COMMENTARY

New FOIA rules open contractors to more risks of disclosure

Here's what you need to know to protect yourself

Last summer, Congress passed and President Obama signed into law the FOIA Improvement Act of 2016 (Public Law No. 114-185), which adds to and amends the Freedom of Information Act.

The amendments create a “presumption of openness” limiting the federal government’s discretionary power to withhold requested information only when disclosure would result in “foreseeable harm.”

For those that transact business with or even simply communicate with the government (referred to as “submitters” in FOIA parlance), the FOIA changes mean that submitters such as government contractors and grant recipients must proactively respond when a FOIA request potentially targets confidential and/or proprietary data that has been shared with the government.

Importantly, the 2016 FOIA improvement Act did not change FOIA Exemption 4, which protects from disclosure “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” Under Exemption 4, the government is prohibited from disclosing trade secrets or other proprietary/confidential information that any submitter has shared with the government.

Unlike with some of the other FOIA exemptions, in their interpretation of Exemption 4, courts have determined that the government lacks any discretion to disclose trade secret or commercial confidential/proprietary information in response to a FOIA request.

The 2016 FOIA Improvement Act was passed to accelerate the FOIA process and to compel government FOIA officials to provide as much information as soon as possible in response to a FOIA request. The act now imposes a penalty (i.e., the waiver of the statutory FOIA fees) on the agency for failing to provide a timely FOIA response. The act also requires that the FOIA response segregate exempt information from releasable information in the same document, as an agency can no longer simply refuse to produce any document containing exempt information.

In addition, the Act requires the agency to produce electronic copies of documents/data, which can be instantly disseminated by the requesting party, rather than paper documents, in response to a FOIA request.

Furthermore, the act requires the creation of a federal government FOIA portal that allows the same FOIA request to be simultaneously submitted to multiple agencies. As a result, submitters must be poised to respond immediately as soon as the government provides notice that a FOIA request seeks disclosure of the submitter’s data and/or documents.

As an initial step, whenever any person or entity first shares information/data with the government that it does not want disclosed to any third party, the title page and each subsequent page of the confidential document or data should be plainly marked as containing “confidential and proprietary information which is exempt from disclosure under FOIA.”

Next, when the agency contacts the submitter (as FOIA requires) to tell them that a request seeks the disclosure of their information, the submitter should promptly respond by identifying:

1) The specific information within each responsive document that is exempt from disclosure.

2) The particular FOIA exemption (there are nine) that prohibits disclosure (as stated above, Exemption 4 protects trade secrets and confidential/proprietary data)

3) Why that exemption applies to each identified section of data/information that the submitter seeks to protect.

Also, the submitter (or submitter’s counsel) should attempt to maintain an open dialogue with the assigned agency FOIA official throughout the FOIA process to promptly address and resolve any disagreements about what should and should not be disclosed before the agency takes a final disclosure position, which is often difficult to unwind.

Finally, the submitter must be ready to assert a “reverse FOIA” action to prevent the disclosure of trade secrets or other confidential/proprietary information in the event that the agency disregards the submitter’s exemption recommendations before the agency releases the submitter’s trade secrets and confidential information in response to a FOIA request.

 

About the Author

Doug Proxmire is a partner in Venable’s government contracts group. He advises clients on matters involving government and construction contract formation and dispute resolution.

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