    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                       GOVERNMENT LITIGATION SAVINGS ACT

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

                                    HEARING

                                   BEFORE THE

                       SUBCOMMITTEE ON COURTS, COMMERCIAL
                             AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 1996

                                   __________

                                OCTOBER 11, 2011

                                   __________

                               Serial No. 112-57

                                   __________

             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

                          LAMAR SMITH, Texas, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        HOWARD L. BERMAN, California
    HOWARD COBLE, North Carolina         JERROLD NADLER, New York
    ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT,
    BOB GOODLATTE, Virginia                  Virginia
    DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
    STEVE CHABOT, Ohio                   ZOE LOFGREN, California
    DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
    MIKE PENCE, Indiana                  MAXINE WATERS, California
    J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
    STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
    TRENT FRANKS, Arizona                  Georgia
    LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
    JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
    TED POE, Texas                       JUDY CHU, California
    JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
    TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
    TOM MARINO, Pennsylvania             [Vacant]
    TREY GOWDY, South Carolina
    DENNIS ROSS, Florida
    SANDY ADAMS, Florida
    BEN QUAYLE, Arizona
    MARK AMODEI, Nevada

          Sean McLaughlin, Majority Chief of Staff and General Counsel
           Perry Apelbaum, Minority Staff Director and Chief Counsel
                                     ------

           Subcommittee on Courts, Commercial and Administrative Law

                     HOWARD COBLE, North Carolina, Chairman

                   TREY GOWDY, South Carolina, Vice-Chairman

    ELTON GALLEGLY, California           STEVE COHEN, Tennessee
    TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
    DENNIS ROSS, Florida                   Georgia
    BEN QUAYLE                           MELVIN L. WATT, North Carolina
                                         [Vacant]

                          Daniel Flores, Chief Counsel

                          James Park, Minority Counsel

                                C O N T E N T S

                                  ----------

                           TUESDAY, OCTOBER 11, 2011

                                                                       Page

                                    THE BILL

    H.R. 1996, the ``Government Litigation Savings Act''.............     3

                               OPENING STATEMENTS

    The Honorable Howard Coble, a Representative in Congress from the
      State of North Carolina, and Chairman, Subcommittee on Courts,
      Commercial and Administrative Law..............................     1
    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, and Ranking Member, Committee on
      the Judiciary..................................................    15
    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Ranking Member, Subcommittee on Courts,
      Commercial and Administrative Law..............................    24

                                   WITNESSES

    Jeffrey Axelrad, Professorial Lecturer in Law, The George
      Washington University Law School
      Oral Testimony.................................................    33
      Prepared Statement.............................................    35
    Lowell E. Baier, President Emeritus, The Boone and Crockett Club
      Oral Testimony.................................................    45
      Prepared Statement.............................................    47
    Jennifer R. Ellis, Chairman, Western Legacy Alliance
      Oral Testimony.................................................    54
      Prepared Statement.............................................    57
    Brian Wolfman, Visiting Professor, Georgetown University Law
      Center
      Oral Testimony.................................................    64
      Prepared Statement.............................................    67

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, and
      Ranking Member, Committee on the Judiciary.....................    16
    Prepared Statement of the Honorable Cynthia M. Lummis., a
      Representative in Congress from the State of Wyoming...........    23
    Material submitted by the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Courts, Commercial and Administrative Law......    27

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Courts, Commercial and Administrative Law......   107
    Letter in Support of H.R. 1996, the ``Government Litigation
      Savings Act''..................................................   114
    Letter from Richard Paul Cohen, Executive Director, National
      Organization of Veterans' Advocates, Inc. (NOVA)...............   117
    Letter from Don Shawcroft, President, Colorado Farm Bureau.......   119
    Letter from Victor B. Flatt, Tom & Elizabeth Taft Distinguished
      Professor of Environmental Law, Director, Center for Law,
      Environment, Adaptation and Resources (CLEAR), University of
      North Carolina School of Law...................................   120
    Letter in Support of H.R. 1996, the ``Government Litigation
      Savings Act''..................................................   123
    Letter from Wayne Allard, DVM, Vice President, Government
      Relations, American Motorcyclist Association (AMA).............   125
    Letter from Cynthia M. Lummis, Member of Congress................   126
    Letter from Lowell E. Baier, President Emeritus, Boone and
      Crockett Club..................................................   128

                       GOVERNMENT LITIGATION SAVINGS ACT

                                  ----------

                           TUESDAY, OCTOBER 11, 2011

                  House of Representatives,
                        Subcommittee on Courts,
                     Commercial and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to call, at 3:35 p.m., in
    room 2141, Rayburn House Office Building, the Honorable Howard
    Coble (Chairman of the Subcommittee) presiding.
        Present: Representatives Coble, Gowdy, and Cohen.
        Also Present: Representatives Conyers and Lummis.
        Staff Present: (Majority) Daniel Flores, Subcommittee Chief
    Counsel; John Hilton, Counsel; Johnny Mautz, Counsel; Ashley
    Lewis, Clerk; (Minority) Norberto Salinas, Counsel; and James
    Park, Counsel.
        Mr. Coble. Good afternoon, ladies and gentlemen. The
    Subcommittee will come to order. I will give my opening
    statement, and then I will recognize the distinguished
    gentleman from Michigan.
        We are a litigious society. One tactic often used by some
    plaintiffs with deep pockets but weak legal claims is to sue
    anyway and then drag out the litigation as long as possible.
    Sooner or later many defendants will realize that it is cheaper
    or less expensive to settle rather than enjoy the hollow
    victory of winning in court by breaking the bank. And no one
    has deeper pockets than the Federal Government. If it runs out
    of money, it simply prints more. The Federal Government
    literally has thousands of attorneys permanently on staff, so
    no person or corporation could ever hope to compete with such
    overwhelming resources.
        Recognizing this, in 1980 the Congress adopted the Equal
    Access to Justice Act to help small businesses and ordinary
    people vindicate their rights in litigation against the Federal
    Government. When the government loses in court, the Equal
    Access to Justice Act allows a court to order the government to
    pay the other side's attorneys fees and costs when the
    government's legal claim was not substantially justified. For
    this reason, the EAJA has been called the anti-bully law.
        Experience over the past 30 years, however, has revealed a
    number of shortcomings in the EAJA, which is what we are here
    to discuss today. Mrs. Lummis, our colleague from Wyoming, has
    been pursuing this issue for some time now, and I want to
    acknowledge her efforts in this regard. Her bill, H.R. 1996,
    the ``Government Litigation Savings Act,'' proposes several
    reforms to the EAJA. First is the lack of transparency. The
    EAJA formerly required the Chairman of the Administrative
    Conference of the United States and the Attorney General to
    file annual reports with Congress stating how much the Federal
    Government was paying out, but the conference lost its funding
    in 1995 and is only just now getting back on its feet, and the
    Attorney General's reporting requirement was repealed
    altogether in 1995. The bottom line is, there has been no
    government-wide accounting of EAJA payments since fiscal year
    1994. We don't know how much money is going out the door, we
    don't know if the EAJA is helping those for whom it was created
    to help; that is, ordinary Americans and small businesses.
    Fixing this lack of transparency is something I hope we can
    agree upon.
        Related to the question of who is benefiting from EAJA is
    the eligibility exception for nonprofit 501(c)(3)
    organizations. It is not altogether clear why this exception
    was included in the original law, but it is clear from a recent
    GAO audit that it benefits certain well-heeled environmental
    groups who use litigation as a strategy to advance their
    ideological agenda. Whether a multimillion-dollar organization
    that already is tax exempt should have the added benefit of
    being able to collect attorneys fees and costs from the Federal
    Government, which originally of course comes from the American
    taxpayers, is another issue which our witnesses I am sure will
    address.
        H.R. 1996 also would reform the special factor exception;
    that is, the $125 per hour cap on attorneys fees. Because of
    the lack of annual reporting, this evidence is anecdotal, but
    it appears that some courts interpret this exception very
    loosely. If the exception has become so large that it swallows
    the rule, why bother capping the attorneys fees at all? H.R.
    1996 would abolish this special factor exception.
        Finally, in many parts of the country a good lawyer, the
    kind you would want to hire if the Federal Government was on
    the other side, costs in excess of $125 per hour. H.R. 1996
    proposes to fix this by raising the cap to $175 per hour and
    allowing it to be adjusted annually based upon the consumer
    price index.
        In closing, I want to thank Mrs. Lummis for her dedication
    to the issue. H.R. 1996 deserves careful and serious
    consideration, and I look forward to the witnesses' testimony
    and reserve the balance of my time.
        [The bill, H.R. 1996, follows:]

                                   __________
        Mr. Coble. I am now pleased to recognize the distinguished
    gentleman from Michigan, Mr. John Conyers, for his opening
    statement.
        Mr. Conyers. Thank you, Mr. Chairman. I am happy to be with
    you to form a quorum so that we could hold this hearing this
    afternoon, and I wanted to just go over some materials here to
    make sure I understand what it is we are doing, because
    according to the author, she did not intend to affect the
    enjoyment of the present law to affect veterans, Social
    Security claimants, and small businesses. And maybe I am wrong
    here, but we have information that the pro bono provision would
    prove a disaster for Social Security claimants, and the
    nonprofit legal service organizations and the private bar who
    often provide pro bono services would be, in many if not most
    instances, precluded from any legal recovery. So I hope that
    this becomes clarified in the course of our hearing today.
        Now, the Equal Access to Justice Act is more than 30 years
    old, and it has helped seniors, veterans, Social Security
    claimants vindicate their rights against inaccurate or
    unreasonable or sometimes illegal government action. So the
    first thing I want to indicate that according to our reading of
    the bill, this proposal may prevent those who are most--the
    most needy in our society from securing legal representation;
    that is senior citizens, that is veterans, that is disabled
    individuals, and so many of them would never get to court if
    they couldn't get attorneys who would take the case pro bono
    but would recover legal fees if they prevail. And so what we
    are doing is a horrendous disservice to disabled veterans, some
    several thousand who recovered fees during fiscal year 2010
    when they successfully appealed Veterans Administration
    decisions that denied them disability benefits.
        So I know that the Committee is very well intentioned, but
    why we would be doing something like this is something I will
    remain to have our distinguished panel of witnesses explain to
    me. So I thank you very much, Mr. Chairman, and ask unanimous
    consent to submit the rest of my statement for the record.
        Mr. Coble. Without objection. Thank you, Mr. Conyers.
        [The prepared statement of Mr. Conyers follows:]

                                   __________

        Mr. Coble. Before I recognize the Ranking Member of the
    Subcommittee, the distinguished gentlewoman from Tennessee,
    Mrs. Lummis, the author of the bill, is not allowed to
    participate, but without objection, we will permit her to sit
    on the dais. Mrs. Lummis, good to have you with us, and without
    objection, I would like to introduce her statement for the
    record as well.
        [The prepared Statement of Ms. Lummis follows:]

                                   __________

        Mr. Coble. I am now pleased to recognize Mr. Cohen, the
    gentleman from Memphis, for his opening statement.
        Mr. Cohen. Thank you, Mr. Chairman. I appreciate the----
        Mr. Conyers. Would the distinguished Ranking Member yield
    to me for just a quick query to the Chairman of the Committee?
        Mr. Cohen. The distinguished Ranking Member will yield to
    the distinguished Ranking Member of the full Committee and the
    Congressman who represents the Detroit Tigers.
        Mr. Conyers. Mr. Chairman, is it possible that the author
    of the bill would be able to be a witness to the hearings?
        Mr. Coble. I would think no, Mr. Chairman. I would say no.
        Mr. Conyers. And why is that, could I ask?
        Mr. Coble. Pardon?
        Mr. Conyers. You don't let the authors of bills testify?
        Mr. Coble. No, sir.
        Mr. Conyers. Oh, pardon me.
        Mr. Cohen. Overruled.
        Mr. Conyers. That is contrary to everything I thought I had
    learned about the way the process works; but if authors of the
    bill can't testify, but they can sit on the Committee, I guess
    that is second best.
        Mr. Coble. No doubt.
        Mr. Conyers. All right. Thank you.
        Mr. Coble. Mr. Cohen is recognized for 5 minutes.
        Mr. Cohen. Thank you. I am recognized in my capacity as
    being the Ranking Member. Could I yield my time to the
    distinguished lady from Wyoming and let her give her statement?
        Mr. Coble. Well, I think not.
        Mr. Cohen. Well, I tried. I tried.
        During this Congress, instead of focusing on much-needed
    job creation and the opportunity for Mrs. Lummis to make her
    statement, the majority has pushed broad anti-regulatory
    messages and talked about small business.
        Today we hold a hearing on H.R. 1996, the, quote,
    Government Savings Litigation Act, which seems to discourage
    those who want to challenge agency actions, including small
    businesses and nonprofit organizations. Specifically, the bill
    would amend the Equal Access to Justice Act, to prohibit small
    businesses and others who have successfully prevailed in court
    against the government from recovering legal fees. As such,
    this hearing and legislation seems to have the effect of being
    pro-government outreach and dissuading small businesses from
    having the opportunity to go to court and get their attorneys
    fees paid, just the opposite of what the majority has talked
    about many times and one of the many reasons why I wanted the
    distinguished, attractive, and bright lady from Wyoming to
    explain her bill.
        Under the EAJA, individuals and small businesses can
    request reasonable attorneys fees if they are the prevailing
    party in a legal action against the government. The award,
    however, is not automatic. If the government can show its
    actions were substantially justified, that is the test, then
    the award is denied. This substantial justification defense
    prevents many awards and discourages frivolous or marginal
    cases that were filed based solely on the hope of recovering
    attorneys fees.
        The Equal--the EAGA--JA--also caps the fee rate at below
    the market rate, except that a judge may award fees above the
    $125 cap if a specialized skill was necessary for the
    litigation. Still, the prevailing party must show that legal
    representation could not have been obtained at that capped rate
    but for the possibility of obtaining a higher rate. This below-
    market cap rate minimizes litigation and discourages frivolous
    or marginal cases. I haven't heard of anybody getting $125 in a
    thousand years. I am sure nobody in this room even considers
    such a thing.
        The current EAJA attorney fee provision strikes the right
    balance between allowing small entities the opportunity to
    challenge the government, little guy against big guy, while
    preventing expensive and runaway litigation. Still, even with
    the very slim chance of recovering attorneys fees, critics
    suggest that awards under this act are astronomical and too
    common. This criticism, however, is based on a mere estimate of
    awards and pure conjecture about the frequency of awards, as
    there has been no comprehensive governmental study since 1998.
    An updated study to reflect the current situation rather than
    that 13 years of age would be a good government measure.
        This bill requires a report, which is laudable.
    Unfortunately, that is the only reasonable provision of this
    bill. H.R. 1996 should concern all of us. It will negatively
    impact veterans, seniors, our public health and small
    businesses.
        A 1998 GAO report found that in 1994, 98 percent of fee
    applications submitted and 87 percent of the dollars awarded
    under this act were in Social Security disability cases and
    veterans disability cases, two of our favorite constituencies.
    Based on those numbers, this bill would prevent the awarding of
    fees disproportionately in cases brought by nonprofit veterans
    groups challenging the VA for systematic delays. This
    discourages the filing of these cases and leaves it to
    individual veterans to bring the cases. Most of these veterans
    cannot afford to do so.
        Likewise, the bill also discourages legal aid programs from
    bringing cases on behalf of senior citizens. Further, because
    H.R. 1996 bars recovery of fees from most nonprofits in citizen
    suits, it will discourage environmental groups from bringing
    actions to enforce environmental laws that protect our public
    health and lands.
        In light of the impact on our veterans, seniors, and public
    health and lands, and many other concerns, various groups have
    expressed opposition. They include the National Organization of
    Veteran's Advocates, the National Organization of Social
    Security Claimant's Representatives, the Natural Resources
    Defense Council--which, of course, includes Robert Redford, who
    I am sure the sponsor of this bill likes, for all women like
    him--the National Legal Aid and Defender Association, the
    Center for Auto Safety, and the Center for Food Safety. There
    are dozens more.
        I thank our witnesses for their participation in today's
    hearing. I look forward to their testimony, and I look forward
    to the Memphis-East Carolina football game this Saturday and
    hope you won't beat up on us too badly, and----
        Mr. Coble. Based upon last week's outing against Houston, I
    don't think you have very much to worry about.
        Mr. Cohen. We are worse, believe me.
        Mr. Coble. We will find out.
        Mr. Cohen. Can I submit these for the record?
        Mr. Coble. Without objection, it will be received.
        [The information referred to follows:]

                                   __________

        Mr. Cohen. Thank you, sir.
        Mr. Coble. And I say to the gentleman from Michigan,
    congratulations to the Tigers. Are they up now? Are they
    leading?
        Mr. Conyers. Not at all.
        Mr. Cohen. But they are going home. My team is over.
        Mr. Coble. Your team is over? Texas? Oh, boy.
        It is good to see all of you. I have detailed introductions
    to give, but I think we need to know the background of our
    distinguished witnesses, so please bear with me. Good to have
    each of you with us.
        Mr. Jeffrey Axelrad teaches at George Washington University
    School of Law. Mr. Axelrad served at the Justice Department for
    more than 35 years and was actively involved in policy and
    development as well as litigation. He worked as director of the
    Department of Justice's tort branch from 1977 to 2003. He also
    served as a trial attorney for 8 years, earning the civil
    division's highest honor, the Stanley D. Rose Memorial Award.
    He also received the Army's highest civilian award, the
    Commander's Award for Public Service, a Presidential
    Meritorious Executive Award, and the Office of Management and
    Budget General Counsel's Award. Mr. Axelrad, thank you for
    sharing your insights and experiences with the Subcommittee
    today.
        Mr. Lowell Baier is the immediate past president of The
    Boone and Crockett Club, the Nation's oldest conservation
    organization. The Boone and Crockett Club was founded by Teddy
    Roosevelt in 1887 to promote wildlife conservation and was
    instrumental in establishing Federal lands, conservation laws
    and agencies, and several other national conservation groups. A
    lawyer by training, Mr. Baier is currently leading the Club in
    the extensive study of the role of litigation in conservation.
    He also is the founding director of the National Conservation
    Leadership Institute and Executive Education Program for
    Conservation Professionals. For these and other accomplishments
    during his career as a small business owner, Mr. Baier was
    named conservationist of the year by Field and Stream magazine.
    Mr. Baier, we are glad to have you with us as well today.
        Ms. Jennifer Ellis is a cattle rancher and wheat and hay
    farmer from Blackfoot, Idaho. She chairs the Western Legacy
    Alliance, a volunteer organization focused on preserving
    working land and life-styles in the American West. Recently Ms.
    Ellis was president of the Idaho Cattle Association and
    chairman of Idaho Sage Grouse Advisory Committee. She also
    chaired Idaho's Wolf Depredation Committee, and she is director
    on the board of the Idaho Agricultural Credit Association, and
    the former chairman of the Blackfoot Hope House Project.
    Through these experiences, Ms. Ellis has acquired much
    firsthand knowledge of environmental litigation, more than she
    ever wanted to know I would dare wager. Ms. Ellis, thank you
    for coming all the way from Idaho to be with us today. We
    appreciate that.
        Finally, Mr. Brian Wolfman is a visiting professor of law
    at the Georgetown University School of Law where he served as
    the co-director for the school's Institute for Public
    Representation. Prior to joining the Georgetown faculty, Mr.
    Wolfman spent nearly 20 years at the national public interest
    law firm, Public Citizen Litigation Group, where he served the
    last 5 years as director. Prior to that, he also conducted
    trial and appellate litigation as a staff lawyer at a rural
    poverty law program in Arkansas. He has handled a broad range
    of litigation and argued five cases before the Supreme Court.
    He has taught appellate litigation courses at his alma mater,
    Harvard School of Law, and also served as an adjunct professor
    at Stanford, Vanderbilt, and American University. Mr. Wolfman,
    thank you as well for being with us.
        Gentlemen and lady, good to have you all with us. We try to
    go by the 5 minute rule, so if you will keep your eye peeled on
    the little panel before you, when the light is green, that
    indicates that you are alive and well, but that light will turn
    amber, and that is your notice that a 1-minute delay is about
    to be resolved. We will not keelhaul any of you for violating
    the 5-minute rule, but if you can comply with it, we would
    appreciate that. Is that panel working out there? Can you all
    see the panel? Can you see the green light now?
        Mr. Coble. Mr. Axelrad, we would be glad to have you start
    your testimony.

    TESTIMONY OF JEFFREY AXELRAD, PROFESSORIAL LECTURER IN LAW, THE
                GEORGE WASHINGTON UNIVERSITY LAW SCHOOL

        Mr. Axelrad. Thank you. I will summarize my statement and
    would appreciate the entire statement being placed in the
    record.
        Mr. Coble. Without objection.
        Mr. Axelrad. I am here to share my views on H.R. 1996, the
    Government Litigation Savings Act. This bill proposes sensible
    amendments to provisions of the Equal Access to Justice Act,
    commonly known as EAJA. My testimony will discuss specific
    improvements this bill makes to EAJA.
        Payment of costs and attorneys fees is a transfer of money,
    pure and simple. Our Constitution's appropriations clause bars
    payments from the public Treasury absent a congressional
    appropriation. This clause stands as a bulwark, ensuring that
    the Congress decides whether and under what conditions Treasury
    funds should be utilized.
        EAJA includes four types of key provisions. First, the
    United States is made susceptible to an award of attorney fees
    under certain circumstances when a private party would
    otherwise be responsible for paying an attorney fee after
    receiving an award in a judicial proceeding. This regime
    applies to settlements as well.
        Second, EAJA authorizes attorney fee awards and expenses if
    the nongovernment party prevails and the government's
    underlying conduct was not substantially justified absent
    special circumstances. This is a one-way, loser-pay provision
    that creates different law against the American taxpayer. EAJA
    puts the Federal Government in a unique and largely disfavored
    position. H.R. 1996 includes needed amendments to more
    precisely specify the means of determining an award.
        Third, EAJA includes standards for recovering attorney
    fees, including when the underlying conduct was not
    substantially justified and when the nongovernment party is
    considered the prevailing party. Vague terms like these can
    lead to protracted side litigation and manipulation. H.R. 1996
    seeks to avoid abuse and to clarify the provisions.
        Fourth, EAJA also penalizes the government if it is not
    sufficiently successful in seeking judicial review of an agency
    adjudication where civil action commenced by the United States.
    There is no such provision against such demands for the private
    party which can disadvantage government civil actions and
    enforcement proceedings.
        H.R. 1996 makes several needed amendments to EAJA's
    substantive attorney-fee award provisions and adds requirements
    to collect and assemble precise data permitting insight into
    EAJA's results in practical terms. H.R. 1996 raises the maximum
    rate of payment for attorneys from $125 per hour to $175 per
    hour and substitutes a precise means of determining cost-of-
    living increases. In return for raising the fee, these
    amendments eliminate the exception to the fee limit for an
    attorney who asserts that a special factor, such as the limited
    availability of qualified attorneys or agents for the
    proceedings, justifies a higher fee.
        In Pierce v. Underwood, the Supreme Court attempted to
    limit the ability to evade application of the cap, but its
    decision did not end litigation over whether the fee cap can be
    pierced. Far from it. The Federal Appellate Courts' decisions
    are in disarray.
        H.R. 1996 places a limit or cap with a limited exception on
    the aggregate amount the Public Fisc will pay to an individual
    or entity for attorney fees or other expenses and confines EAJA
    to parties who have a direct and personal monetary interest in
    the proceedings. These amendments seek to confine EAJA to its
    legitimate and original purpose.
        H.R. 1996 sharpens the language of extant fee-reduction
    provisions by requiring reductions if the party seeking award
    has engaged in specified abusive misconduct. The ability of
    Congress to perform its oversight of EAJA depends on the
    availability of information concerning agency payments
    predicated on the act. Currently this information is largely
    unavailable. Agencies have no obligation to collect and
    assemble data, and even if some agencies did collect data,
    there is no central authority to organize and report the data
    in a sensible format both to the Congress and the public.
        H.R. 1996 remedies this lack of information. Specifically,
    H.R. 1996 requires the Chairman of the Administrative
    Conference of the United States to issue an annual report to
    the Congress and to make the report publicly available online.
    H.R. 1996 also requires GAO to conduct a one-time audit of
    EAJA's implementation during recent years, starting with 1995.
        H.R. 1996 leaves intact the basic structure and central
    focus of EAJA. H.R. 1996 serves to correct unintended
    consequences and clarifies vague terminology that has resulted
    in substantial wasteful collateral litigation. H.R. 1996 also
    requires that Congress receive information or that it may
    determine how effectively EAJA works in practice and the costs
    associated with EAJA. This will permit the Congress to provide
    more effective oversight and enhance the ability of citizens to
    hold their government accountable for the actions of government
    agencies. In my opinion, H.R. 1996 represents a move toward
    enhancing the ability of EAJA to best serve its intended
    purposes.
        I will be happy to answer any questions.
        [The prepared statement of Mr. Axelrad follows:]

                                   __________

        Mr. Coble. Thank you, Mr. Axelrad.
        Mr. Baier, you are recognized for 5 minutes.

    TESTIMONY OF LOWELL E. BAIER, PRESIDENT EMERITUS, THE BOONE AND
                             CROCKETT CLUB

        Mr. Baier. Thank you, Mr. Chairman, Representative Cohen,
    Representative Conyers, Members of the Committee. I represent
    The Boone and Crockett Club, America's oldest conservation
    organization, founded in 1887 by Theodore Roosevelt, and I
    follow him as the Club's 28th president and am now president
    emeritus.
        We support this bill because it will improve managing the
    conservation of our Nation's fish, wildlife, and natural
    resources. We also support the Equal Access to Justice Act's
    historic primary purpose for retirees, for veterans, for small
    business, and for all citizens. They must be protected from
    mistakes and overzealous Federal agencies. These are the
    citizens who can least afford to protect themselves, and we are
    resolute that we do not tread on the historic purpose of EAJA.
        Under this bill, individuals will remain eligible to use
    EAJA if their net worth does not exceed $2 million, just as
    they do today. Likewise, small business will remain eligible
    provided their net worth does not exceed $7 million. The bill
    extends these same eligibility requirements to large interest
    groups. Today these groups can recoup legal fees under EAJA
    regardless of their net worth.
        Unlimited eligibility has helped make litigation
    commonplace in the conservation arena. This is so roundly
    understood that even Earl Devaney, the Inspector General of the
    Department of Interior in 2008, said, ``As it now stands,
    lawsuits are driving nearly everything the Fish and Wildlife
    Service does in the endangered species arena.''
        Just last month a new settlement agreement imposed the
    views of two aggressive interest groups on the entire
    endangered species listing program through 2017. This
    settlement resulted from litigation on procedural--procedural
    rather than substantive grounds. This is the type of litigation
    for which EAJA provides a perverse incentive. We want to put
    ``equal'' back into the Equal Access to Justice Act by
    requiring everyone to meet the same eligibility standards.
        To be clear, litigation will continue, but the taxpayer
    will no longer pay the legal bills of large interest groups.
    Capping eligibility on 501(c)(3)s will also make EAJA
    consistent with the other 205 fee-shifting statutes, not one of
    which exempts 501(c)(3)s from the eligibility requirements that
    apply to private citizens and small business.
        Senior counsel, Henry Cohen, from the Congressional
    Research Service, in 2009 determined that EAJA was an anomaly
    in this regard. It is a glaring privilege that is the
    antithesis of equality and fairness. The antithesis of equality
    and fairness. Along with fairness, this bill will restore
    accountability and transparency to EAJA going forward.
        When EAJA was enacted in 1980, it required an annual report
    of the number of cases processed and total attorneys fees
    reimbursed. That reporting ended in 1995. Since then, the
    Congress and the country have been in the dark of the costs of
    EAJA, which is why this bill reinstates the reporting
    requirement beginning with an audit of prior unreported years.
        Our own targeted research based on GAO reports, tax
    returns, court records, and data from agencies, shows costs of
    EAJA of at least $50 million per year from litigation by the
    top 20 environmental litigants. What are the total costs? We
    don't know. That is why reinstating the annual reporting and
    audit costs since 1995 are critical.
        In conclusion, the actual payout of legal fees is just the
    tip of the iceberg. We estimate that it represents one-fifth of
    the total costs. The hidden costs are the personnel time spent
    by agencies reviewing procedures, defending procedures, and
    often redoing the entire process. Then there are the costs of
    the Justice Department attorneys defending the cases.
        Mr. Chairman, Members of the Committee, this bill is about
    the historic purpose of EAJA. America's conservation community
    urges you to put ``equal'' back into the Equal Access to
    Justice Act in the interest of fairness, sound management of
    our natural resources, and fiscal responsibility. Thank you for
    your consideration.
        Mr. Coble. Thank you, Mr. Baier.
        [The prepared statement of Mr. Baier follows:]

                                   __________

        Mr. Coble. Ms. Ellis.

               TESTIMONY OF JENNIFER R. ELLIS, CHAIRMAN,
                        WESTERN LEGACY ALLIANCE

        Ms. Ellis. Mr. Chairman, Members of the Committee, I
    appreciate the ability to come before you today, and I have
    come to see why it is they asked me today. I am going to dumb
    this conversation down a lot. I hope you will appreciate my
    efforts there.
        More than 20 years ago I was a rancher in Idaho when an
    environmental group declared that its goal was to put myself
    and other ranchers out of business. Other conservationists who
    cared for the land had a better goal of how ranchers could
    change to do their business. This made sense to me. Even though
    we didn't agree on the outcome all the time, we did agree to
    sit down at the table.
        Our self-appointed enemies brought a new and more
    aggressive campaign of lawsuits than we had ever seen before,
    so we formed the Western Legacy Alliance to allow ranchers,
    farmers, sportsmen, and local communities to defend their
    livelihoods. I started out 4 years ago, when we started on this
    project, I thought that EAJA was how environmentalists got the
    money to file the lawsuits, but it is not. They have other much
    better sources of money. I thought that EAJA was the law that
    gave them access to the courts, but it is not. The major
    environmental laws give them access to the court for standing
    and to pay their fees. The Endangered Species Act, Clean Water
    Act, and Clean Air Act are all examples of that.
        EAJA seemed to be written just for the environmental
    groups, but it wasn't. It was written for people like me--as
    Congressman Conyers and Congressman Cohen have made examples of
    small businesses, I am that small business--and also for people
    like my dad, who are Social Security recipients. I had no idea
    that there were 205 laws on the books that allowed fee shifts
    to occur, for groups to gain standing and then recoup their
    fees if they did prove the government was wrong, and none of
    these 205 laws exempt 501(c)(3) organizations.
        In sum, I thought that if we repealed EAJA, then our
    problems would all be solved. Having spent years now learning
    about EAJA, I see it doing really good work for the retirees,
    the veterans, and small businesses. But it is also being used
    by groups that do not need it, and used in ways that make the
    controversies in the West and in Tennessee much more difficult
    on everybody involved than they need to be.
        Passing H.R. 1996 will make things better while protecting
    the proper use of EAJA. And a case out West in the Yellowstone
    Park is a really good example; maybe you have all heard of it,
    the snowmobile debacle. Tour businesses sued to overturn the
    first ban on the snowmobiles and they won. After the Park
    Service issued a new decision, the environmentalists sued the
    Park Service and won. The back-and-forth in court was disputing
    not whether the Park Service was breaking any laws but whether
    it had considered all of the options. It wasn't about justice,
    it was about policy choices.
        I have always understood that people can push their agendas
    in court. I just disagree with using my tax dollars to do it. I
    support the GLSA even though it would prohibit some large
    business groups from collecting fees in the future. There are
    also other reasons that I support the GLSA. The bill improves
    EAJA for its intended users, which have been duly noted. It
    brings transparency and accountability to the costs of
    lawsuits. It separates EAJA from environmental policy, which is
    a completely separate issue. GLSA does these things by
    increasing allowable fees, focusing EAJA on direct and personal
    costs to people instead of to organizations, and reporting the
    amounts distributed and preventing repeat claims by the same
    organizations over and over.
        EAJA is different from the Clean Air and Clean Water Act
    and the ESA. Environmental laws support lawsuits about whether
    the government has done what the law says it must do. EAJA pays
    for environmental cases if you can show the government messed
    up the paperwork, which is a pretty easy thing to do, if any of
    you have seen the NEPA documents and the APA documents. It is a
    real easy way to block decisions that you just don't like.
        I urge the Committee to fix this by passing H.R. 1996 so
    that tax-exempt organizations have to pay their own way when
    they take on taxpaying businesses over differences of opinion.
    And I am actually on the receiving end of the collateral damage
    done by the misapplication of EAJA awards.
        With that, I will stand for any questions. Thank you.
        Mr. Coble. Thank you, Ms. Ellis. I guess you probably came
    the greatest distance here today, Ms. Ellis, so we commend you
    for that.
        [The prepared statement of Ms. Ellis follows:]

                                   __________

        Mr. Coble. Mr. Wolfman, good to have you with us. You are
    recognized for 5 minutes.

      TESTIMONY OF BRIAN WOLFMAN, VISITING PROFESSOR, GEORGETOWN
                         UNIVERSITY LAW CENTER

        Mr. Wolfman. Chairman Smith and Members of the
    Subcommittee, thank you for the opportunity to appear today in
    opposition to H.R. 1996. In almost every particular, H.R. 1996
    would undermine the purpose of EAJA to provide court access to
    citizens, citizens groups, and small businesses subjected to
    unreasonable and unlawful governmental conduct.
        I will focus today on two provisions of H.R. 1996 that
    would cause the most harm, but first I want to explain why
    claims that EAJA is being abused are dead wrong. In fact, EAJA
    is less favorable to a fee-seeking party than virtually any of
    the other more than 200 Federal fee-shifting statutes.
        First, under EAJA, to obtain a fee it is not enough for the
    plaintiff to prevail in the litigation, as it is under
    virtually all other fee-shifting statutes. Rather, the
    government can defeat a fee award entirely if it can show that,
    despite having lost the case, its position on the merits of the
    case was substantially justified. The Supreme Court says this
    means that even when the government takes unlawful action
    against its citizens, it does not have to pay a fee unless the
    positions it took in court were unreasonable. This is a
    powerful defense, and dozens upon dozens of cases deny EAJA
    fees on this ground. So no rational litigant or lawyer would
    bring a frivolous or marginal case in the hope of obtaining a
    fee.
        Second, under EAJA, prevailing parties cannot recover their
    fees at market rates. Under other fee-shifting statutes,
    prevailing parties are awarded attorneys fees at market rates,
    which in D.C. and other major cities can range up to $600 per
    hour or more. But EAJA limits fees to about $180 per hour,
    after adjustment for inflation. Fees can be enhanced above that
    rate only when the Supreme Court has said are narrow
    circumstances involving specialized areas of the law, and even
    then the fee is not paid at market rates. In light of EAJA's
    below-market rates, neither litigants nor lawyers would bring
    marginal cases in the hope of receiving fees.
        Let me turn to H.R. 1996's two most concerning provisions.
    Under H.R. 1996, to obtain an EAJA fee, the fee applicant must
    have, quote, a direct and personal monetary interest in the
    case, unquote. This would eliminate EAJA in the most important
    cases, those that challenge unlawful governmental regulations
    and conduct that affect the public generally. Take, for
    example, cases where service organizations and members of the
    private bar help people who serve our country obtain needed
    disability benefits from the Department of Veterans Affairs.
    EAJA is vitally important to the individual veteran whose
    benefits have been unlawfully denied. But EAJA may be even more
    important to the thousands or tens of thousands of veterans
    whose benefits requests are mishandled because the Department
    of Veterans Affairs has systematically delayed issuing benefit
    rulings or misapplied disability regulations. H.R. 1996 would
    make it impossible to obtain fees in cases brought by nonprofit
    veterans groups challenging such illegal conduct. I set out a
    number of other examples in my written testimony.
        H.R. 1996 would discourage these important cases and
    unfairly require citizens to bear all of their legal costs when
    these types of cases are brought.
        The next section I want to talk about is that H.R. 1996
    would amend EAJA to require a court to reduce or deny fees,
    quote, commensurate with pro bono hours, end quote. Pro bono
    refers to work performed by attorneys free of charge for people
    or charitable organizations unable to afford market-rate
    services. The no pro-bono provision is a very bad idea because
    citizens and citizen groups that hire pro bono lawyers are
    exactly the parties for whom EAJA was designed. They cannot
    afford to pay for legal services and may only be able to hire
    lawyers if there is some chance of a fee down the road if they
    show that the government acted unreasonably. Hundreds if not
    thousands of members of the private bar provide their services,
    for instance, to Social Security and veterans disability
    claimants, with EAJA as the only monetary inducement to take on
    these cases.
        Nearly 10 years ago I worked with a private lawyer in North
    Carolina with a case in the Supreme Court. The lawyer was a
    veteran himself who wanted to give back to those in uniform. He
    represented another veteran who had been denied service-
    connected disability benefits. Ultimately, after years of
    litigation, the Court of Appeals for Veterans Claims found that
    the government's position was wrong and, quote, not reasonably
    debatable, unquote. The government then fought us over the EAJA
    fee itself, which we ultimately won in the Supreme Court.
        Under H.R. 1996, there would have been no fight. There
    would be no EAJA fee because the time of the North Carolina
    lawyer was provided pro bono. Here you have a man who served
    his country, serving another man who served his country, who
    would, if H.R. 1996 becomes law, have to think twice about
    taking on another veteran's disability case. It is hard to
    think of a more unfair result, a result that would make it
    difficult if not impossible for people victimized by
    unreasonable government action to attract competent counsel.
        I would welcome any questions. Thank you.
        Mr. Coble. Thank you, Mr. Wolfman.
        [The prepared statement of Mr. Wolfman follows:]

                                   __________

        Mr. Coble. Now, we try to comply with the 5-minute rule as
    well, so if you all will keep your answers as tersely as you
    can, we would appreciate that, we can move along.
        Mr. Axelrad, will H.R. 1996 adversely affect the ability of
    people seeking Social Security benefits and veterans benefits
    to collect what the government owes them?
        Mr. Axelrad. No, it would not.
        Mr. Coble. Your microphone is not on.
        Mr. Axelrad. Oh, I am sorry, excuse me. H.R. 1996 would not
    affect the right of the individual to recover the award that
    the court or administrative tribunal provides to a Social
    Security beneficiary. The difference is that EAJA as of now has
    a special incentive--depending on where the attorney is located
    actually, because the courts are divided on this--to pay
    attorneys more; and so the cap that is written into EAJA is
    often honored in the breach, so the money will go to an
    attorney. It doesn't affect the rights of the individual to
    actually get the benefits of the award that the court
    determines.
        Mr. Coble. Thank you, sir. Mr. Baier, how does the EAJA in
    its current form disrupt the balance, as you say in your
    written testimony, in environmental and conservation
    policymaking?
        Mr. Baier. I am sorry, Mr. Chairman, I am having trouble
    hearing in this room. The last part of your----
        Mr. Coble. I will repeat it. How does the EAJA in its
    current form disrupt the balance, as you indicate in your
    written testimony, in environmental and conservation
    policymaking?
        Mr. Baier. It encourages and incentivizes lawsuits over
    procedural issues, and by procedural issues what I mean are
    missing deadlines. That is the primary challenge to the way it
    works. These are procedural deadlines that are imposed
    primarily under the Endangered Species Act, which are
    physically and humanly impossible for the Fish and Wildlife
    Service to at times meet. And the litigation that we are
    concerned about that has created this imbalance is primarily
    over procedural issues that relate to missing deadlines and
    paperwork issues.
        Mr. Coble. I thank you, sir.
        Ms. Ellis, when an environmental group sues the Federal
    Government, you discussed how ranchers in your organization end
    up paying three times for the same litigation. Elaborate on
    that, if you will.
        Ms. Ellis. Yes, Mr. Chairman, that is what I referenced as
    collateral damage. When EAJA was enacted in 1980, it said that
    there would be no peripheral damage to anyone outside the
    government, the only hit to a pocketbook was going to be to the
    government, when in actuality now I hold permits on Federal
    land that I am allowed to under the Taylor Grazing Act. When
    environmentalists bring challenges to those permits, they don't
    challenge me personally, they challenge the agency, we will use
    BLM as the example. So when they do that, they cannot--BLM
    attorneys cannot actually represent the losses that would
    happen to me if the change being requested by the plaintiff
    were enacted, and so I have to hire an intervening attorney
    that usually costs, for a good one right now, $400 an hour. So
    in order to have my interests represented when this lawsuit
    comes forward, I have to hire that attorney. I am from the
    Ninth Circuit, and usually they will not allow intervening
    attorneys in on the merits phase of the case, only in on the
    remedies phase. So I pay for my intervening attorney, then
    through my tax dollars I am paying for the agency attorney, the
    DOJ attorney, all of the staff time involved from the BLM
    conservation officers, and everybody preparing for the case.
    And then my tax dollars pay the EAJA award if they are found to
    be the winner in the complaint.
        Mr. Coble. I thank you. Let me try to beat that red light,
    Mr. Wolfman. From your written testimony it seems that you
    basically support the reporting provisions of H.R. 1996, but
    that the bill puts the cart before the horse. What evidence, if
    any, could convince you to support eliminating the exception to
    EAJA for multimillion-dollar organizations?
        Mr. Wolfman. Well, I don't know that there is any, but I
    would like to see what the----
        Mr. Coble. Pull that microphone a little closer to you, Mr.
    Wolfman.
        Mr. Wolfman. I am sorry, Mr. Chairman.
        Mr. Coble. It is okay.
        Mr. Wolfman. I don't know. I would like to see the evidence
    first. What I was saying in my testimony is, I am all for
    transparency, and I do agree that it was unfortunate that,
    after 1995, we did not have an annual report. I myself used it
    frequently. It was a useful document, and there is nothing
    wrong with that. What I was saying in my testimony is I find it
    odd people are complaining about a paucity of data, but they
    are willing to change the substantive law of EAJA without
    having the data. That puts the cart before the horse.
        Mr. Coble. I gotcha. I see that the red light appears. We
    have been joined by the distinguished gentleman from South
    Carolina, Mr. Gowdy. Good to have you with us, Trey. And Mr.
    Cohen, you are recognized for 5 minutes.
        Mr. Cohen. Thank you, Mr. Chairman. Mr. Axelrad, the first
    question that the Chairman asked you was about people getting
    their benefits, and I think it was veterans, and you said they
    get their benefits, if I am correct, but they just--the
    attorney wouldn't get their attorneys fees; is that kind of
    what you said?
        Mr. Axelrad. What I meant to say, I can't exactly quote
    myself, is that the individual who receives an award receives
    the entire award.
        Mr. Cohen. Right.
        Mr. Axelrad. And so the issue is for--and the changes in
    the terminology go to the compensation for the attorney, not
    the individual who receives the award.
        Mr. Cohen. Right. And I can get--where are you from?
        Mr. Axelrad. Where am I from?
        Mr. Cohen. Yeah.
        Mr. Axelrad. Originally from Uniontown, Pennsylvania. I
    have lived here for quite some time.
        Mr. Cohen. All right. Well, if I wanted to go to Uniontown,
    Pennsylvania, and the law said I could do it but said I
    couldn't have transportation, I would have to walk there. It
    would make it a lot harder to get to Uniontown. If your
    attorney can't get an expectation of getting a fee, you are not
    going to get an attorney, and if you can't get an attorney, you
    are not going to get a fee.
        Mr. Axelrad. Let's take the Social Security example that
    you proposed. There actually is a separate fee provision for
    Social Security benefits. What EAJA does, it provides
    suspenders when there is already a belt. But I am not
    suggesting that EAJA not apply to Social Security cases. All I
    am suggesting is that the provisions of EAJA have been
    broadened so that the exception has almost become the rule. The
    cap is being pierced, the 501(c)(3) organizations----
        Mr. Cohen. You mean the cap of a hundred and a quarter or
    so an hour?
        Mr. Axelrad. Beg pardon?
        Mr. Cohen. The cap of the dollar amount?
        Mr. Axelrad. Right now it is at $125 an hour.
        Mr. Cohen. Right. And Ms. Ellis just said you can't get a
    good lawyer in Idaho for $400. So how are you going to get a
    good lawyer in Washington for $126?
        Mr. Axelrad. Social Security decisions, for example, are
    based on the administrative record, I am sure there are--the
    new cap under H.R. 1996 would be $175 an hour. I don't think
    there would be any difficulty whatsoever, and in fact----
        Mr. Cohen. Are you a lawyer, sir?
        Mr. Axelrad. Oh, yes.
        Mr. Cohen. But you don't practice?
        Mr. Axelrad. I don't litigate. I do have a very limited
    practice.
        Mr. Cohen. Even in poor old Memphis, Tennessee, the most
    poverty stricken of the 60 major cities, unfortunately, you
    can't get a lawyer to go to traffic court for you for $175.
        Mr. Axelrad. I think there may be a misapprehension on the
    501(c)(3) organizations. All that H.R. 1996 does is it provides
    the same net-worth cap that applies to other entities. It is
    not saying that the impoverished organization can't avail
    itself of EAJA. It is the one that has a high net worth that is
    not able to pierce the cap----
        Mr. Cohen. Let me ask you a question. In your testimony----
        Mr. Axelrad [continuing]. Under the bill.
        Mr. Cohen. Thank you, sir. In your testimony you say these
    limitations and conditions have not been successful in
    cabining--which is a new word for me, I guess, cabining; I will
    work on it--awards, and have led to substantial, unproductive,
    tangential litigation. What is the substantial, unproductive,
    tangential litigation you are referring to?
        Mr. Axelrad. Over whether the----
        Mr. Cohen. Give me a case.
        Mr. Axelrad. Well, I cite several in my testimony where the
    issue is whether the Supreme Court's comment that the kind of
    specialty that would warrant piercing the cap is something like
    patent law where there is special expertise needed.
        Mr. Cohen. Right.
        Mr. Axelrad. Well, some courts have said that litigating
    Social Security cases is a specialty that sometimes warrants
    piercing the cap. Other courts have disagreed. So the courts
    get into litigation over exactly what is the kind of specialty
    that permits piercing the cap.
        When Congress enacted the cap, it was clear that they
    thought the cap would limit the amount paid by the taxpayers in
    the broad run of EAJA cases. It turns out, because even though
    the Supreme Court tried to--by cabining it, I mean reduce the
    degree of ability to litigate exceptions to the cap. It didn't
    work, and despite the cap, despite the Supreme Court decision,
    there are lots and lots of cases going every which way where
    the attorneys have been able to succeed in getting a greater
    attorney fee and fighting over how they can----
        Mr. Cohen. We have gotten to the red light.
        Mr. Axelrad [continuing]. Pierce it.
        Mr. Cohen. So, yes, thank you, sir.
        Mr. Coble. Thank you, Mr. Cohen. The gentleman from South
    Carolina, Mr. Gowdy, is recognized for 5 minutes.
        Mr. Gowdy. Thank you, Mr. Chairman. Professor Wolfman, who
    decides whether the government position was substantially
    justified?
        Mr. Wolfman. Either the court or the agency adjudicator,
    depending on whether it is an administrative case or a court
    case.
        Mr. Gowdy. Who has the burden of proof?
        Mr. Wolfman. The government has the burden to show its
    position was not substantially justified, but in practice that
    makes no difference because there is no factual determination,
    so burdens usually only matter when facts are at stake. It is a
    legal question.
        Mr. Gowdy. Well, what is the standard of proof by which it
    must be proven?
        Mr. Wolfman. A preponderance of the evidence, just like any
    other civil matter.
        Mr. Gowdy. You mentioned a few moments ago the importance
    of having data, so I am hopeful you will have the data for this
    because I don't. The percentage of cases where plaintiffs
    prevailed but the court said the government's position was
    substantially justified?
        Mr. Wolfman. That is an interesting question, and in the
    area of the Social Security and veterans cases, particularly
    veterans cases, it is very high that the--it usually doesn't
    even go to court, the agency typically settles.
        Mr. Gowdy. What about environmental cases?
        Mr. Wolfman. But in non-Social Security and veterans cases,
    I haven't done a study, so I am just--based on my experience,
    the government wins often. I cite just--what I did in my
    testimony is that I just said I am looking for cases in recent
    years in Courts of Appeals where the court found a reasonable--
    --
        Mr. Gowdy. No, I think you did a good job with anecdotal
    evidence. I was looking for statistical evidence.
        Mr. Wolfman. I don't know of any study on that, I don't
    know of any study that--I know in the non-Social Security----
        Mr. Gowdy. You do not know what percentage of time
    plaintiffs prevailed but still were not allowed to recoup fees
    because a finder of fact----
        Mr. Wolfman. I do not. I don't know that anyone knows that.
    It would be, again, an interesting study. But I will say this,
    because I know it for a fact, is that in the non-Social
    Security and veterans areas, it is much higher than in those
    other areas.
        Mr. Gowdy. You once, I believe, and I don't want to
    mischaracterize your positions because I didn't know you in
    1994, but you once, I believe, supported the notion of doing
    away with the special factor exemption. Do you still support
    that?
        Mr. Wolfman. What I said was at that time--and I would have
    to look back for sure--is that if we chose a more reasonable
    rate that could go up with inflation, actual fees in the real
    market, as opposed to what has occurred, yes, because----
        Mr. Gowdy. Right. I think you said $175; if we go up to
    $175 we would do away with it.
        Mr. Wolfman. Yes, but that--yes, but with all respect, that
    would not be the case.
        Mr. Gowdy. I am just asking you if you said it, I am not
    asking if you meant it.
        Mr. Wolfman. No, but with all respect that was $175 in 1994
    dollars.
        Mr. Gowdy. Two hundred fifty dollars.
        Mr. Wolfman. That is correct, if we were at $250--
        Mr. Gowdy. What if we went up to $250, would you do away
    with it then?
        Mr. Wolfman. I think if we were at $250 an hour and we had
    a reasonable inflation adjuster, right----
        Mr. Gowdy. We just adjusted for inflation, we just bumped
    it from $175 to $250.
        Mr. Wolfman. Right. And if you had a mandatory reasonable
    inflation adjuster, I am with you on this.
        Mr. Gowdy. Then you would be fine doing away with it?
        Mr. Wolfman. I think that would be reasonable rather than
    necessarily what we have now. We have to appreciate that in the
    vast majority of the cases, the vast majority of the cases,
    what attorneys get and the clients get is the basic EAJA rate
    plus an inflation adjuster, except the agencies, which largely
    don't do any inflation adjustment.
        Mr. Gowdy. All right, let me ask you this because I am
    running out of time quickly. I think you said there are 203
    instances where we have something other than the American rule
    with respect to litigation in----
        Mr. Wolfman. Someone else said 203. I know it is
    approximately 200, yes.
        Mr. Gowdy. Are you an advocate for abolishing the American
    rule in all litigation and letting the finder of fact decide
    whether or not attorney----
        Mr. Wolfman. Absolutely not. Absolutely not. I think if you
    had----
        Mr. Gowdy. You hadn't heard my idea yet. Why don't we let
    the finder of fact decide whether or not litigation was
    frivolous or vexatious?
        Mr. Wolfman. Well, I can answer your question if you will
    allow me.
        Mr. Gowdy. I am going to. I just--I wanted to get my
    question out.
        Mr. Wolfman. I think having essentially the rule in Great
    Britain would deny ordinary action.
        Mr. Gowdy. That is not--what I just laid out is not Great
    Britain's rule. I didn't say loser pays. I said the finder of
    fact decides, the same group that we let decide capital cases,
    the same group that we let decide whether there is liability in
    a medical malpractice case or products case, let the finder of
    fact decide whether or not the lawsuit was frivolous or
    vexatious.
        Mr. Wolfman. Well, first of all----
        Mr. Gowdy. That is not the British rule, agreed?
        Mr. Wolfman. That is correct.
        Mr. Gowdy. Okay.
        Mr. Wolfman. I didn't know that is what you were saying,
    but I will say two things about that. First of all, that is
    already the law in the sense that----
        Mr. Gowdy. Well, wait a second. Can you name me a single
    time--how many times when summary judgment is granted or a
    motion to dismiss is granted does the judge then award
    attorneys fees for filing a frivolous lawsuit? In what
    percentage of the cases does that happen?
        Mr. Wolfman. A very small percentage because there is not--
    --
        Mr. Gowdy. Well, then we don't have that rule.
        Mr. Wolfman. Well--Excuse me?
        Mr. Gowdy. Well, then we don't have the rule.
        Mr. Wolfman. We do have that rule. With all respect, we do
    have that rule. Rule 11 applies in every piece of civil
    litigation.
        Mr. Gowdy. How many times has it been enforced? In summary
    judgment cases and just for the viewer, that is where there is
    no dispute over fact, just the law, what percentage of time in
    summary judgment cases are sanctions administered for frivolous
    lawsuits?
        Mr. Wolfman. Well, not often. But with all respect, I don't
    think that proves anything, because all that means is there are
    not that many frivolous cases on purely legal matters.
        Mr. Gowdy. Well, then we don't need rule 11.
        Mr. Wolfman. Huh?
        Mr. Gowdy. Well, then we must not need rule 11 if there are
    no frivolous lawsuits.
        Mr. Wolfman. I didn't say there were none. Rule 11 provides
    an important incentive. But let me give you the other reason
    why I think that would be a poor idea. If you decided fee
    shifting at the back end, right, if you decided frivolity at
    the back end only, and didn't have the 200 fee-shifters at the
    front end, you wouldn't have the encouragement that these fee-
    shifters provide at the front end to give litigants to enforce
    our important civil rights, environmental and consumer laws.
        Mr. Gowdy. We lose an incentive to litigate, to bring a
    lawsuit, because there may be a penalty on the back end if you
    lose.
        Mr. Wolfman. This is a debate that people can have. The
    Congress of the United States has decided that it is important
    on the front end in over 200 instances to provide that
    incentive.
        Mr. Gowdy. You are right. And I am asking you if it is
    important in the rest of all the category of cases if it does
    well in these 200.
        Mr. Wolfman. I think probably not. In my judgment it makes
    sense for the Congress to decide which types of litigation it
    wants to incentivize, and not do it on an across-the-board
    basis.
        Mr. Gowdy. My time has expired. Thank you, Mr. Chairman.
        Mr. Coble. The distinguished gentleman from Michigan, Mr.
    Conyers.
        Mr. Conyers. Thank you, Chairman Coble. I would like to
    start with Mrs. Ellis, please. Mrs. Ellis, have you ever used
    the legal services provided by a nonprofit?
        Ms. Ellis. No, sir.
        Mr. Conyers. So then you have never had the opportunity to
    take advantage of the Equal Access to Justice Act's fee
    provision?
        Ms. Ellis. No, sir.
        Mr. Conyers. All right. Thank you.
        Now, for Mr. Baier. I am the one that sent you a list, Mr.
    Baier, of groups that have sent us notice that they strongly
    oppose Government Litigation Savings Act, H.R. 1996. Do you
    have that list in front of you?
        Mr. Baier. I do, Representative Conyers, yes.
        Mr. Conyers. Okay. Now, look on these 3--4 pages. I think
    you will find that there are 46--64, 65 organizations that are
    conservation organizations. I started noting them. The first I
    put a number one by, Alaska Wilderness League; and then number
    two, the Big Black Foot River Keeper; and number three, Butte
    Environmental Council. Do you see those? Do you see those
    numbers?
        Mr. Baier. I do.
        Mr. Conyers. Okay. And out of this over 100, 65 of them are
    environmental organizations. Now, take a look, just scan them.
    Do you recognize any of those organizations?
        Mr. Baier. Congressman Conyers, yes, I recognize a few of
    these, yes.
        Mr. Conyers. Sure. They have a position of opposition to
    this bill. Is there any possible rationale you could suggest
    for this many people that work in the same field that you do,
    or did work, in having so different a view from you about the
    bill that we are discussing today?
        Mr. Baier. I do, sir.
        Mr. Conyers. Please tell me what it is.
        Mr. Baier. Well, I note that some of our larger, more
    recognizable environmental groups in the country are on this
    list such as the Environmental Defense Fund. The Environmental
    Defense Fund--and Defenders of Wildlife are on here as well.
    Defenders of Wildlife have a net worth of $23.7 million.
        Mr. Conyers. Oh, that is terrible.
        Mr. Baier. And that would put them, make them ineligible
    under this bill. Others fall into that same category. For
    example, Earth Justice.
        Mr. Conyers. Okay, that is two. But we got 65.
        Mr. Baier. Well, I would have to analyze it, Congressman,
    to better respond.
        Mr. Conyers. I will give you that list to take home with
    you. And you send it back to me, the ones that you recognize.
    And if you think that you--I assume that you are saying because
    they have so much money they can afford to be against this
    bill.
        Mr. Baier. Well----
        Mr. Conyers. Is that the inference that I am to draw from
    your explaining to me how big and rich this group is?
        Mr. Baier. Well, if I understand your question, sir, some
    of the larger ones on this list have net worths--for example,
    the Humane Society of the United States has a net worth of $160
    million.
        Mr. Conyers. Now, that is really bad. So what?
        Mr. Baier. Excuse me, I am sorry.
        Mr. Conyers. Yeah. I said, so what?
        Mr. Baier. Well, as I understand your question, you were
    wondering why they would oppose the bill.
        Mr. Conyers. Yes.
        Mr. Baier. And I would suggest, sir, because the bill would
    disqualify them from utilizing EAJA on procedural litigation.
        Mr. Conyers. But they were disqualified before this bill.
    They are disqualified now, aren't they?
        Could I get 1 minute, Chairman Coble?
        Mr. Coble. Without objection.
        Mr. Conyers. Okay. I just want to get one question in to
    Professor Axelrad if I can. Is it not true, sir, that on pages
    3 and 8, in the first section on page 3 and the top section on
    page 8, that both of these amounts--oh, well, this is the only
    bill we have got. Aren't these the two places that deny pro-
    bono fees to lawyers who win awards, and specifically in this
    bill on page 3, the top, and page 8?
        Mr. Axelrad. You are referring to page 3 of the bill?
        Mr. Conyers. I am.
        Mr. Axelrad. Your citations appear to be correct to me.
        Mr. Conyers. Yeah. Well, thank you. And you agree that this
    is the way you would want to go even though there are over 100
    groups, and not all environmental, some just nonprofits, that
    think that this is a bill that should not advance beyond this
    Committee?
        Mr. Axelrad. I support the entire bill. I did not in my
    statement address the particular provision you are addressing
    now. I see the overall purpose of the bill as in keeping with
    the principle that the EAJA is an exception. It is a one-way,
    loser-pay provision in relevant part that doesn't otherwise
    exist. If a person who makes a claim for money or nonmonetary
    relief from the government and loses a claim, it doesn't matter
    whether the person had substantial justification or not,
    because the American public can't recover its costs in
    defending against that unsubstantial claim, whereas EAJA
    provides the opposite against the----
        Mr. Conyers. Do you know, sir, that you have to win the
    case before the attorney can get--she shakes her head no. You
    don't have to win? You can lose the case in claim fees?
        Mr. Axelrad. Many attorneys do not work on a contingency
    basis.
        Mr. Conyers. Well, on a pro-bono basis you can't work on a
    contingency. The client doesn't have any money.
        Mr. Axelrad. If someone is working on a pro-bono basis,
    they are working without an expectation of compensation. That
    to me is what the term ``pro bono'' means.
        Mr. Conyers. But that is exactly why we have this provision
    in the law, is that if a pro-bono lawyer takes the case and
    prevails, the court can award him legal fees. You object to
    that?
        Mr. Axelrad. I think that the--exceptions to the American
    rule that Congress created in EAJA should be narrowly confined.
    I have not specifically addressed this rule, but I favor the
    general principles that H.R. 1996 introduces.
        Mr. Conyers. Would you, Mr. Chairman, give me the time, 1
    minute more, to ask the other witness?
        Mr. Coble. Without objection.
        Mr. Conyers. Thank you very much. Can you help us, sir, Mr.
    Wolfman, about who gets pro-bono fees and who doesn't under
    this rule and in the general practice of law in the United
    States?
        Mr. Wolfman. So one of the things I think, thankfully, that
    has occurred in this country when lawyers are able to do it, is
    they provide their services to the poorest among us, the
    neediest, the people who are in the most difficult
    circumstances, on a pro-bono basis. It has always been the case
    that if there is a fee-shifting statute involved and the person
    prevails, and in the case of EAJA also the government's
    position is not substantially justified, it has always been the
    case that the pro-bono lawyer can have at least some prospect
    of and recovering a fee in that circumstance.
        Mr. Conyers. But if he wins.
        Mr. Wolfman. This provision--yes. Not only do you have to
    win, but under EAJA you have to effectively show that the
    position of the government is not reasonable. But what this
    bill would do, among other things that I think are unfortunate,
    it specifically says that the court shall reduce or deny all
    fees to the extent commensurate with pro-bono hours. So the
    pro-bono lawyers, many of whom are in this very city, that are
    willing to take on a veterans case, a Social Security case, or
    other cases--I just use those two examples--on a pro-bono basis
    can't get fees under EAJA. It says that. I mean, I am not
    making this up. That is what the bill says.
        Mr. Coble. The gentleman's time has expired.
        Mr. Conyers. And I thank the Chairman for his generosity.
        Mr. Coble. You are indeed welcome.
        We want to thank the witnesses for their testimony today.
        Without objection, all Members will have 5 legislative days
    to submit to the Chair additional written questions for the
    witnesses which we will forward and ask the witnesses to
    respond as promptly as they can so that their answers may be
    made a part of the record. Without objection all Members will
    have 5 legislative days to submit any additional material for
    inclusion in the record.
        [The information referred to follows:]
        With that, again, I thank the witnesses and the hearing
    stands adjourned.
        [Whereupon, at 4:50 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     Prepared Statement of the Honorable Steve Cohen, a Representative in
    Congress from the State of Tennessee, and Ranking Member, Subcommittee
                  on Courts, Commercial and Administrative Law