Willamette Industries, Inc. v. United States, Civ. No. 78-336.

• Decision Date: 28 May 1981
• Docket Number: Civ. No. 78-336.
• Citation: 530 F. Supp. 904
• Parties: WILLAMETTE INDUSTRIES, INC., Plaintiff, v. UNITED STATES of America and Jerome Kurtz, Commissioner of Internal Revenue, Defendants.
• Court: U.S. District Court — District of Oregon

530 F. Supp. 904

WILLAMETTE INDUSTRIES, INC., Plaintiff, v. UNITED STATES of America and Jerome Kurtz, Commissioner of Internal Revenue, Defendants.

Civ. No. 78-336.

United States District Court, D. Oregon.

May 28, 1981.

Charles P. Duffy, Phillip N. Jones, Duffy, Georgeson, Kekel & Benner, Portland, Or., for plaintiff.

Sidney I. Lezak, U. S. Atty., Judith Kobbervig, Asst. U. S. Atty., Portland, Or., Michael J. Kearns, Atty., Tax Division, Dept. of Justice, Washington, D. C., for defendants.

OPINION

PANNER, District Judge:

Plaintiff, Willamette Industries, a timber producer and manufacturer of wood and forest products, brought this Freedom of Information Act (FOIA) action to gain access to documents kept by the Internal Revenue Service, which would show how the IRS arrives at fair market values for timber in making tax assessments for the timber harvested by plaintiff each year.

Specifically, plaintiff seeks:

a) access to IRS findings as to the fair market value of timber in western Oregon and northern Louisiana, for tax years ending 1974, 1975 and 1976; and

b) access to private timber sales data compiled by the IRS or foresters, for use by the IRS as comparable sales in the valuation of timber subject to tax.¹

Plaintiff contends that disclosure is required under 5 U.S.C. § 552(a)(2), because the materials sought are "final opinions of an agency," and that the material is not exempt from disclosure under 26 U.S.C. § 6103, because the documents sought are data and statistics, and are covered by the Haskell amendment, 26 U.S.C. § 6103(b)(2).

The matter was submitted on the record and on briefs. Disclosure is ordered.

SUMMARY OF ISSUES

Under the FOIA, the agency has the burden when it contends that requested documents are exempt from disclosure. Ollestad v. Kelly, 573 F.2d 1109, 1110 (9th Cir. 1978). Accordingly, to prevail, the government must show that:

1. The material sought is not a "final opinion," within the meaning of 5 U.S.C. § 552(a)(2), OR

2. The material sought is not statistics or data within the meaning of the Haskell amendment, OR

3. The material sought cannot be edited so as to avoid identifying taxpayers, OR

4. The material, after the necessary editing, would be meaningless, OR

5. The burden of editing the material would be too high.

The legislative history of the FOIA emphasizes that it is not a withholding statute but a disclosure statute. Uncertainties in the statutory language are to be resolved in favor of disclosure, and exemptions are to be read narrowly. County of Madison, New York v. U. S. Department of Justice, 641 F.2d 1036, 1040 (1st Cir. 1981).

DISCUSSION

1. Are the Documents Sought "Final Opinions" under 5 U.S.C. § 552(a)?

5 U.S.C. § 552(a)(2)(A) provides:

(a) Each agency shall make available to the public information as follows:

(2) Each agency, in accordance with published rules, shall make available for public inspection and copying —

(A) Final opinions, including concurring and dissenting opinions, as well as orders, made in the adjudication of cases.

Defendants contend that the engineer's reports sought by plaintiff are not "final opinions," within the meaning of this section. They assert that the engineer's reports, from which the fair market value is determined, are not "final," but only recommendations, subject to agency and to judicial appeal. They rely on NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 95 S.Ct. 1504, 44 L.Ed.2d 29 (1975), for the proposition that agency reports which lead to litigation are not final.

Plaintiff correctly challenges the breadth of this assertion. Sears held that appeals and advice memoranda, prepared by the NLRB General Counsel, were exempt from the FOIA under exemption five, covering attorney work product. Defendants have not, and could not, claim this exemption, because the material they wish to protect is not attorney work product.

The Court in Sears made it clear that this conclusion rested not on the characteristic of "finality" in the document in question, but rather on the attorney work-product exemption:

We recognize that an Advice or Appeals Memorandum directing the filing of a complaint — although representing only a decision that a legal issue is sufficiently in doubt to warrant determination by another body — has many of the characteristics of the documents described in 5 U.S.C. § 552(a)(2). Although not a "final opinion" in the "adjudication" of a "case" because it does not effect a "final disposition," the memorandum does explain a decision already reached by the General Counsel which has real operative effect — it permits litigation before the Board; and we have indicated a reluctance to construe Exemption 5 to protect such documents. Supra, at 153. We do so in this case only because the decisionmaker — the General Counsel — must become a litigating party to the case with respect to which he has made his decision. The attorney's work-product policies which Congress clearly incorporated into Exemption 5 thus come into play and lead us to hold that the Advice and Appeals Memoranda directing the filing of a complaint are exempt whether or not they are, as the District Court held, "instructions to staff that affect a member of the public."

421 U.S. at 160, 95 S.Ct. at 1521.

Unlike the appeals and advice memoranda, the engineer's reports plaintiff seeks are routinely disclosed to taxpayers, either informally or as part of a statutory notice of deficiency. The engineer's report is the agency's final opinion on the valuation of timber. Defendants' expert agreed with plaintiff's expert that the engineer's reports are "final opinions of timber valuation."

Defendants' argument that no opinion can be final which is subject to judicial review must fail. Nearly all agency opinions are subject to judicial review. I find no intent to exclude such orders from the provisions of the Act merely because they are appealable.

2. 26 U.S.C. § 6103: Haskell Amendment's Applicability to the Requested Material.

Defendants claim that plaintiff's request is exempt from the FOIA under 5 U.S.C. § 552(b)(3), which excludes from disclosure matters:

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.

They contend that 26 U.S.C. § 6103 qualifies as such a statute, Chamberlain v. Kurtz, 589 F.2d 827, 838-39 n.33 (5th Cir.) cert. denied, 444 U.S. 842, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979), and that it precludes disclosure of the return information sought by plaintiffs.

26 U.S.C. § 6103, in pertinent part, provides:

§ 6103. Confidentiality and disclosure of returns and return information

(a) General rule. — Returns and return information shall be confidential, and except as authorized by this title —

(1) no officer or employee of the United States,

(2) no officer or employee of any State or of any local child support enforcement agency who has or had access to returns or return information under this section, and

(3) no other person (or officer or employee thereof) who has or had access to returns or return information under subsection (e)(1)(D)(iii), subsection (m)(4)(B), or subsection (n),

shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section. For purposes of this subsection, the term "officer or employee" includes a former officer or employee.

(b) Definitions. — For purposes of this section—

(1) Return. — The term "return" means any tax or information return, declaration of estimated tax, or claim for refund required by, or provided for or permitted under, the provisions of this title which is filed with the Secretary by, on behalf of, or with respect to any person, and any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or part of, the return so filed.

(2) Return information. — The term "return information" means—

(A) a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense, and

(B) any part of any written determination or any background file document relating to such written determination (as such terms are defined in section 6110(b)) which is not open to public inspection under section 6110, but such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.

Plaintiff agrees that the information it seeks is "return information," but contends that it is "data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer" — the Haskell amendment's qualification to section 6103. Defendants contend that the Haskell amendment does not apply because the material sought is not the sort of data covered by the amendment. They argue that the Haskell amendment is aimed only at statistical studies and compilations of data, and that the engineer's reports and private sales information requested by plaintiff do not fit that description. Two cases are helpful on this issue: Long v. U. S. Internal Revenue Service, 596 F.2d 362 (9th...