City of Wheeling v. United States

20 Cl. Ct. 659, 1990 U.S. Claims LEXIS 219, 1990 WL 78156
CourtUnited States Court of Claims
DecidedJune 11, 1990
DocketNo. 403-88L
StatusPublished
Cited by12 cases

This text of 20 Cl. Ct. 659 (City of Wheeling v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Wheeling v. United States, 20 Cl. Ct. 659, 1990 U.S. Claims LEXIS 219, 1990 WL 78156 (cc 1990).

Opinion

OPINION

ROBINSON, Judge.

This action is before the Court on cross-motions for summary judgment pursuant to RUSCC 56. Plaintiff, City of Wheeling, West Virginia (Wheeling), alleges that the United States Environmental Protection Agency (EPA) abused its discretion by refusing to award additional grant funds in the amount of $275,000 to Wheeling. In the alternative, plaintiff asserts that defendant’s motion for summary judgment should be denied, and plaintiff should be given the opportunity for factual development of its due process claims.

Defendant counters that plaintiff’s failure to observe the applicable grant regulation was sufficient grounds to deny enlargement of grant funds and, accordingly, seeks summary judgment. Defendant further contends that plaintiff’s procedural due process claims are irrelevant without allegations of substantive injury. For the reasons which follow, defendant’s motion [661]*661for summary judgment will be granted and plaintiff’s cross-motion for summary judgment will be denied.

Factual Background

Under the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1299, federal financial assistance is provided to construct publicly owned waste treatment works. 33 U.S.C. § 1281(g)(1) authorizes the Administrator of the EPA to make grants to any municipality for the construction of such works. After an applicant for a grant submits for approval the necessary plans and estimates for each construction project, the Administrator shall act upon the application as soon as practicable and his approval “shall be deemed a contractual obligation of the United States for the payment of its proportional contribution to such project.” 33 U.S.C. § 1283(a)(1).

In furtherance of its plan to upgrade and construct new and existing wastewater treatment facilities, Wheeling entered into a subagreement for engineering services with the civil and sanitary engineering firm of Stearns and Wheler (Stearns) in November 1972. Under this subagreement, the amount of the basic fees for engineering services was to be calculated on a percentage of the total construction cost basis. Beginning in January 1976, Wheeling applied for and received approval for Step I and Step II grants. The grant agreement between plaintiff and EPA for actual construction of the project, Step III, was entered into in September 1977.

However, on March 1, 1976, the EPA promulgated 40 C.F.R. § 35.937-1, which prohibited cost-plus-percentage-of-cost and percentage-of-construction-cost contracts.1 The regulation stated that in most cases, a cost-reimbursement type of contract is appropriate. In response to the regulation, Wheeling began renegotiating its engineering subagreement with Stearns to change the basis of computing compensation from the percentage-of-construction-cost method to a cost-plus-fixed-fee method of compensation. On March 26, 1979, Wheeling submitted a letter to the West Virginia Department of Natural Resources (DNR) to advise them of anticipated increases in the costs of engineering services under its proposed new contract with Steams. The letter, which was forwarded to EPA’s Region III office, requested engineering fees based upon increased construction costs attributable to a twelve month delay between the time the original estimates were made and the actual taking of bids. EPA’s Region III office denied this request on July 5, 1979.

On May 29,1979, plaintiff’s renegotiation efforts with Stearns culminated in a new engineering subagreement reflecting the cost-plus-fixed-fee method. Under the new subagreement, engineering fees rose by $275,000. Neither Region III nor DNR was given notice of the renegotiated agreement prior to May 29, 1979.

After comparing the scope and extent of the engineering services provided for in the two subagreements, Region III concluded that no additional services were being offered under the May, 1979 subagreement. On December 27, 1979, the EPA informed Wheeling that it would not enlarge the amount of grant funds. Region III also noted that Wheeling’s failure to obtain pri- or EPA approval of the renegotiated suba-greement was a violation of 40 C.F.R. § 35.937-6(b) which requires prior approval of renegotiated subagreements in excess of $100,000. Region III issued a Final Decision denying further requests for enlargement in February 1981.

Wheeling initiated an administrative appeal which culminated in a Board of Assistance Appeals (Board) decision on October 31, 1983. The Board found that Region III improperly based its decision not to honor the 1979 subagreement on a comparison between the two subagreements. It stated that Region III should have evaluated the [662]*662reasonableness of the later subagreement under the procedures set forth in Appendix D 11 A(2)(b)(4). But for Wheeling’s violation of 40 C.F.R. § 35.937-6(b), in not seeking prior approval of the subagreement, the Board stated it would have remanded the appeal to the EPA for an Appendix D analysis of the reasonableness of the 1979 subagreement. The Board concluded, however, that Region III correctly found noncompliance with 40 C.F.R. § 35.937-6(b) to be a sufficient reason to reject the 1979 subagreement. It stated:

To overrule the Region on this point we would have to grant a deviation from the regulations which we cannot do since that is the prerogative which is within the sole discretion of the Director of the Grants Administration Division.

Pursuant to 40 C.F.R. §§ 30.1001-30.-1005, on July 27, 1984, Wheeling submitted to the EPA a Request for a Deviation from 40 C.F.R. § 35.937-6(b). On April 22, 1985, the Director of the Grants Administration Division (Director) denied the request because Wheeling failed to obtain prior approval. The Director determined that Wheeling’s explanation of an oversight during a period of peak administrative activity was an inadequate justification for the deviation, given the fundamental nature of the requirement for prior approval of changes in project scope.

Jurisdiction

Plaintiff originally filed this action in the United States District Court for the Northern District of West Virginia. On June 29, 1988, it was transferred to this Court. In response to defendant’s Motion to Dismiss, District Judge Gray relied on Portsmouth Redevelopment & Housing Authority v. Pierce, 706 F.2d 471 (4th Cir.1983) to hold that the United States Claims Court had exclusive jurisdiction. He noted that the “critical circumstances in this case are almost identical” to Portsmouth in that both suits involve claims against the United States to recover money allegedly wrongfully withheld. City of Wheeling v. EPA, No.

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Bluebook (online)
20 Cl. Ct. 659, 1990 U.S. Claims LEXIS 219, 1990 WL 78156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-wheeling-v-united-states-cc-1990.