Care Net Pregnancy Center v. United States Department of Agriculture ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
CARE NET PREGNANCY CENTER OF )
WINDHAM COUNTY, )
)
Plaintiff, )
)
v. ) Civil Action No. 11-2082 (RBW)
)
UNITED STATES DEPARTMENT OF )
AGRICULTURE, and )
)
THOMAS J. VILSACK, )
Secretary of the United States Department )
of Agriculture, )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
The plaintiff, Care Net Pregnancy Center of Windham County (“Care Net”), brings this
action against the United States Department of Agriculture (“USDA”) and its Secretary, Thomas
J. Vilsack, appealing a decision of the USDA which allegedly denied Care Net “eligibility to
obtain a government sponsored loan solely on the basis of [its] desire to engage in religious
speech.” Verified Complaint (“Compl.”) at 1. Currently before the Court are the defendants’
motion to dismiss, or in the alternative, for partial summary judgment; Care Net’s cross-motion
for summary judgment; and the defendants’ motion for summary judgment. Upon careful
consideration of the parties’ submissions, 1 the Court concludes for the following reasons that it
1
In addition to the filings already identified, the Court considered the following submissions in rendering its
decision: the Defendants’ Memorandum in Support of their Motion to Dismiss, or in the Alternative, for Partial
Summary Judgment (“Defs.’ Mot. to Dismiss Mem.”); Care Net’s Opposition to Motion to Dismiss and Cross
Motion for Summary Judgment (“Pl.’s Mem.”); the Defendants’ Reply Memorandum in Support of their Motion to
Dismiss, or in the Alternative, for Partial Summary Judgment, in Opposition to Plaintiff’s Motion for Summary
Judgment, and in Support of Defendants’ Motion for Summary Judgment (“Defs.’ MSJ Mem.”); Care Net’s
Consolidated Brief in Reply to its Motion for Summary Judgment and in Opposition to Defendants’ Motion for
(continued . . .)
must grant in part and deny in part the defendants’ motion to dismiss, or in the alternative, for
partial summary judgment; grant in part and deny in part without prejudice the defendants’
motion for summary judgment; deny without prejudice Care Net’s cross-motion for summary
judgment; and remand this case to the USDA’s National Appeals Division for further
consideration.
I. BACKGROUND
A. Statutory and Regulatory Framework
1. The USDA’s Community Facilities Loan Program
The USDA’s Community Facilities Loan Program (“Loan Program”) makes and
guarantees loans in rural areas with less than 20,000 people. See generally 7 C.F.R. §§ 1942.1-
1942.50 (2012). “[N]ot-for-profit” private organizations are among the entities eligible for the
Loan Program. Id. § 1942.17(b)(1)(ii). Loans may be used for “water or waste disposal” as well
as “other essential community facilities providing essential service primarily to rural residents
and rural businesses.” Id. § 1942.17(d)(1)(i). “Essential community facilities are those public
improvements requisite to the beneficial and orderly development of a community operated on a
nonprofit basis,” including, among other things, “[h]ealth services,” and “[c]ommunity, social, or
cultural services.” Id. § 1942.17(d)(1)(i)(B).
In determining an applicant’s eligibility for the Loan Program, the USDA may conduct a
“preapplication” review. See id. §§ 1942.2(a), 1942.17(c)(2). “This process entails a
preliminary review of certain materials to determine whether the applicant may be eligible, and
is intended to avoid unnecessary expenditures by applicants whose ineligibility can be
(. . . continued)
Summary Judgment (“Pl.’s Opp’n”); Defendants’ Reply Memorandum in Support of their Motion for Summary
Judgment (“Defs.’ MSJ Reply”); and the Administrative Record (“A.R.”).
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determined at an early stage.” Defs.’ MSJ Mem. at 2. Applicants who successfully complete the
preapplication stage must then submit a final application for funding. See 7 C.F.R. § 1942.2(c).
“If at any time prior to loan approval it is decided that favorable action will not be taken
on a preapplication or application, the [USDA] will notify the applicant in writing of the reasons
why the request was not favorably considered,” and of the process for administrative review. Id.§ 1942.2(d). Administrative appeals of “adverse decisions” under the Loan Program are
governed by the procedures set forth at “7 C.F.R. part 11.” Id. § 1900.53. Under this regulation,
USDA “program participants shall seek review of an adverse decision before a Hearing Officer”
of the USDA’s National Appeals Division (“Appeals Division”) “prior to seeking judicial
review.” Id. § 11.2(b) (emphasis added); see also 7 U.S.C. § 6912(e) (“Notwithstanding any
other provision of law, a person shall exhaust all administrative appeal procedures established by
the Secretary [of the USDA] or required by law before the person may bring an action in a court
of competent jurisdiction against—(1) the Secretary; (2) the [USDA]; or (3) an agency, office,
officer, or employee of the [USDA].” (emphasis added)). If the Hearing Officer issues an
adverse decision, the program participant “may seek further review by the Director [of the
Appeals Division] . . . prior to seeking judicial review,” but is not required to do so. 7 C.F.R. §
11.2(b) (emphasis added).
2. Regulations Governing the USDA’s Funding of Faith-Based Organizations
The USDA implemented regulations in 2004 setting forth “USDA policy regarding equal
opportunity for religious organizations to participate in USDA assistance programs for which
other private organizations are eligible.” 7 C.F.R. § 16.1(a). These regulations provide that
[a] religious organization is eligible, on the same basis as any other eligible
private organization, to access and participate in USDA assistance programs.
Neither the Federal government nor a State or local government receiving USDA
assistance shall, in the selection of service providers, discriminate for or against a
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religious organization on the basis of the organization’s religious character or
affiliation.
Id. § 16.2(a). The regulations further state that “[a] religious organization that participates in
USDA assistance programs will retain its independence and may continue to carry out its
mission, including the definition, practice, and expression of its religious beliefs.” Id. § 16.2(b).
The USDA’s regulations do, however, impose limitations on funding provided to
religious organizations. To begin with, “[a] religious organization” may “not use USDA direct
assistance to support any inherently religious activities, such as worship, religious instruction, or
proselytization.” Id. Moreover,
[o]rganizations that receive direct USDA assistance under any USDA program
may not engage in inherently religious activities, such as worship, religious
instruction, or proselytization, as part of the programs or services supported with
direct USDA assistance. If an organization conducts such activities, the activities
must be offered separately, in time or location, from the programs or services
supported with direct assistance from USDA, and participation must be voluntary
for beneficiaries of the programs or services supported with such direct assistance.
Id. § 16.3(b). The USDA regulations also contain specific provisions governing the use of funds
for building acquisition, construction, and rehabilitation by religious organizations:
Direct USDA assistance may be used for the acquisition, construction, or
rehabilitation of structures only to the extent that those structures are used for
conducting USDA programs and activities and only to the extent authorized by
the applicable program statutes and regulations. Direct USDA assistance may not
be used for the acquisition, construction, or rehabilitation of structures to the
extent that those structures are used by the USDA funding recipients for
inherently religious activities. Where a structure is used for both eligible and
inherently religious activities, direct USDA assistance may not exceed the cost of
those portions of the acquisition, construction, or rehabilitation that are
attributable to eligible activities in accordance with the cost accounting
requirements applicable to USDA funds. Sanctuaries, chapels, or other rooms
that an organization receiving direct assistance from USDA uses as its principal
place of worship, however, are ineligible for USDA-funded improvements.
Id. § 16.3(d)(1).
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B. Factual and Procedural Background
The following facts are undisputed. Care Net is “a small non-profit organization which
operates a pregnancy resource center in Brattleboro, Vermont, where it provides classes and
services to both pre-natal and post-natal women in need.” Compl. ¶ 1. It is a self-described
“Christ Centered ministry that offers information, referrals and hope to young women (and men)
who find themselves involved in an unplanned pregnancy,” with the goal of “inspir[ing its]
clients to make healthy life style decisions that directly affect the future[.]” A.R. at 000117.
Care Net seeks to “minister[] to women, men and families in the same way that Christ
ministers.” Id. Its services include pregnancy tests, education, counseling, parenting classes,
and baby supplies. Id. The organization “does not perform, recommend or refer for abortion.”
Id.
On December 13, 2010, Care Net’s Executive Director, Elizabeth Chechile, wrote a letter
to the USDA’s Rural Development Center “to inquire about [the] Community Facility [Loan]
Program.” Id. at 000102. Ms. Chechile explained that Care Net was “attempting to purchase a
property of [its] own” in Brattleboro, Vermont, to use as a permanent facility, and expressed
interest in obtaining a USDA loan to help finance the purchase and renovation of the property.
Id. The building that Care Net was considering purchasing “require[d] extensive work to bring it
up to code and functionality,” which was estimated to cost “about $100,000.” Id. Along with
her letter, Ms. Chechile enclosed copies of Care Net’s brochure, its bylaws, articles of
association, and related documentation. Id.
Care Net’s brochure made clear that the organization provided both secular and religious
services. For instance, it stated that Care Net’s “Learn to Earn” program “rewards a pregnant
client (and her partner) with baby and mommy care necessities for participating in a series of
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classes to help prepare them for motherhood (and fatherhood),” and that clients “participate[] in
a parenting class and a Bible study.” Id. at 000117. The “Post Abortive Teaching and Healing”
program was described as “a bible centered program” designed to “enable[] women to process
their abortion-related experiences and emotions with the goal of healing and recovery.” Id. And
the “Why Am I Tempted?” training “encourages people of all ages to build healthy relationships
by saving sex for marriage.” Id.
Following a conversation with a representative from the USDA Rural Development
Center, Ms. Chechile sent the USDA another letter, on January 14, 2011, providing further
explanation of Care Net’s programs. See id. at 000103. Regarding the Learn to Earn program,
Ms. Chechile stated that Care Net “sometimes will adjust the program slightly to fit [its clients]
needs,” e.g., by “substitut[ing] some extra Parenting Classes in for some of the Bible Study
Classes.” Id. Apart from these “slight adjustments,” however, Care Net generally adhered to its
programs’ requirements. Id. Ms. Chechile added that although “[t]he Learn to Earn Program
[was] by far [Care Net’s] most popular,” it was “not [its] only focus.” Id.
On January 14, 2011, representatives from Care Net and the USDA Rural Development
Center held a meeting. See id. at 000159. The USDA representative stated that in light of
USDA’s “faith-based regulations,” and given Care Net’s desire to hold religious classes in the
building for which it sought federal funding, its loan request would have to be “cleared for
eligibility before proceeding.” Id. The USDA Rural Development Center thus sought guidance
from the USDA Office of General Counsel on whether the USDA’s faith-based regulations
precluded Care Net’s eligibility for participation in the Loan Program. See id. at 000099-
000100.
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In a memorandum dated May 5, 2011, the USDA Office of General Counsel concluded
that providing a loan to Care Net for the purpose of purchasing and renovating the facility raised
“significant Constitutional issues,” and that Care Net consequently was “not eligible to
participate” in the Loan Program. Id. at 000098. In reaching this conclusion, the Office of
General Counsel determined that providing the loan to Care Net would violate the Establishment
Clause of the First Amendment because “religious education [would] be conducted in the
building that [would] be renovated with [Loan Program] funds,” and because the “project would
require extensive monitoring to ensure that Care Net . . . was using the renovated building for a
secular purpose,” resulting in an “excessive government entanglement with religion.” Id. at
000097-000098. The USDA Rural Development Center then informed Ms. Chechile, by letter
dated May 16, 2011, that “Care Net . . . was not found eligible to participate in the Community
Facility [Loan] Program.” Id. at 000088. The letter explained that “[t]he Faith-Based Eligibility
Factors could not be met, based on Constitutional issues with potential excessive governmental
entanglement with religion.” Id.
After learning of the USDA’s adverse determination, Ms. Chechile informed the USDA
Rural Development Center on June 13, 2011, that Care Net changed the rules for the Learn to
Earn program by not requiring Bible study classes, and by eliminating the rewards given to
individuals who participated in such classes. See id. at 000156. Then, during a telephone
conversation on June 14, 2011, a USDA representative told Ms. Chechile that Care Net “could
be eligible for the [Loan P]rogram . . . if they moved any religious education to a separate
location” from the building that would be purchased and renovated with federal funds. Id. at
000154; see also id. at 000228-000229. Ms. Chechile, however, did not believe that moving
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Care Net’s religious education programs to a separate location “would be an option.” Id. at
000154.
Care Net then administratively appealed the USDA’s May 16, 2011 denial letter to the
Appeals Division, id. at 000015-000025, alleging that the “Establishment Clause . . . does not
preclude Care Net from participating in USDA programs,” id. at 000017, and that “[t]he
agency’s actions constitute a violation of Care Net’s constitutional rights under the First
Amendment, the Equal Protection Clause, and the Due Process Clause,” id. at 000018-000019.
A hearing was held on the matter on July 21, 2011. See id. at 000056. During the
hearing, Care Net confirmed that it intended to offer both religious and secular services in the
same spaces in its proposed facility. See Transcript of NAD Hearing, July 21, 2011 (“Hr’g Tr.”)
at 165:1-3 [ECF No. 14-3] (“We have a room, and it’s being used for secular activities and it’s
being used for religious activities[.]”); see also A.R. at 000228 (Affidavit of Ms. Chechile)
(“Bible classes will be offered in the same spaces that pregnancy and parenting classes are
offered in.”).
On September 26, 2011, the Hearing Officer issued an Appeal Determination upholding
the USDA’s decision finding Care Net ineligible for participation in the Loan Program. See
A.R. at 000065-000071. In contrast to the May 16, 2011 denial letter, the Hearing Officer based
his decision not on “Constitutional issues” associated with providing a federal loan to Care Net,
but on Care Net’s failure to satisfy “the faith-based eligibility” requirements of the USDA
regulations. Id. at 000066. Specifically, he found that because “the proposed structure will be
used for both eligible and inherently religious activities,” and because the USDA regulations
prohibited the agency from providing “direct program assistance to fund the portion of the
building that [Care Net] intend[ed] to use for the ineligible purposes,” the USDA “was correct to
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determine it [could not] use direct program assistance to fund the complete acquisition and
renovation of the proposed structure as requested by” Care Net. Id. at 000070. He further
concluded that Care Net had “not satisfactorily shown that the amount of direct USDA assistance
requested does not exceed the cost of the proposed acquisition and renovation attributable to
eligible program activities.” Id. In light of these conclusions, the Hearing Officer deemed it
unnecessary to address “the question of whether the [USDA] can use direct . . . assistance to fund
the proposed structure if participation in inherently religious activities conducted at the facility
are mandatory for beneficiaries.” Id.
Care Net then instituted this action challenging the USDA’s decision on November 22,
2011. Its complaint sets forth eight counts. Count I asserts that the defendants misapplied 7
C.F.R. § 16(d)(1) in finding Care Net ineligible for participation in the Loan Program, and
appears to be brought pursuant to the Administrative Procedure Act (“APA”), 5 U.S.C. § 702(2006). See Compl. ¶¶ 4, 34-58. Count II asserts a violation of Care Net’s First Amendment
right to engage in religious speech. See id. ¶¶ 59-67. Count III asserts a violation of the
Religious Freedom Restoration Act (“RFRA”), 42 U.S.C. § 2000bb (2006). See id. ¶¶ 68-74.
Count IV asserts a violation of Care Net’s right to free exercise of religion under the First
Amendment. See id. ¶¶ 75-81. Count V asserts a violation of Care Net’s right to due process
under the Fifth Amendment. See id. ¶¶ 82-95. Count VI asserts a violation of Care Net’s right
to equal protection under the Fifth Amendment. See id. ¶¶ 96-109. Count VII asserts that the
USDA’s denial of a loan on the basis of religious speech violated the Fair Housing Act, 42
U.S.C. § 3605 (2006). See id. ¶¶ 110-115. And Count VIII asserts that the USDA’s denial of a
loan on the basis of religious speech violated the Equal Credit Opportunity Act (“Credit Act”),
15 U.S.C. § 1691 (2006). See id. ¶¶ 116-120.
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The defendants have now filed a motion to dismiss pursuant to Federal Rules of Civil
Procedure 12(b)(1), 12(b)(5), and 12(b)(6), or in the alternative, for partial summary judgment,
as well as a separate motion for summary judgment. Care Net has filed a cross-motion for
summary judgment.
II. STANDARDS OF REVIEW
A. Rule 12(b)(1) Motion to Dismiss
When a defendant moves for dismissal under Rule 12(b)(1), “the plaintiff[] bear[s] the
burden of proving by a preponderance of the evidence that the Court has subject matter
jurisdiction.” Biton v. Palestinian Interim Self-Gov’t Auth., 310 F. Supp. 2d 172, 176 (D.D.C.
2004); see Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). A court considering a Rule
12(b)(1) motion must “assume the truth of all material factual allegations in the complaint and
‘construe the complaint liberally, granting [a] plaintiff the benefit of all inferences that can be
derived from the facts alleged.’” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir.
2011) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)). However, “the district
court may consider materials outside the pleadings in deciding whether to grant a motion to
dismiss for lack of jurisdiction.” Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253
(D.C. Cir. 2005) (citing Herbert v. Nat’l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992)).
B. Rule 12(b)(6) Motion to Dismiss
A Rule 12(b)(6) motion tests whether the complaint “state[s] a claim upon which relief
can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss [under Rule
12(b)(6)], 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) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the
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plaintiff pleads factual content that allows the court to draw [a] reasonable inference that the
defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). While
the Court must “assume [the] veracity” of any “well-pleaded factual allegations” in the
complaint, conclusory allegations “are not entitled to the assumption of truth.” Id. at 679.
C. Summary Judgment in an APA Case
“Summary judgment is the proper mechanism for deciding, as a matter of law, whether
an agency action is supported by the administrative record and consistent with the APA standard
of review.” Loma Linda Univ. Med. Ctr. v. Sebelius, 684 F. Supp. 2d 42, 52 (D.D.C. 2010)
(citing Stuttering Found. of Am. v. Springer, 498 F. Supp. 2d 203, 207 (D.D.C.2007)); see also
Richards v. INS, 554 F.2d 1173, 1177, 1177 n.28 (D.C. Cir. 1977). But due to the limited role of
a court in reviewing the administrative record, the typical summary judgment standards set forth
in Rule 56(c) are not applicable. Stuttering, 498 F. Supp. 2d at 207. Rather, “[u]nder the APA, it
is the role of the agency to resolve factual issues to arrive at a decision that is supported by the
administrative record, whereas ‘the function of the district court is to determine whether or not as
a matter of law the evidence in the administrative record permitted the agency to make the
decision it did.’” Id. (quoting Occidental Eng’g Co. v. INS, 753 F.2d 766, 769 (9th Cir. 1985)).
In other words, “when a party seeks review of agency action under the APA, the district judge
sits as an appellate tribunal,” and “[t]he ‘entire case’ on review is a question of law.” Am.
Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001) (footnote and citations
omitted).
The APA provides a “default standard” of judicial review of agency actions when a
statute does not otherwise provide one: “A court must set aside agency action it finds to be
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Tourus
11
Records, Inc. v. DEA, 259 F.3d 731, 736, 736 n.10 (D.C. Cir. 2001) (quoting 5 U.S.C. §
706(2)(A)). “The ‘arbitrary and capricious’ standard of review as set forth in the APA is highly
deferential,” and the Court must therefore “presume the validity of agency action.” Am. Horse
Prot. Ass’n v. Yeutter, 917 F.2d 594, 596 (D.C. Cir. 1990). Although the “court is not to
substitute its judgment for that of the agency[,] . . . the agency must examine the relevant data
and articulate a satisfactory explanation for its action[,] including a rational connection between
the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983) (citations and quotation marks omitted).
III. ANALYSIS
A. Standing
Although the defendants initially moved to dismiss Care Net’s claims for injunctive and
declaratory relief for lack of standing, see Defs.’ Mot. to Dismiss Mem. at 24-26, they now
concede that Care Net has met its burden to demonstrate Article III standing, Defs.’ MSJ Mem.
at 13. Nevertheless, because “[t]he federal courts are under an independent obligation to
examine their own jurisdiction,” and because “standing ‘is perhaps the most important of [the
jurisdictional] doctrines,’” FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (quoting
Allen v. Wright, 468 U.S. 737, 750 (1984)), the Court must assess whether Care Net possesses
Article III standing.
“‘The irreducible constitutional minimum of standing contains three elements: (1) injury-
in-fact, (2) causation, and (3) redressability.’” Nat’l Ass’n of Home Builders v. EPA, 667 F.3d
6, 11 (D.C. Cir. 2011) (quoting Ass’n of Flight Attendants-CWA v. U.S. Dep’t of Transp., 564
F.3d 462, 464 (D.C. Cir. 2009)). “‘Thus, to establish standing, a litigant must demonstrate a
‘personal injury fairly traceable to the [opposing party’s] allegedly unlawful conduct and likely
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to be redressed by the requested relief.’” Id. (citation omitted). And “[t]o establish
organizational standing, [Care Net] must ‘allege[] such a personal stake in the outcome of the
controversy as to warrant the invocation of federal-court jurisdiction’; that is, it must
demonstrate that it has ‘suffered injury in fact, including [s]uch concrete and demonstrable injury
to the organization’s activities—with [a] consequent drain on the organization’s resources—
constitut[ing] . . . more than simply a setback to the organization’s abstract social interests.’” Id.(quoting Nat’l Taxpayers Union, Inc. v. United States, 68 F.3d 1428, 1433 (D.C. Cir. 1995)).
Care Net claims that it has been “individually harmed” by the USDA’s decision denying
it eligibility for the Loan Program, and it “seeks declaratory and injunctive relief for the benefit
of its own current and future [loan] applications to [the] USDA.” Pl.’s Mem. at 5 & n.5. It has
submitted an affidavit from Ms. Chechile stating that if “the Court order[s the USDA] to allow
Care Net to apply for participation in the [Loan Program] on the same basis as non-religious
applicants, Care Net intends and is likely to apply for assistance from the [Loan Program] for the
Birge Street property, if it is still available, or for another property in Brattleboro, [Vermont,] if
the Birge Street property is no longer available.” Pl.’s Mem., Exhibit (“Ex.”) C (Affidavit of
Elizabeth Chechile) ¶ 22.
The Court finds Care Net’s allegations sufficient to demonstrate a “personal stake” in the
outcome of this case that is “fairly traceable” to the USDA’s decision denying Care Net’s
eligibility for the Loan Program. Indeed, if the USDA’s decision stands, Care Net will either
have to change the way it administers its services or remain ineligible to apply for the Loan
Program. A favorable decision from this Court, moreover, would redress Care Net’s injury by
removing the initial barrier precluding its eligibility for participation in the Loan Program, thus
allowing Care Net to apply for USDA assistance for a property in Brattleboro that it intends to
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use as its permanent facility. Thus, the Court agrees with the parties that Care Net has standing
to pursue its claims for injunctive and declaratory relief.
B. Conceded Arguments
The defendants raised several arguments in their briefs that Care Net has either implicitly
or expressly conceded. First, Care Net does not dispute the defendants’ arguments that sovereign
immunity bars all of Care Net’s damages claims, except those asserted under the Credit Act, and
that Care Net has failed to state a procedural due process claim. See generally Pl.’s Mem; Pl.’s
Opp’n. The defendants’ motion to dismiss these claims is therefore granted as conceded. See
Lewis v. District of Columbia, No. 10-5275, 2011 WL 321711, at *1 (D.C. Cir. Feb. 2, 2011)
(per curiam) (“‘It is well understood in this Circuit that when a plaintiff files an opposition to a
dispositive motion and addresses only certain arguments raised by the defendant, a court may
treat those arguments that the plaintiff failed to address as conceded.’”) (quoting Hopkins v.
Women’s Div., Gen. Bd. of Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003), aff’d 98 F.
App’x 8 (D.C. Cir. 2004)). Second, Care Net expressly concedes that it is not pursuing any
claims against Secretary Vilsack in his individual capacity, see Pl.’s Mem. at 9-10, so the
defendants’ motion to dismiss is granted as to the Secretary on this ground as well.
C. Exhaustion
The defendants move for dismissal or partial summary judgment as to Care Net’s claims
under the RFRA, the Free Exercise Clause of the First Amendment, the Credit Act, and the
substantive component of the Due Process Clause of the Fifth Amendment on the ground that
Care Net failed to exhaust its administrative remedies as to these claims. See Defs.’ Mot. to
Dismiss Mem. at 9.
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Under the exhaustion doctrine, “‘[a] party must first raise an issue with an agency before
seeking judicial review.’” Tesoro Ref. & Mktg. Co. v. FERC, 552 F.3d 868, 872 (D.C. Cir.
2009) (citation omitted). “Broadly speaking, the doctrine of exhaustion of administrative
remedies ‘serves the twin purposes of protecting administrative agency authority and promoting
judicial efficiency.’” Ass’n of Flight Attendants-CWA v. Chao, 493 F.3d 155, 158 (D.C. Cir.
2007) (quoting McCarthy v. Madigan, 503 U.S. 140, 145 (1992)). It “ensures that agencies—
and not the federal courts—take primary responsibility for implementing the regulatory
programs assigned by Congress.” Id. “‘Where Congress specifically mandates, exhaustion is
required. But where Congress has not clearly required exhaustion, sound judicial discretion
governs.’” EEOC v. Lutheran Soc. Servs., 186 F.3d 959, 963 (D.C. Cir. 1999) (quoting
McCarthy, 503 U.S. at 144).
Care Net’s claims in this case are subject to the statutory exhaustion requirement of 7
U.S.C. § 6912(e), which provides that:
Notwithstanding any other provision of law, a person shall exhaust all
administrative appeal procedures established by the Secretary [of the USDA] or
required by law before the person may bring an action in a court of competent
jurisdiction against—
(1) the Secretary;
(2) the [USDA]; or
(3) an agency, office, officer, or employee of the [USDA].
See also Munsell v. USDA, 509 F.3d 572, 581 (D.C. Cir. 2007) (holding that Ҥ 6912(e)
establishes a mandatory, but nonjurisdictional, exhaustion requirement.”). Pursuant to this
statutory provision, the USDA has implemented regulations directing that “program participants
shall seek review of an adverse decision before a Hearing Officer of the [Appeals] Division . . .
prior to seeking judicial review.” 7 C.F.R. § 11.2(b) (emphasis added).
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As the defendants point out, see Defs.’ Mot. to Dismiss Mem. at 11-12, two circuit courts
of appeals have imposed a requirement of “issue exhaustion” (i.e., that administrative remedies
be exhausted specifically as to each issue) in proceedings before the Appeals Division, see
Ballanger v. Johanns, 495 F.3d 866, 868-871 (8th Cir. 2007); Mahon v. USDA, 485 F.3d 1247,
1254-57 (11th Cir. 2007). In so holding, the Eighth and Eleventh Circuits invoked the reasoning
of Sims v. Apfel, 530 U.S. 103 (2000), where the Supreme Court explained:
[R]equirements of administrative issue exhaustion are largely creatures of statute
[or regulation]. . . . [However,] we have imposed an issue-exhaustion requirement
even in the absence of a statute or regulation. . . . The basis for a judicially
imposed issue-exhaustion requirement is an analogy to the rule that appellate
courts will not consider arguments not raised before trial courts. . . . [C]ourts
require administrative issue exhaustion as a general rule because it is usually
appropriate under an agency’s practice for contestants in an adversary proceeding
before it to develop fully all issues there. But, . . . the desirability of a court
imposing a requirement of issue exhaustion depends on the degree to which the
analogy to normal adversarial litigation applies in a particular administrative
proceeding. Where the parties are expected to develop the issues in an adversarial
administrative proceeding, it seems to us that the rationale for requiring issue
exhaustion is at its greatest. . . . Where, by contrast, an administrative proceeding
is not adversarial, we think the reasons for a court to require issue exhaustion are
much weaker.
Id. at 107-109 (internal citations, quotation marks, and alterations omitted). Applying Sims, both
circuits found that, although the USDA regulations do not expressly require issue exhaustion,
“[t]he regulations that describe the hearings and review process before the USDA strongly
suggest that the review process is adversarial and that issue exhaustion should be required.”
Ballanger, 495 F.3d at 869; accord Mahon, 485 F.3d at 1256 (The Appeals Division’s
“procedures provide an adversarial system in which parties are given a full and fair opportunity
to make their arguments and present evidence, and, as a corollary, to attempt to challenge the
arguments and evidence presented by the [USDA]. As such, the adversarial nature of the
administrative proceedings counsel against allowing [the plaintiffs] to raise new arguments that
16
were not raised during the course of their administrative appeal or during the Director Review
phase.”). Because this Court finds the reasoning of Ballanger and Mahon persuasive, and given
that Care Net challenges neither the soundness of those decisions nor the defendants’ reliance on
them, see generally Pl.’s Mem.; Pl.’s Opp’n, the Court likewise deems it appropriate to impose
an issue exhaustion requirement in this case. Accordingly, Care Net will be precluded from
raising any issue before this Court that it failed to raise before the Appeals Division.
In Care Net’s initial appeal to the Appeals Division, it asserted that the “Establishment
Clause . . . does not preclude Care Net from participating in USDA programs,” A.R. at 000017,
and that “[t]he agency’s actions constitute a violation of Care Net’s constitutional rights under
the First Amendment, the Equal Protection Clause, and the Due Process Clause,” id. at 000018-
000019. Care Net then filed a “Memorandum of Law regarding why the Agency’s decision is
contrary to its own regulations, the Constitution and the Fair Housing Act.” Id. at 000213. This
memorandum argued that (1) the USDA “[f]ailed to [f]ollow its [o]wn regulations,” id. at
000216-000218; (2) the USDA’s Loan Program “[d]oes [n]ot [v]iolate the Establishment
Clause,” id. at 000218-000223; (3) the “[d]enial of a [l]oan to Care Net [b]ased on the [r]eligious
[n]ature of Care Net’s [s]peech is a [v]iolation of the Free Speech Clause of the First
Amendment,” id. at 000223-000224; (4) the “[d]enial of a [l]oan to Care Net [w]hile [g]ranting
[l]oans to [o]ther [s]ubstantially [s]imilar [o]rganizations is a [v]iolation of Care Net’s [e]qual
[p]rotection [r]ights,” id. at 000224-000225; and (5) the “[d]enial of a [l]oan to Care Net to
[r]enovate [t]heir [s]helter [b]ecause of the Bible [c]lasses [t]hat [m]ay [t]ake [p]lace in the
[s]ame [b]uilding is a violation of the [Fair] Housing Act,” id. at 000225. When the parties
appeared before the Hearing Officer for a prehearing conference, Care Net did indicate that it
intended to argue at the upcoming hearing that the USDA’s actions violated the Free Exercise
17
Clause. See Transcript of NAD Prehearing Conference, June 30, 2011 [ECF No. 14-2] at 17:13-
22; 18:16-19:4; 20:5-16. However, at the hearing, Care Net maintained that the USDA’s
decision was “wrong for six reasons”—none of which entailed the Free Exercise Clause. See
Hr’g Tr. at 27:13-28:2 (arguing that the USDA’s decision (1) was “not required by the
Establishment Clause”; (2) was “contrary to the Free Speech Clause”; (3) violated “the Fair
Housing Act”; (4) violated “the Equal Protection Clause”; (5) was “contrary to the [USDA]’s
own regulations”; and (6) misapplied a USDA regulation “to a loan application when that
regulation only applies to applications for grants”). Thus, Care Net never explicitly advanced
claims under the RFRA, the Free Exercise Clause, the Credit Act, or the substantive component
of the Due Process Clause during the administrative proceedings before the Appeals Division.
To be sure, the Circuit has recognized that “exhaustion may be excused” in some
situations, namely, “if delaying judicial review would cause irreparable injury, if the agency is
not competent to address the issue or to grant effective relief, or if further pursuit of an
administrative remedy would be futile.” Chao, 493 F.3d at 159. But Care Net does not invoke
any of these “‘ordinary exceptions to exhaustion[.]’” Tesoro Ref., 552 F.3d at 873 (citation
omitted). Instead, it opposes the defendants’ exhaustion argument on four grounds, see Pl.’s
Mem. at 6, none of which the Court finds persuasive. 2
First, Care Net contends that exhaustion does not apply because “the Hearing Officer
affirmed [the] USDA’s decision on a basis different than that originally asserted by [the]
USDA.” Id. Care Net cites no case law or other authority in support of this novel, purported
exception to the exhaustion doctrine. Recognizing such an exception would, moreover, swallow
the rule of requiring issue exhaustion in proceedings before the Appeals Division. Indeed, given
2
Because Care Net does not invoke any of the ordinary exceptions to exhaustion, the Court will not sua sponte
consider the applicability of those exceptions on Care Net’s behalf.
18
the adversarial nature of those proceedings, Care Net must be “held responsible for raising issues
in a manner similar to litigants in court,” Ballanger, 495 F.3d at 869 (citing Sims 530 U.S. at
108-111), meaning that Care Net was obligated to raise any deficiencies it perceived in the
agency’s action before the USDA, regardless of the particular grounds articulated in the agency’s
decisions. Allowing Care Net to raise new claims before this Court would also “undercut ‘the
purposes of exhaustion, namely, preventing premature interference with agency processes, . . .
afford[ing] the parties and the courts the benefit of [the agency’s] experience and expertise, . . .
[or] compil[ing] a record which is adequate for judicial review.’” Hidalgo v. FBI, 344 F.3d
1256, 1259 (D.C. Cir. 2003) (citations omitted and some alterations in original).
Second, Care Net asserts that its “RFRA and [f]ree [e]xercise claims were argued, if not
in name than in substance, before the [Appeals Division] Hearing Officer” because the “primary
issue in a[] RFRA or a [f]ree [e]xercise claim—whether the Establishment Clause requires [the]
USDA to deny Care Net [eligibility for the Loan Program]—was exhaustively argued to the
Hearing Officer.” Pl.’s Mem. at 6, 8. This argument rests on several flawed premises. To begin
with, since issue exhaustion is required in administrative proceedings before the Appeals
Division, Care Net had to raise more than just the “substance” of its RFRA and free exercise
claims. It was instead obligated to “‘forcefully present[]’” its argument before the Appeals
Division, “or else waive the right to raise those arguments on appeal” before this Court. Vill. of
Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650, 655 (D.C. Cir. 2011) (quoting Vt. Yankee
Nuclear Power Corp. v. NRDC, 435 U.S. 519, 554 (1978)). 3 Care Net failed to do that. Rather,
3
Although the foregoing quotation from Village of Barrington concerned the administrative waiver doctrine rather
than the concept of issue exhaustion, the Circuit has recognized that “[t]he distinction between ‘issue exhaustion’
and ‘issue waiver’ is illusive, to say the least.” Advocates for Highway & Auto Safety v. Fed. Motor Carrier Safety
Admin., 429 F.3d 1136, 1149 (D.C. Cir. 2005). “Indeed, both terms appear in the case law without apparent
distinction, and they are sometimes treated as if synonymous.” Id.19
it stated in passing at the prehearing conference that it intended to raise a free exercise challenge
to the USDA’s decision, but then neglected to raise the argument when it actually mattered—at
the hearing itself. And regarding Care Net’s position that it “substantially exhausted” its claims
under the RFRA and the Free Exercise Clause by presenting arguments to the Appeals Division
concerning the Establishment Clause, Pl.’s Mem. at 8, this position assumes that the resolution of
Care Net’s RFRA and free exercise claims hinge solely on an Establishment Clause analysis.
Yet, irrespective of any Establishment Clause issues, Care Net had to “first establish that its free
exercise right ha[d] been substantially burdened” in order “[t]o sustain its claim under either the
Constitution or the [RFRA.]” Branch Ministries v. Rossotti, 211 F.3d 137, 142 (D.C. Cir. 2000);
see RFRA, 42 U.S.C. § 2000bb-1(a), (b) (“Government shall not substantially burden a person’s
exercise of religion even if the burden results from a rule of general applicability,” unless the
government “demonstrates that application of the burden to the person—(1) is in furtherance of a
compelling governmental interest; and (2) is the least restrictive means of furthering that
compelling governmental interest.”). Although Care Net now argues that its religious rights
were substantially burdened because the USDA’s decision forced Care Net “to choose between
offering Bible study classes at its proposed new facility or obtaining a loan from the [Loan
Program],” Pl.’s Mem. at 11, there is no indication that this argument was “forcefully presented”
(or presented at all, for that matter) to the Appeals Division. 4 Nor did Care Net argue before the
Appeals Division, as it does now, that it need not “establish [a] substantial burden” on its free
exercise rights because the USDA’s decision “is not neutral and generally applicable.” Pl.’s
4
While Care Net does not dispute that it failed to raise its “substantial burden” argument before the Appeals
Division, it appears to contend that the administrative record independently demonstrates the purported substantial
burden on its free exercise rights imposed by the USDA’s decision. See Pl’s Mem. at 8; Pl.’s Opp’n at 10. But,
regardless of what the record might support in hindsight, Care Net’s failure to advance the argument before the
Appeals Division is fatal to its position.
20
Opp’n at 13. Consequently, Care Net is barred from raising its claims under the RFRA and the
Free Exercise Clause for the first time before this Court.
Third, Care Net maintains that the RFRA does not require administrative exhaustion,
Pl.’s Mem. at 9, relying on the Ninth Circuit’s decision in Oklevueha Native American Church
of Hawaii, Inc. v. Holder, 676 F.3d 829, 838 (9th Cir. 2012) (“declin[ing] to read an exhaustion
requirement into RFRA where the statute contains no such condition, and the Supreme Court has
not imposed one” (internal citation omitted)). This argument also misses the mark. Regardless
of whether the RFRA requires exhaustion, parties challenging adverse decisions under the
USDA’s Loan Program are required by statute and regulation to exhaust their administrative
remedies, see 7 U.S.C. § 6912(e); 7 C.F.R. § 11.2(b), and by judicial doctrine to exhaust all
issues, including any RFRA claims, before the Appeals Division, see Sims 530 U.S. at 107-09;
Ballanger, 495 F.3d at 869; Mahon, 485 F.3d at 1256. Insofar as Oklevueha, 676 F.3d at 838,
did not involve an administrative scheme mandating exhaustion, that case is distinguishable.
Finally, Care Net argues that its claim under the Credit Act also does “not require . . .
exhaustion of administrative remedies.” Pl.’s Mem. at 9. The defendants “agree . . . as a general
matter” that administrative exhaustion of Credit Act claims is not required by statute or
regulation, but contend that this Court should exercise its discretion to require exhaustion. Defs.’
MSJ Mem. at 16-17. Care Net does not respond to this argument in its opposition brief, see
generally Pl.’s Opp’n, so the Court will deem it conceded. See Lewis, 2011 WL 321711, at *1
(citing Hopkins, 284 F. Supp. 2d at 25).
In sum, the Court concludes that Care Net failed to administratively exhaust its claims in
regards to the RFRA, the Free Exercise Clause, and the substantive component of the Due
Process Clause, and treats as conceded the defendants’ argument urging dismissal of Care Net’s
21
Credit Act claim. Partial summary judgment on these issues is therefore granted in the
defendants’ favor. 5
D. Whether the Hearing Officer Misapplied the USDA’s Regulations
Care Net claims that the Appeals Division’s Hearing Officer erred in his interpretation of
7 C.F.R. § 16.3(d)(1), see Compl. ¶ 55, which provides in pertinent part:
Direct USDA assistance may be used for the acquisition, construction, or
rehabilitation of structures only to the extent that those structures are used for
conducting USDA programs and activities and only to the extent authorized by
the applicable program statutes and regulations. Direct USDA assistance may not
be used for the acquisition, construction, or rehabilitation of structures to the
extent that those structures are used by the USDA funding recipients for
inherently religious activities. Where a structure is used for both eligible and
inherently religious activities, direct USDA assistance may not exceed the cost of
those portions of the acquisition, construction, or rehabilitation that are
attributable to eligible activities in accordance with the cost accounting
requirements applicable to USDA funds.
7 C.F.R. § 16.3(d)(1) (emphasis added). In finding that the USDA’s decision to deny Care Net
eligibility under the Loan Program was consistent with § 16.3(d)(1), the Hearing Officer
reasoned:
7 C.F.R. § 16.3(d)(1) confirms that where a structure is used for both eligible and
inherently religious activities, direct USDA assistance may not exceed the cost of
the acquisition and rehabilitation attributable to the eligible activities. At the
hearing, [Care Net] alleged it would incur no additional costs to acquire and
renovate the building to accommodate the religious education classes. [Care Net]
therefore contends that all direct program assistance requested would be
attributable to the acquisition and rehabilitation of the eligible activities only. I
am not persuaded by [Care Net’s] argument.
5
The Court grants the defendants’ alternative request for partial summary judgment, as opposed to its motion to
dismiss, because it considered materials outside the pleadings—namely, the administrative record—in resolving the
defendants’ exhaustion arguments. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) . . . matters
outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary
judgment under Rule 56.”); Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 & n.5 (D.C. Cir.
1993) (noting that a district court considering a Rule 12(b)(6) motion “can consult the [administrative] record to
answer the legal question[s] before the court,” but that “[i]t is probably the better practice for a district court always
to convert to summary judgment” (emphasis added)).
22
[Care Net] requests direct program assistance to acquire and renovate a building it
intends to use for both eligible and inherently religious activities. Therefore, the
acquisition and renovation costs attributable or associated with the eligible and
inherently religious activities[] . . . must be prorated to ensure [the USDA] is not
funding prohibited or ineligible purposes. . . .[6] [The USDA] can only fund the
portion[] or percentage of the acquisition and rehabilitation costs attributable to
the eligible activities. [The USDA] must be able to realistically quantify or
separate out, either in space or time, the inherently religious activities from the
eligible, secular activities. Due to the fluctuating nature of [Care Net’s] program
and due to a lack of reliable classroom information provided by [Care Net], [the
USDA] is unable to realistically separate the eligible activities from the inherently
religious activities either by time or space, thereby creating an excessive
entanglement between Government and religion. Therefore, I find [that the
USDA] correctly determined [that Care Net] does not meet the faith-based
eligibility factors outlined under § 16.3(d)(1), with a potential for excessive
Government entanglement with religion. [Care Net] has not satisfactorily shown
that the amount of direct USDA assistance requested does not exceed the cost of
the proposed acquisition and renovation attributable to eligible program activities.
A.R. at 000070 (paragraph break added).
Care Net raises the same arguments before this Court that the Hearing Officer rejected.
Namely, it asserts that while its “Bible classes are to take place in the same classrooms that the
non-religious pregnancy and parenting classes take place in[, n]o additional USDA funds and no
additional construction is made necessary by using the classrooms for voluntary Bible study
when the classrooms are not in use for pregnancy and parenting classes.” Pl.’s Mem. at 26.
Thus, according to Care Net, “a proper application of 7 C.F.R. § 16.3(d)(1) provides that [the]
entire acquisition and renovation cost [for the building] is eligible for a USDA loan as no
improvements are required to allow for non-eligible activities such as Bible study.” Id. at 26-27.
“An agency’s interpretation of its own regulation is entitled to ‘substantial deference,’
unless ‘plainly erroneous or inconsistent with the regulation.’” Devon Energy Corp. v.
6
The Court has omitted a statistic referenced by the Hearing Officer purportedly showing the percentage of clients
that visited Care Net for Bible classes. The parties have stipulated to the inaccuracy of the statistic, see Stipulation
[ECF No. 16], and the Hearing Officer, in any event, discounted it as unreliable, see A.R. at 000070.
23
Kempthorne, 551 F.3d 1030, 1036 (D.C. Cir. 2008) (quoting Thomas Jefferson Univ. v. Shalala,
512 U.S. 504, 512 (1994)). This standard applies to the Appeals Division’s interpretations of the
USDA’s regulations. See Clason v. Johanns, 438 F.3d 868, 871 (8th Cir. 2006); Lackey v.
USDA, 384 F. App’x 741, 747-748 (10th Cir. 2010).
Here, Care Net has not shown that the Hearing Officer’s interpretation of § 16.3(d)(1)
was plainly erroneous or inconsistent with the regulation. The regulation states that “[w]here a
structure is used for both eligible and inherently religious activities, direct USDA assistance may
not exceed the cost of those portions of the acquisition, construction, or rehabilitation that are
attributable to eligible activities.” 7 C.F.R. § 16.3(d)(1). The Hearing Officer read this provision
to require that the “acquisition and renovation costs attributable or associated with the eligible
and inherently religious activities . . . be prorated to ensure [the USDA] is not funding prohibited
or ineligible purposes,” given that the USDA “can only fund the portion[] or percentage of the
acquisition and rehabilitation costs attributable to the eligible activities.” A.R. at 000070
(emphasis added). There is nothing unreasonable about this interpretation; indeed, how else is
the USDA supposed to determine what “portions” of mixed-used facilities (i.e., structures “used
for both eligible and inherently religious activities”) are “attributable to eligible activities,” 7
C.F.R. § 16.3(d)(1), other than by requiring proration of eligible vs. ineligible uses? Applying
this plausible reading of § 16.3(d)(1), the Hearing Officer found that “[d]ue to the fluctuating
nature of [Care Net’s] program and due to a lack of reliable classroom information provided by
[Care Net],” the USDA was “unable to realistically separate the eligible activities from the
inherently religious activities either by time or space.” A.R. at 000070. He therefore concluded
that Care Net failed to carry its burden of showing “that the amount of direct USDA assistance
requested [would] not exceed the cost of the proposed acquisition and renovation attributable to
24
eligible program activities.” Id. (emphasis added). Nothing in § 16.3(d)(1) “unambiguously
forecloses” this reading of the regulation, St. Marks Place Hous. Co. v. HUD, 610 F.3d 75, 83
(D.C. Cir. 2010), so the Court must defer to it.
Tellingly, Care Net does not explain why it believes the Hearing Officer’s interpretation
of § 16.3(d)(1) was unreasonable. See Pl.’s Mem. at 26-27. It instead offers a competing
reading of the regulation: that the USDA may permissibly fund the entire project because no
additional improvements are required solely for Care Net’s inherently religious activities (i.e.,
Bible classes). See id. Regardless of the soundness of this interpretation, it is by no means the
only reasonable reading of § 16.3(d)(1). And considering the “substantial deference” to which
the Hearing Officer’s interpretation is entitled, Care Net’s challenge must be rejected.
Accordingly, summary judgment on this issue is granted in the defendants’ favor.
E. Issues Not Addressed by the Appeals Division
The parties expend the majority of their briefs submitted to this Court addressing
constitutional issues relating to the Establishment Clause, the Free Speech Clause, and the Equal
Protection Clause, as well as Care Net’s statutory claims under the Fair Housing Act. Although
these issues were litigated thoroughly before the Appeals Division, see, e.g., A.R. 000215-
000226; Hr’g Tr. at 27:13-28:2, the Hearing Officer, for reasons unbeknownst to the Court,
found it unnecessary to address them in his decision. As he explained:
At the hearing, both [Care Net] and [the USDA] presented arguments on the
Constitutionality of the proposed loan and whether excessive entanglement with
religion exists. In making a determination in this case, I, as an [Appeals Division]
Hearing Officer, am not bound by previous findings of fact on which the
[USDA’s] adverse decision was based. My purpose is to ensure that the decision
is consistent with the laws and regulations of the [USDA] and with the generally
applicable interpretations of such laws and regulations. Therefore, my
determination will not address the Constitutional issues argued, but will be limited
to whether [Care Net] satisfactorily meets the faith-based eligibility factors
necessary to be eligible for the requested . . . loan.
25
A.R. at 000066 (emphasis added).
“[A]gencies . . . have ‘an obligation to address properly presented constitutional claims
which . . . do not challenge agency actions mandated by Congress.’” McBryde v. Comm. to Rev.
Circuit Council Conduct, 264 F.3d 52, 62 (D.C. Cir. 2001) (quoting Graceba Total Comms., Inc.
v. FCC, 115 F.3d 1038, 1042 (D.C. Cir. 1997)); see also Meredith Corp. v. FCC, 809 F.2d 863,
874 (D.C. Cir. 1987) (“Federal officials are not only bound by the Constitution, they must also
take a specific oath to support and defend it. . . . [The FCC] must discharge its constitutional
obligations by explicitly considering [the petitioner’s] claim that the FCC’s enforcement of the
fairness doctrine against [the petitioner] deprives it of its constitutional rights. The [FCC’s]
failure to do so seems to us the very paradigm of arbitrary and capricious administrative
action.”). This rule “guard[s] against premature or unnecessary constitutional adjudication,” and
ensures that courts have the “benefit . . . [of] the [agency’s] analysis.” Meredith Corp., 809 F.2d
at 872. Moreover, even when an argument is non-constitutional, an agency must respond to it so
long as it “do[es] not appear frivolous on [its] face and could affect the [agency’s] ultimate
disposition.” Frizelle v. Slater, 111 F.3d 172, 177 (D.C. Cir. 1997).
Applying these standards, the Court finds that the Appeals Division erred in ignoring: (1)
Care Net’s properly presented claims under the Free Speech and Equal Protection Clauses, which
asserted as-applied challenges to the USDA’s actions in this case; (2) the USDA’s defense under
the Establishment Clause, to the extent that resolution of that defense is potentially dispositive of
any of Care Net’s claims; and (3) Care Net’s non-facially frivolous claim under the Fair Housing
Act. Accordingly, this case must be remanded to the Appeals Division for further consideration.
See Meredith Corp., 809 F.2d at 874 (remanding case to agency with instructions to consider the
petitioner’s previously unaddressed constitutional arguments); Iowa v. FCC, 218 F.3d 756, 760
26
(D.C. Cir. 2000) (agency’s failure to address the petitioner’s argument required remand for
further consideration).
IV. CONCLUSION
For the foregoing reasons, the defendants’ motion to dismiss, or in the alternative, for
partial summary judgment is granted in part and denied in part; the defendants’ motion for
summary judgment is granted in part and denied in part without prejudice; Care Net’s cross-
motion for summary judgment is denied without prejudice; and this case is remanded to the
Appeals Division for further consideration of the issues identified in this Memorandum Opinion.
SO ORDERED this 10th day of October 2012. 7
REGGIE B. WALTON
United States District Judge
7
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
27