Another bad Obama idea (mostly) bites the dust. In a ruling handed down Saturday, US District Court for the District of Columbia Randolph Contreras ruled that several aspects of the Obama Dept. of Education’s “gainful employment” rule were not the product of “reasoned decision-making” and should be vacated, including its debt-repayment measure.
That measure requires that at least 35 percent of a program’s graduates must be actively repaying their student loans.
But Judge Contreras says the department failed to provide a factual basis for why a repayment rate of 35-percent would be a “meaningful performance standard.” Instead, he wrote, it has said it chose that figure “because approximately one quarter of gainful employment programs would fail a test set at that level.” But the department could have chosen a percentage under which only one-tenth of the programs would have failed and justified it by the same rationale, he said. Therefore, he accepted the argument that the standard was arbitrary and capricious.
The judge rejected a similar argument against the rule’s other debt measures, which compare program graduates’ debt to their earnings. Those, he said, “were based upon expert studies and industry practice—objective criteria upon which the Department could reasonably rely.” But because the debt-to-income measures were intertwined with the debt-repayment measure, he said, he had to vacate them too.
By the same reasoning, he also vacated two other provisions that rely in part on the debt-repayment measure: one that requires institutions seeking to offer a new vocational program to get prior approval from the Education Department, and one that requires institutions to provide data to the department for calculating the debt measures.
Judge Contreras allowed other aspects of the rule to stand, and overall allowed that the department has the authority to make such rules.
The gainful employment rule has come under challenge because it imposes post-graduate employment standards on for-profit institutions that it does not impose on taxpayer-funded institutions. It has sparked controversy even among liberal Democrats who argue that it unfairly targets schools that help minority students obtain knowledge and training that help them gain jobs and advance in their careers. The Department of Education issued the gainful employment rule in 2011 and it was to go into effect on July 1, 2012.
“Gainful employment” has been seen as one of many Obama administration regulations that harm private sector enterprises and favor government run entities.
The basis for congressional delegations of authority to administrative agencies is that they allegedly have experts who know more about the subjects of their regulation and can make reasoned decisions based on their expertise. To pick percentages, or anything else, out of thin air requires neither expertise nor reasoning and is arbitrary. The Congress could do so instead (and sometimes does), but chose not to in areas delegated to the agencies.
Years ago when I was practicing communications law and appearing before the Court of Appeals for the D.C. Circuit on behalf of private clients I found that the D.C. Circuit generally rejected FCC regulations when they had lacked any reasonable basis in fact and logic. It’s good to see the District Court do the same occasionally.
With all respect, Mr. Miller, can you document that, “The basis for congressional delegations of authority to administrative agencies is that they allegedly have experts who know more about the subjects of their regulation and can make reasoned decisions based on their expertise”?
The words “expert” and “expertise” do not appear in J.W. Hampton, Jr., & Co. v. United States (1928).
I concede that a passage says, “Congress seems to have doubted that the information in its possession was such as to enable it to make the adjustment accurately.” The decision does not explain why a “body of investigators” could provide information to the President but not the Congress. In any case, the language is a make-weight, since–if I am not mistaken–no court then or since has heard evidence on and ruled whether an administrative agency actually is in fact more expert than Congress.
I myself think that the real (as opposed to declared) basis for congressional delegations of authority to administrative agencies is that agencies can make rules more easily than the Congress can make laws. In other words, agencies exist as a deliberate and obvious evasion of the central rules and purposes of Article I of the Constitution.
“To pick percentages, or anything else, out of thin air requires neither expertise nor reasoning and is arbitrary.”
Arbitrary certainly. But arbitrary action requires a *higher* degree of expertise than does setting non-arbitrary rules; it also requires a higher degree of allegiance to the public interest as opposed to special interests. Neither higher-degree is commonly found in *any* organ of government.
“The D.C. Circuit generally rejected FCC regulations when they had lacked any reasonable basis in fact and logic.”
Obviously not. No rule lacks any reasonable basis in fact and logic. (See, e.g., George Stigler, “The Citizen and the State”). Typically the basis in fact and logic, paraphrased, is something like, “This rule helps our client groups and/or hurts our political enemies.”
Right there is the problem with the rational-basis test: it only bars laws of which the rational basis is unknown to the ruling court, is not understood by the ruling court, or which affronts the ruling court. It’s all about the court, not about the law.
Too bad he couldn’t require that the rule when rewritten apply equally to the non-profits. That would shake up some very comfortable people.
I regret to say that Judge Contreras is wrong. He would have been correct to say that a lower court imposing that rule was acting arbitrarily and capriciously.
The Congress is (rightly) permitted to pass a statute to which the judiciary has no better objection than that it is “arbitrary and capricious.”
The whole question, then, is: is an administrative agency like a lower court, or is it like the Congress? I regret to say that in its rule-making role, it is like the Congress.
I think the Supreme Court should have ruled that unconstitutional in J.W. Hampton, Jr., & Co. v. United States (1928). I hope that someday J.W. Hampton is overruled. But as of this moment it is black-letter law.
I cannot resist one further remark: from one perfectly defensible point of view, *all* legislation is arbitrary and capricious.
I say that without prejudice to the question of which statutes are good; I myself think some are and some aren’t.
“Judge Contreras allowed other aspects of the rule to stand, and overall allowed that the department has the authority to make such rules.”
I’m sure that the department has the authority – but why should it? What function do they perform that cannot or should not be performed by the individual States?
I could even support some kind of standards like these, looking at future employment before granting student loans, if they applied to all colleges equally, both private and public. But as usual, Obama takes an idea that might have some merit, and ruins it with partisanship and cronyism.