United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
RANDOLPH D. MOSS, United States District Judge.
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, No. 17-1330, 2018 WL 4353656 (D.D.C.
Sept. 12, 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.
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.
earlier opinion, the Court held that the Final Delay Rule and
Section 705 Stay were both unlawful. See Bauer, 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, 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 *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 *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.
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 Director 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 (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.
February 14, 2018 Final Delay Rule
parties are in accord-or at least do not contest-that vacatur
is the appropriate remedy with respect to the Final Delay
Rule, which was promogulated without observance of the proper
procedures under the HEA. At the September 14, 2018 hearing,
the Department stated that, “to the extent [the Court]
feels that vacatur is appropriate . . . [the Department] is
not prepared . . . to oppose that.” Dkt. 90 at 55.
Moreover, as the Court has previously noted, the Department
declined to address this issue in opposing Plaintiffs'
motion for summary judgment. See Dkt. 58-1 at 79-80
n.28. Accordingly, the Court will vacate the Final Delay
Section 705 Stay
and the Department disagree, however, as to the appropriate
remedy with respect to the Section 705 Stay. Plaintiffs ask
the Court to vacate the stay and to allow the Borrower
Defense Regulations to take effect immediately. Dkt. 55-1 at
79; Dkt. 56 at 72. In the alternative, they ask the Court to
allow the Borrower Defense Regulations to take immediate
effect, but, if necessary, to issue a temporary restraining
order (“TRO”) in CAPPS, Civ. No. 17-999,
staying the provision prohibiting predispute arbitration
agreements and class action waivers-the only provision that
CAPPS had previously sought to enjoin. Dkt. 90 at 48. The
Department counters that the appropriate remedy is remand
without vacatur, or, in the alternative, to “stay any
implementation pending the [preliminary injunction]
briefing” in CAPPS, Civ. No. 17-999.
Id. at 41. The Department also represented that, in
the event the Court orders the Borrower Defense Regulations
to take immediate effect, the Department requires at least 60
days to implement the regulations. Id. at 56.
initial matter, the Court declines to adopt Plaintiffs'
second suggestion. The Court cannot sua sponte issue a TRO in
CAPPS, Civ. No. 17-999, when CAPPS itself has not
requested one. The Court, accordingly, turns to the
Allied-Signal factors to analyze whether remand
without vacatur is appropriate.
first consideration-whether the Department could substantiate
the Section 705 Stay on remand-presents a close call. The
Department could, “in theory, ” cure the
deficiencies identified in the Court's earlier opinion,
but it “may face practical obstacles when attempting to
remedy them.” NAACP v. Trump, 298 F.Supp.3d at
244. To begin, given the incongruency between the scope of
the Section 705 Stay (which covers 22 provisions) and the
scope of relief sought in the motion for a preliminary
injunction that CAPPS filed and then withdrew, see
Bauer, 2018 WL 4353656, at *23, the Department may not
be able to justify the full breadth of the Section 705 Stay.
The Department would also need to explain why it believes
CAPPS has raised serious questions about the lawfulness of
the Borrower Defense Regulations; why it no longer ascribes
to the view that the prohibition of predistpute arbitration
agreements and class action waivers is lawful, as it had
previously stated, see Borrower Defense Regulations,
81 Fed. Reg. at 76, 021-24; and how that conclusion relates
to other provisions of the Borrower Defense Regulations.
Nevertheless, because ...