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APSCU v. Duncan

APSCU v. Duncan

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Published by Barmak Nassirian
Decision of the U.S. Court of Appeals for the District of Columbia APSCU v. Duncan
Decision of the U.S. Court of Appeals for the District of Columbia APSCU v. Duncan

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Published by: Barmak Nassirian on Jun 06, 2012
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06/06/2012

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 21, 2012Decided June 5, 2012No. 11-5174A
SSOCIATION OF
P
RIVATE
S
ECTOR
C
OLLEGES AND
U
NIVERSITIES
,A
PPELLANT
v.A
RNE
D
UNCAN
,
IN HIS OFFICIAL CAPACITY AS
S
ECRETARY OFTHE
D
EPARTMENT OF
E
DUCATION AND THE
U
NITED
S
TATES
D
EPARTMENT OF
E
DUCATION
,A
PPELLEES
Consolidated with 11-5230Appeals from the United States District Courtfor the District of Columbia(No. 1:11-cv-00138)
 Douglas R. Cox
argued the cause for appellant/cross-appellee. With him on the briefs were
Timothy J. Hatch
,
 Nikesh Jindal
, and
 Derek S. Lyons
.
 Joshua Waldman
, Attorney, U.S. Department of Justice,argued the cause for appellees/cross-appellants. With him onthe briefs were
Tony West 
, Assistant Attorney General,
 Ronald C. Machen, Jr.
, U.S. Attorney, and
 Michael S. Raab
, Attorney.
 
2Before: R
OGERS
,
Circuit Judge
, and E
DWARDS
andG
INSBURG
,
Senior Circuit Judges
.Opinion for the Court filed by
Senior Circuit Judge
E
DWARDS
.E
DWARDS
,
Senior Circuit Judge
: Every year, Congressprovides billions of dollars through loan and grant programs tohelp students pay tuition for their postsecondary education. TheDepartment of Education (“the Department” or “the agency”)administers these programs, which were established under TitleIV of the Higher Education Act of 1965 (“the HEA” or “theAct”), Pub. L. No. 89-329, 79 Stat. 1219, 1232–54. Studentsmust repay their federal loans; the costs of unpaid loans areborne by taxpayers.To participate in Title IV programs –
i.e.
, to be able toaccept federal funds – a postsecondary institution (“a school” or“an institution”) must satisfy several statutory requirements.These requirements are intended to ensure that participatingschools actually prepare their students for employment, suchthat those students can repay their loans. Three requirements areat issue here. First, a school must qualify as an “institution of higher education,” 20 U.S.C. § 1094(a) (2006) – meaning,
inter alia
, that the school is “legally authorized” to provide educationin the state in which it is located,
id.
§ 1001(a)(2). Second, aschool must “enter into a program participation agreement withthe Secretary” of Education (“the Secretary”), pursuant to whichthe school agrees,
inter alia
, not to “provide any commission,bonus, or other incentive payment based directly or indirectly onsuccess in securing enrollments or financial aid to any”recruiters or admissions employees.
 Id.
§ 1094(a)(20). Third,a school must not engage in “substantial misrepresentation of the nature of its educational program, its financial charges, orthe employability of its graduates.”
 Id.
§ 1094(c)(3)(A).In 2009, based on experiences that it had faced in
 
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.
See
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.
See id.
§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.
See id.
§ 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.
See
 
id.
§668.14(b)(22) (“the Compensation Regulations”). Finally, theDepartment amended the regulations covering the HEA’smisrepresentation requirement,
see id.
§§ 668.71–.75 (“theMisrepresentation Regulations”), by,
inter alia
, specifying thata “misleading statement includes any statement that has thelikelihood or tendency to deceive or confuse,”
id 
. § 668.71(c),and restyling the Secretary’s menu of enforcement options,
seeid 
. § 668.71(a).

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