Shortly after the GSL regulations were adopted, Congress passed the Education Amendments of 1976 which, in part, directed the Department to make the GSL regulations concerning limitation, suspension, and termination applicable to all Title IV programs. See Pub. L. No. 94-482, 90 Stat. 2150 (1976) ("the Commissioner is directed to issue a comprehensive revision of the regulations"). The regulations, including the provision for emergency action, were subsequently revised to apply to all Title IV programs. See 42 Fed. Reg. 64,566, 64,568 (Dec. 23, 1977).
Defendant contends that the congressional directive in the 1976 amendments to make the regulations (which contained the emergency action provision) applicable to all Title IV programs suggests that Congress has ratified the emergency action procedure. Defendant also notes that Congress has amended 20 U.S.C. § 1094 on several occasions, but has never expressed dissatisfaction with the emergency action regulation.
Plaintiff argues that the specific enumeration of authority in the statute precludes any reliance on the tacit approval of Congress or the general authority conferred in Section 1082(a).
Under the maxim expressio unius est exclusio alterius, the limitations on the Department's authority in Section 1094 restrict the broader grant of authority in Section 1082(a). See National R.R. Passenger Corp. v. National Ass'n of R.R. Passengers, 414 U.S. 453, 458, 38 L. Ed. 2d 646, 94 S. Ct. 690 (1974). Another example of a limitation on the broad authority in 20 U.S.C. § 1082(a) is provided by 20 U.S.C. § 1082 (h) (1) (A), which requires the Department to provide "reasonable notice and an opportunity for a hearing" before imposing sanctions on lenders. This principle of statutory construction may be controverted by clear evidence of legislative intent. Id. But there is no contrary legislative intent in this case. In fact, the statutory and legislative history relied on by the defendant does not at all suggest that Congress has approved the emergency action regulation.
In the 1976 amendments, Congress instructed the Department to apply its enforcement regulation to all Title IV programs, not just the GSL program. Pub. L. 94-482, § 133(b) 90 Stat. 2150 (1976). The regulation provided procedures for "Suspension" and "Limitation and termination." 45 C.F.R. § 177.77 (1975). An ALJ hearing was required for termination and limitation actions. The "Suspension" subsection provided for notification and an informal meeting before the suspension took effect. Id. at § 177.76. Unlike the present regulation, there was no separate "Emergency Action" subsection; the emergency action provision was a subpart of the "Suspension" subsection. An emergency action without notice could last only seven days (not thirty days as the present regulation provides), at which time a hearing was required. Id.
Congress expressed its dissatisfaction with the absence of an ALJ hearing in suspensions and emergency actions by amending the statute in 1976 to add the requirement that all hearings be "on the record." The regulation was changed to provide an ALJ hearing for suspensions, but not for emergency actions. Thus, congressional approval of the regulation cannot be inferred from the directive to apply the then-existing GSL regulation to all Title IV programs since Congress also instructed the Department to revise the regulation and the Department failed to do so.
The Court's holding on this point is supported by the only case on point, Continental Training Services v. Cavazos, 709 F. Supp. 1443 (S.D. Ind. 1989) (Westlaw). In Continental Training, the plaintiff was a for-profit vocational education institution. In 1980 the institution was deemed eligible to participate in certain Title IV loan programs. In early 1987, the school was audited by Department of Education officials. At their exit interview the officials informed school officials that they had determined that the school was not in compliance with the regulatory requirements and thus was not eligible to participate in the Title IV programs. School officials subsequently met informally with Department officials on three occasions and submitted three written briefs. School officials sought a formal hearing, but their request was denied.
The Department issued a 75-page opinion on February 1, 1989, which terminated plaintiff's eligibility effective immediately. At issue in Continental Training was the reasonableness of the Department's view that because the school was never eligible, the notice and hearing requirements of the regulation and the statute did not apply. The Department did not rely on the emergency action provision. The Court held that the Department's interpretation of the regulations "violate[d] the clear congressional purpose undergirding section 1094." The Court's reasoning is instructive:
Congress clearly intended to provide procedural protections for the settled expectations of those institutions that have been deemed eligible to receive Title IV funds, and that manifest congressional intent may not be thwarted through convoluted verbal gymnastics that unreasonably attempt to label what ED did to Superior on February 1, 1989, as anything other than what it was: a termination of eligibility.
Continental Training, 709 F. Supp. at 1450. Similarly, the Department's action in the instant action is nothing more than a suspension without notice and hearing.
In conclusion, the defendant's argument that the Secretary has inherent authority to promulgate the regulation despite the specific procedural safeguards enunciated in 20 U.S.C. § 1094 is unconvincing. Therefore, plaintiff has demonstrated the requisite likelihood of success on the merits.
B. Irreparable Injury
Plaintiff contends that it would suffer irreparable injury if its students could not receive loans through the federal loan guarantee program. The Department found that all of Ross' Information Institute students were GSL and SLS recipients. McKiernan Declaration, para. 5. Students wishing to enroll in the May 15 semester would be unable to apply for federally guaranteed loans in the absence of an injunction. Given the large number of students who apparently pay their tuition with Title IV loans, Ross' claim that it could be bankrupt in the absence of an injunction is credible.
C. The Public Interest and Harm to Others
The Court previously found that the emergency action injured the students at Ross University and that the public interest favored issuance of an injunction and compliance with the statute.
Date: May 9th 1989
Upon consideration of plaintiff's motion for preliminary injunction, defendant's opposition thereto, and for the reasons set out in the accompanying Memorandum, it is by the Court this 9th day of May, 1989,
ORDERED that plaintiff's motion for preliminary injunction be, and hereby is, granted; and it is further
ORDERED that the defendant be, and hereby is, enjoined from imposing an Emergency Action on plaintiff Ross University pending completion of a hearing before an administrative law judge or further order of this Court.