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The Navajo Nation v. Azar

United States District Court, District of Columbia

March 27, 2018

ALEX M. AZAR II, Secretary, United States Department of Health and Human Services, Defendant.


          DABNEY L. FRIEDRICH United States District Judge.

         Before the Court is the Defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment, Dkt. 17, and the Plaintiff's Motion for Summary Judgment, Dkt. 16. For the following reasons, the Court will deny the defendant's motion and grant the plaintiff's motion.

         I. BACKGROUND

         Under the Head Start Act, 42 U.S.C. § 9831 et seq., the U.S. Department of Health and Human Services (“HHS”) provides grants to tribes that implement Head Start and Early Head Start programs for young children and their families. Qualified organizations can receive grants for up to 80% of Head Start program costs. 42 U.S.C. § 9835(b). The grants are administered by a division of HHS, the Administration of Children and Families' Office of Head Start (“OHS”). Dkt. 19 at 13.

         The plaintiff, the Navajo Nation, is a federally recognized Indian tribe whose reservation spans parts of Arizona, New Mexico, and Utah. Compl. ¶ 11, Dkt.1. It runs Head Start and Early Head Start programs to provide education services to its young members and residents and their families. Dkt. 19 at 13. The programs are funded primarily by a federal grant, No. 90C19889 (“the Grant”), which is at the center of this case. Id. The Grant's budgetary period, or fiscal year, starts on March 1 each year and runs through February of the next year. Id. The Navajo Nation must submit an annual renewal application for the Grant, which is due on December 1 before the new fiscal year starts. Compl. ¶ 18. In recent fiscal years, the Navajo Nation has received $23, 075, 043 annually pursuant to the Grant. Dkt. 19 at 13.

         Under the Head Start Act, however, grants are not static from year to year. Section 641a(h) of the Act provides specific procedures for adjusting grants to Head Start programs that suffer from “chronic underenrollment.” 42 U.S.C. § 9836a(h). Grantees must self-report enrollment each month, id. § 9836a(h)(2), and HHS must conduct a semiannual review to determine which grantees have been under-enrolled for four consecutive months, id. § 9836a(h)(3). HHS and each under-enrolled grantee must then develop a plan and timetable for remediating under-enrollment, and the grantee “shall immediately implement the plan.” Id. § 9836a(h)(3), (4). If the grantee does not reach at least 97% enrollment within twelve months, HHS may designate the grantee as chronically under-enrolled and “recapture, withhold, or reduce” the base grant by a percentage calculated as the difference between funded and actual enrollment. Id. § 9836a(h)(5)(A). Also, HHS may waive or decrease the adjustment in certain circumstances. Id. § 9836a(h)(5)(B). If HHS adjusts funding for an Indian Head Start program, HHS must redistribute the resulting funds to other Indian Head Start programs by the end of the following fiscal year. Id. § 9836a(h)(6).

         The Navajo Head Start program failed to reach its funded enrollment in many recent years in the 2000s and 2010s. See Dkt. 11-1 at 2-3. Due to under-enrollment, HHS decided to reduce the Navajo Nation's funding in 2011. See Dkt. 18-1 at 4, 7; Unedited Hr'g Tr. at 3.[1] At that time, the Nation filed an appeal before the HHS Departmental Appeals Board (“DAB”), but the Nation and HHS ultimately reached a settlement agreement through a tribal consultation process, so they jointly moved the Departmental Appeals to dismiss the appeal. See Dkt. 18-1 at 1-7; Unedited Hr'g Tr. at 3. Even so, under-enrollment continued to be a problem. For example, the Navajo Nation did not meet Head Start funded enrollment in every month from March 2015 to January 2018. During that time period, funded Head Start enrollment was 2, 068 students, but the Nation's self-reported student numbers generally ranged from approximately 1, 000 to 1, 600 students. See Dkt. 11-2 at 1.

         Due to the continuing under-enrollment problems, HHS and the Navajo Nation began discussing remediation in 2015. Dkt. 11-1 at 4. Then, throughout 2016 and 2017, they implemented a detailed remediation plan, as required by Section 641a(h) of the Head Start Act. Dkt. 11-2 at 2-3. The remediation plan involved extensive coordination and communication between the Nation and HHS, including meetings, calls, on-site visits, and training. See Id. at 4- 10.

         Remediation, however, was unsuccessful. By letter on September 26, 2017, HHS informed the Nation that HHS found Navajo Head Start to be “chronically underenrolled” and HHS reduced the Navajo Grant to $15, 766, 194 for fiscal year 2018, which runs from March 1, 2018 to February 28, 2019. Dkt. 11-2 at 14-15. This reduction was based on an enrollment level of 1, 396 students in Navajo Head Start, not the previously funded enrollment of 2, 068 Head Start students. Dkt. 11-2 at 12-15. The 672-student change “represented the average number of vacant slots over a 12 month period.” Dkt. 11-1 at 6; see also Dkt. 11-2 at 1 (listing enrollment reported by the Navajo Nation for each month from March 2015 to January 2018).[2] Despite notifying the Navajo Nation that funding had been reduced, the HHS letter also provided the Navajo Nation with the opportunity to present certain countervailing considerations within 30 days. See Dkt. 11-2 at 15 (“If there are significant causes of underenrollment that OHS was not made aware of over the 12 month period, please inform your regional office within 30 days of the delivery of this notice.”).

         In additional letters on October 5, November 22, and December 4, 2017, HHS reiterated the reduced funding level. Dkt. 19 at 13-14. Even so, on January 12, 2018, the Navajo Nation submitted a funding application for fiscal year 2018 seeking $23, 075, 043. Id. at 14. By letter one week later, HHS again advised the Navajo Nation that the Grant would be the reduced amount for the reduced funded enrollment level. Id. In the same letter, however, HHS committed to restoring $2 million if the Nation meets certain conditions, the most stringent of which appear to be (1) maintaining enrollment levels of only 1, 396 Head Start students and (2) creating a waitlist of children eligible to fill the approximately 180 to 200 additional seats to be supported by the restored funding. See Dkt. 11-2 at 32-33.

         On February 2, 2018, the Navajo Nation filed its complaint in this action. Dkt. 1. On the same day, the Nation moved for a preliminary injunction, Dkt. 2, and requested a decision before the end of the month, see Dkt. 2-1 at 8.[3] On February 28, 2018, the Court denied the motion for a preliminary injunction and set an expedited schedule for resolving the case on its merits. See Dkt. 13; Dkt. 14.

         HHS now moves for dismissal under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure; in the alternative, HHS moves for summary judgment under Rule 56. Dkt. 17. In turn, the Navajo Nation moves for summary judgment, arguing that HHS violated the Head Start Act and the Administrative Procedure Act by reducing the Nation's funding without providing an appeal and hearing required by the Head Start Act. Dkt. 16 at 1.


         Under Rule 12(b)(1), a party may move to dismiss a claim over which the court lacks subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A motion for dismissal under Rule 12(b)(1) “presents a threshold challenge to the court's jurisdiction.” Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987). Federal district courts are courts of limited jurisdiction, and it is “presumed that a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Thus, the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

         “When ruling on a Rule 12(b)(1) motion, the court must treat the plaintiff's factual allegations as true and afford the plaintiff the benefit of all inferences that can be derived from the facts alleged.” Jeong Seon Han v. Lynch, 223 F.Supp.3d 95, 103 (D.D.C. 2016) (quotation marks and citation omitted). Those factual allegations, however, receive “closer scrutiny” than they would in the Rule 12(b)(6) context. Id. Also, unlike when evaluating a Rule 12(b)(6) motion, a court may consider documents outside the pleadings to evaluate whether it has jurisdiction. See Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). If the court determines that it lacks jurisdiction, the court must dismiss the claim or action. Fed.R.Civ.P. 12(b)(1), 12(h)(3).

         Under Rule 12(b)(6), a party may move to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). To survive a Rule 12(b)(6) motion, 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)). To state a facially plausible claim, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A complaint alleging “facts [that] are ‘merely consistent with' a defendant's liability . . . ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).

         When evaluating a Rule 12(b)(6) motion, the court “must construe the complaint in favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts alleged.” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (quotation marks omitted). Conclusory allegations, however, are not entitled to an assumption of truth, and even allegations pleaded with factual support need only be accepted insofar as “they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Along with the allegations within the four corners of the complaint, the court can consider “any documents either attached to or incorporated in the complaint and matters of which [it] may take judicial notice.” EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997).

         Finally, under Rule 56, a court grants summary judgment if the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A “material” fact is one with potential to change the substantive outcome of the litigation. See Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. A dispute is “genuine” if a reasonable jury could determine that the evidence warrants a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895.

         In an Administrative Procedure Act case, summary judgment “serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review.” Sierra Club v. Mainella, 459 F.Supp.2d 76, 90 (D.D.C. 2006). In other words, “the entire case . . . is a question of law” and the district court “sits as an appellate tribunal.” Am. Biosci., Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001) (quotation marks and footnote omitted). Where a plaintiff challenges an agency action that interprets a statute the agency administers, review is governed by the two-step Chevron doctrine. At Step One, a court must determine “whether Congress has directly spoken to the precise question at issue.” Chevron, U.S.A., Inc. v. Nat'l Res. Def. Council, Inc., 467 U.S. 837, 842, 843-44 (1984). “If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. In other words, if the “search for the plain meaning of the statute yields a clear result, then Congress has expressed its intention as to the question, and deference is not appropriate.” Eagle ...

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