Privatization and the Freedom of Information Act: an analysis of public access to private entities under federal law.

AuthorFeiser, Craig D.

    This legislation springs from one of our most essential principles: a democracy works best when the people have all the information that the security of the [n]ation permits. No one should be able to pull curtains of secrecy around decisions which can be revealed without injury to the public interest.(1)

    With this statement over thirty years ago, President Lyndon B. Johnson signed the Freedom of Information Act (FOIA)(2) into law. Although the Act had lofty goals, neither the President nor Congress could have realized, in 1966, the problems that would result once the Act was applied to the myriad of government operations. One of these problems, especially important since the 1980s, is whether to apply the Act to private entities.(3) This issue is important because, as government agencies turn to private entities in order to function more efficiently,(4) courts have had to deal with FOIA requests for information relating to the government but created or possessed by entities not explicitly covered under the Act.(5) Debates therefore have developed regarding the benefits and drawbacks of privatization, including its effects on freedom of information.(6)

    As privatization of government services continues into the late 1990s, some commentators worry that the desire for government efficiency will cause information that is important to the public to become shrouded in secrecy.(7) Commentators say unless Congress amends the FOIA to ensure that private entities performing government functions fall within its reach, courts must come forward to protect the public's right to know because privatization is affecting a wide variety of services and operations associated with the federal government.(8) These services include prison operations,(9) the National Aeronautics and Space Administration (NASA),(10) medical research,(11) and railroad operations.(12) As the federal government contracts with private entities to handle these services, citizens are finding it very difficult to obtain important information related to the government because these private entities often do not fall under the definition of "agency" in the FOIA.(13) Additionally, the Act does not define the term "agency records," and private entities may not be holding records with a sufficient nexus to the government to qualify as agency records under judicial analysis.(14) Thus, federal government privatization can have a substantial impact on important information that was public while in the government's hands but becomes secret once it is farmed out to private entities.

    The purpose of this Article is to discuss what definition of "agency" and "agency record" best protects the public's right to know and retains the spirit of the FOIA in light of the government's privatization efforts. This Article discusses the federal government's privatization efforts and how they have been handled in the federal courts dealing with requests under the FOIA. This Article analyzes the definition of "agency" under the Act, as well as the judicial interpretations of what constitute "agency records," followed by a detailed analysis of the federal court opinions applying these terms to private entities dealing with the federal government. This Article concludes with an analysis of the strengths and weaknesses of the various court approaches, including a discussion of how they square with the stated legislative purposes behind the Act. This Article then suggests an approach that best comports with the spirit of the FOIA and can be applied to federal privatization efforts in the future.


    Several types of privatization are undertaken by state and federal governments in the United States. For example, the federal government engaged in "load shedding" by cutting social welfare programs and allowing private for-profit or not-for-profit companies to take over the programs.(15) Government subsidies allow consumers to choose private entities through a voucher system, such as in the federal food stamp program.(16) The most common form of privatization, however, is "contracting out," where former government functions are delegated to private entities through a contract.(17)

    Since the beginning of the 1990s, media professionals have made their voices heard regarding the potential impact of privatization, particularly contracting out, on access to government information.(18) Communications law scholars also express concern that important government functions, such as the safeguarding of federal prisoners, are now shielded from the public through the use of private companies.(19) Because of the importance of these government services, commentators believe that a lack of oversight due to the failure of the FOIA to reach these entities poses a very real danger to the public.(20) This danger is likely to grow in the future as governments continue to seek more efficient ways to provide services, perhaps at the expense of constitutional protections.(21) Unless Congress or the courts craft liberal definitions of "agency" and "agency records" under the FOIA, it is possible that simply by filtering records out of their possession, federal agencies can circumvent the Act and its spirit of open government.

    One frequently debated area of federal privatization has been the trend toward privatized federal prisons. Commentators suggest that due to the rising costs of housing inmates and persistent overcrowding, the government increasingly has turned to private prison operators since the Reagan era in the 1980s.(22) In fact, as of 1996, state and federal private prisons house as many as 74,000 inmates, with an annual growth rate of over thirty percent expected in the next several years.(23) Because federal legislation allows private federal prisons,(24) this trend led to worries over the quality of services being offered by private companies, as well as the treatment of inmates by private operators.(25)

    Commentators worry that private prisons will allow operators to take liberties with prisoners that would not be allowed by the government.(26) Additionally, private prison operators that are not subject to public oversight could operate against the public's interest by taking a more relaxed approach with such important functions as security measures.(27) Private prison operators have a financial motive and may sacrifice individual constitutional rights and prison quality in the name of the profits to be gained by saving on management and maintaining a full house.(28) Because of the strong public demand to stay tough on crime, governments are likely to feel the pressure to expand prison space while at the same time struggle with the difficulty and expense of day-to-day monitoring, thus overlooking the deficiencies of private prison operators.(29) The public should provide the necessary oversight by classifying private operators as agencies and their records as agency records, for purposes of the FOIA.

    Communications law scholar Nicole Casarez argued that private prison operators should at least be as accountable as government officials in order to ensure that contractors "in no way abuse the public trust or prisoners' rights."(30) The FOIA, if applied to private contractors, would help accomplish this oversight.(31) While private prison operators are subject to marketplace restrictions that increase service quality because of competition,(32) Casarez makes clear that it is the government that should retain the ultimate authority over prison operations.(33) The public can make sure this monitoring is being performed, but only if the FOIA allows access to private contractors.(34)

    Because courts have failed to hold private entities accountable under the FOIA,(35) Casarez argues that the federal government can frustrate the public disclosure purposes behind the Act by delegating services to the private sector.(36) Therefore, Congress must step in to enact legislation holding private prison operators accountable or to amend the FOIA's definition of "agency" to include entities performing "significant agency functions."(37) This Article makes a similar argument by stating that agency and agency records should include any entity or records relating to a government function, even if that function is now being performed by the private sector. Congress should amend the FOIA to make sure public information does not become private simply because it is no longer in agency hands.

    Other examples of federal privatization could have a direct impact on the public's ability to obtain important information. In January 1998, the U.S. Department of Energy (DOE), the federal government's largest contracting agency, refused to allow nuclear watchdog groups access to documents in the hands of its contractors.(38) The result of the pending litigation in the DOE's case could have a major impact on the government's accountability for its energy operations because the DOE contracts with private corporations and nonprofit organizations to perform over eighty percent of its work.(39) Records such as travel expenses of top officials and descriptions of new weapons projects, which are important for public oversight of how its money is spent, could be closed off to the public if the federal courts in New Mexico and California do not hold the contractors accountable as agencies holding agency records under the FOIA.(40) Under the prevailing federal case law, this is not likely to happen,(41) and the federal courts are not likely to force the DOE to comply with its own guidelines because unlike the FOIA, the guidelines are not law.(42)

    Additionally, the federal government considered removing impediments to privatizing airports. In 1996, the federal government began discussing the possibility of easing the federal restrictions on privatizing state or municipality-run airports.(43) These discussions could lead to the easier sale of airports to private companies, which...

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