Niagara Mohawk Power Corp. v. United States Department of Energy

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 12, 1998 Decided March 9, 1999

No. 96-5082

Niagara Mohawk Power Corporation,

Appellant

v.

United States Department of Energy, et al.,

Appellees

Consolidated with

No. 96-5246

Appeals from the United States District Court

for the District of Columbia

(No. 95cv00952)

William J. Mertens argued the cause for appellant. With

him on the briefs was Robert V. Zener.

Claire Whitaker, Assistant U.S. Attorney, argued the cause

for appellee United States Department of Energy. With her

on the brief were Eric H. Holder, Jr., U.S. Attorney, and

John D. Bates, Assistant U.S. Attorney, both at the time the

brief was filed, R. Craig Lawrence, Assistant U.S. Attorney,

and Thomas Kemp, Attorney, U.S. Department of Energy.

Curtis P. Lu argued the cause for appellee Independent

Power Producers of New York, Inc. With him on the brief

were W. Harrison Wellford and John C. Marchese.

Before: Williams, Ginsburg and Henderson, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge: A cogeneration plant produces

not only electric power but also steam or other thermal

energy that can be used for various industrial or commercial

purposes. 16 U.S.C. s 796. To encourage this source of

energy, the Public Utilities Regulatory Policies Act of 1978,

16 U.S.C. s 824a-3 ("PURPA"), imposed a requirement on

electric power utilities to purchase power from any qualifying

facility ("QF")--a cogeneration plant that meets PURPA's

QF standards. See 18 CFR ss 292.101(b)(1), 292.203(b).

The utility must pay for the power at a rate no greater than

its "avoided cost"--the cost it would incur to generate an

equivalent amount of power itself. See 16 U.S.C.

s 824a-3(b); 18 CFR ss 292.304(a), 292.101(b)(6). Although

the phrase "avoided cost" has the ring of an economically

sound price, it was suggested without contradiction at oral

argument that it has not so proved.

Niagara, a producer and seller of electricity in upstate New

York and subject to the PURPA mandate, suspected that

some of the facilities from which it buys may not actually

qualify for QF status, and to pursue the matter filed a

request with the Department of Energy ("DOE") in 1995

under the Freedom of Information Act ("FOIA"), seeking

information collected by DOE on forms that these facilities

are required to file with DOE's Energy Information Adminis-

tration--Forms EIA-867. DOE disclosed some but withheld

other information, invoking FOIA's Exemption 4, 5 U.S.C.

s 552(b)(4), which covers "trade secrets and commercial or

financial information obtained from a person and privileged or

confidential." The information withheld relates particularly

to quantities of fuel consumed and power generated, from

which, given market prices for fuel, outsiders could go far to

calculating a facility's unit cost of power.

Niagara sued in district court to compel release of the

withheld data. Independent Power Producers of New York,

Inc., a trade group, and Sithe Energy Inc. ("QF Intervenors"

collectively) intervened in support of DOE. Both DOE and

the QF Intervenors moved for summary judgment, support-

ing the motion with affidavits describing the QF industry.

Niagara moved for discovery, and on the district court's

denial of its motion filed an opposition to the motion for

summary judgment, attaching an affidavit depicting the in-

dustry in rather different terms. The district court granted

summary judgment. It held that Niagara had failed to raise

an issue of material fact against DOE's position that the

information was exempt because its release (1) would cause

substantial competitive harm to the entities submitting the

information (the QFs), and (2) would impair the agency's

ability to collect this information in the future. The court

also rejected Niagara's claim that no FOIA exemption could

apply because the information was already publicly available.

* * *

The language of Exemption 4 protects from disclosure

"commercial information" obtained from a non-government

source, so long as it is "privileged or confidential." The only

dispute here is over the last phrase. In National Parks &

Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir.

1974) ("National Parks I"), this court adopted a narrow

reading of the word "confidential," saying that information

was confidential within the meaning of Exemption 4 only if its

disclosure was likely to (1) impair the government's ability to

obtain necessary information in the future, or (2) cause

substantial harm to the competitive position of the person

from whom the information was obtained. The district court

found here that DOE had satisfied both alternatives.

In support of its claim that release would impair govern-

ment interests, DOE offered two conclusory affidavits, claim-

ing that disclosure would impair the EIA's ability to collect

such information in the future. See Walton Decl.pp 39-43;

Grutsch Decl., p 10. The claim is inherently weak where, as

here, the agency has secured the information under compul-

sion. Critical Mass Energy Project v. NRC, 975 F.2d 871,

878 (D.C. Cir. 1992) (en banc). Yet DOE and the QF

Intervenors offer nothing but Walton's speculative opinion

that QFs may not be forthcoming in the data they submit if

DOE allows disclosure, see Walton Decl., p 41, and Grutsch's

terse and self-serving statement that as an executive of

various QFs he would "attempt to minimize the scope and

specificity of the information provided." See Grutsch Decl.,

p 10. But the agency has the burden of showing that re-

questing information comes within a FOIA exemption, Na-

tional Parks & Conservation Ass'n v. Kleppe, 547 F.2d 673,

679 (D.C. Cir. 1976) ("National Parks II"), and we have more

than once held that such conclusory and generalized asser-

tions are not enough to establish the requisite risk of impair-

ment. Id. at 680; Washington Post Co. v. Dep't of Health

and Human Serv., 690 F.2d 252, 269 (D.C. Cir. 1982).

DOE insists that summary judgment is proper because

Niagara did not controvert the assertions of impairment.

But on a summary judgment motion, "[f]acts not conclusively

demonstrated, but essential to the movant's claim, are not

established merely by his opponent's silence; rather, the

movant must shoulder the burden of showing affirmatively

the absence of any meaningful factual issue." See National

Assoc. Of Gov't Employees v. Campbell, 593 F.2d 1023, 1027

(D.C. Cir. 1978). A paper asserting the affiant's intention to

sail as close to the wind as possible is hardly enough for this

case--especially as the data sought appears to take the form

of hard, cold numbers on energy use and production, the

fudging of which may strain all but the deliberately menda-

cious. As the DOE and QF Intervenor affidavits are in these

circumstances too vague, the grant of summary judgment on

this issue was unjustified.

DOE fares no better in its effort to show that there is no

genuine issue of material fact on the likelihood of substantial

competitive harm. In National Parks II, we held that for the

government to preclude disclosure based on a competitive

injury claim, it must prove that the submitters "(1) actually

face competition, and (2) substantial competitive injury would

likely result from disclosure." 547 F.2d. at 679. Here,

DOE's assertions of the existence of competition are some-

what conclusory. See Walton Decl. WW 22-31. But assuming

arguendo that DOE met its initial burden of proving that QFs

were engaged in competition, Niagara's response was ade-

quate to raise genuine issues of material fact. The affidavit

submitted by Niagara, from James Cifaratta, its Director of

Unregulated Generation, flatly disputes the assertions of

competition. For example, so far as competition by QFs in

the sale of power is concerned, Cifaratta asserts that arrange-

ments under which QFs sell electricity in an unregulated

market (i.e., outside the shelter of the PURPA mandate) are

uncommon and "truly exceptional." See Cifaratta Decl.

pp 11-12. He further says that the long term contracts that

QFs have with their steam hosts--buyers of the thermal

energy produced by cogeneration--preclude competition

among the QFs for such hosts. Id. p 13. This theoretically

leaves competition among the QFs as contracts expire. But

our decision in National Parks II, that the district court was

clearly erroneous in finding that certain concessionaires faced

substantial competitive harms in contract renewal when the

contracts were for long periods and thus renewal competition

would only occur infrequently, 547 F.2d at 681-82, suggests

that a competitive injury is too remote for purposes of

Exemption 4 if it can occur only in the occasional renegotia-

tion of long-term contracts. Niagara's response thus puts in

dispute whether there is a likelihood of substantial competi-

tion among QFs in contract renegotiation with their steam

hosts.

Further, though implicitly accepting DOE's and the QF

Intervenors' assumption that QFs' competition with their

steam hosts for the division of rents (quite apart from the

long terms of the contracts) qualifies as "competition" for

purposes of National Parks, Niagara contests the claim that

they actually do so. See Cifaratta Decl. p 14. ("[T]he ar-

rangements between QFs and their steam hosts typically are

not determined by ordinary market-based concerns ... QFs

often provide steam to their hosts at very low rates, some-

times for free. Some QFs, in fact, subsidize their steam hosts

in order to secure PURPA and PSL s 66-c benefits for

themselves."). While this struggle-free relation may seem

unlikely, the contention directly contradicts the assertions on

which the district court relied.

DOE's other arguments relating to competitive injury are

legally inadequate under the National Parks standard. For

example, DOE argues that the QFs may face future or

potential competition. But the test explicitly requires proof

that the submitters face actual competition. National Parks

II, 547 F.2d at 679. DOE also insinuates that Niagara's

interest in challenging the regulatory entitlement of QFs

shows a competitive relationship between the QFs and Niaga-

ra. The argument would make sense only if a producer's

regulatory entitlement to governmentally administered prices

could be said to put the producer in "competition" with the

involuntary purchaser. But if National Parks I embraced

any such expansive idea of competition, the case would have

come out differently. There the court recognized that the

private sources of the disputed data, park concessionaires,

enjoyed monopoly contracts with the Park Service, contracts

that by statute were to be renewed so long as the concession-

aires performed satisfactorily. 498 F.2d at 770 n.20. The

data sought to be collected bore on that performance. If the

court thought that a firm's interest in protecting such an

entitlement from the outsider scrutiny qualified as a competi-

tive interest, it would have affirmed the district court's appli-

cation of Exemption 4.

As each legally sound theory offered by DOE is plagued by

factual disputes, summary judgment was improper. On re-

mand the district court will want to consider the Supreme

Court's observation that "categorical decisions may be appro-

priate and individual circumstances disregarded when a case

fits into a genus in which the balance characteristically tips in

one direction," Dep't of Justice v. Reporters Committee for

Freedom of the Press, 489 U.S. 749, 776 (1989); see also

Critical Mass, 975 F.2d at 879. Thus, a finding that QFs as a

class generally do or do not have competitive interests that

would be injured by release of the information on Form EIA-

867 Form may be suitable.

Niagara also claimed that Form EIA-867 information is

already in the public domain--a proposition that if true would

give victory to Niagara independent of the matters discussed

above. Niagara's position here is a little odd: if the informa-

tion is publicly available, one wonders, why is it burning up

counsel fees to obtain it under FOIA? But the logic of FOIA

compels the result: if identical information is truly public,

then enforcement of an exemption cannot fulfill its purposes.

See Davis v. Dep't of Justice, 968 F.2d 1276, 1279 (D.C. Cir.

1992) (Exemptions 7(C) & 7(D)); CNA Financial Corp. v.

Donovan, 830 F.2d 1132, 1154 (D.C. Cir. 1987) (Exemption 4);

Afshar v. Dep't of State, 702 F.2d 1125 (D.C. Cir. 1983)

(Exemptions 1 & 3). On this issue the party favoring disclo-

sure has the burden of production, for otherwise the party

opposing disclosure would theoretically have to identify all

public sources not reproducing the information. Id. at 1130.

Niagara has sought to meet the burden with the argument

that the data on Form EIA-867 is substantially equivalent to

the data the QFs are required to file on Form 556 in their

applications to the Federal Energy Regulatory Commission

for QF certification, which is publicly available.

Before this court, both DOE and the QF Intervenors claim

that the information on Form EIA-867 is narrower in scope

than that submitted on Form 556. But that claim is at odds

with their position before the district court. At argument on

the summary judgment motion, counsel for the QF Interve-

nors conceded that the information provided by QFs upon

initial certification was "substantially identical to that found

in form 867 and that information is public." And DOE

counsel supported this observation with equally emphatic

language: "[The information] may be absolutely totally iden-

tical, but it's projected. It's not actual, and that's the big

difference." Although obviously there is a world of difference

between projected and actual data, these positions either

assert or assume that the information on the two forms is

identical in scope.

The district court accepted DOE's argument that while the

certification information on Form 556 was only projected, the

operational and performance information on Form EIA-867

was drawn from actual experience. Niagara did not dispute

this, but countered by arguing that FERC regulations re-

quire QFs to make corrective filings once there are material

changes in a QF's operations. See 18 U.S.C. s 292.207(d)(1).

But as the district court observed, such new information is

required only when there are material changes in facts and

representations included in the initial self-certification filing.

Since these corrective filings are not necessarily made on an

ongoing and continuous basis, Niagara seems to have initially

failed to carry its burden.

But that is not the end of the story. After the district

court's holding in this case, the New York Public Service

Commission rendered a decision authorizing electric utilities

in New York to monitor the compliance standards set out in

PURPA. See Re Motion to Establish Programs for Moni-

toring Qualifying Facility Status, Nos. 96-E-0775,

95-E-0264, 1997 WL 114364 at *1 (N.Y.P.S.C. Jan. 9, 1997).

It is undisputed that this decision requires New York QFs to

provide actual current performance data of the sort required

for Form 556. Niagara claims that this requirement puts the

requested information squarely in the public domain.

In response to the specific question why in light of this

availability Niagara is still trying to obtain the Form

EIA-867 information, Niagara responds that the Public Ser-

vice Commission decision required information only from 1994

onwards, and that it wants to relieve itself (and in the end

presumably its customers) from the costs of erroneous

PURPA applications from earlier years. In fact, the time

disparity is worse than that argument suggests, because the

Federal Energy Regulatory Commission, though rejecting a

claim by New York independent power producers that the

New York decision was preempted by PURPA, denied it any

effect as to data before the New York independents were on

notice of the requirement,1 on the ground that such a man-

date would impose an undue burden on the producers. See

Independent Power Producers of New York, Inc., 80 FERC

p 61,125 at 61,399 (1997).

Before us DOE and the QF Intervenors try to undercut the

relevance of the New York decision by arguing that the scope

of information on Form EIA-867 is materially broader than

that on Form 556. But that was the scope claim that they

effectively disavowed in district court; to allow them to raise

it now for the first time on appeal would be grossly unfair to

Niagara.

But Niagara is still by no means home free on this issue.

For the period of most concern to Niagara, i.e., before the

effective date of the Public Service Commission decision as

modified by FERC, the New York mandate obviously fails to

put the data into the public domain. But even as to those

earlier data Niagara may have an argument on remand.2

Even if the district court finds that the QFs are in competi-

tion that could be adversely affected by disclosure of the

earlier data if it alone were disclosed, those data may turn out

to add so little to what is covered by the New York decision

that its public disclosure will cause no additional competitive

harm.

__________

1 It is uncertain from FERC's decision, Independent Power

Producers of New York, Inc., 80 FERC p 61,125 at 61,399 (1997),

whether it regarded the QFs as being on notice from August 30,

1996, when the New York Commission made its initial declaratory

ruling and order instituting the QF monitoring program, or from

January 13, 1995, when FERC issued order No. 575, 60 Fed. Reg.

4831 (1995), which established FERC Form 556 and its data re-

quirements, which were in turn picked up by the New York Public

Service Commission.

2 Since the New York decision issued after the judgment in this

case, the district court never had an opportunity to consider it in

evaluating Niagara's claims. Now it will.

* * *

The district court's order granting DOE's motion for sum-

mary judgment is vacated and remanded.

So ordered.