Opinion
No. CV-06-1719-PHX-DGC.
February 5, 2007
ORDER
The Arizona State Department of Education ("ADE") has filed this action against the United States Department of Education ("USDE") and Margaret Spellings, Secretary of the USDE ("Secretary"). Dkt. #1. ADE's claim for declaratory relief concerns the meaning of a particular provision in the No Child Left Behind Act of 2001 ("NCLB), 20 U.S.C. §§ 6301 et seq.
Defendants have filed a motion to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Dkt. #9. ADE has responded and Defendants have filed a reply. Dkt. ##16-17. The Court heard oral argument on February 1, 2007. Having considered the parties' arguments and the applicable legal authority, the Court concludes that this case must be dismissed for lack of subject matter jurisdiction.
I. Motion to Dismiss Standard.
In ruling on a motion to dismiss under either Rule 12(b)(1) or Rule 12(b)(6), the Court must accept all material factual allegations in the complaint as true. Carson Harbor Village, Ltd. v. City of Carson, 353 F.3d 824, 826 (9th Cir. 2004); Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). The Court must also assume that all general allegations "embrace whatever specific facts might be necessary to support them." Peloza v. Capistrano Unified Sch. Dist., 37 F.3d 517, 521 (9th Cir. 1994). The Court may not assume, however, that the plaintiff can prove facts different from those alleged in the complaint. Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983); Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 407 F.3d 1027, 1035 (9th Cir. 2005).
II. Background Facts.
This description of the facts is taken from ADE's verified complaint and the relevant statutes. As noted above, all allegations of the complaint are assumed to be true for purposes of this decision.
Title I of the Elementary and Secondary Education Act of 1965 ("ESEA") provides for federal educational grants to states that meet certain requirements. Pub.L. No. 89-10, 79 Stat. 27 (codified as amended at 20 U.S.C. §§ 6301- 7941). On January 8, 2002, President George W. Bush signed into law the NCLB, a comprehensive educational reform package that amended the ESEA. Pub.L. No. 107-110, 115 Stat. 1425. The primary purpose of the NCLB is to "ensure that all children have a fair, equal, and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency on challenging state academic achievement standards and state academic assessments." 20 U.S.C. § 6301.
The NCLB requires each state that receives Title I funds to determine that its public schools are making "adequate yearly progress" ("AYP") toward enabling all students to meet the state's academic achievement standards. 20 U.S.C. § 6311(b)(2). A school's AYP is determined through the use of standardized tests. The NCLB requires that such tests be given annually to all students, including students whose grasp of English is limited — referred to in the NCLB as "limited English proficient" ("LEP") students. 20 U.S.C. § 6311(b)(3)(C)(ix); see 34 C.F.R. § 200.6(b). To accommodate the special needs of LEP students, the NCLB provides that such students, during their first three years of school in the United States, "shall be assessed in a valid and reliable manner and provided reasonable accommodations on assessments . . . including, to the extent practicable, assessments in the language and form most likely to yield accurate data on what such students know and can do in academic content areas[.]" 20 U.S.C. § 6311(b)(3)(C)(ix)-(x); see 34 C.F.R. § 200.6(b).
Generally speaking, a school fails to make AYP if one of certain specified subgroups of students in any grade fails to meet the state's academic achievement standards. 20 U.S.C. § 6311(b)(2)(I). A school that fails to make AYP may be identified under the NCLB for improvement, corrective action, or restructuring. 20 U.S.C. § 6316(b)(1)-(8). A school may appeal any such identification to the state educational agency on the ground that the identification "is in error for statistical or other substantive reasons[.]" 20 U.S.C. § 6316(b)(2)(B). The agency is required to consider the appeal before making a final determination as to the school's identification status. Id.
Arizona's standardized test for determining whether its schools are making AYP is the Arizona Instrument to Measure Standards ("AIMS") test. A.R.S. § 15-741. Consistent with the NCLB, AIMS tests are given annually to all Arizona public school students. See Dkt. #1 ¶ 9; 20 U.S.C. § 6311(b)(2)-(3).
In November 2000, Arizona voters approved Proposition 203, an initiative measure regarding English language education for public school students. See A.R.S. §§ 751-755. Proposition 203 requires, among other things, that all annual standardized tests be given in English. See A.R.S. § 15-755. This requirement prohibits Arizona schools from testing LEP students in their native languages as permitted by the NCLB. Dkt. #1 ¶ 12; see 20 U.S.C. § 6311(b)(3)(C)(ix).
Concerned about the results of testing LEP students in English, the Superintendent of ADE engaged in negotiations with the USDE regarding the possible exclusion of LEP student test scores from the determination of whether schools make AYP. Dkt. #1 ¶ 12. The negotiations ultimately led to the following 2003 agreement: ADE would follow the general policy of including the tests scores of all LEP students who had completed at least two years of school; any school that failed to make AYP as a result of such scores could appeal that determination under § 6316(b)(2)(B); ADE would have discretion under § 6316(b)(2)(B) to grant such appeals and authorize schools to exclude the test scores of LEP students during their first three years at the school. Id. ¶ 15. ADE implemented this agreement and began granting the appeals.
In April 2005, a team from the USDE monitored ADE's practices under the NCLB. The team issued a monitoring report that found that ADE's practice of granting appeals under § 6316(b)(2)(B) and allowing schools to exclude test results from LEP students violated the NCLB. The report required ADE to "cease the practice of allowing appeals on the basis of . . . LEP students with less than three years of language education services." Id. ¶¶ 25-26.
III. Does the Court Have Subject Matter Jurisdiction?
As noted above, § 6316(b)(2)(B) permits state educational agencies to consider whether a particular school's AYP determination "is in error for statistical or other substantive reasons[.]" ADE contends that it has discretion under this provision to exclude LEP student test scores that do not accurately reflect the type of academic progress with which the NCLB is concerned. Dkt. #1 ¶ 21. ADE claims that if it continues to grant appeals based on its interpretation of § 6316(b)(2)(B), it risks a determination by the USDE that its academic assessment program fails to comply with the NCLB. Id. ¶ 28. ADE further claims that under the General Education Provisions Act ("GEPA"), 20 U.S.C. §§ 1221-1240, the USDE can require Arizona to refund all Title I funds used in violation of the NCLB and can withhold future funding based on such violations. Id. ¶ 29 (citing 20 U.S.C. §§ 1234a, 1234d). Title I funds received by Arizona currently exceed $250,000,000 per year. Dkt. #9 at 6. ADE asks the Court to declare that § 6316(b)(2)(B) grants ADE "discretion to consider the fact that [LEP] students in Arizona must be assessed in English in determining whether a proposed AYP identification is in error for statistical or other substantive reasons, and . . . to continue to grant appeals as it has been doing." Dkt. #1 at 7-8.
Defendants note that while the USDE has found ADE to be in violation of the NCLB, the Secretary has not initiated an enforcement action. Dkt. #9 at 9. Defendants argue that ADE's request for declaratory relief regarding the Secretary's interpretation of § 6316(b)(2)(B) is a pre-enforcement challenge foreclosed by the comprehensive enforcement and review scheme of the GEPA, 20 U.S.C. §§ 1234- 1234i. Id.
The GEPA provides the Secretary with various tools for enforcing the provisions of any "applicable program." 20 U.S.C. §§ 1234a-f (authorizing the Secretary to recover and withhold funds, issue cease and desist orders, enter into compliance agreements, and take any other action authorized by law). The GEPA defines "applicable program" as "any program for which the Secretary or the [USDE] has administrative responsibility as provided by law or by delegation of authority pursuant to law." 20 U.S.C. § 1221(c)(1). The NCLB constitutes an "applicable program" under the GEPA because the USDE is the federal agency responsible for administering it. See Cal. Dep't of Educ. v. Bennett, 833 F.2d 827, 829 n. 4 (9th Cir. 1987) (stating that the USDE was responsible for administering the NCLB's predecessor statute, Title I of the ESEA); Bell v. New Jersey Pennsylvania, 461 U.S. 773, 780-93 (1983) (holding that the USDE had the administrative responsibility of making the initial determination of the appropriate use of Title I funds under the GEPA); see also Dkt. #1 ¶ 5 (alleging that the USDE "is an agency of the United States of America charged with administering the [NCLB]").
When the Secretary undertakes an enforcement action, the GEPA requires that notice of the alleged violation be given to the alleged offender. 20 U.S.C. §§ 1234a(a)(1), 1234d(b), 1234e(a)(2). The alleged offender is then entitled to a hearing before an administrative law judge within the USDE. 20 U.S.C. §§ 1234a(b)-(c), 1234d(c), 1234e(b). The administrative law judge's decision may be appealed to the Secretary, who reviews it for "substantial evidence." 20 U.S.C. § 1234d(e). If the Secretary does not set aside the decision, it becomes a final agency action after 60 days. 20 U.S.C. § 1234d(f). If the Secretary sets aside or modifies the judge's decision, it becomes a final agency action upon written notice to the alleged offender. Id. Any final agency action may be appealed to the United States Court of Appeals. 20 U.S.C. §§ 1234a(g), 1234d(f), 1234g(a)-(b). Actual enforcement may occur only after judicial review is completed. 20 U.S.C. § 1234a(f).
Defendants cite Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), in support of their argument that ADE's claim is a pre-enforcement challenge precluded by the GEPA. Dkt. #9 at 9. In Thunder Basin, the Supreme Court held that the enforcement and review procedures of the Federal Mine Safety and Health Amendments Act ("Mine Act"), 30 U.S.C. § 801 et seq., prevented a district court from exercising jurisdiction over a mine operator's pre-enforcement challenge to an order issued by the Secretary of Labor. 510 U.S. at 202. Defendants argue that the enforcement and review procedures of the Mine Act are similar in all respects to the enforcement and review procedures of the GEPA, and that, like the district court in Thunder Basin, this Court lacks subject matter jurisdiction. Dkt. #9 at 9-14.
The question is one of Congressional intent. Congress created federal district courts, and Congress determines the scope of their jurisdiction. As the Supreme Court said long ago, "[c]ourts created by statute can have no jurisdiction but such as the statute confers." Sheldon v. Sill, 49 U.S. (8 How.) 441, 449 (1850). Thus, "[i]n cases involving delayed judicial review of final agency actions, we shall find that Congress has allocated initial review to an administrative body [rather than to the district courts] where such an intent is `fairly discernible in the statutory scheme.'" Thunder Basin, 510 U.S. at 207 (quoting Block v. Cmty. Nutrition Inst., 467 U.S. 340, 351 (1984)) (footnote omitted). "Whether a statute is intended to preclude judicial review is determined from the statute's language, structure, and purpose, its legislative history, and whether the claims can be afforded meaningful review." Id. (citation omitted).
The language of GEPA does not answer the question. Nothing in the statute expressly precludes pre-enforcement judicial review in district court. The structure, purpose, and legislative history of the GEPA persuade the Court, however, that the statute was intended to create a comprehensive scheme of administrative and judicial review that precludes actions in district court. On these issues the Court finds the recent decision in Connecticut v. Spellings, 453 F. Supp. 2d 459 (D. Conn. 2006), to be thorough, thoughtful, and sound. The comprehensive enforcement and review scheme of the GEPA is analogous to the Mine Act at issue in Thunder Basin. Id. at 482-84 (comparing 20 U.S.C. §§ 1234d and 1234g with 30 U.S.C. §§ 814, 816, and 823). The GEPA is designed to channel disputes over the Secretary's interpretation of the statutes she administers to the USDE for review, followed by appeal to the Court of Appeals. The legislative history of GEPA confirms that Congress sought to create "a comprehensive system for enforcement by the [Secretary] of the requirements related to educational programs." H.R. Rep. No. 95-1137, at 141 (1978) (cited in Spellings, 453 F. Supp. 2d at 484). That comprehensive system does not include pre-enforcement review in federal district court.
The Court accordingly concludes that ADE's claim in this case, like the State of Connecticut's claim in Spellings, is an impermissible pre-enforcement challenge under the GEPA. Spellings, 453 F. Supp. 2d at 482-89; see Bell, 461 U.S. at 778 (holding that the GEPA requires final agency action before judicial review is available); South Dakota v. Alexander, 968 F.2d 1, 2 (8th Cir. 1992) (holding that the State was not entitled to judicial review of the Secretary's preliminary decision seeking refund of Title I funds because the decision was not a final agency action under the GEPA).
ADE makes several arguments to the contrary. Dkt. #16 at 6-13. The Court concludes that none of them has merit.
First, ADE argues that the "Supreme Court has long recognized a `strong presumption that Congress intends judicial review of administrative action.'" Id. at 6-7 (quoting Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986)). As the Supreme Court explained in Thunder Basin, however, "[b]ecause court of appeals review is available [under the administrative scheme], this case does not implicate the strong presumption that Congress did not mean to preclude judicial review." 510 U.S. at 207 n. 8 (internal quotation marks and citation omitted).
Second, ADE argues that the GEPA is distinguishable from the Mine Act at issue in Thunder Basin. Dkt. #16 at 7-8. ADE notes that Congress specifically had amended the Mine Act to prevent mine operators from filing suit in district court to delay the abatement of Mine Act violations, and that no such specific Congressional intent is apparent here. ADE also notes that this action was not filed to delay the abatement of violations of the NCLB, but to remedy the damages suffered by ADE and Arizona schools as a result of Defendants' violation of their agreement and incorrect interpretation of § 6316(b)(2)(B). It is true that this case lacks the clear Congressional effort to limit district court review that was evident in Thunder Basin, and therefore presents a closer question. The Court concludes, nonetheless, that the overall structure, purpose, and legislative history of the GEPA fairly reflect an intent to preclude the type of pre-enforcement judicial review sought by ADE. See Spellings, 453 F. Supp. 2d at 489.
Third, ADE argues that the administrative procedures established in the GEPA are not sufficient and cannot be allowed to foreclose adjudication of ADE's claim. Dkt. #16 at 9. The Court does not agree. ADE alleges that the USDE has ordered ADE to cease the practice of granting appeals in violation of § 6316(b)(2)(B). See Dkt. #1 ¶ 25. The GEPA provides for administrative review of the USDE order. 20 U.S.C. § 1234e. Granted, such review will be available only after the Secretary's commences an enforcement action, but it will be available. The GEPA provides a "`meaningful and adequate opportunity for judicial review' after final agency action." Spellings, 435 F. Supp. 2d at 484 (citation omitted); see 20 U.S.C. § 1234g.
Fourth, relying on an exception recognized in Thunder Basin, ADE argues that its claim is "wholly collateral" to the GEPA's administrative review process and outside USDE's expertise because the claim involves "the specific factual details of an agreement reached by the parties and the effect of [ADE's] reliance on that agreement." Dkt. #16 at 9; see Thunder Basin, 510 U.S. at 213. As counsel for ADE rightly conceded at oral argument, however, the agreement between ADE and USDE cannot alter the meaning and effect of § 6316(b)(2)(B), nor can it nullify the provision. The alleged agreement might constitute evidence that ADE's interpretation of the provision is correct and was once embraced by the USDE, but at the end of the day the dispute between the parties will turn on the meaning and effect of § 6316(b)(2)(B), a question that falls squarely within USDE's expertise and the comprehensive review provisions of the GEPA. See Spellings, 453 F. Supp. 2d at 487 (holding that interpretation of unfunded mandate provision of the NCLB is not wholly collateral to the GEPA's administrative review process because it "falls squarely within the expertise of the Secretary[.]"); Thunder Basin, 510 U.S. at 214 ("Petitioner's statutory claims at root require interpretation of the parties' rights and duties under [the Mine Act], and as such . . . fall squarely within the Commission's expertise.").
Fifth, ADE cites federal cases that have assumed jurisdiction over pre-enforcement actions and argues that this Court should follow suit. Dkt. #16 at 10 (citing Gen. Elec. Co. v. EPA, 360 F.3d 188 (D.C. Cir. 2004); Kreschollek v. S. Stevedoring Co., 78 F.3d 868 (3d Cir. 1996); Rocky Mtn. Radar, Inc. v. FCC, 158 F.3d 1118 (10th Cir. 1998)). The cases cited by ADE are plainly distinguishable from this case. Both General Electric and Kreschollek involved collateral constitutional challenges to entire administrative schemes. Gen. Elec., 360 F.3d at 188 ("The General Electric Company appeals the dismissal of its amended complaint alleging that the administrative orders regime of [CERCLA] violates the Due Process Clause of the Fifth Amendment."); Kreschollek, 78 F.3d at 869 ("Kreschollek's claim presents a new twist on the question [of jurisdiction] because his challenge to the Longshore Act is a constitutional one[.]"). ADE has asserted no such constitutional challenge. Rocky Mountain Radar involved an administrative scheme that did not preclude pre-enforcement actions. 158 F.3d at 1122. For the reasons explained above, the GEPA does.
Sixth, ADE argues that Arizona should not be forced to violate the Secretary's mandate and risk onerous financial penalties — potentially, the loss of hundreds of millions of dollars in Title I funding — in order to obtain a judicial ruling on the meaning of § 6316(b)(2)(B). The Supreme Court has recognized that serious due process concerns might arise when a party must either obey the law and thereby forego the possibility of judicial review, or risk severe penalties in order to gain access to the courts. Thunder Basin, 510 U.S. at 218 (majority opinion), 221 (Scalia, J., concurring). Some courts have treated the issue not as a constitutional problem, but as an exception to the preclusion rule of Thunder Basin, stating that the exception applies when judicial review is effectively foreclosed because "the penalty for violation is set so high that no rational person would dare test the legality of administrative action by refusing to comply." E. Bridge, LLC v. Chao, 320 F.3d 84, 90 (1st Cir. 2003).
Whether treated as a due process concern or an exception to Thunder Basin, these principles do not aid ADE. Counsel for Defendants asserted during oral argument that ADE may obtain judicial review of § 6316(b)(2)(B) without risking severe penalties. This is how: ADE is required by the NCLB to file and obtain approval of an educational plan for Arizona ( 20 U.S.C. § 6311(a)); ADE may file with the Secretary a proposed amendment to the plan that includes ADE's interpretation of § 6316(b)(2)(B); if the Secretary rejects the plan amendment, ADE may seek immediate judicial review in district court under the Administrative Procedures Act. By this means, Defendants assert, ADE can obtain judicial review of its interpretation of § 6316(b)(2)(B) without risking serious sanctions. When questioned about this assertion during oral argument, counsel for ADE agreed that judicial review of § 6316(b)(2)(B) can be obtained in this manner. Thus, as was true of the plaintiff in Thunder Basin, ADE is not precluded from obtaining meaningful judicial review by the risk of severe penalties. As the district court recognized in Spellings: "Because the refusal to approve a plan amendment may be reviewed by a district court without the risk of the State losing federal funding, the State is able to continue to comply with the [NCLB] while at the same time seeking judicial review of it's claims regarding the [NCLB]." Spellings, 453 F. Supp. 2d at 488.
Like the court in Spellings, this Court states no opinion on the nature or scope of such judicial review under the Administrative Procedures Act. 453 F. Supp. 2d at 488 n. 17.
Finally, ADE argues that this Court should exercise jurisdiction because continued administrative review before ADE will be futile. Dkt. #16 at 12-13. When Congress enacted GEPA, however, it knew that the statute "contemplates judicial review only after the [Secretary] has determined that a state has violated the [NCLB]." Spellings, 453 F. Supp. 2d at 486-87 (emphasis in original). Requiring "final agency action, even if the ultimate results can be surmised, is not at all futile" because it may resolve the issue between the parties and "judicial review would be enhanced by forcing the parties to take concrete positions at the administrative level and by development of a full administrative record." Id. at 489.
IV. Conclusion.
This Court lacks subject matter jurisdiction over this pre-enforcement declaratory judgment action regarding the meaning of § 6316(b)(2)(B). The Court accordingly will grant Defendants' motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.
During oral argument, counsel for ADE requested leave to amend the complaint. When questioned closely on this issue, counsel made clear that the amendment would address only the current injury being suffered by ADE. Because the proposed amendment would be relevant only to issues the Court need not address in light of its ruling on the jurisdictional question — the ripeness and standing issues raised by the USDE's motion — the Court sees no need to permit the amendment before entering this ruling. The Court also need not address Defendants' argument that the complaint fails to state a claim for relief.
IT IS ORDERED:
1. Defendants' motion to dismiss (Dkt. #9) is granted.
2. The Clerk of Court shall terminate this action.