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NATIONAL HEAD START ASSOC. v. DEPT.

January 20, 2004.

NATIONAL HEAD START ASSOCIATION, Plaintiff,
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, and TOMMY G. THOMPSON, Secretary, Department of Health and Human Services, Defendants



The opinion of the court was delivered by: JOHN BATES, District Judge

MEMORANDUM OPINION

The National Head Start Association ("NHSA") seeks a temporary restraining order to prevent the Department of Health and Human Services and Secretary Tommy Thompson (collectively "HHS") from requiring NHSA member organizations to complete a survey regarding the compensation of their senior managers. NHSA members — Head Start programs around the nation — receive grants from HHS pursuant to the Head Start Act, 42 U.S.C. § 9831 et seq., and are subject to a bevy of HHS financial record-keeping and reporting requirements. See, e.g., 42 U.S.C. § 9842; 45 C.F.R. § 74.21, 74.27, 74.52, 74.53. The survey at issue is not expressly contemplated by any statute or regulatory provision. Rather, it was generated by HHS in response to a request from the Representative John Boehner, Chairman of the House Committee on Page 2 Education and the Workforce, and Representative Michael Castle, Chairman of the Subcommittee on Education Reform. See Pl.'s Mem., Ex. 3. NHSA contends that the survey exceeds HHS's authority to require information from grant recipients, that demanding completion of the survey amounts to a retroactively-imposed additional requirement made without notice or opportunity for comment, and that the results of the survey will be used by actors in Congress or others unconstitutionally to malign the reputations of highly-compensated Head Start program directors. NHSA challenges HHS's action in issuing the survey as arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706 et seq., and in violation of NHSA members' constitutional rights.

BACKGROUND

  Because the Head Start Act technically expired on September 30, 2003, a continuing resolution currently provides funding for the Head Start apparatus. Political measures to overhaul the system have been underway for over a year, and a bill on the issue has passed the House. See School Readiness Act, H.R. 2210, 108th Cong. (1st Sess. 2003). A bill to reauthorize the Head Start Act has been reported out of by the Health, Education, Labor, and Pensions Committee of the Senate and currently awaits a floor vote. See Head Start Improvements for School Readiness Act, S. 1940, 108th Cong. (1st Sess. 2003).

  In the midst of Congressional debate about the future of Head Start, on October 2, 2003, Representatives Boehner and Castle wrote to Secretary Thompson to express their concern over potential administrative misuse of Head Start funds. Pl.'s Mem., Ex. 3. Specifically, their letter noted a recent article in the San Antonio Express-News about a Head Start program at which five senior administrative officers received six-figure salaries and enjoyed sizeable stipends for car Page 3 allowances and out-of-town travel to attend conferences. The letter requested that HHS "conduct a review of the financial management of Head Start grantees nationwide," and "provide a detailed categorical analysis that shows exactly how Federal Head Start dollars are spent at the local level." Id. Additionally, the letter requested "the salaries and benefits of the top 25 Head Start executives and the amount of their salary and benefits financed using Federal Head Start dollars," as well as "the amount of money spent by the 25 grantees spending the most Federal Head Start dollars on meetings and conference travel." Id. The Members expressed their awareness of existing Head Start financial reporting requirements, but contended that "in light of recent reports . . . some additional scrutiny of grantees' financial records may be warranted. We anticipate that the information needed for such a review will be readily accessible, but please inform us if additional statutory authority is necessary to adequately evaluate grantees' use of Federal Head Start dollars." Id.

  HHS responded to the letter from the Committee and Subcommittee Chairmen by soliciting expedited approval of an emergency information collection from the Office of Management and Budget ("OMB"). See Head Start Survey Under Emergency Review by the Office of Management and Budget, 68 Fed. Reg. 64, 351 (Nov. 13, 2003). The OMB notice of review estimated that the survey would impose nine burden-hours on each of the approximately 2,700 recipients (a total of 24,300 burden-hours), and directed "comments and suggestions about the information collection described" to an OMB official. Id. OMB approved the HHS request on or about December 22, 2003, after receiving comments from NHSA. Compl. ¶ 37.

  HHS's "Head Start Survey of Salaries and Other Compensation" was issued on December 22, 2003. Pl.'s Mem., Ex. 4. Invoking the joint inquiry of Representatives Boehner and Castle, as Page 4 well as its authority under 42 U.S.C. § 9842 "to access . . . program records," HHS required all Head Start programs to complete the survey regarding the compensation of their senior managers by January 22, 2004.*fn1 Id. The survey, three and a half pages in length, is to be completed on-line, with supporting tax forms and budget documents submitted by mail. It requires, for the last three grant years, eighteen categories of compensation information for the Executive Director and Head Start Director of each program, the portion of their compensation paid from Head Start funds, total out-of-town travel expenses, and administrative expenses as a percentage of all program costs. Pl.'s Mem., Ex. 5.

  ANALYSIS

  Whether a temporary restraining order or a preliminary injunction shall be awarded rests in the sound discretion of the trial court. Ambach v. Bell. 686 F.2d 974, 979 (D.C. Cir. 1982).*fn2 However, "[a] preliminary injunction [or temporary restraining order] is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (quoting 11A C. WRIGHT, A. MILLER, & M. KANE, FEDERAL PRACTICE AND PROCEDURE § 2948, pp. 129-130 (2d ed. 1995)); see also Michael, 260 F. Supp.2d at 25. To demonstrate entitlement to a preliminary injunction or temporary restraining order, a litigant must show "(1) a substantial likelihood of Page 5 success on the merits, (2) that it would suffer irreparable injury if the injunction is not granted, (3) that an injunction would not substantially injure other interested parties, and (4) that the public interest would be furthered by the injunction." Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C. Cir. 1998): accord Taylor v. Resolution Trust Corp., 56 F.3d 1497, 1505-06 (D.C. Cir. 1995); Washington Area Metro. Transit Comm'n v. Holiday Tours. Inc. 559 F.2d 841, 843 (D.C. Cir. 1977). These factors must be balanced against each other, but it is especially important for the movant to demonstrate a likelihood of success on the merits. See Davenport v. Int'l Bhd. of Teamsters. 166 F.3d 356, 360, 366 (D.C. Cir. 1999); City Fed Fin. Corp. v. Office of Thrift Supervision. 58 F.3d 738, 747 (D.C. Cir. 1995).

  A. NHSA's Likelihood of Success on the Merits

  As a threshold matter, HHS now argues that issuance of the survey does not amount to final agency action subject to judicial review under the APA. The Court is inclined to agree. "As a general matter, two conditions must be satisfied for agency action to be `final': First, the action must mark the `consummation' of the agency's decisionmaking process — it must not be of merely tentative or interlocutory nature. And second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." Bennett v. Spear. 520 U.S. 154, 177-78 (1997) (internal citations omitted): see also Harris v. FAA, 2004 U.S. App. LEXIS 351 (D.C. Cir. Jan. 13, 2004). It is unclear how merely sending out an information-gathering survey manifests a settled policy decision by HHS as would, for example, the adoption of a rule. The promulgation of the survey itself thus does not seem to "constitute[] an unequivocal statement of the agency's position" on an issue "sufficient to meet the first requisite for final agency action." Harris, 2004 U.S. App. LEXIS 351 at *4 (quoting Reliable Automatic Sprinkler Page 6 Co. v. Consumer Prod. Safety Comm'n, 324 F.3d 726, 734 (D.C. Cir. 2003)). Nor, notes HHS, has NHSA identified what precise legal consequence would flow to a Head Start program from the survey (or from electing not to submit the survey). Rather, failure to tender the information sought in the survey would "merely subject[] the Head Start grantee to the potential of an administrative process allowed under the agency's regulations, which may result in a sanction being imposed." Def.'s Opp. at 7 (emphasis supplied).

  In reply, NHSA directs the Court to National Family Planning and Reproductive Health Association v. Sullivan. 979 F.2d 227, 234 (D.C. Cir. 1992). There, the Court of Appeals held that HHS's announcement of new "directives" regarding abortion counseling significantly altered the meaning of existing regulations, and thus, that their adoption was not exempt from notice and comment rulemaking. Id. at 228. The present case is readily distinguished. It cannot be said that the survey alters the meaning of the existing financial reporting requirements faced by Head Start grantees in the same way that the sea-change in abortion counseling guidelines at issue in National Family Planning did. The survey marks no departure from HHS's policy of broad access to grantee records; it does not repudiate and is easily reconcilable with existing agency policy. See id. at 235. The requirement to complete the survey and the modest cost it imposes cannot be said to change "the terms and conditions of currently existing grants by adding a new requirement." Pl.'s Rep. at 1. In short, NHSA has not, at this juncture, made a convincing showing that the promulgation of the survey amounts to final agency action subject to judicial review under the APA.

  NHSA next contends that HHS regulations do not authorize — and in fact bar — the survey. Pl.'s Mem. at 17. The Head Start Act provides that HHS "shall have access for the purpose of Page 7 audit and examination to any books, documents, papers, and records of the recipients that are pertinent to the financial assistance received under this subchapter." 42 U.S.C. § 9842(b); see also 45 C.F.R. § 74.53 (e) ("HHS awarding agencies . . . have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient's personnel for the purpose of interview and discussion related to such documents."). Furthermore, HHS is explicitly authorized to "take such action as may be necessary to assure that persons employed in carrying out" Head Start programs

 
shall not receive compensation at a rate which is . . . in excess of the average rate of compensation paid in the area where the program is carried out to a substantial number of the persons providing substantially comparable services, or in excess of the average rate of compensation paid to a substantial number of the persons providing substanially comparable services in the ...

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