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Planned Parenthood of Greater Washington and North Idaho v. US Department of Health and Human Services

United States District Court, E.D. Washington

April 24, 2018

PLANNED PARENTHOOD OF GREATER WASHINGTON AND NORTH IDAHO; PLANNED PARENTHOOD OF THE GREAT NORTHWEST AND THE HAWAIIAN ISLANDS; and PLANNED PARENTHOOD OF THE HEARTLAND, Plaintiffs,
v.
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES and ALEX MICHAEL AZAR II in his official capacity as Secretary of the U.S. Department of Health and Human Services, Defendants.

          ORDER GRANTING PERMANENT INJUNCTION; GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS; DENYING MOTION FOR SUMMARY JUDGMENT

          THOMAS O. RICE CHIEF UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT are Plaintiffs' Motion for Preliminary Injunctive Relief (ECF No. 24) and Defendants' Opposition to Plaintiffs' Motion for a Preliminary Injunction and Cross-Motion to Dismiss or for Summary Judgment (ECF No. 27). This matter was heard with oral argument on April 24, 2018. The Court has reviewed the record and files herein, considered the parties' arguments, and is fully informed. For the reasons discussed below, Plaintiffs' Motion for Preliminary Injunctive Relief (ECF No. 24) is GRANTED; Defendants' Motion to Dismiss (ECF No. 27) is GRANTED in part and DENIED in part; and Defendants' Motion for Summary Judgment (ECF No. 27) is DENIED.

         BACKGROUND

         On February 15, 2018, Plaintiffs Planned Parenthood of Greater Washington and North Idaho, Planned Parenthood of the Great Northwest and Hawaiian Islands, and Planned Parenthood of the Heartland (collectively “Planned Parenthood”) filed this Complaint against Defendants United States Department of Health and Human Services (“HHS”) and the Secretary of HHS, Alex Michael Azar II. ECF No. 1. Plaintiffs seek to prevent and declare unlawful HHS's decision to terminate Plaintiffs' grant agreements and end the Teen Pregnancy Prevent Program (“TPP Program”). Id. at ¶ 1. Plaintiffs assert claims for declaratory and injunctive relief under the Administrative Procedure Act (“APA”), Establishment Clause, and Due Process Clause. Id. at ¶¶ 100-31.

         In the instant motion, Plaintiffs move for preliminary injunctive relief enjoining Defendants from terminating without cause Plaintiffs' five-year cooperative agreements under the TPP Program. ECF No. 24 at 8. Defendants oppose Plaintiffs' motion for a preliminary injunction and request the Court dismiss or enter summary judgment on all of Plaintiffs' claims. ECF No. 27.

         FACTS

         Unless otherwise indicated, the following facts are primarily drawn from Plaintiffs' Complaint and documents appended to the instant motion, and are accepted as true for the purposes of the motions for preliminary injunction and to dismiss. The TPP was created by Congress for the 2010 fiscal year (“FY”). ECF No. 1 at ¶ 2. Congress has continued to appropriate funds for the TPP Program since 2010 at approximately $110 million annually. Id. at ¶¶ 26-27, 31. The appropriations language explains that funds “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 ….” Id. at ¶ 26; 27-2 at 353; Pub.L. 115-141, 132 Stat. 348, 733 (Consolidated Appropriations Act, 2018).

         HHS's Office of Adolescent Health (OAH) is responsible for implementing and administering the TPP Program. ECF No. 1 at ¶ 30. In April 2015, HHS issued Funding Opportunity Announcements (FOAs) for the TPP Program. Id. at ¶ 34. The FOAs required a detailed work plan over the “five-year project period.” Id. at ¶ 42; 27-2 at 11 (Ex. A). The FOAs state, “Each year of the approved project period, grantees are required to submit a noncompeting application which includes a progress report for the current budget year, and work plan, budget and budget justification for the upcoming year.” ECF No. 27-2 at 78.

         In July 2015, HHS awarded 81 new TPP Program grants. ECF No. 1. at ¶ 40. In the three TPP Programs at issue, the Notice of Award (“NOA”) forms issued in 2015 and again in 2016 listed the project period as July 1, 2015 through June 30, 2020. ECF Nos. 1 at ¶ 41; 24-3 (Ex. A-B); 24-5 (Exs. A-C); 24-6 (Exs. E-F). The budget period in these awards were only for the relevant year. ECF Nos. 24-3 (Ex. A-B); 24-5 (Exs. A-C); 24-6 (Exs. E-F). Plaintiffs assert that over the first three years of the latest round of the TPP Program funding, HHS consistently commended all three Plaintiffs for their implementation of their respective TPP Program projects. ECF No. 1 at ¶ 55.

         In July 2017, HHS awarded FY 2017 funds to Plaintiffs. Id. at ¶ 76. The NOAs for 2017 state, “This award also shortens the project period to end on June 30, 2018 at the end of this budget year.” ECF Nos. 1 at ¶ 77; 24-3 at 54 (Ex. D); 24-5 at 43 (Ex. C); 24-6 at 565 (Ex. K). On August 1, 2017, Plaintiffs each separately wrote to HHS challenging the alleged termination and Defendants did not respond. ECF No. 1 at ¶¶ 79-80.

         DISCUSSION

         I. Injunction

         Pursuant to Federal Rule of Civil Procedure 65, the Court may grant preliminary injunctive relief in order to prevent “immediate and irreparable injury.” Fed.R.Civ.P. 65(b)(1)(A). Rule 65 also states that “[b]efore or after beginning the hearing on a motion for a preliminary injunction, the court may advance the trial on the merits and consolidate it with the hearing.” Fed.R.Civ.P. 65(a)(2).

         At oral argument, the Court questioned the parties as to whether there was any reason not to make this action a final injunction. Defendants asserted that Plaintiffs had not sought a permanent injunction. On reply, Plaintiffs clarified that their priority is a preliminary injunction, but see no reason why the resolution should not be final if the Court is ready to resolve the case. The Court finds that there is no reason not to decide the issue as a final injunction as it appears that the Defendants do not have any additional evidence concerning the decision with respect to Plaintiffs' APA claims. Accordingly, the Court considers Plaintiffs' request for a preliminary injunction as a final injunction.

         To be entitled to a permanent or final injunction, a plaintiff must demonstrate: “(1) actual success on the merits; (2) that it has suffered an irreparable injury; (3) that remedies available at law are inadequate; (4) that the balance of hardships justify a remedy in equity; and (5) that the public interest would not be disserved by a permanent injunction.” Indep. Training & Apprenticeship Program v. California Dep't of Indus. Relations, 730 F.3d 1024, 1032 (9th Cir. 2013). “The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success.” Id. (quoting Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 546 n.12 (1987)). Accordingly, the Court's analysis remains largely the same as if it were considering the Plaintiffs' original motion for preliminary injunction.

         A plaintiff must satisfy each element for injunctive relief. Yet, the Ninth Circuit uses a “sliding scale” under which the injunction may be issued if there are serious questions going to the merits and the balance of hardships tips sharply in the plaintiff's favor, along with two other Winter factors. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (“[A] stronger showing of one element may offset a weaker showing of another.”); see also Farris v. Seabrook, 677 F.3d 858, 864 (9th Cir. 2012) (“We have also articulated an alternate formulation of the Winter test, under which serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” (internal quotation marks and citation omitted)).

         A. Actual Success on the Merits

         1. APA Claims

         Plaintiffs insist that HHS's actions must be set aside under the APA as HHS's conduct is arbitrary and capricious, and contrary to law. ECF Nos. 1 at ¶¶ 100-13; 24 at 17.

         a. Grant Policy Statement Applicability

         As an initial matter, Plaintiffs argue that the GPS is not a binding regulation, but merely informal internal guidance. ECF No. 29 at 20. The GPS states:

Recipients are not directly subject to the requirements of HHS Grants Policy Directives and implementing HHS Grants Administration Manuals …, which are internal documents guiding HHS operations. If an OPDIV [HHS Operating Divisions] implements a requirement in an internal document that does affect recipients, it will not do so by citing that document; rather, the requirement is placed on the recipient through explicit coverage in the NoA.

ECF No. 27-2 at 111 (Ex. B). The GPS explains general terms and conditions that are common across all OPDIVs and apply “unless there are statutory, regulatory, or award-specific requirements to the contrary (as specified in individual Notices of Award).” Id. at 110. The controlling NOAs specify that the order of precedence for conflicting or inconsistent policies applicable to the grants are: (1) grant program legislation; (2) grant program regulations; (3) award notice including terms and conditions; and (4) federal administrative requirements, costs principles and audit requirements applicable in this grant. ECF No. 24-5 at 14 (item 16).

         Defendants respond that the GPS simply explains what is evident as a consequence of HHS's regulations and the ADA, but is not arguing that the GPS should be followed at the expense of HHS's regulations. ECF No. 30 at 16. Defendants emphasize that HHS's “Federal award must include wording to incorporate, by reference, the applicable set of general terms and conditions.” ECF Id. (quoting 45 C.F.R. § 75.210(b)(2)). Defendants argue that they did not merely cite the document, but “placed [it] on the recipient through explicit coverage in the NoA” terms and conditions. Id. The NOAs state, “You must comply with all terms and conditions outlined in the grant award, including grant policy terms and conditions contained in applicable Department of Health and Human Services (HHS) Grant Policy Statements (GPS) ….” ECF No. 24-3 at 13. Defendants assert that Plaintiffs' interpretation is clear error because it would require 217 pages of the GPS to be appended to the NOA every year in order for HHS to rely upon its general terms and conditions for grants. ECF No. 30 at 16.

         The Court finds that while the NOAs are controlling, the GPS aids in illuminating the general terms and conditions for the TPP Program. The NOAs incorporate the GPS by reference as required under 45 C.F.R. § 75.210(b)(2). See ECF No. 24-3 at 13. Yet, the GPS also makes clear that “statutory, regulatory, or award-specific requirements” are controlling when they contradict the GPS. ECF No. 27-2 at 110. The NOAs also explain that legislation and regulations control over conflicting terms and conditions. ECF No. 24-5 at 14. Accordingly, the Court will consider the GPS, but regulatory or statutory language controls over any conflicting GPS language.

         b. Anti-Deficiency Act

         Defendants contend that Plaintiffs' request for relief would violate the Anti-Deficiency Act (ADA).[1] ECF No. 27 at 21. The ADA is a codification of Congress' power over federal spending. U.S. Const. art. 1, § 8, cl. 1; 31 U.S.C. § 1341. “An officer or employee of the United States Government or of the District of Columbia government may not … involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law.” 31 U.S.C. § 1341(a)(1)(B).

         The parties agree Leiter v. United States, 271 U.S. 204 (1926) is the controlling case on the ADA. ECF Nos. 27 at 22; 29 at 25; 30 at 11. In Leiter, a government agency entered into several leases for office space with terms of four and five years. Leiter, 271 U.S. at 205. Annual funds covered the first year and the lease terms for the next years were specifically made contingent upon appropriations for those years. Id. The Supreme Court found an ADA violation and held, “A lease to the Government for a term of years when entered into under an appropriation available for but one fiscal year, is binding on the Government only for that year.” Id. at 207. “Under Leiter and its progeny, the contract ‘dies' at the end of the fiscal year, and may be revived only by affirmative action by the government. This ‘new' contract is then chargeable to appropriations for the subsequent year.” U.S. Gen. Accountability Office, 6 GAO-RB pt. C, s. 2, Obligation/Expenditure in Excess or Advance of Appropriations (2015).

         Defendants argue that Plaintiffs' view of their TPP Program awards is inconsistent with the ADA. ECF No. 27 at 23. Defendants insist that while Plaintiffs assert that HHS obliged itself in 2015 to award unappropriated funds through 2020, no multi-year obligating authority exists for grants between HHS and TPP Program grantees. Id. Defendants emphasize that HHS could not lawfully commit the government to a “future payment of money in advance of, or in excess of, an existing appropriation.” Id. at 24; Hercules, Inc. v. United States, 516 U.S. 417, 427 (1996).

         The Funding Opportunity Announcement and Application Instructions (“Funding Announcement”) state that future funding would be “contingent upon the availability of funds, satisfactory progress of the project, and adequate stewardship of Federal funds.” ECF Nos. 27 at 24, 27-2 at 39 (Ex. A). Yet, Defendants insist that this language must be read in context with other grant documents that explain the grantee's lack of legal rights to future continuation awards, and they must be read in light of the ADA. ECF No. 27 at 24. Defendants argue that even if the Plaintiffs are correct in the meaning of this document, the HHS is not authorized to agree to the future award scheme Plaintiffs describe and any agreements that do not comport with Leiter and the ADA are void ab initio. Id. Additionally, Defendants contend that the TPP Program appropriation specifically appropriates funds “for making competitive contracts and grants.” Id. Defendants then argue that Plaintiffs cannot use that statute to prohibit HHS from competing FY 2018 funds. Defendants conclude that HHS was legally obliged to reserve the option not to give continuation funds, and exercised that option by choosing to recompete funds appropriated to the TPP Program by Congress. Id. at 25.

         Plaintiffs respond that agencies routinely make plans, including entering into contracts, beyond the expiration date of their available appropriations. ECF No. 29 at 26. Plaintiffs argue that the GAO has consistently recognized that an agency may enter into a multi-year agreements where, at the time of award, the United States incurs no financial obligation beyond current appropriation. Id. A Comptroller General decision stated:

[A] conditional contract which specifically provides that the government's liability is contingent upon future availability of appropriations may be entered into prior to the enactment of an appropriation act … such contract would become operative only if and when the appropriation is made and should be given no legal liability on the part of the government for any payment shall arise until the appropriation has been made.

ECF No. 29 at 26; To the Secretary of the Interior, B-140850 (Comp. Gen. Oct. 29, 1959). Plaintiffs then emphasize that the five-year programmatic approval here does not obligate the government to pay money beyond the first year of performance. ECF No. 29 at 26-27. Plaintiffs insist that the HHS did not violate the ADA by agreeing to work with Plaintiffs for five-year project periods, but it did commit itself to acting in a manner that is not arbitrary, capricious, or otherwise contrary to law. Id. at 27.

         Defendants argue that the Comptroller General decision was an unusual case where Congress passed a statute that conditioned the release of funding on the Secretary of the Interior submitting the principal construction contract to Congress “for a period of 45 calendar days prior to its execution.” ECF No. 30 at 12; To the Secretary of the Interior, B-140850 (Comp. Gen. Oct. 29, 1959). Defendants emphasize that the statute entailed “the soliciting of bids and awarding of a proposed contract to be conditioned upon the approval or disproval” of Congress “and also contingent upon the future authorization by the Congress of sufficient funds ….” ECF No. 30 at 12; To the Secretary of the Interior, B-140850 (Comp. Gen. Oct. 29, 1959). Defendants then argue that under these specific circumstances, the making of a contract contingent on the condition of a specific appropriation for that agreement was acceptable. Defendants assert that there is no similar statutory authority here. ECF No. 30 at 12.

         The Court agrees with Defendants that the Comptroller General decision is distinguishable and is not entirely applicable to the case at hand. Yet, the Court finds no violation of the ADA. Defendants are correct that HHS cannot commit the government to future payments of money in advance of an existing appropriation under the ADA and Leiter. Yet, the Court disagrees that the cooperative agreements here obligate the government to pay money until the appropriation has been made. The GPS explains that “projects are programmatically approved for support in their entirety, but are funded in annual increments called budget periods.” ECF No. 27-2 at 156. These budget periods then ensure that HHS is compliant with the ADA. Merely because HHS approved the project in its entirety, does not mean it committed itself to appropriate money for future years beyond the first year. The Funding Announcement also states that the award is “contingent upon the availability of funds, ” which ensures compliance with the ADA. Id. at 39.

         The Court finds that Plaintiffs' argument does not contravene the ADA, but merely alleges that HHS committed itself to not acting arbitrary, capricious, or otherwise contrary to law throughout the five-year project period, not that HHS was required to appropriate money for each future year. See ECF No. 29 at 27. Accordingly, the Court finds that Plaintiffs' interpretation would not violate the ADA.

         c. Termination

         The parties dispute whether Defendants' conduct amounts to a termination and the Court addresses this issue before considering the merits of Plaintiffs' APA claims. See ECF Nos. 24 at 18-19; 27 at 27-28; 29 at 14-20. This question revolves around whether “period of performance” under the ...


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