The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge
This is a FOIA*fn1 case concerning three requests for documents submitted to the Internal Revenue Service ("IRS") by Mayer, Brown, Rowe & Maw LLP ("Mayer Brown"), a law firm. Mayer Brown wanted to obtain documents on the background to two revenue rulings, certain settlement guidelines, and an official IRS notice. After several years of litigation, and a prior decision by this Court,*fn2 the dispute over approximately 30,000 documents has resolved to only 27. Both parties move for summary judgment. See Dkt. ## 38 & 40. The Court will grant the motions of the parties in part and deny them in part.
The documents at issue concern the tax treatment accorded by the IRS to LILOS, or lease-in/lease-out transactions. Under these LILOS, a transit agency would lease transit equipment to a lessor for an extended period under a "Headlease." See Memorandum Opinion ("Mem. Op.") at 2. The transit agency would then lease the property back under a Lease for a period significantly shorter than the terms of the Headlease. See id. at 2. According to Mayer Brown, the LILO structure was used as a financing method by transit agencies in a number of cities, including San Diego, Washington, D.C., and Dallas, among others. Id. Following an IRS revenue ruling that disallowed deductions for LILO transactions, lessees and lessors increased the use of sale-leaseback structures. In a sale-leaseback (called sale in/lease out, or "SILO" by the IRS), the original owner of transit equipment would sell it and then lease it back. Id.
Mayer Brown sought information regarding two revenue rulings, settlement guidelines, and an IRS Notice. Specifically, in Revenue Ruling 99-14, 1999-1 C.B. 835, issued in March 2002, the IRS disallowed deductions claimed with respect to LILO transactions. In October 2002, the IRS issued Revenue Ruling 2002-69, 2002-2 C.B. 760, which modified and superseded Revenue Ruling 99-14, but maintained the same position disallowing deductions. Then in February 2004, the IRS released Appeals Settlement Guidelines ("ASG") on LILO transactions. Legislation which substantially increased the penalties and sanctions for failing to comply with tax shelter rules was enacted on October 22, 2004. See American Jobs Creation Act of 2004, Pub. L. No. 108-357, 118 Stat. 1418 (codified in scattered sections of 26 U.S.C.). On February 11, 2005, the IRS issued Notice 2005-13, which disallowed tax deductions with respect to SILO transactions. See Sloane Decl., Ex. G. The IRS has not published Appeals Settlement Guidelines for SILO transactions.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); see also Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). Moreover, summary judgment is properly granted against a party who "after adequate time for discovery and upon motion . . . fails to make a showing sufficient to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In ruling on a motion for summary judgment, the court must draw all justifiable inference in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255.
FOIA cases are typically and appropriately decided on motions for summary judgment. Harrison v. Executive Office for U.S. Attorneys, 377, F. Supp2d 141, 145 (D.D.C. 2005); Miscavige v. IRS, 2 F.3d 366, 368 (11th Cir. 1993); Rushford v. Civiletti, 485 F. Supp. 477, 481 n.13 (D.D.C. 1980). In a FOIA case, the court may award summary judgment solely on the basis of information provided by the department or agency in affidavits or declarations when the affidavits or declarations describe "the documents and the justifications for nondisclosure with reasonably specific detail, demonstrate that the information withheld logically falls within the claimed exemption, and are not controverted by either contrary evidence in the record nor by evidence of agency bad faith." Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981). An agency must demonstrate that "each document that falls within the class requested either has been produced, is unidentifiable, or is wholly [or partially] exempt from the Act's inspection requirements." Goland v. CIA, 607 F.2d 339, 352 (D.C. Cir. 1978) (internal citation and quotation omitted). "'Disclosure, not secrecy, is the dominant objective' of FOIA's statutory scheme." Army Times Publ'g Co. v. Dep't of the Air Force, 998 F.2d 1067, 1070 (D.C. Cir. 1993) (quoting Dep't of the Air Force v. Rose, 425 U.S. 352, 361 (1976)). A defendant in a FOIA action is entitled to summary judgment if the defendant proves that it has fully discharged its obligations under the Act. Weisberg v. Dep't of Justice, 705 F.2d 1344, 1350 (D.C. Cir. 1983). In determining whether the defendant agency has met its burden, "the underlying facts and the inferences to be drawn from them are construed in the light most favorable to the FOIA requester." Mead Data Cent. v. Dep't of the Air Force, 566 F.2d 242, 260 (D.C. Cir. 1977).
In response to each of Mayer Brown's pleadings, the IRS has released more documents and submitted successive affidavits from Deborah Lambert-Dean explaining its reasons for not releasing more. Ms. Lambert-Dean is an attorney in the Office of Chief Counsel at the IRS, who is responsible for coordinating the defense of the IRS with the Department of Justice in this case. See 6th Declaration of Deborah Lambert-Dean ("6th Decl.") ¶¶ 1&2. On each occasion, Ms. Lambert-Dean has more fully explained the agency's position and refined her analysis. At this mature stage of the litigation, the only matter before the Court is the IRS's withholding of records under the deliberative process privilege incorporated into FOIA exemption 5. See Mayer Brown's Renewed Mot. for Summ. J. ("Pl.'s Mem.") [Dkt. #38] at 2.
This privilege "encompasses 'documents reflecting advisory opinions, recommendations, and deliberations comprising part of a process by which governmental decisions and policies are formulated, as well as other subjective documents that reflect the personal opinions of the writer prior to the agency's adoption of a policy.'" Tax Analysts v. IRS, 294 F.3d 71, 80 (D.C. Cir. 2002) (quoting Taxation with Representation Fund v. IRS, 646 F.2d 666, 677 (D.C. Cir. 1981)). "To withhold a responsive document under the deliberative process privilege, the agency must demonstrate that the document is 'both predecisional and deliberative.'" Reliant Energy Power Generation v. Fed. Energy Regulatory Comm'n, 520 F. Supp. 2d 194, 203 (D.D.C. 2007) (citing Mapother v. Dep't of Justice, 3 F.3d 1533, 1537 (D.C. Cir. 1993)). A communication is predecisional if "it was generated before the adoption of an agency policy" and it is deliberative if "it reflects the give-and-take of the consultative process." Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). "While the deliberative process privilege serves a number of related purposes, its 'ultimate aim' is to 'prevent injury to the quality of agency decisions.'" Petroleum Info. Corp. v. Dep't of the Interior, 976 F.2d 1429, 1433-1434 (D.C. Cir. 1992) (quoting NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 151 (1975)). The deliberative process privilege is highly "dependent upon the individual document and the role it plays in the administrative process." Coastal States, 617 F.2d at 867.
A. Adoption, Incorporation, and Working Law
Mayer Brown challenges the repeated statements in Ms. Lambert-Dean's Fourth Declaration that "[n]othing on the face of these documents indicated that the recommendations or conclusions contained in these documents were adopted, directly or indirectly, or incorporated by reference, by any final agency decision maker." It argues that "one would not expect a document to state whether it was incorporated by other documents." Pl.'s Mem. at 11 (emphasis in original). Because "[t]he Agency must . . . carry the burden of establishing that documents contain the ideas and theories which go into the making of the law and not the law itself," Arthur Anderson & Co. v. IRS, 679 F.2d 254, 258 (D.C. Cir. 1982), Mayer Brown believes the IRS must produce evidence that the allegedly predecisional documents were not incorporated into final documents or made part of some internal "secret or working law"*fn4 relied on by IRS lawyers and agents. The IRS bitterly protests that Mayer Brown, as plaintiff, bears the burden of proof on the issue.
This interesting point of law has been mooted by Ms. Lambert-Dean's 6th Declaration, in which she clarifies:
I am unaware that any of the opinions or analysis contained in the documents described in my Fifth Declaration as being withheld pursuant to FOIA exemption 5 and the deliberative process privilege have been expressly or informally adopted or incorporated by reference in an agency position, referred to in a precedential fashion, used by the agency in its dealings with the public or otherwise treated as if they constitute agency policy.
6th Decl. ¶ 6. Inasmuch as Ms. Lambert-Dean has been the coordinator on this lawsuit since its inception and has repeatedly "personally reviewed . . . all the documents at issue," id. at ¶ 3, the Court finds that there is an absence of proof that these documents have been adopted, directly or indirectly, as secret ...