Comstock Intern. v. Export-Import Bank of US
| Decision Date | 07 February 1979 |
| Docket Number | Civ. A. No. 78-1107. |
| Citation | 464 F. Supp. 804 |
| Parties | COMSTOCK INTERNATIONAL (U.S.A.), INC., Plaintiff, v. EXPORT-IMPORT BANK OF the UNITED STATES, Defendant. |
| Court | U.S. District Court — District of Columbia |
Anthony C. J. Nuland, Washington, D. C., for plaintiff.
Florence E. Abrams, Special Asst. U. S. Atty., Washington, D. C., for defendant.
Daniel J. Plaine, Allan Gates, Washington, D. C., for amicus Sonatrach.
Plaintiff Comstock International (U.S.A.), Inc. ("Comstock"), an American corporation, has brought this action under the Freedom of Information Act ("FOIA")1 to compel defendant to release certain identified documents held by it. Defendant Export-Import Bank of the United States ("Eximbank"), an independent federal agency, is a banking corporation that seeks to facilitate and finance exports and imports between the United States and other countries. See 12 C.F.R. § 402.1(a) (1978). To accomplish this purpose Eximbank extends loans, guarantees, and other forms of financial assistance. This Court has jurisdiction over the matter under 5 U.S.C. § 552(a)(4)(B).
In June, 1974, Eximbank executed a loan agreement by which it made available a line of credit for over $21 million in favor of Sonatrach ("Societe Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures"), a national oil and gas development company wholly owned by the Republic of Algeria. The agreement also provided that Eximbank would guarantee a line of credit in an equal amount to be made by Chase Manhattan Bank.
Sonatrach planned to use the funds to expand the capacity of an oil pipeline from the Haoud El Harma oil field to the port of Skikda in Algeria. The construction work on the pipeline was to be performed by a consortium of firms, which included plaintiff. The General Electric Company ("GE"), which had formed the consortium, was to supply equipment and other firms would provide various engineering and technical services. During 1974-1975, pursuant to the terms of the loan agreement, Sonatrach and GE submitted at least five progress reports regarding the construction project to Eximbank.
On January 30, 1978, plaintiff made a request under the FOIA that Eximbank release documents pertaining to loans made by it to Sonatrach, including the Pipeline loan.2 Although defendant released a large number of documents relating to the loan agreement, other documents were withheld.3 On March 10, 1978, plaintiff filed an administrative appeal of the refusal to release the following documents:
All of these documents relate to the construction project financed by the Eximbank loan. The Loan Agreement details the terms and conditions under which Eximbank and Chase Manhattan Bank extended credit to Sonatrach for the purchase of goods and services for the Skikda project. The progress reports describe the progress of construction by the five-member construction consortium led by General Electric.
On April 11, 1978, Eximbank notified plaintiff that the documents in question would continue to be withheld on the basis of the commercial and financial information exemption to the FOIA. 5 U.S.C. § 552(b)(4). Having exhausted its administrative remedies, plaintiff instituted this lawsuit on June 16, 1978. Presently before the Court are the parties' cross-motions for summary judgment. Sonatrach has filed a brief as amicus curiae and supporting affidavits opposing disclosure of the loan agreement and progress reports.
When a government agency seeks to withhold information as exempt from disclosure under the FOIA, it must provide detailed justification for its action, specifically identifying reasons why the particular exemption is relevant and relating those claims to the particular part of the withheld documents to which they apply. Mead Data Central, Inc. v. Department of the Air Force, 184 U.S.App.D.C. 350, 359, 566 F.2d 242, 251 (1977). Here Eximbank has based its refusal to release the requested documents on exemption (b)(4) to the FOIA, which states:
5 U.S.C. § 552(b)(4). The agency bears the burden of establishing that the information it seeks to withhold falls within the scope of an exemption. 5 U.S.C. § 552(a)(3)(B).
There is little dispute that the loan agreement and the progress reports represent commercial or financial information. The requirement that the information be obtained from a person is also satisfied in this case because the applicable definition of "person" includes "an individual, partnership, corporation, association, or public or private organization . . .." 5 U.S.C. § 551(2). The United States Court of Appeals for the Fifth Circuit recognized this fact in a recent case involving information submitted to Eximbank by holding that an agency of the Soviet Union was a person within the meaning of exemption (b)(4). Stone v. Export-Import Bank of the United States, 552 F.2d 132, 133 (5th Cir. 1977), cert. denied, 434 U.S. 1012, 98 S.Ct. 726, 54 L.Ed.2d 756 (1978). Because no generally recognized claim of privilege is applicable to the documents at issue here,5 the central question presented by the cross-motions for summary judgment is whether the information contained in these documents is confidential.
The United States Court of Appeals for the District of Columbia Circuit has defined the criteria for determining whether information can be deemed confidential. After reviewing the legislative history to ascertain the purposes of the exemption, the Court held that commercial or financial information is confidential for purposes of this exemption if disclosure of the information is likely to have either of the following results: (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 & Conservation Ass'n v. Morton, 162 U.S.App.D.C. 223, 228, 498 F.2d 765, 770 (1974) (National Parks I).
Because conclusory and generalized allegations are unacceptable as a means of sustaining the burden of nondisclosure under the FOIA, specific factual or evidentiary material is required to support application of the (b)(4) exemption. Pacific Architects & Engineers, Inc. v. The Renegotiation Bd., 164 U.S.App.D.C. 276, 278, 505 F.2d 383, 385 (1974). This requirement must be satisfied for each document or class of documents sought to be withheld.
Eximbank opposes release of the loan agreement on the ground that its disclosure would cause substantial harm to the competitive positions of the two commercial parties involved in the transaction, Chase and Sonatrach. Alternatively, it suggests that the loan agreement should be withheld because it represents information not customarily released to the public by the person from whom it was obtained.6
In National Parks I the Court considered this latter argument and concluded that a determination that the information "would not generally be made available for public perusal" does not, by itself, support application of the financial information exemption. 162 U.S.App.D.C. at 228, 498 F.2d at 770. It stated that the district court also must inquire into the possibility that disclosure will harm legitimate private or governmental interests in secrecy. Id. The General Counsel of Eximbank has stated that commercial banking institutions as a worldwide practice afford loan agreements strict confidentiality and Eximbank as a lending institution does the same.7 Although this fact must be weighed in applying the exemption, it does not end the Court's inquiry.
The Court of Appeals in National Parks I suggested that the most common governmental interest threatened by disclosure of commercial and financial information would be the Government's ability to obtain similar necessary information in the future. 162 U.S.App.D.C. at 228, 498 F.2d at 770. This interest is not affected here, for the information contained in the loan agreement is not submitted to the government but rather generated by it through Eximbank's participation in the negotiation process. The National Parks I court, however, expressly left open the possibility that other governmental interests, such as the interest in program effectiveness, are embodied by this exemption. Id. at 162 U.S.App.D.C. at 228, 498 F.2d 770 n. 17.8
Eximbank maintains that disclosure would significantly impair its ability to promote United States exports. Because Eximbank competes in the world market with other government-supported export credit unions that are not required to disclose financing agreements to outside parties, potential loan applicants might seek financing outside the United States because of their unwillingness to subject themselves to the possible risk of disclosure.9 Eximbank also argues that disclosure would also impair its effectiveness by making it more difficult to negotiate loan agreements because borrowers would be less inclined to make concessions that could be disclosed to a future lender. In addition, disclosure of loan agreements would discourage commercial bank participation with Eximbank on joint loan agreements, thus impairing Eximbank's ability to control overall financing of transactions.10
The Court concludes that the affidavits offered by...
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