Case No. VFA-0349, 26 DOE ¶ 80,237

December 11, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: Dykema Gossett, PLLC

Date of Filing: November 12, 1997

Case Number: VFA-0349

On November 12, 1997, the law firm of Dykema Gossett (Appellant) filed an Appeal from a final determination issued on October 20, 1997, by the Department of Energy’s (DOE) Oak Ridge Operations Office (Oak Ridge). In that determination, Oak Ridge withheld a document entitled “Part III Prime Item Development Specification” (Part III). The Appellant had requested a copy of Part III under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004. This Appeal, if granted, would require the DOE to release Part III.

I. BACKGROUND

On September 9, 1997, the Appellant submitted an extensive request to Oak Ridge for information relating to the Superconducting Super Collider Laboratory (SSCL). Among the items sought by the Appellant was DOE Contract No. SSC-91B-01701 between University Research Associates (URA) and General Dynamics Space Systems Division (GDSSD). On October 20, 1997, Oak Ridge issued a partial determination in response to this request releasing most of the requested contract to the Appellant. However, Oak Ridge withheld several portions of the contract under FOIA Exemption 4, including a document entitled “Part III Prime Item Development Specification” (Part III), which was withheld in its entirety. On November 12, 1997, the Appellant filed the present Appeal, contending that Oak Ridge’s determination fails to explain how release of the information contained in Part III could reasonably be expected to result in substantial competitive harm. Appeal at 2.

II. ANALYSIS

While the FOIA generally requires that information held by government agencies be released to the public upon request, Congress has provided nine exemptions to the FOIA which set forth the types of information agencies are not required to release. Only Exemption 4 is at issue in the present case.

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). It is well settled that information required to be submitted in order to obtain a DOE contract is considered to be submitted on a non-voluntary basis for Exemption 4 purposes. See, e.g., Milton L. Loeb, 23 DOE ¶ 80,124 (1993). Since the information contained in Part III was submitted to the DOE specifically for the purpose of acquiring a contract, it was clearly submitted involuntarily. See Industrial Constructors Corporation, 25 DOE ¶ 80,196 (1996). Since the information contained in Part III was submitted involuntarily, it is "confidential" if it meets the test set out in National Parks. See Hanford Education Action League, 23 DOE ¶ 80,143 (1993).

Both the FOIA and the DOE regulations implementing it require reasonably specific justifications for the withholding of documents or portions of documents. Mead Data Central, Inc. v. United States Dep't of the Air Force, 566 F.2d 242 (D.C. Cir. 1977); National Parks & Conservation Ass'n v. Kleppe, 547 F.2d 673 (D.C. Cir. 1976); Data Technology Industries, 4 DOE ¶ 80,118 (1979). Conclusory and generalized claims by agency officials that material is exempt from disclosure are not acceptable. Thus, an agency determination that material should be withheld under Exemption 4 because its disclosure is likely to cause substantial competitive harm must include the reasons for believing that such harm will result to the competitive position of the person from whom the information is obtained. Federal Information Tools, 3 DOE ¶ 80,163 at 80,807 (1979). An adequate explanation would, for example, indicate the type of competitive injury which would result from disclosure, and the manner in which the information, if disclosed, could be utilized by a competitor to damage the firm's market position. Exxon Co., U.S.A., 8 DOE ¶ 80,162 at 80,794-95 (1981).

Oak Ridge’s Determination Letter does not meet these standards. The Determination Letter does not contain a sufficient explanation of why Oak Ridge determined that release of Part III would cause competitive harm to the information’s submitters. In order to facilitate our review, we obtained a copy of Part III from Oak Ridge. After reviewing this document, it still was not readily apparent to us that release of the information contained in Part III could reasonably be expected to cause substantial harm to the competitive position of its submitters. Consequently, we will remand this matter to Oak Ridge so that it can issue another, more detailed determination letter regarding Part III. On remand, Oak Ridge should fully explain why releasing any information it is withholding in Part III could reasonably be expected to cause competitive harm to that information’s submitters.

We note that it appears that two important steps in applying Exemption 4 were omitted in Oak Ridge’s determination to withhold Part III. Oak Ridge should have solicited the comments of the submitters in accordance with 10 C.F.R. § 1004.11. Instead, Oak Ridge apparently relied on comments submitted in response to a somewhat similar FOIA request filed by the Appellant in 1995. Our review of those comments indicates that they are not on point. On remand, Oak Ridge should offer the submitters an opportunity, pursuant to 10 C.F.R. § 1004.11, to submit comments on the releaseablity of Part III.

Moreover, our review suggests that much of the information contained in Part III could be released without causing harm to the submitters’ competitive position. The FOIA requires that "[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection." 5 U.S.C. § 552(b). Accordingly, Oak Ridge should also review the withheld material under the standard set forth in 5 U.S.C. § 552(b).

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. However, in cases involving material determined to be exempt from mandatory disclosure under Exemption 4, we 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 Freedom of Information Act Appeal filed by Dykema Gossett, PLLC on November 12, 1997 (Case Number VFA-0349) is hereby granted as set forth in Paragraph (2) and denied in all other aspects.

(2) This case is hereby remanded to the Oak Ridge Operations Office for further processing in accordance with the instructions set forth above.

(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 situated, or in the District of Columbia.

George B. Breznay

Director

Office of Hearings and Appeals

Date: December 11, 1997