Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 1 of 22 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

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1 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 1 of 22 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA THE NAVAJO NATION, Plaintiff, v. ALEX M. AZAR II, Civil Action No DLF Defendant. MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT Defendant, by and through counsel, hereby moves, pursuant to Fed. R. Civ. P. 12(b)(1) and (6), to dismiss this action. In the alternative, Defendant moves for summary judgment in his favor, pursuant to Fed. R. Civ. P. 56, because there is no genuine issue as to any material fact and the defendant is entitled to judgment as a matter of law. The Court is respectfully referred to the memorandum and statement of material facts also submitted in support of this motion. Respectfully submitted, JESSIE K. LIU, DC Bar # United States Attorney DANIEL F. VAN HORN, DC Bar # Chief, Civil Division By: /s/ W. MARK NEBEKER, DC Bar # Assistant United States Attorney

2 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 2 of 22 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA THE NAVAJO NATION, Plaintiff, v. ALEX M. AZAR II, Civil Action No DLF Defendant. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT INTRODUCTION Plaintiff s complaint alleges two causes of action. Count One alleges a violation of the Head Start Act, while Count Two alleges a violation of the Administrative Procedure Act ( APA ) because HHS acted not in accordance with the law, the standard under 5 U.S.C. 706(2)(A), or without observance of procedure required by law, the standard under 5 U.S.C. 706(2)(D). The counts related to the alleged violation of the Head Start Act and the allegedly unlawful action under 5 U.S.C. 706(2)(D) can be quickly disposed of. The Head Start Act does not provide a cause of action. Plaintiff does not and cannot point to any provision of the Head Start Act that waives the federal government s sovereign immunity and allows for a cause of action under it alone. The reference to 5 U.S.C. 706(2)(D) is also wanting. The Complaint does not allege HHS failed to go through notice and comment rulemaking or ignored some separate agency-specific rulemaking procedure when promulgating 45 C.F.R (b), so no basis exists for an APA violation pursuant to 5 U.S.C. 706(2)(D).

3 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 3 of 22 The only question properly before the Court is whether Plaintiff has stated a claim on which relief can be granted that HHS violated the APA because it acted not in accordance with law. It has not. The Head Start Act s detailed procedures to adjust funded enrollment does not include an appeal, and the appeals provisions of the Head Start Act do not mention the chronic underenrollment procedures. Although the same common word is shared in the separate sections, HHS interprets those provisions to be discussing two distinct actions, adjustment of funded enrollment and full or partial termination. To ensure no confusion existed, HHS stated its reasonable interpretation through notice and comment rulemaking. Plaintiff s Complaint does not provide sufficient allegations to rebut HHS s interpretation and the deference it deserves. Background Head Start promotes school readiness for children from low-income families nationwide by funding the provision of health, educational, nutritional, social, and other necessary services. Economic Opportunity Act of 1964, Pub. L. No , 78 Stat. 508 (1964); see generally 42 U.S.C et seq. The program is administered by the Office of Head Start ( OHS ), which is a component of the Administration for Children and Families ( ACF ) in the US Department of Health and Human Services ( HHS ). OHS provides grants to local public and private organizations to provide comprehensive child development services for eligible children ages birth to five and their families. Head Start grants are given based on a five year performance period with grantees applying for refunding each yearly budget period. See 42 U.S.C Head Start grant agreements specify a number of children that each grantee is funded to serve during the program s budget year. See 42 U.S.C. 9836a(h)(1)(B). Grantees are required to meet this funded enrollment and maintain waiting lists to fill vacancies as soon as possible and at most within 30 days. 42 U.S.C. 9837(g); 45 C.F.R (a). -2-

4 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 4 of 22 In 2007, Congress reauthorized and overhauled the Head Start Act through the Improving Head Start for School Readiness Act of 2007, Pub. L. No , 121 Stat (2007) ( 2007 Reauthorization ). One of the key new provisions of the 2007 Reauthorization was the detailed process to identify underenrolled programs, to assist programs in improving their enrollment, and adjust the funded enrollment level for those programs that failed to improve. See 42 U.S.C. 9836a(h). Specifically, the 2007 Reauthorization required grantees to self-report their actual enrollment numbers each month. 42 U.S.C. 9836a(h)(2). It required HHS to determine which programs had been underenrolled for at least four consecutive months and to assist such programs in developing a plan and timetable for reducing or eliminating underenrollment. 42 U.S.C. 9836a(h)(3). The 2007 Reauthorization also required the Secretary to review an underenrolled grantee s progress 12 months after implementation of its enrollment improvement plan, and if the grantee is operating a program with an actual enrollment less than 97 percent of its funded enrollment, the Secretary may designate the agency as chronically underenrolled and recapture, withhold, or reduce the program s grant by a percentage equal to the percentage difference between funded enrollment and actual enrollment. 42 U.S.C. 9836a(h)(5)(A). The 2007 Reauthorization allowed the Secretary to waive or reduce the amount of funds recaptured, withheld, or reduced at his discretion under specific circumstances. See 42 U.S.C. 9836a(h)(5)(B) (listing reasons for waivers to include: (i) enrollment shortfall because children served are highly mobile, (ii) the shortfall can reasonably expected to be temporary, or (iii) the agencies number of slots is small enough that underenrollment does not create a significant shortfall). The 2007 Reauthorization directs the Secretary to redistribute the funds derived from adjusting funded enrollment of chronically underenrolled programs. 42 U.S.C. 9836a(h)(6)(A). -3-

5 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 5 of 22 If the funds are derived from Indian Head Start programs, they must be redistributed by increasing enrollment in Indian Head Start programs. 42 U.S.C. 9836a(h)(6)(A)(i). The detailed process described in 42 U.S.C. 9836a(h) did not include the ability of a program designated chronically underenrolled by the Secretary to appeal that determination, its adjusted funded enrollment, or the subsequent adjustment of its funding after the process is complete. There is no cross reference to the notice and hearing procedures required in 42 U.S.C when HHS terminates or partially terminates Head Start grants for uncorrected deficient activities that represent systemic or substantial failures such as threats to the health and safety of children and staff, the misuse of funds, or the loss of legal status or financial viability. See 42 U.S.C. 9832(2) (defining deficiency) and 45 C.F.R (a) (listing grounds for termination of financial assistance). HHS made this interpretation of the Head Start Act s chronic underenrollment procedures clear through notice and comment rulemaking. From 2015 to 2016 HHS went through notice and comment rulemaking to overhaul the Head Start regulations and to bring them up-to-date with the requirements of the 2007 Reauthorization, among other things. In its Notice of Proposed Rulemaking ( NPRM ), HHS specifically proposed to exclude the chronic underenrollment procedures from regulations governing programs appeals of adverse action, which are often required under 42 U.S.C Fed. Reg , (June 19, 2015). It invited comment on that interpretation by noting the issue in the NPRM s preamble as well as including it in the proposed rule text. 80 Fed. Reg , and (June 19, 2015). After receiving no comments on the proposal, the recognition that Head Start appeal procedures do not apply to the chronic underenrollment process was codified in the final rules. See 81 F. Reg , and (Sept. 6, 2016) and 45 C.F.R (b). -4-

6 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 6 of 22 Navajo Nation Head Start suffered from chronic and severe underenrollment, and it went through the chronic underenrollment procedure. See Declaration of Angie Godgrey ( Godfrey Decl. ) (ECF No. 11-1), 5-13, , 23, and Exs. A-D, F-J, L-N. On September 26, 2017, OHS notified the Navajo Nation that its Head Start grant, Grant No. 90CI9889, had been designated chronically underenrolled. See Complaint, 13; Godfrey Decl., 13, Ex. E. Pursuant to the Head Start Act OHS adjusted the Navajo Nation Head Start program s funded enrollment to reflect the average self-reported, actual enrollment over the past year and adjusted its funding level by an equal proportion. See Complaint, 13; Godfrey Decl., 13, Ex. E. Letters requesting reconsideration and consultation were received by and responded to by HHS. See Complaint, 21 and 25; Godfrey Decl., and Exs. G-L. After formal consultation on January 18, 2018, OHS offered to restore $2 million in funding if the Navajo Nation could meet certain conditions including creating a waiting list of eligible children who could fill the restored slots. See Complaint, 25; Godfrey Decl., 27, Exh. M. ARGUMENT A. General Legal Standards Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, see Willy v. Coastal Corp., 503 U.S. 131, (1992); Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986), which is not to be expanded by judicial decree, American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951). It is to be presumed that a cause lies outside this limited jurisdiction, Turner v. Bank of North America, 4 U.S. (4 Dall.) 8, 11, 1 L.Ed. 718 (1799), and the burden of establishing the contrary rests upon the party asserting jurisdiction, McNutt v. General Motors Acceptance Corp., 298 U.S. 178, (1936). Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). -5-

7 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 7 of 22 A Rule 12(b)(1) motion to dismiss for lack of jurisdiction may be presented as a facial or factual challenge. A facial challenge attacks the factual allegations of the complaint that are contained on the face of the complaint, while a factual challenge is addressed to the underlying facts contained in the complaint. Al-Owhali v. Ashcroft, 279 F. Supp. 2d 13, 20 (D.D.C. 2003) (internal quotations and citations omitted). When defendants make a facial challenge, the district court must accept the allegations contained in the complaint as true and consider the factual allegations in the light most favorable to the non-moving party. Erby v. United States, 424 F. Supp. 2d 180, 182 (D.D.C. 2006). With respect to a factual challenge, the district court may consider materials outside of the pleadings to determine whether it has subject matter jurisdiction over the claims. Jerome Stevens Pharmacy, Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). The plaintiff bears the responsibility of establishing the factual predicates of jurisdiction by a preponderance of evidence. Erby, 424 F. Supp. 2d at 182. In order to survive a Rule 12(b)(6) motion, the plaintiff must present factual allegations that are sufficiently detailed to raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). As with facial challenges to subject-matter jurisdiction under Rule 12(b)(1), a district court is required to deem the factual allegations in the complaint as true and consider those allegations in the light most favorable to the non-moving party when evaluating a motion to dismiss under Rule 12(b)(6). Trudeau v. FTC, 456 F.3d 178, 193 (D.C. Cir. 2006). However, where a complaint pleads facts that are merely consistent with a defendant s liability, it stops short of the line between possibility and plausibility of entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). Further, a court considering a motion to dismiss can choose to begin by identifying pleadings -6-

8 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 8 of 22 that, because they are no more than conclusions, are not entitled to the assumption of truth. Iqbal, 556 U.S. at 679. Finally, as a general matter, the Court is not to consider matters outside the pleadings, per Rule 12(b), without converting a defendant s motion to a motion for summary judgment. In interpreting the scope of this limitation, however, the D.C. Circuit has instructed that the Court may also consider any documents either attached to or incorporated in the complaint and matters of which we may take judicial notice. EEOC v. St. Francis Xavier Parochial School, 117 F.3d 621, 624 (D.C. Cir. 1997). For example, the D.C. Circuit has approved judicial notice of public records on file. In re Cheney, 406 F.3d 723, 729 (D.C. Cir. 2005) (statements attached to complaint that undermined inference advocated by plaintiff). Summary judgment is appropriate when, as here, the pleadings, together with the declarations, demonstrate that there is no genuine issue as to any material fact and... the moving party is entitled to judgment as a matter of law. Washington Post Co. v. U.S. Dep t of Health and Human Services, 865 F.2d 320, 325 (D.C. Cir. 1989). As the Supreme Court has declared, [s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is appropriate, under Rule 56, if the pleadings on file, as well as the affidavits submitted, evidence that there is no genuine issue of any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c); see also Mendoza v. Drug Enforcement Admin., 465 F. Supp. 2d 5 (D.D.C. 2006). Courts are required to view the facts and inferences in a light most favorable to the non-moving party. See Flythe v. District of Columbia, 791 F.3d 13, 19 (D.C. Cir. 2015) (citing Scott v. Harris, 550 U.S. 372, 383 (2007)). -7-

9 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 9 of 22 However, the party opposing the motion cannot simply rest upon the mere allegations or denials of the adverse party s pleading, but... must set forth specific facts showing that there is a genuine issue for trial. Mendoza, 465 F.Supp.2d at 9 (quoting former Fed R. Civ. P. 56(e)). A non-moving party must show more than that there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In Neal v. Kelly, 963 F.2d 453 (D.C. Cir. 1992), the Court recognized that any factual assertions in the movants affidavits will be accepted as being true unless [the opposing party] submits his own affidavits or other documentary evidence contradicting the assertion. Lewis v. Faulkner, 689 F.2d 100, 102 (7th Cir. 1982). [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, 556 U.S. 662, 678 (2009). Since the Court is constrained to treat the complaint s factual allegations as true, Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000), the facts alleged in the Complaint must be enough to raise a right to relief above the speculative level. Schuer v. Rhodes, 416 U.S. 232, 236 (1974). In an APA case such as this, summary judgment serves as the mechanism for deciding, as a matter of law, whether agency action is supported by the administrative record and is not in derogation of the APA s standard of review. Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977). In a case involving review of a final agency action under the APA, however, the standard set forth in Federal Rule of Civil Procedure 56 does not apply because of the limited role of a court in reviewing the administrative record. Alston v. Lew, 950 F. Supp. 2d 140, 143 (D.D.C. 2013). Such review is limited to the administrative record, and not some new record made initially in the reviewing court. Camp v. Pitts, 411 U.S. 138, 142 (1973); accord Alliance for Bio-Integrity v. Shalala, 116 F. Supp.2d 166, 177 (D.D.C. 2000). -8-

10 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 10 of 22 The Court reviews administrative decisions made by Defendant in accordance with the standards of the APA. See Miley v. Lew, 42 F.Supp.3d 165, 170 (D.D.C. 2014) (citing 5 U.S.C. 706). Plaintiff s Complaint alleges that Defendant s action is not in accordance with law. When courts review legal challenges to an agency s interpretation of a statute it administers, they must use the two-part test adopted by the Supreme Court in Chevron, USA, Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, (1984). Under the first part of this test, the court must determine whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. Id. Under the second part of the test, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency s answer is based on a permissible construction of the statute. Id. at 843. In reviewing an agency s interpretation of its authority under a statute it administers, the court will uphold that interpretation as long as it is a reasonable interpretation of the statute. See EPA v. Nat l Crushed Stone Ass n, 449 U.S. 64, 83 (1980) ( When construing statutes, we show great deference to the interpretation given the statute by the officers or agency charged with its administration. ); Vill. of Bergen v. FERC, 33 F.3d 1385, 1389 (D.C. Cir. 1994). B. Count One should be dismissed because there is no cause of action under the Head Start Act alone. There is no cause of action under the Head Start Act alone. To establish the jurisdiction of a federal court over a cause of action against a federal agency, a plaintiff must locate both a waiver of the federal government's sovereign immunity and some authorization for judicial review of the challenged agency action. Trudeau v. Fed. Trade Comm n, 384 F. Supp. 2d 281, 288 (D.D.C. 2005), aff d, 456 F.3d 178 (D.C. Cir. 2006). The Complaint points to no provision of the Head Start Act on its own that waives sovereign immunity or authorizes judicial review on -9-

11 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 11 of 22 its face. So, the alleged cause of action under the Head Start Act fails, and that allegation should be dismissed on jurisdictional grounds. Although the counts of the Complaint do not expressly seek relief under the Mandamus Act, Plaintiff references 28 U.S.C in passing in the Complaint s Jurisdiction and Venue section, so presumably it seeks such relief. However, the Complaint fails to sufficiently allege the needed elements to seek such drastic relief that should be invoked only in extraordinary circumstances. Power v. Barnhart, 292 F.3d 781, 784 (D.C. Cir. 2002) (internal quotations marks omitted). The remedy of mandamus is a drastic one, to be invoked only in extraordinary circumstances. Power v. Barnhart, 292 F.3d 781, 784 (D.C. Cir. 2002) (internal quotation marks omitted). To show entitlement to mandamus, plaintiffs must demonstrate (1) a clear and indisputable right to relief, (2) that the government agency or official is violating a clear duty to act, and (3) that no adequate alternative remedy exists. United States v. Monzel, 641 F.3d 528, 534 (D.C. Cir. 2011). These three threshold requirements are jurisdictional; unless all are met, a court must dismiss the case for lack of jurisdiction. See In re Medicare Reimbursement Litigation, 414 F.3d 7, 10 (D.C. Cir. 2005) (internal quotation marks and alteration omitted). Even when the legal requirements for mandamus jurisdiction have been satisfied, however, a court may grant relief only when it finds compelling equitable grounds. Id. The party seeking mandamus has the burden of showing that its right to issuance of the writ is clear and indisputable. Power, 292 F.3d at 784 (internal quotation marks omitted). Am. Hosp. Ass'n v. Burwell, 812 F.3d 183, 189 (D.C. Cir. 2016). As discussed in detail below, Plaintiff cannot show that it has a clear right to relief or HHS had a clear duty to act because HHS s reasonable interpretation of 42 U.S.C is that it does not apply to the designation of chronically underenrolled, the adjustments of funded enrollment of those grantees, and subsequent reduction, withholding, or recapture of funds. There is also an adequate remedy available to Plaintiff, which reflects that actual responsibility of the Secretary under the Head Start Act and has already been offered and completed. In its chronic underenrollment designation letter noted in paragraph 20 of the Complaint, HHS invited -10-

12 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 12 of 22 the Navajo Nation to provide evidence of significant causes of underenrollment that HHS was not aware of, so that HHS could consider whether discretion in altering the funding adjustment was warranted pursuant to 42 U.S.C. 9836(h). This reconsideration process was followed by a request for and an agreement to consultation that allowed Plaintiff to again present evidence and argument and which resulted in the offer referenced in paragraph 25 of the Complaint to restore funding if Plaintiff complied with conditions to ensure the funds would serve children. Another adequate remedy (if Plaintiff had a valid claim to agency error) would be the APA. Because review under that provision of law is available, another adequate remedy exists, precluding a mandamus remedy. Lawyers Comm. for Civil Rights Under Law v. Presidential Advisory Comm n on Election Integrity, 265 F. Supp. 3d 54, 65 (D.D.C. 2017), appeal dismissed, No , 2017 WL (D.C. Cir. Dec. 20, 2017); see also Kirwa v. United States Dep't of Def., No. CV (ESH), --- F.Supp.3d ---, 2017 WL , at *15 (D.D.C. Oct. 25, 2017) (Having found that plaintiffs have available a claim under the APA, the Court need not reach plaintiffs mandamus claim) (citing Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 379 (2004) (noting that mandamus may not issue so long as alternative avenues of relief remain available )). C. Count Two s claim that HHS s decision should be set aside pursuant to 5 U.S.C. 706(2)(D) should be dismissed because Plaintiff has not described any deficiency in the notice and comment rulemaking promulgating 45 C.F.R (b). The Final Head Start Performance Standards Rule specifically states that the appeal procedures promulgated pursuant to the Secretary s responsibility under 42 U.S.C. 9841(a) are contained in 45 C.F.R to , and that those procedures do not apply to reductions based on the chronic underenrollment procedure. 45 C.F.R (b). The Complaint recognizes these facts. Complaint, 7. Notice and comment rulemaking occurred here following the classic model required under the APA: notice of proposed rulemaking, invitation to -11-

13 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 13 of 22 comment, consideration of comments (or here the lack of comment), and adoption of a final rule. Nothing in the Complaint alleges otherwise. Further, the Complaint does not point to any agency-specific rulemaking procedure that HHS failed to follow when promulgating 45 C.F.R (b), and it does not include allegations that such an agency-specific rulemaking procedure was broken. D. Count Two s Claim that HHS s Decision Should Be Set Aside Pursuant to 5 U.S.C. 706(2)(D) Should Be Dismissed Because Under a Deference Analysis HHS s Decision Is Reasonable. Plaintiff s Complaint alleges that HHS failed to follow the requirements of the Head Start Act regarding when an appeal is required. Step one of the Chevron analysis is whether Congress has directly spoken to the precise question at issue. A proper understanding of the structure of the Head Start Act demonstrates that it has not. When Congress overhauled the Head Start Act in the 2007 Reauthorization, it included highly prescribed procedures for determining when a grantee is chronically underenrolled, how to calculate the adjustment to the funded enrollment and the subsequent recapture, withholding, or reduction in 42 U.S.C. 9836a(h). It did not include the availability of an appeal, but it did allow for the Secretary to use his discretion to reduce the recaptured, withheld, or reduced amount under special circumstances without putting procedural limits on how that discretion could be administered. 42 U.S.C. 9836a(h)(5). Despite the significant changes in the 2007 Reauthorization, Congress did not amend 42 U.S.C to add the new procedure of a reduction in funding based on chronic underenrollment to the long-standing list of adverse action covered by 42 U.S.C. 9841(a)(3). Under Chevron step two, if Congress has not directly spoken to the precise question at issue as here and instead the statute is silent or ambiguous with respect to that issue, then the Court should consider whether the agency s action is based on a permissible construction of the -12-

14 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 14 of 22 statute. Here, HHS s interpretation of the Head Start Act is permissible considering the structure, context, and practical application of the provisions in question. Moreover, the Head Start Act did give the Secretary latitude to promulgate regulations regarding appeals and other processes in the Head Start Act. Without a specific directive from Congress to offer an appeal when a program s funded enrollment is adjusted, HHS determined that an appeal was not warranted. Based on this understanding, HHS did not provide for appeals of funded enrollment adjustments or the subsequent adjustments of grant funds and explained in the preamble of the NPRM, the NPRM text, and the final rule text that this exclusion was deliberate. 80 F. Reg , and (June 19, 2015); 81 F. Reg , and (Sept. 6, 2016). This position is similar to the interpretation that HHS employed on another 2007 Reauthorization addition to the Head Start program, the Designation Renewal System, where it also did not find a right to appeal appropriate. This Court upheld HHS s position declining to extend an appeal under the Designation Renewal System when the Court found the procedures offered by the agency were sufficient due process because the decision among other things was based on selfreported data and allowed the grantee an opportunity to present further information. See Ohio Head Start Ass n, Inc. v. U.S. Dept. of Health and Human Servs., 873 F. Supp. 2d 335, 355 (D.D.C. 2012). 1 1 In Ohio Head Start Ass'n, Inc., as here, there was a process for the exchange of information and resolution provided outside of the appellate process but before HHS took action. Ohio Head Start Ass'n, Inc. v. U.S. Dep't of Health & Human Servs., 873 F. Supp. 2d at

15 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 15 of 22 The ruling was summarily affirmed by the D.C. Circuit For the reasons stated in the district court's Memorandum Opinion and Judgment. Ohio Head Start Ass n, Inc. v. U.S. Dept. of Health and Human Servs., 510 Fed. Appx. 1, 2013 WL at *1 (D.C. Cir. 2013). Indeed, in the latest Head Start regulations, HHS s interpretation that no appeal exists under the chronic underenrollment process or the Designation Renewal System share the same sentence. See 45 C.F.R (b).The Secretary s decision is entitled to deference, as Congress delegated authority to the agency generally to make rules carrying the force of law, and... the agency interpretation claiming deference was promulgated in the exercise of that authority. United States v. Mead Corp., 533 U.S. 218, (2001). Although HHS clearly explained its position and invited comment, no comments challenged that position. 81 F. Reg , (Sept. 6, 2016). In statutory construction, the presumption of consistent usage readily yields to context, and a statutory term may mean different things in different places. King v. Burwell, ---U.S. ---, 135 S. Ct. 2480, 2493 n.3 (2015) (quoting Utility Air Regulatory Group v. E.P.A., --- U.S. ---, 134 S. Ct. 2427, 2441 (2014)). Also, it is proper that words grouped in a list should be given related meaning. Dole v. United Steelworkers of America, 494 U.S. 26 (1990) (internal quotation marks omitted). Although both 42 U.S.C. 9836a(h) and 42 U.S.C. 9841(a)(3) use the term reduce to describe an action taken by HHS, the actions being described are distinct. Based on context and surrounding terms, the reduction described in 42 U.S.C. 9841(a)(3) is reasonably understood as a partial termination. And the term reduce does not stand alone in the 2007 amendments, but as part of the actions ( recapture, withhold, or reduce ), 42 U.S.C. 9836a(h)(5)(A)(ii), called for to remedy chronic underenrollment. -14-

16 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 16 of 22 Although simplicity is often attractive, it is not always right. The Head Start Act is a complex statute developed imperfectly over 50 years. Legislation authorizing the Head Start program has drifted in and out of various statutory and regulatory structures over the years and has followed as Head Start transformed from a summer program for five-year-olds funded through demonstration grants to a comprehensive birth to five child development program running year round and providing services to approximately one million low-income children. It has been the responsibility of three different federal agencies, two of which no longer exist, and numerous subagencies. The term reduce was included in the appeals provisions of the Head Start Act during a 1990 reauthorization. Augustus F. Hawkins Human Services Reauthorization Act of 1990, Pub. L. No , 115 (1990). At the time, HHS grant and Head Start regulations did not define termination to include a partial termination as they do today. 45 C.F.R (1990). After its 1990 addition, the term reduce was never defined in the Head Start Act, Head Start regulations, or general HHS grant regulations. The two provisions of the Head Start Act at issue here are reasonably understood as different actions based on the context in which they appear. The context where reduce appears in 42 U.S.C. 9841(a)(3) reasonably indicates that it refers to a partial termination. A termination, partial termination, or denial of refunding are adverse decisions justified when serious circumstances exist including when a grantee has lost its legal status, has failed to comply with reporting requirements, has uncorrected deficiencies, or has been debarred from receiving federal grants or contracts. 45 C.F.R The existence of these circumstances found through monitoring triggers HHS to follow a statutorily mandated procedure that is separate and apart from the chronic underenrollment procedures. See 42 U.S.C. 9836a(e). In general, terminations lead to the complete exit of a grantee from the Head Start program. Indeed, -15-

17 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 17 of 22 a grantee whose grant has been terminated or denied for refunding, in whole or part, is barred from competing for Head Start funding for five years. 45 C.F.R At this time, HHS is not pursuing any enforcement action against Navajo Nation Head Start based on grounds that justify termination. HHS, however, did initiate the chronic underenrollment process to deal with the Navajo Nation Head Start program s severe underenrollment problem as it is required to do under 42 U.S.C. 9836a(h). It has followed the process through the mandated 12 months, provided the necessary technical assistance, and adjusted the enrollment pursuant to the parameters set out in the Head Start Act. See Complaint, 20; Godfrey Decl. 13, Exh. E. Unlike a termination or partial termination of grant funds, the necessary adjustment of funds that accompany the adjustment in funded enrollment under 42 U.S.C. 9836a(h)(5) is not a punishment for bad acts by the grantee. Instead, it is correcting the grant amount to reflect the capacity of a grantee to serve a specific number of children based on the proven actual enrollment of that grantee. Consequently, funded enrollment adjustments do not carry the severe and long-term consequences that accompany a termination or partial termination. As noted in HHS s correspondence with the Navajo Nation, the tribe is able and very welcome to compete for the $7 million derived from the adjustment to its funded enrollment when HHS redistributes the funds as expansion grants for Indian Head Start programs. See Complaint, 22; Godfrey Decl. 20, Exh. I. In contrast to being grouped with defined terms with long historical statutory and regulatory processes, which include appeals, as the term reduce is used in 42 U.S.C. 9841(a)(3), reduce in the context of the chronic underenrollment procedures is grouped with other undefined terms, withhold and recapture. 42 U.S.C. 9836a(h)(5) and (6). The Complaint points to no indication of appeal rights in the Head Start Act, general HHS grant regulations, or Head Start specific regulation that confers appeal rights -16-

18 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 18 of 22 for the undefined terms of withhold and recapture. Given their relationship, the same should be true for the undefined term of reduce as it appears in 42 U.S.C. 9836a(h)(5) in the phrase recapture, withhold, or reduce. HHS interpretation of the Head Start Act is also reasonable because an appeal has no practical end. Here, there is nothing to appeal. The statute dictates the timeframe and criteria for adjusting funded enrollment and the subsequent adjustment in grant funds. Plaintiff, itself, provides the data on which the calculation is based and the 2007 Reauthorization incorporates its own appeal-like process to test the calculations and exceptions, a months-long collaborative planning and technical assistance period, as well as the discretion review process. The Complaint does not allege HHS misread the Navajo Nation s self-reported enrollment data, mistakenly determined that the Navajo Nation Head Start program was not at 97 percent of its funded enrollment, or calculated the proportional adjustment of funds incorrectly. The Complaint only alleges that based on the Secretary s waiver authority under 42 U.S.C. 9836a(h)(5) underenrollment need not result in a reduction of funding if the grantee can persuade the Secretary that there are sufficient mitigating considerations. The Secretary s discretion is not appealable, and to the extent that it is, Plaintiff has already received that process. The Head Start regulations set out that an appeal required under 42 U.S.C. 9841(a)(3) is heard through the Departmental Appeals Board ( DAB ) and pursuant to its procedures and requirements. 45 C.F.R (c). The Complaint does not challenge that process. A DAB appeal is not an opportunity to exercise agency discretion. The DAB is an entity within HHS created by regulation. It is defined in HHS regulations as the independent office established in the Office of the Secretary with delegated authority from the Secretary to review and decide certain disputes between recipients of HHS funds and HHS awarding agencies under 45 CFR -17-

19 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 19 of 22 part 16 and to perform other review, adjudication and mediation services as assigned. 45 C.F.R The DAB can review the written record of an agency decision, consider the validity and quantity of evidence, consider disputes of material facts, collect documents and information, examine witnesses, and review other factual and legal judgments. See 45 C.F.R. 16.4, 16.9, 16.11, But it does not substitute its judgment for agency discretion. See, e.g., In the Case of Abdul Razzaque Ahmed, M.D., DAB Decision No. 2261, at 19 (2009), available at In the Case of Home Education Livelihood Program, Inc., Request for Reconsideration of DAB Decision No (1997), available at (explaining as a preliminary matter, we believe it is important to affirm that it has always been the Board s practice not to substitute our own judgment for that of the agency. ). Furthermore, HHS has already exercised its discretion under 42 U.S.C. 9836a(h)(5) as set out in the correspondence listed but not fully described in the Complaint. First, it considered and denied the requested reconsideration of the adjustment in its November 22, 2017 letter. See Complaint, 21, Godfrey Decl., 20, Exh. I. Second, in response to formal consultation HHS issued a letter on January 19, 2018, in which it used its discretion to offer restoration of $2 million if the Navajo Nation met certain conditions that ensured funds would be used to provide services for actual children. See Complaint, 25; Godfrey Decl., 27, Exh. M. Here, HHS has exercised the discretion afforded it under 42 U.S.C. 9836a(h), and the fact that the Navajo Nation is not happy with the results of that exercised discretion does not mean it is appropriate for what could be considered a third appeal. In its chronic underenrollment determination -18-

20 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 20 of 22 process, the Navajo Nation received the process it was due under the Head Start Act and HHS regulations, and it fails to allege a scenario where this Court should order HHS to provide more. E. HHS properly promulgated rules excluding the chronic underenrollment process from its appeal procedures, but if the Court finds the agency s interpretation to be lacking, it should not require rulemaking but simply some procedure. The Complaint s Prayer for Relief asks the Court to declare HHS s adjustment of funding for chronic underenrollment violates the Head Start Act, to set aside that adjustment, and to declare that a funding adjustment cannot be made until it receives appeal rights under 42 U.S.C. 9841(a)(3). Although not present in its Prayer for Relief, the Complaint earlier asks that the adjustment in funding not be done until the Secretary has promulgated regulations. Complaint 10. Such relief is inappropriate. Under 42 U.S.C. 9841(a)(3), the Secretary is required to prescribe procedures, but the Head Start Act does not specify the method of prescribing that procedure. In contrast, later in section 9841, the Head Start Act directs the Secretary by regulation specify a process. To the extent that Plaintiff s Complaint is requesting an appeal only after rulemaking, that request is inappropriate and should not be entertained by this Court. If the Court so ordered, HHS would be forced to ignore the language of its current regulations that provide no appeal rights (beyond the planning and technical assistance period required in 42 U.S.C. 9836a(h)(3) and (4) and the discretionary review process authorized under 42 U.S.C. 9836a(h)(5)(B)) even if it was prepared to provide an appeal process without amendment to its regulations. In short, if more of an appeal process is deemed by the Court to be needed, the Agency should be permitted the opportunity to simply provide that remedy without delay. -19-

21 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 21 of 22 CONCLUSION For these reasons and those previously set forth in opposition to Plaintiff s Motion For a Preliminary Injunction (see ECF No. 11), this action should be dismissed or judgment entered in favor of Defendant. Respectfully submitted, JESSIE K. LIU, DC Bar # United States Attorney DANIEL F. VAN HORN, DC Bar # Chief, Civil Division By: /s/ W. MARK NEBEKER, DC Bar # Assistant United States Attorney 555 4th Street, N.W. Washington, DC (202) mark.nebeker@usdoj.gov -20-

22 Case 1:18-cv DLF Document 17 Filed 03/09/18 Page 22 of 22 CERTIFICATE OF SERVICE I HEREBY CERTIFY that service of the Defendant s Motion To Dismiss Or, In The Alternative, For Summary Judgment, supporting memorandum and a proposed order has been made through the Court s electronic transmission facilities on the 9th day of March, W. MARK NEBEKER, DC Bar # Assistant United States Attorney 555 4th Street, N.W. Washington, DC (202) mark.nebeker@usdoj.gov /s/