3administering the Title IV programs, the Department concludedthat the existing regulations covering the state authorization,compensation, misrepresentation, and other statutoryrequirements created opportunities for abuse by schools, becausethe regulations were too lax. The Department thus initiated arulemaking process to strengthen the regulations so as to protectthe integrity of these programs. On October 29, 2010, followingnotice and comment, the agency issued final regulations.The new regulations included several new provisions thatare the focus of the dispute in this case. First, the Departmentadopted for the first time substantive regulations addressing theHEA’s state authorization requirement.
34 C.F.R. § 600.9(2011) (“the State Authorization Regulations”). Under theapplicable regulations, a school is now legally authorized by astate, only if the state has a process to review and act oncomplaints concerning institutions, and if the state hasauthorized that specific school by name.
§600.9(a)(1)(i)(A) (“the school authorization regulation”). Inaddition, in order to be “legally authorized,” a school offeringdistance or correspondence education, including online courses,must obtain authorization from all states in which its studentsreside that require such authorization.
§ 600.9(c) (“thedistance education regulation”). Second, the regulationscovering compensation practices were amended to eliminateregulatory “safe harbors” pursuant to which schools had adoptedcompensation practices that effectively circumvented the HEA’sproscription against certain incentive payments.
§668.14(b)(22) (“the Compensation Regulations”). Finally, theDepartment amended the regulations covering the HEA’smisrepresentation requirement,
§§ 668.71–.75 (“theMisrepresentation Regulations”), by,
, specifying thata “misleading statement includes any statement that has thelikelihood or tendency to deceive or confuse,”
. § 668.71(c),and restyling the Secretary’s menu of enforcement options,
. § 668.71(a).