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Law360 (May 12, 2020, 11:30 PM EDT) -- Five major news outlets, including The New York Times, The Washington Post and Bloomberg, slammed the U.S. Small Business Administration for purportedly illegally rebuffing public records requests regarding its Paycheck Protection Program, telling a D.C. federal court Tuesday the SBA has "no basis" to withhold the information sought.
Those publications, along with investigative nonprofit ProPublica and Wall Street Journal parent company Dow Jones, said in their complaint that they've all requested SBA records that would identify and provide basic information about businesses that have received public assistance from the agency during the COVID-19 pandemic. That public assistance includes both the agency's Paycheck Protection Program and the Economic Injury Disaster Loan program, per the suit.
But the SBA has either denied or constructively denied their records requests and requests for expedited processing — violations of the Freedom of Information Act, the publications said.
"Plaintiffs submitted these FOIA requests and sought expedited processing of them because of the public interest in contemporaneously monitoring the disbursement of billions of taxpayer dollars through expansive federal initiatives — most notably the new Paycheck Protection Program — during this period of unprecedented financial and social disruption, and because the SBA has until now routinely provided such information about businesses that take out SBA loans," they said.
The $349 billion PPP is a component of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act. The SBA has also said it would lend up to $2 million to small businesses through the EIDL program, according to the suit.
But there are questions over whether the PPP is functioning properly, according to the suit. For instance, several big-name, public companies received hefty loans from the SBA, like Shake Shack and the Los Angeles Lakers, the news outlets said. Those companies have since returned their loans.
The publications also pointed to an April report from the National Federation of Independent Businesses, which found that just 4% of EIDL loan applicants had been approved and 1% had been rejected. Most applicants hadn't received any update on the status of their applications and none had received the loan or emergency grant, the federation said.
In their records requests, the publications said they all sought essentially the same information — information the SBA had always regularly provided up until this point. And all of the publications sought expedited processing based on the "compelling need to provide the public with contemporaneous information about these important federal programs," they said.
FOIA requires that an agency respond within 20 working days of receiving a request, providing the scope of the documents that the agency will produce or withhold. But the SBA has provided only "boilerplate responses" stating that at some point in the future, it hopes to turn its efforts to providing that information to the public, per the suit. The agency has provided no concrete indication of what data that will be or when that will be, the outlets said.
"To date, the SBA has not produced any records responsive to any of the plaintiffs' FOIA requests," they said, adding that it also hasn't informed any of them as to the scope of the records that the agency will produce or withhold.
Kris Coratti Kelly, a spokesperson for The Washington Post, said in a statement provided Tuesday to Law360 that the suit "seeks to enforce federal law and enable the public to see how their tax dollars are being spent on these massive loan programs."
"The Small Business Administration has disbursed hundreds of billions of dollars through PPP and the Economic Injury Disaster Loan program during the COVID-19 crisis, but it has refused to disclose who is receiving the funds and in what amounts," she said.
ProPublica general counsel Jeremy Kutner said in another statement Tuesday that "[e]normous amounts of taxpayer money are being committed to what is supposed to be a lifeline for millions of struggling American businesses."
"The public has an urgent right and need to know how it is being spent, and whether it is being directed to those most in need," he said in the statement. "We are pleased to be acting along with colleagues at other leading news organizations to make sure this information promptly sees the light of day."
Steve Severinghaus, a Dow Jones spokesperson, told Law360 on Wednesday, "Hundreds of billions of dollars are being distributed by the federal government and we are seeking full transparency, as mandated by law, to see how taxpayer money is being allocated."
The SBA and The New York Times declined to comment. Dow Jones and Bloomberg didn't immediately return requests for comment late Tuesday.
The publications are represented by Charles D. Tobin and Maxwell S. Mishkin of Ballard Spahr LLP.
Counsel information for the Small Business Association wasn't immediately available Tuesday.
The case is WP Co. LLC et al. v. U.S. Small Business Association, case number 1:20-cv-01240, in the U.S. District Court for the District of Columbia.
--Additional reporting by Linda Chiem. Editing by Breda Lund.
Update: This story has been updated to include comment from Dow Jones.
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