U.S. Supreme Court Provides Guidance on the Disclosure of Confidential Information Under FOIA

Businesses often share sensitive information with the government either voluntarily or by mandate. This information becomes subject to requests under the Freedom Of Information Act (FOIA), which is a source of concern to any business worried about disclosure of competitive business information. The United States Supreme Court recently handed down a decision that directly addresses this concern. In Food Marketing Institute v. Argus Leader Media, the Court provides guidance on the protection from the disclosure of shared information deemed “confidential” under FOIA’s Exemption 4. In addition to businesses, this decision will have significant impact on public interest groups and media that may seek information through FOIA. Justice Gorsuch authored the opinion for the majority, which Chief Justice Roberts and Justices Thomas, Alito, Kagan, and Kavanaugh joined. Justice Breyer added an opinion concurring in part, and dissenting in part that Justices Ginsburg and Sotomayor joined.

Argus Leader Media, a newspaper in South Dakota, filed a request under FOIA seeking information the United Stated Department of Agriculture collected as part of the national food stamp program known as the Supplemental Nutritional Assistance Program (SNAP). Specifically, Argus Leader sought the names and addresses of retailers that participate in SNAP and each store’s annual redemption data. The USDA released the names and addresses of participating retailers, but invoked FOIA’s Exemption 4 to deny the request for “store-level SNAP data.” Exemption 4 protects against the disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

Argus Leader challenged the USDA decision in federal District Court. After a procedural journey to the Eighth Circuit and back, and a two day bench trial, the District Court found that disclosure of the sought information would not create substantial competitive harm and thus Exemption 4 did not apply. In the Eighth Circuit, courts reviewing matters concerning FOIA Exemption 4, apply the “substantial competitive harm” test set forth by the D.C. Circuit in the 1972 decision National Parks & Conservation Assn. v. Morton. Under that test, commercial information may only be “confidential” if it is “likely … to cause substantial harm to the competitive position of the person from whom the information was obtained.” The Food Marketing Institute, which is a trade association representing grocery retailers, successfully moved to intervene and appealed the decision. On appeal, the Eighth Circuit affirmed the District Court’s decision. Thereafter, Food Marketing Institute sought and obtained review in the Supreme Court.

Justice Gorsuch’s analysis notes that FOIA does not define the term “confidential” and therefore the inquiry must look to “what that term’s ordinary, contemporary, common meaning was when Congress enacted FOIA in 1966.” (internal quotation marks omitted). Looking to contemporary dictionary definitions of “confidential,” the Court finds two conditions that are required to consider information confidential: 1) the information must be customarily kept private by the person providing it; and 2) the party receiving it must provide some assurance that the information will remain private. Justice Gorsuch further notes that the definition of “confidential” does not include any requirement that substantial competitive harm would result to the provider if the information were disclosed. Indeed, the Court tracks this purported requirement to National Parks, before effectively overruling that decision because of its “casual disregard of the rules of statutory interpretation.” Ultimately, the Court reverses and remands the decision to the lower court in this matter.

Justice Breyer’s part concurrence and part dissent argues that while the National Parks decision “goes too far,” the majority’s decision does not comport with FOIA’s purpose, which is to “permit access to official information long shielded unnecessarily from public view.” The dissent takes issue with the majority’s holding from a policy perspective, asserting that the majority’s holding essentially allows government and businesses to unilaterally determine what information is confidential and when. In the dissent’s view, release of information must cause genuine harm in order to be protected by Exemption 4.

This far-reaching decision is important for any business that shares sensitive information with the government. Businesses that wish to maintain the confidence of such sensitive information should heed the Court’s guidance. Public interest groups and media that seek information through FOIA should also study this decision because it is likely to restrict access to information in the future.

Jordan M. Asch, an Associate in the Gibbons Environmental Department, authored this post.
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