Lakewood Residents Ass'n v. Township of Lakewood

Citations: 294 N.J. Super. 207; 682 A.2d 1232; 1994 N.J. Super. LEXIS 638

Court: New Jersey Superior Court Appellate Division; October 28, 1994; New Jersey; State Appellate Court

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The court is addressing the interaction between the New Jersey Right to Know Law and federal regulations regarding the disclosure of information related to the Section 8 Housing Assistance Program. The plaintiff, Lakewood Residents Association (LRA), seeks to compel the defendants—Township of Lakewood, Lakewood Housing Authority (LHA), Lakewood Tenants Organization (LTO), and Lakewood Township Rental Assistance Program (LTRAP)—to provide either the Housing Assistance Payments Contracts (HAC) or a list of landlords and properties associated with the Section 8 program. LHA, a municipal agency, and LTO, a private non-profit, manage this federally subsidized program, which is designed to assist lower-income families in accessing housing and preventing the concentration of assisted housing in specific areas.

The LRA had previously requested this information in 1991, but while the New Jersey Department of Community Affairs complied, LHA and LTRAP refused, citing federal law as the reason for non-disclosure. They argue that, as local administrators of a federal program, they are restricted by the Federal Privacy Act and its implementing regulations from releasing such information. After unsuccessful negotiations over two years, LRA initiated legal action on June 10, 1994, to enforce their right to access the requested documents under both the Right to Know Law and common law principles.

LHA does not identify as a federal agency but contends that New Jersey's Right to Know Law aligns with federal regulations to limit disclosure. The plaintiff argues for access to the requested information under both state law and the Freedom of Information Act (FOIA), 5 U.S.C. 552. FOIA mandates federal agencies to disclose information in a structured manner: first, by publishing their organizational details and functions in the Federal Register (5 U.S.C. 552(a)(1)); second, by making available final agency statements and manuals (5 U.S.C. 552(a)(2)); and third, by producing other records upon request, barring any of the nine defined exemptions (5 U.S.C. 552(b)). The statute promotes broad public access to records, placing the burden on agencies to justify any withholding.

Conversely, the Privacy Act, 5 U.S.C. 552a, restricts disclosure of individual-specific information unless consent is given or an exception applies (5 U.S.C. 552a(b)(1, 11)). Notably, Section 552a(t) clarifies that the Privacy Act operates independently from FOIA, stating that agencies cannot use one act's exemptions to deny access under the other. Therefore, an agency must show that a document qualifies for a FOIA exemption and does not meet a Privacy Act exception to withhold it. If a FOIA exemption applies, but the Privacy Act allows for disclosure, the documents must be released, and vice versa. Both FOIA and the Privacy Act are applicable solely to 'agencies' as defined by 5 U.S.C. 551(1) and 552(f), which typically includes only federal entities, requiring significant federal oversight for state or local entities to be classified as 'agencies.'

LTRAP claims to be a federal government agent managing a federally funded local public housing assistance program, asserting that the requested information falls under the Privacy Act and not the New Jersey Right to Know Law. The plaintiff counters that the defendants are local entities subject to both statutory and common law document disclosure requirements. Alternatively, the plaintiff argues that even if federal law applies, the documents can still be obtained under the Freedom of Information Act (FOIA). The central issue is whether LTRAP qualifies as an "agency" under 5 U.S.C. § 551(1) and § 552(f), which define an agency as any authority of the U.S. Government, including various governmental departments and corporations. The definitions do not suggest that local governmental bodies are considered federal agencies. 

The Supreme Court case Forsham established that a privately funded organization did not possess "agency" status under FOIA despite receiving federal grants and oversight because it operated independently without extensive supervision. The decision emphasized that federal funding does not transform the actions of recipients into governmental acts unless there is detailed federal oversight. Similarly, in St. Michael’s, the court ruled that the California Department of Health Services, although federally funded, did not qualify as an agency under FOIA and the Privacy Act, reaffirming that local and state governmental actions remain independent despite federal funding.

Oral arguments were held on August 12, 1994, focusing on federal oversight of LHA and LTRAP. Attorneys for both entities acknowledged that HUD does not engage in day-to-day operations but conducts periodic reviews for compliance with federal regulations, with routine supervision managed by the respective Public Housing Authorities (PHAs). The court found no unique circumstances warranting different treatment from similar organizations in the Forsham and St. Michael’s cases, equating LTRAP to a private agency in Forsham and LHA to a public agency in St. Michael’s.

LTRAP referenced 5 U.S.C. § 552(b)(4) of the Freedom of Information Act (FOIA) to argue for protection of certain information regarding trade secrets and commercial data. However, the court noted that the cited exemptions are not applicable to the case at hand, as established by precedent in Benson v. General Services Administration and Burke Energy Corporation v. Department of Energy, which involved unrelated documentary matters. The court highlighted that the (b)(4) exemption is narrowly construed and primarily protects specific types of sensitive commercial data, such as sales figures and confidential bid amounts. Legislative history supports that the exemption does not extend to housing contracts between landlords and PHAs. Reports from both the Senate and House of Representatives emphasize that the exemption aims to safeguard only certain confidential information typically not disclosed to the public, further confirming its inapplicability in this instance.

Material obtained by the Government is exempt from public disclosure if it is not typically made public by the provider. This exemption covers business-related information such as sales statistics, inventories, customer lists, scientific processes, negotiation positions in labor-management contexts, and confidential communications protected under doctor-patient, lawyer-client, or lender-borrower privileges. Additionally, information shared with a government agency in confidence is also protected, as citizens must trust their government. The Government is expected to honor its commitments to confidentiality. The Freedom of Information Act (FOIA) and the Privacy Act do not apply to the plaintiff's request for information, which includes tenant details like income or social security numbers, as there is no statutory or case law basis for withholding such information.

The plaintiff argues for access to a copy of the Housing Assistance Contract (HAC) or a list of landlords and properties involved in the Section 8 program under the New Jersey Right To Know Law (N.J.S.A. 47:1A-2), which mandates that records required by law to be maintained by public agencies are public records. The Lakewood Housing Authority (LHA), as a public housing agency created under N.J.S.A. 40A:12A-17, is subject to this law. The Lakewood Township Rental Assistance Program (LTRAP), administered by the Lakewood Tenants Organization (LTO), operates as an agent of the Township and is authorized as a public housing agency under federal regulations. Both LHA and LTRAP acknowledge that the Right To Know Law applies to them if federal law does not.

Defendants argue that the plaintiff's attempt to access documents under the Right to Know Law is barred by N.J.S.A. 47:1A-2, which exempts disclosure of information protected by federal law, specifically citing 24 C.F.R. 750.20 and 760.20. These regulations mandate compliance with the Privacy Act (5 U.S.C. 552a) regarding the handling of Social Security Numbers (SSNs) and employee wage information. Defendants contend that although they are not federal agencies subject to FOIA or the Privacy Act, the sought data is protected under these regulations. They assert that SSNs are essential for verifying financial information necessary for contract approvals, and therefore, information derived from SSNs should not be disclosed.

The plaintiff counters that it does not seek tenant information and would agree to redactions in released documents, or alternatively, would accept a list of landlords, property locations, and federal funding amounts. Defendants argue that even redacted information could indirectly reveal tenant identities and approximate incomes, thus violating the intent of the regulations. They warn that failing to broadly interpret the regulations could expose Public Housing Authorities (PHAs) and their directors to civil or criminal penalties under 42 U.S.C. 3544(c)(3) for unauthorized disclosures.

The court finds the defendants' argument overly broad, noting that 750.20 specifically protects against the disclosure of SSNs, but that redacting these numbers from the HAC would not violate the regulations or incur penalties. The relevance of 760.20 to the case concerning employee information remains unclear, as it does not directly pertain to the HAC.

Defendants express concern that tenant wage information could be inferred if it is known that a tenant receives Section 8 program subsidies. However, the court finds that existing regulations do not support this concern, as HUD has not extended its regulations to create total secrecy regarding the application and grant process. The court concludes that defendants lack protection from disclosure under federal law and must assess if the plaintiff has a statutory right to disclosure under the New Jersey Right to Know Law (N.J.S.A. 47:1A-2). It is established that Public Housing Authorities (PHAs) are required to maintain the Housing Assistance Payments Contract (HAC) on file, and there are no applicable state law exemptions to prevent its release. Once a statutory right to disclosure is demonstrated, the court cannot weigh the interests of the parties; the document must be produced. The plaintiff is entitled to the HAC or a list of landlords along with relevant properties and rent subsidies. The plaintiff has agreed to allow redaction of any tenant information that may be federally protected. The court permits defendants to provide either the list of landlords or to redact tenant information from housing contracts. The potential outcome of the plaintiff being able to approximate tenant income is acknowledged, but the court finds defendants' concerns about stigma to be largely theoretical. The New Jersey Department of Community Affairs previously complied with similar requests, and the plaintiff claims no intent to identify tenants or their incomes, focusing instead on potential conflicts of interest among landlords or verification of subsidy payments for tenants in tax-exempt properties. Importantly, Congress or HUD could have restricted the disclosure of documents related to Section 8 programs but have not done so.

The court emphasizes the importance of upholding the Right to Know Law, which aims to enhance public awareness of governmental affairs and reduce the risks associated with secretive processes. It asserts that any attempts to limit the law's scope require clear justification under its exemptions. The law is designed to combat the detrimental effects of government secrecy, echoing the sentiment from the United States Supreme Court regarding the necessity of transparency in a democracy. Furthermore, the text clarifies that references to the Section 8 program pertain to the United States Housing Act of 1937. An agreement from August 27, 1982, established that all programs previously administered by LTO would now be conducted under the name LTRAP, with the two terms being interchangeable. While LHA does not claim to be a federal agency, it seeks protections under federal regulations. The references to defendants will include LHA, LTRAP, and LTO, as Lakewood Township has played a passive role in the proceedings. Additionally, it notes that variations in language from House and Senate reports do not affect the outcome of the case.