Summary of a Recent
Judicial Development in
Administrative Law

Equal Access to Justice Act Held to Apply to NAD Decisions
Triggering Additional Benefits to Prevailing Parties

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Five Points Road Joint Venture v. Johanns, 542 F.3d 1121 (7th Cir. 2008), the United States Court of Appeals for the Seventh Circuit affirmed the decision of the district court, which held that the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, applied to adjudications by the National Appeals Division (NAD).

Background

The Farm Service Agency (FSA) ordered Five Points Road Joint Venture (Five Points) to return federal farm benefits it received during in 2003 and 2004. Id. at 1123. Five Points successfully appealed the FSA's decision to NAD, the agency's determination was reversed in its entirety, and the NAD Director affirmed. Id. After Five Points' successful appeal, it applied to the NAD Director for attorney's fees and costs pursuant to EAJA; however, the NAD Director held that the EAJA did not apply to NAD adjudications. Id. at 1124. Five Points sought judicial review of the Director's decision in district court. Id. The court granted Five Points' motion for summary judgment, holding that NAD proceedings are subject to the EAJA. Id. The FSA appealed. Id.

Arguments

Five Points argued the district court was correct in granting its motion for summary judgment and that NAD proceedings were covered by the Administrative Procedures Act (APA), 5 U.S.C. § 701. Id. Because Five Points was a prevailing party in the NAD adjudication, it asserted its entitlement to attorney's fees and costs pursuant to the EAJA. Id. at 1124-25.

The government argued that NAD proceedings were not adjudications under § 554 of the APA, and therefore the EAJA did not apply. Id. at 1125. Additionally, the government asserted that if the EAJA was interpreted to apply to NAD proceedings, the ramifications of the EAJA would amount to a partial waiver of sovereign immunity. Id.

Analysis and Holdings

Because the court interpreted the language of APA § 504 as a congressional waiver of sovereign immunity with respect to attorney's fees and costs to a prevailing party in an adversarial adjudication, the only issue for the court to decide was whether the EAJA applied to administrative proceedings before NAD-a question based on statutory interpretation. Id. at 1125. The EAJA contains a provision that allows prevailing parties, in certain adversary administrative proceedings, to recover attorney's fees and costs from the government. Id. The EAJA defines an adversary proceeding as an adjudication, under APA § 554, in which the United States is represented by counsel. Id.

In the case at bar, the United States conceded that it was represented by counsel. Id. Due to this admission, the court focused on the three factors necessary for a proceeding to be classified as an adjudication. Id. The three requirements were: (1) an adjudication required by statute; (2) a proceeding on the record; and (3) an opportunity for an agency hearing. Id. The court held that the review of agency determinations by NAD clearly met the definition of an adjudication required by statute, and the NAD statute required a mandatory hearing. Id. at 1125-26. With two of the three requirements clearly satisfied, the court examined whether the proceeding at issue was on the record. Although the NAD statutes did not expressly require NAD hearings to be on the record, the statutory language included repeated references to a record, contained provisions for trial-type procedures, and clearly indicated the intent of Congress to trigger the formal, on-the-record hearing provisions of the APA. Id. at 1126-29. For these reasons, the court held that the EAJA applied to NAD proceedings. Id. at 1129.

The case was decided on September 8, 2008.