951 F.3d 1332
Fed. Cir.2020Background
- Ashford University is an online, for‑profit institution that previously had SAA approval from Iowa; after moving headquarters and going fully online it sought SAA approval from California and then obtained approval from Arizona effective July 10, 2017.
- On November 9, 2017 a VA Regional Director sent a Cure Letter to Ashford asserting Ashford lacked required SAA approval because its “main campus” appeared to be in San Diego (California), not Phoenix (Arizona), and threatening suspension of payments and referral to the Committee on Educational Allowances unless Ashford took corrective action.
- The Cure Letter referenced 38 C.F.R. §§ 21.4250 and 21.4266 (definition of “main campus”) and promised Ashford a hearing before the Committee if proceedings continued; the VA stayed any suspension pending litigation.
- Ashford petitioned the Federal Circuit under 38 U.S.C. § 502, arguing the Cure Letter announced two new legally binding interpretations (one allowing VA to nullify SAA approvals and one importing §21.4266’s definition into §21.4250) and that the interpretations were invalid rulemaking without notice‑and‑comment.
- The court dismissed: it held the Cure Letter was an adjudicative, individualized enforcement action (not a reviewable rule under §502), and it was not a final agency action under the APA’s finality test; the appropriate review route for a final discontinuance decision is through VA’s Board appeals and the Veterans Court (38 U.S.C. §511(b)(4)).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Cure Letter is a reviewable "rule" under 38 U.S.C. §502 | Cure Letter "announces" new legal interpretations and thus is a substantive/interpretive rule subject to §502 review | The Letter is an individualized adjudicative enforcement action applying existing regs, not a general rule | Held: Not a rule; §502 does not provide jurisdiction because the Letter is part of an adjudication |
| Whether the Cure Letter is a final agency action under the APA (5 U.S.C. §704) | The Letter compels immediate compliance and threatens suspension, so it is final and reviewable | The Letter is tentative/interlocutory — further procedures (Committee hearing, Regional Director decision, optional Director review) remain | Held: Not final; fails Bennett two‑part test (not consummation; no present legal consequences) |
| Whether §511(a) bars judicial review and whether an alternate path exists | §511(a) would preclude review, so dismissal leaves agency lawmaking unreviewable | §511 channels review through Board and Veterans Court; Board has jurisdiction over benefit‑affecting decisions (38 U.S.C. §7104) and "claimant" can include entities | Held: §511 does not foreclose review — Ashford may obtain review after a final discontinuance decision via the Board → Veterans Court → this court (38 U.S.C. §511(b)(4)) |
| Whether the Cure Letter’s purported reinterpretation of "main campus" violated APA rulemaking requirements | Cure Letter changed regulatory meaning and required notice‑and‑comment; thus invalid | Agency may articulate new principles in adjudication; these are not automatically §502 reviewable | Held: Even if Letter announced new interpretation, Bell Aerospace permits announcing new principles in adjudication; no §502 jurisdiction |
Key Cases Cited
- NLRB v. Bell Aerospace Co. Div. of Textron, 416 U.S. 267 (agency may announce new principles in adjudication)
- NLRB v. Wyman‑Gordon Co., 394 U.S. 759 (rule announced in adjudication may be treated as rule when forward‑looking and binding on non‑parties)
- Lujan v. National Wildlife Federation, 497 U.S. 871 (finality requirement for judicial review of agency action)
- Bennett v. Spear, 520 U.S. 154 (two‑part test for final agency action: consummation and legal consequences)
- Fed. Power Comm’n v. Metropolitan Edison Co., 304 U.S. 375 (requirement of final agency action to avoid piecemeal review)
- Bates v. Nicholson, 398 F.3d 1355 (Fed. Cir.) (Board jurisdiction includes challenges affecting provision of benefits; non‑veteran parties can be within review scheme)