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ARTESIAN INDUS. v. HHS

October 28, 1986

ARTESIAN INDUSTRIES, INC., Plaintiff
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, ET AL., Defendants



The opinion of the court was delivered by: GASCH

 I. Introduction

 Before the Court are cross-motions for summary judgment. The plaintiff, Artesian Industries, Incorporated ("Artesian or the company"), moves the Court to grant judgment on its reverse Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, action to block a proposed release of information it submitted to the defendant, Department of Health and Human Services ("HHS"). *fn1" HHS moves the Court to affirm the agency's decision to release the information in dispute.

 II. Facts

 In October of 1984, the National Institute for Occupational Safety ("NIOSH"), a subdivision of HHS, initiated a review of the Vitreous China Plant owned by Artesian. As part of the review, NIOSH requested that Artesian produce the medical files of all its employees working in that plant. In addition to the files which NIOSH requested, Artesian inadvertently included an interoffice memorandum ("Artesian memorandum or memorandum") marked "CONFIDENTIAL" discussing the effects of the dust conditions at the Vitreous China Plant on its workers. *fn2"

 On December 16, 1985, Mr. Larry Bassin sent NIOSH a letter requesting a copy of the Artesian memorandum on the basis of the FOIA. Relying solely on Mr. Bassin's letter, NIOSH made a preliminary decision to release the document. On January 27, 1986, HHS notified Artesian of Mr. Bassin's request and the agency's decision to grant it. However, before releasing the document, HHS offered Artesian the opportunity to provide an "appropriate rationale" for denying disclosure.

 On February 13, 1986, Artesian filed a timely reply to HHS' request in which the company argued that its memorandum was exempt from the FOIA on the ground that it contained commercial information obtained from a person and was privileged or confidential. 5 U.S.C. § 552 (b)(4). HHS was persuaded by Artesian's response and notified Mr. Bassin on February 21, 1986 that the memorandum was exempt from disclosure under the FOIA and would not be released.

 Subsequently, on March 3, 1986, Mr. Bassin appealed HHS' denial of his FOIA request to the Assistant Secretary for Health. The Assistant Secretary reversed the decision again, this time in favor of Mr. Bassin, concluding that the memorandum contained neither privileged nor confidential information and holding that Exemption 4 of the FOIA was inapplicable.

 HHS notified Artesian of this reversal on May 12, 1986. The agency advised Artesian that it would disclose the memorandum immediately. This suit followed.

 III. Legal Issues

 The range of legal issues presented by this case are fairly narrow. First, the Court must decide the appropriate scope of review for this appeal from an agency determination. Second, the Court must evaluate Artesian's claim that disclosure of the memorandum violates the policies and prerequisites underlying the FOIA. Finally, the Court must address Artesian's conclusion that their memorandum is without the FOIA's reach on the basis of Exemption 4.

 A. Proper Scope of Review

 The Administrative Procedure Act ("APA") governs this Court's review of HHS's decision. *fn3" Factually, this review must be based on the administrative record developed by HHS. See 5 U.S.C. § 706 (1982). However, contrary to the parties' interpretation of the APA, the Court is not bound to set aside the agency judgment only if HHS' decision was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law" ("arbitrary and capricious"). 5 U.S.C. § 706(2)(A) (1982).

  Based on the express language of the APA, the arbitrary and capricious standard applies only to "actions, findings and conclusions," id., by an agency, excluding any questions of law. *fn4" The APA explicitly empowers reviewing courts to decide "all relevant questions of law, " 5 U.S.C. § 706 (1982), and the United States Court of Appeals for the District of Columbia Circuit has construed this language to mean what it says -- questions of law are to be ...


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