IN THE MATTER OF BNAI ARUGATH HABOSEM,
Docket No. 92-131-ST
Student Financial Assistance Proceeding
INITIAL DECISION - LEGAL FEES
Appearances: Leigh Manasevit, Esq. of Brustein & Manasevit, Washington, D.C., for the
Carol Bengle, Esq. of the Office of the General Counsel, United States Department of Education,
for the Office of Student Financial Assistance Programs
Before: Judge Allan C. Lewis
This initial decision addresses a request filed by Bnai Arugath
Habosem (Bnai) on January 20, 1993, for the award of fees and
other expenses in the total amount of $6,578.75 under 5 U.S.C. §
504 (1992) which was added by Section 203(a)(1) of the Equal
Access to Justice Act, Pub. L. No. 96-481, 94 Stat. 2321 and
extended and amended by Section 1 of the Act of August 5, 1985,
Pub. L. No. 99-80, 99 Stat. 183. Following the submission of
respondent's petition, the United States Department of Education
(ED) filed a motion to dismiss this matter on the theory that the
award of fees and other expenses in this proceeding is not
permitted under the Equal Access to Justice Act. Bnai was then
given an opportunity to respond. For the reasons stated below,
Bnai may not recover fees and other expenses.
Pursuant to the Equal Access to Justice Act, 5 U.S.C. §
504(a)(1), "[a]n 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."
An adversary adjudication, according to 5 U.S.C. § 504(b)(1)(C),
means as pertinent herein--
(i) an adjudication under section 554 of this title [i.e. title 5] in
which the position of the United States is
represented by counsel or otherwise . . . .
An adjudication under the Administrative Procedure Act, 5 U.S.C.
§ 554(a), applies--
in every case of adjudication required by statute to be
determined on the record after opportunity for an agency
hearing, except . . . [as to matters not pertinent herein].
The parties agree that the present termination and fine
proceedings are conducted, respectfully, under Sections
487(c)(1)(D) and (c)(2)(B)(i) of the Higher Education Act of
1965, as amended by Section 490(b)(2) of the Higher Education
Amendments of 1992, Pub. L. No. 102-325, 106 Stat. 448 (to be
codified at 20 U.S.C. §§ 1094(c)(1)(D) and (c)(2)(B)(i)). These
provisions provide, presently, that the Secretary is authorized
to prescribe regulations for--
(1)(D) the . . . termination of the eligibility for any
program . . . or the imposition of a civil penalty under
paragraph (2)(B) whenever the Secretary has determined,
after reasonable notice and opportunity for hearing, that
such institution has violated or failed to carry out any
provision of this subchapter . . . .
and the Secretary may impose a civil penalty--
(2)(B)(i) [u]pon determination, after reasonable notice
and opportunity for a hearing, that an eligible
(I) has violated or failed to carry out any provision of this subchapter . . . .
Prior to July 23, 1992, these provisions mandated a "hearing on
the record" as opposed to a "hearing." The phrase "on the
record" was deleted in July 1992 by Section 490(b)(2) of the
Higher Education Amendments of 1992.
In ED's view, an award of fees and other expenses under the Equal Access to Justice Act is permissible only if the fees were incurred in an adversary adjudication conducted in accordance with the Administrative Procedure Act. 5 U.S.C. § 554(a), i.e. it was a hearing "on the record."See footnote 1 1/ According to ED, termination
and fine proceedings were hearings "on the record" until this
phrase was deleted in 1992 from the governing statutes and its
underlying regulations.See footnote 2
Inasmuch as these proceedings arose after the change in the Higher Education Act and this
authorizes only a "hearing," ED argues that these proceedings are
not "on the record" and, therefore, fees and other expenses may
not be awarded.
ED acknowledges that, under 34 C.F.R. § 21.10 (1992) of its
regulations governing the award of fees and other expenses, the
Secretary indicated that termination and fine proceedings are
adversary adjudications under section 554 of Title 5 and,
therefore, an award of fees and other expenses is permitted. It
urges, however, that this aspect of the regulation, in view of
the 1992 legislation altering the type of hearing afforded
institutions in the termination and fine proceedings, "has
recently become outdated . . . [and] cannot be relied upon as
authority" to award fees and other expenses. Accordingly, it
urges, in effect, that the regulation be disregarded and that an
award of fees and expenses be denied.
Bnai, on the other hand, asserts that the present proceedings
remain "on the record" for purposes of the Administrative
Procedure Act, 5 U.S.C. § 554, and the Equal Access to Justice
Act, 5 U.S.C. § 504(b), even though the governing statute
mandates only a "hearing" in this case. Bnai builds on this
concept and urges that the Secretary's failure to delete the
termination and fine proceedings from his list of adversary
adjudications under 34 C.F.R. § 21.10 reflects his concurrence
that these proceedings are still treated as "on the record" for
purposes of the award of fees and other expenses.
The initial question is whether the present proceedings are "on
the record" under the Administrative Procedure Act, 5 U.S.C. §
554, and, therefore, constitute an adversary adjudication under
the Equal Access to Justice Act, 5 U.S.C. § 504(b).
Bnai asserts that the absence of the phrase "on the record" in
the governing statute does not necessarily mandate that the
hearing is not an "on the record" hearing. In this regard, it
relies upon Marathon Oil v. EPA, 564 F.2d 1253 (9th Cir. 1977) and its progeny, Seacoast
Anti-Pollution League v. Costle, 572 F.2d 872 (1st Cir. 1978) and West Chicago, Ill. v. NRC,
701 F.2d 632 (7th Cir. 1983).
In Marathon Oil, the Ninth Circuit held that petitioners seeking discharge permits were entitled
to a hearing "on the record"
although the statute did not specifically provide for an "on the
record" hearing. The Ninth Circuit reasoned, in part, that--
whether the formal adjudicatory hearing provisions of the
APA apply to specific administrative processes does not rest
on the presence or absence of the magical phrase "on the
record." Absent congressional intent to the contrary, it
rests on the substantive character of the proceedings
involved [which include whether the proceeding was conducted
in order to adjudicate disputed facts and whether the
provision for judicial review within the specific act
required an "on the record" proceeding].
Marathon Oil, 564 F.2d at 1263.
Seacoast and West Chicago were resolved in a similar manner. Seacoast, 572 F.2d at 876; West
Chicago, 701 F.2d at 641.
In the instant case, Congress removed the phrase "on the record"
from the governing statutes. This action reflects a
congressional intent to withdraw the right to an Administrative
Procedure Act hearing that was previously afforded institutions
in the termination and fine proceedings. Thus, Bnai was not a
party to a hearing "on the record" in the case at bar.
This conclusion does not apparently resolve this matter,
according to the parties, due to the presence of 34 C.F.R. §
21.10(a) (1992) which indicates that termination and fine proceedings are adversary
adjudications under section 554 of
Title 5. ED urges that this regulation should be disregarded as
it is outdated and, as of December 8, 1992, is under
consideration to delete therefrom the reference to the
termination and fine proceedings. 57 Fed. Reg. 58,100, 58,102
(Dec. 8, 1992). Bnai argues that the regulation should be given
effect and that the award of fees and other expenses is
Both parties fail to recognize the effect of the definition of
adversary adjudication set forth in 34 C.F.R. § 21.3 as it
pertains to 34 C.F.R. § 21.1(a)(1). Section 21.1(a)(1) of 34
C.F.R. provides for the award of fees and other expenses to
(1) Are prevailing parties in adversary adjudications
before the Department of Education; . . . .
An adversary adjudication is defined by 34 C.F.R. § 21.3 as a
(a) Conducted by the Department for the formulation of an
order arising from a hearing on the record under the
Administrative Procedure Act (5 U.S.C. 554);
(b) Listed in § 21.10, and
(c) In which the position of the Department was represented by counsel or by another representative.
Even though termination and fine proceedings are listed in Reg. §
21.10, the hearings must be conducted "on the record" in order to
satisfy the definition of an adversary adjudication under Reg. §
21.3(a). As noted above, the hearing afforded Bnai in this case
was not an "on the record" hearing. Therefore, Bnai may not
recover fees and other expenses under the Equal Access to Justice
Accordingly, it is HEREBY ORDERED that Bnai Arugath Habosem's
petition for the award of fees and other expenses is denied.See footnote 3
Allan C. Lewis
Administrative Law Judge
Issued: March 11, 1993
Leigh Manasevit, Esq.
Brustein & Manasevit
3105 South Street, N.W.
Washington, D.C. 20007
Carol Bengle, Esq.
Office of the General Counsel
U.S. Department of Education
Room 4091, FOB-6
400 Maryland Avenue, S.W.
Washington, D.C. 20202-2110