Judicial Watch Inc. v. Fed. Hous. Finance Agency

• Decision Date: 05 August 2011
• Docket Number: No. 10–5349.,10–5349.
• Parties: JUDICIAL WATCH, INC., Appellantv.FEDERAL HOUSING FINANCE AGENCY, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

646 F.3d 924

JUDICIAL WATCH, INC., Appellant

v.FEDERAL HOUSING FINANCE AGENCY, Appellee.

No. 10–5349.

United States Court of Appeals, District of Columbia Circuit.

Argued May 10, 2011.Decided Aug. 5, 2011.

Appeal from the United States District Court for the District of Columbia (No. 1:09–cv–01537).James F. Peterson argued the cause for appellant. With him on the brief was Paul J. Orfanedes.Mark R. Freeman, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Tony West, Assistant Attorney General, Ronald C. Machen Jr., U.S. Attorney, and Mark B. Stern, Attorney. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.Before: TATEL and GRIFFITH, Circuit Judges, and RANDOLPH, Senior Circuit Judge.Opinion for the Court filed by Circuit Judge GRIFFITH.GRIFFITH, Circuit Judge:

The Federal Housing Finance Agency (FHFA) has been the conservator of Fannie Mae and Freddie Mac since 2008. Judicial Watch filed a request under the Freedom of Information Act (FOIA) asking the FHFA to disclose records of Fannie and Freddie that show how much money they gave to political campaigns. But it is uncontested that no one at the FHFA has ever read or relied upon any such documents. The district court held that the documents are not agency records subject to FOIA, and we agree.

I

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) buy residential mortgages from banks, repackage them for sale as mortgage-backed securities, and guarantee these securities by promising to make investors whole if borrowers default. Cong. Budget Office, Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market viii (2010). Both firms are structured as private corporations, but they are federally chartered and play an important role in the national housing market by making it easier for home buyers to obtain loans. See 12 U.S.C. §§ 1452(a), 1723(b). In 2009, the two companies guaranteed three-quarters of new residential mortgages in the United States. Cong. Budget Office, supra, at iii.

National housing prices began a sustained decline in 2006 that by mid–2008 had substantially eroded the value of Fannie- and Freddie-held mortgages. Worried that either or both Fannie and Freddie might become insolvent, Congress passed the Housing and Economic Recovery Act of 2008 (HERA), Pub.L. No. 110–289, 122 Stat. 2654, which created the FHFA and authorized this new agency to place the two companies into conservatorship under specified circumstances. See 12 U.S.C. § 4511 (creating the FHFA); id. § 4617 (authorizing the FHFA to place either company into conservatorship in various scenarios, including where the firm's assets are insufficient to meet its obligations and where the firm's management consents to a conservatorship). On September 7, 2008, with the consent of management at Fannie and Freddie, the FHFA placed both into conservatorship. As conservator, the FHFA has power to exercise “all rights, titles, powers, and privileges of the regulated entity, and of any stockholder, officer, or director of such regulated entity with respect to the regulated entity and the assets of the regulated entity.” Id. § 4617(b)(2)(A)(i).

Judicial Watch asked the FHFA to disclose “[a]ny and all Freddie Mac ... or Fannie Mae records concerning political campaign contributions,” Letter from Judicial Watch to FHFA (May 29, 2009), and it sued when the agency refused. FOIA gives federal courts jurisdiction “to order the production of any agency records improperly withheld from the complainant.” 5 U.S.C. § 552(a)(4)(B). But under FOIA, a federal court may only order an agency to release “agency records.” Id.; see U.S. Dep't of Justice v. Tax Analysts, 492 U.S. 136, 142, 109 S.Ct. 2841, 106 L.Ed.2d 112 (1989). Judicial Watch acknowledges that Fannie and Freddie are not themselves subject to FOIA, but argues that the requested documents became “agency records” when the FHFA took over as conservator.

In its motion for summary judgment, the FHFA acknowledged that it had access to responsive documents, but, in an accompanying affidavit, swore that no one at the agency had ever read them. Decl. of David A. Felt, Deputy Gen. Counsel, FHFA 3. The FHFA argued that until someone at the agency uses the requested documents, they cannot be “agency records” for purposes of FOIA. The district court agreed and granted summary judgment for the agency. Judicial Watch, Inc. v. Fed. Hous. Fin. Agency, 744 F.Supp.2d 228 (D.D.C.2010). We take jurisdiction to hear Judicial Watch's appeal under 28 U.S.C. § 1291 and affirm the judgment of the district court.

II

The Supreme Court has held that FOIA reaches only records the agency controls at the time of the request. Tax Analysts, 492 U.S. at 144–45, 109 S.Ct. 2841. Control means “the materials have come into the agency's possession in the legitimate conduct of its official duties.” Id. We look to four factors to determine whether an agency controls a document:

(1) the intent of the document's creator to retain or relinquish control over the records; (2) the ability of the agency to use and dispose of the record as it sees fit; (3) the extent to which agency personnel have read or relied upon the document; and (4) the degree to which the document was integrated into the agency's record system or files.

Burka v. U.S. Dep't of Health & Human Servs., 87 F.3d 508, 515 (D.C.Cir.1996) (citation omitted). The district court considered these factors and determined that the FHFA does not “control” the documents Judicial Watch requested because the agency had neither used the documents nor integrated them into its files. Judicial Watch, 744 F.Supp.2d at 235. We agree.

As a threshold matter, Judicial Watch argues that the FHFA controls the documents because it holds title to them and that we therefore need not consider the Burka factors in this case. See 12 U.S.C. § 4617(b)(2)(A)(i) (providing that as conservator the FHFA assumes “all rights, titles, powers, and privileges” of Fannie and Freddie). But our cases have never suggested that ownership means control. On the contrary, in Consumer Federation of America v. Department of Agriculture, we used the Burka test to conclude a document was not an “agency record” even though the agency had an arguable property interest in it. 455 F.3d 283, 293 (D.C.Cir.2006). In that case, we held that electronic calendars kept by agency employees on their work computers were only subject to FOIA if they had been distributed widely within the agency. Id. at 290–93. Rather than asking whether the agency owned the calendars, we used the Burka factors to decide whether FOIA applied. And that is the inquiry we undertake here.

The first Burka factor instructs us to consider “the intent of the document's creator to retain or relinquish control over the records.” Burka, 87 F.3d at 515. We agree with Judicial Watch that Fannie and Freddie, the creators of the documents, intentionally relinquished control over the records when they agreed to the conservatorship. This case is therefore unlike Kissinger v. Reporters Committee for Freedom of the Press, where the Supreme Court held that the private papers of the Secretary of State did not become subject to FOIA when he stored them in his State Department office without any thought that doing so might transform them into “agency records.” 445 U.S. 136, 157, 100 S.Ct. 960, 63 L.Ed.2d 267 (1980). The documents Judicial Watch seeks were transferred to the FHFA with full knowledge that the agency might use them in the conduct of its official business.

The second Burka factor also supports Judicial Watch's claim, as there is no question that as the conservator of Fannie and Freddie, and the titleholder of their documents, the FHFA enjoys “the ability ... to use and dispose of the record[s] as it sees fit.” Burka, 87 F.3d at 515. The FHFA does not dispute this point.

Although the first two Burka factors help Judicial Watch, the third is fatal to its claim. Burka instructs us to consider “the extent to which agency personnel have read or relied upon the document,” id., and here it is uncontested that the FHFA has not used the requested records in any way, Decl. of David A. Felt, Deputy Gen. Counsel, FHFA 3. The public cannot learn anything about agency decisionmaking from a document the agency neither created nor consulted, and requiring disclosure under these circumstances would do nothing to further FOIA's purpose of “open[ing] agency action to the light of public scrutiny.” Dep't of Air Force v. Rose, 425 U.S. 352, 372, 96 S.Ct. 1592, 48 L.Ed.2d 11 (1976). In deciding whether an agency controls a document its employees created, we have consistently found that “use is the decisive factor.” Consumer Fed'n of Am., 455 F.3d at 288; see also Gallant v. NLRB, 26 F.3d 168, 172 (D.C.Cir.1994) (holding...