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Camden County Council on Economic Opportunity v. United States Department of Health and Human Services

November 6, 2009

CAMDEN COUNTY COUNCIL ON ECONOMIC OPPORTUNITY, APPELLANT
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES AND KATHLEEN SEBELIUS, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, APPELLEES



Appeal from the United States District Court for the District of Columbia (Civ. No. 07-1835).

The opinion of the court was delivered by: Kavanaugh, Circuit Judge

Argued September 16, 2009

Before: ROGERS and KAVANAUGH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge KAVANAUGH.

Under the Head Start program, the Federal Government grants money to certain local organizations that provide pre-school services to low-income children. Camden County Council on Economic Opportunity was a Head Start grantee that provided pre-school services to children in the Camden, New Jersey area. During a regularly scheduled review in 2005, the Department of Health and Human Services, which administers Head Start, found several safety-related deficiencies involving "undesirable and hazardous materials" on the playgrounds at Camden sites. After Camden failed to sufficiently correct the problems within the required 30-day period, HHS terminated Camden's grant. Camden then filed suit, challenging HHS's decision as arbitrary and capricious under the Administrative Procedure Act. In a thorough opinion, the District Court held that HHS acted lawfully when it ended Camden's grant. We agree and therefore affirm.*fn1

I.

In 1981, Congress passed and President Reagan signed the Head Start Act, Pub. L. No. 97-35, 95 Stat. 499 (codified as amended at 42 U.S.C. §§ 9831-9852a). The Act authorizes federal funding for local organizations that provide services to low-income pre-school children.

Under the Act, Head Start grantees undergo HHS performance reviews every three years. 42 U.S.C. § 9836a(c). During those evaluations, HHS personnel determine whether a grantee's Head Start program is meeting certain statutory and regulatory obligations pertaining to safety, quality, and the like. Id.; see also 45 C.F.R. Part 1304. If a grantee does not meet the requirements, HHS sends the grantee a notice detailing the deficiencies. The notice sets a date by which the grantee must either correct its deficiencies or face termination of its grant; the length of the corrections period depends on the danger posed by the deficiency and on the time the grantee reasonably needs to correct the deficiency. 42 U.S.C. § 9836a(e)(1)(B). After the relevant period for corrective action has elapsed, HHS conducts a follow-up review. Id. § 9836a(c)(1)(C). If the follow-up review determines that the grantee failed to remedy its deficiencies, HHS ends the grant. Id. § 9836a(e)(1)(C).

Camden County Council on Economic Opportunity was a Head Start grantee serving some 1300 children in 22 facilities in Camden, New Jersey. According to Camden, it received about $13 million annually for its Head Start program.

During a 2005 performance review, HHS found various deficiencies at Camden. Several of the deficiencies related to safety issues and thus were considered more serious under the Act. Most relevant for present purposes, the HHS team observed splinters and rusty nails at one Camden playground and trash cluttering another playground. Based on that evidence, HHS determined that Camden was not meeting its regulatory obligation to keep its sites "free of undesirable and hazardous materials and conditions." 45 C.F.R. § 1304.53(a)(10)(viii).

HHS required Camden to remedy this safety-related deficiency within 30 days. After the 30-day period elapsed, HHS conducted follow-up reviews, which determined, among other things, that Camden had not successfully remedied this deficiency. HHS therefore terminated Camden's grant.

Camden appealed the termination of funding to HHS's Departmental Appeals Board, but the Board ruled in favor of the agency. Camden subsequently brought suit in the District Court; the court likewise rejected Camden's arguments. Camden appealed from the grant of summary judgment. Our review of the District Court's decision is de novo.

II.

According to Camden, HHS acted arbitrarily and capriciously and thus violated the Administrative Procedure Act when it terminated Camden's funding. Camden contends that it corrected the deficiency at the sites specifically identified in the initial HHS notice -- the Hayes and Charleston sites -- and was ...


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