http://chronicle.com/article/For-Profit-Colleges-Win-Major/127744/
Excerpts from the Decision:
MEMORANDUM OPINION
To be eligible to accept federal funds under Title IV of the Higher Education Act, some
institutions of higher education must “prepare students for gainful employment in a recognized
occupation.” 20 U.S.C. §§ 1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A). Last year, the Department of
Education (the “Department”) published a rule that tests compliance with the gainful
employment requirement by examining the debt, earnings, and debt repayment of a program’s
former students. The Association of Private Colleges and Universities (the “Association”) has
brought suit against the Department and its Secretary to challenge those debt measures and two
other related rules. Because one of the debt measures lacks a reasoned basis, that regulation will
be vacated as arbitrary and capricious. Because the majority of the related rules cannot stand
without the debt measures, they will be vacated as well.
***
The Association challenges the debt measure rule, the reporting and disclosure rule, and
the program approval rule. The court will consider each challenge in turn.
A. The Debt Measure Rule
i. Statutory Authority
The Association first argues that the debt measure rule is “in excess of statutory . . .
authority.” 5 U.S.C. § 706(2)(C). Such arguments are “reviewed under the well-known
Chevron framework.” Ass’n of Private Sector Colls. & Univs. v. Duncan, 2012 WL 1992003, at
*9; see Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842–43 (1984). “Under that
framework, ‘[i]f the intent of Congress is clear, . . . [a court] must give effect to the
unambiguously expressed intent of Congress.’” TNA Merchant Projects, Inc. v. FERC, 616 F.3d
588, 591 (D.C. Cir. 2010) (quoting Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837,
842–43 (1984)) (alterations in TNA). “But ‘if the statute is silent or ambiguous with respect to
the specific issue,’ the court must uphold the agency’s interpretation as long as it is reasonable.”
Id. (quoting Chevron, 467 U.S. at 843); see also Nat’l Cable & Telecomm. v. FCC, 567 F.3d
659, 663 (D.C. Cir. 2009) (“If the statute is ambiguous enough to permit the agency’s
interpretation . . . [a court must] defer to that interpretation so long as it is reasonable.”).
The Association argues that “gainful employment” unambiguously means “a job that
pays,” and that the Department’s attempt to define the phrase in terms of debt and income
therefore exceeds its statutory authority. The Association points to contemporary dictionaries,
which define “gainful” as “productive of gain” or “providing an income.” See, e.g., WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 768 (3d ed. 1964). It also notes that the phrase
“gainful employment” is used many times in Title 20, see 20 U.S.C. §§ 1036(e)(1)(B)(ii),
1134c(a), 1135c(d)(2), 1140(1)(B), 1140g(d)(3)(D), 1161g(d)(5)(B), 2208(a), 4706(a),
5605(a)(2)(B)—and each of those uses, the Association argues, means “a job that pays.” Finally,
the Association points to the Education Amendments of 1972, which altered the Vocational
Education Act of 1963 to provide that employment as a volunteer fireman would be gainful
employment for certain purposes. Pub L. No. 92-318, § 202(b), 86 Stat. 235, 325 (1972)
(codified at 20 U.S.C. § 1248(1) (Supp. II 1972) (covering “program[s] designed to prepare
individuals for gainful employment (including volunteer firemen)”). The Association argues that
this amendment demonstrates the plain meaning of “gainful employment,” since without the
amendment volunteer work would not have been considered gainful. See S. Rep. No. 92-346, at
75 (1971) (noting that the amendment was necessary because “these firemen serve on a
volunteer basis, without compensation” and so “are not gainfully employed as firemen and
therefore their training cannot be considered fundable vocational education”). Conversely, the
Association argues, paid work—any paid work—is gainful employment.
The Department replies that Congress did not provide a precise definition of what it
means to “prepare students for gainful employment in a recognized occupation.” 20 U.S.C. §§
1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A). The Department cites to many contemporary
dictionaries that define “gainful” as “profitable” or “lucrative,” thereby implying (the
Department argues) an excess of returns over expenses. See, e.g., BLACK’S LAW DICTIONARY
807 (4th ed. 1951); WEBSTER’S NEW INTERNATIONAL DICTIONARY 1026 (2d ed. 1958); NEW
STANDARD DICTIONARY 1000 (Funk & Wagnalls Co. 1946). It also argues that the operative
statutory phrase is not simply “gainful employment” but rather “gainful employment in a
recognized occupation,” and suggests that the fuller phrase connotes employment in an
established occupation—and therefore, presumably, a decently paying one. It further argues that
“gainful employment” means something different in the context of fellowships for graduate
study, for example, the recipients or which are generally barred from such employment, see, e.g.,
20 U.S.C. § 1036(e)(1)(B)(ii), than in the context of training for entrance into a recognized
occupation. The Department therefore concludes that the phrase “gainful employment in a
recognized occupation” is ambiguous and that in enacting it Congress delegated interpretive
authority to the Department, whose interpretation ought therefore to be evaluated under step two
of the Chevron analysis.
***
IV. CONCLUSION
The Department has set out to address a serious policy problem, regulating pursuant to a
reasonable interpretation of its statutory authority. But it has failed to provide a reasoned
explanation for a core element of its central regulation. Both that regulation and those that
depend upon it must therefore be vacated. Because the disclosure requirements, 34 C.F.R. §
668.6(b), are not so intertwined with the vacated debt measure, they will remain in effect.
Rudolph Contreras
United States District Judge
Date: June 30, 2012
Analysis of the Decision:
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