Supreme Court strengthens FOIA confidential information protection

Companies are often required to submit information to federal environmental regulatory agencies, some of which may be considered confidential and proprietary. While FOIA contains provisions protecting confidential information from disclosure, courts interpreting that exception have applied a “competitive harm” test requiring parties opposing disclosure to prove not only that the information is confidential but also that they will suffer substantial competitive harm if the information is disclosed.  In a 6-3 decision, Food Marketing Institute v. Argus Leader, the Supreme Court rejected that test.  This holding reduces the burden on companies attempting to protect confidential business information from FOIA disclosure.

In this case, Argus Leader, a South Dakota newspaper, asked the USDA for the names and addresses of all retail stores that participate in the Supplemental Nutrition Assistance Program and each store’s annual SNAP redemption data from fiscal years 2005 to 2010.  The USDA released the names and addresses of the participating stores but declined to disclose the requested store-level data. The USDA withheld the store-level data under FOIA’s Exemption 4, which shields from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U. S. C. §552(b)(4).

Argus Leader sued the USDA in federal court to compel release of the store-level data. The district court applied the so-called “competitive harm” test, under which commercial information cannot be deemed “confidential” unless disclosure is “likely . . . to cause substantial harm to the competitive position of the person from whom the information was obtained.”  At trial, witnesses for the USDA testified that retailers closely guard the type of data that Argus sought, and that disclosure of that data would threaten stores’ competitive positions.  Argus Leader did not dispute that retailers customarily keep this data private or that it bears competitive significance. Instead, the company contended that any competitive harm associated with disclosure would not be substantial. In the end, the district court agreed with Argus leader, finding that although the record supported the conclusion that disclosure of the data could provide some competitive harm, the court could not say that the disclosure would rise to the level of causing “substantial competitive harm.”  Therefore, the district court ordered disclosure. 

 The USDA declined to appeal, but it alerted the retailers who had provided the data so that they could consider intervening to pursue the case further. The Food Marketing Institute, a retailer industry group, intervened and appealed to the Eighth Circuit Court of Appeals.  The USDA did not disclose the data pending the appeal.  Before the Eighth Circuit, the Institute argued that the court should discard the “substantial competitive harm” test and apply instead the ordinary public meaning of the statutory term “confidential.” The court rejected that argument and affirmed the district court’s position.

The Supreme Court rejected the “substantial competitive harm” test and instead adopted a plain meaning approach.  Under that approach, “confidential” means “private” or “secret.”  The Court suggested that for information communicated to be considered confidential, the information must be customarily kept private, or at least closely held, by the person imparting it and the party receiving it provides some assurance that it will remain secret.  But FOIA does not require a showing a substantial competitive harm for information to be confidential.

 A link to the Court’s opinion is available here: https://www.supremecourt.gov/opinions/18pdf/18-481_5426.pdf