Natural Res. Def. Council, Inc. v. DOI, No. 13-942, 2014 WL 3871159 (S.D.N.Y. Aug. 5, 2014) (Engelmayer J.)

Natural Res. Def. Council, Inc. v. DOI, No. 13-942, 2014 WL 3871159 (S.D.N.Y. Aug. 5, 2014) (Engelmayer J.)

Re: Request for records concerning coal mining leases previously awarded by DOI and BLM to private mining companies in Powder River Basin, in southeast Montana and northeast Wyoming

Disposition: Granting in part and denying in part defendant's motion for summary judgment; granting in part and denying in part plaintiff's motion for summary judgment

• Exemption 4:  The court holds that defendant "has not met its burden of showing that the information it has withheld under Exemption 4 is confidential."  First, the court rejects plaintiff's argument that "Exemption 4 does not apply because 'the Government's Regulations and the Mineral Leasing Act specifically provide that the withheld information can be released.'"  The court finds that "the Mineral Leasing Act and its implementing regulations do not require the Government to release exploration data," but instead "merely permit the Government to disclose the information when it deems appropriate."  Additionally, the court finds that "even if the Mineral Leasing Act and the cited regulations compelled, as opposed to permitted, the disclosure of exploration data, such data is not implicated here."  Second, the court rejects plaintiff's argument "that the information the Government has withheld under Exemption 4 is the Government's own analysis, not data from an outside 'person,' and is therefore outside of Exemption 4."  While the court notes that plaintiff's "argument is an understandable reaction to the sparse Vaughn Indices submitted by the Government," the court finds that defendant "clarifie[d] the basis for [its] invocation of Exemption 4" by "explain[ing] that 'BLM withheld under Exemption 4 only information it has received from mining companies in response to BLM's requests for information in connection with [lease by application requests].'"  Third, the court finds that "[w]ith only conclusory claims before it, the Court is unpersuaded by the assertion that Powder River Basin mining companies would be put at a significant competitive disadvantage against other mining companies, with whom they are in limited if any competition for the sites at issue, by the disclosure of dated operational cost information."  The court notes that it is "constrained to conclude that the Government, as to its claim that disclosure could enable competitors to underbid one another in selling coal or customers to drive a hard bargain in buying it, has not met its burden to provide 'adequate documentation of the specific, credible, and likely reasons why disclosure of the document would actually cause substantial competitive injury.'"  Last, the court rejects defendant's argument that "if forced to disclose the information that the mining companies voluntarily provide in order to assist the Government in estimating fair market value, the companies would cease to divulge that information in the future," and instead agrees with plaintiff's contention that "regardless of whether their bidding materials are disclosed, the mining companies have a strong incentive to provide the BLM with information about their mines, so as to enable them to lease coal tracts."
   
• Exemption 5, Other Privileges:  The court "grants the Government's motion for summary judgment under Exemption 5, to the extent that the Government seeks to withhold (1) its model, and (2) its fair market value estimates."  The court notes that "the Government invokes Exemption 5's confidential commercial information privilege."  The court "holds that the confidential commercial information privilege under Exemption 5 does not, as a matter of law, automatically and always terminate once a contract is awarded."  "Instead, the Court holds that, in rare cases, the Government's legitimate commercial interests may require the protection of information even after a contract has been awarded."  The court explains that "[u]nder [the] circumstances [at issue here], disclosure of historical bidding information with respect to tracts in the Powder River Basin would effectively enable a coal company to derive, or come unacceptably close to deriving, the number it must beat in order to lease the next tract for mining."  "This, in turn, would deprive the government of the opportunity to obtain meaningfully more than its confidential floor price."  "It would injure the Government's—and thereby the public's—valid interest in maximizing the price obtained for leasing its choice land."  "FOIA does not require BLM to release its pricing model or its fair market value estimates derived from the same model where doing so would enable the coal company neighboring the next tract up for lease to peg its bid strategically to the government's floor bid."  "FOIA does not require that the Government be thus deprived of its ability to secure a good deal for the taxpayer."
  
  However, the court also holds that "[t]o the extent the Government seeks to withhold under Exemption 5 materials divulging its qualitative reasoning process but which do not also divulge its model or its fair market value estimates, the Court cannot, at this point, grant summary judgment to either side."
   
• Exemption 9:  The court finds that it "is constrained not to read Exemption 9 so broadly as to encompass the coal drill holes for which the Government has invoked it here."  The court explains that "[s]imply put, there is no basis on which to conclude that the word 'wells' can also refer to drilling holes used to extract coal."