[Congressional Record Volume 146, Number 96 (Friday, July 21, 2000)]
[Senate]
[Pages S7451-S7453]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD (for himself and Mr. Hutchinson):
  S. 2907. A bill to amend the provisions of titles 5 and 28, United 
States Code, relating to equal access to justice, award of reasonable 
costs and fees, taxpayers recovery of costs, fees, and expenses, 
administrative settlement offers, and for other purposes; to the 
Committee on the Judiciary.


               equal access to justice reform legislation

  Mr. FEINGOLD. Mr. President, I rise today to introduce the Equal 
Access to Justice Reform Amendments of 2000. This legislation contains 
adjustments to the Equal Access to Justice Act (EAJA) that will 
streamline and improve the process of awarding attorney's fees to 
private parties who prevail in litigation against the Federal 
government. This is the third Congress in which I have introduced this 
legislation. I believe these reforms are an important step in reducing 
the burden of defending government litigation for many individuals and 
small businesses.
  I am very pleased to be joined in introducing this legislation this 
year by my friend from Arkansas, Sen. Tim Hutchinson. We hope that by 
working on a bipartisan basis on this important project we can improve 
the chances that it can become law.
  Over the years, and certainly now in this election year, members of 
Congress often speak of ``getting government off the backs of the 
American people.'' Sometimes we disagree about when government is a 
burden and when it is giving a helping hand. But all of us in the 
Senate want to reform government in ways that will improve the lives of 
people all across this nation. The legislation we are proposing today 
deals directly with a problem that affects everyday Americans who face 
legal battles with the federal government and prevail. Even if they win 
in court, they may still lose financially because of the expense of 
paying their attorneys.
  At the outset, it is important to understand what the Equal Access to 
Justice Act is, and why it exists. The premise of this statute is very 
simple. EAJA places individuals and small businesses who face the 
United States Government in litigation on more equal footing with the 
government by establishing guidelines for the award of attorney's fees 
when the individual or small business prevails. Quite simply, EAJA 
acknowledges that the resources available to the federal government in 
a legal dispute far outweigh those available to most Americans. This 
disparity is lessened by requiring the government in certain instances 
to pay the attorneys' fees of successful private parties. By giving 
successful parties the right to seek attorneys' fees from the United 
States, EAJA seeks to prevent small business owners and individuals 
from having to risk their companies or their family savings in order to 
seek justice.
  My interest in this issue predates my election to the Senate. It 
arises from my experience both as a private attorney and a Member of 
the state Senate in my home state of Wisconsin. While in private 
practice, I became aware of how the ability to recoup attorney's fees 
is a significant factor, and often one of the first considered, when 
deciding whether or not to seek redress in the courts or to defend a 
case. Upon entering the Wisconsin State Senate, I authored legislation 
modeled on the federal law, which had been championed by one of my 
predecessors in this body from Wisconsin, Senator Gaylord Nelson. 
Today, section 814.246 of the Wisconsin statutes contains provisions 
similar to the federal EAJA statute.

  It seemed to me then, as it does now, that we should do all that we 
can to help ease the financial burdens on people who need to have their 
claims reviewed and decided by impartial decision makers. To this end, 
I have reviewed the existing federal statutes with an eye toward 
improving them and making them work better. The bill Senator Hutchinson 
and I are introducing today does a number of things to make EAJA more 
effective for individuals and small business men and women all across 
this country.
  First and most important, this legislation eliminates the provision 
in current law that allows the government to avoid paying attorneys' 
fees when it loses a suit if it can show that its position was 
substantially justified. I believe that this high threshold for 
obtaining attorneys' fees is unfair. If an individual or small business 
battles the federal government in an adversarial proceeding and 
prevails, the government should simply pay the fees incurred. Imagine 
the scenario of a small business that spends time and money dueling 
with the government and wins, only to find out that it must now 
undertake the additional step of litigating the justification of 
government's litigation position. For the government, with its vast 
resources, this second litigation over fees poses little difficulty, 
but for the citizen or small business it may simply not be financially 
feasible.
  Not only is this additional step a financial burden on the private 
litigant, but a 1992 study also reveals that it is unnecessary and a 
waste of government resources. University of Virginia Professor Harold 
Krent on behalf of the Administrative Conference of the United States 
found that only a small percentage of EAJA awards were denied because 
of the substantial justification defense. While it is impossible to 
determine the exact cost of litigating the issue of subtantial 
justification, it is Prof. Krent's opinion, based upon review of cases 
in 1989 and 1990, that while the substantial justification defense may 
save some money, it was not enough to justify the cost of the 
additional litigation. In short, eliminating this often burdensome 
second step is a cost effective step which will streamline recovery 
under EAJA and may very well save the government money in the long run.
  The second part of this legislation that will streamline and improve 
EAJA is a provision designed to encourage settlement and avoid costly 
and protracted litigation. Under the bill, the government can make an 
offer of settlement after an application for fees and other expenses 
has been filed. If the government's offer is rejected and the 
prevailing party seeking recovery ultimately wins a smaller award, that

[[Page S7452]]

party is not entitled to the attorneys' fees and costs incurred after 
the date of the government's offer. Again, this will encourage 
settlement, speed the claims process, and thereby reduce the time and 
expense of the litigation.
  The final improvement to EAJA included in this legislation is the 
removal of the carve out of cases where the prevailing party is 
eligible to get attorneys fees under section 7430 of the Internal 
Revenue Code. Under current law, EAJA is inapplicable in cases where a 
taxpayer prevails against the government. I was an original cosponsor 
of a bill that suggested a similar reform introduced by Senator Leahy 
of Vermont in the last Congress. This provision helps to level the 
playing field between the IRS and everyday citizens. There is no reason 
that taxpayers should be treated differently than any other party that 
prevails in a case against the government. They deserve to have their 
fees paid if they win.
  We all know that the American small business owner has a difficult 
road to make ends meet and that unnecessary or overly burdensome 
government regulation can be a formidable obstacle to doing business. 
It can be the difference between success or failure. The Equal Access 
to Justice Act was conceived and implemented to help balance the 
formidable power of the federal government. It has already helped many 
Americans. The legislation we are offering today will make EAJA more 
effective for more Americans while at the same time helping to deter 
the government from acting in an indefensible and unwarranted manner.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2907

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EQUAL ACCESS TO JUSTICE REFORM.

       (a) Short Title.--This Act may be cited as the ``Equal 
     Access to Justice Reform Amendments of 2000''.
       (b) Award of Costs and Fees.--
       (1) Administrative proceedings.--Section 504(a)(2) of title 
     5, United States Code, is amended by inserting after ``(2)'' 
     the following: ``At any time after the commencement of an 
     adversary adjudication covered by this section, the 
     adjudicative officer may ask a party to declare whether such 
     party intends to seek an award of fees and expenses against 
     the agency should such party prevail.''.
       (2) Judicial proceedings.--Section 2412(d)(1)(B) of title 
     28, United States Code, is amended by inserting after ``(B)'' 
     the following: ``At any time after the commencement of an 
     adversary adjudication covered by this section, the court may 
     ask a party to declare whether such party intends to seek an 
     award of fees and expenses against the agency should such 
     party prevail.''.
       (c) Payment From Agency Appropriations.--
       (1) Administrative proceedings.--Section 504(d) of title 5, 
     United States Code, is amended by adding at the end the 
     following: ``Fees and expenses awarded under this subsection 
     may not be paid from the claims and judgments account of the 
     Treasury from funds appropriated pursuant to section 1304 of 
     title 31.''.
       (2) Judicial proceedings.--Section 2412(d)(4) of title 28, 
     United States Code, is amended by adding at the end the 
     following: ``Fees and expenses awarded under this subsection 
     may not be paid from the claims and judgments account of the 
     Treasury from funds appropriated pursuant to section 1304 of 
     title 31.''.
       (d) Taxpayers' Recovery of Costs, Fees, and Expenses.--
       (1) Administrative proceedings.--Section 504 of title 5, 
     United States Code, is amended by striking subsection (f).
       (2) Judicial proceedings.--Section 2412 of title 28, United 
     States Code, is amended by striking subsection (e).
       (e) Offers of Settlement.--
       (1) Administrative proceedings.--Section 504 of title 5, 
     United States Code (as amended by subsection (d) of this 
     section), is amended by adding at the end the following:
       ``(f)(1) At any time after the filing of an application for 
     fees and other expenses under this section, an agency from 
     which a fee award is sought may serve upon the applicant an 
     offer of settlement of the claims made in the application. If 
     within 10 days after service of the offer the applicant 
     serves written notice that the offer is accepted, either 
     party may then file the offer and notice of acceptance 
     together with proof of service thereof.
       ``(2) An offer not accepted shall be deemed withdrawn. The 
     fact that an offer is made but not accepted shall not 
     preclude a subsequent offer. If any award of fees and 
     expenses for the merits of the proceeding finally obtained by 
     the applicant is not more favorable than the offer, the 
     applicant shall not be entitled to receive an award for 
     attorneys' fees or other expenses incurred in relation to the 
     application for fees and expenses after the date of the 
     offer.''.
       (2) Judicial proceedings.--Section 2412 of title 28, United 
     States Code (as amended by subsection (d) of this section), 
     is amended by inserting after subsection (d) the following:
       ``(e)(1) At any time after the filing of an application for 
     fees and other expenses under this section, an agency of the 
     United States from which a fee award is sought may serve 
     upon the applicant an offer of settlement of the claims 
     made in the application. If within 10 days after service 
     of the offer the applicant serves written notice that the 
     offer is accepted, either party may then file the offer 
     and notice of acceptance together with proof of service 
     thereof.
       ``(2) An offer not accepted shall be deemed withdrawn. The 
     fact that an offer is made but not accepted shall not 
     preclude a subsequent offer. If any award of fees and 
     expenses for the merits of the proceeding finally obtained by 
     the applicant is not more favorable than the offer, the 
     applicant shall not be entitled to receive an award for 
     attorneys' fees or other expenses incurred in relation to the 
     application for fees and expenses after the date of the 
     offer.''.
       (f) Elimination of Substantial Justification Standard.--
       (1) Administrative proceedings.--Section 504 of title 5, 
     United States Code, is amended--
       (A) in subsection (a)(1), by striking all beginning with 
     ``, unless the adjudicative officer'' through ``expenses are 
     sought''; and
       (B) in subsection (a)(2), by striking ``The party shall 
     also allege that the position of the agency was not 
     substantially justified.''.
       (2) Judicial proceedings.--Section 2412(d) of title 28, 
     United States Code, is amended--
       (A) in paragraph (1)(A), by striking ``, unless the court 
     finds that the position of the United States was 
     substantially justified or that special circumstances make an 
     award unjust'';
       (B) in paragraph (1)(B), by striking ``The party shall also 
     allege that the position of the United States was not 
     substantially justified. Whether or not the position of the 
     United States was substantially justified shall be determined 
     on the basis of the record (including the record with respect 
     to the action or failure to act by the agency upon which the 
     civil action is based) which is made in the civil action for 
     which fees and other expenses are sought.''; and
       (C) in paragraph (3), by striking ``, unless the court 
     finds that during such adversary adjudication the position of 
     the United States was substantially justified, or that 
     special circumstances make an award unjust''.
       (g) Reports to Congress.--
       (1) Administrative proceedings.--Not later than 180 days 
     after the date of the enactment of this Act, the 
     Administrative Conference of the United States shall submit a 
     report to Congress--
       (A) providing an analysis of the variations in the 
     frequency of fee awards paid by specific Federal agencies 
     under the provisions of section 504 of title 5, United States 
     Code; and
       (B) including recommendations for extending the application 
     of such sections to other Federal agencies and administrative 
     proceedings.
       (2) Judicial proceedings.--Not later than 180 days after 
     the date of the enactment of this Act, the Department of 
     Justice shall submit a report to Congress--
       (A) providing an analysis of the variations in the 
     frequency of fee awards paid by specific Federal districts 
     under the provisions of section 2412 of title 28, United 
     States Code; and
       (B) including recommendations for extending the application 
     of such sections to other Federal judicial proceedings.
       (h) Effective Date.--The provisions of this Act and the 
     amendments made by this Act shall take effect 30 days after 
     the date of the enactment of this Act and shall apply only to 
     an administrative complaint filed with a Federal agency or a 
     civil action filed in a United States court on or after such 
     date.

  Mr. HUTCHINSON. Mr. President, I rise today, with my colleague 
Senator Feingold, to introduce the Equal Access to Justice, EAJA, 
Reform Amendments of 2000. I do so because I firmly believe that small 
business owners and individuals who prevail in court against the 
federal government should be automatically reimbursed for their legal 
expenses-- fulfilling the true intent of EAJA when passed in 1980.
  EAJA's initial premise was to reduce the vast disparity in resources 
and expertise which exists between small business owners or individuals 
and federal agencies and to encourage the government to ensure that the 
claims it pursues are worthy of its efforts. Twenty years ago, former 
Senator Gaylord Nelson, the author of the original, bipartisan EAJA 
bill, clearly explained EAJA's intent when he stated, ``All I can say 
is the taxpayer is injured, and if the taxpayer was correct, and that 
is the finding, then we ought to make the taxpayer whole.'' I commend 
former Senator Nelson. His steadfast commitment to our nation's 
businesses as Chairman of the Senate Small Business Committee is worthy 
of admiration. As

[[Page S7453]]

a result of a political compromise, however, the final version of EAJA 
does not provide for an automatic award of attorneys' fees. Rather, it 
provides for an award of attorneys' fees only when an agency or a court 
determines that the government's position was not ``substantially 
justified'' or that ``special circumstances'' exist which would make an 
award unjust.
  Agencies and courts have strayed far from the original intent of EAJA 
by repeatedly using these provisions to avoid awarding attorneys' fees 
to small businesses and individuals who have successfully defended 
themselves. The bill that Senator Feingold and I are introducing today, 
the Equal Access to Justice Reform Amendments of 2000, would amend EAJA 
to provide that a small business owner or individual prevailing against 
the government will be automatically entitled to recover their 
attorneys' fees and expenses incurred in their defense.
  Unfortunately, EAJA is not making the taxpayers of this nation whole 
after they defend themselves against government action. Thus, I ask 
that my colleagues join Senator Feingold and myself in our effort to 
make these American taxpayers whole by cosponsoring and supporting the 
Equal Access to Justice Reform Amendments of 2000.

                          ____________________