elements. As to any proposed deletions, the entire item in question must be submitted to the Court with the proposed deletions indicated and accompanied by an explanation of their necessity." B. EXEMPTION FOR MATTERS SPECIFICALLY EXEMPTED FROM DISCLOSURE BY STATUTE 5 U.S.C. 552 (b) (3) This exemption is claimed as to letter rulings, technical advice memoranda, and related correspondence with taxpayers. Defendants contend that 26 U.S.C. § 6103 (a) (1) is a specific statutory requirement that these items not be disclosed. Section 6103 (a) (1) is the basic provision of the Internal Revenue Code providing confidentiality for tax returns." The rulings and memos, however, are not returns, submitted by taxpayers, but documents generated by the agency. Those documents are, to be sure, based on information submitted by the taxpayer. But, first of all, a request letter from a taxpayer voluntarily submitting information and seeking tax guidance for his own purposes is not a return within the meaning of the statute.50 It is only correspondence. If a taxpayer receives an advance letter ruling, or no letter ruling, he may abandon the proposed transaction, in which event the correspondence will never become part of a "return." The fact that some information in certain correspondence might, at a later date, be included in a return does not convert the earlier correspondence into a return. Defendants argue that because the taxpayer is advised to file a copy of the ruling with his return," the ruling thereby becomes a part of the return and confidential under the statute. This is a circular and self-fulfilling rationale which cannot be accepted. Any agency would thus be able to avoid the Freedom of Information Act and public disclosure of its decisions by requiring that the parties later attach copies of the decision to otherwise confidential submissions. This is not the purpose of the Internal Revenue Code or the Freedom of Information Act. Secondly, to the extent that the taxpayer's interests in confidentiality are involved, they are fully protected by the express exemption from disclosure of truly confidential commercial or financial information." C. EXEMPTION FOR INTRA-AGENCY MEMORANDA. 5 U.S.C. § 552 (b) (5) This exemption is claimed as available for (1) correspondence relating to rulings, (2) the index-digest card summaries of rulings in the IRS reference system, and (3) memoranda of conferences and telephone calls (part of the communications relating to rulings). The exemption is not claimed for letter rulings or technical advice memoranda. 60 Exemption 5 was designed to protect and encourage the full and frank discussion of views within an agency in the formulation of agency policies and decisions. Thus, such expression of views in the decision-making and policy-making : context_within the agency is exempted from disclosure.50 When faced with a disputed claim of this exemption, it is the duty of the Court to inquire into the nature of the materials, by means of affidavits, reference to a special master, or in camera review, to ascertain that they do in fact contain such an expression of views and to determine whether such expressions are joined with factual information which can and should be disentwined from the policymaking process." The parties here have made no showing, by affidavit or otherwise, of the nature or contents of the three types of items for which this exemption is claimed. It is the burden of the agency to justify its claim to exemption by more than blanket and conclusory assertions. In light of the limited volume of materials here involved the Court will order in camera review. With regard to the indexdigest card system, if as its name implies and defendants themselves argue, this file summarizes rulings which have already been held herein to the subject to disclosure then the index-digest system would likewise have to be disclosed. Any information proerly deleted from the ruling itself, under exemption 4, would of course also be deleted from the index-digest of that ruling. D. EQUITABLE REASONS FOR NON-DISCLOSURE Defendants argue that even if the Court should find that the materials here in question are subject to required disclosure under the Freedom of Information Act the Court should exercise the discretion inherent in its equitable powers and refuse to order disclosure. It is argued that disclosure would disrupt the Footnotes at end of article. agency's established procedures and possibly mean the end of the rulings program as it is presently known. Those consequences may well arise," but here again Defendants' position is contrary to established precedent. Once a determination is made that materials come within the terms of the statute by which Congress has required disclosure the Court does not have discretion to refuse to order disclosure." Finally, it is clear from the record herein that private letter rulings are in fact widely disseminated among the tax bar and taxpayers with similar interests and problems, and that the IRS is aware of this practice. Thus a body of "private law" has in fact been created which is accessible to knowledgable tax practitioners and those able to afford their services. It is only the general public which has been denied access to the IRS' private rulings. The IRS' argument that publication would cause grave damage to its ruling system, then, is viewed by this Court as a specter having little basis in fact. Those taxpayers most likely to rely upon or challenge the rationale of letter rulings issued to others already have access to many rulings through their own efforts. Publication would simply make available to all what is now available to only a select few, and subject the rulings to public scrutiny as well. Such public availability and scrutiny are the very fundamental policies of the Freedom of Information Act. For, "one fundamental principle is that secret law is an abomination.” “ Appropriate Orders will be entered. JUNE 6, 1973. FOOTNOTES AUBREY E. ROBINSON, Jr., Judge. 1 Plaintiffs' Motion for Summary Judgment speaks in broad terms of "Defendants' files,” apparently meaning all of Defendants' files of letter rulings and technical advice memoranda. Yet the Complaint in this case was limited, seeking only such items as they related to determinations under Section 613(c) of the Internal Revenue Code of 1954, 26 U.8.C 8613(c), for the period July 26, 1968 to October 1, 1971. Accordingly, relief must be thes limited in this case. It is only as to those items originally named in the Amended Complaint herein that the record indicates that Plaintiffs' request for access was denied by the agency. 2 26 C.F.R. § 601.701 et seq. $5 U.S.C. 522 (a) (3), Environmental Protection Agency v. Mink, 71-909, January 22, 1973, (41 U.S.L.W. 4201) Slip Opinion at 6. U.S. ——, No. 426 C.F.R. 601.201 (a) (2); Defendants' Statement of Material Facts, 17. Cr. Rev. Proc. 72-3, I.R.B. 1972-1, 9, Section 2.02. Letter rulings are issued only by the National Office of the IRS, which issues approximately 30,000 such rulings each year. Defendants' Statement of Material Facts ¶ 9, 1 12. Cf. Rev. Proc. 72-3, I.R.B. 1972–1, §. Section 13.01. Defendants' Statement of Material Facts, ¶ 10. Cf. Rev. Proc. 72-3, I.R.B. 1972-1, 9. Section 6.14. 726 C.F.R. 601.105 (b) (5), et seq., Rev. Proc. 69-2, 1969-1 C.B. 386, superseded by Rev. Proc. 72-2, 1972-1, I.R.B. 15. Points and Authorities in Support of Defendants Motion for Summary Judgment (hereafter Defendants' Brief) at 7. See especially 26 C.F.R 8601.105 (b) (5) (vii). 8 Id. Id., especially 26 C.F.R. 601.105 (b) (5) (iv) (e). 10 Defendants' Brief at 8. Defendants' Points and Authorities in Opposition to Plaintifs Motion for Summary Judgment, March 12, 1973 (hereafter Defendants' Opposition) at 4. 11 Defendants' Brief at 7. 13 Id. 13 Defendants' Opposition at 1-2. 14 Defendants' Brief at 8. Plaintiffs initially sought all communications relating to the letter rulings and t.a. memos in question, specifically including communications to or from members of Congress and their staffs. Defendants have indicated that the only communications in existence are those to or from the taxpayer. 15 Defendants' Statement of Material Facts, 18. Cf. Rev. Proc. 72-3 I.R.B. 1972–1, 9. Section 2.06. Revenue Rulings are published in the Internal Revenue Bulletin for the infer mation and guidance of the taxpayer, the I.R.S. and the general public. Id. Revenue Rulings are issued only by the National Office of the IRS, which issues approximately 650 such rulings each year. Defendants' Statement of Material Facts ¶ 8, 113. Revenue Rulings, like letter rulings. are narrowly based in that they are usually premised on a given fact situation. In this way Revenue Rulings differ from Income Tax Regulations, which are also formally published but are of more general applicability. 16 As to IRS rules, regulations, decisions and procedure generally, see 26 C.F.R. § 601.601 (Rules and Regulations); 26 C.F.R. § 601.201 (Rulings and Determinations Letters); C.F.R. 601.105(b) (5) (i-vii) (Technical Advice Memoranda); Goodrich, Redman and Quinale Procedure Before the Internal Revenue Service, American Law Institute (Philadelphia, 1965); Rogovin, The Four R's: Regulations, Rulings, Reliance and Retroactivity, 43 Taxes 756 (1965). 17 5 U.S.C. § 552 (a) (2) (1967): (2) Each agency, in accordance with published rules, shall make available for public inspection and copying (A) (B) those statements of policy and interpretations which have been adopted by the agency and are not published in the Federal Register; . . . 18 5 U.S.C. § 552 (a) (3) (1967): Each agency also shall maintain and make available for public inspection and copying current index providing identifying information for the public as to any matter issued adopted, or promulgated after July 4, 1967, and required by this paragraph to be made available or published. 19 Defendants' Statement of Material Facts ¶ 7:26 CFR § 601.201 (a) (2), 20 Ex Parte Collett, 337 U.S. 55, 61 (1949); United States v. Oregon, 366 U.S. 643, 648 (1961). Hanover Bank v. Commissioner, 369 U.S. 672, 686 (1962). See K. Davis, Administrative Law Treatise (1970 Supp.) $ 34.9. Gibson Wine Co. v. Snyder, 194 F. 28 329. 90 U.S. App. D.C. 135 (D.C. Cir. 1952), American President Lines, Ltd. v. Federal Maritime Commission, 316 F. 2d 419, 114 U.S. App. D.C. 418 (D.C. Cir. 1963). See generally, K. Davis, Administrative Law Treatise (1958) $5.03-.06; (1970 Supp.) § 5.01.08. Such a course on the part of the agency, however, might be raised as evidence of arbitrariness or inconsistency in any subsequent challenge to the agency's latest interpretation. This is undoubtedly one of the fears lurking in the background of the agency's position in this case. Yet the ideal is not to conceal arbitrariness and inconsistency but to eliminate it. Such elimination is best served by disclosure and that is precisely the purpose of the Freedom of Information Act. 24 See K. Davis, Administrative Law Treatise (1970 Supp.) § 3A.9 at 130. 26 N.L.R.B. v. Plasterers' Union Local No. 79, 404 U.S. 116, 129 (1971), United States v. Dickerson, 310 U.S. 554, 562 (1940). 27 See K. Davis, Administrative Law Treatise, (1970 Supp.) 3A.2. 3A.9; Hawkes v. I.R.S., 467 F. 2d 787, 794, 797, (6th Cir. 1972); Stokes v. Hodgson. 347 F. Supp. 1371, 1374, (N.D. Ga. 1972), aff'd sub nom. Stokes v. Brennan, No. 72-2946 (5th Cir. April 3, 1973). 28 Senate Report No. 813, Cong. 1st Sess. (1965) at 6–7: agencies must make available... those statements of policy and interpretations which have been adopted by the agency and are not required to be published in the Federal Register. 29 The Supreme Court in Mink expressly found that "the language of the Act itself is sufficiently clear in this respect" (Slip Opinion at 9) and merely cited the House Report for emphasis. 30 See Frankel v. S.E.C., 460 F. 2d 813, 816 n. 5 (2d Cir. 1972). 31 Weisberg v. Department of Justice, No. 71-1026. (D.C. Cir. Feb. 28, 1973) Slip Op. at 8: Fisher v. Renegotiation Board. 473 F. 2d 109, 111 (D.C. Cir. 1972); Getman v. N.L.R.B., 450 F. 2d 670, 672 (D.C. Cir. 1971); Soucie v. David, 448 F. 2d 1067, 1080 (D.C. Cir. 1971); Bristol-Myers Company v. F.T.C.. 424 F. 2d 935, 938-40 (D.C. Cir. 1970); Wellford v. Hardin, 444 F. 2d 21, 25 (4th Cir. 1971). 32 Hawkes v. I.R.S., 467 É. 2d 784 .787 (6th Cir. 1972). 33 Defendants' Opposition at 4. Simmons Dep.. pp. 10-23. 34 Defendants' Opposition at 4. Simmons Dep., pp. 27-29. The ruling writer determines in which file the ruling will be placed. Id. Files occupying over two thousand linear feet of shelf space were laboriously restamped "reference" in place of "precedent." Simmons Dep., pp. 18. 58-59. 38 Defendants' Opposition at 5: Simmons Dep., pp. 27, 36. IRS Manual (11) 633.82. Defendants' Opposition at 5-6; Simmons Dep., pp. 38-39; Levine Dep., pp. 18–19; Singer Dep., p. 21; Davitt Dep., p. 7. 38 Defendants' Opposition at 6; Levine Dep., p. 21; Davitt Dep., p. 32. 40 Defendants' Opposition at 7: Sheets Dep., 33. See National Cable Television Association, Inc., v. F.C.C. No. 24,786 (D.C. Cir. April 17, 1973); Slip Opinion at 15-16, where another agency argued unsuccessfully that it had not relied on certain documents but only on its "knowledge" derived from them. Defendants' Opposition at 7; Davitt Dep., pp. 24-26. 42 Black's Law Dictionary defines precedent as follows (Rev. 4th Ed. 1968 at 1340): An adjudged case or decision of a court of justice considered as furnishing an example or authority for an identical or similar case afterwards arising or a similar question of law. (C) hanges in position are made only after the most careful research and analysis and consideration at appropriately higher levels of review." IRS Manual (11) 152. The "appropriate level of review" is at least the highest level at which the earlier ruling was finally approved. Manual (11) 633.82, Item 7(b); Singer Dep., pp. 5-6. Troyer Dep., p. 11; Jones Dep., pp. 17-26; Nolan Dep., pp. 29-31. 45 United States Thermo Control Co. v. United States, 372 F. 2d 964, 967 (Ct. Cl.) cert. denied 389 U.S. 839 (1967). The letter rulings relied upon by the IRS were held inconsistent with published rulings. See Reid, Public Access to Internal Revenue Service Rulings, 41 Geo. Wash. L. Rev. 23, 24, 32 (1972). This consequence would be somewhat more narrow then that required by the Courts' holding in I-A, supra. The Court has held that all letter rulings and technical advice memos are interpretations adopted by the agency and must therefore be disclosed and indexed. If Defendants theory as examined in I-B is accepted as analyzed here only those letter rulings and technical advice memoranda in the reference files would have to be disclosed and indexed. 47 5 U.S.C. § 552 (a)(3): Except with respect to the records made available under paragraphs (1) and (2) of this subsection, each agency, on request for identifiable records... shall make the records promptly available to any person. See Irons v. Schnyler, 465 F. 2d 608 (D.C. Cir. 1972), National Cable Television Ass'n, Inc. v. F.C.C., No. 24,784 (D.C. Cir. April 17, 1973). 40 Defendants' Opposition (3/12/73) at 9. 50 Bristol-Myers Company v. F.T.C., 424 F. 2d 935 (D.C. Cir. 1970); Getman v. N.L.R.B., 450 F. 2d 670, 673 (D.C. Cir. 1971); Legal Aid Society v. Schultz. 349 F. Supp. 771, 776 (N.D. Cal. 1972); Cf. St. Regis Paper Co. v. U.S., 368 U.S. 208 (1961). To allow a promise of confidentiality by the agency to control would enable the agency to render meaningless the statutory scheme. Defendants' argument to the contrary is based on language of the House Report on the Act: "Moreover, where the Government has obligated itself in good faith not to disclose documentations or information which it receives, it should be able to honor such obligations." House Report No. 1497, 89th Cong. 2d Sess. 10 (1966). Yet here again this Court finds that the House Report "is characteristically broader and goes beyond the express terms of the statute." Getman v. N.L.R.B., 450 F. 2d 670, 673 (D.C. Cir. 1971); Cf. K. Davis, Administrative Law Treatise (1970 Supp.) §§ 3A.2, 3A.23. See Notes 27-32 and accompanying text, supra. 51 Fisher v. Renegotiation Board, 473 F. 2d 109, 113 (D.C. Cir. 1972), M. A. Schapiro & Co. v. S.E.C., 339 F. Supp. 467, 470-71 (D.C.C. 1972). 52 Fisher v. Renegotiation Board, 473 F. 2d 109, 113 n. 4 (D.C. Cir. 1972). 53 Getman v. N.L.R.B., 450 F. 2d 670, 674 (D.C. Cir. 1971), Bristol-Myers Company V. F.T.C., 424 F. 2d 935, 938 (D.C. Cir. 1970); Grunnman Air Craft Engineering Corp. v. Renegotiation Board, 425 F. 2d 578, 580 (D.C. Cir. 1970). 54 See Fisher v. Renegotiation Board, 473 F. 2d 109, 113 (D.C. Cir. 1972). 55 26 U.S.C. § 6103(a) (1): Returns shall constitute public records; but except as hereinafter provided. they shall be open to inspection only upon order of the President and under rules and regulations prescribed by the Secretary or his delegate and approved by the President. 50 26 C.F.R. § 301.6103 (a)-1(a)(3) defines "return" to include: (a) Information returns, schedules, lists and other written statements filed by or on behalf of the taxpayer with the Internal Revenue Service which are designed to be supplemental to or become part of the return, and (b) Other records, reports, information received orally or in writing, factual data, documents, papers, abstracts, memoranda, or evidence taken, or any portion thereof, relating to the items included under (a) of this subdivision. 57 Note 6 and accompanying text, supra. 58 See II-A, supra. U.S. 59 Environmental Protection Agency v. Mink, (January 22, 1973), 41 U.S.L.W. 4201, No. 71-909, Bristol-Myers Company v. F.T.C., 424 F. 2d 935, 939 (D.C. Cir. 1970), Soucie v. David, 448 F. 2d 1067. 1078 (D.C. Cir. 1971), National Cable Television Ass'n, Inc. v. F.C.C. No. 24, 786 (D.C. Cir. April 17, 1973), Slip Op. at 20-22, Tennesseean Newspapers, Inc. v. F.H.A., 464 F. 2d 657, 660 (6th Cir. 1972). No. 71-909, January 22, 80 Environmental Protection Agency v. Mink, U.S. 1973, 41 U.S.L.W. 4201, Slip Op. at 11-20; National Cable Television Ass'n, Inc. v. F.C.C No. 24,786 (D.C. Cir. April 17, 1973), Slip. Op. at 20-22. 61 Wellford v. Hardin, 444 F. 2d 21, 24 74th Cir. 1971): "The Freedom of Information Act was not designed to increase administrative efficiency, but to guarantee the public's right to know how the Government is discharging its duty to protect the public interest. 62 Soucie v. David, 448 F. 2d 1067, 1077 (D.C. Cir. 1971). Getman v. N.L.R.B., 450 F. 2d 670-680 (D.C. Cir. 1971), Wellford v. Hardin, 444 F. 2d 21, 24-25 (4th Cir. 1971); Tennes seean Newspaper, Inc. v. F.H.A., 464 F. 2d 657, 661-62 (6th Cir. 1972); Hawkes v. LRS, 467 F. 2d 787, 792 n. 6 (6th Cir. 1972). 63 Troyer Dep., pp. 5-7, 11; Jones Dep., pp. 15-16, 17, 18, 26; Nolan Dep., pp. 29, 31; Steinbunchel Dep., p. 13; Levine Dep. pp. 11-12: Stafford Dep., pp. 6, 8, 11. 12-14. 21-22. 64 K. Davis, Administrative Law Treatise (1970 Supp.) § 3A.12. Cf. Sterling Drug Co. v. F.T.C., 450 F. 2d 698, 708 (D.C. Cir. 1971): (P)rivate transmittals of binding agency opinions and interpretations should not be encouraged. These are not the ideas and theories which go into the making of the law, they are the law itself, and as such should be made available to the public. Thus to prevent the development of secret law within the Commission, we must require it to disclose orders and interpretations which it actually applies in cases before it. TAX ANALYSTS AND ADVOCATES, THOMAS F. FIELD v. INTERNAL REVENUE SERVICE, ET AL. · UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Civil Action No. 841-72 ORDER Upon the considerations expressed in the Opinion entered herein this date, and upon consideration of the entire record, it is this 6th day of June, 1973, ORDERED, that Defendants' Motion for Summary Judgment be and hereby is denied, and it is FURTHER ORDERED, that Plaintiffs' Motion for Summary Judgment be and hereby is granted, and it is FURTHER ORDERED, that Defendants shall make available to Plaintiffs for inspection and copying within thirty (30) days of date all letter rulings, technical advice memoranda and communications sought by Plaintiffs herein. intact and without deletion, except for those items which, within said thirty (30) days period, Defendants submit to the Court, sealed and intact, without deletion but with any proposed deletions indicated, for in camera review as to whether proposed deletion of information is justified under the Freedom of Information Act, together with a detailed written explanation of the justification for each deletion, and it is FURTHER ORDERED, that Defendants shall make available to Plaintiffs for inspection and copying within thirty (30) days of date all items in the Internal Revenue Service's index-digest reference card file sought by plaintiffs herein, and all memoranda of conferences and telephone calls relating to the letter rulings and technical advice memoranda involved herein, unless within said thirty (30) day period those items are submitted to the Court for in camera review as to whether they may be properly withheld as internal memoranda within the meaning of exemption 5, 5 U.S.C. § 552(b) (5), of the Freedom of Information Act. AUBREY E. ROBINSON, Jr., Judge. JUNE 6, 1973. [From the Monthly Labor Review, September 1973] WAGE AND PRICE CONTROLS DURING THE AMERICAN REVOLUTION IN EARLY AMERICA, TOO, NATIONAL, STATE, AND LOCAL GOVERNMENTS TRIED TO HALT THE SPIRALING INFLATION (By Jonathan Grossman*) In the year 1973, a public opinion poll reports that the problem most on the minds of Americans is how to combat soaring inflation, and one of the most hotly argued issues is over the effective use of wage and price controls. During the American Revolution, too, when changes that altered the future course of history were taking place, one of the greatest concerns of the people of the newly emerging nation was how to curb the astronomical rise in the cost of necessities of life. And perhaps the most controversial economic question of those days was: Should the government impose ceilings on wages and prices? Though historical analysis will reveal significant differences between historical and modern experiences with wage-price controls, there are similarities that are both fascinating and instructive. Wage and price regulation goes far back into history. The Roman Emperor Diocletion, in the fourth century A.D., not only prescribed ceilings on prices and wages, but also froze workers to their jobs. In the 13th century, Kublai Khan, the great Mongol who ruled four-fifths of the Eurasian Continent from China to Russia, decreed maximum prices. Medieval Europe followed a system of "just price" which embraced costs of both labor and commodities. The English Ordinance of Labourers in 1349 was the first of a series of British laws setting maximum wages. Mercantilist practice at the dawn of modern economic history involved intricate economic regulations. 1 The tradition of wage and price controls carried over to several North American colonies, and most particularly to Massachusetts Bay, "the happy hunting ground for paternalistic controls over religion, morals, and business.' By 1630, within a year of its settlement, the Colony set maximum wages in the building trades and 3 years alter curbed the "extortion used by diverse persons of little conscience" by establishing sweeping wage ceilings and limiting colonial prices to one-third above the English level." The Puritans believed that God was on their side, and in 1636 a committee proposed a code, including wage and price limitations, which was "agreeable to the word of God." A Puritan writer classed violators of wage and price laws with "adulterers and whoremongers." Workers who took excessive wages were punished. For example, in 1639, Edward Palmer, a carpenter accused of charging too inuch for building the Boston stocks, was fined heavily and, with Puritan irony, sentenced to sit in the stocks which he himself had built.* Yet, though wage and price laws continued in several colonies for many years, they lost their effectiveness. Governor John Winthrop recognized, as early as 1640, that workers who were restrained "would either remove to other places where they might have more, or else being able to live by planting and other employments of their own, they would not be hired at all. . . ."" By the time of the American Revolution most controls had yielded to the realities of an abundance of free land, a scarcity of free labor, a growing egalitarianism, and increased social mobility." COMPLEXITY OF CONTROLS Soaring wages and prices during the era of the American Revolution brought about a revival of wage-price controls. The history of such controls is extraordinarily complex because of the delicate problem of legal authority and the lack of Footnotes at end of article. |