Opinion
Civil No. 03 C 195-SBC.
May 24, 2005
MEMORANDUM OPINION AND ORDER
People for the Ethical Treatment of Animals ("PETA") requested documents relating to the United States Department of Agriculture's ("USDA") decision to guarantee a loan to Hunte Corporation under the Freedom of Information Act, 5 U.S.C. § 552 ("FOIA"). Hunte is a large puppy distributor. USDA produced some documents and withheld others, claiming they were exempt from disclosure. PETA sued USDA for declaratory and injunctive relief under FOIA. USDA moves for summary judgment with respect to all withheld documents. PETA moves for summary judgment with respect to a limited number of the withheld documents.
BACKGROUND
Both parties filed statements of undisputed material facts in support of their summary judgment motions ("PETA facts" and "USDA facts"). PETA's statement contains numerous legal conclusions. See, e.g., PETA facts ¶¶ 13-15. The court disregards all legal conclusions. See Petrolite Corp. v. United States Environmental Protection Agency, 519 F.Supp. 966, 974-5 (D.D.C. 1981). The relevant material facts are undisputed.
I. PETA's FOIA Request
On December 12, 2001, PETA sent USDA a FOIA request seeking agency records related to the "USDA guaranteed rural development loan to the . . . Hunte Corporation." USDA facts ¶ 1; PETA facts ¶ 5. On December 12, 2001, USDA acknowledged receipt of PETA's FOIA request. PETA facts ¶ 6. On December 14, 2001, PETA sent another letter to USDA clarifying its request for documents. PETA facts ¶ 7. On January 17, 2002, USDA denied PETA's FOIA request in full, claiming the requested documents were exempt from disclosure under FOIA exemptions 4 and 6. USDA facts ¶ 2; PETA facts ¶ 8. On February 27, 2002, PETA appealed USDA's denial of its FOIA request. PETA facts ¶ 8. On November 27, 2002, USDA responded to PETA's appeal and released 51 full pages, and 150 redacted pages. USDA facts ¶ 4. USDA has since released additional documents. Id. II. USDA's Vaughn Index
USDA produced a Vaughn index that describes each withheld document, lists the claimed exemptions, and states a justification for withholding each document. See Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977 (1974). USDA served a corrected Vaughn index with its summary judgment motion. USDA Motion, Att. 3. Unless otherwise noted, the court refers to USDA's corrected Vaughn index.
PETA does not seek all of the withheld documents listed in the Vaughn index. PETA does not seek any documents withheld on personal privacy grounds under 5 U.S.C. § 552(b)(6) ("Exemption 6"). See Vaughn index Nos. 2, 5, 7, 14, 17 and 18. PETA does not seek redacted information relating to the transfer and assignment of Hunte's loan. See Vaughn index Nos. 57, 60, 61, 72, 73 and 74; PETA Motion at 12-13.
III. The Documents at Issue
PETA seeks Vaughn index Nos. 1, 3, 4, 6, 8-13, 16, 19-25, 27-41, 44-56, 58, 59, 62-72, 78-82 (the "withheld documents"). The corrected Vaughn index contains the following description of the withheld documents: No. Description Exemption Justification nd
PETA seeks Nos. 15, 26 and 28. According to the Vaughn index, these documents were released after PETA's appeal. PETA seeks Nos. 42 and 43. According to the Vaughn index, these documents relate exclusively to prior loans and are not responsive to PETA's FOIA request. Finally, PETA seeks Nos. 75-77. According to the Vaughn index, Nos. 75-77 are duplicates of documents PETA does not seek. Accordingly, Nos. 15, 26, 28, 42, 43, and 75-55 are not at issue in PETA's motion.
USDA does not define the terms "RIP" and "WIF" used in its Vaughn index. Presumably, they refer to "redacted in part" and "withheld in full."
USDA submits declarations of Dorothy C. Hinden, USDA FOIA Specialist, Jerry L. Finley, USDA Rural Development Manager, Andrew P. Hunte, President of Hunte Corporation, and Jeffrey A. Williams, Senior Executive Vice President of Hometown Bank, in support of its motion. Finley's declaration attests that "originals or copies of all records responsive to [PETA's] request . . . are maintained in the Springfield Area Office of Rural Development." Finley Decl. ¶ 3. He states that he searched the relevant files and gathered all records concerning the September 19, 2001 loan to Hunte. Id. at ¶ 4.
Hinden's declaration attests that the "information redacted [under Exemption 4] is revelatory of business submitter's internal operations and financial solvency to such an extent that competitive harm was (and is) foreseeable from release of such information." Hinden Decl. ¶ 17. She explains that the information withheld under Exemption 4 is not the "type customarily released to the public" because "financial statements of a closely held corporation generally are accorded confidential treatment. . . ." Id. As to the information withheld under Exemption 5, Hinden attests that "[t]o disclose this information would reveal pre-decisional communications among government personnel (i.e., discussions of the borrower's creditworthiness, business acumen, alternatives, and strategies), which would jeopardize the candid and comprehensive considerations essential for efficient and effective agency decision-making." Id. at ¶ 18. Finally, Hinden states that each document on the Vaughn index was evaluated for segregability. Where a document was withheld in its entirety, USDA determined that no meaningful portions could reasonably be segregated. Id. at ¶ 22.
Hunte's declaration states that the information provided to Hometown Bank in connection with the loan is confidential. Hunte Decl. ¶ 5. Hunte declares that the Hunte Corporation is his principal financial asset and the requested information reveals his and his wife's personal financial circumstances. Id. at ¶ 6. According to Hunte, disclosure of the requested information would competitively harm the Hunte Corporation because the puppy business is highly competitive. Id. at ¶¶ 7-9. Hunte declares that the Hunte Corporation must aggressively compete to purchase high quality puppies. Id. at ¶ 9. He attests that if Hunte's financial information is publicly disclosed, breeders would gain a strong competitive edge in the negotiating process. The information would allow breeders to determine Hunte's margins, capital structure, and prices previously paid on a per puppy basis. Id. Hunte's declaration explains how disclosure of confidential business information would undermine the ability to compete fairly with competitors for the purchase of puppies from breeders, and would allow customers and competitors to calculate price on a per puppy basis. Id. at ¶¶ 10-11.
Finally, Williams' declaration attests that Hometown Bank's ability to conduct business would be severely undermined if the bank could not assure its customers that personal financial information provided in connection with applying for a loan would remain exempt from public disclosure. Williams Decl. ¶ 6. Williams explains that the bank's business is highly dependent on the ability of its customers to obtain loan guarantees from agencies such as the Small Business Administration, the Farm Services Agency and the USDA. Id. at ¶¶ 6-7. According to Williams, the bank does everything possible to protect the confidentiality of information received from its clients in connection with applying for a loan. Id. at ¶ 8.
IV. In Camera Review
On April 25, 2005, the court ordered USDA to submit Vaughn index Nos. 9, 16, 20-22, 24-25, 36-41, 44, 49, 51, 53-55, 59, 62, 78-79, 81 for in camera inspection. USDA submitted the requested documents on May 10, 2005. The court has completed its in camera review.
DISCUSSION
I. Standard of Review
Summary judgment is appropriate when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Kaempe v. Myers, 367 F.3d 958, 966 (D.C. Cir. 2004). A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion, and identifying evidence that demonstrates the absence of a genuine issue of material fact. The non-moving party must then come forward with evidence and designate specific facts that establish there is a genuine triable issue. Kingman Park Civic Ass'n. v. Williams, 348 F.3d 1033, 1041 (D.C. Cir. 2003). A genuine issue of material fact exists when the evidence could support a reasonable jury verdict for the nonmoving party. Waterhouse v. District of Columbia, 298 F.3d 989, 992 (D.C. Cir. 2002).
II. Sufficiency of USDA's Search for Documents
USDA contends it conducted an adequate search for documents responsive to PETA's FOIA request. PETA argues USDA has failed to meet its burden of proving it conducted an adequate search for responsive documents. More specifically, PETA argues USDA has not shown it searched all files likely to contain responsive information. The crux of PETA's argument is that because documents produced refer to other documents that were not produced or listed on the Vaughn index, USDA's search was inadequate.
In deciding whether an agency's document search is adequate, the issue is not whether other responsive records might possibly exist, but whether the search was adequate, judged by a reasonableness standard. Wilbur v. Central Intelligence Agency, 273 F.Supp.2d 119, 124 (D.D.C. 2003). The burden rests with the agency to establish that it made a good faith effort to conduct a search for the requested records, using methods that can be reasonably expected to produce the requested information. Oglesby v. United States Dep't of Army, 920 F.2d 57, 68 (D.C. Cir. 1990). An agency may rely on affidavits to demonstrate the reasonableness of its search. Ferranti v. Bureau of Alcohol, Tobacco Firearms, 177 F. Supp. 2d 41, 45 (D.D.C. 2001). The affidavits must set forth the type of search performed and attest that all files likely to contain responsive materials were searched. Oglesby, 920 F.2d at 68.
USDA has established that it conducted an adequate search for responsive documents. Finley attests that "all records responsive to [PETA's] FOIA request . . . are maintained in the Springfield Area Office of Rural Development." Finley Dec. ¶ 3. He further attests that he "searched the relevant files and gathered all records concerning the September 19, 2001, loan to the Hunte Corporation. . . ." Id. at ¶ 4. Finley's declaration sets forth the type of search performed and attests that all files likely to contain responsive materials were searched. The fact that some of the produced documents refer to other documents does not rebut this evidence because an agency need not establish that all responsive documents were located. See Perry v. Block, 684 F.2d 121, 128 (D.C. Cir. 1982). The undisputed evidence establishes that USDA's search was reasonable.
III. Sufficiency of the Vaughn Index
PETA argues USDA's Vaughn index does not support the claimed exemptions. USDA counters that its Vaughn index provides sufficient information to explain why the claimed exemptions apply to each document. A Vaughn index must adequately describe each withheld document, state which exemption the agency claims for each withheld document, and explain the exemption's relevance. Johnson v. Executive Office for United States Attorneys, 310 F.3d 771, 774 (D.C. Cir. 2002). A Vaughn index must be sufficiently detailed so the court can review the applicability of the claimed FOIA exemptions on a document by document basis. Judicial Watch, Inc. v. United States Postal Service, 297 F. Supp. 2d 252, 270 (D.D.C. 2004). An agency may submit other materials to supplement its Vaughn index, such as affidavits, that give the court enough information to determine whether the claimed exemptions are properly applied. Id. at 257.
USDA's Vaughn index and supporting documents insufficiently describe Vaughn index Nos. 9, 16, 20-22, 24-25, 36-41, 44, 49, 51, 53-55, 59, 62, 78-79, 81. Accordingly, the court ordered USDA to produce those documents for in camera inspection. The Vaughn index and supporting declarations sufficiently describe the remaining documents. USDA asserts Exemption 4 for most of the withheld document and Exemption 5 (the deliberative process privilege) for a few of the withheld documents.
IV. FOIA Exemption 4 — Confidential Financial Information
USDA asserts a majority of the withheld documents are exempt because they contain Hunte's confidential financial information. PETA concedes the withheld documents contain Hunte's commercial or financial information, but denies the information is privileged or confidential. FOIA's purpose is to assure public access to all government documents, subject to only nine narrowly interpreted limitations. Coastal States Gas Corp. v. Dept. of Energy, 617 F.2d 854, 862 (D.C. Cir. 1980). Exemption 4 permits an agency to withhold records that contain "trade secrets" or information that is (1) commercial or financial, (2) obtained from a person, and (3) privileged or confidential. 5 U.S.C. § 552(b)(4); National Parks Conservation Assoc. v. Morton, 498 F.2d 765, 766 (D.C. Cir. 1974) ( National Parks I). Information is privileged or confidential for purposes of Exemption 4 if disclosure would be likely either: (1) to impair the government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained. National Parks I, 498 F.2d at 770. The financial information exemption recognizes the need of government policy makers to have access to commercial and financial data in order to make intelligent, well informed decisions. Id. at 767.
A. Government's Ability to Obtain Information
In National Parks I, plaintiff requested audits of books maintained by concessioners operating in national parks, annual financial statements filed by the concessions with the national parks service, and other financial information. Id. at 770. The agency withheld the documents under Exemption 4. Id. at 766. The district court granted summary judgment for the national parks service. Id. The appellate court reversed and remanded the case for further proceedings to determine whether disclosure of the documents would likely cause substantial harm to the concessioners' competitive positions. Id. at 771. The court noted that the concessioners were required to submit the requested financial information to the national parks service in order to operate a concession in the national parks. Accordingly, there was no danger that public disclosure of the information would impair the government's ability to obtain the information. Id. at 770. Nevertheless, the documents would still be exempt if disclosure was likely to cause substantial harm to the concessioners' competitive positions. Id.
Similarly, here borrowers and lenders are required to submit documents to USDA in order to apply for a USDA guaranteed business and industry loan. For example, applicants must provide an application, a business plan and a description of the business and project for which the loan proceeds will be used. See 7 C.F.R. § 4279.161. The borrower must establish the loan or guarantee proceeds will be used for a project that will provide employment, improve the economic or environmental climate, promote conservation, development and use of water for aquaculture or reduce reliance on nonrenewable energy resources. See 7 C.F.R. § 4279.108. The lender is required to submit documentation to USDA. See, e.g., 7 C.F.R. §§ 4279.131, 4279.137, 4279.144. As in National Parks I, USDA's ability to obtain information in the future would not be impaired by disclosure of the withheld documents because federal regulations require borrowers and lenders to submit the information to apply for a USDA guaranteed loan.
B. Substantial Harm to Hunte's Competitive Position
The court must next consider whether disclosure of the withheld documents would cause substantial harm to Hunte's competitive positions. To satisfy this burden, USDA must show: (1) Hunte faces actual competition; and (2) Hunte would suffer substantial competitive injury from disclosure. National Parks Conservation Assoc. v. Kleppe, 547 F.2d 673, 679 (D.C. Cir. 1976) ( National Parks II). USDA's failure to show either element requires disclosure of the documents. Id.
1. Actual Competition
USDA relies on Hunte's declaration to establish Hunte's competition. Hunte's declaration attests that his business is "highly competitive both with respect to the purchasing of the highest quality animals, as well as the sale of those animals to retail pet stores." Hunte Decl. ¶ 7. Hunte declares that there are "at least a half dozen or more large licensed distributors . . . as well as about 50 smaller competitors . . ." Id. Hunte describes how his company competes with other distributors for the best available puppies. Id. at ¶¶ 9-10. PETA argues the declaration is too generic to show actual competition.
In support of its argument, PETA relies on Miami Herald Publishing Co. v. United States Small Business Administration, 670 F.2d 610 (5th Cir. 1982), where the appellate court affirmed an order compelling the Small Business Administration ("SBA") to disclose documents relating to loans made or guaranteed by SBA. Id. at 614-15. SBA argued the documents were exempt under Exemption 4, but provided no evidence that the borrowers were in actual competition with anyone. Id. at 614. PETA's reliance on Miami Herald is misplaced because Hunte's declaration describes actual competition Hunte faces in the puppy distribution industry.
PETA also cites Niagra Mohawk Power Corp. v. United States Dep't of Energy, 169 F.3d 16 (D.C. Cir. 1999) and Gulf Western Ind. v. United States, 615 F.2d 527 (D.C. Cir. 1980). In Niagra Mohawk, the court found the agency's assertions of competition "somewhat conclusory." Id. at 18. The court did not identify the conclusory assertions. Plaintiff rebutted the agency's conclusory assertions with specific evidence that there was no actual competition in the industry. Id. at 18-19. Niagra Mohawk is distinguishable on several grounds. First, Hunte's declaration is not conclusory. He lists the number of competitors in the puppy distribution industry and describes the nature of the competition. Second, PETA has not offered evidence to contradict Hunte's testimony. PETA relies on Smith's declaration, Smith attests that Hunte shipped more puppies out of Missouri than any other puppy breeder or broker and that Hunte's business is growing. Smith Decl. ¶¶ 6, 8-9. This testimony does not establish a lack of competition.
In Gulf Western, the court found actual competition based on a stipulation that identified a competitor by name. 615 F.2d at 530, n. 7. Gulf Western is inapposite because the court did not hold that an agency must always identify a competitor by name to show actual competition. Hunte's declaration describes the number of competitors in the puppy distribution business. His testimony is not speculative; it is based on his thirteen years of experience in the puppy distribution industry.
In National Parks II, the court held the national parks agency sustained its burden of showing actual competition for a majority of the concessioners. 547 F.2d at 682-83. The agency introduced evidence that the concessioners faced competition not only from other concessioners, but from nearby hotels, gas stations and restaurants. Id. The concessioners competed with motels, gas stations and restaurants for the same tourists, thus demonstrating actual competition. Id. Similarly, Hunte's declaration establishes that his business competes with numerous large and small puppy distributors in the purchase and sale of puppies. USDA has shown that Hunte faces actual competition in the puppy distributor business.
2. Substantial Competitive Injury
Next, the court considers whether Hunte will suffer substantial competitive injury if information contained in the withheld documents is released. USDA relies on Hunte's and Williams' declarations to establish substantial competitive injury. PETA argues the declarations are too conclusory to establish substantial competitive injury. To sustain its burden, USDA must show a likelihood of substantial competitive injury. Judicial Watch, Inc. v. Export-Import Bank, 108 F. Supp. 2d 19, 29 (D.D.C. 2000). An agency can establish a likelihood of substantial competitive injury by demonstrating that disclosure would provide competitors with valuable insights into the company's operations, give competitors pricing advantages over the company, or unfairly advantage competitors in future business negotiations. National Parks II, 547 F.2d at 684; Center for Public Integrity v. Dep't of Energy, 191 F. Supp. 2d 187, 194 (D.D.C. 2002); Export-Import Bank, 108 F. Supp. 2d at 29. Conclusory and generalized assertions of substantial competitive harm are insufficient. Public Citizen Health Research Group v. Food Drug Administration, 185 F.3d 898, 906 (D.C. Cir. 1999).
In National Parks II, 547 F.2d at 684, the court held detailed and comprehensive financial records were covered by Exemption 4 because disclosure of the financial records would likely cause substantial harm to the concessioners' competitive positions. Because the concessioners faced competition, the court held it was "virtually axiomatic" that disclosure of detailed financial records would cause substantial competitive injury. Id. The court stated:
[d]isclosure would provide competitors with valuable insights into the operational strengths and weaknesses of a concessioner. . . . Selective pricing, market concentration, expansion plans and possible take-over bids would be facilitated by knowledge of the financial information the Association seeks. Suppliers, contractors, labor unions and creditors, too, could use such information to bargain for higher prices, wages or interest rates, while the concessioner's unregulated competitors would not be similarly exposed. [The agency's] experienced witness described each schedule of the Concessioner Annual Report and explained how competitors could use this information to the detriment of the concessioners.Id.; see also Export-Import Bank, 108 F.Supp.2d at 29 (release of financial records and export plans of insurance applicant would cause substantial competitive injury; documents were covered by Exemption 4).
a. Williams' Declaration
Williams' declaration attests that Hometown Bank's business would suffer if the information contained in the withheld documents is disclosed because bank customers would be unwilling to participate in federal loan guarantee programs if their financial records may be disclosed under FOIA. Williams Decl. ¶¶ 6-7. This testimony is too conclusory and speculative to demonstrate substantial competitive injury. See Brownstein Zeidman Schomer v. Dep't of the Air Force, 781 F.Supp.31.33 (D.D.C. 1991) (Exemption 4 does not apply where competitive injury is speculative). Williams cannot possibly know whether bank customers would refuse to participate in federal loan guarantee programs if the information is subject to FOIA disclosure. In any event, Williams' declaration does not demonstrate that release of the withheld information would put Hometown Bank at a competitive disadvantage, e.g., that a competitor would use the information to harm Hometown Bank. Indeed, all banks would suffer the same alleged harm if financial information from federal loan applicants is subject to FOIA disclosure. Moreover, Williams has not established the number of loans Hometown Bank would lose if the information was disclosed. Absent such a showing, Hometown Bank cannot establish substantial competitive injury. Accordingly, Williams' declaration does not evidence substantial competitive injury.
b. Hunte's Declaration
Hunte's declaration states that his business would be competitively injured if the withheld documents were released. More specifically, Hunte declares:
• If information regarding financial structure were released, breeders would gain a strong competitive edge in the negotiating process. They would be able to calculate Hunte's margins and prices paid to suppliers and would demand that those prices be met. The breeders would be able to determine Hunte's capital structure and condition, which would give them an advantage in price negotiations. Hunte Decl. ¶ 9.
• Disclosing confidential business information would unfairly benefit Hunte's competitors. Hunte's ability to compete fairly with other distributors when purchasing puppies from breeders would be undermined. Hunte Decl. ¶ 10.
• Release of financial statements would allow any customer or competitor to calculate Hunte's prices and operating margins. Disclosure of this information would provide competitors and customers the ability to undercut Hunte's prices. Hunte Decl. ¶¶ 11-12.
3. Analysis
Hunte's declaration establishes substantial competitive injury if detailed financial statements and records are publicly released. The court must determine whether the withheld documents contain detailed financial information. The Vaughn index indicates that numerous withheld documents consist of financial statements, balance sheets, pro formas, income statements, and similar detailed financial records. See Nos. 1,3,4,6,8, 10-13, 19,23,56,58, and 82. The Vaughn index indicates other documents contain detailed information regarding Hunte's credit history. See Nos. 29-35,45, 47-48, 50,52, 63-64, 66-71. This type of financial information is generally exempt from disclosure under Exemption 4. See, e.g., National Parks II, 547 F.2d at 684; Export-Import Bank, 108 F.Supp.2d at 29; Rural Housing Alliance v. United States Dep't of Agriculture, 498 F.2d 73, 78-79 (D.C. Cir. 1974) (district court's decision that Exemption 4 did not cover USDA investigatory report that contained financial information regarding loan applications was reversed; Exemption 4 covered financial information from loan applicants contained in the report). Hunte's declaration establishes that Hunte would likely suffer substantial competitive injury if this information were released. Accordingly, USDA's summary judgment motion must be granted and PETA's summary judgment motion must be denied with respect to these documents.
The court inspected document Nos. 9,16, 20-22, 24-25, 36-41, 44,49,51, 53-55, 59,62, 78-79, and 81 on a line-by-line basis to determine whether releasing them would likely cause Hunte substantial competitive injury. Most of the redacted information falls into one of the following categories: Hunte's intended use of loan proceeds, repayment terms and conditions for the loan, security pledged for the loan, Hunte's credit history and Hunte's business objectives and plans. For example, document No. 9 lists Hunte's creditors, the original loan amounts, loan balances, interest rates and maturity dates. The redacted portions of document No. 40 reveal the intended use of loan proceeds and Hunte's credit history. Document 53 contains detailed financial information regarding Hunte's business. USDA properly redacted the inspected documents under Exemption 4, with some exceptions.
Document Nos. 27, 46, 65 and 80 are duplicates of previously disclosed documents.
First, although USDA disclosed the amount of the loan ($900,000), it withheld the percentage of the loan amount guaranteed by USDA and the guarantee fee paid by Hunte. USDA has not explained how releasing this information would competitively injure Hunte. It is difficult to imagine how Hunte would be competitively injured if competitors knew how much of the $900,000 loan was guaranteed by USDA and the fee Hunte paid for the loan. Accordingly, USDA has not satisfied its burden with respect to this information. PETA's summary judgment motion must be granted and USDA's summary judgment motion must be denied with respect to this information contained in document Nos. 16-1, 21-2 (item 4), 36-1, 38-1 (item 2), 39-1, 51-1 (items 7 and 10), 53-1, and 54.
Second, USDA redacted information that duplicates information disclosed in other documents. "[A]n agency may waive its claim that information is exempt from disclosure if a FOIA plaintiff carries his `burden of pointing to specific information in the public domain that appears to duplicate that being withheld.'" Assassination Archives Research Center v. Central Intelligence Agency, 334 F.3d 55, 59 (D.C. Cir. 2003). The disclosed information must be "as specific as" and "match" the requested information for waiver to applying a FOIA case. Id. at 60. Document Nos. 16 and 39 are duplicates. Document No. 16 redacts identical information previously released in document No. 39. USDA waived Exemption 4 with respect to document No. 16 by releasing the same information as part of document No. 39. However, because PETA has the identical information in document No. 39, requiring USDA to provide an unredacted document No. 16 would serve no purpose.
USDA redacted other information that duplicates disclosed information. Document No. 16 consists of proposed loan conditions and document No. 38 appears to be final loan conditions. Although the two documents are not identical, some of the information redacted from document No. 38 duplicates information that was released as part of document No. 16 See Document 38-3, ¶¶ 7, 8, 9, 11, 12, 13, 15, 16. USDA has not established Hunte would suffer substantial competitive injury if this information were released as part of document No. 38. Nor has USDA established Hunte would suffer substantial competitive injury if the information contained in ¶¶ 5 and 6 of document No. 38 were released. Both paragraphs contain boiler plate loan terms. Accordingly, PETA's summary judgment motion must be granted and USDA's summary judgment motion must be denied with respect to the information contained in ¶¶ 5-9, 11-13, 15, 16 of document No. 38.
Third, USDA failed to meet its burden of establishing the release of other redacted information would likely injure Hunte's competitive position. For example, USDA redacted the number of days Hunte had to comply with the loan conditions on document No. 41-2. USDA redacted other boilerplate loan terms and conditions from document Nos. 44, 51-1, and 62. USDA has not met its burden of showing Hunte would likely suffer competitive injury if this innocuous information were released. PETA's summary judgment motion must be granted and USDA's cross-motion must be denied with respect to information redacted from document Nos. 41-2 (number of days), 44 (number of days), 51-1 (item 6), and 62 ("accrual method", "cost maturity rate" and "late charge" redactions).
Finally, USDA withheld document Nos. 59 and 79 in full. The documents are duplicates and consist of an assignment of the guaranteed portion of the loan. USDA has not established Hunte would suffer competitive injury if most of the information contained in these documents were released. PETA's motion must be granted and USDA's cross-motion must be denied with respect to information contained in document Nos. 59 and 79, except for the interest rate, balance of the guaranteed loan and prepayment penalty terms.
4. PETA's Other Arguments
PETA claims Hunte would not be competitively injured by release of historic financial information. PETA relies on Center for Public Integrity v. Dep't of Energy, 191 F.Supp.2d 187 (D.D.C. 2002) and Teich v. Food Drug Administration, 751 F.Supp. 243 (D.D.C. 1990). In Center for Public Integrity, plaintiff sought records relating to bids received by the Department of Energy for the sale of a parcel of property. In holding that Exemption 4 did not apply to the names of bidders and the aggregate amount of bids, the court recognized that documents containing more detailed financial information are protected by Exemption 4. Id. at 195. The court distinguished the bid information sought from the type of detailed financial records typically protected under Exemption 4, such as audits, profit margins, inventory balances or appraisal values. Id. Moreover, the Department of Energy established that the competitive industry had changed since the bids were submitted, thus mitigating the potential for competitive harm. Id.
In Teich, plaintiff sought documents Dow-Corning submitted to the Food and Drug Administration ("FDA") relating to animal studies and customer complaints about silicone breast implants. 751 F.Supp. at 245. FDA withheld the requested documents under Exemption 4, claiming disclosure would cause Dow-Corning's substantial competitive injury. In rejecting FDA's argument, the court noted that most of the studies were conducted as much as 20 years age. Consequently, it was unlikely Dow-Corning's competitors would use the information to prepare current drug applications. Id. at 253-54.
PETA's reliance on both cases is misplaced. First, unlike the plaintiff in Center for Public Integrity, PETA requests detailed financial records that are routinely protected under Exemption 4. Second, PETA has not established a significant change in the competitive industry from 2001 through the present. Third, unlike the documents requested in Teich, Hunte's detailed financial records from three and four years ago are not so old as to render them useless to competitors. Indeed, many documents contain forward-looking information such as the intended use of the loan proceeds. See, e.g., Documents Nos. 27, 38, 40.
V. FOIA Exemption 5 — Deliberative Process Privilege
USDA claims document Nos. 22, 49 and 81 are exempt under 5 U.S.C. § 552(b)(5) ("Exemption 5"). The court inspected these documents in camera. Document No. 22 is an internal USDA memorandum regarding the Hunte loan guarantee. USDA redacted several paragraphs from the two-page document. Document No. 49 is an internal agency scoring sheet used to analyze and recommend approval or disapproval of Hunte's loan guarantee. USDA redacted the scores. Document No. 81 is a three-sentence recommendation relating to Hunte's loan guarantee. USDA withheld document No. 81 in full.
Under Exemption 5, an agency may withhold "inter-agency or intra-agency memorandums or letters which would not be available by law to a party . . . in litigation with the agency." Exemption 5 encompasses the deliberative process privilege. Coastal States, 617 F.2d at 862. The deliberative process privilege protects confidential intra-agency advisory opinions when disclosure would be injurious to the consultative functions of government. Taxation with Representation Fund v. Internal Revenue Service, 646 F.2d 666, 677 (D.C. Cir. 1981). The deliberative process privilege has a number of purposes; it serves to assure that subordinates within an agency will be free to provide the decision-maker with their uninhibited opinions and recommendations without fear of later being subject to public ridicule or criticism; to protect against premature disclosure of proposed policies before they are finally formulated or adopted; and to protect against confusing the issues and misleading the public by dissemination of documents suggesting reasons and rationale for a course of action that were not in fact ultimate reasons for the agency's actions. Coastal States, 617 F.2d at 866, citing, Jordan v. U.S. Dep't of Justice, 591 F.2d 753, 772-774 (D.C. Cir. 1978). Documents covered by the privilege are those that would inaccurately reflect or prematurely disclose agency views, suggesting that a personal position is the agency's position. Coastal States, 617 F.2d at 866. For the deliberative process privilege to apply, a document must be both predecisional and deliberative. Id.
A. Predecional
A document is predecisional if it was generated before adoption of an agency policy. Coastal States, 617 F.2d at 866. Documents prepared to assist a decision-maker in arriving at a final decision are predecisional. Quarles v. Dep't of Navy, 893 F.2d 390, 392 (D.C. Cir. 1990). Document Nos. 22 and 49 pre-date USDA's decision to guarantee Hunte's loan. Document No. 81 is undated. However, the context of the document suggests it is predecisional and Hinden's declaration attests that it is. Hinden Decl. ¶ 18. USDA has met its burden of establishing the first element for each of the three documents.
B. Deliberative
A document is deliberative if it reflects the "give-and-take of the consultative process." Coastal States, 617 F.2d at 866. Factual material is not protected by the deliberative process privilege. Judicial Watch, Inc. v. United States Postal Service, 297 F. Supp. 2d 252, 259 (D.D.C. 2004). Deliberative documents are those reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated. Id. Recommendations, draft documents, proposals, suggestions, and other subjective documents that reflect personal opinions of the writer rather than policy of the agency are deliberative. Coastal States, 617 F.2d at 866.
All three documents are deliberative. They contain USDA's deliberations and recommendations regarding the Hunte loan guarantee. USDA has met its burden of establishing these documents are covered by the deliberative-process privilege.
CONCLUSION
There are no disputed factual issues. The parties' motions for summary judgment [20-1 and 21-1] are granted in part and denied in part. Judgment is entered for PETA and against USDA with respect to the above described information contained in document Nos. 16-1, 21-2, 36-1, 38, 39-1, 41, 44, 51-1, 53-1, 54, 59, 62, 79. USDA shall release this information to PETA by June 6, 2005. Judgment is entered for USDA and against PETA with respect to the remaining documents.