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Recent Federal Grants Law Cases

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Title: Recent Federal Grants Law Cases


1
Recent Federal Grants Law Cases
  • November 2005

2
Jana Gagner Senior Counsel Federal Assistance
Law Division Office of the General Counsel U.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. Rumsfeld Oral 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 Development D.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. Gonzales 391 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. Wilkinson 423 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. Woodford 418 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. Stanley 2005 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. Crain 389 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 Wisconsin 2005 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 States 414 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
    Massachusetts Suit 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 County U.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

28
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 Boise 2005 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. Amerigroup 2005 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 University 426
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. Flaschberger 408 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-Chicago 413 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 States 391 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
Township 2005 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 Energy Not 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 Security 2005 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 Council 371 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 Board U.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 Office Some 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
  • (301) 975-5035 (Voice), (301) 840-5976 (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 Division Stacia Davis Le
    Blanc, Chief Sleblanc_at_doc.gov 202/482-8035
    (Voice), 202/501-8005 (Fax) U.S. Department of
    Commerce 1401 Constitution Ave NW, Room
    5099C Washington, DC 20230 http//www.ogc.doc.go
    v/ogc/fl/fedasst.html
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