Florida Farmworkers Council, Inc. v. Marshall

710 F.2d 721
CourtCourt of Appeals for the Eleventh Circuit
DecidedJuly 28, 1983
DocketNo. 80-5909
StatusPublished
Cited by5 cases

This text of 710 F.2d 721 (Florida Farmworkers Council, Inc. v. Marshall) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Florida Farmworkers Council, Inc. v. Marshall, 710 F.2d 721 (11th Cir. 1983).

Opinion

CLARK, Circuit Judge:

Petitioner Florida Farmworkers Council, Inc. (FFC)1 is a Florida nonprofit corporation which operates federal, state, and other programs for low income farmworkers. In 1974 and 1975, FFC received two major grants from respondent Department of Labor (DOL) to provide services to migrant and seasonal farmworkers. DOL awarded Grant No. 40220 to FFC under Title III-B of the Economic Opportunity Act of 1964 (EOA), 42 U.S.C. sec. 2701 et seq.,2 and awarded Grant No. 99-5-326-31-44 under section 303 of the Comprehensive Employment and Training Act of 1973 (CETA), 29 U.S.C. sec. 873 et seq.3 (R. 83, p. 7).

DOL employed independent certified public accountants to conduct audits of FFC’s 1974 and 1975 operations. The audit findings, disclosed in reports on April 30, 1976, showed that FFC had used grant funds improperly. The findings questioned certain accounting practices and procedures of FFC, suggested that various expenditures were improper, and demonstrated that FFC had used CETA funds for administrative expenses in violation of DOL regulations. FFC submitted documents in response to the audit report. On May 25, 1977, a DOL grant officer issued final decisions and comments on the audits of both grants. Specif - ic expenditures by FFC were disallowed and FFC was ordered to return money to both the DOL and the Mississippi Delta Council, from which it had borrowed funds. On June 3, 1977, the grant officer notified the director of the FFC that the Assistant Secretary for Employment and Training requested that FFC be debarred from receiving grants or contracts from the DOL for two years. (Exhibit 3). The grant officer recommended debarring FFC because the material contained in the audits of the two grants showed “substantial mismanagement of federal funds to a degree justifying a Department-wide debarment for a period of two years.” (Exhibit 3).

In separate letters dated June 14, 1977, FFC notified the Secretary of DOL that it wished to appeal all three decisions of the grant officer. In the letter noting the appeal of the debarment, FFC’s attorney stated that the hearing regarding debarment of FFC should be combined with the hearings on the audits and governed by

the Joint Stipulation for Dismissal between FFC and the Labor Department which accompanied the District Court for the District of Columbia’s May 3, 1977, Order of Dismissal of Florida Farmwork-ers Council, Inc. v. Marshall (C.A. No. 76-2326). In the Joint Stipulation it was agreed that the appeal contained in this letter along with the appeal from the decisions involving Grant Nos. 40220 and 99-5-326-31-44, will be combined into a single proceeding and will be governed by the Labor Department procedures for debarment found at 41 CFR Part 29-60.

(Exhibit 6b). On July 20, 1977, FFC filed its complaint which formally commenced the hearing procedure.

[723]*723After a complete hearing in which both parties were afforded full opportunity to be heard, to examine and cross-examine witnesses, to present evidence and testimony, and to submit briefs, the administrative law judge (ALJ) issued a recommended decision and order on January 26, 1978. The ALJ first discussed the debarment of FFC. The grant officer had informed FFC that it would be debarred, but had not indicated what his authority for debarring petitioner FFC was. In the 1977 amendments to the regulations governing migrant and seasonal farmworkers, provision was made for “suspension and debarment” of grantees, 29 C.F.R. sec. 97.267 (1977).4 The amended regulations set forth both procedures and standards for debarring a grantee. Comments accompanying the new regulations stated:

Section 97.266 Termination of a grant, has been revised by deleting paragraph (b) of the proposed regulation, and putting it in a new section 97.267, Suspension and debarment. This new section provides that the Secretary may suspend a grantee from being considered for section 303 funds when there is adequate evidence of illegal use of program funds and provides that DOL Procurement Regulations will be followed if suspension or debarment is proposed.
Accordingly, 29 CFR Parts 94 and 97 are revised, effective February 7, 1977, for the operation of Fiscal Year 1977 grants ....

42 Fed.Reg. 1656-57 (1977). From this language, the ALJ concluded that there was no intention to make section 97.267 retroactive and therefore that section did not apply to FFC’s debarment.

The ALJ concluded, however, that DOL did possess legal authority to withhold federal financial assistance. This authority was described in both the Act and the original 1974 regulations to facilitate the implementation of Title III, Section 303(a) of CETA. The Act provided, in part:

(d) Whenever the Secretary determines, after notice and opportunity for a public hearing, that any prime sponsor . . . is—
(2) incurring unreasonable administrative costs ...
(4) otherwise materially failing to carry out the purposes and provisions of its chapter;
the Secretary shall revoke the prime sponsor’s plan for the area, in whole or in part, and to the extent necessary and appropriate shall not make any further payments to such prime sponsor under this chapter....

29 U.S.C. sec. 818(d) (1975) (repealed 1982).5 Regulations governing the Secretary’s in[724]*724vestigation, hearing, and determination of questions of noncompliance provided:

(f) Content of orders. The final decision may provide for suspension or termination of, or refusal to grant or continue Federal financial assistance, in whole or in part, under the program involved in accordance with the Act ...

29 C.F.R. sec. 98.48(f) (1975). The ALJ concluded that these regulations, the notice given to FFC, and the full hearing met the standards set forth in Gonzalez v. Freeman, 334 F.2d 570 (D.C.Cir.1964), for debarment by a federal agency.

The ALJ next proceeded to review the evidence uncovered in the audits. The DOL Grant No. 40220 was reviewed first. Among the discrepancies discussed was a loan from the Mississippi Delta Council to FFC in the amount of $89,333, which should have been repaid by FFC upon receipt of its 1975 CETA funds. FFC had hoped that DOL would repay this loan itself, but no evidence suggested that DOL had undertaken that obligation. Numerous other expenses under Grant No. 40220 had also been disallowed by the grant officer and were reviewed by the ALJ.

The largest single sum disallowed under Grant No. 99-5-326-31-44 was money paid for administrative expenses of programs funded by other agencies. FFC received money from the Department of Health, Education, and Welfare (HEW) for indirect costs which had already been paid out of DOL funds. Under CETA regulations, direct and indirect administrative costs were supposed to be limited to those necessary to operate the program funded by the DOL grant. 29 C.F.R. sec. 97.256 (1975). Thus, for example, salaries chargeable to the CETA grant should not have exceeded the pro rata share attributable to section 303 functions.

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710 F.2d 721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florida-farmworkers-council-inc-v-marshall-ca11-1983.