grantees to determine "whether the grantee has carried out [its] activities and its certifications in accordance with the requirements and the primary objectives of this chapter and with other applicable laws, and whether the grantee has a continuing capacity to carry out those activities in a timely manner." 42 U.S.C. § 5304(d)(1).
Thus Section 104 has a somewhat forward-looking tilt: it deals with application requirements and lodges in the Secretary the discretion to determine whether grantees will be able to carry forth under the program in the coming year. Although Section 104(d) contemplates audits and allows the Secretary to make adjustments resulting from those audits, the Section is not designed to be a dispute resolution mechanism.
By contrast, Section 111 most closely captures what the Secretary is attempting to accomplish in this case. Section 111 contemplates that there will be instances in which a grantee and the Secretary disagree about whether the grantee has substantially complied with community development requirements.
This Section establishes a mechanism for resolving these types of disputes -- to wit, by submitting them to a hearing officer who can make findings and a determination in accordance with an administrative record which can then be judicially reviewed, if necessary.
This reading of the statute gives meaning to both Section 104 and Section 111. By contrast, to read the statute as the defendants would have me do, would be to make Section 111 a nullity. Indeed, the Secretary does not seem adverse to making Section 111 a nullity -- in the 13 years this statute has been in existence, the Secretary has never initiated Section 111 procedures against any grant recipient. See Deposition of Vincent Landau, HUD Asst. General Counsel, at 90-91. When desiring to compel compliance with its interpretation of the statute, the Department has always proceeded through the Section 104(d) adjustment mechanism. Interpreting the statute as the Department has -- that is, giving the Secretary the unilateral ability to reach a Section 111 result through Section 104 -- means there is simply no incentive for the Secretary to utilize the Section 111 procedure.
While that may make pragmatic sense for the Secretary, I do not believe the law is written that way and I am not prepared to interpret the statute in a manner which renders one portion of it a nullity. See Mountain States Tel. & Tel. v. Pueblo of Santa Ana, 472 U.S. 237, 105 S. Ct. 2587, 2595, 86 L. Ed. 2d 168 (1985). Rather, as the plaintiff has noted, "if two sections potentially conflict, the Court must reconcile the discordant provisions, if at all possible." Pl. Br. at 29, citing Don't Tear It Down v. Pennsylvania Ave. Dev. Corp., 206 U.S. App. D.C. 122, 642 F.2d 527, 533 (D.C. Cir. 1980). In this instance, the two sections can best be reconciled by placing them in their proper contexts and reading them accordingly. Section 104(d), falling as it does within the grant application section of the statute (Section 104) must be read to give the Secretary the authority to make adjustments on grant applications pursuant to audits made of those applications. By contrast, Section 111 applies not to the application process, but to the resolution of disputes concerning alleged past noncompliance.
What is at issue in the two disputes underlying this case is whether Kansas City's actions in assessing abutting homeowners after 1978 and in not submitting GDR forms from nonprofit subrecipients constituted noncompliance with the statute. See fn. 1, supra. These disputes have no connection to the application process and thus are not within the reach of Section 104. These disputes concern whether Kansas City's actions amounted to noncompliance and thus are the types of concerns Section 111 was designed to address. Since the City and HUD disagree about what constitutes compliance on these issues, the fairest method of resolving the issue is by submitting it to an administrative adjudication as contemplated by Section 111.
Plaintiff's motion for summary judgment shall be granted. An appropriate Order accompanies this Memorandum.
For the reasons stated in the Memorandum dated August 5, 1987, it is this 5th day of August, 1987, hereby
ORDERED that plaintiff's motion for summary judgment be granted; and thus it is further
DECLARED that defendants are not authorized to terminate or reduce the amount of the annual Community Development Block Grant ("CDBG") required to be allocated to the plaintiff for fiscal year 1987 pursuant to the provisions of Sections 106(b) of Title I of the Housing and Community Development Act of 1974 ("the Act"), or limit to particular CDBG programs, projects or activities the use to which such grant may be put by plaintiff, unless and until defendants first comply with the requirements and procedures set forth in Section 111 of the Act and 24 C.F.R. § 570.913(c).