It is now two years since Congress broadened the authority of the federal courts to award attorneys’ fees to parties who prevail in litigation against the United States government. The Equal Access to Justice Act (“EAJA”) directs courts to award fees and costs to successful parties other than the federal government, unless the government’s position is found to be substantially justified, or special circumstances would make such an award unjust.1 28 U.S.C. § 2412(d)(1)(A) (Supp. V 1981). Appellees in this case, four national environmental organizations, received a fee award after settlement of their suit challenging the issuance of permits for pesticide application.
Appellants urge reversal of that award, arguing the district judge improperly examined the government’s prelitigation activity in determining that its position lacked substantial justification. We find it unnecessary to decide that issue, or to reach the grounds on which the district court, 554 F.Supp. 36, based its order granting the fee application. We agree, however, that the government’s position was not substantially justified, and therefore affirm.
FACTS
On August 20, 1981, the Environmental Defense Fund (“EDF”) and three additional environmental groups filed suit against then-Secretary of the Interior James Watt and other federal officials. The organizations sought to halt the use of chemical pesticides for mosquito control in the Sea-tuck and Wertheim National Wildlife Refuges on Long Island. They alleged that the Fish and Wildlife Service, in issuing permits for pesticide application, had failed to comply with, inter alia, the National Environmental Policy Act (“NEPA”), 42 U.S.C. § 4321 et seq. (1976), the National Wildlife Refuge System Administration Act, 16 U.S.C. § 668dd et seq. (1976 and Supp. V 1981), regulations promulgated under those Acts, and the Service’s “Final Recommendations on the Management of the National Wildlife Refuge System.” EDF et al. requested declaratory and injunctive relief barring further insecticide use in the refuges until the government had prepared either an environmental impact statement or environmental assessment as required by NEPA, and had considered all feasible alternatives including biological methods of mosquito control.
Counsel for the government opposed ap-pellees’ request for a temporary restraining order at an oral hearing the following day. He represented to Judge Pratt that no fur*1084ther spraying would take place without 48 hours’ notice to appellees. On that basis, and because of the failure to join Suffolk County as a defendant, the judge denied the application for a TRO. A hearing on appellees’ request for a preliminary injunction was scheduled for September 3, 1981. Suffolk County, however, informed the Fish and Wildlife Service on August 28 that it saw no further need for mosquito control measures. As a result, appellants notified the court by letter that the expiration dates of the permits would be accelerated to September 1, and consequently there would be no need for the court to consider a preliminary injunction. Appellees thereafter withdrew their motion for that relief, and the parties initiated negotiations to see if a settlement could be reached.
Almost seven months later, on March 26, 1982, a stipulation of settlement was filed. Appellants conceded the major points sought by appellees, including an acknowl-edgement that the Fish and Wildlife Service’s Final Recommendations did govern the use of chemical pesticides in the Sea-tuck and Wertheim Refuges. They also stipulated that no use of chemical pesticides would be permitted in those areas until the feasibility of using a biological pesticide known as “BTI” had been determined, and compliance with NEPA and the National Wildlife Refuge System Administration Act had been achieved. In accordance with the stipulation, the court entered an order dismissing the action without prejudice on March 29. It retained jurisdiction, however, to consider any application for attorneys’ fees and expenses which might be filed.
On April 29,1982, appellees moved for an award of $24,398.27 in attorneys’ fees and expenses under § 204(a) of the EAJA, 28 U.S.C. § 2412. Appellants contested the motion on three grounds: (1) appellees were not “prevailing parties” within the meaning of the EAJA, (2) appellees were not entitled to fees because the government’s position was “substantially justified,” and (3) any award should be limited to services performed after the effective date of the EAJA, which was October 1, 1981. Judge Pratt found against appellants on all three points, and awarded the full amount of fees which appellees had requested.
DISCUSSION
On this appeal, the amount of fees and expenses awarded by the district court is not contested. Appellants also decline to pursue the arguments that appellees do not qualify as prevailing parties, or that only post-October 1, 1981 services could be compensated.2 Instead, appellants present the sole question whether the district judge erred in considering the position reflected in the underlying agency action — the issuance of the permits — in making the award. Appellants argue that the EAJA permits the court to examine only the government’s litigation position. Because the government “promptly” entered settlement negotiations which were ultimately successful, appellants submit that their litigation position must be deemed substantially justified, and the fee award held to be erroneous.
The proper interpretation of the word “position” in the EAJA is, indeed, an unsettled question. The circuits are split on the point, and this Court has yet to deal with it. The D.C., Fourth and Federal Circuits have concluded that the statute refers only to the government’s position in litigation. Spenc*1085er v. NLRB, 712 F.2d 539, 546-57 (D.C.Cir.1983); Tyler Business Services, Inc. v. NLRB, 695 F.2d 73, 75-76 (4th Cir.1982); Broad Ave. Laundry and Tailoring v. United States, 693 F.2d 1387, 1390-91 (Fed.Cir.1982). The Third Circuit, in a divided opinion, held that the court could examine both the government’s litigation position and the underlying agency action. Natural Resources Defense Council v. EPA, 703 F.2d 700, 706-12 (3d Cir.1983).
We refrain, however, from deciding the issue in the instant case, for we find that the government’s position lacked substantial justification on either the underlying action or the litigation position theory.3 We endorse Judge Pratt’s holding, which appellants do not dispute, that the underlying agency position was not substantially justified. As he found, “prior to suit the government made no attempt whatsoever to comply with the legal requirements that the stipulation of settlement now establishes are applicable to the spraying of chemical pesticides on the Seatuck and Wertheim refuges.” Environmental Defense Fund, et al. v. Watt, et al., 554 F.Supp. 36, 41 (E.D.N.Y.1982). We are left, therefore, with the question of justification for the government’s litigation position.
We note at the outset that the government’s ultimate acquiescence in a settlement is merely the beginning, not the termination, of our inquiry. The legislative history of the EAJA establishes that a party need not prevail after a full trial on the merits in order to obtain a fee award. Under the statute’s more expansive definition, “[a] party may be deemed prevailing if he obtains a favorable settlement of his case.” H.R.Rep. No. 96-1418, 96th Cong., 2d Sess. 11 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 4953, 4984, 4990.4 If, however, by settling a case the government could automatically make its position “substantially justified” and thereby avoid any fee liability, the statute would withdraw with one hand what it proffered with the other.
The test for determining whether the government’s position is substantially justified is “essentially one of reasonableness.”5 House Report at 10, reprinted in 1980 U.S.Code Cong. & Ad.News 4989. The government bears the burden of demonstrating the justification for its position, id.; S & H Riggers & Erectors, Inc. v. OSHRC, 672 F.2d 426, 430 (5th Cir. Unit B 1982), and a “strong showing” must be made to meet that burden. House Report at 18, reprinted in 1980 U.S.Code Cong. & Ad.News 4997; Natural Resources Defense Council v. EPA, 703 F.2d 700, 712 (3d Cir.1983).
In assessing the reasonableness of the government’s position, we must examine the full course of the litigation. In our view, the district court erred on this point. First, as a factual matter, the characterization of the case as one in which “the government settled the case shortly after it was initiated,” Environmental Defense Fund, et al. v. Watt, et al., supra, 554 *1086F.Supp. at 40, was clearly erroneous. Seven months between hearing and settlement is not a short period considering the scope of the issues involved, the brevity of the resulting stipulation, and the government’s acquiescence to appellees’ claims as expressed therein. More importantly, we believe the district court committed an error of law in limiting examination of the government’s litigation position to its “opposition to plaintiffs’ request for the temporary restraining order and its willingness to settle the case once the permits expired.” Id. at 41. On the contrary, the litigation position which the court may scrutinize embraces the full period' during which the case was pending, including the relatively long period of settlement negotiations.
The government may lack substantial justification for its position even though it does not insist upon an unreasonable stance through to the resolution of a case. We share the D.C. Circuit’s view on this point:
It seems clear that, if the government does not immediately accede to the plaintiff’s demand, but instead initially opposes his claims and then at some later stage (e.g., in a pre-trial settlement) surrenders, the United States will be liable for attorneys’ fees regardless of which theory [litigation position or underlying action] is applied.' Under such circumstances, not only will [sic] government have acted unreasonably, but it will have adopted (at least briefly) a litigation position lacking substantial justification.
Spencer v. NLRB, supra, 712 F.2d at 555 n. 58. We find it incumbent upon the government to abandon its opposition to the other party as soon as it becomes apparent that its litigation stance is not substantially justified. See Ellis v. United States, 711 F.2d 1571, 1576-77 (Fed.Cir.1983).6
The issues at stake in this case were few and discrete. All were resolved in appellee’s favor in the stipulation, yet the settlement negotiations consumed a full seven months. We must draw from this the strong inference, reinforced by statements of counsel in oral argument, that the delay was caused by the government’s insistence upon positions which appellees opposed and which were not finally incorporated into the stipulation.7 The government has made no effort to meet its burden by showing justification for its position on the issues responsible for protracting the settlement negotiations.
The purposes which Congress sought to achieve in enacting the EAJA support our construction of the “substantially justified” standard in relation to this case. By awarding fees to parties prevailing in litigation against the government, Congress intended to reduce the likelihood that challenges to bureaucratic action would be deterred by the high cost of litigating, particularly given the enormous resources at the government’s disposal. Section 202(c)(1), Pub.L. No. 96-481, 94 Stat. 2325; House Report at 5-6, reprinted in 1980 U.S.Code Cong. & Ad.News 4984. Clearly, the government can make lawsuits costly and burdensome to private parties by means of both dilatory trial tactics and insistence upon unjustified demands in settlement negotiations.
Our dissenting colleague takes issue with our holding as inhibiting settlement of cases where the government is a party. Nothing in our opinion undermines the principle that *1087settlement should be encouraged in preference to pursuing litigation. We must recognize, however, that Congress struck an accommodation among this and other goals in drafting the EAJA. To encourage private parties to participate, through the legal system, in “refining and formulating public policy”, House Report at 10, reprinted in 1980 U.S.Code Cong. & Ad.News 4988, Congress determined that the federal government should not automatically be immunized from fee liability should it choose to settle with an adversary. Supra at 1085.
To be sure, when private parties settle a dispute, a court need not scrutinize their agreement to decide whether fee recovery is warranted. Under the EAJA, however, the government qua litigant bears a heavier burden than the private party: It must affirmatively demonstrate substantial justification for its position. A fee award under this standard indeed “penalizes” the government as the dissent suggests, but it also serves the complementary and co-equal purpose of rewarding a successful private litigant for challenging official action in the face of the government’s superior resources and expertise. These twin objectives compel a more searching review of the litigation process, even when that process culminates in a settlement, than would otherwise be required.
We therefore conclude that no showing of substantial justification has been made as to either the Fish and Wildlife Service’s issuance of the pesticide permits or the government’s litigation stance in response to EDF et al.’s challenge. We thus concur in the trial court’s result, although we reach it by a somewhat different route. We see no reason to question Judge Pratt’s finding that the amount sought by appellees was reasonable. Accordingly, we affirm the judgment of the district court awarding EDF et a 1. $24,398.27 in fees and expenses pursuant to 28 U.S.C. § 2412(d)(1)(A).
. 28 U.S.C. § 2412(d)(1)(A) provides:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
Subsection (d)(2)(A) makes clear that “fees and other expenses” includes reasonable attorneys’ fees.
. Were these issues presented to us, we would affirm the district court’s disposition of them. A party which settles its case against the government may “prevail” for purposes of a fee award. See text at note 4 and note 4. A comparison of appellees’ initial position, as embodied in its complaint, and the provisions of the stipulation of settlement makes quite clear that appellees received most of what they had sought by instituting the litigation. On the second point, the statutory test governing the applicability of the EAJA looks solely at whether the action was pending on the date of enactment of the Act, not at when the services for which compensation is sought were rendered. Pub.L. No. 96-481, § 208, 94 Stat. 2330 (1980). Because this action was pending on October 1, 1981, the fee award may encompass all services performed by appellees. See Natural Resources Defense Council v. EPA, 703 F.2d 700, 712-13 (3d Cir.1983).
. There are three possible interpretations of the statute. Appellant argues that the court may look only at the government’s litigation position. Judge Pratt held that he was authorized to scrutinize both the government’s litigation stance and the position of the agency. In addition, a third theoretical approach would allow a judge to examine only the agency’s position. While this view is discussed in Spencer v. NLRB, supra, 712 F.2d at 15 n. 28, 36, we are not aware of any court which has adopted it. However, by finding the government’s position lacking in substantial justification either at the agency level or in litigation, we would reach the same result on any of the three interpretations.
. The House report also instructs that the term “prevailing party” be interpreted in a manner “consistent with the law that has developed under existing [fee-shifting] statutes.” House Report at 11, reprinted in 1980 U.S.Code Cong. & Ad.News 4990. In this regard, the Supreme Court has established that a party who prevails through a settlement may be awarded fees under 42 U.S.C. § 1988, which governs fee-shifting in civil rights litigation. See Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2574, 65 L.Ed.2d 653 (1980).
.Because the Senate Judiciary Committee rejected an amendment which would have changed the pertinent language from “substantially justified” to “reasonably justified,” some courts have suggested that the statutory test requires something more than ordinary reasonableness. See, e.g., Spencer v. NLRB, supra, 712 F.2d at 558; Natural Resources Defense Council v. EPA, supra, 703 F.2d at 721 n. 8 (Hunter, J., dissenting).
. We would thus agree with the analysis of the government’s litigation position in Operating Eng’rs Local Union No. 3 v. Bohn, 541 F.Supp. 486 (D.Utah 1982). In that case, plaintiffs sued to enjoin performance of work under a road construction contract which stated incorrect wage rates. Nine days later, defendants agreed to modify the contract, and a formal modification was approved the following month. On grounds that “[o]nce the action was filed, the government acted almost immediately to concede all the substantive relief plaintiff sought,” id. at 496, the court found the government’s ' litigation position to be substantially justified. We do not, as discussed supra, express any view on that court’s interpretations of the word “position.”
. Cf. Ward v. Schweiker, 562 F.Supp. 1173 (W.D.Mo.1983). In evaluating the government’s litigating position for substantial justification, the court there noted the lack of explanation for the delay in achieving a stipulated settlement, especially when the stipulation ultimately reached was “nearly identical” to one entered in an earlier case. Id. at 1180.