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Texas Lawsuit Highlights Tension Between Agency Transparency and Protection of CBI

The federal Freedom of Information Act requires federal agencies to provide public access to their records, subject to certain limitations.  FOIA’s goal is to ensure an informed citizenry and agency accountability.  At the same time, FOIA and states’ equivalent laws recognize the need to protect trade secrets and confidential business information (CBI), preventing such documents from being disclosed to the public if certain requirements are met.  Such protection is critical to the successful implementation of countless federal and state regulatory programs and leads to a circular conundrum:  Agencies need certain company sensitive information in order to fulfill their regulatory mandates, and regulated entities must be assured that CBI will be protected from public disclosure, for otherwise they will be less likely to provide such information to support the agencies’ regulatory functions — hence, the tension between public access to information and protection of sensitive confidential business information.  This tension has increased over the years, with non-governmental organizations and other members of the public increasingly pressing federal and state agencies to view CBI claims more strictly.

A federal lawsuit filed on March 25, 2014 in the United States District Court for the Eastern District of Texas highlights this tension.  Luminant Generation Company, a Texas electric power generation business, filed the lawsuit against EPA asserting that the agency had improperly determined that certain documents were not protected from public disclosure.  Disclosure of these documents, according to Luminant, “would provide competitors, customers, and vendors with detailed knowledge of Luminant’s operations and business strategies and internal processes.”  EPA had reached its determination following a multi-year challenge filed by the Sierra Club which sought more than 330,000 pages of documents that Luminant previously had submitted to the agency.  On April 2, 2014, the Texas federal court granted a preliminary injunction prohibiting EPA from disclosing the requested documents to the Sierra Club.  The court will address the full merits of Luminant’s claims sometime in the future.

Ironically, Luminant had provided the documents to EPA voluntarily in response to the agency’s informal requests, according to the complaint.  Presumably EPA made its informal request to assist it in the implementation of its regulatory program.  And, according to the complaint, the Sierra Club allegedly sought the documents as part of its efforts to “shut down coal plants nationwide and in particular Luminant’s coal plants in Texas.”

Competing public policies are the stuff of which good lawsuits are made.  Businesses must be assured that sensitive company information will not be disclosed to the public (and, directly or indirectly, their competitors).  Agencies must have access to the information necessary to implement and enforce their programs.  Members of the public must have access to information in order to hold the government and industry accountable for their actions and to support the exercise of their First Amendment rights.

Here, much is at stake:  an improperly narrow reading of CBI protection under FOIA will have a chilling effect on the transmission of useful information to agencies as they implement their programs, to the detriment of the public at large.

Ms. Grimaldi maintains a diverse environmental law practice focusing on chemical and product regulation and litigation defense. Her practice areas include Proposition 65, California's Safer Consumer Products Regulations, California's Rigid Plastic Packaging Container Act and the federal Toxic Substances Control Act. Ms. Grimaldi graduated from the University of California Hastings College of the Law magna cum laude and holds a Bachelor of Science Degree in Bacteriology from University of California, Davis. Prior to attending law school, she worked as a research assistant in laboratories at the University of California, San Francisco Cancer Research Institute and at the University of California, San Francisco School of Medicine.