Legal Opinion: GMP-0117

Index: 7.340, 7.470

Subject: FOIA Appeal: Private Equity\--Debt Financing

September 1, 1992

Mr. Gary Storrs

Bakery, Confectionery and Tobacco

Workers International Union

10401 Connecticut Avenue

Kensington, Maryland 20895-3961

Dear Mr. Storrs:

This is in response to your Freedom of Information Act

(FOIA) appeal dated August 17, 1992. In a letter dated May 21,

1992, Christian D. Wallace, Assistant Director of Research for

the Bakery, Confectionery and Tobacco Workers International

Union, requested the application and the amended application for

the Urban Development Action Grant (UDAG) for the Borough of

Oxford, Pennsylvania. On July 6, 1992 Anna-Marie Kilmade Gatons,

Director, Executive Secretariat, provided Mr. Wallace with

information responsive to his request but withheld some

information under Exemptions 4 and 5 of the FOIA. (FOIA Control

No.: FI-295582T). You appeal six of the documents withheld under

Exemption 4.

I have determined to affirm, in part, and reverse, in part,

the initial denial.

Exemption 4 protects from mandatory disclosure trade secrets

and commercial or financial information obtained from a person

which is privileged or confidential. The courts have interpreted

Exemption 4 as protecting confidential commercial or financial

information the disclosure of which is likely to: (1) impair the

Government\'s ability to obtain necessary information in the

future or (2) cause substantial harm to the competitive position

of the entity from whom the information was received. National

Parks and Conversation Association v. Morton, 498 F.2d 765, 770

(D.C. Cir. 1974).

The information withheld under Exemption 4 includes

confidential financial and commercial information such as cost

estimates, private equity, debt financing and market feasibility.

Release of this information would permit competitors to gain

\"valuable insight into the operational strengths and weaknesses

of the supplier of the information.\" National Parks and

Conservation Association v. Kleppe, 547 F.2d 673, 684 (D.C. Cir.

1976).

Courts have recognized the competitive harm to a submitter

by release of the above described information. See, e.g., Gulf &

Western Industries, Inc. v. U.S., 615 F.2d 527 (D.C. Cir. 1979)

protecting from disclosure financial information including profit

and loss data, expense rates, and break-even point calculations;

Timken Co. v. United States Customs Service, 531 F. Supp. 194

(D.D.C. 1981) protecting financial and commercial information on

pricing and marketing; Braintree Electric Light Dep\'t. v.

Department of Energy, 494 F. Supp. 287 (D.D.C. 1980) withholding

financial information including selling price, inventory balance,

profit margins, purchasing activity, and cost of goods sold.

Therefore, I am affirming the inital denial under

Exemption 4, with the exception of the financial data concerning

the UDAG grant which was deleted from page 24 of the Amended

Application. This information, consisting of the amount and term

of the UDAG grant and the interest rate, is public information

releasable under the FOIA. A copy of page 24 of the Amended

Application with the UDAG grant information is enclosed.

Pursuant to HUD\'s regulations at 24 C.F.R. Section 15.21 I

have determined that the public interest in protecting

confidential commercial and financial information, militates

against release of the withheld information.

Please be advised that you have the right to judicial review

of this determination under 5 U.S.C. 552(a)(4).

Very sincerely yours,

George L. Weidenfeller

Deputy General Counsel (Operations)

Enclosure

cc: Yvette Magruder