III. "Contained in or Related to Examination, Operating, or Condition Reports"

You may also argue that the government has failed to demonstrate that the information withheld is “contained in or related to examination, operating, or condition reports.” For example, the U.S. District Court in the District of Columbia held that an agency failed to meet this threshold when it withheld portions of a memo it described as “discussion[s]” of “condition of bank and options for improving conditions of bank,” “bank condition and risk issues,” and “bank condition, options for taking action, effect of not acting, and how bank condition affects other areas.”¹⁸ The agency also had failed to outline the specific information the memoranda contained about the financial institutions that would require their withholding.¹⁹ The court found that it could not determine — “[b]ased on the extremely limited information provided” — “whether the material withheld contains or is derived from any part of an examination, operating report or condition report.”²⁰

In another case, the U.S. District Court for the District of New Mexico held that Exemption 8 does not apply to escrow waivers — “federal forms prepared by lenders at the request of the Forest Service to record the use of a federal grazing permit as collateral to secure a loan.”²¹ The court held that “it is not correct that every piece of paper in a bank’s records are protected” under Exemption 8, and allowing the agency to use it to withhold information such as that which was contained in the waivers “would shield everything banking institutions accumulate if any possibility existed the information might be reviewed in the process of a bank examination.”²²

In contrast, Exemption 8 has been held to apply to, for example, FDIC reports on a bank’s compliance with consumer laws and regulations.²³ A court also held that portions of an SEC inspection report detailing the Boston Stock Exchange’s “on-going . . . investigations of its members” fell within Exemption 8, as it could “be of value to the Commission in its supervision of the BSE.”²⁴

You should be aware that some courts have held that the government does not need to “identify a specific report to which the [withheld] information relates.”²⁵ The U.S. District Court for the District of Columbia held that the Board of Governors of the Federal Reserve could withhold e-mails and tables containing information provided by Board-regulated financial institutions even though the requester argued that the Board had failed to “identify[] the specific ‘report’ to which the information relates.”²⁶ The information related to the Board’s “real-time effort[s]” to monitor the impact of a possible bankruptcy filing of a financial holding company on Board-regulated financial institutions, and the court found its withholding would be consistent with one of the purposes of Exemption 8: ensuring “frank cooperation between bank officials and regulated entities.”²⁷ Requesters should try to argue that release of the information at issue would not result in either of the harms Exemption 8 is intended to prevent — the loss of public confidence in the institution and decreased cooperation between the institution and agency.