UPDATES & ANALYSIS

Definition of ‘confidential’ government records broadened by U.S. Supreme Court in South Dakota decision

by Rox Laird | June 27, 2019

A Sioux Falls, S.D., newspaper’s appeal to the U.S. Supreme Court on its federal Freedom of Information Act request for grocery stores’ food stamp records resulted in a reversal for the newspaper and for the U.S. Court of Appeals for the Eighth Circuit. And businesses now will have a stronger confidentiality claims for information they provide to the U.S. government.

The Supreme Court on June 24 handed down a decision holding that the ordinary meaning of the term “confidential” in the FOI Act means information that the owner of the information does not freely share. Thus, because grocery stores do not voluntarily disclose their food-stamp sales data, the Court reasoned, records of food-stamp spending at grocery stores collected by the U.S. Department of Agriculture may be withheld from public disclosure by the government.

“At least 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’ ” under the FOI Act, Justice Neil Gorsuch wrote for a six-member majority.

Justice Stephen Breyer wrote a separate opinion partially concurring and partially dissenting.

The Sioux Falls Argus Leader asked the U.S. Department of Agriculture for records showing how much federal money was paid to reimburse individual food retailers for purchases made by participants in the department’s Supplemental Nutrition Assistance Program (SNAP), formerly known as the food-stamp program.

The FOI Act request grew out of the newspaper’s investigation into “retailer trafficking” where a retailer illegally exchanges SNAP benefits for cash, giving the SNAP beneficiary 50 cents on the dollar in cash, for example, and pocketing the difference in a claim to the government.

The Argus Leader’s appeals were twice upheld by the Eighth Circuit, the St. Louis-based court that has jurisdiction over seven Midwestern states, including Iowa. The second ruling in support of the newspaper, which was appealed to the U.S. Supreme Court, was written by Judge Jane Kelly of Cedar Rapids and joined by Judges Raymond Gruender of St. Louis and Arlen Beam of Lincoln.

[For more background on the Argus Leader case, go to On Brief’s earlier post.]

In reversing the Eighth Circuit, the Supreme Court parsed the plain language of Exemption 4 of the FOI Act, which says that “commercial or financial information obtained from a person and privileged or confidential” is exempt from disclosure. Since the statute does not define “confidential,” the Court looked to the “ordinary, contemporary, common meaning of the word when the FOI Act was enacted in 1966.

Based on contemporary dictionary definitions of the word, the Court said, information that is customarily kept private would be considered confidential, and based on testimony in this case, food retailers customarily do not freely disclose store-level SNAP data or make it publicly available.

Several courts of appeals, including the Eighth Circuit, have historically applied a “competitive harm” test in which commercial information cannot be considered confidential unless disclosure is “likely . . . to cause substantial harm to the competitive position of the person from whom the information was obtained.”

This “competitive harm” test originated in a 1974 decision by the Court of Appeals for the District of Columbia Circuit (National Parks & Conservation Assn. v. Morton), which the Supreme Court unanimously rejected in this case, calling it a “relic” and the product of “a casual disregard of the rules of statutory interpretation.”

While concurring with the majority opinion on abandoning the National Parks precedent, Justice Breyer argued that the Court went too far in allowing businesses to say what records are confidential under the FOI Act.

“The whole point of FOIA is to give the public access to information it cannot otherwise obtain,” he wrote. “So the fact that private actors have ‘customarily and actually treated’ commercial information as secret cannot be enough to justify nondisclosure.”

Breyer added that “a tool used to probe the relationship between government and business should not be unavailable whenever government and business wish it so. And given the temptation, common across the private and public sectors, to regard as secret all information that need not be disclosed, I fear the majority’s reading will deprive the public of information for reasons no better than convenience, skittishness, or bureaucratic inertia.”

Tags: Eighth Circuit, Iowa Supreme Court, Iowa Supreme Court 2018-19, US Supreme Court