Free Judgment - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Honorable Marcia S. Krieger Civil Action No. 04-cv-00749-MSK-PAC HIGH COUNTRY CITIZENS ALLIANCE; TOWN OF CRESTED BUTTE, COLORADO; BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF GUNNISON, COLORADO, Plaintiffs, v. KATHLEEN CLARKE, in her official capacity as Director of the U.S. Bureau of Land Management; RON WENKER, in his official capacity as Colorado BLM Director; U.S. BUREAU OF LAND MANAGEMENT; GALE NORTON, in her official capacity as Secretary of the Interior; and UNITED STATES DEPARTMENT OF THE INTERIOR, Defendants.

MEMORANDUM OPINION AND JUDGMENT ON THE PLAINTIFFS'FREEDOM OF INFORMATION ACT CLAIM

1 THIS MATTER comes before the Court on the Plaintiffs' claim under the Freedom of

Information Act (" FOIA" 5 U.S.C. § 552. Pursuant to this Court' September 29, 2005 Order ), s (#63), denying the parties'cross-motions for summary judgment, the Defendants have submitted the documents which they deem to be confidential and not subject to disclosure under the FOIA for in camera review. They also have filed a revised Vaughn index2 (#64), to which the Plaintiffs

To the extent practicable, each party is referred to by name. Otherwise, they are referred to, collectively, as the Plaintiffs and the Defendants. A Vaughn index is a compilation which lists each withheld document and explains why it was withheld. See Anderson v. Dept. of Health & Human Services, 907 F.2d 936, 940 n.3 (10th Cir. 1990); Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973).
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have responded (#65). Having considered the submitted materials in camera, the revised Vaughn index, the Plaintiffs'response, and the materials previously submitted in conjunction with the cross-motions for summary judgment, the Court finds and concludes as follows. I. Jurisdiction The Court exercises subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 5 U.S.C. § 552(a)(4)(B). II. Background The High Country Citizens Alliance (hereinafter, " Alliance" submitted two nearly the ) identical FOIA requests to the Bureau of Land Management (hereinafter, " BLM" on April 28, ) 2000 and August 17, 2001, seeking documents relating to the Mt. Emmons Mining Company' s Mineral Patent Application No. COC-54557. The BLM has provided many of the requested documents, but has declined to provide excerpts from documents known as the Western Mine Engineering Report and the Mineral Report.3 Prior to responding to the Alliance' FOIA requests, the BLM gave the Mt. Emmons s Mining Company and the Phelps Dodge Corporation an opportunity to comment as to whether the documents should be disclosed. Through attorney H. Barry Holt, they responded that the release of the withheld portions of the Mineral Report would likely " cause substantial harm to

The undisclosed portions of the Western Mine Engineering Report are found in Section 8 (pages 3 through 18), Section 10 (pages 1, 2, 4 through 9, 11, 12, 14 through 16, 18, 22, 23, 25, 28), Section 11 (pages 1, 2, 12 and 15), Section 12 (pages 2 through 5, 11, 13, 17 and 25) of the report. The undisclosed portions of the Mineral Report consist of excerpts on pages 2, 42, 54, 55 and 57 through 72. Western Mine Engineering, Inc., prepared the Western Mine Engineering Report for use in connection with the Mt. Emmons Mining Company' patent application. The United States Forest Service s then created the Mineral Report, which incorporates some analysis from the Western Mine Engineering Report and data obtained from the Mt. Emmons Mining Company.

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[their] competitive position"because: The molybdenum market can be volatile and sometimes speculative. Release of proprietary mineral and economic information would result in a distinct competitive disadvantage and harm to Phelps Dodge. Information about the presence, kind, and grade of ore in specific drill holes, and the quantity and grade of reserves, coupled with estimates and analyses of mineral extraction, processing, and mine reclamation costs, all could be used by competitors in developing pricing strategies to underbid Phelps Dodge in the futures markets. Release of sampling data also could artificially inflate property values in the area by revealing valuable prospects of which competitors otherwise would not be aware. This type of information customarily is considered proprietary in the mining industry, and its release could result in severe economic damage to the mining company that invested vast sums of capital acquiring the information. Such information generally should be kept confidential for the life of the developed mine. The BLM declined to disclose certain portions of the Mineral Report and the Western Mine Engineering Report because the documents were " voluntarily submitted to the
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disclosed to the public by the Submitter." The BLM did not base its decision on the contention that the information was confidential. The Alliance appealed to the Department of the Interior. Rather than ruling on the merits of the appeal, it authorized the Alliance to commence a legal action. The Defendants now contend that the withheld documents are exempt from disclosure because they are confidential. In support of such contention, they offer an affidavit from Roger Haskins, a Senior Specialist with the BLM, to establish that disclosure of the withheld documents

The parties agree that the documents were not voluntarily submitted to the government because the BLM required these documents to be submitted in connection with the Mt. Emmons Mining Company' s patent application.

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will impair the BLM' ability to obtain this type of information in the future. His affidavit states: s 5. To comply with 43 C.F.R. § 3862.1-1, the mining claimant generally provides proprietary and confidential information about the type and extent of the mineral deposit, including information about the presence, kind, and grade of ore in specific drill holes, assay results, the quantity and grade of mineral reserves, and estimates and analyses of mineral extraction, processing, and mine reclamation costs, in support of the patent application. 6. Obtaining this type of proprietary and confidential information from the patent applicant is essential to the BLM' s ability to determine whether the applicant has satisfied the requirements for a patent under the Mining Law. 7. Often the information provided by the applicant includes data pertaining to the applicant' entire mining operation, s including operations on private lands or other unpatented mining claims, and not just the claims under patent application. 8. This type of information is customarily considered proprietary in the mining industry, and its release could result in severe economic damage to the mining company that invested vast sums of capital acquiring the information. Such information is generally kept confidential for life of the developed mine. 9. To the extent that this type of information is readily provided to the BLM by the mining claimant with the patent application, the BLM' analysis of the patent application is more s efficient, cost effective, and requires less government resources. 10. Requiring the BLM to disclose this type of information obtained in connection with a patent application when it is considered proprietary and confidential in the mining industry is likely to impair the BLM' ability to obtain this necessary s information in the future.

III. Issue Presented

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In this action, the Plaintiffs seek disclosure of the withheld materials. The Defendants contend that disclosure is not required pursuant to Exemption 4 of the FOIA, 5 U.S.C. § 552(b)(4). Such section allows an agency to withhold " commercial or financial information obtained from a person and privileged or confidential[.]" The parties agree that the withheld documents contain commercial or financial information, and the Court has previously ruled that the information was obtained from a person. Thus, the sole issue presented is whether the information is confidential,5 and therefore not subject to disclosure. IV. Analysis The FOIA provides the public with a right of access to federal agency records. See Casad v. United States Dept. of Health and Human Services, 301 F.3d 1247, 1250 (10th Cir. 2002). Its purpose is to enable the public to scrutinize agency action so that the government can be held accountable for its decisions. See Anderson, 907 F.2d at 941. To further this purpose, the FOIA is to be broadly construed in favor of disclosure. See Audubon Society v. United States Forest Service, 104 F.3d 1201, 1203 (10th Cir. 1997). The FOIA sets forth nine exemptions from the FOIA' disclosure requirement that apply s
"In ruling on the cross-motions for summary judgment, this Court stated: [T]he Court cannot determine whether the withheld information is proprietary and would be treated as confidential by the Mt. Emmons Mining Company given its disclosure of the Behre Dolbear Report. In addition, it is not apparent from the revised Vaughn index whether the withheld documents and excerpts of documents contain information which, if disclosed, would likely to harm the competitive interests of the Mt. Emmons Mining Company. Some of the withheld documents are not sufficiently described. For instance, the revised Vaughn index states that the subject matter of page 2 is a " summary and recommendations." The descriptions of other withheld documents suggest that the undisclosed information may already have been made public through the release of the Behre Dolbear Report. It is necessary for the Court to conduct an in camera review of the pertinent documents, comparing them with the Behre Dolbear Report and other documents that have already been disclosed.
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when there are legitimate governmental or private interests which could be harmed by the release of the requested information. All of the exceptions are narrowly construed. See id.; Casad, 301 F.3d at 1250. A government agency bears the burden of justifying nondisclosure. See id.; 5 U.S.C. § 552(a)(4)(B). In the case at bar, the Government invokes FOIA exemption 4, found at 5 U.S.C. § 552(b)(4).6 Exemption 4 is designed " protect the confidentiality of information which is to obtained by the Government . . . but which would customarily not be released to the public by the person from whom it was obtained." See Herrick v. Garvey, 298 F.3d 1184, 1193 (10th Cir. 2002) (internal quotes omitted). In circumstances where the government requires the submission of commercial or financial information from a person, such information is deemed confidential if disclosure: (1) is likely to cause substantial harm to the competitive position of the person who submitted it to the government; or (2) will impair the government' ability to obtain necessary s information in the future. See Anderson, 907 F.2d at 946; Utah v. U.S. Dept. of Interior, 256 F.3d 967, 969 (10th Cir. 2001). For there to be substantial harm to a submitter' competitive s position, there must be: (1) actual competition; and (2) the likelihood of a substantial competitive injury. See Utah, 256 F.3d at 970. A court is not required to conduct a sophisticated economic analysis as to the likely effects of disclosure. See id. Proof of potential economic harm, as opposed to actual economic harm, is sufficient; a specific competitor need not be identified. See id. at 970-71. However, conclusory and generalized allegations of a substantial competitive harm will not carry the day. See id. at 970.

This statute provides that " This section does not apply to matters that are . . . trade secrets and commercial or financial information obtained from a person and privileged or confidential[.]"

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Exemption 4 does not apply if the submitter of information authorizes the Government to release such information to the public. See Herrick, 298 F.3d at 1193. Likewise, the exemption does not apply to information that is already in the public domain. See R & W Flammann GmbH v. United States, 339 F.3d 1320, 1323 (Fed. Cir. 2003). Whether a particular item of information is confidential is determined using an objective standard. See National Parks & Conservation Ass' v. Morton, 498 F.2d 765, 766 (D.C. Cir. n 1974). A court considers which specific documents fall within the exemption and which do not; it cannot " simply conclude that an entire file or body of information is protected without consideration of the component parts." See Anderson, 907 F.2d at 941, 948. Therefore, a court must determine ­document by document, and excerpt by excerpt ­what is confidential. A court' review of a FOIA claim is de novo and may use any appropriate process. See s Anderson, 907 F.2d at 941, 942. For instance, a court may review the disputed documents in camera along with affidavits and other exhibits, or it may simply rely upon a sufficiently detailed Vaughn index. See id.7 In this case, the Vaughn index is not sufficiently detailed to support a ruling on the FOIA claim. Most of its descriptions are conclusory and do not identify, even in general terms, the subject matter of the withheld information. Therefore, to determine whether the Defendants have met their burden of establishing applicability of Exemption 4, the Court has considered the

To facilitate such review in this case, the Defendants delivered unredacted hard copies of the Western Mine Engineering Report, the Mineral Report, and the Behre Dolbear Report to chambers for an in camera review. The portions of the documents which they believe are exempt from disclosure are highlighted in yellow ink. They also filed a revised Vaughn index. In response, the Plaintiffs filed a written document which correlates each entry in the revised Vaughn index to the specific page or pages of the Behre Dolbear Report that they believe show that the withheld documents are not confidential.

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withheld materials and has compared them to the Defendants' justifications for non-disclosure as well as to information already disclosed. The Defendants have identified the following types of information as being confidential: (1) information about the presence, kind and specific grade of ore in specific drill holes; (2) information about the quantity and grade of reserves; (3) estimates and analyses of mineral extraction, processing and mine reclamation costs; and (4) assay results. The first asserted basis for confidentiality is that these types of information could be used by competitors in developing pricing strategies, which might impact the profits to be obtained by the Mt. Emmons Mining Company and the Phelps Dodge Corporation, resulting in harm to their competitive position. The Defendants also argue that if they are forced to disclose this information, it could impair the BLM' ability to obtain this type of information in the future. s Both arguments are belied by the fact that the same information has been released to the public by the Mt. Emmons Mining Company in the Behre Dolbear Report, which is a " prefeasability study of the . . . Mount Emmons project." The Behre Dolbear Report estimated the tonnage and grade of the molybdenum deposit (MoS2) at varying elevations, total production, the production schedule, capital expenditures, average operating costs, and profitability over the mine' 11-year expected operation. It included detailed spreadsheets of anticipated capital s expenses and costs, described the geology of the mine site, and provided drill hole data (including the total feet of drilling and maps of drill hole locations) and assay results. Not only is the withheld information in the Western Mine Engineering Report and Mineral Report of these types, but much of it is directly and explicitly derived from or refers to the Behre

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Dolbear Report.8 Indeed, at least one of the withheld excerpts in the Western Mine Engineering Report is identical to a portion of the Mineral Report which has been disclosed.9 The publication of the information contained in the withheld materials undercuts the necessity for confidentiality to avoid substantial, competitive harm. As to other information withheld from the Western Mine Engineering Report designated as confidential,10 an insufficient showing has been made. No showing has been made that a site layout map, statements concerning the need for a contractor, or a description of the backfill system is confidential. Construing the FOIA broadly in favor of disclosure, the Court cannot conclude that disclosure of this information would substantially harm the competitive positions of the Mt. Emmons Mining Company or Phelps Dodge Corporation, or that disclosure would discourage mineral patent applicants from submitting these types of information to the BLM in the future. As a consequence, the Court concludes that the withheld portions of the Western Mine Engineering Report and the Mineral Report are neither confidential nor otherwise exempt from disclosure under FOIA Exemption 4.

In some instances, the information is nearly identical or overlapping. Compare Section 10 (pages 14, 15 & 16) of the Western Mine Engineering Report with pages 65, 66 and 69 of the Behre Dolbear Report. Also compare page 2 of the Mineral Report with page 1 of the Behre Dolbear Report. Also see Section 8 (pages 3, 4, 7, 9, 11, 12, 13, 14 & 15), Section 10 (pages 4, 5, 7, 8, 11 & 18), Section 11 (pages 1, 2 & 15), and Section 12 (pages 4, 5, 13, 17 and 25) of the Western Mine Engineering Report, and pages 57, 58, 59, 60, 61, 62, 65, 66, 67, 68, 69, 70 and 72 of the Mineral Report.
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Compare Section 10, page 28 of the Western Mine Engineering Report to page 50 of the Mineral

Report. See, e.g., Section 10 (pages 1, 2, 9, 15, 16, 18, 22, 23 & 28), Section 11 (page 15), and Section 12 (pages 2, 3, 4, 5 & 25) of the Western Mine Engineering Report.
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IT IS THEREFORE ORDERED that: (1) Judgment is entered in favor of the Plaintiffs (High Country Citizens Alliance, Town of Crested Butte, Colorado, and Board of County Commissioners of the County of Gunnison, Colorado) and against the Defendants (Kathleen Clarke, Ron Wenker, U.S. Bureau of Land Management, Gale Norton, and United States Department of the Interior) on the FOIA claim. (2) Within 10 days of this Order, the Defendants shall provide unredacted copies of the Western Mine Engineering Report and the Mineral Report to the Plaintiffs. (3) (4) The parties shall bear their own costs. The Clerk of Court is directed to close this case.

Dated this 13th day of June, 2006 BY THE COURT:

Marcia S. Krieger United States District Judge

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