Neighborhood Assistance Corporation of America (Naca) v. U.S. Department of Housing and Urban Development , 19 F. Supp. 3d 1 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
NEIGHBORHOOD ASSISTANCE
CORPORATION OF AMERICA,
Plaintiff,
Civil Action No. 11-cv-1175 (RLW)
v.
UNITED STATES DEPARTMENT
OF HOUSING AND URBAN
DEVELOPMENT,
Defendant.
MEMORANDUM OPINION
Plaintiff Neighborhood Assistance Corporation of America (“NACA”) brings this lawsuit
against the United States Department of Housing and Urban Development (“HUD” or the
“Department”), challenging the Department’s responses to several requests issued by NACA
under the Freedom of Information Act (“FOIA”), 5 U.S.C. §§ 552, et seq. Through this action,
NACA contests the adequacy of the Department’s search for responsive records, and asserts that
HUD improperly invokes FOIA’s statutory exemptions—in particular, the deliberative process
privilege under Exemption 5—to withhold and redact otherwise responsive materials. The case
is presently before the Court on the parties’ cross-motions for summary judgment. Having
carefully considered the parties’ briefing, the entire record in this matter, and the arguments of
counsel during the hearing on July 29, 2013, and having reviewed in camera many of the
documents withheld and redacted by HUD under FOIA Exemption 5, the Court concludes, for
the reasons that follow, that both NACA’s Amended Motion for Summary Judgment (Dkt. No.
30) and HUD’s Cross-Motion for Summary Judgment (Dkt. No. 32) will be GRANTED IN
PART and DENIED IN PART.
1
BACKGROUND
A. Factual Background
NACA is a not-for-profit corporation and advocacy organization that provides mortgage-
related assistance to primarily low- and moderate-income families and communities. NACA
operates from offices in 25 different states and the District of Columbia.
On March 1, 2011, NACA sent three separate FOIA requests to HUD. Through these
requests, NACA generally sought three categories of documents: (1) records related to HUD’s
“performance review” of NACA; (2) documents related to HUD’s investigation of NACA under
the Real Estate Settlement Procedures Act (“RESPA”), and (3) records related to HUD’s Office
of Inspector General (“OIG”) audit of NACA. (See generally Pl.’s Ex. 1). On March 4, 2011,
NACA reissued the third of these requests—the OIG audit request—directly to HUD-OIG for
processing. (Pl.’s Ex. 2). In late March, HUD originally acknowledged its receipt of NACA’s
requests, and advised NACA that the Department would need some additional time to prepare its
response, as fulfilling the request would require consultation between various HUD components,
including the Boston field office responsible for the audit. (See Pl.’s Exs. 3-5). On July 13,
2011, HUD communicated a responsive estimate to NACA, calculating that its search efforts
would take approximately three to four months to complete, at a cost of more than $120,000 in
fees to NACA. (Pl.’s Ex. 6). Shortly thereafter, on July 22, 2011, HUD-OIG directly responded
to NACA concerning the OIG audit request, producing 21 pages of responsive records, but
otherwise advising that NACA’s request for “any other documents” related to the audit was
insufficiently specific to enable a response. (Pl.’s Ex. 8).
After conferring with HUD’s Chief of the FOIA Branch, Deborah Snowden, NACA then
agreed to narrow and reframe its requests. (See Pl.’s Ex. 7). On August 2, 2011, NACA
provided HUD with the following modified FOIA requests:
2
I. Requests Related to HUD’s Performance Review Letter Dated December 21,
2010 [the “Performance Review” request]:
1. Any e-mail, memoranda, notes and/or other documents relating to HUD’s
performance review of NACA described in HUD’s December 21, 2010 letter
to NACA, including, without limitation, any earlier drafts of such letter;
2. Calendars and/or appointment schedules of HUD staff and officials
identifying meetings and/or conversations related to the aforesaid performance
review of NACA. This includes the calendars and/or appointment schedules
of Shaun Donovan, David Stevens, Vicki Bott, Ruth Roman and Brian
Siebenlist.
II. Requests Relating to HUD’s RESPA Review of NACA initiated by Letter from
HUD to NACA Dated February 2, 2011 [the “RESPA” request]:
1. Any e-mails, memoranda, notes and/or other documents relating to HUD’s
RESPA review of NACA described in HUD’s February 2, 2011 letter,
including, without limitation, any RESPA related complaints made to HUD by
any person or entity;
2. Calendars and/or appointment schedules of HUD staff and officials
identifying meetings and/or conversations related to the aforesaid RESPA
review of NACA. This includes the calendars and/or appointment schedules
of Shaun Donovan, David Stevens, Vicki Bott, Ruth Roman and Brian
Siebenlist.
III. Requests Related to the November 17, 2010 Draft Audit Report and the
February 16, 2011 Final Audit Report By the HUD Inspector General
Regarding its Audit of NACA [the “Audit” request]:
1. All e-mails, memoranda, notes and/or other documents written by any
HUD official to the HUD Inspector General, or to his employees or agents,
regarding the aforesaid audit of NACA
2. All emails, memoranda, notes and/or documents written by the HUD
Inspector General, or by his employees or agents, in response to any e-mail,
memoranda, notes or other document identified in your search for documents
responsive to request number III.1 immediately above
3. The calendars and/or appointment schedules of HUD staff and officials
identifying meetings and/or conversations related to the aforesaid audit of
NACA. This includes the calendars and/or appointment schedules of Shaun
Donovan, David Stevens, Vicki Bott, Ruth Roman and Brian Siebenlist.
(Pl.’s Ex. 9). These modified requests are the FOIA requests at issue in this case.
In responding to the Performance Review request, HUD first referred the matter to the
FOIA liaison in HUD’s Office of Housing, who identified the Single Family Program Support
3
Division—the HUD component that had undertaken the review—as the HUD component most
likely to possess responsive records. (Dkt. No. 30-12 (“Snowden Decl.”) at ¶ 8). According to
HUD, three individuals within the Single Family Program Support Division were involved with
the NACA performance review—Director Ruth Roman, Deputy Director Brian Siebenlist, and
Terri Ames, a technical representative; all three were tasked with searching their electronic and
paper files for any responsive records. (Id. ¶¶ 8-10). HUD also retrieved electronic records for
two former HUD officials, David Stevens and Vicki Bott, both of whom had been kept updated
about the status of the Single Family Program Support Division’s review of NACA. (Id. ¶ 13).
HUD retrieved electronic records from the email archives of Ms. Roman and Mr. Siebenlist as
well. (Id. ¶ 14). Along with the Office of Housing, HUD also referred the request to its Office
of Public and Indian Housing, which located no responsive records. (Id. ¶¶ 8, 15). Further,
HUD referred the Performance Review request to the Office of the Secretary, which conducted a
search of the calendar and appointment schedule of HUD Secretary Shaun Donovan for
responsive records, but the records that were located were deemed non-responsive to NACA’s
request. (Id. ¶¶ 8, 16).
In response to NACA’s Performance Review request, HUD ultimately released over
1,500 pages of records to NACA in seven rolling installments over the course of nine months.
(See Snowden Decl. at ¶¶ 18-23). As relevant to NACA’s claims, HUD also withheld 90 records
from disclosure under FOIA Exemption 5 (89 in full and 1 in part). (Id. ¶¶ 30-31). According to
HUD, “the information withheld pertains to predecisional discussions of the performance review
outlined in HUD’s December 21, 2010 letter to NACA, and drafts of that letter. This
information reflects HUD’s predecisional deliberative process and their release would discourage
open and candid advice, recommendations, and exchange of views within the agency.” (Id.).
4
In response to NACA’s RESPA request, HUD contacted the Consumer Financial
Protection Bureau (“CFPB”), to which responsibility for the RESPA investigation had been
transferred in July 2011, and requested that CFPB refer responsive records to HUD. (Id. ¶¶ 25-
26). In doing so, CFPB advised that its RESPA investigation remained ongoing, which
prompted HUD to withhold these records in their entirety under Exemption 7(A). (Id. ¶ 27). 1
Finally, in responding to NACA’s OIG Audit request, HUD referred the request directly
to HUD-OIG for processing and response. (Id. ¶ 28). In turn, HUD-OIG requested the relevant
work papers from its Boston regional office, which conducted the NACA audit. (Dkt. No. 30-13
(“Johnson Decl.”) at ¶¶ 8-9). After reviewing several hundred pages of these records, HUD-OIG
determined that 21 pages were responsive to NACA’s request and produced those documents on
or around July 22, 2011. (Id.). In addition, the OIG Information Technology Division searched
for all emails regarding the NACA audit sent to or from OIG personnel, at any time from January
2010 through March 2011. (Id. ¶ 10). Following an internal review of those email records,
HUD-OIG produced 207 pages of responsive records in mid-December 2011; of this production,
HUD-OIG redacted portions of information from 20 pages pursuant to FOIA Exemption 5. (Id.).
Around the same time, HUD-OIG made its audit file available to NACA for review in February
2012, and it subsequently released another 627 pages of records to NACA. (Id. ¶ 11). This
production contained 34 pages with some redactions made under FOIA Exemption 5. (Id.).
NACA and HUD-OIG subsequently met and conferred regarding the remaining withholdings,
and HUD-OIG agreed to release some additional records to NACA. (Id.). Ultimately, in
connection with NACA’s Audit request, HUD-OIG withheld 25 records under FOIA Exemption
5 (21 records in full and 4 in part). (See Johnson Decl. ¶¶ 12-20).
1
HUD’s response to NACA’s RESPA request is not at issue in this lawsuit.
5
B. Procedural History
NACA commenced this lawsuit on June 27, 2011. (See Dkt. No. 1). NACA originally
filed a Motion for Summary Judgment in October 2011, but following HUD’s continued
production of records over the ensuing months, the parties agreed to an amended briefing
schedule, which the Court adopted. (See Dkt. No. 28). NACA then filed its Amended Motion
for Summary Judgment, and HUD filed its Cross-Motion for Summary Judgment shortly
thereafter. (See Dkt. Nos. 30, 32). The parties appeared before the Court for a hearing on the
cross-motions on July 29, 2013, at which time the Court took the matter under submission.
Following oral argument, the Court ordered HUD to submit many of the documents withheld or
redacted pursuant to FOIA Exemption 5 for in camera review, and the Court has since reviewed
those documents. The matter is now fully ripe for consideration, and the Court’s ruling follows.
ANALYSIS
Through this case, NACA asserts two principal challenges against HUD under FOIA.
First, NACA argues that HUD did not conduct an adequate search for responsive records,
faulting the Department for failing to review the email messages of HUD Secretary Shaun
Donovan and HUD Chief of Staff, Laurel Blatchford. Second, NACA complains that HUD
improperly withheld records under FOIA Exemption 5, insisting that the so-called governmental
misconduct exception bars HUD from relying on the deliberative process privilege in this case.
After summarizing the overall legal principles guiding the appropriate analysis, the Court
considers NACA’s claims in turn.
A. Applicable Legal Standards
“FOIA was intended to ‘pierce the veil of administrative secrecy and to open agency
action to the light of public scrutiny.’” Am. Civil Liberties Union v. U.S. Dep’t of Justice, 655
6
F.3d 1, 5 (D.C. Cir. 2011) (quoting U.S. Dep’t of Air Force v. Rose, 425 U.S. 325, 361 (1976)).
In view of this objective, FOIA requires federal agencies to release all records responsive to a
proper request, unless the records fall within any of the statute’s nine enumerated exemptions.
Loving v. U.S. Dep’t of Def., 550 F.3d 32, 37 (D.C. Cir. 2008); see 5 U.S.C. § 552(b) (listing
exemptions). “FOIA cases typically and appropriately are decided on motions for summary
judgment.” Hainey v. U.S. Dep’t of Interior, 925 F. Supp. 2d 34, 40 (D.D.C. 2013). As in all
cases, “[s]ummary judgment is in order where, viewing the record in the light most favorable to
the non-moving party, the court finds that there remains no ‘genuine issue as to any material
fact.’” Petroleum Info. Corp. v. U.S. Dep’t of Interior, 976 F.2d 1429, 1433 (D.C. Cir. 1992)
(quoting FED. R. CIV. P. 56(c)).
When a requester challenges the adequacy of an agency’s search, the agency is entitled to
summary judgment on such a claim if it can “demonstrate beyond material doubt that its search
was ‘reasonably calculated to uncover all relevant documents.’” Valencia-Lucena v. U.S. Coast
Guard, 180 F.3d 321, 325 (D.C. Cir. 1999) (quoting Truitt v. U.S. Dep’t of State, 897 F.2d 540,
542 (D.C. Cir. 1990)); see also Nation Magazine v. U.S. Customs Serv., 71 F.3d 885, 890 (D.C.
Cir. 1995). In many cases, “[s]ummary judgment may be based on affidavit, if the declaration
sets forth sufficiently detailed information for a court to determine if the search was adequate.”
Students Against Genocide v. U.S. Dep’t of State, 257 F.3d 828, 838 (D.C. Cir. 2001) (internal
citation and quotation marks omitted). “If, however, the record leaves substantial doubt as to the
sufficiency of the search, summary judgment for the agency is not proper.” Truitt v. U.S. Dep’t
of State, 897 F.2d 540, 542 (D.C. Cir. 1990). The governing standard “is not whether there
might exist any other documents possibly responsive to the request, but rather whether the
search for those documents was adequate,” Weisberg v. U.S. Dep’t of Justice, 745 F.2d 1476,
7
1485 (D.C. Cir. 1984) (emphasis in original), and “adequacy is measured by the reasonableness
of the effort in light of the specific request,” Larson v. U.S. Dep’t of State, 565 F.3d 857, 869
(D.C. Cir. 2009) (citation omitted). Put another way, to secure summary judgment, “the agency
must show that it made a good faith effort to conduct a search for the requested records, using
methods which can be reasonably expected to produce the information requested.” Oglesby v.
U.S. Dep’t of Army, 920 F.2d 57, 68 (D.C. Cir. 1990).
When an agency withholds records in response to a FOIA request, the agency “bears the
burden of proving the applicability of claimed exemptions.” Am. Civil Liberties Union v. U.S.
Dep’t of Def., 628 F.3d 612, 619 (D.C. Cir. 2011); Public Citizen, Inc. v. Office of Mgmt. &
Budget, 598 F.3d 865, 869 (D.C. Cir. 2009). Inasmuch as “FOIA mandates a strong presumption
in favor of disclosure . . . the statutory exemptions, which are exclusive, are to be narrowly
construed.” Nat’l Ass’n of Home Builders v. Norton, 309 F.3d 26, 32 (D.C. Cir. 2002) (internal
citations and quotation marks omitted). Summary judgment is proper for the agency when its
“affidavits describe the justifications for nondisclosure with reasonably specific detail,
demonstrate that the information withheld logically falls within the claimed exemption, and are
not controverted by either contrary evidence in the record nor by evidence of agency bad faith.”
Larson, 565 F.3d at 862 (quoting Miller v. Casey, 730 F.2d 773, 776 (D.C. Cir. 1984)).
“Ultimately, an agency’s justification for invoking a FOIA exemption is sufficient if it appears
‘logical’ or ‘plausible.’” Id. (quoting Wolf v. CIA, 473 F.3d 370, 374 (D.C. Cir. 2007)). As a
result, “[t]o successfully challenge an agency’s showing that it complied with the FOIA, the
plaintiff must come forward with ‘specific facts’ demonstrating that there is a genuine issue with
respect to whether the agency has improperly withheld extant agency records.” Span v. U.S.
8
Dep’t of Justice, 696 F. Supp. 2d 113, 119 (D.D.C. 2010) (quoting U.S. Dep’t of Justice v. Tax
Analysts, 492 U.S. 136, 142 (1989)).
B. The Adequacy of HUD’s Search
In contesting the adequacy of the Department’s search, NACA takes issue with only one
aspect of HUD’s approach: the Department’s failure to review the email accounts of HUD
Secretary Shaun Donovan and HUD Chief of Staff, Laurel Blatchford, for potentially responsive
records. According to NACA, both Secretary Donovan and Ms. Blatchford “were intimately
involved in the subject matters of NACA’s FOIA requests.” (Dkt. No. 30 (“Pl.’s Mem.”) at 31).
As a result, NACA argues, the Department’s exclusion of their email records from its search
renders the Department’s efforts “inadequate as a matter of law.” (Id. at 33). NACA
additionally claims that HUD ignored “positive indications of overlooked materials,” insofar as
records already turned over to NACA in response to its FOIA requests reveal that the Secretary
and Ms. Blatchford are likely to possess responsive documents. (Id.). HUD disagrees,
maintaining that it conducted an adequate search. The Department rejoins that, based on the
scope of NACA’s requests as written, HUD was not obligated to search the email records of
Secretary Donovan or Ms. Blatchford. (See Dkt. No. 32 (“Def.’s Mem.”) at 5-8). HUD further
contends that none of the documents uncovered during the course of its review warranted an
expansion of its search to include these email records. (Id.).
In defending the adequacy of its search, HUD rightly focuses, first, on the text of
NACA’s requests. As relevant to this issue, NACA’s Performance Review request sought “[a]ny
e-mail, memoranda, notes and/or other documents relating to HUD’s performance review of
NACA described in HUD’s December 21, 2010 letter to NACA.” (Pl.’s Ex. 9). NACA also
requested “[c]alendars and/or appointment schedules of HUD staff and officials identifying
9
meetings and/or conversations related to the aforesaid performance review of NACA,”
specifically seeking those of “Shaun Donovan, David Stevens, Vicki Bott, Ruth Roman and
Brian Siebenlist.” (Id.). 2 In HUD’s view, it crafted an adequate search for records responsive to
these requests by identifying the agency component most likely to possess such records—the
Office of Housing’s Single Family Program Support Division—and focusing its search efforts on
the individuals within that division who were involved with NACA’s performance review. (See
Snowden Decl. at ¶¶ 8-14). The Court does not necessarily disagree that this method may have
been reasonable at the outset. See Citizens for Responsibility & Ethics in Wash. v. U.S. Dep’t of
Justice, 822 F. Supp. 2d 12, 19 (D.D.C. 2011) (deeming search adequate where “directed at the
people and offices most likely to have responsive information”); Hornbostel v. U.S. Dep’t of
Interior, 305 F. Supp. 2d 21, 27 (D.D.C. 2003), aff’d, 2004 WL 1900562 (D.C. Cir. Aug. 25,
2004) (finding search adequate where requests “involve[d] one single project dealt with
primarily by one division within the Department of Interior,” and agency focused its search
accordingly). But even assuming this approach was proper initially, it does not follow that,
during the course of its review, HUD could then ignore indications that responsive documents
were likely to be located elsewhere. And based on the record before the Court, this is precisely
where HUD fell short here.
2
For purposes of this claim, the Court focuses on NACA’s Performance Review request,
rather than its Audit request. Through the Audit request, NACA sought, in relevant part, emails
“written by any HUD official to the HUD Inspector General, or to his employees or agents,
regarding the aforesaid audit of NACA.” (Pl.’s Ex. 9). In other words, NACA only requested
email messages from HUD officials that were sent to OIG personnel. Insofar as HUD-OIG
searched all email messages sent to or from all OIG personnel during the applicable time period,
(see Johnson Decl. ¶ 10), this search would have located any responsive email messages sent by
from Secretary Donovan or Ms. Blatchford. Accordingly, the Court finds that, with respect to
NACA’s Audit request, HUD’s search was not inadequate based on its decision not to separately
review the email accounts of Secretary Donovan and Ms. Blatchford.
10
In crafting the methods used to carry out its search, an agency must “follow through on
obvious leads to discover requested documents.” Valencia-Lucena, 180 F.3d at 326. While an
agency need not “examine virtually every document in its files, following an interminable trail of
cross-referenced documents like a chain letter winding its way through the mail,” Steinberg v.
U.S. Dep’t of Justice, 23 F.3d 548, 552 (D.C. Cir. 2001), the agency nonetheless “must revise its
assessment of what is ‘reasonable’ in a particular case to account for leads that emerge during its
inquiry,” Campbell v. U.S. Dep’t of Justice, 164 F.3d 20, 28 (D.C. Cir. 1998). In the face of such
leads, “[t]he agency ‘cannot limit its search’ to only one or more places if there are additional
sources ‘that are likely to turn up the information requested.’” Valencia-Lucena, 180 F.3d at 326(quoting Oglesby, 920 F.2d at 68). In view of this framework, the D.C. Circuit has explained
that “the court evaluates the reasonableness of an agency’s search based on what the agency
knew at its conclusion rather than what the agency speculated at its inception.” Campbell, 164
F.3d at 28; see also Negley v. FBI, 169 F. App’x 591, 594-95 (D.C. Cir. 2006) (unpublished).
Applying these principles, the Court agrees with NACA that the Department ignored obvious
leads suggesting that both Secretary Donovan and Ms. Blatchford are likely to possess
documents responsive to NACA’s request.
First, with respect to Secretary Donovan, NACA points to several email messages turned
over by HUD that show the Secretary’s direct involvement in HUD’s decision to withhold
NACA’s fiscal grant. (See Pl.’s Ex. 50) (explaining that the decision was Secretary Donovan’s
“call”); (Pl.’s Ex. 51) (consisting of email chain between Secretary Donovan and Assistant
Secretary of Housing Stevens concerning the suspension of NACA’s grant). In response, HUD
seeks to portray NACA’s performance review as a separate and distinct issue from HUD’s
withholding of NACA’s grant, emphasizing that NACA’s requests only sought documents
11
related to the former subject, but not the latter. (See Def.’s Mem. at 7-8). But HUD’s effort to
compartmentalize these two subjects is not persuasive. Indeed, it is without dispute that HUD’s
ongoing performance review of NACA served as the very basis for HUD’s withholding of
NACA’s grant funds. (See Pl.’s Ex. E) (indicating that NACA’s grant was being withheld
“pending satisfactory resolution of the outstanding program compliance issues,” and extending
NACA’s deadline for “meeting the program compliance issues”). Given this undeniable link, the
documents put forward by NACA at least served as a “lead that emerge[d] during [HUD’s]
inquiry,” Campbell, 164 F.3d at 28—if not a “positive indication of overlooked materials,”
Valencia-Lucena, 180 F.3d at 326—and HUD was required under FOIA to adjust its search
accordingly. That is, upon learning that Secretary Donovan was personally involved with the
decision to withhold NACA’s grant based on HUD’s ongoing performance review, HUD should
have pursued that lead by searching the Secretary’s email messages for other responsive records
related to HUD’s performance review of NACA.
The same is equally true—if not more true—with respect to Ms. Blatchford’s records.
After NACA responded to HUD’s performance review by letter dated March 31, 2011, the
Department prepared a further response to NACA in or around July 2011. Significantly, NACA
points to several documents establishing that HUD officials secured Ms. Blatchford’s “okay” and
“go-ahead” before sending out this additional response. (See Pl.’s Ex. 58) (“I left a signed letter
to NACA on your desk. Kevin was going to check with Laurel [Blatchford] to see if she says if it
is okay to send out.”); (Pl.’s Ex. 59) (“Got the go-ahead from Laurel [Blatchford] to finalize and
send the NACA letter.”). Since Ms. Blatchford appears to have directly reviewed and approved
the Department’s response concerning NACA’s performance review, it seems likely that she
might possess additional records responsive to NACA’s request. Consequently, even if the
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Department did not think Ms. Blatchford a probable source of responsive documents at the outset
of its search, the exhibits cited by NACA are the sort of leads that obligate HUD to reassess the
reasonableness of its search under Campbell and Valencia-Lucera. It may be that HUD’s search
of these sources yields no additional records, but until HUD pursues these leads, the Court
cannot say that an adequate search has occurred. 3
In sum, the Court agrees that the Department should have reviewed Secretary Donovan’s
and Ms. Blatchford’s email messages in responding to NACA’s Performance Review request. 4
C. The Propriety of HUD’s Withholdings
NACA additionally challenges HUD’s reliance on FOIA’s statutory exemptions to
withhold documents. Before addressing the merits of NACA’s challenges, the Court pauses to
delineate those aspects of HUD’s withholdings that NACA does not contest. First, with respect
to NACA’s RESPA request, HUD transferred referred this request to the CFPB, which advised
HUD that its investigation remained ongoing. (Snowden Decl. ¶¶ 25-27, 35). As a result, HUD
withheld all potentially responsive records under Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), and
NACA does not take issue with this this determination. Nor does NACA contest HUD’s
withholding and/or redaction of documents pursuant to Exemption 6. See id. § 552(b)(6).
3
The Court also agrees with NACA that HUD’s failure to pursue these leads is particularly
unreasonable given that NACA brought the above-described records to HUD’s attention during
the course of the Department’s rolling productions. (See Dkt. No. 30-2 (“Weber Decl.”) at ¶ 21).
While the Department correctly observes that an agency “is not obliged to look beyond the four
corners of the request for leads to the location of responsive documents,” Kowalczyk v. U.S.
Dep’t of Justice, 73 F.3d 386, 389 (D.C. Cir. 1996), this principle does not grant an agency carte
blanche to ignore additional leads that unmistakably come to light during its search efforts, see
id. (“This is not to say that the agency may ignore what it cannot help but know.”).
4
Given the narrow scope of NACA’s argument, the Court expresses no opinion as to
whether HUD’s search was inadequate in any other respects. Nor does the Court express any
view on NACA’s claim that HUD’s decision not to search these files was motivated by bad faith,
or some desire to shield Secretary Donovan and Ms. Blatchford from involvement with “a
politically motivated program review of NACA,” as NACA charges. (See Pl.’s Mem. at 33).
13
Instead, NACA’s challenge is confined to HUD’s withholdings under Exemption 5, and
focuses particularly on HUD’s reliance on the deliberative process privilege, though NACA
contests the propriety of HUD’s withholdings pursuant to the attorney-client privilege as well.
The Court tackles these issues below.
1. The Deliberative Process Privilege
FOIA Exemption 5 permits an agency to withhold from public 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). “Courts have construed this
exemption to encompass the protections traditionally afforded certain documents pursuant to
evidentiary privileges in the civil discovery context, including materials which would be
protected under the attorney-client privilege, the attorney work-product privilege, or the
executive deliberative process privilege.” Dow Jones & Co. v. U.S. Dep’t of Justice, 917 F.2d
571, 573 (D.C. Cir. 1990) (quoting Formaldehyde Inst. v. U.S. Dep’t of Health & Human Servs.,
889 F.2d 1118, 1121 (D.C. Cir. 1989)). This case turns principally on the scope of the last of
these privileges—the deliberative process privilege.
As the full D.C. Circuit has observed, the deliberative process privilege rests on the
principle that “the quality of administrative decision-making would be seriously undermined if
agencies were forced to operate in a fishbowl.” Wolfe v. U.S. Dep’t of Health & Human Servs.,
839 F.2d 768, 773 (D.C. Cir. 1988) (en banc); see also Dow Jones & Co., 917 F.2d at 573.
Stated differently, the privilege “protects creative debate and candid consideration of alternatives
within an agency,” along with “the integrity of the decision-making process itself by confirming
that individuals should be judged by what they decided, not for matters they considered before
making up their minds.” Jordon v. U.S. Dep’t of Justice, 591 F.2d 753, 772-73 (D.C. Cir. 1978)
14
(en banc), overruled on other grounds by Crooker v. ATF, 670 F.2d 1051 (D.C. Cir. 1981) (en
banc). Two criteria must be satisfied in order for the privilege to apply. The agency must show
that the withheld document is: (1) “predecisional,” in the sense that it temporally precedes the
decision to which it relates; and (2) “deliberative,” such that it reflects “the give and take of the
consultative process.” Coastal States Gas Corp. v. U.S. Dep’t of Energy, 617 F.2d 854, 866
(D.C. Cir. 1980). In this way, the privilege protects “recommendations, draft documents,
suggestions, and other subjective documents which reflect the personal opinions of the writer
rather than the policy of the agency.” Id. The “key question” in determining whether material
qualifies “as deliberative” is “whether disclosure of the information would discourage candid
discussion within the agency.” Access Reports v. U.S. Dep’t of Justice, 926 F.2d 1192, 1195
(D.C. Cir. 1991) (internal quotation marks and citations omitted).
Relying on the deliberative process privilege in this case, HUD withheld 90 records from
disclosure in response to NACA’s Performance Review request, 89 records in full and 1 in part;
for its part, HUD-OIG withheld 25 records in response to NACA’s Audit request—21 records in
full and 4 in part. (See HUD Vaughn Index at ¶¶ 2a-2e, 3a-3e, 7-10, 13-14, 29, 32, 35-38, 41-42;
see also Johnson Decl. ¶¶ 14, 16, 17, 17a, 17f, 17g, 18a-18p, 19b-19c, 20). Notably, NACA
does not contest that these documents satisfy the core requirements of the deliberative process
privilege. That is, NACA does not meaningfully dispute that the withheld materials are intra-
agency documents that are both predecisional and deliberative, as the privilege requires. Rather,
NACA mounts a global attack on HUD’s invocation of the deliberative process privilege,
arguing that governmental misconduct on the Department’s part precludes its reliance on the
privilege in this case.
15
2. The Governmental Misconduct Exception
As compared with the deliberative process privilege, the so-called governmental
misconduct exception is much less clearly defined. The D.C. Circuit has stated in dicta that
“where there is reason to believe the documents sought may shed light on government
misconduct, the [deliberative process] privilege is routinely denied, on the grounds that shielding
internal government deliberations in this context does not serve the public’s interest in honest,
effective government.” In re Sealed Case, 121 F.3d 729, 738 (D.C. Cir. 1999) (internal
quotation marks and citations omitted); see also id. at 746 (“[T]he [deliberative process]
privilege disappears altogether when there is any reason to believe government misconduct
occurred.”). Elsewhere, our Circuit has observed—again in dicta—that the word “misconduct”
implies “nefarious motives.” In re Subpoena Served on the Office of the Comptroller of the
Currency, 145 F.3d 1422, 1425 n.2 (D.C. Cir. 1998); see also Enviro Tech Int’l, Inc. v. U.S.
EPA, 371 F.3d 370, 377 (7th Cir. 2004) (observing that “internal discussions about a course of
agency action that would be nefarious, if not illegal, . . . would not be protected by the
deliberative process privilege”). But other than these general observations, our Court of Appeals
has never squarely applied the exception, nor has it ever defined the scope of “misconduct” that
triggers the exception’s application.
Those courts in this District to have directly wrested with the exception’s scope,
however, have construed it narrowly, limiting its application to cases of “extreme government
wrongdoing.” See Nat’l Whistleblower Ctr. v. U.S. Dep’t of Health & Human Servs., 903 F.
Supp. 2d 59, 68-69 (D.D.C. 2012); see also ICM Registry, LLC v. U.S. Dep’t of Commerce, 538
F. Supp. 2d 130, 133 (D.D.C. 2008) (same). Recognizing that “[t]he exception runs counter to
the purposes that animate the deliberative process privilege,” those courts explained the need to
apply the exception narrowly as follows:
16
If every hint of marginal misconduct sufficed to erase the privilege, the exception
would swallow the rule. In the rare cases that have actually applied the exception,
the ‘policy discussions’ sought to be protected with the deliberative process
privilege were so out of bounds that merely discussing them was evidence of a
serious breach of the responsibilities of representative government. The very
discussion, in other words, was an act of government misconduct, and the
deliberative process privilege disappeared.
Id.; see also Nat’l Whistleblower Ctr., 903 F. Supp. 2d at 68-69 (reiterating the same logic).
Moreover, the other examples of the governmental misconduct exception’s application in this
District seem to recognize a similarly high benchmark, even though those courts did not
explicitly state as much. See Alexander v. FBI, 186 F.R.D. 154, 164 (D.D.C. 1999) (finding
privilege inapplicable under FOIA Exemption 5 where documents related to misuse of a
government personnel file to discredit a witness in an ongoing investigation of the Clinton
administration); Tax Reform Research Gp. v. IRS, 419 F. Supp. 415, 426 (D.D.C. 1976)
(concluding that privilege did not apply under FOIA Exemption 5 where documents concerned
recommendation to use the powers of the IRS in a discriminatory fashion against “enemies” of
the Nixon administration). Cf. Chaplaincy of Full Gospel Churches v. Johnson, 217 F.R.D. 250,
256-58 (D.D.C. 2003) (finding that the exception precluded use of the deliberative process
privilege to withhold documents as part of the discovery process in discrimination case, where
documents were alleged to show unlawful “discrimination against non-liturgical chaplains”—the
core issue of the dispute).
Following the lead of these cases, and for the reasons espoused therein, this Court
similarly holds that to preclude application of the deliberative process privilege in the FOIA
context, the claimed governmental misconduct must be severe enough to qualify as nefarious or
extreme government wrongdoing. See Nat’l Whistleblower Ctr., 903 F. Supp. 2d at 68-69; ICM
Registry, LLC, 538 F. Supp. 2d at 133; see also Ctr. for Biological Diversity v. Office of Mgmt.
& Budget, No. 07-4997, 2009 WL 1246690, at *12 (N.D. Cal. May 5, 2009) (“The governmental
17
misconduct exception is applied only in extreme circumstances.”). With this backdrop in mind,
the Court turns to the alleged misconduct NACA inveighs against here.
NACA advances two theories of governmental misconduct. First, NACA claims that
HUD’s motives in commencing the OIG audit and the performance review were improperly
political, supposedly designed to retaliate against NACA for its heightened advocacy efforts on
Capitol Hill. Second, NACA complains that once underway, the OIG audit was improperly
conducted because HUD officials wrongly interfered with the audit, purportedly contravening
the independence and objectivity mandated by the Inspector General Act. (See generally Pl.’s
Mem. at 14-29). Following oral argument in this case, the Court reviewed, in camera, many of
the records withheld by HUD pursuant to the deliberative process privilege. 5 Having now done
so, and also taking into consideration the record in this case more broadly, the Court concludes
that the contested materials do not reveal any nefarious government wrongdoing that would
preclude HUD’s reliance on the deliberative process privilege. The Court explains its reasoning
in the sections that follow, discussing each of NACA’s theories in turn.
a. The Purportedly Improper Political Motives Underlying HUD’s OIG Audit
and Performance Review of NACA.
According to NACA, HUD began targeting NACA in response to its advocacy campaign
in Congress in the summer of 2010, through which NACA encouraged homeowners to contact
their Congressional Representatives directly to demand federal intervention in the mortgage and
home foreclosure crisis. Since NACA was a HUD-approved counseling agency, NACA asserts
5
The Court reviewed in camera all of the withheld documents that NACA specifically
requested. (See Pl.’s Mem. at 36-38). The Court’s review encompassed unredacted versions of
Plaintiff’s Exhibits 14, 22, 23, 24, 25, 26 (including withheld attachments), 27, 28, 30, 31
(including withheld attachments), 44, 68, 77, and 86. In addition, the Court reviewed the
following withheld email messages: messages from Melanie Roussell dated June 14 and 15,
2011; from Sarah Gerecke dated January 6, 2012; from Genger Charles dated January 14, 2011;
from Adria Crutchfield dated January 18, 2011; and from Lionel Lynch dated June 7, 2011.
18
that many members of Congress blamed HUD for the “ensuing public relations embarrassment”
and “demanded that HUD address NACA’s conduct.” (See Pl.’s Mem. at 6). In response,
NACA theorizes, HUD improperly initiated a retaliatory OIG audit and program review of
NACA. The Court stresses at the outset that, in arguing that that HUD abused its investigative
authority for improper political purposes, NACA faces an uphill challenge. It is well settled that
a “presumption of regularity supports the official acts of public officers and, in the absence of
clear evidence to the contrary, courts presume that they have properly discharged their official
duties.” Latif v. Obama, 677 F.3d 1175, 1178 (D.C. Cir. 2012) (quoting Sussman v. U.S.
Marshals Serv., 494 F.3d 1106, 1117 (D.C. Cir. 2007)); see also Fed. Trade Comm’n v. Bisaro,
757 F. Supp. 2d 1, 9-10 (D.D.C. 2010) (affording FTC subpoena a “presumption of regularity” in
response to an argument that it was issued “for an improper purpose”).
In support of its theory, NACA principally relies on the timing of the OIG audit’s
commencement. NACA points out that on July 28, 2010, the HUD Assistant Inspector General
for the Office of Audit recommended that the NACA audit be reconsidered, which prompted the
Regional Inspector General to place the audit “on hold.” (See Pl.’s Ex. 12). On August 5, 2010,
though, HUD-OIG officials received an email message from a Senate Appropriations Committee
staffer, Mr. Kamarck, forwarding “inquiries” about NACA that had been raised by constituents,
and the same day, the HUD Inspector General directed that the NACA audit go forward. (See
Pl.’s Ex. 36). According to NACA, “this e-mail chain dramatically depicts the political origins
of the NACA audit.” (Pl.’s Mem. at 16). But the record belies this contention. Mr. Kamarck’s
email message makes no reference whatsoever to NACA’s advocacy campaign, as NACA seems
to suggest. To the contrary, Mr. Kamarck was relaying a constituent’s concern about NACA’s
use of federal funds, and was seeking additional information concerning the extent of
19
government oversight of NACA’s programs. (See Pl.’s Ex. 36) (“Our constituent is hoping that
someone in our office might be able to advise about the oversight process to ensure that . . .
NACA funds are being used appropriately.”). 6 To the extent HUD-OIG’s audit was prompted or
accelerated by these legitimate complaints and inquiries from Congress, this hardly amounts to
the sort of improper, politically-motivated action that NACA makes it out to be. 7
Otherwise, NACA points to a statement purportedly made by HUD Assistant Regional
Inspector General Michael Motulski, during a final exit conference with NACA in February
2011. According to NACA, Mr. Motulski commented that the OIG audit had been “an
inquisition.” (See Dkt. No. 30-8 (“Marks Decl.”) at ¶ 18; Dkt. No. 30-14 (“Mejia Decl.”) at ¶
21). Notably, Mr. Motulski, in subsequent deposition proceedings, expressly denied making any
such remark to NACA representatives. (See Dkt. No. 30-15 (“Motulski Dep.”) at 56-60). But
even taking NACA’s allegations at face value, this ambiguous statement on Mr. Motulski’s part,
without more, does not establish that HUD’s OIG audit of NACA was initiated as a means of
political retribution, as NACA suggests. In short, NACA simply fails to show that the
Department’s initiation of the OIG audit was driven by political retaliation.
6
As additional support, NACA relies upon other messages from Congressional staffers to
HUD officials, asserting that “NACA’s Congressional campaign caused HUD to be ‘inundated’
with complaints from Congressional offices.” (Pl.’s Mem. at 25). But these exhibits are equally
unpersuasive. For one, much like Mr. Kamarck’s August 2010 message, many of these other
messages convey constituent complaints about NACA’s consumer practices, rather than
frustration with NACA’s advocacy efforts. (See, e.g., Pl.’s Ex. 45) (referencing a complaint
about NACA’s “inappropriate disposal of personally identifiable information” and NACA’s
failure to contact a participant in its “First Time Homebuyer program”). Moreover, many of
these communications were sent after the OIG audit was already underway, and thus cannot have
prompted the initiation of the OIG audit in the first place, as NACA suggests. (See Pl.’s Exs. 45,
61, 62, 63, 64) (messages dated between August 17 and November 2, 2010).
7
Indeed, during oral argument, NACA’s counsel conceded that there is nothing improper
about Congress forwarding constituent complaints to HUD, nor with HUD responding to
complaints it received from Congress.
20
Nor does NACA establish that HUD’s performance review of NACA was the product of
“HUD’s politically motivated reaction to NACA’s Congressional campaign.” (Dkt. No. 35
(“Pl.’s Reply”) at 5). Under applicable HUD regulations, “HUD may conduct periodic . . .
performance reviews of all participating agencies [in the Housing Counseling Program],” and
that “review will consist of a review of the participating agency’s compliance with all program
requirements.” 24 C.F.R. § 214.307(a), (b). In arguing that HUD’s wielded this authority for
improper political purposes, NACA points to the supposedly close connection between HUD’s
review letter and Congressional complaints about NACA forwarded to HUD. In particular,
NACA cites to email messages written by HUD officials expressing a desire to issue the NACA
letter as soon as possible, to “demonstrate some action” to Congress. (See Pl.’s Mem. at 25-27).
Whatever support those messages might offer NACA, this theory is squarely undercut by the fact
that the program review was already underway when HUD received these Congressional
complaints. HUD began its review in August 2010, drafting the initial program review letter as
early as August 13, 2010, (see Pl.’s Ex. 73), while the messages NACA seizes upon were all
written in September 2010 and later, (see Pl.’s Ex. 63, 71-72). These documents thus lend no
strength to the notion that HUD commenced its program review as a means of politically
retaliating against NACA’s Congressional advocacy campaign, as NACA suggests.
To the contrary, HUD’s program review letter identifies several legitimate compliance
concerns with NACA’s housing counseling program, many of which plainly predate NACA’s
heightened advocacy efforts. (See Pl.’s Ex. D). HUD sought NACA’s responses in connection
with several governmental investigations into NACA by the State of South Carolina and the
Commonwealth of Virginia during 2008 and 2009, incomplete information in NACA’s quarterly
activity reports to HUD for fiscal year 2010, and NACA’s failure to provide sufficient
21
information in advance of a performance review of NACA’s Los Angeles branch office—which
HUD had notified NACA about in July 2010. (Id.). HUD also outlined several other concerns
that arose out of consumer complaints and the Department’s own reviews, including NACA’s
potential failure to discuss alternatives to NACA loans with consumer clients, NACA’s apparent
lack of follow up with housing counseling clients, and the propriety of NACA’s counseling
disclosures. (Id.). HUD’s focus on these factors—all of which HUD was authorized to review
under applicable regulations, see 24 C.F.R. § 214.307—belies NACA’s argument that the motive
behind HUD’s review was purely political.
Finally, NACA leans on the substantial overlap between the compliance areas examined
in the OIG audit, and those identified in HUD’s program review letter. Because HUD formally
issued its letter after HUD-OIG found no concerns with some of those areas in its draft audit
report circulated weeks earlier, NACA argues that there was no legitimate basis for HUD to
press forward with the program review. (See Pl.’s Reply at 5-7). The Court does not agree.
Simply because there may have been some overlap between the issues reviewed by HUD and
HUD-OIG does not establish governmental wrongdoing. As the Department rightly points out,
the scope of OIG’s audit was distinct from the purposes underlying HUD’s performance review.
The audit’s objective was “to determine whether NACA properly administered its HUD grants
used for housing counseling activities in accordance with HUD requirements.” (See Pl.’s Ex. C).
HUD’s performance review, by contrast, was to evaluate NACA’s compliance with HUD
regulations more broadly, to determine NACA’s continued approval as a participant in HUD’s
Housing Counseling Program. (See Pl.’s Ex. D). The OIG audit expressly did not consider the
latter objective. (Pl.’s Ex. C) (“Since HUD has the responsibility to approve and ensure
compliance with counseling requirements, the audit did not evaluate NACA’s initial and
22
continued approval as a counseling agency.”) (emphasis added). There is nothing improper
about the existence of some overlap in investigations conducted by an Inspector General and its
applicable agency. Cf. Adair v. Rose Law Firm, 867 F. Supp. 1111, 1118 (D.D.C. 1994)
(confirming that investigations conducted by the Resolution Trust Corporation and its Inspector
General, given their different aims and objectives, “need not be mutually exclusive”). As a
result, the Court disagrees that “the true purpose” of HUD’s program review letter was political
retribution.
Finally, as noted above, the Court has reviewed in camera many of the documents that
HUD withheld pursuant to FOIA Exemption 5. None of these materials lend any credence to
NACA’s argument that the OIG audit or HUD’s program review were politically motivated.
In sum, NACA simply fails to establish that HUD’s decision to undertake the OIG audit
or the performance review approaches the type of extreme governmental wrongdoing that would
preclude the application of the deliberative process privilege.
b. HUD’s Alleged Interference With The OIG Audit
NACA’s second governmental misconduct theory is that HUD officials improperly
influenced and interfered with HUD-OIG’s audit. Stated another way, NACA argues that
“OIG’s audit of NACA was not conducted in an ‘independent’ manner as required by law.”
(Pl.’s Mem. at 2). This “impropriety,” according to NACA, is nothing less than “the hallmark of
the audit.” (See id. at 22). Because NACA’s argument essentially hinges on its contention that
either HUD or HUD-OIG, or both, violated the Inspector General Act of 1978 (“IG Act”), 5
U.S.C. App. §§ 1, et seq., the Court begins there.
Congress passed the IG Act “to create independent and objective units . . . to conduct and
supervise audits and investigations relating to the programs and operations” of federal agencies.
23
5 U.S.C. App. § 2; see also Truckers United for Safety v. Mead, 251 F.3d 183, 186 (D.C. Cir.
2001) (“Congress structured the OIG to promote independence and objectivity.”). “In short,
Congress conferred very broad audit, investigatory, and subpoena powers on each Inspector
General, as an independent and objective unit of the department or agency, to help promote
efficiency and prevent fraud, waste, abuse, and mismanagement in federal government
programs.” Winters Ranch P’ship v. Viadero, 123 F.3d 327, 330 (5th Cir. 1997). To this end,
“Congress intended the IG’s investigatory authority to extend to the investigation of recipients of
government funding as well as to government agencies themselves.” Adair, 867 F. Supp. at
1116; U.S. Dep’t of Housing & Urban Dev. v. Sutton, 68 B.R. 89, 94 (Bankr. E.D. Mo. 1986)
(“The [IG Act] conferred upon the OIG the power and the duty to investigate HUD programs for
fraud and irregularities and to oversee compliance with HUD regulations by program
participants.”).
As the Supreme Court has made clear, “OIG’s maintain authority to initiate and conduct
investigations and audits without interference from the head of the agency.” NASA v. Fed. Labor
Relations Auth., 527 U.S. 229, 240 (1999) (citing 5 U.S.C. App. § 3(a)); see also Truckers
United for Safety, 251 F.3d at 186 (“[T]he head of an agency many not interfere with any
[Inspector General] investigation.”). Indeed, “[o]ne of the most important goals of the [IG] Act
was to make Inspectors General independent enough that their investigations and audits would
be wholly unbiased.” U.S. Nuclear Regulatory Comm’n v. Fed. Labor Relations Auth., 25 F.3d
229, 233 (4th Cir. 1994). Seizing on these principles, NACA argues that the nature of HUD’s
involvement in the OIG audit at issue in this case amounted to such “interference,” purportedly
in contravention of the IG Act. The Court disagrees.
24
Simply put, the IG Act’s prescriptions do not operate in such an absolute fashion as
NACA urges here. While the Act certainly emphasizes the importance of auditor objectivity and
independence, Congress also recognized that there must be some degree of cooperation and
interplay between an Inspector General and its designated agency. NASA, 527 U.S. at 240 (“In
conducting their work, Congress certainly intended that the various OIGs would enjoy a great
deal of autonomy. But unlike the jurisdiction of many law enforcement agencies, an OIG’s
investigative office, as contemplated by the [IG Act], is performed with regard to, and on behalf
of, the particular agency in which it is stationed.”) (emphasis added); see also S. REP. NO. 95-
1071, at 9-10 (1978), reprinted in 1978 U.S.C.C.A.N. 2676 (“[T]he Inspector General must have
a close relationship with the Secretary, enjoy his confidence and respect, and be responsive to his
concerns, both as to his specific assignments and as to the Inspector General’s overall function
in the agency.”) (emphasis added). The IG Act does not impose an absolute bar on agency
involvement with an Inspector General audit; the Act only prohibits the agency from interfering
with such an audit. See 5 U.S.C. App. § 3(a) (proscribing an agency head from “prevent[ing] or
prohibit[ing] the Inspector General from initiating, carrying out, or completing any audit or
investigation”). Involvement and interference are not coterminous.
As HUD points out, the IG Act’s provisions expressly contemplate some level of
communication and information-sharing between an agency and its Inspector General. In
carrying out its audit and investigative functions, the Inspector General is authorized:
1) to have access to all records, reports, audits, reviews, documents, papers,
recommendations, or other material available to the applicable establishment
which relate to programs and operations with respect to which that Inspector
General has responsibilities under this Act;
* * *
25
3) to request such information or assistance as may be necessary for carrying out
the duties and responsibilities provided by this Act from any Federal, State, or
local governmental agency or unit thereof;
* * *
6) to have direct and prompt access to the head of the establishment involved
when necessary for any purpose pertaining to the performance of functions and
responsibilities under this Act[.]
5 U.S.C. App. § 6(a)(1), (3), (6) (emphases added). Relatedly, the IG Act provides that an
agency “shall” furnish information or assistance to its Inspector General, “insofar as practicable
and not in contravention of any existing statutory restriction or regulation.” Id. § 3(b)(1).
HUD and HUD-OIG have also developed internal policies concerning the interaction
between HUD-OIG and HUD officials. Generally, HUD Handbook 2000.3 outlines the overall
scope of cooperation between OIG and HUD management as follows:
In order for the OIG to most effectively carry out its program integrity activities,
HUD management must recognize the need for and take an active role in such
activities. Close coordination between the Inspector General and those
responsible for program design and execution is required to maximize the use of
resources in achieving the Department’s mission efficiently. To minimize the
potential for fraud and program abuse, each group has an important role to play
but not to the exclusion of the other.
HUD HANDBOOK 2000.3 REV-4, OFFICE OF INSPECTOR GENERAL ACTIVITIES, at ¶ 6-2 (Feb.
1991) (emphasis added), available at http://portal.hud.gov/hudportal/documents/huddoc?id=
20003c6OIGH.pdf. And as particularly relevant here, in connection with external audits, HUD
guidance contemplates input from appropriate HUD officials prior to OIG’s issuance of the final
audit report: “For OIG-conducted external audits, the report issuer should discuss the audit
recommendations with appropriate HUD program officials prior to the exit conference and invite
additional input from them before final processing and issuance of the audit report.” HUD
HANDBOOK 2000.06 REV-4, AUDIT MANAGEMENT SYSTEMS (AMS), at ¶ 2-1C (Oct. 2011),
available at http://portal.hud.gov/hudportal/documents/huddoc?id= 20006CFOH.pdf. As part of
26
this process, HUD management officials may: “(1) Concur or non-concur with the audit
findings/recommendations; (2) Make known any facts not previously known to the auditor,
which may influence the manner in which matters should be reported; (3) Advise on any
corrective measures proposed or taken in response to the recommendations; and (4) Propose any
alternative action or change to the draft recommendations that would accomplish the same
results more economically.” Id. 8 This framework provides the appropriate scope of HUD
involvement during the course of an OIG audit. 9
According to NACA, the involvement by HUD officials in the OIG audit at issue here
exceeded these bounds and interfered with the requisite independence and objectivity mandated
by the IG Act. The Court does not agree. Upon review of the record in this case, including an in
camera review of many of the documents withheld by HUD under Exemption 5, the contested
materials do not reveal any improper interference with the OIG audit on HUD’s part. Instead,
the withheld documents are emblematic of the sort of legitimate, back-and-forth deliberations
8
HUD submitted excerpts from these handbooks as attachments to the Supplemental
Declaration of Richard Johnson. (See Dkt. No. 36-1). In response, NACA moved to strike this
declaration, taking issue with Mr. Johnson’s authentication and submission of these documents
for the first time on reply. (See Dkt. No. 37). For its part, HUD maintains that Mr. Johnson’s
supplemental declaration should not be stricken, particularly since the materials attached thereto
were expressly relied upon in its original briefing and were amply described in Mr. Johnson’s
prior declaration. (See Dkt. No. 38). Ultimately, the Court need not resolve this dispute because
the Court takes judicial notice of the applicable HUD Handbook excerpts summarized above.
FED. R. EVID. 201(b); see Ikon Global Markets, Inc. v. CFTC, 859 F. Supp. 2d 162, 165 n.1
(D.D.C. 2012) (taking judicial notice of a National Futures Association manual); Hamilton v.
Paulson, 542 F. Supp. 2d 37, 52 n.15 (D.D.C. 2008) (taking judicial notice of an OPM manual).
Since the Court, in turn, does not rely upon the Supplemental Johnson Declaration in rendering
its decision, NACA’s Motion to Strike will be DENIED as moot.
9
Insofar as all Inspector General audits are subject to the standards established by the
Comptroller General of the United States, the Court also independently reviewed the
Government Auditing Standards issued by the U.S. Government Accountability Office, to
determine whether these standards set forth any additional guidance on the scope of permissible
interaction between an Inspector General and its agency during an audit. However, the Court did
not uncover any information on point.
27
between HUD and HUD-OIG that the IG Act contemplates, and that the deliberative process
privilege is designed to protect.
NACA’s arguments to the contrary are unavailing. First, NACA seizes on a reference in
an OIG “Audit Workpaper,” which stated that “the approach taken by [HUD’s] Office of
General Counsel was to badger the OIG auditors.” (See Pl.’s Mem. at 18-19). NACA insists
that this statement undermines any sense of OIG independence. Having reviewed the redacted
portions of this particular “Audit Workpaper” in camera, the Court finds that while the
“badger[ing]” reference is indicative of a disagreement between officials from HUD’s Office of
General Counsel and the OIG auditors, it hardly suffices as extreme governmental wrongdoing.
See Hinckley v. United States, 140 F.3d 277, 285 (D.C. Cir. 1998) (“The deliberative process
privilege would soon be meaningless, if all someone seeking information otherwise protected
under the privilege had to establish is that there was disagreement within the governmental entity
at some point in the decisionmaking process.”). 10 In any event, the same document confirms that
any potential disagreement was resolved without interference on HUD’s part; indeed, in the very
next sentence, the OIG auditors explain that HUD officials “realized that, based on OIG audit’s
responses to Office of General Counsel’s line of questioning, their (Office of General Counsel)
knowledge of the subject matter was limited at best and that the OIG auditors were much more
knowledgeable.” (Pl.’s Ex. 23); (see also id.) (“[HUD officials] recognized that OIG was at a
10
By way of background, HUD-OIG had provided HUD officials with a version of its draft
audit report and invited feedback in late November 2010, just a couple of weeks before this
meeting. (See Pl.’s Ex. 13). During HUD’s review of the draft report, it appears that HUD
officials raised additional concerns they believed might warrant further review by HUD-OIG,
and it seems the OIG audit team was unhappy that these issues were first being raised so late in
the process. (See Pl.’s Ex. 22) (“For all this to come to light now . . . that was not communicated
or shared with us during the audit, is disheartening and disingenuous on HUD’s part.”). During
this December 2010 meeting, then, when representatives from HUD’s Office of General Counsel
questioned the OIG auditors about these newly-surfaced issues, this questioning was
understandably met with some frustration on HUD-OIG’s part.
28
disadvantage and could not perform a proper review without having access to all complaints and
the performance reviews HUD conducted at NACA.”). Thus, NACA’s focus on this isolated
“badger[ing]” reference is unpersuasive.
Otherwise, NACA makes much of the fact that the content of the final audit report differs
substantially from the content of the original draft report. It is true, as NACA stresses, that the
final draft of the audit report contained changes, including additional, substantive sections
discussing conflict of interest issues and the propriety of NACA’s disclosure statements that the
original draft report did not address. (See Pl.’s Ex. H). But the disconnect in NACA’s argument
is that there is no evidence showing that these changes were the result of anything other than
permissible cooperation between HUD and HUD-OIG in finalizing the audit report. That is,
while HUD officials may have brought new information and concerns to the attention of HUD-
OIG following their review of the draft audit report, so long as the OIG auditors then reviewed
those issues independently and made their own determinations and findings, no misconduct can
have occurred. 11 NACA also complains, in particular, that HUD pressured the auditors to
11
The Court stresses that HUD’s involvement in HUD-OIG’s external audit of NACA
raises substantially less concerns vis-à-vis the IG Act than it might in the internal audit context.
When an Inspector General is conducting an audit of its own agency, the need for independence
from agency officials in carrying out the audit is paramount. Indeed, this was one of the core
animating principles underlying the passage of the IG Act:
There is a natural tendency for an agency administrator to be protective of the programs
that he administers. In some cases, frank recognition of waste, mismanagement or
wrongdoing reflects on him personally. Even if he is not personally implicated,
revelations of wrongdoing or waste may reflect adversely on his programs and undercut
public and congressional support for them. Under these circumstances, it is a fact that
agency managers and supervisors in the executive branch do not always identify or come
forward with evidence of failings in the programs they administer. For that reason, the
audit and investigative functions should be assigned to an individual whose independence
is clear and whose responsibility runs directly to the agency head and ultimately to the
congress. This legislation accomplishes that, removing the inherent conflict of interest
which exists when audit and investigative operations are under the authority of an
individual whose programs are being audited.
29
include “footnotes” in the final report, along with “a discussion of what the report did not
examine,” both of which OIG indicated are uncommon. (See Pl.’s Mem. at 19). Because the
final report included both attributes, NACA insists that HUD improperly interfered with the audit
process. In the Court’s view, this argument unconvincingly elevates form over substance.
Relatedly, NACA points to comparisons between the draft and final versions of the audit report,
which supposedly confirm that HUD-OIG deleted 20% of the words from the original draft, and
added 45% of the words to the final draft—all after the OIG auditors consulted with HUD
officials. (See Pl.’s Exs. H, I). This argument also misses the mark, particularly since many of
the changes referenced by NACA were purely stylistic and did not impact the substantive content
of the audit report. At the end of the day, it is quite significant that the overall findings of the
OIG audit report essentially remained unchanged—NACA was found to be generally in
compliance with HUD requirements, and HUD-OIG recommended no action as a result of its
audit. (See Pl.’s Ex. H). Absent some tangible, negative consequences against NACA flowing
from the audit, it is difficult to discern how HUD’s involvement with the audit process could
amount to improper interference, much less the type of nefarious interference that would
preclude the application of FOIA Exemption 5.
* * *
In sum, the Court has carefully reviewed the record in this case, including the documents
submitted by HUD for in camera review, and, contrary to NACA’s supposition, the Court finds
no indication of the sort of extreme governmental wrongdoing that would estop HUD from
relying on the deliberative process privilege to withhold records under FOIA. Consequently, the
S. REP. 95-1071 (emphasis added). When an Inspector General is auditing an external, non-
governmental entity, as here, the conflict of interest concerns are less prevalent, which means
that the OIG need not be as rigid in resisting agency input and involvement in the audit process.
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Court finds that HUD properly withheld those documents that it deemed protected by the
deliberative process privilege under FOIA Exemption 5.
3. The Attorney-Client Communications Privilege
As a final withholding issue, NACA argues that HUD’s reliance on the attorney-client
privilege to withhold documents is unwarranted. This subject garnered minimal attention in the
parties’ briefing—indeed, NACA’s argument on this point was relegated to a footnote in it
moving papers. (See Pl.’s Mem. at 12 n.1). Rightly so, though, because nearly all of the
documents withheld under Exemption 5 on attorney-client privilege grounds were also withheld
pursuant to the deliberative process privilege. And since the Court already concluded that those
records were properly withheld under the deliberative process privilege, it need not separately
determine whether they could also be withheld on an alternative basis. See, e.g., Martin v. U.S.
Dep’t of Justice, 488 F.3d 446, 456 (D.C. Cir. 2007); Ctr. for Nat’l Sec. Studies v. U.S. Dep’t of
Justice, 331 F.3d 918, 925 (D.C. Cir. 2004). As best the Court can tell, only one document
remains an outlier—Document #23 in HUD’s Vaughn Index, an email message entitled
“Litigation Hold – NACA v. HUD.” To be sure, litigation hold letters are generally privileged,
and the NACA offers no particularized argument as to why the attorney-client communication
privilege should not and does not apply here. The Court thus concludes that HUD properly
withheld this document based on the attorney-client privilege under FOIA Exemption 5. 12
12
Under FOIA, “[i]f a document contains exempt information, the agency must still release
‘any reasonably segregable portion’ after deletion of the nondisclosable portions.” Oglesby, 79
F.3d at 1176 (quoting 5 U.S.C. § 552(b)). Though not specifically raised by NACA, the Court
has “an affirmative duty to consider the segregability issue sua sponte.” Trans-Pacific Policing
Agreement v. U.S. Customs Serv., 177 F.3d 1022, 1028 (D.C. Cir. 1999). In making this
determination, the Court properly relies upon “the description of the document[s] set forth in the
Vaughn index and the agency’s declaration that it released all segregable material.” Loving v.
U.S. Dep’t of Def., 550 F.3d 32, 41 (D.C. Cir. 2008) (citing Johnson v. Exec. Office for U.S.
Attorneys, 310 F.3d 771, 776 (D.C. Cir. 2002)). In this case, particularly in the absence of any
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D. NACA’s Request for Attorneys’ Fees
Finally, NACA seeks an award of attorneys’ fees and costs under 5 U.S.C. §
552(a)(4)(E). Under FOIA, the Court “may assess against the United States reasonable attorney
fees and other litigation costs reasonably incurred in any case . . . in which the complainant has
substantially prevailed.” 5 U.S.C. § 552(a)(4)(E)(i). In determining whether a fee award is
appropriate, our Circuit has divided the inquiry into two prongs: “fee ‘eligibility’ and fee
‘entitlement.’” Brayton v. Office of U.S. Trade Rep., 641 F.3d 521, 524 (D.C. Cir. 2011). “The
eligibility prong asks whether a plaintiff has ‘substantially prevailed’ and thus ‘may’ receive
fees.” Id. (quoting Judicial Watch, Inc. v. U.S. Dep’t of Commerce, 470 F.3d 363, 368-69 (D.C.
Cir. 2006)). “If so, the court proceeds to the entitlement prong and considers a variety of facts to
determine whether the plaintiff should receive fees.” Id. (emphasis in original). 13
The Court, for several reasons, declines to rule on NACA’s request for attorneys’ fees at
this juncture. First, NACA has not submitted any underlying documentation in support of its fee
request, as required. See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“The fee applicant
bears the burden of establishing entitlement to an award and documenting the appropriate hours
expended and hourly rates.”); see also Covington v. District of Columbia, 57 F.3d 1101, 1107
(D.C. Cir. 1995). Second, the Court’s resolution of the parties’ summary judgment motions may
facilitate more meaningful discussions to informally resolve NACA’s fee requests, absent further
judicial involvement. As such, the Court directs the parties to meet and confer in an effort to
contrary contention on NACA’s part, the Court finds that HUD’s Vaughn indices and agency
declarations are more than sufficient to satisfy its segregability burden. (See Snowden Decl. ¶
29; Johnson Decl. ¶¶ 12, 14-20).
13
More specifically, in determining whether a prevailing plaintiff is “entitled” to fees, the
Court would be required to assess four factors: “(1) the public benefit derived from the case; (2)
the commercial benefit to the plaintiff; (3) the nature of the plaintiff's interest in the records; and
(4) the reasonableness of the agency's withholding.” Davy v. CIA, 456 F.3d 162, 166-67 (D.C.
Cir. 2006) (quoting Tax Analysts, 965 F.2d at 1093).
32
reach agreement on any outstanding fee issues. See D.D.C. LOCAL CIVIL RULE 54.2(a). Without
making any findings at this point, the Court does note—with an eye toward advancing the
parties’ discussions—that NACA is likely to be awarded at least some amount of fees, given the
Court’s ruling on the adequacy of HUD’s search efforts; on the other hand, since HUD
successfully defended its withholdings under the deliberative process privilege (and otherwise),
it is unlikely that a full fee award would be justified. See Judicial Watch, 470 F.3d at 369 (“A
plaintiff’s overall success on the merits also must be considered in determining the
reasonableness of a fee award.”). Finally, even assuming NACA’s fee request is not informally
resolved, the parties will be able to prepare more targeted briefing with the benefit of the Court’s
rulings on summary judgment.
CONCLUSION
For the foregoing reasons, the Court concludes that both NACA’s Amended Motion for
Summary Judgment and HUD’s Cross-Motion for Summary Judgment are GRANTED IN
PART and DENIED IN PART. NACA’s motion is GRANTED as to the adequacy of HUD’s
search, but DENIED as to the propriety of HUD’s withholdings. Conversely, HUD’s motion is
GRANTED as to the propriety of its withholdings under FOIA’s statutory exemptions, but its
motion is DENIED as to the sufficiency of its search efforts. Finally, the Court DENIES
WITHOUT PREJUDICE NACA’s request for attorneys’ fees under 5 U.S.C. § 552(a)(1)(E).
An appropriate Order accompanies this Memorandum Opinion.
Digitally signed by Judge Robert
L. Wilkins
DN: cn=Judge Robert L. Wilkins,
o=U.S. District Court,
ou=Chambers of Honorable
Robert L. Wilkins,
Date: September 24, 2013 email=RW@dc.uscourt.gov, c=US
Date: 2013.09.24 09:59:08 -04'00'
ROBERT L. WILKINS
United States District Judge
33