Rehearing and Rehearing In Banc Denied May 27, 1983.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
GIBBONS, Circuit Judge.
In NRDC v. EPA, 683 F.2d 752 (3d Cir.1982), the Natural Resources Defense Council (NRDC) filed a petition for review under section 509(b)(1) of the Clean Water Act, 33 U.S.C. § 1369(b)(1) (1976). NRDC sought review of the Environmental Protection Agency's (EPA's) indefinite postponement of the effective date of final amendments to certain EPA regulations. This court held that EPA's actions violated the notice and comment requirements for rulemaking under 5 U.S.C. § 553 (1976) of the Administrative Procedure Act (APA). We ordered EPA to reinstate all of the amendments effective March 30, 1981. NRDC v. EPA, 683 F.2d at 753.
NRDC now petitions the court for an award of counsel fees and other expenses in the amount of $34,375.85 pursuant to section 204(a) of the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A) (1976 & Supp. V 1981). Because we find that the position of EPA was not substantially justified, we will grant NRDC's fee petition.
Section 307(b)(1) of the Clean Water Act mandates that EPA promulgate regulations requiring industries to meet pretreatment standards before discharging certain pollutants into publicly owned treatment works. 33 U.S.C. § 1317(b)(1) (1976 & Supp. I 1977). Pursuant to that mandate and to a consent decree, see NRDC v. EPA, 683 F.2d at 754 n. 6, EPA promulgated General Pretreatment Regulations for Existing and New Sources, 40 C.F.R. § 403 (1978) (the 1978 regulations), and those regulations have been in effect since August 28, 1978. 43 Fed.Reg. 27,736 (1978).
On January 29, 1981, the President of the United States issued a memorandum ordering the federal agencies to postpone for sixty days from the date of the memorandum the effective dates of all regulations that were final but not yet effective. 3 C.F.R. § 223 (1982). In response EPA postponed the effective date of the amendments to the 1978 regulations from March 13, 1981, to March 30, 1981. 46 Fed.Reg. 11,972 (1981). NRDC raised no challenge to that postponement.
On February 17, 1981, President Reagan issued Executive Order No. 12,291, 3 C.F.R. § 127 (1982), reprinted in 5 U.S.C. § 601 (Supp. V 1981) (E.O. 12,291). E.O. 12,291 called for a reassessment of federal agency action in order to insure concentration only on regulatory objectives that would maximize net benefits to society. E.O. 12,291 required the federal agency to prepare a Regulatory Impact Analysis for all its major rules for review by the Office of Management and Budget.
Section 7 of E.O. 12,291 specifically addressed agency regulations which were in final form but not yet effective. Subsections (a) and (d) provided in part:
Exec.Order No. 12,291, 3 C.F.R. §§ 127, 131-32 (1982), reprinted in 5 U.S.C. § 601 (Supp. V 1981). E.O. 12,291 section 3(b) gives each agency the power to decide which of its rules are "major rules" pursuant to the definition in E.O. 12,291 section 1(b).
On June 24, 1981, NRDC filed a petition for review in the court of appeals pursuant to section 509(b)(1), 33 U.S.C. § 1369(b)(1) (1976). NRDC challenged EPA's indefinite postponement of the amendments without the notice and comment period required by the APA, 5 U.S.C. § 553 (1976).
After EPA had reviewed the comments received, it published an order on February 1, 1982, which allowed a majority of the amendments to become effective as of January 31, 1982. 47 Fed.Reg. 4,518 (1982). It indicated, however, that four controversial amendments would be postponed until further notice pending continued analysis. 47 Fed.Reg. 4,518 (1982).
II. THIS COURT'S DECISION
In addressing NRDC's challenge to the March 27, 1981 decision to postpone the amendments, we first examined EPA's and intervenors' contentions that the case was moot because EPA had subsequently established an effective date for the amendments and had held a notice and comment period before considering any further postponement. We noted that the "case may well be moot as to all of the amendments except the four which were further postponed." NRDC v. EPA, 683 F.2d at 759 n. 15. We concluded, however, that because we could order relief which would alter the status quo — i.e., we could order reinstatement of all of the amendments as of March 30, 1981 — the case was not moot. Id. at 759.
Turning to the merits we first addressed the contention raised by intervenors, but not by EPA, that the postponement was not a rulemaking subject to the APA's requirements. Id. at 761. Because the repeal of a rule clearly constitutes rulemaking under the APA, 5 U.S.C. § 551(5) (1976), we held that an indefinite postponement, operating effectively as a repeal, also constituted rule-making.
We next considered and rejected an argument raised by intervenors, but not by EPA, that the agency had "good cause" under 5 U.S.C. § 553(b)(B) (1976) for its failure to comply with the rulemaking requirements of the APA. Id. at 765-67. Although EPA stated that its March 27, 1981 postponement was pursuant to E.O. 12,291, we concluded that EPA could have complied with both the APA and E.O. 12,291. Id. at 765. We saw no reason why EPA could not have held a notice and comment period before its initial postponement instead of waiting until October of 1981 to do so. Id. at 766.
Having held that EPA's action violated the APA, we next addressed the question of a remedy. EPA contended that no remedy was required because it had cured any procedural defect in its initial postponement by establishing an effective date and then holding a notice and comment period before any further postponement. Id. at 767. We rejected EPA's contentions. We held that EPA's later notice and comment procedures did not cure its failure to provide them before the amendments were ever postponed. Accordingly, we remanded the case to EPA with instructions to reinstate all the amendments effective March 30, 1981. Id. at 769.
III. THE EQUAL ACCESS TO JUSTICE ACT
NRDC now petitions the court for counsel fees and expenses incurred in the litigation
Section 2412(d)(1)(A) reads as follows:
28 U.S.C. § 2412(d)(1)(A) (Supp. V 1981) (emphasis added). Tracking the language of the statute, EPA raises two arguments against an award of fees in this case. Relying on the language "[e]xcept as otherwise specifically provided by statute," EPA argues that the EAJA is inapplicable here because the Clean Water Act contains its own fee-shifting provision which exclusively governs this action. In the alternative EPA argues that even if the EAJA applies, the court should not award fees because EPA's position was substantially justified.
A. The Applicability of the EAJA
EPA argues that the conditional language "[e]xcept as otherwise specifically provided by statute" in section 2412(d)(1)(A) renders the Equal Access to Justice Act inapplicable to an action under the Clean Water Act. Section 505(d) of the Clean Water Act, 33 U.S.C. § 1365(d) (1976),
Even in the face of such silence, EPA nonetheless asks us to hold that the Clean Water Act, not the Equal Access to Justice Act, governs the award of attorneys' fees in this case. EPA reads the legislative history of the Equal Access to Justice Act to preclude its application in any case brought pursuant to a statute which somewhere contains a counsel fee provision, even if that provision is inapplicable to the case at issue.
The legislative history of the EAJA makes it clear that Congress intended not to affect cases where fees already could be awarded, but instead to make fee awards possible in additional cases when section 2412(d)(1)(A)'s requirements are met. The House Report explains that
House Report, supra, at 18, U.S.Code Cong. & Admin.News 1980, p. 4997 (emphasis added). See S.Rep. No. 253, 96th Cong., 1st Sess. 10 (1979) [hereinafter "Senate Report"]. We conclude that a section 509 petition under the Clean Water Act is just such a case where Congress has not already authorized a fee award.
Congress intended the EAJA to expand the potential for fee awards under certain circumstances, not to freeze the absence of counsel fee provisions in existing statutes.
We hold therefore that section 2412(d)(1)(A) of the EAJA is applicable to a petition for counsel fees incurred in a review proceeding pursuant to section 509 of the Clean Water Act. We now turn to EPA's claim that its position was substantially justified.
B. Definition of the Act's Terms
The Equal Access to Justice Act, 28 U.S.C. § 2412(d), provides for an award of fees to the prevailing party, which NRDC unquestionably is, "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). No "special circumstances" are relied upon, and thus we must determine what Congress meant when it used the terms "position" and "substantially justified."
Because the Act has only been in effect since October 1, 1981 it has yet to receive much attention from appellate courts. Our decision in Goldhaber v. Foley, 698 F.2d 193 (3d Cir.1983), does not reach the question presented in this case. Two courts of appeals seem to have adopted the dissent's position that "position of the United States" refers to the "position of the United States taken in litigation before the courts," rather than the "position taken by an agency of the United States which made it necessary for the party to file the action." Broad Avenue Laundry and Tailoring v. United States, 693 F.2d 1387 (Fed.Cir.1982); Tyler Business Services, Inc. v. National Labor Relations Board, 695 F.2d 73 (4th Cir.1982). See also S & H Riggers & Erectors, Inc. v. OSHRC, 672 F.2d 426, 431 (5th Cir. Unit B 1982) (examines litigation position). The interpretation adopted by the dissent and the Broad Avenue, Tyler and Riggers courts means that no matter how outrageously improper the agency action has been, and no matter how intransigently a wrong position has been maintained prior to the litigation, and no matter how often the same agency repeats the offending conduct, the statute has no application, so long as employees of the Justice Department act
28 U.S.C. § 2412(d)(2)(C). While the statute does not define "position," it does define "United States" disjunctively. Thus plainly, "position of the United States" means position taken by "any agency and any official of the United States acting in his or her official capacity." Only hostility to the underlying legislative purpose, we suggest, would permit a reading of the words "position of the United States" in isolation from the accompanying definition.
Among the trial courts, a significant number of well-reasoned opinions have held that the underlying conduct of the agency, not merely its trial conduct, must be considered. Moholland v. Schweiker, 546 F.Supp. 383, 386 (D.N.H.1982); Nunes-Correia v. Haig, 543 F.Supp. 812, 816 (D.D.C.1982); Wolverton v. Schweiker, 533 F.Supp. 420, 425 (D.Idaho 1982); Photo Data, Inc. v. Sawyer, 533 F.Supp. 348, 352 (D.D.C.1982); Gava v. United States, No. 817-78, slip op. at 23 (Ct.Claims Tr.Div. July 20, 1982). But see, however, Lauritzen v. Secretary of the Navy, 546 F.Supp. 1221, 1226 n. 6 (C.D.Cal.1982); Operating Engineers Local Union No. 3 v. Bohn, 541 F.Supp. 486, 493-96 (D.Utah 1982); Berman v. Schweiker, 531 F.Supp. 1149, 1154 (N.D.Ill.1982); Alspach v. District Director of Internal Revenue, 527 F.Supp. 225, 228 (D.Md.1981) (focus on litigation position). The proper interpretation of the Act is a matter of first impression in this circuit, and we should interpret it consistently with its plain meaning and the intention of Congress. We hold that the word "position" refers to the agency action which made it necessary for the party to file suit.
The statute's legislative history establishes beyond question that Congress intended that the statute provide an incentive for suits to control agency actions, not merely to make Justice Department litigators behave. There are overwhelming references to that effect and none to the contrary. See generally 126 Cong.Rec. H. 10213-225 (daily ed. October 1, 1980); 125 Cong.Rec. S. 10914-924 (daily ed. January 31, 1979). In Senator DeConcini's Report on the Act for the Senate Judiciary Committee he observed:
Senate Report at 6 (emphasis supplied). The reference to the government having in its control evidence to prove the reasonableness of its action can have no other possible meaning than reasonableness of the agency action. That intention is evidenced further on the next page of the Senate Report:
Senate Report at 7 (emphasis supplied). The same language appears in Congressman Kastenmeier's Report for the House Judiciary Committee. House Report at 11. If the Department of Justice offers to settle a case its litigation position cannot be faulted. But as the Senate Report makes clear, the beneficiary of the settlement may be deemed the prevailing party. The reference to settlements makes plain that "position of the United States" must have been meant to include not only the litigation position, which will more often than not be determined by the Justice Department, but also the agency position which made the lawsuit necessary. Lest there be any doubt, the Senate Report continues:
Senate Report at 7. Moreover in the section-by-section analysis of the Act in the Senate Report at 15 and the House Report at 14, U.S.Code Cong. & Admin.News 1980, p. 4993, it is noted:
(emphasis supplied). Clearly, an agency is not pressed by the Act with respect to abusive and harassing regulatory practices if those practices are not even taken into account in making a fee award.
The Congressional understanding of the meaning of "position of the United States" emerges with even greater clarity from the floor debates. When Senator Domenici introduced the Equal Access to Justice Act, S. 265, on January 31, 1979, the following colloquy between Senators Domenici and Proxmire occurred:
125 Cong.Rec. S. 891 (daily ed. Jan. 31, 1979) (emphasis supplied).
The bill was discussed at length on July 31, 1979, and that discussion is replete with statements by the legislators that "position of the United States" included position taken by an agency in agency proceedings. For example:
125 Cong.Rec. S. 10922 (daily ed. July 31, 1979).
Id. S. 10933.
Id. S. 10914. Throughout the debate the legislators placed clear emphasis on governmental action, not governmental litigation position. The pervasive theme of the debate was the goal of encouraging "little people" to challenge unreasonable actions by government bureaucrats instead of acquiescing because of the expense of a legal challenge. As Senator DeConcini explained:
Id. Senator DeConcini's concern about encouraging challenges to arbitrary and unreasonable bureaucratic action was echoed by Senator Dole, who observed:
Id. S. 10915. Similarly, Senator Stevens commented:
Id. Senator Dole's and Senator Stevens' concern about encouraging litigation to curb outlandish regulation was also voiced by Senator Domenici, who observed:
Id. S. 10916. The intention to police the agencies was reiterated by Senator DeConcini, who continued:
Id. S. 10917. Senator Thurmond put it succinctly:
Id. S. 10920. Senator McClure noted:
Id. S. 10921. Senator Nelson explained:
Id. S. 10922. Similar sentiments were expressed by Senator Goldwater, id. S. 10917, Senator Ford, id. S. 10918, Senator Bayh, id. S. 10923, Senator Kennedy, id., and Senator Warner, id. S. 10924.
No legislator in either the Senate or the House said anything which suggests that the Act applies only to the government's litigation position. There is not a scintilla of legislative history that, fairly read, suggests that Congress did not mean to incorporate in the term "position of the United States" the definition that United States includes "any agency and any official of the United States acting in his or her official capacity." Indeed, the legislative history suggests overwhelmingly and unequivocally that this was precisely what Congress intended. Interpreting the Act so as to restrict application of the Act to the government's litigation position and exclude consideration of the bureaucratic action which necessitated the lawsuit would remove the very incentive which Congress unquestionably intended to provide.
The EPA relies on the fact that Congress did not impose strict liability by providing for an automatic award to the prevailing party, but instead used language, similar to that in Fed.R.Civ.P. 37, permitting a fee award against a party resisting a discovery motion unless the party's resistance is substantially justified. The substantial justification language may have been borrowed from one of the Federal Rules of Civil Procedure, but that premise lends no support for the illogical syllogism the EPA erects from it. The bill as originally drafted provided simply for a fee award to the prevailing party. Senator DeConcini explained its evolution:
Id. S. 10914. The Justice Department position in Congress was far short of how the EPA urges this court to interpret the Act. The Justice Department's alternative proposal plainly focused on the agency action, but would have permitted an award only if that action was "arbitrary, frivolous, unreasonable or groundless." Senator DeConcini continued:
Id. The EPA would rewrite the Act not so that it represents a middle ground, but to give it a meaning that even the Justice Department never sought. See House Report at 15. The reason why the substantial justification language of Rule 37 was chosen was not, as the EPA illogically deduces, in order to restrict the application of the Act to litigation positions, but because, as Senator DeConcini explained:
125 Cong.Rec. S. 10914. Congress was well aware that Rule 37 had just recently been amended by changing the burden to provide for fees unless opposition to a discovery motion was substantially justified, a departure from the former standard which required a finding that the opposition to discovery was unjustified. See 4A J. Moore, Moore's Federal Practice ¶ 37.02 at 37-49 (2d ed. 1982). Congress understood that the showing of substantial justification was required not only for a litigation position, but for a disputed agency action. Nowhere, perhaps, is that understanding disclosed more clearly than in the remarks by Senator Kennedy, who at first had serious concerns about the legislation, but eventually supported it. He explained his change of heart, however, by noting:
125 Cong.Rec. S. 10923. Thus the only senator who in the entire debate on the Act expressed any serious concerns about protecting federal agencies acknowledged that the substantial justification language applied not only to the government's litigation position, but to the agency's decision to take a position with respect to the meaning of the regulatory statute. The House Report confirms Senator Kennedy's understanding:
House Report at 14.
Reliance on references in the House Report to the government's "decision to litigate" or "pursuing litigation" lends no support to the EPA's reading of the statute. Undoubtedly fees can be awarded on the basis that the government did not justify its litigation position. But it is a classic non
C. Substantial Justification For EPA's Position
Having decided that the conduct to examine is the agency's pre-litigation position, we must determine whether the EPA's position was substantially justified. We hold that on this record the agency has failed utterly to establish substantial justification. For its action to be substantially justified, the government must make a "strong showing" that its position was substantially justified. House Report at 16, 18. Deciding whether the agency has carried the burden of showing substantial justification for its position is in this case easy. The point at issue in this case was the agency's decision to dispense with notice and comment in rulemaking. The law was already settled that this could not lawfully be done. Sharon Steel Corp. v. EPA, 597 F.2d 377 (3d Cir.1979). The panel which decided the merits of this case observed that EPA's defense "circumvent[ed] Sharon Steel and the APA." NRDC v. EPA, 683 F.2d 752, 768 (3d Cir.1982). Nor could the agency possibly have believed that the repeal of a rule is not rulemaking, because the APA specifically provides that repeal of a rule is rulemaking subject to notice and comment requirements. 683 F.2d at 765. Moreover, the agency's own subsequent conduct in treating further postponement as rulemaking reveals that the EPA knew all along that its position was legally untenable. It nevertheless continued to resist reinstatement of the repealed rules, even after the lawsuit was filed. If ever a case fit precisely the mold of bureaucratic arbitrariness which one senator after another stated as the target of the Equal Access to Justice Act, this is the case.
The EPA suggests that it responded to the lawsuit in a commendable way. Caught redhanded in a violation of the law on notice and comment rulemaking, it terminated the indefinite postponement, established an effective date for the amendments, and initiated a notice and comment period before any further postponement. Nevertheless the EPA continued to insist that it was free to litigate the issue of the initial postponement. It forced the NRDC to brief and argue the case, and this court to order reinstatement of the initial regulations which the agency had illegally set aside. No fair reading of our decision in NRDC v. EPA can construe it as a decision substantially justifying the EPA's position.
D. The Fee Award
Because we hold that the government failed to carry its burden of substantial justification for the pre-complaint position of the agency, we must address several other issues raised by the parties. These are: (1) whether fees may be awarded for time expended prior to the effective date of the Act; (2) whether the Act provides for compensation for Freedom of Information Act activity; (3) the adequacy of the affidavits supporting the fee application; and (4) the appropriate hourly rate.
The government contends that fees are not awardable for services performed prior to the effective date of the Act. That position is inconsistent with the plain language of the statute, which permits payment of fees in any "civil action ... which is pending on ... [the effective date, October 1, 1981]." Pub.L. No. 96-481, § 208, 94 Stat. 2330 (1980). The test is not when the services were rendered, but whether the action was pending on October 1, 1981. This action was instituted by a petition for review filed on June 24, 1981, and thus the case was pending on the effective date.
The government also objects to compensating NRDC for time spent in procuring information through the Freedom of Information Act, because that route to information is not conventional discovery. That position is inconsistent with the Act's definition of fees and expenses which "includes the reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test, or project which is found by the court to be necessary for the preparation of the party's case, and reasonable attorney fees...." 28 U.S.C. § 2412(d)(2)(A) (1976 & Supp. V 1981). The Freedom of Information Act work was performed after the petition for review was filed, and may well have been more expeditious than conventional discovery, particularly in a petition for review over which this court rather than a district court had jurisdiction. Allowing compensation for such efforts is entirely consistent with the definition of fees and expenses in the Act, and with the policies which it embodies.
Nor are we impressed with the government's objection to the sufficiency of the attorney's supporting affidavits in support of the award requested. The agency's position seems to be, on the one hand, that the affidavit is too general, and, on the other hand, that too much time was spent in preparing it. The hours, dates, times and descriptions are included, along with affidavits from experts establishing that the hourly rates charged were below those normally charged by attorneys of comparable experience. The agency complains that some of the legal work involved preparing responses to positions raised by industry intervenors who supported its action in rescinding regulations without notice and comment. But clearly NRDC would not have been forced to address those points except for the agency's insistence on litigating. The affidavits are, in our view, in satisfactory compliance with 28 U.S.C. § 2412(d)(1)(B).
Finally, NRDC urges that an award in excess of $75.00 an hour is appropriate because the court should determine "that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. § 2412(d)(2)(A). NRDC seeks an adjustment to $77.86 an hour because of the increased cost of living occurring since the effective date of the Act on October 1, 1981. The calculation is made on the basis of the Consumer Price Index published by the Bureau of Labor Statistics. The Act plainly delegates to the court authority to make such an adjustment, although with little guidance as to when it is appropriate. The purpose of the statute was to encourage challenges to agency action, and the cost of living adjustment provision seems designed to provide a disincentive to agencies to prolong the litigation process. The required adjustment should therefore be made.
The total award requested is $34,375.85. We will order that the NRDC's request for
ANNE E. THOMPSON, District Judge, concurring:
I concur with the opinion of Judge Gibbons to the extent that it concludes that the reference to the "position of the United States" in the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), includes the agency action which prompted the aggrieved party to challenge governmental action. I agree with the conclusion reached by Judge Gibbons that the position of the United States in this case was not substantially justified and that NRDC's application for attorneys' fees should be granted in full. However, I file this concurring opinion because I believe that the intent of Congress in enacting the EAJA was by no means as clear as has been suggested, and because I have reached my determination through a route somewhat different than that taken by Judge Gibbons.
The statute itself is silent as to the meaning of the word "position." The legislative history does not address this issue directly, and examination of the legislative history provides no conclusive answer. Photo Data, Inc. v. Sawyer, 533 F.Supp. 348, 352 (D.D.C.1982); Alspach v. Dist. Dir. of Internal Revenue, 527 F.Supp. 225, 228 (D.Md.1981) ("question is a close one"). It is apparent that the primary concern of Congress in enacting the EAJA was to provide an incentive for parties aggrieved by unreasonable governmental action to undertake litigation to vindicate their rights and those of the public, as well as to deter abusive and arbitrary agency action. The legislative history is replete with references to administrative abuses which Congress sought to limit through enactment of the attorneys' fees provisions.
Section 202 of the EAJA, found at 5 U.S.C.A. § 504 note (Supp.1982), describes the purposes underlying the EAJA.
According to H.R.Rep. No. 1418, 96th Cong., 2d Sess. 5-6 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 4984, the bill rests on the premise that certain parties "may be deterred from seeking review of ... unreasonable governmental action because of the expense involved in securing the vindication of their rights ... The purpose of the bill is to reduce the deterrents" through the attorneys' fees provisions. This will help assure "that administrative decisions reflect informed deliberation." Id. at 12, U.S.Code Cong. & Admin.News 1980, p. 4991.
The legislative history is not, however, susceptible of only one interpretation. As Judge Hunter points out, Congress made a number of references to the litigation position of the United States during its discussion of the substantial justification standard. "Where the government can show that its case had a reasonable basis both in law and fact, no award will be made." Id. at 10, U.S.Code Cong. & Admin.News 1980, p. 4989. The House Report also noted that the EAJA would hold the United States "to the same standards in litigating as private parties." Id. at 9, U.S.Code Cong. & Admin.News 1980, p. 4987. Similarly, the House Report indicates that the EAJA was "intended to caution agencies to carefully
At least one court has attempted to reconcile the apparently conflicting references by stating that the passages concerning the underlying agency action must be read in light of Congress' concern with governmental action in administrative or judicial enforcement proceedings, where the action is the litigation posture. Alspach, supra, at 228-39. It would be equally logical to assume, however, that the references to the government's litigation position should be read in light of that very same context, in which the proper focus is on the underlying governmental action.
Nowhere in the legislative history is there a clear statement of congressional intent. As this court noted in Goldhaber v. Foley, 698 F.2d 193, 196 (3d Cir.1983), courts have differed as to whether the government's position should be assessed at the pre-complaint or post-complaint stage. The absence of a clear statement from Congress is, of course, not uncommon. In Broad Avenue Laundry & Tailoring v. United States, 693 F.2d 1387, 1390-91 (Fed.Cir.1982), the court noted 28 U.S.C. § 2412(d)(3), in which Congress specifically dealt with the position of the United States in administrative proceedings. The court concluded that when Congress intended the court to consider the position of the United States before an agency, it knew precisely how to do so. Thus, the court found that the failure of Congress to include similar language in section 2412(d)(1)(A) was strong evidence that Congress did not intend the latter section to cover the agency position. Id. at 1391. This is not conclusive. Congress was not in that context concerned with the "position" of the United States in a civil action before the Court of Appeals. A review of the legislative history indicates that Congress never fully contemplated a situation such as that before this court in which the government's litigation position consisted essentially of an apology for its administrative action forcing this litigation. For the following reasons, I conclude that the purposes underlying the EAJA would best be effected by examining both the government's position at the administrative level which prompted a party to make the decision to litigate and the government's position during the litigation. Under this standard, fees would be awarded to a prevailing party to the extent that the government's action in causing a party to litigate and to continue to litigate was not substantially justified. Thus, unless and until the government's position, starting at the agency level, is or becomes substantially justified, fees should be awarded to a prevailing party.
I agree with the position of Judge Gibbons that examination merely of the government's litigation position would mean that no matter how improper the agency conduct that caused the suit to be filed or no matter how capriciously that position was maintained prior to suit, even after substantial sums have been expended to institute suit, the government can avoid payment of any fees merely by taking corrective action or by maintaining a different, although justifiable, litigation posture. This anomalous situation would contravene the overriding concern repeatedly expressed by the Congress to remove the specter of overwhelming litigation costs from a party's determination of whether to contest unreasonable governmental conduct. See Goldhaber, supra, at 197. Congress considered an aggrieved party's decision to resort to the adjudicatory process to be of paramount concern in enacting the EAJA. House Report, supra, at 9. The EAJA was designed to assure that the decision to contest governmental action is based on the merits of the case rather than on the cost of litigating. Id. at 12. This decision would greatly be affected in an adverse manner if, after substantial sums are expended in mounting an action, the government can avoid payment of fees by, as in this case, granting most of what the party sought.
On the other hand, examination only of the administrative position underlying the suit would not advance the goals of Congress in enacting the EAJA. If by taking corrective action, the government ameliorates the improprieties of its conduct after suit is filed, there would be no valid reason to award attorneys' fees against the government for defending a litigation position after that position has become substantially justified. If, in fact, the complaint in this action had become moot after EPA had taken its "corrective" action, an award of attorneys' fees for plaintiff's pursuit of this case would neither deter unreasonable agency conduct nor eliminate the obstacles to challenging such conduct.
Although not directly on point, this court's decision in Goldhaber is instructive. In Goldhaber, this court was faced with deciding whether fees should be awarded when the position of the United States was substantially justified on one claim but not on another. The court held that the position of the United States referred to the government's defense to each of the claims. 698 F.2d at 197. The court founded its holding upon the central purpose of the EAJA of eliminating any barriers to litigation challenging unreasonable governmental conduct presented by the fear of attorneys' fees. Id.
The court found it incongruous to deny fees to a prevailing party who defeats one unreasonable government position simply because another position of the United States was substantially justified. The court stated:
Id. (emphasis added).
Similarly, an aggrieved party should be able to recover those fees necessary to challenge unreasonable governmental action, whether those fees are incurred in order to file a complaint or to continue the suit unless and until the government takes corrective
The standard of awarding fees against the United States only for those fees incurred in challenging its unreasonable positions would serve to eliminate the specter of attorneys' fees as an obstacle to challenging arbitrary governmental action while at the same time rewarding the government for taking corrective action.
With this standard in mind, I turn to the question of whether, after taking its allegedly "corrective steps" and claiming that the litigation was moot, the position of the United States was substantially justified. EPA's primary defense during the litigation was that even if its action had violated the Administrative Procedure Act, no remedy was required because it had cured any procedural defect. The panel rejected that defense, concluding that EPA's defense circumvented Sharon Steel Corp. v. EPA, 597 F.2d 377 (3d Cir.1979). EPA forced NRDC to brief and argue its case and the panel concluded that EPA's position was lacking. The panel ordered reinstatement of all of the amendments as of March 30, 1981. I cannot conclude that EPA's posture in this litigation had a reasonable basis in law and in fact. I do not find that its position was "novel but credible," see House Report, supra, at 11, and I believe that Sharon provided sufficient guidance for the EPA. Accordingly, I agree with Judge Gibbons that EPA's litigation position was not substantially justified. I would also award NRDC fees for time spent prior to the effective date of the EAJA and for its efforts in obtaining information through the Freedom of Information Act. Finally, the fee request was appropriately documented, and properly included a cost of living adjustment. For these reasons, I concur that NRDC's application for attorney's fees should be awarded in full.
JAMES HUNTER, III, Circuit Judge, concurring and dissenting:
I concur in Judge Gibbons' holding that the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A) (1976 & Supp. V 1981) ("EAJA") is applicable to a petition for counsel fees incurred in a review proceeding pursuant to section 509 of the Clean Water Act, 33 U.S.C. § 1369 (1976). I respectfully dissent from Judge Gibbons' holding that the term "position" refers to the agency's pre-litigation position. I also dissent from his holding that the position of EPA was not substantially justified in this case.
I would hold that in examining a petition for counsel fees pursuant to section 2412(d)(1)(A) of the EAJA, a court must look at the government's litigation position to determine whether it is substantially justified. Because I find that EPA's position was substantially justified in this case, I would deny NRDC's petition for counsel fees.
I. Definition of the Terms
In determining that "the position of the United States was substantially justified," I begin by examining what Congress meant when it used the terms "position" and "substantially justified." As Judge Gibbons notes, there has been disagreement among courts construing the EAJA over whether "position" refers to the government's initial action prompting the lawsuit or whether "position" refers to the government's litigation position. All of the circuit courts which have addressed this issue, however, have concluded that the term refers to the government's litigation position. See Broad Avenue Laundry and Tailoring v. United
That distinction proves immaterial in many cases when the government's litigation position is simply that its underlying actions were proper. In such cases there is no difference between the position of the government before and after the lawsuit. Goldhaber v. Foley, 698 F.2d 193, 196 (3d Cir.1983) (distinction only important when government changes its position); Operating Engineers, 541 F.Supp. at 495 (same).
For example, in Goldhaber the Director of the Administrative Office of the United States had engaged two individuals as reporters for the bankruptcy court. Appellants in Goldhaber were two court reporters who had challenged the AO's action as beyond his authority and as arbitrary and capricious. The AO had defended by asserting that his action was within his authority and that it was not arbitrary and capricious. In Goldhaber consequently we did not have to decide how to interpret the term "position". Goldhaber, 698 F.2d at 196.
In this case, however, the distinction is material because EPA did not attempt in litigation to justify its initial action; it contended instead that its subsequent corrective steps either mooted the case or made the granting of a remedy unnecessary. Examining the statutory language, the purpose of the EAJA, its legislative history, and the cases construing it, I conclude that the term "position" in section 2412(d)(1)(A) is the position taken by the government in litigation.
I note at the outset that the statute itself does not define the term "position."
To achieve that balance, Congress adopted the standard that fees would not be awarded if the "position of the United States was substantially justified."
I conclude that interpreting "position" as litigation position best implements that legislative compromise. There is understandable concern that looking at the government's initial action instead of the reasonableness of the government's decision to press the issue in court would result in almost automatic fee awards to prevailing plaintiffs in many cases. Operating Engineers, 541 F.Supp. at 495. For example, when reviewing many agency actions, the statutory standard of review is whether the action is "arbitrary or capricious" or whether there is "substantial evidence" on the record to support the action. 5 U.S.C. § 706 (1976). It would be logically difficult to conclude that an action was "arbitrary and capricious" and then to conclude on a motion for fees that the action was "substantially justified." Operating Engineers, 541 F.Supp. at 495. That difficulty could result in an almost automatic award of fees in such cases, a result clearly not intended by Congress in passing the EAJA.
Looking at the litigation position to determine substantial justification will still effectuate the purpose of the EAJA to reduce economic deterrents to challenging government action. It will encourage the government to avoid litigation, and correct its actions, a clear intent of the EAJA, House Report, supra, at 10, if it cannot raise reasonable legal arguments. Such action will reduce "the expense of correcting error on the part of the Government." Senate Report, supra, at 6. However, if the government does waste the resources of the
In addition to the language addressing the purpose of the EAJA, other language in the legislative history also supports my position.
House Report, supra, at 11, U.S.Code Cong. & Admin.News 1980, pp. 4989-4990. (emphasis added).
Second, the House Report instructs that fee awards in judicial proceedings pursuant to section 2412(d)(1)(A) should be treated "analogous to the awards authorized in adversary adjudications" at the agency level under section 203 of the EAJA, 5 U.S.C. § 504(a)(1) (Supp. V 1981). House Report, supra, at 17. Section 203 authorizes the award of fees against the United States in administrative adjudications where the United States is in an adversarial role, unless the "position of the United States is substantially justified." The legislative history of the substantial justification standard in section 203 states that "[i]ts effect is to place the burden on the government to make a positive showing that its position and actions during the course of the proceedings were substantially justified...." House Report, supra, at 13, U.S.Code Cong. & Admin.News 1980, p. 4992 (emphasis added). Such language clearly addresses the government's post-complaint conduct rather than the government's pre-complaint conduct.
Therefore in examining a petition for counsel fees pursuant to section 2412(d)(1)(A), I would look at the litigation position of the government in determining whether its position was substantially justified. Rather than demonstrating "hostility" to the legislative intent as Judge Gibbons suggests, 703 F.2d at 707, that approach best comports with the legislative history and with the compromise intended by Congress in enacting the EAJA.
Finally, I turn to the meaning of the term "substantially justified." The House and Senate Reports define the test as follows:
II. Application of the Terms to This Case
Applying the test of substantial justification to EPA's litigation position in this case, I would hold that EPA's position was substantially justified. To make that determination I look at the defense position offered by the government to the successful claim of the prevailing party. Goldhaber, 698 F.2d at 196-98. In this case NRDC was successful in its claim that EPA failed to conduct the notice and comment period required by the APA before indefinitely postponing the amendments. Brief for Petitioner at 22; NRDC v. EPA, 683 F.2d at 764.
This is not a case where the government attempted "with its greater resources and expertise ... [to] coerce compliance with its position." House Report, supra, at 10, U.S.Code Cong. & Admin.News 1980, p. 4988. As this court noted, this is a case where EPA responded to the lawsuit in a commendable way. NRDC v. EPA, 683 F.2d at 768. It terminated the indefinite postponement, established an effective date for the amendments, and initiated a notice and comment period before any further postponement. After evaluating the comments received, EPA then put all but four of the amendments into effect.
We rejected EPA's defense that those corrective steps completely removed any harm that its initial postponement may have caused. However, the fact that we rejected EPA's defense should not "raise a presumption that the Government position was not substantially justified." House Report, supra, at 11, U.S.Code Cong. & Admin.News 1980, p. 4990; Senate Report, supra, at 7.
EPA's argument presented a different scenario than that presented to us in Sharon Steel Corp. v. EPA, 597 F.2d 377 (3d Cir.1979). In Sharon Steel EPA dispensed with notice and comment in promulgating a rule. After promulgation the Administrator invited comments and promised to modify the rule if the comments indicated that modification was necessary. Id. at 379. We held that notice and comment after a rule is promulgated is no substitute for pre-promulgation notice and comment as the APA requires. Id. at 381. We concluded that allowing post-promulgation notice and comment as an acceptable substitute would force the petitioner to "come hat-in-hand and run the risk that the decisionmaker is likely to resist change." Id.
Although we ultimately rejected EPA's defense as "circumvent[ing] Sharon Steel and the APA," NRDC v. EPA, 683 F.2d at 768, I nonetheless find that it was reasonable for EPA to have pressed that position in court.
I conclude that EPA's defense position was "reasonable both in law and fact." I accordingly conclude that EPA has met its burden of showing that its "position" was "substantially justified" within the meaning of section 2412(d)(1)(A). I therefore would deny NRDC's petition for counsel fees and expenses.
33 U.S.C. § 1365(d) (1976).
33 U.S.C. § 1365(a) (1976).
33 U.S.C. § 1369(b)(1) (1976).
125 Cong.Rec. 21445 (1979). We read Senator Kennedy's language, however, as merely reiterating the general principle explained in the House Report and adopted in this opinion.
Congress responded to the D.C.Circuit's opinion by amending the Clean Air Act to include a counsel fees provision covering petitions for review under that Act. 42 U.S.C. § 7607(f) (Supp. I 1977). EPA emphasizes Congress' failure similarly to amend the Clean Water Act. EPA seems to argue that Congress's failure to amend the Clean Water Act to provide counsel fees for section 509 actions precludes the application of the EAJA as well.
The D.C.Circuit, however, recognized that there were two avenues available to Congress if it wished to provide counsel fees for petitions for review under the Clean Air Act. NRDC v. EPA, 512 F.2d at 1357. Congress could amend the Clean Air Act itself to include a fee-shifting provision covering petitions for review, id., a course which Congress ultimately took in 42 U.S.C. § 7607(f) (Supp. I 1977). Alternatively, the court suggested that Congress could expand 28 U.S.C. § 2412 (1976) to include an award of attorneys' fees in addition to costs against the United States, see supra note 4. Id. Congress also eventually pursued the latter course in passing the EAJA.
Clearly the EAJA does not apply to petitions for review under the Clean Air Act, given the specific fee-shifting provision passed by Congress in 42 U.S.C. § 7607(f). We reject the notion, however, that the EAJA is inapplicable to petitions for review under the Clean Water Act. Congress' failure to amend the Clean Water Act as it amended the Clean Air Act in no way precludes the application of the EAJA to this case. Cf. Hall v. Cole, 412 U.S. 1, 10-11, 93 S.Ct. 1943, 1948, 36 L.Ed.2d 702 (1973) (refusal to draw negative inferences from Congressional silence in a statute where fees are otherwise available under common-law exceptions to the American rule); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 389-91, 90 S.Ct. 616, 624, 24 L.Ed.2d 593 (1970) (same); Brennan v. United Steelworkers of America, 554 F.2d 586, 591-94 (3d Cir.1977) (same).
In Goldhaber, 698 F.2d at 197 n. 5, we recognized the parallel between Rule 37 and the EAJA and consequently borrowed the apportionment provision from Rule 37 for EAJA purposes. Although the purposes of Rule 37 and the EAJA are not identical, Operating Engineers, 541 F.Supp. at 494, the meaning of the language in Rule 37 nonetheless gives some indication of what Congress meant when it adopted that same language in the EAJA.
NRDC suggests that EPA should have conceded the illegality of its underlying action in making its mootness defense. Reply Memorandum at 11 n. 11. Such a concession, however, would not have lessened NRDC's litigation burden because NRDC still would have had to answer the arguments raised by the intervenors.