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DC Circuit Blesses IRS’ Glomar Defense In Long Running FOIA Dispute

Posted on Aug. 17, 2022

Back in 2018, in District Court Allows IRS to Use Glomar Defense In FOIA Suit Seeking Whistleblower Info I discussed one of the many installments of the litigation between Thomas and Beth Montgomery and the IRS. The case involved the Mr and Mrs Montgomery’s desire to see documents that shed light on how IRS had gotten wind of their partnerships that threw off mostly phony losses.

Late last month, the DC Circuit Court of Appeals affirmed the district court.

The Montgomery family’s partnership transactions attracted the attention of the IRS, leading to a Fifth Circuit opinion finding that most of the partnerships were shams but that one had a legitimate business purpose.  The finding that one partnership was legitimate led the Montgomerys to initiate separate refund suits that the IRS ultimately settled, leading to an almost $500,000 refund.  

The Montgomerys filed a FOIA claim because they wanted to unearth how the IRS came to scrutinize the transactions, with a particular interest in finding out if there was an informant.

In asserting a Glomar defense to the Montgomery request for documents pertaining to whistleblower forms, the IRS refused to either confirm or deny the existence of the records requested.

As I discussed in my original post, the Glomar defense originates from the Cold War and the CIA wanting to keep secret its efforts to uncover a sunken Soviet submarine:

In certain circumstances, […] an agency may refuse to confirm or deny that it has relevant records. This “Glomar response” derives from a ship, the Hughes Glomar Explorer, about which the CIA refused to confirm or deny the existence of records. See Phillippi v. CIA, 546 F.2d 1009, 1011 (D.C. Cir. 1976). Such responses are appropriate only when “`confirming or denying the existence of records would’ itself reveal protected information.” Bartko v. DOJ, 62 F. Supp. 3d 134, 141 (D.D.C. 2014) (quoting Nation Magazine v. U.S. Customs Serv., 71 F.3d 885, 893 (D.C. Cir. 1995)).

When the government raises a Glomar defense, it still needs to tether the defense to one of the nine statutory FOIA exemptions. In Montgomery, the IRS asserted Exemption 7(D).

Exemption 7(D) excludes from disclosure “records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information could reasonably be expected to disclose the identity of a confidential source … [who] furnished information on a confidential basis.” 5 U.S.C § 552(b)(7)(D).

As the DC Circuit described, the district court was “persuaded by the IRS’s explanation that it asserted a Glomar Response because a confirmation of the existence or absence of whistleblower documents in a particular case may lead a savvy requester to the very whistleblower himself. “

In sustaining the district court, it rejected a variety of estoppel type arguments that were premised on prior government admissions that no informant existed. That admission was not sufficient to estop the government from asserting a Glomar defense because it was not quite precisely what was at stake in the FOIA litigation:

The issue of the existence of a confidential informant…is not the same as the issue confronting us now; namely, whether the IRS possesses any documents pertaining to a confidential informant… Indeed, the documents requested by the Montgomerys…include such items as award applications and reportable transaction forms.. As the IRS and the district court correctly point out, the IRS does not pay awards for every form submitted to it.

The key point that the DC Circuit made was that “documents pertaining to a potential whistleblower can exist regardless of whether a whistleblower himself exists” any prior admission about the absence of an informant should not serve as a basis to assert collateral or judicial estoppel or otherwise serve to waive its right to assert a Glomar defense.

As to the merits of the underlying Glomar claim, the Montgomerys argued that the 7(D) exemption was not properly at play, claiming that the exemption only runs to the identity of the whistleblower and any information that the whistleblower provided, rather than their mere existence.

The DC Circuit squarely rejected that argument:

We disagree. Exemption 7(D) permits the IRS to withhold information that “could reasonably be expected to disclose the identity of a confidential source.”

Noting that the whistleblower regs require the IRS to use its best efforts to protect a whistleblower’s identity, the IRS’s policy to neither confirm nor deny the existence “makes sense”:

If the IRS only asserts Glomar when whistleblower records exist, and gives a negative answer when no records exist, savvy requesters would both (1) recognize that a Glomar Response indicates the positive existence of whistleblower documents; and (2) may well be able to deduce the identity of a potential whistleblower himself, the very information the IRS is required to protect. This is especially true when the pool of potential whistleblowers is very small, leading a revenge-seeking requester to narrow down the informant with relative ease. Far from violating FOIA’s statutory scheme, the IRS’s Glomar Response to FOIA requests for whistleblower documents aligns with the purpose of Exemption 7(D) and the duties of the IRS to protect whistleblower identities.

Conclusion

For those with a keen interest in FOIA , I recommend reading the opinion, which includes a discussion of when it is appropriate for the government to overcome the presumption of confidentiality for informants, the nature of district court in camera review, and the adequacy of the IRS’ search for other records that the Montgomerys wanted. To that end and for an even deeper dive, in Saltzman and Book Chapter 2, Taxpayer Access to Information, we have an extensive FOIA discussion, covering materials that are not subject to IRS disclosure as well as myriad FOIA procedural issues.

As I discussed when blogging the 2018 opinion, this case is a significant victory for the IRS and paves the way for future Glomar responses in FOIA cases where someone is seeking information to determine if there was an informant that led to an IRS investigation.

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