January 28, 1997
Jerome G. Snider
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Re: FOIA Appeal
(Your letter dated December 12, 1996)
Dear Mr. Snider:
On September 17, 1996, you filed a request under the Freedom of
Information Act (FOIA) for certain documents concerning the NCUA,
the Rhode Island Share and Deposit Indemnity Corporation (RISDIC)
and Rhode Island credit unions insured by RISDIC that applied
for federal share insurance. Richard Schulman, NCUA's FOIA Officer,
responded to your request on November 15, 1996. Your request
was granted in part and denied in part. We received your appeal
of the denied documents on December 13, 1996. We sent you a notice
extending the time for a response to your appeal on December 24,
1996. Your appeal is granted in part and denied in part as discussed
below. Responsive documents are enclosed. The cost for the enclosed
documents is set forth on the enclosed invoice. We have not charged
you for new copies of the depositions since you already paid for
copies of them.
Original Request
Your requested the following in your September 17, 1996 FOIA request:
1. All documents dated or created in the period September
1, 1990 through July 1, 1991 that refer or relate to reviews,
evaluations or examinations conducted in whole or in part by,
or on behalf of, the NCUA pertaining to credit unions insured
by the Rhode Island Share and Deposit Indemnity Corporation
("RISDIC"), including, but not limited to, Brown University
Employees' Credit Union, Central Credit Union, Chariho-Exeter
Credit Union, Columbian Credit Union, Davisville Credit Union,
Providence Teachers Credit Union and Rhode Island Central
Credit Union, all of which were credit unions located and doing
business in the state of Rhode Island; and
2. All documents dated or created in the period
September 1, 1990 through July 1, 1991 that refer
or relate to findings, conclusions, or evaluations by,
or on behalf of, the NCUA with respect to RISDIC.
You also asked that NCUA make a representative(s) available to
testify about the requested documents and that an index of any
denied documents be provided.
Documents responsive to item 1. were withheld pursuant to exemption 8 of the FOIA,
(5 U.S.C. 552(b)(8)). Three redacted depositions and several letters and memoranda were released in response to item 2. The redactions were made pursuant to exemptions 6 and 8 of the FOIA (5 U.S.C. 552(b)(6) & (8). Neither testimony nor an
index were provided.
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 consisted of examination reports prepared by NCUA examiners
when the RISDIC insured credit unions applied for federal share
insurance, and, additionally, workpapers, records of action, examiner's
contact information and credit union responses to NCUA examinations.
We reassert the applicability of exemption 8 to all of these
documents. We also note that exemptions 5 and 6 of the FOIA are
applicable to portions of some of these documents.
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). Section 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). 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). 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.
Discretionary Disclosure
Although we believe all of the documents could be withheld pursuant
to exemption 8, we have determined to make a discretionary release
of some of the documents (with some redactions). The Attorney
General has issued a FOIA Memorandum establishing a "foreseeable
harm" standard governing the use of FOIA exemptions, regardless
of whether the information in question might technically fall
within a FOIA exemption. All of the requested records concern
examinations of credit unions that have been closed for six years.
None of the credit unions examined were ever federally insured,
they only applied for federal insurance. We believe that under
these particular circumstances, there is limited, if any, foreseeable
harm in disclosure of the redacted examination reports. However,
we will continue to withhold certain confidential portions of
the examinations pursuant to exemption 8. In addition, redactions
have been made for information withheld pursuant to exemptions
5 and 6 of the FOIA, as discussed below. Portions of the depositions
previously redacted and withheld pursuant to exemption 8 are also
being provided at this time. Copies of the redacted examination
reports and the depositions previously released (these copies
have less information redacted) as well as certain pieces of correspondence
not previously provided are enclosed.
We wish to emphasize that the previously withheld examination
reports, correspondence, and portions of depositions released
today are released solely pursuant to NCUA's discretionary authority.
NCUA has not waived its right to invoke exemption 8, or any other
exemption, that might be applicable to similar or related information
in the future. Courts have held that in no case has the release
of certain documents waived the exemption as to other similar
documents. On the contrary, courts have generally found that
the release of certain documents waives the FOIA exemptions only
for those specific documents released. Mobil Oil Corp. v.
EPA, 879 F.2d 698 (9th Cir. 1989).
Several hundred pages of documents consist of one credit union's
responses to loan exceptions taken by NCUA examiners. Although
these documents may technically be responsive to your request
and we have included copies of loan exceptions with some of the
other credit unions' examinations, we thought it better to provide
you with one sample page before staff copied and redacted all
of these documents. Portions of the sample document (the first
enclosure marked SAMPLE) have been redacted pursuant
to exemption 6 of the FOIA. Please let us know within ten days
of the date of this letter whether or not you wish to have copies
of the rest of the loan exception documents. The sample (including
the redactions) is representative of what the rest of the documents
will look like. You will be charged the applicable rates noted
in §792.5(b) of the NCUA Regulations if you wish to have
copies of these redacted documents.
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). Information withheld pursuant to exemption
5 in this case includes internal, predecisional memoranda concerning
the examination of Rhode Island credit unions applying for federal
share insurance. All of these documents were withheld pursuant
to exemption 8 in addition to exemption 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). 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. The memoranda withheld under exemption 5 are not final opinions of the NCUA. 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), as noted above, the documents withheld pursuant to exemption 5 are also withheld pursuant to exemption 8. Exemption 8 does not require redaction of documents, see discussion of exemption 8 above.
We believe that all purposes and requirements of exemption 5 are
met in this case. Disclosure of predecisional thoughts included
in memoranda, could cause injury to the quality of agency decisions.
Therefore, the memoranda continue to be withheld pursuant to
exemption 5 of the FOIA.
Exemption 6
Exemption 6 of the FOIA protects all information about an individual
in "personnel and medical files and similar files" where
the disclosure of such information "would constitute a clearly
unwarranted invasion of personal privacy." 5 U.S.C. 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). Most of the information withheld
concerns names, account numbers and other information concerning
delinquent borrowers. This financial information found in the
examination reports clearly meets the threshold requirement for
exemption 6 personal information. 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, 372 (1976). The public interest in the information is to
"shed light on an agency's performance of its statutory duties."
United States Department of Justice v. Reporters Committee,
489 U.S. 749 (1989). The burden of establishing that disclosure
would serve the public interest is on the requester. Carter
v. United States Department of Commerce, 830 F.2d 388, 391
(D.C. Cir. 1987). The court in Reporters Committee held
that the interest of the individual FOIA requester is not to be
considered in the balancing. The privacy interest of the individual
is to be balanced against the public interest generally in disclosure.
489 U.S. at 771-772. We believe there is minimal, if any, public
interest in disclosure of individual financial information in
the examination reports. Therefore, this information is withheld
pursuant to exemption 6 of the FOIA and the redacted documents
are released.
Waiver
One of the arguments made in your appeal is that NCUA has waived
any applicable exemptions since the NCUA examinations of the Rhode
Island credit unions you requested were the subject of testimony
and public hearings before the Select Commission to Investigate
the Failure of RISDIC-Insured Financial Institutions. As noted
above, we are releasing portions of the depositions previously
withheld. Although we are releasing redacted examination reports,
these are released pursuant to our discretionary authority. Our
authority to withhold documents was not previously waived due
to the fact that public hearings were held on the credit unions
that were the subject of those examination reports. We are not
aware of a prior release of the examination reports that would
subject us to waiver of an applicable exemption.
Vaughn Index
As part of your original FOIA request and this appeal you requested that, to the extent that access is denied to a requested document or to any portion of a document, you be provided with an index containing a description of the deleted material and a statement of the basis for withholding such document or portion of such document. This is typically known as a Vaughn index. With regard to the timing of the creation of a Vaughn index, it is well settled that a requester is not entitled to a Vaughn index during the administrative process. See e.g. Schaake v. IRS, No. 91-958, slip op. at 7-8 (S.D. Ill. June 23, 1992). The only statutory requirement applicable to an administrative agency under FOIA is that the requester be informed of the decision to withhold along with the underlying reasons. See 5 U.S.C. 552(a)(6)(A)(i) and Judicial Watch, Inc. v. Clinton, 880 F.Supp. 1, 11 (D.D.C. 1995). Courts do not generally require the submission of a Vaughn index prior to the time at which a dispositive motion is filed (normally defendant agency's motion for summary judgment). Efforts to compel a Vaughn index prior to that time are typically denied as premature. Miscavige v. IRS,
2 F.3d 366,369 (11th Cir. 1993). Hence, we are not providing
a Vaughn index at this time.
Testimony of NCUA Representative
As part of your original FOIA request and your appeal, you requested
that NCUA make one or more representatives with knowledge of the
requested documents available for deposition. The FOIA does not
require that agency representatives provide testimony regarding
requested records. The FOIA only requires that agency records
be disclosed unless subject to exemption. Your request for agency
testimony concerning requested records pursuant to the FOIA is
denied since there is no requirement under FOIA to provide such
testimony. We direct you to Part 792, subpart C of the NCUA Rules
and Regulations (12 C.F.R. 792.40 - 792.42), which addresses subpoenas
served on NCUA officials, employees or agents.
Judicial Review
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 the requester resides, where the requester's
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
Enclosures
GC/HMU:bhs
SSIC 3212
96-1225