(1) the Equal Access to Justice Act (Public
Law 96–481; 94 Stat. 2325 et seq.) (in this section
referred to as ‘‘EAJA’’) was intended to make the
justice system more accessible to individuals of mod-
est means, small businesses, and nonprofit organiza-
tions (in this section collectively referred to as
‘‘small parties’’) through limited recovery of their at-
torneys fees when they prevail in disputes with the
Federal Government;
(2) although EAJA has succeeded, at modest
cost, in improving access to the justice system for
small parties, EAJA retains formidable barriers to
attorneys’ fees recovery (even for small parties that
completely prevail against the Government), as well
as inefficient and costly mechanisms for determining
the fees recovery;
(3) among the barriers retained by EAJA are—
(A) EAJA’s ‘‘substantial justification de-
fense’’, whereby the Government can deny at-
torneys’ fees recovery to prevailing small parties
if the Government can show that its position,
although proven illegal, was not abusive or en-
tirely unreasonable;
(B) EAJA’s hourly rate cap on attorneys’
fees of $125, which is well below the market
rate for competent legal services in many legal
markets (especially for complex and high-risk
litigation against the Federal Government) and
thus prevents fair reimbursement of attorneys’
fees for small parties and discourages com-
petent counsel from undertaking meritorious
cases on a contingency or reduced-fee basis; and
(C) EAJA’s outdated small business eligi-
bility requirements, which have not increased or
indexed for inflation the net worth threshold of
$7,000,000 established in 1985;
(4) among the inefficiencies retained by EAJA
are—
(A) EAJA’s substantial justification de-
fense, which initiates collateral litigation over
attorneys’ fees recovery that both consumes sig-
nificant Federal resources and prolongs the
time, expense, and risk of pursuing fees recov-
ery to the prevailing small party;
(B) EAJA’s omission of any mechanism
(such as the offer in compromise feature of
Federal Rule of Civil Procedure 68) that would
apply after a small party has prevailed on the
merits of its claim to encourage both sides to
reach a prompt and reasonable settlement of at-
torneys’ fees;
(C) EAJA’s failure to create an edu-
cational and technical assistance function with-
in an appropriate agency to facilitate more effi-
cient use, settlement, and payment of claims
under EAJA; and
(D) EAJA’s failure to reassign congres-
sional reporting obligations to an appropriate,
existing agency (EAJA lodges annual congres-
sional reporting with the Administrative Con-
ference of the United States, an agency which
ceased to exist in 1995);
(5) none of these barriers or inefficiencies exists
in the primary Federal fee-shifting statute applicable
to State and local governments, Revised Statutes
section 722 (42 U.S.C. 1988(b)), resulting in—
(A) an unequal level of accountability to
Federal law among governments in the United
States (shielding the Federal Government to a
greater degree than State and local govern-
ments from the consequences of violating Fed-
eral law);
(B) an uneven playing field for small party
victims of Federal law violations (discouraging
resistance to illegal action by the Federal Gov-
ernment); and
(C) an inefficient use of Federal agency re-
sources (burdening the Federal budget);
(6) it is in the national interest to remove these
barriers and inefficiencies for small parties, particu-
larly small business owners, involved in disputes with
the Federal Government in order to develop sound
policies relative to the national economy in which
small businesses play a significant and strategic role;
and
(7) the removal of these barriers and inefficien-
cies is essential to—
(A) equalize the level of accountability to
Federal law among governments in the United
States;
(B) discourage marginal or abusive Fed-
eral enforcement actions directed at small par-
ties;
(C) refine and improve Federal policies
through adjudication; and
(D) provide a fairer opportunity for full
participation by small businesses in the free en-
terprise system, further increasing the economic
vitality of the Nation.
(b) PURPOSE.—It is, therefore, the purpose of these
amendments to remove existing barriers and inefficiencies
in EAJA in order to—
(1) equalize the level of accountability to Fed-
eral law among governments in the United States;
(2) discourage marginal or abusive Federal en-
forcement actions directed at small parties;
(3) refine and improve Federal policies through
adjudication;
(4) promote a fair and cost-effective process for
prompt settlement and payment of attorneys’ fees
claims; and
(5) provide a fairer opportunity for full partici-
pation by small businesses in the free enterprise sys-
tem, further increasing the economic vitality of the
Nation.
(c) COMPLIANCE.—In complying with the statement
of congressional policy expressed in this section, each Fed-
eral agency, to the maximum extent practicable, shall—
(1) avoid unjustified enforcement actions di-
rected at small parties covered by EAJA;
(2) alleviate unnecessary burdens of compliance
with justified enforcement actions directed at small
parties covered by EAJA; and
(3) minimize impediments to prompt resolution
and payment of reasonable attorneys’ fees to pre-
vailing small parties covered by EAJA.
SEC. 3. REPORTING AND TECHNICAL ASSISTANCE BY OF-
FICE OF ADVOCACY.
(a) FUNCTIONS OF OFFICE OF ADVOCACY.—Section
202 of Public Law 94–305 (15 U.S.C. 634b) is
amended—
(1) in paragraph (3), by inserting before the
semicolon at the end the following: ‘‘and for ensur-
ing that the justice system remains accessible to
small businesses for the resolution of disputes with
the Federal Government;’’; and
(2) by striking paragraph (11) and inserting
the following:
‘‘(11) advise, cooperate with, and consult with
the President and Attorney General with respect to
section 303(b) of the Small Business Economic Pol-
icy Act of 1980 (15 U.S.C. 631b(b)) and section
504(e) of title 5, United States Code; and’’.
(b) DUTIES OF OFFICE OF ADVOCACY.—Section 203
of Public Law 94–305 (15 U.S.C. 634c) is amended—
(1) in paragraph (2), by inserting before the
semicolon at the end the following: ‘‘, including the
resolution of disputes with the Federal Government