OFFICE PLANNING GROUP INC V BARAGA-HOUGHTON-KEWEENAW CHILD DEVELO
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STATE OF MICHIGAN
COURT OF APPEALS
OFFICE PLANNING GROUP, INC.,
FOR PUBLICATION
November 4, 2003
9:05 a.m.
Plaintiff-Appellee,
v
BARAGA-HOUGHTON-KEWEENAW CHILD
DEVELOPMENT BOARD,
Defendant-Appellant.
No. 245155
Houghton Circuit Court
LC No. 01-011593-CZ
Updated Copy
January 16, 2004
Before: Meter, P.J., and Saad and Schuette, JJ.
SCHUETTE, J.
Defendant Baraga-Houghton-Keweenaw Child Development Board appeals as of right an
order granting in part and denying in part its motion for summary disposition under MCR
2.116(C)(10) and granting summary disposition to plaintiff Office Planning Group, Inc., under
MCR 2.116(I)(2). We affirm.
I. FACTS
This case arose when defendant denied plaintiff access to bids it accepted for the
purchase of office furniture. Defendant is a private, non-profit organization that runs federal
Head Start programs in the three counties it serves. Plaintiff is a private, for-profit corporation.
In January 2001, defendant solicited bids for various office supplies and furnishings. Plaintiff
submitted a bid for office furniture and cubicles on the original January 15 deadline. Defendant
changed the deadline to January 29 after other vendors requested an extension, and plaintiff
submitted a new bid before the extended deadline.
On January 29, 2001, defendant's building committee opened the bids at a public
meeting. Plaintiff 's representative, John Hamm, testified at the hearing on the motion for
summary disposition that defendant's executive director, Rodney Liimatainen, informed him of
the meeting but did not invite him to attend. Liimatainen confirmed none of the vendors that
submitted bids attended the meeting. After the board opened the bids, Liimatainen informed
Hamm that plaintiff 's bid exceeded the lowest bid by $10,000. Defendant's board accepted the
lowest bid at its meeting on February 14, 2001.
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In letters dated February 5 and February 23, 2001, plaintiff and its counsel filed requests
with defendant pursuant to the Freedom of Information Act (FOIA)1 for copies of all bids for
office furniture submitted to defendant. According to Hamm, plaintiff sought to ensure the
winning bid contained the same items as plaintiff 's bid. In a reply letter, defendant refused the
request, stating it was a non-profit corporation and not subject to the FOIA.
Plaintiff filed the instant action and amended its complaint to include claims under the
federal Freedom of Information Act, 5 USC 552, and "federal legislation which requires
disclosure of information by parties supplying service under the so-called Head Start Program."
Defendant moved for summary disposition pursuant to MCR 2.116(C)(10), claiming no genuine
issue existed with regard to any material fact and claiming defendant was not subject to the
federal or state FOIA.
The trial court held an initial hearing on the motion and then requested the parties submit
supplemental briefs addressing the application of 42 USC 9839, which sets administrative
requirements for Head Start agencies. Among other things, the statute requires that agencies
"provide for reasonable public access to information, including public hearings at the request of
appropriate community groups and reasonable public access to books and records of the agency
or other agencies engaged in program activities or operations involving the use of authority or
funds for which it is responsible." 42 USC 9839(a). After receiving the supplemental briefs, the
court scheduled an evidentiary hearing to clarify what it viewed as possible factual disputes.
During this second hearing, the trial court ruled the federal and Michigan versions of the FOIA
did not apply to defendant. Plaintiff 's FOIA claims are not at issue in this appeal.
On November 7, 2001, the trial court issued its opinion and order, denying defendant's
motion for summary disposition with regard to the Head Start statute. The trial court concluded
42 USC 9839(a) required defendant to provide copies of the bids to plaintiff. The court held the
purchase of office furniture required the use of funds for which defendant was responsible and
the bids defendant accepted qualified as "books and records of the agency." Concerning what
constituted reasonable access, the court noted certain types of access would not be reasonable,
including a demand outside of working hours or a request that an agency create a record that
does not exist. But the court concluded plaintiff 's request was within reason:
In the present situation, a denial by the Plaintiff of a written request to
review specified, existing and readily accessible written bids is certainly not
compliant with a requirement of providing reasonable public access. That would
be true regardless of who made the request, but the case is even more compelling
when the requesting party has a genuine, identifiable reason for the information
sought, as did the Plaintiff.
1
The parties agree plaintiff filed its request under Michigan's Freedom of Information Act, MCL
15.231 et seq.
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In summary, Defendant's denial of Plaintiff 's request to review and obtain
copies of the bids in question was in violation of the Federal requirement that
Plaintiff provide for reasonable public access to information, including reasonable
public access to books and records of the agency, involving the use of funds for
which the Plaintiff is responsible.
The trial court granted plaintiff summary disposition pursuant to MCR 2.116(I)(2) and
ordered defendant to provide "copies of all bids received by Defendant pursuant to its request for
bids published in the Daily Mining Gazette and L'Anse Sentinel in accordance with Plaintiff 's
[sic, Defendant's] bid request dated January 4, 2001." The court also found defendant could
require plaintiff to pay reasonable copying costs.2
Defendant now appeals the trial court's grant of summary disposition to plaintiff. The
trial court denied defendant's motion to stay the proceedings pending this appeal, but we granted
defendant's motion to stay the proceedings and its motion for immediate consideration of this
appeal.
II. STANDARD OF REVIEW
A trial court's decision on a motion for summary disposition is reviewed de novo.
Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). Additionally, statutory
interpretation presents a question of law that we review de novo. Eggleston v Bio-Medical
Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003).
III. ANALYSIS
Defendant asserts the trial court erred in concluding 42 USC 9839(a) required defendant
to disclose the bids plaintiff requested. We disagree.
The outcome of this case turns on the interpretation of a provision of the federal Head
Start Act, 42 USC 9831 et seq. The primary goal of statutory interpretation is to ascertain and
give effect to the Legislature's intent. Heinz v Chicago Rd Investment Co, 216 Mich App 289,
295; 549 NW2d 47 (1996). If the statute's plain and ordinary meaning is clear, judicial
construction is neither necessary nor permitted. Id. However, if reasonable minds could differ
regarding the statute's meaning, judicial construction is appropriate. Rowell v Security Steel
Processing Co, 445 Mich 347, 351, 353; 518 NW2d 409 (1994).
Head Start programs "promote school readiness by enhancing the social and cognitive
development of low-income children through the provision, to low-income children and their
families, of health, educational, nutritional, social, and other services that are determined, based
on family needs assessments, to be necessary." 42 USC 9831. According to regulations
2
In an extension of its earlier mix-up, the trial court stated plaintiff could require defendant to
pay reasonable copying costs.
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promulgated by the Department of Health and Human Services (HHS), a Head Start Agency is
"a local public or private non-profit agency designated to operate a Head Start program by the
responsible HHS official . . . ." 45 CFR 1301.2 (emphasis added). Defendant concedes it is
subject to the Head Start Act because it contracts to provide services for HHS.
The Head Start Act requires agencies to follow certain administrative procedures,
including the following:
(a) Employment practices, nonpartisanship, staff accountability, public
access to information, etc. Each Head Start agency shall observe standards of
organization, management, and administration which will assure, so far as
reasonably possible, that all program activities are conducted in a manner
consistent with the purposes of this subchapter [42 USC 9831 et seq.] and the
objective of providing assistance effectively, efficiently, and free of any taint of
partisan political bias or personal or family favoritism. Each such agency shall
establish or adopt rules to carry out this section, which shall include rules to
assure full staff accountability in matters governed by law, regulations, or agency
policy. Each agency shall also provide for reasonable public access to
information, including public hearings at the request of appropriate community
groups and reasonable public access to books and records of the agency or other
agencies engaged in program activities or operations involving the use of
authority or funds for which it is responsible. Each such agency shall adopt for
itself and other agencies using funds or exercising authority for which it is
responsible, rules designed to (1) establish specific standards governing salaries,
salary increases, travel and per diem allowances, and other employee benefits; (2)
assure that only persons capable of discharging their duties with competence and
integrity are employed and that employees are promoted or advanced under
impartial procedures calculated to improve agency performance and effectiveness;
(3) guard against personal or financial conflicts of interest; and (4) define
employee duties in an appropriate manner which will in any case preclude
employees from participating, in connection with the performance of their duties,
in any form of picketing, protest, or other direct action which is in violation of
law. [42 USC 9839(a) (emphasis added).]
The parties dispute the meaning of the emphasized language and whether it requires defendant to
grant plaintiff 's request to view the bids for office furniture and cubicles.
Defendant first asserts 42 USC 9839(a) does not provide for a private cause of action.
We disagree. Whether a statute provides a cause of action presents a question of statutory
interpretation that we review de novo. Pitsch v ESE Michigan, Inc, 233 Mich App 578, 586; 593
NW2d 565 (1999), citing Long v Chelsea Community Hosp, 219 Mich App 578, 581-582; 557
NW2d 157 (1996).
This Court summarized the approach used to determine whether a private cause of action
exists as follows:
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If the common law provides no right to relief, and the right to such
relief is instead provided by statute, then plaintiffs have no private cause of
action for enforcement of the right unless: (1) the statute expressly creates a
private cause of action or (2) a cause of action can be inferred from the fact
that the statute provides no adequate means of enforcement of its provisions.
Bell v League Life Ins Co, 149 Mich App 481, 482-483; 387 NW2d 154
(1986). It follows that courts must dismiss a private cause of action under a
statute creating a new right unless the statute expressly created the private
cause of action or the cause of action may be inferred because the statute
does not provide adequate means to enforce its provisions. Forster v Delton
School Dist, 176 Mich App 582, 585; 440 NW2d 421 (1989). [Long, supra
at 583.]
Michigan courts have not addressed whether a private cause of action arises under 42
USC 9839(a). Neither have other state or federal courts. But two federal district courts have
addressed whether other provisions of the Head Start Act provide a private cause of action, and
each concluded they did not.
In Johnson v Quin Rivers Agency for Community Action, Inc, 128 F Supp 2d 332, 336
(ED Va, 2001), the plaintiff asserted numerous claims of mismanagement of a Head Start
program, in violation of federal regulations. The district court, using an approach similar to that
described in Long, supra at 583, determined no private cause of action existed and dismissed the
claims for failure to state a claim on which relief could be granted. Johnson, supra at 336. The
court concluded:
Under the scheme [the Head Start Act], the Secretary of the Department of
Health and Human Services is directed to "establish by regulation standards
applicable to Head Start agencies, programs, and projects under this subchapter,"
including "minimum levels of overall accomplishment that a Head Start agency
shall achieve." 42 U.S.C. § 9836a(a)(1) & (2). The Secretary is also directed
under this section to monitor the performance of every Head Start program and to
take appropriate corrective action when a program fails to meet the performance
standards established by the regulations. Specifically, the Act requires a full
review of each grantee at least once during each three-year period, review of new
grantees after the completion of the first year, follow up reviews and return visits
to grantees that fail to meet the standards, and "other reviews as appropriate." 42
U.S.C. § 9836a(c). If the Secretary determines, on the basis of such a review, that
a grantee fails to meet the standards described in § 9836a(a), the Secretary shall,
inter alia, institute proceedings to terminate the Head Start grant unless the
agency corrects the deficiency. 42 U.S.C. § 9836a(d).
All but three of the regulations cited in plaintiff 's Second Amended
Complaint were promulgated pursuant to the Head Start Act. See 45 C.F.R. §
1304.1. There is no provision in the Head Start Act, however, permitting a
private citizen to enforce its provisions. Based on the alternative specific
remedies mentioned above, Congress' intent is clear. The remedy for substandard
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performance by a Head Start program is an enforcement action by the Secretary
of the Department of Health and Human Services, not by private litigants. [Id.]
Meanwhile, in Hodder v Schoharie Co Child Dev Council, Inc, 1995 US Dist LEXIS
19049, 1 (ND NY, 1995), former employees of a private, non-profit organization that operated
Head Start programs sued the organization for firing them in violation of the Head Start Act and
its interpretive regulations. The court applied a four-part test to determine whether Congress
intended to provide a private cause of action: "1) whether plaintiffs belong to the class for whose
special benefit Congress passed the statute; 2) whether the indicia of legislative intent reveal a
congressional purpose to provide a private cause of action; 3) whether implying a private cause
of action is consistent with the underlying purposes of the legislative scheme; and 4) whether the
plaintiff 's cause of action concerns a subject that is traditionally relegated to state law." Id. at
10-11, citing Merrell Dow Pharmaceuticals, Inc v Thompson, 478 US 804, 810-811; 106 S Ct
3229; 92 L Ed 2d 650 (1986); Cort v Ash, 422 US 66, 78; 95 S Ct 2080; 45 L Ed 2d 26 (1975).
In light of these factors, the Hodder court decided no private cause of action existed.
First, the court found the plaintiffs were "far-removed from the class for whose special benefit
Congress enacted the Head Start Act," which benefits disadvantaged children and their families.
Hodder, supra at 11. Second, the court found no indication Congress intended to create a private
cause of action for employees terminated from Head Start agencies. Id. at 12. Third, the court
concluded that inferring a private cause of action would do nothing to further the underlying
purposes of the legislative scheme. Id. at 13-14. Finally, the court held actions for breach of an
employment contract are traditionally relegated to state law. Id. at 16.
Returning to the case before us, neither 42 USC 9839(a) nor the Head Start Act generally
creates an express private cause of action. However, we conclude the statute implies a private
cause of action. In Michigan, a private cause of action may be inferred if a statute provides no
adequate means of enforcing its provisions. Long, supra at 583. The statute in question, 42 USC
9839(a), requires Head Start agencies to provide reasonable public access to their books and
records, but it does not provide any means of enforcing this specific provision. Although the
Head Start Act requires agencies to open their books and records to the department secretary or
the United States Comptroller General for audit and examination, 42 USC 9842, Congress
specifically provided for public access to the books and records, not simply to the audits
prepared by these other entities. Therefore, we conclude an implied private cause of action
exists. Further, while the statute creates a federal cause of action, we conclude this Court shares
concurrent jurisdiction to decide this case because the Head Start Act does not provide for
exclusive federal court jurisdiction. See Gulf Offshore Co v Mobil Oil Corp, 453 US 473, 478;
101 S Ct 2870; 69 L Ed 2d 784 (1981), on remand 628 SW2d 171 (Tex App, 1982), cert den 459
US 945 (1982).
Defendant next argues the trial court erred in granting plaintiff summary disposition and
concluding the statute required defendant to reveal the bids to plaintiff. We disagree.
A motion for summary disposition under MCR 2.116(C)(10) tests whether a claim has
factual support. Spiek v Dep't of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998).
We review the record in the same manner as the trial court to determine whether the moving
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party was entitled to judgment as a matter of law. Morales v Auto-Owners Ins Co, 458 Mich
288, 294; 582 NW2d 776 (1998); Michigan Ed Employees Mut Ins Co v Turow, 242 Mich App
112, 114-115; 617 NW2d 725 (2000). Review is limited to the evidence before the trial court
when it decided the motion. Peña v Ingham Co Rd Comm, 255 Mich App 299, 310; 660 NW2d
351 (2003).
We could locate no authority, state or federal, on the issue defendant presents. However,
our reading of the statute indicates the trial court did not err in concluding the statute required
defendant to reveal the bids to plaintiff.
Defendant contends the trial court's interpretation contradicts the plain meaning of the
statute. First, defendant argues the statute applies only to requests from appropriate community
groups. The statute states the agency must provide public access to information, "including
public hearings at the request of appropriate community groups and reasonable public access to
books and records of the agency . . . ." 42 USC 9839(a). Defendant contends "appropriate
community groups" applies both to requests for public hearings and access to books and records
and argues the use of "and" without a comma points to this interpretation. Plaintiff responds that
the interjection of "public access" indicates the agency's books and records are available not only
to these groups.
Although the provision is ambiguous in this regard, we find plaintiff 's argument
persuasive. The structure of the sentence indicates the agency must provide public hearings
when "appropriate community groups" request them, but the agency's books and records are
available for general, albeit reasonable, "public access . . . ." Interpreting the statute to allow
only groups to access the information would render the "public access" language nugatory, and
we avoid constructions that render any part of a statute surplusage. Hoste v Shanty Creek Mgt,
Inc, 459 Mich 561, 574; 592 NW2d 360 (1999).
Defendant next contends it provided plaintiff reasonable access to its records by
providing copies of its audits and financial statements. Defendant did not suggest why providing
access to the bids would be unreasonable. Presumably, defendant either views the process for
producing the documents as too cumbersome to be reasonable or views the content of the
documents as falling outside the scope of necessary disclosure. Regarding the first possibility,
defendant's executive director, Liimatainen, testified the bids were in the agency's records and
could be produced on relatively short notice. So defendant seems to concede the production of
the documents is not unreasonable from an administrative standpoint.
Concerning the second possibility—that is, the content of the documents—defendant
raises various arguments about why it should not have to reveal the information, but primarily
argues the trial court's interpretation is too broad. Defendant notes the federal FOIA and the
state FOIA include exceptions to their disclosure requirements and that courts have narrowed the
scope of these acts even further. Defendant contends the trial court's interpretation improperly
allows the public to conduct a fishing expedition in the records of private corporations simply
because the corporations operate Head Start programs.
Yet, defendant fails to acknowledge that the statute contains limiting language. The
statute requires disclosure only of books and records "involving the use of authority or funds for
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which it [the agency] is responsible." 42 USC 9839(a). Also, defendant does not consider that
the statute's lack of exemptions and further limiting language may reflect a policy decision by
Congress not to limit the disclosure requirements for Head Start agencies. Defendant claims if
Congress had wished to subject Head Start programs to FOIA-type disclosure requirements, it
could have simply referenced the FOIA in the act. Conversely, Congress could have referenced
the FOIA if it had wished to limit Head Start programs' disclosure obligations to those contained
in the FOIA.
Defendant also argues the bidders did not have notice that the bids would be disclosed.
But the statute itself provided that notice. The bidders knew, or should have known, they were
submitting bids to a Head Start agency that was bound by the disclosure obligations of 42 USC
9839(a). Moreover, Liimatainen testified that if a member of the public came to his office and
asked to see the bids, he would disclose them. Thus, defendant's declination to reveal the
information appears to lie in its objection to the party requesting it, not to any characteristic of
the information itself.
Yet defendant's objection to plaintiff 's motivation for obtaining the information does not
provide a proper basis for declining to disclose it. The statute does not state that defendant may
choose to whom it wishes to disclose information. Instead, it requires "reasonable public access"
to the information. 42 USC 9839(a).
In addition, the statute requires disclosure of "books and records of the agency . . .
involving the use of authority or funds for which it is responsible." 42 USC 9839(a). Defendant
has not persuasively asserted the bids do not meet these criteria. The trial court concluded
defendant's purchase of furniture and equipment for its Head Start programs concerns the use of
funds for which it is responsible. We agree. The statute requires disclosure of "books and
records of the agency . . . ." While the trial court indicated that certain documents, such as
personnel files, might not be subject to disclosure, the statute provides no basis for exempting the
requested bids from disclosure. Additionally if the bids contained secret trade information, as
Liimatainen suggested, defendant could comply with the statute by redacting the documents to
protect confidentiality. Defendant did not demonstrate redaction would be laborious or
otherwise make plaintiff 's request unreasonable.
Finally, defendant asserts the trial court erred in finding plaintiff had a genuine reason for
seeking disclosure of the bids. Defendant contends plaintiff sought disclosure for purely
commercial reasons: because it was "shocked" to learn it had not won the bid and wanted to gain
information to allow it to improve future bids. We concur in the trial court's conclusion that
plaintiff had a genuine reason for requesting the bids, that is, to ensure the bid process had been
properly conducted, that the vendors were on equal footing before the agency, and that the
agency properly spent its federal funds. Defendant claims that merely revealing its bid
procedure provides accountability and allows the public to monitor the agency's expenditure of
public funds, but we conclude that only by revealing the actual bids may the public know that the
bid procedure was properly followed. Further, plaintiff 's reason for requesting the bids is
irrelevant. The statute does not limit the disclosure requirement. It requires defendant to provide
reasonable public access to its books and records when they are requested for any reason.
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Next, defendant asserts public policy counsels against interpreting the statute to require
disclosure of the bids. Defendant argues the court's interpretation effectively transforms a
private, non-profit organization into a public entity. Also, defendant contends the decision could
have far-reaching effects, subjecting all private organizations that receive federal funds to similar
disclosure requirements.
While we do not deny these may be valid concerns, they represent policy considerations
for the Legislature, not this Court, to weigh. In interpreting a statute, we may not impose a
construction based on a different policy decision than the one the Legislature has chosen.
Robertson v DaimlerChrysler Corp, 465 Mich 732, 752; 641 NW2d 567 (2002); see also City of
Lansing v Lansing Twp, 356 Mich 641, 648; 97 NW2d 804 (1959) ("'The duty of the Court is to
interpret the statute as we find it. The wisdom of the provision in question in the form in which
it was enacted is a matter of legislative responsibility with which courts may not interfere.'")
(citation omitted).
Additionally, defendant's arguments may be dismissed on other grounds. First,
defendant's argument that the court's interpretation transformed a private, non-profit organization
into a public entity is misplaced. HHS defines "Head Start Agency" to include private, nonprofit organizations designated to operate Head Start programs. 45 CFR 1301.2. The parties do
not dispute defendant meets this definition because it has been designated to operate a Head Start
program in Baraga, Houghton, and Keweenaw counties. The statute at issue then requires each
"Head Start agency" to provide reasonable public access to its books and records in regard to
fiscal matters. 42 USC 9839(a). So, Congress and HHS—not the trial court—decided private,
non-profit organizations must open their books to the public. The policy decisions have rested
where they should, with Congress and administrative agencies.
Defendant also relies on State Defender Union Employees v Legal Aid & Defender Ass'n
of Detroit, 230 Mich App 426; 584 NW2d 359 (1998), to support its argument that a private,
non-profit organization should not be required to open its books to the public. In that case, this
Court ruled a private, non-profit organization that was financed by both private and public funds
and provided legal services to indigent persons was not required to disclose its financial reports
and data to its employees. Id. at 432-433. The panel concluded, "an otherwise private
organization is not 'funded by or through state or local authority' merely because public monies
paid in exchange for goods provided or services rendered comprise a certain percentage of the
organization's revenue." Id. But the plaintiffs in that case sought disclosure under the FOIA. Id.
at 427. The trial court in this case ruled defendant was not subject to FOIA disclosure
requirements, and that ruling is not at issue on appeal. Therefore, the case is inapposite.
Next, defendant's argument that the trial court's decision could have far-ranging effect is
unpersuasive because the statute is limited to Head Start agencies, as defined by 45 CFR 1301.2,
42 USC 9839(a), and our decision is to be narrowly applied to the facts of this case. The statute
cannot be applied to other federally funded programs. Defendant also argues the interpretation
could lead to disclosure of records pertaining to any third-party entity with which an agency
contracts and disclosure by companies providing fleet vehicles for HHS. The duty of third
parties to disclose their records is not at issue in this case. But the statute requires disclosure of
the records and books "of the agency or other agencies engaged in program activities or
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operations . . . ." 42 USC 9839(a). Thus, the determination of who will be required to disclose
information has properly rested with the policy makers.
Finally, defendant asserts the trial court erred in failing to defer to the HHS's
interpretation of the statute at issue. This Court may defer to administrative agency
interpretations of statutes the agency is responsible to administer. Adrian School Dist v
Michigan Pub School Employees' Retirement Sys, 458 Mich 326, 336; 582 NW2d 767 (1998).
Generally, we defer to an agency interpretation unless that interpretation is clearly wrong.
Faircloth v Family Independence Agency, 232 Mich App 391, 406; 591 NW2d 314 (1998).
HHS wrote two letters regarding this situation, in which it concluded that defendant could
comply with the statute simply by providing copies of its procurement procedures and that
defendant need not reveal specific information about the bids it received. Absent a more
definitive ruling on this matter from the upper echelon of the agency staff or the agency secretary
himself, we do not feel bound to follow the agency's interpretation.
Additionally, we conclude the agency interpretation is not entitled to deference because it
is clearly wrong. 42 USC 9839(a) requires that Head Start agencies provide reasonable public
access to their books and records dealing with their use of funds. As discussed, the statute does
not limit the disclosure requirement to the agency's procedures without allowing access to the
documents that reveal how the agency put those procedures into effect. HHS did not indicate in
its letter why that limit should be imposed.
Affirmed.
/s/ Bill Schuette
/s/ Patrick M. Meter
/s/ Henry William Saad
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