Ms. Mae Cheng, Staff Writer
Newsday, Queens Edition
80-02 Kew Gardens Road
Kew Gardens, NY 11415
Re: FOIA Appeal, your letter dated June 18, 1999
Dear Ms. Cheng:
On May 12, 1999 you filed a request under the Freedom of Information
Act (FOIA) for copies of documents relating to NCUA investigations
into the New York Lee Federal Credit Union (Lee FCU). Dianne
Salva, NCUA's FOIA Officer, responded to your request on June
15, 1999. You received copies of three documents - two Letters
of Understanding and Agreement and an NCUA News release. One
hundred and fifty pages of additional documents were withheld
pursuant to exemptions 5 and 8 of the FOIA. We have identified
three additional documents available for release. Enclosed are
the July 1997 Letter of Understanding and Agreement between Lee
FCU and NCUA, an anonymous letter sent to NCUA concerning Lee
FCU, dated May 14, 1998, and a short memo concerning the anonymous
letter dated May 19, 1998.
We received your June 18 appeal on June 25. In order for you
to better understand the use of the exemptions, you ask that we
specify what type of documents were withheld and under which of
the two noted exemptions they fall. Below we provide you with
the types of documents withheld pursuant to exemptions 5 and 8
of the FOIA as well as a brief discussion of each of the two exemptions.
Exemption 5
Two internal memoranda and a draft letter were withheld pursuant
to exemption 5. These documents contain predecisional recommendations
and internal discussions of Lee FCU. They were also withheld
pursuant to exemption 8, see discussion below. Exemption
5 of the FOIA protects "inter-agency or intra-agency memorandums
or letters which would not be available by law to a party ...
in litigation with the agency." 5 U.S.C.552(b)(5). Included
within exemption 5 is information subject to the deliberative
process privilege. The purpose of this privilege is "to
prevent injury to the quality of agency decisions." NLRB
v. Sears, Roebuck & Co., 421 U.S. 132, 151 (1975). Any
one of the following three policy purposes have been held to constitute
a basis for the deliberative process privilege: (1) to encourage
open, frank discussions on matters of policy between subordinates
and superiors; (2) to protect against premature disclosure of
proposed policies before they are finally adopted; and (3) to
protect against public confusion that might result from disclosure
of reasons and rationales that were not in fact ultimately the
grounds for an agency's action. Russell v. Department of the
Air force, 682 F.2d 1045 D.C. Cir 1982). We believe that
the first and third policy reasons are applicable to the documents
withheld. The three documents noted continue to be withheld pursuant
to exemption 5.
Exemption 8
The following types of records were withheld pursuant to exemption
8: examination reports; correspondence and memoranda that were
drafted as a result of examination findings; and a preliminary
warning letter. Exemption 8 of the FOIA (5 U.S.C. 552(b)(8))
applies to 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.
The courts have discerned two major purposes for exemption 8 from its
legislative history: 1) to protect the security of financial
institutions by withholding from the public reports that contain
frank evaluations of a bank's stability; and 2) to promote cooperation
and communication between employees and examiners. See Atkinson
v. FDIC, 1 GDS 80,034, at 80,102 (D.D.C. 1980). Examination
reports fit squarely within the language of exemption 8. Their
release could reasonably harm the financial security of a credit
union and interfere with the relationship between a credit union
and NCUA.
Courts have held that documents related to reports withheld under exemption 8 may also be exempt from disclosure. Documents concerning a report's follow-up as well as internal memoranda that contain specific reference about a named financial institution can be withheld pursuant to exemption 8. See Atkinson and Wachtel v. Office of Thrift Supervision, No. 3-90-833 (M.D. Tenn. Nov. 20, 1990). Although the memos do contain some non-financial information, courts do not require agencies to segregate and disclose those portions of documents that are unrelated to the financial condition of the institution. See Atkinson. Hence, the memos and correspondence continue to be withheld in full pursuant to exemption 8. In addition, courts have held that records pertaining to a financial institution no longer in operation can be withheld pursuant to exemption 8. Gregory v. FDIC, 631 F.2d 896 (D.C. Cir. 1980).
Pursuant to 5 U.S.C. 552(a)(4)(B), 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 in the district
where you reside, where your principle place of business is located,
the District of Columbia, or where the documents are located (the
Eastern District of Virginia).
Sincerely,
/S/
Robert M. Fenner
General Counsel
GC/HMU:bhs
99-0656
SSIC 3212