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Dallas County Community Action Committee Inc. v. Shalala

May 05, 1998

DALLAS COUNTY COMMUNITY ACTION COMMITTEE, INC., PLAINTIFF, V. DONNA SHALALA, DEFENDANT.


The opinion of the court was delivered by: Thomas F. Hogan, United States District Judge.

Plaintiff's motion for a preliminary injunction DENIED.

The opinion of the court was delivered by: Thomas F. Hogan

MEMORANDUM

Pending before the Court is plaintiff's motion for a preliminary injunction. The Court held a hearing on this motion on May 1, 1998. After considering the submissions of both parties, and the arguments made at the hearing, the Court will deny plaintiff's motion.

I. Factual Background

A. Parties

Plaintiff is the Dallas County Community Action Committee (DCCAC), a non-profit that provides "a variety of services and benefits to poor people throughout Dallas County, Texas." (Complaint at P3). DCCAC has received funds from the state of Texas since 1981, and the state has allotted plaintiff funds from its federal block grant again this year.

Defendant is the Secretary of the Department of Health and Human Services ("HHS"). HHS provides some services and oversight, in connection with funds disbursed to the states under the Community Services Block Grant Act, 42 U.S.C. at 9901-9912 ("CSBG Act").

A. Statutory Framework

DCCAC receives funding from the State of Texas under the Community Services Block Grant Act. Congress enacted that statute in 1981, as part of the Reagan Administration's efforts to transfer greater decision-making in social programs to the states. See S.Rep. No. 484 at 4. The CSBG Act authorizes the Secretary of HHS to make grants to the states to ameliorate poverty in local communities. In 1998, HHS has budgeted $470 million in grants, with $23.6 million slated for Texas. HHS grants that money to states, such as Texas, which then fund local programs that pursue the statute's goals.

By accepting funds under the CSBG Act, states accept certain restrictions on their behavior. First, they certify that they will "ensure" that all recipients of funds will use those funds for eligible activities. 42 U.S.C. at 9904(c)(1) (Defining scope of eligible activities). The states agree to repay amounts that are not spent in accordance with the CSBG. 42 U.S.C. at 9904(g).

Second, the states agree not to terminate or reduce funding to an entity, except after notice and a hearing. 42 U.S.C. at 9904(c)(11). A State's decision to terminate or to reduce funding, even if made after notice and a hearing, is reviewable by the Secretary of HHS. 42 U.S.C. at 9905a(b).

Statutes and regulations also impose obligations and powers on the Secretary of HHS, in connection with grant recipients. If a State effects a termination or reduction of funding prior to complying with the requirements of at 9904(c)(11), the CSBG Act directs the Secretary to assume financial responsibility for the aggrieved entity and to directly fund that entity. 42 U.S.C. at 9905a(a). Under those circumstances, HHS must deduct the amount of direct funding from the recipient State's block grant. Id. In addition, the Secretary "may," under certain circumstances provide a "working capital advance payment" to a grantee who otherwise might not survive financially. 45 C.F.R. at 74.22(f).

B. Factual Background

The Texas Department of Housing and Community Affairs ("TDHCA") administers the CSBG program for the State of Texas. It does so by entering into contracts with grantee entities. DCCAC is an eligible entity under the CSBG Act, and by contract of January 20, 1998, TDHCA allotted $1,617,443 to DCCAC for FY 1998. There is no ...


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