Case No. VFA-0613, 28 DOE ¶ 80,120

October 19, 2000

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:Doney, Crowley, Bloomquist & Uda, P.C.

Date of Filing:September 20, 2000

Case Number: VFA-0613

On September 20, 2000, Doney, Crowley, Bloomquist & Uda, P.C. filed an Appeal from a final determination the Bonneville Power Administration (BPA) issued on August 14, 2000. In that determination, BPA redacted information from two documents released in response to a request for information the appellant filed on June 28, 2000, 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. This Appeal, if granted, would require BPA to release the withheld information.

Background

In the appellant’s request for information, the firm sought copies of documents from BPA related to any settlement agreements in the litigation known as ALCOA Inc. and Vanalco, Inc. v. Bonneville Power Administration. In his determination, the BPA FOIA Officer released eight documents, but redacted the agreed amounts of power BPA would supply to Alcoa from two of the documents pursuant to Exemption 4 of the FOIA.(1) In this Appeal, the appellant contends that the FOIA Officer improperly redacted the power amounts. In accordance with the Appeal, we have reviewed the FOIA Officer’s decision to withhold these power amounts pursuant to Exemption 4.

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). These nine exemptions must be narrowly construed. Church of Scientology of California v. United States Dep’t of the Army, 611 F.2d 738, 742 (9th Cir. 1980) (citing Bristol-Meyers Co. v. FTC, 424 F.2d 935 (D.C. Cir.), cert. denied, 400 U.S. 824 (1970)). “An agency seeking to withhold information under an exemption to FOIA has the burden of proving that the information falls under the claimed exemption.” Lewis v. IRS, 823 F.2d 375, 378 (9th Cir. 1987). It is well settled that the agency’s burden of justification is substantial. Coastal States Gas Corp. v. United States Dep’t of Energy, 617 F.2d 854, 861 (D.C. Cir. 1980).

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). “Like all FOIA exemptions, Exemption 4 is to be read narrowly in light of the dominant disclosure motif expressed in the statute.” Washington Post Co. v. HHS, 865 F.2d 320, 324 (D.C. Cir. 1989). 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).

Where, as in this case, the agency determines that the information at issue is not a trade secret, but is instead “commercial or financial” and “obtained from a person,” it must then 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. 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). Information is considered to have been submitted involuntarily if, as in this case, any legal authority compels its submission, including informal mandates that call for the submission of the information as a cost of doing business with the government. Lepelletier v. FDIC, 977 F. Supp. 456, 460 n.3 (D.D.C. 1997). Since the information withheld in this case was involuntarily submitted, the agency must show that its disclosure 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 it obtained the information before withholding it under Exemption 4. National Parks, 498 F.2d 765 at 770; Critical Mass, 975 F.2d 871 at 879.

Once the DOE decides to withhold information, both the FOIA and the Department’s implementing 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. Dep’t 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 understand the basis for claiming the exemption and 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 Associated, Inc., 25 DOE ¶ 80,204 (1996); Milton L. Loeb, 23 DOE ¶ 80,124 (1993). Conclusory and generalized allegations of substantial competitive harm are unacceptable and cannot support an agency's decision to withhold requested documents. Public Citizen Health Research Group v. FDA, 185 F.3d 898, 906 (D.C. Cir. 1999); 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").

BPA has set forth its reasons for withholding the power amounts as confidential information protected by Exemption 4. Specifically, BPA contends that release of this information would cause substantial competitive harm to Alcoa. Furthermore, BPA states that the redacted information is of the type that is and has been customarily held in confidence by agencies and submitters. Thus, BPA contends that if the “strategic and confidential” information is released, Alcoa and other submitters will have a “distinct disincentive to contract with BPA” in the future.

In analyzing BPA's redaction of the power amounts to be supplied to Alcoa under Exemption 4's “competitive harm” prong, we find that BPA has not sufficiently described the substantial competitive harm that might result from disclosure of the information. BPA provided the general assertion that release of the power amounts “could cause substantial harm.” We find that this sole statement is far too conclusory in nature.(2) The courts have required that a submitter provide “adequate documentation of the specific, credible, and likely reasons why disclosure of the document would actually cause substantial competitive harm.” Lee v. FDIC, 923 F. Supp. 451 at 455 (S.D.N.Y. 1996). Since BPA has not articulated any details from the submitter that would shed light on the competitive harm that Alcoa might suffer if the redacted information were released, we must remand this matter back to BPA. Accordingly, we will require that BPA issue a new determination letter describing in sufficient detail the substantial competitive harm that would result if the power amounts were released.

We turn next to BPA’s contention that release of the power amounts would impair the government’s ability to obtain similar information in the future. Essentially, BPA is contending that release of the power amounts to be supplied to Alcoa would impair the government’s ability to make future sales of its power. The courts have denied protection under the impairment prong when disclosure will not, in fact, diminish the flow of information to the agency, such as when the benefits associated with submission of information make it unlikely that the agency’s ability to obtain future submissions will be impaired. See, e.g., McDonnell Douglas Corp. v. NASA, 981 F. Supp. 12, 15 (D.D.C. 1997) (finding that release of contract price information would not cause impairment since “[g]overnment contracting involves millions of dollars and it is unlikely that release of this information would cause [the agency] difficulty in obtaining future bids”) (reverse FOIA suit) (appeal pending); Badhwar v. United States Dep’t of the Air Force, 622 F. Supp. 1364, 1377 (D.D.C. 1985), aff’d in part and rev’d on other grounds, 829 F.2d 182 (D.C. Cir. 1987) (no impairment when submission mandatory if supplier wished to do business with the government); Racal-Milgo Gov’t Sys. v. SBA, 559 F. Supp. 4, 6 (D.D.C. 1981) (no impairment because “[i]t is unlikely that companies will stop competing for Government contracts if the prices contracted for are disclosed”); but see Orion Research v. EPA, 615 F.2d 551, 554 (1st Cir. 1980) (finding impairment for technical proposals submitted in connection with government contract because release “would induce potential bidders to submit proposals that do not include novel ideas”). These cases recognize that the benefits of doing business with the government can be considerable and are generally sufficient to ensure that firms will continue to do business with the government even if some submitted information is made public. Since the BPA has not explained in sufficient detail how its ability to negotiate future power sales would be impaired, we find that BPA has not satisfied the impairment prong of Exemption 4. Accordingly, we will require that BPA also address this impairment issue in sufficient detail in the determination letter.

It Is Therefore Ordered That:

(1) The Appeal filed by Doney, Crowley, Bloomquist & Uda, PC., Case No. VFA-0613, is hereby granted as specified in Paragraph (2) below and denied in all other aspects.

(2) This matter is hereby remanded to the Bonneville Power Administration, which shall issue a new determination 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: October 19, 2000

(1)The FOIA Officer also utilized Exemption 5 of the FOIA to withhold 21 documents generally described as “draft documents, personal observations and notes, recommendations, and comments.” The appellant has not appealed this portion of the FOIA Officer’s determination.

(2) We note that “the mere fact that the contents of a document might be useful to competitors in future contract bids does not constitute sufficient ground to withhold the document unless the document is unique.” Baker, Donaldson, Bearman & Caldwell, 27 DOE ¶ 80,164 (1998), citing Morgan, Lewis & Bockius, 20 DOE ¶ 80,165 at 80,688 (1990). The courts clearly mandate that in order to receive protection under Exemption 4, the expected harm must be substantial in nature. See, e.g., National Parks, 498 F.2d at 770.