    [House Hearing, 109 Congress]
    [From the U.S. Government Publishing Office]

                            EQUAL ACCESS TO JUSTICE
                               REFORM ACT OF 2005

    =======================================================================

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON COURTS, THE INTERNET,
                           AND INTELLECTUAL PROPERTY

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    H.R. 435

                                   __________

                                  MAY 23, 2006

                                   __________

                               Serial No. 109-126

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

                                     ______

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                           COMMITTEE ON THE JUDICIARY

                F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
    HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
    HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
    LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
    ELTON GALLEGLY, California           JERROLD NADLER, New York
    BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
    STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
    DANIEL E. LUNGREN, California        ZOE LOFGREN, California
    WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
    CHRIS CANNON, Utah                   MAXINE WATERS, California
    SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
    BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
    JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
    MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
    RIC KELLER, Florida                  ADAM B. SCHIFF, California
    DARRELL ISSA, California             LINDA T. SANCHEZ, California
    JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
    MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
    J. RANDY FORBES, Virginia
    STEVE KING, Iowa
    TOM FEENEY, Florida
    TRENT FRANKS, Arizona
    LOUIE GOHMERT, Texas

                 Philip G. Kiko, General Counsel-Chief of Staff
                   Perry H. Apelbaum, Minority Chief Counsel
                                     ------

        Subcommittee on Courts, the Internet, and Intellectual Property

                          LAMAR SMITH, Texas, Chairman

    HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
    ELTON GALLEGLY, California           JOHN CONYERS, Jr., Michigan
    BOB GOODLATTE, Virginia              RICK BOUCHER, Virginia
    WILLIAM L. JENKINS, Tennessee        ZOE LOFGREN, California
    SPENCER BACHUS, Alabama              MAXINE WATERS, California
    BOB INGLIS, South Carolina           MARTIN T. MEEHAN, Massachusetts
    RIC KELLER, Florida                  ROBERT WEXLER, Florida
    DARRELL ISSA, California             ANTHONY D. WEINER, New York
    CHRIS CANNON, Utah                   ADAM B. SCHIFF, California
    MIKE PENCE, Indiana                  LINDA T. SANCHEZ, California
    J. RANDY FORBES, Virginia

                         Blaine Merritt, Chief Counsel

                             David Whitney, Counsel

                              Joe Keeley, Counsel

                              Ryan Visco, Counsel

                        Shanna Winters, Minority Counsel

                                C O N T E N T S

                                  ----------

                                  MAY 23, 2006

                               OPENING STATEMENT

                                                                       Page
    The Honorable Lamar Smith, a Representative in Congress from the
      State of Texas, and Chairman, Subcommittee on Courts, the
      Internet, and Intellectual Property............................     1
    The Honorable Howard L. Berman, a Representative in Congress from
      the State of California, and Ranking Member, Subcommittee on
      Courts, the Internet, and Intellectual Property................     2

                                   WITNESSES

    Mr. Ryan W. Bounds, Chief of Staff, Office of Legal Policy,
      Department of Justice
      Oral Testimony.................................................     4
      Prepared Statement.............................................     6
    Mr. Michael Farris, J.D., Chairman and General Counsel, Home
      School Legal Defense Association
      Oral Testimony.................................................    16
      Prepared Statement.............................................    17
    Mr. Jonathan Hiatt, General Counsel, American Federation of
      Labor, Congress of Industrial Organizations, AFL-CIO
      Oral Testimony.................................................    21
      Prepared Statement.............................................    23
    Mr. James M. Knott, Sr., President and Chairman of the Board,
      Riverdale Mills Corporation
      Oral Testimony.................................................    34
      Prepared Statement.............................................    35

                                    APPENDIX
                   Material Submitted for the Hearing Record

    The Honorable Howard L. Berman, a Representative in Congress from
      the State of California, and Ranking Member, Subcommittee on
      Courts, the Internet, and Intellectual Property................    45
    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan and Ranking Member, Committee on the
      Judiciary......................................................    47
    Statement of the Honorable Edwin Meese III, Ronald Reagan
      Distinguished Fellow in Public Policy and Chairman, Center for
      Legal and Judicial Studies, The Heritage Foundation............    49
    News Alert from the National Association of Manufacturers........    55
    A Dear Colleague from the United States Senate on Organizations
      supporting the Equal Access to Justice Reform Act of 2005, H.R.
      435/S. 2017....................................................    56
    Statement of the Honorable Donald A. Manzullo, Chairman, U.S.
      House of Representatives, and Chairman, Committee on Small
      Business.......................................................    59
    Supplemental Statement of the Honorable Donald A. Manzullo,
      Chairman, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................    83
    Letter from Colby M. May, Director, American Center for Law &
      Justice to the Honorable Donald A. Manzullo, Chairman, U.S.
      House of Representatives, and Chairman, Committee on Small
      Business.......................................................    90
    Letter from Laura W. Murphy, Director LaShawn Warren, Legislative
      Counsel, American Civil Liberities Union.......................    91
    Letter from Richard Lessner, Ph.D., Executive Director, The
      American Conservative Union to the Honorable Donald A.
      Manzullo, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................    92
    Letter from Richard Haught, D.D.S., President and James B.
      Bramson, D.D.S., Executive Director, American Dental
      Association to the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business.....    93
    Letter from Michael D. Maves, MD, MBA, American Medical
      Association to the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business.....    95
    Letter to Susan Steinman, Linda Lipsen, Daniel Cohen, Association
      of Trial Lawyers of America from the Honorable Donald A.
      Manzullo, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................    96
    Letter from R. Bruce Josten, Executive Vice President, Government
      Affairs, Chamber of Commerce of the United States of American
      to the Honorable Donald A. Manzullo, U.S. House of
      Represetatives, and Chairman, Committee on Small Business......    97
    Letter from the Honorable Edwin Meese III, Ronald Reagan
      Distinguished Fellow in Public Policy and Chairman, Center for
      Legal and Judicial Studies, The Heritage Foundation to the
      Honorable Donald A. Manzullo, U.S. House of Representatives,
      and Chairman, Committee on Small Business......................    98
    Letter from J. Michael Smith, Esq., President, National Center
      for Home Education to the Honorable Donald A. Manzullo, U.S.
      House of Representatives, and Chairman, Committee on Small
      Business.......................................................    99
    Letter from Jim Covington III, Director of Legislative Affairs,
      Illinois State Bar Association to the Honorable Donald A.
      Manzullo, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................   100
    Letter from Wade Henderson, Executive Director and Nancy Zirkin,
      Deputy Director of the Leadership Conference on Civil Rights to
      the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business and
      the Honorable Earl Blumenauer, Member of Congress, U.S. House
      of Representatives.............................................   101
    Letter from Hilary O. Shelton, Director, Washington Bureau,
      National Assosication for the Advancement of Colored People to
      the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business and
      the Honorable Earl Blumenauer, Member of Congress, U.S. House
      fo Representatives.............................................   103
    Letter from John Engler, President and CEO, the National
      Assosciation of Manufacturers to the Honorable Donald A.
      Manzullo, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................   105
    Letter from Dan Danner, Senior Vice President, Federal Public
      Policy, The National Federation of Independent Business (NFIB)
      to the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business.....   106
    Letter from Drew Caputo, Senior Attorney, The Natural Resources
      Defense Counsel to the Honorable Donald A. Manzullo, U.S. House
      of Representatives, and Chairman, Committee on Small Business
      and the Earl Blumenauer, Member of Congress, U.S. House of
      Representatives................................................   107
    Letter from Patrick Gallagher, Director of Environmental Law,
      Sierra Club to the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business and
      the Honorable Earl Blumenauer, Member of Congress, U.S. House
      of Represenatives..............................................   108
    Letter from the Small Business Equal Access to Justice Coalition
      to the Honorable F. James Sensenbrenner, Jr., Chairman, House
      Judiciary Committee............................................   109
    Letter from J. William Lauderback, Executive Vice President, The
      American Conservative Union to the Honorable Donald A.
      Manzullo, U.S. House of Representatives, and Chairman,
      Committee on Small Business....................................   111
    Letter from Caroline Fredrickson, Director, LaShawn Warren,
      Legislative Counsel, American Civil Liberities Union, to the
      Honorable F. James Sensenbrenner, Jr., Chairman, U.S. House of
      Representatives, House Judiciary Committee and the Honorable
      John Conyers, Jr., a Representative in Congress from the State
      of Michigan, Ranking Member, House Judiciary Committee.........   113
    Letter from the Honorable Donald A. Manzullo, U.S. House of
      Representatives and Chairman, Committee on Small Business and
      the Honorable Earl Blumenauer, Member of Congress, U.S. House
      of Representatives, the Honorable Olympia Snowe, Chair,
      Committee on Small Business and Entrepreneurship, United States
      Senate, and the Honorable Russell Feingold, United States
      Senate to the Honorable Arlen Specter, Senate Judiciary and the
      Honorable F. James Sensenbrenner, Jr., Chairman, House
      Judiciary Committee............................................   115
    Statement of the Honorable Earl Blumenauer, Member of Congress,
      U.S. House of Representatives..................................   119

                            EQUAL ACCESS TO JUSTICE
                               REFORM ACT OF 2005

                                  ----------

                             TUESDAY, MAY 23, 2006

                      House of Representatives,
                  Subcommittee on Courts, the Internet,
                             and Intellectual Property,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 4:07 p.m., in
    Room 2141, Rayburn House Office Building, the Honorable Lamar
    Smith (Chairman of the Subcommittee) presiding.
        Mr. Smith. The Committee on Courts, the Internet and
    Intellectual Property will come to order
        I believe all of our witnesses are here. I am going to
    recognize myself for an opening statement, then the Ranking
    Member. And all other Members' opening statements will, without
    objection, be made a part of the record.
        During the debates that preceded the Constitution's
    ratification, James Madison wrote in the Federalist Number 51:
        ``In framing a government which is to be administered by
    men over men, the great difficulty lies in this,--you must
    first enable the government to control the governed; and in the
    next place oblige it to control itself.
        Today, our Subcommittee will examine the effectiveness of a
    law, the Equal Access to Justice Act of 1980, known as EAJA,
    which was enacted by Congress for the purpose of getting the
    Federal Government to control itself.
        The legislative purpose behind EAJA was characterized in
    the 2004 case of Scarborough versus Principi. Writing for the
    Court, Justice Ginsburg stated:
        ``Congress enacted EAJA in 1980 to eliminate the barriers
    that prohibit small businesses and individuals from securing
    vindication of their rights in civil actions and administrative
    proceedings brought by or against the Federal Government. . .
    .[Its] aim was to ensure that certain individuals [and]
    organizations will not be deterred from seeking review of, or
    defending against, unjustified governmental action because of
    the expense involved.''
        The purpose of EAJA was to shift the expense of defending
    against unreasonable or overzealous government conduct from the
    backs of individuals and small entities to the Federal
    Government, which, in some cases, had initiated and pursued the
    wrongful action.
        According to an estimate by the Congressional Research
    Service, there are approximately 200 fee shifting statutes that
    Congress has enacted as exceptions to the general rule that
    each litigant in a lawsuit ought to bear the expense of their
    own legal fees.
        While EAJA's purpose is similar to other fee shifting
    statutes, its precise language, unique restrictions, and
    historical application have caused many to conclude that the
    law offers a ``false hope'' of recovery to the vast majority of
    citizens who are harmed by unreasonable Federal action.
        Despite initial estimates by the Department of Justice that
    its enactment would lead to a $500 million liability over its
    first 3 years, a 1998 GAO report could only substantiate $3.9
    million in costs over that period and a $34 million expense
    over the first 13 years that the law was on the books.
        When combined with concerns that EAJA has been interpreted
    in a manner that is inconsistent with Congress original intent,
    this record has caused a large number of diverse organizations
    to unite in a call for reform.
        Organizations as ideologically diverse as the American
    Civil Liberties Union, the American Conservative Union, the
    American Trial Lawyers Association, and the U.S. Chamber of
    Commerce, have endorsed efforts to amend EAJA.
        EAJA was enacted to ensure that agencies of the Federal
    Government take seriously Mr. Madison's imperative that the
    Government ought to be obliged to control itself. However, not
    everyone agrees that reforms are warranted, and that is why
    this hearing will be of special interest.
        That concludes my opening remarks. And the gentleman from
    California, Mr. Berman, is recognized for his.
        Mr. Berman. Thank you very much, Mr. Chairman, for
    scheduling the hearing.
        While this issue has come up before the Subcommittee in the
    past, we once again have an opportunity to engage in fresh
    discussions. Congress enacted the Equal Access to Justice Act
    in 1980 as a means of ensuring both individuals and
    organizations the right to effective counsel in vindicating
    important civil rights and civil liberties protections.
        Congress presumably sought to achieve three interconnected
    goals through the EAJA: one, to provide an incentive for
    private parties to contest government overreach; two, to deter
    subsequent government wrongdoing, and; finally, to provide more
    complete compensation for citizens injured by government
    action.
        Since in most suits the government is the deep pocket and
    can marshal more resources in litigation than most private non-
    institutional parties, private parties may not be able to
    afford protracted litigation against the government.
        The goal of the Equal Access to Justice Act was to make the
    justice system more accessible to individuals of modest means,
    small businesses, and nonprofit organizations, by allowing the
    recovery of their attorney fees when they prevail in disputes
    with the Federal Government.
        The ability to obtain attorneys fees is most often found in
    civil rights, environmental protection and consumer protection
    statues in order to help equalize contests between the Federal
    Government and private parties. But the Equal Access to Justice
    Act does not function in exactly the same way as those fee
    shifting provisions do.
        Prevailing here in litigation does not automatically result
    in an award of attorneys fees. We will hear more about those
    criteria and how we are changing those criteria, I would think,
    in the hearing. Although this act has been an important step in
    providing access to counsel, concerns have been raised
    regarding the substantial justification defense. Although I
    also have heard concerns raised about removing the substantial
    justification defense. I look forward to hearing more about
    that in this hearing.
        The hourly cap rate on attorneys fees of $125, and what
    constitutes a small business. Even though EAJA has arguably
    approved the accessibility of the justice system for small
    parties, we should discuss whether potential barriers remain
    and what changes, if any, should be made to the mechanism used
    to determine the recovery of fees.
        Thank you.
        Mr. Smith. Thank you, Mr. Berman.
        Mr. Smith. I would like also to thank the gentleman from
    Virginia, Mr. Forbes, and the gentleman from California, Mr.
    Schiff, for being in attendance today at this hearing. I,
    furthermore, want to recognize the gentleman who actually wrote
    the legislation on which we are having the hearing today and
    that is the gentleman from Illinois, Mr. Manzullo, for stopping
    by and joining us as well.
        And I may well be asking questions on his behalf when we
    get to that point. But I appreciate his initiative and his
    leadership in regard to writing this legislation and seeing it
    to the point where we are now having a hearing on it.
        Before we hear from our witnesses today I would like to
    invite you to stand and be sworn in if you would.
        [Witnesses sworn.]
        Mr. Smith. Our first witness is Ryan Bounds, chief of staff
    in the Office of Legal Policy at the Department of Justice. In
    that capacity, he assists the Assistant Attorney General for
    legal policy in developing and coordinating the Department's
    views on potential improvements in the civil justice system.
        Before joining the Office of Legal Policy in 2004, Mr.
    Bounds served as an associate at a law firm and as a clerk to a
    circuit court judge. He holds a bachelor's degree from Stanford
    University and a JD from Yale Law School.
        Our second witness is Michael Farris, who is chairman and
    general counsel to the Home School Legal Defense Association,
    an organization with 80,000 member families that he founded in
    1983. Mr. Farris is a Constitutional lawyer with extensive
    appellate experience in the U.S. Supreme Court, seven U.S.
    circuit courts of appeal, and 10 State supreme courts. He is a
    prolific author who has written extensively on Constitutional
    law issues.
        Mr. Farris is an honors graduate of Gonzaga University
    School of Law. He received his BA degree in political science
    from Western Washington State College, now known as Western
    Washington University.
        Our next witness is Jonathan Hiatt, who is the general
    counsel of the AFL-CIO, a position in which he has served for
    10 years. Prior to that, Mr. Hiatt served as the general
    counsel of the Service Employees International Union, and as a
    partner in a Boston-based union-side labor law firm.
        Mr. Hiatt is a graduate of Boalt Hall School of Law at the
    University of California Berkeley, and Harvard College.
        Our final witness is James Knott, who is the President and
    CEO of Riverdale Mills Corporation. Riverdale Mills Corporation
    is in Northbridge, Massachusetts.
        Mr. Knott also serves on the board of directors of the
    National Association of Manufacturers. He studied mechanical
    engineering at Northeastern University and has an economics
    degree from Harvard.
        In addition, he has studied at the Harvard Business School,
    the Army War College, and was earlier this month awarded an
    honorary doctorate of science by the University of Maine.
        Mr. Knott will relate to the Members of the Subcommittee
    his own experience with an agency of the Federal Government
    that targeted him and his business based upon an anonymous tip,
    an experience that led to a criminal indictment and the threat
    of a $1.5 million penalty and 6 years in jail.
        Welcome to you all. We have your written statements, and
    without objection your entire written statements will be made a
    part of the record. But please limit your oral testimony to 5
    minutes.
        And Mr. Bounds we will begin with you.

       STATEMENT OF RYAN BOUNDS, CHIEF OF STAFF, OFFICE OF LEGAL
                     POLICY, DEPARTMENT OF JUSTICE

        Mr. Bounds. Thank you, Mr. Chairman, Mr. Ranking Member,
    and other Members of the Subcommittee. Thank you for allowing
    me to testify before you today with respect to the Justice
    Department's views on H.R. 435, the Equal Access to Justice
    Reform Act.
        The Department of Justice opposes this bill. Before
    explaining why, I would like to emphasize that the Department
    shares the desire of H.R. 435's proponents to reduce the burden
    that excessive litigation and unjust enforcement actions impose
    on small businesses and individuals and on the courts.
        Unfortunately, H.R. 435 will not advance this purpose.
    Indeed, the enactment of H.R. 435 would create perverse
    incentives for small businesses, non-profit organizations and
    individuals to file and to prolong lawsuits and for government
    agencies that are sued to adhere to rather than reconsider
    their positions in close cases.
        By expanding the number of parties who can recover
    attorneys fees under the act and the amount of fees that can be
    recovered, the bill would obviously make litigation with the
    government cheaper and more frequent. H.R. 435 would thus
    generate more litigation, not less, between the government on
    the one hand and small businesses, non-profit organizations,
    and individuals on the other.
        Ultimately, such reliance on lawsuits to guide government
    policy-making and enforcement decisions substitutes litigation
    for the political process, a policy that the Justice Department
    does not support.
        H.R. 435 will induce unwise litigation in more subtle ways
    as well. The bill requires the government to pay attorneys fees
    to a prevailing party even when the government's action is
    substantially justified. Therefore, eligible parties will have
    a fairly good prospect of recovering attorneys fees in close
    cases, such as those involving new statutes or the application
    of existing law in novel situations.
        In such cases, eligible parties and the government will
    make equally informed predictions of judicial resolution of the
    issue, but eligible parties will have simple incentives to
    pursue litigation. They do not have to reimburse the government
    for its costs if they lose, and they have individualized stakes
    in the outcome.
        The Department strongly opposes this change not only
    because it would increase litigation, but because it does not
    reflect the reality that enforcing the law often requires
    making judgment calls in close cases. Where a government agency
    is required to pay attorneys fees in a substantial proportion
    of such cases, those agencies would simply be deterred from
    making close calls at all. The government would, at the margin,
    be relatively timid in enforcing the law, and private parties
    would exploit that timidity. For this very reason, Congress
    provided for a substantial justification defense under EAJA in
    the first place, noting that an automatic fee shifting rule
    would have a ``chilling'' effect on proper government
    enforcement efforts.
        To appreciate the perils of timidity, consider immigration
    enforcement. The Department of Homeland Security's efforts to
    detain and to remove illegal aliens in the United States has
    generated more than 13,000 court cases in the last fiscal year
    as aliens sought to remain at large in the United States.
        The government loses some proportion of these cases even
    when its actions are substantially justified. This happened,
    for instance, in a 2001 case in which the government sought to
    remove an illegal alien who was revealed in classified evidence
    to have been involved in the 1993 bombing of the World Trade
    Center. The alien successfully challenged the reliance on the
    classified evidence. By making the government pay attorneys
    fees in circumstances like these, which the government did not
    have to pay under EAJA as it is currently drafted, H.R. 435
    will either discourage attempts at robust enforcement of
    immigration laws or divert resources from enforcement to paying
    for aliens' attorneys.
        Neither result is consistent with seeking either to prevent
    illegal immigration or to combat terrorism. Every time as a
    deterrent for best law enforcement, H.R. 435 will induce
    agencies to stick to positions they would otherwise abandon in
    order to avoid liability for attorneys fees. This result stems
    from the bill's expansion of the definition of a prevailing
    party entitled to fees to include any party whose claims
    against the government are catalysts for voluntary or
    unilateral changes in policies that the parties sought.
        If changing policy would be a part of the agency's
    assessment, to be legally compelled, the agency will avoid
    making the change and paying potentially exorbitant attorneys
    fees. Instead, the agency will successfully conclude litigation
    and then change its policy for free.
        H.R. 435 would thus chill legitimate enforcement activity,
    encourage and prolong litigation with the government, and
    impose huge costs on agency budgets. The Department of Justice
    strongly opposes this legislation.
        In the end, political responsive oversight by the President
    and the Congress can more effectively restrain governmental
    overzealousness and intransigence in litigation and attorneys
    fees.
        Thank you for the opportunity to present the Department's
    views on H.R. 435, and I am ready and willing to answer
    whatever questions you may have. Thank you.
        Mr. Smith. Thank you, Mr. Bounds.
        [The prepared statement of Mr. Bounds follows:]

                      Prepared Statement of Ryan W. Bounds

        Mr. Smith. Mr. Farris.

        STATEMENT OF MICHAEL FARRIS, J.D., CHAIRMAN AND GENERAL
             COUNSEL, HOME SCHOOL LEGAL DEFENSE ASSOCIATION

        Mr. Farris. Chairman Smith, Ranking Member Berman, Members
    of the Subcommittee, thank you for inviting me to testify on
    H.R. 435, the Equal Access to Justice Reform Act of 2005.
        I am here today to speak in strong support of this bill.
    The Home School Legal Defense Association normally litigates
    against State and local governments. We often make claims under
    section 1988 for attorneys fees when the State and local
    officials have violated either the Constitution or the civil
    rights statutes of the United States.
        We have never made an EAJA claim, and so, we appear today
    not in self-interest of any sort, but simply out of principle
    that the justice of the situation requires the Federal
    Government to essentially follow the same rules that State and
    local governments are expected to follow under section 1988 of
    the Civil Rights Act.
        This bill is about small parties having a chance in court
    against the Federal Government. It is about small parties
    having a chance to protect and defend their legal rights when
    they are violated by the Federal Government. This act is
    designed to fix the good intentions of the EAJA, but I would
    submit that the current law is terribly flawed.
        The reason it is flawed is basically in the use of the
    substantially justified rule, which imposes an artificial
    barrier on the ability to collect attorneys fees. Most people
    would say the common sense of the situation is, if you prove
    that the government has violated the law of the United States
    or the Constitution of the United States, the Federal
    Government simply ought to pay for the attorney fees of the
    prevailing party. That is not the case under this substantially
    justified rule.
        The intentions of the officials are weighed, and it imposes
    a barrier that is simply not in place in the case of State and
    local litigation. The ``parade of horribles'' that we hear
    against this legislation and the rare cases that are offered
    for justification for opposing this legislation would be true
    in principle, at least, in State and local governments as well.
    The State and local governments would be bankrupted in their
    ability to have legitimate law enforced, activities have been
    curtailed, or we simply make the State or local governments pay
    attorneys fees when it is proven that they violate the law or
    the Constitution of the United States.
        Just plain equity ought to say that the Federal Government
    ought to obey the same rules that it imposes on State and local
    governments. There is no moral justification for this Congress
    to impose a rule in State and local governments, that it is not
    willing to follow for itself.
        Now, State and local governments have to not only pay
    attorney fees whenever the other side is the prevailing party,
    they have to pay at market rates. The $125-an-hour rate for
    attorneys may have been the market rate at one point in time,
    or is a general approximation, but it is simply not the case
    anymore. You would not be able to pay in most law firms a brand
    new lawyer fresh out of law school at that rate, much less
    someone who has 20 or 30 years of experience.
        Again, it is one more burden upon the Federal Government
    shouldering its responsibilities when it has violated the law.
    Also, rather than encouraging litigation, this bill would
    discourage the ongoing pursuit of litigation when it is obvious
    who should win and who should lose. If the Federal Government
    is willing to say, okay, we violated the law, we are going to
    give you a consent decree or something like that, the incentive
    right now is to continue the case on to litigation, not take
    the consent decree because you lose your ability to recover
    attorney fees for all of the hundreds and perhaps thousands of
    hours that you have invested in the case.
        This promotes settlement. This promotes getting rid of the
    cases clogging our courts. And so the definition of prevailing
    party needs to be shifted so that the plaintiffs have an
    incentive to settle up their case and to get on with their life
    rather than simply litigating to the end for the sole reason of
    being able to recover their attorney fees.
        The thing that strikes me most of all is if there is this
    ``parade of horribles'' what it indicates is not that the
    Federal Government is going to have to pay all of these
    attorney's fees, but there is an epidemic of illegal activity
    on the part of the Federal Government, that we are violating,
    our government is violating the Constitution of the United
    States, or the laws of the United States so often that we have
    to worry about how many millions of dollars in attorneys fees
    we are going to have to pay.
        I think that the incentive should be on the part, as the
    Chairman correctly read, from James Madison, the government,
    first of all, needs to obey the law. When it does not, it
    should have to pay the attorneys fees of those who have
    suffered in that illegal activity.
        Thank you very much.
        Mr. Smith. Thank you, Mr. Farris.
        [The prepared statement of Mr. Farris follows:]

                    Prepared Statement of Michael P. Farris

        Chairman Smith, Ranking Member Berman, and Members of the
    Subcommittee:
        My name is Michael P. Farris. Thank you for inviting me testify on
    H.R. 435, the Equal Access to Justice Reform Act of 2005. I am here
    today to speak in strong support of this bill.
        For the record, I founded and continue to serve as Chairman for the
    Home School Legal Defense Association (HSLDA), the largest home
    schooling organization in the nation. We represent over 80,000 member
    families, with approximately 320,000 children. We are informally
    affiliated with dozens of other home schooling organizations. It is
    estimated that there are over two million children being homeschooled
    in this country today. I am also the founding President of Patrick
    Henry College, where I teach constitutional law. Today, I speak only on
    behalf of HSLDA, a 501 (c)(4) organization.
        This bill is about small parties having a chance in court against
    the Federal Government. It is about small parties having a chance to
    protect and defend their legal rights when they are violated by the
    Federal Government. The Equal Access to Justice Act of 1980 (EAJA) was
    designed with that purpose, but it is terribly flawed. H.R. 435 would
    fix it.
        The ability to pursue justice and fairness is not a partisan issue.
    Nor is this bill partisan. In fact, HSLDA is just one of many groups
    from across the political spectrum giving its strong support to this
    bill--groups ranging from the American Civil Liberties Union and Sierra
    Club to the Heritage Foundation and American Conservative Union to what
    appears to be the entire business community. The breadth and diversity
    of this support is rare, but not unique.
        In the early 1990s, I had the honor to be the co-chairman of the
    drafting committee for the Coalition for the Free Exercise of Religion,
    which helped draft and pass the Religious Freedom Restoration Act of
    1993 (RFRA). That Coalition was as broad as the present EAJA Coalition
    and had many of the same participants. It was gratifying to work side-
    by-side with attorneys from organizations I often face as opponents in
    the courtroom. While we disagreed and still disagree on the outcome of
    many cases, we share an unwavering commitment to the principle that the
    free exercise of religion should be treated as a fundamental freedom.
        We also share an unwavering commitment to the ability to assert and
    defend and protect such fundamental freedoms in the courts. That's why
    we incorporated into the RFRA the Civil Rights Attorneys Fee Awards Act
    of 1976, 42 U.S.C. 1988 (``Section 1988''), the primary fee-shifting
    statute against State and local governments, which allows prevailing
    parties under the RFRA to recover their attorneys' fees at the end of
    the case.
        The Constitution serves as a restraint on government, not private
    parties. It protects some rights explicitly from government
    infringement. Other rights it protects implicitly by restraining the
    powers of the government. Many statutes serve similar purposes. When
    rights guaranteed by the Constitution and such statutes are infringed,
    the infringer always is the government. The party filing pleadings or
    taking action against you is the government. The party across the aisle
    in the courtroom is the government. The party threatening your freedoms
    is the government.
        Freedom means little if there is no real way to stop the government
    from violating the higher laws designed to restrain its power. But
    ordinary Americans cannot resist the government for very long. With its
    skilled litigators and virtually unlimited resources, the government
    can outlast most litigants. There must be a leveling mechanism that
    gives a small party at least a prayer against the government in court.
        Section 1988 was among the first of such leveling mechanisms.
    Congress passed it 1976 to protect people from violations of federal
    law by state and local governments. For 30 years, Section 1988 has
    provided attorney fee recovery against state and local governments in
    cases where those governments were proven to have violated the Federal
    Constitution or Federal statutes. For 30 years, it has provided a
    chance to withstand illegal action by State and local governments. For
    30 years, it has been accepted by the state and local governments and
    administered by the courts without a fuss. As an example of federal
    policy, it stands as a model. It works.
        The way it works is simple. Section 1988 and similar ``prevailing
    party fee-shifting statutes,'' including EAJA, encourage competent
    attorneys to take good cases, meritorious cases, against the government
    on a contingency-fee basis--i.e., by providing legal services
    throughout the case at no cost to the client in the hopes of recovering
    legal fees at the end of the hopefully-successful case. The calculation
    that every attorney must make at the outset is this: Can I afford to
    represent this client who is being pursued wrongfully by the government
    but cannot come close to paying my hourly rates or monthly bills,
    especially when I know that 1) the government can expend great
    resources and drag out the case, 2) there is no guarantee I'll win in
    the end and therefore ever recover any of my fees, 3) the government
    will manage to get any fee award reduced well below the fees I actually
    incur, and 4) I'll have to carry any hope of fee recovery for
    potentially many years.
        Such fee recovery statutes encourage only appropriate litigation.
    Few attorneys in their right minds would take such a case unless they
    were reasonably confident of winning in the end, becoming eligible to
    attempt to collect at least part of his fees. Therefore, such statutes
    provide hope for parties who suffer actual wrongs at the hands of the
    government, they bring accountability to erring government officials,
    and they help refine public policy through useful adjudication. No such
    statute ever inspires the filing of a frivolous claim or defense, or
    even a ``close'' or marginal one. In the vast majority of cases, the
    case is not filed unless it has considerable merit--that is, where the
    government is pretty clearly wrong and acting illegally. Otherwise, it
    is rarely worth the risk in terms of time and treasure. Most attorneys
    have to earn a living and can afford to take very few cases pro bono-
    especially lengthy, complex cases against the government. They need a
    chance to get paid.
        Thus, the cases and defenses encouraged by such statutes are
    precisely the kind of cases that everyone would agree should be
    brought.
        And Congress did agree. Just four years after passing Section 1988,
    Congress passed the EAJA to serve as a fee recovery counterpart
    applicable to the Federal Government--where the federal law violator
    was the Federal Government. Under the EAJA, the Federal Government
    would be held to account for its violations of the federal Constitution
    and federal laws, much as the State and local governments have been
    held to account under Section 1988. But EAJA is very different.
        Under Section 1988, a prevailing party against a State or local
    government recovers attorneys' fees in any case where the party
    succeeds in an important respect. When that party ``prevails,'' it
    becomes eligible for attorney fee recovery and submits a fee
    application documenting the legal services provided. The courts
    determine the amount of fees to be awarded, based on what the court
    determines to be reasonable in the case and based on local market rates
    that the court determines to be appropriate for the kind and quality of
    legal services provided.
        Under Section 1988, there is no escape clause that enables the
    State or local government to avoid paying attorneys fees to the
    prevailing party. There is no size standard for eligible parties. There
    is no rate cap on the hourly rates for the legal services provided.
        Under the EAJA, there is each of these and many other unjustifiable
    differences.
        First, EAJA has size standards. EAJA applies only to small parties
    defined as small businesses with up to 500 employees and a net worth of
    up to $7,000,000, nonprofit charitable organizations with up to 500
    employees, and individuals with a net worth of up to $2,000,000. But
    H.R. 435 takes no issue with EAJA having size standards (applying only
    to small parties). Nor do I.
        Second, EAJA contains an escape clause for the Federal Government
    even after it loses a case, having been proven to have violated Federal
    law. It's called ``substantial justification.'' Prevailing small
    parties must argue in their fee applications--after winning their
    case--that the legal position taken by the Federal Agency in the case
    was not ``substantially justified.''
        In other words, the prevailing small party must win again. While
    the burden of proof may technically be on the Federal agency to show
    that its position was indeed substantially justified, in reality it is
    the prevailing small party that must overcome this hurdle. Regardless,
    the ``substantial justification'' defense initiates in every case a
    second, lengthy series of legal proceedings that rehash the merits of
    the case.
        A few minutes of electronic research of cases involving the EAJA
    confirm what many in this hearing room already know. That is, in a
    great many cases, after years of litigating and following multiple
    appeals, a party that has won a final judgment in its favor is still
    determined ineligible for fee recovery on the theory that the Federal
    Government's position, although proven illegal, was not so unreasonable
    or abusive as to be ``not substantially justified.''
        Third, EAJA contains a cap on hourly rates for legal services of
    $125. Indexed for inflation, many courts now award up to $150 per hour.
    Such a rate--whether $125 or $150 or something in between--is far below
    market rates, especially for complex and usually contingent litigation
    against the federal government. In the major legal markets where such
    litigation often occurs such as New York, Boston, Washington, Chicago,
    San Francisco, Los Angeles, the typical hourly rates range from $200 to
    $750. The EAJA rate will not pay for the most recent law school
    graduate, let alone an experienced attorney.
        This rate cap represents a significant disincentive to qualified
    attorneys to take good cases against the federal government. Perhaps
    because it is so counterproductive, this kind of rate cap has no
    counterpart in fee shifting against state and local governments under
    Section 1988, which employs a ``reasonable hourly'' or ``market'' rate.
    Indeed, EAJA itself employs a ``market'' rate. EAJA states that ``the
    amount of fees awarded under this section shall be based upon
    prevailing market rates for the kind and quality of the services
    furnished.'' But then it caps this rate by way of exception: ``except
    that . . . attorney or agent fees shall not be awarded in excess of
    $125 per hour.'' H.R. 435 simply would remove that exception, which
    leads to absurd results.
        Let me give just one example. In a case called Sorenson v. Mink,
    239 F.3d 1140 (9th Cir. 2001), where social security claimants
    prevailed against both the federal Social Security Administration and
    relevant state agencies, the court awarded market rates under Section
    1988 against the state agencies but had to award much lower rates under
    EAJA against the federal agency--for the same federal law violations in
    the same case. This cap is a big disadvantage for small parties in
    disputes with Federal agencies.
        Thus, at the outset, the attorney must know whether the client is
    being pursued by the Federal Government or by a State or local
    government. If the violation of Federal law is by a State or local
    government, the attorney stands a good chance of recovering his fees
    under Section 1988. If the very same Federal law violation is by the
    Federal Government, he stands a very good chance of receiving nothing
    or very little at the end of a long case even if he wins it completely.
        Put yourself in this attorney's shoes. In a typical situation, a
    client comes in with a very sympathetic case and very little financial
    resources. The attorney listens long enough to determine that the
    client's rights under the Constitution very likely were violated. But
    the government agency involved is Federal. This means several things to
    the attorney.
        First, the Federal Government has more resources than any other
    government, can maintain the case for years, and is filled with
    competent attorneys who sometimes seek to win at any cost. Federal
    attorneys often worry about reputation and career advancement, as do
    their private sector counterparts. They also often seek to ``make law''
    or create precedents quickly, which often means pressing cases rapidly
    against those who cannot hire entire law firms to fight back.
        Second, the Federal Government, even at the end of a long case that
    it has soundly lost, will almost never concede liability for attorneys'
    fees. Under EAJA, it certainly will claim that its position, although
    proven illegal, was substantially justified. This will prolong the
    litigation by many months or even years, requiring the attorney to re-
    litigate the merits of the case and carry his hope for eventual fee
    recovery that much longer.
        Third, the attorney knows that, even if he can overcome the
    substantial justification defense, EAJA will cap his hourly rate at
    $125 (or $150)--which happens to be just half of his regular hourly
    rate. Which means that, even if he soundly wins, not once but twice (on
    the merits and again during fee recovery phase), he will get, at the
    very most, half the fees he incurred.
        Fourth, he knows that in every fee recovery case under any fee
    recovery statute the government always objects to most services
    provided--e.g., there were many attorneys involved who spent too much
    time on this service or that one. He knows the government will seek,
    and the court will agree, to strike any legal services not directly
    related to the winning claims or defenses--even though the attorney was
    obliged, ethically and in good faith, to assert all reasonable claims
    and defenses on the behalf of the client (and not just the ones that
    hindsight will reveal to have been winners). He knows he will get
    ``nickeled and dimed'' to death--and this is his best case scenario.
        And this ignores the possibility that the Federal Government will
    concede the case before a judge can rule on the merits, which will
    deprive the attorney of any fee recovery at all. After years of
    litigating a case, the Federal Government may decide to throw in the
    towel and drop its enforcement action against the client, repeal or
    modify a regulatory action that had burdened the client, or otherwise
    provide the relief sought by the client. The government may do this for
    many reasons. Maybe it has grown weary of the case or moved beyond it
    in terms of office agenda or policy. Maybe it has become convinced of
    its error. Or maybe it expects to lose and wishes to avoid the
    embarrassment of an adverse court judgment and/or payment of attorneys'
    fees. Under current court precedents, the attorney recovers nothing,
    even if he was working the case for many years and even if he clearly
    was succeeding and would have won a court judgment in time.
        In sum, the attorney knows that, if he's very lucky, some years
    later and probably without recovering any interest for lost time, he
    will get about one-third of the fees he incurred years earlier from a
    case he thoroughly and completely won. Again, this is his best case
    scenario.
        Contrast the very same case against a State or local government.
    Under Section 1988, if he wins, he will recover his fees at the going
    market rate--which in the real world is usually the rate he routinely
    charges his paying clients--i.e., the rate the market will bear for an
    attorney of his skills providing certain services in the particular
    location. No substantial justification defense. No rate cap. No Federal
    Government resources to fight indefinitely. No other nonsense under
    EAJA.
        Because the case would be against the Federal Government, in our
    scenario, the attorney gives his regrets to the prospective client and
    tries to encourage him and give him a referral. Thus, a case that
    definitely should be brought, could be brought, only if the wrongdoer
    was a State or local government, not the Federal Government. This
    happens all the time.
        And it is complete nonsense. Section 1988 has worked very well for
    30 years. It has been administered fairly and without fuss and it has
    not bankrupted any State or local treasuries. Nor has it caused any
    severe hardships on State or local treasuries. There is no reason for
    EAJA to retain these counterproductive differences.
        The same Federal legislature (Congress) that passed that passed
    Section 1988 passed the EAJA only four years later. But Congress filled
    EAJA with new and unique exceptions and loopholes, making it much
    harder for litigants to recover fees against the Federal Government.
    This results in gross disincentives for small parties to attempt to
    resist illegal Federal actions. It results in gross disparity in
    accountability to Federal law among the different levels of government
    in the United States, giving the Federal Government a pass. And it
    should be remedied now.
        I therefore urge this Committee, and this Congress, to act swiftly
    to pass H.R. 435, the Equal Access to Justice Reform Act. Thank you for
    you time and consideration of this important matter.

        Mr. Smith. Mr. Hiatt.

        STATEMENT OF JONATHAN HIATT, GENERAL COUNSEL, AMERICAN
    FEDERATION OF LABOR, CONGRESS OF INDUSTRIAL ORGANIZATIONS, AFL-
                                  CIO

        Mr. Hiatt. Thank you, Mr. Chairman, Ranking Member. I am
    Jonathan Hiatt on behalf of the AFL-CIO. We oppose this bill as
    currently drafted. We believe it would seriously weaken
    enforcement of the National Labor Relations Act, of the
    Occupational Safety and Health Act, of the Fair Labor Standards
    Act, of the Mine Safety Health Act and other labor and
    employment laws, but also housing laws, consumer protection
    laws, environmental and other laws that are enacted to promote
    the public welfare.
        Our written testimony focuses on two major sets of
    concerns: One, the elimination of the requirement that to be
    eligible for the award of attorney fees, a prevailing party has
    to show that the government's position was not substantially
    justified, and the other, the size requirement, increasing of
    the size requirement for eligibility as a so-called small
    business, the increase which would effectively bring 98 percent
    of all U.S. firms within that definition.
        I want to focus primarily on the first of these concerns
    concerning the substantially justified standard. This standard
    applies in two distinct sets of circumstances, and I think it
    is very important to make that destinction especially in
    connection with the other--with the points that the other
    witnesses have made. The first is where the government is a
    defendant, that is where a private party is claiming that the
    government has engaged in wrongdoing or has violated--has acted
    illegally by denying a benefit or violating a Federal right,
    and the second is where the government is acting as a public
    prosecutor where the government has brought an action against a
    private party to enforce a Federal law, and the private party
    has prevailed.
        Those two sets of circumstances involve very different sets
    of concerns, and removing the substantially justified standard
    would impact the two types of cases in very different ways.
        In the first, where the private party is the plaintiff and
    the government is found to have acted illegally, making
    attorneys fees automatically available to the prevailing party
    would penalize the government for wrongful conduct, would deter
    future misconduct, would make it easier for plaintiff's rights
    who have been violated to gain access, and we do not disagree
    with the NAACP, with the Leadership Conference on Civil Rights,
    with the ACLU, with prior witnesses who believe that that
    change may very well serve a salutary public purpose. But in
    the second case, where the government is the public prosecutor,
    you have a situation somewhat different from 1988, and the case
    of a State and local government law, there is no issue of the
    government having acted illegally, no issue of the government
    having violated private parties' rights. To the contrary, to
    where the government brings an action that is substantially
    justified, it is doing exactly what Congress intended.
        In the case of the National Labor Relations Act, for
    example, the Board's General Counsel brings an unfair labor
    practice complaint only if he or she believes that there has
    been reasonable cause to believe that the law has been
    violated. The same with the Fair Housing Act, with the
    Americans with Disabilities Act, with the Agriculture Fair
    Practices Act, with various whistleblower laws and so on.
        So, perversely, the premise of this proposed law is that
    agencies enforcement responsibilities like the NLRB should be
    deterred even where there is a substantial justification for
    believing that the law has been violated.
        And indeed the result, we believe, would be a very loud
    message to agencies only to bring complaints where they are
    absolutely certain to prevail and would have many of the
    effects that Mr. Bounds described.
        For example, the impact on the Department of Labor in
    bringing minimum wage or overtime actions under the Fair Labor
    Standards Act or fiduciary duty violation actions under ERISA
    would be subdued, and not just in labor and employment laws,
    but where there is substantial justification to believe that
    companies are putting unsafe products on store shelves, or
    where the SEC was substantially justified in believing that a
    company is bilking its investors, or where EPA is substantially
    justified in believing that a company has violated pollution
    regulations.
        Those are not the kinds of situations where automatic
    attorney's fees should go to the prevailing party unless the
    government is found to not have had substantial justification
    in bringing its action.
        Meanwhile, it is hardly as if--and I hope that the
    Committee will keep this in mind--that it is hardly as if that
    Federal agencies are currently being overly aggressive in the
    enforcement of regulatory statutes. If anything, we believe the
    current problem is one of underenforcement. Since we submitted
    our written testimony, five more miners died--six more miners
    have died under a statute that is so weak in its enforcement
    that the average violation for serious and substantial
    violations is $156 and where there has been a reduction of 190
    full-time inspectors in the last 5 years.
        Lastly, with respect to the definition of small business,
    as I mentioned at the beginning, the notion that somehow
    extending special relief to small businesses defined in a way
    that would bring 98 percent of all firms in the United States
    within that definition, we believe, is not what Congress must
    have in mind; and moreover, we have cited in our written
    testimony a good deal of evidence showing the disproportionate
    violations that take place in small business and ask that the
    Committee be mindful of that.
        Thank you.
        Mr. Smith. Thank you, Mr. Hiatt.
        [The prepared statement of Mr. Hiatt follows:]

                        Prepared Statement of Jon Hiatt

        Mr. Smith. Mr. Knott.

    STATEMENT OF JAMES M. KNOTT, SR., PRESIDENT AND CHAIRMAN OF THE
                   BOARD, RIVERDALE MILLS CORPORATION

        Mr. Knott. Good afternoon, Chairman Smith and Members of
    the Subcommittee. I thank you for the opportunity to testify
    before you today on behalf of the National Association of
    Manufacturers about the need for H.R. 435, the Equal Access to
    Justice Reform Act of 2005. H.R. 435 would update and improve
    the Equal Access to Justice Act.
        My name is James M. Knott, Sr. I am the Founder and
    President of Riverdale Mills Corporation. In addition, I serve
    on the board of directors of the NAM, and I have been in the
    manufacturing business in Massachusetts since October 1, 1956.
        The National Association of Manufacturers is the Nation's
    largest industrial trade association, representing small and
    large manufacturers in every industrial sector and in all 50
    States. Through its direct membership and affiliate
    organization--the Council of Manufacturing Associations, the
    Employer Association Group and the State Associations Group--it
    represents more than 100,000 manufacturers.
        I believe my story demonstrates why a small company needs
    the protections of the EAJA when it challenges the Goliath
    called the United States government.
        Simply put, the government has a lot of resources and is
    loathe to admit to mistakes when it takes action against a
    company. The history of the EAJA shows that government takes a
    very dim view of granting requests for reimbursement and thus
    it has been underutilized.
        I came here today to tell you about what the EPA did to my
    company, Riverdale Mills Corporation, founded in 1979 in an
    abandoned mill building in the economically depressed town of
    Northbridge, Massachusetts.
        However, telling you about that event in which the EPA
    falsified evidence to get me indicted for a felony that carried
    the penalty of a $1.5 million fine and 6 years of my life in
    jail would take much longer than the 5 minutes I can speak here
    today. Therefore, what I would like to do today is to ask you
    to go to the Riverdale Mills Corporation Web site at
    www.riverdale.com and look at ``news.'' There you can see a 60-
    Minute show about how the EPA people falsified the evidence
    with which to put me out of business.
        The fact that the evidence was falsified was proven in
    Worcester Federal court, and the U.S. Justice Department asked
    the judge to dismiss the case. I sued the EPA for falsifying
    the evidence and severely damaging the company. The judge found
    in my favor and awarded me and my company damages of only about
    20 percent of the actual out-of-pocket costs.
        However, in my case, the First Circuit Court of Appeals
    ultimately determined that neither my company nor I were
    eligible for reimbursement under the Hyde amendment,
    overturning the ruling of the district court that my company
    was entitled to reimbursement. The Hyde amendment is a special
    provision dealing with criminal rather than civil prosecutions
    and sets a higher standard for reimbursement.
        Since the Supreme Court of the United States denied my case
    in a writ of certiorari, I will not use that forum to argue the
    First Circuit Court's decision was in error. But I think it is
    very important for the Subcommittee to learn what a small
    business faces when a U.S. Government agency decides that it is
    going to go after a company on charges even when they emanated
    from an anonymous tip and there was no true basis for
    prosecution.
        When I bought the abandoned mill to manufacture plastic-
    coated zinc-galvanized welded wire mesh to be used to make
    traps for the New England lobster fishing industry, the only
    habitable portion of the mill was 20,000 square feet.
        Today, after adding nine additions, it is about 372,000
    square feet and employs about 100 people. Twenty to 25 percent
    of its products are shipped out of the U.S.A. To Canada, Europe
    and South America.
        As you will see in the 60-Minute show, on the 7th of
    November, 1997, 21 EPA personnel swarmed into my offices, many
    of them with pistols holstered on their hips and they announced
    they were going to do a search and seizure. They seized about 7
    and a half feet of documents, 95 percent of which had nothing
    whatsoever to do with the Riverdale Mill wastewater treatment
    plant, as they were authorized to seize.
        I see that it is time to stop, and I would be delighted to
    answer any questions that you might have.
        Mr. Smith. Thank you, Mr. Knott.
        [The prepared statement of Mr. Knott follows:]

                   Prepared Statement of James M. Knott, Sr.

        Chairman Smith and members of the subcommittee on Courts, the
    Internet and Intellectual Property, thank you for the opportunity to
    testify before you today on behalf of the National Association of
    Manufacturers (NAM) about the need for H.R. 435, the Equal Access to
    Justice Reform Act of 20005. H.R. 435 would update and improve the
    Equal Access to Justice Act (EAJA). My name is James Knott, Sr., and I
    am president and chief executive officer of Riverdale Mills
    Corporation. In addition, I serve on the Board of Directors of the NAM
    and have been in the manufacturing business in Massachusetts since
    October 21, 1956.
        The National Association of Manufacturers is the nation's largest
    industrial trade association representing small and large manufacturers
    in every industrial sector and in all 50 states. Through its direct
    membership and affiliate organizations--the Council of Manufacturing
    Associations, the Employer Association Group and the State Associations
    Group--it represents more than a hundred thousand manufacturers.
        I believe that my story demonstrates why a small company needs the
    protections of the EAJA when it challenges the Goliath of the United
    States government. Simply put, the government has a lot of resources,
    and is loathe to admit to mistakes when it takes action against a
    company. The history of the EAJA shows that the government takes a very
    dim view of granting requests for reimbursement and thus it has been
    underutilized.
        In my case, the First Circuit Court of Appeals ultimately
    determined that neither I nor my company were eligible for
    reimbursement under the Hyde Amendment. It is important to note,
    however, that this decision overturned the ruling of the District Court
    that my company was entitled to reimbursement, although even that award
    was far below my company's out-of-pocket expenses. The Hyde Amendment
    is a special provision dealing with criminal rather than civil
    prosecutions and sets a higher standard for reimbursement. Since the
    Supreme Court of the United States denied my case a writ of certiorari,
    I will not use this forum to argue the First Circuit's decision was in
    error. But, I think it is very important for the subcommittee to learn
    what a small business faces when the U.S. government decides that it is
    going to go after a company on charges, even when they emanated from an
    anonymous tip and where there is no true basis for prosecution.
        I started a manufacturing business called Coatings Engineering
    Corporation, the day after I was honorably discharged from the United
    States Army where I served two years of active duty in Oklahoma, Texas
    and Louisiana as the Motor Officer in the 91st Armored Field Artillery
    Battalion. As the Battalion Motor Officer, a position normally filled
    by a Major, not a Second Lieutenant, I received a Meritorious Service
    medal for having 365 of the best-maintained wheeled and tracked
    vehicles in the 1st Armored Division.
        The building I started the business in was built in 1858 on the
    Charles River in South Natick, Massachusetts. It had fallen into
    serious disrepair, in need of windows, doors and patches on the roof to
    stop rainwater from flooding its interior. All of those things were
    done, the business boomed and, six years later I sold the growing and
    successful business to a large manufacturer of wire fencing
    headquartered in Georgetown Connecticut, The Gilbert & Bennett
    Manufacturing Company. I managed it for them for 16 years, and in 1978
    I decided it was time to start over; I bought an abandoned mill
    building, originally built in 1852, which straddled the Blackstone
    River in the village of Riverdale, part of the Town of Northbridge, an
    economically-depressed area, about 13 miles Southeast of Worcester,
    Massachusetts.
        I bought the abandoned mill to manufacture plastic-coated, zinc-
    galvanized, welded-wire-mesh, to be used to make traps for the New
    England lobster fishing industry. The only habitable part of the mill
    was about 20,000 square feet; it was there that I designed and built
    the machinery to make the product and I began producing it in 1980.
    Today, after adding nine additions to the mill it now is about 372,000
    square feet in area and employs about 100 people; 20 to 25% of its
    products are shipped out of the USA to Canada, Europe and South
    America.
        On the 7th of November 1997, I was sitting in my office at the mill
    talking on the telephone, when a local patrolman walked into the lobby
    followed by a man in a black jacket with the word POLICE on its back in
    large white letters. Within a few seconds the lobby was filled with 21
    similarly attired men, many of them carrying pistols holstered on their
    belts.
        I got off the telephone, went out into the lobby and said, ``What's
    going on here?'' One of the EPA people detached himself from the group
    and said, ``We are looking for James Knott.'' I said, ``I am James
    Knott, what are you doing?'' The EPA person said, ``We are here to do a
    search and seizure.'' I said, ``Show me the warrant authorizing you to
    do this.'' The EPA ``CID (Criminal Investigation Division)'' agent
    said, ``We will leave you a copy when we leave.'' I said, ``If you
    don't show me the warrant right now, I will call the police and have
    you removed from these premises.'' Reluctantly, the agent gave me the
    warrant. I read it and learned that the EPA people had been authorized
    to search the premises and seize documents related to the operation of
    the Riverdale Mills Corporation Wastewater Treatment Plant. Seven hours
    later, the EPA people left the plant taking about seven feet of
    documents with them, only about 5% of which had anything whatsoever to
    do with the Wastewater Treatment Plant. Nine months later, on the 12th
    of August 1998, the indictment, with penalties of a $1.5 million fine
    and six years of my life in jail, was issued.
        I knew without any doubt that I had never discharged any acidic
    wastewaters to the publicly-owned sewer, but the problem was how to
    prove it and how could I bear the expenditure of time and money it
    would take. The first step was to examine logbooks kept by EPA
    inspectors who had tested wastewater discharges 17 days before the
    invasion. I hired a retired FBI Agent who was a handwriting expert and
    we went to the EPA offices in Boston. The retired FBI Agent was able to
    show me that the EPA inspectors who had tested the wastewaters 17 days
    before the invasion had found all of the discharges to the publicly-
    owned sewer to be the perfectly neutral pH of 7--neither acidic nor
    caustic. One of the 7's had been altered to a 4 and a number of other
    7's had been altered to 2's with a ballpoint pen that embossed the
    alterations through the pages they were on and engraved them into the
    following pages.
        The next step was to confront the EPA inspector in whose logbook
    the numbers had been altered on the stand, in court in front of a
    judge. The EPA inspector admitted the numbers had been altered and the
    judge ruled that that falsified evidence could not be used by the EPA
    in their case against me and Riverdale Mills Corporation. Without
    evidence that the Rivers Protection Act had been violated, the U.S.
    Justice Department asked the judge to dismiss the case and the judge
    complied.
        The out-of-pocket cost to prove that corruption existed in the EPA
    and also in the US Justice Department--where no one observed the very
    obvious fact that numbers had been altered--cost me about $218,000,
    which is a substantial part of the annual profits with which Riverdale
    Mills has expanded its production facilities, provided new jobs and
    paid taxes to the local, state and federal governments. With the
    limitations of the EAJA as it now exists, the district court awarded my
    company fees of only $68,726, which was ultimately overturned by the
    First Circuit.
        This is why it is very important that the ``Equal Access to Justice
    Reform Act of 2005'' become law. The ability of small businessmen like
    me to be compensated for the costs of protecting themselves and their
    businesses from the attack of overzealous bureaucrats. That's why I
    think that the provision that would charge EAJA awards to the budget of
    the agency that took the action, rather than the general treasury, is
    very important. Right now, the agencies themselves are not punished
    when they are so egregiously overzealous that EAJA compensation
    requests are granted. Award amounts, where warranted of course, also
    need to be raised.
        The NAM will be submitting additional and more detailed comments
    about the provisions of H.R. 435 for the record.
        Thank you Mr. Chairman and members of the subcommittee for your
    time and attention to this matter. I would be happy to answer any
    questions you may have for me.

        Mr. Smith. Mr. Bounds, let me direct my first question to
    you. And say that the Department of Justice may not have the
    most credibility on this particular issue. As you know, they
    opposed the original EAJA bill saying that the cost would be
    excessive. I think they projected that the cost would be $500
    million for the first 3 years. The cost probably was closer to
    1 percent of that than to what the DOJ estimated.
        Furthermore, it would be a rare government agency indeed
    who would encourage lawsuits against them and then have to pay
    attorneys' fees. So I understand all of that.
        However, I wanted to give you an opportunity to redeem
    yourself when it comes to credibility and just focus on one
    aspect of the bill at hand, and that is the attorney's fees.
    Attorneys' fees have only been raised once in 25 years. They
    are now capped at $125 an hour, as I recall.
        Don't you think that you might support an increase in the
    cost or the amount of attorney's fees? And not getting into the
    other issues, but doesn't that sound like an improvement that
    could be made to the system, that if you are going to have
    these lawsuits, and if we do not change anything else, that we
    should at least change that?
        Mr. Bounds. Thank you.
        First, I would like to respond to the question by
    underscoring that the presumptive cap of $125 under the statute
    is regularly deviated from under----
        Mr. Smith. You mentioned that in your testimony. I am aware
    of that.
        But sometimes it is not, and in the case of Mr. Knott, for
    instance, his attorneys' fees were limited because of that
    statute. So why don't we go on and say, raise the cap so that
    everyone--there would be no doubt, you don't have to ask for a
    special consideration by the court.
        Mr. Bounds. Well, the Department of Justice is delighted to
    comment on legislative proposals as they are made by Members of
    Congress or circulated by the Committee.
        The Department does not think that the attorney fees are
    necessarily too low now because of the court's capacity and
    agencies' capacities to deviate from the fee cap in particular
    cases when the circumstances would merit.
        To the extent that there are specific proposals to raise
    the cap, those obviously would have to be considered on a case-
    by-case basis. Obviously, there would be no effective cap if
    the cap were raised to cover, you know, Manhattan law firms.
        Mr. Smith. But certainly we could raise the fees by a
    certain amount, and then that would enable individuals who
    might be bringing the lawsuit to at least get what they
    consider to be very competent counsel and not be deterred from
    doing that.
        Mr. Bounds. I understand the appeal of raising the cap. As
    I say, the Department would be delighted to consider the merits
    of any potential that----
        Mr. Smith. Which is to say that you cannot say anything
    more right now.
        Mr. Bounds. I am not myself authorized to do so.
        Mr. Smith. Okay. Thank you, Mr. Bounds.
        Mr. Farris, Mr. Hiatt mentioned in his written testimony
    two different classes of EAJA cases, one involved violation of
    a right; the other one involved enforcement action. And he
    concludes that automatic attorney fees are appropriate in the
    first instance, that is, where someone has obtained a judgment
    against the Federal Government for violation of their rights,
    but not in the second case involving enforcement actions.
        What do you think of that distinction.
        Mr. Farris. Well, I think it is too easy to become a
    plaintiff, rather than a defendant, to raise exactly the same
    arguments. Bringing declaratory judgment, if I had an agency
    that was threatening my client with an enforcement action, I
    would bring a declaratory judgment action wherever it was
    permitted and simply be the plaintiff, so that I could win
    attorneys' fees and beat them to court, in effect. There is no
    substantial difference at the end of the day.
        The question is, did the government violate the law? Did
    the government violate the Constitution? And wherever that is
    true, whether plaintiff or defendant, commonsense justice says
    that the government ought to pay.
        Mr. Smith. Okay. Thank you, Mr. Farris.
        Mr. Hiatt, you heard Mr. Knott's testimony, which I think
    is pretty compelling. And what I wanted to ask you, if you have
    a situation like this where the government apparently falsified
    the evidence, they actually changed the numbers--I think it was
    changing 2s to 9s or 9s to 2s, something like that--if this was
    a civil case, doesn't that cry out for automatic recovery of
    attorney fees? Don't you think that is a compelling case where
    attorneys' fees should be awarded?
        Mr. Hiatt. Well, I think if this were a civil case, you
    would not need automatic award of attorney fees, because it
    would be so clear, if the facts are as Mr. Knott describes
    them, and I have no reason to doubt that there was no
    substantial justification for the action; that would be
    sufficient. And that is exactly the right; that should be the
    standard.
        Mr. Knott says that under a special provision, and I am not
    familiar with the details of the Hyde amendment, but under the
    special provisions of that, you have an exception where
    apparently even the substantial justifications standard does
    not apply.
        I am very sympathetic if the facts are as they are, but I
    do not think that that in any way detracts from----
        Mr. Smith. You just do not want to expand, you do not want
    to eliminate the defense or increase the number of eligible
    plaintiffs to 98 percent of all businesses?
        Mr. Hiatt. Well, to think if it is going to deter the
    government--and, respectfully, I do not really think the cost
    being any different from Mr. Bound's estimate is the issue as
    much as it is how much of a deterrent will it be for the
    government to have to worry about costs.
        Mr. Smith. I am going to squeeze in one question if other
    Members do not mind. But, Mr. Hiatt, before I get to that last
    question, would you have any objection to raising the cap on
    attorney fees?
        Mr. Hiatt. We have absolutely no objection to the
    provisions of the bill, as I understand it right now, requiring
    the Attorney General to study and report to Congress about how
    effective the act has been or whether the rate cap should be
    changed. We are quite open to hearing more about that.
        Mr. Smith. Okay, great.
        Mr. Knott, thank you for your personal experience. Boy, do
    I regret you had to go through that--the threats to you, the
    threats to your freedom, the cost to you all. I mean, that is
    where you almost believe there ought to be double or triple
    damages when the government acts in that kind of almost
    malicious manner; and maybe I should stop there.
        But, nevertheless, my question is this. Do you know of any
    instances where people have failed to bring lawsuits just
    because of the cost? And has that been a deterrent, and is that
    another argument for the bill itself?
        Mr. Knott. I know of many cases where they have avoided
    these things. I was offered--you know, would I like to settle
    this case? And I said, I do not want to settle it, I want to
    settle you. And that is what I embarked upon.
        When, in the Hyde amendment, the lawyers' fees were capped
    at $75 an hour, I haven't been able to find many of those
    lawyers. What that meant was, I had to do three-quarters of the
    work for them, you know, in order to get the job done.
        Mr. Smith. Thank you, Mr. Knott.
        Mr. Bounds, would you get back to us? And I know that you
    are limited in what you can say today, but would you get back
    to us specifically on the issue of increasing the cap on
    attorney fees and see if the Department of Justice might
    revisit that issue for us.
        Mr. Bounds. I will see what I can find out.
        Mr. Smith. Okay. Thank you, Mr. Bounds.
        [The Department of Justice did not provide the Subcommittee
    with a response to this inquiry, as was requested, prior to the
    closing of the Hearing Record]
        Mr. Smith. The gentleman from California, Mr. Berman, is
    recognized for his questions.
        Mr. Berman. While you are at it, Mr. Bounds, could you get
    back to us on what the cap is on paying private lawyers to
    represent defendants in criminal cases where the Federal public
    defenders office is conflicted out? I am curious whether we are
    looking at rates or just some rates here. Thank you.
        [The Department of Justice did not provide the Subcommittee
    with a response to this inquiry, as was requested, prior to the
    closing of the Hearing Record]
        Mr. Berman. The problem--it is very interesting, the
    interplay here. I am focused on this substantial justification
    issue because, Mr. Farris, you said--first of all, your
    arguments basically are not about small versus big, they are
    about government versus individuals, or companies or non-profit
    associations who might be suing or being sued by the
    government.
        But this is an effort to incentivize the smaller guy both
    to defend and to bring lawsuits. But you do in the context of
    the big government versus the small guy--but in the National
    Labor Relations Board case, in spite of the fact that--I am not
    sure what Mr. Hiatt's basis is for thinking that this will
    dilute the otherwise vigorous enforcement of that act, as I am
    unaware of the vigorous enforcement of that act. But in any
    event, it is sometimes about an even smaller party going to the
    government to pursue enforcement of that person's legal rights
    against a company that might be small, but is a lot larger and
    is a lot more able to handle the cost of litigation than the
    individual.
        So an individual, the National Labor Relations Board's
    General Counsel does not go out there just issuing unfair labor
    practice complaints; it is because some worker came to the
    National Labor Relations Board or one of their regional offices
    saying that he was fired because he had joined a union or that
    other rights protected by that law were violated by that
    employer.
        Now the General Counsel decides whether or not what this
    guy says is true, and if he thinks it is true and he has a
    substantial basis for thinking it is true and there is a
    substantial basis for thinking that that conduct violated the
    law, the General Counsel brings this unfair labor practice
    complaint on behalf of this single individual; and the employer
    fights it, and maybe the employer prevails at the end.
        But a court determines that they were not out on an abusive
    witch hunt, or this was not a frivolous complaint, it was a
    close question and they lost.
        Why shouldn't that--why isn't what Mr. Bounds talks about,
    albeit in the context of immigration cases, true that that
    General Counsel, now thinking that, particularly the way this
    bill works, the costs of it are going to come out of the budget
    for the National Labor Relations Board, is going to think twice
    about taking anything which is a close question because he is
    going to end up facing his agency with attorneys' fees burden.
    And in the end the small guy will really get hurt because they
    will have no agency to go to, even though we created these
    agencies to protect that guy against the abuse of his rights.
        Mr. Farris. Mr. Berman, I understand the logical difference
    between the plaintiff case that I typically am involved with
    and the situation that you are describing here. I do not think
    that the proposed distinction of being the plaintiff or
    defendant really is the right distinction, and so through some
    other means of accomplishing some objective there.
        Mr. Berman. I agree. I am not sure I like the analysis that
    says do it one way but not the other way.
        Mr. Farris. Right.
        Mr. Berman. But my point wasn't, who was plaintiff and
    defendant; my point is, who is really the small guy and who is
    going to get shafted as a result of this. It is one thing to
    have an overzealous government but it is another thing to be
    hurting the even smaller party.
        Mr. Farris.I think that the government should do what is
    right in every circumstance.
        If it has to pay attorney fees for doing what it thinks is
    right, you are not going to have an absolutely perfect system,
    whichever way you go, and basically we have to decide as a
    matter of principle, whether or not the government pays
    attorney fees when it has wronged someone.
        I don't favor personally the small or big rule. I do not
    think it should matter. I think the principle is the same, and
    the government should act on behalf of all of the citizens
    whether it is a small group or a large group and should
    vigorously enforce the law that is before it.
        But when it is found that the government has behaved
    illegally, I think the government should pay, period.
        Mr. Berman. These words, ``found that the government has
    behaved illegally,'' I mean, if that is--if that is true, I
    do--I think I have great sympathy for what you are saying. But
    the fact that a particular enforcement case and a close
    question before an independent judge is found against the
    government does not mean the government acted illegally, and in
    a weird way the substantial justification test is sort of a
    term of art in a process that decides whether the government
    was acting in good faith or not.
        Mr. Farris.Let me give you an example.
        Mr. Smith. Mr. Farris, please be quick. I want to have time
    for Mr. Forbes to ask questions.
        Mr. Farris. I will not respond to that.
        Mr. Smith. Okay. Thank you, Mr. Berman.
        The gentleman from Virginia, Mr. Forbes, is recognized for
    his questions.
        Mr. Forbes. Thank you, Mr. Chairman, and thank all of you
    for being here today.
        My comment and question is a little bit bigger in scope
    than just this bill. Mr. Farris mentioned something that I
    think is important, that we forget when it is the government we
    are interested in doing what is right, not always just what is
    legal.
        And, Mr. Bounds, you talked to us about political
    oversight. That is why I am here today. This may not be a
    perfect bill, but I am groping for, really my question is not
    the close calls that you have talked about, but what I am
    worried about is what I see oftentimes as unfair balance of
    power and sheer heavy-handedness that the government brings.
        I mean, I could bring a notebook of cases that I have
    actually seen, but three of them I am going to do real quick,
    and they are not all ones that would be pertinent to this
    legislation.
        I watched a young man, just a short period of time ago,
    late 20's; the government came at him, and they acknowledged
    because they thought his father was wealthy, they had seven
    lawyers coming at him. It cost him $1.4 million to defend. At
    the end, he has to reach a plea agreement because they threaten
    to go after his father and his mother if he did not do it, and
    he to this day doesn't think that he was guilty.
        In the late 1990's, DOJ--and this was before your time
    maybe--but they went after hospitals across the country for
    coding violations. And if you remember, this was an enforcement
    situation. But they sent out to the hospitals demand letters
    that basically said, if you do not pay this amount of money, we
    are coming after you for treble damages and attorneys' fees,
    and we are going to get you the PR for your hospital.
        I bet you 80 percent of the hospitals that got those
    letters paid them and did not feel they were liable because of
    the unfair balance they felt they had to go against.
        Mr. Berman raised an excellent point when he talked about,
    sometimes you have a small guy going after a corporation. I
    watched that enforcement action go against a small Dunkin
    Donuts franchise owner, mom-and-pop operation. I watched him go
    in three times where the government just continued the case
    each time.
        He looks at me finally and says, How can I do this? How can
    I possibly stand up? And the government even looks at him and
    says, We know you have done nothing wrong, but we want you to
    reach a settlement anyway.
        And the question I have for you is, you mentioned in your
    testimony the negative consequences of this bill would not be
    offset by any significant improvements in EAJA.
        What will get significant improvements in what the Justice
    Department is doing, one? And are you doing anything internally
    to adjust that balance of power when you see situations like
    Mr. Knott talked about, you see these situations where you know
    the government is going at it with just absolutely unfair,
    unequal balance against some of these?
        What are your suggestions? What are you guys doing
    internally so we do not have to take this kind of action?
    Because that is what the political oversight is. If you cannot
    police yourself, we have got to do it. What are you doing?
        Mr. Bounds. Well, I want to assure the Committee that when
    cases involving excessive force or overbearing prosecutions or
    miscarriage of the law come to the attention of the Attorney
    General and the leadership of the Department, those cases are
    taken very seriously; and obviously there is a managerial
    function, a supervising prosecutor in the U.S. Attorneys'
    Offices around the country as well as within the Department of
    Justice offices.
        And that is this entire point of my testimony, which is
    that is how it should function. You will never have an attorney
    fee shifting statute that is going to overcome the disparity
    between a single individual and the government. So the
    management of these cases has to be a political oversight,
    which means the President and the Congress, and the members of
    the Cabinet have to police the actions of the government in
    particular cases.
        And so to the extent that any specific case comes to
    someone's attention, it would be reviewed and remedies would be
    sought. But without any specific case, I really cannot----
        Mr. Forbes. But just to understand, that is what we are
    here today trying to do, to do that oversight. And my time is
    running out too.
        But the question I would ask you, do you have any reports
    or anything that you can get back to us of what efforts you
    have been making in DOJ to do that policing effort that you are
    talking about, and maybe give us a list of, you know, what
    remedies that you have put out and how you have tried to stop
    it.
        I would be interested to see how many cases you guys have
    looked at and what you have done over the last year or so, if
    you could do that.
        Mr. Bounds. I would be happy to look into it. Thank you.
        [The information referred to follows:]
        [The Department of Justice did not provide the Subcommittee
    with a response to this inquiry, as was requested, prior to the
    closing of the Hearing Record]
        Mr. Forbes. Thank you, Mr. Chairman.
        Mr. Smith. Thank you, Mr. Forbes.
        We, as you just heard, have had some votes called. In fact,
    we have six votes coming up, and we will need to head over to
    the House floor. Thank you all for your testimony. It has been
    very helpful, very instructive, and perhaps there will be some
    ways, as we have discussed today, that we can have some reforms
    at least to the process.
        Thank you all.
        [Whereupon, at 4:55 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     The Honorable Howard L. Berman, a Representative in Congress from the
     State of California, and Ranking Member, Subcommittee on Courts, the
                      Internet, and Intellectual Property

                                  ----------

    The Honorable John Conyers, Jr., a Representative in Congress from the
        State of Michigan and Ranking Member, Committee on the Judiciary

                                  ----------

    Statement of the Honorable Edwin Meese III, Ronald Reagan Distinguished
      Fellow in Public Policy and Chairman, Center for Legal and Judicial
                        Studies, The Heritage Foundation

                                  ----------

           News Alert from the National Association of Manufacturers

                                  ----------

        A Dear Colleague from the United States Senate on Organizations
    supporting the Equal Access to Justice Reform Act of 2005, H.R. 435/S.
                                      2017

                                  ----------

    Statement of the Honorable Donald A. Manzullo, Chairman, U.S. House of
           Representatives, and Chairman, Committee on Small Business

                                  ----------

     Supplemental Statement of the Honorable Donald A. Manzullo, Chairman,
        U.S. House of Representatives, and Chairman, Committee on Small
                                    Business

                                  ----------

     Letter from Colby M. May, Director, American Center for Law & Justice
         to the Honorable Donald A. Manzullo, Chairman, U.S. House of
           Representatives, and Chairman, Committee on Small Business

                                  ----------

       Letter from Laura W. Murphy, Director LaShawn Warren, Legislative
                    Counsel, American Civil Liberities Union

                                  ----------

     Letter from Richard Lessner, Ph.D., Executive Director, The American
     Conservative Union to the Honorable Donald A. Manzullo, U.S. House of
           Representatives, and Chairman, Committee on Small Business

                                  ----------

      Letter from Richard Haught, D.D.S., President and James B. Bramson,
        D.D.S., Executive Director, American Dental Association to the
       Honorable Donald A. Manzullo, U.S. House of Representatives, and
                     Chairman, Committee on Small Business

                                  ----------

    Letter from Michael D. Maves, MD, MBA, American Medical Association to
     the Honorable Donald A. Manzullo, U.S. House of Representatives, and
                     Chairman, Committee on Small Business

                                  ----------

     Letter to Susan Steinman, Linda Lipsen, Daniel Cohen, Association of
     Trial Lawyers of America from the Honorable Donald A. Manzullo, U.S.
      House of Representatives, and Chairman, Committee on Small Business

                                  ----------

       Letter from R. Bruce Josten, Executive Vice President, Government
     Affairs, Chamber of Commerce of the United States of American to the
        Honorable Donald A. Manzullo, U.S. House of Represetatives, and
                     Chairman, Committee on Small Business

                                  ----------

    Letter from the Honorable Edwin Meese III, Ronald Reagan Distinguished
      Fellow in Public Policy and Chairman, Center for Legal and Judicial
     Studies, The Heritage Foundation to the Honorable Donald A. Manzullo,
        U.S. House of Representatives, and Chairman, Committee on Small
                                    Business

                                  ----------

    Letter from J. Michael Smith, Esq., President, National Center for Home
         Education to the Honorable Donald A. Manzullo, U.S. House of
           Representatives, and Chairman, Committee on Small Business

                                  ----------

        Letter from Jim Covington III, Director of Legislative Affairs,
      Illinois State Bar Association to the Honorable Donald A. Manzullo,
        U.S. House of Representatives, and Chairman, Committee on Small
                                    Business

                                  ----------

    Letter from Wade Henderson, Executive Director and Nancy Zirkin, Deputy
    Director of the Leadership Conference on Civil Rights to the Honorable
       Donald A. Manzullo, U.S. House of Representatives, and Chairman,
     Committee on Small Business and the Honorable Earl Blumenauer, Member
                   of Congress, U.S. House of Representatives

                                  ----------

     Letter from Hilary O. Shelton, Director, Washington Bureau, National
      Assosication for the Advancement of Colored People to the Honorable
       Donald A. Manzullo, U.S. House of Representatives, and Chairman,
     Committee on Small Business and the Honorable Earl Blumenauer, Member
                   of Congress, U.S. House fo Representatives

                                  ----------

     Letter from John Engler, President and CEO, the National Assosciation
      of Manufacturers to the Honorable Donald A. Manzullo, U.S. House of
           Representatives, and Chairman, Committee on Small Business

                                  ----------

     Letter from Dan Danner, Senior Vice President, Federal Public Policy,
    The National Federation of Independent Business (NFIB) to the Honorable
       Donald A. Manzullo, U.S. House of Representatives, and Chairman,
                          Committee on Small Business

                                  ----------

    Letter from Drew Caputo, Senior Attorney, The Natural Resources Defense
          Counsel to the Honorable Donald A. Manzullo, U.S. House of
    Representatives, and Chairman, Committee on Small Business and the Earl
         Blumenauer, Member of Congress, U.S. House of Representatives

                                  ----------

     Letter from Patrick Gallagher, Director of Environmental Law, Sierra
            Club to the Honorable Donald A. Manzullo, U.S. House of
      Representatives, and Chairman, Committee on Small Business and the
         Honorable Earl Blumenauer, Member of Congress, U.S. House of
                                 Represenatives

                                  ----------

    Letter from the Small Business Equal Access to Justice Coalition to the
       Honorable F. James Sensenbrenner, Jr., Chairman, House Judiciary
                                   Committee

                                  ----------

       Letter from J. William Lauderback, Executive Vice President, The
     American Conservative Union to the Honorable Donald A. Manzullo, U.S.
      House of Representatives, and Chairman, Committee on Small Business

                                  ----------

    Letter from Caroline Fredrickson, Director, LaShawn Warren, Legislative
      Counsel, American Civil Liberities Union, to the Honorable F. James
      Sensenbrenner, Jr., Chairman, U.S. House of Representatives, House
          Judiciary Committee and the Honorable John Conyers, Jr., a
    Representative in Congress from the State of Michigan, Ranking Member,
                           House Judiciary Committee

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          Letter from the Honorable Donald A. Manzullo, U.S. House of
       Representatives and Chairman, Committee on Small Business and the
         Honorable Earl Blumenauer, Member of Congress, U.S. House of
    Representatives, the Honorable Olympia Snowe, Chair, Committee on Small
    Business and Entrepreneurship, United States Senate, and the Honorable
    Russell Feingold, United States Senate to the Honorable Arlen Specter,
        Senate Judiciary and the Honorable F. James Sensenbrenner, Jr.,
                      Chairman, House Judiciary Committee

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     Statement of the Honorable Earl Blumenauer, Member of Congress, U.S.
                            House of Representatives