Sec. 1.1504  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the EAJA, the applicant must be a party, as defined in 5 U.S.C. 
551(3), to the adversary adjudication for which it seeks an award. The 
applicant must show that it meets all conditions of eligibility set out 
in this paragraph and in paragraph (b) of this section.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable association as defined in section 501(c)(3) of the 
Internal Revenue Code (26 U.S.C. 501(c)(3)) with not more than 500 
employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (5) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees;
    (6) For purposes of Sec. 1.1505(b), a small entity as defined in 5 
U.S.C. 601.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated.
    (d) 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 the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (e) The number of employees of an applicant include all persons who 
regularly perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or

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other interest, will be considered an affiliate for purposes of this 
part, unless the Administrative Law Judge determines that such treatment 
would be unjust and contrary to the purposes of the EAJA in light of the 
actual relationship between the affiliated entities. In addition, the 
Administrative Law Judge may determine that financial relationships of 
the applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) 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.
[ 47 FR 3786 , Jan. 27, 1982, as amended at  52 FR 11653 , Apr. 10, 1987;  61 FR 39898 , July 31, 1996]