UNITED STATES OF AMERICA, PETITIONER v. ARTHUR YOUNG & COMPANY, ET
AL.  /1/

   No. 82-687

   In the Supreme Court of the United States

   October Term, 1982

   The Solicitor General, on behalf of the United States of America,
petitions for a writ of certiorari to review the judgment of the
United States Court of Appeals for the Second Circuit in this case.

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Second Circuit

            TABLE OF CONTENTS
   Opinions below
   Jurisdiction
   Statutes involved
   Statement
   Reasons for granting the petition
   Conclusion
   Appendix A
   Appendix B
   Appendix C
   Appendix D
   Appendix E

                            OPINIONS BELOW

   The order of the district court (App. A, infra, 1a-15a) is reported
at 496 F.Supp. 1152.  The opinion of the court of appeals (App. B,
infra, 16a-39a) is reported at 677 F.2d 211.

                             JURISDICTION

   The judgment of the court of appeals was entered on April 13, 1982
(App. C, infra, 40a).  The order denying the government's petition for
rehearing was entered on June 22, 1982 (App. D, infra, 41a).  By order
dated September 13, 1982, Justice Marshall extended the time within
which the United States may file a petition for a writ of certiorari
to and including October 20, 1982.  The jurisdiction of this Court is
invoked under 28 U.S.C. 1254(1).

                           STATUTES INVOLVED

   The pertinent provisions of Sections 7601, 7602 and 7604 of the
Internal Revenue Code of 1954 (26 U.S.C.) are set forth in App. E,
infra, 42a-43a.

                          QUESTION PRESENTED

   Whether tax accrual workpapers, prepared by a corporation's
independent certified public accountant in the course of regular
financial audits, are privileged from disclosure in response to an
internal revenue summons issued under 26 U.S.C. 7602.

                               STATEMENT

   1. Respondent Arthur Young & Co., a firm of certified public
accountants, has served as Amerada Hess Corporation's independent
auditor since November 1971.  In that capacity, respondent conducted
financial audits of, and certified, Amerada's financial statements for
1972 through 1974 (App. B, infra, 19a).  Federal securities laws
require publicly-owned companies such as Amerada to file such
certified financial statements annually.  See 15 U.S.C. 78c and 17
C.F.R. Part 210 et seq.  The certification process requires the
independent auditor to evaluate the adequacy of the corporation's
reserve for potential future tax liabilities.  As part of its
certification of Amerada's financial statements, respondent prepared
tax accrual workpapers, which are documents and memoranda relating to
respondent's evaluation of Amerada's tax liability reserves as they
appeared in its financial statements.  The tax accrual workpapers
contain facts pertaining to Amerada's financial transactions based
upon company records and respondent's interviews with company
personnel and with third parties.  The information in the tax accrual
workpapers may identify specific items of questionable deductibility
that Amerada claimed for the particular year.  If the auditor
determines that items are not deductible or could reasonably lead to
additional tax liability upon examination by the Internal Revenue
Service, it will recommend the establishment of additional contingency
reserves (App. B, infra, 24a-25a).

   In May 1975, the Internal Revenue Service began an audit to
determine Amerada's corporate tax liability for 1972 through 1974.
Amerada is an integrated oil company incorporated in Delaware, and its
reported gross revenues for the years under audit exceeded seven
billion dollars.  During the course of the audit, Amerada disclosed to
the revenue agents that it had maintained a "special disbursement
account," a fund from which political contributions, gifts to foreign
government officials, and other illegal or questionable payments were
disbursed, and that it had convened a special committee to investigate
the company's practices with respect to such payments.  Amerada turned
over the final report of its special committee to the Internal Revenue
Service.  The report disclosed the deduction of some $7,830 in
questionable payments during the years in question (App. A, infra,
2a-3a;  App. B, infra, 19a).  Upon receipt of this information, the
Internal Revenue Service assigned Special Agent Kalemba of the
Criminal Investigations Division to join the investigation.  In
furtherance of the joint investigation, the Special Agent issued an
administrative summons, pursuant to 26 U.S.C. 7602, to respondent,
seeking, inter alia, its tax accrual workpapers.  Pursuant to 26
U.S.C. 7609, notice of the summons was sent to Amerada, which
thereupon instructed respondent not to produce any of the documents
called for by the summons (App. A, infra, 2a-3a;  App. B, infra,
19a-20a).

   On October 9, 1979, the government commenced this proceeding to
enforce the summons in the United States District Court for the
Southern District of New York.  Pursuant to 26 U.S.C. 7609, Amerada
intervened in the proceeding.  Both Amerada and respondent filed
answers to the petition opposing enforcement of the summons,
objecting, inter alia, to the production of the tax accrual workpapers
(App. A, infra, 3a;  App. B, infra, 18a).

   The district court enforced the summons and ordered production of
the tax accrual workpapers.  It found that the documents were relevant
to the Internal Revenue Service's tax investigation of Amerada and
rejected respondent's claim of an accountant-client privilege.  The
district court noted this Court had refused to recognize such a
privilege in Couch v. United States, 409 U.S. 322, 335-336 (1973), and
that the First Circuit adhered to that view, even where the client
claimed that it gave the information to the auditor under an
expectation of privacy.  See United States v. Arthur Andersen & Co.,
623 F.2d 725, 728 (1980).  As the district court concluded, "While
there may be an expectation of privacy insofar as the world at large
is concerned, Amerada cannot reasonably have such an expectation (of
privacy) with regard to the IRS which, the taxpayer knew, could call
for all materials underlying the tax returns and payments" (App. A,
infra, 9a).

   2. A divided panel of the court of appeals reversed the district
court's order with respect to the tax accrual workpapers (App. B,
infra, 28a-32a).  /2/ The court agreed with the district court's
finding that the tax accrual workpapers were relevant to the IRS audit
of Amerada's tax liability (App. B, infra, 24a-27a).  Despite the
relevance of the material, the court refused to enforce the summons
because of its belief that "these documents should remain confidential
in order to protect the reliability of the independent audit process"
(App. B, infra, 19a).

   In support of its decision, the court of appeals expressed the view
that the policies behind the disclosure requirements of the federal
securities laws outweighed the policies in support of the Internal
Revenue Service summons authority.  As the court reasoned, these
"countervailing policies" "require(d) * * * (it) to fashion protection
for the work that independent auditors, retained by publicly owned
companies to comply with the federal securities laws, put into
preparation of tax accrual workpapers" (App. B, infra, 28a).  If the
summons were enforceable, the court feared corporate management "might
not be perfectly candid with independent auditors once it knew that
the information revealed would be reachable under Section 7602
(footnote omitted)" (App. A, infra, 30a).  The court concluded that
enforcement would therefore handicap investors, who must rely on
independent auditors for financial information regarding publicly
traded securities (App. B, infra, 31a).

   In reaching its decision, the court drew support from the
attorney's work-product doctrine of Hickman v. Taylor, 329 U.S. 495
(1947), and created an accountant's work-product privilege, requiring
the Internal Revenue Service to make a heightened showing of need to
justify production of such documents (App. B, infra, 31a). In the
court's view, the Internal Revenue Service had not made the requisite
showing because "(t)he corporation's own books and the audit
workpapers furnish the IRS with all the raw data that it need(s) to
calculate the taxpayer's tax liability" (App. B, infra, 31a).

   The dissenting judge would have enforced the summons (App. B,
infra, 33a-39a).  He believed that Congress had legislated in favor of
disclosure of all relevant documents not subject to traditional common
law privileges, which do not include a privilege for either client
communications to an accountant or an accountant's work-product.  At
all events, the dissent observed that "(i)f there is to be recognition
of new privileges, we should leave that task to Congress" (App. B,
infra, 35a).  The dissent found nothing in the language or the
legislative history of Section 7602 to indicate that Congress intended
to exempt an accountant's work-product from Internal Revenue Service
examination, or anything in Hickman v. Taylor, 329 U.S. 495 (1947), or
the Federal Rules of Civil Procedure, that would permit a court to
depart from the broad command of Section 7602 (App. B, infra,
36a-37a).  As the dissent pointed out, there is no proper analogy
between the attorney-client relationship and that of the public
corporation and the independent public accountant.  The
attorney-client relationship is completely private and cloaked in
confidence.  On the other hand, an independent public accountant has
public obligations to assure itself that contingent tax liabilities
have been accurately reflected, and must decline to certify a
statement if it is not satisfied that it is accurate (App. B, infra,
37a-38a).

   The dissenting judge also rejected the majority's premise that
corporations would be so anxious to minimize their tax payments that
they would be willing to deceive their own accountants about debatable
tax items and thereby violate their obligations under the securities
laws.  He doubted "that many corporations will be so anxious to avoid
that result that they will conceal these debatable items from their
accountants in violation of the securities laws" (App. B, infra, 36a).
 But even on the assumption that the majority's speculation were
accurate, the dissent concluded that the courts should not afford
publicly held corporations "any shield behind which they can increase
their chances of avoiding detection that they have not paid either the
amount of taxes a court might rule was lawfully required or whatever
adjustment might result from a post-audit settlement" (ibid.).

                   REASONS FOR GRANTING THE PETITION

   1. In refusing to enforce an Internal Revenue Service summons
directing a certified public accountant to produce tax accrual
workpapers prepared in connection with its regular financial audits of
a publicly held corporation and its certification of the corporation's
financial statements, the decision below has created an accountant
work-product privilege, under the rationale of an accountant-client
privilege, that threatens to impede the Internal Revenue Service's tax
investigations of public corporations.  The case therefore stands in
derogation of this Court's ruling in Couch v. United States, 409 U.S.
322, 335 (1973), that "no confidential accountant-client privilege
exists under federal law, and no state-created privilege has been
recognized in federal cases * * *."

   Moreover, the decision conflicts with United States v. El Paso Co.,
682 F.2d 530 (5th Cir. 1982).  There, the court enforced an Internal
Revenue Service summons for the identical category of documents
prepared by a public corporation's in-house accountants and revealed
to its independent accountant as part of the process of establishing a
reserve for contingent tax liabilities and certifying its financial
statements.  In so holding, the court relied upon this Court's
admonition in Couch that there is no federal accountant-client
evidentiary privilege, and thereby rejected "(t)he logic of (the
decision below that) implies that the taxpayer's revelation of tax
accrual workpapers to an accountant should be considered a
communication in confidence" (682 F.2d at 540-541).  /3/

   As the substantial amici participation in the court below by
representatives of the accounting community demonstrates (App. B,
infra, 16a-17a), the question presented is of major importance to the
administration and enforcement of the revenue laws, and to the
accounting and legal professions.  The tax accrual workpapers at issue
in this case record the auditor's determination of the adequacy of a
public corporation's reserve for contingent tax liability under
generally accepted accounting standards.  Accordingly, they are
concededly relevant to a legitimate tax investigation.  While the
Internal Revenue Service does not routinely seek these accountants'
workpapers, /4/ it does request them in the course of complex audits
of large corporations with substantial tax liabilities.  Hence, the
question of the enforceability of summonses directing the production
of such documents has already been the subject of appellate litigation
/5/ and is likely to recur with frequency.  As matters now stand,
these summonses are not enforceable in the Second Circuit, where the
financial records of some of the nation's largest corporations are
located.  This Court should grant certiorari and establish a uniform
national rule with respect to the production of such tax accrual
workpapers.

   2. a. As the Court most recently reaffirmed in Trammel v. United
States, 445 U.S. 40, 50 (1980), quoting United States v. Bryan, 339
U.S. 323, 331 (1950), any claim of privilege must overcome the settled
principle that "'the public * * * has a right to every man's
evidence.'" Accord:  Branzburg v. Hayes, 408 U.S. 665, 688 (1972).
"Whatever their origins, these exceptions to the demand for every
man's evidence are not lightly created nor expansively construed, for
they are in derogation of the search for truth." United States v.
Nixon, 418 U.S. 683, 710 (1974).  See also Herbert v. Lando, 441 U.S.
153, 175 (1979);  Blackmer v. United States, 284 U.S. 421, 438 (1932);
 8 J. Wigmore, Evidence, Section 2192 (McNaughton rev. ed. 1961).
Because testimonial privileges preclude the use of highly relevant
evidence and therefore tend to be "an obstacle to the administration
of justice" (id. Section 2192, at 73;  see United States v. Nixon,
supra, 418 U.S. at 711-713), such privileges are tolerable only when
they "are designed to protect weighty and legitimate competing
interests" (id. at 709).  See also Elkins v. United States, 364 U.S.
206, 234 (1960) (Frankfurter, J., dissenting).

   b. These considerations are fully applicable to the summons
authority of the Internal Revenue Service.  Section 7602 of the 1954
Code, App. E, infra, 42a-43a, authorizes the Secretary "(t)o summon *
* * any * * * person * * * to appear * * * and to produce such books,
papers, records, or other data * * * as may be relevant or material"
to ascertaining the correctness of any return.  "The purpose of the
statutes is not to accuse, but to inquire.  Although such
investigations unquestionably involve some invasion of privacy, they
are essential to our self-reporting system, and the alternatives could
well involve far less agreeable invasions of house, business, and
records." United States v. Bisceglia, 420 U.S. 141, 146 (1975).

   In determining the scope of this statutory obligation to "appear"
and "give testimony to the Internal Revenue Service," this Court has
frequently analogized the summons power to the common law duties
attaching to the issuance of a testimonial summons.  See United States
v. Bisceglia, supra, 420 U.S. at 147-148;  United States v. Powell,
379 U.S. 48, 57 (1964).  This common law duty has been expansively
construed and limited principally by relevance and privilege.  See,
e.g., Blair v. United States, 250 U.S. 273 (1919);  United States v.
Bryan, supra, 339 U.S. at 331.  While the Court has recognized that
there may be exemptions from the public duty to give evidence to a
competent authority, the "primary assumption" was that a summoned
party must "give what testimony one is capable of giving" absent an
exemption "grounded in a substantial individual interest which has
been found, through centuries of experience, to outweigh the public
interest in the search for truth" (ibid.).

   Moreover, the Court has consistently construed the breadth of the
summons authority that Congress intended to confer in Section 7602 as
embracing all appropriate measures for enforcement.  See, e.g., United
States v. Powell, supra;  Donaldson v. United States, 400 U.S. 517
(1971);  United States v. Bisceglia, supra;  United States v. Euge,
444 U.S. 707 (1980).  "There is thus a formidable line of precedent
construing congressional intent to uphold the claimed enforcement
authority of the Service if authority is necessary for the effective
enforcement of the revenue laws and is not undercut by contrary
legislative purposes (footnote omitted)" (id. at 715-716).  Simply
put, an Internal Revenue Service summons to produce evidence relevant
to a legitimate investigation is enforceable unless an established
privilege protects such evidence or there are "unambiguous directions
from Congress" to the contrary.  United States v. Bisceglia, supra,
420 U.S. at 150.

   3. Here, both courts below found that the tax accrual papers sought
from respondent were relevant to the Internal Revenue Service's
investigation of Amerada (App. A, infra, 8a;  App. B, infra, 26a-27a).
 Despite this finding, the court of appeals refused to order
production of these documents prepared by respondent in connection
with its determination of the adequacy of Amerada's reserve for
contingent tax liabilities and its certification of Amerada's
financial statements, as required by the securities laws.  As the
court saw the matter, "(t)he verification procedure envisioned by the
(Securities) Act requires, in turn, that management feel free to
cooperate with their auditors, and to disclose to them confidential
information, such as the questionable positions taken on tax returns *
* *" (App. B, infra, 29a).  Hence, the court concluded that the
countervailing policies at issue in the case "* * * require(d) (it) to
fashion protection for the work that independent auditors, retained by
publicly owned companies to comply with the federal securities laws,
put into preparation of tax accrual workpapers" (id. at 28a).  In
support of its decision, the court relied upon the attorney
work-product doctrine established by this Court's decision in Hickman
v. Taylor, 329 U.S. 495 (1947).

   But the work-product doctrine has no bearing upon the
enforceability of the IRS summons for accountant's workpapers at issue
in this case.  In Hickman v. Taylor, supra, the Court recognized a
qualified privilege against pretrial discovery for certain materials
prepared by an attorney "acting for his client in anticipation of
litigation" (329 U.S. at 508).  See United States v. Nobles, 422 U.S.
225, 236-240 (1975);  Upjohn Co. v. United States, 449 U.S. 383,
397-399 (1981).  Here, in marked contrast, the papers in question were
prepared by accountants in the course of a regular audit of financial
statements -- and not in connection with litigation no matter how
remotely contemplated.  These two factors effectively distinguish
Hickman and render the work-product doctrine irrelevant.  United
States v. El Paso Co., supra, 682 F.2d at 542-543.  /6/ The court
below therefore erroneously extended the work-product doctrine beyond
its settled and appropriate bounds.

   4. While the decision below is couched in terms of the work-product
privilege, it is plain that the court's underlying reasoning rests
upon the creation of an accountant-client privilege.  For in refusing
to enforce the summons for the accrual workpapers, the court believed
that it was fostering candid communications between client and
accountant for the benefit of the investing public and the enforcement
of the securities laws.  Such a rationale is the essence of a
communications privilege.  See United States v. El Paso Co., supra,
682 F.2d at 541 n.13.

   There are, we submit, four fundamental errors inherent in the
court's conclusion.  First, there is no accountant-client privilege,
and the courts have uniformly resisted creating one because of the
significant differences between attorneys and certified public
accountants.  Second, the court's conclusion that such a privilege is
necessary in order to encourage enforcement of the securities laws is
based upon an unfounded speculation that public companies would
otherwise deceive their independent accountants.  Third, there is no
conflict between the enforcement of the securities laws and the tax
laws.  And fourth, even on the assumption that there is such a
conflict, it is for Congress, and not the court below, to resolve it.

   a. As we have pointed out (supra, page 6), this Court, and every
court that has considered the issue, has rejected the creation of an
accountant-client privilege.  Couch v. United States, supra, 409 U.S.
at 335-336;  Falsone v. United States, 205 F.2d 734 (5th Cir.), cert.
denied, 346 U.S. 864 (1953);  Wm. T. Thompson Co. v. General Nutrition
Corp., 671 F.2d 100, 103-104 (3d Cir. 1982);  United States v.
Gurtner, 474 F.2d 297, 299 (9th Cir. 1973);  United States v.
Wainwright, 413 F.2d 796, 803 (10th Cir. 1969);  United States v.
Kovel, 296 F.2d 918, 922 (2d Cir. 1961);  United States v. El Paso
Co., supra, 682 F.2d at 540.  Indeed, the reason the law recognizes an
attorney-client privilege and not an accountant-client privilege rests
upon the important practical differences between the function of an
accountant and that of an attorney.  The attorney is an advocate whose
duties to his client include presenting the client's case in the most
favorable light possible.  As this Court noted in Upjohn Co. v. United
States, supra, 449 U.S. at 390-391, "(t)he first step in the
resolution of any legal problem is ascertaining the factual background
and sifting through the facts with an eye to the legally relevant."
Accordingly, unless a client's communications to his attorney are to
be held in strict confidence, the attorney may not be able to
determine the correct facts, and, therefore not be able to represent
his client's cause to the best of his ability.

   An independent certified public accountant performs a very
different function from that of an attorney.  As the title states, he
is independent of his client, and his responsibility is not only to
the client whose books he is auditing but also to various governmental
agencies regulating his client's industry, to his client's creditors
and to investors in his client's securities.  This multiplicity of
loyalties, in contrast to the attorney's undivided loyalty to his
client, exposes accountants to suits by agencies, creditors and
investors on the theory that the accountant ignored his duty to them
in favor of his loyalty to his client.  In such suits, it is common
for accountants to disclose their clients' confidential communications
and their own work-product in order to demonstrate that they properly
discharged their duties to all.  /7/ Indeed, it was precisely those
differences between accountants and attorneys that this Court
recognized in Couch in rejecting the claim of an accountant-client
privilege as to a taxpayer's records turned over to an accountant.  As
the Court stated (409 U.S. at 335-336):

         (T)here can be little expectation of privacy where records
      are handed to an accountant, knowing that mandatory disclosure
      of much of the information therein is required in an income tax
      return.  What information is not disclosed is largely in the
      accountant's discretion, not * * * (the taxpayer's).  Indeed,
      the accountant risks criminal prosecution if he willfully
      assists in the preparation of a false return. * * *.  His own
      need for self-protection would often require the right to
      disclose the information given him. * * * Accordingly, * * *
      (taxpayer) cannot reasonably claim * * * an expectation of * * *
      privacy or confidentiality.

   Thus, an accountant's client obviously cannot have an expectation
of confidentiality similar to that of an attorney's client.  There is
accordingly no justification for the creation of an accountant-client
privilege by the decision below.

   b. Moreover, even on the assumption of the court below (with which
we disagree) that there is some privilege that attaches to the
communications between a client and his accountant that is somewhat
analogous to the attorney-client privilege, the rationale for such a
privilege does not exist in this case.  The principal contemporary
justification for the attorney-client privilege is its presumed value
in encouraging clients to make full disclosure to their attorneys.
Upjohn Co. v. United States, supra, 449 U.S. at 389;  8 J. Wigmore,
supra, Sections 2291 and 2306, at 590.  If damaging information could
more readily be obtained from an attorney following disclosure than
from the client himself in the absence of disclosure, a client aware
of that fact would be reluctant to confide in his lawyer.  See, e.g.,
United States v. Louisville & N. R.R., 236 U.S. 318, 336 (1915).  The
result would be greater difficulty in obtaining fully informed legal
advice.  "Since the privilege has the effect of withholding relevant
information from the factfinder, it applies only where necessary to
achieve its purpose.  Accordingly it protects only those disclosures
-- necessary to obtain legal advice -- which might not have been made
absent the privilege." Fisher v. United States, 425 U.S. 391, 403
(1976).

   But the communications from Amerada to respondent in this case
would undeniably have been made in the absence of any protection of an
accountant-client privilege.  As a publicly held corporation, Amerada
was required to file accurate and complete financial statements,
certified by its independent auditors, with the SEC, if it wished to
continue to have its stock publicly traded.  See 15 U.S.C. 78l;  17
C.F.R. 210.1-02(d).  Thus, Amerada had an independent legal duty to
make the disclosures to respondent wholly without reference to or
encouragement by any privilege.  As the dissenting judge pointed out,
there is accordingly no justification for the majority's premise "that
some corporations are so anxious to minimize their tax payments that
they are willing to deceive their accountants concerning the existence
of debatable items and thereby violate their obligations under the
securities laws" (App. B, infra, 36a;  (footnotes omitted)).  Indeed,
the cost of financial deceit is high for it can cut the corporation
off from the public capital markets and expose it to private causes of
action.  It is therefore the accountant's public duty to withhold
certification of a false, incomplete or misleading statement, and it
is the sanctions of the securities laws -- not the existence of any
privilege -- that provide the corporation with the necessary incentive
to be candid with its independent auditor (see App. B, infra,
37a-38a).  See also In re John Doe Corp., 675 F.2d 482, 488-489 (2d
Cir. 1982).

   c. The court of appeals further erred in assuming a conflict
between the federal statutes regulating securities and those enforcing
revenue collection.  Section 7602 of the 1954 Code unequivocally
authorizes agents of the Internal Revenue Service to summon and
inspect records that may be relevant to their investigation.  On the
other hand, the securities regulations relate to nothing more than the
duty of listed corporations to file annual audited statements, and the
duty of auditors to examine the statements under generally accepted
principles of public accounting.  The statutes and regulations do not
even hint at any duty by the accountants to keep their clients'
communications confidential.  It would therefore be incongruous to
enjoin accountants to do so when their basic function is clearly to
insure that the public is informed accurately.

   As the Court made clear in St. Regis Paper Co. v. United States,
368 U.S. 208 (1961), only a conflict that appears in the statutes
themselves, as a clear statement of congressional purpose, will
prevent disclosure of information.  In St. Regis Paper Co., Section
9(a) of the Census Act, 13 U.S.C. (1958 ed.) 9(a), prevented the
Census Bureau from disclosing census information except in the form of
statistical reports.  St. Regis Paper Co. asserted that this
prohibition was, in effect, a pledge of confidentiality and protected
the company from having to disclose the same information to the
Federal Trade Commission.  This Court disagreed, holding that the
statute merely forbade dissemination of the information by the Census
Bureau;  it said nothing to curtail the normal investigatory powers of
other government agencies.  The Court refused to infer such a
limitation:  "Ours is the duty to avoid a construction that would
suppress otherwise competent evidence unless the statute, strictly
construed, requires such a result." 368 U.S. at 218.  The Court
further pointed out (ibid.) that "when Congress has intended that like
reports not be subject to compulsory process it has said so." The
present case follows a fortiori from St. Regis Paper Co. since the
securities laws and regulations do not contain any requirements of
confidentiality for accountants.  There is accordingly no
justification for creating a privilege for such relevant materials as
a defense to an otherwise valid Internal Revenue Service summons
issued pursuant to a legitimate investigation.

   d. Finally, even assuming that the court below correctly identified
a conflict between the policies underlying the securities laws and the
provisions regarding tax enforcement, the resolution of such a
conflict properly lies with Congress and not in the courts.  This is
particularly true where, as here, the securities laws provide no
explicit defense to the Internal Revenue Service's summons and a
literal reading of the revenue provision directs that the documents be
produced.  There is no justification for the implicit assumption by
the decision below that the securities law has somehow repealed or cut
back on the scope of the Internal Revenue Service's summons authority.
 "One canon of construction is that repeals by implication are
disfavored." Regional Rail Reorganization Act Cases, 419 U.S. 102, 133
(1974).  Since the IRS summons statutes and the securities laws are
"'capable of co-existence, it is the duty of the courts, absent a
clearly expressed congressional intention to the contrary, to regard
each as effective.'" Id. at 133-134, quoting Morton v. Mancari, 417
U.S. 535, 551 (1974).  As the Fifth Circuit put it in El Paso Co. in
reaching the opposite conclusion from that of the court below (682
F.2d at 545):  "In the absence of a more profound clash between
congressional policies, we cannot cut back on the summons power that
Congress has given to the Service.  We do not feel free to reweave the
fabric of national legislation in accord with our notions of how
various statutory schemes mesh.  Such policy choices belong to the
Congress."

                              CONCLUSION

   The petition for a writ of certiorari should be granted.

   REX E. LEE

      Solicitor General

   GLENN L. ARCHER, JR.

      Assistant Attorney General

   STUART A. SMITH

      Assistant to the Solicitor General

   CARLETON D. POWELL

   KRISTINA E. HARRIGAN

      Attorneys

   OCTOBER 1982

   /1/ Amerada Hess Corporation was also a party below, and is a
respondent, along with Arthur Young & Co.  For the sake of clarity,
however, "respondent" refers only to Arthur Young & Co.

   /2/ The Internal Revenue Service's summons directed respondent to
produce all files related to its client, Amerada Hess Corporation, for
which respondent served as independent auditor (App. B, infra,
17a-18a, 20a n.4).  The district court ordered the production of all
items sought by the summons except respondent's audit program and the
documents prepared by the special committee that investigated
Amerada's questionable payments.  The government did not appeal that
portion of the district court's order, except with respect to the
stated items.  Accordingly, the only issues considered by the court of
appeals were the production of audit workpapers and tax accrual
workpapers (App. B, infra, 20a-21a).  The court of appeals affirmed
the district court's order with respect to the audit workpapers (App.
B, infra, 21a-24a).  They are accordingly no longer at issue (App. B,
infra, 24a-32a).  Hence, the only question before this Court involves
the tax accrual workpapers.

   /3/ We have been advised by counsel for El Paso Company that he
intends to seek certiorari.

   /4/ See Guidelines for Requesting Audit or Tax Accrual Workpapers,
(Audit) I Int. Rev. Man. (CCH) Paragraph 4024.4 (May 14, 1981).

   /5/ See, e.g., United States v. Noall, 587 F.2d 123 (2d Cir. 1978),
cert. denied, 441 U.S. 923 (1979) (enforcing IRS summons to produce
internal audit documents);  United States v. Arthur Andersen & Co.,
474 F. Supp. 322 (D. Mass.), appeal dismissed, 612 F.2d 569 (1st Cir.
1979), cert. denied, 449 U.S. 1021 (1980) (enforcing IRS summons to
produce audit work programs, tax accrual workpapers, and tax planning
and consulting papers held by independent auditor);  cf. United States
v. Coopers & Lybrand, 550 F.2d 615 (10th Cir. 1977) (IRS summons for
tax accrual papers not enforced on ground of lack of relevancy).

   /6/ Accord:  Coastal States Gas Corp. v. Department of Energy, 617
F.2d 854, 864 (D.C. Cir. 1980) ("(work-product doctrine) has uniformly
been held to be limited to documents prepared in contemplation of
litigation");  Goosman v. A. Duie Pyle, Inc., 320 F.2d 45, 52 (4th
Cir. 1963) (reports prepared in ordinary course of business under
Interstate Commerce Commission regulations are not work-product).

   /7/ See, e.g., Pegasus Fund, Inc. v. Laraneta, 617 F.2d 1335 (9th
Cir. 1980) (Arthur Young & Co. produced its work papers to show that
it had no reason to know of fraud by its client);  Oleck v. Fischer,
623 F.2d 791 (2d Cir. 1980) (Arthur Andersen & Co. testified regarding
reserves for notes payable appearing in client's financial statement);
 Herzfeld v. Laventhol, Krekstein, Horwath & Horwath, 540 F.2d 27 (2d
Cir. 1976);  SEC v. Geotek, 426 F. Supp. 715 (N.D. Cal. 1976), aff'd,
590 F.2d 785 (9th Cir. 1979).

   Appendix Omitted