379 F. Supp. 3d 1001
N.D. Cal.2019Background
- The Department of Education promulgated the 2016 "Distance-Education Rules" regulating state authorization and disclosures for Title IV-funded distance/correspondence programs, effective July 1, 2018.
- The Higher Education Act requires negotiated rulemaking for Title IV regulations unless the Secretary finds negotiated rulemaking "impracticable, unnecessary, or contrary to the public interest" and publishes that basis when proposing the rule. 20 U.S.C. § 1098a(b)(2).
- After a change in administration, the Department received industry letters in Feb 2018 raising implementation concerns and in May 2018 issued an NPRM proposing to delay the Distance-Education Rules to July 1, 2020 (the "Delay Rule") and invoked "good cause" to bypass negotiated rulemaking.
- Plaintiffs (NEA, CTA, and individual students) sued, arguing the Department violated the HEA and APA by not using negotiated rulemaking; plaintiffs sought vacatur of the Delay Rule so the 2016 rules would go into effect.
- The Department defended by invoking the APA "good cause" exception (5 U.S.C. § 553(b)(3)(B))—claiming it lacked time to complete negotiated rulemaking before July 1, 2018—and argued any procedural error was harmless.
- The court held the Department lacked good cause to bypass statutorily required negotiated rulemaking, found the error not harmless, granted plaintiffs summary judgment, vacated the Delay Rule, and stayed vacatur 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Department lawfully bypassed statutory negotiated rulemaking for the Delay Rule | Department lacked authority to bypass HEA's negotiated-rulemaking requirement; must use negotiated process | Department had "good cause" under APA §553(b)(3)(B) because insufficient time existed to complete negotiated rulemaking before July 1, 2018 | The Department did not have good cause; bypassing negotiated rulemaking was unlawful |
| Whether the Department's asserted time pressure (to avoid the 2016 rules taking effect) constitutes "good cause" | N/A (plaintiffs disputed the sufficiency) | Time pressure and desire to avoid regulatory uncertainty justified bypassing negotiated rulemaking | Court rejected time-pressure justification; new administration's desire to review/repeal predecessors is not the narrow emergency-based good-cause standard |
| Whether the Department's own delay defeats its invocation of good cause | Plaintiffs: agency delay cannot create good cause | Depts often argue exigency or master-calendar deadlines justify expedited action | Court held agency's own delay cannot supply good cause; Department had opportunities earlier and failed to act |
| Whether the failure to use negotiated rulemaking was harmless error | Plaintiffs: error affected congressionally mandated process and was not harmless | Department: short public comment and stakeholder input made error harmless | Court held error was not harmless—negotiated rulemaking is a distinct, substantive process not replaced by a brief comment period |
Key Cases Cited
- California v. Azar, 911 F.3d 558 (9th Cir. 2018) (good-cause exception under Section 553 is narrow and emergency-focused)
- Natural Resources Defense Council v. Nat'l Highway Traffic Safety Admin., 894 F.3d 95 (2d Cir. 2018) (agency delay cannot create good cause to forgo required procedures)
- Bauer v. DeVos, 325 F. Supp. 3d 74 (D.D.C. 2018) (vacating Department delay rule for failing to use negotiated rulemaking)
- Pineros y Campesinos Unidos del Noroeste v. Pruitt, 293 F. Supp. 3d 1062 (N.D. Cal. 2018) (new administration's desire to revisit prior rule insufficient for good cause)
- Organized Village of Kake v. U.S. Dep't of Agric., 795 F.3d 956 (9th Cir. 2015) (procedural violations cannot be justified merely by administrative preference)
- Oregon Trollers Ass'n v. Gutierrez, 452 F.3d 1104 (9th Cir. 2006) (good cause may exist where statutory mission would be impaired by delay; distinguished on facts)
- California Wilderness Coalition v. U.S. Dep't of Energy, 631 F.3d 1072 (9th Cir. 2011) (consultation requirement distinct from mere opportunity to comment; failure to follow mandated interactive process is not harmless)