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2011 mckinley-v-fed-pet4rehearing-07182011

2011 mckinley-v-fed-pet4rehearing-07182011

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THE UNITED STATES COURT APPEALS 
FOR THE DISTRICT COLUMBIA CIRCUIT 
No. 10-5353 
VERN McKINLEY, 

Plaintiff-Appellant, 
BOARD GOVERNORS THE FEDERAL RESERVE SYSTEM, 

Defendant-Appellee. APPEAL FROM THE U.S. DISTRICT COURT 
FOR THE DISTRICT COLUMBIA 

PETITION FOR REHEARING BANC 
Paul Orfanedes 
Michael Bekesha 
JUDICIAL WATCH, INC. 
425 Third Street, S.W., Suite 800 
Washington,  20024 
(202) 646-5172 

Counsel for Plaintiff-Appellant 

CERTIFICATE PARTIES, RULINGS, 
AND RELATED CASES 

Pursuant Cir. 28(a)(1) and 35(c), counsel provides the following information parties, rulings, and related cases: 
(A) 
Parties and Amici: The parties this appeal are Plaintiff-Appellant Vern McKinley and Defendant-Appellee Board Governors the Federal Reserve System.  There are amici curiae participating this appeal. 

(B) 
Ruling under Review:  This petition seeks rehearing banc the June 2011 opinion panel this Court (Henderson, J., joined Garland, J., and Griffith, J.), affirming the September 29, 2010 Opinion and Order the United States District Court for the District Columbia (Huvelle, J.). copy 

the panels decision attached addendum this petition. 
(C) Related Cases: There are related cases appeal. 

CONCISE STATEMENT THE ISSUE 
AND ITS IMPORTANCE its June 2011 Opinion, the panel McKinley Board Governors the Federal Reserve System, Case No. 10-5353, held that government agency claims the deliberative process privilege under Exemption the Freedom Information Act (FOIA), courts must assume ipso facto that the release withheld material harms government agencys decisionmaking process without any specific showing harm. substantially lowering the governments burden demonstrating that material may withheld under the deliberative process privilege, the panel created sweeping exemption that direct conflict with decades decisions holding that material may withheld under the deliberative process privilege only government agency demonstrates that disclosure the withheld material would harm the agencys decisionmaking process. 
Under Rule the Federal Rules Appellate Procedure, banc review necessary because: 
The panels opinion conflicts with U.S. Supreme Court and circuit precedent disregarding the common law deliberative process privilege, which indisputably requires government agency demonstrate that disclosure the withheld material would harm the agencys decisionmaking process.  NLRB Sears, Roebuck Co., 421 U.S. 132, 149 (1975); Northrop Corp. McDonnell Douglas Corp., 751 F.2d 395, 405 (D.C. Cir. 1984). 
The panels opinion contrary this Courts prior banc decision Wolfe Dept Health and Human Servs., 839 F.2d 768 (D.C. Cir. 1988) (en banc) and conflicts with years circuit precedent which this Court has held that material may withheld under the deliberative process privilege only government agency demonstrates that disclosure the withheld material would harm the agencys decisionmaking process. Horowitz Peace Corps, 428 F.3d 271 (D.C. Cir. 2005); Army Times Publn Co. Dept the Air Force, 998 F.2d 1067 (D.C. Cir. 1993); Access Reports Dept Justice, 926 F.2d 1192 (D.C. Cir. 1991); Formaldehyde Inst. Dept Health and Human Servs., 889 F.2d 1118 (D.C. Cir. 1989); Dudman Commcns Corp. Dept Air Force, 815 F.2d 1565 (D.C. Cir. 1987). 
This case presents issue exceptional importance because the panels opinion, which substantially lowers the governments burden demonstrating that material may withheld under the deliberative process privilege, eviscerates FOIA disclosure statute. Milner Dept the Navy, 562 U.S. ___, 2011 U.S. LEXIS 2101 (Mar. 2011). 

BACKGROUND 
This case concerns FOIA request for records about the first what became series bailouts contemplated undertaken the federal government during the financial crisis 2008. March 14, 2008, the Board Governors the Federal Reserve System (the Board) officially convened and took the extraordinary and unprecedented action authorizing the Federal Reserve Bank New York extend credit JPMorgan Chase provide temporary loan Bear Stearns enable meet its financial obligations and avoid filing for bankruptcy. McKinley FDIC, 744 Supp. 128, 133 (D.D.C. 2010). Several months later, the Board released the minutes its March 14, 2008 meeting.  The minutes only summarily stated that the Board had concluded that unusual and exigent circumstances existed and that Bear Stearns, and possibly other primary 
securities dealers, were unable secure adequate credit accommodations elsewhere. Id. 137. Nowhere did the Board identify the specific evidence considered how analyzed this evidence. 
Given the extraordinary nature this transaction and the lack any public explanation the underlying justifications for the Bear Stearns bailout, Plaintiff Vern McKinley submitted FOIA request the Board effort discover what the Government to.  U.S. Dept Justice Reporters Comm. for Freedom Press, 489 U.S. 749, 780 (1989). response, the Board produced only pages their entirety and withheld 190 pages their entirety part under FOIA Exemption McKinley, 744 Supp. 133-134. The Board subsequently moved for, and the U.S. District Court for the District Columbia granted, summary judgment.  Id. 145. appeal, McKinley demonstrated that, under circuit precedent, material may withheld under the deliberative process privilege only government agency demonstrates that disclosure the withheld material would harm the agencys decisionmaking process. Horowitz Peace Corps, 428 F.3d 271, 276 
(D.C. Cir. 2005) (quoting Dudman, 815 F.2d 1568) ([T]he key question Exemption cases whether the disclosure the material would expose 
agencys decision making process such way discourage candid discussion within the agency and thereby undermine the agencys ability perform its functions.).  Yet, its June 2011 ruling, the panel stated, The Congress enacted FOIA Exemption however, precisely because determined that disclosure material that both predecisional and deliberative does harm agencys decisionmaking process. McKinley Bd. Governors the Fed. Reserve Sys., No. 10-5353, 2011 U.S. App. LEXIS 11357, *21 (D.C. Cir. June 2011). other words, the panel held that government agency claims the deliberative process privilege under FOIA Exemption courts must assume ipso facto that the release withheld material harms government agencys decisionmaking process without any specific showing harm. 

DISCUSSION 	The Panels Opinion Conflicts with U.S. Supreme Court and Circuit Precedent Disregarding the Common Law Deliberative Process Privilege, Which Indisputably Requires Specific Showing Harm. 
FOIA Exemption allows agency withhold material that consists inter-agency intra-agency memorandums letters which would not available law party other than agency litigation with the agency. 
U.S.C.  552 (b)(5). Based the plain language the statute, the U.S. Supreme Court has recognized that FOIA Exemption incorporates the privileges which the Government enjoys under the relevant statutory and case law the pretrial discovery context. Renegotiation Bd. Grumman Aircraft Engg Corp., 421 
U.S. 168, 184 (1975); see also EPA Mink, 410 U.S. 73, (1973) (It appears that Exemption contemplates that the publics access internal memoranda will governed the same flexible, commonsense approach that has long 
governed private parties discovery such documents involved litigation with Government agencies.) (emphasis added). Moreover, the U.S. Supreme Court has affirmed this view over the past years. U.S. Weber, 465 U.S. 792, 799 (1984) (FOIA Exemption incorporates the privileges which the Government enjoys under the relevant statutory and case law the pretrial discovery context.) (citations omitted); FTC Grolier, 462 U.S. 19, (1983) (By its own terms, Exemption requires reference whether discovery would normally required 
during litigation with the agency.); see also U.S. Dept Justice Julian, 786 
U.S. 11-12 (1988). The U.S. Supreme Court has even recognized that [the Legislative history Exemption indicates that Congress intended incorporate governmental privileges.  U.S. Weber, 465 U.S. 802. Furthermore, this Court has continuously held that FOIA Exemption incorporates common law governmental privileges.  Stonehill I.R.S., 558 F.3d 534, 539 (2009) (FOIA 
Exemption incorporates the privileges the government typically enjoys pretrial discovery.); Rockwell Intl Corp. U.S. Dept Justice, 235 F.3d 598, 606 (2001) (The test under Exemption whether the documents would routinely normally disclosed upon showing relevance party litigation with the agency.) (quoting Grolier, 462 U.S. 26); see also Sealed Case, 121 F.3d 729, 745 (1997) ([T]he deliberative process privilege primarily common law privilege.). 1975, the U.S. Supreme Court adopted the U.S. Court Claims test for determining whether material privileged under the common law deliberative process privilege. Sears, Roebuck Co., 421 U.S. 149 (The privilege[] claimed petitioners relevant this case [is] the generally recognized privilege for confidential intra-agency advisory opinions, disclosure which would injurious the consultative functions government.) (quoting 
Kaiser Aluminum Chem. Corp. U.S., 157 Supp. 939 (Ct. Cl. 1958)) 
(emphasis added).  Moreover, this Court has stated: 
Assertion the deliberative process privilege requires formal claim privilege the head the department with control over the information. That formal claim must include description the documents involved, statement the department head that she has reviewed the documents involved, and assessment the consequences disclosure the information. 
Northrop Corp., 751 F.2d 405 (emphasis added); see also Landry FDIC, 204 F.3d 1125, 1135 (D.C. Cir. 2000) (noting the requirements for invoking the deliberative process privilege). assuming that the release withheld material harms government agencys decisionmaking process without any specific showing harm, the panels opinion conflicts with decisions both the U.S. Supreme Court and this Court that the deliberative process privilege FOIA Exemption incorporates the common law deliberative process privilege, which requires specific showing harm.  Therefore, banc review necessary 
secure and maintain uniformity this Courts decisions. 
II. 	The Panels Opinion Conflicts with Circuit Precedent. 	The panels opinion conflicts with this Courts prior banc decision concerning the deliberative process privilege. 
The panels opinion conflicts with this Courts banc decision Wolfe Department Health and Human Services. Wolfe, this Court sought determine whether government agency may withhold material that indicates whether agency decision had been made.  839 F.2d 772. other words, the material did not reveal the reasons why action was taken; instead, the material reported whether action had been taken. Id. 775. first glance, the withholding the material appears improper.  However, the banc panel held that the material may withheld under the deliberative process privilege. 
Because there was dispute that the material was predecisional, this Court sought determine whether the release the material would harm the government agencys decisionmaking process. 839 F.2d 774 ([T]he first step determining whether disclosure would harm the deliberative process examine the context which the materials are used.). examining the material within the context the decisionmaking process, this Court held that the material was exempt from disclosure because the government agency had demonstrated that, revealing preliminary recommendations, specific harm would occur.  Id. fact, this Court explained that judges are bound the facts and the record before them reference the government agencys demonstration that the release the material would have harmful effect the agencys processes. Id. 775. This Courts adoption the government agencys assertions convincingly confirms that this Court did, fact, perform harm analysis and consequently 
determined that disclosure the withheld material would harm the agencys 
decisionmaking process. Id. 775-776. 
Unfortunately for future FOIA requesters, this Court did not explicitly explain its step-by-step reasoning.  Therefore, panels such the one issue today confuse language the Wolfe decision for what this Court actually held.  The panel wrongly focused the notion that [c]ourts would become enmeshed continual process estimating or, more accurately, guessing about the adverse effects the decisional process great variety combinations pieces information.  McKinley, 2011 U.S. App. LEXIS 11357, *21 (quoting Wolfe, Id. 775).  Rather than guessing about harm, however, the issue one proof. Wolfe, this Court was presented evidence that the disclosure the withheld material would cause specific harm the government agencys decisionmaking process. There was estimating guessing involved.  The government agency demonstrated harm, and this Court, bound those facts, found harm. say that government agency not required demonstrate specific harm, however, contrary the analysis undertaken this Court Wolfe.  More precisely, the failure government agency demonstrate actual harm  the case with the Board the instant matter  that forces courts become enmeshed estimating guessing about the adverse effects the release the withheld material will have the agencys decisionmaking process.  Therefore, the panels opinion, that government agency not required demonstrate that disclosure the withheld material would harm the agencys decisionmaking process, conflicts with banc decision this Court. The panels opinion conflicts with years circuit precedent. 
One year prior this Courts banc decision Wolfe, this Court, Dudman Communications Corporation Department Air Force, held that courts must focus less the nature the materials sought and more the effect the materials release. 815 F.2d 1565, 1568 (D.C. Cir. 1987). Moreover, and more importantly, even after the Wolfe decision, this Court continuously held that the key question determining material may withheld under the deliberative process privilege whether the disclosure materials would expose agencys decision making process such way discourage candid discussion within the agency and thereby undermine the agencys ability perform its functions.  Horowitz, 428 F.3d 276 (quoting Dudman, 815 F.2d 1568); see also Formaldehyde Inst., 889 F.2d 1123-1124 (The pertinent issue what harm, any, the [documents] release would [an agencys] deliberative process.); Access Reports, 926 F.2d 1195 (The key question identifying deliberative material whether disclosure the information would discourage candid discussions.). Therefore, order for government agency properly withhold material under the deliberative process privilege FOIA Exemption the agency 
must demonstrate that such material would actually inhibit candor the decision making process available the public. Army Times, 998 F.2d 1072. Moreover, government agency cannot meet its statutory burden justification conclusory allegations possible harm. Mead Data Cent., Inc. 
U.S. Dept the Air Force, 566 F.2d 242, 258 (D.C. Cir. 1977). must show 
specific and detailed proof that disclosure would defeat, rather than further, the purposes the FOIA. Id. Horowitz, Wolfe, this Court concluded that the requested material was properly withheld under the deliberative process privilege only after reviewed the facts and the record before it. Horowitz, the record clearly showed that making [the withheld] documents publicly available would deter [individuals] from creating them and deprive such officials the benefit review and comment from other departments. Horowitz, 428 F.3d 276-277. Similarly, Formaldehyde Institute, this Court cited Wolfe and held that the withheld records were properly exempt from disclosure under the deliberative 
process privilege only after reviewed indisputable evidence that disclosure reviewers comments would seriously harm the deliberative process. 889 F.2d 
1124. that case, the government agency produced declarations asserting that the 
release reviewers' editorial comments would very likely have chilling effect either the candor potential reviewers government-submitted articles the ability the government have its work considered for review all. Furthermore, government author likely less willing submit her work refereed journal all critical reviews could come light 
somewhere down the line. Id. 
Contrary the well-established precedent this Court, the panel held that the Board was not required demonstrate that disclosure the withheld material would harm its decisionmaking process.  Since the panels opinion conflicts with prior banc panel and years circuit precedent, banc review necessary secure and maintain uniformity this Courts decisions. 

III. This Case Presents Issue Exceptional Importance. 
This case presents issue exceptional importance because the panels opinion eviscerates FOIA disclosure statute substantially lowering the governments burden demonstrating that material may withheld under the deliberative process privilege not requiring specific showing harm. Under this lax standard, foreseeable that government agency will claim the deliberative process privilege over almost all material.  Without specific showing harm, almost any material could deemed deliberative and therefore withheld under FOIA Exemption For example, employee transmits 
Also noteworthy, the panels opinion conflicts with Ninth Circuit precedent. recently 1992, the U.S. Court Appeals for the Ninth Circuit held that government agency improperly withheld material because failed demonstrate that its production would injurious the consultative functions government that the privilege nondisclosure protects. Assembly California U.S. Dept Commerce, No. 92-15217, 1992 U.S. App. LEXIS 22208, *23 (9th Cir. Sept. 17, 1992) (quoting Mink, 410 U.S. 87). 
record that indicates how many reams paper were used the month before and the supervisor uses that record decide how many reams purchase the following month, that record arguably could be, and will most likely be, withheld under the deliberative process privilege even though there possibility that the release that record would harm the government agencys decisionmaking process. 
Therefore, the panels opinion endures, the deliberative process privilege FOIA Exemption would become a sweeping exemption, posing the risk that FOIA would become less disclosure than withholding statute.  Milner, 2011 
U.S. LEXIS 2101 *30. Milner, the U.S. Supreme Court recently reiterated that FOIA was enacted overhaul earlier public records provision that had become more a withholding statute than disclosure statute.  Id. *6.  For FOIA escape this same fate, the U.S. Supreme Court noted that the nine exemptions contained therein must interpreted narrowly. Id. (observing that the exemptions are explicitly made exclusive and must narrowly construed. (internal citations omitted)); id. *16 (We have often noted the Acts goal broad disclosure and insisted that the exemptions given narrow compass.). the instant matter, the panel failed narrowly construe the deliberative process privilege.  Instead following established precedent and holding that the Board was required demonstrate that disclosure the withheld material would harm its decisionmaking process, the panel substantially lowered the governments burden demonstrating that material may withheld under the deliberative process privilege without specific showing harm. 
Moreover, because this circuits location the seat the federal government, 42% all FOIA lawsuits are filed the U.S. District Court for the District Columbia2 and even greater percentage FOIA appeals are filed this Court.  Specifically, since 1992, one half all appeals FOIA cases were filed this Court.3 Due the staggering percentage FOIA appeals this Court hears, this Court has become recognized the preeminent federal court FOIA issues. City Colo. Springs White, 967 P.2d 1042, 1048 (Colo. 1998) (Because the deliberative process privilege belongs uniquely the government [this Court] has emerged the preeminent authority matters related the privilege.).  Similarly, approximately 35% all material withheld under one the nine claims FOIA exemptions withheld under FOIA Exemption 5.4 other words, FOIA Exemption readily claimed the government, and, most According the District Case Search the Pacer Court Locator, 3680 the 8770 FOIA cases filed federal district courts since 1992 were filed the 
U.S. District Court for the District Columbia. According the Appellate Case Search the Pacer Court Locator, 670 the 1340 FOIA cases filed federal circuit courts were filed this Court. This statistic derived from governmental data located http://www.foia.gov/data.html. total, Fiscal Year 2010, federal government agencies partially withheld material responsive 118,161 FOIA requests and entirely withheld material responsive 18,321 FOIA requests. those 136,482 withholdings, FOIA Exemption was claimed 48,135 times. 
likely, this Court, well the U.S. District Court for the District Columbia, will consistently continue decide whether material may withheld under the deliberative process privilege. Therefore, ensure that the deliberative process privilege Exemption does not consume FOIA completely and that FOIA does not become withholding statute instead disclosure statute, banc rehearing necessary. 

CONCLUSION 
For the reasons stated above, McKinley respectfully requests that this Court 
grant this petition for rehearing banc. 
Dated: July 18, 2011 Respectfully submitted, 
Paul Orfanedes 
/s/ Michael Bekesha Michael Bekesha JUDICIAL WATCH, INC. 425 Third Street, S.W., Suite 800 Washington, 20024 
(202) 646-5172 
Counsel for Plaintiff-Appellant 

ADDENDUM 

United States Court Appeals 
FOR THE DISTRICT COLUMBIA CIRCUIT 
Argued April 21, 2011 Decided June 2011 
No. 10-5353 
VERN MCKINLEY, 
APPELLANT 
BOARD GOVERNORS THE FEDERAL RESERVE SYSTEM, 
APPELLEE 

Appeal from the United States District Court 
for the District Columbia 
(No. 1:09-cv-01263) 

Michael Bekesha argued the cause for the appellant. Paul Orfanedes was brief. 
Samantha Chaifetz, Attorney, United States Department Justice, argued the cause for the appellee. Tony West, Assistant Attorney General, Beth Brinkmann, Deputy Assistant Attorney General, Mark Stern, Attorney, Katherine Wheatley, Associate General Counsel, Board Governors the Federal Reserve System, and Yvonne Mizusawa, Senior Counsel, were the brief. Craig Lawrence, Assistant United States Attorney, entered appearance. 
Before: HENDERSON, GARLAND and GRIFFITH, Circuit Judges. 
Opinion for the Court filed Circuit Judge HENDERSON. 
KAREN LECRAFT HENDERSON, Circuit Judge: December 2008 Vern McKinley (McKinley) submitted request pursuant the Freedom Information Act (FOIA), U.S.C.  552, the Board Governors the Federal Reserve System (Board) seeking information related the Boards March 14, 2008 decision authorize the Federal Reserve Bank New York (FRBNY) provide temporary loan The Bear Stearns Companies Inc. (Bear Stearns) through extension credit JPMorgan Chase Co. (JP Morgan). The Board produced documents response McKinleys request but withheld others pursuant FOIA Exemptions and McKinley filed suit district court compel disclosure the withheld documents. now appeals the district courts entry summary judgment favor the Board. begin with brief overview the Federal Reserve System before describing the events surrounding the Boards March 14, 2008 loan decision and McKinleys FOIA request. Overview Federal Reserve System 
The Congress created the Federal Reserve System 1913 serve the nations central bank. not single entity but rather composite several parts, both public and private, organized regional basis with central governmental supervisoryauthority. Reuss Balles, 584 F.2d 461, 462 (D.C. Cir. 1978). Two the parts are relevant herethe Board and the Federal Reserve Banks (Reserve Banks). The Board, composed seven members appointed the President and confirmed the Senate, the central supervisory authority the Federal Reserve System. U.S.C.  241. There are currently twelve Reserve Banks, each located and operating within specific region the country. bank organized under the laws any State the District Columbia may apply the Board join the Federal Reserve System. U.S.C.  321. joining, the bank purchases stock the Reserve Bank responsible for the region the country where the bank located and thereby becomes member bank. Id. Additionally, all national banks, that is, banks chartered under the National Bank Act 1864 (formerly Act June 1864, ch. 106, Stat. 99) (codified amended scattered sections U.S.C.); see Indep. Ins. Agents Am., Inc. Hawke, 211 F.3d 638, 640 (D.C. Cir. 2000) (The National Bank Act 1864 amended, provides for the chartering national banks.), must join the Federal Reserve System purchasing stock the Reserve Bank located its district. U.S.C.  222. The Reserve Banks, then, are private corporations whose stock owned the member commercial banks within their districts. 
Comm. for Monetary Reform Bd. Governors Fed. Reserve Sys., 766 F.2d 538, 540 (D.C. Cir. 1985). Accordingly, they have the power make contracts, sue and sued, appoint president and vice presidents, prescribe bylaws and perform other acts consistent with private corporation. 
U.S.C.  341. 
Notwithstanding the foregoing powers, the Board exercises significant supervisory authority over the Reserve Banks. For example, the Board appoints three the nine directors each Reserve Bank, U.S.C.  302; the Board approves the compensation Reserve Bank pays its directors, id.  307; the Board approves each Reserve Banks selection its president and first vice president, id.  341; the Board can suspend remove any officer director Reserve Bank, id.  248(f); The Board can readjust the federal reserve districts, subject the requirement that there least eight and more than twelve. U.S.C.  222. 
and the Board can examine its discretion the accounts, books, and affairs each Federal reserve bank and each member bank and require such statements and reports may deem necessary, id.  248(a)(1). The Reserve Banks are authorized lend money member banks. Id.  343. In unusual and exigent circumstances, the [Board] may authorize any Federal reserve bank lend money nonmember institution. Id.  343(A). Before doing so, however, the Reserve Bank must obtain evidence that [the institution] unable secure adequate credit accommodations from other banking institutions. Id. Bear Stearns Financing and FOIA Request early March 2008 the Board became aware that Bear Stearns, important participant many financial markets, was experiencing severe liquidity problems and might soon declare bankruptcy. Stefansson Decl.  7.2 Bear Stearns was holding company comprised partly registered broker-dealers and, such, was regulated the United States Securities and Exchange Commission (SEC), not the Board. Winter Decl.
 10-11. Moreover, because Bear Stearns was not depositoryinstitution, was ineligible borrow through the Federal Reserves regular short-term lending program. Stefansson Decl.  The tools with which the Board could respond Bear Stearnss liquidity problems were accordingly limited. Believing that Bear Stearns bankruptcy would have far 
Coryann Stefansson Associate Director the Boards Division Banking Supervision and Regulation, position she has held since May 2007. Previously she was FRBNY Assistant Vice President Bank Supervision and Regulation from 1998 until 2007. Stefansson Decl.  Margaret Winter the FOIA and Privacy Act Officer the United States Securities and Exchange Commission. Winter Decl.  
reaching and negative effects financial markets, however, the Board and Reserve Bank staff surveyed those institutions subject the Boards regulation assess their exposure Bear Stearns. Id.  particular, they sought ascertain the exposure large complex banking organizations (LCBOs).4 Id. March 13, 2008 the SEC notified the Board and the FRBNY that Bear Stearns had inadequate resources meet its obligations and planned declare bankruptcy the following morning. Id.  The Board met the following dayMarch 14and determined that, given the fragile condition the financial markets the time, the prominent position Bear Stearns those markets, and the expected contagion that would result from the immediate failure Bear Stearns, the best alternative available was provide temporary emergency financing Bear Stearns through arrangement with JPMorgan Chase Co. Thro Decl. Ex. (minutes Board 3/14/08 meeting).5 The Board accordingly authorized the FRBNY extend credit Morgan allow Morgan provide temporary loan Bear Stearns. The FRBNY, turn, approved the loan.6 The loan allowed Bear Stearns avoid LCBOs are characterized the scope and complexity their domestic and international operations; their participation large volume payment and settlement systems; the extent their custody operations and fiduciary activities; and the complexity their regulatory structure, both domestically and foreign jurisdictions. designated LCBO, bank holding company foreign banking organization supervised the Federal Reserve must meet specified criteria considered significant participant least one critical other key financial market. Stefansson Decl.  Alison Thro the most senior attorney the Boards Legal Division responsible for reviewing FOIA requests. Thro Decl.  The FRBNY made the loan through Morgan because Bear Stearns was not depository institution and therefore was not eligible 
filing for bankruptcy but, March 16, the Board and the FRBNY authorized second loan Morgan facilitate Morgans acquisition Bear Stearns. December 2008 McKinley submitted the Board FOIA request for further detail information contained the [March 14, 2008] minutes the Board. Thro Decl. Ex. (FOIA request). specifically sought any supporting memos other information that detail the expected contagion that would result from the immediate failure Bear Stearns and the related conclusion that this action was necessary prevent, correct, mitigate serious harm the economy financial stability described the meeting minutes. Id. 
After having received response from the Board July 2009, McKinley filed complaint district court seeking declaratory judgment that FOIA entitles him disclosure the information requested and seeking disclosure that information. Compl.  36-47. The Board then produced 120 pages previously released publicly available documents August 11, 2009. McKinley FDIC, 744 Supp. 128, 133 
(D.D.C. 2010). September 30, 2009 the Board produced additional forty-eight pages full and twenty-seven pages with information redacted. Id. also identified and withheld 163 pages pursuant FOIA Exemptions and Id. Eight the 163 withheld pages originated with the SEC and the Board referred the disclosure determination regarding those documents receive funds directly from the FRBNYs discount window. Stefansson Decl.  The Discount Window the long-standing program through which the twelve Federal Reserve Banks make short-term loans (often overnight) depository institutions, and can serve emergency, back-up source liquidity for borrowing depository institutions that lack other options. Bloomberg, L.P. Bd. Governors Fed. Reserve Sys., 601 F.3d 143, 145-46 n.1 (2d Cir. 2010) (internal quotation marks omitted). the SEC.7 Id. The remaining withheld pages contain information collected and used the Board and the FRBNY assess the exposure regulated financial institutions Bear Stearns well communications between Board and FRBNY personnel. See Thro Decl.  17-23 (describing withheld documents); Stefansson Decl.  12-14 (same). January 2010 the SEC informed McKinley that was withholding the eight documents referred the Board pursuant FOIA Exemptions and Winter Decl.  
The Board moved for summary judgment February 2010 and McKinley filed cross-motion for summary judgment. The Board produced Vaughn index identifying the withheld material document (rather than page), briefly describing the withheld material and listing the FOIA exemption pursuant which the document was withheld. See Vaughn Rosen, 484 F.2d 820, 826-28 (D.C. Cir. 1973). McKinley does not challenge the Boards withholding five documents pursuant FOIA Exemption challenges only the Boards reliance FOIA Exemptions and The district court held that the withheld documents are protected from disclosure FOIA Exemption or, the alternative, Exemption and granted summary judgment favor the Board. McKinley, 744 Supp. 135-45. The court did not address the applicability vel non FOIA Exemption 4.8 Id. 145. McKinley timely filed notice appeal. McKinley does not discuss the SEC documents appeal and has thus waived any challenge the withholding those documents. See New York EPA, 413 F.3d (D.C. Cir. 2005) (argument not raised opening brief waived). McKinleys complaint originally included FOIA claims against the Federal Deposit Insurance Corporation but they were ultimately dismissed moot. McKinley, 744 Supp. 131 n.1 (internal citations omitted). 
II. review the district courts grant summary judgment novo. Sussman U.S. Marshals Serv., 494 F.3d 1106, 111112 (D.C. Cir. 2007). Summary judgment proper there genuine issue any material fact and the moving party entitled judgment matter law. Id. 
FOIA requires federal agencies disclose records upon request unless the records fall within one more enumerated exemptions. Dept Interior Klamath Water Users Protective Assn, 532 U.S. (2001); see U.S.C.  552. The exemptions are narrowly construed not  obscure the basic policy that disclosure, not secrecy, the dominant objective the Act.  Klamath, 532 U.S. (quoting Dept Air Force Rose, 425 U.S. 352, 361 (1976)). The relevant exemption Exemption which allows agency withhold disclosure record the record meets two requirements: (1) inter-agency intra-agency memorandum[] letter[] that (2) would not available law party other than agency litigation with the agency.9 U.S.C.  552(b)(5). McKinley argues the withheld material fails satisfy both requirements. Inter-Agency Intra-Agency Memoranda 
The Board concedes that the Federal Reserve Banks, including the FRBNY, are not federal agencies and therefore the withheld documents are not inter-agency memoranda. The Because conclude that Exemption shields from disclosure all the withheld documents, not reach the applicability vel non Exemption which allows agency withhold disclosure record contained related examination, operating, condition reports prepared by, behalf of, for the use agency responsible for the regulation supervision financial institutions. U.S.C.  552(b)(8). 
Board further concedes that the Reserve Banks are not components the Board, which concession would appear disqualify the withheld documents from constituting intra-agency memoranda letters. Under the consultant corollary Exemption however, interpret intra-agency to include agencyrecords containing comments solicited from nongovernmental parties. Natl Inst. Military Justice U.S. Dept Defense (NIMJ), 512 F.3d 677, 680, 682 (D.C. Cir.), cert. denied, 129 Ct. 775 (2008). When agency record submitted outside consultants part the deliberative process, and was solicited the agency, find entirely reasonable deem the resulting document intraagency memorandum for purposes determining the applicability Exemption 5. Id. 680 (quoting Ryan Dept Justice, 617 F.2d 781, 790 (D.C. Cir. 1980)). Thus held NIMJ that the consultant corollary protected opinions and recommendations submitted bynon-governmental lawyers the United States Department Defense regarding the establishment militarycommissions trysuspected terrorists after the September 11, 2001 attacks. Id. 678-79. 
McKinley does not dispute the consultant corollary but challenges its application the withheld documents two grounds. First, reliance the holding Department Interior Klamath Water Users Protective Assn, 532 U.S. (2001), argues the Board failed demonstrate that the FRBNYs interest identical that the Board. issue Klamath was FOIA request submitted the United States Department the Interiors Bureau Indian Affairs (Bureau) seeking disclosure communications between the Bureau and certain Indian tribesnamely, six documents prepared byIndian tribes the Bureaus request and one document prepared the Bureau, all which related the allocation water rights among competing users/uses. 532 U.S. The United States Supreme Court held that the requested documents were not protected from disclosure under Exemption The Court noted that the typical case which court applies the consultant corollary, the consultant does not represent interest its own, the interest any other client, when advises the agency that hires it. Id. 11. [The consultants] only obligations are truth and its sense what good judgment calls for, and those respects the consultant functions just employee would expected do. Id. The Indian tribes, contrast, necessarily communicate with the Bureau with their own, albeit entirely legitimate, interests mind. Id. 12. Although that fact alone distinguishes tribal communications from the consultants examples recognized several Courts Appeals, the Court explained that the distinction even sharper, that the [Indian] Tribes are self-advocates the expense others seeking benefits inadequate satisfy everyone. Id. Lest there any confusion, the Court restated the dispositive point: that the apparent object the Tribes communications decision agency the Government support claim the Tribe that necessarily adverse the interests competitors. Id. 14. 
Unlike the Indian tribes, the FRBNY [did] not represent interest its own, the interest any other client, when advise[d] the [Board] the Bear Stearns loan. Id. 11. McKinleys counsel acknowledged oral argument, the FRBNY operating arm the Board. Oral Arg. 11:00
11:05. McKinley nonetheless claims that the FRBNY represented its own interest its consultations with the Board regarding Bear Stearns because the FRBNY had independent statutory duty obtain evidence that [Bear Stearns was] unable secure adequate credit accommodations from other banking institutions before making the loan. See U.S.C.  343(A). That the FRBNY had obtain such evidence before could approve the loan authorized the Board does not mean its interest diverged from the Boards interest, however, and claim otherwise, believe, misconstrues the nature the Federal Reserve System. The Board, together with the Federal Open Market Committeea body composed the Board members and five presidents first vice presidents the Reserve Banks, U.S.C.  263are statutorily mandated maintain long run growth the monetary and credit aggregates commensurate with the economys long run potential increase production, promote effectively the goals maximum employment, stable prices, and moderate long-term interest rates, U.S.C.  225a. See Fasano Fed. Reserve Bank N.Y., 457 F.3d 274, 277-78 (3d Cir. 2006) (The individual Federal Reserve Banks serve the foundation for the Federal Reserve System. The individual Federal Reserve Banks carry out the monetary policy formulated [by the Federal Open Market Committee]. The Board loosely oversees the Federal Reserve Banks operations.), cert. denied, 549 U.S. 1115 (2007). Board regulations make clear that [t]he Federal Reserve System extends credit with due regard the basic objectives monetary policy and the maintenance sound and orderly financial system. C.F.R.  201.1(b). noted, the Board and Reserve Banks work together to assist achieving national economic goals through [the Reserve Systems] influence the availability and cost bank reserves, bank credit, and money. Reuss Balles, 584 F.2d 461, 462 (D.C. Cir. 1978). The key success the [Reserve] System harmonious interaction between and among [its] component parts. Id. Statutes, regulations and case law make clear, therefore, that the Board and the Reserve Banks share common goal, namely the maintenance sound and orderly financial system. C.F.R.  201.1(b). That the Congress requires both the Board and the relevant Reserve Bank (here, FRBNY) separately determine that the loan made Bear Stearns through Morgan promotes the maintenance sound and orderly financial system does not mean that the Boards and the FRBNYs interests diverged deciding make the loan. 
McKinley also claims the Board failed show solicited the withheld material from the FRBNY our precedent requires. See, e.g., NIMJ, 512 F.3d 680 ([A]n agency record submitted outside consultants part the deliberative process[] and solicited the agency [is] intra-agency memorandum for purposes determining the applicability Exemption 5. (emphasis added) (internal quotation marks omitted)); id. 681, 683; Ryan, 617 F.2d 790 (withheld records were generated initiative from the Department Justice, i.e., the questionnaire sent out the Department the Senators). The Stefansson declaration, however, adequately demonstrates that the Board solicited the material from the FRBNY. When news Bear Stearnss financial straits reached the Board, began focus the effects Bear Stearns bankruptcy the financial markets and particularly LCBOs and other organizations supervised the Board. Stefansson Decl.  The Board acted against backdrop significant turmoil and uncertainty the financial markets. Id.  
The deterioration the U.S. housing market late the summer 2007 precipitated sharp rise uncertainty financial markets about the value structured securitized assets. demand for these products fell, funding pressures increased for variety financial institutions. uncertainty grew over the magnitude losses financial institutions, these institutions became unwilling lend each other even against high-quality collateral, asset prices fell, and the availability borrowing declined significantly. result, financial institutions faced severe liquidity pressures. These pressures acceleratedrapidlybetween mid-January and mid-March 2008 left unabated, this dynamic posed risk widespread insolvencies and severe and protracted damage the financial system and, ultimately, the economy whole. 
Id.  The Board thus found itself reacting what believed emergency, evidenced its decision to provide temporary emergency financing Bear Stearns. Thro Decl. Ex. (minutes Board 3/14/08 meeting) (emphasis added). [A]s part the Boards consideration potential responses Bear Stearns [sic] funding difficulties and in accordance with well-established supervisoryprocesses, Board and Reserve Bank staff responsible for LCBO supervision surveyed the LCBOs for purposes assessing the LCBOs real-time exposures Bear Stearns. McKinley, 744 Supp. 136 (quoting Stefansson Decl.  8). The monitoring LCBOs and advising the Board their financial condition is administered the Federal Reserve Banks. Stefansson Decl.  see also U.S.C.  248(a)(1) (Board may examine its discretion the accounts, books, and affairs each Federal reserve bank and each member bank and require such statements and reports may deem necessary); id.  325 (Federal Reserve member banks are subject examinations made direction the [Board] the Federal reserve bank examiners selected approved the [Board]); id.  483 (Every Federal reserve bank shall all times furnish the [Board] such information maybe demanded concerning the condition any member bank within the district the said Federal reserve bank.). Thus, aid its deliberative process, the Board sought information from the FRBNY about the financial condition and exposures institutions monitored the FRBNY. The FRBNY did not simply provide the information, unprompted, the Board. 
Accordingly, conclude the withheld material constitutes intra-agency memorandums letters under FOIA Exemption turn now the second prong Exemption Deliberative Process Privilege 
Intra-agency memoranda are exempt from disclosure under Exemption only they would not available law party other than agency litigation with the agency. U.S.C.  552(b)(5). satisfy the second requirement Exemption the record must non-disclosable under one the established civil discovery privilegeshere, under the deliberative process privilege. NIMJ, 512 F.3d 680 n.4 (citing Klamath, 532 U.S. 8-9). To qualify for Exemption protection under the deliberative process privilege, an agencys materials must both predecisional and part the deliberative process.   Id. (quoting Formaldehyde Inst. Dept Health Human Servs., 889 F.2d 1118, 1121 (D.C. Cir. 1989)). McKinley acknowledges that the withheld material predecisional but argues that the record deliberative only its disclosure would harm the agencys decisionmaking process. The Congress enacted FOIA Exemption however, precisely because determined that disclosure material that both predecisional and deliberative does harm agencys decisionmaking process. have explained, Exemption 
was created protect the deliberative process the government, ensuring that persons advisory role would able express their opinions freely agency decision-makers without fear publicity. the course its day-to-day activities, agency often needs rely the opinions and recommendations temporary consultants, well its own employees. Such consultations are integral part its deliberative process; conduct this process public view would inhibit frank discussion policy matters and likely impair the quality decisions. 
Ryan, 617 F.2d 789-90; see also Klamath, 532 U.S. 8-9 (The deliberative process privilege rests the obvious realization that officials will not communicate candidly among themselves each remark potential item discovery and front page news, and its object enhance the quality agencydecisions byprotecting open and frank discussion among those who make them within the Government. (internal quotation marks and citations omitted)); Judicial Watch, Inc. Dept Energy, 412 F.3d 125, 129 (D.C. Cir. 2005) (deliberative process privilege  reflect[s] the legislative judgment that the quality administrative decision-making would seriously undermined agencies were forced operate fishbowl because the full and frank exchange ideas legal policy matters would impossible.  (alteration original) (quoting Tax Analysts IRS, 117 F.3d 607, 617 (D.C. Cir. 1997))); Formaldehyde, 889 F.2d 1125 ( [H]uman experience teaches that those who expect public dissemination their remarks may well temper candor with concern for appearances the detriment the decisionmaking process.  (ellipsis and emphasis original) (quoting NLRB Sears, Roebuck Co., 421 U.S. 132, 150-51 (1975))); Coastal States Gas Corp. Dept Energy, 617 F.2d 854, 866 (D.C. Cir. 1980) (deliberative process privilege protects documents which would inaccurately reflect prematurely disclose the views the agency). Our role not second-guess that congressional judgment case-by-case basis. Attempting so, moreover, would prove impracticable: would impossible for courts administer rule law the effect that some but not all information about the decisional process may disclosed without violating Exemption Courts would become enmeshed continual process estimating or, more accurately, guessing about the adverse effects the decisional process great variety combinations pieces information. That would inevitably lead courts some occasions undercut legitimate Exemption protections. Indeed, such procedure would not result rule all. Agencies would have pass requests wholly impressionistically, subject the impressionistic second-guessing the courts. 
That hardly satisfactory efficient way 
implementing FOIA. 
Wolfe Dept Health Human Servs., 839 F.2d 768, 775 
(D.C. Cir. 1988) (en banc). 
Moreover, the Board has demonstrated that disclosure the withheld material would discourage candid discussion within the agency and thereby undermine the agencys ability perform its functions. Formaldehyde, 889 F.2d 1122 (internal quotation marks omitted). part the bank supervisory process, [s]upervised institutions frequently provide [Board and Reserve Bank examiners] with detailed, highly sensitive commercial information that they not customarily disclose the public, disclosure which is likely cause substantial competitive harm the LCBOs. Stefansson Decl.  15. For example, LCBO competitor could use the information to assess sensitive trading relationships and credit relationships and could exploit the information weaken specific entity and cause weaknesses its liquidity position pull[ing] accelerat[ing] funding facilities the competitor had outstanding the LCBO. Id. competitor could also use the data underbid the LCBO the private funding markets. Id. Information that revealed the LCBO faced funding shortage could cause some retail and commercial customers move their business other banks and may cause analysts downgrade the LCBOs stock. Id. short, information collected the Board and Reserve Banks from supervised institutions could harm those institutions disclosed the public. For that reason, [s]upervised institutions rely bank supervisors protect the confidentiality information obtained through the supervisory process and are willing provide this information because they know that the supervisors will maintain its confidentiality. Id. The Board and Reserve Banks rely the willingness supervised institutions provide full information order assure robust supervisory environment. Id. supervised institutions longer believe the Board could would maintain the confidentiality information collects through the supervisory process, they would less willing provide the Board with the information needs to assure robust supervisory environment. Disclosure the type information withheld here, therefore, would impair the Boards ability obtain necessary information the future[] and could chill the free flow information between the [supervised] institutions and the Board and Reserve Bank[s]. Id.; see also Winter Decl.  (Release this type information would have inhibitive effect upon the development policy and administrative direction. opinion, SEC employees would hesitate offer their candid opinions superiors coworkers, well colleagues other federal agencies, they knew that their opinions the moment might made matter public record some future date.). Attorney Work Product Privilege 
The Board also withheld one document under Exemption pursuant the attorney work product privilege. See Judicial Watch, Inc. Dept Justice, 432 F.3d 366, 369 (D.C. Cir. 2005) (FOIA Exemption incorporates the work-product doctrine and protects against the disclosure attorney work product.). The work-product doctrine shields materials prepared anticipation litigation for trial for another party for that other partys representative (including the other partys attorney, consultant, surety, indemnitor, insurer, agent).  Id. (quoting Fed. Civ. 26(b)(3)). According the Board, the withheld document was prepared FRBNY attorneys anticipation litigation Bear Stearns shareholders related the Boards authorization extend credit [Bear Stearns] indirectly through [JP Morgan]. Vaughn Index Doc. No. (Joint Appendix 97). appeal, McKinley argues only that the FRBNY does not come within the consultant corollary and for that reason the Board cannot claim the attorney work product privilege. Having concluded that the FRBNY did indeed act consultant the Board, reject McKinleys argument. The FRBNY, acting the Boards consultant, prepared the withheld document for the Board anticipation litigation. Id. Accordingly, the Board properly withheld the document under Exemption 5.10 
For the foregoing reasons, affirm the district courts grant summary judgment the Board. ordered. Bloomberg L.P. Board Governors the Federal Reserve System, 601 F.3d 143, 145-46, 147 (2d Cir. 2010), the Second Circuit recently held that records regarding loans made the twelve Reserve Banks certain private banks April and May 2008specifically the name the borrowing bank, the amount the loan, the origination and maturity dates, and the collateral givencannot withheld under FOIA Exemption The Board argued before the district court that the withheld records were exempt from disclosure under Exemption but declined appeal the district courts adverse ruling Exemption Id. 146. Thus, the Second Circuit did not address the applicability vel non Exemption the requested records. Id. 146-47. Although the district court held the requested records were not protected under Exemption did not address the issues relevant here. The court acceptedbecause Bloomberg did not disputethe Boards assertion that the withheld records were inter-agency intra-agency memorandums letters. Bloomberg L.P. Bd. Governors Fed. Reserve Sys., 649 Supp. 262, 280-81 (S.D.N.Y. 2009). Furthermore, the Board did not rely upon the deliberative process privilege. Id. 281-82. 

CERTIFICATE SERVICE hereby certify that this 18th day July 2011, filed via the CM/ECF system and hand (nineteen copies of) the foregoing PETITION FOR REHEARING BANC with the Court and served via the CM/ECF system and First-Class U.S. Mail (two copies of) the foregoing PETITION FOR REHEARING BANC to: 
Samantha Chaifetz 
Mark Stern 

U.S. Department Justice, Civil Appellate Staff 950 Pennsylvania Ave., N.W. Washington,  20530 
/s/ Michael Bekesha