FOIA Appeal of Response 20-FOI-00051

August 14, 2020

SENT BY E-MAIL

XXXX
XXXX

Re: 2020-APP-00003; Appeal of Response 20-FOI-00051

Dear XXXX:

By correspondence of March 31, 2020, you submitted a Freedom of Information Act (FOIA) request. You requested the following regarding the management of the LOMTO and Melrose credit union liquidations:

  1. The latest AME financials for each of the two credit unions. The last AME’s before the loan assets were transferred.
  2. The RFP issued seeking bidders for the sale of the two credit union’s loans.
  3. The contract or other agreement with the loan servicer for the two credit unions: Midland Loan Services and/or any other contracts.
  4. The copies of all payments made to Midland Loan Services.
  5. Board minutes, memoranda or other documentation provided the board approving the sale of the credit unions’ loans.

By letter of May 12, 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 granted in part. Three pages of responsive agency records were attached. However, information was redacted and withheld as exempt from FOIA release under one or more of the exemptions at 5 U.S.C. § 552(b)(4), (5), (8). The senior attorney advisor’s response explained that exemption 4 protects trade secrets and commercial or financial information obtained from a person that is privileged or confidential. Exemption 5 protects inter-agency or intra-agency memoranda or letters which would not be available by law to a party other than an agency in litigation with the agency. 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.

We further advised that there were additional documents that are Melrose and LOMTO credit union liquidation records of the Asset Management Estates (AME) that were issued, entered into, or paid by the liquidating agent and, as such, the documents are not agency records subject to the FOIA.1 Even if considered subject to the FOIA and responsive, we explained these documents would likewise be exempt from public release under one or more of the same FOIA exemptions cited above (exemptions 4, 5, and 8).

You have appealed this determination in a correspondence dated July 20, 2020. Your appeal is denied, as discussed more fully below.

In your appeal, you argue that the partial denial is without merit, in opposition to the intent of the FOIA, and in conflict with standard agency practice with respect to these requests. In support of this contention, you note that the agency has “routinely and repeatedly released the AME financials, contracts[,] agreements and AME payments to private firms (in both summary and detailed amounts) and held extended public discussion of these activities for all five AME’s from the corporate network.” Upon review, we affirm the partial denial.

The FOIA establishes a statutory framework for public requests for “agency records” and imposes requirements on agencies to make such records promptly available.2 The FOIA applies to agencies within the Executive Branch of the federal government, independent regulatory agencies, and some components within the Executive Office of the President.3

The Federal Credit Union Act4 (FCU Act) establishes the NCUA under the management of the NCUA Board. The FCU Act sets forth the powers and duties of the NCUA and the NCUA Board in relation to credit unions whose share accounts are insured by the National Credit Union Share Insurance Fund (NCUSIF). Similar to the Federal Deposit Insurance Corporation (FDIC) in relation to insured banks, the NCUA operates as both regulator/insurer for insured credit unions (i.e., the NCUA’s agency capacity)5 and, in relevant circumstances, as conservator or liquidating agent for insured credit unions (i.e., the NCUA Board’s capacity as conservator or liquidating agent).6 The NCUA Board has delegated complete authority to act as liquidating agent to the President of the Asset Management and Assistance Center (AMAC).7

In its agency capacity, the NCUA conducts examinations of insured credit unions, administers the NCUSIF, and funds payment on insured shares when federally insured credit unions are liquidated. In contrast, in its capacity as conservator or liquidating agent, the NCUA Board steps into the shoes of the insured credit union, similar to a trustee in bankruptcy, and by operation of law succeeds to “all rights, titles, powers, and privileges of the credit union….”8 Thus, the NCUA’s agency capacity and the NCUA Board’s capacity as conservator or liquidating agent are legally distinct roles governed in some circumstances by separate statutory provisions and regulations. Courts have repeatedly and consistently demarcated these distinct dual capacities with respect to the NCUA and the FDIC.9

The records that are the subject of your request relate to activities conducted by the liquidating agent for Melrose Credit Union and LOMTO Federal Credit Union, which were both liquidated in 2018. Thus, as our May 12 letter responding to your March 31 FOIA request correctly noted, to the extent that the subject documents are Melrose and LOMTO credit union liquidation records of the AMEs that were issued, entered into, or paid by the NCUA in its capacity as liquidating agent, the requested documents are not agency records subject to the FOIA. This point is entirely dispositive of the issue on appeal. Moreover, as we further noted in our May 12 letter, even if considered subject to the FOIA and responsive, exemptions 4, 5, and 8 of the FOIA remain available.

We note that your appeal does not assert any argument to specifically contest the applicability of these exemptions. Instead, your appeal primarily argues that our partial denial is in conflict with standard agency practice, and you note that the agency has in the past released similar AME records relative to liquidated corporate credit unions. You contend that our May 12 denial is arbitrary because of our previous conduct in releasing to you comparable AME records of failed corporate credit unions and in response to other specific requests for records relative to AME activities.

In fact, the NCUA is entitled to exercise its administrative discretion by making discretionary disclosure of exempt information, if such disclosure is not otherwise prohibited under law.10 Indeed, the FOIA’s exemptions are discretionary, not mandatory.11 Courts have observed that the FOIA’s exemptions “simply permit but do not require, an agency to withhold exempted information.”12 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.”13

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.”14 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.”15 Courts have routinely held that the release of certain documents waives FOIA exemptions only for those documents released.16 Accordingly, any prior discretionary disclosure of exempt information by the NCUA does not constitute a waiver of applicable FOIA exemptions as to other similar documents.

Your appeal also makes the assertion that our partial denial is inconsistent with the intent of the FOIA. However, on the contrary, courts have refrained from adopting a waiver rule on discretionary disclosure that would “create an incentive against voluntary disclosure of information,”17 since doing so would “deter agencies from voluntarily honoring FOIA requests,”18 and “create the untenable result of discouraging the government” from making such voluntary disclosures.19 Indeed, “courts have refused to find that the discretionary disclosure of a document effectuates a waiver of other related documents,”20 because to find otherwise “would be contrary to both case law on waiver and to the policies underlying FOIA.”21

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 See 12 U.S.C. § 1766(i)(2); 12 U.S.C. § 1787(a)(1)(A); 12 U.S.C. § 1787(b)(2).

2 5 U.S.C. § 552(a)(3)(A).

3 See 5 U.S.C. § 552(f)(1). Amtrak is also subject to the FOIA by statute. See 49 U.S.C. § 24301(e).

4 12 U.S.C. § 1751 et seq.

5 See, e.g., 12 U.S.C. §§ 1756; 1781 to 1785 (describing the NCUA Board’s authority as regulator and insurer).

6 See, e.g., 12 U.S.C. § 1787(b)(2) (describing the NCUA Board’s authority as conservator and liquidating agent).

7 See NCUA Delegation of Authority AMAC 2.

8 12 U.S.C. § 1787(b).

9 See, e.g., FDIC v. Hatmaker, 756 F.2d 34, 36 n. 2 (6th Cir.1985) (“In its capacity as receiver, the FDIC is obligated to marshal the assets of the failed bank for the benefit of the bank’s creditors and shareholders. In its corporate capacity, the FDIC is obligated to insure the failed bank’s deposits.”); see also Veluchamy v. FDIC, 706 F.3d 810, 812 (7th Cir. 2013) (separately referring to the “FDIC—Corporate” (the equivalent of NCUA’s agency or regulator/insurer capacity) and the “FDIC—Receiver” (the equivalent of the NCUA Board’s liquidating agent capacity)).

10 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.”).

11 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.”).

12 Bartholdi Cable Co. v. FCC, 114 F.3d 274, 282 (D.C. Cir. 1997).

13 CAN Fin. Corp. v. Donovan, 830 F.2d 1132, 1334 n. 1 (D.C. Cir. 1987).

14 Salisbury v. United States, 690 F.2d 966, 871 (D.C. Cir. 1982).

15 Stein v. DOJ, 662 F.2d 1245, 1259 (7th Cir. 1981).

16 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.”).

17 Mehl v. EPA, 797 F. Supp. 43, 47 (D.D.C. 1992).

18 Williams & Connolly v. SEC, 62 F.3d 1240, 1245 (D.C. Cir. 2011).

19 Ctr. for Biological Diversity v. OMB, No. 07-04997, 2009 WL 1246690, at *11 (N.D. Cal. May 5, 2009).

20 Enviro Tech Int’l. Inc. v. EPA, No. 02-C-4650, Slip op. at 15 (N.D. Ill. Mar. 11, 2003).

21 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).

Last modified on
08/20/20