Sometimes the ship of state can be turned abruptly, but sometimes it can’t. Even though agencies possess great budgetary flexibility, and reallocation of appropriated funds is generally an unreviewable exercise of discretion, see Lincoln v. Vigil, 508 U.S. 182 (1993), a new administration encounter constraints in discontinuing the funding of multiple-year grants made by a previous administration.
This post is about the Teen Pregnancy Prevention Program (“the TPPP”), not international trade (the Trans-Pacific Partnership or TPP). Approaches to teen pregnancy have been a flashpoint of the culture wars for years, with contestants debating the appropriateness and relative merits of “abstinence-only” and more multifaceted programs. See, Policy and Research, LLC v. HHS, Dkt. No. 18-cv-356, 2018 WL 2184449 *2 (D.D.C. May 11, 2018).
Early in the Obama Administration, Congress jettisoned an “abstinence-only” approach and created the TPPP. Under the TPPP, the Department of Health and Human Service (“HHS”) would fund “medically accurate and age appropriate programs that reduce teen pregnancy,” Consolidated Appropriations Act, Pub. L. No. 111-117, 123 Stat. 3034, 3253 (2010)(“Con. App. Act of 2010”). Congress has continuously reauthorized the program, most recently in the Consolidated Appropriations Act of 2018, Pub. L. No. 115–141 (2018)(“Con. App. Act of 2018”). See, Healthy Teen Network v. Azar, Dkt. No. C18-0468-CCB, 2018 WL 1942171 (D. Md. Apr. 25, 2018). The bulk of the money appropriated for TPPP has been allocated for “replicating programs that have been proven effective through rigorous evaluation.” A smaller amount has been allocated “for research and demonstration grants to develop, replicate, refine, and test additional models and innovative strategies for preventing teenage pregnancy.” See, e.g., Cons. App. Act of 2018; Cons. App. Act 2010.
The program is described by HSS at https://www.hhs.gov/ash/oah/grant-programs/teen-pregnancy-prevention-program-tpp. HHS has emphasized the program’s evidence-based approach (HSS “use[s] a systematic process for reviewing evaluation studies against a rigorous standard.”); https://tppevidencereview.aspe.hhs.gov/ReviewProtocol.aspx (describing the review process). Others have as well. National Conference of State Legislators, Teen Pregnancy Prevention Program: A Case Study in Evidence-based Policymaking (June 27, 2016)(webinar announcement), accessible at, http://www.ncsl.org/research/health/teen-pregnancy-prevention-program-a-case-study-in-evidence-based-policymaking.aspx; Democracy Forward, Press Release: Lawsuits Filed to Stop Trump’s Rollback of Science-Based Teen Pregnancy Prevention Program (February 15, 2018), accessible at, https://democracyforward.org/press/lawsuits-filed-stop-trumps-rollback-science-based-teen-pregnancy-prevention-program/#.WxUi5O4vypo (“TPPP is a gold-star example of evidence-based policymaking in action”).
Under the program, HHS has entered into grants (termed “cooperative agreements”) for five-year periods, but provides grant funding in annual increments. Each year is referred to as a budget period. The grant recipients’ actual receipt of funding for the second, third, fourth, or fifth budget periods is contingent upon a successful application for continued funding each year. Thus far the program has had two funding cycles, 2010-2015, and 2015-2020. Policy and Research, at *3-*4. In its July of 2017 notices of award to grantees for the 2017–2018 fiscal year, HHS announced that it was shortening the project period so that five-year grants would conclude on June 30, 2018, the end of the third grant year. Healthy Futures v. HSS, Dkt. No. 18-cv-992, slip op. at 13 (D.D.C. June 1, 2018). HHS provided no explanation of its decision to cut two years off the grant period. Policy and Research, at *4. In later press releases, HHS subsequently asserted that the TPPP was not effective, and that is was seeking “a new research and evaluation collaboration.” U.S. Dept. of Health and Human Services, Office of the Assistant Secretary for Health, Teen Pregnancy Prevention Program Facts (Aug. 28, 2017), accessible at, https://www.hhs.gov/ash/about-ash/news/2017/teen-pregnancy-prevention-program-facts.html; U.S. Dept. of Health and Human Services, Office of Adolescent Health, HHS Announces New Efforts to Improve Teen Pregnancy Prevention & Sexual Risk Avoidance Programs (Nov. 6, 2017), accessible at, https://www.hhs.gov/ash/oah/news/news-releases/new-sexual-risk-avoidance-programs/index.html.
Litigation contesting this “shortening” of the grant period for TPPP grants has been commenced by grantees across the country. Grantees have argued that HSS has “terminated” the grants two years early, and that such terminations must be consistent with HSS regulations. HHS regulations allow for “termination” of a Federal award only: (1) when a grantee “fails to comply with the terms and conditions of the award,” (2) “for cause,” (3) with a grantee’s consent, or (4) at the grantee’s request. 45 C.F.R. § 75.372. Accordingly grantees have challenged the terminations as “arbitrary and capricious,” in violation of the Administrative Procedure Act. HHS has characterized its action variously as “a ‘withholding’ of future noncompeting continuation awards, a decision not to issue a continuation award, or a decision to re-compete appropriated TPP Program Funds.” See, e.g., King County v. Azar, C18-0242-JCC, slip op. at 4 (W.D. Wash. May 29, 2018). Under HHS’s Grants Policy Statement the Department may “[withhold] a non-competing continuation award” if: (1) adequate federal funds are not available; (2) a grantee fails to show satisfactory progress; (3) a grantee fails to meet the terms and conditions of the award; or (4) “for whatever reason, continued funding would not be in the best interests of the Federal government.” Id., at 5 (referencing U.S. Dept. of Health and Human Services, Office of the Assistant Secretary for Resources and Technology Office of Grants, Grants Policy Statement II-89 (Jan 1, 2017), accessible at, https://www.hhs.gov/sites/default/files/grants/grants/policies-regulations/hhsgps107.pdf.
Courts appear to have consistently held HHS’s action both reviewable and unlawful. See, e.g., King County v. Azar, C18-0242-JCC (W.D. Wash. May 29,, 2018); Policy and Research, LLC v. HHS, Dkt. No. 18-cv-356, 2018 WL 2184449 (D.D.C. May 11, 2018); Planned Parenthood v. HHS, Dkt. No. C18-0055-TOR, 2018 WL 1934070 (E.D. Wash. Apr. 24, 2018); Healthy Teen Network v. Azar, Dkt. No. C18-0468-CCB, 2018 WL 1942171 (D. Md. Apr. 25, 2018). And on June 1, 2018, a district judge certified a class-action encompassing “all entities awarded Teen Pregnancy Prevention Program grants by the Department of Health and Human Services (HHS) in 2015, with five year project periods, whose grants HHS purported to ‘shorten’ effective June 30, 2018.” Healthy Futures v. HSS, Dkt. No. 18-cv-992 (D.D.C. June 1, 2018). Plaintiffs seek an order declaring the agency’s action unlawful and enjoining HHS to reinstate the five-year grant period. Id., slip op. at 12-13.
HHS has raised three major arguments in defense of its action. First, it argues, the decision to shorten the grant period is an unreviewable exercise of discretionary authority, see Lincoln v. Vigil, 508 U.S. 182 (1993). Second, the Anti-Deficiency Act, ch. 251, § 7, 16 Stat. 251 (1870)(codified as amended at 31 U.S.C. § 1341(a)(1)(B)), precludes an agency from being bound to continue funding grants when it concludes that further funding no longer serves the public interest. Third, its action is consistent with the Department’s Grants Policy Statement.
With respect to the first argument, in Policy and Research the judge noted that a “decision to stop funding for Plaintiffs’ projects, and to recompete the funds associated with those projects, is the type of agency action that is presumptively unreviewable.” Policy and Research, at *8. However, it observed, termination of a grant governed by agency regulations limiting the agency’s power to terminate the grants is reviewable. Id. at 8. In short, courts have found that HHS’s own regulation regarding termination of grants provides a clear standard of review, See, e.g., id., at *8-*9; King County v. Azar, slip op. at 11, and that accordingly those agencies decisions are not “committed to agency discretion by law.”
Courts have also rejected the Anti-Deficiency Act argument. The Act provides that “an officer or employee of the United States Government . . . may not . . . involve [the] government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law.” 31 U.S.C. § 1341(a)(1)(B). In Leiter v. United States, 271 U.S. 204 (1926), the Supreme Court found that a multi-year contract with a government agency must be contingent on appropriation of funds and the government’s affirmative continuation of the agreement each year. Id., at 206–07. The Kings County Court explained that “[t]he TPP Program complies with the requirements set forth in Leiter by requiring grantees to apply each year for affirmative continuation of their awards, which are contingent on available funds.” Slip op. at 8. The Government Accountability Office and federal courts have approved this award structure. See id. (citing 1 U.S. Gov’t Accountability Office, GAO-04-261SP, Principles Of Federal Appropriations Law, 5-49 to 5-50 (3rd ed. 2004) (contingent multiyear awards are permissible when necessary to accomplish objectives defined in the underlying statute)). Moreover, the judge explained, “[t]his structure makes sense from a policy perspective, providing stability for science-based research projects that cannot be completed in one year.” Id., at 8. The Policy and Research Court concurred, Policy and Research, at *11 (citing The Honorable Alan Cranston, B–239435, 1990 WL 10007871, at *3 (Comp. Gen. Aug. 24, 1990), as well as GAO’s Principles of Federal Appropriations Law). The Policy and Research Court added that any lurking ADA problem could not “justify ignoring the plain language of the agency’s regulations and grant documents, or ‘constru[ing]’ its rules and policies ‘in a way that negates [their] plain text[,]’” and thus rejected HSS’ reliance on Hercules, Inc. v. United States, 516 U.S. 417, 427 (1996)(finding no implied-in-fact indemnity agreement given the Anti-Deficiency Act implications). Policy and Research, at 11.
Courts have also rejected HSS reliance upon its Grants Policy Statement, asserting that the document cannot supersede HSS regulations. Kings Co. v. Azar, slip op. at 8-9, 11 n.10; Policy and Research at *12. Indeed, the Grants Policy Statement does not purport to supersede agency regulations. Kings Co. v. Azar, slip op. at 9 (referencing Grants Policy Statement, supra, at i). The Kings County court cited 45 C.F.R. § 75.105, which explicitly provides that HHS regulations supersede all inconsistent “administrative requirements, program manuals, handbooks, and other non-regulatory materials.” Kings Co. v. Azar, slip op. at 9.
Administrative law scholars do not typically devote significant attention to agency grant administration and budgetary decisions. But there are “rule of law” concerns even in such contexts, and HHS’s shortening of five-year grant periods of TPPP grant recipients has brought them to the fore.