Opinion ID: 150464
Heading Depth: 2
Heading Rank: 2

Heading: Plan Amendments

Text: With respect to its proposed plan amendments, the State claims that it was improperly denied a hearing on those amendments, and that the Secretary's denial of those plan amendments was arbitrary and capricious. In Spellings I, the District Court found that the State's request for a hearing was moot because the State had asked the District Court to rule on the merits of those plan amendments and did not ask the District Court to remand the case. 453 F.Supp.2d at 502-03. Although it never moved for reconsideration, the State again raised this claim in its motion for a final judgment on the plan amendments. In Spellings II, the District Court declined to revisit its decision to dismiss the State's hearing claim because it concluded that the State had admitted during oral argument that the question for the Court is purely one of law for which an administrative hearing is unnecessary. 549 F.Supp.2d at 171. In Spellings II, the District Court also found that the Secretary's decision to deny the State's proposed plan amendments was not arbitrary or capricious. Id. at 173-77. The State contends that the District Court misunderstood the State's position, and that the State has in fact sought a hearing throughout the course of this litigation. On the merits of that claim, the State argues that the District Court should have found that the NCLBA and the Secretary's regulations, taken together, required the Secretary to grant the State's request for a hearing. First, the State relies on the NCLBA provision stating that the Secretary shall not decline to approve a State's plan before providing a hearing. 20 U.S.C. § 6311(e)(1)(E)(iii). Second, the State points to a regulation providing that [t]he Secretary uses the same procedures to approve an amendment to a State plan  or any other document a State submits  as the Secretary uses to approve the original document. 34 C.F.R. § 76.142. In the State's view, because the Secretary uses the same procedures to approve amendments to plans as it does to approve the original document, and because the Act specifies that a request for a hearing on the original document must be granted before a plan is rejected, a hearing must be granted before rejecting plan amendments. As a threshold matter, the District Court may have been mistaken when it concluded in Spellings I that the State was not seeking a hearing. In support of that conclusion, the District Court relied on two sources: the Second Amended Complaint, and a brief filed by the State during the course of this litigation. The Second Amended Complaint asked the District Court to [i]ssue an order to the Secretary requiring her to provide a hearing before she denies a plan amendment. The District Court imprecisely observed that [i]f the Secretary did in fact violate the Act by not providing the State with a hearing, the proper remedy would be a remand for the Secretary to hold a hearing. 453 F.Supp.2d at 502 (emphasis added). In support of that observation, the District Court cited Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985). In Florida Power, the Court was considering a petition for review of a decision of the Nuclear Regulatory Commission, which was brought pursuant to a federal statute specifically granting jurisdiction over such petitions to the federal courts of appeal. Id. at 746, 105 S.Ct. 1598. Here, in contrast, the District Court's jurisdiction was original, pursuant to 28 U.S.C. § 1331, and not appellate. See 5 U.S.C. § 703 (The form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action, including actions for declaratory judgments ... in a court of competent jurisdiction.). Accordingly, it is of no moment that the complaint never used the word remand, as the District Court's original jurisdiction would have allowed it to order injunctive relief requiring a hearing on the plan amendments. It was enough that the State sought an order requiring that a hearing be held. The brief that the District Court relied on, meanwhile, argued only that further administrative proceedings would be futile with respect to a plan amendment for alternate grade testing, which the State never proposed. [6] In Spellings II, the District Court again found that the State's request for a hearing was moot, this time relying both on its erroneous belief that the request had been waived, and on the separate ground that there is no need for such a hearing. 549 F.Supp.2d at 170-71. The District Court observed, at argument on the APA appeal, the State once again stated ... there is no need for a remand or a hearing. Id. at 171. The record on appeal, however, suggests that the State's contention below was more nuanced. Though the State was not adverse to obtaining a remand for a hearing, it felt that a hearing would be futile if held before the Court rules on the pending matters of legal interpretation. See Pl. Reply Br. in Supp. of Its Mot. for Judg. on the Rec., Doc. No. 148, Connecticut v. Spellings, No. 3:05CV13330 (D.Conn. Nov. 5, 2007), at 8-9. In Spellings II, the Court decided some of those legal matters. For the reasons explained by the District Court, we agree that the Secretary's decision to reject the State's proposed plan amendments was neither arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law. See Spellings II, 549 F.Supp.2d at 171-77; 5 U.S.C. § 706(2)(A). The agency's decision not to grant Connecticut a hearing on its plan amendments, in contrast, may have been without observance of procedure required by law. 5 U.S.C. § 706(2)(D). But it appears clear from the State's brief on appeal that the pending legal issue that it wants decided is the meaning of the Unfunded Mandates Provision. App. Br. at 57. That issue must remain unresolved, however, because, as the District Court properly held, the State's unfunded mandates argument is not yet ripe for review. As a result, we are left in a somewhat delicate position. While the State has a strong argument that it was entitled to a hearing on its plan amendments, and while the District Court was not entirely correct in finding that claim moot in Spellings I, the State now maintains that nothing could be gained by remanding the case prior to a ruling on the legal merits of its unfunded mandates claim. Id. Because we find that claim unripe, there is no reason to order a hearing on the plan amendments before the agency addresses the State's amendment and waiver requests in the context of the Unfunded Mandates Provision. In Spellings II, the District Court noted that immediately after the Court's ruling on the Secretary's Motion to Dismiss, the Court suggested to the State that it consider dismissing Count IV without prejudice in order to allow the State to return to the Secretary to develop a detailed record regarding the State's unfunded mandates argument. 549 F.Supp.2d at 181. The State did not pursue that suggestion, and now, more than three years later, finds itself in essentially the same position. We believe the Secretary should address the Unfunded Mandates Provision in the first instance at the administrative level. Therefore, should the State wish to propose plan amendments based on its interpretation of the Unfunded Mandates Provision, we agree with the District Court that the State is free to pursue that issue before the Secretary because we have not ruled on that claim. Id. And, based on our analysis, we think it is important that the State be able to re-raise its claim that it is entitled to a hearing on its plan amendments, should the Secretary fail to provide one. In sum, we decline to reach the issue of whether a hearing is required under the Act because such a hearing is moot unless the State opts to re-raise its unfunded mandates argument by way of a plan amendment, but that issue will no longer be moot if the State does so. In order to make it clear that the State retains the right to re-propose the same plan amendments, or any other ones, based on its claims about the Unfunded Mandates Provision, and also to continue pursuing its claim that it is entitled to a hearing on its plan amendments, we AFFIRM the District Court's dismissal of the State's hearing claim and its grant of the Secretary's motion for judgment on the record with the MODIFICATION that they are without prejudice. We also AFFIRM, but without modification, the balance of the District Court's decision in Spellings I.