the case as well as the discussion of the evidence in his Recommended Decision.
Furthermore, whatever argument plaintiff may have that the Presiding Officer failed to consider conditional refunding, there is no question that the LSC Vice President, Mr. Jarvis, considered and rejected that alternative when NCC appealed the Recommended Decision for LSC's final decision. See 45 C.F.R. § 1625.11. At that time, Mr. Jarvis had the full record before him for review, and nevertheless concluded that conditional refunding was not merited under the circumstances. At most, plaintiff was entitled to have conditional refunding considered, and it clearly was before LSC reached a final decision on the denial of refunding.
Neither can this Court find that the submission of the affidavits of Nelwynne Hollie attesting to NCC's post-hearing progress at reform rendered the decision to deny refunding on the basis of financial abuses arbitrary and capricious, or unsupported by substantial evidence. Plaintiff contends that Ms. Hollie's affidavits were uncontroverted, and thereby constituted the only evidence on the record of NCC's current status. Even so, this Court cannot find the decision to deny NCC refunding improper. The Recommended Decision conveys the Presiding Officer's opinion that all efforts at reform made by NCC came too late, and under too much pressure of the threat of lost funding, to provide a reassuring basis for granting refunding, even conditionally. Recommended Decision, at 30, 35. This Court can find no sound basis to second-guess that judgment or label it "arbitrary and capricious."
At oral argument before this Court NCC also asserted that, in light of LSC's obligation under the Act to "ensure that . . . appropriate training and support services are provided in order to provide . . . assistance to. . . significant segments of the population of eligible clients," 42 U.S.C. § 2996f(a)(2) (C)(ii), the decision to deny refunding to NCC despite evidence of its efforts at reform was arbitrary and capricious because NCC is the only existing organization capable of providing such services. In making this argument, NCC relies on the express finding of the Presiding Officer that there is a need for an independent organization, outside of LSC itself, to serve as a conduit of client input into the Legal Services program, and that LSC had failed to establish that any existing organization other than NCC could fulfill this function. Recommended Decision, at 30-31.
However, the Presiding Officer also found that NCC had failed in its mission to provide a conduit of information to local Board members and clients as well as a conduit back to the Legal Services program from those individuals. Recommended Decision, at 23-24. The Presiding Officer found that this failure of NCC to fulfill this function, one of its primary functions, constituted an additional substantial basis for the denial of refunding. Recommended Decision, at 24.
Therefore, although LSC has an obligation to ensure that the services intended to be provided by NCC are in fact provided, this Court cannot conclude that an organization that has been found corrupt and ineffective in the past must be refunded solely on the basis of its own assurances that it will improve simply because no ready alternative has yet been found. Instead, given LSC's determination that NCC's assurances and evidence of reform were inadequate, LSC must now find an alternative to actually fulfill the necessary functions, or be prepared to be called to account for its failure to do so in some legislative or judicial proceeding separate from this action.
5) Access to Documents
The plaintiff also challenges, as an error of law and a finding unsupported by the evidence on the record, the Presiding Officer's conclusion that NCC's failure to grant the review team access to all requested records constituted a substantial basis to deny refunding.
In seeking access to the documents, LSC relied on Condition 6 of NCC's grant, by which NCC agreed to
cooperate with all data collection and evaluation activities undertaken by the Corporation and give any authorized representatives of [LSC] . . . access to all records, books, papers or documents.
The plaintiff maintains that this grant provision is in excess of LSC's statutory authority. NCC maintains that under the provisions of the LSCA pertaining to the maintenance and disclosure of records, LSC is entitled only to require grantees to maintain records "with respect to funds provided by grant or contract" and to demand access to those particular documents at "reasonable times." 42 U.S.C. § 2996g(b).
The defendant argues, however, that its right of access to documents does not derive solely from § 2996g(b)'s right to require certain categories of documents to be maintained and to allow inspection of them, but rather from LSC's broader right under § 2996f(d) to monitor the activities of grantees, thus encompassing a broader category of documents.
In light of this Court's affirmance of LSC's denial of refunding on the independently sufficient grounds of NCC's financial abuse and mismanagement and its failure to fulfill its primary functions under the grant, this Court need not reach the issue of NCC's denial of access to documents. Nevertheless, as a matter of law, this Court fully concurs with the Presiding Officer's conclusion that LSC's obligation to evaluate and review its grant programs to ensure compliance with the law provides sufficient statutory authority to support the broad right of access to documents set forth in Condition 6 of the grant. "Without reviewing technical assistance and correspondence files, LSC cannot be sure that funds are not or were not being spent for prohibited activities." Recommended Decision, at 36.
Likewise, this Court cannot accept plaintiff's contention that, because NCC later agreed to disclose the documents in question, finding the denial of access to the documents a substantial basis for the denial of refunding was arbitrary and capricious. On February 7, 1984 counsel for NCC did in fact submit a proposal to the Presiding Officer for the disclosure of all documents either to LSC, or to the Presiding Officer for in camera review. NCC contends that, in light of this proposal, LSC's continued reliance on this issue as a basis to deny refunding was arbitrary and capricious, evidencing LSC's unreasonable desire to deny refunding and refusal to consider informal reconciliation.
However, NCC's offer came well after the initial request for documents by the review team, and only when NCC was under the threat of losing refunding, a process which its denial of access to the documents could have potentially prevented being initiated. Therefore, this Court cannot conclude that LSC acted arbitrarily and capriciously in pursuing action against NCC for harms that could not be undone by NCC's later efforts, or that the denial of refunding on this basis is not supported by substantial evidence.
Therefore, for the reasons set forth above this Court finds that the final determination of LSC denying refunding of NCC should be affirmed, and summary judgment granted for the defendant.
An order consistent with the ruling herein accompanies this opinion.
For the reasons set forth in this Court's memorandum opinion, it is this 19th day of August, 1985
ORDERED that summary judgment is hereby granted for the defendant, and judgment is hereby entered for the defendant.