Payment of Attorney's Fees in Litigation Involving Successful Challenges to Federal Agency Action Arising Under the Administrative Procedure Act and the Citizen-Suit Provisions of the Endangered Species Act

Payment of Attorney’s Fees in Litigation Involving Successful

Challenges to Federal Agency Action Arising Under the

Administrative Procedure Act and the Citizen-Suit Provisions

of the Endangered Species Act

For purposes o f settling attorney’s fees claim s in a case arising under both section 10 o f the A dm inis­

trative Procedure A ct and the citizen-suit provisions o f the E ndangered Species A ct, federal litiga­

tors, in allocating hours and costs betw een the A PA -Equal Access to Justice A ct and ESA claim s,

should subordinate EAJA section 2412(d) to ESA section 11(g)(4). Under this approach, hours

and costs necessary to both counts should be assigned to the ESA claim for attorney’s fees pur­

poses, leaving o nly the hours and costs necessary only to the APA claim to be paid under EA JA

November 27, 2000

M e m o r a n d u m O p in io n f o r t h e A s s is t a n t A t t o r n e y G e n e r a l

E n v ir o n m e n t a n d N a t u r a l R e s o u r c e s D iv is io n

You have asked us to determine how federal litigators, in settling attorney’s

fees claims in litigation arising under both section 10 of the Administrative Proce­

dure Act (“ APA” ), 5 U.S.C. §704 (1994), and the citizen-suit provision of the

Endangered Species Act (“ ESA” ), ESA § 11(g), 16 U.S.C. § 1540(g) (1994),

should allocate opposing parties’ hours and costs between the APA and ESA

claims. Fees attributable to APA claims are paid out of agency funds, while fees

attributable to ESA section 11(g) claims are paid out of the permanent indefinite

appropriation for the payment of judgments against the United States, commonly

known as the judgment fund. See 31 U.S.C. § 1304 (1994 & Supp. IV 1998).

Accordingly, to settle attorney’s fees claims in suits presenting both classes of

claims, federal litigators must allocate opposing parties’ compensable hours and

costs between these two classes in order to determine the amounts of funding

to be drawn from agency funds and the judgment fund.

Attorneys in the Wildlife and Marine Resources Section ( “ Wildlife Section” )

of the Environment and Natural Resources Division (“ ENRD” ) contacted us in

May 1999 concerning the allocation issue posed by their efforts to settle an oppo­

nent’s fees claim in Pacific Coast Federation o f Fishermen’s Assoc, v. National

Marine Fisheries Service, Civ. No. 97-775 (W.D. Wash.) (“ the Umpqua River

litigation” ), a multi-claim suit involving APA and ESA challenges to federal land

management decisions affecting the Umpqua River cutthroat trout. In June and

July 1999, we provided oral advice concerning the proposed Umpqua River settle­

ment. In December 1999, we provided a brief written summary of our views,

which the Wildlife Section had requested as a source of guidance for attorneys

in other pending APA-ESA cases. This memorandum responds to your subsequent

request for a fuller, more formal statement of our views.

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I. The Payment of Opponents’ Attorney’s Fees in Multi-claim Litigation

Arising under the APA and the ESA

In Bennett v. Spear, 520 U.S. 154 (1997), the Supreme Court found that certain

claims challenging agency action designating critical habitat for endangered spe­

cies were reviewable under the E S A ’s citizen-suit provision, while related claims

concerning agency compliance with ESA data collection requirements were

reviewable only under the APA. See 520 U.S. at 170-78. Under Bennett, suits

against federal agencies involved in the administration of the ESA can present

related claims arising under the APA and the ESA’s citizen-suit provision. The

Umpqua River litigation is one such suit. There, federal litigators determined that

it would be in the government’s interest to settle a multi-claim suit on terms that

would afford the plaintiffs substantial relief under one of their five APA claims

(count V of the Third Amended Complaint) and under their only ESA citizen-

suit claim (count VI). Plaintiffs’ claims for attorney’s fees and costs were also

included in the settlement discussions.

Fee awards for the successful prosecution o f APA claims are governed by sec­

tion 2412(d) of the Equal Access to Justice Act (“ EAJA” ), 28 U.S.C. § 2412(d)

(1994 & Supp. IV 1998). Agencies must pay section 2412(d) judgments out of

their own funds. Id. § 2412(d)(4). However, agencies may interpose several

defenses to section 2412(d) fees claims that are not generally available in other

contexts. In particular, an agency can avoid paying EAJA fees, even to a pre­

vailing party, if it can show (1) that the claimant failed to satisfy the EAJA-

specific means test for recovery o f fees and costs, see 28 U.S.C. § 2412(d)(2)(B)

(barring recovery by individuals with more than $2 million in net assets and by

profit-making enterprises with more than $7 million in net assets or more than

500 employees); (2) that the government’s position was substantially justified, id.

§ 2412(d)(1)(A); (3) that special circumstances make an award of attorney’s fees

unjust, id:, or (4) that the claimant failed to file a section 2412(d) petition within

30 days of final judgment, id. § 2412(d)(1)(B). See generally Commissioner v.

Jean, 496 U.S. 154, 158 (1990) (summarizing preconditions to fee-award eligi­

bility under EAJA section 2412(d)). In addition, attorney’s fees under EAJA are

subject to an hourly cap, currently set at $125 per hour, which can only be

exceeded if a court determines “ that an increase in the cost of living [since 1996,

when the current hourly cap was set] or a special factor, such as the limited avail­

ability of qualified attorneys for the proceedings involved, justifies a higher fee.”

See 28 U.S.C. § 2412(d)(2)(A)(ii).

Fee awards for the successful prosecution of ESA citizen-suit claims are gov­

erned by section 11(g)(4) of the Act, 16 U.S.C. § 1540(g)(4). Section 11(g)(4)

authorizes the award o f attorney’s fees “ whenever the court determines such

award is appropriate.” The Supreme Court has construed this language to require

that at least “ some success on the merits be obtained before a party becomes

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eligible for a fee award.” See Ruckelshaus v. Sierra Club, 463 U.S. 680, 682

& n.l (1983). The United States pays section 11(g) attorney’s fees out of the

judgment fund. See 31 U.S.C. § 1304; see also 28 U.S.C. §§2414, 2517 (1994)

(procedures for the payment of judgments). In opposing section 11(g) fees claims,

the United States cannot invoke any of the special defenses to liability that exist

under EAJA, although special jurisdictional defenses to ESA citizen-suits may

be available to defeat fees claims in some cases. See ESA § 11(g)(2), 16 U.S.C.

§ 1540(g)(2). Hourly rates used to determine section 11(g)(4) fees awards are not

subject to a statutory cap; they are generally paid at rates that courts determine

to be “ reasonable” under the circumstances. Accordingly, hours allocated to ESA

claims may be compensated at a higher rate than hours allocated to related EAJA

claims. Compare, e.g., Jones v. Espy, 10 F.3d 690 (9th Cir. 1993) (due to EAJA

cap on hourly rates, prevailing plaintiff in litigation against federal and state

defendants recovers at a lower rate for hours allocated to the federal claims than

for hours allocated to the state claims).

II. The Allocation of Opposing Attorneys’ Hours and Costs Between Their

Successful APA and ESA Claims in the Umpqua River Litigation

The Wildlife Section, after deciding to pursue a comprehensive settlement of

the Umpqua River litigation, encompassing attorney’s fees as well as merits issues,

sought our assistance in determining the proper allocation of hours and costs

between the APA-EAJA claim set forth in count V of the third amended complaint

and the ESA citizen-suit claim set forth in count VI. Additionally, the Wildlife

Section pointed out that the Umpqua River plaintiffs had amended their complaint

to add count VI after summary judgment motions on the first four APA counts

had been fully briefed, and asked whether this relatively late presentation of the

ESA citizen-suit claim should affect the allocation of hours and costs in the

Umpqua River case.

For the reasons described below, we conclude that the ESA fees provision

should take precedence over EAJA section 2412(d) — i.e., that hours and costs

necessary to both successful counts should be allocated to the ESA claim for attor­

ney’s fees purposes. We also believe that the timing of the ESA count does not

necessarily preclude allocation of hours and costs — even hours spent and costs

incurred prior to the amendment of the complaint — to the ESA claim.

A. The Allocation of Hours and Costs Between Successful

Claims that Implicate Different Fee-Shifting Provisions

A proper allocation of hours and costs between APA-EAJA and ESA claims

for settlement purposes should follow the same analysis that the Department would

urge a court to follow in adjudicating the same allocation question. In our view,

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a court would properly resolve the fees phase of the Umpqua River litigation

(following a judgm ent for the plaintiffs on counts V and VI) by undertaking a

two-stage allocation of hours and costs among the claims that the plaintiffs pre­

sented. The court would, first, allocate total hours and costs between successful

claims (counts V and VI) and unsuccessful claims (counts I through IV) and,

second, allocate hours and costs attributed to the successful claims between count

V, which implicates the fee-shifting requirements of EAJA section 2412(d), and

count VI, which implicates the requirements of ESA section 11(g)(4). We believe

that the proper framework for both stages of this analysis may be found in Hensley

v. Eckerhart, 461 U.S. 424 (1983).

The allocation of hours and costs between successful and unsuccessful claims

calls for a relatively straightforward application of Hensley v. Eckerhart. Although

H ensley was specifically concerned with the allocation of costs and hours between

successful and unsuccessful claims in civil rights litigation governed by the fee-

shifting provisions of 42 U.S.C. § 1988 (1994 & Supp. IV 1998), the Court

indicated that its approach there was “ generally applicable in all cases in which

Congress has authorized an award of fees to a ‘prevailing party,’” 461 U.S. at

433 n.7, and lower courts have relied upon Hensley in allocating costs and hours

between successful and unsuccessful claims in fees litigation arising under a

variety of other fee-shifting statutes.1 Under Hensley, courts determine how much

of a fees claimant’s work was reasonably necessary to the litigation of the success­

ful claims (that is, how much “ involve[d] a common core of facts or [was] based

on related legal theories” ) and whether the degree of success was commensurate

with the effort expended. Id. at 434-36. If successful and unsuccessful claims

were closely related, so that all of the hours and costs at issue contributed to

the prosecution of the successful claims, and the claimant’s victory on those claims

produced significant results, a claimant’s costs and hours may be fully com­

pensated. On the other hand, if successful and unsuccessful claims implicated dif­

ferent facts and legal theories, so that identifiable categories of work did not con­

tribute to the prosecution of the successful claims, or if the successful claims

achieved only partial or limited relief, appropriate reductions must be made.

Because the proposed Umpqua River settlement would give plaintiffs at least

some of the relief sought under two distinct claims that implicate two distinct

fee-shifting mechanisms, this case requires a second allocation of costs and hours

1See, e.g., George H yman Constr Co v. Brooks, 963 F.2d 1532, 1536 (D.C Cir. 1992) (finding that Hensley

requires allocation between successful and unsuccessful claims in case arising under the Longshore and Harbor

W orkers’ Compensation Act; noting that “ low er courts have adopted [Hensley's] instructions in a wide array of

statutory settings” ), Conservation Law Found, o f New England, Inc. v Secretary o f the Intenor, 790 F 2 d 965,

96 9 -7 0 (1st Cir. 1986) (work on unsuccessful claims arising under the Outer Continental Shelf Lands Act was

sufficiently related to work on successful claim s airing under the National Environmental Policy Act ( “ NEPA” )

to justify compensation, although work on unsuccessful ESA claims was insufficiently related to the NEPA claims

and should have been excluded from the fees award); Citizens Council o f Delaware County v Brinegar, 741 F.2d

584, 596 (3d Cir. 1984) ( “ sufficient interrelationship” existed among successful and unsuccessful NEPA claims

for the distnct court to avoid apportioning hours and costs among claims “ based on the success or failure of any

particular legal argum ent advanced by the plaintiffs” ).

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between those two claims — the count V APA claim, fees for which are governed

by EAJA section 2412(d), and the count VI citizen-suit claim, fees for which

are governed by ESA section 11(g)(4). We believe that a court, in addressing

this aspect of the problem, would apply EAJA section 2412(d) only as a fall­

back to other fee shifting provisions, such as ESA section 11(g)(4). A court fol­

lowing this approach would, in essence, apply the Hensley framework a second

time to determine which of the hours and costs attributable to the successful claims

were reasonably necessary to the litigation of the non-EAJA claim and allocate

only the residual hours and costs to the section 2412(d) fees claim.

Two provisions of EAJA indicate that section 2412(d) should be assigned this

secondary role. Section 2412(d)(1)(A) states that the United States may be ordered

to pay fees and expenses under section 2412(d), “ [e]xcept as otherwise specifi­

cally provided by statute.” A separate, uncodified provision establishes even more

clearly section 2412(d)’s subordinate status, stating that nothing in section 2412(d)

“ alters, modifies, repeals, invalidates, or supersedes any other provision of Federal

law which authorizes an award of such fees and other expenses to any party other

than the United States that prevails in any civil action brought by or against the

United States.” See Pub. L. No. 96-481, §206, 94 Stat. 2321, 2330 (1980), as

amended by Pub. L. No. 99-80, §3, 99 Stat. 183, 186 (1985), reprinted in 28

U.S.C. §2412 note (1994). The legislative history of EAJA further supports this

reading. In reporting out the bill that became EAJA, the House Judiciary Com­

mittee stated that

[Sjection [2412(d)] is not intended to replace or supercede any

existing fee-shifting statutes . . . 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.

H.R. Rep. No. 96-1418, at 18 (1980). In addition, the Committee observed that

section 206 (section 6 of the bill before the Committee) “ reinforcefd] the statutory

language and emphasize[d] the Congressional intent that the provisions of section

2412(d) . . . shall not supercede or alter existing statutory authority for fee awards

against the government.” Id. at 19; cf. United States v. 329.73 Acres o f Land,

Situated in Grenada and Yalobusha Counties, M ississippi, 704 F.2d 800, 807 (5th

Cir. 1983) (en banc) (EAJA section 206 “ operates to leave intact the more expan­

sive pre-Act fee-shifting statutes that permit award of attorneys’ fees against the

government” ).

Application of the Hensley methodology to the second-stage allocation issue

presented here is consistent with the courts’ extension of Hensley to cases

involving fee-eligible and fee-ineligible claims. Although Hensley involved the

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allocation of hours and costs between successful and unsuccessful claims, a

number of courts have applied its methodology to allocations between successful

fee-eligible and fee-ineligible claims.2 Following the framework set forth in

Hensley, these courts have examined whether work on the fee-ineligible claims

was reasonably necessary to the prosecution o f the fee-eligible claims and whether

the results obtained on the fee-eligible claims were commensurate with the

expenditures incurred. So too here, we believe that a court would first attribute

to the ESA claim all work reasonably related to the prosecution of that claim.

Those hours and costs would be evaluated for compensation under the ESA, with

payments adjusted in the event that the degree of success was not commensurate

with expenditures. Remaining fees and costs would be evaluated for compensation

under the more restrictive standards of section 2412(d) of EAJA, subject to the

same possibility of reduction for partial or limited success.

In reaching this view of the proper allocation of hours and costs between APA-

EAJA and ESA claims, we have considered arguments that sovereign immunity

principles require allocation of a greater proportion of a prevailing party’s litiga­

tion efforts to EAJA-eligible claims. Waivers of sovereign immunity, including

waivers of federal immunity to fees awards, are strictly construed in favor of

the sovereign. See Ardestani v. INS, 502 U.S. 129, 137 (1991) (“ The EAJA ren­

ders the United States liable for attorney’s fees for which it would not otherwise

be liable, and thus amounts to a partial waiver of sovereign immunity. Any such

waiver must be strictly construed in favor of the United States.” ); Ruckleshaus

v. Sierra Club, 463 U.S. at 685—86 (sovereign immunity principles require a nar­

row construction of the appropriateness standard for fees awards set forth in sec­

tion 307(f) of the Clean Air Act, which governs fees awards in citizen suits against

the United States, as well as against private parties); In re North, 94 F.3d 685,

689 (D.C. Cir. 1996) (per curiam) (“ Sovereign immunity prevents the award of

costs or fees against the United States absent specific statutory authorization.” ).

Because the United States, in defending fees claims under EAJA section 2412(d),

can invoke special defenses to liability (including the substantial justification

defense and financial eligibility tests for recovery), and a fees cap that are unavail­

able to it in fees litigation governed by ESA section 11(g), sovereign immunity

principles arguably require allocation of the greatest possible proportion of a pre­

2See, e .g , Entertainment Research Group, Inc v. Genesis Creative Group, In c , 122 F 3 d 1211, 1230-31 (9th

Cir. 1997) (upholding, under the test of relatedness established in Hensley, distnct court decision that prevailing

defendants were entitled to fees for successful defense against copynght claims but not for successful defenses of

unrelated claims to which no fee-shifung statute applied), cert, denied, 523 U S 1021 (1998), Bridges v Eastman

Kodak, Co., 102 F.3d 56, 59 (2d Cir. 1996) (affirming, under Hensley, distnct court’s determination that plaintiffs

success justified a full award o f fees where plaintiff prevailed on fee-eligible and fee-ineligible claims), cert denied,

520 U.S. 1274 (1997), see also, e.g., Andrews v United States, 122 F 3d 1367, 1376 (11th C ir 1997) (dictum)

(efforts devoted to fee-ineligible tort claim cannot be attributed fee-ebgible CERCLA claim); Mansker v TMG Life

Ins. Co., 54 F.3d 1322, 1329 (8th Cir. 1995) (plainuff in ERISA action prosecuting both personal claims, for which

fees were not available, and representative claims, for which fees were available, entitled to full recovery because

all tim e was necessary to the fee-eligible claims; analysis conforms to but does not cite Hensley)

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vailing party’s hours and costs to the EAJA-eligible claim rather than the ESA-

eligible claim.

This analysis is flawed in two respects. First, allocating litigation effort to non-

EAJA claims would not lead to uniformly lower fees awards. In some multi-claim

lawsuits, the United States may have jurisdictional defenses to the non-EAJA

claims that do not apply to the EAJA claims.3 Similarly, in some multi-claim

lawsuits, liability for fees and costs allocated to non-EAJA claims may be divided

among the United States and other, non-federal defendants while liability for fees

and costs allocated to the EAJA claims falls solely on the United States. And

in some cases fees awarded under the non-EAJA fee-shifting authority may be

lower than fees awarded for the same efforts under EAJA because of fee ceilings

and other statute-specific restrictions.4 It would seem a novel application of sov­

ereign immunity doctrine for a court to base the relationship between EAJA and

other fee-shifting statutes on a broad and uncertain generalization that the alloca­

tion of litigation effort to EAJA claims leads to smaller fee awards. Second, and

more fundamentally, even if it were certain that aggregate federal liability for

fees would be reduced by an approach that increased the proportion of total hours

and costs allocated to EAJA claims, the language of EAJA section 2412(d) would

preclude such an approach. EAJA was clearly written to function as a fallback

waiver of sovereign immunity. Congress explicitly instructed that section 2412(d)

should not be construed to alter or modify other fee-shifting provisions. Allocating

effort between non-EAJA and EAJA claims under the Hensley rule for successful

and unsuccessful claims conforms to this instruction; adjusting this allocation to

bring a greater proportion of total effort within the coverage of section 2412(d)

would disregard it.

One judicial decision might appear to rely upon sovereign immunity principles

to allocate a higher proportion of hours and costs to EAJA than would be proper

under the Hensley framework. In Slugocki v. United States, 816 F.2d 1572, cert,

denied, 484 U.S. 976 (1987), the Federal Circuit rejected a district court’s applica­

tion of Hensley's relatedness test in a case involving successful EAJA and non-

EAJA claims. There, the court of appeals reversed the district court’s award of

fees in a multi-claim overtime pay suit under fee-shifting provisions of the Fair

Labor Standards Act (“ FLSA” ). Prevailing plaintiffs in the case, a class of

Deputy U.S. Marshals, alleged that certain overtime practices of the Marshals

Service violated 5 U.S.C. §5542 prior to 1975 and the FLSA from 1975 onward

(following the amendment of the FLSA to bring the Deputy Marshals within its

coverage). Although the plaintiffs cited EAJA as well as the FLSA fees provision

in their fees application, the trial court awarded fees under the FLSA for the entire

suit, concluding that the “ FLSA and Title 5 claims were too interrelated to be

3See, e g , ESA § 1 l(g)(2)(A)(i), 16 U.S.C § 1540(g)(2)(A)(i) (jurisdictional requirement that citizen plaintiffs

provide written notice o f their intent to sue at least sixty days before filing complaint)

4 See, e.g.t 42 U S.C § 300aa-I5(b) (1994) (fees awards under the Vaccine Act capped at $30,000)

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segregated” under the Hensley standard. 816 F.2d at 1579 (summarizing district

court ruling). The court of appeals reversed, stating that “ allowance of attorneys’

fees for appellees’ Title 5 claims as a part of the FLSA award does not represent

strict observance of limitations on the Government’s waiver of sovereign immu­

nity.” Id. The court of appeals implicitly rejected the district court’s finding of

relatedness and remanded with instructions to “ segregate” work performed on

the Title 5 and FLSA claims and evaluate the Title 5 work under EAJA.5

We interpret the court of appeals’ decision in Slugocki as merely overturning

a trial court’s misapplication o f Hensley's relatedness standard in the cir­

cumstances of a particular lawsuit. Although the decision might also be read to

require a different approach to the allocation of hours and costs in litigation

involving successful EAJA and non-EAJA claims, we think that this interpretation

would be inconsistent with the EAJA’s specific instructions concerning the rela­

tionship between section 2412(d) and alternative fee-shifting provisions. These

provisions, in our view, fully support application of the Hensley framework to

multi-claim cases involving successful EAJA and non-EAJA claims.

Finally, in arriving at our view of the proper method for allocating hours and

expenses between APA-EAJA and ESA citizen-suit fees claims, we have also

considered how the allocation method that we have described might affect the

financial incentive that section 2412(d) establishes for agencies to ensure that their

legal positions are substantially justified. Under most fee-shifting statutes,

including ESA section 11(g)(4), awards of fees and expenses against the govern­

ment are paid from the judgment fund. Awards under EAJA section 2412(d), in

contrast, are “ paid by any agency over which the party prevails from any funds

made available to the agency by appropriation or otherwise.” 28 U.S.C.

§ 2412(d)(4). The legislative history of section 2412(d)(4) indicates that Congress

intended for the payment of fee awards from agency funds to operate as a financial

incentive for agencies to avoid legal positions that courts could find to lack

substantial justification.6 Thus, our conclusion that hours and costs should be alio-

5 The court recited a passage from Hensley th a t characterized “ ‘evaluation of the interrelatedness of several claims

within a single law suit’ ” as “ ‘a task for the distnct court that had and decided the case, subject to appellate

review for abuse o f discretion,’ ” but distinguished Hensley on grounds that “ all of the claims in Hensley fell within

an express w aiver o f sovereign immunity contained in section 42 U.S C § 1988 ” Id. (quoting H ensley, 461 U.S.

at 45 3 -5 4 (Brennan, J., concurring in part and dissenting in part)). The court o f appeals appears to have been unaware

that the passage it quoted, which it ascribed to the Supreme Court, was actually part o f Justice Brennan’s opinion

explaining his reasons for concurring in part and dissenting in part

6 The current language of section 2412(d)(4) originated with the 1985 legislation lhat revised and reenacted EAJA,

which had lapsed in accordance with sunset provisions contained in the original Act. See Pub L No 99-80, § 2(d),

99 Stat. 183, 185 (codified at 28 U S C §2412(d)(4) (1994)). The Senate Judiciary Committee explained that the

revised language, which clarified that section 2412(d) awards must be paid from agency funds, was intended to

“ retu m [] the law to the Senate’s intent when the bill was originally passed ” S Rep. No. 98-586, at 19-20 The

C om m ittee’s original intentions concerning the funding o f section 2412(d) awards were set forth in a 1979 report,

which explained that the contemporaneous Senate bill included an agency funding requirement in order to “ make

the individual agencies and departments accountable for [their] actions.” S Rep No. 96-253, at 21 A 1980 House-

Senate conference eliminated the original Senate bill’s agency funding language, substituting language that made

it difficult to determ ine how Congress intended to fund section 2412(d) awards See generally Funding o f Attorney

Fee Awards Under the Equal Access to Justice A ct, 6 Op O .L C 204, 212 (1982) (original Act’s funding provisions,

although ambiguous, were best understood to require that at least some section 2412(d) awards be paid “ from general

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Attorney’s Fees in Litigation Under Administrative Procedure Act and Endangered Species A ct

cated to APA-EAJA claims only if they were not reasonably necessary to the

claimant’s prosecution of ESA citizen-suit claims might be questioned on grounds

that other approaches to the allocation of hours and costs among claims would

strengthen financial incentives for agencies to avoid unjustified positions.

We recognize that other conceivable approaches to the allocation of hours and

expenses between EAJA and non-EAJA claims, such as allocation based on rough

comparisons of the relative importance of the various claims, might give agencies

stronger financial incentives to ensure that their legal positions are substantially

justified. It is clear, however, that EAJA did not make the establishment of such

incentives the overriding objective o f federal law governing fees awards against

the United States. Congress, as we have seen, expressly relegated section 2412(d)

to a secondary role. Section 2412(d) has no application if Congress has “ specifi­

cally provided by statute” an alternative fee-shifting scheme for the claim at issue,

28 U.S.C. § 2412(d)(1)(A), and does not operate to “ alter[], modif[y] repealf],

invalidate[ ], or supersede[]” any other fee-shifting statute, Pub. L. No. 96—481,

§206, 94 Stat. at 2330 (as amended). In fact, EAJA itself subjected the United

States to a wide range of new fees claims that are decided without regard to

whether the United States was substantially justified and paid out of the judgment

fund when claimants prevail. See 28 U.S.C. § 2412(b) (1994) (United States liable

for fees and expenses under existing fee-shifting statutes and common-law doc­

trines “ to the same extent that any other party would be liable” ). In short, the

tendency for the allocation method that we have described to limit the effective­

ness of section 2412(d)’s financial incentives on agencies in the context of multi­

claim litigation is simply one manifestation of the limited scope that Congress

has provided for the operation of section 2412(d).

B. The Timing of the ESA Claim

The Umpqua River litigation, in addition to requiring elaboration of a general

framework for the allocation of hours and costs between APA-EAJA and ESA

citizen-suit claims, also posed the question of whether the allocation in this par­

ticular case should be affected by the claimant’s relatively late presentation of

the ESA citizen-suit claim. We were informed that the Third Amended Complaint

in the Umpqua River case, which added count VI, was filed after the parties had

filed summary judgment briefs on counts I through IV, though before the parties

had filed briefs on count V and the district court had ruled on the first five counts.

We were asked whether this circumstance should affect the allocation of hours

and costs between counts V and VI.

funds appropriated to the agencies against whom awards were entered” ) The amendment of section 2412(d)(4)

in 1985, as explained by the Senate Judiciary Committee’s report, was meant to establish the clear emphasis on

financial accountability that the Senate had advocated in 1979

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There is little discussion of this type of timing issue in reported fee-shifting

cases. Our analysis is based primarily on the Supreme Court’s consideration of

a related question in Smith v. Robinson, 468 U.S. 992 (1984). Prevailing plaintiffs

in that case initially challenged state officials’ refusal to provide certain edu­

cational services to a handicapped child under federal and state statutes that did

not authorize fee-shifting under the circumstances presented there. Toward the

conclusion of trial court proceedings in the case, however, plaintiffs added an

equal protection claim and then relied on this claim as the basis for a fee request

under 42 U.S.C. § 1988. Plaintiffs did not add the equal protection claim until

after they had obtained a Rhode Island Supreme Court ruling establishing their

statutory right to the relief they sought. The Court stated that the late-filed equal

protection claim had “ added nothing to petitioners’ [statutory] claims” and should

therefore be regarded as having had “ nothing to do with plaintiffs’ success” on

the merits. 468 U.S. at 1009 n.12. Under these circumstances, the Court found,

the equal protection claim could not provide the basis for a fees award. Id. The

Court remarked, however, that claims added before success has been assured on

other grounds can serve as the basis for a fee award, stating that “ [t]here is,

of course, nothing wrong with seeking relief on the basis of certain statutes

because those statutes provide for attorney’s fees, or with amending a complaint

to include claims that provide for attorney’s fees.” Id.', see also Seybold v. Francis

P. Dean, Inc., 628 F. Supp. 912, 914 (W.D. Pa. 1986) (holding that a fee-eligible

federal claim, though never stated in a complaint, was properly before the court

through constructive amendment). We are insufficiently familiar with the facts

of the Umpqua River litigation to have a view on the role of count VI in the

case. The preceding passage from Smith, however, makes clear that hours and

costs may be allocated to a claim that is added after litigation is well underway —

even if that claim is added for the purpose o f establishing a right to fees — pro­

vided that the later-filed claim contributes to the plaintiffs’ success on the merits,

and hours and costs are properly attributable to that claim in accordance with

the principles discussed above.

Although Smith indicates that hours and costs can be allocated to a fee-eligible

claim that is added by amendment, it does not address whether such allocations

should include hours and costs expended before the filing of the relevant amended

complaint. We recognize that some work performed prior to the introduction of

a later-filed fee-eligible claim, at least in some situations, could not reasonably

be deemed to “ relate” to that claim under the Hensley allocation methodology.

For example, we do not believe that work performed on a fee-ineligible claim

before the claimant could reasonably have anticipated the eventual filing of the

later fee-eligible claim can be said to relate to the claim under Hensley.1 Accord­

7 Restrictions on the allocation o f pre-filing hours and costs to late-filed fee-eligible claims presumably will not

apply to essential pre-filing efforts, such as the factual investigations, research, and drafting that normally precede

the filing o f a complaint or amended complaint

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Attorney's Fees in Litigation Under Administrative Procedure Act and Endangered Species Act

ingly, we believe that Hensley itself places limits on the allocation of early litiga­

tion efforts to later-filed fee-eligible claims.

In the present case, however, we are aware of no circumstance that would pre­

clude an allocation of early litigation efforts to count VI of the Umpqua River

litigation. Count VI was filed approximately five months after the plaintiffs com ­

menced this action by filing a four-count APA action and a request for emergency

injunctive relief. Plaintiffs, however, must have formed plans to file their citizen-

suit claim at least two months before the filing date, since ESA section 11(g)

requires plaintiffs to provide at least sixty days’ notice before filing a citizen-

suit. Moreover, we are advised that, in the view of trial counsel for the govern­

ment, the eventual addition of a citizen-suit claim — following the requisite notice

and delay — appears to have been a part of plaintiffs’ litigation strategy from the

outset. In view of these circumstances, we can find no per se bar to the allocation

of previously incurred hours and costs to the later-filed citizen-suit claim in the

Umpqua River litigation.

in. CONCLUSION

Based on the foregoing analysis, we conclude that, in allocating hours and costs

between the APA-EAJA and ESA claims in the Umpqua River litigation, federal

litigators should subordinate EAJA section 2412(d) to ESA section 11(g)(4).

Under this approach, hours and costs necessary to both counts should be assigned

to the ESA claim for attorney’s fees purposes, leaving only the hours and costs

necessary only to the APA claim to be paid under EAJA. We also conclude that

the timing of the ESA citizen-suit claim, which was added after significant

development of the APA issues had already occurred, does not preclude allocation

of hours and costs to the ESA claim, so long as those hours and costs were reason­

ably necessary to litigation of the ESA claim as well.

RANDOLPH D. MOSS

Acting Assistant Attorney General

Office o f Legal Counsel

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