ON PETITION FOR ATTORNEY FEES AND OTHER EXPENSES.
Gibbons, Hunter, Circuit Judges and Thompson,*fn* District Judge. Thompson, District Judge, concurring. Hunter, Circuit Judge, concurring and dissenting.
Opinion ANNOUNCING THE JUDGMENT OF THE COURT
In NRDC v. EPA, 683 F.2d 752 (3d Cir. 1982), the Natural Resources Defense Council (NRDC) filed a petition for review under section 509(b)(1) of the Clean Water Act, 33 U.S.C. § 1369(b)(1)(1976). NRDC sought review of the Environmental Protection Agency's (EPA's) indefinite postponement of the effective date of final amendments to certain EPA regulations. This court held that EPA's actions violated the notice and comment requirements for rulemaking under 5 U.S.C. § 553 (1976) of the Administrative Procedure Act (APA). We ordered EPA to reinstate all of the amendments effective March 30, 1981. NRDC v. EPA, 683 F.2d at 753.
NRDC now petitions the court for an award of counsel fees and other expenses in the amount of $34,375.85 pursuant to section 4 of the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A) (1976 & Supp. V 1981). Because we find that the position of EPA was not substantially justified, we will grant NRDC's fee petition.
Section 307(b)(1) of the Clean Water Act mandates that EPA promulgate regulations requiring industries to meet pretreatment standards before discharging certain pollutants into publicly owned treatment works. 33 U.S.C. § 1317(b)(1) (1976 & Supp. I 1977). Pursuant to that mandate and to a consent decree, see NRDC v. EPA, 683 F.2d at 754 n.6, EPA promulgated General Pretreatment Regulations for Existing and New Sources, 40 C.F.R. § 403 (1978) (the 1978 regulations), and those regulations have been in effect since August 28, 1978. 43 Fed. Reg. 27,736 (1978).
On October 29, 1979, EPA proposed a set of amendments to the 1978 regulations. After the required period of public comment, EPA promulgated those amendments in final form on January 28, 1981, to become effective on March 13, 1981. 46 Fed. Reg. 9,404 (1981).
On January 29, 1981, the President of the United States issued a memorandum ordering the federal agencies to postpone for sixty days from the date of the memorandum the effective dates of all regulations that were final but not yet effective. 3 C.F.R. 223 (1982). In response EPA postponed the effective date of the amendments to the 1978 regulations from March 13, 1981, to March 30, 1981. 46 Fed. Reg. 11,972 (1981). NRDC raised no challenge to that postponement.
On February 17, 1981, President Reagan issued Executive Order No. 12,291, 3 C.F.R. 127 (1982), reprinted in 5 U.S.C. § 601 (Supp. V 1981) (E.O. 12,291). E.O. 12,291 called for a reassessment of federal agency action in order to insure concentration only on regulatory objectives that would maximize net benefits to society. E.O. 12,291 required the federal agency to prepare a Regulatory Impact Analysis for all its major rules for review by the Office of Management and Budget.
Section 7 of E.O. 12,291 specifically addressed agency regulations which were in final form but not yet effective. Subsections (a) and (d) provided in part:
(a) To the extent necessary to permit reconsideration in accordance with this Order, agencies shall, except as provided in Section 8 of this Order, suspend or postpone the effective dates of all major rules that they have promulgated in final form as of the date of this Order, but that have not yet become effective, excluding:
(1) Major rules that cannot legally be postponed or suspended;
(2) Major rules that, for good cause, ought to become effective as final rules without reconsideration.
(d) Agencies may, in accordance with the Administrative Procedure Act and other applicable statutes, permit major rules that they have issued in final form as of the date of this Order, and that have not yet become effective, to take effect as interim rules while they are being reconsidered in accordance with this Order, provided that, agencies shall report to the Director, no later than 15 days before any such rule is proposed to take effect as an interim rule, that the rule should appropriately take effect as an interim rule while the rule is under reconsideration.
Exec. Order No. 12,291, 3 C.F.R. §§ 127, 131-32 (1982), reprinted in 5 U.S.C. § 601 (Supp. V 1981). E.O. 12,291 section 3(b) gives each agency the power to decide which of its rules are "major rules" pursuant to the definition in E.O. 12,291 section 1(b).*fn1 Initially EPA did not consider the amendments to be major rules, NRDC v. EPA, 683 F.2d at 756; however, on March 27, 1981, the Acting Administrator of EPA signed an order eliminating the March 30, 1981 effective date and instead indefinitely postponing the amendments. 46 Fed. Reg. 19,936 (1981). The Acting Administrator cited E.O. 12,291 as the sole reason for the indefinite postponement, indicating that EPA then considered the amendments to be major rules.
On June 24, 1981, NRDC filed a petition for review in the court of appeals pursuant to section 509(b)(1), 33 U.S.C. § 1369(b)(1) (1976). NRDC challenged EPA's indefinite postponement of the amendments without the notice and comment period required by the APA, 5 U.S.C. § 553 (1976).*fn2
On October 5, 1981, EPA decided to make the postponed amendments effective as of January 31, 1982. 46 Fed. Reg. 50,502 (1981). On October 13 EPA indicated that it would conduct a rulemaking proceeding on whether further to postpone the amendments beyond January 31. It gave notice and initiated a public comment period on the possibility of that postponement. 46 Fed. Reg. 50,503 (1981). EPA indicated that it had considered putting the amendments into effect immediately and then conducting the notice and comment period. It had rejected that course, however, to avoid the confusion that would result if EPA put the amendments into effect and then suspended them after notice and comment. 46 Fed. Reg. 50,502 (1981).
After EPA had reviewed the comments received, it published an order on February 1, 1982, which allowed a majority of the amendments to become effective as of January 31, 1982. 47 Fed. Reg. 4,518 (1982). It indicated, however, that four controversial amendments would be postponed until further notice pending continued analysis. 47 Fed. Reg. 4,518 (1982).
II. THIS COURT'S DECISION
In addressing NRDC's challenge to the March 27, 1981 decision to postpone the amendments, we first examined EPA's and intervenors' contentions that the case was moot because EPA had subsequently established an effective date for the amendments and had held a notice and comment period before considering any further postponement. We noted that the "case may well be moot as to all of the amendments except the four which were further postponed." NRDC v. EPA, 683 F.2d at 759 n.15. We concluded, however, that because we could order relief which would alter the status quo -- i.e., we could order reinstatement of all of the amendments as of March 30, 1981 -- the case was not moot. Id. at 759.*fn3
Turning to the merits we first addressed the contention raised by intervenors, but not by EPA, that the postponement was not a rulemaking subject to the APA's requirements. Id. at 761. Because the repeal of a rule clearly constitutes rulemaking under the APA, 5 U.S.C. § 551(5) (1976), we held that an indefinite postponement, operating effectively as a repeal, also constituted rulemaking.
We next considered and rejected an argument raised by intervenors, but not by EPA, that the agency had "good cause" under 5 U.S.C. § 553(b)(B) (1976) for its failure to comply with the rulemaking requirements of the APA. Id. at 765-67. Although EPA stated that its March 27, 1981 postponement was pursuant to E.O. 12,291, we concluded that EPA could have complied with both the APA and E.O. 12,291. Id. at 765. We saw no reason why EPA could not have held a notice and comment period before its initial postponement instead of waiting until October of 1981 to do so. Id. at 766.
Having held that EPA's action violated the APA, we next addressed the question of a remedy. EPA contended that no remedy was required because it had cured any procedural defect in its initial postponement by establishing an effective date and then holding a notice and comment period before any further postponement. Id. at 767. We rejected EPA's contentions. We held that EPA's later notice and comment procedures did not cure its failure to provide them before the amendments were ever postponed. Accordingly, we remanded the case to EPA with instructions to reinstate all the amendments effective March 30, 1981. Id. at 769.
III. THE EQUAL ACCESS TO JUSTICE ACT
NRDC now petitions the court for counsel fees and expenses incurred in the litigation pursuant to section 2412(d)(1)(A) of the Equal Access to Justice Act (the EAJA). Section 2412(d)(1)(A) of the EAJA provides for a mandatory award of counsel fees to a qualified*fn4 prevailing party*fn5 in certain civil actions brought by or against the United States, unless the "position of the United States was substantially justified." That section is a specific statutory exception to the American rule which provides that each litigating party must assume its own counsel fees, absent a common -law exception or a contrary legislative provision. H.R. Rep. No. 1418, 96th Cong., 2nd Sess. 8-9, reprinted in 1980 U.S. Code Cong. & Ad. News 4984, 4986-88 [hereinafter "House Report"].*fn6
Section 2412(d)(1)(A) reads as follows:
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) 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.
28 U.S.C. § 2412(d)(1)(A) (Supp. V 1981) (emphasis added). Tracking the language of the statute, EPA raises two arguments against an award of fees in this case. Relying on the language "except as otherwise specifically provided by statute," EPA argues that the EAJA is inapplicable here because the Clean Water Act contains its own fee-shifting provision which exclusively governs this action. In the alternative EPA argues that even if the EAJA applies, the court should not award fees because EPA's position was substantially justified.
A. The Applicability of the EAJA
EPA argues that the conditional language "except as otherwise specifically provided by statute" in section 2412(d)(1)(A) renders the Equal Access to Justice Act inapplicable to an action under the Clean Water Act. Section 505(d) of the Clean Water Act, 33 U.S.C. § 1365(d) (1976),*fn7 provides for an award of counsel fees for civil actions brought in district court pursuant to section 505(a), 33 U.S.C. § 1365(a) (1976).*fn8 The Clean Water Act, however, is silent with respect to counsel fees for the type of action involved here, a petition for review in the court of appeals pursuant to section 509(b)(1), 33 U.S.C. § 1369(b)(1) (1976).*fn9
Even in the face of such silence, EPA nonetheless asks us to hold that the Clean Water Act, not the Equal Access to Justice Act, governs the award of attorneys' fees in this case. EPA reads the legislative history of the Equal Access to Justice Act to preclude its application in any case brought pursuant to a statute which somewhere contains a counsel fee provision, even if that provision is inapplicable to the case at issue.*fn10 We reject that reading of the legislative history.
The legislative history of the EAJA makes it clear that Congress intended not to affect cases where fees already could be awarded, but instead to make fee awards possible in additional cases when section 2412(d)(1)(A)'s requirements are met. The House Report explains that
this section is not intended to replace or supersede any existing fee-shifting statutes such as the Freedom of Information Act, the Civil Rights Acts, and the Voting Rights Act in which Congress has indicated a specific intent to encourage vigorous enforcement, or to alter the standards or the case law governing those Acts. It is intended to apply only to cases (other than tort cases) where fee awards against the government are not already authorized.
House Report, supra, at 18 (emphasis added). See S. Rep. No. 253, 96th Cong., 1st Sess. 10 (1979) [hereinafter "Senate Report"]. We conclude that a section 509 petition under the Clean Water Act is just such a case where Congress has not already authorized a fee award.*fn11
Congress intended the EAJA to expand the potential for fee awards under certain circumstances, not to freeze the absence of counsel fee provisions in existing statutes.*fn12 In this case where there is no applicable fee-shifting provision in the Clean Water Act, acceptance of EPA's reading of the EAJA would create "a no-man's land contrary to clearly expressed Congressional purposes." Ocasio v. Schweiker, 540 F. Supp. 1320, 1323 (S.D.N.Y. 1982).*fn13
We hold therefore that section 2412(d)(1)(A) of the EAJA is applicable to a petition for counsel fees incurred in a review proceeding pursuant to section 509 of the Clean Water Act. We now turn to EPA's claim that its position was substantially justified.
B. Definition of the Act's Terms
The Equal Access to Justice Act, 28 U.S.C. § 2412(d), provides for an award of fees to the prevailing party, which NRDC unquestionably is, "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). No "special circumstances" are relied upon, and thus we must determine what Congress meant when it used the terms "position" and "substantially justified."
Because the Act has only been in effect since October 1, 1981 it has yet to receive much attention from appellate courts. Our decision in Goldhaber v. Foley, 698 F.2d 193 (3d Cir. 1983), does not reach the question presented in this case. Two courts of appeals seem to have adopted the dissent's position that "position of the United States" refers to the "position of the United States taken in litigation before the courts," rather than the "position taken by an agency of the United States which made it necessary for the party to file the action." Broad Avenue Laundry and Tailoring v. United States, 693 F.2d 1387 (Fed. Cir. 1982); Tyler Business Services, Inc. v. National Labor Relations Board, 695 F.2d 73 (4th Cir. 1982). See also S & H Riggers & Erectors, Inc. v. OSHRC, 672 F.2d 426, 431 (5th Cir. Unit B 1982) (examines litigation position). The interpretation adopted by the dissent and the Broad Avenue, Tyler and Riggers courts means that no matter how outrageously improper the agency action has been, and no matter how intransigently a wrong position has been maintained prior to the litigation, and no matter how often the same agency repeats the offending conduct, the statute has no application, so long as employees of the Justice Department act reasonably when they appear before the court. Such an interpretation ignores a defined term in the statute:
(C) "United States" includes any agency and any official of the United States acting in his or her official capacity.
28 U.S.C. § 2412(d)(2)(C). While the statute does not define "position," it does define "United States" disjunctively. Thus plainly, "position of the United States" means position taken by "any agency and any official of the United States acting in his or her official capacity." Only hostility to the underlying legislative purpose, we suggest, would permit a reading of the words "position of the United States" in isolation from the accompanying definition.
Among the trial courts, a significant number of well-reasoned opinions have held that the underlying conduct of the agency, not merely its trial conduct, must be considered. Moholland v. Schweiker, 546 F. Supp. 383, 386 (D.N.H. 1982); Nunes-Correia v. Haig, 543 F. Supp. 812, 816 (D.D.C. 1982); Wolverton v. Schweiker, 533 F. Supp. 420, 425 (D. Idaho 1982); Photo Data, Inc. v. Sawyer, 533 F. Supp. 348, 352 (D.D.C. 1982); Gava v. United States, No. 817-78, slip op. at 23 (Ct. Claims Tr. Div. July 20, 1982). But see, however, Lauritzen v. Secretary of the Navy, 546 F. Supp. 1221, 1226 n.6 (C.D.Cal. 1982); Operating Engineers Local Union No. 3 v. Bohn, 541 F. Supp. 486, 493-96 (D.Utah 1982); Berman v. Schweiker, 531 F. Supp. 1149, 1154 (N.D.Ill. 1982); Alspach v. District Director of Internal Revenue, 527 F. Supp. 225, 228 (D.Md. 1981) (focus on litigation position). The proper interpretation of the Act is a matter of first impression in this circuit, and we should interpret it consistently with its plain meaning and the intention of Congress. We hold that the word "position" refers to the agency action which made it necessary for the party to file suit.
The statute's legislative history establishes beyond question that Congress intended that the statute provide an incentive for suits to control agency actions, not merely to make Justice Department litigators behave. There are overwhelming references to that effect and none to the contrary. See generally 126 Cong. Rec. H 10213-10225 (daily ed. October 1, 1980); 125 Cong. Rec. S 10914-10924 (daily ed. January 31, 1979). In Senator DeConcini's Report on the Act for the Senate Judiciary Committee he observed:
The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made. In this regard, the strong deterrents to contesting Government action require that the burden of proof rest with the Government. This allocation of the burden in fact, reflects a general tendency to place the burden of proof on the party who has readier access to and knowledge of the facts in question. The committee believes that it is far easier for the Government, which has control of the evidence, to prove the reasonableness of its action than it is for a private party to marshal the facts to prove that the Government was unreasonable.
S. Rep. No. 253, 96th Cong. 1st Sess. 6 (1979) [hereinafter Senate Report]. The reference to the government having in its control evidence to prove the reasonableness of its action can have no other possible meaning than reasonableness of the agency action. That intention is evidenced further on the next page of the Senate Report:
Under existing fee-shifting statutes, the definition of prevailing party has been the subject of litigation. It is the committee's intention that the interpretation of the term in S. 265 be consistent with the law that has developed under existing statutes. Thus, the phrase "prevailing party" should not be limited to a victor only after entry of a final judgment following a full trial on the merits. A party may be deemed prevailing if he obtains a favorable settlement of his case, Foster v. Boorstin, 182 U.S. App. D.C. 342, 561 F.2d 340 (D.C. Cir. 1977); if the plaintiff has sought a voluntary dismissal of a groundless complaint, Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575 (9th Cir. 1941); or even if he does not ultimately prevail on all issues, Bradley v. School Board of the City of Richmond, 416 U.S. 696, 40 L. Ed. 2d 476, 94 S. Ct. 2006 (1974).
In cases that are litigated to conclusion, a party may be deemed "prevailing" for purposes of a fee award in a civil action prior to the losing party having exhausted its final appeal. A fee award may thus be appropriate where the party has prevailed on an interim order which was central to the case, Parker v. Matthews, 411 F. Supp. 1059, 1064 (D.D.C. 1976), or where an interlocutory appeal is "sufficiently significant and ...