August 9, 2018 Orrick, Herrington a. Sutcliffe LLP 51 West 52nd Street Madeline M. Van Nostrand New Yak' NY 100196142 US. Department of Transportation *1 212 506 5000 FOIA Of?cer, PHC-30 Of?ce of Chief Counsel East Building, 2nd Floor, E27-322 1200 New Jersey Avenue, SE ?53 ?new Washington, DC 20590 tonery@orrick.com +1212 506 3710 +1 212 506 5151 Re: Cheniere Energy, Inc. FOIA Control Numbers: 2018-0078, 2018-0097, 2018-0103, 2018-0153, 2018-0154 Dear Ms. Van Nostrand: Cheniere Energy, Inc. (?Cheniere?) is in receipt of your letter, dated July 3, 2018, informing it that a number of requests (?Requests?) had been ?led by several parties (?Requesters?)1 pursuant to the Freedom of Information Act Requesters are seeking the following information related to the US. Department of Transportation Pipeline and Hazardous Materials Safety Administration investigation at Cheniere's Sabine Pass LNG Facility: 1. 2017 Tank S-103 Report Matrix 2. Work Plan submitted April 6, 2018 3. Third Party Reports 4. Reports (March, April, May) 5. March 23, 2018 Hearing Transcript (nonpublic, redacted portion) 6. Root Cause Failure Analysis (submitted May 31, 2018) Mike Soraghan of News made a request on March 9. 2018: Jenny Mandel of News made a request on April 3. 2018 and two Requests on June 18. 2018: and Scott Hodes Hodes") made a request on April 9. 2018. Mr. Soraghan and Ms. Mandel are collectively referred to herein as the News Requesters." 2 5 U.S.C. 552. et seq. (2012). August 9, 2018 Page 2 Items 1(together the ?Requested Con?dential Information?) contain trade secret and privileged and con?dential information provided by Cheniere to PHMSA. Item 1 was marked with ?Information contained in this document is strictly con?dential and quali?es for con?dential treatment under 5.U.S.C. 552(b). No person shall have any right to disseminate. reproduce. quote. report or in any manner whatsoever utilize or rely on the contents of this document or information without the prior written authorization of Sabine Pass LNG. LP. in no circumstances shall the use of this document by any person or by Sabine Pass LNG. LP. in any presentation. meeting or discussion with any person imply that any such authorization is given. Sabine Pass LNG. L.P. retains all rights to any intellectual property that may be contained in this document.? ?This document quali?es for con?dential treatment as a trade secret under 5.U.S.C. 552(b)(4) - DO NOT and ?This document contains Protected Critical Infrastructure Information (PCII). In accordance with the provisions of the Critical In?'astructure Information Act. 6 U.S.C. 131 et seq.. it is exempt from release under the Freedom of Information Act (5 U.S.C. 552) and similar State and local disclosure laws. Unauthorized release may result in criminal and administrative penalties. It is to be safeguarded and disseminated in accordance with the Critical Infrastructure Information Act. 6 U.S.C. 131 et seq.. the implementing Regulation. 6 .F.R. Part 29 and PCII Program requirements.? Items 2. 4 and 6 were marked ?Information contained in this document is strictly con?dential and quali?es for con?dential treatment under 5.U.S.C. 552(b). No person shall have any right to disseminate. reproduce. quote. report or in any manner whatsoever utilize or rely on the contents of this document or information without the prior written authorization of Sabine Pass LNG. LP. in no circumstances shall the use of this document by any person or by Sabine Pass LNG. LP. in any presentation. meeting or discussion with any person imply that any such authorization is given. Sabine Pass LNG. L.P. retains all rights to any intellectual property that may be contained in this document? and ?This document quali?es for con?dential treatment as a trade secret under 5.U.S.C. 552(b)(4) - DO NOT Item 3 documents were marked with ?This document quali?es for con?dential treatment as a trade secret under 5 U.S.C. NOT or DOCUIVIENT IS THE PROPERTY OF CHICAGO BRIDGE IRON COMPANY IT MAY CONTAIN INFORMATION DESCRIBING TECHNOLOGY OWNED BY AND DEEMED TO BE COMMERCIALLY SENSITIVE. IT IS TO BE USED ONLY IN CONNECTION WITH WORK PERFORMED BY REPRODUCTION IN WHOLE OR IN PART FOR ANY PURPOSE OTHER THAN WORK PERFORMED BY IS FORBIDDEN EXCEPT BY EXPRESS WRITTEN PERMISSION OF IT IS TO BE SAFEGUARDED AGAINST BOTH DELIBERATE AND INADVERTENT DISCLOSURE TO ANY THIRD PAR or ?Information contained in this document is strictly con?dential and quali?es for con?dential treatment under 5.U.S.C. 552(b). No person shall have any right to disseminate. reproduce. quote. report or in any manner whatsoever utilize or rely on the contents of this document or information without the prior written authorization of Sabine Pass LNG. LP. in no circumstances shall the use of this document by any person or by Sabine Pass LNG. LP. in any presentation. meeting or discussion with any person imply that any such authorization is given. Sabine Pass LNG. L.P. retains all rights to any intellectual property that may be contained in this document.? To the extent that any Quali?ed Independent Third?Party reports were not so marked. the failure to mark as con?dential was inadvertent and in error. All Quali?ed Independent Third-Party reports submitted pursuant to the CAO are con?dential trade secret information. 5 Item 5 was marked ENERGY ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION. AND CONFIDENTIAL and the transmittal made the following request: ?The enclosed transcript is unredacted and contains Critical Energy/Electric Infrastructure Information. Con?dential Business Information. and con?dential information. Per 49 C.F.R. Sabine Pass Liquefaction. LLC formally requests the protection of this information. Each page of the document is marked ?con?dential.? 49 C.F.R. requires an operator to explain the basis for treating submitted information as con?dential. The enclosed transcript contains Critical Energy/Electric Infrastructure Information. Con?dential Business Information. and con?dential information because it transcribes hearing discussion related to detailed design schematics. proprietary analysis and procedures. and speci?c vulnerabilities related to critical infrastructure. Accordingly. Sabine Pass requests that PHMSA treat this August 9, 2018 Page 3 With the exception of the extracted pages in the attached Cheniere opposes the disclosure of the Requested Con?dential Information because (1) the Requested Con?dential Information contains trade secret and commercially sensitive con?dential information protected from disclosure under FOIA8 (?Exemption (2) release of the Requested Con?dential Information does not ful?ll the purposes of and (3) Requesters have not identi?ed any public interest supporting their requests which outweighs heniere?s interest in privacy. Cheniere further requests that any phone numbers, email addresses and physical addresses be redacted from any information released (including the cover letters in the attached PDF), because such personal information is protected from disclosure under FOIA Exemption 6.9 1. The Requested Con?dential Inform_ation Is Exempt from Disclosure Under Exemption 4 Cheniere opposes the disclosure of the Requested Con?dential Information pursuant to Exemption 4. Exemption 4 covers two categories of information in federal agency records: (I) trade secrets; and (2) information that is commercial or frnancial, obtained from a person, and privileged or con?dential. The Requested Con?dential Information is exempt under both standards as proprietary trade secret information and as proprietary business con?dential information. The Requested Con?dential Information includes trade secret information that has been developed by Cheniere and various vendors and consultants on behalf of and at signi?cant expense to Cheniere. ?Trade secret? is narrowly de?ned as ?a secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort.?lo Trade secret protection has been recognized for blueprints and design information.11 Courts have information as con?dential as described in including following the consultation procedures set out in the Departmental FOIA regulations. 49 CF 7.29. and providing written noti?cation at least ?ve business days before the intended disclosure date if PI-IMSA decides to disclose the information over our objections.? 7 The attached PDF includes an excerpt from Item 1 (Page 1 of the PDF). an excerpt from Item 2 (Pages 1-3 of PDF). an excerpt from Item 4 (Pages 1-3 of PDF for the May Report and Pages 1-4 of PDF for each the March and April Reports). an excerpt from Item 5 (Pages 1-2 of the PDF) and an excerpt from Item 6 (Pages 1-3 of the PDF). 8 Id. 552(b)(4). 9 5 U.S.C. 552(b)(6). See, Electric Frontier Found. V. O?ice of the Dir. 0f Nat 7 Intelligence. 639 F.3d 876. 888-89 (9th Cir. 2010) carriers? agents' email addresses. when not needed to identify the party communicating with the government. are protected from release by Exemption 6. If. however. a particular email address is the only way to identify the carriers' agent at issue from the disputed records. such information is not properly withheld under Exemption (emphasis in original?; Lewis US. Dep ?t of Justice. 867 F. Supp. 2d 1. 17 (D.D.C. 2011) (recognizing a privacy interest in telephone numbers). 1? Public Cifi:en Health Research Group FDA. 704 F.2d 1280. 1288 (DC. Cir. 1983). See, Henick Game?: 200 F. Supp. 2d 1321. 1326?28 (D. Wyo. 2000) (?nding ?teclmical blueprints depicting the design. materials. components. dimensions and geometry of the aircra?. engineering analyses. and engineering test reports? were ?within the scope of Exemption affd. 298 F.3d 1184. 1190 n.3 (10th Cir. 2002) (noting requester?s concession at oral argument that blueprints remained commercially valuable): Heeney August 9, 2018 Page 4 further noted that ?trade secret information regarding. . .processes, as well as quality control and internal security measures, of private business entities? was a suf?ciently speci?c description of sensitive information to trigger Exemption 4.12 The Requested Con?dential Information contains detailed data, design information, analyses, schematics, procedures and speci?cations regarding Cheniere?s Sabine Pass LNG Facility. Moreover, some of the Requested Con?dential Information is subject to con?dentiality agreements between Cheniere or its af?liates and its vendor/consultants. Prior to submission of the Requested Con?dential Information to PHMSA, heniere took reasonable measures to protect this material by clearly marking it as con?dential trade secret or commercial information. This is evidenced by Cheniere?s actions with respect to the manner in which it submitted the Requested Con?dential Information: heniere (1) informed PHMSA that it considered the Requested Con?dential Information to be con?dential trade secret or commercial information; (2) requested con?dential treatment for the material; and (3) marked the documents as con?dential trade secret or commercial information not to be released or provided redacted copies if the entirety of the document was not considered con?dential.13 concurs that the Requested Con?dential Information is trade secret information, it should not be released. If the information does not qualify as a trade secret, it may still be protected under Exemption 4. In this regard, the Requested Con?dential Information also is protected from release under FOIA Exemption 4 because it contains information that is (1) commercial or ?nancial, (2) obtained from a person, and (3) privileged or con?dential. As indicated above, the Requested Con?dential Information contains trade secret and proprietary information and data developed by Cheniere and various vendors and consultants on behalf of Cheniere, some of which is subject to con?dentiality agreements between Cheniere or its af?liates and its vendor/consultants. The DC. Circuit has held that an ?agency may withhold involuntarily submitted information as con?dential if disclosure would (1) impair the agency's ability to get information in the future or (2) cause substantial competitive harm to the entity that submitted the information.?14 A showing of actual harm is not necessary for Exemption 4 to apply. The Courts have clearly recognized that commercially sensitive information must not be disclosed if such disclosure ?is likely to . . . cause substantial harm to the competitive position of the person from whom the FDA, No. CV 97-5461. 1999 WL 35136489, *7 n.13 (CD. Cal. Mar. 16. 1999) (?nding ?design and testing data.? including compliance testing results and ?speci?cation of the materials used in constructing? electrode catheter. ?fall squarely within Exemption 4?s reference to ?trade secrets??). aff? d. 7 Fed. Appx. 770 (9th Cir. 2001). 12 Am. Small Bus. League Dep 't of Def, 674 Fed. Appx. 675. 677 (9th Cir. 2017) (citing Bowen v. US. Food Drug Admin. 925 F.2d 1225. 1227?28 (9th Cir. 1991)). ?3 See in?'a. notes 3-6. 14 See Judicial Watch Inc. FDA. 449 F.3d 141. 148 (DC. Cir. 2006). August 9, 2018 Page 5 information was obtained.?15 In People for the Ethical Treatment of Animals v. US. Department of Agricul ture, the court held that agency can establish a likelihood of substantial competitive injury by demonstrating that disclosure would provide competitors with valuable insights into the company's operations, give competitors pricing advantages over the company, or unfairly advantage competitors in future business negotiations.?16 Similarly, the US. District Court for the District of Columbia has upheld the withholding of data, experiences, approaches, and methodologies; (2) proprietary processes, organization of reports and analyses, facilities, and equipment; and (3) ?nancial information?17 where the agency posited that ?disclosure of the redacted information would, among other things, allow other entities to gain insight into. . .con?dential and proprietary information and strategies, [and] take advantage of techniques and approaches developed by [the company] without any cost.?18 Likewise, the Federal Energy Regulatory Commission has held that ?[r]elease of portions of [a report], which contain, among other things, commercially sensitive engineering data and plans and cause competitive harm?.19 In this regard, the disclosure of all or any portion the Requested Con?dential Information would result in irreparable commercial and competitive harm to Cheniere and/or the vendors and consultants that generated the Requested Con?dential Information on behalf of Cheniere. In particular, release would cause substantial harm to Cheniere?s competitive position as the sponsor of the ?rst operational LNG export facility in the continental US. heniere?s direct competitors include all other LNG projects currently in operation and in development.20 Based on the global nature of the LNG business, competitors include not only projects in the US. but abroad as well, all of which are looking to tap into the global LNG market. The LNG export market is extremely competitive and price sensitive. U.S. LNG projects are in competition for contracts to supply LNG to foreign nations with import capabilities, for construction contractors and third-party assistance. 15 Amoco Prod. Co. and Amoco Energv Trading Corp. Natural Gas Pipeline Co. of America. 82 FERC 61.231. 61.882-83 (1998). 15 People for the Ethical Treatment of Animals v. US. Dep ?t of Agric.. No. 03 195-SBC. 2005 US. Dist. LEXIS 10586. at 19-20 (D.D.C. May 24. 2005). ?7 Urban Air Initiative, Inc. Enr'tl. Prat. Agency. 271 F. Supp. 3d 241. 257 (D.D.C. 2017) 18 Id. at 258. ?9 Order Denying Request for Critical Energv Infonnation. 116 FERC 11 62.168 (2006). Similarly. the Federal Energy Regulatory has held that pursuant to Exemption 4. it ?appropriately withheld from public release privileged and con?dential. proprietary CEII information that could cause competitive harm? including contractor?s spreadsheets and underlying programs. Millennium Pipeline Co., L.L. C. 141 FERC 1] 61.198 (2012). 2? With regard to the Sabine Pass LNG Facility. Cheniere?s direct competitors include but are not limited to: Freeport LNG Development. L.P.. FLNG Liquefaction. LLC. FLNG Liquefaction 2. LLC. FLNG Liquefaction 3. LLC. Cameron LNG. LLC. Lake Charles LNG Export Company. LLC. Lake Charles LNG Company. LLC. Magnolia LNG. LLC. Golden Pass Products. LLC. Gulf LNG Liquefaction Company. LLC. Venture Global Calcasieu Pass. LLC. Texas LNG Brownsville LLC. Rio Grande LNG. LLC. Annova LNG Common Infrastructure. LLC. Annova LNG Brownsville A. LLC. Annova LNG Brownsville B. LLC. Annova LNG Brownsville C. LLC. Port Arthur LNG. LLC. Eagle LNG Partners Jacksonville LLC. Driftwood LNG LLC. and Jordan Cove Energy Project. L.P. August 9, 2018 Page 6 Therefore, competition amongst LNG export projects to complete construction in the most e?icient manner possible and to provide the lowest prices to customers is vital to continued success.21 Detailed facility design is one of the most critical and expensive components of the overall plans for an LNG facility. heniere developed this highly sensitive commercial and trade secret information exclusively for its own use, at signi?cant cost. Disclosure of this information, to any person who could release it publicly, would provide detailed design and operations information regarding the Sabine Pass LNG Facility, which would be of tremendous commercial interest and monetary value to competitors seeking to develop LNG export facilities. Such competitors could use this information to better understand Cheniere?s operations and gain a competitive edge without expending their own resources. These competitors would receive an rmfair competitive advantage having received valuable, proprietary, detailed instructions on plant construction and operation for free, driving their prices and costs down, without the cost and effort of development. Speci?cally, Item 1 (the Matrix Report) provides a technical analysis of process data associated with Tank S-103 at the Sabine Pass LNG Facility. Both the analysis and the data itself are proprietary technical information developed at Cheniere?s expense for its sole use. The information included in the Matrix Report discloses processes, methods, and supporting data and analyses relating to the Sabine Pass LNG Facility. Similarly, Item 2 (the Work Plan) contains a detailed comprehensive work plan that includes tank-speci?c purging plans, a root-cause analysis plan, a detailed repair and modi?cation plan, a continuing operation plan for facilities that remain in service, and a plan to return the affected tanks to service. Item 2 includes proprietary technical information relevant to the isolation, inspection, repair, and future operation of Tanks 8-101 and S-103 at the Sabine Pass LNG Facility. This proprietary technical information includes operational procedures, reports, and other analyses that disclose processes, methods, and supporting data and analyses relating to the Sabine Pass LNG Facility, which were developed at Cheniere?s expense for its sole use. Item 3 (the Third Party Reports), Item 4 (the Reports), Item 5 (the March 23, 2018 Hearing Transcript) and Item 6 (the Root Cause Failure Analysis) all include proprietary technical information relevant to operations at the Sabine Pass LNG Facility and to the ongoing repair of Tanks 8-101 and S-103. The information in Items 3-6 disclose processes, methods, and supporting data and analyses relating to the Sabine Pass LNG Facility, which were developed at Cheniere?s expense for its sole use. In particular, Item 3 contains detailed design drawings, technical procedures, and technical speci?cations. All Quali?ed Independent Third-Party reports submitted pursuant to the CAO are con?dential trade secret information. 21 See, e. g. Gaurav Shanna, U.S. LNG Exporters Reshaping Global Natural Gas Markets, Forbes (March 7. 2018) available at Tim Boersma. Charles K. Ebinger. and Heather L. Greenley. An assessment of US. natural gas exports. The Brookings Institution (July 13. 2015) available at as-ex 0113/. August 9, 2018 Page 7 2. Disclosin the Re uested Con?dential Information Would Not Ful?ll the oses 933C212: Exemption 4 affords protection to those submitters who are required to furnish commercial information to the government by safeguarding them from the competitive disadvantages that could result from disclosure. Ifthere is a requirement that this type of con?dential information be ?led with PHMSA, as is the case here, it must carry some assurance that the information will remain con?dential in order to protect the persons from whom the information was received, even if the harm of releasing such information may fall on parties other than Cheniere. FOIA would be 1mde1mined by requiring disclosure of con?dential information when doing so would lead to Cheniere?s competitive disadvantage, and therefore should deny the Request. 3. Re uesters have Failed to Identi an Public Interest in Releasin the Re nested Con?dential Information that Outweighs Cheniere?s Privacy Interests All of the Requesters have made vague generalized statements in support of the Requests. Mr. Hodes has not provided any reason for releasing the Requested Con?dential Information, nor has he identi?ed any public interest for doing so. Mr. Hodes? FOLA request merely states that he is seeking the Requested Con?dential Information in electronic format and provides no reason why it should be released. The News Requesters state that release will ?contribute signi?cantly to public understanding of how the federal government ensures pipeline safety? or ?contribute to the public?s understanding of your agency and the government at large.? heniere, in contrast, has provided substantial support for its position that its privacy and competitive position might be harmed by releasing the Requested Con?dential Information. Balancing these arguments demonstrates that Cheniere?s interests outweigh the Requesters?. In conclusion, the Requested Con?dential Information should not be released to the Requesters because (1) it contains con?dential trade secret and commercial information that would harm Cheniere?s competitive position if released, (2) its release does not ful?ll the purposes of FOIA, and (3) the Requesters have not identi?ed any public interest supporting the Requests that outweighs heniere?s interest in privacy. Should you have any questions about the instant ?ling, please feel free to contact the undersigned at (212) 506-3710. Respectfully Submitted, Lisa M. Tonerv Lisa M. Tonery Mariah T. Johnston Attorneys for Cheniere Energy, Inc.