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MARK D. ROSENBAUM, SBN 59940 mrosenbaum@aclu-sc.org ACLU FOUNDATION OF SOUTHERN CALIFORNIA 1313 W. 8th Street Los Angeles, CA 90017 T: (213) 977-5220, F: (213) 417-2220 RONALD L. OLSON, SBN 44597 Ron.Olson@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Fl, Los Angeles CA 90071-1560 T: (213) 683-9100, F: (213) 683-5111 JOHN C. ULIN, SBN 165524 John.Ulin@aporter.com ARNOLD & PORTER, LLP 777 South Figueroa Street Los Angeles, CA 90017 T: (213) 243-4228, F: (213) 243-4199 Attorneys for Plaintiffs (Additional counsel listed on next page) LAURENCE H. TRIBE, SBN 39441 tribe@law.harvard.edu Hauser 420, 1575 Massachusetts Ave. Cambridge, MA 02138 T: (617) 495-1767 GARY L. BLASI, SBN 70190 blasi@law.ucla.edu Professor of Law Emeritus UCLA SCHOOL OF LAW* 405 Hilgard Avenue Los Angeles, California 90024 T: (310) 206-9431, F: (310) 206-1234 AMOS E. HARTSTON, SBN 186471 ahartston@innercitylaw.org INNER CITY LAW CENTER 1309 East Seventh Street Los Angeles, CA 90021 T: (213) 891-2880, F: (213) 891-2888 *For identification purposes only UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA GREGORY VALENTINI, et al., Plaintiffs, v. ERIC SHINSEKI, et al., Defendants. Case No. CV-11-04846-SJO (MRW)x The Honorable S. James Otero PLAINTIFFS REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT [NO HEARING DATE]

PLS. REPLY IN SUPP. OF MOT. FOR SUMM. J

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Additional Counsel PETER ELIASBERG, SBN 189110 peliasberg@aclu-sc.org DAVID B. SAPP, SBN 264464 dsapp@aclu-sc.org ACLU FOUNDATION OF SOUTHERN CALIFORNIA 1313 W. 8th Street Los Angeles, CA 90017 T: (213) 977-5220, F: (213) 417-2220 ADAM MURRAY, SBN 199430 amurray@innercitylaw.org MELISSA A. TYNER, SBN 269649 mtyner@innercitylaw.org ELIZABETH HAMAN KUGLER, SBN 273928 EKugler@innercitylaw.org INNER CITY LAW CENTER 1309 East Seventh Street Los Angeles, CA 90021 T: (213) 891-2880, F: (213) 891-2888 JONATHAN MASSEY jmassey@masseygail.com Pro Hac Vice MASSEY & GAIL LLP 1325 G St. NW, Suite 500 Washington, D.C. 20005 T: (202) 652-4511, F: (312) 379-0467

ERIC SHAPLAND, SBN 193853 Eric.Shapland@aporter.com JAMES J. FINSTEN, SBN 234999 James.Finsten@aporter.com JACOB K. POORMAN, SBN 262261 Jacob.Poorman@aporter.com BRIAN MARTINEZ, SBN 274210 brian.martinez@aporter.com ARNOLD & PORTER, LLP 777 South Figueroa Street Los Angeles, CA 90017 T: (213) 243-4228, F: (213) 243-4199 LEONARD GAIL lgail@masseygail.com Pro Hac Vice Massey & Gail LLP 50 East Washington St., Suite 400 Chicago, IL 60602 T: (312) 283-1590, F: (312) 379-0467

BRADLEY S. PHILLIPS, SBN 85263 Brad.Phillips@mto.com DAVID TAYLOR, SBN 247433 David.Taylor@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Fl, Los Angeles, CA 90071-1560 T: (213) 683-9100, F: (213) 683-5111

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Defendants Opposition to Plaintiffs Motion for Summary Judgment (Dkt. No. 127) (Def. Opp.) acknowledges candidly, for the first time, that the Department of Veterans Affairs (DVA) does not recognize any limits on the scope of its authority to dispose of property given its power to share health-care resources under 38 U.S.C. 8151-53. According to DVA, when Congress expressly defined the term health-care resource in 38 U.S.C. 8152(1), Congress really meant any real property under VHAs control. Def. Opp. at 8 (emphasis added). DVAs acknowledgement that it reads the statute to authorize any agreement with any entity for any purposewhich is notably absent from its reports to Congressfinally explains how DVA views movie studio storage facilities, a private school athletic complex, and a hotel laundry service (among other things) as health-care resources. DVAs entry into the challenged leases, however, directly contradicts the clear, unambiguous definition in the health-care resource sharing statute and ignores the broader statutory context in which Congress allowed for the use and disposition of DVA property. In its Opposition, DVA fails to acknowledge, much less undermine, Plaintiffs detailed explanations of why the statute is unambiguous. DVA also fails to meaningfully address Plaintiffs argument that Congress separately provided for the leasing of real property under DVAs control when it enacted the enhanced use lease (EUL) authority, 38 U.S.C. 816169, which explicitly authorized DVA to encumber its property with purely revenue-generating leases unrelated to the provision of health care, subject to various notice and accountability requirements. The very existence of a limited EUL authority, against the backdrop of the clear definition of health-care resource in 8152(1), renders DVAs position untenable.1 DVA inexplicably continues to dispute the Courts ruling that Plaintiffs have standing to pursue their APA claim based on a concrete interest in how the WLA Campus is used. Dkt. No. 70 at 12. DVA concedes, however, that access to undeveloped DVA land can be therapeutic for veterans and that currently underutilized DVA land can be developed to serve veterans. Def. Opp. at 9 & n.13. It is thus undisputed, well documented in the Record, and inescapable as a matter of logic that the encumbered land, totaling nearly a quarter of the WLA Campus, is not available for the benefit of veterans, see Pls. Mot. for Summ. J. at 7-8 (Dkt. No. 124) (Pls. Mot.) (discussing AR 191-1700), so Plaintiffs have suffered injury. Likewise, Plaintiffs are not selectively challenging certain leases because of policy preferences. Def. Opp. 1, 4-5 & n.7. Plaintiffs have no obligation to challenge all leases as void. In any event, Plaintiffs did not challenge certain agreements because they relate to health-care resources, as defined by Congress. See, e.g., AR 460, 586 (stating that Purpose of Salvation Army agreements is [t]o provide space for housing and (Footnote Contd on Following Page) -1PLS. REPLY IN SUPP. OF MOT. FOR SUMM. J.
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A.

The Challenged Leases Exceed Unambiguous Limits on DVAs Statutory Authority

DVA focuses almost exclusively on the purported reasonableness of its reading of the statute. See Def. Opp. at 8-17. DVA thus continues to ignore what the Supreme Court has repeatedly stated is the necessary first step under Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-43 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984): [i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. See also City of Arlington v. F.C.C., 569 U.S. __, 133 S. Ct. 1863, 1874-75, 185 L. Ed. 2d 941 (2013) (Where Congress has established a clear line, the agency cannot go beyond it . . . .). 1. The Statutory Language Is Clear: Health-Care Resource Does Not Mean Any Real Property Under VHAs Control The sum total of DVAs treatment of statutory ambiguity is in footnotes 8 and 9 of its Opposition, see Def. Opp. at 6 n.8 & n.9, and consists of conclusory assertions that ignore Plaintiffs detailed analysis of the statute that explicitly answer the questions that DVA poses. Plaintiffs explained at length that health-care modifies both support and administrative resource in 8152(1) and articulated how health-care support and health-care administrative resource differ from the preceding terms in the definition. Pls. Mot. at 11-13; contra Def. Opp. at 6 n.9. Accounting services, for example, are not hospital care or medical services, as defined, but are an administrative resource and would therefore meet the definition if they are used in the context of health-care related activities. Plaintiffs thus explained that whether a particular sharing agreement is authorized by statute may depend on how the property is used and who uses it, including specifically explaining that reading the statute to cover any space owned by DVA is inconsistent with the phrase medical equipment or space in 38 U.S.C. 8153(3)(A) & (B)(i) (emphasis added). See Pls. Opp. to
(Footnote Contd From Previous Page)

services to veterans transitioning from mental health and substance abuse problems to appropriate housing and services). -2PLS. REPLY IN SUPP. OF MOT. FOR SUMM. J.

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Defs. Mot. for Summ. J. at 6-7 (Dkt. No. 125) (Pls. Opp.); Pls. Mot. at 12 n.5; contra Defs. Opp. at 6 n.8. The statutory language is clear: the health-care resource sharing authority is a limited exception to general restrictions on DVAs authority to encumber its land that merely permits DVA to secure or effectively utilize health-care resources, not broadly to dispose of any unused land. DVAs approach is flawed precisely because it writes the phrase health-care resource out of the statute or, at bottom, treats it as a synonym for anything DVA owns or does.2 The plain language of the statuteincluding adjectives like medical and healthcare used throughout 8151-53does not (and cannot) entail the unfettered grant of authority DVA claims. See Pls. Mot. at 11-13. Instead of grappling with these arguments or the statutory text, DVA baldly asserts, but fails to explain how, the statute is ambiguous. Given its failure to establish ambiguity, the balance of DVAs argument about the purported reasonableness of its interpretation of the statute is beside the point. 2. DVAs Use of the Health-Care Resource Sharing Authority Renders Other Provisions Superfluous The structure of Part VI of Title 38 of the U. S. Code, entitled Acquisition and Disposition of Property, further confirms that, in enacting and amending the health-care resource sharing authority, Congress intended to treat DVAs health-care resources differently from other DVA resources.3 Unlike the health-care resource sharing authority, the EUL statute, 38 U.S.C. 8161-69, separately authorizes the Secretary to enter into leases with respect to real property that is under [his] jurisdiction or control. 38 U.S.C. 8162(a)(1) (emphasis added); compare with 38 U.S.C. 8151-53 (limiting use to healthcare resources). The EUL statute also explicitly authorized the Secretary to enter into purely Plaintiffs have not mischaracterized DVAs interpretation of the statute, see Def. Opp. at 11 n.14, but rather have merely stated the inescapable consequence of the interpretation that DVA has advanced. 3 DVAs resort to legislative history, see Def. Opp. at 9-10, does not support its position. If anything, that history reinforces that Congress was focused on medical care and did not intend to give DVA unfettered authority to enter into any agreement with any entity for any purpose. See Pls. Mot. at 15-16. -3PLS. REPLY IN SUPP. OF MOT. FOR SUMM. J.
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revenue-generating leases unrelated to provision of health care to veterans, but imposed stringent procedural requirements for such leases, requirements that are notably absent from the health-care resource sharing authority. See Pls. Mot. 13-15; Pls. Opp. at 5.4 DVA ignores both the existence of the EUL statute and that its proffered interpretation of medical space as covering all VHA property renders the EUL authority superfluous.5 DVAs only response to this problem, see Def. Opp. at 14 n.16, is a curious citation to Connecticut National Bank v. Germain, 503 U.S. 249, 253, 112 S. Ct. 1146, 117 L. Ed. 2d 391 (1992) (observing that redundancies across statutes are not unusual events . . . and so long as there is no positive repugnancy [e.g., rendering one or the other wholly superfluous] between two laws . . . a court must give effect to both). Sections 8151-53 and 8161-69 provide overlapping authority to DVA, however, only under DVAs tortured interpretation of 8151-53, and the redundancy that DVAs interpretation produces is positive[ly] repugnan[t] because it would, in fact, render the EUL authority superfluous. B. DVAs Impermissible Interpretation Is Not Entitled To Deference or Respect The statute is unambiguous, so DVAs arguments about the reasonableness of its interpretation are irrelevant. Even assuming, however, that the statute is ambiguous, DVAs interpretation does not merit any level of deference or respect. As even DVA concedes, see Def. Opp. at 16, DVAs interpretation is expressed only in agency policy manuals. It therefore does not have the force and effect of law and is not entitled to deference under Chevron. See Pls. Opp. at 13-15. Nor does DVAs interpretation merit the lesser respect sometimes accorded informal agency interpretations. See id. at 15-17. The internal agency documents in the Record contain nothing more than assertions, devoid of any reasoned DVA asserts, without explanation, that leases somehow differ from sharing agreements. See Def. Opp. at 11 n.14. But the Record establishes that the challenged agreements concern property interests such as tenancy, rent, and exclusive occupancy. So the distinction, to the extent one exists, is immaterial. 5 This is particularly perplexing given DVAs reliance on the 2008 memorandum (AR 147151). See Def. Opp. at 8 (citing AR 149). That document clearly grasps the impact of the EUL authority, or more directly the unavailability of the EUL authority at the WLA Campus. See generally AR 147-148. -4PLS. REPLY IN SUPP. OF MOT. FOR SUMM. J.
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analysis or basis in the statutory text. The 2008 memorandum (AR 147-151) upon which DVA relies notably fails to even mention health-care resources or explain its conclusion that the statute authorizes what the memorandum terms use of space agreements. Finally, the Record confirms that DVA did not appraise Congress of DVAs interpretation of the statute, at least not the interpretation articulated in DVAs Opposition. To the contrary, the report that DVA quotes in its Reply (presumably as the best support for its argument that Congress was on notice) indicates that DVA leases underutilized land under the sharing authority only for medical purposes. See Def. Reply ISO Mot. for Summ. J. at 4 (Dkt. No. 128) (quoting AR 116.029 (stating DVA may share underutilized resources with other community entities and provide resources to patients referred by the sharing partner (emphasis added))). Likewise, DVA consistently used the term medical space, see, e.g., AR 115, 116.30, 116.45, 116.58, 116.71-72, 116.85-86, 116.100, 116.111-12, 116.124-25) or specialized space, see AR 101, in its reports to Congress, with no indication that DVA actually views those terms to mean any and all space. Although the disclosures that DVA says it made would not be enough to establish congressional acquiescence, its failure to candidly advise Congress about its use of the statute underscores that its interpretation is deeply flawed. C. Conclusion

Plaintiffs respectfully request the Court GRANT their motion, invalidate the challenged leases, and enjoin future abuses of the health-care resource sharing authority at the WLA Campus.

Dated: June 21, 2013.

ARNOLD & PORTER LLP

By:

/s/ John C. Ulin John C. Ulin Attorneys for Plaintiffs

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