Appeals Court Continues Freeze on State Authorization Rule for Distance Learning
Last year, the Association of Private Sector Colleges and Universities (APSCU) sued the US Department of Education to overturn or revise key aspects of the “Program Integrity Regulations” that were published on October 29.2010 and went into effect, with minor exception, on July 1, 2011. Specifically, APSCU challenged those parts of the new regulations dealing with “Incentive Compensation,” “Misrepresentation,” and “State Authorization.” The Federal District Court for the District of Columbia essentially upheld the ED regulations.
The US Court of Appeals for the DC Circuit today issued its decision, largely but not entirely affirming the District Court decision. Of particular importance to UPCEA members, on the key issue of state regulation of cross-border distance learning, the Court upheld the lower court decision that the rule requiring institutions to demonstrate that they have secured all required state approvals wherever they enroll online students may not be enforced, but it did so on the same basis as the District Court: that the issuance of the rule was procedurally defective because the rule was issued without adequate notice to and opportunity for comment from the affected higher education community – that is, institutions and other parties interested in online learning.
So, for now, the much-feared state authorization regulation is dead. But not quite buried: as has been often stated, the Administration could choose to reissue the rule, except this time do it right: that is, with appropriate notice and opportunity for the community to provide comments. However, it is also clear that the Department did not anticipate such a strong push-back on this rule from across the higher education spectrum: virtually every higher education association joined in support of blocking the distance learning authorization rule, and the distance learning community itself for the first time spoke with a unified voice. And it is likely that the newly-organized Congressional eLearning Caucus will be a force to reckon with if ED decides to resurrect the rule after the election (assuming there is no change in Administration: the other side has no interest whatsoever in this idea).
But regardless of what more, if anything, happens to the rule, it is also clear that the hornets’ nest of state regulation has been forcefully kicked. Whether or when the several efforts to arrive at common state standards, reciprocity or some other non-federal mechanism will bear fruit is unclear, but at least for the time being there is no risk of federal enforcement of state requirements. At least now all attention can now be directed to the state efforts.
Otherwise, while for the most part the Court sustained the Department of Education’s rules, there are significant portions of the decision that bear careful analysis. Notably, the court questioned the reasonableness of parts of the “Misrepresentation” rules as not affording adequate due process protection, and questioned whether the Department had adequately taken into account some key elements in eliminating at least two of the Incentive Compensation “Safe Harbors,” those relating to student persistence/graduation and the implications of the rule on disadvantaged students. Stand by.