62 Agric. Dec. 512

$29,987.25 were also assessed. By letter dated April 17, 2002, Applicants requested an appeal of Respondent's adverse decision pursuant to 7 U.S.C. §§ 6991-7002 and NAD Rules of Procedures, 7 C.F.R. §§ 11.1-.14. On October 7, 2002, the NAD Hearing Officer issued an Appeal Determination in which she found Respondent was erroneous in requesting a refund of $9,995.75 plus interest and liquidated damages of $29,987.25. Neither party requested a Director Review of the Hearing Officer's determination. NAD issued a notice concluding the appeal on November 15, 2002.

FACTURAL BACKGROUND

Applicants allege in their November 4, 2002 EAJA Application that (1) they were the prevailing parties in Donald J and Diana Klosterman, NAD Case No. 2002W000855, in which they appealed Respondent's adverse decision; (2) the adverse decision stating Diana Klosterman was ineligible for benefits under the 2001 Sugar Payment-In-Kind Diversion Program (2001 Sugar PIK Program) was reversed; (3) they had incurred fees and expenses of $7,059.06 as of November 4, 2002 in connection with their appeal of Respondent's adverse decision; and (4) Respondent's position in NAD Case No. 2002 W000855 was not substantially justified.

On November 25, 2002, NAD informed Applicants their EAJA Application was incomplete. Applicants were given until December 15, 2002, to submit a complete application.

By letter dated November 27, 2002, the USDA Office of General Counsel [hereinafter OGC] submitted on behalf of Respondent "Government's Answer to Application for Fees Under the Equal Access to Justice Act." Respondent stated that (1) the application did not show that Applicants were eligible to receive an award for expenses because the application neither contained a declaration that Applicants' net worth did not exceed

$2 million as required by 7 C.F.R. § 1.190, nor provided a detailed exhibit showing the net worth of Applicants; (2) the application did not contain a written verification under oath or affirmation under penalty or perjury; (3) the statement supporting Applicants' request for award reflected an hourly rate for two attorneys at $130 and $160 per hour, which amounts exceed the maximum hourly rate of $125 permitted under the EAJA; and (4) only "reasonable" and "necessary" expenses are recoverable under EAJA.

By letter dated December 11, 2002, Applicants submitted the additional information requested by NAD. In the letter, Applicants revised their fees and expenses. As of December 5, 2002, Applicants claimed attorney fees and

expenses totaled $7,748.23.

By letter dated December 12, 2002, Applicants submitted a "Response to Government's Answer to Application for Attorney Fees." Applicants stated (1) the contentions made by Respondent concerning the statements regarding net worth, the net worth exhibit, and the issue involving affirmation or verification were without merit;

(2) the statute allows for the possibility that a rate may exceed $125 per hour; and

(3) Respondent's contention is without merit when claiming that the $162, $43, and $69 facsimile costs are unreasonable and unnecessary.

On December 13, 2002, NAD issued a "Notice of EAJA Application." The Notice stated Applicants had filed a timely application and that written responses were to be filed with NAD Hearing Officer Carol Christianson [hereinafter Adjudicating Officer].

On January 10, 2003, Respondent submitted the "Government's Reply to Appellants' Response to Government's Answer to Application for Attorney Fees." Respondent withdrew its objections regarding the statement of net worth, the net worth exhibit, and the affirmation or verification. Respondent continued to maintain, however, that the attorney fees should not be awarded in excess of the $125 rate and that only "reasonable" expenses may be compensated.

On January 22, 2003, Applicants submitted their "Reply to Government's Reply to Applicants' Response to Government's Answer to Application for Attorney Fees." In that submission, Applicants stated Respondent's assertion is without merit regarding Respondent's contention that their facsimile costs were unreasonable.

On March 6, 2003, the Adjudicating Officer issued her decision [hereinafter Initial Decision and Order] in which she determined that (1) the application met all the conditions of eligibility for an award of EAJA fees and expenses; (2) Respondent's actions and decision were not substantially justified; (3) Applicants were the prevailing party in the adversarial adjudication; (4) Applicants did not unduly or unreasonably delay or protract the proceedings; and (5) there were no special circumstances that would make the award of expenses unjust. As a result, the Adjudicating Officer awarded Applicants $7,424.73 [$6,943.50 in legal fees and $481.23 in expenses].

By letter dated March 14, 2003, Applicants submitted an amendment requesting an increase of the award to include additional attorney fees and expenses. Applicants

requested that the March 6, 2003 decision be amended to include additional

62 Agric. Dec. 512

attorney fees and expenses for a total award of $8,417.57. The additional costs were incurred during the period December 6, 2002 to January 23, 2003.

On March 25, 2003, NAD issued an “EAJA Notice of Petition for Judicial Officer Review." Attached to the Notice was a March 20, 2003 letter from Respondent objecting to the submission or consideration of Applicants' amendment request for additional attorney fees and expenses. Respondent contended the request is a new application for attorney fees and expenses and is therefore untimely.

Applicants submitted a letter dated March 25, 2003, in which they claim that the amendment request is an extension of the original application. Applicants disagreed with Respondent's position that their March 14, 2003 letter is a new application simply because Applicants ask for additional attorney fees and expenses.

Applicants submitted to NAD, attention the Judicial Officer, a letter dated March 28, 2003, acknowledging receipt of the March 25, 2003 EAJA Notice of Petition for Judicial Officer Review. Attached to the letter was a March 25, 2003 letter explaining that the request for additional attorney fees and expenses was a request for fees and expenses incurred during the period December 6, 2002 to January 23, 2003.

Respondent submitted "Government's Response to Petition for Judicial Officer Review" on April 4, 2003. Respondent stated (1) Applicants did not comply with the requirements for filing a Petition for Review in accordance with 7 C.F.R. §§ 1.145(a), 1.146(a), and 1.201; (2) Applicants' March 14, 2003 letter, which is not a Petition for Review, does not allege an error or omission in the award of fees but is an application for

new fees; (3) Applicants' attorney failed to comply with regulations governing Petitions

for Review by submitting a letter to the Judicial Officer on March 28, 2003 and enclosing the March 25, 2003 letter that requested an amendment increase of fees; and

(4) Applicants are not entitled to fees and costs for work involved in submitting the EAJA application itself.

ISSUES NOT CONTESTED

There is no dispute that Applicants were the prevailing party in the adversarial adjudication. Respondent did not request a Director Review Determination of the Hearing Officer determination that found Diana Klosterman was eligible for the 2001 Sugar PIK program. The determination

issued by NAD Hearing Officer, Case No. 2002 W000855, was the final agency decision issued. Ms. Klosterman prevailed over the Respondent's decision to deny eligibility.

Neither Applicants nor Respondent disputed the Adjudicating Officer's determination that: (1) Respondent's actions and decision were not substantially justified;

(2) Applicants had not unduly or unreasonably delayed or protracted the proceedings;

(3) and there were no special circumstances that would make the award of expenses unjust. In particular, Respondent has been silent as to whether its actions were substantially justified.

Applicants' EAJA application contains a statement of Diana Klosterman's net worth, which did not exceed $2 million, as well as an itemization of legal fees and other expenses incurred in prosecuting Applicants' appeal. After Applicants filed these documents, Respondent withdrew its objections to Applicants' failure to meet the EAJA application requirements. I therefore find that Applicants' EAJA meets the regulatory requirements.

Respondent claims that attorney fees are limited to $125 per hour for EAJA claims. Applicants' position is that EAJA allowed for the possibility that the rate may exceed

$125 per hour. However, when Applicants submitted their amended claim, dated

March 14, 2003, to increase fees for additional hours incurred by their attorney, the

amount requested [$925] was based on a rate of $125 per hour. On appeal to the Judicial Officer, Applicants have not challenged the Adjudicating Officer's decision to reduce their attorney fees to $125.

Respondent did not continue to pursue its argument to deny Applicants' cost of $274 for sending documents via facsimile on three separate days. Respondent had insufficient evidence in the record to support its position that the uses of facsimile on the days in question were an unreasonable expense. The $274 facsimile cost was included in the $481.23 expenses awarded by the Adjudicating Officer.

ISSUES OF THE CASE

EAJA and the EAJA Rules of Practice provide that a decision concerning an applicant's eligibility for an award of fees and other expenses incurred by the party in connection with an adversary adjudication must be based on the

62 Agric. Dec. 512

record of the adversary adjudication. Therefore, this Decision and Order is based on the record in Donald J. and Diana Klosterman, NAD Case No. 2002W000855, and Applicants' and Respondent's filings in this proceeding.

The issues to be resolved in this proceeding are (1) whether Applicants followed correct procedures to file a Petition for Review, and (2) whether Applicants' request for additional fees and expenses is a new application for fees and is therefore untimely.

LEGAL STANDARDS

The following are the statutory and regulatory provisions pertaining to these issues.

(a)(1) An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust. Whether or not the position of the agency was substantially justified shall be determined based on the administrative record, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought.

(2) A party seeking an award of fees and other expenses shall, within thirty days of a final disposition in the adversary adjudication, submit to the agency an application which shows that the party is a prevailing party and is eligible to receive an award under this section, and the amount sought, including an itemized statement from an attorney, agent,

or expert witness representing or appearing in behalf of the party stating the actual time expended and the rate at which fees and other expenses were computed. The party shall also allege that the position of the agency was not substantially justified. When the United States appeals the underlying merits of an adversary adjudication, no decision on an application for fees and other