Supreme Court

Expect More Government Secrecy in Business Relationships, Thanks to Supreme Court

Yesterday's Supreme Court ruling expanded when the government can keep business records secret. That's bad news for transparency

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A Supreme Court ruling expanding when the government can keep business records secret will limit public accountability and hamper investigative journalism, transparency advocates and press organizations say.

In a 6-3 ruling on Monday in Food Marketing Institute v. Argus Leader Media, the Supreme Court broadened an exemption to the Freedom of Information Act (FOIA) that restricts public access to government records containing trade secrets and financial information.

The decision overturned a test established by the Supreme Court in 1974 requiring private entities to show that disclosure of such records would cause substantial competitive harm. Instead, government agencies or third parties will now have to merely demonstrate that the records were intended to be kept secret when they were handed over to the government.

"It's going to be a lot harder to get that kind of information," says Rick Blum, policy director of the Reporters Committee for Freedom of the Press. "The Supreme Court has said 'confidential' means whatever the submitters says it means. There is no public interest consideration that would outweigh just an assertion that information is confidential."

The case arose in 2011 after South Dakota's Argus Leader newspaper filed a FOIA request to the Department of Agriculture seeking data on how much taxpayer money the department's Supplemental Nutritional Assistance Program (SNAP), previously known as food stamps, sent to more than 320,000 retailers participating in the program. 

The Food Marketing Institute, a retail group that intervened in the case, argued that the information would give a competitive edge to those retailers' competition. A federal appeals court ruled last year in favor of the Argus Leader, but the Supreme Court overturned that decision, finding that the text of the law didn't support the competitive harm test.

"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 meaning of (FOIA)," Justice Neil Gorsuch wrote in the majority opinion.

However, Justice Stephen Breyer wrote in a dissent that the majority's broad interpretation was "at odds" with the purpose of the Freedom of Information Act itself.

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

"After all," Breyer continued, "where information is already publicly available, people do not submit FOIA requests—they use Google."

Blum notes that reporters have managed to get identical SNAP data from several states. Using the data, the New Food Economy, a nonprofit news organization, reported last year that as many as 1 in 3 Amazon employees in Arizona receive food stamps.

As a result, Sen. Bernie Sanders (I–Vt.) introduced a bill to force large corporations to fully cover the cost of federal assistance to their employees. Amazon raised its minimum wage to $15 an hour a month later.

"It's a great success story about the power of public disclosure," Blum says. "But this is the very same information that the Supreme Court ruled should be kept confidential because the entity that gave the information to the government claimed that it was considered confidential. That essentially turns FOIA on its head."

Government databases and paper trails are a treasure trove for reporters investigating the intersection of big business and government, but those companies, as well as the government, have often worked to keep those records secret.

For example, the U.S. Court of Appeals for the 6th Circuit ruled last week that the Drug Enforcement Administration (DEA) must disclose a database of prescription opioid sales and shipments to The Washington Post and a chain of West Virginia newspapers.

In its opinion in HD Media Company v. United States Department of Justice, the appellate court noted that reporters had gotten similar data from the West Virginia state government, with stunning results. For example, the Charleston Gazette-Mail discovered that one opioid distributor sent more than 20 million doses of hydrocodone and oxycodone to two pharmacies in a West Virginia town of just under 3,000 people.

The disclosure, despite the caterwauling of the DEA and pharmaceutical companies, "resulted in no demonstrated commercial harm to Defendants and no demonstrated interference with law enforcement interests," the 6th Circuit wrote. "But this reporting did result in a Pulitzer Prize, a Congressional Committee report, and a broader public understanding of the scope, context, and causes of the opioid epidemic."

Corporations and the U.S. government have also colluded to try and hide details on law enforcement's use of cell phone tracking technology. As I reported in 2014, Harris Corporation, the manufacturer of several cell phone tracking devices popular with law enforcement agencies, inserted non-disclosure agreements in its contracts with cities forbidding them from releasing any information about the devices in response to public records requests. Meanwhile, the federal government went so far as to remove documents from public courthouses and toss out criminal prosecutions to keep secret details of how police departments use the technology.

Maribel Perez Wadsworth, the president of the USA TODAY Network, of which the Argus Leader is a part, said Monday's Supreme Court ruling "effectively gives businesses relying on taxpayer dollars the ability to decide for themselves what data the public will see about how that money is spent."

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  1. …how much taxpayer money the department’s Supplemental Nutritional Assistance Program (SNAP), previously known as food stamps, sent to more than 320,000 retailers participating in the program.

    I didn’t realize businesses had a choice in accepting SNAP payments. I thought SNAP worked like any other card. So, if that’s the case and the businesses make the choice to get in bed with the federal government, it seems like those transactions should be available.

    Otherwise, I would agree with the court that just because the government hoovers up information from the private sector doesn’t mean it should be available for FOIA requests.

    1. How is accepting SNAP payments different than accepting the US dollar? Should FOIA requests allow you to request info about a business’s regular sales data? Accepting government minted money is “getting in bed with the federal government,” too.

  2. Oh goody more democrat/ google collaborations. I imagine Suderman is already writing his “conservatives pounce” article in reaction to the shitstorm of progressive fascism that is sure to come.

  3. This isn’t a loss for government transparency, this is a gain for business privacy.

    1. Up is down! Day is night! Right is wrong!

  4. The answer isn’t to use government subsidies to steal private business information. The answer is to stop government subsidies.

  5. When the data is compelled, it should be protected.
    Take this one step further; what is the legal difference between compelled business data, and your compelled financial data in your tax return? Both are data the originator would keep secret absent government force.

  6. I’m a little shocked to see Reason taking this stance. if I give ANY information to the government, I should be able to expect them to protect it. if I give them business sensitive or proprietary information, they damn well better keep it confidential. it isn’t their call, or any third party’s call as to whether I am being accurate or being paranoid in making that call. it is mine. government information, including how decisions are made (ahem, executive privilege), should be subject to FOIA, but corporate records should not. separate mechanisms to find product information that companies are trying to hide from consumers, like safety or unethical sourcing or pricing exist in abundance, including government agencies that conduct oversight, watchdog groups, and the court system. what CJ is decrying as a lost opportunity for transparency sounds to me like someone trying to apply a third party doctrine (an end-around that we rightly blast the government for in terms of individual privacy) to business data that is mandated for submission to the government.

    1. The actual point is that you do not GIVE the government data, they take it by force of laws and regulations.

  7. Yeah, I’m not seeing this decision as a problem. People are allowed to keep secrets and so are companies. Other people should not be allowed to use the government as a proxy to breezily violate that secrecy.

    Transparency is about evaluating government behaviors and policies. Look at the government all you like. You don’t get to see my records to conduct your analysis, though – not even if my records are being held by the government. And especially not when I had no choice but to let the government in on my secrets.

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