International Trade Commission, Investigations Relating to Potential Breaches of Administrative Protective Orders, Sanctions Imposed for Actual Violations

The discussion below illustrates APO breach investigations that the Commission has completed including a description of actions taken in response to breaches. The discussion covers breach investigations completed during 1994 with respect to antidumping and countervailing duty cases. Also discussed are the Commission's investigations completed during 1994 of possible violations of Commission rule 207.3, commonly known as the ``one day rule.'' In the interest of providing as much information to practitioners as possible on APO practice, this notice also discusses breach investigations completed during 1994 with respect to investigations under section 337 of the Tariff Act of 1930. The Commission periodically reports a summary of its actions in response to violations of Commission APOs in an effort to educate those obtaining access to business proprietary information (BPI) under an APO of the common problems encountered in handling BPI and confidential business information (CBI). This is the fifth notice of its kind, the previous ones having been published at 56 FR 4846 (Feb. 6, 1991), 57 FR 12335 (Apr. 9, 1992), 58 FR 21991 (Apr. 26, 1993), and 59 FR 16834 (Apr. 8, 1994). The Commission intends to publish summaries at least annually, and more frequently as appropriate. As part of the effort to educate practitioners about APO practice, the Commission's Secretary issued in September 1991 An Introduction to Administrative Protective Order Practice in Antidumping and Countervailing Duty Investigations. This document is available upon request from the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436, telephone 202-205- 2000.

I. Title VII Administrative Protective Orders

A. In General

APOs are issued in Commission investigations under Title VII of the Tariff Act of 1930 to provide access to BPI to certain party representatives under conditions designed to protect the confidentiality of such information. The

Commission is required to disclose under APO to the authorized representatives of interested parties who are parties to an investigation BPI collected by the Commission in the course of such investigations. 19 U.S.C. 1677f. The Commission has implemented procedures governing this disclosure, which is accomplished under an APO issued by the Secretary to the Commission. 19 CFR 207.7. An important provision of the Commission's rules relating to APOs is the ``one day rule'' that provides parties with an extra day in which to file the public version of certain submissions containing BPI. 19 CFR 207.3. The one day rule, which also permits correction of the bracketing of BPI during that extra day, was intended to reduce the incidence of APO breaches caused by inadequate bracketing and improper placement of BPI. The Commission urges parties to make use of the rule. The Commission Secretary provides BPI only to ``authorized applicants'' who agree to be bound by the terms and conditions of an APO. The Commission is currently revising its standard APO forms for antidumping and countervailing duty investigations to reflect recent regulatory changes and Commission practice. The Commission has also created a new APO form for use in section 201 investigations. The standard APO form for antidumping and countervailing duty investigations issued by the Commission in 1994 required the applicant to swear that he or she would: (1) Not divulge any of the BPI obtained under the APO and not otherwise available to him, to any person other than (i) Personnel of the Commission concerned with the investigation, (ii) The person or agency from whom the BPI was obtained, (iii) A person whose application for disclosure of BPI under the APO has been granted by the Secretary, and (iv) Other persons, such as paralegals and clerical staff, who (a) are employed or supervised by and under the direction and control of the authorized applicant or another authorized applicant in the same firm whose application has been granted; (b) have a need thereof in connection with the investigation; (c) are not involved in competitive decision-making for an interested party which is a party to the investigation; and (d) have submitted to the Secretary a signed Acknowledgment for Clerical Personnel in the form attached hereto (the authorized applicant shall also sign such acknowledgment and will be deemed responsible for such persons' compliance with the APO); (2) Use such BPI solely for the purposes of the above-captioned Commission investigation or for judicial or binational panel review of such Commission investigation; (3) Not consult with any person not described in paragraph (1) concerning BPI disclosed under the APO without first having received the written consent of the Secretary and the party or the attorney of the party from whom such BPI was obtained; (4) Whenever materials (e.g., documents, computer disks, etc.) containing such BPI are not being used, store such material in a locked file cabinet, vault, safe, or other suitable container (N.B.: storage of BPI on so-called hard disk computer media is to be avoided, because mere erasure of data from such media may not irrecoverably destroy the BPI and may result in violation of paragraph C of the APO); (5) Serve all materials containing BPI disclosed under the APO as directed by the Secretary and pursuant to section 207.7(f) of the Commission's rules; (6) Transmit each document containing BPI disclosed under the APO: (i) with a cover sheet identifying the document as containing BPI, (ii) with all BPI enclosed in brackets and each page warning that the document contains BPI, (iii) if the document is to be filed by a deadline, with each page marked ``Bracketing of BPI not final for one business day after date of filing,'' and (iv) if by mail, within two envelopes, the inner one sealed and marked ``Business Proprietary Information--To be opened only by [name of recipient]'', and the outer one sealed and not marked as containing BPI; (7) Comply with the provisions of the APO and section 207.7 of the Commission's rules; (8) Make true and accurate representations in the authorized applicant's application and promptly notify the Secretary of any changes that occur after the submission of the application and that affect the representations made in the application (e.g., change in personnel assigned to the investigation); (9) Report promptly and confirm in writing to the Secretary any possible breach of the APO; and (10) Acknowledge that breach of the APO may subject the authorized applicant and other persons to such sanctions as the Commission deems appropriate, including the administrative sanctions set out in the APO. The APO further provides that breach of the protective order may subject an applicant to: (1) Disbarment from practice in any capacity before the Commission along with such person's partners, associates, employer, and employees, for up to seven years following publication of a determination that the order has been breached; (2) Referral to the United States Attorney; (3) In the case of an attorney, accountant, or other professional, referral to the ethics panel of the appropriate professional association; and (4) Such other administrative sanctions as the Commission determines to be appropriate, including public release of or striking from the record any information or briefs submitted by, or on behalf of, the offender or the party represented by the offender, and denial of further access to business proprietary information in the current or any future investigations before the Commission. In addition, as noted in its December 28, 1994 Notice of Final Rulemaking (59 FR 66719, 66720-21), the Commission may take actions other than sanctions, such as the issuance of letters of warning. Commission employees are not signatories to the Commission's APOs and do not obtain access to BPI through the APO procedure. Consequently, they are not subject to the APOs' requirements with respect to the handling of BPI. However, Commission employees are subject to strict statutory and regulatory constraints concerning BPI, and face potentially severe penalties for noncompliance. See 18 U.S.C. 1905; Title 5, U.S. Code; and Commission personnel policies implementing the statutes. Although the Privacy Act (5 U.S.C. 552a) limits the Commission's authority to disclose any personnel action against agency employees, this should not lead the public to conclude that no such actions have been taken; during 1994, such action was taken.

B. Investigations of Alleged APO Breaches

In an antidumping or countervailing duty investigation, the investigation of an alleged APO breach generally proceeds as follows. The Secretary, acting under delegated authority, issues to the alleged breacher a letter of inquiry to ascertain the alleged breacher's views on whether a breach has occurred. If, based on the response made to such a letter of inquiry, the Commission determines that a breach has occurred,

the Commission often issues a second letter asking the breacher to address the questions of mitigating circumstances and possible sanctions or other actions. The Commission then determines what action to take in response to the breach. However, in some cases, the Commission has determined that although a breach has occurred sanctions are not warranted, and therefore has found it unnecessary to issue a second letter concerning what sanctions might be appropriate, and has waived the rule requiring issuance of the second letter. The Commission's December 28, 1994 Notice of Final Rulemaking formally codifies this procedure. See 59 FR 66719, 66721. The Commission retains sole authority to make final determinations regarding the existence of a breach and the appropriate action to be taken if a breach has occurred. The records of Commission investigations of alleged APO breaches in antidumping and countervailing duty cases are not publicly available and are exempt from disclosure under the Freedom of Information Act, 5 U.S.C. 552. Section 135(b) of the Customs and Trade Act of 1990, 19 U.S.C. 1677f(g). The breach most frequently investigated by the Commission involves the APO's prohibition on the dissemination of BPI to unauthorized persons. Such dissemination usually occurs as the result of failure to delete BPI from public versions of documents filed with the Commission or of transmission of proprietary versions of documents to unauthorized recipients. Other breaches have involved: the failure to properly bracket BPI in proprietary documents filed with the Commission; the failure to immediately report known violations of an APO; and the failure to adequately supervise non-legal personnel in the handling of BPI in certain circumstances. Sanctions for APO violations serve two basic interests: (a) Preserving the confidence of submitters of BPI in the Commission as a reliable protector of BPI, and (b) disciplining breachers and deterring future violations. As the Conference Report to the Omnibus Trade and Competitiveness Act of 1988 observed, ``the effective enforcement of limited disclosure under administrative protective order depends in part on the extent to which private parties have confidence that there are effective sanctions against violation.'' H.R. Conf. Rep. No. 576, 100th Cong., 1st Sess. 623 (1988). The Commission has worked to develop consistent jurisprudence, not only in determining whether a breach has occurred, but also in selecting an appropriate response. In determining the appropriate response, the Commission generally considers mitigating factors such as whether the breach was unintentional, lack of prior breaches committed by the breaching party, the corrective measures taken by the breaching party, the promptness with which the breaching party reported the violation to the Commission, and any relevant circumstances peculiar to the situation. The Commission also considers aggravating circumstances, especially whether persons not under the APO actually read the BPI. The Commission notes that Commission rules permit economists or consultants to obtain access to BPI under the APO under the direction and control of an attorney under the APO, or upon their own responsibility, if the economist or consultant appears regularly before the Commission and represents an interested party who is a party to the investigation. See 19 C.F.R. 207.7(a)(3) (B) and (C). The Commission cautions that economists or consultants who obtain access to BPI under the APO under the direction and control of an attorney nonetheless remain individually responsible for complying with the APO. In appropriate circumstances, for example, an economist under the direction and control of an attorney may be held responsible for a breach of the APO by failing to redact APO information from a document that is subsequently filed with the Commission and served as a public document. This is so even though the attorney exercising direction or control over the economist or consultant may also be held responsible for the breach of the APO.

C. Specific Investigations in Which Breaches Were Found

The following case studies are presented to educate users about the types of APO breaches found by the Commission and the sanctions imposed and other actions taken by the Commission. In addition, the case studies discuss the factors considered by the Commission as mitigating the sanctions imposed in particular instances. The Commission has not included some of the specific facts in the descriptions of investigations where disclosure could reveal the identity of a particular breacher. Thus, in some cases, apparent inconsistencies in the facts set forth in this notice result from the Commission's inability to disclose particular facts more fully. The following discussion covers the 8 instances in which breaches of APOs in antidumping and countervailing duty investigations were found in 1994: Case 1: An attorney (1) failed to redact BPI in the public version of a brief, and (2) subsequently served that version on persons not subject to the APO. The public version of the brief filed with the Commission was placed in the public file and was signed out and reviewed by a person not subject to the APO. The failure to redact the BPI from the brief was not discovered by the attorney but was found by the Secretary to the Commission. After being notified, counsel retrieved copies of the document containing the confidential information and sent replacement pages to the Commission. The Commission found that the attorney had breached the APO, but that mitigating circumstances existed because the attorney had committed no prior breaches and the breaches were unintentional. The attorney was given a private letter of reprimand. Case 2: An attorney failed to redact BPI in the public version of a brief. The Commission was informed of the incident the next day and the attorney filed corrected pages of the brief with the Commission. The public version of the brief was immediately removed from the Commission files. No one other than the Commission staff had seen the public version. The defective public version of the brief was only sent to the attorneys subject to the APO and was recovered without being disseminated to anyone not subject to the protective order. The Commission found that the attorney had breached the APO, but did not sanction the attorney because of the following mitigating circumstances: the breach was not intentional; the attorney had committed no prior breaches; when notified of the defective brief the attorney promptly retrieved the defective documents so no BPI was actually released to any unauthorized persons; and the firm immediately revised and strengthened its previously established procedures for safeguarding against the unintentional release of BPI. Two colleagues were found not to have breached, because they were not directly involved in the preparation of the public version of the brief. The breaching attorney received a warning letter. Case 3: An attorney filed with the Commission and served upon parties a copy of the public version of a brief in which certain bracketed BPI was not deleted and other BPI was neither bracketed nor deleted. The public version of the brief filed with the Commission was placed in the public file and was signed out and reviewed by persons not subject to the APO. The failure to redact the BPI from the brief was brought to the attorney's attention

by the Secretary of the Commission. The Commission found that a breach of the APO had occurred, but that mitigating circumstances existed because the breaches were unintentional, the attorney had not previously been charged by the Commission with an APO violation, and the attorney acted promptly to mitigate the breach when notified by the Commission that the breach had occurred. However, aggravating circumstances included the fact that members of the public actually reviewed the improperly redacted documents on several occasions, the breach was not discovered by the attorney or by the attorney's firm, but by the Commission, and the attorney appeared not to have reviewed the work of a paralegal who created the public version of the brief. With respect to this last item, we note that the Commission has no specific requirement that attorneys review the work of paralegals, but attorneys are held responsible for APO breaches by their staff who are APO signatories. The attorney was given a private letter of reprimand. Case 4: An attorney served the public version of a brief on persons on the public service list and filed it with the Commission. However, BPI was contained in an appendix to the brief. The public version of the brief was not placed in the Commission's public files and the copies of the brief that were served on attorneys on the public service list were destroyed before dissemination to the attorneys' clients. The Commission found that a breach had occurred, but mitigating circumstances were found in that the attorney had committed no prior APO violation, the attorney took immediate steps to ``cure'' the breach by seeking the removal of the brief from the Commission's public file before it could be reviewed by members of the public (although the brief had not yet been placed in the public file), and the attorney notified other counsel participating in the investigations of the problem before they released the information to their clients. The breaching attorney was not sanctioned but received a warning letter. Case 5: An attorney filed the public version of a brief in which bracketed BPI was not redacted. The brief was filed with the Commission and served on persons on the public service list, several of whom were not signatories to the APO. The attorney learned of the error that same day and immediately retrieved all copies of the defective public version of the brief from the parties on whom it had been served. The brief was retrieved before it was viewed by any non-signatories to the APO. The brief was never placed in the Commission's public file. The Commission found that the attorney had breached the APO, but decided not to sanction the attorney because of mitigating circumstances including that the breach was inadvertent, the attorney had never been sanctioned by the Commission in the past for APO breaches, immediate steps were taken to mitigate any harm arising from the breach, and no non-APO signatories viewed the confidential information. The breaching attorney received a warning letter. Three colleagues were found not to have breached the APO because they did not participate in the preparation of the public version of the brief. Case 6: A paralegal assigned to remove bracketed BPI from the public version of a brief failed to do so, and the brief was submitted to the Commission, and served on a signatory to the APO. The error was discovered and reported to the Commission before the brief was placed in the public file. The Commission found that two attorneys responsible for supervising the paralegal breached the APO, but that there were mitigating circumstances including the facts the breach was inadvertent, none of the persons involved had been previously sanctioned by the Commission for APO breaches, steps were taken to mitigate any harm arising from the breach, and no BPI was disclosed. The attorneys were not sanctioned, but received warning letters. Two colleagues were found not to have breached the APO because they were not directly involved with the production of the document in question. Case 7: Two attorneys served the business proprietary version of a brief on a non-APO signatory due to an error in the certificate of service. Two non-APO signatories actually viewed the defective brief before the attorneys could retrieve it. In a related incident, three attorneys also disclosed information in the public version of a brief from which BPI could be derived, but retrieved it before service was complete. That brief also was filed with the Commission's Secretary, but had not yet been placed in the public file when the attorneys reported the incident. The Commission found breaches in both incidents, but determined not to sanction the attorneys. Mitigating circumstances included the facts that the breaches were unintentional, none of the attorneys involved had been previously sanctioned by the Commission for an APO breach, the attorneys promptly reported both breaches to the Commission and took immediate action to mitigate the breaches, and no non-APO signatories viewed the brief in the second incident. The attorneys received warning letters. Case 8: Two attorneys mistakenly served replacement pages containing BPI for the confidential version of a brief on an attorney at another law firm. Neither the law firm to which the APO material was sent, nor any of its attorneys, was included in the APO service list. The attorneys waited several days to inform the Commission of the breach. The Commission found that a breach had occurred, but that mitigating circumstances included the following: the breach was unintentional; the attorneys had no prior APO sanctions; prompt and effective measures were taken to minimize any harm resulting from the breach; and the firm conducted more training of its personnel and instituted new procedures to guard against future breaches. Aggravating circumstances included the fact that non-APO signatories of the law firm that received the misdirected copies viewed the information. The breaching attorneys received private letters of reprimand.

D. Investigations Involving the ``One Day Rule''

During 1994, the Commission completed the following investigations of changes to briefs that were not in compliance with the one day rule. The Commission found no violations in these investigations. The reasons for finding no violation include: (1) Attorneys representing two parties in the same investigation made and submitted substantive corrections to their briefs along with bracketing corrections. The attorneys were found not to be in violation because a representative of the Commission had suggested that the corrections be made and there was a misunderstanding as to the appropriate means to make such changes; and (2) An attorney submitted bracketing changes to a brief in one letter and correction of a typographical error in the brief in a separate letter. The Commission determined that because the correction was filed separately, and not along with the bracketing changes, there was no violation of the one day rule.

E. Investigations in Which No Breach Was Found

During 1994, the Commission completed 4 additional investigations in which no breach was found. The reasons for a finding of no breach included: (1) The information allegedly mishandled was not BPI;

(2) Partially redacted BPI was largely illegible; and (3) The information allegedly mishandled by the alleged breacher consisted entirely of information pertaining to the alleged breacher's own client.

II. Section 337 Administrative Protective Orders

APOs are issued in section 337 investigations pursuant to the statute and the Commission's rules. 19 U.S.C. Sec. 1337(n); 19 CFR 210.37. APO practice in section 337 investigations differs in important respects from APO practice in title VII investigations. Notably, in the section 337 context, it is the presiding Administrative Law Judge rather than the Secretary who issues the APO. The terms of the APO may differ from case to case. Further, the one day rule does not apply. In a section 337 investigation that is no longer before the administrative law judge but is before the Commission, the investigation of an alleged APO breach generally proceeds in the following manner. The Secretary issues a letter of inquiry to ascertain the alleged breacher's views on whether a breach has occurred. If, based on the response made to such a letter of inquiry, the Commission determines that a breach has occurred, the Commission issues a second letter asking the breacher to address the questions of mitigating circumstances and possible sanctions or other actions. The Commission then determines what action to take in response to the breach. The Commission retains sole authority to make final determinations regarding the existence of a breach and the appropriate action to be taken if a breach has occurred. In section 337 investigations that are before the presiding Administrative Law Judge, it is the judge who presides over the inquiry into any alleged APO breaches. Breaches have involved the unauthorized dissemination of CBI; the use of CBI for purposes other than the section 337 investigation; and the failure to return or destroy CBI in a timely manner. The following is a summary of the one case in which a breach of the APO in a section 337 investigation was found in 1994: Case 9: An attorney failed to destroy CBI in a timely manner after the termination of the investigation and after the determination was no longer appealable. The Commission determined that the attorney had breached the APO after written and oral requests by the supplier for return of the information were denied. Mitigating circumstances included the facts that this was the first APO breach by the attorney, and that while the attorney failed to return or destroy the CBI, no CBI was disclosed. The attorney received a private letter of reprimand.

Issued: May 2, 1995.

By order of the Commission. Donna R. Koehnke, Secretary. [FR Doc. 95-11492 Filed 5-9-95; 8:45 am] BILLING CODE 7020-02-P