Case No. VFA-0272, 26 DOE ¶ 80,170

March 25, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: Chemical Weapons Working Group Inc.

Date of Filing: February 25, 1997

Case Number: VFA-0272

On February 25, 1997, Chemical Weapons Working Group Inc. (CWWG) filed an Appeal from a determination the Freedom of Information Act Official of the Federal Energy Technology Center (FOIA Official) of the Department of Energy (DOE) issued to it on January 17, 1997. In that determination, the FOIA Official partially granted a request for information that CWWG filed under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004.

The FOIA requires that a federal agency generally release documents to the public upon request. The FOIA, however, lists nine exemptions that set forth the types of information that a federal agency may withhold at its discretion. 5 U.S.C. § 552(b); 10 C.F.R. § 1004.10(b).

I. Background

In its request for information, CWWG sought all records relating to ELI Eco Logic, a provider of a hazardous waste destruction technology called the Eco Logic Process. In her determination, the FOIA Official released five documents in their entirety, withheld portions of three documents with material redacted pursuant to Exemption 4 of the FOIA, withheld two documents in their entirety pursuant to Exemption 4 of the FOIA, withheld three documents pursuant to Exemption 5 of the FOIA, and withheld another five documents pursuant to both Exemptions 4 and 5 of the FOIA.(1) A representative of the

FOIA Official also explained to Leonard Tao, OHA Staff Attorney, in a March 11, 1997 phone conversation, that the FOIA Official meant to withhold an April 27, 1995 Proposal, Volumes I, II and III, pursuant to Exemption 3 of the FOIA, as authorized by the National Defense Authorization Act of 1997 (NDAA), Pub. L. No. 104-201, § 821, 110 Stat. 2422, 2609 (1997) (NDAA).(2) In its Appeal, CWWG requests that the DOE release all of the redacted information and the withheld documents. Moreover, CWWG requests that the FOIA Official conduct an additional search "in light of the apparently deliberate problems with this search." Finally, CWWG requests that, if the FOIA Official withheld information solely because "it was the information that CWWG was seeking," we take disciplinary action against the FOIA Official.

II. Analysis

As an initial matter, even if we were to find that the FOIA Official withheld information solely because "it was the information that CWWG was seeking," we do not have the authority to take disciplinary action against the FOIA Official. See 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004. Moreover, in our review of this Appeal, we found no reason to believe that the FOIA Official acted improperly.

A. Adequacy of the Search

The FOIA requires that federal agencies generally release documents to the public upon request. Following an appropriate request, the FOIA requires agencies to search their records for responsive documents. We have stated on numerous occasions that a FOIA request deserves a thorough and conscientious search for responsive documents, and we have not hesitated to remand a case where it is evident that the search conducted was in fact inadequate. See, e.g., Hideca Petroleum Corp., 9 DOE ¶ 80,108 (1981); Charles Varon, 6 DOE ¶ 80,118 (1980). In cases such as these, "[t]he issue is not whether any further documents might conceivably exist but rather whether the government's search for responsive documents was adequate." Perry v. Block, 684 F.2d 121, 128 (D.C. Cir. 1982) (emphasis in original).

To determine whether an agency's search was adequate, we must examine its actions under a "standard of reasonableness." McGehee v. CIA, 697 F.2d 1095, 1100-01 (D.C. Cir. 1983), modified in part on rehearing, 711 F.2d 1076 (D.C. Cir. 1983). This standard "does not require absolute exhaustion of the files; instead, it requires a search reasonably calculated to uncover the sought materials." Miller v. Department of State, 779 F.2d 1378, 1384-85 (8th Cir. 1985). Furthermore, the determination of whether a search was reasonable is "dependent upon the circumstances of the case." Founding Church of Scientology v. National Security Agency, 610 F.2d 824, 834 (D.C. Cir. 1979).

In its Appeal, CWWG did not provide any evidence that additional responsive information exists, but cites "deliberate problems" with the original search as a reason for a further search. In our review of the letters between the parties, it became apparent to us that there were no "deliberate problems" with the search as much as a communication problem between representatives of the Federal Energy Technology Center and CWWG. This communication problem involved confusion over what exactly CWWG originally requested. Once the parties clarified CWWG's request, the FOIA Official responded to CWWG's request.

As part of our review, we contacted a representative of the FOIA Official to inquire about the details surrounding her search.(3) The representative of the FOIA Official informed us that she contacted the Associate Director and several other officials of the Office of Project Management, the Director of Environment and Waste Management, the Project Manager for the SAIC contract, the contract specialist dealing with the SAIC contract in the Acquisition and Assistance Division, and the FOIA Officer at the Pittsburgh Energy Technology Center to request that they search their records for responsive information. We find that the FOIA Officer searched the areas that might have reasonably contained responsive information. Since the FOIA Officer conducted a thorough search and verified that no additional responsive documents exist, and since CWWG has not suggested other locations to search, we must deny this portion of the Appeal.

B. Exemption 3

Exemption 3 of the FOIA allows agencies to withhold information if specifically authorized by another federal statute. However, the withholding statute must meet strict statutory guidelines. An agency properly invokes Exemption 3 only where the withholding statute "(A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld." 5 U.S.C. § 552(b)(3); 10 C.F.R. § 1004.10(b)(3). A statute falls within the Exemption's coverage if it satisfies either of its standards. See Long v. IRS, 742 F.2d 1173, 1178 (9th Cir. 1984). The D.C. Circuit has stated that the Exemption 3 analysis under the FOIA is not dependent on the factual content of the documents at issue; instead "the sole issue for decision is the existence of a relevant statute and the inclusion of withheld material within the statute's coverage." Fitzgibbon v. CIA, 911 F.2d 755, 761 (D.C. Cir. 1990) (Fitzgibbon) (quoting Association of Retired Railroad Workers v. U.S. Railroad Retirement Board, 830 F.2d 331, 336 (D.C. Cir. 1987)).

The Supreme Court has established a two-prong standard of review for Exemption 3 cases. See CIA v. Sims, 471 U.S. 159, 167 (1985); Fitzgibbon, 911 F.2d at 761 (applying the Sims test). First, the agency must determine whether the statute in question is a statute of exemption as contemplated by Exemption 3. Id. at 167. Second, the agency must determine whether the withheld material satisfies the criteria of the exemption statute.

The NDAA is a federal statute that contains language specifically prohibiting the FOIA official from releasing protected information. The pertinent part of the NDAA states that "[e]xcept as provided . . . , a proposal in the possession or control of an executive agency may not be made available to any person under section 552 of title 5, United States Code." NDAA at 2609. The statute states, however, that it "does not apply to any proposal that is set forth or incorporated by reference in a contract entered into between the agency and the contractor that submitted the proposal." Id. Since the NDAA allows contracting officials no discretion in withholding certain types of information, we find that it meets the subpart (A) requirement of Exemption 3. Having satisfied the threshold inquiry by classifying the NDAA as a statute of exemption, we must now determine if the information withheld from CWWG satisfies the criteria of the statute.

To satisfy Exemption 3, the Proposal withheld from CWWG must meet the criteria laid out above in the NDAA. We conclude that the DOE properly withheld the Proposal. We reviewed the document and find that it is a "proposal in the possession or control" of the DOE "submitted by a contractor in response to the requirements of a solicitation for a competitive proposal." NDAA at 2609. Furthermore, a representative of the FOIA Official informed us that the final contract between the DOE and the contractor does not set forth or incorporate by reference any part of the Proposal. Thus, the FOIA Official has no discretion to release the Proposal. Accordingly, we find that the FOIA Official properly applied Exemption 3 and the NDAA to the requested Proposal.

C. Exemption 4 and Exemption 5

Exemption 4 exempts from mandatory public disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4); 10 C.F.R. § 1004.10(b)(4). In order to qualify under Exemption 4, a document must contain either (1) trade secrets or (2) information that is "commercial" or "financial," "obtained from a person," and "privileged or confidential." National Parks & Conservation Ass'n. v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (National Parks). In National Parks, the United States Court of Appeals for the District of Columbia Circuit found that commercial or financial information submitted to the federal government involuntarily is "confidential" for purposes of Exemption 4 if disclosure of the information is likely either (1) to impair the government's ability to obtain necessary information in the future or (2) to cause substantial harm to the competitive position of the person from whom the government obtained the information. Id. at 770; Critical Mass Energy Project v. NRC, 975 F.2d 871, 879 (D.C. Cir. 1992), cert. denied, 113 S.Ct. 1579 (1993) (Critical Mass). By contrast, information a submitter provides to an agency voluntarily is "confidential" if "it is of a kind that the provider would not customarily make available to the public." Critical Mass, 975 F.2d at 879. In choosing between these two tests, we have consistently held that a submitter involuntarily submits information in response to a request for proposals. Thus, the information is "confidential" if it meets the test set out in National Parks. See Hanford Education Action League, 23 DOE ¶ 80,143 (1993).

The FOIA Official cited Exemption 4 as a basis for withholding in their entirety a "Cost Plan submitted 11/22/96," and a "Draft Sampling and Analysis Plan prepared by SAIC." In addition, the FOIA Official withheld portions of three other documents with material redacted pursuant to Exemption 4. We reviewed all these documents and find that each of them contains commercial information within the meaning of Exemption 4. Furthermore, the submitter, SAIC, created and provided all these documents to the DOE specifically for the purpose of acquiring a contract. See Industrial Constructors Corporation, 25 DOE ¶ 80,196 (1996) (Industrial); Tri-City Herald, 16 DOE ¶ 80,114 (1987). The DOE also obtained this material from a "person" as required by Exemption 4, since the FOIA considers corporate entities as persons for the purposes of that exemption. See John T. O'Rourke & Associates, 12 DOE ¶ 80,149 (1985). We also conclude that much of the information withheld, cost data and analytical methods and procedures, is confidential because its release would substantially harm the submitter's competitive position. We have stated in the past that release of cost and financial information could be used by a competitor to undercut another firm's bids and thus effectively eliminate the disclosing firm from competition. See Industrial; International Technology Corporation, 22 DOE ¶ 80,107 (1992); U.S. Rentals, 21 DOE ¶ 80,118 (1991). In this case, were the submitter to release, for example, its cost estimates for completing specific tasks and reveal its unique methods and procedures to accomplish these tasks, any competitor could easily determine how to adjust its own costs and approach to arrive at a lower contract price and plan to ultimately beat the submitter's best price and procedures in a future bid process. However, we find that some information in these documents, including cover sheets, background information and headings is releasable. Accordingly, we will require the FOIA Official to either release cover sheets, background information and headings from these documents or provide a detailed explanation for withholding any such information.

Exemption 5 of the FOIA exempts from mandatory disclosure documents that are "inter- agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. § 552(b)(5); 10 C.F.R. § 1004.10(b)(5). The Supreme Court has held that this provision exempts "those documents, and only those documents, normally privileged in the civil discovery context." NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 149 (1975) (Sears) (footnote omitted). The courts have identified three traditional privileges that fall under this definition of exclusion: the attorney-client privilege, the attorney work-product privilege and the executive "deliberative process" or "predecisional" privilege. Coastal States Gas Corp. v. Department of Energy, 617 F.2d 854, 862 (D.C. Cir. 1980) (Coastal States). Only the "deliberative process" privilege is at issue here.

The "deliberative process" privilege of Exemption 5 permits the government to withhold documents that reflect advisory opinions, recommendations, and deliberations comprising part of the process by which government formulates decisions and policies. Sears, 421 U.S. at 150. The ultimate purpose of the exemption is to protect the quality of agency decisions by promoting frank and independent discussion among those responsible for making governmental decisions. Sears, 421 U.S. at 151. See EPA v. Mink, 410 U.S. 73, 87 (1973) (quoting Kaiser Aluminum & Chem. Corp. v. United States, 157 F. Supp. 939, 946 (Ct. Cl. 1958)) (Mink).

In order for Exemption 5 to shield a document, it must be both predecisional, i.e., generated before the adoption of agency policy, and deliberative, i.e., reflecting the give-and-take of the consultative process. Coastal States, 617 F.2d at 866. The exemption thus covers documents that reflect, among other things, the personal opinion of the writer rather than the final policy of the agency. Id. Even then, however, the exemption only covers the subjective, deliberative portion of the document. Mink, 410 U.S. at 87-91. An agency must disclose factual information contained in the protected document unless the factual material is "inextricably intertwined" with the exempt material. Soucie v. David, 448 F.2d 1067, 1077 (D.C. Cir. 1971).

The FOIA Official withheld the following three documents in their entirety pursuant to Exemption 5: (1) Addendum to Selection Statement dated December 12, 1995; (2) Memorandum from W. Huber to T. Martin re: Technical Evaluation of SAIC's EcoLogic #DE-RO21-96MC33091; and (3) NEPA Determination dated April 25, 1996. We reviewed the documents withheld in their entirety pursuant to Exemption 5 and find that they contain information both predecisional and deliberative pursuant to Exemption 5. In fact, we have confirmed that the information withheld pursuant to Exemption 5 contains opinions and interpretations from various DOE employees, the disclosure of which would discourage open, frank discussions between these individuals. Specifically, the Addendum to Selection Statement has a DOE employee's comments and notes to other DOE employees regarding different aspects of the selection process. The Huber Memorandum contains a DOE employee's evaluation of the submitter's proposal to another DOE employee. Likewise, the NEPA Determination is another document intended for internal DOE review regarding the submitter's compliance with the National Environmental Policy Act. All these documents are clearly predecisional and deliberative in their nature and their release could inhibit honest communication and evaluations by DOE employees in the future. However, we find that some information in these documents, including cover sheets and headings, are releasable. Accordingly, we will require the FOIA Official to release cover sheets and headings contained in these documents or provide a detailed explanation for withholding any such information.

The FOIA Official cited Exemption 4 and Exemption 5 as a basis to withhold five documents: (1) a "PC note dated April 8, 1996, from James Marsh to W. Huber"; (2) a "Memorandum dated April 3, 1996 from W. Huber to R. Manilla re: Technical Evaluation of SAIC Contract"; (3) an "April 3, 1996, memorandum from Huber to Manilla re: Discussed cost analysis"; (4) a "Price Negotiation Memorandum dated September 16, 1996"; and (5) a "Response to Revised SOW [Statement of Work] dated July 30, 1996." The April 8, 1996 "PC note" from Marsh to Huber is nearly identical to the "April 3, 1996, memorandum from Huber to Manilla re: Discussed cost analysis." One document is a hard copy of an E-mail note and the other is the paper copy of the same memorandum. These documents describe a DOE employee's views expressed on a Statement of Work regarding EcoLogic. Similarly, the "Memorandum dated April 3, 1996 from W. Huber to R. Manilla re: Technical Evaluation of SAIC Contract" contains a DOE employee's thoughts to another DOE employee regarding the submitter. All these memoranda's contents are clearly predecisional and deliberative in their nature. Thus, the release of this information could inhibit honest communication and evaluations by DOE employees in the future. However, we find that the headings of these memoranda are not information withholdable under Exemption 4 or Exemption 5. Accordingly, we will order the FOIA Official to release the headings of these memoranda.

The "Price Negotiation Memorandum dated September 16, 1996" contains cost and pricing information based on information the submitter provided to the DOE and recommendations regarding price negotiation. This document also contains commercial information within the meaning of Exemption 4 and deliberative predecisional information within the meaning of Exemption 5. The release of the commercial information would substantially harm the submitter's competitive position. Furthermore, the recommendations regarding price negotiation are clearly predecisional and deliberative in their nature and their release could inhibit honest communication and evaluations by DOE employees in the future. However, we find that the first page of the Price Negotiation Memorandum contains some background information that is not withholdable under either Exemption 4 or Exemption 5. Accordingly, we will require the FOIA Official to either release background information on the first page or provide a detailed explanation for withholding.

The "Response to Revised SOW [Statement of Work] dated July 30, 1996" is a document created by the submitter detailing to the DOE its approach and work plan, including staffing and schedule and cost estimates. This document clearly contains commercial information within the meaning of Exemption 4. However, we do not find any information in this document withholdable under Exemption 5. Furthermore, we find that the first four pages of this document contain background information that is not withholdable under Exemption 4. Accordingly, we will require the FOIA Official to release background information on the first four pages of this document or provide a detailed explanation for withholding.

III. The Public Interest in Disclosure

The DOE regulations provide the DOE should release to the public material exempt from mandatory disclosure under the FOIA if the DOE determines that federal law permits disclosure and it is in the public interest. 10 C.F.R. § 1004.1. We have determined that Exemption 3 and the NDAA require the continued withholding of the April 27, 1995 Proposal submitted by SAIC. Although a finding of exemption from mandatory disclosure generally requires our subsequent consideration of the public interest in releasing the information, we are not permitted such consideration where, as in the application of Exemption 3, the applicable statute requires non-disclosure.

In cases involving material determined to be exempt from mandatory disclosure under Exemption 4, we also do not make the usual inquiry into whether release of the material would be in the public interest. Disclosure of confidential information that an agency can withhold pursuant to Exemption 4 would constitute a violation of the Trade Secrets Act, 18 U.S.C. § 1905, and is therefore prohibited. See, e.g., Chicago Power Group, 23 DOE ¶ 80,125 at 80,560 (1993). Accordingly, we may not consider whether the public interest warrants discretionary release of the information properly withheld under Exemption 4.

Notwithstanding our finding that the FOIA Official properly applied Exemption 5 to the requested information, we must consider whether the public interest nevertheless demands disclosure pursuant to 10 C.F.R. § 1004.1. In applying this regulation, we note that the Department of Justice has reviewed its administration of the FOIA and adopted a "foreseeable harm" standard for defending FOIA exemptions. Memorandum from the Attorney General to Heads of Departments and Agencies, Subject: The Freedom of Information Act (October 4, 1993) (Reno Memorandum). The Reno Memorandum indicates that whether or not there is a legally correct application of an exemption, it is the policy of the Department of Justice to defend the assertion of a FOIA exemption only in those cases where the agency articulates a reasonably foreseeable harm to an interest protected by that exemption. See Reno Memorandum at 1, 2. In the present case, the requested information consists of the opinions of individuals regarding different aspects of the bid proposal process involving the submitter. The release of this information would in our opinion have a chilling effect on the willingness of employees and managers to make candid statements of opinion in these types of bid processes. Employees and managers would be less likely to communicate their opinions during such bid processes if they knew or suspected that an agency would release their opinions to the public. Consequently, we find that this harm satisfies the reasonably foreseeable harm standard articulated by the Attorney General and that the release of the requested documents would not be in the public interest.

It Is Therefore Ordered That:

(1) The Appeal filed by Chemical Weapons Working Group, Inc. on February 25, 1997, Case No. VFA-0272, is hereby granted as set forth in paragraph (2) below, and is denied in all other respects.

(2) This matter is hereby remanded to the Freedom of Information Act Official of the Federal Energy Technology Center (FETC) of the Department of Energy who will release cover sheets, background information and headings from any material withheld under Exemption 4 in the FETC's January 17, 1997 determination letter to Chemical Weapons Working Group, Inc. or provide a detailed explanation for withholding any such information after taking into account the submitter's views regarding the impact of possible release. Furthermore, we will require the FOIA Official to release cover sheets and headings withheld under Exemption 5 in the FETC's January 17, 1997 determination letter to Chemical Weapons Working Group, Inc. or provide a detailed explanation for withholding any such information. We will also require the FOIA Official to release the headings in the following documents: (1) "PC note dated April 8, 1996, from James Marsh to W. Huber"; (2) "Memorandum dated April 3, 1996 from W. Huber to R. Manilla re: Technical Evaluation of SAIC Contract"; (3) "April 3, 1996, memorandum from Huber to Manilla re: Discussed cost analysis"; (4) "Price Negotiation Memorandum dated September 16, 1996"; and (5) "Response to Revised SOW dated July 30, 1996." We will require the FOIA Official to either release background information on the first page of the "Price Negotiation Memorandum dated September 16, 1996" or provide a detailed explanation for withholding. Finally, we will require the FOIA Official to either release background information on the first four pages of the "Response to Revised SOW dated July 30, 1996" or provide a detailed explanation for withholding.

(3) This is a final Order of the Department of Energy of which any aggrieved party may seek judicial review pursuant to the provisions of 5 U.S.C. § 552(a)(4)(B). Judicial review may be sought either in the district where the requester resides or has a principal place of business or in which the agency records are situated or in the District of Columbia.

George B. Breznay

Director

Office of Hearings and Appeals

Date: March 25, 1997

(1) In the determination letter, the FOIA Official described one of the documents as follows:

Transmittal letter from SAIC [Science Applications International Corporation] transmitting "proposal" to Thomas Martin, DOE, re:SAIC contract dated July 30, 1996. Enclosed proposed work plan withheld in its entirety under exemption 4 referenced above.

A representative of the FOIA Official informed us that the "[e]nclosed proposed work plan" is actually the same document as the document called the "Response to Revised SOW [Statement of Work] dated July 30, 1996, work plan references EcoLogic process" withheld in its entirety under both Exemption 4 and Exemption 5. See March 11, 1997 Memorandum of Telephone Conversation between Leonard M. Tao, OHA Staff Attorney, and Debra Murphy, Federal Energy Technology Center. We have included this document in the category of documents withheld under both Exemption 4 and Exemption 5. Also, the representative of the FOIA Official informed us that the FOIA Official released "SITE Superfund Innovative Technology Evaluation, Technology Profiles" in its entirety.

(2) In her determination letter, the FOIA Official cited only the NDAA and failed to cite explicitly Exemption 3 in withholding the April 27, 1995 Proposal.

(3) 3/ See memoranda of telephone conversations between Leonard Tao, Office of Hearings and Appeals Staff Attorney, and Debra Murphy, Federal Technology Center (Case No. VFA-0272).