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Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division |
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DATE: March 31, 2006 |
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Docket No. A-04-44
Decision No. 2023 |
| DECISION | |
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DECISION On January 9, 2004, the Ohio Department of Job and Family Services (Ohio) appealed enforcement actions announced by the Administration for Children and Families (ACF) in a notice letter dated November 20, 2003 (ACF Notice). ACF determined that Ohio violated section 1808 of the Small Business Job Protection Act, which prohibits states which receive federal funds from discriminating on the basis of race, color, or national origin in making adoptive and foster care placements. Pub. L. No. 104-188 (1996), 42 U.S.C. §1996b (section 1808); ACF Ex. 2. The asserted violations included systemic state-level policies and practices, as well as actions related to individual children and families taken by Hamilton County, Ohio. As a result of the individual violations, ACF imposed a penalty of two per cent of Ohio's total funding under title IV-E of the Social Security Act for the fiscal quarter in which the ACF Notice was issued, which ACF estimated would result in a reduction of "at least $1.8 million dollars." ACF Notice at 3. ACF provided Ohio with an opportunity to correct systemic violations before incurring a further penalty if Ohio submitted an acceptable corrective action plan (CAP) within 30 days of the ACF Notice and if Ohio implemented its CAP and came into compliance within six months of ACF's approval of the CAP. Id. Ohio initially indicated that its appeal was based on information from Hamilton County (1) asserting that the individual violation [Page 2] "findings are not supported by the underlying facts" and on the contention that Ohio "already had corrected any deficiencies at the state level." Ohio Notice of Appeal at 1. The briefing schedule was postponed several times, in order to permit document exchange and discovery between the parties and to resolve preliminary motions. By the time its initial brief was filed, Ohio had narrowed its appeal to a "single issue," which Ohio defined as "whether ACF is statutorily authorized to require Ohio to enter into a corrective action plan." Ohio Br. at 1. ACF moved to dismiss on the grounds that this issue was not appealable and was moot since the CAP has already been submitted and would remain in effect regardless of the outcome of this case. ACF also argued that Ohio was wrong on the merits because the statute and regulations provide for ACF to require submission of a CAP under the circumstances here. We uphold the ACF final determination in the ACF Notice. For reasons explained more fully below, we conclude that Ohio's position on the merits was wrong and misread the applicable law. Although we conclude that Ohio properly raised its challenge to the applicability of the CAP requirement before us and that this issue was not moot, we also conclude that the applicable law empowers ACF to require Ohio to submit and implement an acceptable CAP as a condition of avoiding further penalties. Factual background In April 1999, the HHS Office for Civil Rights (OCR) began an investigation of adoption practices in Hamilton County, Ohio, in the wake of a lawsuit against the county. Hamilton County Br. at 2, citing Doe v. Hamilton County, Ohio, et al., Case No. C-1-99-281 (S.D. Ohio, filed 1999). That lawsuit was settled in July 2002 with a consent decree which included the appointment of a court monitor. Hamilton County Br. at 6. OCR issued a report [Page 3] and letter of findings on October 20, 2003. ACF Ex. 1. OCR's investigation addressed compliance with title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (title VI), as well as MEPA (2) and section 1808(c). ACF Ex. 1, at 1. In addition, ACF requested, pursuant to 45 C.F.R. § 1355.38(a)(1), that OCR also investigate possible violations of section 1808(a). OCR's findings became the basis of the ACF determination here. OCR focused on the period from 1997 through 1999, but considered some placements from as early as 1990 and as late as 2001 in reaching its conclusions. ACF Ex. 1, at 5. OCR found that Hamilton County committed numerous individual violations by discriminating against African American children in the adoption process and placing discriminatory burdens on families seeking transracial adoptions. Id. at 2. The report provides details on 16 such individual situations. Id. at 15-53. The report also faulted Ohio for having promulgated "certain administrative rules governing transracial adoption and foster care" which OCR concluded were in violation of Title VI, MEPA and section 1808. ACF Ex. 1, at 3. OCR described these rules as follows:
Id. OCR reported that Hamilton County contended that the practices and actions of its workers which constituted the violations were compelled by State rules in effect at the time or resulted from inadequate guidance or training. ACF Ex. 1, at 58. Ohio, on the other hand, denied that it was responsible for Hamilton County's activities because foster care and adoption [Page 4] services in Ohio are "provided at the local level." Ohio Br. at 2. OCR found that Hamilton County engaged in "systemic practices" which violated both title VI and section 1808(c) and found that, in doing so, Hamilton County "acted consistently" with State rules. ACF Ex. 1, at 3, 53-58. On November 20, 2003, ACF notified Ohio of enforcement actions based on OCR's referral. ACF Ex. 2, at 1. ACF adopted OCR's findings. Id. ACF found that "Ohio, directly and through [Hamilton County] . . . discriminated against children and families (some more than once) in violation of Section 1808(a), and that Ohio committed numerous systemic violations of Section 1808(a) and failed to supervise its county public children services agencies to ensure that they adhere to the anti-discrimination provisions of the Ohio Title IV-E State Plan." ACF Ex. 2, at 2. In addition, ACF noted "its concern that Ohio's current [as of November 2003] administrative rule regarding transracial adoption placements . . . may easily be used to foster illegal discrimination on the basis of race." Id. at 2. ACF explained that the rule sets a low bar for agencies to refer cases to outside professionals for opinions on whether a child has special needs based on race and that it treats the outside referral as a request for a concurrence with the agency's assessment that race should be a factor, rather than seeking an open-ended assessment of every child as to all their needs. Id. ACF asserted that it had "exclusive jurisdiction to take enforcement actions for violations of Section 1808(a), which includes imposing financial penalties and requiring a corrective action plan pursuant to Section 1808(b)." ACF went on to take the following actions against Ohio: (1) a two per cent reduction in title IV-E funding "due to Ohio's failure to comply with section 1808(a) with respect to individual families and children," and (2) a corrective action plan (CAP) in regard to the systemic violations, to be submitted within 30 days (coordinated with OCR's requirement of a CAP for the violations over which OCR had jurisdiction). Id. at 2-3. ACF provided specific details of what the plan must contain to be approved and noted that Ohio would have six months from approval to "completely implement the plan and come into compliance," or ACF would have the authority to impose an additional penalty, citing 45 C.F.R. §§ 1355.38(c)(1) and 1355(g)(3). Ohio and Hamilton County submitted a CAP dated July 15, 2004, denying that either discriminated or committed any wrongdoing but complying with ACF's requirements for the content of the CAP, after some back-and-forth drafts. Ohio Ex. C; see also Ohio Ex. K. [Page 5] Applicable law Section 1808, by adding section 471(a) to the Social Security Act (Act), provided ACF with new authority to take enforcement actions against states for discrimination in foster care and adoption. The purpose of the amendment was elucidated in the preamble to the implementing regulations, as follows:
65 Fed. Reg. 4020 (Jan. 25, 2000). Section 471(a)(18) of the Act, as amended by section 1808, requires that state plans for foster care and adoption assistance must, by no later than January 1, 1997, provide that -
ACF's regulations provide that (in the absence of a court finding, which triggers different provisions not alleged to apply here) a section 471(a)(18) violation is considered to occur, "if a State or an entity in the State:"
45 C.F.R. § 1355.38(a)(2). The regulations distinguish between individual violations "with respect to a person or based on a court finding" and systemic violations "resulting from a State's statute, regulation, policy, procedure, or practice." Specifically, with respect to the applicable penalties and corrective action plan requirements, the regulations provide:
45 C.F.R. § 1355.38(b)-(d). Subsections (g) and (h) spell out how ACF calculates the penalty reductions in title IV-E funds based on section 471(a)(18) violations. Since the penalty calculations are not disputed, those provisions are not set out here. |
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| ANALYSIS | |
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Below, we address first ACF's arguments for dismissal, denying ACF's motion. We then discuss the core question of whether the statute and regulations empowered ACF to require Ohio to submit a CAP here. Finally, we address Ohio's assertion in its reply brief that ACF is barred from enforcing any CAP requirement against Ohio because ACF allegedly failed to comply with certain paperwork reduction procedures. 1. ACF's motion to dismiss for lack of jurisdiction and/or for mootness is denied. As a threshold matter, we must address ACF's contention that Ohio's appeal, as set out in its brief, no longer raises any issue cognizable under the appeal regulations. (3) Ohio is no [Page 9] longer challenging either the facts underlying the violation findings or the imposition of a penalty for the individual violations. Ohio does seek to challenge ACF's authority to require Ohio to submit and implement a CAP in order to avoid future penalties for systemic violations. ACF contends that the CAP requirement is not subject to appeal. ACF argues first that Ohio does not have a right to challenge the requirement to submit a CAP. ACF argues next that, even if Ohio had such a right, the appeal here is moot because Ohio has already submitted its CAP and a favorable ruling by the Board would not relieve Ohio of its obligations under that CAP. We address these contentions in turn.
The regulations provide that a state found to have violated section 1808(a) "may appeal, pursuant to 45 C.F.R. part 16, the final determination and any subsequent withholding of, or reduction in, funds" to the Board within 60 days after "receipt of a notice of noncompliance by ACF as described in § 1355.38(a)(3)." 45 C.F.R. § 1355.39(a)(emphasis added). This part of the dispute on this issue hangs on what constitutes the appealable "final determination," apart from any penalty imposed. In Ohio's view, the "final determination" here was the ACF Notice which imposed the CAP requirement. Ohio Reply Br. at 1-2. Therefore, Ohio argues that the imposition of the CAP requirement was part of the final determination appealable under the plain language of the regulation. In essence, Ohio's argument may be viewed as an assertion that it did not commit "a violation of the type described in paragraph (a)(2)(iii)," such that it should be subject to a CAP requirement. Ohio contends that, at the time the ACF Notice was issued, there were no ongoing systemic violations. Ohio contends that it was no longer maintaining "any statute, regulation, policy, procedure, or practice that on its face, is a violation." 45 C.F.R. § 1355.39(a)(2)(iii). Ohio argues that the regulations made an ongoing systemic violation meeting this regulatory definition a prerequisite to requiring a [Page 10] CAP. Thus, Ohio's argument goes to whether the CAP requirement provision is applicable here as a matter of law, not to whether ACF properly exercised its discretion in determining the necessary contents of the CAP or reviewing and approving the CAP. ACF, on the other hand, views the term "final determination" as referring only to the finding of a violation, not to the CAP requirement. ACF Surreply Br. at 5. Since Ohio is not now contesting either the factual violation findings or the penalty, ACF contends that Ohio has no right to appeal. Id. In support of its interpretation, ACF first points out that the appeal regulation does not expressly mention appealing CAPs. Second, ACF argues that reading the regulation to preclude the appeal here is supported by the cross-reference to the notice of noncompliance in subsection 1355.38(a)(3) because that subsection refers only to ACF's providing a "written notification of its determination." According to ACF, if the requirement of a CAP were appealable, the provisions addressing CAPs in subsections 1355.38(b), (c), (d) and (g) would also have been cross-referenced. Third, ACF argues that the preamble supports its reading. The language from the preamble on which ACF relies is the following: "In paragraph (a)(3), we propose that ACF provide written notification to the State or entity of its determination regarding alleged [section 1808(a)] violations." ACF Surreply Br. at 5, quoting 63 Fed. Reg. at 50,070 (Sept. 18, 1998). The Board has generally been reluctant to restrict statutory appeal rights, here arising from section 1123A(c)(2) and (3) of the Act. See, e.g., St. Catherine's Care Center of Findlay, Inc., DAB No. 1964 (2005); Glen Rose Medical Center Nursing Home, DAB No. 1852 (2002); see 63 Fed. Reg. 50,058, at 50,071 (1998) (ACF indicated regulations here were implementing statutory appeal rights in the context of section 471(a)(18)). The regulation at section 1355.39(a) implementing the appeal rights here does not on its face support the narrow view proposed by ACF in this case. The regulation simply confers a right to appeal the final determination without restricting the appealable elements of that determination. The regulation does not explicitly say that the determination that a CAP is required is part of the appealable final determination, but neither does it explicitly mention the violation findings being appealable as part of the final determination, yet ACF concedes that those are appealable. ACF's argument that the appeal regulations cross-reference only the notice of noncompliance is not helpful. The cross-reference merely defines which notice triggers the clock to start running on the state's appeal rights, but does not define what components [Page 11] of the notice are appealable. It would not have made sense in context for ACF to have added cross-references at that point to all the subsections on what actions ACF could take under various circumstances. Therefore, the absence of a cross-reference to the CAP requirement subsections does not suggest an intention to deny a right to challenge the imposition of a CAP requirement in a final determination. Additionally, the language ACF quoted from the preamble similarly provides no guidance about what components of the written notice containing the final determination are appealable. ACF makes a number of other arguments that appear premised on a misunderstanding of the scope of the appeal here. Thus, ACF suggests that "final" determination could not refer to a CAP requirement because CAPs would rarely be prepared, much less approved by ACF, within the 60-day appeal window. ACF Br. at 25; ACF Surreply Br. at 5. Ohio is not seeking to appeal the contents or approvability of its CAP, however, but rather, as noted above, seeks only to challenge the legal authority of ACF to require submission of any CAP under the circumstances here. The decision by ACF that the CAP requirement applied was final at the time the ACF notice was issued. Ohio Reply Br. at 3. ACF also argues by analogy with ALJ decisions in nursing home cases that findings of program violations are appealable because they can be evaluated against statutory and regulatory requirements but that agency "decisions in negotiating and approving a remedy, including the contents of a corrective action plan" are matters left to the program agency's expertise and discretion. ACF Br. at 27. ACF cites in this context preamble language that states that approval of CAPs "is at the sole discretion of ACF." Id., citing 63 Fed. Reg. at 50,070 (ACF's emphasis). ACF's argument has no merit. First, of course, the appeal regulations defining the scope of available review are different in nursing home cases and the present section 1808 appeal, so the analogy is weak. Second, the issue presented by Ohio here is purely a matter of legal interpretation, not an intrusion into the area of agency discretion. What is placed in ACF's discretion here is the "approval of such plans," not the identification of the legal conditions that authorize ACF to require submission of a plan. 63 Fed. Reg. 50,070 (emphasis added). Finally, ACF relies on language from the preamble stating that "[p]enalties will be issued in the form of disallowances and will thus be appealable to the [Board] under the procedures prescribed in" 45 C.F.R. Part 16. ACF Br. at 25, quoting 62 Fed. Reg. at 50,070. ACF argues that this language refers only to penalties [Page 12] and not to CAP requirements, and that therefore the scope of the appeal right is limited to penalties in the nature of disallowances. The problem with that reasoning is that the regulation as adopted on its face refers to appeals of final determinations "and any" penalty, which implies that something may be challenged even if no penalty was imposed, and excepts from the appeals procedure only a finding based on a judicial decision. ACF seems to agree that at least the violation findings are appealable under the "final determination" language, apart from the penalty, if any, imposed. Given that, it is reasonable to conclude that the regulation permits a challenge to the ACF determination that the CAP requirement applies. We conclude that Ohio does have a right to challenge the narrow issue remaining here as to whether ACF was authorized by the applicable law and regulations to impose the requirement that Ohio submit a CAP.
ACF argues that, even if the appeal right sought by Ohio existed, no "genuine case or controversy" arises here, because the CAP would still be enforceable by OCR even if the Board ruled against ACF. ACF Br. at 28. ACF acknowledges that Article III law on case and controversy is not directly applicable but argues that considerations of judicial economy should still militate against permitting an appeal where no effective relief is possible. ACF Br. at 29-30. Ohio does not dispute that at least parts of the CAP address areas over which OCR has sole authority and that those parts would remain binding on Ohio. Ohio Reply Br. at 6. Nevertheless, Ohio disputes the argument that the Board could grant no effective relief. Ohio argues that, on the contrary, a decision against ACF would have practical effect because ACF made submission and completion of a CAP a condition of avoiding additional penalties to which Ohio would not be subject if its appeal prevailed. Ohio Reply Br. at 6-7. In addition, it is undisputed that much of the CAP addresses terms relevant only to title IV-E state plan requirements that are not enforceable by OCR. Ohio argues that a favorable ruling here would have the effect of relieving it of those terms. We agree with Ohio that the appeal is not moot. A favorable resolution would reduce the scope of the CAP provisions to which Ohio is subject and would remove the threat of future monetary [Page 13] penalties based on any failure to implement those provisions fully. 2. ACF had legal authority to require Ohio to submit a CAP. The core argument Ohio makes on the merits is that ACF may require a state to submit a CAP only where systemic violations have been found (a CAP being, according to Ohio, optional in the case of individual violations) and then only if the violations have been re-assessed and found to be ongoing at the time the requirement is imposed by means of ACF's notice. Ohio contends that it had already corrected all systemic violations years before the ACF final determination imposing the CAP requirement was issued. Therefore, according to Ohio, ACF exceeded its authority by requiring Ohio to submit a CAP. We disagree first with Ohio's analysis of the applicable law and, in particular, with Ohio's premise that ACF must demonstrate the existence of ongoing systemic violations at the time that its notice issues in order to justify requiring a state to submit a CAP. We also conclude that Ohio failed to show that it had actually corrected its violations and come into compliance with the law before the ACF Notice was issued, as it claimed. We therefore conclude, for the reasons explained more fully below, that Ohio is wrong on both the factual assumptions and the interpretation of the law underpinning its position. Ohio's legal analysis that ACF had to prove that Ohio was committing systemic violations as defined in the regulations at the moment the ACF Notice issued turns on the use of the present tense in the regulatory language. Thus, Ohio contends that submission of a CAP is mandatory only if a state is committing what Ohio termed "ongoing systemic violations" because the use of the word "is" in the systemic violations section of the regulation implies a requirement to prove a present state of noncompliance. Specifically, the regulations provide that a state "found to have committed" a systemic violation "must develop and submit a corrective action plan within 30 days of receiving written notification from ACF that it is in violation of section 471(a)(18)." 45 C.F.R. § 1355.38(c)(1)(emphasis added). From this language, Ohio reasons that it would be incorrect to say that a state which has corrected its systemic violations prior to receipt of ACF's notification "is" in violation. Ohio admits that the use of a present tense form of the verb "to be" does not always mean that the event or condition referenced must be occurring in the present, since case law cited by ACF [Page 14] demonstrates that the reference may sometimes in context be to a past period or an indefinite time. Ohio Supplemental Br. at 9; ACF Surreply Br. at 19-20, and cases cited therein. Indeed, Ohio acknowledges that the "issue here is not whether the present tense may sometimes be used to refer to the past, present and future, but what meaning makes sense in the context." Ohio Supplemental Br. at 9. We are therefore dealing with a situation where multiple interpretations may be possible. Ohio argues that the commonsense reading is that a CAP would be appropriate only where ACF somehow establishes that an ongoing systemic violation remains to be abated at the time that the notice is issued. Id. Ohio therefore treats "is in violation" as meaning something like "is determined still to be committing systemic violations at the time the notice is issued." Ohio reads the regulations to provide that ACF has the authority to impose a CAP requirement only when ACF can show both that systemic violations existed and that those violations remain in place at the time ACF issues its notice. Ohio thus views the need to submit a CAP as arising only in a narrow subset of situations where a violation has occurred, whereas ACF argues that submitting a CAP is a fundamental step whenever violations have been committed. We explain next why the regulations support ACF's view. First of all, Ohio relies on permissive language in the regulations providing that, in the case of individual violations, a state "may develop, obtain approval of, and implement a plan of corrective action any time after it receives written notification from ACF that it is in violation of section 471(a)(18) of the Act," while, in the case of systemic violations, the regulations provide that a state "must" submit a CAP within 30 days. 45 C.F.R. § 1355.38(b)(1) and (a)(1)(emphasis added). ACF argues, however, that Ohio is wrong to treat this language as meant to make CAPs voluntary for individual violations as opposed to mandatory for systemic violations. ACF Br. at 34-35. Instead, ACF explains, the individual violation provision permits states to control the timing of filing a CAP, but the surrounding provisions make clear the consequences of delay in filing since funding reductions continue "for each succeeding quarter within that fiscal year or until the State completes a corrective action plan and comes into compliance, whichever is earlier." 45 C.F.R. § 1355.38(g)(2); ACF Br. at 34. We agree with ACF that the net effect of the regulations is to make submission of a CAP "voluntary" in the case of individual violations only in the sense that any compliance is "voluntary," i.e., as long as the state prefers to continue to run up [Page 15] penalties. In fact, states that commit violations are obliged to provide a plan to correct those violations and to come into compliance, although with systemic violations, states have an opportunity to correct before becoming subject to a penalty. The distinction that the regulations actually make in the treatment of individual and systemic violations is thus not whether the CAP is optional or mandatory, but whether ACF imposes a penalty immediately (as with actual individual violations) or permits an opportunity for correction first (as with systemic violations). Thus, a state may submit a CAP for individual violations at any time, but until it does so, penalties will be accruing. For that reason, the penalty imposed here, which is not challenged by Ohio, was an immediate penalty for the individual violations. In the case of systemic violations (which have not been shown to have harmed specific individuals), penalties are not imposed if the state submits a CAP within the required time and, after the CAP's approval, the state is given six more months to complete the corrective actions and come into compliance before facing a penalty. 45 C.F.R. § 1355.38(c)(1). We also conclude that Ohio is mistaken in reading the word "is" to add a requirement that ACF must somehow re-assess whether the violations are still occurring at the time that a CAP is required. The same phrase "is in violation" occurs in both the individual violation and systemic violation CAP provisions. 45 C.F.R. § 1355.38(a)(2)(i) and (ii); ACF Reply Br. at 22. Yet, individual violations that trigger violation findings will almost always involve events that have occurred in the past and have been discovered in an investigation completed prior to notification by ACF that the state "is" in violation with regard to the individual actions. It is therefore implausible that the use of the word "is" in this context was intended to have the meaning that Ohio suggests, i.e., that the violation had to be re-assessed as occurring or continuing in place simultaneously with the issuance of ACF's final determination. It follows that the use of the present tense could not have the meaning Ohio ascribes to it in the parallel use in relation to systemic violations. The clearly more reasonable reading of the regulation is that once a state has been found to have committed a violation following an agency investigation, the state is in violation (i.e., presumed to be in the status of violator) until the state achieves compliance by implementing its plan of correction. Ohio asks that we decline to defer to ACF's interpretation of its own regulations, as Ohio recognizes we generally would do, on the grounds that ACF's reading of the phrase "is in violation" [Page 16] conflicts with the plain language and with the agency's interpretation in the preamble to the final regulations. Ohio Supplemental Reply Br. at 11. We disagree. The language of the regulation is susceptible of multiple interpretations, as Ohio itself recognizes. Ohio's reference to the preamble here focuses on the explanation that states are to use the corrective action period to "come into compliance." Id., citing 65 Fed. Reg. 4020, at 4047. Contrary to Ohio's position, a state that has committed systemic violations can reasonably be understood to need to come into compliance, and to so demonstrate, even if the agency's notice letter is issued after the state has changed the specific policies triggering the violation findings. We thus see no conflict between ACF's present interpretation and the language of either the regulation or the preamble. In general, as ACF contends, where two conceivable interpretations of a regulation exist and one furthers the public policy undergirding the program while the other undercuts it, the regulation should be construed to conform with the underlying public policy. ACF Br. at 35. We agree with ACF that Ohio's interpretation would read the implementing regulations for a statute enacted and then amended to tighten the bar against discrimination in adoption "to make optional, at the offender's sole discretion, the question of whether a corrective action plan should be drafted and implemented when discriminatory acts occur." ACF Br. at 35-36 (emphasis in original). Ohio's position thus unreasonably places entirely in the hands of an admitted violator the determination of what constituted adequate correction because ACF would not usually be in possession of contemporaneous information about changes in policies and practices made by a state while ACF was in the process of preparing its final determination. At best, investigators would be obliged to repeatedly reevaluate the moving target of state policies and practices while attempting to issue a notification that the state has been found in violation. The language and structure of the regulation and the public policy concerns underlying the statute which it implements all support the ACF position that whenever a state is found to have committed systemic violations, the state must submit and implement a plan to correct its violations and come into compliance. To permit ACF to require a CAP only if the state is demonstrated to still be in violation at the time that ACF issues its notice would be administratively prohibitive and would undermine the goal of protecting children and prospective families from discrimination. [Page 17] The regulatory scheme recognizes that once systemic violations have been found to exist following an investigation, the process to come into compliance may be more demanding and prolonged than, for example, simply revising or revoking prior written policies, and that a CAP would be necessary in every case to insure that a state brings its operational practices and procedures into full compliance. As our discussion below indicates, this is precisely the case with Ohio. After arguing that it had cured all systemic violations and come into compliance before the ACF final determination, Ohio failed to prove its factual premise. ACF submitted evidence in the record that supports the opposite conclusion. Ohio's basis for its claim is that it repealed in 1999 the two State rules specifically cited by OCR in its report as constituting systemic violations. ACF contends, however, that in fact other practices or omissions either constituted themselves systemic violations that were still uncured by the time the determination letter was issued or at the least presented the risk that repealing the rules which violated section 1808 on their face did not result in Ohio achieving full compliance. ACF Br. at 36. The regulation treats not only rules and policies as systemic violations, but also procedures or practices that violate the anti-discrimination provisions. The ACF Notice listed nine areas that Ohio had to address to bring its practices and procedures into compliance, and expressed specific concern about the potential for a rule newly adopted in 2002 to be easily misused to facilitate racial discrimination. ACF Ex. 2, at 3-4. ACF discusses in some detail in its briefing why various state-wide practices facilitated the violations in Hamilton County and what actions Ohio had not taken or committed to as of the time of the final determination that were required to prevent recurrences. ACF Br. at 37-58; see also ACF Reply Br. at 24-42. The issues included reworking training materials, providing more active oversight to county agencies which had operated with almost no reviews, and improving cross-jurisdictional recruiting practices. Id. Ohio fails to show in response that it had fully addressed all of the outstanding issues that caused the systemic violations. Instead, Ohio asserts that the Board does not need to decide whether an ongoing violation had been proven because, according to Ohio, the ACF Notice did not allege or identify any ongoing violations. Ohio Supplemental Reply Br. at 10. We reject this assertion in light of the allegations in the ACF Notice and the further discussion of the factual underpinnings of those allegations in the briefing. [Page 18] Ohio also argues that the State practices and procedures cited in the ACF Notice and elaborated on in ACF's briefs were not identified as systemic violations by OCR. Ohio Reply Br. at 26. Ohio contends that such practices and procedures could not, in any case, constitute systemic violations because the regulation limits that category to those statutes, regulations, policies, practices and procedures that are violations "on their face." 45 C.F.R. § 1355.38(a)(2). Ohio does not demonstrate, however, that eliminating specific rules which were, on their face, discriminatory is all that is necessary to come into compliance. ACF could reasonably evaluate the full range of Ohio's policies and practices to determine if the state had merely converted facially discriminatory rules into other, perhaps less obvious, forms. Having admitted that it has committed systemic violations, Ohio has not proved that it corrected the situation and came into compliance within the meaning of section 1355.38(c)(1) of the regulations. We conclude that ACF was authorized to require Ohio to submit a CAP under the circumstances here. 3. ACF is not prevented from requiring Ohio to submit a CAP by any alleged noncompliance with the Paperwork Reduction Act. Ohio raises an additional contention in its reply brief, arguing that even if ACF had the authority to require a CAP, the imposition of the requirement is unenforceable because ACF allegedly failed to comply with the Paperwork Reduction Act (PRA). Ohio Reply Br. at 9. The PRA, 44 U.S.C. § 3501 et seq., forbids any collection of information by an agency unless approval is first obtained from the Director of the Office of Management and Budget (OMB) and an OMB control number is displayed on the information collection request. 44 U.S.C. § 3507(a)(2)-(3). Ohio acknowledges that ACF had obtained OMB approval and a control number, but contends that ACF failed to display the number either on the ACF Notice or in the regulation requiring CAP submission. Ohio argues, with references to various cases, that the failure to display the number on the face of the request is an affirmative defense at any stage of proceedings, even if the information was already produced and the remedy is that the CAP becomes unenforceable. Id. at 11-13. Ohio recognizes that PRA protections do not apply where an information collection is expressly required by statute, but argues that this exception does not cover the case where an agency is simply authorized to impose a collection of information. Id. at 13-14, citing Saco River Cellular, Inc. v. FCC, 133 F.3d 25, at 30 (D.C. Cir. 1998). [Page 19] ACF responds that section 1808 mandates the implementation of a CAP in the case of a violation, rather than simply permitting ACF to collect information. ACF Reply Br. at 54. Therefore, according to ACF, the exception does apply here and the PRA protections are inapplicable. We agree with ACF that the statute expressly provides for ACF to require submission and implementation of corrective action plans. Section 1808(b) provides for enforcement penalties to apply to a state found in violation or found "to have failed to implement a corrective action plan within a period of time not to exceed 6 months." Section 1808(b), codified at 42 U.S.C. § 674(d). (4) Where the requirement to provide the information originates with Congress, rather than Congress simply providing the agency with authority to collect information, the PRA does not provide protection from the consequences of failure to submit the information. See Gossner Foods, Inc. v. EPA, 419 F. Supp. 359 (D. Utah. 1996). Clearly, section 1808 contemplates more than simple permission to ACF to collect CAP information and instead mandates specific consequences for a state in violation that fails to submit and implement a CAP. Saco does not compel a different conclusion. In that case, the Federal Communications Commission (FCC) was authorized by statute to issue regulations on license applications. 133 F.3d at 32. The FCC then required applicants to disclose specific financial information. The court found that this situation involved "no collection of information imposed by statute, much less a specific congressional command to provide information showing a firm financial commitment. The Congress merely authorized, it did not require, the Commission to collect information regarding the financial qualifications of applicants for a license." Id. By contrast, here, Congress directly imposed a requirement that states found in violation submit and implement a CAP to avoid liability for enforcement penalties. Unlike in Saco, here Ohio [Page 20] challenged ACF's authority to require submission of any CAP, not the specific information required to be in the CAP, and the statute here does expressly provide for CAP submission. Ohio argues that the provision for penalties for a state that fails to implement a CAP could be "stated differently" as referring to the elimination of violations since the statute does not specify that the plan be in writing. Ohio Supplemental Reply Br. at 6. The statute does not, however, simply expose states to further penalties if violations are not eliminated but rather mandates penalties if a plan is not implemented. It is not plausible that such penalties would be imposed based on oral representations subject to the vagaries of memory and misunderstanding. The expectation of written plans is implicit in the statutory language. Ohio also acknowledges that the PRA does not apply to information collection during the conduct of an administrative action or investigation against a specific entity, as opposed to any investigation of general categories of individuals or entities. Ohio Reply Br. at 15; 44 U.S.C. 3518(c)(1(B)(ii). Ohio argues, however, that ACF should "be estopped from making such an exemption argument since it twice sought and obtained OMB approval for its corrective action plan information collection." Id. Ohio further contends that this exemption is inapplicable in any case. We find no merit to Ohio's contentions. The situation here falls squarely into the category of collecting information as part of a specific administrative investigation. Ohio argues that similar investigations might later involve other states and thus be directed at a category of entities. This argument would render the exemption meaningless since any administrative investigation against a particular entity could also be repeated against another specific entity found in another investigation to be in violation. The point of the exemption is that the information is being sought from a specific entity at a particular time as part of an investigation directed at that entity - as opposed to, for example, categorical industry-wide information collections. Cf. 44 U.S.C. § 3518(c)(2). Ohio here was the target of precisely the kind of individualized enforcement which the PRA sought to remove from its scope. Ohio further claims that the exemption does not apply because the "investigation" ended when OCR issued its findings is equally unavailing. Ohio Supplemental Reply Br. at 15. ACF's enforcement action did not end with OCR's investigation, and the exemption applies to such enforcement actions, as well as the investigative processes that lead to them. [Page 21] Even if estoppel were otherwise available against the government, we see no basis for estopping ACF from relying on the exemption merely because ACF obtained OMB approval. It is hardly logical to punish ACF for undertaking to obtain OMB approval by imposing on ACF an otherwise inapplicable requirement to place its OMB number on a notice letter in a specific administrative investigative proceeding. Contrary to Ohio's argument, agencies are not prevented from applying the PRA exemption for individualized actions and investigations by having obtained OMB approval for more general record collection requirements. See Shell Oil Co. v. Babbitt, 945 F. Supp. 792 (D. Del. 1996), aff'd, 125 F.3d 172 (3d. Cir. 1997). Ohio argues PRA protections attach to any information collection directed at ten or more persons, and that "ten or more persons" includes "any independent entities to which the initial addressee may reasonably be expected to transmit the collection of information . . ., including . . . local entities." 5 C.F.R. § 1320.3(c)(4). Ohio calculates that ACF's estimate that five states may be required to submit CAPs annually and that each might need to transmit the request to one or more local entities means that the total recipients would likely exceed ten per year. Ohio Supplemental Reply Br. at 14. ACF denies that the CAP requirement is a "collection of information" because a CAP is a narrowly tailored document negotiated with a single entity in response to specific violation findings. ACF Reply Br. at 61; 5 C.F.R. § 1320.3(c) and (h). Ohio's estimate of the number of persons who might be subject to CAP requirements is based on unfounded speculation given its own assertions that no other state has been required to submit a CAP yet. Ohio Reply Br. at 33. We need not, however, resolve whether the CAP requirement generally constitutes a collection of information, given our conclusion that its application in the context of an individual enforcement action under the statute is exempt from PRA protections. The parties also dispute what practical effect a PRA violation would have. Ohio argues that any technical violation of the PRA justifies voiding the CAP entirely, while ACF argues that the protection of the PRA, where applicable, is limited to providing a defense to any penalty for failure to comply with the information request. Again, we need not resolve this question given our conclusion that no PRA violation occurred. [Page 22] Conclusion We conclude that ACF had authority to require Ohio to submit and implement a corrective action plan under the circumstances here. We also conclude that ACF did not violate the PRA in exercising that authority here. We therefore uphold ACF's final determination. |
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| JUDGE | |
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Judith A. Ballard Cecilia Sparks Ford Donald
F. Garrett |
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| FOOTNOTES | |
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1. Hamilton County Job and Family Services (Hamilton County) was a subrecipient of federal funds through Ohio. Hamilton County asked to join this action as an intervenor. The Board denied the motion to intervene but granted Hamilton County leave to file a brief in the case, which it did. Board Order dated April 15, 2004. In its brief, Hamilton County states it does not challenge "findings of fact in regard to the individual cases cited" and acknowledges that it "had written procedures and practices that were contrary to HHS's [Department of Health and Human Services] guidance on 1808." Hamilton County Br. at 3. Hamilton County accepted responsibility for the violations, while asserting that its staff did not act intentionally to violate the law and that the children and families involved did not suffer actual harm. 2. The Howard M. Metzenbaum Multiethnic Placement Act of 1994, as amended by the Removal of Barriers to Interethnic Adoption Act, 42 U.S.C. § 671 et seq., effective January 1, 1997 (MEPA). 3. ACF filed an earlier motion to dismiss challenging the original notice of appeal, which referenced Hamilton County's claim that the "findings are not supported by the underlying facts" and asserted Ohio "already had corrected any deficiencies at the state level" before the ACF Notice was issued. ACF Notice of Appeal at 1. ACF argued that Ohio did not set out any disagreement of its own with the violation findings and did not assert that Ohio was in compliance on the dates cited in the penalty letter. ACF Motion, dated March 31, 2004. Further, ACF argued that corrective efforts were legally irrelevant because the penalty was based on past noncompliance. Id. The Board denied that motion to dismiss, finding that Ohio was effectively adopting Hamilton County's challenge to the violation findings. Board Ruling, dated April 15, 2004. 4. The statutory mandate involved here is quite different from the complicated situation presented in In the Matter of AFCARS Penalties Imposed on California, et al., Recommended Decision, DAB Docket Nos. A-2000-59, A-2000-61 (2000)(AFCARS). In that case, the Presiding Officer found, as an alternative basis for the recommended conclusion, that the PRA barred the penalties at issue because the reporting requirements there were imposed on the states by ACF rather than mandated by the statute. AFCARS at 36. In any case, the conclusion related to the PRA was not adopted by the Assistant Secretary as part of the final decision in the AFCARS case issued January 27, 2002. | |