Court Opinion

ID: 4119386
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:39:33.603608+00
Date Added: 2024-06-11T14:46:46.912782
License: Public Domain

Responsibility of Agencies to Pay Attorney’s Fee
             Awards Under the Equal Access to Justice Act
The judgment of attorney’s fees and expenses entered against the United States in Cienega Gardens v.
  United States cannot be paid out of the Judgment Fund because the Equal Access to Justice Act
  provides for payment.
Pursuant to EAJA, the Department of Housing and Urban Development must pay the award. HUD
  would be the “agency over which the [plaintiffs] prevail[ed]” under EAJA because it administered
  the federal program that was the subject of the litigation.

                                                                                 October 16, 2007

         MEMORANDUM OPINION FOR THE ASSISTANT ATTORNEY GENERAL
                             CIVIL DIVISION

   You have asked for our opinion on which agency, if any, must pay the judg-
ment of attorney’s fees and expenses entered against the United States in Cienega
Gardens v. United States, No. 02-5050 (Fed. Cir. Mar. 5, 2004). In particular, you
have asked whether the award may be paid out of the Judgment Fund, under 31
U.S.C. § 1304 (2000), or whether it must be paid out of the appropriations of an
agency responsible for the award under the Equal Access to Justice Act (“EAJA”),
28 U.S.C. § 2412 (2000).
   On December 9, 2005, we advised that the award could not be paid out of the
Judgment Fund, because the Judgment Fund is available only when “payment is
not otherwise provided for.” 31 U.S.C. § 1304(a)(1). EAJA provides for payment,
by directing that a fee award “be 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). We further advised that the Department of Housing and
Urban Development (“HUD”) would be the “agency over which the [plaintiffs]
prevail[ed]” under EAJA, because HUD administered the federal program that was
the subject of the litigation. This opinion confirms our previous advice and
provides additional analysis of these questions.

                                                 I.

    The Federal Circuit imposed the fee award in Cienega Gardens at the close of a
protracted lawsuit challenging amendments to a HUD program designed to
subsidize low- and moderate-income multifamily housing. After almost a decade
of litigation and three rounds of appeals, the United States Court of Appeals for
the Federal Circuit ruled that the amendments constituted a regulatory taking of
the plaintiffs’ property and ordered the United States to pay just compensation.
The court of appeals further ordered that the United States pay the plaintiffs the
attorney’s fees and expenses incurred during their third appeal, the stage of the
litigation during which the plaintiffs prevailed on their takings claims. Before

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considering which instrumentality of the federal government must pay this fee
award, we discuss the relevant events in the Cienega Gardens litigation.

                                         A.

    The plaintiffs in Cienega Gardens were the owners of housing constructed in
the 1970s under the National Housing Act, Pub. L. No. 73-479, 48 Stat. 1246
(1934) (codified as amended at 12 U.S.C. §§ 1701–1750g (2000 & Supp. V.
2005)), and financed with HUD-insured low-interest mortgages. As a condition of
receiving the HUD-insured mortgages, the plaintiffs incorporated into their
mortgage contracts with private lenders a variety of restrictions on the properties,
including restrictions on income levels of tenants, allowable rental rates, and the
rate of return on initial equity that the owners could receive. By their terms, these
restrictions remained in effect for the duration of the mortgage contracts. Under
HUD regulations then in effect, developers retained the right to prepay their loans
and satisfy their mortgage obligations after twenty years. 24 C.F.R. §§ 221.524(a),
236.30(a) (1970). Owners who prepaid the mortgages would be released from the
regulatory restrictions.
    As the twenty-year mark for many HUD-insured mortgages approached, Con-
gress became concerned that large numbers of owners would exercise their
prepayment rights and remove their properties from the low-income housing pool.
Congress found that such an event “would precipitate a grave national crisis in the
supply of low income housing that was neither anticipated nor intended when
contracts for these units were entered into.” Emergency Low Income Housing
Preservation Act of 1987, Pub. L. No. 100-242, tit. II, § 202(a)(4), 101 Stat. 1877,
1877 (1988) (“ELIHPA”); see also S. Rep. No. 101-316, at 105 (1990).
    Congress chose to forestall such an outcome by enacting ELIHPA, which
blocked the owners from exercising their prepayment rights without first obtaining
HUD approval. In order to obtain that approval, the owners were required to
submit a “plan of action” informing HUD of how the developers would use the
property following prepayment. ELIHPA § 223, 101 Stat. at 1879. HUD could
only approve prepayment upon finding that the plan would “not materially
increase economic hardship for current tenants or involuntarily displace current
tenants (except for good cause) where comparable and affordable housing is not
readily available.” Id. § 225(a)(1), 101 Stat. at 1880. In 1988, HUD issued an
interim rule implementing these prepayment restrictions, 53 Fed. Reg. 11,224
(Apr. 5, 1988) (codified at 24 C.F.R. pt. 248 (1989)), and issued instructions to its
field offices detailing the procedures for filing and reviewing plans of action. In
1990, HUD issued a final rule implementing the prepayment restrictions imposed
under the interim rule. 55 Fed. Reg. 38,944 (Sept. 21, 1990) (codified at 24 C.F.R.
pt. 248 (1991)).
    The ELIHPA restrictions would have expired after two years, but Congress
extended them before their expiration, Pub. L. No. 101-494, 104 Stat. 1185 (1990),

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and then made them permanent under the Low-Income Housing Preservation and
Resident Homeownership Act of 1990, Pub. L. No. 101-625, tit. VI, 104 Stat.
4249 (“LIHPRHA”). HUD continued to issue regulations implementing ELIHPA
and LIHPRHA. 1 The plaintiffs were effectively prohibited from prepaying their
mortgages until Congress enacted the Housing Opportunity Program Extension
Act of 1996, which permitted owners to exercise their prepayment rights and be
free from the affordability restrictions if they agreed not to increase their rents
until sixty days after prepayment. See Pub. L. No. 104-120, § 2(b), 110 Stat. 834,
834.

                                                  B.

   In 1994, the Cienega Gardens plaintiffs brought suit in the Court of Federal
Claims challenging their inability to prepay the HUD-insured mortgages under
ELIHPA and LIHPRHA. Cienega Gardens v. United States, 33 Fed. Cl. 196
(1995). Throughout the litigation, the United States was represented by attorneys
from the Civil Division of the Department of Justice (“DOJ”), with attorneys from
HUD appearing on the briefs as “of counsel.” We understand that the Civil
Division and HUD had no significant disagreement over the positions asserted
during the course of the litigation.
   Pursuant to the Tucker Act, 28 U.S.C. § 1491(a)(1) (2000), the plaintiffs named
the United States as the only defendant. Plaintiffs’ complaint charged that the
government had violated several duties allegedly owed to the plaintiffs by
implementing the prepayment restrictions that Congress had imposed through
ELIHPA and LIHPRHA. First, plaintiffs claimed that the government had
breached express contracts with the plaintiffs in the form of the regulatory
agreements that incorporated the prepayment right. Second, plaintiffs claimed that
the government had violated certain statutory directives in the manner in which it
had administered the programs under sections 221(d)(3) and 236 of the National
Housing Act. Finally, plaintiffs claimed that the government had taken their

   1
     See Prepayment of a HUD-Insured Mortgage by an Owner of Low Income Housing, 56 Fed. Reg.
20,262 (May 2, 1991) (proposed rule); Guidelines for Determining Appraisals of Preservation Value
Under the Low-Income Housing Preservation and Resident Homeownership Act of 1990, 56 Fed. Reg.
64,932 (Dec. 12, 1991) (notice and request for public comment); Prepayment of a HUD-Insured
Mortgage by an Owner of Low Income Housing, 57 Fed. Reg. 11,992 (Apr. 8, 1992) (interim rule);
Preservation of Multifamily Assisted Rental Housing: Interim Guidelines for the Section 222(e)
Windfall Profits Test, 57 Fed. Reg. 12,064 (Apr. 8, 1992) (notice of interim guidelines and request for
public comment); Final Guidelines for Determining Appraisals of Preservation Value Under the Low-
Income Housing Preservation and Resident Homeownership Act of 1990, 57 Fed. Reg. 19,970 (May 8,
1992) (notice); Delegation of Authority for the Emergency Low Income Housing Preservation Act of
1987, as Amended by the Low Income Housing Preservation and Resident Homeownership Act of
1990, and as Further Amended by the Housing and Community Development Act of 1992, 58 Fed.
Reg. 63,384 (Dec. 1, 1993) (notice of delegation of authority).

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property without just compensation, in violation of the Fifth Amendment, by
denying them the right to put their property to a more profitable use after twenty
years.
    In the initial round of litigation, the Court of Federal Claims granted summary
judgment in the plaintiffs’ favor on the contract claim, held that plaintiffs could
maintain a claim for a regulatory taking, and ruled in the government’s favor on all
other claims. Cienega Gardens v. United States, 33 Fed. Cl. 196 (1995). The court
then held a trial to determine contract damages for four model plaintiffs. Cienega
Gardens v. United States, 38 Fed. Cl. 64 (1997). On appeal, the Federal Circuit
upheld the rulings in the government’s favor but reversed on the contract claim,
holding that HUD was not in privity with plaintiffs under the regulatory agree-
ments. Cienega Gardens v. United States, 194 F.3d 1231 (Fed. Cir. 1998).
    The case returned to the Court of Federal Claims to address plaintiffs’ remain-
ing claim for a regulatory taking. The trial court dismissed that claim on the
ground that plaintiffs had failed to exhaust their administrative remedies by not
filing a plan of action with HUD seeking a release from the affordability re-
strictions. The Federal Circuit reversed on appeal, however, holding that the
plaintiffs had “set forth uncontested facts demonstrating that it would be futile for
them to file prepayment requests with HUD.” Cienega Gardens v. United States,
265 F.3d 1237, 1248 (Fed. Cir. 2001).
    Following another remand, the trial court rejected the regulatory taking claim
on the merits. The plaintiffs filed a third appeal, and the Federal Circuit again
reversed, ruling that the four model plaintiffs had suffered a regulatory taking and
that the other plaintiffs should be given the opportunity to prove the facts underly-
ing their claims before the trial court. Cienega Gardens v. United States, 331 F.3d
1319 (Fed. Cir. 2003). 2

                                                 C.

   Following their success on the third appeal, the plaintiffs moved for an award
of attorney’s fees and expenses from the United States under EAJA, 28 U.S.C.
§ 2412(d). In relevant part, section 2412(d)(1)(A) provides:

        Except as otherwise specifically provided by statute, a court shall
        award to a prevailing party . . . fees and other expenses . . . incurred
        by that party in any civil action (other than cases sounding in
        tort) . . . brought by or against the United States . . . , unless the court

    2
      The Cienega Gardens litigation has continued, although the subsequent developments are not
relevant to the issues addressed in this opinion. See, e.g., Cienega Gardens v. United States, 503 F.3d
1266 (Fed. Cir. 2007); Independence Park Apts. v. United States, 449 F.3d 1235, on reconsideration,
465 F.3d 1308 (Fed. Cir. 2006).

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          Responsibility of Agencies to Pay Attorney’s Fee Awards Under EAJA

       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). In a brief order, the Federal Circuit granted the motion
for fees and expenses under section 2412(d), but limited the award to those
incurred during the plaintiffs’ third appeal, when the court of appeals reversed the
trial court’s denial of the regulatory taking claim:

       The application is granted in part. The court allows reasonable attor-
       ney fees and expenses pursuant to the EAJA for Cienega III, in the
       amount of $147,373.24 as reasonable attorney fees and $9,386.16 in
       expenses, for a total of $156,759.40.

Order, Cienega Gardens v. United States, No. 02-5050, at 2 (Mar. 5, 2004). To
award fees under this provision, the Federal Circuit was obliged to find that the
efforts of the United States to defend the Court of Federal Claims’ ruling on the
regulatory takings question in the third appeal were not “substantially justified”
and that no “special circumstances” made the award of fees unjust. The Federal
Circuit’s conclusion provided no explanation for why the United States was not
justified in seeking to defend the trial court decision, and on its face, such a ruling
would appear questionable. The United States did not seek further review of that
decision, however.

                                          II.

   In light of the Federal Circuit’s judgment, you have asked which federal agen-
cy, if any, bears responsibility under EAJA to pay the award of attorney’s fees and
expenses in the Cienega Gardens case. EAJA provides that “[f]ees and other
expenses awarded under this subsection to a party shall be 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). In most cases, which federal
agency must pay the award is not likely to be an issue. The defendant in the case
will be a federal agency or an officer acting on behalf of a federal agency, and the
plaintiff’s suit will directly challenge the action or inaction of the government
defendant. In such a case, the “agency over which the party prevails” would be
clearly identified.
   The circumstances of this case, however, have engendered some disagreement
over which agency, or whether in fact any agency, should be responsible for the
award of attorney’s fees and expenses. The plaintiffs did not sue any one agency
but rather brought suit against the United States. Furthermore, the primary issue in
the litigation was whether two statutes enacted by Congress, ELIHPA and
LIHPRHA, had effected an uncompensated taking of plaintiffs’ property. You and
HUD therefore have expressed the view that Cienega Gardens constitutes the rare
case in which no agency bears responsibility for the fee award and in which

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payment should be made out of the Judgment Fund, 31 U.S.C. § 1304, which
Congress established to cover judgments against the United States for which no
appropriation is otherwise available. See Letter for Debra Diener, Chief Counsel,
Financial Management Service, Department of the Treasury, from Carole W.
Wilson, Associate General Counsel for Litigation, Department of Housing and
Urban Development, Re: Cienega Gardens, et al. v. United States, United States
Court of Appeals for the Federal Circuit, Award of Attorneys’ Fees (May 12,
2004) (“HUD Letter”), and attached Memorandum of Law (May 11, 2004) (“HUD
Memo”); Memorandum for Steven Bradbury, Principal Deputy Assistant Attorney
General, Office of Legal Counsel, from Peter D. Keisler, Assistant Attorney
General, Civil Division, Re: Request for New Opinion Concerning Payment of
Judgments under the Equal Access to Justice Act at 10-12 (May 4, 2005) (“DOJ
Letter”).
   The Department of the Treasury, which administers the Judgment Fund, disa-
grees. Treasury notes that the Judgment Fund is available only when “payment is
not otherwise provided for” by federal law, 31 U.S.C. § 1304(a)(1). Letter for
Stuart E. Schiffer, Deputy Assistant Attorney General, Civil Division, Department
of Justice, from Margaret Marquette, Chief Counsel, Financial Management
Service, Department of the Treasury, Re: Cienega Gardens, et al. v. United States,
No. 02-5050 (Fed. Cir.) at 2 (Feb. 1, 2005). Treasury contends that EAJA does
provide for payment of “fees and other expenses” by “any agency over which the
party prevails” and that HUD is the responsible agency under the statute. Treasury
notes that “the cause of action was based upon a statute within HUD’s purview (12
U.S.C. § 4122), DOJ consulted with HUD as the client agency, and HUD attor-
neys were listed on the court briefs as ‘of counsel.’” Id. Based on this understand-
ing, Treasury has declined payment absent an opinion to the contrary from this
office.
   Accordingly, you have asked for this office’s view as to whether the Judgment
Fund is authorized to pay EAJA judgments entered against the United States,
when no agency has been named as a defendant in the litigation. As both Treas-
ury’s response and your memorandum suggest, this question also requires
consideration of whether Congress deemed a particular agency to be responsible
under EAJA for the fee award. For the reasons discussed below, we conclude that
the Judgment Fund is not available to satisfy the fee award, because HUD
constitutes the “agency over which the party prevail[ed]” under EAJA.

                                         A.

   The Judgment Fund is available “to pay final judgments, awards, compromise
settlements, and interest and costs specified in the judgments” against the United
States only when “payment is not otherwise provided for.” 31 U.S.C. § 1304(a)(1).
If Congress has made an appropriation that is reasonably interpreted to cover a
liability incurred by the government, the liability must be satisfied out of that

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appropriation. “The fact that it might be necessary to do some statutory interpreta-
tion to determine if a particular appropriation is available to pay a judgment or
compromise settlement does not preclude use of that appropriation.” Matter of:
S.S. Silberblatt, Inc. v. East Harlem Pilot Block—Payment of Judgment, 62 Comp.
Gen. 12, 16 (1982) (rejecting HUD’s argument that a settlement should be paid out
of the Judgment Fund). 3
    Here, Congress did provide a statutory mechanism for the payment of EAJA
awards by specifically providing that fee awards “shall be paid by any agency over
which the party prevails from any funds made available to the agency by appropri-
ation or otherwise.” 28 U.S.C. § 2412(d)(4). Congress, in other words, intended to
ensure that, to the extent possible, fee awards should be paid by whichever agency,
or agencies, may be described as having been prevailed over in an action against
the United States. Congress did not intend for agencies to turn to the Judgment
Fund to pay a fee award under EAJA, unless it can be said that the plaintiffs did
not prevail over “any agency.”
    The history of EAJA confirms this interpretation. The original version of the
statute provided:

        Fees and other expenses awarded under this subsection may be paid
        by any agency over which the party prevails from any funds made
        available to the agency, by appropriation or otherwise, for such pur-
        pose. If not paid by any agency, the fees and other expenses shall be
        paid in the same manner as the payment of final judgments is made
        in accordance with sections 2414 and 2517, of this title.

Pub. L. No. 96-481, tit. II, § 204(a), 94 Stat. 2325, 2329 (1980) (emphasis added)
(codified at 28 U.S.C. § 2412(d)(4)(A) (Supp. V 1981)). 4 In 1982, this office
opined that Congress had not intended to give the losing agency unfettered
discretion to seek payment from the Judgment Fund, but rather “a reasonable
amount from the unrestricted appropriations of an agency must be allocated to the
payment of awards for fees and expenses” under EAJA. Funding of Attorney Fee
Awards Under the Equal Access to Justice Act, 6 Op. O.L.C. 204, 205 (1982). We
concluded that an agency could seek payment from the Judgment Fund “only
when making an award out of agency funds would be a very heavy financial blow
to the agency[.]” Id. at 211. This office therefore recognized that the previous

    3
      Although the Executive Branch is not bound by the legal opinions of the Comptroller General, in
resolving appropriation issues we consider them for what persuasive value they may have. See, e.g.,
Submission of Aviation Insurance Program Claims to Binding Arbitration, 20 Op. O.L.C. 341, 343 n.3
(1996).
    4
      Sections 2414 and 2517(a) of title 28 set forth the standard procedures for obtaining disburse-
ments from the Treasury to satisfy a judgment against the United States.

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version of EAJA would permit an agency to turn to the Judgment Fund for the
payment of fee awards only under very narrow circumstances.
   Congress eliminated even this narrow agency discretion by amending EAJA in
1985. Rather than providing that an agency “may” pay a fee award from available
funds, Congress declared that the agency “shall” pay the award from agency
funds. Pub. L. No. 99-80, § 2(d), 99 Stat. 183, 185 (1985). Congress also eliminat-
ed the second sentence of the former section 2412(d)(4)(A) that permitted the
agency to treat a fee award like other judgments. EAJA now provides simply that
“[f]ees and other expenses awarded under this subsection to a party shall be 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) (emphasis added).
These amendments confirm that Congress did not intend that the Judgment Fund
be used to pay fee awards under EAJA. The Judgment Fund is available to pay a
fee award only if there is no agency over which the plaintiffs can be said to have
prevailed under EAJA.

                                         B.

    We therefore turn to the question whether “any agency” may be held responsi-
ble for the Cienega Gardens fee award. As a general rule, the “agency over which
the party prevails” under EAJA will be the agency whose regulatory interest was
at stake in the litigation and whose actions or policies are successfully challenged
in the court action. This interest may be identified by the fact that the agency took
affirmative action against the prevailing party, in the form of a regulation or
administrative ruling, or it may be identified by the fact that the agency had
statutory authority over the regulatory program that the prevailing party success-
fully challenged. In a typical case, that agency may be named as the plaintiff or the
defendant, but EAJA does not require that the agency itself be specifically named
as a party. These considerations, as we explain, point towards the conclusion that
HUD is the agency responsible under EAJA.
    EAJA provides that a court shall award fees upon finding that the “position of
the United States” is not “substantially justified.” 28 U.S.C. § 2412(d)(1)(A).
EAJA defines the “position of the United States” to mean “in addition to the
position taken by the United States in the civil action, the action or failure to act
by the agency upon which the civil action is based.” Id. § 2412(d)(2)(D) (emphasis
added). It further provides that “[w]hether or not the position of the United States
was substantially justified shall be determined on the basis of the record (including
the record with respect to the action or failure to act by the agency upon which the
civil action is based) which is made in the civil action for which fees and other
expenses are sought.” Id. § 2412(d)(1)(B) (emphasis added). Congress added these
latter two provisions in the same 1985 amendment in which it clarified that
agencies could not use the Judgment Fund to pay fee awards assessed against them
under EAJA. Pub. L. No. 99-80, §§ 2(b), 2(c)(2), 99 Stat. 183, 184–85. Before the

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1985 amendment, several courts had interpreted EAJA to prohibit consideration of
the actions of the agency that preceded the lawsuit. 5 Congress thus made clear
through the 1985 amendment that EAJA predicates responsibility for the fee award
not simply on the litigating position of the United States, but on the course of
regulatory action, or inaction, giving rise to the position of the United States over
which the private litigants prevailed.
    This definition of the “position of the United States” is consistent with the
purpose underlying EAJA. As the Supreme Court has explained, “Congress passed
the EAJA in response to its concern that persons ‘may be deterred from seeking
review of, or defending against, unreasonable governmental action because of the
expense involved in securing the vindication of their rights.’” Sullivan v. Hudson,
490 U.S. 877, 883 (1989) (quoting Pub. L. No. 96-481, § 202(a), 94 Stat. 2321,
2325 (1980)). Through EAJA, Congress sought “to diminish the deterrent effect of
seeking review of, or defending against, governmental action by providing in
specified situations an award of attorney fees, expert witness fees, and other costs
against the United States.” Pub. L. No. 96-481, § 202(b)(1), 94 Stat. at 2325.
Congress sought therefore to reduce the cost, and consequent deterrent effect, of
challenging or defending against unreasonable government action. Hudson, 490
U.S. at 883 (“When the cost of contesting a Government order, for example,
exceeds the amount at stake, a party has no realistic choice and no effective
remedy. In these cases, it is more practical to endure an injustice than to contest
it.”) (quoting S. Rep. No. 96-253, at 5 (1979)). By the same token, by transferring
the costs of litigation to the agency responsible for the subject matter of the
litigation and whose actions or policies are under challenge, EAJA would deter the
“unreasonable governmental action” that gave rise to litigation in the first place.
    EAJA further recognizes that the agency responsible for the fee award need not
be a named party to the lawsuit. EAJA provides that a “prevailing party” may win
fees, but the statute contains no corresponding requirement that the agency “over
which the party prevails” have been a named party to the litigation. See 28 U.S.C.
§ 2412(d)(1)(A), (d)(4). Indeed, EAJA recognizes that fees may be awarded in any
action “brought by or against the United States,” id. § 2412(d)(1)(A) (emphasis
added), which is defined to include not only the government as a named party but
also “any agency and any official of the United States acting in his or her official
capacity.” Id. § 2412(d)(2)(C). In assigning responsibility for the payment of fee

     5
       See Spencer v. NLRB, 712 F.2d 539, 546–57 (D.C. Cir. 1983) (concluding that “‘the position of
the United States,’ for the purposes of the Act, means the arguments relied upon by the government in
litigation,” not the underlying action of the government); Gava v. United States, 699 F.2d 1367, 1371
(Fed. Cir. 1983) (“In determining an application for attorney’s fees under the Act, the inquiry is
directed to the justification for the government’s litigating position before the court, not the justification
for the government’s administrative action that prompted the suit.”). But see Natural Res. Def. Council
v. EPA, 703 F.2d 700, 707 (3d Cir. 1983) (“We hold that the word ‘position’ refers to the agency action
which made it necessary for the party to file suit.”).

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awards, however, Congress stated that the fees shall be paid by “any agency over
which the party prevails,” id. § 2412(d)(4), and not by “the United States” or by
one of its officials. This difference in language confirms that the “agency over
which the party prevails” will include the agency whose conduct led to “the
position of the United States,” even if the agency was not named as a party to the
litigation.
    Applying these principles to the case at hand, we believe that EAJA assigns
responsibility for the fee award in the Cienega Gardens case to HUD, the agency
charged with administering the federal statutory scheme in question. HUD issued
the regulations in 1970 that were incorporated into plaintiffs’ mortgage notes and
initially gave them the right to prepay their HUD-insured loans after twenty years
and be released from the affordability restrictions. Following Congress’s enact-
ment of ELIHPA and LIHPRHA, HUD again issued regulations that implemented
those statutes and recognized what the Federal Circuit held to be the loss of
plaintiffs’ prepayment rights. Plaintiffs’ successful takings claims were predicated
on the uncompensated deprivation of property rights created and rescinded under
this HUD-administered regulatory scheme. Under these circumstances, we believe
that the plaintiffs are most reasonably said to have prevailed over HUD.
    In opposition to this conclusion, HUD maintains, and you agree, that HUD
should not be deemed the agency responsible for the fee award, because HUD
lacked any institutional interest in the litigation surrounding plaintiffs’ takings
claim. HUD Memo at 4; DOJ Letter at 7. HUD took no direct action against any of
the plaintiffs, who did not file any petition with HUD, but instead brought suit in
the Court of Claims following the enactment of ELIHPA and LIHPRHA. In
addition, plaintiffs’ takings claims did not challenge any HUD regulation or
administrative decision, and the outcome of the litigation—a monetary award
compensating the plaintiffs for their losses—did not affect or alter any existing
HUD program. HUD Memo at 4; DOJ Letter at 7. HUD acknowledges that it had
an institutional interest in the earlier stages, where the plaintiffs asserted claims for
breach of contract and administrative violations. HUD Memo at 7. The agency
maintains, however, that once the dismissal of those claims was upheld on appeal,
HUD had no remaining interest in the litigation, and specifically had no institu-
tional interest in the third appeal that was the subject of the fee award. At that
point, “the plaintiffs’ only remaining claim . . . was that the enactment of
LIHPRHA constituted a temporary regulatory taking of a property right.” Id. The
governmental entity that effectuated the unconstitutional taking was Congress,
which enacted the statutes that of their own force deprived the plaintiffs of their
property interests. DOJ Letter at 10. Under this view, HUD itself lacked any
institutional interest in the litigation by the time of the fee award, and therefore, it
should not be deemed to be the agency over which the plaintiffs prevailed.
    We disagree, however, with the suggestion that HUD lacked a regulatory inter-
est in plaintiffs’ takings claims. HUD acknowledges its “institutional interest” in

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the breach of contract and administrative law claims that arose out of its actions in
granting the prepayment rights and then in restricting prepayment under ELIHPA
and LIHPRHA. HUD Memo at 7. We see no reason why this institutional interest
would not extend to the takings claims that arose out of the very same actions. 6
The Cienega Gardens litigation directly challenged the constitutionality of the
HUD-administered changes to the low-income housing program. HUD issued the
regulations that originally set the terms of plaintiffs’ prepayment rights, and when
Congress enacted ELIHPA and LIHPRHA, HUD was not a passive observer to
events. Rather, HUD issued regulations and other guidance recognizing the loss of
the plaintiffs’ prepayment rights and setting the terms under which HUD would
approve prepayment in the future. By the time of the Federal Circuit’s judgment,
Congress may have relaxed the restrictions on prepayment through a 1996 statute,
see supra p. 231, but that was merely a fortuity. Had Congress not altered the
statutory scheme, the Federal Circuit decision likely would have led HUD to alter
its regulatory policies to prevent the United States from being exposed to continu-
ing liability based on regulatory takings claims.
    It is true that the Cienega Gardens plaintiffs brought suit against the United
States in the Court of Claims without first petitioning HUD for the right to prepay
the mortgages in question. HUD Memo at 7. The Federal Circuit found that such
an action would have been futile, however. Cienega Gardens, 265 F.3d at 1248.
HUD’s regulations provided that plaintiffs could only exercise their prepayment
right if HUD was satisfied that the plaintiffs’ plan of action would not unduly
diminish the availability of low-income housing. 7 Plaintiffs contended that they
could not meet that standard, and the Federal Circuit found the facts underlying
this contention to be undisputed. Cienega Gardens, 265 F.3d at 1248. Plaintiffs’
successful takings claim amounted to a declaration that the existing HUD regula-
tions reflected an uncompensated taking of their prepayment rights. The fact that
the remedy in the case was compensation, rather than injunctive relief directed at

   6
      Indeed, as HUD notes, the agency’s attorneys appeared “of counsel” on the government’s briefs
throughout the litigation, including on the third appeal. HUD Memo at 7. We do not regard the
participation of counsel as a basis ipso facto for assigning responsibility to HUD, but the participation
of HUD attorneys does confirm that HUD constituted the agency with the specific regulatory interest in
the Cienega Gardens litigation.
    7
      HUD states that it “never promulgated regulations to enforce the restrictions on prepayment
contained in ELIHPA and LIHPRHA. HUD’s regulations permitting prepayment after twenty years
remained in effect throughout the time when prepayment was restricted by those statutes.” HUD Memo
at 2. HUD, however, issued multiple sets of regulations to implement ELIHPA and LIHPRHA, see
supra p. 218 & n. 1, including regulations to implement the “plan of action” restriction on prepayment.
See 24 C.F.R. § 248.221(b)(1)(i) (1993) (“The [Federal Housing] Commissioner may approve a plan of
action that involves termination of the low income affordability restrictions only upon a written finding
that . . . [t]he supply of vacant, comparable housing is sufficient to ensure that the prepayment will not
materially affect . . . [t]he availability of decent, safe and sanitary housing affordable to lower income
and very low income families in the area . . . .”).

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the agency, does not alter the fact that HUD’s actions and policies were at issue in
the litigation.
   In addition to suggesting that HUD lacked a regulatory interest in the takings
claim, you and HUD suggest that HUD should not be held responsible for the fee
award on the ground that the agency itself did not engage in any unreasonable
action to cause plaintiffs’ loss. HUD Memo at 7; DOJ Letter at 9. The Federal
Circuit described Congress as the responsible actor in taking plaintiffs’ property
through the enactment of ELIHPA and LIHPRHA. See, e.g., Cienega Gardens,
331 F.3d at 1328 (describing the questions on the appeal as whether plaintiffs’
property interest was “taken by the enactment of ELIHPA and LIHPRHA” and
whether “the regulatory restriction in the statutes” was significant enough to
require compensation). Under this view, HUD’s regulatory actions amounted to
nothing more than implementing the directives of ELIHPA and LIHPRHA. HUD
did not add to plaintiffs’ injury, and HUD lacked any statutory authority to
determine whether those federal laws constituted a taking or to provide the
plaintiffs with payment for any lost property interest. Because HUD took no
wrongful action, you maintain that “making HUD pay EAJA fees, under the
circumstances, would not promote Congress’s primary reason for making agencies
liable for EAJA fees: to penalize unreasonable agency action.” DOJ Letter at 8.
   We do not disagree that HUD did nothing more than carry out its statutory
obligations in this case, yet that fact does not relieve HUD of its responsibilities
under EAJA for fees and costs incurred by plaintiffs who successfully challenged
the HUD-administered program. Congress may be the entity most responsible for
the regulatory takings recognized by the Federal Circuit, but Congress clearly
cannot be the “agency over which the plaintiffs prevailed.” See 5 U.S.C.
§ 551(1)(A) (excluding Congress from the definition of “agency” under the
Administrative Procedure Act). It is no doubt true that “Congress’s primary reason
for making agencies liable for EAJA fees” is “to penalize unreasonable agency
action.” DOJ Letter at 8. Yet EAJA does not require a specific finding of fault
before an agency may be held responsible for the award; it requires only a
showing that the “position of the United States” was not “substantially justified.”
28 U.S.C. § 2412(d)(1)(A). Upon finding that the “position of the United States” is
not “substantially justified,” EAJA requires payment from the “agency over which
the plaintiffs prevailed” without regard to whether the agency properly or improp-
erly exercised its discretion.
   For the above reasons, we conclude that HUD does constitute the agency over
which the plaintiffs prevailed in Cienega Gardens. The agency responsible to pay
a fee award against the United States under EAJA is the agency whose regulatory
interest is at stake in the litigation. This interest may be identified by the fact that
the agency took affirmative action against the prevailing party, in the form of a
regulation or administrative ruling, or it may be identified by the fact that the
agency had statutory authority over the regulatory program that the prevailing

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party successfully challenged. By either measure, HUD would constitute the
agency responsible to pay the fee award to the Cienega Gardens plaintiffs.

                                                   C.

   Our conclusion that HUD bears responsibility for the fee award does not end
our analysis, because EAJA provides for payment by “any agency over which the
party prevails,” suggesting that more than one agency may bear responsibility.
Accordingly, we must consider whether another agency, namely DOJ, should be
deemed jointly responsible. HUD suggests that if the plaintiffs prevailed over any
agency, it was DOJ, because “DOJ, not HUD, was entirely responsible for the
arguments made and briefs filed in the third appeal” for which the plaintiffs were
awarded fees. HUD Memo at 7. HUD further points out that DOJ, not HUD, had
the ability to settle the litigation. Id.; see 28 U.S.C. § 2414 (2000). This would be
true in most cases involving the federal government, however. With the exception
of independent agencies that have their own litigating authority, the Attorney
General has the statutory authority to control the course of any litigation brought
by or against the United States or one of its agencies. 28 U.S.C. § 516 (2000). We
do not believe that Congress intended for DOJ to be deemed the “agency over
which the party prevails” under EAJA merely by virtue of its statutorily mandated
role as litigating counsel. 8 If we were to adopt such an interpretation, DOJ would
become responsible for all fee awards under EAJA (except those involving
independent agencies), even when the plaintiff has named an agency like HUD as
the defendant and has clearly challenged a specific agency action as unreasonable.
This interpretation would render largely superfluous the 1985 amendment, in
which Congress made clear that the “position of the United States” includes more
than the arguments advanced in the briefs; it includes also the “action or failure to
act . . . upon which the civil action is based.” 28 U.S.C. § 2412(d)(2)(D).
   Our view that the regulating agency, and not DOJ, would constitute the agency
subject to a fee award is consistent with fee-shifting principles and fee-shifting
statutes that govern private litigation, which generally impose fee awards on the
parties to the lawsuits, not on the lawyers who represent them. 9 Indeed, parties

    8
      We need not address whether our conclusion would be any different in a case in which DOJ
attorneys engaged in acts of litigation misconduct or advanced a legal argument contrary to the views
of the agency involved. We understand that there was no such disagreement or misconduct in this case.
    9
      Some fee-shifting statutes specifically identify the party responsible for the fee award. See, e.g.,
29 U.S.C. § 2617(a)(3) (2000) (Family and Medical Leave Act) (“The court in such an action shall, in
addition to any judgment awarded to the plaintiff, allow a reasonable attorney’s fee, reasonable expert
witness fees, and other costs of the action to be paid by the defendant.”) (emphasis added); 42 U.S.C.
§ 2000e-5(k) (2000) (Title VII) (“In any action or proceeding under this subchapter the court, in its
discretion, may allow the prevailing party, other than the Commission or the United States, a
reasonable attorney’s fee (including expert fees) as part of the costs, and the Commission and the
United States shall be liable for costs the same as a private person.”) (emphasis added). Others speak

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bear responsibility for fee awards in the same manner that they do for judgments.
It is the exceptional circumstance when a statute or rule specifically identifies that
counsel, in addition to the litigant, may be responsible for sanctions or fees. 10
DOJ’s authority to direct litigation in the federal courts may provide it with
somewhat greater control over the “position of the United States” than a typical
attorney would have over the position of the client, yet we see no basis in EAJA to
suggest that Congress intended to adopt a novel rule, where counsel would be
subject to liability based upon a good faith defense of the position of their clients.
Rather, we believe that EAJA, by providing that the fees shall be paid by the
“agency over which the party prevails,” provides that the responsible agency—
whether or not named as a party adverse to the prevailing party—would be the
agency that functions as the relevant adversary for fee-shifting purposes, because
the litigation implicates its regulatory interests and challenges the agency’s actions
or policies. 11

                                                    III.

   For the reasons given, we conclude that HUD constitutes the agency over
which the Cienega Gardens plaintiffs prevailed under EAJA. Because EAJA
provides for payment, the Judgment Fund is not available and, therefore, the award
must come out of HUD appropriations.

                                                           STEVEN A. ENGEL
                                                     Deputy Assistant Attorney General
                                                         Office of Legal Counsel

in terms of the “prevailing party,” but the fee judgment falls on the losing party, not the losing party’s
counsel. See, e.g., 15 U.S.C. § 1117(a) (2000) (Lanham Act) (“The court in exceptional cases may
award reasonable attorney fees to the prevailing party.”).
     10
        See, e.g., Fed. R. Civ. P. 37(a)(4)(A) (providing in discovery that “the court shall, after affording
an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the
party or attorney advising such conduct or both of them to pay to the moving party the reasonable
expenses incurred in making the motion, including attorney’s fees”).
     11
        We note that our view does not mean that DOJ could never be the “agency over which the party
prevails.” A different case would be presented if DOJ’s own actions or policies were challenged in the
litigation. See Memorandum for Stephen R. Colgate, Assistant Attorney General, Justice Management
Division, from Richard Shiffrin, Deputy Assistant Attorney General, Office of Legal Counsel, Re:
Payment of Attorney’s Fees Under the Equal Access to Justice Act (Aug. 25, 1994) (acknowledging
DOJ’s responsibility to pay EAJA fee award where DOJ had intervened in bankruptcy litigation to
challenge, unsuccessfully, the constitutionality of the Bankruptcy Amendments and Federal Judgeship
Act of 1984).

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