Critical Mass Energy Project v. Nuclear Regulatory Com'n, 90-5120

• Decision Date: 06 September 1991
• Docket Number: No. 90-5120,90-5120
• Citation: 931 F.2d 939
• Parties: CRITICAL MASS ENERGY PROJECT, Appellant, v. NUCLEAR REGULATORY COMMISSION, and Institute for Nuclear Power Operations, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 939

931 F.2d 939

289 U.S.App.D.C. 301

CRITICAL MASS ENERGY PROJECT, Appellant, v. NUCLEAR REGULATORY COMMISSION, and Institute for Nuclear Power Operations, Appellees.

No. 90-5120.

United States Court of Appeals District of Columbia Circuit.

Argued March 11, 1991.

Decided April 30, 1991.

Rehearing Denied Sept. 6, 1991.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 84-1943).

Paul R.Q. Wolfson, with whom David C. Vladeck, Alan B. Morrison and Eric R. Glitzenstein were on the brief, Washington, D.C., for appellant.

Peter R. Maier, Atty., U.S. Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., Leonard Schaitman, Atty., U.S. Dept. of Justice, John Cordes, Sol., Nuclear Regulatory Com'n, and Carolyn F. Evans, Atty., Nuclear Regulatory Com'n, were on the brief, Washington, D.C., for appellee Nuclear Regulatory Com'n.

James D. Miller, Norfolk, Va., with whom Deborah J. Andrews was on the brief, Washington, D.C., for appellee Institute of Nuclear Power Operations.

Before EDWARDS, WILLIAMS and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

Concurring opinion filed by Circuit Judge RANDOLPH, in which Circuit Judge STEPHEN F. WILLIAMS joins.

HARRY T. EDWARDS, Circuit Judge:

This appeal involves a claim under the Freedom of Information Act ("FOIA") regarding certain reports dealing with nuclear power plant safety. The disputed reports are prepared by the Institute for Nuclear Power Operations ("INPO"), a utility consortium; since 1982, INPO has shared these reports with the Nuclear Regulatory Commission ("NRC" or "Commission") pursuant to an agreement providing for the free exchange of nuclear information. The appellant, Critical Mass Energy Project ("Critical Mass"), seeks to secure copies of the reports from the Commission under FOIA.

In 1984, the NRC refused to release the INPO reports to Critical Mass, citing FOIA's exemption for confidential commercial information; Critical Mass then brought suit challenging the agency's action. The District Court issued a summary judgment in favor of the NRC; however, that judgment was vacated on appeal and the case was remanded to the District Court for further proceedings. See Critical Mass Energy Project v. NRC, 830 F.2d 278 (D.C.Cir.1987) ("Critical Mass I "). On remand, the District Court once again denied the appellant's FOIA request, holding that the INPO reports were protected from disclosure under FOIA Exemption 4. Summary judgment was awarded to the Commission, and Critical Mass has appealed from that judgment. 731 F.Supp. 554.

On the record before us, we can find no basis to conclude that disclosure of the relevant reports would be likely to result in any significant impairment of either the effectiveness or efficiency of the NRC by virtue of anticipated antagonism in the relationship between INPO and the Commission. We therefore reverse the judgment of the District Court on this point. In addition, because we find that genuine issues of material fact remain concerning the likely effects of disclosure on the Commission's information-gathering ability, we remand the case for further proceedings consistent with this opinion.

I. BACKGROUND

A. Facts

In the wake of the Three Mile Island accident, the nuclear electric utility industry formed INPO, a voluntary membership organization designed to promote safety and reliability in nuclear power plant operations through peer review. INPO, which is comprised of and funded by utility companies that operate or construct nuclear plants in the United States, employs approximately 400 engineers and other staff. One of INPO's principal programs is the Significant Event Evaluation and Information Network ("SEE-IN"), a system for collecting, analyzing and sharing information concerning construction and operations experiences within the nuclear power industry.

As part of SEE-IN, INPO produces three types of reports on nuclear power plant operations: Significant Event Reports ("SERs"); Significant Operating Event Reports ("SOERs"); and Operation & Maintenance Reminders ("O & MRs"). As their titles suggest, SERs and SOERs involve operating events at nuclear facilities deemed "significant" by INPO engineers. SERs include descriptions of the events, discussions of their possible causes and effects and INPO's analyses of the problems identified; SOERs are more detailed follow-up analyses, containing more wide-ranging, generic recommendations to utilities regarding plant construction, design and operation. O & MRs describe less significant operating and maintenance problems encountered in specific plants and discuss the means used to correct them. In preparing the SERs, SOERs and O & MRs, INPO analysts solicit comments and evaluations from working-level employees who have some familiarity with the events and problems raised in the reports.

INPO currently distributes copies of its SEE-IN reports to all INPO members and "participants," ¹ to the Nuclear Safety Analysis Center (a membership organization of utilities engaged in the commercial production of electricity) and to Nuclear Electric Insurance Limited (an insurer of INPO utilities). In addition, INPO provides copies of particular reports to vendors whose products are mentioned in those reports, and to outside consultants and contractors where necessary to take corrective action suggested by the reports. Pursuant to a 1982 Memorandum of Agreement providing for the free exchange of nuclear safety information between INPO and the Government, INPO also transmits copies of all SEE-IN reports to the Commission. INPO sends its reports to each of the foregoing recipients with an understanding that the reports will not be disclosed to additional third parties without INPO's consent. ²

B. The Decision in Critical Mass I

In 1984, Critical Mass filed a FOIA request seeking access to INPO reports in the Commission's possession. The NRC denied the request on the grounds that the reports were protected from disclosure under FOIA Exemption 4, which shields "commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. Sec. 552(b)(4) (1988). Critical Mass thereupon brought suit in the District Court challenging the Commission's decision. Finding that the records properly came within the ambit of Exemption 4, the District Court granted the Commission's motion for summary judgment.

Following argument before another panel of this court, the District Court's judgment was vacated on appeal. The decision in Critical Mass I first notes that, under FOIA, the agency carries the burden of justifying the decision not to disclose the disputed reports. Critical Mass I, 830 F.2d at 281 & n. 14. The decision then observes that our precedent has established "two prime requirements" for confidentiality. Id. at 281. ³ First, the agency must show "that the information it seeks to shield would customarily not be released to the public by the person from whom it was obtained." Id. (internal quotation omitted). The decision finds this requirement to be satisfied by INPO's limited distribution of its reports to a well-defined (albeit large) class of recipients and its articulated policy forbidding unauthorized disclosure of the reports to third parties.

Second, the Critical Mass I decision declares that "the agency must demonstrate that disclosure [would] ... harm a specific interest that Congress sought to protect by enacting the exemption." Id. (internal quotation omitted). On this point, the court notes that, under the holding of National Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C.Cir.1974), we have recognized two such protected interests: (1) the Government's need to have access to commercial and financial data and (2) the need to safeguard persons submitting such data to the Government from the competitive harms that might result from general publication. Focusing on these interests, National Parks established the following test for the application of Exemption 4:

[C]ommercial or financial matter is "confidential" ... 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 information is obtained.

National Parks, 498 F.2d at 770 (footnote omitted). In the decision under review in Critical Mass I, the District Court had relied on the first prong of this test, finding that disclosure of the INPO reports would be likely to impair the Commission's future ability to acquire the information they contained. ⁴

This court rejected the judgment of the District Court in Critical Mass I for lack of evidentiary support in the record. INPO had made no contention that it would discontinue either preparing the reports or disseminating them to its members if disclosure were required under FOIA; INPO had merely represented that it would no longer voluntarily submit the reports to the Commission. Accordingly, the decision in Critical Mass I holds that, in order to show a significant impairment to its information-gathering ability, the Commission had to demonstrate "either (1) that cessation of INPO's voluntary submission of these reports would in fact deprive the agency of the information contained therein, or (2) that alternative means for obtaining the ... reports would create a significant risk that ... [their] value ... would decrease." 830 F.2d at 283. There was no dispute on the first point because the Commission had conceded that it possessed "ample statutory authority" to obtain the INPO reports by compulsory means. Id. On the second point, however, the parties disagreed over the possible effect of public disclosure on the quality of the information and analyses in the reports. Because the District Court had made no findings on this second point, the...