A battered FOIA collides with the $2 trillion bailout

In the fall of 2019, city officials in Cleveland were confronted with the kind of economic crisis that is, by now, familiar across the country: a Fortune 500 company threatens to leave a city unless it gets millions of dollars to stay. On the line were thousands of jobs and millions in tax revenues. 

A Cleveland suburb offered tax breaks worth as much as $100 million to Sherwin-Williams, which was founded in Cleveland the year after the Civil War ended. Officials in Cleveland went further, freeing up $13.5 million in public funds to give directly to the company so it might build a new corporate headquarters. In the “emergency ordinance” hastily drafted by city officials, the director of economic development—an unelected official—would be given unlimited power to authorize “any agreements necessary to implement” the new headquarters project the company demanded. The clause sounded relatively mild compared to others buried more deeply inside the deal. As Sam Allard, a reporter with the alt-weekly Cleveland Scene, wrote last month, “Built into the agreement is Sherwin’s absolute power to control the flow of information related to the project… Sherwin can designate any and all documents related to the project ‘CONFIDENTIAL’ when they provide them to the city. The city, then, can deny them to the press or any concerned citizen making a public records request.” 

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In the throes of an economic emergency in one of the most unequal cities in America, norms around basic transparency were deemed an acceptable trade-off. Half of Cleveland households have incomes below $30,000. Public schools are grossly underfunded, and public services strapped. Even so, elected officials openly collaborated with private industry to stifle public disclosure on a deal effectively transferring millions from public coffers to a company with profits of $1.5 billion in 2019, and whose CEO earns $14.8 million a year. 

By late March, as a far greater emergency loomed over the region, with numerous positive cases of covid-19 being reported, Cleveland’s city council approved the deal. As a result, local journalists may never get the kind of document cache they would likely need to write an exhaustive, full-throated postmortem on the deal. The public will now likely be stuck with whatever narrative government and business leaders decide to spin. It’s the kind of behavior and outcome deserving of a foia lawsuit, in other words. 

But none is forthcoming. No local media outlet can likely afford it. Days after Allard wrote his story, his employer, the Cleveland Scene, laid off five staffers. Allard still has a job but took a pay cut. And in the same month the deal was finalized, the Plain Dealer was further gutted: another 22 staffers let go, following 36 in 2019. Then, in early April, management restricted the 14 unionized journalists remaining to only covering news outside the city. Ten of the newspaper’s 14 remaining journalists asked to be laid off instead. A unionized newsroom with nearly 340 journalists two decades ago has four journalists left. (Cleveland.com, the non-union media brand, still employs 73 “journalists and content creators.”)

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Such uneven power isn’t unique to Cleveland—a microcosm of transparency problems endemic in almost every city and state. And that was before the economic emergency of a pandemic ushered in the biggest corporate bailout in history. With countless more media outlets on the brink of collapse, and layoffs at media companies climbing to 33,000, suing to get documents has become an even riskier prospect, even if our current moment makes it a necessity.

Trillions in taxpayer dollars are now being allocated to America’s largest corporations to stave off economic disaster. It’s the largest stimulus package in American history. Even before congressional approval, a lobbying gold rush started, with some critics already calling the stimulus package a “corporate coup.” By early April, Trump ousted the head of the Pandemic Response Accountability Committee,  a watchdog panel charged by Congress with overseeing how the administration spends trillions. 

There is, of course, never a good time for a pandemic. But the Freedom of Information Act is weaker than it has ever been. A Supreme Court decision in 2019, described by some media law scholars as a “downward spiral toward secrecy,” will make it difficult for the media to fully investigate conflicts of interest and corruption within the stimulus aid package.

foia lawsuits, which according to media lawyers can range in cost from $10,000 to $80,000, were already financially untenable, especially for local media outlets. In a 2016 Knight Foundation survey of news leaders, 53 percent said their news organizations weren’t prepared to go to court to fight First Amendment violations, with nine out of ten blaming their reluctance on a lack of money. Such hesitation has consequences: research shows the mere threat of litigation increases agency compliance with foia requests. “There was a time when local media companies owned the atmosphere and carried the ball on foia,” says David Cuillier, an associate professor of journalism at the University of Arizona, who has published widely on the history of foia case law and is president of the board of directors at the National Freedom of Information Coalition. “They’ve just all kind of stopped filing lawsuits.” 

The paucity of foia lawsuits reflects the larger and more intractable economic divide now dominating journalism. Local outlets are increasingly struggling, while larger outlets are keeping the pressure on. To finance a lawsuit against the Roswell Police Department for withholding records, a chain of newspapers in Georgia, owned by Appen Media Group, asked for help on GoFundMe, where it raised $4,220. 

Indeed, the threat of a lawsuit is a weapon more easily wielded by powerful media institutions, according to data compiled by the Transactional Records Access Clearinghouse, or TRAC.The research center at Syracuse University maintains a “News Media List,” a database of FOIA lawsuits between 2001 and June 2018. A review of the list shows that it’s far more common to see lawsuits by organizations such as the Center for Public Integrity, which has filed thirteen since 2001. Or New York–based digital outlets such as BuzzFeed, which has filed at least fifteen against federal government agencies, and at least 25 more since.(That’s not counting the numerous lawsuits filed individually by its senior investigative reporter, Jason Leopold, who in his Twitter bio refers to himself as a “FOIA terrorist,” and who has filed all lawsuits jointly with BuzzFeed since 2017.)

The New York Times has filed more than fifty since 2001, and claims to have brought more foia lawsuits over the past decade than any other mainstream media organization in the country. Such an aggressive stance requires resources. “We spend hundreds of hours each year filing the suits, writing briefs, negotiating with government lawyers and going to court. We know better than anyone that foia cases are frustrating; the deck is stacked against us, and the lawsuits drag on for months and years,” wrote David McGraw, deputy general counsel at the Times, in 2019. “If requesters always shrug and walk away at that point, it means we are leaving it to federal bureaucrats to decide just how secret our government is going to be.” 

The Plain Dealer hasn’t filed a lawsuit once during that same time period, according to TRAC, and another Ohio paper, the Columbus Dispatch, last filed a lawsuit in 2003, against the National Institute for Occupational Safety and Health. The Dispatch has instead relied on a complaint program within the Ohio Court of Claims, created in June 2018 by Ohio legislators for citizens denied access to public records. 

While the law wasn’t designed specifically for media companies, newspapers in Ohio are using it to push back. “Despite the clarity of Ohio law, it is not unusual for some cities and villages to thumb their noses at it and refuse to turn over consultant contracts, mayor’s schedules, public officials’ garage-door logs and other documents on the flimsiest excuses,” noted the editorial board of Cleveland.com in a 2019 column praising the new law.  

Using the mediation complaint program, the Columbus Dispatch won a ruling in 2018 against a local police department that had refused to release records involving an investigation of domestic-violence allegations against a former Ohio State University assistant football coach. A foia lawsuit might have cost the newspaper thousands in legal billings. Filing a complaint through the program instead cost the paper just $25. “It’s a cheap, easy way to go, with one downside,” Randy Ludlow, a reporter at the Gannett-owned newspaper, writes in an email. “The cases don’t set precedent and you could be into money for real lawyers if the government entity appeals.” (Along with hundreds of other newspaper journalists at Gannett, Ludlow was recently furloughed for a week, due to plunging ad revenue tied to the coronavirus pandemic.)

The divide in who files foia lawsuits further undermines the power and influence of local media outlets, according to Roy Gutterman, director of the Tully Center for Free Speech at Syracuse. “By all measures, it’s getting worse,” he says. “How will we know if a town or village is jerking around a reporter and legitimately withholding stuff?”

The problem runs deeper than empty pockets. Industry and corporate interests have already resoundingly won a decades-long legal battle aimed at kneecapping the last remnants of real power within the Freedom of Information Act, which even in its early years was derided as insufficient. In an influential 1970 law article, consumer advocate Ralph Nader characterized the act as “freedom from information.” The well-resourced battle directed by corporate interests ever since has vastly expanded what counts as “corporate privacy”—and, in doing so, effectively cloaked billions in public dollars from public and press scrutiny. 

A “parade of darkness that appears to be advancing largely unabated” is how Daxton Stewart describes the rise of government secrecy in a 2019 study, “Secrecy, Inc.,” which examined how governments used trade-secret exemptions and confidentiality clauses, among other strategies, to privatize public records. “It’s basically foia-laundering,” says Stewart, a professor of journalism at Texas Christian University, who coauthored the study with Amy Kristin Sanders of the University of Texas at Austin. 

When states funnel public money through quasi-private entities, they claim previously open records become private. Unfortunately, Stewart adds, “The courts have been willing to go along and are buying those arguments,” and have carved out special exceptions to open records laws that favor private business interests. At the local level, that makes the fight for records even tougher. “They would have to keep suing and keep fighting against these new loopholes to reclaim some measure of transparency in every legislative body across the country,” he says. “But the resources aren’t there from the local newspaper side.” 

Stewart adds that there’s been a shift in what documents local journalists need to tell the full story of their communities, especially the economic fate of a region. In the past, it might have been the travel receipts of the mayor, or some internal government memo with a telltale sign of corruption. But political power increasingly resides outside city hall, or the county commissioner’s office. Many states have privatized economic development. “The fight is less against local government and more against the private entities collaborating with local governments,” he explains. 

Those trends all came to a head with the 2019 Supreme Court case Food Marketing Institute v. Argus Leader. It largely centered on the meaning of the word “confidential.” The Argus Leader, a small daily newspaper in Sioux Falls, South Dakota, wanted access to documents detailing how much money retailers were getting from the US Department of Agriculture’s Supplemental Nutrition Assistance Program. The USDA refused to release the information, citing Exemption 4 under foia, which protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” 

The resulting eight-year foia lawsuit was costly. In the end, it was an unmitigated defeat. The Supreme Court eventually heard the case and ruled against the newspaper; in doing so, the court struck down forty-five years of legal precedent. “Confidentiality” under Exemption 4 once required companies to prove that releasing certain information might result in substantial competitive harm. Now they can merely say it might. Rather than empowering foia, the case radically curtailed its power. “Transparency is taking a back seat,” Stewart warns. “It’s always one of the first things to go, and that’s never great for democracy.” 

That shift had already given rise to big tech companies, in particular, requesting notice of any public-records requests about lucrative tax-incentive deals. That behavior stifled efforts by local media to inform the public and thus robust debate about the resulting financial drain on public coffers. It was far easier for cities and small towns to give up millions in tax revenues during the largest economic expansion in US history. 

But now that it’s over, there’s a no-win public policy question before officials: Will they pull the trigger on clawbacks for economic development incentive deals? Almost without exception, these are tied to job growth. If a company doesn’t retain a certain number of employees, it has to give up the tax incentives or even, in some cases, repay development grants to states and local governments. Will journalists get the documents required to see if government officials ask for these incentives back from companies now shedding millions of jobs? Even now, journalists are prevented from gaining access to the full slate of economic incentives companies receive. For example, in Ohio, Amazon gets millions in undisclosed rate discounts for the electricity it needs to run data centers in the state, an incentive justified by state regulators for economic development reasons. But the value of that discount remains shielded from the public as a “trade secret.” 

Only days into the covid-19 crisis, the downward spiral to secrecy looked ominous, with government transparency being sacrificed and federal agencies stifling requests: the FBI wanted them sent via snail mail, not email. Flouting established norms of basic transparency, the Trump administration asked states to censor jobless claims. Cities extended foia deadlines, with Chicago deeming them “nonessential” until reversing course. “Months down the road, questions are going to need to be asked: If the state gave out money to X, Y, or Z corporation, it’s right for the public to know whether that worked out,” Stewart says. “Having a robust state law in place that favors transparency would help. But most states don’t have that right now.” 

Indeed, there were already gaping exemptions and loopholes favoring corporate secrecy. Among states, compliance with open records laws is shockingly uneven, according to a recent study by the National Freedom of Information Coalition, which analyzed response rates based on 50,433 requests made through MuckRock between 2010 and 2018. Two states, Washington and Idaho, fared best, with a compliance rate of 65 percent, while Alabama’s was a dismal 10 percent. “Without a way to pay, the citizen or news outlet is left to weigh the relative value of the requested records against the cost of litigation,” the study glumly notes. 

As we always have, journalists will write the first draft of history. But during one of the most unprecedented moments in American history, can we afford to fight for the documents required to tell the whole story? 

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Mya Frazier is a business and investigative journalist based in Columbus, Ohio.

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