Federal agencies cannot avoid their obligation to disclose public records in modern electronic formats merely by invoking budgetary constraints, a judge has ruled in a rare decision exploring the scope of the Electronic Freedom of Information Act ("E-FOIA").
United States District Judge William H. Orrick of the Northern District of California ordered on January 29, 2015, that the IRS had to produce a set of records to plaintiff Public.Resource.Org in the machine-readable format that the organization specified in its FOIA request. Public.Resource.Org v. IRS, 2015 WL 393736 (N.D. Cal. 2015). The court rejected the IRS' argument that complying with the request would be unduly burdensome in light of its limited resources, explaining that the "fact that an agency may be under significant financial distress because it is underfunded does not excuse an agency's duty to comply with the FOIA."
The litigation concerns Public.Resource's request for the electronically filed Form 990s for nine tax-exempt charitable organizations. Form 990s are filed by all non-profit organizations and include information about the finances and activities of nonprofit organizations. The IRS uses the information to enforce the rules governing nonprofits' tax-free status. There is no dispute that Form 990s are public records already subject to disclosure, but the IRS refused to produce them in a machine-readable format, even where the records were originally e-filed with the agency in that manner. Instead, the IRS has only made the documents available in an image format akin to a low-resolution photograph.
Public.Resource, a nonprofit organization dedicated to improving public access to government records and the law, filed suit under E-FOIA, a 1996 amendment to the Freedom of Information Act which requires federal agencies to provide copies of public records "in any form or format requested … if the record is readily reproducible by the agency in that form or format." 5 U.S.C. § 552(a)(3)(B).
Public.Resource argued that the IRS' production of the records in a non-machine-readable image format frustrated efforts by watchdog groups, journalists, academics, and other government agencies to monitor the IRS' performance by making it extremely difficult to process and analyze information from Form 990s. It submitted declarations about the public benefit of accessing Form 990s in machine-readable form from experts including its president, Carl Malamud, who has worked to make the IRS Exempt Organizations database more widely accessible while also scrutinizing the IRS' breaches of taxpayer privacy; the former United States Deputy Chief Technology Officer; the CEO of Charity Navigator; and journalists with the Center for Investigative Reporting and ProPublica, among others. Public.Resource also invoked President Obama's Executive Order 13642, Making Open and Machine Readable the New Default for Government Information which sought to "ensure that data are released to the public in ways that make the data easy to find, accessible, and usable." 78 Fed. Reg. 28111 (2013).
The IRS moved to dismiss the case at an early stage on the grounds that FOIA did not apply at all because the disclosure of Form 990s is governed by a separate provision of the Internal Revenue Code. Judge Orrick rejected this argument and denied the IRS' motion to dismiss, holding that FOIA was not superseded, and that given the law's "pro-disclosure purpose," it cannot be supplanted by another federal statute absent express language to that effect. Public.Resource.Org v. IRS, --- F. Supp. 2d ----, 2014 WL 2810499 (N.D. Cal. 2014).
Following this threshold ruling, the IRS argued that it should not have to produce the records in the desired format because it would be too burdensome. While it did not dispute that it receives and maintains e-filed Form 990s in a machine-readable format, the IRS explained that it has an established process for converting the records into image files for processing, which includes redacting certain information which is exempt from public disclosure. The agency argued that it would have to develop new protocols and train new staff to redact sensitive information from Form 990s in machine-readable format. It estimated that such efforts would cost $6,200 to produce the nine Form 990s at issue in the desired format, although virtually all of its evidence focused on the overall costs of producing all Form 990s in a machine-readable form.
In his January 29 Order, Judge Orrick denied the IRS' motion for summary judgment and granted Public.Resource's cross-motion. The judge explained that under E-FOIA, to avoid disclosure in a requested format, the "agency's evidence of burden … must be not only compelling, but also demonstrate that compliance with a request would imposes a significant burden or interference with the agency's operation." As a matter of law, the judge held, the IRS' evidence failed to meet this burden: "That the IRS will have to develop new protocols and train staff to respond to Public.Resource.org's request does not somehow excuse its need to comply with E–FOIA. If that was a valid excuse, anytime there was a request for production in a format that the agency has not accommodated before, the agency could argue undue burden."
The court also dismissed the IRS' argument that its existing production process was sufficient because Public.Resource's format request was "unique." As the court explained, the "IRS cannot defeat Public.Resource.org's request for disclosure of information in the [machine-readable] format by relying on its own prior practices that are inconsistent with the E–FOIA amendments" – particularly because it was likely that the request was unique because the IRS had previously made clear that it would only produce the records in image format.
The court's ruling was based on the burdens of producing the nine specific Form 990s at issue in the litigation. However, the judge suggested that after incurring these "one-time expenses" to establish the necessary protocols for producing machine-readable records, responding to similar requests in the future would be significantly less costly. The judge ordered the IRS to produce the requested records within 60 days of the order.
Public.Resource.Org is represented in this matter by Davis Wright Tremaine LLP attorneys Thomas R. Burke, Ronald G. London, and Dan Laidman.