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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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POLICY AND RESEARCH, LLC, et al.
Plaintiffs,
vs.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES,
Defendant.

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Civil Action No. 18-346
9:35 a.m.
April 19, 2018
Washington, D.C.

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TRANSCRIPT OF ORAL RULING
BEFORE THE HONORABLE KETANJI B. JACKSON,
UNITED STATES DISTRICT COURT JUDGE
APPEARANCES:
FOR THE PLAINTIFFS: ALLISON MARCY ZIEVE
SEAN M. SHERMAN
Public Citizen Litigation Group
1600 20th Street, NW
Washington, DC 20009
(202) 588-1000
Email: Azieve@citizen.org
Email: Ssherman@citizen.org
FOR THE GOVERNMENT: MICHAEL J. GERARDI
JOEL McELVAIN
United States Department of Justice
Civil Division, Federal Programs Branch
20 Massachusetts Ave. NW, Room 7223
Washington, D.C. 20530
Tel: (202) 616-0680
E-mail: Michael.j.gerardi@usdoj.gov
ALSO PRESENT (via telephone):
Michael Quinn, Robert Charrow, Matt Bowman
Brian Simpson, Jocelyn Mendelsohn, Jody Morris
Elizabeth Saindon, Jonathan Jacobson
Reporter:

Elizabeth Saint-Loth, RPR, FCRR
Official Court Reporter
(202) 354-3242

Proceedings reported by machine shorthand, transcript produced
by computer-aided transcription.

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P R O C E E D I N G S

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THE DEPUTY:

Your Honor, this is Civil

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Action 18-346, Policy & Research, LLC, et al. versus

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Department of Health and Human Services, et al.

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I'm going to ask counsel to approach the lectern
and identify yourselves.
MR. SHERMAN:

On behalf of plaintiffs, Sean

Sherman and Allison Zieve for Public Citizen.
THE COURT:

Good morning.

MR. GERARDI:

Good morning, Your Honor.

On behalf

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of Health and Human Services, Michael Gerardi and Joel

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McElvain from the Department of Justice.

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THE COURT:

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THE DEPUTY:

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Good morning to you as well.
Would the parties on the phone please

identify yourselves for the record.
MR. QUINN:

Yes.

Good morning, Your Honor.

Michael Quinn, U.S. Department of Justice.
MR. CHARROW:

Robert Charrow, Department of Health

and Human Services.
MR. BOWMAN:

Matt Bowman, Department of Health and

Human Services.
MR. SIMPSON:

Brian Simpson, Department of Health

and Human Services.
MS. MENDELSOHN:
Health and Human Services.

Jocelyn Mendelsohn, Department of

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MS. SAINDON:

Health and Human Services.

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Elizabeth Saindon, Department of

MR. JACOBSON:

Jonathan Jacobson, Department of

Justice.
MS. MORRIS:

Jody Morris, counsel for plaintiffs

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in the Teen Pregnancy Prevention Program litigation in the

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District of Maryland.

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THE COURT:

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Good morning.

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All right.

It sounds like everyone.

As you know, the parties in this matter appeared

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before me yesterday for a hearing regarding the pending

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cross-motions for summary.

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representations that I made at that time, I am now ready to

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rule on these motions.

Consistent with the

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(The proceeding is paused.)

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THE DEPUTY:

The parties that are on the line, if

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you don't mind, can you please mute your telephone because

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any noise that you are making in the background is being

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picked up by the court reporter.

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your phones on mute.

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THE COURT:

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Let me say, again, that consistent with the

We're asking that you put

Thank you.

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representations that I made yesterday, I am now ready to

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rule on these motions.

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detailed explanation of my decision in the form of a written

I will be issuing a full and

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opinion, and I hope to be able to turn that around

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relatively quickly.

3

given the nature of the Government action that is being

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challenged in this case, I will announce my ruling orally

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now and provide some basic comments about the reasons for

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it.

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But because time is of the essence,

First, though, to lay the groundwork for an

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understanding of my findings and conclusions, I will briefly

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describe the facts, the parties' arguments, and relevant

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legal standards before I tell you what I have concluded, and

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why.

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First, the undisputed facts.

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As you all are aware, the plaintiffs in this case

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are a number of private nonprofit organizations that

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submitted applications to HHS through a competitive process

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for the receipt of grant funding.

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the agency to participate in the agency's Teen Pregnancy

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Prevention Program -- which you may hear me refer to as the

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"TPPP" -- for the five-year project cycle that spans 2015

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through 2020.

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And they were selected by

Each plaintiff proposed a program designed to

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reduce the rate of teen pregnancy within certain

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communities, and the agency programatically approved each

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plaintiff's proposed project for a five-year period.

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five-year projects were to be funded in discrete one-year

The

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increments known as "budget periods."

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the agency's past practices, the actual funding was to be

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allocated to each plaintiff on a yearly basis through a

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legal document known as a Notice of Award, which HHS

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provided to plaintiffs in 2015 and then, again, in 2016 in

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response to each plaintiff's submission of a noncompeting

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continuation application.

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And consistent with

The 2015 and 2016 Notices of Award funded
plaintiff's projects during the fiscal years June 2015
through June 2016 and June 2016 to June 2017.
In July of 2017, HHS issued Notices of Award to

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plaintiffs concerning the funding for the 2017 to 2018

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fiscal year.

These notices allocated funding for that

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fiscal year.

But the notices also stated that "This award

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shortens the project period to end on June 30, 2018 at the

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end of this budget year."

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The notice did not contain any reason or

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explanation as to why the agency was shortening the project

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period by two years.

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plaintiffs had behaved in such a way as to provide a cause

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for this determination.

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And HHS has never suggested that

Plaintiffs filed the instant lawsuit in light of

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HHS's decision to shorten the project period and end the

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period of performance of the grant awards.

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that HHS's shortening decision was an arbitrary and

Plaintiffs claim

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capricious act, in violation of the Administrative

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Procedures Act, both because the agency failed to explain

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its reasons for what plaintiffs characterize as a

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"termination" of their federal grants and because the agency

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terminated the grants in a manner that was contrary to its

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own regulations.

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Plaintiffs also filed a preliminary injunction

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that has been converted into a motion for summary judgment.

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And HHS responded with a summary judgment motion of its own

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arguing that the agency's announcement that it was

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shortening the project period was not a termination for the

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purpose of the regulations but, rather, a lawful

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discretionary decision to withhold a noncompeting

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continuation award under the agency's Grant Policy

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Statement.

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In fact, the agency contends that its action in

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regard to the treatment of plaintiff's grant funding award

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is so discretionary that the agency's decision is

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effectively unreviewable because it is a matter that has

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been committed to agency discretion by law.

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Ultimately, as indicated in their briefs, and

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again yesterday, the parties appear to agree that their

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summary judgment arguments hinge on whether HHS's action is

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best characterized as a termination of the plaintiff's

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awards on the one hand or a withholding of noncompeting

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continuation funds on the other.
Notably and significantly, for present purposes,

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HHS's regulations outline what constitutes a termination of

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a Federal grant award and the instances in which the agency

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can take that action.

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45 CFR Sections 75.2 and 75.372.

I am referring to the provisions in

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Also significant is the fact that HHS's

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regulations do not appear to speak to whether and under what

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circumstances the agency can withhold a noncompeting

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continuation award within an approved project period.

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Again, the evidence that HHS has produced to argue

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that the agency has the authority to withhold funding within

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a competitive segment is its Grant Policy Statement which

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does appear to distinguish between a suspension or

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termination of a grant and a decision by the agency to

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withhold a noncompeting continuation award.

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Thus, the Court's first observation is that the

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2017 Notice of Award and HHS's regulations and Grant Policy

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Statement have put the agency in a difficult spot because,

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in order to succeed on its motion, the agency must establish

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that its decision to shorten the project period of

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plaintiff's grants does not constitute termination under the

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regulations and is not otherwise arbitrary or capricious.

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In this regard, HHS vigorously maintains that its
decision was neither a termination nor an arbitrary or

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capricious exercise of its discretionary authority because

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the Grant Policy Statement, which plaintiffs agreed to when

3

they drew down the funds, clearly states that the agency can

4

decide not to make a noncompeting continuation award if it

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determines that "for whatever reason, continued funding

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would not be in the best interests of the Federal

7

Government."

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9

In response, plaintiffs' query why the Grant
Policy Statement matters, when the regulations themselves

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compel the conclusion that HHS's unexplained decision to

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shorten the project period amounts to a termination that

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violates both the APA and the enforceable standards that

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cabin agency discretion under these circumstances.

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Those were the basic facts and a bird's eye view
of the parties' legal arguments.
The Court now turns to the general standards that
it has applied when reaching its conclusion in this case.
When one or more parties request summary judgment

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in the context of an APA case, the reviewing Court generally

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reviews the challenge to the agency's decision as an

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appellate Court addressing issues of law.

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Court is grappling with a question of law, and only a

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question of law.

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to decide whether an agency's actions were consistent with

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the relevant APA standard of review based on the

This means that a

And that kind of review requires the Court

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administrative record, and the facts and reasons provided

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therein.

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In this case, like many APA cases, what is

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involved is what courts typically refer to as the arbitrary

5

and capricious standard which requires the Court to set

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aside final agency action that is "arbitrary, capricious, an

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abuse of discretion, or otherwise not in accordance with

8

law."

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that agencies must articulate a satisfactory explanation for

And in this regard, the Supreme Court has long held

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their actions, and that an agency must follow its own

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regulations.

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However, notably, a reviewing Court must sometimes

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deal with threshold issues prior to delving into the merits

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of a challenge under the APA.

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contends that the Court does not have the ability to review

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an agency's actions pursuant to Section 701(2) of the APA,

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the Court must determine, as a threshold matter, whether the

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agency's action is a reviewable one under the APA before it

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addresses the merits of plaintiffs' APA claims.

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If a defendant agency

Of course, it is well established that there is an

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initial presumption that a Court can review an agency's

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actions under the APA.

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as where the challenged agency decision is committed to

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agency discretion by law, a Court cannot review whether the

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agency has acted in accordance with the APA.

But in certain circumstances, such

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The Supreme Court has emphasized that the

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committed to agency discretion by law exception is a very

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narrow one and applies only in rare circumstances,

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specifically when there are no statutory, regulatory, or

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binding policy norms that constrain the agency's discretion

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and thereby provide standards for the Court to apply.

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In the event that the Court does find that the

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agency's decision is reviewable, the Court then proceeds to

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review the decision on the merits pursuant to the applicable

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APA standards.

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established that an agency acts arbitrarily and capriciously

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if it failed to provide reasons for the challenged decision

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or if its decision contravenes provisions of federal law.

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And, as mentioned, it is by now well

In this case, the parties have briefed three

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separate issues, specifically:

One, whether HHS's decision

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to shorten the project period for the plaintiff's grants was

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committed to agency discretion and, thus, is an unreviewable

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determination under the APA; two, whether plaintiffs have

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stated a plausible legal claim that HHS terminated the

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plaintiffs' grants; and, three, whether HHS acted

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arbitrarily and capriciously in shortening the project

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period for plaintiffs' grants.

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As the parties acknowledged at yesterday's motion

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hearing, the first two arguments turn on a single question:

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Has the agency terminated the plaintiffs' federal award

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within the meaning of the HHS regulations?

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Court will answer this question first in the context of

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determining whether HHS's decision is reviewable under the

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APA.

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Therefore, this

The Court's general analysis of reviewability

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begins with the observation that, within the D.C. Circuit,

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evaluating whether or not an agency's decision is committed

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to agency discretion by law requires the Court to perform a

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two-step analysis.

First, the Court must consider the

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nature of the administrative action at issue to determine

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the status of the initial presumption, that is, whether

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there is a presumption in favor of or against judicial

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review of an agency's action.

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determined which presumption applies, the Court looks to any

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pertinent statutes, regulations, and formal or informal

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policy statements to determine whether there are judicially

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manageable standards that would allow the Court to evaluate

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whether an agency has behaved in a lawful manner.

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Then, once the Court has

With respect to the presumption issue, it does

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appear that the type of action that HHS took in this case,

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its decision to change the grant funding that had previously

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been provided to plaintiffs, is presumptively unreviewable.

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In Lincoln versus Vigil, the Supreme Court

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explained that, when it comes to funding decisions, an

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agency's decisions of which programs to fund entails

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"a complicated balancing of a number of factors which are

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peculiarly within the agency's expertise, and agency's are

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far better equipped than courts to deal with the many

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variables involved in those decisions."

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from 508 U.S. at 193.

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That was a quote

Moreover, Lincoln's rationale clearly applies to

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instances where an agency has decided to discontinue funding

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for a certain program or project.

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the type of conduct that the federal agency in Lincoln had

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Indeed, that is exactly

taken.
Now, admittedly, this case does differ from

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Lincoln in that this case does not deal with a lump-sum

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appropriation.

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the allocation of funds that Congress specifically earmarked

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for the TPPP.

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Inc. versus Veneman, 310 F.3d 747, bridges that gap.

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This case involves HHS's decision regarding

But the D.C. Circuit's opinion in Milk Train,

The Milk Train Court's decision makes it clear

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that the principles behind Lincoln are not confined to

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instances where Congress has made lump-sum appropriations,

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that is, so long as Congress has left it to the agency's

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sole judgment as to the manner in which funds should be

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spent in order to reach the goals set out by Congress, the

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agency's decisionmaking is presumptively unreviewable

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because the agency's choice, among the many options for

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allocating the funds, requires the same complicated balance

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of factors that Lincoln discussed in the lump-sum

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appropriation context.

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In short, given the principles of Lincoln and

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Milk Train, this Court concludes that HHS's decision to

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shorten the project period and use the funds that would have

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otherwise gone to a given project is the type of decision

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that is presumptively unreviewable.

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9

However, it is also clear to this Court that HHS's
regulations do contain meaningful standards that constrain

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HHS's discretion with respect to its grant-funding

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decisions.

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to review the agency's decisions in this regard.

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These standards provide the Court with the means

As the Court noted earlier, and as HHS conceded at

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yesterday's hearing, if HHS has terminated the plaintiffs'

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awards within the meaning of its regulations, then the

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regulations apply and their standards render the agency's

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decision reviewable by this Court.

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So here is where I get to the part of the ruling

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in which I announce the result because the Court has

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concluded that HHS terminated plaintiffs' federal grants

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within the meaning of the regulations.

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conclusion for several reasons.

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And I reach this

First and foremost, there is the plain language of

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the regulation itself.

As defined in 45 CFR Section 75.2, a

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"termination" means "the ending of a Federal award, in whole

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or in part, at any time prior to the planned end of the

2

period of performance."

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straightforward.

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kind of shortening of the project period that HHS intended

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to accomplish here.

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This definition is fairly

And, on its face, it describes exactly the

This view is further bolstered by the provision in

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the regulations that defines the phrase "period of

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performance."

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non-Federal entity may incur new obligations to carry out

That phrase means:

The time during which the

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the work authorized under the Federal award.

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the programatically approved five-year project period to me.

12

And, indeed, HHS's regulations expressly

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cross-reference and equate the terms "period of performance"

14

and "project period."

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regulation's definition of a "termination" as follows:

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termination is the ending of a Federal award, in whole or in

17

part, at any time prior to the planned end of the project

18

period.

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Sounds like

Thus, one could easily rephrase the
A

Viewed in the light of the regulation's plain

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language, the termination question in this case is thus a

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fairly simple one.

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question prior to the planned end of their project periods?

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Even agency counsel admits that the answer to that question

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is yes.

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action, the agency itself said that this is precisely what

Did HHS end the federal grants in

And in fact, contemporaneously with the challenged

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it was doing.

2

The Notices of Award that plaintiffs received in

3

July of 2017 stated, plainly and unequivocally, that "this

4

award shortens the project period to end on June 30, 2018."

5

Accordingly, it is clear beyond cavil that HHS

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ended plaintiffs' grant awards two years before the planned

7

end of the project period, which is the same thing as saying

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the agency ended the grants two years before the planned end

9

of the period of performance.

And that is exactly what the

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regulations call a termination of plaintiffs' federal

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awards.

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In an attempt to escape this conclusion, HHS

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focuses on the funding aspect of the grant-making dynamic

14

which this Court finds odd to begin with because the

15

regulations plainly require that termination be assessed by

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virtue of the status of the work to be performed, not the

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status of the funding.

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In any event, HHS insists that the period of

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performance is the same as the one-year budget period

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applicable to plaintiffs' projects, which lasts from

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July 1st, 2017 to June 30, 2018.

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that:

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merely refused to provide the additional funding for the

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remainder of the project period which, according to agency

25

counsel, HHS has every right to do under the terms of its

And, therefore, HHS says

Rather than terminating the grants, the agency has

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Grant Policy Statement.
The Court does see the policy statement language

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upon which the agency purports to rely, and it has no doubt

4

that withholding funds in the best interest of the

5

Government was within the agency's announced position at the

6

time of plaintiffs' grant awards.

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similar authority to refuse to make noncompeting

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continuation awards during the planned period of performance

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in the regulations.

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But the Court finds no

The words "budget period" do not appear in the

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relevant regulations at all.

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never equate the phrase "budget period" with the phrase

13

"period of performance," much less suggest that the

14

termination conditions are inapposite if the agency's

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decision to shorten the project period is made at the end of

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the annual budget cycle.

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that appears to address the budget period is the Grant

18

Policy Statement.

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undermine the agency's argument that the project period and

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the budget period are one and the same because it states,

21

for example, on Page B-2, that the "budget period" is "the

22

interval of time into which a project period is divided for

23

budgetary and funding purposes."

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25

And the regulations certainly

And in fact, the only document

And this document seems to simultaneously

In any event, any such "budget period" definition
cannot possibly supersede the regulations which, once again,

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make no mention of budget and, instead, defines

2

"termination" as prematurely ending the period of

3

performance, and defines the "period of performance" as the

4

time period during which the grantee may incur obligations

5

under an HHS project.

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This Court also notes that interpreting the phrase

7

"period of performance" to equate with the one-year budget

8

period -- which agency counsel urges me to do in the context

9

of this instant case -- appears to be entirely inconsistent

10
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with HHS's past practice.
How do I know this?

I have reviewed various

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Funding Opportunity Announcements that the agency created.

13

Not the one that plaintiffs' counsel gave me yesterday, by

14

the way, but the ones that are part of the instant record.

15

Looking at Page 39 of Exhibit N to the Sherman

16

Declaration, for example, in 2015, HHS stated that "grants

17

will be funded in annual increments (budget periods) and are

18

generally approved for a project period of up to five years.

19

And then, further down on that page, the agency notes that

20

the period for performance for these federal awards is not

21

to exceed five years and the budget period length was 12

22

months long.

23

This document, and other similar announcements,

24

plainly demonstrate that HHS has traditionally considered

25

the period of performance of grant-funded projects to extend

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for a significantly longer time than the budget period.

2

in the context of the instant litigation, the agency has not

3

provided any document in which those two terms are actually

4

defined synonymously.

5

And

What is more, the Funding Opportunity Announcement

6

previously referenced indicates that:

Notwithstanding the

7

one-year budget period, the project period and period of

8

performance will not exceed five years, which makes imminent

9

sense given that HHS was soliciting scientific research

10

projects that inherently require significant time to

11

complete, and it is implausible that the agency intended

12

such projects to span only one year at the agency's

13

discretion.

14

One other argument that HHS makes is worthy of

15

mention at this time.

16

reference to "period of performance" must mean the one-year

17

budget period because, otherwise, the agency would incur

18

obligations to pay funds for future years in violation of

19

the Antideficiency Act.

20

HHS maintains the regulation's

But this is not necessarily so.

When it set up this grant program for

21

evidence-based research that promotes scientifically-proven

22

results, HHS not only expressly provided that continued

23

funding would be dependent upon the future availability of

24

funds through appropriation bills, it also went a step

25

further and required annual applications for continuation of

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funding, check-ins that provide the agency with a chance to

2

ensure that it is not spending money it does not have.

3

further safeguard, it also appears that the agency actually

4

waits to confirm that Congress has appropriated the funds

5

for TPPP before it issues a Notice of Award notifying

6

plaintiffs that federal funds are available for their use in

7

that budget year.

8
9

As a

This Court also notes that common sense dictates
that the "budget period" and "period of performance" are not

10

intended to be the same thing.

Through the TPP program --

11

TPPP program that Congress has authorized and funded, HHS

12

gives grants for projects that scientific studies have

13

previously proven to reduce the rates of teen pregnancy

14

within communities, and it also finances research projects

15

to develop innovative new techniques to achieve this goal.

16

Neither of those objectives can be accomplished overnight.

17

And it strains credulity to suggest, as HHS does here, that

18

the agency ever intended these goals to be accomplished in a

19

single year.

20

successful and, thus, for the agency to be a good and

21

effective steward of the taxpayer dollars that it receives

22

from Congress for this purpose, the period of performance

23

and the competed-for -- excuse me -- the period of

24

performance for the competed-for teen pregnancy reduction

25

projects have to extend beyond just one year.

For these projects to have any chance of being

And the

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1

agency's suggestion that it intends otherwise raises serious

2

doubts about the appropriate exercise of HHS's judgment with

3

respect to the funding of what the statute calls "medically

4

accurate and age-appropriate programs that reduce teen

5

pregnancy" which is one of the few requirements that

6

Congress has constantly and unequivocally imposed on HHS in

7

its annual appropriations bills.

8
9

This all means that HHS has ended plaintiffs'
grant awards prior to the planned end of the projects'

10

period of performance such that the agency must be deemed to

11

have effected a termination per the agency's regulations.

12

And as agency counsel acknowledged during the hearing

13

yesterday, the agency's regulations quite clearly provide

14

that HHS may only terminate a grant award if:

15

grantee has failed to comply with the terms and conditions

16

of their award; or, two, HHS has caused to terminate the

17

grantee's awards; or, three, HHS has obtained the grantee's

18

consent to terminate the award; or, four, the grantee has

19

proposed the termination.

20

One, the

This statutory set of criteria is a manageable

21

standard that cabins HHS's discretion and, thus, despite the

22

presumptive unreviewability that is applicable to this case,

23

a federal court can examine whether an agency has complied

24

with these standards.

25

of whether or not HHS's termination of plaintiffs' federal

Which leads me to the merit question

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1

grant awards was arbitrary and capricious within the meaning

2

of the Administrative Procedure Act.

3

I was happy that, during yesterday's hearing,

4

agency counsel and I appeared to view this question in the

5

same way.

6

Counsel readily admitted that if this Court found

7

that there was a termination, then the agency's action in

8

shortening plaintiffs' period of performance, as it did

9

here, clearly violates not only State Farm's requirement

10

that the agency provide a reasoned explanation for why it

11

took a particular course of action but, also, violates the

12

agency's own regulations insofar as HHS has not already

13

found that any of the four circumstances that I mentioned

14

exists.

15

The bottom line is this:

For the purpose of this

16

expedited oral ruling, it suffices to say that, in this

17

Court's view, if HHS's programatic approval of a five-year

18

project period subject to a one-year budget period means

19

anything, then it has to mean that the work projects that

20

plaintiffs proposed to the agency in their initial

21

competitive applications were approved prospectively for the

22

ensuing five-year period, notwithstanding the fact that the

23

projects were going to be funded incrementally during

24

one-year budget cycles.

25

agency's programatic approval carries forward through the

And per the regulations, the

 22
1

prescribed period of performance so long as Congress

2

appropriates the funds and none of the specific grounds for

3

termination arises.

4

The agency's suggestion here that despite the

5

five-year programmatic approval that it gave plaintiffs'

6

grant projects, HHS has the authority to repeatedly

7

reevaluate its approval decision on an annual basis in the

8

context of the budgeting process must be rejected not only

9

because it is manifestly inconsistent with the agency's past

10

practices and the realities of federally-funded scientific

11

research projects, but also because it appears nowhere in

12

the plain language of the regulations that unquestionably

13

govern the agency's actions with respect to the grant-making

14

process.

15

Furthermore, whatever the agency's Grant Policy

16

Statement might be read to mean, when it indicates that HHS

17

may decide not to make a noncompeting continuation award

18

within the current competitive segment, this Court finds

19

that HHS did no such thing here.

20

contemporaneously characterized its own actions as

21

shortening plaintiffs' project periods to end on June 30,

22

2018, which is two years earlier than the period of

23

performance that the agency had previously approved.

24
25

And, instead, it

All of this considered, this Court believes that
there can be no other conclusion but that HHS ended

 23
1

plaintiffs' federal award, in whole or in part, prior to the

2

planned end of the period of performance thereby terminating

3

plaintiffs' grant awards under the regulations and that it

4

did so without explanation, much less a finding of any of

5

the causes that the agency's own regulations prescribe.

6

That is arbitrary and capricious action.

7

Therefore, plaintiffs' motion for summary judgment

8

must be granted, and defendant's cross-motion for summary

9

judgment must be denied.

10

The Court's order on these motions, which will

11

issue today, will further mandate that the agency's decision

12

to shorten the project period for the plaintiffs' awards is

13

vacated, and that the agency shall continue accepting and

14

processing the plaintiffs' noncompeting continuation

15

applications in the same way that it has in past years.

16

Now, as a procedural matter, I want to make clear

17

that this is a final appealable order, and the parties

18

should take that into account when evaluating their options.

19

I have given you the broad outline of my

20

reasoning.

21

written opinion as soon as practicable.

22

meantime, you will have to decide whether to comply or to

23

appeal based on my ruling and the findings that I have

24

articulated here today.

25

And I will do my best to provide you with a
But, in the

Is there anything else that needs to be addressed

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1

in this matter at this time?

2

MR. GERARDI:

3

THE COURT:

4

MR. GERARDI:

5

THE COURT:

6

For those on the phone, this is Mr. Gerardi.

7

MR. GERARDI:

8

The Government would like to request a delay in

9
10

One thing briefly, Your Honor.

Yes.
May I approach?

You may.

Thank you, Your Honor.

the effective date of the order of one week.
To be clear, as we've discussed, the Government

11

has committed to accepting the plaintiffs' applications for

12

noncompeting funding; and we will continue to process them

13

under that commitment.

14

At the same time, the agency is in the middle of

15

planning its re-competition of funds under this program.

16

The process is time sensitive.

17

end of the federal fiscal year, and the Government needs

18

time to evaluate the Court's ruling to determine whether an

19

appeal should happen at all, and what the effect of the

20

order will have on this competitive application process.

21

we would respectfully request that the effective date of the

22

order be delayed by a week.

23

Mr. Sherman.

24

THE COURT:

25

MR. SHERMAN:

As you know, it's key to the

And, of course, I yield to

Mr. Sherman.
Thank you, Your Honor.

So

 25
1

Respectfully, plaintiffs don't agree to the

2

request and would ask the Court to issue the order

3

immediately, not with a delay.

4

As we've discussed, Your Honor, with respect to

5

scheduling the hearing and the decision, time is really of

6

the essence.

7

order to accept and process the applications, it needed a

8

certain amount of time to do it and to make sure that

9

plaintiffs didn't have any sort of gap in their funding.

10

HHS has already indicated previously that, in

THE COURT:

But HHS also agreed to do that as a

11

part of our discussion of whether or not we needed to treat

12

this as a preliminary injunction motion or not.

13

understanding that -- you might tell me otherwise.

14

my understanding that the agency has been accepting and

15

processing your applications.

16

MR. SHERMAN:

17

but they have not processed them.

So it's my
But it's

Your Honor, they have accepted them,

18

The agreement that we had reached with HHS and our

19

understanding of what HHS had done thus far is that they had

20

accepted them and were awaiting Your Honor's ruling.

21

Your Honor had issued a ruling that was favorable then, at

22

that time, the agency would begin processing the

23

applications but that the agency was just accepting them

24

until that time.

25

THE COURT:

All right.

If

But let me ask you how you

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1

are prejudiced by a one-week delay in their processing?

2

If, for example, the agency says, nevertheless, we

3

will -- if we decide not to appeal, or whatever, or if we

4

win on appeal -- on an emergency appeal, we will still get

5

the Notices of Award to you within the same time frame as

6

envisioned initially.

7

if they don't start today, in terms of the processing?

8

What difference does it make to you

MR. SHERMAN:

Your Honor, I think you are right

9

that if -- we wouldn't be prejudiced to the extent that it

10

would not delay the funding in any way or that if somehow

11

this delay that the agency is seeking would delay their

12

decision to appeal, which would then delay a subsequent even

13

expedited appeal, and then there would be a gap in funding

14

because of this delay.

15

stay --

16

THE COURT:

For example, if they then sought a

You would have to argue that at that

17

time.

18

moment, the question that the agency has posed is whether

19

they can have a week before they begin to start processing

20

this.

21

I mean, from the vantage point where I sit at this

I don't see how that harms plaintiffs.
MR. SHERMAN:

I think that's right.

As long as

22

the agency confirms that they can get it done in the time

23

period that there wouldn't be a gap, then I think you are

24

right, the plaintiffs wouldn't suffer prejudice, Your Honor.

25

THE COURT:

All right.

Mr. Gerardi, can the

 27
1

agency still get it done?

If you decide not to appeal or if

2

you appeal and you lose, are we still going to be able to

3

get the plaintiffs their money in the ordinary course?

4

MR. GERARDI:

We should, Your Honor.

5

We have other litigation on this topic where a

6

hearing is not even scheduled until mid next week.

7

have made similar representations to plaintiffs in those

8

cases that we will get the processing done.

9

understand, the week is so we can obtain -- if we decide to

10

appeal, we would obviously need necessary approval in order

11

to file a motion to stay, which would be a necessary

12

component in any necessary appeal.

13

THE COURT:

14

MR. GERARDI:

15

THE COURT:

And we

Just to

I understand.
So yes.

The answer is yes.

So your motion is granted, insofar as

16

you're asking for an additional week before my order becomes

17

effective.

18

to produce my opinion in the week that I am now giving you.

19

Let me say, I am not going to be able, likely,

I am in trial starting Monday.

My schedule is

20

such that I had hoped to have given you enough orally now in

21

order for you to be able to make your appellate decision.

22

MR. GERARDI:

Your Honor, I think the oral ruling

23

is sufficient for us to go forward and make a determination.

24

And we appreciate the effort that you put into that today.

25

THE COURT:

All right.

So you will have an

 28
1

additional week.

I will set up my order so that it becomes

2

effective a week from today.

3

Is there anything else we need to address?

4

MR. SHERMAN:

No, Your Honor.

5

MR. GERARDI:

Nothing further, Your Honor.

6

THE COURT:

7

All right.

Thank you.

You are

excused.

8

(Whereupon, the proceeding concludes, 10:21 a.m.)

9

* * * * *

10

CERTIFICATE

11
12

I, ELIZABETH SAINT-LOTH, RPR, FCRR, do hereby

13

certify that the foregoing constitutes a true and accurate

14

transcript of my stenographic notes, and is a full, true,

15

and complete transcript of the proceedings to the best of my

16

ability.

17
18
19

Dated this 20th day of April, 2018.

20
21
22
23
24
25

/s/ Elizabeth Saint-Loth, RPR, FCRR
Official Court Reporter