Bad Trade: One step forward, two steps back, for public’s oversight of industry

The Brechner Center
Jul 2 · 5 min read

When businesses share records with government regulators, it’s assumed those records become accessible for the public to look at — whether the businesses like it or not. But that access can no longer be taken for granted, as industries are getting increasingly aggressive about claiming that just about anything shedding light on how they do business is a confidential “trade secret.”

In Florida, a high-ranking state legislator couldn’t even get access to the contract between a state-funded tourism agency and Miami rapper Pitbull without a lawsuit — because of quote-unquote “trade secrets.” (Pitbull’s lawyers fought like … well, you know … before relenting and acknowledging the “trade secret” that $1 million had changed hands.)

The Supreme Court isn’t helping.

This term, the Court gave a breathtakingly expansive interpretation to Exemption 4 of the federal Freedom of Information Act, which deals with trade secrets that fall into the hands of government agencies. Open-government advocates are still reeling from the Court’s June 24 opinion in Food Mktg. Inst. v. Argus Leader, in which a six-justice majority voted to broaden the scope of confidentiality under Exemption 4.

The exemption generally allows an agency to withhold “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” The case expanded the accepted definition of “privileged or confidential” material to include scenarios “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[.]” In simple English, the ruling means that an agency can refuse to produce public documents about a business even if there is no evidence that the business will actually be harmed by the disclosure, as long as the documents have traditionally been kept non-public. In effect, businesses get to decide for themselves what’s secret by just keeping it secret.

The Court’s broadening of Exemption 4 has since been the subject of much ire, as critics note that diminishing the public’s access to federal spending records is a threat to effective oversight of government. The threat posed by limiting access under FOIA was not lost on Justice Stephen Breyer, who noted in dissent that the majority view in Argus Leader could “deprive the public of information for reasons no better than convenience, skittishness, or bureaucratic inertia.” The opinion essentially would allow just that, and allow for private companies who receive government funds to determine outright the information the public may obtain regarding the use of taxpayer money.

Advocates and attorneys around the country have expressed their concerns about the holding, particularly in regards to how the opinion goes against the purpose of FOIA:

@a_marshall_plan, Reporters Committee for Freedom of the Press

@TNOpenGovt, Tennessee Coalition for Open Government

@AlexanderAbdo, Knight First Amendment Institute

The coalition News Media For Open Government released a statement urging Congress to re-examine the decision for a potential legislative fix, noting the Court’s ruling “could potentially limit the amount of information that the public has a right to know. This decision erodes the foundation of what is considered public information and will greatly harm the public’s right, and need, to know how their tax dollars are being spent by their government.”

The case was about a South Dakota newspaper’s attempt to gather data about how much money retail establishments receive from redeemed federal food stamps — that is, how much taxpayer money goes through their cash registers. Access to records of this type can help journalists pick up on suspicious patterns and trends — but now, the public will just have to take the USDA’s word about how $70 billion in food-stamp benefits is spent.

FOIA Wars: A New Hope

All is not bleak for requesters seeking information on businesses operating with government funds.

Texas state lawmakers recently closed a loophole in the Texas Public Information Act, a major victory after state-court cases in recent years weakened the law in favor of government secrecy. In 2015, the Texas Supreme Court rendered an opinion in The Boeing Co. v. Paxton that anticipated the U.S. Supreme Court’s unfavorable decision in Argus Leader: The state court limited access to information on private companies doing business with the state or local governments, broadening an exemption that allows agencies to withhold trade secrets, proprietary information, and pending bids.

The new Texas law works to cure some of the harm caused by the Boeing case. When signed by Gov. Greg Abbott, the law immediately permitted requesters to obtain more contract information for dealings between the government and private businesses — including costs — while maintaining the existing exemptions for trade secrets and confidential business information.

The law’s passage was a boon for open government advocates in Texas. Speaking to MuckRock, Freedom of Information Foundation of Texas’s executive director Kelley Shannon enthusiastically stated “[t]he people of Texas now have restored access to information about how their government’s decisions are being made, and how taxpayer money is being spent. We feel really glad that the legislature understood the importance of the public’s right to know and in most cases, did the right thing.”

Perhaps the Texas legislature’s statutory fix will find its way to Washington, where members of Congress can restore by statute what the Supreme Court just took away.

SCOTUS opinion: Food Mktg. Inst. v. Argus Leader

More on the Argus Leader Case: USA Today

More on the Texas law, SB 943: Texas Tribune

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The Brechner Center is an incubator for initiatives that give the public timely access to the information necessary for informed, participatory citizenship.