The U.S. Supreme Court has issued a ruling that is likely to make it harder for the public to access confidential business records.
The court ruled on a longtime exemption under the federal Freedom of Information Act (FOIA), known as Exemption 4, which allows the government to withhold “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”
While federal law doesn’t define the term “confidential,” courts have regularly said it applied to information that is typically kept private and information for which the recipient has provided some promise that it will be kept private.
In 1974, a federal appeals court in D.C. held that information should not be considered “confidential” unless its disclosure would lead to “substantial competitive harm” to the business. The case was National Parks & Conservation Assn. v. Morton.
Since then, some courts have been hesitant to apply the “substantial competitive harm” standard. The D.C. Circuit weighed in again, saying that the more expanded test should be limited to documents that are required to be provided to the federal government, while documents that are voluntarily provided should be held to a lesser standard.
In its decision, the Supreme Court found that the D.C. Circuit’s ruling in the National Parks case was incorrect. It found that the wording of Exemption 4 under the FOIA does not require showing harm to a business.
Rather, the court said, that information is confidential under the FOIA when “commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy.”
The current case involved a FOIA request from The Argus Leader newspaper in Sioux Falls, South Dakota.
The paper sought information about the federal Supplemental Nutrition Assistance Program (SNAP) program.
The Food Marketing Institute, a trade group for food marketers, retailers and wholesalers, argued that the information should not be disclosed. The institute argued that disclosing the information would expose “confidential” information that it provided to the government about the group’s participation in SNAP.
The court said that because the institute typically keeps such information private and provided it to the government under an assurance that it would remain so, the records should not be disclosed, even if disclosure would cause no “competitive harm” to the Food Marketing Institute.
Given that both conditions were met in this case, the court said there was no need to determine whether both conditions must be met in order for information to be labeled “confidential.”