Security University v. Perez et al

Cross MOTION for Summary Judgment

D.D.C.March 2, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SECURITY UNIVERSITY, ) ) Plaintiff, ) ) v. ) Case No. 16-1469 (ABJ) ) EDWARD C. HUGLER1 ) Acting Secretary of Labor, et al., ) ) Defendants. ) ) DEFENDANTS’ COMBINED OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND CROSS-MOTION FOR SUMMARY JUDGMENT Pursuant to Rule 56 of the Federal Rules of Civil Procedure, Defendants respectfully move for summary judgment on the claims asserted in the Complaint, for the reasons set forth fully in the accompanying Memorandum in Support of Defendant’s Combined Opposition to Plaintiff’s Motion for Summary Judgment and Defendants’ Cross-Motion for Summary Judgment. A proposed order is attached. Respectfully submitted, CHANNING D. PHILLIPS, D.C. BAR # 415793 United States Attorney DANIEL F. VAN HORN, D.C. BAR # 924092 Civil Chief By: _______/s/___________________ JEREMY S. SIMON, D.C. BAR #447956 Assistant United States Attorney Civil Division 1 The originally named defendant, Thomas Perez, is now the former Secretary of the Department of Labor and Edward C. Hugler is the Acting Secretary. Therefore, Mr. Hugler is being automatically substituted for Mr. Perez as Defendant, pursuant to Fed. R. Civ. P. 25(d), and the caption of this action is amended accordingly. Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 1 of 26 2 555 4th Street, N.W. Washington, D.C. 20530 (202) 252-2528 Jeremy.Simon@usdoj.gov Counsel for Defendants Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 2 of 26 1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SECURITY UNIVERSITY, ) ) Plaintiff, ) ) v. ) Case No. 16-1469 (ABJ) ) EDWARD C. HUGLER ) Acting Secretary of Labor, et al., ) ) Defendants. ) ) MEMORANDUM IN SUPPORT OF DEFENDANTS’ COMBINED OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT Defendants, by and through undersigned counsel, oppose Plaintiff’s Motion for Summary Judgment and cross-move for summary judgment in their favor. INTRODUCTION Security University (“Security”) received, on September 26, 2013, a Trade Adjustment Assistance Community College and Career Training (“TAACCCT”) grant from the U.S. Department of Labor (“DOL”), Employment and Training Administration (“ETA”). Eligibility requirements to receive TAACCCT grants include the statutory requirement that the recipient be, and remain, an accredited institution of higher education. 19 U.S.C. § 2371(b)(1); 20 U.S.C. § 1002. On the dates that Security applied for and was awarded its TAACCCT grant, Security was then accredited by Accrediting Council for Continuing Education and Training (“ACCET”); however, after the period of grant performance began, Security failed to attain re-accreditation from ACCET, which voted to deny Security re-accreditation in a decision finalized on January 5, 2015. ETA, in accordance with the statutory requirements for eligibility and the procedures for Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 3 of 26 2 administering grants, issued an Initial Determination on February 12, 2015, finding Security out of compliance with the terms of its grant for want of accreditation. Security ultimately requested an extension of time to resolve the matter, and separately asserted that it would be able to swiftly attain accreditation from either ACCET or an alternate provider. Over six months after issuing the Initial Determination, with Security still unaccredited, ETA issued a Final Determination on September 1, 2015, suspending the grant, effective September 15, 2015. In the Final Determination, ETA informed Security that the grant would be terminated if accreditation was not certified by an appropriate authorized agency by January 1, 2016, and additionally laid out the criteria ETA would consider in determining whether to reinstate the grant, should Security become accredited prior to January 1, 2016. As Security itself later acknowledged, the deadline came and went without Security receiving accreditation. On February 8, 2016, with Security still unaccredited, ETA terminated the grant, effective immediately. Over a week later, on February 19, 2016, Security was granted accreditation status by a different accrediting body, Middle States Commissions on Elementary and Secondary Schools (“MSA-CESS”). Both MSA-CESS’s institutional site visit, conducted on or about February 10, 2016, and its subsequent decision on whether to grant accreditation occurred after the grant was terminated. Nonetheless in this action, Security seeks to reinstate the grant based on MSA-CESS’s characterization of its accreditation decision as “retroactive to December 1, 2015.” Simply put, an accreditation decision reached forty-nine days after the deadline, following the termination of the grant, does not suffice to meet the deadline of achieving accreditation by January 1, 2016. Under these circumstances, ETA acted reasonably and lawfully in suspending and then terminating the grant. Its decision to suspend and terminate the grant was Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 4 of 26 3 not arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, in excess of ETA’s statutory jurisdiction, or without observance of procedure required by law. Cutting through Security’s obfuscating pleading, this case should be decided on a simple set of facts: that Security was required to maintain accreditation as a condition of the grant; and that Security, after losing accreditation, failed to regain it by January 1, 2016. Security has neither disputed the timing of these events nor established their irrelevance to ETA’s decision. FACTUAL BACKGROUND The TAACCCT grant program provides funding to “eligible institutions” of higher education, as defined in 20 U.S.C. § 1002, to support the development, offering, and improvement of education or career training programs that can be completed in two years or less, and which are suited for workers eligible for training as trade-affected workers. 19 U.S.C. §§ 2371(a)(1), (b)(1). The statutory definition of “institutions of higher education” – the only entities eligible to receive TAACCCT grants – requires that such institutions must be accredited by a regional accrediting agency or association recognized by the Secretary of Education, in addition to meeting other requirements. In particular, while the definition of “institutions of higher education” under 20 U.S.C. § 1002 includes multiple types of institutions, including those denominated as an “institution of higher education,” as a “proprietary institution of higher education,” and as a “postsecondary vocational institution,” the statutory definition of all such institutions includes the requirement that the institution “is accredited by a nationally recognized accrediting agency or association” that has been recognized as such by the Secretary of Education. 20 U.S.C. § 1001(a)(5) (defining an institution of higher education generally); id. at § 1002(b)(1)(D) (defining proprietary institution of higher education); id. at § 1002(c)(1)(B) (defining postsecondary vocational institution). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 5 of 26 4 In April 2013, ETA issued a Solicitation for Grant Applications (“SGA”), SGA/DFA PY- 12-10, for funding a grant opportunity under the TAACCCT program. (AR00001-00088). Consistent with the statutory requirements, the solicitation specifically stated that “[e]ligible institutions must be accredited, as of the closing date of this SGA, by a nationally recognized accrediting agency or association that has been recognized by the U.S. Department of Education.” (AR00020). ETA, in determining whether an applicant was accredited and thus eligible for the grant, would “rely solely” on the Department of Education’s (“ED”) Database of Accredited Postsecondary Institutions and Programs (“Database”). (Id.) Security submitted an application for the SGA/DFA PY-12-10 grant opportunity under the TAACCCT program (AR00092-00174) and, on September 26, 2013, was awarded grant TC- 24971-13-60-A-51 in the amount of $2.75 million, with a period of performance under the grant lasting from October 1, 2013, through September 30, 2017.1 (AR00092). In applying for this award, Security provided assurances that it would “comply with all applicable requirements of all other Federal laws, executive orders, regulations and policies governing this program,” i.e., including the accreditation requirement. (AR00158). At the time of both its application and its award, Security was duly accredited by the ACCET, and had been since the estimated date of April 2011, per the ED Database. (AR00420; see also AR00406 (statement by Security of current accreditation status dated June 11, 2014)). Subsequently, when ACCET’s Accrediting Commission re-examined Security to determine whether to extend re-accreditation, it denied 1 ETA subsequently advised Security of mandatory modifications and necessary clarifications to be made to its proposal as conditions of the award (AR00175-00188), and Security submitted multiple revisions, which ultimately culminated on June 11, 2014, in a modified grant agreement with a revised statement of work and re-aligned budget. (AR00370-00413). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 6 of 26 5 accreditation.2 (AR00414-00419). Thereafter, ACCET’s Appeals Panel, following briefing and a hearing at which Security participated, “unanimously affirmed” that decision, an action which was final as of January 5, 2015. (AR00416; AR00414). The ED Database records that Security’s accreditation by ACCET was terminated effective January 5, 2015. (AR00420). On February 12, 2015, after receiving information that Security had lost its accreditation, the Grant Officer issued an Initial Determination (AR00423-00425) stating, as an administrative finding, that the lack of accreditation had left Security non-compliant “with a term of its award and the statutory requirements of the TAACCCT program,” and “unqualified to administer a TAACCCT grant.”3 (AR00424). The Initial Determination required Security to “provide evidence that its accreditation has been reinstated,” and advised that if the administrative finding were “not resolved immediately, ETA may seek to terminate [the] grant on the grounds that Security University has materially failed to comply with the terms and conditions of the award.”4 (AR00423-00424). 2 According to Security, ACCET’s Executive Committee had, on August 22, 2013, issued an “Institutional Show Cause directive” to Security “based on non-compliant program offerings and advertising.” (AR00588). Following a subsequent site visit on or around February 11-12, 2014, the Accrediting Commission of ACCET denied re-accreditation on August 21, 2014. (Id.; see also AR00414). 3 The Initial Determination also addressed a separate finding and determination by the Grant Officer that Security was in danger of losing its certification to operate a post-secondary institution in the Commonwealth of Virginia, which would have rendered it unable to comply with the terms and conditions of the award. (AR00425). This deficiency was later corrected and is not at issue in this proceeding. (AR00615). 4 In addition to the statutory requirements for TAACCCT grant recipients to be accredited institutions, programmatically, for an employment-oriented training program, the value of a course of training may be lessened in the perspective of both students and employers if an institution loses its accreditation. C.f. Sherman Coll. of Straight Chiropractic v. U.S. Comm’r of Educ., 493 F. Supp. 976, 978-79 (D.D.C. 1980) (acknowledging the “stigma of nonaccreditation”). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 7 of 26 6 In response to the Initial Determination, Security submitted two separate letters with additional documentation, but neither the March 12, 2015, reply (AR00439-00440) nor the April 30, 2015, reply (AR00600-00602) reflected any success in reinstating its accreditation. (AR00439; AR00600). In its initial reply regarding the denial of accreditation, Security explained that it had “submitted a formal request with the Department of Education into ACCET’s re-accreditation and appeals process.” (AR00440). In its further reply, Security noted that it had not yet received any findings from ED in response to its request,5 and added that “[e]ven if Security University is unable to obtain ACCET accreditation at this juncture, it is able to reapply expeditiously if it so chooses or alternatively, obtain accreditation from a different accrediting agency… some of which have… suggested that Security University begin its self- assessment and application process.” (AR00601). On September 1, 2015, following Security’s failure to provide documentation establishing that it had achieved accreditation and thereby correct that administrative finding, the Grant Officer issued a Final Determination (AR00612-00619), “in accordance with 29 CFR 95.62(a)(3),” finding that Security had “materially failed to comply with the terms and conditions of its award” and thereby “wholly suspend[ing] [the Grant] effective September 16, 2015.” (AR00612). The Final Determination further noted that after the date of suspension, “Security University shall cease all grant activities and expenditures, and ETA will not reimburse Security University for any subsequent expenses.” (Id.) Pursuant to 29 C.F.R. § 95.62(a)(3) 5 ED ultimately determined, by letter dated May 20, 2015 (AR00608-00610), that it was “unable to find that ACCET ha[d] violated any sections” of the applicable regulations and that it was “within ACCET’s purview to make a decision to deny SU’s accreditation.” (AR00610). ED also noted that, “[r]egarding [ACCET’s] decision to terminate the accreditation of SU, as previously discussed, the Department does not have the authority to reverse, revise or vacate accrediting decisions or to direct an accrediting agency’s decision.” (AR00608). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 8 of 26 7 (2015), which sets forth DOL’s remedies for noncompliance by grant recipients, “[i]f a recipient materially fails to comply with the terms and conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, DOL may… [w]holly or partly suspend or terminate the current award,” in addition to taking other actions as appropriate in the circumstances. As described above, the accreditation requirement for TAACCCT grantees is statutory. Therefore, as set forth in the Final Determination: As a result of the loss of its accreditation from ACCET, Security University is failing to comply with a term of its award and the statutory requirements of the TAACCCT program, 19 U.S.C. 2371(b)(1). Eligibility for this grant requires continued accreditation from the appropriate authority. The absence of accreditation renders Security University unqualified to administer a TAACCCT grant…. If accreditation is not certified by an appropriate agency by January 1, 2016, ETA will terminate the grant. (AR00617 (emphasis added)). The Final Determination also noted that if Security “obtain[ed] accreditation prior to January 1, 2016,” lifting the suspension would not be automatic but would depend on the feasibility of reinstating work, Security’s compliance with all other eligibility terms and conditions, and the best interests of the government. (Id.) On November 17, 2015, MSA-CESS notified Security (AR00631-00633) of its “accept[ance] as a Candidate for Accreditation,” a status which, as Security was required to acknowledge, “does not imply or assure eventual accreditation.” (AR00631; AR00633). On December 15, 2015, MSA-CESS sent the Grant Officer a letter stating that Security was a candidate for accreditation, that the school was “currently on track for an early 2016 school visit,” and that “[s]hould the school receive a recommendation for accreditation,” MSA-CESS would consider the accreditation “retroactive to December 1, 2015.” (AR00635 (emphasis added)). MSA-CESS clearly expressed, however, that it would not reach a decision on accrediting Security in calendar year 2015. In the email enclosing the December 15, 2015, letter, the Director of Accreditation at MSA-CESS acknowledged that “[d]ue to the work involved with Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 9 of 26 8 our self-study process, we [MSA-CESS] are unable to solidify an accreditation decision by January 1, 2016.” (Compl., Ex. F at 1). On February 8, 2016, the Grant Officer issued a Notice of Termination of Security’s grant (AR00636-00637), thereby terminating the grant, “effective immediately,” in accordance with the suspension notice of the Final Determination. (AR00637; see also 29 C.F.R. § 95.61(a)(1) (2015) (“Awards may be terminated in whole or in part… [b]y grant officers, if a recipient materially fails to comply with the terms and condition of an award.”)). In terminating the grant, the Grant Officer noted that Security “ha[d] been out of compliance with the eligibility requirements specified by the TAACCCT authorizing legislation (see 19 U.S.C. 2371(b)(1)) for more than a year, and ha[d] failed to regain accreditation status within that timeframe.” (AR00636). The Grant Officer also explained that the possibility that MSA-CESS, following a school visit “plan[ned]” for “early 2016,” could lead to a recommendation for accreditation by MSA-CESS viewed by MSA-CESS as “retroactive to December 1, 2015,” would not suffice to meet the requirement to achieve accreditation by the date of January 1, 2016: [T]he Department specifically stated that the grant would be terminated on January 1, 2016 if accreditation was not obtained by that date. As of January 1, 2016, it is our finding that Security University still remains unaccredited…. The possibility of retroactive accreditation, which has not even been yet approved or finalized, is not relevant to our determination, as Security University remained unaccredited as of January 1, 2016 and unable to serve TAACCCT participants. (Id.). Security, in an email reply on that same day (AR00638-00640), “acknowledge[d] as true that as of January 1, 2016 Security University remains unaccredited,” and that the suspension notice in the Final Determination had promised termination “if accreditation was not obtained by that date.” (AR00638 (emphasis in original)). Security also invoked the procedure for hearings and appeals under 29 C.F.R. § 95.62(b) (2015) to request an appeal of the termination decision. (Id.) Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 10 of 26 9 In a letter dated February 19, 2016 (AR00641-00642), over a week after the grant was terminated, MSA-CESS provided Security with official notification that the Executive Committee for MSA-CESS, “at its February 2016 meeting,” had voted to award accreditation to Security, for a seven year term that MSA-CESS described as “beginning retroactively on December 1, 2015.”6 (AR00641). On March 14, 2016, in reply to Security’s request for reconsideration under 29 C.F.R. § 95.62(b), the Division Chief in ETA’s Office of Grants Management issued a letter concurring with the Grant Officer’s decision to terminate the grant. (AR00643). The Division Chief acknowledged receipt of the February 19, 2016 letter from MSA-CESS providing notice of accreditation, but reaffirmed that this February action “does not change the finding that as of January 1, 2016, Security University was unaccredited.” (AR00644). Finally, in response to Security’s invocation of 29 C.F.R. § 95.62(b), the Division Chief noted that the TAACCCT legislation does not provide any “statutory or regulatory authority for a hearing, appeal, or other administrative proceeding” for a grantee upon suspension or termination of a TAACCCT grant. Security subsequently sought review of the termination decision by the Office of Administrative Law Judges (“OALJ”), but the OALJ, on July 1, 2016, dismissed Security’s request for review for lack of jurisdiction. (Pl’s Mot. Summ. J., at 6). This suit followed. 6 The quarterly narrative progress report for the quarter ending December 31, 2015, which Security submitted as Exhibit 3 to its Motion for Summary Judgment, indicates that the MSA- CESS accreditation team conducted a two-day site visit on or around February 10, 2016. (Pl’s Mot. Summ. J., Ex. 3, at 1). Although this document should not be considered part of the administrative record as Defendants have argued in Section III below, Defendant notes this document as further support for a point already established in the administrative record: that MSA-CESS did not affirmatively decide to grant accreditation to Security until after the grant was terminated. (AR00641; see also AR00639 (noting on February 8, 2016, that MSA-CESS would not make an accreditation decision until the 2016 “Spring Commission meeting”)). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 11 of 26 10 ARGUMENT I. STANDARD FOR APA REVIEW The standard of review for motions for summary judgment under the Administrative Procedures Act (“APA”) is narrow and deferential to agency action. The question before the court is “‘whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did.’” Tex. Neighborhood Servs. v. U.S. Dep’t of Health & Human Servs., 172 F. Supp. 3d 236, 242 (D.D.C. 2016) (citation omitted). On such review, a court must “hold unlawful and set aside agency action, findings, and conclusions found to be. . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A), “in excess of statutory jurisdiction,” id., § 706(2)(C), or “without observance of procedure required by law.” Id., § 706(2)(D). A court, bearing in mind the presumption of validity for the agency’s action, ought to be “satisfied… that the agency has examined the relevant data and articulated a satisfactory explanation for its action, ‘including a rational connection between the facts found and the choice made.’” Mashack v. Jewell, 149 F. Supp. 3d 11, 19-20 (D.D.C. 2016) (quoting Alpharma, Inc. v. Leavitt, 460 F.3d 1, 6 (D.C. Cir. 2006)). In considering the data and agency’s rationale, “[i]t is a widely accepted principle of administrative law that the courts base their review of an agency’s actions on the materials that were before the agency at the time its decision was made.” IMS, P.C. v. Alvarez, 129 F.3d 618, 623 (D.C. Cir. 1997); see also Nat’l Sec. Counselors v. Dep’t of Justice, 80 F. Supp. 3d 40, 57 (D.D.C. 2015) (“The Court’s de novo review is limited to information proffered to the agency at the time of its decision, and to the justifications advanced by the agency in its denial letter.”) (citations omitted). Furthermore, “the party challenging an agency’s action as arbitrary and capricious bears the burden of proof.” San Luis Obispo Mothers for Peace v. U.S. Nuclear Regulatory Comm’n, 789 F.2d 26, 37 (D.C. Cir. 1986) (en banc). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 12 of 26 11 II. SUMMARY JUDGMENT SHOULD BE GRANTED IN FAVOR OF DEFENDANTS ON PLAINTIFF’S APA CLAIMS Security argues in Count I of the Complaint that the suspension of the grant was arbitrary and capricious, and in Count II of the Complaint, that the termination of the grant was arbitrary and capricious.7 For the reasons set forth below, and under the deferential standard applied to challenges to agency actions under the APA, ETA did not act arbitrarily or capriciously in suspending and terminating a grant to Security, following Security’s loss of accreditation and failure to retain accreditation by the deadline provided. A. Security Was Required to Maintain Accreditation Throughout the Grant Period DOL reasonably interpreted the statute to require that an institution both be accredited at the time of application for the grant and also remain accredited throughout performance of the grant. (AR00617 (stating in the Final Determination that “[e]ligibility for this grant requires continued accreditation from the appropriate authority”)). This interpretation is consistent with the statutory language governing the TAACCCT program, and with precedent regarding the operation of federal grants. Separately, the grant solicitation additionally required that eligible institutions must have achieved accreditation “as of the closing date of this SGA.” (AR00020; 7 Security includes as Count I of its Complaint a claim that the suspension of the grant was unlawful and ought to be set aside under 5 U.S.C. § 706(2)(A). (Compl. ¶ 27). However, Security fails to advance any argument regarding the grant suspension in its Motion for Summary Judgment. See LCvR 7(a) (“Each motion shall include or be accompanied by a statement of the specific points of law and authority that support the motion, including where appropriate a concise statement of facts.”). “[F]ailure to proffer any factual or legal authority in support of its motion for summary judgment as to [a particular] Count [in the complaint is] in violation of local rules,” and grounds for the Court to deny a motion for summary judgment as to that count, in accordance with LCvR 7(a). Red Lake Band of Chippewa Indians v. U.S. Dep’t of Interior, 624 F. Supp. 2d 1, 26 (D.D.C. 2009). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 13 of 26 12 see also AR00024). In other words, an institution could not apply for the grant on the hopes or expectation that it would receive accreditation prior to the grant award. In this case, the Federal law governing the TAACCCT program restricted eligibility, by statute, to accredited institutions. See 19 U.S.C. § 2371(b)(1) (“The term ‘eligible institution’ means an institution of higher education (as defined in section 1002 of Title 20).”). The statutory definition of “institution of higher education” includes multiple types of institutions, all of which, in order to meet the definitional criteria, must be an institution that “is accredited by a nationally recognized accrediting agency or association.” 20 U.S.C. § 1001(a)(5); id. at § 1002(b)(1)(D); id. at 1002(c)(1)(B). In statutorily defining an institution of higher education as one that “is accredited,” “Congress’s use of the present tense matters.” United States v. Marsh, 829 F.3d 705, 709 (D.C. Cir. 2016). Courts “look[] to Congress’ choice of verb tense to ascertain a statute’s temporal reach,” as well as to the instructions of the Dictionary Act, 1 U.S.C. § 1. Carr v. United States, 560 U.S. 438, 448 (2010). “‘In determining the meaning of any Act of Congress, unless the context indicates otherwise . . . words used in the present tense include the future as well as the present.” Id. (quoting 1 U.S.C. § 1). An institution that “is accredited,” therefore, must remain accredited into the future. Security’s argument that accreditation is only required at the time of application for the grant, reads the solicitation overly narrowly and fails to consider the statutory requirements. (Pl’s Mot. Summ. J., at 9 (contending there was no requirement that a TAACCCT grant recipient “be accredited throughout the life of the Grant”)). Moreover, the notion that program eligibility is only relevant at the time of application for a grant, is plainly inconsistent with the operation of federal grant programs to which eligibility requirements apply. When a recipient of federal funds ceases to meet the statutory definition of an eligible participant in a federal program, “rendering it unable to provide services Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 14 of 26 13 required by that program,” it would be “a waste of public monies” to take any action other than terminating the relationship in accordance with the agency’s regulatory power and procedures. See Parkview Adventist Med. Ctr. v. United States, 842 F.3d 757, 764 (1st Cir. 2016) (upholding decision of Centers for Medicare & Medicaid Services to terminate a provider agreement with a grantee where the entity no longer qualified as a hospital under the Medicare statute). Nor does the fact that the grant solicitation only refers to accreditation at the time of application provide Security a release from the requirement to maintain accreditation, because “[u]nlike normal contractual undertakings, federal grant programs originate in and remain governed by statutory provisions expressing the judgment of Congress concerning desirable public policy.” Bennett v. Ky. Dep’t. of Educ., 470 U.S. 656, 669 (1985). Security attempts to overcome the lack of accreditation by the deadline by contending that suspension and termination of the grant “had no effect on the quality of the training” it provided students (Pl’s Mot. Summ. J., at 8), but this is beside the point. The fact that Security may have been able to maintain an educational program is irrelevant to the question of whether it was eligible to receive public monies. As ETA stated in the Final Determination, “[t]he absence of accreditation renders Security University unqualified to administer a TAACCCT grant.” (AR00617). Without accreditation, as ETA noted in the Notice of Termination, Security was “unable to serve TAACCCT participants” under the statutory requirements. (AR00636). B. The Termination of the Grant Was Not Arbitrary and Capricious, as Security Failed to Meet the January 1, 2016, Deadline for Achieving Accreditation Security has failed to explain exactly why the Grant Officer’s decision to terminate the grant on February 8, 2016, was arbitrary and capricious. Security’s case rests on the claim that an accreditation decision rendered on February 19, 2016, purportedly effective retroactively to December 1, 2015, occurred within the necessary timeframe. (Pl’s Mot. Summ. J., at 8 (“SU’s Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 15 of 26 14 new accreditation by MSA-CESS, was effective as of December 1, 2015, was in effect as of January 1, 2016, and has remained continuously in effect.”)). However, for the purposes of computing deadlines, time flows in only one direction. As the clock struck midnight on January 1, 2016, Security was unaccredited, and there was no evidence in existence at that point in time to the contrary. On February 8, 2016, as ETA looked backwards at events as of January 1, 2016 to determine whether Security had met the accreditation deadline, no contrary evidence existed to counter the fact that as of the deadline, Security had remained unaccredited. While ETA had received a letter from MSA-CESS describing an intention for MSA-CESS to make an accreditation decision regarding Security in calendar year 2016 (AR00635), the only relevant question was whether Security would be accredited by January 1, 2016 (and not whether an accreditation decision would be made by some later date). Upon consideration of the facts then in existence, ETA terminated the grant. See IMS, 129 F.3d at 623 (emphasizing that review of an agency decision under APA is based “on the materials that were before the agency at the time its decision was made”). Security has not cited to any support for its argument in favor of retroactive – i.e., belated – compliance with administrative deadlines. Nor does support appear available for Security’s accounting of days. On the contrary, as the Supreme Court has instructed: The notion that a filing deadline can be complied with by filing sometime after the deadline falls due is, to say the least, a surprising notion, and it is a notion without limiting principle. If 1-day late filings are acceptable, 10-day late filings might be equally acceptable, and so on in a cascade of exceptions that would engulf the rule erected by the filing deadline…. A filing deadline cannot be complied with, substantially or otherwise, by filing late—even by one day. United States v. Locke, 471 U.S. 84, 100-01 (1985); see also Metro-Goldwyn-Mayer Studios, Inc. v. Peters, 309 F. Supp. 2d 48, 61 (D.D.C. 2004) (applying Locke to determine that a mailing, post-marked after the due date, did not suffice to meet the due date). Likewise, the D.C. Circuit Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 16 of 26 15 has found that the FCC did not act arbitrarily and capriciously where, having established a 30- day deadline for the submission of particular materials, the FCC “denied the waiver request for lack of financing on the due date” after the deadline was not met. Mountain Solutions, Ltd., v. Fed. Commc’n Comm’n, 197 F.3d 512, 514 (D.C. Cir. 1999); c.f. Horsey v. U.S. Dep’t of State, 170 F. Supp. 3d 256, 264-265 (D.D.C. 2016) (quoting Brown v. Marsh, 777 F.2d 8, 13 (D.C. Cir. 1985)) (reiterating as “well-established” that a plaintiff “‘who fails to comply, to the letter, with administrative deadlines ordinarily will be denied a judicial audience’”). An agency’s “decision not to accept and consider” data submitted over a month late “[i]s neither arbitrary nor capricious.” Administración Para El Susteno de Menores v.U.S. Dep’t of Health & Human Servs., 588 F.3d 740, 745 (1st Cir. 2009) (refusing to consider materials submitted forty-five days late). Security’s argument for retroactive accreditation would have the Grant Officer hold his or her decision in abeyance for an untold period of time, but such open- ended waiting, on the part of a federal agency, would itself fall victim to a charge of being arbitrary and capricious. See NetworkIP, LLC v. Fed. Commc’n Comm’n, 548 F.3d 116, 127-28 (D.C. Cir. 2008) (finding the FCC acted capriciously in accepting a late submission after “impos[ing] a strict deadline for filings”). C. ETA’s Suspension and Termination of the Grant Was in Accordance with the Applicable Legal Procedures Under the regulations applicable to DOL’s grants and agreements with institutions of higher education, “[i]f a recipient materially fails to comply with the terms and conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, DOL may” take certain actions, including to “[w]holly or partly suspend or terminate the current award.” 29 C.F.R. § 95.62(a)(3); c.f. Henke v. U.S. Dep’t of Commerce, 83 F.3d 1445, 1450 (D.C. Cir. 1996) (noting that a grant “award instrument . . . imposes numerous conditions to Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 17 of 26 16 which the grantee must agree to receive the grant funds,” and an agency “can suspend or terminate a grant when ‘the grantee has materially failed to comply with the terms and conditions of the grant’”) (citation omitted). The TAACCCT grant explicitly required the applicant to provide assurances, at the time of the initial application, that it “w[ould] comply with all applicable requirements of all other Federal laws, executive orders, regulations and policies governing this program.” (AR00158). Those applicable requirements include the statutory requirement to maintain accreditation, as described above, but also include the background DOL regulations regarding termination and enforcement of grants to institutions of higher education, 29 C.F.R. part 95. (AR00062 (“The grant(s) awarded under this SGA will be subject to the following administrative standards and provisions, as applicable… [including] 29 CFR Part 95 (Administrative Requirements).”)). To the extent Security references due process (Pl’s Mot. at 10), a claim not asserted in the Complaint, ETA’s procedures provided Security more than sufficient protection against any erroneous deprivation of the grant. Here, ETA followed its established practice of notifying Security of the specific compliance failures via an Initial Determination that provided an opportunity to cure during an informal resolution process (AR00421-00425), receiving letters and documentation from Security’s counsel regarding the asserted compliance failures (AR00439-00597; AR00600-00607), issuing a Final Determination with one last opportunity to cure (AR00612-00619), and ultimately terminating the grant (AR00636-00637). In so doing, ETA provided Security the necessary procedural protections: “adequate notice of its assessment” of the deficiency and “an opportunity to cure the deficiency.” Administración Para El Susteno, 588 F.3d at 746-47 (finding an agency did not act unreasonably where it provided such). ETA, in suspending the grant under the Final Determination and in terminating the grant, clearly Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 18 of 26 17 identified the trigger for the suspension as the ongoing lack of accreditation, and the trigger for the termination as the January 1, 2016, deadline to obtain re-accreditation. See Idaho Migrant Council, Inc. v. United States, 9 Cl. Ct. 85, 87, 89 (Cl. Ct. 1985) (finding that a grant was properly terminated for cause, in accordance with the terms of the grant instrument and the requirements for federal grants, for failure to commence operations in accordance with the schedule for the grant, and following written notice to the grantee “of the determination to terminate, the reasons for the termination, and the effective date”). In addition, notwithstanding Security’s complaints about the process, Security has failed to present any evidence that “any additional procedures would have changed the result.” Ohio Head Start Ass’n, Inc. v. U.S. Dep’t of Health & Human Servs., 902 F. Supp. 2d 61, 67 (D.D.C. 2012). Furthermore, ETA, in notifying Security of the compliance deficiencies and the obligation to cure, gave Security sufficient time to comply. After Security fell out of compliance with the grant terms by losing its accreditation, ETA ultimately provided Security a full year to regain accreditation before terminating the grant. See id. (finding an agency did not act unreasonably in terminating a grant, after waiting “over the course of a year” for its grant recipient “to try and resolve the non-compliance/deficiency at issue”). This duration is consistent with ED’s regulations, 34 C.F.R. § 602.20(a)(2)(i) (2015), which permit an accrediting agency to require an institution, which is not in compliance with accreditation standards, to have “[t]welve months” to bring itself into compliance, in the case of institutions like Security where “the program, or the longest program offered by the institution, is less than one year in length.” (AR00609 (corroborating the applicability of the twelve month timeframe)).8 8 Section 602.20(a)(2)(i) provides in relevant part that, “[i]f the agency’s review of an institution or program under any standard indicates that the institution or program is not in compliance with that standard, the agency must . . . [r]equire the institution or program to take appropriate action to bring itself into compliance with the agency’s standards within a time period that must not Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 19 of 26 18 Security’s claim that ETA violated procedural due process in terminating the grant, is not based on the proper standard. Security asserts that it “had a legitimate claim of entitlement to the funds awarded by the Grant in that it ‘would be entitled to receive the government benefit assuming [it] satisfied the preconditions to obtaining it,’” and that therefore Security should have received a hearing at which it could “‘confront any adverse witnesses and present arguments and evidence.’” (Pl’s Mot. Summ. J., at 9-10) (quoting Long v. D.C. Housing Auth., 166 F. Supp. 3d 16, 32 (D.D.C. 2016)). The legal standard Security proffers, however, is applicable to entitlement programs, in which a person is entitled to certain government benefits assuming satisfaction of preconditions. However, a benefit is “not a protected entitlement,” triggering the full panoply of process that Security invokes, “if government officials may grant or deny it in their discretion.” Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 756 (2005). A federal competitive grants program is a quintessential example of the type of discretionary government program in which administrators are assigned the task of allocating scarce financial resources among eligible applicants, “and it is the presence of that discretion which precludes a finding of an entitlement.” Wash. Legal Clinic for the Homeless v. Barry, 107 F. 3d 32, 37 (D.C. Cir. 1997) (emphasis in original). This court has previously found no protected property right to be derived from a federal grant statute where an agency has discretion to determine which grant applicants merit award or renewal, and also found no general obligation, in the absence of particular authority, to provide a grantee an opportunity to present directly to the agency decision-maker before the final deficiency decision is rendered. See Ohio Head Start Ass’n, 902 F. Supp. 2d at 66-67. exceed . . . [t]welve months.” See 34 C.F.R. § 602.20(a)(2)(i). Although the agency is not required to afford the institution a full twelve months to come into compliance, ETA effectively gave Security the maximum amount of time permitted (i.e., Security lost its accreditation on January 5, 2015, and the Grant Officer afforded Security until January 1, 2016, to bring itself into compliance). Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 20 of 26 19 In addition, contrary to Security’s plea, Security had no entitlement under 29 C.F.R. § 95.62(b) to a hearing, appeal, or other administrative proceeding. (Pl’s Mot. Summ. J., at 10). The general regulatory provision that Security cites does not establish a particular procedural right to a “hearing, appeal, or other administrative proceeding” for a federal grantee, but instead clarifies that any rights to additional procedural protections will be found in separate applicable statutes or regulations: “[i]n taking an enforcement action, DOL shall provide the recipient an opportunity for hearing, appeal, or other administrative proceeding to which the recipient is entitled under any statute or regulation applicable to the action involved.” 20 C.F.R. § 95.62(b) (emphasis added). As Congress has not established a procedure for administrative review of TAACCCT grants in the authorizing legislation for that grant program, and as DOL has not promulgated any regulations particular to the TAACCCT program, there is no basis, under section 95.62(b), for administrative review of the suspension or termination of a TAACCCT grant. Rather, the recourse for a TAACCCT grantee is limited to suit in federal district court. Finally, contrary to Security’s insinuations, the fact that a document is titled “Notification of Award/Obligation to Security University” and describes the “Total Government’s Financial Obligation [a]s $2,750,000.00 (unless otherwise amended)” (AR00092), does not, in and of itself, create any obligation on the part of ETA to convey the full sum of $2.75 million to Security, or entitlement on Security’s part to its receipt, should the grant be suspended and terminated. (Pl’s Mot. Summ. J., at 9-10). Security argues that satisfaction of preconditions alone is sufficient to obtain an entitlement to the full grant award (id.), but that claim would eclipse all monitoring of grants for implementation, performance, or malfeasance. Indeed, the grant award on its face subjected the awardee to applicable regulations and cost principles including – for Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 21 of 26 20 grants to institutions of higher education – the regulations under 29 C.F.R. part 95 (2015), which include the procedure for suspending and terminating grants. (AR00092). D. Security Cannot Make a Claim Based on the Fact That the Commonwealth of Virginia No Longer Has a TAACCCT Grantee Security further objects that terminating the grant was “arbitrary and capricious in that it left Virginia without a TAACCCT Grantee.” (Pl’s Mot. Summ. J., at 10). While the grant solicitation provided that ETA would award a TAACCCT grant to at least one institution in each State (AR00001), there are no provisions in the solicitation restricting ETA from suspending or terminating a grant if such actions would leave a State without a grantee. Indeed, the SGA requires that all “grant(s) awarded under this SGA [are] subject to the [applicable] administrative standards and provisions,” which include the regulatory provisions for suspending and terminating grants. (AR00062 (citing 29 C.F.R. part 95)). Likewise, though the TAACCT statute provides that “each State shall receive not less than 0.5 percent of the amount appropriated,” 19 U.S.C. § 2372(b), the statute also restricts ETA from disbursing TAACCCT funding to simply any entity that requests it. ETA may only disburse TAACCCT funding to entities that are “eligible institutions,” in accordance with the statutory requirements for receipt and consideration of grant proposals. Id. at § 2371(a). When Security lost its accreditation, it was no longer eligible. Finally, Security is not the appropriate party to advance any claims that Virginia might have to receive its share of the TAACCCT funds. E. This Is Not a Situation Justifying the Extraordinary Writ of Mandamus Security further asserts that it will be filing a separate motion requesting issuance of a writ of mandamus, directing ETA to process Security’s “draw down requests” and to disburse such funds to Security, including for costs Security improperly incurred after the suspension and termination of its grant. (Pl’s Mot. Summ. J., at 5-6). “An action to ‘compel agency action Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 22 of 26 21 unlawfully withheld or unreasonably delayed,’ 5 U.S.C. § 706(1), is similar to a petition for mandamus.” Nat’l Ass’n of Home Builders v. U.S. Army Corps of Eng’rs., 417 F.3d 1272, 1280 (D.C. Cir. 2005). Security bears the burden of showing itself entitled to such relief, see Power v. Barnhart, 292 F.3d 791, 784 (D.C. Cir. 2002), and that it has “exhausted all other avenues of relief.” Heckler v. Ringer, 466 U.S. 602, 616 (1984). Security has not met that burden. III. SECURITY’S ATTEMPT TO IMPROPERLY SUPPLEMENT THE ADMINISTRATIVE RECORD SHOULD BE DENIED Security has appended to its motion for summary judgment five additional exhibits, four of which are documents that were created after the action challenged in this case and the other is a news release from September 18, 2013. Security, however, has failed to establish that these documents were considered by ETA in making the decision at issue and, therefore, they should not be considered by the Court. See IMS, 129 F.3d at 624 (holding that supplemental documents, which “were not available to the [agency] at the time it made its decision,” were properly excluded from the administrative record). Furthermore, as of the filing of this brief, Security has “not even move[d] to supplement the record.” See C.T.S. Corp. v. EPA, 759 F.3d 52, 64 (D.C. Cir. 2014) (declining to consider additional materials where the plaintiff “simply attached the new evidence to its brief”). “It is black-letter administrative law that in an Administrative Procedure Act case, a reviewing court ‘should have before it neither more nor less information than did the agency when it made its decision.’” Id. (quoting Hill Dermaceuticals, Inc. v. FDA., 709 F.3d 44, 47 (D.C. Cir. 2003) and Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788. 792 (D.C. Cir. 1984)). With the exception of the first document (EC No. 12-1), the extra-record materials that Security seeks to introduce all post-date the decision to terminate the grant, which ETA made on February 8, 2016. “For a court to supplement the record, the moving party must rebut the Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 23 of 26 22 presumption of administrative regularity and show that the documents to be included were before the agency decisionmaker.” Pac. Shores Subdivision, Cal. Water Dist. v. U.S. Army Corps of Eng’rs, 448 F. Supp. 2d 1, 6 (D.D.C. 2006). Given the dates of these documents’ creations, Security cannot show that these documents (ECF No. 12-2; ECF No. 12-3; ECF No. 12-4; and ECF No. 12-5) “were before the agency decisionmaker.” Id. As these documents were not in existence at the time of ETA’s decision, they form no part of the record in this case. In addition, Security has failed to establish that ECF No. 12-1, a news release from September 18, 2013, merits inclusion in the administrative record. “In this Court, there is a well-established presumption that an agency has properly designated the administrative record absent clear evidence to the contrary.” Nat’l Ass’n of Chain Drug Stores v. U.S. Dep’t of Health & Human Servs., 631 F. Supp. 2d 23, 27 (D.D.C. 2009). On November 22, 2016, Defendants served the certified administrative record in this case. This certified administrative record is entitled to the presumption that it properly reflects the materials before the agency decisionmaker at the time of the decision. Security, in attempt to introduce extra-record material into this case by including them as attachments to a motion, has failed to follow the proper procedure for seeking to supplement an administrative record. See C.T.S. Corp., 759 F.3d at 64 (declining to consider additional materials where the plaintiff “simply attached the new evidence to its brief”). Likewise, Security, in declining to make an affirmative case for supplementing the administrative record, has failed to meet its burden of demonstrating that the administrative record ought to be supplemented. Security, in simply appending these materials to its motion for summary judgment, has not “demonstrate[d] unusual circumstance justifying a departure” from the rule that review in APA cases “is to be based on the full administrative record that was before the agency Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 24 of 26 23 decisionmakers at the time they made their decision.” Pac. Shores Subdivision, 448 F. Supp. 2d at 4 (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971) (alteration in original)). Security has not attempted to demonstrate that ETA, in constructing the administrative record, “deliberately or negligently excluded documents that may have been adverse to its decision,” when instead ETA simply excluded documents that did not did not exist at the time of its decision. See Am. Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C. Cir. 2008) (quoting James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1095 (D.C. Cir. 1996)). Security has not suggested that these materials are “background information,” when, again, background information would tend to pre-date an agency’s decision. See id. And Security has not contended that ETA “failed to explain administrative action so as to frustrate judicial review,” when, in fact, ETA repeatedly explained its reasons for suspending and terminating Security’s grant following Security’s loss of accreditation. See id.; see also Hill Dermaceuticals, 709 F.3d at 47 (limiting consultation of extra-record evidence to “challenge[s of] gross procedural deficiencies—such as where the administrative record itself is so deficient as to preclude effective review”). As Security has failed to rebut the presumption of regularity to which the certified administrative record is entitled, this Court should disregard the extra-record evidence described herein and any arguments made by Plaintiff relying on this extra-record material. Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 25 of 26 24 CONCLUSION For the reasons set forth above, Defendants respectfully submit that Plaintiff’s motion for summary judgment should be denied, and Defendant’s cross-motion for summary judgment should be granted. Respectfully submitted, CHANNING D. PHILLIPS, D.C. BAR # 415793 United States Attorney DANIEL F. VAN HORN, D.C. BAR # 924092 Civil Chief By: _______/s/___________________ JEREMY S. SIMON, D.C. BAR #447956 Assistant United States Attorney Civil Division 555 4th Street, N.W. Washington, D.C. 20530 (202) 252-2528 Jeremy.Simon@usdoj.gov Counsel for Defendants Case 1:16-cv-01469-ABJ Document 14 Filed 03/02/17 Page 26 of 26 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SECURITY UNIVERSITY, ) ) Plaintiff, ) ) v. ) Case No. 1:16-cv-01469 (ABJ) ) EDWARD C. HUGLER ) Acting Secretary of Labor, et al. ) ) Defendants. ) ORDER Upon Consideration of Plaintiff’s Motion for Summary Judgment, Defendants’ Cross- Motion for Summary Judgment, any oppositions and replies thereto, and the entire record herein, it is this _____ day of __________ 2017, ORDERED that Plaintiff’s Motion for Summary Judgment is DENIED; and it is FURTHER ORDERED that Defendants’ Cross-Motion for Summary Judgment is GRANTED and Plaintiff’s Complaint is hereby dismissed with prejudice. SO ORDERED. ______________________________ United States District Judge Case 1:16-cv-01469-ABJ Document 14-1 Filed 03/02/17 Page 1 of 1