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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 HARVARD LAW SCHOOL* Hauser 420, 1575 Massachusetts Ave. Cambridge, MA 02138 T: (617) 495-1767 GARY L. BLASI, SBN 70190 blasi@law.ucla.edu 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 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS MOTION FOR SUMMARY JUDGMENT [NO HEARING DATE]

PLS. MEM. OF P. & A. IN OPPN TO DEFS. 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

-2PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. 3. c. b. 2. B. I. II. III.

TABLE OF CONTENTS Page INTRODUCTION ............................................................................................... 1 LEGAL STANDARD ......................................................................................... 3 ARGUMENT....................................................................................................... 4 A. DVAs Use of 8153 For Purely Commercial Leases Is Contrary to Congresss Intent That Sharing Agreements Relate Directly to the Provision of Health Care ................................................... 5 DVA Relies on a Series of Inapplicable Principles of Administrative Law to Avoid Judicial Review ......................................... 8 1. DVAs Entry into the Challenged Leases Is Subject To Judicial Review ............................................................................... 8 DVAs Interpretation of the Scope of Its Authority Is Not Entitled To Deference ................................................................... 12 a. The Statute is Unambiguous, so DVAs Interpretation Is Irrelevant ......................................................................... 12 Even if the Statute Were Ambiguous, DVA Is Not Entitled To Chevron Deference Because It Offers No Formal Interpretation of 8153 ......................................... 13 DVAs Interpretation of 8153 Cannot Be Saved by Resort To the Respect Sometimes Afforded To Agency Interpretations under Mead and Skidmore ............ 15

The Overwhelming Evidence Required to Infer Congressional Acquiescence Is Not Present................................. 16

CONCLUSION ................................................................................................. 20

-iPLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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TABLE OF AUTHORITIES

Page(s)

Abbott Labs. v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967) ...................................... 9 American Friends Serv. Comm. v. Webster, 720 F.2d 29 (D.C. Cir. 1983)............................................................................. 11 Arent v. Shalala, 70 F.3d 610 (D.C. Cir. 1995)............................................................................. 13 Armstrong v. Bush, 924 F.2d 282 (D.C. Cir. 1991)........................................................................... 11 Barnhart v. Walton, 535 U.S. 212, 122 S. Ct. 1265, 152 L. Ed. 2d 330 (2002) ................................ 13 Bd. of Governors of Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 112 S. Ct. 459, 116 L. Ed. 2d 358 (1991) ...................................... 9 Beno v. Shalala, 30 F.3d 1057 (9th Cir. 1994) ............................................................................... 8 Bob Jones Univ. v. United States, 461 U.S. 574, 103 S. Ct. 2017, 76 L. Ed. 2d 157 (1983) ............................ 17, 18 Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011)........................................................................... 19 Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) ...........................passim Christensen v. Harris County, 529 U.S. 576, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000) ................................ 14 Drakes Bay Oyster Co. v. Salazar, 2013 WL 451860, -- F. Supp. 2d -- ................................................................... 11 Gibbons v. Fronton, 533 F. Supp. 2d 449 (S.D.N.Y. 2008) ............................................................... 10 Haig v. Agee, 453 U.S. 290, 101 S. Ct. 2766, 69 L. Ed. 2d 640 (1981) .................................. 19 Heckler v. Chaney, 470 U.S. 821, 105 S. Ct. 1649, 84 L. Ed. 2d 714 (1985) .............................. 9, 10 High Sierra Hikers Assn v. Blackwell, 390 F.3d 630 (9th Cir. 2004) ............................................................................. 14 - ii PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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Holder v. Martinez Gutierrez, 132 S. Ct. 2011, 182 L. Ed. 2d 922 (2012) ....................................................... 13 Morales-Izquierdo v. Gonzales, 486 F.3d 484 (9th Cir. 2007) (en banc) ....................................................... 17, 18 Motor Vehicle Mfrs. Assn of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ...................................................................................... 12, 19 N.L.R.B. v. United Food & Commercial Workers Union, Local 23, AFL-CIO, 484 U.S. 112, 108 S. Ct. 413, 98 L. Ed. 2d 429 (1987) .................................... 12 Nw. Envtl. Advocates v. U.S. E.P.A., 537 F.3d 1006 (9th Cir. 2008) ........................................................................... 17 Pinnacle Armor, Inc. v. United States, 648 F.3d 708 (9th Cir. 2011) ......................................................................... 9, 16 Rapides Regional Medical Center v. Secretary, 974 F.2d 565 (5th Cir. 1992) ....................................................................... 10, 19 Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (SWANCC ), 531 U.S. 159, 121 S. Ct. 675, 148 L. Ed. 2d 576 (2001)............................................................................. 17, 18 Strickland v. Morton, 519 F.2d 467 (9th Cir. 1975) ............................................................................. 11 Topgallant Grp., Inc. v. United States, 704 F. Supp. 265 (D.D.C. 1998) ....................................................................... 12 U.S. Fidelity and Guar. Co. v. Lee Investments, LLC, 641 F.3d 1126 (9th Cir. 2011) ............................................................................. 9 United States v. Mead Corp., 533 U.S. 218, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001) ............3, 4, 13, 14, 15 United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 106 S. Ct. 455, 88 L. Ed. 2d 419 (1985) .................................... 18 Wilderness Socy v. U.S. Fish & Wildlife Serv., 353 F.3d 1051 (9th Cir. 2003) (en banc), amended on rehg en banc on other grounds, 360 F.3d 1374 (9th Cir. 2004) ................................3, 4, 8, 13, 14 Wilderness Watch, Inc. v. U.S. Fish & Wildlife Serv., 629 F.3d 1024 (9th Cir. 2010) ........................................................................... 14 STATUTES, RULES AND REGULATIONS 38 C.F.R. 17.142 ....................................................................................................... 14 5 U.S.C. 701-708 ...................................................................................................... 3 5 U.S.C. 706(2)(A) ..................................................................................................... 3 - iii PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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5 U.S.C. 706(2)(C) ...................................................................................................... 3 38 U.S.C. 8101(3) ..................................................................................................... 10 38 U.S.C. 8152(1) .............................................................................................5, 7, 10 38 U.S.C. 8153 ...................................................................................................passim 38 U.S.C. 8151-53 ...........................................................................................passim 38 U.S.C. 8153(3)(A) ................................................................................................. 6 38 U.S.C. 8153(3)(B)(i) .............................................................................................. 6 38 U.S.C. 8161-69 .................................................................................................... 5 38 U.S.C. 8163 ............................................................................................................ 5 Veterans Millennium Health Care and Benefits Act, Pub. L. No. 106-117, Title II, 208(a), (b), 113 Stat. 1567 (1999) (former 38 U.S.C. 8162(a)(2)(B), repealed 2012)............................................ 5 OTHER AUTHORITIES H.R. REP. 104-690 (1996)............................................................................................. 7

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MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION When Congress authorized the Department of Veterans Affairs (DVA), through 38 U.S.C. 8151-53, to enter into agreements to share health-care resources, it made clear that it intended to authorize only agreements that are related directly to the provision of health care. As detailed in Plaintiffs own motion for summary judgment, filed concurrently with this opposition, Congress did so through both an express statement of congressional intent and an explicit definition of health-care resources that is consistent with the commonsense understanding of that term. DVA has, however, treated the statute as if it were a blanket grant of authority to lease the land on its West Los Angeles Campus (WLA Campus) to anyone for any purpose, including for purely commercial purposes that have nothing to do with health care. Plaintiffs Administrative Procedure Act (APA) claim challenges these purely commercial leases on the ground that they exceed DVAs statutory authority. Under Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), consideration of Plaintiffs APA claim begins with the plain language of the statute. Because the challenged leases do not satisfy the unambiguous statutory requirement that sharing agreements involve health-care resources, that plain language is both the beginning and the end of the inquiry. DVA conveniently ignores almost entirely this first, dispositive step of the inquiry, merely asserting, with no analysis or explanation, that the statute is broad and ambiguous and offering an interpretation that is plainly contradicted by the statutes clear meaning. DVA bases its summary judgment argument largely on an amalgam of quotes extracted from administrative law cases that are divorced from their broader doctrinal framework and totally inapplicable to Plaintiffs claim. DVA advances three distinct arguments. First, DVA argues that its leasing decisions are unreviewable. It claims that Congresss delegation of discretion to DVA to enter into sharing agreements related to health-care resources reflects congressional intent to foreclose judicial review of -1PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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DVAs determination of what health-care resourcesthe term that Congress used to define the boundaries of DVAs discretionmeans. In other words, DVA effectively claims that, when Congress gives an agency discretion to do X, the agency may do whatever it wants, without meaningful judicial review, so long as it calls what it does X. The argument is on its face specious, and it flies in the face of countless cases that recognize that courts can, indeed must, review whether agencies have acted outside of the boundaries of the authority delegated to them by Congress. Second, DVA argues that its interpretation of the statute is entitled to deference. But that is not true where, as here, the agencys interpretation is contrary to the plain language of the statute and there is no evidence that its informal interpretations, which contain no reasoned analysis, meet the well settled conditions for either deference or even the lesser respect sometimes due internal agency guidance. Finally, DVA argues that Congress has acquiesced in DVAs interpretation of the statute. DVA claims the circumstances here justify the extraordinarily unusual departure from the presumption of reviewability of agency action that may occur where there is an overwhelming showing that Congress explicitly and formally considered the precise question before the court and took no action. Such a departure is extremely rare because it raises serious separation-of-power questions by suggesting that Congress, rather than the courts, is empowered to interpret and enforce the law against the Executive Branch. DVA cites no Ninth Circuit case that supports a finding of congressional acquiescence and no case in which a court found such acquiescence on facts even remotely similar to those present here. DVAs arguments are inconsistent with well settled doctrine governing review of agency decisions and, if accepted, would do great injury to Congresss carefully calibrated statutory scheme governing DVA land, generally, and the WLA Campus, in particular. DVA seeks to transform Congresss specific authorization of health-care resource sharing agreements into a blanket power for DVA to encumber its property however it sees fit, regardless of any relationship to health care and totally immune from -2PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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judicial review. This Court should decline DVAs invitation to effectively re-write the relevant statute and deny DVAs motion. II. LEGAL STANDARD The APA, 5 U.S.C. 701-708, governs judicial review of agency action. See Wilderness Socy v. U.S. Fish & Wildlife Serv., 353 F.3d 1051, 1059 (9th Cir. 2003) (en banc), amended on rehg en banc on other grounds, 360 F.3d 1374 (9th Cir. 2004). Under the APA, courts may set aside agency action if the agency decision is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, 5 U.S.C. 706(2)(A), or in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, id. 706(2)(C). Plaintiffs APA claim turns on whether DVA was authorized to enter into the challenged leases under 38 U.S.C. 8151-53, and the claim is therefore governed by Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). In Chevron, the Supreme Court set forth a two-step test for judicial review of administrative-agency interpretations of federal law. Under the first step: If 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. Wilderness Socy, 353 F.3d at 1059 (quoting Chevron, 467 U.S. at 842-43). Congressional intent may be determined by traditional tools of statutory construction, and if a court using these tools ascertains that Congress had a clear intent on the question at issue, that intent must be given effect as law. Id. (quoting Chevron, 467 U.S. at 843 n.9). If a court concludes that the statute is silent or ambiguous with respect to the issue at hand, it proceeds to the second step under Chevron, which involves analyzing the agencys interpretation of the statute. Id. [W]hen it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority, id. (quoting United States v. Mead Corp., 533 U.S. 218, 226-27, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001)) (emphasis in original), the court must defer to the -3PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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agency so long as the agencys answer is based on a permissible construction of the statute, id. (quoting Chevron, 467 U.S. at 843). For administrative decisions that do not meet these standards, the agencys interpretation is entitled not to deference, but to a lesser respect based on the persuasiveness of the agency decision. Id. at 1067 (quoting Mead, 533 U.S. at 228). III. ARGUMENT Plaintiffs APA claim turns on whether the challenged leases fall within DVAs authority to shar[e] health-care resources. It involves the straightforward question of whether DVA exceeded its statutory authority, as defined in 38 U.S.C. 8151-53. DVAs arguments are all variations on the same theme: that this Court should either decline to review DVAs decisions at all or defer to DVAs interpretation of the scope of its authority under 38 U.S.C. 8153. In fact, DVAs interpretation is not entitled to deference under Chevron and its progeny. Where, as here, the language of a statute is clear, an agencys interpretation is irrelevant and courts must set aside agency decisions that contravene the statute. See Chevron, 467 U.S. at 842-43. DVAs interpretation of 8153 is contrary to the plain and unambiguous language of the statute, under which the challenged leases do not involve sharing of health-care resources. DVAs suggestions to the contrary are based on inapplicable standards or mischaracterizations of well settled doctrine. DVAs misreading of the statute is entitled to no deference and is subject to de novo review by this Court.1 DVAs renewed challenge to Plaintiffs standing (Defs. Mot. at 4, n. 6) is without merit. As the Court held in its thoroughly reasoned order denying the Governments standing-based challenge to the APA claim, Plaintiffs have standing to bring this claim. March 16 Order at 8-14. DVA half-heartedly argues that the burden of establishing standing is more rigorous at the summary judgment stage. This ignores, of course, that the burden on summary judgment is different from the burden on a motion to dismiss only insofar as summary judgment may require evidence rather than turning on the allegations in the complaint. Plaintiffs APA claim has not changed: DVA exceeded its statutory authority in entering into the challenges ESAs, which has deprived Plaintiffs of access to space and opportunities that benefit veterans. DVA does not seriously dispute the latter contentionthat entering into the challenged leases encumbers that space and prevents DVA from using it for other purposesbut, in any event, that fact is established by uncontradicted declarations in (Footnote Contd on Following Page) -4PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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A.

DVAs Use of 8153 For Purely Commercial Leases Is Contrary to Congresss Intent That Sharing Agreements Relate Directly to the Provision of Health Care

As Plaintiffs demonstrate in detail in their Motion for Summary Judgment, see Pls. Mot. for Summ. J. at 10-16, 38 U.S.C. 8151-53 clearly limits DVAs authority to enter into health-care resource sharing agreements to resources that are directly related to the provision of health care. Congress defined health-care resource precisely to require that each agreement have some direct relationship to the provision of health care, see id. 8152(1), and both Congresss express statement of purpose and the structure of the statute confirm this plain meaning. Congress also enacted the Enhanced Use Lease statute, 38 U.S.C. 8161-69, which explicitly authorized DVA to enter into purely commercial leases that are not related to the provision of health care, if they generate sufficient revenue to improve veteran medical care, see Veterans Millennium Health Care and Benefits Act, Pub. L. No. 106-117, Title II, 208(a), (b), 113 Stat. 1567 (1999) (former 38 U.S.C. 8162(a)(2)(B), repealed 2012), and contains extensive procedural and notice-and-comment requirements that do not apply to health-care resource sharing agreements, see 38 U.S.C. 8163. Reading 8153 to authorize identical arrangementspurely commercial leases with no relation to health care for veterans but that generate revenue for DVAwould render these provisions superfluous and negate the additional requirements Congress imposed on purely commercial leases. Because the plain language and structure of the statute make it unambiguous, that is the end of the matter. Chevron, 467 U.S. at 842-43. As explained in detail in Section III.B.2.c, infra, the Record contains no analysis that supports DVAs conclusion that 8153 allows purely commercial leases with no relation to health care. It instead contains only numerous self-serving and conclusory

(Footnote Contd From Previous Page)

the record. Dkt. Nos. 64-66. DVA offers no reason for the Court to revisit its prior rejection of DVAs standing arguments, compare March 16 Order at 8-14, and Defendants Motion to Dismiss at 4-8 (Dkt. No. 32), with Defs. Mot. at 4 n.6, and Plaintiffs incorporate by reference their arguments from the motion to dismiss stage. -5PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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assertions by DVA that the section does. DVA provides little more analysis in its motion and does not explain coherently how the statute can plausibly be read to authorize purely commercial leases. It does little more than repeat the conclusory assertions. Defs. Mot. at 13:12-13 (agreements to share space are agreements to share health-care resources) (emphasis added). Occasionally, DVA offers glimpses into a purported rationale for its interpretation of 8153: that the rents it derives from the challenged leases sufficiently benefit veteranseven though such revenues can cause a countervailing decrease in congressional fundingto justify the diversion of land for non-health-care purposes. Id. at 18:10-15. But DVA never explains how this rationale, which would allow any lease to be treated as a health-care resource sharing agreement, is consistent with the clear and unambiguous language that Congress used to define health-care resources and the broader statutory scheme regulating DVA land. Instead of reconciling its interpretation with the plain language and structure of the statute, DVA references a statutory provision establishing when it must subject to competitive bidding a health-care resource sharing agreement for a commercial service, the use of medical equipment or space, or research, which appears at 38 U.S.C. 8153(3)(A) & (B)(i). Defs. Mot. at 13 (emphasis in original). From this unremarkable statutory acknowledgement that a health-care resource may sometimes involve the use of space, DVA would have this Court infer that all space is a health-care resource, regardless of how it is used. That is wrong and inconsistent with the language and structure of the statute. To be sure, a health-care resource, such as hospital rooms or even a laundry facility for those rooms, can be space. But it is a logical fallacy to suggest that means all space is a health-care resource.2 Congresss mention of space as a health-care resource is a reference to medical space, not any space. Many The flaw in DVAs logic is further illustrated when DVA reasons that Plaintiffs assertion that the challenged agreements do not concern the sharing of health-care resources, depends upon a contention that no land or building on [the WLA Campus] is a health-care resource. Brief at 13:19-23. As DVA fails to appreciate, the fact that land on the WLA Campus can be a health-care resource does not mean that all of it is or that leases for any of that that land are arrangements for the mutual use or exchange of use of health-care resources. -6PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
2

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spaces on the WLA Campus could be used to provide health care to veterans, but that does not, for example, make UCLAs baseball stadium or Brentwood Schools athletic fields medical spaces, let alone health-care resources. To the contrary, use of space for these purposes prevents DVA from using it to provide health care to veterans. DVAs reliance on 1996 amendments to its sharing authority (Defs. Mot. at 9-10) is misplaced. DVAs argument ignores completely the definition of health-care resource in 8152(1), which explicitly requires some direct connection to the provision of health care for a resource to be subject to sharing under the revised authority. Moreover, the expansion in the scope of DVAs authority to share health-care resources in no way suggests that Congress intended to authorize DVA to enter into commercial leases with no relation to health care, just because the agreements generate revenue. DVA relies on a single sentence from a House Committee Report indicating that the Committee expected that the Department would broadly construe this new authority. H.R. REP. 104-690 at 11 (1996). But DVA ignores the context of both the report itself and the underlying legislation. Both the plain text of the proposed statutory amendments, including the statement of purpose and definition, and the House Report repeatedly referenced the underlying motivation of expanding health-care resources and repeatedly framed the problem that the legislation sought to address in terms of medical care and providers. See, e.g., H.R. Rep. 104-690 at 11 (1996) (stating that the bill would authorize VA facilities to enter into such sharing agreements not only with health care facilities but with health insurers or any other entity or individual and would expand to include, for example, support services, [within] the scope of resources which might be sold or purchased under such a contract to any health care entity (emphasis added)); see also Pls. Mot. for Summ. J. at 15-16. Congresss expression of hope that DVA would use its authority broadly to expand sharing of health-care resources cannot reasonably be read to suggest that Congress intended DVA to ignore the plain text of the statute by using it to enter into purely commercial leases. As both Chevron and Wilderness Society make clear, when an agency exceeds its -7PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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statutory authority, courts must set the agency action aside. See Chevron, 467 U.S. at 842-43 (holding the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress); Wilderness Socy, 353 F.3d at 1061 (holding the U.S. Fish and Wildlife Services Enhancement Project was void without regard to the agencys interpretation because [t]he language, purpose and structure of the Wilderness Act support[ed] the conclusion that Congress spoke clearly to preclude commercial enterprise in the designated wilderness); see also Beno v. Shalala, 30 F.3d 1057, 1071 (9th Cir. 1994) (holding deference is not appropriate if an agencys interpretation of a relevant statute conflicts with the statutes plain meaning.). Judicial review is therefore appropriate here, and DVAs decisions must be set aside. B. DVA Relies on a Series of Inapplicable Principles of Administrative Law to Avoid Judicial Review

Unable to fit the challenged leases within the unambiguous meaning of healthcare resource sharing under Section 8153, DVA relies on several inapplicable administrative law principles in an effort to convince the Court to defer to what DVA has done. Specifically, DVA offers three purported reasons for this Court to defer: (1) DVAs entry into the agreements is not subject to judicial review at all; (2) DVAs interpretation of 8153 is entitled to deference; and (3) Congress has acquiesced in DVAs interpretation of 8153. None of these arguments has merit. 1. DVAs Entry into the Challenged Leases Is Subject To Judicial Review

DVA erroneously argues that its decisions to enter into the challenged leases are not subject to judicial review because such decisions are committed entirely to the discretion of its Secretary. Defs. Mot. at 3-12. In support of this argument, DVA relies on the uncontested proposition that the Secretary has discretion to decide whether entering into a particular health-care resource sharing agreement is in the best interests of the program. Id. at 6-7. That proposition is beside the point: Plaintiffs argument is that, because these agreements do not involve health-care resources, the Secretarys discretion is not implicated. It is axiomatic that agencies are creatures of statute and -8PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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may not act in excess of their statutory authority. See, e.g., U.S. Fidelity and Guar. Co. v. Lee Investments, LLC, 641 F.3d 1126, 1135 (9th Cir. 2011) ([T]he constant theme generally applicable to administrative agencies [is] that they are creatures of statute, bound to the confines of the statute that created them . . . .). Whether an agencys action exceeds its statutory authority is subject to review, regardless of how much discretion Congress granted the agency within its lawful authority. See Heckler v. Chaney, 470 U.S. 821, 832, 105 S. Ct. 1649, 84 L. Ed. 2d 714 (1985) (holding that, when agencies act, that action at least can be reviewed to determine whether the agency exceeded its statutory powers). As the Ninth Circuit has explained, there is a strong presumption that Congress intends judicial review of administrative action. Pinnacle Armor, Inc. v. United States, 648 F.3d 708, 718 (9th Cir. 2011) (internal quotation marks omitted); see also Bd. of Governors of Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 44, 112 S. Ct. 459, 466, 116 L. Ed. 2d 358 (1991) (holding that only upon a showing of clear and convincing evidence of a contrary legislative intent should the courts restrict access to judicial review (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 141, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967))). This presumption is overcome only in two narrow circumstances: (1) when Congress expressly bars review by statute, and (2) in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply. Pinnacle Armor, 648 F.3d at 718-19 (internal quotation marks omitted). Examples of the second circumstance include those involving an agencys power to manage its own docket, those where courts have neither standards nor expertise, such [as] when [they] are asked to review questions of national security, and those involving an agencys decision to deny a discretionary federal loan. Id. at 720. DVA cannot overcome the presumption of judicial review here. Congress has not explicitly prohibited review of whether the challenged leases are health-care sharing agreements. Additionally, Congress has provided a standard that can be applied to review the agencys conduct: whether the arrangement is an agreement for the mutual -9PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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use or exchange of use of health-care resources. Indeed, Congress went so far as to provide a statutory definition that sets the outer limit of DVAs authority.3 As demonstrated in Section III.A, supra, and in greater detail in Plaintiffs Motion for Summary Judgment, see Pls. Mot. for Summ. J. at 10-16, the meaning of that standard can be discerned through basic rules of statutory construction that courts apply every day. The standard therefore can and should serve as the basis for judicial review of whether DVA had authority to act. See Heckler, 470 U.S. at 832-33 (holding that courts can determine whether the agency exceeded its statutory powers). To be sure, DVA has discretion to decide whether to enter any particular health-care resource sharing agreement, but only if it is a health-care resource sharing agreement. DVA cannot invoke that discretion to justify entering into purely commercial leases or land-use agreements that do not involve health-care resource sharing. DVA erroneously argues that one court has held that the discretionary nature of Section 8153 shields the Secretarys action from judicial review. Defs. Mot. at 11:14-20 (citing Gibbons v. Fronton, 533 F. Supp. 2d 449 (S.D.N.Y. 2008)). Gibbons did not refuse to assess whether a particular lease was in fact a health-care resource sharing arrangement but instead addressed whether DVA was liable for the negligence of a primary-care contractor under the Federal Tort Claims Act. In doing so, the court noted that [t]he VAs decision to enter a contract with an outside health-care provider is clearly within the discretion granted to the VA in 8153(a)(1). 533 F. Supp. 2d at 456. Gibbons thus offers nothing more than dictum for the unremarkable proposition that DVAs entry into a particular (statutorily authorized) health-care resource sharing agreement is a matter of discretion. DVA also relies on Rapides Regional Medical Center v. Secretary, 974 F.2d 565 (5th Cir. 1992). Defs. Mot. at 8 n.10. That case involved a quintessential health-care DVAs argument that the definition of medical facilities in 38 U.S.C. 8101(3) is relevant, see Defs. Mot. at 9, is baffling. Congress explicitly defined health-care resource in 8152(1), and 8153 authorizes only the sharing of health-care resources. Congress defined the resources subject to the sharing authority within the statutes establishing the sharing authority itself. - 10 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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resource sharing agreement: an agreement between DVA and a private hospital to share a sophisticated radiation therapy device for cancer patients. It did not involve a challenge to DVAs authority to enter into the agreement in question. Rather, another private hospital claimed that DVA should have submitted the agreement to competitive bidding. Id. at 566-67. The Fifth Circuit was never presented with, and did not address, the central question in this case: if courts should review whether particular leases are actually health-care sharing agreements and thus authorized under 8153. DVA also suggests that statutory requirements of reports to Congress, like the one in 8153(g), support the conclusion that Congress intended to foreclose judicial review. Defs. Mot. At 10 n.13. But the inclusion of a congressional reporting requirement does not determine whether a statute itself creates clear standards of review available to the court. In fact, numerous courts have rejected this precise argument. See, e.g., Armstrong v. Bush, 924 F.2d 282, 291-92 (D.C. Cir. 1991) (holding agency action subject to judicial review despite requirement that agency submit annual reports to Congress); American Friends Serv. Comm. v. Webster, 720 F.2d 29, 44 (D.C. Cir. 1983) (rejecting the argument that congressional oversight exempts agency action from judicial review because it would create an enormous exception to judicial review: Congress exercises oversight over all agencies, gets reports from many, and is often consulted by the executive branch before specific actions are taken). All of the cases on which DVA relies for general support of its argument that judicial review is inappropriate are distinguishable. They involve agency conduct (a) under a statutory grant of complete agency discretion, (b) in the absence of a clear benchmark limit on the agencys power, or (c) in an area involving national security or agency expertise. E.g., Drakes Bay Oyster Co. v. Salazar, 2013 WL 451860, -- F. Supp. 2d --, at *11 (holding that the express language and legislative history evince Congresss intent to grant the Secretary complete discretion on the issue); Strickland v. Morton, 519 F.2d 467, 472 (9th Cir. 1975) (holding that the land classification at issue was not a clear instance of the Secretary acting without authority and directly contrary - 11 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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to legislative intent); Topgallant Grp., Inc. v. United States, 704 F. Supp. 265, 266 (D.D.C. 1998) (Procurement decisions based on military considerations are not subject to review in the courts in the absence of gross impropriety, fraud, or bad faith.). None of those circumstances are present here. 2. DVAs Interpretation of the Scope of Its Authority Is Not Entitled To Deference

DVA also argues that: (a) the Courts review of its decisions to enter into healthcare sharing agreements must be highly deferential under Chevron; (b) its entry into the challenged leases is presumed to be valid; and (c) its interpretation of 8153 must prevail if reasonable. Defs. Mot. at 12-13. DVA is simply extracting isolated strands of administrative law, divorced from their broader doctrinal framework. These standards do not apply here because Plaintiffs claim is that certain leases are simply beyond the scope of DVAs health-care sharing authority, as defined by clear and unambiguous statutory language.4 a. The Statute is Unambiguous, so DVAs Interpretation Is Irrelevant

As noted in Section III.A, supra, under the first step of the Chevron framework, DVAs interpretation of 8153 is not entitled to any deference because the statute is not ambiguous. DVA glosses over this first step under Chevron without any analysis. See Defs. Mot. at 14 (asserting, with no further analysis, that 8151-53 use broad and ambiguous terms). Even the cases on which DVA relies recognize this important first step in the inquiry. See N.L.R.B. v. United Food & Commercial Workers Union, Local 23, AFL-CIO, 484 U.S. 112, 123, 108 S. Ct. 413, 98 L. Ed. 2d 429 (1987) (On a pure question of statutory construction, our first job is to try to determine congressional DVA also attempts to invoke an arbitrary or capricious standard of review. Defs. Mot. at 12:5. That standard applies, however, only to the exercise of discretion unquestionably delegated to the agency, not acts in excess of statutorily delegated authority, as even the cases cited by DVA make clear. See Motor Vehicle Mfrs. Assn of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-43 (1983) (holding that the arbitrary and capricious standard prevents a court from setting aside an agency rule that is rational, based on consideration of the relevant factors and within the scope of the authority delegated to the agency by the statute) (emphasis added). - 12 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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intent, using traditional tools of statutory construction. If we can do so, then that interpretation must be given effect, and the regulations at issue must be fully consistent with it.); Arent v. Shalala, 70 F.3d 610, 614-16 (D.C. Cir. 1995) (Chevron is principally concerned with whether an agency has authority to act under a statute. Thus, a reviewing courts inquiry under Chevron is rooted in statutory analysis and is focused on discerning the boundaries of Congress delegation of authority to the agency. (internal citation omitted)). And in other cases upon which DVA relies, the court considered the agencys interpretation only after explicitly finding that the statute is ambiguous. See Barnhart v. Walton, 535 U.S. 212, 224-25, 122 S. Ct. 1265, 152 L. Ed. 2d 330 (2002) (The statutes language is ambiguous. And the Agencys interpretation is reasonable.); Holder v. Martinez Gutierrez, 132 S. Ct. 2011, 2018, 182 L. Ed. 2d 922 (2012) (holding that the relevant statute was silent on the relevant question and therefore afforded at least two possible constructions). b. Even if the Statute Were Ambiguous, DVA Is Not Entitled To Chevron Deference Because It Offers No Formal Interpretation of 8153

Even if the Court were to find that 8153 is somehow ambiguous, Defendants still would not be entitled to deference under the second prong of Chevron. Mead makes clear that such deference is not appropriate unless the agency can demonstrate that it has the general power to make rules carrying the force of law and that the challenged action was taken in the exercise of that authority. Wilderness Socy, 353 F.3d at 1059 (internal quotation marks omitted). Although Mead does not state with specificity what types of agency powers are indicative of authority generally to make rules carrying the force of law, it provides guidance on the subject: Delegation of such authority may be shown in a variety of ways, as by an agencys power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent. Id. at 1039 n.6 (quoting Mead, 533 U.S. at 227). Nothing in the Record indicates that DVAs interpretation of the health-care - 13 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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resource sharing authority was ever promulgated in a manner carrying the force of law.5 As noted, DVAs decisions to enter into ESAs are not subject to notice-and-comment requirements (or any formal administrative process), so they do not warrant Chevron deference. See Mead, 533 U.S. at 230 (It is fair to assume generally that Congress contemplates administrative action with the effect of law when it provides for a relatively formal administrative procedure tending to foster the fairness and deliberation that should underlie a pronouncement of such force.); Wilderness Watch, Inc. v. U.S. Fish & Wildlife Serv., 629 F.3d 1024, 1035 (9th Cir. 2010) (evaluating the formality of the administrative procedure that fostered the [agency action] when assessing level of deference to grant agency interpretation). Moreover, the agency guidance contained in the Record, such as interpretations found in VHA Directive 97-015 (AR 16-22), VHA Directive 1660.01 (AR 23-58), VHA Handbook 1820.1 (AR 59-82) or VA Handbook 7401.3 (AR 83-88), and a 2008 memo on use of the WLA Campus (AR 147-150), are prototypical informal agency materials that lack the force of law and do not warrant Chevron-style deference. Wilderness Socy, 353 F.3d at 1068; see also Wilderness Watch, 629 F.3d at 1034 (By contrast, [i]nterpretations such as those in opinion letterslike interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of lawdo not warrant Chevronstyle deference. (quoting Christensen v. Harris County, 529 U.S. 576, 587, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000))). Moreover, the challenged agreements themselves are akin to the type of individual actions made by an agency that are not an exercise of a congressionally delegated legislative function and do not bespeak the legislative type of activity that would naturally bind more than the parties to the ruling. Wilderness Socy, 353 F.3d at 1067 (internal quotation marks omitted); see also High Sierra Hikers Assn v. Blackwell, 390 The only regulation submitted in the Record, 38 C.F.R. 17.142, makes no mention of Defendants interpretation of Section 8153 and instead merely delegates the Secretarys authority to enter to health-care resource sharing agreements to an undersecretary. AR 7. - 14 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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F.3d 630, 648 (9th Cir. 2004) (The Forest Service was not acting with the force of law in this case because it was granting permits, not acting in a way that would have precedential value for subsequent parties.). As such, DVAs proffered interpretation of the health-care resource sharing authority is not entitled to deference under Chevron. c. DVAs Interpretation of 8153 Cannot Be Saved by Resort To the Respect Sometimes Afforded To Agency Interpretations under Mead and Skidmore

DVAs interpretation of 8153 does not warrant even the lesser respect sometimes afforded informal agency guidance. See Defs. Mot. at 16:6-15. Mead and Skidmore call for a level of respect that turns on the persuasiveness of the agencys interpretation as seen in the the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade. Mead, 533 U.S. at 228 (internal quotation marks omitted). DVAs interpretation of 8153 lacks any such indicia of persuasiveness. DVAs proffered construction of the statute is reflected in a January 15, 2008 memo, AR 147-150, and various internal guidance documents. The 2008 document contains no discussion of the underlying statute or the rationale for DVAs interpretation. It contains no discussion of the need for agreements under 8151-53 to involve the sharing of health-care resources and repeatedly refers to a statutory authorization for use of space agreements that does not appear in the statute. Likewise, the internal guidance documents contain nothing but conclusory assertions that 8153 authorizes DVA to lease space without regard to its relationship to healthcare services. See AR 26 (Enhanced sharing agreements for the use of VA space (including parking, outdoor recreational facilities, and vacant land) are authorized under 38 U.S.C. Section 8153.) (August 3, 2000 VHA Directive); AR 46 (Sharing agreements for the use of VA space, including parking, outdoor recreational facilities, and vacant land, are authorized under 38 U.S.C. Section 8153 (see VHA Handbook 1820.1).) (October 11, 2007 VHA Handbook); AR 61 (Proposals and agreements to share the use of VHA space (including parking, outdoor recreational facilities, and - 15 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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vacant land) are authorized under 38 U.S.C. 8153.) (March 7, 2005 VHA Handbook).6 Nor does the Record reflect any demonstration of care by DVA in reaching its selfserving interpretation of 8153. Defendants merely assert powers that do not appear in the statute. As for the challenged leases, DVA simply asserts that each of them is authorized under 8153 without any explanation why; and the Record contains no evidence of any process by which DVA reached these conclusions, which are obviously inconsistent with the fact that (as demonstrated in Plaintiffs summary judgment motion) none of them involves the sharing of health-care resources. On this Record, DVAs ad hoc commentary on, and application of, 8153 is entitled to no respect. 3. The Overwhelming Evidence Required to Infer Congressional Acquiescence Is Not Present

DVAs final effort at avoiding the plain meaning of 8153 is to argue that Congress implicitly accepted its interpretation of 8153 because Congress has received reports from DVA regarding its use of the health-care sharing authority and has not taken action to prohibit the challenged leases. Defs. Mot. at 18-20. Much more would be required, however, before the Court could draw an inference that Congress has acquiesced in DVAs interpretation of 8153 or the challenged leases. In any event, DVA overstates the clarity of its reports to Congress, which do not candidly explain that DVA uses the sharing authority in the manner it has for the challenged leases. As a starting point, there is a strong presumption that Congress intends judicial review of administrative action, Pinnacle Armor, 648 F.3d at 718, and DVA has not

Notably, the agency guidance documents do contain language suggesting that the use of ESAs to sell DVA resources is appropriate only if the ESA relates to services or programs that DVA itself would operate as part of its medical facility. See AR 62 (If [VHA space is offered for the benefit of non-veterans], then this type of agreement must ensure that the service or space is within the scope of VHAs authority . . . and be authorized by law for veterans.). Thus, it appears that DVA approved the challenged leases notwithstanding internal agency guidance indicating that they were improper. - 16 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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cited a single case in which the Ninth Circuit found acquiescence.7 Thus, DVAs burden in proving congressional acquiescence is very heavy: the Ninth Circuit has characterized the sort of acquiescence argument made here by DVA as heroic because the standard for a judicial finding of congressional acquiescence is extremely high. Nw. Envtl. Advocates v. U.S. E.P.A., 537 F.3d 1006, 1022 (9th Cir. 2008). Indeed, the Supreme Court requires the agency to meet an overwhelming evidence standard, id. at 1022 (quoting Bob Jones Univ. v. United States, 461 U.S. 574, 595, 600-01, 103 S. Ct. 2017, 76 L. Ed. 2d 157 (1983), and Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (SWANCC ), 531 U.S. 159, 162, 121 S. Ct. 675, 148 L. Ed. 2d 576 (2001)), and establish that that Congress explicitly considered the precise issue presented to the court, Morales-Izquierdo v. Gonzales, 486 F.3d 484, 493 (9th Cir. 2007) (en banc) (quoting Bob Jones Univ., 461 U.S. at 600)). As demonstrated below, DVAs implication that acquiescence is a standard, recognized exception to the presumption of reviewability misstates the law. In fact, courts have rarely declined review on this ground, and a finding of congressional acquiescence is so rare because courtsnot Congressapply the laws, and courts recognize that Congress has many priorities higher than clarifying an unambiguous statute. DVA has not cited, and cannot cite, a case where a court found acquiescence in factual circumstances that are even remotely analogous to those present here. Three Supreme Court decisions illustrate what is necessary to meet the heavy burden and why DVA has not done so here. In Bob Jones University, the Supreme Court found acquiescence to an IRS interpretation of a statute. First, the Court concluded that there was no question that the agencys interpretation was correct. 461 U.S. at 595. The Court then relied on the acquiescence argument to confirm that DVA nonetheless concedes, as it must, that the Ninth Circuit has expressed great skepticism about finding acquiescence. See Morales-Izquierdo v. Gonzales, 486 F.3d 484, 493 (9th Cir. 2007) (en banc) (recognizing the sharp distinction between Congress deliberate acquiescence and its failure to express any opinion and requiring overwhelming evidence that Congress explicitly considered the precise issue presented to the court (internal quotation marks omitted)). - 17 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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conclusion, where Congress had held hearings on this precise issue, making it hardly conceivable that Congressand in this setting, any Member of Congress was not abundantly aware of what was going on, and where no fewer than 13 bills [were] introduced to overturn the IRS interpretation and had all failed. Id. at 60001. Similarly, in United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 132, 106 S. Ct. 455, 88 L. Ed. 2d 419 (1985), the Supreme Court found acquiescence to an agency interpretation of a statute that failed to provide unambiguous guidance for the [agency], where the correct interpretation was far from obvious. A finding of acquiescence was appropriate only because the administrative construction [had] been brought to Congress attention through legislation specifically designed to supplant it, which included a House bill, a Senate bill amendment, and debate in both Chambers of Congress that ended in the abandonment of efforts to narrow the agencys interpretation. Id. at 136-37. By contrast, in SWANCC, 531 U.S. at 170, the Court rejected an agencys acquiescence argument despite some legislative history showing Congress recognition of the agencys interpretation, including a failed House bill that would have narrowed the agencys interpretation. The Court found that the statute was clear and the agencys interpretation would have assumed that a word in the statute did not have any independent significance. Id. at 172. Here, DVA has not presented overwhelming evidence that Congress explicitly considered the precise issue presented to the court, as would be necessary to support an inference of congressional acquiescence. Morales-Izquierdo, 486 F.3d at 493. By contrast to Bob Jones, Congress has not held hearings on an agencys correct interpretation of a statute and then failed to pass no fewer than 13 bills to overturn it. Nor is this a situation similar to Riverside Bayview Homes, where multiple bills to supplant an agencys interpretation of a vague statute were introduced and abandoned. DVA has introduced no evidence of any bills aimed at correcting DVAs conduct that were introduced and failed. This case does not, therefore, rise even to the level of congressional attention that existed in SWANCC, - 18 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.

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which the Court concluded was insufficient to support an inference of acquiescence.8 In any event, DVAs three examples of its communications with Congress demonstrate that DVA has been anything but candid with Congress, at least with respect to its use of 8153 for purely commercial leases unrelated to health-care on the WLA Campus. First, DVA argues that its annual reports informed Congress that agreements for the sharing of space . . . comprise a significant portion of VA ESAs and made clear that the benefit provided to the VA medical program by an ESA is often revenue. Defs. Mot. at 19:3-7. But, in its reports to Congress, DVA consistently describes the space it has leased as medical space, AR 115, 116.30, 116.45, 116.58, 116.71-.72, 116.85-.86, 116.100, 116.111-.112, 116.124-.125 (emphasis added), or specialized space, AR 101 (emphasis added). The reports describe the direct benefit from its ESAs as making available to veterans certain essential services that have not been readily obtainable at their local VA medical center. AR 116.005; see also AR 116.001116.003, 116.015. These descriptions, at worst, affirmatively misled Congress about how DVA was using the health-care resource sharing authority in some circumstances; at best, they simply fail to disclose the true nature of the challenged leases. Second, DVA suggests that testimony before DVAs oversight committees provided Congress with further detailed information about the challenged agreements. Defs. Mot. at 19-20. The testimony on which DVA relies, however, is not from a DVA official but from the Government Accountability Office. Additionally, the testimony was part of a report on a GAO initiative regarding the management of capital assets, not an examination of the legal limits on DVAs authority to dispose of property. DVAs other cases also do not support its position. Motor Vehicle Mfrs. Assn v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 45, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983), and Cape Cod Hosp. v. Sebelius, 630 F.3d 203, 214 (D.C. Cir. 2011), rejected a finding of acquiescence. Haig v. Agee, 453 U.S. 290, 300-01, 101 S. Ct. 2766, 69 L. Ed. 2d 640 (1981), involved formal regulations that were promulgated pursuant to broad statutory authority; the Court held that the regulations fell within that authority; and as confirmation of that interpretation, the Court merely relied on the fact that the Congress, knowing of the regulation, had re-enacted the broad authority without change. None of those circumstances are present here. - 19 PLS. MEM. OF P. & A. IN OPPN TO DEFS. MOT. FOR SUMM. J.
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Third, DVA argues that [m]embers of Congress have even received notification before DVA exercised its discretion to enter into specific ESAs. Defs. Mot. at 20. But the notification on which DVA relies relates only to its agreement with the Brentwood School, and some members of Congress sent DVA a letter raising concerns about that use of 8153. AR 246.5, 246.7. Although DVA assured the members of Congress that its general counsel reviewed the Brentwood agreement and determined that VA had the authority pursuant to 38 U.S.C. 8153 to enter into the agreement, DVA also noted both that it was renegotiating the terms of the agreement in light of the review and that new directives governing the use of 8153 were being developed. AR 246.24. DVA failed to provide any analysis or justification for its conclusion that the agreement was legal or any indication of what the new guidelines would say; the clear implication, however, was that DVA would behave differently in the future. The Record contains no information suggesting that the members of Congress followed up further or were notified about the new policies or changes to the contract referenced in the letter. In short, the notification DVA purportedly provided to Congress was far from a clear and full accounting of how it was using the sharing authority, and the Record establishes that Congress never took formal action, in the form of either hearings on this specific issue or proposed legislation to address DVAs use of the statute. There is therefore no basis for this Court to invoke congressional acquiescence. IV. CONCLUSION For the foregoing reasons, Plaintiffs respectfully submit that the Court should deny DVAs motion for summary judgment. ARNOLD & PORTER LLP By: /s/ John C. Ulin John C. Ulin Attorneys for Plaintiffs

Dated: May 10, 2013.

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