Center for Public Integ. v. Department of Energy
| Decision Date | 26 March 2002 |
| Docket Number | No. 00CV2803(HHK).,00CV2803(HHK). |
| Citation | 191 F.Supp.2d 187 |
| Parties | CENTER FOR PUBLIC INTEGRITY, Plaintiff, v. DEPARTMENT OF ENERGY, Defendant. |
| Court | U.S. District Court — District of Columbia |
Marc Eric Miller, McLeod, Watkinson & Miller, Watkinson & Miller, Peter Newbatt Smith, Washington, DC, for Plaintiff.
Anne L. Weismann, U.S. Department of Justice Civil Division, Youngjae Lee, U.S. Department of Justice Civil Division, Federal Programs Branch, Washington, DC, for Defendant.
By this action brought under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, the Center for Public Integrity ("CPI") seeks to compel the Department of Energy ("DOE") to disclose records in its possession related to the federal government's sale of Naval Petroleum Reserve Numbered-1 ("NPR-1"). Before the court are the parties' cross-motions for summary judgment. Upon consideration of the motions, the respective oppositions thereto, and the summary judgment record, the court concludes that CPI's motion must be granted because DOE has not met its burden of showing that the records are exempt from FOIA's disclosure requirements.
Congress enacted FOIA to promote "a policy of broad disclosure of Government documents" and "ensure `an informed citizenry, vital to the functioning of a democratic society.'" Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871, 872 (D.C.Cir.1992) (quoting FBI v. Abramson, 456 U.S. 615, 621, 102 S.Ct. 2054, 72 L.Ed.2d 376 (1982) (internal citations omitted)). In so doing, however, Congress acknowledged that "legitimate governmental and private interests could be harmed by release of certain types of information." Id. In order to balance these competing interests, Congress crafted nine exemptions to FOIA under which an agency may withhold information. See 5 U.S.C. § 552(a)(4)(B) & (b)(1)-(9). In the present case DOE invokes Exemptions 3 and 4, see id. at § 552(b)(3) & (b)(4), as grounds for denying CPI's request for information relating to the sale of NPR-1.
Under Exemption 3, an agency may withhold records "specifically exempted from disclosure by statute" if the statute affords the agency no discretion on disclosure, establishes particular criteria for withholding the information, or refers to the particular types of material to be withheld. See id. at § 552(b)(3)(A) & (B). The Supreme Court has established a two-part test for determining whether information is exempt from disclosure under Exemption 3: 1) the asserted statute must qualify as an exemption statute; and 2) the information requested must fall within the statute. See CIA v. Sims, 471 U.S. 159, 167, 105 S.Ct. 1881, 85 L.Ed.2d 173 (1985). CPI concedes that the statute relied upon by DOE as the basis for withholding the NPR-1 records, Section 821(b)(m) of the National Defense Authorization Act for Fiscal Year 19971, is an exemption statute for purposes of Exemption 4, but contends that the records do not fall within the statute.
Under Exemption 4, an agency may withhold from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4). Under the law of this Circuit, information is "confidential" for purposes of Exemption 4 if it is submitted "involuntarily" and is "likely" to 1) "cause substantial harm to the competitive position of the person from whom the information was obtained"; or 2) "impair the government's ability to obtain necessary information in the future." Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C.Cir.1974).
NPR-1 is a tract of approximately 47,000 acres of land located in Elk Hills, California, 25 miles south of Bakersfield. In the National Defense Authorization Act for Fiscal Year 1996 ("the Act"), Pub.L. No. 104-106, § 3412(a), 110 Stat. 186, 631-32 (1996), Congress directed DOE to sell "all right, title, and interest of the United States in and to all lands owned or controlled by the United States" inside NPR-1. The Act required DOE to "set the minimum acceptable price for the reserve," to solicit offers for the purchase of the reserve, and then to identify the "highest responsible offer or offers" that "meet or exceed the minimum acceptable price...." Id. at § 3412(d)(3), (f)(2).
The Act additionally required DOE to "retain the services of an investment banker or an appropriate equivalent financial adviser to independently administer" the sale of NPR-1 "in a manner that maximizes sale proceeds to the Government" and "in a manner consistent with commercial practices." Id. at 3412(e)(1). Pursuant to this provision, DOE hired C.S. First Boston and Petrie Parkman as financial advisers. These advisers contacted over 200 companies from the United States and abroad to assess their potential interest in NPR-1, prepared and distributed a marketing brochure and data sets to interested parties, held technical briefings, and required prospective participants in the sale to execute confidentiality agreements.
DOE then issued a Solicitation of Offers for the sale of the government's interest in NPR-1, structured as one operating working interest representing seventy-four percent of the government's interest, and thirteen non-operating working interests each representing two percent of the government's interest. Qualified parties were allowed to submit bids on one, some, or all of the segments and to submit multiple alternative bids. The offer form that DOE required the offerors to submit stated "Privileged, Confidential, and Highly Sensitive Divestiture Process Information." On October 6, 1997, DOE announced that it had accepted the offer of Occidental Petroleum Corporation to purchase the reserve for $3.65 billion, making the sale the largest privatization in United States history.
In January 2000, CPI filed a FOIA request with DOE, seeking in pertinent part "[t]he names of all entities that placed bids on NPR-1, any portion thereof, and the amounts of all bids." Pl.'s Compl. Ex. 1 at 1. In April 2000, DOE's Office of Fossil Energy ("FE") issued a determination letter denying this request on the grounds that the records sought were exempt from disclosure under Exemption 4 of FOIA. On CPI's appeal, DOE's Office of Hearings and Appeals ("OHA") held that the records were not exempt under Exemption 4 and remanded the matter to FE with instructions "to either release all or part of the withheld information or provide a new justification for any continued withholdings." Pl.'s Compl. Ex. 3 at 8.
On remand, FE denied CPI's request again, this time relying on Exemption 3 in addition to Exemption 4. On CPI's second appeal, OHA held that the records were exempt from disclosure under Exemption 3 and affirmed FE's denial of CPI's request. This suit followed.
FOIA provides for de novo review by the district court, and places the burden on "the agency to sustain its action." 5 U.S.C. § 552(a)(4)(B). The agency may meet this burden by submitting affidavits or declarations that describe the withheld material in reasonable detail and explain why it falls within the claimed FOIA exemptions. See Summers v. Dep't of Justice, 140 F.3d 1077, 1080 (D.C.Cir. 1998). Where the pleadings and affidavits or declarations show that there is no genuine issue of fact and that the moving party is entitled to judgment as a matter of law, summary judgment is the appropriate mechanism for resolving FOIA disclosure disputes. See Fed.R.Civ.P. 56(c); Alyeska Pipeline Serv. Co. v. EPA, 856 F.2d 309, 313-14 (D.C.Cir.1988). In addition, a district court may determine if a FOIA exemption is properly invoked on the basis of affidavits or declarations submitted by the government, see Goland v. CIA, 607 F.2d 339, 352 (D.C.Cir.1978), so long as the affidavits are not conclusory and describe the justification for withholding the requested records "in sufficient detail to demonstrate that the claimed exemption applies." Carter v. Dep't of Commerce, 830 F.2d 388, 392 (D.C.Cir.1987).
DOE argues that Section 821(b)(m) permits it to withhold the records CPI seeks under Exemption 3. Section 821, entitled "Prohibition on Release of Contractor Proposals Under Freedom of Information Act," provides that "a proposal in the possession or control of an executive agency" may not be disclosed under FOIA. 41 U.S.C. § 253b(m)(1).2 The term "proposal" is defined as "any proposal, including a technical, management, or cost proposal, submitted by a contractor in response to the requirements of a solicitation for a competitive proposal." Id. at § 253b(m)(3).
DOE argues that the records requested by CPI fall within Section 821(b)(m) because the names of the bidders for NPR-1 and the amounts of their bids constitute a proposal to "enter into a contractual relationship with the government," Def.'s Mot. at 10, and were submitted "in response to the requirements of a solicitation for a competitive proposal," 41 U.S.C. § 253b(m)(3). CPI contends that the records do not fall within Section 821(b)(m) because the term "contractor" refers to parties providing property or services to the government, not parties purchasing property or services from the government. In other words, CPI argues that Section 821(b)(m) applies to government procurement contracts, not to government sales contracts.
In support of its construction of Section 821(b)(m), CPI points to the statutory scheme of which the provision is a part, noting that the subchapter containing it is entitled "Procurement Provisions," see Title 41, Ch.4, Subchapter IV; and that the first section of the subchapter states that "[t]he purpose of this subchapter is to facilitate the procurement of property and services." 41 U.S.C. § 251 (emphasis added). CPI also points out that sales of government property are governed by a separate section of FPASA, codified at 40 U.S.C. § 484 (...
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