 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued September 6, 2016          Decided February 14, 2017

                       No. 15-5117

   NATIONAL SECURITY COUNSELORS AND JEFFREY STEIN,
                     APPELLANTS

                             v.

         UNITED STATES DEPARTMENT OF JUSTICE,
                      APPELLEE


        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:13-cv-00556)


     Kelly B. McClanahan argued the cause and filed the
briefs for appellants.

    Brian P. Hudak, Assistant U.S. Attorney, argued the
cause for appellee. With him on the brief was R. Craig
Lawrence, Assistant U.S. Attorney.

    Before: BROWN, SRINIVASAN, and WILKINS, Circuit
Judges.

    Opinion for the Court filed by Circuit Judge SRINIVASAN.
                               2
     SRINIVASAN, Circuit Judge: The Freedom of Information
Act generally provides for persons to request the disclosure of
records retained by administrative agencies. FOIA also
addresses the charging of fees by agencies to process the
release of records.

     This case involves challenges raised by two separate
FOIA requesters to the fees assessed against them by the
Department of Justice for processing their requests for
records. One requester argues that the fees assessed against
him exceed the amounts permitted by the statute. The other
contends that its request falls within a statutory waiver of fees
for certain disclosures furthering the public’s understanding
of government operations. The district court denied both
claims and awarded summary judgment to the Department.
We affirm the district court’s rejection of the second
requester’s argument for a statutory waiver of fees, but we
vacate and remand for further proceedings with regard to the
first requester’s challenge to the amount of fees assessed
against him.

                               I.

     The first fee dispute involved in this case concerns a
September 13, 2011, FOIA request submitted to the Federal
Bureau of Investigation by appellant Jeffrey Stein. Stein is a
columnist and blogger who writes about national security
issues. He sought disclosure of “all pages on the internal
Federal Bureau of Investigation (‘FBI’) Records Management
Division (‘RMD’) website, . . . as well as all documents,
images, audio and video files, and any other files posted on
the RMD website.” FOIA Request from Jeff Stein to David
M. Hardy, Chief, FBI Record/Info. Dissemination Section
(Sept. 13, 2011). The FBI, a component of the Department of
Justice, responded to Stein’s request by releasing, free of
                               3
charge, a CD containing an initial 567 pages of responsive
material. The agency further conveyed that it had located an
additional 21,753 responsive pages, which the agency would
produce for Stein on multiple CDs if he paid a fee of $665.
The FBI calculated that fee pursuant to its interim release
policy, under which it responds to large document requests by
burning a series of CDs, each of which contains a maximum
of 500 pages of responsive documents. The agency charges
requesters $15 per CD.

     Stein did not pursue any administrative appeal of that
initial fee determination within the agency. Instead, he
brought an action in district court, claiming that the FBI’s fee
policies, at least as they apply to large requests like his own,
are inconsistent with FOIA.

     The second fee dispute involved in this case arises out of
two September 19, 2011, FOIA requests submitted to the
Department of Justice by appellant National Security
Counselors (NSC), a non-profit law firm. One of NSC’s
requests asked for documents concerning all FOIA cases
handled by the Federal Programs Branch of the Department of
Justice from 2000 to the present. The other request sought
“all sworn declarations made by agency representatives as
part of certain FOIA or Privacy Act litigation between 2002-
2006, inclusive.” FOIA Request from NSC to James M.
Kovakas, FOIA/Privacy Act Officer, Dep’t of Justice Civil
Div. (Sept. 19, 2011). In conjunction with both requests,
NSC asked for a waiver of charges under a FOIA provision
mandating waiver or reduction of fees for certain disclosures
deemed to be in the public interest.             5 U.S.C. §
552(a)(4)(A)(iii). The agency denied NSC’s requests for a
public-interest fee waiver.
                               4
    Stein and NSC brought an action under FOIA against the
Department of Justice, contesting the fees assessed against
them by the agency. The district court granted summary
judgment in favor of the Department. Stein and NSC then
brought this appeal.

                              II.

     We first consider Stein’s challenge to the fees assessed
by the FBI under its interim release policy for production of
multiple CDs containing responsive documents. We review
the district court’s grant of summary judgment de novo. See,
e.g., Judicial Watch, Inc. v. U.S. Dep’t of Justice, 813 F.3d
380, 383 (D.C. Cir. 2016). We vacate the grant of summary
judgment against Stein and remand for further proceedings.

                              A.

     As a threshold matter, the agency contends that Stein’s
failure to exhaust administrative remedies precludes judicial
review of his challenge to the interim release policy. We are
unpersuaded. Because a FOIA requester’s failure to exhaust
administrative remedies “is not [a] jurisdictional” bar to
review, it is within our discretion to entertain Stein’s
arguments. Hidalgo v. FBI, 344 F.3d 1256, 1258 (D.C. Cir.
2003). Although “FOIA’s administrative scheme favors
treating failure to exhaust as a bar to judicial review,” id. at
1259, we conclude that, in the specific circumstances of this
case, the purposes of the exhaustion doctrine would not be
served by declining to hear Stein’s claim.

    Stein filed this suit along with two other plaintiffs, NSC
and an organization called Truthout (which did not join this
appeal). While NSC asserted multiple claims, Stein and
Truthout raised only one, in which they (together with NSC)
                              5
contested the FBI’s fees under its interim release policy.
Stein did not pursue any administrative appeal of the agency’s
assessment of fees under that policy, but both NSC and
Truthout exhausted their administrative remedies.

     We have previously elected to consider the claim of a
party who failed to exhaust agency remedies when that
party’s claim and the claim of someone who did personally
exhaust “are so similar that it can fairly be said that no
conciliatory purpose would be served” by requiring
exhaustion from both parties. Foster v. Gueory, 655 F.2d
1319, 1322 (D.C. Cir. 1981); see also Cellnet Commc’n, Inc.
v. FCC, 965 F.2d 1106, 1109 (D.C. Cir. 1992). Here, when
two co-plaintiffs jointly asserting precisely the same claim in
the same action did exhaust, we elect to consider Stein’s
challenge notwithstanding his own failure to exhaust.

     To be sure, neither of the co-plaintiffs presently stands
alongside Stein in challenging the agency’s fees for producing
multiple CDs under the FBI’s interim release policy:
Truthout is not a party to the appeal at all, and NSC, while
appealing on other grounds (see Part III, infra), retains no
further stake as to this particular challenge because the FBI
has disclosed, free of charge, the documents NSC requested in
connection with the claim. Still, the fact remains that both
Truthout and NSC exhausted administrative remedies with
regard to the same claim brought jointly with Stein’s in the
same case. In the circumstances, denying review of Stein’s
companion claim on grounds of his own non-exhaustion
would not serve the purposes of requiring administrative
exhaustion—i.e., enabling the agency to “function efficiently”
and to “have an opportunity to correct its own errors,”
“afford[ing] the parties and the courts the benefit of its
experience and expertise,” and “compil[ing] a record which is
adequate for judicial review.” Weinberger v. Salfi, 422 U.S.
                               6
749, 765 (1975).     We therefore proceed to the merits of
Stein’s challenge.

                              B.

     The agency submitted a declaration by David Hardy, the
Chief of the Record/Information Dissemination Section at the
FBI, in which it explained the basis for the $665 fee
assessment against Stein. Hardy Decl. ¶ 26 (Sept. 17, 2013).
Under the FBI’s interim release policy for large document
requests, the FBI includes up to 500 pages of responsive
documents on a single CD. Due to the confidential nature of
many of its records, the FBI, before burning each CD, runs
what it refers to as the “Integrity” protocol, a computer
program that scans for “exempt words, names, confidential
sources, or classified techniques” in responsive documents.
Id. ¶ 33(c). For each 500-page CD, the Integrity protocol
takes approximately 50 minutes to complete. The Hardy
Declaration thus explains that, based on the applicable
government pay scale for 50 minutes of operator labor, the
“average operator cost for the Integrity process alone is
$39.50.” Id. ¶ 33(d) n.18. The FBI releases completed CDs
to requesters for $15 apiece, a rate significantly less than the
FBI’s asserted labor costs for producing each CD. Because
the FBI identified 21,753 pages of responsive material in
addition to the initial 567-page CD of disclosures, the FBI
offered to produce the remaining material on forty-four
additional CDs, each containing up to 500 pages, for a total
charge of $660. The final charge of $665 assessed against
Stein includes a $5 fee for the initial 567-page CD, which the
FBI collects only if a requester elects to pay for additional
disclosures.

    FOIA imposes two salient limitations on the fees an
agency can charge requesters. First, fees must “be limited to
                              7
reasonable standard charges.” 5 U.S.C. § 552(a)(4)(A)(ii).
Second, an agency may recover “only the direct costs of
search, duplication, or review.” Id. § 552(a)(4)(A)(iv). Stein
asserts that the $665 fee assessed against him under the
interim release policy fails both requirements.

     Stein first contends that the policy, by limiting the
number of pages included on each CD to 500, produces fees
exceeding “reasonable standard charges.” There is no dispute
that each CD can hold far more than 500 pages of material.
Stein demonstrated that the pages responsive to his request
likely could have fit onto one CD rather than the forty-four
CDs on which the agency proposed to disclose the documents.
If the charges assessed under the interim release policy for
producing forty-four CDs (rather than one) amounted to an
improper inflation of fees “with a view to effectively denying
access,” the policy would infringe FOIA. Nat’l Treasury
Emp’s Union v. Griffin, 811 F.2d 644, 650 (D.C. Cir. 1987).

     That is not the case here. The FBI regularly receives
FOIA requests encompassing a massive number of responsive
documents. Due to the time it takes the agency to run the
Integrity protocol, the processing of a large request, if not
divided into segments, could substantially delay disclosure to
other requesters who seek a smaller number of documents.
As explained in the Hardy Declaration, the interim release
policy thus aims to enable the FBI “to develop multi-track
processing with the goal of responding to more requests.”
Hardy Decl. ¶ 33(a). By processing requests in 500-page
increments, the policy ultimately “provides more pages to
more requesters,” avoiding situations in which “a few, large
queue requests monopolize finite processing resources.” Id.
Far from giving rise to an improper inflation of fees that
effectively denies access to requesters, the FBI’s interim
                               8
release policy serves to promote efficient responses to a larger
number of requesters.

     Because the agency has come forward with a reasonable,
non-obstructionist explanation for the interim release policy’s
500-page-per-CD limitation, that limitation does not result in
a violation of FOIA’s mandate that agencies recover only
“reasonable standard charges.” That is true even though the
policy may, to some degree, increase the cost of disclosure for
large requests. FOIA’s reasonable-charge mandate, as Stein
concedes, does not require an agency to adopt the lowest-cost
method of responding to requests. Nor, relatedly, does that
statutory mandate require the FBI to waive its interim release
policy on request in individual cases. FOIA does not stand in
the way of an agency’s formulation and application of a
reasonable, generally applicable release protocol. Because
the FBI’s justifications for its interim release policy relate to
the efficient processing of requests, it can permissibly adhere
to the standard 500-page limit in the face of a case-specific
waiver request even if, as Stein observes, it occasionally
exercises its discretion to release CDs containing more than
500 pages (as with the initial 567-page CD released to Stein).

     Stein alternatively contends that the fees assessed under
the interim release policy exceed the agency’s “direct costs of
search, duplication, or review.” 5 U.S.C. § 552(a)(4)(A)(iv).
His argument begins with the proposition that the FBI’s
estimation of its direct labor costs at $39.50 per CD rests on
an assumption that running the Integrity program requires 50
minutes of employee labor. Stein questions that assumption,
arguing that it is unclear how much of the 50-minute time
period needed to run the Integrity protocol in fact requires the
actual involvement of an FBI operator. For instance, Stein
submits, the agency’s description of the Integrity program is
consistent with a scenario in which an operator initially
                                 9
activates the software but then sits idly by while the program
processes documents with little or no ongoing employee
engagement. If that were so, the FBI’s labor costs associated
with the Integrity program might fall well below the $15-per-
CD charge under the interim release policy. Because the
FBI’s account of its direct production expenses rests on the
labor costs ostensibly associated with running the Integrity
program, Stein argues that there remains a genuine issue,
precluding the entry of summary judgment against him,
concerning whether the agency’s fees exceed its direct costs.

     We agree with Stein that the Hardy Declaration’s
explanation of the Integrity program lacks adequate
specificity to determine whether, and to what extent, the 50-
minute period for running the program involves employee
engagement rather than idle time. Of course, FOIA does not
require an agency to document its labor or other production
costs with the exactitude of minute-by-minute detail. But
here, after the agency initially submitted its explanation of
labor costs in the Hardy Declaration, which were grounded in
its assertion that the Integrity program generally takes 50
minutes to run, Stein raised questions about whether that
period involves any meaningful employee engagement. The
FBI, despite its awareness of Stein’s argument, gave no
supplemental information addressing whether the operation of
the Integrity program in fact entails any ongoing employee
interaction. Given those circumstances, we conclude that
there remained a genuine issue, foreclosing the entry of
summary judgment, concerning whether the fees assessed by
the agency exceeded its direct costs.

     The agency notes that Stein’s (and his co-plaintiffs’)
briefing in the district court at one point stated that it “is true”
that “running Integrity on a single CD costs more than $15.”
We do not read that statement to constitute a binding and
                              10
irrevocable concession that the direct costs of producing a
single CD exceed the FBI’s per-CD charge of $15. Rather,
we understand the statement, considered in context, to come
into play only if one assumes that the Integrity process
involves no idle time on the part of the operator. Otherwise,
Stein’s argument to the effect that the Integrity process might
involve employee idle time—which Stein repeatedly urged in
the district court (including on the next page of the same
brief), and which necessarily calls into question whether the
direct costs of producing a CD exceed the per-CD charge of
$15—would have been an entirely self-defeating one.
Consequently, there remains a genuine issue of material fact
concerning whether the direct costs of producing a CD exceed
$15.

     In so ruling, we in no way mean to call into question the
possibility that the agency will adequately demonstrate on
remand that the FBI’s labor (or other direct) costs under the
interim release policy in fact equal or exceed $15 per CD.
Indeed, the agency might be able to do so in short order. We
require only that the agency provide a sufficient factual basis
upon which the district court can make the determination that
the fees assessed under the interim release policy do not
exceed direct costs.

                             III.

    We turn now to the second fee dispute at issue in this
case, arising from NSC’s requests for records concerning (i)
post-2000 FOIA cases handled by the Department of Justice’s
Federal Programs Branch and (ii) sworn declarations made by
Department representatives in connection with certain FOIA
and Privacy Act litigation between 2002 and 2006. NSC
claims entitlement to a waiver of fees for those requests
pursuant to FOIA’s provision establishing a waiver or
                                11
reduction of fees for certain disclosures in the public interest.
5 U.S.C. § 552(a)(4)(A)(iii).

     A waiver or reduction of fees under that provision rests
on satisfaction of two requirements. First, a requester must
show that “disclosure of the information is in the public
interest because it is likely to contribute significantly to public
understanding of the operations or activities of the
government.” Id. Second, a requester must show that
disclosure is not “primarily in [its] commercial interest.” Id.
Because the Department here concedes that NSC lacks any
overriding commercial interest, the first requirement alone is
in dispute. As to that requirement, the district court agreed
with the Department that disclosure to NSC was unlikely to
contribute significantly to public understanding of the
government’s operations or activities. Limiting ourselves “to
the record before the agency,” id. § 552(a)(4)(A)(vii), we
review the denial of NSC’s fee-waiver request de novo, and
affirm.

     While fee-waiver applications are to be “liberally
construed” in favor of finding that requesters meet FOIA’s
two-prong test, requesters still must justify their entitlement to
a waiver of fees in “reasonably specific” and “non-
conclusory” terms. See Judicial Watch, Inc. v. Rossotti, 326
F.3d 1309, 1310 (D.C. Cir. 2003). Because NSC failed to
provide adequate evidence suggesting that it would
effectively disseminate its requested information in
furtherance of the public’s understanding of government
operations, we find that NSC failed to carry its burden to
demonstrate its entitlement to a waiver of fees.

    As we have explained, although a fee-waiver applicant
need not demonstrate its ability to reach a “wide audience,” it
must at least show that it can “disseminate the disclosed
                               12
records to a reasonably broad audience of persons interested
in the subject.” Cause of Action v. FTC, 799 F.3d 1108, 1116
(D.C. Cir. 2015) (quoting Carney v. U.S. Dep’t of Justice, 19
F.3d 807, 815 (2d Cir. 1994)). Here, we agree with the
Department that, based on the state of NSC’s website at the
time of its FOIA requests, it appeared to be “no more
tha[n] . . . a clearing house for the records [it] receive[d]”
through FOIA. Denial Letter from James M. Kovakas,
FOIA/Privacy Act Officer, Dep’t of Justice Civil Div., to Kel
McClanahan, Exec. Dir., NSC (Oct. 17, 2011); see Home
Page, Nat’l Sec. Counselors (Sept. 20, 2011),
https://web.archive.org/web/20111104000523/http://nationals
ecuritylaw.org. In addition, the Department correctly noted
that NSC did “not appear [to be] actively engaged in
gathering information to produce” original publications, as
“[t]he ‘NSC Publications’ section of [its] website contains
only three publications, two of which were written . . . prior to
NSC’s existence.” Denial Letter on Administrative Appeal
from Janice Galli McLeod, Assoc. Dir., Dep’t of Justice
Office of Info. Policy, to Kel McClanahan, Exec. Dir., NSC
(May 22, 2012).

     NSC, moreover, produced no information about the size
of its audience or the amount of traffic received by its
website. NSC’s own stated plans about its intended use of the
tens of thousands of pages of records encompassed by its
request indicated only that it hoped to perform “unbiased
analyses,” “develop a predictive model,” “or at least write a
white paper.” FOIA Requests from NSC to James M.
Kovakas, FOIA/Privacy Act Officer, Dep’t of Justice Civil
Div. (Sept. 19, 2011). It further suggested that “the raw
statistical data mined from these records . . . would prove
valuable to any person attempting to model the respective
agencies’ FOIA implementation procedures, policies,
patterns, and practices.” Id. NSC neither identified a
                              13
discernible audience for the disclosures in their raw form nor
demonstrated its possession of the requisite scientific or
technical sophistication to analyze and convey the data in a
more broadly digestible form.

     We have previously upheld a denial of a fee-waiver
request in circumstances in which a requester “failed to
identify the newspaper company to which he intended to
release the requested information, his purpose for seeking the
requested material, or his professional or personal contacts
with any major newspaper companies.” Larson v. CIA, 843
F.2d 1481, 1483 (D.C. Cir. 1988). Here, while NSC provided
some barebones indication of how it intended to use its
requested information, it similarly failed to provide
sufficiently specific and non-conclusory statements
demonstrating its ability to disseminate the disclosures to a
“reasonably broad audience of persons interested in the
subject.” Cause of Action, 799 F.3d at 1116. That deficiency
“alone is a sufficient basis for denying the fee waiver
request.” Larson, 843 F.2d at 1483. We therefore affirm the
denial of NSC’s request for a public-interest fee waiver.

                     *    *   *    *   *

    For the foregoing reasons, we vacate the district court’s
grant of summary judgment with respect to Stein’s claim and
remand for further proceedings consistent with our opinion.
We affirm the district court’s grant of summary judgment in
favor of the Department in connection with NSC’s request for
a public-interest fee waiver.

                                                  So ordered.
