Camden County Council on Economic Opportunity v. United States Department of Health

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 16, 2009 Decided November 6, 2009
No. 08-5396
CAMDEN COUNTY COUNCIL ON ECONOMIC O PPORTUNITY,
APPELLANT
v.
UNITED STATES DEPARTMENT OF HEALTH AND H UMAN
SERVICES AND KATHLEEN SEBELIUS , SECRETARY, UNITED
STATES DEPARTMENT OF HEALTH AND HUMAN S ERVICES,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(Civ. No. 07-1835)
Robert A. Graham argued the cause for appellant. With
him on the briefs was Edward T. Waters.
Robin Meriweather, Assistant United States Attorney,
argued the cause for appellees. With her on the brief were R.
Craig Lawrence, Assistant United States Attorney, and
Channing D. Phillips, Acting United States Attorney.
Before: ROGERS and K AVANAUGH , Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

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Opinion for the Court filed by Circuit Judge
KAVANAUGH .
KAVANAUGH , Circuit Judge: Under the Head Start
program, the Federal Government grants money to certain
local organizations that provide pre-school services to low-
income children. Camden County Council on Economic
Opportunity was a Head Start grantee that provided pre-
school services to children in the Camden, New Jersey area.
During a regularly scheduled review in 2005, the Department
of Health and Human Services, which administers Head Start,
found several safety-related deficiencies involving
“undesirable and hazardous materials” on the playgrounds at
Camden sites. After Camden failed to sufficiently correct the
problems within the required 30-day period, HHS terminated
Camden’s grant. Camden then filed suit, challenging HHS’s
decision as arbitrary and capricious under the Administrative
Procedure Act. In a thorough opinion, the District Court held
that HHS acted lawfully when it ended Camden’s grant. We
agree and therefore affirm.1
I
In 1981, Congress passed and President Reagan signed
the Head Start Act, Pub. L. No. 97-35, 95 Stat. 499 (codified
as amended at 42 U.S.C. §§ 9831-9852a). The Act authorizes
1 HHS separately found that Camden had failed to correct
several non-safety-related deficiencies within the 90-day period
mandated by statute for those deficiencies. Because we find that
HHS acted properly in terminating the grant based on the safety-
related deficiencies, and because, as Camden acknowledges,
termination of a Head Start grant may be based on a single
uncorrected deficiency, see Tr. of Oral Arg. 13, we need not
address the issues raised by Camden with respect to the non-safety-
related deficiencies.

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federal funding for local organizations that provide services to
low-income pre-school children.
Under the Act, Head Start grantees undergo HHS
performance reviews every three years. 42 U.S.C. § 9836a(c).
During those evaluations, HHS personnel determine whether
a grantee’s Head Start program is meeting certain statutory
and regulatory obligations pertaining to safety, quality, and
the like. Id.; see also 45 C.F.R. Part 1304. If a grantee does
not meet the requirements, HHS sends the grantee a notice
detailing the deficiencies. The notice sets a date by which the
grantee must either correct its deficiencies or face termination
of its grant; the length of the corrections period depends on
the danger posed by the deficiency and on the time the
grantee reasonably needs to correct the deficiency. 42 U.S.C.
§ 9836a(e)(1)(B). After the relevant period for corrective
action has elapsed, HHS conducts a follow-up review. Id. §
9836a(c)(1)(C). If the follow-up review determines that the
grantee failed to remedy its deficiencies, HHS ends the grant.
Id. § 9836a(e)(1)(C).
Camden County Council on Economic Opportunity was a
Head Start grantee serving some 1300 children in 22 facilities
in Camden, New Jersey. According to Camden, it received
about $13 million annually for its Head Start program.
During a 2005 performance review, HHS found various
deficiencies at Camden. Several of the deficiencies related to
safety issues and thus were considered more serious under the
Act. Most relevant for present purposes, the HHS team
observed splinters and rusty nails at one Camden playground
and trash cluttering another playground. Based on that
evidence, HHS determined that Camden was not meeting its
regulatory obligation to keep its sites “free of undesirable and

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hazardous materials and conditions.” 45 C.F.R. §
1304.53(a)(10)(viii).
HHS required Camden to remedy this safety-related
deficiency within 30 days. After the 30-day period elapsed,
HHS conducted follow-up reviews, which determined, among
other things, that Camden had not successfully remedied this
deficiency. HHS therefore terminated Camden’s grant.
Camden appealed the termination of funding to HHS’s
Departmental Appeals Board, but the Board ruled in favor of
the agency. Camden subsequently brought suit in the District
Court; the court likewise rejected Camden’s arguments.
Camden appealed from the grant of summary judgment. Our
review of the District Court’s decision is de novo.
II
According to Camden, HHS acted arbitrarily and
capriciously and thus violated the Administrative Procedure
Act when it terminated Camden’s funding. Camden contends
that it corrected the deficiency at the sites specifically
identified in the initial HHS notice – the Hayes and
Charleston sites – and was improperly denied funding based
on a later-discovered problem at a different site, Lois I.
In its initial review, HHS found that some of Camden’s
sites “had outdoor areas that were not secured or cleaned to
prevent the children from being injured.” Head Start Review
Report 5 (Sept. 12, 2005) (J.A. 145). HHS cited Camden’s
Charleston playground for the presence of “splinters, rusty
nails, and leaves” and Camden’s Hayes site for being
“cluttered with trash.” Id. Both of those problems, HHS
stated, violated Camden’s obligation to keep indoor and
outdoor premises “cleaned daily and kept free of undesirable

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and hazardous materials and conditions.” Id. (quoting 45
C.F.R. § 1304.53(a)(10)(viii)). Classifying this as a
deficiency that threatened the “health or safety of staff or
program participants,” 42 U.S.C. § 9836a(e)(1)(B)(i), HHS
afforded Camden 30 days to remedy the problem.
After the corrective period had expired, HHS performed a
follow-up review. It found Camden’s deficient playground
sites “Not Corrected.” Follow-Up Head Start Review Report
16 (Apr. 9, 2006) (J.A. 110). Although acknowledging that
the Charleston and Hayes sites were “now free of splinters
and rusty nails,” HHS nonetheless deemed Camden’s
deficiency uncorrected in light of similar problems at another
Camden site – specifically, the presence of “trash” and a “pile
of old wood planks with rusty nails sticking out” of them at
the Lois I facility. Id. at 16-17 (J.A. 110-11). Based on this
unremedied safety-related deficiency, HHS terminated
Camden’s grant.
Camden says it’s unfair – and arbitrary and capricious –
to terminate its funding based on later-discovered problems at
the Lois I site. Although Camden’s argument is not without
some force, it ultimately misconstrues the nature of a
“deficiency” for purposes of the Head Start Act.
At the time of Camden’s performance review, the Head
Start Act did not define the term “deficiency.” 42 U.S.C. §
9832 (2000).2 But HHS had promulgated a regulation
2 Congress has since amended the Head Start Act to define a
deficiency as “a systemic or substantial material failure of an
agency in an area of performance” involving any of several
enumerated program characteristics, including “health, safety, or
civil rights of children or staff.” Improving Head Start for School
Readiness Act of 2007, Pub. L. No. 110-134, § 3(a)(5), 121 Stat.
1363, 1364 (to be codified at 42 U.S.C. § 9832(18)).

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interpreting the Act. And that regulation defines a
“deficiency” broadly as an “area or areas of performance” in
which a Head Start grantee “is not in compliance with State or
Federal requirements.” 45 C.F.R. § 1304.3(a)(6)(i). HHS’s
regulation is permissible and binding under the principles set
forth in Chevron v. Natural Res. Def. Council, 467 U.S. 837
(1984). Consistent with the HHS regulation, moreover,
HHS’s Departmental Appeals Board has interpreted
“deficiency” to denote a structural or systemic problem, rather
than simply a manifestation of a deficiency at a particular site.
See First State Cmty. Action Agency, Inc., Docket No. A-02-
122, Decision No. 1877, at 78-79 (May 1, 2003); Norwalk
Econ. Opportunity Now, Inc., Docket No. A-05-92, Decision
No. 2002, at 17 (Nov. 28, 2005).
In short, the plain terms of the HHS regulation required
Camden, after it received the initial notice, to ensure that it
did not have “undesirable and hazardous materials and
conditions” at any of its playgrounds, not merely at the Hayes
and Charleston playgrounds. Camden failed to comply with
that obligation.
We also reject Camden’s related argument that it lacked
proper notice of the corrections required at the Lois I site. To
be sure, the Act generally requires notice and an opportunity
for corrective action before a grantee may lose its funding.
Here, however, Camden received such notice: HHS’s initial
deficiency letter informed Camden that it was not meeting its
obligation to maintain sites “free of undesirable and
hazardous materials.” Head Start Review Report 5 (Sept. 12,
2005) (J.A. 145) (quoting 45 C.F.R. § 1304.53(a)(10)(viii)).
That letter, combined with HHS’s regulations and its
Departmental Appeals Board rulings, afforded Camden
sufficient notice that all of its playgrounds had to be free of
“undesirable and hazardous materials” by the time of the

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follow-up review. As HHS’s Departmental Appeals Board
explained, the review process does not allow a grantee “to
play cat and mouse” by correcting problems at one location
“while allowing other premises to be or become noncompliant
or by correcting one set of hazards while allowing similar
hazards to exist.” Docket No. A-07-90, Decision No. 2116, at
16 (Sept. 25, 2007) (J.A. 45).
* * *
We affirm the judgment of the District Court.
So ordered.

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