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Government’s PACER Fees Are Too High, Federal Circuit Says (2)

Aug. 6, 2020, 1:32 PM; Updated: Aug. 6, 2020, 9:00 PM

The U.S. government charges too much for access to an electronic database of federal court records, the Federal Circuit ruled in a decision curbing a revenue stream the court system uses to help fund other programs.

The U.S. Court of Appeals for the Federal Circuit affirmed a lower court’s decision that the government was not authorized under federal law to spend $192 million in Public Access to Court Records system fees on court technology projects.

The lower court “got it just right” when it limited the government’s use of PACER revenues to the costs of operating the system, the court said in a precedential opinion Thursday.

“We agree with plaintiffs and amici that the First Amendment stakes here are high,” the court said. But it said it doesn’t foresee the lower court’s interpretation “as resulting in a level of user fees that will significantly impede public access to courts.”

The ruling is a win for public access to court information, as PACER fees will go down if the ruling withstands a possible government appeal. But access still won’t be free, despite calls for the government to stop charging for it. The Federal Circuit said it was up to Congress to decide whether to require free access.

Challengers said PACER fees were too high, while the government said the middle ground reached by the lower court made the fees too low.

Fees for downloading a copy of a filing run 10 cents per page, up to $3 per document. The Administrative Office of the U.S. Courts collected more than $145 million in fees in 2014 alone, according to the complaint in the case. Under a 2020 change to the fee waiver rules, about 75% of users pay nothing each quarter.

The Justice Department didn’t immediately respond to a request for comment on whether it would appeal the decision.

Some say further restrictions are necessary.

“I’m concerned that the federal courts will keep saying it costs $100 million annually to run an electronic case filing and document management website, which is laughable on its face,” Gabe Roth, executive director of watchdog Fix the Court, said in an email.

Middle Ground

Three nonprofits representing a certified class of 1.4 million users argued that fees the Administrative Office of the U.S. Courts charges for the PACER system violate federal law because they’re higher than the marginal cost of providing documents. The government argued it’s authorized to charge fees that exceed the cost of operating PACER and use the money for other court access projects.

The Federal Circuit rejected both parties’ readings of the statute authorizing PACER fees. “Plaintiffs overread the statutory text while the government underreads it,” the court said.

The plaintiffs selectively combined phrases of the law, the court said, calling it an “odd way to read a statute.” But the government’s arguments “stray too far in the other direction,” it said.

The Federal Circuit adopted the two limitations imposed by the lower court: PACER fees may only be used to cover expenses incurred in providing electronic access to members of the public, and to store information in a federal court docketing system.

That means the government must reimburse revenues it spent on other projects, including increasing access to state court documents, providing federal case information to local law enforcement, and improving courtroom technology, the court said.

“The necessarily implied remedy” for violating the fee-authorizing statute “through over-charging is that the government must return the excess fees collected,” the court said.

The lower court didn’t sufficiently scrutinize whether the government may spend PACER funds on maintaining the federal electronic case filing system, the Federal Circuit said, ordering the lower court to consider the question on remand.

Ready for Restrictions

The Administrative Office declined to comment on the decision. As of Jan. 1, the judiciary raised the user fee waiver from $15 to $30 per quarter.

In its February budget request to Congress, the judiciary said it anticipated PACER revenue would be about $142 million in fiscal years 2020 and 2021.

The judiciary said in its request that it accounted for restrictions on how PACER revenue could be spent while the appeal was pending. It said it has covered the expenses for the last few years with appropriations.

But the constraints will create new challenges if the judiciary doesn’t receive enough funds from Congress in coming years, the judiciary said in its request. If Congress doesn’t provide the appropriations requested, there could be cuts to salaries and expenses in areas like probation and pretrial services offices, or clerks offices, within the bankruptcy, district, and circuit courts, it said.

Although PACER funds have been used for past modernization projects like putting cameras in courtrooms, the decision is likely to have little effect on technology efforts going forward, said Thomas I. Vanaskie, a former U.S. district and appellate judge who chaired the Judicial Conference’s Information Technology Committee.

Judge Todd M. Hughes wrote the opinion, joined by Judges Alan D. Lourie and Raymond C. Clevenger III.

Deepak Gupta of Gupta Wessler PLLC in Washington argued for NVLSP. Justice Department attorney Alisa Beth Klein argued for the government.

Tyler Mills, a team leader in Bloomberg Law’s Litigation Content group, serves on an advisory panel that provides advice and feedback to the Administrative Office of the U.S. Courts on electronic public access services provided by the federal judiciary, including PACER. Bloomberg Law’s Litigation Content group is separate from the news division.

The case is Nat’l Veterans Legal Servs. Program v. United States, Fed. Cir., No. 19-1081, 8/6/20.

(Updated with additional reporting throughout.)

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloombergindustry.com; Madison Alder in Washington at malder@bloombergindustry.com

To contact the editor responsible for this story: Keith Perine at kperine@bloombergindustry.com

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