Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-05115/USCOURTS-caDC-99-05115-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 23, 2000 Decided March 31, 2000

No. 99-5115

Paul D. Halverson, et al.,

Appellants

v.

Rodney E. Slater, Secretary,

United States Department of Transportation,

Appellee

Appeal from the United States District Court

for the District of Columbia

(No. 96cv00028)

John Longstreth argued the cause for appellants. With

him on the briefs were Donald A. Kaplan and Mark Ruge.

Rudolph Contreras, Assistant U.S. Attorney, argued the

cause for appellee. With him on the brief were Wilma A.

Lewis, U.S. Attorney, R. Craig Lawrence, Assistant U.S.

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Attorney, and Dale C. Andrews, Deputy Assistant General

Counsel for Litigation, U.S. Department of Transportation.

Before: Edwards, Chief Judge, Tatel and Garland, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: After a previous panel of this court

invalidated a final rule issued by the Department of Transportation, the prevailing parties, appellants herein, filed an

application for attorneys' fees and costs pursuant to the

Equal Access to Justice Act. The district court denied the

application, finding the Department's defense of the rule,

though unsuccessful, "substantially justified" within the

meaning of the Act. Because the district court failed adequately to explain its decision, and because we find unpersuasive the Department's argument that its position was substantially justified, we grant appellants' application for fees and

expenses and remand for the district court to calculate the

precise amount due.

I

The Great Lakes Pilotage Act of 1960, 46 U.S.C. ss 9301 et

seq., requires that foreign ships traveling the Great Lakes

take on an experienced American or Canadian pilot. Id.

s 9302(a). The Act directs the Secretary of Transportation

to set standards for pilot qualifications, selection, registration,

training, and working conditions. Id. s 9303.

Until 1995, the Secretary had delegated Pilotage Act responsibilities to the United States Coast Guard as permitted

by 46 U.S.C. s 2104(a): "The Secretary may delegate the

duties and powers conferred by this subtitle [Subtitle II,

titled 'Vessels and Seamen'] to any officer, employee, or

member of the Coast Guard, and may provide for the subdelegation of those duties and powers." Pilotage Act responsibilities are among the Secretary's Subtitle II duties. Pursuant to a final rule issued on December 11, 1995, the Secretary

transferred certain Great Lakes pilot responsibilities from the

Coast Guard to the St. Lawrence Seaway Development Corporation. Organization and Delegation of Powers and

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Duties; Transfer of Great Lakes Pilotage Authority From

the Coast Guard to the Saint Lawrence Seaway Development

Corporation, 60 Fed. Reg. 63,444 (Dec. 11, 1995). In support

of this transfer, the Secretary invoked his general delegation

authority under 49 U.S.C. s 322(b): "The Secretary may

delegate, and authorize successive delegations of, duties and

powers of the Secretary to an officer or employee of the

Department."

Troubled by the safety implications of the transfer, appellants, two Great Lakes pilots and two associations of Great

Lakes pilots, filed suit in the United States District Court for

the District of Columbia claiming that the delegation exceeded the Secretary's authority under section 2104(a). According to the Pilots, that provision permits the Secretary to

transfer Pilotage Act responsibilities only to the Coast Guard,

not to the St. Lawrence Seaway Development Corporation.

The Department responded that section 2104(a) does not limit

the Secretary's general authority to delegate responsibilities

pursuant to section 322(b). Granting summary judgment for

the Department, the district court found section 2104(a) "fully

consistent with [section 322(b)'s] broader language." Halverson v. Pena, 1996 WL 217885, *6 (D.D.C. 1996).

This court reversed. Halverson v. Slater, 129 F.3d 180

(D.C. Cir. 1997). Applying step one of the Chevron framework, see Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842 (1984), the panel "conclude[d]

that the plain meaning of section 2104(a) limits delegation of

[Pilotage Act] functions to the United States Coast Guard and

that section 322(b) cannot fairly be construed to expand the

limitation." 129 F.3d at 181. The panel found that the

Secretary's interpretation of section 2104(a) violated three

separate canons of construction: it "plainly violates the familiar doctrine that the Congress cannot be presumed to do a

futile thing," id. at 185; it "runs afoul of the cardinal canon of

statutory construction that '[w]e must read the statutes to

give effect to each if we can do so while preserving their

sense and purpose,' " id. (quoting Watt v. Alaska, 451 U.S.

259, 267 (1981)); and it is "irreconcilable with the statutory

construction principle, expressio unius est exclusio alterius,

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that is, the 'mention of one thing implies the exclusion of

another thing,' " 129 F.3d at 185 (quoting Ethyl Corp. v. EPA,

51 F.3d 1053, 1061 (D.C. Cir. 1995)). The Secretary's assertion that section 2104(a) has wartime significance, the panel

said, was "patently erroneous." 129 F.3d at 185. Concluding

that "even if section 322(b)'s scope is ambiguous, requiring

recourse to Chevron step two, we would be compelled to

reject the Secretary's interpretation as unreasonable because

it 'would deprive [section 2104(a)] of virtually all effect,' " the

panel remanded to the district court with instructions to

vacate the final rule. Id. at 189 (quoting American Fed'n of

Gov't Employees v. FLRA, 798 F.2d 1525, 1528 (D.C. Cir.

1986)) (alternation in original).

The Pilots then applied for attorneys' fees and expenses

under the Equal Access to Justice Act, 28 U.S.C. s 2412(d).

The EAJA provides that "a court shall award to a prevailing

party other than the United States fees and other expenses

... 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 ... 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.

s 2412(d)(1)(A). The Secretary neither contested the Pilots'

status as prevailing parties nor claimed the existence of

"special circumstances." Instead, the Secretary argued that

his interpretation of section 322(b) as authorizing the delegation of Pilotage Act responsibilities to the St. Lawrence

Seaway Development Corporation was "substantially justified." The district court agreed. Describing the issue as a

"straightforward, almost textbook, administrative law problem that was resolved by using well-established general principles of statutory interpretation," it denied the Pilots' EAJA

application. Halverson v. Slater, No. 96-0028, Mem. Op. at 9

(D.D.C. Apr. 6, 1999). The Pilots now appeal.

II

Standards for resolving EAJA fee applications have

emerged from a growing body of case law. The Government

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has the burden of proving that its position, including both the

underlying agency action and the arguments defending that

action in court, was "substantially justified" within the meaning of the Act. See Wilkett v. ICC, 844 F.2d 867, 871 (D.C.

Cir. 1988). "Substantially justified" means "justified in substance or in the main--that is, justified to a degree that could

satisfy a reasonable person. That is no different from ...

[having] a reasonable basis both in law and fact." Pierce v.

Underwood, 487 U.S. 552, 565 (1988) (internal quotation

marks and citation omitted). While a court's "merits reasoning may be quite relevant to the resolution of the substantial

justification question," we have cautioned that "[t]he inquiry

into the reasonableness of the Government's position ... may

not be collapsed into our antecedent evaluation of the merits,

for the EAJA sets forth a distinct legal standard." F.J.

Vollmer Co., Inc. v. Magaw, 102 F.3d 591, 595 (D.C. Cir.

1996) (internal quotation marks omitted). For example, "because 'unreasonable' may have different meanings in different

contexts, even the presence of that term or one of its synonyms in the merits decision does not necessarily suggest

that the Government will have a difficult time establishing

that its position was substantially justified." Id. "The relevance of a court's reasoning on the merits to the reasonableness inquiry under the Equal Access Act thus depends on the

nature of the case." Id.

Appellate courts review district court EAJA decisions for

abuse of discretion. See Pierce, 487 U.S. at 563. Giving

substantial deference to the district court, we will reverse if

we have "a definite and firm conviction that the court below

committed a clear error of judgment in the conclusion it

reached upon a weighing of the relevant factors." Vollmer,

102 F.3d at 596 (internal quotation marks and citations omitted). In exercising our appellate responsibility, we recognize

the awkward position in which the EAJA sometimes places

our district court colleagues. Where, as here, the district

court originally accepts the Government's position and is then

reversed on appeal, the EAJA requires the district court to

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able. Yet district courts have awarded fees just in such

delicate circumstances. See, e.g., Kooritzky v. Herman,

6 F. Supp.2d 1, 4 (D.D.C. 1997), rev'd in part on other

grounds, 178 F.3d 1315 (D.C. Cir. 1999).

With these considerations in mind, we turn first to an

examination of the reasons the district court gave in support

of its finding that the Department's position at the agency

level was substantially justified. The district court attributed

great significance to the Department's reasons for transferring Pilotage Act functions to the St. Lawrence Seaway

Development Corporation, pointing out that two studies, one

by the Department's Inspector General, had raised serious

questions about the Coast Guard's stewardship. See Halverson, Mem. Op. at 4. The district court also relied heavily on

the process that led to the promulgation of the final rule:

Thus, what this rather extended discussion of the Secretary's delegation decision shows is a history of widespread criticism from internal staff studies, as well as

members of Congress and the industry, of the failure of

the Coast Guard to carry out its responsibilities under

[the Pilotage Act], administrative changes to remedy the

problem, of the failure of those administrative changes to

improve the situation, formation of an interagency task

force to study the issue, recommendations by that task

force (concurred in by the Coast Guard) to delegate

certain functions to [the St. Lawrence Seaway Development Corporation], and a formal rule-making process

noticed in the Federal Register with submission of more

than 100 comments, before the Secretary made the final

decision to transfer functions, which was then challenged

by Plaintiffs in this lawsuit.

Id. at 6. Had the Pilots prevailed on a claim that the transfer

was arbitrary and capricious, such factors would indeed have

been relevant to whether the Department's position was

substantially justified. But the merits panel invalidated the

final rule at Chevron step one, so neither the policy reasons

motivating the transfer nor the process by which the decision

was made has anything at all to do with evaluating the

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strength of the Department's claim that section 322(b) authorized the delegation.

Also in support of its conclusion that the Department's

position at the agency level was substantially justified, the

district court said that "there was virtually no question raised

about the legal authority of the Secretary to proceed with the

delegation of functions, and certainly no serious legal question

raised by the Plaintiffs themselves." Id. at 7. Of course, had

no one questioned the Department's authority, that fact might

well have been relevant to the substantial justification analysis. But that isn't what happened. True, the Pilots did not

file written comments challenging the Department's legal

authority, but two groups of Congressmen did, and the Department discussed the issue at some length in the final rule.

See Organization and Delegation of Powers and Duties;

Transfer of Great Lakes Pilotage Authority From the Coast

Guard to the Saint Lawrence Seaway Development Corporation, 60 Fed. Reg. at 63,448-49.

Turning to the second stage of the EAJA analysis--the

district court's evaluation of the Department's position before

the merits panel--we are guided by our decision in Vollmer.

There, we concluded that the district court, having "[s]imply

repeat[ed] arguments made ... before the merits panel without offering any explanation why those arguments showed the

[Government's] position was reasonable," had "largely failed

to grapple with the reasoning underlying this court's merits

decision." Vollmer, 102 F.3d at 596. In this case, the district

court explained the issue before the merits panel: "The

question to be decided in the case was whether the broad

grant of authority in Section 322(b) was limited by the specific

provisions of Section 2104(a)...." See Halverson, Mem. Op.

at 8. The district court repeated the Department's position

before the merits panel: "The Secretary argued, in essence,

that Section 322(b) should be read expansively to give him

largely unfettered discretion to delegate duties and powers to

agency officers and employees." Id. The district court

characterized the issue: "[T]his case presented a rather

straightforward, almost textbook, administrative law problem...." Id. at 9. The district court described the panel's

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holding: "In its opinion, the Court of Appeals then engaged

in a rather lengthy, detailed Chevron analysis, concluding,

under both step one and step two of Chevron, that 'the

language of section 2104(a) compels the conclusion that the

Congress did not intend to authorize the delegation of [Pilotage Act] functions to a non-Coast Guard official.' " Id. (quoting Halverson, 129 F.3d at 185). But Vollmer requires that

the district court do more than explain, repeat, characterize,

and describe the merits panel decision. Under Vollmer, the

district court must analyze the merits panel's reasoning to

determine whether the Department's position, though rejected, was substantially justified.

The closest the district court comes to such an analysis are

three observations: "There was no existing case law as to the

interpretation of either [section 322(b) or section 2104(a)]."

"[T]he legislative history was sparse and not dispositive."

"There was nothing egregious, extreme, frivolous, or foolish

in the positions taken by either party." Halverson, Mem. Op.

at 7, 9. Although each of these observations may well be

true, none answers the question before the district court--

was the Department's position before the merits panel substantially justified within the meaning of EAJA?

Take the district court's first point. Had contrary case law

existed, that fact certainly would have been relevant to the

issue before the district court, for the Department's position

most likely would not have been substantially justified. But

the absence of contrary case law does not necessarily lead to

the opposite conclusion, i.e., that the Department's position

was substantially justified. There may be no contrary case

law for reasons having nothing at all to do with whether the

Department's position had merit. Perhaps until now secretarial delegations under sections 2104(a) or 322(b) had never

been challenged. Or perhaps it had never occurred to the

Department to argue that section 2104(a) permitted delegation to any agency other than the Coast Guard.

The district court's observation about the sparseness of

legislative history likewise tells us nothing about whether the

Department's position was substantially justified. Recall that

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the merits panel's decision rested on its conclusion that "the

plain meaning of Section 2104(a) limits delegation of [Pilotage

Act] functions." Halverson, 129 F.3d at 181. As we have

explained, "[c]ryptic" legislative history "surely is not enough

to overcome the plain meaning of the statute." Ethyl Corp.,

51 F.3d at 1063. Although at the Department's urging the

merits panel did consider section 2104(a)'s legislative history,

it concluded that "[t]he Secretary's attempts to overcome the

plain meaning of section 2104(a) by reference to its legislative

history are equally unsuccessful." Halverson, 129 F.3d at

187.

Finally, a Government position that is neither "foolish,"

"egregious," "extreme," nor "frivolous" is not necessarily

substantially justified. For EAJA purposes, substantially

justified means "justified in substance or in the main--that is,

justified to a degree that could satisfy a reasonable person."

Pierce, 487 U.S. at 565 (internal quotation marks and citation

omitted). Although a frivolous Government argument is obviously neither reasonable nor substantially justified, the opposite is not necessarily true: an unreasonable--not substantially justified--argument need not be frivolous. Words like

"foolish," "egregious," and "extreme" are equally weak measures of EAJA fee liability.

For all of these reasons, we cannot sustain the district

court's finding that the Department's position either at the

agency level or in litigation was substantially justified. We

thus turn to our own analysis of the Department's argument

that its reliance on section 322(b) was substantially justified.

See Jacobs v. Schiffer, No. 99-5217 (D.C. Cir. March 7, 2000),

Slip. Op. at 7-8 ("Because the question of whether the

Department's position was substantially justified can be answered as a matter of law, a remand is unnecessary....").

In its brief here and in the district court, the Department

identified three factors it claims show that its position was

reasonable. Two of these--the absence of previous challenges to the Secretary's delegation authority and section

2104(a)'s legislative history--were unsuccessfully relied on by

the district court. For its third justification, the Department

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states that "the interpretation the government espoused with

respect to the meaning of section 2104(a) was supported

under the precedent cited in the Federal Register notice and

also argued in Court." What precedents? Reviewing the

final rule ourselves, we can find no citations to relevant

decisions of either this court or any other court. If the

Department means to refer to precedents cited in its brief

before the merits panel, the Department should have identified the cases and explained why they show that its position

was substantially justified. Having done neither, and falling

far short of sustaining its burden of proof, the Department's

brief simply repeats in summary fashion the arguments made

before the merits panel.

The Department has failed to demonstrate that its position

was substantially justified for a very good reason: the merits

panel, as even a cursory review of its opinion reveals, found

the Department's position entirely without merit. Rejecting

the Department's section 322(b) argument on Chevron step

one grounds, the panel held that "the plain meaning of section

2104(a) limits delegation of [Pilotage Act] functions to the

United States Coast Guard and that section 322(b) cannot

fairly be construed to expand the limitation." Halverson, 129

F.3d at 181. The panel reached this conclusion through an

elementary application of three standard canons of statutory

construction, finding resort to other tools of statutory construction or legislative history entirely unnecessary. "[E]ven

if section 322(b)'s scope is ambiguous, requiring recourse to

Chevron step two," the panel concluded, it was "compelled to

reject the Secretary's interpretation as unreasonable because

it 'would deprive [section 2104(a)] of virtually all effect.' " Id.

at 189 (quoting American Fed'n of Gov't Employees, 798 F.2d

at 1528).

Put simply, not only did the merits panel think the issue

before it was easy, but we can find not even a wisp of a

suggestion that it gave any credence to the Department's

argument that section 322(b) authorized delegation of Pilotage Act responsibilities to the St. Lawrence Seaway Development Corporation. And most important, the Department has

offered us no persuasive reason for believing that this was an

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issue over "which reasonable minds could differ." Halverson,

Mem. Op. at 9. If the Department's position in this case was

substantially justified, we can hardly imagine an EAJA case

that the Government will ever lose.

In reaching our conclusion, we emphasize that we have not

relied solely on the fact that the merits panel resolved this

case on Chevron step one grounds. As we made clear in

Vollmer, because the EAJA has its own standard, "[t]he

inquiry into the reasonableness of the Government's position

... may not be collapsed into our antecedent evaluation of

the merits...." Vollmer, 102 F.3d at 595 (internal quotation

marks omitted); see also Cooper v. United States R.R. Retirement Bd., 24 F.3d 1414, 1417 (D.C. Cir. 1994) (finding an

agency's decision, which was overturned as unsupported by

substantial evidence, not substantially justified because it

"lacked a reasonable factual basis") (emphasis omitted);

Wilkett, 844 F.2d at 871 (noting that some arbitrary and

capricious agency actions, such as an agency's "failure to

provide an adequate explanation for its actions or failure to

consider some relevant factor in reaching its decision, may

not warrant a finding that an agency's action lacked substantial justification") (citing Federal Election Comm'n v. Rose,

806 F.2d 1081, 1089 (D.C. Cir. 1986)). Just as Vollmer's

EAJA determination did not rest entirely on the merits

panel's conclusion that the agency's position was unreasonable, we have not based our EAJA determination solely on

the merits panel's conclusion that Congress has "directly

spoken to the precise question at issue." Chevron, 467 U.S.

at 842. While this Chevron case turned out to be quite easy,

other Chevron step one cases have presented quite difficult

issues and involved "substantially justified" arguments on

both sides. A prime example is our decision in Martini v.

Federal National Mortgage Ass'n, 178 F.3d 1336 (D.C. Cir.

1999). A Title VII case in which the Government ultimately

prevailed, Martini considered whether the statute requires

complainants to wait one hundred eighty days after filing a

complaint with the Equal Employment Opportunity Commission before suing in federal court. Finding that it did, we

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considered the relevant statute and surrounding provisions,

evaluated the legislative history, found inconclusive the application of several canons of construction, and inquired into the

purpose of the statute before resting our decision on an

ancillary provision that made Congress's intent sufficiently

clear to resolve the case at Chevron step one. Id. at 1340-48.

By comparison, the merits panel's rejection of the Department's argument in this case rested on the easily ascertainable plain meaning of one provision, section 2104(a).

A final point about our analysis of the merits panel's

decision. The panel characterized the Department's position

in various ways, including "patently erroneous" and "irreconcilable with" canons of construction. Halverson, 129 F.3d at

185. Of course, not all panels use language the same way.

Another panel equally unpersuaded by the Department might

have used words like "unsupported," "unconvincing," or simply "without merit." We thus think it would be unwise for a

prevailing party's eligibility for EAJA fees to turn solely on

the particular words a particular merits panel uses to describe the Government's position. Thus in Vollmer, although

we took account of the merits panel's characterization of the

Government's position as "incredible," we ultimately rested

our award of EAJA fees on our own conclusion that the

Government had offered nothing to demonstrate that its

position was substantially justified. Here too we have certainly considered the merits panel's words, but our EAJA

conclusion rests primarily on our view, informed by an analysis of the merits panel's opinion, that the case was easy and

the Department's arguments worthy of little credence, as well

as on the Department's failure to offer any convincing reasons for believing that its interpretation of section 322(b) was

substantially justified.

The decision of the district court is reversed, and the case

is remanded for the district court to calculate the amount of

fees and expenses the Department must pay to the Pilots.

So ordered.

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