Court Opinion

ID: 1006435
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:11:19.326219+00
Date Added: 2024-06-11T09:12:41.067867
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

CALIFORNIA STATE UNIVERSITY             
FULLERTON FOUNDATION,
                 Plaintiff-Appellant,
                 v.
                                                 No. 01-1470
NATIONAL SCIENCE FOUNDATION; RITA
R. COLWELL, Director, National
Science Foundation,
             Defendants-Appellees.
                                        
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                  Gerald Bruce Lee, District Judge.
                          (CA-00-654-A)

                      Argued: October 30, 2001

                      Decided: January 22, 2002

    Before WIDENER, TRAXLER, and KING, Circuit Judges.

Affirmed by unpublished per curiam opinion.

                             COUNSEL

ARGUED: James Leo Feldesman, FELDESMAN, TUCKER,
LEIFER, FIDELL & BANK, L.L.P., Washington, D.C., for Appel-
lant. Gerard John Mene, Assistant United States Attorney, Alexan-
dria, Virginia, for Appellees. ON BRIEF: Kathy S. Ghiladi,
FELDESMAN, TUCKER, LEIFER, FIDELL & BANK, L.L.P.,
2        CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.
Washington, D.C., for Appellant. Kenneth E. Melson, United States
Attorney, Alexandria, Virginia, for Appellees.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   After the National Science Foundation ("NSF" or "the agency")
determined that the California State University Fullerton Foundation
("the Foundation") owed it a refund of some of the money NSF pro-
vided the Foundation pursuant to a grant, the Foundation filed an
action in federal district court seeking a declaration that it owed no
refund and an injunction prohibiting NSF from making collection
efforts. The district court granted NSF’s summary judgment motion,
thus denying the Foundation’s requested relief, and the Foundation
timely appealed. We affirm.

                                  I.

   In 1993, the Advanced Research Projects Agency ("ARPA") of the
Department of Defense, together with other federal agencies, includ-
ing the NSF, collaborated in a Technology Reinvestment Project
("TRP"). The TRP was designed to further eight statutory programs
authorized by the Defense Conversion, Reinvestment, and Transition
Assistance Act of 1992 ("the Act"), Pub.L. No. 102-484, §§ 4001-
4501, 106 Stat. 2315, 2658-770 (1992). One of the primary purposes
of the TRP and the Act was to expand employment opportunities for
displaced defense industry workers.

   In March 1993, the TRP issued a "Program Information Package
for Defense, Technology Conversion, Reinvestment and Transition
Assistance," J.A. 17, describing the eight TRP programs and the spe-
cific grants available for each. ARPA later issued a "Joint Program
         CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.               3
Solicitation", J.A. 17, in which it formally solicited proposals for
projects to be undertaken pursuant to the TRP. The solicitation
required all project proposals to contain TRP cover sheets, a technical
proposal, and a cost proposal. The solicitation further required all cost
proposals to be divided into three sections: (1) "Total Proposed Cost";
(2) "Cost to the Government"; and (3) "Fund Matching and In-Kind
Contributions". J.A. 19. The solicitation required the matching funds
category to be divided into three subsections: "(1) the sources of cash
and amounts to be used for matching requirements, (2) the specific in-
kind contributions proposed, their value in monetary terms, and the
methods by which their values were derived, and (3) evidence of
matching fund availability." J.A. 19.

   The Foundation, a private, non-profit foundation established under
California law to manage certain activities on behalf of California
State University, Fullerton, submitted a grant proposal under the
Manufacturing Engineering Education program described in the solic-
itation. The Foundation named the proposed project the "Integrated
Environmental Training Program for Defense Industry Engineers,"
J.A. 256, and otherwise referred to the program as Project INTENT.
The Foundation designed the project in order to retrain up to ninety
defense engineers for environmentally related, dual-use capacity
employment in small businesses, with an emphasis on manufacturing.
To this end, the Foundation proposed a two-step project. The first step
involved recruiting twenty-five to thirty engineers annually for three
years and providing them with a one-month orientation to environ-
mental careers and the university and then providing them several
intensive two-month seminars. When the classwork ended, the Foun-
dation proposed to provide the engineers six-month externships with
mentors in environmentally sensitive industries as the second step of
the project.

   In the required cost proposal section, the Foundation estimated that
the project would cost $1,179,544. Of this amount, the Foundation
sought $593,166 in federal funding from NSF and proposed to match
that with $586,378 from other sources. The bulk of the non-federal
money was to come from industry during the on-the-job externships.
The cost proposal estimated that industry would contribute $96,000
annually for wages for the externships. The Foundation proposal also
estimated that $20,000 of in-kind contributions would be made annu-
4        CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.
ally by the advisory board, and roughly $35,000 of in-kind contribu-
tions would be made annually by the faculty designated to work on
the project.

   NSF awarded the Foundation a $550,000 grant based on the pro-
posal. Under the terms of the award letter, the Foundation "agree[d]
to share in the costs of the project in the amount of $583,507, includ-
ing industry share." J.A. 323. The award letter declared that the Foun-
dation was "responsible for documenting and maintaining all cost
sharing records for a period of three years after the expiration date of
the award" and required "[d]ocumentation of matching funds and a
breakdown of that matching support by source, by type . . ., and by
allocation to the functions of the project, certified by an authorized
organizational representative, [to] be included with the annual TRP
progress report." J.A. 323-24.

   The GC-1 Grant General Conditions ("the Conditions"), to which
the grant was explicitly made subject in the award letter, contained
several noteworthy provisions. With regard to cost sharing, the Con-
ditions provided that "[t]he grantee must cost share under this grant
in accordance with any specific requirements contained in or refer-
enced by the grant," and "must maintain records of all project costs
that are claimed by the grantee as cost sharing." J.A. 353. Also, the
Conditions provided that the grant could be suspended or terminated,
in whole or in part, if, among other reasons, the NSF believed that the
grantee had materially failed to comply with the terms and conditions
of the grant or if the NSF had other reasonable cause.

   Sometime before the grant period expired, NSF became concerned
about the Foundation’s ability to meet its cost sharing obligations. As
a result of its dissatisfaction with the actual implementation of Project
INTENT and the Foundation’s apparent inability to meet its obliga-
tions under the grant documents, NSF set an early termination date of
January 31, 1997. By letter dated November 25, 1996, Stuart Ross,
Director of the University’s Office of Faculty Research and Develop-
ment, indicated that the Foundation would not seek to continue the
grant beyond that date. Furthermore, after acknowledging that much
of the anticipated cost sharing did not materialize, Ross requested that
NSF "work with [the Foundation] on finding a way to account for the
cost sharing that will accommodate our difficult situations and still
         CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.                5
satisfy NSF’s audit needs." J.A. 401. The letter made suggestions
about how to accomplish that goal.

   On September 17, 1998, NSF’s Office of Inspector General
("OIG") completed a draft Audit Report relating to Project INTENT.
Several of the findings raised concerns about the effort put into the
project. The audit also noted problems with the externship aspect of
the program and with the cost sharing data provided by the Founda-
tion. With regard to the cost sharing data, the audit found that when
the paid externships that were to comprise industry’s matching contri-
bution to Project INTENT failed to materialize, the Foundation unilat-
erally decided to claim as industry’s contribution twenty-five percent
of the salaries paid to fellows1 who obtained full-time jobs "even
though the employers were not involved with Project INTENT and
most of the jobs were not in the environmental field." J.A. 265. When
it became clear that these substitutions were not acceptable to the
agency, the Foundation contacted the employers of all fellows who
had obtained jobs or participated in externships and asked them to
estimate the cost of supervising those persons. The Foundation then
submitted these amounts as cost sharing in the final report.

   OIG also found that although key organizational personnel had
signed certifications that the cost sharing requirements had been met,
those reports actually contained inaccurate information that the sign-
ers had not attempted to verify. Because the progress reports and cost
sharing certifications were material to NSF’s decision to continue
funding of Project INTENT, OIG referred the matter to the appropri-
ate United States Attorney’s Office.

   Ultimately, OIG questioned $308,858 of the $527,240 the Founda-
tion finally claimed in cost sharing. The majority of the contested
amount ($206,410) consisted of claims for "supervisory training costs
for externships." J.A. 266. The audit recommended that NSF require
the Foundation to repay $148,291.2 The Foundation responded to the
   1
     The displaced defense engineers that participated in the program were
referred to as "fellows."
   2
     OIG essentially reached this amount by taking the actual cost of the
project, dividing by two and subtracting its half of the total costs from
the amount it actually provided the Foundation.
6        CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.
draft Audit Report and basically contested the factual bases upon
which NSF had decided to disallow certain costs. NSF reviewed the
audit and sustained the finding.

   The Foundation again responded, arguing this time that the refund
determination was based on an incorrect interpretation of the cost-
sharing provision of the authorizing legislation. NSF stood its ground,
sustaining the decision of the reviewing office with a few minor mod-
ifications. As a result of those modifications, it determined that the
Foundation owed NSF $139,152.

   Pursuant to the Administrative Procedure Act, 5 U.S.C.A. § 701-
706 (West 1996) ("the APA"), the Foundation then filed the instant
action for declaratory and injunctive relief. The parties filed cross
motions for summary judgment. The district court granted NSF’s
motion, effectively sustaining the agency’s refund determination, and
the Foundation timely appealed.

                                   II.

   This Court reviews a grant of summary judgment de novo. See
Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th
Cir. 1988). Summary judgment is appropriate if there are no material
facts in dispute and the moving party is entitled to judgment as a mat-
ter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). This Court must view the evidence in the light
most favorable to the non-moving party. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986).

   Central to this case is the interpretation by the NSF and the district
court of the terms of the grant agreement. An NSF grant agreement
"establishes what would commonly be regarded as a contractual rela-
tionship between the government and the grantee." Henke v. United
States Dep’t of Commerce, 83 F.3d 1445, 1450 (D.C. Cir. 1996). The
question we are presented with is whether, under the terms of the
grant, the Foundation was contractually obligated to share in the cost
of Project INTENT, such that it is now obliged to refund all amounts
NSF paid in excess of its half. Under the APA, when the "essential
question" is one of contract interpretation, as it is in this case, the
         CSU FULLERTON FOUND. v. NATIONAL SCIENCE FOUND.               7
question is "a question of law . . . which we review de novo." Burgin
v. Office of Pers. Mgmt., 120 F.3d 494, 497-98 (4th Cir. 1997).

   The Foundation’s sole contention is that, with regard to cost shar-
ing, the grant contract merely incorporated the standard of the statute
authorizing the grant. The statute provides that, with respect to federal
support, "[t]he amount of financial assistance furnished to an institu-
tion . . . may not exceed 50 percent of the estimated cost" of the proj-
ect. 10 U.S.C.A. § 2196(k) (West 1998). Under this statutory
standard, which the Foundation contends is the sole term in the con-
tract that defines the parties’ cost sharing obligations, the Foundation
reasons that because NSF did not provide more than fifty percent of
the estimated cost of the project, both the agency and the district court
erred in determining that the Foundation owed NSF a refund.

   Like the district court, we are unable to find support for this argu-
ment. We have no problem with the Foundation’s contention that the
grant contract incorporated the statutory standard set forth above. The
problem is that that standard does nothing more than set a limit on the
amount of funding NSF is authorized to provide. It simply does not
speak to the fact that the Foundation contractually agreed to share
costs in the amount of $583,507, an amount that represented just over
half of the estimated costs of the project. Nor does the Foundation
argue that it satisfied its obligation in that regard. As a result of the
Foundation’s breach of its obligation to share costs in the amount of
$583,507, the agency sought a partial refund of the money it provided
to the Foundation so that the final amounts expended by each party
approximated that party’s pro rata share as reflected in the award let-
ter. As we see it, NSF was well within its contractual rights to seek
that relief, and we do not see how the statutory cap on NSF’s spend-
ing bears on the issue of the Foundation’s cost-sharing obligations
when the award letter unequivocally stated that as a condition of
receiving the grant, the Foundation had to "agree to share in the costs
of the project." J.A. 323. Because that is the only argument the Foun-
dation raises on appeal, and because we find it meritless, we affirm
the district court’s order granting summary judgment to NSF.

                                                            AFFIRMED