Food Marketing Institute v. Argus Leader Media
T. Daniel Logan*
Why It Made the List
On June 24, 2019, in a dozen pages, the Supreme Court upended forty years of precedent regarding Exemption 4 of the Freedom of Information Act (FOIA) that had been relied on by federal agencies, submitters, and requestors of information. Specifically, the decision sets forth a new standard for determining when commercial or financial information, obtained from a third party, can be considered “confidential” for the purposes of FOIA and withheld from release under that statute. The consequences of the decision have yet to be seen, but it is likely that the bar for demonstrating that commercial and financial information is confidential under FOIA Exemption 4 has been substantially lowered, making it much more difficult for the public to obtain such records and information by way of FOIA. collects and holds significant stores of business and financial information from product applications, inspections, and submissions. It also receives significant numbers of FOIA requests for such information. Thus, the decision has the potential to vastly change the degree to which FDA makes commercial and financial information submitted to it available.
FOIA Exemption 4 Prior to Food Marketing Institute
Generally, under the FOIA, agencies must make documents and information available to the public upon request, except where a specific statutory exemption or exclusion applies. Exemption 4 of the FOIA prohibits the release of documents or information containing “commercial or financial information obtained from a person and privileged or confidential.” Thus, in response to a request under the FOIA, the federal government is required to withhold certain business and financial information, but only if such information meets the threshold condition of confidentiality. Because the term “confidential” is not defined by the statute, since the passage of FOIA in 1966, courts have developed their own tests for assessing the confidentiality of information provided by industry to the federal government. The initial tests developed by courts were supplanted in 1974 by the standard set by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in National Parks & Conservation Ass’n v. Morton. In that case, the Court examined the legislative history of the FOIA statute and determined that commercial or financial information was “confidential” if the disclosure of that information would: (1) impair the government’s ability to obtain such information in the future; or (2) cause substantial harm to the competitive position of the person from whom the information was adopted. This test became the dominant approach for confidentiality determinations under Exemption 4 of the FOIA and was eventually adopted broadly.
Subsequently, in Critical Mass Energy Project v. Nuclear Regulatory Comm’n, the D.C. Circuit reaffirmed the National Parks test, but clarified that such test should only be applied where commercial or financial information is “required” to be provided to the government. Under Critical Mass, commercial or financial information that is “voluntarily” provided to the government must be withheld from disclosure if such information would “customarily not be released to the public by the person from whom it was obtained.” That the D.C. Circuit declined to extend National Parks may have presaged the Food Marketing Institute decision twenty-seven years later.
Factual and Procedural Background
In February 2011, the Argus Leader (Argus), a newspaper based in Sioux Falls, South Dakota, submitted a request to the U.S. Department of Agriculture (USDA), seeking records related to the Supplemental Nutrition Assistance Program (SNAP), formerly referred to as the “food-stamp” program. Specifically, the request sought retail store SNAP records for 2005 to 2011, including: store identifier, store name, store address, store type, and store-specific yearly redemption amounts or Electronic Benefit Transfer (EBT) sales figures. Although USDA released all other data requested, relevant here, it withheld the redemption data from release under FOIA Exemption 4. Argus disagreed with the USDA’s rationale and brought suit in federal court. At trial, USDA presented evidence that retailers do not disclose SNAP redemption data because release of such information would harm the competitive positions of stores to which the SNAP redemption data pertained. Relying on Eighth Circuit case law incorporating the National Parks standard, the district court disagreed and ordered the release of the SNAP data, finding that while there was a likelihood of some commercial harm to retail stores, the evidence presented did not show that such harm would be “substantial.” After USDA declined to appeal the district court’s ruling, Food Marketing Institute (FMI), a trade association representing grocery stores, intervened and filed its own appeal with the U.S. Court of Appeals for the Eighth Circuit, which affirmed the district court’s ruling. The Supreme Court granted FMI’s petition for certiorari and held oral argument on April 11, 2019.
The Court’s Ruling in Food Marketing Institute v. Argus Leader Media
The key issue addressed by the Court’s decision is “when does information provided to a federal agency qualify as ‘confidential?’” Although the Supreme Court previously had considered the meaning of “confidential” in the context of FOIA Exemption 7(D), the Court had not opined on such terms’ meaning with regard to FOIA Exemption 4.
Justice Gorsuch, writing for the 6-3 majority, rejected the National Parks/Critical Mass framework for determining what information is “confidential” for the purposes of FOIA Exemption 4 as a “relic from ‘a bygone era of statutory construction’”  that had drawn considerable criticism, even from the D.C. Circuit. Panning the rationale of National Parks as supported by a “selective tour of the legislative history,” the Court explained that the appropriate starting point for statutory analysis is “careful examination of the ordinary meaning and structure of the law itself.” Notably, the Court rejected the argument that Exemption 4 must be construed to mirror a common law term of art, “confidential commercial information,” stating that no evidence had been presented that necessitates such a reading.
Instead, noting that the term is not defined by the statute, the Court looked to the “ordinary, contemporary, common meaning” of the term when FOIA was enacted in 1966. Based on examination of contemporaneously published dictionaries, the Court concluded that “confidential” meant “private” or “secret” at the time of FOIA’s enactment and the term continues have the same meaning. It further posited that two conditions could be required for information transmitted between parties to be considered confidential. First, “information communicated to another remains confidential whenever it is customarily kept private, or at least closely held, by the person imparting it.” Second, “information might be considered confidential only if the party receiving it provides some assurance that it will remain secret.” The Court considered whether both conditions must be met for information to be considered “confidential” under FOIA Exemption 4. Explaining that it would be “hard to see how information could be deemed confidential if its owner shares it freely,” the Court concluded that at least the first condition must be met and had been met with regards to store-level SNAP data. Finding that the second condition was easily satisfied by USDA’s promises to retailers to keep store-level SNAP data private, the Court found it unnecessary to decide whether or not information would lose its confidential character under FOIA Exemption 4 if communicated to the government absent an assurance of privacy.
Ultimately, the Court propounded a new standard to be applied for determinations of confidentiality under FOIA Exemption 4—“where 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 information is ‘confidential’ within the meaning of Exemption 4.”
Justice Breyer, writing for the minority, concurred with the majority’s two conditions for confidentiality, but argued that a third condition was also necessary: “[r]elease of . . . information must . . . cause genuine harm to the owner’s economic or business interests.” In the view of the dissent, the term “confidential” pertains to the nature of the information, not just the submitter’s treatment of such information. Moreover, the dissent argues that the majority decision frustrates FOIA’s purpose of “broad disclosure of government records,” because it would, in effect, shield the relationship between the government and private business from public scrutiny by lowering the bar for demonstrating confidentiality of business records.
Because the Court’s decision swept away forty years of precedent, businesses, agencies, and courts are left to apply and interpret the new standard for determinations of confidentiality under FOIA Exemption 4. Many questions have been left unanswered. One critical question is whether an assurance of privacy from the government is necessary for information to be considered confidential, and if so, must such assurance be express or may it be implied? What kind of evidence will it require of private entities to demonstrate “confidentiality,” particularly with regard to the “assurance of secrecy” prong, if that showing is required? Moreover, how should FDA and regulated entities engage with various statutes and regulations that employ the term “confidential commercial information”? Will the information FDA has historically made proactively available be curtailed? As it works to answer these questions, FDA stands to be a litmus for how agencies will apply (and litigate) the Food Marketing Institute decision.
* Kleinfeld, Kaplan & Becker LLP
 Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356 (2019).
 5 U.S.C. § 552(b)(4).
 See, e.g., Sterling Drug, Inc. v. F.T.C., 450 F.2d 698, 701 (D.C. Cir. 1971); Gen. Servs. Admin. v. Benson, 415 F.2d 878, 881 (9th Cir. 1969).
 498 F.2d 765 (D.C. Cir. 1974).
 Id. at 770.
 See Contract Freighters, Inc. v. Sec. of U.S. Dep’t of Transp., 260 F.3d 858, 861 (8th Cir. 2001) (survey of cases).
 975 F.2d 871, 879–80 (D.C. Cir. 1992) (en banc).
 Argus Leader Media v. U.S. Dep’t of Agric., 900 F. Supp. 2d 997, 1000 (D.S.D. 2012).
 Note that USDA initially withheld under both Exemption 3 and 4 of the FOIA. Although the district court affirmed USDA’s action, the Court of Appeals for the Eighth Circuit reversed and remanded, finding that Exemption 3 was not applicable. Argus Leader Media v. U.S. Dep’t of Agric., 740 F.3d. 1172, 1173 (8th Cir. 2014).
 Argus Leader Media v. U. S. Dep’t of Agric., 224 F. Supp. 3d 827, 833–35 (D.S.D. 2016) (citing Contract Freighters, Inc. v. Sec’y of U.S. Dep’t of Transp., 260 F.3d 858, 861 (8th Cir. 2001)).
 Argus Leader Media v. United States Dep’t of Agric., 889 F.3d 914 (8th Cir. 2018).
 Food Mktg. Inst., 139 S. Ct. at 2360.
 Id. at 2364 (citing U.S. Dep’t of Justice v. Landano, 508 U.S. 165 (1993)); 5 U.S.C. § 552(b)(7)(D).
 Id. at 2635 (noting that Critical Mass declined to extend the National Parks test to commercial or financial information voluntarily provided to the government).
 Id. at 2364.
 Id. at 2365.
 Id. at 2362.
 Id. at 2363.
 Id. at 2366.
 Id. at 2367 (Breyer, J. dissenting).
 Id. at 2368 (citing C.I.A. v. Sims, 471 U.S. 159, 166 (1985)).
 See, e.g., 21 U.S.C. § 350(a) (publication of new dietary ingredient submissions); 21 U.S.C. § 360eee-1(g)(1)(E)(i) (relating to drug track-and-trace requirements); 21 U.S.C. § 387k(e) (publication of modified risk tobacco product applications).