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I'm writing a memo. Two executive agencies have released letters back and forth contradicting each other. My assignment is "which side should we take?" Should the legal arguments presented by the agencies in the letters go in the Statement of Facts section or should it go under the legal discussion section? My discussion section will say Agency 1 is right on the point b/c or ABC, but Agency 2 is right on this point b/c of XYZ.

The arguments in the letters go in the arguments section of your memo. Only include the underlying facts in your statement of fact. I would also pick one agency over the other, ultimately, without changing any of your analysis, since you were asked to recommend a side to take.