News organizations win six-year battle for access to coal tax records

From the Summer 2000 issue of The News Media & The Law, page 30.

Several Montana news organizations have won a six-year legal battle against the state Department of Revenue to obtain public access to tax information about coal companies, after the state Supreme Court ruled in late June that the department’s rule limiting access to the information was unconstitutional.

The rule disregarded a constitutional provision requiring all government records to be made public unless a significant privacy concern outweighed the public’s right to know, the court said.

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Since 1975, Montana has required coal companies to pay a special tax on the coal they mine in the state. To help the state determine their tax liabilities, the coal companies have provided the state with information on the amount of coal extracted, the energy-producing value of the coal, and the contract prices paid to them, among other information. The state Department of Revenue collected the information and used it in preparing reports on the amount of coal produced and taxes paid by mining companies. These reports were routinely made available to the public.

But in November 1993, the Department of Revenue reversed course. It created a rule preventing the state from releasing to the public most information that taxpayers are required to supply to the department and any documents created by the department that identify individual taxpayers. In modified coal-tax reports, the department continued to publish the amount of coal mined by individual companies, but it no longer included the amount each company paid in taxes. The department instead included the amount of coal taxes paid by all companies combined.

The following January, Montana news organizations, led by the Associated Press, requested access to the reports for 1992 and 1993. The department denied the request, agreeing instead to release the modified reports that complied with the new confidentiality rule. The news organizations filed suit against the department in state court in Helena.

Both sides filed motions for summary judgment. The news organizations argued that the rule was unconstitutional as a matter of law, and the department countered that the rule was a proper exercise of its authority and necessary to protect the privacy rights of coal-mining companies. The court denied both parties’ motions, explaining that the question of whether the mining companies had an expectation of privacy was a question of fact that needed to be separately decided. A year later, the news organizations asked the court to reconsider its decision, but the court denied the request, saying it was untimely and without merit.

The court scheduled a hearing for August 1998 to decide whether the coal companies had an expectation that their tax information would be kept confidential. Four months later, the court ruled that the coal companies did in fact have an expectation of privacy and that the department had properly concluded the expectation of privacy outweighed the public’s right to know.

The news organizations appealed to the state Supreme Court in Helena. They argued that Montana’s constitution prevents the department from enacting such a broad rule that cuts off access to historically public information. According to the news organizations, the constitution’s privacy protections must instead be weighed against the public’s right to know on a case-by-case basis. The news organizations also argued that the coal companies did not have a reasonable expectation that their coal-tax information would be kept confidential.

The department disagreed, arguing that all the constitution required was a balancing of the public’s right to know against coal companies’ expectation of privacy before it created the rule.

In a unanimous opinion by Justice Jim Regnier, the Supreme Court reversed, finding that the rule was unconstitutional on its face. The constitution’s guarantee of access to government information requires the government to weigh the competing interests on a case-by-case basis, a unanimous court decided. The rule, the high court said, was unconstitutional because it foreclosed access to most coal-tax information in all cases.

The Supreme Court also found that the coal industry’s purported privacy interest — that public access to the coal-tax information would injure their economic competitiveness — was nonexistent. The court also said that the coal companies’ reliance on a clearly unconstitutional rule was not a reasonable expectation of privacy.

Finding that the news organizations’ efforts to enforce the constitutional guarantee of access to government records benefitted the entire state, the court ordered the state to pay the news organizations’ legal bills. The case was remanded to the trial court to determine the amount the news organizations incurred in legal fees.

While a majority of the court assumed that corporations could enjoy an expectation of privacy, Justice James Nelson, in a special concurrence, disagreed. He argued that the language of the constitution makes it clear that the framers intended the right of privacy to extend only to natural-born humans and not corporations, even though both are sometimes described as “persons” and thought to enjoy some of the same rights under the law.