Pursuant to the Government contract renegotiation process in
effect under the Renegotiation Act of 1951 for so-called Class A
cases (those in which the contractor reported profits of more than
$800,000 on the relevant contracts) during the period involved in
this case, if the Regional Board made a recommendation as to the
amount of excessive profits in the year in issue, rather than
recommending a clearance,
i.e., a unilateral determination
that a contractor realized no excessive profits during the year in
issue, the case, if the contractor declined to enter into an
agreement, would be reassigned to the Renegotiation Board (Board).
The case file, including the Regional Board Report, was then
transmitted to the Board and assigned to a division of the Board,
usually consisting of three of its five members, which, in due
course, would make its own decision and submit to the full Board a
Division Report, including a recommendation for final disposition
of the case. If the Regional Board concluded that no excessive
profits had been realized and that a clearance should therefore
issue, a "final recommendation" that a clearance be issued was sent
to the Board, which considered the case on the basis of the
Regional Board Report. Respondent brought an action pursuant to the
Freedom of Information Act (FOIA), 5 U.S.C. § 552, seeking
disclosure of certain Regional Board Reports resulting in a
recommendation of clearance and Board approval, and of Division
Reports in other cases, all related to and issued during
renegotiation proceedings involving 14 other companies during the
period 1962-1965. The District Court ultimately granted relief on
the grounds that both the Regional Board and Division Reports were
"final opinions" within the meaning of § 552(a)(2)(A), which
requires a Government agency to make available to the public "final
opinions, including concurring and dissenting opinions, as well as
orders, made in the adjudication of cases," and were not exempt
from disclosure under § 552(b)(5) (Exemption
Page 421 U. S. 169
5) as "inter-agency or intra-agency memorandums . . . which
would not be available by law to a party other than an agency in
litigation with the agency." The Court of Appeals affirmed, further
holding that, even if the Regional Board Report were not "final
opinions" of the Board, they were disclosable as final opinions of
the Regional Board, which was to be considered an "agency" for
purposes of the FOIA.
Held: Neither the Regional Board nor Division Reports
are final opinions, and they do fall within Exemption 5, since (1)
only the full Board has the power by law to make the decision
whether excessive profits exist; (2) both types of reports are
prepared prior to that decision, and are used by the Board in its
deliberations; and (3) the evidence fails to support the conclusion
that the reasoning in the reports is adopted by the Board as its
reasoning, even when it agrees with a report's conclusion. Pp.
421 U. S.
183-190.
(a) The Regional Board Reports, being prepared long before the
Board reached its decision and being used by it as a basis for
discussion, are precisely the kind of pre-decisional deliberative
advice and recommendations contemplated by Exemption 5 which must
remain uninhibited, and thus undisclosed, in order to supply
maximum assistance to the Board in reaching its decision.
Regardless of whether the Regional Boards are agencies for Class A
purposes, so that their final recommendations are inter-agency
memoranda, or are not agencies separate from the Board, so that
their recommendations are intra-agency memoranda, the Regional
Boards' total lack of decisional authority brings their reports
within Exemption 5 and prevents them from being "final opinions."
Pp.
421 U. S.
185-188.
(b) Since the Division Reports were prepared before the Board
reached its decision and to assist it in its deliberations, and
were used by the full Board as a basis for discussion, the Board
should not be deprived of such a thoroughly uninhibited version of
this valuable deliberative tool by making such reports public on
the unsupported assumption that they always disclose the final
views of at least some Board members. Pp.
421 U. S.
189-190.
157 U.S.App.D.C. 121, 482 F.2d 710, reversed.
WHITE, J., delivered the opinion of the Court, in which BURGER,
C.J., and BRENNAN, STEWART, MARSHALL, BLACKMUN, and REHNQUIST, JJ.,
joined. DOUGLAS, J., dissented. POWELL, J., took no part in the
consideration or decision of the case.
Page 421 U. S. 170
MR. JUSTICE WHITE delivered the opinion of the Court.
The issue in this case is whether certain documents -- documents
generated by the Renegotiation Board (Board) and by its Regional
Boards in performing their task of deciding whether certain
Government contractors have earned, and must refund, "excessive
profits" on their Government contracts -- are "final opinions"
explaining the reasons for agency decisions already made, and thus
expressly subject to disclosure pursuant to the Freedom of
Information Act (Act), 5 U.S.C. § 552(a)(2)(A), or are instead
pre-decisional consultative memoranda exempted from disclosure by §
552(b)(5).
See NLRB v. Sears, Roebuck & Co., ante p.
421 U. S. 132.
I
Essential to the consideration of whether the documents at issue
in this case must be disclosed pursuant to the relevant provisions
of the Act is an understanding of the renegotiation process, a
process that itself serves to define the documents in issue and
hereinafter described. [
Footnote
1]
Page 421 U. S. 171
Under the Renegotiation Act of 1951, 65 Stat. 7, as amended, 50
U.S.C.App. § 1211
et seq., the Government is entitled to
recoup from those who hold contracts or subcontracts with certain
departments of he Government any "excessive profits" received by
such persons on such contracts. The amount of the profits which
will be considered "excessive" in connection with a particular
contract depends upon the statutory factors which are set forth in
the margin. [
Footnote 2] As the
Board's name suggests, it
Page 421 U. S. 172
endeavors to, and in fact does, conclude the vast majority of
its cases by agreement. 50 U.S.C.App. § 1215(a) (1970 ed., Supp.
I). Absent an agreement, however, the Board must decide either to
issue a "clearance,"
i.e., a unilateral determination that
the contractor realized no excessive profits during the year in
issue, or to issue a unilateral order fixing excessive profits at a
specified amount and directing the contractor to refund them. The
unilateral order is final unless a
de novo determination
regarding excessive profits is sought within 90 days before the
Court of Claims. [
Footnote 3]
It is in those cases not terminated by agreement that the documents
at issue in this case were generated. [
Footnote 4] With this in mind, we turn to the details of
the renegotiation process as it existed during the period relevant
to the decision in this case. [
Footnote 5]
Persons holding contracts or subcontracts with certain
departments of the Government were required to file financial
statements as prescribed by the Board, 50 U.S.C.App. § 1215(e)(1)
(1964 ed.); 32 CFR Part 1470, if their receipts from those
contracts met the requisite jurisdictional amount, 50 U.S.C.App. §
1215(f). These statements
Page 421 U. S. 173
were reviewed by the staff of the Board, and, if that initial
review indicated the possibility that the contractor realized
"excessive" profits, the "case" was referred to one of two Regional
Boards for further action. [
Footnote 6] At the time of this assignment, each case was
designated as a Class A case or a Class B case: the former if the
contractor had reported profits of more than $800,000 on the
relevant contracts covered in his financial statement, and the
latter in all other cases. [
Footnote 7] The principal difference between Class A cases
and Class B cases was that the Regional Boards had some final
decisional authority in the latter, and none in the former. 32 CFR
§§ 1471.2(b), 1473.2(a), 1474.3(a), and 1475.3(a). Since the
documents sought by respondent in this case were all generated in
Class A cases, only the procedure applicable to those cases will be
discussed.
After reference to a Regional Board, a case was usually assigned
to a staff team consisting of an accountant and a renegotiator.
[
Footnote 8] This team, after
determining what further information from the contractor was
required, secured such information and received any submissions
Page 421 U. S. 174
the contractor might have wanted to make with regard to his
case, including his position concerning the statutory factors that
largely determined whether he had received "excessive profits," 50
U.S.C.App. § 1213(e). A document entitled "Report of Renegotiation"
was then prepared by the team. Part IA of that report, the
accountant's section, contained pertinent financial and accounting
data, and was furnished to the contractor upon request. [
Footnote 9] Part II of the Report of
Renegotiation, prepared by the renegotiator, and not furnished to
the contractor, generally contained
"an analysis and evaluation of the case; and a recommendation
with respect to the amount, if any, of excessive profits for the
fiscal year under review."
32 CFR § 1472.3(d). According to testimony given in this case, a
Part II, in outline form, would be as follows:
"A. Sources of Information"
"B. Application of Statutory Factors:"
"1. Character of Business"
"2. Capital Employed"
"3. Extent of Risk Assumed"
"4. Contribution to the Defense Effort"
"5. Efficiency"
"6. Reasonableness of Costs and Profits"
"~(a) Costs"
"~(b) Pricing"
"~(c) Profits"
"C. Special Matters"
"D. Conclusion and Recommendation."
After a Report of Renegotiation was prepared, but,
Page 421 U. S. 175
prior to its submission to the Regional Board, the team assigned
to the case endeavored to meet with the contractor to resolve "any
issues or disputed matters of fact, law or accounting." 32 CFR §
1472.3(b). The report was then submitted to the Regional Board.
After reviewing the Report of Renegotiation and the case file,
the Regional Board would make a "tentative recommendation with
respect to the amount of excessive profits realized in the fiscal
year under review." 32 CFR § 1472.3(e). [
Footnote 10] This "tentative recommendation" could "be
in an amount greater than, equal to, or less than the amount
recommended in the Report of Renegotiation."
Ibid. After a
"tentative recommendation" was made, the contractor, unless he
declined, attended a meeting with the renegotiation team at which
he was informed of the tentative recommendation of the Regional
Board, as well as the Regional Board's reasons therefor, and was
afforded the opportunity to respond. The Regional Board would then
enter a "final recommendation" either that a clearance be issued or
that excessive profits be found in an amount greater than, equal
to, or less than the tentative recommendation reached previously.
If this final recommendation of the Regional Board corresponded to
that of the staff team or panel, the report would be signed by the
chairman of the Regional Board, signifying the approval of the
staff or panel recommendation; if the Regional Board's final
recommendation differed from the prior recommendation, an addendum
would be attached to the report. The Report of Renegotiation, with
addenda, if any, will hereafter be referred to for convenience as
the Regional Board Report.
Page 421 U. S. 176
(i)
Assuming the Regional Board did not recommend a clearance, it
notified the contractor of its final recommendation in an effort to
obtain an agreement. Toward this end, the contractor, upon request,
would be furnished a "summary of the facts and reasons" (Summary)
upon which the recommendation was based. 32 CFR § 1472.3(i).
[
Footnote 11] If a
contractor did not request such a document, there is no indication
that one was ever prepared in his case.
If the contractor declined to enter into an agreement, the case
was then reassigned to the Board, to which the case file, including
the Regional Board Report, was transmitted. The case was then
assigned to a "division" of the Board, usually consisting of three
of its five members, which would undertake a study of the case.
Staff personnel would go over both Part IA and Part II of the
Regional Board Report and indicate, in memoranda, their
Page 421 U. S. 177
agreement or disagreement with the recommendation made by the
Regional Board. At an appropriate juncture, the contractor would be
afforded an opportunity to meet with the division members to
discuss his case and submit additional relevant material. The
division, in due course, would reach its own decision as to what
recommendation should be made to the Board, "not . . . bound or
limited in any manner by any evaluation, recommendation or
determination of the Regional Board." 32 CFR § 1472.4(b). The
division would then submit to the full Board a report of the case,
prepared by one of the members (Division Report), and including a
recommendation for final disposition along with additional or
contrary views, if any, of the other division members. The Division
Report is one of the categories of documents sought by respondent
under the Act.
The Board would then meet, each member having had the
opportunity to study the case file and the report submitted on
behalf of the division, discuss the case, and vote on a final
disposition. Neither the Board nor any of its members were bound by
any prior recommendations. The Board was free, after discussion, to
reject the proposed conclusion reached in the Division Report, or
to accept it for reasons other than those set forth in the report.
32 CFR § 1472.4(d). Assuming the Board did not decide that a
clearance should issue, the contractor was then notified of the
Board's conclusion, and would be given, at his request, a Summary
to enable him to decide whether to enter into an agreement with the
Board. If an agreement was not reached, the Board would then enter
a unilateral order within a specified time, 32 CFR Part 1475, and
would issue, pursuant to statute, at the request of the contractor,
a "statement of such determination, of the facts used as a basis
therefor, and of its reasons for such determination." 50
U.S.C.App.
Page 421 U. S. 178
§ 1215(a) (Statement). [
Footnote 12] Absent a contractor's request for a
Statement, there is no indication that one was ever prepared in his
case. For this type of case, the renegotiation process thus came to
an end. [
Footnote 13]
(ii)
If the Regional Board concluded that no excessive profits had
been realized by a particular contractor and that a clearance
should therefore issue -- or if the contractor agreed with the
Regional Board as to an amount of excessive profits before the case
was reassigned to the Board -- then a Division Report was never
created in that case. Instead, a "final recommendation" that a
clearance be issued or that the agreement be consummated was sent
to the Board, and the Board considered the case on the basis of the
Regional Board Report, together with comments made by the Board's
accounting and review divisions. After meeting and discussing the
case on the basis of these documents, the Board decided whether to
approve the Regional Board's conclusion. If it did, appropriate
closing documents were prepared by the
Page 421 U. S. 179
Regional Board. No explanation of the Board's reasons for
agreeing with the Regional Board's recommendation was prepared or
sent to the contractor, and it is not possible to know whether the
Board agreed with the reasoning of the Regional Board Report or
just its conclusion. If the conclusion of the Regional Board was
not approved, the case was either returned to the Regional Board
for further factfinding, or assigned to a division of the Board as
though no recommendation agreeable to the contractor had ever been
made. The Regional Board Reports in the category of cases in which
clearances were recommended and approved by the Board -- and
therefore in which no Division Report was created -- is the other
type of document in issue in this case.
II
Against the foregoing backdrop, respondent filed a complaint,
pursuant to the Act, in the District Court on June 27, 1968,
seeking disclosure of "certain final opinions, orders and
identifiable records" related to or issued during renegotiation
proceedings involving 14 other companies during the period
1962-1965. [
Footnote 14]
Respondent additionally sought certain documents related to its
then-pending renegotiation proceedings before the Board for 1965,
but later agreed that it was not seeking access to
"[i]ntra-agency memoranda and communications consisting of
advisory
Page 421 U. S. 180
opinions, conclusions, recommendations, and analyses prepared by
personnel and members of the Board"
in its own case. 138 U.S.App.D.C. 147, 150, 425 F.2d 578, 581
(1970). The District Court denied relief. On appeal, the Court of
Appeals appears to have assumed that the "opinions" sought by
respondent were limited to Statements and Summaries as defined in
32 CFR § 1480.8. [
Footnote
15] 138 U.S.App.D.C. at 148, and n. 2, 425 F.2d at 579, and n.
2. On this basis, the Court of Appeals reversed, rejecting the
claim of the Renegotiation Board that the documents sought were
"completely immune" from disclosure under 5 U.S.C. § 552(b)(4), the
provision of the Act exempting certain privileged or confidential
information submitted to the Government by any person. [
Footnote 16] The court, stating that
the Board was required to make available "
final opinions,
including concurring and dissenting opinions,'" [Footnote 17] remanded the case to the
District Court for further proceedings in which the requested
documents were to be made available after "suitable deletions." 138
U.S.App.D.C. at 150, 425 F.2d at 581.
Page 421 U. S.
181
Subsequent to the remand of the case by the Court of Appeals,
the Board turned over to respondent certain documents, including
Statements and Summaries, in attempted compliance with the mandate
of that court. Respondent, not satisfied with the documents so
disclosed, moved in the District Court for the disclosure,
inter alia, of (1) Division Reports in all cases in which
neither "Statements" nor "Summaries" were created; (2) Regional
Board Reports resulting in a clearance; and (3) any document
concurring in or dissenting from(1) and (2) above. [
Footnote 18]
On the question whether these documents were "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
District Court permitted respondent to take the deposition of the
then Chairman of the Board. That deposition of the Chairman
constitutes almost the only evidence of record in this case bearing
on this question other than the pertinent statutes and regulations.
Although conceding, as it had to on the basis of the Chairman's
deposition, that only the Board had final decisional authority, and
that it studies and considers, but does not adopt, Regional Board
or Division Reports, the District Court held that these reports
were "final opinions" for purposes of the Act, and rejected the
Board's contention that the documents were specifically exempted
from disclosure under subsection (b)(5) of the Act, 5 U.S.C. §
552(b)(5) (Exemption 5), which encompasses:
"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. "
Page 421 U. S. 182
As to the Regional Board Reports in clearance cases, the court
characterized the clearance as the "decision" of the Regional Board
"unless the Board is not in accord"; and held that,
"[i]n order for the public to be fully informed, the reasons
behind the clearance . . . must be made available, and, in this
type of case, such . . . reasons are found in the Regional Board's
report."
As to the Division Reports, the court said that, although the
Board may disagree with the reasoning of the report, "[i]t is, in
fact, the last document which explains reasons for the Board's
decision," it should "at the very least . . . reflect the analysis
of one member," and thus it must be disclosed at least as a
"concurring [or] dissenting opinion." 5 U.S.C. § 552(a)(2)(A). On
appeal, the Court of Appeals affirmed the "findings of fact" and
"conclusions" reached by the District Court and found two
additional grounds supportive of the lower court's judgment as to
the Regional Board Reports. The court held that, even if the
Regional Board Reports recommending a clearance subsequently
approved by the Board [
Footnote
19] were not "final opinions" of the Board, they were
disclosable as final opinions of the Regional Board: the Regional
Board itself was to be considered an "agency" for purposes of the
Act, and the reports were certainly its "final opinions" and, as
such, they were disclosable under the express provisions of 5
U.S.C. § 552(a)(2)(A), and therefore outside the scope of Exemption
5. In concluding that the Regional Boards are agencies, the court
relied in part on the power of the Regional Boards finally to
dispose of certain Class B
Page 421 U. S. 183
cases. [
Footnote 20] In
concluding that its decisions were "final," notwithstanding
inevitable Board review, it analogized the power of the Regional
Board in Class A cases to the power of a United States district
court: the former's decisions being reviewable by the Board and the
latter's by a United States court of appeals. The fact that the
Regional Board's decisions were subject to review did not obviate
the fact, any more than it does in the case of a United States
district court, that its decisions are "final," 157 U.S.App.D.C.
121, 128, 482 F.2d 710, 717 (1973), and that its report leading to
a clearance was perforce a "final opinion" of an "agency" subject
to disclosure under the Act. The Court of Appeals additionally held
that the Regional Board Reports were, in any event, "identifiable
records," 5 U.S.C. § 552(a)(3), which are disclosable, unless
exempt, and that these reports were not within the purview of
Exemption 5 of the Act because they "are not solely part of the
consultative and deliberative process, but, rather, reflect actual
decisions communicated outside the agency." 157 U.S.App.D.C. at
129, 482 F.2d at 718.
See NLRB v. Sears, Roebuck Co.,
ante, p.
421 U. S. 132.
The Board brought the case to this Court, and we granted
certiorari, 417 U.S. 907 (1974), setting the case for argument with
NLRB v. Sears, Roebuck & Co., ante, p.
421 U. S. 132, in
order to resolve the important questions presented particularly
with respect to the proper construction and interpretation of
Exemption 5 of the Act. For reasons set forth hereafter, we reverse
the judgment of the Court of Appeals.
III
Strictly speaking, the issue in this case is whether the
Division Reports and the Regional Board Reports fall
Page 421 U. S. 184
within Exemption 5, pertaining to
"inter-agency or intra-agency memorandums . . . 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). [
Footnote 21] As we hold today in the companion case of
NLRB v. Sears, Roebuck & Co., ante at
421 U. S. 149,
Exemption 5 incorporates the privileges which the Government enjoys
under the relevant statutory and case law in the pretrial discovery
context; and both Exemption 5 and the case law which it
incorporates distinguish between pre-decisional memoranda prepared
in order to assist an agency decisionmaker in arriving at his
decision, which are exempt from disclosure, and post-decisional
memoranda setting forth the reasons for an agency decision already
made, which are not. Because only the full Board has the power by
law to make the decision whether excessive profits exist, because
both types of reports involved in this case are prepared prior to
that decision and are used by the Board in its deliberations, and
because the evidence utterly fails to support the conclusion that
the reasoning in the reports is adopted by the Board as its
reasoning, even when it agrees with the conclusion of a report, we
conclude
Page 421 U. S. 185
that the reports are not final opinions, and do fall within
Exemption 5.
A. Regional Board Reports
It is undisputed that the Regional Boards had no legal authority
to decide whether a contractor had received "excessive profits" in
Class A cases. [
Footnote 22]
In such cases, the Regional Boards could investigate and recommend,
but only the Board could decide. 32 CFR §§ 1472.1472.4. The reports
were prepared long before the Board reached its decision. The Board
used the Regional Board Report as a basis for discussion, and, even
when it agreed with the Regional Board's conclusion, it often did
so as a result of an analysis of the flexible statutory factors
completely different from that contained in the Regional Board
Report. Chairman Hartwig testified:
"[W]hen the recommendation clearance of the Regional Board comes
up on the Board agenda, the Board simply approves or disapproves
the clearance. It does not adopt any of the memoranda that are
before it. It does not ratify or adopt any of these staff
memoranda. It simply, in the exercise of its judgment, says it is a
clearance or it isn't a clearance.
Page 421 U. S. 186
And there is no Board-adopted document which you could call an
opinion."
App. 79. The Regional Board Reports are thus precisely the kind
of pre-decisional deliberative advice and recommendations
contemplated by Exemption 5 which must remain uninhibited and thus
undisclosed, in order to supply maximum assistance to the Board in
reaching its decision. Moreover, absent indication that its
reasoning has been adopted, there is little public interest in
disclosure of a report.
"The public is only marginally concerned with reasons supporting
a [decision] which an agency has rejected, or with reasons which
might have supplied, but did not supply, the basis for a [decision]
which was actually adopted on a different ground."
NLRB v. Sears, Roebuck & Co., ante at
421 U. S. 152.
Indeed, release of the Regional Board's reports on the theory that
they express the reasons for the Board's decision would, in those
cases in which the Board had other reasons for its decision, be
affirmatively misleading.
Sterling Drug, Inc. v. FTC, 146
U.S.App.D.C. 237, 246-247, 450 F.2d 698, 707-708 (1971);
International Paper Co. v. FPC, 438 F.2d 1349, 1358 (CA2),
cert. denied, 404 U.S. 827 (1971). Accordingly, these
reports are not "final opinions," they do fall within the
protection of Exemption 5, and they are not subject to compulsory
disclosure pursuant to the Act.
The Court of Appeals' attempt to impute decisional authority to
Regional Boards by analogizing their final recommendations to the
final decisions of United States district courts must fail. The
decision of a United States district court, like the decision of
the General Counsel of the NLRB discussed in
NLRB v. Sears,
Roebuck & Co., ante at
421 U. S.
158-159, n. 25, has real operative effect independent of
"review" by a court of appeals: absent appeal by one of the
parties, the decision has the force of law; and, even if an appeal
is filed, the court
Page 421 U. S. 187
of appeals will be bound, within limits, by certain of the
district court's conclusions. [
Footnote 23] The recommendation of a Regional Board, by
contrast, has no operative effect independent of the review:
consideration of the case by the Board is not dependent on the
decision by a party to "appeal" -- such consideration is an
inevitable event without which there is no agency decision, and the
recommendation of the Regional Board carries no legal weight
whatever before the Board -- review by the latter is, as the Court
of Appeals conceded,
de novo. Indeed, "review" is an
entirely inappropriate word to describe the process by which the
Board decides whether to issue a clearance following a
recommendation to that effect by the Regional Board. The latter's
recommendation is functionally indistinguishable from the
recommendation of any agency staff member whose judgment has earned
the respect of a decisionmaker. There is simply no sense in which
Regional Boards have the power to make "final dispositions," and
thus no sense in which the explanations of their recommendations
can be characterized as "final opinions." [
Footnote 24]
See NLRB v. Sears, Roebuck
& Co., ante at
421 U. S.
158-159.
In concluding that the Regional Board Reports are within the
scope of Exemption 5, it is unnecessary to
Page 421 U. S. 188
decide whether, as respondent strenuously argues and the Court
of Appeals concluded, the Regional Boards are themselves "agencies"
for the purposes of the Act. Respondent and the court below proceed
on the premise that the final written product of an "agency's"
deliberations may never fall within Exemption 5, and reason that,
since the Regional Board Report is the final product of the
Regional Board, it must therefore be disclosable if the Regional
Board is a separate agency. [
Footnote 25] The premise is faulty, however, overlooking
as it does the fact that Exemption 5 does not distinguish between
inter-agency and intra-agency memoranda. By including inter-agency
memoranda in Exemption 5, Congress plainly intended to permit one
agency possessing decisional authority to obtain written
recommendations and advice from a separate agency not possessing
such decisional authority without requiring that the advice be any
more disclosable than similar advice received from within the
agency. Thus, if the Regional Boards are agencies for Class A
purposes, their final recommendations are inter-agency memoranda;
and, if they are not agencies separate from the Board, their
recommendations are intra-agency memoranda. In either event, the
Regional Boards' total lack of decisional authority brings their
reports within Exemption 5 and prevents them from being "final
opinions."
Page 421 U. S. 189
B. Division Reports
It is equally clear that a division of the Board has no legal
authority to decide. Once again, it may analyze and recommend, but
the power to decide remains with the full Board. The evidence is
uncontradicted that the Division Reports were prepared before the
Board reached its decision, were used by the full Board as a basis
for discussion, and, as the Chairman testified, were "prepared for
and designed to assist the members of the Board in their
deliberations"; nor is the discussion limited to the material and
analysis contained in the Division Report. Following the
discussion,
any Board member may disagree with the
report's conclusion or agree with it for reasons other than those
contained in the report. Indeed, as Chairman Hartwig testified, it
is likely that this will occur because of the highly judgmental
nature of the Board's decisions given the number and generality of
the statutory criteria. In any event, the reasoning of the Division
Report is never adopted -- though its conclusion may be -- and no
effort is made to reach agreement on anything but the result.
It is true that those who participate in the writing of the
Division Report are among those who participate in the Board's
decision, and that, human nature being what it is, they may not
change their minds after discussion by the full Board. This creates
a greater likelihood that the Board's decision will be in
accordance with the Division Report than is the case with respect
to a Regional Board Report, and that, where the Board's decision is
different, the Division Report will reflect the final views of at
least one of the Board's members.
See NLRB v. Sears, Roebuck
& Co., ante at
421 U. S.
158-159, n. 25. However, this is not necessarily so. The
Board obviously considers its discussion following the creation of
the Division Report to be of crucial importance to its decision
for, notwithstanding
Page 421 U. S. 190
the fact that a division is made up of a majority of the Board,
it has been delegated no decisional authority. The member of the
Board who wrote the report may change his mind as a result of the
discussion or, consistent with the philosophy of Exemption 5, he
may have included thoughts in the report with which he was not in
agreement at the time he wrote it. The point is that the report is
created for the purpose of discussion, and we are unwilling to
deprive the Board of a thoroughly uninhibited version of this
valuable deliberative tool by making Division Reports public on the
unsupported assumption that they always disclose the final views of
at least some members of the Board. [
Footnote 26]
Page 421 U. S. 191
The effect of this decision is that, in those cases in which
Statements and Summaries were not issued, the public will be
largely uninformed as to the basis for decisions by the
Renegotiation Board. Indeed, the decisions of both courts below --
conceding, as they both did, the absence of decisional authority in
either the Regional Boards or divisions of the statutory board --
appear to have rested in the final analysis on the notion that the
Renegotiation Board has an affirmative obligation under the Act to
make public the reasons for its decisions, and that it must
disclose its opinion,
or the nearest thing to an opinion,
in every case. However, Congress explicitly exempted the
Renegotiation Board from all provisions of
Page 421 U. S. 192
the Administrative Procedure Act except for the Public
Information Section. 50 U.S.C.App. § 1221. Thus, the
opinion-writing section of the APA, 5 U.S.C. § 557 -- which itself
applies only to "adjudication required by statute to be determined
on the record after opportunity for an agency hearing," and even
then only if the agency decision is not subject to
de novo
court review, 5 U.S.C. § 551 -- is inapplicable to Board decisions.
The Freedom of Information Act imposes no independent obligation on
agencies to write opinions. It simply requires them to disclose the
opinions which they do write.
NLRB v. Sears, Roebuck & Co.,
ante p.
421 U. S. 132. If
the public interest suffers by reason of the failure of the Board
to explain some of its decisions, the remedy is for Congress to
require it to do so. It is not for us to require disclosure of
documents, under the purported authority of the Act, which are not
final opinions, which do not accurately set forth the reasons for
the Board's decisions, and the disclosure of which would impinge on
the Board's pre-decisional processes.
The judgment of the Court of Appeals is
Reversed.
MR. JUSTICE DOUGLAS dissents.
MR. JUSTICE POWELL took no part in the consideration or decision
of this case.
[
Footnote 1]
See generally S.Rep. No. 93-927, pp. 1-2 (1974); Staff
Review of Recommendations Made on the Renegotiation Process: A
Preliminary Report 3-5 (1974) (prepared for the use of the House
Committee on Ways and Means and the Senate Committee on Finance by
the staff of the Joint Committee on Internal Revenue Taxation
(hereinafter Staff Review)).
[
Footnote 2]
Title 50 U.S.C.App. § 1213(e) reads as follows:
"(e) The term 'excessive profits' means the portion of the
profits derived from contracts with the Departments and
subcontracts which is determined in accordance with this title [§§
1211 to 1224 of this Appendix] to be excessive. In determining
excessive profits, favorable recognition must be given to the
efficiency of the contractor or subcontractor, with particular
regard to attainment of quantity and quality production, reduction
of costs, and economy in the use of materials, facilities, and
manpower; and in addition, there shall be taken into consideration
the following factors:"
"(1) Reasonableness of costs and profits, with particular regard
to volume of production, normal earnings, and comparison of war and
peacetime products;"
"(2) The net worth, with particular regard to the amount and
source of public and private capital employed;"
"(3) Extent of risk assumed, including the risk incident to
reasonable pricing policies;"
"(4) Nature and extent of contribution to the defense effort,
including inventive and developmental contribution and cooperation
with the Government and other contractors in supplying technical
assistance;"
"(5) Character of business, including source and nature of
materials, complexity of manufacturing technique, character and
extent of subcontracting, and rate of turn-over;"
"(6) Such other factors the consideration of which the public
interest and fair and equitable dealing may require, which factors
shall be published in the regulations of the Board from time to
time as adopted."
These statutory "factors" were developed by the War Contracts
Price Adjustment Board during World War II, were incorporated by
Congress into the original Renegotiation and Revenue Acts of that
era, were continued in the Renegotiation Act of 1951, and have
undergone little change since their initial development. Staff
Review,
supra, n 1, at
23, and nn. 34-36.
[
Footnote 3]
Prior to July 1971,
de novo review was by the Tax
Court.
See 85 Stat. 98.
[
Footnote 4]
Through June 30, 1970, 3,524 out of 4,006 cases not resulting in
clearances terminated by agreement. Of the remaining 482 cases, the
Board's unilateral orders were challenged in court in 203
cases.
[
Footnote 5]
The description of the renegotiation process is of the process
existing between 1962 through 1965 -- the period in which the
documents relevant to this case were generated within the Board --
notwithstanding changes made since. Unless otherwise indicated, all
citations to the Code of Federal Regulations throughout this
opinion are to the Renegotiation Board's regulations in effect
during this period (
i.e., the Code as revised January 1,
1967).
[
Footnote 6]
The reference is normally made on the basis of geographical
considerations, 32 CFR § 1471.2(a). These Regional Boards were
established in 1952 by regulation, 32 CFR § 1451.32, pursuant to
statutory authorization, 50 U.S.C.App. § 1217(d). Unlike members of
the Board, who are appointed to the Board by the President,
Regional Board members are civil servants.
[
Footnote 7]
Under certain circumstances, cases may be redesignated after
their initial designation. 3 2 CFR § 1471.2(f).
[
Footnote 8]
During the years 1962-1965, a renegotiator might be a staff
member employed by the Regional Board or a member of the Regional
Board itself. Under the Board's current regulations, a member of
the Regional Board who acts as a renegotiator in a specific case is
thereafter barred from participation in the case as a member of the
Regional Board. 32 CFR § 1472.3(d) (1974). There was no comparable
regulation in effect during the period relevant to this case.
[
Footnote 9]
32 CFR § 1472.3(d). Under 1972 amendments to the regulations,
the Report of Renegotiation was discontinued, and was replaced by
other reports not relevant to this case.
See generally 32
CFR §§ 1472.3(e)-(g), and (i) (1974).
[
Footnote 10]
Under current regulations, the Regional Board no longer makes
this "tentative recommendation" in Class A cases, 32 CFR §§
1472.3(k) and (
l) (1974).
[
Footnote 11]
This document was made available to the general public by
regulation on February 24, 1971. 32 Fed Reg. 3808, 32 CFR §
1480.5(a) (1972). When the Board first made the summaries of facts
and reasons available to the public by regulation, it specifically
stated that its action was taken"[w]ithout regard to the provisions
of 5 U.S.C. [§] 552(a)(2). . . ."
Ibid. Subsequent to the
effective date of that regulation, the District Court in this case,
notwithstanding the fact that the controversy over respondent's
access to the summaries of facts and reasons sought in this action
had apparently been mooted, held that these documents must be made
available under the Act as "final opinions" of either the Board or
the Regional Board, except in certain circumstances. 325 F. Supp.
1146, 1151-1152 (DC 1971). The Board has since amended its
regulations, indicating that its own interpretation of the Act as
to these documents is now consistent with that of the District
Court. 32 CR § 1480.5(a) (1974). Under current Board regulations,
the contractor automatically receives a document entitled "Proposed
Opinion" if he has not indicated a willingness to enter into an
agreement with the Board. 32 CFR § 1477.3(a) (1974).
[
Footnote 12]
The "Summaries" and "Statements" were similar in both format and
content. App. 35-41; 32 CFR § 1477.4. Under current Board
regulations, the Regional Board now issues to the contractor a
"Proposed Opinion," in lieu of the "summary of facts and reasons"
discussed above, and furnishes to the contractor a "Regional Board
Opinion" when the Regional Board's recommendation is forwarded to
the Board. 32 CFR §§ 1477.3(a) and (c) (1974). The Board also
issues a "Final Opinion" in place of the Statement at the same time
as it enters a unilateral order. 32 CFR § 1477.3(b) (1974). All of
these documents are available to the public. 32 CFR § 1480.5(a)
(1974).
[
Footnote 13]
A satisfied contractor had the right at this point to bring an
action in the Tax Court, which had jurisdiction to determine
de
novo whether excessive profits had been realized (
see
n 3,
supra);
jurisdiction of these cases has subsequently been transferred to
the Court of Claims.
See Renegotiation Board v. Bannercraft
Clothing Co., 415 U. S. 1,
415 U. S. 15 and
n. 14 (1974).
[
Footnote 14]
By reference in its complaint to correspondence between it and
the Board of April 26, 196, respondent requested access to
"final opinions, determinations, unilateral orders, agreements,
clearance notices and letters not to proceed issued in the
adjudication of renegotiation cases"
and
"written summaries of the facts and reasons upon which such
final opinions, determinations, unilateral orders and agreements
have been reached."
Nothing in the complaint or the letter suggests that, at that
time, respondent sought the Regional Board Report, or the Division
Report, in any of these renegotiation cases.
[
Footnote 15]
Title 32 CFR § 1480.8 read in pertinent part:
"Except as authorized . . . opinions and orders will not be
published or made available to the public . . . inasmuch as they
are regarded as confidential . . . by reason of the confidential
data furnished by contractors. . . . For the purposes of this
paragraph, the term 'opinion' includes a statement furnished
pursuant to [32 CFR Part 1477] and the term 'order' includes an
agreement to eliminate excessive profits, as well as a unilateral
determination. Opinions and orders are not cited as precedents in
any renegotiation proceedings."
Part 1477, as written during the period 1962-1967, included only
Statements and Summaries.
[
Footnote 16]
Title 5 U.S.C. § 552(b)(4) exempts from disclosure "trade
secrets and commercial or financial information obtained from a
person and privileged or confidential matters."
[
Footnote 17]
138 U.S.App.D.C. at 149, 425 F.2d at 580, quoting from 5 U.S.C.
§ 552(a)(2)(A).
[
Footnote 18]
A more detailed description of the documents sought is set out
in the opinion written by the District Court after the initial
remand from the Court of Appeals, 325 F. Supp. at 1151.
[
Footnote 19]
The District Court had held the reports of Regional Boards to be
disclosable only in instances where a Regional Board made a final
recommendation for a clearance and the Board concurred in the
recommendation.
Id. at 1154. The Court of Appeals did not
purport to extend the holding of the District Court to Regional
Board Reports in other contexts.
[
Footnote 20]
157 U.S.App. D C. 121, 126-127, and nn. 20 and 23, 482 F.2d 710,
715-716, and nn. 20 and 23 (1973).
[
Footnote 21]
Grumman claims that the documents are "final opinions" expressly
made disclosable, pursuant to 5 U.S.C. § 552(a)(2)(A). However, as
we noted in the companion case of
NLRB v. Sears, Roebuck &
Co., ante at
421 U. S.
147-148, a conclusion that the documents are within
Exemption 5 would be dispositive in the Government's favor, since
the Act "does not apply" to such documents, and a contrary
conclusion would he dispositive against the Government, since it
concedes that the documents are "identifiable records" otherwise
disclosable pursuant to 5 U.S.C. § 552(a)(3). Thus, strictly
speaking, the question whether the documents are "final opinions"
is relevant only in deciding whether Exemption 5 applies to them,
and is important only because we have construed Exemption 5 in
NLRB v. Sears, Roebuck & Co., ante at
421 U. S.
153-154, not to include "final opinions" within the
meaning of 5 U.S.C. § 552(a)(2)(A).
[
Footnote 22]
We decline to consider whether this case would be different if
the Regional Boards had
de facto decisional authority --
i.e., if, instead of making up its own mind in each case,
the Board "reviewed" the Regional Board's recommendation under a
clearly erroneous or some other deferential standard; or if the
Board failed even to review the vast bulk of the reports absent
special circumstances. There is no evidence in the record
indicating that the Regional Boards had such
de facto
authority. Indeed, the evidence is to the contrary. In a recent
review by the Comptroller General of 209 cases, the Board concurred
in the Regional Board's recommendation only 85 times. Comptroller
General, Report to the Congress: The Operations and Activities of
the Renegotiation Board 33-34 (B-163520 -- May 1973).
[
Footnote 23]
Fact determinations, for example, are reviewable under a
"clearly erroneous" standard and certain legal judgments only for
abuse of discretion.
[
Footnote 24]
The distinction, between "recommendations" and "final opinions"
subject to review, for Exemption 5 purposes, is compelling. In
order that a decisionmaker consider all the arguments in support of
all the options, those who recommend should be encouraged to make
arguments which they would not make in public, and with which they
may even disagree. However, if their recommendations were to have
operative effect, and thus qualify as decisions -- even though
subject to review -- they should be discouraged from basing their
decisions on arguments which they would not make publicly, and with
which they disagree.
[
Footnote 25]
We note in passing that, while the conclusion of the court below
that the Regional Board's status as an agency stemmed from its
power to issue "orders" in Class B cases finds support in the
cases,
International Paper Co. v. FPC, 438 F.2d 1349,
1358-1359 (CA2),
cert. denied, 404 U.S. 827 (1971);
Washington Research Project, Inc. v. Department of HEW,
164 U.S.App.D.C. 169, 504 F.2d 238 (1974),
cert. pending,
No. 74-736, the Court of Appeals never considered the possibility
that the Regional Board might be an agency for Class B purposes and
not for Class A purposes.
[
Footnote 26]
Since all of the members of the division are free to change
their minds after deliberation, and are free to place thoughts or
arguments in the Division Reports which were only tentative in the
first place, we need not reach the question whether a concurring or
dissenting opinion must be disclosed even where no opinion
expressing the view of the agency is written.
Respondent argues that Division Reports, as well as concurrences
or dissents thereto, constitute "final opinions" of the Board or
individual members of the Board, relying on a specific reference,
assertedly made to such documents, in the House Report which
accompanied the Act, H.R.Rep. No. 1497, 89th Cong., 2d Sess.
(1966). That report, in speaking to the Committee's understanding
of what is now codified as 5 U.S.C. § 552(a)(2)(A), stated:
"[Subsection (A)] requires concurring and dissenting opinions to
be made available for public inspection. The present law, requiring
most final opinions and orders to be made public, implies that
dissents and concurrences need not be disclosed. As a result of a
Government Information Subcommittee investigation a number of years
ago, two major regulatory agencies agreed to make public the
dissenting opinions of their members, but a recent survey indicated
that five agencies -- including . . . the Renegotiation Board -- do
not make public the minority views of their members."
H.R.Rep. No. 1497,
supra at 8. This statement from the
legislative history of the Act supports the proposition that
Congress intended the Board to be subject to the Act's provisions,
Renegotiation Board v. Bannercraft Clothing Co., 415 U.S.
at
415 U. S. 16,
and, at first blush, lends support to respondent's contention that
Congress assumed, in passing the Act, that the Board was issuing
"final opinions" in cases, that the Board was withholding
concurrences and dissents to those final opinions, and that §
552(a)(2)(A) was designed to put an end to this practice. Our
research convinces us, however, that this language from the House
Report is not to be so read. The "survey" referred to in the report
was conducted in 1963 by the Foreign Operations and Government
Information Subcommittee of the Committee on Government Operations
of the House. The unpublished data gathered during that survey
indicate that, in response to three questions submitted by the
subcommittee to the Board, concerning its practices with respect to
opinion writing and publication, the Board stated:
"Except as authorized in Renegotiation Board Regulations
1480.4(a) (attached), opinions and orders of the Renegotiation
Board are not published or made available to the public
(
see RBR [32 C.F.R. §] 1480.8). . . ."
As our prior discussion of 32 CFR § 1480.8, n. 15,
supra, makes clear, the "opinions" to which the Board
referred were Statements and Summaries. Thus, the reference to
concurring and dissenting opinions in the House Report with respect
to the Renegotiation Board was not to Division Reports, but was to
nonexistent concurrences to and dissents from Statements and
Summaries which were already being made public.