Document: 461 U.S. 773 103 S.Ct. 2187 76 L.Ed.2d 312 Terrel H. BELL, Secretary of Education, Petitionerv.NEW JERSEY AND PENNSYLVANIA. No. 81-2125. Argued April 18, 1983. Decided May 31, Syllabus Respondent States received funds as part the federal grant-in-aid program under Title I Elementary and Secondary Education Act 1965 (ESEA), a designed to improve educational opportunities available disadvantaged children. Subsequently, auditors determined that each State had misapplied funds. The Appeal Board (Board) while modifying auditors' findings, assessed deficiencies against both States. (Secretary) declined review orders establishing deficiencies, and, after period for comment, became final. Both filed petitions in Court Appeals, which consolidated cases held Department did not have authority issue orders. Held: 1. Appeals jurisdiction § 195 ESEA—which permits judicial courts appeals Secretary's final action with respect audits—and 455 General Provisions (GEPA)—which such actions Board. In absence an appealable collateral order, may exercise only over order Education. Here, fact Board's merely established amount leaving further "discussion" method repayment, render less than "final." agency's determination represented definitive statement its position, determining rights obligations parties. Pp. 777-780. 2. provisions 207(a)(1) ESEA 415 GEPA required payments grants take into account or make adjustments any overpayments underpayments previous grants—in effect during periods audits these were conducted gave Government right recover misused granted ESEA. 780-790. (a) plain language statutes recognized this right, legislative history supports reading. 782-787. (b) Even if interpreted cover made "accidently," it covers payments. Grants result from "accident" reliance on assurances by will use complies I, when recipient misuses P.787. (c) To construe §§ provide liability does leave meaningless 185 Amendments 1978, was enacted here occurred makes explicit misspent State. On contrary, plays important role specifying procedures be followed deficiency collecting it. 788-790. 3. Imposition interfere state sovereignty violation Tenth Amendment. Requiring honor voluntarily assumed condition funding before recognizing their ownership intrude sovereignty. If conditions receiving are valid, has no sovereign retain without complying those conditions. Pp.790-791 4. initial existence administratively And seek whether findings supported substantial evidence reflect application proper legal standards. 791-792. 662 F.2d 208 (3 Cir., 1981), reversed remanded. Kenneth S. Geller, Washington, D.C., petitioner. Margaret Hunting, Harrisburg, Pa., respondent Com. Pennsylvania. Michael R. Cole, Trenton, N.J., N.J. Justice O'CONNOR delivered opinion Court. 1 case we consider Federal advanced manner assert rights. We hold funds, determine debt, determination. 2 * respondents, New Jersey Pennsylvania, Pub. 89-10, 79 Stat. 27, amended, 20 U.S.C. 2701 et seq. (1976 ed. Supp. V). created 102, 2702 Local agencies obtain through agencies, turn Education1 upon providing local spend qualifying programs. 182(a), 2832 V).2 auditing September 1, 1970 August 1973, Pennsylvania July 1967 June 30, ensure compliance regulations promulgated ESEA, After requested States, (the Board) modified $1,031,304 $422,424.29 See App. Pet. Cert. 57a, 86a-87a. timely United Third Circuit, orders, 208. It therefore reach Jersey's arguments 3a, Pennsylvania's challenging rulemaking ESEA's limitations provision, ibid. II 3 threshold question case, one need detain us long, is court below jurisdiction. Since limited jurisdiction, could hear authorized statute. premised alternatively 2851 V), (GEPA), 95-561, 92 2350, 1234d first provision appeal audits, second Board.3 Although explicitly requires "final" action, think necessary either section. strong presumption agency becomes final, FPC v. Metropolitan Edison, 304 375, 383-385, 58 963, 966-967, 82 L.Ed. 1408 (1938); see generally 5 704; 16 C. Wright, A. Miller, E. Cooper & Gressman, Practice Procedure 3942 (1977), there nothing overcome presumption. Indeed, provides decisions 452, 453, 454, 1234a, 1234b, 1234c includes subsection dealing finality suggesting "decision" subject review. 452(d), 453(d), 454)d, 1234a(d), 1234b(d), 1234c(d) Consequently, conclude that, at least Mathews Eldridge, 424 319, 331, n. 11, 96 893, 901, 47 18 (1976); Cohen Beneficial Finance Corp., 337 541, 545-547, 69 1221, 1225-1226, 93 1528 (1949), Department. must meets requirement. 4 decision, owed Government, repayment.4 88a, 90a. possibility proceedings repayment not, our view, situation corresponds ordinary adjudication trial plaintiff damages. judgment favor self-executing he undertake collect damages awarded, prevent appellate Our pragmatically requirement administrative finality, focusing time disrupt process. See, e.g., FTC Standard Oil Co., 449 232, 239, 101 488, 493, 66 416 (1980); Port Boston Marine Terminal Assn. Rederiaktiebolaget Transatlantic, 400 62, 71, 91 203, 209-210, 27 203 (1970). Review decision more court's award interferes processes. full expedite collection process, since know ultimate certainty. parties, supra, U.S., S.Ct., 493 (explaining Abbott Laboratories Gardner, 387 136, 87 1507, 681 (1967)); Boston, 209-210; Co. 363 202, 205, 80 1131, 1133, 1165 (1960). Therefore, properly took too address merits. III Turning merits, challenge asserting even they cannot misused. Thus, decide whether, assuming liable 1978 (1978 amendments), 2143, rendered recipient. 185, 2190, 2835(b) enactment amendments, reviewed 1978. position sole remedy noncompliance prospective: withhold comply, until brought compliance, 146, 241j, deny applications noncomplying programs, 142, 241f.5 Further, contend amendments operated prospectively only.6 argued retroactive recovery existed pre-1978 version persuaded contemplated misusing would incur debt misused, possible amendments.7 6 Section 32, originally provided: 7 "The Commissioner shall, [dealing inadequate appropriations], pay State, advance otherwise, eligible receive part. Such shall extent (if any) payment title (whether same fiscal year) greater should been paid it." This remained substantially unchanged 1970, gives overpaid. statute recognizes right,8 natural Senate Report explained, "Since given excess sums title, returned taken making subsequent State." S.Rep. 89th Cong., 1st Sess., 14 (1965), U.S.Code Cong. Admin.News 1965, pp. 1446, 1459-60. Committee obtained recapture payments, debate floor termed "an essential enacting proposed legislation." 111 Cong.Rec. 7690 (1965).9 8 Congress GEPA, 91-230, 84 164, main function bring general prior law together single title. H.R.Conf.Rep. 91-937, p. 97 (1970), 2768. Its apply programs 1221(b), force some years here. original I,10 likewise creates impose again clear intention return "Even though difficulties arising improperly used exceptions enforced carry out responsibility taxpayer." 91-634, (1970),11 2768, 2827. 9 Moreover, interpretation enjoys support later Congresses. Of course, view establish definitively meaning earlier enactment, but persuasive value. Bowsher Merck, --- ----, 12, 1587, 1595, 75 580 (1983). discussion reveals thought recipients already Rep. Corrada explained: 10 "[T]itle . [the] currently two enforcement mechanisms level: First withholding discovered; second, audit. 11 12 "[The] last couple number occasions effective measure. Approximately one-third reached resolution repayment. 13 solve problems existing audit authority." 124 20612 (1978) (emphasis added)." 15 Later, 1981, Senator DeConcini introduced amendment prevented debts misuse 127 S5427 (May 21, 1981). chair ultimately ruled id., S5430, S5442, preceding ruling clearly reflects participants As Stennis observed, "It back." Id., S5428; (remarks Sen. DeConcini). Not members stated views, acted views.12 1974, limiting refunds them within five written notice liability. 93-380, 106, 88 512, 884.13 applicability, drafted other Brief 32. While terms administered Secretary, State's argument fails, statutory specifically refer identifies recent source Committee's concern. H.R.Rep. 93-805, 79, 156 (1974), 4093. long statute, often sought Audit Files 09-20033 (refund October 6, 1975 1971, 25, 1978), 05-90178 3, 1971 1966-August 1967, 26, 1971), 04-10001 January 29, 1973 1965-June 1969, 1973); (discussing audits); Washington Research Project Southern Center Studies Public Policy NAACP Defense Educational Fund, Inc., ESEA: Is Helping Poor Children? 52 (rev. 1969). DeConcini's amendment, Schmitt cited 44 instances repayments S5428-S5429 Finally, worth noting commentators possessed power request refunds, although frequently castigated failure often.14 17 Arguing consistent understanding attempt explain covering "accidentally." Tr. Oral Arg. 36. accepting interpretation, remain convinced been. funds.15 A suggested Appeals.16 crystal governed included 185(b), provides: 19 adopt assure appropriate recommendations audits. include timetables step process Where, procedures, misapplied, require subchapter finally misapplied. derived non-Federal sources accountability Government. installment exceed three years." 2835 IV). feared interpreting "plain[ly] redundan[t]." 18a. share reluctance fashion leaves superfluous, agree construction presents problem. accompanying were, words Report, "clarif[y] HEW's applicant programs" "specif[y] certain minimum standards concerning outstanding audits." 95-856, 137 added); 95-1137, 53, 4971 (describing requiring "regularize" process). House "[N]othing new radically changing present relationship government These rather, meant lay responsibilities clearly. ." 5112. itself set demand once established, rather entirely his discretion beginning. limits regard imposing maximum years. Construing liability, then, meaningless. debt. undermine construction. strongly viewing do. discussed, 10-11, debates proceeded assumption existed. also identified many restitution 50. sum, conclusion give efforts 95th Congress, amending. Accordingly, adhere misuse.17 IV 21 Jersey, relying National League Cities Usery, 426 833, 2465, 49 245 (1976), urges imposition sovereignty, views presenting "unpalatable" alternatives: special appropriation repay cutting back budget education 28-29. Either alternative, asserts, infringes 22 agree. simply chose participate grant, freely abide I. Pennhurst School Halderman, 451 17, 1531, 1539, 67 694 (1981); Quern Mandley, 436 725, 734, 98 2068, 2074, 56 658 (1978); Rosado Wyman, 397 397, 408, 90 1207, 1215, 25 442 (1970); Oklahoma Civil Service Comm'n, 330 127, 143-144, 544, 553, 794 (1947); Cappalli, Cooperative Agreements 1:09 (1982). assume stage litigation, failed fulfill assurances, grant specified. challenged intruding unduly 19-20, challenges accepted admittedly valid comply. V 23 Once confronted how, scheme, Again, administratively. assigned duty recipients, 437, 1232f, magnitude, surface. 1226a-1 refers "as determine." committed agency, instance. 24 opportunity facts justifications expenditures agency. auditors, provided Board, 137-138, 144-145, 158165, body invited submit comments Also, appeal. review, indications commits irrevocably discretion, 701(a), 702, 681, propriety cognizable district courts, supra. lies appeal, 195, V); 455, so, like ones, began transferred Hallowell Commons, 239 506, 508, 36 60 409 (1916) (change forum can applied retroactively); litigate 1234d(c); 706. VI cases, procedures. He 4, empowered Whether affected parties remand permit raised remanded opinion. 26 so ordered. WHITE, concurring. 28 holds "plain language" Act, Pub.L. 32 successor (Supp. 1976), expressly 1) 2) misspent, being limited, "substantial evidence" basis. Ante, 782-792. doubt pleased today's holding, note authorizing "plain," lawyers deemed worthy passing mention brief. Petitioner 7, 20. 29 join Court's opinion, preferred different basis, thoroughly briefed. Specifically, 1234, unequivocally recoup retroactively. "apply renders unless doing manifest injustice direction contrary." Bradley Richmond 696, 711, 94 2006, 2016, 40 476 (1974). Accord, Gulf Offshore Mobil 453 473, 486, 16, 2870, 2879, 784 (1981). suggests intended retroactively, injustice. entered contractual-type agreements disburse monies accordance specified legitimate claim able breach impunity. contrary congressional intent, surely enforceable law. most, changed litigating Government's claims breached competent tribunal. Because simple change forum, ante, 777-778, 3; (1916), bar preferably decided 30 closing, do involve substantive standard violated commitments judged. Rather, concern abstract circumstances. my significant technical agreement rests regulation issued plan approved. 1980. 96-88, 668, 3401 involved events relevant litigation predecessor, Office official For simplicity, distinction significant, Similarly, Hearing successor, By regulation, Fed.Reg. 30528, 43807 (1979), 1234(f) pending created. 182(a) part: approve specific writing satisfied contained section 435 (where applicable) carried out." 435(b), 1232d(b) V) "that all applicable statutes, regulations, plans, applications." 182 added 2188, similar date 206, 31. 1232, 2196-2197, 2350. pretermit infra, 8. Under available, 140, 1511, (1967), coupled indication wholly otherwise precluded, leads involving questions, 1331 K. Davis, Administrative Law Treatise 23:5 135 (1983); Courts (3d 1976). (1979); 451, (authorizing transfer), Holmes explained "takes away right" thus seems settled demanding 28, 15, 33-34. fact, record shows stating, "[The State] refund [the amount] Appropriate authorities touch you early discuss question." reproduced appendix brief letter immediate 1a-2a, collection. That record, inclined, event, proposal means Cf. CFR 102.2 (1983) (regulation Claims Collection 89-508, 309, 31 952, attempting claims). who petitioner, asked what him, creditor. remedies, explains now object characterizes "setoff" Appeals. 10. is, could, entitled future years, smaller however, "recovery" Ordinarily, sum giving expend 142(a)(1), 241f(a)(1). proposes money Resp. 10, 34, 48. words, cost Jersey. form satisfactory. 13-14. despite assertion longer dispute between availability remedy, controversy remains. Consolidation Improvements 1981 (ECIA) governs case. 44. anything compliance. argues remedies 42. misapprehend seeks retroactivity ECIA, differ, ECIA remedy. 95-561 452(e), 2348, 1234a(e) 400(b), 1221(b); 52348 (1982) (requiring ECIA). approved pre-existing effect. arises Relying alternative offered Secretary—that common fails comply grant. Compare 8:12, 8:15 (suggesting regulatory authorization necessary); Willcox, Function Nature Grants, Ad.L.Rev. 125, 131 (1970) (same), Mount Sinai Hospital Weinberger, 517 329 (CA5 1975) exists contrary), cert. denied, 425 935, 1665, 48 176 West Virginia 667 417 (CA4 1981) (per curiam) (specific unnecessary). California Block, 663 855 (CA9 invalid where "gross negligence"). Milwaukee Illinois, 304, 1784, 68 114 Wurts, 303 414, 637, 932 (1938). remotely plausible reading 5, supra —that reduce receive, extensive program, recovers nothing: pays less, receives correspondingly way reading, plausible. First, hardly likely children suffer twice: cancels because refusal fund Second, 207 starting point "the receive" adjust past misuses. But "eligible" (1965); 207, contemplate something amount—a net recovery. desire accountable every possible: seem insofar accomplish end, rules accountability, economy, efficiency insisted upon, wastefully diverted uses permitted act." 6146 (1965) added). reads: "Payments pursuant contracts installments, reimbursement, underpayments, numbered 425. quoted comes "Sections 422, 423, [since renumbered 415]." concluded heading reflected typographical error, referred 424. 15a-16a. reference 424, fail why feature should, argues, relevant. types recordkeeping Auditing records reveal overpaid recipient, lead recovery, former "Here most authoritative, adding complex sophisticated act. expressing acting understands own acts mean." Hosp. F.2d, 343. aspect eliminated 901(b), 2305. 1974 bill remedy: performance. retained performance "contract" courts. 93d 2d 434(c)(2) Conference eventually 93-1211, 184 inducing interruption applying N. 93-763, 63, 211 Senate's addresses 415. addressed beneficiaries lose services live up duties. lost opposed current noncompliance, applicable. Particularly light contemporaneous 884, complementing, undermining, 1969); Comment, Aid Education: Operational Level, L. Soc. Order 324, 350; Berke Kirst, Role American Finance: Fiscal Analysis, 61 Geo.L.J. 927, 944, 71 (1973); Murphy, Politics Implementing Reform, 41 Harv.Educ.Rev. 35, 44-45 (1971). "overpayment" expended treasury. limitation history, indeed, find difficult believe good owing expedient spending them. relied deciding recognize applies equally (1981), act "unambiguously" intends money. 1539. argue speak unambiguously disagree. shows, sufficiently clear, Pennhurst's clarity. arose context unexpected compliance—a obligation participating

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