An article last Saturday said that, in a financial statement, Attorney General-designate Edwin Meese III had not listed as a liability $720,924 in legal fees amassed during an investigation of his finances by an independent counsel. Meese did, however, indicate a potential liability for fees in the statement, saying he had applied to the government for reimbursement of an unspecified amount in excess of $250,000 and "the amount, if any," that he would owe would depend on the government's response.

Independent counsel Jacob A. Stein has told a panel of judges that Attorney General-designate Edwin Meese III might not be entitled to reimbursement of $700,000 in legal fees, Justice Department sources said yesterday.

In a sealed document in the U.S. Court of Appeals here, Stein raised legal and policy issues showing that "it's not a foregone conclusion that Meese gets the money," according to a source familiar with the document. However, Stein suggested grounds on which Meese might be entitled to some repayment.

Stein also wrote that if the Justice Department did not assume its usual role as an advocate protecting the Treasury, the judges should consider hiring another independent counsel or judicial master to recommend whether Meese should be reimbursed and by how much, according to sources.

Justice Department staff attorneys have been in conflict with their superiors about whether the department should challenge Meese's request for $700,000 in fees, according to department sources. Staff attorneys recommended early this month that the department challenge Meese's request, as it would any other request for more than $75 an hour in fees. Meese's attorneys billed him at $250 an hour, according to sources.

But department officials rejected the staff recommendation, sources said. After receiving a copy of Stein's response to Meese's application, department lawyers decided to draft a response that "closely resembles" Stein's.

In his response, Stein refused to judge whether Meese should receive reimbursement. Instead, he pointed to several legal problems that must be addressed before it is decided whether Meese receives the money for his lawyers.

A source close to the investigation said Stein was concerned that the work of future independent counsels would be impaired if the subjects of their investigations and their attorneys knew that those conducting the investigation had to recommend how much they should receive in attorneys fees. "They might try to curry favor," said the source. Stein refused to comment.

Meese has been seeking legal fees under the Ethics in Government Act to reimburse lawyers who advised him during Stein's five-month investigation. Stein found no relationship between Meese's financial ties to individuals and their appointments to federal jobs. He also found no evidence that Meese violated any laws.

In his written response to Meese's fee application, Stein raised questions about whether Meese is entitled to compensation under the Ethics in Government Act. Amendments to the act, Stein pointed out, state that public officials should be reimbursed only if their status as public officials, rather than the offense they allegedly committed, triggers the investigation. "There shouldn't be additional burdens in terms of being a public official," said one source.

In Meese's case, the sources say, the nature of the allegations against Meese would have been serious enough, if true, to warrant prosecution by normal Justice Department standards, so it is doubtful whether Meese is entitled to reimbursement for fees.

Stein's response also questioned whether Meese legally owes his lawyers $700,000 as defined in the amendments to the act. "The statute talks about reimbursement for fees incurred," said a source familiar with the document. "But what does incurred mean?"

Stein's document did not raise at least one issue that Meese could point to in favor of receiving reimbursement for fees, sources said. For example, at least three of the 11 areas that Stein investigated -- Meese's decision to keep a gift of gold cufflinks, his alleged involvement in "Debategate" and the relationship between his wife's position at two universities and federal grants to those universities -- are not allegations that normally would be investigated or prosecuted by the Justice Department. Nevertheless, they were "thrown in" with the other topics investigated by Stein. As a result, the sources said, Meese could make an argument for reimbursement of legal fees to defend himself against those allegations.

Meanwhile, U.S. Court of Appeals judges here ordered that Meese's application and supporting documents be unsealed today.