This article is an excerpt from the 2020 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2019 decision in Food Marketing Institute v. Argus Leader Media, the Supreme Court of the United States significantly restricted the scope of public access disclosures for confidential business information in the possession of government institutions. The dispute dealt with a public access request made by The Argus Leader, a South Dakota media outlet, to the U.S. Department of Agriculture (USDA) for the names and addresses of stores that participate in the national food stamp program, the Supplemental Nutritional Assistance Program (SNAP). The USDA initially refused to disclose that information, invoking Exemption 4 of the federal Freedom of Information Act (FOIA), which shields trade secrets and commercial or financial information obtained from disclosure, but was ordered to disclose the information by a lower court. The Food Marketing Institute appealed that lower court ruling on behalf of the impacted grocery stores.
The Supreme Court framed the issue as turning on the meaning of “confidential information” under public access laws:
Congress has instructed that the disclosure requirements of the Freedom of Information Act do “not apply” to “confidential” private-sector “commercial or financial information” in the government’s possession. But when does information provided to a federal agency qualify as “confidential”?
In its decision, the Supreme Court parted company with lower courts that have historically imposed a strict legal test that requires a business to prove that it will suffer “substantial competitive harm” before protecting its confidential information from public access request disclosures:
The Food Marketing Institute says it’s enough if the owner keeps the information private rather than releasing it publicly. The government suggests that an agency’s promise to keep information from disclosure may also suffice to render it confidential. But the courts below imposed a different requirement yet, holding that information can never be deemed confidential unless disclosing it is likely to result in “substantial competitive harm” to the business that provided it. Finding at least this “competitive harm” requirement inconsistent with the terms of the statute, we reverse.
In considering the case under appeal, the Supreme Court noted that the lower court had applied the “competitive harm” test to the protection of confidential business information even though that test was not part of the original legislation:
Like several other courts of appeals, the Eighth Circuit has engrafted onto Exemption 4 a 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.” Argus Leader Media v. United States Dept. of Agriculture, 889 F. 3d 914, 915 (2018)
As the Supreme Court noted, while the USDA provided evidence at trial of the harm that could ensue if the information was disclosed, the requesting party failed to provide contradictory evidence and instead simply asserted that disclosing the information would not cause substantial harm to the businesses in question:
At trial, witnesses for the USDA testified that retailers closely guard store-level SNAP data and that disclosure would threaten stores’ competitive positions. They explained that retailers use models of consumer behavior to help choose new store locations and to plan sales strategies. Competitors’ estimated sales volumes represent an important component of these models and can be time consuming and expensive to generate. model’s accuracy and utility increase significantly if it includes a rival’s actual sales data rather than mere estimates. So disclosure of store-level SNAP data could create a windfall for competitors: Stores with high SNAP redemptions could see increased competition for SNAP customers from existing competitors, new market entrants could use SNAP data to determine where to build their stores, and SNAP-redemption data could be used to discern a rival retailer’s overall sales and develop strategies to win some of that business too. For its part, Argus Leader offered no fact witnesses and 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.
The Supreme Court explained that the trial court agreed with the requester and concluded that the release of the information would not cause substantial harm. The Food Marketing Institute then appealed that ruling on behalf of the grocery stores in question:
In the end, the district court agreed; while “[c]ompetition in the grocery business is fierce,” and while the record supported the conclusion that revealing store-level SNAP data could work some competitive harm, the court could not say that disclosure would rise to the level of causing “substantial competitive harm,” and thus ordered disclosure. Argus Leader Media v. United States Dept. of Agriculture, 224 F. Supp. 3d 827, 833–835 (SD 2016) (emphasis added). 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 trade association representing grocery retailers, answered the call.
After the Food Marketing Institute was unsuccessful in convincing the appeal court to abandon the “substantial competitive harm” test as a condition for protecting confidential information, it subsequently appealed to the Supreme Court of the United States. In considering the merits of the matter, the Supreme Court noted that the federal Freedom of Information Act does not define “confidential information” and it was therefore up to the courts to determine what the legislators meant by that term when they enacted the statute. After engaging in a review of standard dictionary definitions, the Supreme Court noted that to qualify as confidential information, that information: (i) must typically be kept secret by the party sharing the information; and (ii) the party receiving that information must typically agree to maintain its confidentiality:
As we’ve seen, Exemption 4 shields from mandatory disclosure “commercial or financial information obtained from a person and privileged or confidential.” 5 U. S. C. §552(b)(4). But FOIA nowhere defines the term “confidential.” So, as usual, we ask what that term’s “ordinary, contemporary, common meaning” was when Congress enacted FOIA in 1966. Perrin v. United States, 444 U. S. 37, 42 (1979). We’ve done the same with other undefined terms in FOIA. See, e.g., Milner v. Department of Navy, 562 U. S. 562, 569 (2011); United States v. Weber Aircraft Corp., 465 U. S. 792, 804 (1984).
The term “confidential” meant then, as it does now, “private” or “secret.” Webster’s Seventh New Collegiate Dictionary 174 (1963). Contemporary dictionaries suggest two conditions that might be required for information communicated to another to be considered confidential. In one sense, information communicated to another remains confidential whenever it is customarily kept private, or at least closely held, by the person imparting it. See, e.g., Webster’s Third New International Dictionary 476 (1961) (“known only to a limited few” or “not publicly disseminated”); Black’s Law Dictionary 370 (rev. 4th ed. 1968) (“intended to be held in confidence or kept secret”). In another sense, information might be considered confidential only if the party receiving it provides some assurance that it will remain secret. See, e.g., 1 Oxford Universal Dictionary Illustrated 367 (3d ed. 1961) (“spoken or written in confidence”); Webster’s New World Dictionary 158 (1960) (“told in confidence”).
The Supreme Court determined that the information in question met both parts of that test since the grocery stores carefully protected their information and the government had initially agreed to maintain its confidentiality:
Must both of these conditions be met for information to be considered confidential under Exemption 4? At least the first condition has to be; it is hard to see how information could be deemed confidential if its owner shares it freely. And there’s no question that the Institute’s members satisfy this condition; uncontested testimony established that the Institute’s retailers customarily do not disclose store-level SNAP data or make it publicly available “in any way.” See, e.g., App. 93–94. Even within a company, witnesses testified, only small groups of employees usually have access to it. But what about the second condition: Can privately held information lose its confidential character for purposes of Exemption 4 if it’s communicated to the government without assurances that the government will keep it private? As it turns out, there’s no need to resolve that question in this case because the retailers before us clearly satisfy this condition too. Presumably to induce retailers to participate in SNAP and provide store-level information it finds useful to its administration of the program, the government has long promised them that it will keep their information private. See, e.g., 43 Fed. Reg. 43275 (1978); see also Brief for United States as Amicus Curiae 27–30.
As the Supreme Court observed, while lower courts had imposed the condition of proving “substantial competitive harm” before business information could be considered confidential and shielded from public access disclosures, the plain meaning of “confidential information” under the statute did not include that condition. Furthermore, no reliable evidence of legislative intention was provided to support the more restrictive interpretation of confidential information:
Notably lacking from dictionary definitions, early caselaw, or any other usual source that might shed light on the statute’s ordinary meaning is any mention of the “substantial competitive harm” requirement that the courts below found unsatisfied and on which Argus Leader pins its hopes. Indeed, when called on some years ago to interpret the similar phrase “information furnished by a confidential source” in FOIA Exemption 7(D),§552(b)(7)(D), this Court looked, as we do now, to “common usage” and never suggested that the government must prove that the disclosure of a source’s information would result in substantial harm. Department of Justice v. Landano, 508 U. S. 165, 173–174 (1993). So where did the “substantial competitive harm” requirement come from? In 1974, the D. C. Circuit declared that, in addition to the requirements actually set forth in Exemption 4, a “court must also be satisfied that non-disclosure is justified by the legislative purpose which underlies the exemption.” National Parks & Conservation Assn. v. Morton, 498 F. 2d 765, 767. Then, after a selective tour through the legislative history, the court concluded that “commercial or financial matter is ‘confidential’ [only] if disclosure of the information 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.” Id., at 770. Without much independent analysis, a number of courts of appeals eventually fell in line and adopted variants of the National Parks test. See Contract Freighters, Inc. v. Secretary of U. S. Dept. of Transp., 260 F. 3d 858, 861 (CA8 2001) (collecting cases).
The Supreme Court cautioned against applying unwritten implied meanings to legislation when the plain meaning of a term is sufficiently clear to resolve an interpretive question. It referred to the leading National Parks decision that had restricted the protection of confidential information to circumstance of “substantial competitive harm” as originating in a “bygone era of statutory construction”. The Supreme Court overruled that restrictive interpretation and opted for a plain language interpretation that gave more protection to confidential business information:
We cannot approve such a casual disregard of the rules of statutory interpretation. In statutory interpretation disputes, a court’s proper starting point lies in a careful examination of the ordinary meaning and structure of the law itself. Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U. S. 401, 407 (2011). Where, as here, that examination yields a clear answer, judges must stop. Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 438 (1999). Even those of us who sometimes consult legislative history will never allow it to be used to “muddy” the meaning of “clear statutory language.” Milner, 562 U. S., at 572. Indeed, this Court has repeatedly refused to alter FOIA’s plain terms on the strength only of arguments from legislative history. See, e.g., Landano, 508 U. S., at 178 (refusing to expand the plain meaning of Exemption 7(D) based on legislative history); Weber Aircraft, 465 U. S., at 800– 803 (refusing to restrict Exemption 5 based on legislative history).
National Parks’ contrary approach is a relic from a “bygone era of statutory construction.” Brief for United States as Amicus Curiae 19. Not only did National Parks inappropriately resort to legislative history before consulting the statute’s text and structure, once it did so it went even further astray. The court relied heavily on statements from witnesses in congressional hearings years earlier on a different bill that was never enacted into law. 498 F. 2d, at 767–769. Yet we can all agree that “excerpts from committee hearings” are “‘among the least illuminating forms of legislative history.’” Advocate Health Care Network v. Stapleton, 581 U. S. ___, ___ (2017) (slip op., at 12); see also Kelly v. Robinson, 479 U. S. 36, 51, n. 13 (1986) (declining to “accord any significance” to “comments in [legislative] hearings”). Perhaps especially so in cases like this one, where the witness statements do not comport with official committee reports that are consistent with the plain and ordinary meaning of the statute’s terms. See S. Rep. No. 813, 89th Cong., 1st Sess., 9 (1965).
After finding that the original legislation did not include the condition of proving “substantial competitive harm” as a condition to shielding confidential business information from disclosure, the majority of the Supreme Court dismissed the requester’s argument (which was accepted by the minority dissenting Supreme Court judges) that the “substantial competitive harm” test should be read into the legislation as a matter of public policy to promote greater access to government information. Rather, the Supreme Court’s ruling majority decided that access to government information must be balanced against the need to protect the confidential information of businesses that support government operations:
Finally, Argus urges us to adopt a “substantial competitive harm” requirement as a matter of policy because it believes FOIA exemptions should be narrowly construed. But as we have explained in connection with another federal statute, we normally “have no license to give [statutory] exemption[s] anything but a fair reading.” Encino Motorcars, LLC v. Navarro, 584 U. S. ___, ___ (2018) (slip op., at 9). Nor do we discern a reason to depart from that rule here: FOIA expressly recognizes that “important interests [are] served by [its] exemptions,” FBI v. Abramson, 456 U. S. 615, 630–631 (1982), and “[t]hose exemptions are as much a part of [FOIA’s] purpose[s and policies] as the [statute’s disclosure] requirement,” Encino Motorcars, 584 U. S., at ___ (slip op., at 9). So, just as we cannot properly expand Exemption 4 beyond what its terms permit, see, e.g., Milner, 562 U. S., at 570–571, we cannot arbitrarily constrict it either by adding limitations found nowhere in its terms.
Our dissenting colleagues appear to endorse something like this final argument. They seem to agree that the law doesn’t demand proof of “substantial” or “competitive” harm, but they think it would be a good idea to require a showing of some harm. Neither side, however, has advocated for such an understanding of the statute’s terms. And our colleagues’ brief brush with the statutory text doesn’t help; they cite exclusively from specialized dictionary definitions lifted from the national security classification context that have no bearing on Exemption 4. Really, our colleagues’ submission boils down to a policy argument about the benefits of broad disclosure. But as JUSTICE BREYER has noted, when Congress enacted FOIA it sought a “workable balance” between disclosure and other governmental interests—interests that may include providing private parties with sufficient assurances about the treatment of their proprietary information so they will cooperate in federal programs and supply the government with information vital to its work. See Milner, 562 U. S., at 589 (dissenting opinion) (arguing for a broad exemption from FOIA disclosure obligations to honor a “workable balance” between disclosure and privacy).
As the Supreme Court concluded, since the store data was typically treated as private by its owners and was provided to the government under the assurance of privacy, that information could be considered to be confidential and should therefore be protected from disclosure under federal access laws.
This case represents a significant departure from other jurisdictions that continue to place a heavy onus on businesses to prove that they will suffer harm before the government can withhold the disclosure of their confidential information from a public access request. It remains to be seen whether this more protective approach to confidential business information will set a new global standard in the years to come or whether other jurisdictions will continue to allow interpretations of their public access laws that further erode the protection of confidential business information.
