Many private parties—companies and individuals alike—provide information to the federal government believing that the government will maintain confidentiality of those documents.  But much of the federal government is subject to the Freedom of Information Act (FOIA), which requires the government to make information in its possession available to the public upon request.  As is true with almost every rule, FOIA’s disclosure requirement has exceptions.  One of those exceptions—also known as an exemption from disclosure—is Exemption 4, which shields from public disclosure information a private party provides to the government if the information amounts to “trade secrets and commercial or financial information” that is “privileged or confidential.”  A critical question around Exemption 4 is what it means for information to be “confidential.”

Yesterday, the Supreme Court answered that question.  In Food Marketing Institute v. Argus Leader Media, 588 U.S. ___, (2019), the Court concluded that, at a minimum, information disclosed to the government is “confidential” and protected from disclosure when both (1) it is customarily and actually treated as private by the private sector organization that owns it, and (2) the organization has provided that information to the government under an assurance that the government will keep that information private.                                                    

This decision should be welcome news to businesses and other private parties that frequently provide information to the federal government.

Background

This case arose when the Argus Leader—a South Dakota newspaper—filed a FOIA request with the United States Department of Agriculture, asking for information about all retail stores that participate in the federal Supplemental Nutrition Assistance Program (SNAP).  The requested information included each store’s name, address and annual SNAP redemption data.  The Department provided some of the information, but refused to disclose the stores’ redemption data, invoking FOIA’s Exemption 4 as a reason to withhold that information—asserting that it was confidential commercial information.

The Argus Leader sued the Department to force it to disclose the SNAP redemption data.  The lower courts concluded that the information was not confidential and, as a result, ordered the Department to provide it to the Argus Leader.  In reaching that conclusion, the lower courts applied a test asking whether disclosure of the information would be likely to “cause substantial harm to the competitive position” of the retail stores.  Through their trade association, the stores then petitioned the Supreme Court to address the question of whether the word “confidential” as used in Exemption 4, required that they show a likelihood of substantial harm to their competitive positions.  The Supreme Court granted the trade association’s petition and, in April 2019, heard argument on that very question.

The Decision

After holding that the trade association had standing to raise this argument, the Supreme Court concluded that the lower courts erred in looking to whether disclosure was likely to cause substantial harm to the stores’ competitive positions.  Instead of using that more onerous standard, the Court found “two conditions that might be required” for information to be confidential under Exemption 4.  The first condition is whether the information “is customarily kept private, or at least closely held, by the person imparting it.”  The second is that “information might be considered confidential only if the party receiving it provides some assurance that it will remain secret.”

The Court concluded with ease that at least the first condition—whether the information customarily is kept private, or at least closely held, by the person providing it—must be met to be withheld from disclosure under Exemption 4.  The Court then decided not to rule on whether the second condition—an assurance from the government that the information will remain secret—must be met in order for information to fall within Exemption 4.  Specifically, the Court explained that, under the facts of the case before it, the government has long promised retailers who participate in SNAP that it will keep their information private, such that even if disclosure were required under Exemption 4, the standard had been met in this case.  Because the lower courts applied the incorrect test, the Court reversed and remanded the case.

The Impact  

The Argus Leader decision provides helpful insight into whether, and to what extent, information companies provide to the federal government will remain confidential where the government receives an otherwise responsive FOIA request.  Specifically, to fall within FOIA’s Exemption 4, a company will need evidence showing that it customarily and actually treats that information as private.