February/March 2009
Federal Court Rejects Treasury’s Categorical FOIA Withholding
Holland & Knight Newsletter
A federal judge in California has ordered the Treasury Department to disclose petitions from individuals and groups who have asked to have their names removed from a list of suspicious people maintained by the Office of Foreign Assets Control (OFAC). The Freedom of Information Act (FOIA) lawsuit was brought by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area.
OFAC maintains and administers the Specially Designated Nationals List (SDN List), which is a publicly available compilation of suspected terrorists, drug traffickers and other “specially designated nationals,” that includes individuals, banks, companies and other entities deemed to be a threat to national security. Private businesses screen potential customers and applicants against the SDN List. If an applicant’s name appears – or is similar to a name on the SDN List – an alert is generated, and the businesses and/or employers may refuse to conduct business or employ the customer or applicant. The SDN List casts a fairly wide net – it includes common names such as Sanchez, Gonzalez, Ali and Hussein – so the Treasury often receives petitions requesting removal from it.
In the lawsuit, the Treasury primarily argued that the delisting petitions could be withheld under FOIA Exemption7, which permits the government to shield law enforcement records where the disclosure could interfere with law enforcement proceedings. The Treasury asserted a categorical exclusion, unusual under FOIA, arguing that it was not required to argue for closure of each petition individually or to release redacted versions of the petitions.
In rejecting this argument, the court first held that the Treasury failed to meet the standard for a categorical exclusion, as it did not show that all petitions belonged in the same category rather than being divided into narrower subcategories. With regard to wholesale withholding, rather than redaction, the court held that the Treasury had disregarded FOIA’s doctrine of segregability, which requires that any reasonably segregable portion of a record be released after deletion of the portions which are exempt. The court reiterated that an agency cannot simply conclude that there is no segregable information without explaining its reasons. The Treasury had simply asserted that “OFAC determined that there was no reasonably segregable information that could be released.”
Significantly, the court also held that the Treasury’s argument confused the issue of segregability with the distinct concept of categorical application of a FOIA exemption. The court noted that the inquiry regarding the segregability of exempt and non-exempt material within documents is not the same as the inquiry regarding whether a class of documents may be withheld. In other words, even if the court determined that the exemption applied categorically to the delisting petitions, the Treasury would still be required to demonstrate that the “reasonably segregable portions” of the delisting petitions had been produced.
Finally, the court concluded that the Treasury also had not made a sufficient showing that disclosure of the delisting petitions could reasonably interfere with pending enforcement proceedings. It was required to make a detailed showing with respect to each individual delisting petition, according to the court. The Treasury’s “conclusory” declaration failed to meet this burden because it did not explain how disclosure of the petitions could jeopardize any pending proceedings; nor did it describe the harm that could result from third parties’ possession of the information in the petitions. Rather, the declaration simply set forth “speculative and unsupported” consequences, the court held.
Because the court concluded that it could not make an independent assessment whether the Treasury properly withheld the delisting petitions in their entirety, it denied the Treasury’s motion for summary judgment and ordered the release of the delisting petitions.
OFAC maintains and administers the Specially Designated Nationals List (SDN List), which is a publicly available compilation of suspected terrorists, drug traffickers and other “specially designated nationals,” that includes individuals, banks, companies and other entities deemed to be a threat to national security. Private businesses screen potential customers and applicants against the SDN List. If an applicant’s name appears – or is similar to a name on the SDN List – an alert is generated, and the businesses and/or employers may refuse to conduct business or employ the customer or applicant. The SDN List casts a fairly wide net – it includes common names such as Sanchez, Gonzalez, Ali and Hussein – so the Treasury often receives petitions requesting removal from it.
In the lawsuit, the Treasury primarily argued that the delisting petitions could be withheld under FOIA Exemption7, which permits the government to shield law enforcement records where the disclosure could interfere with law enforcement proceedings. The Treasury asserted a categorical exclusion, unusual under FOIA, arguing that it was not required to argue for closure of each petition individually or to release redacted versions of the petitions.
In rejecting this argument, the court first held that the Treasury failed to meet the standard for a categorical exclusion, as it did not show that all petitions belonged in the same category rather than being divided into narrower subcategories. With regard to wholesale withholding, rather than redaction, the court held that the Treasury had disregarded FOIA’s doctrine of segregability, which requires that any reasonably segregable portion of a record be released after deletion of the portions which are exempt. The court reiterated that an agency cannot simply conclude that there is no segregable information without explaining its reasons. The Treasury had simply asserted that “OFAC determined that there was no reasonably segregable information that could be released.”
Significantly, the court also held that the Treasury’s argument confused the issue of segregability with the distinct concept of categorical application of a FOIA exemption. The court noted that the inquiry regarding the segregability of exempt and non-exempt material within documents is not the same as the inquiry regarding whether a class of documents may be withheld. In other words, even if the court determined that the exemption applied categorically to the delisting petitions, the Treasury would still be required to demonstrate that the “reasonably segregable portions” of the delisting petitions had been produced.
Finally, the court concluded that the Treasury also had not made a sufficient showing that disclosure of the delisting petitions could reasonably interfere with pending enforcement proceedings. It was required to make a detailed showing with respect to each individual delisting petition, according to the court. The Treasury’s “conclusory” declaration failed to meet this burden because it did not explain how disclosure of the petitions could jeopardize any pending proceedings; nor did it describe the harm that could result from third parties’ possession of the information in the petitions. Rather, the declaration simply set forth “speculative and unsupported” consequences, the court held.
Because the court concluded that it could not make an independent assessment whether the Treasury properly withheld the delisting petitions in their entirety, it denied the Treasury’s motion for summary judgment and ordered the release of the delisting petitions.