                                                       D ecem ber 16, 1977


77-71     MEMORANDUM OPINION FOR THE
          GENERAL COUNSEL OF THE DEPARTMENT
          OF THE TREASURY

          Termination of Federal Financial Assistance Under
          the Civil Rights Act of 1964


   This responds to your inquiry concerning the requirement in Title VI
o f the Civil Rights Act of 1964 that action terminating Federal financial
assistance shall not take effect until the agency head has sent a report to
the pertinent congressional committees and 30 days have elapsed after
the filing of the report. Specifically, your question is whether such a
report may be made at the start of an administrative proceeding or only
at a later stage.
   You have concluded that the earliest action that could trigger the
requirement of a report to Congress is the issuance of the initial deci­
sion of the administrative law judge, but it appears that the Office of
Revenue Sharing favors an interpretation permitting a report to Con­
gress to be made immediately after service of the administrative com­
plaint. F or reasons discussed below, our opinion is that under Title VI
the action that gives a basis for and necessitates a report to Congress is
a final administrative decision terminating assistance. The same interpre­
tation should apply to the nondiscrimination provision of the 1972
revenue sharing statute.
    1.   Title V I o f the Civil Rights A ct o f 1964 prohibits discrimination
on the grounds o f race, color, or national origin in programs receiving
Federal financial assistance. Section 601, 42 U.S.C. 2000d. Under §602,
42 U.S.C. 2000d-l, Federal agencies w ere directed to issue regulations
implementing the requirement of nondiscrimination. Section 602 pro­
vides that one means of enforcing the requirements of the regulations is
“the termination of or refusal to grant or continue assistance . . . to
any recipient as to whom there has been an express finding on the
record, after opportunity for hearing, o f a failure to comply with any
such requirement. . . .” Section 602 provides further that:

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     In the case of any action terminating, or refusing to grant or
     continue, assistance because of failure to comply with a require­
     ment imposed pursuant to this section, the head of the Federal
     department or agency shall file with the committees of the House
     and Senate having legislative jurisdiction over the program or
     activity involved a full written report of the circumstances and the
     grounds for such action. No such action shall become effective
     until thirty days have elapsed after the filing o f such report.
    In our opinion, the language of the statute indicates that the report
 requirement pertains to a final administrative decision. The requirement
 applies “In the case of any action terminating, or refusing to grant or
 continue, assistance. . . .’’ As indicated above, under another provision
 of § 602, there may be no such action until the recipient has been
 granted the opportunity for a hearing and a finding of noncompliance
 has been made. Clearly, the commencement of an administrative pro­
 ceeding does not constitute such action; at that point, it is uncertain
 whether the proceeding will result in the termination of financial assist­
ance.
   Similar reasoning supports our view that the report requirement is
not triggered by an initial (or intermediate) administrative decision. The
statute refers to action “terminating” assistance, and mere issuance o f an
initial decision does not have that effect. Under the essentially uniform
agency regulations implementing Title VI, there can be no termination
until the administrative process has run its course. See, e.g., the regula­
tion of this Department, 28 CFR §§ 42.108(c) and 42.110(e), and the
Department of Health, Education, and Welfare regulation, 45 C FR
§§ 80.8(c) and 80.10(e). These regulations, which have the force of law,
make clear that there is to be no report to Congress for purposes of
§ 602, unless and until there is a final administrative decision terminat­
ing assistance.
   The administrative construction of the report requirement is support­
ed by the legislative history. See, e.g., 110 Cong. Rec. 2498 (1964)
(Representative Willis); 110 Cong. Rec. 13700 (1964) (Senator Pastore).
This requirement is intended, as is the provision on judicial review,
§ 603, 42 U.S.C. 2000d-2, to provide a safeguard against arbitrary
action by an agency. Until the agency itself has reached a final deci­
sion, there is no real need for notification of the congressional commit­
tees.
   2.    The nondiscrimination provision of the State and Local Fiscal
Assistance A ct o f 1972 incorporated the procedural provisions of Title




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VI, see § 122 of the 1972 Act, 31 U.S.C. 1242(b) (1975 Supp.),1 and the
 November 1975 implementing regulation of the Office of Revenue
 Sharing provides, inter alia, for submission of reports to Congress with
 respect to monetary sanctions, see 31 C FR 51.59(b) (1976).
   In our opinion, the above conclusion regarding the report require­
ment of Title VI is also applicable to an administrative proceeding to
enforce the nondiscrimination provision o f the 1972 Act. When Con­
gress adopted that provision, it was aware of the manner in which the
agencies had construed and carried out the report requirement of § 602
of Title VI.
   The pertinent provisions o f the November 1975 regulation of the
Office of Revenue Sharing are not entirely clear, but do permit an
interpretation consistent with our reading of Title VI. The subpart on
nondiscrimination contained in the November 1975 regulation, Subpart
E, incorporates the provisions of Subpart G, which deals generally
with administrative hearings under the 1972 Act. See 31 C F R §§51.60
and 51.80 (1976). Subpart G distinguishes between (1) an initial decision
of an administrative law judge, including an order for the withholding
of funds, and (2) a final decision. See 31 CFR §§51.98, 51.101, 51.102
and 51.103 (1976). If, within a prescribed period after issuance of an
initial decision, there is neither an appeal to the Secretary by one of the
parties nor review by the Secretary on his own motion, then the initial
decision becomes final. In the event of review by the Secretary, howev­
er, the final decision may differ from the initial one. Accordingly, read
in context and in light of § 602 of Title VI, the report requirement of
§ 51.59(b) of the November 1975 regulation contemplates a report con­
cerning a final administrative decision—that is, a decision that, upon
completion of the 30-day period, actually has the effect o f withholding
payments.
                                                    John M . H arm on
                                                 Assistant Attorney General
                                                         Office o f Legal Counsel




  ‘ The State and Local Fiscal Assistance Amendments of 1976, Pub. L. No. 94-488, 90
Stat. 2341, replaced § 122 of the 1972 A ct with a substantially different provision, one
that does not incorporate the procedures o f Title VI. See 31 U.S.C. § 1242.
     Your letter expresses the view that the nondiscrimination provision o f the 1972 Act
     continues to apply to cases that arose before January 1, 1977, the effective date of
     the 1976 Amendments. We have not considered this issue, and we express no opinion
     regarding it.

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