USDA Can No Longer Hide How Much Money Stores Make From Food Stamps

Image courtesy of J.G. Park

All across America, families use benefits from the Supplemental Nutrition Assistance Program (SNAP — formerly, and colloquially, known as the Food Stamp program) to buy food, but participation in SNAP varies from store to store, and the federal regulator that oversees the program has denied requests to turn over data on retailer-specific use of SNAP benefits. However, yesterday a federal court ruled that the government can no longer shield this information from public view.

The ruling [PDF] comes out of a long-running legal dispute between South Dakota’s Argus Leader newspaper and the U.S. Department of Agriculture.

In 2011, Argus staff filed a Freedom of Information Act request with the USDA, seeking — among other SNAP-related information — data on how much revenue certain retailers had made from SNAP benefits. The USDA denied that request, citing a number of FOIA exemptions that prevent certain information from being disclosed to the public.

And so the Argus folks sued the USDA in 2012. After various court rulings, appeals, and more rulings, the question ultimately came down to one particular FOIA exemption: Exemption #4, which prohibits the government from disclosing “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”

For example, the FCC saw all sorts of financial and contract-related information when it reviewed the failed merger of Time Warner Cable and Comcast, but you can’t get that data through a FOIA request.

The USDA and its witnesses told the court during a May 2016 bench trial that release store-specific SNAP revenue data would cause competitive harm to these businesses by allowing their competitors to see information that is not otherwise publicly available.

The testimony given by the industry painted a confusing portrait of the possible impact of revealing SNAP data.

A lawyer for Sears Holding Corp., which owns Kmart, testified that owners of leased Kmart locations might not renew the stores’ leases if they found out about high levels of SNAP revenue. But then the president and CEO of the National Grocers Association testified that if a supermarket were found to be making a lot of money from SNAP, competitors would swoop in to take advantage.

That last argument from the NGA appears to contradict what we’ve already seen: That a high number of SNAP users is decidedly not bringing competition to urban food deserts.

The USDA’s witnesses also acknowledged that there is a lot more to competition than SNAP, and that by the very nature of supermarkets, competing stores have ready access to what other retailers are selling, and how much they are charging.

“Competitors in the grocery industry already use a variety of publicly available information to make decisions,” concluded Judge Karen Schreier. “This information includes a store’s location, layout, pricing, product selection, and customer traffic… while SNAP information may provide some insight into a store’s overall financial health, the data is a small piece in a much larger picture— disclosure would have a nominal effect on competition in the grocery industry.”

While shoppers and retailers may be stigmatized by the public revelation about high levels of SNAP usage, the judge notes that this stigma has nothing to do with Exemption 4, which is about protecting trade secrets — not protecting people or businesses from negative associations.

“Even if stigma was relevant, the USDA’s evidence on potential stigma was not sufficient to meet its burden,” explained Schreier, who found it “unlikely” that a landlord of a retail building would be taken by surprise to learn that a large number of a store’s customers use SNAP benefits.

The judge also took issue with the NGA president’s unsubstantiated assertion that high SNAP use would be a lure to competition, noting that “Another equally compelling conclusion is that SNAP sales will have no or little effect on a store’s decision to expand into new sites.”

In short, said the judge, there is no real competitive advantage to be gained from disclosing SNAP use data.

“SNAP data does not provide… insights into store profitability,” explained the ruling. “SNAP sales are merely a part of the store’s total revenue. SNAP data does not disclose a store’s profit margins, net income, or net worth. SNAP data also does not disclose how a company bids on government contracts or negotiates with the federal government. In essence, SNAP data is merely a bill from the retailer to the government. As the USDA acknowledges, this type of data is regularly disclosed, and disclosure is consistent with FOIA’s underlying purpose… The data should be disclosed.”


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