Concerning the withholding of “confidential” information requested under the Freedom of Information Act
The Food Marketing Institute challenges the Eighth Circuit’s decision to require the USDA to release data on SNAP redemptions at individual stores. The Food Marketing Institute intervened after the USDA declined to appeal the district court’s decision that Exemption 4 did not apply because “any potential competitive harm from the release of the requested SNAP data is speculative at best.” The Eighth Circuit adopted D.C. Circuit’s approach to whether information is “confidential” from National Parks & Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). Under that test, Exemption 4’s applicability turns on whether disclosure would likely cause substantial competitive harm. The Eighth Circuit found that there would be no substantial harm because the data would only cause a “marginal improvement in accuracy” of competitors’ models. The court also said that a “likelihood of commercial usefulness” was “not the same as a likelihood of substantial competitive harm.” Food Marketing filed a petition for review at the U.S. Supreme Court. The petition was granted.
The Supplemental Nutrition Assistance Program (SNAP) is a federal program that provides nutritious food to low-income families. The U.S. Department of Agriculture (USDA) receives and maintains a record when a SNAP recipient makes an eligible purchase at a participating store.
The USDA releases monthly compilations of SNAP redemption data. The public can access national, state, and congressional-district level SNAP cost data on the USDA’s website. The USDA, however, does not disclose the amount of SNAP redemptions at individual stores.
In 2011, respondent Argus Leader, a newspaper in Sioux Falls, North Dakota, filed a Freedom of Information Act request for SNAP data. Argus Leader requested the store identifier, name, address, store type, and total SNAP sales on an annual sales basis for 2005 to 2010. The USDA released most of the requested information but withheld the store-level SNAP sales data.
The Freedom of Information Act (FOIA) allows the public to request and receive information from executive branch agencies. The law presumes that information is releasable. However, there are nine exemptions. Exemption 4 covers (1) trade secrets, and (2) information that is (a) commercial or financial, (b) obtained from a person, and (c) privileged or confidential.
This case involves the proper test for when information is “confidential.” Until 1974, courts had read “confidential” as information a company held as such, a subjective standard. In 1974, the D.C. Circuit adopted an objective test that requires showing substantial competitive harm in National Parks & Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). In subsequent decisions, the D.C. Circuit has reaffirmed the National Parks standard. Several circuits, including the Eighth Circuit, have adopted the National Parks substantial competitive harm test.
U.S. District Court for the District of South Dakota
After the USDA refused to provide the requested information, Argus Leader brought suit. The USDA claimed that the store-level SNAP data was protected under the Exemption 4 as “confidential.”
The District Court applied the D.C. Circuit’s substantial competitive harm test. At trial, the USDA proposed two theories for substantial competitive harm: competitors could use the SNAP data to lure away clients and high SNAP sales could stigmatize stores. The court rejected both, finding that any potential competitive harm was speculative because the amount of information released is marginal compared to the data already available for competitor’s models.
U.S. Court of Appeals for the Eighth Circuit
When the USDA declined to appeal the trial court’s decision, a trade group, Food Marketing Institute, which represents grocery stores, appealed the case on the USDA’s behalf. The Eighth Circuit found that there would be no substantial harm because the data would only cause a “marginal improvement in accuracy” of competitors’ models. The court said that a “likelihood of commercial usefulness” was “not the same as a likelihood of substantial competitive harm.” The court also found that there was no evidence stores would be stigmatized or stop accepting SNAP participants if the information were released.
In a footnote, the Eighth Circuit rejected Food Marketing’s argument that “confidential” should be given its “dictionary definition.” The Eighth Circuit, quoting the district court, found this argument precluded by “the Supreme Court’s admonition that FOIA exemptions ‘must be narrowly construed.'” The Eighth Circuit added that “Under FMI’s reading, Exemption 4 would swallow FOIA nearly whole.”
U.S. Supreme Court
The Supreme Court granted certiorari on two questions:
Whether the statutory term “confidential” in the Freedom of Information Act’s Exemption 4 bears its ordinary meaning, thus requiring the government to withhold all “commercial or financial information” that is confidentially held and not publicly disseminated—regardless of whether a party establishes substantial competitive harm from disclosure—which would resolve at least five circuit splits.
Whether, in the alternative, if the Supreme Court retains the substantial-competitive-harm test, that test is satisfied when the requested information could be potentially useful to a competitor (as the U.S. Courts of Appeals for the 1st and 10th Circuits have held) or whether the party opposing disclosure must establish with near certainty a defined competitive harm like lost market share (as the U.S. Courts of Appeals for the 9th and District of Columbia Circuits have held, and as the U.S. Court of Appeals for the 8th Circuit required here).
This case bears directly on EPIC’s case against the FTC for Facebook assessments, EPIC v. FTC. EPIC seeks documents from the FTC that Facebook claims are “confidential” and thus should be withheld from the public.