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11 ELR 20762 | Environmental Law Reporter | copyright © 1981 | All rights reserved Pennwalt Corp. v. Environmental Protection AgencyNo. 80-2400 (E.D. Pa. April 10, 1981)The court refuses to enjoin the Environmental Protection Agency (EPA) from using data submitted by plaintiff in evaluating a pesticide registration application submitted by another applicant under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) but does enjoin EPA from disclosing trade secrets submitted by plaintiff in connection with its own application under FIFRA. Despite a stipulation between the parties that provides that plaintiff has a property interest in the data, the court determines, relying on a recent Third Circuit Court of Appeals decision, that data submitters do not have a common-law property interest in material submitted voluntarilv to a federal agency in order to obtain a license to sell products in interstate commerce, that the stipulation does not provide that plaintiff has a property interest in the Agency's nonuse of the data. In granting the motion for a preliminary injunction, the court notes that the data is extremely valuable because of the amount of time and money invested in its generation and that disclosure under § 10 of FIFRA would compromise the data's greatest value — its confidentiality. It finds that plaintiff has demonstrated irreparable injury, reasonable likelihood of success on the merits, and that the potential harm to EPA and the public is outweighed by the potential harm to plaintiff. Counsel for Plaintiff Counsel for Defendants Patrick J. Cafferty Dennis Carluzzo McGlynn, J.: AND NOW, this 10th day of April, 1981, upon consideration of plaintiff Pennwalt Corporation's motion for preliminary injunction, it is hereby ORDERED 1. Plaintiff Pennwalt's motion for preliminary injunction seeking to enjoin defendants, U.S. Environmental Protection Agency and Douglas M. Costle, and their officers, agents, servants, employers and attorneys and those persons in active concert or participation with them from disclosing any trade secret data submitted by Pennwalt, including all safety and efficacy reports, studies and data, relating to chemical products listed in Exhibit "A" hereto without the permission of Pennwalt is GRANTED. 2. Pennwalt's motion for preliminary injunction seeking to enjoin defendants, U.S. Environmental Protection Agency and Douglas M. Costle, and their agents, servants, employees and attorneys, and those in active concert or participation with them from using or considering any trade secret data submitted by Pennwalt to support a pesticide registration application filed by any person other than Pennwalt without Pennwalt's permission is DENIED. This action between plaintiff Pennwalt Corporation (Pennwalt) and defendant Douglas M. Costle, Administrator of the United States Environmental Protection Agency (EPA), arises out of the EPA's intention to use test data submitted by Pennwalt to EPA to support pesticide registration applications of Pennwalt's competitors and to disclose that data to certain members of the public at large. In support of its motion for preliminary injunction, Pennwalt argues that both EPA's disclosure of Pennwalt's data, under § 10 of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. § 135 et seq. superceded by 7 U.S.C. § 136 et seq., and use of Pennwalt's data for the benefit of Pennwalt's competitors, under § 3 of FIFRA, constitutes a "taking" of Pennwalt's property under the Fifth Amendment of the United States Constitution. This taking may be enjoined, Pennwalt argues, because (1) FIFRA, as amended does not authorize EPA's use of pre-1970 data, (2) the taking is for private rather than public purposes, (3) the use and compensation scheme set forth in § 3(c)(1)(D) of FIFRA calling for binding arbitration unconstitutionally precludes a judicial determination of just compensation, and (4) any Tucker Act remedy against the government that might be available to Pennwalt is inadequate under the circumstances. In addition, the statute is said to violate Pennwalt's right to due process in that it acts retroactively to divest Pennwalt of its trade secret property. On May 22, 1980, EPA advised Pennwalt that EPA would disclose safety and efficacy data to a third party, G. M. Zemansky, who requested such data under the Freedom of Information Act. Pennwalt contends that such disclosures must be prohibited because EPA has not promulgated suitable regulations under § 10(g) to insure that the data will not be provided to persons who may disclose it to foreign or multi-national producers, further than the disclosures constitute a violation of the Trade Secrets Act, 18 U.S.C. § 1905, and finally that § 10(d) does not provide adequate notice to the data submitter of disclosure of such information. The Third Circuit recently addressed the § 3 "taking" issue in Chevron Chemical Corp. v. Costle, C.A. No. 80-2037 [11 ELR 20156] (3d Cir. filed February 4, 1981). The Court concluded that data submitters have no common-law property interests in materials submitted voluntarily to a federal agency in order to obtain a license to sell a product in interstate commerce. Id. at 23. Because the Court found no property right which would prevent internal agency use of the data, there was no need to reach any of the constitutional issues relating to the taking of Pennwalt's property. The Court affirmed the denial of Chevron's motion for a preliminary injunction as well as summary judgment for EPA. The Chevron decision is controlling as to Pennwalt's claims under § 3 of FIFRA. Pennwalt has advanced essentially the same arguments as those advocated in Chevron, and the relevant facts are substantially the same. Pennwalt argues that Chevron is distinguishable from the instant case because the parties have entered into a stipulation providing that Pennwalt does have property rights in the data submitted. The stipulation provides in pertinent part: "plaintiff has property rights which are of value to plaintiff in the reports, studies and data described . . . and which may be of value to competing producers." Pennwalt contends that because EPA concedes by stipulation that Pennwalt has property rights of agency non-use in the data, the Court's finding in Chevron that there is no such property right is not applicable here. The stipulation only states that Pennwalt has property rights in the data; it does not state that Pennwalt has the property right of agency non-use. It is consistent with both the analysis in Chevron and the stipulation in the present case to find that Pennwalt does have some property rights, of agency non-disclosure or otherwise, in the submitted data, but does not have the property right of agency non-use in the data. Moreover, the court is not bound to accept, as controlling, stipulations to questions of law. Securities and Exchange Commission v. Albert and Maguire Securities Co., Inc., 560 F.2d 569 (3d Cir. 1977). The Court in Chevron did not have any § 10 claim of agency disclosure before it. It decided only that the plaintiff had no property right of non-use by the agency; it did not reach the question of whether there was a federal or state law property right of non-disclosure by the agency. The Court noted the possibility of both a federal law right of non-disclosure by the agency created through 18 U.S.C. § 1905, and a state law right of non-disclosure under the [11 ELR 20763] RESTATEMENT, TORTS (1939) § 757. Id. at 22-23. For these reasons, I am not persuaded that the Court's analysis in Chevron dictates the outcome of Pennwalt's § 10 claims. EPA and Pennwalt have entered into a stipulation which states that the data Pennwalt has submitted to EPA related to trade secrets. Trade secrets may provide property rights within the meaning of the Fifth Amendment and compelled disclosure of one's property rights may be considered an unconstitutional taking. Wearly v. FTC, 462 F. Supp. 589 (D.N.J. 1978) vacated on other grounds, 616 F.2d 662 (3d Cir. 1980). Citing National Fertilizer Association v. Bradley, 301 U.S. 178 (1977) and Corn Products Refining Co. v. Eddy, 149 U.S. 427 (1919), defendants argue that the disclosure of Pennwalt's data will not amount to a taking because Congress may make available information which educates the public about a pesticide's chemical ingredients. Pennwalt argues that when both public and private parties benefit from a taking, the public benefit must be paramount and the private benefit incidental. Thompson, et al. v. Consolidated Gas Utilities Corporation, et al., 300 U.S. 55 (1937). Pennwalt further argues that in the instant case the predominant benefit from disclosure of the research data will accrue to Pennwalt's private competitors. In deciding this motion, we must be mindful that we are concerned with data that has taken years of research and has cost private corporations millions of dollars to generate. The danger is that a disclosure might compromise the data's greatest value to its owners, i.e., its confidentiality. The competitive advantage that this data provides Pennwalt is of virtually incalculable value. A plaintiff seeking a preliminary injunction to enjoin the disclosure of trade secret material must show that: (1) irreparable injury will result if the relief is not granted to maintain the status quo until final adjudication, and (2) there exists a reasonable like-lihood of success on the merits. Continental Group, Inc. v. Amoco Chemical Group, 614 F.2d 351 (3d Cir. 1980). In addition, the court must weigh the possibility of harm to the opposing party, and when relevant, the harm to the public. Id. Though these considerations structure the inquiry a court must make in deciding whether to grant the preliminary injunction, no one factor will necessarily determine the outcome. Weintraub v. Rural Electrification Administration, 457 F. Supp. 78 (3d Cir. 1978). It is the duty of this court to minimize the amount of harm which will accrue to legally protected rights between the time a motion for preliminary injunction is filed and the time of the final hearing. When the factors of irreparable harm, interest to third parties and public considerations favor the moving party, a preliminary injunction might be appropriate even though plaintiff does not demonstrate as strong a likelihood of ultimate success as would generally be required. Constructors Association of Western Pennsylvania v. Kreps, 573 F.2d 811 (3d Cir. 1978). In the present case, EPA will release Pennwalt's data to Mr. Zemansky unless this Court enjoins public disclosure of the information. Thus, Penwalt faces imminent irreparable injury if EPA is not enjoined from disclosing the information. The magnitude of the loss of Pennwalt from the destruction of the confidentiality of their trade secret data is great and outweighs any potential harm to EPA or the public. Additionally, Pennwalt has shown that there is a reasonable likelihood that they will eventually succeed in this litigation. For the foregoing reasons, a preliminary injunction enjoining defendants from disclosing Pennwalt's trade secret data will be entered
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