERNMENT COUNSEL: In the view of the other independent regulatory agencies and the Justice Department, it might make a difference. We take no position on the matter; we want to reserve our position on that point.

May 10, 1976 Tr., 28-30 [Conformed to tape recording].

4 . Government counsel stated that “the view of the Federal Trade Commission that they have expressed, is that they feel obligated to comply with Congressional requests.” Tr., 29. On the other hand, counsel emphasized that the Department of Justice “take[s] no position on the matter; we want to reserve our position on that point.” Tr., 30.

5 . Of course, there is no requirement that all agencies of the government adopt the same position with regard to matters under litigation. See, e. g., McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544 (1944); United States v. ICC, 396 U.S. 491, 90 S.Ct. 708, 24 L.Ed.2d 700 (1970); Seatrain Lines v. FMC, 148 U.S.App.D.C. 424, 460 F.2d 932 (1972), aff’d, 411 U.S. 726, 93 S.Ct. 550, 34 L.Ed.2d 510 (1973); United States v. CAB, 167 U.S.App.D.C. 313, 511 F.2d 1315 (1975).

6 .The dissent gives only one reason for dispensing with the principles of Chenery:

In the case before us, . there is no issue of FTC expertise. On the contrary, the expertise involved is precisely the expertise of the Department of Justice: the orderly and consistent management of the litigation of the widely diverse agencies and departments of the United States Government. Dissent, 7.

It is true that where no special agency expertise is involved a court may affirm on a ground in addition to those relied on by the agency. See, e. g., Local 833, UAW v. NLRB, 112 U.S. App.D.C. 107, 300 F.2d 699, 705, cert. denied, 370 U.S. 911, 82 S.Ct. 1258, 8 L.Ed.2d 405 (1962). But a court’s view that the agency is lacking in expertise has never been thought to license it to reverse while ignoring the grounds on which the agency relied.

Moreover, the dissent is simply in error when it asserts that the FTC’s expertise does not bear on this case. The FTC’s position that it is obligated to honor Congressional requests for information is based on its interpretation of 15 U.S.C. § 46(f), part of the Federal Trade Commission Act. The Supreme Court has directly held that administrative interpretations of such a statute, to which the courts are to accord “great weight,” depend on the expertise of the agency, not appellate counsel. Investment Co. Institute v. Camp, 401 U.S. 617, 626-7, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971):

Congress has delegated to the administrative official and not to appellate counsel the responsibility for elaborating and enforcing statutory commands. It is the administrative official and not appellate counsel who possesses the expertise that can enlighten and rationalize the search for the meaning and intent of Congress. Id., 628, 91 S.Ct. at 1097.

While we would be required to give “great weight” to the FTC’s interpretation of 15 U.S.C. § 46(f), it is not necessarily controlling. However, we are not called upon in this case to determine whether the FTC’s construction of the statute as obligating it to comply with all Congressional requests for information is correct. The Department of Justice is not authorized to press this issue. Cf. S. & E. Contractors, Inc. v. United States, 406 U.S. 1, 92 S.Ct. 1411, 31 L.Ed.2d 658 (1972) (authority to “conduct litigation” under 28 U.S.C. § 516 does not grant Department of Justice general power to challenge in court decisions of other government agencies). No other party has challenged the FTC’s action on this basis. See supra note . 2. Therefore, we express no opinion on the FTC’s obligations in response to Congressional requests.

7 . Orloff v. Willoughby, 345 U.S. 83, 73 S.Ct. 534, 97 L.Ed. 842 (1953); Gibson v. United States, 329 U.S. 388, 67 S.Ct. 301, 91 L.Ed. 331 (1947); Young v. United States, 315 U.S. 257, 62 S.Ct. 510, 86 L.Ed. 832 (1942). See also McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544 (1944) (ICC affirmed despite confession of error by the United States).