CAREER COLLEGE ASS'N v. Duncan
796 F. Supp. 2d 108
D.D.C.2011Background
- APSCU challenged three parts of the Department of Education's Final Rule under the Higher Education Act and APA: the compensation regulations, misrepresentation regulations, and the state authorization regulations; regulations effective July 1, 2011, with pre-enforcement challenges ripe upon finalization.
- The HEA prohibits incentive payments based on enrolling or awarding aid; the Department eliminated twelve safe harbors and redefined compensation to ban merit increases tied to recruitment or outcome-based measures.
- The misrepresentation regulations prohibit substantial misrepresentations and expand the universe of potentially sanctionable speakers and statements, defining misleading as likely to deceive or confuse.
- The state authorization rules require distance-education programs to obtain state authorization not only where located but also where students reside, if required by those states.
- APSCU sought summary judgment; the Department sought summary judgment as to facial validity; the court addressed standing, ripeness, and whether the regulations were arbitrary and capricious under the APA.
- The court vacated 34 C.F.R. § 600.9(c) (distance-state authorization) for lack of proper notice and will deny/in part grant in part the parties’ motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the compensation regulations within the Department's statutory authority? | APSCU argues they overstep the HEA by regulating salaries and merit pay not tied to recruitment. | Department says broad statutory language and record support regulation of incentive-like pay disguised as salary. | Regulations reasonable within statute; not arbitrary. |
| Do the misrepresentation regulations exceed authority or violate due process? | APSCU contends expanded scope and definition of misrepresentation and lack of intent violate the statute and policy. | Department contends reasonable definition; due process preserved; misrepresentations limited to core topics. | Regulations facially permissible; definitions reasonable; due process adequate. |
| Do the misrepresentation regulations infringe on First Amendment commercial speech rights? | Regulations chill commercial speech by broadly constraining truthful information. | Regulations target false/misleading statements; commercial speech can be regulated. | Regulations withstand First Amendment challenge as related to commercial speech. |
| Is the State authorization for distance education a valid, but properly noticed, regulation? | APSCU challenges the requirement of multi-state authorization as beyond notice; distance-education mandate not properly proposed. | Regulations within HEA; Dear Colleague guidance clarifies scope; department can impose multi-state requirements. | Court vacates § 600.9(c) for lack of logical outgrowth/notice. |
| Does the APA permit the challenged actions given the agency’s explanation and data? | Agency failed to justify its policy changes and relied on improper considerations. | Agency provided reasoned explanations and data; changes aligned with statutory goals. | Agency action not arbitrary or capricious on the record. |
Key Cases Cited
- Rust v. Sullivan, 500 U.S. 173 (1991) (facially challenging a regulation requires showing it cannot be valid under any circumstance)
- Mayo Found. for Med. Educ. & Research v. United States, 131 S. Ct. 704 (2011) (agency must have a rational basis for changes; Chevron step two applies to ambiguity)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency must provide rational connection between facts and choice; not arbitrary and capricious)
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (establishes deferential review of agency interpretations)
- Co eeur Alaska, Inc. v. Southeast Alaska Conservation Council, 557 U.S. 261 (2009) (agency interpretations of regulations receive deference if not plainly erroneous)