Bauer v. Devos, Civil Action No. 17-1330 (RDM)

• Decision Date: 17 September 2018
• Docket Number: Civil Action No. 17-1330 (RDM)
• Citation: 332 F.Supp.3d 181
• Parties: Meaghan BAUER, et al., Plaintiffs, v. Elisabeth DEVOS, Secretary, U.S. Department of Education, et al., Defendants.
• Court: U.S. District Court — District of Columbia

332 F.Supp.3d 181

Meaghan BAUER, et al., Plaintiffs,

v.Elisabeth DEVOS, Secretary, U.S. Department of Education, et al., Defendants.

Civil Action No. 17-1330 (RDM)

United States District Court, District of Columbia.

Signed September 17, 2018

Adam R. Pulver, Scott Lawrence Nelson, Julie A. Murray, Public Citizen Litigation Group, Robyn Renee Bender, Office of Attorney General/DC, Benjamin Michael Wiseman, Office of the Attorney General Office of Consumer Protection, Washington, DC, Toby R. Merrill, Legal Services Center of Harvard Law School, Jamaica Plain, MA, Yael Shavit, Office of the Attorney General of Massachusetts, Boston, MA, Bernard Ardavan Eskandari, California Department of Justice, Los Angeles, CA, Nicklas A. Akers, California Department of Justice, San Francisco, CA, John A.B. Langmaid, Joseph J. Chambers, Office of Attorney General/CT, Hartford, CT, Christian Douglas Wright, Delaware Department of Justice, Wilmington, DE, Mark Stanley Kubiak, Office of the Attorney General of Virginia Consumer Protection Section, Richmond, VA, Bryan Chien Yee, Department of the Attorney General, James Collington Paige, Thomas Francis Mana Moriarty, State of Hawaii Department of the Attorney General, Honolulu, HI, Joseph Michael Sanders, Gregory Wood Jones, Illinois Attorney General's Office, Chicago, IL, Jessica Whitney, Iowa Attorney General's Office, Des Moines, IA, Christopher John Madaio, Office of the Attorney General of Maryland, Baltimore, MD, Jason Timothy Pleggenkuhle, Minnesota Attorney General's Office, St. Paul, MN, Carolyn Fast, Office of the Attorney General/NY, Jane Melissa Azia, Office of the New York Attorney General, New York, NY, Matthew Liles, North Carolina Department of Justice, Raleigh, NC, Andrew U. Shull, Oregon Department of Justice, Salem, OR, Jesse Harvey, Pennsylvania Office of the Attorney General Bureau of Consumer Protection, Pittsburg, PA, John M. Abel, Office of Attorney General/PA Litigation Section, Harrisburg, PA, Michael John Fischer, Pennsylvania Office of Attorney General, Philadelphia, PA, Edmund Francis Murray, Jr., Rhode Island Department of Attorney General, Providence, RI, Neil F. X. Kelly, Office of the Attorney General/RI, Providence, RI, Christopher James Curtis, Office of the Attorney General, State of Vermont, Montpelier, VT, Samuel Thurston Towell, Office of the Attorney General of Virginia, Richmond, VA, Benjamin Jerauld Roesch, Washington State Attorney General's Office, Seattle, WA, for Plaintiff.

Karen Bloom, U.S. Department of Justice, Washington, DC, R. Charlie Merritt, U.S. Department of Justice - Richmond, Richmond, VA, for Defendant.

MEMORANDUM OPINION AND ORDER

RANDOLPH D. MOSS, United States District JudgeHaving concluded that the Department of Education's various actions delaying the Borrower Defense Regulations violated the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq. , the Court turns to the issue of the appropriate remedy. The Court concludes that, as with most unlawful agency actions, the proper remedy here is vacatur. The Court will, accordingly, vacate the "Final Delay Rule," William D. Ford Federal Direct Loan Program, 83 Fed. Reg. 6,458 (Feb. 14, 2018). The Court will also vacate the "Section 705 Stay," William D. Ford Federal Direct Loan Program, 82 Fed. Reg. 27,621 (June 16, 2017), but will stay that vacatur for 30 days from the date of issuance of the Court's original opinion, Bauer v. DeVos , 325 F.Supp.3d 74, 2018 WL 4353656 (D.D.C. 2018) —that is, until October 12, 2018 at 5:00 p.m., to allow the Department to attempt to remedy the deficiencies identified in the Court's original opinion.

I. BACKGROUND

On November 1, 2016, the Department of Education promulgated the Borrower Defense Regulations, a package of regulatory changes to federal student loan programs that was to become effective on July 1, 2017. William D. Ford Federal Direct Loan Program ("Borrower Defense Regulations"), 81 Fed. Reg. 75,926 (Nov. 1, 2016). Shortly before the effective date, the California Association of Private Postsecondary Schools ("CAPPS") brought suit challenging the regulations, and, on June 2, 2017, CAPPS sought a preliminary injunction blocking the implementation of two aspects of the new rules. Dkt. 1, Dkt. 6, CAPPS v. DeVos , Civ. No. 17-999 (D.D.C.). But that motion was never fully briefed or decided because the Department, on its own accord, issued a stay under § 705 of the APA, postponing not only the effective date of the two changes that CAPPS had asked the Court preliminarily to enjoin, but most of the other portions of the new regulations as well. Section 705 Stay, 82 Fed. Reg. at 27,621. Separately, the Department issued an interim final rule on October 24, 2017, that delayed the effective date of the Borrower Defense Regulations to July 1, 2018.

William D. Ford Federal Direct Loan Program ("Interim Final Rule"), 82 Fed. Reg. 49,114 (Oct. 24, 2017). That same day, the Department also issued a notice of proposed rulemaking ("NPRM") to further delay the effective date to July 1, 2019. William D. Ford Federal Direct Loan Program ("October 24, 2017 NPRM"), 82 Fed. Reg. 49,155 (Oct. 24, 2017). Then, on February 14, 2018, the Department issued a final rule delaying the effective date of the Borrower Defense Regulations until July 1, 2019. Final Delay Rule, 83 Fed. Reg. at 6,458.

In its earlier opinion, the Court held that the Final Delay Rule and Section 705 Stay were both unlawful. See Bauer , 325 F.Supp.3d at 78–79, 2018 WL 4353656, at *1. With respect to the Final Delay Rule, the Court held that the Department failed to comply with the procedures prescribed by the Higher Education Act ("HEA"), 20 U.S.C. § 1070 et seq. In particular, the Court held that the Department's decision to dispense with the negotiated rulemaking procedures that generally apply in Title IV rulemakings, see 20 U.S.C. § 1098a(a), was not supported by a reasoned invocation of the "good cause" exception, see Bauer , 325 F.Supp.3d at 96–102, 2018 WL 4353656, at *14–18. With respect to the Section 705 Stay, the Court held that the stay was arbitrary and capricious. See id. at 110–11, at *25. As the Court explained, the Department had stayed the Borrower Defense Regulations pending the resolution of the CAPPS litigation on three grounds: the CAPPS litigation raised "serious questions" about the validity of the Borrower Defense Regulations; the delay would not cause the government any significant harm; and the Department was, in any event, reconsidering the regulations, and the delay would minimize confusion while that process proceeded. Id. at 106–07, at *22 (citing Section 705 Stay, 82 Fed. Reg. at 27,621 ). The Court concluded that none of the reasons withstood APA scrutiny. Id. The first rationale was "unsupported by any analysis" and "was at odds with the Department's prior [and unacknowledged] conclusion to the contrary." Id. The second and third rationales also lacked "any meaningful analysis" and were "beyond the scope of the § 705 considerations" because they were "unrelated to the pending CAPPS case." Id.

II. LEGAL STANDARD

"[W]hen a reviewing court determines that agency regulations are unlawful, the ordinary result is that the rules are vacated ...." NAACP v. Trump , 298 F.Supp.3d 209, 243 (D.D.C. 2018) (quoting Harmon v. Thornburgh , 878 F.2d 484, 495 n.21 (D.C. Cir. 1989) ). That rule, however, is not absolute, and a remand without vacatur may be "appropriate [if] ‘there is at least a serious possibility that the [agency] will be able to substantiate its decision’ given an opportunity to do so, and when vacating would be ‘disruptive.’ " Radio-Television News Directors Ass'n v. FCC , 184 F.3d 872, 888 (D.C. Cir. 1999) (quoting Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm'n , 988 F.2d 146, 151 (D.C. Cir. 1993) ). In some circumstances, moreover, a combined approach is warranted; the Court may vacate the invalid rule but stay "its order of vacatur for a limited time to allow the agency to attempt to cure defects that the court has identified." NAACP v. Trump , 298 F.Supp.3d at 244 (staying vacatur for 90 days so agency could provide more fulsome explanation for rescission of DACA); see also, e.g., Nat. Res. Def. Council, Inc. v. EPA , 301 F.Supp.3d 133, 145 (D.D.C. 2018) (staying vacatur of rule governing pollution level in Anacostia River until agency promulgated replacement rule). Such a combined approach falls within the Court's remedial discretion. See Friends of the Earth, Inc. v. EPA , 446 F.3d 140, 142, 148 (remanding to district court to vacate agency rule, but noting that the district court had "remedial discretion ... to stay [its] order on remand"); Ronald M. Levin, "Vacation" at Sea: Judicial Remedies and Equitable Discretion in Administrative Law , 53 Duke L.J. 291, 324–25 (2003) ("[T]he criteria that judges use to determine whether to order a stay have evolved, and variations on those criteria have emerged in specific contexts, but the APA drafters' core premise that they were conferring an equitable power has not been controversial." (footnotes omitted) ); Patricia M. Wald, Judicial Review in Midpassage: The Uneasy Partnership Between Courts and Agencies Plays On , 32 Tulsa L.J. 221, 236 (1996) ("[T]here are inherent powers in a reviewing court to postpone vacation until the agency has a chance to make things right."); cf. Buckley v. Valeo , 424 U.S. 1, 143, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) (staying judgment for 30 days to "afford Congress an opportunity to reconstitute the [FEC] by law or to adopt other valid enforcement mechanisms ...."). Vacatur with a brief stay may be warranted, for example, where the Allied-Signal factors are satisfied, but where a prolonged agency remand threatens to deprive one or more parties of significant rights. See NAACP v. Trump , 298 F.Supp.3d at 245.

III. ANALYSIS

A. February 14, 2018 Final Delay Rule

All parties are in accord—or at least do not contest—that vacatur is the appropriate remedy with respect...