Rocap v. Indiek, 75-1806

• Decision Date: 21 June 1976
• Docket Number: No. 75-1806,75-1806
• Citation: 539 F.2d 174,176 U.S.App.D.C. 172
• Parties: James ROCAP v. Victor H. INDIEK and Federal Home Loan Mortgage Corporation, Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 174

539 F.2d 174

176 U.S.App.D.C. 172

James ROCAP v. Victor H. INDIEK and Federal Home Loan Mortgage Corporation Appellants.

No. 75-1806.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 13, 1976.

Decided June 21, 1976.

Robert T. Lasky, Washington, D. C., with whom Joseph A. Artabane, Washington, D. C., was on the brief for appellants.

Charles E. Hill, Washington, D. C., with whom Victor H. Kramer, and Richard B. Wolf, Washington, D. C., were on the brief for appellee.

Before BAZELON, Chief Judge, TAMM, Circuit Judge and JUSTICE, ^* United States District Judge for the Eastern District of Texas.

Opinion for the Court filed by Circuit Judge TAMM.

TAMM, Circuit Judge:

I. INTRODUCTION

The single major issue presented by this case is whether the Federal Home Loan Mortgage Corporation (hereinafter "FHLMC" or "Corporation") is required by the Freedom of Information Act, 5 U.S.C. § 552 (1974) (hereinafter "FOIA" or the "Act"), to publish certain information in the Federal Register and to compile and make available to the public a current index of various corporate materials and information. ¹ The Corporation need comply with the Act only if it can be deemed an "agency" within the recently expanded definition of section 552(e). Subsection (e), added in 1974 as part of a comprehensive Congressional effort to fortify and expand coverage of the Act, provides:

For purposes of this section, the term "agency" as defined in Section 551(1) of this title includes any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency.

5 U.S.C. § 552(e), added to FOIA by P.L. 93-502 (November 21, 1974) (emphasis added).

Plaintiff-appellee James Rocap ² ("Rocap") contends that FHLMC is a "Government controlled corporation," and hence subject to the disclosure and reporting requirements of the Act. The district court, the Honorable Aubrey E. Robinson, Jr. presiding, granted Rocap's motion for summary judgment and ordered the Corporation to comply with the Act, ³ but stayed the operative portions of his order pending the outcome of this appeal. Because we believe the legislative history of the 1974 Amendments mandates the conclusion that Congress intended to extend FOIA to certain hybrid governmental/private entities like the Corporation, we affirm.

II. SUMMARY OF THE ARGUMENTS

In support of the contention that FHLMC is subject to the reporting and disclosure requirements of the Act, Rocap argues that the Corporation shares many of the following attributes characteristic of other quasi-federal entities clearly intended to be included within the "Government controlled corporation" language: the Corporation is chartered solely under federal law, and not according to the laws of any state; its Board of Directors consists solely of federal officers; its operations are tightly controlled by statute; and, at least for some purposes, it is treated by Congress as the equivalent of a federal agency, its employees as "officers or employees of the United States." Rocap Brief at 6.

The Corporation argues in response that it is less subject to federal control than the Corporation for Public Broadcasting ("CPB"), specifically mentioned by the Senate Conference Report as outside the reach of the 1974 Amendments, ⁴ and that Congress intended it to function essentially as a private corporation. In support of this theory, the Corporation points out that it receives no appropriated funds its operations are financed solely by virtue of its initial capital, profits generated from operations, and borrowings in the capital markets. In addition, its expenditures are not subject to regular Congressional budget review, and its obligations are in no way guaranteed by the federal government. The Corporation's Board of Directors is composed of the three members of the Federal Home Loan Bank Board, who receive no additional compensation for their service to the Corporation, 12 U.S.C. § 1452(a), and its capital stock is non-voting and held solely by the twelve Federal Home Loan Banks. FHLMC Brief at 6. Thus, the Corporation argues that its federal characteristics no more require the conclusion that it is a "Government controlled corporation" than in the case of national banks or federally-insured savings and loan associations, also entirely creatures of federal law. See 12 U.S.C. § 24 (national banks) and 12 U.S.C. § 1464 (federally-chartered savings and loan associations).

The Corporation further contends that the language and legislative history of the 1974 Amendments demonstrate that it is not subject to FOIA. For this argument, the Corporation relies on two provisions added in 1974 in order to increase the overall effectiveness of the Act. The first, added as subparagraph (4)(E) to section 552(a), permits a court to assess against the United States attorneys' fees and costs for any complainant who has "substantially prevailed" in a FOIA action. FHLMC refers us to the House Committee Report, which states that the allowable fees and costs are to be payable "out of Government funds." FHLMC Brief at 10, citing H.R.Rep.No.93-876, 93d Cong., 2d Sess., as reprinted in 1974 U.S.Code Cong. & Admin.News 6267. ⁵ The Corporation would have us interpret this provision as an indication that Congress intended the new definition of "agency" to extend only to entities which receive appropriate funds or whose budgets are approved by Congress. The second provision upon which FHLMC relies permits courts in FOIA cases, under certain circumstances, to direct the Civil Service Commission to initiate an investigation into whether a public official who wrongfully withholds information should be disciplined. 5 U.S.C. § 552(a)(4) (F). Pursuant to this provision, the Commission then "shall submit its findings and recommendations to the administrative authority of the agency concerned," and the "administrative authority shall take the corrective action that the Commission recommends." The Corporation argues that this provision demonstrates a Congressional intent that only those agencies whose employees are subject to Civil Service Commission jurisdiction be subject to the Act. ⁶

We agree with the Corporation that the mere presence of a federal charter, by itself, does not compel the conclusion that an entity is a "Government controlled corporation" and therefore an "agency" subject to FOIA. We believe it clear, however, that the Corporation is subject to such substantial federal control over its day-to-day operations that the dividing line for FOIA purposes must be drawn between national banks and federally-insured savings and loan associations, not covered by FOIA, and entities like the Corporation which, we believe, were intended to be included within the 1974 expansion. We reject the Corporation's argument that its similarity in organizational characteristics to the Corporation for Public Broadcasting indicates that Congress intended to exempt it and other similarly-constituted quasi-public entities. We also reject the Corporation's argument that Congress intended the expanded definition to reach only those entities specifically mentioned in the Senate and Conference Reports. See FHLMC Brief at 16, referring to S.Conf.Rep.No.93-1200, 93d Cong., 2d Sess. 17 (1974); S.Rep.No.93-854, 93d Cong., 2d Sess. 33 (1974). The CPB was exempted for reasons which have little, if anything, to do with its organizational structure; the entities specifically mentioned in the Reports admittedly areas of primary Congressional concern, were by no means inclusive. We turn now to a brief examination of the

legislative history behind the 1974 Amendments. III.

LEGISLATIVE HISTORY OF THE EXPENDED COVERAGE,

DISCIPLINARY, AND ATTORNEYS' FEES PROVISIONS

The legislative history of the 1974 Amendments to FOIA reveals that Congress intended to strengthen the Act and expand its coverage to include quasi-governmental entities like the Postal Service, Amtrak, the Federal Deposit Insurance Corporation and, we conclude, the Corporation. As appellant points out, the Senate Conference Report specifically mentioned the United States Postal Service and the Postal Rate Commission. See S.Conf.Rep. 93-1200, 93d Cong., 2d Sess. 14-15 (1974). The Senate Report adds to the list the National Rail Passenger Corporation (Amtrak). See S.Rep.No.93-854, 93d Cong., 2d Sess. 33 (1974). We reject appellant's suggestion, however, that this properly indicates an intent that the Act extend only to these named agencies. It is clear in the case of the Postal Service, for example, that specific mention was deemed necessary because the Service previously had taken the position that, absent specific inclusionary language, any amendments to FOIA "would not apply to the Postal Service." Senate Report, supra.

Similarly, the CPB was excluded in response to specific objections raised when the bill ⁷ was reported which had little or nothing to do with its organizational characteristics. As originally reported, the phrase "Government controlled corporation," as used in the House bill, included "a corporation which is not owned by the Federal Government, such as the National Railroad Passenger Corporation (Amtrak) and the Corporation for Public Broadcasting (CPB)." H.R.Rep.No.93-876, 93d Cong., 2d Sess. 7-8, U.S.Code Cong. & Admin.News 1974, p. 6274 (1974) (emphasis added). This version met substantial opposition during the House debate. Representative Van Deerlin of California, deeply troubled by the CPB's inclusion, stated:

The Corporation for Public Broadcasting, as the gentleman (Rep. Moorhead of Pennsylvania) knows, was created by Congress as a means of pumping Federal money into broadcasting without having Federal control over broadcasting.

This was by no means intended to be a Government information agency...