City of Oakland v. Donovan
| Decision Date | 12 April 1983 |
| Docket Number | No. 82-7291,82-7291 |
| Citation | 703 F.2d 1104 |
| Parties | CITY OF OAKLAND, a Municipal Corporation, Petitioners, v. Secretary Raymond DONOVAN, United States Department of Labor, et al., Respondents. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Jayne W. Williams, Oakland, Cal., for petitioners.
Harry Sheinfeld, Washington, D.C., for respondents.
Petition on Review from the United States Department of Labor.
Before TRASK, KENNEDY and POOLE, Circuit Judges.
The Secretary of Labor ordered the City of Oakland to repay $61,050 in costs that were incurred by a subgrantee, Vocational Innovation Project (VIP), under a Comprehensive Employment and Training Act (CETA) program. The costs were disallowed because Oakland had not performed an audit of VIP as directed by the Secretary. Oakland was unable to perform the audit but submitted other records concerning VIP's expenditure of the funds. Oakland petitions for review of the Secretary's order.
Oakland entered into a grant agreement with the Department of Labor (DOL) to operate a CETA program. The agreement covered the period from July 1, 1974 to September 30, 1976. Oakland entered into a subcontract with VIP in November of 1974. VIP was required to achieve 33 training related job entries for Chinese speaking enrollees. During the course of the subcontract, Oakland paid VIP $61,050 based on monthly invoices submitted by VIP.
In its agreement with DOL, Oakland assured the agency that it would comply with CETA requirements. Under CETA, 29 U.S.C. Sec. 801 et seq., and regulations promulgated thereunder, 29 C.F.R. Sec. 98.1 et seq., detailed accounting requirements are imposed on a grantee. In addition to the statutory requirements, Oakland specifically assured it would maintain records and provide the DOL with access thereto to insure that funds were being expended in accordance with the agreement and CETA.
After VIP had performed its subcontract, DOL informed Oakland that it should arrange an audit of VIP. In May of 1976, Oakland notified VIP that an audit had been scheduled. In July of 1976, the CPA hired by Oakland to conduct the audit notified the city that he was unable to complete his task because VIP representatives refused to make their records available. (VIP had dissolved as an organization upon completing the contract with Oakland.) VIP agreed to provide certification, training and placement records, but refused to provide financial records.
In November of 1976, DOL formally notified Oakland that an audit of VIP would be required. VIP eventually provided a one-page summary of income and expenditures in a letter dated January 28, 1977. An audit was never performed.
In January of 1979, DOL notified Oakland it was liable for all questioned costs incurred by VIP and stated it was essential for the matter to be resolved within 30 days. On January 30, 1980, the Grant Officer for DOL made an initial determination to disallow the entire $61,050 subgrant due to the time delays and failure to obtain an audit. The Grant Officer made his final determination to disallow the entire amount of the subcontract by letter dated October 17, 1980. The letter stated that failure to comply with his determination by returning the money to DOL could result in sanctions ranging from suspension of Oakland's letter of credit to refusal to continue CETA funding.
In March of 1982, the ALJ affirmed the Grant Officer's disallowance of Oakland's expenditures. The ALJ held:
The evidence shows that, by not having an audit performed and a report of it submitted to the Department of Labor when required, the City of Oakland thereby failed to comply with the Act at 29 U.S.C. Sec. 983(12) as well as paragraph 3(s) of the General Assurances contained in the grant agreement between the City and the Department of Labor. Also, the City violated 29 CFR 98.27(d)(3) of the CETA regulations as well as 29 U.S.C. Sec. 938(12) in failing to insure that VIP, its contractor and subgrantee, maintained and made available to it and the Department of Labor for review all records pertaining to the operations of the VIP program. In addition, the City failed to comply with 29 CFR 98.18 in seeing that VIP's records were retained for 3 years or until audited and with 29 U.S.C. Sec. 983(14) of the Act, 29 CFR 98.5 and 98.6 of the regulations and 3 H,S and U of the grant agreement's General Assurances with the Department of Labor, since it failed to see that the VIP program had adequate administrative and accounting control, maintained its records and provided access to them as necessary for the Secretary's review to assure that the funds were being expended properly.
In The Matter of City of Oakland, California, 81-CETA/A-28 at 9-10 (March 5, 1982). The ALJ ordered Oakland to pay DOL $61,050 within 45 days of the order or all CETA funding would be terminated pending compliance. The parties have stipulated to a stay of this order pending appeal.
The issues on review are: (1) whether substantial evidence supports the DOL finding that Oakland violated CETA by failing to audit or otherwise substantiate VIP's expenditures; (2) whether DOL's order that Oakland repay the entire subgrant or lose all CETA funding was arbitrary, capricious or an abuse of discretion; (3) whether DOL violated CETA and due process by failing to provide a hearing regarding the grant termination.
The applicable standard of review of the DOL decision is set forth in 29 U.S.C. Sec. 817(b) (Supp. II 1978) which states:
The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive, but the court, for good cause shown, may in whole or in part, set aside the findings of the Secretary or remand the case to the Secretary in whole or in part to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify the previous action, and shall certify to the court the record of the further proceedings.
Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971), (quoting Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)); RSR Corp. v. F.T.C., 602 F.2d 1317, 1320 (9th Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1313, 63 L.Ed.2d 760 (1980). The possibility of drawing a different conclusion than the agency does not prevent the agency's decision from being supported by substantial evidence. Illinois Cent. R.R. Co. v. Norfolk & W. Ry. Co., 385 U.S. 57, 69, 87 S.Ct. 255, 262, 17 L.Ed.2d 162 (1966); Widing Transportation, Inc. v. I.C.C., 545 F.2d 652, 658-59 (9th Cir.1976).
As the ALJ stated, Oakland violated CETA by not keeping accurate financial records. CETA requires that:
(12) the applicant will make such reports, in such form and containing such information as the Secretary may from time to time require, and...
To continue reading
Request your trial
-
Local One, Amalgamated Lithographers of America v. N.L.R.B.
...drawn by the agency, that would not prevent the agency's decision from being supported by substantial evidence. City of Oakland v. Donovan, 703 F.2d 1104, 1106 (9th Cir.), modified, 707 F.2d 1013 (1983). The union makes much of the fact that initially the ALJ ruled in its favor. While the A......
-
Woods v. U.S.
...under the CETA program the government is entitled to recover misappropriated funds from municipal governments. Cf. City of Oakland v. Donovan, 703 F.2d 1104 (9th Cir.1983). The choice between proceeding by general rule or by individual, ad hoc litigation to recoup damages, is one that lies ......
-
Stamper v. Secretary of Agriculture
...842 (1971), quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); City of Oakland v. Donovan, 703 F.2d 1104, 1106 (9th Cir.1983). Where an administrative agency disagrees with the conclusions of its ALJ, the standard does not change; the ALJ's f......
-
Wardell v. Department of Transp., Nat. Transp. Safety Bd.
...only if, considering the record as a whole, a reasonable mind would necessarily come to a different conclusion. City of Oakland v. Donovan, 703 F.2d 1104, 1106 (9th Cir.1983), clarified 707 F.2d 1013 (9th Cir.1983)(quoting Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 T......