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January 17, 1979

James R. SCHLESINGER et al.

The opinion of the court was delivered by: LORD, III

In this action for declaratory and injunctive relief brought by Gulf Oil Corporation ("Gulf") against the Federal Energy Administration ("FEA") and two FEA officials, *fn1" Gulf is challenging the validity of FEA Ruling 1977-5, as well as that of a Decision and Order and Revised Remedial Order of the FEA, all issued pursuant to the FEA's authority to regulate the price of petroleum.

Ruling 1977-5 *fn2" is an interpretation of the term "transaction" as that term is used in the petroleum price regulations. Those regulations define "transaction" as a "binding contract", *fn3" a definition originally adopted in 1973 by the Cost of Living Council ("CLC") and carried forward without change by the FEA. The Ruling purports to interpret the "transaction" definition in a manner consistent with the original CLC definition. Gulf, however, arguing that the CLC intended the phrase "binding contract" to apply to variable-price contracts, contends that the Ruling in reality Amended the original "transaction" definition by excluding variable-price contracts from the meaning of "binding contract". This amended definition, Gulf says, was detrimentally and retroactively applied to it by the FEA in the challenged Orders.

 Unfortunately, when the CLC issued its regulation defining "transaction" as a "binding contract", it published no contemporaneous statement explaining whether or not the definition was meant to include variable-price contracts. In seeking to fill this administrative vacuum, Gulf noticed the depositions of Ottie Vipperman, a former official of the CLC, the Federal Energy Office ("FEO"), *fn4" and the FEA, and of William Walker, former General Counsel of the CLC and the FEO and former Acting Deputy Director of the CLC.

 The defendants moved for a protective order, claiming that Gulf was not permitted to probe the thought processes of agency decision-makers, and that judicial review in this case is limited to the administrative record developed in connection with the challenged FEA Orders. On November 9, 1978, we denied the defendants' motion for a protective order, and on November 14, 1978, Gulf attempted to depose Mr. Vipperman. Gulf's efforts were largely frustrated by counsel for defendants, who objected to, and instructed Mr. Vipperman not to answer, questions relating to the "transaction" definition and whether or not the CLC had intended the definition to include variable-price contracts. A similar fate befell Gulf when it deposed Mr. Walker on November 16, 1978.

 Gulf has now moved for orders compelling discovery and specifically ordering Mr. Vipperman and Mr. Walker to respond to those questions to which defendants objected at the depositions. We have heard oral argument on these motions, and for the following reasons, we will grant them.

 When we denied the defendants' motion for a protective order we did not write an accompanying memorandum, assuming it obvious that our denial of the motion indicated our recognition of the fact that no absolute privilege attaches to the administrative decision-making process, and that the matters concerning which Gulf sought to depose Mr. Vipperman and Mr. Walker were relevant to this litigation. Apparently we assumed too much, since defendants continued to maintain at the depositions that the information sought by Gulf was irrelevant and privileged.

 Therefore, we now state expressly that because Gulf is challenging Ruling 1977-5 as being arbitrary and capricious and an irrational amendment of the CLC's "transaction" definition, the intent and meaning of the original CLC regulation are relevant to this litigation. Since no contemporaneous administrative explanation of the original regulation exists, *fn5" the only means by which Gulf can demonstrate the original interpretation of the phrase "binding contract" and, indeed, the only means by which we may review the challenged Ruling 1977-5 and its relationship to the original CLC regulation, is through the testimony of the agency officials responsible for formulating and interpreting the regulations at issue.

 Thus, the situation confronting Gulf and us is similar to that presented in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971). In order to overcome this problem of the lack of a contemporaneous administrative explanation of a relevant agency action, the Court in Overton Park expressly authorized the taking of testimony of agency decision-makers. Faced with the defendants' motion for a protective order, and following Overton Park, we concluded that the privilege traditionally given to agency decision-makers was outweighed in this case by the need for the information sought, and we therefore denied the motion for a protective order.

 II. The information Gulf sought from Mr. Vipperman and Mr. Walker is not privileged.

 The questions asked of Mr. Vipperman and Mr. Walker and objected to by defendants were within the perimeter of proposed subjects for inquiry set forth in Gulf's memorandum in opposition to the defendants' motion for a protective order. The information sought was thus relevant to this litigation, and, absent some privilege attached to the information, should be provided. So far as defendants' objections were based upon a claim of privilege for the decisional process of agency officials, they cannot be sustained. Overton Park, supra.

 Nor, with respect to Mr. Walker, can they be sustained under the attorney-client privilege, a barrier to inquiry which defendants raised at his deposition. Defendants seem not to understand that they bear the burden of proving the applicability of the privilege to the information sought by Gulf. International Tel. & Tel. Corp. v. United Tel. Co. of Florida, 60 F.R.D. 177 (M.D.Fla.1973). Defendants' statement that "Gulf has failed to even attempt to demonstrate why the privilege should not apply notwithstanding the fact that it was clearly raised" *fn6" demonstrates a misconception of the relevant burden of proof; it is the defendants who must show, for each question objected to, that the question elicits communications made to the attorney

"(a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) ...

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