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Economic Opportunity Commission of v. Weinberger

decided: August 6, 1975.

ECONOMIC OPPORTUNITY COMMISSION OF NASSAU COUNTY, INC., APPELLANT,
v.
CASPAR WEINBERGER, INDIVIDUALLY AND IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE; BERNICE BERNSTEIN, INDIVIDUALLY AND IN HER CAPACITY AS REGIONAL DIRECTOR OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, REGION 2, SAUL ROSOFF, INDIVIDUALLY AND IN HIS CAPACITY AS ACTING DIRECTOR OF THE OFFICE OF CHILD DEVELOPMENT OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE; JOSUE DIAZ, INDIVIDUALLY AND IN HIS CAPACITY AS REGIONAL PROGRAM DIRECTOR OF THE OFFICE OF CHILD DEVELOPMENT OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE FOR REGION 2, AND LESTER MILLER, INDIVIDUALLY AND IN HIS CAPACITY OF BOARD CHAIRMAN OF THE GLEN COVE CHILD DAY CARE CENTER, INC., APPELLEES



Appeal from a decision and order of the United States District Court for the Eastern District of New York, Jacob Mishler, Chief Judge, granting defendants' motion for summary judgment and dismissing plaintiff's complaint, brought pursuant to 42 U.S.C. § 2701 et seq. Affirmed.

Friendly and Feinberg, Circuit Judges, and Lasker, District Judge.*fn* Friendly, Circuit Judge, concurring that the complaint should be dismissed.

Author: Lasker

LASKER, D.J.

Economic Opportunity Commission of Nassau County, Inc. (NCEOC) is a Community Action Agency as defined by 42 U.S.C. § 2790.*fn1 As the grantee agency for Nassau County, NCEOC is responsible within its territory for implementation of the provisions of the Equal Opportunity Act of 1964, 42 U.S.C. § 2701 et seq. (the Act). Pursuant to 42 U.S.C. § 2795, NCEOC established delegate agencies in eleven target poverty areas in Nassau County. In the Glen Cove area, NCEOC contracted with the Glen Cove Equal Opportunity Council (GCEOC) to serve as its delegate agency and to assume responsibility for the day-to-day supervision of programs funded by NCEOC.

The Act provides for a number of special programs to "stimulate actions to meet or deal with particularly critical needs or problems of the poor which are common to a number of communities." 42 U.S.C. § 2809(a). Beginning in 1967, the Glen Cove Child Day Care Center (GCD)*fn2 operated one such program, Project Headstart, with funds channelled from NCEOC through GCEOC. In March, 1972, GCEOC went into receivership and NCEOC assumed direct supervision over the operation of the Headstart program in Glen Cove. On April 13, 1972 NCEOC applied to the Department of Health, Education and Welfare (HEW) for refunding of the Glen Cove Headstart program for the fiscal year 1972-1973, stating that GCD would be the delegate agency. However, on August 3, 1972, shortly after HEW had approved the application, NCEOC informed GCD that no further Headstart funds would be allocated to it because the structure of GCD's Policy Committee did not conform with HEW guidelines requiring parental participation in local Headstart programs.

This suit arises out of NCEOC's decision to defund GCD. After two administrative appeals in which NCEOC's action was overturned, the Office of Child Development (OCD)*fn3 informed NCEOC that the funds allocated to it which were earmarked for the GCD Headstart program would revert to OCD, that NCEOC's grant would be reduced in a like amount, and that HEW would fund GCD directly. NCEOC then brought this action attacking on several grounds the procedures used by HEW/OCD in deciding the administrative appeals, and challenging the propriety of its direct funding of GCD.

I.

The relevant facts are as follows. On March 16, 1973, the Regional Program Director of OCD, Josue E. Diaz, responded to GCD's request for an appeal from NCEOC's decision and invited it to submit certain materials, including GCD's budget application to NCEOC and any communications between NCEOC and GCD which related to the application. Diaz also asked GCD to specify the reasons it believed NCEOC's determination to defund it was arbitrary or unfair, and to state any other facts it thought relevant. Diaz also wrote to NCEOC on March 16, 1973 and directed it to hold in escrow the Headstart funds allocated to GCD pending the appeal. In addition, he requested NCEOC to submit the same kind of materials which GCD had been asked to submit, including a statement of reasons for its action, and any other material it believed relevant.*fn4

In response, NCEOC submitted only copies of the correspondence in its files relating to GCD. In August, 1973 Diaz rendered his decision finding NCEOC's action improper for the following reasons:

"1. That the EOC of Nassau County, Inc. submitted an application for Program Year 'G' (August 1, 1972 to July 31, 1973), which indicated on the OS 187 (Delegate Agency Summary Information) that the Glen Cove Child Day Care Center, Inc. would be the Delegate Agency operating the Head Start program in Glen Cove. The OCD never gave its approval for any change in the sponsorship or the operation of the Glen Cove program. The denial of refunding of the Glen Cove Agency is a violation of the work program approved for the EOC of Nassau County.

2. That the EOC of Nassau County did not provide the Glen Cove Child Day Care Center, Inc. a reasonable opportunity to correct the defects and deficiencies alleged nor did the grantee submit evidence that it provided appropriate technical assistance with respect to the correction of the alleged defects and deficiencies."

NCEOC protested Diaz' decision to the Regional Director of OCD, charging that the determination had been tainted by improper considerations and was procedurally defective, and requested plenary review by the Acting Director of OCD, Saul Rosoff. On October 11, 1973 Rosoff informed the parties that he would review Diaz' decision and set forth the procedural course he would follow:

"The basis for the decision will be a determination of the reasonableness and fairness with which [NCEOC] acted in denying refunding to [GCD]. Unless it is found that [NCEOC] acted arbitrarily and unfairly, the decision to deny refunding will be sustained. In the event that the decision of [NCEOC] to deny refunding is not sustained, it will be possible, among other alternatives, for [GCD] to submit an application to the New York Regional Office for consideration of direct funding as a Head Start grantee. Approval of such an application could result in an appropriate reduction of funds to [NCEOC].

The record in this case which I will be reviewing will consist of the following:

(1) the written material submitted by [NCEOC] and [GCD] which was forwarded by the New York Regional Office to each party as an enclosure to Mr. Diaz' letter of September 20; (2) any rebuttal to the written material of the other agency described in '1' which [NCEOC] or [GCD] wishes to provide to me, but not later than October 25, 1973; (3) any additional information furnished in response to a specific request by the Acting Director, OCD.

Should additional information be requested, there will be an exchange of the information with all parties with an additional period for rebuttal to the new material."

Neither GCD nor NCEOC submitted additional materials. On November 12, 1973 Rosoff informed NCEOC that he agreed with Diaz' findings and sustained the determination that the denial of refunding to GCD was arbitrary. He also stated:

"In the event that you do not wish to continue as grantee with respect to the [GCD], I will suggest that the Regional Office obtain an application for direct funding from the [GCD] and that the funding of your agency be adjusted accordingly."

NCEOC did not respond to this suggestion. On March 11, 1974, the Acting Regional Program Director of OCD, Elaine P. Danavall, informed NCEOC that the funds earmarked for GCD would revert to OCD and that NCEOC's funding would be reduced accordingly; NCEOC then commenced this suit.

II.

In the district court, NCEOC sought declaratory and injunctive relief claiming that (1) Diaz and Rosoff were without authority to render a decision in the dispute between NCEOC and GCD because HEW had failed to prescribe procedures for administrative appeal, as required by 42 U.S.C. § 2944; (2) assuming they did have authority, the administrative proceedings were a nullity because the ad hoc procedures used in considering the appeals were improper and not in accordance with applicable rules and regulations; (3) the decisions of Diaz and Rosoff were not supported by substantial evidence; and (4) HEW acted in excess of its statutory authority, and encroached on NCEOC's authority, in funding GCD directly. The district court rejected these claims and granted defendants' motion for summary judgment ...


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