UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

EDWARD F. HENNESSEY, IV,

Plaintiff-Appellant,

v.

No. 97-1133

UNITED STATES AGENCY FOR

INTERNATIONAL DEVELOPMENT,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of North Carolina, at Charlotte.

Robert D. Potter, Senior District Judge.

(CA-95-479-3-P)

Argued: July 10, 1997

Decided: September 2, 1997

Before WILKINS, LUTTIG, and WILLIAMS, Circuit Judges.

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Reversed and remanded by unpublished per curiam opinion.

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COUNSEL

ARGUED: Robert Walker Fuller, III, ROBINSON, BRADSHAW &

HINSON, P.A., Charlotte, North Carolina, for Appellant. James

Michael Sullivan, Assistant United States Attorney, Charlotte, North

Carolina, for Appellee. ON BRIEF: Lawrence C. Moore, III, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina,

for Appellant. Mark T. Calloway, United States Attorney, Charlotte,

North Carolina, for Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Appellant Edward Hennessey brought this action in district court

against the United States Agency for International Development

(USAID) under the Freedom of Information Act (FOIA), 5 U.S.C.

§ 552, to compel USAID to provide him with a report and related

documents. On the parties' cross motions for summary judgment, the

district court granted summary judgment for USAID, holding that the

requested documents were exempt from disclosure under 5 U.S.C.

§ 552(b)(5) because they fall within the deliberative process and

work-product privileges. Hennessey appeals. For the reasons

explained, we reverse.

I.

The facts giving rise to this dispute began in 1988, when USAID

awarded a $17.6 million construction contract to a company named

Encorp to build an agricultural university in Peshawar, Pakistan. The

project encountered substantial delays which Encorp alleges were

caused by USAID's inept administration of the project. Eventually,

Encorp submitted a claim to USAID seeking reimbursement of those

costs for which it believed USAID was responsible. USAID rejected

many of the assumptions underlying Encorp's claim and, in order to

facilitate a resolution of the dispute and complete the project, officials

at USAID commissioned a third party to conduct an independent

review of the project delays.

To that end, USAID hired the Neilsen-Wurster Group (NWG) to

perform a detailed scheduling analysis, or a "critical path method"

(CPM) report of the project history. The NWG report comprises three

parts. The first part includes the "as-built" data, which is an historical

record of when the various project construction activities took place.

The second part is the methodology, pursuant to which the project

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was divided into several "windows," or time periods, and events that

affected the project schedule during each window were examined.

The third part is the causation analysis, which synthesizes the relationships between the various scheduling delays and the ultimate

delay in the completion date. This portion also attributes responsibility for specific delays between USAID and Encorp.

When USAID commissioned the CPM, an official at the agency

expressed her intention to share a full copy of the report with Encorp

upon its completion. In return, Encorp promised to and did cooperate

with the agency by sharing scheduling software and documents. J.A.

at 312-13, 424, 570-73.

Over two years after USAID committed to provide Encorp with the

final CPM, the agency sent a draft of a substantial portion of the

report to Encorp for its review and comments. J.A. at 563-64. Encorp

declined to comment on the report on the grounds that the draft was

incomplete. J.A. at 522 & 573. USAID subsequently refused to share

the entire final report with Encorp.

After failing to obtain the NWG documents directly from USAID,

Edward Hennessey, acting as an agent for Encorp, brought this action

under FOIA, 5 U.S.C. § 552, to compel USAID to produce the final

NWG report, drafts of the NWG report, and correspondence between

NWG and USAID concerning the report.1 In its final response to this

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1 Specifically, Hennessey sought,

a. All schedules, schedule analyses, draft and final reports, correspondence, memoranda, and other documents prepared in

whole or in part by Nielsen-Wurster Group with respect to

the construction of the Northwest Frontier Province Agricultural University in Peshawar, Pakistan (the "project"); and

b. All schedules, schedule analyses, draft and final reports, correspondence, memoranda, and other documents received

from Nielsen-Wurster Group with respect to the project; and

c. All contracts, agreements, and correspondence establishing

the scope of work and terms of engagement of NielsenWurster Group with respect to the project.

J.A. at 10 (Plaintiff's Complaint).

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FOIA action, USAID declared its intention to withhold the requested

records on the grounds that they were deliberative process materials

and confidential work-product which were exempt from disclosure

pursuant to FOIA's so-called "Exemption 5," 5 U.S.C. § 552(b)(5).

Both parties moved for summary judgment, and the district court

granted summary judgment for USAID, holding that there was no

genuine issue that the contested documents were exempted from disclosure by both the deliberative process and work-product exceptions.

The district court also conducted an in camera review of the

requested documents and concluded that "any factual materials contained therein is inextricably linked with deliberative and/or workproduct such that it is protected by these privileges." J.A. at 720.

Thus, the district court also refused to order the disclosure of what it

considered to be purely factual portions of the requested materials.

Appellant-Hennessey appeals both rulings.

II.

Although FOIA imposes a broad duty upon government agencies

to disclose requested documents, see 5 U.S.C. § 552(a), that duty is

not without limitation. For example, FOIA exempts 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). This open-ended exemption

incorporates both the deliberative process and work-product privileges. Virginia Beach v. Department of Commerce, 995 F.2d 1247,

1251 (4th Cir. 1993). We examine in turn USAID's claims of deliberative process and work-product privilege, ultimately reviewing the

district court's judgment de novo to determine whether a genuine

issue of material fact exists as to whether the subject documents are

protected by the deliberative process privilege or work product privilege, or whether USAID or Hennessey is entitled to judgment as a

matter of law at this stage of the litigation.2 In undertaking this

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2 Although it would appear, at first blush, that the § 552(b)(5) exemption would not apply to the documents at issue in this case because they

were prepared by an outside consulting firm (NWG) and therefore do not

seem to be "intra-agency memorandums," the district court below held

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review, we construe Exemption 5 narrowly, as we are required to do

in order to give full effect to this public disclosure statute. See Ethyl

Corp. v. Environmental Protection Agency, 25 F.3d 1241, 1245 (4th

Cir. 1994).

A.

The deliberative process privilege protects Executive deliberations

from public scrutiny in order to encourage "open[ and] frank discussion between subordinate and chief concerning administrative action."

Environmental Protection Agency v. Mink , 410 U.S. 73, 87 (1973).

The privilege permits the government to withhold certain documents

whose release would reveal "advisory opinions, recommendations and

deliberations comprising part of a process by which governmental

decisions and policies are formulated." In re: Sealed Case, 116 F.3d

550, 557 (D.C. Cir. 1997) (citation omitted). The privilege attaches

only to documents that "reflect[ ] the give-and-take of the consultative

process by revealing the manner in which the agency evaluates possible alternative policies or outcomes." Virginia Beach v. Dep't of

Commerce, 995 F.2d 1247, 1253 (4th Cir. 1993) (citation and internal

quotation marks omitted). The ultimate issue in evaluating any deliberative process privilege claim is "whether the materials bear on the

formulation or exercise of agency policy-oriented judgment . . . [and]

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that the § 552(b)(5) exemption also applies to documents commissioned

by an agency from outside experts for the purposes of informing the

agency's judgment. The district court's interpretation of the statutory

term "intra-agency" is by no means unreasonable, and it has actually garnered the support of a number of our sister circuits, Thurner Heat Treating Corp. v. NLRB, 839 F.2d 1256 (7th Cir. 1988); CNA Financial Corp.

v. Donovan, 830 F.2d 1132 (D.C. Cir. 1987), as well as the assent of

three Supreme Court Justices, United States Dep't of Justice v. Julian,

486 U.S. 1, 18 n.1 (1988) (Scalia, J., dissenting). However, because we

reverse the district court's grant of summary judgment, and direct the

district court to enter summary judgment in favor of appellant because

there is no genuine issue that the documents at issue in this case are

either deliberative process materials or work-product, we need not reach

the question of whether these two privileges, if otherwise satisfied,

would apply under § 552(b)(5) to documents produced by an outside

expert.

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whether disclosure would tend to diminish candor within an agency."

Id. at 1254 (citation and internal quotation marks omitted) (emphasis

in original).

After reviewing the record in this case, the final NWG report itself,

and the circumstances in which the final report was to be used, see

Virginia Beach, 995 F.2d at 1253, we conclude that the final report

is not protected by the deliberative process privilege. From its inception, the process of producing this report was intended as a cooperative enterprise designed to resolve a dispute between Encorp and

USAID that arose over the Peshawar project. It was clearly contemplated by both parties that Encorp would be a co-equal partner in this

effort to develop a chronology and factual account of the events surrounding the delays in the project. The process was never viewed as

a "deliberative" activity exclusively between NWG and USAID.

It is undisputed, for example, that USAID intended to share the

final NWG report with Encorp in order to facilitate completion of the

project and resolve the outstanding differences between the parties. A

USAID contracting officer, who was the Chief of USAID's Pakistan

Office of Contracts and Commodities, committed to Encorp, prior to

commissioning the CPM, that USAID would share a full copy of the

final CPM report with Encorp upon its completion. J.A. at 424. This

official later testified that her purpose in commissioning the NWG

report was to facilitate a discussion of Encorp's claim and "further the

completion of the project." J.A. at 342. In fact, it appears that this

promise to share the final NWG report is why Encorp shared its data

and software with USAID and NWG. See, e.g., J.A. at 424. Furthermore, after USAID hired NWG, but before the final report was available, a subordinate USAID contracting officer who was involved in

the Peshawar project represented in writing to Encorp that "USAID

is commencing its analysis of the Contract progress delays" and

"hopefully, we will have results for your review and negotiations in

about six weeks." J.A. at 572-73. Appellee does not dispute this testimony, nor does it deny that the aforementioned Chief of USAID's

Pakistan office was the "ultimate decisionmaker" with regard to the

Peshawar project. See J.A. 338. Thus, there is no genuine issue that,

prior to receiving the final NWG report, USAID intended to share that

report with Encorp and committed to do so. Indeed, consistent with

its intent and promise, USAID actually provided Encorp with what it

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now admits was "a substantial part of the NWG analysis" in draft

form. Appellee's Brief at 24.

Against this backdrop, it is clear, as a matter of law, that these documents are not protected by the deliberative process privilege. The

agency had the opportunity, if not the prerogative, to shield these

materials from public disclosure through invocation of the deliberative process privilege, but it chose instead to open to the public its

process of preparing this report by making Encorp a participant in that

process in the hope that the agency's dispute with Encorp would be

facilitated thereby. As a consequence, there simply is no intra-agency

"deliberative process" to be protected. And, it goes without saying,

disclosure of the final report to Encorp under such circumstances

would not in any sense chill open and frank communications within

USAID in the future. The agency may invite members of the public

into its "deliberations" as it deems appropriate. Or it may avail itself

of the privilege by keeping its own counsel.

Essentially, the agency's only response is that it was not contractually bound with Encorp to share the CPM, and that Encorp therefore

cannot compel the agency to furnish the report. Thus, USAID maintains that Encorp's suit is properly brought in the Court of Claims as

a government contract action. Encorp, however, does not contend that

disclosure of the NWG report is required by the terms of an enforceable contract with USAID, nor, in holding that the report is not protected by the deliberative process privilege, do we suggest that such

a contract exists between the parties. Rather, Encorp argues, and we

hold, only that the agency may not assert the deliberative privilege to

protect documents that it intended to produce to the public, promised

to produce to the public, and in fact did, in substantial part, produce

to the public.

That the final NWG documents were never intended to be, and are

not, deliberative materials is also confirmed by our examination of the

documents themselves. With few exceptions, purely factual materials

are not protected by the deliberative process privilege, see Ethyl

Corp., 25 F.3d at 1249 (holding that statistical data were not deliberative process materials). Insofar as we can discern, the final NWG

report is almost entirely factual in nature. The district court concluded

that several portions of the report could not have been produced with-

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out the exercise of some judgment and are therefore closer to opinion

than fact. For example, it reasoned that the methodology section was

not factual because it involved an assessment of which particular

steps in the construction project had an effect upon overall delays. It

further reasoned that the causation section was not purely factual

because it included "recommendations concerning Encorp's responsibility, if any, for delay in completion of the project to-date." J.A. at

708.3 While it is doubtless true that the process of composing these

portions of the final report may have involved the exercise of some

judgment or discretion, the NWG report must ultimately be regarded

as factual because it is written as an objective and retrospective recitation of historical facts. To illustrate the factual nature of the CPM,

consider one of its typical conclusions: for the first "critical path" in

the time period ranging from November 17, 1988, to April 15, 1989

-- the construction of the library -- Encorp utilized a 35-day mobilization period (instead of the 60 days allowed by contract specification), was 16 calendar days late in beginning construction, made

significant out-of-sequence work, and ultimately gained 17 days on

the critical path of 150 projected construction days. A typical entry

from the report's causation analysis, which discusses the period from

April 16, 1989, to September 16, 1990, identifies 37 days of project

delay arising out of Encorp's tardy pouring of concrete footings. To

the extent that any portion of the report expresses an "opinion," it is

simply an opinion regarding what occurred in the past rather than

advisory opinion regarding future agency action. The entire final

NWG report, consequently, is unprotected by the deliberative privilege.

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3 The district court also concluded that the final NWG report includes

"recommendations concerning whether Encorp's claim should be compromised." J.A. at 708. After reviewing the record, as well as the final

NWG report itself, we appreciate that the report discusses facts underlying Encorp's claim. We are unable to find any portions of the final

report, however, that constitute "recommendations concerning whether

Encorp's claim should be compromised." At most, the report recites facts

that USAID may find helpful in compromising its claim with Encorp.

The document does not set forth recommendations concerning whether

USAID should compromise that claim, and if so, how it should proceed

to do that.

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Nor does the final NWG report "bear on the formulation or exercise of agency policy-oriented judgment." Virginia Beach, 995 F.2d

at 1254. The district court concluded that the final NWG report is relevant to the government's "policy" of evaluating and settling

Encorp's claim against USAID. While acknowledging that this is not

the traditional understanding of a governmental"policy," the district

court nevertheless declined "to limit the deliberative process privilege

to cases that only relate to more generalized policy-making decisions

as opposed to decisions made in specific cases . . . because both situations implicate the concerns that motivate the privilege." J.A. at 711.

This reasoning, taken to its logical conclusion, would shield virtually

all government records from disclosure. From a review of the record,

it is evident that the final report does not bear on a policy-oriented

judgment of the kind contemplated by Exemption 5. The information

included in the report at issue at most informs USAID's decision of

whether to settle Encorp's claim for delays arising out of a garden

variety construction scheduling dispute over an agricultural university

in Peshawar, Pakistan. The resolution of such a minor issue is "essentially technical and facilitative" and therefore not the type of decision

protected by the deliberative privilege. See Petroleum Information

Corp. v. Dep't of Interior, 976 F.2d 1429, 1437 (D.C. Cir. 1992)

(holding that a data file fell outside the deliberative process privilege,

even though creation of the file involved the exercise of discretion in

how to represent data, in part because the file was not used to implement "a significant policy decision" and was "essentially technical

and facilitative") (emphasis in original). Indeed, to the extent that

such a decision can be regarded as a "policy" at all, which we doubt,

it must be viewed at the very outer limits of that type of decision. It

is not at all the "stuff" of the deliberative process privilege.

This is not the typical deliberative process case where the government jealously guards certain documents which embody or incorporate a subordinate's pre-decisional advice, the disclosure of which

would chill others from offering candid advice to the agency in the

future. Nor is this a case where the disclosure of certain documents

would reveal the manner in which an agency formulates policy and

thus threaten the integrity of future agency decision-making. Rather,

this is a case where the agency asserts a privilege with respect to a

document that is seemingly entirely factual in character and that was

prepared with the expectation that it would be shared with the very

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party from whom the government now attempts to withhold the document. Under such circumstances, summary judgment properly

belongs to the appellants, not to the government agency.

B.

The district court also granted summary judgment for USAID on

the ground that the final NWG report is protected by the workproduct privilege. Documentary evidence qualifies as work-product if

it is prepared "in anticipation of litigation." E.g. National Union Fire

Ins. v. Murray Sheet Metal, 967 F.2d 980, 984 (4th Cir. 1992). That

is, "[t]he document must . . . [have been] prepared because of the

prospect of litigation;" "materials prepared in the ordinary course of

business . . . or for other non-litigation purposes" are not protected.

Id. (emphasis in original). The district court held that there was no

issue that the final NWG report is work-product primarily because

Encorp had threatened USAID with litigation before the agency commissioned the report. In this conclusion as well, we believe that the

district court erred.

USAID commissioned the final report with the purpose of sharing

it with Encorp in order to "further the completion of the project" or

"get the project done." J.A. at 342. Furthering completion of the project is a non-litigation purpose, and thus, the report was not commissioned "because of the prospect of litigation." The district court

reasoned that neither USAID's commitment to share the report nor its

intention to use the report for non-litigation purposes defeats

USAID's work-product claim because the "potential sharing of information to further settlement negotiations in no way precludes the

preparation of the document in anticipation of litigation." J.A. at 716.

The record, however, establishes not merely that USAID intended a

"potential sharing of information" with Encorp, but that USAID

indisputably intended to share the report with Encorp and actually did

share a substantial portion of the report with Encorp. Because sharing

the final report with Encorp is incompatible with withholding it from

Encorp as work-product, the final report simply cannot be considered

work-product.

III.

The foregoing analysis applies only to the final NWG report, and

with respect to the draft report and correspondences we reach a differ-

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ent conclusion. Although the Chief of USAID's Contracting Office in

Pakistan represented to Encorp its intention to share the final report,

that same official denies promising to furnish Encorp with "all correspondence" or "all written analyses of any kind" concerning the final

report. J.A. at 254. Furthermore, because we do not appear to have the

draft report or related correspondences, we are unable to perform our

own in camera review of those materials in order to determine

whether they are protected by the deliberative process or workproduct privileges. Accordingly, to the extent that there remains a dispute over these documents following our opinion today, that dispute

should be brought anew before the district court for resolution in light

of the foregoing opinion. The district court's judgment with respect

to these agency records is hereby vacated.

CONCLUSION

With respect to disclosure of the final NWG report, the judgment

of the district court is reversed and the case is remanded with instructions to enter judgment for appellant Hennessey. With respect to any

drafts of the NWG report and any correspondences between USAID

and NWG pertaining thereto, the judgment of the district court is

vacated and the case remanded for such proceedings as may be necessary.

REVERSED AND REMANDED

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