Long v. U.S. I.R.S.

• Decision Date: 02 May 1979
• Docket Number: No. 76-3734,76-3734
• Citation: 596 F.2d 362
• Parties: 79-1 USTC P 9381, 5 Media L. Rep. 1165 Susan B. LONG and Philip H. Long, Plaintiffs-Appellants, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 362

596 F.2d 362

79-1 USTC P 9381, 5 Media L. Rep. 1165

Susan B. LONG and Philip H. Long, Plaintiffs-Appellants, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellee.

No. 76-3734.

United States Court of Appeals, Ninth Circuit.

May 2, 1979.

American Civil Liberties Union, Stephen K. Strong, Seattle, Wash., for plaintiffs-appellants.

Richard W. Perkins, Murray S. Horwitz (argued), Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before KOELSCH and KENNEDY, Circuit Judges, and JAMESON, ^* District Judge.

KENNEDY, Circuit Judge:

This case comes as an appeal from the district court's granting of appellee's motion for partial summary judgment by which appellants were denied access to certain information they seek under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Appellants request all the information the IRS has compiled in the Taxpayer Compliance Measurement Program (TCMP). TCMP is a continuing series of statistical studies by the IRS on a national scale to measure the level of compliance with federal tax laws.

The IRS has disclosed all statistical tabulations based on the TCMP. ¹ The primary issue on appeal is whether TCMP source material must also be disclosed. This source material is in the form of check sheets and data tapes. Check sheets are the underlying documents from which TCMP statistics and conclusions are derived. Each check sheet contains information from an individual taxpayer's tax return and includes the taxpayer's name, address, social security number, and all the financial data reported on the return. A check sheet also contains additional information obtained by audit of the return. The computer data tapes contain the same information as the check sheets, with the exception of the taxpayer's name and address. Appellants state they are interested primarily in the data tapes; they seek individual check sheets only where necessary to interpret the tapes. Appellants do not seek the identities of individual taxpayers, and they request that identifying information be deleted both from the tapes and the check sheets.

We dispose at the outset of any contention that computer tapes are not generally within the FOIA. The district court apparently determined that the term "records," as used in the Act, does not include computer tapes. This conclusion, however, is quite at odds with the purpose and history of the statute. The Senate Report which accompanied the 1974 amendments to the FOIA expressly considered special problems of computer records in the context of search and copying fees. S.Rep.No.854, 93rd Cong., 2d Sess. 12 (1974). Moreover, the Treasury Department's FOIA regulations make explicit provision for disclosure of "records maintained in computerized form." 31 C.F.R. § 1.5(f) & 1.6(g)(3)(ii) (1977). In view of the common, widespread use of computers by government agencies for information storage and processing, any interpretation of the FOIA which limits its application to conventional written documents contradicts the "general philosophy of full agency disclosure" which Congress intended to establish. S.Rep.No.813, 89th Cong., 1st Sess. 3 (1965). We conclude that the FOIA applies to computer tapes to the same extent it applies to any other documents. Cf. Save the Dolphins v. United States Department of Commerce, 404 F.Supp. 407, 410-11 (N.D.Cal.1975) (ordering disclosure of nonexempt portions of a motion picture); See also SDC Development Corp. v. Mathews, 542 F.2d 1116 (9th Cir. 1976) (holding that computer materials for library reference are exempt but basing the ruling solely on the nature of the information contained in the tapes.)

More difficult is the IRS argument that TCMP source information is protected from disclosure under exemption 3 of the Act, which provides the FOIA does not apply to matters that are:

(3) specifically exempted from disclosure by statute . . . provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld . . . . ²

Exemption 3 necessarily requires reference to some other statute, and the IRS relies primarily on 26 U.S.C. § 6103, which provides detailed rules for the disclosure of tax "returns" and "return information." The IRS argues that the tapes and check sheets are return information, prohibited from disclosure by section 6103 except where that section so allows. Appellants reply that the source data does not constitute "return information" as defined by section 6103 and point to what the parties call the "Haskell amendment," which provides that "return information" does not include data in a form which "cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." 26 U.S.C. § 6103(b)(2). Appellants argue that they seek information with the taxpayers' identities deleted and that so edited the data are not "return information" as defined by the statute.

The district court, applying the predecessor to the current section 6103, held the source information exempt from disclosure even if names, addresses, and social security numbers are deleted. The court held further that whether or not removal of the identifying information would take the material outside the scope of section 6103, the IRS had no duty to remove the identifying material to bring it within the FOIA.

Turning first to the obligation of the agency to edit the materials, we cannot agree with the district court. The FOIA requires that "(a)ny reasonably segregable portion" of a requested record must be revealed "after deletion of the portions which are exempt." 5 U.S.C. § 552(b). See 31 C.F.R. § 1.2(c)(3) (1977). The district court, relying primarily on Chief Justice Burger's dissent in Department of the Air Force v. Rose, 425 U.S. 352, 385, 96 S.Ct. 1592, 48 L.Ed.2d 11 (1976) and on NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 162, 95 S.Ct 1504, 44 L.Ed.2d 29 (1975), concluded that the process of deleting identifying information would result in the creation of a whole new record and that therefore segregation of the material was not required. We do not believe, however, that the mere deletion of names, addresses, and social security numbers results in the agency's creating a whole new record. The facts here are very different from the Sears case. There, the issue was whether agencies were required to explain the meaning of the phrase "in the circumstances of this case" and to provide all the documents on which they relied as showing the circumstances of the case. The Supreme Court held that the FOIA does not require agencies to create records that did not previously exist. Requiring an agency to write an opinion upon request is far different, however, from requiring it to excise a name or social security number from an existing record. Rose does not support the IRS position either. The reasoning of the majority opinion in that case leads us to conclude that the editing required here is not considered an unreasonable burden to place on an agency. Rose concerned records of disciplinary proceedings at the Military Academy and sensitive questions of privacy were involved. Although the district court in that case was required to determine on remand whether the deletion of personal references would be sufficient to safeguard privacy, the majority apparently rejected the argument that such editing could not be required because it was too burdensome.

The district court in the present case concluded that the deletion of identifying information would be so expensive that the IRS was relieved of its duty imposed by the FOIA to segregate revealable information. Noting that the IRS had estimated the total cost of editing and reproducing all the check sheets and tapes to be about $160,000, the court held that "the magnitude of time and expense required to 'sanitize' the TCMP source material prior to disclosure is a matter of law unreasonable." Record, vol. III, at 862.

As an initial matter, we note the $160,000 is the estimated cost for editing and reproduction. Both the FOIA and Treasury regulations permit a fee to be charged for the cost of record search and reproduction, so the IRS will not bear the costs attributable to these functions. 31 C.F.R. § 1.6(g)(1)(i) & (ii), (g)(3)(ii) (1977). Moreover, the most significant portion of the $160,000 expense figure, about $150,000, is the estimate for editing and reproducing all of the 200,000 check sheets. Appellants have indicated, however, that they do not seek all or even most of the check sheets. They are primarily interested in the computer tapes and only seek the check sheets where there is a problem with interpretation of the tapes.

Even after these appropriate adjustments have been made, a very difficult question remains of whether the cost and inconvenience to the agency attributable to the editing process can be the sole basis for determining that material is not reasonably segregable. Treasury regulations define "reasonably segregable portions" to be "any portion of the record which is not exempt . . . and which after deletion of the exempt material still conveys meaningful and nonmisleading information." 31 C.F.R. § 1.2(c)(3) (1977). These regulations make no reference to cost or convenience as a relevant factor in the determination.

Additional insights on this question can be derived from the 1974 amendments to the FOIA dealing with fees, which provides that agencies can only charge for the direct costs of search and duplication. Pub.L.No.93-502, 88 Stat. 1561 (codified at 5 U.S.C. § 552(a)(4)(A)). As a result of this amendment, the Treasury Department adopted a new FOIA fee regulation which states that "under no circumstances will a fee be charged for . . . deleting exempt matter . . . ." 31 C.F.R. § 1.6(a)(1) (19...