Subchapter A. SUBMISSION AND CONSIDERATION OF APPLICATIONS FOR AWARDS OF FEES AND EXPENSES

§ 2.1. Purpose.

 The act provides for the award of fees and other expenses to eligible individuals and entities who are parties to certain administrative proceedings initiated by Commonwealth agencies. An eligible party may receive an award, except as otherwise provided or prohibited by law, when it prevails over an agency, unless the agency’s position in the proceeding was substantially justified or special circumstances make an award unjust. This subchapter describes how to apply for awards and the procedures for initiating payment. The guidelines and standard procedures contained in this subchapter are to apply unless specifically modified by an agency in accordance with §  2.9 (relating to agency rules).

 The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

   Act—Act of December 13, 1982 (P. L. 1127, No. 257) (71 P. S. § §  2031—2035).

   Adjudication—A final order, decree, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties to the proceeding in which the adjudication is made. The term does not include an order based upon a proceeding before a court or which involves the seizure or forfeiture of property, paroles, pardons or releases from mental institutions.

   Agency—A government agency.

   Applicant—The prevailing party seeking an award of fees and expenses.

   Employe—An individual whom a party has the right to hire, the power to discharge and the right to direct work to be performed and the manner in which the work is to be performed.

   Party—An individual, partnership, corporation, association, private organization or public organization except an agency, which appears in a proceeding before an agency that has a direct interest in the subject matter of the proceeding. The term does not include the following:

     (i)   An individual whose net worth exceeded $500,000 at the time the adversary adjudication was initiated and a sole owner of an unincorporated business, or a partnership, corporation, association or organization whose net worth exceeded $2 million at the time the adversary adjudication was initiated.

     (ii)   A sole owner of an unincorporated business, or a partnership, corporation, association or organization having more than 250 employes at the time the adversary adjudication was initiated.

     (iii)   A party represented by counsel paid, directly or indirectly, in whole or in part, by an appropriation, grant, subsidy or loan made by the State, local or Federal government.

 (a)  This subchapter is effective for proceedings begun on or after July 1, 1983.

 (b)  This subchapter expires July 1, 1997.

   The provisions of this §  2.3 adopted May 18, 1984, effective May 19, 1984, 14 Pa.B. 1707; amended March 4, 1988, effective March 5, 1988, 18 Pa.B. 936. Immediately preceding text appears at serial page (89712).

 Every executive and independent Commonwealth agency, as defined in the act, the Auditor General, the State Treasurer and the Pennsylvania Public Utility Commission are subject to this subchapter.

 (a)  A Commonwealth agency that initiates an adversary adjudication will award to a prevailing party, other than the Commonwealth, fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer finds that the position of the agency, as a party to the proceeding, was substantially justified or that special circumstances make an award unjust. This subchapter shall not apply if otherwise provided or prohibited by law.

 (b)  An attorney, agent or expert witness whose fee is in dispute may be required by the adjudicative officer to produce detailed contemporaneous records verifying the actual time spent on behalf of the prevailing party. The inability of an attorney, agent or expert witness to produce the records may be considered by the adjudicative officer as a basis for reducing the amount of fees and expenses sought for that attorney, agent or expert witness.

 (a)  To be eligible for an award of fees and expenses under the act, an applicant shall be a party, as defined in the act; shall prevail over the Commonwealth agency initiating the adversary adjudication; shall allege that the position of the Commonwealth agency was not substantially justified; and shall meet the conditions set forth in the act.

 (b)  The applicant shall provide the information required by this subchapter and by the Application for Award of Adjudicative Fees and Expenses.

 (c)  Each applicant shall provide a statement showing the net worth of the applicant. The statement may be in any form convenient to the applicant that provides full disclosure of assets and liabilities and is sufficient to determine eligibility under this subchapter. The net worth statement shall be made available only to the adjudicative officer and the Commonwealth agency except when an appeal is taken, in which case the net worth statement shall be included in the record of the proceeding in which an award is sought.

 (d)  For purposes of eligibility, the net worth and number of employes of an applicant will be determined as of the date the proceeding was initiated.

   The fact that a court reporter failed to appear at a hearing and appellant offered to pay for another court reporter were not sufficient reason, by itself, to award the appellant the costs and fees of bringing an expert witness from Alabama since appellant was not the prevailing party. Willard Agri-Service, Inc., v. Department of Agriculture, 554 A.2d 596 (Pa. Cmwlth. 1989).

 (a)  Application forms will be available, insofar as possible, from adjudicative officers. The form will also be published in the Pennsylvania Bulletin as a notice. The application must be completed by the prevailing party and submitted to the adjudicative officer as prescribed in the act. The prevailing party, at the same time, shall send an additional copy of the application to the chief counsel of the Commonwealth agency that initiated the proceeding. The form shall be signed by the applicant attesting to his eligibility to submit an application.

 (b)  A statement of net worth must be attached to the application. The applicant may also include any other documents that the applicant wishes the adjudicative officer to consider in determining whether and in what amount an award should be made.

 (c)  Upon determination of an award the adjudicative officer must complete an Award of Adjudicative Fees and Expenses form and submit it to the agency’s chief counsel. A copy of this form will be forwarded to the applicant as notification of the finding of the adjudicative officer.

 (d)  The Award of Adjudicative Fees and Expenses form must be signed by the applicant and returned to the chief counsel of the agency as notification of acceptance or nonacceptance of the award.

 (e)  Upon receipt of an Award of Adjudicative Fees and Expenses form signed by the applicant accepting an award, or upon completion of an appeal resulting in an award, the chief counsel shall sign and forward the acceptance form to the agency fiscal officer for submission to the agency comptroller for encumbrance and payment.

 A completed set of application and other forms, with attachments, shall be maintained by the chief counsel of the Commonwealth agency involved in the proceeding. The chief counsel shall provide a complete set to the agency fiscal officer when an award is to be paid.

 (a)  Section 4(b) of the act (71 P. S. §  2034(b)) requires that ‘‘after consultation with the Secretary of Budget and Administration, each agency shall by rule establish specific procedures for the submission and consideration of applications for an award of fees and other expenses for adjudicative proceedings before the agency, or may adopt the uniform procedures recommended by the Secretary.’’ Consultation with the Secretary of Budget and Administration will be as delegated by the Secretary of Administration and the Secretary of the Budget.

 (b)  To avoid the need for each agency to promulgate its own regulation to either adopt or modify the standard procedures in this subchapter, adoptions will be published as amendments to this section. Each agency is to notify the Secretary of Administration of its willingness to adopt the procedures in this subchapter.

 (c)  Under subsections (a) and (b), the following agencies have adopted the uniform procedures in this subchapter:

 Aging, Department of
 Agriculture, Department of (includes Harness and Horse Racing Commissions)
 Arbitration Panels for Health Care
 Banking, Department of
 Commerce, Department of
 Community Affairs, Department of
 Corrections, Department of
 Crime and Delinquency, Commission on
 Education, Department of
 Emergency Management Agency, Pennsylvania
 General Services, Department of
 Health, Department of
 Health Facility Hearing Board, State
 Higher Education Assistance Agency
 Housing Finance Agency
 Insurance Department
 Labor and Industry, Department of
 Liquor Control Board
 Medical Professional Liability Catastrophe Loss Fund
 Military Affairs, Department of
 Municipal Retirement Board, Pennsylvania
 Pardons, Board of
 Public Welfare, Department of
 Revenue, Department of
 School Employes’ Retirement System, Pennsylvania
 State, Department of
 State Employes’ Retirement System
 State Police
 State System of Higher Education
 Transportation, Department of

   Editor’s Note: Subsection (c) appears under the Rules and Regulations heading as a document which the Legislative Reference Bureau finds to be general and permanent in nature and therefore a document to be codified. See 1 Pa. Code § §  3.1 and 3.25 (relating to contents of Pennsylvania Code and rules and regulations).

   The provisions of this §  2.9 amended December 13, 1985, effective December 14, 1985, 15 Pa.B. 4426. Immediately preceding text appears at serial page (89714).

   This section cited in 4 Pa. Code §  2.1 (relating to purpose); and 4 Pa. Code §  2.11 (relating to statements of policy).

STATEMENTS OF POLICY

 Both the net worth and the number of employes of an applicant and all of its affiliates shall be aggregated to determine eligibility. A party that directly or indirectly controls or owns a majority of the voting shares of another business, or controls, in any manner, the election of a majority of that business’ board of directors, trustees, or other persons exercising similar functions, shall be considered an affiliate for purposes of this subchapter, unless the adjudicative officer determines that the treatment would be unjust and contrary to the purposes of the act in light of the actual relationship between the affiliated entities. In addition, the adjudicative officer may determine that financial relationships of the applicant, other than those described in this subsection, constitute special circumstances that would make an award unjust. A part-time employe who works more than 20 hours per week should be counted as one employe. A part-time employe who works 20 hours or less per week should be counted as one-half an employe.

   Affiliate

 (a)  An individual who is the sole owner of an unincorporated business and who, at the time the adversary adjudication was initiated against him, had an individual net worth not exceeding $500,000 but whose unincorporated business had a net worth not exceeding $2 million or had more than 250 employes will be considered an individual rather than a sole owner of an unincorporated business only for those issues on the merits on which he prevails which primarily relate to his interests as an individual and which are severable from issues relating to his interests as sole owner of an unincorporated business.

 When an award of fees or other expenses is made, the agency shall provide a report to the Secretary of Administration. The reports shall include a brief summary of the circumstances underlying the disposition of the case and the basis for the award, the amount of the award, and an identification of the remedial actions necessary to avoid future adversary adjudications being undertaken without substantial justification.