Opinion
No. C 00-3072-MWB, C 01-3030-MWB.
September 20, 2004
MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFFS' REASSERTED APPLICATIONS FOR ATTORNEY FEES AND EXPENSES
These two cases are separate actions for judicial review of agency determinations by the United States Department of Agriculture (USDA) that the plaintiffs violated the "Swampbuster" Act, 16 U.S.C. §§ 3821-24, by "converting" "wetlands." These actions come before the court on reasserted applications for attorney fees and costs pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. The court rejected the plaintiffs' initial fee claims, filed soon after the court remanded these actions to the USDA for further administrative action, on the ground that the remands did not make the plaintiffs "prevailing parties" within the meaning of the EAJA. In their renewed applications, the plaintiffs contend that the administrative process on the remand of each action has now been completed in a manner favorable to them, so that it is now clear that they are "prevailing parties" entitled to attorney fees and expenses under the EAJA. The USDA, however, contests the award of attorney fees in these cases, because, in its view, the plaintiffs are not really "prevailing parties," the USDA's position was "substantially justified," "special circumstances" warrant denial of the fee claim, and the hourly rate claimed for attorney time is too high. The court does not wish to become mired in another round of litigation in this "Swampbuster" case; nevertheless, the court must wade back into these cases to determine whether or not the plaintiffs are entitled to attorney fees and expenses.
Although these two cases have never been formally consolidated, the court once again finds that — as with certain pre-trial matters, trial on the merits, and the original fee applications — a consolidated ruling on the reasserted fee applications is appropriate. Indeed, the plaintiffs have filed only one consolidated fee itemization for their lead attorney in both cases, one consolidated itemization of expenses for both cases, and one fee itemization for the second attorney in Case No. C 00-3072.
I. INTRODUCTION A. Factual Background
These actions involved review of agency determinations that the plaintiffs violated the "Swampbuster" Act, 16 U.S.C. §§ 3821-24, when they purportedly "converted" "wetlands" by repairing an existing tile drainage system on their farmland The actions involved two adjacent tracts of farmland, which are located in Winnebago County, Iowa. Tract #2024, which plaintiff Monroe Branstad purchased in 1995, is the subject of Case No. C 00-3072-MWB, and Tract # 1475, which plaintiff Edward Branstad, Monroe's father, also purchased in 1995, is the subject of Case No. C 01-3030-MWB. Monroe and Edward Branstad are both "operators" of both tracts for purposes of the pertinent statute and USDA regulations.The court discussed extensively the factual background to these cases in prior rulings on the plaintiffs' motions for preliminary injunctions on enforcement actions, see Branstad v. Glickman, 118 F. Supp. 2d 925 (N.D. Iowa 2000) ( Branstad I) (preliminary injunction on enforcement action in Case No. C 00-3072-MWB); Branstad v. Veneman, 145 F. Supp. 2d 1011 (N.D. Iowa 2001) ( Branstad II) (preliminary injunction on enforcement action in Case No. C 01-3030-MWB), and on trial on the merits on written submissions. See Branstad v. Veneman, 212 F. Supp. 2d 976 (N.D. Iowa 2002) ( Branstad III) (both cases). For present purposes, suffice it to say that, in 1987 and again in 1991, the USDA determined that there were "wetlands" on both tracts in question. A "whistle-blower" complaint led to determinations by the USDA that the Branstads had "converted" "wetlands" on both tracts in 1997 by repairing a tile drainage system, affecting both tracts, which had been in place prior to 1985. In the course of administrative proceedings on the wetland violations, the USDA refused to reconsider the underlying 1987 and 1991 wetland determinations. The USDA took the position that those wetland determinations were "final" and "unappealable" and, therefore, could not be attacked as a basis for challenging a "conversion" determination. Consequently, the USDA upheld the "conversion" determinations. As a result of the administrative determinations that the Branstads had "converted" "wetlands," the USDA sought repayment from the Branstads of hundreds of thousands of dollars in farm program benefits and determined that the Branstads were ineligible for future benefits. The Branstads' actions for judicial review followed.
B. The Actions For Judicial Review
In Case No. C 00-3072-MWB, the Branstads sought, inter alia, the following relief on the merits: (1) a declaration that wetland determinations in 1987 and 1991 were appealable and were incorrect, and that the Branstads were being denied certain USDA farm program benefits on the basis of these erroneous wetland determinations; and (2) reinstatement of the Hearing Officer's conclusion that the NRCS's certification of a wetland on Tract #2024 was erroneous and that the NRCS's decision that the Branstads had converted a wetland in the course of their repair of the tile drainage system on Tract # 2024 was erroneous. Similarly, in Case No. C 01-3030-MWB, the Branstads sought reinstatement of the Hearing Officer's conclusion that their actions as to Tract #2024 did not violate the law and that their activity as to Tract #1475 was the same activity as that involving Tract #2024. They also sought declaratory judgment that the USDA had improperly refused to hear their untimely administrative appeal on the basis of "good cause" or "extenuating circumstances."
After trial on the merits, the court concluded that the "final" agency determinations in the two cases could not stand upon judicial review. More specifically, in Case No. C 00-3072-MWB, the court found and declared (1) that the Branstads' administrative appeal was not mooted by a Wetland Restoration Agreement for Tract #2024 entered into by the parties, and that the agency's final determination to the contrary was arbitrary and capricious, an abuse of discretion, and contrary to law; and (2) that wetland determinations in 1987 and 1991 were subject to "appeal" in the administrative proceedings on the charges of "converting" those wetlands, and that the agency's final determination to the contrary was arbitrary and capricious, an abuse of discretion, and contrary to law. The court also vacated in its entirety the Director Review Determination as to Tract #2024 and remanded the case for agency action in conformity with the court's judgment. Finally, the court enjoined any and all enforcement actions of the USDA with regard to any wetland violation on Tract #2024.
In Case No. C 01-3030-MWB, the court also vacated the Director's February 13, 2001, decision denying the Branstads' request for consideration of their untimely administrative appeal regarding Tract #1475 on the basis of "extenuating circumstances" or "good cause" and that case was remanded to the NAD for consideration of the Branstads' administrative appeal of the "wetland" and "conversion" determinations regarding Tract #1475 on the merits. The court also enjoined any and all enforcement actions of the USDA with regard to any wetland violation on Tract #1475 until the conclusion of the administrative appeal. Judgment in both cases entered accordingly.
C. The Initial Fee Applications
The Branstads filed their initial Applications for Attorney Fees and Expenses as Well as Costs in each case on July 29, 2002. However, the court denied those fee applications. See Branstad v. Veneman, 232 F. Supp. 2d 945 (N.D. Iowa 2002) ( Branstad IV). Although the Secretary had made numerous challenges to an award of fees and expenses, the court found that one issue was dispositive of the initial fee claims: The Branstads were not then eligible for an award of fees and expenses pursuant to the EAJA in either case, because they were not "prevailing parties" within the meaning of the statute, where the court had only remanded the actions for further administrative proceedings. The court's denial of the Branstads' initial fee applications was without prejudice to reassertion if and when they obtained relief on the merits of their claims.
D. Agency Determinations After Remand
In the Reasserted Applications For Attorney Fees And Expenses now before the court, the Branstads contend that the remanded administrative actions have now been completed. They assert — and the USDA does not dispute — that on January 29, 2004, District Conservationist Brenda Tenold-Moretz informed the Branstads by letter of new "preliminary" wetland determinations by the National Resources Conservation Service (NRCS) of the USDA for Tracts #1475 and #2024. Those determinations were the following: "that TRACT 1475, Field 1, contain[s] 4 acres of Farmed Wetlands (FW)" and "that TRACT 2024, Fields [sic] 2 and the Unnumbered field, contain 16.1 acres of Farmed Wetland (FW)." See Plaintiffs' Exhibit B to Reasserted Fee Applications (emphasis in the original). The District Conservationist's preliminary wetland determinations became final on February 29, 2004, and were no longer appealable in the administrative process on March 30, 2004.
E. The Reasserted Fee Applications
On April 29, 2004, the Branstads filed in each case a Reasserted Application For Attorney Fees And Expenses As Well As Costs. In their Reasserted Applications, the Branstads contend that the remanded administrative actions have now been completed on the merits in a manner favorable to them. They contend that the necessary implications of the District Conservationist's redetermination that any "wetlands" on the tracts in question are "farmed wetlands" are that the Branstads committed no "conversion" of the wetlands and are now no longer subject to any enforcement proceedings by the USDA. In short, they contend that these redeterminations establish that they are "prevailing parties" in this litigation entitled to recover attorney fees and expenses pursuant to the EAJA.
The attachments to the Branstads' Reasserted Fee Applications indicate that the Branstads seek a total for both cases of $35,855.75 in attorney fees for their lead attorney, consisting of 204.89 hours at $175 per hour; a total of $6,470.50 in attorney fees for their second attorney in Case No. C 00-3072, billed at $150 per hour for attorney activities and $65 per hour for administrative activities; and a total of $1,987.14 in expenses. The Branstads assert that hourly rates for their attorneys in excess of the statutory rate of $125 are justified by consumer price index adjustments and the distinct knowledge in agricultural law possessed by their attorneys.
On June 17, 2004, the USDA resisted the Branstads' Reasserted Fee Applications on various grounds. The USDA's resistance was accompanied by various affidavits in support of factual contentions that the USDA contends warrant awarding no fees in these cases. The Branstads filed replies in each case on June 28, 2004, contesting many of the factual assertions underpinning the USDA's resistance to the fee applications. The court then granted the USDA leave to file a surreply in each case, which the USDA did on July 16, 2004. With those filings, the Branstads' Reasserted Fee Applications are fully submitted.
II. LEGAL ANALYSIS A. Attorney Fees And Expenses Under The EAJA
The pertinent portion of the EAJA states the following:
Except as otherwise 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.28 U.S.C. § 2412(d)(1)(A) (emphasis added); see also United States S.E.C. v. Zahareas, 374 F.3d 624, 627 (8th Cir. 2004) ("The EAJA provides that a prevailing party is entitled to an award of fees and expenses in any action brought by or against the United States `unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.'") (quoting the statute); Yarbrough v. Cuomo, 209 F.3d 700, 703 (8th Cir. 2000) ("The EAJA directs courts to award fees and other expenses to prevailing parties unless the United States' position was substantially justified or special circumstances would make an award unjust. See 28 U.S.C. § 2412(d)(1)(A)."). "The goal of the EAJA is to remove the deterrent effect of having to pay attorney's fees to defend against unreasonable government action." Zahareas, 374 F.3d at 630. Thus, the "EAJA allows most parties who prevail against the United States in civil litigation to recover costs." Herman v. Schwent, 177 F.3d 1063, 1065 (8th Cir. 1999).
`"In addition, the EAJA provides that the `United States shall be liable for such fees and expenses to the same extent that any other party would be liable under the common law.'" Zahareas, 374 F.3d at 627 (quoting 28 U.S.C. § 2412(b)). Based on this provision, the Eighth Circuit Court of Appeals has concluded that "the government may be liable for attorney's fees [under the EAJA] if it acted in bad faith." Id. However, the Branstads do not seek attorney fees on the basis that the USDA acted in bad faith.
The Eighth Circuit Court of Appeals has identified the following requirements for a person to recover attorney fees and expenses under the EAJA: "(1) the person is a prevailing party; (2) the individual's net worth did not exceed $2,000,000 at the time the civil action was filed [or, in the case of any owner of an unincorporated business, partnership, corporation, association, unit of local government, or organization, that its net worth did not exceed $7,000,000 and that it had not more than 500 employees at the time the civil action was filed, see 28 U.S.C. § 2412(d)(2)(B)]; and (3) the fees and expenses were `incurred by that party in [the] civil action' in which it prevailed." Id. (citing 28 U.S.C. § 2412(d)(1)(A)-(2)(B)). The USDA does not challenge the Branstads' financial eligibility for an award of fees under the EAJA, nor does the USDA contend that the Branstads did not incur the fees in question in the civil actions in this court. See id. (second and third elements that the claimant must prove). However, the USDA does challenge the Branstads' status as "prevailing parties." See id. (first element the claimant must prove). The Branstads bear the burden of proving that they are, indeed, "prevailing parties." Id. at 630-31 (the claimant bears the burden of proving that it incurred the legal fees and otherwise proving that it is entitled to fees).
However, the government bears the burden of proving that its position in the litigation "was substantially justified or that special circumstances make an award unjust" in order to defeat a fee claim. 28 U.S.C. § 2412(d)(1)(A); Zahareas, 374 F.3d at 627 ("The government bears the burden of proving that its position was substantially justified."); Herman, 177 F.3d at 1065 (stating that the "EAJA also allows those parties to recover attorney fees and some litigation expenses if the Government fails to prove that its position in the litigation `was substantially justified or that special circumstances make an award unjust,'" quoting 28 U.S.C. § 2412(d)(1)(A), and citing Friends of the Boundary Waters Wilderness v. Thomas, 53 F.3d 881, 885 (8th Cir. 1995), which states that the government bears the burden of proving its position was substantially justified). The USDA contends that, in these cases, its position was "substantially justified" and that there are "special circumstances" making awards of fees in these cases inappropriate.
The court will consider in turn the USDA's various challenges to the award of fees in these cases. However, the court notes, first, that its "decision concerning an application for fees under the EAJA is reviewed for abuse of discretion," meaning that its "conclusions of law are reviewable [on] a de novo basis, and its factual findings are reviewed for clear error." United States Dep't of Labor v. Rapid Robert's, Inc., 130 F.3d 345, 347 (8th Cir. 1997); accord Zahareas, 374 F.3d at 627 (applying this standard of review to denial of a fee application under the EAJA); Yarbrough, 209 F.3d at 703 (also applying this standard of review).
B. The USDA's Challenges To The Award Of Fees
1. "Prevailing party" status a. Arguments of the parties
The Branstads contend that they are "prevailing parties" within the meaning of the EAJA, because this litigation established that the 1987 and 1991 wetland determinations could be reviewed and changed in administrative proceedings on a wetland "violation," and those wetland determinations have, in fact, now been reviewed and changed by the USDA. Consequently, they contend that, because of this litigation, it is now clear that there have been no wetland violations, they are no longer subject to repayment of over $400,000 in farm program benefits, and they are not disqualified from receiving further benefits. In short, they contend that they have now obtained all of the results that they sought in this litigation. They contend, further, that the legal relationship of the parties has changed, to their benefit, because they are no longer required to pay back farm program benefits nor are they disqualified from receiving future benefits, as they were prior to this litigation. Moreover, with the redesignation of the supposed wetlands as "farmed wetlands," they are entitled to maintain the drainage system on those acres.
The USDA, however, has a markedly different view of whether the Branstads "prevailed." The USDA contends that the Branstads did not "prevail" on the merits of their claims, because there is no causal link between this litigation and the achievement of their desired results. Rather, the USDA contends that the 1999 "wetland conversion" determinations resulted, in part, from the Branstads' failure to provide requested and relevant information for a substantial period of time. Furthermore, the USDA argues, the redetermination after remand was based on new facts that the Branstads revealed for the first time in 2003 concerning the extent and capacity of the drainage system for the tracts of land in question before and after the Branstads' refurbished the drainage system. The USDA contends that, had the Branstads provided requested information concerning the size, depth, and grade of the pre-existing drainage system to the USDA prior to the 1999 assessment, then NRCS would have determined that the subsequent renovations resulted in the drainage system having the same capacity as the original system, and consequently, NRCS never would have found any wetland violations. The USDA also contends that the relief granted did not materially alter the legal relationship of the parties, because this case did not modify the government's behavior toward the Branstads. This is so, the USDA explains, because the USDA still maintains that, based upon the information provided in 1999, the new drainage system exceeded the drainage capacity of the old system, so that there were wetland violations. Only the new information provided in 2003, the USDA contends, changed the legal relationship between the parties.
In reply, the Branstads assert that the focus must be on the USDA's position prior to the court's remand order, not some hypothetical position taken after the remand order. With this focus, the Branstads point out that, prior to the remand, the USDA maintained that the 1987 and 1991 wetland determinations were final and unappealable and that the Branstads' wetland restoration agreement mooted their appeal of the 1999 converted wetland determinations. If the Branstads had not sought judicial review of these agency actions, they contend that the USDA would never have allowed them to provide further information concerning the pre-existing drainage system, nor would the USDA have taken any further action to review either the wetland determinations or the "conversion" determinations. In short, but for the remand, they assert that the USDA would never have discovered that a rock in the outlet for the old drainage system had caused a mismeasurement of the outlet and consequent miscalculation of the capacity of the old system. They also assert that they obtained relief on account of prevailing, because, as a result of the remand, they are relieved of the obligation to pay back farm program benefits and are eligible for future benefits, where the USDA has now changed the designation of the acres in question from "wetlands" and "converted wetlands" to "farmed wetlands." Finally, the Branstads also contend that the parties' legal relationship changed as a result of this litigation, because only the court's determination that the 1987 and 1991 wetland determinations were appealable opened the door to the favorable results and changed relationships they now enjoy.
b. Applicable standards
In ruling on the Branstads' initial fee applications, the court stated the following standards for determining whether or not a claimant is a "prevailing party" as required to recover fees pursuant to the EAJA:
"Prevailing party" status involves mixed questions of law and fact, but the ultimate question of whether or not a litigant is a "prevailing party" is one of law. See Yarbrough v. Cuomo, 209 F.3d 700, 703 (8th Cir. 2000) ("We review for clear error the court's factual findings underlying its determination of prevailing party status, but we consider de novo the legal question whether those facts suffice to render the plaintiff a prevailing party.") (citing Jenkins v. Missouri, 127 F.3d 709, 713 (8th Cir. 1997)); Jenkins, 127 F.3d at 713 ("[W]hile abuse of discretion governs in reviewing fee awards, the question of prevailing party status, a statutory term, presents a legal issue for decision, which we review de novo.").
The Eighth Circuit Court of Appeals has explained that a plaintiff is considered a "prevailing party" for purposes of EAJA fee awards "when he obtains `actual relief on the merits of his claim [that] materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff'" at the time of a settlement or judgment. Yarbrough, 209 F.3d at 703 (quoting this standard from Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S. Ct. 566, 121 L.Ed. 2d 494 (1992), in a case that had resulted in settlement); see also Farrar, 506 U.S. at 111, 113 S. Ct. 566 (stating this standard as applicable in cases resulting in judgment or settlement). Somewhat more expansively, the Supreme Court has explained the applicable standard in the context of a civil rights case as follows:
[T]o qualify as a prevailing party, a civil rights plaintiff must obtain at least some relief on the merits of his claim. The plaintiff must obtain an enforceable judgment against the defendant from whom fees are sought, Hewitt [v. Helms, 482 U.S. 755,] 760, 107 S. Ct. 2672, 96 L. Ed. 2d 654 [(1987)], or comparable relief through a consent decree or settlement, Maher v. Gagne, 448 U.S. 122, 129, 100 S. Ct. 2570, 65 L. Ed. 2d 653 (1980). Whatever relief the plaintiff secures must directly benefit him at the time of the judgment or settlement. See Hewitt, supra, at 764, 107 S. Ct. 2672. Otherwise the judgment or settlement cannot be said to "affec[t] the behavior of the defendant toward the plaintiff." Rhodes [v. Stewart, 488 U.S. 1,] 4, 109 S. Ct. 202, 102 L. Ed. 2d 1 [(1988) (per curiam)]. Only under these circumstances can civil rights litigation effect "the material alteration of the legal relationship [*956] of the parties" and thereby transform the plaintiff into a prevailing party. [Texas State Teachers Ass'n v.] Garland, [ 489 U.S. 782,] 792-93, 109 S. Ct. 1486 [(1989)].
Farrar, 506 U.S. at 111, 113 S. Ct. 566. Although Farrar involved civil rights claims and fee-shifting pursuant to 42 U.S.C. § 1988(b), and the present case involves fee-shifting pursuant to the EAJA, 28 U.S.C. § 2412(d), "the standards for analyzing such claims are generally applicable to all claims arising under prevailing party fee-recovery statutes." Yarbrough, 209 F.3d at 703 n. 3 (citing Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), and Jenkins, 127 F.3d at 712-13, noting that the latter case "equat[ed] standards for reviewing § 1988(b) claims and EAJA claims").Branstad IV, 232 F. Supp. 2d at 955-56.
In this case, the USDA's principal challenge to the Branstads' status as "prevailing parties" is the purported lack of a causal link between the litigation and the favorable results that the Branstads ultimately obtained. The Eighth Circuit Court of Appeals has explained the nature of the required causal relationship, as follows:
Critically, it must be the litigation — not some other process — that brings about the change in the defendant's behavior. [*704] See Peter [v. Jax], 187 F.3d [829,] 834 [(8th Cir. 1999), cert. denied sub nom. Westendorp v. Ventura, 529 U.S. 1098 (2000)]. In demonstrating causation, moreover, the plaintiff must show more than that he would not have obtained relief but for the filing of his lawsuit; he must show that his putative cause made remedial action more likely. See id. Because the existence of a causal link between the plaintiff bringing suit and the defendant changing his behavior is a factual issue, we review for clear error the district court's findings on the matter. See id.Yarbrough, 209 F.3d at 703-04.
c. Analysis
The USDA's objections notwithstanding, it is clear that the Branstads have "prevailed," that is, "obtain[ed] `actual relief on the merits of [their] claim[s] [that] materially alter[ed] the legal relationship between the parties by modifying the [USDA's] behavior in a way that directly benefits the [Branstads].'" Yarbrough, 209 F.3d at 703 (quoting Farrar, 506 U.S. at 111-12). The Branstads sought in these judicial review proceedings, and ultimately obtained, relief from the USDA's original determinations that the 1987 and 1991 wetland determinations were "final" and "unappealable" as well as relief from the USDA's determinations that the Branstads "converted" those wetlands, when the USDA made a "redetermination" on remand that the wetlands in question were "farmed wetlands." This relief materially altered the legal relationship between the parties by modifying the USDA's behavior in a way that directly benefitted the Branstads, see id. (requiring such direct benefit), because it relieved the Branstads of the obligation to repay hundreds of thousands of dollars of farm program benefits and restored their eligibility for future benefits. The change in legal relationship and benefit to the Branstads could not be clearer.
The USDA nevertheless contends that, even if this is true, the Branstads still have not established the causal link between this litigation and the relief obtained that would make them "prevailing parties." Rather, the USDA contends that the favorable outcome of the administrative proceedings on remand was the result of consideration of entirely new information, not the remand itself. The court has no hesitation agreeing with the Branstads that, but for the court's remand, the USDA would never have reconsidered the 1987 and 1991 wetland determinations nor would the USDA ever have reconsidered the scope and capacity of the pre-existing drainage system. On the other hand, the USDA is correct that such a showing of "but for" causation is not enough. Yarbrough, 209 F.3d at 704 ("In demonstrating causation, . . . the plaintiff must show more than that he would not have obtained relief but for the filing of his lawsuit."). Rather, the Branstads "must show that [their] putative cause made remedial action more likely." Id.
Although the USDA contends that the Branstads cannot make the necessary showing, the court disagrees. Not only did the remand of these actions to the USDA make the USDA's ultimate redetermination of the wetland status of the tracts in question possible, it made the favorable redetermination much more likely, see id. (the claimants "must show that [their] putative cause made remedial action more likely"); indeed, in this case, the court finds that remand of the Branstads' cause made remedial action all but inevitable. Prior to the remand, the upper levels of review in the administrative proceedings had held staunchly to the erroneous view that the agency simply did not have to reconsider the 1987 and 1991 wetland determinations, whatever evidence was presented that those determinations were wrong. In sharp contrast, the Hearing Officer, the only administrative review officer to consider the Branstads' evidence that the prior wetland determinations were wrong prior to remand, found in the Branstads' favor on that issue. When this court destroyed the straw man barrier to reconsideration of the pre-existing wetland determinations, the record evidence already supported a finding that the prior wetland determinations were wrong. Under these circumstances, the remand made remedial action much more likely.
The USDA attempts to avoid this conclusion by asserting that only newly-discovered evidence established that the 1987 and 1991 wetland determinations were wrong and that the wetland and "conversion" determinations prior to 1999 were correct based on evidence then available, thus purportedly breaking the causal link between the remand and a decision on the merits favorable to the Branstads. The USDA's argument, however, simply ignores the evidence marshaled by the Branstads in the original administrative process and considered by the Hearing Officer and the inevitable consequences of forcing the USDA to consider that evidence. The court, therefore, finds that the favorable results ultimately obtained on the merits did not depend solely upon newly-discovered evidence that the Branstads' repairs did not exceed the scope or capacity of the pre-existing drainage system. Rather, the remand of these actions to the USDA made the favorable redetermination much more likely, because it forced the USDA to review evidence that the USDA had otherwise refused to consider. See id. (the claimants "must show that [their] putative cause made remedial action more likely").
Contrary to the USDA's contentions, the court concludes that the Branstads are "prevailing parties" within the meaning of the EAJA.
2. "Substantial justification" for the USDA's position a. Arguments of the parties
The USDA next contends that its position in this litigation was "substantially justified," such that an award of attorney fees and expenses is inappropriate. Apparently anticipating such a challenge, the Branstads argued in their opening brief in support of their renewed application for fees that the USDA's position in this litigation and the prior administrative proceedings was not substantially justified, because it was contrary to the plain meaning of applicable statutes and settled law in this circuit on several issues. Specifically, the Branstads point out the USDA refused until remand to conduct a review of the 1987 and 1991 wetland determinations, and the Director of NAD ignored the Hearing Officer's conclusion that those prior wetland determinations were wrong, on the basis of an erroneous contention that those determinations were no longer reviewable. They also point out that the USDA continued to adhere to its "unreviewability" argument, despite the court's clear indications in the rulings on the Branstads' applications for preliminary injunctions and the USDA's motions for summary judgment that the USDA's position was untenable. Next, they note that the Director of NAD arbitrarily asserted that the wetland restoration agreement mooted the appeal, when the USDA had previously taken the position that the wetland restoration agreement would not stop the appeal. These positions, the Branstads contend, were not mainly or partially correct, but entirely wrong, and the USDA's redeterminations on remand acknowledge that its prior legal positions were incorrect. Morever, the Branstads contend that the USDA took several untenable positions on facts, despite copious evidence that there was a drainage system in place on the purported wetlands well before 1985, that any wetland characteristics returned only because of failure to maintain that system, and that the repairs to the drainage system did not exceed the scope and capacity of the original system. Indeed, the Branstads contend that the USDA squelched any attempt by agency officials to determine the scope and capacity of the existing system and refused to consider evidence presented by the Branstads, instead clinging to the legally untenable position, until remand, that the 1987 and 1991 wetland determinations were unreviewable.
The USDA contends that its position was, nevertheless, substantially justified, in light of the deference due final agency action. The USDA contends that it is not enough that this court stated that the government's motions for summary judgment were ill-advised, nor is it enough that the court ultimately ruled against the USDA. The USDA maintains that it has not taken two different positions on the same facts, before and after remand, but has instead maintained a consistent position that the information provided by the Branstads prior to remand showed that the new drainage system improperly increased the drainage capacity of the old system. That position, the USDA contends, was substantially justified. The USDA offers affidavits of various agency officials in support of its contentions that the Branstads failed to provide sufficient information prior to remand to support any different evaluation of the record by the USDA.
In reply, the Branstads catalogue evidence in the administrative record prior to remand that they contend demonstrates that the USDA was never substantially justified in its position that the 1987 and 1991 wetland determinations were correct or that the repairs to the drainage system "converted" wetlands. They also contend that the record shows that the USDA was in a hurry to make a decision and plainly was not interested in any decision other than upholding the 1987 and 1991 wetland determinations. The Branstads then catalogue what they assert are manifest errors in the affidavits submitted in support of the USDA's resistance on this issue.
In its surreply, the USDA takes issue with the Branstads' statement and interpretations of facts. In short, the USDA continues to assert the accuracy of the supporting affidavits and the correctness of its prior decisions finding "conversions" of wetlands based on the information known to the USDA at the time those decisions were made.
b. Applicable standards
As mentioned above, the USDA bears the burden of proving that its position in the litigation "was substantially justified." Zahareas, 374 F.3d at 627; Herman, 177 F.3d at 1065. In Zahareas, the Eighth Circuit Court of Appeals explained what "substantially justified" means, as follows:
In Pierce v. Underwood, the Supreme Court defined substantially justified as having a "reasonable basis both in law and fact," or being "justified in substance or in the main." 487 U.S. 552, 565, 108 S. Ct. 2541, 101 L. Ed. 2d 490 (1988) (citations and internal quotations omitted). Therefore, the government's position can be substantially justified even though ultimately incorrect, as long as "a reasonable person could think it correct." Id. at 566 n. 2, 108 S. Ct. 2541. The government, however, is not exempt" from liability under the EAJA merely because it prevailed at some interim point in the judicial process." Sierra Club v. Sec'y of Army, 820 F.2d 513, 517 (1st Cir. 1987). The fact that the district court in this case found for the [agency] is a factor weighing in the government's favor, but the district court's judgment "is not sufficient, [* 627] in and of itself, to show that the Government's position was substantially justified." Davidson v. Veneman, 317 F.3d 503, 507 (5th Cir. 2003). Rather, "[t]he most powerful indicator of the reasonableness of an ultimately rejected position is a decision on the merits and the rationale which supports that decision." Friends of Boundary Waters Wilderness v. Thomas, 53 F.3d 881, 885 (8th Cir. 1995) (reversing the district court and awarding attorney's fees). Moreover, the government must show "that it acted reasonably at all stages of the litigation." Davidson, 317 F.3d at 506 (citing 28 U.S.C. § 2412(d)(2)(D)); see also Keasler v. United States, 766 F.2d 1227, 1231 (8th Cir. 1985) (stating that "the position of the government" includes" the government's positions at both the prelitigation and litigation states"). . . .
The substantial justification standard, however, should not be used to deter the government from bringing cases of first impression or offering novel arguments. The special circumstances exception "is a `safety valve' designed to `insure that the Government is not deterred from advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts.'" Russell v. Nat'l Mediation Bd., 775 F.2d 1284, 1290 (5th Cir. 1985) (quoting H.R. Rep. No. 96-1418 at 11 (1980)). Still, the mere fact that the government advances a novel argument does not automatically insulate it from EAJA liability. Keasler, 766 F.2d at 1234 ("That a case presents an issue of first impression in the forum does not ipso facto make the government's position in the litigation reasonable."); Russell, 775 F.2d at 1290 (stating that the special circumstances exception" merely preserves government efforts to present creative legal interpretations, which though not yet commonly accepted, still merit the court's careful examination" (citation and internal quotations omitted)).Zahareas, 374 F.3d at 627. The court explained, further, that in evaluating the government's position, the court "must fully analyze the facts and law under the applicable standards" and take advantage of "the benefit of looking at the case in its entirety, reviewing all the issues presented and the [agency's] actions both prior to and during the litigation." Id. (concluding in that case that, "[f]rom this vantage point, we find that the SEC's case was not substantially justified").
c. Analysis
"[L]ooking at the case in its entirety, reviewing all the issues presented and the [USDA's] actions both prior to and during the litigation," id., and also considering the USDA's actions after remand, cf. id., the court concludes that the USDA's position simply was not "substantially justified." Rather, evaluating the USDA's position by making a full analysis of the facts and law under the applicable standards, id., it is plain that the USDA's position, before, during, or after the judicial review actions, was never substantially justified "`in substance or in the main,'" id. (quoting Pierce, 487 U.S. at 565), and no reasonable person could have thought so. Id. at 566 n. 2. As to Tract #2024, first, the administrative record shows that the USDA was not interested in reviewing evidence that the 1987 and 1991 wetland determinations were wrong; rather, the record shows that the USDA blindly adhered to the supposed "unappealability" or "unreviewability" of the 1987 and 1991 wetland determinations as the sole justification for refusal to consider any other evidence. Thus, the USDA's position does not now, and never did, stand up in view of the facts. Second, that position, as demonstrated in the court's ruling on the merits, was "plainly contrary to statutory and regulatory provisions existing at the time of the alleged wetland violation" on Tract #2024, see Branstad III, 212 F. Supp. 2d at 998 (ruling after trial on the merits), so that it was patently at odds with the applicable legal standards.
Similarly, as to Tract #1475, the USDA's standards for consideration of an untimely appeal shifted in the course of agency determination of whether the untimely appeal would be allowed, so that the agency did not apply the proper legal standards. See id. at 1001-02 (the agency notified the Branstads that they might be able to obtain review of their untimely administrative appeal if they showed "extenuating circumstances," then decided not to consider the untimely appeal for failure to show "good cause"). Second, as this court indicated, the Director's response to the Branstads' attempt to establish "extenuating circumstances" for failure to perfect a timely appeal was "rather bizarre," on the record presented, id. at 1001, so that it fails in light of pertinent facts. Also unjustified was the USDA's reliance for the first time during judicial review on a "secret reason" for denying the administrative appeal, mailing of administrative appeal papers to the wrong address, where that reason was never asserted in the administrative proceedings. Id. at 1002-03.
The court's analysis does not end there, because the court finds another bizarre shift in the USDA's position, from its position during the first administrative proceedings and the action for judicial review, to a new position in the litigation of the present fee applications. Faced with a judicial determination that its argument that the prior wetland determinations were unreviewable was unsound, the USDA now attempts to argue that the prior wetland determinations and "conversion" determinations were only wrong because the Branstads did not provide sufficient information at the time. This position is not only revisionist, it is disingenuous, in light of the USDA's prior refusal to consider any evidence that the 1987 and 1991 wetland determinations were wrong, because those determinations were supposedly "unreviewable." It is also contrary to the evidence marshaled by the Branstads in the administrative proceedings and considered by the Hearing Officer. Thus, the USDA's shifting positions further demonstrate that the USDA has been unable to take substantially justified positions in this case. Cf. Zahareas, 374 F.3d at 628 (the court has the benefit of looking at the agency's actions both prior to and during the litigation).
In short, the USDA has failed to prove that its position in this litigation was substantially justified; consequently, the USDA cannot escape liability for fees and costs under 28 U.S.C. § 2412(d)(1)(A) on that basis.
3. "Special circumstances" a. Arguments of the parties
If all else fails, the USDA asserts that there are "special circumstances" that make an award of fees inappropriate in this case. In their opening brief, the Branstads assert flatly that there are no such "special circumstances." However, in its response, the USDA refashions its "substantial justification" argument as its "special circumstances" argument, as well, asserting that equitable principles should bar an award of fees, because the Branstads failed for a substantial period of time to provide all relevant information regarding the original and new drainage systems, leading to the USDA's unfavorable determination and extensive litigation. The USDA argues that the Branstads should not be allowed to profit any further from their lack of cooperation and forthrightness. In their reply, the Branstads again take umbrage with such a characterization of the record, and in its surreply, the USDA again asserts that the Branstads, not the USDA, are mischaracterizing the record.
b. Applicable standards
The EAJA provides that an award of attorney fees and expenses may be denied if "special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). As mentioned above, the agency bears the burden of proving "special circumstances" to bar an award of fees and expenses. Herman, 177 F.3d at 1065 (stating that "EAJA also allows those parties to recover attorney fees and some litigation expenses if the Government fails to prove . . . `that special circumstances make an award unjust,'" quoting 28 U.S.C. § 2412(d)(1)(A)).
As the Eighth Circuit Court of Appeals has explained, "[t]he special circumstances exception `is a "safety valve" designed to "insure that the Government is not deterred from advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts."'" Zahareas, 374 F.3d at 627 (quoting Russell v. National Mediation Bd., 775 F.2d 1284, 1290 (5th Cir. 1985), in turn quoting H.R. Rep. No. 96-1418 at 11 (1980)). On the other hand, "[s]uch `vigorous enforcement' . . . should not be protected when the [agency] fails to diligently investigate the parties involved in the action and circumvents its own guidelines in seeking approval to bring an action." Id. at 630.
Similarly, the "special circumstances" exception "gives the court discretion to deny awards where equitable considerations dictate an award should not be made." H.R. Rep. No. 1418, 96th Cong., 2d Sess. at 11, reprinted in 1980 U.S.C.C.A.N. 4953, 4990; accord United States Dep't of Labor v. Rapid Robert's, Inc., 130 F.3d 345, 347 (8th Cir. 1997) (quoting this language from H.R. Rep. No. 1418). "`The EAJA thus explicitly directs a court to apply traditional equitable principles in ruling upon an application for counsel fees by a prevailing party.'" Rapid Robert's, Inc., 130 F.3d at 347-48 (quoting Oguachuba v. INS, 706 F.2d 93, 98 (2d Cir. 1983)). In Rapid Robert's, the Eighth Circuit Court of Appeals gave the following examples of "special circumstances" warranting denial of attorney fees: (1) a case in which a claimant prevailed on a petition for a writ of habeas corpus owing to a technical error by the Immigration and Naturalization Service (INS), even though the claimant had repeatedly violated federal immigration laws, leading the court to conclude that the claimant had "unclean hands," see id. at 347-48 (citing Oguachuba, 706 F.2d at 99); and (2) a case in which an otherwise eligible prevailing party did not substantially contribute to the successful phase of the litigation, so that the court concluded that the claimant was not entitled to a "free ride" on the efforts of other parties willing to pursue the litigation. See id. at 348 (citing United States v. 27.09 Acres of Land in Town of Harrison, 43 F.3d 769, 775 (2d Cir. 1994)). The court in Rapid Robert's then held that a fee claim was properly denied in the case before it, because regardless of the validity of interim regulations that the claimant had been charged with violating in administrative proceedings, the claimant had committed several violations of the underlying statute itself, but those violations had gone unpunished as a result of the district court's order setting aside the Secretary of Labor's decision. Id. c. Analysis
The court concludes that there are no "special circumstances" warranting denial of the Branstads' fee applications; indeed, if there is any "inequitable conduct" here, it is conduct by the USDA. See id. (the court is to apply "traditional equitable principles" to a claim that "special circumstances" bar a fee award under the EAJA). It was the USDA that advised the Branstads that they could refurbish the existing drainage system, then charged the Branstads with a wetland violation for doing so, then refused to consider evidence that the original wetland determinations were wrong, including evidence about the extent and capacity of the original drainage system, and finally, asserted in the fee claim proceedings that the whole mess was the Branstads' fault. The last flip-flop is, as the court observed above, both disingenuous and revisionist. It was also the USDA that changed the standards for determining whether or not to consider the Branstads' untimely administrative appeal as to Tract #1475 in the middle of the review process, and reached what was at best a "rather bizarre" (and plainly inequitable) conclusion with regard to the Branstads' attempt to establish "extenuating circumstances" for failure to perfect a timely appeal on the record presented. Branstad III, 212 F. Supp. 2d at 1001. If there are "unclean hands" here, those hands belong to the USDA.
Nor is there any indication that the Branstads have escaped the wetland "conversion" determinations only on the basis of technical errors by the agency, or that they have escaped regulatory violations while violating the underlying statute, or that they obtained a "free ride" to success on the efforts of others. See Rapid Robert's, 130 F.3d at 347-48 (identifying these circumstances as "special circumstances" warranting denial of EAJA fee applications). The only violation of the governing statutes and regulations that the court has found have been the USDA's actions pursuant to the agency's untenable interpretations of governing law.
Thus, there is no barrier to an award of fees in this case.
C. Challenge To The Amount Of Fees Claimed
1. Arguments of the parties
As its final argument, the USDA contends that the Branstads' attorneys are simply claiming too high an hourly rate for their services. Again anticipating such an argument, the Branstads assert that "special factors" warrant an award above the $125 per hour statutory rate under the EAJA, including increases in the cost of living; the limited availability of qualified attorneys able to take on a "Swampbuster" case; and their counsel's development of distinct knowledge, in both applicable law and administrative procedures, necessary to litigate their cases.
The USDA, however, contends that the court should reduce or deny the Branstads' fee claim, pursuant to 28 U.S.C. § 2412(d)(1)(C), because the Branstads' conduct during the course of the proceedings unduly and unreasonably protracted the final resolution of the matter in controversy, which argument is again premised on the Branstads' purported failure to provide necessary information in a timely manner. The USDA also contends that there is no shortage of qualified attorneys to take on this kind of case, nor any sufficient change in the cost of living, to warrant fees above the statutory hourly rate. If the court does make a cost-of-living adjustment, the USDA also advocates a less generous formulation. Finally, the USDA disputes the purported expertise of the Branstads' counsel as a basis for enhancing counsel's hourly rate.
2. Analysis
The EAJA establishes a reasonable hourly rate for attorney fees and certain exceptions to that rate, as follows:
[A]ttorney 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.28 U.S.C. § 2412(d)(2)(A)(ii); see also Stockton v. Shalala, 36 F.3d 49, 50 (8th Cir. 1994) (quoting the statute, which then provided for a maximum hourly rate of $75); Lowe v. Apfel, 65 F. Supp. 2d 989, 990 (N.D. Iowa 1999) (also quoting the statute). Thus, it is readily apparent that the EAJA provides for enhancement of the statutory hourly rate for attorney fees on both of the grounds that the Branstads seek such an enhancement in this case: (1) "an increase in the cost of living"; and (2) "a special factor, such as the limited availability of qualified attorneys for the proceedings involved."
Moreover, the court is satisfied that both grounds for enhancement are actually present in this case. First, both the Branstads' and the USDA's formulations of the cost of living would warrant enhancement of fees to approximately $150 per hour. Second, the court finds that the Branstads' lead attorney can justifiably assert special qualifications in applicable areas of the law, and the lack of availability of attorneys with such qualifications, to warrant further enhancement of his hourly rate to $175 per hour. The court also finds that, while perhaps a little high for a rural practice, the hourly rate of $175 claimed by the Branstads' lead attorney is well within the prevailing range for fee awards for attorneys in Iowa engaged in practice in federal court. Therefore, the court will award the Branstads' attorneys their claimed fees at the claimed hourly rates.
The court also summarily rejects the USDA's contention that the Branstads have unduly protracted this litigation, warranting reduction or denial of fees pursuant to 28 U.S.C. § 2412(d)(1)(C). The record reflects, if anything, undue haste by the USDA to adhere to faulty "wetland" and "conversion" determinations, not dilatory conduct by the Branstads in attempting to show that the wetland determinations were wrong and that there had been no "conversion" of "wetlands."
D. Expenses
In addition to attorney fees, the Branstads claim expenses totalling $1,987.14. The USDA has not challenged either the propriety or the amount of those expenses. Moreover, the court finds the claimed expenses to be reasonable and appropriate. Therefore, the court will award the amount of expenses claimed by the Branstads.
III. CONCLUSION
Having skirted or found its way through the mire of a disputed fee application, the court grants the Branstads' April 29, 2004, Reasserted Application For Attorney Fees And Expenses As Well As Costs in each case. Therefore, the Branstads are awarded the following totals for both cases:
1. $35,855.75 in attorney fees for their lead attorney, Mr. Lawler, consisting of 204.89 hours at $175 per hour; and
2. $6,470.50 in attorney fees for their second attorney in Case No. C 00-3072, Mr. Phillips, billed at $150 per hour for attorney activities and $65 per hour for administrative activities; and
3. $1,987.14 in expenses.