Source: https://www.justice.gov/jm/civil-resource-manual-83-grants-breach-conditions
Timestamp: 2019-04-21 22:42:15+00:00

Document:
An increasingly large portion of federal disbursements are made through grants rather than contractual arrangements. The distinctions between grants, contracts, and hybrids generally known as cooperative agreements are not always clear. The Federal Grant and Cooperative Agreement Act of 1977, 41 U.S.C. § 501 et seq., addresses distinctions between funding arrangements.
The United States is entitled to recover for breaches of grant conditions much as it would recover for breaches of contractual provisions. Grant-in-aid arrangements are much like contracts. See Pennhurst State School & Hospital v. Halderman, 451 U.S. 1 (1981). Some statutory schemes explicitly provide for recoveries of grant overpayments, and some further provide for administrative determinations of grant overpayments that are reviewable only on a substantial evidence basis. See Bell v. New Jersey, 461 U.S. 773 (1983). Even in the absence of such statutory schemes, a right to recover damages or restitutionary awards exists as a matter of common law, on the theory that the government possesses a right to recover funds illegally or erroneously paid out. See United States v. Wurts, supra; United States v. Bank of Metropolis, 40 U.S. 377, 401 (1841).
Government funds from a federal grant cannot be attached or made subject to garnishment action, until they have paid for the purposes for which they were appropriated. Buchanan v. Alexander, 45 U.S. (4 How.) 20 (1846); Palmiter v. Action, Inc., 733 F.2d 1244 (7th Cir. 1984).

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