ILLINOIS POLLUTION CONTROL BOARD

March

10,

1983

IN

THE

MATTER OF:

PROCEDURES FOR IDENTIFYING

)

R81~30

AND PROTECTING TRADE SECRETS

)

Proposd~inion.

First_Notice.

PROPOSED OPINION OF THE BOARD

(by I.

C,

Goodman):

Section 7 of the Illinois Environmental Protection Act (Act)

establishes a general policy and procedural

framework regarding

access to

information acquired pursuant to the Act.

As a general

policy

‘tall

files,

records and data of

the

Illinois Environmental.

Protection

Agency

(IEPA), the Pollution Control Board (Board),

and the Department

of Energy and Natural Resources

(Department)

are to be

open to reasonable public inspection and may be copied

upon payment

of reasonable fees.~

Section

7 also establishes

four

exceptions

to this general policy,

including an exception for

“information

which constitutes a trade secret.”

Sections 7(b),

(c)

and

(d)

specify certain

types of

information

which may not

be treated

as

confidential, irrespective of a trade

secret,

or

otherwise privileged or confidential status.

In

addition,

Section

7.1 establishes a general policy of non—disclosure

with regard to

trade secrets and mandates that

the

Board adopt

regulations which

pr~scribeprocedures for

identifying and protecting trade secrets,

This

Proposed

Opinion supports the proposed regulations

contained

in the Board~sFirst Notice Order of February 10,

1983.

These

regulations are designed to meet the mandate for rulemaking

in Section

7.1(b).

A

proposal for rulemaking was presented to

the

Board on

December 16,

1981 by

the IEPA

and

docketed

as

R8l-30,

Hearings meeting Section

28 requirements were

held

on

the IEPA

proposal on February 10th and 23rd,

1982.

In addition,

several

lengthy public

comments and redrafts

of

the proposal were received.

The Board

proposal retains the basic procedural framework proposed

by the IEPA.

However,

as will

he discussed

later,

it provides

greater

specificity than the IEPA

proposal,

and,

in particular,

specifies administrative procedures

for the protection of trade

secrets.

Scope

These regulations prescribe uniform

procedures

to be applied

to “all

articles

representing

a

trade

secret

reported

to

or

obher~

wise

obtained

by the Agency,

the

Board or the

Department

in corinec-

bion with any examination, inspection or proceeding

under

this

Act.”

Two comments

on the scope of these

rules should be noted.

First,

51-277

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2

these regulations apply to all three agencies subject to the

Environmental Protection Act.

However, they apply only to arti-

cles which are obtained pursuant to Environmental Protection Act

authority.

Thus, these procedures are applicable to most informa-

tion handled by the Board and

the

IEPA,

but are not necessarily

applicable

to

all articles obtained by the Department,

which

operates largely pursuant to other statutory authority.

Second,

these rules cover only “trade secrets.”

(The term “trade secret”

is defined in Section 3 of the Act,)

Although the Board agrees with

some participants in the hearings who suggested it would be advisable

for the agencies involved to adopt similar uniform procedures

for

identifying and protecting other privileged or confidential infor-

mation, Section 7.1(b) appears to authorize uniform Board rules

for “trade secrets” only.

Arguably, since the Board is authorized

under Section

26 to adopt

“such procedural rules as

may be

necessary

to accomplish the purposes of this Act,” a broader authority to

promulgate procedural regulations applicable to all three agencies

may exist.

The Board particularly solicits comment on the advis-

ability and legal authority for expanding this proposal

to

include

“information concerning secret manufacturing processes or confiden-

tial data.” This is a category of information which

is specified

as an exception to the general disclosure policy in Section

7 and

which is likely to involve the same type of decision—making

process as the “trade secret” category.

Balance of Interests

These regulations attempt to balance the interests of the

information requestor,

the information submitter,

and the

agencies handling the information.

There

is an obvious public

interest in informed citizen oversight of administrative actions

affecting public health and the environment.

Often this requires

timely access to information.

Unreasonable delays can effectively

eliminate public comment in actions moving through administrative

processes such as rulemaking or permitting.

For example, the

Act requires that IEPA decisions on permits generally must be

made within

90 days from the date an application is submitted.

Public access to information must be geared to the public

participation process.

A second obvious interest is the property interest of the

owner of the information.

In the field of pollution control,

this person is generally a regulated industry,

unit of

government,

or individual,

The information involved is generally technical in

nature and may have

an economic value to the owner,

The avid

interest of competitors and consultants

in environmental

files

is evidence of the fact that a regulated party may have a

legitimate concern about submitting valuable information

to

the

three government agencies covered by these

rules.

A third interest is that of government itself.

The governmen~

has several concerns

in regard to the handling of information.

First, there is an interest in encouraging rather than inhibiting

51-278

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3

the flow of technical information to a government agency charged

with overseeing regulated activities.

Second,

there is an

interest in handling the massive amount of information submitted

to and obtained by government

in the most efficient and inexpensive

way possible.

A third government concern

is insuring against

liability for either inappropriate or unintentional disclosure or

non—disclosure of information.

It should be recognized, however,

that none of these concerns justify a general agency policy of

non—disclosure, nor delays and unnecessary expense based on

inefficient

filing procedures.

Proposed Claim/Waiver/Justification_System

The proposed regulations establish

a procedure which is

intended to accomodate the interests delineated above.

Briefly,

the “claim/waiver/justification” system works as follows.

Upon

submitting an article, the owner of

the article has the option

of claiming that it represents a trade secret.

(Although the

most common situation involves an article submitted to an agency,

provision is also made for articles already in the possession

of an agency or independently obtained by the agency.)

The

owner must accompany such

a claim with either a “Statement of

justification”,

as defined in Section 120.204(c), or a limited

“waiver” of certain statutory deadlines as defined Section

120.201(b).

If the “justification”

route

is taken, the owner

must include specified information to enable

the agency to

determine whether the article qualifies as a “trade secret”

under the statutory definition.

The article is then temporarily

protected and the agency has 10 working days to make

a final

determination.

If the “waiver” route

is chosen,

the article

will

be

“protected”

by

the

agency

and

neither

the owner nor

the

agency

need

do

anything

more

until

a

request

for

access

to

the

information

is

received.

In

this

case,

the

request

for

access

to

the

information

triggers

the

formal

agency

determination

process

during

which

the

owner

is

required

to

provide

information

justifying its claim.

There are advantages and disadvantages in providing an option

under which articles may be claimed and protected before they

are determined to represent “trade secrets”.

The advantages

accrue

to the owner of the article and the agency which are spared

the expense and burden involved in justifying and determining

the legal status of articles which may never be the subject of

a request for access.

The vast majority of

information submitted

to the agencies involved is never the subject of

inquiry,,

thus

many “front—end” determinations would be unnecessary.

On the other hand,

the availability of trade secret protection

without a justification may encourage owners to make unfounded

claims.

This may also result

in

increased information handling

costs to the agencies.

Another drawback to this approach is the

delay in the requestor’s access

to information which has been

claimed “but not determined” to be

a trade

secret.

Tinder

these

51-279

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4

rules, upon receiving a request the agency must notify the owner

and allow the owner 10 days in which to submit a justification.

(Section 120,204(a)

and

(b).)

Then,

the agency itself may take

another

10

days to make a determination.

(Section 120.205(a).)

(In addition, both of these time periods may be extended :by 10

days.)

Finally, under these rules

the article may not be released

until

the owner has been given 30 days in which to appeal the

agency determination,

(Section 120,206.)

In total, the delay

involved can be

as long as

80 days

(including mailing time)

where the agency decision is not appealed.

Obviously, this

lengthy delay may jeopardize the public’s ability to participate

in permitting and variance proceedings before the agency where

agency decisions are limited by statutory time constraints.

The “waiver”, which must be submitted in this situation,

is

designed to alleviate this

jeopardy.

As described in Section

120.201(b)

it would extend any statutory decision deadline

for a period equal to the period by which the decision is delayed

plus 10 working days.

This system as drafted attempts to strike a balance between

the competing interests described.

However, the Board recognizes

that this system is not ideal

from the perspective

of any of these

interests.

For example, requestors will still be at jeopardy

in situations where agency actions do not involve statutory time

constraints or proceed before deadlines.

Also, under this

proposed system

the agencies are compelled to undertake addi-

tional responsibilities with regard to “claims” and “waivers”.

The Board specifically solicits comments on both the general

approach taken here and specific aspects of the rules as drafted,

such as time

frames and notice procedures.

~p~i

frorn

enc

Determination

Section 120.208 establishes the route of appeal which may

be taken by either an owner or a requestor from an agency determination

of trade secret status.

Both IEPA and Department determinations

are directly appealable to the Board.

Board determinations,

whether initial

determinations of trade secret status by the Board

itself or Board review of other agency determinations, are directly

appealable to the Appellate Court pursuant to Section 41 of the

Act.

This route of appeal differs from that proposed by

the

IEPA

which would have had IEPA and Department determinations made

appealable to the Circuit Courts rather than the Board.

There are several

advantages

in making these decisions

appealable

to the Board.

Appeals to a single body will result

in

a consistent,

statewide interpretation of the law on

the subject

of

trade

secrets

as

defined

under

the

Act.

The

delay

caused

by

the

case

backlog

in

many

circuit

courts

will

be

avoided.

Furthermore,

the technical qualifications of the Board

in

this specialized

field provide it with a better understanding

of the technical material involved.

Recognition of the need for

technical expertise in this area

is the

fundamental concept

51-280

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5

behind

the

structure

established

in the Act for

the

appeal

of

permit

decisions

and

the

enforcement

of

the

Act’s

provisions

before

the

Board.

Having

stated

the

basis

of

this

proposed

provision,

the

Board

nonetheless

welcomes

additional comment

on

this

provision.

Level

of

De

tail

in thi~922s~dRule

These

proposed

rules provide greater detail than those

proposed

by

the

IEPA.

In

particular,

the

IEPA’s

proposal

did

not provide uniform procedures

for the protection of articles

which are claimed or determined to represent trade secrets,

Rather the IEPA proposal would have left those practices up to

the individual agencies involved.

In light of information

presented in the record on vague and inconsistent practices within

the agencies involved as well as the explicit statutory mandate

to adopt procedures

for the “protection” of trade secrets, the

Board believes explicit, uniform procedures are necessary.

The

possibility that articles may be transferred from one agency to

another underscores

the necessity that policies with regard

to “marking” articles and restriction on access to articles be

clearly stated and uniformly applied.

The Board believes this

includes specificity in details such as how and where an article

is to be marked, how trade secret articles are to be maintained

in the agency files, and who may have access to them,

Notably this level of specificity is a protection to the

clerical employees who handle

the

great mass of materials sub-

mitted to and maintained by

the

agencies.

In addition,

these

specific requirements

will have

the positive result

of

formalizing many practices which are currently

informal and

about

which people submitting and requesting information

are neither

informed nor have an opportunity to enforce,

The Board, again,

solicits comments on the general level of detail

in these rules,

and the appropriateness

of specific details, or lack thereof.

Conclusion

In conclusion, these rules establish a process to he used

by the three agencies in identifying trade secrets,

and specific

formalities

for the protection of trade secrets held by the

agencies.

Many of the fine points of the proposed rules have not

been discussed in this preliminary opinion, but nonetheless may

have significance in the daily operation of the agencies and the

flow of information to and from them,

e.g.

the prohibition on

copying of trade secrets

(Section 120.307).

The Board encourages

a detailed review of this proposal by the agencies and all members

of the public who may be affected by their actions,

Additional

hearings on this matter are not anticipated, however,

the comment

period will remain open until Monday, May

2,

1983.

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6

IT IS SO ORDERED.

Mr. Nega abstained.

I,

Christan L. Moffett,

Clerk of

the Illinois Pollution

Control Board,

hereby c~rtifythat the above P~oposedOpinion

was

adopted on,the_/?~

day of_j)’

~

,

1983

by

a vote of

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.

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Illinois Pollution~—c(QntrolBoard