B-171019, JUN 3, 1975

B-171019, JUN 3, 1975

STATE LIABILITY FOR MISSPENT INDIAN SUBGRANT FUNDS AWARDED UNDER OMNIBUS CRIME CONTROL AND SAFE STREETS ACT OF 1968, 42 U.S.C. SEC. 3701 ET SEQ., AS AMENDED, MAY NOT BE WAIVED BY LEAA, EVEN THOUGH STATE MAY NOT TAKE LEGAL ACTION AGAINST INDIAN TRIBE TO RECOVER SUCH FUNDS BECAUSE OF TRADITIONAL SOVEREIGNTY OF INDIAN TRIBES AND CONSEQUENT JURISDICTIONAL PROBLEMS.

WAIVER BY LEAA OF STATE LIABILITY FOR MISSPENT INDIAN SUBGRANT FUNDS:

THE LAW ENFORCEMENT ASSISTANCE ADMINISTRATION (LEAA) REQUESTS OUR DECISION AS TO WHETHER IT CAN LEGALLY WAIVE STATE LIABILITY FOR MISUSED INDIAN SUBGRANT FUNDS AWARDED PURSUANT TO THE OMNIBUS CRIME CONTROL AND SAFE STREETS ACT OF 1968, 42 U.S.C. SEC. 3701 ET SEQ., AS AMENDED BY THE CRIME CONTROL ACT OF 1973, PUB. L. NO. 93-83, 87 STAT. 197 (AUG 6, 1973) (THE ACT).

THIS LEGISLATION SEEKS TO ASSIST STATE AND LOCAL GOVERNMENTS IN STRENGTHENING AND IMPROVING LAW ENFORCEMENT AND CRIMINAL JUSTICE AT EVERY LEVEL BY NATIONAL ASSISTANCE. TO ACCOMPLISH THIS PURPOSE LEAA IS AUTHORIZED, IN ACCORDANCE WITH SECTIONS 303(A) AND 306(A), TO MAKE BLOCK GRANTS TO STATES WHICH IN TURN ARE AUTHORIZED TO DISBURSE THE AVAILABLE FUNDS TO ELIGIBLE SUBGRANT APPLICANTS. ELIGIBLE SUBGRANT APPLICANTS INCLUDE CITY, COUNTY AND STATE AGENCIES, NONPROFIT ORGANIZATIONS AND INDIAN TRIBES. PURSUANT TO SECTION 202, THE STATES HAVE SET UP STATE PLANNING AGENCIES (SPA'S), WHICH HAVE THE PRIMARY RESPONSIBILITY FOR ADMINISTRATION AND CONTROL OF FUNDS AND, ACCORDING TO LEAA, THE CORRESPONDING LIABILITY FOR IMPROPER EXPENDITURES.

LEAA IN ITS REQUEST FOR DECISION STATES THAT DUE TO THE TRADITION AND LEGAL STATUS OF SOVEREIGNTY WHICH HAS BEEN AFFORDED MANY INDIAN TRIBES IN THE UNITED STATES, SOME STATES MAY BE VIRTUALLY WITHOUT JURISDICTION FOR CIVIL ACTIONS ARISING ON THE RESERVATION UNLESS THE INDIAN TRIBES CONSENT TO SUCH JURISDICTION, AND THAT THE TRIBES MAY NOT BE SUBJECT TO STATE LAW, EXCEPT INSOFAR AS THE UNITED STATES GIVES ITS CONSENT. THEREFORE, ACCORDING TO LEAA, IT IS POSSIBLE THAT THE STATES MAY BE HELD LIABLE FOR THE IMPROPER EXPENDITURE OF THE INDIAN SUBGRANT FUNDS WITHOUT POSSESSING THE AUTHORITY TO ENFORCE THE SUBGRANT CONDITIONS OR TAKE FUND RECOVERY ACTION AGAINST THE TRIBAL SUBGRANTEES. THUS, THE QUESTION PRESENTED IS WHETHER LEAA CAN LEGALLY WAIVE STATE LIABILITY FOR MISUSED INDIAN SUBGRANT FUNDS.

SECTION 303(A)(12) OF THE ACT PROVIDES THAT LEAA SHALL NOT MAKE GRANTS TO THE SPA UNLESS IT HAS FILED A COMPREHENSIVE STATE PLAN WHICH SHALL:

"PROVIDE FOR SUCH FUND ACCOUNTING, AUDIT, MONITORING, AND EVALUATION PROCEDURES AS MAY BE NECESSARY TO ASSURE FISCAL CONTROL, PROPER MANAGEMENT, AND DISBURSEMENT OF FUNDS RECEIVED UNDER THIS TITLE."

LEAA GUIDELINE MANUAL M 4100-1B PERTAINING TO "STATE PLANNING AGENCY GRANTS" PROVIDES THAT IT WILL BE A FUNCTION OF THE SPA TO "MONITOR PROGRESS AND EXPENDITURES UNDER GRANTS TO STATE LAW ENFORCEMENT AND CRIMINAL JUSTICE AGENCIES, LOCAL UNITS OF GOVERNMENT AND OTHER RECIPIENTS OF LEAA GRANT FUNDS." LEAA GUIDELINE MANUAL M 7100.1A "FINANCIAL MANAGEMENT FOR PLANNING AND ACTION GRANTS" PROVIDES, IN PERTINENT PART, THAT:

STATE PLANNING AGENCY SUPERVISION AND MONITORING RESPONSIBILITY

"THE STATE PLANNING AGENCY HAS PRIMARY RESPONSIBILITY FOR ASSURING PROPER ADMINISTRATION OF PLANNING AND ACTION FUNDS AWARDED UNDER TITLE I. THIS INCLUDES RESPONSIBILITY FOR THE PROPER CONDUCT OF THE FINANCIAL AFFAIRS OF ANY SUBGRANTEE OR CONTRACTOR INSOFAR AS THEY RELATE TO PROGRAMS OR PROJECTS FOR WHICH TITLE I FUNDS HAVE BEEN MADE AVAILABLE - AND FOR DEFAULT IN WHICH THE STATE PLANNING AGENCY MAY BE HELD ACCOUNTABLE FOR IMPROPER USE OF GRANT FUNDS."

UNDER THE ABOVE PROVISION OF LAW AS IMPLEMENTED BY THE QUOTED AGENCY DIRECTIVES, AND THE CONDITIONS OF THE GRANT ITSELF, LEAA CONSIDERS AN SPA LIABLE FOR THE MISUSE OF GRANT FUNDS BY A SUBGRANTEE. APPARENTLY THE PRIMARY REASON LEAA DESIRES TO WAIVE STATE LIABILITY FOR IMPROPER EXPENDITURES OF GRANT FUNDS BY AN INDIAN SUBGRANTEE, AS DISTINGUISHED FROM OTHER SUBGRANTEES, IS THAT THE STATE MAY BE WITHOUT LEGAL AUTHORITY TO ENFORCE THE SUBGRANT CONDITIONS OR TAKE COURT ACTION AGAINST THE INDIAN SUBGRANTEE TO RECOVER GRANT FUNDS IMPROPERLY EXPENDED. AS TO WAIVER FOR THE REASON IN QUESTION, HOWEVER, WE NOTE THE FOLLOWING STATEMENT IN LEAA'S LETTER:

"*** LEAA WOULD BE FORCED TO PROCEED ONLY AGAINST A JUDGEMENT PROOF DEFENDANT - THE INDIAN TRIBES - TO RECOVER THE MISSPENT FUNDS."

THUS IT WOULD APPEAR THAT EVEN WHERE A STATE COULD TAKE LEGAL ACTION AGAINST AN INDIAN SUBGRANTEE AND OBTAIN A FAVORABLE JUDGMENT IT MAY NOT BE ABLE TO SATISFY THE JUDGMENT.

IT IS OUR OPINION THAT LEAA HAS NO MORE AUTHORITY TO WAIVE THE LIABILITY OF AN SBA FOR AN IMPROPER EXPENDITURE OF GRANT FUNDS BY AN INDIAN SUBGRANTEE THAN IT HAS TO WAIVE SBA'S LIABILITY FOR AN IMPROPER EXPENDITURE BY ANY OTHER SUBGRANTEE. WE AGREE WITH THE LEGAL OPINION NO. 74-35, DATED NOVEMBER 19, 1973, OF THE ASSISTANT ADMINISTRATOR, GENERAL COUNSEL OF LEAA WHEREIN IT IS STATED:

"THE STATE *** HAS QUESTIONED ITS LIABILITY UNDER THE LEAA ACT FOR SUBGRANTS MADE TO INDIAN TRIBES. IT IS THE OPINION OF THIS OFFICE THAT THE *** (STATE) *** WOULD HAVE THE SAME LIABILITY AS IT WOULD HAVE UNDER ANY OTHER ACTION OR DISCRETIONARY GRANT. BOTH IN THE ACCEPTANCE OF THE ACTION GRANT FUNDS AND IN ADMINISTRATION OF THE DF GRANTS, THE STATE AGREES TO PROVIDE FOR SUPERVISION AND MONITORING OF THE GRANTS. THE PRIORITY OF CONTRACTS EXPRESSED BY THE GRANT INSTRUMENT WILL MAKE THE STATE POTENTIALLY LIABLE FOR MISSPENT FEDERAL FUNDS. FOR EXAMPLE, IN ITS APPLICATION FOR AN ACTION GRANT, THE STATE ATTESTS THAT UNDER THE GENERAL CONDITIONS APPLICABLE TO ADMINISTRATION OF GRANTS UNDER PART C AND PART E OF TITLE I, THAT:

'10. RESPONSIBILITY OF STATE AGENCY.

THE STATE AGENCY MUST ESTABLISH FISCAL CONTROL AND FUND ACCOUNTING PROCEDURES WHICH ASSURE PROPER DISBURSEMENT OF, AND ACCOUNTING PROCEDURES WHICH ASSURE PROPER DISBURSEMENT OF, AND ACCOUNTING FOR GRANT FUNDS AND REQUIRED NON-FEDERAL EXPENDITURES. THIS REQUIREMENT APPLIES TO FUNDS DISBURSED BY UNITS OF LOCAL GOVERNMENT AS WELL AS TO FUNDS DISBURSED IN DIRECT OPERATIONS OF THE STATE PLANNING AGENCY.' M 4300.1, APPENDIX 4-1, NUMBER 10.

"ALSO A DISCRETIONARY GRANT, IF IT IS ADMINISTERED THROUGH A STATE PLANNING AGENCY, MAKES THE STATE LIABLE FOR ADMINISTERING THE FISCAL REGULATIONS AND PROVISIONS OF THE ACT, (SEE DISCRETIONARY GRANT APPLICATION, PAGE 5, PROVISIONS 5 THRU 17)."

FURTHERMORE, EVEN THOUGH IN SOME CASES A STATE MAY NOT BE ABLE TO BRING AN ACTION IN A STATE COURT AGAINST AN INDIAN TRIBE FOR MISSPENT GRANT FUNDS, THE RECORD BEFORE US DISCLOSES THAT THERE MAY BE OTHER ALTERNATIVE COMPETENT FORUMS SUCH AS FEDERAL COURTS AND TRIBAL COURTS IN WHICH A STATE MAY BE ABLE TO BRING SUCH AN ACTION.

IN ANY EVENT, AS INDICATED ABOVE, IT IS OUR VIEW THAT LEAA MAY NOT LEGALLY WAIVE STATE LIABILITY FOR MISUSED INDIAN SUBGRANT FUNDS EVEN THOUGH THE STATE MAY NOT BE ABLE TO BRING LEGAL ACTION AGAINST THE INDIAN TRIBE TO RECOVER THE FUNDS IMPROPERLY EXPENDED.