USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 97-1834
ACTION FOR BOSTON COMMUNITY DEVELOPMENT, INC.,

Plaintiff, Appellant,
v.

DONNA E. SHALALA, AS SHE IS THE

SECRETARY OF THE UNITED STATES DEPARTMENT
OF HEALTH AND HUMAN SERVICES,
AND THE UNITED STATES DEPARTMENT
OF HEALTH AND HUMAN SERVICES,
ADMINISTRATION FOR CHILDREN,
AND FAMILIES, REGION I,
Defendants, Appellees.

____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, U.S. District Judge]
___________________

____________________
Before

Torruella, Chief Judge,

___________
Boudin, Circuit Judge,
_____________

and Woodlock,* District Judge.

______________
____________________

Janet Steckel Lundberg with

______________________
Bluestein,
_________

Garrick F. Cole
________________

whom Richard M. Bluestein, Krokida

____________________ _______

and Smith & Duggan

_______________

were

on brief

appellant.
David S. Mackey,
________________
Donald K. Stern, United
_______________
States.

Assistant

United

States

Attorney, with

States Attorney, was on brief

for the Uni

____________________

February 9, 1998
____________________

____________________

*Of the District of Massachusetts, sitting by designation.

BOUDIN,

Circuit

Judge.

In

form,

this

appeal seeks

______________

review

of the district

relief

to

the

court's refusal to

plaintiff,

Action

for

grant injunctive

Boston

Community

Development ("ABCD"), a major provider of Head Start services

in Boston.

In substance,

proceeding by which

this is an

ABCD seeks to

administrative review

overturn the decision

by

the Department of Health and Human Services ("HHS") to select

a different

grantee to

project in Boston.

The Head

services

families.

makes

receive funds for

Start program

U.S.C.

grants to

longstanding

Head Start

The pertinent facts are undisputed.

to economically

42

a new

is designed

disadvantaged

9831.

To

private entities,

to deliver

social

children and

their

provide such services, HHS

like

ABCD.

ABCD is

Head Start grantee in Boston, responsible for a

number

of diverse programs, and it tells us that in a recent

year its grants exceeded $20 million.

From

1982 to

1995,

the

year

Esquelita Aquebana, Inc. operated

Boston area known

HHS

replacement

amount

announced

provider

somewhat

applicants

lost

its

that

of

exceeding

for the

End of Boston.

grant

services in

$500,000.

funds were

Health Center ("Dimmock").

-2-2-

funding,

a Head Start program

as Uphams Corner, comprising a

Roxbury, Dorchester and the South

1996,

it

ABCD

would

Uphams

Two

be

portion of

In January

made

Corner

of

and Dimmock

in a

the

to

in an

three

Community

For many years, Congress has provided that HHS must give

"priority" to Head

Start

funds

phrasing]

the

involved fails

other

Start agencies which were

on August

13,

Secretary

to meet

1981, "unless

makes a

program,

finding

receiving Head

[in

the current

that

the agency

financial management,

requirements established by the Secretary."

9836(c)(1).

HHS

apparently

took

no account

and

42 U.S.C.

of

this

priority since its announcement said that the funding was "to

be competitively awarded."

independent panel

In any case, HHS

to review

established an

the applicants and

on May

13,

1996, the panel awarded ABCD 419 points; Dimmock, 354 points;

and the third applicant, 266 points.

At the same

time, HHS was undertaking

of all of ABCD's 26 Head Start program

its

review

of

demonstration

ABCD's

program

toddlers,

on May

revealed

serious

parental

involvement

summarized

10,

Parent

Child

providing

1996.

and social

sites.

Center,

services for

The

deficiencies

a regular review

in

review

special

infants

of this

the health,

service

HHS completed

and

program

disability,

components.

HHS

the problem as one of "inadequate agency capacity

to plan, and manage the delivery of Head Start services."

Head

Start

programs

are

run

through

Administration for Children and Families.

the local

regional administrator,

the selection

of Dimmock

-3-3-

HHS

On August 2, 1996,

Hugh Galligan,

as the Head

the

Start agency

announced

for the

Uphams Corner

program.

Galligan reported

that "[w]hile ABCD's [periodic review]

positive, a recent

review of its

standing

and

Massachusetts

proposal

more

that

state

both

Parent Child Center

(PCC)

This report also

a Head Start program in good

Galligan's

counterpart

clearly

superior

results are generally

program showed it was seriously deficient."

___________________

stated that Dimmock was running

to his

responded

organization

"agreed that

to

the

and

the

its

Dimmock

opportunity

for

creative, comprehensive and flexible programming."

On

district

Dimmock

August

14, 1996,

court, seeking

on the

ABCD

to

ground that

statutory priority to which

under

9836(c)(1).

When

brought

enjoin the

HHS had

this

case in

the

award

of funds

to

failed to

respect the

ABCD was conditionally

the

administrative

entitled

record was

lodged, the

district court

found no record

ABCD's right to a priority.

of a

ruling on

On December 19, 1996, the court

ordered HHS to determine explicitly whether ABCD was entitled

to

priority

and

to

explain the

reasons

for

the

HHS

determination.

In

response, HHS filed

a declaration of

Hugh Galligan

stating that ABCD did not qualify for the statutory

"because

of the

program,

established

award

May

financial

10

finding that

management,

by the Secretary,"

of the grant

to Dimock.

-4-4-

and

ABCD

other

priority

fails to

meet

requirements

and reaffirming his previous

HHS

also filed a memorandum

dated

March 21,

Deputy Assistant

1997, from

Olivia

Secretary, Administration for

Families, ratifying

Galligan's

selection of

then challenged the authority of

this

decision.

Golden, then

On June

9,

Principal

Children and

Dimock.

ABCD

Golden and Galligan to make

1997, Golden

issued a

second

memorandum, further ratifying all decisions and actions taken

by Galligan in the matter up to that date.

On July

district court filed

an opinion,

Action for Boston Community Development, Inc.

________________________________________________

v. Shalala,
_______

1997

2, 1997, the

WL 677447 (D.

favor of HHS.

The

lacked the necessary

been filled by

Mass. 1997), granting

court ruled

authority at the

court found that

priority was

neither in

the

if Galligan

had

outset, that gap

had

the subsequent ratification.

the district

under

that even

final judgment in

standards

the decision to

violation of

usually

On the merits,

law nor

applied in

withhold the

unreasonable

reviewing

agency

action.

On

the

appeal now

before

us, ABCD's

that the

decision

extensive

argument

is

priority,

even

properly ratified

if

first

to

(which

and most

withhold the

ABCD denies),

rested on legal errors.

The

main thrust of its argument

that

not

permit HHS

the statute

priority .

. . on

does

the basis of

deficiency findings

with respect

Head Start

sites that

program

-5-5-

"to

deny ABCD

is

its

temporary, program-specific

to one

of the

ABCD operates,

twenty-six

a site

that

constitutes

only a small

part of ABCD's

overall Head Start

program activities."

So far as ABCD's issue presents a question of

construction--and

statutory

in some respects it does--our review is de

__

novo, tempered by whatever deference is to be accorded to the

____

Secretary's

construction of

doctrine or otherwise.

the statute

under

the Chevron
_______

See Chevron, U.S.A., Inc. v. Natural

___ ______________________
_______

Resources Defense Council, Inc.,

_______________________________

without full-scale Chevron

_______

467 U.S. 837 (1984).

Even

deference, courts usually give

respectful hearing to the agency charged with administering a

statute.

Because our own

that of HHS, we

view of the statute

need go no further than that

accords with

in the present

case.

We

agree

decision

to

with

give

ABCD that

priority

Congress

to

receiving funds on August 13, 1981.

any

made

Head

a considered

Start

agency

The expressed rationale-

-to give preference to stability and experience--may not seem

to jibe with

the selection of

the single, now

ancient date.

But choices of this kind

arbitrary, and

Congress has

altering

increasingly

are always somewhat

maintained this priority

date,

the statutory language only slightly over a lengthy

period.

On this premise, ABCD concludes

must

"that

that Congress therefore

_________

have intended that the condition for denying priority--

the agency involved

fails to meet

program, financial

-6-6-

management,

and

other

requirements

established

by

the

Secretary"--be based on a "overall" failure to the Head Start

agency to meet

HHS standards.

is not entirely clear, but

more

concrete by

asserting

What ABCD

means by "overall"

ABCD makes its arguments somewhat

that the

failure

of a

single

program,

conducted

by

a multi-program

cannot be an "overall" failure.

Head

Congress

Start agency,

could have written

the statute in this manner but did not do so.

The

the

word "overall" simply

priority

congressional

provision

purpose, we

does not appear

(section

anywhere in

9836(c)).

agree that

the

Given

failure to

the

meet

standards would certainly have to be substantial and relevant

as

opposed

nothing

requires

to slight

in the

or

language

inconsequential.

of

the

priority

But

there

provision

is

that

that the failure be one that affects all or many of

the programs the agency may be supervising.

Further,

the failure to

manage properly

program might be very informative as

an individual

to the agency's ability

to

take

on

new responsibilities.

single program might

Deficiencies

be more important to HHS

deficiency--say in some aspect

than a single

of bookkeeping--that infected

all of the programs run by a Head Start agency.

failures

in

ABCD's

Parent

within a

Child

Center

were

Whether the

of

great

magnitude is a different question to which we return below.

-7-7-

One

could argue, with a better footing in the statutory

language, that

there must be

different kinds,

the

at least multiple

since the statute calls for

failures of

a finding that

agency "fails to meet program, financial management, and

___

other

requirements established

9836(c)(1)

the

(emphasis added).

conjunctive,

but

contradicted by context,

the

by the Secretary."

The word "and" usually denotes

rule

is

catch-all

not

absolute

Reiter v. Sonotone Corp.,

______
______________

330, 338 (1979), as we think it is here.

of the

Section

category "other

when

442 U.S.

Especially in light

requirements,"

"and" certainly was intended to mean "and/or."

the

term

This is borne out by common-sense considerations.

Head Start agency

services,

Congress

meticulously

as

to

could

not

have

delivery of program

intended

that

its

kept books would assure it a statutory priority

new programs.

expressly

Acting

failed utterly in the

If

find, in

As

it

happens, here

a determination

Assistant Secretary,

later

that ABCD

Galligan

did

ratified by

the

failed to

meet

had

"program, financial management, and other requirements."

Finally, there is

that

the

Practically

deficiency

all

discovering and

their

existence

agency ought

little mileage for ABCD

cannot

deficiencies

be

can be

rectifying them.

is a

to be

warning

merely

The

made

"temporary."

"temporary"

question is

signal that

correcting the

in its claim

the

by

whether

Head Start

deficiencies that

exist

-8-8-

before

it takes on new programs--which might further stretch

management resources already shown to be inadequate.

ABCD

argues

that

its

reading

of

section

9836

supported by section 9836a enacted by Congress in 1994.

is

Pub.

L. No. 103-252,

involves

9836a

the

108, 108 Stat. 631.

designation

requires HHS to

Start agencies

and to

of Head

1996

report,

Start

agencies, section

establish quality standards

monitor such

The deficiencies in the Parent

10,

Whereas section 9836

agencies and

for Head

programs.

Child Center found in the May

which Galligan

invoked

in

denying ABCD

priority, derived from a monitoring program carried out under

the newly enacted section 9836a.

ABCD

section

argues that an "overall" failure is required under

9836(c)(1) because section 9836a refers at one point

to

the need for the

of

overall accomplishment"

achieve to

Secretary to promulgate "minimum levels

that a

Head

Start agency

must

meet the primary "standards" to be established by

the Secretary

for program services,

for administrative

and

financial

management,

9836a(a)(1),

(2),

and

and

required to conduct

wrenching

words

many

other

because elsewhere

subjects,

the

a "full review" of each

once every three years.

of

for

Secretary is

agency at least

Id. subsection (c)(1)(A).

___

out

"overall accomplishment"

of

and

context

is

"full review"

context, and neither phrase has the same

-9-9-

not

make

This kind

persuasive:

sense

in

meaning as "overall

failure"--the

phrase ABCD would

like to substitute

for the

word "failure" in the prior section of the statute.

ABCD next objects to HHS' use of the

periodic

review

priority.

9835a

the

basis

for

ABCD points out that

address

periodic

as

review

termination

of

the

the

quality

agency

denying

deficiencies

improvement

if

statutory

other provisions of section

correction of

by

findings made in a

the

found

plans

deficiencies

in a

and

the

are

not

corrected.

But nothing in these provisions prevents HHS from

considering

the findings of a periodic review in determining

under the prior section whether

the Head Start agency should

lose its priority.

If

this were an

would now reach

its action or whether,

action was arbitrary,

would expect ABCD to

agency had a

contrariwise, its

capricious or unreasonable.

And, one

explain why the findings of

deficiency

by HHS were mistaken or unsupported or why, to the

extent they might

were

proceeding, we

the usual question whether the

rational basis for

relied on

ordinary agency review

be correct and adequately

not sufficiently

serious, even

supported, they

taken as

a whole,

to

justify the significant step of the denial of priority.

If such an attack were made, we would take it seriously.

Agencies

formal

are

fact

entitled to

finding

and

considerable

in

the

deference

application

of

in their

general

standards

to specific facts

within their expertise,

but in

-10-10-

neither case is

argued,

(although

deference unlimited.

treated the

priority

as

the condition attached

This court has

Congress has,

matter

to it is

been willing enough even

of

as ABCD

importance

also important).

in fairly technical

areas to overturn agency decisions which appeared to us to be

unreasonable or

inadequately supported.

See, e.g.,
___ ____

Puerto
______

Rico Sun Oil Co. v. EPA, 8 F.3d 73, 76-77 (1st Cir. 1993).
________________
___

ABCD

has chosen

not to

therefore have no occasion

of the May

in the

677477 at *19.

not narrowly

attack, and

to review in detail

district court's

It is enough to say that

confined or

while ABCD has

percent

such an

we

the findings

10, 1996, review of the Parent Child Center which

are summarized

small

make

limited to

decision.

1997 WL

the criticisms are

trivial matters.

stressed that the Parent Child

And

program was a

portion of its budget, it implies that the figure is 4

of $22

million--most would

dollar program as small change.

not

regard a

million-

ABCD's next line

of argument contests the

Galligan to make the priority decision

the background which

court decision.

matter

at all.

is discussed at length

1997 WL 677447 at

*6-13.

authority of

We condense

in the district

The gist

of the

is that, as Regional Administrator, Galligan had from

the outset the authority to

Commissioner

of

Youth

and

award Head Start grants, but the

Family

-11-11-

Services--then

Olivia

Golden--had

the

authority

to

designate

new

Head

Start

agencies.

The district court

officials had

but found that

deemed it unclear

the authority to

grant or deny

it did not matter.

Galligan had lacked

two

the priority,

It concluded that even if

the authority in August 1996, Golden had

explicitly ratified his actions in

Golden

which of the

June 1997.

By that time,

was Principal Deputy Assistant Secretary and had been

nominated for the vacant Assistant Secretary position.

We agree with

the district court that as

the Principal

Deputy and

nominee, Golden could

assistant secretary.

secretary

argues

ABCD admits that the

had the authority

that

exercise the powers

Golden

was

proper assistant

to make priority

nominated

of an

for

decisions but

an

assistant

secretaryship other than the one with authority to decide the

issue.

Despite

district

some confusion

court's reasoning for

over titles,

rejection of

we adopt

the

this argument.

Id. at *12.
___

ABCD's

not

more interesting

ratify

Galligan's

argument is that

decision

Golden could

"retroactively."

All

ratifications

are retroactive in the sense that they purport

to

validate

unauthorized.

procedural

prior

action

that

might

But ABCD relies here on an

manual

that

refers

to

otherwise

be

HHS administrative

ratification

of

prior

-12-12-

actions

being

permissible

in "special

circumstances"

and

"with the approval" of the general counsel's office.

We

know

almost

nothing

about

the

scope

of

this

provision, or the

ABCD did

ABCD's

not

legal significance of the

make

objection

this

is

argument in

therefore

the

waived.

manual, because

district

See
___

McCoy
_____

Massachusetts Institute of Technology, 950 F.2d 13,

______________________________________

Cir. 1991).

Accordingly, we

argument that

the record

do not reach

shows that

court.

v.

22 (1st

HHS' alternative

the general

counsel's

office informally acquiesced in the ratification.

Finally, ABCD says

that the ratification is

"post hoc rationalization."

courts

in various

lawyers
_______

reasoning

from

ways

providing

omitted from
_______

This epithet

but most

in

often

briefs

the agency's

an invalid

has been used

to prevent

necessary

decision.

agency

findings

See
___

by

or

Motor
_____

Vehicle Mfrs. Ass'n v. State Farm Mut. Automobile Ins. Co.,

___________________
_____________________________________

463

U.S. 29,

50

(1983); Burlington Truck Lines, Inc.

______________________________

United States, 371

_____________

sort is

presented here:

respectively in

denied

U.S. 156, 168-69 (1962).

May and

the priority based

both Galligan

June 1997,

Nothing of the

and Golden

that ABCD

v.

agreed,

was properly

on information available

to them

from the time the grant was originally made to Dimock.

Thus,

the

usual

concern

of

courts--that

the

decisionmaker may not have made the necessary determinations-

-is absent here.

Further, it was the

-13-13-

district court itself

that

ordered HHS to make its priority determination explicit

and explain its reasons.

v. LTV Corp., 496 U.S.

_________

in

the

1997

requirements:

See Pension Benefit Guaranty Corp.

___ ______________________________

633, 653-54 (1990).

redeterminations

Finally, nothing

violated

any

procedural

We have been pointed to nothing in the statute

or regulations that requires any specific procedures before a

priority is

denied.

See Dubois v.
___ ______

Agric., 102

F.3d 1273, 1289

United States Dep't of

_______________________

(1st Cir. 1996),

cert. denied,

______

117 S. Ct. 2510 (1997).

Affirmed.
_________

____________

-14-14-