ASSOCIATION OF PRIVATE SECTOR COLLEGES & UNIVERSITIES, Plaintiff, v. Arne DUNCAN, Secretary of the Department of Education, et al., Defendants.
Civil Action No. 14-1870 (JDB)
United States District Court, District of Columbia.
June 23, 2015
JOHN D. BATES, United States District Judge
110 F. Supp. 3d 176
III. Plaintiffs’ state law claims
Defendants moved to dismiss the remaining state law claims pursuant to
Because Plaintiffs’ two predicate federal-law claims have been dismissed and they cannot establish diversity of citizenship jurisdiction15 pursuant to
CONCLUSION
For the foregoing reasons Defendants’ motion to dismiss is GRANTED. Plaintiffs’ motions for leave to file amended complaints are REOPENED and DENIED.
A corresponding order will issue separately.
Gregory Peter Dworkowitz, Marcia Berman, Michelle Renee Bennett, U.S. Department of Justice, Washington, DC, for Defendants.
MEMORANDUM OPINION
This case asks how the government should determine whether certain for-profit and vocational schools “prepare [their] students for gainful employment in a recognized occupation.”
BACKGROUND
Title IV of the Higher Education Act of 1965 “provides billions of dollars [every year] through loan and grant programs to help students pay ... for their postsecondary education.” Ass‘n of Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 433 (D.C. Cir. 2012). But there are boundaries to this billion-dollar industry—including limits on the kinds of schools whose students qualify for federal loans and grants. As this Circuit has explained, “[t]hese [statutory] requirements are intended to ensure that participating schools actually prepare their students for employment, such that thosе students can repay their loans.” Id. at 434. One such requirement sits at the center of this case. Students enrolled at “[p]roprietary institution[s] of higher education” (that is to say, for-profit schools) or “[p]ostsecondary vocational institution[s]” are only eligible for Title IV funding if the institutions’ programs “prepare [those] students for gainful employment in a recognized occupa
Although Congress did not explain what it meant by “prepare” or “gainful employment” or “recognized occupation,” the Department has grappled with this language once before. After a notice-and-comment period ending in 2011, the Department promulgated a final rule designed “to improve disclosure of relevant information and to establish minimal measures for determining whether certain postsecondary educational programs lead to gainful employment in recognized occupations.” 76 Fed. Reg. 34,386, 34,386 (June 13, 2011). The rule established several tests to measure the adequacy of schools’ preparation efforts, including two different metrics for weighing the average student‘s debt load against her income, as well as a separate metric to calculate whether a sufficient percentage of a school‘s students were actually repaying their loans. See id. at 34,389. The 2011 rule also required schools “to report the information necessary for the Department to calculate [its new metrics] ... and to disclose to prospective students various facts about [its] program[s].” Ass‘n of Private Sector Colls. & Univs. v. Duncan, 870 F. Supp. 2d 133, 143 (D.D.C. 2012) (hereinafter ”APSCU I“) (internal citation omitted).
This rule never took effect, however. In 2012, the Association of Private Sector Colleges and Universities—a trade group representing 1,400 for-profit colleges which is also the plaintiff here, see Compl. [ECF No. 1] ¶ 2—brought suit against the Department, arguing that the proposed “gainful employment” regulations exceeded statutory authority and violated the APA, see APSCU I, 870 F. Supp. 2d at 144-45. And the district court agreed—at least in part. While the court held that the “gainful employment” provision was ambiguous, that the Department‘s interpretation of the provision was reasonable, and that many aspects of the proposed regulations withstood arbitrary-and-capricious review, see id. at 149-53, it nonetheless vacated the bulk of the regulations because one of the Department‘s debt metrics did not reflect reasoned decisionmaking, see id. at 154 (“Because the Department has not provided a reasonable explanation of [its debt-repayment] figure, the court must conclude that it was chosen arbitrarily.“). The court likewise rejected some aspects of the Department‘s proposed reporting requirements, while retaining the rule‘s disclosure requirements. See id. at 155-57; see also Ass‘n of Private Sector Colls. & Univs. v. Duncan, 930 F. Supp. 2d 210, 218-21 (D.D.C. 2013) (hereinafter ”APSCU II“) (denying a motion to amend APSCU I‘s holdings concerning the reporting and disclosure requirements).
The Department went back to the drawing board in 2014. It announced a proposed rulemaking in March of that year, see 79 Fed. Reg. 16,426, 16,426 (Mar. 25, 2014), and seven months later published its final rule, see 79 Fed. Reg. 64,890, 64,890 (Oct. 31, 2014). As in the previous go-round with these regulations, the Department concluded that the statute‘s “gainful employment” clause was ambiguous. Id. at 64,893. Again, the Department interpreted this language to mean “provid[ing] ... training that lead[s] to earnings that will allow students to pay back their student loan debts.” Id. at 64,890. And again, thе Department issued several regulations designed to give this interpretation some teeth, including (1) a modified regime for measuring the acceptable debt-to-earnings ratios for a program‘s students,2 and (2) revised disclosure, report
Beginning with the debt-to-earnings test: the 2014 regulations prescribe two metrics for measuring a program‘s compliance with the “gainful employment” eligibility restrictions. The first is a debt-to-discretionary-income metric, which the Department calculates by dividing the median annual loan payment for a program‘s students by those same students’ discretionary income (which is equal to “the higher of the mean or median annual earnings” of the students minus 150% of the poverty-guidelines figure).
Two percentage scores thus result from the Department‘s debt-to-earnings test, and those two scores determine whether a program is passing or failing—or neither. Specifically, the Department will pass a program if its median annual loan payment is less than or equal to either 20% of discretionary income or 8% of annual earnings. See id.
Where a program falls on this spectrum—passing, failing, or in the zone—comes with consequences. A program loses eligibility for all Title IV financial aid if it fails the debt-to-earnings test for two out of three consecutive years, or if it has debt-to-earnings scores that are in the zone or failing for four consecutive years. See id.
The regulations also include other disclosure, reporting, and certification requirements. For example, programs may be required to disclose to students information like “[t]he length of the program in
It should come as no surprise that the Association is no happier with the 2014 version of these regulations than it was with the 2011 version. And it has rehashed its challenge to those earlier regulations here, moving for summary judgment on its claims that the regulations exceed the Department‘s statutory authority, are arbitrary or capricious, or otherwise violate federal law. But the Department stands by its latest “gainful employment” regime, and it has filed a competing summary-judgment motion of its own.
STANDARD OF REVIEW
In the usual case, courts will review such cross-motions for summary judgment with an eye toward finding “genuine dispute[s] as to any material fact[s]” that might make summary judgment inappropriate.
DISCUSSION
I. STATUTORY INTERPRETATION
Before answering this arbitrary-or-capricious question, the Court must first address a preliminary one—in truth, a series of them. Does “prepare students for gainful employment in a recognized occupation” have a plain meaning that the Department (and the Court) must simply implement? Or is this language ambiguous such that the Court should accept the Department‘s interpretation—assuming, of course, that its interpretation is a reasonable one? See Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).
The Department has the better of this dispute, аs more than one court has now recognized. See Ass‘n of Proprietary Colls. v. Duncan, 107 F. Supp. 3d 332, 362-63 (S.D.N.Y. 2015); APSCU I, 870 F. Supp. 2d at 146.3 We start with the first step of the Chevron analysis, which asks “whether Congress has directly spoken to the precise question at issue.” 467 U.S. at 842. The answer is important: “[i]f 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.” Id. at 842-43. But that is not the case here. For one thing, Congress opted not to define words like “gainful” in the Higher Education Act. And for another, the usual sources do not establish a single, ordinary meaning for this word. The duel of dictionaries, in fact, ends in stalemate. “Gainful” could mean (as the Association contends) “productive of gain” or “provid[es] an income.” Webster‘s Third New Int‘l Dictionary 928 (1966). But it could also mean (as the Department counters) “profitable” or “lucrative,” Black‘s Law Dictionary 807 (4th ed. 1951)—which, of course, implies that a “gainful” job must not just pay, but instead must pay enough to exceed the jobholder‘s expenditures. This back-and-forth is the very definition of “ambiguous.” See, e.g., Black‘s Law Dictionary 79 (7th ed. 1999) (“An uncertainty of meaning or intention, as in a ... statutory provision.“).
Context only muddies the waters. Consider the word “employment,” which Congress also left undefined. Dictionaries explain that “employment” could mean “to make use of” or “to occupy ... advantageously.” Webster‘s New Collegiate Dictionary 373 (1975) (“employ“). These definitions suggest that payment is an unnecessary part of the “employment” concept, and thus that Congress might have used the “gainful” qualifier to distinguish those jobs that pay from those that do not. But “employment” can also mean “the act of hiring, implying a request and a contract for comрensation,” Black‘s Law Dictionary 618 (4th ed. 1951) (emphasis added), or “a job that pays wages or a salary,” Webster‘s New Collegiate Dictionary 373 (emphasis added). If Congress adopted these definitions of “employment“—where payment is baked into the word—then “gainful” must mean something more than simply “paying.” After all, reading “gainful employment” as “a paying job that pays” is hardly consistent with the command that courts should avoid interpreting statutes in ways that “render[] some words altogether redundant.” Gustafson v. Alloyd Co., 513 U.S. 561, 574 (1995). The point is: these words, read together, could reasonably mean different things; hence, they are ambiguous.
One more ambiguity puts the first Chevron question to bed. However the Department prefers to mix-and-match definitions of “gainful” and “employment,” it is beyond dispute that the statute is silent regarding how, exactly, the Department should assess whether a program “pre
The Department‘s reading of this provision also navigates Chevron‘s second step. Under this step, “a court must defer to the agency‘s interpretation of the ambiguous statutory term if it represents a reasonable accommodation of conflicting policies that were committed to the agency‘s care by the statute.” Id. (internal quotation marks omitted). That is the case here. As explained, the Department‘s interpretation is rooted in the text: “employment” can mean a paying job, and “gainful” can specify which of those paying jobs meet the mark (e.g., only those that pay enough to be “profitable” or “lucrative“). But that only gets the Department halfway to a useful regulation. It still must decide how to measure “profit.” And the two-part debt-to-earnings test is one reasonable way to do just that—especially when the experts (Congress, the Department, etc.) are “concern[ed] that [the government‘s] resources w[ill] be used to provide financial aid to students who [are] unable to find jobs that would allow them to repay their loans.” 79 Fed. Reg. at 64,894. The Court is in no position to second-guess this reasonable policy choice. See Chevron, 467 U.S. at 844 (“[A] court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.“).
The Association sees things differently, but its arguments are not persuasive. It first notes that “gainful employment” is used elsewhere in other provisions of the Higher Education Act, and that the Department‘s preferred reading of these words would not make sense in those contexts. See, e.g., Pl.‘s Mot. at 28 n.16 (citing, for example,
Both of Robinson‘s contextual points apply here. Let‘s assume that “gainful employment” unambiguously means “any job that pays” in a section of the Higher Education Act that tells schools they cannot award federally funded fellowships to individuals who already have other jobs. See
The Association also appeals to other provisions of the Higher Education Act to argue that the Department‘s reading of “gainful employment” irreconcilably conflicts with the larger structure and purpose of the Act. See Pl.‘s Mot. at 31-34. But there is no conflict here, irreconcilable or otherwise. It may be true, for instance, that the Act was designed to “expand access to higher education,” id. at 31—but the Act does not countenance expansion at all costs. After all, it includes several explicit limits on the financial-aid eligibility of schools, including the provision at issue here. See, e.g.,
Other supposed “conflicts” are likewise not conflicts at all. For example, just because a provision of the Higher Education Act establishes debt metrics at the institution-level, see id.
What about In re Academy for Jewish Education, 1994 WL 1026087, at *1 (Dep‘t of Educ. Mar. 23, 1994)? The Association leans on that case to argue that the Department has previously interpreted the “gainful employment” provision “without any consideration of students’ earnings or debt“—which may call into question a definition containing these elements now. Pl.‘s Opp‘n at 20. But this administrative adjudication cannot bear the weight the Association assigns it. There, the program in question failed to meet the definition of “gainful employment in a recognized occupation” because it was undisputed that “the training offered [was] not directed toward a specific occupation.” In re Acad. of Jewish Educ., 1994 WL 1026087, at *2. The program, in other words, failed at the threshold—it left students unprepared for any job, let alone a job that was “gainful” or “in a recognized occupation.” Given this failure, the Department had little reason to settle on a more nuanced definition for the full “gainful employment” provision—and (so far as the record reflects) it offered none. See id. (“It is difficult to objectively assess what, per se, prepares one for ‘gainful employment in a recognized occupation.‘“). Without any prior definition to hold over the Department‘s head, then, the Association‘s appeal on this front сomes to naught. See APSCU I, 870 F. Supp. 2d at 149-50; see also Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 515-16 (1994) (“Petitioner‘s attempt to infer from that silence the existence of a contrary policy fails because the [agency‘s] letter did not purport to be a comprehensive review of all conditions that might be placed on reimbursement of educational costs.“).6
The Association next retreats to its back-up position: maybe the provision is ambiguоus, but even assuming this is so, the Department‘s debt-to-earnings test is outside the scope of that ambiguity. See Pl.‘s Opp‘n at 17-18. “It does not matter,” the Association argues, “whether the word yellow is ambiguous when the agency has interpreted it to mean purple.” Id. at 18 (quoting United States v. Home Concrete & Supply, LLC, 132 S. Ct. 1836, 1846 n.1 (2012) (Scalia, J., concurring in part and concurring in the judgment)) (some internal quotation marks omitted). But the Department did nothing of the
In sum, then, the text, context, and legislative history of the Higher Education Act point in several directions, and the Association has offered no compelling reason why this Court‘s answers to the Chevron step one (ambiguous?) and step two (reasonable?) inquiries should be any different from those given in other cases before other courts. This Court therefore responds in the same way as those others: the “gainful employment” provision is ambiguous, and the Department‘s interpretation of that provision is reasonable. See Ass‘n of Proprietary Colls., 107 F. Supp. 3d at 362-63; APSCU I, 870 F. Supp. 2d at 146.
II. APA ANALYSIS OF THE DEBT-TO-EARNINGS TEST
That conclusion only scratches the surface of this case, however. And so the Court will dig further. The Association maintains that even if the Department has reasonably interpreted the ambiguous “gainful employment” command, it still arrived at that interpretation in an arbitrary and capricious way. But the Association “carries a heavy burden indeed” regarding this claim. Wisc. Valley Improvement Co. v. FERC, 236 F.3d 738, 745 (D.C. Cir. 2001) (internal quotation marks omitted). While “an agency must articulate a satisfactory explanation for its action[,] including a rational connection between the facts found and the choice made,” Owner-Operator Indep. Drivers Ass‘n v. Fed. Motor Carrier Safety Admin., 494 F.3d 188, 203 (D.C. Cir. 2007) (internal quotation marks omitted), courts will “presume[] agency action to be valid,” Am. Wildlands v. Kempthorne, 530 F.3d 991, 997 (D.C. Cir. 2008) (internal quotation marks omitted). Indeed, courts will not set aside such action unless the agency, for instance, “relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Motor Vehicle Mfrs. Ass‘n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
The Association cannot meet their “heavy burden” here. Far from acting arbitrarily or capriciously, the record shows that the Department engaged in a thorough rulemaking process before promulgating its debt-to-earnings regulations. It announced a proposed rulemaking in March 2014, see 79 Fed. Reg. at 16,426, and that announcement prompted “approximately 95,000 comments on the proposed regulations,” id. at 64,892. The Department fastidiously reviewed these comments, making changes to thе proposed regulations based on some comments, and explaining its rationale for rejecting others. See id. (“The final regulations contain a number of changes from the [National Proposed Rulemaking].“). And at the other end of this process came a final
This is not the result the Association wants to hear, however, and it throws a host of arbitrary-or-capricious arguments against the wall in hope of a different outcome. None of them stick. Its first toss: the Department failed to “offer[] a rational explanation of how debt and earnings metrics measure whether programs prepare students for gainful employment.” Pl.‘s Mot. at 36. But this is plainly incorrect. If—as the Court has already held—the Department‘s interpretation of “gainful employment” (i.e., a job that pays enough to cover the cost of student loans) is reasonable, then balancing former students’ debt against their earnings is a rational mechanism for assessing whether a program has, in fact, prepared those students for such employment. Moreover, the final rule is replete with explanations for the Department‘s chosen metric. The rule explains that Congress was particularly concerned “that vocational and career training ... should equip students to earn enough to repay their loans,” 79 Fed. Reg. at 64,913, and then describes how comparing debt to earnings can accurately predict students’ ability to repay these loans, see id. at 64,920-21. Of course, the Association might not agree with the Department‘s explanations. But that alone does not make them irrational, arbitrary, or capricious. See Owner-Operator, 494 F.3d at 211 (“[Plaintiff] may disagree with this policy balance, but it does not reflect a failure to consider relevant factors.“).
The Association‘s second argument fares no better. It contends that the debt-to-earnings test must be arbitrary and capricious, because the test‘s percentage scores turn on factors outside a school‘s control, including student employment choices, external market forces, and the amount of debt a student chooses to take on. See Pl.‘s Mot. at 37-39. But several problems plague this argument—including its premise. As the final rule recognized, schools have some say in many of these (supposedly) “outside” factors, including how they market their programs, how much they charge for their programs, and how diligent they are about satisfying licensing and accreditation requirements for their programs. See 79 Fed. Reg. at 65,032 (explaining that such factors affect default rates). Additionally, the Department designed the debt-to-earnings regulations to account for—and mitigate—these externalities. For example, regarding the possibility of “unanticipated fluctuations in local labor market сonditions,” the Department explained that the regulations’ “in the zone” category protects schools from such conditions, because it allows programs “to remain eligible [for financial aid] for up to four years“—which is long enough to survive “[m]ost economic downturns” that tend to last around eleven months. Id. at 64,926. Other aspects of the test offer additional protections. See, e.g., id. (“[M]eans and medians mitigate the effects of economic cycles by measuring central tendency and reducing the influence of students who may have been most impacted by a downturn.“); id. at 64,918 (“[L]oan debt [is] capped [in the debt-to-earnings
Third, the Association protests that the debt-to-earnings test does not measure a program‘s preparation efforts at all. Instead, it believes the test “really measure[s] student demographics,” including the racial and socio-economic makeup of a program‘s student body. Pl.‘s Mot. at 39. But again, the Department expressly considered this criticism, and it explained its rationale for rejecting it. Indeed, in response to comments during the rulemaking process, the Department conducted “several regression analyses examining the relationship between demographic factors and program results under the [dеbt-to-earnings] rates.” 79 Fed. Reg. at 65,039; see also id. at 65,043 (“[T]he Department conducted additional analysis for the final regulations.“). After explaining its methodology and publishing the results, the Department summarized its findings:
[T]he Department cannot conclude ... that demographic characteristics are largely determinative of results.... Instead, we find a negative association between the proportion of low-income students and the annual earnings rate when controlling for other demographic and non-demographic factors, similar passing rates across all quartiles of low-income variables, and similar demographic profiles in passing, zone, and failing programs for almost all of the variables examined. These and other results of our analyses suggest that the regulation is not primarily measuring student demographics.
Id. at 65,057. The Department therefore made extensive efforts to get to the bottom of this criticism, and this Court cannot fairly say that the agency acted arbitrarily in the face of it. See Ass‘n of Proprietary Colls., 107 F. Supp. 3d at 364-65 (“[The Association of Proprietary College‘s] argument on this point appears utterly to disregard the extensive statistical analyses underlying the [“gainful employment” regulations].“); APSCU I, 870 F. Supp. 2d at 151 (similar).
The Associations’ fourth argument also fails to persuade. It challenges the Department‘s decision to apply “[a] [s]ingle [d]ebt [t]est” to measure “gainful employment“—which (the Association believes) is a reversal of the Department‘s prior position. Pl.‘s Mot. at 40. Yet this argument rests on shaky ground too. Although the APSCU I court noted that the Department‘s debt-to-earnings test was “designed to work together” with its separate (but now abandonеd) debt-repayment test, 870 F. Supp. 2d at 154, the Department never conceded that the debt-to-earnings test could not operate on its own. Instead, it said that “no single percentage ... answers the question of how much students can borrow without risking repayment difficulties,” Gov‘t‘s Reply in APSCU I, 11-1314 [ECF No. 20] at 18 (emphasis added)—a statement wholly consistent with its current debt-to-earnings test, which calculates two distinct percentages for students’ average debt load: a debt-to-annual-earnings percentage and a debt-to-disposable-income percentage.7 What is more, the decision to drop the debt-repayment test
Fifth, the Association labels as arbitrary the Department‘s decision to rely on debt-to-earnings percentages derived from the reported bills and incomes of recent graduates, because “[h]igher education is a lifelong investment that yields benefits not fully realized within the first few years after graduation.” Pl.‘s Mot. at 41. “[L]ifelong” benefits, however, might not do much good when the bill collectors come calling today. And the Department realized exactly that when crafting its final rule. As the rule explains, “[b]оrrowers are still responsible for managing debt payments, which begin shortly after they complete a program, even in the early stages of their career.” 79 Fed. Reg. at 64,914; see also id. (“[B]enefits ultimately
The same can be said in response to the Association‘s sixth argument, which concerns the timeline by which the Department assumes students will typically repay their loans. See Pl.‘s Mot. at 42-43. Under the rule, the Department calculates the annual loan payment for students based on the credential level they receive from a program (i.e., the Department calculates debt payments based on a ten-year amortization period for students receiving certificates, diplomas, and associate‘s degrees, but it calculates those payments based on a fifteen- or twenty-year period for students receiving more advanced degrees). See 79 Fed. Reg. at 64,939. These periods survive scrutiny under the APA. “Agencies generally do not violate the ... arbitrary-and-capricious standard when they employ bright-line rules ..., so long as those rules fall within a zone of reasonableness and are reasonably explained.” Emily‘s List v. Fed. Election Comm‘n, 581 F.3d 1, 22 n.20 (D.C. Cir. 2009). And the Department‘s rules do (and are) just that. The “gainful employment” rule references over thirty years of repayment data, which suggests that a majority9 of student borrowers from two-year institutions are able to fully repay their loans within ten years, while borrowers from four-year institutions and graduate schools tend to need more time. See 79 Fed. Reg. at 64,939-40. Drawing amortization lines based on decades’ worth of data is reasonable. After all, “the line[s] had to be drawn somewhere,” and it is not this Court‘s province—or the Association‘s, for that matter—to “redraw the line[s] according to [its] own notions of what might be best.” Process Gas Consumers Grp. v. FERC, 712 F.2d 483, 488 (D.C. Cir. 1983).
Seventh, the Association considers the Department‘s passing and failing debt thresholds to be arbitrary, and it takes specific issue with the 8% threshold attached to the Department‘s debt-to-annual-earnings metric. See Pl.‘s Mot. at 43-45. As the Association sees things, this number is inapt, because it is based on the acceptable debt load for individuals who also have a mortgage—something most recent graduates do not have to worry about. See id. at 43. But the Department is hardly alone in adopting the 8% figure as the tipping point for unbearably high student debt. As the final rule recognized, “the 8 percent cutoff has long been referred to as a limit for student debt burden. Several studies of student debt have accepted the 8 percent standard. [And] [s]ome State agencies have established guidelines based on this limit.” 79 Fed. Reg. at 64,919 (four footnotes citing studies omitted). Moreover, even experts who are critical of the 8% cutoff “acknowledge the widespread аcceptance of [that figure]
The Association‘s eighth argument fares no better. It sees the underlying data used in the Department‘s calculations as “[u]nreliable” and “[s]kewed.” Pl.‘s Mot. at 45. Specifically, the Association complains that the Department‘s data—borrowed from the Social Security Administration‘s Master Earnings File—“provides a severely distorted (and understated) picture of earnings,” because some data is allegedly missing or inaccurate. Id. at 45, 46. Even accepting that there are problems with the Social Security data, however, the APA does not “demand the perfect at the expense of the achievable.” Am. Pub. Gas Ass‘n v. Fed. Power Comm‘n, 567 F.2d 1016, 1046 (D.C. Cir. 1977) (internal quotation marks omitted). Instead, “the accuracy of any particular [data] ... must be evaluated by reference to the data that was available to the agency at the relevant time.” Baystate Med. Ctr. v. Leavitt, 545 F. Supp. 2d 20, 41 (D.D.C. 2008). Agencies, in other words, must use “the best data available,” id. at 44, and the Department met that standard here. It used the Social Security data—but only after determining that no better data existed, see 79 Fed. Reg. at 64,956; only after rejecting other possible sources of data as inadequate, see id. at 64,941-42 (describing problems with alternative data from the Bureau of Labor Statistics); and only after answering commenters’ concerns regarding the data, see, e.g., id. at 64,950-59. Once again, then, the Department‘s treatment of the Associations’ criticism demonstrates rationality—not arbitrariness. See Mt. Diablo Hosp. v. Shalala, 3 F.3d 1226, 1233 (9th Cir. 1993) (“The agency simply chose one imperfect database over another while seeking to develop data superior to either. This choice was rational.“).
Ninth, the Association raises the specter of absurd results. See Pl.‘s Mot. at 46-47. It hypothesizes, for example, that one Colorado medical school “likely will be in the ‘zone’ or failing under the
The same can be said of the Associations’ tenth challenge. The Association detects arbitrariness in the final rule, because (it believes) the Dеpartment failed to address “[t]he immense ... practical consequences of [its] debt-to-earnings test,” including the (it says) enormous negative impact on “disadvantaged students” like those “who are older, women, Black, Hispanic, ... with low incomes ... [and] single parents.” Pl.‘s Mot. at 47-48 (internal quotation marks omitted). But the final rule belies this claim. To start, the Department‘s studies “show[ed] that passing, zone, and failing programs have very similar proportions of low-income, non-traditional, female, white, Black, and Hispanic students,” so there is no basis for the claim—on this record, at least—that any particular group of students will suffer special harm under these regulations. 79 Fed. Reg. at 65,045. And in any event, the Department gave all these alleged harms their due, producing an eighty-page Regulatory Impact Analysis that weighed the positive and negative implications of its debt-to-earnings test. See id. at 65,024-103. The result? “[T]he benefits [of the regulations] justify the costs.” Id. at 64,993. The Court will not “quibble” with this “policy choice[]“; it will not, put differently, “substitute [its] judgment for that of the agency.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 530 (2009) (internal quotation marks omitted).
Eleventh, the Association argues that the “gainful employment” rule is arbitrary because it retroactively sanctions programs for their past behavior. See Pl.‘s Mot. at 50 (“[T]he Department‘s debt-to-earnings test calculates the earnings of students who graduated before the regulations were finalized.“). But legally speaking (which, of course, is all that matters), this is not a retroactive rule. “A statute is not rendered retroactive merely because the facts or requisites upon which its subsequent action depends, or some of them, are drawn from a time antecedent to the enactment.” Reynolds v. United States, 292 U.S. 443, 449 (1934). That is to say, so lоng as the Department‘s regulations do not alter “the past legal consequences of past actions,” they are not improperly retroactive. Nat‘l Cable & Telecomms. Ass‘n v. FCC, 567 F.3d 659, 670 (D.C. Cir. 2009) (emphasis added). And the debt-to-earnings test does no such thing. It does not, for example, retroactively take away failing programs’ already-granted Title IV financial aid; rather, the
In a twelfth try at an arbitrary-or-capricious finding, the Association calls the punishments attached to the debt-to-earnings test “[o]verbroad,” because (as it reads the regulations) programs that lose Title IV funding eligibility “cannot offer any other program ... that shares the same four-digit Classification of Instructional Programs ... code.” Pl.‘s Mot. at 51 (emphasis omitted). The Association misreads the rule, however. In truth, just because one program within a four-digit CIP code fails the debt-to-earnings test (e.g., a school‘s associate‘s degree program in nursing), does not mean that all of a school‘s existing programs that share that code become ineligible for Title IV funds. Instead, the prohibition on similar programs applies only to new programs; that is to say, a school cannot get a failing grade in its associate‘s degree nursing program and then start a bachelor‘s degree program in nursing. See
Finally, the Association‘s thirteenth argument is also unavailing. It contends that the regulations do not include any meaningful mechanism for challenging the Department‘s debt-to-earnings test results, and that this omission independently violates the APA. See Pl.‘s Mot. at 52-53. Not so. The Higher Education Act requires the Department to give only “reasonable notice and opportunity for hearing” to programs denied Title IV funding.
To recap: try as it might, thе Association has not shown that the Department unreasonably interpreted an ambiguous statutory command, nor has it proven (despite at least a baker‘s-dozen arguments) that the debt-to-earnings portion of the Department‘s final “gainful employment” rule is arbitrary or capricious or otherwise in violation of the APA. The debt-to-earnings test therefore survives this latest challenge, as it previously has. See Ass‘n of Proprietary Colls., 107 F. Supp. 3d at 367-68 (“The Court concludes, in all the circumstances, that the [“gainful employment” rules]—and the rates contained therein—were the product of reasoned decisionmaking.” (internal quotation marks omitted)); APSCU I, 870 F. Supp. 2d at 153-54 (similar).
III. ANALYSIS OF THE DISCLOSURE, REPORTING, & CERTIFICATION RULES
The Association‘s final set of challenges takes aim not at the debt-to-earnings test, but at the “gainful employment” rule‘s various disclosure, reporting, and certification requirements. Each of these challenges also proves unsuccessful.
A. Disclosure Requirements
The regulations require that “[a]n institution ... use the disclosure template provided by the [Department] to disclose information about each of its [“gainful employment“] programs to enrolled and prospective students.”
The answer is no for both procedural and substantive reasons. On procedure: for starters, this challenge is not yet ripe for judicial review, as a quick glance at the regulations makes clear. Thе regulations say that the information subject to disclosure ”may include, but is not limited to ...” sixteen possible data points, id. (emphasis added), and the final rule further equivocates that the Department “do[es] not intend to include all of the disclosure items listed in [that regulation] on the disclosure template each year,” 79 Fed. Reg. at 64,976. The upshot is that the parties (and the Court) cannot yet know what information, exactly, programs will be required to provide, or what problems, exactly, the disclosures will cause. This foggy state of affairs hardly lends itself to review of concrete harms subject to judicial remedy. See Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.” (internal quotation marks omitted)).
Moreover, at least one of the Association‘s claims runs headlong into an already-litigated issue. Recall that in APSCU I, the district court upheld the disclosure requirements imposed under the 2011 version of the “gainful employment” rule. In so doing, the court explicitly rejected the Association‘s argument (virtually identical to the argument it makes here) that
Alternatively, and in any event, a substantive review of the Association‘s various claims comes to the same result. First, several statutes give the Department all the authority it needs to require these disclosures. Take the two statutes relied on by the APSCU I court:
Second, the Association‘s First Amendment claim falls short as well. It believes that requiring schools to reveal to students “uncertain, speculative estimates” concerning the total cost of completing their programs is impermissible compelled speeсh. See Pl.‘s Mot. at 54. But there are two problems with this argument. To begin with, the Association has not offered a single piece of evidence to show that any of its members do not know the cost of their programs and instead can only estimate. The Association‘s claimed injury thus falls on the speculative (and insufficient) side of the line. See, e.g., Clapper v. Amnesty Int‘l USA, 568 U.S. 398, 409 (2013) (“[T]hreatened injury must be certainly impending to constitute injury in fact.” (internal quotation marks omitted)). Moreover, requiring commercial entities to disclose “purely factual and uncontroversial information” does not contravene the First Amendment. Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985). That describes this case. The regulations require schools to disclose the “total cost” of things like tuition, fees, books, and supplies for its programs.
Third, the disclosure requirements are not arbitrary, despite the Associations’ protests to the contrary. It complains: (1) that the program-level disclosures conflict with another provision of the Highеr Education Act that already requires disclosure of certain institution-level information, see Pl.‘s Mot. at 55 (citing
B. Reporting Requirements
The same goes for the 2014 rule‘s reporting requirements. The rule requires schools to report several pieces of information about students to the Department, which the Department will then use to calculate the schools’ debt-to-earnings scores.13 Schools need not report information on all students, however, because the rule applies only to those “enrolled in a [“gainful employment“] program during an award year who received title IV, [Higher Education Act] program funds for enrolling in that program.”
Start with the statutory-authority question. Federal law authorizes the Department to “collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving the intended purpose of such programs.”
Nor do the reporting requirements violate
The Association disagrees with the latter conclusion. Borrowing from APSCU II, it argues that because the Department plans to collect private-loan information under the latest reporting regime, it has effectively transformed the NSLDS into something new. See Pl.‘s Mot. at 56-57. But neither the holding of APSCU II nor its rationale support that conclusion. Regarding the holding: the court acknowledged that “there [is] a point at which an existing database could be changed so substantially that it effectively be[comes] a new database.” 930 F. Supp. 2d at 218. But—when faсed with a 2011 regime that (like the present rule) allowed the collection of private-loan data, and that (unlike the present rule) allowed collection of such data from non-Title IV-funding recipients, see id. at 214—where did the court draw the line? As Judge Contreras saw things, it was not the data the Department sought to collect that was the problem; it was, instead, who the data concerned. “The Department,” in other words, “could not create a ... system of information on all students in gainful employment programs; nor can it graft such a system onto a pre-existing database of students who have applied for or received Title IV assistance.” Id. at 221 (emphasis added). This holding does not undermine the narrower reporting regime at issue here. See
APSCU II‘s rationale does the Association no favors either. As the court explained, “[b]efore the [2011] regulations ... were promulgated, the NSLDS contained records on borrowers who have applied for and received loans under a variety of federal programs.... It did not contain any information about students who were not direct beneficiaries of Title IV programs and had not applied to benefit from those programs.” 930 F. Supp. 2d at 219. Given this pedigree, the court
C. Certification Requirements
Leaving no stone unturned, the Association takes issue with the 2014 regulations’ certification requirements as well. The
In a new take on an old theme, the Association contends that the Department only has authority to require “institutions” (not “programs“) to certify that they meet “national” (not “state“) accreditation and licensure standards. In other words, “[b]y conditioning Title IV eligibility on program-level, state-specific accreditation, the Department has impermissibly substituted its policy judgment for that of Congress.” Pl.‘s Mot. at 59 (internal quotation marks and brackets omitted). But a familiar rejoinder rings true here as well: just because Congress elsewhere discussed institution- and national-level accreditations does not rob the Department of authority to mandate accreditations at the program- and state-level. See, e.g.,
One last question needs answering: are the certification requirements arbitrary or capricious? The Association says yes, reasoning first that the certifications are arbitrarily (even unconstitutionally) vague, “because they fail to define clearly which licensure requirements any given program must satisfy.” Pl.‘s Mot. at 59 (emphasis added). But this gets both the law and the facts wrong. On the law: “[t]he vagueness doctrine does not require perfect clarity and precise guidance,” Act Now to Stop War & End Racism Coal. v. Dist. of Columbia, 905 F. Supp. 2d 317, 331 (D.D.C. 2012) (internal quotation marks omitted), and this is especially true where economic regulations are at play. “[B]usinesses,” after all, “face economic demands to plan behavior carefully, [and] can be expected to consult relevant legislation in advance of action.” Vill. of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498 (1982). Just so here. Indeed, a review of the facts reveals nothing vague about the rule‘s licensure scheme. A school need only certify that its programs meet the licensing standards for occupations that the school chooses to list on its disclosure template, see
And the answer to the arbitrary-or-capricious question remains no, notwithstanding the Association‘s second argument: that the certifications “increase the risk that schools will be subject to conflicting requirements of multiple States.” Pl.‘s Mot. at 59. This is an invention by the Association. The current regulatory scheme requires schools to be “legally authorized to provide an educational program ... in the State in which the institution is physically located.”
CONCLUSION
And that, as they say, is that. The Department‘s “gainful employment” regulations—including the current debt-to-earnings test and disclosure, reporting, and certification requirements—survive this court challenge in their entirety, just as prior courts hаve concluded. The Court will therefore deny the Association‘s motion for summary judgment and grant the Department‘s cross-motion. A separate Order has issued on this date.
JOHN D. BATES
UNITED STATES DISTRICT JUDGE
William R. MOSES, Plaintiff, v. John F. KERRY, in official role as Secretary of State, Defendant.
Civil Action No.: 13-00619 (RC)
United States District Court, District of Columbia.
Signed June 23, 2015