Attorneys' Fees Granted to Environmentalists in Alaska Pipeline Litigation

A sharply divided Court of Appeals for the District of Columbia Circuit has given a boost to the growing trend to awards of counsel fees in public interest litigation and also to the National Environmental Policy Act.¹ Sitting en banc, the court ruled 4-3 that the environmentalist plaintiffs who sued to stop construction of the Trans-Alaska Pipeline were entitled to recover half of their attorneys' fees from Alyeska, the pipeline consortium. Judge J. Skelly Wright, writing for the majority, stated that in fairness the cost of the litigation should be divided equally between Alyeska, which had requested permission to build the pipeline across public land, and the Department of the Interior, which approved Alyeska's application despite a clear violation of the pipeline right-of-way width limitation of the Mineral Leasing Act of 1920.² Since recovery of counsel fees from the United States is specifically prohibited by 28 U.S.C. § 2412, the court ruled that the plaintiffs in the suit would have to bear that half of the cost of counsel fees themselves.

The court held that an award of fees was appropriate, not only for the hours devoted to the Mineral Leasing Act issues on which the case was decided, but also for the time spent on NEPA questions, though those were never adjudicated, and Congress subsequently declared the Interior Department's impact statement to be adequate. In a bitter dissent, Judge Wilkey, joined by Judges MacKinnon and Robb, disagreed as to the facts, the law, and the policy considerations involved in the legal battle over the pipeline, and in a separate dissenting opinion, Judge MacKinnon bitterly charged that "when we subsidize lawyers to bring such suits against our national interests we promote our own destruction."

To environmentalists, the case is interesting from several viewpoints. In addition to its highly favorable holding, the conflicting views of majority and dissent illustrate with often acrimonious clarity the division of opinion on several important questions: what the "public interest" is; where the balance between energy needs and conservation should be struck; whether environmentalists scored a partial victory or suffered a total rout in the pipeline controversy; and whether Congress' action in declaring the project to have met NEPA's requirements should be construed as legislative implementation of NEPA or as a slap at the judiciary for enforcing a law which had — in this instance, at least — become an encumbrance.

To the majority, the resolution of the disputed issues was relatively straightforward. Reviewing the exceptions to the traditional "American rule" forbidding grants of counsel and expert witness fees to the prevailing party, the court noted the now rapidly growing number of cases in which the "private attorney general" rationale has been used to reward plaintiffs whose suits have advanced or vindicated public policy.

The court recognized the policy interest underlying the usual American rule: to force the losing party to pay the winner's legal fees would greatly increase the stakes of litigation, thereby discouraging plaintiffs from filing suit and likewise pressuring defendants to settle out of court instead of waiting for a court's decision on the controversy. In this case, however, the pipeline consortium had a billion-dollar investment at stake, next to which the cost of plaintiffs' counsel fees was in the court's words "paltry." From the point of view of the plaintiffs, however, the litigation represented 4,500 hours of lawyers' time expended to vindicate rights guaranteed by statute to all [4 ELR 10068] citizens. The court rejected the contention that the width limitation of the 1921 Mineral Leasing Act was too insignificant to be considered an important congressional policy enforceable by a "private attorney general." Far more important than the width limitation itself was the plaintiffs' challenge to the Government's "settled administrative practice to evade those restrictions," in flagrant violation of "the duty of the Executive Branch to observe the restrictions imposed by the Legislative." Judge Wright commented that by requiring Congress to change the anachronistic provision of the Act instead of permitting continued evasion of it, the court had spurred Congress to make other statutory changes beneficial to the public interest: the law now requires the agency issuing a right-of-way to recover its fair market value from the recipient, as well as the cost of processing the application, where previously rights-of-way were issued gratis and the taxpayers bore the cost of acting on applications. In addition, the law now imposes strict liability on the pipeline operator for any damage resulting from use of the right-of-way and compels the operator to maintain a $100 million fund to satisfy claims arising against it.

The court stressed that the plaintiffs' raising of NEPA issues had achieved beneficial results even without a final judicial resolution of their claims, as their suit served as the "catalyst" ensuring that the Interior Department prepared a thorough impact statement. Judge Wright noted that the original district court injunction was based both on the Mineral Leasing Act width limitation and on the Government's apparent non-compliance with NEPA.In the course of preparing its impact statement, the Interior Department accepted numerous environmental stipulations which subsequently were incorporated into the 1973 bill authorizing construction of the pipeline. In addition, the court stated, the environmentalists' challenge to the project focused Congress' attention on the question of whether a trans-Alaskan or trans-Canadian route would be preferable; that Congress found the Alaskan route more desirable, and the nation's fuel needs so pressing as to require work on the project to begin immediately, did not constitute complete rejection of the environmentalists' position. The court quoted at length from a speech delivered by Russell Train, EPA Administrator, in which he called the pipeline controversy an "excellent example" of how NEPA and the courts can bring about highly beneficial changes in hasty governmental decision-making. Had the Interior Department's inadequate response to the environmental problems created by the pipeline not been challenged, said Train, and the pipeline built according to the original specifications, both serious environmental damage and operational problems, including possible rupture of the pipeline, would probably have resulted. In substance, therefore, if not in law, the court found the plaintiffs to have achieved success on their NEPA claim. The court also observed that the Mineral Leasing Act and NEPA issues were closely intertwined: only by examining the NEPA impact statement could the court determine whether the permits approved by Interior were in fact revocable licenses, as the agency claimed, or permanent rights-of-way, as the plaintiffs successfully contended.

The court next considered the question of who should pay the plaintiffs' counsel fees, and in what amount. Alyeska protested that it, as the applicant, should not be penalized for the illegality committed by the Interior Department in approving the application. The court pointed out that Alyeska was a far from passive participant in the controversy, having first convinced the Interior Department that the right-of-way should be granted and having then intervened in the environmentalists' suit against the agency in order to protect the consortium's billion-dollar investment. Since grants of counsel fees in suits against the Government are prohibited by 28 U.S.C. § 2412, to exempt Alyeska would be to place the entire financial burden on the plaintiffs. The court emphasized that the rationale of fee-shifting under the private attorney general theory is not punitive, but aims instead at reimbursing litigants who have undertaken to vindicate public policy. Finding that Alyeska was a "major and real party at interest" in the case, the court assessed it half of the plaintiffs' attorneys' fees. The other half, representing the share which Interior would have had to pay if not for the statutory prohibition, could not be recovered. The court stated that it would be "inappropriate" to force the state of Alaska, which intervened in the suit "to present to the court a different version of the public interest implications of the trans-Alaska pipeline," as this would "undermine rather than further the goal of ensuring adequate spokesmen for public interests."

The court recognized that the amount of counsel fees is in general to be fixed by the district court, but itprovided some guidance for the lower court's determination. The sum should, it said, include at the very least all fees actually paid to attorneys by the Wilderness Society, Environmental Defense Fund, and Friends of the Earth. This amount should go directly to the three organizations. If, however, the attorneys were working for substantially less money than they could earn in the marketplace, such an award would be inadequate, as it made the attorneys in effect charitable donors of the difference between the actual and potential earnings. The reasonable market value of the attorneys' services should therefore be allowed, and should be given to the lawyers themselves, rather than to the organizations they represent. From this, the attorneys would be required to reimburse the organizations for the secretarial and other services provided for them, but beyond that, the money is the lawyers' to use as they please. In this way, the court said, the court avoids the possible unauthorized practice of law problem which an award to an organization might present.

Two dissents were filed in the case. Judge Wilkey, joined by Judges MacKinnon and Robb, argued that far from vindicating public policy, the plaintiffs in the case [4 ELR 10069] had been frustrating the policy on which Congress placed the highest priority, that of increasing the nation's energy supplies. Apart from the lawyers in the case, the litigation conferred a benefit on no one, the dissenters charged, while the 3 1/2-year delay raised the cost of the pipeline at least $637 million, a sum which the consumer will ultimately pay in higher fuel prices. All that the plaintiffs had achieved, said Judge Wilkey, was to force amendment of the Mineral Leasing Act's right-of-way width limitation.

The dissent derided in vitriolic terms the majority's interpretation of "public interest," even inserting a parenthetical "sic" when quoting the majority's description of the lawsuit as "meritorious." A "sincere feeling of self-righteous correctness" is insufficient, said Judge Wilkey; in addition, good judgment in determining where the public interest lies is also required, and here the plaintiffs rendered a public disservice. He reminded the court that in 1972, the district court dissolved the preliminary injunction based on NEPA and the Mineral Leasing Act. Since the appellate court never considered the NEPA issues, but was nonetheless rewarding the plaintiffs as theough they had succeeded, the dissenters saw in the majority's opinion a "dangerous precedent," likely to encourage ill-advised lawsuits: "The flood of 'public interest' litigation, particularly in the environmental field, is given a new impetus by the majority decision." The dissent warned that it is now no longer necessary either to prevail on the legal issues or to confer a clear public benefit, but "only to gain the sympathy of the court … for the substantive merits of plaintiffs' case, and, lo, plaintiffs can fail to prevail legally and dislocate the economy in trying, but can be awarded a consolation prize of attorneys's fees." The dissent also charged that the plaintiffs had assured the district court, and thereby succeeded in preventing a change of venue to Alaska, that the attorneys in the case were donating their time.

Judge MacKinnon, in a separate dissent, ridiculed the majority's assertion that Congress' action in amending the Mineral Leasing Act had not amounted to a "total rejection" of the environmentalists' arguments. The judge, who had in 1972 attacked as "monstrous" the Court of Appeals' refusal to pass on the NEPA issues raised, argued that Congress "would not deprive a court (this court) of its basic jurisdiction unless it felt that the court had misused its power in the past and could not, at least with respect to this case, be relied on in the future."

The majority, replying in footnotes to the dissenters' objections, were able to dispose of some of them easily and convincingly. On the question of misrepresentation as to counsel fees when the court ruled in 1971 on the motion for change of venue, the majority noted that the case law regarding fee awards had not yet developed; the plaintiffs could hardly have foreseen that they would ultimately recover their legal costs, and even if they had entertained that then "quixotic" idea, it would not have increased their ability to prosecute the suit.The motion for a change of venue was denied because litigating in the District of Columbia was more convenient both for the plaintiffs, with offices in Washington, and for the Department of the Interior.

The decision of the majority must be regarded as sound both in terms of law and policy. The plaintiffs were in fact successful in their lawsuit and were vindicating both a federal statute and the right of all citizens to a government which operates within the law and not above it. The litigation also resulted in the incorporation of numerous environmental safeguards into a hastily conceived and inadequately planned project. In addition, it seems reasonable that Alyeska, the prime mover in the battle to secure the pipeline rights-of-way, should be assessed a share of the plaintiffs' legal fees, rather than be allowed to hide behind the derelictions of the Interior Department, which could in turn invoke § 2412 to place the entire cost of the suit on the plaintiffs. A question is raised, however, by the court's decision to value the time spent by plaintiffs' attorneys at the fair market value of their services. Since the sum actually awarded is only half of plaintiffs' legal costs, this may be seen simply as a device to ensure that they receive adequate compensation, increasing the sum before halving it. But attorneys working in the field of environmental law usually do so because they find non-monetary rewards which more than compensate for the lower salaries they receive. If the rule of this case is applied to cases in which there is no barrier to awarding all legal costs, there is a strong possibility that the attorney will be allowed to have his cake and eat it too: public interest satisfaction at a private law firm salary.

On the broadest questions which the case raised — whether the plaintiffs served or disserved the public interest, and whether they won or lost the battle of the pipeline — it is difficult to agree wholeheartedly with either the majority or the dissent. To some extent the answer to the first question is speculative; only at the point in the future at which the pipeline would have been completed if not delayed by litigation will it be possible to assess how important the Alaskan oil is to the nation's economy and security. Nor is it possible to know for sure what damage would have occurred to the environment or to the pipeline if it had been constructed as originally planned. In general, though, it is clear that when they filed suit in 1970 and throughout the litigation, the plaintiffs, were acting in an enlightened version of the public interest, setting a higher priority on protection of the Alaskan environment than on increasing United States fuel supplies and consumption; that the October 1973 war in the Middle East subsequently changed many Americans' assessment of the issues and priorities involved should not affect the plaintiffs' recovery of fees. But even before the October war and the severe fuel shortages which followed it, the American public had decided, through the Congress, that it wanted the pipeline built without further delay. The crucial decision came last summer, when the Senate passed the Gravel amendment by a [4 ELR 10070] narrow margin. That provision could be read, as the majority does, to declare that Congress has made a legislative decision that the Interior Department's impact statement satisfies NEPA, and foreclosing further judicial second-guessing of the legislature's final authority. It could also be seen as the dissenters urge, as exempting the pipeline from NEPA, a statement to environmentalists and the courts that "enough is enough." At the time the Gravel amendment was under consideration, NEPA's strongest backers on Capitol Hill, including many who favored construction of the pipeline, warned that to create a precedent for future NEPA exemptions because of exasperation over the delay of a single project would be shortsighted in the extreme. Despite the warnings, the amendment passed.

To be sure, the plaintiffs in this case won a legal battle, one for which an award of counsel fees is amply justified, and they also secured important environmental concessions in the planning of the pipeline. But while they won battles, they effectively lost the war when Congress and the public decided that oil supplies were more important than keeping either the Alaskan environment or NEPA intact.The plaintiffs were eager to see a through review in Congress and the courts of the relative merits of proposed routes across Alaska and through Canada; this never took place, and was foreclosed by the statutory exemption from further judicial review. As it was, environmentalists and backers of NEPA did suffer a partial defeat, one which must be acknowledged if it is to be learned from. While the outcome was by no means the rout depicted by the dissenters, to hold with Judge Wright that the environmental movement scored a resounding victory would be wishful thinking.

1. Wilderness Society v. Morton, 4 ELR 20279 (D.C. Cir. Apr. 4, 1974). See Comment, Attorney's Fees: The Growing Number of Awards to Public Interest Plaintiffs, 4 ELR 10021 (Feb. 1974).

2. P.L. 93-153, 93d Cong. 1st Sess. (Nov. 16, 1973), amending 30 U.S.C. § 185 (1970).