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King County v. Azar

United States District Court, W.D. Washington, Seattle

May 29, 2018

KING COUNTY, Plaintiff,
ALEX M. AZAR, in his official capacity as Secretary, U.S. Dept. of Health and Human Services; and U.S. Dept. of Health and Human Services, Defendants.



         This matter comes before the Court on Plaintiff King County's (“King County” or the “County”) motion for a preliminary injunction and summary judgment (Dkt. No. 20) and Defendants Alex Azar and the U.S. Department of Health and Human Services' (“Defendants”) cross-motion for summary judgment (Dkt. No. 26). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS King County's motion for summary judgment (Dkt. No. 20) and DENIES Defendants' cross-motion for summary judgment (Dkt. No. 26) for the reasons explained herein.

         I. BACKGROUND

         A. Factual Background

         Congress established the Teen Pregnancy Prevention (“TPP”) Program in 2010 “to fund medically accurate and age appropriate programs that reduce teen pregnancy.” (Dkt. No. 1 at 1, 6) (citing Consolidated Appropriations Act, Pub. L. No. 111-117, 123 Stat. 3034, 3253 (2010)). The TPP Program is administered by the U.S. Department of Health and Human Services (“HHS”) through its Office of Adolescent Health (“OAH”). (Dkt. No. 20 at 4.) Congress directed OAH to fund two tiers of grants[1]: Tier 1 grants to fund programs with demonstrated positive impacts on sexual behavior outcomes, and Tier 2 grants to fund development and testing of new and innovative approaches to preventing teen pregnancy. Id. Congress has appropriated funds for the TPP Program every year since 2010. (Id.) HHS awarded a first set of five-year TPP Program grants in 2010 and a second set of grants in 2015. (Id. at 1.)

         In July 2015, King County received a Tier 2B[2] grant for a long-term study of its High School Family Life and Sexual Health (“FLASH”) curriculum. (Id. at 7.) The initial Notice of Award (“NOA”) approved a cooperative agreement with King County for a five-year “project period, ” funded through one-year “budget periods.” (Dkt. No. 21-1 at 180.) The agreement required King County to submit a non-competing continuation application annually to obtain funds for the following budget year. (Dkt. No. 20 at 2.) The continuation applications allow HHS to ensure that federal funding has been appropriated, a project has been making satisfactory progress, and a grantee is an adequate steward of federal funds. (Dkt. Nos. 28 at 40, 21-1 at 180.) Annual continuation applications include a progress report, work plan, budget, and budget justification for the upcoming year. (Dkt. No. 22-1 at 186.) In 2016, King County's year-two continuation application was approved with commendations. (Dkt. No. 23-1 at 42-43, 49-50.)

         In July 2017, HHS approved King County's continuation application for year three of the grant. (Dkt. No. 21-1 at 202.) HHS issued a Notice of Award (“NOA”) allocating funds for the ensuing budget year, but also stating that the agency was “[shortening] the project period” from June 30, 2020 to June 30, 2018. (Id.) This was the only notice King County received of HHS's decision shortening its grant by two years, and HHS provided no further explanation. (Dkt. No. 20 at 9.) TTP Program grants across the country were similarly summarily “shortened.” (Id.) King County appealed HHS's action to the agency, characterizing it as a “termination” that failed to comply with HHS regulations. (Dkt. No. 21-1 at 2.) The County received no response. (Dkt. No. 20 at 9.) Despite HHS's “shortening” of TPP Program project periods to end at the close of the 2017-2018 budget period, on March 23, 2018, Congress appropriated year-four funds for the TPP Program. (Dkt. No. 21 at 2.)

         King County challenges HHS's action as arbitrary and capricious and contrary to law, and the agency's refusal to process its year-four continuation application as an unlawful withholding of agency action. (Dkt. No. 20 at 13.) Defendants respond that King County had no entitlement to a five-year grant, and HHS acted within its lawful discretion. (Dkt. No. 26 at 9.)

         B. Procedural Posture

         King County moves for summary judgment on its claim that HHS's termination of its grant violated the Administrative Procedure Act (“APA”) (Count I).[3] (Dkt. No. 20 at 3, 13 n. 5.) The County also requests a preliminary injunction directing HHS to process King County's year-four non-competing continuation application (Count II).[4] (Id.) Defendants cross move for summary judgment, seeking to dismiss the complaint. (Dkt. No. 26 at 9.) The parties' dispute is purely legal. Thus, the Court finds it appropriate to rule on the merits of King County's APA claim (Counts I & II), which moots Plaintiff's motion for an injunction. See Healthy Teen Network v. Azar, No. C18-0468-CCB (D. Md. Apr. 25, 2018) (similarly converting the plaintiff's motion for an injunction to a motion for summary judgment).


         The APA provides for judicial review of agency actions or any person “adversely affected or aggrieved” by a “final agency action for which there is no other adequate remedy in a court.” 5. U.S.C. §§ 702, 704. Where questions before the Court are purely legal, the Court can resolve an APA challenge on a motion for summary judgment. See Fence Creek Cattle Co. v. U.S. Forest Serv., 602 F.3d 1125, 1131 (9th Cir. 2010.) Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate where 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). However, in APA cases, the Court's role is to determine whether, as a matter of law, evidence in the administrative record supports the agency's decision. Occidental Engineering Co. v. I.N.S., 753 F.2d 766, 769 (9th Cir. 1985).


         This matter turns, in large part, on the proper characterization of the challenged action. King County contends that HHS's decision to shorten its five-year project period was a premature grant “termination.” (Dkt. No. 20 at 13.) HHS regulations allow for “termination” of a Federal award: (1) when a grantee “fails to comply with the terms and conditions of the award, ” (2) “for cause, ” (3) with a grantee's consent, or (4) at the grantee's request. 45 C.F.R. § 75.372. King County argues that HHS terminated its award without explanation and in violation of this regulation, an action that was arbitrary and capricious and contrary to law. (Dkt. No. 36 at 2.)

         In contrast, Defendants characterize HHS's action as a “withholding” of future non-competing continuation awards, a decision not to issue a continuation award, or a decision to re-compete appropriated TPP Program Funds. (Dkt. Nos. 26 at 2, 25; 39 at 4.) Accordingly, Defendants maintain HHS's termination regulation does not apply. Instead, Defendants base their arguments on language in HHS's Grant Policy Statement (“GPS”) providing that the agency may “[withhold] a non-competing continuation award” if: (1) adequate Federal funds are not available; (2) a grantee fails to show satisfactory progress; (3) a grantee fails to meet the terms and conditions of the award; or (4) “for whatever reason, continued funding would not be in the best interests of the Federal government.” (Dkt. No. 28 at 250) (emphasis added). Defendants argue that each NOA issued to King County incorporated this standard, which provides HHS unfettered discretion to manage grant funds without judicial oversight. (Dkt. No. 39 at 3-4.)

         Defendants have attempted to convince multiple courts of their position with no success.[5]For the reasons stated below, this Court reaches a similar conclusion as those courts. The Court will address threshold arguments regarding the nature of the challenged action and reviewability before reaching the merits of King County's APA claims.

         A. ...

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