UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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AAR AIRLIFT GROUP, INC., )
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Plaintiff, )
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v. ) Civil Action No. 15-373 (RDM)
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UNITED STATES TRANSPORTATION )
COMMAND, )
)
Defendant. )
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MEMORANDUM OPINION
This action to enjoin Defendant United States Transportation Command (“USTC”) from
publicly releasing information submitted to it by Plaintiff AAR Airlift Group, Inc. (“AAR”)—
known as a “reverse” Freedom of Information Act (“FOIA”) case—is presently before the Court
on the parties’ cross-motions for summary judgment. See Dkt. 18, 19. AAR asserts that line-
item pricing information included in its contract with USTC constitutes “commercial or financial
information” that is protected from disclosure under FOIA Exemption 4. Dkt. 1 ¶ 11. USTC
responds that AAR has failed to meet its burden to justify the nondisclosure of this information.
Dkt. 19 at 5. As explained below, the Court agrees with AAR that the rationale given by USTC
in its March 3, 2015, Decision Letter is insufficient to sustain the agency’s decision to disclose
the line-item pricing information. The Court, accordingly GRANTS Plaintiff’s motion for
summary judgment, Dkt. 18, and DENIES Defendant’s cross-motion for summary judgment,
Dkt. 19. The matter is REMANDED to USTC for further consideration in light of this opinion.
I. BACKGROUND
The following facts are not in dispute. AAR is a civilian provider of airlift services to the
Department of Defense and its constituent agencies, including USTC. Dkt. 1 ¶¶ 2–5. In
September 2013, USTC issued a Request for Proposals (“RFP”) to procure passenger and cargo
airlift services for the United States Africa Command in Uganda, the Central African Republic,
the Democratic Republic of the Congo, and South Sudan. Id. ¶ 6. The Performance Work
Statement issued in connection with the RFP explains that the contractor will “provide all
personnel, equipment, supplies, transportation, tools, materials, supervision, insurance, life
support (e.g., housing, meals[,] etc., for contractor personnel) and other items and services
necessary to operate two fixed-wing aircraft . . . [for] approximately 225 [flying] hours . . . for 24
days per month,” as well as a “surge” schedule adding approximately 100 flying hours once
every three months. Dkt. 1-4 at 3, 5.
On November 27, 2013, USTC awarded the contract, designated Contract Number
HTC711-14-D-R026 (“R026 contract”), to AAR. Dkt. 1 ¶ 7. As relevant here, the signed R026
contract specifies pricing for certain services and supplies required to fulfill the contract—known
as Contract Line Item Numbers (“CLINs”). See Dkt. 12 at 3–19 (redacted version). The CLINs
include unit and/or maximum prices during specified periods of time for supplies and services
itemized as “Post Award Conference,” “Mobilization,” “Monthly Fixed Operation Costs,”
“Regular Flying Hours,” “Surge Flying Hours,” “Fuel EPA Reimbursable,” “Reimbursables,”
and “Demobilization.” Id.
Around November 26, 2014, USTC advised AAR by letter that it had received a request
from Rose Santos of FOIA Group for records “that may result in the release of data in our
possession that you released, specifically” the R026 contract. Dkt. 1-4 at 20; Dkt. 1 ¶ 8. The
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letter explained that AAR was “invited to provide [USTC] justification to withhold the data in
question from public release,” and attached “guidelines that may assist [AAR] in justifying a
request that [USTC] not release [AAR’s] information.” Dkt. 1-4 at 20. On December 4, 2014,
AAR responded by providing USTC with a redacted copy of the R026 contract, which omitted
the dollar amounts of the unit and maximum prices for the CLINs identified above, as well as the
total award amount. Dkt. 1-4 at 22; Dkt. 12. In addition to noting that it was providing USTC
with a redacted copy of the contract “in response to [USTC’s] letter,” AAR’s letter also stated
that
[AAR] assumes the following with regards to the FOIA request:
1. [AAR’s] proposal and all updates remain AAR . . . confidential and
proprietary information and is not to be released . . . .
2. The FOIA request corresponds only to the basic contract, and not to any
modifications, task orders, or task order modifications.
Dkt. 1-4 at 22.
On January 20, 2015, USTC e-mailed AAR, stating that it had received AAR’s response
but that “[t]he information you provided as justification to withhold your company’s proposal
does not show how if released [it] would cause competitive harm. Please provide a more in-
depth analysis . . . by 3 February 2015.” Dkt. 1-4 at 24. On January 26, 2015, AAR replied,
stating that (1) in its prior response “AAR identified that our proposal, including all updates,
remain confidential and proprietary information”; (2) “AAR properly marked our proposal in
accordance with FAR 3.104-4,” which restricts the disclosure of contractor bid or proposal
information and source selection information; and (3) “[d]isclosure of the proposal . . . would
cause irreparable harm as it includes competition sensitive information regarding technical,
pricing, and business operations that are unique and specific to AAR . . . .” Id.
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On March 3, 2015, USTC notified AAR by letter of its decision to release the R026
contract to the FOIA Group. Dkt. 1-4 at 26 (“Decision Letter”). It explained that it had
“reviewed [AAR’s] response, the requested information, and the applicable law” and that “AAR
did not address the contract itself which was the subject of the FOIA request, but rather
addressed the proposal, which was not incorporated into the contract.” Id. It also stated that it
would refrain from disclosing the contract for five business days following AAR’s receipt of the
Decision Letter so that AAR could seek an injunction against public disclosure of the contract.
Id.
On March 15, 2015, Plaintiff filed the instant action. Dkt. 1. Plaintiff sought a
temporary restraining order (“TRO”) and preliminary injunction against public release of the
R026 contract, as well as permanent injunctive relief. Id.; Dkt. 2. The Court held a hearing on
Plaintiff’s motion for preliminary relief on March 16, 2015. March 16, 2015, Minute Order. At
the hearing, both parties agreed to the entry of an injunction against disclosure of the contract
until December 16, 2015, in order to permit adjudication of the case on the merits. Dkt. 6; Dkt.
61-1 at 1–2. 1 The Court, accordingly, denied as moot Plaintiff’s Application for a TRO and
Motion for Preliminary Injunction, Dkt. 2, and entered an order enjoining the public release of
the R026 contract “and all other related documents and memoranda within the scope of FOIA
request 14-34” until otherwise ordered by the Court or until December 16, 2015, Dkt. 7 at 2. The
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At the hearing, the parties also agreed to waive the requirements of Local Civil Rule 7(n)
concerning the filing of an administrative record and appendix because “the documents that
would comprise all or the vast majority of the administrative record are already attached as
exhibits to Plaintiff’s Complaint and Plaintiff’s Application for Temporary Restraining Order
and Motion for Preliminary Injunction.” Dkt. 6-1 at 1; see also Dkt. 7 at 1.
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parties subsequently agreed to public docketing of the redacted version of the R026 contract that
was submitted to USTC with AAR’s December 4, 2014, letter. See Dkt. 12.
The Court now addresses the merits of the parties’ cross-motions for summary judgment.
See Dkt. 18, 19, 21, 24.
II. DISCUSSION
Under FOIA Exemption 4, a government agency is not required publicly to release “trade
secrets and commercial or financial information” that is “obtained from a person and privileged
or confidential.” 5 U.S.C. § 552(b)(4). Although FOIA does not itself require an agency to
assert this right to withhold documents, the D.C. Circuit has “long held the Trade Secrets Act, 18
U.S.C. § 1905, a criminal statute that prohibits Government personnel from disclosing several
types of confidential information unless ‘authorized by law,’ is ‘at least co-extensive with . . .
Exemption 4 of FOIA.’” Canadian Commercial Corp. v. Dep’t of Air Force, 514 F.3d 37, 39
(D.C. Cir. 2008) (quoting CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1151 (D.C. Cir. 1987)).
As a result, “unless another statute or a regulation authorizes disclosure of the information, the
Trade Secrets Act requires each agency to withhold any information it may withhold under
Exemption 4 of the FOIA.” Id. Thus, where an agency possesses information submitted to it by
a private party and it decides publicly to disclose that information in response to a FOIA request,
the private party may file a “reverse-FOIA action” to prevent the disclosure of information
covered by Exemption 4.
In a reverse-FOIA case, the Court reviews the agency’s decision to release information
under the Administrative Procedure Act (“APA”). Id. The agency’s decision “must be set aside
if and only if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.’” Id. (quoting 5 U.S.C. § 706(2)(A)). “Unlike a typical FOIA case, in which the court
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would undertake its own analysis of the interests at stake, under this deferential standard of
review, the court does not substitute its judgment for that of the [agency], but the [agency] must
examine the relevant data and articulate a satisfactory explanation for its action including a
rational connection between the facts found and the choice made.” Jurewicz v. USDA, 741 F.3d
1326, 1330–31 (D.C. Cir. 2014) (internal citations and quotation marks omitted); see also CNA
Fin. Corp., 830 F.2d at 1153 (“Review of the informal agency action contested here does not
involve the ‘substantial evidence’ test, for no hearing on the record was required.”).
As relevant here, Exemption 4 applies to information that is “(1) commercial or financial,
(2) obtained from a person [outside the government], and (3) privileged or confidential.” Pub.
Citizen Health Research Grp. v. FDA, 704 F.2d 1280, 1290 (D.C. Cir. 1983); see also Gulf & W.
Indus., Inc. v. United States, 615 F.2d 527, 529 (D.C. Cir. 1979). The parties dispute only
whether USTC properly determined that the line-item pricing information contained in the R026
contract is not “confidential.” 2 Two distinct tests govern the inquiry whether information is
“confidential” for purposes of Exemption 4.
Where “financial or commercial information” is “provided to the Government on a
voluntary basis,” it will be treated as “confidential . . . if it is of a kind that would customarily not
be released to the public by the person from whom it was obtained.” Critical Mass Energy
Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992) (en banc).
Alternatively, where “[c]ommercial or financial information [is] obtained from a person
2
Although the version of the R026 contract filed on the public docket also redacts the total
award amount, Dkt. 12 at 1, AAR has argued only that the line-item pricing information is
exempt from disclosure, see, e.g., Dkt. 18, and in any event it is highly dubious that the total
contract award price could ever be covered by Exemption 4, see McDonnell Douglas Corp. v.
U.S. Dep’t of the Air Force, 375 F.3d 1182, 1193 (D.C. Cir. 2004); McDonnell Douglas Corp. v.
NASA, 180 F.3d 303, 306 (D.C. Cir. 1999).
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involuntarily,” it is treated as “‘confidential’ for purposes of [Exemption 4] if disclosure [would
either] . . . impair the Government’s ability to obtain necessary information in the future; or . . .
cause substantial harm to the competitive position of the person from whom the information was
obtained.” Canadian Commercial, 514 F.3d at 39 (internal quotation marks omitted) (third,
fourth, and fifth alterations in the original) (quoting Nat’l Parks & Conservation Ass’n v.
Morton, 498 F.2d 765, 770 (D.C. Cir.1974)). The parties do not dispute that the standard
applicable to the “involuntary” provision of information—often known as the “National Parks
test”—governs here. See Dkt. 18 at 10–11; Dkt. 19 at 7; Dkt. 21 at 7; see also Critical Mass,
975 F.3d at 878–79. The Court agrees. Although AAR’s complaint includes a conclusory
statement that “Contract R026 . . . was voluntarily submitted to USTC,” Dkt. 1 ¶ 20, there is no
indication that the line-item pricing information contained in the contract was optional. As
Judge Bates has explained, line-item pricing information “is most often deemed a required
element of government solicitations, and hence involuntarily submitted.” Canadian Commercial
Corp. v. Dep’t of Air Force, 442 F. Supp. 2d 15, 29 (D.D.C. 2006), aff’d, 514 F.3d 37 (D.C. Cir.
2008). Here, there is no reason to doubt that this usual practice was followed and that the line-
item pricing information was required.
Applying the National Parks test, AAR relies solely on the second prong—that its
competitive position would be substantially harmed by disclosure of the line-item pricing
information. Dkt. 21 at 8–12. In a reverse-FOIA action, the plaintiff bears the burden of
justifying nondisclosure. Canadian Commercial, 442 F. Supp. 2d at 30. Moreover, although the
D.C. Circuit has repeatedly addressed the confidentiality of line-item pricing, it has declined to
adopt any per se test—in favor of either disclosure or protection. Canadian Commercial, 514
F.3d at 40; McDonnell Douglas, 375 F.3d at 1192–93. Indeed, although some judges on the
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D.C. Circuit have expressed skepticism that line-item pricing information should be shielded
from disclosure because “it seems quite unlikely that Congress intended to prevent the public
from learning how much the government pays for goods and services,” it is settled law in this
circuit that the “substantial competitive harm” test applies. Canadian Commercial, 514 F.3d at
43 (Tatel, J., concurring). Cf. McDonnell Douglas, 375 F.3d at 1194 (Garland, J., concurring in
part and dissenting in part); McDonnell Douglas Corp. v. Widnall, 57 F.3d 1162, 1167 (D.C. Cir.
1995) (“Although the idea that a price charged to the government for specific goods or services
could be a ‘trade secret’ appears passing strange to us, we agree with the government that it is
not open to us to attempt to decide that issue at this stage.”). To satisfy this test, AAR must
“prove that: (1) [it] actually face[s] competition, and (2) substantial competitive injury would
likely result from disclosure.” Nat’l Parks, 547 F.2d at 679. “Conclusory and generalized
allegations are . . . unacceptable as a means of sustaining the burden of nondisclosure.” Id. at
680.
AAR asserts that the Court should permanently enjoin disclosure of the line-item pricing
information contained in the R026 contract because the “substantial competitive harm” test is
“unambiguously met” and because USTC’s rationale for its decision to release the R026
contract, as stated in its March 3, 2015, Decision Letter, does not withstand judicial scrutiny.
Dkt. 18 at 11. USTC responds that AAR failed to meet its burden of demonstrating that
substantial competitive harm is likely to result from disclosure of the line-item pricing
information because it offered the agency only conclusory statements of competitive harm
despite the agency’s request in its January 20, 2015, e-mail that AAR “provide a more in-depth
analysis” of competitive harm. Dkt. 19 at 8–9; Dkt. 1-4 at 24.
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It is a “simple but fundamental rule of administrative law” that “a reviewing court . . .
must judge the propriety of such action solely by the grounds invoked by the agency. If those
grounds are inadequate or improper, the court is powerless to affirm the administrative action by
substituting what it considers to be a more adequate or proper basis.” SEC v. Chenery Corp.
(Chenery II), 332 U.S. 194, 196 (1947). “[A]n important corollary of [this] rule” is that “[i]f the
administrative action is to be tested by the basis upon which it purports to rest, that basis must be
set forth with such clarity as to be understandable.” Id. See also SEC v. Chenery Corp.
(Chenery I), 318 U.S. 80, 94 (1943) (“[T]he courts cannot exercise their duty of review unless
they are advised of the considerations underlying the action under review.”). Here, USTC’s
Decision Letter stated that “AAR did not address the contract itself . . . but rather addressed the
proposal, which was not incorporated into the contract.” Dkt 1-4 at 26.
AAR asserts that this rationale is arbitrary and capricious because AAR addressed the
contract when it provided a redacted version to USTC in response to USTC’s December 2014
inquiry. Dkt. 18 at 11. Ordinarily, the Court would likely defer to an agency’s (eminently
sound) determination that merely providing a redacted copy of a contract is insufficient to meet
the burden of demonstrating that disclosure of the redacted information would likely cause
substantial competitive harm. Cf. Nat’l Parks, 547 F.2d at 679. It is far from clear, however,
that USTC in fact made such a determination or otherwise relied on this rationale. Rather, as
explained below, the record of the parties’ correspondence as well as USTC’s argument before
this Court suggest that this was not the basis of the agency’s disclosure decision.
In support of its claim that it based its disclosure determination on AAR’s failure to meet
its burden of proving that the line-item pricing information in the contract should be withheld,
USTC points to its January 20, 2015, e-mail seeking more information from AAR and faults
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AAR for failing to address the confidentiality of the R026 contract in its response. Dkt. 24 at 2–
3. USTC’s e-mail, however, sought additional information about AAR’s “justification to
withhold [the] company’s proposal,” and not more information about its justification for
withholding portions of the contract. Dkt. 1-4 at 24 (emphasis added). Nothing in the record
indicates that the proposal and the contract contain the same information or are interchangeable,
and indeed the Decision Letter affirmatively contrasts the “contract” and “the proposal, which
was not incorporated into the contract.” Dkt. 1-4 at 26 (emphasis added). With this distinction
in mind, it is apparent that USTC’s warning that the information AAR “provided as justification
to withhold [the] proposal” and request for “more in-depth analysis” of how the release of that
information “would cause competitive harm” was conspicuously silent with respect to the line-
item pricing information that AAR redacted from the contract. Dkt. 1-4 at 24 (emphasis added).
That is, USTC faults AAR for focusing its second response (the January 26 e-mail) on the
proposal, rather than on the contract, Dkt. 19 at 6, but that is precisely what USTC’s January 20,
2015, e-mail invited AAR to do.
In short, the record indicates that the parties have been talking past one another all along:
First, USTC informed AAR that a FOIA requester sought disclosure of the R026 contract. Dkt.
1-4 at 20. AAR responded with a redacted copy of the R026 contract and stated that it
“assume[d]” that the “proposal and all updates” would remain confidential because “[t]he FOIA
request corresponds only to the basic contract.” Dkt. 1-4 at 22. Then, USTC apparently
misinterpreted this response as an attempt to justify nondisclosure of the proposal and asked for
further information. Dkt. 1-4 at 24. AAR’s second response then explained why the proposal
was confidential and reiterated that the FOIA request pertained to the contract. Dkt. 1-4 at 24.
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USTC’s Decision Letter then changed course and apparently faulted AAR for failing to “address
the contract itself.” Dkt. 1-4 at 26.
To the extent that USTC’s determination that AAR “addressed the proposal” rather than
“the contract itself,” Dkt. 1-4 at 26, is based on AAR’s discussion of the proposal in its second
response, the determination is arbitrary and capricious because AAR’s second response was
based on a fair—and, indeed, the only fair—reading of USTC’s request for more information.
Moreover, in light of the administrative record of the parties’ correspondence, the Decision
Letter and the agency’s decision to disclose cannot reasonably be construed as merely relying on
the ground that AAR’s initial response failed to justify the company’s redaction of the line-item
pricing information in the contract, and not on USTC’s apparently mistaken belief that AAR had
ignored a subsequent request for that justification. It is true that courts will “uphold a decision of
less than ideal clarity if the agency’s path may be reasonably discerned.” Motor Vehicle Mfrs.
Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The Court cannot,
however, affirm USTC’s disclosure determination based on a rationale that was not in fact
considered or relied upon by the agency, see Canadian Commercial, 514 F.3d at 41*; AT&T
Info. Sys. v. Gen. Servs. Admin., 810 F.2d 1233, 1236 (D.C. Cir. 1987); Chenery I, 318 U.S. at
95, nor can it “be expected to chisel that which must be precise from what the agency has left
vague and indecisive,” Chenery II, 332 U.S. at 197.
The Court concludes that remand to the agency is appropriate. If the problem were
simply that the agency “fail[ed] to explain [its] administrative action [so] as to frustrate effective
judicial review,” the Court could resolve the matter by “obtain[ing] from the agency, either
through affidavits or testimony, such additional explanation of the reasons for the agency
decision as may prove necessary.” Camp v. Pitts, 411 U.S. 138, 142–43 (1973). See also
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Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971). In this case,
however, the problem is that USTC’s current explanation of its rationale is in tension with the
contemporaneous record of its decision. Any “new materials” requested by the Court at this
stage would more likely constitute “new rationalizations” for the agency’s decision that the
Court may not consider on the present record, as opposed to being “merely explanatory of the
original record.” Envtl.. Def. Fund, Inc. v. Costle, 657 F.2d 275, 285 (D.C. Cir. 1981); see also
AT&T, 810 F.2d at 1236 (“[T]his exception [to remand] may not be employed to offer post-hoc
rationalizations . . . .”). USTC opposes remand on the ground that AAR “has already had two
opportunities to make a showing that would justify nondisclosure of the contract” and AAR
failed “to meaningfully respond on either occasion,” Dkt. 24 at 6, but as the Court has explained,
the second “opportunity” was directed at the proposal, and not to the contract. USTC is thus
incorrect that a remand would improperly afford AAR a “third . . . bite of the apple.” Id. In
these circumstances, “the preferable course is to remand so that we can have one considered and
complete statement of the [agency’s] position on [AAR’s] claim.” McDonnell Douglas, 57 F.3d
at 1167.
III. CONCLUSION
Accordingly, Plaintiff’s motion for summary judgment (Dkt. 18) is GRANTED, and
Defendant’s cross-motion for summary judgment (Dkt. 19) is DENIED.
A separate order accompanies this Opinion.
SO ORDERED.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
Date: December 8, 2015 United States District Judge
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