WILLIAM E. BROCK, SECRETARY OF LABOR, PETITIONER, V. SOUTHEASTERN ARIZONA GOVERNMENTS ORGANIZATION No. 85-912 In the Supreme Court of the United States October Term, 1985 The Solicitor General, on behalf of William E. Brock, Secretary of Labor, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. Petition For A Writ Of Certiorari To The United States Court of Appeals For The Ninth Circuit TABLE OF CONTENTS Opinions below Jurisdiction Statute involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D OPINIONS BELOW The order of the court of appeals (App., infra, 1a-2a) is unreported. The decision of the administrative law judge (App., infra, 3a-10a) is unreported. JURISDICTION The judgment of the court of appeals (App., infra, 11a) was entered on May 20, 1985, and a petition for rehearing was denied on August 28, 1985 (App., infra, 12a). The jurisdiction of this Court rests upon 28 U.S.C. 1254(1). STATUTE INVOLVED Section 106(b) of the Comprehensive Employment and Training Act, 29 U.S.C. (Supp. V 1981) 816(b), provides in pertinent part: Whenever the Secretary receives a complaint from any interested person or organization * * * which alleges, or whenever the Secretary has reason to believe (because of an audit, report, on-site review, or otherwise) that a recipient of financial assistance under this chapter is failing to comply with the requirements of this chapter, the regulations under this chapter or the terms of the comprehensive employment and training plan, the Secretary shall investigate the matter. The Secretary shall conduct such investigation, and make the final determination required by the following sentence regarding the truth of allegation or belief involved, not later than 120 days after receiving the complaint. If, after such investigation, the Secretary determines that there is substantial evidence to support such allegation or belief thatsuch a recipient is failing to comply with such requirements, the Secretary shall, after due notice and opportunity for a hearing to such recipient, determine whether such allegation or belief is true. QUESTIONS PRESENTED Whether Section 106(b) of the Comprehensive Employment and Training Act (CETA), 29 U.S.C. (Supp. V 1981) 816(b), which states that the Secretary of Labor "shall" issue a final determination within 120 days of the receipt of a complaint alleging the unlawful use of CETA funds by a grant recipient, bars the Secretary from recovering misused grant funds when he fails to issue a final determination within the 120-day period. STATEMENT 1. The Comprehensive Employment and Training Act (CETA), 29 U.S.C. (Supp. V 1981) 801 et seq., authorized the Secretary of Labor to grant federal funds to qualified entities, principally states or local government units, for programs "provid(ing) job training and employment opportunities for economically disadvantaged unemployed, or underemployed persons." 29 U.S.C. (Supp. V 1981) 801; see also S. Rep. 95-891, 95th Cong., 2d Sess. 4, 42-43 (1978); H.R. Rep. 93-659, 93d Cong., 1st Sess. 1-3 (1973). /1/ The statutory scheme was carefully constructed to ensure that programs financed with CETA funds would further the purposes of the Act. Thus, the statute prescribes detailed eligibility standards for participants in CETA programs and sets forth the terms and conditions governing the employment of such program participants. See 29 U.S.C. (Supp. V 1981) 823-827; see also 20 C.F.R. 675.5, 676.21 to 676.30a, 676.51 to 676.76. Each grant recipient is required to submit assurances that its program will comply with all applicable statutory and regulatory requirements (29 U.S.C. (Supp. V 1981) 813(a)(21)). The Act authorizes the Secretary of Labor to conduct audits of CETA grant recipients "(i)n order to assure that funds provided under (the CETA) are used in accordance with its provisions" (29 U.S.C. (Supp. V 1981) 835(a)). /2/ In addition, any interested person, such as a program participant, may file a complaint with the Secretary alleging that a grant recipient has failed to comply with CETA standards (29 U.S.C. (Supp. V 1981) 81611. Section 106(b) of the Act, 29 U.S.C. (Supp. V 1981) 816(b), states that if the Secretary obtains information -- either as the result of an audit or through the receipt of a complaint -- concerning a grant recipient's failure to adhere to the Act's requirements, the Secretary must investigate the matter. The same provision then states that "not later than 120 days after receiving the complaint," the Secretary "shall" make a "final determination" regarding the allegation involved (ibid.). If after notice to the grant recipient and an opportunity for a hearing, the Secretary finds that the grant recipient violated the CETA's requirements, the Secretary may order the grant recipient to repay any misspent funds to the United States. 29 U.S.C. (Supp. V 1981) 816(b) and (d). 2. Respondent, an association of local governments in Arizona, received a CETA subgrant in 1980 from the Department of Economic Security of the State of Arizona. The Department of Economic Security (DES) received the CETA funds from the federal government. On August 22, 1981, a private accounting firm filed with the DES an audit report concerning respondent's subgrant; the audit report was received by the Labor Department grant officer who administered the DES grant on or before October 5, 1981. App., infra, 4a-5a. The grant officer issued a final determination 184 days later, on April 7, 1982, disallowing $2,461 in costs claimed by respondent on the ground that the costs related to the hiring of an ineligible CETA participant (id. at 4a-5a). The DES sought review of the grant officer's determination before an administrative law judge (ALJ). /3/ The ALJ found that respondent had incurred the costs in violation of CETA regulations and ordered the DES to repay the $2,461 to the United States (App., infra, 3a-10a). The DES argues that the length of time between the grant officer's receipt of the audit report and his issuance of the final determination barred the repayment order. The ALJ rejected this claim, holding that Section 106(b) and the implementing regulations were "essentially made for internal order and not intended to deprive the Department of its rights" (App., infra, 9a). The ALJ's decision became the final decision of the Secretary (see 20 C.F.R. 676.9(f)), and respondent sought judicial review in the court of appeals pursuant to 29 U.S.C. (Supp. V 1981) 817. 3. The court of appeals summarily reversed the Secretary's determination (App., infra, 1a-2a). /4/ The court observed that "(t)he Secretary failed to make a final determination within 120 days of receiving a final audit report," and held that the 120-day limit set forth in Section 106(b) is "mandatory and jurisdictional" (App., infra, 2a). The court cited its prior decision in City of Edmonds v. Department of Labor, 749 F.2d 1419 (9th Cir. 1984), in which the court stated that "Congress intended to preclude any action on a complaint if the Secretary failed to make a final determination within 120 days" (749 F.2d at 1422). REASONS FOR GRANTING THE PETITION The question presented in this case is the same as the question now before the Court in Brock v. Pierce County, cert. granted, No. 85-385 (Nov. 4, 1985); i.e., whether Section 106(b) of the CETA bars the Secretary of Labor from recovering misspent CETA funds when he fails to issue a final determination within 120 days. /5/ Here, as in Pierce County, the court of appeals reversed a determination of the Secretary of Labor directing the repayment to the United States of misspent CETA funds because the court viewed Section 106(b) as establishing a jurisdictional bar to the recovery of those funds. We demonstrated in our petition in Pierce County (at 8-16) that this interpretation of Section 106(b) is incorrect because it ignores a well-settled rule of statutory construction and is contrary to the explicit legislative history and purposes of the CETA. CONCLUSION The petition for a writ of certiorari should be held and disposed of as appropriate in light of Brock v. Pierce County, No. 85-385. Respectfully submitted, CHARLES FRIED Solicitor General FRANCIS X. LILLY Solicitor of Labor Department of Labor NOVEMBER 1985 /1/ The statute originally was enacted in 1973 (Pub. L. No. 93-203, 87 Stat. 839, et seq.) and was amended substantially in 1978 (Pub. L. No. 95-524, 92 Stat. 1909 et seq.). The CETA was repealed effective October 13, 1982, and replaced by the Job Training Partnership Act, 29 U.S.C. 1501 et seq. (see Pub. L. No. 97-300), Section 184(a)(1), 96 Stat. 1357). However, the CETA continues to govern administrative or judicial proceedings pending on October 13, 1982, or begun between October 13, 1982, and September 30, 1984 (29 U.S.C. 1591(e)). /2/ Typically, an audit is performed or arranged by the Department of Labor's Office of Inspector General and the audit report is forwarded to the Department of Labor grant officer responsible for the particular grant. The grant officer provides the grant recipient with an opportunity to comment on the report, issues an initial deter;ination, offers to attempt informally to resolve the dispute, and then issues a final determination. 20 C.F.R. 676.86(d), 676.88. The grant recipient is entitled to a hearing before an administrative law judge (ALJ) with respect to the grant officer's final determination. The ALJ then renders a decision that, if not modified or vacated within 30 days, becomes the final decision of the Secretary. A decision adverse to the grant recipient or another interested person is subject to judicial review in a court of appeals. 29 U.S.C. (Supp. V 1981) 816(b), 817(a); 20 C.F.R. 676.88 to 676.92. /3/ Respondent did not appear in the administrative proceeding (App., infra, 3a). /4/ The court of appeals denied the Secretary of Labor's motion to dismiss the petition for review, holding that respondent had standing to seek review of the Secretary's order (App., infra, 1a). /5/ We have served respondent with a copy of our petition for a writ of certiorari in Brock v. Pierce County. APPENDIX