House Report 112-594 - GOVERNMENT LITIGATION SAVINGS ACT

[House Report 112-594]
[From the U.S. Government Publishing Office]

112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-594

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

GOVERNMENT LITIGATION SAVINGS ACT

_______

July 11, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the
following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 1996]

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the
bill (H.R. 1996) to amend titles 5 and 28, United States Code,
with respect to the award of fees and other expenses in cases
brought against agencies of the United States, to require the
Administrative Conference of the United States to compile, and
make publically available, certain data relating to the Equal
Access to Justice Act, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.

CONTENTS

Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 4
Background and Need for the Legislation.......................... 4
Hearings......................................................... 9
Committee Consideration.......................................... 10
Committee Votes.................................................. 10
Committee Oversight Findings..................................... 13
New Budget Authority and Tax Expenditures........................ 13
Congressional Budget Office Cost Estimate........................ 13
Performance Goals and Objectives................................. 16
Advisory on Earmarks............................................. 16
Section-by-Section Analysis...................................... 16
Changes in Existing Law Made by the Bill, as Reported............ 19
Dissenting Views................................................. 25

The Amendment

The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Government Litigation Savings Act''.

SEC. 2. MODIFICATION OF EQUAL ACCESS TO JUSTICE PROVISIONS.

(a) Agency Proceedings.--Section 504 of title 5, United States Code,
is amended--
(1) in subsection (a)--
(A) in paragraph (1)----
(i) by inserting after the first sentence the
following: ``Fees and other expenses may be
awarded under this subsection only to a
prevailing party who has a direct and personal
interest in the adversary adjudication because
of medical costs, property damage, denial of
benefits, unpaid disbursement, fees and other
expenses incurred in defense of the
adjudication, interest in a policy concerning
such medical costs, property damage, denial of
benefits, unpaid disbursement, or fees and
other expenses, or otherwise.''; and
(ii) by adding at the end the following:
``The agency conducting the adversary
adjudication shall make any party against whom
the adjudication is brought, at the time the
adjudication is commenced, aware of the
provisions of this section.''; and
(B) in paragraph (3), in the first sentence--
(i) by striking ``may reduce'' and inserting
``shall reduce''; and
(ii) by striking ``unduly and unreasonably''
and inserting ``unduly or unreasonably'';
(2) in subsection (b)(1)--
(A) in subparagraph (A)(ii), by striking ``$125 per
hour'' and all that follows through the end and
inserting ``$200 per hour.);''; and
(B) in subparagraph (B)(ii), by striking ``; except
that'' and all that follows through ``section 601;''
and inserting ``except that--
``(I) the net worth of a party (other than an
individual or a unit of local government) shall include
the net worth of any parent entity or subsidiary of
that party; and
``(II) for purposes of subclause (I)--
``(aa) a `parent entity' of a party is an
entity that owns or controls the equity or
other evidences of ownership in that party; and
``(bb) a `subsidiary' of a party is an entity
the equity or other evidences of ownership in
which are owned or controlled by that party;'';
(3) in subsection (c)(1), by striking ``, United States
Code''; and
(4) by striking subsections (e) and (f) and inserting the
following:
``(e)(1) The Chairman of the Administrative Conference of the United
States, after consultation with the Chief Counsel for Advocacy of the
Small Business Administration, shall report annually to the Congress on
the amount of fees and other expenses awarded during the preceding
fiscal year pursuant to this section. The report shall describe the
number, nature, and amount of the awards, the claims involved in the
controversy, and any other relevant information that may aid the
Congress in evaluating the scope and impact of such awards. Each agency
shall provide the Chairman in a timely manner all information necessary
for the Chairman to comply with the requirements of this subsection.
The report shall be made available to the public online.
``(2)(A) The report required by paragraph (1) shall account for all
payments of fees and other expenses awarded under this section that are
made pursuant to a settlement agreement, regardless of whether the
settlement agreement is sealed or otherwise subject to nondisclosure
provisions, except that any version of the report made available to the
public may not reveal any information the disclosure of which is
contrary to the national security of the United States.
``(B) The disclosure of fees and other expenses required under
subparagraph (A) does not affect any other information that is subject
to nondisclosure provisions in the settlement agreement.
``(f) The Chairman of the Administrative Conference shall create and
maintain online a searchable database containing the following
information with respect to each award of fees and other expenses under
this section:
``(1) The name of each party to whom the award was made.
``(2) The name of each counsel of record representing each
party to whom the award was made.
``(3) The agency to which the application for the award was
made.
``(4) The name of each counsel of record representing the
agency to which the application for the award was made.
``(5) The name of each administrative law judge, and the name
of any other agency employee serving in an adjudicative role,
in the adversary adjudication that is the subject of the
application for the award.
``(6) The amount of the award.
``(7) The names and hourly rates of each expert witness for
whose services the award was made under the application.
``(8) The basis for the finding that the position of the
agency concerned was not substantially justified.
``(g) The online searchable database described in subsection (f) may
not reveal any information the disclosure of which is prohibited by law
or court order, or the disclosure of which is contrary to the national
security of the United States.
``(h) The Director of the Office of Management and Budget shall
adjust the maximum hourly fee set forth in subsection (b)(1)(A)(ii) for
the fiscal year beginning October 1, 2012, and for each fiscal year
thereafter, to reflect changes in the Consumer Price Index, as
determined by the Secretary of Labor.''.
(b) Court Cases.--Section 2412(d) of title 28, United States Code, is
amended--
(1) by amending paragraph (1)(A) to read as follows: ``(A)
Except as otherwise specifically provided by statute, a court,
in any civil action (other than cases sounding in tort),
including proceedings for judicial review of agency action,
brought by or against the United States in any court having
jurisdiction of that action, shall award to a prevailing party
(other than the United States) fees and other expenses, in
addition to any costs awarded pursuant to subsection (a),
incurred by that party in the civil action, unless the court
finds that the position of the United States was substantially
justified or that special circumstances make an award unjust.
Fees and other expenses may be awarded under this paragraph
only to a prevailing party who has a direct and personal
interest in the civil action because of medical costs, property
damage, denial of benefits, unpaid disbursement, fees and other
expenses incurred in defense of the civil action, interest in a
policy concerning such medical costs, property damage, denial
of benefits, unpaid disbursement, or fees and other expenses,
or otherwise.'';
(2) in paragraph (1)(C)--
(A) by striking ``court, in its discretion, may'' and
inserting ``court shall''; and
(B) by striking ``unduly and unreasonably'' and
inserting ``unduly or unreasonably'';
(3) in paragraph (2)--
(A) in subparagraph (A)(ii), by striking ``$125'' and
all that follows through the end and inserting ``$200
per hour.);'';
(B) in subparagraph (B)(ii), by striking ``; except
that'' and all that follows through ``section 601 of
title 5;'' and inserting ``except that--
``(I) the net worth of a party (other than an
individual or a unit of local government) shall include
the net worth of any parent entity or subsidiary of
that party; and
``(II) for purposes of subclause (I)--
``(aa) a `parent entity' of a party is an
entity that owns or controls the equity or
other evidences of ownership in that party; and
``(bb) a `subsidiary' of a party is an entity
the equity or other evidences of ownership in
which are owned or controlled by that party;'';
and
(4) by adding at the end the following:
``(5) The Director of the Office of Management and Budget shall
adjust the maximum hourly fee set forth in paragraph (2)(A)(ii) for the
fiscal year beginning October 1, 2012, and for each fiscal year
thereafter, to reflect changes in the Consumer Price Index, as
determined by the Secretary of Labor.
``(6)(A) The Chairman of the Administrative Conference of the United
States shall report annually to the Congress on the amount of fees and
other expenses awarded during the preceding fiscal year pursuant to
this subsection. The report shall describe the number, nature, and
amount of the awards, the claims involved in each controversy, and any
other relevant information which may aid the Congress in evaluating the
scope and impact of such awards. Each agency shall provide the Chairman
with such information as is necessary for the Chairman to comply with
the requirements of this paragraph. The report shall be made available
to the public online.
``(B)(i) The report required by subparagraph (A) shall account for
all payments of fees and other expenses awarded under this subsection
that are made pursuant to a settlement agreement, regardless of whether
the settlement agreement is sealed or otherwise subject to
nondisclosure provisions, except that any version of the report made
available to the public may not reveal any information the disclosure
of which is contrary to the national security of the United States.
``(ii) The disclosure of fees and other expenses required under
clause (i) does not affect any other information that is subject to
nondisclosure provisions in the settlement agreement.
``(C) The Chairman of the Administrative Conference shall include and
clearly identify in the annual report under subparagraph (A), for each
case in which an award of fees and other expenses is included in the
report--
``(i) any amounts paid from section 1304 of title 31 for a
judgment in the case;
``(ii) the amount of the award of fees and other expenses;
and
``(iii) the statute under which the plaintiff filed suit.
``(7) The Chairman of the Administrative Conference shall create and
maintain online a searchable database containing the following
information with respect to each award of fees and other expenses under
this subsection:
``(A) The name of each party to whom the award was made.
``(B) The name of each counsel of record representing each
party to whom the award was made.
``(C) The agency involved in the case.
``(D) The name of each counsel of record representing the
agency involved in the case.
``(E) The name of each judge in the case, and the court in
which the case was heard.
``(F) The amount of the award.
``(G) The names and hourly rates of each expert witness for
whose services the award was made.
``(H) The basis for the finding that the position of the
agency concerned was not substantially justified.
``(8) The online searchable database described in paragraph (7) may
not reveal any information the disclosure of which is prohibited by law
or court order, or the disclosure of which is contrary to the national
security of the United States.
``(9) The Attorney General of the United States shall provide to the
Chairman of the Administrative Conference of the United States in a
timely manner all information necessary for the Chairman to carry out
the Chairman's responsibilities under this subsection.''.
(c) Clerical Amendment.--Section 2412(e) of title 28, United States
Code, is amended by striking ``of section 2412 of title 28, United
States Code,'' and inserting ``of this section''.

SEC. 3. GAO STUDY.

Not later than 30 days after the date of the enactment of this Act,
the Comptroller General shall commence an audit of the implementation
of the Equal Access to Justice Act for the years 1995 through the end
of the calendar year in which this Act is enacted. The Comptroller
General shall, to the extent practical, not later than 1 year after the
end of the calendar year in which this Act is enacted, complete such
audit and submit to the Congress a report on the results of the audit.

Purpose and Summary

H.R. 1996, the ``Government Litigation Savings Act,''
revises provisions of the Equal Access to Justice Act (``the
EAJA'' or ``the Act'') relating to the award of attorney's fees
and costs to prevailing parties in agency proceedings and civil
actions against the Federal Government. The bill instaurates
the Act's annual reporting requirements, which have not been
fulfilled since Fiscal Year 1994, and makes other needed
reforms to protect taxpayer dollars while ensuring that the
EAJA is serving all legitimate beneficiaries.

Background and Need for the Legislation

A. The American Rule and Sovereign Immunity
Absent a specific statute authorizing fee-shifting, in the
United States a party prevailing in litigation typically is not
entitled to recover attorney's fees from the losing party.\1\
This is known as the American Rule, in contrast with the
English Rule, which routinely allows fee-shifting between
litigants. There are limited common law exceptions to the
American Rule, such as the bad faith doctrine, which holds that
``a Federal court may award counsel fees to a successful party
when his opponent has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.''\2\ Owing to the doctrine
of sovereign immunity, however, these common law exceptions
traditionally were inapplicable in litigation against the
United States. Sovereign immunity prevents the United States
from being sued or forced to pay out funds without its consent,
which Congress can give in the form of a statute expressly
waiving sovereign immunity for a particular purpose.\3\ Section
2412 of Title 28, U.S. Code, formerly codified the rule that
attorney's fees and costs were not recoverable from the United
States.
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\1\See Alyeska Pipelines Serv. Co. v. Wilderness Soc'y, 421 U.S.
240, 247 (1975) (``In the United States, the prevailing litigant
typically is not entitled to collect a reasonable attorney's fee from
the loser.'').
\2\Hall v. Cole, 412 U.S. 1, 5 (1973) (citations omitted).
\3\See, e.g., United States v. Chem. Found., Inc., 272 U.S. 1, 20
(1926).
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The 1960's and 1970's witnessed a dramatic increase in
``public interest law'' and lawsuits filed by citizen activists
challenging governmental decisions. Courts partly enabled this
by developing the ``private attorney general doctrine,'' which
allowed a plaintiff to ``be awarded attorneys' fees when
[through litigation] he has effectuated a strong Congressional
policy which has benefited a large class of people, and where
further the necessity and financial burden of private
enforcement are such as to make the award essential.''\4\ The
Supreme Court, however, cut back sharply on this trend in
Alyeska Pipeline, holding that a specific statute authorizing
fee-shifting was required before a court could award attorney's
fees.\5\
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\4\La Raza Unida v. Volpe, 57 F.R.D. 94, 98 (N.D. Cal. 1972).
\5\See 421 U.S. at 263.
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Congress has waived the United States' sovereign immunity
for attorney's fees in particular causes of action. ``In about
200 statutes Congress has clearly put aside the American Rule
and waived the Federal Government's sovereign immunity to
permit the award of attorney's fees to prevailing parties other
than the Federal Government.''\6\ Examples include the Civil
Rights Acts of 1964 and 1968; the Voting Rights Act of 1975;
the Organized Crime Control Act; the Freedom of Information
Act; the Consumer Product Safety Act; and, the Civil Rights
Attorneys Fees Awards Act of 1976.\7\
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\6\Christopher R. Kelley, Attorney's Fee Awards for Unreasonable
Government Conduct: Notes on the Equal Access to Justice Act, 2004 Ark.
L. Notes 65, 65 (2004).
\7\See Equal Access to Justice Act, S. Rep. No. 96-253, at 4 (1979)
(citing statutes).
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B. The Equal Access to Justice Act
In October 1980, Congress passed and the President signed
the EAJA\8\ (originally entitled the ``Small Business Equal
Access to Justice Act,'' and re-enacted permanently in 1985\9\)
as part of a broader small business assistance bill, ``in
response to widespread sentiment that administrative agencies
were burdening small businesses with excessive
regulation.''\10\ The Supreme Court has noted that the EAJA was
adopted with the ``specific purpose'' of ``eliminat[ing] for
the average person the financial disincentive to challenge
unreasonable governmental actions.''\11\
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\8\96 P.L. 481, 94 Stat. 2321 (Oct. 21, 1980). See generally Lowell
E. Baier, Reforming the Equal Access to Justice Act, 38 J. Legis. 1
(2012) (thorough discussion of the EAJA's legislative history and
legislative suggestions to restore its original purpose of protecting
ordinary citizens and small businesses from excessive or unreasonable
government policies and enforcement actions).
\9\99 P.L. 80, 99 Stat. 183 (Aug. 5, 1985).
\10\John W. Finley III, Unjust Access to the Equal Access to
Justice Act: A Proposal to Close the Act's Eligibility Loophole for
Members of Trade Associations, 53 Wash. U. J. Urb. & Contemp. L. 243,
247 (Winter 1998).
\11\Comm'r v. Jean, 496 U.S. 154, 163 (1990).
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Civil litigation can become a war of attrition as parties
strategically try to deplete one another's resources to force a
settlement. Fundamentally, the EAJA recognizes the enormous
``disparity of resources between individuals, small businesses,
and other organizations with limited resources and the Federal
Government.''\12\ Unlike any person or corporation, the Federal
Government literally has thousands of attorneys at its
immediate disposal, none of whom bills on an hourly basis. This
could discourage a citizen from hiring counsel to challenge an
abusive government policy or could induce a citizen to settle
on unfavorable terms a capricious civil or administrative
enforcement action. The EAJA ``is meant to discourage the
Federal Government from using its superior litigating resources
unreasonably--it is in this respect an `anti-bully' law.''\13\
Consequently, the EAJA ``probably is the most important'' and
also ``among the most litigated'' of the Federal fee-shifting
statutes.\14\
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\12\Kelley, note 6 supra, at 66 (quoting Equal Access to Justice
Act Amendments, H.R. Rep. No. 99-120, at 4 (1985)).
\13\Battles Farm Co. v. Pierce, 806 F.2d 1098, 1101 (D.C. Cir.
1986).
\14\Kelley, note 6 supra, at 65.
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The EAJA is a one-way fee-shifting statute, allowing the
recovery of attorney's fees and costs from the United States in
certain circumstances. First, the EAJA makes the United States
liable for attorney's fees to the same extent as any other
party under a common law or statutory exception to the American
Rule.\15\ Thus, for example, if the United States litigates a
case in bad faith, then the bad faith exception could be used
to require the United States to pay the prevailing party's
attorney's fees and costs. Second, the EAJA allows certain
parties who prevail against the United States in any
administrative adjudication or in any civil litigation (not
just on certain claims brought under particular statutes) to
recover attorney's fees if the position of the United States
was not ``substantially justified,'' unless ``special
circumstances make an award unjust.''\16\
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\15\See 28 U.S.C. Sec. 2412(b).
\16\See 5 U.S.C. Sec. 504(a); 28 U.S.C. Sec. 2412(d).
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The EAJA puts the burden on the government to show that its
position was substantially justified, and the Supreme Court has
interpreted the EAJA's ``substantially justified'' standard as
equivalent to reasonableness.\17\ Only individuals with a net
worth of less than $2 million, or organizations worth less than
$7 million (except for tax-exempt 501(c)(3) organizations and
cooperative associations under the Agricultural Marketing Act)
and with fewer than 500 employees, can collect attorney's fees
from the Federal Government under the EAJA.\18\ Further,
attorney's fees are capped at $125 per hour, unless ``a special
factor, such as the limited availability of qualified attorneys
or agents for the proceedings involved, justifies a higher
fee.''\19\ An award under the EAJA may be paid ``from any funds
made available to the agency by appropriation or
otherwise.''\20\
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\17\See Pierce v. Underwood, 487 U.S. 552, 565 (1988) (``We are of
the view, therefore, that as between the two commonly used connotations
of the word `substantially,' the one most naturally conveyed by the
phrase before us here is not `justified to a high degree,' but rather
`justified in substance or in the main'--that is, justified to a degree
that could satisfy a reasonable person.'').
\18\5 U.S.C. Sec. 504(b)(1)(B); 28 U.S.C. Sec. 2412(d)(2)(B).
\19\5 U.S.C. Sec. 504(b)(1)(A); 28 U.S.C. Sec. 2412(d)(2)(A); see
also Pierce, 487 U.S. at 572 (holding that the special factor exception
in the EAJA ``refers to attorneys having some distinctive knowledge or
specialized skill needful for the litigation in question--as opposed to
an extraordinary level of the general lawyerly knowledge and ability
useful in all litigation. Examples of the former would be an
identifiable practice specialty such as patent law, or knowledge of
foreign law or language.'').
\20\5 U.S.C. Sec. 504(d); 28 U.S.C. Sec. 2412(d)(4).
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No reports have been made documenting EAJA payments
government-wide since FY1994. The EAJA requires the
Administrative Conference of the United States (``ACUS'' or
``the Conference'') to report annually to Congress regarding
fees paid out in administrative actions under Section 504. But
ACUS was defunded in 1995 and lay dormant until it was re-
appropriated in 2009. Its last report under Section 504 covered
FY1994, although the Conference is now fully operational and is
preparing a report for FY2010. The EAJA originally charged the
Administrative Office of the U.S. Courts, changed to the
Attorney General in 1992,\21\ with filing a similar annual
report under Section 2412, but that reporting requirement was
repealed altogether in 1995.\22\
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\21\Federal Courts Administration Act of 1992, 102 P.L. 572,
Sec. 502(B) (Oct. 29, 1992).
\22\Federal Reports Elimination and Sunset Act of 1995, 104 P.L.
66, Sec. 1091(b) (Dec. 21, 1995).
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C. Necessary Reforms to the EAJA
The Subcommittee on Courts, Commercial and Administrative
Law held a hearing on H.R. 1996, the ``Government Litigation
Savings Act,'' on October 11, 2011.\23\ Testimony was received
from Lowell Baier, President Emeritus of the Boone & Crockett
Club and 2008 Field & Stream magazine Conservationist of the
Year; Jeffrey Axelrad, Professorial Lecturer in Law at The
George Washington University Law School and former Director of
the U.S. Department of Justice Torts Branch (1978-2003);
Jennifer Ellis, rancher and Chairman of the Western Legacy
Alliance; and, Brian Wolfman, Visiting Professor at Georgetown
University Law Center and Co-Director of the Institute for
Public Representation.
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\23\Government Litigation Savings Act: Hearing before the Subcomm.
on Courts, Commercial and Administrative Law of the H. Comm. on the
Judiciary, 112th Cong. (Oct. 11, 2011).
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i. Increasing transparency
To be sure, the EAJA has not lived up to initial cost
projections, which were astronomical. The DOJ believed allowing
the American Rule's common law exceptions to apply against the
Federal Government would cost $250 million per year.\24\ The
CBO proffered the somewhat more modest estimate of $108 million
in the first year, rising to $137 million by FY1982.\25\ From
FY1982 to FY1994, the last year for which reliable data is
available, GAO reported that $34 million was paid out under the
EAJA to 6,200 applicants.\26\ The majority of these were small
payments made in Social Security and veteran's benefits cases.
But no comprehensive, reliable data is available since FY1995.
The GAO has published three reports regarding EAJA payments
made by particular agencies during this ``blackout'' period,
but none is government-wide.\27\ For its most recent report,
only 10 of the 75 bureaus and agencies that GAO contacted
within the U.S. Departments of Agriculture and the Interior
could provide any data on EAJA payments for FY2000 to FY 2010.
This ongoing, near-total lack of transparency is a glaring
shortcoming of the current EAJA regime.
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\24\The Awarding of Attorneys' Fees in Federal Courts: Hearings
before the Subcomm. on Courts, Civil Liberties, and the Administration
of Justice of the H. Comm. on the Judiciary, 95th Cong., at 73 (Apr.
26, 1978) (Statement of Paul Nejelski, Deputy Assistant Attorney
General).
\25\S. Rep. No. 96-253, note 7 supra, at 10.
\26\See United States General Accounting Office, Equal Access to
Justice Act: Its Use in Selected Agencies, at 3 (GAO/HEHS-98-58-R Jan.
14, 1998).
\27\See id.; United States Government Accountability Office,
Environmental Litigation: Cases Against the EPA and Associated Costs
over Time (GAO-11-650 Aug. 1, 2011); United States Government
Accountability Office, Limited Data Available on USDA and Interior
Attorney Fee Claims and Payments (GAO-12-417R Apr. 12, 2012).
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ii. Accounting for inflation and protecting taxpayer
dollars
At the hearing, all witnesses (including Professor Wolfman)
broadly agreed that the annual reporting requirement should be
reinstated\28\ and that the cap on attorney's fees and costs
should be raised.\29\ The $125 hourly cap was last increased in
1996, from $75;\30\ the inflation-adjusted 2011 equivalent
would be around $180.\31\ The Subcommittee heard testimony that
the ``special factor'' exception has overtaken the hourly cap
and that courts regularly award attorney's fees far in excess
of the cap.\32\ The majority of witnesses urged eliminating the
``special factor'' exception altogether. Professor Wolfman
allowed that if the cap were raised to $250 per hour, with an
automatic mechanism to adjust it annually, then the special
factor exception could be eliminated.\33\ At the hearing,
Professor Wolfman objected to requiring courts to reduce
attorney's fees awarded under the EAJA ``commensurate with pro
bono hours,''\34\ and to limiting EAJA awards to $200,000 per
case or three cases annually.\35\
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\28\See Government Litigation Savings Act, note 23 supra, at 41-43
(Testimony of Jeffrey Axelrad); 50-51 (Testimony of Lowell Baier); 62-
63 (Testimony of Jennifer Ellis); 96 (Testimony of Brian Wolfman).
\29\See id. at 34 (Testimony of Jeffrey Axelrad); 50 (Testimony of
Lowell Baier); 60 (Testimony of Jennifer Ellis). Cf. id. at 91
(Testimony of Brian Wolfman).
\30\Contract with America Advancement Act of 1996, 104 P.L. 121,
Sec. 232(b) (Mar. 29, 1996).
\31\Government Litigation Savings Act, note 23 supra, at 77-78
(Testimony of Brian Wolfman).
\32\See id. at 39-40 (Testimony of Jeffrey Axelrad), 60-61
(Testimony of Jennifer Ellis); see also Ctr. for Food Safety v.
Vilsack, 08-cv-00484-JSW, Dkt. No. 648, Report and Recommendations re:
Plaintiffs' Motion for Attorneys' Fees (N.D. Cal. Oct. 13, 2011)
(approving hourly rates of $650, $385, $450, and $410 for environmental
attorneys under EAJA's special factor exception).
\33\See Government Litigation Savings Act, note 23 supra, at 101-02
(``I think if we were at $250 an hour and we had a reasonable inflation
adjuster . . . And if you had a mandatory inflation adjuster, I am with
you on this.'').
\34\Id. at 86-91.
\35\Id. at 92-95.
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iii. Clarifying eligibility
Certain 501(c)(3) organizations routinely receive large
awards under the EAJA. This is based on reliable (although, due
to the annual reporting blackout since FY1994, not
comprehensive) evidence, including the GAO's August 2011
report.\36\ The GAO report revealed that EarthJustice received
32%--$4.6 million--of attorney's fees paid by the EPA during
the period of time studied. The Natural Resources Defense
Council and the Sierra Club combined to take another 41%.\37\
Another recent study found that the U.S. Forest Service paid
EAJA awards in 149 instances over a 7-year period (1999-2005),
totaling over $6 million in attorney's fees and costs.\38\
Eighty three of these involved environmental organizations,
accounting for approximately 70% of the EAJA award dollars.\39\
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\36\See Environmental Litigation, note 27 supra.
\37\See Ron Arnold, ``Fed pays Big Green to sue the government,''
Wash. Examiner, Aug. 31, 2011, at 29.
\38\Michael J. Mortimer & Robert W. Malmsheimer, The Equal Access
to Justice Act and US Forest Service Land Management: Incentives to
Litigate?, 109 J. Forestry 352, 354-55 (2011).
\39\Id.
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For example, in Center for Food Safety v. Vilsack, a case
challenging the adequacy of an environmental review, the Center
for Food Safety was awarded more than $2.6 million in
attorney's fees,\40\ with its lead counsel compensated at a
rate of $650 per hour and assisting attorneys at $385 to $450
per hour.\41\ The court specifically cited the attorneys'
specialized knowledge in and experience with environmental
issues as the ``special factor'' meriting fees in excess of the
EAJA's statutory rate.\42\
---------------------------------------------------------------------------
\40\Ctr. for Food Safety v. Vilsack, No. 08-cv-00484-JSW, Dkt. No.
656, Order Adopting Report and Recommendations (N.D. Cal. Dec. 15,
2011); see also id., appeal docketed, No. 12-15323 (9th Cir. Feb. 17,
2012).
\41\See Report and Recommendations, note 32 supra.
\42\Id. at 14-18.
---------------------------------------------------------------------------
The Subcommittee heard extensive testimony on the issue of
eligibility for EAJA awards. Mr. Baier testified that the
EAJA's legislative history shows it was meant to protect
``private individuals and small businesses'' from unreasonable
regulatory and civil enforcement by the Federal Government.\43\
Of the more than 200 other fee-shifting statutes, the EAJA is
the only one that makes a special exception for 501(c)(3)
corporations.\44\ By reviewing court filings for cases marked
``closed'' between September 1, 2009, and August 31, 2010, Mr.
Baier found that twenty environmental organizations collected
$5.8 million in EAJA payments under Section 2412 in this 1-year
period alone.\45\ This figure does not include other EAJA
payments that may have been made to such groups in
administrative proceedings under Section 504. Mr. Baier
specifically suggested that the law be improved so that ``[i]n
calculating the net worth of the litigant the net worth of all
parent entities and wholly owned subsidiaries should be
included, in order to prevent the use of small ephemeral or
shell organizations to circumvent the net worth eligibility
requirement.''\46\
---------------------------------------------------------------------------
\43\See Government Litigation Savings Act, note 23 supra, at 49.
\44\See id. at 48 (Testimony of Lowell Baier).
\45\Id. at 52.
\46\See id. at 49.
---------------------------------------------------------------------------
Mr. Baier and Ms. Ellis also argued that EAJA awards should
be available only for cases challenging the substance of a
governmental policy or decision, rather than challenges to the
decision-making process.\47\ As Ms. Ellis put it, ``I have
always understood that people can push their agendas in court.
I just disagree with using my tax dollars to do it.''\48\
---------------------------------------------------------------------------
\47\See id. at 48-49 (Testimony of Lowell Baier); 59-61 (Testimony
of Jennifer Ellis).
\48\Id. at 55.
---------------------------------------------------------------------------

Hearings

The Subcommittee on Courts, Commercial and Administrative
Law held a legislative hearing on H.R. 1996, the ``Government
Litigation Savings Act,'' on October 11, 2011. Testimony was
received from Lowell Baier, President Emeritus of the Boone &
Crockett Club and 2008 Field & Stream magazine Conservationist
of the Year; Jeffrey Axelrad, Professorial Lecturer in Law at
The George Washington University Law School and former Director
of the U.S. Department of Justice Torts Branch (1978-2003);
Jennifer Ellis, rancher and Chairman of the Western Legacy
Alliance; and, Brian Wolfman, Visiting Professor at Georgetown
University Law Center and Co-Director of the Institute for
Public Representation.

Committee Consideration

On November 17, 2011, the Committee met in open session and
ordered the bill H.R. 1996 favorably reported, with an
amendment in the nature of a substitute from Mr. Coble, by a
rollcall vote of 19 to 14, a quorum being present.

Committee Votes

In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 1996.
1. Amendment #3, offered by Mr. Scott, to strike the
attorney's fee cap and instead provide for ``reasonable''
attorney's fees; to preserve the net worth exemption for
501(c)(3) corporations; and to strike the requirement that a
party's net worth shall include the net worth of a parent
entity or subsidiary of that party. Amendment not agreed to by
vote of 14 to 18.

ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren.....................................................
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy.......................................................
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Amodei...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman...................................................... X
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley..................................................... X
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Ms. Sanchez..................................................... X
(Vacant)........................................................
-----------------------------------------------
Total....................................................... 14 18
----------------------------------------------------------------------------------------------------------------

2. Motion by Mr. Sensenbrenner to Table the Appeal of the
Ruling of the Chair. The chairman ruled that it was not in
order to consider further amendments following the committee's
adoption of an amendment in the nature of a substitute that by
unanimous consent was considered the base text for purposes of
markup. Ms. Jackson Lee appealed this ruling, and Mr.
Sensenbrenner moved to table Ms. Jackson Lee's motion.\49\
Motion agreed to by vote of 19 to 13.
---------------------------------------------------------------------------
\49\Despite the record vote occurring on the motion to table, the
Committee notes that a ruling by the Chair that it is not in order to
offer an amendment following a Committee's adoption of an amendment in
the nature of a substitute which by unanimous consent was considered
the base text for purposes of markup is not subject to appeal.

ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren.....................................................
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy.......................................................
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Amodei...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Ms. Sanchez..................................................... X
(Vacant)........................................................
-----------------------------------------------
Total....................................................... 19 13
----------------------------------------------------------------------------------------------------------------

3. Motion to report H.R. 1996, as amended, favorably to the
House. Motion agreed to by vote of 19 to 14.

ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren.....................................................
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy.......................................................
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Amodei...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman...................................................... X
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Ms. Sanchez..................................................... X
(Vacant)........................................................
-----------------------------------------------
Total....................................................... 19 14
----------------------------------------------------------------------------------------------------------------

Committee Oversight Findings

In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.

New Budget Authority and Tax Expenditures

Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.

Congressional Budget Office Cost Estimate

In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 1996, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:

U.S. Congress,
Congressional Budget Office,
Washington, DC, June 26, 2012.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1996, the
``Government Litigation Savings Act.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Martin von
Gnechten and Matthew Pickford, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.

Enclosure

cc:
Honorable John Conyers, Jr.
Ranking Member

H.R. 1996--Government Litigation Savings Act.

As ordered reported by the House Committee on the Judiciary
on November 17, 2011.

SUMMARY

H.R. 1996 would make several amendments to the Equal Access
to Justice Act (EAJA), which allows plaintiffs to recover
attorneys' fees and other costs from the Federal Government
when they prevail in a case against the government.
Specifically, the legislation would increase the cap on hourly
attorney rates, restrict who is eligible to receive EAJA
awards, and impose new reporting requirements on the
Administrative Conference of the United States (ACUS).
Based on information from affected Federal agencies, CBO
estimates that implementing H.R. 1996 would cost about $95
million over the 2013-2017 period, assuming appropriation of
the necessary amounts. Enacting the legislation also could
affect direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant. Enacting the bill would not
affect revenues.
H.R. 1996 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of State, local, or tribal
governments.

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 1996 is shown in the
following table. The costs of this legislation fall within
budget functions 750 (administration of justice), 800 (general
government), and all other budget functions from which EAJA
claims are paid.

By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017 2013- 2017
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level 21 18 18 19 19 95

Estimated Outlays 20 19 18 19 19 95
----------------------------------------------------------------------------------------------------------------

BASIS OF ESTIMATE

CBO estimates that implementing H.R. 1996 would cost $95
million over the 2013-2017 period. That amount includes
increased payments to reimburse attorneys' fees and the
estimated costs of carrying out new reporting and auditing
requirements by Federal agencies. For this estimate, CBO
assumes that the bill will be enacted by the end of 2012, that
the necessary amounts will be appropriated each year, and that
spending will follow historical patterns for EAJA payments and
litigation against the Federal Government.
Increased Payments for Attorneys' Fees
Generally, in the United States, parties involved in
litigation pay their own attorneys' fees. However, under EAJA,
parties that sue the Federal Government and prevail are
entitled to repayment of attorneys' fees, subject to certain
conditions. In general, EAJA allows smaller groups with limited
resources to pursue claims against the Federal Government.
Based on information provided by the affected agencies, CBO
estimates that payments of attorneys' fees under EAJA from
agencies' appropriations have totaled around $40 million
annually in recent years.
Under EAJA, plaintiffs who successfully bring a civil
action against the Federal Government through a statute that
lacks what is known as a ``fee-shifting provision'' for
attorneys' fees are entitled to repayment of attorneys' fees
from the defendant agency's appropriation. Fee-shifting
provisions require that payments to plaintiffs be paid through
the Treasury's Judgment Fund. This legislation would affect
only payments that are made from an agency's appropriation.
H.R. 1996 would make several changes that CBO estimates
would increase discretionary spending for that subset of EAJA
payments. Specifically, the bill would raise the cap for
attorneys' fees, payable from agency appropriations, from $125
per hour to $200 per hour; it would prohibit reimbursements
above the cap for special factors, such as cost-of-living
adjustments as allowed under current law; and it would require
the Office of Management and Budget to adjust the hourly cap to
reflect changes in the Consumer Price Index. Based on
information provided by the Departments of Justice (DOJ) and
Veterans Affairs, the Environmental Protection Agency, the
Social Security Administration, and various private-sector
entities, CBO estimates that those changes would have a net
cost of about $17 million annually, predominantly from
increasing the cap on attorneys' fees for cases involving the
Social Security Administration and the Department of Veterans
Affairs.
The bill also would restrict the class of parties eligible
for repayment and require judges to reduce awards in specified
situations. Based on information provided by the affected
agencies, CBO projects that those provisions would not have a
significant impact on caseload or awards of attorneys' fees.
The majority of cases that would be affected by the legislation
currently meet the eligibility restrictions for plaintiffs
required under the legislation.
Auditing and Reporting Requirements
The legislation also would require the ACUS to annually
report EAJA fee payments made by all government agencies and to
maintain an online searchable database of such payments. In
addition, the Government Accountability Office (GAO) would be
required to audit all EAJA payments since 1995. CBO estimates
that those provisions would cost about $10 million over the
2013-2017 period.

PAY-AS-YOU-GO CONSIDERATIONS

The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. Enacting H.R. 1996 could affect
direct spending by agencies not funded through the
appropriation process, but CBO estimates that such effects
would not be significant in any year.

INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

H.R. 1996 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
State, local, or tribal governments.

ESTIMATE PREPARED BY:

Federal Costs: Martin von Gnechten and Matthew Pickford
Impact on State, Local, and Tribal Governments: Elizabeth Cove
Delisle
Impact on the Private Sector: Paige Piper/Bach

ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis

Performance Goals and Objectives

The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
1996 as amended will instaurate the annual reporting
requirements of the Equal Access to Justice Act, and make other
needed reforms to the EAJA.

Advisory on Earmarks

In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 1996 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

Section-by-Section Analysis

The following discussion describes the bill as reported by
the Committee.
Section 1: Short Title. This section designates the bill as
the ``Government Litigation Savings Act.''
Section 2: Modification of Equal Access to Justice
Provisions. This section makes several amendments to the Equal
Access to Justice Act, at 5 U.S.C. Sec. 504 and 28 U.S.C.
Sec. 2412.
Section 2(a) amends 5 U.S.C. Sec. 504 regarding EAJA
payments made in administrative adjudications. Section
2(a)(1)(A)(i) requires EAJA filers to show a ``direct and
personal interest'' in the action to be eligible for an award
of attorney's fees and costs. Types of such a ``direct and
personal interest'' are medical costs, property damage, denial
of benefits, unpaid disbursement, fees and costs incurred in
defense of an adjudication, or a policy interest concerning
such a direct and personal interest. In this respect the bill
draws upon language suggested by the National Organization of
Veterans' Advocates to ensure that the EAJA continues to
protect everyone whom it was meant to protect.\50\
---------------------------------------------------------------------------
\50\See Government Litigation Savings Act, note 23 supra, at 117-
18.
---------------------------------------------------------------------------
Section 2(a)(1)(A)(ii) requires agencies to apprise parties
to an adjudication of the provisions of Section 504, to
discourage someone without counsel from settling a vexatious
adjudication for lack of resources to pay an attorney.
Responding to concerns expressed at the legislative hearing
that parties may increase their attorney's fees by prolonging
the litigation,\51\ Section 2(a)(1)(B) requires a reduction in
the award if a party has ``unduly or unreasonably protracted
the final resolution of the matter in controversy.''
---------------------------------------------------------------------------
\51\See id. at 61 (Testimony of Jennifer Ellis).
---------------------------------------------------------------------------
Section 2(a)(2) raises the hourly cap to $200 and
eliminates the special factor exception. Section 2(a)(4)
requires the Director of the Office of Management and Budget to
adjust the cap annually according to the Consumer Price Index.
Professor Wolfman specifically objected to giving the Director
any discretion in this regard, and urged that the annual
inflation adjustment should be mandatory.\52\ The bill directly
addresses this point. Consistent with other of Professor
Wolfman's concerns expressed at the Subcommittee hearing, the
bill does not require courts to discount pro bono hours from an
EAJA award, or impose an annual limit on the number or amount
of awards a party can receive.
---------------------------------------------------------------------------
\52\See id. at 91-92, 102.
---------------------------------------------------------------------------
Section 2(a)(2)(B) of the bill would eliminate the net
worth exemption for 501(c)(3)s and for farm co-ops. The
National Council of Farmer Cooperatives has endorsed the
Bill,\53\ and the Committee is unaware that any farm co-op has
ever benefitted from this exemption. To close this loophole
once and for all, at Section 2(a)(2)(B) the bill specifies that
a corporation's net worth includes resources available to the
corporation from a parent or subsidiary. Section 2(a)(3) makes
a clerical amendment to the U.S. Code.
---------------------------------------------------------------------------
\53\Id. at 126.
---------------------------------------------------------------------------
Section 2(a)(4) expands the reporting requirement for the
Administrative Conference of the United States under Section
504. The Conference is required to report to Congress annually,
and a copy of the report will be published online. The public
version of the report should redact information contrary to the
national security of the United States, and should not reveal
information that is sealed or subject to a nondisclosure
agreement. The public, unredacted version of the report,
however, should account for payments made in sealed cases. The
Conference will maintain an online searchable database of
payments made under this Section. The online database may not
reveal any information the disclosure of which is contrary to
the national security of the United States or the disclosure of
which is prohibited by law or court order. Thus, the report
will account for payments made in sealed cases without
disclosing any other information from such sealed cases, but no
information about sealed cases, including payments, should be
available in the online database. The agencies must promptly
provide the ACUS Chairman with all necessary information to
fulfill this reporting requirement.
Section 2(b) makes analogous changes to 28 U.S.C.
Sec. 2412, regarding EAJA payments made by agencies in civil
lawsuits. Section 2(b)(1) requires EAJA filers to show a
``direct and personal interest'' in the civil case to be
eligible for an award of attorney's fees and costs. Types of
such a ``direct and personal interest'' are medical costs,
property damage, denial of benefits, unpaid disbursement, fees
and costs incurred in defense of a case, or a policy interest
concerning such a direct and personal interest.
This is consistent with the EAJA's original purpose of
awarding attorney's fees and costs to private individuals and
small businesses that have been personally and unreasonably
wronged by the Federal Government. Fundamentally, a plaintiff's
eligibility for an EAJA award should be narrower than his or
her standing to sue. Under the bill, to receive an EAJA award a
party must have a particular kind of ``direct and personal
interest'' in the case. An organization may be eligible for an
award under the EAJA if the organization itself, as an entity,
has a ``direct and personal interest'' of the type listed in
the bill. Although an organization may have standing to sue on
behalf of one of its members, an organization should not
receive an EAJA award in such a case. Rather, one of the
organization's members who has standing and who has a ``direct
and personal interest'' in the governmental policy or decision
of the type described in the bill, would have to bring the suit
to be eligible for an EAJA award. A ``direct and personal
interest'' does not include a case predicated on an alleged
failure in the government's decision-making process, such as
allegedly failing to follow the Administrative Procedure Act or
an alleged deficiency in conducting a regulatory flexibility or
environmental impact analysis. A party may receive an EAJA
award only if the governmental policy or decision resulting
from this decision-making process affects the party's ``direct
and personal interest'' of the type listed in the bill. This
should limit EAJA awards to cases challenging the substance of
a governmental policy or decision that directly and personally
affects the party's interest of the type listed in the bill,
rather than challenges related to the procedure the government
should follow to make a policy or decision.
This is consistent with the plain language of Sections 504
and 2412, which do not allow attorney's fees to be awarded if
the government's ``position'' was ``substantially justified.''
This language was intended to limit all EAJA payments as a
cost-control mechanism, and it indicates that awards should be
made only in cases challenging an actual governmental decision,
not an alleged flaw in the decision-making process. Section
2(b) makes this limitation more explicit.
Section 2(b)(2) requires courts and agencies to reduce the
award if a party has ``unduly or unreasonably protracted the
final resolution of the matter in controversy.'' Section
2(b)(3) raises the hourly cap on attorney's fees to $200 per
hour; eliminates the ``special faction'' exception to the cap;
and, removes the net worth exemptions for 501(c)(3)s and farm
co-ops. As in Section 2(a)(2)(B), under Section 2(b)(3) all
funds available to a corporation count toward its net worth,
including funds of a parent or subsidiary. Section 2(b)(4)
requires the OMB Director annually to adjust for inflation the
hourly cap on attorney's fees.
Like the Section 504 reporting requirements, Section
2(b)(4) charges ACUS with reporting annually to Congress
regarding payments made under Section 2412, and requires
agencies and the Attorney General to support ACUS in meeting
this responsibility. (The Attorney General formerly was
required to make this annual report, but that requirement was
repealed in 1995.) The Attorney General also must make
available to ACUS information about EAJA payments made from the
Judgment Fund, and in its report ACUS should clearly identify
all such payments as originating from the Judgment Fund. The
Conference is willing and able to assume these
responsibilities. Section 2(c) makes a clerical amendment to
the U.S. Code.
Section 3. GAO Study. Section 3 requires the GAO to audit
EAJA payments over the last 15 years, when no annual reports
regarding EAJA payments were conducted. Given that during this
period of time EAJA payments were not documented systematically
and many of the relevant files are not electronic, conducting a
truly comprehensive audit would cause the GAO to incur
tremendous expenses. The bill requires the GAO to provide
Congress with as much information as practical regarding EAJA
payments made during the ``blackout'' period.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):

TITLE 5, UNITED STATES CODE

* * * * * * *
PART I--THE AGENCIES GENERALLY

* * * * * * *

CHAPTER 5--ADMINISTRATIVE PROCEDURE

SUBCHAPTER I--GENERAL PROVISIONS

* * * * * * *

Sec. 504. Costs and fees of parties

(a)(1) An agency that conducts an adversary adjudication
shall award, to a prevailing party other than the United
States, fees and other expenses incurred by that party in
connection with that proceeding, unless the adjudicative
officer of the agency finds that the position of the agency was
substantially justified or that special circumstances make an
award unjust. Fees and other expenses may be awarded under this
subsection only to a prevailing party who has a direct and
personal interest in the adversary adjudication because of
medical costs, property damage, denial of benefits, unpaid
disbursement, fees and other expenses incurred in defense of
the adjudication, interest in a policy concerning such medical
costs, property damage, denial of benefits, unpaid
disbursement, or fees and other expenses, or otherwise. Whether
or not the position of the agency was substantially justified
shall be determined on the basis of the administrative record,
as a whole, which is made in the adversary adjudication for
which fees and other expenses are sought. The agency conducting
the adversary adjudication shall make any party against whom
the adjudication is brought, at the time the adjudication is
commenced, aware of the provisions of this section.

* * * * * * *

(3) The adjudicative officer of the agency [may reduce]
shall reduce the amount to be awarded, or deny an award, to the
extent that the party during the course of the proceedings
engaged in conduct which [unduly and unreasonably] unduly or
unreasonably protracted the final resolution of the matter in
controversy. The decision of the adjudicative officer of the
agency under this section shall be made a part of the record
containing the final decision of the agency and shall include
written findings and conclusions and the reason or basis
therefor. The decision of the agency on the application for
fees and other expenses shall be the final administrative
decision under this section.
(b)(1) For the purposes of this section--
(A) ``fees and other expenses'' includes the
reasonable expenses of expert witnesses, the reasonable
cost of any study, analysis, engineering report, test,
or project which is found by the agency to be necessary
for the preparation of the party's case, and reasonable
attorney or agent fees (The amount of fees awarded
under this section shall be based upon prevailing
market rates for the kind and quality of the services
furnished, except that (i) no expert witness shall be
compensated at a rate in excess of the highest rate of
compensation for expert witnesses paid by the agency
involved, and (ii) attorney or agent fees shall not be
awarded in excess of [$125 per hour unless the agency
determines by regulation that an increase in the cost
of living or a special factor, such as the limited
availability of qualified attorneys or agents for the
proceedings involved, justifies a higher fee.);] $200
per hour.);
(B) ``party'' means a party, as defined in section
551(3) of this title, who is (i) an individual whose
net worth did not exceed $2,000,000 at the time the
adversary adjudication was initiated, or (ii) any owner
of an unincorporated business, or any partnership,
corporation, association, unit of local government, or
organization, the net worth of which did not exceed
$7,000,000 at the time the adversary adjudication was
initiated, and which had not more than 500 employees at
the time the adversary adjudication was initiated[;
except that an organization described in section
501(c)(3) of the Internal Revenue Code of 1986 (26
U.S.C. 501(c)(3)) exempt from taxation under section
501(a) of such Code, or a cooperative association as
defined in section 15(a) of the Agricultural Marketing
Act (12 U.S.C. 1141j(a)), may be a party regardless of
the net worth of such organization or cooperative
association or for purposes of subsection (a)(4), a
small entity as defined in section 601;] except that--
(I) the net worth of a party (other than an
individual or a unit of local government) shall
include the net worth of any parent entity or
subsidiary of that party; and
(II) for purposes of subclause (I)--
(aa) a ``parent entity'' of a party
is an entity that owns or controls the
equity or other evidences of ownership
in that party; and
(bb) a ``subsidiary'' of a party is
an entity the equity or other evidences
of ownership in which are owned or
controlled by that party;

* * * * * * *

(c)(1) After consultation with the Chairman of the
Administrative Conference of the United States, each agency
shall by rule establish uniform procedures for the submission
and consideration of applications for an award of fees and
other expenses. If a court reviews the underlying decision of
the adversary adjudication, an award for fees and other
expenses may be made only pursuant to section 2412(d)(3) of
title 28[, United States Code].

* * * * * * *

[(e) The Chairman of the Administrative Conference of the
United States, after consultation with the Chief Counsel for
Advocacy of the Small Business Administration, shall report
annually to the Congress on the amount of fees and other
expenses awarded during the preceding fiscal year pursuant to
this section. The report shall describe the number, nature, and
amount of the awards, the claims involved in the controversy,
and any other relevant information which may aid the Congress
in evaluating the scope and impact of such awards. Each agency
shall provide the Chairman with such information as is
necessary for the Chairman to comply with the requirements of
this subsection.
[(f) No award may be made under this section for costs,
fees, or other expenses which may be awarded under section 7430
of the Internal Revenue Code of 1986.]
(e)(1) The Chairman of the Administrative Conference of the
United States, after consultation with the Chief Counsel for
Advocacy of the Small Business Administration, shall report
annually to the Congress on the amount of fees and other
expenses awarded during the preceding fiscal year pursuant to
this section. The report shall describe the number, nature, and
amount of the awards, the claims involved in the controversy,
and any other relevant information that may aid the Congress in
evaluating the scope and impact of such awards. Each agency
shall provide the Chairman in a timely manner all information
necessary for the Chairman to comply with the requirements of
this subsection. The report shall be made available to the
public online.
(2)(A) The report required by paragraph (1) shall account
for all payments of fees and other expenses awarded under this
section that are made pursuant to a settlement agreement,
regardless of whether the settlement agreement is sealed or
otherwise subject to nondisclosure provisions, except that any
version of the report made available to the public may not
reveal any information the disclosure of which is contrary to
the national security of the United States.
(B) The disclosure of fees and other expenses required
under subparagraph (A) does not affect any other information
that is subject to nondisclosure provisions in the settlement
agreement.
(f) The Chairman of the Administrative Conference shall
create and maintain online a searchable database containing the
following information with respect to each award of fees and
other expenses under this section:
(1) The name of each party to whom the award was
made.
(2) The name of each counsel of record representing
each party to whom the award was made.
(3) The agency to which the application for the
award was made.
(4) The name of each counsel of record representing
the agency to which the application for the award was
made.
(5) The name of each administrative law judge, and
the name of any other agency employee serving in an
adjudicative role, in the adversary adjudication that
is the subject of the application for the award.
(6) The amount of the award.
(7) The names and hourly rates of each expert
witness for whose services the award was made under the
application.
(8) The basis for the finding that the position of
the agency concerned was not substantially justified.
(g) The online searchable database described in subsection
(f) may not reveal any information the disclosure of which is
prohibited by law or court order, or the disclosure of which is
contrary to the national security of the United States.
(h) The Director of the Office of Management and Budget
shall adjust the maximum hourly fee set forth in subsection
(b)(1)(A)(ii) for the fiscal year beginning October 1, 2012,
and for each fiscal year thereafter, to reflect changes in the
Consumer Price Index, as determined by the Secretary of Labor.

* * * * * * *

----------

SECTION 2412 OF TITLE 28, UNITED STATES CODE

Sec. 2412. Costs and fees

(a) * * *

* * * * * * *

(d)(1)[(A) Except as otherwise specifically provided by
statute, a court shall award to a prevailing party other than
the United States fees and other expenses, in addition to any
costs awarded pursuant to subsection (a), incurred by that
party in any civil action (other than cases sounding in tort),
including proceedings for judicial review of agency action,
brought by or against the United States in any court having
jurisdiction of that action, unless the court finds that the
position of the United States was substantially justified or
that special circumstances make an award unjust.] (A) Except as
otherwise specifically provided by statute, a court, in any
civil action (other than cases sounding in tort), including
proceedings for judicial review of agency action, brought by or
against the United States in any court having jurisdiction of
that action, shall award to a prevailing party (other than the
United States) fees and other expenses, in addition to any
costs awarded pursuant to subsection (a), incurred by that
party in the civil action, unless the court finds that the
position of the United States was substantially justified or
that special circumstances make an award unjust. Fees and other
expenses may be awarded under this paragraph only to a
prevailing party who has a direct and personal interest in the
civil action because of medical costs, property damage, denial
of benefits, unpaid disbursement, fees and other expenses
incurred in defense of the civil action, interest in a policy
concerning such medical costs, property damage, denial of
benefits, unpaid disbursement, or fees and other expenses, or
otherwise.

* * * * * * *

(C) The [court, in its discretion, may ] court shall reduce
the amount to be awarded pursuant to this subsection, or deny
an award, to the extent that the prevailing party during the
course of the proceedings engaged in conduct which [unduly and
unreasonably] unduly or unreasonably protracted the final
resolution of the matter in controversy.

* * * * * * *

(2) For the purposes of this subsection--
(A) ``fees and other expenses'' includes the
reasonable expenses of expert witnesses, the reasonable
cost of any study, analysis, engineering report, test,
or project which is found by the court to be necessary
for the preparation of the party's case, and reasonable
attorney fees (The amount of fees awarded under this
subsection shall be based upon prevailing market rates
for the kind and quality of the services furnished,
except that (i) no expert witness shall be compensated
at a rate in excess of the highest rate of compensation
for expert witnesses paid by the United States; and
(ii) attorney fees shall not be awarded in excess of
[$125 per hour unless the court determines that an
increase in the cost of living or a special factor,
such as the limited availability of qualified attorneys
for the proceedings involved, justifies a higher
fee.);] $200 per hour.);
(B) ``party'' means (i) an individual whose net
worth did not exceed $2,000,000 at the time the civil
action was filed, or (ii) any owner of an
unincorporated business, or any partnership,
corporation, association, unit of local government, or
organization, the net worth of which did not exceed
$7,000,000 at the time the civil action was filed, and
which had not more than 500 employees at the time the
civil action was filed[; except that an organization
described in section 501(c)(3) of the Internal Revenue
Code of 1986 (26 U.S.C. 501(c)(3)) exempt from taxation
under section 501(a) of such Code, or a cooperative
association as defined in section 15(a) of the
Agricultural Marketing Act (12 U.S.C. 1141j(a)), may be
a party regardless of the net worth of such
organization or cooperative association or for purposes
of subsection (d)(1)(D), a small entity as defined in
section 601 of Title 5;] except that--
(I) the net worth of a party (other than an
individual or a unit of local government) shall
include the net worth of any parent entity or
subsidiary of that party; and
(II) for purposes of subclause (I)--
(aa) a ``parent entity'' of a party
is an entity that owns or controls the
equity or other evidences of ownership
in that party; and
(bb) a ``subsidiary'' of a party is
an entity the equity or other evidences
of ownership in which are owned or
controlled by that party;

* * * * * * *

(5) The Director of the Office of Management and Budget
shall adjust the maximum hourly fee set forth in paragraph
(2)(A)(ii) for the fiscal year beginning October 1, 2012, and
for each fiscal year thereafter, to reflect changes in the
Consumer Price Index, as determined by the Secretary of Labor.
(6)(A) The Chairman of the Administrative Conference of the
United States shall report annually to the Congress on the
amount of fees and other expenses awarded during the preceding
fiscal year pursuant to this subsection. The report shall
describe the number, nature, and amount of the awards, the
claims involved in each controversy, and any other relevant
information which may aid the Congress in evaluating the scope
and impact of such awards. Each agency shall provide the
Chairman with such information as is necessary for the Chairman
to comply with the requirements of this paragraph. The report
shall be made available to the public online.
(B)(i) The report required by subparagraph (A) shall
account for all payments of fees and other expenses awarded
under this subsection that are made pursuant to a settlement
agreement, regardless of whether the settlement agreement is
sealed or otherwise subject to nondisclosure provisions, except
that any version of the report made available to the public may
not reveal any information the disclosure of which is contrary
to the national security of the United States.
(ii) The disclosure of fees and other expenses required
under clause (i) does not affect any other information that is
subject to nondisclosure provisions in the settlement
agreement.
(C) The Chairman of the Administrative Conference shall
include and clearly identify in the annual report under
subparagraph (A), for each case in which an award of fees and
other expenses is included in the report--
(i) any amounts paid from section 1304 of title 31
for a judgment in the case;
(ii) the amount of the award of fees and other
expenses; and
(iii) the statute under which the plaintiff filed
suit.
(7) The Chairman of the Administrative Conference shall
create and maintain online a searchable database containing the
following information with respect to each award of fees and
other expenses under this subsection:
(A) The name of each party to whom the award was
made.
(B) The name of each counsel of record representing
each party to whom the award was made.
(C) The agency involved in the case.
(D) The name of each counsel of record representing
the agency involved in the case.
(E) The name of each judge in the case, and the
court in which the case was heard.
(F) The amount of the award.
(G) The names and hourly rates of each expert
witness for whose services the award was made.
(H) The basis for the finding that the position of
the agency concerned was not substantially justified.
(8) The online searchable database described in paragraph
(7) may not reveal any information the disclosure of which is
prohibited by law or court order, or the disclosure of which is
contrary to the national security of the United States.
(9) The Attorney General of the United States shall provide
to the Chairman of the Administrative Conference of the United
States in a timely manner all information necessary for the
Chairman to carry out the Chairman's responsibilities under
this subsection.
(e) The provisions of this section shall not apply to any
costs, fees, and other expenses in connection with any
proceeding to which section 7430 of the Internal Revenue Code
of 1986 applies (determined without regard to subsections (b)
and (f) of such section). Nothing in the preceding sentence
shall prevent the awarding under subsection (a) [of section
2412 of title 28, United States Code,] of this section of costs
enumerated in section 1920 of such title (as in effect on
October 1, 1981).

* * * * * * *

Dissenting Views

INTRODUCTION

H.R. 1996, the ``Government Litigation Savings Act,'' would
prohibit certain groups and individuals seeking to protect
important rights and interests threatened by governmental
action from recovering attorneys' fees under the Equal Access
to Justice Act (EAJA).\1\ The bill accomplishes this objective
in several respects. First, the bill requires a plaintiff to
have a direct and personal interest in his or her claim for
relief, and thus would deny attorneys' fees for some claims
which are currently eligible for fee recovery. Second, H.R.
1996 would cap the attorneys' fee rate at $200 per hour, a rate
that may be inadequate to obtain legal representation in
certain legal markets or for complex litigation. Third, the
bill prevents fee recovery for many non-profit groups. Taken as
a whole, these changes threaten to undermine the ability of
various groups to obtain legal representation. In essence, H.R.
1996 has a single objective: to prevent access to justice for
some individuals, small businesses, and non-profit
organizations by eliminating their eligibility to recover their
legal fees and expenses when they challenge government action.
---------------------------------------------------------------------------
\1\Pub. L. No. 96-481, title II, 94 Stat. 2321, 2325 (1980)
(codified as amended at 5 U.S.C. Sec. 504, 28 U.S.C. Sec. 2412). EAJA
became permanent in 1985. Pub. L. No. 99-80, 99 Stat. 183 (1985).
---------------------------------------------------------------------------
Citing these problems and other concerns presented by the
bill, Access for All, Alliance for Justice, American Civil
Liberties Union, American Association for Justice, Center for
Biological Diversity, Center for Food Safety, Center for Law &
Social Policy, Defenders of Wildlife, Earthjustice, Endangered
Species Coalition, Equal Justice Society, Law Foundation of
Silicon Valley, Legal Aid Service of Broward County, Oregon
Wild, People for the American Way, National Consumer Law
Center, National Senior Citizens Law Center, National
Disability Rights Network, National Employment Lawyers
Association, National Fair Housing Alliance, National Legal Aid
& Defender Association, National Health Law Program, National
Treasury Employees Union, Natural Resources Defense Council,
Oceana, Public Citizen, Rocky Mountain Wild, Sargent Shriver
National Center on Poverty Law, Sierra Club, Western
Environmental Law Center, and WildEarth Guardians oppose H.R.
1996.\2\
---------------------------------------------------------------------------
\2\Letter Opposing the ``Government Litigation Savings Act'' (H.R.
1996) (Nov. 16, 2011), available at http://
democrats.judiciary.house.gov/sites/democrats.judiciary.house.gov/
files/RnIGroups
111116.pdf; Letter from Collen M. Kelley, National President of the
National Treasury Employees Union to Representative Howard Coble, Chair
of the Subcommittee on Courts, Commercial and Administrative Law and
Representative Steve Cohen, Ranking Member of the Subcommittee on
Courts, Commercial and Administrative Law (Nov. 29, 2011), available at
http://democrats.judiciary.house.gov/sites/
democrats.judiciary.house.gov/files/NTEU111129.pdf.
---------------------------------------------------------------------------
For these reasons, and those discussed below, we
respectfully dissent and urge our colleagues to reject this
unnecessary and flawed legislation.

THE EQUAL ACCESS TO JUSTICE ACT

Enacted in 1980, EAJA provides for the award of fees and
expenses to certain litigants who prevail against the United
States in adversary adjudications or civil actions. Congress
expressly found that EAJA was necessary because ``certain
individuals, partnerships, corporations, and labor and other
organizations may be deterred from seeking review of, or
defending against, unreasonable governmental action because of
the expense involved in securing the vindication of their
rights in civil actions and in administrative proceedings.''\3\
Congress also wanted EAJA to be based on ``the premise that a
party who chooses to litigate an issue against the government
is not only representing his or her own vested interest but is
also refining and formulating public policy. . . . Where
parties are serving a public purpose, it is unfair to ask them
to finance through their tax dollars unreasonable government
action and also bear the costs of vindicating their
rights.''\4\
---------------------------------------------------------------------------
\3\Pub. L. No. 96-481, Sec. 202(a), 94 Stat. 2325 (1980).
\4\H.R. Rep. No. 96-1418, reprinted in 1980 U.S.C.C.A.N. 4984,
4988-89 (1980) (emphasis added).
---------------------------------------------------------------------------
When EAJA was reenacted on a permanent basis in 1985,
President Reagan expressed strong support for the legislation.
He said:

I am pleased to be able to approve H.R. 2378, a bill to
extend the Equal Access to Justice Act. I support this
important program that helps small businesses and
individual citizens fight faulty government actions by
paying attorneys' fees in court cases or adversarial
agency proceedings where the small business or
individual citizen has prevailed and where the
government action or position in the litigation was not
substantially justified.\5\
---------------------------------------------------------------------------
\5\President's Statement on Signing the Bill Extending the Equal
Access to Justice Act (Aug. 5, 1985), available at http://
www.presidency.ucsb.edu/ws/index.php?pid=38973#axzz1a1eqZfZq.

When no other fee-shifting statute applies, a party
prevailing against the United States is entitled to an award of
fees and expenses under EAJA. Unlike other fee shifting
statutes,\6\ however, EAJA does not automatically award fees
and expenses. If the United States can show that its position
was ``substantially justified'' or when special circumstances
would make an award unjust, then fees and expenses are not
awarded.\7\ ``This is a powerful defense, and dozens upon
dozens of cases (and many more unreported cases) deny winning
plaintiffs EAJA fees on substantial-justification grounds.''\8\
---------------------------------------------------------------------------
\6\See, e.g., 42 U.S.C. Sec. 1988; 42 U.S.C. Sec. 2000e-5(k).
\7\5 U.S.C. Sec. 504(a)(1); 28 U.S.C. Sec. 2412(d)(1)(A). The term
``substantially justified'' has been interpreted to mean ``justified to
a degree that could satisfy a reasonable person.'' Pierce v. Underwood,
487 U.S. 552, 565 (1988).
\8\The Government Litigation Savings Act: Hearing on H.R. 1996
Before the Subcomm. on Commercial and Admin. Law of the H. Comm. on the
Judiciary, 112th Cong. 76 (2011) [hereinafter H.R. 1996 Hearing]
(written statement of Brian Wolfman, Visiting Associate Professor of
Law and Co-Director of the Institute for Public Representation at
Georgetown University Law Center).
---------------------------------------------------------------------------
EAJA caps attorneys' fees at $125 per hour, unless the
court or administrative agency determines ``that an increase in
the cost of living or a special factor, such as the limited
availability of qualified attorneys [] for the [proceedings]
involved, justifies a higher fee.''\9\ Most other fee-shifting
statutes award fees at market rates.\10\
---------------------------------------------------------------------------
\9\5 U.S.C. Sec. 504(b)(1)(A); 28 U.S.C. Sec. 2412(d)(2)(A).
\10\Most attorneys' fees awards under other statutes are
calculated, for example, by multiplying the number of hours spent in
the adjudication or case by the hourly market rate. See Blum v.
Stenson, 465 U.S. 886 (1984); Hensley v. Eckerhart, 461 U.S. 424
(1983).
---------------------------------------------------------------------------
A fee award may be reduced or denied when the party seeking
it has caused undue delay.\11\ When fees and costs are awarded,
the funds are paid ``from any funds made available to the
agency by appropriation or otherwise.''\12\
---------------------------------------------------------------------------
\11\5 U.S.C. Sec. 504(a)(3); 28 U.S.C. Sec. 2412(d)(1)(C).
\12\5 U.S.C. Sec. 504(d); 28 U.S.C. Sec. 2412(d)(2)(A).
---------------------------------------------------------------------------
An individual is eligible for an award if his or her net
worth is not more than $2 million, while sole proprietors,
corporations, partnerships, local governmental units, and
public or private organizations with a net worth of not more
than $7 million and having not more than 500 employees are
eligible.\13\ Regardless of net worth, tax-exempt organizations
under 26 U.S.C. Sec. 501(c)(3) and agricultural cooperatives
under 12 U.S.C. Sec. 1141j(a) with not more than 500 employees
are also eligible.\14\
---------------------------------------------------------------------------
\13\5 U.S.C. Sec. 504(b)(1)(B); 28 U.S.C. Sec. 2412(d)(2)(B).
\14\Id.
---------------------------------------------------------------------------
For a period of time, the Administrative Conference of the
United States (ACUS) was directed to report annually to
Congress on the amount of attorneys' fees and expenses awarded
in agency adjudications under the Act to help Congress evaluate
the scope and impact of EAJA. The report provided information
about individual awards and the proceedings in which they were
made.\15\ That directive ended in 1998,\16\ although by then,
ACUS had ceased operations.
---------------------------------------------------------------------------
\15\Report of the Chairman of the Administrative Conference of the
United States on Agency Activity under the Equal Access to Justice Act,
Oct. 1, 1993-Sept. 30, 1994 2 (1995) (citing 5 U.S.C. Sec. 504(e)).
\16\Federal Reports Elimination and Sunset Act of 1995, Pub. L. No.
104-66, title III, Sec. 3003, 109 Stat. 734 (1995).
---------------------------------------------------------------------------

DESCRIPTION AND BACKGROUND OF H.R. 1996

On May 25, 2011, Representative Cynthia Lummis (R-WY)
introduced H.R 1996. H.R. 1996 substantially expands a bill
that Representative Lummis introduced in the last Congress.\17\
This prior legislation, H.R. 4717, required ACUS and the
Attorney General to issue annually online reports on the amount
of fees and costs awarded under EAJA, the history of the
proceedings, and the parties involved in those controversies.
It also required a GAO audit of EAJA awards for the years since
1995.
---------------------------------------------------------------------------
\17\H.R. 4717, 111th Cong. (2010).
---------------------------------------------------------------------------
In contrast, H.R. 1996 is much more comprehensive than its
predecessor. In addition to the reporting requirements, H.R.
1996 includes several problematic provisions based on
unsupported criticisms of EAJA.
H.R. 1996 contains two principal provisions that could
prevent access to justice for individuals, small businesses,
and non-profit organizations. Those provisions include:

La requirement that claimants demonstrate a
``direct and personal interest'' in the action to be
eligible to recoup attorneys' fees and expenses.\18\
Under current law, EAJA does not include such limiting
language. As a result of this amendment, the awarding
of fees and expenses in challenges in which plaintiffs
are presently eligible could be barred.
---------------------------------------------------------------------------
\18\H.R. 1996, Sec. 2(a)(1)(A)(i).

La cap on attorneys' fees at $200 per
hour.\19\ Under current law, a judge or adjudicator may
adjust the attorneys' fee rate under EAJA based on
special circumstances, such as the complexity of the
case. This amendment could hinder the ability of
certain parties to obtain competent legal
representation.
---------------------------------------------------------------------------
\19\H.R. 1996, Sec. 2(a)(2).

Taken together, these two provisions will significantly impact
the ability of individuals, small businesses, and non-profit
organizations to recoup their legal fees and expenses when they
are vindicating their rights against Federal governmental
actions. A more detailed section-by-section analysis of the
reported legislation follows:
Section 1. Short Title. Section 1 sets forth the bill's
short title as the ``Government Litigation Savings Act.''
Section 2. Modification of Equal Access to Justice
Provisions. Section 2(a)(1) amends 5 U.S.C. Sec. 504, which
governs the awarding of fees and costs in administrative
adjudications. Section 2(a)(1) narrows the category of who is
eligible to receive EAJA awards. As amended, section 504(a)(1)
requires that a prevailing party, in order to receive an award
of fees and expenses, must have a ``direct and personal
interest in the adversary adjudication because of medical
costs, property damage, denial of benefits, unpaid
disbursement, fees and other expenses incurred in defense of
the adjudication, interest in a policy concerning such medical
costs, property damage, denial of benefits, unpaid
disbursement, or fees and other expenses, or otherwise.'' This
revision will disqualify currently eligible parties. This
subsection also amends section 504(a)(3) to require, as opposed
to the current law's permissive standard, the adjudicator to
reduce awards based on an unduly or unreasonable party.
Section 2(a)(2) amends section 504(b)(1)(A) to increase the
hourly fee award from $125 to $200, but it also prevents the
awarding of higher fees under certain circumstances.\20\ The
cap may hinder a party's ability to obtain legal representation
in high cost legal markets or when complex litigation is
expected. This subsection also requires in section 504(b)(1)(B)
the adjudicator to determine the net worth of a party's
eligibility to meet the net worth exclusion, and to include in
its calculation the net worth of subsidiaries and parent
companies. This provision is intended to bar more groups from
being eligible to recover attorneys' fees under EAJA.
---------------------------------------------------------------------------
\20\The Government Litigation Savings Act: Markup of H.R. 1996
Before the H. Comm. on the Judiciary, 112th Cong. 20 (2011)
[hereinafter H.R. 1996 Markup] (statement of Representative Howard
Coble, Chair of the Subcommittee on Courts, Commercial and
Administrative Law of the Committee on the Judiciary) (``The
[manager's] amendment raises the cap of hourly fees to $200 and
eliminates the special factor exemption which the subcommittee learned
courts are interpreting very loosely.'').
---------------------------------------------------------------------------
Section 2(a)(4) requires ACUS to submit a detailed report
to Congress, and publish an annual, publicly-available online
report of the amount of fees and costs awarded under EAJA. The
report is intended to provide a record that tracks how much the
government pays in fees and costs to parties in adjudication
against the government. The last substantial government report
on EAJA fees was conducted in 1995.\21\ This subsection also
requires the Office of Management and Budget (OMB) to adjust
annually the fee cap to reflect changes in the Consumer Price
Index.\22\
---------------------------------------------------------------------------
\21\ACUS report, supra, note 15.
\22\H.R. 1996 Markup, supra, note 20 (statement of Subcommittee
Chair Coble) (``. . . the [manager's] amendment replaces the word `may'
with the word `shall' and requires the Director [of the OMB] to make
this adjustment every year following the Consumer Price Index.'')
---------------------------------------------------------------------------
Section 2(b)(1) amends 28 U.S.C. Sec. 2412, which governs
the awarding of fees and costs when the United States
Government is a party in a Federal court. The subsection
narrows the category of who is eligible to receive EAJA awards
by requiring that in section 2412(d)(1)(A), for a prevailing
party to receive an award of fees and expenses, the party must
have a ``direct and personal interest in the civil action
because of medical costs, property damage, denial of benefits,
unpaid disbursement, fees and other expenses incurred in
defense of the civil action, interest in a policy concerning
such medical costs, property damage, denial of benefits, unpaid
disbursement, or fees and other expenses, or otherwise.'' This
language mirrors the language proposed in Section 2(a)(1).
Section 2(b)(2) amends section 2412(d)(1)(C) to require, as
opposed to the current law's permissive standard, the court to
reduce awards based on an unduly or unreasonable party. Section
2(b)(3) amends section 2412(d)(2)(A) and (B) in identical
fashion as section 2(a)(2) of the bill. Section 2(b)(4) amends
28 U.S.C. Sec. 2412 to require the OMB to adjust annually the
fee cap to reflect changes in the Consumer Price Index. Section
2(b)(4) also amends 28 U.S.C. Sec. 2412 to require ACUS to
submit a detailed report to Congress, and publish an annual,
publicly-available online report of the amount of fees and
costs awarded under EAJA. The purpose of the report is to
provide a record of how much the government pays in fees and
costs to plaintiffs who sue the government in court.
Section 3. GAO Study. Section 3 requires the Comptroller
General to begin an audit of the implementation of the Equal
Access to Justice Act since 1995 through the end of the
calendar year in which H.R. 1996 is enacted.

CONCERNS WITH H.R. 1996

I. H.R. 1996 LACKS ANY EVIDENTIARY SUPPORT WARRANTING THE AMENDMENT OF
EAJA

H.R. 1996 amends EAJA to restrict eligibility for awards in
the absence of any evidentiary support warranting such
amendment. While supporters of H.R. 1996 contend that fees and
expenses awarded under EAJA are astronomical and too common,
the facts are to the contrary.
First, EAJA has a very high threshold with respect to
potential claimants. Under EAJA, a party may recover fees from
the government only if the party is the prevailing party and
the government cannot prove that its position was
``substantially justified.''\23\ This standard is not required
in typical fee-shifting statutes and ensures that prevailing
plaintiffs do not automatically recover legal costs.\24\ The
threshold would seem to contain the prevalence of EAJA awards.
---------------------------------------------------------------------------
\23\5 U.S.C. Sec. 504(a)(1); 28 U.S.C. Sec. 2412(d)(1)(A).
\24\H.R. 1996 Hearing, supra note 8, at 76 (written statement of
Wolfman).
---------------------------------------------------------------------------
Second, there is no official data on the total amount of
fees and expenses awarded under EAJA. Since 1995, the Federal
Government has not prepared a comprehensive report on such
amounts.\25\ Neither has there been a report detailing to whom
and in what types of challenges courts and adjudicators have
awarded fees and expenses under EAJA since then. As
Representative Lummis, the sponsor of the legislation,
acknowledged for the Subcommittee's legislative hearing, ``it
is this lack of transparency that [H.R. 1996] seeks in part to
correct.''\26\
---------------------------------------------------------------------------
\25\Id. at 2 (statement of Subcommittee Chair Coble) (``The bottom
line is, there has been no government-wide accounting of EAJA payments.
. . . 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. . . .'')
Although the GAO has published additional reports focusing on EAJA
awards in certain agencies, see, e.g., U.S. Gen. Accounting Office,
Equal Access to Justice Act: Its Use in Selected Agencies (GAO/HEHS-98-
58-R, Jan. 14, 1998), there is no comprehensive data since the 1995
ACUS report, supra, note 15.
\26\H.R. 1996 Hearing, supra note 8, at 23 (written statement of
Representative Cynthia Lummis). ``Since [1995], the Congress and the
country have been in the dark of the costs of EAJA, which is why [H.R.
1996] reinstates the reporting requirement beginning with an audit of
prior reported years.'' Id. at 45 (testimony of Lowell Baier, President
Emeritus of the Boone and Crockett Club).
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An audit and annual reporting of EAJA, as required in H.R.
1996, would help Congress determine how the Act has been
implemented, and thus, whether there is any need for Congress
to amend it. The value of Congress having concrete data on the
awards of fees and expenses under EAJA cannot be understated.
As one academic testified, ``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.''\27\ In
fact, ``[i]n order for Congress to evaluate the success or
failure of [EAJA] historic data must be gathered.''\28\
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\27\Id. at 34 (testimony of George Washington University Law School
Professor Jeffrey Axelrad).
\28\Id. at 63 (written statement of Jennifer Ellis, Chair of the
Western Legacy Alliance).
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Still, proponents of H.R. 1996 urge Congress to substitute
estimates of the amount of fees and expenses awarded under EAJA
for actual data, presumably because they do not approve of some
of the awards going to certain groups. Some assert that over
the last decade, more than $37 million has been awarded under
EAJA, which they acknowledge is an estimate.\29\ Another
proponent contends that even though ``there has been no
accounting of this money . . . the smallest of estimates
[places it] in the hundreds of millions of dollars.''\30\
Others cite anecdotal evidence or informal research purportedly
showing that millions of dollars were awarded under EAJA in
support of lawsuits that a handful of environmental groups
filed.\31\ Still others claim, without having any supportive
data, that EAJA purportedly incentivizes and finances frequent
and unnecessary environmental protection litigation.\32\ These
estimates far exceed the $34.1 million that the General
Accounting Office calculated had been awarded during the fiscal
years 1982 to 1994.\33\ And these assertions also do not
reflect the typical types of recipients who had received awards
from 1980 to 1994, which were mostly veterans and Social
Security recipients.\34\ Congress can and should wait for more
credible reports.
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\29\Id. at 123 (letter from various groups supporting H.R. 1996 to
Howard Coble, Chair of the Subcommittee on Courts, Commercial and
Administrative Law, and Steve Cohen, Ranking Member of the Subcommittee
on Courts, Commercial and Administrative Law) (Oct. 11, 2011).
\30\Karen Budd-Falen, Americans for Prosperity--Oregon, Attorneys
Fees Reform Passes the U.S. House Judiciary Committee, available at
http://www.americansforprosperity.org/112111-attorneys-fees-reform-
passes-us-house-judiciary-committee.
\31\See, e.g., Richard Pollock, Activist `Green' Lawyers Billing
U.S. Millions in Fraudulent Attorney Fees (Mar. 4, 2010), available at
https://westernlegacyalliance.org/eaja-abuse-home-page/activist-green-
lawyers-billing-u-s-millions-in-fraudulent-attorney-fees.
\32\H.R. 1996 Markup, supra, note 20, at 15 (statement of
Representative Lamar Smith, Chair of the Committee on the Judiciary)
(``Certain frequent litigants . . . are financing their lawsuits with
large awards of attorney's fees paid under the act.''); Id. at 20
(Statement of Subcommittee Chair Coble) (``Certain ideologically
oriented [groups] have used the act to finance ideological oftentimes
and policy-driven litigation against the Federal Government.'').
\33\U.S. Gen. Accounting Office, Equal Access to Justice Act: Its
Use in Selected Agencies 4 (GAO/HEHS-98-58-R, Jan. 14, 1998).
\34\H.R. 1996 Markup, supra, note 20, at 14 (statement of Committee
Chair Smith) (``The annual reports filed from 1980 to 1994 showed that
most awards under the act were modest sums paid to veterans and Social
Security recipients.'').
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Unfortunately, however, supporters of H.R. 1996 do not want
Congress to wait for more credible information. Notwithstanding
the lack of such evidence, proponents of H.R. 1996 want
Congress first to substantively change EAJA, and then to
collect concrete data,\35\ which they believe undoubtedly will
support the changes. ``When reporting requirements were dropped
we believe that the ATM card type use of the EAJA began.
Without proof positive of this phenomenon, rhetoric and
supposition will rule over the debate regarding reform. This
critical component will lend undeniable proof for substantive
and equitable reforms of EAJA.''\36\ As one witness testified
at the Subcommittee hearing, ``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.''\37\
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\35\H.R. 1996 Hearing, supra note 8, at 96-97 (written statement of
Wolfman).
\36\Id. at 63 (written statement of Ellis).
\37\Id. at 94 (testimony of Wolfman).
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H.R. 1996 clearly does put the cart before the horse.
Nevertheless, the Majority is determined to push legislation
based on anecdotal evidence that will substantively undermine
the ability of individuals, small businesses, and certain non-
profits to challenge government action.

II. H.R. 1996 WILL MAKE IT MORE DIFFICULT FOR SMALL BUSINESSES,
INDIVIDUALS, AND NON-PROFIT ORGANIZATIONS TO FIND LEGAL REPRESENTATION

H.R. 1996 will make it significantly more difficult for
small businesses, individuals, and non-profits to secure
competent legal representation in their challenges against the
Federal Government. This legislation needlessly caps the fee
rate at which parties may recoup their legal fees. Capping the
fee rate ``will make it difficult for plaintiffs to find
lawyers willing to challenge unreasonable government actions in
some instances.''\38\
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\38\Id. at 92 (written statement of Wolfman).
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Under EAJA, plaintiffs can recover attorneys' fees at a
rate of $125 per hour if the government does not prove it was
``substantially justified'' in bringing or defending the
action.\39\ While some courts have adjusted upward the cap for
cost of living purposes, the rate is still less than half of
the amount most private attorneys' charge.\40\ In very limited
circumstances, plaintiffs may recover attorneys' fees in excess
of the statutory rate if they show that the attorney possessed
specialized knowledge and skills developed through a practice
area, which were needed in the litigation and not available
elsewhere at the statutory rate.\41\
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\39\See 28 U.S.C. Sec. 2412(d)(2)(A).
\40\See Thangaraja v. Gonzales, 428 F.3d 870, 876-77 (9th Cir.
2005).
\41\See Love v. Reilly, 924 F.2d 1492, 1496 (9th Cir. 1991).
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As stated earlier, EAJA is unlike most other fee-shifting
statutes for two reasons. Under EAJA, prevailing parties do not
recover their attorneys' fees at market rates.\42\ Further,
EAJA awards are not automatic because the United States can
still show that it was ``substantially justified'' in bringing
or defending the case.\43\ Because of these two differences,
``in light of EAJA's below-market rates, neither litigants nor
lawyers would bring marginal cases'' in the expectation of
receiving EAJA fees.\44\
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\42\H.R. 1996 Hearing, supra note 8, at 76 (written statement of
Wolfman).
\43\Id. at 75.
\44\Id. at 79.
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H.R. 1996 sets a new rate at $200 per hour, which is an
increase of $75 from current law, but it eliminates the
possibility of upward adjustment.\45\ Because even $200 would
be insufficient to hire a ``good lawyer'' in Idaho,\46\ capping
the fee rate at $200 across the entire country may have the
effect of ``dissuading small businesses from having the
opportunity to go to court and get their attorneys fees
paid.''\47\ Further, ``[b]y eliminating the possibility of
increased fees for specialization, [H.R. 1996] creates yet
another hurdle that will make it more difficult to find
competent legal representation to enforce complex environmental
laws.''\48\
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\45\H.R. 1996, 112th Cong. Sec. 2(a)(2), 2(b)(3) (2011).
\46\H.R. 1996 Hearing, supra note 8, at 98 (2011) (testimony of
Ellis) (``. . . I have to hire an intervening attorney that usually
costs, for a good one right now, $400 an hour.'').
\47\Id. at 25 (statement of Representative Steve Cohen, Ranking
Member of the Subcommittee on Courts, Commercial and Administrative Law
of the Committee on the Judiciary).
\48\Id. at 21 (written statement of John Conyers, Jr., Ranking
Member of the Committee on the Judiciary).
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Representatives Bobby Scott (D-VA) and Hank Johnson (D-GA)
offered an amendment at the full committee markup to amend the
attorneys' fee rate in the bill from the arbitrary $200 per
hour to a ``reasonable attorneys' fee'' rate, which would
mirror most other fee-shifting statutes.\49\ As Representative
Scott noted, by imposing the arbitrary cap, for example, in a
complex case, ``you could have the anomaly of one side being
able to afford an attorney at the going rate for that kind of
case, and the other side is stuck with this arbitrary
limit.''\50\ Thus, the arbitrary cap ``is not fair to our
veterans and senior citizens who may not be able to bring an
attorney willing to take their case with such a cap.''\51\ The
judge or adjudicator, who is more familiar with the complexity
of the case and the local legal market, could better determine
the appropriate attorneys' fee rate. If the award is
inappropriate, the appellate court can always revisit it.\52\
Unfortunately for our veterans, senior citizens, small
businesses, and others who EAJA was intended to benefit, the
amendment was defeated 14 to 18.
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\49\H.R. 1996 Markup, supra, note 20, at 33 (statement of
Representative Jerrold Nadler) (``Of the 200-plus fee-shifting
statutes, between 150 and 160 of them use reasonable attorney's fees as
their standard, as the amendment would seek to do.'').
\50\H.R. 1996 Markup, supra, note 20, at 27 (statement of
Representative Bobby Scott).
\51\Id. at 29 (statement of Representative Hank Johnson).
\52\See id. at 33 (statement of Representative Nadler).
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By capping the rate at which parties may recoup their
attorneys' fees, H.R. 1996 will make it more difficult for many
to obtain legal representation.

CONCLUSION

H.R. 1996 is irresponsible legislation that will have a
devastating impact on access to justice for individuals, small
businesses, and non-profit organizations. It amends the Equal
Access to Justice Act without definitive data that the Act
needs or should be amended. For all of these reasons, we
respectfully dissent.

John Conyers, Jr.
Howard L. Berman.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Melvin L. Watt.
Zoe Lofgren.
Sheila Jackson Lee.
Maxine Waters.
Henry C. ``Hank'' Johnson, Jr.
Judy Chu.
Ted Deutch.