The opinion of the court was delivered by: PARKER
BARRINGTON D. PARKER, District Judge.
In this proceeding, four state legal services centers seek to enjoin the Legal Services Corporation ("LSC" or "Corporation") from refusing to renew the centers' regional training grants for 1984. These plaintiffs receive grants from the LSC for the purpose of providing a variety of support services to local legal services programs. As one aspect of this support, the plaintiffs operate regional training centers which provide training and related services. These services contribute to the effectiveness of the local legal services programs and thus are of value to legal services clients.
The plaintiffs argue that the Corporation's decision not to renew their training center grants is contrary to the recently enacted appropriations measure, Pub.L. 98-166 (Findings of Fact para. 5, infra), and violates the procedural provisions of the Legal Services Corporation Act of 1974 ("LSCA" or "Act"), 42 U.S.C. § 2996 et seq. Specifically, the plaintiffs argue that the appropriations measure requires the Corporation to increase the funding for their training center grants, and that in any event, they are entitled to hearings before their funding may be terminated. They also argue that the Corporation has breached 1981 grant agreements with the plaintiffs.
On January 20, 1984, this Court entered a temporary restraining order which required the Corporation to maintain a segregated account for the benefit of the plaintiffs, and to pay the plaintiffs a proportionate share of those funds. The Court renewed the order on January 30, 1984, and on February 10, 1984, the order was extended with the consent of the parties until the Court rules on the plaintiffs' motion for a preliminary injunction. The third order is similar to the earlier ones with the exception that the Corporation was unwilling to continue to make payments from the account.
The legal memoranda, affidavits, depositions, oral argument of counsel, and the entire record have been fully considered, and the Court finds that the plaintiffs have met the requirements for the requested equitable relief. Accordingly, a preliminary injunction should issue. The findings of fact and conclusions of law supporting this determination are set out below.
In the event that the Corporation's Congressional appropriation is not sufficient to enable the Corporation to renew this grant, at least sixty (60) days before the end of the grant term, the Corporation will notify the grantee that it does not intend to renew this grant.
2. The defendants are the Legal Services Corporation and Donald Bogard, the president of the Corporation and its chief executive officer. The LSC is a private, nonprofit corporation created "for the purpose of providing financial support for legal assistance in noncriminal proceedings or matters to persons financially unable to afford legal assistance." 42 U.S.C. § 2996b(a). The Corporation is specifically authorized to fund "training and technical assistance" programs. See n. 3, supra.
3. The LSCA provides that the Corporation shall be governed by an 11-member board of directors, appointed by the President of the United States with the advice and consent of the Senate. 42 U.S.C. § 2996c(a). At present, a full board of directors has not been confirmed by the Senate.
4. By letter of December 1981, the Corporation extended the September 1981 grant agreements in two separate contracts with the plaintiffs. In each case, the smaller of the two grants was for the period January 1, 1982 to December 31, 1982, see, e.g., Rodgers Affidavit, Exhibit 2, and the larger grant was for the period October 1, 1982 to December 31, 1983.
Id., Exhibit 3. The funds obligated for the later period were not carryover funds from previous years, and were specifically targeted for the operation of the training centers for the last three months of 1982 and all of 1983.
The grant agreements also cautioned that the grants "are awarded on a non-recurring basis and do not affect [the centers'] annual funding level" and that a decision not to renew the grants would not "constitute a denial of refunding within the meaning of section 1011 of the Legal Services Corporation Act," 42 U.S.C. § 2996j.
5. On December 21, 1982, Congress amended the LSC appropriations for FY 1983 by attaching an affirmative rider to a funding measure. The rider required that all current grantees receive 1983 grants equaling their 1982 grants, unless contrary action was taken by a legally confirmed board of the Corporation. H.J.Res. 631, Pub.L. 97-377, 96 Stat. 1830, 1876 (1982). Nearly identical language has since appeared in two subsequent continuing resolutions, Pub.L. 98-107, 97 Stat. 733, 739 (1983) and Pub.L. 98-151, 97 Stat. 964, 973 (1983), and most recently was incorporated for a fourth time in the FY 1984 Appropriations Act for the Departments of Commerce, Justice, State, the Judiciary and Related Agencies, Pub.L. 98-166, 97 Stat. 1071, 1088 (1983).
7. In October of 1983, the training centers submitted applications for refunding of their training center activities to the Corporation. Shortly after these submissions, Gregg Hartley, the Director of the LSC Office of Field Services, wrote letters notifying the plaintiffs that:
Pursuant to the original grant award, Condition #12, this is notification that the Corporation will not renew your grant.
Condition No. 12, as previously discussed, stated that the Corporation could refuse to renew the plaintiffs' grants on the basis of insufficient funds. See supra at 1182. In addition, the letters explained the consequences of the LSC action:
Your organization should begin to phase out the related grant activities including minimizing expenditures between now and the end of the year. A final audit will be required as of December 31, 1983
Any unused grant funds must be returned to the Corporation no later than January 31, 1984.
The decision to deny the plaintiffs' refunding was not based on a determination that their performances were inadequate. Hartley Dec. at para. 35, Hartley Dep. at 90-91. The LSC has taken no action on the plaintiffs' applications for refunding, Hartley Dep. at 62-64, and has denied the ...