The opinion of the court was delivered by: PARKER
BARRINGTON D. PARKER, District Judge:
This matter comes before the Court on the motion for a preliminary injunction, filed by the plaintiff Western Center on Law and Poverty, Inc. ("Western Center") and the opposition of the defendants, the Legal Services Corporation ("LSC" or "Corporation") and Donald Bogard, its president.
This Court previously granted the plaintiff's motion for a temporary restraining order on June 1, 1984. The Court of Appeals for this Circuit granted the defendants' motion for summary reversal of the June 1 temporary restraining order, concluding "that the plaintiff-appellee has not demonstrated irreparable injury so as to justify the extraordinary injunctive relief entered. . . ." No. 84-5354 (June 15, 1984).
Nevertheless, all three members of the Circuit panel supported the majority statement that "based upon the materials before us, it would appear that [Western Center] is likely to succeed on the merits and the District Court correctly so concluded," and the case was remanded for further proceedings.
The Court has considered the entire record in this proceeding, including the March 12, 1984 Recommended Decision of Judge Ralph Drummond, the independent hearing officer appointed by President Bogard; the April 4, 1984 Final Decision of President Bogard, reversing Judge Drummond; the newly-submitted declarations of Mary Burdick, June 14 and 21, 1984, and Philip Henderson, June 20, 1984, responsible officers of Western Center; and the oral argument of counsel for the parties at the June 22, 1984 hearing on the application for preliminary injunction. The Court determines that the plaintiff is entitled to preliminary relief. The findings of fact and conclusions of law for purposes of Fed.R.Civ.P. 52(a) are set out below.
1. The plaintiff, the Western Center on Law and Poverty, Inc. provides specialized state support center services for California legal services programs and clients. As a means to this end, LSC has provided the plaintiff with annual grants since 1974, when the Corporation was created by the Legal Services Corporation Act of 1974 ("LSCA" or "Act"), 42 U.S.C. § 2996 et seq.
2. The defendants are the Legal Services Corporation and its President, Donald P. Bogard.
3. In late 1979, certain clients of the Western Center asked the Center to assist them in opposing Proposition 9, a highly-publicized initiative in California, sponsored by Howard Jarvis. The announced purpose of the Proposition 9 was to drastically reduce state income taxes. Ex. 49 at para. 3; Ex. 13.
4. Later, in 1980 the Western Center submitted a grant proposal to LSC's Regional Office in San Francisco, requesting funding for the purpose of assisting clients in various Proposition 9 activities. Exs. 1-4, 8.
5. The Regional Office urged the Corporation to approve the grant application if its General Counsel concluded that the activities could be funded under the Act. Mario Lewis, the then General Counsel of the LSC, reviewed the grant and concluded that the types of activities listed in the grant proposal were legal. Exs. 16, 17. In March of 1980, the Corporation made a grant of $61,665 to the Center. Ex. 1-5.
6. The Corporation became aware of the Center's use of the Proposition 9 grant as early as late 1980, when Alan Rader, an employee of the Center, described those activities at a meeting of LSC employees and officers in San Francisco. Exs. 16, 49. On basis of that presentation, the Corporation invited Mr. Rader to give the same speech at a second meeting of LSC officials in Denver, Colorado, in January of 1981. Id.; Ex. 1-3.
8. On September 19, 1983, the General Accounting Office ("GAO") issued a report to Senator Orrin Hatch, who had requested the GAO to conduct an investigation of LSC activities in order to determine whether there had been violations of the Legal Services Corporation Act. The GAO report was limited entirely to reviewing selected documents provided by Senator Hatch. The GAO also noted that ...