13 de mayo de 2022
SENT BY E-MAIL
Re: 2022-APP-00003; Appeal of Response 22-FOI-00012
By correspondence of November 29, 2021, you submitted a Freedom of Information Act (FOIA) request (22-FOI-00012) for agency records of the “accounting study referred to in the NCUA November board meeting by CFO XXXX.”
By letter of January 12, 2022, a Senior Attorney and FOIA Officer (FOIA Officer) in the NCUA's Office of General Counsel responded to your request and advised that your request was granted in part, and responsive pages would follow upon completion of the submitter notice process required pursuant to 12 C.F.R. § 792.29. The FOIA Officer's response explained that Executive Order 12600 and 12 C.F.R. § 792.29 required the agency to provide the company that conducted the study with notice and opportunity to object to FOIA release of the record.
On January 21, 2022, thirteen pages of publicly releasable responsive records were sent to you. The FOIA Officer withheld or redacted information contained in those records as exempt from release under the FOIA exemptions at 5 U.S.C. §552(b)(4), (5), (6) and (8). The January 12, 2022 response explained that subsection (b)(4) (Exemption 4) protects from disclosure trade secrets and commercial or financial information obtained from a person, which is considered privileged or confidential. Subsection (b)(5) (Exemption 5) protects interagency or intra-agency memoranda or letters which would not be available by law to a party other than an agency in litigation with the agency. Subsection (b)(6) (Exemption 6) protects information about individuals when its disclosure would constitute a clearly unwarranted invasion of personal privacy. Subsection (b)(8) (Exemption 8) protects matters that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.
On January 28, 2022, you asked whether the response had been approved by the NCUA Office of General Counsel (OGC). The same day, the FOIA Officer replied and indicated that the January 12 and 21, 2022 responses to 22-FOI-00012 were from the NCUA FOIA Processing Center in OGC.
You appealed this determination in a correspondence dated April 15, 2022. Your appeal is denied, as discussed more fully below.
In your appeal, you contend that the redacted records the agency released to you "contained none of the actual information used to support the single sentences released nor any of the other advice requested in the study as described in the first page." Your appeal does not challenge the applicability of the FOIA exemptions cited in the response but argues generally that "full disclosure of this document is critical to [the NCUA Board's] oversight of the [National Credit Union Share Insurance Fund (NCUSIF)], the appropriateness of the accounting information presented and most importantly public confidence in the Agency and board's oversight." You have also asserted that your appeal of this FOIA is "to the same legal office that made the initial decision and is not an independent review."
The FOIA provides that an agency may withhold responsive records if the agency reasonably foresees that disclosure would harm an interest protected by one of the nine exemptions that the FOIA enumerates or disclosure is prohibited by law.1 However, courts have acknowledged that “materials normally immunized from disclosure under FOIA lose their protective cloak once disclosed and preserved in a permanent public record.”2 Accordingly, responsive records that would otherwise qualify for a FOIA exemption are required to be released if the information has been officially acknowledged or is in the public domain.3 The underlying rationale for this waiver doctrine is that withholding exempted records “can serve no purpose once information . . . becomes public.”4 Consequently, to demonstrate that a waiver has occurred, the FOIA requester has “the initial burden of pointing to specific information in the public domain that appears to duplicate that being withheld.”5 An agency’s “publication of a part of a document does not put the rest into the public domain.”6 Nevertheless, if an agency determines that it cannot make full disclosure of a requested record, the FOIA requires that it “consider whether partial disclosure of information is possible” and “take reasonable steps necessary to segregate and release nonexempt information.”7
Your appeal cites discussions between NCUA’s Chief Financial Officer and members of the NCUA Board that occurred at the November 18, 2021 and February 17, 20228 public board meetings, which make reference to "engag[ing] an accounting firm to review and advise [the NCUA]" on accounting methods relative to the NCUSIF. While not expressly stated, it seems you may be inferring that the requested "accounting study referred to in the NCUA November board meeting by CFO XXXX" has already been officially acknowledged or is in the public domain and thus is required to be fully released under the FOIA.
This is not so. While public board meeting discussions have generally referenced the requested accounting study and disclosed certain limited information from it, the public disclosure of a part of the study does not put the entire study into the public domain. You have not met your burden of showing that the public board meeting discussions disclosed the full contents of the accounting study, nor that the NCUA has otherwise officially acknowledged or put into the public domain the entirety of the study or a duplicate of its full contents. Thus, any contention that the exemptions cited in the January 2022 responses are waived or inapplicable because the information has been made public is misguided.
Exemption 4 protects “commercial or financial information” obtained from a person9 that is “privileged or confidential.”10 When Exemption 4 is implicated, courts have held that the interest protected by Exemption 4 is the “information’s confidentiality.”11 The term “confidential” is given its “ordinary” meaning of “private” or “secret” for purposes of Exemption 4.12 Thus, if commercial or financial information is held in confidence and given to the government under an assurance of confidentiality, the foreseeable harm standard is satisfied and the information may be withheld.13
On its face, the accounting study you requested contains sensitive and proprietary analysis and expert opinion relative to the agency's accounting and management of the NCUSIF, thus qualifying as confidential commercial or financial information that is within the scope of Exemption 4. Such proprietary opinion and analysis would customarily be treated as private commercial or financial information by the consulting accounting firm that authored the study. Moreover, the information was held in confidence and given to the agency with an assurance of confidentiality. In fact, by agreement, the accounting study was provided to the NCUA as an internal use report. It contains express language to indicate that it is not intended to be a public report, and that the report was furnished to the agency strictly for the limited purpose described within it and should not be used for any other purpose.
Also, pursuant to Executive Order 12600 and 12 C.F.R. § 792.29, the FOIA Officer conducted the submitter notice process to further validate the use of Exemption 4.14 That is, the FOIA Officer notified the submitter (i.e. the accounting firm that provided the report to the NCUA) of your request and afforded the submitter time to object to the disclosure of specified portions of the responsive information. The FOIA Officer carefully considered the reply from the submitter in making the determination to withhold certain sensitive portions of the requested study under Exemption 4. The accounting report you requested appeared to be confidential, had been agreed in writing to treated as confidential before it was written, and was confirmed to be confidential via the submitter’s notice process. For all these reasons, the use of Exemption 4 is upheld.
The information you requested is also pre-decisional and deliberative and its full disclosure will harm the agency's decision-making process. Exemption 5 incorporates the deliberative process privilege, the attorney-client privilege, and the attorney work product privilege.15 The deliberative process privilege is generally intended to “prevent injury to the quality of agency decisions.”16 The privilege protects “debate and candid consideration of alternatives,” thus improving agency decision making.17 After all, “experience teaches that those who expect public dissemination of their remarks may well temper candor . . . to the detriment of the decision-making process.”18 Records are protected as pre-decisional and deliberative where they are “antecedent to the adoption of an agency policy,”19 and where they are “part of the deliberative process in that it makes recommendations or expresses opinions on legal or policy matters.”20
Here, the requested record was produced by an external consultant specifically engaged by the agency to conduct an independent review of the NCUA's current accounting practice for recognizing its semi-annual capital deposit adjustment in the NCUSIF, in order to inform the agency's policy decisions concerning accounting and reporting for the NCUSIF. The requested record includes discussion and analysis of a host of potential considerations and options for the NCUSIF revenue recognition that, if fully disclosed, will have a harmful chilling effect on the deliberative process in which the agency may consult expert opinion for advice on policy matters and engage in a free exchange of ideas. The NCUA engaged the accounting firm for candid accounting advice under an agreement and assurance that the opinions shared with the agency would be for internal agency use only. The accounting firm has expressed clear opposition to public disclosure of the full study. Undermining that agreement and understanding will cause reputational harm to the agency and impair our existing business relationship with the accounting firm, as well as inhibiting our future business dealings with it. More broadly, public disclosure of a propriety record, despite assurances of confidentiality made to the owner of that record, will harm the NCUA's reputation and business relationships with other similar expert consultants, upon which the agency relies for frank and unreserved advice and opinion. These reputational and relationship harms will hinder the free flow of ideas into the agency and, consequently, diminish the quality of the NCUA's decision making. Additionally, a full disclosure of the requested record will undermine public confidence by creating confusion about the agency's decisions and policy justifications because the study considers a range of options and rationales for the method and timing of the capital deposit adjustment recognition, some of which have not been adopted nor relied upon as grounds for the agency's accounting policies relative to the NCUSIF. The requested record was independently authored by, and contains the sole opinions and analysis of, an external consultant for consideration by the NCUA in its decision-making process. If fully disclosed, the redacted portions of the requested record will create public confusion as some of the opinions expressed in the record are not necessarily consistent with the agency's own policy determinations. In light of these reasonably foreseeable harms, the partially redacted records were also properly withheld under Exemption 5.
In addition, Exemptions 6, and 8 are not waived and also remain available. Exemption 6 protects information about individuals in personnel and medical files and similar files when the disclosure of such information "would constitute a clearly unwarranted invasion of personal privacy."21 Exemption 6 has been interpreted broadly, such that all information that “applies to a particular individual” meets the threshold requirement of falling within the category of “personnel and medical files and similar files” to warrant protection under Exemption 6.22 Here, redacted personally identifying information applies to particular submitter personnel and qualifies for withholding under Exemption 6.
Exemption 8 provides for protection against release of information contained in “or related to” examination, operating or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.23 Courts have interpreted Exemption 8 broadly and have declined to restrict its all-inclusive scope.24 The information you requested also meets this broad standard.
Having determined that the NCUA cannot make a full disclosure of the requested record, all portions of the requested record that are arguably in the public domain or otherwise nonexempt were duly segregated and released to you.
Finally, to the extent that your appeal also raises general concerns about the administrative appeals process, please note that all FOIA appeals made to the NCUA are subject to a full and independent review. Under the NCUA's FOIA regulations, initial requests are processed by "[t]he Freedom of Information Officer of the Office of General Counsel,"25 while “[t]he General Counsel is the official responsible for determining all appeals from initial determinations.”26 Thus, consistent with relevant guidelines, this appeal was independently reviewed by an appeal authority that is separate and distinct from the official that made the initial determination on your request.27
For these reasons, your FOIA appeal is denied. Pursuant to 5 U.S.C. §552(a)(4)(B) of the FOIA, you may seek judicial review of this determination by filing suit against the NCUA. Such a suit may be filed in the United States District Court where you reside, where your principal place of business is located, the District of Columbia, or where the documents are located (the Eastern District of Virginia).
The 2007 FOIA amendments created the Office of Government Information Services (OGIS) to offer mediation services to resolve disputes between FOIA requesters and Federal agencies as a non-exclusive alternative to litigation. Using OGIS services does not affect your right to pursue litigation. You may contact OGIS in any of the following ways:
Oficina de Servicios de Información Gubernamental
Administración Nacional de Registros y Archivos
8601 Adelphi Road - OGIS
College Park, MD 20740-6001 E-mail: firstname.lastname@example.org
Web: (se abre en una ventana nueva) (Usted está abandonando el sitio NCUA.gov y está accediendo a un sitio que no pertenece a la NCUA. Le recomendamos leer las políticas del enlace de salida de NCUA (se abre en una nueva página)..)
Telephone: 202.741.5770; Toll-free: 877.684.6448
1 See 5 U.S.C. § 552(a)(8)(A)(i).
2 Cottone v. Reno, 193 F.3d 550, 556 (D.C. Cir. 1999) (noting that “the logic of FOIA mandates that where information requested ‘is truly public, then enforcement of an exemption cannot fulfill its purposes.’”).
3 See Davis v. DOJ, 968 F.2d 1276, 1279 (D.C. Cir. 1992).
4 Cottone at 555.
5 Chesapeake Bay Found., Inc. v. U.S. Army Corps of Engineers, 722 F.Supp.2d 66, 72 (D.D.C. 2010) (quoting Afshar v. Dep’t of State, 702 F.2d 1125, 1130 (D.C. Cir. 1983)).
6 Ancient Coin Collectors Guild v. U.S., 641 F.3d 504, 510 (D.C. Cir. 2011).
7 Id.; 5 U.S.C. § 552(a)(8)(A)(ii).
8 Notably, the NCUA's February 17, 2022 board meeting occurred after the January 12 and 21, 2022 responses to your November 29, 2021 FOIA request. Any discussions that took place at that meeting are outside the scope of your request for the "accounting study referred to in the NCUA November  board meeting by CFO XXXX" and, consequently, this appeal.
9 The FOIA defines “person” as an “individual, partnership, corporation, association, or public or private organization other than an agency.” 5 U.S.C. § 551(2).
10 5 U.S.C. § 552(b)(4).
11 American Small Business League v. Department of Defense, 3:18-cv-01979-WHA (N.D. Cal. 2019) ECF No. 153 at 14.
12 Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356, 2363 (2019) (finding that “where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.”).
13 American Small Business League at 14 (citing Food Marketing Institute v. Argus Leader, 139 S. Ct. 2356 (2019).
14 See 12 C.F.R. § 792.29; E.O. 12600 (June 23, 1987).
16 NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 151 (1975).
17 Jordan v. DOJ, 591 F.2d 753, 772 (D.C. Cir. 1978) (en banc).
18 Machado Amadis v. United States Dep't of State, 971 F.3d 364, 371 (D.C. Cir. 2020) (quoting Sears at 150–51 (quotation marks omitted)).
19 Ancient Coin Collectors Guild v. U.S. Dep't of State, 641 F.3d 504, 513 (D.C. Cir. 2011) (quoting Jordan v. DOJ, 591 F.2d 753, 774 (D.C. Cir. 1978) (en banc)); see also Adamowicz v. IRS, 672 F. Supp. 2d 454, 469 (S.D.N.Y. 2009) (protecting documents that “reflect the consultative process” underlying an agency’s decisions).
20 Vaughn v. Rosen, 523 F.2d 1136, 1143-44 (D.C. Cir. 1975).
21 5 U.S.C. § 552(b)(6).
22 U.S. Dep’t of State v. Washington Post Co., 456 U.S. 595, 602 (1982).
23 5 U.S.C. §552(b)(8).
24 See Consumers Union of United States, Inc. v. Heimann, 589 F. 2d 531 (D.C. Cir. 1978).
25 12 C.F.R. §792.07(a); see also 12 C.F.R. §792.10.
26 12 C.F.R. §792.28(b). In case of the General Counsel's absence, the appropriate officer acting in the General Counsel's stead will make the appellate determination, unless such officer was responsible for the initial determination, in which case the Vice-Chairman of the NCUA Board will make the appellate determination.
27 The Department of Justice’s Office of Information Policy (OIP) advises that “agencies should ensure that administrative review is conducted by an appeal authority that is separate and distinct from the office or official that made the initial determination on the request." OIP Guidance: Adjudicating Administrative Appeals under the FOIA (Updated Aug. 12, 2021).