The Code is black and white when it comes to "restrained pipe" - either it is fully restrained (buried) or it is not restrained by soil whatsoever.
This "Fac" is our attempt to provide some shades of gray in handling buried pipe. You enter the value for "Fac" to share the stress calculation between the two equations provided. But, if you are actually modeling the soil, these simplified approaches need not apply and a value of "Fac" = 0.001 is teh CAESAR II flag to bypass this simplification that you show in the stress equation above.
It is up to you to set "Fac".