Case No. VFA-0472, 27 DOE ¶ 80,191

March 10, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:City of Federal Way

Date of Filing:February 9, 1999

Case Number: VFA-0472

On February 9, 1999, the City of Federal Way, Washington, completed the filing of an Appeal from a determination issued to it in response to a request for documents submitted under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the Department of Energy (DOE) in 10 C.F.R. Part 1004. The Manager of Real Property Services and the Freedom of Information Act Officer (Authorizing Officials) of the Bonneville Power Administration (BPA) issued the determination on November 9, 1998. This Appeal, if granted, would require that the Authorizing Officials release responsive information that was withheld under FOIA Exemptions 4 and 5, 5 U.S.C. §§ 552(b)(4) and (b)(5).

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). The DOE regulations further provide that the DOE shall nonetheless release to the public a document exempt from disclosure under the FOIA whenever the DOE determines that disclosure is in the public interest. 10 C.F.R. § 1004.1.

I. Background

On June 12, 1998, the City of Federal Way filed a request with the Bonneville Power Administration for copies of any and all leases, licenses or agreements, or any proposed leases, licenses or agreements between Western Wireless and the BPA within the State of Washington and between any telecommunication provider and the BPA within the State of Washington. The Manager of BPA's Real Property Services responded to this FOIA request in a July 29, 1998 letter and released some portions of documents, but withheld information pursuant to Exemption 4 of the FOIA. On September 14, 1998, the City of Federal Way filed an appeal with the Office of Hearings and Appeals of the DOE (OHA). Following an inquiry by the OHA, the BPA requested that the OHA allow it to withdraw its determination so that it could issue a new determination concerning the City of Federal Way's FOIA request. On October 19, 1998, the OHA granted the BPA's request and allowed the BPA to issue a new determination within 20 working days. Finally, on November 9, 1998, the BPA issued a new determination withholding information pursuant to Exemptions 4 and 5 of the FOIA.

II. Analysis

In its Appeal, the City of Federal Way claims that the BPA incorrectly applied Exemptions 4 and 5 to responsive information. The City of Federal Way maintains that the Authorizing Officials did not identify the proposed lease documents the BPA withheld pursuant to Exemption 5, or explain how the exemption applies to the particular records and why discretionary release is not appropriate. The City of Federal Way also contends that improper ex parte communications between the OHA and the BPA staff, and the illegal withdrawal and reissuance of the BPA's determination, have "invalidated" the BPA's entire decision process. For these reasons, the City of Federal Way argues that the OHA must reverse the BPA's determination and disclose the withheld information.

Allegations of Improper Procedure

As an initial matter, we note that the OHA addressed the City of Federal Way's allegations regarding improper ex parte communications between the OHA and the BPA staff, and alleged illegal withdrawal and reissuance of the BPA's determination, in a November 4, 1998 letter from Thomas O. Mann, OHA Deputy Director, to Bob Sterbank, Deputy City Attorney for the City of Federal Way. In this letter, the OHA Deputy Director stated that the OHA's role in FOIA proceedings is not that of an appellate court reviewing the holding of a lower court, but is instead more informal. The OHA's responsibility in these cases is to ensure that FOIA determinations are properly done and are issued fully in accordance with both the letter and the spirit of the FOIA and the applicable DOE regulations. In fulfilling this responsibility, the OHA often performs a non-judicial function such as investigating the adequacy of a DOE Office's search for responsive documents and facilitating communications between a requester and the DOE Office that processed the request.

The City of Federal Way had claimed that the BPA is limited to "one bite at the apple" through the doctrine of "res judicata" and that this doctrine is made applicable to administrative agencies by Drummond v. Commissioner of Social Security, 126 F.3d 837, 840-41 (6th Cir. 1997) (Drummond) and similar cases. The City of Federal Way exaggerates the limitations imposed upon agencies by the doctrine of "res judicata." Agencies are always able and encouraged to correct mistakes. The OHA Deputy Director informed the City of Federal Way that, contrary to its argument, nothing in 10 C.F.R. § 1004.8 of the DOE FOIA regulations prohibits the OHA from allowing the BPA to withdraw its determination and issue a new one. Specifically, the OHA Deputy Director stated that Drummond is inapposite because that case involved a quasi-judicial, trial type administrative hearing, which is not the case here. The City of Federal Way's argument, if carried to its logical conclusion, would prevent an issuing Office from amending or replacing a defective determination letter, even if that letter was so vague as to make it impossible to identify the exemptions or the reasons for the actions taken. Nothing in the FOIA or the DOE regulations requires such a result. Furthermore, the OHA Deputy Director informed the City of Federal Way that the BPA has not waived its ability to rely in the future on any exemptions that it did not cite in the original determination. The federal courts have held that an agency's failure to raise a FOIA exemption at any level of the administrative process does not constitute a waiver of that defense. See, e.g., Young v. CIA, 972 F.2d 536, 538-39 (4th Cir. 1992); Frito-Lay v. EEOC, 964 F.Supp. 236, 239 (W.D. Ky. 1997). Thus, nothing in the DOE regulations or in the applicable case law precludes the withdrawal of a determination letter and the issuance of a new one.

Finally, unlike other areas of OHA jurisdiction (e.g. personnel security and "whistleblower" proceedings, which are quasi-judicial in nature) there are no provisions in the DOE's FOIA regulations prohibiting ex parte contacts. Moreover, our experience confirms that communication with the DOE office issuing the determination often proves critical to our ability to investigate the process underlying that determination and to reach the correct result following an appeal. Accordingly, for all of the reasons stated above, we again find no merit in the City of Federal Way's contention that improper procedures require the OHA to reverse the BPA's determination.

The Documents Withheld Pursuant to 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) (Critical Mass). By contrast, information a submitter provided 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 appropriate cases, Exemption 4 protects the release of the type of information the requester seeks. We have reviewed the redacted information and find that it contains rates and charges negotiated for lease agreements between the BPA and Western Wireless. These negotiated rates and charges are confidential commercial information within the meaning of Exemption 4. The DOE obtained this material from a "person" as Exemption 4 requires, 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). In this case, once the BPA began negotiations with Western Wireless, the firm involuntarily submitted information to the BPA since a requirement of completing the lease agreement was Western Wireless's submission of rates and charges it was willing to pay. See March 2, 1999 Record of Telephone Conversation between Leonard M. Tao, OHA Staff Attorney, and Sonya Baskerville, BPA Attorney. Thus, the information Western Wireless submitted is "confidential" if it meets the test set out in National Parks. We conclude that the charges and rates are confidential because their release would substantially harm the submitter's competitive position. A competitor could use the release of these lease terms to easily determine how to adjust its proposed payments to offer more favorable terms than the submitter in an attempt to obtain another lease agreement with the federal government. Moreover, release of these lease terms would provide a competitor with detailed information revealing the submitter's financial position in its negotiations with the federal government.

The Documents Withheld Pursuant to Exemption 5

As stated above, the City of Federal Way maintains that the Authorizing Officials did not identify the proposed lease documents the BPA withheld pursuant to Exemption 5, or explain how the exemption applies to the particular records and why discretionary release is not appropriate. We have consistently held that the FOIA requires the authorizing official give reasonably informative descriptions of the documents or portions of documents being withheld that are sufficient to allow the requester to understand the determination and if appropriate to formulate a meaningful appeal. See, e.g., Klickitat Energy Partners, 25 DOE ¶ 80,132 (1995); Arnold & Porter, 12 DOE ¶ 80,108 at 80,527 (1984); Exxon Co., USA, 5 DOE ¶ 80,178 at 80,813 (1980); Cities Service Co., 5 DOE ¶ 80,101 at 80,502 (1980). Descriptions are generally adequate if each document is identified by a brief description of the subject matter it discusses and "if available, the date each document was produced [and] its authors and recipients. . . ." Klickitat Energy Partners, 25 DOE ¶ 80,132 (1995); Petroleum Delivery Service, 5 DOE ¶ 80,152 (1980). We have indicated that the "brief description" requirement is generally satisfied if sufficiently informative titles of the withheld documents are provided and that the descriptions need not contain factual information that would compromise the privileged nature of the documents. Klickitat Energy Partners, 25 DOE ¶ 80,132 (1995); P.A. Barnes, 5 DOE ¶ 80,112 at 80,538 (1980); Akin Gump, Hauer & Feld, 3 DOE ¶ 80,155 at 90,765 (1979).

In the determination letter, the Authorizing Officials cited Exemption 5 as the basis for withholding "'any and all' proposed licenses that BPA is planning to execute in the future with 'any telecommunication provider'. . . ." The BPA did not elaborate any further than this statement regarding its application of Exemption 5 to specific documents. We find that applying Exemption 5 to "proposed licenses that BPA is planning to execute" does not provide an adequate description of the documents or portions of documents being withheld sufficient to allow the requester to understand the determination and if appropriate to formulate a meaningful appeal. Accordingly, we must remand this determination to the Authorizing Officials for a more informative description of each proposed license the BPA withheld pursuant to Exemption 5. The BPA must specifically identify each proposed license it withheld in November of 1998 with an informative title.

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 4 requires the continued withholding of negotiated rates and charges between the BPA and Western Wireless. 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. Furthermore, since it is not possible for us to determine at this time which documents the BPA withheld pursuant to Exemption 5, we are not currently able to make a public interest determination concerning those documents.

It Is Therefore Ordered That:

(1) The Appeal the City of Federal Way filed on February 9, 1999, Case No. VFA-0472, 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 Bonneville Power Administration of the Department of Energy for a reasonably informative description of the documents being withheld pursuant to Exemption 5 sufficient to allow the City of Federal Way to understand the BPA's November 9, 1998 determination.

(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 10, 1999