tion to permit presentation of witnesses within specified time limits, provided that a list of witnesses is furnished to the presiding officer prior to the hearing. Witnesses shall not be sworn. The presiding officer may ask questions of any witness and each party may cross-examine any witness presented by an opposing party.

§ 308.95 Decision of the Board of Directors.

Following submission of the hearing transcript to the Board of Directors, the Board may grant the exemption where it determines by reason of the number of public investors, the amount of trading interest in the securities, the nature and extent of the issuer's activities, the issuer's income or assets, or otherwise, that the exemption is consistent with the public interest or the protection of investors. An exemption shall be granted by an order specifying the terms of the exemption, the person to whom it is granted, and the period for which it is granted. A copy of the order shall be served upon each party to the proceeding.

Subpart M-Rules and Procedures Re

lating to the Recovery of Attorney Fees and Other Expenses

§ 308.96 Scope.

This subpart, and the Equal Access to Justice Act (5 U.S.C. 504 and 504 note) which it implements, apply to adversary adjudications that are pending before the FDIC at any time between October 1, 1981, and September 30, 1984. The types of adjudication covered by this subpart are those listed in § 308.03.

§ 308.97 Eligibility of applicants.

(a) To be eligible for an award under this subpart, an applicant must have been named or admitted as a party to the proceeding. In addition, the applicant must show that it meets all other conditions of eligibility set out in this subpart.

(b) The types of eligible applicant are as follows:

(1) An individual with a net worth of not more than $1 million;

(2) A sole owner of an unincorporated business who has a net worth of not more than $5 million, including both personal and business interests, and not more than 500 employees; and

(3) A corporation, association, partnership, or public or private organization with a net worth of not more than $5 million and not more than 500 employees.

(c) An applicant who owns an unincorporated business will be considered as an "individual" rather than a "sole owner of an unincorporated business" if the issues on which he or she prevails are related primarily to personal interests rather than to business interests.

(d) For the purpose of determining eligibility, the net worth of an applicant shall be its net worth as of the date the underlying proceeding was initiated. As provided in § 308.102(d), in the case of a bank, net-worth information reported in conformity with applicable instructions and guidelines on the bank's Consolidated Report of Condition filed for the last reporting date before the initiation of the underlying proceeding will be used in establishing the bank's net worth as of the date the underlying proceeding was initiated.

(e) The employees of an applicant include all those persons who were regularly providing services for remuneration for the applicant, under its direction and control, on the date the proceeding was initiated. Part-time employees are included as though they were full-time employees.

(f) An applicant's net worth includes the value of any assets disposed of for the purpose of meeting an eligibility standard and excludes the value of any obligations incurred for this purpose. Transfers of assets or obligations incurred for less than reasonably equivalent value will be presumed to have been made for this purpose.

(g) The net worth and number of employees of the applicant and all of its affiliates shall be aggregated to determine eligibility. The aggregated net worth shall be adjusted if necessary to avoid counting the net worth of any entity twice. As used in this subpart, "affiliates" are (1) individuals, corporations, and entities that directly or

indirectly or acting through one or more entities control a majority of the voting shares of the applicant, and (2) corporations and entities of which the applicant directly or indirectly owns or controls a majority of the voting shares. The Board of Directors may, however, on the recommendation of the administrative law judge or otherwise, determine that such aggregation with regard to one or more of the applicant's affiliates would be unjust and contrary to the purposes of this subpart in light of the actual relationship between the affiliated entities. In such a case the net worth and employees of the relevant affiliate or affiliates will not be aggregated with those of the applicant. In addition, the Board may determine that financial relationships of the applicant other than those described in this paragraph constitute special circumstances that would make an award unjust.

(h) An applicant that participates in a proceeding primarily on behalf of one or more other persons or entities that would be ineligible is not itself eligible for an award.

§ 308.98 Prevailing party.

(a) An eligible applicant who, following litigation, has gained victory on the merits in the proceeding is a "prevailing party."

(b) An eligible applicant may be a "prevailing party" if a settlement of the proceeding was effected on terms favorable to it or if the proceeding against it has been dismissed. In appropriate situations an applicant may also have prevailed if the outcome of the proceeding has substantially vindicated the applicant's position on the significant substantive matters at issue, even though the applicant has not totally avoided adverse final action.

(c) When a proceeding has presented a number of discrete substantive issues, an applicant may have prevailed even though all the issues were not resolved in its favor. If such an applicant is deemed to have prevailed, any award shall be based on the fees and expenses incurred in connection with the discrete significant substantive issue or issues on which the applicant's position has been upheld. If

such segregation of costs is not practicable, the award may be based on a fair proration of those fees and expenses incurred in the entire proceeding which would be recoverable under § 308.99 if proration were not performed.

(d) Whether separate or prorated treatment under the preceding paragraph is appropriate, and the appropriate proration percentage, shall be determined on the facts of the particular case. Attention shall be given to the significance and nature of the respective issues and their separability and interrelationship.

§ 308.99 Standards for awards.

(a) A prevailing applicant may receive an award for fees and expenses unless the position of the FDIC during the proceeding was substantially justified. To avoid an award, counsel for the FDIC must carry the burden of proof that its position was reasonable in fact and law.

(b) An award will be reduced or denied if the applicant has unduly or unreasonably protracted the proceedings or if special circumstances make the award sought unjust.

(c) Awards for fees and expenses incurred before the date on which a proceeding was initiated are allowable if their incurrence was necessary to prepare for the proceeding.

§ 308.100 Measure of awards.

(a) Except as limited by the next subsection, awards will be based on rates customarily charged by persons engaged in the business of acting as attorneys, agents, and expert witnesses, even if the services were made available without charge or at a reduced rate.

(b) No award under this subpart for the fee of an attorney or agent may exceed $75 per hour. No award to compensate an expert witness may exceed the highest rate at which the FDIC pays expert witnesses. An award may also, however, include the reasonable expenses of the attorney, agent, or expert witness as a separate item, if the attorney, agent, or expert witness ordinarily charges clients separately for such expenses.

(c) In determining the reasonableness of the fee sought for an attorney, agent, or expert witness, the administrative law judge shall consider the following:

(1) If the attorney, agent, or expert witness is in private practice, his or her customary fee for like services, or, if he or she is an employee of the applicant, the fully allocated cost of the services;

(2) The prevailing rate for similar services in the community in which the attorney, agent, or expert witness ordinarily performs services;

(3) The time actually spent in the representation of the applicant;

(4) The time reasonably spent in light of the difficulty or complexity of the issues in the proceeding; and

(5) Such other factors as may bear on the value of the services provided. (d) The reasonable cost of any study, analysis, test, project, or similar

matter prepared on behalf of an applicant may be awarded to the extent that the charge for the service does not exceed the prevailing rate payable for similar services, and the study or other matter was necessary for preparation of the applicant's case and not otherwise required by law or sound business or financial practice.

§ 308.101 Contents of application.

(a) An application for an award of fees and expenses under the Act shall contain (1) the name of the applicant and an identification of the proceeding, (2) showing that the applicant has prevailed, and an identification of each issue with regard to which the applicant believes that the position of the FDIC in the proceeding was not substantially justified, (3) a statement of the amount of fees and expenses for which an award is sought, (4) if the applicant is not an individual, a statement of the number of its employees on the date the proceeding was initiated, (5) a description of any affiliated individuals or entities, as defined in § 308.97(g), or a statement that none exist, (6) a declaration that the applicant, together with any affiliates, had a net worth not more than the ceiling established for it by § 308.97(b) as of the date the proceeding was initiated, and (7) any other matters that the ap

plicant wishes the FDIC to consider in determining whether and in what amount an award should be made.

(b) The application shall be signed by the applicant or an authorized officer or attorney of the applicant. It shall also contain or be accompanied by a written verification under oath or under penalty of perjury that the information provided in the application and supporting documents is true and correct.

§ 308.102

Statement of net worth.

(a) A statement of net worth must be filed with the application. It need not be served on parties to the underlying proceeding other than counsel for the FDIC. Unless otherwise ordered by the Board or required by law, the statement shall be for the confidential use of the Board and the administrative law judge.

(b) The statement of net worth shall reflect the net worth of the applicant and all affiliates of the applicant as affiliates are defined in § 308.97(g). To determine eligibility for an award, net worth of affiliates will be aggregated with that of the applicant according to § 308.97(g).

(c) The statement of net worth may be in any form convenient to the applicant which fully discloses all the assets and liabilities of the applicant and all the assets and liabilities of its affiliates, as of the time of the initiation of the underlying proceeding. Unaudited financial statements are acceptable unless the administrative law judge or the Board shall otherwise require. Financial statements or reports to an agency of the Federal Government or to a State, prepared before the initiation of the underlying proceeding for other purposes, and accurate as of a date not more than three months prior to the initiation of the underlying proceeding, are acceptable in establishing net worth as of the time of the initiation of the underlying proceeding, unless the administrative law judge or the Board shall otherwise require. If the applicant or any of its affiliates is a bank, the portion of the statement of net worth which relates to the bank shall consist of a copy of the bank's last Consolidated

Report of Condition filed before the initiation of the underlying proceeding. In all cases the administrative law judge or the Board may call for additional information needed to establish the applicant's net worth as of the initiation of the underlying proceeding.

(d) In the case of banks, except as adjusted by additional information that was called for under the preceding sentence, net worth shall be considered for the purposes of this subpart to be the total equity capital (or, in the case of mutual savings banks, the total surplus accounts) as reported, in conformity with applicable instructions and guidelines, on the bank's Consolidated Report of Condition filed for the last reporting date before the initation of the underlying proceeding. In the case of applicants or affiliates that are not banks, net worth shall be considered for the purposes of this subpart to be the excess of total assets over total liabilities, as of the date the underlying proceeding was initiated, except as adjusted under § 308.97(f). Assets and liabilities of individuals shall include those beneficially owned within the meaning of § 335.102(e) of the FDIC's rules and regulations.

§ 308.103 Statement of fees and expenses.

The application shall be accompanied by a statement fully documenting the fees and expenses for which an award is sought. A separate itemized statement shall be submitted for each professional firm or individual whose services are covered by the application, showing the hours spent in work in connection with the proceeding by each individual, a description of the specific services performed, the rate at which each fee has been computed, any expenses for which reimbursement is sought, the total amount claimed, and the total amount paid or payable by the applicant or by any other person or entity for the services performed. The administrative law judge or the Board of Directors may require the applicant to provide vouchers, receipts, or other substantiation for any expenses claimed.

§ 308.104 Filing and service of documents.

(a) Any application for an award and any other pleading or document related to an application shall be filed with the Executive Secretary. It shall conform to the requirements of § 308.19 (on filing papers) and shall be served on all parties to the underlying proceeding in accordance with § 308.21(b) (on service), except as provided in § 308.102(a) for statements of net worth.

(b) An application may be filed with the Executive Secretary whenever the applicant has prevailed in the proceeding or in a discrete significant substantive portion of the proceeding but in no case later than 30 days after service of the final order of the Board of Directors in disposition of the proceeding.

§ 308.105 Answer to application.

(a) Within 20 days after service of an application, counsel for the FDIC may file an answer to the application. Unless counsel for the FDIC requests and is granted an extension of time for filing or files a statement of intent to negotiate under paragraph (b) of this section, failure to file an answer within the 20-day period will be treated as a consent to the award requested.

(b) If counsel for the FDIC and the applicant believe that the issues in the fee application can be settled, they may jointly file a statement of their intent to negotiate a settlement. The filing of this statement shall extend the time for filing an answer for an additional 20 days, and further extensions may be granted by the administrative law judge upon the joint request of counsel for the FDIC and the applicant.

(c) The answer shall explain in detail any objections to the award requested and identify the facts relied on in support of counsel's position. If the answer is based on any alleged facts not already in the record of the proceeding, counsel shall include with the answer either supporting affidavits or a request for further proceedings under § 308.107.

(d) Reply to answer. The applicant may file a reply if counsel for the

FDIC has addressed in his or her answer any of the following issues: That the position of the FDIC was substantially justified, that the applicant unduly protracted the proceedings, or that special circumstances make an award unjust. The reply shall be filed within 15 days after service of the answer. If the reply is based on any alleged facts not already in the record of the proceeding, the applicant shall include with the reply either supporting affidavits or a request for further proceedings under § 308.107.

(e) Additional filings in the nature of pleadings may be submitted only by leave of the administrative law judge. §308.106 Comments by other parties.

Any party to the proceeding, other than the applicant and counsel for the FDIC, may file comments on an application within 20 days after service of the application. If the applicant is entitled to file a reply to an answer under $308.105(d), another party may file comments on the answer within 15 days after service of the objection. A commenting party may not participate further in proceedings on the application unless the administrative law judge determines that the public interest requires such participation in order to permit additional exploration of matters raised in the comments.

(a) General. Ordinarily, the determination of a recommended award will be made by the administrative law judge on the basis of the written record. However, on request of either the applicant or counsel for the FDIC, or on his or her initiative, the administrative law judge may order further proceedings such as an informal conference, oral argument, additional written submissions, or an evidentiary hearing. Such further proceedings will be held only when necessary for full and fair resolution of the issues arising from the application and will be conducted as promptly and expeditiously as possible.

(b) Request for further proceedings. A request for further proceedings under this section shall specifically identify the information sought or the

issues in dispute and shall explain why additional proceedings are necessary.

(c) Hearing. The administrative law judge shall hold an oral evidentiary hearing only on disputed issues of material fact which cannot be adequately resolved through written submissions.

§ 308.108 Recommended decision.

The administrative law judge shall file a recommended decision on the fee application with the Executive Secretary no later than 90 days after the filing of the application or 30 days after the conclusion of the hearing, whichever is later. The recommended decision shall include written proposed findings and conclusions on the applicant's eligibility and its status as a prevailing party and an explanation of the reasons for any difference between the amount requested and the amount of the recommended award. The recommended decision shall also include, if at issue, proposed findings on whether the FDIC's position was substantially justified, whether the applicant unduly protracted the proceedings, or whether special circumstances make an award unjust. The administrative law judge shall also file with the Executive Secretary the record of the proceeding on the fee application and a proposed order and at the same time serve upon each party a copy of the recommended decision, findings, conclusions, and proposed order.

§ 308.109 Decision of the Board of Directors.

(a) Within 20 days after service of the recommended decision, findings, conclusions, and proposed order, the applicant or counsel for the FDIC may file with the Executive Secretary written exceptions thereto. A supporting brief may also be filed.

(b) The Board of Directors shall render its decision within 60 days after the matter is submitted to it. The Executive Secretary shall furnish copies of the decisions and order of the Board to the parties. Judicial review of the decision and order may be obtained as provided in 5 U.S.C. 504(c)(2).

[46 FR 62814, Dec. 29, 1981, as amended at 47 FR 53840, Nov. 30, 1982]