Case No. VFA-0430, 27 DOE ¶ 80,157

August 20, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:Baker, Donelson, Bearman & Caldwell

Date of Filing:July 23, 1998

Case Number: VFA-0430

On July 23, 1998, the Washington, D.C., law firm of Baker, Donelson, Bearman & Caldwell (Baker, Donelson) filed an Appeal from a determination issued on June 29, 1998, by the Golden Field Office of the Department of Energy (DOE). That determination denied in part the law firm’s request for information submitted pursuant to 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 the withheld information.

The FOIA requires that agency records held by a covered branch of the Federal Government, and which have not been made public in an authorized manner, generally be released to the public upon request. 5 U.S.C. § 552(a)(3). In addition to this requirement, the FOIA lists nine exemptions that set forth the types of information that may be withheld at the discretion of the agency. 5 U.S.C. § 552(b)(1)-(b)(9); 10 C.F.R. § 1004.10(b)(1)-(b)(9). The DOE regulations further provide that documents exempt from mandatory disclosure will nonetheless be released to the public if the DOE determines that disclosure is not contrary to federal law and is in the public interest. 10 C.F.R. § 1004.1. See also Dykema Gossett, PLLC, 26 DOE ¶ 80,237 at 80,904-05 (1997) (no public interest analysis required in Exemption 4 cases because release of exempt material would violate the Trade Secrets Act, 18 U.S.C. § 1905).

BACKGROUND

On June 9, 1998, Baker, Donelson filed a FOIA request with the Freedom of Information Officer at DOE Headquarters in Washington, D.C. The request sought any document provided to the DOE by the National Renewable Energy Laboratory (NREL), or any contractor, concerning the DOE “Building America” program. The June 9 request also referenced a previous April 28, 1998 FOIA request to DOE Headquarters looking for other documents related to the “Building America” program and contracts issued pursuant to Request for Proposal RAR-4-14061. DOE Headquarters referred the request to the Golden Field Office, the portion of the Department that was determined to have responsive documents. In its June 29, 1998 determination, the Golden Field Office released all responsive information in its files except records concerning a contract between NREL and Steven Winter Associates, Inc. This material was withheld pursuant to Exemption 4, which permits withholding of confidential business and trade secret information. Baker, Donelson appeals this withholding.

ANALYSIS

Exemption 4 permits an agency to withhold from release to a FOIA requester “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). Thus, to qualify for this exemption, withheld material must either be (A) information that constitutes a trade secret or (B) information that is (1) “commercial” or “financial,” (2) “obtained from a person,” and (3) “privileged” or “confidential.” In applying Exemption 4, the withholding office must first determine whether the information either is a trade secret or is commercial or financial information. If the agency determines the material is trade secret information for the purposes of the FOIA, its analysis is complete and the material may be withheld under Exemption 4. Public Citizen Health Research Group v. Food & Drug Admin., 704 F.2d 1280, 1286, 1288 (D.C. Cir. 1983). However, if the agency determines the material is commercial or financial information, there is another threshold determination the agency must make: whether the information was involuntarily or voluntarily submitted. If it was involuntarily submitted, the information may be withheld under Exemption 4 if disclosure is likely either to (A) impair the government’s ability to obtain necessary information in the future or (B) cause substantial harm to the competitive position of the person from whom the government obtained the information. National Parks and Conservation Ass’n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). Conversely, if the information is voluntarily submitted, it may be withheld under Exemption 4 if it is of a kind that the submitter would not customarily make available to the public. Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992). As the descriptions indicate, these three tests are mutually exclusive; for Exemption 4 purposes information is either voluntarily or involuntarily submitted commercial or financial information or it is a trade secret.

In its determination letter, the Golden Field Office offered three justifications for invoking Exemption 4. First, it stated that, “[a]ccording to the submitter, such information would not customarily be disclosed to the public.” Thus, the Determination Letter implied that the relevant information was commercial or financial material that was voluntarily submitted, and that it was withheld on that basis under the Critical Mass standard. However, the Determination Letter then stated that the withheld information “could cause substantial harm to their [the submitter’s] competitive position, in that it could allow competing institutions to determine their trade secrets.” This indicates that the material was trade secret information. Finally, the Determination Letter added that “[d]isclosure could also have a chilling effect on the government’s ability to work with similar institutions in the future.” With this statement, the Determination Letter reverted to a finding that the material was commercial or financial information. However, under this formulation, the Determination Letter applied the National Parks test for involuntarily submitted information as opposed to the Critical Mass standard for voluntarily submitted information that it previously employed.

When the Determination Letter melded together the three, analytically distinct, Exemption 4 tests, it became unclear which test applied, or whether discrete portions of the information individually qualified for the different tests. As a result, the Determination Letter does not satisfy either the FOIA or the DOE regulations implementing the FOIA. Both require a reasonably specific justification for withholding a document. See 5 U.S.C. § 552(a)(6), 10 C.F.R. § 1004.7(b)(1); Digital City Communications, Inc., 26 DOE ¶ 80,149 at 80,657 (1997). This allows both the requester and this Office to determine whether the claimed exemption was accurately applied. Tri-State Drilling, Inc., 26 DOE ¶ 80,202 at 80,816 (1997). It also aids the requester in formulating a meaningful appeal and this Office in reviewing that appeal. Wisconsin Project on Nuclear Arms Control, 22 DOE ¶ 80,109 at 80,517 (1992). The Determination Letter does not conform to these principles because it fails to precisely state or explain the application of Exemption 4. As such, it does not permit either a meaningful appeal or review.

Under these circumstances, the proper course is to remand this matter to the Golden Field Office to issue a new determination. That determination shall either release the withheld information or provide a new justification for withholding. If the Golden Field Office chooses the latter course, it must explain which Exemption 4 test it is applying to the material it withholds, and it must provide more than the simple restatement of the applicable Exemption 4 test. William H. Payne, 26 DOE ¶ 80,221 at 80,861 (1997); Davis Wright & Jones, 19 DOE ¶ 80,104 at 80,510 (1989). Finally, if the Golden Field Office withholds any information, it should segregate and release any non-exempt material. 5 U.S.C. § 552(c); 10 C.F.R. § 1004.10(b); Glen M. Jameson, 26 DOE ¶ 80,236 at 80,902 (1997)

It Is Therefore Ordered That:

(1) The Appeal filed by Baker, Donelson, Bearman & Caldwell of Washington, D.C. on July 23, 1998, OHA Case No. VFA-0430, is hereby granted as specified in Paragraph (2) below, and is denied in all other respects.

(2) This matter is hereby remanded to the Golden Field Office to issue a new determination in accordance with the instructions set forth in the above 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 the provisions of 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: August 20, 1998