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12/08/89 Raton Gas Transmission v. Federal Energy Regulatory


December 8, 1989





On Application for Taxation of Costs and Award of Attorneys' Fees.


Ruth Bader Ginsburg and Silberman, Circuit Judges, and Robinson, Senior Circuit Judge. Opinion for the Court filed by Circuit Judge Robinson. Dissenting Opinion filed by Circuit Judge Silberman.


Raton Gas Transmission Company applies for taxation of court costs *fn1 and allowance of attorneys' fees *fn2 following our resolution of its controversy with the Federal Energy Regulatory Commission over fees charged upon its Purchased Gas Adjustment filings. *fn3 The Commission contends that an assessment of court costs is precluded by statute. *fn4 It resists any recovery of attorneys' fees, not on grounds that Raton did not prevail in the underlying litigation, *fn5 but that the Commission's stance therein was adequately justified. *fn6

We share the Commission's conviction that taxation of court costs is statutorily barred. We conclude, however, that Raton prevailed sufficiently to qualify for recovery of attorneys' fees in some amount, and that the Commission was not substantially justified in advancing the defenses we found lacking. We accordingly award such fees as we deem appropriate. I.

We open our discussion with a summary of the salient events forerunning the present dispute. Raton objected to a fee charged uniformly by the Commission upon PGA filings by regulated utilities. *fn7 Raton had submitted with a six-page PGA filing a check for $2,300, a fee amount established by the Commission in its Order No. 361. *fn8 Shortly before Raton's submission, however, the Commission had raised the filing fee to $4,000. *fn9 Raton paid the $1,700 difference under protest and then sought relief therefrom. After exhausting its administrative remedies without achieving success, Raton petitioned for review by this court.

Originally, Raton asserted two grounds here. First, it contended that it should not have to pay any fee at all since its filing would merely enable it to lower the price of its gas, and would not result in any special benefit. Alternatively, Raton insisted that the fee was not commensurate with the cost to the Commission of processing Raton's six-page filing. *fn10 We rejected Raton's first argument, not only as an attack on Order No. 361 made long after expiration of the statutory 60-day period for judicial review, *fn11 but also because "the Commission's processing of Raton's filing conferred enough of a special benefit to support a fee requirement under the governing statute." *fn12

With respect to Raton's objection to the size of the fee, however, we disagreed with the Commission that Raton was tardy. We pointed out that Raton's petition for review did not "implicate Order No. 361 directly, but focuse[d] instead on the increase [which was] announced only a month prior to Raton's motion for [administrative] relief, *fn13 and which spawned a new generation of concerns. *fn14 With respect to these, we said, Raton's petition for review was timely, *fn15 and the Commission's explanation inadequate. *fn16 Reminding the Commission that filing fees must be both "cost-justified and fair," *fn17 we vacated its order and remanded the case to the Commission for reconsideration of its decision to charge Raton the full $4,000. *fn18 Following our remand, the Commission, "partially in response" to our decision, modified its regulation to reduce to $1,800 the fee for PGA filings by "nonmajor" natural gas companies such as Raton. *fn19 II

Raton's application has provoked a welter of arguments and counterarguments, and to some extent concessions by Raton. It is useful, if indeed not necessary, to catalog them before proceeding to further analysis.

In the beginning, Raton asserted that it was the prevailing party in this court, *fn20 and as such was entitled to court costs in the amount of $924 and attorneys' fees aggregating $17,200, *fn21 for a total of $18,124. *fn22 Citing the steady increase in the cost of living, *fn23 and declaring that "practice before the Federal Energy Regulatory Commission requires specialized legal experience," *fn24 Raton beseeched us to exercise our authority to relax the Equal Access to Justice Act's ceiling on attorneys' fee allowances, *fn25 and to award compensation at the rate of $100 per hour for the services of its counsel. *fn26

The Commission opposed Raton's application and moved to dismiss it on grounds that taxation of costs against the Commission is prohibited by the Natural Gas Act, *fn27 and that Raton could not recover attorneys' fees because the Commission's position in the main litigation was substantially justified. *fn28 Alternatively, the Commission maintained that if Raton were allowed attorneys' fees, the amount sought should be reduced because the attorney's hourly rate surpassed the normal statutory ceiling *fn29 and thus was unreasonable. *fn30 The Commission suggested, however, that even if Raton were entitled to more than the statutory maximum rate would confer, the adjustment should be limited to a cost-of-living increase producing an hourly rate of $95.83. *fn31

The Commission also argued that the "law clerk's" $40 hourly rate was too high. *fn32 Raton, said the Commission, had not shown that this rate was "within the range of prevailing market rates for law clerks of comparable experience" *fn33 nor had Raton provided information regarding the law clerk's salary. *fn34 In the Commission's view, the rate for the law clerk's work should not exceed the clerk's salary rate. *fn35 Finally, the Commission maintained that since Raton did not prevail on all of the issues raised in this court, time spent on those on which it was unsuccessful should be eliminated. *fn36

In a tendered reply, *fn37 Raton conceded that taxation of costs against the Commission is forbidden by the Natural Gas Act, *fn38 and withdrew its request therefor. *fn39 Raton also accepted the $95.83 proposed by the Commission as the ceiling on the attorney's hourly rate. *fn40 Raton insisted, however, that the associate's hourly rate was reasonable, and that the Commission's litigation position was not substantially justified. Raton noted that in 1982 the District Court approved an hourly rate of $35 for a summer associate, *fn41 and maintained that with "a significant escalation in the cost of legal services since 1982," a $5 increase to $40 would not only be reasonable but also "conservative." *fn42 Raton declared that "an allowance of $40.00 per hour for the time spent by the associate in writing the Petitioner's Initial Brief, reviewing Respondent's Brief, assisting in the preparation of the Reply Brief, and assisting preparation for oral argument is justified." *fn43

Raton amplified its claim that the Commission's defense in the principal case was not justified by characterizing "respondent's litigation position [as] part of a course of conduct deliberately engaged in to obstruct sustantive (sic) review of its fee structure." *fn44 Raton observed that as soon as Phillips Petroleum Co. v. FERC *fn45 was decided, the Commission nearly doubled the fee, and later increased it again. *fn46 Raton said that by "radically changing the magnitude of the impact of that rule, and then claiming that the changed impact cannot be challenged because the impacted party had lost its opportunity to challenge the rule," the Commission had engaged in "'vexatious and oppressive' action," *fn47 and thus went beyond the bounds of justification.

Raton countered the Commission's plea for disallowance of time spent on issues upon which Raton was not successful with the argument that they were distinctly secondary to the issues upon which it prevailed. *fn48 Raton suggested, however, that if a partial disallowance was in order, a 15 percent reduction would be appropriate. *fn49

From this discussion, the status and contours of the parties' dispute emerge more clearly. Raton has abandoned its quest for taxation of court costs *fn50 and lowered the amount requested as attorneys' fees. Raton now asks that it be allowed fees at the hourly rate of $95.83 for its attorney's services and $40 per hour for the associate--a total of $16,741. *fn51 Raton suggests that this figure be reduced by 15 percent for time expended on unsuccessful arguments, but that the award include an additional $958 for 10 hours consumed in preparation of its reply to the Commission's "unjustified" motion to dismiss. *fn52 In all, Raton seeks fees in the amount of $15,188. *fn53 III

The Equal Access to Justice Act authorizes an award of attorneys' fees to Raton if it was the "prevailing party" in the underlying litigation, unless the position asserted therein by the Commission "was substantially justified" or "special circumstances make an award unjust." *fn54 Our task is to determine whether these requirements are met.

The first need detain us only for a moment. The Supreme Court informs us that "'plaintiffs may be considered "prevailing parties" for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.'" *fn55 Indubitably, the issues on which Raton won in this court were crucial to its cause, and its twin victories secured ultimately the very benefit it had pursued--a drastic reduction of the PGA fee imposed upon Raton and other small pipelines. *fn56 Thus, the conclusion that Raton was a prevailing party is inescapable. *fn57 Indeed, the Commission does not say otherwise; rather, it insists that its position in the underlying case was sufficiently justified.

Substantial justification is a reasonableness standard recently defined by the Supreme Court as "justified in substance or in main", rather than "justified to a high degree." *fn58 The Court explained that the standard "is no different from the 'reasonable basis in law and fact' formulation" *fn59 Measured by these criteria, it cannot be said that the position of the Commission was substantially justified.

The Commission's litigation position *fn60 is laid bare by "the arguments [it] relied upon . . . in litigation." *fn61 The approach articulated by the Commission was that Raton's challenge was "foreclosed by [ Order No. 361 ], and [was] as well shattered by the Tenth Circuit's decision in Phillips Petroleum Co. " *fn62 The Commission elucidated:

Since the original rule plainly set forth the methodology for calculating the fee for filings, and also made clear that the fee was to be uniform for all entities, large and small, except in special circumstances covered by individual waivers, consideration of Raton's protest would necessarily involve a forbidden substantive review of Order No. 361. *fn63

At no time have these arguments been "justified [either] in substance or in main."

As we stated on our review of the Commission's refusal to alleviate the financial burden that fee-charging imposed upon Raton, the latter's alternative ground for relief was that the amount of the contested fee was disproportionate to the cost of processing PGA filings. *fn64 We pointed out that "this complaint, unlike the more general challenge to the Commission's power to impose any fee, does not implicate Order No. 361 directly, but focuses instead on the increase announced only a month prior to Raton's motion for relief." *fn65 The inevitability of that conclusion, we think, was well-nigh obvious. And, for reasons elaborated in our earlier opinion, *fn66 the Commission's arguments that Raton's motion nonetheless assailed the original rather than the newer agency action quite plainly lacked the potential for carrying the day.

In no other respect do those arguments serve the Commission's theory of substantial justification. While clearly the Commission is authorized to charge filing fees, just as clearly they must be "cost-justified and fair," *fn67 a point that Phillips Petroleum Co. *fn68 did not address. Furthermore, "approval of an old fee," the most that Phillips Petroleum Co. did, "does not automatically translate into validity of the new fee," *fn69 against which Raton leveled its attack. Phillips Petroleum Co. thus offered no assistance to the Commission, and its invocation of Order No. 361 was equally unfounded. The Commission did not rely on the methodology set forth in the original order when it increased its fees; it merely stated, without explanation, "that the fees had been recalculated by use of the Commission's new time distribution reporting system." *fn70 To boot, the Commission's failure to supply the recalculation in its fee-hiking order pushed further into the dark the matter of cost-justification and fairness of the increase, which nearly doubled the original fee. *fn71 These decisional techniques do not survive the test of reasonableness.

Lastly, we inquire as to whether there were any special circumstances that would make an award of attorneys' fees to Raton unjust. None has been voiced, nor do we perceive any. So, with all three preconditions to such an award satisfied by Raton, we proceed to a determination of what the amount thereof should be. IV

The parties agree that the hourly rate for the services of Raton's attorney should not exceed $95.83. *fn72 That figure, by Raton's reasoning, would translate to a fee of $10,541. *fn73 There remain, however, disputes relative to treatment of the time devoted to issues on which Raton was not successful, and to the hourly rate for the services of the law clerk. In addition, Raton seeks compensation for hours expended in responding to the Commission's "unjustified" motion to dismiss. *fn74

Raton's request for $40 per hour for the associate's work, we hold, is reasonable. *fn75 In both the Supreme Court and this circuit, comparable rates -- and recently much higher rates -- for legal assistants of similar caliber have been upheld. *fn76 We deny, however, Raton's bid for compensation for the 10 hours spent on its response to the Commission's motion to dismiss, and deduct the $958 claimed therefor from the amount of the fee. The Commission's motion was clearly justified; Raton virtually invited the motion by its meritless demand for court costs, and for an hourly rate for its attorney that exceeded the statutory ceiling as increased. Moreover, Raton's reply to the Commission's motion served to confirm on several points that the Commission was correct.

In determining whether and by how much the rest of Raton's claimed fee should be reduced, we note that "there is no precise rule or formula for making [such] determinations. The . . . court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for limited success. The court necessarily has discretion in making this equitable judgment." *fn77 To simplify matters, the applicant "should exercise 'billing judgment' with respect to hours worked, and should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims. *fn78

Since Raton did not prevail on all of its contentions, it is evident that some reduction in the amount sought is called for. *fn79 We encounter problems, however, when we endeavor to ascertain how much time was consumed by Raton's unsuccessful activities. Raton did not identify the hours it worked on particular claims; instead, it recorded hours according to specific tasks, such as preparing and filing its briefs, and preparing for oral argument. The difficulty is compounded by hours expended by both its attorney and the associate on the same tasks. *fn80

Raton raised two issues questioning the validity of the PGA filing fee. Raton first resisted the imposition of any fee whatsoever when a pipeline lowers its price; Raton's second challenge was to the cost-justification and fairness of charging a large fee uniformly without regard to the size of the pipeline or the complexity of its filing. In both instances, Raton was compelled to address the Commission's untimeliness objection. Raton pressed four major contentions and it succeeded on two--timeliness of its assault on the fee increase, and absence of a showing of cost-justification and fairness thereof.

We are unwilling simply to translate that outcome to a 50 per cent success ratio and correspondingly make a 50 percent reduction in attorneys' fees. That approach could rest logically only upon the highly unlikely premise that Raton devoted an equal amount of time to each of its four theses. Recalling that Raton was willing to pay the original $2,300 filing fee, Raton's argument that no filing fee at all could be assessed clearly was not its strongest or primary point. Rather, it may plausibly be assumed that Raton devoted most of its effort to the claims on which it prevailed, and accordingly that a reduction of less than 50 percent is in order. The 15 percent reduction proposed by Raton, however, does not seem reasonable in view of Raton's limited success. Since Raton has not provided us with an adequate description of how much time was spent on each issue, we cannot "'determine with a high degree of certainty' that the hours billed were reasonable;" *fn81 and where the "documentation of hours is inadequate, the . . . court may reduce the award accordingly." *fn82 In the exercise of that discretion, we trim by 25 percent the amount of the fees requested for services rendered in the underlying litigation.

For similar reasons, we are constrained to exclude from the computation of Raton's award a portion of the 12 hours consumed in preparation of its application for fees. *fn83 We credit the application for the informational assistance it provided in connection with the claims for compensation, but its presentation in regard to court costs was a misadventure. Resorting again to our discretion, we subtract 6 hours of the 12 hours expended.

A judgment awarding Raton attorneys' fees in the amount of $12,268 will be entered. *fn84

So ordered.



Amounts Requested:

Attorney (110 hours x $95.83

per hour) $10,541

Associate (155 hours x $40 per

hour) 6,200

Preparation for Reply (10

hours X $95.83) 958

Subtotal $17,699


On fee application (6 hours) $ - 575

On Reply (10 hours) - 958

25% overall reduction of time

spent in underlying litigation:

25% X ($16,741 - $1,150 =

$15,591) -3,898

Fee Award $12,268


SILBERMAN, Circuit Judge, dissenting:

I dissent for reasons similar to those I stated in Jones v. Lujan, 281 U.S. App. D.C. 105, 887 F.2d 1096 (D.C.Cir. 1989) (Silberman, J., dissenting). Unlike the majority, I believe that the Federal Energy Regulatory Commission's litigation position in the underlying case, see Raton Gas Transmission Co. v. FERC, 271 U.S. App. D.C. 314, 852 F.2d 612 (1988), was "substantially justified."

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