Equal Access to Justice Act Implementation Rule, 39117-39123 [2012-14046]
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Enforcement or its successor entity
should be contacted.
(3) On the same date that notice is
provided to the Office of Enforcement
and the Office of the Executive
Secretary pursuant to paragraph (a)(1) of
this section, a copy of the notice shall
be sent to the relevant prudential
regulator, if any, or the designee thereof,
by mail or electronic mail.
(4) Notice shall be deemed to have
been provided as of the date of
transmitting or mailing the materials
described in paragraph (c) of this
section.
(5) The Office of Enforcement, or its
successor entity, in consultation with a
State Official, may provide, for good
cause shown, an alternative deadline for
the notice described in paragraph (a)(1)
of this section.
(b) Emergency actions. (1) Pursuant to
12 U.S.C. 5552(b), in the event that a
State Official initiates or intends to
initiate an action and, in order to protect
the public interest or prevent irreparable
and imminent harm, is unable to
provide timely notice as described in
paragraph (a) of this section, the State
Official shall provide the notice
described in paragraph (c) of this
section as soon as is practicable and not
later than 48 hours after initiation of the
action.
(2) Notice shall be provided in
accordance with the procedures set
forth in paragraphs (a)(2) through (4) of
this section.
(3) The Office of Enforcement, or its
successor entity, in consultation with a
State Official, may provide, for good
cause shown, an alternative deadline for
the notice described in paragraph (b)(1)
of this section.
(c) Contents of notice. (1) Pursuant to
12 U.S.C. 5552(b), the notice required
under paragraphs (a) and (b) of this
section shall include a written
description of the anticipated action,
including:
(i) The court or body in which the
action is to be initiated;
(ii) The identity of the parties to the
action;
(iii) The nature of the action to be
initiated;
(iv) The anticipated date of initiating
the action;
(v) The alleged facts underlying the
action;
(vi) A contact name, electronic mail
address, and phone number of an
individual involved with the matter in
the office of the State Official with
whom the Bureau may consult;
(vii) A determination as to whether
there may be a need to coordinate the
prosecution of the action so as not to
interfere with any action, including any
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rulemaking, undertaken by the Bureau,
a prudential regulator, or another
Federal agency; and
(viii) A statement by the State Official
setting forth any limitations on the
disclosure of the substance or fact of the
notice to any person or entity outside of
the recipient agency.
(2) The notice required under
paragraphs (a) and (b) of this section
shall further include a complete and
unredacted copy of any complaint,
motion for relief, or similar document
that is the subject of the notice, in its
form as of the date the notice is
provided. To the extent the complaint,
motion for relief, or similar document
contains the information described in
paragraph (c)(1) of this section,
provision of the complaint, motion for
relief, or similar document shall be
deemed sufficient notice of that
information.
(3) In the event that notice is provided
after the initiation of an action, the
written description shall also include
the following, in addition to the
information described in paragraph
(c)(1) of this section:
(i) A brief description of any
proceeding that occurred as a result of
the initiation of the action, including
any orders issued by a court or other
body;
(ii) Any case number, matter number,
or designation assigned to the action;
and
(iii) Information on scheduled court
or other administrative or regulatory
proceedings.
(4) In the event that notice is provided
after the initiation of an action, in
addition to the requirements set forth in
paragraph (c)(3) of this section, the
notice shall further include a complete,
unredacted copy of any document filed
by any party in relation to the action
and any orders issued by the court or
other body.
(5) If the State Official, after providing
the notice described in paragraphs (c)(1)
and (c)(2) of this section, intends to file
a complaint, motion for relief, or similar
document that is materially different
from the document included with the
notice, the State Official shall provide a
copy of that document prior to filing, in
accordance with the method described
in paragraph (a)(2) of this section.
(d) Bureau response. In any action
described in paragraphs (a) and (b) of
this section, the Bureau may:
(1) Intervene in the action as a party;
(2) Upon intervening,
(i) Remove the action to the
appropriate United States district court,
if the action was not originally brought
there; and
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39117
(ii) Be heard on all matters arising in
the action;
(3) Appeal any order or judgment, to
the same extent as any other party in the
proceeding may; and
(4) Otherwise participate in the action
as appropriate.
(e) Confidentiality and privilege. (1)
The information described in paragraph
(c) of this section, including the
complaint, motion for relief, or other
document, as well as the fact that notice
has been provided, shall be subject to
any limitations on disclosure imposed
by the State Official pursuant to
paragraph (c)(1)(viii) of this section;
provided, however, that the recipient
may disclose such information:
(i) As required by law;
(ii) When the information is or
becomes publicly available;
(iii) With the consent of the State
Official; or
(iv) To another State or Federal
government entity when necessary to
protect the public interest, after
consultation with the State Official who
provided the notice.
(2) Provision of notice by a State
Official and disclosure of information
pursuant to paragraph (e)(1) of this
section shall not be deemed a waiver of
any applicable privilege.
(f) No private right of action or
defense. The requirements set forth in
this section are not intended to, do not,
and may not be relied upon to create
any right, benefit, or defense,
substantive or procedural, enforceable at
law by a party against the United States
or any State enforcing the provisions of
the Dodd-Frank Act or any regulation
prescribed thereunder.
Dated: June 4, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2012–14062 Filed 6–28–12; 8:45 am]
BILLING CODE 4810–AM–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1071
[Docket No.: CFPB–2012–0020]
RIN 3170–AA27
Equal Access to Justice Act
Implementation Rule
Bureau of Consumer Financial
Protection.
ACTION: Interim final rule with request
for public comment.
AGENCY:
The Equal Access to Justice
Act (EAJA or the Act) requires agencies
SUMMARY:
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that conduct adversary adjudications to
award attorney fees and other litigation
expenses to certain parties other than
the United States in certain
circumstances. EAJA also requires
agencies that conduct adversary
adjudications to establish procedures for
the submission and consideration of
applications for the award of fees and
other expenses. The Consumer
Financial Protection Bureau (Bureau)
now issues an interim final rule
establishing such procedures and seeks
public comments.
DATES: This interim final rule takes
effect on June 29, 2012. Comments must
be received on or before August 28,
2012 to be assured of consideration.
ADDRESSES: You may submit comments
by any of the following methods:
• Electronic: www.regulations.gov.
Follow the instructions for submitting
comments.
• Mail or Hand Delivery/Courier:
Monica Jackson, Office of the Executive
Secretary, Consumer Financial
Protection Bureau, 1700 G Street NW.,
Washington, DC 20552.
Instructions: All submissions must
include the agency name and docket
number or Regulatory Information
Number (RIN) for this rulemaking. In
general, all comments received will be
posted to https://www.regulations.gov. In
addition, comments will be available for
public inspection and copying at 1700
G Street NW., Washington, DC 20552,
on official business days between the
hours of 10 a.m. and 5 p.m. Eastern
Time. An appointment to inspect
comments can be made by telephoning
(202) 435–7275. All comments,
including attachments and other
supporting materials, will become part
of the public record and subject to
public disclosure. Submit only
information that you wish to make
publicly available. Sensitive personal
information, such as account numbers
or Social Security numbers, should not
be included. Comments will not be
edited to remove any identifying or
contact information such as name and
address information, email addresses, or
telephone numbers.
FOR FURTHER INFORMATION CONTACT: John
R. Coleman, Office of the General
Counsel, Consumer Financial Protection
Bureau, 1700 G Street NW., Washington,
DC 20552; (202) 435–7254.
SUPPLEMENTARY INFORMATION:
I. Background
Originally enacted in 1980, EAJA
provides that ‘‘[a]n agency that conducts
an adversary adjudication shall award,
to a prevailing party other than the
United States, fees and other expenses
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incurred by that party in connection
with that proceeding, unless the
adjudicative officer of the agency finds
that the position of the agency was
substantially justified or that special
circumstances make an award unjust.’’ 5
U.S.C. 504(a)(1). The Administrative
Conference of the United States (ACUS)
was charged with coordination of the
procedural rules adopted by various
agencies to implement EAJA. To carry
out this responsibility, ACUS issued
model rules implementing EAJA (46 FR
32900, June 25, 1981), after receiving
public comment on draft model rules
(46 FR 15895, March 10, 1981). ACUS
published revised model rules in 1986
that reflected the amendments Congress
made when it re-authorized the Act in
1985. 51 FR 16659 (May 6, 1986),
previously codified at 1 CFR part 315
(1995); see Administrative Conference
of the U.S., Federal Administrative
Procedure Sourcebook at 419 (2d ed.
1992). ACUS did not publish model
rules reflecting amendments to the Act
made since 1985 before ACUS was
temporarily defunded in 1996.
In preparing regulations
implementing the Act, the Bureau has
used the 1986 ACUS model rules as a
point of departure, modifying them to
put them in plain language, to reflect
more recent amendments to the Act, and
to make certain changes the Bureau
believes are warranted for reasons
explained in the following section-bysection analysis. Since the preamble to
the draft model rules explained their
formulation and the preamble to the
final model rules summarized and
responded to the public comments
submitted concerning the draft rules,
the Bureau does not repeat here the
rationale of the model rules. Rather, the
Bureau notes where its rule differs from
the model rules and explains significant
provisions, as follows:
1. The Bureau’s rule is divided into
three subparts, as are the model rules,
and maintains the same sequence with
the following exception: The Bureau’s
rule starts at § 1071.100 and omits
model rule § 315.107, ‘‘Rulemaking on
maximum rates for attorney fees,’’ and
§ 315.108, ‘‘Awards against other
agencies.’’ The revised numbering
causes Bureau § 1071.106 to correspond
to model rule § 315.109.
2. Section 1071.100, ‘‘Purpose of this
rule,’’ inserts a new paragraph (b),
‘‘When an eligible party will receive an
award,’’ which reflects amendments to
EAJA made by the Small Business
Regulatory Enforcement Fairness Act of
1996 (SBREFA), Pub. L. 104–121, Title
II, 110 Stat. 857 (1996). This paragraph
is modeled on the EAJA rules of the
Federal Trade Commission (FTC), 16
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CFR 3.81(a)(1)(ii), but includes
additional language to clarify the
circumstances under which the
Bureau’s notice of charges may
constitute a demand. This clarifying
language is consistent with the
Congressional intent in promulgating
SBREFA. Legislative history suggests
that Congress intended the term
‘‘demand’’ as used in the SBREFA
amendments to mean ‘‘an express
written demand that leads directly to an
adversary adjudication or civil action.’’
See 142 Cong. Rec. E571–01, E573
(1996) (statement of Rep. Hyde). The
Congressional Record further clarifies
that ‘‘the ‘demand’ at issue would be the
government’s demand that was pending
upon commencement of the
adjudication or action.’’ Id. (emphasis
added). Accordingly, the Bureau’s
notice of charges would constitute the
agency’s demand only where it was not
preceded by an express written demand.
3. Section 1071.102, ‘‘Proceedings
covered,’’ is modified and simplified
from model rule § 315.103 and identifies
the specific proceedings before the
Bureau that are covered by EAJA.
Incorporation of paragraphs (b) and (c)
of model rule § 315.103 into the Bureau
rule is not necessary because it is clear
which Bureau proceedings are covered
by EAJA.
4. Section 1071.103(b) inserts
paragraph (6), which does not appear in
the corresponding model rule
§ 315.104(b), in order to conform with
the SBREFA amendments to EAJA.
5. Section 1071.104, ‘‘Standards for
awards,’’ inserts paragraph (b), which
does not appear in the corresponding
model rule § 315.105, in order to
conform with the SBREFA amendments
to EAJA. The provision in paragraph (b)
of model rule § 315.105 was moved to
§ 1071.104(a)(2). The last sentence in
paragraph (a)(1) is modeled on the
comparable rule of the Department of
the Treasury governing the standards for
awards under EAJA, 31 CFR 6.5, and
clarifies that although the Bureau bears
the burden of proof that its position was
substantially justified, the fact that the
Bureau did not prevail in the underlying
proceeding does not create a
presumption that the its position was
not substantially justified.
6. Unlike model rule § 315.106(b), the
corresponding paragraph (b) of
§ 1071.105 does not specify a rate for
attorney fees, but instead refers back to
the corresponding statutory provision in
EAJA that sets forth the maximum
hourly rate for attorney fees. This
modification is intended to eliminate
the need to promulgate a revised rule
whenever the statutory maximum is
increased. Most recently, the maximum
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amount of fees that may normally be
awarded to an attorney or agent was
increased from $75 per hour to $125 per
hour pursuant to 1996 amendments to
EAJA. 5 U.S.C. 504(b)(1)(A)(ii). Section
1071.105 modifies the model rule to
permit recovery of expert fees at the
‘‘reasonable rate at which the Bureau
pays witnesses with similar expertise’’
instead of the ‘‘highest rate’’ paid by the
Bureau.
7. Model rule § 315.107, ‘‘Rulemaking
on maximum rates for attorney fees,’’
does not appear in the Bureau rule.
Since frequent rulemaking on this
subject is not foreseen, a rule
concerning it is not deemed necessary.
8. Section 315.108 of the model rules,
‘‘Awards against other agencies,’’ does
not appear in the Bureau rule because
it is not anticipated that another agency
of the United States will participate in
an adversary proceeding before the
Bureau. In the event another agency did
so participate, it is anticipated that the
adjudicative officer would take
appropriate action in the absence of an
express rule.
9. Section 1071.106, ‘‘Delegation of
authority,’’ is a simplified version of the
corresponding model rule, § 315.109.
10. Section 1071.200, ‘‘Contents of
application,’’ is modeled on the
corresponding FTC rule governing the
contents of an application for recovery
of awards under EAJA, 16 CFR 3.82(a),
which provides a more comprehensive
list of requirements than the
corresponding model rule, § 315.201(a).
11. The provisions in paragraph (b) of
model rule § 315.202 have been moved
to § 1071.201(b) to consolidate the
provisions relating to the net worth
exhibit into a single section. The
provisions in paragraph (b) of
corresponding model rule § 315.202
regarding the presumptively public
nature of the net worth exhibit can be
found in § 1071.201(c).
12. Section 1071.202,
‘‘Documentation of fees and expenses,’’
is modified from the corresponding
model rule, § 315.203, to conform with
the SBREFA amendments to EAJA.
13. Section 1071.203, ‘‘When an
application may be filed,’’ is modified
from the corresponding model rule,
§ 315.204, to conform with the SBREFA
amendments to EAJA.
14. Paragraph (c) of § 1071.203 defines
the date of final Bureau disposition.
This is significant for paragraph (a),
which makes reference to final
disposition. In particular, paragraph (a)
reiterates the statutory provision, set
forth at 5 U.S.C. 504(a)(2), that a party
may file an application for an award
within thirty days of the Bureau’s final
disposition of the adversary
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adjudication as to which the award is
sought.
15. Section 1071.300, ‘‘Filing and
service of documents,’’ incorporates the
provisions of §§ 1081.111, 1081.112 and
1081.113 concerning service and filing
in adjudication proceedings. The
section also requires the applicant to
serve a copy of the application for fees
and expenses on the General Counsel of
the Bureau.
16. Section 1071.304, ‘‘Settlement,’’
revises the corresponding model rule,
§ 315.305, to make explicit that no
application for recovery of fees and
expense may be filed if the settlement
of the underlying proceeding provides
that each side shall bear its own
expenses.
17. Section 1071.306, ‘‘Decision,’’ is
modified from the corresponding model
rule, § 315.307, to conform with the
SBREFA amendments to EAJA.
18. Section 1071.307, ‘‘Bureau
review,’’ is modified from the
corresponding model rule, § 315.308, so
that Bureau review of an adjudicatory
officer’s decision concerning a fee
application follows the same procedures
as Bureau review of a hearing officer’s
decision in the underlying matter.
19. Section 1071.309, ‘‘Payment of
award,’’ sets forth a 60 day deadline in
which the Bureau must pay the amount
awarded to the applicant.
II. Regulatory Requirements
The rule relates solely to agency
procedure and practice and, thus, is not
subject to the notice and comment
requirements of the Administrative
Procedure Act, 5 U.S.C. 553(b).
Although the rule is exempt from these
requirements, the Bureau invites
comment on it.
Because no notice of proposed
rulemaking is required, these
regulations are not a ‘‘rule’’ as defined
by the Regulatory Flexibility Act, 5
U.S.C. 601(2). The regulations in this
part do not contain any information
collection requirement that requires the
approval of OMB under the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.
List of Subjects in 12 CFR Part 1071
Administrative practice and
procedure, Banking, Banks, Consumer
protection, Credit, Credit unions, Equal
access to justice, Law enforcement,
National banks, Savings associations.
Authority and Issuance
For the reasons set forth in the
preamble, the Bureau adds part 1071 to
Chapter X in Title 12 of the Code of
Federal Regulations to read as follows:
■
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PART 1071—RULE IMPLEMENTING
EQUAL ACCESS TO JUSTICE ACT
Subpart A—General
Sec.
1071.100 Purpose.
1071.101 When the Act applies.
1071.102 Proceedings covered.
1071.103 Eligibility of applicants.
1071.104 Standards for awards.
1071.105 Allowable fees and other
expenses.
1071.106 Delegations of authority.
Subpart B—Information Required from
Applicants
1071.200 Contents of application.
1071.201 Net worth exhibit.
1071.202 Documentation of fees and
expenses.
1071.203 When an application may be filed.
Subpart C—Procedures for Considering
Applications
1071.300 Filing and service of documents.
1071.301 Answer to application.
1071.302 Reply.
1071.303 Comments by other parties.
1071.304 Settlement.
1071.305 Further proceedings.
1071.306 Recommended decision.
1071.307 Bureau review.
1071.308 Judicial review.
1071.309 Payment of award.
Authority: 5 U.S.C. 504.
Subpart A—General
§ 1071.100
Purpose.
(a) In general. The Equal Access to
Justice Act (the Act), 5 U.S.C. 504,
provides for the award of attorney fees
and other expenses to eligible
individuals and entities who are parties
to certain administrative proceedings
(adversary adjudications) before the
Bureau of Consumer Financial
Protection (the Bureau). An eligible
party may receive an award when it
prevails over the Bureau, unless the
Bureau’s position in the proceeding was
substantially justified or special
circumstances make an award unjust.
This part describes the parties eligible
for awards and the proceedings that are
covered. This part also explains how to
apply for awards, and the procedures
and standards that the Bureau will use
in ruling on those applications.
(b) When an eligible party will receive
an award. An eligible party will receive
an award when:
(1) It prevails in the adversary
adjudication, unless the Bureau’s
position in the proceeding was
substantially justified or special
circumstances make an award unjust.
Whether or not the position of the
Bureau was substantially justified will
be determined on the basis of the
administrative record as a whole that is
made in the adversary proceeding for
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which fees and other expenses are
sought; or
(2) The Bureau’s demand is
substantially in excess of the decision of
the adjudicative officer and is
unreasonable when compared with that
decision, under all the facts and
circumstances of the case, unless the
party has committed a willful violation
of law or otherwise acted in bad faith,
or special circumstances make an award
unjust. ‘‘Demand’’ means the express
final written demand made by the
Bureau prior to initiation of the
adversary adjudication, but does not
include a recitation by the Bureau of the
statutory penalty in the notice of
charges or elsewhere when
accompanied by an express demand for
a lesser amount. The relief requested in
the Bureau’s notice of charges issued
pursuant to 12 CFR 1081.200(b)(3) may
constitute the Bureau’s demand only
where the notice of charges was not
preceded by an express final written
demand.
§ 1071.101
When the Act applies.
The Act applies to any adversary
adjudication pending before the Bureau
at any time after July 21, 2011.
§ 1071.102
Proceedings covered.
The Act applies to all adjudicative
proceedings under part 1081 as defined
in § 1081.103.
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§ 1071.103
Eligibility of applicants.
(a) To be eligible for an award of
attorney fees and other expenses under
the Act, the applicant must be a party
to the adversary adjudication for which
it seeks an award. The term ‘‘party’’ is
defined in 5 U.S.C. 551(3). The
applicant must show that it meets all
conditions of eligibility set out in this
subpart.
(b) The types of eligible applicants are
as follows:
(1) An individual with 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
interests, and not more than 500
employees;
(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; or
(5) Any other partnership,
corporation, association, or public or
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private organization with a net worth of
not more than $7 million and not more
than 500 employees.
(6) For purposes of receiving an award
for fees and expenses for defending
against an excessive Bureau demand,
any small entity, as that term is defined
under 5 U.S.C. 601(6).
(c) For purposes of eligibility, the net
worth and number of employees of an
applicant shall be determined as of the
date the proceeding was initiated.
(d) An applicant who owns an
unincorporated business will be
considered an ‘‘individual’’ rather than
a ‘‘sole owner of an unincorporated
business’’ if the issues on which the
applicant prevails are related primarily
to personal interests rather than to
business interests.
(e) The employees of an applicant
include all persons who regularly
perform services for remuneration for
the applicant, under the applicant’s
direction and control. Part-time
employees shall be included on a
proportional basis.
(f) The net worth and number of
employees of the applicant and all of its
affiliates shall be aggregated to
determine eligibility. Any individual or
group of individuals, corporation or
other entity that directly or indirectly
controls or owns a majority of the voting
shares or other interest of the applicant,
or any corporation or entity of which
the applicant directly or indirectly owns
or controls a majority of the voting
shares or other interest, will be
considered an affiliate of that business
for purposes of this part, unless the
adjudicative officer determines that
such treatment would be unjust and
contrary to the purposes of the Act in
light of the actual relationship between
the affiliated entities. In addition, the
adjudicative officer may determine that
financial relationships of the applicant
other than those described in this
paragraph constitute special
circumstances that would make an
award unjust.
(g) An applicant that participates in a
proceeding primarily on behalf of one or
more other persons or entities that
would be ineligible is not itself eligible
for an award.
§ 1071.104
Standards for awards.
(a) For a prevailing party:
(1) An eligible prevailing applicant
may receive an award for fees and
expenses incurred after initiation of the
adversary adjudication in connection
with the entire adversary adjudication,
or on a substantive portion of the
adversary adjudication that is
sufficiently significant and discrete to
merit treatment as a separate unit,
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unless the position of the Bureau was
substantially justified. The burden of
proof that an award should not be made
to an eligible prevailing applicant
because the Bureau’s position was
substantially justified is on counsel for
the Bureau. However, no presumption
arises that the Bureau’s position was not
substantially justified simply because
the Bureau did not prevail.
(2) An award will be reduced or
denied if the applicant has unduly or
unreasonably protracted the proceeding
or if special circumstances make the
award sought unjust.
(b) For a party defending against an
excessive demand:
(1) An eligible applicant will receive
an award for fees and expenses incurred
after initiation of the adversary
adjudication related to defending
against the portion of a Bureau demand
that is substantially in excess of the
decision of the adjudicative officer and
is unreasonable when compared with
that decision under all the facts and
circumstances of the case.
(2) An award will be denied if the
applicant has committed a willful
violation of law or otherwise acted in
bad faith or if special circumstances
make an award unjust.
§ 1071.105
expenses.
Allowable fees and other
(a) Subject to the limitations in
paragraph (b) of this section, awards
will be based on rates customarily
charged, in the locale of the hearing, 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 applicant.
(b) No award for the fee of any
attorney or agent under this rule may
exceed the hourly rate specified in 5
U.S.C. 504(b)(1)(A). No award to
compensate an expert witness may
exceed the reasonable rate at which the
Bureau pays witnesses with similar
expertise. However an award may also
include the reasonable expenses of the
attorney, agent or witness as a separate
item, if the attorney, agent or witness
ordinarily charges clients separately for
such expenses.
(c) In determining the reasonableness
of the fee sought for an attorney, agent
or expert witness, the adjudicative
officer shall consider the following:
(1) If the attorney, agent or witness is
in private practice, his or her customary
fee for similar services, or, if an
employee of the applicant, the fully
allocated cost of the services;
(2) The prevailing rate for similar
services in the community in which the
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attorney, agent or witness ordinarily
performs services;
(3) The time actually spent in the
representation of the applicant;
(4) The time reasonably spent in light
of the difficulty or complexity of the
issues in the proceeding; and
(5) Such other factors as may bear on
the value of the services provided.
(d) The reasonable cost of any study,
analysis, engineering report, test, project
or similar matter prepared on behalf of
a party may be awarded, to the extent
that the charge for the services does not
exceed the prevailing rate for similar
services, and the study or other matter
was necessary for preparation of the
applicant’s case.
(e) An award of fees or expenses
under the Act is limited to fees and
expenses incurred after initiation of the
adversary adjudication and, with
respect to excessive demands, the fees
and expenses incurred in defending
against the excessive portion of the
demand.
§ 1071.106
Delegations of authority.
The Director may delegate authority
to take final action on matters pertaining
to the Equal Access to Justice Act in
particular cases.
Subpart B—Information Required from
Applicants
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§ 1071.200
Contents of application.
An application for an award of fees
and expenses under the Act shall
contain the following:
(a) Identity of the applicant and the
proceeding for which the award is
sought;
(b) A showing that the applicant has
prevailed; or, if the applicant has not
prevailed, a showing that the Bureau’s
demand was substantially in excess of
the decision of the adjudicative officer
and was unreasonable when compared
with that decision, under the facts and
circumstances of that case;
(c) Identification of the Bureau
position(s) in the proceeding that the
applicant alleges was (were) not
substantially justified; or, identification
of the Bureau’s demand that is alleged
to be excessive and unreasonable and an
explanation as to why the demand was
excessive and unreasonable;
(d) A brief description of the type and
purpose of the organization or business
(unless the applicant is an individual).
(e) A statement of how the applicant
meets the eligibility criteria of
§ 1071.103;
(f) The amount of fees and expenses
incurred after the initiation of the
adversary adjudication, or in the case of
a claim for defending against an
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allegedly excessive demand, the amount
of fees and expenses incurred after the
initiation of the adjudicative proceeding
attributable to the allegedly excessive
portion of the demand;
(g) Any other matter the applicant
wishes the Bureau to consider in
determining whether and in what
amount an award should be made; and
(h) A written verification under oath
or under penalty of perjury that the
information provided is true and
correct, accompanied by the signature of
the applicant or an authorized officer or
attorney.
§ 1071.201
Net worth exhibit.
(a) The application shall also include
a detailed exhibit showing that the
applicant’s net worth did not exceed $2
million (if an individual) or $7 million
(for all other applicants, including their
affiliates) when the proceeding was
initiated. The exhibit may be in any
form convenient to the applicant that
provides full disclosure of the
applicant’s and its affiliates’ assets and
liabilities and is sufficient to determine
whether the applicant qualifies under
the standards in this subpart. The
adjudicative officer may require an
applicant to file additional information
to determine its eligibility for an award.
(b) However, an applicant may omit
this exhibit if:
(1) It attaches a copy of a ruling by the
Internal Revenue Service that it
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 applicant’s belief that it
qualifies under such section;
(2) It states that it is a cooperative
association as defined in section 15(a) of
the Agricultural Marketing Act (12
U.S.C. 1141j(a));
(3) In the case of an application for an
award related to an allegedly excessive
demand by the Bureau, it demonstrates
that it is a small entity as that term is
defined by 5 U.S.C. 601(6).
(c) Ordinarily, the net worth exhibit
will be included in the public record of
the proceeding. However, an applicant
that objects to public disclosure of
information in any portion of the exhibit
and believes there are legal grounds for
withholding it from disclosure may
submit that exhibit directly to the
adjudicative officer in a sealed envelope
labeled ‘‘Confidential Financial
Information,’’ accompanied by a motion
to withhold the information from public
disclosure. The motion shall describe
the information sought to be withheld
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and explain, in detail, why it falls
within one or more of the specific
exemptions from mandatory disclosure
under the Freedom of Information Act,
5 U.S.C. 522(b)(1) through (9), why
public disclosure of the information
would adversely affect the applicant,
and why disclosure is not required in
the public interest. The material in
question shall be served on Bureau
counsel but need not be served on any
other party to the proceeding. If the
adjudicative officer finds that the
information should not be withheld
from disclosure, it shall be placed in the
public record of the proceeding.
Otherwise, any request to inspect or
copy the exhibit shall be handled in
accordance with the Bureau’s
established procedures under the
Freedom of Information Act, 12 CFR
subpart B.
§ 1071.202
expenses.
Documentation of fees and
The application shall be accompanied
by full documentation of the fees and
expenses incurred after initiation of the
adversary adjudication, including the
cost of any study, engineering report,
test, or project for which an award is
sought. With respect to a claim for fees
and expenses involving an excessive
demand by the Bureau, the application
shall be accompanied by full
documentation of the fees and expenses
incurred after initiation of the adversary
adjudication, including the cost of any
study, engineering report, test, or project
for which an award is sought
attributable to the portion of the
demand alleged to be excessive and
unreasonable. A separate itemized
statement shall be submitted for each
professional firm or individual whose
services are covered by the application,
showing the hours spent in connection
with the proceeding by each individual,
a description of the specific services
performed, the rate at which each fee
has been computed, 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 for the
services provided. The adjudicative
officer may require the applicant to
provide vouchers, receipts, or other
substantiation for any expenses claimed.
§ 1071.203
filed.
When an application may be
(a) An application may be filed not
later than 30 days after the final
disposition of the proceeding to which
the application relates.
(b) If review or reconsideration is
sought or taken of a decision,
proceedings for the award of fees shall
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be stayed pending final disposition of
the underlying controversy.
(c) For purposes of this subpart, final
disposition means the later of—
(1) The date that the Director’s final
order issued pursuant to § 1081.405 is
final and unappealable, both within the
agency and to the courts; or
(2) The date that the Bureau issues
any other final resolution of a
proceeding, such as a consent
agreement, settlement or voluntary
dismissal, that is not subject to a
petition for reconsideration.
Subpart C—Procedures for
Considering Applications
§ 1071.300 Filing and service of
documents.
(a) Any application for an award or
other pleading or document related to
an application shall be filed and served
on all parties to the proceeding in the
same manner as other pleadings in
proceedings under part 1081.
(b) In addition, a copy of each
application for fees and expenses shall
be served on the General Counsel of the
Bureau.
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§ 1071.301
Answer to application.
(a) Within 30 days after service of an
application, counsel representing the
Bureau may file an answer to the
application. Unless Bureau counsel
requests an extension of time for filing
or files a statement of intent to negotiate
under paragraph (b) of this section,
failure to file an answer within the 30day period may be treated as consent to
the award requested.
(b) If Bureau counsel and the
applicant believe that the issues in the
fee application can be settled, they may
jointly file a statement of their intent to
negotiate a settlement. The filing of this
statement shall extend the time for filing
an answer for an additional 30 days and
further extensions may be granted by
the adjudicative officer upon joint
request by Bureau counsel and the
applicant.
(c) The answer shall explain in detail
any objections to the award requested
and identify the facts relied on in
support of Bureau counsel’s position. If
the answer is based on any alleged facts
not already in the record of the
proceeding, Bureau counsel shall
include with the answer either
supporting affidavits or a request for
further proceedings under § 1071.305 of
this part.
§ 1071.302
Reply.
Within 15 days after service of an
answer, the applicant may file a reply.
If the reply is based on any alleged facts
not already in the record of the
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proceeding, the applicant shall include
with the reply either supporting
affidavits or a request for further
proceedings under § 1071.305 of this
part.
§ 1071.303
Comments by other parties.
Any party to a proceeding other than
the applicant and Bureau counsel may
file comments on an application within
30 days after it is served or on an
answer within 15 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.
§ 1071.304
Settlement.
The applicant and Bureau counsel
may agree on a proposed settlement of
the award before final action on the
application, either in connection with a
settlement of the underlying proceeding
or after the underlying proceeding has
been concluded, in accordance with the
Bureau’s standard settlement
procedures. If a prevailing party and
Bureau counsel agree on a proposed
settlement of an award before an
application has been filed, the
application shall be filed with the
proposed settlement. If a proposed
settlement of an underlying proceeding
provides that each side shall bear its
own expenses and the settlement is
accepted, no application may be filed.
§ 1071.305
Further proceedings.
(a) Ordinarily, the determination of an
award will be made on the basis of the
written record. However, on request of
either the applicant or Bureau counsel,
or on his or her own initiative, the
adjudicative officer may order further
proceedings, such as an informal
conference, oral argument, additional
written submissions or an evidentiary
hearing. Such further proceedings shall
be held only when necessary for full
and fair resolution of the issues arising
from the application, and shall be
conducted as promptly as possible.
(b) A request that the adjudicative
officer order further proceedings under
this section shall specifically identify
the information sought or the disputed
issues and shall explain why the
additional proceedings are necessary to
resolve the issues.
§ 1071.306
Recommended decision.
The adjudicative officer shall issue a
recommended decision on the
application within 60 days after the
time for filing a reply, or where further
proceedings are held, within 60 days
after completion of such proceedings.
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(a) For a decision involving a
prevailing party: The decision shall
include written findings and
conclusions on the applicant’s
eligibility and status as a prevailing
party, and an explanation of the reasons
for any difference between the amount
requested and the amount awarded. The
decision shall include, if at issue,
findings on whether the agency’s
position was substantially justified,
whether the applicant unduly
protracted the proceedings, or whether
special circumstances make an award
unjust.
(b) For a decision involving an
allegedly excessive Bureau demand: The
decision on the application shall
include written findings and
conclusions on the applicant’s
eligibility and an explanation of the
reasons why the Bureau’s demand was
or was not determined to be
substantially in excess of the underlying
decision of the adjudicative officer and
was or was not unreasonable when
compared with that decision. That
determination shall be based upon all
the facts and circumstances of the case.
The decision on the application shall
also include, if at issue, findings on
whether the applicant has committed a
willful violation of law or otherwise
acted in bad faith, or whether special
circumstances make an award unjust.
§ 1071.307
Bureau review.
Either the applicant or Bureau
counsel may seek review of the
recommended decision on the fee
application by filing a notice of appeal
under § 1081.402(a), or the Director may
decide to review the decision on his or
her own initiative, in accordance with
§ 1081.402(b). If neither the applicant
nor Bureau counsel seeks review and
the Director does not take review on his
or her own initiative, the Director will
adopt the recommended decision on the
application as the final decision of the
Bureau within 30 days of the issuance
of the recommended decision. Whether
to review a decision is a matter within
the discretion of the Director. If review
is taken, the Director will issue a final
decision on the application or remand
the application to the adjudicative
officer for further proceedings.
§ 1071.308
Judicial review.
Judicial review of final Bureau
decisions on awards may be sought as
provided in 5 U.S.C. 504(c)(2).
§ 1071.309
Payment of award.
An applicant seeking payment of an
award shall submit to the Bureau a copy
of the Bureau’s final decision granting
the award, accompanied by a statement
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that the applicant will not seek review
of the decision in the United States
courts. An applicant shall be paid the
amount awarded within 60 days of entry
of the final decision unless judicial
review of the award or of the underlying
decision of the adversary adjudication
has been sought by the applicant or any
other party to the proceeding.
Dated: June 4, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2012–14046 Filed 6–28–12; 8:45 am]
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]]>Agencies
[Federal Register Volume 77, Number 126 (Friday, June 29, 2012)]
[Rules and Regulations]
[Pages 39117-39123]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14046]
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1071
[Docket No.: CFPB-2012-0020]
RIN 3170-AA27
Equal Access to Justice Act Implementation Rule
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interim final rule with request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Equal Access to Justice Act (EAJA or the Act) requires
agencies
[[Page 39118]]
that conduct adversary adjudications to award attorney fees and other
litigation expenses to certain parties other than the United States in
certain circumstances. EAJA also requires agencies that conduct
adversary adjudications to establish procedures for the submission and
consideration of applications for the award of fees and other expenses.
The Consumer Financial Protection Bureau (Bureau) now issues an interim
final rule establishing such procedures and seeks public comments.
DATES: This interim final rule takes effect on June 29, 2012. Comments
must be received on or before August 28, 2012 to be assured of
consideration.
ADDRESSES: You may submit comments by any of the following methods:
Electronic: www.regulations.gov. Follow the instructions
for submitting comments.
Mail or Hand Delivery/Courier: Monica Jackson, Office of
the Executive Secretary, Consumer Financial Protection Bureau, 1700 G
Street NW., Washington, DC 20552.
Instructions: All submissions must include the agency name and
docket number or Regulatory Information Number (RIN) for this
rulemaking. In general, all comments received will be posted to https://www.regulations.gov. In addition, comments will be available for public
inspection and copying at 1700 G Street NW., Washington, DC 20552, on
official business days between the hours of 10 a.m. and 5 p.m. Eastern
Time. An appointment to inspect comments can be made by telephoning
(202) 435-7275. All comments, including attachments and other
supporting materials, will become part of the public record and subject
to public disclosure. Submit only information that you wish to make
publicly available. Sensitive personal information, such as account
numbers or Social Security numbers, should not be included. Comments
will not be edited to remove any identifying or contact information
such as name and address information, email addresses, or telephone
numbers.
FOR FURTHER INFORMATION CONTACT: John R. Coleman, Office of the General
Counsel, Consumer Financial Protection Bureau, 1700 G Street NW.,
Washington, DC 20552; (202) 435-7254.
SUPPLEMENTARY INFORMATION:
I. Background
Originally enacted in 1980, EAJA provides that ``[a]n agency that
conducts an adversary adjudication shall award, to a prevailing party
other than the United States, fees and other expenses incurred by that
party in connection with that proceeding, unless the adjudicative
officer of the agency finds that the position of the agency was
substantially justified or that special circumstances make an award
unjust.'' 5 U.S.C. 504(a)(1). The Administrative Conference of the
United States (ACUS) was charged with coordination of the procedural
rules adopted by various agencies to implement EAJA. To carry out this
responsibility, ACUS issued model rules implementing EAJA (46 FR 32900,
June 25, 1981), after receiving public comment on draft model rules (46
FR 15895, March 10, 1981). ACUS published revised model rules in 1986
that reflected the amendments Congress made when it re-authorized the
Act in 1985. 51 FR 16659 (May 6, 1986), previously codified at 1 CFR
part 315 (1995); see Administrative Conference of the U.S., Federal
Administrative Procedure Sourcebook at 419 (2d ed. 1992). ACUS did not
publish model rules reflecting amendments to the Act made since 1985
before ACUS was temporarily defunded in 1996.
In preparing regulations implementing the Act, the Bureau has used
the 1986 ACUS model rules as a point of departure, modifying them to
put them in plain language, to reflect more recent amendments to the
Act, and to make certain changes the Bureau believes are warranted for
reasons explained in the following section-by-section analysis. Since
the preamble to the draft model rules explained their formulation and
the preamble to the final model rules summarized and responded to the
public comments submitted concerning the draft rules, the Bureau does
not repeat here the rationale of the model rules. Rather, the Bureau
notes where its rule differs from the model rules and explains
significant provisions, as follows:
1. The Bureau's rule is divided into three subparts, as are the
model rules, and maintains the same sequence with the following
exception: The Bureau's rule starts at Sec. 1071.100 and omits model
rule Sec. 315.107, ``Rulemaking on maximum rates for attorney fees,''
and Sec. 315.108, ``Awards against other agencies.'' The revised
numbering causes Bureau Sec. 1071.106 to correspond to model rule
Sec. 315.109.
2. Section 1071.100, ``Purpose of this rule,'' inserts a new
paragraph (b), ``When an eligible party will receive an award,'' which
reflects amendments to EAJA made by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. 104-121, Title II,
110 Stat. 857 (1996). This paragraph is modeled on the EAJA rules of
the Federal Trade Commission (FTC), 16 CFR 3.81(a)(1)(ii), but includes
additional language to clarify the circumstances under which the
Bureau's notice of charges may constitute a demand. This clarifying
language is consistent with the Congressional intent in promulgating
SBREFA. Legislative history suggests that Congress intended the term
``demand'' as used in the SBREFA amendments to mean ``an express
written demand that leads directly to an adversary adjudication or
civil action.'' See 142 Cong. Rec. E571-01, E573 (1996) (statement of
Rep. Hyde). The Congressional Record further clarifies that ``the
`demand' at issue would be the government's demand that was pending
upon commencement of the adjudication or action.'' Id. (emphasis
added). Accordingly, the Bureau's notice of charges would constitute
the agency's demand only where it was not preceded by an express
written demand.
3. Section 1071.102, ``Proceedings covered,'' is modified and
simplified from model rule Sec. 315.103 and identifies the specific
proceedings before the Bureau that are covered by EAJA. Incorporation
of paragraphs (b) and (c) of model rule Sec. 315.103 into the Bureau
rule is not necessary because it is clear which Bureau proceedings are
covered by EAJA.
4. Section 1071.103(b) inserts paragraph (6), which does not appear
in the corresponding model rule Sec. 315.104(b), in order to conform
with the SBREFA amendments to EAJA.
5. Section 1071.104, ``Standards for awards,'' inserts paragraph
(b), which does not appear in the corresponding model rule Sec.
315.105, in order to conform with the SBREFA amendments to EAJA. The
provision in paragraph (b) of model rule Sec. 315.105 was moved to
Sec. 1071.104(a)(2). The last sentence in paragraph (a)(1) is modeled
on the comparable rule of the Department of the Treasury governing the
standards for awards under EAJA, 31 CFR 6.5, and clarifies that
although the Bureau bears the burden of proof that its position was
substantially justified, the fact that the Bureau did not prevail in
the underlying proceeding does not create a presumption that the its
position was not substantially justified.
6. Unlike model rule Sec. 315.106(b), the corresponding paragraph
(b) of Sec. 1071.105 does not specify a rate for attorney fees, but
instead refers back to the corresponding statutory provision in EAJA
that sets forth the maximum hourly rate for attorney fees. This
modification is intended to eliminate the need to promulgate a revised
rule whenever the statutory maximum is increased. Most recently, the
maximum
[[Page 39119]]
amount of fees that may normally be awarded to an attorney or agent was
increased from $75 per hour to $125 per hour pursuant to 1996
amendments to EAJA. 5 U.S.C. 504(b)(1)(A)(ii). Section 1071.105
modifies the model rule to permit recovery of expert fees at the
``reasonable rate at which the Bureau pays witnesses with similar
expertise'' instead of the ``highest rate'' paid by the Bureau.
7. Model rule Sec. 315.107, ``Rulemaking on maximum rates for
attorney fees,'' does not appear in the Bureau rule. Since frequent
rulemaking on this subject is not foreseen, a rule concerning it is not
deemed necessary.
8. Section 315.108 of the model rules, ``Awards against other
agencies,'' does not appear in the Bureau rule because it is not
anticipated that another agency of the United States will participate
in an adversary proceeding before the Bureau. In the event another
agency did so participate, it is anticipated that the adjudicative
officer would take appropriate action in the absence of an express
rule.
9. Section 1071.106, ``Delegation of authority,'' is a simplified
version of the corresponding model rule, Sec. 315.109.
10. Section 1071.200, ``Contents of application,'' is modeled on
the corresponding FTC rule governing the contents of an application for
recovery of awards under EAJA, 16 CFR 3.82(a), which provides a more
comprehensive list of requirements than the corresponding model rule,
Sec. 315.201(a).
11. The provisions in paragraph (b) of model rule Sec. 315.202
have been moved to Sec. 1071.201(b) to consolidate the provisions
relating to the net worth exhibit into a single section. The provisions
in paragraph (b) of corresponding model rule Sec. 315.202 regarding
the presumptively public nature of the net worth exhibit can be found
in Sec. 1071.201(c).
12. Section 1071.202, ``Documentation of fees and expenses,'' is
modified from the corresponding model rule, Sec. 315.203, to conform
with the SBREFA amendments to EAJA.
13. Section 1071.203, ``When an application may be filed,'' is
modified from the corresponding model rule, Sec. 315.204, to conform
with the SBREFA amendments to EAJA.
14. Paragraph (c) of Sec. 1071.203 defines the date of final
Bureau disposition. This is significant for paragraph (a), which makes
reference to final disposition. In particular, paragraph (a) reiterates
the statutory provision, set forth at 5 U.S.C. 504(a)(2), that a party
may file an application for an award within thirty days of the Bureau's
final disposition of the adversary adjudication as to which the award
is sought.
15. Section 1071.300, ``Filing and service of documents,''
incorporates the provisions of Sec. Sec. 1081.111, 1081.112 and
1081.113 concerning service and filing in adjudication proceedings. The
section also requires the applicant to serve a copy of the application
for fees and expenses on the General Counsel of the Bureau.
16. Section 1071.304, ``Settlement,'' revises the corresponding
model rule, Sec. 315.305, to make explicit that no application for
recovery of fees and expense may be filed if the settlement of the
underlying proceeding provides that each side shall bear its own
expenses.
17. Section 1071.306, ``Decision,'' is modified from the
corresponding model rule, Sec. 315.307, to conform with the SBREFA
amendments to EAJA.
18. Section 1071.307, ``Bureau review,'' is modified from the
corresponding model rule, Sec. 315.308, so that Bureau review of an
adjudicatory officer's decision concerning a fee application follows
the same procedures as Bureau review of a hearing officer's decision in
the underlying matter.
19. Section 1071.309, ``Payment of award,'' sets forth a 60 day
deadline in which the Bureau must pay the amount awarded to the
applicant.
II. Regulatory Requirements
The rule relates solely to agency procedure and practice and, thus,
is not subject to the notice and comment requirements of the
Administrative Procedure Act, 5 U.S.C. 553(b). Although the rule is
exempt from these requirements, the Bureau invites comment on it.
Because no notice of proposed rulemaking is required, these
regulations are not a ``rule'' as defined by the Regulatory Flexibility
Act, 5 U.S.C. 601(2). The regulations in this part do not contain any
information collection requirement that requires the approval of OMB
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
List of Subjects in 12 CFR Part 1071
Administrative practice and procedure, Banking, Banks, Consumer
protection, Credit, Credit unions, Equal access to justice, Law
enforcement, National banks, Savings associations.
Authority and Issuance
0
For the reasons set forth in the preamble, the Bureau adds part 1071 to
Chapter X in Title 12 of the Code of Federal Regulations to read as
follows:
PART 1071--RULE IMPLEMENTING EQUAL ACCESS TO JUSTICE ACT
Subpart A--General
Sec.
1071.100 Purpose.
1071.101 When the Act applies.
1071.102 Proceedings covered.
1071.103 Eligibility of applicants.
1071.104 Standards for awards.
1071.105 Allowable fees and other expenses.
1071.106 Delegations of authority.
Subpart B--Information Required from Applicants
1071.200 Contents of application.
1071.201 Net worth exhibit.
1071.202 Documentation of fees and expenses.
1071.203 When an application may be filed.
Subpart C--Procedures for Considering Applications
1071.300 Filing and service of documents.
1071.301 Answer to application.
1071.302 Reply.
1071.303 Comments by other parties.
1071.304 Settlement.
1071.305 Further proceedings.
1071.306 Recommended decision.
1071.307 Bureau review.
1071.308 Judicial review.
1071.309 Payment of award.
Authority: 5 U.S.C. 504.
Subpart A--General
Sec. 1071.100 Purpose.
(a) In general. The Equal Access to Justice Act (the Act), 5 U.S.C.
504, provides for the award of attorney fees and other expenses to
eligible individuals and entities who are parties to certain
administrative proceedings (adversary adjudications) before the Bureau
of Consumer Financial Protection (the Bureau). An eligible party may
receive an award when it prevails over the Bureau, unless the Bureau's
position in the proceeding was substantially justified or special
circumstances make an award unjust. This part describes the parties
eligible for awards and the proceedings that are covered. This part
also explains how to apply for awards, and the procedures and standards
that the Bureau will use in ruling on those applications.
(b) When an eligible party will receive an award. An eligible party
will receive an award when:
(1) It prevails in the adversary adjudication, unless the Bureau's
position in the proceeding was substantially justified or special
circumstances make an award unjust. Whether or not the position of the
Bureau was substantially justified will be determined on the basis of
the administrative record as a whole that is made in the adversary
proceeding for
[[Page 39120]]
which fees and other expenses are sought; or
(2) The Bureau's demand is substantially in excess of the decision
of the adjudicative officer and is unreasonable when compared with that
decision, under all the facts and circumstances of the case, unless the
party has committed a willful violation of law or otherwise acted in
bad faith, or special circumstances make an award unjust. ``Demand''
means the express final written demand made by the Bureau prior to
initiation of the adversary adjudication, but does not include a
recitation by the Bureau of the statutory penalty in the notice of
charges or elsewhere when accompanied by an express demand for a lesser
amount. The relief requested in the Bureau's notice of charges issued
pursuant to 12 CFR 1081.200(b)(3) may constitute the Bureau's demand
only where the notice of charges was not preceded by an express final
written demand.
Sec. 1071.101 When the Act applies.
The Act applies to any adversary adjudication pending before the
Bureau at any time after July 21, 2011.
Sec. 1071.102 Proceedings covered.
The Act applies to all adjudicative proceedings under part 1081 as
defined in Sec. 1081.103.
Sec. 1071.103 Eligibility of applicants.
(a) To be eligible for an award of attorney fees and other expenses
under the Act, the applicant must be a party to the adversary
adjudication for which it seeks an award. The term ``party'' is defined
in 5 U.S.C. 551(3). The applicant must show that it meets all
conditions of eligibility set out in this subpart.
(b) The types of eligible applicants are as follows:
(1) An individual with 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
interests, and not more than 500 employees;
(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; or
(5) Any other partnership, corporation, association, or public or
private organization with a net worth of not more than $7 million and
not more than 500 employees.
(6) For purposes of receiving an award for fees and expenses for
defending against an excessive Bureau demand, any small entity, as that
term is defined under 5 U.S.C. 601(6).
(c) For purposes of eligibility, the net worth and number of
employees of an applicant shall be determined as of the date the
proceeding was initiated.
(d) An applicant who owns an unincorporated business will be
considered an ``individual'' rather than a ``sole owner of an
unincorporated business'' if the issues on which the applicant prevails
are related primarily to personal interests rather than to business
interests.
(e) The employees of an applicant include all persons who regularly
perform services for remuneration for the applicant, under the
applicant's direction and control. Part-time employees shall be
included on a proportional basis.
(f) The net worth and number of employees of the applicant and all
of its affiliates shall be aggregated to determine eligibility. Any
individual or group of individuals, corporation or other entity that
directly or indirectly controls or owns a majority of the voting shares
or other interest of the applicant, or any corporation or entity of
which the applicant directly or indirectly owns or controls a majority
of the voting shares or other interest, will be considered an affiliate
of that business for purposes of this part, unless the adjudicative
officer determines that such treatment would be unjust and contrary to
the purposes of the Act in light of the actual relationship between the
affiliated entities. In addition, the adjudicative officer may
determine that financial relationships of the applicant other than
those described in this paragraph constitute special circumstances that
would make an award unjust.
(g) An applicant that participates in a proceeding primarily on
behalf of one or more other persons or entities that would be
ineligible is not itself eligible for an award.
Sec. 1071.104 Standards for awards.
(a) For a prevailing party:
(1) An eligible prevailing applicant may receive an award for fees
and expenses incurred after initiation of the adversary adjudication in
connection with the entire adversary adjudication, or on a substantive
portion of the adversary adjudication that is sufficiently significant
and discrete to merit treatment as a separate unit, unless the position
of the Bureau was substantially justified. The burden of proof that an
award should not be made to an eligible prevailing applicant because
the Bureau's position was substantially justified is on counsel for the
Bureau. However, no presumption arises that the Bureau's position was
not substantially justified simply because the Bureau did not prevail.
(2) An award will be reduced or denied if the applicant has unduly
or unreasonably protracted the proceeding or if special circumstances
make the award sought unjust.
(b) For a party defending against an excessive demand:
(1) An eligible applicant will receive an award for fees and
expenses incurred after initiation of the adversary adjudication
related to defending against the portion of a Bureau demand that is
substantially in excess of the decision of the adjudicative officer and
is unreasonable when compared with that decision under all the facts
and circumstances of the case.
(2) An award will be denied if the applicant has committed a
willful violation of law or otherwise acted in bad faith or if special
circumstances make an award unjust.
Sec. 1071.105 Allowable fees and other expenses.
(a) Subject to the limitations in paragraph (b) of this section,
awards will be based on rates customarily charged, in the locale of the
hearing, 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 applicant.
(b) No award for the fee of any attorney or agent under this rule
may exceed the hourly rate specified in 5 U.S.C. 504(b)(1)(A). No award
to compensate an expert witness may exceed the reasonable rate at which
the Bureau pays witnesses with similar expertise. However an award may
also include the reasonable expenses of the attorney, agent or witness
as a separate item, if the attorney, agent or witness ordinarily
charges clients separately for such expenses.
(c) In determining the reasonableness of the fee sought for an
attorney, agent or expert witness, the adjudicative officer shall
consider the following:
(1) If the attorney, agent or witness is in private practice, his
or her customary fee for similar services, or, if an employee of the
applicant, the fully allocated cost of the services;
(2) The prevailing rate for similar services in the community in
which the
[[Page 39121]]
attorney, agent or witness ordinarily performs services;
(3) The time actually spent in the representation of the applicant;
(4) The time reasonably spent in light of the difficulty or
complexity of the issues in the proceeding; and
(5) Such other factors as may bear on the value of the services
provided.
(d) The reasonable cost of any study, analysis, engineering report,
test, project or similar matter prepared on behalf of a party may be
awarded, to the extent that the charge for the services does not exceed
the prevailing rate for similar services, and the study or other matter
was necessary for preparation of the applicant's case.
(e) An award of fees or expenses under the Act is limited to fees
and expenses incurred after initiation of the adversary adjudication
and, with respect to excessive demands, the fees and expenses incurred
in defending against the excessive portion of the demand.
Sec. 1071.106 Delegations of authority.
The Director may delegate authority to take final action on matters
pertaining to the Equal Access to Justice Act in particular cases.
Subpart B--Information Required from Applicants
Sec. 1071.200 Contents of application.
An application for an award of fees and expenses under the Act
shall contain the following:
(a) Identity of the applicant and the proceeding for which the
award is sought;
(b) A showing that the applicant has prevailed; or, if the
applicant has not prevailed, a showing that the Bureau's demand was
substantially in excess of the decision of the adjudicative officer and
was unreasonable when compared with that decision, under the facts and
circumstances of that case;
(c) Identification of the Bureau position(s) in the proceeding that
the applicant alleges was (were) not substantially justified; or,
identification of the Bureau's demand that is alleged to be excessive
and unreasonable and an explanation as to why the demand was excessive
and unreasonable;
(d) A brief description of the type and purpose of the organization
or business (unless the applicant is an individual).
(e) A statement of how the applicant meets the eligibility criteria
of Sec. 1071.103;
(f) The amount of fees and expenses incurred after the initiation
of the adversary adjudication, or in the case of a claim for defending
against an allegedly excessive demand, the amount of fees and expenses
incurred after the initiation of the adjudicative proceeding
attributable to the allegedly excessive portion of the demand;
(g) Any other matter the applicant wishes the Bureau to consider in
determining whether and in what amount an award should be made; and
(h) A written verification under oath or under penalty of perjury
that the information provided is true and correct, accompanied by the
signature of the applicant or an authorized officer or attorney.
Sec. 1071.201 Net worth exhibit.
(a) The application shall also include a detailed exhibit showing
that the applicant's net worth did not exceed $2 million (if an
individual) or $7 million (for all other applicants, including their
affiliates) when the proceeding was initiated. The exhibit may be in
any form convenient to the applicant that provides full disclosure of
the applicant's and its affiliates' assets and liabilities and is
sufficient to determine whether the applicant qualifies under the
standards in this subpart. The adjudicative officer may require an
applicant to file additional information to determine its eligibility
for an award.
(b) However, an applicant may omit this exhibit if:
(1) It attaches a copy of a ruling by the Internal Revenue Service
that it 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 applicant's belief that it qualifies under
such section;
(2) It states that it is a cooperative association as defined in
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a));
(3) In the case of an application for an award related to an
allegedly excessive demand by the Bureau, it demonstrates that it is a
small entity as that term is defined by 5 U.S.C. 601(6).
(c) Ordinarily, the net worth exhibit will be included in the
public record of the proceeding. However, an applicant that objects to
public disclosure of information in any portion of the exhibit and
believes there are legal grounds for withholding it from disclosure may
submit that exhibit directly to the adjudicative officer in a sealed
envelope labeled ``Confidential Financial Information,'' accompanied by
a motion to withhold the information from public disclosure. The motion
shall describe the information sought to be withheld and explain, in
detail, why it falls within one or more of the specific exemptions from
mandatory disclosure under the Freedom of Information Act, 5 U.S.C.
522(b)(1) through (9), why public disclosure of the information would
adversely affect the applicant, and why disclosure is not required in
the public interest. The material in question shall be served on Bureau
counsel but need not be served on any other party to the proceeding. If
the adjudicative officer finds that the information should not be
withheld from disclosure, it shall be placed in the public record of
the proceeding. Otherwise, any request to inspect or copy the exhibit
shall be handled in accordance with the Bureau's established procedures
under the Freedom of Information Act, 12 CFR subpart B.
Sec. 1071.202 Documentation of fees and expenses.
The application shall be accompanied by full documentation of the
fees and expenses incurred after initiation of the adversary
adjudication, including the cost of any study, engineering report,
test, or project for which an award is sought. With respect to a claim
for fees and expenses involving an excessive demand by the Bureau, the
application shall be accompanied by full documentation of the fees and
expenses incurred after initiation of the adversary adjudication,
including the cost of any study, engineering report, test, or project
for which an award is sought attributable to the portion of the demand
alleged to be excessive and unreasonable. A separate itemized statement
shall be submitted for each professional firm or individual whose
services are covered by the application, showing the hours spent in
connection with the proceeding by each individual, a description of the
specific services performed, the rate at which each fee has been
computed, 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 for the services provided. The
adjudicative officer may require the applicant to provide vouchers,
receipts, or other substantiation for any expenses claimed.
Sec. 1071.203 When an application may be filed.
(a) An application may be filed not later than 30 days after the
final disposition of the proceeding to which the application relates.
(b) If review or reconsideration is sought or taken of a decision,
proceedings for the award of fees shall
[[Page 39122]]
be stayed pending final disposition of the underlying controversy.
(c) For purposes of this subpart, final disposition means the later
of--
(1) The date that the Director's final order issued pursuant to
Sec. 1081.405 is final and unappealable, both within the agency and to
the courts; or
(2) The date that the Bureau issues any other final resolution of a
proceeding, such as a consent agreement, settlement or voluntary
dismissal, that is not subject to a petition for reconsideration.
Subpart C--Procedures for Considering Applications
Sec. 1071.300 Filing and service of documents.
(a) Any application for an award or other pleading or document
related to an application shall be filed and served on all parties to
the proceeding in the same manner as other pleadings in proceedings
under part 1081.
(b) In addition, a copy of each application for fees and expenses
shall be served on the General Counsel of the Bureau.
Sec. 1071.301 Answer to application.
(a) Within 30 days after service of an application, counsel
representing the Bureau may file an answer to the application. Unless
Bureau counsel requests an extension of time for filing or files a
statement of intent to negotiate under paragraph (b) of this section,
failure to file an answer within the 30-day period may be treated as
consent to the award requested.
(b) If Bureau counsel and the applicant believe that the issues in
the fee application can be settled, they may jointly file a statement
of their intent to negotiate a settlement. The filing of this statement
shall extend the time for filing an answer for an additional 30 days
and further extensions may be granted by the adjudicative officer upon
joint request by Bureau counsel and the applicant.
(c) The answer shall explain in detail any objections to the award
requested and identify the facts relied on in support of Bureau
counsel's position. If the answer is based on any alleged facts not
already in the record of the proceeding, Bureau counsel shall include
with the answer either supporting affidavits or a request for further
proceedings under Sec. 1071.305 of this part.
Sec. 1071.302 Reply.
Within 15 days after service of an answer, the applicant may file a
reply. If the reply is based on any alleged facts not already in the
record of the proceeding, the applicant shall include with the reply
either supporting affidavits or a request for further proceedings under
Sec. 1071.305 of this part.
Sec. 1071.303 Comments by other parties.
Any party to a proceeding other than the applicant and Bureau
counsel may file comments on an application within 30 days after it is
served or on an answer within 15 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. 1071.304 Settlement.
The applicant and Bureau counsel may agree on a proposed settlement
of the award before final action on the application, either in
connection with a settlement of the underlying proceeding or after the
underlying proceeding has been concluded, in accordance with the
Bureau's standard settlement procedures. If a prevailing party and
Bureau counsel agree on a proposed settlement of an award before an
application has been filed, the application shall be filed with the
proposed settlement. If a proposed settlement of an underlying
proceeding provides that each side shall bear its own expenses and the
settlement is accepted, no application may be filed.
Sec. 1071.305 Further proceedings.
(a) Ordinarily, the determination of an award will be made on the
basis of the written record. However, on request of either the
applicant or Bureau counsel, or on his or her own initiative, the
adjudicative officer may order further proceedings, such as an informal
conference, oral argument, additional written submissions or an
evidentiary hearing. Such further proceedings shall be held only when
necessary for full and fair resolution of the issues arising from the
application, and shall be conducted as promptly as possible.
(b) A request that the adjudicative officer order further
proceedings under this section shall specifically identify the
information sought or the disputed issues and shall explain why the
additional proceedings are necessary to resolve the issues.
Sec. 1071.306 Recommended decision.
The adjudicative officer shall issue a recommended decision on the
application within 60 days after the time for filing a reply, or where
further proceedings are held, within 60 days after completion of such
proceedings.
(a) For a decision involving a prevailing party: The decision shall
include written findings and conclusions on the applicant's eligibility
and status as a prevailing party, and an explanation of the reasons for
any difference between the amount requested and the amount awarded. The
decision shall include, if at issue, findings on whether the agency's
position was substantially justified, whether the applicant unduly
protracted the proceedings, or whether special circumstances make an
award unjust.
(b) For a decision involving an allegedly excessive Bureau demand:
The decision on the application shall include written findings and
conclusions on the applicant's eligibility and an explanation of the
reasons why the Bureau's demand was or was not determined to be
substantially in excess of the underlying decision of the adjudicative
officer and was or was not unreasonable when compared with that
decision. That determination shall be based upon all the facts and
circumstances of the case. The decision on the application shall also
include, if at issue, findings on whether the applicant has committed a
willful violation of law or otherwise acted in bad faith, or whether
special circumstances make an award unjust.
Sec. 1071.307 Bureau review.
Either the applicant or Bureau counsel may seek review of the
recommended decision on the fee application by filing a notice of
appeal under Sec. 1081.402(a), or the Director may decide to review
the decision on his or her own initiative, in accordance with Sec.
1081.402(b). If neither the applicant nor Bureau counsel seeks review
and the Director does not take review on his or her own initiative, the
Director will adopt the recommended decision on the application as the
final decision of the Bureau within 30 days of the issuance of the
recommended decision. Whether to review a decision is a matter within
the discretion of the Director. If review is taken, the Director will
issue a final decision on the application or remand the application to
the adjudicative officer for further proceedings.
Sec. 1071.308 Judicial review.
Judicial review of final Bureau decisions on awards may be sought
as provided in 5 U.S.C. 504(c)(2).
Sec. 1071.309 Payment of award.
An applicant seeking payment of an award shall submit to the Bureau
a copy of the Bureau's final decision granting the award, accompanied
by a statement
[[Page 39123]]
that the applicant will not seek review of the decision in the United
States courts. An applicant shall be paid the amount awarded within 60
days of entry of the final decision unless judicial review of the award
or of the underlying decision of the adversary adjudication has been
sought by the applicant or any other party to the proceeding.
Dated: June 4, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2012-14046 Filed 6-28-12; 8:45 am]
BILLING CODE 4810-AM-P
