Equal Access to Justice Act Implementation, 17622-17630 [2010-7889]

Download as PDF 17622 Proposed Rules Federal Register Vol. 75, No. 66 Wednesday, April 7, 2010 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1203 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of Federal Housing Enterprise Oversight 12 CFR Part 1705 RIN 2590–AA29 Equal Access to Justice Act Implementation WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS AGENCY: Federal Housing Finance Agency, HUD, Office of Federal Housing Enterprise Oversight. ACTION: Notice of proposed rulemaking. SUMMARY: The Federal Housing Finance Agency (FHFA) proposes to issue a regulation that would codify the authority and responsibility of FHFA to establish procedures for the submission and consideration of applications for awards of fees and other expenses by prevailing parties in adjudications against FHFA. DATES: Comments regarding this Notice of Proposed Rulemaking must be received on or before May 24, 2010. For additional information, see SUPPLEMENTARY INFORMATION. ADDRESSES: You may submit your comments on the proposed regulation, identified as RIN ‘‘2590–AA29’’ by any of the following methods: • U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590–AA29, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. • Hand Delivered/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/ RIN 2590–AA29, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 package should be logged at the Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m. • E-mail: Comments to Alfred M. Pollard, General Counsel may be sent by e-mail to RegComments@fhfa.gov. Please include ‘‘RIN 2590–AA29’’ in the subject line of the message. • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. If you submit your comment to the Federal eRulemaking Portal, please also send it by e-mail to FHFA at RegComments@fhfa.gov to ensure timely receipt by the agency. Include the following information in the subject line of your submission: ‘‘RIN 2590– AA29.’’ FOR FURTHER INFORMATION CONTACT: Janice A. Kullman, Associate General Counsel, telephone (202) 414–8970 (not a toll-free number); Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The telephone number for the Telecommunications Device for the Deaf is (800) 877–8339. SUPPLEMENTARY INFORMATION: I. Comments The Federal Housing Finance Agency (FHFA) invites comments on all aspects of the proposed regulation, and will consider all relevant comments before issuing the final regulation. Copies of all comments will be posted without change, including any personal information you provide, such as your name and address, on the FHFA Web site at: http://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel (FHFA) at (202) 414– 6924. II. Background A. Establishment of the Federal Housing Finance Agency The Housing and Economic Recovery Act of 2008 (HERA), Public Law 110– 289, 122 Stat. 2654, amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) (Safety and Soundness Act) to establish FHFA as an PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 independent agency of the Federal Government.1 FHFA was established to oversee the prudential operations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation (collectively, Enterprises), and the Federal Home Loan Banks (collectively with Enterprises, regulated entities) and to ensure that they operate in a safe and sound manner including being capitalized adequately; foster liquid, efficient, competitive and resilient national housing finance markets; comply with the Safety and Soundness Act and rules, regulations, guidelines and orders issued under the Safety and Soundness Act, and the respective authorizing statutes of the regulated entities; and carry out their missions through activities authorized and consistent with the Safety and Soundness Act and their authorizing statutes; and, that the activities and operations of the regulated entities are consistent with the public interest. The Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal Housing Finance Board (FHFB) were abolished on July 30, 2009, one year after the enactment of HERA. However, the regulated entities continue to operate under regulations promulgated by OFHEO and FHFB and such regulations are enforceable by the Director of FHFA until such regulations are modified, terminated, set aside, or superseded by the Director of FHFA.2 B. Equal Access to Justice Act The Equal Access to Justice Act, 5 U.S.C. 504, requires that an agency that conducts adversarial adjudications award costs and fees in connection with that adjudication to the prevailing party unless the adjudicative officer of the agency finds that the agency’s position was substantially justified or other circumstances make such an award unjust. Because FHFA conducts adversarial adjudications, FHFA proposes to issue a regulation to codify the responsibility of FHFA to establish procedures for the submission and consideration of applications for awards of fees and other expenses by prevailing parties. After the proposed regulation is published in its final form, the OFHEO ‘‘Implementation of the Equal Access to 1 See Division A, titled the ‘‘Federal Housing Finance Regulatory Reform Act of 2008,’’ Title I, Section 1101 of HERA. 2 See section 1302 and section 1312 of HERA. E:\FR\FM\07APP1.SGM 07APP1 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules Justice Act’’ regulation at 12 CFR part 1705 will be removed. This proposed regulation is substantially the same as that OFHEO regulation. III. Section-by-Section Analysis The following is a section-by-section analysis of the proposed regulation. Subpart A—General Provisions Section 1203.1 Purpose and Scope Proposed § 1203.1 would provide that the purpose of this regulation is to implement the Equal Access to Justice Act, 5 U.S.C. 504, by establishing procedures for the filing and consideration of applications for awards of fees and other expenses to eligible individuals and entities who are parties to adversary adjudications before FHFA. This section would also provide that the purpose of this part is to award fees and other expenses in connection with adversary adjudications before FHFA. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS Section 1203.2 Definitions This proposed section would set forth definitions for the regulation. Adjudicative officer would be defined as the official who presided at the underlying adversary adjudication, without regard to whether the official is designated as a hearing examiner, administrative law judge, administrative judge, or otherwise. Adversary adjudication would be defined as an administrative proceeding conducted by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other agency of the United States is represented by counsel or otherwise, including but not limited to an adjudication conducted under the Safety and Soundness Act, as amended, and any implementing regulations. Any issue as to whether an administrative proceeding is an adversary adjudication for purposes of this part will be an issue for resolution in the proceeding on the application for award. Affiliate would be defined as an individual, corporation, or other entity that directly or indirectly controls or owns a majority of the voting shares or other interests of the party, or any corporation or other entity of which the party directly or indirectly owns or controls a majority of the voting shares or other interest, unless the adjudicative officer determines that it would be unjust and contrary to the purpose of the Equal Access to Justice Act in light of the actual relationship between the affiliated entities to consider them to be affiliates for purposes of this part. Agency counsel would be defined as the attorney or attorneys designated by the General Counsel of FHFA to VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 17623 represent FHFA in an adversary adjudication covered by this part. Demand of FHFA would be defined as the express demand of FHFA that led to the adversary adjudication, but does not include a recitation by FHFA of the maximum statutory penalty when accompanied by an express demand for a lesser amount. Director would be defined as the Director of the Federal Housing Finance Agency. Fees and other expenses would be defined as including reasonable attorney or agent fees, the reasonable expenses of expert witnesses, and the reasonable cost of any study, analysis, engineering report, test, or expense which the agency finds necessary for the preparation of the eligible party’s case. FHFA would be defined as the Federal Housing Finance Agency. Final disposition date would be defined as the date on which a decision or order disposing of the merits of the adversary adjudication or any other complete resolution of the adversary adjudication, such as a settlement or voluntary dismissal, becomes final and unappealable, both within the agency and to the courts. Party would be defined as an individual, partnership, corporation, association, or public or private organization that is named or admitted as a party, that is admitted as a party for limited purposes, or that is properly seeking and entitled as of right to be admitted as a party in an adversary adjudication. Position of FHFA would be defined as the position taken by FHFA in the adversary adjudication, including the action or failure to act by FHFA upon which the adversary adjudication was based. interest, and not more than 500 employees; however, a party who owns an unincorporated business will be considered to be an ‘‘individual’’ rather than the ‘‘sole owner of an unincorporated business’’ if the issues on which the party prevails are related primarily to personal interests rather than to business interests; • A charitable or other tax-exempt organization described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), with not more than 500 employees; • A cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 employees; or • Any other partnership, corporation, association, unit of local government, or organization that has a net worth of not more than $7 million and not more than 500 employees. Proposed paragraph (c) of this section would clarify the requirements for eligibility by requiring that: • The employees of a party must include all persons who regularly perform services for remuneration for the party, under the party’s direction and control. Part-time employees must be included on a proportional basis. • The net worth and number of employees of the party and its affiliates must be aggregated to determine eligibility. • The net worth and number of employees of a party will be determined as of the date the underlying adversary adjudication was initiated. • A party that participates in an adversary adjudication primarily on behalf of one or more entities that would be ineligible for an award is not itself eligible for an award. Section 1203.3 Eligible Parties Proposed § 1203.3 would set out the eligibility requirements for parties seeking fees and expenses. Proposed paragraph (a) of this section would require the applicant to be a party to the adversary adjudication for which it seeks an award and be a small entity as defined in 5 U.S.C. 601. It would also require an applicant to meet all conditions of eligibility set out in this paragraph and comply with all the requirements in subpart B of this part. Proposed paragraph (b) of this section would require that a party be one of the following: • An individual who has a net worth of not more than $2 million; • The sole owner of an unincorporated business who has a net worth of not more than $7 million, including both personal and business Section 1203.4 Standards for Awards Proposed § 1203.4 would set out the standards for the award of fees and expenses. Proposed paragraph (a) of this section would provide that an eligible party that files an application for award of fees and other expenses in accordance with this part would receive an award of fees and other expenses related to defending against a demand of FHFA if the demand was in excess of the decision in the underlying adversary adjudication and was unreasonable when compared with the decision under the facts and circumstances of the case, unless the party has committed a willful violation of law or otherwise acted in bad faith, or unless special circumstances make an award unjust. This paragraph would also explain that the burden of proof that the demand of FHFA was PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\07APP1.SGM 07APP1 17624 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules substantially in excess of the decision and is unreasonable when compared with the decision would be on the eligible party. Proposed paragraph (b) of this section would provide that an eligible party that submits an application for award in accordance with this part would receive an award of fees and other expenses incurred in connection with an adversary adjudication in which it prevailed or in a significant and discrete substantive portion of the adversary adjudication in which it prevailed, unless the position of FHFA in the adversary adjudication was substantially justified or special circumstances make an award unjust. This paragraph would further explain that FHFA would have the burden of proof to show that its position was substantially justified and could do so by showing that its position was reasonable in law and in fact. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS Section 1203.5 Expenses Allowable Fees and Proposed § 1203.5 would set forth what fees and expenses a party may collect under this part. Proposed paragraph (a) of this section would provide that awards of fees and other expenses would be based on rates customarily charged by persons engaged in the business of acting as attorneys, agents, and expert witnesses, even if the services were made available without charge or at a reduced rate to the party. This paragraph would also explain that, except as provided in proposed § 1203.6, an award for the fee of an attorney or agent could not exceed $125 per hour and an award to compensate an expert witness could not exceed the highest rate at which FHFA pays expert witnesses. However, under this paragraph, an award could also include the reasonable expenses of the attorney, agent, or expert witness as a separate item if he or she ordinarily charges clients separately for such expenses. Proposed paragraph (b) of this section would set out the factors the adjudicative officer must consider for determining the reasonableness of the fee, including the following: • If the attorney, agent, or expert witness is in private practice, his or her customary fees for similar services; or, if the attorney, agent, or expert witness is an employee of the eligible party, the fully allocated costs of the services; • The prevailing rate for similar services in the community in which the attorney, agent, or expert witness ordinarily performs services; • The time actually spent in the representation of the eligible party; VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 • The time reasonably spent in light of the difficulty or complexity of the issues in the adversary adjudication; and • Such other factors as may bear on the value of the services provided. Proposed paragraph (c) of this section would provide that in determining the reasonable cost of any study, analysis, engineering report, test, project, or similar matter prepared on behalf of a party, the adjudicative officer would consider the prevailing rate for similar services in the community in which the services were performed. Proposed paragraph (d) of this section would provide that fees and other expenses incurred before the date on which an adversary adjudication was initiated would be awarded only if the eligible party can demonstrate that they were reasonably incurred in preparation for the adversary adjudication. Section 1203.6 Rulemaking on Maximum Rate for Fees Proposed § 1203.6 would provide that FHFA could adopt regulations providing for an award of attorney or agent fees at a rate higher than $125 per hour in adversary adjudications covered by this part if warranted by an increase in the cost of living or by special circumstances. Special circumstances would include the limited availability of attorneys or agents who are qualified to handle certain types of adversary adjudications. This section would provide that FHFA could conduct any rulemaking proceedings for this purpose under the informal rulemaking procedures of the Administrative Procedure Act, 5 U.S.C. 553. Section 1203.7 Awards Against Other Agencies Proposed § 1203.7 would provide that if another agency of the United States participates in an adversary adjudication before FHFA and takes a position that was not substantially justified, the award or appropriate portion of the award to an eligible party that prevailed over that agency will be made against that agency. Subpart B—Information Required From Applicants Section 1203.10 Contents of the Application for Award Proposed § 1203.10 would provide, under proposed paragraph (a) of this section, that an application for award of fees and other expenses under either proposed § 1203.4(a) or § 1203.4(b) would have to: • Identify the applicant and the adversary adjudication for which an award is sought; PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 • State the amount of fees and other expenses for which an award is sought; • Provide the statements and documentation required by paragraph (b) or (c) of this section and proposed § 1203.12 and any additional information required by the adjudicative officer; and • Be signed by the applicant or an authorized officer or attorney of the applicant and contain or be accompanied by a written verification under oath or under penalty of perjury that the information provided in the application is true and correct. Proposed paragraph (b) of this section would require that an application for award under proposed § 1203.4(a), must show that the demand of FHFA was substantially in excess of, and was unreasonable when compared to, the decision in the underlying adversary adjudication under the facts and circumstances of the case. This paragraph would also require the application to show that the applicant is a small entity as defined in 5 U.S.C. 601. Proposed paragraph (c) of this section would set out the requirements for an application for award under proposed § 1203.4(b) including that the application must: • Show that the applicant has prevailed in a significant and discrete substantive portion of the underlying adversary adjudication and identify the position of FHFA in the adversary adjudication that the applicant alleges was not substantially justified; • State the number of employees of the applicant and describe briefly the type and purposes of its organization or business (if the applicant is not an individual); • State that the net worth of the applicant does not exceed $2 million, if the applicant is an individual; or for all other applicants, state that the net worth of the applicant and its affiliates, if any, does not exceed $7 million; and • Include one of the following: —A detailed exhibit showing the net worth (net worth exhibit) of the applicant and its affiliates, if any, when the underlying adversary adjudication was initiated. The net worth exhibit may be in any form convenient to the applicant as long as the net worth exhibit provides full disclosure of the assets and liabilities of the applicant and its affiliates, if any, and is sufficient to determine whether the applicant qualifies as an eligible party; —A copy of a ruling by the Internal Revenue Service that shows that the applicant qualifies as an organization described in section 501(c)(3) of the E:\FR\FM\07APP1.SGM 07APP1 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the case of a taxexempt organization not required to obtain a ruling from the Internal Revenue Service on its exempt status, a statement that describes the basis for the belief that the applicant qualifies under such section; or —A statement that the applicant is a cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a). Section 1203.11 Worth Exhibit Confidentiality of Net Proposed § 1203.11 would state that unless otherwise ordered by the Director, or required by law, the statement of net worth will be for the confidential use of the adjudicative officer, the Director and agency counsel. Section 1203.12 Documentation for Fees and Expenses Proposed § 1203.12 would provide the requirements for documenting fees and expenses. Proposed paragraph (a) of this section would require that the application for award should be accompanied by full and itemized documentation of the fees and other expenses for which an award is sought. This paragraph would further provide that the adjudicative officer could require the applicant to provide vouchers, receipts, logs, or other documentation for any fees or expenses claimed. Proposed paragraph (b) of this section would require that a separate itemized statement be submitted for each entity or individual whose services are covered by the application and that each itemized statement must include: • The hours spent by each entity or individual; • A description of the specific services performed and the rates at which each fee has been computed; and • Any expenses for which reimbursement is sought, the total amount claimed, and the total amount paid or payable by the applicant or by any other person or entity. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS Subpart C—Procedures for Filing and Consideration of the Application for Award Section 1203.20 Filing and Service of the Application for Award and Related Papers Proposed § 1203.20 would set out the procedures for filing and service of an application for award. Proposed paragraph (a) of this section would require that an application for an award of fees and other expenses must be filed no later than 30 days after the VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 final disposition of the underlying adversary adjudication. Proposed paragraph (b) of this section would require that an application for award and other papers related to the proceedings on the application for award must be filed and served on all parties in the same manner as papers are filed and served in the underlying adversary adjudication, except as otherwise provided in this part. Proposed paragraph (c) of this section would require that the computation of time for filing and service of the application of award and other papers must be computed in the same manner as in the underlying adversary adjudication. Section 1203.21 Response to the Application for Award Proposed § 1203.21 would set out the procedure for responding to the application for an award. Proposed paragraph (a) of this section would require that agency counsel file a response within 30 days after service of an application for award of fees and other expenses except as provided in proposed paragraphs (b) and (c) of this section. This paragraph would also require that agency counsel explain any objections to the award requested and identify the facts relied upon to support the objections. If any of the alleged facts are not already in the record of the underlying adversary adjudication, agency counsel would include with the response either supporting affidavits or a request for further proceedings under proposed § 1203.25. Proposed paragraph (b) of this section would provide that if agency counsel and the applicant believe that the issues in the application for award can be settled, they may jointly file a statement of their intent to negotiate a settlement. The filing of this statement would extend the time for filing a response for an additional 30 days. Upon request by agency counsel and the applicant, the adjudicative officer could grant for good cause further time extensions. Proposed paragraph (c) of this section would provide that agency counsel could request that the adjudicative officer extend the time period for filing a response. This paragraph would further provide that if agency counsel does not answer or otherwise does not contest or settle the application for award within the 30-day period or the extended time period, the adjudicative officer may make an award of fees and other expenses upon a satisfactory showing of entitlement by the applicant. PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 17625 Section 1203.22 Reply to the Response Proposed § 1203.22 would provide that within 15 days after service of a response, the applicant could file a reply. This section would further provide that if the reply is based on any alleged facts not already in the record of the underlying adversary adjudication, the applicant must include with the reply either supporting affidavits or a request for further proceedings under proposed § 1203.25. Section 1203.23 Comments by Other Parties Proposed § 1203.23 would provide that any party to the underlying adversary adjudication other than the applicant and agency counsel could file comments on an application for award within 30 calendar days after it is served, or on a response within 15 calendar days after it is served. This section would also provide that a commenting party may not participate further in proceedings on the application unless the adjudicative officer determines that the public interest requires such participation in order to permit full exploration of matters raised in the comments. Section 1203.24 Settlement Proposed § 1203.24 would provide that the applicant and agency counsel could agree on a proposed settlement of an award before the final decision on the application for award is made, either in connection with a settlement of the underlying adversary adjudication or after the underlying adversary adjudication has been concluded. This section would further require that if the eligible party and agency counsel agree on a proposed settlement of an award before an application for award has been filed, the application must be filed with the proposed settlement. Section 1203.25 Further Proceedings on the Application for Award Proposed § 1203.25 would set forth procedures for further proceedings on an application for award. Proposed paragraph (a) of this section would provide that on request of either the applicant or agency counsel, on the adjudicative officer’s own initiative, or as requested by the Director of FHFA under proposed § 1203.27, the adjudicative officer could order further proceedings, such as an informal conference, oral argument, additional written submissions, or, as to issues other than substantial justification (such as the applicant’s eligibility or substantiation of fees and expenses), pertinent discovery or an evidential hearing. This paragraph would further E:\FR\FM\07APP1.SGM 07APP1 17626 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS provide that such further proceedings will be held only when necessary for full and fair resolution of the issues arising from the application for award and will be conducted as promptly as possible. Last, this paragraph would require that the issue as to whether the position of FHFA in the underlying adversary adjudication was substantially justified must be determined on the basis of the whole administrative record that was made in the underlying adversary adjudication. Proposed paragraph (b) of this section would require that a request that the adjudicative officer order further proceedings under this section would specifically identify the information sought on the disputed issues and must explain why the additional proceedings are necessary to resolve the issues. decision; and, if at issue, whether the applicant has committed a willful violation of the law or otherwise acted in bad faith, or whether special circumstances would make the award unjust. Proposed paragraph (e) of this section would provide that in decisions on applications filed pursuant to proposed § 1203.4(b), the adjudicative officer would include written findings and conclusions as to whether the applicant is a prevailing party and whether the position of FHFA was substantially justified; and, if at issue, whether the applicant unduly protracted or delayed the underlying adversary adjudication or whether special circumstance make the award unjust. Section 1203.26 Decision of the Adjudicative Officer Proposed § 1203.26 would set forth the requirements for the decision of the adjudicative officer. Proposed paragraph (a) of this section would provide that the adjudicative officer must make the initial decision on the basis of the written record, except if further proceedings are ordered under proposed § 1203.25. Proposed paragraph (b) of this section would provide that the adjudicative officer must issue a written initial decision on the application for award within 30 days after completion of proceedings on the application. This paragraph would provide that the initial decision would become the final decision of FHFA after 30 days from the day it was issued, unless review is ordered under proposed § 1203.27. Proposed paragraph (c) of this section would provide that in all initial decisions, the adjudicative officer would include findings and conclusions with respect to the applicant’s eligibility and an explanation of the reasons for any difference between the amount requested by the applicant and the amount awarded. This paragraph would also provide that if the applicant has sought an award against more than one agency, the adjudicative officer must also include findings and conclusions with respect to the allocation of payment of any award made. Proposed paragraph (d) of this section would provide that in initial decisions on applications filed pursuant to proposed § 1203.4(a), the adjudicative officer would include findings and conclusions as to whether FHFA made a demand that was substantially in excess of the decision in the underlying adversary adjudication and that was unreasonable when compared with that Proposed § 1203.27 would provide that within 30 days after the adjudicative officer issues an initial decision under proposed § 1203.26, either the applicant or agency counsel could request the Director to review the initial decision of the adjudicative officer. This section would also provide that the Director or his or her designee could also decide, on his or her own initiative, to review the initial decision. Under this section, whether to review a decision would be at the discretion of the Director or his or her designee. If review is ordered, the Director or his or her designee would issue a final decision on the application for award or remand the application for award to the adjudicative officer for further proceedings under proposed § 1203.25. VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 Section 1203.27 Section 1203.28 Review by FHFA Judicial Review Proposed § 1203.28 would provide that any party, other than the United States, that is dissatisfied with the final decision on an application for award of fees and expenses under this part could seek judicial review as provided in 5 U.S.C. 504(c)(2). Section 1203.29 Payment of Award Proposed § 1203.29 would provide that to receive payment of an award of fees and other expenses granted under this part, the applicant would submit a copy of the final decision that grants the award and a certification that the applicant will not seek review of the decision in the United States courts to the Director, Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. Under this section, FHFA would pay the amount awarded to the applicant within 60 days of receipt of the submission of the copy of the final decision and the certification, unless judicial review of PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 the award has been sought by any party to the proceedings. Regulatory Impacts Paperwork Reduction Act The proposed regulation does not contain any information collection requirement that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation’s impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation does not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of the proposed regulation under the Regulatory Flexibility Act and certifies that the proposed regulation is not likely to have a significant economic impact on a substantial number of small business entities. The regulation is applicable only to parties who have prevailed in an adjudication against FHFA. These parties will not represent a substantial number of small business entities. List of Subjects in 12 CFR Parts 1203 and 1705 Administrative practice and procedure, Equal access to justice. Authority and Issuance Accordingly, for the reasons stated in the preamble, under the authority of 12 U.S.C. 4526 and 5 U.S.C. 504, FHFA proposes to amend Chapters XII and XVII of Title 12 of the Code of Federal Regulations, as follows: CHAPTER XII—FEDERAL HOUSING FINANCE AGENCY Subchapter A—Organization and Operations 1. Add part 1203 to subchapter A to read as follows: PART 1203—EQUAL ACCESS TO JUSTICE ACT Subpart A—General Provisions Sec. 1203.1 Purpose and scope. 1203.2 Definitions. 1203.3 Eligible parties. 1203.4 Standards for awards. 1203.5 Allowable fees and expenses. E:\FR\FM\07APP1.SGM 07APP1 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules 1203.6 Rulemaking on maximum rate for fees. 1203.7 Awards against other agencies. 1203.8–1203.9 [Reserved] Subpart B—Information Required From Applicants 1203.10 Contents of the application for award. 1203.11 Confidentiality of net worth exhibit. 1203.12 Documentation for fees and expenses. 1203.13–1203.19 [Reserved] Subpart C—Procedures for Filing and Consideration of the Application for Award 1203.20 Filing and service of the application for award and related papers. 1203.21 Answer to the application for award. 1203.22 Reply to the answer. 1203.23 Comments by other parties. 1203.24 Settlement. 1203.25 Further proceedings on the application for award. 1203.26 Decision of the adjudicative officer. 1203.27 Review by FHFA. 1203.28 Judicial review. 1203.29 Payment of award. Authority: 12 U.S.C. 4526, 5 U.S.C. 504. Subpart A—General Provisions § 1203.1 Purpose and scope. (a) This part implements the Equal Access to Justice Act, 5 U.S.C. 504, by establishing procedures for the filing and consideration of applications for awards of fees and other expenses to eligible individuals and entities who are parties to adversary adjudications before FHFA. (b) This part applies to the award of fees and other expenses in connection with adversary adjudications before FHFA. However, if a court reviews the underlying decision of the adversary adjudication, an award for fees and other expenses may be made only pursuant to 28 U.S.C. 2412(d)(3). WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS § 1203.2 Definitions. Adjudicative officer means the official who presided at the underlying adversary adjudication, without regard to whether the official is designated as a hearing examiner, administrative law judge, administrative judge, or otherwise. Adversary adjudication means an administrative proceeding conducted by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other agency of the United States is represented by counsel or otherwise, including but not limited to an adjudication conducted under the Safety and Soundness Act, as amended, and any implementing regulations. Any issue as to whether an administrative proceeding is an adversary adjudication for purposes of VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 17627 this part will be an issue for resolution in the proceeding on the application for award. Affiliate means an individual, corporation, or other entity that directly or indirectly controls or owns a majority of the voting shares or other interests of the party, or any corporation or other entity of which the party directly or indirectly owns or controls a majority of the voting shares or other interest, unless the adjudicative officer determines that it would be unjust and contrary to the purpose of the Equal Access to Justice Act in light of the actual relationship between the affiliated entities to consider them to be affiliates for purposes of this part. Agency counsel means the attorney or attorneys designated by the General Counsel of FHFA to represent FHFA in an adversary adjudication covered by this part. Demand of FHFA means the express demand of FHFA that led to the adversary adjudication, but does not include a recitation by FHFA of the maximum statutory penalty when accompanied by an express demand for a lesser amount. Director means the Director of the Federal Housing Finance Agency. Fees and other expenses means reasonable attorney or agent fees, the reasonable expenses of expert witnesses, and the reasonable cost of any study, analysis, engineering report, test, or which the agency finds necessary for the preparation of the eligible party’s case. FHFA means the Federal Housing Finance Agency. Final disposition date means the date on which a decision or order disposing of the merits of the adversary adjudication or any other complete resolution of the adversary adjudication, such as a settlement or voluntary dismissal, becomes final and unappealable, both within the agency and to the courts. Party means an individual, partnership, corporation, association, or public or private organization that is named or admitted as a party, that is admitted as a party for limited purposes, or that is properly seeking and entitled as of right to be admitted as a party in an adversary adjudication. Position of FHFA means the position taken by FHFA in the adversary adjudication, including the action or failure to act by FHFA upon which the adversary adjudication was based. of eligibility set out in this paragraph and has complied with all the requirements in Subpart B of this part. The applicant must also be a party to the adversary adjudication for which it seeks an award. To be eligible for an award of fees and other expenses for prevailing parties, a party must be one of the following: (1) An individual who has a net worth of not more than $2 million; (2) The sole owner of an unincorporated business who has a net worth of not more than $7 million, including both personal and business interest, and not more than 500 employees; however, a party who owns an unincorporated business will be considered to be an ‘‘individual’’ rather than the ‘‘sole owner of an unincorporated business’’ if the issues on which the party prevails are related primarily to personal interests rather than to business interests; (3) A charitable or other tax-exempt organization described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), with not more than 500 employees; (4) A cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 employees; (5) Any other partnership, corporation, association, unit of local government, or organization that has a net worth of not more than $7 million and not more than 500 employees; or (6) For the purposes of an application filed pursuant to 5 U.S.C. 504(a)(4), a small entity as defined in 5 U.S.C. 601. (b) For purposes of eligibility under this section: (1) The employees of a party must include all persons who regularly perform services for remuneration for the party, under the party’s direction and control. Part-time employees must be included on a proportional basis. (2) The net worth and number of employees of the party and its affiliates must be aggregated to determine eligibility. (3) The net worth and number of employees of a party will be determined as of the date the underlying adversary adjudication was initiated. (4) A party that participates in an adversary adjudication primarily on behalf of one or more entities that would be ineligible for an award is not itself eligible for an award. § 1203.3 § 1203.4 Eligible parties. (a) To be eligible for an award of fees and other expenses under the Equal Access to Justice Act, the applicant must show that it meets all conditions PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 Standards for awards. (a) An eligible party that files an application for award of fees and other expenses in accordance with this part will receive an award of fees and other E:\FR\FM\07APP1.SGM 07APP1 17628 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules expenses related to defending against a demand of FHFA if the demand was in excess of the decision in the underlying adversary adjudication and was unreasonable when compared with the decision under the facts and circumstances of the case, unless the party has committed a willful violation of law or otherwise acted in bad faith, or unless special circumstances make an award unjust. The burden of proof that the demand of FHFA was substantially in excess of the decision and is unreasonable when compared with the decision is on the eligible party. (b) An eligible party that submits an application for award in accordance with this part will receive an award of fees and other expenses incurred in connection with an adversary adjudication in which it prevailed or in a significant and discrete substantive portion of the adversary adjudication in which it prevailed, unless the position of FHFA in the adversary adjudication was substantially justified or special circumstances make an award unjust. FHFA has the burden of proof to show that its position was substantially justified and may do so by showing that its position was reasonable in law and in fact. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS § 1203.5 Allowable fees and expenses. (a) Awards of fees and other expenses will be based on rates customarily charged by persons engaged in the business of acting as attorneys, agents, and expert witnesses, even if the services were made available without charge or at a reduced rate to the party. However, except as provided in § 1203.6, an award for the fee of an attorney or agent may not exceed $125 per hour and an award to compensate an expert witness may not exceed the highest rate at which FHFA pays expert witnesses. However, an award may also include the reasonable expenses of the attorney, agent, or expert witness as a separate item if he or she ordinarily charges clients separately for such expenses. (b) In determining the reasonableness of the fee sought for an attorney, agent, or expert witness, the adjudicative officer will consider the following: (1) If the attorney, agent, or expert witness is in private practice, his or her customary fees for similar services; or, if the attorney, agent, or expert witness is an employee of the eligible party, the fully allocated costs of the services; (2) The prevailing rate for similar services in the community in which the attorney, agent, or expert witness ordinarily performs services; (3) The time actually spent in the representation of the eligible party; VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 (4) The time reasonably spent in light of the difficulty or complexity of the issues in the adversary adjudication; and (5) Such other factors as may bear on the value of the services provided. (c) In determining the reasonable cost of any study, analysis, engineering report, test, project, or similar matter prepared on behalf of a party, the adjudicative officer will consider the prevailing rate for similar services in the community in which the services were performed. (d) Fees and other expenses incurred before the date on which an adversary adjudication was initiated will be awarded only if the eligible party can demonstrate that they were reasonably incurred in preparation for the adversary adjudication. § 1203.6 fees. Rulemaking on maximum rate for If warranted by an increase in the cost of living or by special circumstances, FHFA may adopt regulations providing for an award of attorney or agent fees at a rate higher than $125 per hour in adversary adjudications covered by this part. Special circumstances include the limited availability of attorneys or agents who are qualified to handle certain types of adversary adjudications. FHFA will conduct any rulemaking proceedings for this purpose under the informal rulemaking procedures of the Administrative Procedure Act, 5 U.S.C. 553. § 1203.7 Awards against other agencies. If another agency of the United States participates in an adversary adjudication before FHFA and takes a position that was not substantially justified, the award or appropriate portion of the award to an eligible party that prevailed over that agency will be made against that agency. §§ 1203.8–1203.9 [Reserved] Subpart B—Information Required From Applicants § 1203.10 award. Contents of the application for (a) An application for award of fees and other expenses under either § 1203.4(a) and § 1203.4(b) must: (1) Identify the applicant and the adversary adjudication for which an award is sought; (2) State the amount of fees and other expenses for which an award is sought; (3) Provide the statements and documentation required by paragraph (b) or (c) of this section and § 1203.12 and any additional information required by the adjudicative officer; and PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 (4) Be signed by the applicant or an authorized officer or attorney of the applicant and contain or be accompanied by a written verification under oath or under penalty of perjury that the information provided in the application is true and correct. (b) An application for award under § 1203.4(a) must show that the demand of FHFA was substantially in excess of, and was unreasonable when compared to, the decision in the underlying adversary adjudication under the facts and circumstances of the case. It must also show that the applicant is a small entity as defined in 5 U.S.C. 601. (c) An application for award under § 1203.4(b) must: (1) Show that the applicant has prevailed in a significant and discrete substantive portion of the underlying adversary adjudication and identify the position of FHFA in the adversary adjudication that the applicant alleges was not substantially justified; (2) State the number of employees of the applicant and describe briefly the type and purposes of its organization or business (if the applicant is not an individual); (3) State that the net worth of the applicant does not exceed $2 million, if the applicant is an individual; or for all other applicants, state that the net worth of the applicant and its affiliates, if any, does not exceed $7 million; and (4) Include one of the following: (i) A detailed exhibit showing the net worth (net worth exhibit) of the applicant and its affiliates, if any, when the underlying adversary adjudication was initiated. The net worth exhibit may be in any form convenient to the applicant as long as the net worth exhibit provides full disclosure of the assets and liabilities of the applicant and its affiliates, if any, and is sufficient to determine whether the applicant qualifies as an eligible party; (ii) A copy of a ruling by the Internal Revenue Service that shows that the applicant qualifies as an organization described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the case of a tax-exempt organization not required to obtain a ruling from the Internal Revenue Service on its exempt status, a statement that describes the basis for the belief that the applicant qualifies under such section; or (iii) A statement that the applicant is a cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a). E:\FR\FM\07APP1.SGM 07APP1 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules § 1203.11 exhibit. Confidentiality of net worth Unless otherwise ordered by the Director, or required by law, the statement of net worth will be for the confidential use of the adjudicative officer, the Director, and agency counsel. § 1203.12 Documentation for fees and expenses. (a) The application for award must be accompanied by full and itemized documentation of the fees and other expenses for which an award is sought. The adjudicative officer may require the applicant to provide vouchers, receipts, logs, or other documentation for any fees or expenses claimed. (b) A separate itemized statement must be submitted for each entity or individual whose services are covered by the application. Each itemized statement must include: (1) The hours spent by each entity or individual; (2) A description of the specific services performed and the rates at which each fee has been computed; and (3) Any expenses for which reimbursement is sought, the total amount claimed, and the total amount paid or payable by the applicant or by any other person or entity. §§ 1203.13–1203.19 [Reserved] Subpart C—Procedures for Filing and Consideration of the Application for Award WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS § 1203.20 Filing and service of the application for award and related papers. (a) An application for an award of fees and other expenses must be filed no later than 30 days after the final disposition of the underlying adversary adjudication. (b) An application for award and other papers related to the proceedings on the application for award must be filed and served on all parties in the same manner as papers are filed and served in the underlying adversary adjudication, except as otherwise provided in this part. (c) The computation of time for filing and service of the application of award and other papers must be computed in the same manner as in the underlying adversary adjudication. § 1203.21 award. Answer to the application for (a) Agency counsel must file a response within 30 days after service of an application for award of fees and other expenses except as provided in paragraphs (b) and (c) of this section. In the answer, agency counsel must VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 explain any objections to the award requested and identify the facts relied upon to support the objections. If any of the alleged facts are not already in the record of the underlying adversary adjudication, agency counsel must include with the answer either supporting affidavits or a request for further proceedings under § 1203.25. (b) If agency counsel and the applicant believe that the issues in the application for award can be settled, they may jointly file a statement of their intent to negotiate a settlement. The filing of this statement will extend the time for filing a response for an additional 30 days. Upon request by agency counsel and the applicant, the adjudicative officer may grant for good cause further time extensions. (c) Agency counsel may request that the adjudicative officer extend the time period for filing a response. If agency counsel does not answer or otherwise does not contest or settle the application for award within the 30-day period or the extended time period, the adjudicative officer may make an award of fees and other expenses upon a satisfactory showing of entitlement by the applicant. § 1203.22 Reply to the answer. Within 15 days after service of a response, the applicant may file a reply. If the reply is based on any alleged facts not already in the record of the underlying adversary adjudication, the applicant must include with the reply either supporting affidavits or a request for further proceedings under § 1203.25. § 1203.23 Comments by other parties. Any party to the underlying adversary adjudication other than the applicant and agency counsel may file comments on an application for award within 30 calendar days after it is served, or on a response within 15 calendar days after it is served. A commenting party may not participate further in proceedings on the application unless the adjudicative officer determines that the public interest requires such participation in order to permit full exploration of matters raised in the comments. § 1203.24 Settlement. The applicant and agency counsel may agree on a proposed settlement of an award before the final decision on the application for award is made, either in connection with a settlement of the underlying adversary adjudication or after the underlying adversary adjudication has been concluded. If the eligible party and agency counsel agree on a proposed settlement of an award before an application for award has been PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 17629 filed, the application must be filed with the proposed settlement. § 1203.25 Further proceedings on the application for award. (a) On request of either the applicant or agency counsel, on the adjudicative officer’s own initiative, or as requested by the Director under § 1203.27, the adjudicative officer may order further proceedings, such as an informal conference, oral argument, additional written submissions, or, as to issues other than substantial justification (such as the applicant’s eligibility or substantiation of fees and expenses), pertinent discovery or an evidential hearing. Such further proceedings will be held only when necessary for full and fair resolution of the issues arising from the application for award and will be conducted as promptly as possible. The issue as to whether the position of FHFA in the underlying adversary adjudication was substantially justified will be determined on the basis of the whole administrative record that was made in the underlying adversary adjudication. (b) A request that the adjudicative officer order further proceedings under this section must specifically identify the information sought on the disputed issues and must explain why the additional proceedings are necessary to resolve the issues. § 1203.26 officer. Decision of the adjudicative (a) The adjudicative officer must make the initial decision on the basis of the written record, except if further proceedings are ordered under § 1203.25. (b) The adjudicative officer must issue a written initial decision on the application for award within 30 days after completion of proceedings on the application. The initial decision will become the final decision of FHFA after 30 days from the day it was issued, unless review is ordered under § 1203.27. (c) In all initial decisions, the adjudicative officer must include findings and conclusions with respect to the applicant’s eligibility and an explanation of the reasons for any difference between the amount requested by the applicant and the amount awarded. If the applicant has sought an award against more than one agency, the adjudicative officer must also include findings and conclusions with respect to the allocation of payment of any award made. (d) In initial decisions on applications filed pursuant to § 1203.4(a), the adjudicative officer must include E:\FR\FM\07APP1.SGM 07APP1 17630 Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / Proposed Rules findings and conclusions as to whether FHFA made a demand that was substantially in excess of the decision in the underlying adversary adjudication and that was unreasonable when compared with that decision; and, if at issue, whether the applicant has committed a willful violation of the law or otherwise acted in bad faith, or whether special circumstances would make the award unjust. (e) In decisions on applications filed pursuant to § 1203.4(b), the adjudicative officer must include written findings and conclusions as to whether the applicant is a prevailing party and whether the position of FHFA was substantially justified; and, if at issue, whether the applicant unduly protracted or delayed the underlying adversary adjudication or whether special circumstance make the award unjust. CHAPTER XVII—OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT § 1203.27 Airworthiness Directives; Rolls-Royce plc RB211 Trent 700 and Trent 800 Series Turbofan Engines Review by FHFA. Within 30 days after the adjudicative officer issues an initial decision under § 1203.26, either the applicant or agency counsel may request the Director to review the initial decision of the adjudicative officer. The Director may also decide, at his or her discretion, to review the initial decision. If review is ordered, the Director must issue a final decision on the application for award or remand the application for award to the adjudicative officer for further proceedings under § 1203.25. § 1203.28 Judicial review. Any party, other than the United States, that is dissatisfied with the final decision on an application for award of fees and expenses under this part may seek judicial review as provided in 5 U.S.C. 504(c)(2). WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS § 1203.29 Payment of award. To receive payment of an award of fees and other expenses granted under this part, the applicant must submit a copy of the final decision that grants the award and a certification that the applicant will not seek review of the decision in the United States courts to the Director, Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. FHFA must pay the amount awarded to the applicant within 60 days of receipt of the submission of the copy of the final decision and the certification, unless judicial review of the award has been sought by any party to the proceedings. VerDate Nov<24>2008 15:16 Apr 06, 2010 Jkt 220001 [FR Doc. 2010–7889 Filed 4–6–10; 8:45 am] the instructions for sending your comments electronically. • Mail: Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12–140, Washington, DC 20590–0001. • Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • Fax: (202) 493–2251. BILLING CODE 8070–01–P Examining the AD Docket PART 1705—[REMOVED] 2. Remove part 1705. Dated: April 1, 2010. Edward J. DeMarco, Acting Director, Federal Housing Finance Agency. DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2010–0364; Directorate Identifier 2009–NE–27–AD] RIN 2120–AA64 AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive (AD) for the products listed above. This proposed AD results from mandatory continuing airworthiness information (MCAI) issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: In completing a review of Engine Manual repair/acceptance limits for titanium compressor shafts, RollsRoyce has found the specified limits to be incorrect such that the shot peened surface layer at life critical features (the axial dovetail slots) may have been inadvertently removed in-service. Removal of the shot peened layer results in increased vulnerability of the part to tensile stresses, which could reduce the life of the shaft to below the published life limits. We are proposing this AD to prevent failure of the intermediate-pressure (IP) and high-pressure (HP) shaft, which could result in an overspeed condition, possible uncontained disc failure and damage to the airplane. DATES: We must receive comments on this proposed AD by May 24, 2010. ADDRESSES: You may send comments by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov and follow PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 You may examine the AD docket on the Internet at http:// www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647–5527) is the same as the Mail address provided in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: James Lawrence, Aerospace Engineer, Engine Certification Office, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; e-mail: james.lawrence@faa.gov; telephone (781) 238–7176; fax (781) 238–7199. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include ‘‘Docket No. FAA–2010–0364; Directorate Identifier 2009–NE–27–AD’’ at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments. We will post all comments we receive, without change, to http:// www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of the Web site, anyone can find and read the comments in any of our dockets, including, if provided, the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). E:\FR\FM\07APP1.SGM 07APP1

Agencies

[Federal Register Volume 75, Number 66 (Wednesday, April 7, 2010)]
[Proposed Rules]
[Pages 17622-17630]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7889]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 75, No. 66 / Wednesday, April 7, 2010 / 
Proposed Rules

[[Page 17622]]



FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1203

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1705

RIN 2590-AA29


Equal Access to Justice Act Implementation

AGENCY: Federal Housing Finance Agency, HUD, Office of Federal Housing 
Enterprise Oversight.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Housing Finance Agency (FHFA) proposes to issue a 
regulation that would codify the authority and responsibility of FHFA 
to establish procedures for the submission and consideration of 
applications for awards of fees and other expenses by prevailing 
parties in adjudications against FHFA.

DATES: Comments regarding this Notice of Proposed Rulemaking must be 
received on or before May 24, 2010. For additional information, see 
SUPPLEMENTARY INFORMATION.

ADDRESSES: You may submit your comments on the proposed regulation, 
identified as RIN ``2590-AA29'' by any of the following methods:
     U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel, Attention: Comments/RIN 2590-AA29, Federal 
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, 
DC 20552.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA29, 
Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., 
Washington, DC 20552. The package should be logged at the Guard Desk, 
First Floor, on business days between 9 a.m. and 5 p.m.
     E-mail: Comments to Alfred M. Pollard, General Counsel may 
be sent by e-mail to RegComments@fhfa.gov. Please include ``RIN 2590-
AA29'' in the subject line of the message.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by e-
mail to FHFA at RegComments@fhfa.gov to ensure timely receipt by the 
agency. Include the following information in the subject line of your 
submission: ``RIN 2590-AA29.''

FOR FURTHER INFORMATION CONTACT: Janice A. Kullman, Associate General 
Counsel, telephone (202) 414-8970 (not a toll-free number); Federal 
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, 
DC 20552. The telephone number for the Telecommunications Device for 
the Deaf is (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Comments

    The Federal Housing Finance Agency (FHFA) invites comments on all 
aspects of the proposed regulation, and will consider all relevant 
comments before issuing the final regulation. Copies of all comments 
will be posted without change, including any personal information you 
provide, such as your name and address, on the FHFA Web site at: http://www.fhfa.gov. In addition, copies of all comments received will be 
available for examination by the public on business days between the 
hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, 
Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an 
appointment to inspect comments, please call the Office of General 
Counsel (FHFA) at (202) 414-6924.

II. Background

A. Establishment of the Federal Housing Finance Agency

    The Housing and Economic Recovery Act of 2008 (HERA), Public Law 
110-289, 122 Stat. 2654, amended the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) 
(Safety and Soundness Act) to establish FHFA as an independent agency 
of the Federal Government.\1\ FHFA was established to oversee the 
prudential operations of the Federal National Mortgage Association, the 
Federal Home Loan Mortgage Corporation (collectively, Enterprises), and 
the Federal Home Loan Banks (collectively with Enterprises, regulated 
entities) and to ensure that they operate in a safe and sound manner 
including being capitalized adequately; foster liquid, efficient, 
competitive and resilient national housing finance markets; comply with 
the Safety and Soundness Act and rules, regulations, guidelines and 
orders issued under the Safety and Soundness Act, and the respective 
authorizing statutes of the regulated entities; and carry out their 
missions through activities authorized and consistent with the Safety 
and Soundness Act and their authorizing statutes; and, that the 
activities and operations of the regulated entities are consistent with 
the public interest.
---------------------------------------------------------------------------

    \1\ See Division A, titled the ``Federal Housing Finance 
Regulatory Reform Act of 2008,'' Title I, Section 1101 of HERA.
---------------------------------------------------------------------------

    The Office of Federal Housing Enterprise Oversight (OFHEO) and the 
Federal Housing Finance Board (FHFB) were abolished on July 30, 2009, 
one year after the enactment of HERA. However, the regulated entities 
continue to operate under regulations promulgated by OFHEO and FHFB and 
such regulations are enforceable by the Director of FHFA until such 
regulations are modified, terminated, set aside, or superseded by the 
Director of FHFA.\2\
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    \2\ See section 1302 and section 1312 of HERA.
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B. Equal Access to Justice Act

    The Equal Access to Justice Act, 5 U.S.C. 504, requires that an 
agency that conducts adversarial adjudications award costs and fees in 
connection with that adjudication to the prevailing party unless the 
adjudicative officer of the agency finds that the agency's position was 
substantially justified or other circumstances make such an award 
unjust. Because FHFA conducts adversarial adjudications, FHFA proposes 
to issue a regulation to codify the responsibility of FHFA to establish 
procedures for the submission and consideration of applications for 
awards of fees and other expenses by prevailing parties. After the 
proposed regulation is published in its final form, the OFHEO 
``Implementation of the Equal Access to

[[Page 17623]]

Justice Act'' regulation at 12 CFR part 1705 will be removed. This 
proposed regulation is substantially the same as that OFHEO regulation.

III. Section-by-Section Analysis

    The following is a section-by-section analysis of the proposed 
regulation.

Subpart A--General Provisions

Section 1203.1 Purpose and Scope
    Proposed Sec.  1203.1 would provide that the purpose of this 
regulation is to implement the Equal Access to Justice Act, 5 U.S.C. 
504, by establishing procedures for the filing and consideration of 
applications for awards of fees and other expenses to eligible 
individuals and entities who are parties to adversary adjudications 
before FHFA. This section would also provide that the purpose of this 
part is to award fees and other expenses in connection with adversary 
adjudications before FHFA.
Section 1203.2 Definitions
    This proposed section would set forth definitions for the 
regulation.
    Adjudicative officer would be defined as the official who presided 
at the underlying adversary adjudication, without regard to whether the 
official is designated as a hearing examiner, administrative law judge, 
administrative judge, or otherwise.
    Adversary adjudication would be defined as an administrative 
proceeding conducted by FHFA under 5 U.S.C. 554 in which the position 
of FHFA or any other agency of the United States is represented by 
counsel or otherwise, including but not limited to an adjudication 
conducted under the Safety and Soundness Act, as amended, and any 
implementing regulations. Any issue as to whether an administrative 
proceeding is an adversary adjudication for purposes of this part will 
be an issue for resolution in the proceeding on the application for 
award.
    Affiliate would be defined as an individual, corporation, or other 
entity that directly or indirectly controls or owns a majority of the 
voting shares or other interests of the party, or any corporation or 
other entity of which the party directly or indirectly owns or controls 
a majority of the voting shares or other interest, unless the 
adjudicative officer determines that it would be unjust and contrary to 
the purpose of the Equal Access to Justice Act in light of the actual 
relationship between the affiliated entities to consider them to be 
affiliates for purposes of this part.
    Agency counsel would be defined as the attorney or attorneys 
designated by the General Counsel of FHFA to represent FHFA in an 
adversary adjudication covered by this part.
    Demand of FHFA would be defined as the express demand of FHFA that 
led to the adversary adjudication, but does not include a recitation by 
FHFA of the maximum statutory penalty when accompanied by an express 
demand for a lesser amount.
    Director would be defined as the Director of the Federal Housing 
Finance Agency.
    Fees and other expenses would be defined as including reasonable 
attorney or agent fees, the reasonable expenses of expert witnesses, 
and the reasonable cost of any study, analysis, engineering report, 
test, or expense which the agency finds necessary for the preparation 
of the eligible party's case.
    FHFA would be defined as the Federal Housing Finance Agency.
    Final disposition date would be defined as the date on which a 
decision or order disposing of the merits of the adversary adjudication 
or any other complete resolution of the adversary adjudication, such as 
a settlement or voluntary dismissal, becomes final and unappealable, 
both within the agency and to the courts.
    Party would be defined as an individual, partnership, corporation, 
association, or public or private organization that is named or 
admitted as a party, that is admitted as a party for limited purposes, 
or that is properly seeking and entitled as of right to be admitted as 
a party in an adversary adjudication.
    Position of FHFA would be defined as the position taken by FHFA in 
the adversary adjudication, including the action or failure to act by 
FHFA upon which the adversary adjudication was based.
Section 1203.3 Eligible Parties
    Proposed Sec.  1203.3 would set out the eligibility requirements 
for parties seeking fees and expenses.
    Proposed paragraph (a) of this section would require the applicant 
to be a party to the adversary adjudication for which it seeks an award 
and be a small entity as defined in 5 U.S.C. 601. It would also require 
an applicant to meet all conditions of eligibility set out in this 
paragraph and comply with all the requirements in subpart B of this 
part.
    Proposed paragraph (b) of this section would require that a party 
be one of the following:
     An individual who has a net worth of not more than $2 
million;
     The sole owner of an unincorporated business who has a net 
worth of not more than $7 million, including both personal and business 
interest, and not more than 500 employees; however, a party who owns an 
unincorporated business will be considered to be an ``individual'' 
rather than the ``sole owner of an unincorporated business'' if the 
issues on which the party prevails are related primarily to personal 
interests rather than to business interests;
     A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
     A cooperative association as defined in section 15(a) of 
the Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 
500 employees; or
     Any other partnership, corporation, association, unit of 
local government, or organization that has a net worth of not more than 
$7 million and not more than 500 employees.
    Proposed paragraph (c) of this section would clarify the 
requirements for eligibility by requiring that:
     The employees of a party must include all persons who 
regularly perform services for remuneration for the party, under the 
party's direction and control. Part-time employees must be included on 
a proportional basis.
     The net worth and number of employees of the party and its 
affiliates must be aggregated to determine eligibility.
     The net worth and number of employees of a party will be 
determined as of the date the underlying adversary adjudication was 
initiated.
     A party that participates in an adversary adjudication 
primarily on behalf of one or more entities that would be ineligible 
for an award is not itself eligible for an award.
Section 1203.4 Standards for Awards
    Proposed Sec.  1203.4 would set out the standards for the award of 
fees and expenses.
    Proposed paragraph (a) of this section would provide that an 
eligible party that files an application for award of fees and other 
expenses in accordance with this part would receive an award of fees 
and other expenses related to defending against a demand of FHFA if the 
demand was in excess of the decision in the underlying adversary 
adjudication and was unreasonable when compared with the decision under 
the facts and circumstances of the case, unless the party has committed 
a willful violation of law or otherwise acted in bad faith, or unless 
special circumstances make an award unjust. This paragraph would also 
explain that the burden of proof that the demand of FHFA was

[[Page 17624]]

substantially in excess of the decision and is unreasonable when 
compared with the decision would be on the eligible party.
    Proposed paragraph (b) of this section would provide that an 
eligible party that submits an application for award in accordance with 
this part would receive an award of fees and other expenses incurred in 
connection with an adversary adjudication in which it prevailed or in a 
significant and discrete substantive portion of the adversary 
adjudication in which it prevailed, unless the position of FHFA in the 
adversary adjudication was substantially justified or special 
circumstances make an award unjust. This paragraph would further 
explain that FHFA would have the burden of proof to show that its 
position was substantially justified and could do so by showing that 
its position was reasonable in law and in fact.
Section 1203.5 Allowable Fees and Expenses
    Proposed Sec.  1203.5 would set forth what fees and expenses a 
party may collect under this part.
    Proposed paragraph (a) of this section would provide that awards of 
fees and other expenses would be based on rates customarily charged by 
persons engaged in the business of acting as attorneys, agents, and 
expert witnesses, even if the services were made available without 
charge or at a reduced rate to the party. This paragraph would also 
explain that, except as provided in proposed Sec.  1203.6, an award for 
the fee of an attorney or agent could not exceed $125 per hour and an 
award to compensate an expert witness could not exceed the highest rate 
at which FHFA pays expert witnesses. However, under this paragraph, an 
award could also include the reasonable expenses of the attorney, 
agent, or expert witness as a separate item if he or she ordinarily 
charges clients separately for such expenses.
    Proposed paragraph (b) of this section would set out the factors 
the adjudicative officer must consider for determining the 
reasonableness of the fee, including the following:
     If the attorney, agent, or expert witness is in private 
practice, his or her customary fees for similar services; or, if the 
attorney, agent, or expert witness is an employee of the eligible 
party, the fully allocated costs of the services;
     The prevailing rate for similar services in the community 
in which the attorney, agent, or expert witness ordinarily performs 
services;
     The time actually spent in the representation of the 
eligible party;
     The time reasonably spent in light of the difficulty or 
complexity of the issues in the adversary adjudication; and
     Such other factors as may bear on the value of the 
services provided.
    Proposed paragraph (c) of this section would provide that in 
determining the reasonable cost of any study, analysis, engineering 
report, test, project, or similar matter prepared on behalf of a party, 
the adjudicative officer would consider the prevailing rate for similar 
services in the community in which the services were performed.
    Proposed paragraph (d) of this section would provide that fees and 
other expenses incurred before the date on which an adversary 
adjudication was initiated would be awarded only if the eligible party 
can demonstrate that they were reasonably incurred in preparation for 
the adversary adjudication.
Section 1203.6 Rulemaking on Maximum Rate for Fees
    Proposed Sec.  1203.6 would provide that FHFA could adopt 
regulations providing for an award of attorney or agent fees at a rate 
higher than $125 per hour in adversary adjudications covered by this 
part if warranted by an increase in the cost of living or by special 
circumstances. Special circumstances would include the limited 
availability of attorneys or agents who are qualified to handle certain 
types of adversary adjudications. This section would provide that FHFA 
could conduct any rulemaking proceedings for this purpose under the 
informal rulemaking procedures of the Administrative Procedure Act, 5 
U.S.C. 553.
Section 1203.7 Awards Against Other Agencies
    Proposed Sec.  1203.7 would provide that if another agency of the 
United States participates in an adversary adjudication before FHFA and 
takes a position that was not substantially justified, the award or 
appropriate portion of the award to an eligible party that prevailed 
over that agency will be made against that agency.

Subpart B--Information Required From Applicants

Section 1203.10 Contents of the Application for Award
    Proposed Sec.  1203.10 would provide, under proposed paragraph (a) 
of this section, that an application for award of fees and other 
expenses under either proposed Sec.  1203.4(a) or Sec.  1203.4(b) would 
have to:
     Identify the applicant and the adversary adjudication for 
which an award is sought;
     State the amount of fees and other expenses for which an 
award is sought;
     Provide the statements and documentation required by 
paragraph (b) or (c) of this section and proposed Sec.  1203.12 and any 
additional information required by the adjudicative officer; and
     Be signed by the applicant or an authorized officer or 
attorney of the applicant and contain or be accompanied by a written 
verification under oath or under penalty of perjury that the 
information provided in the application is true and correct.
    Proposed paragraph (b) of this section would require that an 
application for award under proposed Sec.  1203.4(a), must show that 
the demand of FHFA was substantially in excess of, and was unreasonable 
when compared to, the decision in the underlying adversary adjudication 
under the facts and circumstances of the case. This paragraph would 
also require the application to show that the applicant is a small 
entity as defined in 5 U.S.C. 601.
    Proposed paragraph (c) of this section would set out the 
requirements for an application for award under proposed Sec.  
1203.4(b) including that the application must:
     Show that the applicant has prevailed in a significant and 
discrete substantive portion of the underlying adversary adjudication 
and identify the position of FHFA in the adversary adjudication that 
the applicant alleges was not substantially justified;
     State the number of employees of the applicant and 
describe briefly the type and purposes of its organization or business 
(if the applicant is not an individual);
     State that the net worth of the applicant does not exceed 
$2 million, if the applicant is an individual; or for all other 
applicants, state that the net worth of the applicant and its 
affiliates, if any, does not exceed $7 million; and
     Include one of the following:

--A detailed exhibit showing the net worth (net worth exhibit) of the 
applicant and its affiliates, if any, when the underlying adversary 
adjudication was initiated. The net worth exhibit may be in any form 
convenient to the applicant as long as the net worth exhibit provides 
full disclosure of the assets and liabilities of the applicant and its 
affiliates, if any, and is sufficient to determine whether the 
applicant qualifies as an eligible party;
--A copy of a ruling by the Internal Revenue Service that shows that 
the applicant qualifies as an organization described in section 
501(c)(3) of the

[[Page 17625]]

Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the case of a tax-
exempt organization not required to obtain a ruling from the Internal 
Revenue Service on its exempt status, a statement that describes the 
basis for the belief that the applicant qualifies under such section; 
or
--A statement that the applicant is a cooperative association as 
defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 
1141j(a).
Section 1203.11 Confidentiality of Net Worth Exhibit
    Proposed Sec.  1203.11 would state that unless otherwise ordered by 
the Director, or required by law, the statement of net worth will be 
for the confidential use of the adjudicative officer, the Director and 
agency counsel.
Section 1203.12 Documentation for Fees and Expenses
    Proposed Sec.  1203.12 would provide the requirements for 
documenting fees and expenses.
    Proposed paragraph (a) of this section would require that the 
application for award should be accompanied by full and itemized 
documentation of the fees and other expenses for which an award is 
sought. This paragraph would further provide that the adjudicative 
officer could require the applicant to provide vouchers, receipts, 
logs, or other documentation for any fees or expenses claimed.
    Proposed paragraph (b) of this section would require that a 
separate itemized statement be submitted for each entity or individual 
whose services are covered by the application and that each itemized 
statement must include:
     The hours spent by each entity or individual;
     A description of the specific services performed and the 
rates at which each fee has been computed; and
     Any expenses for which reimbursement is sought, the total 
amount claimed, and the total amount paid or payable by the applicant 
or by any other person or entity.

Subpart C--Procedures for Filing and Consideration of the Application 
for Award

Section 1203.20 Filing and Service of the Application for Award and 
Related Papers
    Proposed Sec.  1203.20 would set out the procedures for filing and 
service of an application for award.
    Proposed paragraph (a) of this section would require that an 
application for an award of fees and other expenses must be filed no 
later than 30 days after the final disposition of the underlying 
adversary adjudication.
    Proposed paragraph (b) of this section would require that an 
application for award and other papers related to the proceedings on 
the application for award must be filed and served on all parties in 
the same manner as papers are filed and served in the underlying 
adversary adjudication, except as otherwise provided in this part.
    Proposed paragraph (c) of this section would require that the 
computation of time for filing and service of the application of award 
and other papers must be computed in the same manner as in the 
underlying adversary adjudication.
Section 1203.21 Response to the Application for Award
    Proposed Sec.  1203.21 would set out the procedure for responding 
to the application for an award.
    Proposed paragraph (a) of this section would require that agency 
counsel file a response within 30 days after service of an application 
for award of fees and other expenses except as provided in proposed 
paragraphs (b) and (c) of this section. This paragraph would also 
require that agency counsel explain any objections to the award 
requested and identify the facts relied upon to support the objections. 
If any of the alleged facts are not already in the record of the 
underlying adversary adjudication, agency counsel would include with 
the response either supporting affidavits or a request for further 
proceedings under proposed Sec.  1203.25.
    Proposed paragraph (b) of this section would provide that if agency 
counsel and the applicant believe that the issues in the application 
for award can be settled, they may jointly file a statement of their 
intent to negotiate a settlement. The filing of this statement would 
extend the time for filing a response for an additional 30 days. Upon 
request by agency counsel and the applicant, the adjudicative officer 
could grant for good cause further time extensions.
    Proposed paragraph (c) of this section would provide that agency 
counsel could request that the adjudicative officer extend the time 
period for filing a response. This paragraph would further provide that 
if agency counsel does not answer or otherwise does not contest or 
settle the application for award within the 30-day period or the 
extended time period, the adjudicative officer may make an award of 
fees and other expenses upon a satisfactory showing of entitlement by 
the applicant.
Section 1203.22 Reply to the Response
    Proposed Sec.  1203.22 would provide that within 15 days after 
service of a response, the applicant could file a reply. This section 
would further provide that if the reply is based on any alleged facts 
not already in the record of the underlying adversary adjudication, the 
applicant must include with the reply either supporting affidavits or a 
request for further proceedings under proposed Sec.  1203.25.
Section 1203.23 Comments by Other Parties
    Proposed Sec.  1203.23 would provide that any party to the 
underlying adversary adjudication other than the applicant and agency 
counsel could file comments on an application for award within 30 
calendar days after it is served, or on a response within 15 calendar 
days after it is served. This section would also provide that a 
commenting party may not participate further in proceedings on the 
application unless the adjudicative officer determines that the public 
interest requires such participation in order to permit full 
exploration of matters raised in the comments.
Section 1203.24 Settlement
    Proposed Sec.  1203.24 would provide that the applicant and agency 
counsel could agree on a proposed settlement of an award before the 
final decision on the application for award is made, either in 
connection with a settlement of the underlying adversary adjudication 
or after the underlying adversary adjudication has been concluded. This 
section would further require that if the eligible party and agency 
counsel agree on a proposed settlement of an award before an 
application for award has been filed, the application must be filed 
with the proposed settlement.
Section 1203.25 Further Proceedings on the Application for Award
    Proposed Sec.  1203.25 would set forth procedures for further 
proceedings on an application for award.
    Proposed paragraph (a) of this section would provide that on 
request of either the applicant or agency counsel, on the adjudicative 
officer's own initiative, or as requested by the Director of FHFA under 
proposed Sec.  1203.27, the adjudicative officer could order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions, or, as to issues other than substantial 
justification (such as the applicant's eligibility or substantiation of 
fees and expenses), pertinent discovery or an evidential hearing. This 
paragraph would further

[[Page 17626]]

provide that such further proceedings will be held only when necessary 
for full and fair resolution of the issues arising from the application 
for award and will be conducted as promptly as possible. Last, this 
paragraph would require that the issue as to whether the position of 
FHFA in the underlying adversary adjudication was substantially 
justified must be determined on the basis of the whole administrative 
record that was made in the underlying adversary adjudication.
    Proposed paragraph (b) of this section would require that a request 
that the adjudicative officer order further proceedings under this 
section would specifically identify the information sought on the 
disputed issues and must explain why the additional proceedings are 
necessary to resolve the issues.
Section 1203.26 Decision of the Adjudicative Officer
    Proposed Sec.  1203.26 would set forth the requirements for the 
decision of the adjudicative officer.
    Proposed paragraph (a) of this section would provide that the 
adjudicative officer must make the initial decision on the basis of the 
written record, except if further proceedings are ordered under 
proposed Sec.  1203.25.
    Proposed paragraph (b) of this section would provide that the 
adjudicative officer must issue a written initial decision on the 
application for award within 30 days after completion of proceedings on 
the application. This paragraph would provide that the initial decision 
would become the final decision of FHFA after 30 days from the day it 
was issued, unless review is ordered under proposed Sec.  1203.27.
    Proposed paragraph (c) of this section would provide that in all 
initial decisions, the adjudicative officer would include findings and 
conclusions with respect to the applicant's eligibility and an 
explanation of the reasons for any difference between the amount 
requested by the applicant and the amount awarded. This paragraph would 
also provide that if the applicant has sought an award against more 
than one agency, the adjudicative officer must also include findings 
and conclusions with respect to the allocation of payment of any award 
made.
    Proposed paragraph (d) of this section would provide that in 
initial decisions on applications filed pursuant to proposed Sec.  
1203.4(a), the adjudicative officer would include findings and 
conclusions as to whether FHFA made a demand that was substantially in 
excess of the decision in the underlying adversary adjudication and 
that was unreasonable when compared with that decision; and, if at 
issue, whether the applicant has committed a willful violation of the 
law or otherwise acted in bad faith, or whether special circumstances 
would make the award unjust.
    Proposed paragraph (e) of this section would provide that in 
decisions on applications filed pursuant to proposed Sec.  1203.4(b), 
the adjudicative officer would include written findings and conclusions 
as to whether the applicant is a prevailing party and whether the 
position of FHFA was substantially justified; and, if at issue, whether 
the applicant unduly protracted or delayed the underlying adversary 
adjudication or whether special circumstance make the award unjust.
Section 1203.27 Review by FHFA
    Proposed Sec.  1203.27 would provide that within 30 days after the 
adjudicative officer issues an initial decision under proposed Sec.  
1203.26, either the applicant or agency counsel could request the 
Director to review the initial decision of the adjudicative officer. 
This section would also provide that the Director or his or her 
designee could also decide, on his or her own initiative, to review the 
initial decision. Under this section, whether to review a decision 
would be at the discretion of the Director or his or her designee. If 
review is ordered, the Director or his or her designee would issue a 
final decision on the application for award or remand the application 
for award to the adjudicative officer for further proceedings under 
proposed Sec.  1203.25.
Section 1203.28 Judicial Review
    Proposed Sec.  1203.28 would provide that any party, other than the 
United States, that is dissatisfied with the final decision on an 
application for award of fees and expenses under this part could seek 
judicial review as provided in 5 U.S.C. 504(c)(2).
Section 1203.29 Payment of Award
    Proposed Sec.  1203.29 would provide that to receive payment of an 
award of fees and other expenses granted under this part, the applicant 
would submit a copy of the final decision that grants the award and a 
certification that the applicant will not seek review of the decision 
in the United States courts to the Director, Federal Housing Finance 
Agency, 1700 G Street, NW., Washington, DC 20552. Under this section, 
FHFA would pay the amount awarded to the applicant within 60 days of 
receipt of the submission of the copy of the final decision and the 
certification, unless judicial review of the award has been sought by 
any party to the proceedings.

Regulatory Impacts

Paperwork Reduction Act

    The proposed regulation does not contain any information collection 
requirement that requires the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities, small businesses, or small organizations must 
include an initial regulatory flexibility analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the regulation does not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the 
proposed regulation under the Regulatory Flexibility Act and certifies 
that the proposed regulation is not likely to have a significant 
economic impact on a substantial number of small business entities. The 
regulation is applicable only to parties who have prevailed in an 
adjudication against FHFA. These parties will not represent a 
substantial number of small business entities.

List of Subjects in 12 CFR Parts 1203 and 1705

    Administrative practice and procedure, Equal access to justice.

Authority and Issuance

    Accordingly, for the reasons stated in the preamble, under the 
authority of 12 U.S.C. 4526 and 5 U.S.C. 504, FHFA proposes to amend 
Chapters XII and XVII of Title 12 of the Code of Federal Regulations, 
as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

Subchapter A--Organization and Operations

    1. Add part 1203 to subchapter A to read as follows:

PART 1203--EQUAL ACCESS TO JUSTICE ACT

Subpart A--General Provisions
Sec.
1203.1 Purpose and scope.
1203.2 Definitions.
1203.3 Eligible parties.
1203.4 Standards for awards.
1203.5 Allowable fees and expenses.

[[Page 17627]]

1203.6 Rulemaking on maximum rate for fees.
1203.7 Awards against other agencies.
1203.8-1203.9 [Reserved]
Subpart B--Information Required From Applicants
1203.10 Contents of the application for award.
1203.11 Confidentiality of net worth exhibit.
1203.12 Documentation for fees and expenses.
1203.13-1203.19 [Reserved]
Subpart C--Procedures for Filing and Consideration of the Application 
for Award
1203.20 Filing and service of the application for award and related 
papers.
1203.21 Answer to the application for award.
1203.22 Reply to the answer.
1203.23 Comments by other parties.
1203.24 Settlement.
1203.25 Further proceedings on the application for award.
1203.26 Decision of the adjudicative officer.
1203.27 Review by FHFA.
1203.28 Judicial review.
1203.29 Payment of award.

    Authority: 12 U.S.C. 4526, 5 U.S.C. 504.

Subpart A--General Provisions


Sec.  1203.1  Purpose and scope.

    (a) This part implements the Equal Access to Justice Act, 5 U.S.C. 
504, by establishing procedures for the filing and consideration of 
applications for awards of fees and other expenses to eligible 
individuals and entities who are parties to adversary adjudications 
before FHFA.
    (b) This part applies to the award of fees and other expenses in 
connection with adversary adjudications before FHFA. However, if a 
court reviews the underlying decision of the adversary adjudication, an 
award for fees and other expenses may be made only pursuant to 28 
U.S.C. 2412(d)(3).


Sec.  1203.2  Definitions.

    Adjudicative officer means the official who presided at the 
underlying adversary adjudication, without regard to whether the 
official is designated as a hearing examiner, administrative law judge, 
administrative judge, or otherwise.
    Adversary adjudication means an administrative proceeding conducted 
by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other 
agency of the United States is represented by counsel or otherwise, 
including but not limited to an adjudication conducted under the Safety 
and Soundness Act, as amended, and any implementing regulations. Any 
issue as to whether an administrative proceeding is an adversary 
adjudication for purposes of this part will be an issue for resolution 
in the proceeding on the application for award.
    Affiliate means an individual, corporation, or other entity that 
directly or indirectly controls or owns a majority of the voting shares 
or other interests of the party, or any corporation or other entity of 
which the party directly or indirectly owns or controls a majority of 
the voting shares or other interest, unless the adjudicative officer 
determines that it would be unjust and contrary to the purpose of the 
Equal Access to Justice Act in light of the actual relationship between 
the affiliated entities to consider them to be affiliates for purposes 
of this part.
    Agency counsel means the attorney or attorneys designated by the 
General Counsel of FHFA to represent FHFA in an adversary adjudication 
covered by this part.
    Demand of FHFA means the express demand of FHFA that led to the 
adversary adjudication, but does not include a recitation by FHFA of 
the maximum statutory penalty when accompanied by an express demand for 
a lesser amount.
    Director means the Director of the Federal Housing Finance Agency.
    Fees and other expenses means reasonable attorney or agent fees, 
the reasonable expenses of expert witnesses, and the reasonable cost of 
any study, analysis, engineering report, test, or which the agency 
finds necessary for the preparation of the eligible party's case.
    FHFA means the Federal Housing Finance Agency.
    Final disposition date means the date on which a decision or order 
disposing of the merits of the adversary adjudication or any other 
complete resolution of the adversary adjudication, such as a settlement 
or voluntary dismissal, becomes final and unappealable, both within the 
agency and to the courts.
    Party means an individual, partnership, corporation, association, 
or public or private organization that is named or admitted as a party, 
that is admitted as a party for limited purposes, or that is properly 
seeking and entitled as of right to be admitted as a party in an 
adversary adjudication.
    Position of FHFA means the position taken by FHFA in the adversary 
adjudication, including the action or failure to act by FHFA upon which 
the adversary adjudication was based.


Sec.  1203.3  Eligible parties.

    (a) To be eligible for an award of fees and other expenses under 
the Equal Access to Justice Act, the applicant must show that it meets 
all conditions of eligibility set out in this paragraph and has 
complied with all the requirements in Subpart B of this part. The 
applicant must also be a party to the adversary adjudication for which 
it seeks an award. To be eligible for an award of fees and other 
expenses for prevailing parties, a party must be one of the following:
    (1) An individual who has a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net 
worth of not more than $7 million, including both personal and business 
interest, and not more than 500 employees; however, a party who owns an 
unincorporated business will be considered to be an ``individual'' 
rather than the ``sole owner of an unincorporated business'' if the 
issues on which the party prevails are related primarily to personal 
interests rather than to business interests;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees;
    (5) Any other partnership, corporation, association, unit of local 
government, or organization that has a net worth of not more than $7 
million and not more than 500 employees; or
    (6) For the purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (b) For purposes of eligibility under this section:
    (1) The employees of a party must include all persons who regularly 
perform services for remuneration for the party, under the party's 
direction and control. Part-time employees must be included on a 
proportional basis.
    (2) The net worth and number of employees of the party and its 
affiliates must be aggregated to determine eligibility.
    (3) The net worth and number of employees of a party will be 
determined as of the date the underlying adversary adjudication was 
initiated.
    (4) A party that participates in an adversary adjudication 
primarily on behalf of one or more entities that would be ineligible 
for an award is not itself eligible for an award.


Sec.  1203.4  Standards for awards.

    (a) An eligible party that files an application for award of fees 
and other expenses in accordance with this part will receive an award 
of fees and other

[[Page 17628]]

expenses related to defending against a demand of FHFA if the demand 
was in excess of the decision in the underlying adversary adjudication 
and was unreasonable when compared with the decision under the facts 
and circumstances of the case, unless the party has committed a willful 
violation of law or otherwise acted in bad faith, or unless special 
circumstances make an award unjust. The burden of proof that the demand 
of FHFA was substantially in excess of the decision and is unreasonable 
when compared with the decision is on the eligible party.
    (b) An eligible party that submits an application for award in 
accordance with this part will receive an award of fees and other 
expenses incurred in connection with an adversary adjudication in which 
it prevailed or in a significant and discrete substantive portion of 
the adversary adjudication in which it prevailed, unless the position 
of FHFA in the adversary adjudication was substantially justified or 
special circumstances make an award unjust. FHFA has the burden of 
proof to show that its position was substantially justified and may do 
so by showing that its position was reasonable in law and in fact.


Sec.  1203.5  Allowable fees and expenses.

    (a) Awards of fees and other expenses will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents, and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the party. However, 
except as provided in Sec.  1203.6, an award for the fee of an attorney 
or agent may not exceed $125 per hour and an award to compensate an 
expert witness may not exceed the highest rate at which FHFA pays 
expert witnesses. However, an award may also include the reasonable 
expenses of the attorney, agent, or expert witness as a separate item 
if he or she ordinarily charges clients separately for such expenses.
    (b) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the adjudicative officer will 
consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fees for similar services; or, if the 
attorney, agent, or expert witness is an employee of the eligible 
party, the fully allocated costs of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the eligible 
party;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the adversary adjudication; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) In determining the reasonable cost of any study, analysis, 
engineering report, test, project, or similar matter prepared on behalf 
of a party, the adjudicative officer will consider the prevailing rate 
for similar services in the community in which the services were 
performed.
    (d) Fees and other expenses incurred before the date on which an 
adversary adjudication was initiated will be awarded only if the 
eligible party can demonstrate that they were reasonably incurred in 
preparation for the adversary adjudication.


Sec.  1203.6  Rulemaking on maximum rate for fees.

    If warranted by an increase in the cost of living or by special 
circumstances, FHFA may adopt regulations providing for an award of 
attorney or agent fees at a rate higher than $125 per hour in adversary 
adjudications covered by this part. Special circumstances include the 
limited availability of attorneys or agents who are qualified to handle 
certain types of adversary adjudications. FHFA will conduct any 
rulemaking proceedings for this purpose under the informal rulemaking 
procedures of the Administrative Procedure Act, 5 U.S.C. 553.


Sec.  1203.7  Awards against other agencies.

    If another agency of the United States participates in an adversary 
adjudication before FHFA and takes a position that was not 
substantially justified, the award or appropriate portion of the award 
to an eligible party that prevailed over that agency will be made 
against that agency.


Sec. Sec.  1203.8-1203.9  [Reserved]

Subpart B--Information Required From Applicants


Sec.  1203.10  Contents of the application for award.

    (a) An application for award of fees and other expenses under 
either Sec.  1203.4(a) and Sec.  1203.4(b) must:
    (1) Identify the applicant and the adversary adjudication for which 
an award is sought;
    (2) State the amount of fees and other expenses for which an award 
is sought;
    (3) Provide the statements and documentation required by paragraph 
(b) or (c) of this section and Sec.  1203.12 and any additional 
information required by the adjudicative officer; and
    (4) Be signed by the applicant or an authorized officer or attorney 
of the applicant and contain or be accompanied by a written 
verification under oath or under penalty of perjury that the 
information provided in the application is true and correct.
    (b) An application for award under Sec.  1203.4(a) must show that 
the demand of FHFA was substantially in excess of, and was unreasonable 
when compared to, the decision in the underlying adversary adjudication 
under the facts and circumstances of the case. It must also show that 
the applicant is a small entity as defined in 5 U.S.C. 601.
    (c) An application for award under Sec.  1203.4(b) must:
    (1) Show that the applicant has prevailed in a significant and 
discrete substantive portion of the underlying adversary adjudication 
and identify the position of FHFA in the adversary adjudication that 
the applicant alleges was not substantially justified;
    (2) State the number of employees of the applicant and describe 
briefly the type and purposes of its organization or business (if the 
applicant is not an individual);
    (3) State that the net worth of the applicant does not exceed $2 
million, if the applicant is an individual; or for all other 
applicants, state that the net worth of the applicant and its 
affiliates, if any, does not exceed $7 million; and
    (4) Include one of the following:
    (i) A detailed exhibit showing the net worth (net worth exhibit) of 
the applicant and its affiliates, if any, when the underlying adversary 
adjudication was initiated. The net worth exhibit may be in any form 
convenient to the applicant as long as the net worth exhibit provides 
full disclosure of the assets and liabilities of the applicant and its 
affiliates, if any, and is sufficient to determine whether the 
applicant qualifies as an eligible party;
    (ii) A copy of a ruling by the Internal Revenue Service that shows 
that the applicant qualifies as an organization described in section 
501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the 
case of a tax-exempt organization not required to obtain a ruling from 
the Internal Revenue Service on its exempt status, a statement that 
describes the basis for the belief that the applicant qualifies under 
such section; or
    (iii) A statement that the applicant is a cooperative association 
as defined in section 15(a) of the Agricultural Marketing Act, 12 
U.S.C. 1141j(a).

[[Page 17629]]

Sec.  1203.11  Confidentiality of net worth exhibit.

    Unless otherwise ordered by the Director, or required by law, the 
statement of net worth will be for the confidential use of the 
adjudicative officer, the Director, and agency counsel.


Sec.  1203.12  Documentation for fees and expenses.

    (a) The application for award must be accompanied by full and 
itemized documentation of the fees and other expenses for which an 
award is sought. The adjudicative officer may require the applicant to 
provide vouchers, receipts, logs, or other documentation for any fees 
or expenses claimed.
    (b) A separate itemized statement must be submitted for each entity 
or individual whose services are covered by the application. Each 
itemized statement must include:
    (1) The hours spent by each entity or individual;
    (2) A description of the specific services performed and the rates 
at which each fee has been computed; and
    (3) Any expenses for which reimbursement is sought, the total 
amount claimed, and the total amount paid or payable by the applicant 
or by any other person or entity.


Sec. Sec.  1203.13-1203.19   [Reserved]

Subpart C--Procedures for Filing and Consideration of the 
Application for Award


Sec.  1203.20  Filing and service of the application for award and 
related papers.

    (a) An application for an award of fees and other expenses must be 
filed no later than 30 days after the final disposition of the 
underlying adversary adjudication.
    (b) An application for award and other papers related to the 
proceedings on the application for award must be filed and served on 
all parties in the same manner as papers are filed and served in the 
underlying adversary adjudication, except as otherwise provided in this 
part.
    (c) The computation of time for filing and service of the 
application of award and other papers must be computed in the same 
manner as in the underlying adversary adjudication.


Sec.  1203.21  Answer to the application for award.

    (a) Agency counsel must file a response within 30 days after 
service of an application for award of fees and other expenses except 
as provided in paragraphs (b) and (c) of this section. In the answer, 
agency counsel must explain any objections to the award requested and 
identify the facts relied upon to support the objections. If any of the 
alleged facts are not already in the record of the underlying adversary 
adjudication, agency counsel must include with the answer either 
supporting affidavits or a request for further proceedings under Sec.  
1203.25.
    (b) If agency counsel and the applicant believe that the issues in 
the application for award can be settled, they may jointly file a 
statement of their intent to negotiate a settlement. The filing of this 
statement will extend the time for filing a response for an additional 
30 days. Upon request by agency counsel and the applicant, the 
adjudicative officer may grant for good cause further time extensions.
    (c) Agency counsel may request that the adjudicative officer extend 
the time period for filing a response. If agency counsel does not 
answer or otherwise does not contest or settle the application for 
award within the 30-day period or the extended time period, the 
adjudicative officer may make an award of fees and other expenses upon 
a satisfactory showing of entitlement by the applicant.


Sec.  1203.22  Reply to the answer.

    Within 15 days after service of a response, the applicant may file 
a reply. If the reply is based on any alleged facts not already in the 
record of the underlying adversary adjudication, the applicant must 
include with the reply either supporting affidavits or a request for 
further proceedings under Sec.  1203.25.


Sec.  1203.23  Comments by other parties.

    Any party to the underlying adversary adjudication other than the 
applicant and agency counsel may file comments on an application for 
award within 30 calendar days after it is served, or on a response 
within 15 calendar days after it is served. A commenting party may not 
participate further in proceedings on the application unless the 
adjudicative officer determines that the public interest requires such 
participation in order to permit full exploration of matters raised in 
the comments.


Sec.  1203.24  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of an award before the final decision on the application for award is 
made, either in connection with a settlement of the underlying 
adversary adjudication or after the underlying adversary adjudication 
has been concluded. If the eligible party and agency counsel agree on a 
proposed settlement of an award before an application for award has 
been filed, the application must be filed with the proposed settlement.


Sec.  1203.25  Further proceedings on the application for award.

    (a) On request of either the applicant or agency counsel, on the 
adjudicative officer's own initiative, or as requested by the Director 
under Sec.  1203.27, the adjudicative officer may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions, or, as to issues other than substantial 
justification (such as the applicant's eligibility or substantiation of 
fees and expenses), pertinent discovery or an evidential hearing. Such 
further proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application for award and 
will be conducted as promptly as possible. The issue as to whether the 
position of FHFA in the underlying adversary adjudication was 
substantially justified will be determined on the basis of the whole 
administrative record that was made in the underlying adversary 
adjudication.
    (b) A request that the adjudicative officer order further 
proceedings under this section must specifically identify the 
information sought on the disputed issues and must explain why the 
additional proceedings are necessary to resolve the issues.


Sec.  1203.26  Decision of the adjudicative officer.

    (a) The adjudicative officer must make the initial decision on the 
basis of the written record, except if further proceedings are ordered 
under Sec.  1203.25.
    (b) The adjudicative officer must issue a written initial decision 
on the application for award within 30 days after completion of 
proceedings on the application. The initial decision will become the 
final decision of FHFA after 30 days from the day it was issued, unless 
review is ordered under Sec.  1203.27.
    (c) In all initial decisions, the adjudicative officer must include 
findings and conclusions with respect to the applicant's eligibility 
and an explanation of the reasons for any difference between the amount 
requested by the applicant and the amount awarded. If the applicant has 
sought an award against more than one agency, the adjudicative officer 
must also include findings and conclusions with respect to the 
allocation of payment of any award made.
    (d) In initial decisions on applications filed pursuant to Sec.  
1203.4(a), the adjudicative officer must include

[[Page 17630]]

findings and conclusions as to whether FHFA made a demand that was 
substantially in excess of the decision in the underlying adversary 
adjudication and that was unreasonable when compared with that 
decision; and, if at issue, whether the applicant has committed a 
willful violation of the law or otherwise acted in bad faith, or 
whether special circumstances would make the award unjust.
    (e) In decisions on applications filed pursuant to Sec.  1203.4(b), 
the adjudicative officer must include written findings and conclusions 
as to whether the applicant is a prevailing party and whether the 
position of FHFA was substantially justified; and, if at issue, whether 
the applicant unduly protracted or delayed the underlying adversary 
adjudication or whether special circumstance make the award unjust.


Sec.  1203.27  Review by FHFA.

    Within 30 days after the adjudicative officer issues an initial 
decision under Sec.  1203.26, either the applicant or agency counsel 
may request the Director to review the initial decision of the 
adjudicative officer. The Director may also decide, at his or her 
discretion, to review the initial decision. If review is ordered, the 
Director must issue a final decision on the application for award or 
remand the application for award to the adjudicative officer for 
further proceedings under Sec.  1203.25.


Sec.  1203.28  Judicial review.

    Any party, other than the United States, that is dissatisfied with 
the final decision on an application for award of fees and expenses 
under this part may seek judicial review as provided in 5 U.S.C. 
504(c)(2).


Sec.  1203.29  Payment of award.

    To receive payment of an award of fees and other expenses granted 
under this part, the applicant must submit a copy of the final decision 
that grants the award and a certification that the applicant will not 
seek review of the decision in the United States courts to the 
Director, Federal Housing Finance Agency, 1700 G Street, NW., 
Washington, DC 20552. FHFA must pay the amount awarded to the applicant 
within 60 days of receipt of the submission of the copy of the final 
decision and the certification, unless judicial review of the award has 
been sought by any party to the proceedings.

CHAPTER XVII--OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, 
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PART 1705--[REMOVED]

    2. Remove part 1705.

    Dated: April 1, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2010-7889 Filed 4-6-10; 8:45 am]
BILLING CODE 8070-01-P