Ass'n of Private Sector Colls. & Univs v. Duncan

• Decision Date: 19 March 2013
• Docket Number: Civil Action No. 11–1314 (RC).
• Citation: 930 F.Supp.2d 210
• Court: U.S. District Court — District of Columbia
• Parties: ASSOCIATION OF PRIVATE SECTOR COLLEGES AND UNIVERSITIES, Plaintiff, v. Arne DUNCAN, in his official capacity as Secretary of the Department of Education, and United States Department of Education, Defendants.

930 F.Supp.2d 210

ASSOCIATION OF PRIVATE SECTOR COLLEGES AND UNIVERSITIES, Plaintiff,

v.Arne DUNCAN, in his official capacity as Secretary of the Department of Education, and United States Department of Education, Defendants.

Civil Action No. 11–1314 (RC).

United States District Court, District of Columbia.

March 19, 2013.

Douglas R. Cox, Derek S. Lyons, Nikesh Jindal, Veronica S. Root, Gibson, Dunn & Crutcher, LLP, Washington, DC, Timothy John Hatch, Gibson, Dunn & Crutcher, Los Angeles, CA, for Plaintiff.

Marcia Berman, Gregory Peter Dworkowitz, Michelle Renee Bennett, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

RUDOLPH CONTRERAS, District Judge.

The Department of Education and its Secretary (collectively, “the Department”) have moved the court to amend its judgment, which vacated 34 C.F.R. §§ 600.10(c), 600.20(d), 668.6(a), and 668.7. The Department argues that the disclosures required by 34 C.F.R. § 668.6(b)(1)(v), which the court upheld, cannot be fully effective without both the vacated reporting requirements, 34 C.F.R. § 668.6(a), and portions of the vacated debt measures, 34 C.F.R. § 668.7(a)(2), (b)-(f). For the reasons set out below, the Department's motion will be denied.

I. BACKGROUND

The Association of Private Sector Colleges and Universities (the “Association”) brought this suit to challenge three related regulations governing institutions of higher education that must “prepare students for gainful employment in a recognized occupation” in order for those students to receive federal funds under Title IV of the Higher Education Act. 20 U.S.C. §§ 1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A). One regulation established reporting and disclosure requirements for such institutions, 34 C.F.R. § 668.6, another attempted to assess whether programs were in fact preparing their students for gainful employment by examining the income earned and debt repaid by students after leaving the programs, 34 C.F.R. § 668.7, and a third required schools to submit new gainful employment programs to the Department for its approval, 34 C.F.R. §§ 600.10(c), 600.20(d). The court vacated the debt measures, 34 C.F.R. § 668.7, because the Department lacked a reasoned basis for one of the three debt and income tests established therein; ¹ the other tests, though supported by reasoned decisionmaking, were inextricably intertwined with the third and therefore vacated along with it.

Turning to the reporting requirements, 34 C.F.R. § 668.6(a), which mandated that institutions report, among other things, “[i]nformation needed to identify [a] student and the institution the student attended,” id. § 668.6(a)(1)(i)(A), the court said that “the Higher Education Act prohibits ‘the development, implementation, or maintenance of a Federal database of personally identifiable information on individuals receiving assistance under this chapter’ unless that information ‘is necessary for the operation of programs authorized by’ Title IV (among other subchapters).” Assoc. of Private Sector Colleges & Univs. v. Duncan, 870 F.Supp.2d 133, 155 (D.D.C.2012) ( “APSCU ”) (quoting 20 U.S.C. § 1015c(a), (b)(1)). Although the Department argued that the information to be collected under the reporting requirements was “necessary for the operation of” the debt and income tests, the court noted that once those tests were vacated, that argument had little force. Referring to that newly-collected information—which was to be stored in the National Student Loan Data System, a Congressionally-mandated database containing extensive information about the beneficiaries of Title IV programs, see20 U.S.C. § 1092b—as “the database [that the Department] would maintain,” the Court concluded that “the Department cannot show that the database it would maintain is necessary for the operation of any other Title IV program,” and therefore vacated the reporting requirements as contrary to the prohibition of 20 U.S.C. § 1015c. APSCU, 870 F.Supp.2d at 155. The court further noted its concern that that statutory provision, which only allows the Department to develop, implement, or maintain “a Federal database of personally identifiable information on individuals receiving assistance under this chapter,” 20 U.S.C. § 1015c(a), if that database is “a system (or a successor system) that ... was in use by the Secretary ... as of the day before August 14, 2008,” id. § 1015c(b), (2), not be interpreted to allow the Department to “fold any new database into an existing one” and thereby evade the statutory limitation, APSCU, 870 F.Supp.2d at 155 n. 8.

The disclosure requirements, 34 C.F.R. § 668.6(b)-(c), by contrast, did “not run afoul of th[e] statutory prohibition” set out in 20 U.S.C. § 1015c because they did not require the creation of any database. APSCU, 870 F.Supp.2d at 155–56. The court found that the disclosure requirements were authorized by the Department's “broad authority ‘to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operation of, and governing the applicable programs administered by, the Department,’ ” APSCU, 870 F.Supp.2d at 156 (quoting 20 U.S.C. § 1221e–3), and that they were neither arbitrary nor capricious. It further found that the disclosure requirements were severable from the reporting requirements, and so left them in place. Id. at 156–57. Finally, the court vacated the program approval rule, 34 C.F.R. §§ 600.10(c), 600.20(d), because it was “centered on” the vacated debt measures set out in 34 C.F.R. § 668.7. APSCU, 870 F.Supp.2d at 157–58.

The Department now moves the court to reinstate the reporting requirements, 34 C.F.R. § 668.6(a), and portions of the debt measures, 34 C.F.R. § 668.7(a)(2), (b)-(f), arguing that those regulations are necessary for the operation of the disclosure requirements, 34 C.F.R. § 668.6(b)-(c), which are in turn necessary for the operation of Title IV programs, and that reinstating them would not require the Department to create a new database of personally identifiable information about students in violation of 20 U.S.C. § 1015c(b)(2). With this motion, the Department does not challenge the court's determination that the debt repayment test contained an arbitrary threshold, nor that the program approval rule could not stand without the debt measures.

II. LEGAL STANDARD

Rule 59(e) permits a court to alter or amend a judgment. Fed.R.Civ.P. 59(e). “A Rule 59(e) motion is discretionary and need not be granted unless the district court finds that there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.Cir.1996) (per curiam) (internal quotation marks omitted).

III. ANALYSIS

This motion arises from a basic tension in the court's judgment. In its earlier opinion, the court upheld 34 C.F.R. § 668.6(b)(1)(v), which requires covered institutions to disclose to their prospective students “[t]he median loan debt incurred by students who completed the program as provided by the Secretary, as well as any other information the Secretary provided to the institution about that program.” 34 C.F.R. § 668.6(b)(1)(v) (emphasis added). But the court vacated 34 C.F.R. § 668.6(a)(1)(i)(C)(2), which required those institutions to report to the Department “[t]he amounts [that any student who completed a covered program during the award year] received from private education loans and the amount from institutional financing plans that the student owes the institution upon completing the program.” The Department argues that, unless it receives that information, it cannot in turn provide covered schools with the median loan debt data that they are required to disclose to their prospective students. The Department also notes that schools are required to disclose “any other information the Secretary provided to the institution about th[e] program” that a prospective student is considering. 34 C.F.R. § 668.6(b)(1)(v). The Department intended to provide schools with data regarding their performance on the vacated debt measures, which the schools would then have been required to disclose to their prospective students. The Department asks the court to revive the reporting requirements so that it can accurately calculate the median loan debt of the former students of gainful employment programs, and to revive portions of the debt measures, so that it can use the formulas contained therein to calculate the debt repayment rate and debt-to-income ratios of those former students, and require institutions to disclose the same.

The strength of the Department's motion depends primarily on the proper interpretation of 20 U.S.C. § 1015c, which is titled “Database of student information prohibited” and reads in relevant part:

(a) Prohibition

Except as described in subsection (b), nothing in this chapter shall be construed to authorize the development, implementation, or maintenance of a Federal database of personally identifiable information on individuals receiving assistance under this chapter, attending institutions receiving assistance under this chapter, or otherwise involved in any studies or other collections of data under this chapter, including a student unit record system, an education bar code system, or any other system that tracks individual students over time.

(b) Exception

The provisions of subsection (a) shall not apply to a system (or a successor system) that—

(1) is necessary for the operation of programs authorized by subchapter II, IV, or VII of this chapter; and

(2) was in use by the Secretary, directly or through a contractor, as of the day before August 14, 2008.

In brief, 20 U.S.C. § 1015c prohibits the creation of new “Federal database[s] of personally identifiable information” about students at post-secondary institutions, as well as the maintenance of any such pre-existing database that is not “necessary for the...