Everything's Finally Clear: Agency Transparency Under FOIA

EVERYTHING’S FINALLY CLEAR: AGENCY TRANSPARENCY UNDER FOIA Whit Swift Bryan Dumesnil Brittany Pemberton Moderator: Jason Hutt

INTRODUCTION • Recent transparency developments:

‒ The Court reviewed the standard for demonstrating Freedom of Information Act (“FOIA”) Exemption 4  Food Marketing Institute v. Argus Leader Media ‒ DOJ issued new FOIA guidance ‒ EPA and DOI finalized new FOIA regulations ‒ FOIA litigation ‒ President Trump signed two Executive Orders aimed at improving transparency of and access to guidance documents

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2019 ADMINISTRATIVE LAW DEVELOPMENTS • Freedom of Information Act (FOIA) ‒ Changes to the interpretation of FOIA Exemption 4 o Food Marketing Institute v. Argus Leader Media (2019) ‒ DOJ guidance on Exemption 4 post- Argus

‒ EPA revisions to FOIA regulations ‒ EPA FOIA trends compared year- by-year

Courtesy of Google photos

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FREEDOM OF INFORMATION ACT (“FOIA”) • Two types of FOIA actions: (1) “regular” FOIA requests (seeking disclosure of information by gov’t); or (2) “reverse” FOIA (seeking to prevent gov’t disclosure of information) ‒ Regular FOIA. In general, gov’t can disclose unless an exemption applies. ‒ If gov’t intends to provide documents to requestor that includes a company’s confidential/proprietary information, company may object (43 C.F.R. § 2.30) o Gov’t must “carefully consider” company’s objections & grounds for nondisclosure (§ 2.32a). o If gov’t decides to submit information over company’s objection, gov’t must notify company 10 days before actual disclosure (§ 2.33) ‒ Reverse FOIA. Party bringing reverse FOIA bears burden of justifying nondisclosure o Reverse FOIA plaintiffs often argue that the government’s contemplated release would violate Trade Secrets Act and thus would "not be in accordance with law" or would be "arbitrary and capricious" within meaning of the APA

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SCOTUS EXPANDS FOIA EXEMPTION 4 • Exemption #4 ‒ Protects from mandatory disclosure "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” 5 U.S.C. § 552(b)(4) • Food Marketing Institute v. Argus Leader Media (2019) ‒ SCOTUS reject ed the longstanding “substantial competitive harm” definition of “confidential” information under Exemption 4 o The Court held that information is “confidential” for purposes of Exemption 4

Courtesy of Google photos

if it is (1) both customarily and actually treated as private by its owner and (2) provided to the government under an assurance of privacy » No longer will a submitter need to demonstrate any harm, whether substantial or negligible

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SIGNIFICANCE OF ARGUS • Dispensing with the substantial competitive harm requirement may expand the types of information submitted to EPA that can claim to be protected under Exemption 4 • The beneficiaries may be businesses in regulated industries that are required to provide information to agencies that is confidential but does not a “trade secret” under Exemption 4

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DOJ AGENCY STEP-BY-STEP GUIDE TO DETERMINE CONFIDENTIALITY STATUS UNDER EXEMPTION 4

‒ 1. Does the submitter customarily keep the information private or closely- held? (This inquiry may in appropriate contexts be determined from industry practices concerning the information.) » If no, the information is not confidential under Exemption 4 » If yes, answer question 2 ‒ 2. Did the government provide an express or implied assurance of confidentiality when the information was shared with the government? » If no, answer question 3 » If yes, the information is considered confidential under Exemption 4 ‒ 3. Were there express or implied indications at the time the information was submitted that the government would publicly disclose the information? » If no, the information is “confidential” under Exemption 4 (based upon the view that the government has effectively been silent – it hasn’t indicated the information would be protected or disclosed – so a submitter’s practice of keeping the information private may be sufficient to warrant confidential status) » If yes, and no other sufficient countervailing factors exist, the submitter could not reasonably expect confidential treatment by the government upon submission and so the information is not considered confidential under Exemption 4.

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NOTABLE EPA REVISIONS TO FOIA REGULATIONS • Centralized processing of FOIA requests • Designating its National FOIA Office within the EPA Office of General Counsel as the entry point for all requests

• Clarification of the authority to respond to FOIA requests • Specifying the EPA officials who are authorized to make a final FOIA determination • Basis for the exercise of authority on a FOIA request • The revised language also states that final determinations by officials may be reached “on the basis of responsiveness” and that their authority extends to issuance of “no records” responses. The preexisting EPA FOIA regulation did not address the basis for the exercise of authority to make a final determination on a FOIA request

Courtesy of Google photos

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INTERIOR WALKS BACK FOIA CHANGES • January 2019 proposal applicable to all bureaus/offices: ‒ DOI considered whether it could deny requests that sought a “vast quantity of material” or that did not specify an “agency activity, operation, or program.” ‒ DOI also contemplated capping the number of FOIA requests filed by an individual. • October 2019 final rule: ‒ Changes necessitated by Argus

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INTERIOR FINAL RULE • Eliminating unnecessary referrals to other agencies (2.13) • Clarifying multitrack processing based on how long it would generally take to process, not how long it will actually take due to backlogs (2.15) • Clarifying when officials will grant expedited processing (following consultation with DOI SOL) of FOIA requests (2.20) • Allowing Office of the Solicitor to preapprove certain routine withholdings (e.g., SSNs) (2.23) • Lessens burden on DOI to notify submitters when there is a FOIA request for confidential submitter information – DOI must diligently attempt notice (but need not be successful) (2.27) • For a submitter to rely on Exemption 4 for nondisclosure : ‒ Must provide a statement the info is a trade secret or ‒ Certify the info is both customarily and actually treated as private by the owner ‒ Must also include whether the info was provided to the government under an assurance of privacy (2.31)

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BASIC FOIA TIME PERIODS • The agency must respond with a grant or denial of access within 20 business days ( i.e. , make a final determination). “Respond” does not mean deliver the records • The agency can “toll” twenty-day time period ( i.e. , stop the clock): ‒ One time to obtain additional information from requester, or ‒ As many times as necessary to clarify fee-related issues • This deadline can be extended by up to 10 additional business days if “ unusual circumstances ” exist. Most commonly cited: ‒ Voluminous records ‒ Must search and collect records from multiple offices ‒ Must consult with another agency

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UNUSUAL CIRCUMSTANCES • Agency must notify requester in writing if timing is extended due to unusual circumstances • If an extension of more than 10 days is needed, agency must: ‒ Provide the requester an opportunity to limit the scope of the request so that it can be processed more quickly, or ‒ To arrange an alternative time to respond ‒ Agency must make its FOIA Public Liaison available to assist requester • Common reason given is need to locate and search voluminous Electronically Stored Information (ESI) • The challenge of locating ESI creates the possibility for agency delay

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ADMINISTRATIVE APPEALS

• The agency must indicate by the deadline: ‒ The scope of the documents it will produce, and ‒ The exemptions it will claim with respect to any withheld documents

• Requester must pursue an administrative appeal if request is denied

• But, what happens if the agency fails to comply with applicable time limits?

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“CONSTRUCTIVE EXHAUSTION” OF ADMINISTRATIVE REMEDIES • A requester is “deemed to have exhausted his administrative remedies with respect to such request if the agency fails to comply with the applicable time limit provisions.” 5 U.S.C. § 552(a)(6)(C)(i) Citizens for Responsibility and Ethics in Washington v. Federal Election Com'n , 711 F.3d 180, 182-83 (D.C. Cir. 2013) Therein lies the Catch–22 that the agency seeks to jam into FOIA: A requester cannot appeal within the agency because the agency has not provided the necessary information. Yet the requester cannot go to court because the requester has not appealed within the agency. Although the agency may desire to keep FOIA requests bottled up in limbo for months or years on end, the statute simply does not countenance such a system, as we read the statutory text.

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Jason Hutt

Whit Swift

Bryan Dumesnil

Brittany Pemberton

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AGENCY GUIDANCE AND TRANSPARENCY • Two Executive Orders issued in October 2019 regarding transparency in federal agency guidance and enforcement: • E.O. 13891, “Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication”  limits the use of guidance in enforcement  But note: the E.O. does not apply to independent agencies! • E.O. 13892, “Promoting the Rule of Law Through Improved Agency Guidance Documents”  guidance must be issued using “good guidance practices” • Applicable to ‒ (1) agency statements of general applicability, intended to have future effect on the behavior of regulated parties ‒ (2) that set forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statute or regulation

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TRANSPARENCY AND FAIRNESS IN CIVIL ADMINISTRATIVE ENFORCEMENT AND ADJUDICATION • Guidance can’t be used to impose new standards of conduct ‒ an agency can only establish violations of law through the application of statutes and regulations • No unfair surprise ‒ an agency can cite a guidance document in enforcement or adjudication that articulates the agency’s interpretation of a statute or a regulation, but only if the agency has notified the public of the document by: o publication or citation in the Federal Register or o publication in a searchable, indexed database on the agency’s website • Opportunity to contest ‒ an agency must provide notice and opportunity to be heard before taking an action with respect to a particular person

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TRANSPARENCY AND FAIRNESS IN CIVIL ADMINISTRATIVE ENFORCEMENT AND ADJUDICATION • No new/expanded jurisdiction ‒ An agency can use guidance or adjudication but only with notice ‒ Limits use of litigation and adjudication documents to establish jurisdiction in a future matter o Must publish guidance document in the Federal Register (or on the portion of the agency’s website that contains a single, searchable, indexed database of all guidance documents in effect) and provide an explanation of its jurisdictional implications • Cooperative information sharing and enforcement ‒ Agencies must propose procedures to encourage voluntary sharing by regulated parties and self reporting of regulatory violations in exchange for penalty reductions

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AGENCY “GOOD GUIDANCE PRACTICES” • Transparent use of guidance documents (deadline 2/28/20) ‒ Requires federal agencies to establish a searchable database on their website where the agency’s guidance documents can be found  BUT waivers are available ‒ Agencies must review their guidance and rescind guidance that should no longer be in effect o But anything not added to the database will be void even if not rescinded • Promulgate new procedures for issuing guidance documents (deadline 8/26/20) ‒ Before issuing “significant” guidance, agencies must follow additional procedures, including, among other things: o notice and comment of at least 30 days, o response to public comments, o approval from the agency head/agency component head o OIRA review ‒ “Significant” = novel issues of law or policy OR economic impact of ≥ $100 million ‒ “Good cause” waiver

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OMB MEMORANDUM • OMB implementation of E.O. 13892 (Agency Guidance) ‒ Guidance is not to be used to establish new binding positions. ‒ Agencies should not use non-binding guidance documents to “coerce private-party conduct” or threaten enforcement against parties who do not follow the guidance. ‒ Waivers from the requirement to upload specific documents or categories of documents into the searchable database require a demonstration of harm or interference with the agency’s mission. ‒ Creates additional exclusions: o Agency statements of specific, rather than general, applicability (e.g., advisory or legal opinions; correspondence with individual persons or entities) o Updates about the agency (vs. its policies, rules, or statutes it administers) and rules of agency organization or procedure or other internal documents o Legal briefs and court filings ‒ Clock starts to run on E.O. deadlines • Further direction from OMB  categories of excepted guidance documents and categorical presumptions on whether guidance documents are significant

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This presentation is provided for informational purposes only and should not be considered specific legal advice on any subject matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. The content of this presentation contains general information and may not reflect current legal developments, verdicts or settlements. Use of and access to this presentation does not create an attorney-client relationship between you and Bracewell.

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