November 17, 1998
Joseph s. Melchione
Todd A. Okun
550 North Brand Boulevard, Suite 550
Glendale, CA 91203
Re: FOIA Appeal, your letter dated October 12, 1998
Dear Mssrs. Melchione and Okun:
On August 17, your client Roger Ballard (the President/CEO of
Network Federal Credit Union), filed a Freedom of Information
(FOIA) request for "all information including summaries,
attachments, analysis, and any other information submitted to
the General Counsel's office for evaluation of our conversion
request." Jane Walters, the Region VI Director, responded
to the request on September 16. Some records were released in
full, some released in part, and some withheld in full. Six documents
were withheld pursuant to exemption 4, eight documents were withheld
pursuant to exemption 5, and 6 documents were withheld pursuant
to exemption 8 of the FOIA, 5 USC 552(b), (4), (5), and (8).
We received your appeal on October 19. In your appeal you ask
that we release any factual information from the documents withheld
pursuant to exemptions 4 and 5. You do not request release of
the documents withheld pursuant to exemption 8. Your request
is granted in part in that some factual information is now being
released. The documents are now released in part with redactions.
The newly released documents are enclosed. Exemption 6, rather
than exemption 4, applies to the redacted documents that were
originally withheld in full pursuant to exemption 4. Exemptions
5 and 8 apply to the redacted documents that were originally withheld
pursuant to exemption 5. The documents and applicable exemptions
are explained below.
The six documents originally withheld pursuant to exemption 4
(and now withheld in part pursuant to exemption 6) were telephone
contact records of calls made by NCUA staff to area credit unions
regarding their position on Network's proposed conversion and
whether or not each of those credit unions requested an exclusion
clause if the community charter is granted. These are the documents
described under the first bullet in Ms. Walters' September 16
letter to Mr. Ballard. These documents are now released in part.
Enclosed are two sets of the six telephone contact records.
The first set discloses the position of each credit union on the
conversion and exclusion clause issues. The name of each credit
union appears on this set, the name of the individual contacted
is redacted. The second set contains only the handwritten notes
of NCUA staff reflecting comments made by the individuals contacted.
The names of the credit union and the individuals contacted is
redacted pursuant to exemption 6 to protect the individuals' privacy.
Each of the eight documents withheld pursuant to exemption 5 is
described separately. These are the same documents described
under the second bullet in Ms. Walters' September 16 letter to
Mr. Ballard.
Exemption 5
Staff recommendations in the Regional Summary, intra-agency memos,
and the draft Board Action Memorandum constitute the information
withheld pursuant to exemption 5. Some factual information contained
in the Regional Summary and the Board Action Memorandum continues
to be withheld pursuant to exemption 5. 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 USC 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 all three policy purposes exist
for withholding the predecisional recommendations and internal
discussions in this case.
As noted, some factual information continues to be withheld.
Courts interpreting exemption 5 have recognized there are instances
where factual information can be withheld. The act of selecting
specific facts out of a larger group of facts for inclusion in
a document can be deliberative in nature. In such a case, the
facts themselves would be subject to exemption 5. See Montrose
Chemical Corporation v. Train, 491 F.2d 63 (D.C. Cir. 1974).
Certain factual information from the Board Action Memorandum
and the Regional Summary have been redacted as deliberative in
nature under Montrose. This information continues to be
withheld pursuant to exemption 5.
Exemption 6
The names of individuals who expressed their opinions are withheld
pursuant to exemption 6. Exemption 6 of the FOIA permits the
government to withhold all information about individuals in "personnel
and medical files and similar files" when the disclosure
of such information "would constitute a clearly unwarranted
invasion of person privacy." 5 USC 552(b)(6). The courts
have held that all information which applies to a particular individual
meets the threshold requirement for exemption 6 protection. United
States Department of State v. Washington Post Co., 456 U.S.
595 (1982). Once a privacy interest is established, application
of exemption 6 requires a balancing of the public's right to disclosure
against the individual's right to privacy. Department of the
Air Force v. rose, 425 U.S. 352,373 (1976). Courts have held
that individuals expressing their opinions to the government generally
do so with some expectation of confidentiality; their identities,
but not necessarily the substance of their letters, should be
withheld. Strout v. United States Parole Commission, 40
F.3d 136 (6th Cir. 1994). We believe the disclosure
of the opinions and comments of the credit union staff, without
identifying them, strikes the appropriate balance between the
public's right to disclosure and the individuals' right to privacy.
Exemption 8
Information concerning the financial condition of Network FCU
and information concerning the safety and soundness of other credit
unions is the information withheld pursuant to exemption 8. Exemption
8 of the FOIA exempts 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.
5 USC 552(b)(8). 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). Either purpose is sufficient to withhold
the information. Exemption 8 has been employed to withhold portions
of documents other than examination reports, such as internal
memoranda, that contain specific information about named financial
institutions. Wachtel v. Office of Thrift Supervision,
No. 3-90-833, slip op. (M.D. Tenn. Nov. 20, 1990). Disclosure
of portions of the memoranda containing exemption 8 information
(portions of documents 4, 6, and 8 above) could harm the financial
security of the credit union(s) addressed. The standard to withhold
the information pursuant to exemption 8 is met.
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 the requester resides, where the requester's principle place
of business is located, the District of Columbia, or where the
documents are located (the Eastern District of Virginia).
Sincerely,
Robert M. Fenner
General Counsel
GC/HMU:bhs
98-1024
SSIC 3212
Enclosures
cc: Region VI Director