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Georgia-Pacific Corp. v. Internal Revenue Service

April 13, 2007


The opinion of the court was delivered by: Reggie B. Walton United States District Judge


Georgia-Pacific Corporation ("the plaintiff") has filed this action seeking disclosure of certain records requested pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 522 et seq. (2000), and concerning the promulgation of a 1972 regulation by the United States Department of the Treasury ("Treasury"). Complaint ("Compl.") ¶ 1. The plaintiff now moves for partial summary judgment, alleging that the Internal Revenue Service ("IRS" or "the defendant") has (1) failed to conduct an adequate search for documents responsive to its FOIA request; and (2) improperly withheld in full seven responsive documents under Exemption 5 of the FOIA, 5 U.S.C. § 552(b)(5). Motion for Partial Summary Judgment and In Camera Review of Improperly Withheld Documents ("Pl.'s Mot.") at 1-2. In the alternative, the plaintiff asks the Court to review the disputed documents in camera to determine whether they have been properly withheld in full. Id. at 2. In response, the defendant has filed a cross-motion for summary judgment, contending that its search was adequate and that its withholdings are justified under FOIA Exemption 5.*fn1 Defendant's Cross-Motion for Summary Judgment ("Def.'s Mot.") at 1. For the reasons set forth below, the Court grants in part and denies in part without prejudice both parties' motions and orders an in camera inspection of the seven documents at issue.

I. Background

The following facts are not in dispute. The plaintiff and the IRS are currently engaged in "several pending administrative proceedings . . . with respect to the taxability of certain tax-exempt bonds . . . issued by various governmental issuers to finance solid waste disposal facilities owned by Georgia-Pacific." Pl.'s Mem. at 1. To support its position that these bonds are taxable, the IRS is relying upon the definition of "solid waste" contained in Treasury Regulation § 1.103-8(f), T.D. 7199 ("the Regulation" or "T.D. 7199"). Id. at 2. According to the plaintiff, the term "solid waste" is defined in a substantially different manner in the final version of the Regulation, promulgated in July 1972, than in the proposed Regulation published by Treasury in June 1971. Id. The plaintiff further represents that "[i]t is the modified portion of the definition that [the] IRS relies upon to justify its determination that interest on the [b]onds is subject to federal income tax." Id.

On August 25, 2005, the plaintiff submitted a letter to the IRS pursuant to the FOIA seeking "disclosure of any documents that provide[d] an explanation for [the] substantial modification" of Treasury's definition of "solid waste" between the proposed and final versions of the Regulation. Id. at 2; see also Pl.'s Mem., Exhibit ("Ex.") 1 (August 25, 2005 letter from Barbara Kaplan to the IRS) ("FOIA Request"). Specifically, the plaintiff's FOIA request stated that it sought copies of any and all documents, reports, records, memoranda, correspondence, notes, research, or other written or electronic materials, including public comments and hearing transcripts, that pertain to or were considered, reviewed, or referred to by Internal Revenue Service or Treasury Department personnel in connection with the promulgation, and any amendments thereto, of Treasury Regulation Section 1.103-8(f), T.D. 7199.

FOIA Request at 1; see also Pl.'s Stmt. ¶ 2; Def.'s Stmt. ¶ 1. This request was forwarded to the defendant's Legal Processing Division ("LPD"), which is the IRS office "responsible for maintaining files for finalized published guidance." Def.'s Stmt. ¶ 2; Pl.'s Resp. ¶ 2.

On December 20, 2005, after receiving no substantive response to its FOIA request in the intervening four months, the plaintiff commenced the present litigation. Pl.'s Stmt. ¶ 8; Def.'s Stmt. ¶ 8. Thereafter, the defendant conducted a search for documents responsive to the plaintiff's FOIA request. Pl.'s Stmt. ¶ 9; Def.'s Stmt. ¶¶ 9-11. The defendant represents that "[i]n accordance with the guidelines set forth in the Internal Revenue Manual, the documents sought in [the] plaintiff's FOIA request are maintained in one file that is labeled with the T.D. number and stored at [the LPD office]." Def.'s Opp. at 2. The defendant states, and the plaintiff does not dispute, that the purpose and contents of legal files such as the one created for T.D. 7199 is as follows:

The assembly and storage of files such as the file for T.D. 7199 at issue here[] is governed by guidelines set forth in the Internal Revenue Manual (IRM). The IRM specifies that the attorney assigned to a regulation project is to create a legal file that the attorney is responsible for maintaining until the file is closed. The legal file is to contain all documents germane to the publication of the regulation, including published regulations and notices, unmarked drafts, drafts that have been marked-up by the IRS and/or the Department of Treasury along with related buckslips and distribution memorand[a], briefing memoranda, IRS and Treasury memoranda (designated as transmittal, policy memoranda[,] and internal comments), conference and briefing reports (designated as summaries of conferences and briefing sessions), public comments[] (including summaries of these comments and documents related to public hearings), administrative memoranda, handwritten notes, e-mail communications and, after a regulation has been published, a copy of the Federal Register reprint. When a regulation is published and the assembly of the legal file for the T.D. is complete, the file is to be labeled with the T.D. number and submitted to the Docket, Records and User Fee Branch in LPD for storage.

Pl.'s Mem., Ex. 3 (Affidavit of Deborah Lambert-Dean) ("Lambert-Dean Decl.") ¶ 13 (emphasis added)*fn2 ; see also Def.'s Stmt. ¶ 11; Pl.'s Mem. at 6-7; Def.'s Mem., Ex. 6 (Internal Revenue Manual, Guidelines for Specific Categories of Case Files, Part ("IRM guidelines") at 1.*fn3 The defendant therefore restricted the scope of its search to the LPD's legal file pertaining to T.D. 7199, where it determined that any responsive documents would be found. Lambert-Dean Decl. ¶¶ 12-13; Pl.'s Stmt. ¶ 6; Def.'s Stmt. ¶¶ 10-11; see also Def.'s Opp. at 9 (stating that "the legal file for T.D. 7199 contains all documents germane to the publication of the regulation").

On April 7, 2006, the defendant released in their entirety 2,918 pages of documents deemed responsive to the plaintiff's FOIA request. Def.'s Stmt. ¶ 13; see also Pl.'s Stmt. ¶ 12. In addition, the defendant partially released 125 pages of responsive documents and withheld 613 pages in full pursuant to FOIA exemptions 3, 5, and 6. Pl.'s Stmt. ¶ 12; Def.'s Stmt. ¶ 13; see also Lambert-Dean Decl. ¶¶ 15-20 (describing the applicability of the claimed FOIA exemptions to the withholdings); Def.'s Opp., Ex. 1 (Second Declaration of Deborah Lambert-Dean) ("Second Lambert-Dean Decl.") ¶¶ 7-9 (same). In all, the defendant identified 3,656 pages of responsive documents, all retrieved from the legal file for T.D. 7199. Def.'s Stmt. ¶ 13; Pl.'s Resp. ¶ 7. According to the plaintiff, none of these documents "appear to address the fact of[,] or reason for[,] the substantial modification to the definition of 'solid waste' in the Regulation" between the 1971 proposed rule and the 1972 final promulgation. Pl.'s Mem. at 7.

On June 16, 2006, in response to the defendant's production of documents, the plaintiff moved for partial summary judgment and for an in camera review of certain responsive documents withheld in full by the defendant. Def.'s Mot. at 1-2. The plaintiff's motion is predicated on two grounds.

First, the plaintiff argues that the defendant's search for documents responsive to its FOIA request was inadequate because (1) "[n]othing [the defendant] has produced . . . explains the policy behind the definition of 'solid waste' in the final Regulation," Pl.'s Mem. at 4; (2) "[u]nder the Federal Records Act ["FRA"], somewhere in the file for T.D. 7199 should be an explanation of [the] IRS's policy with respect to its definition of 'solid waste' and solid waste disposal facilities," especially considering that the definition was "substantially modified . . . after publication of the proposed regulations and before issuing the version [the] IRS now relies on to declare interest on the Bonds taxable," id. at 6 (emphasis in original); and (3) therefore "either [these] documents [explaining the definitional change] do not exist and [the] IRS has not fulfilled its duty under the FRA, or . . . the IRS's search for records responsive to [the plaintiff's] FOIA request was inadequate," id. at 7. The plaintiff thus asks the Court to require the defendant to look outside of the T.D. 7199 legal file for documents relating to the change in the definition of 'solid waste.' Id. at 7-8; see also id. at 8 (asserting that "[the] IRS must have at least one document explaining why it changed the definition of 'solid waste' from that which was originally proposed"). Alternatively, the plaintiff states that "[i]f [the] IRS cannot produce such documents because none exist, [the] IRS should acknowledge that fact." Id. at 8; see also Pl.'s Reply at 3 (stating that "if such a document does not exist, [the plaintiff] will concede that the IRS search was reasonable"). For its part, the defendant states conclusively that "[b]ased upon [the] plaintiff's FOIA request in this case, all responsive documents should be located in the file for T.D. 7199." Def.'s Opp. at 8. It therefore claims that it conducted "a good faith search reasonably calculated to uncover all responsive documents." Id. at 6.

Second, the plaintiff identifies seven documents as being improperly withheld in full by the plaintiff pursuant to the deliberative process privilege of FOIA exemption 5, "which protects from disclosure 'inter-agency or intra-agency memoranda or letters which would not be available by law to a party other than an agency in litigation with the agency."*fn4 Pl.'s Mem. at 9 (quoting 5 U.S.C. ยง 552(b)(5)); see also id. at 12-15; Pl.'s Opp. at 9-14; Pl.'s Reply at 4-8. The plaintiff contends that the defendant "fails to describe these withheld documents, or the reason the exemption applies to them, with sufficient specificity." Pl.'s Mem. at 9. It "therefore requests that the Court examine the seven improperly-withheld documents in camera" to determine the applicability of the claimed exemption. Id.; see also id. at 15 (arguing that "[t]he only adequate remedy is an in camera inspection of the seven documents to determine whether they should be released"). In response, the defendant states that the disputed withholdings are justified and that its proffered declarations "establish genuine, material, undisputed facts under which this Court should sustain the material withheld by the [IRS] under the FOIA without the need for further declarations or an in camera review." Def.'s Opp. at 10. The defendant goes on to say, however, ...

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