The Privacy Act of 1974: An Assessment. APPENDIX 4 TO The Report of The Privacy Protection Study Commission.. The Third-Party Source Issue


In both 1975 and 1976, many agencies reported that third parties had become less willing than before to divulge information about individuals to government agents conducting employment and security investigations and to panels reviewing applications for research grants. Yet it is not clear that the problem is a serious one or that the Act is its chief cause. The agencies' 1975 annual reports only covered the period from September 27 through December 31 (i.e., the three months immediately after the Act took effect), and while a year later OMB reported that 14 agencies (including Justice, Treasury, Defense, State, DHEW, the Civil Service Commission, and the Veterans Administration) were still finding third parties less willing to provide information than they were before the Act took effect, it saw little evidence that agencies were unable to obtain "sufficient, relevant information to achieve their purposes."13 Furthermore, the Civil Service Commission appeared to be solving its problem by reducing the amount of marginal utility information it gathers in employment and security investigations.

The reported reluctance of third-party sources has taken many forms, and many explanations for it have been offered. The State Department reported that Foreign Service Officers had become reluctant to provide adverse information on their co-workers, but attributed the change to a "prevailing . . . reluctance" to disclose personal information and to "suspicion of government institutions."14 The Securities and Exchange Commission (SEC), on the other hand, expressed concern about the effect of the Privacy Act Statement. Reciting a long list of "routine uses" made sources "confused, tense and/or bored," the SEC said, and often curtailed their cooperation.15 NASA has claimed that third parties are less willing than before to say anything that could result in an unpleasant confrontation,16 and the Civil Service Commission has noted a decline in responses to written inquiries but not to the questions put in direct interviews. 17

Seven agencies remarked on the reluctance of record-keeping organizations to disclose information. The Department of Defense (DOD), for example, reported that many corporations would not disclose information about an individual without his written authorization.18 The Canal Zone Government19 and the Energy Research and Development Administration (ERDA)20 noted a decline in the willingness of educational institutions to disclose information about teachers and students (the latter no doubt attributable more to the Family Educational Rights and Privacy Act of 1974 than to the Privacy Act).21 The Social Security Administration noticed that some physicians and medical institutions had become less willing to provide information on applicants and recipients of benefits,22 and the Secret Service reported some difficulty in getting information from State and local law enforcement agencies, as well as from other Federal agencies.23

The Act's treatment of confidentiality pledges has been the one common thread linking the agencies' observations and complaints about its alleged effect on third-party sources. Subsections 3(k)(2) and 3(k)(5) of the Act allow an agency to exempt a system of records from the individual access requirement if the system is

. . . investigatory material compiled for law enforcement purposes, other than material within the scope of subsection Ú)(2) . . .. Provided, however, that if any individual is denied any right, privilege, or benefit that he would otherwise be entitled [to] by Federal law, or for which he would otherwise be eligible, as a result of the maintenance of such material, such material shall be provided to such individual, except to the extent that the disclosure of such material would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence, or, prior to the effective date of this section, under an implied promise that the identity of the source would be held in confidence; [5 U.S.C. 552a(k)(2)] [or]

. . . investigatory material compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal civilian employment, military service, Federal contracts, or access to classified information, but only to the extent that the disclosure of such material would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence, or, prior to the effective date of this section, under an implied promise that the identity of the source would be held in confidence. [5 U.S.C 552a(k)(5)] (emphasis added)

The OMB Guidelines, like the Senate-House floor statement on the Act, firmly assert that the two italicized clauses must not be used to "deprive an individual from knowing of the existence of any information maintained in a record about him which was received from a confidential source."24 The Guidelines also state that pledging confidentiality to sources of information on applicants must be limited to "the most compelling circumstances" and that agency

regulations and any implementing procedures will not provide that all information collected on individuals being considered for any particular category of positions will automatically be collected under a guarantee that the identity of the source will not be revealed to the subject of the record.25

The rationale for the agencies' objections to these requirements has varied. The Department of Defense, for example, claimed that its personnel, criminal, and counter-intelligence investigations in foreign countries had been jeopardized because host governments-necessary sources for DOD overseas investigators who often have no jurisdiction off the base or postdemand that the information they give, as well as their identities, be kept secret.26

The National Foundation on the Arts and Humanities reports that it has taken a subsection 3(k)(5) exemption for its files on grant applicants and claims that most third parties it asks to evaluate applicants' proposals request a pledge of confidentiality.27 The National Science Foundation (NSF) also claims that "a large percentage of references" continue to ask for confidentiality, and reports that there is a direct correlation between the rating given and the frequency with which confidentiality is requested-the lower the rating, the higher the frequency.28 The National Institutes of Health (NIH), whose current practice is to reveal the reviewer's identity (since it does not believe it can legitimately qualify for a 3(k)(5) exemption), believes that its own procedures for amending, appealing, and resubmitting a grant application are adequate without resort to Privacy Act procedures, which it too claims are making it difficult to find reviewers of grant applications.29

NIH and NSF have both attempted to develop data to support their arguments. In late 1975, NIH surveyed l,354 members of its initial grant review groups and advisory councils, asking them whether it would be beneficial to let grant applicants see the reviewers' critiques of their proposals, provided, of course, that the individual reviewers were not identified. Of the l,250 who responded, 53 percent favored allowing applicants see them, 41 percent were opposed, and 6 percent thought such a practice would have no effect, one way or the other. When asked whether the identity of the individual reviewers should also be revealed, however, 93 percent were opposed, five percent were in favor, and two percent thought the matter of no consequence.30 The NSF findings, however, were less clearcut. NSF has sections on its reference report forms in which sources can indicate if they want their identity kept confidential. In 1975, 40 percent requested confidentiality, 40 percent indicated no preference, and 20 percent made no choice whatsoever.31

The agencies have also reacted to the source disclosure issue in a variety of ways. Some, like NASA, no longer give a written pledge of confidentiality to employment references and to supervisors filling out merit-promotion appraisals, and even allow an individual access to any such record made about him prior to passage of the Privacy Act, regardless of whether the source was supposedly a confidential one.32 DHEW has interpreted the Act as not allowing pledges of confidentiality to reviewers of grant applications (hence, the NIH practice of disclosing reviewer identities), while the Treasury Department's Bureau of Alcohol, Tobacco, and Firearms allows an investigative source to be promised confidentiality without first asking for it if the Bureau agent seeking information determines that harm or embarrassment might otherwise result, or if the source is not being responsive.33 Some agencies have filed confidential references and merit-promotion appraisals by job rather than by the individual's name,34 thereby avoiding the Act's individual access requirement altogether, whereas others have attempted to solve the source disclosure problem procedurally.

At the Commission's October 1976 staff workshop on employment and personnel record keeping in the Federal government, DHEW participants stated that in spite of their efforts to keep sources in personnel investigations confidential, former supervisors were reluctant to provide information because they did not believe their identity could be adequately protected if the substance of their comments were released. Department of Transportation participants, however, said that they had solved that problem by asking their sources to indicate which items would identify them and then deleting the marked sections if, and when, the individual asks to see the record. Veterans Administration participants said that the VA gives supervisors the right not to have their names released but makes clear on its recommendation forms that the employee does have the right to see what is said. The General Services Administration (GSA) participants took an even stronger position, stating their belief that there is almost nothing in a personnel file that the individual should not see, and that GSA does not withhold the identity of anyone making a performance appraisal. The Civil Service Commission reported that it has developed a new file format for its investigations system (CSC/GOVT-4) that lists sources at the back of the file so that they can be easily separated from the information in the body of it.