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Unless an appellate court intervenes, December 1, 2020 is going to be a big day.
On November 24, 2020, Judge James Boasberg for the United States District Court of the District of Columbia, in response to a Freedom of Information Act request, ordered the Small Business Administration (SBA) to "release the names, addresses, and precise loan amounts" for borrowers that obtained loans approved pursuant to the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. Production must occur by December 1, 2020. The SBA was given Thanksgiving week to appeal the District Court's order. Absent appellate relief, personal identifying information on millions of individuals and financial information about millions of businesses will be sent to a major news conglomerate.
In WP Co. LLC v. United States SBA, Civil Action Nos. 20-1240 (JEB) and 20-1614 (JEB), plaintiff WP Co., LLC (a host of national-news organizations) submitted FOIA requests for records to the SBA, seeking PPP and EIDL loan information. Administered by the SBA to assist small businesses impacted by the COVID-19 shutdowns and worker shortages, the SBA approved and processed $525 billion in more than 5.2 million individual PPP loans, along with an additional $192 billion in EIDL loans.
According to Duns & Bradstreet, WP Co. LLC is a Washington, DC entity with more than 50 companies in its corporate family, including The Washington Post. The SBA provided limited responses to the initial FOIA request, omitting dollar figures, names, and addresses for loan recipients. The SBA argued that its withholdings were based on FOIA Exemptions 4 and 6, which respectively protect confidential commercial information and information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Federal Court disagreed and ordered full production of documents as required by WP Co. The SBA then filed a Motion to Stay the court’s order of production, arguing that compliance would create an irreparable injury to both the SBA and the privacy of the loan recipients. The court again disagreed, denying the stay, and ordering production of all PPP and EIDL loans (with recipient details) on or before December 1, 2020.
SBA argued that “in the FOIA context, an agency experiences irreparable harm where release of the information at issue would moot its right to appeal[,]” as “once the information has been turned over, the bell cannot be unrung on appeal.”
Plaintiffs claimed that the SBA would simply be revealing its own internal processes, despite the inclusion of information regarding private individuals and entities, which contributes to public understanding of the government's activities. The Court held that even if “SBA can make out some showing of irreparable harm in the absence of a stay — as the Court is willing to assume — any such injury is substantially outweighed by the harm to Plaintiffs and the public at large” and “the powerful public interest in disclosure renders a stay inappropriate here.”
Focusing on the need for public scrutiny of government agencies, the Court further held that “[d]isclosure of the complete list of borrowers and precise loan amounts would facilitate ‘meaningful evaluation’ of the government's activities — specifically, whether the programs ‘are being operated consistent with applicable legal constraints; whether funds have been distributed fairly, equitably, and devoid of fraud; and whether the programs are achieving their purpose.’” Citing Multi Ag Media LLC v. Dep't of Agric., 515 F.3d 1224, 1232, 380 U.S. App. D.C. 1 (D.C. Cir. 2008).
Articulating further concern, the Court stated as follows:
"For instance, as a result of SBA's withholdings, there currently exists no public record of the identities of over 87% of PPP loan recipients ... That stands as an obvious impediment to any meaningful public inquiry regarding the overwhelming majority of loans, including whether certain types of businesses were over-or under-represented and whether the loans were distributed to qualifying recipients along equitable racial, gender, and geographic lines.
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While the withheld data does concern loans previously allocated, the public maintains an urgent and immediate interest in assessing the results of SBA's initial effort at administering a massive small-business relief package and extracting lessons where possible — both to inform a critical, ongoing federal debate and to remedy failures in the loan-disbursement process moving forward."
Although the SBA argued that disclosure would "harm the many individuals and businesses whose loans are at issue," particularly given their "privacy and commercial confidentiality interests in the disputed records[,]" the Court found greater weight in public interest and denied the stay. Therefore, unless an appellate court grants a stay or overturns the district court, the Washington Post will have, and be free to publish, all PPP and EIDL loan information – including the personal identifying information of recipients. I hope the Washington Post has better sense.