August 28, 2020
SENT BY E-MAIL
XXXX
XXXX
Re: 2020-APP-00004; Appeal of Response 20-FOI-00079
Dear XXXX:
By correspondence of June 12, 2020, you submitted a Freedom of Information Act (FOIA) request (20-FOI-00079), requesting the names of credit unions that are currently direct members of the Central Liquidity Facility (CLF).
By letter of July 27, 2020, a senior attorney advisor in the National Credit Union Administration’s (NCUA) Office of General Counsel responded to your request and advised that your request was denied. However, we offered you related summary information about CLF membership.1
Regular (i.e., direct) CLF member names were withheld as exempt from FOIA release under one or both of the statutory exemptions at 5 U.S.C. § 552(b)(4) and (8). Our response explained that Exemption 4 protects trade secrets and commercial or financial information obtained from a person that is privileged or confidential, and Exemption 8 protects matters that are 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.
You have appealed this determination in a correspondence dated August 2, 2020.2 Your appeal is denied, as discussed more fully below.
Your appeal argues that our July 27 denial contradicts the NCUA’s past publication of the names of the CLF’s direct members in the NCUA’s annual reports to Congress.3 In support of this contention, you cite as examples the 1987 and 1992 annual reports, which list the names of the CLF’s regular members. You argue that neither the cited FOIA exemptions nor the CLF legislation has changed since those member listings were published. You contest the applicability of Exemption 4, asserting that, as the CLF is a mixed private-public corporation, trade secrets are not involved. In addition, you question the logic of applying Exemption 8, asserting the agency could not have publicized member lists in the past if CLF membership were an examination matter. Upon review, we affirm the denial.
The CLF is a mixed-ownership government corporation under the Government Corporation Control Act,4 existing within the NCUA and managed by the CLF’s president under the oversight of the NCUA Board. The CLF’s purpose is to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls. The CLF accomplishes its purpose by lending funds to members, subject to certain statutory limitations, when a liquidity need arises. Membership in the CLF is open to all credit unions that purchase a prescribed amount of capital stock.5 Generally, only natural person credit unions are subscribed as regular members and may borrow from the CLF directly. However, to provide liquidity support to the credit union system during the COVID-19 pandemic, the recently enacted CARES Act6 amended the Federal Credit Union Act to permit temporary direct access for corporate credit unions in addition to natural-person credit unions.7 As noted in our July 27 response, as of that date, there were 324 regular members of the CLF.
While you correctly note that the NCUA in the past published CLF member lists in its annual reports to Congress, the agency discontinued this practice in 1992. In the intervening three decades since that time, the NCUA’s longstanding and current policy has been to keep CLF member names confidential to avoid any unfair stigmatization or loss of public trust of credit unions that choose to borrow directly from the CLF. Public disclosure of credit unions’ CLF membership status could lead outside parties to speculatively draw adverse inferences about an institution’s safety and soundness or health and condition. Thus, CLF member names are no longer published in the NCUA’s annual reports.
In any regard, the FOIA’s exemptions are discretionary, not mandatory.8 The NCUA is entitled to exercise its administrative discretion by making discretionary disclosure of exempt information, so long as such disclosure is not otherwise prohibited under law.9 Courts have observed that the FOIA’s exemptions “simply permit but do not require, an agency to withhold exempted information.”10 As such, an agency’s decision whether to release information can “be grounded either in its view that none of the FOIA exemptions applies, and thus that disclosure is mandatory, or in its belief that release is justified in the exercise of its discretion, even though the data fall within one or more of the statutory exemptions.”11
Furthermore, courts have opined that “disclosure of a similar type of information in a different case does not mean that the agency must make its disclosure in every case.”12 An agency’s exercise of its administrative discretion to make a voluntary disclosure does not waive the right to withhold records of a “similar nature.”13 Courts have routinely held that the release of certain documents waives FOIA exemptions only for those documents released.14 Courts have refrained from adopting a waiver rule on discretionary disclosure that would “create an incentive against voluntary disclosure of information,”15 since doing so would “deter agencies from voluntarily honoring FOIA requests,”16 and “create the untenable result of discouraging the government” from making such voluntary disclosures.17 Indeed, “courts have refused to find that the discretionary disclosure of a document effectuates a waiver of other related documents,”18 because to find otherwise “would be contrary to both case law on waiver and to the policies underlying FOIA.”19 Accordingly, any prior discretionary disclosure of exempt information by the NCUA does not constitute a waiver of applicable FOIA exemptions as to other similar information.
We disagree with your assertion that Exemption 4 is inapplicable because, as a private-public mixed-ownership government corporation, trade secrets do not apply with respect to the CLF. In fact, Exemption 4 protects not only trade secrets, but also “commercial or financial information” obtained from a person20 that is “privileged or confidential.”21 The word “confidential” is not defined in the FOIA but the Supreme Court recently issued an opinion in Food Marketing Institute v. Argus Leader Media addressing the meaning of this term for purposes of Exemption 4.22 Under Argus Leader, the Supreme Court held that the term “confidential” must be given its “ordinary” meaning of “private” or “secret.”23 The Court also suggested two conditions might be required for information communicated to another to be considered confidential. First, “information communicated to another remains confidential whenever it is customarily kept private, or at least closely held, by the person imparting it.”24 Second, “information might be considered confidential only if the party receiving it provides some assurance that it will remain secret.”25 Accordingly, “at least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.”26
Additionally, Exemption 8 also remains available. Exemption 8 provides for protection against release of 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.27 Courts have interpreted Exemption 8 broadly and have declined to restrict its all-inclusive scope.28 CLF regular member names meet this broad standard insofar as a credit union’s utilization of an emergency liquidity lending program is related to its condition. Moreover, the fact that the requested information is only in possession of the NCUA due to its regulatory and supervisory relationship with CLF member credit unions lends further support to an implied assurance of confidentiality for purposes of Exemption 4, as described above.
For these reasons, your FOIA appeal is denied.
Pursuant to 5 U.S.C. §552(a)(4)(B) of FOIA, 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 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).
The 2007 FOIA amendments created the Office of Government Information Services (OGIS) to offer mediation services to resolve disputes between FOIA requesters and Federal agencies as a non-exclusive alternative to litigation. Using OGIS services does not affect your right to pursue litigation. You may contact OGIS in any of the following ways:
Office of Government Information Services
National Archives and Records Administration
8601 Adelphi Road - OGIS
College Park, MD 20740-6001 E-mail: ogis@nara.gov
Web: https://ogis.archives.gov
Telephone: 202.741.5770; Toll-free: 877.684.6448
Fax: 202.741.5769
Sincerely,
/s/
Frank Kressman
Acting General Counsel
Footnotes
1 Specifically, we provided that, as of July 27, 2020, there are 324 regular and 11 agent members of the CLF. Two agent members are also regular Members. The CLF’s total subscribed capital stock and surplus is approximately $1.8 billion for a total borrowing authority of approximately $29 billion.
2 Your appeal was received by the NCUA Office of General Counsel on August 3, 2020.
3 The NCUA’s annual reports to Congress are publicly available online at https://www.ncua.gov/news/annual-reports. The annual reports focus on the NCUA's strategic goals and performance results, and detail the agency's major regulatory initiatives, activities, and accomplishments. They also contain financial statements and audit information for the four funds the NCUA administers: the National Credit Union Share Insurance Fund, the NCUA Operating Fund, the Central Liquidity Facility, and the Community Development Revolving Loan Fund.
4 See 31 U.S.C. § 9101-10.
5 NCUA 2019 Annual Report.
6 Among other changes, the CARES Act removed the “primarily serving natural persons” reference under the definition of “liquidity needs” in the Federal Credit Union Act. See Coronavirus Aid, Relief, and Economic Security Act, Public Law 116–136, 134 Stat 281 (March 27, 2020).
7 In accordance with the CARES Act, this amendment will sunset on December 31, 2020. See 85 FR 23731 (April 29, 2020).
8 See Chrysler Corp. v. Brown, 441 U.S. 281, 293 (1979) (noting that “Congress did not design the FOIA exemptions to be mandatory bars to disclosure.”).
9 See FOIA Update, Vol. VI, No. 3, at 3 (“OIP Guidance: Discretionary Disclosure and Exemption 4”) (noting “agencies generally have discretion under the [FOIA] to decide whether to invoke applicable FOIA exemptions.”).
10 Bartholdi Cable Co. v. FCC, 114 F.3d 274, 282 (D.C. Cir. 1997).
11 CAN Fin. Corp. v. Donovan, 830 F.2d 1132, 1334 n. 1 (D.C. Cir. 1987).
12 Salisbury v. United States, 690 F.2d 966, 871 (D.C. Cir. 1982).
13 Stein v. DOJ, 662 F.2d 1245, 1259 (7th Cir. 1981).
14 See Mobil Oil Corp. v. EPA, 879 F.2d 698, 701 (9th Cir. 1989); see also ACLU v. DOD, 752 F. Supp. 2d 361, 372-373 (S.D.N.Y. 2010) (“[D]iscretionary disclosure does not constitute a waiver for the rest of the requested information.”).
15 Mehl v. EPA, 797 F. Supp. 43, 47 (D.D.C. 1992).
16 Williams & Connolly v. SEC, 62 F.3d 1240, 1245 (D.C. Cir. 2011).
17 Ctr. for Biological Diversity v. OMB, No. 07-04997, 2009 WL 1246690, at *11 (N.D. Cal. May 5, 2009).
18 Enviro Tech Int’l. Inc. v. EPA, No. 02-C-4650, Slip op. at 15 (N.D. Ill. Mar. 11, 2003).
19 Mobile Oil Corp., 879 F. 2d at 700; see also Stone v. FBI, 727 F. Supp. 662, 666 (D.D.C. 1990) (noting that agencies should have discretion to make voluntary disclosures without fear that prior disclosures “could come back to haunt them” in subsequent cases).
20 The FOIA defines “person” as an “individual, partnership, corporation, association, or public or private organization other than an agency.” 5 U.S.C. § 551(2). A credit union is a “person” under the FOIA.
21 5 U.S.C. § 552(b)(4).
22 See Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019).
23 Id. at 2363.
24 Id.
25 Id.
26 Id. at 2366.
27 5 U.S.C. §552(b)(8).
28 See Consumers Union of United States, Inc. v. Heimann, 589 F. 2d 531 (D.C. Cir. 1978).