Judicial Watch, Inc. v. Federal Housing Finance Agency

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 10, 2011 Decided August 5, 2011

No. 10-5349

JUDICIAL WATCH, INC.,
APPELLANT

v.

FEDERAL HOUSING FINANCE AGENCY,
APPELLEE

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.
 2

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
 3
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 (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
 4
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. 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
 5
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 (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
 6
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 (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 that an agency
official’s personal correspondence was not subject to FOIA in
part because of a “lack of reliance on the correspondence to
carry out the business of the agency”); Bureau of Nat’l
Affairs, Inc. v. U.S. Dep’t of Justice, 742 F.2d 1484, 1490
(D.C. Cir. 1984) (observing that where a document is created
by an agency employee and located at the agency, “use of the
document becomes more important in determining the status
of the document under FOIA”). We think use is decisive here
as well. Although we appreciate Judicial Watch’s interest in
how much money Fannie and Freddie gave to which
politicians in the years leading up to our current financial
crisis, satisfying curiosity about the internal decisions of
private companies is not the aim of FOIA, and there is no
question that disclosure of the requested records would reveal
nothing about decisionmaking at the FHFA. We therefore
 7
hold that where an agency has neither created nor referenced a
document in the “conduct of its official duties,” Tax Analysts,
492 U.S. at 145, the agency has not exercised the degree of
control required to subject the document to disclosure under
FOIA.

The fourth Burka factor instructs us to consider “the
degree to which the document was integrated into the
agency’s record system or files.” Burka, 87 F.3d at 515. In
this case, the degree is none at all. It goes without saying that
an agency cannot integrate into its record system a document
created by a third party that none of its employees have read,
and as we have pointed out, it is the undisputed testimony of
the FHFA’s General Counsel that no one at the agency has
relied upon these documents in any way. By directing us to
look to the files an agency uses to make decisions, the fourth
Burka factor confirms what the third factor teaches: a
document that could not reveal anything about agency
decisionmaking is not an “agency record.”

Although there is no doubt that the FHFA could consult
the requested records as it conducts its business, the problem
for Judicial Watch is that no one from the FHFA has done so.
The Supreme Court held in Forsham v. Harris that documents
an agency had the right to acquire would not become agency
records subject to FOIA “unless and until the right is
exercised.” 445 U.S. 169, 181 (1980). In the same way, the
FHFA’s unexercised right to use and dispose of the records
requested in this case is not enough to subject those records to
FOIA. In weighing the Burka factors, we are mindful that the
“core purpose of the FOIA” is to “‘contribut[e] significantly
to public understanding of the operations or activities of the
government.’” U.S. Dep’t of Justice v. Reporters Comm. for
Freedom of the Press, 489 U.S. 749, 775 (1989) (quoting 5
U.S.C. § 552(a)(4)(A)(iii)).
 8

The FHFA argues in the alternative that even if it
“controls” the requested documents, they are not subject to
disclosure because it has not “obtained” them. See Tax
Analysts, 492 U.S. at 144-45 (holding that documents are only
“agency records” within the meaning of FOIA if the agency
both “create[s] or obtain[s]” the documents and “control[s]”
them). Because we hold that the FHFA does not control the
documents, we do not reach that argument.

III

The judgment of the district court is

Affirmed.