Greenpeace USA, Case No. VFA-0311, September 11, 1997

Case No. VFA-0311, 26 DOE ¶ 80,219

September 11, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: Greenpeace USA

Date of Filing: July 25, 1997

Case Number: VFA-0311

On July 25, 1997, Sherry Lee Meddick (Meddick) of Greenpeace USA filed an Appeal from a determination issued on June 2, 1997 by the Department of Energy's Idaho Operations Office (DOE/ID). The determination concerned a request submitted by Meddick under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004. In her Appeal, Meddick requests that the Office of Hearings and Appeals (OHA) order the release of the information withheld by DOE/ID.

The FOIA requires that documents held by federal agencies generally be released to the public upon request. The FOIA, however, lists nine exemptions that set forth the types of information which may be withheld at the discretion of an agency. 5 U.S.C. § 552(b); 10 C.F.A. § 1004.10(b). DOE regulations further provide that a document exempt from mandatory disclosure under the FOIA shall nonetheless be released to the public, whenever the DOE determines that disclosure is in the public interest. 10 C.F.R. § 1004.1.

I. Background

Meddick, an Energy and Radioactive Waste Campaigner for Greenpeace USA, sought information from DOE/ID in a March 26, 1997 FOIA request. She wrote that DOE literature stated that "[t]he National Low Level Waste Management Program (NLLWMP) at the Idaho National Engineering Laboratory (INEL) assists the U.S. Department of Energy in fulfilling its responsibilities under the Low-Level Radioactive Waste Policy Amendments Act of 1986 by providing technical assistance to states and compact regions as they develop new commercial low-level radioactive waste management systems." Letter from Meddick to Carl Robertson, FOIA Officer, DOE/ID (March 26, 1997) [hereinafter Request Letter]. In an effort to understand the type of assistance that INEL provides to DOE, Meddick requested that DOE/ID provide her with copies of:

"[a]ll contracts, grants and agreements for such assistance from the DOE and DOE/ID contractors to :

The State of California and any of its agencies or departments

The California Department of Health Services

The Southwestern Low Level Radioactive Waste Compact and the Compact

Commission

4. Any and all contractors for any of the entities listed above in (1-3)

5. Any other entities, organizations or groups not specifically listed above

Such contracts, grants, agreements by DOE may include any of the entities listed in (1-5) above or may be for work directly performed by DOE or their contractors or subcontractors."

Request Letter at 1-2.

Lockheed Martin Idaho Technologies Company (LMITCO), INEL's management contractor, performed an extensive search of its files, and forwarded responsive documents along with recommended redactions to DOE/ID. DOE/ID made further redactions. On June 2, 1997, DOE/ID sent Meddick the documents it determined to be responsive, a file index listing document folders by name and the LMITCO employees maintaining the documents, and a 25-page list describing each redaction made and exemption applied to the documents. DOE/ID withheld some material under FOIA Exemption 3 as exempt under the National Defense Authorization Act, under Exemption 4 as confidential commercial information, and under Exemption 6 as personal information the disclosure of which would invade personal privacy.(1) Letter from Carl Robertson, FOI Officer, DOE/ID to Meddick (June 2, 1997).

On July 25, 1997, Meddick filed the present Appeal requesting the release of withheld documents, removal of redactions, and explanations of seeming inconsistencies in disclosures.(2) She also included a list of 12 specific types of information desired (e.g., contract requisitions, supporting documentation, cost information, proposals, organization charts, guidelines, correspondence) and requested information on media assistance workshops conducted in California. Letter from Meddick to DOE/ID (July 25, 1997) [hereinafter Appeal]. This Appeal, if granted, would require DOE/ID to release the withheld material to Meddick.

II. Analysis

A. Exemption 3

Exemption 3 of the FOIA allows agencies to withhold information if specifically authorized by another federal statute. 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 these standards. See Long v. IRS, 742 F.2d 1173, 1178 (9th Cir. 1984). 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 v. CIA, 911 F.2d 755, 761 (D.C. Cir. 1990) (applying the Sims test). First, the agency must determine whether the statute in question is a statute of exemption as contemplated by Exemption 3. Sims at 167. Second, the agency must determine whether the withheld material satisfies the criteria of the exemption statute.

According to DOE/ID, the withheld documents were proposals submitted in response to a competitive solicitation, and thus exempt under the National Defense Authorization Act for Fiscal Year 1997 (NDAA), Pub. L. No. 104-201, § 821, 110 Stat. 2609 (1996) (to be codified at 41 U.S.C. § 253b(m)). We have previously determined that the NDAA is a statute of exemption as contemplated by Exemption 3. Chemical Weapons Working Group, Inc., 26 DOE ¶ 80,170 (1997) (Chemical Weapons). The NDAA(3) 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(4) 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." 110 Stat. 2609. The NDAA also declares 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.

To satisfy Exemption 3, the documents withheld from Meddick must meet the criteria laid out above in the NDAA. The FOI Officer informed us that the final contracts between the DOE and the various contractors do not set forth or incorporate by reference any part of the proposals submitted in response to the solicitations. Letter from FOI Officer, DOE/ID to Valerie Vance Adeyeye, Staff Attorney, OHA (August 1, 1997). We reviewed the material withheld from Meddick and found that most were proposals submitted in response to a competitive solicitation. Thus, for those proposals that meet the requirements of the statute, i.e., proposals that were submitted in response to a competitive solicitation, the FOI Officer has no discretion to release this material.

However, the FOI Officer also asserted that "[p]roposal information, whether solicited or unsolicited, sole-source or otherwise appears to be witholdable under the statute." Letter from FOI Officer, DOE/ID to Valerie Vance Adeyeye, Staff Attorney, OHA (August 1, 1997). He was joined in this opinion by the LMITCO FOI Officer, who declared that "proposal information, whether solicited or unsolicited, is withholdable under the statute." Letter from LMITCO FOI Officer to DOE/ID FOI Officer (August 7, 1997). We do not agree that the NDAA provides a blanket exemption for all proposal information. Rather, the NDAA exempts only material that was "submitted by a contractor in response to the requirements of a solicitation for a competitive proposal." 110 Stat. 2609; 41 U.S.C. § 253b(m)(3) (emphasis added). In our review, we discovered one document in File Index Number 9 referring to Unsolicited Proposal #P8509011. We find that unsolicited proposals are not covered by the NDAA. In addition, Meddick argues that many of the documents were "sole sourced at the request of the California Department of Health Services." Appeal at 4, 6. Although she has not provided us any evidence that this is true, there may be such documents and we find that the FOIA may apply to that material. According to the FOI Officer, there were no responsive sole source documents. Nonetheless, in view of the previous statements of the FOI Officers that they believe that sole source proposal information is exempt from disclosure under Exemption 3, we find that a new search should be made, keeping in mind that the NDAA exempts only proposals submitted in response to a competitive solicitation. Accordingly, we shall remand this matter to DOE/ID for the release of the non-exempt portions of all relevant unsolicited or non-competitive proposals, or issuance of a justification for further withholding under any other applicable FOIA exemption.

B. Exemption 4

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). 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).

DOE/ID cited Exemption 4 as a basis for withholding details regarding contract cost estimating. We reviewed unredacted copies of the withheld documents and found that they contain commercial information within the meaning of Exemption 4. Furthermore, the submitters 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 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 labor 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 method to arrive at a lower contract price and gain unfair advantage in a future bid process. See Chemical Weapons, 26 DOE ¶ 80,170 (1997).

However, we believe that some information in these documents is not exempt. For example, File Index 7c contains a chart entitled "Independent Cost Estimate " that was withheld under Exemption 4. LMITCO recommended redacting only detailed cost breakouts for labor prior to release to Meddick. We agree that this material should be withheld. DOE/ID, however, withheld the entire chart, which also included, inter alia, travel costs and rental car prices. (In our review of the unredacted Exemption 4 material, we found that DOE/ID consistently withheld entire documents despite LMITCO's recommendation of partial redactions.) We are not convinced that release of this material would cause substantial harm to the contractors' competitive position, or impair DOE's ability to obtain such data in the future. Rental car charges, airfares, and postage are not "unique methods and procedures" that the submitters use to accomplish their tasks, nor do the contractors control these prices. If this material is non-exempt and "reasonably segregable," the FOIA requires its release. See Tri-State Drilling, Inc., 26 DOE ¶ 80,202 (1997); Dr. A. Victorian, 25 DOE ¶ 80,166 (1994). However, we remind DOE/ID that segregation and release of non-exempt material are not necessary when it is inextricably intertwined with exempt material, such that release of the non- exempt material would compromise the confidentiality of the withheld material. Id. Accordingly, we shall remand this matter to DOE/ID for review of the redacted and withheld material under the standards set forth above.

C. The Public Interest in Disclosure

The DOE regulations direct the DOE to release to the public material exempt from mandatory disclosure under the FOIA if the DOE determines that federal law permits disclosure and disclosure 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 various contractor proposals. 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.

It Is Therefore Ordered That:

(1) The Appeal filed by Greenpeace on July 25, 1997, Case No. VFA-0311, 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 Officer of the DOE/ID who will promptly issue a new determination in accordance with the guidance set forth in the above Decision.

(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: September 11, 1997

(1)Meddick does not appeal the redactions made under Exemption 6. Appeal at 8.

(2)LMITCO indicated that some information was released in error. Letter from Dale Claflin, FOIA Officer, LMITCO, to FOI Officer, DOE/ID (August 7, 1997). DOE/ID is currently reviewing alleged inconsistencies in its disclosure of contractor fees, and will respond to the requester directly. In response to allegations of illegible copies and missing materials, DOE/ID will send Meddick the missing material and the best available copies of the illegible documents. Letter from FOI Officer, DOE/ID, to Valerie Vance Adeyeye, OHA Staff Attorney (August 1, 1997).

(3)Meddick contends that the NDAA only applies to defense acquisitions. We reject this interpretation. In fact, the introduction to the law declares that it authorizes appropriations for the fiscal year 1997 defense activities of the Department of Energy. 110 Stat. 2422. The statute itself contains subsections pertaining to both civilian and armed forces acquisitions. NDAA at 110 Stat. 2609.

(4)The NDAA defines a proposal as "any proposal, including a technical, management, or cost proposal, submitted by a contractor in response to the requirements of a solicitation for a competitive proposal." 110 Stat. 2609; 41 U.S.C. § 253b(m)(3) (emphasis added).