Case No. VFA-0546, 27 DOE ¶ 80,256

February 3, 2000

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Appellant: STAND, Inc.

Date of Filing: December 28, 1999

Case Number: VFA-0546

STAND, Inc. (Appellant) has filed an Appeal from a final determination issued by the Department of Energy’s Oak Ridge Operations Office (Oak Ridge). In that determination, Oak Ridge released a number of documents in response to a Request for Information filed by the Appellant under the Freedom of Information Act (FOIA), 5 U.S.C. § 552(b), as implemented by the DOE in 10 C.F.R. Part 1004. In its determination, Oak Ridge also withheld some responsive information under Exemptions 4 and 6 of the FOIA. This Appeal, if granted, would require Oak Ridge to release the information it withheld under Exemption 4.

I. BACKGROUND

On January 22, 1999, the Appellant filed a Request for Information with Oak Ridge. On October 26, 1999, Oak Ridge issued a determination letter releasing responsive information to the Appellant. Oak Ridge, however, withheld some responsive information under FOIA Exemptions 4 and 6. The present Appeal was submitted on December 28, 1999, challenging Oak Ridge’s withholdings under Exemption 4.(1) The withholdings that the Appellant contests concern two documents, one generated by a contractor, the other generated by Oak Ridge itself.

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 which 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. Food & Drug Admin., 704 F.2d 1280, 1286, 1288 (D.C. Cir. 1983). 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." 5 U.S.C. § 552(b)(4) (1994 & Supp. II 1996). Finally, the agency must determine whether the information is "privileged or confidential." (2)

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); Data Technology Industries, 4 DOE ¶ 80,118 (1979). 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 on the grounds that its disclosure is likely to cause substantial competitive harm, it must state the reasons for believing such harm will result. Larson Associated, Inc., 25 DOE ¶ 80,204 (1996); Milton L. Loeb, 23 DOE ¶ 80,124 (1993). Conclusory and generalized allegations of substantial competitive harm, on the other hand, are unacceptable and cannot support an agency's decision to withhold requested documents. Public Citizen Health Research Group v. F.D.A., 704 F.2d 1280, 1291 (D.C. Cir. 1983); 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").

In the present case, Oak Ridge withheld information from two documents under Exemption 4. The first document is entitled "Audit of Off-Site Treatment, Storage, Disposal, and Recycle (TSDR) Facility" (the WCS Report). This audit of Waste Control Specialists (WCS) was conducted by a DOE contractor, Bechtel Jacobs Company (Bechtel). Oak Ridge withheld from this document Bechtel’s ratings and scores of WCS for (1) Financial Strength, (2) Title Transfer, (3) Management Systems, (4) Historical Use, (5) Operations, Design, and Equipment, (6) Compliance, (7) Public Relations, (8) Facility Siting, and (9) Overall Evaluation. In addition, the entire portion of the WCS Report entitled "Concerns" was withheld. Finally, Oak Ridge withheld portions of those sections of the WCS Report entitled "Parent Company and Facility" and "Waste Analysis and Laboratory."

The ratings and scores in the audit report clearly cannot be withheld under Exemption 4. Oak Ridge asserts that release of this information could cause WCS competitive harm. This information, however, was generated for the DOE by another firm, Bechtel, rather than by WCS, and there is no evidence that WCS has any sort of privilege or proprietary interest in it. The legislative history of the statute clearly indicates that Congress intended that the protection of Exemption 4 only be applied to that information "which would customarily not be released to the public by the person from whom it was obtained." S. Rep. No. 813, 89th Cong., 1st Sess. 9 (1965) (emphasis supplied), as cited at National Parks, 498 F.2d at 766. Accordingly, we find that Oak Ridge improperly withheld the scores and ratings under Exemption 4.

Moreover, the determination letter fails to describe the withheld portion of the WCS Report entitled "Concerns." Nor does the determination letter describe the information withheld from the sections of the WCS Report entitled "Parent Company and Facility" and "Waste Analysis and Laboratory." The determination letter also fails to state why release of this information could reasonably be expected to result in competitive harm to its submitter. Without a more detailed justification of these withholdings, we cannot sustain Oak Ridge's actions on STAND's FOIA request.

Accordingly, we are remanding this portion of the Appeal to Oak Ridge. On remand, Oak Ridge must either release the ratings and scores or issue a new determination letter with an appropriate justification for withholding the ratings and scores under one of the eight other FOIA exemptions. In addition, Oak Ridge must either release the other portions of the WCS Report it withheld under Exemption 4 or issue a new determination letter that both adequately describes the withheld information and provides an adequate justification for withholding it.

The second document from which Oak Ridge withheld information under Exemption 4 is the Audit Report resulting from the Oak Ridge Operations Office of Environmental Management's audit of WCS's Andrews, Texas Facility (the DOE Audit Report). The information that Oak Ridge withheld from this document appears to have been generated by the DOE. It is well settled that information generated by the federal government is not "obtained from a person" and is therefore excluded from Exemption 4's coverage. See, e.g., Board of Trade v. Commodity Futures Trading Comm'n, 627 F.2d 392, 404 (D.C. Cir. 1980). To the extent that the withheld information was not obtained from a person, it fails to meet a statutory threshold for withholding under Exemption 4. It therefore cannot be withheld under Exemption 4. We recognize, however, that the DOE Audit Report may contain information that the Office of Environmental Management obtained from WCS as it was performing its audit. Such information may in fact be confidential, proprietary information and therefore eligible for protection from mandatory disclosure under Exemption 4. However, Oak Ridge has not segregated that type of information from other information in the DOE Audit Report that Oak Ridge itself generated. Accordingly, we are also remanding this portion of the Appeal to Oak Ridge. On remand, Oak Ridge should either release the information it withheld from the DOE Audit Report under Exemption 4 or issue a new determination letter that adequately justifies any withholdings from this document.

III. CONCLUSION

For the reasons set forth above, we are remanding the present Appeal to the Oak Ridge Operations Office. On remand, Oak Ridge shall either release the information it withheld under Exemption 4 or provide a new justification for withholding in accordance with the instructions set forth above.

It Is Therefore Ordered That:

(1) The Appeal filed by STAND, Inc., Case No. VFA-0546, is hereby granted in part as set forth in Paragraph (2) below and denied in all other aspects.

(2) The Appeal 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 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: February 3, 2000

(1)The Appeal does not contest any of Oak Ridge's withholdings under Exemption 6.

(2)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. Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992), cert. denied, 113 S. Ct. 1579 (1993) (Critical Mass). If the information was involuntarily submitted, before withholding it under Exemption 4 the agency must show that release of the information is likely either to: (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. National Parks, 498 F.2d at 770; Critical Mass, 975 F.2d at 879.