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Sandwich Isles Communications, Inc.

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Released: October 30, 2013

Federal Communications Commission

FCC 13-140

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
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Sandwich Isles Communications, Inc.
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FOIA Control No. 2012-116
On Request for Inspection of Records
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MEMORANDUM OPINION AND ORDER

Adopted: October 29, 2013

Released: October 30, 2013

By the Commission:

I.

INTRODUCTION

1.
This Memorandum Opinion and Order dismisses in part and denies in part an application
for review (AFR) filed by Sandwich Isles Communications, Inc. (Sandwich Isles), which seeks review of
a decision by the Wireline Communications Bureau (WCB) that would release certain documents
submitted to the Commission by Sandwich Isles. The Decision addresses a Freedom of Information Act
(FOIA) request filed by David Burstein (Burstein) seeking an unredacted version of Sandwich Isles’
petition for waiver of section 54.302 and other provisions of the Commission’s rules, as revised by the
USF/ICC Transformation Order. The AFR seeks Commission review of WCB’s Decision insofar as it
would disclose three types of Sandwich Isles’ waiver documents in response to Burstein’s request: (1)
List of Outstanding Loans; (2) Audited Financial Statements and Notes; and (3) Summary of Corporate
Operating Expenses. Among other things, the AFR asserts that the documents should not be disclosed
pursuant to FOIA Exemption 4, which protects “commercial or financial information obtained from a
person [that is] privileged or confidential.”1 As explained below, we deny the AFR to the extent it
challenges the Bureau’s Decision to disclose the List of Outstanding Loans in Sandwich Isles’ waiver
petition. We also dismiss as moot the AFR’s challenges to the Bureau’s decision to release document
types (2) and (3) above, to the extent that the Bureau’s Supplemental Decision determined that these
documents should be withheld under Exemption 4.

II.

BACKGROUND

2.
The USF/ICC Transformation Order, adopted by the Commission on November 18,
2011, comprehensively reformed and modernized the universal service and intercarrier compensation
systems to promote the availability of broadband service nationwide.2 For any carrier negatively
impacted by its reforms, the Transformation Order provided guidance on the showing that must be made
to obtain a waiver, including a listing of specific types of financial data and other information.3 In
addition, the Transformation Order revised reporting requirements for all eligible telecommunications
carriers4 (ETCs), requiring, among other things, all privately-held rate-of-return carriers to file a full and

1 5 U.S.C. § 552(b)(4).
2 See USF/ICC Transformation Order, 26 FCC Rcd 17663 (2011).
3 Id. at 17839-42, paras. 539-44.
4 A common carrier designated to receive universal service support under Part 54, Subpart C of the Commission’s
rules is an “eligible telecommunications carrier.” See 47 C.F.R. §§ 54.5, 54.201.

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FCC 13-140

complete annual report on their financial condition and operations, and specifying types of information to
be included.5 The Transformation Order determined that the annual reports would be made publicly
available, because the public has a legitimate interest in being able to verify the efficient use of support
funds and because the Commission would be assisted in its oversight duties by public interest watchdogs,
consumer advocates, and others who seek to ensure that recipients receive support funding that is
sufficient, but not excessive.6
3.
On December 30, 2011, Sandwich Isles, a privately-held rate-of-return carrier, filed a
petition for waiver of section 54.302 and other provisions of the Commission’s rules, as revised by the
Transformation Order.7 Along with the waiver petition, Sandwich Isles filed a request for confidential
treatment of certain portions of the petition,8 as well as a public version of the petition from which it had
redacted certain information. On January 4, 2012, the Commission received a FOIA request filed by
David Burstein, seeking release of an unredacted version of Sandwich Isles’ waiver petition.9 On January
23, 2012, Sandwich Isles objected to Burstein’s FOIA request on a number of grounds and reasserted its
request for confidential treatment of its waiver petition,10 to which Burstein responded on the same day.11
4.
The Wireline Competition Bureau issued a decision on Burstein’s FOIA request on July
3, 2012, denying it in part and granting in part.12 The Decision relied on FOIA Exemption 4 in denying
release of certain portions of Sandwich Isles’ waiver petition.13 Among the portions of Sandwich Isles’
waiver petition designated for release, the Bureau determined that the List of Outstanding Loans
contained some information that was already publicly available and, where it was not public, the
information did not appear likely to cause substantial competitive harm to Sandwich Isles.14 As to the
Audited Financial Statements and Notes, however, the Bureau declined to address the applicability of
FOIA Exemption 4, and instead determined that discretionary release was appropriate pursuant to the
Transformation Order’s finding that privately-held rate-of-return carriers, such as Sandwich Isles, must
submit comparable information to the Commission annually and that such submissions would be made
publicly available.15 Noting that the Summary of Corporate Operating Expenses comprises information
that is contained in the Audited Financial Statements and Notes, the Bureau determined to disclose this
record for the same reasons.16 We also note that the Bureau “anticipate[d] that any application for review
of this [Decision] would be held in abeyance pending Commission action on the petitions for

5 Id.at 17856-58, paras. 595-602.
6 Id. at 17857-58, para. 602.
7 Sandwich Isles Communications, Inc. Petition for Waiver of 47 C.F.R. 54.302 (filed Dec. 30, 2011).
8 Letter from Albert Hee, Sandwich Isles Communications, to Marlene Dortch, Secretary, Federal Communications
Commission, WC Docket No. 10-90, WT Docket No. 10-208 (filed Dec. 30, 2011) (Sandwich Isles Request for
Confidential Treatment).
9 E-mail from David Burstein to FOIA, FCC (Jan. 3, 2012). Mr. Burstein subsequently modified his request to
withdraw “any request for the company’s future estimates other than the amounts of public subsidies requested.” E-
mail from David Burstein, DSL Prime, to Mark Wigfield, Public Affairs Specialist, Wireline Competition Bureau,
Federal Communications Commission (Feb. 9, 2012).
10 Letter from Frederick Joyce, on behalf of Sandwich Isles Communications, to Patricia Quartey, Federal
Communications Commission (Jan. 23, 2012) (Sandwich Isles FOIA Objection).
11 E-mail from Dave Burstein to Frederick Joyce, Counsel for Sandwich Isles, Kesha Woodward, Federal
Communications Commission, and Patricia Quartey, Federal Communications Commission (Jan. 23, 2012).
12 Decision.
13 Id. at 3-5.
14 Id. at 6.
15 Id. at 6.
16 Id. at 6.
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FCC 13-140

reconsideration” that had been filed of the Transformation Order’s determination to make publicly
available these annual reports.17
5.
On July 18, 2012, Sandwich Isles filed an AFR, challenging the Bureau’s Decision to
disclose the three sets of documents listed above (i.e., List of Outstanding Loans, Audited Financial
Statements and Notes, and Summary of Corporate Operating Expenses).18 Sandwich Isles’ AFR makes
two general arguments: (1) the Bureau was not required under the Transformation Order to make
publicly available the waiver petition documents at issue here;19 and (2) under the FOIA and Commission
precedents, the Bureau should not disclose the documents at issue here. With respect to the List of
Outstanding Loans, Sandwich Isles specifically argues that “[t]he mere fact that there have been ‘public
[press] reports about the fact that Sandwich Isles has obtained loans to finance its activities’” does not
justify the release of the List itself, which Sandwich Isles states is “commercially sensitive.”20
6.
On November 16, 2012, the Commission issued the USF/ICC Fifth Order on
Reconsideration,21 resolving various petitions for reconsideration and/or clarification of the
Transformation Order. Among other things, the Fifth Reconsideration Order revised its determination in
the USF/ICC Transformation Order that annual financial reports filed by privately-held rate-of-return
carriers should be made available to the public and concluded that, in some instances, there could be a
potential for competitors to use the submitted financial data of these carriers in an anti-competitive
manner.22 Privately-held ETCs thus were permitted to file their annual reports subject to the terms of the
Bureau’s USF/ICC Protective Order, pursuant to which the annual reports would not be made publicly
available.23
7.
On September 26, 2013, the Wireline Competition Bureau issued a Supplemental
Decision addressing Burstein’s FOIA request.24 Consistent with the Fifth Reconsideration Order, the
Supplemental Decision revised the previous decision to release the Audited Financial Statements and
Notes and Summary of Corporate Operating Expenses.25 In the Supplemental Decision, the Bureau found
that the financial information contained in the Audited Financial Statements and Notes and the Summary
of Corporate Operating Expenses should be withheld, because this material is competitively sensitive and
therefore confidential under Exemption 4. The Bureau further found that other portions of these
documents should be released, because they are not competitively sensitive.26 The Supplemental
Decision did not address the List of Outstanding Loans, because the basis for releasing this document was
not affected by the Commission’s reconsideration of the Transformation Order.

III.

DISCUSSION

8.
We first address Sandwich Isles’ request to overturn the Bureau’s decision to disclose the
List of Outstanding Loans. As an initial matter, we disagree with any suggestion by Sandwich Isles that

17 Id. at 7.
18 We refer to the second and third groups of documents collectively as Sandwich Isles’ “Audited Financials.” See
AFR at 1.
19 See id. at 3-6.
20 AFR at 8.
21 USF/ICC Fifth Order on Reconsideration, 27 FCC Rcd 14549 (2012).
22 Id. at 14549, 14555, para. 15.
23 See id. at 14555, para. 15; Connect America Fund et al., Protective Order, 27 FCC Rcd 14231 (WCB 2012).
24 Letter from Kirk S. Burgee, Chief of Staff, Wireline Competition Bureau to David Burstein, Editor and Publisher
of DSL Prime (dated September 26, 2013) (Supplemental Decision).
25 Id. at 4-6.
26 Id. at 6.
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the Bureau relied either on the Transformation Order or the fact that there were public press reports about
Sandwich Isles’ loans to justify the release of the List.27 In its decision, the Bureau analyzed whether it
should withhold the documents under FOIA Exemption 4. Exemption 4 protects from disclosure “trade
secrets and commercial or financial information obtained from a person [that is] privileged or
confidential.”28 When a FOIA request is filed for information that may be confidential, the Commission’s
rules provide that the original submitter may object to disclosure by submitting “a detailed written
statement specifying all grounds for withholding any portion of the information” requested.29
9.
The Bureau found in its decision that the List of Outstanding Loans did not fall within
Exemption 4, given that the List contains information that is either publicly available or does not appear
likely to cause substantial competitive harm to Sandwich Isles. Specifically, the Bureau found that the
List “contains general details about Sandwich Isles’ loan obligations, and does not appear to provide
information that competitors could exploit to harm Sandwich Isles.”30 We agree with the Bureau’s
findings. Sandwich Isles generally argued that disclosure of the information for which it sought
confidentiality would “enable competitors to accurately determine Sandwich Isles’ operating costs,
revenues, and customer penetration, thus giving them an undue advantage in determining where to invest,
price setting, and market targeting efforts.”31 It did not, however, in either its objection to the FOIA
disclosure or in the subsequent AFR, demonstrate or clarify how releasing the List of Loans, which only
contains the amounts, terms, and outstanding balances (as of December 31, 2011) of notes issued by the
Rural Utilities Service (RUS) and the Rural Telephone Bank (RTB), would result in the alleged
harms.32 In any event, however, given the fact that the information in the List of Loans was originally
generated by RUS and RTB, which are government agencies, in conjunction with their loan programs, it
is difficult to envision how Sandwich Isles could have made a showing of competitive harm. Courts have
held that Exemption 4 is not applicable to loan documents generated by an agency, because they were not
“obtained from a person.”33 This indicates that RUS and RTB would probably be required to release the
information in the List of Loans in response to a FOIA request. Given the likelihood that the loan
information would be freely available from RUS and RTB, we find that this agency has no basis to
withhold the information as confidential.34 Accordingly, we uphold the Bureau’s decision to release the
List of Outstanding Loans and deny the AFR in this regard.

27 See AFR at 2-3 (“[T]he Bureau determined to release various confidential and commercially sensitive documents
. . . based on a mistaken interpretation of Paragraph 602 in the USF/ICC Transformation Order”)and id. at 8 (“The
mere fact that there have been ‘public reports about the fact that Sandwich Isles has obtained loans to finance its
activities’ does not mean that this commercially sensitive information should be disclosed to the public”).
28 5 U.S.C. § 552(b)(4).
29 47 C.F.R. § 0.461(d)(3).
30 Decision at 6.
31 See Sandwich Isles FOIA Objection, supra n.13; see also Sandwich Isles Request for Confidential Treatment,
supra n.11.
32 This case thus differs from Lakin Law Firm, 19 FCC Rcd 12727 (2004), cited by Sandwich Isles, in which the
submitter of information made a persuasive showing that disclosure of information would cause competitive harm.
33 See Bloomberg, L.P. v. Board of Governors of the Federal Reserve System, 601 F.3d 143, 148-49 (2d Cir. 2010)
(information about loans made by the Federal Reserve Banks not protected by Exemption 4); Board of Trade of the
City of Chicago v. Commodity Futures Trading Comm’n
, 627 F.2d 392, 403-04 (D.C. Cir. 1980) (courts have
restricted application of Exemption 4 to data which have not been generated within the Government).
34 See Worthington Compressors, Inc. v. Costle, 662 F.2d 45, 51-53 (D.C. Cir. 1981) (“If the information is freely or
cheaply available from other sources, it can hardly be called confidential and agency disclosure is unlikely to cause
competitive harm”); Niagara Mohawk Power Corp. v. U.S. Dept. of Energy, 169 F.3d 16, 20 (D.C. Cir. 1999)
(performance data to be made publicly available pursuant to state PSC decision may not be withheld by DOE under
Exemption 4).
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FCC 13-140

10.
As an additional matter, we find that the Bureau’s Supplemental Decision moots
Sandwich Isles’ AFR to the extent that the AFR asks us to withhold the portions of the Audited Financial
Statements and Notes and the Summary of Corporate Operating Expenses that the Supplemental Decision
withholds, inasmuch as the Supplemental Decision grants the relief that Sandwich Isles seeks with respect
to this material. We do not reach the question of whether the Supplemental Decision correctly
determined to release other portions of these documents as non-confidential. We do not know whether
Sandwich Isles objects to the narrowed disclosures ordered by the Supplemental Decision and, if it does
so, why it objects. For this reason, we dismiss Sandwich Isles’ challenge to the Bureau’s now-
superseded decision to release in their entirety the Audited Financial Statements and Notes and the
Summary of Corporate Operating Expenses. If Sandwich Isles objects to the narrowed release in the
Supplemental Decision, it may seek review of the Supplemental Decision, as may Burstein, if he objects
to the withholding of the portions of the documents that the Bureau deems confidential. We will defer
any review of the Supplemental Decision, until if and when the parties seek review and set forth any
objections they may have to the analysis contained in the Supplemental Decision.

IV.

ORDERING CLAUSES

11.
IT IS ORDERED that the application for review filed by Sandwich Isles IS DISMISSED
IN PART and DENIED IN PART as set forth herein. If Sandwich Isles does not seek a judicial stay
within ten (10) working days of the date of release of this decision, the List of Outstanding Loans will be
produced to Burstein as indicated. See 47 C.F.R. § 0.461(i)(4).35
12.
The officials responsible for this action are the following: Acting Chairwoman Clyburn
and Commissioners Rosenworcel and Pai.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary

35 We note that as part of the Open Government Act of 2007, the Office of Government Information Services
(OGIS) was created to offer mediation services to resolve disputes between FOIA requesters and Federal agencies as
a non-exclusive alternative to litigation. Using OGIS services does not affect Sandwich Isles’ right to pursue
litigation. Sandwich Isles may contact OGIS in any of the following ways:
Office of Government Information Services
National Archives and Records Administration
Room 2510
8601 Adelphi Road
College Park, MD 20740-6001
E-mail: ogis@nara.gov
Telephone: 301-837-1996
Facsimile: 301-837-0348
Toll-free: 1-877-684-6448.
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