FCC 96-43 Federal Communications Commission Record 11 FCC Red No. 4
Before the
Federal Communications Commission
Washington, D.C. 20554
FOIA Control No. 92-229
In the Matter of
E.T. Kennedy
On Request for Inspection
of Records
MEMORANDUM OPINION AND ORDER
Adopted: February 2, 1996; Released: February 12, 1996
By the Commission:
l. The Commission has under consideration an Applica
tion for Review, filed December 8, 1992, by Pacific Bell
(Pacific), appealing a decision by the Chief, Common Car
rier Bureau. (Bureau Order). 1 The Bureau granted in part
E.T. Kennedy's Freedom of Information Act (FOIA) re
quest for "all evidence, audit results and any infor mation
concerning Pacific Bell inappropriately using monopoly
ratepayer funds to use in competitive businesses." In its
application for review, Pacific Bell complains that the Bu
reau's ruling would make available to the public Commis
sion letters containing information that is exempt from
disclosure under FOIA Exemptions 4. 5, and 7{e). 5 U.S.C.
§ 552(b)4, 5, 7(E). It also objects to the proposed release of
certain segments of various internal audit reports and/or
mei:ttor~nda, urging that further redactions are necessary to
avoid disclosure of confidential material that falls within
FOIA Exemption 4. We shall grant in part and deny in
part Pacific's application for review.
BACKGROUND
2. The Bureau identified 19 documents that were respon
sive to Kennedy's FOIA request. These included eleven
internal audit reports and/or memoranda that the Bureau
found were exempt from mandatory disclosure under
FOIA Exemptions 4 and 5. Citing Manha Plait, 5 FCC Red
5742 ( 1990), the Bureau proposed to make available for
public inspection only non-exempt segregable portions of
these documents. In contrast, the Bureau found that the
other eight documents did not contain a ny information
that could be withheld under the Freedom of Informatio n
Act. These included one internal audi t report that had
already been made public, as well as seven Commission
letters to Pacific that summar ized audit findings and. in
some cases, directed Pacific to take corrective action. On
1 Letter from Chief, Common Carrier Bureau to E.T. Kennedy,
dated November 23, IQ92.
2 Kennedy has not sought review or any portion or the Bureau's
ruling. and we do not review the merits or the determination
that certain documents are wholly or partially exempt from
mandatory disclosure under FOIA.
1784
review, Pacific challenges the Bureau's determination to
make available for public inspection some of the audit
letters as well as certain redacted portions of the internal
audit reports and/or memoranda.2
DECISION
3. For the reasons set forth below, we affirm the Bu
reau's determination to release the Commission's audit let
ters, except with respect to a port ion of one letter. We
agree with Pacific that further redactions of the internal
audit reports and/or memoranda are warranted.
4. The Audit Le11ers. The first category of documents
Pacific claims should be withheld are letters sent from the
Commission to Pacific summarizing audit find ings.3 Pacific
c~ntends that these documents are exempt from mandatory
d1SClosure pursuant to FOIA Exemptions 4, 5, and 7(E). 5
U.S.C. §§ 4, 5, 7(E). For the most part, we reject these
claims.
5. In support of its Exemption 4 claim, Pacific argues
that release of the audit findings letters will impair the
Commission's ability to secure reliable information in the
future, jeopardize the effectiveness of the Commission's
audit process, or cause Pacific substantial competitive
harm. Specifically, Pacific relies on Manha H. Plait, 5 FCC
Red 5742 (1990), and claims that, since the findings letters
contain information supplied by Pacific during the course
of Commission audits, they are entitled to the same degree
of protection accorded to actual audit reports.
6. We disagree. In Martha H. Plait, the Commission
refused to make available for public inspection actual audit
r.eports th~t. contained a substantial amount of competi
tively sens1ttve raw data because of the possible impact of
such disclosure on the effectiveness of its audit process.
Despite its authority to compel the submission of the in
formation on which the audit reports are based, the Com
mission feared that its routine disclosure could nevertheless
diminish the quantity as well as the quality of future
submissions by the carriers. Pla11, 5 FCC Red at 5742-43 1
'IJ 6-7. See also Scolt J. Rafferty, 5 FCC Red 4138, 4138-39 'IJ
1 5-7 ( 1990); J. David Stoner, 5 FCC Red 6458. 6~59 1 12
( 1990). Under these circumstances. the Commission con
cluded that the FOIA did not require disclosure of com
mercially sensitive information submitted by a carr ier to
Commission auditors.
7. In contrast to the audit reports held to be exempt in
Pfau, however. the audit findings letters at issue, with one
exception , do not contain or reflect any commercially sen
sitive data submitted by Pacific. Those portions of the
letters which we will make available for inspection contain
the Bureau's general conclusions regarding the procedures
used by the carrier. or its independent auditor, to ensure
compliance with the Joint Cost Order, 2 FCC Red 1298
( 1987), modified on recon. 2 FCC Red 6283 ( 1987). The
letters thus relate principally to Pacific's accounting meth
odology and contain no commercially sensitive material
that could have an impact either on Pacific's competitive
3 These letters are listed as Items 1--l and 6 10 Attachment I of
1he Bureau Ordu. Pacific notes that the Bureau subsequently
decided to withhold hem 2 to Attachment I. and we therefore
do not review that determination.
11 FCC Red No. 4 Federal Communications Commission Record FCC 96-43
position, or its willingness to provide commercially sen
sitive information to the Commission. Accordingly, we
conclude that, for the most part, FOIA Exemption 4 is not
a basis for withholding the Commission's audit findings
letters.
8. We do agree, however, that portions of Item l (letter
dated June 19, 1990 fro m Jose-Luis Rodriguez to Frank
Hopwood), containing specific information concerning the
Commission's review of a travel study by Pacific, should be
withheld from disclosure because release could cause Pa
cific substantial competitive harm. Specifically, this portion
of the letter contains information concerning the time
required for performing work on inside wiring that could
be used by competitors to compute Pacific's costs for this
non-regulated activity. In addition, Pacific is correct in its
assertion that the Bureau improperly designated Item 7 as
being available for public disclosure. This letter relates
solely to Nevada Bell, rather than to Pacific, and is there
fore not within the scope of Kennedy's FOIA request.
9. We also reject Pacific's Exemption 5 claim. By its
terms, Exemption 5 protects from compulsory disclosure
"interagency or intra-agency memoranda or letters which
would not be available by law to a party other than an
agency in litigation with the agency." 5 U.S.C. §552(b)(5).
The audit find ing letters sent by the Commission to one of
its regulatees are not inter or intra-agency letters and are
ou tside the scope of Exemption 5.
10. Nor is Exemption 7(E) applicable. Exemption 7(E)
protects from mandatory disclosure records and informa
tion compiled for law enforcement purposes. the disclosure
of which would reveal techniques and procedures for law
enforcement investigations. We find no basis to invoke
Exemption 7(E) here.
1 i. The Audit Reports. The second category of documents
under consideration in this Application for Review are
portions of the internal audit reports and/or memoranda
that the Bureau proposes to release as containing no Ex
emption 4 o·r Exemption 5 data. In its application for
review Pacific generally agrees with the Bureau's redactions
of the reports. It argues. however, that five additional items
should be redacted in order to preserve the confidentiality
of the information contained in the reports and/or memo
randa. We agree that the material identified by Pacific
should not be released. Specifically. we will not release the
heading under Subparagraph A of the Table of Contents on
the second page of Item 3 because it discloses exempt
information that the Bureau has redacted from the audit
report. Similarly. we will withhold the footnote denoted *'*
on page 6 of item 10. which contains competitively sen
sitive cost data. Finally, we agree with Pacific that three
items should be withheld because they are not within the
scope of Kennedy"s FOIA ·s request. These include: ( l) the
specific financial information relating to Pacific Bell's Di
rectory in paragraph 3 of item 7; (2) the financial data of
Nevada Bell on page 5 of item 10; and (3) the cumulative
totals for Pacific Telesis located on page 6. paragraph 8. of
.item 6.
12. ACCORDINGLY, IT IS ORDERED, That the Ap
plication for Review, filed December 8, 1992. by Pacific
Be ll IS GRANTED in part AND DEN IED in part. Pacific
Bell will be afforded ten (10) working days from the re
lease date of this Order in which to seek a judicial stay. See
47 C.F.R. § 0.46l(h)(4). Tot.he extent that Kennedy seeks
to challenge the aspects of our decision modifying the
Bureau's decision below, it may appeal pursuant to 5
U.S.C. § 552(a)(4)(B).
1 '71lf;
FEDERAL COMMUNICATIONS COMMISSION
William F. Caton
Acting Secretary