Rogers v. Ink

• Decision Date: 28 June 1985
• Docket Number: No. 82-2286,82-2286
• Citation: 766 F.2d 430
• Parties: Wallace ROGERS and Southeast Kansas Community Action Program, Inc., Plaintiffs- Appellants, v. Dwight INK, Director of the Community Services Administration, and David Stockman, Director of the Office of Management and Budget, Defendants- Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 430

766 F.2d 430

Wallace ROGERS and Southeast Kansas Community Action

Program, Inc., Plaintiffs- Appellants, v. Dwight INK, Director of the Community Services

Administration, and David Stockman, Director of

the Office of Management and Budget,

Defendants- Appellees.

No. 82-2286.

United States Court of Appeals, Tenth Circuit.

June 28, 1985.

David Achtenberg of Achtenberg & Achtenberg, P.C., Kansas City, Mo., for plaintiffs-appellants.

Richard A. Olderman, Atty., Civ. Div., Dept. of Justice, Washington, D.C. (J. Paul McGrath, Asst. Atty. Gen., William Kanter Civ. Div., Dept. of Justice, Washington, D.C., and Jim J. Marquez, U.S. Atty., Topeka, Kan., were also on the brief), for defendants-appellants.

Before HOLLOWAY, Chief Judge, SEYMOUR, Circuit Judge, and BOHANON, District Judge ^*.

HOLLOWAY, Chief Judge.

Plaintiffs, a Kansas organization which provides assistance to low income residents and a recipient of such assistance, brought this action challenging defendants' refusal to fund the entire 1981 program year of the organization. This refusal followed a decision by Congress to replace the former system of direct federal funding of state and local anti-poverty organizations with a block grant program effective October 1, 1981.

The district court granted defendants' motion to dismiss, treating it as a motion for summary judgment, both on the merits and on the ground that plaintiffs' action was premature. We hold that the district court was without jurisdiction of this action which essentially requested the court to compel defendants to effect release and payment of grant funds. Accordingly, we remand to the district court with directions to transfer the case to the United States Claims Court.

I

Prior to 1981, the federal government provided financial assistance to low income people through various state and local Community Action Agencies ("CAAs") funded by the Community Services Administration ("CSA"). The CAAs were divided into two categories: large CAAs (which received over $300,000 annually in federal funds) and small CAAs (which received less than $300,000 annually in federal funds). Large CAAs generally were funded by two separate grants: one grant at the beginning of the CAA's program year to the end of the federal fiscal year on September 30, and another grant at the commencement of the subsequent federal fiscal year on October 1 to the end of the CAA's program year. Large CAAs generally had their programs funded from congressional appropriations for two separate federal fiscal years. Small CAAs, on the other hand, generally were funded by a single grant at the beginning of the CAA's program year from congressional appropriations for one federal fiscal year. There were approximately 740 small CAAs and 160 large CAAs.

The Omnibus Budget Reconciliation Act of 1981, ¹ enacted on August 13, 1981, changed the way federal funds were distributed to CAAs. These changes were effective on October 1 of that year. The CSA was abolished and replaced with a Community Service Block Grant Program which authorized the Secretary of Health and Human Services to make block grants to the states "to ameliorate the causes of poverty in communities within the State." 42 U.S.C. Sec. 9901(a). ² The Act authorized the Director of the Office of Management and Budget ("OMB") to provide for the termination of the affairs of the CSA. ³

The Act provided that after certain reductions were made from the annual appropriation, each State would receive "an amount which bears the same ratio to such remaining amount as the amount received by the State for fiscal year 1981 under Section 2808 of this title bore to the total amount received by all States for fiscal year 1981 under such part, except that no State shall receive less than one-quarter of 1 percent of the amount appropriated under section 9901 of this title for such fiscal year." 42 U.S.C. Sec. 9903(a)(1). The states then would use this money in their discretion to fund local anti-poverty efforts, including the former CAAs. 42 U.S.C. Secs. 9902(1), 9904(c). The Act permitted states to opt out of the block grant program for fiscal year 1982 and instead have the Secretary of Health and Human Services directly fund state and local CAAs under the former law. 42 U.S.C. Sec. 9911. Beginning in fiscal year 1983, all states were required to operate under the block grant program.

Plaintiff Southeast Kansas Community Action Program ("SEK-CAP") is a large CAA in Kansas. ⁴ Plaintiff Wallace Rogers is a low income Kansas resident served by SEK-CAP. SEK-CAP's program year runs from June 1 through May 31. SEK-CAP received $384,000 for fiscal years 1978, 1979 and 1980. On June 1, 1981, SEK-CAP received $114,222 in federal funding for the first four months of its program year through September 30. With the passage of the new Act on August 13, there were no monies appropriated for fiscal year 1982 to fund CAAs.

Defendants chose to use the remaining funds from fiscal year 1981 to fund the few small CAAs that had not yet received full funding for program years beginning prior to October 1. Defendants decided not to make further payments for part or all of program years extending beyond October 1 to large CAAs that already had received their initial grant for the portion of their program year ending on September 30. Surplus funds from fiscal year 1981 totaling $1.4 million remained in the CSA region responsible for distributing funds to CAAs in Kansas after funding these small CAAs. Although the director of this region requested authority to use these remaining funds for payments to large CAAs for at least a portion of their program years remaining after October 1 as had been done in other regions, this request was denied.

Plaintiffs brought this action for declaratory, injunctive and other relief on September 30, 1981, the day before the new Act was to take effect and the day before the beginning of fiscal year 1982. Plaintiffs sought, among other things, to enjoin defendants from returning to the Treasury any appropriations made to CSA, to obtain a declaratory judgment that defendants' funding decisions from August 13 to October 1 violated applicable law and regulations, and to compel defendants to provide funding for SEK-CAP for the remainder of its program year from October 1, 1981 through May 30, 1982. The district court denied a temporary restraining order. I R. 15-18. Thereafter, defendants moved for dismissal or summary judgment, id. at 24-58, and plaintiffs filed a response, id. at 194-242. The district court treated the motion to dismiss as a motion for summary judgment because the parties had supplied various affidavits in support of their motions. Id. at 252.

The district court granted defendants' motion to dismiss, holding that the action was "premature and should be dismissed on that ground" because SEK-CAP was eligible to receive money under the block grant program administered by Kansas. I R. 253-54. However, the court addressed plaintiffs' arguments on the merits and concluded as follows.

First, the disposition of funds by CSA in its final six weeks of operation did not violate the statutory minimum level of funding provided to Kansas under 42 U.S.C. Sec. 2812(a) or the statutory guarantee of equitable distribution of funds between rural and urban areas under 42 U.S.C. Secs. 2833(b) and 2967 because those sections were repealed by the new Act effective October 1, 1981, the day the decision not to give SEK-CAP additional funds became effective. 42 U.S.C. Sec. 9912(a). I R. 254-55.

Second, the funding decision did not deprive plaintiffs of due process of law. Plaintiffs had no statutory or regulatory right to notice and a hearing because the right to notice and opportunity to be heard guaranteed by 42 U.S.C. Sec. 2944(2) and 45 C.F.R. Sec. 1067.2 before a CAA's application for refunding could be reduced or denied did not apply to cases of reduced appropriations. 45 C.F.R. Sec. 1067.2-4(a). Plaintiffs had no constitutional right to notice and a hearing because they had no property interest in continued funding for the remainder of their program year beyond October 1, 1981, when Congress had chosen to dismantle the entire funding program. I R. 255-58.

Third, the funding of small CAAs for program years ending in fiscal year 1982 while denying large CAAs similar funding did not deprive plaintiffs of equal protection and was not arbitrary, capricious, or an abuse of discretion under 5 U.S.C. Sec. 706(2)(A). I. R. 12-18. ⁵

For reasons that follow, we find that there is a serious question concerning the subject matter jurisdiction of the district court which must be addressed and is dispositive. ⁶

II

The Tucker Act provides that the United States Claims Court has exclusive jurisdiction to render judgment upon any claim against the United States exceeding $10,000 "founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States or for liquidated or unliquidated damages in cases not sounding in tort." 28 U.S.C. Sec. 1491(a)(1). See United States v. City of Kansas City, 761 F.2d 605, 607-08 (10th Cir.1985). ⁷ Exclusive jurisdiction therefore rests in the Claims Court if three conditions are satisfied: (1) the action is against the United States; (2) the action seeks monetary relief in excess of $10,000; and (3) the action is founded upon the Constitution, federal statute, executive regulation, or government contract. See Portsmouth Redevelopment and Housing Authority v. Pierce, 706 F.2d 471, 473 (4th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). We are satisfied that plaintiffs' claim meets these criteria and that exclusive jurisdiction is thus in the Claims Court.

Plaintiffs' prayer requested two forms of relief. First, a declaratory judgment was sought that defendants' action in funding small CAAs for program years ending in fiscal...