CHEYENNE – Cheyenne attorney Karen Budd-Falen has raised a furor among ranching communities in Wyoming and elsewhere in the West by claiming that environmental groups are abusing federal statutes and collecting billions of dollars in attorneys’ fees from the public treasury.
In an October 3, 2009 guest opinion in the Wyoming Livestock Roundup, Budd-Falen said, “Environmental groups are receiving billions of federal taxpayer dollars in attorney fees for settling or ‘winning’ cases against the federal government.” (Emphasis in original).
On November 3, U.S. Representatives Cynthia Lummis (R-WY) and Rob Bishop (R-UT), writing for the Congressional Western Caucus, sent a letter to US Attorney General Eric Holder alleging abuse of the Equal Access to Justice Act (EAJA) by “certain organizations” and citing “alarming” figures presented by “an independent law firm.” The letter urged the Department of Justice to set up a searchable database detailing disbursements made under the act, which enables the payment of the attorney fees.
On November 7, Lummis and Bishop wrote a guest editorial in the Billings Gazette in which they repeated Budd-Falen’s charges and her incredible numbers, which they attributed to an anonymous “Wyoming-based law firm“: “Over the years, these groups have been able to force the federal government to pay out billions of dollars for attorney fees and costs.” Later in the month, Fox Television News picked up the story, interviewed Budd-Falen on camera, and commented, “Sometimes they [environmentalists’ lawyers] are paid if they lose.”
Attorneys from the environmental groups say Budd-Falen’s calculations are wildly inaccurate, deceitful and defamatory. An analysis by WyoFile indicates that Budd-Falen’s research contains no support for her assertion that these fee payments are anywhere near “billions”.
Lummis Wants to Shine
Rep. Lummis, moved by Budd-Falen’s figures, says she plans to introduce a bill in Congress on the issue. Her bill would require federal agencies to provide a readily accessible means of determining how much is being paid to whom under federal statutes authorizing attorneys’ fees to litigants—plaintiffs or defendants– who prevail in lawsuits against the government. Lummis said she decided to address the issue after she read Budd-Falen’s allegations and also learned that the federal government is no longer required to report on recipients and the amounts.
“The information I received from Karen Budd-Falen indicates that these fees might be quite large and that certain environmental groups might be receiving such large payments as to draw suspicion on my part as to what is motivating these lawsuits,” Lummis told WyoFile in a telephone interview this month. “I’m simply wanting to shine a light on this expenditure of taxpayer monies.”
Who Pays for the Lawyer?
In the United States, the loser in a lawsuit does not have to pay the winner’s attorney’s fees unless obligated to do so by a contract or a law specifically authorizing such an award. Many federal statutes do exactly that, authorizing a court to allow fees to a prevailing party in a proceeding in which the government agency, whether involved in the litigation as a plaintiff or a defendant, is found to have violated the federal laws and regulations. The Equal Access to Justice Act, which is the focus of Budd-Falen’s work, was passed by Congress to give citizens a tool to lessen the risk of challenging the power of the federal government by allowing them to recoup attorneys’ fees when they prevail– and also meet several other requirements that federal judges have broad discretion to apply.
Budd-Falen argues that tax-exempt environmental groups should not be able to use these fee-shifting laws because some of the groups are well-heeled and can afford to pay their own lawyers. She claims that some of these non-profit groups use the fee awards just to finance the filing of more lawsuits, a sort of self-perpetuating lawsuit industry.
On the other hand, environmental lawyers say Budd-Falen’s crusade is ultimately motivated more by a dislike of the substance of the decisions being made in their successful cases, rather than the awards of fees.
And others point out that the fee-shifting laws benefit many besides environmentalists. Two Northern Plains lawyers who have represented agricultural producers in cases where fees were awarded, believe these fee-shifting statutes are helpful to their clients.
“Given how expensive it is to sue the government, this is an important protection of an individual’s right to try to correct government mistakes,” says Susan Schneider, director of the graduate program in agricultural law at the University of Arkansas, which also houses the National Agricultural Law Center.
EAJA “is important overall as a safeguard of individual rights when dealing with government action,” Schneider said.
Route to ‘Billions’
According to a December 2009 article in the Wyoming Livestock Roundup, concerns about the attorneys’ fees going to environmental groups arose during a 2007 meeting of the Idaho Cattlemen’s Association, and led that group to join with a Farm Bureau coalition to form an organization called the Western Legacy Alliance.
Legacy Alliance President Jeff Faulkner stated in the article that people at the meeting “gave us $30,000 in five minutes” to investigate.
“We knew we wanted to de-fund environmental groups, but we didn’t know what was going on,” Faulkner said.
Faulkner said Budd-Falen has helped the group with research on the issue.
“We’ve had folks tell us that if we do away with EAJA [Equal Access to Justice Act], we’ll lose funding ourselves, “ Faulkner said in the article. “Karen pulled the same numbers for the Idaho court to see how much our side had garnered through EAJA and it was zero.”
In Budd-Falen’s widely reprinted 2009 opinion piece, she began her journey to the “billions” by noting that from 2003 until mid-2007, payments from the federal government’s “Judgment Fund”  totaled $4.7 billion. But the attorney fees to environmental groups, which are the target of her campaign, are mainly paid from the Equal Access to Justice Act, not the Judgment Fund. When Congress had re-authorized EAJA in 1985, it amended the statute by removing the Judgment Fund as a source of payment. Payments from the Judgment Fund are authorized under nearly 100 federal statutes — including damages awarded under the Federal Tort Claims Act. Only seven of those are environmental protection statutes.
After stating the billions paid out of the Judgment Fund, Budd-Falen presented her finding that eight environmental groups had filed 1,596 lawsuits against the federal government between 2000 and 2009. Then she asserted: “On the other end, these same environmental groups are receiving billions of federal tax payer dollars in attorney fees for settling or ‘winning’ cases against the federal government.”
Representatives of environmental groups contacted by WyoFile said they had no objection to Lummis’ effort to make the payments for fees more transparent to the public. They did, however, express strong concerns about the accuracy of Budd-Falen’s work.
A representative of the Center for Biological Diversity, one of the environmental groups that Budd-Falen has highlighted in her report, sent her a letter in November focusing on her assertion that environmental groups were receiving “billions” in attorneys’ fees. That statement was “not only inaccurate and defamatory, it is misleading and deceitful regarding a matter of public concern,” wrote Brent Hendricks, general counsel of the group.
John Kostyack of the National Wildlife Federation in Washington, the nation’s largest conservation organization, said Budd-Falen’s allegation that the Federation had filed 427 lawsuits over the past 15 years was not close to being accurate.
“Virtually all our cases are as part of a coalition of environmental groups, or as intervenors or amicus [friend of the court], where we are not the lead attorneys receiving fees,” he said. “We pick cases carefully, choosing cases where the violation is pretty clear.” Sometimes, he said, the group intervenes to support – rather than challenge – the government’s decision.
WyoFile’s calculations show that the average attorneys’ fees award in each of the 1,596 cases Budd-Falen counted in her September report would have had to be $1.25 million to reach “billions” (i.e., at least $2 billion). In a later report, Budd-Falen raised her count to 2,875 suits involving environmental groups. Even using that number, the average award would have had to be nearly $700,000 to reach “billions.” Budd-Falen did not respond to WyoFile requests for documentation of her “billions” assertion. Even the Western Legacy Alliance, in a November press release, characterized Budd-Falen’s report as substantiating “nearly $10 million in payouts.”
Tracking the Dollars
No one contacted by WyoFile, however, disagrees with Budd-Falen’s assertion that the amounts paid as fees under EAJA are difficult to determine, because the government provides no central data system or tracking of these payments from the agency’s budgets.
EAJA was enacted decades ago, emerging from a Congressional concern – according to the U.S. Supreme Court – “that the Government, with its vast resources, could force citizens into acquiescing to adverse Government action, rather than vindicating their rights, simply by threatening them with costly litigation.”
The law provides that individual litigants with a net worth of less than $2 million; for-profit organizations with a net worth of less than $7 million; agricultural co-ops; and IRS-recognized tax-exempt organizations are all eligible to receive attorney’s fees under the EAJA.
The court must find that the individual or group seeking the fees prevailed in the suit, that the government’s position was not substantially justified, and that no special circumstances would make payment unjust. These restrictions are significant, requiring “more than just winning the case,” said Schneider from the agricultural law program in Arkansas.
Also, a 1996 amendment to the EAJA capped fee payments for litigation in court at $125 an hour unless the court finds that an increase for inflation is proper or that a limited availability of qualified attorneys for the proceedings justifies a higher fee.
In Budd-Falen’s September report, the only statistics that actually showed attorneys’ fees payments from EAJA was a report from the U.S. Forest Service of 44 fee payments totaling $1.7 million between 2003 and 2005. Nine of these payments went to non-environmental groups. In other Forest Service data, Budd-Falen also found fee reimbursements over the past 10 years of nearly $1 million to the Western Watersheds Project in Idaho.
Environmental Cases a Minority
A WyoFile review of a federal court database that included decisions by the U.S. appeals and district courts (but not cases settled before a decision) indicated that the vast majority in which EAJA payments were discussed were non-environmental cases.
For example, the search showed 2,307 cases involving Social Security; 1,347 cases involving veterans’ benefits; 921 cases involving labor or employment. By contrast, a broad search designed to turn up cases where EAJA was discussed in connection with words from the names of environmental groups or titles of federal environmental laws produced only 370 cases– and many of them were not cases actually involving environmental laws or groups. Several of the cases in this search resulted in livestock or commodity groups or landowners receiving attorneys’ fees from the government.
None of the most recent 25 court of appeals decisions produced by the search resulted in an award of fees to a conservation organization, but three of them resulted in a denial of fees to such groups, including the 10th Circuit’s reversal of an award of $175,000 in fees to Biodiversity Conservation Alliance of Laramie. Two of the most recent 25 circuit court decisions, on the other hand, allowed a fees award to an agricultural group. In 2007, the 9th Circuit affirmed an attorneys’ fees award of about $18,000 to two Montana farming corporations that had challenged the U.S. Agriculture Department’s decision on crop disaster claims. In a 2005 case, the D.C. Circuit found that a milk-marketing co-op was a “prevailing” party under the EAJA in a suit against the USDA over butterfat pricing, but reversed a portion of the $101,000 award for fees and costs because the district court had allowed a rate of $385 and $325/hour for some of the attorneys’ work.
Three federal district court cases from recent years also illustrate these points. In a Minnesota case last year, the Sierra Club and other environmental groups successfully challenged a timber sale and road-building project in a national forest, and then sought $230,000 in fees. The Forest Service acknowledged that the plaintiffs were “prevailing parties,” but argued that the agency’s position was substantially justified. The court had found that the Forest Service’s decision was arbitrary and capricious, but nevertheless determined that the USFS position was reasonable, and denied the fees.
In a federal court case last year in Iowa, on the other hand, the plaintiff livestock company sued the U.S. Department of Agriculture seeking judicial review of a determination that plaintiff had illegally converted wetlands. The plaintiff was successful and sought $57,000 in fees at $175 and $185/hour for both administrative and judicial proceedings. The government raised several objections, arguing that fees were not allowed for the administrative proceedings and that its position was substantially justified, but the court ruled in favor of the plaintiff and awarded the fees.
In a 2005 decision by the federal district court in Billings, Mont., the Ranchers Cattlemen Action Legal Fund (R-CALF) was awarded $80,000 in attorney fees at $150/hour after suing to prevent the U.S.D.A. from relaxing a rule banning importation of bovine products from Canada. That case was dismissed in an early stage, after issuance of a preliminary injunction.
In an interview with WyoFile, Budd-Falen acknowledged that most of her research looked at cases that were decided during the Bush administration, which most observers consider to have been much more friendly to business than to the environment. Yet, Budd-Falen said her research shows that the federal government was more willing to settle with and pay fees to environmental groups than to “groups representing the property owner side or commodity side of the issue.” She said career bureaucrats in “middle management” of the agencies have been making the settlements.
Budd-Falen does not believe that the ascendancy of a Democratic administration more sympathetic to environmental protections could turn the tables, making the EAJA more valuable to landowners or commodity groups and less needed by environmental groups.
“We have not seen any fall-off in the number of cases filed by environmental groups” since President Obama came to power, she said. “Look at their websites. They have announced they are stepping up suits about the listing of endangered species and considering global warming.”
Budd-Falen contends that many of the attorneys’ fee awards to environmental groups are granted because the agencies are unable to comply with tight procedural requirements in the laws. She argues that the fees payments drain funds the agencies could be using for programs to protect national forests, wildlife and recreation opportunities.
She also argues that it is unfair to allow groups such as Sierra Club or National Wildlife Federation to recover attorneys’ fees as “non-profit groups recognized by IRS” because their top officers earn mid-six-figure salaries and their net assets are far above the $7-million ceiling enforced against for-profit groups under EAJA.
John Buse, legal director for the Center for Biological Diversity, a Tucson, Ariz.-based group, said Budd-Falen has not responded to the group’s November letter. Buse charged that “Budd-Falen and the Congressional Western Caucus … are not concerned with the fees so much as with the fact that the illegal decisions that have been made by the federal agencies under environmental laws are being overturned” in lawsuits brought by environmental groups.
The National Wildlife Federation’s Kostyack agreed.
“Budd-Falen represents economic interests who would prefer that our environmental laws were not enforced,” he said. “Congress passed these laws with the idea that water would be kept clean and that wildlife would be protected and they recognized that citizen enforcement might be necessary to make that happen.”
Buse said that without the EAJA, the environmental laws passed by Congress would be eviscerated because citizens would be unable to challenge agency actions that violate those laws.Budd-Falen Firm has Sought Fees
Budd-Falen told WyoFile that in recent years the net worths of her firm’s clients have been above the maximum EAJA allows for the recovery of fees. A search of a database of federal court decisions showed that the firm has unsuccessfully sought attorneys’ fee awards for its clients in at least three lawsuits under EAJA or a similar statute that applies in criminal cases. In a 2000 decision, the U.S. 10th Circuit Court of Appeals affirmed a Colorado federal district court ruling that denied fees to her client, the Shooting Star Ranch, because insufficient evidence was presented to show that the client’s net worth met the EAJA maximum. In a 1998 decision by a Colorado federal court, fees were denied to another of the firm’s ranching clients for the same reason.
In 1999, the Budd-Falen firm sued to recover attorneys’ fees for Harvey Frank Robbins Jr. after he had been acquitted of criminal charges of interfering with a Bureau of Land Management employee. The claim for fees was made pursuant to a statute allowing fees in certain criminal cases where the prosecution is determined to be in bad faith. The 10th Circuit rejected the claim, finding that the appeal of the district court’s ruling denying fees was not filed on time.
Subsequently, Karen Budd-Falen represented Robbins in a suit against two BLM employees for damages, alleging they tried to coerce Robbins into granting an easement to federal land. Budd-Falen sued under the Fifth Amendment and under the Racketeer Influenced and Corrupt Organizations Act. The case went to the U.S. Supreme Court, which in June 2007, affirmed the dismissal of the suit. Liberal-leaning Harvard Law Professor Lawrence Tribe did the oral argument for Robbins, and two liberal-leaning justices led by Ruth Bader Ginsburg dissented.
Some Ag Lawyers Value EAJA
In addition to Schneider at the University of Arkansas, WyoFile reached two agricultural law attorneys practicing in the U.S. farmbelt who have won attorneys’ fees under EAJA.
Attorney Thomas Lawler of Parkersburg, Iowa, said EAJA is a valuable asset for small producers.
“In both of my recent cases, the government had taken a position that was contrary to its own data and to the data we had from outside experts,” he said. “But fighting these actions is a long, involved procedure and is very expensive on a per-acre basis.” Even though EAJA provides the possibility of recovering fees if the challenge is successful, Lawler said, many of the producers who contact him eventually decide the risk of losing the case and losing the associated federal program payments is too high. They often decide to simply comply with the USDA decision.
Lawler said the efficacy of EAJA is also limited because of a U.S. Supreme Court decision several years ago that rejected the “catalyst theory” for deciding whether the litigant was legally a “prevailing party.” The court restricted attorneys’ fees recoveries to cases where the result favorable to the producer was the result of an actual decision by the court or hearing board, rather than a voluntary change in position by the government.
“We have gone into National Appeals Division hearings and we’ve convinced the government its decision was wrong,” Lawler said. “But if they voluntarily withdraw the action, we cannot collect fees. I would recommend that EAJA be amended to allow a fee award if the agency changes its position during the appeal process.”
Beth Baumstark in Bismarck, N.D., has represented agricultural producers “in quite a number of cases” where fees under EAJA were requested, including the 2007 Aageson case from Montana that went to the 9th Circuit. She said the EAJA “definitely” is an important vehicle for producers.
“Without the ability to recoup some of their fees when they are able to show that the agency action wasn’t justified, they wouldn’t be able to afford the challenges lots of times,” Baumstark said.
Baumstark said that the 8th Circuit, which includes much of the northern Midwest, has allowed fee awards for administrative proceedings for several years and has now been joined by three other circuits. This has caused the USDA recently to change its regulations to allow an award of fees in administrative proceedings across the country.
She said, however, that the USDA has not raised the strict $125-per-hour cap that applies to administrative proceedings, “so it’s still very limited in that respect.”
This story originally appeared on WyoFile.com. WyoFile is non-partisan public service journalism, focused on politics and public policy. Our goal is to supplement Wyoming’s news media with in-depth coverage and insightful commentary on issues critical to Wyoming residents. Our name is a play on words that reflects our journalistic purpose and our love for our unique and beautiful mountain state.