B-40342.4 October 5, 1984

B-40342.4 October 5, 1984

The Honorable Strom Thurmond chairman, Committee on the Judiciary united States Senate

Dear Mr. Chairman:

We have just reviewed S.919, 98th Congress, as reported by your Committee, and the accompanying report, Senate Report No. 98-586. The basic purpose of S.919 is to make the Equal Access to Justice Act permanent. As we read the bill,, the payment provisions would be consistent with the conclusions we reached in our decision 63 Comp.Gen. 260 (1984) (copy enclosed). /1/

We are concerned with one provision of the reported version of S.919, section 2(a)(7), which would add a new subsection (f) to 28 U.S.C. Sec. 2412. The new 28 U.S.C. Sec. 2412(f) would require the payment of interest on costs or attorney's fees awarded under 28 U.S.C. Sec. 2412 which are not paid within 60 days after the date of the award. Since the proposed subsection (f) uses the words "pursuant to this section," it would presumably include those costs and fees awarded under 28 U.S.C. Secs. 2412 (a) and ( b) which are payable, upon certification by the General Accounting office, from the permanent appropriation established by 31 U.S.C. Sec. 1304.

With respect to payments processed by this Office, which encompass the major portion of cost and fee awards against the united states, we are not aware of the need for this legislation. The Report, at pages 13 and 17, cites the Contract Disputes Act and the Prompt Payment Act as precedent. The Contract Disputes Act merely codified existing practice in that interest had been payable on contract claims for some time by virtue of a "Payment of Interest" clause included in most Government contracts. The Prompt Payment Act, as its legislative history makes clear, was the congressional response to a documented history of slow payment by many agencies. In contrast, costs and attorney's fees awarded by the course are paid automatically and with reasonable promptness.

While we believe our record in processing these payments is good, it will be impossible in most cases to make payment within 60 days after the award, even if there is no appeal. First, the Justice Department must review the award and decide whether or not to appeal. The Report indicates that this is the basis of the 60-day "grace period." However, payment thereafter is not simply a matter of sending a voucher to a disbursing office. The necessary documents must be gathered and forwarded to our Claims Group for certification. As part of our certification process, we are charged by law with off-setting any known indebtedness by the judgment creditor to the Government. Our certification document (Certificate of Settlement) is then transmitted to the Treasury Department for issuance of the check. Given the best effort on everyone's part, payment within 60 days will be the clear exception.

The offsetting of indebtedness could also produce an anomalous situation. Suppose, for example, an attorney who has received a fee award also has an outstanding defaulted student loan. Under our offset authority (31 U.S.C. Sec. 3728), we must first seek consent to the offset. Should the attorney delay in responding to us, interest under the proposed subsection (f) would continue to accrue on the fee award, making the resulting offset correspondingly meaningless. If the debt is relatively small compared to the fee award, considerations of cost effectiveness could prompt the Government to write off the debt, even in the face of a source of funds for potential offset. We think this result is undesirable and at odds with congressional emphasis in recent years on debt collection.

If the Congress should determine that interest on cost and fee awards is nevertheless desirable,, the reported version of S.919 would still introduce a number of inconsistencies into the law, and could result in giving preferential treatment to lawyers in many cases. The problems we perceive are summarized below:

(1) Interest on judgments against the United States has for some time been premised on an unsuccessful appeal by the Government and is not normally payable for brief processing delays. Existing/law, revised as recently as 1982, is found in 28 U.S.C. Secs. 1961 and 2516 and 31 U.S.C. Sec. 1304. under section 2(a)(7) of S. 919, lawyers would receive more favorable treatment with respect to interest on their fee awards. (As discussed above, lawyers in many cases could also end up receiving more favorable treatment regarding offset of indebtedness.

(2) The applicable rate of interest under S.919 would be the rate established under section 12 of the Contract Disputes Act. The rate of interest an judgements generally is determined pursuant to 28 U.S.C. Secs. 1961(a) and 2516 516(b) based on the equivalent coupon issue yield of 52-week treasury bills. We see no reason to apply different rates of interest.

(3) Many fee awards against the Government are made under statutory authority which predated the original Equal Access to Justice Act. Frequently encountered examples are awards under the Freedom of Information Act and Title VII of the Civil Rights Act. As a matter of statutory construction, we assume these awards are not made "pursuant to this section [28 U.S.C. Sec. 2412] a as that phrase is used in the proposed subsection (f). Thus, S.919 could produce unequal treatment even as among fee awards.

(4) Interest under S.919 would run through the date "payment is posted by certified or registered mail." Since the Government is a self-insurer, the Treasury Department does not normally use certified or registered mail in dispatching checks. Compliance with this aspect of S.919 would thus increase processing costs to the Government.

For the reasons set forth above, and especially in view of current congressional concern over the budget deficit, we recommend that section 2(a)(7) of S.919 be deleted pending fuller consideration. If interest is to be paid on cost and fee awards, /2/ we think it should be payable on the same basis as judgments generally.. We further think this could be accomplished without the need for legislation. As far as we are concerned in the performance of our functions under 28 U.S.C. Secs. 2414, 2517, and 31 U.S.C. Sec. 1304, we would be guided by a clear statement of congressional intent in the legislative history with respect to the eligibility of fee awards under the existing interest statutes.

We hope these comments are helpful. We are sending similar letters to Senator Grassley,, Chairman of the Subcommittee on Administrative Practice and Procedure, and chairman Rodino of the House Judiciary Committee.

Sincerely yours,

Comptroller General of the United States

Enclosure

1. Senate Report No. 98-586, at pages 37 and 38, indicates that 5 U.S.C. Sec. 504(c) and 28 U.S.C. Sec. 2412(c) would be deleted. If this is in fact intended, the payment of awards under 28 U.S.C. Sec. 2412(b) would be cast into doubt. We assume, however, that this is merely a clerical error and that S.919 is intended to repeal merely the sunset provisions of the original law, sections 203(c) and 204(c) of Pub. L. NO. 96-481.

2. Interest has traditionally not been payable on court costs. With respect to attorney's fees, the courts have not been uniform.