Accrediting Council for Indep. Colls. & Sch. v. DevosAccrediting Council for Indep. Colls. & Sch. v. Devos
The plaintiff, the Accrediting Council for Independent Colleges and Schools (the "Accrediting Council"),
I. BACKGROUND
A. Statutory and Regulatory Framework
Title IV of the Higher Education Act of 1965 ("HEA") "provides billions of dollars [every year] through loan and grant programs to help students pay tuition for their postsecondary education." Ass'n of Private Sector Colls. & Univs. v. Duncan,
The Secretary of the Department (the "Secretary") determines which accrediting agencies are nationally recognized for the purposes of the HEA. See
Pursuant to the HEA, the Secretary has promulgated regulations establishing procedures for the review of an accrediting agency's application for recognition. See 20 U.S.C. § 1099b(o) (providing that "[t]he Secretary shall by regulation provide procedures for the recognition of accrediting agencies"). First, the staff of the Department's Office of Postsecondary Education (the "Department staff") "analyzes the [accrediting] agency's application ... to determine whether the agency satisfies the criteria for recognition, taking into account all available relevant information concerning the compliance of the agency with those criteria and in the agency's effectiveness in applying the criteria."
The Department staff then submits its final written analysis and certain other relevant materials to the Advisory Committee for its review. See
"The senior Department official [then] makes a decision" on the accrediting agency's application for recognition "based on the record compiled" in the prior proceedings, including all materials submitted to the Advisory Committee, the Advisory Committee meeting transcript, the Advisory Committee's recommendation, and any written comments from the accrediting agency or the Department staff in response to the Advisory Committee's recommendation. See
"[An accrediting] agency may appeal the senior Department official's decision to the Secretary."
B. Factual and Procedural History
The Accrediting Council is a nonprofit organization that was, until recently, recognized by the Department as an accrediting agency for certain institutions of higher education. See Pl.'s Mem. at 1; see also AR 3 ("[The Accrediting Council] is a previously-recognized national accrediting agency[.]"). On January 8, 2016, the Accrediting Council submitted its Petition for Continued Recognition, which was comprised of a narrative submission and approximately one hundred exhibits. See
On March 3, 2016, Herman Bounds, the Director of the Accreditation Group for the Department's Office of Post Secondary Education, emailed Albert Gray, the Accrediting Council's then-President and Chief Executive Officer, informing him "that the Office of the Under Secretary [ ] ha[d] developed a set of question[s] [it] want[ed] to ask [the Accrediting Council] during the recognition process." AR 437. He explained that the questions, which he attached to the email, see AR 438-42, were "tied ... to relevant recognition criteria," and that the Accrediting Council's petition would be "return[ed] ... so [that the Accrediting Council] c[ould] respond to the[ ] questions[ ] in [its] petition," AR 437. He further informed Gray that the Accrediting Council would be "allow[ed] [ ] up to [thirty] days to respond."
The Under Secretary's questions were divided into two parts: "Overall Questions" ("Part I") and "Questions related to specific standards in [the Accrediting Council's] Jan[uary] 2016 submission" ("Part II"). See AR 438-42. Part I contained questions regarding "[Accrediting Council]-accredited institutions [that] have been the subject of major investigations and lawsuits from multiple federal agencies and state attorneys general," including Corinthian schools, ITT Technical Institute, and the Michigan Jewish Institute. AR 438. Part II requested "further information, and [d]ocumentation as appropriate, on ... questions related to [the Accrediting Council's] January 2016 submission to the Department." AR 439. Each of the Part II questions sought information related to the Accrediting Council's performance as to particular recognition criteria, specifically,
On March 10, 2016, Gray responded to Bounds's email and requested a 45-day extension for the Accrediting Council to submit its response to the Under Secretary's questions, noting that the questions were "substantial" and would require it to "supplement or replace more than [thirty] narrative sections and more than [one hundred] exhibits in [its] petition that was submitted ... in early January." AR 435. On March 15, 2016, Bounds responded to Gray's request, informing him that the Department would deny an extension as to Part I, but would grant an extension as to Part II, which would therefore be due on May 16, 2016. See AR 434. The Department further explained that "given that information received as late as May 16, 2016, would not allow [the] Department staff the time to fully review and analyze [that information] in time for the June [Advisory Committee] meeting, [the Accrediting Council] should be prepared to return at the fall [Advisory Committee] meeting for further discussion and possible action as warranted." AR 434. Additionally, the Department emphasized that "the information [it] requested is important to the Department's responsibility to monitor and review [the Accrediting Council]'s effectiveness as a recognized accrediting agency."
On May 4, 2016, the Department staff provided the Accrediting Council with a draft analysis and report, in which it found
On May 16, 2016, the Accrediting Council uploaded its Part II response to the Department's system, but did not technically "submit" the response due to questions it had about the proper method for submission, specifically, its desire "to be sure ... that [the Accrediting Council would] have the opportunity to submit more information ... as [pa]rt of [its] response to" the Department staff report. AR 431. On May 18, 2016, Steve Porcelli, a member of the Department staff, see Pl.'s Mem. at 25, instructed Anthony Bieda, the then-Executive in Charge at the Accrediting Council, that "[u]nless [he] hear[d] otherwise from [the Department] within the next two hours," he should "hit the submit button," AR 431. Approximately one hour later, Bounds emailed Bieda, instructing him to "not include the supplemental information in the petition at all," noting that the Accrediting Council could "submit[ ] [it] to [the Department] on a flash drive." AR 430. As the explanation for this decision, Bounds stated that "the Department do[es] not want to mix the responses. [It] will review the supplemental information ... separately outside of the recognition process."
• A 27-page single-spaced narrative responding to each of the Department's questions regarding specific recognition criteria ...; and
• Approximately 36,000 pages of documents relating to:
• [Its] adverse actions taken against dozens of campuses of schools that [it] has accredited;
• Accreditation application materials submitted to [it] by specific institutions identified by the Department, and [its] evaluations of those institutions' applications (including site visit reports); and
• Voluminous email correspondence between [it] and specific institutions identified by the Department.
Pl.'s Mem. at 10.
On June 3, 2016, the Accrediting Council requested an extension of time to file its response to the Department staff's draft analysis and report. See AR 429; see also Defs.' Supp. Opp'n, Ex. 1 (Bounds Decl.), Attachment A. Bounds denied the request in a letter the same day, explaining that "[t]he draft analysis include[d] numerous findings of non-compliance," and, consequently, a "[d]eferral would violate the[ ] [HEA's] requirements," and in any event, Bounds had "no authority to grant one." AR 429. Bounds additionally explained that "[the Accrediting Council] w[ould] not be compelled to respond at the June[ ] 2016 [Advisory Committee] meeting to any analysis by the staff of its [Part II] submission," noting that "[t]he delayed submission of th[at] material, and the additional deferral of consideration of it, was an accommodation provided to [the Accrediting Council], and does not postpone the need for [the Accrediting Council] to establish its compliance for purposes of renewal."
On June 3, 2016, the Accrediting Council timely filed its response to the Department staff's draft analysis and report. See Defs.' Supp. Opp'n, Ex. 1 (Bounds Decl.) ¶ 13; see also Pl.'s Mem., Ex. A (Bieda Decl.) ¶ 20; AR 7,100-9,424. As part of its response, the Accrediting Council detailed various actions it had taken to address compliance issues identified by the Department staff in its draft analysis and report. For example, in response to the Department staff's finding that the Accrediting Council did not comply with
On June 15, 2016, the Department staff issued its final report. See AR 763-92; see also Pl.'s Mem. at 12. The report found the Accrediting Council to be noncompliant with at least twenty-one recognition criteria. See AR 763-65. As support for a number of its findings of noncompliance, the Department staff cited various government investigations and lawsuits demonstrating "widespread placement rate fraud" and other misconduct by Accrediting Council-accredited institutions nationwide. See AR 775 (citing the Department's and the California Attorney General's findings of placement rate fraud by numerous Corinthian Colleges campuses); see also AR 774 (citing "investigations from [twenty] different [Attorneys General] regarding, e.g., placement [and] other rates," against ITT Technical Institute campuses); AR 779 (citing the Department's findings of Title IV fraud by the Michigan Jewish Institute). The Department staff concluded that, in a number of instances, the Accrediting Council was aware of misconduct by institutions it had accredited, but failed to appropriately address the misconduct or report it to the Department. See AR 774 ("[The Accrediting Council] had irrefutable evidence of [falsified or low placement rates], ... [yet, it] left the institution's accreditation in place or re-accredited it anyway[.]"); see also AR 779 (despite being notified by the Department of concerns regarding Title IV fraud by the Michigan Jewish Institute and subsequently discovering "numerous findings of noncompliance," the Accrediting Council "renewed the institution's accreditation 'with admonishment' " and failed to report its findings of noncompliance to the Department). In the Department staff's view, these failures demonstrated that the Accrediting Council had failed to effectively apply its standards regarding student achievement, recruiting, and Title IV compliance, as well as failed to effectively enforce and monitor institutions' compliance with those standards. See AR 783 (concluding that "the large number of substantial settlements agreed to by [Accrediting Council]-accredited institutions in qui tam actions and actions by State attorneys general indicate that [the Accrediting Council]'s ... monitoring regime appears insufficient to deter widespread misconduct regarding placement, recruiting[,] and admissions"); see also AR 786 (citing the Accrediting Council's failure "to provide [ ] documentation to demonstrate
On June 23, 2016, the Advisory Committee reviewed the Accrediting Council's petition at its biannual meeting. See AR 470-762 (transcript of proceedings). The Advisory Committee heard presentations from representatives of the Accrediting Council, the Department staff, and various interested third parties, including the Maryland Assistant Attorney General, who testified regarding state investigations into schools accredited by the Accrediting Council, including ITT Technical Institute. See AR 616-27. At the conclusion of the hearing, the Advisory Committee voted ten to three to revoke the Accrediting Council's recognition. See AR 761; see also AR 747 (introducing the motion to revoke the Accrediting Council's recognition).
Following the Advisory Committee meeting, in July 2016, the Department staff and the Accrediting Council submitted comments to the senior Department official for her consideration. See AR 361-429. In its comments, the Accrediting Council argued that it "c[ould] demonstrate compliance with all accrediting agency criteria, and provide evidence of effective application of those criteria, by April 2017, well within the [twelve]-month period the [senior Department official] is permitted to allow [the Accrediting Council] to come into compliance." AR 398-99. Specifically, it represented that "more than half ( [eleven] ) of the [twenty-one] problems identified in the [Department s]taff [r]eport were remedied [on] July 1, 2016[,] ... or will be remedied by ... August 2016," and that as to the "remaining [ten] findings," the Accrediting Council "[wa]s acting ... to establish new policies and procedures[,] ... with evidence of implementation to be established no later than ... April 2017." AR 397-98.
On September 22, 2016, the senior Department official issued her decision, in which she found that the Accrediting Council was noncompliant with the same twenty-one recognition criteria identified by the Department staff in its final report. See AR 314-15. She ultimately "agree[d] with [the] Department Staff and [the Advisory Committee] that [the Accrediting Council] could not come into full compliance within [twelve] months," reasoning that the Accrediting Council's violations "reveal[ed] fundamental problems with [its] functions as an accreditor," and that its "track record d[id] not inspire confidence that it c[ould] address all of the problems effectively." AR 315. She further reasoned that "most of the remedial efforts currently underway began in earnest just several months ago, despite having reason to take action long before that,"
On September 23, 2016, the Accrediting Council appealed the senior Department official's decision to the Secretary. See AR 228-30. In its briefings before the Secretary, the Accrediting Council represented that it "continue[d] to take aggressive action to implement recent changes to its accrediting standards and review procedures, ... [and t]hese ongoing efforts evidence[d] that [it would] be able to demonstrate full compliance within twelve months, particularly in the areas that appear[ed] to be of concern to the [senior Department official]." AR 121. As evidence of these efforts, the Accrediting Council cited the following actions taken after the Advisory Committee meeting: (1) "significant leadership changes," including the fact that as of August 1, 2016, "the President, and five Vice Presidents, [we]re no longer employed by [the Accrediting Council,] [t]he Board doubled the number of public members ... [, and] [t]he Board also appointed Roger J. Williams-a [twenty-five]-year veteran of management of higher education accreditation-as the new Interim Chief Executive Officer and President," AR 120-21; and (2) various adverse actions and other enforcement measures, including that it took adverse action against DuBois Business College on August 1, 2016, and that in or after August 2016, it conducted "nine unannounced on-site visits to assess the level of compliance across a broad spectrum of ITT's campuses," AR 122.
On December 12, 2016, the Secretary issued her final decision. See AR 14. Although not addressing all of the recognition criteria as to which the Department staff had found the Accrediting Council noncompliant, the Secretary found the Accrediting Council to be noncompliant with at least five separate recognition criteria relating to the Accrediting Council's standards, application of its standards, monitoring, enforcement, and review of its standards. See AR 6-8 (citing
[i]n the context of the[ ] examples of [the Accrediting Council's] failures and others, the profound problems with [the Accrediting Council's] accreditation scheme ..., and the lack of progress in addressing those problems in crucial areas, I cannot conclude that [the Accrediting Council] would be able to both revise (or, in some instances, enact) policies and demonstrate its effective implementation of those policies within [twelve] months as required to come into compliance.
... Both [the Accrediting Council's] insufficient progress in addressing its areas of noncompliance and [its] past track record weigh against granting a renewal of recognition for [twelve] months. Rather, I find that [the Accrediting Council]'s petition for renewal should be denied and that the Department should withdraw its recognition.
AR 10.
On December 15, 2016, the Accrediting Council initiated this action seeking judicial review of the Secretary's decision and simultaneously seeking immediate injunctive relief from that decision. See generally Compl.; see also Plaintiff's Motion for Temporary Restraining Order and Preliminary
II. STANDARD OF REVIEW
A moving party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In the APA context, summary judgment is the mechanism for deciding whether as a matter of law an agency action is supported by the administrative record and is otherwise consistent with the APA standard of review. See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe,
The APA "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." Fed. Commc'ns Comm'n v. Fox Television Stations, Inc.,
III. ANALYSIS
A. Reviewability
The defendants assert that the Secretary's decision should be understood as two decisions, and contend that only one of these decisions is reviewable by this Court. According to the defendants, the first decision
"[T]he APA explicitly excludes from judicial review those agency actions that are 'committed to agency discretion by law.' " Sierra Club v. Jackson,
In assessing reviewability, courts in this Circuit must first address the nature of the administrative action, which refers to whether an action falls into certain "categories of administrative decisions" that the Supreme Court and this Circuit have held are unreviewable. See Sec'y of Labor v. Twentymile Coal Co.,
Courts in this Circuit next look to the language and structure of the statute, which "involves applying typical canons of statutory construction to determine whether the statute provides standards for the agency to apply and for the courts to review." Id. at 138 (citing Delta Air Lines, Inc. v. Export-Import Bank of the U.S.,
[i]f the Secretary determines that an accrediting agency ... has failed to apply effectively the [recognition] criteria ..., the Secretary shall-
(A) after notice and opportunity for a hearing, limit, suspend, or terminate the recognition of the agency ...; or
(B) require the agency ... to take appropriate action to bring the agency ... into compliance with such requirements within a timeframe specified by the Secretary, except that-
(i) such timeframe shall not exceed [twelve] months unless the Secretary extends such period for good cause[.]
20 U.S.C. § 1099b(l)(1). The defendants argue that the language of the HEA supports their position that the Secretary's "choice of remedy" is committed to the Secretary's discretion by law because the HEA "do[es] not obligate the Secretary to choose one [remedial action] over the other in any particular circumstance, and it provides no standards whatsoever that a court might use to judge the Secretary's choice of one remedial action over another." Defs.' Mem. at 15. Additionally, they argue that "the HEA's implementing regulations, which reflect the statutory scheme, contain no standards for determining what severity of sanctions is appropriate ... and explicitly invoke discretionary language."
Although the Court agrees with the defendants that the HEA does not
Furthermore, the Secretary's regulations provide additional applicable standards. See Twentymile Coal Co.,
if a recognized agency fails to demonstrate compliance with or effective application of a criterion or criteria, but the [Secretary] concludes that the agency will demonstrate or achieve compliance with the criteria for recognition and effective application of those criteria within [twelve] months or less, the [Secretary] may continue the agency's recognition, pending submission by the agency of a compliance report [and] review of the report[.]
Although this regulation, like the HEA, does not require the Secretary to conditionally renew an accrediting agency's recognition in any given case, it does require the Secretary, before continuing recognition on a conditional basis, to make a threshold determination of whether an agency could achieve compliance with the recognition criteria within twelve months. See
even if the Coast Guard is entitled to prefer the [a]ssociation over non-member pilots when there is limited demand, a court could still review the Director's determination with respect to the adequacy of the service provided by the pool-i.e., whether the pool has the physical and economic ability to provide sufficient service.... We have often held that standards similar to that set forth in section 401.720(b) are reviewable. See, e.g., Dickson v. Sec'y of Defense,, 1401[-]03 (D.C. Cir. 1995) (reviewing decision of military review board where board "may excuse failure to file" if in the "interest of justice"); Marshall [Cty.] Health Care Auth. v. Shalala, 68 F.3d 1396 , 1223[-]25 (D.C. Cir. 1993) (allowing review of agency decision to provide exceptions "as the Secretary deems appropriate" because statutory scheme provided sufficient standards to guide review). To be sure, the Director might be entitled to a good deal of deference in determining whether the pool was physically or economically able to provide adequate service, but that does not mean the Director could make such decisions unreasonably. For example, it would be presumably arbitrary and capricious for the Coast Guard to ignore an obvious unfilled demand for pilotage service, or to change its standards for determining what level of service is adequate without explanation. Also dubious would be a refusal to appoint a pilot for reasons not mentioned in the regulations, such as an effort to force the pilot to join the Association. 988 F.2d 1221
Although the Secretary is "entitled" to decline to conditionally renew an accrediting agency's recognition in any given case, in doing so here, she determined that "[the Accrediting Council] would [not] be able to both revise (or, in some instances, enact) policies and demonstrate its effective implementation of those policies within [twelve] months as required to come into compliance." AR 10. As Menkes instructs, even if that determination is "entitled to a good deal of deference ... [,] that does not mean the [Secretary] c[an] make such decisions unreasonably." See
Moreover, the Department's regulations provide additional standards to guide the Court in its review of the challenges the Accrediting Council raises in this case. As already described, see supra Part I.A, the regulations provide a detailed set of procedures that the Department must follow when considering an accrediting agency's application for recognition, see
Having considered the nature of the administrative action and the language and structure of the statute, the Court finally considers Congress's intent regarding whether judicial review is available, as evidenced by the statute's structure and other factors. See Watervale Marine Co.,
Additionally, the cases that the defendants cite in support of their position are distinguishable. See Defs.' Mem. at 15-16. First, this Circuit's decision in NTCH, Inc. v. Federal Communications Commission is easily distinguishable because, in that case, the Circuit concluded that the agency action at issue, the Commission's decision not to initiate proceedings to revoke a company's radio license, see
Second, the defendants cite Watervale Marine Co. v. United States Department of Homeland Security for the proposition that when "the word 'may' [in a statute or regulation] is coupled with absolutely no guidance as to how the agency should exercise [a discretionary choice], the matter has been committed to agency discretion by law." Defs.' Mem. at 15 (quoting
Finally, the Eleventh Circuit's decision in Forsyth County v. United States Army Corps of Engineers,
In sum, the Court concludes that the Secretary's decision to deny the Accrediting Council's petition is subject to judicial review under the APA because both the HEA and the Secretary's implementing regulations provide judicially manageable standards to guide the Court's review and the structure of the statute suggests that Congress did not intend that the decision being challenged here be totally subject to the Secretary's discretion.
B. Arbitrary and Capricious Review
Having concluded that the Secretary's decision is subject to judicial review, the Court turns to the Accrediting Council's arguments that the decision should be set aside as arbitrary and capricious, an abuse of discretion, and otherwise not in accordance with law. See Pl.'s Mem. at 18. The Accrediting Council's challenges can be organized into two categories: (1) challenges to the Secretary's decisionmaking process, see, e.g.,
1. Failure to Consider Relevant Evidence
The Accrediting Council first argues that the Secretary's decision was arbitrary and capricious because it "failed ... to consider all of the available dynamic and relevant evidence," id. at 18, specifically (1) the Accrediting Council's Part II submission, which consisted of "a detailed narrative and tens of thousands of pages of documents," id. at 20-21; (2) evidence of leadership changes it made and adverse actions it took against institutions following the Advisory Committee's meeting, see id. at 22-24; and (3) evidence of its placement verification and data integrity procedures, see id. at 25-27. The Court will address each category of evidence in turn.
a. The Accrediting Council's Part II Submission
The Accrediting Council argues that the Secretary's failure to consider its Part II submission violated the HEA's and the implementing regulations' requirement that the Secretary consider all available relevant information, see id. at 21 (citing 20 U.S.C. 1099b(n) ;
An agency must not only comply with the terms of its authorizing statute, see Eco Tour Adventures, Inc. v. Zinke,
As already explained, see supra Part I.A, the HEA and its implementing regulations require the Secretary and the Department staff to consider "all available relevant information concerning the compliance of the accrediting agency ... with the [recognition] criteria," 20 U.S.C. § 1099b(n)(3) ; see also
In addition to the Secretary's violation of the HEA and the regulations, both which independently support findings that the APA was violated, see Eco Tour Adventures, Inc.,
Again, there is no dispute that the Accrediting Council's Part II Submission contained data relevant to its compliance with the recognition criteria. See Defs.' Mem. at
Furthermore, the Department staff did not provide an adequate explanation for its refusal to consider this evidence. Although the Department staff, after granting the Accrediting Council's request for an extension to respond to the Part II questions, informed the Accrediting Council that it would not have "time to fully review and analyze [that information] in time for the June [Advisory Committee] meeting," it suggested that it would consider the information at the fall Advisory Committee meeting. See AR 434 ("[The Accrediting Council] should be prepared to return at the fall [Advisory Committee] meeting for further discussion and possible action as warranted."). And at the same time, the Department staff emphasized that "the information [it] requested is important to the Department's responsibility to monitor and review [the Accrediting Council]'s effectiveness as a recognized accrediting agency."
The defendants now contend that the Department staff did not consider the Part II submission because doing so "would have obliged the Department [staff] ... to postpone the [Advisory Committee] hearing on [the Accrediting Council's] application by six months," and in light of "the severity of [the] findings of [the Accrediting Council]'s noncompliance, and the statutory requirement for a re-assessment of whether to continue recognition at least every five years," the Department staff concluded that postponement "would not have been consistent with responsible administration of the statute." Defs.' Mem. at 33. Although this rationale is similar to the one the Department staff gave for denying the Accrediting Council an extension of time to respond to the Department staff's draft report, see AR 429 (explaining that in light of "numerous
The Court is also not persuaded by other counterarguments raised by the defendants. The defendants argue that the Department staff's failure to consider the Part II submission did not violate the Department's regulations because those regulations "do not require the Department to provide unlimited time for the submission of supplemental information." Defs.' Mem. at 33. Relatedly, they argue in their reply that "allow[ing] an applicant nearly unlimited opportunity to disrupt the Department's ability to set and adhere to a schedule of review, [ ] is a particularly serious concern [ ] given that binding statutory and regulatory authority require the Department to comport with specific timelines." Defs.' Reply at 16 (citing 20 U.S.C. § 1099b(d) ;
Next, the defendants argue that the Accrediting Council "had ample opportunity to cure any deficiencies it believed existed in the evidentiary record," including when it submitted its Petition in January 2016 or "on or before June 3, 2016," when it submitted its response to the Department staff's draft report. Defs.' Mem. at 33. This argument is also not persuasive. Prior to June, the defendants claim that the Department staff had informed the Accrediting Council that it would not consider its Part II submission as part of the recognition process, so it is perplexing that the defendants now claim that the Accrediting Council should have ignored that communication and submitted its Part II submission a second time. In any event, it is the defendants' responsibility to comply with the HEA, the implementing regulations, and the APA, and as already explained, those authorities required the defendants to consider the Part II submission.
Finally, the defendants argue that because the Accrediting Council "d[oes] not allege ... that the contents of [its Part II submission] would have altered the Secretary's finding of noncompliance, it cannot show that any purported procedural error arising from the Department[ ] [staff's] decision not to consider th[ose] contents ... was prejudicial." See Defs.' Reply at 15. "In administrative law, as in federal civil and criminal litigation, there is a harmless error rule: § 706 of the [APA] instructs reviewing courts to take 'due account ... of the rule of prejudicial error.' " PDK Labs. v. U.S. Dep't of Drug Enf't,
In sum, the Court concludes that the Secretary's failure to consider the Part II submission violated the APA because it violated the HEA and the implementing regulations, see Eco Tour Adventures, Inc.,
b. The Accrediting Council's Improvements After the Advisory Committee Hearing
The Accrediting Council further argues that the Secretary acted arbitrarily and capriciously by failing to meaningfully consider evidence that (1) "during the three months following the [Advisory Committee] meeting ... [the Accrediting Council]'s Board doubled the number of public members, replaced [its] President with Mr. Williams, and others who previously served in leadership roles [ ] left [the Accrediting Council]," Pl.'s Mem. at 23;
The Court agrees with the defendants that the regulations did not require the Secretary (or the senior Department official) to consider this evidence. The Department's regulations provide that "[n]either the agency nor the senior Department official may include in its submission [on appeal to the Secretary] any new evidence it did not submit previously in the proceeding,"
Nonetheless, the Accrediting Council totally ignores the regulations barring
The two decisions cited by the Accrediting Council as support for its position are distinguishable. See Pl.'s Mem. at 23-24 (citing Butte Cty.,
In any event, the Court agrees with the defendants that the Secretary adequately considered this post-Advisory Committee evidence. In the course of assessing whether the Accrediting Council could come into compliance within the requisite twelve months, the Secretary explicitly acknowledged that the Accrediting Council "ha[d] undertaken major changes in leadership" and "immediate adverse actions against institutions such as DuBois Business College." AR 8. Nevertheless, in light of the Secretary's conclusion that the Accrediting Council had failed to effectively revise or adopt certain standards, as well as the "comprehensive and systematic failure of [its] monitoring and enforcement scheme," AR 9, the Secretary ultimately concluded that the Accrediting Council had made "insufficient progress in addressing its areas of noncompliance," and that "[b]oth [the Accrediting Council]'s insufficient progress ... and past track record weigh[ed] against granting a renewal of recognition for twelve months," AR 10. In other words, the Secretary considered this evidence, but concluded that it was outweighed by other evidence of "insufficient progress" and the Accrediting Council's "past track record." See AR 10. Although the Secretary does not, for example, reference the Accrediting Council's new president or name each and every enforcement action that the Accrediting Council had undertaken, and therefore, she "could have explained [her] reasons for rejecting [the Accrediting Council's] arguments in more detail, ... [a] reviewing court will 'uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.' " Frizelle,
c. The Accrediting Council's Placement Verification and Data Integrity Procedures
The Accrediting Council additionally argues that the Secretary "ignored" evidence of its placement verification and data integrity procedures, including that it had implemented (1) "a robust [Placement Verification Program] and enhanced data integrity algorithm that establishe[d] random monthly testing of institutions' placement data," Pl.'s Mem. at 25; (2) an "At-Risk Institutions Group," which "use[d] the [placement] data to identify at risk institutions and patterns of concern," id.; (3) an "enhanced process of on-site random sampling of placement documentation through the addition of a dedicated Dat[a] Integrity Reviewer [ ] to every campus review that [the Accrediting Council] conducts," id.; and (4) a "Campus Effectiveness Plan [which] espoused a comprehensive approach to evaluating student achievement," id. at 29.
As the Accrediting Council notes, see id. at 25, 29, and the defendants do not appear to dispute, see generally Defs.' Mem., this evidence is relevant to the recognition criteria regarding student achievement standards, including monitoring compliance with and evaluation of those standards, see
Additionally, the Secretary's apparent failure to consider this relevant evidence violates the basic requirement of the APA that an "agency must examine the relevant data." Motor Vehicle Mfrs. Ass'n,
Although the Court is mindful that "an agency's decision [need not] be a model of analytic precision to survive a challenge," Frizelle,
The defendants' counterargument that "the Secretary reviewed the entire record de novo, including documents in which [the Accrediting Council] posited its arguments" regarding this evidence, Defs.' Mem. at 27 (citing AR 1), is not persuasive. "The assertion that the Secretary reviewed the administrative record ... is not nearly enough to satisfy h[er] burden to reveal the decision-making process." Fuller,
2. Alleged Failure to Consider Relevant Factors
The Accrediting Council appears to also challenge the Secretary's failure to discuss all of the recognition criteria as to which the Department staff and the senior Department official found the Accrediting Council noncompliant. See Pl.'s Mem. at 27 ("[T]he Secretary's brief discussion of a handful of [r]ecognition [c]riteria did not provide the depth of analysis required under the APA and did not reflect consideration of all available relevant evidence."). The Secretary admittedly only considered "a non-exhaustive selection of violations that demonstrate the profound and systemic failure of [the Accrediting Council] to effectively meet the basic Title IV responsibilities of a nationally recognized accrediting agency." AR 6; see also
3. Alleged Procedural Errors by the Department staff, the Advisory Committee, and the Senior Department Official
The Accrediting Council also argues that the Department staff, the Advisory Committee, and the senior Department official committed various procedural errors, and
As a threshold matter, the Court rejects the defendants' argument that intermediate agency action is never reviewable, as that position is explicitly contradicted by the APA, which provides that "[a] preliminary, procedural, or intermediate agency action ... not directly reviewable is subject to review on the review of the final agency action."
a. The Department Staff's Report
The Court has already determined that the Department staff violated the HEA and the Secretary's regulations by declining to consider the Accrediting Council's Part II submission, and thus, it need not address that claim again here. However, the Court must dismiss the Accrediting Council's remaining arguments that the Department staff committed procedural error.
The Accrediting Council first argues that the Under Secretary's request for supplemental information violated the Secretary's regulations because those regulations "do not contemplate involvement of the Secretary or the Secretary's deputies at the [Department staff] review stage." Pl.'s Mem. at 34 (emphasis removed). However, as the defendants point out, see Defs.' Mem. at 30, the Accrediting Council has provided no evidence that the Secretary was involved in the Department staff's review, and indeed, as the Secretary observed, evidence in the record expressly refutes the Secretary's involvement, see AR 12 n.88 (citing testimony of the Department staff at the Advisory Committee meeting that "both the [senior Department official] and the Secretary 'ha[d] been completely walled off from the discussion of [the Accrediting Council] and from the preparation of the staff report' "). Further, although it is undisputed that the Under Secretary was involved in the Department
The Accrediting Council next argues that the Department staff erred when it failed to consider "[i]ts use of algorithms designed to further verify job placement data ... [from] the schools it accredits." Pl.'s Mem. at 37. However, the Court does not find it necessary to address this claim because it has already determined that the Secretary must consider this evidence on remand. See supra Part III.B.1.c. In any event, the Department staff did address the Accrediting Council's algorithm. See AR 775 ("Overall, in the context of the documentation of widespread placement rate fraud, ... the effectiveness of [the Accrediting Council]'s algorithm cannot be credited.").
Finally, the Accrediting Council argues that the Department staff "relied on irrelevant factors by highlighting the investigations and lawsuits against some institutions that [it had] accredited, even though [the Accrediting Council] had nothing to do with those lawsuits[ ] [and] often did not have knowledge of these investigations." Pl.'s Mem. at 38; see also id. ("There [ ] are no recognition criteria that require an accrediting agency to establish its compliance by explaining how it has responded to a filed lawsuit against an institution[.]"). Although it is true that an agency acts arbitrarily and capriciously when it "relie[s] on factors which Congress has not intended it to consider," Puerto Rico Higher Educ. Assistance Corp. v. Riley,
b. The Advisory Committee Meeting
The Accrediting Council also argues for two reasons that the Advisory Committee proceedings were procedurally flawed, neither of which the Court finds persuasive. First, the Accrediting Council argues that the Advisory Committee permitted the presentation of "[i]mproper [t]hird [p]arty [c]omments" in violation of the Secretary's regulations, which it asserts
Second, the Accrediting Council contends that the Advisory Committee was "unduly influenced by politics," Pl.'s Mem. at 41, specifically, by (1) the Under Secretary's comments at the opening of the Advisory Committee meeting "expressi[ng] ... his preferred outcome of the hearing,"
The Court concludes that the Accrediting Council has not shown that these events constitute procedural error. As to the Under Secretary's comments, the Accrediting Council cites no provision of the
As to Senator Warren's report, the Accrediting Council has not directed the Court to any evidence demonstrating that any of the members of the Advisory Committee even considered the report, let alone that they improperly relied upon it to make their decision. The Accrediting Council merely asserts that the senior Department official's argument on appeal that "[Advisory Committee] members neither can, nor are expected to, close their eyes to information they are exposed to day-to-day by virtue of th[eir] expertise," AR 354, demonstrates that "[the Advisory Committee] members may have been influenced by the report," Pl.'s Mem. at 40 (emphasis added). This speculative statement is not proof that any Advisory Committee member in fact considered or was influenced by the report. Nor is the Court persuaded by the statement of "one [Advisory Committee] member expressly acknowledg[ing] the impact of politics on the proceedings," Pl.'s Mem. at 41, as the Accrediting Council has not identified anything in the record as support for this claim, and in any event, the general opinion of one member that politics had some impact on the Advisory Committee proceedings does not persuade the Court that the Advisory Committee's recommendation, or the Secretary's ultimate decision, were improperly influenced by politics. Finally, the Accrediting Council's reliance on a statement from a third-party observer that "the [Advisory Committee's recommendation] makes clear the extent to which both [the Advisory Committee]-and accreditation-have been politicized" is even less persuasive.
c. The Senior Department Official's Decision
The Accrediting Council's final argument is that the senior Department official's decision was procedurally flawed in
First, the Accrediting Council contends that the senior Department official's "truncated" decision failed to comply with the procedures set forth in
Second, the Accrediting Council argues that "the [senior Department official]'s determination not to allow [the Accrediting Council twelve] months to come into compliance marks a significant break with precedent as to [Department s]taff and [Advisory Committee] recommendations," which required "an adequate explanation" for the break that the senior Department official failed to provide. Pl.'s Mem. at 42. The Accrediting Council cites as "precedent" the fact that, "[i]n all but one" of the "[seventy] petitions for continued recognition heard by [the Advisory Committee] since December 2010 in which an agency was found to have one or more violations of the [r]ecognition [c]riteria," the "Department staff and [the Advisory Committee] recommended that the institution be given more time to come into compliance."
As an initial matter, the Accrediting Council cites no authority for the proposition that the non-final recommendations of the Department staff or the Advisory Committee are precedential, and it also fails to indicate whether the senior Department official or the Secretary ultimately adopted these recommendations in any of the cases it cites. More importantly, although it is true in some cases that "[a]n agency's failure to come to grips with conflicting precedent constitutes an inexcusable departure from the essential requirement of reasoned decisionmaking,"
4. The Accrediting Council's Additional Challenges
The Court must resolve two final matters. First, as already indicated, the Accrediting Council has challenged the merits of the Secretary's decision, see, e.g., Pl.'s Mem. at 30 ("The Secretary's conclusion is not grounded by the record evidence; there is simply 'no rational connection' between the facts found and the 'choice made' by the Secretary."), as well as the merits of the Department staff's recommendation and the senior Department official's decision, see, e.g., id. at 36 (arguing that the Department staff report "made numerous conclusory findings"); id. at 37 (questioning the soundness of the Department's staff's conclusion that the Accrediting Council did not comply with
"Under settled principles of administrative law, when a court reviewing agency action determines that an agency made an error of law, the court's inquiry is at an end: the case must be remanded to the agency for further action consistent with the corrected legal standards." PPG Indus., Inc. v. United States,
Second, the Accrediting Council requests that the Court "return [its p]etition for recognition to [the] Department [s]taff for reconsideration," Proposed Order at 1, ECF No. 55-1 (emphasis added). However, the Accrediting Council cites no authority that compels the Court to do so. See generally Pl.'s Mem.; Pl.'s Opp'n. Because the HEA requires the Secretary to consider an application de novo, see 20 U.S.C. 1099b(n)(1) ("The Secretary shall conduct an independent evaluation of the information provided by [the accrediting] agency ...."), the Court finds it appropriate to remand the case to the Secretary for proceedings consistent with this opinion. This is not to say, however, that the Secretary may not decide to return the Accrediting Council's petition to the Department staff. Indeed, the regulations contemplate, although in circumstances not applicable here, that the Secretary may do so if necessary to consider evidence not in the record. See
IV. CONCLUSION
For the foregoing reasons, the Court concludes that the Secretary violated the APA by failing to consider the Accrediting Council's Part II submission and evidence
SO ORDERED this 23rd day of March, 2018.
Notes
The Court has substituted more descriptive terms for some of the acronyms used by the parties, due to complaints several appellate judges have expressed about the use of acronyms that are not readily recognized, as opposed to readily recognized acronyms like the "FBI."
In addition to the filings already identified, the Court considered the following submissions in rendering its decision: (1) the Plaintiff's Memorandum of Points and Authorities in Support of Motion for Summary Judgment ("Pl.'s Mem."); (2) the Memorandum of Points and Authorities in Support of Defendants' Cross[-]Motion for Summary Judgment, and in Opposition to Plaintiff's Motion for Summary Judgment ("Defs.' Mem."); (3) the Plaintiff's Memorandum of Points and Authorities in Opposition to Defendants' Cross-Motion for Summary Judgment and Reply in Further Support of Plaintiff's Motion for Summary Judgment ("Pl.'s Opp'n"); (4) the Reply in Support of Defendants' Cross[-]Motion for Summary Judgment ("Defs.' Reply"); (5) the Accrediting Council's Notice of Supplemental Authority; (6) the Plaintiff's Motion to Supplement the Record ("Pl.'s Mot. to Supp."); (7) the Defendants' Opposition to Plaintiff's Motion to Supplement the Administrative Record ("Defs.' Supp. Opp'n"); and (8) the Plaintiff's Reply in Further Support of Plaintiff's Motion to Supplement the Administrative Record.
The Advisory Committee is comprised of eighteen members, six of whom are appointed by the Secretary, six appointed by the Speaker of the United States House of Representatives, and six appointed by the President pro tempore of the United States Senate. See 20 U.S.C. § 1011c(b).
The Accrediting Council also presented this information to the senior Department official in its motion for reconsideration of the senior Department official's decision. See AR 239-43.
To the extent that the defendants argue that these standards apply only to the Secretary's determination of compliance, and not to her ultimate decision to deny or conditionally extend recognition, that position is undermined by the text of the provision in which these standards are found, which refers broadly to "decisions on the recognition or denial of recognition of accreditation agencies." 20 U.S.C. § 1099b(n)(3).
The Accrediting Council has also filed a motion to supplement the administrative record with its Part II submission. See Pl.'s Mot. to Supp. at 1. In light of the Court's decision to remand this case to the Secretary for consideration of the Part II submission and other evidence, the Court denies as moot the plaintiff's motion to supplement the administrative record. See BFI Waste Sys. of N. Am., Inc. v. Fed. Aviation Admin.,
The Department staff notes that it did consider three of the documents in the Part II submission because the Accrediting Council attached those documents as Exhibits 150, 150-2, and 150-3 to its response to the Department staff's draft report. See Defs.' Supp. Opp'n, Ex. 1 (Bounds Decl.) ¶¶ 14-15; see also Pl.'s Mot. to Supp. at 9 (representing that these documents were included in the Part II submission). However, these exhibits contain only approximately 150 pages, see AR 7,156-314, meaning that they only represent a small fraction of the 36,000-page Part II submission.
Although the Accrediting Council also argues that the Secretary ignored evidence that it "substantially restructured its leadership in the weeks leading up to ... the [Advisory Committee] meeting," Pl.'s Mem. at 22, it only specifically refers to leadership changes that took place after the meeting, see id. at 22-23 (referring to changes made "during the three months following the [Advisory Committee] meeting"). Thus, the Court will consider only the evidence of leadership changes that took place after the meeting in conducting its analysis.
These regulations provide two limited exceptions, both of which are inapplicable here. First, they permit an accrediting agency to submit "additional documentary evidence" to the senior Department official if the Advisory Committee's "recommendation proposes finding the agency noncompliant with, or ineffective in its application of, a criterion or criteria for recognition not identified in the final Department staff analysis."
The Secretary's decision is not a formal adjudication within the meaning of the APA. "An adjudication is formal only when the decision is 'required by statute on the record after opportunity for an agency hearing.' " Shell Oil Co. v. U.S. Dep't of Labor,
The Accrediting Council argues that the Secretary's failure to adequately consider its evidence of leadership changes is demonstrated by the fact that the Secretary's decision "included but one brief reference [to] the Department [s]taff's comments [prior to the Advisory Committee meeting], and thus before [the Accrediting Council] had fully installed its new leadership team." Pl.'s Mem. at 23. However, the Secretary's discussion of this evidence also cited an Advisory Committee's member's comment "express[ing] doubt as to whether [the Accrediting Council], even with a 'fresh team of people' had the 'talent and capability and ... culture' to achieve compliance in the face of the challenges accumulated over a number of 'disastrous ... years and failures of schools." AR 9 n.62 (quoting Advisory Committee Transcript at 258-59).
To the extent that the Accrediting Council refers to enhancements to these programs and initiatives that were made and presented to the senior Department official following the Advisory Committee meeting, see, e.g., AR 411 (referring to enhancements to its algorithm that would be made by December 2016), as already explained, see supra Part III.B.1.b, under the applicable regulations, the Secretary was not required to consider that evidence.
Although the Department staff appears to have ultimately found evidence of the Accrediting Council's placement verification and data integrity procedures unpersuasive, see, e.g., AR 775 ("Overall, in the context of documentation of widespread placement rate fraud, [the Accrediting Council]'s statements regarding ... the effectiveness of its algorithm cannot be credited."), the Secretary does not explicitly adopt this analysis.
The Accrediting Council also argues that the senior Department official failed to consider "the specific leadership changes that [it] had made" and other evidence of its improvements made after the Advisory Committee meeting. See Pl.'s Mem. at 43-44. Because the Court has already determined that this evidence was not timely submitted and, in any event, was properly considered by the Secretary, see supra Part III.B.1.b, the Court need not separately address whether the senior Department official failed to consider this evidence.
For the reasons explained, infra, the Court does not decide whether the senior Department official's decision satisfies the requirements of the APA.
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.