News Orgs Rip Feds' Bid To Pause COVID-19 Relief Disclosure

By Khorri Atkinson
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Law360 (November 16, 2020, 8:13 PM EST) -- Several news outlets fired back Monday at the Trump administration's bid to pause a recent D.C. federal court order to disclose records that would ​identify and provide information on all businesses that have received COVID-19 relief funds, arguing that the data is vital to the public's evaluation of the government's response to the pandemic.

Five major news organizations, including the New York Times, the Washington Post and Bloomberg, that secured a win earlier this month in their Freedom of Information Act suit for access to the records told U.S. District Judge James E. Boasberg in an opposition brief that the U.S. Small Business Administration must not be allowed to delay its disclosure obligations further by requesting a stay of his Nov. 5 order pending possible appeal to the D.C. Circuit.

According to the publications, the loan data concerning disbursed funds is of national importance to understanding how the taxpayer-funded virus relief program is working and to identifying any failures in the disbursement process that the government must address.

"This court, firmly and unequivocally, found that the … the SBA has wrongfully withheld from the public timely information of significant interest during the COVID-19 pandemic," the outlets said. "With no minced words, the court … ordered the SBA by November 19 to 'release the names, addresses, and precise loan amounts of all individuals and entities that obtained COVID-related loans pursuant to the Paycheck Protection Program and Economic Injury Disaster Loans program.' The SBA has [previously] withheld this information … for many months, in clear violation of the Freedom of Information Act even though it explicitly told loan applicants that the data is public information."

In a Nov. 12 filing informing the judge that acting U.S. Solicitor General Jeffrey B. Wall is considering whether to lodge an appeal, the SBA asked that the ruling be paused until Dec. 7, or, if the government files a notice of appeal by that date, pending appeal.

The agency called the FOIA case an "unwarranted intrusion," saying the records being sought are too sensitive for public disclosure. It further insisted that Judge Boasberg's order would "irreparably harm" the SBA and several individual borrowers and businesses if the data is released pending appeal.

"Once the information is disclosed, it cannot be recalled, and the confidentiality of the PPP and EIDL information in dispute would be lost for all time," the SBA said.

"Borrowers are already suffering from the dramatic decrease in economic activity the pandemic inflicted," the agency added. "It would contradict the purposes of the CARES Act to subject them to further risk — in particular, the risk of competitors and other interested parties inferring payroll information from loan amounts and attributing that information to particular businesses, and using that information to the disadvantage of borrowers."

But the publications replied that among other factors, the SBA's "clear unlikelihood" of prevailing on appeal and failure to show irreparable harm absent a stay cannot overweigh the imminent public importance of disclosing the loan data. 

The SBA severely downplayed the importance of this information, the brief contended, by arguing that the data is "mainly of historical interest" because the "loans have already been made and new applications are not being considered." But the filing noted that Judge Boasberg's recent ruling had also acknowledged what he called "the enormous public interest in disclosure, characterizing it as significant, powerful, and weighty."

The organizations lodged their complaint in May, almost two months after Congress allocated $349 billion in PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act to support jobless Americans and help businesses recover from the financial downturn caused by the novel coronavirus pandemic. The SBA has also said it would lend up to $2 million to small businesses through the EIDL program. 

The publications, along with the investigative nonprofit ProPublica and the Wall Street Journal's parent company, Dow Jones, said the SBA had either denied or constructively denied their initial records requests and bids for expedited processing — violations of the Freedom of Information Act.

The complaint cited growing concerns over whether the PPP is functioning properly, noting, for instance, several large public companies that received hefty loans from the SBA, including Shake Shack and the Los Angeles Lakers. Those companies have since returned their loans.

Over the past months, the U.S. Department of Justice has filed several criminal actions targeting schemes designed to defraud the virus relief program for small businesses. In September, the DOJ's Criminal Division announced that it had charged 57 people since early May for attempts to steal over $175 million from the PPP. They obtained more than $70 million, the agency said, but the government was able to recover or freeze more than $30 million of that amount.

The news outlets pointed to the DOJ's ongoing prosecutions to reinforce their argument that the public is interested in accessing the records to understand the risk of waste, fraud and abuse that continues to threaten the virus relief program. 

Monday's brief came in response to Judge Boasberg's order on Friday pausing his Nov. 5 decision until he rules on the merits of the SBA's pending motion. The judge had also given the news outlets until Nov. 27 to reply to the merits of the pending motion. In a minute order Monday, the judge said the government may file a reply to the outlets' opposition brief by Thursday.

A spokesperson for the SBA did not immediately reply to a request for comment.

Ballard Spahr LLP partner Charles D. Tobin, an attorney for the publications, told Law360 in an email late Monday that Judge Boasberg "has correctly recognized, and we hope will continue to hold firm, that the SBA has no valid reason to hide this information."

The attorney doubled down that "with businesses continuing to need the government's help, the public has a deep interest in monitoring how taxpayer dollars are being spent."

The publications are represented by Charles D. Tobin, Maxwell S. Mishkin and Kristel Tupja of Ballard Spahr LLP.

The SBA is represented by Indraneel Sur of the U.S. Department of Justice's Civil Division.

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 Hailey Konnath. Editing by Peter Rozovsky.

Update: This story has been updated with a statement from an attorney for the publications. 

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