CREW I citizens for responsibility

and ethics in washington

December 23,20 10

Office of Freedom of Information and Pri vacy Act Operations

Security and Ex change Commission
100 F Street, N E
Mail Stop 2736
Washington, D.C . 20549

Office of the General Counsel

Security and Ex change Commission
100 F Street, NE
Mail Stop 961 2
Was hington, D.C. 20 549

Re: Free dom ofInformation Ac t Ap pea l, Requ est No . 10- 10344-FOIA

Dear Sir or Mada m :

By lett er dated November 29,20 10, the Sec urities and Exc hange Co mmiss ion ("SEC")
pro vided Citizens for Responsibility and Ethics in Washington ("C REW") with a fin al response
to our Freedom of Informati on Act ("FOIA") requ est of September 28, 20 10. The SEC provided
20 pages of records, but adv ised CREW cert ain records and porti ons of record s are exempt from
disclosure based on FOIA Ex emptions 2 and 5. CREW hereb y appeals th e initi al determination,
and requests you revers e it for the reasons set forth below.

CREW 's FOIA request (attached as Ex hibit A) seeks records related to steps the SEC has
taken to improve its responses to FOIA requests. Spe cific ally, CREW see ks :

(1) the SEC ' s new procedural guidance pro viding "processing guida nce to FOIA/Pri vacy
Act liai sons and Commission staff tasked with invol vement in FOI A responses," and all
records that refer or relate to thi s guida nce;

(2) all record s that refer or rel ate to the poli cy that a decision on a FOIA appeal may be
made only by a senior offic er who did not participate substant ive ly in processin g the
initi al FOIA request;

(3) all record s th at refer or relate to the restru ctur ing of the FOIA/Privacy Ac t Office "to
improve managem ent oversight of qualit y and consistency of resp on ses, adherence to
policy and procedure, and workload volume and backlog management" ;

(4) the age ncy -w ide ema il sent by Cha irman Mary Schapiro "to improve management

1400 Eye Street, N.W., Suite 450, Washington, D.C. 20005 I 202.408.5565 phone I 202.588.5020 fax I www.citizensforethics.org
Freedom of Information Act Appeal
December 23,2010
Page 2

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 FOIA and
Privacy Act matters that can be accessed by any staff member through the Commission's
intranet. "

The SEC's response (attached as Exhibit B) advised CREW it was producing some
records in their entirety, producing some records with portions redacted, and withholding some
records in their entirety. Specifically:

(1) in response to Request No.1, the SEC produced the requested procedural guidance
(attached as Exhibit C), but withheld significant portions of it pursuant to Exemption 2;

(2) in response to Request No.2, the SEC produced in its entirety a memorandum dated
March 17,2010 adopting 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, but withheld 11;4 inches of records as deliberative process material pursuant to
Exemption 5;

(3) in response to Request No.3, the SEC produced no records, but explained that shortly
after his appointment, the Chief FOIA Officer restructured the Office of Freedom of
Information Act Services, including adding an additional processing branch;

(4) in response to Request No.4, the SEC produced in its entirety the requested agency-
wide email;

(5) in response to Request No.5, the SEC produced in its entirety a copy of the homepage
of the Office of Freedom of Information Act Services from its internal website.

The SEC Improperly Withheld Responsive Records Under Exemption 2

The SEC contends portions of procedural guidelines providing processing guidance to the
agency's FOIA liaisons produced in response to Request No.1 are exempt under Exemption 2.,
because they relate solely to its internal rules and practices and, if released, would significantly
risk circumvention of statutes or regulations and impede the effectiveness of its law enforcement
activities.

Exemption 2 applies to materials used for '''predominantly internal purposes,'" Schiller v.

NLRB, 964 F.2d 1205, 1207 (D.C. Cir. 1992) (citation omitted), but only if they are sufficiently
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December 23,2010
Page 3

related to an internal rule or practice, see, e.g., Schwaner v. Dep 't ofAir Force, 898 F.2d 793,
795-98 (D.C. Cir. 1990); Abraham & Rose, P.L.e. v. United States., 138 F.3d 1075, 1079-82 (6th
Cir. 1998). Typically, records encompassed by Exemption 2 are agency rules or practices such as
law enforcement manuals. See, e.g., Crooker v. Bureau ofAlcohol, Tobacco & Firearms, 670
F.2d 1051, 1053 (D.C. Cir. 1981); Caplan v. Bureau ofAlcohol, Tobacco & Firearms, 587 F.2d
544, 545 (2d Cir. 1978). Moreover, records may be withheld under Exemption 2 only if
disclosure of specific information "significantly risks circumvention of agency regulations or
statutes," Crooker, 670 F.2d at 1073, or if disclosure "would quickly render those documents
obsolete for the purpose for which they were designed." Nat 'I Treasury Employees Union v. Us.
Customs Serv., 802 F.2d 525, 530 (D.C. Cir. 1986). Where there is no such demonstrated risk,
Exemption 2 does not apply. See, e.g., Dep 't ofAir Force v. Rose, 425 U.S. 352, 366, 369
(1976); Gordon v. FBI, 388 F. Supp. 2d 1028,1036-37 (N.D. Cal. 2005).

It is difficult to imagine how disclosure of the information redacted by the SEC would
risk circumvention of any regulation or statute. The purpose of the record at issue is to provide
guidance to SEC employees designated as "FOIA Liaisons" for conducting records searches and
otherwise responding to FOrA requests. Exhibit C at 3. Much of the redacted information
appears to be instructions to the liaisons concerning how and when to search for records. For
example, the section titled "FOrA/P A Liaison Responsibilities" includes guidance on how to
"[r]eview the request and search for records." Id. at 10. The guidance first instructs the liaison
to read the request carefully to determine if there are records within the liaison's division or
program office that may be responsive to the request. Id. The rest of the guidance on this topic,
spanning nearly three pages, was withheld under Exemption 2. Id. at 10-13. The redacted
portion appears to be further guidance on how to conduct a search.

Similarly, the SEC withheld information related to the amount of time FOrA liaisons
have to provide a response, id. at 10, information related to "aging" FOrA requests, id. at 14, the
guidance on providing records to be redacted and transmitting a response to the SEC's FOrA
office, id. at 13-14, and information related to the review ofresponses by SEC FOrA specialists,
id. at 9.

Disclosure of this information does not risk circumvention of any regulation or statute.
The only possibly relevant statute and regulation are the ForA and the SEC's FOIA regulations,
but disclosure of how and when SEC FOrA liaisons should conduct a search in no way risks
circumvention of the FOrA or implementing regulations. ForA's provisions related to agency
searches for records do not regulate the behavior of requesters or others outside the government,
so there is nothing to circumvent. To the contrary, understanding how the SEC conducts its
searches should allow requesters to better direct the SEC to the records they seek, thereby aiding
the SEC's implementation of the FOIA. Disclosure also would not render the guidance obsolete.
The purpose of the guidance is to instruct the ForA liaisons on how to conduct searches and
otherwise respond to FOIA requests, and they can continue to follow that guidance regardless of
Freedom of Information Act Appeal
December 23,2010
Page 4

whether or not it is disclosed to the public.

The SEC Improperly Withheld Responsive Records Under Exemption 5

Exemption 5 protects from disclosure "inter-agency or intra-agency memorandums or

letters which would not be available by law to a party other than an agency in litigation with the
agency." 5 U.S.c. § 552(b)(5). Here, the SEC claims 1Y4 inches ofrecords responsive to
Request No.2 are exempt pursuant to the deliberative process privilege.

In order to fall within the protection of Exemption 5 under the deliberative process
privilege, the communication in question must be both predecisional and deliberative. Wolfe v.
HHS, 839 F.2d 768, 774 (D.C. Cir. 1988) (en bane), To establish that the material in question is
predecisional, the SEC must show "what deliberative process is involved, and the role played by
the documents in issue in the course of that process." Coastal States Gas Corp. v. Dep 't of
Energy, 617 F.2d 854, 868 (D.C. Cir. 1980). Furthermore, Exemption 5 does not protect purely
factual information, and permits withholding only specific materials reflecting the "give-and-take
of the consultative process." Wolfe, 839 F.2d at 774.

The FOIA requires agencies to "disclose any reasonably segregable portion of a record ..
. after deletions of the portions which are exempt." 5 U.S.C. § 552(b). "[T]he focus in the FOIA
is information, not documents, and an agency cannot justify withholding an entire document
simply by showing that it contains some exempt material." Mead Data Central, Inc., 566 F.2d at
260; see also Public Citizen Health Research Group v. FDA, 185 F.3d 898, 907 (D.C. Cir. 1999).

The SEC contends that the withheld documents form an integral part of the predecisional
process related to its adopting 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.
However, to the extent these records include factual information, the SEC should have redacted
the exempt material and disclosed the remainder of the records.

In addition, the SEC should consider making a discretionary release of these records,
consistent with Attorney General Eric Holder's FOIA guidance that rests on a presumption of
openness and President Obama's January 21,2009 memoranda that commits the administration
to an unprecedented level of transparency and openness. Discretionary releases are encouraged
under the Attorney General's guidelines, and the Department of Justice notified agencies that
such releases are "most applicable under Exemption 5." Department of Justice, Office of
Information Policy, OIP Guidance: President Obama 's FOIA Memorandum and Attorney
General Holder's FOIA Guidelines, Creating a "New Era ofOpen Government", April 17,2009
(attached at Exhibit D). Discretionary release is especially appropriate here, where the records
relate to FOIA policy and processing.
Freedom of Information Act Appeal
December 23,2010
Page 5

The SEC Failed to Respond to Request No.3

Under the FOIA and SEC regulations, requested records are to be produced within 20
working days. See 5 U.S .C. § 552(a)(6)(A)(i); 17 C.F.R. § 200.80(d)(5). An agency's failure to
respond within statutory time limits constitutes a constructive denial of the request. See 5 U.S.C.
§ 552(a)(6)(C)(i) (requester "shall be deemed to have exhausted his administrative remedies .. .
if the agency fails to comply with the applicable time limit provisions"). The SEC may properly
withhold the records requested by CREW only if it demonstrates "by specific and detailed proof
that disclosure would defeat, rather than further, the purpose of the FOIA." Mead Data Cent.,
Inc., 566 F.2d at 258 (citation omitted). To withhold information, the SEC must provide both the
factual support and "the reasons behind their conclusions in order that they may be challenged by
FOIA plaintiffs and reviewed by the courts." Id. at 261.

In response to Request No.3, the SEC described actions taken by the Chief FOIA Officer
to restructure the Office of Freedom of Information Services, including adding a processing
branch. The SEC further claimed the restructuring has improved management oversight of
workload, adherence to policy and procedure, and workload volume and backlog management.
While CREW appreciates this explanation, it does not satisfy our request for records that refer or
relate to the restructuring. Accordingly, the SEC has exceeded the 20-working-day statutory time
limit for responding, which constitutes a constructive denial of CREW's request.

Conclusion

CREW filed this request in response to Chairman Schapiro 's testimony to Congress that
the SEC had implemented nine of the ten recommendations made by the Office of the Inspector
General in a report reviewing the SEC's compliance with the FOIA. It is concerning and ironic
that the SEC appears to have misapplied the FOIA and its exemptions in responding to it.

Based on the foregoing, we request that you reverse the SEC's withholding ofrecords and
portions of records responsive to Request Nos. 1 and 2, and the SEC's constructive denial of
Request No.3.

Sin~jel~C
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Adam 1. Rappap
Senior Counsel
7
Citizens for Responsibility and Ethics in Washington

Enclosures