The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge
Plaintiff Vern McKinley brings this action against the Board of Governors of the Federal Reserve System ("Board") pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552 et seq.*fn1 Plaintiff seeks access to documents related to the Board's March 14, 2008 decision to authorize the Federal Reserve Bank of New York ("FRBNY") to extend credit to JP Morgan Chase to provide temporary emergency financing to The Bear Stearns Companies Inc. ("Bear Stearns"). In response to plaintiff's FOIA request, the Board produced a number of documents, but withheld or redacted others pursuant to FOIA Exemptions 4, 5, and 8. 5 U.S.C. § 552(b)(4)(5) & (8). Before the Court are the parties' cross-motions for summary judgment. For the reasons stated herein, the Court will grant the Board's motion for summary judgment and deny plaintiff's motion.
The Federal Reserve System is composed of the Board and twelve regional Federal Reserve Banks. The Board is a federal agency composed of seven members appointed by the President and confirmed by the Senate. (Pl.'s Statement of Material Facts ("Pl.'s Statement") ¶ 2 (Mar. 8. 2010); Def.'s Resp. to Pl.'s Statement ("Def.'s Resp.") at 2 (Apr. 22, 2010).) It supervises and regulates the operation of the Federal Reserve System, promulgates and administers regulations, and plays a major role in the supervision and regulation of the United States banking system. (Pl.'s Statement ¶ 3; Def.'s Resp. at 2.) For example, the Board is "authorized and empowered . . . (1) [t]o examine at its discretion the accounts, books, and affairs of each Federal reserve bank and of each member bank and to require such statements and reports as it may deem necessary" and "(2) [t]o require any depository institution specified in this paragraph to make, at such intervals as the Board may prescribe, such reports of its liabilities and assets as the Board may determine to be necessary or desirable to enable the Board to discharge its responsibility to monitor and control monetary and credit aggregates." 12 U.S.C. § 248. It is not, however, authorized to extend credit. (Pl's Statement ¶ 14; Def.'s Resp. at 4.)
The twelve regional Federal Reserve Banks serve as the operational arm of the nation's central banking system. (Pl.'s Statement ¶ 2; Def.'s Resp. at 2.) They receive no appropriated funds from Congress, but rather are capitalized by required contributions from member banks. (Pl.'s Statement ¶ 11; Def.'s Resp. at 4.) Each bank is a separate corporation that issues stock held by depository institutions within its district; each has its own 9-member board of directors, six of whom are elected by member banks within the district, and three of whom are appointed by the Board; and each acts as a depository for banks within its district, a lender to eligible institutions through its "discount window," a clearing agent for checks, and fulfills other responsibilities for banks within the district. (Pl.'s Statement ¶¶ 6, 8, 9; Def.'s Resp. at 3.) The regional banks, unlike the Board, are authorized to extend credit. (Pl.'s Statement ¶ 14; Def.'s Resp. at 4.)
In early March 2008, the Board became aware of potential liquidity problems at Bear Stearns, a holding company comprised of a number of different financial instiutions. (Decl. of Coryann Stefansson ("Stefansson Decl.") ¶ 7; Decl. of Margaret Celia Winter ("Winter Decl.") ¶ 11.) On Thursday, March 13, 2008, Bear Stearns' liquidity declined to levels that were inadequate to cover its maturing obligations. (Stefansson Decl. ¶ 7.) That evening, the United States Securities and Exchange Commission ("SEC") notified both the Board and the FRBNY, one of the twelve regional banks, that as things stood Bear Stearns "would have to file for bankruptcy protection the next day." (Id.) "In response to the rapidly evolving crisis, Board staff and staff of the FRBNY began collecting and sharing real-time data on the exposure of various financial institutions to Bear Stearns, as well as other information and analyses, to assess the gravity of Bear Stearns' situation, the possible impact of a Bear Stearns bankruptcy on financial institutions and markets, and the Board's possible policy responses." (Def.'s Statement of Material Facts ("Def.'s Statement") ¶ 9 (Feb. 1, 2010 (citing Stefansson Decl. ¶¶ 7-10).) Among other actions, the Board surveyed the Large Complex Banking Institutions (LCBOs) under its supervision to assess their exposure to Bear Stearns. (Stefansson Decl. ¶ 8.) The information gathered was disseminated and discussed among Board members and other Federal Reserve staff. (Id. ¶ 9.)
Ultimately, the Board concluded that "a sudden disorderly failure of Bear Stearns would have had unpredictable, but severe, consequences on the functioning of financial markets." (Id. ¶¶ 9,10.) However, "[b]ecause Bear Stearns was not a depository institution, it was not eligible to obtain financing directly from the FRBNY's discount window." (Id. ¶ 7.) Citing these "unusual and exigent circumstances" and its authority under section 13(3) of the Federal Reserve Act (Decl. of Alison Thro ("Thro Decl."), Ex. A, at 3), the Board agreed, as reflected in the minutes of its meeting on the morning of March 14, 2008, "that, given the fragile condition of the financial markets at the time, the prominent position of Bear Stearns in those markets, and the expected contagion that would result from the immediate failure of Bear Stearns, the best alternative available was to provide temporary emergency financing to Bear Stearns through an arrangement with JPMorgan Chase & Co." (Id.; Stefansson Decl. ¶ 10.) Specifically, the Board authorized the FRBNY to extend credit to JP Morgan Chase to provide a temporary loan to Bear Stearns to enable it to meet its financial obligations and to avoid filing for bankruptcy. (Thro Decl., Ex. A.). The FRBNY decided to extend the loan, and Bear Stearns did not file for bankruptcy.*fn2
On December 17, 2008, plaintiff submitted the following FOIA request to the Board: I am requesting further detail on information contained in the following minutes of the Board of Governors of the Federal Reserve dated March 14, 2008: http://www.federalreserve.gov/newsevents/press/other/other20080627a1.pdf The source of this power is Section 13(3) of the Federal Reserve Act. In particular, I am requesting any supporting memos or other information that detail the 'expected contagion that would result from the immediate failure of Bear Stearns' and the related conclusion that 'this action was necessary to prevent, correct, or mitigate serious harm to the economy or financial stability' as described in the meeting minutes. (Id.)
In responding to plaintiff's request, Board staff reviewed "a document repository containing over 28,000 pages of information." (Id. ¶¶ 4, 5.) On August 11, 2009, the Board produced 120 pages of previously released or publicly available documents. (Id. ¶ 9 & Ex. D.) On September 30, 2009, the Board identified an additional 238 pages of responsive documents. (Id. ¶10.) From this universe, the Board produced 48 pages in full, produced 27 pages with information redacted, and withheld 163 pages in full, including 8 pages containing information about the financial condition of Bear Stearns that had originated with the SEC, which the Board referred to the SEC for final disposition.*fn3 (Id.) The Board based its withholdings and redactions on FOIA Exemptions 4, 5, 6, and 8. (Id.) On January 7, 2010, the SEC informed plaintiff that it considered the documents referred to it by the Board protected from disclosure under FOIA Exemptions 5 and/or 8. (Winter Decl. ¶ 5.) The Board has produced a Vaughn Index, identifying the withheld material by "Item" number (1-38), "Bates" number(s), physical location on the page (where necessary), a description of the withheld material, and the "basis for withholding." (Thro Decl., Ex. F ("Vaughn Index").)*fn4
Defendant has moved for summary judgment, contending that its application of FOIA exemptions was proper. (Def.'s Mot. for Summ. J., Feb. 1, 2010). Its motion is supported by declarations from Alison M. Thro, Senior Counsel in the Board's Legal Division, Coryann Stefannson, Associate Director of the Board's Division of Banking Supervision and Regulation, Margaret Celia Winter, Freedom of Information Act and Privacy Act Officer at the SEC, and Michelle A. Danis, senior financial economist in the Broker-Dealer Risk Office of the SEC Division of Trading and Markets ("Danis Decl."). (Id.; Def.'s Opp'n & Reply, Apr. 22, 2010.) Plaintiff does not dispute defendant's application of FOIA Exemption 6 (Item #'s 2, 3, 19, 25, and 28), but challenges the applicability of FOIA Exemptions 4, 5 and/or 8 (Item #'s: 1, 4-22, 24, 26-27, 29-38),*fn5 and cross-moves for summary judgment.*fn6 (Pl.'s Cross-Mot. for Summ. J., Mar. 8, 2010).
The Court may grant a motion for summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the burden of demonstrating an absence of a genuine issue of material fact in dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Factual assertions in the moving party's affidavits may be accepted as true unless the opposing party submits his own affidavits or declarations or documentary evidence to the contrary. Neal v. Kelly, 963 F.2d 453, 456 (D.C. Cir. 1992).
"FOIA cases typically and appropriately are decided on motions for summary judgment." Defenders of Wildlife v. U.S. Border Patrol, 623 F. Supp. 2d 83, 87 (D.D.C. 2009) (citations omitted). "In a FOIA case, summary judgment may be granted to the government if 'the agency proves that it has fully discharged its obligations under the FOIA, after the underlying facts and the inferences to be drawn from them are construed in the light most favorable to the FOIA requester.'" Fischer v. U.S, Dep't of Justice, 596 F. Supp. 2d 34, 42 (D.D.C. 2009) (quoting Greenberg v. U.S. Dep't of Treasury, 10 F. Supp. 2d 3, 11 (D.D.C. 1998))). "An agency that has withheld responsive documents pursuant to a FOIA exemption can carry its burden to prove the applicability of the claimed exemption by affidavit." Larson v. Dep't of State, 565 F.3d 857, 862 (D.C. Cir. 2009) (citing Ctr. for Nat'l Sec. Studies v. U.S. Dep't of Justice, 331 F.3d 918, 926 (D.C. Cir. 2003)). "Summary judgment is warranted on the basis of agency affidavits when the 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." Id. (quoting Miller v. Casey, 730 F.2d 773, 776 (D.C. Cir. 1984)); see also Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir.1981); Larson, 565 F.3d at 862.*fn7
"FOIA represents a balance struck by Congress between the public's right to know and the government's legitimate interest in keeping certain information confidential." Ctr. for Nat'l Security Studies, 331 F.3d at 925 (citing John Doe Agency, 493 U.S. at 152). "While these exemptions are to be 'narrowly construed,' FBI v. Abramson, 456 U.S. 615, 630, courts must not fail to give them 'a meaningful reach and application,' John Doe Agency, 493 U.S. at 152." Id. Ultimately, an agency's justification for invoking a FOIA exemption is ...