Uncle Sam Can't Keep Food Stamp Dollars Secret, Court Rules

Minnesota case law summary and commentary by Attorney Richard Clem : Freedom of Information Act (FOIA) food stamp figures.

Argus Leader Media v. United States Department of Agriculture . Freedom of Information (FOIA) food stamp (SNAP) data.

When the Food Stamp program, now known as SNAP, was launched in 1964, Congress appropriated a mere $75 million. By the program's third year, this amount had risen to $200 million. The program kept growing and growing, and by fiscal year 2012, the program had a total price tag of over $78 billion. More that 46 million people--more than 15 percent of the U.S. population--were receiving benefits. Most of that money goes to needy families. But an estimated $858 million per year is "trafficked". In other words, recipients illegally sell their benefits for cash to unscrupulous retailers. It is estimated that 10% of the participating retailers engage in this illegal practice, which amounts to stealing food from hungry people, in addition to stealing money from the taxpayers.

The Sioux Falls Argus Leader newspaper decided to do some investigation about how prevalent this theft was. Therefore, in 2011, they sent a letter to the USDA requesting some numbers under the Freedom of Information Act (FOIA). They wanted a list of the yearly redemption amounts or sales figures for each store participaing in the program. SNAP beneficiaries have an EBT card, which works like a debit card to make eligible purchases. These purchases are processed through third-party processors in a process called "redemption". That data is sent by the processors to a government database.

The USDA admitted that it could simply take the information from this database and supply the information that the newspaper was requesting. However, the USDA simply refused to hand over the data. It did give the newspaper a list of all names and addresses of all participating retailers. But it refused to provide the requested dollar amounts. It claimed that this was authorized by 5 U.S.C. 552(b)(3) and (b)(4).

The newspaper filed an administrative appeal with the USDA. Of course, this appeal was also quickly denied. Undaunted, the newspaper brought its fight to the U.S. District Court in South Dakota, and filed a complaint against the USDA to compel release of the requested information. The USDA moved for summary judgment, and once again too the position that the information came under one of the exceptions in the statute.

The South Dakota federal court agreed with the USDA and threw out the newspaper's complaint. Not willing to give up the fight, the newspaper appealed the case to the U.S. Court of Appeals for the Eighth Circuit, where it finally found a sympathetic ear. The Court first noted that it is the Government that bears the burden of proof. The agency must show that it has fully discharged its obligations under the Freedom of Information Act, and that it must show that the information fits squarely within one of the law's exemptions.

The USDA took the position that the information came under an exception in the FOIA that states that information can be withheld if some other statute requires withholding, or has its own criteria for withholding information. In this case, the USDA took the position that the information was "specifically exempted" by 7 U.S.C. 2018(c).

That statute does, indeed, keep some information under wraps. It requires a retailer to submit information in order to determine whether it's eligible to participate in the program. That information includes sensitive and confidential information about the retailer, such as copies of tax returns. The statute goes on to say that the USDA needs to have safeguards in place to keep this sensitive confidential information from being disclosed.

However, the Eighth Circuit quickly concluded that the information the newspaper wanted did not have anything to do with this statute. The statute related to information that had been "submitted by" the retailer to be part of the program. The information being sought by the newspaper was never "submitted by" the retailer. The USDA generated the information, and the underlying data comes from the third-party payment processors.

Therefore, the Appellate Court concluded that the lower court had misread the statute. The statute is clear that only the information submitted by the retailer under that provision is exempted from disclosure. Since the spending information is not part of that statute, then it is not exempt from disclosure. Here, the Government obtained the information from the payment processors, and the retailers had never submitted it under that statute. Therefore, it was not exempt from disclosure.

Since the information was not exempt, the Court concluded that the USDA needed to hand it over to the newspaper. It remanded the case to the federal court in South Dakota for further proceedings consistent with its interpretation.

You can read more about this case at my blog.

No. 12-3765 (8th Cir. Jan. 28, 2014).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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