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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

__________________________________________

)

MEAGHAN BAUER and STEPHANO )

DEL ROSE, )

)

Plaintiffs, )

)

v. ) Civil Action No. 1:17-cv-1330 (RDM)

)

ELISABETH DEVOS, in her official capacity as )

Secretary of Education, and THE )

DEPARTMENT OF EDUCATION, )

)

Defendants. )

__________________________________________)

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’

RENEWED MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO

PLAINTIFFS’ SECOND RENEWED MOTION FOR SUMMARY JUDGMENT

Case 1:17-cv-01330-RDM Document 58-1 Filed 04/13/18 of 80

i

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

BACKGROUND ............................................................................................................................ 5

I. STATUTORY AND REGULATORY BACKGROUND .................................................. 5

A. Title IV and Borrower Defense ............................................................................... 5

B. The “Master Calendar” Requirement...................................................................... 6

II. THE DEPARTMENT’S 2016 RULEMAKING ................................................................ 7

III. THE CAPPS LITIGATION AND THE DEPARTMENT’S 705 NOTICE ....................... 8

IV. THE IFR.............................................................................................................................. 9

V. THE 2018 RULE .............................................................................................................. 11

VI. THIS LITIGATION .......................................................................................................... 13

STANDARD OF REVIEW .......................................................................................................... 14

ARGUMENT ................................................................................................................................ 16

I. THE 705 NOTICE WAS A VALID EXERCISE OF AGENCY AUTHORITY ............. 16

A. The Decision Of Whether To Postpone The Effective Date Of Agency

Action Pending Judicial Review Is Committed To Agency Discretion By

Law ....................................................................................................................... 16

B. The Department Complied With The Requirements Of Section 705 ................... 20

i. The Department Properly Concluded That “Justice So Requires”

Postponing The 2016 Rule’s Effective Date ............................................. 20

ii. The Department Was Not Required To Use The Four-Part

Preliminary Injunction Standard Employed By Courts ............................ 25

iii. Plaintiffs’ Remaining Arguments Regarding The Department’s

Explanation Lack Merit ............................................................................ 29

C. The 705 Notice Is Not A Form Of Rulemaking And Neither Amends Nor

Rescinds the 2016 Rule ......................................................................................... 32

II. THE 2018 FR WAS SUBSTANTIVELY AND PROCEDURALLY VALID ................ 35


ii

A. The Department Has Articulated A Satisfactory Explanation For the 2018

FR .......................................................................................................................... 36

B. There Is No Basis To Second-Guess The Department’s Determination

That The Benefits Of The 2018 Rule Justify Its Costs ......................................... 40

i. APA Review Of An Agency’s Cost-Benefit Analysis Under

Executive Orders 12866 and 13563 Is Precluded ..................................... 40

ii. The HEA Does Not Require A Cost-Benefit Analysis For Rules

Related To The Federal Student Loan Programs ...................................... 42

iii. The Department In Any Event Properly Concluded That The

Benefits Of The 2018 Rule Justify Its Costs ............................................. 43

C. The 2018 Rule Complies With Required Procedures ........................................... 48

III. THE IFR WAS SUBSTANTIVELY AND PROCEDURALLY VALID ........................ 52

A. The IFR Is Justified By The Department’s Reasonable Interpretation Of

The Master Calendar Requirement, Which Is Entitled To Deference .................. 52

i. The Department’s Interpretation Is Entitled To Chevron Deference ........ 52

ii. The Department’s Interpretation Is Reasonable ....................................... 55

B. Plaintiffs’ Remaining Arguments That The IFR Is Arbitrary And

Capricious Are Unavailing ................................................................................... 62

C. The IFR Complies With All Applicable Procedural Requirements ...................... 64

CONCLUSION ............................................................................................................................. 67


iii

TABLE OF AUTHORITIES

CASES PAGE(S)

Affinity Healthcare Servs., Inc. v. Sebelius,

746 F. Supp. 2d 106 (D.D.C. 2010) .......................................................................................... 48

Air Transportation Association of America v. FAA,

169 F.3d 1 (D.C. Cir. 1999) ...................................................................................................... 41

Al-Fayed v. CIA,

254 F.3d 300 (D.C. Cir. 2001) .................................................................................................. 16

All. Nat. Health v. Sebelius,

775 F. Supp. 2d 114 (D.D.C. 2011) .......................................................................................... 42

Allina Health Servs. v. Price,

863 F.3d 937 (D.C. Cir. 2017) .................................................................................................. 17

Alston v. District of Columbia,

561 F. Supp. 2d 29 (D.D.C. 2008) ............................................................................................ 26

Am. Portland Cement All. v. EPA,

101 F.3d 772 (D.C. Cir. 1996) .................................................................................................. 44

Am. Textile Mfrs. Inst., Inc. v. Donovan,

452 U.S. 490 (1981) .................................................................................................................. 42

Am. Trucking Ass’ns, Inc. v. Fed. Motor Carrier Safety Admin.,

724 F.3d 243 (D.C. Cir. 2013) .................................................................................................. 43

Arizona v. Thompson,

281 F.3d 248 (D.C. Cir. 2002) .................................................................................................. 54

Ass’n of Private Sector Colls. & Univs. v. Duncan,

681 F.3d 427 (D.C. Cir. 2012) .................................................................................................. 46

Auto. Parts & Accessories Ass’n v. Boyd,

407 F.2d 330 (D.C. Cir. 1968) .................................................................................................. 46

Barnhart v. Walton,

535 U.S. 212 (2002) .................................................................................................................. 54

Batterton v. Marshall,

648 F.2d 694 (D.C. Cir. 1980) .................................................................................................. 34

Becerra v. U.S. Dep’t of Interior,

276 F. Supp. 3d 953 (N.D. Cal. 2017) ...................................................................................... 23


iv

Bernardo ex rel. M&K Eng’g, Inc. v. Johnson,

814 F.3d 481 (1st Cir. 2016) ..................................................................................................... 18

Black Oak Energy, LLC v. FERC,

725 F.3d 230 (D.C. Cir. 2013) .................................................................................................. 68

Budd Co. v. Travelers Indem. Co.,

820 F.2d 787 (6th Cir. 1987) .................................................................................................... 21

California v. Bureau of Land Management,

268 F. Supp. 3d 1054, 2018 WL 1014644 (N.D. Cal. Feb. 22, 2018) .......................... 30, 38, 44

Calloway v. Harvey,

590 F. Supp. 2d 29 (D.D.C. 2008) ............................................................................................ 14

Career Coll. Ass’n v. Riley,

74 F.3d 1265 (D.C. Cir. 1996) .............................................................................................. 7, 57

Chevron U.S.A., Inc. v. NRDC, Inc.,

467 U.S. 837 (1984) .................................................................................................................. 53

Chew v. Brumagen,

80 U.S. 497 (1871) .................................................................................................................... 51

Citizens for Responsibility & Ethics in Wash. v. SEC,

916 F. Supp. 2d 141 (D.D.C. 2013) .......................................................................................... 15

City of Portland v. EPA,

507 F.3d 706 (D.C. Cir. 2007) .................................................................................................. 42

Clean Air Council v. Pruitt,

862 F.3d 1 (D.C. Cir. 2017) ...................................................................................................... 51

Coal. for Parity, Inc. v. Sebelius,

709 F. Supp. 2d 10 (D.D.C. 2010) .......................................................................... 51, 65, 66, 67

Consumer Elecs. Ass’n v. FCC,

347 F.3d 291 (D.C. Cir. 2003) .................................................................................................. 43

Council of S. Mountains, Inc. v. Donovan,

653 F.2d 573 (D.C. Cir. 1981) .................................................................................................. 65

Ctr. for Auto Safety v. Peck,

751 F.2d 1336 (D.C. Cir. 1985) ................................................................................................ 43

Cty. of L.A. v. Shalala,

192 F.3d 1005 (D.C. Cir. 1999) ................................................................................................ 15


v

Defs. of Wildlife v. Jackson,

791 F. Supp. 2d 96 (D.D.C. 2011) ............................................................................................ 42

Deppenbrook v. Pension Benefit Guar. Corp.,

950 F. Supp. 2d 68 (D.D.C. 2013) ............................................................................................ 15

Dickson v. Secretary of Defense,

68 F.3d 1396 (D.C. Cir. 1995) ............................................................................................ 20, 21

EME Homer City Generation LP v. EPA,

795 F.3d 118 (D.C. Cir. 2015) .................................................................................................. 65

Envtl. Integrity Project v. McCarthy,

139 F. Supp. 3d 25 (D.D.C. 2015) ...................................................................................... 36, 39

Esquire, Inc. v. Ringer,

591 F.2d 796 (D.C. Cir. 1978), cert denied, 440 U.S. 908 (1979) ........................................... 59

Ethyl Corp. v. EPA,

51 F.3d 1053 (D.C. Cir. 1995) .................................................................................................. 63

FCC v. Fox Television Stations, Inc.,

556 U.S. 502 (2009) ............................................................................................................ 36, 38

FERC v. Elec. Power Supply Ass’n,

136 S. Ct. 760 (2016) ................................................................................................................ 37

Fla. Bankers Ass’n v. U.S. Dep’t of Treasury,

19 F. Supp. 3d 111 (D.D.C. 2014), vacated on other grounds,

799 F.3d 1065 (D.C. Cir. 2015) .......................................................................................... 40, 42

Griffin v. Oceanic Contractors, Inc.,

458 U.S. 564 (1982) .................................................................................................................. 27

Harris v. Sec’y, U.S. Dep’t of Veterans Affairs,

126 F.3d 339 (D.C. Cir. 1997) .................................................................................................. 21

Heckler v. Chaney,

470 U.S. 821 (1985) .................................................................................................................. 17

Hibbs v. Winn,

542 U.S. 88 (2004) .................................................................................................................... 57

Hoctor v. U.S. Dep’t of Agric.,

82 F.3d 165 (7th Cir. 1996) ...................................................................................................... 34

In re Subpoena Duces Tecum Served on Office of Comptroller of Currency,

156 F.3d 1279 (D.C. Cir. 1998) ................................................................................................ 25


vi

Inv. Co. Inst. v. CFTC,

720 F.3d 370 (D.C. Cir. 2013) .................................................................................................. 42

Jackson v. Mabus,

808 F.3d 933 (D.C. Cir. 2015) .................................................................................................. 15

James Madison Ltd. by Hecht v. Ludwig,

82 F.3d 1085 (D.C. Cir. 1996) .................................................................................................. 15

Keene Corp. v. United States,

508 U.S. 200 (1993) .................................................................................................................. 26

Kingdomware Techs., Inc. v. United States,

136 S. Ct. 1969 (2016) .............................................................................................................. 22

Kreis v. Sec’y of Air Force,

866 F.2d 1508 (D.C. Cir. 1989) ................................................................................................ 17

Lincoln v. Vigil,

508 U.S. 182 (1993) .................................................................................................................. 34

Luddington v. Ind. Bell Tel. Co.,

966 F.2d 225 (7th Cir. 1992) .................................................................................................... 57

Martel v. Clair,

565 U.S. 648 (2012) .................................................................................................................. 21

McKinney v. McDonald,

796 F.3d 1377 (Fed. Cir. 2015)................................................................................................. 39

Mead Corp. v. Tilley,

490 U.S. 714 (1989) .................................................................................................................. 53

Mendoza v. Perez,

754 F.3d 1002 (D.C. Cir. 2014) ................................................................................................ 34

Meyer v. Bush,

981 F.2d 1288 (D.C. Cir. 1993) ................................................................................................ 41

Michigan v. EPA,

135 S. Ct. 2699 (2015) .............................................................................................................. 42

Mid Continent Nail Corp. v. United States,

846 F.3d 1364 (Fed. Cir. 2017)................................................................................................. 67

Mid-Tex Elec. Co-Op., Inc. v. FERC,

822 F.2d 1123 (D.C. Cir. 1987) ......................................................................................... passim


vii

Mingo Logan Coal Co. v. EPA,

829 F.3d 710 (D.C. Cir. 2016) .................................................................................................. 36

Miniard v. Lewis,

387 F.2d 864 (D.C. Cir. 1967) .................................................................................................. 62

Mobil Oil Corp. v. Dann,

448 F. Supp. 487 (D.D.C. 1978) ............................................................................................... 18

Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29 (1983) ............................................................................................................. passim

N.J. Dep’t of Envtl. Prot. v. U.S. EPA,

626 F.2d 1038 (D.C. Cir. 1980) ................................................................................................ 51

N. Mariana Islands v. United States,

686 F. Supp. 2d 7 (D.D.C. 2009) ........................................................................................ 65, 67

Nat’l Ass’n of Home Builders v. EPA,

682 F.3d 1032 (D.C. Cir. 2012) ................................................................................................ 43

Nat’l Fed’n of Fed. Emps. v. Devine,

671 F.2d 607 (D.C. Cir. 1982) .................................................................................................. 65

Nat’l Min. Ass’n v. Mining Safety & Health Admin.,

116 F.3d 520 (D.C. Cir. 1997) .................................................................................................. 47

Nat’l Parks Conservation Ass’n v. United States,

177 F. Supp. 3d 1 (D.D.C. 2016) .............................................................................................. 15

Nat’l Women, Infants, & Children Grocers Ass’n v. Food & Nutrition Serv.,

416 F. Supp. 2d 92 (D.D.C. 2006) ...................................................................................... 53, 66

National Venture Capital Association v. Duke,

---F. Supp. 3d---, 2017 WL 5990122 (D.D.C. Dec. 1, 2017) ................................................... 51

Nicopure Labs, LLC v. FDA,

266 F. Supp. 3d 360 (D.D.C. 2017) .................................................................................... 20, 43

Nitto Chem. Indus. Co. v. Comer,

Civ. A. No. 93-1378(JHG), 1994 WL 872610 (D.D.C. Mar. 7, 1994) ..................................... 19

Norwest Bank Minn. Nat’l Ass’n v. FDIC,

312 F.3d 447 (D.C. Cir. 2002) .................................................................................................. 33

Oceana v. Bureau of Ocean Energy Mgmt.,

37 F. Supp. 3d 147 (D.D.C. 2014) ............................................................................................ 31


viii

People for the Ethical Treatment of Animals, Inc. v. U.S. Dep’t of Agric.,

7 F. Supp. 3d 1 (D.D.C. 2013) .................................................................................................. 16

Perez v. Mort. Bankers Ass’n,

135 S. Ct. 1199 (2015) .............................................................................................................. 27

Petry v. Block,

737 F.2d 1193 (D.C. Cir. 1984) .......................................................................................... 49, 65

Picur v. Kerry,

128 F. Supp. 3d 302 (D.D.C. 2015) .......................................................................................... 16

Prof’l Plant Growers Ass’n v. U.S. Dep’t of Agric.,

879 F. Supp. 130 (D.D.C. 1995) ............................................................................................... 52

Pub. Citizen, Inc. v. FAA,

988 F.2d 186 (D.C. Cir. 1993) .................................................................................................. 46

Public Citizen v. Steed,

733 F.2d 93 (D.C. Cir. 1984) .............................................................................................. 38, 39

Ratzlaf v. United States,

510 U.S. 135 (1994) .................................................................................................................. 29

Russello v. United States,

464 U.S. 16 (1983) .................................................................................................................... 26

Sierra Club v. Gorsuch,

715 F.2d 653 (D.C. Cir. 1983) ............................................................................................ 37, 63

Sierra Club v. Jackson,

833 F. Supp. 2d 11 (D.D.C. 2012) ..................................................................................... passim

Sierra Club v. Salazar,

177 F. Supp. 3d 512 (D.D.C. 2016) .................................................................................... 37, 63

Simpson v. Young,

854 F.2d 1429 (D.C. Cir. 1988) ................................................................................................ 46

Sorensen Commc’ns Inc. v. FCC,

755 F.3d 702 (D.C. Cir. 2014) .................................................................................................. 66

Stand Up for California! v. U.S. Dep’t of Interior,

71 F. Supp. 3d 109 (D.D.C. 2014) ............................................................................................ 14

State v. U.S. Bureau of Land Mgmt.,

277 F. Supp. 3d 1106 (N.D. Cal. 2017) .............................................................................. 23, 29


ix

Steenholdt v. FAA,

314 F.3d 633 (D.C. Cir. 2003) .................................................................................................. 17

Trawler Diane Marie, Inc. v. Brown,

918 F. Supp. 921 (E.D.N.C. 1995), aff’d, 91 F.3d 134 (4th Cir. 1996) .................................... 42

Triad Elec. & Controls, Inc. v. Power Sys. Eng’g, Inc.,

117 F.3d 180 (5th Cir. 1997) .................................................................................................... 21

U.S. ex rel. Totten v. Bombardier Corp.,

380 F.3d 488 (D.C. Cir. 2004) .................................................................................................. 29

United States v. Mead Corp.,

533 U.S. 218 (2001) .................................................................................................................. 53

Vermont Yankee Nuclear Power Corp. v. NRDC,

435 U.S. 519 (1978) .................................................................................................................. 27

Wagner Seed Co. v. Bush,

946 F.2d 918 (D.C. Cir. 1991) .................................................................................................. 53

Watervale Marine Co. v. U.S. Dep’t of Homeland Sec.,

55 F. Supp. 3d 124 (D.D.C. 2014) ............................................................................................ 19

Webster v. Doe,

486 U.S. 592 (1988) ...................................................................................................... 17, 18, 20

Wendland v. Gutierrez,

580 F. Supp. 2d 151 (D.D.C. 2008) .......................................................................................... 18

Wildearth Guardians v. Kempthorne,

592 F. Supp. 2d 18 (D.D.C. 2008) ............................................................................................ 19

STATUTES

5 U.S.C. § 551 ................................................................................................................... 31, 32, 34

5 U.S.C. § 553 ......................................................................................................................... 33, 65

5 U.S.C. § 701 ............................................................................................................................... 16

5 U.S.C. § 705 ........................................................................................................................ passim

5 U.S.C. § 706 ......................................................................................................................... 15, 20

20 U.S.C. § 1070 et seq................................................................................................................... 5

20 U.S.C. § 1087a et seq.. ............................................................................................................... 5


x

20 U.S.C. § 1087e ........................................................................................................................... 5

20 U.S.C. § 1087ll........................................................................................................................... 5

20 U.S.C. § 1088 ......................................................................................................................... 1, 6

20 U.S.C. § 1089 .................................................................................................................... passim

20 U.S.C. § 1094 ........................................................................................................................... 53

20 U.S.C. § 1098a ............................................................................................................... 7, 35, 49

20 U.S.C. § 1221e-3 .................................................................................................................. 5, 53

20 U.S.C. § 3474 ....................................................................................................................... 5, 53

Higher Education Opportunity Act of 2008,

Pub. L. No. 110-315, 122 Stat. 3078 ........................................................................................ 58

RULES

Fed. R. Civ. P. 15 .......................................................................................................................... 21

Fed. R. Civ. P. 56 .......................................................................................................................... 15

REGULATIONS

37 C.F.R. § 1.183 .......................................................................................................................... 18

34 C.F.R. § 685.206 .................................................................................................................... 5, 6

59 Fed. Reg. 34,964 (July 7, 1994) ............................................................................................... 57

60 Fed Reg. 54,949 (Oct. 27, 1995) .............................................................................................. 35

60 Fed. Reg. 61,424 (Nov. 29, 1995)............................................................................................ 60

61 Fed. Reg. 60,426 (Nov. 27, 1997)............................................................................................ 60

63 Fed. Reg. 52,854 (Oct. 1, 1998) ............................................................................................... 60

65 Fed. Reg. 65,662 (Nov. 1, 2000).............................................................................................. 60

66 Fed. Reg. 20,191 (Apr. 20, 2001) ............................................................................................ 35

66 Fed. Reg. 27,863 (May 21, 2001) ............................................................................................ 35

69 Fed. Reg. 19,937 (Apr. 15, 2004) ............................................................................................ 35

72 Fed. Reg. 61,960 (Nov. 1, 2007).............................................................................................. 60


xi

73 Fed. Reg. 67,107 (Nov. 13, 2008)............................................................................................ 35

75 Fed. Reg. 66,832 (Oct. 29, 2010) ............................................................................................. 60

76 Fed. Reg. 34,386 (June 13, 2011) ............................................................................................ 60

76 Fed. Reg. 59,896 (Sept. 28, 2011) ........................................................................................... 35

77 Fed. Reg. 66,088 (Nov. 1, 2012).............................................................................................. 60

78 Fed. Reg. 65,768 (Nov. 1, 2013).............................................................................................. 60

79 Fed. Reg. 26,297 (May 7, 2014) .............................................................................................. 35

79 Fed. Reg. 62,752 (Oct. 20, 2014) ............................................................................................. 60

79 Fed. Reg. 63,317 (Oct. 23, 2014) ............................................................................................. 59

79 Fed. Reg. 64,890 (Oct. 31, 2014) ............................................................................................. 59

80 Fed. Reg. 67,126 (Oct. 30, 2015) ....................................................................................... 60, 61

80 Fed. Reg. 67,204 (Oct. 30, 2015) ............................................................................................. 59

81 Fed. Reg. 39,330 (proposed June 16, 2016) .............................................................................. 7

81 Fed. Reg. 92,232 (Dec. 19, 2016) ............................................................................................ 59

Exec. Order 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993) .......................................................... 41

Exec. Order 13,563, 76 Fed. Reg. 13,563 (Jan. 18, 1999) ............................................................ 41

OTHER AUTHORITIES

Administartive Procedure Act, Legislative History,

79th Cong., S. Doc. No. 248 (1946) ............................................................................. 26, 28, 51

Senate Judiciary Committee Print, June 1945 .............................................................................. 26


1

INTRODUCTION

Congress has explicitly authorized federal agencies to postpone the effective date of an

agency action pending judicial review of that action. This authority reflects the common sense

idea that it may make sense to forestall the implementation of an agency action when that action

is being challenged in court and may be struck down. 5 U.S.C. § 705 provides that all that an

agency must do in order to effect such a delay is determine that “justice so requires.” In this case,

the Department of Education (the “Department”) used its authority under Section 705 to postpone

the effective date of certain provisions of a final rule that had been challenged in a lawsuit, CAPPS

v. DeVos, Civil Action No. 17-cv-999 (RDM). The rule encompassed a series of regulations

establishing new conditions for institutions of post-secondary education participating in a student

loan program administered by the Department under Title IV of the Higher Education Act

(“HEA”), and the students who borrow federal funds to attend such institutions. See Student

Assistance General Provisions, Federal Loan and Grant Programs, 81 Fed. Reg. 75,926-01 (Nov.

1, 2016) (AR-A at 10-173) (the “2016 Rule”).

The CAPPS case remains pending. Finding that the litigation raised serious questions

concerning the validity of the 2016 Rule, and that substantial injuries would result if it went into

effect before those questions were resolved, the Department determined that justice required it to

preserve the regulatory status quo and postpone the effective date of the Rule’s major provisions

pending judicial review. As a result of the Department’s valid invocation of Section 705 (the “705

Notice”), the 2016 Rule did not go into effect as scheduled on July 1, 2017, which date marks the

beginning of an “award year” for Title IV financial aid programs. See 20 U.S.C. § 1088(a).

Pursuant to a separate provision of the HEA, known as the “master calendar” requirement,

“regulatory changes” affecting Title IV financial aid programs must become effective at the start


2

of an award year (i.e., on July 1). See id. § 1089(c)(1). The Department reasonably interprets this

statutory provision to limit its discretion to designate for any such regulatory change an effective

date that is in the middle of an award year: If a regulatory change does not take effect on July 1 of

a given year, then the master calendar compels an effective date of July 1 of the following year, at

the earliest. The effect of the master calendar requirement in this case, once the 2016 Rule did not

go into effect on July 1, 2017, was to set the earliest possible effective date for July 1, 2018. To

reflect this understanding and give notice to the regulated industry, the Department issued an

interim final rule (“IFR”) confirming that, regardless of the outcome of the CAPPS litigation, the

provisions of the 2016 Rule postponed by the 705 Notice would not take effect until July 1, 2018.

Because the Department’s longstanding interpretation of the HEA removed its discretion to set

any earlier effective date, the Department found good cause to make the IFR effective immediately.

The Department separately announced its intent to engage in negotiated rulemaking, as

required by the HEA, to revise and reconsider the borrower defense regulations. To accommodate

this process, as well as to comply with the master calendar and to avoid substantial disruption and

inefficient compliance costs that would result if multiple, potentially divergent, rules addressing

the same subject matter were to become effective within a short period of time, the Department,

in accordance with the Administrative Procedure Act (“APA”), announced a final rule further

delaying the relevant provisions of the 2016 Rule until July 1, 2019. 83 Fed. Reg. 6458 (Feb. 14,

2018) (“2018 FR” or “2018 Rule”). Like the actions that preceded it, the 2018 FR merely delayed

the 2016 Rule, in accordance with lawfully delegated congressional authority, and did not itself

rescind the 2016 Rule or otherwise depart from existing policy.

Plaintiffs challenge all three actions postponing the 2016 Rule. Plaintiffs’ claims are

meritless, however, and the Department is entitled to judgment as a matter of law. As an initial


3

matter, the decision whether to postpone the effective date of agency action pending judicial

review is committed to agency discretion by law and therefore unreviewable under the APA.

Section 705 authorizes a court to postpone agency action or preserve status or rights “to the extent

necessary to prevent irreparable injury,” but, in contrast, an agency may do so when “justice so

requires.” In making this distinction between agency action and judicial action, and in providing

a discrete, measurable standard for the latter but not the former, the statute commits the former to

the agency’s discretion and insulates from judicial review an agency’s decision to postpone the

effective date of its action.

To the extent a court has any role in reviewing the Department’s decision to postpone the

2016 Rule’s effective date under Section 705, the postponement should be upheld under the

deferential standard of review it is due, pursuant to which the Court’s role is limited to determining

whether the statute’s inherently flexible “justice so requires” standard was met. Although

Plaintiffs attempt to argue that the Department should have applied the four-part test used by courts

to evaluate requests for preliminary injunctions, that textually unsupported argument ignores the

ample discretion that Section 705 accords agencies, as opposed to courts, to postpone an effective

date based on a holistic consideration of what justice requires in a given case. The Department

easily met that standard here, where it found that justice required a postponement of the 2016

Rule’s effective date pending judicial review of a legal challenge to that rule. Nor was the

Department required, as Plaintiffs contend, to employ notice and comment procedures in issuing

the 705 Notice. Because Section 705 is a free-standing grant of authority that neither mentions

nor cross-references the APA’s separate rulemaking provisions, the Department lawfully issued

its 705 Notice without undergoing notice and comment.

In addition, the 2018 FR was a valid exercise of the Department’s rulemaking authority,


4

both adequately justified by the need to avoid regulatory whiplash in light of the uncertainty

surrounding the 2016 Rule, from both a legal and policy perspective, and procedurally proper

based on the particular burdens that the HEA’s negotiated rulemaking procedure would have

imposed in this context. Although Plaintiffs repeatedly argue that the Department’s ongoing

review and reconsideration of the borrower defense regulations was an improper basis on which

to justify either the 705 Notice or the 2018 FR, there is nothing preventing an agency from taking

such a relevant consideration into account when determining whether to postpone a rule subject to

such review. Ultimately, a challenge to neither action is the appropriate vehicle for Plaintiffs to

raise concerns regarding the Department’s rulemaking to revise the borrower defense regulations,

which are appropriately ventilated in connection with that rulemaking process itself.

As for the IFR, the Court should defer to the agency’s reasonable interpretation of the

HEA’s master calendar requirement. That statutory provision, the purpose of which is to provide

notice to the regulated industry and prevent disruptions to the disbursement of financial aid during

an award year, prevents the 2016 Rule from becoming effective on any date other than July 1. The

Department’s statutory interpretation divests it of the discretion to set a different date, and so the

Department’s focus in the IFR on the statutory factors of notice and disruption-prevention, rather

than, as Plaintiffs would prefer, an analysis of the potential harms to student borrowers from

delayed implementation, was not arbitrary and capricious. For the same reasons, both notice and

comment (under the APA) and negotiated rulemaking (under the HEA) were unnecessary and

impracticable: according to the Department’s reasonable interpretation of the master calendar

provision, it simply lacked the discretion to take a different action than that reflected in the IFR.

Because the Department lawfully invoked Section 705 to delay the 2016 Rule pending

ongoing litigation, adequately justified its decision to further delay that rule in light of ongoing


5

rulemaking procedures that create uncertainty as to that rule, and reasonably interprets its

governing master calendar to require that regulatory changes go into effect on July 1, the Court

should grant Defendants summary judgment.

BACKGROUND

I. STATUTORY AND REGULATORY BACKGROUND

A. Title IV and Borrower Defense

Under Title IV of the Higher Education Act of 1965 (“HEA”), 20 U.S.C. § 1070 et seq.,

the Department can enter into a Program Participation Agreement (“PPA”) with a post-secondary

school that allows students at that school to receive federal grants and loans to pay for a student’s

cost of attendance at the school. Generally, students must repay any federal loans they

receive. The William D. Ford Federal Direct Loan Program (“Direct Loan Program”), 20 U.S.C.

§ 1087a, et seq., allows students to apply for and receive Direct Loans from the federal government

to pay for their educational expenses, including tuition as well as living expenses. Id. §

1087ll. Congress has granted the Department broad authority to promulgate regulations to

implement and administer the HEA and the Direct Loan Program. See 20 U.S.C. §§ 1221e-3,

3474.

The HEA authorizes the Secretary to “specify in regulations which acts or omissions of an

institution of higher education a borrower may assert as a defense to repayment” of a Direct Loan.

20 U.S.C. § 1087e(h). Pursuant to this authority, the Department codified regulations in 1994,

which remain in effect, permitting a borrower, “[i]n any proceeding to collect on a Direct Loan,”

to “assert as a defense against repayment, any act or omission of the school attended by the student

that would give rise to a cause of action against the school under applicable State law.” 34 C.F.R.

§ 685.206(c). Such “proceedings” include administrative proceedings for tax refund offset, wage


6

garnishment, and salary offset for federal employees. Id. §§ 685.206(c)(1)(i)-(iv).

If a borrower successfully asserts a borrower defense against repayment, “the Secretary

notifies the borrower that the borrower is relieved of the obligation to repay all or part of the loan

and associated costs and fees that the borrower would otherwise be obligated to pay . . . [and]

affords the borrower such further relief as the Secretary determines is appropriate under the

circumstances.” Id. § 685.206(c)(2). “Further relief” may include reimbursing the borrower for

amounts paid either voluntarily or through enforced collection, determining that the borrower is

not in default and eligible to receive further Title IV assistance, and updating reports to consumer

credit agencies where adverse reports had previously been made. Id. In addition, the Secretary

“may initiate an appropriate proceeding to require the school whose act or omission resulted in the

borrower’s successful defense against repayment of a Direct Loan to pay to the Secretary the

amount of the loan to which the defense applies.” Id. § 685.206(c)(3).

B. The “Master Calendar” Requirement

Title IV student financial assistance programs are generally administered annually. The

statute defines the relevant “award year” as “the period beginning July 1 and ending June 30 of

the following year.” 20 U.S.C. § 1088(a)(1). In order “[t]o assure adequate notification and timely

delivery of student aid funds” during a Title IV award year, the HEA imposes a detailed “master

calendar,” which sets forth a series of dates by which the Department must take certain action in

the year preceding the award year in order to ready forms, funding levels, and other administrative

steps for the start of the award year. Id. § 1089(a). In a sub-section entitled “Delay of effective

date of late publications,” the master calendar section of the HEA provides:

any regulatory changes initiated by the Secretary affecting the programs under this

subchapter that have not been published in final form by November 1 prior to the

start of the award year shall not become effective until the beginning of the second

award year after such November 1 date.


7

Id. § 1089(c). In other words, the statute requires that (1) a regulatory change that has been

published in final form on or before November 1 prior to the start of an award year may take effect

only at the beginning of the next award year (i.e., on July 1 of the next year); and (2) any regulatory

change that has not been published in final form by November 1 prior to the start of an award year

may not become effective until the beginning of the second award year after the November 1 date

(i.e., the second July 1 following that November 1). A purpose of this statute is to “apprise

regulated institutions of the coming year’s requirements. Career Coll. Ass’n v. Riley, 74 F.3d

1265, 1268 (D.C. Cir. 1996).

II. THE DEPARTMENT’S 2016 RULEMAKING

In June 2015, the Secretary announced “that the Department would develop new

regulations to establish a more accessible and consistent borrower defense standard and clarify and

streamline the borrower defense process to protect borrowers and improve the Department’s ability

to hold schools accountable for actions and omissions that result in loan discharges.” 81 Fed. Reg.

39,330, 39,331 (proposed June 16, 2016). After failing to reach consensus through the negotiated

rulemaking committee process required to issue regulations related to the Title IV student loan

programs, see 20 U.S.C. § 1098a, the Department published a notice of proposed rulemaking

(“NPRM”) seeking comment on proposed borrower defense regulations. 81 Fed. Reg. at 39,330.

After reviewing comments and making appropriate changes, the Department published the

2016 Rule on November 1, 2016. See AR-A at 10-173. The Rule clarified the conditions under

which a borrower may assert a borrower defense to repayment, and established “a new Federal

standard for borrower defenses.” Id. at 11. Further, it put in place several provisions allowing the

Department to collect and review evidence for processing borrower defense claims, to require

schools to provide additional financial protection for the Department’s Title IV funds if certain


8

triggering or early-warning events occur, and to prevent schools from using predispute arbitration

agreements and class action waivers with student recipients of Direct Loans for claims related to

borrower defense. See id. The Rule was determined to impose a net budget impact of $16.6 billion

over the 2017 to 2026 loan cohorts. Id. at 139. Pursuant to the master calendar, the Department

provided for the regulations encompassed in the 2016 Rule to become effective on July 1, 2017.

III. THE CAPPS LITIGATION AND THE DEPARTMENT’S 705 NOTICE

On May 24, 2017, the California Association of Private Postsecondary Schools (“CAPPS”)

filed a complaint seeking to vacate the 2016 Rule in its entirety. AR-A at 174-259. CAPPS argued

that the Borrower Defense regulations, in their entirety, “exceed the Department’s authority under

the HEA and conflict with the Federal Arbitration Act (‘FAA’), are arbitrary and capricious under

the APA, and violate the United States Constitution.” Id. at 175. As relief, CAPPS requested a

court order declaring that “the entirety of the Final Rule is contrary to the Constitution,” enjoining

the Department “from implementing, applying, or taking any action whatsoever pursuant to the

final regulations,” and vacating the 2016 Rule in its entirety. Id. at 248. On June 2, 2017, CAPPS

moved to preliminarily enjoin implementation of certain provisions of the 2016 Rule concerning

the use of predispute arbitration and class action waiver provisions by institutions eligible for Title

IV funding. Mot. for Prelim. Inj., CAPPS v. DeVos, Civil Action No. 17-cv-999-RDM (D.D.C.

June 2, 2017), ECF No. 6. By Minute Order entered June 6, 2017, the defendants were ordered to

respond to CAPPS’ preliminary injunction motion by June 15, 2017.

In light of this pending litigation, the Department published a notice in the Federal Register,

which was placed on public inspection on June 14, 2017, announcing that, pursuant to 5 U.S.C. §

705, it was delaying the July 1, 2017 effective date of certain provisions of the 2016 Rule, pending

judicial review in the CAPPS litigation. See Ex. A to Defs.’ Notice Concerning the Effective Date


9

of Certain Provisions in the Final Rule, CAPPS v. DeVos, Civil Action No. 17-cv-999-RDM

(D.D.C. June 14, 2017), ECF No. 20. This notice was formally published in the Federal Register

two days later on June 16, 2017. See 82 Fed. Reg. 27,621 (AR-A at 1-2). Given the “serious

questions concerning the validity” of certain provisions of the 2016 Rule that the CAPPS litigation

raised, as well as the “substantial injuries that could result if the final regulations go into effect

before those questions are resolved,” the Department determined that justice required it to

postpone the effective date of certain provisions of the 2016 Rule, pending the Court’s review of

CAPPS’ challenge. AR-A at 1. The Department found it particularly important to preserve the

regulatory status quo during the pendency of the litigation, given the high costs that compliance

with the new rule would impose and the Department’s finding that a temporary delay would not

result in “significant harm” to the United States in light of the delay’s budgetary impacts. Id.

At the same time as it published the 705 Notice, the Department announced, by separate

publication in the Federal Register, its intention to review and revise the borrower defense

regulations through the HEA’s negotiated rulemaking process. See AR-A at 8-9. The 705 Notice

explicitly referenced this negotiated rulemaking announcement. Id. at 2.

IV. THE IFR

On October 24, 2017, the Department published in the Federal Register the IFR, which

“provide[d] the public and regulated parties notice” that the provisions of the 2016 Rule postponed

by the 705 Notice would not take effect until July 1, 2018, regardless of the outcome or timing of

the CAPPS litigation. See 82 Fed. Reg. 49,114 (AR-B at 1-8). The IFR was based on the

requirements of the master calendar, which the Department explained “provides that regulatory

changes affecting the title IV programs must become effective at the beginning of an award year

and does not authorize the Department to make a regulatory change affecting the title IV programs


10

effective in the middle of an award year.” AR-B at 3. Because the 705 Notice, which remains in

effect, delayed provisions of the 2016 Rule past July 1, 2017, the Department determined that, by

direct operation of the master calendar, the Rule’s effective date “must be July 1, 2018 (or July 1

of a later year).” Id. “[I]mplementing this substantial regulatory change in the middle of an award

year would frustrate the notice objectives of the HEA and deny schools the assurance of the master

calendar.” Id. Thus, in order to provide notice of the Department’s interpretation of the master

calendar requirement in light of its 705 Notice, the Department issued the IFR to make clear that

the 2016 Rule would not take effect until July 1, 2018, “even if the [CAPPS] litigation concludes

before” that date. Id.

The Department waived notice and comment under the APA, as well as negotiated

rulemaking under the HEA, based on its finding that such procedures were unnecessary and

impracticable in this instance. AR-B at 4. These findings were based on the Department’s

reasonable interpretation that once the 2016 Rule had been validly delayed (by the 705 Notice)

past July 1, 2017, the 2016 Rule could not become effective on any date prior to July 1, 2018 under

the master calendar. See id. (“Given the Department’s limited discretion to set an effective date

under the master calendar requirement, the Department determined that both notice-and-comment

and negotiated rulemaking are unnecessary.”). The CAPPS litigation was filed on May 24, 2017,

only about five weeks before the original July 1, 2017 effective date. Once that date passed, the

Department interpreted the master calendar provision to divest it of discretion to set an effective

date earlier than the following July 1. Therefore, it was impracticable to undertake notice and

comment before the original effective date, and once the original effective date was postponed by

the 705 Notice past July 1, it was unnecessary to do so. Nevertheless, the Department did provide

a 30-day post-promulgation comment period. AR-B at 4.


11

V. THE 2018 RULE

On the same day it published the IFR, the Department issued a separate NPRM taking

comment on whether the effective date of the 2016 Rule should be postponed from July 1, 2018

until July 1, 2019, in order to allow the Department adequate time to conduct the negotiated

rulemaking proceedings that were mentioned in the 705 Notice and, as necessary, to develop

revised regulations, before any regulatory changes becomes effective. See 82 Fed. Reg. 49,155-

49,160 (Oct. 24, 2017) (Administrative Record for 2018 Rule, “AR,” at 19-24). Given that it

would have been impracticable to engage in the HEA’s lengthy negotiated rulemaking procedures

before the July 1, 2018 effective date specified in the IFR, the Department announced that it was

waiving this requirement for “good cause.” Id. at 21.

On February 14, 2018, the Department published the final 2018 Rule. See AR at 1-13. The

Rule adopted the proposal in the NPRM and delayed, until July 1, 2019, the relevant provisions of

the 2016 Rule in order to “continue to preserve the regulatory status quo” while ensuring that the

Department has adequate time to complete negotiated rulemaking and draft any revised regulations

that result from the process. Id. at 26. As the Department explained in response to a comment

challenging the sufficiency of the Department’s justification for delaying the 2016 Rule, in light

of the factual scenario in which it was promulgated (pursuant to which the Department was

engaged in a process of reviewing and potentially revising the 2016 Rule that could not be

completed before July 1, 2019), the 2018 FR prevents “a scenario in which the 2016 final

regulations . . . become effective for a short period of time before new regulations resulting from

the current borrower defense rulemaking process take effect, a result which likely would lead to a

great deal of confusion and difficulty for borrowers and schools alike.” Id. at 7. The Department

emphasized that borrowers could still apply for full or partial loan discharges based on defenses to


12

repayment under the existing regulations, and that the Department would continue to process such

claims. Id.

In response to commenters’ assertions that borrowers would be harmed by the 2016 Rule’s

delayed implementation, the Department responded by acknowledging that some benefits would

be delayed, but determined any associated harms to borrowers were outweighed by the benefits

associated with delay for two reasons. First, because the 1995 borrower defense regulations remain

in effect during the delay, “borrowers can continue to apply for relief from payment of loans under

this existing process, and the Department is committed to processing those applications in a timely

manner.” Id. at 4. Second, because the 2018 Rule merely delays the 2016 Rule, and does not

revoke it, the Department concluded that any marginal benefits to borrowers associated with

having the 2016 Rule take effect during the time period covered by the delay were outweighed by

the potential “administrative and transaction costs for regulated entities and borrowers of having

those regulations go into effect only to be changed a short while later.” Id.

The Department also responded to comments asserting that the NPRM “fails to identify

any specific deficiencies in the 2016 final regulations.” Id. at 7. Again, the Department

emphasized that its rule merely delays the effective date of the 2016 Rule and does not “amend

[its] substance.” Id. The Department explained that if its negotiated rulemaking process resulted

in a new NPRM addressing borrower defense, the Department would “provide a rationale for

proposed changes” at that time. Id. But for purposes of the actual delay effectuated by the 2018

Rule, it “was not required to solicit comment on any matters other than the effective date,” id., or

respond to any comments beyond the scope of its rulemaking, id. at 3, such as comments

addressing “the effect of the 2016 final regulations,” id. at 8.

And in response to comments challenging the Department’s waiver of negotiated


13

rulemaking procedures, the Department explained how it would not have been practicable to

complete the process, which “typically takes” well over 12 months, on the discrete issue of whether

to delay the 2016 Rule an additional year to allow for the underlying negotiated rulemaking process

with respect to the borrower defense regulations to conclude. Id. at 7. Because it “would not have

been feasible” to conclude this process before the July 1, 2018 effective date set by the IFR, the

Department explained that it had “good cause” to waive negotiated rulemaking. Id. In addition,

the Department also engaged in regulatory impact and cost-benefit analyses, as required by

applicable Executive Orders, ultimately concluding that it “issu[ed] the final rule only on a

reasoned determination that its benefits justify its costs.” Id. at 9.

At present, the Department has completed its negotiated rulemaking on the topic of revising

the borrower defense regulations, and is in the process of drafting a notice of proposed rulemaking.

VI. THIS LITIGATION

Plaintiffs filed their original complaint challenging the 705 Notice on July 6, 2017. See

ECF No. 1. They have since amended that complaint twice to add claims against both the IFR and

the 2018 Rule. The currently operative pleading is the Second Amended Complaint, which asserts

six causes of action challenging each of the Department’s three actions on both substantive and

procedural grounds. See Sec. Am. Compl. for Declaratory & Injunctive Relief, ECF No. 53

(“SAC”). As reflected in their memorandum supporting their second renewed motion for summary

judgment, ECF No. 56 (“Pls.’ Mem.”), Plaintiffs allege that the 705 Notice violates the APA

because the Department did not comply with the requirements of Section 705, and did not engage

in notice-and-comment rulemaking. Plaintiffs contend that the Department should have applied

the four-part test a court would use in assessing preliminary injunctive relief, and that the

Department’s explanation in support of the 705 Notice “is unreasonable and insufficient under any


14

standard.” Pls.’ Mem. at 30. Plaintiffs also allege that the 2018 Rule is substantively invalid

because the Department provided an arbitrary and capricious justification, id. at 42, and

procedurally defective because the Department improperly invoked the “good cause” exception to

negotiated rulemaking under the HEA, id. at 50-52. Plaintiffs assert similar challenges to the IFR.

See id. at 52-60.

By Minute Order entered March 1, 2018, the Court ordered this case consolidated with a

companion case challenging the same agency actions and brought by a group of state attorneys

general (Massachusetts v. DeVos, No. 1:17-cv-1331). That same order set the currently operative

briefing schedule1 and provided for Defendants to supplement the administrative record with a

certified list of the contents of the administrative record underlying the 2018 Rule, which

Defendants filed and served upon Plaintiffs on April 2, 2018.2 See ECF No. 57. Because

Defendants have complied with the requirements of the APA, Plaintiffs’ claims fail as a matter of

law and the Court should enter summary judgment for Defendants.

STANDARD OF REVIEW

The Court’s review of the parties’ cross motions for summary judgment is “limited to the

administrative record,” Calloway v. Harvey, 590 F. Supp. 2d 29, 36 (D.D.C. 2008), which

“includes all materials compiled by the agency . . . that were before the agency at the time the

1 The parties agree that the case can be resolved on cross motions for summary judgment, and that

Defendants’ obligation to respond to Plaintiffs’ Second Amended Complaint is stayed pending

disposition of the parties’ summary judgment motions.

2 Plaintiffs’ reliance, even as background, on extra-record materials, such as “comments and other

documents from the 2016 rulemaking,” Pls.’ Mem. at 5 n.1, is improper. The Department is

“accorded a presumption of regularity in the compilation of the administrative record in APA

cases,” which may be overcome to permit consideration of evidence beyond that which it submits

as part of the administrative record only upon a showing, which Plaintiffs have not attempted to

make here, of “bad faith on the part of the agency or other exceptional circumstances.” Stand Up

for California! v. U.S. Dep’t of Interior, 71 F. Supp. 3d 109, 123 (D.D.C. 2014).


15

[challenged] decision was made,” James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1095

(D.C. Cir. 1996) (citations omitted). Summary judgment is typically warranted if the record shows

that the case has no genuine issue of material fact and that “the [moving party] is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a)-(c). But in an action for judicial review of

agency action, “the Rule 56 standard does not apply.” Nat’l Parks Conservation Ass’n v. United

States, 177 F. Supp. 3d 1, 12 (D.D.C. 2016). Rather, the “court’s review is limited to the

administrative record, . . . and its role is limited to determining whether or not as a matter of law

the evidence in the administrative record permitted the agency to make the decision [that] it did.”

Id. (citations omitted); see also Cty. of L.A. v. Shalala, 192 F.3d 1005, 1011 (D.C. Cir. 1999)

(“Generally speaking, district courts reviewing agency action . . . operate [ ] as appellate courts

resolving legal questions” (citation omitted)). “Summary judgment thus serves as the mechanism

for deciding, as a matter of law, whether the agency action is supported by the administrative

record and otherwise consistent with the APA standard of review.” Citizens for Responsibility &

Ethics in Wash. v. SEC, 916 F. Supp. 2d 141, 145 (D.D.C. 2013).

“The APA provides a ‘default standard’ of judicial review of agency actions when a statute

does not otherwise provide one.” Deppenbrook v. Pension Benefit Guar. Corp., 950 F. Supp. 2d

68, 74 (D.D.C. 2013) (citation omitted). Pursuant to that standard, an agency decision is set aside

only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

5 U.S.C. § 706(2)(A). This standard of review is “deferential,” and does not allow a court to

substitute its judgment for that of the agency. Jackson v. Mabus, 808 F.3d 933, 936 (D.C. Cir.

2015) (“The question is not what we would have done, nor whether we agree with the agency

action. Rather, the question is whether the agency action was reasonable and reasonably

explained.”).


16

Where, however, a statutory provision “sets forth its own standard of judicial review,” that

standard applies and the default APA standard is “inapposite.” Al-Fayed v. CIA, 254 F.3d 300,

304 (D.C. Cir. 2001). To the extent that Section 705’s “justice so requires” language provides a

judicially manageable standard of review, that standard controls the Court’s review of action taken

pursuant to Section 705. See Picur v. Kerry, 128 F. Supp. 3d 302, 308 (D.D.C. 2015) (“unless a

particular statute provides otherwise, courts review final agency actions . . . using the standard of

review set forth in section 706 of the APA”).

ARGUMENT

I. THE 705 NOTICE WAS A VALID EXERCISE OF AGENCY AUTHORITY

Plaintiffs’ challenges to the 705 Notice fail because Section 705 confers upon an agency

unreviewable discretion to postpone the effective date of its action pending judicial review. Even

if judicial review were available, the Court should enter summary judgment for Defendants on

Plaintiffs’ 705 Notice claims because the Department satisfied Section 705’s flexible “justice so

requires” standard and because it was not required to go through notice and comment rulemaking

or justify a substantive change in policy to effectuate the temporary postponement that Section

705’s plain text authorizes.

A. The Decision Of Whether To Postpone The Effective Date Of Agency Action

Pending Judicial Review Is Committed To Agency Discretion By Law

Judicial review of the Department’s Section 705 Notice is unavailable because Section 705

commits to agency discretion the decision to postpone an effective date pending judicial review.

By their terms, the APA’s judicial review provisions do not apply in two situations: “first, if an

applicable statute precludes judicial review, and second, if the agency action at issue is ‘committed

to agency discretion by law.’” People for the Ethical Treatment of Animals, Inc. v. U.S. Dep’t of

Agric., 7 F. Supp. 3d 1, 10 (D.D.C. 2013) (quoting 5 U.S.C. § 701(a)(2)). “Agency action is


17

committed to agency discretion by law when the statute is drawn so that a court would have no

meaningful standard against which to judge the agency’s exercise of discretion . . . [rendering]

meaningful judicial review [ ] impossible.” Steenholdt v. FAA, 314 F.3d 633, 638 (D.C. Cir. 2003)

(citation omitted). Where this occurs, the applicable statute “can be taken to have ‘committed’ the

decisionmaking to the agency’s judgment absolutely.” Heckler v. Chaney, 470 U.S. 821, 830

(1985).

Section 705 effectuates this type of absolute commitment. As it pertains to agency action,

it provides: “When an agency finds that justice so requires, it may postpone the effective date of

action taken by it, pending judicial review.” 5 U.S.C. § 705. The only prerequisite Congress

imposed is that the agency “find[]” that “justice so requires.” The statute thus draws a distinction

between “the objective existence of certain conditions” – i.e. that justice requires a postponement

– “and the [agency’s] determination that such conditions are present.” Kreis v. Sec’y of Air Force,

866 F.2d 1508, 1513 (D.C. Cir. 1989). The Supreme Court has recognized this distinction and

found that similar statutory language basing agency action upon an official making a finding that

certain conditions are met committed that finding to agency discretion. Webster v. Doe, 486 U.S.

592, 600 (1988) (emphasizing that the relevant statute “allows termination of [a CIA] employee

whenever the Director ‘shall deem such termination necessary or advisable in the interests of the

United States,’ not simply when the dismissal is necessary or advisable to those interests”); cf.

Allina Health Servs. v. Price, 863 F.3d 937, 941 (D.C. Cir. 2017) (language in the Medicare statute

granting providers a right to expedited judicial review “whenever the [Provider Reimbursement

Review Board] determines” it lacks authority to decide a particular issue “conditions expedited

judicial review in the district court on the existence of that no-authority determination, not on

whether that determination is correct” and precludes judicial review of that determination).


18

Likewise, Section 705 allows an agency to postpone an effective date pending judicial

review whenever the agency finds that justice so requires, not when justice requires such action in

the estimation of a reviewing court. Accordingly, it “fairly exudes deference” to the Department

in this case and “foreclose[s] the application of any meaningful judicial standard of review.”

Webster, 486 U.S. at 600; see also Bernardo ex rel. M&K Eng’g, Inc. v. Johnson, 814 F.3d 481,

491–92 (1st Cir. 2016) (finding that statutory language allowing the Secretary of the Department

of Homeland Security to take certain action based on “what [he] deems to be good and sufficient

cause” made clear that “what constitutes ‘good and sufficient cause’ is within the Secretary’s

discretion” (citation omitted)); Wendland v. Gutierrez, 580 F. Supp. 2d 151, 153–54 (D.D.C. 2008)

(statutory language conferring authority to take action “[a]t such times as [the Director of the

National Oceanic and Atmospheric Administration] may deem necessary” precluded judicial

review of the decision).

The discretionary finding that Section 705 requires an agency to make – that “justice so

requires” – further suggests that the agency’s determination is unreviewable. Like “good and

sufficient cause,” Bernardo, and when the director “deem[s] it necessary,” Wendland, “justice so

requires” is inherently discretionary and devoid of a standard. In interpreting the similar phrase

“when justice requires” in a regulation of the Patent and Trademark Office, 37 C.F.R. § 1.183,

courts have found that the “inherently flexible” standard confers unreviewable discretion on the

Office’s Commissioner. See Mobil Oil Corp. v. Dann, 448 F. Supp. 487, 489 n.3 (D.D.C. 1978)

(“when justice requires” was an “inherently flexible standard” that “addressed to the sound

discretion of the Commissioner” the authority to “grant equally flexible forms of relief to do justice

according to the facts of individual cases.”); Nitto Chem. Indus. Co. v. Comer, Civ. A. No. 93-


19

1378(JHG), 1994 WL 872610, at *2 n.4 (D.D.C. Mar. 7, 1994) (same regulation “places the

determination of whether . . . justice requires waiver, within the discretion of the Commissioner.”).

Here, the statute commits the decision of whether to postpone an effective date to the

agency, irrespective of whether a court would so find. In fact, the statute provides a separate

standard by which a reviewing court can delay the effective date of an agency action: “[o]n such

conditions as may be required and to the extent necessary to prevent irreparable injury.” 5 U.S.C.

§ 705. In setting forth these distinct standards, Congress distinguished between agency action and

court action, committing each exclusively to the province of the entity taking the action. See

Watervale Marine Co. v. U.S. Dep’t of Homeland Sec., 55 F. Supp. 3d 124, 138–39 (D.D.C. 2014)

(when considering whether statutory scheme evinces congressional intent to commit a decision to

agency discretion, court should consider “the function and purpose of the statute as a whole,”

including “guidance or standards from other portions of the statute”).

Congress did not set forth any factors that an agency must consider in making its

determination or any other requirements to guide agency discretion. Indeed, it merely permits (by

using the word “may”) an agency to postpone an effective date and does not require it to take or

not take such action under any circumstances or provide any further guidance on how an agency

should exercise its discretion. See id. at 143 (where the word “may” is “coupled with ‘absolutely

no guidance’ as to how the agency should exercise that discretion, the matter has been committed

to agency discretion by law” (citation omitted)); Wildearth Guardians v. Kempthorne, 592 F. Supp.

2d 18, 25 (D.D.C. 2008) (where statute gave the Secretary of the Interior the “authority – but not

the duty” to take certain action, the Secretary’s decision of whether or not to take that action was

“expressly committed to the Secretary’s discretion, the exercise of which is not structured by any

statutorily prescribed criteria or procedures” (emphasis and citation omitted)). Because Section


20

705 “fairly exudes deference to the [Secretary]” and “appears to . . . foreclose the application of

any meaningful judicial standard of review,” Webster, 486 U.S. at 600, the decision Plaintiffs

attempt to challenge is committed to agency discretion by law.3

B. The Department Complied With The Requirements Of Section 705

Even if the Court were to find that Section 705’s grant of discretionary authority provided

a meaningful judicial standard of review, it should still enter summary judgment for Defendants

on Plaintiffs’ claim that the Department “set forth an arbitrary and illogical justification” for the

705 Notice. SAC ¶ 99. Because the Department made the only finding required to invoke Section

705’s permissive authority – that justice required the effective date of the 2016 Rule to be

postponed – Plaintiffs’ arguments are meritless.4

i. The Department Properly Concluded That “Justice So Requires”

Postponing The 2016 Rule’s Effective Date

3 Section 705’s place within the framework of the APA distinguishes this case from Dickson v.

Secretary of Defense, in which the court found that different statutory language authorizing a

military review board to excuse a failure to timely file a request for correction of military records

“if it finds it to be in the interest of justice,” allowed for judicial review. 68 F.3d 1396, 1399 (D.C.

Cir. 1995). Notably the APA grants agencies the authority to stay implementation dates pending

judicial review in Section 705, which is titled “Relief pending review” and is entirely separate

from Section 704 (“[a]ctions reviewable”), which delineates the types of agency actions that are

reviewable. It is entirely reasonable to conclude that Congress, in granting an agency this unique

authority under Section 705 to postpone temporarily its own action pending judicial review,

intended to make the Section 705 stay itself – which has no effect on the reviewability of the

underlying action – unreviewable. In any event, as discussed below, the discretionary language in

Section 705 is the kind that, “even if judicial review is permitted, ‘fairly exudes deference,’ and

should be reviewed deferentially.” Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360, 393 (D.D.C.

2017) (quoting Webster, 486 U.S. at 600)); see also Dickson, 68 F.3d at 1401–02.

4 Plaintiffs assert at several points that the APA’s default standard of review, 5 U.S.C. § 706(2),

imposes various requirements on the Department’s 705 decision. See, e.g., Pls.’ Mem. at 22-23.

As noted above, however, that standard only applies to the extent that “a statute does not otherwise

provide a standard of judicial review.” Dickson, 68 F.3d at 1404 n.12. Because Section 705 does

provide its own standard (to the extent it allows for judicial review at all), Plaintiffs’ resort to the

APA default is improper. At the very least, the Court’s review should be limited to whether the

Department “arbitrarily and capriciously” applied that discretionary standard.


21

As set forth above, an agency’s decision under Section 705 to temporarily postpone an

effective date pending judicial review is committed to agency discretion and unreviewable. But

even if some level of judicial review is permitted, that review must reflect the broad grant of

discretion that Congress has conferred upon an agency to act pursuant to Section 705. See Dickson,

68 F.3d at 1401 (finding that even if judicial review is available pursuant to a statutory provision

conferring broad discretion upon an agency to act, that review should “show deference to the

agency’s determination”).

The phrase “when justice requires” is traditionally understood to provide a broad, flexible

standard conferring discretion to act. For instance, as used in Federal Rule of Civil Procedure

15(a)(2), and previously in Rule 13(f), the phrase is understood to create a “generous standard,”

Harris v. Sec’y, U.S. Dep’t of Veterans Affairs, 126 F.3d 339, 344 (D.C. Cir. 1997), and a

presumption that amendments to complaints should be liberally allowed. See Budd Co. v.

Travelers Indem. Co., 820 F.2d 787, 791–92 (6th Cir. 1987) (“The clause in Rule 13(f) permitting

amendments ‘when justice requires’ is especially flexible and enables the court to exercise its

discretion and permit amendment whenever it seems desirable to do so.”); see also Triad Elec. &

Controls, Inc. v. Power Sys. Eng’g, Inc., 117 F.3d 180, 195 (5th Cir. 1997) (same). And the

Supreme Court recently held that the similar phrase “interests of justice” calls for a flexible, case-

by-case, deferential inquiry: “As its name betrays, the ‘interests of justice’ standard contemplates

a peculiarly context-specific inquiry. So we doubt that any attempt to provide a general definition

of the standard would prove helpful. . . . Because a trial court’s decision [using this standard] is so

fact-specific, it deserves deference.” Martel v. Clair, 565 U.S. 648, 663-64 (2012). Moreover, the

permissive nature of Section 705 further underscores the discretionary nature of the standard. See

Dickson, 68 F.3d at 1401 (“When a statute uses a permissive term such as ‘may’ rather than a


22

mandatory term such as ‘shall,’ this choice of language suggests that Congress intends to confer

some discretion on the agency . . . .”); see also Kingdomware Techs., Inc. v. United States, 136 S.

Ct. 1969, 1977 (2016) (“Unlike the word ‘may,’ which implies discretion, the word ‘shall’ usually

connotes a requirement.”).

Here, the Department explicitly and reasonably concluded that “[i]n light of the existence

and potential consequences of the [CAPPS] litigation,” “justice requires it to postpone certain

provisions of the final regulations pursuant to the [APA], pending judicial review.” AR-A at 1.

Specifically, the Department recognized the need to “preserve the regulatory status quo while the

[CAPPS] litigation is pending and the Court decides whether to uphold the final regulations.” Id.

The Department explained that the plaintiffs in that litigation “raised serious questions” about the

validity of certain provisions of the 2016 Rule and identified “substantial injuries” that could result

if the 2016 Rule were to go into effect before judicial review could be completed. Id. Given this

legal uncertainty, the Department determined that “maintaining the status quo [was] critical.” Id.

Among the substantial injuries noted by the Department were the compliance costs that

participating institutions would incur, including modifying existing enrollment agreements and

increased exposure to the “substantial costs” associated with the 2016 Rule’s financial

responsibility trigger provisions. Id. Basing its finding on this obvious point – that it makes little

sense to require regulated entities to incur the costs of complying with regulations that might be

struck down in a pending court challenge – is in full keeping with Section 705’s purpose.

The Department also considered the impact that postponing the 2016 Rule pending judicial

review would have on student borrowers, finding that they would not be prevented from obtaining

relief because the existing regulations allow for borrower defense claims, those regulations will

remain in effect, and the Department will continue to process borrower defense claims under those


23

regulations. Id. Further, the Department determined, upon its analysis of the overall budgetary

impact of the 2016 Rule, that the United States would suffer no significant harm as a result of the

delay and would in fact avoid significant costs associated with changes to the borrower defense

provisions and closed school discharges. Id.

These findings, which establish that postponing the effective date would avoid substantial

costs associated with implementing the 2016 Rule while its legality is litigated in court, are more

than sufficient to satisfy Section 705’s flexible “when justice so requires” standard. The 705

Notice clearly set forth a “rational connection” between the stay and the CAPPS litigation, Sierra

Club v. Jackson, 833 F. Supp. 2d 11, 34 (D.D.C. 2012), and invoked the common-sense rationale

on which Section 705 is premised – that there may be situations when it is efficient for an agency

to forestall the effective date of an action when that action has been challenged in court. As such,

the Department’s invocation of Section 705 was valid.

Further, “there is no prohibition against having more than one justification for invoking

Section 705, provided that one of them meets the statutory requirements.” State v. U.S. Bureau of

Land Mgmt., 277 F. Supp. 3d 1106, 1122 (N.D. Cal. 2017), appeal filed, No. 17-17456 (9th Cir.

Dec. 8, 2017).5 As such, there is no merit to Plaintiffs’ argument that the Section 705 Notice is

invalid because it took note of an additional benefit associated with the postponement: that the

5 In that case, the court ultimately vacated a Section 705 stay because it was used to postpone

certain “compliance dates” applicable to an agency rule that had already become effective. In

rejecting the Bureau of Land Management’s argument that Section 705 allows an agency to

postpone a compliance date in addition to an effective date, the court focused on the plain language

of the statute, which “authorizes postponement of the ‘effective date,’ not ‘compliance dates.’”

277 F. Supp. 3d at 1118. That holding relies on an overly-constrained reading of Section 705.

More importantly, it is inapplicable to this case, in which it is undisputed that the Department

invoked Section 705 prior to the date the 2016 Rule was to become effective. See also Becerra v.

U.S. Dep’t of Interior, 276 F. Supp. 3d 953, 964 (N.D. Cal. 2017) (holding Section 705 stay was

invalid where it postponed rule which had already become effective and recognizing that the statute

“permits an agency to postpone the effective date of a not yet effective rule” (citation omitted)).


24

Department was planning to review and revise the regulations through the negotiated rulemaking

process, and the postponement would therefore prevent regulated entities from incurring costs that

might be eliminated in a future rulemaking. Plaintiffs assert that the Department’s noting this

additional factor invalidates the 705 Notice because “Section 705 does not authorize an agency to

delay a rule for the purpose of undertaking a new rulemaking.” Pls.’ Mem. at 39.

Far from imposing rigid requirements on an agency’s discretion to act, however, Section

705’s flexible “justice so requires” standard accords an agency significant latitude to stay an

effective date pending judicial review whenever justice might require such action in a particular

circumstance. Here, it was entirely reasonable for the Department to consider, in deciding whether

justice requires a delay of the 2016 Rule effective date pending litigation, the reality that it intends

to review and revise the borrower defense regulations in the near future. As noted above, the

CAPPS case raised serious legal questions about the 2016 Rule in a lawsuit that seeks to vacate

that Rule in its entirety.6 These legal questions, in addition to policy concerns identified by the

new administration, led the Department to initiate a new negotiated rulemaking process. See AR-

A at 8-9. Given these considerations, as well as the substantial savings to regulated entities and

the public fisc that would be achieved through delayed implementation, the Department was within

its discretion to stay all significant portions of the 2016 Rule to avoid disruption and substantial

compliance costs that could potentially be obviated either by the promulgation of new borrower

defense rules or, ultimately, the issuance of a judicial ruling in the CAPPS litigation. Unlike in

6 CAPPS expressly requested an order declaring “that the entirety of the [2016] Rule is contrary

to the Constitution,” enjoining the Defendants from “taking any action whatsoever pursuant to the

final regulations,” and “[v]acating the final regulations.” AR-A at 248-249. That the Department

responded to its concerns about the litigation by staying the significant portions of the 2016 Rule,

as opposed to only those that CAPPS sought to preliminarily enjoin, does exactly the opposite of

“confirm[ing ] that the [705 Notice] had little relation to the CAPPS litigation.” Pls.’ Mem. at 40.


25

Sierra Club, where the 705 Notice related “entirely to the pending reconsideration proceedings”

and only “paid lip service” to the pending litigation, 833 F. Supp. 2d at 33–34, the 705 Notice at

issue here is primarily focused on the CAPPS litigation, with only a brief mention of the

Department’s review of the borrower defense regulations.7

ii. The Department Was Not Required To Use The Four-Part Preliminary

Injunction Standard Employed By Courts

Plaintiffs further argue that the Department’s failure to employ the four-part judicial test

for awarding preliminary injunctive relief “alone warrant[s] setting aside” the 705 Notice. Pls.’

Mem. at 26. As indicated above, however, the phrase “when justice so requires” has not been read

in other contexts to require a finding that relief is available only if preliminary injunction standards

have been satisfied. And there is nothing specific to Section 705 that compels such a result.

Importantly, the section sets forth different standards for agencies than for courts to provide relief

pending judicial review, and the language of the section’s first sentence contrasts with the language

of the second sentence, which permits a court, “[o]n such conditions as may be required and to the

extent necessary to prevent irreparable injury,” to “issue all necessary and appropriate process to

postpone the effective date of an agency action or to preserve status or rights pending conclusion

of the review proceedings.” 5 U.S.C. § 705 (emphasis added). That Congress chose, in the second

sentence of Section 705, to make irreparable injury a predicate for a court’s grant of a judicial stay

demonstrates that neither irreparable injury nor any other portion of the traditional test for granting

preliminary relief is a predicate to an agency’s exercise of discretion under the section’s first

7 Plaintiffs’ related argument that the CAPPS litigation was “merely a pretext for anticipated

deregulation,” Pls.’ Mem. at 41, is similarly misplaced. In cases involving challenges to

administrative agency action under the APA, the general rule is that “the actual subjective

motivation of agency decisionmakers is immaterial as a matter of law” absent a strong showing of

bad faith or improper behavior. In re Subpoena Duces Tecum Served on Office of Comptroller of

Currency, 156 F.3d 1279, 1279-80 (D.C. Cir. 1998).


26

sentence. “[W]hen Congress selects different language in one part of a statute from that used

elsewhere, the choice is intentional and purposeful.” Alston v. District of Columbia, 561 F. Supp.

2d 29, 41 (D.D.C. 2008) (citing Russello v. United States, 464 U.S. 16, 23 (1983)).

The difference in language between Section 705’s first and second sentences carefully

delineates the different authorities and standards for courts and agencies to apply before offering

interim relief. An agency may “postpone the effective date of any action taken by it,” while a

court has more expansive authority to either “postpone the effective date of an agency action” or

“preserve status or rights” pending judicial review. See Senate Judiciary Committee Print, June

1945 at 38 (“The first sentence merely confirms administrative authority to grant a stay. The

second sentence authorizes courts to postpone the effective dates of administrative judgments or

rules in cases in which . . . parties could otherwise have no real opportunity to seek judicial review

except at their peril.”). An agency’s less expansive authority is expressly tied to a finding that

“justice so requires,” while a court’s powers are conditioned on a finding of irreparable harm. See

Administrative Procedure Act, Legislative History, 79th Cong., 1944-46, S. Doc. No. 248, at 369

(1946) (“[Section 705] provides that any agency may itself postpone the effective date of its action

pending judicial review, or, upon conditions and as may be necessary to prevent irreparable

injury, reviewing courts may postpone the effective date of contested action or preserve the status

quo pending conclusion of judicial review proceedings.” (emphasis added)). A court should not

disturb this differentiated scheme by imposing on agencies a four-factor preliminary injunction

test that Congress did not impose. See Keene Corp. v. United States, 508 U.S. 200, 208 (1993) (A

court will not “read[ ] a phrase into the statute when Congress has left it out.”). By using different

language, Congress established that the standards governing stays issued by agencies on one hand,

and courts on the other, are different.


27

More fundamentally, the four-factor preliminary injunction standard is judicially made,

fashioned by courts over time to impose a framework on judicial determinations of when equitable

relief may be warranted. Courts should not require an agency to employ the same framework to

grant equitable relief under Section 705. The Supreme Court has “caution[ed] reviewing courts

against engrafting their own notions of proper procedures upon agencies,” Vermont Yankee

Nuclear Power Corp. v. NRDC, 435 U.S. 519, 525 (1978), and emphasized the “basic tenet of

administrative law that agencies should be free to fashion their own rules of procedure,” Perez v.

Mort. Bankers Ass’n, 135 S. Ct. 1199, 1207 (2015) (citation omitted). Engrafting the framework

for judicial stays on stays granted by agencies when Section 705 itself gives agencies broad

discretion to determine what justice requires is contrary to these longstanding principles.

The danger in imposing judicially-crafted standards on an agency’s exercise of discretion

is readily apparent here. By its plain terms, Section 705’s first sentence envisions the existence of

a court proceeding challenging a particular agency action and the judicial resolution of that

challenge. Requiring an agency to make a finding regarding the preliminary injunction factors

prior to such judicial resolution and as a precondition to exercising its Section 705 authority would

result in the agency defending in litigation an action it has just argued should be preliminarily

enjoined because it would cause irreparable harm and is unlikely to survive a merits challenge.

While it is possible that Congress meant for Section 705 to provide an agency a means to prevent

irreparable injury in the unusual circumstance that it formally determines its own action to be

illegal in the face of a challenge, it is hardly likely that Congress, in employing the broad and

flexible “when justice so requires” standard, intended an agency’s Section 705 authority to be

exclusively limited to such a situation. See Griffin v. Oceanic Contractors, Inc., 458 U.S. 564,

575 (1982) (“[I]nterpretations of a statute which would produce absurd results are to be avoided if


28

alternative interpretations consistent with the legislative purpose are available.”). The Court

should decline to accord Section 705 such an interpretation, especially when that interpretation, as

described above, runs contrary to the plain text of the statute.

Plaintiffs rely on Sierra Club v. Jackson, 833 F. Supp. 2d at 30–31, for their contention

that an agency, as opposed to a court, is required to employ the four-factor preliminary injunction

test before it acts pursuant to Section 705.8 That holding is not binding on this Court and is not

supported by the text of Section 705, which expressly states different criteria for agencies and

courts. Further, the Sierra Club court’s departure from the clear text of the statute is based on its

reading of an isolated portion of the APA’s legislative history, which stated that the “section

permits either agencies or courts, if the proper showing be made, to maintain the status quo,” and

that “[t]he authority granted is equitable and should be used by both agencies and courts to prevent

irreparable injury or afford parties an adequate judicial remedy.” Administrative Procedure Act,

Pub. L. No. 1944–46, S. Doc. No. 248, at 277. This language stops well short of evincing a

congressional intent to require an agency to consider the preliminary injunction factors, including

irreparable injury, before postponing action pursuant to Section 705. Indeed, it recognizes that

agencies and courts can act pursuant to Section 705 either to prevent irreparable injury “or afford

parties an adequate judicial remedy.” Id. This distinction belies Plaintiffs’ contention that an

agency and a court are both bound to act according to the same standard and only when irreparable

harm is at issue, and, as noted above, other contemporaneous legislative history explicitly

distinguishes between the standards to be applied by agencies and courts.

8 Plaintiffs cite three additional cases for the proposition that courts apply the preliminary

injunction factors when determining whether to grant a judicial stay under Section 705. See Pls.’

Mem. at 25. Assuming arguendo that this is true, it says nothing about what standard an agency

must use in exercising its Section 705 authority. On that point, Sierra Club stands alone in

requiring that an agency apply the preliminary injunction factors.


29

In any event, substituting the language of the legislative history for the operative text of

the statute is inappropriate. As the D.C. Circuit and the Supreme Court have emphasized, “resort

to legislative history is not appropriate in construing plain statutory language.” U.S. ex rel. Totten

v. Bombardier Corp., 380 F.3d 488, 494 (D.C. Cir. 2004); see also Ratzlaf v. United States, 510

U.S. 135, 147–48 (1994) (courts should “not resort to legislative history to cloud a statutory text

that is clear”). This is especially true in the context of Section 705 where “the legislative history

provides limited and not entirely consistent evidence of Congress’ intent.” Bureau of Land Mgmt.,

277 F. Supp. 3d at 1124-25. This Court should therefore reject Sierra Club’s holding that an

agency must analyze the preliminary injunction factors when acting pursuant to Section 705.9

iii. Plaintiffs’ Remaining Arguments Regarding The Department’s Explanation

Lack Merit

Plaintiffs further argue that the Department’s explanation in support of the 705 Notice is

“unreasonable and insufficient under any standard.” Pls.’ Mem. at 27. This argument is essentially

a rehash of the argument that the Department should have applied the four-factor test courts use

for awarding preliminary injunctive relief. See id. at 28 (discussing the first factor of the

9 In vacating the EPA’s invocation of Section 705 as arbitrary and capricious, the court also noted

that the EPA “previously ha[d] employed the four-part preliminary injunction test in its review of

requests to stay prior agency actions.” Sierra Club v. Jackson, 833 F. Supp. 2d at 32. See also

Pls.’ Mem. at 26 n.4 (citing other agencies’ Section 705 practices). Here, on the other hand, there

is no suggestion that the Department of Education has ever adopted this standard. Nevertheless,

the 705 Notice reflects consideration of the factors that inform a preliminary injunction analysis,

insofar as it determined that (1) the plaintiffs “have raised serious questions concerning the

validity of certain provisions of the final regulations”; (2) there were “substantial injuries that

could result if the final regulations go into effect before those questions are resolved,” including

the modification of existing contracts; (3) the balance of harms favored postponement because

implementation “could impose substantial costs” on institutions while “the postponement of the

final regulations will not prevent student borrowers from obtaining relief” under existing

regulations; and (4) the public interest favored postponement because “the United States will suffer

no significant harm” and postponement would “avoid . . . significant costs to the Federal

government and ultimately the Federal taxpayer.” AR-A at 1-2.


30

preliminary injunction test and arguing that the 705 Notice is deficient because the Department

“did not evaluate the likelihood of success of CAPPS’s claims”); id. at 29-31 (arguing that 705

Notice is invalid because it did not identify any “imminent or certain” harms that would be

“irreparably suffered” in the absence of a postponement, as would be required under the second

prong of the preliminary injunction test); id. at 31-37 (arguing that the 705 Notice failed to balance

the various equities involved, as is required under the preliminary injunction test, in Plaintiffs’

preferred manner); id. at 38-39 (arguing that the Department insufficiently analyzed the “public

interest” prong of the preliminary injunction test). As discussed above, the Department was not

required to consider these judicial standards or make any findings respecting them. And contrary

to Plaintiffs’ apparent belief, an agency’s consideration of what “justice” requires in a given case

need not precisely parallel a court’s analysis of whether preliminary injunctive relief would be

appropriate. The Department made the only finding Congress required it to make to act pursuant

to Section 705 – that justice so required the stay.

Plaintiffs’ challenge to the Department’s explanation in support of the 705 Notice is also

based on the premise that various statements in the Notice represent a change in agency policy

from that reflected in the 2016 Rule. As such, Plaintiffs repeatedly argue that the Department had

an obligation to provide “reasoned explication” for its policy change. Pls.’ Mem. at 28; see also

id. at 31 (arguing that the 705 Notice was “arbitrary and capricious” because it failed to

acknowledge or give reasons for its change in position regarding the harm imposed by the 2016

Rule); id. at 36 (same, with respect to position on impact of arbitration and class action waiver

provisions) id. at 39 (same, with respect to assessment of public interest).10 But these arguments

10 Plaintiffs cite California v. Bureau of Land Management, 286 F. Supp. 3d 1054, 2018 WL

1014644, at *6 (N.D. Cal. Feb. 22, 2018) (“California v. BLM II), for the proposition that an

agency must provide “good reasons and detailed justification” when its reasoning in a “delay rule”


31

incorrectly assume that the 705 Notice effectuates a substantive change in agency policy. As

discussed in more detail below, the Notice is a purely procedural device that operates by

temporarily freezing the status quo during the pendency of judicial review; it does not announce

any new policy or substantively amend or rescind the 2016 Rule, which at present time remains

the official policy of the Department. See Jackson, 833 F. Supp. 2d at 28 (“A temporary stay to

preserve the status quo does not constitute a substantive rulemaking because, by definition, it is

not ‘designed to implement, interpret, or prescribe law or policy[.]’” (quoting 5 U.S.C. § 551(4))).

While it is true that the Department is reconsidering the borrower defense regulations, its

process for doing so remains ongoing, and the Department has not yet determined what policy it

will implement going forward. Because the 705 Notice is not appropriately characterized as an

exercise of substantive rulemaking under the APA, the Department was not required to “display

awareness that it is changing position and provide [a] reasoned explication,” Pls.’ Mem. at 32

(internal quotations omitted), and its failure to do so provides no basis to set aside the 705 Notice.

See Oceana v. Bureau of Ocean Energy Mgmt., 37 F. Supp. 3d 147, 165 n.18 (D.D.C. 2014) (noting

that where an agency decision does not depart from any prior policy, the line of cases requiring an

agency to provide reasoned explanation in support of such departure is “inapposite”).

Importantly, Section 705 is available only in the narrow circumstance when an agency

action that has not yet become effective is subject to judicial review, and an agency determines

that justice requires the effective date to be postponed during the pendency of the judicial review.

The resulting delay in effective date is temporary and limited by its express terms to the duration

“contradicts the reasoning underlying the [rule it is delaying].” Pls.’ Mem. at 29. But that case is

inapposite because it did not address a temporary postponement pursuant to Section 705 or suggest

that any particular factor is prohibited in a court’s consideration of what justice requires. In any

event, it misapplies the doctrine on which it relies. See infra pp. 38 & n.14.


32

of judicial review. Congress, by providing a flexible and discretionary standard that eschews any

rigid considerations or detailed findings, allowed for quick, decisive agency action to prevent an

agency rule being challenged from becoming effective during the pendency of that challenge. An

agency that invokes Section 705 to freeze the regulatory status quo by imposing a temporary stay

in these circumstances does not announce any new policy or substantively amend or rescind the

action it delays. Plaintiffs, nevertheless, would require an agency under these circumstances to

provide an analysis of the costs and benefits associated with the policy whose implementation date

it is delaying, in the same manner it would have to explain a substantive rulemaking or formal

change in policy. This would violate both the letter and the spirit of Section 705. The Court should

reject Plaintiffs’ attempt to impose burdens under Section 705 that are simply not there.

C. The 705 Notice Is Not A Form Of Rulemaking And Neither Amends Nor

Rescinds the 2016 Rule

The Court should also enter summary judgment for Defendants on Plaintiffs’ claim that

the 705 Notice was subject to the notice-and-comment requirements of the APA. The APA defines

“rule making” as “agency process for formulating, amending, or repealing a rule.” 5 U.S.C. §

551(5). The 705 Notice, on the other hand, does none of these things. It is not a substantive rule

itself and it neither amends nor rescinds the 2016 Rule. Rather, the 705 Notice is a purely

procedural device, employed for the specific purpose of temporarily postponing the effective date

of agency action during the pendency of judicial review of that action.

The APA further provides, as a general matter, that a “notice of proposed rule making shall

be published in the Federal Register” and then “the agency shall give interested persons an

opportunity to participate in the rule making through submission of written data, views, or

arguments with or without opportunity for oral presentation.” 5 U.S.C. § 553(b)-(c). Section 705

does not, however, cross-reference the procedural requirements of Section 553 or otherwise


33

indicate that an agency must comply with rulemaking procedures when issuing a temporary stay

pending judicial review under Section 705. The APA has many cross-references, indicating that

Congress knew how to include them and chose to do so when it wanted to incorporate distinct

statutory elements within a separate, standalone statutory provision. That Congress declined to

include a cross-reference to Section 553 in Section 705 suggests that it did not conceive of an

agency’s postponement of an effective date under Section 705 as a form of rulemaking to which

notice and comment requirements apply. As between Section 553 and Section 705, which contains

no notice-and-comment requirement, Section 705 controls here, as it specifically authorizes the

action the Department took. See Norwest Bank Minn. Nat’l Ass’n v. FDIC, 312 F.3d 447, 451

(D.C. Cir. 2002) (“When both specific and general provisions cover the same subject, the specific

provision will control, especially if applying the general provision would render the specific

provision superfluous. . . .”).

Indeed, the fact that Section 705 addresses the authority of both courts (which have no

rulemaking authority under any provision of the APA) and agencies to provide relief pending

review – albeit different authority under different standards – confirms that the power is not

properly understood as a form of rulemaking to which notice and comment procedures apply. Nor

would it be practical for Section 553’s notice and comment requirements to apply to agency actions

taken pursuant to Section 705. Congress passed Section 705 to enable agencies to postpone the

effective date of an action pending litigation, but that would often be impossible if an agency had

to undergo time-consuming notice-and-comment rulemaking before issuing a Section 705


34

postponement. See Hoctor v. U.S. Dep’t of Agric., 82 F.3d 165, 167 (7th Cir. 1996) (recognizing

that notice-and-comment is “time-consuming” and “cumbersome”).11

Even if Section 553(c) were applicable to actions taken under Section 705, it only applies

to legislative or substantive rules, which the 705 Notice is not. See Lincoln v. Vigil, 508 U.S. 182,

196 (1993). In general, “[a] rule is legislative” – and thus subject to notice-and-comment – “if it

supplements a statute, adopts a new position inconsistent with existing regulations, or otherwise

effects a substantive change in existing law or policy.” Mendoza v. Perez, 754 F.3d 1002, 1021

(D.C. Cir. 2014). The agency action must somehow manifest a substantive change to the status

quo, such as by “grant[ing] rights, impos[ing] obligations, or produc[ing] other significant effects

on private interests.” Batterton v. Marshall, 648 F.2d 694, 701–02 (D.C. Cir. 1980).

The 705 Notice does not adopt any new policy position, grant any rights, impose any

obligations, or produce significant effects on any private interests – to the contrary, it expressly

“preserve[s] the regulatory status quo while the [CAPPS] litigation is pending.” AR-A at 1. See

Sierra Club v. Jackson, 833 F. Supp. 2d at 28 (finding that a stay pursuant to Section 705, which

was “not designed to do anything other than preserve the status quo,” “does not constitute a

substantive rulemaking because, by definition, it is not ‘designed to implement, interpret, or

prescribe law or policy[.]’” (quoting 5 U.S.C. § 551(4))). While the 2016 Rule has been published

in final form, its current status has been called into question by the CAPPS litigation, in which the

validity of the 2016 Rule has not yet been adjudicated. In this sense, the Department’s 705 Notice

11 Plaintiffs’ conception of Section 705 would also yield an anomalous result. Section 705 grants

agencies power to postpone the effect of any “action” taken. Agency action under the APA

includes, “an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or

failure to act.” 5 U.S.C. 551. Under Plaintiffs’ understanding, notice and comment procedures

would seemingly be required to postpone an agency action pursuant to Section 705 even for agency

actions where no such notice and comment rulemaking occurred in the first instance.


35

preserves the status quo by maintaining the prior regulatory regime governing borrower defenses,

in place since 1995, during the pendency of judicial review.

Ultimately, Section 705 does not provide for an agency to substantively change the status

quo, either by amending or rescinding the action it postpones or operating as its own substantive

rule, and thus falls well outside the rulemaking provisions of the APA.12 This conclusion is

bolstered by the fact that agencies frequently issue postponements pursuant to Section 705 without

utilizing notice-and-comment procedures, demonstrating that Plaintiffs’ interpretation, in addition

to contradicting the text and structure of the APA, finds no support in historical practice. See 79

Fed. Reg. 26,297-01 (May 7, 2014) (SEC); 76 Fed. Reg. 59,896-01 (Sept. 28, 2011) (Dep’t of

Labor); 73 Fed. Reg. 67,107-01 (Nov. 13, 2008) (EPA); 69 Fed. Reg. 19,937-01 (Apr. 15, 2004)

(EPA); 66 Fed. Reg. 27,863-01 (May 21, 2001) (Dep’t of Labor); 66 Fed. Reg. 20,191-01 (Apr.

20, 2001) (Dep’t of Energy); 60 Fed Reg. 54,949-01 (Oct. 27, 1995) (EPA). For all of these

reasons, the Department was not required to utilize notice-and-comment procedures,13 and the

Court should enter judgment for Defendants on Count II of the Amended Complaint.

II. THE 2018 FR WAS SUBSTANTIVELY AND PROCEDURALLY VALID

As with their challenge to the 705 Notice, Plaintiffs’ claims against the 2018 FR improperly

attempt to turn a mere delay into a substantive rescission of the 2016 Rule and the announcement

12 Because Section 705 is an independent grant of authority that authorizes an agency to

temporarily delay an effective date pending judicial review, Plaintiffs’ assertion that, outside of

the context of Section 705, a change to an agency’s effective date “triggers the HEA and APA

procedural requirements for rulemaking,” Pls.’ Mem. at 41, is legally irrelevant in this case.

13 Plaintiffs also assert that Defendants were required to use the negotiated rulemaking procedure

that the HEA requires for substantive Title IV regulations. By its terms, however, the negotiated

rulemaking statute applies only to the development of proposed rules. See 20 U.S.C.

§§ 1098a(a)(1); 1098a(b)(1). Because the 705 Notice did not propose regulations, the Department

was not required to engage in negotiated rulemaking before issuing it.


36

of a new agency rule changing the Department’s substantive policy. But once again, they have

chosen the wrong forum to attack the Department’s review and reconsideration of the 2016 Rule,

which remains ongoing, try as Plaintiffs might to argue otherwise. Because the Department

adequately explained the rationale for the temporally limited 2018 Rule and complied with all

procedural requirements, the Court should uphold the rule and grant Defendants’ summary

judgment on Plaintiffs’ substantive and procedural challenges.

A. The Department Has Articulated A Satisfactory Explanation For the 2018 FR

An agency action must be upheld so long as an agency “examine[s] the relevant data and

articulate[s] a satisfactory explanation for its action[,] including a rational connection between the

facts found and the choice made.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 43 (1983) (citation omitted). The Supreme Court has cautioned that pursuant

to the deferential standard of review required under the APA, “a court is not to substitute its

judgment for that of the agency . . . and should uphold a decision of less than ideal clarity if the

agency’s path may reasonably be discerned.” FCC v. Fox Television Stations, Inc., 556 U.S. 502,

513-14 (2009) (citations omitted); see also Mingo Logan Coal Co. v. EPA, 829 F.3d 710, 718

(D.C. Cir. 2016) (“Whether we would have done what the agency did is immaterial.”); Envtl.

Integrity Project v. McCarthy, 139 F. Supp. 3d 25, 40 (D.D.C. 2015) (“One might disagree with

the Agency’s conclusions or analysis—as Plaintiffs do—but its explanation is plain and

coherent”).

The Department’s explanation of the basis for the 2018 Rule readily withstands the APA’s

standard of review. The Department identified multiple grounds for the 2018 Rule, including the

“timing of the negotiated rulemaking,” “the effect of the master calendar requirement,” and the

desire to mitigate regulatory confusion. AR at 7. Based on these factors, and after considering

comments on the proposed delay, id. at 4-8, the Department concluded that delaying the effective


37

date of the 2016 Rule to July 1, 2019 is appropriate. Id. Buttressing this conclusion was an

extensive discussion of the effects of the delay, as well as an accounting statement. Id. at 8-12;

see FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760, 783 (2016), as revised (Jan. 28, 2016)

(holding agency’s conclusion was not arbitrary or capricious, and noting that the agency’s

“rationale received added support from [its] adoption of the net benefits test”). Having thus

articulated “a rational connection between the facts found and the choice made,” see State Farm,

463 U.S. at 43, the Department has satisfied its obligation under the APA to explain its action.

Plaintiffs’ arguments to the contrary are unpersuasive. Plaintiffs first claim that the

Department failed to adequately explain the basis for its decision because it cannot rely on the fact

of ongoing negotiated rulemaking and the potential effect of that rulemaking on the 2016 Rule.

Pls.’ Mem. at 42-45. Underlying this argument is the theory that the 2018 FR, in order to be found

legally sufficient, must fully articulate any deficiencies in the 2016 Rule that the Department has

identified. See id. at 43-44. But the APA imposes no such requirement, which would overlook

the limited and temporary nature of the agency action at issue. Again, the 2018 Rule does not

itself revise the contents of the 2016 Rule, nor does it impose new obligations on borrowers or

institutions, nor does it make assumptions as to what provisions of the borrower defense

regulations will ultimately be revised. There is therefore no basis to subject this temporary

postponement to the same level of judicial inquiry as would be required when considering any

future rule developed from the negotiated rulemaking. See Sierra Club v. Gorsuch, 715 F.2d 653,

658 (D.C. Cir. 1983) (“[A]pplication of the ‘arbitrary and capricious’ standard requires reviewing

courts to adjust their inquiry according to the particular agency action under review.”); Sierra Club

v. Salazar, 177 F. Supp. 3d 512, 532 (D.D.C. 2016) (“[A]rbitrary and capricious review defies

generalized application and must be contextually tailored.” (citation omitted)).


38

In this respect, the 2018 Rule is materially different from the Suspension Rule at issue in

California v. BLM II, 2018 WL 1014644 (N.D. Cal. Feb. 22, 2018), a case on which Plaintiffs

heavily rely. See Pls.’ Mem. at 42-45, 47. The Suspension Rule was based in large part on the

agency’s concerns about the costs, complexity, feasibility, and other implications of the underlying

rule, known as the Waste Prevention Rule, that the rule was suspending. The court found that the

agency’s new concerns appeared to rest on factual findings that contradicted those underlying the

Waste Prevention Rule but did not provide any contrary facts to support those concerns, and for

that reason, found that the plaintiffs were reasonably likely to succeed on the merits of their claim

that the Suspension Rule was arbitrary and capricious. 2018 WL 1014644 at *7-10 (citing as

examples the lack of facts to support concerns expressed in the Suspension Rule that the Waste

Prevention Rule burdens operators of marginal or low-producing wells, has a disproportionate

impact on small operators, and unnecessarily encumbers energy production).14 In contrast, here

the 2018 Rule does not challenge any of the factual underpinnings of the 2016 Rule.

Nor are Plaintiffs aided by Public Citizen v. Steed, 733 F.2d 93, 98 (D.C. Cir. 1984). See

Pls.’ Mem. at 44. In that case, the agency issued an “indefinite suspension” of regulations that had

previously been in effect for years, and subsequently argued that a “less precise explanation of the

bases for the decision” would suffice to survive judicial review because it had merely suspended

14 Moreover, in rejecting the contention that the Suspension Rule “should be reviewed with less

rigor than any future revision,” 2018 WL 1014644, at *7, the Court misapplied the Supreme

Court’s decision in Fox Television Stations, a case that Plaintiffs also rely on. See Pls.’ Mem. at

52-54). Fox Television Stations involved the implementation of a new enforcement policy, not

merely the suspension or delay of a prior policy, 556 U.S. at 517, and confirmed that the inquiry

into arbitrariness must be tailored to the agency action at issue. Id. at 514 (“We find no basis in

the Administrative Procedure Act or in our opinions for a requirement that all agency change be

subjected to more searching review.”). Thus, while Fox Television Stations may guide a challenge

to the outcome of the Department’s negotiated rulemaking process, it does not here compel a

conclusion that the Department’s explanation for the 2018 FR is inadequate.


39

the regulations rather than revoking them. Public Citizen, 733 F.2d at 98. The court rejected the

agency’s argument, concluding that the suspension amounted to a revocation because it would

remain in effect indefinitely. Id. Public Citizen is inapposite here, because the challenged 2018

FR is expressly limited to one year. AR at 1. Thus, and consistent with the requirements of Public

Citizen, the Department need only explain why it chose to temporarily delay the 2016 Rule for one

year; it need not delve into all of the rationales or justifications relating to whatever action the

agency may take in a separate rulemaking to revise the borrower defense regulations. See 733 F.2d

at 98 (“The inquiry required by the APA is a familiar one. The ‘agency must cogently explain

why it has exercised its discretion in a given manner.’” (citation omitted)).

Moreover, Plaintiffs’ contention that “[t]he need for ‘clarity and consistency’ is not a valid

basis for delay” is without merit. Pls.’ Mem. at 45-46. The crux of Plaintiffs’ argument appears

to be based on the premise that the Department “could have let the 2016 Rule go into effect in

2017.” Id. at 45; see id. at 46 (claiming that the Department’s “interests in clarity and consistency

would be equally served by letting the 2016 Rule go into effect as contemplated”). But the question

before the Court is not whether the agency could have pursued a different path, but whether its

action was a reasonable one. See Envtl. Integrity Project, 139 F. Supp. 3d at 40.

Additionally, courts have recognized that an agency may permissibly take into account the

confusion that may result from a particular course of action. See McKinney v. McDonald, 796

F.3d 1377, 1385 (Fed. Cir. 2015) (holding action making regulation prospective was not arbitrary

or capricious, where alternative “would create potential confusion among both claimants and

adjudicators, increasing the complexity of adjudications and the potential for errors and

inconsistent results”). Cf. Mid-Tex Elec. Co-Op., Inc. v. FERC, 822 F.2d 1123, 1132-34 (D.C. Cir.

1987) (R.B. Ginsburg, J.) (holding agency’s promulgation of interim rule without notice and


40

comment met good cause standard, given agency’s concern that the lack of a new rule would cause

“regulatory confusion” and “irremedia[ble] financial consequences” for utilities and their

customers). Further, Plaintiffs’ claim that the Department “failed to acknowledge the role of the

master calendar rule in addressing the potential for confusion or lack of clarity resulting from

regulatory changes,” Pls.’ Mem. at 46, is contradicted by the 2018 Rule, AR at 8 (acknowledging

comment “assert[ing] that the delay of selected provisions of the 2016 final regulations would

mitigate uncertainty about the potential impact of the regulations, especially in light of ongoing

litigation, the master calendar requirement, and ongoing negotiated rulemaking,” and agreeing that

“the delay will provide clarity for institutions and students”). Nor does the Department’s desire to

avoid “three separate sets of standards for borrower defense claims,” id. at 5, contravene its prior

determination that students should have “access to consistent, clear, fair, and transparent processes

to seek debt relief,” Pls.’ Mem. at 46 (quoting 81 Fed. Reg. at 76,047)—again, Plaintiffs incorrectly

conflate the 2018 Rule with what they expect to be the outcome of the negotiated rulemaking

process.

Plaintiffs therefore have offered no basis for the Court to conclude that the 2018 FR is

anything but “the product of reasoned decisionmaking.” See State Farm, 463 U.S. at 52.

B. There Is No Basis To Second-Guess The Department’s Determination That

The Benefits Of The 2018 Rule Justify Its Costs

i. APA Review Of An Agency’s Cost-Benefit Analysis Under Executive

Orders 12866 and 13563 Is Precluded

The Department assessed the costs and benefits of the 2018 Rule not because any statutory

provision required it to, but instead because “Executive Orders 12,866 and 13,563” did. AR at 8-

9. Alleged violations of these “Executive Orders cannot give rise to a cause of action” under the

APA. Fla. Bankers Ass’n v. U.S. Dep’t of Treasury, 19 F. Supp. 3d 111, 118 n.1 (D.D.C. 2014),

vacated on other grounds, 799 F.3d 1065 (D.C. Cir. 2015). “An Executive Order devoted solely


41

to the internal management of the executive branch—and one which does not create any private

rights—is not subject to judicial review.” Meyer v. Bush, 981 F.2d 1288, 1297 n.8 (D.C. Cir. 1993).

Executive Orders 12,866 and 13,563 are precisely such orders. While Executive Order 12,866

directs federal agencies to “assess both the costs and the benefits of the intended regulation,” Exec.

Order 12,866, § 1(b)(6) (Sept. 30, 1993), in a section titled “Judicial Review,” it states:

This Executive order is intended only to improve the internal management of the

Federal Government and does not create any right or benefit, substantive or

procedural, enforceable at law or equity by a party against the United States, its

agencies or instrumentalities, its officers or employees, or any other person.

Id. § 10. Executive Order 13,563, which “supplement[s] and reaffirms” Executive Order 12,866,

Exec. Order 13,563, § 1(b) (Jan. 18, 2011), contains nearly identical language: “This order is not

intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law

or in equity by any party against the United States, its departments, agencies, or entities, its

officers, employees, or agents, or any other person.” Id. § 7(d).

Such language expressly precludes judicial review. In Air Transportation Association of

America v. FAA, 169 F.3d 1 (D.C. Cir. 1999), the D.C. Circuit considered a similar Executive

Order that required federal agencies to conduct a “‘systematic analysis of expected benefits and

costs’” for infrastructure investments, but was expressly “‘intended only to improve the internal

management of the executive branch and does not create any right . . . enforceable against the

United States.’” Id. at 8 (quoting EO 12,893). Based on this language, the court dismissed the

plaintiff’s challenges to the agency’s cost-benefit analysis as “not subject to judicial review.” Id.

The court also flatly rejected the plaintiff’s argument that “it does not seek to assert rights under

the order but is merely referencing it to provide evidence of the arbitrary and capricious nature of

the [agency’s] decision,” calling it “nothing more than an indirect—and impermissible—attempt

to enforce private rights under the order.” Id. at 9.


42

In the wake of Air Transportation Association, courts in this district have regularly rejected

attempts to obtain APA review of cost-benefit analyses conducted pursuant to Executive Orders

12,866 and 13,563. See, e.g., Fla. Bankers Ass’n, 19 F. Supp. 3d at 118 n.1 (EOs 12,866 and

13,563); All. for Nat. Health v. Sebelius, 775 F. Supp. 2d 114, 135 n.10 (D.D.C. 2011) (EO 12,866);

see also Trawler Diane Marie, Inc. v. Brown, 918 F. Supp. 921, 932 (E.D.N.C. 1995), aff’d, 91

F.3d 134 (4th Cir. 1996) (table) (EO 12,866); cf. Defs. of Wildlife v. Jackson, 791 F. Supp. 2d 96,

120 (D.D.C. 2011) (EO 13,186) (“[P]laintiffs’ attempt to enforce this order is made hopeless by

the language of the order itself, which explicitly rules out the possibility of judicial review.”). This

Court should not chart a different course.

ii. The HEA Does Not Require A Cost-Benefit Analysis For Rules Related To

The Federal Student Loan Programs

The Department’s cost-benefit analysis is not reviewable under the APA for the additional

reason that the HEA does not require the Department to conduct such an analysis when

promulgating rules regarding the student loan programs. Whether an agency’s cost-benefit

analysis is reviewable under the APA depends on the text of the authorizing statute. See Michigan

v. EPA, 135 S. Ct. 2699, 2706 (2015) (evaluating agency’s cost-benefit analysis because

authorizing statute should be read to mean the agency cannot ignore cost when deciding to

promulgate certain regulations). In general, “[w]hen Congress has intended that an agency engage

in cost-benefit analysis, it has clearly indicated such intent on the face of the statute.” Am. Textile

Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 510 (1981); see also City of Portland v. EPA, 507 F.3d

706, 712 (D.C. Cir. 2007) (when “Congress wanted EPA to undertake cost-benefit analysis, it said

so expressly”); Inv. Co. Inst. v. CFTC, 720 F.3d 370, 377–78 (D.C. Cir. 2013). Indeed, even where

Congress wants an agency to engage in less formal economic analysis—or merely to consider the

costs of regulation on a regulated party—it has generally made its intent clear in the statutory text.


43

See, e.g., Nat’l Ass’n of Home Builders v. EPA, 682 F.3d 1032, 1039 (D.C. Cir. 2012) (“[W]hen

Congress . . . authorize[d] regulations addressing lead-paint hazards, it instructed EPA to ‘tak[e]

into account reliability, effectiveness, and safety’—but did not mention cost.”) (citation omitted).

By contrast, in the HEA, Congress declined to call for a cost-benefit analysis. Accordingly, there

is no basis for APA review of that analysis.

iii. The Department In Any Event Properly Concluded That The Benefits Of

The 2018 Rule Justify Its Costs

Even if the Department’s cost-benefit analysis were subject to APA review, it would

readily withstand the applicable level of scrutiny. The principle “that ‘a court is not to substitute

its judgment for that of the agency’” is “especially true when the agency is called upon to weigh

the costs and benefits of alternative polices.” Consumer Elecs. Ass’n v. FCC, 347 F.3d 291, 303

(D.C. Cir. 2003) (quoting State Farm, 463 U.S. at 43). Accordingly, courts “review [an agency’s]

cost-benefit analysis deferentially.” Am. Trucking Ass’ns, Inc. v. Fed. Motor Carrier Safety

Admin., 724 F.3d 243, 254 (D.C. Cir. 2013). When reviewing a challenge to an agency’s cost-

benefit analysis, a court must limit its role to determining whether “the decision was based on a

consideration of the relevant factors and whether there has been a clear error of judgment.” Ctr.

for Auto Safety v. Peck, 751 F.2d 1336, 1342 (D.C. Cir. 1985) (citation omitted); see also Nicopure

Labs, LLC, 266 F. Supp. 3d at 403 (D.D.C. 2017).

Plaintiffs fail to meet the high burden required to cast doubt on the Department’s analysis.

Plaintiffs first claim that the Department’s cost-benefit analysis is “internally inconsistent” because

it “minimize[s] the burden of its actions on student borrowers by saying it is not revoking the 2016

Rule, while basing the claimed benefits of the delay on its presupposition that the 2016 Rule will

be revoked.” Pls.’ Mem. at 47 (emphasis in original). But Plaintiffs’ characterization of the

Department’s analysis is inaccurate. The Department did not discuss permanent benefits to the


44

industry, but rather focused on delayed implementation costs. See AR at 9 (“[The analysis of the

net budget impact in this final rule is limited to the effect of delaying the effective date of the 2016

final regulations from July 1, 2018, to July 1, 2019, and does not account for any potential changes

in the 2016 final regulations or administrative updates to existing processes and procedures related

to borrower defense claims.”). Thus, the Department appropriately, and consistently,15 considered

the costs and benefits associated with that delay, rather than the costs and benefits that would result

if the 2016 Rule were ultimately rescinded and replaced with a new, different rule. See Am.

Portland Cement All. v. EPA, 101 F.3d 772, 777 (D.C. Cir. 1996) (“An announcement of an

agency’s intent to establish law and policy in future is not the equivalent of the actual promulgation

of a final regulation.”). While the cost side of this equation is appropriately limited to the short-

term nature of the delay (any costs beyond that are inherently unknowable at this time), a proper

assessment of the benefits also factors in the likelihood that the rule might be altered or amended

in the future, making delay, in the present day, advantageous in order to avoid the disruptive costs

associated with multiple regulatory changes in a short period of time. Without presupposing

anything about the ultimate, substantive result of its rulemaking, the Department could reasonably

determine that the benefits associated with delaying the 2016 Rule in light of the uncertainty

engendered by those rulemaking procedures outweighed the costs of that delay (as opposed to the

costs that would result if the rule were ultimately revoked).

Second, Plaintiffs state that the Department’s cost-benefit analysis is deficient because it

is based on a conclusion that “the preexisting regime adequately protected borrowers.” Pls.’ Mem.

15 Again, therefore, Plaintiffs cannot persuasively rely on California v. BLM II, 2018 WL 1014644,

at *10, where the court found the agency had made assumptions, without adequate evidence or

consideration, about the cost savings related to the delay. See Pls.’ Mem. at 47-48.


45

at 48.16 Not so. Here too Plaintiffs overlook the limited nature of the 2018 FR, and therefore

ascribe to the Department a view it did not express. As the Department explained in the 2018

Rule, at issue is not whether the pre-2016 regulations are an adequate substitute for the regulations

included in the 2016 Rule, but rather whether “borrowers will be significantly harmed by changing

the effective date of the 2016 final regulations to July 1, 2019.” AR at 3. In this specific context,

the Department concluded that “[w]hile the Department acknowledges that certain benefits of the

2016 final regulations will be delayed, it has determined that those benefits are outweighed by the

administrative and transaction costs for regulated entities and borrowers having those regulations

go into effect only to be changed a short while later.” Id. at 4; see id. (“Any benefits to borrowers

associated with having the Federal standard in place during that time period are outweighed by the

confusion and disruption that would result from allowing the 2016 final regulations to take effect

during a time when they are subject to a legal challenge and when the Department is reevaluating

its borrower defense regulations generally.”); id. (“The Department does not share the

commenters’ concern that borrowers will be subject to certain institutions’ predatory practices

absent the 2016 regulations,” as “the current borrower defense regulations will remain in effect”

and “we routinely grant forbearances, and stop collection activities on defaulted loans, to

borrowers while their discharge claims are under review”); id. (noting “other existing protections

for borrowers, including periodic reviews and site visits by Department employees,” as well as

“activities of the enforcement units within FSA” and other federal and state agencies). Thus, and

contrary to Plaintiffs’ contention, Pls.’ Mem. at 48, the Department’s cost-benefit analysis does

not evidence an “inconsistency” regarding its general view of the adequacy of the 2016 Rule.

16 Although this argument is presented as part of their challenge to the Department’s cost-benefit

analysis, Plaintiffs here do not specify any costs or benefits calculated by the Department with

which they disagree. See Pls.’ Mem. at 47-49.


46

Nor can Plaintiffs persuasively argue that the Department’s “conclusion that borrowers will

not be significantly harmed [] fails to adequately respond to comments submitted explaining that

delays of the Rule do just that.” Pls.’ Mem. at 49.17 The D.C. Circuit has recognized that an

agency’s obligation to respond to comments on a proposed rulemaking is “not ‘particularly

demanding.”’ Ass’n of Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 441-42 (D.C. Cir.

2012) (quoting Pub. Citizen, Inc. v. FAA, 988 F.2d 186, 197 (D.C. Cir. 1993)). Indeed, “the

agency’s response to public comments need only ‘enable [courts] to see what major issues of

policy were ventilated . . . and why the agency reacted to them as it did.”’ Pub. Citizen, Inc., 988

F.2d at 197 (quoting Auto. Parts & Accessories Ass’n v. Boyd, 407 F.2d 330, 335 (D.C. Cir. 1968));

cf. Simpson v. Young, 854 F.2d 1429, 1435 (D.C. Cir. 1988) (“The agency need only state the main

reasons for its decision and indicate that it has considered the most important objections.”).

Here, the Department expressly identified the types of harms about which commenters

were concerned. AR at 3. It further “acknowledge[d] that certain benefits of the 2016 final

regulations will be delayed.” Id. at 4. Nevertheless, relying on, inter alia, the ability of borrowers

to “continue to apply for relief from the payment of loans under th[e] existing process,” as well as

the fact that “the instant rule merely delays the marginal benefits of the 2016 final regulations for

a brief period of time,” id., the Department concluded that “those benefits are outweighed by the

administrative and transaction costs for regulated entities and borrowers of having those

regulations go into effect only to be changed a short while later,” id. Additionally, responding to

one commenter’s concern “regarding the number of pending claims before the Department,” the

agency explained that “the Department has issued decisions on borrower defense claims and []

17 Plaintiffs appear to be conflating the line of APA inquiry concerning an agency’s cost-benefit

analysis with that concerning what constitutes an adequate response to a comment. See Pls.’ Mem.

at 47.


47

will continue to accept and process borrower defense claims.” Id. The Department has thus

adequately responded to comments regarding the potential harm to borrowers caused by the

proposed one-year delay; to the extent Plaintiffs demand that the Department discuss the potential

harm to borrowers beyond that time period, see Pls.’ Mem. at 49 (claiming that the 2018 Rule

“presume[s] that substantially less student debt will be forgiven pursuant to the Borrower Defense

process under the existing regime than if the 2016 Rule went into effect”), they demand too much.

See Nat’l Min. Ass’n v. Mining Safety & Health Admin., 116 F.3d 520, 549 (D.C. Cir. 1997) (an

agency is not required to address comments “beyond the scope of the rulemaking”).

Finally, Plaintiffs claim that the Department improperly discounted harms related to the

delay of the arbitration and class action waiver provisions. Pls.’ Mem. at 49-50. But, as Plaintiffs

recognize, id. at 49, “[t]he Department acknowledge[d] the commenters’ concern that the window

under applicable statutes of limitation for some borrowers to file lawsuits may end during the

period covered by the delay of the 2016 final regulations’ prohibitions on institutions’ use of pre-

dispute arbitration and class action waiver contractual provisions,” AR at 5; see also id. at 3.18

However, given the Department’s assessment of the litigation risk in the CAPPS case, the ability

of borrowers to apply for discharges directly from the Department, and the administrative costs

associated with implementing the provisions, the Department concluded that “the harm from

having these provisions take effect . . . is too great and outweigh[s] any benefits these provisions

would have.” Id. at 5.19 And again, because it is clear the Department considered these provisions

18 Contrary to Plaintiffs’ claim, Pls.’ Mem. at 49, the Department acknowledged borrowers’

concerns about the statute of limitations, not that the statute of limitations would in fact run. AR

at 5. Plaintiffs’ allegation that such a harm would inevitably ensure is, to borrow Plaintiffs’

phrasing, “unsupported speculation.” See Pls.’ Mem. at 49.

19 Similarly, the Department made clear that “[t]he CAPPS litigation is not the basis for the delay

proposed in the NPRM.” AR at 8. Nonetheless, the Department permissibly accounted for the

administrative costs presented by the potentially short-lived arbitration and class action waiver


48

in the context of a limited delay, and because borrowers may continue to seek relief directly from

the Department, there is no merit to Plaintiffs’ characterization of the Department’s approach as a

“reversal.” See Pls.’ Mem. at 50. Plaintiffs have therefore failed to cast doubt on the agency’s

reasoned cost-benefit analysis.20

C. The 2018 Rule Complies With Required Procedures

The Department promulgated the 2018 FR in accordance with the APA’s notice and

comment procedures, and Plaintiffs do not contend otherwise. Instead, Plaintiffs contend that the

Department should have undertaken the additional procedural step of negotiated rulemaking, under

the HEA, before promulgating the rule. See Pls.’ Mem. at 50-52. But negotiated rulemaking is

not required where it would be unnecessary or impractical, and the Department has adequately

explained its good cause for determining that such is the case here.

As the 2018 Rule makes clear, HEA negotiated rulemaking is a cumbersome process, much

more involved and time-consuming than APA notice and comment procedures. It requires the

provisions. See id. at 5. Indeed, failure to account for these costs would arguably be inconsistent

with E.O. 13,563, which “requires an agency ‘to use the best available techniques to quantify

anticipated present and future benefits and costs as accurately as possible.’” Id. at 9.

20 Plaintiffs contend that because the 2018 FR “incorporates the two prior unlawful delay rules,”

the Court must, if it finds either of those other rules unlawful, “vacate the 2018 Delay Rule and

remand it to the agency.” Pls.’ Mem. at 50. But contrary to Plaintiffs’ assertion, the 2018 Rule is

not “explicitly premised” on either the 705 Notice or the IFR. Rather, as described above, the

Department identified multiple grounds for the 2018 FR, including the “timing of the negotiated

rulemaking,” and the desire to mitigate regulatory confusion. AR at 7. Plaintiffs do not cite any

authorities in support of their strained, and over-broad notion that the 2018 FR is “explicitly

premised” on the earlier regulatory actions. And the cases Plaintiffs cite do not, as Plaintiffs

suggest, support their argument that, if it finds either the 705 Notice or IFR invalid, the Court

should also vacate the 2018 FR. For example, in Affinity Healthcare Servs., Inc. v. Sebelius, 746

F. Supp. 2d 106, 120 (D.D.C. 2010), the court found invalid a calculation that was explicitly based

on a regulation that the court found to be unlawful. This case does not say anything about what

should happen to a regulatory action when a separate regulatory action is found unlawful. Should

the Court here decide to first evaluate the legality of the 705 Notice and the IFR, it should, if

necessary, order briefing on any appropriate remedy in light of the existence of the 2018 Rule.


49

Department, before it even commences the negotiating process, to hold public hearings, consider

public feedback, and “identif[y] those issues on which it will conduct negotiated rulemaking.” AR

at 7; see also 20 U.S.C. §§ 1098a(a), 1098a(b)(1) (requiring Secretary to obtain “advice and

recommendations” from a broad group of interested parties, including students, legal assistance

organizations, institutions of higher education, guaranty agencies, and lenders, and to provide for

a “comprehensive discussion and exchange of information”). Following that, the Department

“solicits nominations for non-Federal negotiators,” and engages in a “typically” three-month

period of negotiations regarding the Department’s identified issues. AR at 7. Only after this

process has been completed can the Department move forward with any NPRM, which must in

turn be submitted to OMB for review, and the public for comment, before it can be published in

final form. See id. Completion of this comprehensive process typically takes “well over 12

months.” Id.

Thus, although the HEA generally adopts the APA’s standard for determining when these

procedural requirements can be waived because they are “impracticable, unnecessary, or contrary

to the public interest,” 20 U.S.C. § 1098a(b)(2), that requirement must be assessed in light of the

particular administrative burdens associated with negotiated rulemaking. In other words,

depending on the nature of the regulatory action, negotiated rulemaking might be “impracticable”

even where simpler and more streamlined notice and comment procedures are not. See Petry v.

Block, 737 F.2d 1193, 1200 (D.C. Cir. 1984) (review of exceptions to notice to comment based on

“totality of the circumstances”); Mid-Tex Elec. Co-op., Inc., 822 F.2d at 1132 (inquiry is

“inevitably fact- or context- dependent”).

Such is the case here. As has been discussed, following the initiation of the CAPPS

litigation in May 2017, the Department announced its intent to review and revise its borrower


50

defense regulations, a process which is actively progressing at this time. As the Department

proceeded with that review, it also delayed, pursuant to the 705 Notice and the IFR, certain

provisions of the 2016 Rule until July 1, 2018. Within that framework, the Department proposed

further delaying the 2016 Rule until July 1, 2019 – before which time the Department could not

“complete the negotiated rulemaking” and develop “revised regulations” addressing borrower

defense – in order to “preserve the regulatory status quo” pending the ongoing negotiated

rulemaking proceedings. AR at 20. The limited purpose of the 2018 Rule was to “ensure that

there is adequate time,” id. at 2, to complete the underlying rulemaking process, as well as to avoid

“the confusion and disruption that would result from allowing the 2016 final regulations to take

effect during a time when they are subject to legal challenge and when the Department is

reevaluating its borrower defense regulations generally,” id. at 4.

It would make little sense, then, to subject the rule delaying the 2016 Rule – for a limited

period of time while the Department conducts negotiated rulemaking with respect to the potential

revised borrower defense rule – to the same negotiated procedures that created, at least in part, the

need for the 2018 FR in the first place. Indeed, it would be impracticable. See Mid-Tex Elec. Co-

op., 822 F.2d at 1132 (a rule’s “temporally limited scope is among the key considerations in

evaluating the agency’s ‘good cause’ claim” (citation omitted)). As the Department announced in

the NPRM, and further explained in the final 2018 Rule, it would not have been practicable (or

even possible) to conduct negotiated rulemaking, and to further publish a rule in final form, after

notice and comment, prior to the July 1, 2018 date on which the 2016 Rule would otherwise

become effective (whether the Department began that process when CAPPS initiated its challenge,

or when it published the NPRM). AR at 21 (NPRM); id. at 7 (Final Rule). As discussed above,

the 2018 Rule is justified, in part, on the need to provide clarity in advance to the regulated


51

community about the effective date of the Department’s regulations, as well as the need to avoid

disruption if multiple rules were to become effective within a short period of time. See Coal. for

Parity, Inc. v. Sebelius, 709 F. Supp. 2d 10, 19-20 (D.D.C. 2010) (waiver of APA notice and

comment procedures justified in “many different contexts,” including where agency was engaged

in “ongoing procedures to devise a final rule,” and there was a need for “regulatory guidance”).

In order to serve both purposes, the 2018 Rule needed to be published well in advance of

the culmination of the (still ongoing) process to revise the borrower defense regulations, as well

as in advance of the July 1, 2018 date on which the 2016 Rule would otherwise become effective.

If the Department were required to go through negotiated rulemaking, in addition to notice and

comment, for the mere delay, these objectives would be frustrated and the Department would

effectively be prevented from taking expeditious action to delay a regulation, despite its “broad

discretion to reconsider a regulation at any time,” Clean Air Council v. Pruitt, 862 F.3d 1, 8 (D.C.

Cir. 2017), and the express statutory exception allowing the Department to waive negotiated

rulemaking whenever such procedures would be impracticable. See N.J. Dep’t of Envtl. Prot. v.

U.S. EPA, 626 F.2d 1038, 1046 (D.C. Cir. 1980) (“impracticable,” as defined by the APA, means

a situation in which “the due and required execution of the agency functions would be

(unavoidably) prevented by its undertaking public rule-making proceedings” (quoting S. Doc. No.

248, 79th Cong., 2d Sess. 200, 258 (1946)); Chew v. Brumagen, 80 U.S. 497, 501 (1871) (statutory

constructions that “depriv[e] an express exception of all meaning and purpose whatever” should

be avoided).21

21 The case Plaintiffs cite, National Venture Capital Association v. Duke, is not to the contrary.

There, the Court determined that the agency’s argument regarding the need to avoid wasteful

expenditures on a rule likely to be effective only for a short period of time was undermined by the

fact that the agency had made “no effort” to issue the new rule on which it based the need to delay

a previous one. ---F. Supp. 3d. ----, 2017 WL 5990122, at *10 (D.D.C. Dec. 1, 2017). Here, on


52

III. THE IFR WAS SUBSTANTIVELY AND PROCEDURALLY VALID

Finally, Plaintiffs’ challenges to the Department’s IFR fail. As noted above, the

Department issued the IFR to provide “the public and regulated parties notice that even if the

litigation concludes before July 1, 2018, the final regulations will not take effect until that date

consistent with the master calendar requirement.” AR-B at 3. Because the Department’s

explanation is adequate and reflected in long-standing agency practice, and because the

Department has limited discretion to take action other than that announced in the IFR, the IFR is

substantively and procedurally proper.

A. The IFR Is Justified By The Department’s Reasonable Interpretation Of The

Master Calendar Requirement, Which Is Entitled To Deference

The delay of the effective date reflected in the IFR is based on the Department’s

interpretation of the HEA’s master calendar requirement. As the IFR stated, “the Department has

consistently interpreted and applied the master calendar requirement to provide that any regulatory

change relating to student financial aid programs may take effect only at the beginning of an award

year.” AR-B at 3. The IFR, which was based on this reasonable interpretation, is neither arbitrary

nor capricious. See Prof’l Plant Growers Ass’n v. U.S. Dep’t of Agric., 879 F. Supp. 130, 131

(D.D.C. 1995) (plaintiff could not show likelihood of success on arbitrary and capricious claim

where agency considered factors that it was required by statute to consider).

i. The Department’s Interpretation Is Entitled To Chevron Deference

The master calendar provision does not speak to the precise question at issue here

the other hand, the Department has demonstrated that new rulemaking, in some form, is likely,

having already completed the lengthy negotiated rulemaking process and announced its intent to

draft a NPRM announcing new regulations. As such, there is no reason to force the Department

to “fritter[ ] away resources on a temporary rule.” Id.


53

– whether a regulation that was scheduled to become effective on July 1, but that does not take

effect on that date, may go into effect sometime during the award year, or must wait for the next

July 1 to go into effect. See 20 U.S.C. § 1089(c) (“Any regulatory changes initiated by the

Secretary affecting the programs under this subchapter that have not been published in final form

by November 1 prior to the start of the award year shall not become effective until the beginning

of the second award year after such November 1 date”). “Under Chevron [U.S.A., Inc. v. NRDC,

Inc., 467 U.S. 837, 843-45 (1984)], when the court is presented with an interpretation of the statute

by an agency that administers it, and ‘the statute is silent or ambiguous with respect to the specific

issue,’ then the court must defer to that interpretation if it is reasonable.” Wagner Seed Co. v.

Bush, 946 F.2d 918, 920 (D.C. Cir. 1991) (quoting Mead Corp. v. Tilley, 490 U.S. 714, 722

(1989)). The “[c]ourt need not conclude that the agency’s construction was the only one it

permissibly could have adopte . . . in order to conclude that the agency’s construction was

reasonable.” Nat’l Women, Infants, & Children Grocers Ass’n v. Food & Nutrition Serv., 416 F.

Supp. 2d 92, 98 (D.D.C. 2006) (citation omitted).

The Department has authority to administer the HEA. Congress has granted the

Department broad power to implement Department programs, including federal student aid

programs. 20 U.S.C. §§ 1221e-3, 3474. And with respect to Title IV programs specifically, the

Department is authorized to prescribe regulations related to “the establishment of reasonable

standards of financial responsibility and appropriate institutional capability for the administration

by an eligible institution of a program of student financial aid . . . including any matter the

Secretary deems necessary to the sound administration of the financial aid programs.” Id. §

1094(c)(1)(B). Moreover, the IFR was “promulgated in the exercise of [the Department’s]

authority” to administer the HEA, United States v. Mead Corp., 533 U.S. 218, 227 (2001),


54

reflecting the Department’s “consistent[ ] interpret[ation] and appli[cation]” of that statute’s

master calendar provision to “provide that any regulatory change relating to student financial aid

programs may take effect only at the beginning of an award year.” AR-B at 3. Contrary to

Plaintiffs’ contention, this interpretation is entitled to deference notwithstanding the fact that it

“exists nowhere in [the Department’s] regulations.” Pls.’ Mem. at 56. See Barnhart v. Walton,

535 U.S. 212, 221-22 (2002) (fact that agency reaches interpretation “through means less formal

than ‘notice and comment’ rulemaking . . . does not automatically deprive that interpretation of

the judicial deference otherwise its due,” and factors such as the “expertise” of the agency and the

“careful consideration” it has given to the question “over a long period of time” warrant according

deference to a particular interpretation).

Plaintiffs’ argument that Chevron deference is nonetheless inappropriate because the

Department “proceeded as if its view was the only construction of the statute” and claimed that “it

had no discretion,” Pls.’ Mem. at 55, conveniently confuses discretion in interpreting a statute with

discretion to act in light of the agency’s interpretation. Only lack of the former precludes Chevron

deference under the precedents that Plaintiffs cite, see, e.g., Arizona v. Thompson, 281 F.3d 248,

254 (D.C. Cir. 2002) (noting that Chevron deference is “only appropriate when the agency has

exercised its own judgment” (citation omitted)), but the Department lacks only the latter here. The

Department does not contend that it did not have discretion in interpreting the HEA; rather, its

position is that once it exercised its judgment to reach the interpretation that regulatory changes

affecting Title IV student loan programs should only become effective on July 1, it did not, going

forward, have discretion to implement the 2016 Rule (or any other rule) on a date other than July

1. AR-B at 3-4 (noting that under Department’s “consistent[ ] interpret[ation] and appli[cation],”

it had “limited discretion to set an effective date under [this interpretation of] the master calendar


55

requirement”). This interpretation is not the only one possible, but, as the Department has

concluded and as discussed below, it is the most reasonable in light of the statute’s text, legislative

history, and the Department’s historical practice.

ii. The Department’s Interpretation Is Reasonable

The Department interprets the HEA’s master calendar provision to require that regulatory

changes affecting Title IV student aid programs become effective only at the start of an award

year, and that the Department thus lacks discretion to set such a regulation to become effective in

the middle of an award year. Based on the statutory language and Congress’ interests in providing

adequate notice, certainty, and simplicity, the Department’s interpretation is reasonable. In

providing for changes to go into effect only on July 1 of the year following publication or on July

1 of the year after that, the master calendar clearly contemplates that regulatory changes affecting

the relevant Title IV programs must become effective only at the beginning of an award year. That

the relevant sub-section is titled “delay of effective date of late publications,” reflects the notion

that there is only one “effective date” during the year (i.e., the first day of the award year), so that

if that date passes and the regulation is not implemented, it cannot become effective until the

beginning of the next award year.

In addition, as the HEA’s text confirms, the very purpose of the master calendar provision

is “[t]o assure adequate notification and timely delivery of student aid funds.” 20 U.S.C. § 1089(a).

Ensuring that regulations are implemented only at the beginning of an award year promotes these

goals by providing institutions and students with sufficient time in advance of a new academic

year to prepare for and adjust to any new regulatory changes. If new regulations could be

implemented at any point during the award year, the disruptive effects on the regulated industry

would be clear: schools and students would need at all times to closely monitor whether new


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regulations were being published and might have to adjust contemporaneously to any such

publication, without the ability to allocate resources in advance. This in turn would undermine the

notice-giving and certainty-promoting objectives of the master calendar.

Plaintiff’s textual argument, on the other hand, is by no means “straightforward.” Pls.’

Mem. at 53. Their focus on the word “until,” at most, shows that the statute does not explicitly

provide that regulations can be implemented only at the beginning of an award year (i.e., on July

1), but just means that regulations cannot be implemented before then. Id. at 53-54. But the

Department’s position is not that the statute explicitly provides such a rule; rather, it is that the

statute is ambiguous as to this point, and that, based on other statutory language and objectives,

the master calendar provision should be read to incorporate such a rule. The statutory ambiguity

is evident in the statute’s inclusion of both the word “until,” on which Plaintiffs focus, and the

phrase “beginning of the [award year],” which complicates Plaintiffs’ interpretation. See 20

U.S.C. § 1089(c)(1) (regulatory changes affecting Title IV programs that have not been published

by November 1 prior to the start of an award year “shall not become effective until the beginning

of the second award year after [that] date”).

Plaintiffs strain to argue that the master calendar requirement means that regulations not

finalized by November 1 can be implemented at any time during the second award year following

the relevant November 1. This interpretation may have been reflected in the statutory language if

Congress omitted the words “beginning of the,” so that the statute stated instead that regulations

not published in final form before November 1 “shall not become effective until the second award

year after such November 1 date.” But Congress did include these words. Because Plaintiffs’

interpretation renders the words “beginning of the” superfluous, the Court should reject it. Hibbs


57

v. Winn, 542 U.S. 88, 101 (2004) (a “statute should be construed so that effect is given to all its

provisions, so that no part will be inoperative or superfluous, void or insignificant”).22

Nor does the D.C. Circuit’s decision in Career College Association v. Riley, 74 F.3d 1265

(D.C. Cir. 1996), support Plaintiffs’ reading. See Pls.’ Mem. at 54. The dispute in that case turned

on whether an “Interim Final Rule” published by the Department was published “in final form,”

such that it could take effect at the start of the next award year, id. at 1268, and simply did not

involve the issue of on what date a rule should take effect if, for whatever reason, it did not take

effect on July 1 as originally scheduled. Moreover, although Plaintiffs note that, as to some

provisions at issue in that case, the Department published a notice of effective date “after the start

of the award year,” Pls.’ Mem. at 54, the relevant Federal Register notice clearly states that “the

effective date” of all of the relevant regulations remained July 1, although compliance with certain

information collection requirements would not be required until those requirements were approved

by the Office of Management and Budget (“OMB”). See 59 Fed. Reg. 34,964 (July 7, 1994)

(correcting earlier Federal Register notice, which had stated that some regulations were exempted

from the July 1 effective date). That document, signed by the Secretary of Education on June 30,

1994, also states that, by that time, OMB had approved these information collection requirements

and so “parties must now comply with [them].” Id.

The legislative history of the HEA provides further support for the Department’s

interpretation. Congress has been clear that “the effective dates of all regulations on Title IV are

driven by the Master Calendar requirements,” AR-B at 930, and it has reaffirmed the breadth of

22 This reading is supported by the legislative heading, titling § 1089(c) “[d]elay of effective date

of late publications.” By using the singular “date”, this heading reflects the notion that there is

only one effective date during the year. Cf. Luddington v. Ind. Bell Tel. Co., 966 F.2d 225, 229-

30 (7th Cir. 1992) (term “effective dates” plural because “several sections carry different effective

dates”).


58

the master calendar requirement by providing express waivers of the requirement only in specific

limited circumstances.23 The legislative history also confirms that the master calendar requirement

is designed to “assure adequate notification and timely delivery of student aid funds.” Id. at 23.

One of the “major goals” of the legislation was to “simplify the process for applying for Federal

aid [for students and their parents].” Id. at 930. Providing for one uniform time at which

regulations will be implemented serves to simplify the process.

Plaintiffs’ alternative reading of the purpose of the legislation is unpersuasive. They

suggest that the master calendar requirement is “about predictability,” and, because the 2016 Rule

was published on November 1, 2016, the regulated community has already been afforded the

requisite level of notice and predictability. Pls.’ Mem. at 56. This argument ignores the effect of

the CAPPS litigation and the 705 Notice, which identified significant legal concerns regarding the

2016 Rule and created significant uncertainty about its future implementation. In light of the active

legal challenge to the regulations’ validity, as well as the Department’s ongoing rulemaking

process, there is no basis to conclude that publication of the 2016 Rule last November has given

the regulated industry the kind of advance notice the master calendar deems necessary. Without

the added certainty of clarifying when a given regulation will become effective and in what form,

mere notice of the existence of a substantive regulatory change does not allow the regulated

industry to adjust in advance its behavior to comply with the regulatory requirements and prepare

for the timely delivery of student aid funds.

23 See, e.g., Higher Education Opportunity Act of 2008, Pub. L. No. 110-315, § 402(b), 122 Stat.

3078, 3191 (waiving the negotiated rulemaking and master calendar requirements of the HEA for

changes made to the Academic Competitiveness Grants and National Science and Mathematics

Access to Retain Talent Programs, so that it can become effective on July 1, 2009 instead of July

1, 2010).


59

Indeed, the way Plaintiffs want things to play out demonstrates the rationale for the IFR.

They argue that absent the IFR, if the Court invalidates the 705 Notice, the 2016 Rule would go

into effect immediately, providing no notice to regulated entities and the public, and potentially

insufficient time to implement the 2016 Rule before the start of an award year, depending on when

the Court rules. Pls.’ Mem. at 54. And more uncertainty would be created if the Court then strikes

down all or part of the 2016 Rule in the CAPPS case. The Department obviously has little control

over when these decisions come down. These recent events have clearly obviated the effect of the

notice period provided in 2016 when the Rule was promulgated.

The Department’s longstanding policy and practice of implementing Title IV regulations

only at the beginning of an award year further demonstrate that the Department’s interpretation of

the master calendar requirement is reasonable, and refute Plaintiffs’ contention that the Department

“has never before advanced this interpretation.” Pls.’ Mem. at 53. See Esquire, Inc. v. Ringer,

591 F.2d 796, 801 (D.C. Cir. 1978) (Bazelon, J.) (administrative interpretation deserves

“controlling weight,” particularly when it “has been consistently followed for a significant period

of time”) (citation omitted), cert. denied, 440 U.S. 908 (1979). For more than twenty years, “the

Department has consistently interpreted and applied the master calendar requirement to provide

that any regulatory change relating to student financial aid programs may take effect only at the

beginning of an award year.” AR-B at 3. See also 81 Fed. Reg. 92,232 (Dec. 19, 2016) (setting

effective date for amended institutional eligibility regulations on disclosures for distance education

and correspondence courses as July 1, 2018); 80 Fed. Reg. 67,126 (Oct. 30, 2015) (July 1, 2016

effective date for final cash management regulations); 80 Fed. Reg. 67,204 (Oct. 30, 2015) (July

1, 2016 effective date for final income-contingent plan regulations); 79 Fed. Reg. 64,890 (Oct. 31,

2014) (July 1, 2015 effective date of final gainful employment regulations); 79 Fed. Reg. 63,317


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(Oct. 23, 2014) (July 1, 2015 effective date for final Federal Direct PLUS Loan Program

regulations); 79 Fed. Reg. 62,752 (Oct. 20, 2014) (July 1, 2015 effective date for regulatory

changes pursuant to the Violence Against Women Act); 78 Fed. Reg. 65,768 (Nov. 1, 2013) (July

1, 2014 effective date for regulatory changes pursuant to the SAFRA Act); 77 Fed. Reg. 66,088

(Nov. 1, 2012) (July 1, 2013 effective date for income-contingent payment plan regulations); 76

Fed. Reg. 34,386 (June 13, 2011) (July 1, 2012 effective date for gainful employment regulations);

75 Fed. Reg. 66,832 (Oct. 29, 2010) (July 1, 2011 effective date of final institutional eligibility

rules); 72 Fed. Reg. 61,960 (Nov. 1, 2007) (July 1, 2008 effective date for amendments to loan

program regulations); 65 Fed. Reg. 65,662 (Nov. 1, 2000) (July 1, 2001 effective date for

regulatory amendments); 63 Fed. Reg. 52,854 (Oct. 1, 1998) (July 1, 1999 effective date for

amendments to the federal work study program regulations); 61 Fed. Reg. 60,426 (Nov. 27, 1996)

(July 1, 1997 effective date for amended Federal Family Education Loan Program regulations); 60

Fed. Reg. 61,424 (Nov. 29, 1995) (July 1, 1996 effective date for regulatory changes pursuant to

the Equity in Athletics Disclosure Act).

The Department has been clear that this practice stems from the HEA’s master calendar

requirement. For example, in a regulation addressing arrangements between institutions of higher

education and financial account providers for the disbursement of Title IV funds, for which the

Department set an effective date of July 1, the Department noted that the master calendar required

that the regulation could become effective only at the beginning of an award year. 80 Fed. Reg. at

67,131 (“If we had extended the comment period beyond 45 days, we would have been unable to

comply with the master calendar provision of section 482(c) of the HEA, which requires that the

Department publish final regulations before November 1 to take effect on July 1 of the following


61

year . . . An extension of the comment period would therefore allow the abuses identified to persist

an additional year.” (emphasis added)).24

Nor is Plaintiffs’ argument that the Department’s interpretation means that it could achieve

a yearlong delay of any regulation it does not want to implement simply by “invoking section 705”

or “issuing an ‘interim final rule’” persuasive. See Pls.’ Mem. at 56. Plaintiffs blatantly ignore

that a valid postponement pursuant to Section 705 necessarily depends on the existence of

litigation challenging an underlying regulation and an agency’s conclusion that justice requires it

to stay the effective date pending judicial review. Plaintiffs’ characterization of the Department

as wielding exclusive power to delay any of its regulations does not reflect the specific and limited

power Congress provided in Section 705 or what occurred in this case. And Plaintiffs’ naked

allegation that such a delay “evade[s]” the APA and HEA, id., ignores that Congress itself

specifically directed that (1) an agency can delay the effective date of its action pending judicial

review whenever it finds that justice so requires; and (2) Title IV regulations affecting financial

aid programs must comply with a master calendar provision for the disbursement of student

financial aid and can become effective only at the beginning of an award year.

Plaintiffs’ argument that the 2016 Rule can become effective “on July 1, 2017, or any date

thereafter,” because it was published in final form by November 1, 2016, Pls.’ Mem. at 53-54,

24 The Department made this regulation effective on July 1, 2016, but chose, in the regulation

itself, to delay required compliance with the regulation’s disclosure requirements until September

1, 2016 and September 1, 2017. 80 Fed. Reg. at 67,178. That the Department provided for these

later compliance dates for certain disclosure requirements does not change the key fact that the

rule became effective on July 1. Nor does it create any conflict with the master calendar, which

requires only that regulatory changes become effective on July 1 and does not prevent the

Department from extending compliance with ancillary obligations (such as disclosure

requirements) that stem from such changes and do not disrupt the distribution of Title IV funds

during an award year.


62

fails to grapple with the situation at hand and the precise question at issue. It utterly ignores the

fact that the rule did not go into effect on the original July 1, 2017 effective date (pursuant to the

705 Notice), as contemplated by the master calendar requirement. It is also premised on Plaintiffs’

notion – for which they offer no support – that if the 705 Notice were vacated, the 2016 Rule could

go into immediate effect. The only ostensible proof Plaintiffs offer in support of this argument is

that the regulations were published in final form by November 1, 2016, the date by which the

master calendar requires such publication to occur for rules to become effective at the start of the

following award year. But Defendants do not contest the finality of the 2016 Rule; only that the

Rule may be implemented during an award year, now that it did not become effective at the start

of the current award year. As to that issue, the date of the 2016 Rule’s initial publication has no

bearing. Ultimately, Plaintiffs’ arguments boil down to a challenge to the Department’s reasonable

interpretation of a statute that it administers, which does not demonstrate the IFR is arbitrary or

capricious. See Miniard v. Lewis, 387 F.2d 864, 865 (D.C. Cir. 1967) (since the interpretation “is

a reasonable one, its application [in] this case was not arbitrary or capricious”).

B. Plaintiffs’ Remaining Arguments That The IFR Is Arbitrary And Capricious

Are Unavailing

Plaintiffs argue that, regardless of the validity of the Department’s interpretation of the

master calendar provision, the IFR is arbitrary and capricious because it did not adequately

consider “the consequences of its interpretation,” and “failed to acknowledge” certain alleged

effects of the delay on borrowers. Pls.’ Mem. at 58. Plaintiffs’ argument fundamentally

misconstrues the nature of the IFR and the applicable standard of review, and accordingly fails to

demonstrate that the IFR is invalid.

As discussed above, application of the “narrow” “arbitrary and capricious” standard, State

Farm, 463 U.S. at 43, “requires reviewing courts to adjust their inquiry according to the particular


63

agency action under review.” Sierra Club v. Gorsuch, 715 F.2d at 658; see also Sierra Club v.

Salazar, 177 F. Supp. 3d at 532 (“[A]rbitrary and capricious review defies generalized application

and must be contextually tailored” (citation omitted)). Thus, where, as here, an agency action is

limited to setting forth the agency’s interpretation of its governing statute to provide notice to the

regulated industry, the Court’s inquiry is less demanding than if it were reviewing an agency’s

substantive policy decision within a complex regulatory scheme.

As they did in their challenge to the 705 Notice and the 2018 Rule, Plaintiffs argue that the

Department failed to consider the negative effects of delayed implementation of the 2016 Rule on

student borrowers and taxpayers. Pls.’ Mem. at 53. But once again, Plaintiffs fail to take into

account the limited nature of the Department’s action postponing (as opposed to repealing) the

2016 Rule and fail to acknowledge that in taking such limited action, the Department is not held

to the same standard as if it were announcing a new regulation or a substantive change in policy.

This is especially true with respect to the IFR, which is based on a statutory provision that expressly

limits the Department’s discretion to set the effective date of a Title IV student aid regulation to

consideration of a single factor: the start of an award year as defined by the HEA. See Ethyl Corp.

v. EPA, 51 F.3d 1053, 1064 (D.C. Cir. 1995) (agency decision will be upheld where agency acts

within “delegated statutory authority” and considers “all of the relevant factors”). Because the

Department lacked discretion to implement the 2016 Rule at a date earlier than that set forth in the

IFR, any discussion of costs and benefits related to delayed implementation, as well as any

consideration of the impact of the “delay” on student borrowers, Pls.’ Mem. at 53, is irrelevant to


64

the Department’s implementation of the master calendar requirement and unnecessary to justify

the delay reflected in the IFR.25

Ultimately, the Department’s reasonable interpretation that it lacks discretion to implement

the 2016 Rule other than at the start of an award year means any consideration beyond the

Department’s interpretation of the master calendar requirement is irrelevant. Whether the IFR is

lawful depends only on the reasonableness of the Department’s interpretation of the master

calendar requirement (which reflects no view as to the policy underlying 2016 Rule). As discussed

above, to the extent Plaintiffs have concerns regarding the Department’s potential revision of the

substance of its borrower defense regulations, the appropriate forum for them to air such concerns

is in connection with the ongoing rulemaking process related to those regulations, not as a

challenge to this IFR, which does nothing more than enforce the procedural requirements of the

HEA’s master calendar.

C. The IFR Complies With All Applicable Procedural Requirements

Although the IFR was only intended to provide notice of the 2016 Rule’s permissible

implementation date under the Department’s interpretation of the master calendar provision,

Plaintiffs allege that the Department was required to comply with APA notice and comment

procedures and the HEA’s negotiated rulemaking process before issuing the IFR. Both statutory

25 The same is true with respect to Plaintiffs’ claims that the Department is allegedly “fail[ing] to

acknowledge” its previous findings about the importance of the 2016 Rule, allegedly not

explaining its “reversal” of position, and allegedly countenancing a delay of the Rule here, despite

the Department having initially chosen to promulgate it. See Pls.’ Mem. at 58. Because the

Department was acting pursuant to the master calendar, its discretion in delaying the effective date

of the 2016 Rule (once the original effective date passed) was severely limited, and the Department

was under no obligation to consider factors that the master calendar provision does not reference.

The IFR is not, as Plaintiffs allege, an unexplained change in position, and the Department was

not obligated to justify its IFR giving notice of the earliest date the Rule can now become effective

with the same level of analysis necessary to justify the broad borrower defense regulations

themselves.


65

provisions, however, exempt an agency from such procedures where, as here, they are unnecessary

or impracticable.

An agency is required to provide notice and opportunity to comment when making

substantive regulatory changes, unless the agency, “for good cause” determines that proceeding

through notice and comment would be “impracticable, unnecessary, or contrary to the public

interest.” 5 U.S.C. § 553(b)(B). Although this “good cause” exception is to be “narrowly

construed,” see Petry, 737 F.2d at 1200, the “courts within this Circuit have found ‘good cause’ in

many different contexts.” Coal. for Parity, Inc., 709 F. Supp. 2d at 19 (D.D.C. 2010). See also

Petry, 737 F.2d at 1200–02; Nat’l Fed’n of Fed. Emps. v. Devine, 671 F.2d 607 (D.C. Cir. 1982);

Mid-Tex Elec. Co-op., 822 F.2d at 1123. Notably, the D.C. Circuit has explicitly ruled that where

an agency “lacks discretion to reach a different conclusion” than what is put forth in a rule, it

would be “utterly ‘unnecessary’” to require the agency to go through notice and comment. EME

Homer City Generation LP v. EPA, 795 F.3d 118, 134-35 (D.C. Cir. 2015) (citation omitted).

When evaluating whether there is “good cause,” courts must also consider “the totality of

the circumstances.” Petry, 737 F.2d at 1200; see also, Mid-Tex, 822 F.2d at 1132 (“[T]he ‘good

cause’ inquiry is inevitably fact-or context-[specific]”). To the extent the agency action would

bring about a wholly novel, complex program, notice and comment “are especially warranted.”

But where, as here, the agency action in question is of “limited scope” or only of short duration,

promulgating it without notice and comment is more acceptable. See Council of S. Mountains,

Inc. v. Donovan, 653 F.2d 573, 582 (D.C. Cir. 1981); N. Mariana Islands v. United States, 686 F.

Supp. 2d 7, 14-15 (D.D.C. 2009) (“[r]elevant circumstances [to evaluate] may include the scale

and complexity of the regulatory” action in the challenged rule); Mid-Tex, 822 F.2d at 1132 (a

rule’s temporally limited scope is among the key considerations in evaluating an agency’s good


66

cause claim); Coal. for Parity, 709 F. Supp. 2d at 20 (listing cases in which D.C. Circuit found

agency had “good cause” based on interim nature of challenged rule). Moreover, where an agency

acts without notice and comment in order to help a regulated industry avoid regulatory confusion,

courts have found “good cause.” See Coal. for Parity, 709 F. Supp. 2d at 20-21 (citing Nat’l

Women, Infants, & Children Grocers Ass’n , 416 F. Supp. 2d at 107 (need to have interim rule in

effect before effective date of statutory changes to federal program so states would have guidance

from agency responsible for implementing the statute)); Mid-Tex Elec. Co-op., 822 F.2d at 1132-

33 (citing concerns about regulatory confusion in the absence of the interim rule).26

As demonstrated above, once the Department reached its reasonable interpretation of the

master calendar requirement with respect to the question of when a regulation may be implemented

once the July 1 effective date has come and gone, the Department then lacked discretion to

implement the 2016 Rule on a date other than July 1, per the master calendar requirement, and it

therefore was not required to seek comment on the IFR. Plaintiffs’ procedural challenge to the

IFR, then, amounts to a challenge to the agency’s interpretation of whether it has discretion to

implement student financial aid regulations other than at the beginning of an award year. For all

the reasons set forth above, the agency’s interpretation on that question is a reasonable

interpretation of the HEA and is entitled to deference.27

26 While “[a]n agency’s desire to provide immediate guidance does not, by itself, constitute ‘good

cause’ to avoid notice and comment procedures . . . courts within this Circuit have considered the

need for regulatory guidance as one factor in assessing whether an agency has ‘good cause’ to

forego notice and comment.” Coal. for Parity, 709 F. Supp. 2d at 20-21. Plaintiffs here argue,

like the plaintiffs did in Coalition for Parity, that “the need for prompt guidance is overstated

because the regulated community was already complying.” Id. at 22. As discussed above, this

argument ignores the state of uncertainty that currently exists.

27 Although agencies are not generally afforded deference to their “good cause” determinations,

Sorensen Commc’ns Inc. v. FCC, 755 F.3d 702, 706 (D.C. Cir. 2014), this does not mean that if

an agency’s good cause determination is itself based on an interpretation of a statute that the agency

administers, that the underlying interpretation is not entitled to its customary deference. See id.


67

This conclusion is further supported by the fact that the Department separately, and with

notice and comment, addressed the issue of at the start of which award year the 2016 Rule should

become effective. See N. Mariana Islands, 686 F. Supp. 2d at 21 (agencies can, without notice

and comment, issue a “short-term rule that would address only immediate problems created by the

advent of the statute’s effective date, while waiting to issue a more comprehensive rule until it

could provide the public with notice and an opportunity for comment. This is the procedure most

consistent with the letter and the spirit of the APA”).

In any event, any harm from the lack of notice and comment was mitigated by the post-

promulgation comment period the Department provided. Courts in analogous situations have

relied on post-promulgation solicitation of comments in finding “good cause.” See, e.g., Coal. for

Parity, 709 F. Supp. 2d at 23 (“the continued solicitation of comments after promulgation of the

Interim Final Rule[] suggests that Defendants have kept an open mind as to the impact of its rules

on the regulated community.” (citation omitted)). Plaintiffs’ claim that the post-promulgation

comment period could serve no other purpose than creating the appearance of public consultation

is unavailing; the Department is open to feedback about the IFR. The appropriate forum for any

objections Plaintiffs have to the IFR is in a comment to the agency, rather than this action.

CONCLUSION

For the foregoing reasons, Defendants respectfully request that the Court deny Plaintiffs’

motion for summary judgment and grant Defendants’ motion for summary judgment.28

(no deference to agency’s interpretation of good cause requirement because “an agency has no

interpretive authority over the APA”); Mid Continent Nail Corp. v. United States, 846 F.3d 1364,

1372 (Fed. Cir. 2017) (noting that while an agency is not accorded deference for its interpretation

of the APA, the APA itself incorporates a standard of review of agency action that is “highly

deferential”).

28 If the Court instead grants summary judgment for Plaintiffs, Defendants request the opportunity

to provide separate briefing on the proper remedy. Defendants disagree with Plaintiffs that the


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Dated: April 13, 2018 Respectfully submitted,

CHAD A. READLER

Acting Assistant Attorney General

MARCIA BERMAN

Assistant Branch Director

/s/ R. Charlie Merritt

KAREN S. BLOOM

Senior Counsel

R. CHARLIE MERRITT (VA # 89400)

STUART J. ROBINSON

Trial Attorneys

U.S. Department of Justice

Civil Division, Federal Programs Branch

20 Massachusetts Ave. NW

Washington, DC 20530

(202) 616-8098

[email protected]

Counsel for Defendants

extreme remedy of vacatur is appropriate in this case. See Pls.’ Mem. at 60-62. “The decision to

vacate depends on two factors: the likelihood that deficiencies in [agency action] can be redressed

on remand, even if the agency reaches the same result, and the disruptive consequences of vacatur.”

Black Oak Energy, LLC v. FERC, 725 F.3d 230, 244 (D.C. Cir. 2013) (citation omitted). If the

Court rules in Plaintiffs’ favor with respect to any of their claims, Defendants respectfully request

an opportunity to brief these factors.


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