United States District Court, District of Columbia
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Steven Henry Aden, Alliance Defense Fund, Washington, DC, Michael J. Tierney, Wadleigh, Starr & Peters, PLLC, Manchester, NH, for Plaintiff.
Jesse Z. Grauman, U.S. Department of Justice, Washington, DC, for Defendants.
REGGIE B. WALTON, District Judge.
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,  the Court concludes for the
following reasons that it 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.
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 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 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).
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 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 ...