20 U.S.C. § 1234a — Recovery of funds

Page 919 TITLE 20—EDUCATION § 1234a ‘‘(2) The amendments made by this part [part D (§ 3501) of title III of Pub. L. 100–297, enacting sections 1234f to 1234i of this title and amending this section and sections 1232d and 1234a to 1234e of this title] shall not apply to any case in which the recipient, prior to the effective date of this part, received a written notice that such recipient must return funds to the Depart- ment.’’ EFFECTIVE DATE Subchapter effective 120 days after Nov. 1, 1978, see section 1261 of Pub. L. 95–561, set out as a note under section 1232c of this title. § 1234a. Recovery of funds (a) Preliminary departmental decision; grounds of determination; notice requirements; prima facie case; amount of funds recoverable (1) Whenever the Secretary determines that a recipient of a grant or cooperative agreement under an applicable program must return funds because the recipient has made an expenditure of funds that is not allowable under that grant or cooperative agreement, or has otherwise failed to discharge its obligation to account properly for funds under the grant or coopera- tive agreement, the Secretary shall give the re- cipient written notice of a preliminary depart- mental decision and notify the recipient of its right to have that decision reviewed by the Of- fice and of its right to request mediation. (2) In a preliminary departmental decision, the Secretary shall have the burden of establishing a prima facie case for the recovery of funds, in- cluding an analysis reflecting the value of the program services actually obtained in a deter- mination of harm to the Federal interest. The facts to serve as the basis of the preliminary de- partmental decision may come from an audit re- port, an investigative report, a monitoring re- port, or other evidence. The amount of funds to be recovered shall be determined on the basis of section 1234b of this title. (3) For the purpose of paragraph (2), failure by a recipient to maintain records required by law, or to allow the Secretary access to such records, shall constitute a prima facie case. (b) Review of preliminary departmental decision; form and contents of application for review; inadequate preliminary decisions; duties of recipient to subrecipients after preliminary decision; burden of proof (1) A recipient that has received written no- tice of a preliminary departmental decision and that desires to have such decision reviewed by the Office shall submit to the Office an applica- tion for review not later than 60 days after re- ceipt of notice of the preliminary departmental decision. The application shall be in the form and contain the information specified by the Of- fice. As expeditiously as possible, the Office shall return to the Secretary for such action as the Secretary considers appropriate any prelimi- nary departmental decision which the Office de- termines does not meet the requirements of sub- section (a)(2). (2) In cases where the preliminary depart- mental decision requests a recovery of funds from a State recipient, that State recipient may not recover funds from an affected local edu- cational agency unless that State recipient has— (A) transmitted a copy of the preliminary departmental decision to any affected sub- recipient within 10 days of the date that the State recipient in a State administered pro- gram received such written notice; and (B) consulted with each affected subrecipient to determine whether the State recipient should submit an application for review under paragraph (1). (3) In any proceeding before the Office under this section, the burden shall be upon the recipi- ent to demonstrate that it should not be re- quired to return the amount of funds for which recovery is sought in the preliminary depart- mental decision under subsection (a). (c) Time for hearing A hearing shall be set 90 days after receipt of a request for review of a preliminary depart- mental decision by the Office, except that such 90-day requirement may be waived at the discre- tion of the judge for good cause. (d) Review of findings of fact in preliminary de- cision; conclusiveness; remand; new or modi- fied findings (1) Upon review of a decision of the Office by the Secretary, the findings of fact by the Office, if supported by substantial evidence, shall be conclusive. However, the Secretary, for good cause shown, may remand the case to the Office to take further evidence, and the Office may thereupon make new or modified findings of fact and may modify its previous action. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence. (2) During the conduct of such review, there shall not be any ex parte contact between the Secretary and individuals representing the De- partment or the recipient. (e) Time for filing petition for review of prelimi- nary decision Parties to the proceeding shall have 30 days to file a petition for review of a decision of the ad- ministrative law judges with the Office of the Secretary. (f) Stay of collection or other adverse action by Secretary against recipient (1) If a recipient submits a timely application for review of a preliminary departmental deci- sion, the Secretary shall take no collection ac- tion until the decision of the Office upholding the preliminary Department decision in whole or in part becomes final agency action under subsection (g). (2) If a recipient files a timely petition for ju- dicial review under section 1234g of this title, the Secretary shall take no collection action until judicial review is completed. (3) The filing of an application for review under paragraph (1) or a petition for judicial re- view under paragraph (2) shall not affect the au- thority of the Secretary to take any other ad- verse action under this subchapter against the recipient. (g) Preliminary decision as final agency action A decision of the Office regarding the review of a preliminary departmental decision shall be- come final agency action 60 days after the re- Page 920 TITLE 20—EDUCATION § 1234b cipient receives written notice of the decision unless the Secretary either— (1) modifies or sets aside the decision, in whole or in part, in which case the decision of the Secretary shall become final agency ac- tion when the recipient receives written no- tice of the Secretary’s action, or (2) remands the decision to the Office. (h) Publication of decisions as final agency ac- tions The Secretary shall publish decisions that have become final agency action under sub- section (g) in the Federal Register or in another appropriate publication within 60 days. (i) Collection amounts and procedures The amount of a preliminary departmental de- cision under subsection (a) for which review has not been requested in accordance with sub- section (b), and the amount sustained by a deci- sion of the Office or the Secretary which be- comes final agency action under subsection (g), may be collected by the Secretary in accordance with chapter 37 of title 31. (j) Compromise of preliminary departmental de- cisions; preconditions; notice requirements (1) Notwithstanding any other provision of law, the Secretary may, subject to the notice re- quirements of paragraph (2), compromise any preliminary departmental decision under this section which does not exceed the amount agreed to be returned by more than $200,000, if the Secretary determines that (A) the collection of any or all or the amount thereof would not be practical or in the public interest, and (B) the practice which resulted in the preliminary de- partmental decision has been corrected and will not recur. (2) Not less than 45 days prior to the exercise of the authority to compromise a preliminary departmental decision pursuant to paragraph (1), the Secretary shall publish in the Federal Register a notice of intention to do so. The no- tice shall provide interested persons an oppor- tunity to comment on any proposed action under this subsection through the submission of written data, views, or arguments. (k) Limitation period respecting return of funds No recipient under an applicable program shall be liable to return funds which were ex- pended in a manner not authorized by law more than 5 years before the recipient received writ- ten notice of a preliminary departmental deci- sion. (l) Foregoing of interest during period of admin- istrative review No interest shall be charged arising from a claim during the administrative review of the preliminary departmental decision. (Pub. L. 90–247, title IV, § 452, as added Pub. L. 95–561, title XII, § 1232, Nov. 1, 1978, 92 Stat. 2347; amended Pub. L. 100–297, title III, § 3501(a), Apr. 28, 1988, 102 Stat. 350; Pub. L. 103–382, title II, § 250(a), Oct. 20, 1994, 108 Stat. 3926.) Editorial Notes AMENDMENTS 1994—Subsec. (a)(2). Pub. L. 103–382, § 250(a)(1), sub- stituted ‘‘establishing a prima facie case for the recov- ery of funds, including an analysis reflecting the value of the program services actually obtained in a deter- mination of harm to the Federal interest.’’ for ‘‘stating a prima facie case for the recovery of funds.’’ Subsec. (b)(1). Pub. L. 103–382, § 250(a)(2), substituted ‘‘60 days’’ for ‘‘30 days’’. Subsec. (d). Pub. L. 103–382, § 250(a)(3), designated ex- isting provisions as par. (1) and added par. (2). 1988—Pub. L. 100–297 amended section generally, sub- stituting provisions relating to recovery of funds for provisions relating to audit determinations. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–297 effective 180 days after Apr. 28, 1988, but not applicable to recipients receiving written notice to return funds prior to that date, see section 3501(b) of Pub. L. 100–297, set out as a note under section 1234 of this title. § 1234b. Measure of recovery (a) Amount returned proportionate to extent of harm violation caused to an identifiable Fed- eral interest; reduction; determination of identifiable Federal interest (1) A recipient determined to have made an unallowable expenditure, or to have otherwise failed to discharge its responsibility to account properly for funds, shall be required to return funds in an amount that is proportionate to the extent of the harm its violation caused to an identifiable Federal interest associated with the program under which the recipient received the award. Such amount shall be reduced in whole or in part by an amount that is proportionate to the extent the mitigating circumstances caused the violation. (2) For the purpose of paragraph (1), an identi- fiable Federal interest includes, but is not lim- ited to, serving only eligible beneficiaries; pro- viding only authorized services or benefits; com- plying with expenditure requirements and condi- tions (such as set-aside, excess cost, mainte- nance of effort, comparability, supplement-not- supplant, and matching requirements); pre- serving the integrity of planning, application, recordkeeping, and reporting requirements; and maintaining accountability for the use of funds. (b) Reduction or waiver of amount based on mitigating circumstances; burden of proof; determination of mitigating circumstances; weight, etc., of written request for guidance (1) When a State or local educational agency is determined to have made an unallowable ex- penditure, or to have otherwise failed to dis- charge its responsibility to account properly for funds, and mitigating circumstances exist, as described in paragraph (2), the judge shall re- duce such amount by an amount that is propor- tionate to the extent the mitigating cir- cumstances caused the violation. Furthermore, the judge is authorized to determine that no re- covery is justified when mitigating cir- cumstances warrant. The burden of dem- onstrating the existence of mitigating cir- cumstances shall be upon the State or local edu- cational agency. (2) For the purpose of paragraph (1), miti- gating circumstances exist only when it would be unjust to compel the recovery of funds be- cause the State or local educational agency—