(a) General. The Board shall award costs and attorneys' fees as part of a determination where it is established that a participant engaged in bad-faith conduct, unless such an award would be inconsistent with the interests of justice.

(b) Allegations of bad-faith conduct—(1) On the Board's initiative. On its own, and prior to a final determination, the Board may order a participant to show cause why certain conduct does not constitute bad-faith conduct. Within 14 days, the participant accused of bad-faith conduct shall file a response to this order, which shall follow the procedures set forth in § 220.5(a)(2).

(2) On a party's initiative. A party that in good faith believes that a participant has engaged in bad-faith conduct may file a request for a conference with the Board describing the alleged bad-faith conduct and attaching any relevant exhibits. Requests for a conference concerning allegations of bad-faith conduct and any responses thereto shall follow the procedures set forth in § 220.5(a)(2) of this subchapter.

(c) Establishing bad-faith conduct. After the response of an accused participant has been filed under paragraph (b) of this section, or the time to file such a response has passed, the Board shall either make a determination that no bad-faith conduct occurred or schedule a conference concerning the allegations.

(d) Determining the award. A determination as to any award of attorneys' fees and costs due to bad-faith conduct shall be made as part of the final determination. In determining whether to award attorneys' fees and costs due to bad-faith conduct, and the amount of any such award, the Board shall consider the requests and responses submitted, any arguments on the issue, and the accused participant's behavior in other Board proceedings. Such an award shall be limited to an amount of not more than $5,000, unless—

(1) The adversely affected party appeared pro se in the proceeding, in which case the award shall be limited to costs in an amount of not more than $2,500; or

(2) Extraordinary circumstances are present, such as a demonstrated pattern or practice of bad-faith conduct, in which case the Board may award costs and attorneys' fees in excess of the limitations in this section.