NATIONAL ASSOCIATION OF HOME BUILDERS
Federal Regulatory Counsel
Regulatory and Legal Affairs Division
Department of Agriculture Held Subject
to
Equal Access to Justice Act
A recent case from the 8th Circuit Court of Appeals is significant for participants in Rural Housing Service programs. Under the Equal Access to Justice Act (5 U.S.C. Section 504) (EAJA) a federal agency that conducts an adversary adjudication against a private party must award to the private party attorney fees and costs of litigation if the private party prevails in the proceeding, unless the hearing officer determines that the agency’s position was justified. The Department of Agriculture has long maintained that appeals of agency decisions were not subject to the EAJA. In Lane v. U.S. Dept. of Agriculture, (1997 WL 384628, July 14, 1997) the U.S. Court of Appeals for the 8th Circuit (North Dakota) has ruled that the Department is subject to the EAJA. The case is significant because this is the first appellate court to decide the issue.
The Department of Agriculture had maintained for years that the EAJA did not apply to any hearings it conducts involving a program participant or any appeals of any of the Department’s decisions. In the Lane case, the plaintiffs had borrowed money through the Farmers Home Administration and had been denied delinquent farmer loan servicing. The Lanes appealed the decision to the National Appeals Division of the Department of Agriculture. They won their appeal and then sought attorney fees under EAJA. Agriculture denied them the attorney fees arguing that the Department hearings held under the National Appeals Division were not “adjudications” subject to the Administrative Procedure Act, and therefore were not covered by the Equal Access to Justice Act.
Under the National Appeals Division statute (7 USC Section 6991 et seq.) a participant in any of the programs administered by the agencies of the Department of Agriculture including the Farmers Home Administration (now the Rural Housing Service) is entitled to appeal the decision and be given a hearing. The court in Lane held that the hearing procedures described in the National Appeals Division statute are "hearings" within the meaning of the Administrative Procedure Act, and therefore the hearings are subject to the EAJA. The court concluded that the APA cannot be superseded by a subsequent statute, except to the extent it does so expressly. The court found that there was no language in the NAD statute that superseded the APA.
Under the EAJA, in order to qualify for attorney fees and costs, a private party must have either a net worth of less an $2,000,000 at the time the adversary proceeding was initiated, or have been the owner of a partnership or corporation the net worth which did not exceed $7,000,000 and which had not more than 500 employees.
(See also Coan & Lyons on the EAJA)