UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
January 17, 1983
INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, et al., Plaintiffs,
RAYMOND J. DONOVAN, Defendant
The opinion of the court was delivered by: GREENE
The Trade Act of 1974, 19 U.S.C. § 2101 et seq., provides federally funded benefits, including Trade Readjustment Allowances (TRA), to workers laid off because of a decline in sales or production by the firms employing them due to competition from imports.
This assistance program is fully funded by the federal government, but it is administered by state unemployment insurance agencies which act as agents of the United States.
19 U.S.C. § 2311. Overpayments appear to have been not uncommon and prior to August 13, 1981, the Act provided for repayment by the worker of any such overpayment only where fraudulent conduct was involved.
In 1981, as part of the Omnibus Budget Reconciliation Act, Pub. L. 97-35, Congress enacted major amendments to the Trade Act. These amendments had the primary effect of substantially reducing the scope of TRA benefits,
but they also authorized recoupment of overpayments in non-fraud cases. Section 2315(a)(1) now provides:
If a cooperating State agency, the Secretary, or a court of competent jurisdiction determines that any person has received any payment under this part to which the person was not entitled, including a payment referred to in subsection (b) of this section [relating to fraud], such person shall be liable to repay such amount to the State agency, or the Secretary, as the case may be, except that the State agency or the Secretary may waive such repayment if such agency or the Secretary determines, in accordance with guidelines prescribed by the Secretary, that --
(A) the payment was made without fault on the part of such individual; and
(B) requiring such repayment would be contrary to equity and good conscience. 19 U.S.C. § 2315(a)(1) (emphasis added).
The Secretary has never issued the guidelines contemplated by section 2315 but, to the contrary, he has directed the state agencies not to grant waivers under any conditions.
The present action was brought by the automobile workers union and several individuals to restrain the Secretary from carrying out further recoupments
until valid guidelines are issued.
The basic question before the Court is whether the Secretary of Labor, who clearly has the power to issue guidelines which conform to the statutory standard -- and presumably some latitude with respect thereto -- also has the power to decline to issue any guidelines whatever.
In the view of the Court, there can be no doubt that the answer must be in the negative.
Both the language of section 2315 and its legislative history indicate that Congress intended to establish a system under which waiver of recoupment would be available where the payment was made without the fault of the recipient and repayment would violate "equity and good conscience."
The Secretary's refusal to issue guidelines thus not only violates the statutory mandate, but it also adversely affects both the state agencies and the individuals who, but for that refusal, would have been eligible for waiver of recoupment. The Secretary's action deprives state agencies of the discretion vested in them by the Congress to determine whether a waiver would be appropriate in an individual case. Cf. Tongol v. Usery, 601 F.2d 1091 (9th Cir. 1979) (Secretary's regulation barring waiver of recoupment overpayments is contrary to congressional intent to allow states to waive recoupment). Additionally, that failure deprives those members of the plaintiff union who would have been able to sustain an "equity and good conscience" claim of the congressionally-mandated opportunity to make such a claim and have it sustained if meritorious.
As indicated in note 8 supra, the Secretary appears now to concede that section 2315(a)(1) requires that guidelines providing for waiver be promulgated, and counsel have advised the Court that the Secretary intends to issue proposed guidelines for waiver "within the next few weeks."
This belated promise does not moot the lawsuit.
In the first place, the Secretary has only committed himself to issue "proposed" guidelines, no commitment at all having been made as to when final, binding guidelines will actually be issued and when they will take effect. During the interim period, however long it may be, the Secretary's current directive to the states would remain in effect, no waivers could be granted under any conditions, and individuals would continue to have benefits recouped without the opportunity for waiver intended by Congress. Additionally, the Secretary has not indicated whether there will be a reprocessing of cases where repayments have been made, nor has he stated that those individuals who had their benefits recouped under § 2315(a)(1) but would satisfy the standards of the new guidelines will have their benefits restored. Thus, since the events subsequent to the filing of the action have not "completely and irrevocably eradicated the effects of the alleged violation"
the case is not moot.
The Secretary cannot and will not be permitted to take advantage of his unlawful refusal to issue guidelines by continuing to recoup overpayments without providing for waivers where equitable, as intended by Congress. Accordingly, an order will be issued enjoining the Secretary, and the state agencies acting as his agents under the Trade Act, from recouping overpayments not resulting from fraudulent conduct on the part of the claimant until appropriate guidelines are published in final form.
At that time, efforts to recoup overpayments may resume in accordance with valid guidelines. The order also directs the Secretary to reprocess all cases in which repayment has been made under § 2315(a)(1) upon the application of the recipient for a waiver, with repayments being restored to those who qualify for waiver under the guidelines. See Martinez v. Marshall, 573 F.2d 555, 557 (9th Cir. 1977).
Upon consideration of the cross motions for summary judgment submitted by the parties, and the entire record herein, it is this 17th day of January, 1983,
ORDERED That plaintiffs' motion for summary judgment be and it is hereby granted in part and denied in part, and defendant's motion for summary judgment be and it is hereby granted in part and denied in part, and it is further
ORDERED That defendant Raymond J. Donovan, as Secretary of the United States Department of Labor, his successors, agents, delegates, employees, and assigns, shall
(a) forthwith cease any effort to recoup overpayments under 19 U.S.C. § 2315(a) in cases not involving claimant fraud until such time as guidelines have been issued by the Secretary in conformity with the statute providing for waiver in circumstances in which payment was made without claimant fault and repayment would be contrary to equity and good conscience;
(b) reprocess any cases in which repayments of such overpayments have been made under 19 U.S.C. § 2315(a) following the issuance of guidelines upon application of a claimant, and if a claimant is granted a waiver upon reprocessing the full amount of his repayment shall be restored to him; and
(c) notify and direct all cooperating state agencies acting as his agents in processing TRA applications under the Trade Act of 1974, as amended, 19 U.S.C. § 2101 et seq.:
(1) that his previous instruction that no waivers of repayment of overpayments be granted is null and void; and
(2) that any efforts under 19 U.S.C. § 2315(a)(1) to recoup overpayments not involving claimant fraud shall be suspended pending issuance by the Secretary of valid guidelines.