General Practice, Solo & Small Firm DivisionMagazine

Volume 17, Number 2
March 2000




The Equal Access to Justice Act (EAJA) is designed to afford private litigants a means of recovering their attorney fees in actions brought by and against federal agencies. In 1996, Congress amended it in several important respects. This article places some of those amendments in context, describes the amendments and their relationship to the pre-1996 EAJA, and discusses several issues raised by the amendments.

The Pre-1996 EAJA: Recovery of Fees by Prevailing Parties. The pre-1996 EAJA provided that the government must pay the "fees and expenses" of certain prevailing parties. That avenue for recovering fees remains intact, with certain amendments effected by the 1996 Act.

Parties eligible to recover EAJA fees as "prevailing parties" in-clude: individuals whose net worth was two million dollars or less at the time the adversary adjudication was initiated or the civil action was filed; owners of unincorporated businesses, or partnerships, corporations, associations, units of local government, or organizations that had a net worth of seven million dollars or less and not more than 500 employees at the time the adversary adjudication was initiated or the civil action was filed; tax-exempt organizations recognized under § 501(c)(3) of the Internal Revenue Code; and agricultural cooperative associations.

The Small Business Regulatory Enforcement Fairness Act. Title II of the Contract with America Advancement Act of 1996 is the Small Business Regulatory En-forcement Fairness Act of 1996 (SBREFA), which includes, in Subtitle C, the 1996 EAJA Amendments. Subtitle C effected various amendments to the original EAJA, and created a new basis for recovering fees. Where the original statute allowed eligible parties to recover fees if they prevailed in the administrative or judicial proceeding, the amendments permit eligible parties to recover their fees even though they do not prevail, if the government's demand is substantially in excess of the final award.

By enacting the amendments, Congress accomplished three objectives. First, it amended the existing "prevailing party" avenue for relief by raising the hourly rate cap, to make that avenue more advantageous for eligible parties to receive awards. Second, it expanded the class of litigants eligible to receive EAJA fees. Finally, it created a new avenue for awarding fees-the "excessive demand" avenue-to award fees to eligible parties who did not prevail against the government. The "prevailing party" and the "excessive demand" avenues co-exist as means for obtaining fees under the EAJA.

The 1996 amendments revised the definition of "fees and other expenses" recoverable by eligible parties by raising the statutory maximum from $75 per hour to $125 per hour. The provisions permitting a court, in civil litigation, or an agency, through regulation, to determine that an increase in the cost of living or a special factor, "such as the limited availability of qualified attorneys or agents for the proceedings involved," justify a higher fee, remain intact.

The amendments revised the definition of "party" for purposes of determining EAJA eligibility both in judicial and administrative proceedings. The net worth and size requirements applicable to the original "prevailing party" avenue of relief remain intact. For purposes of the new "excessive demand" avenue, "party" includes a new element-a "small entity" as defined at 5 U.S.C. § 601. Under § 601(6), "small entity" has the same definition as "small business," "small organization," and "small government jurisdiction." Thus, as the Regulatory Flexibility Act indicates, a "small entity" is synonymous with a "small business concern," as defined in the Small Business Act. In addition, the administrator of the SBA may specify detailed definitions-size standards-by which a particular business concern may be determined to be a "small business concern." Alternatively, an agency may establish its own definitions through notice-and-comment rulemaking.

Issues Raised by the 1996 Amendments. Under the amendments, an agency may be liable for fees if the demand by the agency is substantially in excess of the judgment finally obtained or the decision of the adjudicative officer, and is unreasonable when compared with the judgment or decision, under the facts and circumstances of the case. What is the agency "demand" against which the final judgment or decision will be measured? The 1996 amendments include provisions defining the term "demand" as "the express demand of the agency which led to the adversary adjudication, but does not include a recitation by the agency of the maximum statutory penalty (i) in the administrative complaint, or (ii) elsewhere when accompanied by an express demand for a lesser amount."

In cases where there are multiple demands by an agency, such as those that occur when an agency engages in settlement negotiations with the prospective defendant or respondent, it may be necessary to construe the language of the EAJA to determine which demand "led to the adversary adjudication." It is also possible to construe the definition of "demand" in other ways. For example, "demand" could be defined as the agency's last demand made prior to the court's or administrative law judge's adjudication, even if that demand comes well after the initiation of formal litigation. Or, "demand" may mean the formal complaint itself. In addition to temporal questions regarding the definition of a "demand," questions may arise regarding the characteristics that define an agency "demand." The legislative history provides some guidance in this respect, as well, by suggesting that the demand must be in writing and is not limited to requests for monetary relief.

It is not only monetary de-mands that may be considered excessive. If an agency seeks injunctive or other non-monetary relief, which it does not ultimately obtain, its demand for such relief may be adjudged excessive for EAJA purposes. Although a court might find a violation, it might not award an injunction for reasons unrelated to the merits, such as the defendant's age, the fact that he is working in a different type of business, or his expression of remorse. Thus, the agency's exposure to EAJA liability would be increased, despite the reasonableness of its position and the fact that it prevailed in proving a violation.

Another issue concerns when a demand will be considered substantially in excess of the judgment and unreasonable under the facts and circumstances of the case. The statutory language gives no definition to these terms. The statutory admonition that the "excessiveness" of an agency's demand be adjudged "under the facts and circumstances of the case" makes it unlikely that widely applicable precedents will be developed by the courts. The determination of "excessive demand" is likely to be a fact-bound determination that will vary from case to case. What is clear, however, is that the purpose of the amendments was to require agencies to give careful consideration to the remedies sought vis-à-vis small entities.

Another issue concerns when willfulness, bad faith, or special circumstances make an award of fees unjust. Even where an agency's demand is found to be excessive under the facts and circumstances of the case, the agency may defend against an EAJA claim by showing that "the party has committed a willful violation of law or otherwise acted in bad faith, or special circumstances make an award unjust." The bad faith that may give rise to an award of attorney fees generally falls into one of three categories: bad faith in the conduct of the litigation; bad faith in bringing an action; and bad faith in the acts giving rise to the substantive claim. Courts have cautioned against applying the bad-faith exception to this third category of cases. The original "prevailing party" prong of the EAJA provides an exclusion in cases where "special circumstances make an award unjust."

Another issue concerns what portion of the claimant's fee may be recovered. The amendments provide that a court or administrative agency shall award to an eligible party "the fees and other expenses related to defending against the excessive demand." The intent of Congress in enacting the amendments was to compensate a party only for those fees and expenses that it would not have incurred but for the government's excessive demand. The legislative history suggests that the fees awarded should be proportionate to the percentage of the demand that the government ultimately obtained. Similarly, an agency might resist EAJA fees for that portion of the opposing attorney's time spent defending issues unrelated to the demand itself.

Judith E. Kramer is deputy solicitor for planning and coordination at the United States Department of Labor

For more Information About the Section of Administrative Law and Regulatory Practice

  • This article is an abridged and edited version of one that originally appeared on page 363 of Administrative Law Review, Spring 1999 (51:2).
  • For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.
  • Website:
  • Periodicals: Administrative Law Review, quarterly law journal; Administrative and Regulatory Law News, quarterly newsletter; Transportation Committee Quarterly, quarterly committee newsletter; Beverage Alcohol Practice Committee, quarterly committee newsletter, Veterans Affairs Review, periodic newsletter.
  • Books and Other Recent Publications: Lobbying Manual, 2d ed.; A Guide to Federal Agency Rulemaking, 3d ed.; Federal Administrative Dispute Resolution Deskbook; Developments in Administrative Law & Regulatory Practice.

Back to Top