David R. Merrill v. Federal Open Market Committee of the Federal Reserve System

565 F.2d 778, 184 U.S. App. D.C. 203, 3 Media L. Rep. (BNA) 1579, 1977 U.S. App. LEXIS 10842
CourtCourt of Appeals for the D.C. Circuit
DecidedNovember 10, 1977
Docket76-1379
StatusPublished
Cited by20 cases

This text of 565 F.2d 778 (David R. Merrill v. Federal Open Market Committee of the Federal Reserve System) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
David R. Merrill v. Federal Open Market Committee of the Federal Reserve System, 565 F.2d 778, 184 U.S. App. D.C. 203, 3 Media L. Rep. (BNA) 1579, 1977 U.S. App. LEXIS 10842 (D.C. Cir. 1977).

Opinion

Opinion for the Court filed by Circuit Judge McGOWAN.

McGOWAN, Circuit Judge:

Appellee instituted in the District Court a Freedom of Information Act (FOIA) suit in order to challenge a regulation, 12 C.F.R. § 271.5 (1975), under which appellant Federal Open Market Committee (FOMC) of the Federal Reserve System delays disclosure of certain of its records. On cross motions for summary judgment, the District Court held that the monthly instructions given by the Committee to the Manager of its Systems Open Market Account, which guide his dealing in securities, do not fall within any exemption of the Act, and therefore must be made publicly available upon adoption.

The issue on appeal is the scope of Exemption 5 of FOIA, 5 U.S.C. § 552(b)(5) (1970). 1 That exemption affords civil discovery privileges to intra-agency memoran-da, such as the documents in dispute in this case, which would otherwise be subject to disclosure under FOIA. 2 We conclude that the materials sought by appellee are not encompassed by the government’s “executive” or deliberative process privilege. Since appellant is unable to assert any other privilege which would exempt these materials from civil discovery, we hold that they are not within the purview of Exemption 5; and affirm the judgment of the District Court.

I

The Federal Open Market Committee (FOMC), composed of the Board of Governors of the Federal Reserve System and five representatives of Federal Reserve Banks, has responsibility under the Federal Reserve Act for directing Federal Reserve *781 Bank purchases and sales of securities in the domestic securities market. 12 U.S.C. § 263 (1970). The Committee’s authority to direct open-market operations is to be utilized “with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country.” Id. § 263(e). To implement this regulatory responsibility, FOMC has established a Systems Open Market Account, which is a combined investment pool for all Reserve Banks. An Account Manager, appointed by FOMC, conducts open market operations in accordance with instructions from FOMC. These instructions are received in the form of a Domestic Policy Directive, supplemented by a statement of objectives for rates of growth of monetary aggregates (and for the federal funds interest rate) expressed in terms of tolerance ranges. 3 A Directive is issued after each meeting of FOMC, which typically takes place once a month. On occasion, changing conditions require FOMC to amend its Directive or tolerance ranges before its next monthly meeting.

The Directive guides the Account Manager in his open-market operations by stating, for example, whether growth in monetary aggregates (which is achieved by open-market purchases) 4 should be moderate or rapid. In addition to the Directive and tolerance ranges, the Account Manager’s operations are guided by daily communication with at least one member of FOMC. However, the Account Manager has discretion as to the method of implementing FOMC policy. He has authority to purchase or sell any quantity of a variety of securities, or he may decide to undertake no transactions at all.

Appellee, by means of a letter dated March 7, 1975, requested access under FOIA to 1) records of policy actions 5 taken by FOMC at its meetings in January 1975 and February 1975, including instructions to the Account Manager, and 2) Memoranda of Discussion at these meetings. 6 The FOMC Secretary replied on March 21, 1975 that records of policy action would be made publicly available 45 days after their adoption, pursuant to 12 C.F.R. § 271.5 (1976). 7 While the reply did not respond to appellee’s contention that this deferred disclosure violated FOIA, it did state that FOMC considered its Memoranda of Discussion to be exempt under Exemption 5 from FOIA’s disclosure requirements.

Upon appeal to the agency, Robert Holland, a member of the Board of Governors of the Federal Reserve System, released the *782 requested records of policy actions on April 23, 1975 (45 days having elapsed since their adoption), but affirmed the Secretary’s decisions that such delay in public release of the records of policy action was warranted, and that the requested Memoranda of Discussion were exempt under Exemption 5. Holland’s letter constituting final agency action, appellee then filed suit in the District Court, seeking declaratory and injunc-tive relief against the operation of 12 C.F.R. § 271.5, and an order directing FOMC to release the parts of the Memoran-da of Discussion claimed by appellee to be nonexempt under FOIA.

In granting appellee’s motion for summary judgment, the District Court rejected FOMC’s contentions that the records of policy action (including Domestic Policy Directives) fell under the fifth FOIA exemption, and that release 45 days subsequent to adoption constituted “prompt” disclosure as required by (a)(2)(B) and (a)(3) of the Act. It therefore enjoined the operation of 12 C.F.R. § 271.5 insofar as it permitted delays in disclosure of FOMC policy actions. Holding that the Domestic Policy Directive is a statement of general policy within the meaning of 5 U.S.C. § 552(a)(1)(D), the court ordered FOMC to publish it in the Federal Register upon its adoption. Memorandum Opinion at 17-19. Statements and interpretations of other FOMC policy actions were ordered to be made publicly available upon adoption as statements and interpretations of policy, pursuant to 5 U.S.C. § 552(a)(2)(B), (a)(3). Id. at 19-21. 8

After the District Court entered its order, FOMC changed its deferral policy from that described in the challenged regulation. All records of policy action are now made available- “within a few days” following the FOMC meeting the month after the Directive is adopted. 9 The parties agree that this constitutes compliance with the District Court’s order only with respect to one of the requested documents, that entitled “Records of Policy Actions.” This document, described in note 6 supra,

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Bluebook (online)
565 F.2d 778, 184 U.S. App. D.C. 203, 3 Media L. Rep. (BNA) 1579, 1977 U.S. App. LEXIS 10842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/david-r-merrill-v-federal-open-market-committee-of-the-federal-reserve-cadc-1977.