NEW LIFE EVANGELISTIC CENTER, INC., v. SEBELIUS et al

Filing 45

MEMORANDUM OPINION. Signed by Judge Colleen Kollar-Kotelly on December 1, 2010. (lcckk3)

-DAR NEW LIFE EVANGELISTIC CENTER, INC., v. SEBELIUS et al

Doc. 45

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA NEW LIFE EVANGELISTIC CENTER, INC., Plaintiff, v. KATHLEEN SEBELIUS, Secretary of the U.S. Department of Health and Human Services, and MARTHA N. JOHNSON, Administrator, U.S. General Services Administration, Defendants. MEMORANDUM OPINION (December 1, 2010) Plaintiff New Life Evangelistic Center, Inc. ("New Life") commenced this action on July 13, 2009, naming as defendants Kathleen Sebelius, in her official capacity as Secretary of the U.S. Department of Health and Human Services ("HHS"), and Martha N. Johnson, in her official capacity as Administrator of the U.S. General Services Administration ("GSA") (collectively, "Defendants").1 In the first instance, New Life challenged HHS' denial of New Life's application, made pursuant to Title V of the McKinney-Vento Homeless Assistance Act, 42 U.S.C. §§ 11301 et seq. (the "McKinney Act" or the "Act"), to use a particular piece of federal Civil Action No. 09-01294 (CKK) (DAR)

Ms. Johnson was automatically substituted as a defendant in this action upon her appointment as Administrator of the GSA. See Fed. R. Civ. P. 25(d) ("when a public officer who is a party in an official capacity . . . resigns, or otherwise ceases to hold office," during the pendency of an action, "[t]he officer's successor is automatically substituted as a party").

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Dockets.Justia.com

property in Cape Girardeau, Missouri for establishing a homeless assistance program. On December 8, 2009, after conducting a searching review of the administrative record and the parties' respective submissions, this Court vacated the denial and remanded the action for further proceedings below. On remand, HHS again denied New Life's application and issued a second denial letter. Presently before the Court is New Life's [35] Second Motion for Vacatur and Remand, through which New Life challenges both the substantive bases for the second denial letter and the procedural underpinnings of the proceedings conducted on remand. After reviewing the parties' submissions, including the attachments thereto, the administrative record, the relevant authorities, and the record of the case as a whole, the Court shall DENY New Life's Second Motion for Vacatur and Remand and DISMISS this action in its entirety, for the reasons set forth below. I. BACKGROUND The Court assumes familiarity with its prior opinion in this action, which sets forth in detail the factual and procedural background of this case, see New Life Evangelistic Ctr., Inc. v. Sebelius, 672 F. Supp. 2d 61 (D.D.C. 2009), and shall therefore only address the factual and procedural background necessary to address the issues currently before the Court. A. The McKinney Act and the Accompanying Regulatory Framework

Congress passed the McKinney Act in 1987, recognizing that "the federal government `has a clear responsibility and an existing capacity' to help meet an immediate and unprecedented crisis due to the lack of shelter for a growing number of individuals and families." Nat'l Law Ctr. on Homelessness & Poverty v. U.S. Veterans Admin., 98 F. Supp. 2d 25, 27 (D.D.C. 2000) (quoting 42 U.S.C. § 11301(a)). In particular, Title V of the Act, 42 U.S.C. §§ 11411-11412, and 2

its implementing regulations, 45 C.F.R. §§ 12a.1 et seq., provide a comprehensive legal framework for making "unutilized, underutilized, excess or surplus" federal real property available for use by representatives of the homeless. Id. § 12a.2(a). In the process, the Act appropriates and modifies, in part, the administrative procedures established by the Federal Property and Administrative Services Act of 1949, 40 U.S.C. §§ 541 et seq., which authorizes HHS to dispose of surplus property "as needed for use in the protection of public health," id. § 550(d)(1), a congressional mandate interpreted to include use by organizations that provide "services (including shelter) to homeless individuals," 45 C.F.R. § 12.3(e). Under the McKinney Act, HHS is charged with soliciting and evaluating applications by representatives of the homeless for the use of properties designated as suitable "surplus" federal property. 42 U.S.C. § 11411(e). The process starts, however, with the Secretary of Housing and Urban Development ("HUD"), which is responsible for canvassing landholding agencies to collect data on properties that are designated as unutilized, underutilized, excess, or surplus. 45 C.F.R. § 12a.3. HUD is required to publish in the Federal Register a description of any available property that has been identified as suitable for use as a facility to assist the homeless. 42 U.S.C. § 11411(c); 45 C.F.R. § 12a.8(a). Thereafter, any representative of the homeless that may be interested in such property must send HHS a written "expression of interest" within sixty days. 45 C.F.R. § 12a.9(a). Upon receipt of a written expression of interest, the property may not be made available for any other purpose until the application has been resolved. Id. § 12a.9(a)(2). Once HHS has received an expression of interest, it sends the interested party an application packet, which requires the applicant to provide certain information, including, among other things, (i) a description of the applicant organization, (ii) a description of the property 3

desired, (iii) a description of the proposed program, (iv) a description of the applicant organization's ability to finance and operate the proposed program, and (v) a certification of compliance with non-discrimination requirements. Id. § 12a.9(b); see also Appl. Instruction Booklet at AR686-715.2 Applications must be received by HHS within ninety days after receipt of an expression of interest. 42 U.S.C. § 11411(e)(2); 45 C.F.R. § 12a.9(d). Upon receipt, HHS "review[s] [the application] for completeness and, if incomplete, may return it or ask the applicant to furnish any missing or additional required information prior to final evaluation of the application." 45 C.F.R. § 12a.9(e)(1). However, "[d]ue to the short time frame imposed for evaluating applications, HHS' evaluation will, generally, be limited to the information contained in the application." Id. § 12a.9(c). Indeed, the Application Instruction Booklet advises: [Incomplete applications] will either result in disapproval of the application or a request for additional information. It is to the applicant's benefit to err on the side of providing too much information as opposed to omitting information or not providing enough detail. It is the applicant's responsibility to ensure their [sic] application presents all the information requested in a detailed and complete manner. Appl. Instruction Booklet at AR691. HHS must "evaluate each completed application within 25 days of receipt and . . . promptly advise the applicant of its decision." 45 C.F.R. § 12a.9(e)(2); see also 42 U.S.C. § 11411(e)(3). By regulation, all applications must be evaluated on the basis of the following five, non-exhaustive criteria (which are listed in descending order of priority, except for the final two

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Citations to "AR" refer to the Administrative Record. See Docket Nos. [14], [15], [33], 4

[37].

factors, which are of equal importance): (i) Services offered. The extent and range of proposed services, such as meals, shelter, job training, and counseling. Need. The demand for the program and the degree to which the available property will be fully utilized. Implementation Time. The amount of time necessary for the proposed program to become operational. Experience. Demonstrated prior success in operating similar programs and recommendations attesting to that fact by Federal, State, and local authorities. Financial Ability. The adequacy of funding that will likely be available to run the program fully and properly and to operate the facility.

(ii)

(iii)

(iv)

(v)

45 C.F.R. § 12a.9(e)(2) (emphasis added). In addition, the regulations provide that, when "construction or major renovation is not required or proposed, the property must be placed into use within twelve (12) months from the date of transfer." Id. § 12.3(c). When major construction or renovation is required or proposed, the property must be placed into use within thirty-six months from the date of transfer. Id. Finally, the regulations reserve to HHS the right to add "[a]dditional evaluation factors . . . as deemed necessary," provided the application packet is revised accordingly. Id. § 12a.9(e)(3). B. Factual and Procedural Background 1. The Initial Denial of New Life's Application

New Life is a self-described 501(c)(3) organization that provides services to homeless men, women, and children throughout Missouri, Illinois, Kansas, and Arkansas. Compl., Docket No. [1], ¶ 1; see also Appl. for Surplus Fed. Property ("Appl.") at AR717. On December 19,

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2008, HUD published an availability announcement for the federal building and courthouse located at 339 Broadway Street in Cape Girardeau, Missouri (the "Broadway Street Property"), which had been identified as no longer serving a federal need. See Fed. Property Suitable as Facilities to Assist the Homeless, 73 Fed. Reg. 77821-01 (Dec. 19, 2008). On January 26, 2009, New Life filed its expression of interest requesting an application for use of the property, see Jan. 26, 2009 Ltr. from B. Calkins to H. Ransom at AR681, and filed a formal application on May 1, 2009, see Appl. at AR716-1006. In its application, New Life proposed serving "temporary and/or chronically homeless persons in Cape Girardeau, Missouri and the surrounding twenty-two rural counties." Id. at AR721. More specifically, New Life proposed providing transitional housing and related services through its "Core Program" to approximately 125 homeless individuals per year, 20 of whom would also be eligible to receive job training through New Life's Leadership Job Training Program, as well as emergency shelter and a free store to an additional 1,100 homeless individuals per year. Id. at AR721-22. By letter to New Life President Rev. Lawrence W. Rice, Jr., dated May 28, 2009, HHS denied New Life's application for failure to meet the threshold requirements for four of the five criteria set forth in the relevant regulations ­ namely, services offered, need, implementation time, and financial ability. See May 28, 2009 Ltr. from P. Bartley to L. Rice at AR1023-26. 2. The Court's Remand Order

On July 13, 2009, New Life commenced this action seeking judicial review of HHS' decision. See Compl. Shortly thereafter, on July 21, 2009, it moved for a preliminary injunction, see Pl.'s Mot. for Prelim. Inj., Docket No. [9], which was subsequently converted into and treated as New Life's opening brief on the merits, see Order (July 24, 2009), Docket No. [11], at 6

1-2. On October 9, 2009, Defendants filed an opposition and the administrative record. See Defs.' Mem. of P. & A. in Opp'n to Pl.'s Opening Merits Br., Docket No. [13]; AR1-1028, Docket Nos. [14], [15]. New Life filed a reply on November 9, 2009, and Defendants filed a surreply on November 18, 2009. See Pl.'s Reply in Supp. of its Mot. for Summ. J., Docket No. [17]; Defs.' Surreply in Supp. of their Mem. in Opp'n to Pl.'s Opening Merits Br., Docket No. [20]. On December 8, 2009, after conducting a searching review of the administrative record and the parties' respective submissions, this Court vacated HHS' decision and remanded the action for further proceedings below. See New Life Evangelistic Ctr., 672 F. Supp. 2d at 61. In remanding, the Court identified three specific defects in HHS' decision. First, because New Life's underlying application did not include any proposal regarding primary health care services, HHS erred in criticizing New Life for failing to make clear how it proposed to deliver such services.3 Id. at 72-73. Second, HHS erred in relying exclusively on a "point-in-time" survey conducted by the Missouri Housing Development Commission to conclude that New Life failed to demonstrate a sufficient need for a program of the size and scope proposed, as New Life had submitted other evidence and statistical data; to the extent HHS intended to rely only on the point-in-time survey, it was required to explain its decision to discount contradictory evidence. Id. at 73-74. Third, because New Life's proposal included a description of estimated costs for proposed capital projects and revenue sources for those projects, HHS erred in concluding that New Life failed to allocate funds for capital improvements in its budget. Id. at 74-75. The Court
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At the same time, the Court concluded that HHS did not err in faulting New Life for failing to sufficiently explain how it proposed to deliver mental health and substance abuse services. New Life Evangelistic Ctr., 672 F. Supp. 2d at 73 n.11. 7

declined to address New Life's additional challenges to the decision, electing instead to remand the action for further proceedings below. Id. Although it did note that "HHS would be well served to augment the record below with such additional explanation as may be appropriate," the Court did not impose any specific conditions or limitations on the nature of the proceedings on remand. Id. at 74 n.14; see also Order (Dec. 8, 2009), Docket No. [23]. 3. The Proceedings on Remand

Shortly after the Court's remand order, on December 11, 2009, New Life wrote to HHS concerning the nature of the proceedings on remand. See Dec. 11, 2009 Ltr. from E. Waters to D. Rybicki at AR1059-60. Specifically, New Life "propose[d] that before HHS reevaluates the application per the Court's [remand] order, New Life [] supplement its application." Id. at AR1059. By letter dated December 28, 2009, HHS rejected New Life's proposal, indicating that New Life's original application was "complete" and taking the position that the relevant regulations reserve to HHS the discretion to request further information. See Dec. 28, 2009 Ltr. from D. Rybicki to E. Waters at AR1061-62. By letter dated May 14, 2010, HHS again denied New Life's application and issued a second denial letter (the "Second Denial Letter"). See May 14, 2010 Ltr. from P. Bartley to L. Rice ("2d Denial Ltr.") at AR1215-1225. As before, albeit in considerably greater detail and based on somewhat distinct reasoning, HHS denied New Life's application for failure to meet the threshold requirements for four of the five criteria set forth in the relevant regulations ­ namely, services offered, need, implementation time, and financial ability. Id. On July 19, 2010, New Life filed the present motion for vacatur and remand, challenging both the substantive bases for the Second Denial Letter and the procedural underpinnings of the proceedings conducted on

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remand. See Pl.'s Mem. of P. & A. in Supp. of Pl.'s Second Mot. for Vacatur & Remand ("Pl.'s Mem."), Docket No. [35-1]. Defendants filed an opposition, and supplemented the administrative record to include additional materials referenced in denying New Life's application. See Defs.' Mem. of P. & A. in Opp'n to Pl.'s Second Mot. for Vacatur & Remand ("Defs.' Opp'n"), Docket No. [41]; Defs.' Not. of Suppl. Filing of Admin. Record, Docket No. [33]; Defs.' Not. of Suppl. Filing of Admin. Record, Docket No. [37]. On August 26, 2010, Plaintiff filed a reply. See Pl.'s Reply to Defs.' Opp'n to Pl.'s Second Mot. for Vacatur & Remand ("Pl.'s Reply"), Docket No. [42]. The motion is now fully briefed and ripe for adjudication. II. LEGAL STANDARD Both parties agree that HHS' decision to deny New Life's application for the Broadway Street Property is properly analyzed under the "arbitrary or capricious" standard set forth in the Administrative Procedure Act (the "APA"). See 5 U.S.C. § 706(2)(A) ("The reviewing court shall . . . 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"). New Life, as the party challenging the agency action, bears the burden of proof. Abington Crest Nursing & Rehab. Ctr. v. Sebelius, 575 F.3d 717, 722 (D.C. Cir. 2009) (citing City of Olmsted Falls v. Fed. Aviation Admin., 292 F.3d 261, 271 (D.C. Cir. 2002)). In assessing the merits of New Life's challenge, the Court begins with the presumption that HHS' action was valid. Grid Radio v. Fed. Commc'ns Comm'n, 278 F.3d 1314, 1322 (D.C. Cir.), cert. denied, 537 U.S. 815 (2002). Agency action must generally be affirmed on the grounds originally stated by the agency;

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a reviewing court may not attempt to supply "a reasoned basis for the agency's action that the agency itself has not given." Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Nor may counsel's "post hoc rationalizations," offered for the first time on judicial review, substitute for an agency's obligation to articulate a valid rationale in the first instance. El Rio Santa Cruz Neighborhood Health Ctr., Inc. v. U.S. Dep't of Health & Human Servs., 396 F.3d 1265, 1276 (D.C. Cir. 2005). Consistent with these principles, judicial review is typically confined to the administrative record before the agency at the time the decision was made. Envtl. Def. Fund, Inc. v. Costle, 657 F.2d 275, 284 (D.C. Cir. 1981). In order to avoid a finding that the challenged agency action was arbitrary or capricious, the "agency must [have] examine[d] the relevant data and articulate[d] a satisfactory explanation for its action." PPL Wallingford Energy LLC v. Fed. Energy Regulatory Comm'n, 419 F.3d 1194, 1198 (D.C. Cir. 2005) (quoting Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43) (internal quotation marks omitted). In articulating the reason for its action, the agency "must have provided a `rational connection between the facts found and the choice made.'" Int'l Union, United Mine Workers of Am. v. Mine Safety & Health Admin., __ F.3d __, 2010 WL 4180677, at *4 (D.C. Cir. Oct. 26, 2010) (quoting Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43) (internal notations omitted). An agency's decision may be said to be arbitrary or capricious if any of the following apply: (i) its explanation runs counter to the evidence before the agency or is so implausible that it could not be ascribed to a difference of view or the product of agency expertise; (ii) the agency entirely failed to consider an important aspect of the problem or issue; (iii) the agency relied on factors which Congress did not intend the agency to consider; or (iv) the decision otherwise constitutes a clear error of judgment. Motor Vehicle Mfrs. Ass'n, 463 U.S. at

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43; accord Jicarilla Apache Nation v. U.S. Dep't of Interior, 613 F.3d 1112, 1118 (D.C. Cir. 2010). This standard of review is highly deferential to the agency; a court need not find that the agency's decision is "the only reasonable one, or even that it is the result [the court] would have reached had the question arisen in the first instance in judicial proceedings." Am. Paper Inst., Inc. v. Am. Elec. Power Serv. Corp., 461 U.S. 402, 422 (1983). That is, it is not enough for the agency decision to be incorrect; so long as it has some rational basis, the court is bound to uphold the decision. Hosp. of Univ. of Pa. v. Sebelius, 634 F. Supp. 2d 9, 13 (D.D.C. 2009) (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)). At bottom, the reviewing court is not entitled to substitute its judgment for that of the agency. Overton Park, 401 U.S. at 416. Finally, in evaluating agency action under the "arbitrary or capricious" standard, the reviewing court must take "due account . . . of the rule of prejudicial error." 5 U.S.C. § 706. Just as the burden of establishing that the agency action is arbitrary or capricious rests with the party challenging agency action, so too must that party establish that the errors ascribed were prejudicial. Jicarilla Apache Nation, 613 F.3d at 1121 (citing PDK Labs. Inc. v. U.S. Drug Enforcement Agency, 362 F.3d 786, 799 (D.C. Cir. 2004)). The question of whether an error was prejudicial is necessarily contextual, and courts must proceed with a case-specific application based upon an examination of the record. Jicarilla Apache Nation, 613 F.3d at 1121. However, where the party challenging agency action fails to show that the agency's error may have affected the outcome of the proceedings below, the error is not prejudicial, and it would be senseless to vacate and remand for further proceedings. Id.

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With these principles in mind, the Court turns to the merits of the present motion. III. DISCUSSION New Life tenders three principal arguments in support of its claimed entitlement to a second vacatur and remand: (i) New Life first claims, in essence, that HHS acted arbitrarily or capriciously on remand by engaging in a procedurally defective decisionmaking process, see infra Part III.A; (ii) New Life next contends that, even if HHS' conduct on remand was not procedurally defective, the Second Denial is nevertheless substantively arbitrary or capricious, see infra Part III.B; and (iii) finally, New Life appears to argue that, even if HHS' decision was not otherwise arbitrary or capricious, the Court should nevertheless permit New Life to file a revised application to account for changed circumstances arising in the time since this action was first commenced, see infra Part III.C. The Court addresses each argument in turn. A. New Life Has Failed to Establish that the Proceedings on Remand Were Procedurally Defective

New Life first claims that HHS acted arbitrarily or capriciously on remand by "engag[ing] in a one-sided reevaluation process that gave the agency every advantage, []while denying New Life any similar benefit." Pl.'s Mem. at 4. In other words, New Life claims that HHS' decisionmaking process on remand was procedurally defective. New Life's four specific complaints are as follows: (i) HHS improperly supplemented the administrative record on remand with materials unfavorable to New Life's position, see infra Part III.A.1; (ii) HHS improperly rejected New Life's request to supplement its application on remand, see infra Part III.A.2; (iii) HHS unreasonably delayed the issuance of its decision on remand, purportedly in violation of statutorily required time limits, see infra Part III.A.3; and (iv) the circumstances of HHS' decisionmaking process on remand suggest that the agency was acting not out of a desire 12

to act as a neutral decisionmaker, but rather to insulate its decision from judicial review, see infra Part III.A.4. For the reasons set forth below, the Court concludes that none of the foregoing complaints renders HHS's decision arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law. 1. HHS' Supplementation of the Record on Remand

New Life first contends that HHS acted arbitrarily or capriciously by supplementing the administrative record on remand with approximately two hundred additional pages of materials unfavorable to New Life's position. Pl.'s Mem. at 4-7. For at least two reasons, the contention is unavailing: first, the Court finds no error in HHS' course of conduct; and, second, even assuming that HHS erred, New Life has failed to carry its burden of establishing that such error was prejudicial. a. HHS Retained the Discretion to Supplement the Record on Remand

It is beyond dispute that a reviewing court may allow an agency to supplement the record with additional evidence following remand. See, e.g., Union Elec. Co. v. Fed. Energy Regulatory Comm'n, 890 F.2d 1193, 1196 (D.C. Cir. 1989) ("On remand the Commission may wish to supplement the record with such [additional] evidence."). Equally non-controversial, however, is the proposition that an agency's review on remand must be responsive to the court's mandate. Process Gas Consumers Grp. v. Fed. Energy Regulatory Comm'n, 292 F.3d 831, 840 (D.C. Cir. 2002). The only question here is whether HHS was permitted to supplement the record by the terms of this Court's remand order. The Court's remand order and accompanying memorandum opinion are, quite simply, silent on the question of how HHS was to treat the evidentiary record on remand. While the 13

Court did suggest that "HHS would be well served to augment the record below with such additional explanation as may be appropriate," the Court did not impose any specific conditions or limitations on the nature of the proceedings below. New Life Evangelistic Ctr., 672 F. Supp. 2d at 74 n.14 (emphasis added); see also Order (Dec. 8, 2009), Docket No. [23]. As such, nothing in the metes and bounds of this Court's remand order precluded HHS from supplementing the record on remand. At the same time, "[w]hen the court does not require additional fact gathering on remand . . . the agency is typically authorized to determine, in its discretion, whether such fact gathering is needed." Chamber of Commerce of the U.S. v. Secs. & Exch. Comm'n, 443 F.3d 890, 900 (D.C. Cir. 2006); see also PPG Indus., Inc. v. United States, 52 F.3d 363, 366 (D.C. Cir. 1995) ("there is no principle of administrative law that restricts an agency from reopening proceedings to take new evidence after the grounds upon which it relied are determined by a reviewing court to be invalid."). Such an approach is consonant with the general preference to leave to the agency's discretion to decide how, in light of internal organizational considerations, it may best proceed upon remand. Fed. Power Comm'n v. Transcon. Gas Pipe Line Corp., 423 U.S. 326, 333 (1976) (per curiam). Accordingly, although this Court's remand order admittedly could have been more clear by expressly affording HHS leave to supplement the factual record on remand, and certainly the better practice would have been for the parties to have sought clarification prior to engaging in extended proceedings below, the Court concludes that HHS was permitted to exercise its discretion to collect and consider additional evidence on remand. Its election to do so cannot be characterized as arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

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b.

New Life Has Failed to Establish Prejudicial Error

As a separate and independent grounds for upholding HHS' decision in this regard, New Life has failed to satisfy its burden of establishing that the ascribed error was prejudicial. First, although the two hundred pages added to the administrative record consist of a variety of documents,4 New Life has only specifically objected to two: letters from two homeless assistance providers in the Cape Girardeau area, Safe House for Women ("Safe House") and Mending Hearts Recovery ("Mending Hearts"), in which those providers disclaim any formal referral relationship with New Life. Pl.'s Mem. at 4. To the extent New Life objects to any other documents, it has, quite simply, failed to discharge its burden of establishing that HHS' decision to supplement the record with those documents was, even if presumed to be erroneous, prejudicial. Meanwhile, with respect to the letters from Safe House and Mending Hearts, it is true that both letters are referenced in the Second Denial Letter. Specifically, in addressing the extent and range of services proposed by New Life ­ i.e., the "services offered" criterion ­ HHS highlighted that New Life had identified Safe House and Mending Hearts as service providers with which it had established referral relationships, and provided that "[i]n unsolicited correspondence to HHS, the executive directors of [Safe House] and [Mending Hearts] disputed the claims made by [New Life] in its application." 2d Denial Ltr. at AR1216. This, however, was hardly the linchpin of HHS' analysis; rather, HHS broadly determined that, while "it is acceptable for an applicant to

Simply by way of example, the two-hundred pages added to the administrative record upon remand include: a copy of this Court's December 8, 2009 Memorandum Opinion, AR102950; the Second Denial Letter, AR1215-25; copies of correspondence between New Life and HHS following remand, AR1059-62; and a copy of the definition of "homelessness" under the McKinney Act, AR1056-58. 15

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propose providing services via referrals . . . [New Life's] application fails to adequately support its proposal and demonstrate that [it] would successfully implement the referral program it proposes." Id. at AR1217. Indeed, in the Second Denial Letter, HHS expressly stated that the letters from Safe House and Mending Hearts "not only call into question [New Life's] ability to provide referrals to mental health and substance abuse services, they also serve to highlight why it is inadequate to rely simply on informal partnerships, arrangements, or telephone conversations." Id. In other words, HHS referenced the two letters as illustrative examples of what it viewed as a more fundamental failing with New Life's application ­ i.e., the failure to adequately describe how New Life intended to implement the referral program it proposed. Nor was this the only basis that HHS cited as grounds for rejecting New Life's showing under the "services offered" criterion; HHS separately determined that New Life's proposed staffing model was inadequate for the scope and extent of services proposed. Id. at AR1217. In short, because the reference to the letters from Safe House and Mending Hearts was far from essential to the agency's analysis under the "services offered" criterion, New Life has failed to establish that their inclusion in the administrative record, even if erroneous, was prejudicial. See Pittsburgh & Lake Erie R.R. Co. v. Interstate Commerce Comm'n, 796 F.2d 1534, 1543 (D.C. Cir. 1986) (ascribed procedural error not prejudicial where it related to issues "irrelevant" or "tangential" to the agency's conclusion); Olson v. Clinton, 602 F. Supp. 2d 93, 104 (D.D.C. 2009) (plaintiff failed to demonstrate that alleged procedural errors tainted the decision below and thereby caused him prejudice). Further preventing New Life from demonstrating prejudice is the question of what relief it would be entitled to in the event of an error. In the formal rulemaking context, a party may

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demonstrate prejudicial error by showing that the agency relied upon documents that were not previously disclosed, and establishing that it could have mounted a "credible challenge" to those documents. Owner-Operator Indep. Drivers Ass'n, Inc. v. Fed. Motor Carrier Safety Admin., 494 F.3d 188, 202-03 (D.C. Cir. 2007). But, as set forth in greater detail below, see infra Part III.A.2, New Life simply has no comparable procedural right in this setting, an informal adjudication for which neither notice-and-comment nor an on-the-record hearing is required. As such, even if the Court's remand order could somehow be construed to restrict HHS' discretion on remand, the Court would simply issue an amended order expressly allowing HHS leave to consider additional evidence, at which juncture New Life would have no right of response or rebuttal. There is no need to compel an agency to go through the "empty exercise of repeating a procedure according to rules where the result of the procedure is foreordained," Wilkinson v. Legal Servs. Corp., 27 F. Supp. 2d 32, 63 (D.D.C. 1998), and therefore New Life's first argument fails on this ground as well. 2. New Life's Request to Submit a Supplemental Application

In truth, New Life's complaint is less that HHS supplemented the record with additional materials in support of its Second Denial Letter, but rather that it did so while simultaneously "reject[ing] New Life's request to supplement its application." Pl.'s Mem. at 4. As described above, shortly after the Court's remand order, New Life wrote to HHS proposing to supplement its application before HHS commenced the reevaluation process. See Dec. 11, 2009 Ltr. from E. Waters to D. Rybicki at AR1059-60. HHS rejected the proposal, taking the position that New Life's original application was "complete" and that the relevant regulations reserve to the agency the right to request additional information. See Dec. 28, 2009 Ltr. from D. Rybicki to E. Waters

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at AR1061-62. New Life's argument is premised upon a fundamental misunderstanding of its procedural rights in this specific setting, an informal adjudication in which New Life had no entitlement to respond to or rebut HHS' evidentiary showing, or to submit countervailing evidence in support of its position beyond whatever it included in its original application. Because New Life had no such right under the APA or the McKinney Act and its accompanying regulations, New Life's argument fails. a. The APA Does Not Confer Upon New Life a Right to Supplement the Record

The APA's provisions do not specify the procedures that are to govern the great bulk of agency adjudications ­ i.e., those for which an on-the-record hearing is not statutorily required. See Occidential Petroleum Corp. v. Secs. & Exch. Comm'n, 873 F.2d 325, 337 (D.C. Cir. 1989) ("no provision of the APA contains specific procedures to govern an informal agency adjudication"); see generally Peter L. Strauss, Administrative Justice in the United States 210-12 (2d ed., Carolina Academic Press 2002). The provisions governing formal rulemaking proceedings, adjudications for which an on-the-record hearing is statutorily required, and proceedings relating to applications for a license required by law, see 5 U.S.C. §§ 553-554, 556558, have no direct application to the informal adjudication setting. Meanwhile, the one provision of any possible relevance to the immediate context imposes only modest obligations on the acting agency: Prompt notice shall be given of the denial in whole or in part of a written application, petition, or other request of an interested person made in connection with any agency proceeding. Except in affirming a prior denial or when the denial is self-explanatory, the notice shall be accompanied by a brief statement of the grounds for denial. Id. § 555(e). In sum, in this setting, the APA requires only (i) prompt notice of the denial of any 18

written application, and (ii) a brief statement of the grounds for denial. Unlike other agency proceedings, the APA does not confer upon participants in informal adjudications the right to "present his case or defense by oral or documentary evidence, to submit rebuttal evidence, [or] to conduct such cross-examination as may be required for a full and true disclosure of the facts." Id. § 556(d). b. Neither The McKinney Act Nor its Regulations Confer Upon New Life a Right to Supplement the Record

The inquiry cannot end with the APA: if the McKinney Act or the relevant regulations confer upon applicants for the use of surplus federal properties certain procedural rights above and beyond those contemplated by the APA, then those rights must be honored. However, at least in terms of the application process, the procedures contemplated by the McKinney Act are few: (i) HHS must, with the concurrence of the relevant landholding agency, "grant reasonable extensions" of the time to submit an application, 42 U.S.C. § 11411(e)(2); (ii) HHS must "review, make all determinations, and complete all actions on the application" within twenty-five days after receipt, id. § 11411(e)(3); and (iii) HHS must "maintain a written public record of all actions taken in response to an application," id. Nothing in the McKinney Act requires HHS to allow New Life to submit any information, evidence, or argument beyond whatever may be included in the original application. The relevant regulations are more fulsome in articulating the procedures attaching to the application process, but not significantly so. Most notably for our present purposes, the regulations provide as follows: (i) "[u]pon request from the applicant, HHS may grant extensions [to submit applications], provided that the appropriate landholding agency concurs with the extension," 45 C.F.R. § 12a.9(d); (ii) "[u]pon receipt of an application, HHS will review it for 19

completeness, and, if incomplete, may return it or ask the applicant to furnish any missing or additional required information prior to final evaluation of the application," id. § 12a.9(e)(1); (iii) HHS must "evaluate each completed application within 25 days of receipt and . . . promptly advise the applicant of its decision," id. § 12a.9(e)(2); and (iv) HHS must evaluate each application on the basis of the specified evaluation factors, as well as any additional factors identified in the application packet, id. § 12a.9(e)(2)-(3). Of these procedural requirements, only one has any relevance here ­ namely, the requirement that, "[u]pon receipt of an application, HHS . . . review it for completeness." Id. § 12a.9(e)(1). The regulation goes on to provide that, "if incomplete, [HHS] may return [the application] or ask the applicant to furnish any missing or additional required information prior to final evaluation of the application." Id. Two matters are worthy of note here. First, the quoted language applies, if at all, only when HHS determines that an application is incomplete; where the application is complete, the regulations are silent as to the furnishing of additional information. This interpretation is not only mandated by the conditional "if complete" that begins the sentence, but also by the provision's use of the terms "missing" and "additional required information," which would have no applicability to complete applications. Second, even with respect to incomplete applications, the sentence structure and the use of the term "may" unambiguously evinces an intention to vest in HHS the discretion whether or not to seek further information from applicants. See Jama v. Immigration & Customs Enforcement, 543 U.S. 335, 346 (2005) ("The word `may' customarily connotes discretion."). Such an interpretation is virtually compelled by the separate provision of the regulations warning applicants that "[d]ue to the short time frame imposed for evaluating applications, HHS' evaluation will, generally, be

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limited to the information contained in the application." 45 C.F.R. § 12a.9(c). To summarize, nothing in either the McKinney Act or the regulations requires HHS to allow applicants to submit supplemental materials once an application has been deemed complete; even where applications are incomplete, HHS retains the discretion to decide whether to request and accept additional materials. c. HHS Did Not Act Arbitrarily or Capriciously in Denying New Life's Request to Supplement its Application

On remand, HHS again determined that New Life's application was "complete," as that term is used in the McKinney Act and its accompanying regulations. See Dec. 28, 2009 Ltr. from D. Rybicki to E. Waters at AR1061-62. Notably, New Life has never suggested that its application was not "complete," a fact highlighted by HHS in its opposition papers but left conspicuously unaddressed by New Life in its reply. See Defs.' Opp'n at 6 ("[New Life] has never argued that its application is incomplete, nor does it so argue here."); Pl.'s Reply at 1-4. Instead, in the proceedings below, New Life sought to introduce additional materials "that New Life would have filed had HHS engaged in a more appropriately interactive process." Dec. 11, 2009 Ltr. from E. Waters to D. Rybicki at AR1059. That is, New Life did not claim then, and does not claim now, that the information it sought to provide on remand was "additional required information" or information "missing" from its original application. 45 C.F.R. § 12a.9(e)(1). If anything, the materials ­ characterized by New Life as "evidence . . . elaborating on the changed circumstances in Cape Girardeau . . . and the increasing need for New Life's proposed Title V program," Pl.'s Reply at 7 ­ are designed to rebut or respond to the deficiencies in New Life's application that were identified by HHS in the initial proceedings below and in the course of litigation before this Court, a transparent attempt to reopen an evidentiary submission phase to 21

the informal adjudication below that never existed in the first place. What New Life wants, in essence, is "a more . . . interactive process," Dec. 11, 2009 Ltr. from E. Waters to D. Rybicki at AR1059, one in which it is permitted to engage in a dialogue with HHS over the merits of its application for use of the Broadway Street Property. It is here that New Life's argument becomes particularly problematic, rendering it necessary for this Court to examine its role in assessing the procedural sufficiency of an agency's decisionmaking process in matters where the governing statute and regulations are silent. New Life does not argue that the relief it seeks is required by the McKinney Act itself or by the supporting regulations (plainly, it is not), and therefore New Life's argument rises and falls upon the APA. Unfortunately for New Life, the APA "sets forth the full extent of judicial authority to review executive agency action for procedural correctness," Fed. Commc'ns Comm'n v. Fox Television Stations, Inc., __ U.S. __, 129 S. Ct. 1800, 1810 (2009), and, as set forth above, the APA simply does not confer upon participants in informal adjudications a right to supplement the evidentiary record, or to submit countervailing evidence or argument. To put it bluntly, nothing contemplated by the APA is even remotely comparable to an "interactive process" between the participant and the agency. As such, it is unsurprising that New Life resorts to notions of "fundamental fairness" in an attempt to resurrect its claim, Pl.'s Mem. at 5-7, but this avenue is foreclosed by decades of settled jurisprudence precluding courts from imposing upon agencies specific procedural requirements not contemplated by the governing statutory and regulatory framework. In the seminal case of Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519 (1978), the Supreme Court held that a court reviewing an agency

22

rulemaking proceeding may not impose upon the agency procedural requirements beyond those that Congress specifically set forth in the APA. Describing agencies' freedom to fashion their own procedural rules as "the very basic tenet of administrative law," id. at 544, the Supreme Court described the limits of the reviewing court's role in no uncertain terms: absent constitutional constraints or extremely compelling circumstances, agencies are free to fashion their own procedural rules and pursue methods of inquiry as they see fit, id. at 524, 543. Consistent with these principles, the court should not "explore the procedural format or . . . impose upon the agency its own notion of which procedures are `best' or most likely to further some vague, undefined public good." Id. at 549. The general principles announced in Vermont Yankee were extended to the informal adjudication setting in Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633 (1990), where the Supreme rejected an argument remarkably similar to the one now pressed by New Life. There, the Court of Appeals concluded that the agency's decision, made in the context of an informal adjudication, was arbitrary or capricious because it did not, inter alia, apprise the petitioner of the material on which it was to base its decision or provide the petitioner with an opportunity to offer contrary evidence. Id. at 653. Reconciling Vermont Yankee with its prior opinion in Overton Park, 401 U.S. 402, the Pension Benefit Court provided that, in the informal adjudication context, the relevant question is whether the agency's procedures below, whatever they may be, suffice to "provide an explanation that will enable the [reviewing] court to evaluate the agency's rationale at the time of the decision." Pension Benefit, 496 U.S. at 654. The Court was unequivocal that Vermont Yankee's basic thrust still applied: in the informal adjudication setting, "courts are not free to impose upon agencies specific procedural requirements that have

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no basis in the APA" or the governing legislation. Id. In so holding, the Supreme Court faulted the Court of Appeals for focusing on notions of "fundamental fairness" and for critiquing the agency for failing to afford the petitioner a greater role in its decisionmaking process; because those criticisms had no basis in the APA or the relevant legislation, the Court of Appeals had run afoul of Vermont Yankee. Id. at 655; see also Occidental Petroleum, 873 F.2d at 338 (Vermont Yankee would forbid the reviewing court from "imposing upon the agency specific procedural steps that must be followed in order to create a reviewable record" of an informal adjudication proceeding). The relief now sought by New Life is nearly identical to the relief rejected by the Supreme Court in Pension Benefit; the Court can see no reason (and New Life has certainly provided none) to depart from the Supreme Court's commandments in this case. Over the past three decades, courts have applied the principles first announced in Vermont Yankee time and time again. The Court will only mention two here. The first, Process Gas Consumers Grp. v. Fed. Energy Regulatory Comm'n, 930 F.2d 926 (D.C. Cir. 1991), illustrates how these principles might apply to agency proceedings upon remand. In Process Gas, the D.C. Circuit Court of Appeals was asked to review a decision issued by the Federal Energy Regulatory Commission ("FERC") for the second time, a decision rendered on remand after the Court of Appeals concluded that FERC had erred in approving a gas surcharge to support research by the Gas Research Institute ("GRI"). Id. at 928. During the proceedings on remand, FERC "requested and received new submissions from GRI justifying its end-use research proposals," but "denied a request by certain participants for discovery of background documents supporting GRI's new submissions." Id. at 929. In its decision following remand, FERC adopted GRI's analysis. Id. The petitioners then raised a variety of challenges to the

24

procedures that FERC used on remand, "contend[ing] that FERC unfairly structured its procedures in favor of GRI" by denying their discovery requests and adopting most of GRI's conclusions. Id. at 929-30. The Court, quite simply, rejected each of the procedural challenges, on the basis that the agency "has broad discretion to decide what procedures to use in fulfilling its statutory responsibilities." Id. at 930 (internal quotation marks and notations omitted). Similarly, here, HHS was well within its discretion in deciding to supplement the record with a small number of documents consistent with its prior determination while simultaneously determining that it was not appropriate to permit New Life to submit additional materials; these are matters that Congress has entrusted to HHS. More recently, in Dist. No. 1, Pac. Coast Dist., Marine Eng'rs' Beneficial Assoc. v. Mar. Admin., 215 F.3d 37, 42-43 (D.C. Cir. 2000), the D.C. Circuit Court of Appeals rejected a claim that "fundamental fairness" may be used to create procedural rights where the APA and the relevant legislation envision none. In that case, the petitioner claimed that the agency denied it "fundamental fairness" in violation of the APA by accepting and relying upon ex parte communications in granting an application to transfer registry of vessels outside the United States. Echoing Vermont Yankee, the Court held that, "[i]n the absence of any statutory or self[]imposed limitation, [courts] have no jurisdiction to review under the APA an agency's procedural decision regarding how best to make a substantive decision committed by law." Id. at 43. Furthermore, the Court rejected the petitioner's attempt to side-step these limitations on judicial review by arguing that, once the agency requested comments from interested parties, it effectively forfeited its discretion to rely upon such comments without first providing the public an opportunity to respond to them. Id. The Court reasoned that "how [the agency] deals with

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those comments are procedural decisions that, like the underlying substantive decision, are matters within the agency's discretion." Id. These pronouncements apply with no less force here. Simply put, HHS retained broad discretion on remand to decide whether, and if so how, to collect and consider additional materials in support of its determination. Agencies are, of course, free to adopt additional procedures as they see fit, but this Court is "without authority" to impose such procedural requirements against HHS' will in the absence of a constitutional or statutory command or extremely compelling circumstances, none of which are present here. Natural Res. Def. Council, Inc. v. Nuclear Regulatory Comm'n, 216 F.3d 1180, 1190 (D.C. Cir. 2000); see also Transcon. Gas Pipe Line, 423 U.S. at 333 (warning that, inter alia, dictating to the agency methods and procedures "clearly runs the risk of propelling the court into the domain which Congress has set aside exclusively for the administrative agency.") (internal quotation marks and notations omitted). Accordingly, the Court concludes that HHS did not act arbitrarily, capriciously, or otherwise not in accordance of law, nor abused its discretion, by supplementing the record with additional materials in support of its Second Denial Letter while simultaneously denying New Life's request to supplement its application. 3. The Timing of HHS' Second Denial Letter

The third procedural error ascribed by New Life to the proceedings on remand ­ i.e., that HHS unreasonably delayed the issuance of its decision, Pl.'s Mem. at 5 ­ does not warrant a different result. New Life's argument is that, by issuing its Second Denial letter "a whopping 157 days" after this Court's remand order, id., HHS ran afoul of the twenty-five day time limitation placed upon its evaluation process by the McKinney Act and its supporting

26

regulations.5 New Life's argument here fares no better than its predecessors for two reasons: first, because HHS was not required to issue its decision within twenty-five days of remand, it committed no error; and second, even if HHS' delay somehow constituted error, New Life has nevertheless failed to carry its burden of establishing that the error was prejudicial. a. HHS Was Not Required to Issue its Decision Within Twenty-Five Days of Remand

The inquiry begins with the statutory and regulatory landscape. The two relevant provisions are essentially coterminous. Section 11411(e)(3) of the McKinney Act provides, in relevant part: No later than 25 days after receipt of a completed application, the Secretary of Health and Human Services shall review, make all determinations, and complete all actions on the application. 42 U.S.C. § 11411(e)(3). Meanwhile, the regulations provide as follows: "HHS will evaluate each completed application within 25 days of receipt and will promptly advise the applicant of its decision." 45 C.F.R. § 12a.9(e)(2). Unsurprisingly, the parties offer conflicting interpretations of these provisions. Defendants maintain that the time limitations contemplated by § 11411(e)(3) and its accompanying regulation relate only to the initial submission of an application, and have no applicability to the agency's reconsideration of an application upon remand from the district court. Defs.' Mem. at 5 n.1. Although never expressed with model clarity, New Life's contention appears to be that the provisions should be read to require HHS to act within twenty-

Although it need not belabor the point, the Court notes that New Life does not explain why, if it actually believed that HHS was obligated to render a decision within twenty-five days after remand, it proposed to HHS that it be afforded a total of fifty-two days to submit a revised application. See Dec. 11, 2009 Ltr. from E. Waters to D. Rybicki at AR1059-60. 27

5

five days after remand. Pl.'s Reply at 2. In resolving these conflicting interpretations, the threshold determination for the Court, although one not addressed by the parties, is the level of deference to be afforded Defendants' proffered interpretation. The basic legal framework is well-established and non-controversial: unless Congress has directly spoken to the question at issue, the court's role is limited to determining whether the agency's construction of a statute it administers "is based on a permissible construction of the statute." Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984); see also Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (agency's interpretation of its own regulation must be given controlling weight unless plainly erroneous or inconsistent with the regulation). That framework becomes somewhat more complicated where, as here, multiple agencies are charged with administering a statute and enacting enabling regulations. See, e.g., Regulations to Carry Out the Requirements of Title V of the McKinney Act, 56 Fed. Reg. 23789-01 (May 24, 1991) (identifying HHS, GSA, and HUD as promulgators of joint interim final rule). In this Circuit, where multiple agencies are charged with administering a statute, a single agency's interpretation is generally not entitled to Chevron deference; instead, the court must review the agency's interpretation de novo. Grant Thornton, LLP v. Office of Comptroller of the Currency, 514 F.3d 1328, 1331 (D.C. Cir. 2008); but see 1185 Ave. of Ams. Assoc. v. Resolution Trust Corp., 22 F.3d 494, 497 (2d Cir. 1994) (adopting middle-ground approach affording some deference, but short of full Chevron deference, to the interpretation proffered by a single agency); Bd. of Trade of Chicago v. Secs. & Exch. Comm'n, 187 F.3d 713, 719 (7th Cir. 1999) (suggesting "it is possible to defer simultaneously to two incompatible agency positions"). The alternative, it

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is said, "would lay the groundwork for a regulatory regime in which either the same statute is interpreted differently by the several agencies or the one agency that happens to reach the courthouse first is allowed to fix the meaning of the text for all." Rapaport v. U.S. Dep't of Treasury, Office of Thrift Supervision, 59 F.3d 212, 216-17 (D.C. Cir. 1995), cert. denied, 516 U.S. 1073 (1996). Of course, there would be no comparable concern if all three agencies charged with administering the McKinney Act pressed the same interpretation before this Court, but only two of the three, HHS and GSA, are parties to the present proceeding. Compare Individual Reference Servs. Grp., Inc. v. Fed. Trade Comm'n, 145 F. Supp. 2d 6, 23 (D.D.C. 2001) (regulations were the result of coordinated effort among the defendants), aff'd, 295 F.3d 42 (D.C. Cir. 2002). Accordingly, even though there is no such indication, the existence of an alternative agency interpretation is at least theoretically possible. Nevertheless, the Court is not convinced that the exception to Chevron deference should apply here. This is because, whereas preceding subsections of § 11411 define the responsibilities of other agencies, see, e.g., 42 U.S.C. § 11411(a), (c) (describing HUD's responsibility for canvassing landholding agencies and collecting data on surplus properties), Subsection (e) speaks to the role and responsibilities of HHS alone. The same holds true for the relevant regulation, which mentions other agencies only insofar as defining HHS' role vis-à-vis those agencies. See, e.g., 45 C.F.R. § 12a.9(e)(4) (requiring HHS to notify GSA of the relative rankings among competing applications). By all accounts, the statutory and regulatory text have delegated to HHS the primary responsibility for overseeing the application process attendant to Title V of the McKinney Act. There is therefore some support for the argument that the exception to Chevron deference that arises where multiple agencies are charged with administering a statute should not

29

apply in this instance, where the text has carved out an area more clearly the domain of one agency over another. To the Court's knowledge, no court within this Circuit has yet addressed the precise issue, and, ultimately, the Court finds it unnecessary to do so here. Even applying de novo review to the parties' conflicting interpretations, HHS' interpretation must prevail. New Life's argument is predicated upon a strained, and ultimately unacceptable, interpretation of the relevant statutory and regulatory language. The McKinney Act requires HHS to review an application for surplus federal property "[n]o later than 25 days after receipt of a completed application." 42 U.S.C. § 11411(e)(3) (emphasis added). By its plain language, the provision has no bearing upon the timing of agency decisionmaking upon receipt of an order of remand from a district court. The accompanying regulation demands the same treatment; the relevant provision only requires HHS to "evaluate each completed application within 25 days of receipt." 45 C.F.R. § 12a.9(e)(2). It too has nothing to say about the timeframe for an agency's response upon receiving an order of remand from the district court. New Life's attempts to make an end-run around this plain language bear no fruit. New Life first suggests that any construction of the word "receipt" to mean only "initial receipt" would contravene Congress' pronouncement that "all actions relative to a Title V application should be completed in 25 days." Pl.'s Reply at 2 (citing H. Conf. Rep. No. 101-645, at 101) (internal emphasis and notations omitted). But the operative word in each provision is not so much "receipt" as it is "application," and the interplay between the two; the statute and its regulation only set a deadline for HHS to act upon receipt of an application, that and nothing else. Perhaps recognizing that its interpretation is not supported by the text itself, New Life

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next suggests that Defendants' reading would allow the agency to "render[] an unlawful decision" and "then arbitrarily enlarge the Title V processing timeframe on remand, with no apparent limits." Pl.'s Reply at 2. The suggestion that Defendants' reading would insulate the timing of agency action on remand from judicial review misses the mark for several reasons. As an initial matter, this Court is not free to re-write the unambiguous language chosen by Congress merely on the basis that policy considerations might counsel in favor of a different result; the statutory command is clear, and this Court is obligated to respect that command. In any event, despite New Life's hyperbolic averments to the contrary, interpreting the statute and the regulation by their plain meaning would not yield the world of arbitrary agency action conjured up by New Life. First, this Court highly doubts that HHS would strategically and intentionally render an unlawful decision merely to enlarge the time it has to consider an application; not only would it be nonsensical for HHS to improperly deny an application in order to buy itself more time to consider the application, the underlying decision would nevertheless remain subject to judicial review. Second, although the reviewing court must of course take into account the general reluctance to intervene in the practice and procedure of the agency decisionmaking process, there is no per se bar to a reviewing court specifying some timeframe for the agency's consideration upon remand, or, for that matter, encouraging the parties to reach some agreement as to the general timing for the proceedings on remand. Third, and finally, New Life's argument completely ignores that the APA provides a remedy for agency action "unreasonably delayed." 5 U.S.C. § 706(1); see also Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 63 (2004) (claims may proceed where agency "failed to take a discrete agency action that it is required to take"). In sum, even applying de novo review to the relevant provisions, the Court finds that

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HHS was under no obligation to render its decision within 25 days of remand. By logical extension, its failure to do so was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. b. New Life Has Failed to Establish Prejudicial Error

Furthermore, as a separate and independent ground supporting the Court's decision in this regard, New Life has once again failed to demonstrate that HHS' conduct, even if erroneous, was also prejudicial. Even crediting New Life's interpretation, and even assuming that vacatur was necessary, HHS would be free to simply reissue its decision 25 days following a second remand. Again, courts are not required to compel an agency to go through the "empty exercise of repeating a procedure according to rules where the result of the procedure is foreordained," Wilkinson, 27 F. Supp. 2d at 63, and the Court declines to do so here. See also Barnhart v. Peabody Coal Co., 537 U.S. 149, 158-59 (2003) (expressing a reluctance to void subsequent agency action for failure to comply with statutory timing where statute itself does not specify a consequence for noncompliance). New Life's argument that it was prejudiced by the alleged delay because the information in its application "had become stale by the date of decision, over one year later," Pl.'s Reply at 3, fails for at least two reasons. First, because the foundation of New Life's argument is that HHS erred by taking more than 25 days to act on remand, the relevant "delay," if any, extends not from the time of New Life's original application to the date of HHS' decision upon remand, but rather from the date of this Court's remand order to the date of HHS' decision upon remand. That period was a mere 132 days (i.e., the full 157 days it took HHS to render its decision, subtracting the 25 days during which New Life believes HHS could have rendered a timely decision). But

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New Life has adduced no evidence that would support a finding that its application became "stale" only in the course of those 132 days, as opposed to the full year that intervened between HHS' decision on remand and New Life's original application. Second, even assuming, arguendo, that New Life was capable of making such a showing, in claiming that "HHS could have cured [the] harm by permitting New Life to supplement is application," Pl.'s Reply at 3, New Life again rests its argument on an untenable premise. For the reasons described above, see supra Part III.A.2, New Life simply has no procedural right to supplement the record on remand, and therefore it could not be prejudiced even if HHS' delay prompted a desire on New Life's part to supplement the record. Stated differently, the "prejudice," if any, emanates not from HHS' alleged delay, but from the failure of the APA or the McKinney Act to confer upon applicants a right to submit supplementary materials. 4. Generalized Allegations of Bad Faith

The fourth and final procedural error ascribed by New Life to HHS' decision on remand, to the extent it is even independent of matters previously discussed, is that the circumstances of HHS' decisionmaking process suggest that HHS was acting not out of a desire to act as a neutral decisionmaker, but rather to insulate its decision from judicial review. See Pl.'s Mem. at 4-7. This purported ground for vacatur and remand is easily disposed of and merits little attention here. New Life, as the party challenging agency action, bears the burden of establishing that HHS acted arbitrarily or capriciously. Abington Crest, 575 F.3d at 722. In assessing whether New Life has discharged this burden, this Court must afford HHS' decision a presumption of regularity. Grid Radio, 278 F.3d at 1322. To put it generously, New Life's generalized,

33

conclusory, and wholly unsupported allegations of agency bad faith fall short of the circumstances that would justify overcoming this presumption and concluding that New Life has discharged its burden of proof. Cf. Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d 57, 65 (D.D.C. 2002) ("conclusory allegations of bad faith and inadequate procedures," and claims that the agency's action was a "sham" with a "predetermined outcome" were insufficient to warrant heightened review), aff'd, 333 F.3d 156 (D.C. Cir. 2003), cert. denied, 540 U.S. 1218 (2004). Because New Life attributes no further procedural errors to the proceedings on remand, the Court concludes that New Life has failed to carry its burden of establishing that HHS' procedural decisions on remand were arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. At bottom, New Life's unhappiness with the outcome on remand, while understandable, cannot be ascribed to the process below: New Life was afforded all the process to which it was due under the APA, the McKinney Act, and the supporting regulations. B. New Life Has Failed to Establish that HHS' Decision on Remand Was Substantively Defective

New Life next contends that, even if HHS' conduct below on remand was not procedurally defective, the Second Denial Letter is nevertheless substantively arbitrary or capricious. Pl.'s Mem. at 7-13. New Life's objections in this regard are three-fold: (i) New Life first asserts that the Second Denial Letter violates a permanent injunction entered against HHS in a separate action, see infra Part III.B.1; (ii) New Life next argues that the Second Denial Letter is arbitrary or capricious because it faults New