A recent Decision Notice (case reference number FER0317507) issued by the Commissioner under the Environmental Information Regulations 2004 (the EIR), in relation to the disclosure of information about the financial provision for a specified landfill site, found in favour of the Environment Agency that the information requested was commercially confidential. However, an appeal by the complainant against this decision has subsequently been lodged with the First Tier Tribunal for Information Rights and has led to concern throughout the waste industry that the decision could be overturned.
The importance of protecting commercial, confidential information is paramount in a free market as it goes to the very core of the competitiveness of the business. It is only through legal requirements that such information would be willingly disclosed to a regulator and, as a primary concern for a business, it is almost always disclosed on the understanding that it is and will remain confidential.
The purpose of this briefing is therefore to explain the legal context for the case while we await with interest the outcome of the appeal. We have considered below the various factors involved in determining confidentiality of information under the EIR, the key points of the Decision Notice issued by the Commissioner and any practical considerations for the waste industry in keeping information confidential.
In light of the uncertainty surrounding the appeal, we consider that the key points to note in relation to the appeal and, more generally, requests for commercially confidential information under the EIR include:
(a) the guidance from the Information Commissioner's Office in relation to exception under the EIR of information that is commercial confidential is not statutory guidance and provides minimal explanation of this exception. Instead the guidance refers to a similar but significantly different set of guidance for an exemption under the Freedom of Information Act 2000 (the FOIA) for breach of confidence. While there is a useful and applicable statement on the law of confidence in the FOIA guidance there is no direction on how this should be applied to the EIR exception in order to ascertain whether the exception has been engaged. As a result, this could be an issue that is raised as part of the appeal due to the lack of clarity;
(b) it is apparent from the Decision Notice that the Commissioner considered and applied the necessary duty of confidence and public interest tests to the exception in line with the guidance, in a clear and reasoned fashion and taking on board valid representations from both sides. The Commissioner concluded that, in relation to the withheld financial information, the exception had been appropriately applied; and
(c) there are two grounds for appeal against a Decision Notice (discussed further below) which relate to either an error in application of the law to the decision or, where appropriate, that the Commissioner should have exercised his discretion differently. It is not clear on which ground (or both) that the Decision Notice will be challenged.
Background to the appeals procedure
Appeals of EIR Decision Notices are determined under the Freedom of Information Act 2000 and there are two grounds for which the Tribunal can either i) allow the appeal or ii) substitute the EIR Decision Notice with another notice as could have been served by the Commissioner:
(a) that the notice against which the appeal is brought is not in accordance with the law; or
(b) to the extent that the notice involved an exercise of discretion by the Commissioner, that he ought to have exercised his discretion differently.
The Tribunal is also able to review any finding of fact on which the notice is based.
The Information Commissioner's Office has produced guidance (the Guidance) on the exception of Regulation 12(5)(e) of the EIR which relates to a public authority's refusal to disclose confidential commercial or industrial information where such confidentiality is provided to protect a legitimate economic interest.
The Guidance provides limited advice on this exception and instead specifically refers to two further documents known as 'Awareness Guidance', for commercial interests (Commercial Interest Guidance) and for information provided in confidence (Confidentiality Guidance). These documents are guidance issued under the FOIA for assistance with the relevant exemptions under that legislation. However, unfortunately the EIR Guidance does not go into detail as to exactly how these documents may be applied to EIR requests. There are, for example, a number of significant differences between the EIR and the FOIA which would impact on the applicability of that guidance to EIR requests such as:
- there is a presumption in favour of disclosure under the EIR which may be reversed in some cases under the FOIA (i.e. in relation to confidential information);
- unlike the FOIA, the EIR does not require a potential breach of confidence to be actionable (i.e. if a person could bring legal action over the breach); and
- unlike the FOIA, the exception under the EIR does not apply to commercial information concerning emissions, discharges and other releases.
The Commercial Interests Guidance discusses the exemption from disclosure if the release of the information is likely to prejudice the commercial interests of any person. A commercial interest is defined as a person's ability to participate competitively in a commercial activity. The ability of the Landfill Operator to compete with its peers in the waste management market was raised frequently in the representations made to the Commissioner in his enquiries under the Decision Notice.
Information supplied to a public authority so that the public authority may perform a regulatory function, such as issuing licences, is considered by the guidance to be a type of information that may affect commercial interests. The next stage of assessing the information is to understand whether the release of that information would prejudice the commercial interests of the person in question. The Commercial Interests Guidance sets out a number of questions that can be raised in order to determine the impact of releasing the information, such as:
- does the information relate to, or could it impact on, a commercial activity;
- is that commercial activity conducted in a competitive environment;
- would there be damage to reputation or business confidence; and
- what is the likelihood of prejudice being caused.
If the release of the information would prejudice someone's commercial interest it is then necessary to apply the public interest test to decide whether there is an overriding public interest in providing the information. Key considerations under this particular test could include:
- accountability for the spending of public money;
- protection of the public i.e. access to information that would protect the public from the unsafe conduct of private companies;
- competition issues to ensure that companies are able to compete fairly; and
- timing of the request i.e. requests during tendering processes will be more sensitive than once the contract has been awarded.
Some of these considerations were raised by the complainant in his representations to the Commissioner however, as explained below, it was the Commissioner's opinion that these points had been fairly addressed through the disclosure of redacted documents.
Information provided in confidence
The FOIA exemption for breach of confidence is significantly different from the EIR exception in a number of ways and the FOIA guidance contains a lot of information that is not applicable to the EIR exception. That said, the key question from the FOIA guidance is whether the information gathered under the regulator's statutory powers is subject to the law of confidence and thereby protected from disclosure by an obligation of confidence. The Confidentiality Guidance states that the information must have the requisite 'quality of confidence' which has two key elements:
(a) the information does not have to be highly sensitive but it must not be trivial;
(b) the information must not be readily available by other means.
More detailed FOIA guidance on this exemption notes that the court will recognise that a person holds information subject to a duty of confidence in two types of situation:
(a) where that person expressly agrees or undertakes to keep the information confidential (an express duty) – this is considered further below in relation to the exclusion from the public register of confidential information under the EPR; or
(b) where the nature of the information of the circumstances in which the information is obtained imply that the person should keep the information confidential (an implied duty).
Further guidance issued by the Information Commissioner's Office on the duty of confidence notes that under the common law duty of confidence there is an inherent public interest test that assumes that the information should be withheld unless the disclosure outweighs the public interest in maintaining the duty of confidence. The following are listed as arguments in favour of disclosure:
- if it would highlight any misconduct, wrongdoing or risks to the public;
- if it would promote openness and transparency;
- if it would promote freedom of expression.
Openness and transparency were considered to be strong arguments by the Commissioner in favour of disclosure of the information but other considerations prevailed in the public interest test as discussed below. Meanwhile, arguments against disclosure in this guidance include:
- if it would undermine the principle of confidentiality so that people would be discouraged from confiding in public authorities;
- there is public interest in maintaining trust and preserving a free flow of information to the public authority so that the authority may perform its statutory functions;
- if it would be an infringement of privacy such as disclosure of a individual's private personal information.
Practical considerations from the guidance include the use of confidential markings to documents as indicators that the information is intended to be confidential. However, this is not a steadfast or absolute way of ensuring that the information would be kept confidential or that the information possesses the 'quality of confidence' noted above.
Exclusion from the Public Register
There is a statutory process under the Environmental Permitting Regulations 2010 (the EPR) under which an operator can request confidential information to be excluded from the public register by giving notice to the regulator that:
(a) states that the information subject considers the information is confidential information, and
(b) gives reasons for that view.
The regulator, or the appropriate authority, may then determine whether that information should be included on the public register and an appeals procedure is in place should the operator wish to challenge the decision.
In light of the guidance above on confidentiality it is likely that information that goes through this process, and is deemed confidential by the operator, regulator and/or the appropriate authority, would constitute confidential information and give rise to an express duty of confidence under common law. This may be an issue for the appeal to consider if it is raised by the complainant.
Key points of the Decision Notice
The Commissioner considered the following questions in order to determine whether the information fell within the requirements of the exception.
(a) Is the information commercial or industrial in nature? The Decision Notice related to a performance agreement and a bond which contained the agreed costs for the financial provision following negotiation between the Landfill Operator and the Environment Agency. It was held to be commercial information of strategic relevance and it was noted by the Environment Agency that the waste management industry is a very competitive sector.
(b) Is the information subject to a duty of confidence which is provided by law? The information in question was requested, under the EPR, to be kept confidential and it was argued that this imposed a duty of confidence and an expectation that the information would be held in confidence. Furthermore, the Environment Agency had accepted in relation to the financial information of landfill operators that it would be kept off the public register and that no such information was available in the public domain.
(c) Is confidentiality required to protect a legitimate economic interest? It was noted that it would be possible to deduce the Landfill Operator's financial modelling from the information requested and that this would essentially be advantageous to its competitors and customers for a number of reasons. In particular there would be real potential for the information to undermine the Landfill Operator's pricing structure and end its viability. Non-disclosure was therefore necessary to protect the company's economic interests.
(d) Would that confidentiality be adversely affected by disclosure? The Commissioner confirmed that it would be adversely affected as the expectation was that the information was confidential and its disclosure could cause real commercial problems for the Landfill Operator.
The Commissioner has also given careful and detailed consideration to the public interest test, with representations made by the complainant, the Environment Agency and the Landfill Operator, and given justified and logical reasons for his conclusions in that regard.
It was held by the Commissioner that the strongest reasons given for disclosure of the financial information, transparency and accountability, had been addressed by the disclosure of redacted versions of the documents and that the age of the information had not made it less commercially sensitive as it included information about the future finances of the landfill. The Commissioner was of the opinion that the competitive market for waste management means that the public interest favours the maintenance of the exception. Overall, the exception of Regulation 12(5)(e) had been applied appropriately to the retained information and the information should not be disclosed to the public.
The following are recommendations that we feel will assist a company in preventing the release of confidential information under an EIR request. As noted where relevant above, these are not fool-proof but will provide strong indications to the authorities that such information is confidential and should not be disclosed:
(a) information should be marked as 'confidential' – as noted above, trivial information in a document does not possess the quality of confidence so may not be protected from disclosure and this is not an absolutely certain method of determining a document as confidential; and
(b) follow the procedure under the EPR to determine whether the document is confidential and can be excluded from the public register – this was considered in the Decision Notice and it will remain to be seen whether such a process gives rise to an express duty of confidence.