SUBJECT: Susanville Indian Rancheria

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

The Indian Health Service (IHS) appealed the December 9, 2002 decision of Administrative Law Judge (ALJ) William E. Hammett awarding fees and expenses to Susanville Indian Rancheria (Tribe) under the Equal Access to Justice Act. Susanville Indian Rancheria v. Director, California Area Office, Indian Health Service (ALJ Decision). ⁽¹⁾ The Equal Access to Justice Act provides that an eligible party may receive an award for attorney fees and other expenses when it prevails over a federal agency in an adversary adjudication, unless the adjudicative officer finds that the position of the federal agency was substantially justified or that special circumstances would make an award of fees and expenses unjust. 5 U.S.C. � 504(a)(1). The Tribe sought an award of fees and expenses incurred in connection with its appeal of the determination of the Indian Health Service (IHS) to partially decline the Tribe's proposal to renew its contract to provide health care programs, functions, services and activities under the Indian Self-Determination Act. I issued a final decision in that matter on February 6, 2002 (Susanville Indian Rancheria, DAB No. 1813). The ALJ found that IHS's position in the litigation was not substantially justified and awarded $71,147.96 in fees and expenses.

IHS sought review of the ALJ Decision pursuant to 25 C.F.R. � 900.177. ⁽²⁾ IHS argued on appeal that the amount of the award was not reasonable and should be reduced.

For the reasons discussed below, I conclude that the ALJ did not err in determining that fees and expenses in the amount of $71,147.96 were reasonable. Accordingly, I sustain the ALJ Decision except to the extent that the ALJ misstated the precedential effect of the recommended decision I reviewed in DAB No. 1813.

The record for this decision consists of the record of the proceedings on the underlying case as well as on the EAJA application. The record for IHS's appeal of the ALJ's December 9, 2002 decision on the EAJA award includes IHS's January 10, 2003 appeal, the Tribe's January 17, 2003 response, IHS's January 22, 2003 response to my written questions of January 16, 2003, the audio tape of the January 23, 2002 oral argument, IHS's January 24, 2003 further response to my written questions, IHS's January 27, 2003 response to questions raised in the oral argument, and the Tribe's January 28, 2003 response.

Legal Background

The Equal Access to Justice Act (EAJA), 5 U.S.C. � 504, provides in relevant part as follows:

(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 on the basis of the administrative record, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought.

(a)(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 any 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. . . .

(b)(1)(A) "fees and other expenses" includes the reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test, or project which is found by the agency to be necessary for the preparation of the party's case, and reasonable attorney or agent fees (The amount of fees awarded under this section shall be based upon prevailing market rates for the kind and quality of the services furnished, except that

* * * * *

(ii) attorney or agent fees shall not be awarded in excess of $125 per hour unless the agency determines by regulation that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys or agents for the proceedings involved, justifies a higher fee.) ⁽³⁾

(c)(1) After consultation with the Chairman of the Administrative Conference of the United States, each agency shall by rule establish uniform procedures for the submission and consideration of applications for an award of fees and other expenses. . . .

Prior to its amendment in 1996, section 504(b)(1)(a)(ii) provided for attorney fees of up to $75 per hour. Section 233 of Public Law No. 104-121 provided that the amendment increasing the maximum hourly rate to $125 "shall apply to civil actions and adversary adjudications commenced on or after the date of the enactment of this subtitle [March 29, 1996]." ⁽⁴⁾

The EAJA regulations issued by the Office of Hearings and Appeals in the Department of the Interior (DOI), at 43 C.F.R. � 4.601-4.619, are made applicable to EAJA applications in cases under the Indian Self-Determination Act by 25 C.F.R. � 900.177. The DOI regulations, which were published in 1983 and never amended, provide in pertinent part that "[r]easonable attorney or agent fees are allowable," and that "[a]ttorney or agent fees will not exceed $75 per hour." 43 C.F.R. � 4.607(a)(3) and (b)(2). The regulations further provide in relevant part:

(c) In determining the reasonableness of the fee sought, the adjudicative officer shall consider the following:

(1) The prevailing rate for similar services in the community in which the attorney, agent, or witness has performed the service . . . .

The Decision on Which the EAJA Application Was Based

On February 6, 2002, I issued a decision, DAB No. 1813, on review of the December 14, 2001 recommended decision on remand by ALJ William E. Hammett regarding IHS's partial declination of the Tribe's proposal to renew its contract to provide health care programs, functions, services and activities under the Indian Self-Determination Act (ISDA). IHS had originally declined to fund part of the Area Office and Headquarters shares in the Tribe's proposed annual funding agreement (AFA) for 1997 based on section 102(a)(2)(D) of the ISDA, which permits IHS to decline a proposal for funding "in excess of the applicable funding level for the contract, as determined under section 106(a). . . ." In support of the declination, IHS concluded: 1) the proposed Area Office share was excessive because it included funds that IHS should have withheld to pay for administrative functions that cannot be contracted but must be performed by the Area Office; and 2) the proposed Headquarters share was excessive because it included funds for non-recurring costs which IHS should have distributed among tribes on a program formula basis. In DAB No. 1813, I agreed "with the ALJ's ultimate conclusion that IHS owes the Tribe the difference between the amount of the Area Office share in the Tribe's proposed contract for 1997 and the amount the Tribe actually received for the Area Office share, and that this amount should be paid out of appropriations for the current fiscal year." DAB No. 1813, at 1-2. I summarized my findings as follows:

• Section 900.32 of 25 C.F.R. prohibits IHS from declining any portion of a proposed successor AFA that is substantially the same as the AFA for the prior year even if the aggregate funding for the proposed successor AFA is not reduced.
  

• Since IHS conceded that the Area Office share in the Tribe's proposed AFA for 1997 was substantially the same as the Area Office share in the Tribe's AFA for 1996, section 900.32 prohibited IHS from declining the proposed AFA with respect to the Area Office share.

• IHS must pay the difference between the proposed Area Office share for 1997 and the amount received by the Tribe for the Area Office share out of funds appropriated for the current fiscal year.
  

  � The Tribe is not entitled to any interest on the amount owed by IHS. In his recommended decision on remand, the ALJ found that neither the ISDA nor the Tribe's self-determination contact required the payment of interest. Pursuant to 25 C.F.R. � 900.166, this finding is final in the absence of a timely appeal by the Tribe.

• I need not decide whether IHS was prohibited from declining the Tribe's proposed AFA for 1997 with respect to the Headquarters share since the Tribe would have no remedy even if it were to prevail on this issue. In his recommended decision on remand, the ALJ found that the Tribe ultimately received at least the same amount of funding for the Headquarters share in 1997 as it received the prior year, so that IHS did not owe the Tribe any additional amount for this share. Pursuant to 25 C.F.R. � 900.166, this finding is final in the absence of a timely appeal by the Tribe.
  

DAB No. 1813, at 2.

The ALJ Decision on the EAJA Award

Since IHS did not appeal the ALJ's finding that IHS's position in the litigation was not substantially justified, I summarize below only the ALJ's findings and conclusions regarding the amount of the award.

In determining the proper amount of the award, the ALJ first determined the "lodestar" amount, which he stated is arrived at "by multiplying the 'prevailing market rates for the kind and quality of services rendered' by the amount of time reasonably expended on the case." ALJ Decision at 9. The Tribe requested an award of $115,946.44 "based on the current statutory maximum rate of $125 per hour for attorneys fees for 803.2 hours, plus additional amounts for time spent by law clerks and legislative assistants, fees charged by an expert witness for the tribe, and expenses." Id. at 10. ⁽⁵⁾ The ALJ found that the Tribe "made an adequate showing that the 'prevailing market rate' for its services is at least $125 per hour." Id. The ALJ noted that, while IHS did not dispute that this was the prevailing market rate, IHS argued that "the regulatory language limits the maximum rate for attorney time, so that the $75 per hour limit in the regulation applies." Id. at 11. The ALJ further determined that, for law clerks and legislative assistants, a rate of $62.50 per hour, or one-half of the statutory maximum for attorneys, should be applied when calculating the lodestar amount. Id. at 13. The ALJ reduced the number of hours claimed by the Tribe both for attorneys and for law clerks and legislative assistants by 10% to account for duplication of effort. The ALJ rejected IHS's argument that the number of hours should be further reduced to account for the time spent on the Tribe's unsuccessful claim for Headquarters share funds, finding that that claim "involves many of the same facts and legal issues as the claim for Area Office funds." Id. at 14.

After arriving at a lodestar amount of $101,639.95, ⁽⁶⁾ the ALJ proceeded to determine the extent to which that amount should be reduced based on the result obtained. The ALJ relied on Supreme Court precedent holding that, in determining what fees are reasonable, the "most critical factor" is the extent of the applicant's success. ALJ Decision at 16, quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1982). The ALJ determined that the lodestar amount in this case should reduced by 30%, to $71,147.96, "in order to account for the mixed results achieved by the Tribe." ALJ Decision at 19. The ALJ noted that, pursuant to DAB No. 1813, the Tribe recovered $11,300 for its Area Office share but failed to recover $60,000 it was seeking for its Headquarters share. Thus, "the Tribe obtained only about one-seventh of the amount of money it sought." Id. The ALJ stated, however, that "the Tribe has achieved victories on significant legal issues, which should benefit the Tribe and other contracting tribes in the future." Id. Specifically, the ALJ found that the determination in his December 14, 2001 recommended decision that IHS's partial declination of the amount proposed for the Headquarters share violated the Indian Self-Determination Act and the regulations at 25 C.F.R. � 900.32 was not reversed or modified on appeal. Id. at 18. The ALJ further found that the Tribe "achieved victories with findings regarding IHS's aggregate funding argument, and regarding IHS's argument that IHS had no funds with which to pay the Tribe" (made by IHS in connection with both the Area Office and the Headquarters shares). Id.

Summary of Issues Raised on Appeal

IHS argued that the ALJ erred in awarding $71,147.96 by:

1) not sufficiently reducing the hours expended in pursuing the Tribe's unsuccessful claim for additional IHS Headquarters funding; 2) not sufficiently reducing the award in light of the Tribe's very limited recovery ($11,300); 3) ignoring the maximum attorney hourly rate of $75 per hour as set forth in the applicable regulation (43 C.F.R. � 4.607), and instead applying an hourly rate of $125 per hour; and 4) awarding law clerk and legislative assistant fees at $62.50 per hour, just a few dollars less than the maximum attorney hourly rate permitted by regulation.

IHS appeal dated 1/10/03, at 1-2.

I address below each of the arguments advanced by IHS on appeal, none of which I find is a basis for reducing the amount of the EAJA award.

1. A further reduction in the hours expended in pursuing the Tribe's claim for Headquarters funding is not warranted.

As noted above, the ALJ reduced the lodestar amount by 30% in order to account for the fact that the Tribe failed to recover the $60,000 it was seeking for its Headquarters share. IHS argued that the Tribe was not entitled to any fees related to its appeal of IHS's declination of the Headquarters share and that the ALJ's reduction was therefore not sufficient. According to IHS, not only did the Tribe's appeal of the declination not result in any additional funding for its 1997 Headquarters share, but the Tribe obtained no other benefit from the findings in DAB No. 1813 on this aspect of its appeal. Specifically, IHS argued that "the ALJ incorrectly asserted that because the DAB did not specifically modify or reverse the ALJ's findings [that IHS's partial declination of the Headquarters share violated section 106(b) of ISDA and 25 C.F.R. � 900.32], the ALJ's decision became final on these issues." IHS appeal dated 1/10/03, at 10. IHS asserted, moreover, that an award of fees related to the Headquarters share would inappropriately reward the Tribe for pursuing a claim that IHS characterized as "clearly insupportable at the outset of this litigation." IHS appeal dated 1/10/03, at 8.

I agree with IHS that the ALJ misstated the effect of his December 14, 2001 recommended decision. Once the ALJ found that the Tribe had been paid the full amount of Headquarters funds it had requested in its proposed AFA for 1997, he did not need to reach the legal issues of whether IHS's partial declination of the Headquarters share violated 25 C.F.R. � 900.32 or section 106(b) of the ISDA. In this sense, his conclusion that this declination violated these provisions was dicta. Indeed, although I found that IHS's partial declination of the Area Office share violated section 900.32, I did not reach the issue of whether there was a similar violation of this regulation (or a violation of the statute) as to the Headquarters share since I found that the Tribe did not timely appeal the ALJ's finding that the Tribe was paid more than the amount requested for the Headquarters share in the Tribe's proposed AFA for 1997 and thus, "even if there was a violation of section 900.32, the Tribe did not suffer any harm as a result . . . ." DAB No. 1813, at 14.

Nevertheless, I conclude that the 30% reduction in the lodestar amount taken by the ALJ is more than sufficient to account for the Tribe's lack of success with respect to its Headquarters share claim. The ALJ held, and IHS did not dispute, that the Headquarters share claim involved many of the same legal issues as the claim for Area Office funds. Thus, for the most part, the Tribe would have incurred the same legal fees whether or not it had appealed IHS's partial declination of the Headquarters share. The only significant additional issue that arose with respect to the latter declination was whether the Tribe had been paid the full amount of the Headquarters share in its proposed AFA for 1997. In support of its position that it had not been paid the full amount, the Tribe argued that Maintenance and Improvement (M & I) and other types of non-recurring program funds it received were not properly considered Headquarters share funds. See December 14, 2001 recommended decision at 21 - 24. Since the Tribe did not appeal the ALJ's finding that M & I funds must be considered Headquarters share funds, the ALJ's finding was final. See DAB No. 1813, at 14-15. The Tribe is thus not entitled to be reimbursed for any legal fees incurred in litigating matters that pertained only to the Headquarers share. Nevertheless, a further reduction of the lodestar amount to account for the legal fees attributable to this issue is not warranted. The itemized list of billable hours in the Tribe's EAJA application identifies only a very small number of hours as specifically associated with the Headquarters share or M & I. See EAJA Application, Ex. E, Att. 2. Moreover, given the limited scope of the only significant issue that does not jointly apply to both the Headquarters and Area Office shares, it is inconceivable that it consumed more than 30% of all attorney time spent on the case. ⁽⁷⁾

2. A further reduction of the award in light of the limited amount recovered by the Tribe for the Area Office share is not warranted.

IHS argued that the $71,147.96 award "is per se unreasonable since it is over six times the $11,300 that the Tribe recovered for its Area Office share. IHS appeal dated 1/10/03, at 14. IHS cited caselaw holding that "the amount involved and the result obtained" are among the factors that may be considered when calculating the number of hours reasonably expended on litigation. Id. at 12, citing Coleman v. Block, 589 F.Supp. 1411 (1984); Johnson v. Georgia Hwy. Express, 588 F.2d 714 (5^th Cir. 1974).

I conclude that the $71,147.96 award is not unreasonable in light of the significance of the Tribe's victory on the Area Office share issue. While the Tribe's $11,300 recovery is not large, the ALJ noted that "[i]n determining how the degree of success should affect the fee award, courts have tended to avoid strict mathematical ratios based upon, for example, the amount of money obtained as a result of the action. [Citations omitted.]" December 9, 2002 decision at 16. Thus, the mere fact that the EAJA award is six times the amount recovered in the underlying action does not establish that the amount of the award is unreasonable. The court decision on which IHS relied, Gumbhir v. Curators of the Univ. of Missouri, 157 F.3d 1141 (8^th Cir. 1998), tends to support the Tribe's case instead. Although the court reduced the fee award to account for the plaintiff's limited success, the amount awarded by the court was still almost six times the amount recovered by the plaintiff.

Moreover, the result in this case has broad implications beyond the amount at issue for 1997 due to the interpretation of 25 C.F.R. � 900.32 which was the basis for the Tribe's recovery of Area Office funding. Section 900.32 provides in relevant part that "[a]ny portion of an annual funding agreement proposal which is not substantially the same as that which was funded previously . . . is subject to the declination criteria." The Tribe had argued, and the ALJ had held in his December 14, 2001 recommended decision, that IHS's partial declination of the Area Office share and the Headquarters share violated this regulation. In DAB No. 1813, I found that the quoted language-

plainly contemplates that the Secretary may decline a proposed successor AFA only to the extent that it is not substantially the same as the AFA for the prior year and that the Secretary must otherwise approve the proposed AFA. The regulation looks not at whether the proposed AFA as a whole is substantially the same, but at whether portions of the proposed AFA are substantially the same. If a portion of the proposed AFA is substantially the same, it is required to be approved at the prior year's funding level. Moreover, section 900.32 gives the following examples of a portion of a proposed AFA that IHS might determine not to be substantially the same: "a redesign proposal; waiver proposal; different proposed funding amount; or different program, service, function, or activity" (emphasis added). Thus, IHS was required to determine, with respect to both the Area Office share and the Headquarters share, whether that portion of the proposed AFA-including the proposed funding amount--was substantially the same as in the prior year's AFA, and, if so, to approve the proposed AFA with respect to that share, even though the aggregate funding was not reduced.

DAB No. 1813, at 9-10.

This interpretation of section 900.32 finally determined only the amount of the Tribe's Area Office share for 1997; however, it could also affect the Tribe's funding agreements in the future. Even if, as IHS asserted in its EAJA appeal, most of the California Area Office budget is now obligated as non-recurring funding which is not subject to negotiation, this situation is subject to change. ⁽⁸⁾ Moreover, the Tribe could reasonably argue in a future appeal of a declination that the interpretation of section 900.32 in DAB No. 1813 precludes IHS from reducing funding from the prior year's level with respect to any portion of a proposed AFA, not just the Area Office share. Accordingly, the amount of the Tribe's recovery in the instant case does not reflect the full extent of the benefit to the Tribe.

3. The ALJ did not err in determining that the rate for attorney fees in this case is $125 per hour.

The ALJ concluded based on the following rationale that $125 per hour is the rate for attorney fees where, as here, the prevailing rate exceeds $125 per hour:

The statutory maximum for attorney fees, which began at $75 per hour and was amended in 1996 to $125 per hour, must be read in context. The primary requirement for attorney fees is that those fees are to be based on "prevailing market rates for the kind and quality of services furnished." See 43 U.S.C. � 504(b)(1)(A); 43 CFR 4.607(b). The statutory maximum limits the prevailing market rate. Thus, if the prevailing market rate is lower than the statutory maximum, then it is the prevailing market rate which is used. On the other hand, if the prevailing market rate is equal to or higher than the statutory maximum, then the statutory maximum applies to limit that amount.

However, as the Tribe points out, the phrase "shall not be awarded in excess" can not reasonably be interpreted to mean that agencies are free to set lower maximums in their regulations. In other words, where Congress has dictated that attorneys fees shall be awarded at the prevailing market rate or $75 per hour, whichever is lower, as it initially did when it passed EAJA, agencies are not free to say, for example, that attorney fees shall be awarded at the prevailing market rate or $50 per hour, whichever is lower. To do so is to contradict the statutory language. Logically, then, when Congress changed the statutory maximum from $75 per hour to $125 per hour in 1996, agency regulations setting the maximum fee at $75 per hour became obsolete, because they contradicted the new statutory language.

Therefore, this forum finds that, because EAJA was amended after DOI's EAJA regulations were promulgated, and because the regulation contradicts the statute as amended, the statutory language should control. Floyd Collins v. BIA, 30 IBIA 165, 172 (1997) ("Where there are discrepancies between a BIA regulation and a later-enacted statute, the statute controls.") Accordingly, this forum applies the $125 per hour rate for attorneys fees in determining the lodestar amount.

ALJ Decision at 12-13.

IHS took the position in its EAJA appeal that the applicable rate here is $75 per hour, as provided in the DOI regulation. IHS contended that the relevant statutory language is section 504(b)(1)(A)(ii), which provides that "attorney or agent fees shall not be awarded in excess of $125 per hour unless the agency determines by regulation that an increase in the cost of living or a special factor . . . justifies a higher fee." IHS contended that this merely establishes "a maximum amount to be paid to an eligible party . . . ." IHS Response to Questions, dated 1/22/03, at 3. According to IHS, this language, in conjunction with the language in section 504(c)(1) providing that "each agency shall by rule establish . . . procedures for. . . an award of fees and other expenses" gives each agency "the discretion to determine whether to permit an award up to the maximum rate of $125 per hour." Id. Thus, in IHS's view, the DOI regulation providing for a lower maximum hourly rate can be reconciled with the statute. IHS also asserted that, as a delegate of the Secretary, the ALJ was bound by the duly promulgated regulation implementing the original EAJA statute. In addition, IHS noted that the same issue was raised in St. Regis Mohawk Tribe, DAB No. 1859 (2002), which held that there was no conflict between the statute and the regulation and that the $75 per hour maximum rate specified in the regulation governed.

I conclude that the ALJ did not err in determining that the maximum hourly rate for attorney fees in this case is $125. IHS mistakenly focused on only part of the relevant statutory language--section 504(b)(1)(A)(ii). In so doing, IHS ignored the prefatory language in section 504(b)(1)(A), which states that "[t]he amount of fees awarded under this chapter shall be based upon prevailing market rates for the kind and quality of the services furnished . . . ." ⁽⁹⁾ As the ALJ concluded, the only reasonable interpretation of section 504(b)(1)(A) as a whole is that it requires payment of the prevailing market rate unless that rate is greater than $125 per hour, in which case payment is limited to $125 per hour. ⁽¹⁰⁾ Even apart from the initial reference to the prevailing rate, the fact that section 405(b)(1)(A)(ii) provides that an agency may determine by regulation that certain factors may justify a rate above $125 per hour, but contains no provision for setting a lower rate, indicates that agencies were not intended to have discretion to cap payments at a rate of less than $125 per hour. ⁽¹¹⁾

Moreover, application of the statutory $125 per hour maximum is not contingent upon the issuance of implementing regulations. Instead, section 233 of Public Law No. 104-121 provides that the 1996 EAJA amendments "shall apply to civil actions and adversary adjudications commenced on or after the date of the enactment of this subtitle [March 29, 1996]." The EAJA amendments could not have been effective immediately, as section 233 provides, unless they were self-implementing. Moreover, IHS provided no support for its assertion that section 233 refers only to new substantive rights conferred by the 1996 EAJA amendments. On its face, section 233 applies to all of section 231, including the $125 per hour provision in section 231(b)(1). Indeed, numerous administrative decisions have found section 233 dispositive in determining whether the maximum rate for attorney fees is $75 or $125 per hour without regard to what the existing agency regulation provided. See, e.g., Application Under the Equal Access to Justice Act-Carousel Development, Inc., ASBCA No. 50719, 2001-2 B.C.A. (CCH) P31,590 (2001) (maximum rate of $125 per hour applicable since underlying appeal filed after March 29, 1996); Application Under the Equal Access to Justice Act-Logics, Inc., ASBCA Nos. 46914, 49364, 2001-2 B.C.A. (CCH) P31,482 (2001); Application Under the Equal Access to Justice Act- Commercial Energies, Inc., ASBCA Nos. 47106, 50316, 2000-1 B.C.A. (CCH) P30,907 (2000); Staff, Inc., Application for Attorneys' Fees, AGCBA No. 98-152-10, 99-1 B.C.A. (CCH) P30,260 (1999) (attorney fees limited to $75 per hour since underlying appeals commenced prior to March 29, 1996). ⁽¹²⁾

Finally, the legislative history confirms that the ALJ's interpretation is the correct one. A House report on the original version of EAJA stated that the definition of fees and expenses "establishes that fees are to be based on the prevailing market rate for the kind and quality of services rendered. However, no attorney or agent may be compensated at a rate in excess of $75 per hour unless special factors justify a higher fee." H. Rep. No. 96-1418, 1980 USCCAN 4953, 4994 (Sept. 26, 1980). ⁽¹³⁾ There was no indication of any intent to change this approach in the 1996 amendments, the purpose of which was merely to bring the maximum rate "more closely into line with current hourly rates charged by attorneys" and thus to enlarge the pool of attorneys willing to take on such cases. 141 Cong. Rec. S3891-02, S3896 (daily ed. Mar. 14, 1995) (statement of Sen. Feingold).

Even if, as IHS argued, the statute gives agencies the discretion to set their own limit on the prevailing rate, DOI has not taken any action which could be viewed as an exercise of such discretion. The DOI regulation setting the $75 per hour maximum was issued in 1983 to implement EAJA as it then existed. ⁽¹⁴⁾ Thus, the regulation cannot logically be considered as an exercise of DOI's purported discretion under the statutory amendments enacted 13 years later. Indeed, there is no indication that the provision in the regulation for a maximum rate of $75 per hour was intended to do anything other than repeat the original statutory provision setting $75 per hour as the maximum rate. Moreover, IHS did not point to any official issuance by DOI after EAJA was amended which indicated that the agency believed that a $75 per hour maximum was still appropriate in light of the new statutory requirement to pay attorney fees of $125 per hour where the prevailing rate equals or exceeds that amount. Nor did IHS cite to any regulation of another agency setting a ceiling on attorney fees lower than that in the version of EAJA that was applicable at the time the regulation was issued. ⁽¹⁵⁾

IHS cited numerous court and administrative decisions as holding that "an administrative board does not have the authority to rule on the validity of a regulation, including whether it conflicts with the applicable statute, and cannot disregard, invalidate, or ignore the duly promulgated regulations of the Secretary." IHS submission dated January 27, 2003, at 9. This is not a situation where the ALJ declined to apply a duly promulgated regulation on the ground that it conflicted with the statute, however. Rather, the portion of the regulation that repeated the maximum statutory rate of $75 per hour became obsolete when the statute was amended to increase the maximum rate to $125 per hour. IHS did not assert that any of the decisions on which it relied held that an administrative decision-maker is required to violate a statute and apply an obsolete regulation.

Indeed, it is a fundamental mandate of this Board in reviewing an ALJ decision to ensure that the decision contains no error of law that could cause the decision to be reversed in federal court. The reviewing official must determine whether the ALJ properly considered all applicable statutory provisions. The 1996 EAJA amendments increased the ceiling on the prevailing rate for attorney fees to $125 per hour from the $75 per hour rate in the original EAJA statute. The amendments apply to "civil actions and adversary adjudications commenced on or after the date of the enactment." The ALJ was bound to apply the amended statute here because the "adjudication" in question commenced after the date of the enactment. By the express terms of the amended statute, IHS must pay an award based on the prevailing rate with a ceiling of $125 per hour. If the prevailing rate equals or exceeds $125 per hour (as is undisputed here), the EAJA applicant is entitled to a rate of $125 per hour. The DOI regulation has never been modified to reflect the new statutory ceiling of $125 per hour. The regulation was promulgated in 1983 and merely repeated the original EAJA statute's ceiling on prevailing rates of $75 per hour. It would be an error of law to fail to follow the applicable statutory provision. The amended statute must take precedence over a regulation that reflects the ceiling from the prior version of the statute. ⁽¹⁶⁾

Otherwise, the Department would continue to apply (by means of the outdated regulation) a version of the statute that is no longer in effect. Thus, this Department must follow the provision of the 1996 EAJA amendments that contains the $125 per hour ceiling on the prevailing rate.

4. The ALJ did not err in determining that the rate for law clerk and administrative assistant fees in this case is $62.50 per hour.

The ALJ used an hourly rate of $62.50 for law clerks and legislative assistants in determining the lodestar amount, finding that this rate was reasonable since it was one half of the attorney fee. IHS argued in its EAJA appeal that "[t]hese non-attorney rates are very close to the maximum rate allowed under 43 C.F.R. � 4.607 [DOI's EAJA regulation] for an attorney, and therefore are unreasonable." IHS appeal dated 1/10/03, at 17 (emphasis in original). IHS requested that "all claims for non-attorney fees be eliminated, or, in the alternative, be reduced to $40.00 per hour." Id. IHS did not provide any basis for its request that all non-attorney fees be eliminated. Moreover, in light of my conclusion above that the ALJ did not err in determining that the rate for attorney fees in this case is $125 per hour, there is no merit to IHS's objection to the $62.50 hourly rate for non-attorneys as too close to the $75.00 per hour rate for attorney fees in DOI's regulation.

Conclusion

For the foregoing reasons, I uphold the ALJ's EAJA award of $71,147.96. This is the final determination of the Department in this matter.

Donald F. Garrett, Member
Departmental Appeals Board

1. The decision was issued on remand following my September 19, 2002 decision that the ALJ had erred in denying the Tribe's application for fees and expenses on the ground that the Tribe did not submit an application signed in accordance with the applicable regulations. Susanville Indian Rancheria, DAB No. 1846 (2002).

2. Section 900.177 provides in relevant part that "[f]or DHHS, appeals from the EAJA award will be according to 25 CFR 900.165(b)" (providing procedures for appeals of ALJ decisions issued in cases under the Indian Self-Determination Act). The Secretary's authority to hear appeals under section 900.165(b) was delegated to the Appellate Division of the Departmental Appeals Board on August 16, 1996.

3. Section 504(b)(1)(A)(i) pertains to the rate of compensation for an expert witness.

4. A note in 5 U.S.C.A. � 504 indicates that the effective date provision in section 233 of Public Law No. 104-121 refers to the wrong sections and should refer instead to the section amending section 504 of EAJA.

5. The Tribe noted that the 802.3 hours included not only the time it took the Tribe's legal counsel to present its case on appeal of IHS's partial declination but also the time it took to respond to IHS's two appeals of the ALJ's recommended decisions on the underlying issue.

6. The loadstar amount included expenses (which the ALJ reduced by 50%) as well as the product of the number of hours multiplied by the applicable fees.

7. Since I agree with IHS that the Tribe should not be reimbursed for any of the legal fees attributable solely to the Tribe's Headquarters share claim, I need not address IHS's argument that this claim was insupportable from the outset of the litigation.

8. In making this point, IHS referred to "recurring funding" (IHS appeal dated 1/10/03, at 11); however, it appears that IHS intended to refer to non-recurring program funds.

9. St. Regis Mohawk Tribe did not address the language in section 504(b)(1)(A) which I find to be critical here. Although that decision is the final decision of the Department of Health and Human Services in that matter, it is not binding in the instant case.

10. Thus, it simply makes no sense to argue, as IHS did in the oral argument, that if $125 per hour had been intended as an amount that an agency could not go below, the statute could have stated it as a minimum amount. The statute did not set $125 per hour as a minimum rate but rather as a maximum rate or ceiling which an award based on the prevailing rate could not exceed.

11. In addition, IHS quoted selectively from section 504(c)(1), the full text of which requires agencies to establish "procedures for the submission and consideration of applications for an award of fees and other expenses" (emphasis added). It is clear from this language that the intent was merely to grant agencies discretion with respect to how to process applications for fee awards.

12. The original EAJA statute similarly had an effective date without any requirement for implementing regulations. Public Law No. 96-481, section 208.

13. This is in fact how federal courts interpreted EAJA prior to its amendment in 1996. See, e.g., Meyer v. Sullivan, 958 F.2d 1029, 1033-1034 (11^th Cir. 1992) ("The EAJA therefore establishes a two-step analysis for determining the appropriate hourly rate to be applied in calculating attorney's fees under the Act. The first step in the analysis . . . is to determine the market rate for "similar services [provided] by lawyers of reasonably comparable skills, experience, and reputation." [Citation and footnote omitted.] The second step, which is needed only if the market rate is greater than $75 per hour, is to determine whether the court should adjust the hourly fee upward from $75 to take into account an increase in the cost of living, or a special factor . . . .")

14. Indeed, section 4.604 of the DOI regulation still states that "[t]he Act applies to any adversary adjudication pending before the Office of Hearings and Appeals of the Department of the Interior at any time between October 1, 1981, and September 30, 1984." While EAJA as originally enacted provided for repeal of section 504 effective October 1, 1984, section 6(b)(1) of Public Law No. 99-80 repealed this sunset provision.

15. A notice of proposed rulemaking issued by the Department of Health and Human Services provides for a maximum rate of $125 per hour. 67 Fed. Reg. 52696, 52697, 52700 (August 13, 2002). IHS, however, provided a copy of a November 14, 2002 letter from the Department's Secretary to the Chairman of the Senate Committee on Indian Affairs commenting on proposed legislation (which was not enacted) to amend the ISDA to retroactively apply a $125 per hour rate for tribal administrative appeals pending or filed after October 5, 1988 (thus going farther back than the March 29, 1996 effective date of the EAJA amendments). The letter states that "the EAJA allows the rate to be set by regulations of the various Departments up to a maximum of $125 per hour. HHS (and the Department of the Interior) regulations currently set the rate at $75 per hour." At 1. The letter then states that the Department strongly objects to section 303(a) of the bill for the following reasons:

HHS is in litigation with a tribe and its lawyers over the EAJA rates. Section 303(a), in setting the rate at $125 per hour by statute, would override our litigation position and the applicable regulations. In doing so, the bill would create an exception to the EAJA statute which gives Federal agencies the administrative discretion to set the rate by regulation (up to a maximum of $125). Such a significant change to the legislative scheme in the EAJA should involve Congressional committees overseeing EAJA. This proposed change to the EAJA would have significant budgetary implications, including the potential imposition on HHS of unforeseen financial obligations for this fiscal year and past fiscal years.

Id. This merely characterizes the Department's litigation position, however, and does not purport to be an official interpretation of the statute.

16. Alternatively, rather than viewing the regulation as obsolete, one could read the regulation consistently with the statute by substituting the statutory rate now in effect.