GRUMMAN AIRCRAFT ENG. CORP. v. RENEGOTIATION BOARD

J. SKELLY WRIGHT, Circuit Judge.

This appeal involves the validity of a District Court order requiring the Renegotiation Board to disclose documents explaining decisions of the Board and its decision-making delegates, the Regional Boards, made between 1962 and 1965, as to whether 14 companies1 accrued excess profits in their business with the Government. These documents were sought by Grumman Aircraft Engineering Corporation under the Freedom of Information Act, 5 U.S.C. § 552 (1970), which mandates that Government agencies, including the Renegotiation Board, make available for public inspection and copying "final opinions, including concurring and dissenting opinions, as well as orders, made in the adjudication of cases * * *." 5 U.S.C. § 552(a)(2)(A). The Act also requires disclosure of "identifiable records," 5 U.S.C. § 552(a) (3), but exempts from the disclosure requirement certain specified materials, 5 U.S.C. § 552(b)(1)-(9).

This is the second time this case is before us. Initially the District Court refused to order disclosure on the ground that the requested documents contained trade secrets and other confidential information covered by the Act's exemption for "trade secrets and commercial or financial information obtained from a person and privileged or confidential," 5 U.S.C. § 552(b) (4). On appeal we held that Congress did not intend to exempt an entire document simply because it contained confidential information, that the proper procedure where exempted data is contained in the requested documents is to accommodate the Freedom of Information Act's dual policy of promoting public awareness and administrative fairness, on the one hand, and the need for justifiable secrecy on the other, by striking identifying details from the documents prior to release. We remanded the case to the District Court for further proceedings to determine precisely which of the documents or parts thereof sought by Grumman should be produced under the Act. Grumman Aircraft Engineering Corp. v. Renegotiation Board, 138 U.S.App.D.C. 147, 425 F.2d 578 (1970).

On remand the Board agreed to produce many of the documents requested, but disagreement remained as to whether certain documents generated by the Board and its statutorily authorized decision-making delegates, the Regional Boards, in the decision-making process were "final opinions, including concurring and dissenting opinions," producible under 5 U.S.C. § 552(a) (2) (A) or, as appellant contends, inter- or intra-agency memoranda exempt from production under 5 U.S.C. § 552(b) (5). The District Court's opinion, D.D.C., 325 F.Supp. 1146 (1971), describes at length the kinds of documents at issue and holds that the documents requested by Grumman should be produced under the Freedom of Information Act as "final opinions, including concurring and dissenting opinions," of the Renegotiation Board. Given the evident care of the District Court's delineation of the facts and its discussion of the issues, we avoid covering the same ground. We hold its findings of fact not clearly erroneous and concur in its conclusions and its judgment. Indeed, we find its judgment as to the principal documents still in dispute supportable on two additional grounds.2

I

The District Court ordered disclosure of Regional Board reports in Class A renegotiation cases3 where pursuant to Renegotiation Board regulations (a) the Regional Board decides that a clearance, or finding of no excess profits liability, is proper4; (b) the Renegotiation Board (hereinafter the National Board) notifies the Regional Board that "it is in accord with the [Regional Board's] determination"5; and (c) the Regional Board issues a notice to the contractor under investigation of his non-liability.6 These reports, which the District Court found were "prepared and signed by a Regional Board member, and [were] signed on behalf of the Regional Board by its Chairman," 325 F.Supp. at 1153, were held by the District Court to be a "final opinion of the [National] Board," ibid., and thus required to be produced under the Freedom of Information Act.

The National Board strongly challenges this disposition on the ground that the Regional Boards are merely advisory to the National Board, that the National Board is in fact the final decision-maker in cases of this sort, and, finally, that the unrecorded and undisclosed reasons for the National Board's agreement with the Regional Board's finding might have been different from those contained in the Regional Board report. As the District Court's opinion indicated, this argument loses much of its force when one considers the perfunctory nature of the National Board's review in such cases, the fact that in cases of this sort the National Board, in accepting the determination of the Regional Board, rejects the alternative of assigning the case to its own docket for independent consideration by a division of its membership,7 and the fact that the determination reflected in the clearance notice to the contractor is attributed to "the Regional Board pursuant to due delegation of authority" under National Board regulations.8

Conceding, arguendo, that the Regional Board report is not tantamount to a "final opinion" of the National Board, we have no doubt that it does represent the "final opinion" of the Regional Board. Not only is the report, as the District Court found, "prepared and signed by a Regional Board member, and * * * signed on behalf of the Regional Board by its Chairman," 325 F.Supp. at 1153, but the practicalities of National Board procedure dictate this conclusion. When the Regional Board decides that a clearance should be granted in the type of case at issue here, the report is the only document in the file it forwards to the National Board which purports to justify the Regional Board's clearance recommendation in terms of the statutory standards the National Board is required to apply to the facts of the case.9 And the National Board itself acknowledges that the report is treated at the National Board level as the Regional Board's justification of its recommendation.10 Given this function, plus the formal role it is assigned in the National Board's regulations, 32 C.F.R. § 1473.2(a), and the District Court's findings, the Regional Board report clearly occupies the same opinion status as any document produced by a decision-maker in an adjudicatory-like process and forwarded to a reviewing tribunal.

For purposes of the Freedom of Information Act, the crucial question then becomes whether the Regional Board, wholly apart from the National Board, is to be considered an "agency" to which the provisions of the Act, including the requirement of disclosure of "final opinions," applies. Compare Soucie v. David, 145 U.S.App.D.C. 144, 149-153, 448 F.2d 1067, 1072-1076 (1971), with International Paper Co. v. FPC, 2 Cir., 438 F.2d 1349, 1359, cert. denied, 404 U.S. 827, 92 S.Ct. 61, 30 L. Ed.2d 56 (1971). We believe the Regional Board should be so considered.

The statutory definition of "agency" in the Freedom of Information Act is supplied in Section 2 of the Administrative Procedure Act, 5 U.S.C. § 551(1) (1970),11 which states: "`agency' means each authority of the Government of the United States, whether or not it is within or subject to review by another agency * * *." This statutory language obviously disposes of any contention that the Regional Board cannot be considered an "agency" merely because it is subject, in the kinds of cases for which the reports are sought here, to de novo review by the National Board. But beyond that the provision is hardly self-defining, as both this court12 and commentators,13 have acknowledged.

We believe that several broad guidelines as to the meaning of the term "agency" have emerged and that they compel the conclusion that the Regional Boards fit within the APA definition. The leading case, of course, is Soucie v. David, supra, where we held that the Office of Science and Technology in the Office of the President is to be considered an "agency" for the purposes of Section 2 of the Administrative Procedure Act and therefore for the Freedom of Information Act. Soucie, relying on the legislative history of the APA, reasoned that the "APA apparently confers agency status on any administrative unit with substantial independent authority in the exercise of specific functions." 145 U.S.App.D.C. at 150, 448 F.2d at 1073. We then concluded that OST met this broad standard and was not to be considered merely personal staff to the President.14 We relied on several factors for this conclusion, including indications that Congress, in acquiescing in the presidential reorganization plan that created OST, believed that the unit would assume the independent administrative function of evaluating congressionally approved federal scientific programs. 145 U.S.App.D.C. at 151-152, 448 F.2d at 1074-1075.

The factors we relied on in Soucie to conclude that OST was an "agency" for purposes of the Administrative Procedure Act and thus for purposes of the Freedom of Information Act are clearly evident in this case. There is no question that the Regional Boards have been granted what Soucie termed "substantial independent authority." Equally, the Regional Boards fit the functional definition of "agency" proposed by the commentator who has given the question the most exhaustive study, Professor James O. Freedman.15 He argues that the primary task in applying the term "agency" is "to identify centers of gravity of the exercise of administrative power * * where substantial `powers to act' with respect to individuals are vested."16 The National Board regulations, setting forth the powers of the Regional Boards, point unmistakably to an affirmative conclusion in this respect as well. The Regional Boards have their own investigating and negotiating personnel with whom the contractors are instructed to discuss their excess profit liability prior to decision of their cases by the Regional Boards.17

Following these investigations and negotiations, moreover, the members of the Regional Board are instructed to make a formal recommendation as to the contractor's excess profit liability18 and this recommendation is communicated openly to the contractor prior to any assumption of jurisdiction by the National Board.19 Furthermore, in many cases the Regional Boards are empowered to make final decisions not even reviewable by the National Board.20 In other words, the Regional Boards serve as a discrete, decision-producing layer in the renegotiation process.21 And this is the case from the standpoint of the National Board, which often, but not always, reviews their decisions,22 as well as from the standpoint of the regulated parties, the contractors, who conduct negotiations with the Regional Boards and are communicated the Regional Board's conclusions prior to and separate from any possible subsequent negotiations or decisions at the National Board level.

It is also clear to us that the exercise of formal decision-making power by the Regional Boards, as authorized by delegation from the National Board, was within Congress' contemplation when it established the Renegotiation Board apparatus. Evidence that Congress believed the governmental body in question would exercise authority of the kind customarily granted legislatively was an important factor in Soucie, as we have pointed out, and we believe it exists in ample measure here. In fact, we need go no further than the Renegotiation Act of 1951 itself for a conclusive indication that Congress foresaw and approved creation of Regional Boards with the kind of decisional authority we feel is sufficient to hold that the Regional Boards are "agencies." Section 107(d) of the statute, 50 U.S.C.App. § 1217(d) (1970), provides in pertinent part:

(Emphasis added.)

There is further reason to believe that Congress meant the term "agency" in the above quoted statute — describing the subsidiary decision-making bodies now known as Regional Boards — to have the same meaning as the term has in Section 2 of the APA. For Congress, in establishing the Renegotiation Board, had the detailed requirements of the APA at the forefront of its concern. In another section of the Renegotiation Act of 1951, 50 U.S.C.App. § 1221 (1970), it specifically excluded the Board's functions from the operation of the APA with one important exception, the APA's public information provision, which is now, of course, the Freedom of Information Act. Given this legislative attention to the APA, the choice of the word "agency" must have been purposeful, lending further support to our view that the Regional Boards are covered by the term "agency" utilized in the APA and thus must be considered "agencies" for purposes of the Freedom of Information Act.

The National Board's own regulations corroborate the conclusion that the Regional Boards, apart from the National Board, are agencies subject to the Freedom of Information Act. And the National Board's own view of its responsibilities, as evidenced in its regulations, is entitled to considerable weight in interpreting the relevant statutes. See, e. g., Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965). The regulations acknowledge that pursuant to the Freedom of Information Act all clearances and agreements determining excess profits must be disclosed. 32 C. F.R. § 1480.5 (1972). In many cases these decisions to issue clearances or make agreements with contractors are solely the Regional Board's decisions and no review whatever is undertaken by the National Board.23 Thus the regulations clearly subject to the requirements of the Freedom of Information Act documents that represent administrative actions whether taken by the National Board or exclusively by the Regional Boards. This suggests to us that the National Board itself, for some purposes at least, considers the Regional Boards "agencies" separately subject to the Freedom of Information Act's provisions.

Since we conclude that the Regional Board reports at issue here should be considered "final opinions" of an "agency" and thus subject to disclosure under 5 U.S.C. § 552(a) (2) (A), it necessarily follows that the documents cannot be exempted from disclosure as "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" under Exemption 5 of the Act, 5 U.S.C. § 552(b) (5). Obviously, the two sections are mutually exclusive. By definition "final opinions, including concurring and dissenting opinions" cannot be "inter-agency or intraagency memorandums."

Exemption 5 is simply irrelevant to final agency opinions because such opinions are decisional documents rather than purely pre-decisional, consultative and deliberative inter- or intra-agency memoranda. See Section II infra. The fact that determinations by the Regional Boards are in some cases reviewable by the National Board does not make the Regional Board reports on which they are based inter- or intra-agency documents under Exemption 5 and thus not disclosable final opinions of the Regional Boards, any more than lower court opinions subject to appeal are not final. Indeed, finality is ordinarily the touchstone of appealability. See, e. g., 5 U.S. C. § 704 (1970); 28 U.S.C. § 1291 (1970). Moreover, the Administrative Procedure Act specifically provides that an "agency" may be reviewable by another agency, 5 U.S.C. § 551(1) (1970), and the Freedom of Information Act requires disclosure of final orders and opinions of "each agency," 5 U.S.C. § 552(a) (2) (A), whether or not reviewable by another agency.

II

We also believe the District Court's decision can stand for reasons other than the status of Regional Board reports as "final opinions, including concurring and dissenting opinions." The Freedom of Information Act mandates disclosure of a far broader category of agency papers. 5 U.S.C. § 552(a) (3) calls for production of "identifiable records." There is no question that the Regional Board reports fit into this category, as Grumman pointed out in its original pleadings.24 No argument has been made by the Renegotiation Board that the papers were not "identifiable" or that Grumman's request was insufficiently specific. The nature of the documents and the naming of the companies and subject matter concerned and the dates when they were prepared make clear that the Government could identify them without inordinate difficulty. See National Cable Television Assn v. FCC, 156 U.S.App.D.C. 91, 479 F.2d 183 (1973); Irons v. Schuyler, 151 U.S.App. D.C. 23, 465 F.2d 608, cert. denied, 409 U.S. 1076, 93 S.Ct. 682, 34 L.Ed.2d 664 (1972). And it is settled that once the "identifiability" requirement is met, as it is here, the central question remaining in Freedom of Information Act litigation is whether any of the Act's exemptions apply. See Bristol Myers Co. v. FTC, 138 U.S.App.D.C. 22, 25, 424 F.2d 935, 938 (1970).

As we have indicated, appellants rely on Exemption 5. In our view this exemption for "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" does not apply to the documents at issue, wholly apart from their status as "final opinions." We reach this conclusion on the ground that the policies underlying the exemption are simply not jeopardized by disclosure of the documents Grumman seeks here.

At the outset we must acknowledge that "[d]rawing such a line between what may be withheld and what must be disclosed is not without difficulties." EPA v. Mink, 410 U.S. 73, 86 93 S.Ct. 827, 835, 35 L.Ed.2d 119 (1973). At the same time it seems clear that Congress, in enacting the exemption, did not mean for agencies to refuse disclosure of documents merely on the ground that such documents were customarily circulated only within the bureaucracy. See Bristol Myers Co. v. FTC, supra, 138 U.S.App.D.C. at 26, 424 F.2d at 939. If agency custom were the touchstone for applicability of the exemption, the pro-disclosure policy of the Act would be easily evaded. As its language indicates, the exemption is intended to adopt an evidentiary privilege that preceded the Freedom of Information Act. The statutory modification of the phrase "inter-agency or intra-agency memorandums or letters" with the phrase "which would not be available by law to a party other than an agency in litigation with the agency" makes clear the Act's adoption of a pre-existent privilege from discovery, and this court has so held. Ackerly v. Ley, 137 U.S.App.D.C. 133, 138, 420 F.2d 1336, 1341 (1969).25 See also EPA v. Mink, supra, 410 U.S. at 87-90, 93 S.Ct. 827; Tennessean Newspapers, Inc. v. FHA, 6 Cir., 464 F.2d 657, 660 (1972); GSA v. Benson, 9 Cir., 415 F.2d 878, 880 (1969). And this privilege, it is also clear, aims to further a discrete set of policies. See Kaiser Aluminum & Chemical Corp. v. United States, 157 F.Supp. 939, 944-947, 141 Ct.Cl. 38 (1958); Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, D. D.C., 40 F.R.D. 318, 324-327 (1966), affirmed per curiam, 128 U.S.App.D.C. 10, 384 F.2d 979, cert. denied, 389 U.S. 952, 88 S.Ct. 334, 19 L.Ed.2d 361 (1967).

The case law involving the privilege for governmental papers which underlies Exemption 5 indicates that the purpose of nondisclosure is protection of the "consultative functions" of government. EPA v. Mink, supra, 410 U.S. at 87-90, 93 S.Ct. 827. The privilege aims to cover "advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated." Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, supra, 40 F.R.D. at 324. Put another way, the privilege aims to protect "free discussion of prospective operations and policy." Kaiser Aluminum & Chemical Corp. v. United States, supra, 157 F. Supp. at 947. Protecting the confidentiality of advice given during governmental deliberations prior to actual promulgation of policy is, of course, eminently sensible. For it is well recognized that pre-decisional deliberation requires privacy so that staffers and decision-makers alike may engage in free and frank consideration of alternatives.26 Moreover, as this court suggested recently in Sterling Drug Inc. v. FTC, 146 U.S.App.D.C. 237, 245-247, 450 F.2d 698, 706-708 (1971), the public might be misled by exposure to discussions occurring before policy affecting it were actually determined. And finally, delving into predecisional policy deliberations impairs the integrity of decisionmakers; officials should be judged by what they decide, not for the matters they properly considered before making up their minds.27

But the case for applying the privilege, and thus the exemption, is markedly weaker where the documents at stake are not solely part of the consultative and deliberative process, but rather reflect actual decisions communicated outside the agency. Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, supra, for example, stressed that the documents sought in that case were "pre-decision data."28 Professor Davis has put the matter well, arguing that the exemption should apply only to "papers which reflect the agency's group thinking in the process of working out its policy and determining what its law shall be." Davis, The Information Act: A Preliminary Analysis, 34 U.Chi.L.Rev. 761, 797 (1967).

This limitation is supported by the House Committee Report on the Freedom of Information Act which stressed that "a Government agency cannot always operate effectively if it is required to disclose documents or information which it has received or generated before it completes the process of awarding a contract or issuing an order, decision or regulation. This clause [Exemption 5] is intended to exempt from disclosure this and other information and records wherever necessary without, at the same time, permitting indiscriminate administrative secrecy." H.R.Rep.No.1497, 89th Cong., 2d Sess., 10 (1966). (Emphasis added.) And the policies supporting Exemption 5 as well as its predecessor privilege — the practical need for privacy in the formulation of policy, avoiding misleading the public, and judging officials for what they actually decide rather than what they say or write to themselves beforehand — are not jeopardized when, after a decision has been communicated to the public by a decision-maker, a document whose whole purpose and effect, as with the Regional Board reports, here, are to support that decision is disclosed. See Note, The Freedom of Information Act and the Exemption for Intra-Agency Memoranda, 86 Harv.L.Rev. 1047, 1057-1061 (1973).

Thus for purposes of applying Exemption 5 we believe a distinction must be drawn between documents composed exclusively for purposes of assisting policy formulation and those which serve to reflect policy already made and announced.29 Cf. Tennessean Newspapers, Inc. v. FHA, supra, 464 F.2d at 660-661. Indeed, in view of our obligation "to delimit the exception as narrowly as consistent with efficient Government operation," EPA v. Mink, supra, 410 U.S. at 89, 93 S.Ct. at 837, quoting S.Rep. No. 813, 89th Cong., 1st Sess., 9 (1965), it is incumbent on us to enunciate such a limitation.30 Of course, the line is not always a bright one. Some papers can serve both functions — assisting pre-decisional deliberational and unambiguously rationalizing announced decisions. For example, in American Mail Line, Ltd. v. Gulick, 133 U.S.App.D.C. 382, 411 F.2d 696 (1969), what began as a staff memorandum in the pre-decisional stage was transformed into a document that had to be disclosed by the agency's admission in its publicly communicated order that its decision was based on the memorandum.

In other cases, the basis of the decision may not be so openly admitted. But the difficulty of line-drawing between documents that reflect only pre-decisional deliberation and those which reflect decisions communicated to the public should not eviscerate the principle. And the principle is a simple one: a document which a decision-maker treats as justification for a decision communicated outside the bureaucracy to regulated parties should not be shielded from public disclosure on the ground that it was originally prepared for purposes of pre-decisional consultation, because the agency has customarily not disclosed the document, or because the agency labels the document other than what it really is. Therefore, since the Regional Board reports clearly reflect and are used to justify decisions of the Regional Board communicated to the contractors under scrutiny, they must fall outside the scope of Exemption 5 and should be disclosed as "identifiable records."

III

Several weeks after the District Court's opinion rejecting the Government's argument that the documents Grumman sought should remain privileged under Exemption 5 was issued, the Government moved for rehearing under Rule 59, Fed.R.Civ.P., requesting the District Court to consider a formal claim of executive privilege by the chairman of the Renegotiation Board for the first time during the litigation. In our view, the District Court properly denied the motion for rehearing as untimely without considering its merits.

Ordinarily Rule 59 motions for either a new trial or a rehearing are not granted by the District Court where they are used by a losing party to request the trial judge to reopen proceedings in order to consider a new defensive theory which could have been raised during the original proceedings. Echevarria v. United States Steel Corp., 7 Cir., 392 F.2d 885, 892 (1968); Rue v. Feuz Construction Co., D. D.C., 103 F.Supp. 499, 502 (1952). See also 6A J. Moore, Federal Practice ¶ 59.07 (1972). The Government attempts to avoid applicability of this well established principle, one that is required for the orderly disposition of judicial business, by arguing that it had no "occasion" to raise the executive privilege claim before the District Court opinion was handed down.

We disagree. First of all, the Government had sufficient "occasion" to raise all its legal claims long before the District Court took the case under advisement. On remand from this court's original decision, the District Court ordered a deposition taken from the chairman of the Renegotiation Board to shed more light on the Board's decisional process to help the court determine whether the documents sought were final opinions. During the deposition proceedings the Board chairman argued, as the Government does here, that allowing production of the documents sought by Grumman would mean disclosure of what he felt were essentially advisory, consultative papers. But the Government chose not to argue executive privilege in the memorandum of points and authorities subsequently submitted to the court or in oral argument before the District Court. It could not have been unaware of the possible relevance of executive privilege to its case, for it did invoke Exemption 5 of the Freedom of Information Act. And the history and language of that exemption make clear that Congress did intend to codify at least some components of the executive privilege doctrine as it had been applied in pre-Freedom of Information Act cases. See Ackerly v. Ley, supra, 137 U.S.App.D.C. at 138, 420 F.2d at 1341. Since we cannot disturb the District Court's ruling on a Rule 59 motion absent a finding of abuse of discretion, see Atchison, Topeka & Santa Fe R. Co. v. Jackson, 10 Cir., 235 F.2d 390, 394 (1956); Mayer v. Higgins, 2 Cir., 208 F.2d 781 (1953); see also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), plainly no reversal is called for.

We are asked to hold that the ordinary standards governing a District Court's decision on a Rule 59 motion have no application because of the unique nature of an executive privilege claim. Properly noting that executive privilege, like the narrower privilege against disclosure of military secrets, "is not to be lightly invoked," United States v. Reynolds, 345 U.S. 1, 7, 73 S.Ct. 528, 532, 97 L.Ed. 727 (1953), the Government says that it follows that the rule requiring clearly available defenses raised in time for trial courts to pass on them in the normal course of proceedings has no place. We are given no reasoning or serious policy arguments to support this conclusion. Just because the assertion of executive privilege, with its constitutional overtones, is a matter of obvious gravity, see Soucie v. David, supra, 145 U.S.App.D.C. at 149, 448 F.2d at 1072, and like any constitutional claim should not be used to dispose of a case where a statutory claim can do equal service, it hardly follows that the Government should be allowed to play cat and mouse by withholding its most powerful cannon until after the District Court has decided the case and then springing it on surprised opponents and the judge. In saying this, we do not mean to suggest that this particular cannon, in the context of this case, is any more than a popgun. If the claim were indeed of such gravity as the Government now suggests, we can only wonder why the Government failed to alert the District Court in a less extraordinary manner.

Affirmed.