Source: https://www.legalcrystal.com/case/105466/bell-vs-new-jersey
Timestamp: 2018-02-22 05:35:17
Document Index: 282574010

Matched Legal Cases: ['§ 195', '§ 455', '§ 207', '§ 115', '§ 415', '§ 207', '§ 185', '§ 185', '§ 2701', '§ 102', '§ 2702', '§ 182', '§ 2832', '§ 195', '§ 2851', '§ 455', '§ 1234', '§ 195', '§ 704', '§ 3942', '§ 455', '§ 455', '§ 452', '§ 1234', '§ 452', '§ 1234', '§ 142', '§ 241', '§ 1221', '§ 207', '§ 106', '§ 884', '§ 415', '§ 415', '§ 185', '§ 185', '§ 185', '§ 1', '§ 701', '§ 195', '§ 2851', '§ 455', '§ 1234', '§ 455', '§ 1234', '§ 706', '§ 195', '§ 701', '§ 701', '§ 1331', '§ 23', '§ 103', '§ 451', '§ 1234', '§ 452', '§ 1234', '§ 400', '§ 1221', '§ 200', '§ 207', '§ 415', '§ 1226']

Bell Vs New Jersey - Citation 105466 - Court Judgment | LegalCrystal
Bell Vs. New Jersey - Court Judgment
LegalCrystal Citation legalcrystal.com/105466
Case Number 461 U.S. 773
bell v. new jersey - 461 u.s. 773 (1983) u.s. supreme court bell v. new jersey, 461 u.s. 773 (1983) bell v. new jersey no. 81-2125 argued april 18, 1983 decided may 31, 1983 461 u.s. 773 certiorari to the united states court of appeals for the third circuit syllabus respondent states received funds as part of the federal grant-in-aid prog1am under title i of the elementary and secondary education act of 1965 (esea) a program designed to improve the educational opportunities available to disadvantaged children. subsequently, federal auditors determined that each state had misapplied the funds. the education appeal board (board), while modifying the auditors' findings, assessed deficiencies against both states. the.....
Bell v. New Jersey - 461 U.S. 773 (1983)
U.S. Supreme Court Bell v. New Jersey, 461 U.S. 773 (1983)
1. The Court of Appeals had jurisdiction of the cases under both § 195 of ESEA -- which permits judicial review in the courts of appeals of the Secretary's final action with respect to audits -- and § 455 of the General Education Provisions Act (GEPA) -- which permits such review of actions of the Board. In the absence of an appealable collateral order, federal courts may exercise jurisdiction only over a final order of the Department of Education. Here, the fact that the Board's order merely established the amount of the deficiencies, leaving for further "discussion" the method of repayment, did not render the orders less than "final." The agency's determination of the deficiencies represented a definitive statement of its position, determining the rights and obligations of the parties. Pp. 461 U. S. 777 -780.
2. The provisions of § 207(a)(1) of ESEA and § 115 of GEPA -- which required payments of federal grants to States under ESEA to take into account or make adjustments for any overpayments or underpayments in previous grants -- in effect during the periods in which the audits in these cases were conducted gave the Government the right to recover misused funds granted to a State under Title I of ESEA. Pp. 461 U. S. 780 -790.
(a) The plain language of the statutes recognized this right, and the legislative histoly suppolts this reading. Pp. 461 U. S. 782 -787.
(b) Even if § 415 were interpreted to cover payments made "accidently," it covers misused payments. Grants of misused funds result from the "accident" of the Secretary's reliance on assurances by the State that it will use the funds in a program that complies with Title I, when in fact the recipient misuses the funds. P. 461 U. S. 787 .
(c) To construe §§ 207(a)(1) and 415 to provide for liability does not leave meaningless § 185 of the Education Amendments of 1978, which was enacted after the audits here occurred and makes explicit the Secretary's authority to recover funds misspent by the recipient State. On the contrary, § 185 plays an important role in specifying the procedures to be followed in determining the amount of the deficiency and in collecting it. Pp. 461 U. S. 788 -790.
3. Imposition of liability fo misused funds does not intrfere with state sovereignty in violation of the Tenth Amendment. Requiring States to honor the obligations voluntarily assumed as a condition of federal funding before recognizing their ownership of the funds does not intrude on their sovereignty. If the conditions for receiving the funds are valid, the State has no sovereign right to retain the funds without complying with those conditions. Pp. 461 U. S. 790 -791.
4. The initial determination of the existence and amount of the liability for funds misused by a State is to be made administratively by the Department of Education. And the State may seek judicial review of such determination in the courts of appeals as to whether the Secretary's findings are supported by substantial evidence and reflect application of the proper legal standards. Pp. 461 U. S. 791 -792.
O'CONNOR, J., delivered the opinion for a unanimous Court. WHITE, J., filed a concurring opinion, post, p. 461 U. S. 793 .
and Secondary Education Act of 1965 (ESEA), Pub.L. 89-10, 79 Stat. 27, as amended, 20 U.S.C. § 2701 et seq. (1976 ed., Supp. V). Title I created a program designed to improve the educational opportunities available to disadvantaged children. § 102, 20 U.S.C. § 2702 (1976 ed., Supp. V). Local educational agencies obtain federal grants through state educational agencies, which in turn obtain grants from the Department of Education [ Footnote 1 ] upon providing assurances to the Secretary that the local educational agencies will spend the funds only on qualifying programs. § 182(a), 20 U.S.C. § 2832(a) (1976 ed., Supp. V). [ Footnote 2 ] In auditing New Jersey for the period September 1, 1970, through
The threshold question in this case, one that need not detain us long, is whether the court below had jurisdiction. Since federal courts are courts of limited jurisdiction, the court below could hear the case only if authorized by statute. It premised its exercise of jurisdiction alternatively on § 195 of ESEA, 20 U.S.C. § 2851 (1976 ed., Supp. V), and on § 455 of the General Education Provisions Act (GEPA), as amended, Pub.L. 95-561, 92 Stat. 2350, 20 U.S.C. § 1234d (1976 ed., Supp. V). The first provision permits judicial review in the courts of appeals of the Secretary's final action with respect to audits, and the second permits judicial review in the courts of appeals of actions of the Board. [ Footnote 3 ] Although
only § 195 explicitly requires "final" action, we think that a final order is necessary under either section. The strong presumption is that judicial review will be available only when agency action becomes final, FPC v. Metropolitan Edison Co., 304 U. S. 375 , 304 U. S. 383 -385 (1938); see generally 5 U.S.C. § 704 (1982 ed.); 16 C. Wright, A. Miller, E. Cooper, & E. Gressman, Federal Practice and Procedure § 3942 (1977), and there is nothing in § 455 to overcome that presumption. Indeed, § 455 provides judicial review of decisions made under §§ 452, 453, and 454, 20 U.S.C. §§ 1234a, 1234b, 1234c (1976 ed., Supp. V), each of which includes a subsection dealing with finality and suggesting that only a "decision" of the Board is subject to review. See §§ 452(d), 453(d), 454(d), 20 U.S.C. §§ 1234a(d), 1234b(d), 1234c(d) (1976 ed., Supp. V). Consequently, we conclude that, at least in the absence of an appealable collateral order, Mathews v. Eldridge, 424 U. S. 319 , 424 U. S. 331 , n. 11 (1976); Cohen v. Beneficial Industrial Loan Corp, 337 U. S. 541 , 337 U. S. 545 -547
The Board's order, which became the agency's decision, merely established the amount of the deficiency owed by the States to the Federal Government, leaving for further "discussion" the method of repayment. [ Footnote 4 ] See App. to Pet. for Cert. 88a, 90a. The possibility of further proceedings in the agency to determine the method of repayment does not, in our view, render the orders less than "final." The situation here corresponds to the ordinary adjudication by a trial court that a plaintiff has a right to damages. Although the judgment in favor of the plaintiff is not self-executing, and he may have to undertake further proceedings to collect the damages awarded, that possibility does not prevent appellate review of the decision, which is final. Our cases have interpreted pragmatically the requirement of administrative finality, focusing on whether judicial review at the time will disrupt the administrative process. See, e.g., 449 U. S. Standard Oil
Co., 449 U. S. 232 , 449 U. S. 239 (1980); Port of Boston Marine Terminal Assn. v. Rederiaktiebolaget Transatlantic, 400 U. S. 62 , 400 U. S. 71 (1970). Review of the agency's decision at this time will not disrupt administrative proceedings any more than review of a trial court's award of damages interferes with its processes. Indeed, full review of the judgment may expedite the collection process, since the States know their ultimate liability with certainty. The agency's determination of the deficiency here represented a definitive statement of its position, determining the rights and obligations of the parties, see Standard Oil Co., supra, at 449 U. S. 239 (explaining Abbott Laboratories v. Gardner, 387 U. S. 136 (1967)); Port of Boston, supra, at 400 U. S. 71 ; Pennsylvania R. Co. v. United States, 363 U. S. 202 , 363 U. S. 206 (1960). Therefore, the Court of Appeals properly took jurisdiction of the case, and we too have jurisdiction to address the merits.
could deny applications for funds for noncomplying programs, § 142, 20 U.S.C. § 241f. [ Footnote 5 ] Further, they contend that the 1978 Amendments operated prospectively only. [ Footnote 6 ] The Secretary
has argued both that the 1978 Amendments had retroactive effect and that the right of recovery existed in the pre-1978 version of ESEA. Since we are persuaded that the pre-1978 version contemplated that States misusing federal funds would incur a debt to the Federal Government for the amount misused, we need not address the possible retroactive effect of the 1978 Amendments. [ Footnote 7 ]
This provision, which remained substantially unchanged as part of Title I until 1970, in our view, gives the Federal Govenment a right to the amount of any funds overpaid. The plain language of the statute recognizes the right, [ Footnote 8 ] and the legislative history supports that natural reading. The Senate Report explained:
S.Rep. No. 146, 89th Cong, 1st Sess., 14 (1965). Indeed, the Committee obtained assurances from the Department that it would recapture these payments, and the debate on the floor termed those assurances "an essential condition for enacting the proposed legislation." 111 Cong.Rec. 7690 (1965). [ Footnote 9 ]
In 1970, Congress enacted GEPA, Pub.L. 91-230, 84 Stat. 164, the main function of which was to bring the general provisions of prior law together into a single title. See H.R.Conf.Rep. No. 91-937, p. 97 (1970). Its provisions apply to programs under Title I, 20 U.S.C. § 1221(b), and it was in force for some of the years at issue here. Section 415 of GEPA is substantially the same as the original § 207(a)(1) of Title I, [ Footnote 10 ] and its language likewise creates a right to impose liability on the States. In enacting GEPA, Congress again made clear its intention that States return misused funds. The Senate Committee explained:
S.Rep. No. 91-634, p. 84 (1970). [ Footnote 11 ]
See, e.g., Bowsher v. Merck & Co., 460 U. S. 824 , 460 U. S. 837 -838, n. 12 (1983). The discussion of the 1978 Amendments to ESEA reveals that Congress thought that recipients were already liable for any funds they misused. Representative Corrada explained:
124 Cong.Rec. 20612 (1978) (emphasis added). Later, in 1981, Senator DeConcini introduced an amendment that would have prevented collection of any debts arising from misuse of Title I funds before 1978. 127 Cong.Rec. 10643 (1981). The chair ultimately ruled the amendment out of order, id. at 10646, 10658, but the discussion preceding the ruling clearly reflects the view of the participants that States were liable for misused funds. As Senator Stennis observed: "It has to be paid back." Id. at 10644; see ibid. (remarks of Sen. DeConcini). Not only have Members of Congress stated their views, but Congress has acted on those views. [ Footnote 12 ] In 1974, it enacted a provision
limiting the liability of state and local educational agencies for refunds to those payments received by them within five years before the final written notice of liability. Pub.L. 93-380, § 106, 88 Stat. 512, 20 U.S.C. § 884. [ Footnote 13 ] Pennsylvania has argued that this provision has general applicability, and that Congress drafted it to cover other programs, which explicitly impose liability on recipients for misused funds. Brief for Respondent Pennsylvania 32. While the provision, by its terms, does apply to a number of programs administered by the Secretary, the State's argument fails, for both the statutory provision and the legislative history specifically refer to grants under Title I of ESEA, and the legislative history identifies the recent audits under Title I as the source of the Committee's concern. See H.R.Rep. No. 93-805, pp. 79, 156 (1974).
and received May 25, 1978), 05-90178 (refund requested September 3, 1971, for period September 1, 1966-August 31, 1967, and received by October 26, 1971), 04-10001 (refund requested January 29, 1973, for period July 1, 1965-June 30, 1969, and received by April 27, 1973); H.R.Rep. No. 93-805, supra, at 79 (discussing recent audits); Washington Research Project of the Southern Center for Studies in Public Policy & NAACP Legal Defense and Educational Fund, Inc., Title I of ESEA: Is it Helping Poor Children? 52 (rev.2d ed.1969). Indeed, in the discussion of Senator DeConcini's proposed amendment, Senator Schmitt cited some 44 instances of repayments by recipients of misused Title I funds. 127 Cong.Rec. 10644-10645 (1981). Finally, it is worth noting that commentators on the pre-1978 version of ESEA assumed without discussion that the Department possessed the power to request refunds, although they frequently castigated the Department for its failure to exercise that power more often. [ Footnote 14 ]
Arguing against this consistent understanding of the pre-1978 ESEA, the States attempt to explain § 415 as a provision covering payments made "accidentally." Tr. of Oral Arg. 36. Even accepting that interpretation, we remain convinced that the provision covers payments misused as the Board determined these to have been. Grants of misused funds result from the "accident" of the Secretary's reliance on assurances by the State that the recipient will use the funds in a program that complies with Title I, when in fact the recipient misuses the funds. [ Footnote 15 ]
A more substantial argument against our interpretation of § 415 is suggested by the opinion of the Court of Appeals. [ Footnote 16 ] The 1978 Amendments make it crystal clear that, at least for any period governed by the Amendments, the recipient will be liable for misused funds. The Amendments included § 185(b), which provides:
statute in a fashion that leaves some provisions superfluous, but we cannot agree that our construction presents that problem. Section 185 and the accompanying provisions of the 1978 Amendments were, in the words of the Senate Report designed to " clarif[y] HEW's legal authority and responsibility to audit applicant programs" and to "specif[y] certain minimum standards concerning the resolution of outstanding audits." S.Rep. No. 95-856, p. 137 (1978) (emphasis added); see H.R.Rep. No. 95-1137, p. 53 (describing the Amendments as requiring that the Secretary "regularize" the process). As the House Report explained:
Id. at 142. Section 185 itself requires the Secretary to set timetables for each step of the audit resolution process, and it requires an appeals process. Further, the provision requires that the Secretary demand repayment once liability is established, rather than leaving the method of collection entirely to his discretion from the beginning. And it limits the Secretary's discretion with regard to installment payments, imposing a maximum period of three years. Construing the pre-1978 ESEA to provide for liability, then, does not leave § 185 meaningless. On the contrary, § 185 plays an important role in specifying the procedures to be followed in the determination of the amount of the debt and in the collection of the debt. Thus, the enactment of the 1978 Amendments does not undermine our construction. Indeed, the legislative history of the 1978 Amendments strongly supports viewing the pre-1978 ESEA as we do. As we have discussed, supra at 461 U. S. 785 , the debates in the House proceeded on the assumption that the liability existed. The House Report also identified as one of the problems with existing law the failure of the agency in many cases to seek restitution and to recover the funds misused. H.R.Rep. No. 95-1137, supra, at 50. In sum, not only does our conclusion give meaning to the efforts
of the 95th Congress, it also gives meaning to their understanding of the law that they were amending. Accordingly, we adhere to our view that the pre-1978 version of ESEA reuires that recipients be held liable for funds that they misuse. [ Footnote 17 ]
We cannot agree. Requiring States to honor the obligations voluntarily assumed as a condition of federal funding before recognizing their ownership of funds simply does not intrude on their sovereignty. The State chose to participate in the Title I program and, as a condition of receiving the grant, freely gave its assurances that it would abide by the conditions of Title I. See generally Pennhurst State School and Hospital v. Halderman, 451 U. S. 1 , 451 U. S. 17 (1981); Quern v.
Mandley, 436 U. S. 725 , 436 U. S. 734 (1978); Rosado v. Wyman, 397 U. S. 397 , 397 U. S. 408 (1970); Oklahoma v. CSC, 330 U. S. 127 , 330 U. S. 143 -144 (1947); 1 R. Cappalli, Federal Grants and Cooperative Agreements § 1:09 (1982). As we must assume at this stage of the litigation, the State failed to fulfill those assurances, and it therefore became liable for the funds misused, as the grant specified. New Jersey has not challenged the program itself as intruding unduly on its sovereignty, see Brief for Respondent New Jersey 19-20, but challenges only the requirement that it account for funds that it accepted under admittedly valid conditions with which it failed to comply. If the conditions were valid, the State had no sovereign right to retain funds without complying with those conditions.
and, once that body rendered its decision, the Department invited the States to submit comments before the Board's decision became the final decision of the Secretary, App. to Pet. for Cert. 57a, 86a-87a. Also, the agency's decision is subject to judicial review. The 1978 Amendments explicitly provide for review in the courts of appeals. Even without an explicit provision for judicial review, review was also available under the pre-1978 version of ESA, for, in the absence of strong indications that a statute commits a decision irrevocably to agency discretion, 5 U.S.C. §§ 701(a), 702, 704 (1982 ed.); Abbott Laboratories v. Gardner, 387 U. S. 136 (1967), the propriety of the agency's action presents a federal question cognizable in the district courts, see n 3, supra. Review of the Education Appeal Board lies in the courts of appeals, ESEA § 195, 20 U.S.C. § 2851 (1976 ed., Supp.V); GEPA § 455, 20 U.S.C. § 1234d (1976 ed., Supp. V), so, in cases like the present ones, which began before the Title I Audit Board and which were transferred to the Education Appeal Board, judicial review is available in the courts of appeals. See Hallowell v. Commons, 239 U. S. 506 , 239 U. S. 508 (1916) (change of forum can be applied retroactively); n 3, supra. Thus, the States have an opportunity to litigate in the courts of appeals whether the findings of the Secretary are supported by substantial evidence and reflect application of the proper legal standards. § 455(c), 20 U.S.C. § 1234d(c) (1976 ed., Supp. V); 5 U.S.C. § 706 (1982 ed.).
Both provisions were originally enacted as part of the Education Amendments of 1978 (1978 Amendments), Pub.L. 95 561, §§ 195, 1232, 92 Stat. 2196-2197, 2350. We agree with the Court of Appeals that those provisions apply retroactively, though we pretermit the question whether the substantive provisions of the 1978 Amendments also apply retroactively, see infra at 461 U. S. 782 . Under the pre-1978 version of ESEA, there was no explicit provision for judicial review of decisions of the Title I Audit Hearing Board. The presumption that review is available, see 5 U.S.C. §§ 701(a), 702, 704 (1982 ed.); Abbott Laboratories v. Gardner, 387 U. S. 136 , 387 U. S. 140 (1967), coupled with the absence of any indication in the statute that the decision is committed wholly to the discretion of the agency or that review is otherwise precluded, see 5 U.S.C. § 701(a) (1982 ed.), leads to the conclusion that the district courts would have had jurisdiction under the general grant of jurisdiction over cases involving federal questions, 28 U.S.C. § 1331 (1976 ed., Supp. V). See generally 4 K. Davis, Administrative Law § 23:5, p. 135 (2d ed.1983); C. Wright, Law of Federal Courts § 103 (3d ed.1976). Once the Department transferred the cases of the Title I Audit Hearing Board to the Education Appeal Board, 44 Fed.Reg. 30528, 43807 (1979); see § 451, 20 U.S.C. § 1234(f) (1976 ed., Supp. V) (authorizing transfer), the effect of the 1978 Amendments was merely to change the forum for review. As Justice Holmes explained for the Court in Hallowell v. Commons, 239 U. S. 506 , 239 U. S. 508 (1916), a change of forum "takes away no substantive right," and thus can apply retroactively.
In any event, even if we misapprehend Pennsylvania's argument and it seeks full retroactivity of ECIA, our result would not differ, for the remedies of the ECIA clearly include a repayment remedy. Se e § 452(e), as added by Pub.L. 95-561, 92 Stat. 2348, 20 U.S.C. § 1234a(e) (1976 ed., Supp.V), made applicable to ECIA by § 400(b), 20 U.S.C. § 1221(b); see also 47 Fed.Reg. 52348 (1982) (to be codified in 34 CFR § 200.57(a)(2)) (requiring repayment of funds misused under ECIA). We decide here only whether the States can be held liable for the misuse of funds, and we leave for the Court of Appeals on remand the question whether the substantive standards of the ECIA or the 1978 Amendments can apply to grants approved and paid under the pre-1978 ESEA.
The States have also argued that Pennhurst State School and Hospital v. Halderman, 451 U. S. 1 (1981), requires a different view of the effect of the pre-1978 version of the statute. Pennhurst required that Congress act "unambiguously" when it intends to impose a condition on the grant of federal money. Id. at 451 U. S. 17 . The States argue that Congress did not speak unambiguously before 1978 in imposing liability, and it therefore was not effective in imposing liability. We disagree. As our discussion shows, we think that the plain language of the statute is sufficiently clear, and ESEA meets Pennhurst's requirement of legislative clarity. Moreover, Pennhurst arose in the context of imposing an unexpected condition for compliance -- a new obligation for participating States -- while here our concern is with the remedies available against a noncomplying State.
The Court holds that the "plain language" of § 207(a)(1) of the Elementary and Secondary Education Act of 1965, Pub.L. 89-10, 79 Stat. 32, and its successor provision, § 415 of the General Education Provisions Act, 20 U.S.C. § 1226a-1 (1976 ed., Supp. V), expressly grants the Secretary of Education (1) the right to require States to repay misspent Title I funds, and (2) the right to make an administrative adjudication of the question whether funds have, in fact, been misspent, with the result that such adjudication is subject to judicial review only on a limited, "substantial evidence" basis. Ante at 461 U. S. 782 -792. The Secretary will no doubt be pleased with today's holding, but I note that he must have thought the authorizing language of this provision was not so "plain," since his lawyers deemed it worthy of no more than passing mention in his brief. See Brief for Petitioner 7, 20.
Bradley v. Richmond School Board, 416 U. S. 696 , 416 U. S. 711 (1974). Accord, Gulf Offshore Co. v. Mobil Oil Corp., 453 U. S. 473 , 453 U. S. 486 , n. 16 (1981). Here, nothing in the 1978 Amendments or the legislative history suggests that the Amendments were not intended to be applied retroactively,
and their application to this case would not result in manifest injustice. The States entered into contractual-type agreements with the United States to disburse the moneys in accordance with specified conditions. The States had no legitimate claim to a right to be able to breach these agreements with impunity. In the absence of any contrary congressional intent, agreements such as these are surely enforceable in a court of law. Therefore, at most, the 1978 Amendments merely changed the appropriate forum for litigating the Federal Government's claims that the agreements had been breached from a court of competent jurisdiction to an administrative tribunal. Because there is no manifest injustice in a simple change of forum, see ante at 461 U. S. 777 -778, n. 3; Hallowell v. Commons, 239 U. S. 506 , 239 U. S. 508 (1916), there is no bar to the retroactive application of the 1978 Amendments, and this case more preferably should have been decided on this basis.