[Federal Register Volume 63, Number 218 (Thursday, November 12, 1998)]
[Rules and Regulations]
[Pages 63172-63178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29680]



[[Page 63172]]

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FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

29 CFR Part 2704


Implementation of Amendments to the Equal Access to Justice Act 
in Commission Proceedings

AGENCY: Federal Mine Safety and Health Review Commission.

ACTION: Final rule.

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SUMMARY: The Federal Mine Safety and Health Review Commission is 
publishing final revisions to its rules providing for the award of 
attorney's fees and other expenses under the Equal Access to Justice 
Act (EAJA), 5 U.S.C. 504, applicable to eligible individuals and 
entities who are parties to administrative proceedings before the 
Commission. The revisions to the rules are in response to amendments to 
the EAJA, enacted pursuant to Pub. L. 104-121, 110 Stat. 862 (1996), 
and effective on March 29, 1996. The rules authorize fee awards under a 
newly-defined standard--when the Secretary of Labor's demand is 
substantially in excess of the decision of the Commission and is 
unreasonable when compared to that decision. The rules also expand the 
definition of a ``party'' eligible for an award under this new standard 
to include ``a small entity'' as defined by 5 U.S.C. 601. The maximum 
hourly rate for attorney's fees in all EAJA cases before the Commission 
is increased to $125.
    In addition to the changes in the rules mandated by the EAJA 
amendments, the Commission is revising other EAJA rules in light of its 
experience under the present rules and in light of comments submitted 
during the comment period for the proposed rules. The procedure under 
the rules for increasing the maximum hourly rate for fees is modified 
to allow an applicant to request such an increase from an 
administrative law judge, subject to Commission review. The Commission 
is revising its rules to provide that parties submit EAJA applications 
directly to the Chief Administrative Law Judge instead of to the 
Chairman. Finally, the requirement in the present rules requiring 
Commission approval of the settlement of an EAJA claim that is resolved 
prior to the filing of an application is deleted, and the rule is 
modified to provide for notification of the Commission in the event 
that an EAJA claim is settled after an application is filed with the 
Commission.

DATES: Effective December 14, 1998.

FOR FURTHER INFORMATION CONTACT: Norman M. Gleichman, General Counsel, 
Office of the General Counsel, 1730 K Street, NW, 6th Floor, 
Washington, DC 20006, telephone: 202-653-5610 (202-566-2673 for TDD 
Relay). These are not toll-free numbers.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Commission's present rules, the EAJA applies to 
administrative adjudications, brought pursuant to the Federal Mine 
Safety and Health Act of 1977, 30 U.S.C. 801 et seq., in which an 
eligible party prevails over the Department of Labor's Mine Safety and 
Health Administration. 29 CFR 2704.100 and 2704.103. Prior to the 
enactment of Pub. L. 104-121, prevailing parties could receive awards 
if they met the EAJA's eligibility standards (which set ceilings on the 
net worth and number of employees) and if the government's position was 
not ``substantially justified.''
    Pub. L. 104-121 creates an additional standard under which eligible 
parties can obtain fees in administrative adjudications. The EAJA 
amendments authorize an award when a government ``demand'' is both 
``substantially in excess of the decision of the adjudicative officer'' 
and ``unreasonable.'' Id. at 231(a). Under this standard, if the demand 
by the Secretary of Labor is substantially in excess of the amount 
finally obtained by the Secretary and is unreasonable when compared 
with that amount under the facts and circumstances of the case, the 
Commission shall award to the opposing party the fees and other 
expenses related to defending against the demand, unless the party has 
committed a willful violation of law or otherwise acted in bad faith, 
or special circumstances make an award unjust. Id.
    Pub. L. 104-121 also establishes a separate definition of a 
``party'' for fee awards under the new standard. Parties that are 
eligible to apply for awards include ``small entit[ies] as defined in 
section 601 [of title 5].'' Id. at 231(b)(2). Title 5 U.S.C. 601(6) 
provides that ``small entity'' has ``the same meaning as the term[] 
`small business'. . . .'' In turn, a ``small business'' is defined at 5 
U.S.C. 601(3) as a ``small business concern'' under section 3 of the 
Small Business Act (15 U.S.C. 632). Section 632(a) authorizes the Small 
Business Administration (SBA) to establish standards to specify when a 
business concern is ``small.'' The SBA has recently issued updated size 
standards for various types of economic activity, categorized by the 
Standard Industrial Classification System. 13 CFR 121.105. In defining 
the standards for small businesses engaged in mining, the SBA 
regulations count either annual receipts or numbers of employees. The 
number of employees or annual receipts specified is the maximum allowed 
for a concern and its affiliates to be considered small. 13 CFR 
121.201. The standards for the mining industry are as follows:

Division B-Mining:
    Major Group 10-Metal Mining..............  500 employees.
    Major Group 12-Coal Mining...............  500 employees.
    Major Group 14-Mining and Quarrying of     500 employees.
     Non-Metallic Minerals, Except Fuels.
Except:
    1081 Metal Mining Services...............  $5 million.
    1241 Coal Mining Services................  $5 million.
    1481 Nonmetallic Minerals Services,        $5 million.
     Except Fuels.

13 CFR 121.201.
    Pub. L. 104-121 also increases the maximum fee award of an attorney 
or agent from $75 to $125 per hour. Id. at 231(b)(1).
    In addition to the changes mandated by the EAJA amendments, the 
Commission has the benefit of experience under its current rules and 
the comments of the Secretary and other parties who have practiced 
before it and has determined to revise its rules to handle EAJA 
applications in a more efficient manner. Accordingly, the Commission is 
modifying its rules to provide that applicants can file EAJA 
applications directly with the Chief Administrative Law Judge, that 
parties are not required to seek Commission approval for settlement of 
EAJA claims, and that applicants may seek an increase in the maximum 
rate for attorney's fees by filing a petition with the administrative 
law judge who is assigned to the EAJA application.

[[Page 63173]]

II. Analysis of the Regulations

    The Commission published a proposed rule on December 19, 1996 (61 
FR 66961). The Commission proposed to add language to the present 
language of Sec. 2704.100 to provide that an eligible party may receive 
an award if a demand is made by the Secretary that is substantially in 
excess of the decision of the Commission and is unreasonable when 
compared with that decision, unless the applicant party has committed a 
willful violation of law or otherwise acted in bad faith or special 
circumstances make an award unjust, as required by the EAJA amendments. 
For purposes of this part, a decision of the Commission includes not 
only a decision by the Commission but also a decision by an 
administrative law judge that becomes final by operation of law. The 
Commission did not receive any comments to its proposed rule. 
Accordingly, the Commission is publishing the rule, as proposed, with 
the exception of an editorial change in the language specifying the new 
grounds for recovery of fees and expenses in order to fully conform to 
the language of the statute.
    The Commission proposed to change the present language of 
Sec. 2704.102 to provide for a new subpart to specify that, where an 
applicant seeks an award based on the new standard for recovery in the 
EAJA amendments--substantially excessive and unreasonable demand of the 
Secretary--the adversary adjudication before the Commission must have 
commenced on or after March 29, 1996, the effective date of the 
amendments. There were no comments to the proposed rule, and the final 
rule is published as proposed.
    In Sec. 2704.104, as proposed, the Commission has added language to 
its present rule at paragraph (c) to refer to the new eligibility 
requirements in the EAJA amendments for the new standard of recovery. 
Paragraphs (c) through (g) in the present rule are redesignated in 
light of additions to the section.
    The bulk of the comments submitted in reference to proposed 
Sec. 2704.104 concerned the aggregation of net worth and number of 
employees of affiliated organizations, subjects currently addressed in 
the present paragraph (f),which will be redesignated as 
Sec. 2704.104(b)(2). Several of the comments suggested that the 
Commission modify its present rule regarding the aggregation of 
affiliated companies. Another commenter asserts that majority ownership 
is not always the correct standard for determining control. However, 
the Commission's present approach to affiliated companies in its rules 
was based on the Model Rules, promulgated by the Administrative 
Conference of the United States (``ACUS''). Under the 1996 EAJA 
amendments, Congress adopted the definition of a ``small business 
concern'' of the SBA in the new class of claims eligible for relief, 
which is similar to the present approach in the Commission's rules in 
addressing affiliated companies. Accordingly, the Commission is not 
persuaded that its approach to aggregated companies that are prevailing 
parties should be changed. Further, the Commission believes that it has 
the flexibility to look at considerations other than majority ownership 
under its present rules.
    The Commission proposed to delete any reference to a ``unit of 
local government'' in Sec. 2704.104, which specifies those prevailing 
parties that are eligible for EAJA awards, because of the unlikelihood 
that they would be involved in Commission proceedings. However, one 
commenter pointed out a prior Commission proceeding involving such an 
entity. Accordingly, the reference to units of local government has 
been retained in Sec. 2704.104(b)(4)(iii). Under the new EAJA grounds 
for recovery--an excessive and unreasonable demand by the Secretary--an 
applicant must be a small entity as defined in 5 U.S.C. 601. To qualify 
as a small business under 5 U.S.C. 601(3), the applicant must meet the 
requirements for a small mining business concern as set forth by the 
SBA at 13 CFR 121.104, 121.106 and 121.201. No commenter objected to 
the Commission's incorporation by reference, at Sec. 2704.104(c), of 
the SBA's specification of annual receipts or number of employees that 
are specified at 13 CFR part 121.
    As set forth in the proposed rules, Sec. 2704.105(a) specifies the 
standard for an award based on prevailing party status and is unchanged 
except that it is revised to include the sentence regarding denial or 
reduction of an award because of unreasonable protraction in the 
proceedings or special circumstances that is presently in paragraph 
(b).
    Section 2704.105(b) tracks the language of Pub. L. 104-121 at 
section 231(a) and provides that, if the demand of the Secretary is 
substantially in excess of the decision of the Commission and is 
unreasonable when compared with such decision, under the facts and 
circumstances of the case, the Commission shall award to an eligible 
applicant fees and expenses related to defending against the excessive 
demand. Nevertheless, an award may not be made if the applicant has 
committed a willful violation of law or otherwise acted in bad faith or 
special circumstances make an award unjust. Whether the applicant has 
unduly or unreasonably protracted the underlying proceeding may also be 
considered.
    In the proposed Sec. 2704.105(b), it was specified that the burden 
of proof is on the applicant to show that the demand of the Secretary 
is substantially excessive and unreasonable. In response to the 
proposed rule, two commenters argued that it was at odds with EAJA to 
place on the applicant the burden of showing that a demand of the 
Secretary was excessive and unreasonable. Upon further consideration, 
the Commission has concluded that the burden of proof of showing the 
reasonableness of Secretary's demand is best borne by the Secretary, 
because she is in the best position to plead and prove the facts and 
circumstances leading to the formulation of her demand. As one of the 
commenters suggested, the showing of reasonableness of the Secretary's 
demand is analogous to the Secretary's burden of proving substantial 
justification. However, as stated in the proposed rules, the burden is 
on the applicant to establish that the Secretary's demand was 
excessive. Unlike reasonableness of the Secretary's demand, this 
threshold determination is based on objective facts ascertainable to 
the applicant.
    Section 2704.105(b) defines ``demand'' by tracking language in the 
EAJA amendments, Pub. L. 104-121 at Sec. 231(b)(5)(F).
    In conformity with the EAJA amendments, the Commission proposed to 
amend Sec. 2704.106(b) to provide that the maximum award for fees of an 
attorney or agent is $125 per hour. No comments were received in 
response to the proposed rule. An additional reference has been 
included in the final Sec. 2704.106(b) to the revised procedure in 
Sec. 2704.107(a), governing increases to the maximum rate.
    As proposed, Sec. 2704.107(a) is amended to reflect that the 
highest award for attorney's fees is $125 per hour. A number of 
commenters suggested that the Commission further amend its present 
procedure to authorize the administrative law judge assigned to an EAJA 
application to grant increases in the $125 per hour rate for fees in 
light of increases in the cost of living or other ``special factors.'' 
The Commission has concluded that delegating to its judges the 
authority to authorize increases in the level of fees is a more 
efficient and expeditious way of implementing such increases. Further, 
authorization of higher fees because of ``special circumstances'' is,

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by necessity, a matter determined by the unique facts and circumstances 
in an individual case. Therefore, the Commission has revised 
Sec. 2704.107(a) to provide that requests for increases in fees are 
submitted to the administrative law judge assigned to the matter, 
subject to Commission review as specified in Sec. 2704.308.
    Section 2704.108 presently provides for awards to prevailing 
parties in cases where the Secretary's position is not substantially 
justified, the basis for recovery specified in Sec. 2705.105(a). As 
proposed, the rule is amended to refer to the new basis for recovery in 
Sec. 2704.105(b), which specifies that recovery under EAJA also 
includes an excessive and unreasonable demand by the Secretary. The 
rule provides that, if an applicant is entitled to an award under 
either standard in Sec. 2704.105, the award shall be made by the 
Commission against the Department of Labor. At the suggestion of one 
commenter, a reference in the rule that the applicant must meet its 
burden of proof under Sec. 2704.105 was deleted as unnecessary.
    As proposed, Sec. 2704.201 designates the Chief Administrative Law 
Judge as the Commission official to whom EAJA applications are 
submitted, revising the present procedure that requires submission of 
applications to the Chairman. The rule has been revised substantially 
to limit specification of the contents of an EAJA application to those 
matters common to all applications, whether based on prevailing party 
status or a substantially excessive and unreasonable demand by the 
Secretary. In addition to the revisions in the proposed rule, the final 
rule contains a new reference to the filing of a request for an 
increase in fees with the application, as provided for in 
Sec. 2704.107.
    Section 2704.202 specifies the contents of an EAJA application by a 
prevailing party, formerly covered in Sec. 2704.201(a) and (b). 
Language from present Sec. 2704.201(b) permitting a tax-exempt 
organization to omit a net-worth statement has not been retained 
because of the low likelihood that such an organization would ever be a 
party to a Commission EAJA proceeding.
    Present Sec. 2704.203 is redesignated as Sec. 2704.205. Revised 
Sec. 2704.203(a) specifies the new standard for recovery--whether the 
Secretary's demand was substantially in excess of the decision of the 
Commission and unreasonable. The subsection has also been revised, 
consistent with the changes to Sec. 2704.105(b), to specify that 
application shall show that the Secretary's demand is excessive; 
further, the application shall allege the Secretary's demand that is 
deemed to be unreasonable. Revised Sec. 2704.203(b) provides that the 
application must show that the applicant is a small entity as defined 
in 5 U.S.C. 601(6) and provides that the application shall include a 
statement of the applicant's annual receipts or number of employees, as 
appropriate, where the applicant seeks eligibility based on being a 
small business. Section 2704.203(b) also requires a brief description 
of the type and purpose of the applicant's organization or business. 
Because the EAJA amendments rely on the SBA's definition of ``small 
business concern,'' and because the SBA has defined small business 
concerns engaged in mining in terms of annual receipts or number of 
employees and has set forth its methodology for calculating the annual 
receipts or number of employees (13 CFR 121.104 and 121.106), the 
Commission intends that parties be guided by those regulations in 
meeting the SBA's standards of annual receipts or number of employees 
to qualify as a ``small business.''
    Present Sec. 2704.204 is redesignated as Sec. 2704.206. The new 
Sec. 2704.204 is a redesignation of Sec. 2704.202(b). The Commission 
has revised the language of the rule to regulate the public disclosure 
of financial information in the annual receipts exhibits under the new 
EAJA standard for recovery, in addition to the present coverage of net 
worth exhibits.
    Section 2704.205 is a redesignation of present Sec. 2704.203. The 
Commission did not propose to revise the content of the rule. However, 
one commenter suggested several modifications to the rule. It was 
recommended that the rule specify that the applicant file with its 
application a statement that it actually paid the fees to preclude an 
application when a mine operator or other ineligible party has paid the 
fees. The commenter further requested that an applicant be required to 
segregate out fees and expenses related to that application when there 
are multiple positions and parties. We agree with the commenter's 
concern that there must be an adequate segregation of claims and fees 
when there are multiple claims and issues present. However, we believe 
that the rules adequately address the problem. See Secs. 2704.105(a), 
(b), 2704.202(a), and 2704.203(a). We also conclude that Sec. 2704.205, 
as presently drafted, is adequate to ensure that the applicant has 
actually paid the expenses and fees claimed. (``The administrative law 
judge may require the applicant to provide vouchers, receipts, or other 
substantiation for any expenses claimed.''). See also Sec. 2704.104(e) 
(barring recovery of fees and expenses by an applicant who appears in a 
Commission EAJA proceeding on behalf of an entity that is ineligible). 
Accordingly, we have not adopted the suggested revisions.
    Section 2704.206 is a redesignation of present Sec. 2704.204. As 
proposed, paragraph (a) adds new language to provide for an 
application, as required by the EAJA amendments, when a demand by the 
Secretary is substantially in excess of the decision in the case and 
unreasonable. In addition, language has been added to provide for the 
filing of EAJA applications with the Commission 30 days after final 
disposition by a court in the event that an applicant wishes to file in 
light of the court's disposition. See Dole v. Phoenix Roofing, Inc., 
922 F.2d 1202,1206-07 (5th Cir. 1991). Cases that are remanded back to 
the Commission by the court of appeals, in which an applicant then 
becomes a prevailing party, are governed by the rule that an 
application must be filed no later than 30 days after the Commission's 
final disposition of the underlying proceeding.
    Section 2704.206(b), which specifies that an application for fees 
is stayed in the event that review or reconsideration of the merits 
decision is sought, adds language to include the new standard for 
recovery. Section 2704.206(c) is revised to delete an inadvertent 
reference to section 105(a) of the Mine Act, 30 U.S.C. 815(a), in the 
definition of final Commission dispositions in the present rule; in 
addition, references to Commission decisions in Secs. 2704.307 and 
2704.308 are deleted because those provisions pertain to decisions on 
EAJA applications, rather than decisions on the merits.
    The Commission is revising Sec. 2704.305 to eliminate the reference 
to ``prevailing'' party status because an EAJA award is no longer 
limited to proceedings involving a prevailing party but includes those 
proceedings in which the Secretary has made a substantially excessive 
and unreasonable demand. In addition, the Commission proposed to 
eliminate a portion of the present rule requiring Commission approval 
of some, but not all, settlement agreements that resolve EAJA claims. 
In response to the proposed rule, one commenter noted that no provision 
in the Mine Act or EAJA requires Commission approval of such 
settlements. We agree. Accordingly, the Commission is revising the 
present rule to require only that parties notify the Commission if a 
case settles, after an EAJA application is filed, in order that the 
Commission can properly maintain its docket.
    Because under the EAJA amendments, an EAJA award is no longer 
limited to

[[Page 63175]]

a prevailing party, the Commission proposed adding language to 
Sec. 2704.307 to provide for the issuance of written findings and 
conclusions addressing whether the applicant has been subjected to a 
substantially excessive and unreasonable demand. The proposed rule 
further delineated between the specific findings depending on whether 
the application was filed pursuant to Sec. 2704.105(a) (prevailing 
party) or (b) (excessive and unreasonable demand). The Commission 
received numerous comments to this rule and Sec. 2704.308, which 
governs Commission review of EAJA decisions issued by its judges. The 
comments addressed none of the proposed changes but rather addressed 
the provisions in Secs. 2704.307 and 2704.308, which reference 
Commission review of administrative law judge EAJA decisions. The 
commenters asserted that there is no provision for administrative 
review of decisions adverse to the government in EAJA or its 
amendments, nor was there mention of such review in its legislative 
history. Further, in the view of one commenter, such administrative 
review would have a ``chilling effect'' on the willingness of small 
businesses to challenge unreasonable actions of MSHA.
    The Commission has fully addressed this issue in Contractors Sand 
and Gravel, Inc., 20 FMSHRC 960, (Sept. 1998). As noted in that 
decision, provisions in EAJA and its legislative history support such 
administrative appellate review. Further, as we noted, such 
administrative review ensures a uniform body of caselaw in this area. 
None of the comments persuade us to change our view that the Commission 
should have the same ability to review judges' decisions on EAJA 
applications that it has with regard to judges' decisions under the 
Mine Act.
    Finally, the Commission is revising Sec. 2704.308(c) by eliminating 
the last two sentences of the present rule. The matter of when a 
Commission order can be appealed is beyond the scope of the 
Commission's rules and addressed by EAJA, 5 U.S.C. 504(c)(2), and 
federal rules of procedure. The finality of an unreviewed decision of 
an administrative law judge is addressed in Sec. 2704.307.

III. Matters of Regulatory Procedure

    The Commission has determined that these rules are not subject to 
Office of Management and Budget review under Executive Order 12866.
    The Commission has determined under the Regulatory Flexibility Act 
(5 U.S.C. 601-612) that these rules, if adopted, would not have a 
significant economic impact on a substantial number of small entities. 
Therefore, a Regulatory Flexibility Statement and Analysis has not been 
prepared.
    The Commission has determined that the Paperwork Reduction Act (44 
U.S.C. 3501 et seq.) does not apply because these rules do not contain 
any information collection requirements that require the approval of 
the Office of Management and Budget.

List of Subjects in 29 CFR Part 2704

    Administrative practice and procedure, Equal access to justice.
    For the reasons set out in the preamble, 29 CFR part 2704 is 
amended as follows:

PART 2704--IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN 
COMMISSION PROCEEDINGS

    1. The authority citation for part 2704 is revised to read as 
follows:

    Authority: (5 U.S.C. 504(c)(1); Pub. L. 99-80, 99 Stat. 183; 
Pub. L. 104-121, 110 Stat. 862.

Subpart A--General Provisions

    2. Section 2704.100 is revised to read as follows:


Sec. 2704.100  Purpose of these rules.

    The Equal Access to Justice 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 (called 
``adversary adjudications'') before this Commission. An eligible party 
may receive an award when it prevails over the Department of Labor, 
Mine Safety and Health Administration (MSHA), unless the Secretary of 
Labor's position in the proceeding was substantially justified or 
special circumstances make an award unjust. In addition to the 
foregoing ground of recovery, an eligible party may receive an award if 
the demand of the Secretary is substantially in excess of the decision 
of the Commission and unreasonable, unless the applicant party has 
committed a willful violation of law or otherwise acted in bad faith, 
or special circumstances make an award unjust. The rules in this part 
describe the parties eligible for each type of award. They also explain 
how to apply for awards, and the procedures and standards that this 
Commission will use to make the awards.
    3. Section 2704.102 is revised to read as follows:


Sec. 2704.102  Applicability.

    Section 2704.105(a) applies to adversary adjudications before the 
Commission pending or commenced on or after August 5, 1984. Section 
2704.105(b) applies to adversary adjudications commenced on or after 
March 29, 1996.
    4. Section 2704.104 is amended by revising paragraphs (b) through 
(e) and removing paragraphs (f) and (g) to read as follows:


Sec. 2704.104  Eligibility of applicants.

* * * * *
    (b) For purposes of awards under Sec. 2704.105(a) for prevailing 
parties:
    (1) 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;
    (2) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, 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 other 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 for 
purposes of this part unless the administrative law judge 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 administrative law judge may determine that 
financial relationships of the applicant other than those described in 
this paragraph constitute special circumstances that would make an 
award unjust.
    (3) An applicant who owns an unincorporated business will be 
considered as 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.
    (4) The types of eligible applicants are as follows:
    (i) An individual with a net worth of not more than $2 million;
    (ii) 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 employs not more than 500 employees;
    (iii) Any other partnership, corporation, association, unit of 
local government, or public or private organization with a net worth of 
not more than $7 million and not more than 500 employees.

[[Page 63176]]

    (c) For the purposes of awards under Sec. 2704.105(b), eligible 
applicants are small entities as defined in 5 U.S.C. 601, subject to 
the annual-receipts and number-of-employees standards as set forth by 
the Small Business Administration at 13 CFR Part 121.
    (d) For the purpose of eligibility, the net worth, number of 
employees, or annual receipts of an applicant, as applicable, shall be 
determined as of the date the underlying proceeding was initiated under 
the Mine Act.
    (e) 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.
    5. Section 2704.105 is revised as follows:


Sec. 2704.105  Standards for awards.

    (a) A prevailing applicant may receive an award of fees and 
expenses incurred in connection with a proceeding, or in a significant 
and discrete substantive portion of the proceeding, unless the position 
of the Secretary was substantially justified. The position of the 
Secretary includes, in addition to the position taken by the Secretary 
in the adversary adjudication, the action or failure to act by the 
Secretary upon which the adversary adjudication is based. The burden of 
proof that an award should not be made to a prevailing applicant 
because the Secretary's position was substantially justified is on the 
Secretary, who may avoid an award by showing that his position was 
reasonable in law and fact. An award will be reduced or denied if the 
applicant has unduly or unreasonably protracted the underlying 
proceeding or if special circumstances make the award unjust.
    (b) If the demand of the Secretary is substantially in excess of 
the decision of the Commission and is unreasonable when compared with 
such decision, under the facts and circumstances of the case, the 
Commission shall award to an eligible applicant the fees and expenses 
related to defending against the excessive demand, unless the applicant 
has committed a willful violation of law or otherwise acted in bad 
faith or special circumstances make an award unjust. The burden of 
proof is on the applicant to establish that the Secretary's demand was 
substantially in excess of the Commission's decision; the Secretary may 
avoid an award by establishing that the demand was not unreasonable 
when compared to that decision. As used in this section, ``demand'' 
means the express demand of the Secretary which led to the adversary 
adjudication, but does not include a recitation by the Secretary of the 
maximum statutory penalty--
    (1) In the administrative complaint, or
    (2) Elsewhere when accompanied by an express demand for a lesser 
amount.
    6. Section 2704.106 is revised to read as follows:


Sec. 2704.106  Allowable fees and expenses.

* * * * *
    (b) No award for the fee of an attorney or agent under this part 
may exceed $125 per hour, except as provided in Sec. 2704.107. No award 
to compensate an expert witness may exceed the highest rate at which 
the Secretary of Labor pays expert witnesses. 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.
* * * * *
    7. Section 2704.107(a) is revised to read as follows:


Sec. 2704.107  Rulemaking on maximum rates for attorney's fees.

    (a) If warranted by an increase in the cost of living or by special 
circumstances (such as limited availability of attorneys qualified to 
handle certain types of proceedings), attorney's fees may be awarded at 
a rate higher than $125 per hour. Any such increase in the rate for 
attorney's fees will be made only upon a petition submitted by the 
applicant, pursuant to Sec. 2704.201, and only if the administrative 
law judge determines, in his or her discretion, that it is justified. 
Any such adjustment in fees is subject to Commission review as 
specified in Sec. 2704.308.
* * * * *
    8. Section 2704.108 is revised to read as follows:


Sec. 2704.108  Awards.

    If an applicant is entitled to an award under Sec. 2704.105(a) or 
(b), the award shall be made by the Commission against the Department 
of Labor.
    9. Subpart B is revised to read as follows:

Subpart B--Information Required From Applicants

Sec.
2704.201  Contents of application--in general.
2704.202  Contents of application--where the applicant has 
prevailed.
2704.203  Contents of application--where the Secretary's demand is 
substantially in excess of the judgment finally obtained and 
unreasonable.
2704.204  Confidential financial information.
2704.205  Documentation of fees and expenses.
2704.206  When an application may be filed.

Subpart B--Information Required From Applicants


Sec. 2704.201  Contents of application--in general.

    (a) An application for an award of fees and expenses under the Act 
shall be made to the Chief Administrative Law Judge of the Commission 
at 1730 K Street NW, 6th Floor, Washington, DC 20006. The application 
shall identify the applicant and the underlying proceeding for which an 
award is sought.
    (b) The application shall state the amount of fees and expenses for 
which an award is sought. The application may also include a request 
that attorney's fees be awarded at a rate higher than $125 per hour 
because of an increase in the cost of living or other special factors.
    (c) The application may also include any other matters that the 
applicant wishes the Commission to consider in determining whether and 
in what amount an award should be made.
    (d) The application should be signed by the applicant or an 
authorized officer or attorney of the applicant. It shall also 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.
    (e) Upon receipt of an application, the Chief Administrative Law 
Judge shall immediately assign it for disposition to the administrative 
law judge who presided over the underlying Mine Act proceeding.


Sec. 2704.202  Contents of application--where the applicant has 
prevailed.

    (a) An application for an award under Sec. 2704.105(a) shall show 
that the applicant has prevailed in a significant and discrete 
substantive portion of the underlying proceeding and identify the 
position of the Department of Labor in the proceeding that the 
applicant alleges was not substantially justified. Unless the applicant 
is an individual, the application shall also state the number of 
employees of the applicant and describe briefly the type and purpose of 
its organization or business.
    (b) The application also shall include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants including their affiliates, as 
described in Sec. 2704.104(b)(2) of this part).
    (c) Each applicant must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
described in

[[Page 63177]]

Sec. 2704.104(b)(2) of this part) when the underlying 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 part. The 
administrative law judge may require an applicant to file additional 
information to determine its eligibility for an award.


Sec. 2704.203  Contents of application--where the Secretary's demand is 
substantially in excess of the judgment finally obtained and 
unreasonable.

    (a) An application for an award under Sec. 2704.105(b) shall show 
that the Secretary's demand is substantially in excess of the decision 
of the Commission; the application shall further allege that the 
Secretary's demand is unreasonable when compared with the Commission's 
decision.
    (b) The application shall show that the applicant is a small entity 
as defined in 5 U.S.C. 601(6), and the application must conform to the 
standards of the Small Business Administration at 13 CFR 121.201 for 
mining entities. The application shall include a statement of the 
applicant's annual receipts or number of employees, as applicable, in 
conformance with the requirements of 13 CFR 121.104 and 121.106. The 
application shall describe briefly the type and purpose of its 
organization or business.


Sec. 2704.204  Confidential financial information.

    Ordinarily, the net-worth and annual-receipts exhibits will be 
included in the public record of the proceeding. However, an applicant 
that objects to public disclosure of information in any portion of such 
exhibits and believes there are legal grounds for withholding the 
information from disclosure may submit that portion of the exhibit 
directly to the administrative law judge 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. 
552(b)(1)-(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 counsel 
representing the Secretary of Labor against whom the applicant seeks an 
award, but need not be served on any other party to the proceeding. If 
the administrative law judge 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 disposed of in accordance with the established procedures 
under the Freedom of Information Act (29 CFR part 2702).


Sec. 2704.205  Documentation of fees and expenses.

    The application shall be accompanied by full documentation of the 
fees and expenses, including the cost of any study, analysis, 
engineering report, test, project or similar matter, for which an award 
is sought. 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 underlying 
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 administrative law judge may 
require the applicant to provide vouchers, receipts, or other 
substantiation for any expenses claimed.


Sec. 2704.206  When an application may be filed.

    (a) An application may be filed whenever the applicant has 
prevailed in the underlying proceeding or in a significant and discrete 
substantive portion of that proceeding. An application may also be 
filed when a demand by the Secretary is substantially in excess of the 
decision of the Commission and is unreasonable when compared with such 
decision. In no case may an application be filed later than 30 days 
after the Commission's final disposition of the underlying proceeding, 
or 30 days after issuance of a court judgment that is final and 
nonappealable in any Commission adjudication that has been appealed 
pursuant to section 106 of the Mine Act, 30 U.S.C. 816.
    (b) If review or reconsideration is sought or taken of a decision 
on the merits as to which an applicant has prevailed or has been 
subjected to a demand from the Secretary substantially in excess of the 
decision of the Commission and unreasonable when compared to that 
decision, proceedings for the award of fees shall be stayed pending 
final disposition of the underlying controversy.
    (c) For purposes of this part, final disposition before the 
Commission means the date on which a decision in the underlying 
proceeding on the merits becomes final under sections 105(d) and 113(d) 
of the Mine Act (30 U.S.C. 815(d), 823(d)).

Subpart C--Procedures for Considering Applications

    10. Section 2704.305 is revised to read as follows:


Sec. 2704.305  Settlement.

    In the event that counsel for the Secretary and an applicant agree 
to settle an EAJA claim after an application has been filed with the 
Commission, the applicant shall timely notify the Commission of the 
settlement and request dismissal of the application.
    11. Section 2704.307 is revised to read as follows:


Sec. 2704.307  Decision of administrative law judge.

    The administrative law judge shall issue an initial decision on the 
application within 75 days after completion of proceedings on the 
application. In all decisions on applications, the administrative law 
judge shall include written findings and conclusions on the applicant's 
eligibility, and an explanation of the reasons for any difference 
between the amount requested and the amount awarded. As to applications 
filed pursuant to Sec. 2704.105(a), the administrative law judge shall 
also include findings on the applicant's status as a prevailing party 
and whether the position of the Secretary was substantially justified; 
if at issue, the judge shall also make findings on whether the 
applicant unduly protracted or delayed the underlying proceeding or 
whether special circumstances make the award unjust. As to applications 
filed pursuant to Sec. 2704.105(b), the administrative law judge shall 
include findings on whether the Secretary made a demand that is 
substantially in excess of the decision of the Commission and 
unreasonable when compared with that decision; if at issue, the judge 
shall also make findings on whether the applicant has committed a 
willful violation of the law or otherwise acted in bad faith or whether 
special circumstances make the award unjust. Under either paragraph, 
the decision shall include, if at issue, detailed findings and 
conclusions on whether an increase in the cost of living or any other 
special factor justifies a higher fee than the $125 per hour fee set 
forth in

[[Page 63178]]

the statute. The initial decision by the administrative law judge shall 
become final 40 days after its issuance unless review by the Commission 
is ordered under Sec. 2704.308 of this part.
    12. Section 2704.308(c) is revised to read as follows:


Sec. 2704.308  Commission review.

* * * * *
    (c) If review of the initial decision of the administrative law 
judge is granted by the Commission, the Commission shall, after 
allowing opportunity for presentation of views by opposing parties, 
review the case and issue its own order affirming, modifying or 
vacating in whole or in part the initial decision or directing other 
appropriate relief.

    Issued this 30th day of October, 1998 at Washington, D.C.
Mary Lu Jordan,
Chairman, Federal Mine Safety and Health Review Commission.
[FR Doc. 98-29680 Filed 11-10-98; 8:45 am]
BILLING CODE 6735-01-P