FOIO Appeal (Exhibits) : CREW: SEC: Regarding Steps Taken To Improve FOIA Responses: 12/23/10

EXHIBIT A
citizens for responsibility and ethics in 'washington

September 28,2010

By facsimiI~f~Q_Z:7}Z::.9.J37) and first class mail

Securities and Exchange Commission Office of ForA and Privacy Act Operations 100 F Street, NE

l\!fail Stop 2736

Washington, D.C. 20549-2736

Re: Freedom of Information Act Request

Dear Sir or Madam:

Citizens for Responsibility and Ethics in Washington ("CRE\V") makes this request for records, regardless of format, medium, or physical characteristics, and including electronic records and information, audiotapes, videotapes and photographs, pursuant to the Freedom of Information Act ("FOrA"), 5 U.S.C. §§ 552, et seq., and U.S. Security and Exchange Commission ("SEC") regulation 17 C.F.R. § 200.80.

CREW seeks records of steps the SEC has taken to improve its responses to FOIA requests. Specifically, CREW seeks:

(1) The SEC's new procedural guidance providing "processing guidance to FOrA/Privacy Act liaisons and Commission staff tasked with involvement in FOIA responses," and all records that refer or relate to this guidance;

(2) All records that refer or relate to the policy that a decision on a FOTA appeal may be made only by a senior officer who did not participate substantively in processing the initial FOIA request;

(3) All records that refer or relate to the restructuring of the FOrA/Privacy Act Office "to improve management oversight of quality and consistency of responses, adherence to policy and procedure, and workload volume and backlog management";

(4) The agency-wide email sent by Chairman Schapiro "to improve management oversight of quality and consistency of responses, adherence to policy and procedure, and workload volume and backlog management," and all records that refer or relate to the email; and

(5) All records that refer or relate to the reinstated "web-based resource for all FOTA and Pri vacy Act matters that can be accessed by any staff member through the Commission's intranet."

1400 Eye Street, N.W., Suite 450. Washington, D.C. 20005

202.408.5~'i65 phone

202.588.50?O fax

Securities and Exchange Commission September 28, 2010

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As background, on September 25, 2009, the SEC's Office of the Inspector General ("OIG") issued a report reviewing the SEC's compliance with the FOIA. See Office of the Inspector General, Review 0/ the SEC '.I' Compliance with the Freedom of Information Act, Report No. 465 (Sept. 25,2009) (available at: http://w\vvv.sec-oig.gov/Reports/Auditslnspections/2009/465.pdf). The report included ten recommendations. Id. In September 16, 2010 testimony before the House Financial Services Committee, SEC Chairman Mary Schapiro stated nine of the recommendations had been completed by the SEC and closed by the OIG. See Legislative Proposals to Address Concerns Over the SEC '.I' New Confidentiality Provision, Hearing Before the House Committee on Financial Services (Sept. 16,2010) (Testimony of Mary L. Schapiro) (attached as Exhibit A). CREW requests records related to several of those steps.

Please search for responsive records regardless of format, medium, or physical characteristics. Where possible, please produce records electronically, in PDF or TIF format on a CD-ROM. We seek records of any kind, including electronic records, audiotapes, videotapes, and photographs. Our request includes any letters, emails, facsimiles, telephone messages, voice mail messages, and transcripts, notes, or minutes of any meetings, telephone conversations, or discussions. Our request also includes any attachments to these records.

Ifit is your position that any portion of the requested records is exempt from disclosure, CREW requests that you provide it with an index of those documents as required under Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977 (1972). As you are aware, a Vaughn index must describe each document claimed as exempt with sufficient specificity "to permit a reasoned judgment as to whether the material is actually exempt under FOIA." Founding Church of Scientology v. Bell, 603 F.2d 945, 949 (D.C. Cir. 1979). Moreover, the Vaughn index must "describe each document or portion thereof withheld, and for each withholding it must discuss the consequences of supplying the sought-after information." King v. u.s. Dep 't of Justice, 830 F.2d 210,223-24 (D.C. Cir. 1987) (emphasis added). Further, "the withholding agency must supply' a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply. '" Id. at 224 (citing Mead Data Central v. Us. Dep 't of the Air Force, 566 F.2d242, 251 (D.C. Cir. 1977».

In the event that some portions of the requested records are properly exempt from disclosure, please disclose any reasonably segregable non-exempt portions of the requested records. See 5 U.S.C. § 5S2(b). If it is your position that a document contains non-exempt segments, but that those non-exempt segments are so dispersed throughout the document as to make segregation impossible, please state what portion of the document is non-exempt, and how the material is dispersed throughout the document. Mead Data Central, 566 F.2d at 261. Claims of nonsegregability must be made with the same degree of detail as required for claims of exemptions in a Vaughn index. If a request is denied in whole, please state specifically that it is


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not reasonable to segregate portions of the record for release.

Finally, CREW welcomes the opportunity to discuss with you whether and to what extent this request can be narrowed or modified to better enable the SEC to process it within the FOIA's deadlines.

Fee \Vaiver Request

In accordance with 5 U.S.C. § 552(a)(4)(A)(iii) and 17 C.F.R. § 200.80(e)(4), CREW requests a 'Naiver of fees associated with processing this request for records. The subject of this request concerns the operations of the federal government and expenditures, and the disclosures will likely contribute to a better understanding of relevant government procedures by CREW and the general public in a significant way. Moreover, the request is primarily and fundamentally for non-commercial purposes. 5 U.S.C. § 552(a)(4)(A)(iii). See, e.g., McClellan Ecological v. Carlucci, 835 F.2d 1282, 1285 (9th Cir. 1987).

These records are likely to contribute to greater public awareness and understanding of the changes the SEC instituted following the OIG's report reviewing the SEC's compliance with the FOIA. The public has a strong interest in the SEC's compliance with the FOIA to insure transparency and accountability. This interest is underscored by the news media coverage of the Inspector General's report concerning the SEC's problems with FOIA compliance. See, e.g., Marcy Gordon, SEC Audit Cites Issues With Meeting FOrA Requests, Associated Press, Sept. 25,2009 (attached as Exhibit B).

CREW is a non-profit corporation, organized under section 501(c)(3) of the Internal Revenue Code. CREW is committed to protecting the public's right to be aware of the activities of government officials and to ensuring the integrity of those officials. CREW uses a combination of research, litigation, and advocacy to advance its mission. The release of information garnered through this request is not in CREW's financial interest. CREW will analyze the information responsive to this request, and will share its analysis with the public, either through memoranda, reports, or press releases. In addition, CREW will disseminate any documents it acquires from this request to the public through its website, \vwvl.citizensforethics.org, which also includes links to thousands of pages of documents CREW acquired through its multiple FOIA requests as well as documents related to CREW's litigation and agency complaints, and through www.scribd.com.

News Media Fee Waiver Request

CREW also asks that it not be charged search or review fees for this request because CREW qualifies as a "representative of the news media" pursuant to the FOIA and SEC regulation 17 C.F.R. § 200.80(e)(l 0). In Nat'! Sec. Archive v. Us. Dep 't of Defense, 880 F.2d


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1381, 1386 (D.C. Cir. 1989), the Court of Appeals for the District of Columbia Circuit found the National Security Archive was a representative of the news media under the FOIA, relying on the FOIA's legislative history, which indicates the phrase "representative of the news media" is to be interpreted broadly; "it is critical that the phrase 'representative of the news media' be broadly interpreted if the act is to work as expected .... In fact, any person or organization which regularly publishes or disseminates information to the public ... should qualifyfor waivers as a 'representative of the news media.:" 132 Congo Rec. S 14298 (daily ed. Sept. 30, 1986) (emphasis added), cited in id.

CREW routinely and systematically disseminates information to the public in several ways. First, CREW maintains a frequently visited website, \V\vv/.citizensforethics.org, that received 75,629 visits in August 2010. In addition, CREW posts all of the documents it receives under the FOrA on v/ww.scribd.com, and that site has received 412,057 visits to CREW's documents since April 14, 2010.

Second, since May 2007 CREW has published an online newsletter, CREWCuts, that currently has 15,731 subscribers. CREvVCuts provides subscribers with regular updates regarding CREW's activities and information the organization has received from government entities. A complete archive of past CREWCuts is available at

b.1..1.R ://www.citizensforethics.org/newsletter.

Third, CREW publishes a blog, Citizens bloggingfor responsibility and ethics in Washington, that reports on and analyzes newsworthy developments regarding government ethics and corruption. The blog, located at http://www.citiznesforethics.org/blog, also provides links that direct readers to other news articles and commentary on these issues. CREW's blog had 1,174 hits in August.

Finally, CREW has published numerous reports to educate the public about government ethics and corruption, including agencies' failure to comply with their record keeping responsibilities. See Record Chaos, which examines agency compliance with electronic record keeping responsibilities; The Revolving Door, a comprehensive look into the post-government activities of24 former members of President Bush's cabinet; and Those Who Dared: 30 Officials Who Stood Up For Our Country. These and all other CREW's reports are available at http://w\vw.citizensforethics.ondreports.

Based on these extensive publication activities, CREvV qualifies for a fee waiver as a "representative of the news media" under the FOrA and agency regulations.

Conclusion

If you have any questions about this request or foresee any problems in releasing fully the

Securities and Exchange Commission September 28,2010

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requested records please contact me at (202) 408-5565. Also, if CREW's request for a fee waiver is not granted in full, please contact our office immediately upon making such a determination. Please send the requested records to Adam J. Rappaport, Citizens for Responsibility and Ethics in Washington, 1400 Eye Street, N.W., Suite 450, Washington, D.C. 20005.

Enclosures

EXHIBIT A

Testimony Before the

United States House of Representatives Committee on Financial Services

"Legislative Proposals to Address Concerns Over the SEC's New Confidentiality Provision" Thursday, September 16, 2010

by

Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Chairman Frank, Ranking Member Bachus, and members of the Committee:

Thank you for the opportunity to testify today on behalf of the Securities and Exchange Commission concerning Section 9291 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Section 9291 was designed to eliminate a substantial and longstanding impediment to our examiners' ability to obtain vital examination information on a timely basis by providing clarity to regulated entities that the Commission can protect the confidential and proprietary information they provide to Commission examiners.

Overview

The Commission is responsible for examining in excess of 17,000 entities, including investment advisers, broker-dealers, credit rating agencies, self-regulatory organizations, clearing agencies, transfer agents and municipal advisors, among others. There are significant differences among these highly specialized regulated entities. Given the vital role they play in the nation's securities markets, the Commission must routinely access important and potentially sensitive information on a timely basis. Unfortunately, some regulated entities have in the past expressed concern about the level of protection available to examination materials provided to the Commission.

Though the Freedom of Information Act (FOIA) does provide important protections for examination materials obtained from "financial institutions," courts have not yet addressed whether every entity the Commission examines is a "financial institution" for purposes of these ForA protections. In addition, these protections do not apply in non-Ftrl A contexts such as third-party litigation. Accordingly, Commission examinations, in some cases, have been hindered by registered entities' refusal to produce in a timely way certain information requested by examination staff due to concerns about the Commission's ability to protect the information from compelled third-party disclosure.

Section 9291 enhances the Commission's ability to examine regulated entities by making clear that the Commission may protect, in appropriate circumstances, information gathered in the examination process from the many entities it regulates, supervises or examines. This provision will better enable the Commission's examination staff to access important information to monitor markets, identify risks, discover fraud and other securities law violations, and more efficiently focus its in-depth examinations - in short, to better protect investors and maintain efficient capital markets.

I understand there are questions about the scope of Section 9291. To address these concerns, Commission staff was instructed to not use Section 9291 pending promulgation of Commission guidance that makes clear that Section 9291 should be used in accordance with the principles of FOIA. That guidance, which the Commission recently promulgated, is both attached I and described in more detail below.

Prior Congressional Action

The Commission has raised these issues with Congress for many years. At least as far back as July 2006, then-SEC Chairman Cox provided legislative language that sought the same substantive protections for examination documents as the current Section 9291 to the Chairmen and Ranking Members of the House Financial Services Committee and Senate Banking Committee, among others. As noted then, the proposed language sought to ensure the confidentiality of sensitive business records that the staff obtained during examinations, indicating that while such records:

generally are protected from disclosure under [FOIA] by Exemptions 4 and 8 ... [i]n other proceedings, such as pursuant to a court-issued subpoena, the staff must contest any production of records on grounds such as relevance and the application of common law privileges. In the absence of the [requested] provision, ajudge taking an expansive view of relevance or a narrow view of possible privileges could order the production of sensitive records to a firm's competitor. Such disclosures could cause significant harm to the businesses whose records are disclosed, and the integrity of the supervisory process.

Chairman Cox provided the same legislative proposal and explanation to the Chairmen and Ranking Members of the same committees in May 2007, and re-referenced it again in May 2008.

On September 11,2008, the House of Representatives passed the Securities Act of 2008 by voice vote. The bill was introduced by Chairman Kanjorski and was co-sponsored by seven Democrats and eight Republicans. Section 15 of that bill contained language that was virtually identical to the language Chairman Cox had provided.

Dodd-Frank Wall Street Reform and Consumer Protection Act

In July 2009, I provided a list of forty-two legislative proposals to the Chairmen and Ranking Members of the relevant House and Senate Committees and Subcommittees. Included was language that, while not identical, was substantively the same in its protection of examination documents as what Chairman Cox had provided/ and which ultimately became Section 929I.

1 See Guidance to Staff on the Application of Section 9291 of the Dodd-Frank Act, located at hIU):L\~:\i:\y_,~!;<::_,g()~:b)(,\Y5(~~<::JL9J.1_:_9 2 2i.::g 1I ida 1\ ce . h I Ill.

2 The operative language of Chairman Cox's proposal stated "Notwithstanding any other provision of law, the Commission shall not be compelled to disclose any information, documents, records or reports that relate to an examination of a person subject to or described in" three sections of the securities laws - Section 17 of the Exchange Act, Section 31 of the Investment Company Act, and Section 204 of the Investment Advisers Act. In my July 2009 proposal, the operative language included was "the Commission shall not be compelled to disclose records or

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In November 2009, this Committee reported out the Investor Protection Act of2009, Section 409 of which was very similar to what passed the House in 2008. This language was included in the Wall Street Reform and Consumer Protection Act that passed the House 011 December 11,2009.

Finally, the base text for the Conference Committee's consideration of the financial reform bill included the current Section 929I. The provision was not amended during the conference's consideration of the legislation.

The importance of certainty in this area has been heightened by the passage of the Dodd-Frank Act, which mandates new responsibilities for the Commission, including new authority over, for example, municipal advisors, credit rating agencies, and clearing agencies that clear securitiesbased swaps. Fulfilling these responsibilities will require that the Commission expand and improve its examination capabilities, including its surveillance and risk assessment capabilities, to provide the type of risk-focused regulatory oversight necessary to protect investors. Accordingly, it is critical that examined entities freely share relevant and potentially sensitive information without concern that the information will later be made available to competitors or other third parties. Such disclosures may occur in response to a FOIA request or a subpoena served on the Commission in non-FOl A litigation. Section 9291 was sought to address these issues.

Why the Existing FOIA Exemptions Alone Are Insufficient

Some have questioned why it is that the Commission needs Section 9291, arguing that existing FOrA Exemptions 8 and 4 should provide comfort to regulated entities that sensitive materials they provide to the Commission during examinations will not ultimately be disclosed to third parties. F01A Exemption 8 applies to matters that are "contained in or related to examination, operating, or condition reports prepared by, 011 behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions," while EOl A Exemption 4 applies to "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential."

FOIA Exemption 8

'With respect to FOIA Exemption 8, neither the text nor the legislative history of FOIA defines the term "financial institution" or otherwise sheds light on what Congress intended that term to encompass. The courts have looked to the Government in the Sunshine Act (Sunshine Act) for guidance, holding that FOIA and the Sunshine Act are in pari materia, or "upon the same matter or subject." Although the text of the Sunshine Act also does not define the term "financial institution," the legislative history includes an illustrative list of types of institutions that Act was intended to encompass. The case law applying Exemption 8 to the Commission has extended the

information obtained pursuant to [the same three sections of the Exchange Act, Investment Company Act and Investment Advisers Act], or records or information based upon or derived from such records or information, if such records have been obtained by the Commission for use in furtherance of the purposes of this title, including without limitation surveillance, risk assessments, or other regulatory and oversight activities."

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exemption to those entities specifically named in the legislative history to the Sunshine Act.3 Despite this, other types of entities the Commission is responsible for supervising, regulating or examining (e.g., credit rating agencies, transfer agents, municipal advisors) are not specifically named in the Sunshine Act legislative history and, indeed, may not even have existed when the Sunshine Act was passed three decades ago.

Although the Commission believes that all entities it regulates, supervises or examines are encompassed by the term "financial institution" and that, as a result, all entities subject to examination by the Commission should be covered by this exemption, it cannot be presumed that the courts will find that every entity the Commission examines is necessarily a "financial institution." For example, before the Sunshine Act was passed, the governing case law rejected the argument that national securities exchanges and broker-dealers were "financial institutions."

Section 929I eliminates any legal uncertainty concerning FOrA Exemption 8 by making it clear that information obtained in examinations from any covered regulated entities would be protected, even if there is uncertainty as to whether they are "financial institutions" covered by Exemption 8.

ForA Exemption 4

The Commission also believes that FOrA Exemption 4 should protect all information provided to the Commission in examinations that constitutes trade secrets and confidential commercial or financial information, but again, it cannot be presumed that courts necessarily will agree. While this exemption provides broad protection for trade secrets and confidential commercial or financial information submitted voluntarily to the government, information that is required to be submitted to the government enjoys more limited protection.i Because the Commission's examination authority allows it to require entities to produce information in examinations, there is a possibility that the broad protection for voluntarily submitted information might not apply to information obtained in an examination.6

When information is required to be submitted, it is protected only if "disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.,,7 To satisfy the

) See, e.g., Mermelstein v. SEC, 629 F. Supp. 672 (D.D.C. 1986) (securities exchanges); Feshbach v. SEC, 5 F. Supp. 2d 774 (N.D. Cal. 1997) (broker-dealers and self-regulatory organizations), and Berliner, Zisser, Waller & Gallegos v. SEC, 962 F. Supp. 1348 (D. Colo. 1997) (investment advisers).

" MA. Schapiro & Co. v. SEC, 339 F. Supp. 467, 470 (D.D.C. 1972).

5 See, e.g, Nat 'l Parks & Conservation Ass '/1 v. Morton, 498 r.2d 765, 767-70 (D.C. Cir. 1974), as clarified by Critical Mass Energy Project v. NRC, 975 F.2d 871, 878 (D.C. Cir. 1992) (en bane); see generally Department of Justice Guide to the Freedom ofInformation Act (FO/A Guide) at 276.

6 See Centerfor A1Ito Safety v. Nat 'I Highway Traffic Safety A dmin. , 244 F.3d. 144,149 (DC Cir. 20()1).

7 Nat 'l Parks & Conservation Ass '/1 v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974).

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first prong, the government cannot simply argue that forced disclosure could impair its ability to quickly and efficiently obtain similar information in the future; instead it must show that disclosure "will result in a diminution of the 'reliability' or 'quality' of what is submitted."s Courts rarely have found the first prong met, rejecting arguments about potential harms to reliability and quality as too speculative."

Courts have limited the definition of "competitive harm" in the second prong to "harm flowing from the affirmative use of proprietary information by competitors" and have explained that this "should not be taken to mean simply any injury to competitive position, as might flow from customer or employee disgruntlement.v'" Beyond this, there are stringent requirements to establish a "competitive harm," including in some cases a line-by-Iine analysis and justification of potentially thousands of pages of documents. Given these impediments, courts have frequently required disclosure of information that businesses endeavored to keep confidential.11

Non-FOrA Litigation

Of course, neither POl A Exemption 8 nor 4 is available in non-FOIA litigation. The Commission cannot, for example, rely on FOrA exemptions when responding to a subpoena served on it in private litigation. When faced with such subpoenas, the Commission has had to rely on arguments ofunduc burden, relevance, or common law privileges to protect the information provided by the registered entities.V

Section 9291 addresses this issue by providing important protections in non-Ffrl A litigation, clarifying that sensitive information received from third parties in examinations should be protected from forced disclosure to outside persons in both the F01A and non-F'Ol A contexts, thereby removing a substantial barrier to the Commission's ability to obtain critical information in a timely fashion via our examination and surveillance efforts.

Rather than use the Commission to gain access to the third-party information, private litigants should seek the documents from the registered entities themselves. This approach is in many

8 See, e.g, Critical Mass, 975 F.2d at 878; FO/A Guide at 30 I (and cases cited thcrcin).

9 See, e,g., Niagara Mohawk. Power Corp. \I. DOE, 169 FJd 16, 18 (D.C. Cir. 1999); Aguirre v. Sr.;C, 551 F. Supp. 2d 33, 52-53 (D.D.C. 2008); FO/A Guide at 301.

10 See, e.g., Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280, 1291 n.30 (D.C. Cir. 1983).

II See, e.g, He Network for Animals v. USDA, No. 90-1443, slip op. at 8-9 (4th Cir. Feb. 5, 1991) (finding "evidence presented by" agency "insufficient to support" its burden, noting absence of sworn affidavits or detailed justification for withholding from submitters); Lee v. FDIC, 923 F. Supp. 451,455 (S.D.N.Y. 1996) (rejecting competitive harm whcn submitter failed to provide "adequate documentation of the specific, credible, and likely reasons why disclosure of the document would actually cause substantial competitive injury"); see generally FOIA Guide at 305-47.

12 Indeed, earlier this year the Commission received a third-party subpoena in a civil action involving only private parties broadly seeking all documents provided by three registered entities in connection with a 2007 sweep examination, as well as all internal work product based on those documents. One of the three registered entities is not a party to the litigation.

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cases preferable to seeking the documents from the SEC, as the registered entities are best positioned to articulate the sensitivity of the information.

Post-Enactment Concerns and Commission Guidance

Shortly after enactment, concerns were expressed about Section 9291. The Commission shares the commitment to accountability and transparency embodied by FOlA and recognizes that Section 929I reflects a balancing of competing interests, specifically, the public's right to gain access to certain documents and information, with the need for a robust Commission examination program that encourages open communication and unfettered Commission access to information that best protects investors and contributes to orderly markets.

To ensure that these important and competing interests were fully realized, soon after passage of the Dodd-Frank Act r determined that Commission guidance for using Section 9291 was necessary and instructed staff to not invoke Section 929I until such guidance was issued. Recently, the Commission published guidance instructing staff on when and how to assert Section 9291. In my view, that guidance will provide the clarity we need for a more robust examination program in a manner consistent with principles of open government. A copy of that guidance is attached. The guidance is clear and unequivocal, and states that Section 9291 is:

designed to protect the confidential and proprietary information of regulated entities and foster an open examination process not to protect the Commission or any Commission employee. Public oversight and transparency are essential and the staff may not invoke Section 9291 to withhold information to protect the Commission or a Commission employee.

The guidance defines the few circumstances in which Section 929I may be invoked, and then only to address potential gaps in the pre-Section 9291 law aimed at alleviating concerns among regulated entities about the Commission's ability to protect certain information from disclosure. Specifically, the guidance addresses the extent to which the Commission will rely on Section 929I in the context of both F01A requests and discovery requests served on the Commission. In response to FOrA requests and in FOrA litigation, the Commission will rely on Section 9291 only to address situations where the absence of case law holding the entities at issue to be "financial institutions" could limit the application ofF01A Exemption 8 pertaining to examination-related materials. In response to discovery requests, the Commission will not rely on Section 9291 in any non-F01A case in which it is a party, and in other cases will invoke Section 9291 illJ.ly with respect to information obtained pursuant to the Commission's examination authority that would be withheld in response to a FOIA request. The Commission will, however, continue to produce documents in third-party litigation where the party requesting the documents has demonstrated a "substantial need" for them that outweighs the confidentiality interest of the examined entity.

Pending Legislation

Four bills have been introduced in the House that explicitly or effectively would repeal Section 929I: H.R. 6086 by Chairman Towns, H.R. 5948 by Congressman Campbell, H.R. 5924 by

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Congressman Issa, and H.R. 5970 by Congressman Paul. r am concerned that, as currently drafted, these bills may not provide certainty to regulated entities concerning the protection of their proprietary information, thereby undercutting the Commission's ability to obtain in a timely manner the sensitive or confidential information needed for comprehensive examinations.

Though H.R. 6086 seeks to address the ambiguity in FOrA Exemption 8 relating to "financial institutions," this proposal currently would not provide any clarity to address the risk of compelled disclosure in private litigation, i.e., those instances in which third parties seek through third-party subpoenas to compel the Commission to produce documents provided to the Commission in examinations. As stated above, when responding to a subpoena served on it in private actions, the Commission is not able to rely on FOrA exemptions and instead must rely on common law arguments such as undue burden or lack of relevance. Failure to make clear that sensitive information received from third parties in examinations is protected from forced disclosure in both FOIA and non-FOIA matters will continue to inhibit the Commission's ability to obtain critical, timely information through the exercise of our examination authority.

In addition, Section 9291 struck Section 31(c) of the Investment Company Act, which provided that the Commission could not be compelled to disclose - in response to a ForA request or otherwise -- any internal compliance or audit records provided to the Commission by a registered investment company. The need for Section 31 (c) was obviated by the broader Section 9291. The current draft of H.R 6086, however, essentially strikes Section 9291 but does not restore Section 31(c), potentially resulting in fewer protections for these entities' documents than was the case prior to Dodd-Frank.

H.R. 5948, H.R. 5924 and H.R. 5970 all would repeal Section 9291 and restore Section 31 (c) of the Investment Company Act, effectively returning the Commission to the pre-Dodd-Frank status quo when our examinations were impacted by registered entities' concerns about our ability to protect sensitive information from compelled disclosure. I believe a more careful balance could be reached if any legislation not only restored prior protections but also addressed the unnecessary legal ambiguities in this area, in particular (1) the "financial institution" issue concerning FOIA Exemption 8, and (2) the non-FOIA instances in which private litigants seek to compel the Commission to produce documents via third-party subpoenas.

Response to Commission's Office of the Inspector General Report on FOIA

On September 25,2009, the Commission's Office of the Inspector General (OIG) issued a report entitled "Review of the Securities and Exchange Commission's Compliance with the Freedom of In/ormation Act". The review was conducted by the OIG as part of its continuous efforts to assess management of the Commission's programs and operations and was based on the OIG's audit plan. The report contained ten recommendations developed to strengthen the Commission's FOIA function and process, including recommending that the Chairman's Office affirm the importance of F01A to its mission and ensure the Chief FOIA Officer has sufficient Commission-wide support to fulfill the responsibilities contained in the Open Government Act.

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In response, a significant number of actions have been undertaken to address the findings and recommendations made by the OIG. In summary, the significant actions taken in response to the report include:

• Hiring a new Chief Freedom ofInformation Act/Privacy Act Officer in October 2009;

• Requiring that a staff attorney be contacted to verify whether an open enforcement investigation is active or inactive before asserting FOrA Exemption 7(A);

• Issuing new procedural guidance that provides clear and concise processing guidance to all FOIA/Privacy Act liaisons and Commission staff tasked with involvement in FOJA responses;

• Implementing a policy that, in general, a decision on a FOrA appeal may be made only by a senior officer who did not participate substantively in processing the initial FOIA request;

• Restructuring the FOIA/Privacy Act Office to improve management oversight of quality and consistency of responses, adherence to policy and procedure, and workload volume and backlog management;

• Increasing training opportunities for FOIA staff and liaisons, including annual3-day seminars led by the former Co-Director of the Department of Justice's Office of Information Policy (the office responsible for providing guidance to all agencies on FOrA-related questions);

• Emphasizing the importance and seriousness of every staff member's obligation to assist with making timely FOIA responses through my sending of an agency-wide email;

• Reinstating a web-based resource for all FOIA and Privacy Act matters that can be accessed by any staff member through the Commission's intranet; and

• Improving technology and office equipment resources for the FOrA/Privacy Act Office, including upgrading the software, server support and performance that is at the center of the Office's work.

Significantly, action has been taken on all ten recommendations. Nine of the ten recommendations made in the report have been closed by the OIG, and we hope to have closure on the remaining item in the very near future.

Conclusion

Section 929I is central to our ability to develop a robust examination program that better protects investors. Though we recognize the competing policy interests it raises, a return to the preSection 929I status quo will perpetuate circumstances that have limited the efficacy of our examination program.

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I believe the Commission's guidance strikes an appropriate balance by addressing the primary issues that existed prior to Section 929I while simultaneously protecting against its application to a broader than-intended swath of information. It will allow the SEC to gain access in a timely fashion to information and data that it otherwise may not receive, thereby further enhancing our ability to maintain an efficient and effective compliance program, while also ensuring that the provision is not used to protect the Commission or its employees. It will provide certainty to registrants by clarifying that the sensitive information the Commission receives in its examination or surveillance efforts can be protected from compelled disclosure, while maintaining the commitment to transparency and accountability that FOIA promotes. In short, it will improve our ability to fulfill our mission in a manner that is consistent with the principles of open government.

Thank you again for allowing me to be here today to discuss Section 9291. 1 look forward to working with Congress and interested parties to ensure that these importance interests are fully achieved.

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Appendix

GUIDANCE TO STAFF ON APPLICATION OF SECTION 929I OF THE DODD-FRANK ACT

Introduction. The Commission is committed to accountability and transparency in govcl'llll1cnt as embodied by the Freedom of Information Act (FOrA). EOl A provides a broad framework for disclosure of government documents, subject to particular exemptions that recognize compelling public policy interests including the effective examination and supervision of financial institutions.

A fundamental element of an effective oversight and examination regime is the ability to obtain access to sensitive information from regulated entities. In FOIA Exemption 8, Congress recognized that if details from examinations were made available to the public or to competitors of financial institutions, those institutions might "cooperate less than fully with federal authorities." Consumers Union of United States, Inc. v. Heimann, 589 F.2d 531, 534 (D.C. Cir. 1978).

In recent years, some entities subject to examination have resisted sharing potentially sensitive information with the Commission in light of concerns about the Commission's ability to protect certain information from disclosure. These concerns arise in both FOl.A and litigation contexts.

In the FOrA context, while the Commission believes that all entities it regulates, supervises or examines are "financial institutions" within the meaning ofFOIA Exemption 8, a court could reach a different conclusion.

In the non-Ffrl A context, sensitive information obtained pursuant to the Commission's examination authority remains subject to discovery in litigation.

The uncertainty about the Commission's ability to protect sensitive information can cause delay and undermine the open dialogue and review essential for a thorough examination. These problems could be magnified as the Commission's role expands and the types of entities regulated, examined and supervised by the Commission increase. Although the Commission has considerable statutory authority to compel access to sensitive information over the objections of a regulated entity, a supervisory regime where regulated entities provide timely access to sensitive information to regulators because they are confident the information will remain protected from mandatory disclosure ensures more efficient and often more productive examinations.

Section 929I of the Dodd-Frank Consumer Financial Protection and Wall Street Reform Act (Public Law 111-203) gives the Commission clear authority to protect, in appropriate circumstances, all information gathered in the examination process from many of the entities it regulates, supervises or examines. It is an important provision that will better enable the staff to access important information to monitor markets, identify risks at regulated entities, and more efficiently focus its in-depth examinations.

Page 11

Summary of the Guidance. The Commission should use Section 9291 in a manner that recognizes the importance of both open government and an effective examination process. This guidance instructs the staff on when and how to assert Section 9291 so that it is applied consistently with the provision's intent and the principles of open government. The guidance addresses to what extent the Commission will rely on Section 929J in the context of both ForA requests and discovery requests served on the Commission. In response to FOJA requests, the Commission will rely on Section 929J only to address situations where the possibility that some of the entities the Commission examines may not be deemed "financial institutions" could limit the application of Exemption 8. In response to discovery requests in non-FOJA cases, the Commission will not rely on Section 9291 in any case in which it is a party, and in other cases will invoke Section 9291 only with respect to information obtained pursuant to the Commission's examination authority that would be withheld in response to a FOJA request. The Commission wi II, however, continue to produce documents if the party requesting the documents has demonstrated a "substantial need" for them that outweighs the confidentiality interest of the examined entity.

Application in Response to FOTA Requests. In response to a FOJA request, staff will invoke Section 929I only for information obtained pursuant to the Commission's examination authority, and only to information provided by entities not already clearly covered as "financial institutions" under F01A Exemption 8. Because FOJA Exemption 8 protects materials related to examinations of "financial institutions" - but does not define the term "financial institution"" staff should invoke Section 9291 in response to a FOlA request only:

(I) where the request seeks information obtained pursuant to the Commission's examination authority from an entity the Commission is responsible for regulating, supervising or examining;

(2) the examined entity may not be clearly recognized as a "financial institution" under Exemption 8; and

(3) Exemption 8 would protect the information if the entity were clearly deemed a "financial institution."

Application in Response to Discovery Requests where the Commission or the United States Is a Party. In non-EOf A litigation, staff should not invoke Section 9291 in response to discovery requests where the Commission or the United States is a party. 13 As noted above, Section 9291 was designed to protect information obtained pursuant to the Commission's examination authority where parties in litigation are using the discovery process to seek from the Commission information about their competitors or about other unrelated entities.

Wplication in Response to Third-Party Discovery Requests (where the Commission or the United States Is Not a Party). In response to discovery requests in litigation in which neither the Commission nor the United States is a party, Section 9291 may be invoked only if:

I) When the Commission is a defendant in FOrA litigation, staffshould be guided by the Application in Response to FOrA Requests.

Page 12

(I) the information sought was obtained pursuant to the Commission's examination authority from an entity the Commission is responsible for regulating, supervising or examining,

(2) the information would be withheld if sought in a fOIA request; and

(3) the requesting party has not demonstrated a "substantial need" sufficient to overcome the need to maintain confidentiality.

In decid ing whether a "substantial need" has been shown, the staff should consider (i) the relationship of the information to the issues raised by the litigation in which the discovery is being sought; (ii) the requestor's need for the information to prepare or present its case; (iii) the reason why the requestor cannot obtain the information from any other source; and (iv) the requestor's commitment to obtain a protective order acceptable to the Commission from the judicial or administrative tribunal hearing the action. The need to maintain confidentiality is paramount when the information at issue is a trade secret or confidential commercial information within the meaning of FOl A Exemption 4, and confidentiality of such information should be maintained in private litigation except in extraordinary circumstances.

Discretionary Disclosures. Section 9291 and FOIA do not require the Commission to withhold information. Even if Section 9291 or a FOJA exemption may provide a basis for withholding information, the Commission should make disclosures, where permitted by law, when the need for confidentiality is outweighed by the public's interest in accountability and transparency. 14

As noted, these provisions are designed to protect the confidential and proprietary information of regulated entities and foster an open examination process - not to protect the Commission or any Commission employee. Public oversight and transparency is essential and the staff may not invoke Section 9291 to withhold information to protect the Commission or a Commission employee.

Application in Administrative Proceedings Brought by the Commission or the United States. Section 24(f) of the Exchange Act (as renumbered pursuant to Section 9291(a) of the Dodd-Frank Act), Section 31 of the Investment Company Act of 1940 (as amended by Section 929J(b) of the Dodd-Frank Act), and Section 210 of the Investment Advisers Act of 1940 (as amended by Section 929I(c) of the Dodd-Frank Act) confirm that the Commission cannot assert Section 9291 as a basis for refusing to "comply with an order of a court of the United States in an action brought by the United States or the Commission." The staff should interpret "a court of the United States" as including administrative proceedings brought by Commission divisions or offices.

14 The Commission cannot make a discretionary release pursuant to Section 9291 or FOIA if another provision of law prohibits disclosing the information at issue (e.g., if the Privacy Act or the Trade Secrets Act requires that the information be withheld). In addition, before making any discretionary disclosure of information that is subject (0 a confidential treatment request, the staff should first follow the procedures detailed in the Commission's regulations. See 17 C.F.R. 200.83.

Page 13

EXHIBIT B

Page 1

Lexi s Nex i SCi)

15 of25 DOCUMENTS

Copyright 2009 Associated Press All Rights Reserved

The Associated Press

September 25,2009 Friday II :27 PM GMT

SECTION: BUSINESS NEWS

LENGTH: 481 words

HEADLINE: SEC audit cites issues with meeting ForA requests

BYLINE: By MARCY GORDON, AP Business Writer

DATELINE: WASHINGTON

BODY:

The Securities and Exchange Commssion's problems handling requests under the Freedom of Information Act make its compliance with the federal public access law the weakest among all federal agencies, a report released Friday by the agency's inspector general has found.

A separate audit found the SEC must tighten management of its contracting and procurement operations to fix significant deficiencies.

The review of the SEC's handling of the ForA law, aimed at promoting openness and transparency in government, also said the agency's chief FOrA officer held the position temporarily and didn't have sufficient legal authority.

"There are inadequate or incorrect procedures for determining whether potentially responsive documents exist and how exemptions (from disclosure) ... are applied," says the report commissioned by the office of Inspector General David Kotz,

As a result, a presumption in favor of withholding, rather than disclosing, information has been created contrary to the FOIA law, the report says.

The SEC's rate of compliance with FOIA rules was "significantly lower" than those of all other federal agencies, the report said.

In addition, it said, few staff working on FOrA requests at the agency have written policies and procedures for processing them, thereby increasing the risk of errors that could result in information being disclosed when it should be withheld or vice versa.

The report recommends that SEC Chairman Mary Schapiro name a qualified person as the new chiefFOIA officer, with sufficient authority to carry out the responsibilities effectively. Schapiro's office should communicate "011 an ongoing basis to (SEC) employees and the public the importance" of the FOIA law to the agency's mission, it says.

Kayla Gillan, Schapiro's deputy chief of staff, said in a letter to Kotz: "We are committed to the principle of openness in government that is embodied by the Freedom of Information Act and intend to take any necessary steps to re-emphasize the importance ofFOIA throughout the agency."

Page 2 SEC audit cites issues with meeting ForA requests The Associated Press September 25, 2009 Friday 11 :27 PM GMT

In contracting and purchasing operations, the audit found that the agency's Office of Administrative Services and Office of Acquisitions don't maintain accurate records and data, and have reported inaccurate data to the Federal Procurement Data System, Activities and training of personnel in the SEC regional offices isn't adequately monitored, it said,

The audit report recommended the agency develop standard procedures to track them, as well as a periodic internal review process to ensure that the standards are followed, It said the administrative services and acquisitions offices "have proactively taken steps and developed plans to address" some of the deficiencies,

Sharon Sheehan, associate director for administrative services, told Kotz in a letter that her office concurs with the recommendations and "has begun taking appropriate steps" to address them,

LOAD-DATE: September 26,2009

EXHIBIT B

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

STATION PLACE

100 F STREET, N E WASHINGTON, DC 20549·2736

Office of FOIA Services

November 29, 2010

Mr. Adam Rappaport CREW

1400 Eye Street, N.W. Suite 450 Washington, DC 20005

Re: Freedom of Information Act (FOIA), 5 U.S.C. § 552 Request No. 10-10344-FOIA

Dear Mr. Rappaport:

This is a final response to your request, dated September 28, 2010 and received in this office on September 29, 2010, for the following:

1) The SEC's new procedural guidance providing "processing guidance to FOIA/Privacy Act liaisons and Commission staff tasked with involvement in FOIA responses," and all records that refer or relate to this guidance;

2) All records that refer or relate to the policy that a decision on a FOIA appeal may be made only by a senior officer who did not participate substantively in processing the initial FOIA request;

3) All records that refer or relate to the restructuring of the FOIA/Privacy Act Office "to improve management oversight of quality and consistency of responses, adherence to policy and procedure, and workload volume and backlog management";

4) The agency-wide email sent by Chairman Schapiro "to improve management oversight of quality and consistency of responses, adherence to policy and procedure, and workload volume and backlog management," and all records that refer or relate to the email; and

5) All records that refer or relate to the reinstated "webbased resource for all FOIA and Privacy Act matters that can be accessed by any staff member through the Commission's intranet."

Mr. Adam Rappaport November 29, 2010 Page 2

10-10344-FOIA

with respect to No. 1 of your request, access is granted to the "Freedom of Information and Privacy Act Processing Guidance for Liaisons" with the exception of certain information which is being denied under 5 U.S.C. § 552(b) (2), 17 CFR § 200.80(b) (2). The redacted information is protected under FOIA Exemption 2, since it relates solely to the internal rules and practices of the Commission and, if released, would significantly risk circumvention of statutes or regulations and impede the effectiveness of the Commission's activities.

with respect to No.2 of your request, access is granted in full to a Memorandum dated March 17, 2010. Access is denied, however, to approximately 1~ inches of records comprised of draft materials and emails related to the March 17th memorandum under 5 U.S.C. § 552 (b) (5), 17 CFR § 200.80 (b) (5). Because these documents form an integral part of the predecisional process they are protected from release by the deliberative process privilege embodied in FOIA Exemption 5.

In response to NO.3 of your request, shortly after his appointment, the Chief FOIA Officer reviewed and re-aligned the Office of Freedom of Information Act (FOIA) Services structure to provide more effective use of management and staff resources. With additional funding, an additional processing branch was created within the office, thereby improving the ratio of Branch Managers to Research Specialists from 1 to 8 to 1 to 5. This restructuring has improved management oversight of workload in terms of quality and consistency of responses, adherence to policy and procedure, as well as workload volume and backlog management.

with respect to No.4 of your request, access is granted in full to a page from the Commission's internal website from November 2009 entitled "From the Chairman: Freedom of Information Act Program at the SEC."

with respect to No. 5 of your request, access is granted in full to a page from the Commission's internal website entitled "Office of Freedom of Information Act (FOIA) Services."

Mr. Adam Rappaport November 29, 2010 Page 3

10-10344-FOIA

You have the right to appeal our decision to our General Counsel under 5 U.S.C. § 552(a) (6), 17 CFR § 200.80(d) (5) and (6). Your appeal must be in writing, clearly marked "Freedom of Information Act Appeal," and should identify the requested records. The appeal may include facts and authorities you consider appropriate.

Send your appeal to the Office of FOIA Services of the Securities and Exchange Commission located at Station Place, 100 F Street NE, Mail Stop 2736, Washington, D.C. 20549, or deliver it to Room 1120 at that address. Also, send a copy to the SEC Office of the General Counsel, Mail Stop 9612, or deliver it to Room 1120 at the Station Place address.

If you have any questions, please contact me by email at

sifordm@sec. or by telephone at (202) 551-7201. If you

cannot reach me please contact Ms. Celia Winter by calling (202) 551-7900 or by sending an e-mail to foiapa@sec.gov.

Sincerely,

Mark P. Siford

FOIA/Privacy Act Attorney Advisor

Enclosures

EXHIBIT C

SEC FO/A/PA Liaison Guidance

rev z z r m t g Ulolrrnmttr

FREEDOM OF INFORMATION AND PRIVACY ACT PROCESSING GUIDANCE FOR LIAISONS

Revised August 27,2010

Page 1


IiW n

v

FOIA AND PRIVACY ACT PROCESSING GUIDANCE FOR LIAISONS

Table of Contents

1. Overview of Office of Freedom of Information and Privacy Act Operations (FOIA/P A Office)

2. FOIA/P A Statutes and Regulations

3. The FOIA Liaison Role

4. FOIA/P A Reference Materials

5. FOIA/PA Training

6. Overview of FOIA/P A Request Process

7. FOIA/P A Specialist Responsibilities

8. FOIA/P A Liaison Responsibilities

9. FOIA Reports and Recordkeeping

10. FOIAXpress Guidance for Liaisons

- REVISION CHRONOLOGY-


Page 2

SEC FOIAjPA Liaison Guidance

FOIA AND PRIVACY ACT PROCESSING GUIDANCE FOR LIAISONS

The purpose of this memorandum is to provide guidance to persons designated as FOlA Liaisons for conducting records searches and responding to the FOlA/PA Office when a FOlA request is referred to the program office or division.

1. Overview of Office of Freedom of Information and Privacy Act Operations (FOIA!P A Office).

The mission of the FOIA/PA Office is to facilitate the Commission's response to FOIA and Privacy Act requests and to manage the processing of requests, the tracking system, and reporting functions as mandated by the statute. All FOIA and PA requests received by the Commission are processed through the Office of FOU\ and PA Operations. The Commission has a centralized FOTA & PA process, therefore, no requests are considered "received" by the Commission until received in the FOlA/PA Office. The FOIA/PA Office staff receives and assigns tracking numbers for all incoming requests. FOIA Research Specialists perform initial research on requests to determine which officers) may hold records responsive to the request. The request may then be referred to the FOIA Liaisonrs) for the appropriate offices.

The FOIA/PA Office also receives all incoming appeals of denials under the

FOIA and Privacy Act. Once a FOIA or PA request has been denied in full or granted in part, or a finding of "no responsive records" is rendered, the requestor is provided appeal rights instructing the submission of an appeal to the Office of the General Counsel (OGC). However, the FOIA/PA Office receives all incoming appeals, assigns a tracking number and forwards the appeal to the OGC for direct response to the requestor.

2. FOIA/P A Statutes and Regulations.

The Freedom of Information Act (FOIA), 5 USC 552, the Privacy Act (PA), 5 USC 552a, and the Commissions FOIA and PA regulations, 17 CFR 200.80, may be accessed via the FOIA/PA page on the INSIDER.


Page 3

SEC

Liaison Guidance

3. The FOIA Liaison Role.

A, FOIA Responsibilitv Commission-wide: The Chairman. in her November 2009 message to all ernplovccs. slated:

':.1.)' an Sl,,'C employee, .vOL! JlJaJ' be} called upon to locale or review dOClIJJlO!7LS' that are responsive to a FOll request. It is your responsibility to do so in D timclv manner so that a prompt response con he provided to the requestor. The public 's interest about our work is' a! an nlt=timc /71:[[h, and this presents an opportunity /0 illustretc the dedication and cttort tiun .\'011 Pill Iorth cvcrycla» 017 bchelt of' L/7e investor com/nun/f)' and the American public, "

SeC' the full me ssage at:

13. Liaison Purpose: Each division and program office director designates

one or more FOI:\ liaisonts) as contact points fOI- the FOI/\!P/\ Office and to receive' and coordinate responses to FOl!\ requests which arc' referred to the division or program office', Each division and program office must have at. least one staff member designated as the primary FOl/\ Liaison. It is recommended that each primary liaison have at least one alternate liaison. ;\FOfA liaison should be' of sufficient grade or exper ience within the office to be knowledgeable about the work and the records of the program entity: [he staff member should have the time and ability to accurately search for records or direct other staff members to conduct searches and perform document=by=document rc vic IVS'} it noccssorv; and the liaison should be' able to provide a written response to the r;Oli\/pi\ Office responding to the rcterrat in a lillIch' and accurate manner. FC)];\ liaisons should have: knowledge of the law (FO]i\ and Privacy Act) which is commensurate with the volume and complexity of referrals to tile' program office.


Page 4

SEC

Liaison Guidance

4. FOIA/P A Reference Materials.

']'he FOI!\/PA page on the INSIDE];: provides internal ~~uicl(Jncc and information for FOl/\ liaisons and all staff including links to reference' material including:

• SEC FOI;\ and Privacy Act l-:('gulations:

• The Freedom of Information Act (5 lTSC 552):

• 'rile Privacy Act (5 t:SC 552a):

• SEC Privacy Act System of l<ccords Notices (SOI<J\'s):

• SEC Confidential Treatment Rule 8~3 (I7 CFI~ 200.8:5);

• SEC /vnnual FOL\ Hc:ports:

• Department of Justice Guide to the F'OIA:

• Department of Justice FOIA Post (includes on-going litigation update's.

Attorney General Announcements and information for the F01A community):

• Department of Justice listings of all agency FO];\/l..J,!\ Officers: and

• r'-O]A/P;\Training availability


Page 5

SEC FOIAjPA Liaison Guidance

5. FOIA/PA Training.

Liaisons may obtain training on the FOrA and Privacy Acts through the following sources via links on the FOIA/PA INSIDER page:

• SEC University sponsors FOIA/PA training annually;

• Department of Justice (DOJ);

• ASAP (American Society of Access Professionals)

• Graduate School (formerly USDA Graduate School).

6. Overview of FOIA/P A Request Process.

A. Agency Receipt of FOIA/PA Requests and Appeals: The FOIA Office receives all FOIA and Privacy Act requests and subsequent appeals via email account (foiapa@sec.goy), fax or postal mail. FOIA and PA requests and appeals are received in the FOJA/PA Office 24 hours a day, including weekends. Some requests are dated days or months in advance of receipt, however, the statutory time frame for response does not begin until the request is received in the FOrA/PA Office.

B. Receipt of Requests by Other Offices: Should any other office receive a request for non-public records or information from a member of the public, which is outside the normal course of business (or authority to release information - such as access requests) for the receiving office or entity, the request should immediately be forwarded to the FOIA/PA Office for tracking and coordination of response. The FOIA/PA Office routinely coordinates requests for the release of sensitive information under the FOIA and PA, as well as to Congressional members, with the Offices of

the General Counsel, Public Affairs, and Legislative Affairs. All requests and responses are tracked in the e- FOIA tracking system (FOrAXpress) to ensure accuracy, completeness and consistency of responses from the Commission.

C. Tracking of FOrA and PA Requests: Once received in the FOIA/PA Office, all FOIA requests, PA requests and appeals are date-stamped, scanned into the FOIAXpress (FX) tracking system, and assigned a request number. The requestor is immediately notified of the receipt of the request and given the request tracking number for future correspondence. The FOLA. request number is in the following format as shown in the example:

Revised August 27, 2010

Page 6


lO-01234-FOlA

o The first 2 digits = fiscal year request received;

o The next 5 digits = chronological numbering of requests as received for the fiscal year:

o The suffix which denotes the type of request, as follows:

• FOIA - Freedom of Information Act request

• FOPA- FOIA and Privacy Act request

• APPS - Appeal

• GOVT - Government Agency referral to SEC

• REMD - Remand on appeal

• CONG- Request from Congressional

• CHAI - Request directed to Chairman's Office

• P AAM - Privacy Act amendment

• FIFO - First- In, First-Out

D. Initial Review, Research and Referral of FOrA requests: Each FOIA request is assigned to a FOIA Research Specialist within the FOTA/PA Office whose role is to facilitate processing of the request within 20 working days. If a requester is granted "expedited treatment" the request will be responded to as soon as possible and as an agency priority. The Research Specialist will review the content of the request and search appropriate Commission databases, including SEC websites, to determine the existence of responsive records, and how best to obtain those records for review and processing under the FOIA. Once the request has been reviewed, the Specialist may contact the requestor for further information or clarification, and/or may need to request additional time for processing. After initial review and research is completed, the FOTA Specialist may forward the request to one or more program officeCs) or division FOIA liaisonts) for review of the request and to search for and provide responsive records back to the FOIA Research Specialist. If the request has been granted expedited treatment, the liaison office will be notified to prioritize the processing.

The FOIA Office will provide a referral memo to the liaison office and attach a complete copy of the incoming request. The full request is provided to the liaisonCs) to preclude any discrimination regarding the requester or stated motives for the request and any confusion on the interpretation of the content of the request.


Page 7


The liaison is directed to provide the FOIA Office a recommendation as to releasability in full or in part of the requested records; and if any records or portions thereof are to be denied, the FOIA exemption should be cited. In addition, the liaison is directed to respond to the request within a specified period of time in order to comply with the statutory response time, including expedited treatment as well as when additional time (over 20 days) has been secured.

E. Receipt of Liaison Response: Once the liaison response is received in the FOIA/PA Office, the response is scanned into the FOIAXpress tracking system and the Specialist will prepare a response to the request reflecting the recommendation of the liaison office and the availability of responsive records. All redacting of records will be done by FOIA Research Specialists using FOIA specific redaction tools in FOIAXpress.

F. Requests for Confidential Treatment under Rule 83 07 CFR 200.83):

Certain records submitted to the Commission, normally in conjunction with an Enforcement investigation, may also have a submission requesting confidential treatment (CT) in the event that a FOIA request is received for the submitted materials. In the event that records requested under FOIA are marked as "CT requested" and/or bates stamped indicating they are part of a CT submission, the FOIA Office will contact the submitter to request a substantiation of the request for CT. Once substantiation is received by the FOIA Office, the liaison may be asked to review and comment on the basis claimed for confidential treatment. The FOIA Office will notify the submitter of the determination to grant or deny CT for which the basis is Exemption 4 of the FOIA (5 USC 552(b)(4».

G. Review of Final or Partial FOIA or PA Responses: Final or partial FOIA and PA responses may be provided for review prior to release to the program office or division, the Office of Public Affairs, the Office of the General Counsel, the Office of Legislative Affairs and the Office of the Chairman. Should a division or program office specifically want to review the final response before it is released, the FOIA Specialist should be notified by the liaison by stating the request in the recommendation memo (see paragraph 8.D.)


Page 8

SEC

Liaison Guidance

7. FOIA/PA Specialist Responsibilities.

/\. Referral rvlerno to Liaison: The FOIA J\csearch Specialist assigned to process the request will forward an ('-mail containing a FO]A Pcfcrral Merno to the appropriate liaisor.Is) including a copy of the FUIA rccluC'sL Any additional information in the case can be viewed in I;OIi\Xpress, All FOrA liaisons have; been placed in user groups in FCJL\Xprcss; and each designated liaison has access to the cases assignc'cl to the user group, All referrals arc done via FC)IA e+ mail accounts. which contain the names of the liaisons for the division or program office.

13. Reviewing andRedacting Responsive Records: The rot» S'(afl has' [he responsibility 10 do a document by document rev/ell' otrcsponsivc records provided h.v agene.v components which are considered to he responsive to [he reqlles! and to olficiaJ/.v redact :lnd prepare those' documents lor release. Liaison offices should not redact documents for release. The FO]/\ Staff will process the records for a final response. applying exemptions and preparing records for release. The F01;\ (}fficc will scan responsive documents into the 1<'()IAXprc'ss clOCUll1CnL management component <mel will electronic,lily apply ,1 redaction layer to the I'('cords. Electronically redacted records can be reviewed by others prior to release. including FOL\n1ana~;cmcnt and often the Office of the CeDe!'ai Counsel.

C. Review of Final or Partial [<esponses: The !·'OL\ Office is responsible for scanning all records associated with the request in the electronic case file in F01J\Xprc'ss. All full and partial responses to a request arc located in the FOIAXprcss case file', which liaisons can view at any time. Final or partial FOJi\/PA responses may be provided for review prior to release to the program office or division, the Office of Public Affait-s. the ()Uice' of

the (3c~n('ral Counsel. the ()ffic(' of Chairman,

Afrairs arId rhe Office or the


Page 9

8, FOIA!PA Liaison Responsibilities.

A. Time frame for response: All FOIA l\cfcrral \lcmos require a response lrorn the Liaison within the time frame specified in the l~cfcrral \1C1110. l\cgardlcss of when the' request was rccciv(:d in the Commission. the liaison will geneTally be given :-) working clays to provide a response to the FOli\ Office. Depending on the nature of the reclucsL more time may be allocated. If additional time is nc~cclcd, the: liaison should contact the: HJL\

as possible to r('Jay the need for additional time to the

13. Heview the request and search for records: Upon receipt of a FOL\ referral rnerno. the liaison should read the' rcques'[ carcfuJJv to determine if there arc records within the division or program office which may be responsive to the request:


Page 10

(t))(2)

SEC

Liaison Guidance

Revised August 27, 2010

Page 11

SEC

Liaison Guidance


Page 12

Liaison Guidance

E. Providing Releasable Records: The F()JA liaison. or persons dcsiS~Jl(HCd by the liaison, should forward to the FOIA/P/\ Office a copy of the responsive records tel 1)(' rclcasc'd in full: or

F. Providing Records to be Redacted. (b)(2)


Page 13

SEC

Liaison Guidance

9. FOIA Reports and Recordkeeping,

j\. FOIA Annual Report to DO]. The FOli\ requires that agencies produce a report of all FOIA activities on a fiscal year basis. The Commission's Annuall-Ol/; [\CPC)rlS arc posted on the F()J;\ page' at -C-C--'-C--'--'-'--C--'-'-C-_

The Annual FOI/\ !\cport is prepared during Oct thru Dec of each year. Liaisons may hc~ contacted to provide' or clarify information regarcling the processing of referrals sent to their office during the Iiscal year. 'rile contact would primarily he to provide input in determining the cost of the FOJ/\ processing LO the: Commission for the fiscal year.

I). Aging Reports. 'rile FOLi\!P:\ Officer routinely runs reports via FOl;\Xprcss to determine what requests remain opon and aging and determine why certain requests remain unresolved. There arc many reasons why a request remains open for a long period of Lil11(" including

the complexity or volume of the request: the' need to consult with other c()[1fi(](~l1ti~lltrqatrn('n tsubst anti ati()]1 l)()C e 55: all (1 lit 1 gatioll ..

C, FOIAIPA Request Recorclkeeping. 'I'h(' FOl/\Xprcss system contains the official electronic case file for all FOI/\ and PA rcquC'sts.LiaisoJls arc not required to do any official recordke eping t'I',g;arcling FC)I/\ requests, FOI/\, Privacy Act and appeal files arc considered temporary administrative records and arc maintained governrrtent+wide in accordance with the National Archives General Hcconis Schedule (Cl\S) Number 14. The FOIA Liaison may provide any information pertinent to the request to the FOI!\ Offic(~ [or placement in rile elcctn)nic cas(' file. '1'11(' I,'UIJ\ Starr will scan or import any record provided by the liaison into the case.' file,


Page 14

SEC

Liaison Guidance

10. FOIAXpress Guidance for Liaisons.

FOl/\Xprcss CFX) is an electronic: document management system designc'd cally for usc in FOIA Offices across the p;uvcrnmcnt. The SI;:C


Page 15


- REVISION CHRONOLOGY -

June 30,2010

initial Version of Liaison Guidance, as released on July 1, 2010,'

August 27, 2010 Revision released to update paragraphs 3.B.; 7B.,· and B.B. to further define responsibilities for conducting document search and review.

WWI a mzm

"

-


Page 16

EXHIBIT D

FOIA Post (2009): Creating a "New Era of Open Government"

http://www.justice.gov/oip/foiapostl2009foiapost8.htm

OIP Guidance:

President Obama's FOIA Memorandum and

Attorney General Holder's FOIA Guidelines

Creating a "New Era of Open Government"

On his first full day in office, January 21, 2009, President Obama issued a memorandum to the heads of all departments and agencies on the Freedom of Information Act (FOIA). The President directed that FOIA "should be administered with a clear presumption: In the face of doubt, openness prevails." Moreover, the President instructed agencies that information should not be withheld merely because "public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears."

Agencies were directed to respond to requests "promptly and in a spirit of cooperation." The President also called on agencies to "adopt a presumption in favor of disclosure" and to apply that presumption "to all decisions involving [the] FOIA." This presumption of disclosure includes taking "affirmative steps to make information public," and utilizing "modern technology to inform citizens about what is known and done by their Government."

The President directed the Attorney General to issue FOIA Guidelines for the heads of executive departments and agencies "reaffirming the commitment to accountability and transparency." On March 19, 2009, during Sunshine Week, Attorney General Eric Holder issued those Guidelines. The Attorney General highlighted that the FOIA "reflects our nation's fundamental commitment to open government" and that his Guidelines are "meant to underscore that commitment and to ensure that it is realized in practice."

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The FOrA Guidelines stress that the FOrA is to be administered with the presumption of openness called for by the President. This presumption means that information should not be withheld "simply because [an agency] may do so legally." Moreover, the Attorney General has directed that whenever full disclosure of a record is not possible, agencies "must consider whether [they] can make partial disclosure." The Attorney General also "strongly encouragers] agencies to make discretionary disclosures of information."

While recognizing that the "disclosure obligation under the FOIA is not absolute," and that the FOIA contains exemptions to protect, for example, national security, personal privacy, privileged records, and law enforcement interests, the Guidelines stress that the President has directed agencies not to withhold information merely to prevent embarrassment, or because "errors and failures might be revealed, or because of speculative or abstract fears."

Significantly, the Attorney General rescinded the October 12, 2001 Attorney General Memorandum on the FOrA and established a new standard for defending agency decisions to withhold information. When a FOIA request is denied, agencies will now be defended "only if (1) the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions, or (2) disclosure is prohibited by law."

Establishing an Effective System to Respond to Requests

In addition to establishing these principles applicable to the presumption of disclosure, the Attorney General also comprehensively addressed in his Guidelines a range of principles applicable to establishing an effective system for improving transparency. In doing so he emphasized that "[e]ach agency must be fully accountable for its administration of the FOIA."

The Guidelines emphasize that all agency employees are responsible for the FOrA, not just those who interact directly with FOIA requesters. In the past, agencies have identified common concerns that hinder their ability to provide information to the public, including competing agency priorities that pull FOIA personnel and resources away from FOrA duties, and the lack of sufficient technological support for FOrA activities. As a result, the Guidelines stress that in order "[t]o improve FOIA performance, agencies must address the key roles played by a broad spectrum of agency personnel who work with agency FOIA professionals in responding to requests. "

The Attorney General highlighted the key roles played by both agency Chief FOIA Officers and FOIA professionals in each agency. Chief FOIA Officers "must recommend adjustments to agency practices, personnel, and funding as may be necessary." The Attorney General also specifically recognized the important role played by the FOIA professionals in each agency who directly work with FOIA requesters. He stressed that these professionals "deserve the full support of the

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agency's Chief FOIA Officer to ensure that they have the tools they need to respond promptly and efficiently to FOIA requests." Those FOIA professionals, in turn, were reminded that the President had directed agencies to work "in a spirit of cooperation" with FOIA requesters and to be mindful that "[u]nnecessary bureaucratic hurdles have no place in the 'new era of open Government' that the President has proclaimed."

The Guidelines emphasize the need for agencies to work proactively to post information online in advance of FOIA requests. When responding to requests, agencies are directed "to make it a priority to respond in a timely manner." Finally, Chief FOIA Officers are asked to review "all aspects of their agencies' FOIA administration, with particular focus on the concerns highlighted in" the Guidelines, and to report each year to the Department of Justice "on the steps that have been taken to improve FOIA operations and facilitate information disclosure at their agencies. "

Net Impact

The combined impact of the President's FOIA Memorandum and the Attorney General's FOIA Guidelines is a sea change in the way transparency is viewed across the government. As a result of these directives there are now:

* New approaches to responding to requests and to working with requesters. * New, more limited standards for defending agencies when they deny a FOIA request.

* New requirements to maximize the use of technology to disclose information. * New requirements to post information online affirmatively, in advance of FOIA requests.

* New focus on the broad array of agency personnel whose actions impact the FOIA.

* New accountability requirements, particularly for agency Chief FOIA Officers who must report to the Department of Justice each year.

To implement these new Guidelines agencies must review all aspects of their approach to transparency and incorporate these principles into ali decisions they make involving the FOIA to ensure that the presumption of disclosure is fully realized in practice.

Starting Point: Altering the Mind Set to Make the Presumption of Openness a Reality

The President has asked agencies to renew their commitment to the principles embodied in the FOIA in order to "usher in a new era of open Government." There are five key points agencies should keep in mind to realize this goal.

Agency personnel must alter their mind set in keeping with the President's

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vision. This is the first and in many ways the most important step. To achieve a "new era of open Government" agency personnel must think about the FOIA differently. They must focus on the principles set out in the President's Memorandum and the Attorney General's Guidelines. Most importantly, agency personnel should view all FOIA decisions through the prism of openness.

The key frame of reference for this new mind set is the purpose behind the FOIA.

The statute is designed to open agency activity to the light of day. As the Supreme Court has declared: "FOIA is often explained as a means for citizens to know what 'their Government is up to.'" NARA v. Favish, 541 U.S. 157, 171 (2004) (quoting U.S. Dep't of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989). The Court elaborated that "[t]his phrase should not be dismissed as a convenient formalism." !fl at 171-72. Rather, "[i]t defines a structural necessity in a real democracy." ~ at 172. The President's FOIA Memoranda directly links transparency with accountability which, in turn, is a requirement of a democracy. The President recognized the FOIA as "the most prominent expression of a profound national commitment to ensuring open Government." Agency personnel, therefore, should keep the purpose of the FOIA -- ensuring an open Government -- foremost in their mind.

Second, agencies should be mindful not to review records with the sole purpose of determining what can be protected under what exemption. Instead, records should be reviewed in light of the presumption of openness with a view toward determining what can be disclosed, rather than what can be withheld. For every request, for every record reviewed, agencies should be asking "Can this be released?" rather that asking "How can this be withheld?"

Third, in keeping with the Attorney General's directive, agencies "should not withhold information simply because [they] may do so legally." Information should not automatically be withheld just because an exemption technically or legally might apply. Indeed, if agency personnel find themselves struggling to fit something into an exemption, they should be aware of the President's directive that "[i]n the face of doubt, openness prevails."

Fourth, when full disclosure of a record is not possible, agencies should consider making a partial disclosure. The Attorney General reminded agencies that they "should always be mindful that the FOIA requires them to take reasonable steps to segregate and release nonexempt information." Under the Guidelines, that review takes on an added element. In addition to reviewing records to see if portions are reasonably segregable as non-exempt, agencies should also be reviewing records to see if portions that are technically exempt can be released as a matter of discretion. Whether a release involves boxes of material, or only a few pages, it is important for agencies to remember that the increased transparency resulting from even a partial disclosure of records is worthwhile.

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Finally, agencies must keep in mind the President's directive that records cannot be withheld merely to protect public officials from embarrassment, or "because errors and failures might be revealed, or because of speculative or abstract fears." Rather, agencies should only withhold records, or portions of records, when they reasonably foresee that disclosure would harm an interest protected by one of the exemptions or when disclosure is prohibited by law.

Applying the "Foreseeable Harm" Standard

After taking all of these openness principles into account, there still will be records and portions of records for which protection will remain entirely appropriate. As the Attorney General recognized in his Guidelines, lithe disclosure obligation under the FOIA is not absolute." Congress included exemptions from mandatory disclosure to protect against different harms, such as, for example, harm to national security, harm to personal privacy, and harm to law enforcement interests.

Under the Attorney General's Guidelines, before withholding a record, the agency must reasonably foresee that disclosure would harm an interest protected by one of the exemptions. Thus, FOIA professionals should examine individual records with an eye toward determining whether there is foreseeable harm from release of that particular record, or portion thereof. Each record should be reviewed by agencies for its content, and the actual impact of disclosure for that particular record, rather than simply looking at the type of document or the type of file the record is located in.

Thus, for example, a requested record might be a draft, or a memorandum containing a recommendation. Such records might be properly withheld under Exemption 5, but that should not be the end of the review. Rather, the content of that particular draft and that particular memorandum should be reviewed and a determination made as to whether the agency reasonably foresees that disclosing that particular document, given its age, content, and character, would harm an interest protected by Exemption 5. In making these determinations, agencies should keep in mind that mere "speculative or abstract fears" are not a sufficient basis for withholding. Instead, the agency must reasonably foresee that disclosure would cause harm. Moreover, agencies must be mindful of the President's directive that in the face of doubt, openness prevails.

Discretionary Release

The determination of whether an agency reasonably foresees harm from release of a particular record, or record portion, goes hand-In-hand with the determination of whether to make a discretionary release of information. Under the Attorney General's Guidelines, agencies are encouraged to make discretionary releases. Thus, even if an exemption would apply to a record, discretionary disclosures are encouraged. Such releases are possible for records covered by a number of FOIA exemptions, including Exemptions 2, 5, 7, 8, and 9, but they will be most applicable under

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Exemption 5.

For records covered by certain other exemptions, however, discretionary disclosures are not possible because the information is required to be withheld by some other legal authority. Specifically, records protected by the exemptions covering national security, commercial and financial information, personal privacy, and information protected by statute, are generally not subject to discretionary releases. Thus, for material covered by Exemption 1, which protects properly classified information, if an agency determines that the information is properly classified, no discretionary disclosure is appropriate.

Similarly, if material is required to be withheld by a withholding statute encompassed under Exemption 3, the protection afforded by that statute should be applied and a discretionary release is not appropriate. Agencies should be certain, however, that the statute being invoked meets the requirements of Exemption 3 and, importantly, that the documents being withheld fall within the scope of the statute.

If material falls within Exemption 4, it is also generally protected by the Trade Secrets Act, a statute that prohibits release of commercial and financial information unless the release is otherwise authorized by law. Here, again, a discretionary disclosure of such material cannot be made if doing so is in violation of the Trade Secrets Act Before withholding, agencies should be certain that the many requirements for invoking Exemption 4 are met in the first instance.

For information falling within Exemptions 6 and 7(C), if the information is also protected by the Privacy Act of 1974, it is not possible to make a discretionary release, as the Privacy Act contains a prohibition on disclosure of information not "required" to be released under the FOIA. Agencies should be mindful of the need to conduct a balancing under these exemptions in the first instance and also should consider whether it is possible, given the context of the request, to protect the identities of the individuals mentioned in the documents while releasing the rest, in order to both protect privacy and to further the public's interest in openness.

When reviewing documents to determine whether Exemptions 1, 3, 4, 6, and 7(C) apply, agencies should carefully review all portions of the documents to determine whether they fall within the scope of the claimed exemption. In addition, agencies should strive to reasonably segregate any non-exempt information from such documents in order to make a partial disclosure if possible.

Factors to Consider in Making a Discretionary Release

Documents protected by the remaining Exemptions, Exemptions 2, 5, 7, 8, and 9, can all be subjects of discretionary release. Agency FOrA professionals must use their judgment in making such determinations for each document, but they should be guided by the "fundamental commitment to open government" that the Attorney General directed should be "realized in practice." Fundamentally, in reviewing a

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record the agency must first ensure that any portion being considered for withholding fits all requirements of the exemption being considered. If the exemption applies, the agency should then take the second step of determining whether to make a discretionary release of the record or portion of the record. For all records, the age of the document and the sensitivity of its content are universal factors that need to be evaluated in making a decision whether to make a discretionary release.

For records covered by Exemption 2, agencies should handle "Low 2" differently from "High 2". Information covered by "Low 2" is, by definition, trivial to begin with, thus there would be no reasonably foreseeable harm from release, and discretionary release should be the general rule. "High 2," by contrast, is premised on a finding of harm. Before applying High 2 to a record, agencies should ensure that they are not withholding based on "speculative or abstract fears," but instead are withholding because they reasonably foresee that disclosure would harm an interest protected by Exemption 2.

Similarly, for the subparts of Exemption 7 other than 7(C), agencies should ensure that before invoking the exemption they are not basing the withholding on "speculative or abstract fears," but instead are withholding because they reasonably foresee that disclosure would harm an interest protected by one of the subparts of Exemption 7. As with Exemption 2, there are certainly opportunities to make discretionary disclosures for records covered by Exemption 7. For example, agencies should consider whether records which reference a law enforcement technique or procedure are now outdated, or no longer sensitive, or not specific enough to cause harm. In such cases, a discretionary release can be made. Similarly, due to the breadth of protection afforded information provided by a confidential source, records covered by Exemption 7(0) also hold potential for discretionary disclosures. Some agencies already release much source-provided information

when processing records of historical significance. Agencies can review their practices in this area to look for additional cases where greater information can be released as a matter of discretion.

There is no doubt that records protected by Exemption 5 hold the greatest promise for increased discretionary release under the Attorney General's Guidelines. Such releases will be fully consistent with the purpose of the FOIA to make available to the public records which reflect the operations and activities of the government. Records covered by the deliberative process privilege in particular have significant release potential. In addition to the age of the record and the sensitivity of its content, the nature of the decision at issue, the status of the decision, and the personnel involved, are all factors that should be analyzed in determining whether a discretionary release is appropriate. Documents protected by other Exemption 5 privileges can also be subject to discretionary disclosures.

Thus, in response to requests for records, agencies should view each request with a presumption of openness. They should strive to maximize the amount of

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records released and aim to release portions of records when full release is not possible. Agencies should not withhold records merely because an exemption legally applies. For any document or portion of a document for which a discretionary release is possible, agencies should consider making such a release and should withhold only if the agency reasonably foresees that disclosure would harm an interest protected by an exemption.

Achieving Transparency in New Ways

Responding to FOIA requests with a presumption of openness is only one element of the President's and Attorney General's vision for creating a "new era of open Government." In addition to responding to FOIA requests, agencies must look for other ways to increase transparency.

Specifically, the President directed agencies to "take affirmative steps to make information public." Moreover, the President stressed that agencies "should not wait for specific requests from the public." Instead, agencies "should use modern technology to inform citizens about what is known and done by their Government." This is a key area where agencies should strive for significant improvement.

Agencies should implement systems and establish procedures whereby records of interest to the public are routinely identified and systematically posted. This needs to be an on-going practice within each agency. To assist agencies in applying Federal agency dissemination policies for public information FOIA professionals should consult the dissemination principles outlined in Section 8 of OMS's Circular A-130. See http://www.whitehouse.gov/omb/assets/omb/circulars la130/a130trans4.pdf

FOIA professionals themselves can work with officials in their agency to seek out records for purposes of posting. Additionally, agencies can set up procedures in key offices where other officials routinely identify in advance, or as records are finalized, those that are good candidates for posting. The more information that is made available on agency websites, the greater the potential to reduce the number of individual requests made for records. More importantly, agencies must recognize that proactively disclosing information about the operations and activities of their agency is an integral part of achieving transparency.

Working Cooperatively with Requesters and Disclosing Records Promptly

The President also directed agencies to "act promptly" and make timely disclosures of information. Significantly, the Attorney General declared that "[Ilong delays should not be viewed as an inevitable and insurmountable consequence of high demand."

These directives require all agencies, but particularly those with a large volume of requests or a large backlog, to examine their entire approach to providing

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information to requesters in order to be able to respond more promptly. Certainly, increasing the amount of information made available proactively by the agency has the potential to reduce backlogs and delays. Chief FOIA Officers should be involved in reviewing their agency's FOIA operations to find areas where delays can be reduced. FOIA professionals in turn, must utilize their agency Chief FOIA Officer and keep him or her fully informed regarding the particular challenges they are facing so that the Chief FOIA Officer can make appropriate adjustments within the agency.

The President also directed agencies to act in a "spirit of cooperation" with requesters. As the Attorney General stressed: "Unnecessary bureaucratic hurdles have no place in the 'new era of open Government' that the President has proclaimed." Agencies should keep these principles in mind when interacting with requesters and work to ensure that the process of requesting information is easy. One way that interaction with requesters has improved is through the use of tracking numbers for requests that will take longer than ten days to process. The FOIA now requires that such tracking numbers be provided to requesters and that a telephone line or internet service be established so that a requester can check the status of his or her request. This is just one example of how agencies can simplify and improve their interaction with FOIA requesters.

Accountability

The Attorney General emphasized that each agency must be fully accountable for its FOIA operation. He also stressed that Chief FOIA Officers must be active participants in their agency's FOIA operations. Chief FOIA Officers are required by law to be senior level officials at the Assistant Secretary level or its equivalent. These officials are required to "recommend adjustments to agency practices, personnel, and funding as may be necessary" to improve FOIA administration.

As mentioned above, competing agency priorities and insufficient technology support were commonly cited by agencies as concerns that hindered their ability to improve their FOIA operations. These are key areas where the Chief FOIA Officer's assistance can be vital. When, for example, FOIA personnel are pulled away from FOIA to work on other matters, or when IT support personnel are not available to FOIA professionals, these actions negatively impact FOIA administration. This is where the agency Chief FOIA Officer plays a critical role in prioritizing demands and allocating resources so that FOIA operations are not negatively impacted. As the Attorney General emphasized, FOIA professionals "deserve the full support of the agency's Chief FOIA Officer to ensure that they have the tools they need to respond promptly and efficiently to FOIA requests."

Chief FOIA Officers will now be required to report to the Department of Justice each year on the steps they have taken to improve transparency in their agency. This will ensure that the principles established by the Attorney General's Guidelines continue to remain vital year after year.

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Summary

The President and Attorney General have established sweeping new changes in the way transparency is to be viewed and administered across the Government. These principles require agencies to employ a comprehensive approach to transparency. This approach can be summarized in ten key elements that agencies must take into account in order to ensure that the fundamental commitment to open Government is realized.

1. The presumption of disclosure applies to ~ decisions involving the FOIA; agencies should keep that presumption foremost in their mind.

2. When responding to a request, agencies should approach their review of documents by asking, "What can I release?"

3. Records should not be withheld merely because they fall within an exemption.

4. Agencies should review each document with a focus on whether there is foreseeable harm from disclosure of that particular record.

5. Determinations of foreseeable harm are made on a case-by-case basis, but universal factors to consider are the age of the document and the sensitivity of its contents.

6. Agencies should make discretionary releases of records when possible.

7. When full disclosure of a record is not possible, agencies should strive to make a partial disclosure.

8. Separate and apart from the handling of individual FOIA requests, agencies should anticipate interest in records, should set up systems for identifying and retrieving them, and should post them on their website. Information about agency operations and decisions should be available to the public online. This is a key area where agencies can make real improvements in increasing transparency.

9. Agencies should work cooperatively with requesters and respond promptly.

10. FOIA professionals should work with their agency Chief FOIA Officers who, in turn, will be reporting to the Department of Justice each year so that each agency is fully accountable for its administration of the FOIA.

Achieving the "new era of open Government" that the President has proclaimed will require the commitment of all agency personnel. It will be an on-going process, as agencies continually strive to integrate the new openness principles into their FOIA operations and seek out ways to disclose more information proactively. By

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renewing their commitment to transparency, all agencies will be a part of this "new era of open Government." (posted 0411712009)

Go to: Main FOIA Post Page

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