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1
Recent Federal Grants Law Cases

• November 2005

2
Jana Gagner Senior CounselFederal Assistance
Law DivisionOffice of the General CounselU.S.
Department of Commerce
3
Overview

• This presentation provides limited information
  about some cases of potential interest to the
  Federal grants community.
• It does not cover all grants-related cases, but
  provides illustrative selections of
  general-interest grant cases in common categories
  arising in the past year.

4
Overview

• This information does not constitute legal
  advice.
• Consult source documentation or legal counsel to
  verify information about the specific cases or
  issues mentioned.
• This information is intended to be factual, not
  viewpoint-oriented.

5
Major topics arising in recent Federal grants
cases

• Constitutional Spending Clausevarious
  restrictions on Federal funding
• Federal fundingreligious expression in prisons
• Faith-based grants
• False Claims Act cases
• Appropriations interpretations
• Damages in Grant Cases
• Accepting Federal fundslimits on State immunity
• Land use issues
• Miscellaneous

6
Other legal sources for Federal grants law
material

• Government Accountability Office
• Government-wide Guidance and Rules
• Major Agency Actions of interest

7
Spending Clause Cases
8
Spending Clause Requirements

• When Congress enacts legislation under the
  Spending Power authorized under the Constitution,
  that legislation is in the nature of a contract.
  In return for Federal funds, grantees comply with
  Federally imposed conditions.
• In implementing this power over grantees through
  award conditions, the Supreme Court has ruled
  that the conditions must advance the general
  welfare, must be unambiguous, and must not cross
  the line into coercion, effectively nullifying
  the grantees choice of whether to accept the
  funds and the conditions.

9
Jackson v. Birmingham Bd. Of Educ.__U.S.__, 125
S.Ct. 1497 (Mar. 29, 2005)

• In a case regarding whether a high school girls
  basketball coach was unconstitutionally
  retaliated against because he had complained
  about sex discrimination in the schools athletic
  program, the U.S. Supreme Court, in a 5-4
  decision, held that Title IX of the Civil Rights
  Act covered his claim.
• The Court wrote that Congress enacted Title IX,
  which prohibits sex discrimination, through its
  power under the Spending Clause.
• The Court reviewed and discussed some of its past
  cases interpreting the Spending Clause.
• In accepting its contract for Federal funds,
  the State grantee was on notice that it could be
  held liable for damages if it retaliated against
  anyone who complained of sex discrimination under
  Title IX.
• Given Justice OConnors impending retirement and
  the 5-4 nature of this decision, the outcome of
  future cases with similarities to cases like this
  is unknown.

10
FAIR v. RumsfeldOral Arguments Scheduled for
U.S. Supreme Court Dec. 6, 2005

• The Forum for Academic and Institutional Rights
  (FAIR), a group of law schools and others,
  contend that a Federal statute called the Solomon
  Amendment violates the First Amendment rights of
  its members by conditioning Federal funds to
  universities on its members support of military
  recruitment on campuses, a concern to them
  because that recruitment excludes openly gay law
  students.
• On November 29, 2004, the Third Circuit Court of
  Appeals found the Solomon Amendment
  unconstitutional under the First Amendment. The
  ruling was stayed in January 2005, given
  potential consideration by the U.S. Supreme
  Court.
• The Supreme Court will hear oral arguments in the
  case on December 6, 2005.

11
Velazquez v. Legal Services Corp.349 F.Supp.2d
566 (E.D.N.Y., Dec 20, 2004)

• A 1996 Federal Legal Services Corporation (LSC)
  rule restricts how legal aid groups receiving
  Federal funds can use private funds for various
  legal advocacy and other activities for indigent
  clients, such as class action lawsuits.
• In this case, some of the restrictions were held
  unconstitutional. The LSC rules required
  grantees to have physically separate facilities
  with separate personnel, as well as financial
  separation for the unallowable activities funded
  with private dollars.
• The governments justification for this was that
  the public might think the government was
  endorsing the grantees positions.
• The court deemed this a violation of the
  grantees' First Amendment rights because the
  governments justification did not support
  imposing such a significant burden, which could
  be otherwise addressed.
• Similar issues regarding the appearance of
  government endorsement of grantee views could
  arise in faith-based grant cases. If this case
  is appealed, a court may address this point.

12
DKT International v. U.S. Agency for
International DevelopmentD.D.C., Civil Action
Case No. 05-01604

• Under Public Law 108-25 (2003), grantees under
  the Foreign Assistance Act cannot be required to
  use an AIDS prevention method for which the
  organization has a religious objection, grantees
  are prohibited from using funds to promote
  prostitution, and funds cannot be issued to
  groups that do not explicitly oppose
  prostitution. The law is implemented by USAID
  Policy Directive 05-04.
• A grantee lawsuit asserts that this law is a
  limitation on first amendment speech rights, and
  raised other legal and policy concerns. The
  Federal governments response, filed October 31,
  2005, raised Spending Clause arguments, among
  others.
• Web sites of various non-government organizations
  involved in AIDS prevention and health care
  include links to legal documents in pending case.

13
National Family Planning and Reproductive Health
Assn., Inc. v. Gonzales391 F.Supp.2d 200
(D.D.C. Sept. 28, 2005)

• Congress passed a law restricting funding
  relating to grantees involved with health care
  entities that provide, pay for, provide coverage
  of, or refer for abortions.
• A District Court held that the grantees suffered
  an injury that this language might have been
  ambiguous in a colloquial sense but was not
  unconstitutionally vague, thus it did not violate
  First Amendment rights of grantees and it did
  not impermissibly delegate legislative power to
  executive agencies.
• The case included analysis of the Spending Power.

14
Spending Clause Religious Expression in
Federally-Funded Prisons
15
Cutter v. Wilkinson__U.S.__, 125 S.Ct. 2113 (May
31, 2005)

• State prisoners in Ohio alleged that they were
  denied the right to practice their religions due
  to unwarranted security concerns, in violation of
  Federal Religious Land Use and Institutionalized
  Persons Act (RLUIPA).
• The Supreme Court held that a part of the RLUIPA
  increasing the level of protection for the
  prisoners religious rights did not violate the
  Constitutional provision prohibiting government
  establishment of religion.
• Spending Clause issues were addressed only at a
  lower court level, not by intermediate Courts of
  Appeal, although they were mentioned in a
  concurrence by Justice Thomas.
• The case was sent back to lower courts for
  further action on unaddressed issues, where the
  Spending Clause issue then begins to be more
  fully addressed.

16
Cutter v. Wilkinson423 F.3d 579 (6th Cir., Sept.
13, 2005)

• A Federal Court of Appeals ruled that requiring
  States receiving Federal funds for prison
  programs to comply with RLUIPA involved a proper
  exercise of Congressional power under the
  Spending Clause.
• The Court stated that the Act furthered the
  general welfare of the United States, the
  language of the statute made it clear to states
  applying for Federal funds that they were subject
  to the Act, the conditions were reasonably
  calculated to address Federal interests in the
  rehabilitation of prisoners, and the Act did not
  require states to administer a Federal program
  instead, it required states to refrain from
  acting in a way that interfered with inmates
  exercise of religion.

17
Warsoldier v. Woodford418 F.3d 989 (9th Cir.
July 29, 2005)

• A Native American inmate alleged that a
  California prison policy requiring male inmates
  to have short hair violated RLUIPA.
• A Court of Appeals agreed that the policy imposed
  substantial burden on the inmates religious
  practice.
• Women inmates in the state were allowed to have
  hair longer than three inches. The purpose of
  hair grooming policy was to maintain prison
  security.
• The Spending Clause issue was not directly
  addressed.

18
Farrow v. Stanley2005 WL 2671541 (D.N.H. Oct.
20, 2005)

• A New Hampshire inmate sought to practice Native
  American religious practices under RLUIPA, which
  included having access to tobacco, herbs, certain
  foods, specified activities, and a fire.
• The State asked for the court for Summary
  Judgment, to rule for the government without a
  full hearing of all of the issues, but court
  indicated that the case will proceed.

19
Gooden v. Crain389 F.Supp.2d 722 (E.D. Tex. Oct.
5, 2005)

• A Muslim state prison inmate in Texas raised
  RLUIPA in a case in which he was denied
  permission to grow a quarter-inch beard, in
  accordance with his religious beliefs.
• Among its holdings, a District Court held that
  RLUIPA does not violate the Spending Clause.
  Congress can attach conditions on the receipt of
  Federal funds, such power may be exercised to
  achieve goals not within other enumerated powers
  of Congress, and Congress clearly put states on
  notice that by accepting Federal funds they
  waived their immunity from lawsuits under RLUIPA.
• The State sought to dismiss the case, but now the
  case is allowed to proceed.

20
Andreola v. State of Wisconsin2005 WL 2233995
(E.D. Wis. Sept. 2, 2005)

• An inmate sought damages after he was unable to
  obtain a kosher diet when serving time in a
  county jail. His claim was dismissed on various
  grounds, except for RLUIPA, for which further
  proceedings in the case will occur.

21
Grants and Interpretations of Appropriations Law
22
Cherokee Nation of Oklahoma v.
Leavitt__U.S.__, 125 S.Ct. 1172 (Mar. 1, 2005)

• This case raises an important question when a
  specific appropriation is expended or unfunded,
  when must an agency fund an outside party, based
  on a statutory authorization, from an
  unrestricted appropriation?
• Initially, Indian tribes sued Secretary of Health
  and Human Services seeking to recover full costs
  incurred by the tribes pursuant to
  self-determination health services contracts. A
  District Court and Appeals Court ruled for HHS.
• In a separate case, a tribe appealed a
  Contracting Officer's denial of its claim for
  similar costs. The Department of Interior Board
  of Contract Appeals found in tribe's favor. A
  different Appeals Court agreed.

23
Cherokee Nation of Oklahoma

• The Supreme Court took up the cases to resolve
  the conflict between the circuits.
• The Supreme Court held that
• where Congress had appropriated sufficient
  legally unrestricted funds to pay the contracts
  in question, the government could not avoid its
  contractual obligation to pay contract support
  costs on grounds of "insufficient
  appropriations.
• The funding instrument in this case did not
  appear to be exactly a procurement contract or a
  financial assistance instrument, but a contract
  to provide a public benefit specific to the
  Federal statute at issue. It is unclear how that
  might affect future grant cases.

24
Star-Glo Associates, LP v. United States414 F.3d
1349 (C.A. Fed. July 13, 2005)

• This case involved a standard appropriations
  statute for a citrus grower reimbursement program
  stating that the Secretary of Agriculture shall
  use 58,000,000 of the funds of the Commodity
  Credit Corporation to carry out this section, to
  remain available until expended.
• The court discussed the Cherokee Nation case, but
  concluded that the language above established a
  maximum cap on the available funds.
• The eligible applicant submitted a timely
  application, but funds were exhausted from the
  program account. The agency was not required to
  consider whether additional funds from another,
  overlapping appropriation might exist.

25
Faith-Based Federal Assistance
26
Religion and Social Policy Roundtable Legal
Updates

• http//www.religionandsocialpolicy.org/legal/legal
  _updates.cfm
• George Washington University law professors Lupu
  and Tuttle are experts on the subject
• They track the cases and provide objective
  information on this web site
• Oct 25, 2005 The Federal Emergency Management
  Agency and Faith-Based Organizations Disaster
  Relief following the Gulf Coast Hurricanes- More
• Oct 25, 2005 The Federal Emergency Management
  Agency and Faith-Based Organizations Repair and
  Reconstruction of Private Facilities- More
• Oct 11, 2005 Lown (and others) vs. The Salvation
  Army, Inc. Commissioner, New York City
  Administration for Children's Services (and
  others)-More

27
More Faith-Based Cases from the Roundtable

• May 31, 2005 ACLU of Massachusetts v. Leavitt
  U.S. District Court, District of
  MassachusettsSuit filed 5/16/05- More
• Apr 12, 2005 Freedom from Religion Foundation,
  Inc. (and others) v. Minnesota Faith/Health
  Consortium (and others) U.S. District Court,
  District of Minnesota(Suit filed 3/30/05)- More
• Mar 21, 2005 Moeller v. Bradford CountyU.S.
  District Court, Middle District of
  Pennsylvania(Suit filed 2/17/05)- More
• Mar 15, 2005 American Jewish Congress v.
  Corporation for National Community Service
  (U.S. Court of Appeals for the District of
  Columbia Circuit, decided 3/8/05)- More
• Jan 18, 2005 Freedom from Religion Foundation,
  Inc. (and others) v. Jim Towey, Director of White
  House Office of Faith Based and Community
  Initiatives (and others)- More
• Nov 22, 2004 Freedom from Religion Foundation,
  Inc. (and others) v. Jim Towey, Director of
  White House Office of Faith Based and Community
  Initiatives (and others)- More

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Additional Information on Faith-Based Grants

• National Grants Management Association 26th
  Annual Training Conference, Washington, D.C., May
  2005--Highlights in grants law from the past
  year, contributed by the Federal Bar Association,
  includes extensive analysis on faith based grants
  law cases and Federal agency administrative
  actions, courtesy of Management Concepts, Inc.
  http//www.fedbar.org/govtcontracts_section.htmlc
  ommittees
• A couple of recent sample cases follow

29
Community House, Inc. v. City of Boise2005 WL
2847390 (D.Idaho Oct. 28, 2005)

• One issue in this case involved the Boise Rescue
  Mission, a homeless shelter in which allegations
  were made that residents were required to attend
  religious meetings as a condition of receiving
  services.
• The Court enjoined the City from operating a
  lease with the Mission if such a requirement was
  in place.

30
Lown v. Salvation Army __ F.Supp.2d__, 2005 WL
2415978 (S.D.N.Y. 2005)

• The Salvation Army, a religious and social
  services provider funded primarily from
  government sources, required employees to advance
  its religious objectives. Former employees sued,
  alleging discrimination.
• The Court held that state and local government
  agencies did not violate the employees equal
  protection rights by supporting the grantee
  also, the grantee did not violate the
  Establishment Clause because its religion policy
  was not required by the government.

31
False Claims Act
32
U.S. ex Rel. Totten v. Bombardier Corp.380 F.3d
488 (C.A.D.C. Aug. 27, 2004)rehearing en banc
denied Dec. 8, 2004

• In a False Claims Act case, someone alleged that
  a contractor submitted false claims to Amtrak to
  obtain payment for allegedly defective railroad
  cars.
• The False Claims statute says the false claim
  must be submitted to the government. The Appeals
  Court stated that presenting a false claim to a
  grantee is not presenting a false claim to the
  government.
• Often a court will say that a grantee is not the
  Federal government, because it is not. Watch
  these cases closely, however results may vary,
  depending on specific statutes and circumstances.
  False claims, torts, freedom of information,
  employment, breach of contract, etc. can produce
  different results in legal cases.

33
U.S. ex Rel. Totten v. Bombardier Corp

• A noteworthy dissenting opinion was issued,
  Congressional authors raised concerns, and the
  Department of Justice is particularly concerned
  about the result of this case.
• Elsewhere in the False Claims Act statute, the
  law refers to grantees. Reading the statute as
  a whole, one could say that Congress intended the
  part of the law requiring presentment of a false
  claim to the government to extend to grantees.
• The legislative history also indicated that the
  law was to be applied to grantees.

34
U.S. ex Rel. Totten v. Bombardier Corp

• The majority opinion was written by Judge John
  Roberts, now Chief Justice of the U.S. Supreme
  Court.
• How this part of the False Claims Act will be
  interpreted in the future, and by the Supreme
  Court if cases rise to that level, remains
  unknown.
• During his confirmation hearings, Judge Roberts
  acknowledged the difficulty of the case.

35
Totten case What does the future hold for grant
cases involving potential false claims?
Judge Roberts .it's certainly possible that
the majority in that case didn't get it right.
And the dissent, that was a very strong dissent,
did get it right. I think the majority got it
right.... There was an extensive discussion
between the majority and the dissent. The view
that you've articulated was certainly presented
in a compelling way by Judge Garland, my
colleague on the court of appeals. But I'm happy
to concede that it was among the more difficult
cases I've had over the past two years. Any time
Judge Garland disagrees, you know you're in a
difficult area. And the function of his dissent,
to make us focus on what we were deciding and to
make sure that we felt we were doing the right
thing, I think was well-served. But Judge
Garland disagreed, and so it's obviously, to me,
a case on which reasonable judges can disagree.
And I just have to rest on the analysis in the
majority opinion. Senator Grassley noted
.the Bush administration has filed an amicus
brief in the 11th Circuit, arguing that you had
misread the False Claims Act in the Totten case.
.In fact, quote, "The Totten majority
misconstrued the language and purpose of the
False Claims Act."
36
U.S. ex rel. Tyson v. Amerigroup2005 WL 2667207
(N.D. Ill., Oct. 17, 2005)

• In a case involving allegations of Medicaid
  fraud, the defense referred to the Totten case
  and argued that the case should be dismissed. No
  false claims could have been presented to the
  Federal government all claims were presented to
  the grantee, a state agency.
• The Court worked around Totten, observing some
  distinctions between the funding mechanisms of
  Amtrak and Medicaid, and determining that the
  claims would indirectly be presented to the
  government.
• The Court also pointed out other parts of the
  False Claims Act statute referencing grants and
  the legislative history.

37
U.S. ex rel. Main v. Oakland City University426
F.3d 914 (7th Cir. Oct. 20, 2005)

• A former university recruiter made allegations
  regarding university representations for Federal
  subsidies.
• An Appeals Court held that allegations that a
  university certified it would comply with
  regulations despite its intent to continue paying
  recruiters for enrolling students in violation of
  a Federal regulation stated a claim under the
  False Claims Act, as students could not have
  received Federal aid absent the universitys
  eligibility under Federal education statutes.
• Related securities litigation In re Apollo
  Group, Inc., __F.Supp.__, 2005 WL 2655275
  (D.Ariz. Oct. 18, 2005)

38
U.S. v. Flaschberger408 F.3d 941 (7th Cir. May
31, 2005)

• Indian community college certified compliance
  with conditions on its Federal grant
  applications, but certifications about eligible
  students had been false, as the number of
  students had been inflated, and most funds went
  into tribal account.

39
U.S. ex rel. Gross v. AIDS Research
Alliance-Chicago413 F.3d 1139 (C.A.Fed. July 13,
2005)

• In a False Claims Act case, the relator alleged
  false certification of compliance with statutory
  and regulatory requirements regarding AIDS
  research.
• The FCA requires that the certification of
  compliance be a condition of payment by the
  government.
• In this case, the alleged false statements to the
  government in forms, written reports, and study
  results were not specific enough to take action.

40
Damages in Grant Cases
41
San Juan City College v. United States391 F.3d
1357 (Dec. 9, 2004)

• San Juan City College, a for-profit higher
  education institution, sued the Department of
  Education for damages for violating a grant
  agreement by cutting off funding and forcing the
  school to close without a hearing and to correct
  deficiencies, as the Department requires.
• The Court of Appeals for the Federal Circuit held
  that the grantee may recover damages from a
  Federal awarding agency for breach of its grant
  agreement. The case was remanded to determine
  whether a breach occurred and if so, the amount
  of damages.
• This may be unprecedented. Ordinarily, the
  relief provided in grant cases is equitable,
  such as an injunction, rather than money
  judgments.

42
Land Use Grants
View from atop Connecticut College, New London,
Connecticut
43
Kelo v. City of New London, Conn.__U.S.__, 125
S.Ct. 2655 (Jun 23, 2005)

• After approving an integrated development plan
  designed to revitalize its ailing economy, a city
  purchased most of the property earmarked for the
  project from willing sellers, but initiated
  condemnation proceedings when the owners of the
  rest of the property refused to sell. The
  economic development plan included public and
  private facilities. The unwilling sellers
  claimed that the taking of their properties would
  violate the "public use" restriction in the Fifth
  Amendment's Takings Clause.
• The Supreme Court held that the city's proposed
  disposition of the property for economic
  development purposes qualifies as a "public use"
  within the meaning of the Takings Clause.
• The Court indicated that the city's determination
  that the area at issue was sufficiently
  distressed to justify a program of economic
  rejuvenation was entitled to deference the plan
  unquestionably serves a public purpose, and the
  takings challenged here satisfied the Fifth
  Amendment. The Court indicated that promoting
  economic development is a traditional and long
  accepted governmental function, and there is no
  principled way of distinguishing it from the
  other public purposes the Court has recognized.
• The case has generated some public controversy.
  Some jurisdictions are considering laws limiting
  their ability take private property for economic
  development purposes.
• Many Federal financial assistance programs
  involve land use and economic development
  aspects.

44
Save Ardmore Coalition v. Lower Merion
Township2005 WL 3021087 (E.D. Pa., Nov. 9, 2005)

• In a case involving a Federal transportation
  grant, the extent of compliance with the National
  Environmental Policy Act (NEPA) was unclear.
• Whether the project in this case qualifies as a
  major Federal action under NEPA was uncertain.
  No final agency decision was made about an
  environmental impact statement.
• The Court stated that further factual development
  was required before it could determine whether
  compliance with applicable statutes occurred.
• The status of grant activity as a potential
  major Federal action under NEPA is a potential
  topic for an upcoming Federal Bar Association
  seminar. If a speaker is scheduled, information
  will be posted on the grantslaw listserv (sign up
  through esharp_at_doc.gov).

45
State Waiver of Eleventh Amendment Immunity
46
Stave Waiver of Immunity

• The Eleventh Amendment to the Constitution allows
  States to be immune from lawsuits by others,
  except to the extent States waive this immunity.
• The immunity is waived when States accept Federal
  funds and agree to conditions on awards that can
  in lawsuits, such as anti-discrimination
  requirements.
• How this immunity is interpreted is an ongoing
  source of lawsuits.

47
Some Recent Immunity Cases

• Thomas v. University of Houston, 2005 WL 2902207
  (Fifth Cir. Nov. 4, 2005) (includes clarification
  that the state waives immunity even though the
  Federal funds are not earmarked for programs that
  further the anti-discrimination and
  rehabilitation goals of the statute at issue)
• Espinoza v. Texas Dept of Public Safety, 2005 WL
  2044547 (Fifth Cir. Aug. 25, 2005)
• Williams v. District Bd. Of Trustees of Edison
  Community College, Fla., 421 F.3d 1190 (11th Cir.
  Aug. 23, 2005)
• Constantine v. Rectors and Visitors of George
  Mason University, 411 F.3d 474 (4th Cir. June 13,
  2005)
• Bill M. ex rel. William M. v. Nebraska Dept. of
  Health and Human Services, 408 F.3d 1096 (8th
  Cir. May 27, 2005)
• Pace v. Bogalusa City School Board, 403 F.3d 272
  (Fifth Cir. Mar. 8, 2005) (this case also
  included significant discussion of major Supreme
  Court and other Federal cases on the
  constitutionality of imposing conditions on
  Federal grants)

48
Miscellaneous Federal Cases

• Grant cases related to
• the Freedom of Information Act
• the definition of financial assistance
• due process and audits

49
Boyes v. U.S. Dept. of EnergyNot reported in
F.Supp.2d, 2005 WL 607882 (D.D.C. Mar. 16, 2005)

• A person filed a Freedom of Information Act
  request, seeking a copy of a grant file and
  related materials from the U.S. Department of
  Energy. The request was granted in part and
  denied in part.
• The case includes significant discussion
  regarding exemption of certain material from a
  grant file, particularly trade secrets, as the
  grant related to General Electrics design and
  development of superconducting generators. The
  proposal also included financial data about GEs
  cost and rate structure. The expected level of
  confidentiality in the grant process was also
  discussed.

50
News-Press, Div. Of Multimedia Holdings Corp. v.
U.S. Dept. of Homeland Security2005 WL 2921952
(M.D. Fla. Nov. 4, 2005)

• Media organizations submitted Freedom of
  Information Act requests for records showing
  Federal Emergency Management Agency grant aid
  information related to 2004 hurricanes (including
  Charley, Frances, Ivan, and Jeanne).
• Among other issues, the Court stated it must
  balance substantial privacy interests of those
  seeking aid against the public interest in
  understanding FEMAs activities.
• The Court concluded that the balance weighed in
  favor of nondisclosure of the Federal assistance
  beneficiaries.

51
Shotz v. American Airlines, Inc.430 F.3d 1332
(11th Cir. Aug. 22, 2005)

• In a suit alleging discrimination by the airline
  industry against disabled people, the Court of
  Appeals ruled that the funds and financial
  benefits that Congress provided to the airline
  industry in response to the terrorist attacks of
  September 11, 2001, under a particular statute,
  did not constitute Federal financial assistance
  within the meaning of the Rehabilitation Act,
  which prohibits discrimination against disabled
  people.
• For the September 11-related Federal funds and
  benefits to the airline industry to be considered
  Federal financial assistance, for
  anti-discrimination purposes, the Court
  determined that the governments intent would
  have had to have been a subsidy, rather, the
  Court viewed it as compensation.

52
Municipality of San Juan v. Human Resources
Occupational Development Council371 F.Supp.2d 52
(D. Puerto Rico May 20, 2005)

• A city brought a lawsuit against a Federal
  agency, alleging that the agencys decision to
  audit the citys Federal Workforce Investment Act
  program denied it due process of law and
  discriminated against it on the basis of
  political affiliation.
• The case was dismissed for failure to exhaust
  administrative remedies.

53
Government Accountability Office Cases
54
Matter of Department of LaborGrant to New York
Workers Compensation BoardU.S. Government
Accountability Office, B-303927 (June 7, 2005)

• Appropriation to the Department of Labor "for
  payment to" New York Workers' Compensation Board
  for 'processing of claims' was not available for
  the Workers' Compensation Board to make payments
  to other New York State entities. The Department
  should seek recovery of 44 million improperly
  transferred unless the Secretary seeks and
  obtains congressional ratification of the grant
  expenditures to date.
• Department of Labor's grant to New York Workers'
  Compensation Board imposed a responsibility on
  the Department to ensure proper performance of
  that grant, even though it was outside the
  Department's normal sphere of operations.

55
U.S. Government Accountability OfficeSome Grants
Reports

• GAO ReportGrants ManagementAdditional Actions
  Needed to Streamline and Simply ProcessesReport
  05-335, April 18, 2005.
• Grants Management EPA Needs to Strengthen
  Efforts to Provide the Public with Complete and
  Accurate Information on Grant Opportunities, GAO
  Report 05-149, February 3, 2005.
• See also National Grants Management Association
  26th Annual Training Conference, Washington,
  D.C., May 2005--Highlights in grants law from the
  past year, contributed by the Federal Bar
  Association, includes some information on GAO
  actions and reports related to grants, courtesy
  of Management Concepts, Inc., at the FBA
  Government Contracts Section Grants Committee web
  site

56
Office of Management and Budget Action
57
Government-wide Guidance and Rules

• On-going long-term regulatory and award-term
  implementation process covered in working groups
  and public input processes
• OMB-Grants Policy Streamlining Overview on
  Nonprocurement Debarment and Suspension and Cost
  Principles Guidance, 70 Fed. Reg. 51862, Aug. 31,
  2005.
• OMB-Cost Principles for Non-Profit Organizations
  (OMB Circular A-122), 70 Fed. Reg. 51927, August
  31, 2005.
• OMB-Cost Principles for State, Local, and Indian
  Tribal Governments (OMB Circular A-87), 70 Fed.
  Reg. 5190 (Aug. 31, 2005).
• OMB Cost Principles for Educational Institutions
  (OMB Circular A-21), 70 Fed. Reg. 51880, Aug. 31,
  2005.

58
Government-wide Guidance

• OMB Guidance for Governmentwide Debarment and
  Suspension (Nonprocurement) 70 Fed. Reg. 51863,
  Aug. 31, 2005.
• OMB Audits of States, Local Governments, and
  Non-Profit Organizations Circular A-133
  Compliance Supplement, Notice of Availability of
  the 2005 Circular A-133 Compliance Supplement, 70
  Fed. Reg. 41242, July 18, 2005.
  http//www.whitehouse.gov/omb/circulars/a133-compl
  iance/05/ 05toc.html
• Department of Justice Government-wide Debarment
  and Suspension (Nonprocurement) and
  Government-wide Requirements for Drug-Free
  Workplace Grants, Final Rule, 70 Fed. Reg. 12141,
  Mar. 11, 2005.

59
Major Agency Actions
60
Major Agency Actions

• Department of Energy Assistance Regulations,
  Interim Final Rule, 70 Fed. Reg. 69250, Nov. 15,
  2005.
• Note Addresses other transactions, a category
  characterized as neither grant, cooperative
  agreement, nor contract. Department of Defense
  also has legal authority for these funding
  instruments.
• Department of Defense Grant and Agreement
  Regulations, Final Rule, 70 Fed. Reg. 49640, Aug.
  24, 2005.
• Health and Human ServicesSimplification of the
  Grant Appeals Process, Notice of Proposed
  Rulemaking, 70 Fed. Reg. 33053, June 7, 2005.

61
Other References

• Department of Commerce Federal Assistance Law
  Division
• http//www.ogc.doc.gov/fed_asst.html (see Grants
  Law Developments on the far
• Federal Bar Association Government Contracts
  Section, Federal Grants Committee
• Recent Grants Law Cases, National Grants
  Management Association Training Luncheon,
  February 10, 2005, a presentation by Jana Gagner,
  Edward Sharp, and Edward Levin
  http//www.fedbar.org/govtcontracts_section.htmlc
  ommittees

62
Federal Bar Association
http//www.fedbar.org/govtcontracts_section.html
Grantslaw listserv send e-mail to esharp_at_doc.gov
63

• Jana Gagner, Senior Counsel
• jana_at_nist.gov
• Federal Assistance Law Division
• Office of the General Counsel
• U.S. Department of Commerce
• [phone] (Voice), [phone] (Fax)
• National Institute of Standards and Technology
• 100 Bureau Drive, Stop 3580
• Gaithersburg, MD 20899
• http//www.ogc.doc.gov/ogc/fl/fedasst.html

64

• Federal Assistance Law DivisionStacia Davis Le
  Blanc, ChiefSleblanc_at_doc.gov 202/482-8035
  (Voice), 202/501-8005 (Fax)U.S. Department of
  Commerce1401 Constitution Ave NW, Room
  5099CWashington, DC 20230 http//www.ogc.doc.go
  v/ogc/fl/fedasst.html