Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 1 of 54 UNITED STATES DISTRICT COURT DISTRICT OF COLUMBIA

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1 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 1 of 54 UNITED STATES DISTRICT COURT DISTRICT OF COLUMBIA ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS, Plaintiff, v. BETSY DEVOS, in her official capacity as Secretary of the Department of Education, and the UNITED STATES DEPARTMENT OF EDUCATION, Civil Action No (RBW) Defendants. PLAINTIFF S MOTION FOR SUMMARY JUDGMENT Pursuant to Federal Rule of Civil Procedure 56 and Local Civil Rules 7(h) & (n), Plaintiff Accrediting Council for Independent Colleges and Schools ( ACICS ), by and through its undersigned counsel, hereby moves the Court for an Order granting summary judgment. ACICS accredits postsecondary institutions. Prior to December 12, 2016, ACICS was recognized by the Department of Education. Defendants improperly terminated ACICS s recognition status through an agency review process that violated the Administrative Procedure Act. Defendants unlawful decision should be set aside. Pursuant to the Administrative Procedure Act and the Department of Education Regulations, 34 C.F.R , ACICS is entitled to judicial review of Defendants termination decision and is entitled to summary judgment. Specifically, Defendants actions in terminating ACICS s recognition violated the Administrative Procedure Act because the termination decision was arbitrary and capricious and was the result of a procedurally defective process.

2 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 2 of 54 In support of this motion, Plaintiff relies upon the attached memorandum of points and authorities. A proposed order is attached. ORAL ARGUMENT IS RESPECTFULLY REQUESTED. Dated: March 31, 2017 Respectfully submitted, By: /s/ Allyson B. Baker Allyson B. Baker (#478073) Meredith L. Boylan (#978088) Andrew T. Hernacki (# ) Hillary S. Profita (pro hac vice) Venable LLP 600 Massachusetts Ave., NW Washington, DC Telephone Facsimile abbaker@venable.com mlboylan@venable.com athernacki@venable.com hsprofita@venable.com Counsel for Accrediting Council for Independent Colleges and Schools

3 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 3 of 54 UNITED STATES DISTRICT COURT DISTRICT OF COLUMBIA ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS, Plaintiff, v. BETSY DEVOS, in her official capacity as Secretary of the Department of Education, and the UNITED STATES DEPARTMENT OF EDUCATION, Civil Action No (RBW) Defendants. PLAINTIFF S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

4 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 4 of 54 TABLE OF CONTENTS PRELIMINARY STATEMENT...1 STATEMENT OF PROCEDURAL FACTS...3 A. The Department of Education s Regulations Prescribe A Process For Reviewing Accrediting Agency Petitions That Seek Continued Recognition... 3 B. ACICS Submitted Substantial Information To The Department In Support Of Its Petition For Continued Recognition... 6 LEGAL STANDARD...16 ARGUMENT...17 I. THIS COURT HAS JURISDICTION OVER ACICS S PETITION FOR JUDICIAL REVIEW OF THE SECRETARY S FINAL ADMINISTRATIVE AGENCY ACTION 17 II. THE SECRETARY S DECISION WAS ARBITRARY AND CAPRICIOUS, AN ABUSE OF DISCRETION, AND NOT OTHERWISE IN ACCORDANCE WITH LAW 18 A. The Secretary Failed To Consider The Complete And Dynamic Evidence Submitted By ACICS The Secretary Was Not Provided, And Did Not Consider, 36,000 Pages Of Relevant Evidence Submitted By ACICS In Response To The Office Of The Under Secretary The Secretary Did Not Consider Current, Material and Relevant Evidence Regarding ACICS s Leadership Changes B. The Secretary s Decision Does Not Reflect Reasoned Explanation III. THE SECRETARY RELIED ON THE SDO DECISION, NACIQI PANEL RECOMMENDATION, AND STAFF REPORT, EACH OF WHICH WAS THE PRODUCT OF FLAWED PROCEDURES 33 A. The Staff Report The Staff Report s Findings Were Conclusory, Ignored Record Evidence, And Relied On Irrelevant Factors B. NACIQI hearing Improper Political Influence C. SDO Decision i-

5 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 5 of 54 CONCLUSION...45 Cases TABLE OF AUTHORITIES Page(s) Amerijet Int l, Inc. v. Pistole, 753 F.3d 1343 (D.C. Cir. 2014)...17 Aragon v. Tillerson, 2017 WL (D.D.C. Feb. 23, 2017)...23, 24, 42, 45 Butte County v. Hogen, 613 F.3d 190 (D.C. Cir. 2010)...16, 23, 24, 36 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971),...17 Cnty. of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999)...17 Cook v. FDA, 733 F.3d 1 (D.C. Cir. 2013)...19 Ehrman v. United States, 429 F. Supp. 2d 61 (D.D.C. 2006)...27 Jicarilla Apache Nation v. U.S. Dept. of Interior, 613 F.3d 1112 (D.C. Cir. 2010)...42 Judulang v. Holder, 132 S. Ct. 476 (2011)...16 Mori v. Dep t of the Navy, 917 F. Supp. 2d 60 (D.D.C. 2013)...43 In the Matter of Northwest Commission on Colleges and Universities, Decision of the Secretary, No O...18 Olsen v. Powell, No. 02-cv-1371, ECF No. 46 (D.D.C. Feb. 4, 2005)...28 PPL Wallingford Energy LLC v. FERC, 419 F.3d 1194 (D.C. Cir. 2005)...16, 21 -ii-

6 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 6 of 54 Pharm. Research & Mfrs. of Am. v. FTC, 790 F.3d 198 (D.C. Cir. 2015)...16 Price v. United States Dep t of Education, H , 2016 WL (S.D. Texas July 22, 2016)...33 Puerto Rico Higher Educ. Assistance Corp. v. Riley, 10 F.3d 847 (D.C. Cir. 1993)...36 Toy v. United States (D.D.C. Dec. 7, 2000)...27 United Technologies Corp. v. U.S. Dept. of Defense, 601 F.3d 557 (D.C. Cir. 2010)...36 Water Quality Insurance Syndicate v. United States, No , 2016 WL (D.D.C. December 22, 2016)...39, 42 Xcel Energy Servs. Inc. v. Fed. Energy Regulatory Comm n, 815 F.3d 947 (D.C. Cir. 2016)...16 Statutes 5 U.S.C , 36 5 U.S.C. 706(2)(A) U.S.C. 1099b U.S.C. 1099b(n) U.S.C. 1099b(n)(1) U.S.C. 1099b(n)(1), (3)...6, U.S.C. 1099b(n)(3) U.S.C. 1099c...6 Other Authorities 34 C.F.R C.F.R CFR (a) C.F.R (b) iii-

7 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 7 of CFR C.F.R C.F.R passim 34 C.F.R (b)...3, 19, 33, C.F.R (b), C.F.R (b), (f)(4) C.F.R (d) C.F.R C.F.R (b) C.F.R (c) C.F.R , 17 -iv-

8 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 8 of 54 PRELIMINARY STATEMENT ACICS is a nonprofit accrediting agency of institutions of higher education. It was founded in 1912, and the Department of Education ( Department or ED ) (and its precursor agency) has continuously recognized ACICS as an accreditor since On January 8, 2016, ACICS submitted to the Department its regularly-scheduled Petition for Continued Recognition (the Petition ). Department recognition ensures that students who attend an ACICS-accredited school are eligible to receive Title IV student financial aid, which is the program that offers federally-funded student loans and grants. When an accrediting agency loses its Department recognition status, the students who attend schools accredited by that agency are no longer eligible to receive Title IV student funding. This means a school must find another accrediting agency recognized by ED if its students are to remain eligible for receipt of Title IV funding. On December 12, 2016, the Secretary of Education issued a procedurally-flawed and politically-tainted decision that revoked ACICS s status as a recognized accrediting agency. The Department s regulations prescribe a specific process for reviewing petitions for continuing recognition. This process involves several layers of review by the Department s Staff, Congressionally appointed members of the National Advisory Committee on Institutional Quality and Integrity ( NACIQI ), the Senior Department Official and ultimately by the Secretary of Education (the Secretary ). Here, as to ACICS s Petition for Continued Recognition, during each step of this review, there were substantial procedural flaws that have rendered this process and the Secretary s Decision to deny ACICS s Continued Recognition a violation of the APA. First, the Secretary s Decision relied on a misstatement of record evidence that ACICS had submitted to the Department in connection with its Petition. The Department s Staff Report misstated this evidence and the Secretary did not independently review this evidence. 1

9 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 9 of 54 Second, the Secretary s Decision relied on a flagrantly incomplete record that omitted more than 36,000 pages of documents that ACICS submitted to the Department with its Petition and at the express request of the Office of the Under Secretary (OUS) at the Department. In fact, this request from the OUS included cumbersome document and information requests that were politically-charged, proffered nearly two months after ACICS had already submitted its Petition, and characterized as being tied to recognition. Nevertheless, the Department declined to consider any of this information in its decision-making or even to include these materials in its record. Third, the Department s process and the Secretary s Decision failed to consider dynamic evidence of how ACICS s operations, structure and organizational leadership demonstrate compliance with the specific Recognition Criteria that the Department and the Secretary were required to consider in reviewing the Petition. The Secretary s Decision also failed to consider dynamic evidence that affirmatively evinced ACICS s ability to demonstrate or achieve compliance with the Recognition Criteria within 12 months. Fourth, the Department and the Secretary misapplied the Recognition Criteria to the incomplete and stale evidence that formed the apparent record on which they relied. Finally, the Secretary the ultimate arbiter of ACICS s recognition as an accrediting agency did not conduct an independent evaluation of all relevant evidence in considering the Petition, as he was required to do pursuant to the governing statute and the Department s Regulations. Accordingly, the Secretary s Decision is the product of decision-making that was arbitrary, capricious and an abuse of discretion in violation of the Administrative Procedure Act (APA). 2

10 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 10 of 54 STATEMENT OF PROCEDURAL FACTS A. The Department of Education s Regulations Prescribe A Process For Reviewing Accrediting Agency Petitions That Seek Continued Recognition In January 2016, ACICS submitted a Petition for Continued Recognition (the Petition ) by the Department of Education. ACICS submitted the Petition in accordance with Section 602 of the Code of Federal Regulations. See 34 C.F.R ( Regulations ); see also 20 U.S.C. 1099b (Recognition of accrediting agency or association). The Regulations set forth a specific process that the Department must follow when it evaluates whether a petitioning accrediting agency meets the Recognition Criteria. See id During the first step in the recognition process, a petitioning agency submits a written application and supporting evidence (see id (a)). Department Staff must then conduct an analysis to determine whether the [accrediting] agency satisfies the criteria for recognition, taking into account all available relevant information concerning the compliance of the agency with those criteria and the agency s effectiveness applying the criteria. See id (b) (emphasis added). This includes observations of the accrediting agency s activities, public and third-party comments about the agency, a review of complaints about the agency, and all other relevant materials. Id. The Department Staff then prepare a written draft analysis with a proposed recommendation as to recognition status (the Draft Report ). The petitioning agency is invited to respond to the Draft Report and any third party comments, and is to be given at least 30 days to do so. See id (f). After considering the agency s response, Department Staff draft a final written analysis ( Final Staff Report ) that includes a recognition recommendation to the Senior Department Official ( SDO ). See id (f)(4). The National Advisory Committee on Institutional Quality and Integrity ( NACIQI ) then convenes to consider the Petition and provide its own recognition recommendation. See id. 3

11 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 11 of NACIQI is a Department advisory panel comprised of academics, administrators, and others in the field of education who are appointed by the Congress to six-year terms. In advance of a public NACIQI Panel meeting, Department Staff provide the Panel with the Final Staff Report, the agency s response to the draft staff report, and other related materials. See id (c). Department Staff, the petitioning agency, and third-party commenters are invited to make presentations at the hearing, provided that the comments are tied to the recognition criteria. See id (e). At the conclusion of the meeting, the NACIQI Panel makes a recommendation regarding the Petition to the SDO. See id Within ten days of the NACIQI Panel meeting, the accrediting agency and the Department Staff are allowed to submit comments to the SDO that respond to the NACIQI Panel s recommendation in advance of the SDO making a decision. See id (a). The SDO, in turn, then makes a decision regarding an agency s petition for recognition. See id The SDO must make a decision based on the record compiled under , , , and Id (a). Thus, the SDO must consider all available relevant information ( (a)), including: The agency s application and supporting documentation ( (b), (c)(1)); Observations from agency panel and decision meetings ( (b)(1)); The agency s responses to third-party comments ( (b)(2)), (c)(5)); The agency s written response to the Department Staff s draft analysis (602.32(f)(3), (602.34(3))); The agency s presentations at the NACIQI meeting ( (e)); and The agency s written comments to the SDO ( (a)). 4

12 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 12 of 54 See id (a). The SDO also considers the materials provided to the NACIQI Panel, the transcript of the NACIQI meeting, NACIQI s recommendation, and any other comments and evidence that the SDO receives in connection with the Petition. See id. With respect to an accrediting agency s application for continued recognition, the SDO may take one of the following actions after the SDO has considered all of the relevant information in the record ( (c)). Specifically, the SDO may: (1) approve, deny, limit, suspend, or terminate an agency s recognition; (2) grant or deny an application for expansion of scope of the accrediting agency; (3) revise or affirm the scope of the accrediting agency; or (4) continue recognition pending submission and review of a compliance report. See id (e). The SDO may continue an accrediting agency s recognition for up to 12 months if an agency fails to demonstrate compliance with the required recognition criteria but will demonstrate or achieve compliance with the criteria for recognition and effective application of those criteria within 12 months or less. See id (e)(3)(i). For good cause, the SDO may further extend this 12-month grace-period, allowing an agency additional time to demonstrate or achieve compliance with the Recognition Criteria. See id (e)(3)(ii). An agency may appeal the SDO s decision to the Secretary of Education ( Secretary ). The Secretary s recognition decision must be based on specific criteria. See id The Secretary renders a final decision after taking into account the [SDO s] decision, the agency s written submissions on appeal, the [SDO s] response to the appeal, if any, and the entire record before the [SDO] ; the Secretary is not required to consider new evidence [the accreditor] did not submit previously in the proceeding. Id (c). The Secretary, however, is required to conduct a comprehensive review and an independent evaluation of the information provided by the agency, to include all available relevant information concerning 5

13 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 13 of 54 the agency s compliance with the Recognition Criteria. 20 U.S.C. 1099b(n)(1), (3). The Secretary shall not, under any circumstances, base decisions on the recognition or denial of recognition on criteria other than those in the statute. Id. at 1099b(n)(3). An agency may appeal the Secretary s Decision before a federal court. See 34 C.F.R B. ACICS Submitted Substantial Information To The Department In Support Of Its Petition For Continued Recognition The Recognition Criteria expressly consider the following characteristics of an accrediting agency and prescribe certain requirements that the accrediting agency must demonstrate. The Recognition Criteria provide that (1) a private accrediting agency (one that is not a state regulatory body) is comprised of voluntary members; (2) that the primary purpose and mission of the agency is accreditation of educational institutions and/or programs; (3) that the accrediting agency is separate and independent of any affiliated, associated or related trade association thus clarifying and demonstrating the autonomy and integrity of the accreditation activity; (4) that an accreditor must have and demonstrate clear and effective controls against conflicts of interest, or the appearance of conflicts of interest; (5) that an accrediting agency had the administrative and financial capability to carry out its functions; and (6) that the agency maintains policies that are consistent with federal standards. 34 C.F.R ; see also 20 U.S.C. 1099c. The Department also ensures that institutional accreditors, such as ACICS, review postsecondary institutions for numerous criteria, including curricula, faculty, quality of facilities, student support services, and recruiting and admissions practices. See 34 C.F.R On January 8, 2016, ACICS filed a substantial narrative submission and over 100 exhibits spanning thousands of pages in support of its Petition for Continued Recognition. See AR_ (narrative); AR_ (exhibits). ACICS s Petition included: 6

14 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 14 of 54 Narrative descriptions of ACICS s policies, practices, and procedures with respect to each recognition criteria; ACICS s financial reports and budgets; Campus-level evaluations and data analyses; ACICS s Council Actions; Minutes from ACICS s Business Practices Group meetings; Memoranda to the Field describing changes to ACICS s accreditation standards Documentation of ACICS s revised standards and their implementation at ACICS-accredited schools 1. The Office Of The Under Secretary Of Education Issued An Unprecedented And Onerous Request That ACICS Answer Additional Questions As Part Of Its Application For Continued Recognition On March 3, 2016, nearly two months after ACICS had already submitted its Petition, the Department sent ACICS an stating that it would return [ACICS s] petition and ask ACICS to respond to a set of questions from the Office of the Undersecretary ( OUS Request ). See AR The Department explained that the OUS Request was a set of question[s] that the Office of the Under Secretary a high-level political appointee who, under the Department s Regulations, is not a contemplated participant in the Department Staff recognition process want[ed] to ask ACICS during the recognition process. Id. To this end, the Department then return[ed] the petition to ACICS so that ACICS could respond to these questions [from the OUS] in [its] petition. Id. The OUS Request set forth five single-spaced pages of interrogatory-styled questions, with multiple subparts, many of which focused on investigations and lawsuits relating to institutions such as Corinthian Colleges and ITT. See AR_ Section I of the OUS Request was entitled Overall Questions ; Section II of the OUS Request was entitled Questions related to specific standards in Jan submission, referencing ACICS s January 2016 Petition. Id. 7

15 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 15 of 54 The OUS Request required ACICS to submit a narrative with supporting Documents, including, but by no means limited to: Documents regarding the evolution of ACICS s monitoring and enforcement standards (AR_000439); Documents regarding ACICS s knowledge of non-public law enforcement investigations of schools that it has accredited (id.); [A]ll s among, and Documents sent or received by, any of ACICS directors, officers, staff members, consultants (including all members of college review teams), and third parties which concern [six] schools, dating back two, three, or more than four years (AR_000440); [A]ll documentation regarding teach out policies and processes in general or the application of such polices and processes to any institution in the last three years (AR_000441); and [A]ll pre-review materials for each Corinthian, CEC, and ITT campus that [ACICS] had gathered. (AR_000442). The Department maintained that the information by OUS was tied to the recognition process, and delineated specific recognition criteria to which each question related. See AR_ In a subsequent , the Department emphasized the materiality of the information sought, stating: the information we requested is important to the Department s responsibility to monitor and review ACICS s effectiveness as a recognized accrediting agency. See AR_ Notably, the OUS Request sought information about recognition criteria with which the Secretary would subsequently find ACICS to be out of compliance ACICS Responded To The Cumbersome OUS Request, But The Department, By Its Own Admission, Failed To Consider Most, If Not All Of, This Response When It Reviewed ACICS s Petition 1 The OUS Request sought information related to, inter alia, 34 C.F.R (a), (f), , and See AR_ As discussed in section II.B, infra, the Secretary found ACICS to be out of compliance with these criteria. 8

16 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 16 of 54 The OUS Request provided that ACICS had only until April 1 to respond, giving ACICS approximately three weeks to compile the substantial materials necessary to answer the two part Request. See AR_ Accordingly, on March 10, ACICS sought an extension of time to respond. Id. Specifically, ACICS explained to the Department that the OUS Request required that ACICS supplement or replace more than 30 narrative sections and more than 100 exhibits in [its] petition that was submitted by ACICS in early January. Id. The Department granted ACICS until May 16 to respond to only Section II of the OUS Request, which sought specific information and documentation on more than fifteen recognition criteria; the Department required ACICS to produce by April 1 its response to Section I of the OUS Request, which sought narrative responses and supporting documentation regarding approximately ten ACICS-accredited institutions compliance with ACICS s accrediting standards. See AR_ Apparently recognizing that ACICS s response to the Under Secretary s complex request would be voluminous and require additional time for Department Staff to appropriately review, the Department wrote that given that information received as late as May 16, 2016 would not allow Department Staff the time to fully review and analyze it in time for the June NACIQI meeting, ACICS should be prepared to return at the fall NACIQI meeting for further discussion and possible action as warranted. Id. (emphasis added). Accordingly, ACICS expected that the NACIQI panel would consider ACICS s response to Section II of the OUS Request during the Fall NACIQI meeting, especially since Section II of the OUS Request specifically concerned Questions related to specific standards in Jan submission. Id. Moreover, the Department had reiterated that the OUS Requests sought information that was important to the Recognition process. Id. 9

17 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 17 of 54 ACICS met the April 1 deadline to respond to OUS Request Section I. On May 16, 2016, ACICS uploaded its voluminous Section II Response with the Department; the submission was tens of thousands of pages that had been gathered in response to the OUS Request. See AR_ ACICS, through its then-acting Executive-in-Charge, Mr. Anthony Bieda, sought guidance from the Department about how the Department would process this submission, because the Department s portal did not appear to have a mechanism that would enable ACICS to upload responses to the OUS Request and also to upload subsequently a response to the Department s Draft Report on June 3. Id. ACICS s May 16 response to Section II of the OUS Request included: A 27-page single-spaced narrative responding to each of the Department s questions regarding specific recognition criteria (including criteria with which the Secretary would ultimately find ACICS to be noncompliant) (see Dkt. 6 at ); and Approximately 36,000 pages of documents relating to: o o o ACICS s adverse actions taken against dozens of campuses of schools that ACICS has accredited; Accreditation application materials submitted to ACICS by specific institutions identified by the Department, and ACICS s evaluations of those institutions applications (including site visit reports); and Voluminous correspondence between ACICS and specific institutions identified by the Department. Two days later, on May 18, the Department confirmed that ACICS had successfully uploaded onto the portal its responses to Section II of the OUS Request, but the Department also noted that [s]ince we have not done this type of multi-layered data submission before, everyone will need to remember that there could be unforeseen complications. See AR_ In other words, the Department s OUS Request was unprecedented. Moreover, because of the portal s 10

18 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 18 of 54 technical limitations and the logistical complications caused by the OUS Request, the Department asked ACICS to formally submit its documents and narrative response on a thumbdrive the following day, as the Department explained that we do not want to mix responses. See AR_ The next day, on May 19, ACICS delivered the thumb-drive containing its Section II response to the Department, with a cover letter that that enclosed a thumb-drive from the Accrediting Council for Independent Colleges and Schools (ACICS) containing the agency s response (Dkt. 6 at ) and supporting documents (supporting Exhibits ) to Part II of the U.S. Department of Education s supplemental request for information, concerning ACICS Petition for Recognition, See Exhibit 1 to Declaration of Anthony Bieda ( Bieda Decl. ), attached as Exhibit A. 3. While ACICS Was In The Midst Of Responding To The OUS Request, The Department Prematurely Issued A Draft Staff Report That Failed To Consider ACICS s Response To The OUS Request On May 4 two weeks before ACICS submitted its response to Section II of the OUS Request the Department Staff issued a draft Staff Report and directed ACICS to submit a response to the draft Report by June 3. See AR_ (Draft Staff Analysis); AR_ (Draft Staff Report). Although ACICS was in the midst of compiling its response to Section II of the OUS Request, the Department denied ACICS s request for an extension of time to respond to the draft Staff Report. See AR_ In addition, the Department, notwithstanding its prior representation that ACICS should plan to appear at the Fall NACIQI meeting, then advised ACICS that the NACIQI panel would not defer consideration of the Petition. Id. The Department insisted on having ACICS s Petition considered during the June 2016 NACIQI Meeting, which effectively meant that voluminous information ACICS submitted in response to the OUS Request would not be considered by the 11

19 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 19 of 54 Department or the NACIQI panel in June. Id. This was the case even though the Department expressly return[ed] ACICS s Petition so that it could respond to the OUS Request, meaning that the OUS Request was seen as seeking information that either supplanted or at least supplemented ACICS s original Petition. To this end, the OUS Request asked questions about the specific standards conerning the Petition. AR_ On June 3, 2016, ACICS timely submitted its response to the draft Staff Report, providing substantial narratives and additional supporting documentation in response to questions and concerns noted in the draft Staff Report. See AR_ To the extent a limited number of Recognition Criteria required additional attention, ACICS s response also confirmed ACICS s ability to be fully compliant within 12 months. Id. 4. The Department Staff s Rushed Final Report Was Flawed And The Department And Third Parties Presented Inflammatory Information To The NACIQI Panel The Department issued its Final Staff Report to the SDO on June 15, AR_ The report recommended that the Department deny ACICS s Petition for renewal of recognition based on the Staff s misguided impression that ACICS could not remedy its compliance issues. See AR_ The Staff Report, however, included substantive errors (see Section III.A, infra) evidencing the Department Staff s rush to complete the report before the June 23 NACIQI meeting. The Report referenced only a tiny fraction three ACICS exhibits 2 of the more than 36,000 of pages of documentation submitted by ACICS in response to Section II of the OUS Request, and did not address at all ACICS s 27-page narrative response that was also part of the response to Section II. 2 Letters of support (Exhibit 150), employer letters (Exhibit 150-2), and letters from students (Exhibit 150-3). See AR_

20 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 20 of 54 On June 23, 2016, the NACIQI panel, relying heavily on the Staff Report and in the wake of inflammatory third-party comments unrelated to the Recognition Criteria, voted 10-3 to recommend withdrawal of the Agency s recognition, without giving the Agency twelve months to demonstrate compliance. See AR_000761: The SDO Issued A Short Letter, Lacking Any Meaningful Analysis, To Inform ACICS That It Would No Longer Be Recognized; The SDO Also Improperly Denied ACICS s Request for Reconsideration On July 5, 2016, ACICS submitted substantial comments to SDO following the NACIQI recommendation ( ACICS s July 5 Comments ) pursuant to 34 C.F.R (b). See AR_ ACICS s July 5 Comments included an Executive Summary and detailed response to each of the 21 findings of the Final Staff Report, explained how ACICS already was in compliance with more than half of those findings, and demonstrated specifically how ACICS could come into compliance with the remaining findings within 12 months. See id. 3 Over the next several weeks, the Office of Postsecondary Education ( OPE ) submitted responsive comments to the SDO (the OPE Letter ) (AR_ ), and ACICS submitted a reply (the July 25 Response ) (AR_ ). ACICS again addressed in detail its progress in meeting the standards of the recognition criteria, as well as additional improvements, such as engaging industry expert Roger Williams a respected and veteran accreditation expert as a consultant on accreditation matters. See AR_ On September 22, 2016, the SDO summarily disposed of ACICS s petition in a two and one-half page letter to Mr. Williams who, in August, had been elevated to serve as Interim President of ACICS. See AR_ The SDO, who was aware of that development, 3 The Executive Summary to ACICS s July 5 Comments is attached hereto, for ease of reference, as Exhibit B. 13

21 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 21 of 54 tersely informed Mr. Williams that the Department had elected to terminate its recognition of ACICS as a nationally recognized accrediting agency. Id. ACICS promptly submitted a Request for Reconsideration of the SDO s September 22, 2016 Decision (the Request for Reconsideration ) based on fresh evidence that further addressed questions previously posed by the Department Staff and the NACIQI panel, including information regarding the Agency s new leadership under Mr. Williams, implementation of new policies, and improvements to existing policies that would solidify ACICS s compliance with all applicable criteria within 12 months. See AR_ The Reconsideration request specifically included: Materials detailing Mr. Williams s background and his prior successes; An explanation of the departure of six senior leaders from ACICS s ranks and the addition of three new public members to ACICS s Board; Specific instances of ACICS taking adverse action against noncompliant institutions, including increased monitoring and on-site visits, issuance of show-cause directives, institution of secret shopper processes; and More robust confirmation of placement information. The SDO declined to reconsider her decision. 4 See AR_ ACICS Appealed To The Secretary, Who Terminated ACICS s Recognition Without Having Discharged His Obligation To Independently Review All Relevant Information On September 23, 2016, ACICS filed a notice of appeal to the Secretary, and both parties filed briefs in support of their positions. See AR_ On December 12, 2016, the Secretary issued a Decision. See AR_ The Secretary adopted the SDO s decision 4 The SDO denied ACICS s Request for Reconsideration purely on technical, procedural grounds. The SDO did not provide any analysis of the substantive evidence and legal argument that ACICS presented in its Request for Reconsideration. 14

22 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 22 of 54 and terminated ACICS s recommendation. The Secretary based his determination on the flawed conclusions of the Department Staff, NACIQI, and the SDO, and he rendered his decision without having conducted a statutorily required independent review of all relevant information. 7. ACICS Exercised Its Right To Appeal To The Court On December 15, 2016, ACICS filed a Complaint and Motion for a Temporary Restraining Order and Preliminary Injunction against the Department and then-secretary John King. See ECF 1, 5. Following a December 20, 2016 hearing, this Court denied ACICS s Motion for a Temporary Restraining Order on December 21, See Dkt. 12. On February 21, 2017, this Court conducted a hearing regarding ACICS s Motion for Preliminary Injunction. See Feb. 21, 2017 Minute Entry. The Court heard testimony from Mr. Williams, as well as Mr. Ronald Bennett of the Department of Education. Mr. Williams, whom the Court described as extremely credible and forthright and an extremely competent individual, (see Feb. 21, 2017 Hearing Transcript at 112:21-22; 121:8-9) 5 testified extensively on the negative impact of the Secretary s Decision upon ACICS, as well as its institutions and students; he also described his extensive experience serving at the helm of an accrediting agency similarly-situated to ACICS. See id. at By contrast, the Department s witness, Ronald Bennett, was evasive and did not demonstrate an understanding of how accrediting agencies operate or, for example, on-board schools, which is a necessary by-product of the Provisional Program Participation Agreements ( PPPAs ) the Department has required ACICS-accredited institutions to enter into as a condition for having their students continue to receive Title IV funding. Id. at made public. 5 ACICS does not attach the transcript as an exhibit because it has not yet been 15

23 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 23 of 54 LEGAL STANDARD Under the APA, a reviewing court may set aside a challenged agency action if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. 706(2)(A). Although the scope of review under the arbitrary and capricious standard is deferential, courts retain a role, and an important one, in ensuring that agencies have engaged in reasoned decisionmaking, Judulang v. Holder, 132 S. Ct. 476, (2011), which is the touchstone of arbitrary and capricious review. See Pharm. Research & Mfrs. of Am. v. FTC, 790 F.3d 198, 209 (D.C. Cir. 2015) (internal quotations and citation omitted). Simply put, the agency must explain why it decided to act as it did, Butte County v. Hogen, 613 F.3d 190, 194 (D.C. Cir. 2010), and the reason for the agency s decision must be both rational and consistent with the authority delegated to it by Congress. See Xcel Energy Servs. Inc. v. Fed. Energy Regulatory Comm n, 815 F.3d 947, 952 (D.C. Cir. 2016). To avoid a finding that the challenged agency action was arbitrary or capricious, the agency must [have] examine[d] the relevant data and articulate[d] a satisfactory explanation for its action. PPL Wallingford Energy LLC v. FERC, 419 F.3d 1194, 1198 (D.C. Cir. 2005) (quoting Motor Vehicle Mfrs. Ass n, 463 U.S. at 43) (internal quotation marks omitted). In articulating the reason for its action, the agency must have provided a rational connection between the facts found and the choice made. Motor Vehicle Mfrs. Ass n, 463 U.S. at 43. The D.C. Circuit has summarized the circumstances under which a federal agency action would be arbitrary and capricious to include if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Pharm. Research & Mfrs. of Am., 790 F.3d at 209. Thus, when an agency 16

24 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 24 of 54 fail[s] to provide a reasoned explanation, or where the record belies the agency s conclusion, [the court] must undo its action. Cnty. of Los Angeles v. Shalala, 192 F.3d 1005, 1021 (D.C. Cir. 1999) (quoting BellSouth Corp. v. FCC, 162 F.3d 1215, 1222 (D.C. Cir. 1999)); see also Amerijet Int'l, Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C. Cir. 2014) ( [A] fundamental requirement of administrative law is that an agency set forth its reasons for decision; an agency's failure to do so constitutes arbitrary and capricious agency action. (internal quotation marks and citation omitted)). In APA cases involving cross-motions for summary judgment, the Court shall review the whole record or those parts of it cited by a party.... See 5 U.S.C The Department of Education and Secretary of Education acted in an arbitrary and capricious manner and also abused discretion in failing to continue ACICS s recognition status. ARGUMENT I. THIS COURT HAS JURISDICTION OVER ACICS S PETITION FOR JUDICIAL REVIEW OF THE SECRETARY S FINAL ADMINISTRATIVE AGENCY ACTION Courts have long held that agency actions are presumptively subject to review under the APA, and that such review is available, except where there is a statutory prohibition on review or where agency action is committed to agency discretion by law. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 (1971), rev d on other grounds, Califano v. Sanders, 430 U.S. 99 (1977) (quoting 5 U.S.C. 701). There is no bar to judicial review here. Indeed, the Department s own regulations expressly prescribe that the Secretary s Decision to deny an agency s recognition is reviewable in Federal court. Specifically, 34 C.F.R , entitled Contesting the Secretary s final decision to deny, limit, suspend, or terminate an agency s recognition, explicitly states: An agency may contest the Secretary s decision under this part in the Federal courts as a final decision in accordance with applicable Federal 17

25 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 25 of 54 law. Furthermore, the Department itself has specifically acknowledged: [A]ny [accrediting] agency may appeal the Secretary s final decision to Federal court.... In the Matter of Northwest Commission on Colleges and Universities, Decision of the Secretary, No O at 4, December 11, 2014, available at II. THE SECRETARY S DECISION WAS ARBITRARY AND CAPRICIOUS, AN ABUSE OF DISCRETION, AND NOT OTHERWISE IN ACCORDANCE WITH LAW The Secretary failed to conduct an independent evaluation of ACICS s petition and consider all of the available dynamic and relevant evidence. The Department Staff, NACIQI, and SDO decisions that came before the Secretary s determination were rendered without a complete Administrative Record, ignored the available record evidence, were conclusory, and were premised on irrelevant factors. Yet, the Secretary s Decision leaves no doubt that the Secretary in addition to being presented with an incomplete Administrative Record simply adopted the previously rendered erroneous and procedurally deficient conclusions. Rather than undertaking a deliberate review of the complete body of evidence that ACICS had submitted, the Secretary s Decision repeatedly demonstrates that the Secretary instead deferred to what the Department Staff found, and what the SDO observed, and what the SDO, Department staff, and NACIQI already considered. See AR_000006, AR_ The Court should grant summary judgment in favor of ACICS because the Secretary s determination to deny ACICS recognition, which was rendered without consideration of all relevant evidence and founded upon faulty prior Department conclusions, was the product of unlawful decision-making. A. The Secretary Failed To Consider The Complete And Dynamic Evidence Submitted By ACICS 18

26 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 26 of 54 The Higher Education Act explicitly states that the Secretary shall consider all available relevant information concerning the compliance of the accrediting agency in the course of conducting a comprehensive review and independent evaluation of an agency seeking recognition. 20 U.S.C. 1099b(n)(1) & (3); see also 34 C.F.R (b) (emphasis added). Indeed, the Recognition Criteria and the Higher Education Act expressly contemplate granting an accrediting agency 12 months to demonstrate compliance with the Recognition Criteria. The Secretary did not follow the statutory and regulatory requirements for evaluating ACICS s Petition for Continuing Recognition. Notably, the Secretary s Decision to terminate ACICS s recognition and refusal to give ACICS twelve-months to finalize its compliance efforts glaringly omits any consideration of substantial changes ACICS implemented or made after the June NACIQI meeting, as detailed at length in ACICS s July 5, 2016 Comments. For example, ACICS s submission included an exhibit entitled: Executive Summary and Detailed Background of ACICS Resolution of 21 Residual Findings of the Department s Staff Report. See Ex. B (AR_ ). This is not the only evidence that the Secretary failed to consider. Indeed, the Secretary did not review ACICS s May 16, 2016 response to Section II of the OUS Request; as noted above, this included an extensive narrative response to Recognition Criteriarelated questions posed by the Department, along with more than 36,000 pages of documents. By ignoring his statutory charge to conduct a complete and independent review of relevant evidence and relying instead on evidence that, by December 2016, was twelve months old to conclude that ACICS would not be able to demonstrate or achieve compliance within the next twelve months the Secretary violated the APA. Cook v. FDA, 733 F.3d 1, 5, 11 (D.C. Cir. 2013) (FDA s failure to comply with its mandatory duties rendered its decision not in accordance with law and in violation of the APA). 19

27 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 27 of The Secretary Was Not Provided, And Did Not Consider, 36,000 Pages Of Relevant Evidence Submitted By ACICS In Response To The Office Of The Under Secretary It is indisputable that the Secretary failed to consider a detailed narrative and tens of thousands of pages of documents submitted by ACICS in response to Section II of the OUS Request, which sought information related to specific standards in [ACICS s] Jan submission and addressed ACICS s compliance with Recognition Criteria relating to, for example, monitoring and enforcement. Nevertheless, the Administrative Record compiled by the Department excludes all but three of the nearly 50 exhibits that ACICS provided in response to Section II of the OUS Request in its May 16 submission. 6 This means that more than 36,000 pages of materials expressly sought by the Under Secretary of Education were not considered by the Department, SDO, or Secretary and then were deliberately excluded from the Administrative Record in this case. It is indisputable that the evidence the Secretary failed to consider was material in substance. The Department described the information it requested as tied to the recognition process and important to its evaluation of ACICS s compliance with the Recognition Criteria. See AR_000437, AR_000434; see also December 20, 2017 Hearing Transcript 7 at 21:23-22:2 (Defendants counsel stated that the OUS Request had to do with areas of concern that the Department had. In other words, it was designed to elicit evidence of further noncompliance ). 6 Exhibit 150 (letters of support), Exhibit (employer letters), and Exhibit (letters from students). See generally, ECF 41 - Plaintiff s Motion to Supplement the Administrative Record. 7 ACICS does not attach the transcript as it has not yet been made public. 20

28 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 28 of 54 It is indisputable that the evidence the Secretary failed to consider was material in sheer volume. At 36,000 pages, the information ACICS submitted on May 16 is three times the size of the Administrative Record filed by the Department in this matter. 8 Neither the Secretary, nor the Department Staff and SDO before him, articulated any explanation for ignoring this highly relevant body of evidence. The Secretary s failure to consider this information information the OUS, i.e., the Secretary s right-hand man, had specifically requested, and which ACICS went to great lengths to compile in a comprehensive and efficient manner is a per se violation of the Higher Education Act, which requires the Secretary to conduct an independent evaluation of the information provided by [an] agency seeking recognition. 20 U.S.C. 1099b(n)(1). See also 20 U.S.C. 1099b(n)(3) ( The Secretary shall consider all available relevant information concerning the compliance of the accrediting agency with the criteria ). It also is a per se violation of the Department s Regulations, which require the Department to take into account all available relevant information to an agency s compliance with the Recognition Criteria. 34 C.F.R (b), ). These statutory and regulatory violations constitute a clear violation of the Administrative Procedure Act, which requires an agency to have examine[d] the relevant data before taking an administrative action. PPL Wallingford Energy LLC, 419 F.3d at ACICS has filed a motion to supplement the Administrative Record to include the omitted evidence. See ECF No. 41 (March 31, 2017). 9 The Secretary and Department cannot avoid an APA violation by concocting a post hoc explanation for the failure to consider ACICS s evidence. Nowhere below did the Department contend that the information ACICS provided was not responsive to the Under Secretary s request, or that it was unimportant or irrelevant to the Department s recognition analysis. The Department, and then the Secretary, simply ignored it, perhaps because the May 16 submission contradicted the Department s theory of ACICS noncompliance, or perhaps, because the Department ran out of time to review these materials. No after-fact-rationalization 21

29 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 29 of The Secretary Did Not Consider Current, Material and Relevant Evidence Regarding ACICS s Leadership Changes ACICS substantially restructured its leadership in the weeks leading up to and immediately following the June NACIQI meeting a critical fact that the Secretary ignored. As ACICS explained to the Secretary, and as this Court heard during the Preliminary Injunction hearing, ACICS appointed Roger J. Williams a 25-year veteran of management of higher education accreditation as the Interim Chief Executive Officer and President. See AR_ ; AR_ ; AR_ Mr. Williams is uniquely qualified to lead ACICS and serve as a change agent. At the NACIQI meeting, Mr. Porcelli remarked that he was personally blown away by the fact of Mr. Williams s involvement with the committee established to strengthen ACICS. Shortly after Mr. Porcelli made that comment, Mr. Williams agreed to serve as ACICS s President. See AR_000725:8-9; see also AR_ As the former Executive Director of the Accrediting Council for Continuing Education and Training ( ACCET ), Mr. Williams transformed ACCET from nearly losing its recognition status with the Department into an agency praised for its holding schools accountable for clearlydefined student achievement outcomes. See AR_ That agency was also the only Department-recognized agency certified by the International Organization for Standardization as a Quality Management System. Id. Mr. Williams s work to implement numerous changes and improvements at ACICS (including changes designed to address the Department s concerns regarding student achievement) were presented to the Secretary (see AR_ ), and that information fell squarely within the scope of relevant information the Secretary was statutorily charged to or attempt to explain away the relevance of ACICS s evidence can cure the Department s and the Secretary s blatant violation of the APA. 22

30 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 30 of 54 consider. But, the Secretary s Decision does not reflect a deliberate consideration of the structural changes ACICS had made, which were patently relevant to ACICS s compliance with the Recognition Criteria. See AR_ ; see also AR_ ; Ex. B at AR_ Further, during the three months following the NACIQI meeting and before the Secretary rendered his Decision ACICS s Board doubled the number of public members, replaced the Agency s President with Mr. Williams, and others who previously served in leadership roles have left the Agency. See AR_239-40; AR_ ; AR_ These sweeping changes addressed the Department s statement that: Much of NACIQI s concern was based on the fact that the management in place had not really changed. See AR_ Yet, the robust record of ACICS s structural transformation went unheeded by the Secretary, whose Decision included but one brief reference the Department Staff s comments pre-naciqi, and thus before ACICS had fully installed its new leadership team. AR_ The evidence upon which the Secretary relied was inherently stale. The Secretary s failure to consider relevant information reflects arbitrary and capricious decision-making. See Aragon v. Tillerson, 2017 WL , at *8 (D.D.C. Feb. 23, 2017) (explaining that the failure to consider relevant evidence that is at least probative of an important aspect of an issue before the administrative agency amounts to an arbitrary and capricious action); Butte County, Cal. v. Hogen, 613 F.3d 190 (D.C. Cir. 2010) (same). For example, in Butte County v. Hogen, the D.C. Circuit set aside the final decision of the Secretary of the Interior as arbitrary and capricious because the Secretary failed to consider relevant evidentiary submissions. 613 F.3d at 194. There, Butte County submitted evidence that called into doubt an interim administrative decision, and the Secretary s failure to consider that 23

31 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 31 of 54 information violated the longstanding tenet of administrative decision-making that [t]he substantiality of evidence must take into account whatever in the record fairly detracts from its weight. Id. at 194 (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, (1951)). Though the Secretary is permitted to consider the views of Department Staff and those of the NACIQI panel, he cannot solely rely on those opinions. The Secretary has an independent obligation to consider all relevant evidence. 20 U.S.C. 1099b(n). Here, the Secretary relegated his purported consideration of ACICS s evidence detailing its important leadership changes to a footnote, stating: ACICS is barred from submitting additional evidence during the appeal to the Secretary. 34 C.F.R (c). Nevertheless, ACICS has submitted evidence regarding its change of leadership and recent enforcement actions, a departmental guidance letter, and a letter from the Council for Higher Education Accreditation Committee on Recognition recommending ACICS for recognition by that body. ACICS Brief, Ex. A, B; ACICS Reply Brief, Exs. A, B. Having reviewed these submissions, I conclude that even if this additional evidence were admissible, and, arguendo, accepted as true, nothing ACICS submitted overcomes the pervasive compliance problems that are reflected in the existing record and recommendations of the Department staff and NACIQI. Further, despite ACICS s ongoing efforts, there is nothing in the additional evidence, even if it were admissible, that would lead me to conclude that it will come into compliance within the 12 month period provided by regulation. AR_000009, n.66. The Secretary s perfunctory review of only one of ACICS s post-naciqi submissions 10 of relevant and current information falls woefully short of the reasoned decisionmaking required under the APA. As in Aragon v. Tillerson, it was arbitrary and capricious for the Department to fail to consider and assess probative evidence, as demonstrated by its relegation of [probative information] to a footnote without meaningfully considering [its] contents WL at *8. 10 ACICS submitted substantial additional evidence after the NACIQI hearing, though the Secretary here refers only to ACICS s last administrative appeal briefs. Those briefs, however, expressly incorporate by reference ACICS s earlier submissions, which the Secretary also neglected to consider. AR_

32 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 32 of The Secretary Ignored ACICS s Positive And Substantial Changes Regarding The Measurement Of Student Achievement The Secretary further ignored evidence of ACICS s new Placement Verification Program ( PVP ) and data integrity program, both of which are directly relevant to the recognition criteria concerning student achievement with which the Secretary found ACICS to be noncompliant. ACICS presented evidence including ACICS s comprehensive Executive Summary detailing how ACICS had resolved the Department Staff s findings showing that it had implemented a robust PVP and enhanced data integrity algorithm that establishes random monthly testing of institutions placement data. See Ex. B at AR_ ; AR_ ; AR_ The program and enhanced data algorithm tests document and data submissions made by ACICS s institutions for inaccurate or missing data, and ACICS s At-Risk Institutions Group ( ARIG ), in turn, uses the data to identify at risk institutions and patterns of concern. Id. Further, ACICS presented evidence of its enhanced process of on-site random sampling of placement documentation through the addition of a dedicated Date Integrity Reviewer ( DIR ) to every campus review that ACICS conducts. Id. As ACICS explained, this enhanced process involved a review of all available back-up documentation of student placement outcomes, not only randomized samples. Id. Steve Porcelli, a member of the Department Staff, noted during the NACIQI hearing that ACICS started using an algorithm to catch fraudulent representations from the schools and [that] falsified placements just dropped dramatically. See AR_000525:9-13. These enhancements are directly related to the recognition criteria concerning student achievement, were acknowledged by the Department, and yet the Secretary cast aside all evidence of ACICS s relevant improvements with sweeping generalizations. See AR_ ( I am also unpersuaded by the new evidence submitted by ACICS in this appeal. ). 25

33 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 33 of 54 The Secretary in disregarding ACICS s evidence stated that he perceived a lack of evident progress, by citing to ACICS s purported track record and past failures. Id. To this end, the Secretary cited two institutions where Department Staff claimed that ACICS should have been responsible for rooting out fraud Michigan Jewish Institute and Corinthian Collegeaffiliated Everest Colleges. Id. But the Secretary utterly ignored ACICS s detailed Executive Summary and glossed over the Department s role in those two cases. With respect to the Michigan Jewish Institute, ACICS explained that while ACICS was conducting its investigation during 2013, the Department concurrently conducted a Title IV program review and to the best of [ACICS s] knowledge, the [Federal Student Aid] division of ED had no findings from that program review. See Ex. B at AR_ The Secretary was blind to this fact, and instead laid blame entirely at the feet of ACICS, suggesting that ACICS should have acted as a de facto attorney general to uncover fraud and unlawful appropriation. See AR_ Moreover, the Secretary ignored the fact that ACICS as expressly acknowledged in the Staff Report had commenced implementation of a revised multi-faceted approach to monitoring which will target and apply increased monitoring/reporting of specific schools that are not meeting agency standards/expectations. See AR_ ACICS provided detailed responses at several stages of the administrative process demonstrating that it satisfied the relevant recognition criteria, and would continue to demonstrate effective implementation of the criteria with increasingly robust procedures for detecting and reporting Title IV-related issues. See AR_ ; AR_ ; AR_ The Secretary failed to consider any of this information. Similarly, with respect to Everest Colleges (a Corinthian College school), the Secretary again faulted ACICS for failing to uncover alleged fraud, but ignored the evidence ACICS 26

34 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 34 of 54 presented in which ACICS explained that none of the four other accrediting agencies that accredited Corinthian Colleges schools (and which continue to be recognized by the Department) uncovered any fraud. See AR_ Further, the Secretary ignored the fact that the Department itself assumed oversight of Corinthian-related matters and investigations beginning in June 2014, including the Department s imposition of an independent monitor who had full access to Corinthian s books and records. See AR_ At no point had the Department indicated that ACICS s Corinthian accreditation activities had not been in accordance with Department expectations of regulations. See AR_ Indeed, pursuant to Section (a)(2), Department staff may review the compliance of a recognized agency with the criteria for recognition at any time... [b]ased on any information that, as determined by Department staff, appears credible and raises issues relevant to recognition. (emphasis added). The Department pursued no such compliance review of ACICS. The Secretary s scapegoating of ACICS was unsupported by the record and ignored the actual facts also a violation of the APA. B. The Secretary s Decision Does Not Reflect Reasoned Explanation The Secretary did not engage in the thoughtful, careful analysis required under the APA. Instead, the Secretary selected a non-exhaustive selection of violations which he contended demonstrated sufficient grounds to deny ACICS s petition for continued recognition. AR_ However, the Secretary s brief discussion of a handful of Recognition Criteria did not provide the depth of analysis required under the APA and did not reflect consideration of all available relevant evidence. Indeed, the Secretary s lack of explanation and overgeneralizations amount to arbitrary and capricious action. See Toy v. United States, (D.D.C. Dec. 7, 2000) (finding administrative decision arbitrary and capricious where the agency failed to make clear which factual contentions it adopted and which it rejected, and why it did so. ); Ehrman v. 27

35 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 35 of 54 United States, 429 F. Supp. 2d 61, 68 (D.D.C. 2006) ( Although the [administrative] Decision thoroughly summarized the parties positions, its findings reflect a selective reliance on the Department s conclusory statements in the administrative record. ); Olsen v. Powell, No. 02-cv- 1371, ECF No. 46 at 10 (D.D.C. Feb. 4, 2005) ( In actuality, the [agency] devoted only two pages of analysis to the issue and merely concluded that the evidence need not be considered, without analyzing the evidence ) CFR (a) and First, the Secretary considered ACICS s purported non-compliance with 34 CFR (a) and , which require an accreditor to demonstrate that it enforces and applies its standards to effectively evaluate the quality of an institution in areas such as student achievement, fiscal and administrative capacity, recruiting and admissions practices, and Title IV compliance. The Secretary adopted erroneous conclusions reached by the Department Staff, while ignoring clear record evidence of ACICS s compliance with these two criteria. For example, the Secretary s Decision repeated the Department Staff s criticism of ACICS s revised standards for measuring student achievement (Recognition Criterion (a)(1)(i)). See AR_ The Department Staff had cited ACICS s 58-page Exhibit 217 (AR_ ) minutes from a December 8, 2015 Institutional Effectiveness Committee meeting but only narrowly referred to ACICS s use of level of graduate satisfaction as a standard to evaluate an institution s Campus Effectiveness Plan. See AR_ Without having conducted his own statutorily required independent evaluation of the information provided (20 U.S.C. 1099b(n)), the Secretary wrote: ACICS has enacted a scheme for evaluating student achievement that replaced the element graduation rates with level of graduate satisfaction. The Department notes that this new standard is inherently incomprehensible as a way to measure 28

36 Case 1:16-cv RBW Document 55 Filed 03/31/17 Page 36 of 54 student achievement, however, because it will by definition only measure information from those students who complete the program, and thus would ignore student achievement information from those students who do not complete the program. The Secretary s statement is incorrect. Had the Secretary independently examined Exhibit 217, he would have seen that ACICS s Campus Effectiveness Plan espoused a comprehensive approach to evaluating student achievement. ACICS s Exhibit 217 demonstrated that ACICS expected institutions to consider level of graduate satisfaction as only one of at least six criteria, and that the revised standards continued to include student retention rates and placement rates as benchmarks: 29