I 

108TH CONGRESS 

1ST SESSION H. R. 2204

To amend the provisions of titles 5 and 28, United States Code, relating 

to equal access to justice, award of reasonable costs and fees, and 

administrative settlement offers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2003

Mr. MANZULLO introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each 

case for consideration of such provisions as fall within the jurisdiction of 

the committee concerned 

A BILL

To amend the provisions of titles 5 and 28, United States 

Code, relating to equal access to justice, award of reasonable costs and fees, and administrative settlement offers, 

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Equal Access to Jus5 tice Reform Act of 2003’’. 

6 SEC. 2. FINDINGS AND STATEMENT OF PURPOSE. 

7 (a) FINDINGS.—The Congress finds that—
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1 (1) the Equal Access to Justice Act (Public 

2 Law 96–481; 94 Stat. 2325 et seq.) (in this section 

3 referred to as ‘‘EAJA’’) was intended to make the 

4 justice system more accessible to individuals of mod5 est means, small businesses, and nonprofit organiza6 tions (in this section collectively referred to as 

7 ‘‘small parties’’) through limited recovery of their at8 torneys fees when they prevail in disputes with the 

9 Federal Government; 

10 (2) although EAJA has succeeded, at modest 

11 cost, in improving access to the justice system for 

12 small parties, EAJA retains formidable barriers to 

13 attorneys’ fees recovery (even for small parties that 

14 completely prevail against the Government), as well 

15 as inefficient and costly mechanisms for determining 

16 the fees recovery; 

17 (3) among the barriers retained by EAJA are—

18 (A) EAJA’s ‘‘substantial justification de19 fense’’, whereby the Government can deny at20 torneys’ fees recovery to prevailing small parties 

21 if the Government can show that its position, 

22 although proven illegal, was not abusive or en23 tirely unreasonable; 

24 (B) EAJA’s hourly rate cap on attorneys’ 

25 fees of $125, which is well below the market 
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1 rate for competent legal services in many legal 

2 markets (especially for complex and high-risk 

3 litigation against the Federal Government) and 

4 thus prevents fair reimbursement of attorneys’ 

5 fees for small parties and discourages com6 petent counsel from undertaking meritorious 

7 cases on a contingency or reduced-fee basis; and 

8 (C) EAJA’s outdated small business eligi9 bility requirements, which have not increased or 

10 indexed for inflation the net worth threshold of 

11 $7,000,000 established in 1985; 

12 (4) among the inefficiencies retained by EAJA 

13 are—

14 (A) EAJA’s substantial justification de15 fense, which initiates collateral litigation over 

16 attorneys’ fees recovery that both consumes sig17 nificant Federal resources and prolongs the 

18 time, expense, and risk of pursuing fees recov19 ery to the prevailing small party; 

20 (B) EAJA’s omission of any mechanism 

21 (such as the offer in compromise feature of 

22 Federal Rule of Civil Procedure 68) that would 

23 apply after a small party has prevailed on the 

24 merits of its claim to encourage both sides to 
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1 reach a prompt and reasonable settlement of at2 torneys’ fees; 

3 (C) EAJA’s failure to create an edu4 cational and technical assistance function with5 in an appropriate agency to facilitate more effi6 cient use, settlement, and payment of claims 

7 under EAJA; and 

8 (D) EAJA’s failure to reassign congres9 sional reporting obligations to an appropriate, 

10 existing agency (EAJA lodges annual congres11 sional reporting with the Administrative Con12 ference of the United States, an agency which 

13 ceased to exist in 1995); 

14 (5) none of these barriers or inefficiencies exists 

15 in the primary Federal fee-shifting statute applicable 

16 to State and local governments, Revised Statutes 

17 section 722 (42 U.S.C. 1988(b)), resulting in—

18 (A) an unequal level of accountability to 

19 Federal law among governments in the United 

20 States (shielding the Federal Government to a 

21 greater degree than State and local govern22 ments from the consequences of violating Fed23 eral law); 

24 (B) an uneven playing field for small party 

25 victims of Federal law violations (discouraging 
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1 resistance to illegal action by the Federal Gov2 ernment); and 

3 (C) an inefficient use of Federal agency re4 sources (burdening the Federal budget); 

5 (6) a further barrier and inefficiency is the 

6 practice of Federal agencies of paying their EAJA 

7 liabilities from the General Treasury rather than 

8 their own agency budgets, relieving those agencies of 

9 the financial consequences of their misconduct (i.e., 

10 EAJA liability) and burdening the Federal budget 

11 unnecessarily; 

12 (7) it is in the national interest to remove these 

13 barriers and inefficiencies for small parties, particu14 larly small business owners, involved in disputes with 

15 the Federal Government in order to develop sound 

16 policies relative to the national economy in which 

17 small businesses play a significant and strategic role; 

18 and 

19 (8) the removal of these barriers and inefficien20 cies is essential to—

21 (A) equalize the level of accountability to 

22 Federal law among governments in the United 

23 States;
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1 (B) discourage marginal or abusive Fed2 eral enforcement actions directed at small par3 ties; 

4 (C) stop the practice of paying EAJA li5 abilities from the General Treasury, which has 

6 insulated agencies from the financial con7 sequences of their misconduct and burdened the 

8 Federal budget unnecessarily; 

9 (D) refine and improve Federal policies 

10 through adjudication; 

11 (E) promote a fair and cost-effective proc12 ess for prompt settlement and payment of at13 torneys’ fees claims; and 

14 (F) provide a fairer opportunity for full 

15 participation by small businesses in the free en16 terprise system, further increasing the economic 

17 vitality of the Nation.

18 (b) PURPOSE.—It is, therefore, the purpose of this 

19 Act to remove existing barriers and inefficiencies in EAJA 

20 in order to—

21 (1) equalize the level of accountability to Fed22 eral law among governments in the United States; 

23 (2) discourage marginal or abusive Federal en24 forcement actions directed at small parties; 
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1 (3) stop the practice of paying EAJA liabilities 

2 from the General Treasury, which has insulated 

3 agencies from the financial consequences of their 

4 misconduct and burdened the Federal budget unnec5 essarily; 

6 (4) refine and improve Federal policies through 

7 adjudication; 

8 (5) promote a fair and cost-effective process for 

9 prompt settlement and payment of attorneys’ fees 

10 claims; and 

11 (6) provide a fairer opportunity for full partici12 pation by small businesses in the free enterprise sys13 tem, further increasing the economic vitality of the 

14 Nation. 

15 (c) COMPLIANCE.—In complying with the statement 

16 of congressional policy expressed in this section, each Fed17 eral agency, to the maximum extent practicable, should—

18 (1) avoid unjustified enforcement actions di19 rected at small parties covered by EAJA; 

20 (2) alleviate unnecessary burdens of compliance 

21 with justified enforcement actions directed at small 

22 parties covered by EAJA; and 

23 (3) minimize impediments to prompt resolution 

24 and payment of reasonable attorneys’ fees to pre25 vailing small parties covered by EAJA. 
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1 SEC. 3. REPORTING AND TECHNICAL ASSISTANCE BY OF2 FICE OF ADVOCACY. 

3 (a) FUNCTIONS OF OFFICE OF ADVOCACY.—Section 

4 202 of Public Law 94–305 (15 U.S.C. 634b) is amend5 ed—

6 (1) in paragraph (3), by inserting before the 

7 semicolon at the end the following: ‘‘and for ensur8 ing that the justice system remains accessible to 

9 small businesses for the resolution of disputes with 

10 the Federal Government;’’; and 

11 (2) by striking paragraph (11) and inserting 

12 the following: 

13 ‘‘(11) advise, cooperate with, and consult with 

14 the President and Attorney General with respect to 

15 section 303(b) of the Small Business Economic Pol16 icy Act of 1980 (15 U.S.C. 631b(b)) and section 

17 504(e) of title 5, United States Code; and’’. 

18 (b) DUTIES OF OFFICE OF ADVOCACY.—Section 203 

19 of Public Law 94–305 (15 U.S.C. 634c) is amended—

20 (1) in paragraph (2), by inserting before the 

21 semicolon at the end the following: ‘‘, including the 

22 resolution of disputes with the Federal Government 

23 and the role of procedures established by the Equal 

24 Access to Justice Act (Public Law 96–481; 94 Stat. 

25 2325) in such disputes’’; and 
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1 (2) in paragraph (3), by inserting after ‘‘the 

2 Small Business Act’’ the following: ‘‘, including 

3 those related to the Equal Access to Justice Act,’’. 

4 (c) REPORTS TO CONGRESS.—

5 (1) IN GENERAL.—Not later than 180 days 

6 after the date of the enactment of this Act, the At7 torney General, in cooperation with the Chief Coun8 sel for Advocacy of the Small Business Administra9 tion, shall transmit to the congressional committees 

10 specified in paragraph (2) a report containing—

11 (A) an analysis of the effectiveness of the 

12 Equal Access to Justice Act (Public Law 96–

13 481; 94 Stat. 2325) (in this paragraph referred 

14 to as ‘‘EAJA’’) in achieving its purpose to ease 

15 the burden upon small businesses and other 

16 small parties covered by EAJA of engaging in 

17 dispute resolution with the Federal Govern18 ment, including— 

19 (i) the relative awareness of EAJA in 

20 the small business community; 

21 (ii) the relative awareness of EAJA’s 

22 requirements among Federal agencies; 

23 (iii) the extent and quality of rules 

24 and regulations adopted by each Federal 
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1 agency for processing, resolving, and pay2 ing attorneys’ fees claims under EAJA; 

3 (iv) the extent to which each Federal 

4 agency claims any exemptions in whole or 

5 in part from EAJA’s coverage; 

6 (v) the frequency or degree of use of 

7 EAJA’s procedures by prevailing small 

8 businesses; and 

9 (vi) an analysis of the costs and bene10 fits of EAJA generally; 

11 (B) an analysis of the variations in the fre12 quency and amounts of fee awards paid by spe13 cific Federal agencies and within specific Fed14 eral circuits and districts under section 504 of 

15 title 5, United States Code, and section 2412 of 

16 title 28, United States Code, including the 

17 number and total dollar amount of all claims 

18 filed with, and all claims processed, settled, liti19 gated, and paid by, each agency under EAJA; 

20 and 

21 (C) recommendations for congressional 

22 oversight or legislative changes with respect to 

23 EAJA, including any recommendations for pro24 mulgation or amendment of regulations issued 

25 under EAJA by specific Federal agencies.
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1 (2) SPECIFIED COMMITTEES.—The congres2 sional committees referred to in paragraph (1) are 

3 the following: 

4 (A) The Committee on the Judiciary and 

5 the Committee on Small Business of the House 

6 of Representatives. 

7 (B) The Committee on the Judiciary and 

8 the Committee on Small Business and Entre9 preneurship of the Senate. 

10 (3) REPORT ON SMALL BUSINESS AND COM11 PETITION.—Section 303 of the Small Business Eco12 nomic Policy Act of 1980 (15 U.S.C. 631b) is 

13 amended—

14 (A) in subsection (a) by striking paragraph 

15 (5) and inserting the following: 

16 ‘‘(5) recommend a program for carrying out the 

17 policy declared in section 302 (including a policy to 

18 ensure that the justice system remains accessible to 

19 small business enterprises for the resolution of dis20 putes with the Federal Government), together with 

21 such recommendations for legislation as the Presi22 dent may deem necessary or desirable.’’; 

23 (B) in subsection (b)—

24 (i) by striking ‘‘(b)’’ and inserting 

25 ‘‘(b)(1)’’; and 
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1 (ii) by adding at the end the fol2 lowing: 

3 ‘‘(2) The President, after consultation with the Chief 

4 Counsel for Advocacy of the Small Business Administra5 tion and the Attorney General, shall transmit simulta6 neously as an appendix to such annual report, a report 

7 that describes, by agency and department—

8 ‘‘(A) the total number of claims filed, proc9 essed, settled, and litigated by small business con10 cerns under section 504 of title 5, United States 

11 Code, and section 2412 of title 28, United States 

12 Code (originally enacted pursuant to the Equal Ac13 cess to Justice Act (Public Law 96–481; 94 Stat. 

14 2325)); 

15 ‘‘(B) the total dollar amount of all outstanding 

16 awards and settlements to small business concerns 

17 under such sections; 

18 ‘‘(C) the total dollar amount of all claims paid 

19 to small business concerns under such sections; 

20 ‘‘(D) the underlying legal claims involved in 

21 each controversy with small business concerns under 

22 such sections; and 

23 ‘‘(E) any other relevant information that the 

24 President determines may aid Congress in evalu-
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1 ating the impact on small business concerns of such 

2 sections. 

3 ‘‘(3) Each agency shall provide the President with 

4 such information as is necessary for the President to com5 ply with the requirements of this subsection.’’; and 

6 (C) in subsection (d)—

7 (i) by striking ‘‘(d)’’ and inserting 

8 ‘‘(d)(1)’’; and 

9 (ii) by adding at the end the fol10 lowing: 

11 ‘‘(2) All reports concerning the Equal Access to Jus12 tice Act (Public Law 96–481; 94 Stat. 2325), or the con13 gressional policy to ensure that the justice system remains 

14 accessible to small business enterprises for the resolution 

15 of disputes with the Federal Government, shall be trans16 mitted to the following congressional committees: 

17 ‘‘(A) The Committee on the Judiciary and the 

18 Committee on Small Business of the House of Rep19 resentatives. 

20 ‘‘(B) The Committee on the Judiciary and the 

21 Committee on Small Business and Entrepreneurship 

22 of the Senate.’’. 
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1 SEC. 4. EQUAL ACCESS FOR SMALL PARTIES IN CIVIL AND 

2 ADMINISTRATIVE PROCEEDINGS. 

3 (a) ELIMINATION OF SUBSTANTIAL JUSTIFICATION

4 STANDARD.—

5 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

6 504 of title 5, United States Code, is amended—

7 (A) in subsection (a)(1), by striking ‘‘, un8 less the adjudicative officer’’ and all that fol9 lows through the period at the end and insert10 ing a period; and 

11 (B) in subsection (a)(2), by striking ‘‘The 

12 party shall also allege that the position of the 

13 agency was not substantially justified.’’. 

14 (2) JUDICIAL PROCEEDINGS.—Section 2412 of 

15 title 28, United States Code, is amended—

16 (A) in subsection (d)(1)(A), by striking

17 ‘‘, unless the court’’ and all that follows 

18 through the period at the end and inserting a 

19 period; 

20 (B) in subsection (d)(1)(B), by striking 

21 ‘‘The party shall also allege’’ and all that fol22 lows through the period at the end and insert23 ing a period; and 

24 (C) in subsection (d)(3), by striking ‘‘, un25 less the court’’ and all that follows through the 

26 period at the end and inserting a period. 
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1 (b) ELIGIBILITY OF SMALL BUSINESSES FOR FEE

2 AWARD.—

3 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

4 504(b)(1)(B)(ii) of title 5, United States Code, is 

5 amended by striking ‘‘$7,000,000’’ and inserting 

6 ‘‘$10,000,000’’. 

7 (2) JUDICIAL PROCEEDINGS.—Section 

8 2412(d)(2)(B)(ii) of title 28, United States Code, is 

9 amended by striking ‘‘$7,000,000’’ and inserting 

10 ‘‘$10,000,000’’. 

11 (c) ELIMINATION OF RATE CAP.—

12 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

13 504(b)(1)(A) of title 5, United States Code, is 

14 amended—

15 (A) by striking ‘‘(i)’’; and 

16 (B) by striking ‘‘by the agency involved’’ 

17 and all that follows through ‘‘a higher fee’’ and 

18 inserting ‘‘by the agency involved’’. 

19 (2) JUDICIAL PROCEEDINGS.—Section 

20 2412(d)(2)(A) of title 28, United States Code, is 

21 amended—

22 (A) by striking ‘‘(i)’’; and 

23 (B) by striking ‘‘by the United States’’ and 

24 all that follows through ‘‘a higher fee’’ and in25 serting ‘‘by the United States’’.
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1 (d) OFFERS OF SETTLEMENT.—

2 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

3 504(a) of title 5, United States Code, as amended 

4 by this section, is further amended by adding at the 

5 end the following: 

6 ‘‘(5)(A) At any time after an agency receives an ap7 plication submitted under paragraph (2), the agency may 

8 serve upon the applicant a written offer of settlement of 

9 the claims made in the application. If within 10 business 

10 days after such service the applicant serves written notice 

11 that the offer is accepted, either the agency or the appli12 cant may then file the offer and notice of acceptance to13 gether with proof of service thereof. 

14 ‘‘(B) An offer not accepted within the time allowed 

15 shall be deemed withdrawn. The fact that an offer is made 

16 but not accepted shall not preclude a subsequent offer. If 

17 any award of fees and expenses for the merits of the pro18 ceeding finally obtained by the applicant is not more favor19 able than the offer, the applicant shall not be entitled to 

20 receive an award for fees or other expenses incurred (in 

21 relation to the application for fees and expenses) after the 

22 date of the offer.’’. 

23 (2) JUDICIAL PROCEEDINGS.—Section 

24 2412(d)(1) of title 28, United States Code, as 
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1 amended by this section, is further amended by add2 ing at the end the following: 

3 ‘‘(E)(i) At any time after an agency receives an appli4 cation submitted under subparagraph (B), the agency may 

5 serve upon the applicant a written offer of settlement of 

6 the claims made in the application. If within 10 business 

7 days after such service the applicant serves written notice 

8 that the offer is accepted, either the agency or the appli9 cant may then file the offer and notice of acceptance to10 gether with proof of service thereof. 

11 ‘‘(ii) An offer not accepted within the time allowed 

12 shall be deemed withdrawn. The fact that an offer is made 

13 but not accepted shall not preclude a subsequent offer. If 

14 any award of fees and expenses for the merits of the pro15 ceeding finally obtained by the applicant is not more favor16 able than the offer, the applicant shall not be entitled to 

17 receive an award for fees or other expenses incurred (in 

18 relation to the application for fees and expenses) after the 

19 date of the offer.’’. 

20 (e) DECLARATION OF INTENT TO SEEK FEE

21 AWARD.—

22 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

23 504(a)(2) of title 5, United States Code, as amended 

24 by this section, is further amended by inserting be25 fore the first sentence the following: ‘‘At any time 
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1 after the commencement of an adversary adjudica2 tion, the adjudicative officer may (and if requested 

3 by a party shall) require a party to declare whether 

4 such party intends to seek an award of fees and ex5 penses against the agency should such party pre6 vail.’’. 

7 (2) JUDICIAL PROCEEDINGS.—Section 

8 2412(d)(1)(B) of title 28, United States Code, as 

9 amended by this section, is further amended by in10 serting before the first sentence the following: ‘‘At 

11 any time after the commencement of an adversary 

12 adjudication, as defined in subsection (b)(1)(C) of 

13 section 504 of title 5, United States Code, the court 

14 may (and if requested by a party shall) require a 

15 party to declare whether such party intends to seek 

16 an award of fees and expenses against the agency 

17 should such party prevail.’’. 

18 (f) PAYMENT OF ATTORNEYS’ FEES FROM AGENCY

19 APPROPRIATIONS.—

20 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

21 504(d) of title 5, United States Code, is amended—

22 (A) by striking ‘‘subsection’’ and inserting 

23 ‘‘section’’; and 

24 (B) by adding at the end the following: 

25 ‘‘Fees and expenses awarded under this section 
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1 may not be paid from the claims and judgments 

2 account of the Treasury from funds appro3 priated pursuant to section 1304 of title 31.’’. 

4 (2) JUDICIAL PROCEEDINGS.—Section 

5 2412(d)(4) of title 28, United States Code, is 

6 amended by adding at the end the following: ‘‘Fees 

7 and expenses awarded under this subsection may not 

8 be paid from the claims and judgments account of 

9 the Treasury from funds appropriated pursuant to 

10 section 1304 of title 31.’’. 

11 (g) ELIGIBILITY OF TAXPAYERS FOR FEE AWARD.—

12 (1) ADMINISTRATIVE PROCEEDINGS.—Section 

13 504 of title 5, United States Code, as amended by 

14 this section, is further amended by striking sub15 section (f). 

16 (2) JUDICIAL PROCEEDINGS.—Section 2412 of 

17 title 28, United States Code, as amended by this 

18 section, is further amended by striking subsection 

19 (e) and redesignating subsection (f) as subsection 

20 (e). 

21 (h) CONFORMING AMENDMENT RELATING TO RE22 PORTING REQUIREMENT UNDER SMALL BUSINESS

23 ACT.—Section 504(e) of title 5, United States Code, is 

24 amended to read as follows:
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1 ‘‘(e)(1) The Attorney General, after consultation with 

2 the Chief Counsel for Advocacy of the Small Business Ad3 ministration, shall report annually to the Congress on the 

4 amount of fees and other expenses awarded to individuals 

5 during the preceding fiscal year pursuant to this section 

6 and section 2412 of title 28. The report shall describe the 

7 number, nature, and amount of the awards, the claims in8 volved in the controversy, and any other relevant informa9 tion which may aid the Congress in evaluating the scope 

10 and impact of such awards for individuals engaged in dis11 putes with Federal agencies. Each agency shall provide the 

12 Attorney General with such information as is necessary 

13 for the Attorney General to comply with the requirements 

14 of this subsection. 

15 ‘‘(2) A requirement that the President report annu16 ally on proceedings affecting small business concerns 

17 under this section and under section 2412 of title 28 is 

18 provided in section 303(b) of the Small Business Eco19 nomic Policy Act of 1980 (15 U.S.C. 631b(b)).’’. 

20 (i) APPLICABILITY.—The provisions of this section 

21 and the amendments made by this section shall apply to 

22 any proceeding pending on, or commenced on or after, the 

23 effective date of this Act. 
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1 SEC. 5. DEFINITION OF PREVAILING PARTY IN EAJA CASES. 

2 (a) TITLE 5.—Section 504(b)(1) of title 5, United 

3 States Code, is amended by adding at the end the fol4 lowing new paragraph: 

5 ‘‘(G) ‘prevailing party’ includes, in addition to 

6 a party who prevails through a judicial or adminis7 trative judgment or order, a party whose pursuit of 

8 a nonfrivolous claim or defense was a catalyst for a 

9 voluntary or unilateral change in position by the op10 posing party that provides any significant part of 

11 the relief sought.’’. 

12 (b) TITLE 28.—Section 2412 of title 28, United 

13 States Code, is amended—

14 (1) in subsection (d)(2)(H), by inserting after 

15 ‘‘means’’ the following: ‘‘, subject to subsection 

16 (g),’’; and 

17 (2) by adding at the end the following new sub18 section: 

19 ‘‘(g) For the purposes of this section, the term ‘pre20 vailing party’ includes, in addition to a party who prevails 

21 through a judicial or administrative judgment or order, 

22 a party whose pursuit of a nonfrivolous claim or defense 

23 was a catalyst for a voluntary or unilateral change in posi24 tion by the opposing party that provides any significant 

25 part of the relief sought.’’. 
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1 SEC. 6. EFFECTIVE DATE. 

2 The provisions of this Act and the amendments made 

3 by this Act shall take effect 30 days after the date of the 

4 enactment of this Act.

Æ