November 30, 1999
Todd Okun, Esq.
Styskal, Wiese & Melchione, LLP
550 North Brand boulevard, Suite 550
Glendale, CA 91203
Re: FOIA Appeal, your letter dated October 26, 1999
Dear Mr. Okun:
On September 8, 1999, you filed a Freedom of Information Act (FOIA)
request for the applications, regional office summaries and Board
orders for the community charter/expansion approvals of Point
Mugu Federal Credit Union, CBC Federal Credit Union, First Service
Federal Credit Union, Kennedy Space Center Federal Credit Union
and El Paso Federal Credit Union. Dianne Salva, NCUA's FOIA Officer,
replied to your request on October 19, 1999. You were provided
with over 2000 pages of responsive documents. Some of the released
pages contained redactions. Close to 400 pages were withheld
in full. The redactions and pages withheld in full were made
pursuant to exemptions 4, 5, 6, and 8 of the FOIA. 12 U.S. C.
552(b)(4), (5), (6) and (8). Your appeal is granted in part and
denied in part. Enclosed are 23 pages of newly released information.
Some of these pages contain redactions. The remaining pages
withheld in part and in full continue to be withheld pursuant
to exemptions 4, 5, 6 and 8 of the FOIA. A short description
of the requested and responsive documents for each credit union
and an explanation of the applicable exemptions follows.
Credit Unions
Point Mugu Federal Credit Union
Approximately 370 pages were released with no redactions, no pages
were withheld in full.
First Service Federal Credit Union
Approximately 950 pages were released with no redactions. Approximately
210 pages were withheld in full. Information withheld concerned
business and marketing policies and plans, audit opinion letters,
financial projections, overlap analysis, and examination information
for First Service FCU. Information was withheld pursuant to exemptions
4, 5, 6 and 8 of the FOIA. Enclosed are 4 unredacted pages and
portions of 5 pages, all previously withheld in full. The remaining
pages withheld in full and the portions redacted from the newly
released pages continue to be withheld pursuant to exemptions
4, 5, 6 and 8.
CBC Federal Credit Union
Approximately 200 pages were released, some with redactions.
Ms. Salva's letter indicates that approximately 123 pages were
withheld in full. The number of pages withheld in full is actually
closer to 100. Information redacted and pages withheld in full
concerned the financial condition and CAMEL ratings, non-final
staff opinions, examination and follow-up examination information
of CBC FCU and other credit unions; and financial projections
and marketing and business plans for CBC FCU. The information
was withheld pursuant to exemptions 4, 5, and 8 of the FOIA.
Enclosed are 10 unredacted pages and portions of 4 pages that
were previously withheld in full. The remaining pages withheld
in full and the portions redacted from the newly released pages
continue to be withheld pursuant to exemptions 4, 5, and 8.
Kennedy Federal Credit Union
Approximately 286 pages were released with only one redaction
for a CAMEL code rating. Approximately 60 pages were withheld
in full. Information withheld includes examination material,
CAMEL code ratings and business and marketing plans and projections
for Kennedy FCU. The information was withheld pursuant to exemptions
4 and 8 of the FOIA. The redaction and all pages withheld in
full continue to be withheld pursuant to exemptions 4 and 8.
El Paso Federal Credit Union
Approximately 300 pages were released, some with redactions.
No pages were withheld in full. Information redacted concerned
the financial condition and CAMEL ratings of El Paso FCU and other
credit unions, and some information on business planning for El
Paso FCU. The redacted information was withheld pursuant to exemptions
4 and 8 of the FOIA. None of the information redacted in the
El Paso package is being released. The information continues
to be withheld pursuant to exemptions 4 and 8.
Applicable FOIA Exemptions
Exemption 4
The information withheld pursuant to exemption 4 consists of business and marketing plans and budget and financial projections for credit unions that applied for the charter changes. 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 is 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 and redacted pursuant to exemption 5
consists of staff opinions and recommendations expressed prior
to final action by the applicable Regional Office or the NCUA
Board. Exemption 5 o 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 five community applications.
Exemption 6
The information withheld pursuant to exemption 6 consists of personal information about officials of one of the credit unions applying for a charter expansion. Exemption 6 of the FOIA protects 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). 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, 272 (1976). Personal information about FCU officials
has been redacted from three of the released pages. This information
meets the threshold requirement for exemption 6 protection. There
is minimal, if any, public interest in disclosing this personal
information. The individuals' privacy interests outweigh any
public interest in disclosure.
Exemption 8
The information withheld pursuant to exemption 8 consists of CAMEL
code ratings and other financial condition and examination information
including overlap analyses and safety and soundness concerns for
the credit unions that applied for charter changes, as well as
other credit unions within the requested communities. 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
GC/HMU:bhs
99-1105
SSIC 3212
Enclosure