July 14, 2014
Carroll County Public Service Authority (PSA) Chairman Sam Dickson announced Monday that a Federal Appeals Hearing Officer has reversed federal funding agency Rural Development’s decision that the PSA improperly used funds allocated in the Fancy Gap Sewer Project for construction of the Joy Ranch Road sewer line extension. As a result, the PSA will receive $266,167.20 in a refund from Rural Development.
“I find (Rural Development) Agency erred in deciding the (Joy Ranch Road sewer line) extension constituted unauthorized assistance and could not be funded with grant funds,” Federal Hearing Office Jerry King wrote in his ruling. “This ruling includes eligibility under 7 C.F.R. § 1780.45(f) since Agency approved road extension prior to construction, making it an eligible part of the project.”
King went on to state he did not find any regulatory violation that supports a finding of unauthorized assistance.
“I find (the) Agency erred in deciding (Joy Ranch) road extension constituted unauthorized assistance and could not be funded with grant funds,” King wrote.
Dickson said the Carroll County PSA was made aware of the federal decision May 21, but could not announce it until all of the appeals were made final “and we had this sewed up.”
According to a press release issued by the PSA, a complaint was made to Rural Development on August 29, 2013, from Stephen Gregson claiming that the Carroll County PSA had improperly used Fancy Gap Sewer Project funds to construct the Joy Ranch Road sewer line extension. On the same day as his complaint, Rural Development notified the Carroll County PSA that grant funds issued to the PSA for the Joy Ranch Road extension constituted unauthorized assistance and would have to be repaid. Additionally, Rural Development advised the PSA that until these funds were repaid it would not provide any funding on Rural Development projects already approved and under construction.
“It was very odd that no discussion of the matter took place by (Rural Development), they just seemed to take the complaint as factual,” said Dr. Tom Littrell, who served as Chairman of the PSA in 2013. “We could have shown (Rural Development) the written approvals (by Rural Development) for the Joy Ranch Road sewer line extension; however Rural Development never gave us a chance for a discussion prior to making their unilateral ruling. A group of us did travel to Richmond to make our case in an informal discussion after the fact, however the Rural Development decision had been made at that point and they did not accept our arguments. So as a result, we were forced to formally appeal the decision…and won the challenge, just as we knew we would.”
Faced with Rural Development’s refusal to reconsider its finding and refusal to release funding for projects underway, the PSA had no option but to refund the amount demanded to Rural Development, but resolved to appeal the decision as unfair and factually inaccurate. On October 23, 2013, the Carroll County PSA reimbursed Rural Development for $266,167.20 in a single check and authorized the appeal.
“Both Mr. Gregson and Mr. Mike Goldwasser continue to appear before the PSA and make unfounded and incorrect statements. Recently Mr. Goldwasser was in complete error when he claimed that the PSA tried to hide the repayment of the funds by issuing multiple checks to USDA-RD. Mr. Goldwasser also said that the PSA was not transparent,” Dickson said. “The PSA has been exceptionally open with this issue; however the PSA leadership had to develop a plan of action necessary to address the situation and we simply did not need the assistance of Mr. Goldwasser in that process since he is not part of the PSA and not even a paying user of county water or sewer. By making these false accusations against the PSA to Rural Development, Mr. Gregson has cost Carroll County tens of thousands of dollars along with a massive redirection of time, efforts and resources that cannot even be calculated. We understand that Mr. Gregson has also made unfounded and erroneous allegations against the PSA to other state and federal agencies as well. I am not aware of the motives behind these efforts by these gentlemen but I note that in addition to Mr. Goldwasser not being connected to the PSA’s water or sewer system, and therefore not a customer of the PSA, Mr. Gregson is not a citizen of Carroll County or of the Commonwealth of Virginia. After the success of the PSA in this appeal I hope they are getting the idea that we operate in a very professional and upstanding manner. Unfortunately, these appeals required the expenditure of public funds, which could have been put to better use by extending service to citizens of the County in need of public water or sewer or used to pay debt down sooner. The PSA does a great job for Carroll County and we need citizens to understand the nature and source of these unfounded complaints and to consider the source when these complaints are made.”
According to the press release, on September 5, 2013, after Rural Development had already approved construction of the Joy Ranch Road sewer line extension, in writing, the PSA was notified that an environmental review (ER) of the Joy Ranch Road sewer extension and some elements of the preliminary engineering review (PER) had not been submitted. Immediately upon this notice, the Carroll County PSA ordered the ER and other PER documentation (as allowed by federal regulations), which showed no adverse environmental effects of the construction of the Joy Ranch Road sewer line extension. The PSA provided Rural Development this environmental review on October 31, 2013, but Rural Development chose not to accept and did not place it in the project file.
By the appeal process, it was determined by the Federal Hearing Officer that, “Under Agency written rules issued by Agency by bulletin to guide parties in implementing water and sewer programs, (Rural Development) Agency gave itself discretionary authority to approve additions and modifications to projects following PER and ER.” And thus, according to the PSA press release, the information provided by Carroll County PSA was accepted and provided a basis for the final ruling in favor of Carroll County PSA.
“We are exceptionally pleased with the results of the federal finding,” Dickson said.
“It seems as if Rural Development took the word of an individual they did not know without checking the details,” Littrell added. “The Rural Development State Engineer had already approved this project in writing prior to construction, without any complaints.”
Dickson thanked PSA Executive Director Gary Larrowe, consulting engineers The Lane Group, staff, and the law offices of Sands Anderson “for assisting in this win for the citizens of Carroll County. We look forward to continuing to work with Rural Development on future projects; however this is a monumental win.”
Following the announcement of the appeal ruling, each PSA member offered their reactions. Jeannette Dalton wondered aloud how much money Gregson made off the situation.
“I think it is interesting a whistleblower can get paid up to 30 percent of the cost, sometimes even if they don’t win the appeal,” Dalton said. “I just wonder how much the whistleblower got this time?”
PSA member William Payne said it was a shame the Authority had to “go through that and its cost.” Dickson added the entire process cost the county “tens of thousands of dollars.”
“And it really gets to you when the whistleblower is not even a citizen, not a taxpayer,” Dickson said. “The question was asked to me whether you could turn around and sue, blow the whistle on the whistleblower.”
Payne asked if the $266,000 had been returned yet to the PSA. Dickson said it was in the process.
Littrell said it has been a difficult road for the PSA, but added that perseverance paid off.
“I think it’s good for the citizens of Carroll County and there will be a lot of folks who will have the opportunity to be served by these dollars when they come back,” Littrell said.
Dalton said the PSA knew its appeal would work.
“When you are honest and do the best you can, it usually works in your favor,” she said.
PSA member James Light said he hoped the county’s citizens would realize the Authority handled the matter in an upfront manner.
“I hope that this makes the front page and the citizens see everything was on the up and up; there was nothing hid, nothing underhanded, everything was right,” Light said. “This should have never happened and it will be right from now on.”
Littrell said the PSA “got the stuffing kicked out of us” when it got the demand letter last fall from Rural Development.
“It certainly took us by surprise, but I felt like in the long run justice will prevail. We went through the proper channels and I’m just glad we can release this letter to the public,” Littrell said. “What we tried to do was right and we are going to get our money back.”
Added Dickson, “It just shows you the integrity of the PSA as a whole. When they asked for the check and money back, we sent the money back. We didn’t delay, but we went through the procedures and appealed. We won that appeal and waited to see. We remained honest and worked with integrity. We didn’t try to destroy one person or organization. We just continued with we thought they were wrong. The deciding person, when he looked at all things, decided they erred and we were in the right. I’m glad we won, but I’m still glad we did the right thing.”