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Judicial Watch • Mckinley v Fed Appellant Reply Brief 03182011

Mckinley v Fed Appellant Reply Brief 03182011

Mckinley v Fed Appellant Reply Brief 03182011

Page 1: Mckinley v Fed Appellant Reply Brief 03182011

Category:General

Number of Pages:19

Date Created:March 18, 2011

Date Uploaded to the Library:February 20, 2014

Tags:frbny, Appellee, Material, Reserve, MCKINLEY, Force, Exemption, Supreme, AGENCY, Congress, justice, National, federal, board, Supreme Court, department, court, EPA, IRS, ICE, CIA


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ORALL ARGUMMENT SCHHEDULEDD FOR APRRIL 21, 20011] TTHE UNIITED STAATES COUURT AAPPEALSS 
FOOR THE DDISTRICTT COLLUMBIA CCIRCUIT 
Noo. 10-5353 
VERN McKINL LEY, 
Plaintiiff-Appellaant, 
BBOARD OOF GOVERRNORS THEE FEDERAAL RESERRVE SYSTTEM, 

Defenddant-Appeellee. APPEALL FROM TTHE U.S. DDISTRICTT COURTT
 FOR THE DISTRRICT COLUMMBIA 

REPPLY BRIEEF APPPELLANTT 
Paul JJ. Orfaneddes
 Michhael Bekeshha 
JUDICIAAL WATCH, INC. 
4255 Third Strreet, S.W., Suite 800
 Washinggton, 220024 
(2022) 646-51722 

Coounsel for Plaintiff-AAppellant 
TABLE CONTENTS
 

TABLE CONTENTS ............................................................................................i 

TABLE AUTHORITIES .................................................................................... 

INTRODUCTION .....................................................................................................1 

ARGUMENT .............................................................................................................2 	
The Board Has Not Demonstrated the FRBNY Outside 
Consultant Satisfy the Intra-Agency Communication  
 Requirement  ....................................................................................................2 

II. 	
The Board Has Failed Demonstrate that Release the 
Withheld Material Would Harm its Decision Making Process  ......................7
 
III.	 
The Board Has Failed Sufficiently Demonstrate that the Withheld  
Material Was Contained Related Examination, Operating Condition Reports Invoke FOIA Exemption ...............................10 

CONCLUSION ........................................................................................................13 

CERTIFICATE COMPLIANCE .......................................................................14 

CERTIFICATE SERVICE ................................................................................15 

TABLE AUTHORITIES 

CASES 
Army Times Publishing Company Department the Air Force, 998 F.2d 1067 (D.C. Cir. 1993) ........................................
 
Department the Interior Klamath Water  
 Users Protective Assoc., 532 U.S. (2001)  ................................................... Dudman Communications Corporation 
Department Air Force, 815 F.2d 1565 (D.C. Cir. 1987) ........................ 8-9 

Environmental Protection Agency Mink, 410 U.S. (1973)  .............................. 
Founding Church Scientology Washington, D.C., Inc. National Security Agency, 610 F.2d 824 (D.C. Cir. 1979)  ................. 11-12 Horowitz Peace Corps., 428 F.3d 271 (D.C. Cir. 2005)  ................................... Sealed Case, 121 F.3d 729 (D.C. Cir. 1997)  ............................................... 7-8 
King United States Department Justice, 

830 F.2d 210, (D.C. Cir. 1987)  ..................................................................... 
Mead Data Central, Inc. U.S. Department the Air Force, 
566 F.2d 242 (D.C. Cir. 1977) ........................................................................ Milner Department the Navy, 562 U.S. ___, 
2011 U.S. LEXIS 2101 (2011)  ........................................................ 1-2, 10-11 

Morley Central Intelligence Agency, 
508 F.3d 1108 (D.C. Cir. 2007) .................................................................... National Institute Military Justice United States
 Department Defense, 512 F.3d 677 (D.C. Cir. 2008)  ........................ 6-7 Authorities upon which Plaintiff-Appellant chiefly relies are marked with asterisks. 

STATUTES U.S.C.  552(b)(8) ................................................................................................ U.S.C.  343(A)  ............................................................................................... 5-6 

INTRODUCTION Milner Department the Navy, the United States Supreme Court recently reiterated that the Freedom Information Act (FOIA) was enacted overhaul earlier public records provision that had become more a withholding statute than disclosure statute.  562 U.S. ___, 2011 U.S. LEXIS 2101, (2011) (quoting Environmental Protection Agency Mink, 410 U.S. 73, (1973)). For FOIA escape this same fate, the Supreme Court noted that the nine exemptions contained therein must interpreted narrowly.  Id. (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.). avoid overly expansive applications  FOIAs exemptions and maintain FOIAs status disclosure statute, the Supreme Court explained that the lower courts should adhere the plain meaning the language used Congress.  Id. *17; Id. *30 (holding that odd reading the plain language would produce sweeping exemption, posing the risk that FOIA would become less disclosure than withholding statute.  (internal citations omitted)).  The Supreme Court further explained, The judicial role enforce that congressionally determined balance rather than assess case case, department department, and task task whether disclosure interferes with good government.  Id. *18. 
conclusion, the Supreme Court re-emphasized that the role the courts apply the law written. succinctly declared: these other exemptions not cover records whose release would 
threaten the Nations vital interests, the Government may course 
seek relief from Congress. All hold today that Congress has not 
enacted the FOIA exemption the Government desires. leave 
Congress, appropriate, the question whether should so. Id. **34-35. 
The Supreme Court was addressing the governments overly expansive application FOIA Exemption  Yet, easily could have been expounding upon the arguments raised Appellee Board Governors the Federal Reserve System (the Board) with respect its assertion FOIA Exemptions and this litigation. Appellant Vern McKinley demonstrated his opening brief, the Board attempting turn FOIA into withholding statute construing both Exemption and Exemption beyond their plain meaning. FOIA maintain its status disclosure statute and not withholding statute, the Boards claims must rejected. 

ARGUMENT 	The Board Has Not Demonstrated that the FRBNY  Outside Consultant Satisfy the Intra-Agency  Communication Requirement. McKinley demonstrated his opening brief, the Board has not presented any evidence satisfy its burden proving that its communications with the Federal Reserve Bank New York (FRBNY) constitute intra-agency communications for purposes the deliberative process privilege.  The Board has not shown that solicited the withheld data, information, advice from the FRBNY all.  Nor does the Board demonstrate that the FRBNY communicated with the Board for the purpose aiding the Boards deliberative process.  The law this Circuit clear: only material submitted non-agency parties response agencys request for advice fall under intra-agency communication.  National Institute Military Justice U.S. Department Defense, 512 F.3d 677, 681 (D.C. Cir. 2008).  Communications between government agency and outside consultant are only intra-agency communication solicited the agency and for the purpose aiding the agencys deliberative process.  Id. 681 (internal citations omitted). other words, unsolicited data, information, advice offered government agency not intra-agency communication protected the deliberative process privilege. its brief, the Board continues rely the broad and inconclusive assertion that in accordance with well-established supervisory processes, Board and [the FRBNY] staff responsible for LCBO [large complex banking organizations] supervision surveyed the LCBOs for purposes assessing LCBOs real-time exposure Bear Stearns.  Appellees Brief (quoting Declaration Coryann Stefansson  (JA 100-101)). Yet, McKinley illustrated his opening brief, nowhere this passage does Ms. Stefansson testify that the Board solicited the withheld data, information, and advice from the FRBNY.  The Boards failure make this evidentiary showing fatal its argument that the FRBNY was acting consultant the Board and that the withheld data, information, and advice provided the FRBNY the Board constitute intraagency communications protected from disclosure Exemption 5s deliberative process privilege. undisputed that some instances the FRBNY required law provide data and information the Board.  Yet, those instances are specific and defined law. attempting expand the consultant corollary include the relationship between the Board and the FRBNY, however, the Board glosses over and generalizes this relationship instead citing concrete statute regulation that specifically required the FRBNY provide the Board with the data and information the Board now seeks withhold from McKinley.  Even the Board could demonstrate that some specific statute regulation required the FRBNY provide this data information the Board, information and data are obviously different from advice, analysis, opinions.  The FRBNY therefore would not have been required provide the Board with any the advice, analyses, opinions that the Board now seeks withhold from McKinley.  See Appellee Brief
24. Any such advice, analyses, opinions still would not constitute intraagency communications for purposes Exemption 5s deliberative process 
privilege. other words, because the advice, analyses, opinions are not 
material that the law required FRBNY provide the Board, the Board cannot 
withhold that same material from McKinley under Exemption this regard, the Board argues, Indeed, nowhere coordination between 
the Federal Reserve Board and the Reserve Banks more central and more apparent 
than the extension credit pursuant Section 13(3) the Federal Reserve 
Act. The statute requires the Board and the Federal Reserve Bank act together order make loan.  Appellees Brief 27.  Yet, nowhere does the statute 
require any such coordination between the two entities. its entirety, Section 
13(3) states: unusual and exigent circumstances, the Federal Reserve Board [Board Governors the Federal Reserve System], the affirmative vote not less than five members, may authorize any Federal reserve bank, during such periods the said board may determine, rates established accordance with the provisions section 14, subdivision (d) this Act [12 USCS  357], discount for any participant any program facility with broad-based eligibility, notes, drafts, and bills exchange when such notes, drafts, and bills exchange are indorsed otherwise secured the satisfaction the Federal reserve bank: Provided, That before discounting any such note, draft, bill exchange, the Federal reserve bank shall obtain evidence that such participant any program facility with broad-based eligibility unable secure adequate credit accommodations from other banking institutions. All such discounts for any participant any program facility with broad-based eligibility shall subject such limitations, restrictions, and regulations the Federal Reserve Board [Board Governors the Federal Reserve System] may prescribe. U.S.C.  343(A). The statute has two clearly delineated aspects. grants authority the Board authorize any Federal Reserve bank discount notes, drafts, and bills exchange unusual and exigent circumstances. also requires that, before Federal Reserve bank may extend credit authorized the Board, the Federal Reserve bank must obtain evidence that the recipient unable secure adequate credit accommodations from other banking institutions. does not require coordination, even coordination may occur desirable.   
Finally, and demonstrated McKinleys opening brief, because the Board failed demonstrate that the FRBNYs interests are identical those the Board, the FRBNY cannot deemed government consultant for purposes Exemption 5s deliberative process privilege.  Department the Interior Klamath Water Users Protective Assoc., 532 U.S. (2001). The Board attempts skirt around this issue making the argument that, because the FRBNY ultimately decided extend emergency credit JPMorgan under Section 13(3), the interests FRBNY and the Board must have been the same.  That, quite simply, not the proper analysis under well-established precedent.  The appearance hindsight that interests may have been similar does not demonstrate that the interests were, fact, the same.  Instead, the law requires that, for the consultant corollary apply, the third party non-governmental agency which the government agency consulted must have no individual interests promote their submissions the agency.  National Institute, 512 F.3d 683. Consequently, for the FRBNYs communications with the Board protected under the consultant corollary, the FRBNYs interests could not any different from those the Board.  The Board has not presented any evidence demonstrate that the FRBNY had individual interests promote, and Section 13(3) clearly shows that the Board and the FRBNY obviously had different statutory roles play extending emergency credit JPMorgan, not different interests.  Id. Again, the Boards argument fails for lack proof. sum, nowhere does the Board demonstrate that solicited data, information, advice from the FRBNY.  Nor does the Board demonstrate that the FRBNY gathered data and information and provided advice the Board for purposes aiding the Boards deliberative process.  Finally, the Board has failed demonstrate that the FRBNY had individual interests promote.  Since the Board has failed demonstrate that the communication between the Board and the FRBNY was, fact, intra-agency communication, FOIA Exemption 5s deliberative process privilege does not protect the withheld material from disclosure. The Board therefore must produce the withheld material McKinley. 

II. 	The Board Has Failed Demonstrate that Release the  Withheld Material Would Harm its Decision Making Process. his opening brief, McKinley demonstrated that, for material withheld under the deliberative process privilege, must predecisional and must deliberative. Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997) (citations omitted). finding that withheld material is, fact, deliberative, the 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.  Horowitz Peace Corps., 428 F.3d 271, 276 (D.C. Cir. 2005) (quoting Dudman Communications Corporation Department Air Force, 815 F.2d 1565, 1568 (D.C. Cir. 1987)); see also Mead Data Central, Inc. U.S. Department the Air Force, 566 F.2d 242, 259 (D.C. Cir. 1977) (An agency cannot meet its burden justification conclusory allegation possible harm but must show specific and detailed proof that disclosure would defeat, rather than further, the purposes the FOIA.).  
The Board would have the Court ignore this often repeated language. claiming that showing harm required under the deliberative process privilege, the Board misconstrues McKinleys argument.  McKinley does not assert that, addition finding withheld material deliberative and predecisional, court also must find that the release the withheld material would cause harm.  Rather, McKinley argues that the law this Circuit has defined deliberative mean that the release the withheld material would expose agencys decision making process such way cause harm.  McKinley not asking the Court add new, third prong the Exemption deliberative process privilege analysis.  Rather, applying this Courts pre-existing definition the current, two prong test. this regard, McKinley demonstrated that  least far back 1987  this Court rejected rigid distinction between factual and deliberative material and began focus less the nature the materials sought and more the effect the materials release.  Dudman Communications Corp., 815 F.2d 1568. Thus, for the deliberative process privilege defined any other way would contrary this Courts long-established precedent. Because the Board made effort show that its decision-making process would suffer the material requested McKinley was released, the Board has failed sustain its burden demonstrating that deliberative process privilege applies.  Responsive material withheld pursuant Exemption 5s deliberative process privilege must produced McKinley. 
The Board failed make this required showing with respect all its deliberative process privilege claims, including its withholding the identities particular financial institutions that the Board may have discussed.  Thus, the Boards assertion that McKinley failed challenge the District Courts ruling regarding the withholding these identities plainly incorrect.  See Brief Appellee 28, n.12. 
III. 	The Board Has Failed Sufficiently Demonstrate that the Withheld  Material Was Contained Related Examination, Operating  Condition Reports Invoke FOIA Exemption 
Exemption provides that agency may withhold material that contained related the 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) (emphasis added). his opening brief, McKinley demonstrated that the Board has failed sufficiently demonstrate that the withheld material was contained relates specific examination, operating condition report. response, the Board simply says that does not have make specific showing.  The Board argues that its invocation FOIA Exemption proper because the withheld material similar material that may withheld pursuant Exemption and that disclosure the material would undermine the Boards ability gather information the future.  Appellees Brief 34-35. The Boards construction Exemption would swallow FOIA completely. would produce sweeping exemption, posing the risk that FOIA would become less disclosure than withholding statute. Milner, 562 U.S. ___, 2011 U.S. LEXIS *30. Milner, the Supreme Court held that under FOIA Exemption which protects from disclosure material that related solely the internal personnel rules and practices agency, the Department the Navy could not lawfully withhold predominately internal material which disclosure would risk circumvention the law.  Id. **8-9. The Supreme Court through the simple device confining the provisions meaning its words held that FOIA Exemption must read narrowly only authorize government agencies from withholding material related personnel. Id. *17. 
Similarly, FOIA Exemption must applied written.  Congress specifically chose use the words contained related the examination, operating condition reports when constructed the exemption. Congress had wanted authorize government agency withhold any and all information regardless how where was held, Congress could have crafted FOIA Exemption accordingly. the Board believes that disclosure the type material issue would undermine the frank cooperation between bank officials and regulated entities, (Appellees Brief 35), then the Board should ask Congress for authorization withhold such information. Exemption currently written, however, the Board cannot lawfully withhold the requested material. 
Finally, agency must provide relatively detailed justification for why particular exemption relevant.  Morley Central Intelligence Agency, 508 F.3d 1108, 1122 (D.C. Cir. 2007) (quoting King United States Department Justice, 830 F.2d 210, 219 (D.C. Cir. 1987)) (internal quotation marks omitted).  Barren assertions that exempting statute has been met cannot suffice establish that fact. Founding Church Scientology Washington, D.C., Inc. National Security Agency, 610 F.2d 824, 831 (D.C. Cir. 1979). Moreover, agency cannot meet its obligation simply quoting the language exemption.  See, e.g., Army Times Publishing Company Department the Air Force, 998 F.2d 1067, 1070 (D.C. Cir. 1993) (discussing how affidavits that merely parrot the statutory language insufficient). evident from the declarations submitted the Board, the Board has supported its claims exemption presenting evidence that simply parrots the language FOIA Exemption  See, e.g., Declaration Coryann Stefansson  (JA 100) (This information was contained related examination, operating condition reports prepared by, behalf of, for the use agency (Board) responsible for the regulation supervision financial institutions.). Not only does Stefansson not testify which specific examination, operating condition report the information was contained related to, she does not even testify whether the information was contained examination, operating condition report was related such report. sum, the Board has not sufficiently shown that the withheld material contained related examination, operating condition reports.  Moreover, has presented declarations that more than quote the language FOIA Exemption  Therefore, the Board must produce the requested material McKinley. 

CONCLUSION 
The Board seeks extend FOIA Exemptions and beyond their well-established boundaries and without the requisite factual predicates. the Supreme Court recently reaffirmed, however, FOIA meant disclosure statute, not withholding statute, and the Boards arguments would turn FOIA into withholding statute. For the reasons set forth McKinleys opening brief and the additional reasons set forth above, McKinley respectfully requests that this Court reverse the District Courts order granting the Boards motion for summary judgment and denying McKinleys cross-motion for summary judgment and 
remand for further proceedings.  
Dated: March 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  

CERTIFICATE COMPLIANCE 
The undersigned certifies that this brief complies with the type-volume limitations Fed. App. 32(a)(7).  The brief, excluding exempted portions, contains 3,016 words (using Microsoft Word 2010), and has been prepared proportional Times New Roman, 14-point font. 
/s/ Michael Bekesha 

CERTIFICATE SERVICE hereby certify that this 18th day March 2011, filed via the CM/ECF system and hand (the original and eight copies of) the foregoing REPLY BRIEF APPELLANT with the Court and served via the CM/ECF system and First-Class U.S. Mail (two copies of) the foregoing REPLY BRIEF APPELLANT to: 
Samantha Chaifetz 
Mark Stern 

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