Supreme Court Reversal of Narrow Freedom of Information Act “Confidential Business Information” Definition Will Affect EPA Regulations and Practice

The opinion reversed a lower court decision involving the Argus Leader newspaper’s FOIA request for sales data on stores participating in the Supplemental Nutrition Assistance Program administered by the U.S. Department of Agriculture (USDA). After a bench trial, the court determined that while the release of the sales data would cause competitive harm, that harm was not substantial and ordered USDA to release the data. The Supreme Court, however, held that FOIA requires federal agencies to withhold “trade secrets and commercial or financial information” that is “privileged or confidential.” 5 U.S.C. § 552(b)(4). The Court determined “confidential” to mean only that the owner of the information does not disclose it publicly or that the information was provided to a government agency with assurances that it would be treated as private. 

Below are five key issues arising from the Court’s decision.

1. EPA will have to change its FOIA regulations. EPA’s FOIA regulations include an entire subpart defining what is and is not protected confidential business information. For instance, it limits protection to cases where a company “obtain[s] or retain[s] business advantages … from its rights in the information.” 40 C.F.R. § 2.201(e). To obtain protection, the submitting company must explain, to EPA’s satisfaction, “that the disclosure of the information is likely to cause substantial harm to the business’s competitive position.” Id. § 2.208(e)(2). The Supreme Court’s Argus Leader Media decision explicitly prohibited agencies from requiring such a showing of “substantial competitive harm” and will require EPA to revise its regulations accordingly. The change will eliminate the need to persuade EPA staff — who may not be familiar with the company’s industry or the type of information at issue — how and why public disclosure could harm the company as well as greatly reduce the likelihood of administrative appeals under EPA regulations.
2. EPA could instead focus on the definitions of “commercial” or “financial.” Justice Stephen Breyer’s dissent agreed that the “substantial competitive harm” standard was improper but pushed for companies to demonstrate some prejudice if their information was released. He fears that a broad reading of “confidential” could shield communications between industry and government or merely protect embarrassing documents from public view. This could lead EPA or the courts to interpret the terms “commercial” or “financial” (which were not at issue in Argus Leader) narrowly, such as limiting them to sales data, costs, employee salaries, core technical documents or other information that could provide an advantage to a company’s competitors. This could re-introduce some form of the “substantial competitive harm” standard through a back door.
3. EPA may still deny protection to air emissions and effluent data. EPA regulations exempting air emissions data gathered for rulemaking or enforcement purposes from confidential business information protection will not change. Sections 114(c) and 307(d) of the Clean Air Act specifically exclude such data from confidential business information protection under FOIA. Although the Clean Water Act does not categorically exclude effluent data provided to EPA from protection, the statute requires companies to meet the high standard of demonstrating that effluent data “if made public would divulge methods or processes entitled to protection as trade secrets.” The Supreme Court’s decision affects neither of these statutory requirements.
4. Information gathered under CERCLA is still subject to the “substantial harm” test. EPA’s authority to gather information related to contaminated sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) Section 104(e) has always been a boon to potentially responsible parties considering a contribution action because they can request access to information submitted by other parties. CERCLA Section 104(e)(7)(E)(iii) requires parties seeking protection of their information from disclosure to demonstrate how disclosure of that information “is likely to cause substantial harm to the competitive position” of that party. Thus, regardless of Argus Leader, that test remains part of the CERCLA disclosure analysis.
5. EPA may have to categorically protect “voluntarily submitted information.” EPA regulations categorically exempt “voluntarily submitted information” related to the Safe Drinking Water Act, the Solid Waste Disposal Act and the Toxic Substances Control Act from confidential business information protection. This is a broad category of information that includes anything that EPA did not have a duty to collect and companies had no regulatory duty to provide. U.S. Court of Appeals for the District of Columbia Circuit case law has long drawn a distinction between voluntary and compelled information for purposes of the “substantial competitive harm” analysis. But this line of cases is now obsolete, and EPA must evaluate its regulations to determine whether voluntarily submitted confidential information may be treated differently. Nothing in Argus Leader suggests that the term “confidential” means anything different if the information at issue is submitted voluntarily.