Court filing

Plaintiffs' reply in support of cross-motion for summary judgment — WP Co. v. SBA

Filed September 29, 2020 in Wp Co v. SBA; one of 21 filings from this case.

Record facts

Court	UNITED STATES DISTRICT COURT
Filed	2020-09-29

UNITED STATES DISTRICT COURT · No. 1:20-cv-01240-JEB · Doc. 21 · 2020-09-29 · Docket on CourtListener

Full text

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

WP COMPANY LLC
d/b/a THE WASHINGTON POST, et al.,
Plaintiffs,
v.
U.S. SMALL BUSINESS ADMINISTRATION,

Defendant.

Case No. 1:20-cv-1240-JEB
Oral Argument Requested

REPLY MEMORANDUM IN FURTHER SUPPORT OF
PLAINTIFFS’ CROSS-MOTION FOR SUMMARY JUDGMENT

Dated: September 29, 2020

Charles D. Tobin (#455593)
Maxwell S. Mishkin (#1031356)
Kristel Tupja (#888324914)
BALLARD SPAHR LLP
1909 K Street, NW, 12th Floor
Washington, DC 20006
Telephone: (202) 661-2200
Fax: (202) 661-2299
tobinc@ballardspahr.com
mishkinm@ballardspahr.com
tupjak@ballardspahr.com

Counsel for Plaintiffs

Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 1 of 17

i
TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... ii
PRELIMINARY STATEMENT .....................................................................................................1
ARGUMENT ...................................................................................................................................3
I.
THE SBA CANNOT WITHHOLD LOAN DATA UNDER EXEMPTION 4 ...................3
A.
The Loan Data Does Not Reveal Any Information That Is
Customarily And Actually Treated As Private ........................................................3
1.
Non-profit groups already disclose the data the SBA
seeks to protect .............................................................................................3
2.
The Loan Data would not actually reveal borrowers’
average payrolls ...........................................................................................5
B.
The Loan Data Was Not Provided Under An Assurance Of Privacy ......................7
II.
THE SBA CANNOT WITHHOLD LOAN DATA UNDER EXEMPTION 6 .................10
III.
THE SBA HAS NOT SATISFIED THE FORESEEABLE HARM
STANDARD ......................................................................................................................14
CONCLUSION ..............................................................................................................................14

Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 2 of 17

TABLE OF AUTHORITIES

Page(s)
Cases
Alliance for the Wild Rockies v. Department of the Interior,
53 F. Supp. 2d 32 (D.D.C. 1999) .............................................................................................11
American Immigration Lawyers Association v. Executive Office
for Immigration Review,
830 F.3d 667 (D.C. Cir. 2016) .................................................................................................10
Flightsafety Services Corporation v. Department of Labor,
326 F.3d 607 (5th Cir. 2003) .....................................................................................................5
*Food Marketing Institute v. Argus Leader Media,
139 S. Ct. 2356 (2019) ...............................................................................................................3
Judicial Watch, Inc. v. Department of Commerce,
375 F. Supp. 3d 93 (D.D.C. 2019) ...........................................................................................14
Maydak v. Department of Justice,
218 F.3d 760 (D.C. Cir. 2000) ...................................................................................................7
*Multi AG Media LLC v. Department of Agriculture,
515 F.3d 1224 (D.C. Cir. 2008) ...............................................................................................13
Prechtel v. FCC,
330 F. Supp. 3d 320 (D.D.C. 2018) .........................................................................................11
Public Citizen, Inc. v. OMB,
598 F.3d 865 (D.C. Cir. 2009) ...................................................................................................3
RadLAX Gateway Hotel, LLC v. Amalgamated Bank,
566 U.S. 639 (2012) ...................................................................................................................9
Statutes
31 U.S.C. § 6101 ............................................................................................................................10
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 3 of 17

PRELIMINARY STATEMENT
In its Opposition (“Opp.”), the SBA concedes the falsity of the factual premises it relies
on to withhold the identities of and amounts borrowed by the recipients of more than half a
trillion taxpayer dollars through the PPP and EIDL programs. The forms, regulations, statutes,
and precedent that the SBA cites, and the public interest that has only grown since this litigation
began, all favor the release of this “Loan Data” to Plaintiffs and the public.
First, the SBA now acknowledges that “[b]usinesses that pay salaries of greater than
$100,000 received PPP loans” and that “PPP borrowers did not all receive the maximum loan
amount available to them,” see SBA’s Resp. to Pls.’ Statement of Undisputed Material Facts
(“SBA’s Resp. SUMF”) at ¶¶ 18-19, Dkt. 20-1. The SBA’s admissions thus undercut its entire
Exemption 4 rationale that the Loan Data would reveal “average payroll” information, because in
making that claim the agency assumes precisely the opposite, that borrowers paid salaries of no
more than $100,000 and took out the maximum loans. See Opp. at 7-8.
Second, the SBA asks the Court to overlook its own PPP application and instead look to
its Standard Operating Procedure (“SOP”), even though that document also lists “names . . . of
recipients of approved loans” and “amounts of loans” as information generally disclosed under
the Freedom of Information Act (“FOIA”), see Ex. Q to the Decl. of William Manger (“Manger
Decl.”), Dkt. 15-2 at 55. Moreover, the SBA’s claim that it errantly included the transparency
language in the PPP application form (i.e., that “[i]nformation about approved loans will be
automatically released,” including “the names of the borrowers” and “the amount of the loan”),
because it hastily copied “boilerplate” from another program’s application form, supports more
scrutiny – not less – in the administration of this $525 billion aid program. See Opp. at 2, 10.
The SBA therefore cannot justify its claim that the Loan Data is confidential under Exemption 4
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 4 of 17

or that the public interest is outweighed by the borrowers’ private interests under Exemption 6.
Third, the government’s own enhanced concerns about the administration of the SBA
loan program demonstrate the public interest in the Loan Data. The Justice Department has
already opened dozens of cases for alleged PPP-related crimes, and the SBA’s own Inspector
General calls these prosecutions “the smallest, tiniest piece of the tip of the iceberg.” See Stacy
Cowley, Spotting $62 Million in Alleged P.P.P. Fraud Was the Easy Part, The New York Times,
Aug. 28, 2020, https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-
coronavirus.html at 1-2. Indeed, just days after Plaintiffs filed their opening brief (“Br.”), the
Department’s Criminal Division held a press conference on “PPP Criminal Fraud.” Prosecutors
announced charges against PPP borrowers for spending taxpayer dollars “on things like luxury
cars, homes, renovations, jewelry – and even adult entertainment and gambling in Las Vegas,”
and acknowledged that “any time the federal government makes a large amount of money
available to the public on an expedited basis, the opportunities for fraud are clear.”1 In light of
these official allegations that the program has been abused, the SBA’s argument that the public
interest is “satisfied” because the SBA plans “to review all PPP loans greater than $2 million”
and “other PPP loans, as appropriate,” is simply inadequate. See Opp. at 16. The SBA’s vague
promise of oversight rings especially hollow as loans of greater than $2 million, the threshold for
scrutiny that the SBA selected, represent only 0.6% of all loans made under the PPP. Thus, even
under the SBA’s assurances, the vast majority of PPP loans would receive no government
scrutiny. Again, the public’s need to monitor waste, fraud, and abuse, in a program that

1 See Acting Assistant Attorney General Brian Rabbitt Delivers Remarks at the PPP Criminal
Fraud Enforcement Action Press Conference: Remarks as Prepared for Delivery, Dep’t of
Justice, Sept. 10, 2020, https://www.justice.gov/opa/speech/acting-assistant-attorney-general-
brian-rabbitt-delivers-remarks-ppp-criminal-fraud.
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 5 of 17

prosecutors already have identified as vulnerable to rampant criminal conduct, outweighs any
private interests under Exemption 6.
In light of the SBA’s groundless confidentiality and privacy objections, and the
compelling public interest in disclosure of these records, the Court should order the SBA to
promptly release the Loan Data in full and award Plaintiffs their costs and reasonable attorneys’
fees.
ARGUMENT
The SBA fails to rebut FOIA’s “presumption in favor of disclosure” that underlies
FOIA’s objective “‘to pierce the veil of administrative secrecy and to open agency action to the
light of public scrutiny.’” Pub. Citizen, Inc. v. OMB, 598 F.3d 865, 869 (D.C. Cir. 2009)
(quoting Dep’t of Air Force v. Rose, 425 U.S. 352, 360-61 (1976)). The SBA also fails to carry
the burden, under the FOIA Improvement Act of 2016, to show that any harm from releasing the
Loan Data is not simply possible, but is reasonably foreseeable.
I.
THE SBA CANNOT WITHHOLD LOAN DATA UNDER EXEMPTION 4.
The SBA’s Opposition undermines its Exemption 4 claim and fails to rebut Plaintiffs’
argument that the Loan Data does not satisfy either part of the Exemption 4 test – i.e., that for
“commercial or financial information” to indisputably be “confidential” under that exemption, it
must have been “both customarily and actually treated as private by its owner and provided to
the government under an assurance of privacy.” Food Mktg. Inst. v. Argus Leader Media, 139 S.
Ct. 2356, 2366 (2019).
A.
The Loan Data Does Not Reveal Any Information That Is Customarily
And Actually Treated As Private.

1.
Non-profit groups already disclose the data the SBA seeks to protect.

As Plaintiffs have pointed out, the SBA maintains that if it “release[d] the borrowers’
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 6 of 17

identities and PPP loan amounts, the public and competitors could attribute average payroll
information to particular borrowers,” Opp. at 6, yet the tens of thousands of non-profit groups
that borrowed PPP funds generally make that information public on their IRS Form 990s. Br. at
15. While the SBA informs the Court that “Form 990 does not make an organization’s average
payroll public,” Opp. at 11-12 (citing Second Manger Decl. ¶ 21, in turn citing 26 U.S.C.
§ 6033(b)(7)), the form’s first page requires a non-profit to furnish its total “[s]alaries, other
compensation, [and] employee benefits.” See Form 990, https://www.irs.gov/pub/irs-
pdf/f990.pdf, at 1 line 15. That information is drawn from Form 990 Part IX, which requires an
organization to report its total payroll, the very information the SBA says is not public. The
smaller subset of compensation disclosures to which the SBA’s declarant refers – the non-
profit’s officers, key employees, highest paid staff, etc. – is found in Form 990 Part VII.
For example, Carnegie Hall, a non-profit, received a PPP loan of between $5 and $10
million. See Christian Berthelsen, Carnegie Hall Is Among Cultural Sites That Got PPP Aid,
Bloomberg, July 6, 2020, https://www.bloomberg.com/news/articles/2020-07-06/carnegie-hall-
whitney-museum-and-s-f-symphony-got-ppp-loans. On its latest public Form 990, Carnegie
Hall lists total “[s]alaries, other compensation, [and] employee benefits” for the current year as
$48,276,831. See Form 990, Carnegie Hall Corp., Feb. 25, 2019, at 1 line 15, available at
https://projects.propublica.org/nonprofits/display_990/131923626/05_2019_prefixes_06-
13%2F131923626_201806_990_2019051316293975. That figure encompasses the more than
$5 million in compensation Carnegie Hall paid to current officers, directors, trustees, and key
employees, as well as the more than $30 million in compensation paid in “[o]ther salaries and
wages.” See id. at 10 (Part IX) lines 5-10.
Because the public already knows the amount of Carnegie Hall’s and tens of thousands of
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 7 of 17

other non-profits’ total payroll from the Form 990, which requires that public disclosure, the
SBA cannot justify withholding the size of PPP loans for non-profits on the faulty premise that it
needs to safeguard that data from disclosure under FOIA.
2.
The Loan Data would not actually reveal borrowers’ average payrolls.
The SBA has demonstrated that any connection between payroll information and loan
size is fallacious even for businesses that do treat their average payroll as private.2 The SBA
merely “assumes that a borrower took out a loan for the maximum amount allowed” and also
“assum[es] . . . that a PPP borrower would pay few if any of its employees more than $100,000.”
Opp. at 6-7 (emphasis added). It is now beyond dispute, however, that PPP borrowers in fact
took less than the maximum and in fact paid more than $100,000 in salary. See SBA’s Resp.
SUMF at ¶¶ 18-19 (admitting that “PPP borrowers did not all receive the maximum loan amount
available to them” and that “[b]usinesses that pay salaries of greater than $100,000 received PPP
loans”). The SBA’s assumptions are therefore concededly false.
The SBA supports its supposition by arguing that the PPP application “steered borrowers
to calculate the maximum loan amount available to them and thus to request that amount.” Opp.
at 7. But the SBA does not say how many borrowers took less than the amount to which they
were “steered.” And while some businesses may have “had an obvious reason” to borrow
greatly at a time of economic distress, see id., others also had an obvious reason not to take too
much. The SBA will forgive loans only to a business that expends sufficient funds on designated

2 The SBA criticizes Plaintiffs for “declin[ing] to address” Flightsafety Services Corporation v.
Department of Labor, 326 F.3d 607 (5th Cir. 2003), which the SBA cites for the proposition that
“Exemption 4 protects ‘information regarding salaries and wages,’” Opp. at 6, but that point is
not in question here. Plaintiffs do not contest that an individual for-profit business’s payroll
information can be confidential under Exemption 4; Plaintiffs dispute that the Loan Data reveals
payroll information in the first place.
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 8 of 17

budget items. Businesses that over-borrowed and were unable to hit those spending thresholds
risk losing out on loan forgiveness. See Br. at 16. The SBA provides no sound basis for its
argument that enough borrowers maxed-out their loans such that disclosing the entire program’s
Loan Data reasonably risks disclosure of an individual business’s confidential information.
As to the salary thresholds, the SBA similarly tries to shore up its assumption by mis-
citing its own evidence to assert that “the vast majority of PPP borrowers have no employees
who earn more than $100,000 per year.” Opp. at 8 (citing Second Manger Decl. ¶¶ 11-12).
What that declaration actually says, however, is that “[b]ased on available W-2 data, the
Department of Treasury estimates that 77% of all small businesses do not have any employees
whose salary exceeds $100,000,” and that “by implication” this figure applies for PPP borrowers.
Second Manger Decl. ¶ 10 (emphasis added). The SBA thus assumes it can treat PPP borrowers
as representative of all small businesses, even though businesses with existing ties to banks
likely had easier access to PPP loans. See, e.g., Haoyang Liu and Desi Volker, Where Have the
Paycheck Protection Loans Gone So Far?, Fed. Reserve Bank of New York: Liberty Street
Economics, May 6, 2020, https://libertystreeteconomics.newyorkfed.org/2020/05/where-have-
the-paycheck-protection-loans-gone-so-far.html (“Our interpretation is that banks’ preference for
their own customers causes the PPP to favor firms with existing lending relationships.”); Ruth
Simon & Peter Rudegeair, In Race for Small-Business Loans, Winning Hinged on Where Firms
Bank, The Wall Street Journal, Apr. 20, 2020, https://www.wsj.com/articles/in-race-for-small-
business-loans-winning-hinged-on-where-firms-bank-11587410421 (“Whether a firm made the
cut often came down to how and where it banked.”). To the extent that businesses with ties to
banks may tend to pay higher salaries than those without such connections, the SBA offers no
reason to presume that “the vast majority” of PPP borrowers pay salaries of under $100,000.
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 9 of 17

Resting on these faulty premises, SBA’s argument is unsustainable. The SBA itself
demonstrates this through its appeal to speculation. No member of the public looking at the
Loan Data would be able to ascertain a specific business’s confidential payroll data, as they
would have no way to know whether a specific borrower took less than the maximum amount for
its loan, paid salaries of over $100,000, or both. The Court therefore should overrule SBA’s
argument under FOIA Exemption 4.3
B.
The Loan Data Was Not Provided Under An Assurance Of Privacy.

In addition to the SBA’s failure to satisfy the Exemption 4 requirement that the
information must be “customarily and actually treated as private by its owner,” the SBA also
fails to demonstrate that the information was “provided to the government under an assurance of
privacy” under the Argus Leader test. Despite the SBA’s efforts to avoid the concession, the
record is clear that the Loan Data was not provided to the SBA under an “assurance of privacy.”
Instead, it was provided with a guarantee of disclosure.

The PPP application told borrowers that “[i]nformation about approved loans will be
automatically released,” including “the names of the borrowers” and “the amount of the loan.”
See SBA, Paycheck Protection Program Borrower Application Form,
https://www.sba.gov/sites/default/files/2020-07/PPP-Borrower-Application-Form-508.pdf at 4
(emphasis added). The relevant portion of the form, near the top of page 4, appears as follows:

3 The SBA mis-cites precedent in arguing that the agency “satisfied its burden of protecting the
PPP loan amounts under Exemption 4 by articulating a ‘generic,’ and ‘categorical’ justification
that applied to the loan data in its entirety.” Opp. at 8 (citing Maydak v. Dep’t of Justice, 218
F.3d 760 (D.C. Cir. 2000)). Maydak does not support an Exemption 4 claim based on a generic
showing; rather, it recognizes that the government “satisfies its burden of proof under Exemption
7(A) by grouping documents in categories and offering generic reasons for withholding the
documents in each category” and observes that “other exemptions” not including Exemption 4
can be satisfied “through generic, categorical showings” as well. Maydak, 218 F.3d at 765-66
(emphasis added) (identifying cases addressing Exemptions 3, 5, 7(C), and 7(D)).
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 10 of 17

The EIDL application likewise stated that FOIA generally requires the SBA to release
“information such as names of borrowers” and “loan amounts at maturity.” See SBA, COVID-19
Economic Injury Disaster Loan Application,
https://www.sba.gov/sites/default/files/articles/SBA_Form_3501_Economic_Injury_Disaster_Lo
an_Application.pdf at 12. The SBA could not have told borrowers more clearly that the Loan
Data would be made public, not kept private.

The SBA nonetheless maintains – again, contrary to its own proofs – that “‘an implied
assurance of confidentiality fairly can be inferred’” from its actions. Opp. at 9 (quoting Dep’t of
Justice v. Landano, 508 U.S. 165, 179 (1993)). The SBA principally argues that “[t]he
application form did not purport to override the [SBA’s] Standard Operating Procedure,” which
“for many years has committed SBA to preserving the confidentiality of payroll information.”
Opp. at 10. In particular, Mr. Manger cites Appendix C of the current SOP as “includ[ing]
among information generally exempt from disclosure the payroll information of businesses.”
Second Manger Decl. ¶ 13; Manger Decl., Ex. Q at 54. The SBA therefore argues that a
borrower unsure whether its name and loan amount might be disclosed would look past the four-
page PPP application itself and rely on a statement made in a separate document, the SOP.

The SBA fails to mention, however, that on the very next page of the SOP, it lists
“[n]ames and commercial street and email addresses of recipients of approved loans” and
“[k]inds and amounts of loans” under the heading, in all capital letters, “INFORMATION
GENERALLY DISCLOSED.” See id. at 55. The SOP further states that “[a]pproved loan
recipients, amounts and dates” are “information [that] usually is not granted Exemption 4
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 11 of 17

protection.” See id. at 24-25 (emphasis in original). Even if the Court would expect borrowers
to consult the SOP in reviewing the PPP application form, and calibrate their expectations about
public disclosure of the Loan Data, the SOP supports Plaintiffs’ position that the information was
presumptively public.

The SBA also illogically insists that “the most natural reading” of the explicit disclaimer
– stating that “the names of the borrowers” and “the amount of the loan” will be “automatically
released” – instead tells borrowers that their names and loan amounts will be kept secret. Opp. at
10. According to the SBA, because the disclaimer text also states that “collateral pledged to
secure the loan” will be made public, and “PPP loans do not require collateral,” potential
borrowers will assume the disclaimer “applies only to Section 7(a) loans, not PPP loans.” Id.
(emphasis omitted). The SBA therefore assumes that PPP borrowers would recognize the PPP
form’s reference to “collateral” as inapt, would be aware of the 7(a) loan program, and would
cross reference the plain language of the PPP form they are instructed to complete with a 7(a)
loan application form that they do not need to complete.4 Rather than a “natural” reading, the
SBA urges that the Court, and borrowers, traverse through its various programs and applications
to arrive at an unnatural reading of the PPP form itself.

As Plaintiffs additionally argued in their opening brief (Br. at 19), the idea that the SBA
“implicitly” assured borrowers the Loan Data would be kept confidential is further weakened by

4 Likewise, because the application notes that the SBA will not disclose undefined “[p]roprietary
data,” the SBA claims that applicants will view borrower names and loan amounts as proprietary
data to be kept confidential. Id. That argument continues to ignore the commonsense
interpretative principle that the specific controls the general. Br. at 18-19. The disclaimer states
that names and loans amounts specifically will be disclosed and that proprietary data generally
will be kept private. The most natural reading of the disclaimer is that names and loan amounts
will, in fact, be disclosed. See, e.g., RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566
U.S. 639, 645 (2012) (“To eliminate the contradiction, the specific provision [must be] construed
as an exception to the general one.”).
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 12 of 17

the Federal Funding Accountability and Transparency Act of 2006. The statute provides that the
Office of Management and Budget “shall” disclose the “name of the entity receiving the award”
and “the amount of the award” for “[f]ederal award[s]” of $25,000.00 or more, where “[f]ederal
award” is defined specifically to include “loans . . . and other forms of financial assistance.”
31 U.S.C. § 6101 note § 2(a)(4) & (b)(1). The SBA responds that the law does not require the
disclosure of information exempt under FOIA, see Opp. at 12, but that simply begs the question.
The relevant point is that this statute on its face weighs against any “implicit” message from the
SBA that borrowers’ names and loan amounts would be kept private.

The SBA did not receive the Loan Data under an assurance of privacy, whether explicit
or implicit. Rather, the SBA received the Loan Data under an assurance of disclosure: the
application forms themselves and the agency’s SOP state outright that borrowers’ names and
loan amounts will be public record. The SBA thus cannot satisfy either element of the Argus
Leader test, and it cannot justify withholding the Loan Data under Exemption 4.5
II.
THE SBA CANNOT WITHHOLD LOAN DATA UNDER EXEMPTION 6.

The SBA likewise fails to carry its burden under Exemption 6 to show that releasing the
Loan Data “would rise to the level of a clearly unwarranted invasion of personal privacy” when
balanced against “the public interest in disclosure.” Am. Immigration Lawyers Ass’n v. Exec.
Office for Immigration Review, 830 F.3d 667, 673-74 (D.C. Cir. 2016) (internal marks and
citations omitted). The privacy interest, if any, is minimal, and the public interest is mammoth.

On the privacy issue, the SBA emphasizes that the D.C. Circuit recognizes a privacy
interest “in connection with financial information” as a general matter, Opp. at 13, but Plaintiffs

5 To be sure, even if the SBA had made an assurance of confidentiality to borrowers, the first
Argus Leader element still would require disclosure of the Loan Data.
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 13 of 17

have shown that in these particular circumstances PPP and EIDL borrowers have no reasonable
expectation of privacy in the Loan Data. Br. at 20-21. As discussed above, the SBA expressly
notified borrowers that their names and loan amounts would be disclosed. See supra at 7-9. In
analogous circumstances courts have concluded that such a notification diminishes (or
eliminates) any reasonable expectation of privacy under Exemption 6. See Br. at 21-22 (citing
Prechtel v. FCC, 330 F. Supp. 3d 320, 329 (D.D.C. 2018) and All. for the Wild Rockies v. Dep’t
of the Interior, 53 F. Supp. 2d 32, 37 (D.D.C. 1999)). The SBA attempts to distinguish these
decisions by asserting that “to release the identities of individuals who comment on agency
rulemakings is not to reveal anything especially private about them.” Opp. at 14.6 But the SBA
dodges the point: whatever the individual’s privacy interest in the abstract, the precedent teaches
that the interest diminishes or disappears entirely when information is provided to the
government despite notice that the agency will disclose it to the public. See Br. at 21-22 (citing
Prechtel, 330 F. Supp. 3d at 329; All. for the Wild Rockies, 53 F. Supp. 2d at 37). Borrowers
took out these loans being told, in no uncertain terms, that their names and loan amounts would
be made public.
The SBA errs on the public interest side of the scale as well. According to the SBA, the
public already has ample information about these unprecedented financial assistance programs,
see Opp. at 15-17, but the SBA’s arguments on this point are baseless. The SBA states that it has
“released the identities of PPP borrowers with loans above $150,000, who account for almost

6 Interestingly, while the government distinguishes the Prechtel precedent on this basis, in
actually litigating that case, it took the opposite position, arguing there that the individuals
submitting comments on the rulemaking “have a substantial privacy interest” in the requested
information. See Def.’s Opp. to Pl.’s Mot. for Summ. J. at 4, Prechtel v. FCC, No. 1:17-cv-
1835-CRC (D.D.C. June 18, 2018), Dkt. 25.
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 14 of 17

75% of all PPP funds loaned,” id. at 16, but loans of less than $150,000 make up 87% of all PPP
loans, see SBA, Paycheck Protection Program (PPP) Report: Approvals through Aug. 8, 2020,
https://www.sba.gov/sites/default/files/2020-08/PPP_Report%20-%202020-08-10-508.pdf at 6.
Moreover, the SBA has pledged to review only PPP loans for more than $2 million (and others
“as appropriate”), Opp. at 16, leaving the overwhelming majority of PPP loans, and thus the
lion’s share of all borrowers, subject to neither agency nor public oversight.
The SBA also disputes that Loan Data would enable the press and the public to monitor
whether taxpayer funds have been distributed fairly and equitably, stating that “the SBA has
already released demographic data for PPP loans.” Opp. at 16 (citing Manger Decl. ¶¶ 88-89).
But as the Government Accountability Office noted in a report published just one day before the
SBA filed its Opposition in this case:
The loan-level data that SBA provided include limited demographic data on
borrowers, as SBA did not ask for demographic information on the PPP loan
application. According to SBA officials, SBA does not have the legal authority to
require a borrower to submit demographic data on a loan application. In a May
2020 report, the SBA Office of Inspector General noted that SBA did not request
optional demographic information on the PPP loan application and suggested that
the agency (1) revise the borrower application to request these optional data and
(2) include optional demographic information on the loan forgiveness form. SBA
did not revise the borrower application to collect such information in an effort to
streamline the application process, according to agency officials. Consequently,
information was not reported for business owners’ race for 90 percent of
approved loans, gender for 79 percent of approved loans, and veteran status
for 85 percent of approved loans.

See COVID-19: Federal Efforts Could Be Strengthened by Timely and Concerted Actions, GAO,
Sept. 21, 2020, https://www.gao.gov/reports/GAO-20-701/ (emphasis added). The SBA has thus
failed to make this information available, and by withholding the Loan Data it has prevented the
press and public from finding out the information for itself. Nor can the SBA plausibly argue
that “release of borrower identities for the smallest loans would not enable the public to
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 15 of 17

determine which businesses receiving PPP loans were minority-owned.” See Opp. at 16. Of
course, journalists regularly cross-reference publicly available data to supplement and augment
the government’s self-reporting, all for the public benefit.7

Even more remarkable than what the SBA says, however, is what the agency ignores.
The words “waste” and “fraud” and “abuse” are found nowhere in the SBA’s Opposition, and
they receive just a single passing mention in SBA’s proofs. See Second Manger Decl. ¶ 29. As
noted, however, the Justice Department has begun dozens of prosecutions for alleged PPP-
related crimes, and the SBA’s Inspector General calls these cases “the smallest, tiniest piece of
the tip of the iceberg.” See supra at 2. As the Department stated, “The money these defendants
stole was taxpayer money. Every dollar received was a dollar drawn from the American
people’s account. Even worse, every dollar they took was a dollar set aside to help our fellow
Americans weather one of the worst national crises in recent history.” See supra note 1. It is for
this reason that the D.C. Circuit recognizes “a special need for public scrutiny of agency action
that distributes extensive amounts of public funds in the form of subsidies and other financial
benefits.” Multi AG Media LLC v. Dep’t of Ag., 515 F.3d 1224, 1232 (D.C. Cir. 2008).

The SBA cannot justify withholding the Loan Data under Exemption 6. The public
interest in this information is enormous and the privacy risk from its release is minimal at most.

7 See, e.g., Craig Whitlock, At War With The Truth, The Washington Post, Dec. 9, 2019,
https://www.washingtonpost.com/graphics/2019/investigations/afghanistan-papers/afghanistan-
war-confidential-documents/ (reporting based on interviews and data gathered to supplement
FOIA disclosures by the Special Inspector General for Afghanistan Reconstruction); Katelyn
Polantz et al., Highlights from the new Mueller FBI investigation documents, CNN, Feb. 11,
2020, https://www.cnn.com/2020/01/02/politics/mueller-investigation-documents/index.html
(reporting based on interviews and observations to supplement FOIA disclosures by the
Department of Justice).
Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 16 of 17

III.
THE SBA HAS NOT SATISFIED THE FORESEEABLE HARM STANDARD.

In the wake of the FOIA Improvement Act of 2016, withholding public records now
requires “more than speculation” that their release will harm some interest protected by a FOIA
exemption. Judicial Watch, Inc. v. Dep’t of Commerce, 375 F. Supp. 3d 93, 100-01 (D.D.C.
2019). Instead, an agency must show that the harm “is reasonably foreseeable” and must
articulate “the link between this harm and the specific information contained in the material
withheld.” Id. The SBA has failed this test. The agency’s speculative arguments discussed
above cannot even pass the baseline for withholding records under FOIA, let alone satisfy the
enhanced “foreseeable harm” standard that now governs this action.
CONCLUSION
For the foregoing reasons and those stated in their opening brief, Plaintiffs respectfully
request that their cross-motion for summary judgment be granted, that the SBA’s motion for
summary judgment be denied, that the SBA be ordered to promptly disclose the Loan Data in
full, and that Plaintiffs be awarded their costs and reasonable attorneys’ fees incurred in this
action.
Dated: September 29, 2020

Respectfully submitted,

BALLARD SPAHR LLP

/s/ Charles D. Tobin

Charles D. Tobin (#455593)
Maxwell S. Mishkin (#1031356)
Kristel Tupja (#888324914)
1909 K Street, NW, 12th Floor
Washington, DC 20006
Telephone: (202) 661-2200
Fax: (202) 661-2299
tobinc@ballardspahr.com
mishkinm@ballardspahr.com
tupjak@ballardspahr.com

Counsel for Plaintiffs

Case 1:20-cv-01240-JEB Document 21 Filed 09/29/20 Page 17 of 17

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Plaintiffs' reply in support of cross-motion for summary judgment — WP Co. v. SBA

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