The Sunshine Act: Administrative Conference Of The United States

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Special Committee To Review The Government In The Sunshine Act

Washington, D.C.

Stephen Calkins, Former General Counsel

I am pleased to appear today before the Special Committee to Review the Government in the Sunshine Act, to discuss the Federal Trade Commission's experience under this statute and to suggest some changes that the Commission believes merit consideration. The Sunshine Act generally requires that any meeting of a collegial agency at which deliberations of a quorum of agency members þdetermine or result in the joint conduct or disposition of official agency businessþ be open to the public, unless the meeting may be held in closed session pursuant to one or more of ten exemptions provided in the statute.

The Federal Trade Commission

The basic missions of the Federal Trade Commission ("FTC") are to maintain competition and prevent unfair and deceptive practices that can harm consumers. The FTC is committed not only to promoting the interests of American consumers, but also to informing the public concerning agency decisions and operations. Toward this end, the FTC has implemented numerous public outreach programs. The Commission makes available a wide range of information, such as daily news releases, consumer and business education brochures, pleadings filed in court, agency determinations concerning cases and rules (including the separate views of concurring or dissenting commissioners), interpretive guidelines, and studies and reports by the agency's Bureau of Economics. The FTC holds public hearings and maintains a public record in both its rulemaking and agency adjudications, and the Commission's court actions involve public hearings and a public record as well. The FTC also solicits public comments on all consent agreements, and carefully considers the public comments before issuing a final order in such matters. In addition, commissioners and senior staff deliver many speeches and often participate in public examinations of key policy issues. One commissioner has even participated in a live, on-line, public discussion over the Internet.

The FTC's increasing use of on-line computer technologies has significantly expanded public access to Commission information. The FTC makes many of its public documents available not only in print but through on-line news and commercial services, including Lexis/Nexis, Westlaw, and Newsnet. Many of these materials, and other public information as well, are also available on the Internet through the new FTC Home Page on the World Wide Web. The FTC is recognized as one of the more advanced federal agencies with respect to computer capabilities and is steadily increasing the amount of public data available electronically.

Experience of the FTC Under the Sunshine Act

Although the FTC is committed to openness, this goal at times comes into tension with other important objectives. The Sunshine Act represents an effort to resolve that tension. I turn now to a review of the Commission's experience under that Act.

At the FTC, which is primarily a law enforcement agency, the most frequently used exemptions are those relating to law enforcement investigations and to adjudicative and judicial proceedings. These are Exemptions 7(A) and 10. In addition, the FTC often closes its meetings to guard information integral to the anticipated discussion that is protected from public disclosure by other statute (under Exemption 3), or that is confidential commercial or financial information (under Exemption 4). Other exemptions occasionally apply to portions of Commission discussions as well.

Because the FTC is primarily a law enforcement agency, most of its meetings are closed to the public to protect the enforcement process, to assure fairness to parties under investigation and protect them from unwarranted publicity, and to ensure that markets are not jeopardized by premature or inappropriate allegations of unlawful business practices. The FTC bases all decisions whether or not to close a meeting on an assessment of the need for restricted access. The Commission's 1994 annual report to Congress on the Sunshine Act demonstrates that out of a total of thirty-six meetings held during the reporting period, thirty-three related to particular law enforcement activity and, as a consequence, were wholly or partially closed to the public pursuant to Sunshine Act Exemption 10 and often one or more of Exemptions 3, 4, and 7(A).

Because virtually all closed Commission meetings fall under Exemption 10, the FTC employs simplified procedures for expedited notice, as authorized by Sunshine Act 552b(d)(4) and specified in Commission Rule 4.15. As required by the statute, the Commission maintains minutes of its meetings, and places any releasable material in those minutes on the public record. Accordingly, when, as occasionally happens, meetings that are properly closed under Exemption 10 include segregable discussions that are not exempt from public disclosure under Exemption 10 or otherwise, the portions of the minutes reflecting those discussions are placed on the agency's public record.

Under FTC practice, votes are frequently taken by notation, rather than at meetings. The commissioner responsible for a particular matter determines in the first instance whether the matter should be addressed at a Commission meeting or resolved by notation vote, in accordance with Commission Rule 4.14(a). Ordinarily, the Commission holds meetings before issuing or approving the filing of a complaint in a contested case and before issuing a final order and opinion in a contested adjudicative matter. Further, Rule 4.14(a) provides that any commissioner may place a matter on the agenda for a Commission meeting.

The FTC does conduct open meetings. Typical examples include oral arguments before the Commission in adjudicative matters, which are open to the public, and meetings relating to the agency's rulemaking function. In addition to permitting the public to attend such a meeting, the Commission's rules authorize the commissioner assigned to the matter under consideration to make public before the meeting "material sufficient to inform the public of the issues likely to be discussed in connection with that matter."

Proposals Suggested for Consideration

The August 8, 1995, Federal Register notice announcing this hearing encourages participants to suggest specific proposals for improving public access to agency decisionmaking processes and the quality of agency decisionmaking. As you know, the Sunshine Act represents an attempt to strike a balance between competing values. Opening government deliberations to public scrutiny is desirable because it promotes public understanding and confidence in agency processes. On the other hand, permitting deliberations to occur in confidence protects the confidentiality of commercially sensitive or proprietary business information and the integrity of agency law enforcement and adjudicative mechanisms. The Commission shares the commonly- expressed view that, contrary to the original expectations of Congress, the Sunshine Act has had some unanticipated adverse effects on the deliberative process by which agency members consider options, accommodate differences of opinion, and reach a consensus as to the proper course of action.

The FTC offers for consideration the following three proposals, which are intended to facilitate more practical and efficient collegial decisionmaking, while ensuring appropriate public access to information about FTC decisionmaking.

First, the Commission suggests that improvements in public access can be made if agencies take full advantage of the technological revolution to increase public access to agency information and processes. As noted earlier, much of the Commissionþs activity already appears on the public record. The Commission has made great strides in making information available through the Internet and other electronic systems. Currently, Commission staff is considering how to provide the public with computer access to many more documents through a sophisticated document management system incorporating a comprehensive indexing and retrieval system. Such a system could, for example, permit ready public access to the procedural rulings of our Administrative Law Judges. Those rulings comprise a substantial body of precedent relevant to administrative adjudications but are, at present, difficult to research. Improved access to them would improve legal practice within the adjudicative context, contribute to a more level playing field, and increase case management efficiency. The Commission suggests that agencies aggressively explore the possibilities of using the Internet and other means of electronic dissemination of information to increase public access to and knowledge about government activities.

Second, the Commission suggests consideration of permitting closed discussions of adjudication and litigation policy. As I mentioned, most FTC meetings are closed. The Sunshine Actþs Exemption 10 clearly permits the Commission to meet on individual cases and consider such questions as whether to file an administrative or a court complaint, seek consumer redress, allege a particular antitrust theory, or request an ex parte freeze of a defendant's assets during the pendency of a lawsuit.

The FTC ordinarily does not decide a case without reference to other, similar cases. Consequently, the discussion of a particular case may address commonly arising issues such as what remedies are appropriate for particular types of law violations; how to calculate an acceptable settlement offer for civil penalties in various circumstances; and what kind of evidence is sufficient to proceed with complaints. Because such discussions deal with the initiation, conduct, and disposition of specific enforcement actions, holding them in closed session is entirely proper under the Act. In the Clark-Cowlitz case, the en banc United States Court of Appeals for the District of Columbia Circuit recognized that litigation tactics in a particular case and litigation policy for similar cases are inextricably intertwined, and that agencies repeatedly face the same litigation strategy issues. The court stated: "For purposes of Exemption 10, then, there could be no hard-and-fast distinction between litigation strategy and policy questions; what matters is simply that the agency deliberations in question deal with 'the agency's participation in a civil action.'" Accordingly, the court ruled that records of deliberations involving both specific litigation decisions and the underlying policy issues were protected under Exemption 10 in their entirety.

The Commission believes that, from time to time, its law enforcement processes would benefit from discussion focusing on general litigation or adjudication policy to be applied in a class of cases. The conventional wisdom, however, is that the agency may not meet in closed session to develop a consistent approach for application in future cases. Exemption 10 allows a closed meeting only to discuss agency action regarding "a" civil action or proceeding or "a particular" case of formal adjudication. The legislative history of this exemption explains that one purpose is to protect agencies' strategy respecting litigation and adjudication, but not discussions of "agency adjudication policies in general. Therefore, whereas commissioners may discuss in closed session whether an asset freeze is appropriate in connection with a particular proposed complaint, a meeting scheduled specifically to discuss the circumstances that should justify seeking asset freezes apparently may not be closed.

This treatment of litigation policy issues under the Act has unfortunate consequences. The FTC does not convene public meetings on such issues as asset freeze policy; and, indeed, it would be unrealistic for it to do so. Public, on-the-record debates about litigative and adjudicative policy options could weaken the position of the agency in subsequent litigation proceedings and settlement discussions by disclosing arguable weaknesses to persons with an interest in exploiting them. A commissioner may be unlikely to discuss issues fully and freely when the commissionerþs expression of preliminary views and concerns that may ultimately be resolved nonetheless could be cited by opposing counsel in pending and future litigation with the FTC. Further, public discussion of policies such as the criteria for bringing an action, seeking an asset freeze, or accepting a settlement offer could enable law violators to devise means of evading a lawsuit or minimizing the adverse consequences of prosecution.

As the court recognized in Clark-Cowlitz, some issues recur time and again in agency litigation, and revealing litigation strategy concerning those issues, even outside the context of a particular ongoing case, could harm an agency's long-term enforcement effort. A law enforcement agency should be permitted to engage in closed-meeting consideration of such policies in order to enhance its development of thoughtful, consistent approaches to those adjudicative and litigative issues that repeatedly arise.

The Commission recognizes that a discussion of litigative or adjudicative policy can sometimes be made public without harm to the agency or the public interest. In those circumstances, the agency should exercise its discretion to open a meeting or to release even protected portions of the meeting minutes in the public interest. Nonetheless, a cognizable danger that publication of these policies or their development could assist law violators arises sufficiently often that the FTC believes that it would be useful to adopt an exemption for adjudication and litigation strategy to protect such discussions.

Third, for discussions that are sufficiently sensitive that the Sunshine Act would permit closed-meeting treatment, we suggest that the scope of the discussions subject to the Act's formal requirements may merit refinement. The basis for this suggestion can be introduced by comparing the processes by which a court and the Commission write adjudicative opinions. When two Justices or judges are discussing how to handle a difficult issue in a draft opinion, or how to reconcile divergent views, they may ask another Justice or judge sitting on the case to join the discussion. Even after commissioners have voted on the matter at a formal meeting following oral argument of an adjudicative appeal to the Commission, however, the Sunshine Act apparently prevents commissioners from engaging in such informal discussions on a draft opinionþs language whenever the number of participants would constitute a quorum. The commissioner assigned to draft the majority Commission opinion could consult jointly with the other members of the majority on how to frame the opinion only by calling a formal meeting and satisfying the procedural requirements of notice to the public and memorialization in minutes. The Act would permit the discussion in closed session under these circumstances, but the imposition of the procedural requirements discourages spontaneity. The result is that such meetings are rarely held, and there is a loss of collegial decisionmaking with no corresponding gain in openness.

A comparable difficulty arises with respect to decisions about FTC law enforcement actions, such as the size or kind of penalty to seek in a particular contemplated law enforcement action, or how to plead a case, or whether to accept a proposed settlement. The cautious view of the Sunshine Act is that two commissioners discussing such an issue may not solicit the views of a third commissioner, and, indeed, two commissioners would have to halt a discussion were a third commissioner to join them, unless and until the procedural requirements of the Act were met. The loss of useful dialogue becomes acute when, because of vacancies, the number of sitting commissioners is reduced to three. In such circumstances, two commissioners constitute a quorum, so one commissioner may not even telephone a fellow commissioner to ask a clarifying question about the merits of a law enforcement matter without triggering the notice and other formal requirements of the Act. Again, collegial decisionmaking is made more difficult without any gain in openness, since law enforcement requires confidential deliberation and decisionmaking in any event.

Collegial decisionmaking is a gradual process, requiring identification of issues, consideration of a variety of approaches to each issue, and discussion of the possibility of accommodating divergent views in order to achieve a consensus. This often may not happen in a single meeting, or even in two. Prohibiting the development and reconsideration of positions on pending issues except in formal meetings accompanied by the full panoply of statutory procedural requirements necessarily results in either a plethora of formal meetings or a substantial decrease in useful discussion without a corresponding gain in openness.

The heart of the problem lies in the definition of "meetingþ and the consequences that turn on this definition. When no þmeetingþ occurs, such as when deliberation occurs between commissioners not constituting a quorum and when the agency resolves a matter by notational voting, the Act does not apply. Whenever there is a þmeeting,þ however, full notice and memorialization procedures apply. The Act defines "meeting" as "the deliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine or result in the joint conduct or disposition of agency business." Although the reach of this language is not free from doubt, many agencies have been hesitant to permit any substantive discussions among a quorum of agency members.

This broad interpretation of "meeting," which includes not just the disposition of agency business but also a variety of exchanges among commissioners, captures discussions that do not truly constitute joint deliberations of the agency, because neither the agency as a whole nor a delegated committee of agency members authorized to act for the agency has been convened. For example, although three members of the FTC ordinarily constitute a quorum, the FTC's rules provide that agency action may be taken only by majority vote recorded through notation procedures or at a formal meeting for which all commissioners have received notice. Informal discussions among three or more commissioners in an elevator, or in a car heading to an ACUS meeting, or in an office, are not really the þjoint conductþ of agency business by the Commission, even though enough commissioners to constitute a quorum are present.

The Commission recognizes the importance of the goals that underlie the broad view of "meeting," including ensuring for certain matters that not only final votes but agency deliberations that may determine those votes are open to the public. These goals are laudable and, for joint deliberations on open matters, they may well justify some inconvenience and inhibition of collegial interchange. The goals have less relevance, however, to deliberations, such as those involving law enforcement decisions, that must remain confidential regardless of format. An excessively broad view of "meeting," adopted to ensure public decisionmaking, imposes burdens on collegial decisionmaking about law enforcement that likely are not justified by increased openness.

It would be desirable to develop a bright line test to identify those informal discussions about law enforcement and other properly confidential matters that could be held among several commissioners without formal notice and recordkeeping. Such a test is especially needed to permit some substantive discussion between two commissioners who constitute a quorum, and among commissioners drafting an adjudicative opinion following a tentative commission vote. A bright line test might be established, for example, by interpreting þmeetingþ with reference to whether all agency members are expected to attend a gathering, or whether there was a formal convening of the agency for the purpose of jointly formulating decisions or disposing of agency business. Alternatively, instead of refining the term "meeting," informal discussions of law enforcement or other confidential matters might be expressly exempted from the Act's notice and recordkeeping requirements. The Commission is not prepared at this time to recommend a particular operational test, but it urges attention to this important question.

In the Commission's view, changes along the lines discussed above could improve the Sunshine Act by increasing clarity and enhancing effective deliberation without any significant loss of openness. I would be glad to answer in my personal capacity any questions that you may have.