Court Opinion

ID: 2965135
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:35:53.37839+00
Date Added: 2024-06-11T11:37:26.799615
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 97-1834
                    ACTION FOR BOSTON COMMUNITY DEVELOPMENT, INC.,

                                Plaintiff, Appellant,
                                          v.

                           DONNA E. SHALALA, AS SHE IS THE
                      SECRETARY OF THE UNITED STATES DEPARTMENT
                            OF HEALTH AND HUMAN SERVICES,
                           AND THE UNITED STATES DEPARTMENT
                            OF HEALTH AND HUMAN SERVICES,
                             ADMINISTRATION FOR CHILDREN,
                               AND FAMILIES, REGION I,
                                Defendants, Appellees.

                                 ____________________
                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS
                     [Hon. Robert E. Keeton, U.S. District Judge]
                                             ___________________

                                 ____________________
                                        Before

                                Torruella, Chief Judge,
                                           ___________
                                Boudin, Circuit Judge,
                                        _____________

                            and Woodlock,* District Judge.
                                           ______________
                                 ____________________

            Janet Steckel Lundberg with  whom Richard M. Bluestein, Krokidas &
            ______________________            ____________________  __________
        Bluestein,  Garrick F.  Cole  and Smith  & Duggan  were  on brief  for
        _________   ________________      _______________
        appellant.
            David  S. Mackey,  Assistant  United  States  Attorney, with  whom
            ________________
        Donald K. Stern, United  States Attorney, was on brief  for the United
        _______________
        States.

                                 ____________________

                                   February 9, 1998
                                 ____________________

                            
        ____________________

        *Of the District of Massachusetts, sitting by designation.

                 BOUDIN,  Circuit  Judge.   In  form,  this  appeal seeks
                          ______________

            review  of the district  court's refusal to  grant injunctive

            relief   to  the  plaintiff,   Action  for  Boston  Community

            Development ("ABCD"), a major provider of Head Start services

            in Boston.   In substance,  this is an  administrative review

            proceeding by which  ABCD seeks to  overturn the decision  by

            the Department of Health and Human Services ("HHS") to select

            a different  grantee to  receive funds for  a new  Head Start

            project in Boston.  The pertinent facts are undisputed.

                 The Head  Start program  is designed  to deliver  social

            services  to economically  disadvantaged  children and  their

            families.  42  U.S.C.   9831.  To  provide such services, HHS

            makes  grants to  private entities,  like  ABCD.   ABCD is  a

            longstanding  Head Start grantee in Boston, responsible for a

            number  of diverse programs, and it tells us that in a recent

            year its grants exceeded $20 million.

                 From  1982 to  1995,  the  year  it  lost  its  funding,

            Esquelita Aquebana, Inc. operated  a Head Start program  in a

            Boston area known  as Uphams Corner, comprising a  portion of

            Roxbury, Dorchester and the South  End of Boston.  In January

            1996,  HHS  announced  that  a  grant  would  be  made  to  a

            replacement  provider  of  services in  Uphams  Corner  in an

            amount  somewhat  exceeding  $500,000.    Two  of  the  three

            applicants  for the  funds were  ABCD  and Dimmock  Community

            Health Center ("Dimmock").

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                 For many years, Congress has provided that HHS must give

            "priority" to Head  Start agencies which were  receiving Head

            Start  funds  on August  13,  1981, "unless  [in  the current

            phrasing]  the  Secretary  makes a  finding  that  the agency

            involved fails  to meet  program,  financial management,  and

            other  requirements established by the Secretary."  42 U.S.C.

               9836(c)(1).    HHS  apparently  took  no account  of  this

            priority since its announcement said that the funding was "to

            be competitively awarded."   In any case, HHS  established an

            independent panel  to review  the applicants and  on May  13,

            1996, the panel awarded ABCD 419 points; Dimmock, 354 points;

            and the third applicant, 266 points.

                 At the same  time, HHS was undertaking  a regular review

            of all of ABCD's 26 Head Start program  sites.  HHS completed

            its  review  of   ABCD's  Parent  Child  Center,   a  special

            demonstration  program  providing  services for  infants  and

            toddlers,  on May  10,  1996.   The  review  of this  program

            revealed  serious  deficiencies  in  the health,  disability,

            parental  involvement  and social  service  components.   HHS

            summarized  the problem as one of "inadequate agency capacity

            to plan, and manage the delivery of Head Start services."

                 Head   Start   programs   are  run   through   the   HHS

            Administration for Children and Families.  On August 2, 1996,

            the local  regional administrator,  Hugh Galligan,  announced

            the selection  of Dimmock  as the Head  Start agency  for the

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            Uphams Corner  program.   Galligan reported  to his  superior

            that "[w]hile ABCD's [periodic review]  results are generally

            positive, a recent  review of its  Parent Child Center  (PCC)

            program showed it was seriously deficient."  This report also
                                  ___________________

            stated that Dimmock was running  a Head Start program in good

            standing  and  that  both  Galligan's  organization  and  its

            Massachusetts  state  counterpart  "agreed that  the  Dimmock

            proposal  more  clearly  responded  to  the  opportunity  for

            creative, comprehensive and flexible programming."

                 On  August  14, 1996,  ABCD  brought  this  case in  the

            district  court, seeking  to  enjoin the  award  of funds  to

            Dimmock  on the  ground that  HHS had  failed to  respect the

            statutory priority to which  ABCD was conditionally  entitled

            under     9836(c)(1).   When  the  administrative  record was

            lodged, the  district court  found no record  of a  ruling on

            ABCD's right to a priority.   On December 19, 1996, the court

            ordered HHS to determine explicitly whether ABCD was entitled

            to  a  priority  and  to  explain the  reasons  for  the  HHS

            determination.  

                 In  response, HHS filed  a declaration of  Hugh Galligan

            stating that ABCD did not qualify for the statutory  priority

            "because  of the  May  10  finding that  ABCD  fails to  meet

            program,   financial  management,   and  other   requirements

            established  by the Secretary,"  and reaffirming his previous

            award  of the grant  to Dimock.  HHS  also filed a memorandum

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            dated  March 21,  1997, from  Olivia  Golden, then  Principal

            Deputy Assistant  Secretary, Administration for  Children and

            Families, ratifying  Galligan's  selection of  Dimock.   ABCD

            then challenged the authority of  Golden and Galligan to make

            this  decision.   On June  9,  1997, Golden  issued a  second

            memorandum, further ratifying all decisions and actions taken

            by Galligan in the matter up to that date.

                 On July  2, 1997, the  district court filed  an opinion,

            Action  for  Boston Community  Development, Inc.  v. Shalala,
            ________________________________________________     _______

            1997  WL 677447 (D.  Mass. 1997), granting  final judgment in

            favor of HHS.   The  court ruled  that even  if Galligan  had

            lacked the necessary  authority at the  outset, that gap  had

            been filled by  the subsequent ratification.   On the merits,

            the district  court found that  the decision to  withhold the

            priority was  neither in  violation of  law nor  unreasonable

            under  the  standards  usually  applied in  reviewing  agency

            action.

                 On  the  appeal now  before  us, ABCD's  first  and most

            extensive  argument  is  that the  decision  to  withhold the

            priority,  even  if  properly ratified  (which  ABCD denies),

            rested on legal errors.  The  main thrust of its argument  is

            that  the statute  does  not  permit HHS  "to  deny ABCD  its

            priority .  . . on  the basis of  temporary, program-specific

            deficiency findings  with respect  to one  of the  twenty-six

            Head Start  program  sites that  ABCD operates,  a site  that

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            constitutes  only a small  part of ABCD's  overall Head Start

            program activities."

                 So far as ABCD's issue presents a question of  statutory

            construction--and  in some respects it does--our review is de
                                                                       __

            novo, tempered by whatever deference is to be accorded to the
            ____

            Secretary's  construction of  the statute  under  the Chevron
                                                                  _______

            doctrine or otherwise.  See Chevron, U.S.A.,  Inc. v. Natural
                                    ___ ______________________    _______

            Resources Defense Council, Inc.,  467 U.S. 837 (1984).   Even
            _______________________________

            without full-scale Chevron  deference, courts usually give  a
                               _______

            respectful hearing to the agency charged with administering a

            statute.   Because our own  view of the statute  accords with

            that of HHS, we  need go no further than that  in the present

            case.

                 We  agree  with  ABCD that  Congress  made  a considered

            decision  to  give  a  priority  to  any  Head  Start  agency

            receiving funds on August 13, 1981.  The expressed rationale-

            -to give preference to stability and experience--may not seem

            to jibe with  the selection of  the single, now  increasingly

            ancient date.   But choices of this kind  are always somewhat

            arbitrary, and  Congress has  maintained this priority  date,

            altering  the statutory language only slightly over a lengthy

            period.

                 On this premise, ABCD concludes  that Congress therefore
                                                                _________

            must  have intended that the condition for denying priority--

            "that  the agency involved  fails to meet  program, financial

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                                         -6-

            management,  and   other  requirements  established   by  the

            Secretary"--be based on a "overall" failure to the Head Start

            agency to meet  HHS standards.  What ABCD  means by "overall"

            is not entirely clear, but  ABCD makes its arguments somewhat

            more  concrete by  asserting  that the  failure  of a  single

            program,  conducted  by  a multi-program  Head  Start agency,

            cannot be an "overall" failure.  Congress  could have written

            the statute in this manner but did not do so.

                 The  word "overall" simply  does not appear  anywhere in

            the   priority  provision  (section   9836(c)).    Given  the

            congressional  purpose, we  agree that  the  failure to  meet

            standards would certainly have to be substantial and relevant

            as  opposed  to slight  or  inconsequential.   But  there  is

            nothing  in the  language  of  the  priority  provision  that

            requires  that the failure be one that affects all or many of

            the programs the agency may be supervising.

                 Further,  the failure to  manage properly  an individual

            program might be very informative as  to the agency's ability

            to  take  on  new responsibilities.    Deficiencies  within a

            single program might  be more important to HHS  than a single

            deficiency--say in some aspect  of bookkeeping--that infected

            all of the programs run by a Head Start agency.   Whether the

            failures   in  ABCD's  Parent  Child  Center  were  of  great

            magnitude is a different question to which we return below.

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                                         -7-

                 One  could argue, with a better footing in the statutory

            language, that  there must be  at least multiple  failures of

            different kinds,  since the statute calls for  a finding that

            the  agency "fails to meet program, financial management, and
                                                                      ___

            other  requirements established  by the Secretary."   Section

            9836(c)(1)  (emphasis added).  The word "and" usually denotes

            the   conjunctive,  but  the   rule  is  not   absolute  when

            contradicted by context,  Reiter v. Sonotone Corp.,  442 U.S.
                                      ______    ______________

            330, 338 (1979), as we think it is here.  Especially in light

            of the  catch-all  category "other  requirements,"  the  term

            "and" certainly was intended to mean "and/or."

                 This is borne out by common-sense considerations.  If  a

            Head Start agency  failed utterly in the  delivery of program

            services,  Congress   could  not   have  intended   that  its

            meticulously  kept books would assure it a statutory priority

            as  to  new programs.    As  it  happens, here  Galligan  did

            expressly  find, in  a determination  later  ratified by  the

            Acting  Assistant Secretary,  that ABCD  had  failed to  meet

            "program, financial management, and other requirements."

                 Finally, there is  little mileage for ABCD  in its claim

            that   the   deficiency   cannot   be   merely   "temporary."

            Practically  all  deficiencies  can be  made  "temporary"  by

            discovering and  rectifying them.   The  question is  whether

            their  existence  is a  warning  signal that  the  Head Start

            agency ought  to be  correcting the  deficiencies that  exist

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            before  it takes on new programs--which might further stretch

            management resources already shown to be inadequate.

                 ABCD   argues  that  its  reading  of  section  9836  is

            supported by section 9836a enacted by Congress in 1994.  Pub.

            L. No. 103-252,    108, 108 Stat. 631.   Whereas section 9836

            involves  the  designation  of Head  Start  agencies, section

            9836a  requires HHS to  establish quality standards  for Head

            Start agencies  and to  monitor such  agencies and  programs.

            The deficiencies in the Parent  Child Center found in the May

            10,  1996  report,  which Galligan  invoked  in  denying ABCD

            priority, derived from a monitoring program carried out under

            the newly enacted section 9836a.

                 ABCD  argues that an "overall" failure is required under

            section  9836(c)(1) because section 9836a refers at one point

            to  the need for the  Secretary to promulgate "minimum levels

            of  overall accomplishment"  that a  Head  Start agency  must

            achieve to  meet the primary "standards" to be established by

            the Secretary  for program services,  for administrative  and

            financial   management,  and  for  many  other  subjects,    

            9836a(a)(1),  (2),  and  because elsewhere  the  Secretary is

            required to conduct  a "full review" of each  agency at least

            once every three years.  Id. subsection (c)(1)(A).  This kind
                                     ___

            of   wrenching  words  out  of  context  is  not  persuasive:

            "overall accomplishment"  and  "full review"  make  sense  in

            context, and neither phrase has the same  meaning as "overall

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            failure"--the  phrase ABCD would  like to substitute  for the

            word "failure" in the prior section of the statute.

                 ABCD next objects to HHS' use of the  findings made in a

            periodic   review  as  the  basis  for  denying  a  statutory

            priority.   ABCD points out that  other provisions of section

            9835a  address  the  correction of  deficiencies  found  in a

            periodic  review   by  quality  improvement  plans   and  the

            termination  of  the  agency  if  the  deficiencies  are  not

            corrected.  But nothing in these provisions prevents HHS from

            considering  the findings of a periodic review in determining

            under the prior section whether  the Head Start agency should

            lose its priority.

                 If  this were an  ordinary agency review  proceeding, we

            would now reach  the usual question whether the  agency had a

            rational basis for  its action or whether,  contrariwise, its

            action was arbitrary,  capricious or unreasonable.   And, one

            would expect ABCD to  explain why the findings of  deficiency

            relied on  by HHS were mistaken or unsupported or why, to the

            extent they might  be correct and adequately  supported, they

            were  not sufficiently  serious, even  taken as  a whole,  to

            justify the significant step of the denial of priority.

                 If such an attack were made, we would take it seriously.

            Agencies  are  entitled to  considerable  deference  in their

            formal  fact  finding  and  in  the  application  of  general

            standards  to specific facts  within their expertise,  but in

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            neither case is  deference unlimited.  Congress has,  as ABCD

            argued,  treated the  priority  as  a  matter  of  importance

            (although  the condition attached  to it is  also important).

            This court has  been willing enough even  in fairly technical

            areas to overturn agency decisions which appeared to us to be

            unreasonable or  inadequately supported.   See, e.g.,  Puerto
                                                       ___  ____   ______

            Rico Sun Oil Co. v. EPA, 8 F.3d 73, 76-77 (1st Cir. 1993).
            ________________    ___

                 ABCD  has chosen  not to  make  such an  attack, and  we

            therefore have no occasion  to review in detail  the findings

            of the May  10, 1996, review of the Parent Child Center which

            are summarized  in the  district court's  decision.   1997 WL

            677477 at *19.   It is enough to say that  the criticisms are

            not narrowly  confined or  limited to  trivial matters.   And

            while ABCD has  stressed that the Parent Child  program was a

            small  portion of its budget, it implies that the figure is 4

            percent  of $22  million--most would  not  regard a  million-

            dollar program as small change.

                 ABCD's next line  of argument contests the  authority of

            Galligan to make the priority decision  at all.   We condense

            the background which  is discussed at length  in the district

            court decision.   1997 WL 677447 at  *6-13.  The gist  of the

            matter  is that, as Regional Administrator, Galligan had from

            the outset the authority to  award Head Start grants, but the

            Commissioner  of  Youth  and   Family  Services--then  Olivia

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            Golden--had  the  authority  to   designate  new  Head  Start

            agencies.

                 The district court  deemed it unclear  which of the  two

            officials had  the authority to  grant or deny  the priority,

            but found that  it did not matter.  It concluded that even if

            Galligan had lacked  the authority in August 1996, Golden had

            explicitly ratified his actions in  June 1997.  By that time,

            Golden  was Principal Deputy Assistant Secretary and had been

            nominated for the vacant Assistant Secretary position.

                 We agree with  the district court that as  the Principal

            Deputy and  nominee, Golden could  exercise the powers  of an

            assistant secretary.   ABCD admits that the  proper assistant

            secretary  had the authority  to make priority  decisions but

            argues   that  Golden   was   nominated   for  an   assistant

            secretaryship other than the one with authority to decide the

            issue.   Despite  some confusion  over titles,  we adopt  the

            district  court's reasoning for  rejection of  this argument.

            Id. at *12.
            ___

                 ABCD's  more interesting  argument is that  Golden could

            not  ratify   Galligan's  decision   "retroactively."     All

            ratifications  are retroactive in the sense that they purport

            to   validate  a  prior   action  that  might   otherwise  be

            unauthorized.  But ABCD relies here on an  HHS administrative

            procedural  manual  that  refers  to  ratification  of  prior

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                                         -12-

            actions  being  permissible  in "special  circumstances"  and

            "with the approval" of the general counsel's office.  

                 We  know  almost   nothing  about  the  scope   of  this

            provision, or the  legal significance of the  manual, because

            ABCD did  not  make  this  argument in  the  district  court.

            ABCD's  objection  is   therefore  waived.    See   McCoy  v.
                                                          ___   _____

            Massachusetts Institute of  Technology, 950 F.2d 13,  22 (1st
            ______________________________________

            Cir. 1991).   Accordingly, we  do not reach  HHS' alternative

            argument that  the record  shows that  the general  counsel's

            office informally acquiesced in the ratification.

                 Finally, ABCD says  that the ratification is  an invalid

            "post hoc rationalization."   This epithet  has been used  by

            courts  in various  ways  but most  often  to prevent  agency

            lawyers  from  providing  in  briefs  necessary  findings  or
            _______

            reasoning  omitted from  the agency's  decision.   See  Motor
                       _______                                 ___  _____

            Vehicle Mfrs. Ass'n v. State  Farm Mut. Automobile Ins.  Co.,
            ___________________    _____________________________________

            463  U.S. 29,  50  (1983); Burlington  Truck  Lines, Inc.  v.
                                       ______________________________

            United States, 371  U.S. 156, 168-69 (1962).   Nothing of the
            _____________

            sort is  presented here:   both Galligan  and Golden  agreed,

            respectively in  May and  June 1997,  that ABCD  was properly

            denied  the priority based  on information available  to them

            from the time the grant was originally made to Dimock.  

                 Thus,   the   usual   concern   of   courts--that    the

            decisionmaker may not have made the necessary determinations-

            -is absent here.   Further, it was the  district court itself

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            that  ordered HHS to make its priority determination explicit

            and explain its reasons.   See Pension Benefit Guaranty Corp.
                                       ___ ______________________________

            v. LTV Corp., 496 U.S.  633, 653-54 (1990).  Finally, nothing
               _________

            in   the  1997   redeterminations  violated   any  procedural

            requirements:  We have been pointed to nothing in the statute

            or regulations that requires any specific procedures before a

            priority is  denied.   See Dubois v.  United States  Dep't of
                                   ___ ______     _______________________

            Agric., 102  F.3d 1273, 1289  (1st Cir. 1996),  cert. denied,
            ______                                          ____________

            117 S. Ct. 2510 (1997).

                 Affirmed.
                 _________

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