American Federation of Teachers v. DeVos

Background

The Higher Education Act allows students to receive federal financial aid for postsecondary education. It limits eligibility for that aid to certain programs that prepare students for “gainful employment in a recognized occupation.” In 2014, the Department of Education adopted a Gainful Employment Rule with two main parts: disclosure requirements and an eligibility framework based on graduates’ debt-to-earnings rates.

The disclosure requirements required covered programs to use a Department-designed template and publish information about their programs. The eligibility framework used earnings data from the Social Security Administration to determine whether programs passed, fell within a warning range, or failed debt-to-earnings standards. Programs that repeatedly failed could lose eligibility for federal aid.

In 2019, the Department adopted a rule rescinding the 2014 requirements, effective July 1, 2020, with much of the rescission implemented earlier. The rescission eliminated the debt-to-earnings measure and the requirements to publish disclosures and warn students about possible loss of eligibility.

The American Federation of Teachers, the California Federation of Teachers, Isai Baltezar, and Julie Cho challenged the rescission under the Administrative Procedure Act in one action. They alleged that the repeal increased the risk of poor educational investments, deprived students of information, and increased the burden of finding information. They also alleged that the Department failed to provide adequate notice and an opportunity to comment. California brought a separate Administrative Procedure Act action, asserting harms to its public colleges and universities, finances, residents, and other stated interests.

Standing and the AFT Plaintiffs’ Claims

The defendants moved to dismiss both actions for lack of standing. Standing is the requirement that a plaintiff show a concrete injury, a connection between that injury and the challenged action, and a likelihood that the court can remedy the injury. The court held that standing must be established for each distinct claim and each form of relief.

The court treated the disclosure requirements and the eligibility framework as legally separate. It granted the motion to dismiss the disclosure claims. The court reasoned that the 2014 regulation did not require the Department to collect or disclose specific information; instead, the Secretary had discretion to decide what information the template would contain. The plaintiffs therefore did not show that they had been deprived of information that the law required the Department or schools to provide. The court also found that it could not order the Secretary to require particular disclosures.

The court further held that the plaintiffs’ alleged risks of making poor educational decisions and their increased burden of seeking information were consequences of the asserted informational injury. Because the plaintiffs could not establish the required informational injury, they also could not establish standing based on those related harms. The court stated that the American Federation of Teachers and the California Federation of Teachers could not pursue the disclosure claims on behalf of their members or in the American Federation of Teachers’ own right.

The court also granted the motion to dismiss the eligibility claims. The 2014 framework depended on aggregate earnings data from the Social Security Administration. The agreement that had allowed the Department to receive that data expired, and the Social Security Administration declined to renew it. The court concluded that, even if it set aside the rescission, the Department could not calculate new debt-to-earnings rates under the 2014 framework. Reinstatement therefore would not provide the information or relief the plaintiffs sought.

The court denied the plaintiffs’ request for jurisdictional discovery concerning the Department’s declaration about the Social Security Administration data. It found that the plaintiffs offered no reason beyond speculation to believe the Social Security Administration might again provide the data.

Procedural Claims

The American Federation of Teachers plaintiffs alleged in Count 11 that the Department did not give them an adequate opportunity to comment on the rescission. They pointed to the Department’s references to unnamed research and unexplained analyses supporting the repeal. The court held that the complaint adequately alleged that the Department failed to disclose research and analysis on which it relied. It therefore denied the defendants’ motion to dismiss this procedural claim.

California also alleged that the Department rescinded the 2014 rule without adequate reasoning. The court allowed this procedural claim to proceed. The court’s order thus granted in part and denied in part the defendants’ motions to dismiss the two complaints. It did not decide whether the rescission was ultimately lawful on the merits.

California’s Other Claims and Amendment

The court granted in part the defendants’ motion to dismiss California’s complaint. It declined to resolve whether California could establish standing through its asserted interests because California could not show that a favorable decision would remedy the alleged injuries. The court applied the same reasoning concerning the Secretary’s discretion over disclosures and the lack of Social Security Administration data for eligibility calculations.

The court found that amendment would be futile. It reasoned that the standing problems resulted from the structure of the regulation and the Department’s lack of access to the Social Security Administration data, which the plaintiffs could not cure by changing their allegations. The opinion does not state that the dismissed claims were dismissed with or without prejudice.