[Federal Register Volume 65, Number 246 (Thursday, December 21, 2000)]
[Proposed Rules]
[Pages 80394-80397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32565]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 2

[FRL-6921-2]


Public Information and Confidentiality: Advance Notice of 
Proposed Rulemaking; Withdrawal of 1994 Proposed Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Advance notice of proposed rulemaking (ANPRM); withdrawal of 
1994 proposed rule.

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SUMMARY: EPA is providing advance notice of proposed rulemaking 
regarding revisions of its regulations dealing with the handling of 
confidential business information (CBI). We refer to these as ``the CBI 
regulations.'' As part of this process, we are planning to revise the 
current CBI regulations so they will be in plain language and will 
reflect current case law and recent technological developments. In 
revising the CBI regulations, we also intend to improve our processing 
of requests for CBI while ensuring appropriate protection of 
confidential business information. We are seeking comments as to the 
extent of additional revisions. EPA is also withdrawing its November 
23, 1994 Proposed Rulemaking (59 FR 60445).

DATES: Comments on this advance notice of proposed rulemaking must be 
submitted by March 21, 2001. EPA will be holding a public meeting on 
the potential revision of the CBI regulations on January 18, 2001 from 
9:00 a.m. to 4:30 p.m. in the EPA Auditorium, 401 M Street, SW 
Washington, DC. Please direct all correspondence to the addresses shown 
below.

ADDRESSES: Written comments should be submitted (in duplicate if 
possible) to Docket Number EC-2000-004, Enforcement and Compliance 
Docket and Information Center (ECDIC), U.S. Environmental Protection 
Agency, 1200 Pennsylvania Ave., NW, Room 4033, Mail Code 2201A, 
Washington, DC 20460; Phone, 202-564-2614 or 202-564-2119; Fax, 202-
501-1011 EMail,[email protected]. Written, but not oral, comments for 
the official record will also be accepted at the public meeting. 
Documents related to this advance notice of proposed rulemaking are 
available for public inspection and viewing by contacting the ECDIC at 
this same address. The ECDIC is open from 8:00 a.m. to 4:00 p.m., 
Monday through Friday, excluding Federal holidays.
    Comments in an electronic format also should reference docket 
number EC-2000-004. All electronic comments must be submitted as an 
ASCII file and should avoid the use of special characters and any form 
of encryption. Commenters should not submit any CBI electronically. To 
the extent a comment contains CBI, commenters must submit an original 
and one copy of CBI under separate cover to: Alan Margolis, Office of 
Information Collection, Office of Environmental Information, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW, Mail Code 
2822, Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Alan Margolis, Office of Information 
Collection, Office of Environmental Information, U.S. Environmental 
Protection Agency, 1200 Pennsylvania Ave., NW, Mail Code 2822, 
Washington, DC 20460; Phone, 202-260-9329; Fax, 202-401-4544; Email, 
[email protected].

SUPPLEMENTARY INFORMATION:

Index of Advance Notice of Proposed Rulemaking

I. Purpose and Background of ANPRM
II. Withdrawal of 1994 Proposal
III. Major CBI Topics
    A. Submissions of CBI
    1. Up-Front Substantiation of CBI Claims
    2. Submission of Redacted Copies
    B. EPA Treatment of Information Claimed as CBI
    1. Class Determinations
    2. Aggregation of Data
    3. Mosaic Effect
    4. Disposition of CBI
    5. Definition of ``voluntarily submitted information''
    6. Legal Challenge to 40 CFR 2.205(c)

I. Purpose and Background of ANPRM

    In this ANPRM, we provide advance notice of proposed rulemaking 
regarding revisions of our CBI regulations. Our intent is to ensure 
that the regulations are in plain language, and that they adequately 
protect CBI in light of current caselaw and recent technological 
developments. Additionally, EPA is reviewing its current regulations to 
determine whether there are ways the Agency could reduce the burden on 
the regulated community while also ensuring the adequate protection of 
CBI and streamlining the Agency's processes for handling CBI. The ANPRM 
sets forth existing problems with current policies and suggests 
possible options for improving the efficiency of the Agency's CBI 
operations.
    Under the Freedom of Information Act (FOIA), any person has a right 
to obtain federal agency records, except to the extent that such 
records (or portions thereof) are protected from disclosure by one of 
nine exemptions or three exclusions. Exemption 4 of FOIA, 5 U.S.C. 
552(b)(4), protects ``trade secrets and commercial or financial 
information obtained from a person and privileged or confidential.'' In 
1976, EPA first promulgated its comprehensive CBI regulations, which 
are codified as 40 CFR part 2, subpart B. EPA's CBI regulations are 
part of its public information regulations and implement Exemption 4 of 
FOIA. In addition to

[[Page 80395]]

implementing FOIA Exemption 4, the CBI regulations also generally 
address issues outside of the FOIA context that involve the handling, 
processing, and disclosure of CBI under specific EPA-administered 
statutes. The CBI regulations set out procedures for EPA to make 
confidentiality determinations for information claimed as confidential.

II. Withdrawal of 1994 Proposal

    On November 23, 1994, EPA published a proposed rule on Public 
Information and Confidentiality (``the 1994 proposal''), which proposed 
amendments to the CBI regulations (59 FR 60445). The intent of the 
proposed rule was to eliminate unnecessary procedures and to streamline 
and expedite activities involving CBI. Major changes raised in 1994 
included up-front assertion of CBI claims, up-front substantiation, 
sunset provisions, different options for changing the manner of 
processing FOIA requests, and clarification regarding the release of 
aggregated data. Over 60 comments were received from the public. The 
rule was not finalized due to the complexity of the issues raised in 
the public comments. EPA is withdrawing this proposed rule on December 
21, 2000. EPA will initiate a new and separate rulemaking based on the 
issues raised in the comments to this ANPRM and at the public meeting.

III. Major CBI Topics

    EPA intends to revise its CBI regulations to make them less 
burdensome on EPA and the submitters of CBI, while preserving the 
public's right to obtain publicly available information and ensuring 
the adequate protection of CBI. For each idea presented below, we 
discuss some existing problems with current policies and suggest 
possible options for improving the policies. EPA welcomes comments on 
any of the topics discussed below. We are not proposing any specific 
action regarding the CBI regulations at this time but are providing 
background information and requesting additional information that we 
should consider.

A. Submissions of Confidential Business Information

    EPA receives a large number of submissions of various types of 
information claimed as CBI. Many of the claims received are very broad, 
and the Agency has limited resources to deal with this stream of 
information. As a result, large amounts of information claimed as CBI 
are retained by the Agency longer than necessary, and broad or non-
specific CBI claims may limit public access to information that is not 
actually CBI. We are considering the following options to facilitate 
EPA's examination and, if appropriate, protection of this material, as 
well as the Agency's responses to those who request the information 
under FOIA.
1. Up-front Substantiation of CBI Claims
    An option that a number of other agencies have used to reduce the 
number of overly-broad or non-specific CBI claims is the use of up-
front substantiation. Up-front substantiation would require the 
submission of statements setting forth the basis of business 
confidentiality at the time the information is first submitted and 
claimed confidential. Our current CBI regulations require that when EPA 
is determining whether information claimed as confidential is entitled 
to confidential treatment, it must notify affected businesses that they 
may submit comments substantiating their claims of confidentiality (see 
section 2.204(e)). The CBI regulations generally do not require a 
business to submit a substantiation until disclosure becomes an issue.
    Although EPA realizes that seeking complete up-front 
substantiations may increase the burden on submitters of information, 
we are exploring options to permit the reduction of overly-broad or 
non-specific CBI claims, while requiring less handling and storage of 
the information claimed as confidential. One possible option would be 
to require that certain elements of a CBI substantiation be provided 
when the information is submitted and claimed as confidential. A more 
comprehensive substantiation would be required only if disclosure 
becomes an issue. We believe this would help reduce the number of 
overly-broad or non-specific claims, while providing only an 
incremental burden on submitters. Additionally, EPA is interested in 
comments concerning whether it should require up-front substantiation 
when only portions of documents are claimed as CBI. The Agency is 
interested in other suggestions for facilitating the initial CBI 
determination process.
2. Submission of Redacted Copies
    An additional method of streamlining the CBI process would be to 
require that a copy of the document from which information claimed to 
be confidential has been deleted (hereinafter ``redacted copy'') be 
submitted along with a copy of the material claimed as confidential. 
The submission of redacted copies would enable the Agency to respond in 
a timely fashion to FOIA requests for CBI by releasing the redacted 
copy of the information to the FOIA requester. Certain submitters to 
the Agency already submit redacted copies of information as a matter of 
practice. EPA is soliciting comments concerning the effect of requiring 
businesses to submit redacted copies whenever they submit information 
claimed as confidential.

B. EPA Treatment of Information Claimed as CBI

    EPA often finds it necessary to make final confidentiality 
determinations as a result of FOIA requests or rulemaking. Final 
determinations are written by the EPA legal office in consultation with 
the appropriate EPA program staff. EPA is interested in improving the 
efficiency of this process. In addition, the Agency has relied on class 
determinations and the aggregation of data in order to maximize Agency 
resources, ensure the timely release of information to the public, and 
appropriately protect information that is claimed to be confidential. 
We are seeking comments and suggestions on the use of class 
determinations and data aggregation.
    The Agency is also considering adding language to the CBI 
regulations concerning the disposition of records containing CBI in 
accordance with the appropriate records management schedules. We are 
seeking comments on the possible addition of this language to the CBI 
regulations.
1. Class Determinations
    Title 40 CFR section 2.207 permits EPA to use class determinations 
to make known its position regarding the manner in which information 
within a class will be treated by EPA under the CBI regulations. EPA 
relies on class determinations to permit efficient processing of 
numerous FOIA requests for the same types of CBI. Certain affected 
businesses have expressed concern over the Agency's reliance on class 
determinations, arguing that decisions about whether specific 
information is entitled to be treated as CBI are best made on a case-
by-case basis. We are soliciting comments on the benefits or the harm 
resulting from EPA's use of class determinations.
2. Aggregation of Data
    EPA uses several mechanisms to ensure that public records in 
rulemaking adequately allow for meaningful public comment and effective 
judicial review, while at the same time complying with the Agency's CBI 
obligations. These mechanisms include using summaries or aggregations 
of data as well as identity-masking strategies, to develop a public 
rulemaking record from information

[[Page 80396]]

claimed as CBI while avoiding the disclosure of such information.
    EPA does not have general guidelines for aggregating CBI data, and 
we are seeking comments on whether such guidelines are needed. We are 
also interested in suggestions concerning the form such guidelines 
could take, given the diversity of data submitted to the Agency.
3. Mosaic Effect
    Since the 1976 regulations were promulgated, the information 
landscape has changed. The rapid growth of the Internet and other 
electronic means of disseminating information, the increasing use of 
competitive intelligence measures by private industry, and the 
perceived potential for environmental terrorist attacks have heightened 
concerns about the public release of information. The main challenge to 
the Agency is to achieve an appropriate balance between disclosing 
information to the public and withholding information that could cause 
competitive harm.
    In response to the growth of the Internet, the regulated community 
has made the argument that multiple pieces of data which may not 
qualify individually to be treated as CBI and are made publicly 
available can be pieced together to reveal a trade secret. EPA held 
discussions with stakeholders about the potential for such a ``mosaic 
effect'' as part of the EPA/State Stakeholder Forum on Public 
Information Policies, in Chicago on November 15-16, 1999 (for summary 
see EPA's web site at www.epa.gov/oei/issuepapers). No consensus was 
reached on whether the ``mosaic effect'' exists, how extensive or 
serious it is, or how EPA could address it. This lack of consensus was 
also reflected in the General Accounting Office's report 
``Environmental Information, EPA Could Better Address Concerns About 
Disseminating Sensitive Business Information'' (GAO/RCED-99-156, 
General Accounting Office, June 1999), citing the range of views 
expressed by industry representatives and competitive intelligence 
professionals.
    In several lawsuits, courts have recognized the mosaic approach in 
sustaining a finding that the disclosure of information that was not in 
and of itself harmful, would be harmful when combined with information 
already available to the requestor. These courts, however, made their 
decisions on a case-by-case basis by examining the facts that would 
lead to such an outcome.\1\ EPA is not aware of any general government 
policy or regulation that attempts to regulate the dissemination or 
disclosure of information based on the concept of a mosaic effect. Our 
current policy is to continue treating such claims on an individual 
case-by-case basis, as required by FOIA. In doing so, we would also 
consider any concerns raised by the submitter of the information 
regarding its potential to be combined with other information in a way 
that could result in competitive harm.
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    \1\ See, e.g., Trans-Pacific Policing Agreement v. United States 
Customs Service, 1998 U.S. Dist. LEXIS 7800 (D.D.C. 1998), reversed 
and remanded, 177 F.3d 1022 (D.C. Cir. 1999); Timken Co. v. United 
States Customs Service, 491 F. Supp. 557 (D.D.C. 1980); Department 
of Justice Freedom of Information Act Guide & Privacy Act Overview, 
p. 201 (May 2000 Edition).
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    We are soliciting comments on this issue, particularly specific 
examples of the harm resulting from the mosaic effect and ideas to 
prevent harm while also preserving the public's right to obtain 
government-held information that is not exempt from disclosure under 
FOIA.
    In addition to the issues listed above, we are dealing with other 
issues concerning CBI. These issues are driven by legal concerns. We 
describe them below.
4. Disposition of CBI
    EPA's current CBI regulations do not address the disposition of CBI 
records. Retention of all records (including CBI records) is governed 
by records schedules approved by the Archivist of the United States. 
National Archives and Records Administration (NARA) regulations at 36 
CFR Part 1256 allow for the transfer of CBI records to the Federal 
Records Centers and the National Archives. The Agency is considering 
adding language to the CBI regulations referencing the appropriate 
retirement of records containing CBI in accordance with NARA-approved 
records schedules. The purpose of this addition is to encourage 
compliance with the NARA regulations and EPA records schedules by the 
various EPA offices responsible for handling CBI. EPA is soliciting 
comments on the addition of this language to the CBI regulations.
5. Definition of ``voluntarily submitted information''
    Since the promulgation of the CBI regulations, the definition of 
``voluntarily submitted information'' used in our CBI regulations has 
been called into question by the decision in Critical Mass Energy 
Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992). Critical Mass held that 
``voluntarily'' submitted information should be categorically protected 
as confidential, provided it is not ``customarily'' disclosed to the 
public by the submitter. Cases subsequent to Critical Mass have 
clarified the meaning of ``voluntary'' pursuant to the holding in 
Critical Mass.
    The Department of Justice, in accordance with recent case law, has 
concluded that a submitter's voluntary participation in an activity 
does not govern whether any submissions made in connection with that 
activity are likewise ``voluntary.'' Submissions that are required to 
realize the benefits of a voluntary program are considered to be 
mandatory.\2\ EPA's current regulations defining voluntary are located 
at 2.201(i)(2) and 2.208 and predate the Critical Mass decision. EPA is 
considering revision of the regulatory language to reflect the decision 
in Critical Mass and the subsequent case law defining ``voluntarily 
submitted.''
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    \2\ See Public Citizen Health Research Group v. FDA, 964 F. 
Supp. 413, 414 (D.D.C. 1997); Lykes Bros. Steamship Company v. Pena, 
1993 WL 786064 (D.D.C. 1993). Department of Justice Freedom of 
Information Act Guide & Privacy Act Overview, pp. 173-174 (May 2000 
Edition).
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6. Legal Challenge to 40 CFR 2.205(c)
    Under section 2.205(c) of our CBI regulations, EPA will 
automatically treat as CBI a substantiation marked as confidential by 
the submitter in accordance with section 2.203(b) if the information in 
the substantiation is not otherwise possessed by EPA. When EPA receives 
a FOIA request for such a substantiation, we do not request that the 
affected business submit comments substantiating why the information in 
its previous CBI substantiation should be treated as confidential, and 
we automatically deny the FOIA request for the substantiation on the 
basis of section 2.205(c). The result is that information submitted to 
EPA in a CBI substantiation and claimed as CBI is treated differently 
than all other business information submitted to EPA and claimed as 
CBI. This special treatment has been challenged in United States 
District Court (Northwest Coalition for Alternatives to Pesticides 
(NCAP) v. EPA, D.D.C., Civil Action No. 99-437) on the grounds that it 
violates FOIA.
    EPA has currently reproposed a rule to eliminate the automatic 
protection of CBI substantiations (65 FR 52684, Aug. 30, 2000). This 
rule was originally published in the Federal Register in October 1999, 
in response to a lawsuit from NCAP. EPA is reproposing the rule to 
explain in more detail why the proposed change in its CBI regulations

[[Page 80397]]

is needed. EPA has proposed that the rule be applied prospectively, but 
we are soliciting further comments on this issue.

List of Subjects in 40 CFR Part 2

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Freedom of information, Government 
employees.

    Dated: December 15, 2000.
Carol M. Browner,
Administrator.
[FR Doc. 00-32565 Filed 12-20-00; 8:45 am]
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