Nation v. Azar
Nation v. Azar
Opinion of the Court
Before the Court is the Defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment, Dkt. 17, and the *432Plaintiff's Motion for Summary Judgment, Dkt. 16. For the following reasons, the Court will deny the defendant's motion and grant the plaintiff's motion.
I. BACKGROUND
Under the Head Start Act,
The plaintiff, the Navajo Nation, is a federally recognized Indian tribe whose reservation spans parts of Arizona, New Mexico, and Utah. Compl. ¶ 11, Dkt.1. It runs Head Start and Early Head Start programs to provide education services to its young members and residents and their families. Dkt. 19 at 13. The programs are funded primarily by a federal grant, No. 90C19889 ("the Grant"), which is at the center of this case.
Under the Head Start Act, however, grants are not static from year to year. Section 641a(h) of the Act provides specific procedures for adjusting grants to Head Start programs that suffer from "chronic underenrollment." 42 U.S.C. § 9836a(h). Grantees must self-report enrollment each month,
The Navajo Head Start program failed to reach its funded enrollment in many recent years in the 2000s and 2010s. See Dkt. 11-1 at 2-3. Due to under-enrollment, HHS decided to reduce the Navajo Nation's funding in 2011. See Dkt. 18-1 at 4, 7; Unedited Hr'g Tr. at 3.
Due to the continuing under-enrollment problems, HHS and the Navajo Nation began discussing remediation in 2015. Dkt. 11-1 at 4. Then, throughout 2016 and 2017, they implemented a detailed remediation plan, as required by Section 641a(h) of the Head Start Act. Dkt. 11-2 at 2-3. The remediation plan involved extensive coordination and communication between the Nation and HHS, including meetings, calls, on-site visits, and training. See
Remediation, however, was unsuccessful. By letter on September 26, 2017, HHS informed the Nation that HHS found Navajo Head Start to be "chronically underenrolled" and HHS reduced the Navajo Grant to $15,766,194 for fiscal year 2018, which runs from March 1, 2018 to February 28, 2019. Dkt. 11-2 at 14-15. This reduction was based on an enrollment level of 1,396 students in Navajo Head Start, not the previously funded enrollment of 2,068 Head Start students. Dkt. 11-2 at 12-15. The 672-student change "represented the average number of vacant slots over a 12 month period." Dkt. 11-1 at 6; see also Dkt. 11-2 at 1 (listing enrollment reported by the Navajo Nation for each month from March 2015 to January 2018).
In additional letters on October 5, November 22, and December 4, 2017, HHS reiterated the reduced funding level. Dkt. 19 at 13-14. Even so, on January 12, 2018, the Navajo Nation submitted a funding application for fiscal year 2018 seeking $23,075,043.
On February 2, 2018, the Navajo Nation filed its complaint in this action. Dkt. 1. On the same day, the Nation moved for a preliminary injunction, Dkt. 2, and requested a decision before the end of the month, see Dkt. 2-1 at 8.
HHS now moves for dismissal under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure ; in the alternative, HHS moves for summary judgment under Rule 56. Dkt. 17. In turn, the Navajo Nation moves for summary judgment, arguing that HHS violated the Head Start Act and the Administrative Procedure Act by reducing the Nation's funding without providing an appeal and hearing required by the Head Start Act. Dkt. 16 at 1.
II. LEGAL STANDARD
Under Rule 12(b)(1), a party may move to dismiss a claim over which the court lacks subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). A motion for dismissal under Rule 12(b)(1)"presents a threshold challenge to the court's jurisdiction." Haase v. Sessions ,
"When ruling on a Rule 12(b)(1) motion, the court must treat the plaintiff's factual allegations as true and afford the plaintiff the benefit of all inferences that can be derived from the facts alleged." Jeong Seon Han v. Lynch ,
Under Rule 12(b)(6), a party may move to dismiss for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal ,
When evaluating a Rule 12(b)(6) motion, the court "must construe the complaint in favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts alleged." Hettinga v. United States ,
Finally, under Rule 56, a court grants summary judgment if the moving party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. ,
In an Administrative Procedure Act case, summary judgment "serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Sierra Club v. Mainella ,
III. ANALYSIS
A. Defendant's Motion to Dismiss
The Court begins by briefly addressing the grounds upon which HHS moves for dismissal under Rules 12(b)(1) and 12(b)(6). First, this Court has federal-question jurisdiction under
Second, the complaint states a claim for relief. HHS argues that the Head Start Act alone does not provide a cause of action or authorize judicial review, see Dkt.
*43617 at 9-10, but that does not mean the complaint fails. Even though the Head Start Act does not provide a specific private cause of action, the Administrative Procedure Act provides a cause of action to those aggrieved by agency action, see
HHS also argues that the complaint fails to allege that HHS's notice-and-comment rulemaking was deficient under Section 706(2)(D) of the Administrative Procedure Act. See Dkt. 17 at 12-13. But that argument is beside the point. The Navajo Nation does not assert that HHS failed to follow the Administrative Procedure Act's notice-and-comment rulemaking procedures when HHS promulgated its regulations, such as they are, for appeals and hearings under
HHS counters that Section 706(2)(D) applies only to procedures mandated by the Administrative Procedure Act, not the Head Start Act, see Dkt. 21 at 2, an argument against which the Navajo Nation responds vigorously, see Unedited Hr'g Tr. at 13-16. Regardless, Sections 706(2)(A) and (C) permit review of the issue in this case: whether HHS's action was "in accordance with law," i.e. , with the Head Start Act.
*437Accordingly, the Court will deny dismissal under Rules 12(b)(1) and 12(b)(6). To the extent that HHS's motion raises other arguments, the motion presents material outside the pleadings. See, e.g. , Dkt. 17 at 6, 17, 19; Dkt. 19 at 13-14. Therefore, it must be treated as a cross-motion for summary judgment, to which the Court now turns. See Fed. R. Civ. P. 12(d).
B. Cross-Motions for Summary Judgment
This case turns on whether HHS must provide for an appeal and hearing before adjusting funding due to under-enrollment. Under Section 641a(h) of the Head Start Act, HHS "may .... recapture, withhold, or reduce the base grant" of "chronically underenrolled" programs. 42 U.S.C. § 9836a(h)(5)(A). Section 646 of the Head Start Act provides for an appeal and hearing in certain situations, including when financial assistance is "reduced":
(a) Notice requirements; suspension or termination of assistance stayed pending hearing; mediation
The Secretary shall prescribe ...
(3) procedures to assure that financial assistance under this subchapter may be terminated or reduced , and an application for refunding may be denied, after the recipient has been afforded reasonable notice and opportunity for a full and fair hearing, including-
(A) a right to file a notice of appeal of a decision not later than 30 days after notice of the decision from the Secretary; and
(B) access to a full and fair hearing of the appeal, not later than 120 days after receipt by the Secretary of the notice of appeal
To "reduce" means "to diminish in size, amount, extent, or number," and a "reduction" is "the act or process of reducing." Merriam-Webster's Collegiate Dictionary at 1044 (11th ed. 2009); Webster's Third New International Dictionary at 1905 (1981). That definition encompasses funding adjustments for chronic under-enrollment such as the adjustment in this case, which diminished the Nation's funding from approximately $23 million to $15 million. Dkt. 19 at 13. Furthermore, HHS clearly labeled the funding adjustment as a "reduction" under Section 641a(h).
Perhaps most tellingly, however, the Head Start Act itself explicitly deems funding adjustments due to chronic under-enrollment to be "reductions." The provision governing such adjustments, Section 641a(h), is titled "Reduction of grants and *438redistribution of funds in cases of underenrollment." 42 U.S.C. § 9836a(h) (emphasis added). Section 641a(h) authorizes HHS to adjust funding due to chronic under-enrollment by permitting the agency to "recapture, withhold, or reduce the base grant."
Moreover, although the presumption of consistent usage can be rebutted by context, see UARG v. EPA , --- U.S. ----,
Contrary to HHS's assertions, this reading does not violate the anti-surplusage canon. Even if the three actions are functional analogues, that does not mean the actions are entirely identical. The Act might reasonably specify similar actions in Section 641a(h), and then-in a different section of the Act-use the umbrella term "reductions" to cover all three actions for purposes of appeal and hearing rights, just as Section 641a(h) identifies all three actions under the title "reductions." In other words, treating all three actions as "reductions" within the meaning of Section 646 does not make surplusage of the terms *439"recapture" and "withhold" within Section 641a(h).
Further examining the Head Start Act's context, the detailed procedures for dealing with under-enrollment under Section 641a(h) do not bar the Act from also contemplating an appeal and hearing under Section 646 in cases of under-enrollment. Struggling Head Start programs have the opportunity to go through a lengthy remediation process-with extensive notice and interaction with HHS-before being designated as chronically under-enrolled and losing funding. See 42 U.S.C. § 9836a(h)(3), (4), (5). But highly prescribed procedures before designation do not foreclose appeal and hearing procedures afterwards . As a result, Sections 641a(h) and 646 do not conflict, and both can be given their full effect.
This is especially true because the designation procedures are not automatic; thus, contrary to HHS's arguments that the procedures leave nothing to appeal, the procedures are consistent with appeals on various grounds. If a program's remediation plan fails, HHS "may"-not "shall"-designate the program as chronically under-enrolled and reduce funding. 42 U.S.C. § 9836a(h)(5)(A). "The word 'may' customarily connotes discretion." Jama v. ICE ,
In sum, the context of the Head Start Act does not rebut the presumption of consistent usage. Rather, the context confirms that a funding adjustment for chronic under-enrollment under Section 641a(h) is clearly a reduction that merits an appeal and a hearing under Section 646. The Head Start Act thus " 'unambiguously foreclose[s] the agency's statutory interpretation' ... by prescribing a precise course of conduct other than the one chosen by the agency." Vill. of Barrington v. Surface Transp. Bd. ,
Given that the Head Start Act requires the opportunity for an appeal and a hearing in this case, it is clear that HHS has not met this requirement. HHS has promulgated regulations that prescribe appeal and hearing procedures for certain *440actions that reduce funding, but the regulations do not apply to reductions based on chronic under-enrollment, see
In addition, HHS did not provide for an individualized appeal and hearing before adjusting funding in the Navajo Nation's particular case. HHS suggests briefly that its interactions with the Nation did in fact constitute the appeal and hearing required by Section 646(a)(3). See, e.g. , Unedited Hr'g Tr. at 19, 32. It is true that, in the letter reducing the Nation's funding, HHS added: "If there are significant causes of underenrollment that [HHS] was not made aware of over the 12 month period, please inform your regional office within 30 days of the delivery of this notice." Dkt. 11-2 at 16. In response to this invitation, the Nation submitted a letter regarding its program's enrollment challenges, see Dkt. 11-2 at 18, but HHS ultimately decided against changing the reduction, see Dkt. 11-2 at 25.
Without the benefit of briefing on this issue, the Court does not express a comprehensive view on the full meaning of an "appeal" and "hearing" in Section 646(a)(3), but it is clear that these HHS actions do not qualify. The reduction letter did not clearly convey appeal rights: it did not use the word "appeal," nor did the letter state that additional information could change HHS's initial decision. And to the extent that the reduction letter did suggest that HHS might reconsider its initial decision, that reconsideration would not be a general appeal; instead, it would be limited to "significant causes of underenrollment" of which HHS was previously unaware. Also, even if the letter did provide for an appeal, it made no mention of a hearing. Finally, it appears from the record before the Court that the same HHS official-the OHS Acting Director-reduced the Nation's funding and later decided against changing that reduction based on the Nation's enrollment challenges. Compare Dkt. 11-2 at 16 (reduction letter signed by OHS Acting Director Ann Linehan), with Dkt. 11-2 at 26 (letter deciding against changing the reduction, also signed by OHS Acting Director Ann Linehan). It would be an odd "appeal" that asks the initial decision-maker to also sit as the appellate body reviewing the initial decision.
C. Relief
For the foregoing reasons, the Court will grant the relief requested by the Navajo Nation. See Dkt. 16 at 7; Dkt. 16-1 at 1; Dkt. 20 at 4. In particular, the Court will (1) declare that HHS's reduction of the Navajo Nation's Head Start funding for fiscal year 2018 was not in accordance with the requirements of Section 646(a)(3) of the Head Start Act; (2) set aside the reduction of the funding; and (3) declare that HHS cannot reduce the Navajo Nation's Head Start funding under the Grant unless and until the Navajo Nation is afforded the notice, appeal, and hearing rights to which it is entitled under Section 646(a)(3).
The Court takes no position on the manner in which HHS must afford the Navajo Nation its rights under Section *441646(a)(3). The parties debate whether Section 646(a)(3) requires HHS to "prescribe [the appeal and hearing] procedures" via notice-and-comment rulemaking, via less formal processes, or via an ad hoc procedure specific to the Navajo Nation. Regardless, "it is the prerogative of the agency to decide in the first instance how best to provide relief." Bennett v. Donovan ,
Finally, the Court declines the Navajo Nation's request that the Court retain jurisdiction over this dispute. "When a district court reverses agency action and determines that the agency acted unlawfully, ordinarily the appropriate course is simply to identify a legal error and then remand to the agency, because the role of the district court in such situations is to act as an appellate tribunal." Bennett ,
CONCLUSION
For the foregoing reasons, Defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment, Dkt. 17, is denied, and Plaintiff's Motion for Summary Judgment, Dkt. 16, is granted. A separate order consistent with this decision accompanies this memorandum opinion.
Once the final transcript is published, the Court will update transcript citations in accordance with the final transcript instead of the unedited transcript.
The Grant funds the Nation's Head Start and Early Head Start programs, but the reduction appears driven by under-enrollment in Head Start only. The HHS letter of September 26 reduced the Grant amount apportioned to Head Start, but did not change the amount apportioned to Early Head Start nor the enrollment level for Early Head Start ($586,277 for 37 students in Early Head Start). Compare Dkt. 11-2 at 12, with id. at 15.
The Navajo Nation effected service of the complaint and summons on the U.S. Attorney and the U.S. Attorney General on February 9, 2018, see Dkt. 6 & 7, and on the HHS Secretary on February 12, 2018, see Dkt. 8. But the Nation did not immediately serve the motion for a preliminary injunction. Dkt. 10 at 1-2. As a result, the defendant's deadline for opposing the motion was not triggered. See Local Civil Rule 65.1(c). On February 21, 2018, the Court ordered the Nation to serve the motion immediately, and the Court set an expedited briefing schedule for resolving the preliminary injunction motion.
The parties may also disagree about whether jurisdiction and relief are appropriate under the Mandamus Act,
An adequate alternative remedy is available to the Navajo Nation because the Administrative Procedure Act empowers district courts to "compel agency action unlawfully withheld or unreasonably delayed."
See HHS Letter of Sept. 26, 2017, Dkt. 11-2 at 14 ("[I]t is the decision of OHS to reduce your federal Head Start program funding levels."); HHS Letter of Nov. 22, 2017, Dkt. 11-2 at 25 (OHS's "decision to reduce Navajo Head Start's funding and funded enrollment;" "decision to reduce funded enrollment and funding"); HHS Letter of Dec. 4, 2017, Dkt. 11-2 at 27 (OHS's "decision to reduce funding and enrollment;" "reduced funding"); HHS Letter of Jan. 19, 2018, Dkt. 11-2 at 32 ("FY 18 funding is a reduction from FY 17 funding resulting from chronic and severe underenrollment over a decade.").
HHS advocates the opposite conclusion by relying in part on Ohio Head Start Association, Inc. v. HHS ,
The Court also notes that the anti-surplusage canon should be applied with caution because "[s]ometimes drafters do repeat themselves and do include words that add nothing of substance, either out of a flawed sense of style or to engage in the ill-conceived but lamentably common belt-and-suspenders approach." United States v. Bronstein ,
At the motion hearing, the defendant's counsel suggested that a higher HHS official, the acting assistant secretary, actually "approved" the decision against changing the reduction. See Unedited Hr'g Tr. at 19 ("I will concede that ... the acting assistant secretary didn't actually sign the letter that resolved the request for reconsideration, but he was in meetings, and my understanding is he approved it."). But that is insufficient to overcome the record before the Court, particularly the two letters signed by the OHS Acting Director.
Reference
- Full Case Name
- The NAVAJO NATION v. Alex M. AZAR II, Secretary, United States Department of Health and Human Services
- Cited By
- 3 cases
- Status
- Published