Case No. VFA-0517, 27 DOE ¶ 80,225

August 31, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:Myers Bigel Sibley & Sajovec

Date of Filing:August 12, 1999

Case Number: VFA-0517

On August 12, 1999, Myers Bigel Sibley & Sajovec (Appellant) filed an Appeal from a determination issued to it by the Federal Energy Technology Center (FETC) of the Department of Energy (DOE) on July 14, 1999. In that determination, FETC released some documents to the Appellant as the result of a request filed by the Appellant on May 27, 1999, under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004. That determination also withheld several documents pursuant to Exemption 4 of the FOIA. If the present Appeal were granted, the DOE would be ordered to release in its entirety the information that was withheld in the July 14, 1999 determination.

I. Background

In a submission dated May 27, 1999 (and supplemented on June 16, 1999), the Appellant filed a request for information under the FOIA for copies of documents regarding tests conducted in the course of a scientific project. In its July 14, 1999 determination letter (Determination Letter), FETC

released some documents and withheld others, citing Exemption 4 of the Freedom of Information Act. FETC stated as its only justification that the withheld information is “business confidential material.” See Determination Letter.

In its August 12, 1999 Appeal, the Appellant made various arguments as to why the withheld information should be released based on patent law. However, these arguments are premature because FETC has failed to adequately justify its determination that the withheld records are exempt from release under Exemption 4. Nor did FETC state whether any non-exempt material could be segregated for release. Therefore, we are remanding this matter to FETC for a new determination.

II. Analysis

The FOIA generally requires that records held by federal agencies be released to the public upon request. 5 U.S.C. § 552(a)(3). However, the FOIA lists nine exemptions that set forth the types of information that an agency may withhold. 5 U.S.C. § 552(b)(1)-(b)(9); 10 C.F.R. § 1004.10(b)(1)- (b)(9).

The only exemption at issue in the present case is found at 5 U.S.C. § 552(b)(4) (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 be withheld under Exemption 4, a document must contain either (a) trade secrets or (b) 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). If the agency determines the material is a trade secret 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. FDA., 704 F.2d 1280, 1286, 1288 (D.C. Cir. 1983) (Public Citizen). If the material does not constitute a trade secret, a different analysis applies. First, the agency must determine whether the information in question is commercial or financial. It is well settled that any information relating to business or trade meets this criterion. See, e.g. Lepelletier v. FDIC, 977 F. Supp. 456, 459 (D.D.C. 1997) (appeal pending). The Court of Appeals for the Second Circuit has specifically held that the term "commercial," as used in the FOIA, includes anything "pertaining or relating to or dealing with commerce." American Airlines, Inc. v. National Mediation Bd., 588 F.2d 863, 870 (2d Cir. 1978). Next, the agency must determine whether the information is "obtained from a person." Corporations are deemed "persons" for purposes of Exemption 4. See Allnet Communications Servs. v. FCC, 800 F. Supp. 984, 988 (D.D.C. 1992) ("person" under Exemption 4 "refers to a wide range of entities including corporations"), aff'd, No. 92-5351 (D.C. Cir. May 27, 1994); see also Ronson Management Corp., 19 DOE ¶ 80,117 (1989). Then, the agency must determine whether the information is "privileged or confidential." If the information is subject to a valid claim of legal privilege on the part of its submitter, it may properly be withheld under Exemption 4.

In order to determine whether the information is "confidential" the agency must first decide whether the information was involuntarily or voluntarily submitted. If the information was voluntarily submitted, it may be withheld under Exemption 4 if the submitter would not customarily make such information available to the public. If the information was involuntarily submitted, the agency must show that the information is likely to either (i) impair the government's ability to obtain necessary information in the future or (ii) cause substantial harm to the competitive position of the person from whom the information was obtained before withholding it under Exemption 4. Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992) (Critical Mass.), cert. denied, 113 S. Ct. 1579 (1993); National Parks, 498 F.2d 765 at 770. In this case, because the information was submitted as part of a solicitation, it is considered to have been submitted voluntarily. It is therefore considered "confidential" if it meets the test set out in National Parks. Nayar & Company, P.C., 23 DOE ¶ 80,185 at 80,710 (1994).

In addition, once an agency decides to withhold information, both the FOIA and the Department’s regulations require the agency to provide a reasonably specific justification for its withholding. 5 U.S.C. § 552(a)(6), 10 C.F.R. § 1004.7(b)(1); Mead Data Central, Inc. v. Department 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) (Kleppe); 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).

Thus, if an agency withholds material under Exemption 4 because its disclosure is likely to cause substantial competitive harm, it must state the reasons for believing such harm will result. Larson Associates, Inc., 25 DOE ¶ 80,204 (1996); Milton L. Loeb, 23 DOE ¶ 80,124 (1993). In addition, conclusory and generalized allegations of substantial competitive harm are unacceptable and cannot support an agency's decision to withhold requested documents. Lykes Bros. S.S. Co. v. Peña, No. 92-2780, slip op. at 13 (D.D.C. Sept. 2, 1993) (Westlaw, DCT database) (submitters “required to make assertions with some level of detail as to the likelihood and the specific nature of the competitive harm they predict”); Public Citizen, 704 F.2d at 1291; Kleppe, 547 F.2d at 680 ("Conclusory and generalized allegations are indeed unacceptable as a means of sustaining the burden of nondisclosure under the FOIA.").(1) Consequently, we must remand this case so that FETC may give the Appellant a specific explanation as to why Exemption 4 applies to the information at issue in the present case.

We also point out that 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 . . . ." 5 U.S.C. § 552(b) (1982). See EPA v. Mink, 410 U.S. 73, 89, 91 (1973); Mead Data Central, Inc. v. Air Force, 556 F.2d 242, 259-62 (D.C. Cir. 1977), cert. denied, 436 U.S. 927 (1978); Casson, Calligaro & Mutryn, 10 DOE ¶ 80,137 at 80,615 (1983). Segregation and release of non- exempt material is not necessary where it is "inextricably intertwined" with the exempt material so that release of the non-exempt material would "compromise" the withheld material, or where the amount of non-exempt material is small and so interspersed with exempt material that it would pose "an inordinate burden" to segregate. Lead Indus. Ass'n v. OSHA, 610 F.2d 70, 83-86 (2d Cir. 1979). Consequently, FETC should consider whether non-exempt material can be released.

Accordingly, we will remand this case to FETC, which should promptly issue a new determination releasing any non-exempt information to the Appellant. FETC should clearly explain in its determination letter why release of any withheld information would either impair the government's ability to obtain necessary information in the future or cause substantial harm to the competitive position of the information’s submitter. FETC should also state whether any non-exempt information can be segregated and released. For the reasons explained above, the present Appeal will be granted in part.

It Is Therefore Ordered That:

(1) The Freedom of Information Act Appeal filed by Myers Bigel Sibley & Sajovec, Case No. VFA-0517, is hereby granted as specified in Paragraph (2) below and denied in all other respects.

(2) This matter is hereby remanded to the DOE’s Federal Energy Technology Center, which shall 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 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: August 31, 1999

(1)*/ FETC should also be aware that it is bound to follow the requirements contained in 10 C.F.R. § 1004.11.