OPINION
WILLIAMS, Judge:
These consolidated cases are before us on petitioners’ motion for determination of respondent’s access to grand jury materials. The Commissioner determined the following deficiencies in income tax and additions to tax against petitioners:
Additions to tax
Name of petitioner Docket No. Year Deficiency Sec. 6653(a/3i Sec. 6653(b)
Thomas H. and Dorothy A. Hajecate 498-81 1976 $2,411,821 --- $1,205,911
Thomas M. and Kitten I. Hajecate 499-81 1976 6,946,748 - - - 3,473,374
Linda L. Burch[4] 500-81 1976 5,143
Additions to tax
Name of petitioner Docket No. Year Deficiency Sec. 6653(a) Sec. 6653(b)
Thomas M. and Kitten I. Hajecate 1250-82 1977 $9,256,487 $4,834,859
Thomas H. and Dorothy A. Hajecate 1251-82 1977 3,243,678 1,786,364
Thomas H. Hajecate 792-83 1978 9,874,056
Dorothy A. Hajecate 793-83 1978 9,874,056
Thomas M. Hajecate 794-83 1978 27,667,752
Kitten I. Hajecate 795-83 1978 27,667,752
Texas Independent Oil Co.[5] iw 6809-83 8/31/781 36,249,260 18,124,630
Thomas M. and Kitten I. Hajecate 626-85 1980 155,853 ' $7,792.65
1981 565,775 28,288.75
1Fiscal year.
The issues we must decide are (1) whether transcripts of grand jury proceedings and business records of the Hajecates that were submitted to several grand juries and later provided to respondent are “matters occurring before the grand jury,” the disclosure of which is prohibited without a valid court order under rule 6(e), Federal Rules of Criminal Procedure; (2) if so, whether the rule 6(e) orders pertaining to the use of these materials, which fail to satisfy the requirements of the Supreme Court’s decisions in Baggot 6 and Sells,7 have prospective effect; and (3) whether respondent’s proposed use of these materials to prepare for trial, to rebut petitioner’s case-in-chief and to prove fraud constitutes a new use or disclosure for which a new rule 6(e) order is required.
The relevant facts are not in dispute. At the time they filed their petitions, all of the petitioners resided or had their principal place of business in Texas.
Thomas H. Hajecate is the father of Thomas M. Hajecate. Dorothy A. and Kitten I. Hajecate were the spouses of father and son, respectively, when the petitions were filed. Thomas H. and Thomas M. were major shareholders in Uni Oil Co., which eventually changed its name and ownership and became Texas Independent Oil Co., a subchapter S corporation. Thomas H. and Thomas M. were also shareholders of Hajecate & Associates, Inc., a subchapter S corporation. Linda L. Burch was an employee of the Hajecates and a shareholder of Hajecate & Associates, Inc.
During the late 1970s, a number of taxpayers including the Hajecates were targeted for grand jury investigation of possible Department of Energy regulation violations. In March 1979, October 1979, and March 1981, the U.S. attorney’s office for the Southern District of Texas obtained orders under rule 6(e) of the Federal Rules of Criminal Procedure (the rule 6(e) orders) from the U.S. District Court for the Southern District of Texas, Houston Division. The rule 6(e) orders permitted respondent to examine transcripts of testimony and books and records relating to the Hajecates’ business operations obtained from several grand juries to determine whether any civil tax liabilities might arise therefrom. Respondent relied ort the information obtained through the rule 6(e) orders in determining the deficiencies and additions to tax at issue in these cases (but see note 13 infra).
After respondent examined the materials provided to the grand juries and the transcripts of the grand jury proceedings, the Federal Bureau of Investigation (FBI) took custody of them, and until November 1986, respondent lost track of the materials. The FBI was holding more than 70 boxes of materials. Respondent has now obtained physical custody of the more than 70 boxes of grand jury information, transcripts, and documents relating to the Hajecates, but neither respondent nor petitioners know precisely what is in the boxes.
Respondent issued notices of deficiency and petitioners timely filed their petitions on the following dates:
Date notice of deficiency issued Docket No. Date petition filed
498-81 1/12/81 10/14/80
499-81 1/12/81 10/14/80
500-81 1/12/81 10/14/80
1250-828 1/18/82 10/14/81
Docket No. Date notice of deficiency issued Date petition filed
1251-82 10/14/81 1/18/82
792-82 10/14/82 1/11/83
793-83 10/14/82 1/11/83
794-83 10/14/82 1/11/83
795-83 10/14/82 1/11/83
6809-83 12/29/82 3/28/83
626-859 10/09/84 1/09/85
Rule 6(e) of the Federal Rules of Criminal Procedure (rule 6(e)) codifies the traditional rule of secrecy of grand jury proceedings and provides in relevant part:
(e) Recording and Disclosure of Proceedings.
* * * * * * *
(2) General Rule of Secrecy. A grand juror, an interpreter, a stenographer, an operator of a recording device, a typist who transcribes recorded testimony, an attorney for the government, or any person to whom disclosure is made under paragraph (3)(A)(ii) of this subdivision shall not disclose matters occurring before the grand jury, except as otherwise provided for in these rules. No obligation of secrecy may be imposed on any person except in accordance with this rule. A knowing violation of Rule 6 may be punished as a contempt of court.
(3) Exceptions.
*******
(C) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury may also be made—
(i) when so directed by a court preliminarily to or in connection with a judicial proceeding;
Respondent first contends that the records that were the subject of the rule 6(e) orders are not “matters occurring before the grand jury.” If they are not, then rule 6(e) is inapplicable, and respondent does not need a court order to inspect or use them.10
The purpose of rule 6(e) is to protect the “essence of what takes place in the grand jury room,” including the identities of witnesses or jurors and the substance of the investigation. In re Grand Jury Investigation, 630 F.2d 996, 1000 (3d Cir. 1980), cert. denied 449 U.S. 1081 (1981). Documents subpoenaed and examined by a grand jury and transcripts of proceedings before a grand jury are protected under rule 6(e) if they are “matters occurring before the grand jury.” Grand jury materials are those that directly or indirectly reveal what transpired in the grand jury. In re Grand Jury Matter (Catania), 682 F.2d 61, 63 (3d Cir. 1982); United States v. DiBona, 601 F. Supp. 1162, 1164 (E.D. Pa. 1984). Rule 6(e), however, does not shield for all time revelation of information that was previously presented to a grand jury. United States ex rel. Woodard v. Tynan, 757 F.2d 1085, 1087 (10th Cir. 1985).11 Thus,
when testimony or data is sought for its own sake — for its intrinsic value in the furtherance of a lawful investigation — rather than to learn what took place before the grand jury, it is not a valid defense to disclosure that the same information was revealed to a grand jury or that the same documents had been, or were presently being, examined by a grand jury. [United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir. 1960).]
Accord In re Grand Jury Investigation, 630 F.2d at 1000.
At issue in this case are more than 70 boxes of documents including transcripts of grand jury proceedings and business records subpoenaed by the grand juries. Both parties admit that they do not know precisely what the boxes contain. Respondent nonetheless argues that the boxes contain business records of the Hajecates which were created for purposes independent of the grand jury investigations and do not reveal anything about the grand jury proceedings. Consequently, respondent contends that secrecy is not necessary. The Hajecates argue that because the documents in the boxes were subpoenaed and examined by the grand juries, they will necessarily reveal the scope, nature, and purpose of the grand juries’ investigations and are entitled to the protection of rule 6(e).
We cannot accept either party’s reasoning. The Hajecates’ position assumes that any document subpoenaed or examined by a grand jury is entitled to protection under rule 6(e) because it will necessarily reveal what occurred before the grand jury. When testimony or records examined by a grand jury are sought for purposes other than to learn what took place before the grand jury, however, grand jury secrecy is not compromised and rule 6(e) does not apply. United States ex rel. Woodard v. Tynan, 757 F.2d 1085, 1087, 1088 (10th Cir. 1985); United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir. 1960).
Respondent’s position is flawed because it assumes that documents created for purposes independent of a grand jury investigation can never reveal what took place before the grand jury. Because such documents are created for purposes other than a grand jury investigation, and may be useful for purposes unrelated to discovering what occurred before the grand jury, courts have found such documents to be other than “matters occurring before the grand jury.” See In re Grand Jury Matter (Catania), 682 F.2d at 64; In re Grand Jury Investigation, 630 F.2d at 1000; United States v. DiBona, 601 F. Supp. at 1164-1165. That does not mean, however, that documents can never reveal what went on before a grand jury. Most importantly, respondent has ignored the fact that the boxes in his possession also contain transcripts of grand jury proceedings and other matters that are likely to reveal the “essence” of what took place before the grand jury. See In re Grand Jury Investigation, 630 F.2d at 1000. Because we do not know what the boxes in respondent’s possession contain, we cannot determine whether any of the records fall outside of the protection of rule 6(e). Secrecy is essential to the proper functioning of a grand jury. The Supreme Court has decided that issue firmly and unequivocally. Absent a clear indication that documents submitted to a grand jury are not entitled to protection, we will not approve a breach of this secrecy. See United States v. Sells Engineering, Inc., 463 U.S. 418, 425 (1983); Illinois v. Abbott & Associates, 460 U.S. 557, 572-573 (1983). We, therefore, assume that everything in the boxes is a “matter occurring before the grand jury” which may be disclosed only pursuant to a valid rule 6(e) order.
Respondent has insisted on relying on his position that the existing rule 6(e) orders remain valid12 and has neither sought a new rule 6(e) order nor offered us the opportunity to inspect the records in camera. We must, therefore, determine whether the existing rule 6(e) orders permit respondent’s prospective use of the grand jury materials in preparing these cases for trial or whether such use constitutes a new use of disclosure. This is an issue of first impression for this Court.
Subsequent to the issuance of the rule 6(e) orders in these cases, the Supreme Court decided two cases interpreting the requirements of rule 6(e). In United States v. Baggot, 463 U.S. 476 (1983), the Court held that a civil tax audit is not “preliminar[y] to or in connection with a judicial proceeding” within the meaning of rule 6(e)(3)(C)(i). Consequently, disclosure is not permitted under rule 6(e) for purposes of a civil tax audit, even if the results of that audit lead to litigation because the purpose of the audit is to determine a tax liability administratively and not to prepare for litigation. In United States v. Sells Engineering, Inc., 463 U.S. at 418, the Court held that rule 6(e) was not intended to grant free access to grand jury materials to attorneys other than those involved in the criminal investigation to which the grand jury materials pertained. Thus, attorneys in the Civil Division of the Justice Department could not obtain disclosure of grand jury materials without first obtaining a court order under rule 6(e)(3)(C)(i), which would be granted only upon a showing of particularized need for the information.
The rule 6(e) orders at issue in these cases do not satisfy the “preliminarfy] to or in connection with a judicial proceeding” standard enunciated in Baggot or the “particularized need” standard of Sells, and respondent so concedes. In Kluger v. Commissioner, 83 T.C. 309, 335 (1984) (Kluger), however, we held that the decisions of the Supreme Court in Baggot and Sells would not be applied retroactively to invalidate final rule 6(e) orders under collateral attack in this Court. Consequently, notices of deficiency, the basis of which was the grand jury information disclosed as a result of pre-Baggot and Sells rule 6(e) orders, remain valid.
Petitioners concede that the notices of deficiency issued in these cases, based on information obtained from the grand jury materials, are valid under Kluger.13 They argue, however, that respondent’s proposed use of the materials at trial constitutes a new and separate use requiring a new disclosure order. To obtain a new rule 6(e) order, respondent would have to demonstrate to the District Court that he satisfied the requirements of Baggot and Sells. Respondent contends that his proposed use of the grand jury materials constitutes a continuing use or disclosure authorized by the existing rule 6(e) orders. We agree with petitioners.
In Sells, the Supreme Court held that disclosure of grand jury materials to a Government attorney other than a prosecutor involved in the criminal proceeding constitutes a new disclosure for which the attorney must obtain a separate rule 6(e) order. 463 U.S. at 418. The Court cited three dangers that might arise from the disclosure of grand jury materials to Government attorneys for use in civil proceedings. First, disclosure increases “the number of persons to whom the information is available (thereby increasing the risk of inadvertent or illegal release to others)” and may render witnesses less willing to testify before a grand jury. Second, disclosure increases the possibility that Government attorneys conducting the grand jury investigation “might be tempted to use the grand jury’s powerful investigative tool to root out additional evidence useful in the civil suit.” Finally, use of grand jury materials by Government attorneys in civil cases may enable them to circumvent the usual methods of discovery. Sells, 463 U.S. at 432-433. To mute these dangers, the Court prohibited disclosures to attorneys other than the prosecutors pursuing the criminal case. Sells, 463 U.S. at 440-442.
More recently, in United States v. John Doe, Inc. I, 481 U.S_(1987) (John Doe), the Supreme Court held that a Government attorney who conducted the criminal prosecution of a case could review grand jury materials for use in the civil phase of the same dispute without obtaining a rule 6(e) order because his review was not a new disclosure. The Court specifically discussed what constitutes a new disclosure. The Supreme Court noted that although the word “disclose” is not defined in rule 6(e), common dictionary definitions include to “open up,” “expose to view,” and “make known or public something previously held secret.” John Doe, 481 U.S. at_n. 4. In addition, to constitute a disclosure, someone other than a person who already has access to the information must receive it. See John Doe, 481 U.S. at_; United States v. Archer-Daniels-Midland Co., 785 F.2d 206, 212 (8th Cir. 1986), cert. denied 481 U.S. _ (1987).
The Second Circuit recently considered the precise issue now before us and concluded that (1) pre-Baggo t-and-Sells rule 6(e) orders should not be given prospective effect, and (2) each subsequent use of grand jury materials constitutes a new disclosure. In re Grand Jury Proceedings (Henry Kluger, Deceased), 827 F.2d 868 (2d Cir. 1987) (Estate of Kluger).14 In Estate of Kluger, decedent’s estate moved to have rule 6(e) orders issued prior to and not in compliance with Baggot and Sells vacated on the ground that the decisions in Baggot and Sells should be applied retroactively. The District Court concluded, and the Second Circuit agreed, that the better approach was not to apply Baggot and Sells retroactively to invalidate previous disclosures, but rather to hold that the original orders would no longer have prospective effect. Thus, although the determinations of civil tax liability which respondent had based on materials obtained from the grand jury remained valid, the Government was denied further access to the grand jury materials for use in pending civil tax litigation until it could establish a “particularized need” for the materials.
The Second Circuit, quoting United States v. Sells Engineering, Inc., 463 U.S. at 422-423 n. 6, reasoned,
Each day this order remains effective the veil of secrecy is lifted higher by disclosure to additional personnel and by the continued access of those to whom the materials have already been disclosed. We cannot restore the secrecy that has been lost but we can grant partial relief by preventing further disclosure. [Estate of Kluger, 827 F.2d at 873.]
The court noted that because the grand jury had terminated, the danger of possible inadvertent disclosure was lessened. See John Doe, 481 U.S. at_; In re Grand Jury Proceedings GJ-76-4 and GJ-75-3, 800 F.2d 1293, 1300-1301 (4th Cir. 1986). There nonetheless remained significant secrecy concerns because the existing rule 6(e) orders did not limit the number of people who would have access to the grand jury materials and because the materials were to be used in an adversarial proceeding. See John Doe, 481 U.S. at_; Sells, 463 U.S. at 432.
Respondent cites United States v. (Under Seal), 783 F.2d 450 (4th Cir. 1986), cert. denied sub nom. Raven’s Hollow, Ltd. v. United States, 481 U.S._(1987). In that case, grand jury materials were disclosed to respondent in 1979 pursuant to a rule 6(e) order. Relying on those materials, respondent issued a notice of deficiency. The taxpayers commenced a proceeding in this Court before the Supreme Court handed down its opinions in Baggot and Sells. In 1984, the taxpayers moved in District Court to vacate the rule 6(e) order and to restrain future use of the materials obtained and continually used pursuant to the order. The District Court denied the relief and the Fourth Circuit affirmed on the ground that Baggot and Sells were not to be applied retroactively. The Fourth Circuit held that because the existing order remained valid, continued use of the grand jury materials would not violate rule 6(e). Because of its holding, the court did not consider petitioners’ argument that continued use of the materials constitutes a further disclosure.
The facts that the Fourth Circuit faced in (Under Seal) were considerably different from those before us.15 In this case, agents and attorneys of respondent seek access to grand jury information 5 years after the materials were last examined. These agents and attorneys have never seen the grand jury materials. In (Under Seal), much of the grand jury material had already been disclosed to the public in the course of a criminal trial. Furthermore, much of the civil use of the material had occurred prior to Baggot and Sells and had been uninterrupted. Under these circumstances, the Fourth Circuit concluded that continued use was permissible. Moreover, it is difficult to perceive how precluding additional disclosure in (Under Seal) would further the secrecy interests of rule 6(e).
The facts in the instant case present a strong case in favor of applying Sells prospectively to deny respondent renewed access to the grand jury materials. 16 Respondent originally obtained rule 6(e) orders from the District Court permitting him to examine more than 70 boxes containing business records of the Hajecates and transcripts of testimony before the grand juries investigating possible Department of Energy regulation violations. Based on the information contained in those boxes, respondent’s agents issued statutory notices of deficiency in 1980, 1981, and 1982 to the Hajecates and related parties. After the deficiency notices were issued, respondent lost track of the boxes and did not discover until November 1986 that the FBI had taken custody of them. Five years after respondent last examined the information in the boxes, different agents and attorneys of respondent now seek to examine it again and use the information in the pending litigation. In the interim, however, the Supreme Court has changed the standards under which an individual may obtain disclosure of grand jury materials.
Reexamination of the materials by respondent, after a 5-year lapse in which he lost custody and no longer remembers the contents of the materials, is, in the ordinary sense of the words, a new use of disclosure. Moreover, if his counsel uses the grand jury materials at trial, it will increase “the number of persons to whom the information is available” and will “open up” and “make known or public something previously held secret.” See John Doe, 481 U.S. at_n. 4; Sells, 463 U.S. at 432. Although we cannot restore any secrecy already lost as a result of the rule 6(e) orders that did not meet the requirements of Baggot and Sells, “we can grant partial relief by preventing further disclosure.” Sells, 463 U.S. at 422-423 n. 6; Estate of Kluger, supra. Our refusal to grant prospective effect to the pre-Baggot-and-Sells rule 6(e) orders in this case is not inconsistent with (Under Seal) and reflects the Supreme Court’s insistence upon more stringent protection of grand jury secrecy. 17 The fact that the materials Eire to be used in an adversarial proceeding heightens the need for secrecy and thus the need for a stronger showing of necessity to gain access to the information. See John Doe, 481 U.S. at
We, therefore, hold that respondent may not, in these cases, rely on the rule 6(e) orders issued prior to, and not satisfying the requirements of, Sells to authorize a new disclosure of grand jury materials by using these materials to prepare for tried. To obteiin disclosure of the information, respondent must first obtain a new rule 6(e) order from the District Court, which can be granted only upon a showing of particularized need. 18
To reflect the foregoing,
An appropriate order will be entered.
Reviewed by the Court.
Sterrett, Chabot, Whitaker, Korner, Hamblen, Clapp, Jacobs, Wright, Wells, and Whalen, JJ., agree with the majority opinion. COHEN and Ruwe, JJ., did not participate in the consideration of this case.