This appeal concerns the United States Department of Agriculture’s (“USDA’s”) denial .of three Freedom of Information Act (“FOIA”) requests of appellant Lion Raisins (“Lion”). Lion, a large independent handler of California raisins, is the subject of a criminal investigation because the government suspects that Lion falsified documents related to USDA inspections of its raisins. In preparation of its defense, Lion submitted FOIA requests seeking documents related to USDA raisin inspections conducted at Lion’s packing facility and the facilities of its competitors, and two internal reports related to the
BACKGROUND
The California raisin industry is highly competitive. At the time this action was commenced, raisin prices were at a 15-year low and the success or failure of contract bids hinged on price differentials of a fraction of a cent per pound. Lion is the largest independent handler of California raisins in the state. Like its competitors, Lion is governed by the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. §§ 601-627, and a “marketing order” promulgated thereunder, 7 C.F.R. §§ 989.1-989.801, that regulate the sale of raisins. The marketing order requires that raisin handlers have their products inspected by USDA once when they are received from producers, and again before they are sold to the consumer. 7 C.F.R. §§ 989.58-989.59. When conducting the required inspections, USDA inspectors periodically take' samples from handlers’ processing lines and assess the quality of the raisins in various categories, including weight, color, size, sugar content, and moisture. See 7 C.F.R. § 989.159. The inspectors note their observations on “Line Check Sheets” and assign grades to the observed raisins. The original of the Line Check Sheet is retained by USDA and a carbonless copy is left with the handler. 1 Information from the Line Check Sheets is summarized on USDA “Inspection Certificates,” which raisin handlers can send to their consumers as an assurance of quality.
On February 20, 1998, the USDA received an anonymous tip that Lion was falsifying its Inspection Certificates. Acting on that tip, Agricultural Marketing Services of USDA (“AMS”) initiated an investigation. The AMS investigation revealed that, on at least three occasions between March and December of 1998, Lion representatives forged the signatures of USDA inspectors or recorded false moisture readings on Inspection Certificates. On at least one occasion, Lion allegedly altered the grade assigned to its raisins on an Inspection Certificate from “C” to “B.” On May 26, 1999, AMS prepared a report of its findings. On October 19, 2000, the USDA Office of the Inspector General (“OIG”) served and executed a search warrant at Lion’s packing plant. In the course of that search, agents seized the Lion-retained copies of Line Check Sheets of inspections performed at Lion’s packing plant between 1995 and 2000. 2 OIG prepared a report of its findings. Based on the AMS investigation and the fruits of the OIG raid, USDA suspected that Lion falsified the Lion-retained copies of Line Check Sheets in addition to Inspection Certificates.
On August 20, 2001, Lion submitted FOIA requests seeking copies of all USDA-retained original Line Check Sheets for inspections at its packing plant from 1991 to the present. Although its FOIA request did not so specify, Lion made clear in its briefs and at oral argument that it sought copies of the USDA-retained originals of Line Check Sheets for inspections at its own plants, not the Lion-retained copies that were seized from Lion’s packing plant. 3 Lion suspected that any discrepancies between the Lion-retained copies of the Line Check Sheets and the USDA-retained originals were the result of USDA’s intentional or negligent alteration of the USDA-retained originals. In a separate request, submitted on August 21, 2000, Lion sought the reports prepared by AMS and OIG related to USDA’s investigation of Lion. 4 Both of Lion’s requests (for the check sheets and for the investigative reports) were denied pursuant to the “law enforcement” exemption to FOIA, on the basis that releasing the documents would interfere with an ongoing criminal investigation. See 5 U.S.C. § 552(b)(7)(A).
In a third request, submitted on August 29, 2000, Lion sought copies of the USDA-retained originals of Line Check Sheets, from 1996 to the present, for six of its competitors in the California raisin packing industry: Sunmaid Raisins, National Raisin, Enoch Packing, Chooljian Bros., Del Rey Packing, and Victor Packing. Lion sought the Line Check Sheets of its competitors because.it believed that USDA inspectors routinely committed fraud when filling out Line Check Sheets, and it wanted to compare the way its competitors’ raisins were graded to the way its own raisins were graded. USDA withheld these Line Check Sheets pursuant to the “trade secrets” exemption of FOIA, on the basis that producing them would cause “substantial competitive harm” by allowing Lion to deduce the volume, market share, and marketing strategy of its main competitors. See 5 U.S.C. § 552(b)(4).
Lion administratively appealed the denials of each of its FOIA requests within USDA. Two of Lion’s appeals were denied. The third appeal received no response.
5
Lion then brought this action. Both parties moved for summary judgment. In support of its “trade secrets” withholding, USDA submitted two declarations from David Trykowski, an AMS Senior Compliance Officer. Trykowski’s declarations stated that Lion could use the information contained in its competitors’ Line Check Sheets to undercut its competitors’ bids for raisin contracts, and they discounted the
STANDARD OF REVIEW
In reviewing summary judgment in a FOIA case, we employ a two-step test. The first step is to determine whether the district court had an adequate factual basis for its decision.
Doyle v. FBI, 722
F.2d 554, 555 (9th Cir.1983);
Church of Scientology v. United States Dep’t of the Army,
The second step is to review the district court’s decision itself. We have reviewed district court determinations as to whether a FOIA exemption applies using both the “clearly erroneous” and
“de novo
” standards of review.
See TPS, Inc. v. United States Dep’t of Def.,
The district court’s application of the claimed FOIA exemptions in this case was grounded in its findings of fact. With respect to the “trade secrets” exemption, the district court determined that withholding was proper based on its factual finding that Lion could use the information in its competitors’ Line Check Sheets to gain an unfair competitive advantage in the raisin market.
See
5 U.S.C. § 552(b)(4). With respect to the “law enforcement” exemption, the district court found that withholding Lion’s Line Check Sheets and the investigative reports was proper because revealing the information in the withheld documents could reasonably be expected to interfere with the government’s criminal investigation.
See
5 U.S.C. § 552(b)(7)(A). Accordingly, we review the district court’s decisions for clear error.
See Assembly of Cal.,
ANALYSIS
FOIA gives individuals a judicially-enforceable right of access to government agency documents. 5 U.S.C. § 552.
6
The Supreme Court has interpreted the disclosure provisions of FOIA broadly, noting that the act was animated by a “philosophy of full agency disclosure.”
John Doe Agency v. John Doe Corp.,
A. The “Trade Secrets” Exemption
USDA withheld the Line Check Sheets of Lion’s competitors pursuant to the “trade secrets” exemption.
See
5 U.S.C. § 552(b)(4). The “trade secrets” exemption allows government agencies to withhold documents that contain “commercial or financial information obtained from a person and privileged or confidential.”
Id.
Information is “confidential” for the purposes of the “trade secrets” exemption where disclosure of that information could cause “substantial harm to the competitive position of the person from whom the information was obtained.”
G.C. Micro Corp. v. Defense Logistics Agency,
We must first determine whether the district court had an adequate factual basis for its decision. Courts can rely solely on government affidavits so long as the affiants are knowledgeable about the information sought and the affidavits are detailed enough to allow the court to make an independent assessment of the government’s claim.
Church of Scientology,
In support of its claim to the “trade secrets” exemption, USDA submitted blank Line Check Sheet forms and two
Next we must decide whether the district court clearly erred in determining that Lion’s competitors’ Line Check Sheets fell within the “trade secrets” exemption to FOIA. The parties agree that there is actual competition in the relevant market. As Trykowski points out, prices for raisins are at a 15-year low and bids for raisin contracts can succeed or fail on margins of less than one cent per pound. The parties disagree, however, as to whether releasing the Line Check Sheets would cause “substantial competitive harm” to Lion’s competitors.
In
G.C. Micro,
the plaintiff sought information from a government agency regarding several large defense contractors’ compliance with the minority contracting provisions of the Small Business Act.
8
As in G.C. Micro, Lion contends that the information it seeks from the Line Check Sheets would not allow it to infer confidential information about its competitors because significant variables would be redacted. 9 USDA contends, however, that revealing even the limited information Lion seeks would allow Lion to infer critical information about its competitors’ volume, market share, and marketing strategy. The district court gave credence to USDA’s position and held that releasing the documents would cause substantial competitive harm.
We cannot conclude that the district court’s decision was clearly erroneous. At minimum, producing the Line Check Sheets of Lion’s competitors would reveal the type of raisins Lion’s competitors produced at the time of the inspection at issue because the format for Line Check Sheets is distinct depending on the type of raisin inspected. Thus, unlike the documents sought in
G.C. Micro,
in which the subject matter of the government contracts was obscured,
see
B. The “Law Enforcement” Exemption
The district court determined that the USDA-retained originals of Lion’s Line Check Sheets and the AMS and OIG investigative reports fell within the “law enforcement” exemption to FOIA.
See
5 U.S.C. § 552(b)(7)(A). The “law enforcement” exemption allows the government to withhold “records or information compiled
The sole evidence submitted in support of USDA’s claim under the “law enforcement” exemption was a declaration filed under seal by an assistant United States attorney. After reviewing the sealed declaration
in camera,
the district court ruled in favor of USDA. The district court did not elucidate its reasoning; it stated only that “[bjased on the information disclosed in the declaration filed under seal” the “law enforcement exemption was properly invoked in this case.” USDA did not brief the “law enforcement” exemption issue on appeal, nor was it prepared to discuss it at oral argument, because its counsel had never seen the sealed document and did not know the reasons for withholding the documents.
10
Lion vehemently opposed the court’s reliance on
in camera
review of the sealed declaration as the sole basis for its decision. Although Lion frames its opposition as a due process challenge, its arguments are cognizable as an attack on the factual basis for the court’s decision.
See Wiener,
Courts are permitted to rule on summary judgment in FOIA cases solely on the basis of government affidavits describing the documents sought.
Church of Scientology,
Under certain limited circumstances, we have endorsed the use of
in camera
review of government affidavits as the basis for FOIA decisions. In
Doyle,
the plaintiff requested all FBI documents that pertained to him, but the FBI withheld the documents pursuant to several FOIA exemptions.
Likewise, in
Wiener,
the FBI submitted affidavits supporting its withholding of documents pursuant to various FOIA exemptions but the affidavits justified withholding only in general terms.
In this case, USDA submitted no public affidavits justifying the application of the § 552(b)(7)(A) exemption to either the Line Check Sheets or the investigative reports. Rather, the United States Attorney submitted its declaration to the court directly, under seal,
in lieu
of a public affidavit. USDA cites four cases in support of its approach, but none supports its position.
Ray v. Turner,
None of the cases cited by the government justifies the district court’s reliance on
in camera
review of a sealed declaration
as a substitute for
docketed public declarations, and we decline to endorse the approach here. Requiring as detailed public disclosure as possible of the government’s reasons for withholding documents under a FOIA exemption is necessary to restore, to the extent possible, a traditional adversarial proceeding by giving the party seeking the documents a meaningful opportunity to oppose the government’s claim of exemption.
Wiener,
We do not imply that the government must disclose facts that would undermine the very purpose of its withholding.
12
See Lewis,
1. The Investigative Reports
With respect to the investigative reports prepared by AMS and OIG, we remand to the district court with instructions to require submission of detailed public declarations, testimony, or other material in support of the “law enforcement” exemption. Because Lion requested specific documents, and the USDA identified the exemptions under which it withheld each document, the USDA need only explain, publicly and in detail, how releasing each of the withheld documents would interfere with the government’s ongoing criminal investigation.
See, e.g., Lewis,
2. Lion’s Line Check Sheets
With respect to the withholding of the USDA-retained
originals of Lion’s Line Check Sheets, no remand is necessary. We have reviewed the sealed declaration and we find that nothing therein justifies the application of the “law en
CONCLUSION
We affirm summary judgment for USDA with respect to Lion’s request for copies of its competitors’ Line Check Sheets. We reverse summary judgment for USDA with respect to Lion’s request for copies of the AMS and OIG investigative reports. On remand, the district court should require USDA to submit detailed public declarations, testimony, or other material in support of its invocation of the “law enforcement” exemption and afford Lion an opportunity to advocate for the release of the reports. With respect to Lion’s request for copies of the USDA-retained originals of its own Line Check Sheets, we reverse summary judgment for USDA, grant summary judgment for Lion, and order that the documents be produced forthwith. Each party shall bear its own costs on appeal.
AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings.
Notes
. For clarity, the "original” retained by USDA will be referred to as the "USDA-retained original,” and the "copy” left with Lion will be referred to as the "Lion-retained copy.”
. USDA contends that it did not seize any Lion-retained copies of Line Check Sheets for the years 1995 and 2000, or for the months of January and February, 1998, and December, 1999.
. Pursuant to a court order in a separate case, USDA photocopied and returned most of the Lion-retained copies of Line Check Sheets it seized from Lion's packing plant.
. A redacted version of the AMS report was provided to Lion pursuant to a court order in a separate case. Lion's FOIA request sought the unredacted report.
.The papers relating to the third appeal were lost when the USDA mail room became infected with anthrax spores. USDA's failure to respond to Lion’s third FOIA appeal within the statutory 20-day period had the legal effect of denying Lion’s appeal and exhausting Lion's administrative remedies. See 5 U.S.C. § 552(a)(6)(C).
. FOIA provides, inter alia, that:
[E]ach agency, upon any request for records which (i) reasonably describes such records and (ii) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person.
5 U.S.C. § 552(a)(3)(A).
. USDA estimates that approximately 30,000 to 50,000 documents would be responsive to Lion's three FOIA requests. A considerable portion of those documents would consist of the Line Check Sheets of Lion's competitors.
. See 15 U.S.C. § 644(g).
. Lion conceded in its FOIA requests that the name of the producer should be redacted. In its subsequent briefs to the district court, Lion further conceded that the buyer's name and information about the size and nature of the packaging should be redacted. Finally, in its briefs to this court, Lion abandoned its request for the inspector’s name and the case codes. See Appellant's Opening Brief at 25 (“Lion could even care less about whether or not the inspector’s name is redacted as well ... Lion does not care about the case code or the size and type of container, but simply the bare analysis of the raisins.”). Thus, on appeal, Lion seeks only information from the Line Check Sheets relating to the times and dates of the inspections and the "bare bone results” of the inspections. Because the question of whether these additional redactions would be sufficient to prevent competitive harm was raised for the first time on appeal, we do not reach the issue. We do not preclude the district court from reconsidering the issue based on these, or other, additional redactions.
. We find it perplexing that the government would choose to assign counsel to defend its position on appeal (both in its brief and at oral argument) who is totally unfamiliar with (and, presumably, denied access to) the facts upon which the government bases its claim to the law enforcement exemption.
. As noted in footnote 10, supra, government counsel was also totally unprepared to assist this court with any "informed advocacy" on the law enforcement exemption.
. It is not clear, however, how USDA could sincerely argue that disclosing the reasons that justify its "law enforcement” withholding would undermine the government’s criminal investigation in light of counsel’s admission that USDA does not know what reasons justify the invocation of the law enforcement exemption.
. In Lewis, the government submitted detailed declarations explaining why the identification and release of certain documents would interfere with its ongoing criminal investigation. Id. One of the affidavits explained that:
Disclosure of the documents ... would interfere with the current Service investigation of the plaintiff by prematurely revealing the evidence developed against the plaintiff; the reliance placed by the government on that evidence; the names of witnesses and potential witnesses; the scope and limits of the investigation; the identities of third parties contacted; the specific transactions- being investigated; the strengths and weaknesses of the government’s case; and potential impeachment material. In addition, disclosure could aid plaintiff in tampering with potential evidence and witnesses, or otherwise frustrating the government’s ability to present its best case in court.
Id. at 379 n. 5 (alteration in the original). We held that the public affidavit gave the plaintiff a fair opportunity to respond to the government’s arguments in support of the "law enforcement” exemption and provided an adequate factual basis for the court’s decision. Id. at 379.
