Step by Step: New FOIA Guidance Issued by DOJ

The US Department of Justice has issued new guidance for the exemption of trade secrets and commercial or financial information under newly minted Supreme Court precedent in the case of Food Marketing Institute v. Argus Leader Media . See Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019). This past June, we wrote about the decision and expressed the hope that the case would simplify what had become a somewhat convoluted analysis.

Briefly, FOIA requires the Government to give information to the public upon request. See 5 U.S.C. § 552(a)(3)(A). However, FOIA exempts certain information from disclosure including “commercial or financial information obtained from a person and privileged or confidential” under FOIA Exemption 4. See 5 U.S.C. § 552(b)(4). That seems simple enough; however, a complicated body of law evolved that attempted to honor the underlying legislative purpose of FOIA, which led to distinctions between information provided voluntarily to the Government versus that which was submitted involuntarily. This body of law (which evolved from the Federal Circuit’s decision in National Parks Assn. v. Morton, 498 F.2d 765, 770 (D.C.Cir.1974)) was roundly rejected by the Court. It called the National Parks analysis a “casual disregard of the rules of statutory interpretation” that “is a relic of a bygone era of statutory construction.” See Argus Leader, 139 S.Ct at 2364.

The Court ultimately offered what I view as a clear and (as the Court put it) “fair reading” of Exemption 4:

[W]here commercial or financial information is customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.

Id. at 2364.

Enter now DOJ’s new guidance, which can be found here along with a “step by step” guide to be used by agencies in practice. I have to say that DOJ’s guidance memo is quite detailed in its discussion; however, if you scroll to the end, you'll get to the heart of the matter.

DOJ endorses a two element approach to determining whether commercial or financial information is exempt from disclosure. First, the submitter has to treat the information as private. If it doesn’t, the analysis is complete and the information is not confidential. If it does, you go to the second and potentially more complicated question: whether the information was submitted to the Government with an assurance of privacy. If an agency makes an express promise to keep the information confidential, then the second test is met and the information will be deemed confidential. In the absence of an express assurance, agencies are to consider whether there has been an implied assurance of privacy. Such implied assurances could be established by established agency practices.

You should note that DOJ takes the implied assurance analysis one step further in its “step by step” guide. In the absence of an express or implied assurance of privacy, DOJ advises that agencies should consider whether there are “express or implied indications” that an agency would disclose information such as the purported confidential information. If yes, then the information should not be deemed confidential because the submitter would have no expectation of privacy. However, if the agency has been silent, the “submitter’s practice of keeping the information private will be sufficient to warrant confidential status.”

My take on DOJ’s guidance is that it strives to honor the Court’s decision in Argus Leader. Sometimes agencies will be protective of their turf and interpret case law as narrowly as possible so as to retain as much of their primacy as possible. Here, however, DOJ appears to be siding with clarity. If the submitter of information treats its information as private and the government provides an assurance that it will remain private, the information is confidential and will not be released. In the absence of an express assurance, DOJ directs agencies to consider whether there implied assurances of privacy or, alternatively, “indications” that the information is subject to disclosure. The former leads to a finding of confidentiality; the latter doesn’t. Silence, however, will tip the scale in favor of the submitter so long as it treats the information as private.

We’re in somewhat new territory here and, based on recent experience, FOIA personnel are not tuned into these developments. We urge contractors to be vigilant in their handling of their trade secrets and confidential commercial and financial information. Use “confidential” legends to clearly identify material that should not be released. Likewise, we recommend that you confirm whether there are assurances of privacy. If not, consider whether the circumstances suggest there is an implied assurance of privacy - but be careful and deliberate about relying on implied assurances

I still remain optimistic that the application of FOIA Exemption 4 is going to be simpler. However, there no doubt will be legal actions down the road that will expand on the Court’s ruling.