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Corporate America's latest trick: The reverse Public Records Act

When it comes to evading accountability, corporate America is endlessly inventive. Recently, private government contractors have been fighting disclosure of crucial information in virtually every context nationwide, including with a sneaky maneuver called a “reverse Public Records Act.” A case in Los Angeles is the latest example.

New Flyer, a bus manufacturer based in Winnipeg, Canada, signed a $500-million contract with Metro in 2013 for up to 900 compressed natural gas (CNG) vehicles. To win the bid, New Flyer volunteered to create 250 jobs, both locally and within the United States, with good wages and benefits. Under the U.S. Employment Plan, that promise allowed New Flyer to win an $18-million credit on the contract.

The idea behind the U.S. Employment Plan is simple: If taxpayers put millions of dollars into the pockets of private corporations for infrastructure, the least the companies could do is contribute to the local economy with good-paying jobs.

So far, so good. The problem arose when Jobs to Move America, the public interest group that created the U.S. Employment Plan, wanted to assess whether New Flyer had actually kept its word.

New Flyer gave generalized information, but sought to heavily redact all specifics like hourly wages, job location and descriptions, and benefit packages, citing “trade secrets and proprietary information.”

When Metro said they would release the full information anyway, New Flyer sued in May to block the release. Such lawsuits are known as “reverse Public Records Act” requests; the whole idea is to keep the public in the dark.

New Flyer is hardly the only offender. Whether it’s privately contracted call centers, water systems operators, retirement plan managers, charter schools or manufacturers of infrastructure, companies all over the country are using the vague “trade secret” claim to reduce disclosure on how public money gets used.

Donald Cohen, executive director of the organization In the Public Interest, highlighted a case in Texas in which a journalist asked for traffic projections for a privately built toll road project. “The company said no, it’s a trade secret, and the courts backed them up. What’s more public than how many people are going to be on the road?”

The effect of these maneuvers is fairly obvious: If companies can declare job and compensation information a trade secret, the government can’t ensure compliance with a host of rules and standards, including prevailing or living wage laws.

Metro actually didn’t contest New Flyer’s lawsuit, leaving Jobs to Move America to intervene. Which brings us to a hearing last week in downtown Los Angeles.

New Flyer attorney John Danos asserted that wage and benefit information for specific types of employees would harm the company by exposing its operations to competitors.

Paul Moore, the attorney for Jobs to Move America, countered that the contract stipulated that job and compensation information would be public, and that some of the documents submitted to Metro that New Flyer wanted redacted weren’t even marked as confidential. “New Flyer entered into this arrangement voluntarily,” Moore summarized. “Now it’s saying that the public is not entitled to know whether those promises are actually being fulfilled.”

Judge Mary H. Strobel sided with Jobs to Move America. In a lengthy ruling, she argued that the information New Flyer wanted to keep under wraps was not a trade secret. More important, she said that even if it was, the public interest in knowing this information outweighed any damage it might cause.

There’s another issue here as well: Because L.A. Metro did nothing to fight New Flyer’s objection in court, it pushed the cost of obtaining public documents off to public interest groups. That undermined the whole idea of the Public Records Act, which is to make it quick and easy for the public to obtain information. In the ruling, Judge Strobel said that Metro abdicated its responsibility to defend its decision.

None of this has prevented Metro from contracting with New Flyer. In fact, they just announced another contract this week, for 100 zero-emission buses. That decision came over Jobs to Move America’s objection that Metro should not give New Flyer a new contract when it hasn’t even proven it met the terms of the last one.

The fact that companies think they can get away with this shows how much ground government has given up. As we shift more and more functions onto the private sector, companies pull every trick in the book to hide disclosure of what they’re doing with public money. That has implications for rooting out corruption, breach of contract, and the public’s right to know.

At least last week’s decision, however, suggests it’s possible for transparency to make a comeback.

David Dayen contributes to the Nation, the Intercept and the New Republic.

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