Recent FOIA Exemption 4 decision highlights problems with SCOTUS’s holding in Argus Leader

Earlier this year, in Food Marketing Institute v. Argus Leader, the Supreme Court radically altered the scope of Exemption 4 under the Freedom of Information Act (“FOIA”).  Exemption 4 protects from disclosure “trade secrets” and “commercial or financial information obtained from a person [that is either] privileged or confidential.”  At issue in Argus Leader was the precise meaning of the term “confidential.”  Rather than accept the long-standing “competitive harm” standard developed by the D.C. Circuit nearly forty years ago, the Supreme Court instead held that “confidential” meant anything “customarily and actually treated as private by its owner.”  As Cause of Action Institute warned at the time, that “cramped reading” of Exemption 4 “failed to grapple with the historical and contextual meaning” of “confidential” and would “make it more difficult for the media and government-transparency groups to conduct oversight of the often-murky nexus between business and government.”

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Investigation Update: The VA continues to subject certain FOIA requests to “sensitive review,” but the agency is keeping records about the practice secret

Over the past year, Cause of Action Institute (“CoA Institute”) has been investigating the Department of Veterans Affairs for its continued politicization (here, here, and here) of the Freedom of Information Act (“FOIA”).  That politicization takes the form of “sensitive review,” which refers generally to the practice of giving certain FOIA requests extra scrutiny.  Sensitive review usually entails an additional layer of review or “consultation” with interested parties before potentially embarrassing or politically sensitive records are released to the public.  At its best, it almost always causes delay.  At its worst, it leads to intentionally inadequate searches, politicized document review, improper redaction, and incomplete disclosure. Learn More

CoA Institute Defeats IRS Motion to Dismiss Lawsuit Over Access to Congressional Communications

Washington, D.C. (July 18, 2019) – U.S. District Court Judge Ketanji Brown Jackson yesterday denied the Internal Revenue Service’s (“IRS”) motion to dismiss Cause of Action Institute’s (“CoA Institute”) Freedom of Information Act (“FOIA”) lawsuit over the agency’s refusal to produce records relating to its dealings with Congress’s Joint Committee on Taxation (“JCT”).  To date, the IRS has refused to search for records potentially responsive to CoA Institute’s FOIA requests.  The agency instead has argued that all relevant records would categorically be “congressional records” outside the scope of disclosure permitted under the FOIA.  In its failed motion, the IRS claimed that the federal district court even lacked the authority—or subject-matter jurisdiction—to adjudicate CoA Institute’s well-pleaded claims in the first instance.

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Commerce Provides Poor Excuse in First Substantive Answer on Secrecy of 232 Auto Tariff Report

Washington, D.C. (June 19, 2019) – After nearly four months, Cause of Action Institute (CoA Institute) has finally received an explanation from the Department of Commerce (Commerce) that claims the Commerce Secretary’s final report to the President regarding the Section 232 investigation into the national security impacts of the Administration’s proposed automobile tariffs may constitute a presidential record. In this determination, which is in response to CoA Institute’s Freedom of Information Act (FOIA) request and subsequent litigation, Commerce states it is reviewing whether the report does in fact constitute a presidential record, which would remove it from the scope of the FOIA. It also claims that if the report ultimately is classified as an “agency record,” Commerce will still refuse to provide access to the report under the guise of presidential communications or deliberate process privileges.

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District Court Denies FBI’s Open America Motion in Daily Caller News Foundation FOIA Lawsuit

Washington, D.C. (June 12 2019) – Cause of Action Institute (CoA Institute), celebrated a victory for its client, the Daily Caller News Foundation (DCNF), after the U.S District Court for the District of Columbia denied the Federal Bureau of Investigation’s (FBI) motion for an Open America stay. The victory for DCNF will ensure the FBI produces court ordered records, 500 records per month, pertaining to DCNF’s Freedom of Information Act (FOIA) request for documents relating to Special Government Employee Daniel Richman. The Court largely echoed the arguments made by CoA Institute that the FBI failed to show any unexpected spike in FOIA requests or litigation and had not properly reduced its FOIA backlog.

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Institute of Museum and Library Services Adopts CoA Institute’s Recommendation for Revised FOIA Regulations

The Institute of Museum and Library Services (“IMLS”) finalized a rule today implementing revised Freedom of Information Act (“FOIA”) regulations that incorporates an important revision proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted to the agency in January 2019.  The IMLS is a small agency that provides federal support to libraries and museums across the country in coordination with state and local government.

CoA Institute made several recommendations in response to the IMLS’s proposed rulemaking.  Most importantly, we urged the agency to remove outdated “organized and operated” language from its definition of a “representative of the news media.”  That language has been used in the past to deny news media requester status—and favorable fee treatment—to government watchdog organizations, including CoA Institute.

In 2012, we sued the Federal Trade Commission, and took our case all the way to the D.C. Circuit, just to get the agency to acknowledged that its FOIA fee regulations were outdated and that it had improperly denied CoA Institute a fee reduction by relying on the “organized and operated” standard.  In deciding that case, the D.C. Circuit issued a landmark decision in 2015, which clarified the proper fee category definitions and application of fees in FOIA cases.  We cited this case to the IMLS and the agency took heed of the controlling case law, removing the outdated “organized and operated” standard from its final rule.

CoA Institute also asked the IMLS to remove language directing its FOIA officials to read agency regulations “in conjunction with” fee guidelines published by the White House Office of Management and Budget (“OMB”) in 1987.  Portions of the OMB guidance, which are the source of the “organized and operated” standard, are no longer authoritative because they conflict with the statutory text, as amended by Congress, and judicial authorities, including Cause of Action v. Federal Trade Commission.

Continued reliance on the OMB guidelines is a source of confusion.  In 2016, the FOIA Advisory Committee and the Archivist of the United States both called on OMB to update its fee guidelines.  CoA Institute also filed a petition for rulemaking on the issue, and is currently litigating the matter in federal court.  Although the IMLS has decided not to alter its reference to the OMB guidelines, the fact remains that no agency can rely on OMB’s superseded directives.

Since the passage of the FOIA Improvement Act of 2016, CoA Institute has commented on twenty-seven separate rulemakings.  Of the twelve interim or proposed rulemakings that have been finalized, CoA Institute has succeeded in convincing nine agencies to abandon the outdated “organized and operated” standard in favor of a proper definition of “representative of the news media,” including the following:

Other agencies, including the National Credit Union Administration and the Federal Reserve, chose to defer CoA Institute’s recommendations and have promised to propose further revisions in the near future to address outstanding fee issues.  A small minority of agencies, which published direct final rules, have failed to acknowledge the continued deficiency in their regulations.

CoA Institute’s successful comment to the IMLS is another small step in our efforts to provide effective and transparent oversight of the administrative state and, more specifically, to ensure agency compliance with the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute

Cause of Action Institute leads diverse coalition in filing Supreme Court amicus brief in FMI v. Argus Leader

Urges Court to follow the text and strike a wise balance when examining Exemption 4 within the Freedom of Information Act

Today, Cause of Action Institute, a nationally recognized government watchdog organization with a specialty in government transparency, led an ideologically diverse coalition in filing an amicus brief involving Exemption 4 of the Freedom of Information Act (FOIA), a statute the Court rarely interprets. The brief, filed before the U.S. Supreme Court, urges the Court to improve and clarify how Exemption 4 is applied. This particular exemption protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”

The case has the potential to upset the status quo and drastically expand the use of this exemption – meaning more information that was otherwise public could now be withheld from disclosure. The coalition’s amicus brief urges the Court to strike a sound balance by clarifying and improving the competitive-harm test, eliminating the Critical Mass distinction, confirming an objective test for determining confidential information, and ensuring Exemption 4 takes into account some reputational harms that could occur if confidential information is disclosed.

James Valvo, counsel and senior policy advisor for Cause of Action issued the following statement:

“It’s rare to see the Supreme Court take a FOIA case, and far more rare that the case deals with the specifics of Exemption 4. But good government is government that is transparent and open. This is perhaps why it is so critical that the Court uses this opportunity to clarify how Exemption 4 is applied, to ensure the public’s right to information is protected while not harming legitimate commercial concerns. The existing standards to determine what information falls within or out of the scope of Exemption 4 has created a confusing web that does a disservice to spirit of the FOIA.”

In addition to Cause of Action Institute, Citizens for Responsibility and Ethics in Washington, FOIA Advisor, Open the Government, and the Project on Government Oversight signed the amicus brief.

The amicus brief specifically asks the Court to:

  • Address and interpret the term “confidential,” as used under Exemption 4, to bring it into harmony with the statutory text and its historical usage in other legal contexts and confirm an objective test for determining the confidentiality of commercial or financial information;
  • Eliminate the National Parks standard that the impairment of the government’s ability to collect information is a justification for withholding information as unnecessary and duplicative;
  • Eliminate the atextual distinction created in Critical Mass between information that is obtained through voluntary or compulsory means; and
  • Ensure Exemption 4 protects against certain types of reputational harm that have a negative impact on competitive standing.

Summary:

All records subject to the FOIA should be disclosed to the public unless the federal government cites one of nine exemptions. This case specially deals with Exemption 4, which concerns, “Trade secrets or commercial or financial information that is confidential or privileged.”

FOIA Exemption 4, exempts from disclosure “confidential” commercial or financial information that the government obtains from a person. But the FOIA does not define “confidential.” The meaning of that term cannot be derived from bare dictionary definitions. “Confidential” instead must be understood in light of its historical usage in other legal contexts and in the FOIA. Persuasive canons of statutory interpretation counsel the Court to take that approach. Petitioner’s overbroad understanding of “confidential” ignores legal history, deviates from the interpretative methodology accepted for other terms in Exemption 4, and would render the whole of Exemption 4 surplusage by swallowing up the independent meanings of “trade secret” and “privileged.”

The proper meaning of “confidential” covers information that, if made public, would cause competitive harm to its source. This meaning is rooted in the common law and the nature of confidential relationships. But history is not the only basis for this understanding. In other legal contexts, construing the phrase “confidential information” frequently involves some form of harm analysis. From judicial records and the Bankruptcy Code, to the Rules of Civil Procedure and this Court’s precedents on FOIA Exemptions 5 and 7, legal context demonstrates the inadequacy of Petitioner’s dictionary-bound approach to Exemption 4.

This case also presents the Court with an opportunity to clarify other aspects of Exemption 4. Although amici ask the Court to uphold the competitive-harm justification of National Parks, they also ask the Court to eliminate the government-impairment justification, abandon the distinction between information submitted voluntarily or under compulsion, reiterate that competitive harm is analyzed under an objective test, and accept reputational harms that impact competitive standing as cognizable under Exemption 4.

As the Court considers this case, it should do so consistent with its precedent for interpreting the FOIA. The Court has recognized that the FOIA is essential to “ensure an informed citizenry, vital to the functioning of a democratic society,” and that it contains a “strong presumption in favor of disclosure. To ensure that citizens have access to information and to honor the strong presumption of disclosure, FOIA exemptions “must be ‘narrowly construed.”

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Media ContactMatt Frendewey, matt.frendewey@causeofaction.org | 202-699-2018