Case No. VFA-0581, 28 DOE ¶ 80,104

July 28, 2000

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: John Michael Unfred, P.C.

Date of Filing: June 22, 2000

Case Number: VFA-0581

On June 22, 2000, John Michael Unfred, P.C. (Unfred) completed filing this Appeal with the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) in response to a determination that the Albuquerque Operations Office of the DOE (DOE/AL) issued to Unfred on April 18, 2000. The determination concerned a request for information that Unfred 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. If the present Appeal were granted, DOE/AL would be required to release any responsive material.

The FOIA requires that documents held by federal agencies generally be released to the public upon request. The FOIA, however, 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). Those nine categories are repeated in the DOE regulations implementing the FOIA. 10 C.F.R. § 1004.10(b). The DOE regulations further provide that documents exempt from mandatory disclosure under the FOIA shall nonetheless be released to the public whenever the DOE determines that disclosure is in the public interest. 10 C.F.R. § 1004.1.

I. Background

On January 16, 2000, Unfred requested copies of any Cooperative Research and Development Agreements (CRADAs) involving the technology described in U.S. Patent No. 5,858,457. Letter from DOE/AL to Unfred (April 18, 2000) (Determination Letter). Unfred requested: (1) any responsive CRADAs including any statements of work (SOW) and any appendices thereto; (2) any documents reflecting the negotiation of the responsive CRADA(s); (3) any documents reflecting the award, changes, modification or amendment of the CRADA(s); and (4) any documents of the contracting officer that reevaluate the quality of the technology. Letter from Unfred to Director, OHA (May 30, 2000) (Appeal).

DOE/AL determined that CRADA SC97/01489 between Sandia Corporation and Air Products and Chemicals, Inc. (APCI), a procurement document of Sandia National Laboratory, was responsive to the request. However, DOE regulations require that DOE contact the firm who submitted the requested information in order to give that firm the opportunity to identify proprietary, financial, or commercial information contained in the documents. Consequently, a representative of APCI reviewed the documents and identified all proprietary information. Letter from APCI to DOE/AL (February 25, 2000) (APCI Letter). On April 18, 2000, DOE/AL released the following three documents to Unfred, withholding all of the material that APCI had identified as proprietary: (1) CRADA 01489 Version 3/12/98, withholding Appendices A (SOW) and C (Background Intellectual Property); (2) CRADA 01489 Version 3/10/99, Amendment 1, withholding Appendices A (SOW) and C (Background Intellectual Property); and (3) CRADA 01489 Version 2/23/98, withholding Appendix A (SOW). Determination Letter at 1. All redacted information was withheld under FOIA Exemption 4. Id. On June 22, 2000, Unfred filed this Appeal with OHA, contending that the response was “both untimely and inadequate.” Appeal at 2. He further argued: (1) that DOE improperly relied upon the Trade Secrets Act in refusing to consider whether it is in the public interest to disclose non-exempt information; (2) that there is segregable information in the documents that DOE is obliged to release; (3) that DOE has made only conclusory assertions that competitive injury would result to APCI if the documents were released; and (4) that the documents were not fully identified to the requester. Id.

II. Analysis

Exemption 4 of the FOIA exempts from mandatory 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 Association 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), cert. denied, 113 S. Ct. 1579 (1993) (Critical Mass). By contrast, information a submitter provides 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.

We have reviewed the redacted material and find that most of the deleted information was properly withheld under the National Parks test. (1) The documents contain specific details of the project that could cause substantial harm to APCI’s commercial success in near term commercial opportunities. We agree with APCI’s argument that public release of any proprietary information could enable a competitor to decrease its development time for the same product and diminish APCI’s’s chance to commercialize the technology developed under the CRADA. APCI Letter at 2-3. See Judicial Watch, Inc. v. United States Dep’t of Commerce, 83 F. Supp. 2d 105 (D.D.C. 1999) (finding disclosure of proprietary information outlining the development of a venture would permit competitors to undercut development effort). As a result of our review, we find that release of most of the withheld information could cause substantial harm to APCI’s competitive position. Therefore, we conclude that most of the information withheld (e.g., subject matter of the CRADA, scope of the product, costs, background intellectual property) is subject to withholding under FOIA Exemption 4. (2)

A. DOE/AL Determination Letter

Unfred argues that the determination letter was not timely, and did not adequately identify the responsive documents. We disagree. Although the FOIA requires an agency to inform the requester of its decision to grant or deny access to requested records within 20 working days, 5 U.S.C. § 552(a)(6)(A)(i), the federal courts have held that agencies may exceed the initial time limits in certain situations. See, e.g., Zuckerman v. FBI, No. 94-6315, slip op. at 8 (D.N.J. Dec. 6, 1995) (resource limitations); Open Am. v. Watergate Special Prosecution Force, 547 F.2d 605, 614-16 (D.C. Cir. 1976) (agency need not adhere strictly to first-in, first-out processing so long as proceeding expeditiously and fairly). See also Larson Associated, Inc., 25 DOE ¶ 80,204 (1996) (Larson) (no legal error in exceeding initial time limit). In this case, DOE regulations required DOE/AL to provide APCI with 10 working days to identify proprietary information. DOE/AL informed Unfred that APCI’s review would cause processing to exceed the 20 day limit. Electronic mail message from Terry Apodaca, DOE/AL to Valerie Vance Adeyeye, OHA (July 24, 2000). Thus, we find that the Determination Letter was timely within the standards established by the federal courts. Larson, 25 DOE at 80,763. Further, we find that DOE/AL adequately identified the responsive documents by CRADA number, version, and subject. Determination Letter at 1.

Unfred also argues that the determination stated “conclusory assertions.” We do not agree. DOE/AL adequately explained its basis for finding Appendix A, the Statement of Work, to be exempt from withholding under Exemption 4. (3) In the Determination Letter, DOE/AL described the withheld information and further explained that release would be competitively harmful to APCI, “due to the highly competitive environment of supplying the next generation dielectrics for integrated circuits currently envisioned by the electronics industry.” Determination Letter at 2. See Public Citizen Health Research Group v. FDA, 185 F.3d 898 (D.C. Cir. 1999) (Public Citizen) (finding competitive harm where disclosure of proprietary information would eliminate much of the time and effort otherwise required to market a product).

B. Public Interest Inquiry and Trade Secrets Act

As we have stated in previous cases, we do not make the typical inquiry into whether release of the material would be in the public interest in cases involving material determined to be exempt from mandatory disclosure under Exemption 4. See FOIA Group, Inc., 27 DOE ¶ 80,111 (1998); Tactical Weapons Working Group, Inc., 26 DOE ¶ 80,170 (1997). Courts have held that if information falls within the scope of Exemption 4, it also falls within the scope of the Trade Secrets Act. Bartholdi Cable v. FCC, 114 F.3d 274, 281 (D.C. Cir. 1997) (when information shown to be protected by Exemption 4, government is generally “precluded from releasing” it due to Trade Secrets Act); CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1140 (D.C. Cir. 1987) (noting that Trade Secrets Act appears to cover practically any commercial or financial data collected by any federal employee from any source). We therefore reject Unfred’s assertion that DOE/AL improperly refused to consider a public interest release of the withheld information.

C. Segregable Information

The FOIA also requires the agency to provide to the requester any reasonably segregable portion of a record after deletion of the portions that are exempt. See 5 U.S.C. § 552(b). See also FAS Engineering Inc., 27 DOE ¶ 80,131 (1998), quoting Soucie v. David, 448 F.2d 1067, 1077 (D.C. Cir. 1971) (factual material must be disclosed unless inextricably intertwined with exempt material). The determination letter did not identify any segregable, non-exempt factual material. However, our review finds that the March 12, 1998 and February 23, 1998 versions of the Statement of Work contain some factual information that may not be withheld under Exemption 4 unless inextricably intertwined with exempt material. See, e.g., Center for Public Integrity, 27 DOE ¶ 80,277 (2000) (non-exempt material is inextricably intertwined if its release would compromise the confidentiality of withheld material). In the section entitled “Background,” the second sentence contains some segregable information. In the section entitled “Reasons for Cooperation,” the first sentence of paragraph two, the first sentence of paragraph three, and the final sentence also contain some segregable information. Accordingly, we shall remand these two documents to DOE/AL. On remand, DOE/AL must review the aforementioned versions of the Statement of Work and segregate and release all purely factual portions, or provide a detailed explanation for withholding them.

It Is Therefore Ordered That:

(1) The Appeal filed on June 22, 2000 by John Michael Unfred, OHA Case No. VFA-0581, is hereby granted as set forth in paragraph (2) below, and is in all other respects denied.

(2) This matter is hereby remanded to the Albuquerque Operations Office for further proceedings in accordance with the instructions set forth in this 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: July 28, 2000

(1)DOE/AL informed us during our review that the proprietary information was submitted involuntarily. Electronic Mail from Terry Apodaca, DOE/AL, to Valerie Vance Adeyeye, OHA (July 27, 2000).

(2)In addition, material that is “commercial or financial information that is privileged or confidential, under the meaning of [FOIA Exemption 4]” shall not be disclosed when obtained from a non-federal party participating in a CRADA under Chapter 63 of United States Code Title 15. 15 U.S.C.A. § 3710a(c)(7)(A).

(3)However, after reviewing the APCI letter, we note that the Determination Letter failed to include the basis of the claim of exemption for Appendix C, Background Intellectual Property. APCI Letter at 3.