SUPREME COURT EXPANDS PROTECTIONS FOR CONFIDENTIAL PRIVATE BUSINESS INFORMATION
July 10, 2019
In a 6-3 decision on June 24, 2019, the U.S. Supreme Court held that the Freedom of Information Act (FOIA) permits a federal regulatory agency to keep confidential records that are submitted by a private entity, so long as the records at issue are kept secret in the normal course of business, and the agency promises to keep the records from disclosure. In Food Marketing Institute v. Argus Leader Media, the Argus Leader, a South Dakota newspaper, submitted a FOIA request for records that would disclose data pertaining to the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program, known as “SNAP”. The data being requested included certain confidential commercial information about grocery stores at which SNAP recipients shop. In trying to prevent disclosure of this information, USDA and the affected grocers argued that the retailers’ market positions – which were confidential and kept secret from competitors and the public in the normal course of business – would be revealed if the FOIA request was granted.
Before this month’s decision, the 8th Circuit held that the SNAP data fell outside the scope of established FOIA exemptions (and was therefore not protected) because the affected grocers could not satisfy the prevailing Exemption 4 test, which applied only to information that if disclosed, is likely “(1) to impair the Government’s ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.”
The Supreme Court focused on interpreting the word “confidential”. Ultimately, the high court held that information that is “customarily and actually treated as private by its owner and provided to the government under an assurance of privacy” falls under the protection of FOIA’s Exemption 4 for “confidential” private information. In so holding, the Court developed a new authoritative test: when information is submitted to an agency by a private sector submitter, that entity will only need to show its efforts to keep the information private, provided that it received assurances from the agency that the information would remain confidential. Submitting entities will no longer need to show any harm (substantial or otherwise) for the information to qualify for protection under Exemption 4.
Practically, the Court’s decision in Food Marketing Institute is a win for business, as it broadens the scope of Exemption 4, thus making it easier for private records to remain protected from disclosure. It will especially benefit entities in regulated industries that must routinely provide information to government agencies that is confidential, but may not meet the definition of a “trade secret”.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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