US court rejects BIS bid to withhold Entity List documents in FOIA dispute

A US federal court has denied the Bureau of Industry and Security’s (‘BIS’) motion for summary judgment in a Freedom of Information Act dispute, ruling the agency failed to adequately justify withholding documents related to the Entity List designation of Chinese semiconductor companies Yangtze Memory Technologies Corporation and its Japanese subsidiary, YMTJ. 

US District Judge John D Bates said BIS did not provide sufficient reasoning beyond ‘mere recitation of damage from the release of classified information’ to rely on FOIA’s national security exemption, and failed to demonstrate the withheld records fell within statutory protections under the Export Control Reform Act, according to a memorandum opinion issued last week in Husch Blackwell LLP v Department of Commerce.

Law firm Husch Blackwell, representing YMTC, submitted FOIA requests in September 2023 seeking ‘the final proposal and any accompanying attachments, exhibits, or appendices’ submitted to the End-User Review Committee supporting its decision to list YMTC and YMTJ on the Entity List in December 2022.

BIS identified 553 pages of responsive documents but initially withheld all records, citing FOIA exemptions for classified information.  The agency later made two interim releases, disclosing ten pages in full and 124 pages in part in the first release, and seven additional pages in the second release.

The court found BIS’s justifications for withholding documents under Exemption 1, which protects properly classified national security information, were insufficient because the agency merely stated the information was classified at the top secret level and its release would cause ‘grave damage’ to national security without explaining why disclosure would threaten national security.

Regarding Exemption 3, which shields information specifically exempted by statute, the court said BIS took ‘too expansive a view’ of protected documents under ECRA. 

The agency asserted withheld information was ‘submitted or obtained in connection with’ End-User Review Committee operations regarding Entity List changes or was ‘derived from or directly related to’ such information.

Judge Bates interpreted ECRA’s nondisclosure provision as requiring that lists of information types to be withheld are ‘not exhaustive but the information must be submitted or obtained in connection with an operation or activity similar to the enumerated list’.

The court said that without more information it cannot discern whether the withheld memoranda include information submitted or obtained in connection with ECRA operations.

It noted that Congress expressly included a policy of transparency in ECRA, stating ‘the export control system must ensure that it is transparent, predictable, and timely’. The judge also pointed to legislative history showing Commerce asked Congress to exempt ‘all information’ submitted under a predecessor statute but Congress declined, exempting only ‘export data’.

The court denied summary judgment motions from both parties and declined to conduct in-camera review of the disputed documents at this stage.