-
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 97-1834
ACTION FOR BOSTON COMMUNITY DEVELOPMENT, INC.,
Plaintiff, Appellant,
v.
DONNA E. SHALALA, AS SHE IS THE
SECRETARY OF THE UNITED STATES DEPARTMENT
OF HEALTH AND HUMAN SERVICES,
AND THE UNITED STATES DEPARTMENT
OF HEALTH AND HUMAN SERVICES,
ADMINISTRATION FOR CHILDREN,
AND FAMILIES, REGION I,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Boudin, Circuit Judge, _____________
and Woodlock,* District Judge. ______________
____________________
Janet Steckel Lundberg with whom Richard M. Bluestein, Krokidas & ______________________ ____________________ __________
Bluestein, Garrick F. Cole and Smith & Duggan were on brief for _________ ________________ _______________
appellant.
David S. Mackey, Assistant United States Attorney, with whom ________________
Donald K. Stern, United States Attorney, was on brief for the United _______________
States.
____________________
February 9, 1998
____________________
____________________
*Of the District of Massachusetts, sitting by designation.
BOUDIN, Circuit Judge. In form, this appeal seeks ______________
review of the district court's refusal to grant injunctive
relief to the plaintiff, Action for Boston Community
Development ("ABCD"), a major provider of Head Start services
in Boston. In substance, this is an administrative review
proceeding by which ABCD seeks to overturn the decision by
the Department of Health and Human Services ("HHS") to select
a different grantee to receive funds for a new Head Start
project in Boston. The pertinent facts are undisputed.
The Head Start program is designed to deliver social
services to economically disadvantaged children and their
families. 42 U.S.C. 9831. To provide such services, HHS
makes grants to private entities, like ABCD. ABCD is a
longstanding Head Start grantee in Boston, responsible for a
number of diverse programs, and it tells us that in a recent
year its grants exceeded $20 million.
From 1982 to 1995, the year it lost its funding,
Esquelita Aquebana, Inc. operated a Head Start program in a
Boston area known as Uphams Corner, comprising a portion of
Roxbury, Dorchester and the South End of Boston. In January
1996, HHS announced that a grant would be made to a
replacement provider of services in Uphams Corner in an
amount somewhat exceeding $500,000. Two of the three
applicants for the funds were ABCD and Dimmock Community
Health Center ("Dimmock").
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For many years, Congress has provided that HHS must give
"priority" to Head Start agencies which were receiving Head
Start funds on August 13, 1981, "unless [in the current
phrasing] the Secretary makes a finding that the agency
involved fails to meet program, financial management, and
other requirements established by the Secretary." 42 U.S.C.
9836(c)(1). HHS apparently took no account of this
priority since its announcement said that the funding was "to
be competitively awarded." In any case, HHS established an
independent panel to review the applicants and on May 13,
1996, the panel awarded ABCD 419 points; Dimmock, 354 points;
and the third applicant, 266 points.
At the same time, HHS was undertaking a regular review
of all of ABCD's 26 Head Start program sites. HHS completed
its review of ABCD's Parent Child Center, a special
demonstration program providing services for infants and
toddlers, on May 10, 1996. The review of this program
revealed serious deficiencies in the health, disability,
parental involvement and social service components. HHS
summarized the problem as one of "inadequate agency capacity
to plan, and manage the delivery of Head Start services."
Head Start programs are run through the HHS
Administration for Children and Families. On August 2, 1996,
the local regional administrator, Hugh Galligan, announced
the selection of Dimmock as the Head Start agency for the
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Uphams Corner program. Galligan reported to his superior
that "[w]hile ABCD's [periodic review] results are generally
positive, a recent review of its Parent Child Center (PCC)
program showed it was seriously deficient." This report also ___________________
stated that Dimmock was running a Head Start program in good
standing and that both Galligan's organization and its
Massachusetts state counterpart "agreed that the Dimmock
proposal more clearly responded to the opportunity for
creative, comprehensive and flexible programming."
On August 14, 1996, ABCD brought this case in the
district court, seeking to enjoin the award of funds to
Dimmock on the ground that HHS had failed to respect the
statutory priority to which ABCD was conditionally entitled
under 9836(c)(1). When the administrative record was
lodged, the district court found no record of a ruling on
ABCD's right to a priority. On December 19, 1996, the court
ordered HHS to determine explicitly whether ABCD was entitled
to a priority and to explain the reasons for the HHS
determination.
In response, HHS filed a declaration of Hugh Galligan
stating that ABCD did not qualify for the statutory priority
"because of the May 10 finding that ABCD fails to meet
program, financial management, and other requirements
established by the Secretary," and reaffirming his previous
award of the grant to Dimock. HHS also filed a memorandum
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dated March 21, 1997, from Olivia Golden, then Principal
Deputy Assistant Secretary, Administration for Children and
Families, ratifying Galligan's selection of Dimock. ABCD
then challenged the authority of Golden and Galligan to make
this decision. On June 9, 1997, Golden issued a second
memorandum, further ratifying all decisions and actions taken
by Galligan in the matter up to that date.
On July 2, 1997, the district court filed an opinion,
Action for Boston Community Development, Inc. v. Shalala, ________________________________________________ _______
1997 WL 677447 (D. Mass. 1997), granting final judgment in
favor of HHS. The court ruled that even if Galligan had
lacked the necessary authority at the outset, that gap had
been filled by the subsequent ratification. On the merits,
the district court found that the decision to withhold the
priority was neither in violation of law nor unreasonable
under the standards usually applied in reviewing agency
action.
On the appeal now before us, ABCD's first and most
extensive argument is that the decision to withhold the
priority, even if properly ratified (which ABCD denies),
rested on legal errors. The main thrust of its argument is
that the statute does not permit HHS "to deny ABCD its
priority . . . on the basis of temporary, program-specific
deficiency findings with respect to one of the twenty-six
Head Start program sites that ABCD operates, a site that
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constitutes only a small part of ABCD's overall Head Start
program activities."
So far as ABCD's issue presents a question of statutory
construction--and in some respects it does--our review is de __
novo, tempered by whatever deference is to be accorded to the ____
Secretary's construction of the statute under the Chevron _______
doctrine or otherwise. See Chevron, U.S.A., Inc. v. Natural ___ ______________________ _______
Resources Defense Council, Inc., 467 U.S. 837 (1984). Even _______________________________
without full-scale Chevron deference, courts usually give a _______
respectful hearing to the agency charged with administering a
statute. Because our own view of the statute accords with
that of HHS, we need go no further than that in the present
case.
We agree with ABCD that Congress made a considered
decision to give a priority to any Head Start agency
receiving funds on August 13, 1981. The expressed rationale-
-to give preference to stability and experience--may not seem
to jibe with the selection of the single, now increasingly
ancient date. But choices of this kind are always somewhat
arbitrary, and Congress has maintained this priority date,
altering the statutory language only slightly over a lengthy
period.
On this premise, ABCD concludes that Congress therefore _________
must have intended that the condition for denying priority--
"that the agency involved fails to meet program, financial
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management, and other requirements established by the
Secretary"--be based on a "overall" failure to the Head Start
agency to meet HHS standards. What ABCD means by "overall"
is not entirely clear, but ABCD makes its arguments somewhat
more concrete by asserting that the failure of a single
program, conducted by a multi-program Head Start agency,
cannot be an "overall" failure. Congress could have written
the statute in this manner but did not do so.
The word "overall" simply does not appear anywhere in
the priority provision (section 9836(c)). Given the
congressional purpose, we agree that the failure to meet
standards would certainly have to be substantial and relevant
as opposed to slight or inconsequential. But there is
nothing in the language of the priority provision that
requires that the failure be one that affects all or many of
the programs the agency may be supervising.
Further, the failure to manage properly an individual
program might be very informative as to the agency's ability
to take on new responsibilities. Deficiencies within a
single program might be more important to HHS than a single
deficiency--say in some aspect of bookkeeping--that infected
all of the programs run by a Head Start agency. Whether the
failures in ABCD's Parent Child Center were of great
magnitude is a different question to which we return below.
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One could argue, with a better footing in the statutory
language, that there must be at least multiple failures of
different kinds, since the statute calls for a finding that
the agency "fails to meet program, financial management, and ___
other requirements established by the Secretary." Section
9836(c)(1) (emphasis added). The word "and" usually denotes
the conjunctive, but the rule is not absolute when
contradicted by context, Reiter v. Sonotone Corp., 442 U.S. ______ ______________
330, 338 (1979), as we think it is here. Especially in light
of the catch-all category "other requirements," the term
"and" certainly was intended to mean "and/or."
This is borne out by common-sense considerations. If a
Head Start agency failed utterly in the delivery of program
services, Congress could not have intended that its
meticulously kept books would assure it a statutory priority
as to new programs. As it happens, here Galligan did
expressly find, in a determination later ratified by the
Acting Assistant Secretary, that ABCD had failed to meet
"program, financial management, and other requirements."
Finally, there is little mileage for ABCD in its claim
that the deficiency cannot be merely "temporary."
Practically all deficiencies can be made "temporary" by
discovering and rectifying them. The question is whether
their existence is a warning signal that the Head Start
agency ought to be correcting the deficiencies that exist
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before it takes on new programs--which might further stretch
management resources already shown to be inadequate.
ABCD argues that its reading of section 9836 is
supported by section 9836a enacted by Congress in 1994. Pub.
L. No. 103-252, 108, 108 Stat. 631. Whereas section 9836
involves the designation of Head Start agencies, section
9836a requires HHS to establish quality standards for Head
Start agencies and to monitor such agencies and programs.
The deficiencies in the Parent Child Center found in the May
10, 1996 report, which Galligan invoked in denying ABCD
priority, derived from a monitoring program carried out under
the newly enacted section 9836a.
ABCD argues that an "overall" failure is required under
section 9836(c)(1) because section 9836a refers at one point
to the need for the Secretary to promulgate "minimum levels
of overall accomplishment" that a Head Start agency must
achieve to meet the primary "standards" to be established by
the Secretary for program services, for administrative and
financial management, and for many other subjects,
9836a(a)(1), (2), and because elsewhere the Secretary is
required to conduct a "full review" of each agency at least
once every three years. Id. subsection (c)(1)(A). This kind ___
of wrenching words out of context is not persuasive:
"overall accomplishment" and "full review" make sense in
context, and neither phrase has the same meaning as "overall
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failure"--the phrase ABCD would like to substitute for the
word "failure" in the prior section of the statute.
ABCD next objects to HHS' use of the findings made in a
periodic review as the basis for denying a statutory
priority. ABCD points out that other provisions of section
9835a address the correction of deficiencies found in a
periodic review by quality improvement plans and the
termination of the agency if the deficiencies are not
corrected. But nothing in these provisions prevents HHS from
considering the findings of a periodic review in determining
under the prior section whether the Head Start agency should
lose its priority.
If this were an ordinary agency review proceeding, we
would now reach the usual question whether the agency had a
rational basis for its action or whether, contrariwise, its
action was arbitrary, capricious or unreasonable. And, one
would expect ABCD to explain why the findings of deficiency
relied on by HHS were mistaken or unsupported or why, to the
extent they might be correct and adequately supported, they
were not sufficiently serious, even taken as a whole, to
justify the significant step of the denial of priority.
If such an attack were made, we would take it seriously.
Agencies are entitled to considerable deference in their
formal fact finding and in the application of general
standards to specific facts within their expertise, but in
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neither case is deference unlimited. Congress has, as ABCD
argued, treated the priority as a matter of importance
(although the condition attached to it is also important).
This court has been willing enough even in fairly technical
areas to overturn agency decisions which appeared to us to be
unreasonable or inadequately supported. See, e.g., Puerto ___ ____ ______
Rico Sun Oil Co. v. EPA, 8 F.3d 73, 76-77 (1st Cir. 1993). ________________ ___
ABCD has chosen not to make such an attack, and we
therefore have no occasion to review in detail the findings
of the May 10, 1996, review of the Parent Child Center which
are summarized in the district court's decision. 1997 WL
677477 at *19. It is enough to say that the criticisms are
not narrowly confined or limited to trivial matters. And
while ABCD has stressed that the Parent Child program was a
small portion of its budget, it implies that the figure is 4
percent of $22 million--most would not regard a million-
dollar program as small change.
ABCD's next line of argument contests the authority of
Galligan to make the priority decision at all. We condense
the background which is discussed at length in the district
court decision. 1997 WL 677447 at *6-13. The gist of the
matter is that, as Regional Administrator, Galligan had from
the outset the authority to award Head Start grants, but the
Commissioner of Youth and Family Services--then Olivia
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Golden--had the authority to designate new Head Start
agencies.
The district court deemed it unclear which of the two
officials had the authority to grant or deny the priority,
but found that it did not matter. It concluded that even if
Galligan had lacked the authority in August 1996, Golden had
explicitly ratified his actions in June 1997. By that time,
Golden was Principal Deputy Assistant Secretary and had been
nominated for the vacant Assistant Secretary position.
We agree with the district court that as the Principal
Deputy and nominee, Golden could exercise the powers of an
assistant secretary. ABCD admits that the proper assistant
secretary had the authority to make priority decisions but
argues that Golden was nominated for an assistant
secretaryship other than the one with authority to decide the
issue. Despite some confusion over titles, we adopt the
district court's reasoning for rejection of this argument.
Id. at *12. ___
ABCD's more interesting argument is that Golden could
not ratify Galligan's decision "retroactively." All
ratifications are retroactive in the sense that they purport
to validate a prior action that might otherwise be
unauthorized. But ABCD relies here on an HHS administrative
procedural manual that refers to ratification of prior
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actions being permissible in "special circumstances" and
"with the approval" of the general counsel's office.
We know almost nothing about the scope of this
provision, or the legal significance of the manual, because
ABCD did not make this argument in the district court.
ABCD's objection is therefore waived. See McCoy v. ___ _____
Massachusetts Institute of Technology, 950 F.2d 13, 22 (1st ______________________________________
Cir. 1991). Accordingly, we do not reach HHS' alternative
argument that the record shows that the general counsel's
office informally acquiesced in the ratification.
Finally, ABCD says that the ratification is an invalid
"post hoc rationalization." This epithet has been used by
courts in various ways but most often to prevent agency
lawyers from providing in briefs necessary findings or _______
reasoning omitted from the agency's decision. See Motor _______ ___ _____
Vehicle Mfrs. Ass'n v. State Farm Mut. Automobile Ins. Co., ___________________ _____________________________________
463 U.S. 29, 50 (1983); Burlington Truck Lines, Inc. v. ______________________________
United States, 371 U.S. 156, 168-69 (1962). Nothing of the _____________
sort is presented here: both Galligan and Golden agreed,
respectively in May and June 1997, that ABCD was properly
denied the priority based on information available to them
from the time the grant was originally made to Dimock.
Thus, the usual concern of courts--that the
decisionmaker may not have made the necessary determinations-
-is absent here. Further, it was the district court itself
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that ordered HHS to make its priority determination explicit
and explain its reasons. See Pension Benefit Guaranty Corp. ___ ______________________________
v. LTV Corp., 496 U.S. 633, 653-54 (1990). Finally, nothing _________
in the 1997 redeterminations violated any procedural
requirements: We have been pointed to nothing in the statute
or regulations that requires any specific procedures before a
priority is denied. See Dubois v. United States Dep't of ___ ______ _______________________
Agric., 102 F.3d 1273, 1289 (1st Cir. 1996), cert. denied, ______ ____________
117 S. Ct. 2510 (1997).
Affirmed. _________
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Document Info
Docket Number： 97-1834
Filed Date： 2/10/1998
Precedential Status： Precedential
Modified Date： 9/21/2015