Case No. VFA-0540, 27 DOE ¶ 80,248

December 20, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: TIC Holdings, Inc.

Date of Filing: November 19, 1999

Case Number: VFA-0540

On November 19, 1999, TIC Holdings, Inc. (TIC) filed an Appeal from a final determination that the Strategic Petroleum Reserve Management Office (SPR) of the Department of Energy (DOE) issued on October 19, 1999. In its determination, SPR informed TIC that records responsive to its request for information submitted under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004 were not agency records but instead belonged to DynMcDermott Petroleum Operations Company (DynMcDermott), the management and operating contractor for the DOE's Strategic Petroleum Reserve. Thus the responsive documents were not subject to the FOIA. (1) Consequently, SPR did not provide a copy of the responsive documents to TIC. This Appeal, if granted, would require SPR to release the information it withheld.

Background

In a March 30, 1999 request for information (Request), TIC, through its counsel, Smith, Pachter, McWhorter and D'Ambriosio, P.L.C., requested copies of documents relating to two specific Strategic Petroleum Reserve Life Extension projects at the Strategic Petroleum Reserve's Big Hill and Bayou Choctaw sites. (2) After subsequent discussions with SPR officials, SPR provided Smith with an index of files (Index) which could contain responsive documents and asked Smith to select from the Index those files it wanted searched. Smith subsequently provided SPR with a list of the files from which it was requesting documents. On July 7, 1999, SPR issued a determination letter

(Determination Letter) releasing copies of various documents. SPR's July 7 Determination Letter withheld Summary & Bid Item Sheets (cost summaries) created by unsuccessful competitors for the two Life Extension projects. TIC subsequently appealed the SPR's July 7 Determination Letter. In a September 1, 1999 Decision, we remanded the matter to SPR so that it could issue a more detailed, adequate response to TIC's Request. See Smith, Pachter, McWhorter and D'Ambriosio, P.L.C., 27 DOE ¶ 80,228 (1999). On October 19, 1999, SPR issued another determination letter regarding TIC's Request. In the October 19 Determination Letter, SPR found that the cost summaries were not "agency" records and thus were not subject to the FOIA. In response, TIC filed this Appeal. TIC argues that according to the provisions of the Department of Energy's Acquisition Regulations (DEAR), the withheld documents are the property of the Department of Energy and as such are subject to the FOIA. (3)

Analysis

The statutory language of the FOIA does not define the essential attributes of "agency records," but merely lists examples of the types of information agencies must make available to the public. See 5 U.S.C. § 552(a). In interpreting this phrase, we have applied a two-step analysis the courts have fashioned for determining whether documents created by non-federal organizations, such as DynMcDermott, are subject to the FOIA. See, e.g., Los Alamos Study Group, 26 DOE ¶ 80,212 (1997) (LASG). That analysis involves a determination (i) whether the organization is an "agency" for purposes of the FOIA and, if not, (ii) whether the requested material is nonetheless an "agency record." See LASG, 26 DOE at 80,841.

The FOIA defines the term "agency" to include any "executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch . . . , or any independent regulatory agency." 5 U.S.C. § 552(f). In making the determination whether an entity is an agency for purposes of the FOIA, the Supreme Court has held that an entity will not be considered a federal agency for purposes of the FOIA unless its operations are subject to "extensive, detailed, and virtually day-to-day supervision." Forsham v. Harris, 445 U.S. 169, 180 & n. 11 (1980) (citing United States v. Orleans, 425 U.S. 807 (1976)). In the present case, the DOE does not supervise DynMcDermott's day-to-day operations. See Memorandum of telephone conversation between Deanna Harvey, SPR, and Richard Cronin, Assistant Director, OHA (December 9, 1999). We therefore conclude that DynMcDermott is not an "agency" subject to the FOIA.

Although DynMcDermott is not an agency for the purposes of the FOIA, its records relevant to the Appellant's request could become "agency records" if DOE obtained them and they were within the DOE's control at the time the Appellant made its FOIA request. Department of Justice v. Tax Analysts, 492 U.S. 136, 144-46 (1989) (Tax Analysts). In this case, none of the potentially responsive documents was in the DOE's control or possession at the time of the Appellant's request. See Memorandum of telephone conversation between Deanna Harvey, SPR, and Richard Cronin, Assistant Director, OHA (December 9, 1999). Based on these facts, the documents clearly do not qualify as "agency records" under the test set forth by the federal courts. See Tax Analysts, 492 U.S. at 145-46. (4)

Even if contractor-acquired or contractor-generated records fail to qualify as "agency records," they may still be subject to release if the contract between the DOE and that contractor provides that the documents in question are the property of the agency. The DOE regulations provide that "[w]hen a contract with DOE provides that any records acquired or generated by the contractor in its performance of the contract shall be the property of the Government, DOE will make available to the public such records that are in the possession of the Government or the contractor, unless the records are exempt from public disclosure under 5 U.S.C. § 552(b)." 10 C.F.R. § 1004.3(e)(1).

The relevant provisions in the contract between DOE and DynMcDermott's are provided below:

I. 103. DEAR 970.5204-79 - ACCESS TO AND OWNERSHIP OF RECORDS (JUN 1997)

(a) Government's Records. Except as provided in paragraph (b) of this clause, all records acquired or generated by the Contractor in its performance of this contract shall be the property of the Government and shall be delivered to the Government or otherwise disposed of by the Contractor either as the Contracting Officer may from time to time direct during the process of the work, or in any event, as the Contracting Officer shall direct upon completion or termination of the contract.

(b) Contractor's Own Records. The following records are considered the property of the Contractor and are not within the scope of paragraph (a) of this clause.

. . . .

(3) Records relating to any procurement action by the Contractor, except for records that under 48 C.F.R. (DEAR) 970.5204-9 Accounts, records, and Inspection, are described as the property of the Government . . . .

(c) Contract completion or termination. In the event of completion or termination of this contract, copies of any of the Contractor-owned records identified in paragraph (b) of this clause, upon the request of the Government, shall be delivered to the DOE or its designees, including successor contractors. Upon delivery, title to such records shall vest in DOE or its designees, and such records shall be protected in accordance with applicable federal laws (including the Privacy Act) as appropriate.

Contract No. DE-AC96-93PO18000, Modification M130 (DOE-DynMcDermott contract). (5)

Our examination of the cost summaries indicates that they are related to DynMcDermott's procurement of services and material for the SPR Life Extension Program. The provisions of Paragraph I.103 therefore dictate that these records are contractor records and not government records. Thus, we find that the cost summaries are not DOE records for the purposes of 10 C.F.R. § 1004.3(e).

We reach this finding notwithstanding the two arguments asserted by TIC. First, TIC argues that paragraph (b) of DEAR Section 970.5204-79 gives the contracting officer discretion to identify which categories of documents are contractor documents. (6) Further, paragraph (b) of this section does not mandate which categories of documents be deemed contractor records in a DOE contract. TIC goes on to assert that DOE failed to specify in its determination letter which DEAR contractor records provisions the contracting officer inserted in the contract between DOE and DynMcDermott. November 18, 1999 Appeal Letter from Kit L. Kramer, Senior Attorney, TIC, to George B. Breznay, Director, Office of Hearings and Appeals, at 3. Thus, TIC believes that the cost summaries may have been designated as government records by the provisions of the DOE-DynMcDermott contract. Second, TIC points out that paragraph (c) of DEAR Section 970.5204-79 provides that when contractor records are delivered to DOE they become the property of the DOE. TIC asserts that the cost summaries have been delivered to DOE and consequently the cost summaries are now DOE records. As discussed below, we find both of these arguments to be without merit.

With regard to TIC's first argument, Paragraph I.103(b) of the contract provides that records relating to procurement actions by DynMcDermott are deemed contractor property. The cost summaries themselves relate to bid pricing information from unsuccessful bidders for the SPR Life Extension projects. Consequently, as discussed earlier, we believe that pursuant to the DOE-DynMcDermott contract, the cost summaries are DynMcDermott-owned documents. With respect to the second argument, paragraph (c) of DEAR Section 970.5204-79 (which is incorporated verbatim in Paragraph I.103(c) of the DOE-DynMcDermott contract) is only operative when the contract between the DOE and the contract is completed or terminated. In the present case, the contract between DOE and DynMcDermott is currently on-going. Further, we have been informed by a contracting official at SPR that the SPR contracting officer has not requested possession of any of the cost summaries. See Memorandum of telephone conversation between Anne Quern, Contracting Specialist, SPR, and Richard Cronin, Assistant Director, OHA. (December 8, 1999). Consequently, neither DEAR Section 970.5204-79 nor Paragraph I.103 of the DOE-DynMcDermott contract has transferred title of the cost summaries to the government.

In sum, the cost summaries were not in the control or possession of DOE at the time of TIC's Request. Further, the cost summaries are not DOE records but are DynMcDermott-owned records. As such, they are not subject to the FOIA. Therefore, TIC’s appeal will be denied.

It Is Therefore Ordered That:

(1) The Appeal filed by TIC Holdings, Inc., on November 19, 1999, Case No. VFA-0540, is hereby denied.

(2) This is a final Order of the Department of Energy of which any aggrieved party may seek judicial review pursuant to the provision 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: December 20, 1999

(1)In its October 19 Determination Letter, SPR also cited Exemptions 3 and 4 as justifying withholding the documents in the event the withheld documents are considered to be agency records.

(2)The projects are part of the Strategic Petroleum Reserve Life Extension Program, which seeks to upgrade or replace most major systems in the Strategic Petroleum Reserve by the year 2000, and to streamline Strategic Petroleum Reserve facilities to reduce operating and maintenance costs.

(3)TIC also argued that the cost summaries are not protected by Exemption 3 or 4. Because we find that the cost summaries are not agency records and thus are not subject to the FOIA, we need not decide on the applicability of Exemptions 3 and 4 to these documents. Additionally, TIC argued that it had still not been given an adequate description of the withheld documents. In this regard, TIC is further advised that the cost summaries consist of two documents that contain bid pricing information created by two unsuccessful bidders for the Life Extension projects.

(4)We note that the fact that SPR subsequently obtained possession of the cost summaries for the purpose of responding to TIC's Request does not make the cost summaries under SPR's control for FOIA purposes. A document must be in the agency's control at the time of a FOIA request. See Tax Analysts , 492 U.S. at 145; Sangre de Cristo Animal Protection, Inc., 25 DOE ¶ 80,121 at 80,551 (1995)

(5)Section 970.5204-9 of the DEAR referenced in paragraph (b)(3) of the DOE-DynMcDermott contract refers to government ownership of records relating to "financial and cost reports, books of account and supporting documents and other data evidencing costs allowable, revenues, and other applicable credits" pertaining to a contract. See DEAR Section 970.5204-9(d). None of the withheld documents relate to DOE-DynMcDermott contract accounts.

(6)DEAR Section 970.5204-79 is a form contract clause. Portions of this section of the DEAR were inserted verbatim in Paragraph I.103 of the DOE-DynMcDermott contract. This section also provides a list of form contract clauses to be used by the contracting officer in a contract to describe which categories of documents may be deemed contractor property.