Mr. NADER. Ironically, the proponents of the repeal of the law which required such massive disclosure were not individuals-who clearly have a legitimate and constitutionally protected interest in personal privacy-but powerful business groups.

And in Wisconsin, public officials, including members of the legislature and State university professors, continue to have access to complete income tax returns. To my knowledge, corporations have not fled the State nor has commerce been interrupted as a consequence.

In this context, I might say that although the Supreme Court, in a divided opinion, almost 30 years ago, decided that the 14th amendment applies to corporations, I think we have to raise that question again and again.

The idea that the kinds of constitutional protections that apply to individuals should apply across the board to corporation entities, as contrasted to people inside the corporations, who would have the same status as outside the corporation under the Constitution, is, I think, undesirable.

These are legal fictions. They are not persons in the constitutional sense of the term envisioned in the late 18th century.

I think the reasoning process that has brought them under the 14th amendment has shielded these corporate structures from the kind of accountability, the kind of disclosure, that would have made them more accountable years ago.

Fourth, corporations should be required to report their profits and sales on every product or service they market. Individual firms should not be permitted to establish the categories of reporting-otherwise, for example, GM, which produces thousands of different products, would be able to continue to report all of its sales and profits in one single figure. (See exhibit 21 in app. IV.)

The smaller businesses that compete with General Motors and other conglomerates in just one of its many product lines reveal much more about their operations if they are single-product enterprises and if they have to report to stockholders or to a State or Federal agency. The successful entrepreneur who becomes just big enough to issue public reports is a ripe plum for conglomerate takeover because he must reveal how successful he is.

The large conglomerate, which now can get away with hiding its profits and sales on any one or all of its product lines, can keep its successes and its failures secret and be in a better position to avoid even potential competition-because the competition can't find out where the profit opportunities are to enter the market.

And, they are in an excellent position to befuddle stockholders and investors-because no outsider can read the firm's financial report to determine where it's operating efficiently and where it's operating inefficiently. (See exhibit 22 in app. IV.)

The giants can then attain high concentration or monopoly in some product lines and remain incompetent in other product lines, then use the monopoly profits in one sector to underwrite below-cost selling in the other.

The result: massive misallocation of our national resources and accelerating trends toward heavy concentration of economic power without public knowledge until it is almost too late to do anything about.

The small businessman suffers because he can be driven out of business no matter how efficient he is; the consumer suffers because he

must pay higher prices for shoddier goods for which he can find fewer and fewer substitutes; Government policy makers suffer because they simply can't tell what is really happening in the economy. (See exhibit 23 in app. IV.)

Corporate secrets are not merely those bits and pieces of information buried in the bowels of the corporation. They include information about corporate activity maintained by Government, but kept from the public without justification. The interplay between governmental secrecy and corporate secrecy in the context of an accelerating erosion of personal privacy represents a single, widening thrust in recent history. (See exhibit 24 in app. IV.)

In the traditional invasion of privacy area, that is, credit bureaus collecting activity in files on individuals, one company in Atlanta. Ga., has files on some 45 million Americans at the present time, and that secrecy has been recognized in part by Congress which passed the Fair Credit Reporting Act last year giving a limited access to these files on the part of the people who these files relate to if the files were used to deny employment, insurance or credit to these individuals. (See exhibit 25 in app. IV.)

But there is a lot more reform that should be coming down the pike in terms of giving the debtor or the individual a credit bill of rights, so to speak, giving the individual the right to correct the file in the company's offices, the right to rebut errors or fallacies or myths or gossip, and the right to control to whom these files are given. Often these files are given to Government agencies for uses completely unknown to the citizen.

This, again, is an example of the complicity between Government and business and manipulating information taken through inquiries about private citizens and used for commercial and governmental purposes without the knowledge of the citizen.

This development is strikingly symbolized in the February meeting of the Industry Advisory Council to the Department of Defense, reported by Bernard Nossiter in the Washington Post. Twenty-four executives of the leading defense contracting firms met with DOD officials.

The participants discussed, among other things, "drastic limitations" which currently limit industry's freedom to screen prospective employees and what they felt to be the pernicious tendency in Federal and State laws and in union contracts limiting the rights of management to terminate employment at will.

Industry spokesmen, including Mark Shepherd, Jr., president of Texas Instruments, and William P. Gwinn, chairman of United Aircraft, sought to have access to intelligence data from appropriate Federal agencies and "special FBI agents who can work closely with companies on an area-by-area basis. * * *”

Senator NELSON. May I ask, can you amplify in any way on this statement about the president of Texas Instruments and the chairman of United Aircraft? You say that in their position as members of an Industry Advisory Council to the Department of Defense they "sought to have access to intelligence data from appropriate Federal agencies and special FBI agents who can work closely with companies on an area-by-area basis."

Can you give us a copy of the Nossiter article to which you referred and any additional information?

My special concern is this: Are the executives of giant corporations, in addition to the knowledge they acquire and monopolize as a result of their own company's information-gathering activities, getting access to Government knowledge that is denied to their small business competitors?

Mr. NADER. I can certainly supply the article from the Washington Post. It was based on an extensive memorandum of minutes of the meeting, as I recall, of the meeting of the Industry Advisory Council. Whether Mr. Nossiter still has a copy of that memorandum and is willing to provide it for the committee is something that perhaps he can be asked. I believe he is in Europe at the present time. (See exhibit 26 in app. IV.)

Accordingly, the Freedom of Information Act should be amended to provide sanctions against government officials who fail to disclose information which the act declares to be public.

Today if information is illegally denied a citizen or a citizens' group and if a court makes a finding of illegality, the only thing the court can do under the statute is order disclosure-in many cases, long after the value of the information has declined.

In the recent Amchitka case, for example, citizens were not able to obtain the information available to the Atomic Energy Commission on the environmental risks of the underground nuclear explosion until literally a few days before the test, when they finally prevailed in court.

The opponents of the test had only a few days to review the complicated data which the agency had monopolized and to present it to the courts to support their request for an order halting the detonation.

The bureaucrats had lost a Freedom of Information Act battle, but they won the war. They were able to withhold the information just long enough--without ever risking anything more than an order to disclose.

I think the issue is plain and clear. If Government officials refuse illegally to disclose information that citizens have a right to know, they should be penalized for that refusal. They should, for instance, have been held jointly and severally liable with the Government for all the costs of the suit to compel disclosure, including attorney's fees and the court should have had the option of suspending them temporarily or permanently from their positions of public trust-without pay and any other of the emoluments of office-as a penalty for their misconduct.

The burden of illegal failure to disclose-particularly when the consequences are fraught with such measures of safety and the public health should be placed squarely on the Government and its officials, not on the citizen who had a legal right to the information in the first place.

Ironically, Mr. Chairman, today under section 1905 of title 18 of the U.S. Code, each and every Federal civil servant runs the risk of criminal prosecution for the unauthorized disclosure of trade secrets and a grab bag of other information, all so loosely defined as to bewilder even an expert in trade secret law.

Contrary to popular opinion-and the widespread belief among lawmakers and civil servants, even the phrase "trade secret" lacks precise legal definition. In government, it usually means whatever a corporation can convince a bureaucrat the public shouldn't know. (See exhibit 20 in app. IV.)

So, this section of the U.S. Code should be amended to precisely define the types of corporate data which a civil servant can be forbidden to disclose on pain of criminal prosecution. And no prosecution should be permitted unless an agency has previously made a formal finding that confidential treatment is justified in the public interest. This finding itself should be publicly made and should be subject to judicial challenge by members of the public who might be adversely affected by confidential treatment.

This is by no means a complete list of the reforms desperately needed to put an end to the reign of corporate secrecy-and governmental complicity in corporate secrecy. These are simply some of the most important ones.

Senator NELSON. You are recommending that we substantially amend section 1905 of title 18 of the U.S. Code which imposes criminal penalties on on Federal employees if they reveal confidential data, including business confidential data.

Have you considered section 9 of title 13 of the U.S. Code which prohibits anyone at all, outside the Bureau of Census, from having access to individual company's Census reports? The Census will not even publish any statistics from which a knowledgeable person might deduce or infer any information about an individual company's reports on a particular plant or product.

The last time Congress considered that particular brand of corporate secrecy it was to condone and strengthen it by giving a company's own file copies of its Census reports immunity from being subpoenaed in a court proceeding or an administrative proceeding.

Mr. NADER. That raises the same question I raised earlier, whether the company should have the same standard of privacy under the law as privacy of individuals. I don't think so. I do think, however, that the Census Bureau feels very strongly about the uniform integrity of the privacy of its information. The way to deal with the problem you posed is, in effect, to have another bureau collect the same information that the Census Bureau collects about the largest companies and have that made public, rather than force the Census Bureau to split its standard which perhaps can spread into legitimate areas as well.

In short, I would have the company make two reports: One to the Census Bureau and let the Census Bureau keep it private, if it wishes, let it keep its information private as far as individuals are concerned, also, but have the same information submitted to the Federal Trade Commission.

Senator NELSON. What is the advantage of that?

Mr. NADER. The advantage is it still permits the Census Bureau to have this rather professional ethic of privacy without any breaches and still permits the public to have the information that flows from a company completion of the Census reports.

Senator NELSON. Would both reports, to the Trade Commission and the Census Bureau, contain all of the same information?

Mr. NADER. Yes. This is a policy decision on the part of Congress, of course. It would contain the information that the companies submit, that the Congress does not feel has any right to protection for privacy as individually submitted information.

Senator NELSON. I would assume the reason you would have them submit separate reports to the Federal Trade Commission is the assumption that there is some material in the reports that the Census Bureau gets that should not be made public. Is that what you are saying?

Mr. NADER. Yes. Rather than putting a burden on the Census Bureau to decide where to draw the line and to possibly subject itself to an erosive influence of disclosure, give it that across-the-board protection and have the FTC receive the information that the Congress believes it should receive under the census.

Senator NELSON. So the report made to the Federal Trade Commission would not be exactly the same, but it would be the information that the Congress felt ought to be disclosed to the public. Is that what you are saying?

Mr. NADER. That is right. It could be part of an overall corporate disclosure statute to require routine information to be filed publicly with the relevant Government agency.

On that last point about the contrast here, Mr. Chairman, just picture any year. Say 1967. If a Federal civil servant disclosed to the public corporate information dealing with the amount of pollutants dumped into various rivers and lakes in the country which was considered proprietary information by the company when it was given to the Government, that civil servant could be prosecuted, convicted, and jailed. But if another civil servant willfully refused to disclose information dealing with the environmental effects, say, of a government action or of a corporate action, and the court adjudicated that it was illegal, that civil servant would incur no sanction and no penalty. Do you see the double standard that is involved here?

Just very briefly, I would like to recommend the committee seek answers to the following questions from all the executive and administrative agencies in government:

What requirements do the statutes under which they operate set for the nondisclosure of information? My initial survey suggests that most if not all agencies accept the thesis that whatever the corporation seeks to be held confidential it will be so held, even though there might be an overriding public interest in disclosure. Even section 208 (b) of the Clean Air Act which grants the Administrator the discretion to reject claims of trade secrecy provides no standards by which he is obligated to measure the public interest against the corporation's interest in nondisclosure.

Each agency should be queried on the extent to which it distinguishes, if at all, from personal privacy and any alleged right to corporate privacy. What we may be seeing here is the creation of an administratively defined law of corporate privacy. This trend must be examined and, if possible, reversed.

Each agency should be asked to justify why it has incorporated the commercial law of trade secrecy into its own regulations.

Each agency should be requested to recommend procedures for reviewing trade secrecy and confidentiality claims made by corporations