Case No. VFA-0326, 26 DOE ¶ 80,221

SEPTEMBER 19, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: William H. Payne

Date of Filing: August 21, 1997

Case Number: VFA-0326

On August 21, 1997, the Office of Hearings and Appeals (OHA) received an Appeal filed by William H. Payne from a determination that the Department of Energy's (DOE) Albuquerque Operations Office (Albuquerque) issued to him. Albuquerque issued this determination in response to a request for information that Mr. Payne submitted in accordance with the provisions of the Freedom of Information Act (FOIA), 5 U.S.C § 552, as implemented by the DOE in 10 C.F.R. Part 1004. The Appeal, if granted, would require Albuquerque to release certain legal invoices to Mr. Payne in unredacted form.

The FOIA generally requires that documents held by the federal government be released to the public upon request. However, Congress has provided nine exemptions to the FOIA which set forth the types of information agencies are not required to release. Under the DOE's regulations, a document which is exempted from disclosure under the FOIA shall nonetheless be released to the public unless the DOE determines that disclosure is not contrary to federal law and is in the public interest. 10 C.F.R. § 1004.1.

I. Background

On October 16, 1996, Mr. Payne submitted a FOIA request for: (I) invoices submitted by private law firms to Sandia National Laboratories (Sandia), a DOE contractor, for the defense of a sexual harassment lawsuit involving Sandia employees, (ii) investigative reports concerning the plaintiff's allegations of sexual harassment in the Sandia litigation, and (iii) records indicating whether a former DOE official had been accused of sexual harassment or was the subject of a "security clearance action."

In its response to Mr. Payne's request, Albuquerque provided the names of two law firms that Sandia had retained to defend the

harassment litigation and provided the dollar amounts paid to these firms. The actual invoices were withheld in their entirety under Exemption 5 of the FOIA. Albuquerque further stated that any investigative reports concerning the harassment allegations made in the litigation were the property of Sandia and were not agency records. Finally, based on Exemptions 6 and 7© of the FOIA, Albuquerque refused to confirm or deny the existence of records that would indicate whether a former DOE official had been accused of sexual harassment or had been the subject of a "security clearance action."

Mr. Payne appealed Albuquerque's determination to this Office on January 22, 1997. In his submission, Mr. Payne argued that the legal invoices are not subject to Exemption 5 because they are not internal governmental records. He also contested Albuquerque's findings with regard to investigative reports concerning the alleged harassment and records pertaining to whether the former DOE official had been accused of sexual harassment or had been the subject of a "security clearance action."

In a Decision and Order issued on February 20, 1997, William H. Payne, 26 DOE ¶ 80,161 (1997), the OHA rejected Mr. Payne's contentions and upheld Albuquerque's determination except for that Office's finding that the legal invoices are exempt from mandatory disclosure in their entirety pursuant to Exemption 5. We found that although the invoices consist largely of information that is privileged under the attorney work product component of Exemption 5 and therefore shielded from mandatory disclosure, such as the descriptions of the legal services provided, the monthly and daily totals of hours billed by each attorney and the dates on which their services were provided, they also contain non-privileged information, such as the attorneys' identities, their hourly rates, the total fees charged for the litigation, and the costs of expenses such as photocopying, reporting services and mileage, that cannot be withheld under Exemption 5. Accordingly, we remanded this matter to Albuquerque with instructions to segregate non- exempt material from the invoices and release that material to Mr. Payne.

In response to our Decision, Albuquerque issued a new determination to Mr. Payne on July 18, 1997. In this determination, Albuquerque released portions of the invoices indicating the names of the law firms retained by Sandia, the dates of the invoices, the dates that they were received by Sandia, the name of the person whose suit the firms were defending, and the names of the individual attorneys of record in the case. However, citing Exemption 4 of the FOIA, Albuquerque withheld the name of an attorney who worked on the case but whose participation is not a matter of public record, the attorneys' hourly rates and the costs of expenses such as photocopying, reporting services and mileage. Exemption 4 protects from mandatory disclosure "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential." 5 U.S.C. § 552(b)(4). In support of its determination, Albuquerque stated that release of the information would likely cause financial harm to the legal firms involved by revealing their pricing strategy and the attorneys' thought processes and theories in defending cases of this nature. That Office also stated that information of this type is generally closely guarded by the firms, and that disclosure would impair the competitive position and ability of the legal firms to provide low- cost, quality legal services to government contractors.

On August 21, 1997, Mr. Payne filed the current Appeal. In this submission, he again argues that Exemption 5 does not apply to the invoices because they are not inter-agency or intra-agency memorandums. Mr. Payne also contests the Albuquerque Office's application of Exemption 4 in this case.

II. Analysis

A. Exemption 5

Exemption 5 protects from mandatory disclosure "inter-agency or intra-agency memorandums or letters which would not be available by law to a party ... in litigation with the agency." 5 U.S.C. § 552(b)(5). In the February 20, 1997 Decision issued to Mr. Payne, we addressed and rejected his contention that Exemption 5 does not apply to the invoices. We stated that when documents have been created outside of an agency but pursuant to agency initiative, courts have held that such documents are intra-agency documents. See Soucie v. David, 448 F.2d 1067, 1078 n.44 (D.C. Cir. 1971). See also Joyce E. Economus, 23 DOE ¶ 80,182 (1994); Tri-City Herald, 18 DOE ¶ 80,115 (1989); Rio Grande Sun, 15 DOE ¶ 80,132 (1987) (Exemption 5 applies to invoices prepared by law firm representing DOE contractor). Mr. Payne has not presented any arguments that convince us that our previous holding in this regard is incorrect. We therefore conclude that Albuquerque properly applied Exemption 5 in withholding portions of the invoices.

B. Exemption 4

Exemption 4 permits an agency to withhold from 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 be exempt from mandatory disclosure under Exemption 4, a document supplied to the DOE on a non-voluntary basis must meet the following criteria: the document must contain either (A) "trade secrets" or (B) information which is (1) "commercial or financial," (2) "obtained from a person," and (3) "privileged or confidential." National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (National Parks). Cf. Critical Mass Energy Project v. Nuclear Regulatory Commission, 975 F.2d 871, 879 (D.C. Cir. 1992) (information voluntarily provided to the Government is confidential under Exemption 4 if it is the kind of information that the provider would not customarily make available to the public).

We have previously stated that a determination by the DOE that information is exempt from disclosure pursuant to Exemption 4 must include a reasonably specific explanation of how the withheld material meets the foregoing tests. Davis, Wright & Jones, 19 DOE ¶ 80,104 (1989) (Davis); Arnold & Porter, 12 DOE ¶ 80,108 (1984). Such an explanation should indicate the type of competitive injury which would result from disclosure or the manner in which the information, if disclosed, could be utilized by a competitor to damage the firm's market position. Davis.

Applying these criteria to the determination under review, we do not believe that Albuquerque has adequately explained its reasons for withholding the attorney's name, the hourly rates, and the copying, reporting service and mileage expenses under Exemption 4. Although the determination generally concludes that release of this information would impair the firms' competitive positions, Albuquerque has not indicated what competitive harm would result from the release of each of these three categories of information, or how this information might be used by the law firms' competitors. For example, it is unclear from Albuquerque's determination how release of the expense information would compromise the firms' competitive positions, or how release of the attorney's name might be used by the firms' competitors.

We will therefore remand this matter to Albuquerque. On remand, Albuquerque should, if necessary, confer with the law firms and then issue a new determination in which it either releases the attorney's name, the hourly rates and the expense information to Mr. Payne, or describes the specific competitive harms that will result from the release of each of these categories of information.

It Is Therefore Ordered That:

(1) The Appeal filed by William H. Payne on August 21, 1997 is hereby granted as set forth in paragraph (2) below, and is in all other respects denied.

(2) This matter is hereby remanded to the Albuquerque Operations Office for further proceedings in accordance with the directions set forth in this Decision and Order.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: September 19,1997