DOE Cross Motion

8/2/2019 DOE Cross Motion

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SOUTHERN ALLIANCE FOR CLEAN

ENERGY,

Plaintiff,

v.

UNITED STATES DEPARTMENT OF ENERGY,

Defendant.

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Civil Action No. 10-1335 (RLW)

DEFENDANT’S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff, Southern Alliance for Clean Energy (“SACE”), brings this action against

Defendant, United States Department of Energy (“DOE”), under the Freedom of Information Act

(“FOIA”), 5 U.S.C. § 552, regarding DOE’s response to a FOIA request that Plaintiff submitted

by letter dated March 25, 2010. Specifically, SACE challenges DOE’s response to Item 6 of

SACE’s FOIA response,1 contending that DOE improperly invoked FOIA Exemption 4 to

withhold portions of three conditional term sheets setting forth the terms and conditions

underlying federal loan guarantees for the construction and operation of two nuclear reactors at

the Vogtle Electric Generating Plant in Burke County, Georgia. As the supporting memorandum

demonstrates, DOE properly redacted confidential commercial information contained in these

three conditional term sheets upon its determination that disclosure of such information would

likely result in substantial competitive injury to the loan applicants from whom the information

was obtained.

1 Pursuant to the parties’ joint request, the Court entered a schedule governing the briefing of partial summary judgment on DOE’s response to Item 6 of Plaintiff’s FOIA request, along with aschedule governing DOE’s ongoing processing and disclosure of nonexempt documentsresponsive to the remaining outstanding aspects of Plaintiff’s FOIA request. See ECF No. 9.

Case 1:10-cv-01335-RLW Document 12 Filed 03/01/11 of 34



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As there are no material facts in dispute, Defendant respectfully moves this Court

pursuant to Federal Rule of Civil Procedure 56 for partial summary judgment on its response to

Item 6 of Plaintiff’s FOIA request. Defendant respectfully submits that the attached

memorandum of points and authorities, statement of material facts not in genuine dispute, and

supporting declarations and exhibits thereto establish that Defendant is entitled to the relief it is

seeking.

Date: March 1, 2011 Respectfully submitted,

RONALD C. MACHEN JR., D.C. Bar #447889United States Attorney

for the District of Columbia

RUDOLPH CONTRERAS, D.C. Bar #434122Chief, Civil Division

By: /s/ Michelle Lo .MICHELLE LOAssistant United States Attorney555 4th Street, N.W.Washington, D.C. 20530Tel: (202) 514-5134 Fax: (202) [email protected]

Of counsel:

Marilyn M. Madarang, Esq.Office of General CounselU.S. Department of Energy







ENERGY,

Plaintiff,

v.


Defendant.

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DEFENDANT’S STATEMENT OF MATERIAL FACTS NOT IN GENUINEDISPUTE AND RESPONSE TO PLAINTIFF’S STATEMENT OF

MATERIAL FACTS NOT IN GENUINE DISPUTE

Pursuant to Local Civil Rule 7(h), Defendant, United States Department of Energy

(“DOE”), respectfully submits this Statement of Material Facts Not in Genuine Dispute in

support of its Cross-Motion for Summary Judgment and responds to Plaintiff’s Statement of

Material Facts Not in Genuine Dispute.

I. DEFENDANT’S STATEMENT OF MATERIAL FACTS NOT IN GENUINE

DISPUTE

1. Section 1703 of the Title XVII of the Energy Policy Act of 2005, 42 U.S.C. §§

16511-16514, establishes a federal loan guarantee program whereby the Secretary of Energy is

authorized to make loan guarantees to qualified projects that avoid, reduce or sequester air

pollutants or anthropogenic emissions of greenhouse gases, and employ new or significantly

improved technologies as compared to commercial technologies in service in the United States at

the time of issuance of the guarantee. Declaration of David G. Frantz (“Frantz Decl.”) ¶ 4.

2. On July 11, 2008, DOE issued a solicitation, Federal Loan Guarantees for Nuclear

Power Facilities, DE-FOA-0000006 (“Solicitation”), to invite applications for loan guarantees




2

for nuclear power projects. Id. ¶ 8.

3. In accordance with DOE regulations, 10 C.F.R. Part 609, the Solicitation

specified the requirements that a borrower or applicant must meet to obtain federal support of its

project under Section 1703 of Title XVII, including the submission of sensitive trade, financial,

commercial and technological information. Id. ¶¶ 7-8.

4. In September 2008, Georgia Power Company, Oglethorpe Power Company, and

Municipal Electric Authority of Georgia (“MEAG”) (collectively, “Applicants”), the three joint

owners of two new nuclear generating units under construction at the Alvin J. Vogtle Electric

Generating Plant in Burke County, Georgia, each filed a Part I application. Id. ¶ 9.

5. Georgia Power is a wholly-owned subsidiary of Southern Company engaged in

the generation and purchase of electricity and the transmission, distribution and sale of electricity

in Georgia. Id.; Declaration of Earl C. Long (“Long Decl.”) ¶ 4. Georgia Power competes with

other electric utilities, independent power producers, and cooperatives for short-term and long-

term energy sales in the wholesale energy market in the Southeast. Long Decl. ¶ 4.

6. Oglethorpe, a not-for-profit electric cooperative, provides wholesale electric

power to its members which are consumer-owned electric cooperatives that provide retail electric

service in Georgia on a not-for-profit basis. Frantz Decl. ¶ 9; Declaration of Elizabeth B. Higgins

(“Higgins Decl.”) ¶ 3. Oglethorpe competes in the wholesale power market in the southeastern

United States with other wholesale power suppliers to provide wholesale power at the lowest

possible cost to its members as well as off-system sales. Higgins Decl. ¶ 4.

7. MEAG is a member-owned general and transmission authority supplying public

power entities in Georgia. Frantz Decl. ¶ 9; Declaration of James E. Fuller (“Fuller Decl.”) ¶ 4.




3

MEAG and its participants are engaged in competition with other electric service providers for

the provision of retail and wholesale electric service, respectively. Fuller Decl. ¶ 4.

8. The loan guarantee application process involved negotiations between DOE and

each Applicant regarding the terms and conditions of the loan guarantee. Frantz Decl. ¶¶ 13-14.

9. In October 2009, DOE offered to each Applicant initial draft term sheet based on

Loan Guarantee Program policy, federal laws governing the program, and each applicant’s

particular loan needs and credit profile. Id.

10. The proposed terms and conditions in the initial term sheet drafts were

subsequently revised by DOE and each Applicant to reflect each Applicant’s associated risk

profile and incorporate information provided by the Applicant. Id.

11. Over the period between October and December 2009, LGPO and the Applicants

held a series of meetings to identify risk mitigation strategies and develop transaction terms to

enhance the prospect for timely payment of principal and interest. Id. Each Applicant received

and responded to numerous term sheet revisions until a final term sheet was agreed upon by both

parties. Id.

12. During this time, the Applicants also supplemented their Part I and Part II

application materials in response to additional due diligence requests made by LGPO seeking

sponsor corporate matters such as resource plans, corporate capital expenditure plans, and

financing plans. Id.

13. Each Applicant developed project cost estimates for DOE that contained

assumptions about interest rates and financing costs that were specific for each company,

including, in Georgia Power’s role as agent for the other joint owners, the details of an




4

Equipment, Procurement and Construction contract that represented a significant portion of the

total capital cost of the project. Id. ¶ 14.

14. In addition, Applicants provided historical and projected financial statements,

financial models, resource plans and financing plans supporting their assumptions to fund,

operate and own the Vogtle Project, as well as loan draw schedules reflecting projected eligible

project costs and amortization schedules. Id.

15. After extensive negotiations between DOE and the Applicants, the information

provided by each Applicant was incorporated into the final terms and conditions of the

Conditional Commitment. Id.

16. After DOE and each Applicant reached a consensus on the terms and conditions

of the Applicant’s term sheet, DOE issued final term sheets dated February 13, 2010, thereby

making each term sheet a conditional commitment to the corresponding Applicant. Id. ¶¶ 14, 16;

see Pulliam Decl. Exs. C, D & E.

17. Pursuant to 10 C.F.R. 609.9, the requirements and conditions stated in the

Conditional Commitment Letters must be satisfied or waived by the Contracting Officer prior to

issuance of the loan guarantee, and the Secretary may terminate a Conditional Commitment for

any reason at any time prior to issuance of the loan guarantee. Frantz Decl. ¶¶ 16-17.

18. Until the parties negotiate and execute a definitive loan guarantee agreement, the

Conditional Commitment Letters are not binding on DOE and there can be no assurance that any

Applicant will receive a federal loan guarantee from DOE. Id. ¶ 17; Long Decl. ¶ 8; Higgins

Decl. ¶ 10; Fuller Decl. ¶ 8.

19. On March 25, 2010, Plaintiff submitted a FOIA request seeking certain records

pertaining to loan guarantees for the construction and operation of two nuclear reactors at Vogtle




5

Electric Generating Plant in Burke County, Georgia. Am. Compl. ¶ 6; Pl. Mem. Ex. B.

Specifically, Plaintiff’s FOIA request sought seven categories of records, including a request in

Item 6 for “[a]ll records related to the general terms and conditions of the Loan Guarantees.” See

Pl. Mem. Ex. B.

20. DOE determined that Plaintiff’s FOIA request for the term sheets called for the

disclosure of sensitive commercial and financial information that potentially fell within the scope

of Exemption 4. Pulliam Decl. ¶ 7.

21. In accordance with DOE regulations, the LPO FOIA staff notified each Applicant

of SACE’s FOIA request and directed the companies to submit their views on any information

that should be withheld along with an explanation as to why such information was subject to

withholding under FOIA. Id. ¶¶ 8-9; 10 C.F.R. § 1004.11(c).

22. The DOE Office of General Counsel took into consideration the views and

justifications provided by the Applicants in making an independent determination on whether the

information in question was protected from disclosure pursuant to Exemption 4. Pulliam Decl. ¶

11.

23. In addition, LPO subject matter experts reviewed the documents to determine if

information contained therein may otherwise be exempt from public disclosure under FOIA. Id.

¶ 12.

24. On July 6, 2010, DOE released versions of the three Conditional Commitment

Letters at issue containing redactions pursuant to FOIA Exemption 4. Id. ¶ 13; see Pl. Mem. Ex.

D at 1.




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25. The redacted portions of the Conditional Commitment Letters included

commercial and financing information. See Pulliam Decl. ¶ 13 & Exs. F-H; see generally Long

Decl.; Higgins Decl.; Fuller Decl.

26. In an effort to narrow the issues for judicial review, DOE conducted a further

review to determine whether any additional non-exempt information could be segregated and

disclosed. Pulliam Decl. ¶ 14.

27. DOE subsequently made a disclosure of the Conditional Commitment Letters on

December 3, 2010, which contained additional releases of segregable non-exempt information.

Id. ¶ 13; Pl. Mem. Exs. I, J & K.

28. On March 1, 2011, DOE released an additional version of the Conditional

Commitment Letter for MEAG disclosing additional information that DOE determined to be

non-exempt under the FOIA. Pulliam Decl. ¶ 14 & Ex. C.

II. DEFENDANT’S RESPONSE TO PLAINTIFF’S STATEMENT OF MATERIAL

FACTS NOT IN GENUINE DISPUTE

As set forth below, the purportedly material facts included in Plaintiff’s Statement of

Material Facts do not entitle Plaintiff to partial summary judgment in this case. Defendant refers

to its above Statement of Material Facts Not in Genuine Dispute for an identification of

additional facts that are material to the resolution of the parties’ cross-motions for partial

summary judgment.

1. Not disputed.

2. Not disputed.

3. Not disputed but not material.

4. Defendant does not dispute that DOE sent a letter dated April 2, 2010 stating that

“upon completion of the searches and review of any records located, [SACE] will be provided a




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response.” However, the statements in this paragraph are not material to the resolution of the

parties’ cross-motions for partial summary judgment.

5. Defendant does not dispute that on July 6, 2010, DOE sent SACE a determination

letter providing a “partial response” to paragraph 6 of the FOIA request and asserted FOIA

Exemption 4 as the legal basis for withholding the redacted portions from release. However, the

statements in this paragraph are not material to the resolution of the parties’ cross-motions for

partial summary judgment.


7.

Defendant does not dispute that on August 11, 2010, the OHA issued a decision

and order with respect to SACE’s administrative appeal. However, the statements in this

paragraph are not material to the resolution of the parties’ cross-motions for partial summary

judgment.

8. Not disputed.



11. Not disputed.

12. Defendant does not dispute that on December 3, 2010, DOE re-released the

Conditional Commitment Letters to SACE with fewer redactions. Plaintiff’s statement that

“DOE, however, still failed to disclose substantial portions of the Term Sheets” consists of

arguments or characterizations, not facts.

13. Not disputed that the Term Sheets released on December 3, 2010 contained

redactions. However, the number of individual redactions is not material to the resolution of the

parties’ cross-motions for partial summary judgment.




8


RONALD C. MACHEN JR., D.C. Bar #447889United States Attorneyfor the District of Columbia



Of counsel:








ENERGY,

Plaintiff,

v.


Defendant.

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))))))))))


MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OFDEFENDANT’S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND

OPPOSITION TO PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff, Southern Alliance for Clean Energy (“SACE”), brings this action against

Defendant, United States Department of Energy (“DOE” or “Agency”), under the Freedom of

Information Act (“FOIA”), 5 U.S.C. § 552, challenging DOE’s response to a FOIA request that

Plaintiff submitted on March 25, 2010. Plaintiff seeks partial summary judgment on DOE’s

response to Item 6 of its FOIA response, which sought “[a]ll records related to the general terms

and conditions of the Loan Guarantees” issued for the construction and operation of two nuclear

reactors at the Vogtle Electric Generating Plant in Burke County, Georgia. See ECF No. 11.

Specifically, SACE contends that DOE insufficiently justified its application of FOIA Exemption

4 to withhold portions of the three conditional loan guarantee letters at issue (“Conditional

Commitment Letters” or “term sheets”) and that, even if DOE had adequately justified the

exemption, the information at issue does not fall within the scope of Exemption 4 because it was

“not obtained from a person” and would not result in competitive harm to the loan applicant.




2

SACE’s arguments suffer from a host of legal and factual defects that preclude summary

judgment in its favor.

As the declarations and Vaughn indices submitted herewith demonstrate, DOE has

properly supported its withholdings of the confidential commercial and financial information

contained in the three Conditional Commitment Letters at issue here. DOE properly redacted

commercial and financial information in the three term sheets upon its determination that the

information had been obtained in the first instance from applicants seeking loan guarantees from

DOE and that disclosure of such information would likely result in substantial competitive injury

to the applicants. As there are no material facts in dispute, DOE submits that partial summary

judgment in its favor is appropriate. DOE respectfully requests that the Court enter judgment for

DOE on the claims asserted with respect to Item 6 of Plaintiff’s FOIA request and deny

Plaintiff’s motion for partial summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

I. THE FEDERAL LOAN GUARANTEE PROGRAM FOR NEW OR

SIGNFICANTLY IMPROVED ENERGY TECHNOLOGIES

A. Background of the Federal Loan Guarantee Program

Section 1703 of the Title XVII of the Energy Policy Act of 2005, 42 U.S.C. §§ 16511-

16514, establishes a federal loan guarantee program whereby the Secretary of Energy is

authorized to make loan guarantees to qualified projects that avoid, reduce or sequester air

pollutants or anthropogenic emissions of greenhouse gases, and employ new or significantly

improved technologies as compared to commercial technologies in service in the United States at

the time of issuance of the guarantee. Declaration of David G. Frantz (“Frantz Decl.”) ¶ 4. The

Agency’s Title XVII Loan Guarantee Program was initially administered through its Loan

Guarantee Program Office, which was the predecessor to the Loan Programs Office (“LPO”).




3

Id. ¶ 5. The mission of LPO is to “accelerate the domestic commercial deployment of innovative

and advanced clean energy technologies at a pace sufficient to contribute meaningfully to the

achievement of . . . national clean energy objectives.” Id. ¶ 6. Among the ways in which LPO

accomplishes its mission is by guaranteeing loans to eligible clean energy projects and agreeing

to repay the borrower’s debt obligation in the event of default. Id.

On July 11, 2008, DOE issued a solicitation, Federal Loan Guarantees for Nuclear Power

Facilities, DE-FOA-0000006 (“Solicitation”), to invite applications for loan guarantees for

nuclear power projects. Id. ¶ 8. In accordance with DOE regulations, 10 C.F.R. Part 609, the

Solicitation specified the requirements that a borrower or applicant must meet to obtain federal

support of its project under Section 1703 of Title XVII, including the submission of sensitive

trade, financial, commercial and technological information. Id. ¶¶ 7-8. In response to the

Solicitation, applications for loan guarantees to be issued under Title XVII were filed in

connection with 17 proposed new nuclear generating projects around the country. Id. ¶ 9.

In September 2008, Georgia Power Company, Oglethorpe Power Company, and

Municipal Electric Authority of Georgia (“MEAG”) (collectively, “Applicants”), the three joint

owners of two new nuclear generating units under construction at the Alvin J. Vogtle Electric

Generating Plant in Burke County, Georgia, each filed a Part I application. Id. Georgia Power,

an investor-owned utility whose retail rates are regulated by the Georgia Public Service

Commission, is a wholly-owned subsidiary of Southern Company engaged in the generation and

purchase of electricity and the transmission, distribution and sale of electricity in Georgia. Id.;

Declaration of Earl C. Long (“Long Decl.”) ¶ 4. Georgia Power competes with other electric

utilities, independent power producers, and cooperatives for short-term and long-term energy

sales in the wholesale energy market in the Southeast. Long Decl. ¶ 4. Oglethorpe, a not-for-




4

profit electric cooperative, provides wholesale electric power to its members which are

consumer-owned electric cooperatives that provide retail electric service in Georgia on a not-for-

profit basis. Frantz Decl. ¶ 9; Declaration of Elizabeth B. Higgins (“Higgins Decl.”) ¶ 3.

Oglethorpe competes in the wholesale power market in the southeastern United States with other

wholesale power suppliers to provide wholesale power at the lowest possible cost to its members

as well as off-system sales. Higgins Decl. ¶ 4. MEAG is a member-owned general and

transmission authority supplying public power entities in Georgia. Frantz Decl. ¶ 9; Declaration

of James E. Fuller (“Fuller Decl.”) ¶ 4. MEAG and its participants are engaged in competition

with other electric service providers for the provision of retail and wholesale electric service,

respectively. Fuller Decl. ¶ 4.

The Part I applications explained each Applicant’s proposed method of achieving the

technical, budget, financial, personnel and project scheduling requirements of the Solicitation,

and defined the percentage of the cost of the Vogtle Project that each owner would pay based on

its ownership interest. Frantz Decl. ¶ 10. Under the Applicants’ proposed financing structure,

Georgia Power would be the direct borrower of the government funds and DOE would have full

recourse to all of Georgia Power’s assets in the event of a default on the guaranteed borrowing.

Long Decl. ¶ 6.

B. DOE’s Processing of Loan Guarantee Applications

Following an initial review to eliminate loan guarantee proposals that did not meet the

criteria set forth in the Solicitation, DOE determined that each Applicant satisfied the initial

eligibility requirements. Frantz Decl. ¶¶ 11-12. DOE next provided guidance to each Applicant

on its submission of a Part II application in December 2008. Id. ¶ 12. As part of the Part II

application process, DOE and its independent consultants undertook a more comprehensive due




5

diligence review of a project’s financial, technical, regulatory, and legal strengths and

weaknesses, along with a market analysis and environmental review (which assesses a project’s

compliance with the National Environmental Policy Act, Endangered Species Act and other state

and local environmental laws and regulations). Id.

An essential part of the loan guarantee application process involved negotiations between

DOE and each Applicant regarding the terms and conditions of the loan guarantee. Id. ¶¶ 13-14.

In October 2009, DOE offered to each Applicant initial draft term sheet based on Loan

Guarantee Program policy, federal laws governing the program, and each applicant’s particular

loan needs and credit profile. Id. Each Applicant then responded to the term sheet offer with

“issues lists” and through follow-up in-person and telephonic meetings to discuss and negotiate

the terms and conditions contained in the initial term sheet. Id. The proposed terms and

conditions in the drafts initial term sheet were subsequently revised by DOE and each Applicant

to reflect each Applicant’s associated risk profile and to incorporate information provided by the

Applicant. Id. Over the period between October and December 2009, LGPO and the Applicants

held a series of meetings to identify risk mitigation strategies and develop transaction terms to

enhance the prospect for timely payment of principal and interest. Id. Each Applicant received

and responded to numerous term sheet revisions until a final term sheet was agreed upon by both

parties. Id. During this time, the Applicants also supplemented their Part I and Part II

application materials in response to additional due diligence requests made by LGPO seeking

sponsor corporate matters such as resource plans, corporate capital expenditure plans, and

financing plans. Id.

As stated in their respective applications, each joint owner of the Vogtle Project is

obligated to pay a certain percentage of the total cost to construct the units as well as its own




6

separate financing costs. Id. ¶¶ 10, 14. Thus, each Applicant developed project cost estimates

for DOE that contained assumptions about interest rates and financing costs that were specific to

each company, including, in Georgia Power’s role as agent for the other joint owners, the details

of an Equipment, Procurement and Construction contract that represented a significant portion of

the total capital cost of the project. Id. ¶ 14. In addition, Applicants provided historical and

projected financial statements, financial models, resource plans and financing plans supporting

their assumptions to fund, operate and own the Vogtle Project, as well as loan draw schedules

reflecting projected eligible project costs and amortization schedules. Id. After extensive

negotiations between DOE and the Applicants, the information provided by each Applicant was

incorporated into the final terms and conditions of the Conditional Commitment. Id. Although

most of the terms and conditions in the initial term sheet drafts offered to Applicants were

negotiated and revised based on the information provided by Applicants, a few of the terms

remained unchanged and were incorporated into the Conditional Commitment Letters. Id. ¶ 15.

After DOE and each Applicant reached a consensus on the terms and conditions of the

Applicant’s term sheet, DOE issued final term sheets dated February 13, 2010, thereby making

each term sheet a conditional commitment to the corresponding Applicant. Id. ¶ 16; see Pulliam

Decl. Exs. C-E. On February 16, 2010, President Obama announced that DOE had offered

conditional commitments for the construction and operation of two new nuclear generating units

at Vogtle Electric Generating Plant in Burke County, Georgia. Am. Compl. ¶ 5; Pl. Mem. Ex. A.

Pursuant to 10 C.F.R. 609.9, the requirements and conditions stated in the Conditional

Commitment Letters must be satisfied or waived by the Contracting Officer prior to issuance of

the loan guarantee, and the Secretary may terminate a Conditional Commitment for any reason at

any time prior to issuance of the loan guarantee. Frantz Decl. ¶¶ 16-17. Until and unless the




7

parties negotiate and execute a definitive loan guarantee agreement, the Conditional

Commitment Letters are not binding on DOE and there can be no assurance that any Applicant

will receive a federal loan guarantee from DOE. Id. ¶ 17; Long Decl. ¶ 8; Higgins Decl. ¶ 10;

Fuller Decl. ¶ 8.

II. SACE’S FOIA REQUEST FOR CONDITIONAL COMMITMENT LETTERS

On March 25, 2010, Plaintiff submitted a FOIA request seeking certain records pertaining

to loan guarantees for the construction and operation of two nuclear reactors at the Vogtle

Electric Generating Plant. Am. Compl. ¶ 6; Pl. Mem. Ex. B. Specifically, Plaintiff’s FOIA

request sought seven categories of records, including a request in Item 6 for “[a]ll records related

to the general terms and conditions of the Loan Guarantees.” See Pl. Mem. Ex. B.

A. The Agency’s Search for and Disclosure of Responsive Records

On April 5, 2010, the LPO FOIA staff began its search for documents responsive to

SACE’s FOIA request. See Pulliam Decl. ¶ 6. With respect to Item 6 of SACE’s FOIA request,

the LPO FOIA staff obtained from the Senior Investment Officer copies of the term sheets or

conditional commitment letters issued to each Applicant in connection with the Vogtle Project.

Id. DOE determined that Plaintiff’s request for the term sheets called for the disclosure of

sensitive commercial and financial information that potentially fell within the scope of

Exemption 4. Id. ¶ 7. Section 1004.11 of the Agency’s regulations requires that DOE, in the

course of responding to a Freedom of Information request, promptly notify the submitter of the

commercial and/or financial information and provide the submitter “an opportunity to submit his

view on whether information contained in the requested document . . . is exempt from the

mandatory public disclosure requirements of the Freedom of Information Act.” See id. ¶ 8

(citing 10 C.F.R. § 1004.11(c)). Agency regulations also require that DOE give the submitter of

potentially exempt information no less than seven days prior to intended public disclosure to




8

provide their views and submit an “item-by-item indication, with accompanying explanation”

addressing whether such information is subject to FOIA exemptions. Id. Since the Applicants

provided information to DOE related to the financing of the Vogtle Project, the LPO FOIA staff

notified each Applicant of SACE’s FOIA request and directed the companies to submit their

views on any information that should be withheld along with an explanation as to why such

information was subject to withholding under FOIA. Id. ¶¶ 8-9.

The DOE Office of General Counsel took into consideration the views and justifications

provided by the Applicants in making an independent determination on whether the information

in question should be released. Id. ¶ 11. Where necessary, DOE engaged in additional follow-up

discussions with each Applicant to determine whether certain commercial information in the

Conditional Commitment Letters was protected from disclosure pursuant to Exemption 4. Id. In

addition, LPO subject matter experts reviewed the records to determine if information contained

therein may otherwise be exempt from public disclosure under FOIA. Id. ¶ 12.

B. The Agency’s Additional Disclosures of Non-Exempt Information in the

Conditional Commitment Letters

On July 6, 2010, DOE released versions of the three Conditional Commitment Letters

containing redactions pursuant to FOIA Exemption 4. Id. ¶ 13; see Pl. Mem. Ex. D at 1.

Plaintiff thereafter commenced this action on August 9, 2010. ECF No. 1. In its partial response

dated September 2, 2010, DOE indicated that the portions redacted from the Conditional

Commitment Letters included sensitive cost and financing information that, if disclosed, “would

provide an unfair advantage to competitors by enabling competing power suppliers to estimate

supply costs and use this information to bid against the applicant.” See Pulliam Decl. ¶ 13 & Ex.

B at 2-3. In an effort to narrow the issues for judicial review, DOE conducted a further review to

determine whether any additional non-exempt information could be segregated and disclosed.




9

Id. ¶ 14. DOE subsequently made another disclosure of the Conditional Commitment Letters on

December 3, 2010, which contained additional releases of segregable non-exempt information.

Id. ¶ 13; Pl. Mem. Exs. I, J & K. On March 1, 2011, DOE released another version of the

Conditional Commitment Letter issued to MEAG, disclosing additional information determined

to be non-exempt under the FOIA. Pulliam Decl. ¶ 14 & Ex. C.

LEGAL STANDARD

Summary judgment is appropriate when the pleadings and evidence “show that there is

no genuine issue as to any material fact and that the moving party is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986);

Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986); Tao v. Freeh, 27 F.3d 635, 638 (D.C. Cir.

1994). The party seeking summary judgment must demonstrate the absence of a genuine issue of

material fact. See Celotex, 477 U.S. at 248. A genuine issue of material fact is one that “might

affect the outcome of the suit under the governing law.” Anderson, 477 U.S. at 248. Once the

moving party has met its burden, the nonmoving party “may not rest upon the mere allegations

or denials of his pleading, but . . . must set forth specific facts showing that there is a genuine

issue for trial.” Anderson, 477 U.S. at 248.

FOIA cases are typically and appropriately decided on motions for summary judgment.

Citizens for Responsibility & Ethics in Washington v. U.S. Dep’t of Labor , 478 F. Supp. 2d 77,

80 (D.D.C. 2007) (“CREW ”); Wheeler v. Dep’t of Justice, 403 F. Supp. 2d 1, 5-8 (D.D.C. 2005).

An agency may be entitled to summary judgment in a FOIA case if it demonstrates that no

material facts are in dispute, it has conducted an adequate search for responsive records and each

responsive record that it has located either has been produced to the plaintiff or is exempt from

disclosure. See Weisberg v. Dep’t of Justice, 627 F.2d 365, 368 (D.C. Cir. 1980). To meet its




10

burden, a defendant may rely on reasonably detailed and non-conclusory declarations. See

McGehee v. C.I.A., 697 F.2d 1095, 1102 (D.C. Cir. 1983); Vaughn v. Rosen, 484 F.2d 820 (D.C.

Cir. 1973), cert denied , 415 U.S. 977 (1974); Wheeler , 403 F. Supp. 2d at 6. “[T]he Court may

award summary judgment solely on the basis of information provided by the department or

agency in declarations when the declarations describe ‘the documents and the justifications for

nondisclosure with reasonably specific detail, demonstrate that the information withheld

logically falls within the claimed exemption, and are not controverted by either contrary

evidence in the record nor by evidence of agency bad faith.’” CREW , 478 F. Supp. 2d at 80

(quoting Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981)).

Here, DOE has submitted the declarations of David G. Frantz and Wendy Pulliam and

detailed Vaughn indices for each of the three Conditional Commitment Letters to explain and

justify the Agency’s response to Item 6 of Plaintiff’s FOIA request. Additionally, DOE submits

the declarations of Earl C. Long, Assistant Treasurer of Georgia Power Company, Elizabeth B.

Higgins, Executive Vice President and Chief Financial Officer of Oglethorpe, and James E.

Fuller, Senior Vice President and Chief Financial Officer of MEAG, to explain the competitive

harm that would result from disclosure of the commercial and financial information in the three

Conditional Commitment Letters.

ARGUMENT

I. DOE PROPERLY WITHHELD CONFIDENTIAL COMMERCIAL AND

FINANCIAL INFORMATION PURSUANT TO EXEMPTION 4

The FOIA requires that an agency release all records responsive to a properly submitted

request unless such records are protected from disclosure by one or more of the Act’s nine

exemptions. 5 U.S.C. § 552(b); U.S. Dep’t of Justice v. Tax Analysts, 492 U.S. 136, 150-51

(1989). Exemption 4 shields the disclosure of “trade secrets and commercial or financial




11

information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4). As

the D.C. Circuit articulated in National Parks I , the applicability of Exemption 4 under the FOIA

is guided by the substantial competitive harm test. National Parks and Conservation Ass’n v.

Morton, 498 F.2d 765, 770 (D.C. Cir. 1974) (“ Nat’l Parks I ”), as modified by National Parks

and Conservation Ass’n v. Kleppe, 547 F.2d 673, 679 (D.C. Cir. 1976) (“ Nat’l Parks II ”). This

standard remains the definitive measure for evaluating whether information falls within the scope

of FOIA Exemption 4 where the materials in question were not volunteered, but required to be

provided, to the Government. In National Parks I , the D.C. Circuit held that commercial or

financial information qualified as “confidential” if disclosure of the information would likely:

“(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 [it] was obtained.” 498

F.2d at 770.

Plaintiff does not dispute that the Conditional Commitment Letters contain commercial

and financial information, so this element of the National Parks I test is not before the Court.

See Pl. Mem. at 11-15. See Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1291

(D.C. Cir. 1983) (instructing that the terms “commercial” and “financial” be given their ordinary

meaning). Plaintiff challenges, however, DOE’s application of Exemption 4 to redact certain

information from the term sheets on the grounds that the withheld information was not obtained

“from a person” and would not cause competitive harm if disclosed. See id. As explained

below, Plaintiff’s arguments are without merit. Plaintiff ignores the fact that the Applicants were

the ultimate source of the requested information and offers only speculation in support of its

claims of lack of competitive injury.




12

A. The Requested Commercial Information Was Obtained “From A Person”

Exemption 4 excepts from disclosure confidential information that is obtained “from a

person.” 5 U.S.C. § 552(b)(4). Under the FOIA, a “person” is defined as “an individual,

partnership, corporation, association, or public or private organization other than an agency.” 5

U.S.C. § 551(2); Pub. Citizen Health Research Group v. Nat’l Inst. of Health, 209 F. Supp. 2d

37, 44 (D.D.C. 2002) (“There is no doubt that a corporation may be considered a “person” for

the purposes of exemption 4.”). Plaintiff contends that the withheld portions of the Conditional

Commitment Letters contain “unequivocally DOE’s terms and conditions,” and therefore fall

outside the scope of Exemption 4 because they were generated by the government. Pl. Mem. at

11-13.

The fact that the confidential terms of the loan agreement were arrived at as a result of

negotiations between LPO and the Applicants does not, however, “alter the fact that the

[Applicants] were the ultimate source of this information.” See Pub. Citizen, 209 F. Supp. 2d at

44. Indeed, courts have held that documents containing “summaries or reformulations of

information supplied by a source outside of the government” are protected under Exemption 4.

Judicial Watch, Inc. v. Exp.-Imp. Bank , 108 F. Supp. 2d 19, 28 (D.D.C. 2000) (citing Gulf & W.

Indus. v. United States, 615 F.2d 527, 529-30 (D.C. Cir. 1979)); see OSHA Data/CIH, Inc. v.

U.S. Dep’t of Labor , 220 F.3d 153, 162 n.23 (3d Cir. 2000) (concluding that the release of a ratio

derived by an agency from numbers submitted to the agency would result in the disclosure of

commercial information obtained from a person and would thus come within Exemption 4 if the

information was confidential). On this basis, the court in Public Citizen upheld the application

of Exemption 4 to withhold the royalty rate in an agreement between a licensee and the National

Institutes of Health upon its determination that the licensee “still must provide the information in




13

the first instance,” even if the final royalty rates may be the result of negotiation between the

licensee and the agency. See Pub. Citizen, 209 F. Supp. 2d at 44-45.

Plaintiff’s reliance on the Second Circuit’s decision in Bloomberg, L.P. v. Board of

Governors of the Federal Reserve System, 601 F.3d 143 (2d Cir. 2010), does not compel a

contrary conclusion here. In Bloomberg, the Second Circuit considered whether “documents that

show what loans the Federal Reserve Banks actually made” to borrowers, and not any of the loan

applications by the borrowers themselves, were obtained from a person within the meaning of

FOIA and concluded in the negative. Id. at 148 (emphasis added). As explained in more

specific detail in the district court opinion, the requested documents did not reflect any financial

information of the borrowers, such as pledged collateral and requested loan amounts; rather, they

described the originating Federal Reserve Bank districts of the loans, individual loan amounts

extended, types of lending program borrowed from, and loan origination and maturity dates, all

of which was information generated by a Federal Reserve Bank upon its decision to approve the

loan request. See Bloomberg L.P. v. Bd. of Governors of the Fed. Res. Sys., 649 F. Supp. 2d 262,

277-78 (S.D.N.Y. 2009).

Unlike the actual loans at issue in Bloomberg, the requested information in the

conditional loan commitments was generated as a result of “extensive negotiations between DOE

and the Applicants,” with the information provided by each Applicant incorporated into the

terms and conditions of the Conditional Commitment Letters. See Frantz Decl. ¶¶ 13-14. For

example, each Applicant supplied DOE with estimates of the cost to construct, finance, own, and

operate its interest in the Vogtle Project, including assumptions about interest rates and financing

costs specific to each Applicant, as well as loan draw schedules reflecting each company’s

projected eligible project costs and amortization schedules. Id. ¶ 14. Further, the Applicants are,




14

as of the date of this filing, in the process of negotiating the loan documentation to effectuate the

parties’ agreements as embodied in the Conditional Commitment Letters. Id. ¶ 16. Importantly,

the term sheets remain conditional; DOE will issue a loan guarantee if and when all the terms

and conditions specified in the terms sheets and the accompanying loan documentation have

been satisfied or otherwise waived. Id. ¶¶ 16-17. Moreover, although most of the terms and

conditions in the initial term sheet drafts offered to Applicants were negotiated and revised based

on the information provided by Applicants, a few initial terms remained unchanged and were

subsequently incorporated into the Conditional Commitment Letters. Id. ¶ 15. Initial terms that

were generated by DOE and remained unchanged include, but are not limited to, the following

unredacted provisions: Sections 1, 6, 7, 11, 12 (Application Fee, Modification Fee), 15, 18(d)

and (g) (Condition Precedent to Each Advance for Borrower) of the GPC Conditional

Commitment; and Sections 1, 11, 12 (Application Fee, Modification Fee), 13, 15, 17(a)-(l)

(Conditions Precedent to Initial Advance for Borrower) of the OPC Conditional Commitment.1

Id.

Thus, given that the Applicants were the “ultimate source” of the commercial information

contained in the Conditional Commitment Letters, the requested records contain information

“obtained from a person” and are therefore protected from disclosure pursuant to Exemption 4.

B. Disclosure of the Commercial Information Would Cause Substantial

Competitive Harm to the Applicants

The D.C. Circuit does not require that a party show “actual competitive harm” in order to

make an adequate showing of the likelihood of substantial competitive harm. Public Citizen

1 As Mr. Frantz attests, even some of the Initial Terms that were revised as a result of negotiations were also released to Plaintiff. These revised terms include, but are not limited to,the following sections: Sections 2, 3, 7, 13, 16, 17(a)-(l)(Conditions Precedent to Each Advancefor Borrower), 23, 28 of GPC Conditional Commitment and Sections 2, 3, 7, 10, 23, 24, 27, 28of OPC Conditional Commitment. See Frantz Decl. ¶ 14.




15

Health Research Group v. FDA, 704 F.2d 1280, 1291 (D.C. Cir. 1983) (quoting Gulf & W.

Indus., 615 F.2d at 530). Rather, “evidence revealing ‘[a]ctual competition and the likelihood of

substantial competitive injury’ is sufficient to bring commercial information within the realm of

confidentiality.” Kahn v. Fed. Motor Carrier Safety Admin., 648 F. Supp. 2d 31, 36 (quoting

Pub. Citizen, 704 F.2d at 1291). Although conclusory and generalized allegations of substantial

competitive harm are insufficient to justify the application of Exemption 4, “the court need not

engage in a sophisticated economic analysis to determine whether there is a likelihood of

substantial competitive injury.” Id. (citing Public Citizen, 704 F.2d at 1291). Here, the

declarations submitted by Georgia Power, Oglethorpe, and MEAG provide detailed support

demonstrating that each Applicant faces actual competition in the market for energy sales and the

likelihood of substantial competitive injury that would result from disclosure of their commercial

and financial information. See Nat’l Parks II , 547 F.2d at 684 (concluding that it is “virtually

axiomatic” that disclosure of commercial and financial information is likely to cause competitive

harm in light of the “extremely detailed and comprehensive nature of the financial records

requested”).

1. Georgia Power Conditional Commitment Letter

As Earl Long, Assistant Treasurer of Georgia Power, attests, Georgia Power competes

with other electric utilities, independent power producers, and cooperatives for short-term and

long-term energy sales in the wholesale energy market in the Southeast. Long Decl. ¶ 4.

Georgia Power also competes with other electric suppliers with regard to large retail electric

customers and the acquisition of additional generating resources. Id. In light of the capital

intensive nature of its business, Georgia Power’s ability to compete in the marketplace is

influenced heavily by its ability to effectively manage borrowing costs. Id.




16

In view of the fact that the Conditional Commitment Letter issued dated on February 13,

2010 does not represent a definitive agreement between the agency and Georgia Power, and may

in fact be terminated at the election of the Secretary of Energy “for any reason at any time prior

to the execution of a definitive loan agreement,” Georgia Power faces the possibility of having to

seek alternative financing for the significant amount of roughly $3.4 billion for the construction

of the Vogtle Plant. Id. ¶ 8. In such an event, Georgia Power would have to negotiate financing

documents with alternative sources of capital, and would do so in competition with other electric

utilities, independent power producers, and cooperatives that are also seeking capital. Id. The

disclosure of certain proposed terms in the Conditional Commitment -- which differ from the

terms of Georgia Power’s transactions in the private market -- would significantly undermine

Georgia Power’s negotiating position in an alternative financing transaction by reducing its

operational and financial flexibility without any of the attendant benefits of DOE loan

guarantees. Id. ¶¶ 10-11. The disclosure of the redacted provisions would expose the terms and

conditions upon which DOE may be willing to make federal loan guarantees for new nuclear

projects, and in effect permit Georgia Power’s competitors to benefit from the terms to which

Georgia Power has devoted substantial time and resources to negotiate with DOE. Id. ¶ 13. See

Nat’l Parks II , 547 F.2d at 684 (“Disclosure would provide competitors with valuable insights

into the operational strengths and weaknesses of a [company], while [its competitors] could

continue in the customary manner of ‘playing their cards close to their chest.’”).

Exemption 4 thus guards against the disclosure of information that would result in the

“affirmative use of proprietary information” by competitors. See United Techs. Corp. v. United

States Dep’t of Defense, 601 F.3d 557, 564 (D.C. Cir. 2010). Here, the redacted information

includes the following:




17

• information in Schedules I, II, and III to the Conditional Commitment Lettercontaining detailed project cost estimates and a loan draw schedule (which reflectsthe anticipated timing of certain project costs) for the construction of the VogtleUnits, which would be of great value to competitors who are, or may be, consideringthe construction of new nuclear generating units, but who are not required to share

their confidential internal cost estimates with Georgia Power; and

• provisions addressing a particular aspect of the Title XVII Loan Program that iscurrently the subject of discussions between DOE and Georgia Power and, dependingon the final resolution of these issues, may require Georgia Power to engage infurther negotiations with certain third parties. Disclosure of these provisions in theirpresent unmodified form could negatively impact Georgia Power’s negotiatingposition with these third parties.

Id. ¶¶ 14-15. As established in the Long Declaration and the Vaughn index attached as Exhibit F

to the Pulliam Declaration, the commercial and financial information in the Conditional

Commitment Letter would permit Georgia Power’s competitors to better evaluate financing

alternatives for their new nuclear generating units and assist competitors who either have less

favorable credit ratings or wish to propose a different borrowing structure in obtaining a more

favorable set of terms from DOE. Long Decl. ¶ 13.

As set forth above, disclosure of certain proposed project cost estimates, loan draw

schedules, and financing terms of its proposed transaction with DOE would likely injure Georgia

Power’s competitive position in the wholesale energy market given the non-binding nature of the

DOE’s conditional commitment. Therefore, DOE properly withheld the requested information

from the Conditional Commitment Letter issued to Georgia Power. See Pulliam Decl. Ex. F.

2. Oglethorpe Conditional Commitment Letter

Along with its 39 members, Oglethorpe, a not-for-profit electric cooperative, participates

in the wholesale power market in the southeastern United States. See Higgins Decl. ¶¶ 3-4. As a

result of the number of market participants and the interconnectedness of the electric grid in the

Southeast, Oglethorpe competes in a competitive marketplace with other wholesale power




18

suppliers to provide wholesale power at the lowest possible cost to its members as well as off-

system sales. Id. ¶ 4. The pricing and availability of the necessary power and capacity are

primary considerations in determining whether Oglethorpe or a third-party should supply the

power and capacity needs of its members, and therefore Oglethorpe’s ability to construct, acquire

and finance power and capacity sources in the most cost-efficient manner possible is critical if

Oglethorpe is to meet its members’ needs. Id. ¶ 5.

As demonstrated in the Higgins Declaration and the Vaughn index attached as Exhibit G

to the Pulliam Declaration, the limited redactions of confidential financial information in the

Conditional Commitment Letter issued to Oglethorpe include:

• confidential loan terms, including the treatment of Oglethorpe’s fundingcommitments, details on the term and maturity of the guaranteed loan, loan advanceschedules, loan covenants, events of default, and loan repayment terms; and

• confidential financial data, including Oglethorpe’s internal estimates of the cost of developing and financing the additional units at the Vogtle Plant, broken down intocategories such as, among others, nuclear fuel, training and debt service on non-DOEfunding, and the amount of and details for calculating the loan maintenance fee toDOE and specific amounts to be paid under the repayment schedule.

Higgins Decl. ¶ 7. The project cost estimates that Oglethorpe has developed for and provided to

DOE represent are subject to revision up until the final terms of Oglethorpe’s financing for the

Vogtle Project are determined. Id. ¶ 10. Thus, the disclosure of different estimates of the project

cost would likely cause substantial competitive harm to Oglethorpe by creating confusion in the

credit market and presenting difficulties for Oglethorpe in future public debt offerings. Id.

Moreover, the disclosure of confidential financial data and confidential loan terms could

adversely affect Oglethorpe’s negotiating position for short-term borrowings, as well as its

ability to negotiate favorable financing terms from private lenders. Id. ¶¶ 11-17. The prospect of

competitive harm is especially acute where, as here, public release of the confidential financial




19

data and loan terms would likely have a substantial adverse effect on the pricing and structure of

any alternative financings should the DOE loan guarantee fail to close. Id. ¶ 13. That is,

Oglethorpe may be harmed in its ability to obtain alternative financing if other lenders require

payment of an interest rate premium in order to avoid inclusion of certain of the confidential loan

terms that Oglethorpe has agreed to with DOE. Id.

As set forth above, Oglethorpe faces actual competition in the wholesale energy market,

and disclosure of certain confidential loan terms and financial data would likely injure its

competitive position in the event Oglethorpe were to seek alternative sources of financing.

Therefore, DOE correctly applied Exemption 4 to withhold the requested information from the

Conditional Commitment Letter issued to Oglethorpe. See Pulliam Decl. Ex. G.

3. MEAG Conditional Commitment Letter

MEAG was created by the State of Georgia for the purpose of owning and operating

electric generation and transmission facilities to supply bulk electric power to political

subdivisions of the State of Georgia. Fuller Decl. ¶ 4. It currently provides bulk electric power

to 48 cities and one county in the State of Georgia (referred to as “participants”) through its

ownership interests in ten electric generating units and its purchases from, sales to, or exchanges

with other bulk electric suppliers of additional capacity and energy. Id. MEAG and its

participants are engaged in competition with other electric service providers for the provision of

retail and wholesale electric service, respectively. Id. In addition, all retail electric providers in

the State of Georgia compete to serve the power requirements of new large commercial and

industrial customers. Id. ¶ 5. MEAG’s competitive position in the wholesale power market has

a direct effect on its participants’ competitive position in the retail power market in that reduced

wholesale power costs lead to reduced retail prices. Id. Separately, MEAG also competes in the




20

wholesale power market in and outside of the State of Georgia through its participation in a

Georgia wholesale power trading organization and through bilateral long-term sales of power to

wholesale power consumers. Id. ¶ 6.

As with the requested information contained in the terms sheets for the other two

applicants, the information redacted in the Conditional Commitment Letter issued to MEAG

reveals specific terms and conditions that were negotiated by MEAG and DOE in connection

with the DOE loan guarantee. Id. ¶ 7. A great number of the withheld information represents

specific financing terms and conditions negotiated at length and agreed with the DOE that are

more restrictive and burdensome to MEAG than what MEAG would generally agree in its

financing arrangements. Id. Disclosure of these specific restrictive financing terms and

conditions would provide unfair bargaining advantage to current and future lenders in

negotiations with MEAG in that other lenders may demand inclusion of same or similar

restrictions that have the effect of increasing financing costs to MEAG and its participants. Id.

As detailed in the Fuller Declaration and in Exhibit H to the Pulliam Declaration, the redacted

financing terms and conditions include:

• role of DOE engineer in connection with advance requests;

• information to be submitted by MEAG for each advance and details of DOE’sapproval procedure;

• details of applicable late charge, mandatory prepayments, voluntary prepaymentoption; timing of initial advance;

• details of conditions precedent to financial closing date and to each advance;representations and warranties;

• affirmative and negative covenants in favor of DOE;

• cure periods and exceptions relating to certain events of default; and details of thecollateral securing DOE’s security interest; and




21

• other aspects of MEAG’s financing strategy for the Project.

Id. ¶¶ 7, 10-16. The redacted information also contains certain terms that, if not timely satisfied,

may trigger DOE’s right to terminate the conditional commitment -- this in turn may cause harm

to MEAG’s competitive position in that its business competitors, competing and potential

applicants for the DOE Loan Guarantee Program and various groups who do not support

development of new nuclear plants could take actions to negatively affect or delay MEAG’s

ability to satisfy these terms. Id. ¶ 8. Finally, public disclosure of the information withheld in

Schedules 1, 2 and 3 to the Conditional Commitment Letter would reveal MEAG’s financing

strategy for the Project -- such as the description of certain accounts and funds to which Project

costs are to be deposited, the flow of funds and information about application of proceeds of

guaranteed loans -- information that would provide MEAG’s competitors with insight into its

financing plan for this Project, inform estimates of MEAG’s cost of funding for the Project and,

consequently, its cost of power produced from the Project. Id. ¶ 17. This would enable MEAG’s

competitors to compete unfairly against MEAG by disclosing confidential information that its

competitors do not themselves have to disclose. Id.

As set forth above, MEAG faces actual competition in the wholesale energy market, and

disclosure of its confidential commercial information would likely injure its competitive position

by disclosing financial strategy information to other lenders and its competitors. Therefore,

DOE properly withheld the requested information from the Conditional Commitment Letter

issued to MEAG. See Pulliam Decl. Ex. H.

C. Disclosure of the Confidential Information Would Impair DOE’s Ability to

Effectively Implement the Loan Guarantee Program

In evaluating the interests protected by Exemption 4, courts have recognized interests

beyond the impairment of an agency’s ability to obtain necessary information in the future, such




22

as the interest in the effectiveness of a government program. See Pub. Citizen, 209 F. Supp. 2d

at 51-52 (observing that “impairment of the effectiveness of a government program is a proper

factor for consideration in conducting an analysis under FOIA exemption 4”); Comstock Int’l

(U.S.A.), Inc. v. Ex.-Im. Bank of the United States, 464 F. Supp. 804, 808 (D.D.C. 1979) (citing

Nat’l Parks I , 498 F.2d at 770 n.17) (upholding agency’s application of Exemption 4 to withhold

information obtained through the product of negotiation on the ground that the effectiveness of a

government program would be impaired by disclosure).

In addition to the competitive harm that may result, disclosure of the requested

information would have an adverse impact on DOE’s ability to implement the loan guarantee

program established in Title XVII of the Energy Policy Act. In enacting Title XVII, Congress

envisioned a cooperative relationship between DOE and business or non-federal governmental

entities whereby DOE would issue loan guarantees to encourage business or non-federal

governmental entities to develop and finance clean energy projects that employ innovative

technologies. Frantz Decl. ¶ 18. Due to the risks associated with high technology, such projects

are typically unable to obtain conventional private financing risks. Id. In light of the

competitive application process, which demands a competitive review of confidential and

sensitive trade, financial, commercial and technical information, loan applicants have a

legitimate expectation that their confidential financial and commercial information will not be

disclosed to the public during the pendency of negotiations over the terms and conditions of the

loan documents. Id. The public disclosure of sensitive and confidential information could

significantly and adversely impair the Applicants’ performance and completion of the Vogtle

Project, particularly by complicating negotiations with other third parties involved in the Vogtle

Project, which would in turn impair DOE’s ability to carry out its mission to work with non-




23

federal entities to facilitate the development of clean energy projects. Id. For these reasons, the

district court upheld the Export-Import Bank’s withholding of export-insurance documents upon

the court’s conclusion that disclosure would interfere with the agency’s “ability to carry out its

statutory purpose” of promoting the exchange of goods between the United States and foreign

countries. Judicial Watch, Inc., 108 F. Supp. 2d at 30.

Finally, disclosure of confidential and sensitive business and technical information would

discourage prospective applicants from seeking federal loan guarantees because there would be

no assurances that sensitive and confidential information provided by applicants will be

protected from disclosure. Id.; Long Decl. ¶ 12 (“It is not customary for financing parties to

publicly disclose the particular proposed terms of a financing transaction that is pending

negotiation of binding agreements. . . . In the event DOE is required to make premature

disclosure of proposed terms of its loan guarantee transactions, this may jeopardize the

willingness of parties such as Georgia Power or other borrowers with similar access to capital to

negotiate freely and come to proposed terms with a government agency such as DOE that is

interested in supporting projects.”). As demonstrated above, disclosure of the confidential

commercial information would likely result in the reluctance of private entities to seek loan

guarantees from DOE. Because this would have a deleterious effect on DOE’s ability to

effectively fulfill its statutory mandate of promoting and financing the construction of clean

energy projects to meet the growing energy needs of the country, DOE properly applied

Exemption 4 to withhold commercial and financial information contained in the non-binding

Conditional Commitment Letters.




CONCLUSION

For the reasons set forth above, Defendant respectfully requests that this Court grant its

motion for partial summary judgment as to the claims asserted with respect to Item 6 of

Plaintiff’s FOIA request.


RONALD C. MACHEN JR., D.C. Bar #447889United States Attorneyfor the District of Columbia



Of counsel:



DOE Cross Motion

Documents

Transcript of DOE Cross Motion