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Policy and Research, LLC v. United States Department of Health and Human Services

United States District Court, District of Columbia

May 11, 2018

POLICY AND RESEARCH, LLC, et al., Plaintiffs,



         As far as the Administrative Procedures Act, 5 U.S.C. § 701 et seq., is concerned, this much is clear: a federal agency that changes course abruptly without a well-reasoned explanation for its decision or that acts contrary to its own regulations is subject to having a federal court vacate its action as “arbitrary [and] capricious, ” id. § 706(2)(A); see also Encino Motorcars, LLC v. Navarro, 136 S.Ct. 2117, 2125-26 (2016); Motor Vehicle Mfs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48-49 (1983); Nat'l Envtl. Dev. Ass'n's Clean Air Project v. EPA, 752 F.3d 999, 1009 (D.C. Cir. 2014). Plaintiffs Policy and Research, LLC, Project Vida Health Center, Sexual Health Initiatives for Teens North Carolina, and South Carolina Campaign to Prevent Teen Pregnancy (collectively, “Plaintiffs”) seek that remedy in the instant lawsuit; they have filed a complaint that alleges arbitrary and capricious action on the part of Defendants U.S. Department of Health and Human Services and Secretary Alex Azar (“HHS” or “Defendants”) with respect to HHS's administration of the federal Teen Pregnancy Prevention Program (“the TPPP”), because, according to Plaintiffs, HHS suddenly and unlawfully terminated their TPPP grant funding without explanation and in contravention of applicable HHS regulations. (See Compl., ECF No. 1, ¶¶ 71- 75; see also Pls.' Mem. in Supp. of Combined Mot. for Prelim. Inj. & for Expedited Summ. J. (“Pls.' Mem.”), ECF No. 6-1, at 33-39.)[1] In the context of the cross-motions for expedited summary judgment that are before this Court at present, HHS responds that, first of all, it has not “terminated” Plaintiffs' TPPP awards; rather, it has merely exercised its authority to withhold funding for the two fiscal years that remain with respect to the five-year programmatic approval that Plaintiffs received in 2015. (See Mem. in Supp. of Defs.' Cross-Mot. to Dismiss or for Summ J. & in Opp'n to Pls.' Mot. for Summ. J. (“Defs.' Mem.”), ECF No. 13, at 19-27.) HHS also insists that its decision to stop funding Plaintiffs' projects two years shy of the initial award period is “committed to agency discretion by law” and thus not subject to judicial review. (See id. at 27-30.)

         Notably, HHS appears to have placed all of its eggs into the unreviewability basket, because the agency does not dispute that the one-sentence notice it provided to Plaintiffs announcing the shortening of Plaintiffs' TPPP project periods violates the APA. (See Hr'g Tr., ECF No. 20, at 23:15-21.) Consequently, the parties' cross-motions focus on the threshold inquiry into whether there are meaningful standards for this Court to apply when reviewing that agency decision, such that the Court can reach the merits of Plaintiffs' challenge to HHS's determination at all. At bottom, that debate reduces to an argument about the appropriate characterization of the agency action at issue: was it a “termination” of Plaintiffs' grants within the meaning of the framework set forth in the HHS regulations, or a withholding of grant funding under the agency's less-well-defined Grants Policy Statement, which appears to indicate that HHS can withhold funding non-competing continuation award if the agency determines that, “[f]or whatever reason, continued funding would not be in the best interests of the Federal government”? (Grants Policy Statement, Ex. B to Decl. of Michael Gerardi, ECF No. 13-1, at 13.)

         To accommodate the parties' need for expeditious resolution of Plaintiffs' APA claim, this Court ruled on their cross-motions orally on April 19, 2018-the day after the motion hearing. The Court announced its conclusion that HHS had terminated Plaintiffs' grants within the meaning of the agency's regulations, and thus Plaintiffs' APA claim is subject to judicial review. (See Tr. of Oral Ruling, ECF No. 21, at 13:8- 22.) The Court also held that HHS's termination of Plaintiffs' TPPP grants was plainly arbitrary and capricious and in violation of the law for APA purposes. (See Id. at 21:6- 14.)

         The instant Memorandum Opinion provides a more comprehensive explanation of the Court's conclusions. In short, it is clear to this Court that, while a federal agency's allocation of congressionally-appropriated grant funding is the type of discretionary action that is presumptively unreviewable, HHS's regulations provide clear and applicable standards for evaluating Plaintiffs' challenge to the agency's decision to shorten the project periods for Plaintiffs' federal awards, such that HHS's decision to shorten Plaintiffs' project periods is not unreviewable agency action. And because HHS terminated Plaintiffs' grant funding within the meaning of the HHS regulations without any explanation and in contravention of its own regulations, HHS's action easily qualifies as an arbitrary and capricious act under the APA. Therefore, as detailed in this Court's April 19, 2018 (see ECF No. 19), Plaintiffs' motion for summary judgment has been GRANTED and Defendants' motion for summary judgment has been DENIED. In addition, this Court has VACATED the agency's decision to shorten the project period for Plaintiffs' projects, and has ordered HHS to accept and process Plaintiffs' applications as if the agency had never terminated Plaintiffs' federal awards.


         A. The History And Administration Of The Teen Pregnancy Prevention Program

         The federal government has long recognized that teenage pregnancy carries “high economic, social, and health costs” for teen parents, their families, and society at large. Carmen Solomon-Fears, Teenage Pregnancy Prevention: Statistics And Programs 1, 2 (Jan. 15, 2016).[2] In the late 1970s and early 1980s, Congress set out to address this problem. By statute, Congress established a number of federal programs aimed at reducing the rate of teen pregnancy in America, and over the years, Congress has repeatedly increased the number of programs, and the amount of federal funding, directed toward those efforts. See Id. at 8-10. Meanwhile, the teen pregnancy rate in the United States has steadily fallen. See Id. at 7.

         Notably, although the federal government's commitment to reducing teenage pregnancy has never waned, its preferred method of addressing this societal concern has changed over time. These shifts in policy roughly occurred during three separate periods. First, between 1981 and 1996, the federal government funded programs that educated teenagers and their families about abstinence, contraceptives, sexual health, and the social services available to young mothers. See Id. at 8-9. Then, from 1996 to 2009, Congress used “abstinence-only education as the primary tool” for lowering teen pregnancy rates, and did not authorize funding for preventative services that promoted the use of contraceptives or birth control. Id. at 9. Most recently, beginning in 2009, Congress once again provided funding that could be used for both “abstinence-only and contraception information/services” approaches. Id. at 10.

         Congress created the TPPP as part of this latest shift in policy. The program was initially enacted through the Consolidated Appropriations Act of 2010, and most recently, the Consolidated Appropriations Act of 2018 reauthorized it. In relevant part, the 2018 appropriations legislation provided that

of the [$470, 629, 000] made available under this heading, $101, 000, 000 shall be for making competitive contracts and grants to public and private entities to fund medically accurate and age appropriate programs that reduce teen pregnancy and for the Federal costs associated with administering and evaluating such contracts and grants . . . .

         Consol. Appropriations Act of 2018, Pub. L. No. 115-141. Through this appropriation, Congress further specifically stated that it was funding contracts and grants for two types of projects; namely, on the one hand, projects that seek to replicate successful evidence-based approaches that discourage teen pregnancy, see Id. (specifying that the bulk of the $101 million “shall be for replicating programs that have been proven effective through rigorous evaluation to reduce teenage pregnancy, behavioral risk factors underlying teenage pregnancy, or other associated risk factors”), and on the other hand, projects that involved the researching and developing of new evidence- based approaches for lowering the teen pregnancy rate, see Id. (reserving some of the funds “for research and demonstration grants to develop, replicate, refine, and test additional models and innovative strategies for preventing teenage pregnancy”).

         After Congress first appropriated funding for the TPPP in 2009, HHS undertook to authorize “cooperative agreements”-a type of funding agreement that involves substantial government monitoring-in order to administer Congress's directives with respect to the TPPP. (See, e.g., Funding Opportunity Announcement 2015-2020 (“FOA 2015-2020”), Ex. N to Decl. of Scott Sherman, ECF No. 6-7, at 87.) In most cases, HHS “programmatically approved” selected TPPP projects “for support in their entirety.” (Grants Policy Statement at 12.) And, indeed, the grants at issue in the instant case each involved five-year project periods. (See, e.g., FOA 2015-2020 at 88; Policy and Research Notice of Award FY 2015-2016 (“Notice of Award 2015-2016”), Ex. A to Jenner Decl., ECF No. 6-2, at 11.)

         Significantly for present purposes, although HHS programmatically and prospectively approved the TPPP projects for up to five-year terms, the agency actually provided the grant funding for each project “in annual increments called budget periods.” (Grants Policy Statement at 12.) Thus, each five-year project period contained five budget periods (id.), and the grant recipients' actual receipt of funding for the second, third, fourth, or fifth budget periods was conditioned upon its submission of what HHS calls a “noncompeting [continuation] application” (FOA 2015-2020 at 90; see also Grants Policy Statement at 10). HHS reviews these applications to ensure that the project remains eligible for federal funding-i.e., that federal funding has been appropriated, that the project has been making satisfactory progress, and that the grantee has maintained adequate stewardship of federal funds. (See FOA 2015-2020 at 88; Notice of Award 2015-2016 at 11 (listing projected grant payments for years two, three, four, and five, and indicating that such “future support” is “[s]ubject to the availability of funds and satisfactory progress of the project”); see also Guidance for Preparing a Non-Competing Continuation Grant Application, Ex. C to Gerardi Decl., ECF No. 13-1, at 18.) Absent any of these circumstances, an entity's annual non-competing continuation application is ordinarily approved, and the agency then issues a legal document known as a “Notice of Award[, ]” which authorizes the grant recipient to access the designated TPPP funding for the following fiscal year. (See Notice of Award 2015-2016 at 11.)

         The most recent TPPP award cycle began in July of 2015, and was scheduled to have a five-year project period lasting from July of 2015 to June of 2020. (See, e.g., id.; see also FOA 2015-2020 at 88.) However, in July of 2017, HHS issued notices of award for the 2017-2018 fiscal year that not only provided the 2015-2020 TPPP projects with funding for the ensuing budget year, but that also stated: “[t]his award . . . shortens the project period to end on June 30, 2018[, ] at the end of this budget year.” (See, e.g., Policy and Research Notice of Award FY 2017-2018, Ex. J. to Jenner Decl., ECF No. 6-2, at 82.) This was the first and only notice that Plaintiffs received indicating that the project period for their TPPP projects would end in 2018, two years earlier than expected, and that HHS would not be providing any additional funding for subsequent years. Moreover, these notices provided no explanation for HHS's decision to shorten the project period for the 2015-2020 TPPP awards. (See, e.g., id.)

         B. Facts Specific To Plaintiffs' Suit

         This case concerns four organizations with TPPP grants that received the aforementioned notice from HHS that their previously approved five-year project periods were being shortened. Plaintiff Policy and Research, LLC had obtained two five-year funding awards for the 2015-2020 award cycle, which allowed it to run two programs that seek to decrease the prevalence of teen pregnancy among eighteen- and nineteen-year-old African American and Latina women, and among youths between the ages of fourteen and nineteen who have suffered trauma and are receiving outpatient counseling services. (See Jenner Decl., ECF No. 6-2, ¶¶ 1, 5-7.) Plaintiff Sexual Health Initiatives for Teens North Carolina also received two funding awards for the TPPP's 2015-2020 cycle (only one of which is at issue here); these grants fund the integration of what is known as “prevention programming” into North Carolina's foster care and juvenile detention systems. (See Baird Decl., ECF No. 6-4, ¶¶ 2, 5.) Plaintiff South Carolina Campaign to Prevent Teen Pregnancy used its two 2015-2020 TPPP awards to provide programs and services aimed at reducing teen pregnancy rates among youths in juvenile justice centers, foster care, and certain high-need counties within South Carolina. (See De Santis Decl., ECF No. 6-3, ¶¶ 2, 5-7.) Finally, Plaintiff Project Vida Health Center received one five-year award for the 2015-2020 funding cycle, which sustained three teen pregnancy prevention programs in middle schools and high schools located in rural, predominantly Hispanic communities with high teen birth rates. (See Schlesinger Decl., ECF No. 6-5, ¶¶ 2-3.)

         While Plaintiffs come from different states and use the TPPP money they have received in different ways, these organizations have a number of things in common. It is undisputed that each has complied with all of the TPPP's requirements, and that each has submitted the routine non-competing continuation applications that HHS mandates. (See Jenner Decl. ¶ 11; De Santis Decl. ¶ 11; Baird Decl. ¶ 10; Schlesinger Decl. ¶ 7.) Moreover, as mentioned, each organization learned in early July of 2017 that their five-year project periods would be discontinued at the close of year three on June 30, 2018. (See Jenner Decl. ¶ 16; De Santis Decl. ¶ 16; Baird Decl. ¶ 14; Schlesinger Decl. ¶ 11.) It is undisputed that these organizations are not able to obtain alternative sources of funding to offset the loss of funds from the TPPP grants (see Jenner Decl. ¶ 21; De Santis Decl. ¶ 21; Baird Decl. ¶ 20; Schlesinger Decl. ¶ 16), and the loss of funding will force Plaintiffs to cease ongoing studies, terminate programs currently taking place in various communities, and lay off employees (see Jenner Decl. ¶ 23; De Santis Decl. ¶ 22; Baird Decl. ¶ 23; Schlesinger Decl. ¶ 20).

         C. Procedural History

         On February 15, 2018, Plaintiffs filed the instant action in this Court, [3]challenging HHS's decision to shorten their project periods. About a week after bringing this action, Plaintiffs filed a combined motion for a preliminary injunction and expedited summary judgment. (See Pls.' Combined Mot. for Prelim. Inj. & for Expedited Summ. J., ECF No. 6.) Because the parties subsequently agreed to move ahead with expedited summary judgment proceedings, the briefing and arguments featured at this Court's motion hearing of April 18, 2018 focused on the merits of Plaintiffs' complaint and Defendants' nonjusticiability contention.

         In their complaint and summary judgment motion, Plaintiffs' primary contention is that HHS's termination of their TPPP grants violated the APA's prohibition on “final agency action that is arbitrary, capricious, [an abuse of discretion, ] and [otherwise] not in accordance with law” (Compl. ¶ 3), because “HHS terminated [P]laintiffs' grants without explanation” and in contravention of the requirements set forth in its own regulations (id. ¶ 74; see also Pls.' Mem. at 33-39).[4] HHS responded to Plaintiffs' substantive APA claim and summary judgment motion with its own motion for summary judgment, which argues that the agency's decision to shorten the project period and discontinue funding for Plaintiffs is an unreviewable decision committed to agency discretion (see Defs.' Mem. at 27-30), and further maintains that Plaintiffs have no legal right to continued funding under any statute, regulation, or award document issued by HHS (see Id. at 19-27). As noted, the Court announced its decision on the parties' cross-motions orally on April 19, 2018, and issued an Order granting summary judgment for Plaintiffs and denying HHS's summary judgment motion on that same date. (See Order.)


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