Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Pennsylvania Directors' Association for Community Action
DATE: July 6, 1994
Docket No. A-94-51
Decision No. 1482
RECOMMENDED DECISION
Both the Pennsylvania Directors' Association for Community Action
(PDACA) and the Administration for Children and Families (ACF) appealed
the decision of Presiding Officer Gerald Choppin concerning PDACA's
eligibility for special funding under the Community Services Block Grant
(CSBG) program. The CSBG program provides funds to the states to
ameliorate the causes of poverty in their communities. 1/ ACF initially
determined that Pennsylvania had been "clearly erroneous" in finding
PDACA to be an "eligible entity" for "set aside" funding
under the CSBG
program and in funding PDACA every fiscal year beginning with 1985.
"Set aside" funding comprises the 90 percent of a state's annual
allotment under the program that must be used for grants to "eligible
entities." The remaining 10 percent of a state's allotment may be used
for discretionary grants and administrative costs.
ACF directed that Pennsylvania desist from funding PDACA with "set
aside" funding on a prospective basis. Pennsylvania and PDACA requested
a hearing on that determination before a specially designated hearing
officer of this Department (referred to as the "Presiding Officer").
The Presiding Officer upheld ACF's position, finding that Pennsylvania's
formal opinion from its Attorney General concerning PDACA's eligibility
had been "clearly erroneous." The Presiding Officer, nevertheless,
rejected many elements of ACF's interpretation of the eligibility
requirement at issue. PDACA then appealed the Presiding Officer's
decision to the Secretary of Health and Human Services (Secretary).
Although ACF agreed with the overall conclusion of the Presiding
Officer's decision, it cross-appealed all of the findings that had been
unfavorable to its position. The Secretary in turn referred the
application for appeal to the Board for a recommended decision. 2/
The record in this appeal consists of appellate briefs submitted by both
PDACA and ACF as well as the entire record before the Presiding Officer.
For the reasons discussed below, we conclude that the Presiding Officer
erred in concluding that Pennsylvania's position on PDACA's eligibility
was "clearly erroneous." Accordingly, we recommend that the Presiding
Officer's decision finding PDACA ineligible for "set aside" funding
be
reversed.
Summary of our recommended decision
The CSBG program provides states with considerable latitude in making
funding decisions on behalf of individual grantees within their states
and specifically requires that this Department give deference to those
funding decisions. The particular eligibility requirement at issue in
this appeal concerns whether PDACA was a limited purpose agency that
"served the general purposes of a community action agency" in federal
fiscal year 1981 (henceforth referred to as "1981"). The statutory
wording of the requirement itself affords discretion to states in
interpreting and applying the requirement since the language does not
expressly identify which "general purposes" of a community action
agency
must be served nor does the language specify how an organization must
"serve" those purposes.
PDACA argued that Pennsylvania reasonably relied on the congressional
statement of purpose for community action agencies and programs in title
II of the former Economic Opportunity Act (that provided the original
authority for community action agencies) as the means of identifying the
"general purposes" of a community action agency. (The
federally-administered program for community action authorized by title
II was repealed in 1981 at the same time that the CSBG program was
enacted.) PDACA also argued that in determining whether PDACA "served"
the general purposes of a community action agency in 1981, Pennsylvania
properly relied on, in its Attorney General opinion and before the
Presiding Officer, a wide range of evidence relating to PDACA's programs
and activities and its corporate purpose in 1981. Finally, PDACA argued
that this evidence fully substantiated that PDACA served the general
purposes identified in the congressional statement, and that ACF had
simply failed to meet its burden (under applicable rules of deference)
of demonstrating that Pennsylvania had been "clearly erroneous."
ACF argued, on the other hand, that only an organization that functioned
in exactly the same way as a community action agency and that met the
critical requirements for qualifying as a community action agency (save
for formal designation as such) can be considered to have "served the
general purposes" of a community action agency. ACF argued that PDACA
did not qualify under its interpretation because, among other things,
PDACA was an association of local community action agency directors and
because ACF had concluded that PDACA did not provide grass-roots,
comprehensive services to a particular community that was unserved by
any community action agency.
We conclude that Pennsylvania's position that PDACA meets the "general
purposes" requirement in question is at least a reasonable position that
was not "clearly erroneous," and as such, is entitled to this
Department's deference. Although ACF's more restrictive interpretation
of the "general purposes" requirement and its application of that
requirement to PDACA in 1981 may also be a reasonable position, it is
not ACF's role under the program to second guess a state's reasonable
application of this funding requirement even where ACF believes that its
position is the preferable one.
The following additional factors also provide support for our
conclusion.
o Since the start of the CSBG program, ACF has had a statutory duty to
inform states about limited purpose agencies which meet the requirements
of an "eligible entity" for "set aside" funding. Although
ACF provided
some information in 1982, ACF failed to provide revised information in
1984 when critical statutory changes affected the manner in which
previously eligible organizations such as PDACA could qualify as
eligible entities. If ACF had provided information regarding PDACA's
eligibility at that time, Pennsylvania would at least have been put on
notice of how ACF applied the "general purposes" requirement to PDACA
and could have discussed and resolved any differences in position before
continuing a lengthy history of funding PDACA. In other words, as
Pennsylvania argued before the Presiding Officer, if such information
had been provided at the appropriate time as the statute required, this
case would not be before us now. Instead, ACF questioned PDACA's
eligibility only after Pennsylvania had authorized "set aside" funding
for PDACA for eight fiscal years. Pennsylvania has continued to
authorize "set aside" funding for five more years during the pendency
of
administrative review.
o ACF here argued that its interpretation of the "general purposes"
requirement is the "only plausible" interpretation based on various
factors. However, ACF has never provided the states with notice of that
interpretation in the form of regulations. ACF's basis for that
interpretation is not self-evident and requires reference to extensive
related statutory provisions which were repealed with the establishment
of the CSBG program and the implementing regulations for the repealed
provisions as well as legislative history documents.
o In fact, the CSBG Act contemplates that ACF will not promulgate
extensive regulations to bind the states in how they will comply with
the program requirements. ACF here acknowledged that as a result of
this clear congressional intent that maximum discretion be provided to
the states in administering their programs, it did not promulgate
detailed regulations to implement the statutory requirements. But ACF
cannot here have it both ways. ACF cannot refrain from assisting states
in interpreting through regulations what must surely be viewed as a
complex funding requirement and still expect the states to reach
precisely the same outcome in administering their programs ACF would
reach. Moreover, in administering their CSBG programs each year,
individual states have to make scores or even hundreds of funding
decisions between competing organizations. They can hardly be expected
to apply the complicated legal and factual analysis to each of these
decisions that ACF has applied in reviewing Pennsylvania's decision
concerning PDACA in this appeal.
o Ultimately, the Presiding Officer rejected all but one element of
ACF's interpretation of the "general purposes" requirement as
unestablished. He concluded, and we agree, that ACF's interpretation is
so restrictive that a limited purpose agency would literally have had to
be a "community action agency" (save for formal designation as such)
in
order to be found to be a limited purpose agency that "served the
general purposes of a community action agency." The plain meaning of
the statute does not require an interpretation this restrictive.
o Not only has Pennsylvania made 13 funding decisions in favor of PDACA
since the beginning of the program, but also its Attorney General has
issued a formal written opinion in favor of PDACA's eligibility. The
CSBG program gives heightened deference to a formal opinion from a
state's attorney general concerning an organization's eligibility.
o The current proceedings were initiated entirely at ACF's behest, and
not as a result of any complaint arising from within Pennsylvania. The
parties pointed to no evidence of complaints from any community action
agencies or other organizations that might be competitors of PDACA's for
funding or from the citizens of Pennsylvania about PDACA's performance
over a 13-year period.
The remainder of our recommended decision is organized as follows.
After providing a brief description of the CSBG program, including the
applicable statutory requirements and the relevant legislative history,
as well as a brief history of the proceedings leading to the current
appeal, we first address the parties' general arguments concerning
whether the Presiding Officer erred in his analysis and in his ultimate
findings and conclusions in not deferring to Pennsylvania's position on
PDACA's eligibility. We then address the exceptions taken by the
parties concerning specific findings and conclusions related to each
section of the Presiding Officer's analysis.
Background on relevant statutory provisions, legislative history and
Departmental policy
The CSBG Act ("the Act") was enacted in 1981 and authorized the
Secretary to make block grants to states beginning with fiscal year 1982
to ameliorate the causes of poverty in communities within the states. A
primary feature of the new program was to provide the states "with the
broadest possible latitude in the use of block grant funds and be free
from all but the most minimal and necessary federal administrative and
regulatory direction." S. Rep. 139, 97th Cong., 1st Sess. at 933
(1981); 1981 U.S.C.C.A.N. 396; ACF Ex. 3, at 4; Certified Record (CR) at
1229. 3/ The CSBG program replaced particular titles of the Economic
Opportunity Act of 1964 (including title II of that Act) that had
authorized categorical grant programs for community services
administered directly by the federal government.
Under the CSBG program, each state had to file an annual application
with the Secretary to receive a funding allotment for the fiscal year.
As part of this application, the chief executive officer of the state
had to certify that the state makes certain assurances regarding use of
the funds. Section 675(c) of the Act. The statute, however,
specifically provides that--
The Secretary may not prescribe the manner in which the States will
comply with the provisions of this subsection [regarding the
assurances] . . . .
Section 675(c) of the Act.
Also, under the original version of the CSBG Act (Pub. L. No. 97-35),
the states were required to use 90 percent of their funding allotment
("set aside" funding) for "eligible entities" in 1982 only.
An
"eligible entity" was defined as any organization which was officially
designated as a community action agency or community action program
under the provisions of section 210 of the Economic Opportunity Act of
1964 for 1981. Section 673(1) of the Act (August 13, 1981). Shortly
after the enactment of the original version of the CSBG Act, the
Congress passed certain amendments to the Act (Pub. L. No. 97-115).
These 1981 amendments modified the definition of "eligible entity"
to
include: any limited purpose agency designated under the Economic
Opportunity Act of 1964 for 1981 which served the general purposes of a
community action agency under title II of the Economic Opportunity Act
of 1964, and any grantee which received financial assistance under
section 221 or section 222(a)(4) of the Economic Opportunity Act of 1964
in 1981. 4/ Section 673(1) of the Act (as amended December 29, 1981).
The amendments also provided a statutory requirement that --
The Secretary shall provide to the chief executive officer of each
State appropriate information regarding designated limited purpose
agencies and grantees which meet the requirements of the second
sentence of section 673(1).
Section 675(c) of the Act.
In response to the 1981 amendments, the Department, on February 18,
1982, sent a letter to the governor of each state which included an
"expanded list of organizations within your State which you may fund
during fiscal year 1982." ACF Ex. 43; CR at 1655. The letter further
stated that the technical amendments provide states the opportunity to
make funding decisions from among a broader range of organizations. ACF
Ex. 43; CR at 1656. The letter also stated that--
The Office of Community Services has determined, in accordance with
the technical amendments, that Limited Purpose Agencies (LPA) which
performed the functions of a community action agency in fiscal year
1981 may be funded by the States in fiscal year 1982. Likewise,
grantees that received financial assistance under Section 221 of
the Economic Opportunity Act in fiscal year 1981 also may be funded
by the States during the current fiscal year.
Id. 5/
In 1984, the CSBG Act was further amended by the Human Services
Reauthorization Act (Pub. L. No. 98-558). The amendments deleted the
reference in section 673(1) of the CSBG Act, the section which defines
eligible entities, to grantees receiving financial assistance under
section 221 of the Economic Opportunity Act. Thus, ACF argued (and
Pennsylvania did not dispute in the proceedings before the Presiding
Officer) that the only way PDACA could qualify for CSBG funding as of
1985 was if it could be considered a limited purpose agency which served
the general purposes of a community action agency in 1981. 6/
The legislative history makes no mention of why this change was made to
the definition of eligible entities. Nevertheless, the statute still
provided that the Secretary "may not prescribe the manner in which the
States will comply with the provisions of this subsection." Section
675(c) of the Act. Moreover, the 1984 amendments did not delete the
requirement that the Secretary provide information to the states on
which limited purpose agencies met the definition of eligible entities
under the Act.
At the time of the 1984 amendments, the only information provided the
states was a copy of the amendments. The only other guidance ever
provided by ACF was in the preamble to final regulations published on
October 13, 1987. 52 Fed. Reg. 37,957 (1987). The preamble listed six
categories of organizations which could be considered an "eligible
entity." While one of the categories listed was "a limited purpose
agency under title II of the Economic Opportunity Act of 1964 for fiscal
year 1981 which served the general purposes of a community action
agency," the preamble provided no guidance on how a state should
interpret the phrase "served the general purposes of a community action
agency." Moreover, ACF did not provide the states with a list of
limited purpose agencies that met the definition of eligible entity as a
result of the 1984 amendments. Transcript of hearing before the
Presiding Officer (Tr.) at 240; and ACF Ex. 61, CR at 2001.
Since the initial enactment of the CSBG Act, HHS has issued extensive
regulations and policy statements discussing the deference to be
afforded the states in block grant programs generally. Regulations
published in 1982 at 45 C.F.R. 96.50(e) provide:
The Department recognizes that under the block grant programs the
States are primarily responsible for interpreting the governing
statutory provisions. As a result, various States may reach
different interpretations of the same statutory provisions. This
circumstance is consistent with the intent of and statutory
authority for the block grant programs. In resolving any issue
raised by a complaint or a Federal audit the Department will defer
to a State's interpretation of its assurances and of the provisions
of the block grant statutes unless the interpretation is clearly
erroneous. . . .
On October 15, 1982, HHS issued a policy statement which emphasized
HHS's very limited role in the administration of the block grants. 7/
PDACA Ex. 1, CR at 2342. It states:
The very nature of this statutory design implies that the
Department is not to be involved actively in the administration of
the statutory particulars, except to investigate complaints and to
conduct spot-check audits. . . . As stated in the block grant
regulations, "the Department will defer to a State's interpretation
of its assurances and of the provisions of the block grant
statutes, unless the interpretation is clearly erroneous." The
regulations thus anticipate that the Department will accept any
reasonable State interpretation in connection with an audit or the
evaluation of a complaint and that the Department will not seek to
establish a uniform interpretation of any particular assurance or
statutory provision in those proceedings.
Underlying the decision to issue only brief Departmental
regulations implementing all the block grant statutes is the
assumption that the Department would not make policy affecting
those outside HHS except by regulation. If significant issues were
not addressed by regulation, but need to be resolved by the
Department, the regulations will be amended to address them.
CR at 2344.
The policy also states--
In the absence of a regulation, a uniform interpretation of the
block grant statutes is not required. It is the Department's
position that any reasonable state interpretation should be
acceptable to the Department, the General Accounting Office and the
Courts.
CR at 2345.
The policy statement further provides that where a state asks for an
interpretation of the statute, if the Department has not established a
position, the state is to be informed and the Department should suggest
that the state seek legal advice from its Attorney General. Id. The
policy statement then added:
We should point out to the State that it enjoys a special role
under the block grants, and that if its attorneys hand down a
formal opinion stating that a particular action is lawful under the
block grant statutes, it is very unlikely that the Department would
find the State's interpretation to have been erroneous, even if
other states arrive at conflicting interpretations.
Id. See also CR at 2348.
Procedural History
In December, 1988, ACF conducted a program implementation assessment in
Pennsylvania pursuant to section 679(b)(1) of the CSBG Act. ACF claimed
that this assessment indicated that Pennsylvania was impermissibly
funding PDACA from the 90 percent share of its CSBG funds that are to be
set aside for "eligible entities" as defined under the CSBG Act. In
recent years, PDACA had received annual grants in the range of $150,000
from Pennsylvania.
Accordingly, on March 31, 1989, ACF sent a letter to the Pennsylvania
Department of Community Affairs (DCA) (the administrator of the CSBG
program in Pennsylvania) which raised questions about the propriety of
funding PDACA as an "eligible entity" and stated that "Pennsylvania
should cease funding PDACA until you can make a satisfactory showing
that the agency is an eligible entity." ACF Ex. 9; CR at 1297. DCA
responded by providing information in support of its funding of PDACA as
an eligible entity, but also indicated it would cease all funding as
directed. ACF Ex. 18; CR at 1365. On August 21, 1989, ACF informed DCA
that its submission did not furnish sufficient documentation that PDACA
was an eligible entity as defined by section 673(1) of the CSBG Act and
requested that DCA obtain a ruling on PDACA's eligibility from the
Attorney General of Pennsylvania. In September, 1989, DCA requested
assistance in determining what ACF considered to be serving the general
purposes of a community action agency and stating that it had cut off
PDACA's funding only because ACF directed it to do so. DCA Ex. 14; CR
at 2047. ACF never responded to DCA's request for assistance. DCA Ex.
16; CR at 2050.
In accordance with a request from DCA, the Attorney General of
Pennsylvania determined in a decision dated June 12, 1990, that PDACA
was an eligible entity under the applicable statutes and that
Pennsylvania was not violating its assurances under the CSBG Act by
funding PDACA. DCA Ex. 18; CR at 2053. The Attorney General stated
that his determination was based on a review of the relevant federal
statutes and regulations, a joint stipulation prepared by DCA and PDACA,
PDACA's memorandum of law, the correspondence among the parties and the
other exhibits and documents submitted to him.
On February 28, 1991, ACF informed DCA that despite the June 12, 1990
decision of the Pennsylvania Attorney General, it had determined that
PDACA should not receive funding as an "eligible entity" under the
CSBG
Act because PDACA did not serve the general purposes of a community
action agency under title II of the Economic Opportunity Act and did not
comply with the tripartite board requirements of section 675(c)(3) of
the CSBG Act. DCA Ex. 21; CR at 2063. In May, 1991, DCA sought the
guidance of ACF with regard to continued CSBG funding of PDACA in light
of the conflict between the state's determination and ACF directives.
DCA Ex. 23; CR at 2066. DCA subsequently advised ACF of Pennsylvania's
intention to abide by the decision of its Attorney General that PDACA
was an eligible entity. DCA Ex. 25; CR at 2070.
On October 31, 1991, ACF reiterated to DCA its position that
Pennsylvania was violating its assurances by continued funding of PDACA
as an eligible entity, that Pennsylvania was subject to termination of
funding unless such funding ceased immediately, and that Pennsylvania
had the statutory right to a hearing on the issue of PDACA's
eligibility. DCA Ex. 26; CR at 2072. On November, 1991, DCA requested
a hearing. DCA Ex. 27; CR at 2074. At ACF's request, the Presiding
Officer was appointed by the Chair of the Departmental Appeals Board. CR
at 43 and 53. PDACA moved to be allowed to intervene in that proceeding
as a party. CR at 60. The Presiding Officer ultimately granted PDACA's
petition to intervene as a party in the proceeding before him. CR at
242.
After conducting an in-person hearing and receiving post- hearing
briefing from the parties, the Presiding Officer issued his decision
that the Pennsylvania Attorney General's determination that PDACA is an
eligible entity within the meaning of section 673(1) of the CSBG Act was
clearly erroneous. CR at 1.
On July 2, 1993, PDACA appealed the Presiding Officer's decision to the
Secretary pursuant to 45 C.F.R. 96.52(c). CR at 675. Although ACF
agreed with the decision of the Presiding Officer insofar as it found
that PDACA is not an eligible entity and that the Pennsylvania Attorney
General's opinion to that effect is clearly erroneous, it filed a
protective notice of cross-appeal of a number of the findings and
challenged the Presiding Officer's determination to allow PDACA to
intervene as a party in these proceedings. CR at 868. Pennsylvania did
not appeal the Presiding Officer's decision.
The Secretary referred the request to the Departmental Appeals Board for
a recommended decision pursuant to her authority under 45 C.F.R.
96.52(c)(3). CR at 1119. The Chair of the Departmental Appeals Board
ruled on September 1, 1993 that the regulations do not provide for
consideration of an appeal brought by an intervening party which is
neither the state nor the Department. CR at 1120. Following the
withdrawal by ACF of its cross-appeal, the Chair indicated in a Notice
dated September 14, 1993 that the case was closed. CR at 1125 and 1129.
Thereafter, PDACA filed a Complaint and Application for Preliminary
Injunction in the United States District Court for the Middle District
of Pennsylvania. By Memorandum and Order dated December 23, 1993, which
was clarified by Order dated January 10, 1994, the Court ruled that
PDACA should be permitted to proceed with its appeal to the Secretary
from the Presiding Officer's decision, that the Department is enjoined
from terminating PDACA's funding pending the outcome of the
administrative appeal, and that PDACA's CSBG funding should be restored
effective July 1, 1993. In light of the Court's ruling, on January 5,
1994 ACF requested reinstatement of its cross-appeal. PDACA moved to
dismiss ACF's cross-appeal.
Pursuant to 45 C.F.R. 96.52(c), this matter was referred to a
three-member Panel of the Departmental Appeals Board's Appellate
Division. We denied PDACA's motion to dismiss the cross-appeal, but
reinstated ACF's July 30, 1993 Notice of Cross-Appeal, striking new
argument and evidence that had been included with ACF's January 5, 1994
submission.
Analysis
Our role in this appeal is to provide an appellate review of the
Presiding Officer's decision. Specifically, the regulations provide
that we must resolve the issues raised by the parties in their notice of
appeal. See 45 C.F.R. 96.52.
The primary issue before the Presiding Officer was whether ACF
demonstrated that Pennsylvania's position on PDACA's eligibility for
"set aside" funding was "clearly erroneous." The specific
eligibility
requirement for "set aside" funding in question is the "general
purposes" requirement in section 673(1) of the CSBG Act. As discussed
in the background section above, the "general purposes" requirement
permits an organization which qualified as a "limited purpose agency"
to
be eligible for "set aside" funding under the CSBG program if that
organization also "served the general purposes of a community action
agency." There is no dispute that PDACA met the qualifications for a
"limited purpose agency" under the prior, federally-administered
community services program, so that the only issue before the Presiding
Officer was whether PDACA also "served the general purposes of a
community action agency."
1. The Presiding Officer erred generally in his conclusions and
findings by failing to give proper deference to Pennsylvania's
longstanding and considered opinion on PDACA's eligibility.
A. Pennsylvania's interpretation of the "general purposes" requirement
was reasonable.
PDACA argued on appeal that the Presiding Officer's decision was
erroneous because Pennsylvania reasonably interpreted and applied the
"general purposes" requirement to PDACA and that this Department was
obliged to defer to Pennsylvania's reasonable position under provisions
of the CSBG Act, applicable regulations and policy statements (quoted
extensively in the background section above). ACF, on the other hand,
argued that Pennsylvania's position was not entitled to deference
because it did not adopt the "only plausible" interpretation of this
requirement identified by the "responsible" federal agency and for
a
variety of other reasons.
In determining what were the "general purposes" of a community action
program, Pennsylvania relied upon the "Congressional statement of
purpose" for title II of the Economic Opportunity Act, as amended in
1967, 8/ which provides, in pertinent part:
(a) This subchapter provides for community action agencies and
programs, prescribes the structure and describes the functions of
community action agencies and authorizes financial assistance to
community action programs and related projects and activities. Its
basic purpose is to stimulate a better focusing of all available
local, State, private, and Federal resources upon the goal of
enabling low-income families, and low-income individuals of all
ages, in rural and urban areas, to attain the skills, knowledge,
and motivations and secure the opportunities needed for them to
become fully self-sufficient. Its specific purposes are to
promote, as methods of achieving a better focusing of resources on
the goal of individual and family self-sufficiency--
(1) the strengthening of community capabilities for planning
and coordinating Federal, State, and other assistance related to
the elimination of poverty, . . . ; (2) the better organization of
a range of services related to the needs of the poor, so that
these services may be made more effective and efficient . . . ; (3)
the greater use, subject to adequate evaluation, of new types
of services and innovative approaches in attacking causes of
poverty, . . . ; (4) the development and implementation of all
programs and projects designed to serve the poor or low-income
areas with the maximum feasible participation of residents of the
areas and members of the groups served, so as to best stimulate and
take full advantage of capabilities for self-advancement and assure
that those programs and projects are otherwise meaningful to and
widely utilized by their intended beneficiaries; and (5) the
broadening of the resource base of programs directed to the
elimination of poverty, so as to secure, in addition to the
services and assistance of public officials, private religious,
charitable, and neighborhood organizations, and individual
citizens, a more active role for business, labor, and professional
groups able to provide employment opportunities or otherwise
influence the quantity and quality of services of concern to the
poor.
42 U.S.C. 2781(a) (1967); 201(a) of the Economic Opportunity Act
(1967) (emphasis supplied). 9/
We conclude that Pennsylvania's reliance on this statement of purpose
for determining the "general purposes" of a community action agency
is
entirely reasonable. The "general purposes" requirement at issue
clearly contemplates that the states will rely on the Economic
Opportunity Act for determining the general purposes "served" by a
community action agency since the Economic Opportunity Act authorized
community action agencies and programs (and indeed was specifically
cited in the requirement). The congressional statement of purpose,
moreover, is the place in the Act which specifically refers to
"purposes" pertaining to community action agencies.
ACF argued that this statement of purpose covered the entire title II of
the Economic Opportunity Act and thus covered a broader set of purposes
than those pertaining simply to community actions agencies. While it is
true that the purposes identified are literally the purposes of title II
as a whole, the statement specifically contemplates achieving those
purposes through community action agencies. Therefore it is reasonable
to say that the purposes in the statement are the purposes of community
action agencies.
ACF also argued that instead of using this "overly broad" statement
of
purpose, Pennsylvania should have relied on all of the provisions in
title II pertaining to community action agencies (and particularly those
setting out the qualifications or characteristics of community action
agencies) and all of the implementing regulations as well as relevant
legislative history regarding the "general purposes" requirement.
Essentially, ACF expected the limited purpose agency to meet every
qualification for a community action agency except that it be
"designated" as such. Under the Economic Opportunity Act (1967), a
private or public nonprofit organization which wished to serve as a
community action agency had to be designated by the local political
subdivision or the state to qualify for funding as a community action
agency. 42 U.S.C. 2790(a) (1967); 210 of the Economic Opportunity
Act (1967). ACF provided testimony that in some instances a limited
purpose agency may have met all of the qualifications of a community
action agency (and may have functioned in precisely the same way as a
community action agency), except that it was unable to receive the
requisite designation from the local political subdivision. Tr. at
193-194, 230. ACF concluded that only this type of limited purpose
agency could truly "serve the general purposes of a community action
agency," and argued that Congress must have fashioned the requirement to
cover that type of agency.
We conclude that although ACF's interpretation of the "general purposes"
of a community action agency may be a reasonable one, it certainly was
not the only plausible interpretation and it certainly does not mandate
that we conclude that Pennsylvania's interpretation was clearly
erroneous. Needless to say, the more provisions in title II that a
state must rely on to determine the general purposes of a community
action agency, the more difficult this requirement becomes to apply. In
requiring that a state rely on practically the entire repealed title,
the implementing regulations and legislative history documents, ACF's
interpretation clearly increases the complexity of the requirement.
More importantly, however, ACF's interpretation imposes a restriction on
the requirement that is not obvious in the plain wording of the
requirement.
Under the plain wording of the requirement, an organization is eligible
if it met the requirements of a limited purpose agency and served the
"general purposes" of a community action agency in 1981. ACF here
assumed that a limited purpose agency cannot serve the "general
purposes" unless it functioned (and was structured) precisely like a
community action agency in 1981. However, ACF thereby imposed a
restriction on the requirement that is not evident from the plain
wording of the statute. The statute nowhere specifies that a limited
purpose agency must have particular qualifications or characteristics of
a community action agency in addition to serving the general purposes of
a community action agency.
ACF also argued that the only piece of legislative history relevant to
the "general purposes" requirement constrains us to reject
Pennsylvania's interpretation. The report to the Senate bill which
first included the "general purposes" requirement characterized it
as
covering limited purpose agencies that "perform the functions of
community action agencies, but are not technically community action
agencies." H.R. Conf. Rep. No. 386, 97th Cong., 1st Sess. 38 (1981),
reprinted in 1981 U.S.C.C.A.N. 2574.
The legislative history simply does not conclusively support ACF's
position over Pennsylvania's. At best, it is ambiguous, and therefore
not useful in resolving this dispute. Just as a limited purpose agency
can serve the general purposes of a community action agency without
actually qualifying in every respect as a community action agency (as
PDACA argued), so an organization can perform the functions of a
community action agency without actually qualifying as a community
action agency in every respect. Certainly, whether the requirement
referred to "purposes" or "functions," states would still
retain some
discretion in determining whether a particular limited purpose agency
could qualify under the requirement. In any event, we note that if ACF
had concluded that states should be bound by the more restrictive gloss
that ACF interprets the legislative history to place on the requirement,
it should have provided notice in regulations to all of the states of
this interpretation. Without such notice, Pennsylvania clearly retained
the option of interpreting the requirement based on the plain statutory
wording. 10/
We also disagree with ACF that Pennsylvania's interpretation would cover
literally all of the limited purpose agencies (many hundreds) that may
have existed under the former, federally-administered program. (PDACA
countered with its own argument that ACF's interpretation would cover
barely more than a handful of agencies and therefore would impermissibly
cause the "general purposes" provision to be a nullity. ACF indeed
conceded that its interpretation would have a highly restrictive effect
on the implementation of the requirement.) Pennsylvania's
interpretation, however, would not reasonably cover all of the limited
purpose agencies under the former program. It would simply cover those
agencies encompassed by the plain wording of the statute. Under
Pennsylvania's approach to the requirement, a state first has to
determine precisely what were the "general purposes" of a community
action agency. (In doing so, a state could refer to the congressional
statement of purpose in the Economic Opportunity Act, as Pennsylvania
did). The state would then have to determine whether a particular
limited purpose agency served those purposes in 1981 by considering
evidence such as its programs, activities and corporate structure at
that time. ACF pointed to nothing in the record which supports its
assertion that this interpretation would open the flood gates on the
requirement.
Accordingly, on the basis of the foregoing, we reject ACF's argument
that its interpretation was the only plausible one and conclude that
Pennsylvania's reliance on the congressional statement of purpose for
title II of the Economic Opportunity Act as the source of the "general
purposes" of a community action agency was at least a reasonable
interpretation of the "general purposes" requirement.
B. Pennsylvania's application of the requirement to the evidence
concerning PDACA's activities was also reasonable.
PDACA argued on appeal that the Presiding Officer erred in not properly
considering the reasonableness of Pennsylvania's position based on the
evidence of record concerning PDACA and its activities in 1981, the
referenced year in the statutory requirement. The record contains the
following evidence concerning PDACA in 1981:
o A 1981 letter from Dr. W. Astor Kirk, the Regional Director of the
federal Community Services Administration to Mr. John Wilson, President,
PDACA, which discussed Dr. Kirk's assessment of PDACA's activities for
the prior year and his expectations of PDACA in 1981. Dr. Kirk stated:
Our assessment of PDACA activities during the past year has
provided us with examples of positive accomplishment in the general
areas of statewide community action planning and coordination and
in steps to assist and complement state efforts to plan for the new
community services block grant.
We understand that the PDACA mission in the coming year will
consist of three categories of activities. First you will continue
to engage in transition planning, both with the Department of
Community Affairs and on your own. You will identify and analyze
community action agency strengths and weaknesses, problems and
needs, and available resources. Second, you will engage in
coalition building at the state level, with emphasis on the private
sector and on local government. Third, you will conduct a public
awareness and education effort, developing sensitivity toward the
needs of the poor and the desirability of including them in the
development of public policy.
ACF Ex. 14; CR at 1354.
o The record shows that PDACA actually received and carried out a grant
for 1981 from the Community Services Administration to engage in the
very three categories of activities outlined in Dr. Kirk's letter. CR
at 1354.
o PDACA conducted the following additional projects and activities in
1981: a comprehensive energy access project (which included a crisis
program and energy funding to counties which did not have community
action programs) and a rural housing training and assistance program.
CR at 1677; Tr. at 352-357. 11/
o PDACA testified before the Pennsylvania legislature during 1981 on
various topics such as low-income energy assistance, community services
funding within Pennsylvania, welfare issues, and employment and training
of low-income individuals. Tr. at 357.
o PDACA's former President of the Board during the relevant time period
testified extensively during the hearing before the Presiding Officer
concerning PDACA's mission during 1981, its funded programs, and its
additional activities. For example, he stated that the purposes of
PDACA in 1981 were:
to advance the mission of community action, to increase the
opportunities for low income individuals and families within
Pennsylvania . . . to become self- sufficient and move out of
poverty, to do that in concert with community action agencies where
they didn't have in their own area sufficient resources to focus on
the problem, but where there was a state-wide or nearly state-wide
issue. Tr. at 395.
o The same former Board President characterized PDACA's purpose as
being an advocate for community action and as collaborating with local
community action agencies, of "joint planning with them, in concert to
affect the mission of community action." Tr. at 359-360.
o The former Board President testified that PDACA received input from
low income persons in the areas served and from representatives of the
poor in planning and coordinating its activities. He stated that this
input was accomplished in part by means of an advisory council which was
established some time between the beginning of his term as President in
1980 and the end of his term in 1982. Tr. at 342-348.
o Virtually all of ACF's witnesses testified at the hearing that the
types of programs or activities performed by PDACA in 1981 were typical
of activities undertaken by a community action agency. See CR at
744-745 and citations to the transcript of the hearing therein.
o PDACA's Articles of Incorporation in effect during 1981 state that
PDACA's corporate purpose is to promote programs for the relief of the
poor. ACF Ex. 10; CR at 1302.
When all of the foregoing evidence is viewed against the "general
purposes" of a community action agency as identified in the
congressional statement of purpose for title II of the Economic
Opportunity Act, it becomes clear that Pennsylvania could reasonably
have concluded that PDACA served those general purposes. The grant from
the Community Services Administration (and supporting verification of
the project purposes from the federal Regional Director) alone supports
the conclusion that PDACA served the basic purpose of a community action
agency (to better focus state and community resources for attainment of
self-sufficiency) and several specific purposes, such as the
strengthening of community capabilities for planning and coordinating
assistance, the better organization of services, the broadening of the
resource base of programs, and the greater participation of the poor in
the development of policy.
Moreover, the evidence substantiates that the two energy assistance
programs and the rural housing program were typical of the type of
activities performed by a community action agency and also served the
basic purpose of a community action agency and specific purposes such as
the better organization of services related to the needs of the poor.
ACF argued, nevertheless, that the energy programs did not support
PDACA's position. We conclude, on the contrary, that Pennsylvania might
reasonably have concluded that an organization that fills the gaps by
providing programs typical of a community action agency in regions of
the state where no such agency exists could be considered to "serve"
the
general purposes of a community action agency.
Finally, we conclude that the remaining evidence in the record,
concerning PDACA's advocacy efforts before the Pennsylvania legislature,
its general mission, and its corporate purpose, all lend support to
Pennsylvania's position that PDACA can reasonably be considered to have
served the general purposes of a community action agency in 1981. Thus,
we conclude that Pennsylvania's interpretation of the general purposes
and its application of the general purposes to the evidence concerning
PDACA in 1981 were both reasonable.
In our background section, we cited and quoted extensively from
provisions of the CSBG Act and from Department regulations and policy
issuances concerning the deference this Department must provide for the
decisions of states in block grant programs generally and in the CSBG
program in particular. Generally speaking, these provisions provide
that states administering block grants under the CSBG program will have
a wide degree of latitude in applying the requirements and that this
Department will defer to a state's position unless clearly erroneous.
We conclude that the Presiding Officer simply failed to consider whether
Pennsylvania's interpretation of the "general purposes" requirement
as a
whole was a reasonable interpretation and whether its application of
that interpretation to all of the evidence concerning PDACA in 1981 was
also reasonable, and thus entitled to this Department's deference. We
therefore find that the Presiding Officer erred in his analysis and in
his ultimate findings and conclusions by not deferring to Pennsylvania's
position on PDACA's eligibility for "set aside" funding under the
CSBG
program.
In the remaining three sections of this recommended decision, we address
exceptions taken by PDACA and ACF to the specific findings of fact and
conclusions of law relating to each of the three sections of the
Presiding Officer's decision containing his analysis of the issues,
sections IV, V, and VI of his decision. In general, the Presiding
Officer's analysis is not convincing because he focuses on flaws in
discrete aspects of the Attorney General's opinion, rather than
examining whether the conclusion the Attorney General reached was
clearly erroneous.
2. The Presiding Officer erred in finding and concluding that
Pennsylvania had been clearly erroneous because of its Attorney
General's reliance on particular factual and legal bases. (Section IV
of the Presiding Officer's Decision)
A. Attorney General's reliance on factual bases (Parts A and C of
Section IV).
A primary reason the Presiding Officer concluded that Pennsylvania's
position on PDACA's eligibility was clearly erroneous was because the
formal opinion of the Attorney General of Pennsylvania had considered
evidence of programs and corporate purpose that were not related
strictly to 1981. (The "general purposes" requirement at issue focuses
on whether the limited purpose agency served the general purposes of a
community action agency in 1981.) While it is true that the Attorney
General's opinion did consider evidence of programs and of corporate
purposes for years outside of 1981, it also indisputably considered
evidence of programs and purposes for 1981. Moreover, Pennsylvania
through DCA and PDACA proffered to the Presiding Officer extensive
evidence and argument relating to PDACA's programs and corporate
purposes in 1981 during the proceedings below. Indeed, both Pennsylvania
and PDACA relied primarily, if not entirely, on evidence relating to
1981 during the proceedings before the Presiding Officer.
Moreover, the Attorney General's opinion was issued in advance of the
proceedings before the Presiding Officer. During those proceedings, many
of the issues relating to the complicated requirement at issue were
brought into better focus. Just as ACF was free to amplify and modify
its position during the proceedings before the Presiding Officer, so was
Pennsylvania. Thus, Pennsylvania could and did clarify before the
Presiding Officer that it wished to rely on evidence relating to 1981 in
determining whether PDACA met the "general purposes" requirement in
1981. Pennsylvania was not required to return to its Attorney General
for a formal opinion in order to amplify its position in this regard.
12/ We conclude that the evidence cited in the Attorney General's
opinion and the evidence presented before the Presiding Officer relating
to 1981 is sufficient to make Pennsylvania's application of the "general
purposes" requirement to PDACA a reasonable one. (We discussed this
evidence in detail in section 1.B. of the Analysis above.)
Moreover, even if we viewed Pennsylvania's position as limited to the
precise wording of its Attorney General's opinion, we would still
conclude that the Attorney General's consideration of evidence relating
to years both before and after 1981 (as well as to 1981) did not render
his opinion clearly erroneous. While evidence of programs performed in
1981 would obviously be the most probative evidence for the requirement
at issue, evidence of programs performed before and after 1981 would
clearly demonstrate the organization's consistency of purpose over a
number of years and thus could be used to buttress evidence directly
relating to 1981. Likewise, while bylaws for 1981 might be the most
probative evidence of corporate purpose for 1981, bylaws of a later year
could still be of some value, either to show a consistency of purpose
over a number of years (or a likelihood of purpose in 1981, if the
bylaws in effect for 1981 were not available.) 13/
B. Attorney General's reliance on original version of Economic
Opportunity Act (Part B of Section IV).
The Presiding Officer also concluded that the opinion of the Attorney
General was clearly erroneous because it had relied on a definition of a
community action program in section 202(a) of title II of the Economic
Opportunity Act of 1964, Pub. L. No. 88-452 (1964), to define the
general purposes of a community action agency. According to the
Presiding Officer, the Attorney General should have relied on the
amended version of that Act just prior to its repeal in 1981.
Specifically, the amended version would have included the Green
Amendments of 1967 (Pub. L. No. 90-222) with a revised congressional
statement of purpose. Although the Presiding Officer concluded that the
definition in the original version relied upon in the Attorney General's
opinion "is admittedly somewhat similar" to the statement of purpose
in
the amended version, the Presiding Officer stated that the amended
version contained "a more stringent, specific, and elaborate statement"
of the general purposes of a community action agency. Decision at 23;
CR at 25.
Even if we concluded that Pennsylvania's position on PDACA's eligibility
status must be strictly limited to the wording of its Attorney General's
opinion (which we do not, as we previously explained), we would not
conclude that the opinion was "clearly erroneous" because of its
reliance on the definition of a community action program in the original
version of the Economic Opportunity Act. While we agree with the
Presiding Officer that it would have been preferable for the opinion to
have relied upon the congressional statement of purpose in the revised
version of the Act instead of the definition of a community action
program in the original version, we simply disagree that the two
versions are so radically different that reliance on the earlier version
would cause the opinion to be "clearly erroneous". In our view, the
two
versions are sufficiently similar in setting out the purpose of
community action agencies and programs, that reliance on the original
version would still cause a state to focus on the proper "general
purposes" of a community action agency in applying the eligibility
requirement at issue. 14/ In any event, the Presiding Officer did not
identify any aspect of the Attorney General's application of the
original statutory definition (as opposed to the revised version) that
would have caused the opinion to be clearly erroneous.
More importantly, Pennsylvania was entitled to amplify and clarify its
position concerning its interpretation of the eligibility requirement at
issue and was by no means wedded to the reference to the original
version of the Economic Opportunity Act in the Attorney General's
opinion. Pennsylvania cited the 1967 version in its brief before the
Presiding Officer and provided extensive argument as to why PDACA served
the purposes identified in that version of the congressional statement
of purpose in 1981. CR at 791-802. PDACA's briefs before the Presiding
Officer contained even more detailed arguments. These same issues were
also extensively addressed during the hearing proceedings themselves.
3. The Presiding Officer erred in concluding that Pennsylvania's
opinion was clearly erroneous based on his independent finding that
PDACA did not serve one of the specific purposes cited in the
congressional statement of purpose. (Section V of the Presiding
Officer's Decision)
After concluding that Pennsylvania's opinion was "clearly erroneous"
because of its reliance on inappropriate factual and legal bases, the
Presiding Officer then found it was unnecessary for him to consider
"remanding the case" to the Pennsylvania Attorney General because
he
independently concluded that PDACA did not serve the general purposes of
a community action agency in 1981. In making his independent finding
concerning PDACA, the Presiding Officer did not adopt ACF's
interpretation of the "general purposes" requirement in entirety.
In
fact, he adopted only one element and rejected four others, which are
now the subject of ACF's cross-appeal of the Presiding Officer's
decision (and which are discussed below). The sole element of ACF's
interpretation relied upon by the Presiding Officer is the "maximum
feasible participation" requirement found in section 201(a)(4) of the
congressional statement of purpose of the Equal Opportunity Act. That
section provides that one of the purposes of community action agencies
is to promote:
the development and implementation of all programs and projects
designed to serve the poor or low-income areas with the maximum
feasible participation of residents of the areas and members of the
groups served, as to best stimulate and take full advantage of
capabilities for self-advancement and assure that those programs
and projects are otherwise meaningful to and widely utilized by
their intended beneficiaries. . . .
42 U.S.C. 2781(a)(4) (1967); 201(a)(4) of the Economic Opportunity
Act (1967).
After weighing the affirmative evidence on this specific purpose
presented by Pennsylvania (and PDACA), the Presiding Officer concluded
that "[w]hile PDACA may have had some input from poor persons [in the
planning, conduct, and evaluation of its programs], it fell far short of
the statutory requirement of maximum feasible participation." Decision
at 27; CR at 29
We conclude that the Presiding Officer erred in reaching this conclusion
for several reasons:
o In concluding that Pennsylvania failed to present sufficient evidence
to demonstrate that PDACA in fact served a particular purpose of a
community action agency in 1981, the Presiding Officer improperly
shifted the burden of proof in these proceedings. ACF and Pennsylvania
agreed before the Presiding Officer that ACF bears the burden of
demonstrating that Pennsylvania's opinion was clearly erroneous. (This
agreement is consistent with the basic premise of the block grant
program that the Department must defer to a state's assurance or funding
decision unless clearly erroneous.) Pennsylvania had concluded in a
formal opinion from its Attorney General (supplemented by extensive
additional evidence and argument presented by Pennsylvania and PDACA in
proceedings before the Presiding Officer) that PDACA met the "general
purposes" requirement. Thus, the Presiding Officer's role here was to
defer to Pennsylvania's decision unless ACF demonstrated it to be
clearly erroneous. Pennsylvania did not have the burden (which the
Presiding Officer erroneously placed on it) to substantiate and justify
each and every aspect of its decision on the "general purposes"
requirement.
Moreover, after improperly shifting the burden from ACF to Pennsylvania
(and PDACA), the Presiding Officer then improperly substituted his
judgment for Pennsylvania's on PDACA's eligibility. In so doing, he
incorrectly interpreted the "general purposes" requirement and
incorrectly applied the requirement to the evidence of record.
o Pennsylvania here could reasonably rely on the entire congressional
statement of purpose for title II of the Economic Opportunity Act (as
revised in 1967) in determining the "general purposes" of a community
action agency. That statement identifies the "basic purpose" of
community action agencies and programs and five "specific" purposes.
The Presiding Officer, however, considered the evidence relating to only
one of the specific purposes identified by the statement and concluded
that PDACA did not serve the "general purposes" of a community action
agency. The Presiding Officer's focus on just one purpose to the
exclusion of all others identified in the congressional statement was
incorrect. In relying on the 1967 congressional statement, Pennsylvania
could reasonably evaluate whether a limited purpose agency "served the
general purposes of a community action agency" in terms of all of the
purposes identified in the congressional statement (and particularly,
the basic purpose identified), and not merely in terms of only one of
five "specific" purposes identified. As we discussed in section 1.B.
above, Pennsylvania and PDACA presented considerable evidence to
demonstrate that PDACA served the full array of "general purposes"
identified by the 1967 congressional statement of purpose. The
Presiding Officer was unreasonable in resolving PDACA's eligibility
after considering its performance under only one "specific" purpose.
o Moreover, in applying to PDACA the single specific purpose identified
in section 201(a)(4) of the congressional statement, the Presiding
Officer adopted a narrow interpretation of that purpose to the exclusion
of other more reasonable interpretations Pennsylvania could have
adopted. This "specific" purpose requires community action agencies
and
programs to "promote" the development and implementation of programs
and
projects designed to serve the poor or low- income areas "with the
maximum feasible participation of residents of the areas." The
Presiding Officer assumed that PDACA could only have served that purpose
through the direct input of poor persons in the planning and development
of PDACA's own programs. While we conclude in the paragraph below that
PDACA did in fact have input of the poor in the planning and development
of its own programs, the evidence demonstrates that PDACA also served
this purpose through its advocacy with state and local officials. PDACA
specifically received a grant from the Community Services Administration
in 1981 under which it conducted a public awareness and education
effort, developing sensitivity toward the needs of the poor and the
desirability of including them in the development of public policy. We
see no reason why this type of activity could not properly have been
considered by Pennsylvania in determining whether PDACA met this
specific purpose of a community action agency.
o Even applying the Presiding Officer's interpretation of this specific
purpose of a community action agency, we would still find that the
Presiding Officer gave insufficient weight to unrebutted evidence from
PDACA's former President of the Board relating to the input on the
planning and implementation of PDACA's program from poor or low-income
citizens through PDACA's advisory council and from other sources. This
evidence clearly establishes that PDACA had direct input of the poor in
the planning and implementation of its programs. See, e.g., Tr. at
342-348. Moreover, the record shows that, at least with respect to some
projects, PDACA worked in concert with community action agencies. Since
the community action agencies would have had maximum feasible
participation in determining needs, PDACA projects supplementing
community action agency resources to meet those identified needs in
effect were developed with community participation, even if it was
provided indirectly through the community action agencies rather than
directly through input to PDACA.
o Finally, as we have reiterated throughout this recommended decision,
PDACA as a limited purpose agency was not required by at least the plain
wording of the requirement at issue to serve this or any other general
purpose in precisely the same way (or to precisely the same extent) that
a community action agency would have. As long as Pennsylvania state
could reasonably conclude that the limited purpose agency "served"
this
"purpose" of the "general purposes" of a community action
agency,
Pennsylvania's decision was entitled to deference.
4. The Presiding Officer correctly concluded that ACF had not
established four other elements of its interpretation as binding on
Pennsylvania. (Section VI of the Presiding Officer's Decision)
ACF cross-appealed the Presiding Officer's decision on four elements of
its interpretation of the "general purposes" requirement. Specifically,
the Presiding Officer concluded that ACF did not establish as
requirements for eligibility that: 1) PDACA had to serve a specific and
limited geographic area not served by a community action agency; 2)
PDACA had to conduct a comprehensive needs assessment and provide direct
services to the poor; 3) PDACA had to receive local initiative funding;
and 4) PDACA was not permitted to be an association of community action
directors. The Presiding Officer concluded that these four elements had
not been substantiated by ACF because ACF relied chiefly on regulatory
provisions applicable to eligibility requirements for community action
agencies and "also on the testimony of various federal officials who
related anecdotal experiences with other limited purpose agencies
serving the general purposes of a [community action agency]." Decision
at 27; CR at 29. ACF here cross-appealed these findings arguing
generally that each element of its interpretation was fully
substantiated.
We agree with the Presiding Officer's findings on these four elements of
ACF's interpretation to the extent that he meant that these (or any
other) elements should not be considered to be binding on Pennsylvania.
ACF's interpretation may have been a reasonable interpretation of the
"general purposes" requirement, relying as it did on provisions of
the
former Economic Opportunity Act as well as implementing regulations that
specified the characteristics and qualifications of community action
agencies. ACF failed to establish, however, that its interpretation was
the only plausible interpretation of the requirement or that it was
otherwise "binding" on Pennsylvania.
Perhaps the major criticism of ACF's interpretation is that ACF would
require a limited purpose agency to meet all of the requirements in the
former statute and regulations that had to be met by a community action
agency save for the requirement that it receive "designation." The
"general purposes" requirement at issue, however, does not require
a
limited purpose agency literally to be a community action agency in
every way save for the "designation" requirement. It merely requires
the
agency to meet the requirements of a limited purpose agency (which PDACA
concededly does) and to "serve the general purposes of a community
action agency." While it is conceivable that a reasonable interpretation
might be that only an organization that met all critical qualifications
of a community action agency save for "designation" could "serve
the
general purposes" of a community action agency, clearly other less
restrictive interpretations would also be reasonable, including the
interpretation reached here by Pennsylvania. We also agree with the
specific reasons cited by the Presiding Officer in his analysis in
rejecting each of these elements of ACF's interpretation.
ACF of course is free to make any reasonable interpretation of the
"general purposes" requirement adopted by it binding on all of the
states including Pennsylvania in the future by issuing regulations on
the requirement. Such regulations, of course, would also have to take
into account ACF's general policy (required by the statute) of not
prescribing the manner in which states will comply with the statutory
requirements and of relying on the states to interpret requirements and
deferring to any reasonable state interpretation. 15/
Conclusion
On the basis of the foregoing analysis, we conclude that the Presiding
Officer erred in not deferring to Pennsylvania's reasonable position on
PDACA's eligibility for "set aside" funding under the CSBG program.
Accordingly, we recommend that the Presiding Officer's decision that
PDACA is not eligible for "set aside" funding be reversed.
___________________________ Judith A.
Ballard
_____________________________ Cecilia
Sparks Ford
_____________________________ Donald F.
Garrett Presiding Board Member
1. The CSBG program is administered by the Office of Community
Services (OCS), which is part of ACF.
2. Pennsylvania, however, decided not to appeal the Presiding
Officer's decision and the Board Chair initially concluded that the
Board lacked jurisdiction to hear PDACA's appeal. PDACA appealed the
Board Chair's Ruling in the United States District Court in the Middle
District of Pennsylvania, and the Court subsequently ruled that PDACA
should be permitted to proceed with its appeal from the Presiding
Officer's decision. The Board then reinstated PDACA's appeal and ACF's
cross-appeal. We discuss the lengthy procedural history of this appeal
in greater detail in a later section of this decision.
3. Page references to the record below are to the certified record
which was submitted to the United States District Court when PDACA filed
its judicial appeal, which we discuss in the procedural history below.
4. While neither the Economic Opportunity Act of 1964 or its
implementing regulations specifically defines a "limited purpose
agency," section 221(b) of the Economic Opportunity Act of 1964 provided
that if the Director of the Community Services Administration determined
that a limited purpose project or program involving activities otherwise
fundable under section 221 is needed to serve the needs of the poor in a
community and no community action agency has been designated for that
community or where a designated community action agency gives its
approval for such a program to be funded directly through a private or
public nonprofit organization, the Director may provide funding to such
a nonprofit organization for that program. Consequently, the
organization receiving funding was called a limited purpose agency
because it received funding to carry out a specific but limited project
or program.
5. The letter further explained that the 1981 amendments,
particularly the requirement to use "set aside" funding for grants
to
organizations which qualify under the expanded definition of eligible
entity, are applicable to fiscal year 1982 block grant funds only. The
letter stated that after fiscal year 1982 a state may distribute its
"set aside" funds to any political subdivision of the state, non-profit
private community organization, or seasonal farm worker organization.
However, two subsequent continuing resolutions passed by Congress and
applicable to the states' allotments for FYs 1983 and 1984 apparently
extended the grandfather provision requiring states to use set aside
funds for grants to "eligible entities" as defined in the 1981
amendments for those fiscal years. ACF Exs. 46 and 38; CR at 1675 and
1608.
6. The 1984 amendments further provided that a governor may decide
to serve any area not presently served by an eligible entity, and, where
no existing eligible entity requested to serve the new area decides to
do so, the governor may designate any organization which has a
tripartite board of directors meeting the requirements of section
675(c)(3). Section 673(1) of the CSBG Act (1985). The governor's
designation of any organization which has a tripartite board qualifies
such organization as an eligible entity under the Act.
7. This policy was later formally adopted as part of the
Department's Grants Administration Manual (GAM) at chapter 3- 01, dated
October 1, 1983. PDACA Ex. 2, CR at 2351.
8. The Attorney General's opinion relied specifically on a
definition of a community action program in section 202(a) of title II
of the Economic Opportunity Act of 1964, Pub. L. No. 88-452 (1964).
Pennsylvania clarified that it relied on the "Congressional statement of
purpose" in the 1967 amended version of the CSBG Act. CR at 791-802.
We discuss issues surrounding this clarification of position at length
in section 2.B. below.
9. Pennsylvania (and PDACA) also relied on the regulations
interpreting and implementing the statement. CR at 791 citing 45 C.F.R.
1063.130-3; CR at 762 citing 45 C.F.R. 1063.130-3(b).
10. ACF also argued that it used "perform the function" language
to
describe the "general purposes" requirement in its February 18, 1982
letter to the states (discussed in our background section). However,
that letter did not indicate to the states that the language used by ACF
constituted a restrictive policy interpretation of the "general
purposes" requirement. Moreover, under a policy statement applicable to
the CSBG program (discussed in the background section), the Department
indicated that it did not contemplate making policy affecting the states
except by regulation. Likewise, ACF cannot simply rely on the
restrictive interpretation various federal officials might have read
into the requirement over the years (as suggested by the hearing
testimony) if that interpretation was never made binding on the states
through a regulation. We also note in this regard, that when ACF
described the "general purposes" requirement in a 1987 preamble to
regulations (see our background section above), it described the
requirement by using the plain statutory wording of "served the general
purposes of a community action agency."
11. PDACA and Pennsylvania also alleged that PDACA sponsored a
domestic violence program to provide training and organize groups in
setting up women's shelters and to advocate for state funding or ongoing
resources to support expansion of women's shelters across Pennsylvania.
The Presiding Officer found that this project had been carried out by
PDACA in 1981. However, since ACF disputed that the program took place
in 1981, and the record does not conclusively establish that it was, we
have not relied on it. ACF Supplemental Brief at 7 and CR at 408, 598,
and 877.
12. Even if the Presiding Officer had been correct in concluding
that only the Attorney General could speak for Pennsylvania, then the
proper remedy would have been to stay the proceedings long enough to
allow the Attorney General to consider whether these factual
clarifications would change the result of his opinion. The Presiding
Officer's finding of "clearly erroneous" in Part IV of his decision
based on deficiencies in the Attorney General's opinion which could have
been rectified by the Attorney General if he had been allowed to do so
was at the very least premature.
13. Pennsylvania argued before the Presiding Officer, and PDACA here
argued, that the passage of 13 years made it difficult to present
extensive evidence concerning PDACA's activities and corporate structure
in 1981. They argued, further, that the burden should not be placed on
them to demonstrate precisely which general purposes were served by
PDACA back in 1981, but rather on ACF to demonstrate through affirmative
evidence that Pennsylvania had been "clearly erroneous" in its annual
assurances. Even though we agree that the burden did rest with ACF, as
we discuss in section 4 below, we nevertheless conclude that the record
contains sufficient evidence from Pennsylvania and PDACA to substantiate
under at least a reasonable application of the requirement in question
that PDACA did serve the general purposes of a community action agency
in 1981.
14. We quoted the 1967 congressional statement of purpose in section
1.A. above. The definition of a community action program in the
original 1964 version of the Economic Opportunity Act parallels the 1967
statement by defining a community action program as:
o mobilizing and utilizing the widest array of resources of the
community (which can include a state, metropolitan area, county or
multi-county unit) in an attack on poverty;
o providing services, assistance and other activities toward
eliminating poverty through improving employment opportunities and
bettering the conditions under which people live and work;
o developing, conducting and administering programs with the maximum
feasible participation of residents of the areas and members of the
groups served;
o being conducted, administered or coordinated by a public or
private nonprofit agency.
15. ACF also challenged the Presiding Officer's ruling to allow
PDACA to intervene as a party in the proceedings before the Presiding
Officer. We conclude that it was within his discretion under the
regulatory authority he cited to allow PDACA's intervention in the first
place. Moreover, to the extent that ACF also here raises an objection
to PDACA's right to receive administrative review of the Presiding
Officer's decision, the Department is bound by the Memorandum and Order
of the U.S. District Court to provide PDACA an administrative review of
the Presiding Officer's