extent to which suppression effectively denies justice to those harmed prior to the issuance of the decree by denying them vital information.

You should also consider the procedures used to negotiate the consent decrees. Generally, no records are kept of negotiations, the lawyers within the Justice Department who are supposed to monitor the performance of companies under decrees are rarely consulted on how the decree should be drawn to protect the public, and rarely is there any explanation of the purpose and intent of the many and complicated sections of a typical decree.

THE SO-CALLED ENERGY SHORTAGE

For the last several years, natural gas producers-primarily the giant oil companies have been claiming an approaching shortage of natural gas to meet the country's future needs for a relatively clean and efficient source of energy. They have been seeking—and obtaining from F.P.C.-significant increases in prices based on proof of the alleged shortage. But what kind of proof are they offering and what kind is the Commission accepting? The FPC almost solely on figures supplied by the Reserve Committee of the American Gas Association. The Committee and subcommittee members are all representatives of the very companies that are demanding rate increases. During the recent Southern Louisiana rate proceeding, the Commission refused to approve a detailed questionaire proposed by its staff to collect data directly on current reserves and potential reserves from the companies, then accepted without serious question the A.G.A.'s figures. I say without "serious question", because the Commission did assign to staff members to spot check figures on intra state reserves. But even these figures were provided by an accounting firm which would not identify individual producers. Apparently, whatever this spot check included, it did not include an analysis of the raw data, which the accounting firm indicated it destroyed prior to testifying.

Notice carefully what has happened here. The A.G.A. represents all the producers. Its committees, therefore, have the information which the public is denied and which the F.P.C. denies itself. Remarkably the entire group of corporations which is asserting confidentiality in this information have access to what their so-called competitors' reserves are doing, but the public and the regulators do not.

On June 14th and 15th of this year, Washington columnist Jack Anderson revealed the contents of a secret memorandum which had been prepared under the direction of the Chief Economist of the Commission. The memo compared A.G.A.'s figures with those provided by pipeline companies on the forms which they must file with the EPC. The staff noted discrepancies as high as 33%. Had the pipeline company figures also included intra state gas supplies, the discrepancies would have been even greater. Though these reports surfaced in the middle of the Southern Louisiana rate hearings, the Commission refused pleas from consumer and municipally-owned power companies to reopen the case. Shortly thereafter the Commission granted price increases totalling $4 billion.

EMPLOYMENT INFORMATION: DISCRIMINATION

I have mentioned McDonnell Aircraft's comment to the Civil Rights Commission at the Commission's St. Louis hearings in February, 1970 that it considered its affirmative action plan to increase minority employment to be confidential. DuPont refused to provide information on minority employment to a student task force this past year, even though they compile the same data for the Equal Employment Opportunity Commission. The students were told that in any case, the information was not broken down by plant. Shortly thereafter, two plant managers, oblivious to the non-existence of this information, disclosed minority employment figures to the study group. It had apparently not occurred to them that some information was proprietary.

DuPont also refused to provide a company phone book, maintained that they did not keep employee injury rates on a plant-by-plant basis, and refused, in most cases, to reveal how many employees were employed at any one plant. As to the latter, they argued that if competitors knew how many engineers were employed at a plant, they might be able to figure out secret manufacturing processes. This would be ridiculous except for the fact that this is precisely the kind of excuses government agencies regularly accept for granting confidential treatment to information supplied by corporations.

EMPLOYMENT INFORMATION: OCCUPATIONAL SAFETY AND HEALTH

One of the premises underlying the new Occupational Safety Act is that employees should be fully advised of the risks involved in their work and should be placed in a position to protest threats to their health and safety caused by polluted and/or dangerous in-plant environment. Under the act, workers and their representatives are permitted to initiate complaints to the Occupational Health and Safety Authorities at the Labor Department and even to request that an entire plant or portions of the plant be shut down, if the danger is so imminent as to threaten death or serious injury. But how is the worker to know that mercury poisoning, for instance, can cause serious injury and that his work environment contains excessive quantities of mercury?

The Allied Chemical Company at its chlorine gas plant in Moundsville, West Virginia routinely tested workers' urine for the presence of mercury. Workers with quantities of mercury greater than company-established tolerances were moved to parts of the plant where apparently little or no mercury vapor was present. One worker later reported that he had been pulled off the job 17 times in this process. Ultimately, workers reported the situation to the Occupational Safety and Health authorities who found the company guilty of a serious violation of the law. The company made no effort to report to workers the levels of toxic substances present in different parts of the plant, nor the identity of these substances. Nor did the company ever suggest the risks the workers were running in being exposed to mercury vapor over long periods of time, nor did it report the extent to which it was temporarily shifting workers around to lower the level of mercury in their bodies. Only through a fortuitous set of circumstances did the workers learn the full implication of what was happening to them. This is corporate secrecy in one of its most tragic forms. The company had apparently set arbitrarily high tolerance levels for mercury, far greater than those generally regarded as acceptable even with the present limited state of knowledge about the effect of concentrated dosages of mercury on the human body. At last report, Allied had taken a number of significant steps acceptable to both the workers and the agency, but was refusing to disclose the results of its own surveys of mercury vapor in the plant,

WHO OWNS AMERICA

Last year, Reuben Robertson, attorney on the staff of the Center for Study of Responsive Law and a member of the Consumer Advisory Committee to the Civil Aeronautics Board, discovered that the Board had only a very rough idea of who owned the regulated air carriers in the United States. Section 407 (b) of the Federal Aviation Act requires each carrier to report annually the names of all persons owning five percent or more of their stock. The Act and even the regulations promulgated under it clearly require that the real owner of the stock must be revealed-not merely the stockbroker or the bank that holds stock for the benefit of someone else. So Mr. Robertson scanned the reports filed by the Airlines. He found that Chase Manhattan Bank held 11.75 percent of TWA, 6 percent of Northwest Airlines and 6.4 percent of Eastern Airlines. In all three cases the bank apparently held the stock for one or more customers. The records failed to disclose the names of these customers and some failed to reveal whether or not in fact the stock was held for the benefit of third parties. Mr. Robertson, charging that the CAB might be guilty of gross dereliction in failing to enforce either its statute or its own regulation is still awaiting a reply from the CAB. The complaint was filed on August 13, 1970.

Senator Lee Metcalf reported a similar experience-the reporting of substantial portions of the stock of major corporations only in the names of "nominees" at the S.E.C., the Interstate Commerce Commission, and the Federal Power Commission. A "nominee" is a code word for another corporation or bank, which in turn holds stock as a trustee for someone else. "Cede & Co." is the New York Stock Exchange, "Kane & Co." and "Cudd & Co." mean the Chase Manhattan Bank, and the Bank of California uses 50 nominees. Fortunately, Senator Metcalf obtained a copy of the heretofore difficult to come by list kept by the American Society of Corporate Secretaries and has published it in the Congressional Record. This breaks the nominee code until and unless the code is changed. We can now at least pierce the first line of defense against ownership disclosure,

RECOMMENDATIONS

Mr. Chairman, I have developed a separate statement on Legislative Recommendations which I would like to present to the Subcommittee at this time,

LEGISLATIVE RECOMMENDATIONS ON CORPORATE SECRECY PRESENTED TO THE MONOPOLY SUBCOMMITTEE OF THE SENATE SMALL BUSINESS COMMITTEE BY RALPH NADER, Nov. 9, 1971

A. First, the concept of "trade secrecy" and "confidentiality" must be redefined in virtually every regulatory act and administrative regulation applicable to corporate behavior. Such new definitions would specifically enumerate the types of information eligible for confidential treatment.

B. Second, no information submitted to any governmental agency by any business enterprise should receive confidential treatment in the absence of a showing that the business interest in secrecy outweighs the public's right to know. Any agency decision in favor of confidential treatment should be subject to judicial review.

C. Third, corporate income tax returns-especially those of the top 100 to 500 companies by sales-should be public information. Summaries of these returns should be published annually and copies of individual returns should be made available at cost. Mr. Chairman, your home state Wisconsin denied confidentiality to virtually all state income tax returns from the early twenties until 1953. 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.

D. Fourth, Corporations should be required to report their profits and sales on every product or service they market. Individual firms should not be perImitted to establish the categories of reporting-otherwise, for example G. M., which produces thousands of different products, would be able to continue to report all of its sales and profits in one single figure. 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 positon to avoid even potential competition-because the competition can't find out where the profit opportunities are. 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 efficiency and where it's operating inefficiently. 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 business man 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's really happening in the economy.

E. 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.

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 spokesman, 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 F.B.I. agents who can work closely with companies on an area by area basis....."

Accordingly, the Freedom of Information Act should be amended to provide for 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 weren't able to obtain the information available to the Atomic Energy Commission on the risks of the underground nuclear explosion until literally a few days before the test. 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. 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 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 bewlider even an expert in trade secret law. Contrary to popular opinion-and the widespread belief among law makers 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. 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.

STATEMENT OF RALPH NADER-Continued

I would like to suggest further some specific approaches for this committee during the continuation of these hearings this year and next year.

(1) I recommend that you seek answers to the following questions from all the executive and administrative agencies in the government:

(a.) What requirements do the statutes under which they operate set for the non-disclosure 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 non-disclosure.

(b.) 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.

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

(d.) Each agency should be requested to recommend procedures for reviewing trade secrecy and confidentiality claims made by corporations who must file reports or otherwise provide data to the agency on a regular basis. If an agency does not feel that existing law permits it to establish such procedures, it should be requested to submit a memorandum of law justifying its conclusion.

(e.) It is important that some agencies be required to make oral presentations before this subcommittee and that agency representatives come prepared to discuss in depth their answers to these questions.

(2) I recommend that this subcommittee request all federal agencies to survey the record-keeping requirements imposed by statute and by regulations on all groups regulated by each agency. Those agencies without such authority should be requested to justify their failure to seek legislation giving them such authority. Sanctions which can be imposed for failure to keep adequate records should also be reviewed. It has been suggested by some, including Willard Mueller, former Director of the Bureau of Economics at the Federal Trade Commission, that some firms might be maintaining internal records by means of census forms, not subject to subpoena by individuals or by the government. No agency should be permitted to condone this practice without justification.

(3) This subcommittee should seek to have every agency indicate whether or not it uses the consent decree as a regulatory device and to reveal the steps which have been taken to assure that the public interest is protected by monitoring compliance, by developing a full record of negotiations for internal agency review, by seeing to it that those who will have to assure compliance on a day-today basis take part in the formulation of the decree. The consent decree process has in some cases perverted the judicial process: The Judge who must approve the decree is often the last person to stand between the public on one side and what may be a cozy arrangement between the law enforcer and the law breaker. He is rarely given any substantial record to review the agency's decision to settle for a consent decree; and judges who may later be called upon to review the decree are provided no authoritative statement of the intent and purposes of the sections included in the original decree.

(4) This subcommittee should devote several hearing days to explore the pattern of trade association involvement in the perpetuation of the iron curtain of corporate secrecy. The American Gas Association and the National Petroleum Council-a government sponsored trade association-have set the pattern for intermediate collection points of corporate information, available to members, but not to the public and not to the regulators. Neither trade associations nor other private groups should perform governmental functions. And if they do, under this or any other subterfuge, Congress has an overriding responsibility to inquire into the practice.

(5) This subcommittee should hear testimony from representatives of identifiable interest groups to fill in the record of abusive corporate secrecy which I have begun to outline today. Labor unions should be among the first to be heard and so should small businessmen, consumer groups, and small farmers and investors. Next week's hearings-when the subcommittee considers "Agribusiness" will be an excellent first step in this direction. Any group whose interests are affected by the denial of access or the effective denial of access to corporate information should be considered a good prospect to provide input.

(6) Many of the examples I have discussed today have been of "de facto secrecy" the effective denial of access. The subcommittee should constantly test any assertion that secrecy is no problem in a certain area against this or similar standards: Can the ordinary citizen without the aid of legal counsel and with only a modest commitment of money, time and effort obtain the information? Any weaker standard should be reserved for exceptional cases. And stronger standards should be applied whenever health or safety is a factor. In these latter cases the corporation should be required to present the relevant information to the worker or consumer even before it is requested.

Mr. NADER. Dr. Till would like to comment briefly on some specific items that she has specialized knowledge of, Mr. Chairman.

Dr. TILL. I will speak briefly, Mr. Chairman, about corporate secrecy in terms of my own experience as an economist in the antitrust agencies and with the Senate Subcommittee on Antitrust and Monopoly.