M. F. Cavanagh, J.
Defendant appeals from an interlocutory order of August 27, 1974, requiring immediate publication of income tax records compiled under MCLA 206.195; MSA 7.557(1195) and MCLA 206.421; MSA 7.557(1421). On March 3, 1975, we granted leave to appeal and a motion for stay of the circuit court proceedings.
In 1973, plaintiff International Business Machines Corporation (IBM) filed an action in circuit court to recover income taxes previously paid, alleging discriminatory and arbitrary enforcement of the tax laws by the Revenue Division. As part of discovery in its suit, IBM petitioned the court for an order requiring the Revenue Division to disclose the following information: reports of hearing officers under § 421(1) of the Income Tax Act of 1967, the Revenue Commissioner’s Orders of Determination of Tax made after the § 421(1) hearings, and the Revenue Commissioner’s written apportionment or allocation determinations made under authority of § 195 of the Income Tax Act.
IBM claimed that the disclosure provisions of the
Administrative Procedures Act of 1969 (APA); MCLA 24.201
et seq.;
MSA 3.560(101)
et seq.,
required the Revenue Division to release the information. After a hearing, the circuit court found that the Revenue Division had violated §§ 21 and 23 of the APA; MCLA 24.221; MSA 3.560(121), and MCLA 24.223; MSA 3.560(123), and ordered it to disclose the requested information after deleting identifying details.
The procedure followed by the Revenue Division under §§ 421 and 195 of the Income Tax Act is detailed in the concise statement of facts submitted under GCR 1963, 806.3(1)(b):
"Manner in which Defendant Conducts Statutorily Prescribed Section 421 Hearings:
Taxpayers are notified of Defendant’s intent to assess income tax by letter and advised of their right to demand a hearing as provided in § 421 of the Income Tax Act. * * * Thereafter, taxpayers are advised by a Hearing Officer of the time and place of hearing and the Defendant’s asserted governing rules of procedure * * * . Present at the § 421 hearing are the Hearing Officer; a representative
of the Revenue Division, Department of Treasury, the Taxpayer and/or the Taxpayer’s attorney or accountant. [The Revenue Commissioner is ordinarily not in attendance at the hearing.] After the § 421 hearing the Hearing Officer prepares written findings of fact; a summary of evidence; a delineation of applicable legal authority; a reasoned opinion; and, a decisional recommendation. No transcript of the § 421 hearings is prepared. An Order of Determination is issued by the Revenue Commissioner and is sent to the Taxpayer.
* * * While the Order of Determination states that it is based on:
"' * * * the evidence and findings of the Hearing Officer * * * supported by authority or reasoned opinion * * * ’ none of the Hearing Officer’s evidence, findings, authority or reasoned opinions (referred to in the Order of Determination and upon which it is based) are ever disclosed to the Taxpayer. The information received by the Taxpayer, as the result of the § 421 hearing, is the Revenue Commissioner’s Order of Determination; the Final Assessment and, in some cases, income tax schedules showing adjustments to the intent to assess consistent with the Order of Determination.
"Variation of the Statutorily Prescribed Apportionment and Allocation Provisions of the Act Under Section 195:
In practice, taxpayers customarily submit written requests, all or most based on actual facts, for rulings for permission to change the statutorily prescribed apportionment and allocation formulas; or, upon audit, the Revenue Division, Department of Treasury proposes a change pursuant to its authority under § 195 of the Act. Taxpayers are advised in writing of approvals or rejections of their requests to change the statutorily prescribed apportionment and allocation provisions under § 195 of the Act. Taxpayers are also advised in writing of decisions by the Revenue Division, Department of Treasury, to invoke § 195.
'Absence of Published Rulings and Regulations Approved by the Legislature under Sections 45 and 46 of the Administrative Procedures Act:
No Rules or Regulations have ever been submitted for approval by, or approved by, the Legislature as provided in §§ 45 and 46 of the Administrative Procedures Act. Section 471 of the Michigan Income Tax Act provides, in material part, that:
" 'The Department shall * * * promulgate rules in conformity with this act * * * for the computation of the tax, the manner and time of changing or electing accounting methods and of exercising the various options contained in this act, the making of returns and the ascertainment, assessment and collection of the tax imposed hereunder. * * * ’
The Treasury Department, Revenue Division has published, what it terms, proposed Rules and Regulations which it uses in administering the Income Tax Act. The proposed Rules and Regulations are public, but have not been submitted to or been approved by the Legislature as provided for in the Administrative Procedures Act.”
The APA requires state agencies to make certain information available to the public. Sections 21-23 of the APA; MCLA 24.221-24.223; MSA 3.560(121)-3.560(123), provide:
"Sec. 21. (1) An agency shall publish and make available for public inspection and copying during its business hours or on subscription on request of any person:
"(a) Final orders or decisions in contested cases and the records on which they were made.
"Os) Promulgated rules.
"(c) Other written statements which implement or interpret law, rules or policy, including but not limited to guidelines, manuals and forms with instructions, adopted or used by the agency in the discharge of its functions.
"(2) To the extent required to prevent an unwarranted invasion of personal privacy, an agency may delete identifying details when it publishes or makes available a matter required to be published and made available for public inspection.
"(3) The publications may be in pamphlet, loose-leaf or other appropriate form in printed, mimeographed or other written manner. Except as otherwise provided by law, the agency may charge not more than cost for each copy of the publication.
"Sec. 22. (1) This chapter does not apply to:
"(a) Material exempted from disclosure by statute.
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M. F. Cavanagh, J.
Defendant appeals from an interlocutory order of August 27, 1974, requiring immediate publication of income tax records compiled under MCLA 206.195; MSA 7.557(1195) and MCLA 206.421; MSA 7.557(1421). On March 3, 1975, we granted leave to appeal and a motion for stay of the circuit court proceedings.
In 1973, plaintiff International Business Machines Corporation (IBM) filed an action in circuit court to recover income taxes previously paid, alleging discriminatory and arbitrary enforcement of the tax laws by the Revenue Division. As part of discovery in its suit, IBM petitioned the court for an order requiring the Revenue Division to disclose the following information: reports of hearing officers under § 421(1) of the Income Tax Act of 1967, the Revenue Commissioner’s Orders of Determination of Tax made after the § 421(1) hearings, and the Revenue Commissioner’s written apportionment or allocation determinations made under authority of § 195 of the Income Tax Act.
IBM claimed that the disclosure provisions of the
Administrative Procedures Act of 1969 (APA); MCLA 24.201
et seq.;
MSA 3.560(101)
et seq.,
required the Revenue Division to release the information. After a hearing, the circuit court found that the Revenue Division had violated §§ 21 and 23 of the APA; MCLA 24.221; MSA 3.560(121), and MCLA 24.223; MSA 3.560(123), and ordered it to disclose the requested information after deleting identifying details.
The procedure followed by the Revenue Division under §§ 421 and 195 of the Income Tax Act is detailed in the concise statement of facts submitted under GCR 1963, 806.3(1)(b):
"Manner in which Defendant Conducts Statutorily Prescribed Section 421 Hearings:
Taxpayers are notified of Defendant’s intent to assess income tax by letter and advised of their right to demand a hearing as provided in § 421 of the Income Tax Act. * * * Thereafter, taxpayers are advised by a Hearing Officer of the time and place of hearing and the Defendant’s asserted governing rules of procedure * * * . Present at the § 421 hearing are the Hearing Officer; a representative
of the Revenue Division, Department of Treasury, the Taxpayer and/or the Taxpayer’s attorney or accountant. [The Revenue Commissioner is ordinarily not in attendance at the hearing.] After the § 421 hearing the Hearing Officer prepares written findings of fact; a summary of evidence; a delineation of applicable legal authority; a reasoned opinion; and, a decisional recommendation. No transcript of the § 421 hearings is prepared. An Order of Determination is issued by the Revenue Commissioner and is sent to the Taxpayer.
* * * While the Order of Determination states that it is based on:
"' * * * the evidence and findings of the Hearing Officer * * * supported by authority or reasoned opinion * * * ’ none of the Hearing Officer’s evidence, findings, authority or reasoned opinions (referred to in the Order of Determination and upon which it is based) are ever disclosed to the Taxpayer. The information received by the Taxpayer, as the result of the § 421 hearing, is the Revenue Commissioner’s Order of Determination; the Final Assessment and, in some cases, income tax schedules showing adjustments to the intent to assess consistent with the Order of Determination.
"Variation of the Statutorily Prescribed Apportionment and Allocation Provisions of the Act Under Section 195:
In practice, taxpayers customarily submit written requests, all or most based on actual facts, for rulings for permission to change the statutorily prescribed apportionment and allocation formulas; or, upon audit, the Revenue Division, Department of Treasury proposes a change pursuant to its authority under § 195 of the Act. Taxpayers are advised in writing of approvals or rejections of their requests to change the statutorily prescribed apportionment and allocation provisions under § 195 of the Act. Taxpayers are also advised in writing of decisions by the Revenue Division, Department of Treasury, to invoke § 195.
'Absence of Published Rulings and Regulations Approved by the Legislature under Sections 45 and 46 of the Administrative Procedures Act:
No Rules or Regulations have ever been submitted for approval by, or approved by, the Legislature as provided in §§ 45 and 46 of the Administrative Procedures Act. Section 471 of the Michigan Income Tax Act provides, in material part, that:
" 'The Department shall * * * promulgate rules in conformity with this act * * * for the computation of the tax, the manner and time of changing or electing accounting methods and of exercising the various options contained in this act, the making of returns and the ascertainment, assessment and collection of the tax imposed hereunder. * * * ’
The Treasury Department, Revenue Division has published, what it terms, proposed Rules and Regulations which it uses in administering the Income Tax Act. The proposed Rules and Regulations are public, but have not been submitted to or been approved by the Legislature as provided for in the Administrative Procedures Act.”
The APA requires state agencies to make certain information available to the public. Sections 21-23 of the APA; MCLA 24.221-24.223; MSA 3.560(121)-3.560(123), provide:
"Sec. 21. (1) An agency shall publish and make available for public inspection and copying during its business hours or on subscription on request of any person:
"(a) Final orders or decisions in contested cases and the records on which they were made.
"Os) Promulgated rules.
"(c) Other written statements which implement or interpret law, rules or policy, including but not limited to guidelines, manuals and forms with instructions, adopted or used by the agency in the discharge of its functions.
"(2) To the extent required to prevent an unwarranted invasion of personal privacy, an agency may delete identifying details when it publishes or makes available a matter required to be published and made available for public inspection.
"(3) The publications may be in pamphlet, loose-leaf or other appropriate form in printed, mimeographed or other written manner. Except as otherwise provided by law, the agency may charge not more than cost for each copy of the publication.
"Sec. 22. (1) This chapter does not apply to:
"(a) Material exempted from disclosure by statute.
"(b) Interagency or intra-agency letters, memoranda or statements which would not be available by law to a party other than an agency in litigation with the agency and which, if disclosed, would impede the agency in the discharge of its functions.
"(c) Material obtained in confidence from a person, matter privileged by law and trade secrets.
"(d) Financial and commercial information relating to a specific regulated person prepared by or for the use of an agency responsible for the regulation or supervision of the person.
"(e) Investigatory materials compiled or used for regulatory or law enforcement purposes except to the extent available by law to a party to a contested case.
"(f) Material the disclosure of which would constitute an unwarranted invasion of privacy.
"(2) This chapter does not authorize the withholding of information otherwise required by law to be made available to the public or to a party in a contested case.
"Sec. 23. (1) Except to the extent that a person has actual and timely notice of the terms thereof, a person shall not in any manner be required to resort to, or be adversely affected by, a matter required to be published and made available and not so published and made available.
"(2) The circuit court for the county in which the agency records are situated may order, on petition of any person, the production of any identifiable material improperly withheld from public inspection and copying.”
The Michigan disclosure provisions are essentially an abbreviated version of the Federal Freedom of Information Act (FOIA), 81 Stat 54 (1967), 5 USCA 552. The close similarity between the Federal and state acts’ language makes constructions of the FOIA by the Federal courts persuasive in construction of our own disclosure requirements.
Citizens for Better Care v Department of Public Health,
51 Mich App 454, 463; 215 NW2d 576 (1974),
lv den,
392 Mich 758 (1974).
In order to implement the legislative policy of comprehensive disclosure of administrative law as evidenced in these provisions of the APA, we must broadly construe the categories of disclosable information contained in § 21. Michigan lacks any device to provide truly systematic public notice of administrative rulings that would serve the function of the Federal Register. Although § 23(1) of the APA; MCLA 24.223(1); MSA 3.560(123)(1), protects a person from adverse effects of matters otherwise required to be published, the scope of that provision itself depends upon the scope attributed to § 21. As a corollary to the requirement that the disclosure categories be expansively construed, the exemptions from disclosure contained in § 22 of the APA must be read restrictively. In general the process is one of deciding whether the
information sought fits within a disclosure category; such information is prima facie disclosable. The court must then decide whether an exemption contained in § 22 removes the agency’s duty to disclose, always keeping in mind the Legislature’s decision that disclosure is the preferred outcome.
I
The reports of hearing officers under § 421(1) of the Income Tax Act, the Orders of Determination issued by the Revenue Commissioner, and the Revenue Commissioner’s decisions under authority of § 195 are subject to public disclosure as "written statements which implement or interpret law, rules or policy * * * adopted or used by the agency in the discharge of its functions”, within § 21(1)(c) of the APA.
A.
The § 421 Hearings and Determinations
The Michigan APA disclosure provisions focus on public access to administrative law. While the Michigan provisions are not as broad as the FOIA, which in 5 USCA 552(a)(3) extends to "all identifiable records”, § 21 of the APA parallels the FOIA provisions that forbid the promulgation of secret administrative law, whether by decisions in contested cases, by rulemaking procedures, or by any other interpretive written statements.
The scheme of § 21 reveals that § 21(1)(c) was intended to sweep within the disclosure requirements any written statements upon which the agency relies as indicative of law or policy, whether or not those
statements might also fall within parts (a) or (b) as decisions in contested cases or promulgated rules. We agree with the Federal courts that the "fundamental principle is that secret law is an abomination”. Davis, Administrative Law Treatise, § 3A.12 (1970 Supp).
Under this standard, the reports of a hearing officer under § 421(1) of the Income Tax Act, including the "delineation of authority, reasoned opinion, and decisional recommendation” are within § 21(1)(c) of the APA. As discussed below, to the extent that certain facts or identifying details are unnecessary to understand the hearing officer’s position or constitute an unwarranted invasion of privacy, the circuit court may delete them after
in camera
inspection.
Similarly, the Orders of Determination of Tax issued by the Revenue Commissioner come within the ambit of § 21(1)(c). Although these orders appear to contain few statements of value, they provide the final result of the agency proceeding, indicating the Revenue Commissioner’s approval or disapproval of the hearing officer’s report. One is of little value without the other; together they comprise the agency’s reasoned legal decision.
B.
Section 195 Interpretations
The Revenue Commissioner’s decisions concerning apportionment or allocation of income under § 195 of the Income Tax Act are prima facie disclosable material under § 21(1)(c) of the APA. These often take a form similar to the Federal Internal Revenue Service’s letter rulings, although based on actual, rather than "hypothetical” facts. Although as discussed later, an exemption may apply to limit the scope of disclosure, there can be little doubt that these decisions make up part of a secret body of Revenue Division interpretations of
the tax law. Given the paucity of published Treasury Department rules or regulations, we have little choice but to believe that such a body of secret law exists.
Much of the argument of the parties centers on the interpretation of "contested case” within § 21(1)(a) of the APA. While we note that the § 421 hearing officer report and order of determination appear to fall squarely within the definition of a contested case as "a proceeding * * * in which a determination of the legal rights, duties or privileges of a named party is required by law to be made by an agency after an opportunity for an evidentiary hearing”, § 3(3) of the APA; MCLA 24.203(3); MSA 3.560(103)(3), we are reluctant to so hold. The purpose of the § 421 hearing is to provide an informal meeting of the taxpayer and the state; formal agency adjudication is provided by appeal to the Board of Tax Appeals. MCLA 206.421(3); MSA 7.557(1421)(3). To hold that the § 421 hearing is a contested case would require the state to provide all of the protections of a formal hearing which are now furnished by the
de novo
review of the Board of Tax Appeals. Compare Chapter 4 of the APA; MCLA 24.271-24.287; MSA 3.560(171)-3.560(187), with MCLA 205.7; MSA 7.657(7).
Although the hearing requirements of the APA postdate the creation of the § 421 hearings, the Legislature has reiterated its view that these hear
ings should be informal. In § 87(1) of the Single Business Tax Act, 1975 PA 228; MCLA 208.87(1); MSA 7.558(87), the Legislature expressly exempted the procedures of the analogous conference on tax assessment from the requirements of the APA. Although this exemption does not preclude application of "contested case” procedures to § 421 hearings, it appears much less likely that that was the legislative purpose.
Our view of the policy incorporated into the APA does not require that we label the § 421 proceedings a "contested case”. The APA disclosure mandate is not limited to decisions rendered after formal hearing. It is the content of the written decision, not the procedures at the hearing, which determines whether or not the decision must be released. The impact of § 21(1)(c) is to make any written decision or statement which interprets or implements law, rules or policy subject to public disclosure.
II
Upon remand the circuit court must examine
in camera
the materials otherwise subject to disclosure and delete such identifying details as are necessary to prevent an unwarranted invasion of privacy as well as statements of the hearing officer which reflect the Revenue Division’s general policy discussions.
A.
Material Exempted from Disclosure by Statute
The Revenue Division argues that MCLA 206.465; MSA 7.557 (1465) is. a statute which precludes the agency from disclosing any of the information, thereby exempting it from disclosure through § 22(1)(a) of the APA; MCLA 24.222(1)(a); MSA 3.560(122)(1)(a). Section 465 of the Income
Tax Act; MCLA 206.465; MSA 7.557(1465), provides:
"(1) Unless in accordance with a judicial order, or as required in the proper administration of this act, or as permitted by Act No. 122 of the Public Acts of 1941, as amended, no member of the department or agent or employee thereof, or former member, agent or employee, shall divulge any facts or information obtained in connection with the administration of this act.
"(2) Any person who violates any provision of this section is guilty of a misdemeanor and shall be fined not more than $1,000.00 or imprisoned not more than 1 year in the county jail, or both.”
Although IBM argues in response that the circuit court order at issue is a sufficient "judicial order” to make the confidentiality provisions of § 465 inapplicable, it is apparent that the "judicial order” exception is intended to provide agency employees a defense from criminal prosecution. The issue demands a more thorough analysis.
As we noted before, exemptions to disclosure are to be restrictively construed. Moreover, § 21(2) of the APA; MCLA 24.221(2); MSA 3.560(121)(2) indicates that whenever possible, confidential portions should be deleted in order to allow release of otherwise disclosable information. In order to preserve the taxpayers’ privacy contemplated in § 465, above, the circuit court on remand must examine all of the requested information and delete identifying facts and names. The task is to separate the kernel of agency statements of law and policy from what would otherwise be confidential or identifying details. Only that information which cannot be rendered sufficiently anonymous by deletion of the party’s name and other identifying information must be excluded from disclosure. See
Tax Analysts and Advocates v Internal Reve
nue Service,
362 F Supp 1298 (D DC 1973),
aff'd in part
164 US App DC 243; 505 F2d 350 (1974), requiring disclosure of IRS letter rulings and technical advice memoranda.
B.
The Intra-Agency Memoranda Exemption
Finally, the Revenue Division argues that this material contains intra-agency memoranda or statements which are exempt through § 22(1)(b) of the APA. This argument fails with respect to the § 195 decisions and § 421 orders of determination. These materials are released to the taxpayer. The courts in construing the similar Federal provision, 5 USCA 552(b)(5), have noted that the purpose of the exemption is to protect the decision-making processes within the agency by preserving the candor with which agency employees communicate. "Exemption 5, properly construed, calls for 'disclosure of all "opinions and interpretations” which embody the agency’s effective law and policy, and the withholding of all papers which reflect the agency’s group thinking in the process of working out its policy and determining what its law shall be’. Davis, The Information Act: A Preliminary Analysis, 34 U Chi L Rev 761, 797 (1967).”
National Labor Relations Board v Sears, Roebuck & Co,
421 US 132, 153; 95 S Ct 1504, 1517-1518; 44 L Ed 2d 29, 48-49(1975). Where the very information that the defendant seeks to shield from view is already in the possession of the party regulated, there can be no meritorious claim that the defendant agency is protecting the integrity of its decision-making process.
Citizens For Better Care v Department of Public Health,
51 Mich App 454, 470; 215 NW2d 576, 584 (1974).
The information contained in the hearing officer reports is more troublesome. The defendant alleges through affidavits that approximately 30% of the
reports contain "suggestions, recommendations, or proposals regarding changes to current interpretations of the Income Tax Act”, and not infrequently deal with matters only indirectly related to disposition of the case. Yet it is clear that the hearing officer reports contain the bulk of legal interpretation involved in the disposition of a § 421 hearing; in most cases the Order of Determination of Tax contains little more than a statement of the hearing officer’s conclusion. In order to reconcile the policy of preservation of the agency’s policy-making processes with the fundamental that secret administrative law is intolerable, we must remand for an
in camera
inspection of the reports. The circuit court shall delete those statements which relate only indirectly to the disposition of the case discussed in the report. The remainder of each report will embody the agency’s effective law and policy, and must be disclosed. Any reasonable doubt in categorization of a statement should be resolved in favor of disclosure.
"[P]rivate transmittals of binding agency opinions and interpretations should not be encouraged. These are not the ideas and theories which go into the making of the law, they are the law itself, and as such should be made available to the public. Thus, to prevent the development of secret law within the * * * [agency], we must require it to disclose orders and interpretations which it actually applies in cases before it.”
Ash Grove Cement Co v Federal Trade Commission,
167 US App DC 249, 252; 511 F2d 815, 818 (1975), n 12.
Remanded for proceedings not inconsistent with this opinion. No costs, since the issues involve a public question.