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Keeping Information Confidential: What Businesses Need to Know About Recent Developments under FOIA and CWA

Most businesses face numerous privacy concerns. Businesses that provide confidential information to regulatory agencies face a unique challenge: How can they keep this information private?

Recently, several hundred power plants faced this challenge when environmental groups sued EPA to compel disclosure of confidential information the plants had provided to EPA. The case highlights the different tactics groups may take to obtain information, and reminds businesses to be aware of the laws governing confidentiality of information.

Background

Lock Up, SecretIn Environmental Integrity Project v. EPA, environmental groups sued EPA to obtain business information provided to it.[1] EPA had distributed a survey on wastewater to 733 power plants to obtain information to promulgate rules limiting pollution by steam-electric power plants. All the plants responded to the survey and provided information on items including the amounts of pollutants discharged from the plant, the costs of removing the pollutants, and the performance of wastewater treatment technologies.

Several environmental groups reacted quickly and requested the data from the surveys under the Freedom of Information Act (FOIA),[2] claiming the data would help the public better understand effluent limits. EPA gave some but not all the data requested, noting that some of the information was confidential and protected by FOIA’s fourth exemption.

Agencies frequently use FOIA’s fourth exemption because it protects two broad categories of information in agency records: “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”[3] The goal of the fourth exemption is to encourage businesses to provide useful, truthful information to agencies while also protecting the businesses from competitive disadvantages.

When EPA wouldn’t disclose the full effluent data, the groups filed suit to force EPA to disclose the information. EPA won its motion for summary judgment in the district court,[4] and the environmental groups appealed.[5] The environmental groups conceded that the information is protected under the FOIA exemption, but argue that Section 308(b)[6] of the Clean Water Act (CWA) supersedes or modifies FOIA so that even information protected under a FOIA exemption is subject to disclosure under the CWA.

The D.C. District Court ruled that the language of the CWA did not expressly modify or supersede FOIA as required under the Administrative Procedure Act,[7] and so EPA acted within its discretion to withhold the data.

Maintaining Confidentiality of Submitted Information

Although this case did not turn on the issue of whether the information was “confidential” and thus protected under a FOIA exemption, that issue frequently arises for companies.

In Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992), the D.C. Circuit created two different standards to determine when information provided by companies to the government is confidential. One standard applies when the information is given to the agency voluntarily, while a different standard applies when the information is required to be handed over to the agency.[8] The court held that information given to an agency voluntarily is considered confidential and not disclosable under FOIA if the business would not ordinarily release the information to the public.[9] With respect to information a company is required to disclose, the court also held that a two-prong test—that includes an impairment prong and a competitive harm prong—should be applied.[10]

The ruling left open the question of how to analyze the issue of when a business ordinarily releases information to the public. Courts have since considered a range of evidence to determine what information is “ordinarily released,” including how extensively the information is distributed within the company, whether the documents are marked “confidential,”[11] as well as affidavits from the agency combined with detailed descriptions of the documents to determine whether the information should be considered confidential.[12]

Companies can therefore take action to improve the likelihood that the information they provide voluntarily to agencies remains confidential. It is critical for businesses to designate information as confidential, be aware of its internal dissemination, and be able to explain their normal processes for disseminating information to ensure confidential information given to regulatory agencies is protected from FOIA disclosures.


[1] Notice of Appeal, Envtl. Integrity Project v. EPA, No. 16-5109 (D.C. Cir. Apr. 29, 2016).

[2] 5 U.S.C. § 552 (2016).

[3] 5 U.S.C. § 552(b)(4) (2016).

[4] Envtl. Integrity Project v. EPA, No. 14-1282 (D.D.C. Mar. 29, 2016).

[5] Brief for Appellee, Envtl. Integrity Project v. EPA, No. 16-5109 (D.C. Cir. Feb. 8, 2017). Oral argument is scheduled for April 10, 2017.

[6] 33 U.S.C. § 1318(b) (2016).

[7] 5 U.S.C. § 559 (2016).

[8] Mandatorily disclosed information is subject to a two prong test. See Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (laying out the impairment and competitive harm prongs to determine whether information is confidential).

[9] Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992).

[10] Id. (citing Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765 (D.C. Cir. 1974)).

[11] See, e.g., Parker v. Bureau of Land Mgmt., 141 F. Supp. 2d 71, 78 n.6 (D.D.C. 2001); McDonnell Douglas Corp. v. EEOC, 922 F. Supp. 235, 237, 242-43 (E.D. Mo. 1996), appeal dismissed, No. 96-2662 (8th Cir. Aug. 29, 1996). AGS Computers, Inc. v. U.S. Dep’t of Treasury, No. 92-2714, slip op. (D.N.J. Sept. 16, 1993).

[12] Judicial Watch, Inc. v. U.S. Dep’t of Justice, 306 F. Supp. 2d 58, 68 (D.D.C. 2004).

© 2017 Schiff Hardin LLP

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Joshua More, Civil Litigation, Compliance Counseling Lawyer, Schiff Hardin, Law Firm

Joshua R. More's practice includes civil litigation, compliance counseling, regulatory advocacy and transactional support, including:

  • Major New Source Review (NSR) enforcement actions
  • Defense of Resource Conservation and Recovery Act (RCRA) citizen suits
  • Voluntary site remediations
  • Permitting analysis
  • Notices of violation
  • Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) removal and remedial actions
  • Defense of mass tort claims arising from environmental exposures to hazardous substances
  • Management of coal combustion by-products
  • Rulemakings
  • Environmental due diligence and negotiation of the environmental provisions associated with the transfer of property, sale of assets, or sale of a business
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