Todd Okun, Esq.
Styskal, Wiese & Melchione
550 North Brand Boulevard, Suite 550
Glendale, CA 91203
Re: FOIA Appeal, your letter dated February 2, 2000
Dear Mr. Okun:
On December 7, 1999, you filed a Freedom of Information
Act (FOIA) Request for the application, NCUA Board Order, all
NCUA memoranda concerning the application, and any letters or
other documents submitted by third parties concerning the application
by Visions Federal Credit Union to convert to a community charter.
Dianne Salva, NCUA's FOIA Officer, replied to your request on
January 27, 2000. You were provided with over 200 pages of responsive
documents. Some of the released pages contained redactions.
Approximately 50 pages were withheld in full. The pages withheld
in full and redactions were made pursuant to exemptions 4, 5,
and 8 of the FOIA. 12 U.S.C. 552(b)(4), (5), and (8). We received
your appeal on February 7. Your appeal is granted in part and
denied in part. All of the information redacted from the approximately
200 pages released continues to be withheld pursuant to exemptions
4, 5, and 8. Several pages that were previously withheld are being
released, some in full, some with redactions. Information is
redacted pursuant to exemption 5. The newly released pages are
enclosed. A discussion of the applicable exemptions follows.
In your appeal, you specifically asked about the
basis upon which the Board Order concerning the Visions application
was withheld. There is no Board Order in this case. A Decision
and Order is only issued by the Board when it makes a determination
on appeal. There is no Decision and Order when the Board makes
the initial (and only) NCUA decision on a charter conversion application.
We have enclosed a copy of the letter sent by the Region I Director
notifying Visions of the Board's action on its conversion application.
Applicable FOIA Exemptions
Exemption 4
The information withheld pursuant to exemption 4 consists of business and marketing plans and budget and financial projections for Visions FCU. Exemption 4 of the FOIA protects two categories of information: (1) trade secrets; and (2) information which is commercial or financial, obtained from a person and privileged or confidential.
5 U.S.C.552(b)(4). All of the information withheld
falls within the commercial/financial category. The term "commercial"
has been interpreted to include anything "pertaining or relating
to or dealing with commerce." American Airlines, Inc.
v. National Mediation Board, 588 F.2d 863, 870 (2d Cir. 1978).
All of the information withheld pursuant to exemption 4 meets
the broad interpretation of commercial or financial information.
Information "obtained from a person" has been held
to include information obtained from a corporation. Nadler
v. FDIC, 92 F.3d 93, 95 (2d Cir. 1996). Information obtained
from a credit union meets the standard of obtained "from
a person" under Nadler. In Critical Mass Energy
Project v. NRC, 975 F2d 871 (D.C. Cir. 1992), cert. denied,
507 U.S. 984 (1993), the court established two distinct standards
to be used in determining whether commercial/financial information
submitted to an agency is "confidential" under exemption
4. According to Critical Mass, information required to
be submitted to an agency (which is the case here) is confidential
if its release would (1) impair the Government's ability to obtain
necessary information in the future; or (2) cause substantial
harm to the competitive position of the person from whom the information
was obtained. See National Parks & Conservation
Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974). We
believe the information withheld meets the substantial harm prong
of National Parks as noted in Critical Mass.
Exemption 5
The information withheld pursuant to exemption 5
consists of staff opinions and recommendations expressed prior
to final action by the NCUA Board. 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). The first and third policies enumerated in
Russell apply in this case. The second policy does not
apply since the NCUA Board has taken final agency action on the
Visions FCU application.
We note that several of the newly released pages (internal memoranda) were previously withheld pursuant to exemption 5. The factual information in the memoranda is now released. Redacted information continues to be withheld pursuant to exemption 5.
Exemption 8
The information withheld pursuant to exemption 8
consists of CAMEL code ratings and other financial condition and
examination information including overlap and safety and soundness
analyses for Visions FCU, as well as other credit unions within
the requested community. 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.C.
Cir. 1980). Examination information fits squarely within the
language of exemption 8. Both purposes outlined in Atkinson
are met. Release of the information withheld could reasonably
harm the financial security of a credit union and interfere with
the relationship between a credit union and NCUA.
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'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
Enclosures
GC/HMU:bhs
00-0208
SSIC 3212
FOIA 00-95