North Carolina Com'n of Indian Affairs v. U.S. Dept. of Labor, s. 82-1936
| Citation | 725 F.2d 238 |
| Decision Date | 12 January 1984 |
| Docket Number | Nos. 82-1936,s. 82-1936 |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
| Parties | NORTH CAROLINA COMMISSION OF INDIAN AFFAIRS, Petitioner, v. UNITED STATES DEPARTMENT OF LABOR, Respondent. National Association of Counties; National League of Cities; United States Conference of Mayors; American Public Welfare Association; National Council of Local Public Welfare Administrators; City of Stockton, California; County of Los Angeles, California; County of Onslow, North Carolina; City of Portland, Oregon; City of Boston, Massachusetts; Broward Employment and Training Administration; State of Maine; Franklin County, New York, Employment and Training Administration; Alameda County Training and Employment Board; City of San Jose, California; Memphis and Shelby County, Tennessee, Consortium; City of Bridgeport, Connecticut; City of Camden, New Jersey; Toledo Area Consortium; City of Los Angeles, California; City of Detroit, Michigan; and State of Vermont, Amici Curiae. NORTH CAROLINA DEPARTMENT OF NATURAL RESOURCES AND COMMUNITY DEVELOPMENT, Petitioner, v. UNITED STATES DEPARTMENT OF LABOR, Respondent. WILSON COUNTY and Wilson County Technical Institute, Petitioners, v. UNITED STATES DEPARTMENT OF LABOR and North Carolina Department of Natural Resources and Community Development, Respondents. (L), 83-1079 and 83-1161. |
Elizabeth Anania, Nashville, Tenn. (Rufus L. Edmisten, Atty. Gen., Daniel McLawhorn, Raleigh, N.C., on brief), George A. Weaver, L.H. Gibbons, Wilson, N.C. (Carr, Gibbons, Cozart & Jones, Wilson, N.C., on brief), for petitioners.
Steven J. Mandel, Jane C. Snell, Washington, D.C. (Francis X. Lilly, Deputy Solicitor, William H. DuRoss, III, Associate Sol. for Employment and Training, Harry L. Sheinfeld, Counsel for Litigation, E. Kathleen Shahan, Washington, D.C., on brief), for respondent.
Robert N. Sayler, John E. Heintz, Karen H. Rothenberg, Joan E. Donoghue, Covington & Burling, Washington, D.C., on brief, for amici curiae.
Before ERVIN and CHAPMAN, Circuit Judges and BUTZNER, Senior Circuit Judge.
The principal issue in this appeal by the North Carolina Commission of Indian Affairs (Commission) and the North Carolina Department of Natural Resources and Community Development (Department) (collectively, North Carolina or the State) is whether the Secretary of Labor may order repayment of $135,611.77 in misspent funds under the Comprehensive Employment and Training Act of 1973, Pub.L. 93-203, 87 Stat. 839, 29 U.S.C. Sec. 801 et seq. (1973) (1973 CETA Act). North Carolina claims that, prior to amendments enacted in 1978, the Secretary of Labor's sole remedy when funds were improperly expended was to withhold future grant moneys. In reliance on the Supreme Court's decision in Bell v. New Jersey and Pennsylvania, --- U.S. ----, 103 S.Ct. 2187, 76 L.Ed.2d 313 (1983), which held that the Secretary of Education was entitled to order recoupment of misspent grant funds under the Elementary and Secondary Education Act of 1965 (ESEA), Pub.L. 89-10, 79 Stat. 27, as amended, 20 U.S.C. Sec. 2701 et seq. (1976 ed. Supp. V) and in accord with the decision of the Court of Appeals for the Third Circuit in Atlantic County New Jersey v. United States Department of Labor, 715 F.2d 834 (3rd Cir.1983), we hold that the authority to require repayment of improper expenditures existed under the 1973 CETA Act. Finding also that there was substantial evidence to support the Secretary of Labor's conclusion that the funds were improperly expended or inadequately monitored and that North Carolina was responsible for insuring that the grant was properly administered, we affirm the Secretary's repayment order. 1
The two North Carolina governmental agencies, as "prime sponsors" under the 1973 CETA Act, received grant funds from the Department of Labor and contracted with subgrantees for expenditure of the funds. Grantees and subgrantees receive CETA funds prior to expenditure instead of being reimbursed by the Department of Labor after moneys are expended. Since the grants were awarded prior to 1978, the provisions of the 1973 Act control. Following an audit and a grants officer's determination that certain funds had been misused, 2 the Administrative Law Judge (ALJ) issued orders instructing the Commission to repay $34,147.19 and the Department, $101,464.58. 3 These orders became final decisions of the Secretary.
North Carolina questions whether the rule of S.E.C. v. Chenery, 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947) that "a reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency" precludes this court from affirming the ALJ's order based on an interpretation of the 1973 CETA Act that differs from the ALJ's interpretation. We do not, however, perceive there to be a Chenery problem in the instant case because the question of interpretation of a federal statute is not "a determination or judgment which an administrative agency alone is authorized to make." Chenery, supra. A similar question of statutory interpretation was at issue in Milk Transport v. Interstate Commerce Commission, 190 F.Supp. 350 (D.Minn.1960), aff'd per curiam 368 U.S. 5, 82 S.Ct. 15, 7 L.Ed.2d 16 (1961). The court concluded that Chenery was not applicable:
We are not concerned here with a judgment which only the Interstate Commerce Commission can make. The expertness of the Commission does not make it better qualified than this court to interpret the phrase ... involved in this action. The interpretation here is wholly different from what it is in the case where Congress specifically entrusts an administrative agency, because of its special competence, with the task of defining or interpreting general words or setting up standards or rules of conduct. We are interpreting the scope of a federal statute and this task is not peculiar to an administrative agency. 190 F.Supp. at 355. (footnote omitted).
The Secretary of Labor raises three grounds in support of his authority to require repayment by North Carolina. First, the Secretary argues that the 1973 Act includes a right of recovery. The Secretary also contends that the 1978 Act, which Congress amended to provide expressly for recovery of misused funds, may be applied retroactively to reach funds administered under the earlier act. Labor's third argument is that there is a common law right of recovery. Following the lead of Bell, we find that a right of recovery exists under the 1973 Act, and therefore we need not reach the issues of whether recovery is also authorized by retroactive application of the 1978 amendments or by the common law.
In Bell the Court found that the argument that ESEA contained a recoupment right was supported by the language, the legislative history and the administrative interpretation of the statute. We are persuaded that the language, the evidence of legislative intent, the administrative interpretation and the overall rationale of the 1973 CETA Act are sufficiently similar to that of ESEA to mandate a finding that the Department of Labor may order repayment of misapplied moneys.
Section 602(b) of the 1973 CETA Act provided in part:
The Secretary may make ... necessary adjustments in payments on account of overpayments or underpayments. The Secretary may also withhold funds otherwise payable under this chapter, but only in order to recover any amounts expended in the current or immediately prior fiscal year in violation of any provision of this chapter.
North Carolina contends that the withholding provision gives the only available remedy in the event of noncompliance by a grantee. In Bell, however, the Court found that in a similar provision of ESEA, 4 the "plain language of the statute" recognized the right of the federal government to overpaid funds. 103 S.Ct. at 2193. The Bell court also found that to adopt the State's view of set-off as the only remedy would allow the State to escape liability for misuse of the moneys while penalizing those who were intended to benefit from the programs by reducing the amount of funds that the beneficiaries would actually receive. 103 S.Ct. at 2192 n. 5 and 2193 n. 8.
North Carolina seeks to distinguish Sec. 602(b) from the provision of ESEA relied on in Bell to authorize repayment. The State's argument is that only the withholding sanction, and not the adjustments in payments language, applies to recoupment of amounts expended in violation of the act. North Carolina contends that any other construction would render the last sentence of Sec. 602(b) redundant or largely superfluous. The argument is refuted, however, by the fact that ESEA also provided for withholding funds from a State that failed to comply with the requirements of the program. Section 146, 20 U.S.C. Sec. 241j. Moreover, in providing that the Secretary "may also withhold funds" the language of Sec. 602(b) indicates that remedies other than withholding are available to the Department of Labor.
North Carolina argues that, because the 1978 amendments expressly provided for right of repayment, 5 there was no similar right under the 1973 Act, otherwise the later amendments would be redundant. The Bell Court was faced with the issue of later amendments to ESEA that clearly provided for the federal government's right to demand repayment when states misused grant moneys. The Court concluded that the discussion of the 1978 amendments to ESEA, which were of persuasive value, revealed that Congress thought that recipients were already liable for misused funds. 103...
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