The opinion of the court was delivered by: BARRON P. MCCUNE
BARRON P. McCUNE, District Judge
The following is written to comply with Rule 52 following a non jury trial during August and September of 1980.
Mobay is a major developer of pesticides and has been for many years. It has spent millions of dollars in research and development and experimentation and analysis. Production of pesticides is essential to the production of food throughout the world. The evaluation and registration of pesticides are essential to the protection of people. How both interests are to be accommodated has occupied the industry and the government for many years. Both interests have long sought an accommodation, but the result achieved thus far has left Mobay, and we suspect many other developers, exasperated and frustrated. As technology improves, more products are developed, but the need for protection increases.
Mobay's complaints are understandable. Certainly a better accommodation can be devised by the human mind, and it must be, if the industry is to succeed in developing the sophisticated pesticides which will be required in the years to come.
However, for the reasons which follow we cannot grant either declaratory or injunctive relief, in our judgment.
In essence, Mobay attacks three features of FIFRA's new regulatory scheme. First, EPA's use of data previously submitted by one applicant to support the application for registration filed by a later applicant. Second, disclosure provisions which make certain trade secret data submitted to EPA available to the public and to government contractors. Third, EPA's policy of issuing, for the time being, only conditional registrations and of requiring, from time to time, general, as opposed to specific and detailed, data requirements in order to maintain the conditional registrations.
These features of the regulatory scheme, Mobay claims, render research and development in the pesticide industry unprofitable and impractical. It says that chemical companies will not devote large amounts of money and time to developing new pesticides if they know that their trade secret data will be disclosed to others; if another company may obtain a registration by relying entirely on their data and submitting none of its own; if EPA is continually imposing new conditions on them which they must meet in order to keep their products on the market; or if EPA does not publish definite data requirements specifying exactly what tests and studies must be submitted.
In short, Mobay contends that the scheme is now arbitrary and uncertain.
The defendant offered justification for both the FIFRA amendments and EPA's interpretation of those amendments, expressed in its regulations. The defendant contends that Congress and the EPA acted together to increase competition in the pesticide industry, present all scientific data necessary for informed regulatory decisions before EPA, protect the proprietary rights of data submitters, inform the public about the effects of the chemicals contained in the pesticides, and ease the burden EPA has long borne in processing thousands of applications for registration and analyzing innumerable items of data. In other words, despite FIFRA's and the regulations' seeming inscrutability, and their allegedly appropriative data sharing scheme, and the interminable registration process, Congress and EPA have devised a rational scheme designed to meet several needs and satisfy diverse interests.
Numerous exhibits were introduced at trial, and both sides have filed extensive pretrial and posttrial briefs. These, together with our review of the transcripts of the able direct and cross examination of both sides' witnesses, have facilitated our understanding of FIFRA and the regulations, and our perception of Mobay's objections to them.
The Federal Insecticide, Fungicide, and Rodenticide Act
Enacted in 1947, the Federal Insecticide, Fungicide, and Rodenticide Act, ch. 125, 61 Stat. 163 (1947), initially provided for a simple and straightforward registration process. An applicant seeking to register his pesticide -- or "economic poison" as it was called then, see id, § 2(a) -- was required to file with the Secretary of Agriculture
his name and address, the name of the pesticide, a complete copy of the labeling and a statement of all claims made for it, including directions for use, and, if requested by the Secretary, a full description of the tests made and the results thereof upon which the claims were based. Id. § 4a, 61 Stat. 167. If he deemed it necessary for the effective administration of the Act, the Secretary could require the applicant to submit the complete formula of the pesticide. Id. § 4b.
The early FIFRA made it unlawful for any person to reveal or use to his own advantage information relative to product formulas, acquired by authority of the Act, id. § 3c(4), and provided penalties for violations. Id. § 8, 61 Stat. 170.
The Secretary registered the pesticide if it appeared that its composition was such as to warrant the proposed claims made for it and if it and its labeling and other submitted materials complied with the Act. Id. § 4b, 61 Stat. 167-68. If the Secretary was dissatisfied with an application, he would notify the applicant of the manner in which the application failed to comply with the Act, and permit him to make the necessary corrections. Id. § 4c, 61 Stat. 168.
The Secretary was authorized to cancel the registration of any pesticide after it had been registered for five years, unless the registrant requested that it be continued in effect. Id. § 4e. The Secretary was also authorized to cancel a registration at any time on his own motion "in order to protect the public." Id. § 4c.
FIFRA was virtually reenacted in 1972
(and then amended in 1975
) as a response to growing public concern about public health and the ecological effects of pesticides. The new FIFRA provided for a more complete registration process and stronger enforcement measures, and heralded a policy of thorough scientific analysis of pesticide chemicals before making them available to the public. Now, under § 3(c)(5), not only does an applicant for registration have to show that his pesticide's composition is such as to warrant the proposed claims for it and that its labeling and other submitted materials comply with the Act before he may obtain a registration, but the EPA must also determine that the pesticide will perform its intended function without unreasonable adverse effects on the environment, and that, when used in accordance with widespread and commonly recognized practice, it will not generally cause unreasonable adverse effects on the environment. Federal Environmental Pesticide Control Act of 1972, Pub. L. No. 92-516, § 2, 86 Stat. 980-81 (codified at 7 U.S.C.A. § 136a(c)(5)(1980)).
Under § 3(c)(3), EPA must review the data submitted with an application and, "as expeditiously as possible," either register the pesticide or notify the applicant that his application does not comply with FIFRA. Id., 86 Stat. 980, 7 U.S.C.A. § 136a(c)(3).
Under the 1972 amendments, data submitters for the first time were given proprietary rights in their data. Section 10(a) permitted them to mark any portions of their data which they considered to be trade secrets or commercial or financial information, and section 10(b) prohibited the EPA from disclosing those portions.
The amendments affected data submitters' rights in another way. As under the 1947 Act, applicants still had to submit full descriptions of the tests made and the results thereof upon which their claims were based, if they were requested to do so by EPA. But Congress added the following, to what was now § 3(c)(1)(D):
Federal Environmental Pesticide Control Act of 1972, Pub. L. No. 92-516, § 2, 86 Stat. 980. The 1975 amendments limited this protection, however, to data submitted on or after January 1, 1970 Act of November 28, 1975, Pub. L. No. 94-140, § 12, 89 Stat. 755. If the parties could not agree on the amount and method of payment the EPA could make this determination, with the owner of the data having a right of appeal to a federal district court. But in no event was registration to be delayed pending the determination of reasonable compensation. Id.
One final feature of the amended FIFRA is worth noting. The EPA, realizing that pesticides registered under the 1947 FIFRA had not been subjected to the thorough scientific testing that new products had to undergo, planned to reregister these older pesticides under the stricter standards of the 1972 amendments. This reregistration was to occur by October 21, 1976, four years after the enactment of the 1972 amendments. Federal Environmental Pesticide Control Act of 1972, Pub. L. No. 92-516, § 4(c)(2), 86 Stat. 999. This deadline was extended to October 21, 1977, by the 1975 amendments. Act of Nov. 28, 1975, Pub. L. No. 94-140, § 4(ii), 89 Stat. 752.
Problems soon developed with the registration process. One problem was that many data submitters took advantage of FIFRA's trade secret provisions and marked their data on file with EPA as trade secrets pursuant to § 10(a), thereby relying on §§ 10(b) and 3(c)(1)(D) to preclude EPA's use of that data to support anyone else's application without their permission. These claims of trade secret protection thus operated to limit the amount of data available for the EPA to use in considering applications for registration, and to thwart the compensation provision of § 3(c)(1)(D).
A second problem was that many applications for new pesticides were being denied because they had insufficient data for meeting the stringent standards of the 1972 amendments necessary for a § 3(c)(5) finding of no "unreasonable adverse effects on the environment," while similar products registered under the 1947 Act and awaiting reregistration remained on the market. This created a double standard in registration. The incongruity was particularly irksome to an applicant whose rejected pesticide was identical or substantially similar to one on the market.
The third problem grew out of the burden of separately reregistering the previously registered pesticides. Upon reviewing its files during the mid-1970's, EPA discovered that the data it had were incomplete and unreliable. It realized it could not reregister any registered pesticides until it determined in what respect the data were incomplete. That EPA would have to acquire more data, plus the fact that some 40,000 products had to be reregistered, impressed upon EPA that it would have to adopt a new registration system if it were to execute FIFRA's mandate.
Congress responded to EPA's plight with the 1978 amendments. Federal Pesticide Act of 1978, Pub. L. No. 95-396, 92 Stat 819. A notable feature of the amendments is the extensive changes made to § 3(c)(1)(D). Now, an applicant must file, if requested by EPA, "a full description of the tests made and the results thereof upon which the claims are based, or alternatively, a citation to data that appear in the public literature or that previously had been submitted to the Administrator. . . .", 7 U.S.C.A. § 136a(c)(1)(D).
1. With respect to pesticides containing new active ingredients that are initially registered after September 30, 1978, data submitted to support the application for the original registration of the pesticide (or an application for an amendment adding a new use to the registration) shall not, without the written permission of the original data submitter, be considered by EPA to support an application by another person for a period of 10 years after EPA first registers the product. § 3(c)(1)(D)(i), 7 U.S.C.A. § 136a(c)(1)(D)(i). In other words, those who submit data relative to new chemicals contained in pesticides registered after September 30, 1978, have exclusive use of their data for 10 years after the pesticides are registered.
2. With respect to data submitted after December 31, 1969, and which is not entitled to exclusive use, EPA may, without the permission of the original data submitter, consider any such data in support of another person's application for 15 years following the date the data were originally submitted, but only if the applicant has made an offer to compensate the original data submitter and also submits the offer to EPA, accompanied by evidence of delivery of the offer to the original data submitter. The parties may fix the terms and amounts of compensation by agreement. If they cannot reach an agreement after 90 days, either party may initiate binding arbitration proceedings by asking the Federal Mediation and Conciliation Service to appoint an arbitrator. Federal officials or courts may not review an arbitrator's findings or determinations except for fraud, misrepresentation, or other misconduct. While compensation is being established, registration of the pesticide is not to be delayed. § 3(c)(1)(D)(ii), 7 U.S.C.A. § 136a(c)(1)(D)(ii).
3. After the expiration of any period of exclusive use and any period for which compensation is required for use of the data, EPA may consider the data in support of another person's application without the permission of the original data submitter and without an offer having been received to compensate the origin data submitter. § 3(c)(1)(D)(iii), 7 U.S.C.A. § 136a(c)(1)(D)(iii).
The trade secret provisions of § 10 have also been changed by the 1978 amendments. Section 10(d), 7 U.S.C.A. § 136h(d), authorizes the public disclosure of all information concerning the objectives, methodology, results, or significance of any test performed on or with a pesticide, and of any residue, environmental chemistry, safety, toxicology, metabolism, and fish and wildlife data. The use of any of this data for registration purposes shall be governed by § 3(c)(1)(D).
Information that discloses manufacturing or quality control processes, discloses the details of any methods of testing, detecting, or measuring the quantity of deliberately added inert ingredients, or discloses the identity or percentage quantity of any deliberately added inert ingredients, may not be released unless it is necessary to protect against an unreasonable risk of injury to health or the environment. Likewise, information concerning production, distribution, sale, or inventories is nondisclosable except in connection with a public proceeding to determine whether a pesticide or any ingredient causes unreasonable adverse effects on the environment, if disclosure is necessary in the public interest. Before disclosing any of the data described, however, EPA must notify the data submitter of the proposed disclosure, and § 10 sets out procedures for contesting it.
Furthermore, disclosures to foreign or multinational pesticide producers, without the data submitter's consent, are unauthorized under § 10(g), 7 U.S.C.A. § 136h(g). Penalties for unauthorized disclosures of any kind are provided in § 10(f), 7 U.S.C.A. § 136a(f).
Another public disclosure provision, but which originated in the 1972 reenactment of FIFRA, is found at § 3(c)(2)(A), 7 U.S.C.A. § 136a(c)(2)(A). Section 3(c)(2)(A) states that within 30 days after the EPA registers a pesticide, it shall make available to the public the data contained in the registration statement, plus such other scientific information EPA deems relevant to its decision. EPA may not disclose information protected by § 10.
A final disclosure provision is found at § 10(e), 7 U.S.C.A. § 136h(e), permitting EPA to disclose trade secret data to contractors with the United States and their employees, if EPA believe disclosure is necessary for the satisfactory performance of work in connection with FIFRA. As a condition to disclosure, however, the contractor must provide adequate security measures.
As for the problem of alleviating the administrative burden of registering new pesticides and reregistering old ones, EPA devised an innovative process. Before the 1978 amendments, EPA usually was considering applications one at a time, and conducting full data reviews for each pesticide end-use product. This meant that sometimes it was analyzing data concerning products with the same active ingredients over and over again, resulting in a duplication of effort. This fact, together with the realization that it would have to reregister 40,000 products in the same manner, necessitated streamlining the registration process.
Under EPA's new process, it is changing its focus from the end-use product to the active ingredients of the end-use product. EPA is developing a generic standard for each active ingredient. It will conduct a review of all data pertinent to a particular active ingredient, and publish a standard detailing its findings and summarizing its position relative to the active ingredient. Essentially, each standard sets out the conditions which products containing that active ingredient must meet if they are to be registered. Thus, a full data review having already been performed when each standard was developed, EPA will be able simply to make registration decisions for end-use products based on the standard. EPA estimates that it will take 10 to 15 years to develop standards for all of the active ingredients, however, so it will be some time before all registered pesticides are reregistered.
The 1978 amendments authorize and facilitate this change of philosophy. Section 3(c)(2)(C), 7 U.S.C.A. § 136a(c)(2)(C), provides that EPA shall publish regulations prescribing simplified registration procedures. One of these simplified procedures is described in § 3(c)(2)(D), 7 U.S.C.A. § 136a(c)(2)(D), which exempts applicants who have purchased a registered pesticide from another producer and propose to formulate it into an end-use product, from submitting or citing safety data relevant to the purchased product, or from offering to pay compensation otherwise required by § 3(c)(1)(D) for the use of such data. This is known as the "formulator's exemption."
The 1978 amendments also removed the definite deadline when reregistration is to occur. Cognizant of the reality of the reregistration ordeal awaiting EPA, Congress has said that reregistration now shall occur "in the most expeditious manner practicable." § 3(g), 7 U.S.C.A. § 136a(g).
Finally, EPA sought to resolve the anomalous situation resulting from applicants being denied registrations for their pesticides because their data were insufficient to satisfy the stringent standards of the 1972 amendments, while pesticides registered before the amendments remain on the market. EPA proposes to conditionally register pesticides, upon a showing that allowing each product on the market will not significantly increase the risk of unreasonable adverse effects on the environment already presented by pesticides on the market. In other words, the EPA would not have to make a § 3(c)(5) determination that a pesticide would not cause unreasonable adverse effects on the environment before registering it. Rather, the EPA would only have to be satisfied that allowing the pesticide on the market would not significantly increase the risk of environmental harm already existing. The registrant would have to submit additional data when EPA requested it to fulfill the conditions imposed on his registration, but at least he would be able to sell his product. In this way, the double standard will be averted.
That EPA might require a § 3(c)(7) registrant to submit additional data is to be expected of a registration denominated as being "conditional." Nevertheless, authority for requesting additional data to support registrations -- conditional or not -- is provided by the 1978 amendments in § 3(c)(2)(B), 7 U.S.C.A. § 136a(c)(2)(B), 7 U.S.C.A. § 136a(c)(2)(B). Once additional data are requested, registrants must provide evidence within 90 days that they are securing the data. Two or more registrants may agree to develop the additional data jointly, and if they cannot agree on the terms of a data development arrangement, any registrant may initiate binding arbitration. As with § 3(c)(1)(D), the findings and determination of the arbitrator are not subject to review except for fraud, misrepresentation, or misconduct. By failing to take steps to secure the additional data, cooperate with a joint development arrangement, or abide by an arbitration decision, a registrant may have his registration suspended.
The changes made by the 1978 amendments are reflected in regulations implementing the conditional registration and data compensation provisions of FIFRA, which EPA published as final and interim final rules, respectively, on May 11, 1979, at 44 Fed. Reg. 27,932-53 (published at 40 C.F.R. §§ 162.2(g), 162.7(d)-(e), (g), 162.8, 162.9-1 to 8, 162.18-1 to 5 (1980)). For the purposes of this general discussion, it is necessary only to mention the notable features of the regulations at this time.
Sections 162.9-1 to 8 interpret and implement the compensation provisions of § 3(c)(1)(D). It will be recalled that § 3(c)(1)(D) gives data submitters certain exclusive use or compensatory rights in their data. Section 3(c)(1)(D) also describes how applicants fulfill their responsibility of submitting data to EPA. Applicants must file a statement which includes,
if requested by the Administrator, a full description of the tests made and the results thereof upon which the claims are based, or alternatively a citation to data that appears in the public literature or that previously had been submitted to the Administrator. . . .
7 U.S.C.A. § 136a(c)(1)(D). EPA has interpreted this provision as requiring an applicant, if no generic standard exists, to rely on all data in EPA's files which concern his product or a similar product, even if the applicant has submitted his own data which he himself has generated. See 40 C.F.R. § 162.9-4. EPA thus is foreclosing an applicant from exercising what a cursory reading of § 3(c)(1)(D) suggests is an option either to submit his own data or to cite data in EPA's files.
This is the so-called "cite all" method of supporting an application.
EPA has interpreted § 3(c)(1)(D) in this way because it believes it is consistent with the spirit of FIFRA to require that it have all relevant information in order to determine that a pesticide will not cause unreasonable adverse effects on the environment. EPA says it cannot know if the data which an applicant chooses to give it is sufficient to make this determination.
The regulations also provide that EPA will issue, almost exclusively, nothing but conditional registrations under § 3(c)(7). See id. § 162.7(d)-(e). It will issue unconditional registrations under § 3(c)(5) only when reregistering currently registered pesticides, when acting on applications for registration of products containing new chemicals, or when it determines that it would otherwise serve the public interest. Id. § 162.7(d)(1).
Mobay's complaint contains three counts. In Count I of its First Amended Complaint, Mobay asks us (1) to declare that the provisions of § 3(c)(1)(D), permitting the use of its data for its competitors' benefit, constitute a taking without just compensation and violate the fifth amendment; (2) to declare unconstitutional the provision of § 3(c)(1)(D) which allegedly compels it to submit to binding arbitration the determination of reasonable compensation for use of its data, upon pain of forfeiture of its registration, and which limits its right to judicial review of that determination; (3) to declare that § 3(c)(2)(B) does not compel it to agree to develop, with other registrants, additional data requested by EPA, or to participate in procedures for reaching agreements concerning joint data development, or to submit to binding arbitration to resolve the problem of reaching agreements concerning joint data development; (4) to declare which registrants are exempted by the formulator's exemption, described in § 3(c)(2)(D), from providing safety data or complying with § 3(c)(1)(D); and (5) to declare unconstitutional the public disclosure provisions of §§ 3(c)(2)(A), 10(d), and 10(e), and the prohibition against disclosures to foreign or multinational pesticide producers, set out in § 10(g). Mobay also seeks to enjoin EPA from using its trade secret data for other applicants' applications, and from disclosing its trade secret data, both without its express written permission; from otherwise implementing and enforcing §§ 3(c)(1)(D), 3(c)(2)(A), and 10(d); and from implementing and enforcing § 3(c)(2)(B).
In Count II, Mobay seeks declaratory and injunctive relief from EPA's administration of the pesticide registration procedure. It claims that EPA has violated §§ 3(c)(3) and 3(c)(5) by failing to review data submitted in support of its applications for registrations and granting it unconditional registrations as expeditiously as possible.
Mobay also challenges the conditional registration and data compensation regulations, alleging that they violate FIFRA and are arbitrary, capricious, and unlawful. In particular, it takes exception to (1) the "cite all" method; (2) EPA's conditional-registration-only policy; (3) EPA's interpretation of the formulator's exemption under § 3(c)(2)(D), as expressed in 40 C.F.R. § 162.9-7 (1980); and (4) the amendment of § 162.8, subsection (b) of which previously had set out data requirements for registration with some detail, but which now requests the submission of data sufficient for making an incremental risk assessment. Mobay says that the amendment now offers little guidance concerning the data to be submitted.
In addition, Mobay alleges that the regulations are void because EPA did not comply with the procedural requirements of FIFRA and the Administrative Procedure Act, 5 U.S.C. § 553 (1976).
Finally, in Count II, Mobay seeks declaratory and injunctive relief with regard to EPA's use or consideration of its trade secret data submitted prior to January 1, 1970, unless Mobay gives its express written permission.
In Count III, Mobay seeks a declaratory judgment that as applied to it, § 3(g) deprives it of its property without due process or just compensation, in violation of the fifth amendment. It also seeks a judgment ordering EPA to immediately reregister the 23 pesticides, or else to cancel their registrations.
We divide our discussion into three parts. In Part I, we consider the effect of FIFRA on the trade secret data which Mobay has submitted to EPA. In Part II, we examine the registration process derived from the 1978 FIFRA amendments and defined by the compensation and conditional registration regulations. And in Part III, we consider the matter of reregistration.
Provisions of FIFRA Affecting Mobay's Trade Secret Data
A. EPA's Use of Mobay's Trade Secret Data to Support Other Applicants' Applications Under § 3(c)(1)(D)
Mobay also challenges § 3(c)(1)(D)'s provision for binding arbitration of disputes concerning reasonable compensation owed the original data submitter. It contends that the arbitration scheme violates its liberty of contract and constitutes a taking, in that it denies Mobay the right to a judicial determination of just compensation for the taking of its property.
EPA responds that, even if § 3(c)(1)(D) were found to constitute a taking, any taking would be for the public purpose of fostering competition in the pesticide industry. EPA explains that § 3(c)(1)(D) prevents a data submitter from relying on § 10(b) to impose an indefinite monopoly on his data, a monopoly which would extend well past the 17-year period provided for patents.
As to the issue of just compensation, EPA argues that Mobay may receive just compensation for any taking by filing a suit in the Court of Claims, pursuant to the Tucker Act.
Addressing Mobay's contention that its Tucker Act remedy is unavailable by virtue of the existence of binding arbitration for compensation disputes, and the explicit prohibition against seeking judicial review of an arbitrator's determination, EPA notes that Congress has not withdrawn a Tucker Act remedy, see Regional Rail Reorganization Act Cases, 419 U.S. 102, 126, 42 L. Ed. 2d 320, 95 S. Ct. 335 (1974), and that, in any event, it is the purpose of § 3(c)(1)(D)'s compensation provisions only to provide compensation as between the parties, rather than just compensation from the government.
Mobay's challenges to § 3(c)(1)(D) raised interesting questions involving the taking clause of the fifth amendment
which both parties had briefed thoroughly, and which had been a major issue during the trial. Since the trial was held, however, the Third Circuit Court of Appeals has decided a case also involving a challenge to § 3(c)(1)(D), Chevron Chemical Co. v. Costle, 641 F.2d 104 (3d Cir. 1981), cert. docketed, No. 80-1680.
Chevron Chemical Company (Chevron) alleged that use by the EPA of its pre-1970 data was an uncompensated taking in violation of the fifth amendment. It also contended that use by the EPA of its post-1969 data to support other applicants' applications was a taking for private rather than public purposes, and that the binding arbitration provision deprived it of an opportunity for a judicial determination of just compensation.
The court of appeals did not reach the question whether § 3(c)(1)(D) took Chevron's property, in violation of the fifth amendment, because it determined that Chevron essentially had no property in the first place. The district court in Chevron assumed that Chevron's trade secret data were property, and EPA in this case was willing to assume that Mobay's trade secret data likewise were property. Nevertheless, it is clear that a threshold determination must be made whether the subject matter of an alleged taking is "property" within the meaning of the fifth amendment.
The court of appeals held that a property right arises out of an entitlement created-by some law. Id. at 114, citing Paul v. Davis, 424 U.S. 693, 47 L. Ed. 2d 405, 96 S. Ct. 1155 (1976), Meachum v. Fano, 427 U.S. 215, 49 L. Ed. 2d 451, 96 S. Ct. 2532 (1976), and Montanye v. Haymes, 427 U.S. 236, 49 L. Ed. 2d 466, 96 S. Ct. 2543 (1976). Federal statutory law may protect intellectual property, but it can not preempt state law, which traditionally has protected it.
The court of appeals noted that the 1972 amendment of FIFRA, adding § 3(c)(1)(D), conferred a property right in some data submitted to EPA. But that only provided protection from the date when the 1972 amendments became effective. Before that time, the only other pertinent federal statute was 18 U.S.C. § 1905, which provides criminal penalties for the unauthorized disclosure of trade secret data by federal officers or employees. The court observed, however, that criminal statutes are rarely construed as conferring a private right of action. Id. at 115, citing Chrysler Corp. v. Brown, 441 U.S. 281, 316-17, 60 L. Ed. 2d 208, 99 S. Ct. 1705 (1979). At best, the court believed that 18 U.S.C. § 1905 created a federal law right of non-disclosure; not of non-use by a federal agency. Id.
Finding no federal statute, the court then searched for any state law purporting to confer a state law property interest in data Chevron had voluntarily submitted to a federal agency. Chevron proffered only Restatement of Torts § 757 (1939), which provides civil liability for the nonprivileged disclosure or use of trade secrets.
But the court observed that this provision also dealt with the disclosure of trade secrets to others, rather than use of trade secrets by a government agency.
Id. The court recognized that Chevron undoubtedly had submitted its data to EPA and its predecessors with some expectation of privacy. But it held that 18 U.S.C. § 1905 and agency practice
had defined the scope of that expectation prior to the 1972 FIFRA amendments, and that, since that time, the various versions of § 3(c)(1)(D) had done so. Id.
In any event, the court expressed doubt that a state law defining the degree of confidentiality in which federal agencies must keep information submitted to them in connection with their regulatory responsibilities, if it existed, would survive supremacy clause scrutiny. Id. at 116.
The court of appeals therefore held that Chevron had no property right in its data until the 1972 amendments created § 3(c)(1)(D). And the 1975 amendment of § 3(c)(1)(D), to provide compensation for reliance on data submitted after 1969, subsequently enlarged the property right to extend from January 1, 1970, onward. Nevertheless, despite the fact that Chevron did have a property interest in some of its data, the court of appeals held that "Congress, having conferred a property right to which the chemical companies had no prior claims, may condition that right to accommodate agency practice." Id. at 117 n.29.
Thus, the Chevron case must be read as authorizing EPA's use, without the original data submitter's permission, of data submitted before 1970. It also must be read as authorizing EPA's use of data submitted after 1969, but in conformity with the compensation and exclusive use provisions of § 3(c)(1)(D) which were added by the 1978 amendments. Because we find that Chevron and Mobay's challenges to § 3(c)(1)(D) are identical, we deny Mobay relief in connection with its contention that the use of its trade secret data to support applications by third parties under § 3(c)(1)(D) constitutes a taking in violation of the fifth amendment.
Like Mobay, Chevron had also challenged the binding arbitration scheme provided by § 3(c)(1)(D) for resolving compensation disputes involving the use of post-1969 data. The district court ruled that the language of § 3(c)(1)(D) indicated that that section was intended to provide for the payment of compensation by a private entity, and not just compensation from the government if a taking occurred. 449 F. Supp. at 743. The district court observed that an arbitration scheme between private parties could not be viewed as precluding resort to the Court of Claims. As a result, the district court concluded that Chevron's Tucker Act remedy had not been withdrawn. Id. See Regional Rail Reorganization Act Cases, 419 U.S. 102, 126, 42 L. Ed. 2d 320, 95 S. Ct. 335 (1974).
Since Mobay's challenge to the arbitration scheme is similar to Chevron's, we find that this portion of § 3(c)(1)(D) is valid and Mobay is not entitled to declaratory or injunctive relief.
Mobay further claims that the allegedly compulsory binding arbitration scheme violates its liberty of contract. We disagree. First, arbitration comes into play only when Mobay and an applicant seeking to rely on its data cannot reach an agreement after 90 days on the terms and amount of compensation or on a procedure for reaching such an agreement, and either Mobay or the applicant requests arbitration.
Second, EPA has published rules controlling the arbitration procedure. See 29 C.F.R. § 1440.1 (1980).
Under FIFRA and the regulations, the rules of the Federal Mediation and Conciliation Service apply to the selection of the arbitrator and to the arbitration proceedings. The arbitrators are to be selected from the roster of commercial arbitrators maintained by the American Arbitration Association.
Thus, EPA has supplied the arbitration procedure with detailed rules designed to provide guidance and ensure fairness, and has staffed it with arbitrators who are knowledgeable in commercial matters. Binding arbitration is not the exclusive means for determining reasonable compensation, but is to be used only after other methods have failed to reach an agreement. We find that the FIFRA arbitration scheme does not violate Mobay's liberty of contract.
Accordingly, we deny Mobay's request for declaratory and injunctive relief from § 3(c)(1)(D)'s provision for binding arbitration to settle data compensation disputes.
B. Trade Secret Data Disclosure Provisions Under §§ 3(c)(2)(A) and 10
1. Public Disclosure Under §§ 3(c)(2)(A) and 10(d)
Section 3(c)(2)(A), 7 U.S.C.A. § 136a(c)(2)(A), provides that within 30 days after EPA registers a pesticide, it shall make available to the public the data called for in the registration statement, together with such other scientific information as it deems relevant to its decision. Disclosure is subject to the trade secret provisions of § 10, 7 U.S.C.A. § 136h.
Section 10, as mentioned earlier, permits data submitters to mark portions of their data which they consider to be trade secrets and, until the 1978 amendments, generally prohibited the EPA from disclosing such data to the public. The 1978 amendments qualified this prohibition, however. Now, under § 10(d)(1)-(2), 7 U.S.C.A. § 136h(d)(1)-(2),
(1) All information concerning the objectives, methodology, results, or significance of any test or experiment performed on or with a registered or previously registered pesticide or its separate ingredients, impurities, or degradation products, and any information concerning the effects of such pesticide on any organism or the behavior of such pesticide in the environment, including, but not limited to, data on safety to fish and wildlife, humans and other mammals, plants, animals, and soil, and studies on persistence, translocation and fate in the environment, and metabolism, shall be available for disclosure to the public: Provided, That the use of such data ...