J. D. Ratliff
Re: Freedom of Information Act Appeal
(Your letter dated November 15, 1995)
Dear Mr. Ratliff:
On October 9, 1995, you filed a Freedom of Information Act (FOIA)
request with NCUA's Region III Office. Timothy McCollum, Acting
Regional Director for Region III, responded to your request on
October 19, 1995. Your request was denied pursuant to exemption
8 of the FOIA. We received your November 15 appeal on November
22, 1995. You note that the October 19 letter from Mr. McCollum
indicated that there were enclosures, however no enclosures were
included with the response. The "Enclosures" notation
on the October 19 letter was in error. There were no enclosures
missing from the response. Your FOIA request was denied in full.
Your appeal is denied and Mr. McCollum's October 19 denial is
upheld pursuant to exemptions 5 and 8 of the FOIA as discussed
below.
Background
In February of 1995 you resigned your position as chairman of the supervisory committee of the Federal Credit Union. On February 9, 1995, you wrote to Mr. McCollum, informing him of your resignation and setting forth several concerns you had with the credit union and its management team, noting that these concerns were the reasons for your resignation. You requested that the NCUA investigate your concerns and allegations. Upon receipt of your February letter, the NCUA examiner for FCU contacted you and told you that your concerns would be addressed in next annual examination to take place in August, 1995. On May 15, 1995, you wrote to the Chairman of the NCUA again requesting a review of your concerns and allegations. The NCUA examiner met with you on July 31, 1995, and at the same time began annual examination. On September 8, 1995, upon completion of examination which included the investigation of your allegations, Mr. McCollum wrote to you stating that your concerns had been investigated and that NCUA concerns were addressed. You indicate in your appeal that the investigation of your allegations is separate from the annual examination and the results of the investigation should not be withheld as part of the examination.
Documents responding to your FOIA appeal include both internal
NCUA memoranda (exemption 5 documents) and examination documents
(exemption 8 documents). We believe that all of these responsive
documents should be withheld pursuant to exemption 8. The exemption
5 documents are related to examination reports and therefore should
be withheld pursuant to exemption 8. We have included a discussion
of exemption 5 because the internal memoranda are also exempt
pursuant to exemption 5. There is one additional document withheld
pursuant to exemption 5, that is a draft of the September 8, 1995
letter you received from Mr. McCollum.
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 U.S.C. 552(b)(5). The documents withheld pursuant to exemption
5 consist of three memoranda from the NCUA examiner carrying out
the investigation and a draft letter to you (draft of
9/8/95 letter to you from Mr. McCollum).
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). Three
policy purposes have been held to constitute the bases 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).
The courts have established two fundamental requirements for the deliberative process privilege to be invoked. The communication must be predecisional and it must be deliberative. Mapother v. Department of Justice, 3 F.3d 1533 (D. C. 1993). The information withheld is both predecisional and deliberative. Although exemption 5 does not always allow for entire documents to be withheld (factual information that is not deliberative in nature must be disclosed, see Mapother at 1538 - 40) the three memoranda withheld pursuant to exemption 5 are also withheld pursuant to exemption 8. Exemption 8 does not require redaction of documents, see discussion below.
The draft of the September 9, 1995 letter is withheld in its entirety
since you received the final version of the letter. The draft
is clearly a predecisional document.
We believe that all purposes and requirements of exemption 5 are
met in this case. Disclosure of predecisional thoughts included
in the memoranda and draft letter could cause injury to the quality
of agency decisions. Therefore the information described above
is withheld pursuant to exemption 5 of the FOIA.
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 U.S.C. 552(b)(8). Information withheld pursuant to exemption
8 includes the memoranda noted under exemption 5 above as well
all information contained in the annual NCUA examination
which was completed on August 23, 1995.
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 reason to withhold examination information.
The NCUA regulation implementing exemption 8 of the FOIA is found
at 12 C.F.R. 792.3(a)(8). Sections 792.3(a)(8) repeats exemption
8 and states:
This includes all information, whether in formal or informal report
form, the disclosure of which would harm the financial security of
credit unions or would interfere with the relationship between
NCUA and credit unions.
Courts have interpreted exemption 8 broadly and have declined
to restrict its all- inclusive scope. Consumers Union of United
States, Inc. v. Heimann, 589 F.2d 531 (D.C. Cir. 1978). Examination
reports as well as matters that are related to such reports (the
findings of an examination and its follow-up) have been withheld
from disclosure. See Atkinson at 80,102. Exemption
8 has been held to apply to 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). In addition, courts have generally not
required agencies to segregate and disclose portions of documents
unrelated to the financial condition of the institution. See
Atkinson at 80,103. It is appropriate to withhold
entire documents pursuant to this exemption.
You indicate in your appeal that the information you requested
has been withheld because the investigation was made a part of
annual examination. You imply that the results of
the investigation would have been made available to you pursuant
to the FOIA had the investigation been done apart from the annual
examination. We disagree. Exemption 8 applies to "examination,
operating or condition reports." Its coverage is not limited
to the annual examination. The courts have not limited exemption
8 to any specific type of examination. The investigation results
would have been withheld pursuant to exemption 8 if the investigation
had been separate from the annual examination.
We believe that the purposes of exemption 8 are met, therefore
information contained in the above noted documents continues to
be withheld pursuant to exemption (8).
Pursuant to 5 U.S.C. 552(a)(4)(B), you may seek judicial review of this determination by filing suit to enjoin NCUA from withholding the documents you requested and to order production of the documents. Such a suit may be filed in the United States District
Court in the district 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).
Sincerely,
Robert M. Fenner
General Counsel
GC/HMU:bhs
95-1138
SSIC 3212