Rules of Procedure Governing Cases Before the Office of Hearings and Appeals

SMALL BUSINESS ADMINISTRATION

13 CFR Parts 132 and 134

Rules of Procedure Governing Cases Before the Office of Hearings

and Appeals

AGENCY: Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: In response to President Clinton's government-wide regulatory

reform initiative, the Small Business Administration (SBA) has

completed a page-by-page, line-by-line review of all of its existing

regulations to determine which might be revised or eliminated. The

regulations proposed here would reorganize all but one of the

regulations pertaining to procedures before the Office of Hearings and

Appeals (``OHA'') and consolidate them in one part. In addition, the

proposed regulations would clarify, simplify, and significantly shorten

the existing regulations governing OHA. Finally, a number of

substantive changes are proposed.

DATES: Comments must be submitted on or before December 27, 1995.

ADDRESSES: Written comments should be addressed to David R. Kohler,

Regulatory Reform Team Leader, Attention: Part 134, U.S. Small Business

Administration, 409 3rd Street, S.W., Suite 13, Washington, D.C. 20416.

FOR FURTHER INFORMATION CONTACT: Gary Fox, Chief Counsel for Special

Litigation, at (202) 205-6643.

SUPPLEMENTARY INFORMATION: On March 4, 1995, President Clinton issued a

memorandum to Federal agencies, directing them to simplify their

regulations. In response to this directive, SBA has completed a page-

by-page, line-by-line review of all of its existing regulations to

determine which might be revised or eliminated. This proposed rule

would consolidate all the existing regulations governing proceedings

before OHA into part 134 with the exception of proceedings under the

Program Fraud Civil Remedies Act, which would be covered in part 142 of

this chapter. It would also clarify, simplify and revise the current

rules, reorganize sections for ease of use, and eliminate unnecessary

provisions.

As background, the following analysis discusses the anticipated

effect of this proposed rule on SBA's current regulations.

The proposed rule would be divided into four subparts. Subpart A

would contain general rules (currently subpart A). Subpart B (currently

subpart B and Secs. 124.210 and 124.211 (d) through (i)) would contain

rules of practice applicable to all cases before OHA except size and

SIC code appeals and proceedings under the Program Fraud Civil Remedies

Act. Subpart C would contain the rules applicable to size and SIC code

appeals (currently Secs. 121.1701-1722). Subpart D would contain the

rules for implementation of the Equal Access to Justice Act, currently

contained in part 132. Proceedings covered by the Program Fraud Civil

Remedies Act would continue to be contained in part 142 of this

chapter.

A number of policy changes are also proposed. OHA's jurisdiction

would be expanded to include cases brought under the Age Discrimination

Act. At the same time, its jurisdiction would be narrowed to exclude

contractor debarment and suspension proceedings, employee formal stage

grievances,

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arbitrations concerning labor agreements, and certain civil rights

cases.

The service and filing requirements would be simplified

considerably. Certification requirements and format requirements would

be eliminated. The requirement that submissions be filed and served by

certified or registered mail would be deleted, and the time limits for

filing petitions and answers would be simplified and made uniform for

all types of proceedings to the extent possible. In addition, the

reviewing official on requests for review of all initial OHA decisions

would be SBA's Administrator or his or her designee.

The proposed rule would expand the rights of parties in a number of

ways. The rule would stay the time to answer a petition when a motion

for summary decision is filed. The section on intervention would be

broadened. The use of alternative dispute resolution procedures would

be authorized where all parties consented. Finally, a number of time

limits would be enlarged for the benefit of the public.

The proposed rule would also modify the rights of parties in a

number of respects in the interests of efficiency and uniformity, and

to conserve limited resources. For proceedings other than size and SIC

code appeals, an oral hearing would not be granted unless there was a

genuine dispute as to a material fact that could not be resolved except

by the taking of testimony and the confrontation of witnesses. Oral

hearings would not be permitted at all in SIC code appeals, and would

be permitted in size appeals only under extraordinary circumstances.

Discovery would be permitted in cases other than size, SIC code, and

certain MED appeals only where a showing of good cause was made. No

discovery would be permitted in size or SIC code appeals, and limited

discovery would be permitted in certain MED appeals. There would no

longer be an absolute right to review by OHA of a size determination.

Instead, OHA would decide in its discretion whether to consider the

appeal. Evidence would not be admitted in size appeals unless directed

by the Judge. A size determination by an Area Office would be upheld

unless the Judge found clear error of fact or law. Finally, the right

to file motions for reconsideration of a Judge's decision in size and

SIC code cases would be eliminated.

Subpart D would be reorganized, condensed, and rewritten in plain

language. The text would be presented in a question and answer format

for clarity and ease of use. Minimal substantive changes are proposed

to clarify existing ambiguities and eliminate obsolete directions or

references.

Section-by-Section Analysis

The following is a section by section analysis of each provision of

SBA's regulations that would be affected by this proposed rule:

Proposed Sec. 134.101 would provide that the rules in this part

would govern the conduct of cases before OHA.

Proposed Sec. 134.102 would provide definitions applicable to all

subparts within part 134. Many of the definitions in current Sec. 134.2

would be shortened and simplified. Some definitions would be deleted as

unnecessary; others would be added with the incorporation of portions

of parts 121 and 124 into part 134. Minor language changes would also

be made. The definition of ``hearing'' would clarify that a hearing may

or may not include live testimony or argument. The definition of

``Judge'' would be expanded to include the Assistant Administrator for

Hearings and Appeals (``AA/OHA'') when acting in the capacity of an

Administrative Judge. The definition of ``pleading'' would be narrowed

to include only the petition, appeal, answer, or any supplement or

amendment to these documents. The current rule defines ``pleading'' to

include all submissions other than documentary or testimonial evidence.

Proposed Sec. 134.103 would list proceedings over which OHA has

jurisdiction and would amend current Sec. 134.3. Paragraph (a) of the

current rule would be deleted because contractor debarment and

suspension proceedings can be more appropriately handled by the program

office.

Current Sec. 134.3(d) would be amended to delete all proceedings

except those under the Rehabilitation Act of 1973 (29 U.S.C. Sec. 794,

as amended). Proceedings under the Age Discrimination Act (42 U.S.C.

Secs. 6101 et seq.) would be added. The remainder of the proceedings in

current Sec. 134.3(d) can be more appropriately conducted in other

forums.

Current Secs. 134.3(e) and (f) would be deleted. Thus, employee

formal stage grievances and arbitrations arising under a pertinent

labor agreement no longer would be under OHA's jurisdiction.

Proceedings to determine allowance of fees and expenses under the

Equal Access to Justice Act (5 U.S.C. Sec. 504), size and SIC code

appeals, and proceedings pursuant to the Program Fraud Civil Remedies

Act against persons who make false claims or statements would be added

to the jurisdictional section.

Section 134.104 would restate in clear language the statutory limit

on OHA's jurisdiction over certain types of MED appeals. Those

limitations are currently set forth in Sec. 124.210(d).

Proposed Sec. 134.105 would restate in clear language the rules for

computing time (current Sec. 134.2(b)(2)) and modifying time limits

(current Sec. 134.4(a)). Paragraph (b) of current Sec. 134.4 would be

deleted.

Proposed Sec. 134.201 would explain the scope of subpart B. Subpart

B would cover all cases over which OHA has jurisdiction, except appeals

from size determinations and SIC code designations, which would be

covered in subpart C, and proceedings under the Program Fraud Civil

Remedies Act, which would be covered in part 142.

Proposed Sec. 134.202 would explain how to commence a case, and

would provide revised time limits for filing petitions for various

types of proceedings. The current regulation contains seven different

rules pertaining to time limits for filing petitions, depending on the

type of case. The proposed rule would provide that, with two

exceptions, all petitions must be filed no later than 45 days from the

date of service of the SBA action or determination to which the

petition relates.

Proposed Sec. 134.203 would specify the information required in a

petition and provide that insufficient petitions may be dismissed. It

would also incorporate the rules for filing petitions in certain MED

appeals currently contained in Sec. 124.210(b).

Proposed Sec. 134.204 would amend the current rule on service and

filing (Sec. 134.14). It would delete the requirement that multiple

copies of pleadings be filed, and would add a provision permitting

service and filing by facsimile transmission, United States express

mail, or commercial delivery service. It is intended that ``commercial

delivery service'' includes overnight or other expedited delivery by

private business concerns. In cases where the filing is sent by first-

class United States mail, it would change the date of filing with OHA

from date of receipt to date of mailing, as determined by the postmark.

It would also provide that in cases where the postmark is illegible or

incomplete, the submission would be presumed to have been mailed five

days prior to receipt. Finally, it would add a requirement that any

filing by personal delivery or commercial delivery service must be made

between the hours of 8:30 AM and 5:00 PM.

Current Sec. 134.14(d), on waiver of rights to service, and current

Sec. 134.15, on format requirements, would be

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deleted, as would the requirement that a certification be made as to

the truth and accuracy of a filing. Under proposed Sec. 134.209(b), a

person's signature on a document would represent an express

certification.

Proposed Sec. 134.205 (currently Sec. 134.11(c)) would be written

in simpler language. The time limit for serving and filing a motion for

a more definite statement would be increased from 15 to 20 days after

service of a petition or order to show cause, so as to allow sufficient

time in light of proposed Sec. 134.204(e) pertaining to service. The

rule would clarify that, where a motion for a more definite statement

is filed, the Judge would establish the time for serving and filing an

answer.

Proposed Sec. 134.206, on answers, corresponds to Sec. 134.12 of

the current regulation. The current rule provides that answers for some

types of cases must be filed within 30 days and others within 45 days

after the filing of a petition. The proposed rule would provide that

all answers must be filed no later than 45 days after the service of a

petition, with the exception of debt collection proceedings for which a

30-day time limit would apply. The provision on notification to the

Office of General Counsel of the docketing of a case would be deleted

because it is an internal administrative procedure. Paragraph (d) of

the current rule would be deleted. Proposed paragraphs (d) and (e)

would clarify that SBA must submit the administrative record to OHA,

and that the Judge can direct its compliance if necessary.

Proposed Sec. 134.207, on amendments and supplemental pleadings,

would not change the current rule substantially other than to simplify,

shorten and reorganize it. It would limit the filing of amendments and

supplements to pleadings in certain MED appeals to cases where a

showing of good cause is made, with the Judge determining the time to

answer. Current Sec. 134.13(b), on conformance to evidence, would be

deleted.

Proposed Sec. 134.208, concerning representation in cases before

OHA, would shorten the current section on appearances. Paragraphs (b)

and (e) of current Sec. 134.16 would be deleted as unnecessary

practices. Paragraph (d) would also be eliminated since attorneys are

presumed to know the ethical standards under which they must practice.

Proposed Sec. 134.209 would adopt the signature requirements found

elsewhere in the current rule, and would provide that the signing of a

submission by a party or its counsel attests that the submission is

true and is not being filed for delay or harassment. This provision

would replace the requirement in current Sec. 134.15 requiring a

separate, express certification.

Proposed Sec. 134.210, on intervention, would eliminate the

distinction between intervention as of right and discretionary

intervention, and would broaden and simplify the current rule by adding

a provision permitting intervention at the Judge's discretion to

protect the moving party's interests. The proposed rule would provide

SBA a right to intervene at any time until final decision.

Proposed Sec. 134.211 would state in summary form the requirements

of motion practice. Paragraph (d) of the current rule relating to the

disposition of motions when the assigned Judge is unavailable would be

deleted. The response time in the proposed rule would be enlarged to 20

days after the service of a motion to allow sufficient time in light of

proposed Sec. 134.204(e) pertaining to service.

Proposed Sec. 134.212 would summarize the current provision on

summary decision (current Sec. 134.22) with some minor revisions.

Current paragraph (d) relating to the content of the Judge's order when

a motion is granted would be deleted. A new paragraph (d) would be

added to stay the response time for filing an answer when a motion for

summary decision has been filed, and to provide that the Judge would

determine the response time for answering any claims remaining after a

decision on the motion is rendered.

Proposed Sec. 134.213 would require the establishment of good cause

as a prerequisite to discovery in non-MED matters. Current

Sec. 124.210(h)(3)(i), governing discovery in certain MED program

appeals, would be incorporated in this proposed rule. Current

Sec. 134.18(c), Protective orders, and current Sec. 134.26, Motions to

compel, would be summarized and incorporated in the proposed rule on

discovery.

Proposed Sec. 134.214, on subpoenas, would modify the current rule

with respect to both application requirements and service. While the

current rule permits a party to apply for a subpoena both orally on the

record and ex parte by written application, the proposed rule would

limit all subpoena requests to written applications. Service in the

proposed rule would be limited to personal delivery only, eliminating

service by certified mail. The proposed rule would require the subpoena

and the affidavit of service to be filed with OHA within two days of

service. The time for response to a motion to quash would be enlarged

in the proposed rule. Finally, the rule would clarify that a Judge can

issue a subpoena on his or her own initiative.

Proposed Sec. 134.215 would simplify the current procedure for

interlocutory appeals by designating the AA/OHA or his or her designee

as the reviewing official for purposes of all interlocutory appeals.

The time for filing a motion to certify a ruling for an interlocutory

appeal would be enlarged. The proposed rule also would make it clear

that if the Judge declined to certify a ruling for interlocutory

appeal, the affected party would be able to raise the adverse ruling in

a subsequent request for review under Sec. 134.228.

Proposed Sec. 134.216 is new. This provision would permit the use

of alternative dispute resolution techniques, such as arbitration and

mediation, to resolve cases before OHA and would provide that, when

such procedures are employed, the Judge would stay the proceedings

before OHA as appropriate.

Proposed Sec. 134.217 would shorten the current rule on settlements

considerably. Cumulative information would be deleted and the

requirements concerning the content of the agreement would be

eliminated. The proposed rule would allow for partial settlements by

eliminating paragraph (5) of the current rule. The remainder of the

rule, while reorganized, would not be substantially revised.

Proposed Sec. 134.218 would both shorten and modify current

Sec. 134.18 on Judges. It would require that an Administrative Law

Judge be assigned to all proceedings under the Administrative Procedure

Act. It would clarify that the AA/OHA could assign any other proceeding

to himself or herself, provided that he or she is a duly licensed

attorney. The duties and powers of the Judge would be stated broadly,

clarifying that they can take such action as may be required to

regulate proceedings and issue decisions. The proposed rule would

eliminate paragraph (c) because protective orders are covered in

proposed Sec. 134.204(g), Service and filing requirements, and in

Sec. 134.213(d), Discovery. The proposed rule would also eliminate

paragraph (e) on interference, which would be covered in proposed

Sec. 134.220, Prohibition against ex parte communications. The current

paragraph on recusal would be rewritten in summary form. Paragraph (f),

Substitution of Judges, would be eliminated because OHA's substitution

procedures are consistent with court practice.

Proposed Sec. 134.219 would modify the current rule on sanctions to

clarify the type of conduct for which sanctions

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might be imposed and to clarify that no sanctions imposing fees, costs,

or monetary penalties can be ordered by the Judge. The rest of the rule

would be more broadly stated, but its scope would not be substantively

expanded.

Proposed Sec. 134.220 would adopt the summary language of

Sec. 121.1715, now deleted, which also deals with the topic of ex parte

communications. Rather than list the duties and obligations of a Judge

as in current Sec. 134.38, the proposed rule would incorporate by

reference the Administrative Procedure Act, 5 U.S.C. Sec. 557(d)(1).

This statute contains explicit instructions for Judges who have been

contacted ex parte. The proposed rule would reiterate current

Sec. 134.38 in emphasizing that prohibited communications may result in

the imposition of sanctions.

Proposed Sec. 134.221 would be shortened and rewritten in summary

format instead of listing possible matters to be considered in a

prehearing conference.

Proposed Sec. 134.222, on oral hearings, would restate in clear

language the intention of the current rule to leave oral hearings to

judicial discretion. In the proposed rule, the Judge could permit an

oral hearing in a non-MED matter only if he or she concluded that

confrontation of witnesses was necessary to resolve a genuine dispute

as to a material fact. The proposed rule would eliminate the provision

in current Sec. 134.19(a) restricting the time period within which a

motion requesting an oral hearing may be submitted. However, current

Sec. 124.210(h)(3), which restricts the ability to request an oral

hearing in certain MED program appeals, would be incorporated in

Sec. 134.222. Section 124.210(g) would also be modified and

incorporated in this proposed rule. Selection of the location for all

oral hearings would be committed to judicial discretion. Current

Secs. 124.211(e) and 124.211(h), relating to hearings on MED

suspensions, would be incorporated in this part and expanded to provide

that, for good cause, a Judge may waive the requirement that an oral

hearing commence no more than 20 days after the ruling granting such

hearing. Current paragraphs (c) and (d) of Sec. 134.19, which track

common federal court practices, would be eliminated, and current

paragraphs (e)-(g) would be summarized for brevity's sake.

Proposed Sec. 134.223, on evidence, would clarify OHA's use of the

Federal Rules of Evidence as a general guide in its proceedings.

Accordingly, paragraphs (b), (c), (d), (e), (f), and (g) of the current

rule would be eliminated or shortened both for the sake of brevity, and

because these paragraphs track the federal rules. Current

Sec. 124.210(h)(1) would be revised and incorporated in paragraph (c)

and in proposed Sec. 134.224, Standards for decision. Current

Sec. 124.210(h)(3)(i) would be reorganized for clarity and moved to

this section, insofar as it relates to the submission of evidence, and

to Sec. 134.211(b), insofar as it relates to discovery. Section

124.210(h)(2) would also be incorporated in paragraph (d) of the

proposed rule, clarifying that the Judge would retain jurisdiction

during any remand.

Proposed Sec. 134.224, on standards for decision, would set forth

the burden of proof in factual matters arising in cases before OHA.

This language is currently set forth in Sec. 134.31, Contents of

decisions. It would also incorporate current Sec. 124.210(h)(1), which

provides the standard of review in cases involving MED program appeals.

The scope of review would not change from the current rule.

Proposed Sec. 134.225, dealing with the record, would be shortened

considerably. The proposed rule would refer to the ``record'', instead

of the ``docket file'', which would comport with the terminology used

in the Administrative Procedure Act. Information relating to the

internal administration of OHA would be deleted. The proposed rule

would incorporate portions of current Sec. 134.31, which would be

deleted in its entirety. The remaining sections of the current rule on

records would be eliminated or summarized for the sake of brevity.

Proposed Sec. 134.226 would require that all decisions pertaining

to the collection of debt owed to SBA and the United States under the

Debt Collection Act of 1982 and part 140 of this chapter, must be

rendered within 60 days after a petition is filed. Further it would

incorporate, without modification, Sec. 124.210(j), relating to

decisions in certain MED proceedings, and would amend current

Sec. 124.211(i) to eliminate the requirement that a decision be

rendered at the close of a suspension hearing, where one is held. It

would also adopt the remaining portions of Sec. 134.31, Contents of

decisions.

Proposed Sec. 134.227, on finality of decisions, would be rewritten

to reflect the jurisdictional changes in Sec. 134.103. Since OHA would

no longer have jurisdiction over employee formal stage grievances or

arbitrations involving labor agreements, current paragraphs

134.31(a)(1) and (a)(2) would be deleted. Paragraph (b) would be

rewritten consistent with the jurisdictional changes in proposed

Sec. 134.103. Because OHA would no longer have jurisdiction in

contractor debarment and suspension proceedings, former paragraph (c)

would also be eliminated. The remaining portions of paragraphs (a) and

(b) would be rewritten for clarity.

Proposed Sec. 134.228, on review of initial decisions, is based

upon current Sec. 134.34, but would permit the filing of a request for

review directly with OHA. The term ``agency reviewing official'' would

be eliminated. Upon a request for review, SBA's Administrator or his or

her designee would review the initial decision and could set aside a

decision if it were found to be based upon an erroneous finding of fact

or an erroneous interpretation of case law, statute, regulation, or SBA

policy. Time frames for filing a response to a petition for review

would be enlarged.

Proposed Sec. 134.229 would be rewritten for clarity.

Proposed Sec. 134.301 would define the scope of subpart C. Subpart

C would cover the rules on appeals from size determinations and SIC

code designations currently found in Secs. 121.1701 et seq. It would

shorten and simplify current Sec. 121.1701, deleting any reference to

Regional Offices since authority to make size determinations has been

transferred from Regional Offices to Government Contracting Area

Offices.

Proposed Sec. 134.302 corresponds to current Sec. 121.1703 and

would specify who may appeal a size determination or SIC code

designation. This section would delete the reference to the Regional

Administrator (since Regional Offices are no longer involved in size

determinations), and clarify that the procuring agency contracting

officer responsible for the relevant procurement has an appeal right.

Proposed Sec. 134.303 would incorporate a policy decision to make

the review of size appeals by OHA a matter of its discretion. This

change would conserve limited resources and avoid the necessity of

deciding cases where the regulation or case precedent is clear.

Proposed Sec. 134.304 would specify the time limits for appeal,

simplifying the current rule considerably. Time limits for appealing

size determinations would now run from the date of service of the

determination rather than from the date of receipt. The time periods

for filing would be lengthened for certain types of appeals and

shortened for others. Time limits for appeals from SIC code

designations would run from the date the solicitation is issued. The

current time limits for appeals of SIC code designations run backwards

from the bid opening date or deadline for submitting proposals or

quotations and are complex and difficult to use. The

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rule on counting Saturdays, Sundays and holidays would be amended to

conform to the rule for other OHA proceedings and would be incorporated

in Sec. 134.105. The remainder of the current section would be

reorganized, but not substantively changed.

Proposed Sec. 134.305 concerning the appeal petition would simplify

current Sec. 121.1706. A telefaxed notice would no longer need to be

confirmed by next day mailing of a written notice. A signed

certification as to the truth and accuracy of the appeal petition would

no longer be required. In size appeals, the appellant would no longer

be required to serve a copy of the appeal petition on all alleged

affiliates of the concern whose size is at issue. The requirement would

provide separate requirements for service of an SIC code appeal

petition as opposed to a size appeal petition. A provision would be

added clarifying that appeals may be dismissed if they do not contain

all the required information.

Proposed Sec. 134.306 would restate current Sec. 121.1706(b)

concerning transmission of the case file from the office that made the

size determination to OHA.

Proposed Sec. 134.307 would incorporate by reference proposed

Sec. 134.204. The rule for service and filing of submissions for size

and SIC code appeals would be the same as that for filing petitions

under subpart B, with the rule in subpart B incorporated by reference.

The requirement in the current rule (Sec. 121.1712) that service be

made by certified or registered mail would be deleted to ease the

burden on the public. The current requirement that an express

certification be made as to the truth and accuracy of any submission to

OHA would be deleted. Under proposed Sec. 134.209 (incorporated by

reference), any person signing a document attests to its truth and

accuracy. Proposed Sec. 134.307 would incorporate by reference a rule

on determining the date of service or filing. Proposed Sec. 134.105

would incorporate the rule on modification of time limits in current

Sec. 121.1712(e).

Proposed Sec. 134.308 is new and would provide that evidence not

presented to the SBA official whose size determination is being

appealed would only be considered when ordered by the Judge. A new

provision would also be added to provide that the Judge could draw

adverse inferences against parties who do not submit evidence in their

possession when directed to do so.

Proposed Sec. 134.309, concerning responses to the appeal petition,

corresponds to current Sec. 121.1708. It would be reorganized for

clarity, would enlarge the time to file a response to an appeal from 5

to 10 days, and would clarify that replies to responses would not be

permitted unless directed by the Judge.

Proposed Sec. 134.310 on discovery would incorporate the current

policy of OHA not to permit discovery in either size or SIC code

proceedings.

Proposed Sec. 134.311 would provide that oral hearings not be held

in SIC code appeals, and be held in size appeals only under exceptional

circumstances. In SIC code cases, short time frames make the use of

oral hearings impracticable. Moreover, there is rarely a need to

confront witnesses in an SIC code appeal. Under exceptional

circumstances, oral hearings may be appropriate in size determination

appeals. In such instances, the proceedings would be conducted in

accordance with those rules in subpart B deemed appropriate by the

Judge.

Proposed Sec. 134.312 would incorporate by reference certain

paragraphs in Sec. 134.223 for cases where evidence is admitted. There

is no separate rule on evidence in the current regulations relating to

appeals from size determinations and SIC code designations.

Proposed Sec. 134.313 would incorporate by reference certain other

provisions in subpart B. The rules for amendments to pleadings,

representation, signature, intervention, motions, subpoenas, Judges,

sanctions, and the prohibition against ex parte communications, would

be identical to those for other proceedings before OHA. For the sake of

brevity and simplicity, these sections would be incorporated by

reference in subpart C rather than repeated verbatim.

The proposed rule on amendments to pleadings does not appear in the

current rule and would permit parties to amend pleadings if permitted

by the Judge. The proposed rule on representations does not appear in

the current rules and would limit the types of persons who could

represent parties in proceedings before OHA. The current rule on

intervention (Sec. 121.1709) would be broadened to permit OHA to allow

an interested person to intervene if the Judge determines that the

person's participation in the proceedings would likely assist in the

efficient, prompt, and fair determination of the case. The proposed

rule on signatures would include a provision that by signing a

submission a person attests to its truth and accuracy. This would

replace the requirement in current Sec. 121.1712(d) that an express

certification be made as to the truth and accuracy of a document. The

proposed section on motions is new and would clarify what is required

when filing a motion in these proceedings. The section on Judges would

be shortened considerably. The current rule on Judges (Sec. 121.1713)

lists all the various powers of a Judge in OHA. The proposed rule would

state the duties and powers of the Judge in broad terms. The current

section on ex parte communications (Sec. 121.1715) would not be

substantially changed except that the Administrative Procedure Act

would be cited with regard to a Judge's duty to disclose ex parte

communications. The provision on sanctions (current Sec. 121.1713(p))

would be shortened, and the list of the types of sanctions that could

be imposed would be deleted.

Proposed Sec. 134.314 would provide that the standard of review in

size and SIC code appeals would be whether the determination was based

on clear error of law or fact. In cases where new evidence was

submitted, it is recognized that clear error of law or fact could be

found as a result of such new evidence.

Proposed Sec. 134.315, concerning the record, would incorporate by

reference certain paragraphs in Sec. 134.225, and would add a sentence

providing that the contents of the record would also include the file

submitted to OHA by the Area Office and any materials submitted by the

contracting officer.

Proposed Sec. 134.316, on the decision, corresponds to current

Sec. 121.1720. The current rule would be shortened considerably.

References to hearings and post-hearing procedures would be eliminated.

The statement concerning oral notification of the ultimate

determination would be eliminated. Judges may provide oral notice of

the decision as a matter of practice under their powers as Judges.

Proposed Sec. 134.317 is new and would clarify that OHA's

jurisdiction would terminate upon the issuance of the decision.

Proposed Sec. 134.318 would inform the public that the case file

would be returned to the transmitting Area Office upon termination of

OHA's jurisdiction.

A number of sections in the current rules would be deleted or

incorporated elsewhere. The definitions in current Sec. 121.1702 would

be incorporated in proposed Sec. 134.102, the definitional section for

all of part 134. Current Sec. 121.1704 would be incorporated in

proposed Sec. 134.204 on service and filing requirements. Current

Sec. 121.1710 would be substantially incorporated in proposed

Sec. 134.225. Current Sec. 121.1711 would be deleted since the

assignment of a Judge is an internal administrative procedure. The

right to request reconsideration in current Sec. 121.1712 would be

eliminated in order to streamline the appellate process.

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Current Sec. 121.1716, on subpoenas, would be deleted since proposed

Sec. 134.313 would incorporate by reference proposed Sec. 134.214.

Current Sec. 121.1717, concerning in camera orders, would be deleted

since proposed Sec. 134.307 would incorporate by reference proposed

Sec. 134.204(g), and proposed Sec. 134.315 would incorporate by

reference proposed Sec. 134.225(b). Current Sec. 121.1719, concerning

post-hearing procedures, would be eliminated since oral hearings would

no longer be held in SIC code appeals, and only rarely in size appeals.

Current Sec. 121.1722, concerning the delegation of authority when a

Judge is not available, would be deleted since it is an internal

procedure and is a matter of general practice in administrative and

judicial forums.

Proposed Sec. 134.401 corresponds to existing Sec. 132.101. There

are no substantive changes in the proposed section. This section, and

the sections which follow, are organized in question and answer format

to make the information more accessible.

Current Sec. 132.102 which discusses the sunset of the Equal Access

to Justice Act (the ``Act'') would be deleted because Public Law 99-80

enacted August 5, 1984 reauthorized the Act.

Proposed Sec. 134.402 describes generally the types of proceedings

under which you may apply for reimbursement. This proposed section

corresponds to current Secs. 132.101, 132.103, and 132.105.

Proposed Sec. 134.403 corresponds to existing Sec. 132.103. The

proposed section defines which types of proceedings conducted by OHA

are ``agency adversary adjudications'' covered by the Act. The proposed

section would revise the current section to be consistent with

Sec. 134.103 in subpart A of this rule, which lists the types of

proceedings in which OHA has jurisdiction. Note that only a few

categories of OHA proceedings qualify as ``agency adversary

adjudications'': proceedings concerning the revocation or suspension of

SBIC licensees, cease and desist orders, and the removal or suspension

of SBIC directors and officers; proceedings under the Debt Collection

Act of 1982; and MED eligibility appeals relating to admission,

termination, graduation, and waiver denials under Sec. 124.317.

Proposed Sec. 134.404 is new. It describes generally the type of

benefits you may claim.

Proposed Sec. 134.405 corresponds to existing Sec. 132.105. The

material is revised in the proposed rule to provide clarification of

certain terms used in the current section, such as ``position of the

agency''. The proposed section would incorporate the clarified

definition added to the Act in the 1984 amendment at 5 U.S.C.

Sec. 504(b)(1)(E) and in the amended Model Rule at 1 C.F.R.

Sec. 315.105(a). The definition now includes the position taken by the

agency in the administrative proceeding, as well as the agency's

position in the underlying action which triggered the administrative

proceeding. The proposed section would also provide that although no

presumption arises that SBA's position was not substantially justified

simply because it did not prevail in a proceeding, nonetheless, upon

the assertion that the position of SBA was not substantially justified,

SBA would be required to establish that its position was reasonable in

fact and law.

Proposed Sec. 134.406(a) clarifies the definition of eligible party

found in current Sec. 132.104. The current section does not define

``party'' but instead refers to the definition in 5 U.S.C. Sec. 551(3).

This reference is confusing because the definition of ``party'' in that

statute could include federal agencies. Federal agencies are not

parties eligible for reimbursement under the Act. The proposed new

section actually defines an eligible party in a manner consistent with

the Act. Proposed Sec. 134.406(b) corresponds to existing

Sec. 132.104(h).

Proposed Sec. 134.407 corresponds to existing Secs. 132.104(b),

(c), (d) and (e), which describe eligibility criteria. The proposed

section summarizes the material on eligibility in the form of a chart

and revises it to reflect the amendment to the Act which increased the

net worth eligibility ceiling.

Proposed Sec. 134.408 corresponds to existing subsections

132.104(f) and (g). The reorganized material summarizes all the special

rules for calculating eligibility in one section.

Proposed Sec. 134.409 describes the difference between fee and

expense.

Proposed Sec. 134.410 describes the limitations on reimbursement of

professional fees and expenses found in current Secs. 132.201 and

132.202. That portion of the proposed section pertaining to fees

presents the information in more succinct form, but does not

substantively revise it. That portion of the proposed section relating

to expenses revises the current rule so that it will be consistent with

the proposed rule relating to fees. The current section would not

otherwise be substantively revised.

Proposed Sec. 134.411 corresponds to existing Sec. 132.301. The

proposed section reorganizes material relating to applications and

conforms the service and filing requirements to the requirements of

Sec. 134.204. The lengthy requirements of the current section would be

revised and summarized for ease of reference. A chart would be added to

clarify what each type of party must attach as exhibits to the

petition.

Proposed Sec. 134.412 corresponds to existing Sec. 132.302. The

proposed section reorganizes material relating to net worth exhibits

and presents it in simplified form. The text is significantly

condensed. Redundant information is deleted.

Proposed Sec. 134.413 corresponds to existing Sec. 132.303. The

proposed section sets forth the requirements of the current rule in a

clearer format for ease of reference. Additional specificity is

provided in the proposed section respecting the submission of

statements or invoices for expenses. This language was added so that

the requirements for expense invoices would be consistent with the

requirements for fee statements.

Proposed Sec. 134.414 corresponds to existing Secs. 132.301 and

132.402. The proposed section reorganizes material relating to the

filing deadline of applications. The proposed section also effectuates

the stay language in the Act, at 5 U.S.C. Sec. 504(a)(2), which

provides for a stay of award requests if the SBA or another party

appeals the underlying decision. The Act requires award requests to be

stayed until a final unreviewable decision is rendered in the

underlying adjudication. This information is not contained in the

current SBA regulations although it is both in the Act and in the Model

Rule for Implementation of the Equal Access to Justice Act at 1 CFR

Sec. 315.204.

Proposed Sec. 134.415 incorporates the procedural requirements of

subpart B by reference.

Proposed Sec. 134.416 corresponds to existing Secs. 132.402(a) and

132.403. The proposed section reorganizes the material relating to the

ALJ's decision. The current text would be condensed and summarized in

the proposed rule, but not otherwise revised.

Proposed Sec. 134.417 corresponds to existing Sec. 132.404. The

proposed section clarifies the avenues available to an applicant to

seek review of an ALJ's decision on an award, and the time frames which

must be observed. The proposed section adds new language to current

Sec. 134.404 as to what type of SBA decision is a ``determination''

under the Act for purposes of judicial review.

Proposed Sec. 134.418 corresponds to existing Sec. 132.501. The

proposed section would add the SBA's address for Financial Operations

to expedite payment of awards but would not otherwise revise the

section.

[[Page 58288]]

Compliance With Executive Orders 12612, 12778, and 12866, the

Regulatory Flexibility Act (5 U.S.C. Secs. 601, et seq.), and the

Paperwork Reduction Act (44 U.S.C. Ch. 35)

SBA certifies that this proposed rule would not have a significant

economic impact on a substantial number of small entities within the

meaning of Executive Order 12866 or the Regulatory Flexibility Act, 5

U.S.C. Secs. 601 et seq. This rule would reorganize and simplify the

rules governing procedures before SBA's Office of Hearings and Appeals.

Contracting opportunities and financial assistance for small business

would not be affected by this proposed rule. Therefore, it is not

likely to have an annual economic effect of $100 million or more,

result in a major increase in costs or prices, or have a significant

adverse effect on competition or the United States economy.

For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA

certifies that this proposed rule, if adopted in final form, would

contain no new reporting or record keeping requirements.

For purposes of Executive Order 12612, SBA certifies that this rule

would not have any federalism implications warranting the preparation

of a Federalism Assessment.

For purposes of Executive Order 12778, SBA certifies that this rule

is drafted, to the extent practicable, in accordance with the standards

set forth in section 2 of that Order.

List of Subjects

13 CFR Part 132,

Claims, Equal Access to Justice, Lawyers.

13 CFR Part 134

Administrative practice and procedure, Organization and functions

(Government agencies).

For the above reasons, and under the authority of 15 U.S.C.

634(b)(6), SBA proposes to amend 13 CFR Chapter I as follows:

1. Part 134 would be revised to read as follows:

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF

HEARINGS AND APPEALS

Subpart A--General Rules

Sec.

134.101 Scope of the rules in this part 134.

134.102 Definitions used in this part 134.

134.103 Jurisdiction of OHA.

134.104 Limitation on the jurisdiction of OHA.

134.105 Rules applicable to time periods provided in this part 134.

Subpart B--Rules of Practice for Most Cases

134.201 Scope of the rules in subpart B.

134.202 Commencement of cases.

134.203 The petition.

134.204 Service and filing requirements.

134.205 Motion for a more definite statement.

134.206 The answer.

134.207 Amendments and supplemental pleadings.

134.208 Representation in cases before OHA.

134.209 Requirement of signature.

134.210 Intervention.

134.211 Motions.

134.212 Summary decision.

134.213 Discovery.

134.214 Subpoenas.

134.215 Interlocutory appeals.

134.216 Alternative dispute resolution procedures.

134.217 Settlement.

134.218 Judges.

134.219 Sanctions.

134.220 Prohibition against ex parte communications.

134.221 Prehearing conferences.

134.222 Oral hearing.

134.223 Evidence.

134.224 Standards for decision.

134.225 The record.

134.226 The decision.

134.227 Finality of decisions.

134.228 Review of initial decisions.

134.229 Termination of jurisdiction.

Subpart C--Rules of Practice for Appeals From Size Determinations and

SIC Code Designations

134.301 Scope of the rules in subpart C.

134.302 Who may appeal.

134.303 No absolute right to an appeal from a size determination.

134.304 Commencement of appeals from size determinations and SIC

code designations.

134.305 The appeal petition.

134.306 Transmission of the case file.

134.307 Service and filing requirements.

134.308 Limitation on the submission of new evidence in appeals

from size determinations.

134.309 Response to an appeal petition.

134.310 Discovery.

134.311 Oral hearings.

134.312 Evidence.

134.313 Applicability of subpart B provisions.

134.314 Standard of review.

134.315 The record.

134.316 The decision.

134.317 Termination of jurisdiction.

134.318 Return of the case file.

Subpart D--Implementation of the Equal Access to Justice Act

134.401 What is the purpose of this subpart?

134.402 Under what circumstances may I apply for reimbursement?

134.403 What is an agency adversary adjudication?

134.404 What benefits may I claim?

134.405 Under what circumstances are fees and expenses

reimbursable?

134.406 Who is eligible for possible reimbursement?

134.407 How do I know which eligibility requirement applies to me?

134.408 What are the special rules for calculating net worth and

number of employees?

134.409 What is the difference between a fee and an expense?

134.410 Are there limitations on reimbursement for fees and

expenses?

134.411 What should I include in my application for an award?

134.412 What must a net worth exhibit contain?

134.413 What documentation do I need for fees and expenses?

134.414 What deadlines apply to my petition for an award and where

do I send it?

134.415 How will proceedings relating to my application for fees

and expenses be conducted?

134.416 How will I know if I receive an award?

134.417 May I seek review of the ALJ's decision on my award?

134.418 How are awards paid?

Authority: 5 U.S.C. 504; 15 U.S.C. 634(b)(6) and 637(a).

Subpart A--General Rules

Sec. 134.101 Scope of the rules in this part 134.

The rules in this part 134 govern the conduct of all proceedings

before OHA except those governed by part 142 of this chapter.

Sec. 134.102 Definitions used in this part 134.

As used in this part:

AA/OHA means the Assistant Administrator for OHA.

Address means the primary home or business address of a person or

entity, including the street location or postal box number, city or

town, state, and postal zip code.

Area Office means a Government Contracting Area Office or a

Disaster Area Office of the Small Business Administration.

Day means a calendar day, unless a Judge specifies otherwise.

Hearing means the presentation and consideration of argument and

evidence. A hearing may or may not include live testimony or argument.

Judge means an Administrative Law Judge or an Administrative Judge

of OHA, or the AA/OHA when he or she acts in the capacity of an

Administrative Judge.

OHA means the Office of Hearings and Appeals.

Party means the petitioner, respondent, or intervenor.

Person means an individual, or a partnership, association,

corporation, or other business entity.

Petition means a written complaint, a written notice of appeal from

an SBA

[[Page 58289]]

determination, or a written request for the initiation of proceedings

before OHA.

Petitioner means any person or governmental agency which has

brought a proceeding before OHA.

Pleading means a petition, an order to show cause commencing a

case, a notice of appeal, or an answer, as well as any amendment or

supplement to those documents.

Respondent means any person or governmental agency against which a

case has been brought before OHA.

SBA means the United States Small Business Administration.

SIC code means Standard Industrial Classification code.

Size determination means a formal size determination made by an

Area Office.

Sec. 134.103 Jurisdiction of OHA.

OHA has authority to conduct proceedings in the following types of

cases:

(a) The revocation or suspension of Small Business Investment

Company licenses, cease and desist orders, and the removal or

suspension of directors and officers of licensees, under the Small

Business Investment Act of 1958, 15 U.S.C. 681 et seq. and part 107 of

this chapter;

(b) Alleged violations of the Age Discrimination Act of 1975, 42

U.S.C. 6101 et seq. and part 112, subparts A and B, of this chapter,

and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, as

amended, and part 112, subpart C, of this chapter;

(c) The revocation of the privilege of any applicant or agent to

conduct business with SBA under the Small Business Act, 15 U.S.C. 634

and 642 and part 103 of this chapter;

(d) The eligibility of, or preferred or certified status of, any

bank or non-bank lender to continue to participate in SBA loan programs

under the Small Business Act, 15 U.S.C. 634 et seq. and part 120 of

this chapter;

(e) The suspension or termination of surety bond program

participants under 15 U.S.C. 694a et seq. and part 115 of this chapter;

(f) The rights, privileges, or obligations of development companies

under sections 501, 502, 503, and 504 of the Small Business Investment

Act of 1958, 15 U.S.C. 695 et seq. and part 120, subpart H, of this

chapter;

(g) Allowance of fees and expenses under the Equal Access to

Justice Act, 5 U.S.C. 504 and subpart D of this part;

(h) Debarment from appearance before the SBA because of post-

employment restrictions under 18 U.S.C. 207 and part 105 of this

chapter;

(i) Collection of debts owed to SBA and the United States under the

Debt Collection Act of 1982 and part 140 of this chapter;

(j) Appeals from the following SBA determinations involving the MED

program under the Small Business Act, 15 U.S.C. 637 and part 124 of

this chapter:

(1) Denial of program admission based solely on a negative finding

as to social disadvantage, economic disadvantage, ownership or control;

program termination; program graduation; or denial of a waiver of the

requirement to perform to completion a MED contract; and

(2) Program suspension;

(k) Appeals from size determinations and SIC code designations

under part 121 of this chapter;

(l) The imposition of civil penalties and assessments against

persons who make false claims or statements to SBA under the Program

Fraud Civil Remedies Act, 31 U.S.C. 3801-3812 and part 142 of this

chapter; and

(m) Any other hearing, determination, or appeal proceeding referred

to OHA by the Administrator of SBA.

Sec. 134.104 Limitation on the jurisdiction of OHA.

A Judge considering a MED program appeal arising under

Sec. 134.103(j)(1) of this part must not accept jurisdiction if:

(a) The appeal does not allege facts that, if true, would warrant

reversal or modification of the determination; or

(b) The appeal is not filed on time and in accordance with the

requirements of this part; or

(c) The matter has been decided or is the subject of a pending case

before a court.

Sec. 134.105 Rules applicable to time periods provided in this part

134.

(a) Computing time. In computing time, the day from which the time

is computed is not counted. The last day of the time period is counted,

unless it is a Saturday, Sunday, or Federal holiday, in which event the

next business day is counted.

(b) Modification of time limits. At the Judge's discretion, or upon

the motion of a party showing good cause, the Judge may modify any of

the time limits set forth in this part, other than those established by

statute and those governing when a case may be commenced. However, any

motion to extend a time limit must be filed and served before the

expiration of that time limit.

Subpart B--Rules of Practice for Most Cases

Sec. 134.201 Scope of the rules in subpart B.

The rules of practice in subpart B of this part apply to all

proceedings over which OHA has jurisdiction, except for appeals from

size determinations and SIC code designations and proceedings governed

by part 142 of this chapter.

Sec. 134.202 Commencement of cases.

(a) Commencement of a case by a person. A case may be commenced by

a person by filing a written petition within the following time

periods:

(1) Except as otherwise provided by this paragraph, no later than

45 days from the date of service of the SBA action or determination to

which the petition relates;

(2) In the case of debt collection proceedings under part 140 of

this chapter, no later than 15 days after receipt of a notice of

indebtedness and intention to collect such debt by salary or

administrative offset;

(3) In the case of applications for an award of fees pursuant to

subpart D of this part, no later than 30 days after the decision to

which it applies becomes final.

(b) Commencement of a case by SBA. A case may be commenced by SBA

by filing a written order to show cause.

Sec. 134.203 The petition.

(a) Required contents of a petition. A petition must contain the

following information:

(1) The basis of OHA's jurisdiction over the case;

(2) A clear and concise statement of the factual basis of the case

and, if the case is a MED program appeal arising under

Sec. 134.103(j)(1) of this part, the reasons why the determination is

alleged to be arbitrary, capricious, or contrary to law;

(3) The relief being sought; and

(4) The name, address, telephone number, and signature of the

petitioner or its attorney.

(b) Dismissal of insufficient petitions. A petition which does not

contain all of the information required by paragraph (a) of this

section may be dismissed, with or without prejudice, by the Judge at

his or her own initiative, or upon motion of the respondent.

Sec. 134.204 Service and filing requirements.

(a) Service. Each party is responsible for the service of its

pleadings and other submissions upon all other parties or their

attorneys. Unless otherwise ordered by the Judge, service is made by

providing each party, or its attorney, with a copy of the pleading or

other submission by personal delivery, first-

[[Page 58290]]

class United States mail, United States express mail, facsimile

transmission, or commercial delivery service. If service is to be by

first-class United States mail or United States express mail, it must

be accomplished as follows:

(1) By mailing to a party's last-known residence or business

address if it has not yet appeared in the case, or by mailing to the

address of a party which has appeared as shown in its submission;

(2) If a party has appeared in the case through an attorney, by

mailing to the address of the attorney shown in the party's submission

or in a notice of appearance;

(3) If to SBA, unless an attorney is specified in SBA's submissions

to OHA, by mailing to: Office of General Counsel, Small Business

Administration, 409 Third Street, S.W.--Seventh Floor, Washington, D.C.

20416.

(b) Filing. (1) All pleadings and other submissions must be filed

with OHA by personal delivery, first-class United States mail, United

States express mail, facsimile transmission, or commercial delivery

service. Filing may only be accomplished at the following address:

Office of Hearings and Appeals, Small Business Administration, 409

Third Street, S.W.--Mail Code 2441, Washington, D.C. 20416.

(2) If filing is to be by personal delivery or commercial delivery

service, such filing must be accomplished between the hours of 8:30

a.m. and 5:00 p.m. If filing is to be by facsimile transmission, the

telephone number to be used may be obtained by calling OHA in

Washington, D.C.

(c) Number of copies which must be filed. Only the original of a

pleading or other submission must be filed with OHA. In the case of a

document offered as evidence, an authenticated copy may be filed

instead of the original.

(d) Certificate of service. A signed certificate stating how and

when service was made on all parties must be attached to each pleading

or other submission filed with OHA.

(e) Date of service and filing. Unless otherwise specified by the

Judge, the date of service or filing is as follows:

(1) In the case of service or filing by facsimile transmission, the

date of transmission;

(2) In the case of service or filing by first-class United States

mail, the date of postmark; and

(3) In the case of service or filing by personal delivery, United

States express mail, or commercial delivery service, the date of

receipt.

(f) Presumption relating to the date of service or filing by first-

class United States mail. Where the determination of the date of

service or filing is dependent upon the date of postmark, and the

postmark is illegible or incomplete, there will be a rebuttable

presumption that the postmark was dated five days prior to the date of

receipt.

(g) Treatment of confidential information. Any information in

pleadings or other submissions that is believed by the submitting party

to constitute proprietary or confidential information need not be

served upon other parties so long as the deletions are clearly

identified and generally described in the documents which are served.

Upon motion, the Judge may direct that the withheld information be

provided to other parties, subject to any appropriate protective order.

Sec. 134.205 Motion for a more definite statement.

(a) Procedure. No later than 20 days after service of the petition

or order to show cause, the respondent may serve and file a motion

requesting a more definite statement by the petitioner of particular

allegations in the petition or order to show cause identified by the

respondent. Where the respondent makes a reasonable showing that a

response cannot be made in the absence of further detail by the

petitioner, the Judge will issue an order directing the petitioner to

serve and file a more definite statement.

(b) Stay. The serving and filing of a motion for a more definite

statement stays the time for serving and filing an answer. In the order

determining the motion for a more definite statement, the Judge will

establish the time for serving and filing an answer.

Sec. 134.206 The answer.

(a) Time due. A respondent must serve and file an answer within 45

days after the service of a petition or order to show cause, except

that debt collection proceeding answers are due within 30 days.

(b) Required contents of an answer. The answer must contain the

following:

(1) An admission or denial of each of the factual allegations

contained in the petition or order to show cause, or a statement that

the respondent denies knowledge or information sufficient to determine

the truth of a particular allegation;

(2) Any affirmative defenses; and

(3) The name, address, telephone number, and signature of the

respondent or its attorney.

(c) Failure to deny. Allegations in the petition or order to show

cause which are not answered in accordance with paragraph (b)(1) of

this section will be deemed admitted unless injustice would occur.

(d) Submission of the written administrative record. Upon an appeal

from an SBA determination concerning the MED program, SBA must serve

and file the written administrative record pertaining to that

determination within the same time period applicable to the service and

filing of its answer. If SBA fails to serve and file the written

administrative record within the appropriate time period, the Judge

will issue an order directing SBA to serve and file the administrative

record by a specified date.

(e) Default. If the respondent fails to serve and file an answer

within the time period set forth in paragraph (a) of this section, or

within any extended time period granted by the Judge, that failure will

constitute a default. Following such a default, the respondent will be

prohibited from participating further in the case, except to serve and

file the written administrative record in accordance with paragraph (d)

of this section. The Judge will then proceed to issue a decision.

Sec. 134.207 Amendments and supplemental pleadings.

(a) Amendment of pleadings. Upon motion, and under terms needed to

avoid prejudice to any non-moving party, the Judge may permit the

service and filing of amendments to pleadings. However, an amendment

will not be permitted if it would cause unreasonable delay in the

determination of the matter.

(b) Supplemental pleadings. Upon motion, and under terms needed to

avoid prejudice to any non-moving party, the Judge may permit the

service and filing of a supplemental pleading setting forth relevant

transactions or occurrences that have taken place since the filing of

the original pleading.

(c) Limitation applicable to MED program appeals arising under

Sec. 134.103(j)(1) of this part. In MED program appeals arising under

Sec. 134.103(j)(1) of this part, amendments to pleadings and

supplemental pleadings will be permitted by the Judge only upon a

showing of good cause.

(d) Answer to a petition or order to show cause which has been

amended or supplemented. In an order permitting the serving and filing

of an amended or supplemented petition or order to show cause, the

Judge will establish the time for serving and filing an answer.

Sec. 134.208 Representation in cases before OHA.

(a) Representation pro se or by an attorney. A party to a case

before OHA may represent itself, or be represented by a duly licensed

attorney. A member

[[Page 58291]]

of a partnership may represent the partnership, and an officer may

represent a corporation, trust, or association.

(b) Notice of appearance. An attorney for a party who did not

appear on behalf of that party in the party's first filing with OHA,

must serve and file a written notice of appearance.

(c) Withdrawal of appearance. An attorney seeking to withdraw from

a case must serve and file a motion for the withdrawal of his or her

appearance.

Sec. 134.209 Requirement of signature.

(a) Requirement of signature. Every written submission to OHA,

other than evidence, must be signed by the party filing that

submission, or by the party's attorney.

(b) Meaning of signature. By signing a submission to OHA, a party

or its attorney attests that the statements and allegations in that

submission are true to the best of its knowledge, and that the

submission is not being filed for the purpose of delay or harassment.

Sec. 134.210 Intervention.

(a) Intervention by SBA. SBA may intervene as of right at any time

in any case until final decision.

(b) Intervention by interested persons. Any individual,

partnership, association, corporation, trust, or governmental agency

may move to intervene at any time until final decision by serving and

filing a motion to intervene containing a statement of the movant's

interest in the case and the necessity for intervention, to protect

such interest. The Judge may grant leave to intervene upon such terms

as he or she deems appropriate.

Sec. 134.211 Motions.

(a) Contents. All motions must state the relief being requested, as

well as the grounds and any authority for that relief.

(b) Response. No later than 20 days after the service of a motion,

all non-moving parties must serve and file a response or be deemed to

have consented to the relief sought. Unless the Judge directs

otherwise, the moving party will have no right to reply to a response,

nor will oral argument be heard on the motion.

(c) Service of written orders. OHA will serve upon all parties any

written order issued in response to a motion.

Sec. 134.212 Summary decision.

(a) Grounds. A party may move for summary decision at any time as

to all, or any portion of, the case, on the grounds that there is no

genuine issue as to any material fact, and that the moving party is

entitled to a decision in its favor as a matter of law.

(b) Contents of motion. The motion must include a statement of the

material facts believed not to be disputed, and relevant law.

Supporting affidavits may also be included.

(c) Cross-motions. In its response to a motion for summary

decision, a party may cross-move for summary decision in its own favor.

The initial moving party may serve and file a response to any cross-

motion for summary decision within 20 days after the service of that

cross-motion.

(d) Stay. A motion for summary decision stays the time to answer.

If appropriate, the Judge will establish the time for serving and

filing an answer in the order determining the motion for summary

decision.

Sec. 134.213 Discovery.

(a) Discovery in cases other than those involving MED program

appeals arising under Sec. 134.103(j)(1) of this part. In cases other

than those involving MED program appeals arising under

Sec. 134.103(j)(1) of this part, a party may obtain discovery only upon

motion, and for good cause shown.

(b) Discovery in MED program appeals arising under

Sec. 134.103(j)(1) of this part. In MED program appeals arising under

Sec. 134.103(j)(1) of this part, discovery will be permitted only upon

motion, and only if it is determined by the Judge that the requesting

party has made a substantial showing, based upon credible evidence, and

not mere allegation, that the SBA determination in question may have

resulted from bad faith or improper behavior. Any permitted discovery

will be limited to facts relating to the alleged bad faith or improper

behavior asserted by the party seeking discovery.

(c) Forms of permissible discovery. The forms of discovery which a

Judge can order under paragraphs (a) and (b) of this section include

requests for admissions, requests for production of documents,

interrogatories, and depositions.

(d) Limitations upon discovery. Discovery may be limited in

accordance with the terms of a protective order. Further, privileged

information and irrelevant issues or facts will not be subject to

discovery.

(e) Motions available to resolve a discovery dispute. If a dispute

should arise between the parties over a particular discovery request,

the party seeking discovery may serve and file a motion to compel

discovery. Discovery may be opposed on the grounds of harassment,

needless embarrassment, irrelevance, undue burden or expense,

privilege, or confidentiality.

Sec. 134.214 Subpoenas.

(a) Availability of subpoenas. At the request of a party, or upon

his or her own initiative, a Judge may issue a subpoena requiring a

witness to appear and testify, or to produce particular documents, at a

specified time and place.

(b) Requests for the issuance of a subpoena. A request for the

issuance of a subpoena must be written, served upon all parties, and

filed. The request must clearly identify the witness and any documents

to be subpoenaed, and must set forth the relevance of the testimony or

documents sought.

(c) Service. A subpoena may only be served by personal delivery.

The individual making service shall prepare an affidavit stating the

date, time, and place of the service. The party which obtained the

subpoena must serve upon all other parties, and file with OHA, a copy

of the subpoena and affidavit of service within 2 days after service is

made.

(d) Motion to quash. A motion to limit or quash a subpoena must be

served and filed within 10 days after service of the subpoena, or by

the return date of the subpoena, whichever date comes first. Any

response to the motion must be served and filed within 10 days after

service of the motion, unless a shorter time is specified by the Judge.

No oral argument will be heard on the motion unless the Judge directs

otherwise.

Sec. 134.215 Interlocutory appeals.

(a) General rules. A motion for leave to take an interlocutory

appeal from a Judge's ruling will not be entertained in those

proceedings in which OHA issues final decisions. In all other cases, an

interlocutory appeal will be permitted only if, upon motion by a party,

or upon the Judge's own initiative, the Judge certifies that his or her

ruling raises a question which is immediately appealable. Interlocutory

appeals will be decided by the AA/OHA or a designee.

(b) Motion for certification. A party must serve and file a motion

for certification no later than 20 days after issuance of the ruling to

which the motion applies. A denial of the motion does not preclude

objections to the ruling in any subsequent request for review of an

initial decision.

(c) Basis for certification. The Judge will certify a ruling for

interlocutory appeal only if he or she determines that:

(1) The ruling involves an important question of law or policy

about which

[[Page 58292]]

there is substantial ground for a difference of opinion; and

(2) An interlocutory appeal will materially expedite completion of

the case, or denial of an interlocutory appeal would cause undue

hardship to a party.

(d) Stay of proceedings. A stay of the proceedings, while an

interlocutory appeal is pending, will be at the discretion of the

Judge.

Sec. 134.216 Alternative dispute resolution procedures.

At any time during the pendency of a case, the parties may submit a

joint motion requesting that the Judge permit the use of alternative

dispute resolution procedures to assist in resolving the matter. If the

motion is granted, the Judge will also stay the proceedings before OHA,

in whole or in part, as he or she deems appropriate, pending the

outcome of the alternative dispute resolution procedures.

Sec. 134.217 Settlement.

(a) Contents of a Settlement Agreement. At any time during the

pendency of a case, the parties may submit a settlement agreement,

signed by all settling parties, to the Judge.

(b) Admissibility. Settlement negotiations, and rejected settlement

agreements, are not admissible into evidence.

Sec. 134.218 Judges.

(a) Assignment of Judges. The AA/OHA will assign all cases subject

to the Administrative Procedure Act, 5 U.S.C. Secs. 551 et seq., to an

Administrative Law Judge. The AA/OHA will assign all other cases before

OHA to either an Administrative Law Judge or an Administrative Judge,

or, if the AA/OHA is a duly licensed attorney, to himself or herself.

(b) Authority of a Judge. Except as otherwise limited by this part,

or by statute or other regulation, a Judge has the authority to take

all appropriate action to ensure the efficient, prompt, and fair

determination of a case, including, but not limited to, the authority

to administer oaths and affirmations and to subpoena and examine

witnesses.

(c) Recusal. Upon the motion of a party, or upon the Judge's own

initiative, a Judge will promptly recuse himself or herself from

further participation in a case whenever disqualification is

appropriate due to conflict of interest, bias, or some other

significant reason. A denial of a motion for recusal may be immediately

appealed to the AA/OHA, or to the Administrative Law Judge if the AA/

OHA is the Judge, but that appeal will not stay proceedings in the

case.

Sec. 134.219 Sanctions.

A Judge may impose appropriate sanctions, except for fees, costs,

or monetary penalties, which he or she deems necessary to serve the

ends of justice, if a party or its attorney:

(a) Fails to comply with an order of the Judge;

(b) Fails to comply with the rules set forth in this part;

(c) Acts in bad faith or for purposes of delay or harassment;

(d) Submits false statements knowingly, recklessly, or with

deliberate disregard for the truth; or

(e) Otherwise acts in an unethical or disruptive manner.

Sec. 134.220 Prohibition against ex parte communications.

No person shall consult or communicate with a Judge concerning any

fact, question of law, or SBA policy relevant to a case before that

Judge except on prior notice to all parties, and with the opportunity

for all parties to participate. In the event of such prohibited

consultation or communication, the Judge will disclose the occurrence

in accordance with the Administrative Procedure Act, 5 U.S.C.

557(d)(1), and may impose such sanctions as he or she deems

appropriate.

Sec. 134.221 Prehearing conferences.

Prior to a hearing, the Judge, at his or her own initiative, or

upon the motion of any party, may direct the parties or their attorneys

to appear, by telephone or in person, in order to consider any matter

which may assist in the efficient, prompt, and fair determination of

the case. The conference may be recorded verbatim at the discretion of

the Judge, and, if so, a party may purchase a transcript, at its own

expense, from the recording service.

Sec. 134.222 Oral hearing.

(a) Availability of an oral hearing. At his or her own initiative,

or upon the motion of any party, the Judge may order an oral hearing if

he or she concludes that there is a genuine dispute as to a material

fact that cannot be resolved except by the taking of testimony and the

confrontation of witnesses. However, in MED program appeals arising

under Sec. 134.103(j)(1) of this part, an oral hearing will not be

permitted unless the Judge determines that there has been a substantial

showing, based upon credible evidence, that the SBA determination in

question may have resulted from bad faith or improper behavior.

(b) Place and time of oral hearings. The place and time of oral

hearings is within the discretion of the Judge, who shall give due

regard to the necessity and convenience of the parties, their

attorneys, and witnesses. The Judge may direct that an oral hearing be

conducted by telephone. In cases arising from a MED program suspension

determination, any oral hearing granted by the Judge must commence as

soon as possible, but not more than 20 days after the ruling granting

the oral hearing except upon a showing of good cause.

(c) Public access to oral hearings. Unless otherwise ordered by the

Judge, all oral hearings are public.

(d) Payment of witnesses subpoenaed to attend oral hearings. A

party which obtains a witness's presence at an oral hearing by

subpoena, must pay to that witness the fees and mileage costs to which

the witness would be entitled in the Federal Courts.

(e) Recording of an oral hearing. Oral hearings will be recorded

verbatim. A transcript of a recording may be purchased by a party, at

its own expense, from the recording service.

Sec. 134.223 Evidence.

(a) Applicability of the Federal Rules of Evidence. Unless contrary

to a particular rule in this part, or it is otherwise ordered by the

Judge, the Federal Rules of Evidence will be used as a general guide in

all cases before OHA.

(b) Admissibility of hearsay. Hearsay evidence is admissible if it

is deemed by the Judge to be relevant and reliable.

(c) Certain decisions based upon the written administrative record.

Unless it is determined by the Judge, upon motion, that there has been

a substantial showing, based upon credible evidence, that the SBA

determination in question may have resulted from bad faith or improper

behavior, any MED program appeal arising under Sec. 134.103(j)(1) of

this part will be decided solely on a review of the written

administrative record.

(d) Remand for further consideration. If, upon a MED program appeal

arising under Sec. 134.103(j)(1) of this part, the Judge determines

that, due to the absence in the written administrative record of the

reasons upon which the determination in question was based, the

administrative record is insufficient to decide whether the

determination is arbitrary, capricious, or contrary to law, the Judge

will remand the case for further consideration. The Judge will retain

jurisdiction of the matter during the period of remand.

[[Page 58293]]

Sec. 134.224 Standards for decision.

The decision of a Judge in cases other than those involving MED

program appeals arising under Sec. 134.103(j)(1) of this part will be

based upon a preponderance of the evidence. In MED program appeals

arising under Sec. 134.103(j)(1) of this part, the determination will

be sustained unless it is found to be arbitrary, capricious, or

contrary to law.

Sec. 134.225 The record.

(a) Contents of record. The record of a case before OHA will

consist of all pleadings, motions, and other non-evidentiary

submissions, all admitted evidence, all orders and decisions, and any

transcripts of proceedings in the case.

(b) Public access. Except for information subject to a protective

order, proprietary or confidential information withheld in accordance

with this part, or any other information which is excluded from

disclosure by law or regulation, the record will be available at OHA

for public inspection during normal business hours. Copies of the

documents available for public inspection may be obtained by the public

upon payment of any duplication charges.

(c) Closure of the pre-decisional record. The Judge will set the

date upon which the pre-decisional record of the case will be closed,

and after which no additional evidence or argument will be accepted.

Sec. 134.226 The decision.

(a) Contents. Following closure of the record, the Judge will issue

a decision containing findings of fact and conclusions of relevant law,

reasons for such findings and conclusions, and any relief ordered. The

contents of the record will constitute the exclusive basis for a

decision.

(b) Time limit for certain decisions. Decisions pertaining to the

collection of debts owed to SBA and the United States under the Debt

Collection Act of 1982 and part 140 of this chapter must be rendered

within 60 days after a petition is filed. Decisions pertaining to MED

program appeals arising under Sec. 134.103(j)(1) of this part will be

rendered, insofar as practicable, within 90 days after a petition is

filed.

(c) Service. OHA will serve a copy of all written decisions on:

(1) Each party, or, if represented by counsel, on its counsel; and

(2) SBA's General Counsel, or his or her designee, if SBA is not a

party.

Sec. 134.227 Finality of decisions.

(a) Final decisions. A decision on the merits shall be a final

decision, upon issuance, in the following cases:

(1) Proceedings concerning the collection of debts owed to SBA and

the United States, under the Debt Collection Act of 1982 and part 140

of this chapter; and

(2) Appeals from determinations relating to SBA's MED program.

(b) Initial decisions. All decisions on the merits other than those

set forth in paragraph (a) of this section are initial decisions.

However, unless a request for review is filed pursuant to

Sec. 134.228(a), an initial decision shall become the final decision of

SBA 30 days after its issuance.

Sec. 134.228 Review of initial decisions.

(a) Request for review. Within 30 days after the service of an

initial decision, any party, or SBA's Office of General Counsel, may

serve and file with OHA a request for review. A request for review must

set forth the filing party's specific objections to the initial

decision, and any alleged support for those objections in the record,

or in case law, statute, regulation, or SBA policy. A party must serve

its request for review upon all other parties and upon SBA's Office of

General Counsel.

(b) Response to a request for review. Within 20 days after the

service of a request for review, any party so served, or SBA's Office

of General Counsel, may serve and file with OHA a response. A party

must serve its response upon all other parties and upon SBA's Office of

General Counsel.

(c) Transfer of the record to the Administrator for review. Upon

receipt of all possible responses, but in no case later than 30 days

after the filing of a request for review, OHA will transfer the record

of the case to the Administrator. The Administrator, or his or her

designee, will then review the record.

(d) Standard of review. Upon review, the Administrator, or his or

her designee, will sustain the initial decision unless it is based on

an erroneous finding of fact or an erroneous interpretation or

application of case law, statute, regulation, or SBA policy.

(e) Order. After consideration of the record, the Administrator, or

his or her designee, will:

(1) Affirm, reverse, or modify the initial decision, which

determination will become the final decision of the SBA upon issuance;

or

(2) Remand the initial decision to the Judge for appropriate

further proceedings.

Sec. 134.229 Termination of jurisdiction.

The jurisdiction of OHA will terminate upon the issuance of a

decision by a Judge resolving all material issues of fact and law

unless the case is subsequently remanded for appropriate further

proceedings, pursuant to Sec. 134.228(e)(2) of this part.

Subpart C--Rules of Practice for Appeals From Size Determinations

and SIC Code Designations

Sec. 134.301 Scope of the rules in subpart C.

The rules of practice in subpart C of this part apply to all

appeals to OHA from:

(a) Formal size determinations made by an SBA Government

Contracting Area Office, under part 121 of this chapter, or by a

Disaster Area Office, in connection with applications for disaster

loans; and

(b) SIC code designations, pursuant to part 121 of this chapter.

Sec. 134.302 Who may appeal.

Appeals from size determinations and SIC code designations may be

filed with OHA by the following, as applicable:

(a) Any person adversely affected by a size determination;

(b) Any person adversely affected by a SIC code designation.

However, with respect to a MED contract, only the Associate

Administrator for Minority Enterprise Development may appeal a SIC code

designation;

(c) The Associate or Assistant Administrator for the SBA program

involved, through SBA's Office of General Counsel; and

(d) The procuring agency contracting officer responsible for the

procurement affected by a size determination.

Sec. 134.303 No absolute right to an appeal from a size determination.

It is within the discretion of the Judge whether to accept an

appeal from a size determination. If the Judge decides not to consider

such an appeal, he or she will issue an order denying review, and

specifying the reasons for the decision.

Sec. 134.304 Commencement of appeals from size determinations and SIC

code designations.

(a) When appeals must be commenced. Appeals from size

determinations and SIC code designations must be commenced by serving

and filing a notice of appeal as follows:

(1) If appeal is from a size determination in a pending procurement

or pending Government property sale, then the notice of appeal must be

served and filed within 15 days after service of the size

determination;

[[Page 58294]]

(2) If appeal is from a size determination other than one in a

pending procurement or pending Government property sale, then the

notice of appeal must be served and filed within 30 days after service

of the size determination;

(3) If appeal is from a SIC code designation, then the notice of

appeal must be served and filed within 10 days after the issuance of

the initial invitation for bids or initial request for proposals or

quotations.

(b) Untimely appeals. An untimely appeal will be dismissed.

However, an appeal which is untimely under paragraph (a)(1) of this

section, with respect to a pending procurement or sale, may, if timely

under paragraph (a)(2) of this section, proceed with respect to future

procurements or sales.

Sec. 134.305 The appeal petition.

(a) Form. There is no required format for an appeal petition.

However, it must include the following information:

(1) The Area Office which issued the size determination, or the

contracting office which designated the SIC code;

(2) The solicitation or contract number, and the name, address, and

telephone number of the contracting officer;

(3) A full and specific statement as to why the size determination

or SIC code designation is alleged to be in error, together with

argument supporting such allegations; and

(4) The name, address, telephone number, and signature of the

appellant or its attorney.

(b) Who must be served with a size determination appeal petition.

The appellant must serve the appeal petition upon each of the

following:

(1) The SBA official who issued the size determination;

(2) The contracting officer responsible for the procurement

affected by a size determination;

(3) The business concern whose size status is at issue;

(4) All persons who filed protests; and

(5) SBA's Office of General Counsel.

(c) Who must be served with a SIC code appeal petition. The

appellant must serve the contracting officer who made the SIC code

designation.

(d) Certificate of service. The appellant must attach to the appeal

petition a signed certificate identifying each person or governmental

agency which was served with the notice of appeal, and how and when

each of those persons or governmental agencies was served.

(e) Dismissal of insufficient appeal petitions. An appeal petition

which does not contain all of the information required in paragraph (a)

of this section may be dismissed, with or without prejudice, by the

Judge at his or her own initiative, or upon motion of a respondent.

Sec. 134.306 Transmission of the case file.

Upon receipt of an appeal petition pertaining to a size

determination, the Area Office which issued the size determination must

immediately send to OHA the entire case file relating to that

determination. Upon receipt of an appeal petition pertaining to a SIC

code designation, the contracting officer who designated the SIC code

must immediately send to OHA the solicitation relating to that

designation.

Sec. 134.307 Service and filing requirements.

The provisions of Sec. 134.204 of this part apply to the service

and filing of all pleadings and other submissions permitted under this

subpart.

Sec. 134.308 Limitation on the submission of new evidence in appeals

from size determinations.

(a) When new evidence may be submitted. Evidence not previously

presented to the Area Office which issued the size determination being

appealed will not be considered by a Judge unless:

(1) The Judge, on his or her own initiative, orders the submission

of such evidence; or

(2) A motion is served and filed establishing good cause for the

submission of such evidence.

(b) Adverse inference resulting from the failure to comply with an

order to submit evidence. If the submission of evidence is ordered by a

Judge, and the party in possession of that evidence does not submit it,

the Judge may draw adverse inferences against that party.

Sec. 134.309 Response to an appeal petition.

(a) Who may respond. Any person served with an appeal petition, or

any other interested person, may serve and file a response supporting

or opposing the appeal. The response should present argument.

(b) Time limits for serving and filing a response. Unless otherwise

specified by the Judge, a respondent must serve and file a response

within 10 days after service of the appeal petition upon it.

(c) Who must be served. The respondent must serve its response upon

the appellant and upon each of the persons identified in the

certificate of service attached to the appeal petition pursuant to

Sec. 134.305 of this part.

(d) Reply to a response. No reply to a response will be permitted

unless the Judge directs otherwise.

Sec. 134.310 Discovery.

Discovery will not be permitted in appeals from size determinations

or SIC code designations.

Sec. 134.311 Oral hearings.

Oral hearings will not be held in appeals from SIC code

designations, and will be held in appeals from size determinations only

upon a finding by the Judge of extraordinary circumstances. If such an

oral hearing is ordered, the proceeding shall be conducted in

accordance with those rules of subpart B of this part as the Judge

deems appropriate.

Sec. 134.312 Evidence.

To the extent the rules in this subpart permit the submission of

evidence, the provisions of Secs. 134.223 (a) and (b) apply.

Sec. 134.313 Applicability of subpart B provisions.

The following sections from subpart B apply to an appeal under this

subpart: Sec. 134.207(a) (pertaining to amendments to pleadings);

Sec. 134.208 (Representation in cases before OHA); Sec. 134.209

(Requirement of signature); Sec. 134.210 (Intervention); Sec. 134.211

(Motions); Sec. 134.214 (Subpoenas); Sec. 134.218 (Judges);

Sec. 134.219 (Sanctions); and Sec. 134.220 (Prohibition against ex

parte communications).

Sec. 134.314 Standard of review.

The standard of review is whether the size determination or SIC

code designation was based on clear error of fact or law.

Sec. 134.315 The record.

Where relevant, the provisions of Secs. 134.225 (a), (b), and (c)

apply. In an appeal under this subpart, the contents of the record also

include the case file or solicitation submitted to OHA in accordance

with Sec. 134.306.

Sec. 134.316 The decision.

(a) Contents. Following closure of the record, the Judge will issue

a decision containing findings of fact and conclusions of law, reasons

for such findings and conclusions, and any relief ordered.

(b) Finality of the decision. The decision is the final decision of

the SBA and becomes effective upon issuance.

(c) Service. OHA will serve a copy of all written decisions on:

(1) Each party, or, if represented by counsel, on its counsel; and

(2) SBA's General Counsel, or his or her designee, if SBA is not a

party.

[[Page 58295]]

Sec. 134.317 Termination of jurisdiction.

The jurisdiction of OHA will terminate upon the issuance of a

decision.

Sec. 134.318 Return of the case file.

Upon termination of jurisdiction, OHA will return the case file to

the transmitting Area Office. The remainder of the record will be

retained by OHA.

Subpart D--Implementation of the Equal Access to Justice Act

Sec. 134.401 What is the purpose of this subpart?

The Equal Access to Justice Act, 5 U.S.C. 504, establishes

procedures by which prevailing parties in certain administrative

proceedings may apply for reimbursement of fees and other expenses.

Eligible parties may receive awards when they prevail over SBA, unless

SBA's position in the proceeding was ``substantially justified'' or

special circumstances make an award unjust. The rules of this subpart

which follow explain which OHA proceedings are covered, who may be

eligible for an award of fees and expenses, and how to apply for such

an award.

Sec. 134.402 Under what circumstances may I apply for reimbursement?

You may apply for reimbursement under this subpart if you meet the

eligibility requirements in Sec. 134.406 and you prevail over SBA in a

final decision in:

(1) The type of administrative proceeding which qualifies as an

``agency adversary adjudication'' under Sec. 134.403; or

(2) An ancillary or subsidiary issue in that administrative

proceeding that is sufficiently significant and discrete to merit

treatment as a separate unit; or

(3) A matter which the agency has designated in its order for

hearing as an ``agency adversary adjudication'' under 5 U.S.C. 554.

Sec. 134.403 What is an agency adversary adjudication?

For purposes of this subpart, agency adversary adjudications are

administrative proceedings before OHA which involve SBA as a party and

which are required to be conducted by an Administrative Law Judge

(``ALJ''). These adjudications (``administrative proceedings'') include

those proceedings listed in Secs. 134.103(a), 134.103(i), and

134.103(j)(1), but do not include other OHA proceedings such as those

listed in Sec. 134.103(k). In order for an administrative proceeding to

qualify, SBA must have been represented by counsel or by another

representative who enters an appearance and participates in the

proceeding.

Sec. 134.404 What benefits may I claim?

You may seek reimbursement for certain reasonable fees and expenses

incurred in prosecuting or defending a claim in an administrative

proceeding.

Sec. 134.405 Under what circumstances are fees and expenses

reimbursable?

(a) If you are a prevailing eligible party, you may receive an

award for reasonable fees and expenses unless the position of the

agency in the proceeding is found by the ALJ to be ``substantially

justified'', or special circumstances exist which make an award unjust.

The ``position of the agency'' includes not only the position taken by

SBA in the administrative proceeding, but also the position which it

took in the action which led to the administrative proceeding. No

presumption arises that SBA's position was not substantially justified

simply because it did not prevail in a proceeding. However, upon your

assertion that the position of SBA was not substantially justified, SBA

will be required to establish that its position was reasonable in fact

and law.

(b) The ALJ may reduce or deny an award for reimbursement, if you

have unreasonably protracted the administrative proceeding or if other

circumstances would make the award unjust.

(c) Awards for fees and expenses incurred before the date on which

an administrative proceeding was initiated are allowable only if you

can demonstrate that they were reasonably incurred in preparation for

the proceeding.

Sec. 134.406

Who is eligible for possible reimbursement?

(a) You are eligible for possible reimbursement if:

(1) You are an individual, sole proprietorship, partnership,

corporation, association, organization, or unit of local government;

and

(2) You are identified as a party in a petition or order to show

cause; and

(3) You are the prevailing party; and

(4) You meet certain net worth and employee eligibility

requirements set forth in Sec. 134.407.

(b) You are not eligible for possible reimbursement if you

participated in the administrative proceeding only on behalf of persons

or entities that are ineligible.

Sec. 134.407 How do I know which eligibility requirement applies to

me?

Follow this chart to determine your eligibility. You should

calculate your net worth and the number of your employees as of the

date the administrative proceeding was initiated.

------------------------------------------------------------------------

If your participation in the proceeding

was: Eligibility requirements:

------------------------------------------------------------------------

For individual or personal interests... Personal net worth may not

exceed 2 million dollars.

As sole owner of an unincorporated Personal net worth may not

business. exceed 7 million dollars

and

No more than 500 employees.

As a partnership, corporation, Business net worth may not

association, organization, or unit of exceed 7 million dollars

local government.

and

No more than 500 employees.

As a charitable or other tax exempt No net worth limitations

organization described in section and

501(c)(3) of the Internal Revenue Code No more than 500 employees.

(26 U.S.C. 501(c)(3)).

As a cooperative association as defined No net worth limitations

in section 15(a) of the Agricultural and

Marketing Act (12 U.S.C. 1141j(a)). No more than 500 employees.

------------------------------------------------------------------------

Sec. 134.408 What are the special rules for calculating net worth and

number of employees?

(a) Your net worth must include the value of any assets disposed of

for the purpose of meeting an eligibility standard, and must exclude

any obligation incurred for that purpose. Transfers of assets, or

obligations incurred, for less than reasonably equivalent value will be

presumed to have been made for the purpose of meeting an eligibility

standard.

[[Page 58296]]

(b) If you are a sole owner of an unincorporated business, or a

partnership, corporation, association, organization, or unit of local

government, your net worth must include the net worth of all of your

affiliates. ``Affiliates'' are corporations or other business entities

which directly or indirectly own or control a majority of the voting

shares or other ownership interests in the applicant concern.

``Affiliates'' are also corporations or other business entities in

which the applicant concern directly or indirectly owns or controls a

majority of the voting shares or other ownership interests.

(c) Your employees include all those persons regularly working for

you at the time the administrative proceeding was initiated, whether or

not they were at work on that date. Part-time employees must be

included on a proportional basis. You must include the employees of all

your affiliates in your total number of employees.

Sec. 134.409 What is the difference between a fee and an expense?

A fee is a charge to you for the professional services of

attorneys, agents, or expert witnesses rendered in connection with your

case. An expense is the cost to you of any study, analysis, engineering

report, test, project, or similar matter prepared in connection with

your case.

Sec. 134.410 Are there limitations on reimbursement for fees and

expenses?

(a) Awards will be calculated on the basis of fees and expenses

actually incurred. If services were provided by one or more of your

employees, or were made available to you free, you may not seek an

award for those services. If services were provided at a reduced rate,

fees and expenses will be calculated at that reduced rate.

(b) In determining the reasonableness of the fees for attorneys,

agents or expert witnesses, the ALJ will consider:

(1) That provider's customary fee for like services;

(2) The prevailing rate for similar services in the community in

which that provider ordinarily performs services;

(3) The time actually spent in representing you; and

(4) The time reasonably spent in light of the difficulty and

complexity of the issues.

(c) An award for the fees of an attorney or agent may not exceed

$75 per hour, and an award for the fees of an expert witness may not

exceed $25 per hour, regardless of the rate charged.

(d) An award for the reasonable cost of any study, analysis,

engineering report, test, project or similar matter prepared on your

behalf may not exceed the prevailing rate payable for similar services,

and you may be reimbursed only if the study or other matter was

necessary to the preparation of your case.

Sec. 134.411 What should I include in my application for an award?

(a) Your application must be in the form of a written petition

which is served and filed in accordance with Sec. 134.204 of this part.

It must contain the following information:

(1) A statement that OHA has jurisdiction over the case pursuant to

Sec. 134.103(g);

(2) An identifying reference to the administrative proceeding for

which you are seeking an award;

(3) A statement that you have prevailed, and a list of each issue

in which you claim the position of SBA was not substantially justified;

(4) Whether you are an individual, sole proprietorship,

partnership, corporation, association, organization, or unit of local

government;

(5) Your net worth and number of employees as of the date the

administrative proceeding was initiated, or a statement that one or

both of these eligibility requirements do not apply to you;

(6) The amount you are seeking;

(7) A description of any affiliates (as that term is defined in

Sec. 134.408), or a statement that no affiliates exist;

(8) A statement that the petition and any attached statements and

exhibits are true and complete to the best of your knowledge and that

you understand a false statement on these documents is a felony

punishable by fine and imprisonment under 18 U.S.C. 1001; and

(9) Your name, address, and telephone number, and the signature of

you or your attorney.

(b) You should follow this chart to determine which attachments

must be included with your petition:

------------------------------------------------------------------------

Party Required attachment

------------------------------------------------------------------------

Individual............................. Net worth exhibit

and

Statement of fees and/or

expenses for the services of

each provider for which you

seek reimbursement.

Sole owner of unincorporated business.. Net worth exhibit

or and

Partnership, corporation, association, Statement of fees and/or

organization, or unit of local expenses for the services of

government. each provider for which you

seek reimbursement.

Organization qualified as tax exempt Copy of a ruling by the

under section 501(c)(3) of the Internal Revenue Service that

Internal Revenue Code (26 U.S.C. you qualify as a 501(c)(3)

501(c)(3)). organization

or

Statement that you were listed

in the current edition of IRS

Bulletin 78 as of the date the

administrative proceeding was

initiated,

and

Statement of fees and/or

expenses for the services of

each provider for which you

seek reimbursement.

Tax exempt religious organization not Description of your

required to obtain a ruling from the organization and the basis for

Internal Revenue Service on its exempt your belief you are exempt

status. and

Statement of fees and/or

expenses for the services of

each provider for which you

seek reimbursement.

Cooperative association as defined in Copy of your charter or

section 15(a) of the Agricultural articles of incorporation

Marketing Act (12 U.S.C. 1141j(a)). and

Copy of your bylaws and

Statement of fees and expenses

for the services of each

provider for which you seek

reimbursement.

------------------------------------------------------------------------

[[Page 58297]]

Sec. 134.412 What must a net worth exhibit contain?

(a) A net worth exhibit may be in any format, but it must:

(1) List all assets and liabilities for you and each affiliate in

detail sufficient to show your eligibility;

(2) Aggregate net worth for you and all affiliates; and

(3) Describe any transfers of assets or obligations incurred by you

or your affiliates within one year of the initiation of the

administrative proceeding which have reduced your total net worth below

the eligibility ceiling, or state that no such transfers occurred.

(b) The net worth exhibit must be filed with your petition, but

will not be part of the public record of the proceeding. Further, in

accordance with the provisions of Sec. 134.204(g), you do not have to

serve your net worth exhibit on other parties.

Sec. 134.413 What documentation do I need for fees and expenses?

You must submit a separate itemized statement or invoice for the

services of each provider for which you seek reimbursement. All

expenses claimed must be verifiable. Each separate statement or invoice

must contain:

(a) The hours worked in connection with the proceeding by each

individual providing a billable service;

(b) A description of the specific services performed by these

individuals;

(c) The rate at which fees were computed for each individual

working on your case;

(d) Where applicable, a description of any study, analysis, report,

test, project, or other similar matter prepared in connection with your

case;

(e) The total charged by the provider on that statement or invoice;

and

(f) The provider's verification that the statement or invoice is

true to the best of his or her knowledge and that he or she understands

that a false statement is punishable by fine and imprisonment under 18

U.S.C. 1001.

Sec. 134.414 What deadlines apply to my petition for an award and

where do I send it?

After you have prevailed in an administrative proceeding or in a

discrete unit thereof, you must serve, and file with OHA, your written

petition for an award, and its attachments, no later than 30 days after

the decision in the administrative proceeding becomes final under

Sec. 134.227 of this part. The deadline for filing a petition for an

award may not be modified. If SBA or another party requests review of

the decision in the underlying administrative proceeding, your request

for an award for fees and expenses may still be filed, but it will not

be considered by the ALJ until a final decision is rendered.

Sec. 134.415 How will proceedings relating to my application for fees

and expenses be conducted?

Proceedings will be conducted in accordance with the provisions in

subpart B of this part.

Sec. 134.416 How will I know if I receive an award?

The ALJ will issue an initial decision on the merits of your

request for an award which will become final in 30 days unless a

request for review is filed under Sec. 134.228 of this part. The

decision will include findings on your eligibility, on whether SBA's

position was substantially justified, and on the reasonableness of the

amount you requested. Where applicable, there will also be findings on

whether you have unduly protracted the proceedings or whether other

circumstances make an award unjust, and an explanation of the reason

for the difference, if any, between the amount requested and the amount

awarded. If you have sought an award against more than one federal

agency in the administrative proceeding, the decision will allocate

responsibility for payment among the agencies with appropriate

explanation.

Sec. 134.417 May I seek review of the ALJ's decision on my award?

You may request review of the ALJ's decision on your award by

filing a request for review in accordance with Sec. 134.228. A request

for review must be filed within 30 days of service of the ALJ's initial

decision. You may also seek judicial review of the decision of the ALJ

as provided in 5 U.S.C. 504(c)(2). For purposes of judicial review, the

initial decision of the ALJ is not an appealable ``determination''

under that statute until it becomes a final decision as provided in

Sec. 134.227. Judicial review of the ALJ's decision on your award must

be requested within 30 days of the final decision.

Sec. 134.418 How are awards paid?

If you are seeking payment of an award, you must submit a copy of

the ALJ's final award to SBA along with your certification that you are

not seeking review of the ALJ's decision in the award proceeding. The

request must be sent to the Chief Financial Officer, Office of

Financial Operations, SBA, P.O. Box 205, Denver, CO 80201-0205. SBA

will pay you the amount awarded within 60 days of receipt of your

request unless it is notified that you or another party has sought

judicial review of the ALJ's decision on the award or of the decision

in the underlying administrative proceeding.

PART 132--[REMOVED]

2. Part 132 is hereby removed.

Dated: November 13, 1995.

Philip Lader,

Administrator.

[FR Doc. 95-28508 Filed 11-24-95; 8:45 am]

BILLING CODE 8025-01-P