ARB CASE NO. 96-128
ALJ CASE NO. 94-JTP-20
DATE: December 11, 1996

In the Matter of :

STATE OF TEXAS DEPARTMENT
OF COMMERCE,
   Complainant,

    and

MIDDLE RIO GRANDE DEVELOPMENT
COUNCIL,
    Intervenor and
    Party-in-Interest,

    v.

UNITED STATES DEPARTMENT OF LABOR,
    Respondent.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD¹

   This case arises under the Job Training Partnership Act of 1982, as amended (JTPA or the Act), 29 U.S.C. §§ 1501-1791 (1988),² and the regulations issued thereunder at 20 C.F.R. Parts 626-638 (1992). Following an audit and related procedures, the Department of Labor (DOL) Grant Officer issued a Final Determination, concluding that $822,257 of JTPA grant funds expended by the Texas Department of Commerce (TDOC or the State) during the program years 1989 through 1991 must be disallowed. TDOC requested a hearing before an Administrative Law Judge (ALJ) to contest the determination of the Grant Officer. See 29 U.S.C. § 1576(a) (1988 and Supp. IV 1992); 20 C.F.R. § 636.10 (1994). On April 30, 1996, the ALJ issued the Recommended Decision and Order (R. D. and O.) in this case, which concluded that the disallowance determinations rendered by the Grant Officer should be reversed. Based on the Grant Officer's Statement of Exceptions, this Board asserted jurisdiction on June 14, 1996. See 29 U.S.C. § 1576(b) (1988). On the basis provided herein, we disagree with the recommended disposition of the ALJ regarding the disallowances delineated in Finding 3 of the Final Determination and disagree in part with the ALJ's

   The Act and implementing regulations provide detailed guidelines for the expenditure of JTPA funds by grantees and subgrantees. 29 U.S.C. § 1518 (1988); 20 C.F.R. §§ 629.37-629.39; see generally Mississippi Dep't of Economic and Community Development v. United States Dep't of Labor, 90 F.3d 110 (5th Cir. 1996)(affirming Secy's determination regarding misspent JTPA funds).³ In the interest of ensuring compliance with such guidelines, the Act and regulations also provide for oversight of JTPA expenditures by the Labor Secretary. 29 U.S.C. §1573; 20 C.F.R. § 629.43. The fiscal controls provided under the Act include an audit and appeals process. 29 U.S.C. §§ 1574 - 1576; see 20 C.F.R. §§ 629.42, 629.44. Audits, which are provided for under Sections 164 and 165 of the Act, 29 U.S.C. §§ 1574, 1575, are conducted by the Office of the Inspector General for the DOL (OIG). See 20 C.F.R. § 629.42. Following receipt of audit reports from the OIG, the Grant Officer, who serves within the DOL Employment and Training Administration (ETA), provides a copy of the auditor's report to the grantee for comments; subsequently, the Grant Officer evaluates the audit report and the grantee's responses and issues an Initial Determination to the grantee. 20 C.F.R. § 629.54(d). An informal resolution process follows, during which the grantee is provided the opportunity to provide additional information pertinent to the issues in dispute. Id. The Final Determination is then issued by the Grant Officer, and, if the grantee wishes to challenge that determination, the grantee may request a hearing before an ALJ. 29 U.S.C. § 1576; 20 C.F.R. § 636.10.

   Following an audit of JTPA expenditures for the grant years 1989-1991 by the grantee TDOC, a final report was issued by the OIG on March 23, 1993. GX 1 at 12, 31, 151-77⁴ ; see R. D. and O. at 2. On March 31, 1993, the audit report was forwarded to TDOC with instructions to resolve questions arising within the audit with the Middle Rio Grande Development Council (MRGDC), an agency that administered JTPA grants received by the State. GX 1 at 12, 31, 147-48; see R. D. and O. at 2. On September 30, 1993, the State's resolution report was submitted to ETA. GX 1 at 12, 31, 42-146; see R. D. and O. at 2. The Grant Officer concluded that TDOC's resolution of the matter was not satisfactory and, on December 15, 1993, the Grant Officer issued an Initial Determination which concluded that $885,525 in JTPA funds must be disallowed. GX 1 at 31-39; see R. D. and O. at 2-3. Following submission of further documentation by TDOC, the Grant Officer issued a Final Determination on March 14, 1994, which allowed $63,268 of the previously questioned funds and disallowed $822,257 in funds. GX 1 at 14-28; see R. D. and O. at 3. Consistent with Section 164(d) of the Act, 29 U.S.C. § 1574(d), the Grant Officer directed TDOC to repay DOL, from non-federal funds. GX 1 at 14; see R. D. and O. at 3.

   TDOC requested a hearing before an administrative law judge, and MRGDC, as a subgrantee, was allowed to intervene. GX 1 at 1-11; R. D. and O. at 3; see 29 C.F. R. § 18.10 (1994); cf. County of Los Angeles v. United States Dep't of Labor, 891 F.2d 1390 (9th Cir. 1989)(reversing ALJ's conclusion that subrecipient under JTPA could not intervene pursuant to 29 C.F.R. § 18.10(b) in hearing requested by state). In response to a motion for partial summary decision filed by the Grant Officer and motions for summary decision and

   At issue before the ALJ under Finding 2 were costs that the Grant Officer had disallowed as expenditures for economic development activities (EDA) rather than employment generating activities (EGA), as contended by TDOC and MRGDC. R. D. and O. at 6; see GX 1 at 19-21.⁵ EDA are broad-based efforts that are not chargeable to grant funds under the Act, whereas EGA costs are allowed under Section 204(19) of the Act, 29 U.S.C. § 1604(19), if the grantee demonstrates that the activity "directly resulted in the placement of JTPA eligible individuals and participants into jobs created by these contracts."⁶ GX 1 at 20; see R. D. and O. at 6-7 (citing JTPA Conf. Rep. No. 97-889, Sept. 28, 1982 and 20 C.F.R. § 629.37(a)). In challenging the ALJ's reversal of the disallowances under Finding 2, the Grant Officer urges that the ALJ erred in rendering factual findings that are unsupported by the record. Gr. Ofcr. Initial Brief at 19-22.

   First, the Grant Officer contends that the ALJ erroneously reversed the Grant Officer's disallowance of $6,925 for three consultant contracts (the Bates/Balderas/Urbina contracts), which the Grant Officer had determined to be directed toward assisting business ventures and employers rather than intended "to generate jobs for JTPA-eligible individuals." HT at 220-23; see GX 1 at 19-21, 161-62. In reversing this conclusion and finding that the costs were for EGA, the ALJ found that the consultants who were paid under the three contracts had been utilized to help establish businesses that had originated in the MRGDC "business incubator" center, and that these businesses, in turn, provided jobs for JTPA participants and JTPA eligible individuals. R. D. and O. at 8-9. The Grant Officer challenges this conclusion as unsupported by the record because the evidence does not establish that MRGDC was actually operating an "incubator" center. Gr. Ofcr. Initial Brief at 19-21. Although the ALJ may have misinterpreted the evidence of record regarding the existence of such a center, any such error is not material to his analysis regarding the EGA nature of the Bates/Balderas/Urbina contracts and is therefore harmless. The testimony of the MRGDC Deputy Executive Director does not indicate that an incubator center, within the meaning provided by the Grant Officer, had been established. T. 506-07, 554-56. Nonetheless, the rationale relied on by the ALJ, i.e., that the three consultants' contracts had directly benefitted JTPA participants by providing placement in jobs at specific businesses whose development was aided by these consultants, is in accord with the mandates of the Act regarding the allowability of EGA costs. See R. D. and O. at 6-9; 29 U.S.C. § 1604(19); see also IX 7, 8, 9. As the costs of operating the physical plant for an incubator site are not at issue here, the question of whether such a center was formally established is largely irrelevant.⁷ MRGDC concedes, MRGDC Brief at 20, that there was no incubator center physically established.⁸ We therefore reject the Grant Officer's challenge to the ALJ's reversal of the disallowance of $6,925 for the Bates/Balderas/Urbina contracts under Finding 2 of the Final

Determination.⁹

   The Grant Officer also challenges the ALJ's reversal of the disallowance of $2,500 for a consultant contract with the University of Texas (UT).¹⁰ Gr. Ofcr. Initial Brief at 21-22. The Grant Officer had disallowed the costs as EDA expenditures, as he determined that the focus of the contract was on a statistical analysis of transportation in the Middle Rio Grande area, "the flow of goods in and out." HT at 169-173. The ALJ determined that "the contract results helped to establish a truck driving training program that provided training and created jobs for JTPA eligible individuals and participants." R. D. and O. at 13. In support of that conclusion, the ALJ stated that the Grant Officer was unaware of the truck driving training program that was an offshoot of the research done under the UT contract when he drafted the Final Determination. Id. In challenging the ALJ's conclusion, the Grant Officer argues that the ALJ erred in finding that the Grant Officer was unaware of the truck driving training program and in relying on that factor in concluding that the Grant Officer had improperly disallowed the $2,500 as an EDA cost. Gr. Ofcr. Initial Brief at 21.

   We agree with the Grant Officer that the ALJ's analysis regarding the UT contract is flawed. The purpose of the UT contract is much more broad-based and industry oriented than, for example, the three consultants' contracts discussed supra, which aided in the development of specific businesses that provided employment positions for JTPA participants. As stated by the ALJ, the purpose of the UT contract was to "explore" job opportunities. See IX 12. Like all economic development activity, the UT research encompassed, to some degree, the exploration of job opportunities. As the Grant Officer concluded, however, the focus was on the identification of products and industries rather than on the creation of jobs for JTPA participants or eligible individuals. HT at 231-33, 345-46. We also agree with the Grant Officer that the ALJ improperly relied on the development of a truck driving program resulting from the UT contract research to conclude that the contract lead to the creation of jobs for JTPA participants or JTPA eligible individuals. Providing training with the intent of preparing participants to perform jobs is distinguishable from the actual creation of such jobs and, as indicated by the Grant Officer, training funds constitute a separate category of costs under the Act, which are not at issue under Finding 2 of the Final Determination. See 20 C.F.R. § 629.38(a); GX 1 at 19-21. We therefore agree with the Grant Officer that TDOC and MRGDC did not demonstrate that the UT contract costs qualified as EGA under the Act and affirm the disallowance by the Grant Officer.

   The Grant Officer also challenges the ALJ's reversal of the Grant Officer's disallowance of costs associated with a contract between MRGDC and Japan Consultants, Ltd. (JCL), because, the Grant Officer urges, the ALJ relied on an inaccurate reading of the Grant Officer's testimony regarding that contract. Gr. Ofcr. Initial Brief at 22. In response, MRGDC asserts that the ALJ correctly interpreted the Grant Officer's testimony on this issue. MRGDC Brief at 22-24.

   The Grant Officer testified that he had concluded that the $8,444 for the JCL contract must be disallowed as EDA expenditures based on his review of the contract, which provided that JCL would assist MRGDC in preparing for a trip to Japan to meet with government and industry representatives there and would act as liaison between the MRGDC and Japanese representatives, but did not make any reference to job creation for JTPA participants. HT at

   At issue before the ALJ were $719,567 in costs for EGA that the Grant Officer determined TDOC and MRGDC had improperly charged to the participant support costs (PSC) category.¹¹ Of that amount, $628,115 remain at issue.¹² To qualify under the PSC category, expenditures must be for "services which are necessary to enable an individual eligible for training under [the JTPA], but who cannot afford to pay for such services, to participate in a training program funded under" the Act. 29 U.S.C. § 1503(24). The Act provides that such services "may include transportation, health care, . . . child care and dependent care, meals, temporary shelter, financial counseling, and other reasonable expenses required for participation in the training program . . . ." Id.; see 20 C.F.R. § 629.38(e)(4). As concluded by the ALJ, PSC costs are further defined by the four categories provided by Section 108(b)(2)(A) of the Act, 29 U.S.C. § 1518(b)(2)(A). See Order at 9-10 and authorities cited therein.

   The Grant Officer challenges the ALJ's reversal of the disallowance of those costs on the following grounds. The Grant Officer urges that the ALJ erred in allocating the parties' burdens. Gr. Ofcr. Initial Brief at 9-18; Reply Brief at 6-10. The Grant Officer also urges that, in the R. D. and O., the ALJ inexplicably reversed the interpretation that he had stated in the November 3, 1995 Order regarding the Section 108(b)(2)(A) limitation on the charging of EGA costs to the PSC category as well as his ruling regarding the respective burdens of the parties in demonstrating compliance with that provision vel non. Gr. Ofcr. Initial Brief at 9-12; Reply Brief at 6-7. In response, TDOC and MRGDC urge that the ALJ's analysis of the parties' burdens was proper and that the interpretation of Section 108(b)(2)(A) set forth

20 C.F.R. § 636.10(g) (1994).¹³ The ALJ summarized the Grant Officer's burden as the establishment of a prima facie case¹⁴ "that TDOC violated JTPA regulations based on substantial evidence." R. D. and O. at 5; accord State of Florida v. United States Dep't of Labor, Case No. 92-JTP-17, Sec. Dec., Dec. 5, 1994, aff'd 83 F.3d 435(table)(11th Cir. 1996). In construing the Grant Officer's burden, the ALJ relied in part on the decision of the United States Supreme Court in Director, OWCP v. Greenwich Collieries, 114 S.Ct. 2251 (1984). R. D. and O. at 5, 18. Specifically, the ALJ cited legislative history from the Administrative Procedure Act (APA) that was quoted in Greenwich Collieries in support of the ALJ's concern that the DOL could not permissibly "presume" that certain costs were expended in violation of the JTPA. R. D. and O. at 5, 18-19. The ALJ then concluded that the Grant Officer had failed to establish a prima facie case of JTPA violations in support of the disallowance of EGA costs charged by the recipients to the PSC category based, in part, on the failure of the Grant Officer to rule out the possibility that such costs could, at least in part, be allocated to the category of PSC. Id. at 18.

   We agree with the Grant Officer's contention, Gr. Ofcr. Initial Brief at 11-14; Reply Brief at 9-10, that the ALJ's reliance on Greenwich Collieries, which addresses a narrow range of administrative law cases, was misplaced. The question before the Court in Greenwich Collieries was whether an employee/claimant could prevail over an employer/respondent in a disability claim based on less than a preponderance of the evidence, i.e., when the conflicting evidence was in equipoise.¹⁵ Greenwich Collieries, 114 S.Ct. at 2252. Within that context, the Court emphasized the APA legislative history indicating that a defending party should not be presumed by the government to have violated the law. Id. at 2258 (quoting S. Rep. No. 752, 79th Cong., 1st Session, 22 (1945)). The Court also construed the "burden of proof" which is placed by Section 7(c) of the APA, 5 U.S.C. § 556(d), on the proponent of a rule or order, "unless otherwise provided by statute," as the burden of persuasion. 114 S.Ct. at 2258. In contrast, the conflicting evidence on any particular issue involved in this case is clearly not in equipoise and the Grant Officer did not presume that TDOC and MRGDC misspent JTPA funds; rather, the findings presented in the Grant Officer's Final Determination are based on an extensive and detailed examination of relevant documents. See GX 1.

   We agree with the Grant Officer that the ALJ misallocated the parties' burdens by requiring the Grant Officer to rule out the possibility that the EGA costs at issue could qualify as expenditures for participant support services. Although we agree with the ALJ's detailed analysis of the restrictions imposed on the charging of EGA expenditures to the participant support costs category by the Act, see Order at 7-10, we disagree with his conclusion regarding the evidence necessary to prove a failure to comply with those restrictions. As noted by the ALJ, Order at 8, the Act indicates that participant support costs are those that directly benefit eligible individuals by assisting in their participation in the JTPA training program. See 29 U.S.C. §§ 1503(24), 1518(b)(2)(A); see also 20 C.F.R. § 629.38(e)(5). For the purpose of establishing a prima facie violation of the Act under Section 108(b)(2)(A), it was sufficient for the Grant Officer to explicate the four types of participant support delineated in that statutory provision and to explain why he had concluded that the costs charged by TDOC and MRGDC to the PSC category did not fall within one of the four types of participant support. Cf. State of Florida, slip op. at 4-12 . The Grant Officer accomplished this task by testifying that TDOC and MRGDC had not provided the documentation necessary to demonstrate that the costs at issue directly benefitted specific JTPA participants or eligible individuals by assisting them in participating in training under the Act. HT at 251-53, 275, 365; see GX 1 at 17. The issue of whether the EGA costs at issue could possibly qualify as an exception to the general rule that EGA costs do not constitute expenditures for participant support services was raised by TDOC and MRGDC as a defense against the case presented by the Grant Officer. Consequently, TDOC and MRGDC bore the burden of establishing, if possible, that such costs were chargeable to the PSC category because the expenditures directly benefitted specific JTPA participants or eligible individuals. Cf. Quechan Indian Tribe, 723 F.2d at 736 ; First Nat'l Bank of Bellaire v. Comptroller of the Currency, 697 F.2d 674, 683 (5th Cir. 1983).¹⁶ The placement of this burden on the grant recipients is consistent with the well-established evidentiary principle that the burden of establishing a fact should be placed on the party having knowledge of the fact and that the opposing party should not be required to establish a negative. See McCormick, Evidence § 336 (4th ed. 1992); 9 Wigmore, Evidence § 2486 (3d ed. 1940).

    The ALJ had indicated in the Order that TDOC and MRGDC would be provided an opportunity at hearing to prove that the EGA costs at issue qualified as PSC.¹⁷ Order at 12. TDOC and MRGDC thus were provided an adequate opportunity to provide documentation in support of this defense. Nonetheless, as stated by the ALJ at hearing, the record does not contain documentation adequate to establish that the EGA costs at issue qualify as PSC under Section 108(b)(2)(A). HT at 577; see HT at 251-53, 275, 365 (Donahue), 462-63 (Martinez); GX 1 at 17; see also R. D. and O. at 18; Gr. Ofcr. Initial Brief at 14, 23-24; MRGDC Brief at 24.

   Lastly, we also agree that the ALJ erred in finding, in the R. D. and O. at 17-18, that the Grant Officer had failed to correct the faulty premise relied on by the auditor regarding the potential for EGA costs to qualify as PSC. As initially concluded by the ALJ, in the Order at 18-19, the Grant Officer's testimony indicates that in drafting the Final Determination he was mindful of the possibility that EGA expenditures, in very unusual circumstances, may be allocated as expenditures for participant support. HT at 311-15. Furthermore, inasmuch as specific, identifiable JTPA participants or eligible individuals must

be directly benefitted by such EGA costs in order for the costs to qualify under the PSC category, it is clear that none of the employment generating activities that were testified about at hearing and which are referenced in the evidence of record could qualify under the PSC category.¹⁸ See R. D. and O. at 15-18. Thus, any error in the Grant Officer's failure to specifically analyze each of the EGA at issue under the PSC requirement is harmless. See HT at 96-98 (Williams, addressing MRGDC responses to audit report, GX 1 at 172). We therefore reject the ALJ's conclusion in this regard and affirm the Grant Officer's disallowance of EGA costs charged to the participant support services category under Finding 3 of the Final Determination.

   Accordingly, the ALJ's decision to reverse the disallowance of costs under Finding 2 of the Grant Officer's Final Determination is reversed in part and affirmed in part and the ALJ's decision to reverse the disallowance of costs under Finding 3 is reversed in its entirety. The Texas Department of Commerce¹⁹ is ORDERED to pay to the United States Department of Labor $628,115.²⁰ The Grant Officer shall be guided as to the appropriate method of repayment by the State pursuant to Section 164(d) of the Act and 20 C.F.R. § 629.44.

   SO ORDERED.

      DAVID A. O'BRIEN
      Chair

      KARL J. SANDSTROM
      Member

      JOYCE D. MILLER
      Alternate Member

¹ On April 17, 1996, a Secretary's Order was signed delegating jurisdiction to issue final agency decisions under, inter alia, the Job Training Partnership Act of 1982, as amended, 29 U.S.C. §§ 1501-1791 (1988 and Supp. IV 1992), and the implementing regulations at 20 C.F.R. Part 627, to the newly created Administrative Review Board. 61 Fed. Reg. 19978 (May 3, 1996). Secretary's Order 2-96 contains a comprehensive list of the statutes, executive order and regulations under which the Board now issues final agency decisions.

² This case involves an audit for grant expenditures during the period July 1, 1989 through June 30, 1992. Administrative file at 14, 42. Statutory guidelines for allowable expenditures under the Act that are applicable to this case are therefore those in effect prior to the amendments to the Act of September 7, 1992, Pub. L. No. 102-367, Title I, Subtitle B, § 117, 106 Stat. 1035. References to the regulations are for those in effect during the period covered by the audit except for regulations concerning procedures pertinent to the hearing before the Administrative Law Judge, which are accordingly noted.

³] We note the following provisions concerning limitations on expenditures of JTPA grant funds that are pertinent to the discussion to follow. Section 629.38(a) provides these three categories of expenditures that are allowable under Section 108 of the Act: training, administration and participant support. 20 C.F.R. § 629.38(a); see 29 U.S.C. § 1518. Expenditures under the JTPA must not only be allowable under the Act but must also be properly allocated under one of the foregoing categories. 20 C.F.R. § 629.38(a); see OMB Circular No. A-87, 60 Fed. Reg. 26484, 26491 (May 17, 1995). Section 629.39 of the regulations implements the Section 108(a), (b) limits on the percentage of funds that may be expended under the administration category. 20 C.F.R. § 629.39; see 29 U.S.C. § 1518(a), (b). Employment generating activities are allowable under the Act, 29 U.S.C. § 1604(19), but employment generating activities per se, see discussion infra at II., may be charged only to the administration costs category, see Order at 7-9 and authorities cited therein.

⁴ For references to the exhibits of record, we will follow the ALJ's example, R. D. and O. at 2 n.2, and abbreviate as follows: U.S. government exhibit, GX; Complainant/TDOC exhibit, CX; Intervenor/MRGDC exhibit, IX. For references to the hearing transcript, we will use "HT."

⁵ Of the $42,296 in costs that were at issue before the ALJ under Finding 2, the Grant Officer has challenged the ALJ's findings regarding only $17,869. See Gr. Ofcr. Initial Brief at 19-23; R. D. and O. at 6-13. These costs are at issue under both Finding 2 and Finding 3. See Gr. Ofcr. Initial Brief at 5 n.2; R. D. and O. at 15 n.12; GX 1 at 21.

⁶ As discussed infra, EGA costs are allocable under the category of administrative costs and are therefore subject to the fifteen percent cap on administrative costs imposed under Section 108(a), (b) of the Act, 29 U.S.C. § 1518(a),(b). Order at 19 (citing Williams' deposition at 42-46); see 29 C.F.R. § 629.39(a)(1).

⁷ The Grant Officer testified that an incubator center provides assistance through shared resources to developing businesses and that certain costs associated with the space and staff needed for such a center could qualify as allowable EGA under the Act. HT at 238-42. Paul Edwards, the Deputy Executive Director for MRGDC, testified that his agency had worked on job creation and job development in a manner that "could, at some level, be defined as an incubator without walls," T. 506-07, 554-56, but he did not testify that an incubator center had been established.

⁸ Edwards' description of an incubator center, i.e., "a place where people come in with ideas for business," differs from the definition provided by the Grant Officer, "a center . . . set up wherein a number of businesses could be started, i.e. a start-up project for businesses and working in the center, they may share various types of services, such as receptionist, secretarial types of services, accounting services, . . . equipment, copy machines and so forth." HT at 238.

⁹ In view of the foregoing disposition regarding the costs for the Bates/Balderas/Urbina contracts, we need not address MRGDC's contention, MRGDC Brief at 19, that the Grant Officer failed to properly raise an exception to the ALJ's finding in this regard in the Statement of Exceptions.

¹⁰ The total cost of the University of Texas contract was $5,000; the Grant Officer determined, after issuance of the Final Determination, that only one-half of that cost was expended from JTPA funds. Gr. Ofcr. Initial Brief at 22 n.9; see R. D. and O. at 13; HT at 169-73.

¹¹ The total amount of costs for EGA charged to the PSC category that was disallowed in Finding 3 of the Final Determination was $822,257; this amount was reduced prior to hearing by the allowance of costs chargeable to the training category in the amount of $102,690. Gr. Ofcr. Initial Brief at 8 n.4; HT at 8; see R. D. and O. at 15 n.12.

¹² Also under Finding 3 of the Final Determination, the ALJ reversed the Grant Officer's disallowance of EGA costs charged to the training costs category of Section 629.38(e)(1). R. D. and O. at 19-25. The Grant Officer does not challenge this aspect of the ALJ's decision. Gr. Ofcr. Initial Brief at 9 n.5.

¹³ The hearing in this case was requested on April 12, 1994. GX 1 at 4. Section 636.10(g), as quoted supra, has been in effect since 1993. The ALJ cited its predecessor provision, which was found at 20 C.F.R. § 629.57(i). R. D. and O. at 5. The two provisions are identical, except that "Secretary" was referred to throughout Section 629.57(i) instead of "Grant Officer."

¹⁴ The ALJ defined prima facie case as "relevant evidence sufficient to enable a reasonable person to draw from it the inference sought to be established,'" quoting from McCormick, Evidence 789-790 (2d ed. 1972). R. D. and O. at 5. Although not noted by the ALJ, that definition was also relied on by the court in State of Maine v. United States Dep't of Labor, 669 F.2d 827, 830 (1st Cir. 1982), which involved a grant officer's final determination under the predecessor statute, the Comprehensive Employment and Training Act of 1973, Pub. L. No. 93-203, 87 Stat. 839 (1973)(repealed 1978).

¹⁵ Greenwich Collieries involved claims for benefits under the Black Lung Benefits Act, as amended, 30 U.S.C. § 901 et seq., and the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. § 901 et seq., and the application by DOL of the "true doubt rule" to these claims. Under this rule, a finding by the ALJ that the conflicting evidence was equally probative was considered to give rise to "true doubt" which was to be resolved in favor of the claimant. The Court determined that this practice, which allowed the claimant to win when the parties' evidence was evenly balanced, was in conflict with Section 7(c) of the APA, which requires the successful claimant's evidence to preponderate. 114 S.Ct. at 2259.

¹⁶ In Quechan Indian Tribe, the court concluded that the Secretary had established a violation of statutory restrictions on expenditures by a CETA grantee; the court concluded that the grantee spent grant funds on "programs for which they were intended" but "failed to meet its burden of proving that certain specified administrative expenditures were made in furtherance of the grants' purposes, and also that program participants met the condition of eligibility." 733 F.2d at 736. In First Nat'l Bank of Bellaire, the court relied on the provision at Section 7(c) of the APA that the proponent of a rule or order has the burden of proof to conclude that, although the Comptroller bore the burden to establish a violation of the lending limitations provided in 12 U.S.C. § 84, the bank bore the burden of establishing that the exception to lending limitations provided by Section 84(13) was applicable. 697 F.2d at 683.

¹⁷ We reject the Grant Officer's contention that the ALJ ruled, in the November 3, 1995 Order, that the Grant Officer had established a prima facie case. Gr. Ofcr. Initial Brief at 17. As urged by TDOC and MRGDC, TDOC Brief at 4-5; MRGDC Brief at 12, the ALJ ruled only on the question of law before him regarding the interpretation of Section 108(b)(2)(A) of the Act as it pertained to evidence that would support a prima facie case of non-compliance with the JTPA. Order at 12.

¹⁸ The Grant Officer points out, Reply Brief at 2-3, that MRGDC attempts to confuse the issues at hand regarding the disallowance of EGA costs charged to the participant support category by the grant recipients with the question of whether the EGA would otherwise qualify as an allowable cost under the administrative costs category. MRGDC Brief at 3-11. As indicated supra, expenditures for activities that directly result in the placement of JTPA eligible individuals and participants into jobs, see R. D. and O. at 6-7 (citing JTPA Conf. Rep. No. 97-889, Sept. 28, 1982 and 20 C.F.R. § 629.37(a)) qualify as allowable EGA costs under the administrative costs category, subject to the fifteen percent cap. To be chargeable to the participant support costs category, on which there is no percentage cap, however, expenditures that would otherwise be considered EGA costs must be shown to have directly benefitted specific, identifiable JTPA participants or eligible individuals. Order at 7-10 and authorities cited therein.

¹⁹ The TDOC has been renamed the Texas Workforce Commission since the initiation of this adjudication. See TDOC Brief; Gr. Ofcr. Reply Brief at 4 n.3.

²⁰ As indicated supra at n. 5, the costs at issue under Finding 2 of the Final Determination were also at issue under Finding 3. We have agreed with the Grant Officer that the $628,115 in EGA costs that were at issue in Finding 3 should be disallowed; of those costs, we have also agreed that the $2,500 UT contract and the $8,444 JCL contract should also be disallowed on the additional basis that those costs do not qualify as EGA, as concluded by the Grant Officer under Finding 2.