[Federal Register Volume 63, Number 128 (Monday, July 6, 1998)]
[Rules and Regulations]
[Pages 36339-36344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17803]


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FEDERAL TRADE COMMISSION

16 CFR Parts 0, 1, and 3


Organization, General Procedures, Rules of Practice for 
Adjudicative Proceedings

AGENCY: Federal Trade Commission (FTC).

ACTION: Final rule.

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SUMMARY: The Commission is revising its Rules of Practice to 
incorporate statutory requirements of the Small Business Regulatory 
Enforcement Fairness Act concerning congressional review of certain 
agency rules and publication of small entity guides for certain rules.
    The revised rules also reflect statutory amendments to the Equal 
Access to Justice Act as well as technical and interpretive 
nonsubstantive changes to the rules governing claims under the Act.

EFFECTIVE DATES: These amendments are effective July 6, 1998.

FOR FURTHER INFORMATION CONTACT: Sandra M. Vidas, Attorney, (202) 326-
2456, Office of the General Counsel, FTC, Sixth Street & Pennsylvania 
Avenue, N.W., Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: The Commission is amending Parts 0, 1, and 3 
of its existing Rules of Practice to reflect the statutory provisions 
of the Small Business Regulatory Enforcement Fairness Act (SBREFA), 
Pub. L. 104-121, 110 Stat. 857 (1996) as that Act amends the 
Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., the 
Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, and the Equal 
Access to Justice Act (EAJA), 5 U.S.C. 504.
    The Commission is amending Part 1 by adding a new Subpart M 
reflecting SBREFA's requirements concerning the submission of 
information to Congress and the Comptroller General when the agency 
issues or amends a rule or industry guide, or formally adopts an 
interpretation or policy statement that constitutes a rule within the 
meaning of 5 U.S.C. 804(3). The amendments also reflect SBREFA's 
statutory requirements with respect to publication of small entity 
compliance guides, and add references to the RFA and Paperwork 
Reduction Act, (PRA), 44 U.S.C. 3501-3520, where appropriate.
    The Commission is revising its rules governing EAJA claims to 
reflect statutory amendments and to clarify certain provisions of the 
Commission's existing EAJA rules. These clarifying amendments provide, 
inter alia, additional information concerning filing time limits, 
procedures, and allowable expenses to assist persons eligible to file 
claims under the EAJA. The Commission is also amending Sec. 0.5 of its 
rules, ``Laws authorizing monetary claims,'' to include a reference to 
the EAJA and a new telephone contact number in the Office of the 
General Counsel.
    The Commission has determined that these rule amendments relate to 
agency practice or are interpretive in nature. Accordingly, they are 
not subject to the notice and comment requirements of the APA, 5 U.S.C. 
553(b)(A), or to the RFA, 5 U.S.C. 601-612.
    The submissions required by the amended rules with respect to 
claims under the EAJA, 5 U.S.C. 504, do not likely constitute ``the 
collection of information'' as that term is defined by the PRA. 
Submission of a claim for fees occurs in connection with an 
administrative proceeding with respect to a specific party and is 
therefore exempt from PRA coverage. 5 CFR 1320.4(a)(2). In the event 
that an EAJA claim is subject to the requirements of the PRA, the 
Commission has previously received clearance for Part 3, Subpart I, of 
the Rules of Practice, which specifies, inter alia, the documentation 
necessary to support an application for reimbursement under the EAJA, 
See 16 CFR 3.81-3.83 (OMB

[[Page 36340]]

Control Number 3084-0047, expiration date Sept. 30, 1998).

List of Subjects

16 CFR Part 0

    Organization and functions (Government agencies).

16 CFR Part 1

    Administrative practice and procedure.

16 CFR Part 3

    Administrative practice and procedure.

    For the reasons set forth in the preamble, the Federal Trade 
Commission amends Title 16, Chapter 1, Subchapter A, of the Code of 
Federal Regulations as follows:

PART 0--ORGANIZATION

    1. The authority for part 0 continues to read as follows:

    Authority: See 6(g), 38 Stat. 721 (15 U.S.C. 46); 80 Stat. 383 
as amended (5 U.S.C. 552).

    2. Section 0.5 is revised to read as follows:


Sec. 0.5  Laws authorizing monetary claims.

    The Commission is authorized to entertain monetary claims against 
it under three statutes. The Federal Tort Claims Act (28 U.S.C. 2671-
2680) provides that the United States will be liable for injury or loss 
of property or personal injury or death caused by the negligent or 
wrongful acts or omissions of its employees acting within the scope of 
their employment or office. The Military Personnel and Civilian 
Employees Claims Act of 1964 (31 U.S.C. 3701, 3721) authorizes the 
Commission to compensate employees' claims for damage to or loss of 
personal property incident to their service. The Equal Access to 
Justice Act (5 U.S.C. 504 and 28 U.S.C. 2412) provides that an eligible 
prevailing party other than the United States will be awarded fees and 
expenses incurred in connection with any adversary adjudicative and 
court proceeding, unless the adjudicative officer finds that the agency 
was substantially justified or that special circumstances make an award 
unjust. In addition, eligible parties, including certain small 
businesses, will be awarded fees and expenses incurred in defending 
against an agency demand that is substantially in excess of the final 
decision of the adjudicative officer and is unreasonable when compared 
with such decision under the facts and circumstances of the case, 
unless the adjudicative officer finds that the party has committed a 
willful violation of law or otherwise acted in bad faith, or special 
circumstances make an award unjust. Questions may be addressed to the 
Office of the General Counsel, (202) 326-2462.

PART 1--GENERAL PROCEDURES

    1. The authority for part 1 continues to read as follows:

    Authority: Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless otherwise 
noted.

Subpart B--Rules and Rulemaking Under Section 18(a)(1)(B) of the 
FTC Act

    2. The authority for Subpart B is revised to read as follows:

    Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; sec. 
212(a), Pub. L. 104-121, 110 Stat. 857 (5 U.S.C. 601 note).
    3. Section 1.11(b)(4) is revised to read as follows:


Sec. 1.11  Commencement of a rulemaking proceeding.

* * * * *
    (b) * * *
    (4) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, 
if applicable.
    4. In Sec. 1.14 paragraph (a)(2)(vi) is revised and paragraph 
(a)(3) is added to read as follows:


Sec. 1.14  Promulgation.

    (a) * * *
    (2) * * *
    (vi) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, 
if applicable.
    (3) Small entity compliance guide. For each rule for which the 
Commission must prepare a final regulatory flexibility analysis, the 
Commission will publish one or more guides to assist small entities in 
complying with the rule. Such guides will be designated as ``small 
entity compliance guides.''
* * * * *

Subpart C--Rules Promulgated Under Authority Other Than Section 
18(a)(1)(B) of the FTC Act

    1. The authority for Subpart C is added to read as follows:

    Authority: 15 U.S.C. 46; 5 U.S.C. 552; Sec. 212(a), Pub. L. 104-
121, 110 Stat. 857 (5 U.S.C. 601 note).

    2. Section 1.26 is amended by adding 3 sentences to the end of 
paragraph (d) to read as follows:


Sec. 1.26  Procedure.

* * * * *
    (d) Promulgation of rules or orders. * * * The Federal Register 
publication will contain the information required by the Paperwork 
Reduction Act, 44 U.S.C. 3501-3520, and the Regulatory Flexibility Act, 
5 U.S.C. 601-612, if applicable. For each rule for which the Commission 
must prepare a final regulatory flexibility analysis, the Commission 
will publish one or more guides to assist small entities in complying 
with the rule. Such guides will be designated as ``small entity 
compliance guides.''
* * * * *
    3. Subpart M, consisting of Sec. 1.99, is added to read as follows:

Subpart M--Submissions Under the Small Business Regulatory 
Enforcement Fairness Act

    Authority: 5 U.S.C. 801-804.


Sec. 1.99  Submission of rules, guides, interpretations, and policy 
statements to Congress and the Comptroller General.

    Whenever the Commission issues or substantively amends a rule or 
industry guide or formally adopts an interpretation or policy statement 
that constitutes a ``rule'' within the meaning of 5 U.S.C. 804(3), a 
copy of the final rule, guide, interpretation or statement, together 
with a concise description, the proposed effective date, and a 
statement of whether the rule, guide, interpretation or statement is a 
``major rule'' within the meaning of 5 U.S.C. 804(2), will be 
transmitted to each House of Congress and to the Comptroller General. 
The material transmitted to the Comptroller General will also include 
any additional relevant information required by 5 U.S.C. 801(a)(1)(B). 
This provision generally applies to rules issued or substantively 
amended pursuant to Secs. 1.14(c), 1.15(a), 1.19, or 1.26(d); industry 
guides issued pursuant to Sec. 1.6; interpretations and policy 
statements formally adopted by the Commission; and any rule of agency 
organization, practice or procedure that substantially affects the 
rights or obligations of non-agency parties.

PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS

    1. The authority for part 3 continues to read as follows:

    Authority: Section 6, 38 Stat. 721 (15 U.S.C. 46), unless 
otherwise noted.

    2. Subpart I is revised to read as follows:

[[Page 36341]]

Subpart I--Recovery of Awards Under the Equal Access to Justice Act in 
Commission Proceedings

3.81  General provisions.
3.82  Information required from applicants.
3.83  Procedures for considering applicants.

    Authority: 5 U.S.C. 504 and 5 U.S.C. 553(b).

Subpart I--Recovery of Awards Under the Equal Access to Justice Act 
in Commission Proceedings


Sec. 3.81  General provisions.

    (a.) Purpose of these rules. The Equal Access to Justice Act, 5 
U.S.C. 504 (called ``the Act'' in this subpart), provides for the award 
of attorney fees and other expenses to eligible individuals and 
entities who are parties to adversary adjudicative proceedings under 
part 3 of this title. The rules in this subpart describe the parties 
eligible for awards, how to apply for awards, and the procedures and 
standards that the Commission will use to make them.
    (1.) When an eligible party will receive an award. An eligible 
party will receive an award when:
    (i) It prevails in the adjudicative proceeding, unless the 
Commission's position in the proceeding was substantially justified or 
special circumstances make an award unjust. Whether or not the position 
of the agency was substantially justified will be determined on the 
basis of the administrative record as a whole that is made in the 
adversary proceeding for which fees and other expenses are sought; or
    (ii) The agency'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. 
``Demand'' means the express final demand made by the agency prior to 
initiation of the adversary adjudication, but does not include a 
recitation by the agency of the statutory penalty in the administrative 
complaint or elsewhere when accompanied by an express demand for a 
lesser amount.
    (b.) When the Act applies. (1) Section 504(a)(1) of the Act applies 
to any adversarial adjudicative proceeding pending before the 
Commission at any time after October 1, 1981. This includes proceedings 
begun before October 1, 1981, if final Commission action has not been 
taken before that date.
    (2) Section 504(a)(4) applies to any adversarial adjudicative 
proceeding pending before the Commission at any time on or after March 
29, 1996.
    (c) Proceedings covered. (1) The Act applies to all adjudicative 
proceedings under part 3 of the rules of practice as defined in 
Sec. 3.2, except hearings relating to the promulgation, amendment, or 
repeal of rules under the Fair Packaging and Labeling Act.
    (2) [Reserved]
    (d) Eligibility of applicants. (1) To be eligible for an award of 
attorney fees and other expenses under the Act, the applicant must be a 
party to the adjudicative proceeding in 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.
    (2) 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 not more than 500 employees;
    (iii) 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;
    (iv) 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;
    (v) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 
million and not more than 500 employees; and
    (vi) For purposes of receiving an award for fees and expenses for 
defending against an excessive Commission demand, any small entity, as 
that term is defined under 5 U.S.C. 601.
    (3) Eligibility of a party shall be determined as of the date the 
proceeding was initiated.
    (4) 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.
    (5) 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.
    (6) 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.
    (7) 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.
    (e) Standards for awards--(1) For a prevailing party:
    (i) A prevailing applicant will 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 agency was substantially justified. The burden of proof that an 
award should not be made to an eligible prevailing applicant is on 
complaint counsel, which may avoid an award by showing that its 
position had a reasonable basis in law and fact.
    (ii) An award to prevailing party will be reduced or denied if the 
applicant has unduly or unreasonably protracted the proceeding or if 
special circumstances make an award unjust.
    (2) For a party defending against an excessive demand:
    (i) An eligible applicant will receive an award for fees and 
expenses incurred after initiation of the adversary adjudication 
related to defending against the excessive portion of a Commission 
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.
    (ii) 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.

[[Page 36342]]

    (f) Allowable fees and expenses. (1) Awards will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the applicant.
    (2) No award for the fee of an attorney or agent under these rules 
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 highest rate at which 
the Commission paid expert witnesses for similar services at the time 
the fees were incurred. The appropriate rate may be obtained from the 
Office of the Executive Director. 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.
    (3) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the Administrative Law Judge shall 
consider the following:
    (i) 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;
    (ii) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (iii) The time actually spent in the representation of the 
applicant;
    (iv) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (v) Such other factors as may bear on the value of the services 
provided.
    (4) 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 service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.
    (5) Any 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.
    (g) Rulemaking on maximum rates for attorney fees. 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), the Commission may, upon its own initiative or on 
petition of any interested person or group, adopt regulations providing 
that attorney fees may be awarded at a rate higher than the rate 
specified in 5 U.S.C. 504(b)(1)(A) per hour in some or all the types of 
proceedings covered by this part. Rulemaking under this provision will 
be in accordance with Rules of Practice Part 1, Subpart C of this 
chapter.


Sec. 3.82  Information required from applicants.

    (a) Contents of application. An application for an award of fees 
and expenses under the Act shall contain the following:
    (1) Identify of the applicant and the proceeding for which the 
award is sought;
    (2) A showing that the applicant has prevailed; or, if the 
applicant has not prevailed, a showing that the Commission's demand was 
the final demand before initiation of the adversary adjudication and 
that it was substantially in excess of the decision of the adjudicative 
officer and was unreasonable when compared with that decision;
    (3) Identification of the Commission position(s) that applicant 
alleges was (were) not substantially justified; or, identification of 
the Commission's demand that is alleged to be excessive and 
unreasonable and an explanation as to why the demand was excessive and 
unreasonable;
    (4) A brief description of the type and purpose of the organization 
or business (unless the applicant is an individual);
    (5) A statement of how the applicant meets the criteria of 
Sec. 3.81(d);
    (6) The amount of fees and expenses incurred after the initiation 
of the adjudicative proceeding or, in the case of a claim for defending 
against an excessive demand, the amount of fees and expenses incurred 
after the initiation of the adjudicative proceeding attributable to the 
excessive portion of the demand;
    (7) Any other matters the applicant wishes the Commission to 
consider in determining whether and in what amount an award should be 
made; and
    (8) A written verification under oath or under penalty or perjury 
that the information provided is true and correct accompanied by the 
signature of the applicant or an authorized officer or attorney.
    (b) Net worth exhibit. (1) Each applicant except a qualified tax-
exempt organization or cooperative association must provide with its 
application a detailed exhibit showing the net worth of the application 
and any affiliates (as defined in Sec. 3.81(d)(6)) 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 part. The 
Administrative Law Judge may require an applicant to file additional 
information to determine its eligibility for an award.
    (2) Ordinarily, the net worth exhibit will be included in the 
public record of the proceeding. However, if an applicant objects to 
public disclosure of information in any portion of the exhibit and 
believes there are legal grounds for withholding it from disclosure, 
the applicant 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) 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 complaint counsel 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 Sec. 4.11.
    (c) 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, analysis, engineering report, test, project or similar 
matter, for which an award is sought. With respect to a claim for fees 
and expenses involving an excessive demand, 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, analysis, engineering report, test, project or similar 
matter, 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

[[Page 36343]]

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 Administrative Law 
Judge may require the applicant to provide vouchers, receipts, or other 
substantiation for any expenses claimed.
    (d) When an application may be filed--(1) For a prevailing party.
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results 
in final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.
    (2) For a party defending against an excessive demand:
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results 
in final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes the agency's demand was excessive and 
unreasonable, proceedings for the award of fees and expenses shall be 
stayed pending final disposition of the underlying controversy.
    (3) For purposes of this subpart, ``final disposition'' means the 
later of--
    (i) The date that the initial decision of the Administrative Law 
Judge becomes the decision of the Commission pursuant to Sec. 3.51(a);
    (ii) The date that the Commission issues an order disposing of any 
petitions for reconsideration of the Commission's final order in the 
proceeding; or
    (iii) The date that the Commission issues a final order or any 
other final resolution of a proceeding, such as a consent agreement, 
settlement or voluntary dismissal, which is not subject to a petition 
for reconsideration.


Sec. 3.83  Procedures for considering applicants.

    (a) Filing and service of documents. Any application for an award 
or other pleading or document related to an application shall be filed 
and served on all parties as specified in Secs. 4.2 and 4.4(b) of this 
chapter, except as provided in Sec. 3.82(b)(2) for confidential 
financial information. The date the Office of the Secretary of the 
Commission receives the application is deemed the date of filing.
    (b) Answer to application. (1) Within 30 days after service of an 
application, complaint counsel may file an answer to the application. 
Unless complaint counsel requests an extension of time for filing or 
files a statement of intent to negotiate under paragraph (b)(2) of this 
section, failure to file an answer within the 30-day period may be 
treated as a consent to the award requested.
    (2) If complaint 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 Administrative 
Law Judge upon request by complaint counsel and the applicant.
    (3) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of complaint 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, complaint counsel shall 
include with the answer either supporting affidavits or a request for 
further proceedings under paragraph (f) of this section.
    (c) 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 paragraph (f) of this section.
    (d) Comments by other parties. Any party to a proceeding other than 
the applicant and complaint 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 Administrative Law Judge 
determines that the public interest requires such participation in 
order to permit full exploration of matters in the comments.
    (e) Settlement. The applicant and complaint counsel may agree on a 
proposed settlement of the award before final action on the 
application. A proposed award settlement entered into in connection 
with a consent agreement covering the underlying proceeding will be 
considered in accordance with Sec. 3.25. The Commission may request 
findings of fact or recommendations on the award settlement from the 
Administrative Law Judge. A proposed award settlement entered into 
after the underlying proceeding has been concluded will be considered 
and may be approved or disapproved by the Administrative Law Judge 
subject to Commission review under paragraph (h) of this section. If an 
applicant and complaint counsel agree on a proposed settlement of an 
award before an application has been filed, the application shall be 
filed with the proposed settlement.
    (f) Further proceedings. (1) Ordinarily, the determination of an 
award will be made on the basis of the written record. However, on 
request of either the applicant or complaint counsel, or on his or her 
own initiative, the Administrative Law Judge 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.
    (2) A request that the Administrative Law Judge 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.
    (g) Decision. The Administrative Law Judge shall issue an initial 
decision on the application within 30 days after closing proceedings on 
the application.
    (1) 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 also 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.
    (2) For a decision involving an excessive agency demand: The 
decision shall include written findings and conclusions on the 
applicant's eligibility and an explanation of the reasons why the 
agency's demand was or was not determined to be substantially in excess 
of the decision of the adjudicative officer and was or was not 
unreasonable when compared with that decision. That decision shall be 
based upon all the facts and circumstances of the case. The decision 
shall also include, if at issue, findings on whether the applicant has 
committed a willful violation of law or otherwise

[[Page 36344]]

acted in bad faith, or whether special circumstances make an award 
unjust.
    (h) Agency review. Either the applicant or complaint counsel may 
seek review of the initial decision on the fee application by filing a 
notice of appeal under Sec. 3.52(a), or the Commission may decide to 
review the decision on its own initiative, in accordance with 
Sec. 3.53. If neither the applicant nor complaint counsel seeks review 
and the Commission does not take review on its own initiative, the 
initial decision on the application shall become a final decision of 
the Commission 30 days after it is issued. Whether to review a decision 
is a matter within the discretion of the Commission. If review is 
taken, the Commission will issue a final decision on the application or 
remand the application to the Administrative Law Judge for further 
proceedings.
    (i) Judicial review. Judicial review of final Commission decisions 
on awards may be sought as provided in 5 U.S.C. 503(c)(2).
    (j) Payment of award. An applicant seeking payment of an award 
shall submit to the Secretary of the Commission a copy of the 
Commission's final decision granting the award, accompanied by a 
statement that the applicant will not seek review of the decision in 
the United States courts. The agency will pay the amount awarded to the 
applicant within 60 days, unless judicial review of the award or of the 
underlying decision of the adjudicative proceeding has been sought by 
the applicant or any party to the proceeding.

    By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 98-17803 Filed 7-2-98; 8:45 am]
BILLING CODE 6750-01-M