UN I TED S TATE S 0 F AM ER IC A 

DEPARTMENT OF TRANSPORTATION 

UNITED ST ATES COAST GUARD 

UNITED STATES OF AMERICA 

UNITED STATES COAST GUARD 

DECISION OF THE 

vs. 

VICE COMMANDANT 

JOHN P. LOVE, JR. 

ON APPEAL 

NO. 2623 

This appeal is taken in accordance with 46 U.S.C. § 7704 and 46 C.F.R. § 5.701, 

and the procedures in 33 C.F.R. Part 20. 

On September 9, 1999, the United States Coast Guard initiated an administrative 

proceeding in the above captioned matter by filing a Complaint against John P. Love, Jr., 

charging him with the use of a dangerous drug in violation of 46 U .S.C. § 7704( c ). The 

complaint alleged that Appellant took a drug test and tested positive for marijuana 

metabolite. On October 27, 1999, the then assigned Administrative Law Judge, Judge 

H.J. Gardner, granted Appellant's motion and dismissed the Complaint ruling on the 

basis of the parties' written submissions. In accordance with Department of 

Transportation (DOT) Equal Access to Justice Act, 5 U.S.C. 504 (EAJA) settlement 

procedures, agency counsel agreed to enter into a settlement with Appellant on an 

appropriate award for attorneys' fees and expenses. On December 23, 1999, Appellant 

filed with the Chief Administrative Law Judge (CALJ) (who assumed responsibility for 

the case upon the retirement of Judge Gardner) a Stipulation for Attorneys Fees and 

Expenses along with an application for attorney fees and expenses. On April 28, 2000, 

the CALJ issued an Order to Show Cause why the fee application should not be denied. 

On June 16, 2000, the CALJ issued an Order approving the settlement stipulation in the 

amount of $10,000. On July 6, 2000, Appellant filed a letter with the CALJ requesting 
some revisions to the text of the fee decision, specifically, the deletion of perceived 

inaccurate statements. Appellant's letter did not make a supplemental EAJA application. 

On July 18, 2000, the CALJ issued an order denying this request. On August 14, 2000, 

Appellant filed a supplemental EAJA application for attorney fees. On November 15, 

2000, the CALJ issued an order denying the supplemental EAJA application for 

attorney's fees. 

The CALJ Order Denying the Application for Supplemental Attorney's Fees and 

Expenses was served on Appellant on November 15, 2000. Appellant filed a notice of 

appeal on December 8, 2000. Appellant perfected this appeal on January 9, 2001. This 

appeal is properly before me. 

BASIS OF APPEAL 

Appellant contends that the CALJ Order Denying Respondent's Supplemental 

Application for Attorney's Fees and Expenses should be vacated, that his latest 

Supplemental Application for additional attorneys' fees at reasonable market rates and 

costs should be granted, and that the CALJ should be ordered to revise the text of his 

Order of June 16, 2000 to omit language Appellant contends is unnecessary to the 

decision. 

OPINION 

To narrow the issues in this appeal, reviewing the timeline for a possible EAJA 

award in this case is useful. Once Judge Gardner dismissed the Complaint against 

Appellant, he was entitled to apply for attorney's fees and expenses under EAJA subject 

to the approval of the CALJ (who had been assigned the case following Judge Gardner's 

retirement). Rather than apply to the ALJ for an award, Appellant entered into 

negotiations with agency counsel and ultimately agreed to settle his EAJA claim for 

$10,000. The settlement agreement was submitted to the CALJ for approval. Before 

approving the settlement, the CALJ issued an order, directing Appellant to provide 

documentation to support the EAJA application. The CALJ also issued to the parties an 

Order to Show Cause why the EAJA application should not be denied. After the CALJ 

approved the settlement, Appellant submitted another EAJA application requesting an 

award of attorney's fees and costs associated with responding to the CALJ's Show Cause 

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Order, with his request for a revision of the CALJ's order of June 16, 2000, and with 

other post-settlement proceedings associated with the case. The principal issue in this 

appeal therefore is whether, having received his EAJA settlement, Appellant is entitled to 

an EAJA award for expenses incurred in supporting the settlement agreement. 

As a result of Judge Gardner's decision dismissing the Complaint, Appellant 

was a prevailing party in an adversarial proceeding conducted by the Department of 

Transportation and was therefore eligible to apply for an EAJA award pursuant to 5 

U.S.C. § 504 and 49 C.F.R. Part 6; however, 'no award o:ffees is "automatic".' 

Commissioner, Immigration and Naturalization Service v. Jean, 496 U.S. 154, 163 

(1990). The Department of Transportation's (DOT's) standards for making an award are 

found at 49 C.F.R. § 6.9. 

Before a decision is made on an EAJA application, the applicant or agency 

counsel may request, or the assigned ALJ on his or her own initiative may order further 

proceedings. 49 C.F.R. § 6.31. The ALJ then must issue an initial decision. 49 C.F.R. 

§ 6.33. In making an initial decision of any type, an ALJ must include in the record a 

statement of findings and conclusions and the basis therefore with regard to any material 

issues of fact, law or discretion. 5 U.S.C. § 557(c). If neither the applicant nor the 

agency counsel request agency review within 30 days, the decision becomes final. 49 

C.F.R. § 6.35. 

In this case, the parties agreed to a stipulated settlement to avoid the hazards of a 

contested proceeding. Each side had an incentive to settle. For the Coast Guard, 

Appellant was agreeing to take less than the full claim he: was asserting. For Appellant, 

he would receive nothing ifthe CALJ found that the agency's position in bringing the 

complaint was substantially justified. The agency does not have to prevail for its position 

to be substantially justified; its position need only be "justified to a degree that would 

satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552 (1988). In accordance 

with DOT regulations, the proposed settlement agreement was submitted to the CALJ for 

his approval. 49 C.F.R. § 6.29. The Coast Guard's administrative hearing settlement 

procedures are found at 33 C.F.R. § 20.502. 

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When a prevailing party and agency counsel reach a settlement agreement 

before the EAJA application has been submitted, the application "shall be filed with the 

proposed settlement." 49 C.F.R. § 6.29. An EAJA application must contain certain 

information including a net worth exhibit and documentation of fees and expenses. 49 

C.F.R. Part 6 Subpart B. Appellant's application contained no supporting documentation 

with regard to attorneys' fees and expenses so the CALJ issued an order to produce the 

necessary documentation on February 7, 2000. Appellant responded on February 19, 

2000 by supplying the necessary documentation. In his cover letter, Appellant gave no 

indication that he was planning to change the amount he was seeking under the settlement 

agreement by supplementing his EAJA application. 

The role of the ALJ 'is "functionally comparable"' to that of a judge.' Butz v. 

Economou, 438 U.S. 478, 513 (1978). Furthermore, the administrative procedures 

system is structured so that the ALJ "exercises his independent judgment on the evidence 

before him, free from pressures by the parties or other officials within the agency." Id. 

He cannot engage in any ex parte consultations with parties, including agency officials, 

except on notice and with the opportunity of all parties to participate. 5 U.S.C. § 

554( d)(l ). Significantly for this case, the ALJ is not subject to the supervision or 

direction of any agency employee engaged in the perfomiance of prosecution functions 

for the agency. 5 U.S.C. § 554(d)(2); 33 C.F.R. § 20.206. In other words, agency 

counsel cannot direct the ALJ to take any specific action,, including the approval of a 

settlement of an EAJA claim. Much as a judge approving a settlement agreement, the 

ALJ must make an independent judgment that the settlement agreement is both in 

accordance with the law and public policy and is fair, reasonable, and in the best interests 

of the parties. Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1079 (2°d Cir. 

1995). See also, United States, ex rel. Sharma v. Uni. Of Southern Cal., 217 F .3d 1141 

(9th Cir. 2000) (court may modify attorney fee settlement agreement to ensure it complies 

with False Claims Act); Eifler v. Peabody Col Co. et. al .. 13 F.3d 236 (71

h Cir. 1993) 

(award of attorneys' fees in compensation case requires :administrative or judicial 

approval even if both parties agree on award). Among the factors to consider is the 

likelihood of success on the merits. Maywalt, 67 F.3d at 1079. 

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The settlement agreement in this case consisted of a Stipulation for Attorneys' 

Fees and Expenses that noted the complaint had been dismissed, a statement of net worth, 

that Appellant had incurred an amount in excess of $10,000 in attorneys' fees and 

expenses, that the agency was satisfied with the documentation of expenses, and an 

agreement that Appellant was entitled to an award of $10,000. With only this 

information in the record, as noted above, the ALJ requested documentation supporting 

the fees and expenses and Appellant produced documents showing that his expenses 

totaled $27,794.55. 

In order to evaluate the merits of the proposed settlement and reach an 

independent decision, the CALJ felt it was necessary to issue a Show Cause Order 

seeking additional information with regard to merits of Appellant's EAJA claim. Such 

proceedings are permitted under 49 C.F .R. § 6.31. It is worth noting again that the CALJ 

was not originally assigned to the case, but was assigned the case after Judge Gardner 

retired. After reviewing the record, the CALJ had questions regarding the key issue of 

whether the Coast Guard's decision to bring the complaint was substantially justified, 

including whether the Coast Guard agreed with Appellant's allegation that its position 

was not substantially justified. Since this would have been the principal issue in dispute 

if the EAJA application were litigated, the CALJ needed a good understanding of the 

merits of the Coast Guard's position in bringing the complaint to evaluate the settlement 

proposal. For example, ifthe Coast Guard was completely without justification and was 

acting in bad faith when it brought the complaint, settling for a little more than a third of 

his claimed expenses would have been unfair to Appellant. (A significant portion of this 

difference can also be explained by the fact that under DOT' s regulations, the maximum 

billing rate is $125/hour.) 

In issuing the two orders prior to making his decision, the CALJ was acting in an 

independent role, much as a judge, to create a record for possible later review and to 

gather sufficient evidence to reach an independent decision. In doing so, he was fulfilling 

his independent role under the Administrative Procedures Act, not acting as agency 

counsel contesting an EAJA application. In fact, the merits of the EAJA application were 

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never litigated in this case; instead they were compromised by both parties in the 

settlement agreement to avoid further litigation and costs. 

After reviewing submissions from both the Coast Guard and Appellant, the CALJ 

approved the settlement proposal on June 16, 2000, by his Order Granting Respondent's 

Request for Attorneys' Fees and Expenses Pursuant to the Equal Access to Justice Act. 

On July 6, 2000, Appellant wrote to the CALJ requesting revisions to this Order; again 

this letter makes no mention of a supplemental EAJA application. The CALJ denied the 

request on July 18, 2000. On July 24, 2000, Appellant requested payment of the 

settlement, agreed not to seek review of the CALJ's Order Granting Respondent's 

Request (apparently the June 16, 2000 order), and, for the first time, reserved the right to 

seek an additional EAJA award as a result of the April 28, 2000 Show Cause Order. 

Appellant submitted such an application on August 15, 2000. 

On November 15, 2000, the CALJ denied Appellant's "supplemental 

application." As explained above, Appellant is not eligible to receive an EAJA award for 

the attorneys' fees and expenses associated with responding to the Show Cause Order 

because this Order was an action of the independent CALJ both to build a record and to 

decide whether to approve the settlement agreement, not an action of an adverse party in 

litigation. Despite the statutory scheme creating the ALJ as an independent actor, 

Appellant claims that the CALJ's actions should be ascribed to the Agency without 

providing any support for this position. Although a respondent may under certain 

circumstances recover the costs associated with EAJA fee litigation in addition to the 

costs of the underlying litigation, in this case there was no EAJA fee litigation because of 

the settlement. Having received the benefit of the settlement bargain and having agreed 

not to contest the CALJ's decision, Appellant cannot try to reopen the settlement through 

this supplemental application. 

Even if Appellant were allowed to supplement the settlement agreement with a 

new EAJA application, he would still have to meet all the requirements for an award 

including that the agency's position in the underlying litigation was not substantially 

justified. Despite Appellant's contention that the Coast Guard is estopped from asserting 

that its position was substantially justified by its failure to appeal the dismissal of the 

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complaint, the failure of the agency to prevail in the litigation does not even create a 

presumption that its position was not substantially justified. 49 C.F.R. § 6.9(a). 

Furthermore, in responding to the CALJ's Show Cause, the Coast Guard clearly stated 

that the settlement stipulation was not an admission that it was not substantially justified 

in filing a Complaint. This statutory requirement for an EAJA award has never been 

litigated in this case despite extensive discussion of the issue in Appellant's pleadings. 

To the extent that he addressed the issue, the CALJ indicated he believes the Coast 

Guard's position was substantially justified. 

Since this decision denies Appellant's application, there is no need to address his 

request for attorney's fees above the regulatory maximum except to note that the power to 

make such a rulemaking rests with the DOT. 

CONCLUSION 

The Order of the Chief Administrative Law Judge dated November 15, 2000, is 

AFFIRMED. 

ORDER 

The Decision and Order of the Chief Administrative Law Judge dated November 

15, 2000, is AFFIRMED. 

~-Yft~ ~~NS Vice Admiral, U.S. Coast Guard 

Vice Commandant 

Signed at Washington, D.C. this I (fl-Hay of Srr~L , 2001. 

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