On June 30, 2016, President Obama signed into law the FOIA Improvement Act of 2016, Pub. L. No. 114-185, which made significant changes to the Freedom of Information Act, 5 U.S.C. § 552, et seq. (“FOIA”). FOIA can be a great tool for unlocking the federal government’s vast compilations of documents and information, which make it a great resource for business intelligence. But you also should be aware of FOIA’s pitfalls, including how your own business’s confidential documents and information can be disclosed to the public, including the media, if the federal government has them in its possession and they become subject to a FOIA request.
FOIA was enacted in 1966 and allows any member of the public to request access to government information without requiring a showing of a need or reason for seeking the information. FOIA was a revision of the Administrative Procedure Act, 5 U.S.C. § 551, et seq. (“APA”). Congress saw that the APA was falling short of its original disclosure goals and that the original law came to be viewed more as a withholding statute than a disclosure statute. See EPA v. Mink, 410 U.S. 73, 79 (1973). Congress’s intent in enacting FOIA was to make the government’s records and activities available and transparent to the public with only a handful of express exemptions that the government could invoke to withhold documents and information from disclosure. Generally the exemptions prevent disclosure of information related to national security, law enforcement investigations, government personnel rules and practices, specific exemptions from other statutes, and trade secret, commercial, or financial information obtained from third parties such as individuals and businesses.
The federal government is a huge collector of documents and information and businesses can use FOIA to request this information in order to analyze markets, research competitors, or find new customers. It usually is just a matter of knowing where to look. Many sources of information do not even require a formal FOIA request. For example, the web site Data.gov is the federal government’s online repository of data and tools that allow individuals and businesses to harness the government’s data collection efforts for their own uses. The recent FOIA amendments expand upon this accessibility by requiring that a new, consolidated online-request portal be built in order to field FOIA requests for records from any federal government agency. This one-stop electronic shop should make it very easy to submit information requests to the government.
The New FOIA Amendments
The new FOIA amendments codify the standard announced by the Obama administration in 2009, that agencies of the federal government shall withhold information “only if the agency reasonably foresees that disclosure would harm an interest protected by an exemption” or “disclosure is prohibited by law.” This presumption stands in contrast to the prior Bush administration policy that directed agencies to limit disclosures of discretionary information and withhold information unless the non-disclosure “lack[ed] a sound legal basis.” See Senate Report 114-4 at 3. The new presumption tilts government policy further in favor of disclosure of its records.
A second significant change to FOIA made by the new law is a so-called “sunset” provision for documents withheld under one of FOIA’s nine exemption provisions. One major exemption of FOIA protects from disclosure documents that reflect the government’s “deliberative process.” The “deliberative process” privilege covers documents and information such as advisory opinions, recommendations, and deliberations by which governmental decisions and policies are formulated. This privilege “rests on the obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news, and its object is to enhance ‘the quality of agency decisions,’ by protecting open and frank discussion among those who make them within the Government.” Dep’t of Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8-9, (2001) (internal citations omitted). The amended law, however, lifts that exemption for any document created 25 years or more before the date on which the records are requested. The removal of this exemption after 25 years may prove to be a wellspring of information to understand the reasons for government policy decisions made beyond the 25-year limit. Drawing back the curtain on many of these documents may prove to be a fruitful source for future litigation against the government.
Finally, the amended law also includes provisions requiring the Office of Government Information Services to offer mediation services to resolve disputes among persons making requests and the administrative agencies as an alternative to bringing a lawsuit in federal district court seeking an order compelling the government to disclose the records. Such mediation services could reduce the costs of obtaining records from an otherwise recalcitrant agency asserting an exemption against a requesting party.
Pitfalls for Confidential Information Submitted to the Government
While FOIA provides a great access tool, businesses should remain cautious about the disclosure of their own confidential information that they provide to the government. The same transparency that makes FOIA a useful research tool also could become a back door to your own trade secrets and commercial information. Businesses submit a constant stream of documents and information to the government as the result of regulatory action or a compulsory order in a government investigation, administrative action, or a civil or criminal proceeding. Information and documents collected from businesses by the government become “records” subject to FOIA requests unless they fall within an exemption from disclosure under the statute. Information in the hands of the government may end up being the subject of a FOIA request by a media organization or other third party. Such requests may be specifically targeting the information about your business or it may be swept unexpectedly into a broad search request.
FOIA has another exemption from disclosure for all “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4). The exemption is futher backstopped by the Trade Secrets Act, 18 U.S.C. § 1905, a criminal statute that prohibits the government and its agents from divulging confidential information obtained from private parties. The FOIA exemption is intended to protect both the government’s interest in obtaining information and any submitters’ interest in making sure that it remains confidential. The meaning and application of what is “confidential” under this provision, however, has been the subject of a convoluted history of litigation in the federal courts. (The history is detailed here in a nearly 100-page document by the Department of Justice.) Because of the way the FOIA statute is structured, the agency responding to a FOIA request asserts the applicable exemption(s) from disclosure in any response or dispute over the requested documents, not the real party in interest – the actual owner of the documents and information. Although a submitter may challenge an agency’s ultimate decision regarding the application of an exemption and attempt to prevent disclosure through a so-called “reverse FOIA” lawsuit, the agency’s decision about the application of an exemption is the first line of defense against disclosure.
So what can you do to protect itself from disclosure of its confidential information by the government? Be proactive from the moment that you submit information. If you are submitting information requested by the government for any reason and want to preserve its confidentiality under FOIA, notify the government that you would like the documents and information to be exempted from FOIA by saying so in your communications with the agency and by clearly labeling the documents and information that you submit with a legend that says “Confidential Trade Secrets” or “Confidential Commercial Information.” Some agency regulations give specific guidance about how to designate and identify confidential information and how long the agency will protect it. For example, the Department of Labor’s FOIA regulations provide for marking documents provided by the submitter and that a submitter’s designations will expire after ten years unless justification is provided for a longer period. See 29 C.F.R. §70.26(b). The designations and labels are intended to flag the fact that you want to keep the information confidential to any FOIA officer later reviewing the documents in response to a FOIA request. The markings also signal the agency to give notice that the documents and information have become the subject of a request, giving you warning that a third party is requesting (or otherwise about to receive) what you have designated as confidential. This notice also gives you an additional chance to substantiate your request for confidential treatment and and provide any additional reasons why your information should not be disclosed. Be aware that the reasons that you give for confidentiality likely will become the reasons that the agency asserts for the exemption from FOIA. The more thorough and detailed your reasons, the more likely that the exemption will be asserted by the agency and will withstand scrutiny on review in the courts and your business’s trade secrets and confidential information will remain under wraps within the government’s files as you intended and the law requires.