Frazee v. U.S. Forest Service, 95-35333

• Decision Date: 02 October 1996
• Docket Number: No. 95-35333,95-35333
• Citation: 97 F.3d 367
• Parties: 41 Cont.Cas.Fed. (CCH) P 77,057, 96 Cal. Daily Op. Serv. 7368, 96 Daily Journal D.A.R. 12,067 James E. FRAZEE and Joann P. Frazee, doing business as High Lakes Contractors, Plaintiffs-Appellants, v. UNITED STATES FOREST SERVICE; United States Department of Agriculture; John E. Lowe, Regional Forester, Pacific Northwest Region; Sally Collins, Supervisor of Deschutes National Forest, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 367

97 F.3d 367

41 Cont.Cas.Fed. (CCH) P 77,057, 96 Cal. Daily

Op. Serv. 7368,

96 Daily Journal D.A.R. 12,067

James E. FRAZEE and Joann P. Frazee, doing business as High Lakes Contractors, Plaintiffs-Appellants, v. UNITED STATES FOREST SERVICE; United States Department of Agriculture; John E. Lowe, Regional Forester, Pacific Northwest Region; Sally Collins, Supervisor of Deschutes National Forest, Defendants-Appellees.

No. 95-35333.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 19, 1996.

Decided Oct. 2, 1996.

John B. Crowell, Jr., Lane, Powell, Spears, Lubersky, Portland, OR, for plaintiffs-appellants.

Judith D. Kobbervig, Assistant United States Attorney, Portland, OR, for defendants-appellees.

Appeal from the United States District Court for the District of Oregon, Donald C. Ashmanskas, Magistrate Judge, Presiding. D.C. No. CV-94-01007-DCA.

Before: PREGERSON, BOOCHEVER and T.G. NELSON, Circuit Judges.

OPINION

PREGERSON, Circuit Judge:

Plaintiffs-Appellants James E. and Joann P. Frazee, doing business as High Lakes Contractors (collectively, the "Frazees") challenge an administrative agency decision to release information under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552. The United States Forest Service, United States Department of Agriculture, John E. Lowe, Regional Forester, Pacific Northwest Region, and Sally Collins, Supervisor of Deschutes National Forest (collectively, "Forest Service") decided to disclose the Frazees' Operating Plan for managing two Forest Service recreational facilities in response to a FOIA request. The Frazees filed suit in district court to prevent this disclosure, alleging their Operating Plan was exempt from disclosure as confidential information protected by § (b)(4) of FOIA, 5 U.S.C. § 552(b)(4). On cross motions for summary judgment, the district court granted summary judgment in favor of the Forest Service and dismissed the Frazees' complaint. We have jurisdiction under 28 U.S.C. § 1291. We affirm.

I.

Through a Solicitation for Offers dated November 16, 1993 ("Solicitation"), the Forest Service sought proposals for qualified applicants to operate the Cascade Lakes Complex of recreational campgrounds and day-use areas in the Bend District of the Deschutes National Forest. The Solicitation provided that the Forest Service would issue a Special Use Permit ("Permit") to the successful applicant for a twelve-month period. This Permit is a public document.

The Solicitation required applicants to submit the following: verification of financial responsibility, including a cash flow analysis, financial statement, payment history, and verification of accounts for each financial institution; estimated income and expenses; three business references; a detailed description of applicable business experience; and a proposed operating plan. The proposed operating plan required a description of operating seasons, equipment, supplies, storage, personnel management, cleaning and maintenance, law enforcement and security, fee collection, public information, and health and safety. The Solicitation also served as a guideline for drafting a proposal.

The Solicitation assured applicants that "ALL INFORMATION DERIVED FROM THIS REVIEW IS CONFIDENTIAL AND FOR OFFICIAL USE ONLY." A Forest Service representative repeated this assurance of confidentiality at public pre-application meetings held on November 2, and November 29, 1993. But the Solicitation also stipulated that the selected applicant's final operating plan would be attached to and made a part of the Permit, a public document. At the same two November meetings, a Forest Service representative informed applicants that those portions of documents that become public information would be available to the public through FOIA requests.

The Frazees responded to the Solicitation with a proposal which included a proposed operating plan. The Forest Service selected the Frazees' application and awarded them the Permit for the Cascades Lakes Complex for the period effective March 16, 1994 through December 31, 1994. Following the award of the Permit, the Frazees, as required by the Forest Service, modified their proposed operating plan. This modified plan, once approved by the Forest Service, became a final operating plan ("Plan") and was attached to and made a part of the Permit.

The previous year, the Frazees had unsuccessfully bid for the 1993 Permit. After the bid was rejected, the Frazees filed a FOIA request with the Forest Service, seeking to obtain full copies of all the proposals submitted, successful and unsuccessful. That FOIA request also sought copies of the Forest Service's "evaluation sheets completed by the evaluation team as part of the review and selection process." The Forest Service denied the Frazees' request on the ground that the proposals and the evaluations were derived from the application review process and thus were confidential, as the Forest Service had assured prospective applicants in the Solicitation and in public meetings.

On June 3, 1994, pursuant to FOIA, an attorney for a competitor requested a copy of the Frazees' Plan from the Forest Service. ¹ Upon receiving the FOIA request, the Supervisor of the Deschutes National Forest gave the Frazees an opportunity to object to the release of any financial or confidential information contained in the Plan. The Frazees objected to the disclosure of the Plan or any portion thereof.

On July 15, 1994, the FOIA request and the Frazees' objection were forwarded to the Regional FOIA Coordinator for the Forest Service's Pacific Northwest Region. On July 29, 1994, the Coordinator notified the Frazees that, "After a thorough review, it has been determined [that the Plan is] public information." The Coordinator explained that when the Permit was issued to the Frazees, the Plan became a part of the Permit available to the public as a public document. After receiving this disclosure notification, the Frazees filed a reverse FOIA action in district court to enjoin the Forest Service from releasing the Plan.

On cross motions for summary judgment, the district court upheld the Forest Service's decision to release the Plan and dismissed the Frazees' complaint. The district court, after reviewing the documents in question in camera, found that most of the information contained in the Plan was publicly available and/or was taken directly from the Solicitation, from the Guidebook for Establishing and Managing Campground Concession Operations, ² or from other sources. The district court determined that based on the record, the Forest Service had adequate factual basis for its decision to disclose, that it had not abused its discretion in deciding to disclose, and that it had not acted arbitrarily, capriciously, or otherwise not in accordance with law. The district court therefore determined that the Plan was not protected from disclosure under Exemption 4 of FOIA nor under the Trade Secrets Act, with the exception of two items in the Plan. ³

The Frazees appeal the district court's grant of summary judgment. On appeal, the Frazees claim that: (1) the district court clearly erred by failing to analyze whether disclosure of the Plan would likely cause the Frazees substantial competitive harm; (2) this circuit should adopt the District of Columbia Circuit's test for protecting information volunteered to the government; (3) the Forest Service is bound by its promise to keep proposals confidential and should be held to its 1993 "precedent" where it refused to release to the Frazees all bidders' proposals and the Forest Service's evaluations of these proposals; and (4) alternatively, the Trade Secrets Act prohibits release of the Plan. The Forest Service agreed not to release the Plan during the pendency of this appeal.

II.

This circuit employs a special standard to review factual issues arising in an appeal from the grant of summary judgment in a FOIA case. "Instead of determining whether a genuine issue of material fact exists, we employ the following two-step standard. We inquire whether an adequate factual basis supports the district court's ruling. If such a basis exists, we overturn the ruling only if it is clearly erroneous." Rosenfeld v. United States Dep't of Justice, 57 F.3d 803, 807 (9th Cir.1995).

The parties do not dispute that the district court had an adequate factual basis for its decision. Therefore, our only inquiry in this case is whether the district court's decision was clearly erroneous. GC Micro Corp. v. Defense Logistics Agency, 33 F.3d 1109, 1112 (9th Cir.1994). "Under this standard, we will reverse only if we are left with a definite and firm conviction that the district court has erred." National Wildlife Fed'n v. United States Forest Serv., 861 F.2d 1114, 1116 (9th Cir.1988).

III.

Section (a) of FOIA, 5 U.S.C. § 552, "places a general obligation on the [government] agency to make information available to the public...." Pacific Architects & Eng. v. United States Dep't of State, 906 F.2d 1345, 1346 (9th Cir.1990). FOIA contains nine exceptions to this presumption of disclosure "that are to be narrowly construed by the courts." GC Micro, 33 F.3d at 1112. Exemption 4 of FOIA, 5 U.S.C. § 552(b)(4), exempts from disclosure commercial or financial information that is "privileged or confidential." ⁴ See Id. at 1112. Because the parties agree that the Plan is commercial information, the only issue on appeal is whether the information is privileged or confidential.

The leading case on Exemption 4 sets out the test for exempting commercial information from FOIA disclosure as follows Commercial or financial matter is "confidential" for purposes of [Exemption 4] if disclosure of the information is likely to have either of the following effects: (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...