When a South Carolina special purpose district sells services outside its statutory boundary in competition with private companies, can it shield its customer list from a FOIA request as a 'trade secret'?

Plain-English summary

Representative Mike Burns asked the AG whether a South Carolina special purpose district (SPD) that competes with private companies outside its statutory territory can keep its customer list secret from a FOIA requester. The SPD had argued the list was a "trade secret" under S.C. Code § 30-4-40(a)(1).

The AG concluded a court would likely reject that argument. South Carolina FOIA is a remedial statute meant to be liberally construed in favor of disclosure (long line of cases). Exemptions are narrowly construed. The Court of Appeals' 2003 Campbell v. Marion Co. Hospital District decision read the trade secrets exemption literally: it protects "feasibility, planning, and marketing studies, and evaluations and other materials which contain references to potential customers." A customer list is not a study or marketing analysis; it is the actual roster of present customers. The federal Public Citizen Health Research Group v. FDA decision similarly limits "trade secrets" to information about production processes, not "collateral matters of business confidentiality such as pricing and sales volume data, sources of supply and customer lists."

The opinion concludes: "when in doubt, disclose."

What this means for you

If you administer a special purpose district that sells services in competition with private companies

The trade-secrets exemption is not a blanket shield over your customer list. If you receive a FOIA request for a list of customers (even those outside your statutory territory, where you compete with private providers), expect that a court would order disclosure. To protect competitive sensitivity, your options are limited:

• Plan business strategy and marketing studies, which are the kind of materials the statute protects (per Campbell).
• Avoid creating the customer list itself in a way that mixes in protected materials, but do not assume the list itself is protected.
• Consider whether private-sector competition is consistent with your statutory mandate. If you are operating well outside your enabling territory, the FOIA exposure is just one of several legal questions.

If you are an SPD competitor (e.g., a private water, sewer, or utility company)

You can FOIA the SPD's customer list (especially the out-of-territory list) and have a strong basis to insist on production. The trade-secrets exemption is narrowly construed, and a customer list does not fit the statutory definition. If the SPD refuses, your remedy is a FOIA action in state court.

If you are a state legislator concerned about SPDs operating outside their statutory territory

Two angles. First, FOIA gives you a tool: the customer list itself is producible. With that list, you can document the geographic and competitive reach of the SPD's operations. Second, the broader question of whether an SPD has authority to compete with private entities outside its statutory boundary is a separate legal question (one of statutory authority, not FOIA). The AG opinion does not address that question.

If you are a journalist or accountability researcher

This opinion is helpful precedent. When South Carolina public bodies invoke "trade secrets" to withhold customer lists, billing records, or supplier rosters, you can cite Campbell and Public Citizen Health Research Group to push back. The AG's office has a clear interpretive lean: "when in doubt, disclose."

Common questions

Q: What is a "trade secret" under SC FOIA?
A: Per § 30-4-40(a)(1): "unpatented, secret, commercially valuable plans appliances, formulas, or processes, which are used for the making, preparing, compounding, treating or processing of articles or materials which are trade commodities..." The statute also includes "for those public bodies who market services or products in competition with others, feasibility, planning, and marketing studies, and evaluations and other materials which contain references to potential customers, competitive information, or evaluation."

Q: Why doesn't a customer list fit the definition?
A: Because the statute protects studies and preparations aimed at potential customers. The Court of Appeals in Campbell read this as protecting "an organization's studies or preparations in its quest to produce or sell its product or service to 'potential customers.'" A customer list is not a study; it is data on existing customers. The federal Public Citizen case reaches the same conclusion in the FOIA exemption context.

Q: Doesn't the SPD have a competitive interest in keeping its customer list private?
A: Maybe, but FOIA does not let competitive concerns override disclosure unless the records fit a statutory exemption. The AG's view is that the customer list does not fit the trade-secrets exemption. The AG also notes that public funds are likely involved, which weighs further toward disclosure.

Q: What about other FOIA exemptions like privacy?
A: The opinion does not engage privacy-based exemptions in detail. Customer privacy could be a separate basis for redaction (especially residential customer addresses), but customer-list-as-trade-secret is the specific issue addressed here.

Q: Could the legislature change this?
A: Yes. The legislature could amend § 30-4-40 to expressly protect SPD customer lists. Until it does, the existing definition controls and the opinion's analysis stands.

Background and statutory framework

South Carolina FOIA was adopted in 1978 and has been amended periodically. Section 30-4-15 contains the legislative purpose: "vital in a democratic society that public business be performed in an open and public manner... to make it possible for citizens, or their representatives, to learn and fully report the activities of their public officials at a minimum cost or delay."

The South Carolina Supreme Court and Court of Appeals have repeatedly emphasized:

• FOIA is "remedial in nature" and "must be liberally construed."
• Exemptions are narrowly construed.
• The purpose is to "protect the public from secret government activity."

The trade-secrets exemption in § 30-4-40(a)(1) has two parts:

1. The traditional definition: unpatented, commercially valuable plans, formulas, or processes used in trade commodities.
2. A specific addition for public bodies that market services or products in competition with others: "feasibility, planning, and marketing studies, and evaluations and other materials which contain references to potential customers, competitive information, or evaluation."

The Court of Appeals' 2003 Campbell decision is the controlling state-court precedent. Marion County Hospital District argued that physician compensation and practice-purchase prices were "trade secrets" because the rural hospital needed competitive privacy. The Court of Appeals rejected the argument. The exemption protects studies and preparations aimed at potential customers, not internal data about existing operations.

The federal Public Citizen Health Research Group v. FDA (D.C. Cir. 1983) decision applies a parallel analysis. Federal FOIA's trade-secrets exemption (Exemption 4) does not include customer lists as trade secrets. "Under the restrictive definition, trade secret status is reserved for information involving 'the productive process itself, as opposed to collateral matters of business confidentiality such as pricing and sales volume data, sources of supply and customer lists.'"

The AG concludes that South Carolina's FOIA framework reaches the same answer: a customer list is not a trade secret, and the SPD must disclose.

Citations and references

Statutes:
- S.C. Code § 30-4-15 (preamble)
- S.C. Code § 30-4-40 (exemptions, including trade secrets)

Cases:
- Campbell v. Marion Co. Hospital District, 354 S.C. 274, 580 S.E.2d 163 (Ct. App. 2003)
- Evening Post Publishing Co. v. City of North Charleston, 363 S.C. 452, 611 S.E.2d 496 (2005)
- Quality Towing, Inc. v. City of Myrtle Beach, 345 S.C. 156, 547 S.E.2d 863 (2001)
- S.C. Dep't of Mental Health v. Hanna, 270 S.C. 210, 241 S.E.2d 563 (1978)
- Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280 (D.C. Cir. 1983)

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-on-whether-a-subdivision-of-the-state-specifically-a-special-purpose-district-spd-is-permitted-to-withhold-a-list-of-customers-for-whom-spd-provides-service/
• Original PDF: https://www.scag.gov/media/ymmfiwad/burns-final-3-23-26.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

ALAN WILSON
ATTORNEY GENERAL

March 23, 2026

The Honorable Mike Burns
South Carolina House of Representatives
1105 Pendleton Street
326-D Blatt Building
Columbia, SC 29201

Dear Representative Burns:

You seek our opinion as to "whether a subdivision of the state specifically, a special purpose district (SPD), is permitted to withhold a list of customers for whom SPD provides service."

By way of background, you provide the following information:

[t]he SPD has a geographic territory under state law. In this case, however, SPD also offers those same services outside of their geographically assigned territory to commercial customers in competition with other non-governmental providers of the same service.

A Freedom of Information request sought a list of all customers outside of its geographic territory. The SPD responded that the information was protected as a "trade secret" under SC Code Section ... 30-4-40(a)(1).

I further believe that SPD is incorrect in their reading of this section as protecting their list of customers as a so-called "trade secret."

Law/Analysis

In Op. S.C. Atty Gen., 2012 WL 3875118 (August 28, 2012), we summarized the purpose and intent of South Carolina's Freedom of Information Act (FOIA) as follows:

[p]rior to addressing the merits of your particular request, it is important to emphasize that South Carolina's Freedom of Information Act ("FOIA") was adopted in its present form in 1978 S.C. Acts No. 593. A number of amendments have been made to FOIA over the years. [See, e.g. 2017 Act No. 67]. The Act's preamble best expresses both the Legislature's intent in enacting the statute, as well as the public policy underlying it. The preamble to FOIA, set forth in S.C. Code Ann. § 30-4-15 provides as follows:

[t]he General Assembly finds that it is vital in a democratic society that public business be performed in an open and public manner so that citizens shall be advised of the performance of public officials and of the decisions that are reached in public activity and in the formulation of public policy. Toward this end, provisions of this chapter must be construed so as to make it possible for citizens, or their representatives, to learn and fully report the activities of their public officials at a minimum cost or delay to the persons seeking access to public documents or meetings.

On numerous occasions in construing FOIA, we have emphasized the Legislation's expression of openness in government, as articulated in § 30-4-15. In an opinion of this office, dated April 11, 1988, for example, we summarized the rules of statutory construction which this office follows in interpreting FOIA as follows:

[a]s with any statute, the primary objective in construing the provisions of the Freedom of Information Act is to give effect to the Legislature's intent. Banker's Trust of South Carolina v. Bruce, 275 S.C. 35, 267 S.E.2d 424 (1980). South Carolina's Freedom of Information Act was designed to guarantee to the public reasonable access to certain information concerning activities of the government. Martin v. Ellisor, 266 S.C. 377, 213 S.E.2d 732 (1975). The Act is a statute remedial in nature and must be liberally construed to carry out the purpose mandated by the General Assembly. South Carolina Department of Mental Health v. Hanna, 270 S.C. 210, 241 S.E.2d 563 (1978). Any exception to the Act's applicability must be narrowly construed. News and Observer Publishing Co. v. Interim Bd. For Wake Co., 29 N.C. App. 37, 223 S.E.2d 580 (1976).

See also Evening Post Publishing Co. v. City of North Charleston, 363 S.C. 452, 611 S.E.2d 496 (2005) [FOIA exemptions are to be narrowly construed to fulfill the purpose of FOIA to guarantee the public reasonable access to certain activities of government.]; South Carolina Tax Commission v. Gaston Copper Recycling Corp., 316 S.C. 163, 447 S.E.2d 843, 846 (1994) ["The purpose of the FOIA is to protect the public from secret government activity"]; Quality Towing, Inc. v. City of Myrtle Beach, 345 S.C. 156, 547 S.E.2d 863, 864-65 (2001) ["FOIA is remedial in nature and should be liberally construed to carry out the purpose mandated by the Legislature"].

The decision of Campbell v. Marion Co. Hospital District 354 S.C. 274, 281, 580 S.E.2d 163, 166 (Ct. App. 2003), is instructive with respect to your question. In Campbell, our Court of Appeals emphasized that:

... the exemptions from disclosure contained in §§ 30-4-40 and 30-4-70 do not create a duty of nondisclosure.... These exemptions, at most, simply allow the public agency the discretion to withhold exempted materials from public disclosure.

Moreover, the Campbell case involved interpretation of the "trade secrets" exemption contained in § 30-40 (a)(1) of FOIA. In Campbell, Marion County Hospital argued that information relating to physician's salaries, compensation and the purchase price of physician practices "amounted to 'trade secrets' thereby necessitating protection from disclosure." According to Marion County, "as a rural county hospital, [the County] needed to keep the information private in order to attract qualified physicians and to compete with wealthier urban areas." 254 S.C. at 281, 580 S.E.2d at 167.

However, the Court of Appeals rejected this argument. The Court referenced the definition of "trade secrets," contained in § 30-4-40(a)(1) of FOIA. Such provision states:

Trade secrets, which are defined as unpatented, secret, commercially valuable plans appliances, formulas, or processes, which are used for the making, preparing, compounding, treating or processing of articles or materials which are trade commodities obtained from a person and which are generally recognized as confidential; and work products, in whole or in part collected or produced for sale or resale, and paid subscriber information. Trade secrets also include for those public bodies who market services or products in competition with others, feasibility, planning, and marketing studies, and evaluations and other materials which contain messages to potential customers, competitive information, or evaluation.

The Campbell Court evaluated this definition, as well as the legislative purpose, as follows:

[t]he statute specifically defines "trade secrets" for public bodies, such as the Hospital, that market services. "Trade secrets" include "feasibility, planning, and marketing studies, and evaluations and other materials which contain references to potential customers, competitive information, or evaluation." S.C. Code Ann. § 30-4-40(a)(1) (1991 & Supp. 2002). It is evident from reading the entire "trade secret" section that the Legislative intended the "trade secret" exemption to protect an organization's studies or preparations in its quest to produce or sell its product or service to "potential customers," not its internal quest to obtain employees compensation and salary information regarding physicians and the purchase price of physician practices indubitably do not meet this unambiguous definition,

Concomitantly, the circuit court erred in finding the information constituted "trade secrets" that mandated protection.

354 S.C. at 286, 580 S.E.2d at 169.

Case law in other jurisdictions generally supports disclosure of customer lists as not constituting a trade secret where FOIA is concerned. Much like our Court of Appeals in Campbell, courts elsewhere view FOIA as not requiring a technical definition of a "trade secret," but one more liberal in nature, consistent with the legislative intent requiring disclosure.

For example, in Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280, 1288-89 (D.C. Cir. 1983), the court rejected the Restatement's definition of "trade secrets" in favor of a more narrower definition, consistent with the disclosure requirements of FOIA. In the words of the court,

[i]n our opinion, the term "trade secrets" in Exemption 4 of the FOIA should be defined in its narrower common law sense, which incorporates a direct relationship between the information at issue and the productive process. Accordingly, we define trade secret solely for the purpose of FOIA Exemption 4, as a secret, commercially valuable plan, formula, process or device that is used for the making, preparing, compounding, or processing of trade commodities, and that can be said to be the end product of either innovation or substantial effort.

According to the Court, "[a] number of courts had adopted a more restrictive definition of trade secrets prior to the adoption of the FOIA. Under the restrictive definite, trade secret status is reserved for information involving 'the productive process itself, as opposed to collateral matters of business confidentiality such as pricing and sales volume data, sources of supply and customer lists.'" Id. at 1286-87.

A reading of the definition of "trade secrets" contained in South Carolina's FOIA is consistent with the approach taken in Pub. Citizen Health Research Group and other decisions. As our Court of Appeals emphasized in Campbell, "[i]t is evident from reading the entire 'trade secret' section that the legislature intended the 'trade secret' exemption to protect an organization's studies or preparations in its quest to produce or sell its product to 'potential customers...'" 354 S.C. at 286, 580 S.E.2d at 169.

In short a "customer list" is not a study or preparation of prospective clients, but an actual list of present customers.

Conclusion

For decades, we have interpreted FOIA and its provisions, employing the tenet "when in doubt, disclose." We read exceptions to disclosure narrowly. Thus, in our view, such an interpretation of FOIA requires the conclusion that a "customer list" is not a "trade secret" pursuant to § 30-4-40(a)(1) of FOIA. Neither the express language, nor the legislative intent, compels this construction, particularly in light of the fact public funds are most likely involved. Accordingly, it is our opinion that a court would likely conclude that a customer list is not entitled to an exemption under FOIA as a trade secret.

Robert D. Cook
Solicitor General Emeritus