The principal issue in this appeal by the North Carolina Commission of Indian Affairs (Commission) and the North Carolina Department of Natural Resources and Community Development (Department) (collectively, North Carolina or the State) is whether the Secretary of Labor may order repayment of $135,611.77 in misspent funds under the Comprehensive Employment and Training Act of 1973, Pub.L. 93-203, 87 Stat. 839, 29 U.S.C. Sec. 801 et seq. (1973) (1973 CETA Act). North Carolina claims that, prior to amendments enacted in 1978, the Secretary of Labor's sole remedy when funds were improperly expended was to withhold future grant moneys. In reliance on the Supreme Court's decision in Bell v. New Jersey and Pennsylvania, --- U.S. ----, 103 S. Ct. 2187, 76 L. Ed. 2d 313 (1983), which held that the Secretary of Education was entitled to order recoupment of misspent grant funds under the Elementary and Secondary Education Act of 1965 (ESEA), Pub.L. 89-10, 79 Stat. 27, as amended, 20 U.S.C. Sec. 2701 et seq. (1976 ed. Supp. V) and in accord with the decision of the Court of Appeals for the Third Circuit in Atlantic County New Jersey v. United States Department of Labor, 715 F.2d 834 (3rd Cir.1983), we hold that the authority to require repayment of improper expenditures existed under the 1973 CETA Act. Finding also that there was substantial evidence to support the Secretary of Labor's conclusion that the funds were improperly expended or inadequately monitored and that North Carolina was responsible for insuring that the grant was properly administered, we affirm the Secretary's repayment order.1

* The two North Carolina governmental agencies, as "prime sponsors" under the 1973 CETA Act, received grant funds from the Department of Labor and contracted with subgrantees for expenditure of the funds. Grantees and subgrantees receive CETA funds prior to expenditure instead of being reimbursed by the Department of Labor after moneys are expended. Since the grants were awarded prior to 1978, the provisions of the 1973 Act control. Following an audit and a grants officer's determination that certain funds had been misused,2 the Administrative Law Judge (ALJ) issued orders instructing the Commission to repay $34,147.19 and the Department, $101,464.58.3 These orders became final decisions of the Secretary.

North Carolina questions whether the rule of S.E.C. v. Chenery, 332 U.S. 194, 196, 67 S. Ct. 1575, 1577, 91 L. Ed. 1995 (1947) that "a reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency" precludes this court from affirming the ALJ's order based on an interpretation of the 1973 CETA Act that differs from the ALJ's interpretation. (The ALJ found that the "1973 statute by implication authorized the Department of Labor to obtain repayment from the State of moneys, paid to ineligible applicants." Based on the reasoning of Bell, we find that repayment authority is found in the language of the 1973 statute.) We do not, however, perceive there to be a Chenery problem in the instant case because the question of interpretation of a federal statute is not "a determination or judgment which an administrative agency alone is authorized to make." Chenery, supra. A similar question of statutory interpretation was at issue in Milk Transport v. Interstate Commerce Commission, 190 F. Supp. 350 (D.Minn.1960), aff'd per curiam 368 U.S. 5, 82 S. Ct. 15, 7 L. Ed. 2d 16 (1961). The court concluded that Chenery was not applicable:

We are not concerned here with a judgment which only the Interstate Commerce Commission can make. The expertness of the Commission does not make it better qualified than this court to interpret the phrase ... involved in this action. The interpretation here is wholly different from what it is in the case where Congress specifically entrusts an administrative agency, because of its special competence, with the task of defining or interpreting general words or setting up standards or rules of conduct. We are interpreting the scope of a federal statute and this task is not peculiar to an administrative agency. 190 F. Supp. at 355. (footnote omitted).

The Secretary of Labor raises three grounds in support of his authority to require repayment by North Carolina. First, the Secretary argues that the 1973 Act includes a right of recovery. The Secretary also contends that the 1978 Act, which Congress amended to provide expressly for recovery of misused funds, may be applied retroactively to reach funds administered under the earlier act. Labor's third argument is that there is a common law right of recovery. Following the lead of Bell, we find that a right of recovery exists under the 1973 Act, and therefore we need not reach the issues of whether recovery is also authorized by retroactive application of the 1978 amendments or by the common law.

In Bell the Court found that the argument that ESEA contained a recoupment right was supported by the language, the legislative history and the administrative interpretation of the statute. We are persuaded that the language, the evidence of legislative intent, the administrative interpretation and the overall rationale of the 1973 CETA Act are sufficiently similar to that of ESEA to mandate a finding that the Department of Labor may order repayment of misapplied moneys.

Section 602(b) of the 1973 CETA Act provided in part:

The Secretary may make ... necessary adjustments in payments on account of overpayments or underpayments. The Secretary may also withhold funds otherwise payable under this chapter, but only in order to recover any amounts expended in the current or immediately prior fiscal year in violation of any provision of this chapter.

North Carolina contends that the withholding provision gives the only available remedy in the event of noncompliance by a grantee. In Bell, however, the Court found that in a similar provision of ESEA,4 the "plain language of the statute" recognized the right of the federal government to overpaid funds. 103 S. Ct. at 2193. The Bell court also found that to adopt the State's view of set-off as the only remedy would allow the State to escape liability for misuse of the moneys while penalizing those who were intended to benefit from the programs by reducing the amount of funds that the beneficiaries would actually receive. 103 S. Ct. at 2192 n. 5 and 2193 n. 8.

North Carolina seeks to distinguish Sec. 602(b) from the provision of ESEA relied on in Bell to authorize repayment. The State's argument is that only the withholding sanction, and not the adjustments in payments language, applies to recoupment of amounts expended in violation of the act. North Carolina contends that any other construction would render the last sentence of Sec. 602(b) redundant or largely superfluous. The argument is refuted, however, by the fact that ESEA also provided for withholding funds from a State that failed to comply with the requirements of the program. Section 146, 20 U.S.C. Sec. 241j. Moreover, in providing that the Secretary "may also withhold funds" the language of Sec. 602(b) indicates that remedies other than withholding are available to the Department of Labor.

North Carolina argues that, because the 1978 amendments expressly provided for right of repayment,5 there was no similar right under the 1973 Act, otherwise the later amendments would be redundant. The Bell Court was faced with the issue of later amendments to ESEA that clearly provided for the federal government's right to demand repayment when states misused grant moneys. The Court concluded that the discussion of the 1978 amendments to ESEA, which were of persuasive value, revealed that Congress thought that recipients were already liable for misused funds. 103 S. Ct. at 2194.

The comments made by members of Congress during the debates on the 1978 CETA amendments indicate that they assumed the existence of a right of recovery and approved of the Department of Labor's pre-1978 practice of actually recouping funds.6 The Congressional intent in amending the CETA Act in this manner appears to have been to clarify a pre-existing right and not to provide Labor with new authority.

The agency's practice of ordering that funds be reimbursed prior to the 1978 amendments also supports Labor's argument that a right of recovery existed under the 1973 Act. As observed by the court in Atlantic County, recoupment under CETA's predecessors amounted to "more than the 'long held' view of an agency which the Bell court found persuasive." 715 F.2d at 836 (citation omitted). The CETA Act of 1973 replaced a number of earlier federal employment and training programs.7 Although the earlier laws provided no express right of recoupment, the Secretary of Labor routinely audited grantees, disallowed costs and recovered misspent funds. See Midlands Community Act Agency, 73-1 BCA p 9790 (November 30, 1972) (EOA and MDTA); Metropolitan Denver Construction Opportunity Policy Committee, 74-2 BCA p 10,749 (November 30, 1973) (MDTA); Cooperative League of U.S.A., 74-2 BCA p 10,768 (August 14, 1974) (MDTA), aff'd, 578 F.2d 1390 (Ct.Cl., 1978).

North Carolina's final objection is that the CETA Act of 1973 does not meet the mandate of Pennhurst State School and Hospital v. Halderman, 451 U.S. 1, 17, 101 S. Ct. 1531, 1539, 67 L. Ed. 2d 694 (1981) that Congress act unambiguously when it intends to impose a condition on the grant of federal money. We think that the Supreme Court's two grounds for distinguishing Pennhurst with respect to ESEA are equally applicable to CETA. The Court found that the plain language of ESEA was sufficiently clear to meet Pennhurst's requirement of legislative clarity and that Pennhurst involved imposition of an unexpected condition of compliance while in Bell the Court was concerned with remedies available against a noncomplying State. 103 S. Ct. at 2197 n. 17.

Having decided that the Department of Labor has the authority to recoup misspent funds, we must address the issue of whether there is substantial evidence to support the Secretary's conclusion that the moneys were improperly expended. 29 U.S.C. Sec. 817(b) (1978). The State argues, however, that it was not responsible for these instances of inadequate administration. We disagree. In the overall scheme of the CETA Act, although a grantee may enter into contracts and subgrants, the grantee retains the responsibility for development, approval and operation of all grants and subgrants. Milwaukee County v. Peters, 682 F.2d 609, 612-613 (7th Cir.1982). The regulations provide that the prime sponsor shall require that its contractors and subgrantees adhere to the requirements of the Act, regulations and other applicable law. 29 C.F.R. Sec. 98.27. North Carolina's responsibility under the legislative scheme is clear and the Secretary's decision is supported by substantial evidence.

AFFIRMED.