EQUAL ACCESS TO JUSTICE ACT OF 1979, S. 265 FRIDAY, APRIL 20, 1979 U.S. SENATE, SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY, Washington, D.C. The subcommittee met, pursuant to notice, at 9:45 am., in the hearing room, Maricopa County Board of Supervisors, Phoenix, Ariz. Hon. Dennis DeConcini (chairman of the subcommittee) presiding. Also present: Romano Romani, staff director; Pamela Eldred, counsel: Sally Rogers, legislative assistant to Senator Thurmond. Senator DECONCINI. The Subcommittee on Improvements in Judicial Machinery will come to order. It's a pleasure to be here in Phoenix to hold our second set of hearings on S. 265, a bill pending before the Senate Subcommittee on Improvements in Judicial Machinery, which I do chair. OPENING STATEMENT OF SENATOR DeCONCINI S. 265, which is titled the Equal Access to Justice Act, represents a vital weapon in our struggle to tame Government regulations, and I hope it will mark a new era in the development of a responsive and responsible bureaucracy. Under the bill, if a citizen prevails in a civil action or agency proceeding brought by or against the U.S. Government, he or she would be able to recover attorneys fees from the Government unless the Government can show that its actions were substantially justified. The fee award will come directly from the operating budget of the offending agency. The purpose of the bill is twofold. First, it is intended to provide citizens with effective legal and administrative remedies where none now exist. It is clear that in many situations under the present law, citizens do not have viable remedies. It simply costs too much to resort to agencies or court proceedings to vindicate your particular rights. Under these circumstances, the only realistic alternative left is to capitulate to the Government, even when you believe the Government is wrong, unreasonable, or irresponsible. This bill is intended to overcome these financial obstacles and thus to provide citizens and small businesses with an opportunity to stand up for their rights. It would, I hope, at least make a fair fight by increasing citizens' access. In this way, the bill will achieve a second purpose: to make the bureaucracy more accountable in the exercise of the regulatory powers and more responsive to its citizens' needs. As I mentioned, the fee awards will be taken from the budget of the agency involved. The bill thus recognizes that the most persuasive way to make an agency assume a more responsible posture is to affect its pocketbook. Agencies which are paying awards under this bill will have good cause to valuate their rules, their procedures, and their staffs. Even more importantly, the award will provide an objective gauge of whether or not an agency is engaging in excessive, unreasonable regulations and will also allow Congress to carefully scrutinize that agency's budget request each year. We are not seeking to dismantle the Government's authority to regulate, nor are we seeking to provide an opportunity for General Motors or Exxon to challenge the Government on every single regulation. What we are seeking is more responsibility on the part of the Government in enforcing its rules and a fair shake for the corner grocery store and the husband-and-wife shoe repair shop. I hope these hearings in Arizona will help the Congress to pass an effective piece of legislation. Again, I want to welcome all of you and particularly thank the witnesses who will appear here today, some of them coming from Washington and other places. I would also want to pay particular thanks to Pam Eldred of the Judiciary Committee staff and Romano Romani, the director of the subcommittee. Our first witness will be Robert Robb, representing the Arizona Chamber of Commerce, and Perry Shilling, representing the Independent Business Committee of the Phoenix Chamber of Commerce. Gentlemen, welcome, and thank you for being here with us today. If you have a prepared text, we will put it fully in the record and you may highlight it. If you do not, you can just proceed as you please. Please speak directly into the microphone. STATEMENT OF ROBERT ROBB, ARIZONA CHAMBER OF COMMERCE Mr. ROBB. Thank you, Mr. Chairman. I am Robert Robb, director of government affairs and publications for the Arizona Chamber of Commerce. We fully are in support of S. 265. Unfortunately, Mr. Chairman, these hearings occur toward the end of the State legislative session here. Unfortunately, we are unable to give the bill as much careful attention as it merits. With the chairman's permission, we will file more extensive written comments at a later date. Senator DECONCINI. We will be very pleased to have it. The record will remain open until May 10 for these hearings. We will look forward to receiving those comments. We understand your plight with the legislature trying to get out tonight. Mr. ROBB. Hopefully, they won't get out without doing some things we'd like them to do. Senator DECONCINI. I'm sure. Mr. ROBB. Mr. Chairman, I do have some very general comments and some concerns to express despite our support. One of the most encouraging developments for the business community in recent years has been the increased concern by Congress for the plight of the small business community. This concern has been manifested in many ways, not the least of which is this particular bill to allow small businessmen to be better able to protest and fight what they consider to be unreasonable or wrong actions by the Government. It is a concern that the Congress properly has. The small business community is playing an increasingly declining role in our economic mix. It is receiving less and less venture capital as a percentage of the total venture capital available. More and more, small businessmen are going out of business at an alarming rate. Small business bankruptcies have become a national concern. The plight of small business has been caused by many many things, not the least of which-a very important factor-has been the growth in recent years of both regulation and regulatory agencies. This bill would seek to alleviate at least one of the problems that small business faces by providing that if the small business was brought into court or into an agency adjudication and if the actions of the Government were not substantially justified, the small business could recover its costs of protesting the action. We are fully in support of this concept, but do have two basic concerns about the bill as it presently exists. This bill is different than last year's bill in that the award of attorneys fees and court costs, if the private party prevails, is not mandatory. We understand, due to the testimony last year about the costs involved, that there was concern for the taxpayers with the effect of this bill. However, we think that, if the testimony shows that the cost of making these awards mandatory would be beyond the ability of taxpayers to bear, it is more reason to make them mandatory, not less. It indicates that, on too many occasions, Government is proceeding with wrongful actions against private parties. We believe a larger principle is involved here than simply allowing small businessmen to go into court. It's the principle that, if a private party, regardless of whether an individual or a business, is required to expend money due to Government actions and prevails, the private party ought not to have to pay for it. If the public wrongfully moves against somebody, the public ought to pay for the individual's costs. We also have some questions about the way the discretionary provisions apply. We are doubtful or at least we are apprehensive about the willingness of an agency to determine that its own actions were not substantially justified. We are also concerned that the courts are only able to change the agency's decision if they determine that there has been an abuse of discretion. We believe that even if the governmental action was substantially justified but was wrong and an individual was made to pay for it, that individual should be made whole. Our other concern, Mr. Chairman, even though we share the plight of small business, is the fact that this bill is limited to small business and to individuals-although the limit on that indicates that some individuals of some wealth could still have the remedies provided for in this bill. As to business, however, it is seriously limited to small business. We see this particular bill in this limitation as part of a pattern' which exists. Without question, the small businessman is less capable of dealing with the regulations which are imposed. He operates with less resources, so he is less capable of moving his resources around in response to governmental demands. He also operates on a smaller margin generally, so he is less capable of affording the cost of increased regulations. The concern of Congress for this situation is very justified. However, we don't believe that the answer to unreasonable regulation is to exempt some part of the business community from it. The answer to unreasonable regulation is to repeal unreasonable regulation and not impose it in the first instance. We are concerned, because we do see this as part of a pattern. Out of the White House Conference, the regional conference in preparation for the White House Conference on Small Business that occurred in Denver recently, there was a proposal that had some considerable support that there be a multitiered regulatory process, that small business would be subject to one set of regulations and big business to another set of regulations. The President's recent Regulatory Reform Act incorporates this concept to a certain extent. We believe that the market should determine the extent to which small and big business prevails. There is a role for both to play, and it shouldn't be the interest of the Government to interfere with what the market dictates the economies of scale will be. We would prefer, Mr. Chairman, that this bill be expanded to all people and all businesses who are required to expend their resources or the resources of their stockholders to protest or fight wrong govern mental actions. We, Mr. Chairman, would very much support the bill as introduced, and we agree with the sunset provision in it which says this is part of an experiment. Perhaps at some point, the experiment can be expanded to include a mandatory provision and also provide that anyone who is wronged by Government action will be able to be made whole. But without question, even without those changes which we would prefer, the Arizona Chamber of Commerce and its small business council are fully in support of S. 265. Senator DECONCINI. Thank you, Mr. Robb. STATEMENT OF PERRY SHILLING, INDEPENDENT BUSINESS COMMITTEE, PHOENIX CHAMBER OF COMMERCE Mr. SHILLING. I am Perry Shilling, representing the Independent Business Committee of the Phoenix Metropolitan Chamber of Commerce. We strongly are in favor of the bill and highly recommend passage of the bill. We too have some concerns, as Bob expressed. One of my concerns is that the small businessman is going to be convinced by some shrewd attorney that he has a very legitimate claim. He is going to proceed with an action, and he is going to be left holding the bag, because I don't think it's definite that he is going to get damages from it. I do feel we are not going to have a rash of lawsuits. I think we are going to see that your governmental officials are really going to review their decisions, their actions, and perhaps stop some abuse going on in small business. As an independent business committee, we strongly recommend passage of the bill. Thank you. |