Opinion ID: 416730
Heading Depth: 2
Heading Rank: 3

Heading: The Substantially Justified Standard

Text: 9 The legislative history assists us in construing the statutory phrase, substantially justified. The House Committee on the Judiciary's report on the EAJA states:The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and in fact, no award will be made.... 10 The standard, however, should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. 11 Id. 12 Other Circuits have adopted the reasonableness test. For instance, S & H Riggers & Erectors, Inc. v. OSHRC, 672 F.2d 426 (5th Cir.1982), applied this standard to deny an application for attorney's fees where one of the Government's three contentions advanced a novel but credible extension or interpretation of the law, even though it was inconsistent with existing precedent in the circuit. Id. at 431 (quoting H.R.Rep. No. 1418, 96th Cong., 2d Sess. 11, reprinted in 1980 U.S.Code Cong. & Ad.News 4984, 4990). United States for Heydt v. Citizens State Bank, 668 F.2d 444 (8th Cir.1982), affirmed a district court's denial of attorney's fees in a case where a taxpayer successfully narrowed an IRS summons because [t]he district court found that the summons had been issued in good faith and for a proper purpose. Id. at 448. In Donovan v. Dillingham, 668 F.2d 1196 (11th Cir.1982) reh'g granted, id. at 1199, the Eleventh Circuit appears to have applied a reasonableness test. That case denied attorney's fees where another circuit had decided the question adversely to the Government, but at the time of the appeal it was not clear that there was controlling precedent in the circuit. Id. at 1199. It appears to us that reasonableness is the correct test for determining whether the Government's position was substantially justified.