UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
AMERICAN BAR ASSOCIATION et al.,
Plaintiffs,
v.
Civil Action No. 16-2476 (TJK)
UNITED STATES DEPARTMENT OF
EDUCATION et al.,
Defendants.
MEMORANDUM OPINION
In 2007, Congress established the Public Service Loan Forgiveness Program (“PSLF” or
“PSLF Program”), which offers federal student loan forgiveness for those who make ten years,
or 120 months, of monthly loan payments while employed in public service. At any time,
federal student loan borrowers employed in public service may check their ongoing eligibility to
participate in the program by submitting an Employment Certification Form (ECF). Upon
receipt of that form, the Department of Education (the “Department”) determines whether the
borrower’s loan payments were made while employed at a qualifying “public service
organization,” such that they count towards the PSLF Program’s requirements. This case
concerns whether the Department’s reversals of certain of those determinations, made before the
borrower’s completion of all 120 monthly loan payments, were lawful.
Plaintiffs American Bar Association (ABA) and Michelle Quintero-Millan, Geoffrey
Burkhart, Kate Voigt, and Jamie Rudert (collectively, the “Individual Plaintiffs”) filed this action
against the Department and Betsy DeVos, in her official capacity as Secretary of Education
(collectively, “Defendants”), challenging the Department’s allegedly unlawful reversal of certain
determinations under the PSLF Program. They bring five claims against Defendants. Counts I,
II, III, and IV are brought under the Administrative Procedure Act (APA), 5 U.S.C. § 500 et seq.
In Count I, Plaintiffs allege that the Department changed its interpretation of its regulations in an
arbitrary and capricious manner by adopting new standards governing whether non-501(c)(3)
not-for-profit organizations, such as the ABA and the Individual Plaintiffs’ employers, qualify as
“public service organizations” under the PSLF Program. ECF No. 1 (“Compl.”) ¶¶ 183–92. In
Count II, Plaintiffs allege that the Department failed to follow the APA’s notice requirements
when it introduced those standards. Id. ¶¶ 193–200. In Count III, the ABA and Plaintiffs
Burkhart, Rudert, and Voigt allege that the Department’s retroactive application of the standards
was arbitrary and capricious. Id. ¶¶ 201–08. And in Count IV, Plaintiffs allege that the
Department’s new standards were themselves inconsistent with the PSLF statute and regulation.
Id. ¶¶ 209–16. In Count V, Plaintiffs allege that the Department’s retroactive application of the
standards violated the Due Process Clause of the Fifth Amendment. Id. ¶¶ 217–20.
Before the Court are the parties’ cross-motions for summary judgment. For the reasons
explained below, the Court concludes that Defendants acted arbitrarily and capriciously when the
Department changed its interpretation of the PSLF regulation in two ways without displaying
awareness of its changed position, providing a reasoned explanation for that decision, and taking
into account the serious reliance interests affected. Accordingly, summary judgment is
appropriate on behalf of Quintero-Millan, Burkhart, and Voigt, on Count I, and the new
standards on which the Department relied when it sent denial letters to them must be vacated. As
a result, the Court need not reach their additional causes of action.
In contrast, summary judgment is appropriate in favor of Defendants on all causes of
action brought by Rudert and the ABA. The record does not support Rudert’s assertion that the
Department impermissibly changed its interpretation of the PSLF regulation, and then relied on
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that interpretation in determining that his employment failed to qualify for the PSLF Program.
For this and other reasons explained below, Rudert has failed to demonstrate that the APA was
violated in his case. And further, for the reasons explained below, the Department’s
representations to the ABA concerning whether it qualified as a public service organization for
purposes of the PSLF Program were not final agency actions subject to challenge by the ABA
through the APA. Finally, both the ABA’s and Rudert’s claims under the Due Process Clause
fail because both lack the protected property interests required to succeed on their claims.
Accordingly, the Court will grant in part and deny in part Plaintiffs’ Motion for Summary
Judgment, ECF No. 17, and grant in part and deny in part Defendants’ Motion for Summary
Judgment, ECF No. 22. For the reasons explained below, the Court will also grant Plaintiffs’
Supplemental Motions to Allow for Extra-Record Review. ECF Nos. 24, 35.1
Background
A. The PSLF Program
1. The PSLF Statute
In 2007, the College Cost Reduction and Access Act, Pub. L. No. 110-84, 121 Stat. 784,
established the PSLF Program, under which the Department is required to forgive eligible loans
of borrowers who make monthly loan payments for ten years while employed in public service.
Under the statute, the Department must “cancel the balance of interest and principal” of
qualifying student loans belonging to an individual who (1) is not in default on the loans, (2)
1
In evaluating these motions, the Court considered all relevant filings including, but not limited
to, the following: Compl.; ECF No. 14 (“Ans.”); ECF No. 17 at 1–4 (“Mot.”); id. at 5–99 (“Pls.’
MSJ Br.”); ECF No. 22 at 1–2 (“Cross-Mot.”); id. at 3–46 (“Defs.’ MSJ Br.”); ECF No. 24
(“Pls.’ Supp. Br.”); ECF No. 25 (“Pls.’ Reply”); ECF No. 30 (“Defs.’ Opp. to Supp.”); ECF No.
31 (“Defs.’ Reply”); ECF No. 32 (“Pls.’ Supp. Reply”); ECF Nos. 34-1, 34-2 (Joint Appendix,
with citations designated as “AR __”); ECF No. 35 (“Pls.’ 2d Supp. Br.”); ECF No. 36 (“Defs.’
Opp. to 2d Supp.”); ECF No. 37 (“Pls.’ 2d Supp. Reply”); and ECF No. 46 (“Oral Arg. Tr.”).
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makes 120 monthly payments after October 1, 2007, on the loans, and (3) is “employed in a
public service job” at the time each payment is made and at the time of forgiveness. 20 U.S.C. §
1087e(m)(1). For a payment to qualify, the borrower must also be enrolled in an approved
repayment plan, such as an “income-based repayment plan” (“IBR plan”), id., which permits a
borrower facing financial hardship to make lower monthly payments capped at a percentage of
her gross income, 20 U.S.C. § 1098e(a). A “public service job” is defined to cover “a full-time
job in . . . government . . . , public education . . . , public interest law services (including
prosecution or public defense or legal advocacy on behalf of low-income communities at a
nonprofit organization) . . . , [and] public service for individuals with disabilities.” 20 U.S.C. §
1087e(m)(3)(B).
2. The PSLF Regulation
In October 2008, the Department promulgated a regulation setting forth the procedures
through which a borrower may apply for loan forgiveness. See 34 C.F.R. § 685.219. The
regulation defines the statutory term “employed in a public service job,” 20 U.S.C. §
1087e(m)(1)(B), to require that an eligible borrower be “hired and paid by a public service
organization,” 34 C.F.R. § 685.219(b). Thus, a borrower’s eligibility for the PSLF Program is
not determined by her job responsibilities, but rather by whether her employer qualifies as a
“public service organization.” Id. Under the regulation, “public service organization” includes
any government organization, not-for-profit organization classified under Section 501(c)(3) of
the Internal Revenue Code, or not-for-profit private organization that is not classified under
Section 501(c)(3) so long as it “provides [qualifying] public services” and does not engage in
certain disqualifying activities. 34 C.F.R. § 685.219(b). The qualifying “public services”
include, among many others, “public interest law services,” “public education,” and “public
service for individuals with disabilities and the elderly.” Id.
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During the negotiated rulemaking process leading to the promulgation of the regulation,
the Department agreed to develop a form with “an employer certification section and instructions
regarding supporting documentation that the Department [needs] to determine the borrower’s
eligibility for the forgiveness benefit.” Federal Perkins Loan Program, Federal Family Education
Loan Program, and William D. Ford Federal Direct Loan Program, 73 Fed. Reg. 63,232, 63,241–
42 (Oct. 23, 2008); AR 45–46. The Department affirmed that the form would permit a borrower
“to collect a certification from his or her employer either annually or at the close of the 120-
payment qualifying period.” 73 Fed. Reg. at 63,242; AR 46. Based on these commitments
undertaken during the negotiated rulemaking, the Department developed a process through
which a borrower may certify the eligibility of payments made during a particular period of
employment at any time, long before she submits a loan forgiveness application upon completion
of all 120 qualifying payments (the “ECF Process”). Oral Arg. Tr. at 25:1–11.
3. The ECF Process
According to the Department, the ECF Process allows borrowers to certify that their
“employment and payments qualify for [the PSLF Program].” AR 178. Through the submission
of an ECF, borrowers and their employers certify that the borrower was employed full-time for a
qualifying public service organization when making monthly loan payments. See AR 152–53.
In order to receive loan forgiveness under the program, borrowers must submit valid ECFs
covering their “full-time public service employment while making the required 120 separate,
qualifying monthly payments.” AR 154. But, as noted above, borrowers may also submit ECFs
before they are eligible to apply for loan forgiveness in order to “receive feedback on the
eligibility of [a borrower’s] employment and payments,” AR 178, and to “verify that [a
borrower’s] employer qualifies as a public service organization,” AR 152. The Department
recommends that borrowers submit ECFs either annually or whenever the borrower changes
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employers. AR 154. A single ECF may cover loan payments made over any length of time, but
the Department requires borrowers to submit separate ECFs for each employer. See AR 152–53.
The ECF application must be signed by an authorized official from the relevant organization to
verify that the borrower was a full-time employee during the relevant time period. Id.
The Department relies on PSLF servicers, primarily “FedLoan Servicing,” to process
ECFs prior to a borrower submitting a loan forgiveness application at the conclusion of making
120 qualifying monthly payments. AR 178. ECFs are processed in several steps. First,
FedLoan Servicing conducts an “initial review” in which it “check[s] that the borrower provided
all required information” and followed the form instructions. AR 143. Once the check is
complete, Fedloan Servicing “determine[s] whether an employer is a qualifying public service
organization” by confirming that the organization is listed in one of the Department’s
“searchable databases, based on the type of public service organization.” Id. If FedLoan
Servicing cannot determine whether an employer qualifies as a public service organization—and
in all cases where a borrower submits an ECF based on her employment at a private, non-
501(c)(3) not-for-profit organization—it is required to escalate the decision to the Department.
AR 143, 160–61.
After determining that the borrower’s employer is a qualifying public service
organization, FedLoan Servicing will “determine whether the borrower has met the full-time
requirement . . . while employed [there].” AR 143. If FedLoan Servicing confirms that the
borrower made loan payments while employed full-time at a qualifying employer, then, after
approving the first ECF received by the borrower, it will “request the transfer of all federally-
held loans” to FedLoan Servicing from the borrower’s original loan servicer. AR 144. Once the
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transfer is made, FedLoan Servicing will “track the number of PSLF qualifying payments made
after the loans [were] transferred from the original servicer.” Id.
After completing 120 eligible monthly payments, borrowers may apply for loan
forgiveness through a separate application. AR 179. If a borrower submitted ECFs covering the
entire period during which she made 120 qualifying payments, then she must submit “one
additional” ECF to verify that she is employed full-time with a qualifying public service
organization at the time she submits the application. Id. If a borrower did not submit ECFs prior
to completing her loan forgiveness application, or only submitted a portion of them, then she
must provide all the remaining ECFs upon her application for loan forgiveness. Id.
B. Plaintiffs
The ABA is an organization for legal professionals that asserts that the Department
unlawfully stripped it of its status as a qualifying public service organization for purposes of the
PSLF Program. Compl. ¶¶ 21, 208. The Individual Plaintiffs are law school graduates who
contend that they made qualifying loan payments under the PSLF Program while employed by
public service organizations, including the ABA, over varying periods since 2011—but have
since been informed that, to the contrary, because their employers are not public service
organizations, their payments do not qualify. See id. ¶¶ 107–77.
1. ABA
The ABA is a private, not-for-profit 501(c)(6) organization that, among other activities,
conducts legal education initiatives, administers the accreditation of law schools and other
projects for the legal profession, and provides public interest law services. Pls.’ MSJ Br., Ex. A
¶¶ 5–11. The ABA operates several public interest legal divisions, including the South Texas
Pro Bono Asylum Representative Project (“ProBAR”), the Commission on Homelessness and
Poverty, and the Center on Children and the Law. Id., Ex. A ¶¶ 12, 14, 18. According to
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Plaintiffs, ProBAR serves as the nation’s “largest provider . . . of legal services and legal-rights
education for detained unaccompanied immigrant children.” Id., Ex. A ¶ 12.
Following the establishment of the ECF Process in January 2012, the ABA asserts that
several of its employees submitted ECFs to the Department and received letters in response
confirming that their “employment with the ABA qualified” for participation in the PSLF
program. Id., Ex. A ¶ 22. Based on these determinations, the ABA informed several prospective
employees that “it was a qualifying employer under the PSLF program.” Id., Ex. A ¶ 23.
Beginning in 2015, ABA employees began to receive letters from the Department that denied
their eligibility for the PSLF Program on the basis that the Department “could find no evidence
of [the ABA] being a not-for-profit organization that also provides a qualifying service for the
PSLF program.” Id., Ex. A ¶ 22; AR 185. Around April 2016, the ABA’s then-Executive
Director and Chief Operating Officer contacted the Department about the ABA’s status. Pls.’
MSJ Br., Ex. A ¶ 28. In June 2016, the Department informed the ABA that, even after reviewing
the additional information the ABA had submitted, the Department concluded that the ABA did
not qualify “as a public service organization for . . . PSLF purposes” because it did not
demonstrate “that the primary purpose of the ABA is to provide ‘public interest law services’
[as] the term is defined in the PSLF regulations.” AR 190–91. After an additional exchange of
letters and a meeting with Department officials, in December 2016 the Department reaffirmed to
the ABA that it was not a qualifying public service organization “for the reasons outlined” in its
June 2016 letter. AR 192–93.
2. Michelle Quintero-Millan
After graduating from the Sturm College of Law at the University of Denver in 2012,
Quintero-Millan joined ProBAR in June 2012 as a Staff Attorney. See Pls.’ MSJ Br., Ex. E
¶¶ 1, 4. She departed in May 2015 with the title of Supervising Attorney. Id., Ex. E ¶ 7. During
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her time at ProBAR, Quintero-Millan provided pro bono legal services to undocumented and
unaccompanied immigrant children in southern Texas. Id., Ex. E ¶¶ 4–5. In November 2015,
Quintero-Millan submitted her first ECF to FedLoan Servicing. Id., Ex. E ¶ 10; AR 218. In
November 2016, FedLoan Servicing informed Quintero-Millan, without explanation, that her
employment at ProBAR did not qualify under the PSLF program. Pls.’ MSJ Br., Ex. E ¶ 13; AR
237–38. Quintero-Millan asserts that she had accepted the position at ProBAR “with the
understanding, based on [her] inquiries during the application process[,] that [her] employment
would qualify for PSLF.” Pls.’ MSJ Br., Ex. E ¶ 9. Since January 2013, Quintero-Millan has
been enrolled in an IBR plan, which caps her loan payments as a percentage of her income and,
as a result, has caused her monthly payments to be less than the interest on her loans. Id., Ex. E
¶ 16. Accordingly, Quintero-Millan’s total federal student debt has increased from
approximately $340,000 when she entered repayment to $430,446.48 as of May 2017. Id., Ex. E
¶ 17.
3. Geoffrey Burkhart
In June 2014, Burkhart—a 2008 graduate of DePaul University College of Law—joined
the ABA as Attorney and Project Director for the Division for Legal Services. Pls.’ MSJ Br., Ex.
D ¶¶ 1, 4. He remained in the position until December 21, 2016, when he became the Deputy
Director of the ABA’s Center for Innovation. Id., Ex. D ¶ 4. While employed at the Division for
Legal Services, Burkhart worked “to improve civil legal services and criminal justice for poor
individuals through technological and process innovations.” Id. His work included, among other
responsibilities, drafting amicus briefs, conducting workload studies of public-defender offices,
and launching a news service for public-defense leaders. Id., Ex. D ¶ 5.
Prior to joining the ABA, Burkhart asserts that he received confirmation (though he does
not specify how) from both the ABA and FedLoan Servicing that his prospective position there
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was eligible for the PSLF Program. Id., Ex. D ¶ 7. Burkhart claims that he accepted the job in
reliance on those representations. Id. In July 2014, Burkhart submitted an ECF to FedLoan
Servicing and, that same month, received a letter confirming the eligibility of his loan payments.
AR 208–11. Burkhart continued to submit ECFs in order to track his eligibility and received, as
recently as June 28, 2016, verifications that his payments counted toward those necessary for
loan forgiveness. Pls.’ MSJ Br., Ex. D ¶ 8. On October 12, 2016, Burkhart received a letter
from FedLoan Servicing informing him that upon its “further research and after consulting with
the Department,” it had reversed its previous determinations because the ABA does not “provide
a qualifying service.” AR 214–15. During his employment with the ABA, Burkhart has been
enrolled in an IBR plan, which has caused his monthly payments to be lower than the accruing
interest on his student loans. Pls.’ MSJ Br., Ex. D ¶ 9. As a result, Burkhart estimates that the
total balance of his “federal student loans has grown from $155,899.95 in October 2009 to over
$200,000 as of May 17, 2017.” Id., Ex. D ¶ 11. Burkhart asserts that the Department’s reversal
has caused him and his family “great concern” and may force him to seek alternative
employment. Id., Ex. D ¶ 12.
4. Kate Voigt
Voigt graduated from Boston College Law School in 2011. Pls.’ MSJ Br., Ex. C ¶ 1. In
December 2011, she accepted a position in the Liaison Department of the American Immigration
Lawyers Association (“AILA”), a 501(c)(6) organization that provides a variety of services for
immigrants, as well as educational services on the topic of immigration. Id., Ex. C ¶¶ 4–5.
Shortly after starting at AILA, Voigt contacted the Department seeking clarification as to
whether her position there qualified for the PSLF Program. Id., Ex. C ¶ 6. In June 2012, the
Department informed Voigt that her employment at AILA qualified. Id. As a result, Voigt
claims, she continued to work at AILA. Id., Ex. C ¶ 7.
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In June 2014, Voigt contacted the Department about a letter received by her coworker
that stated, to the contrary, that employment at AILA did not qualify under the PSLF Program.
Id., Ex. C ¶ 9. In response, the Department sent Voigt a letter in December 2014 informing her
that, although it previously recognized employment with AILA as qualifying for the PSLF
Program, it had reversed its position. AR 335. The letter was emailed to her by Ian Foss, a
Department employee. AR 334. The Department had done so, the letter explained, because
AILA’s services did not fit within its definition of “public education services,” defined by the
Department as “services that provide educational enrichment or support directly to students or
their families in a school or a school-like setting.” AR 335–36. Voigt followed up to the letter
by emailing Foss, expressing her disagreement with the decision. Pls.’ MSJ Br., Ex. C ¶ 13.
Voigt never received a response to the email. Id.
In November 2016, almost two years later, Voigt received a letter from FedLoan
Servicing confirming that the Department had reversed its position as to whether employment at
AILA qualified for the PSLF Program. Id., Ex. C ¶ 17. Voigt asserts that, based on the
Department’s original confirmation, she chose to remain enrolled in an IBR plan that capped her
monthly loan payments at an amount lower than the monthly interest charges of her student debt.
Id., Ex. C ¶ 8. Accordingly, Voigt estimates that, from October 2011 to May 2017, her federal
student loan balance grew from $205,546 to $247,638.55. Id., Ex. C ¶ 18. She asserts that the
Department’s decision to rescind her employment’s eligibility has caused her great concern and
has affected her ability to plan her finances. Id., Ex. C ¶ 19.
5. Jamie Rudert
In April 2012, Rudert began working at Vietnam Veterans of America (“VVA”), a
501(c)(19) organization that provides advocacy and support services to Vietnam veterans,
including representing veterans seeking government benefits and services. Id., Ex. B ¶ 4; AR
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315. Rudert, a 2010 graduate of the American University Washington College of Law, asserts
that he first learned of the PSLF Program while in law school. Pls.’ MSJ Br., Ex. B ¶¶ 1–2.
Upon joining VVA, Rudert worked as an Appellate Attorney from April 2012 to May 2013,
where he represented veterans with service-connected disability claims before the Board of
Veterans’ Appeals. Id., Ex. B ¶ 6. In May 2013, he was promoted to Deputy Director. Id., Ex.
B ¶ 7. As Deputy Director, he continued to represent veterans in their appeals while also
supervising other attorneys. Id. He remained in this position until September 2015, when he left
VVA for Paralyzed Veterans of America (“PVA”), a 501(c)(3) organization, where he continued
to represent veterans in disability-benefit appeals. Id., Ex. B ¶ 11.
In July 2012, Rudert submitted an ECF and received a letter from FedLoan Servicing
(which was not his loan servicer at the time but receives all ECF applications regardless of
whether it is a borrower’s servicer) indicating that his work at VVA from April 1, 2012, to June
18, 2012, qualified for the PSLF Program. Id., Ex. B ¶ 8. On August 1, 2012, he received
another letter from FedLoan Servicing, this one informing him that his loans were being
transferred to FedLoan Servicing from his original loan servicer due to his qualifying payments.
Id., Ex. B ¶ 9. On October 30, 2014, he received a letter, in response to a second ECF
submission, confirming that his employment at VVA qualified for the PSLF Program. Id., Ex. B
¶ 10. FedLoan Servicing later informed Rudert that, as of January 2015, he had made 30
qualifying payments. Id.
In early 2016, after his departure from VVA, Rudert submitted another ECF, while
employed at PVA, which covered loan payments during his final year at VVA. Id., Ex. B ¶ 12.
In April 2016, he received a letter from FedLoan Servicing informing him that, based on its
“further research and after consulting with the Department,” it “reversed [his] previously
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approved employment period” because VVA “does not provide a qualifying service.” AR 282–
83. Rudert asserts that, if he had known that his employment at VVA did not qualify for the
PSLF Program, he would have departed earlier for another employer. Pls.’ MSJ Br., Ex. B ¶ 14.
During his participation in the PSLF Program, Rudert has been enrolled in an IBR plan, which
has decreased his required monthly loan payments to an amount lower than the monthly interest
charges on his total student debt. Id., Ex. B ¶ 3. Consequently, Rudert estimates that his federal
student loan balance has grown from $134,8087.16 in August 2012 to $161,985.02 in May 2017.
Id., Ex. B ¶¶ 9, 18.
The Parties’ Motions for Summary Judgment
A. Legal Standard
Under Federal Rule of Civil Procedure 56(c), this Court must grant summary judgment
“if the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” “Summary judgment is appropriately granted when,
viewing the evidence in the light most favorable to the non-movants and drawing all reasonable
inferences accordingly, no reasonable jury could reach a verdict in their favor.” Lopez v. Council
on Am.-Islamic Relations Action Network, Inc., 826 F.3d 492, 496 (D.C. Cir. 2016). However, in
a case involving review of an agency action under the APA, “the district judge sits as an
appellate tribunal” and “[t]he ‘entire case’ on review is a question of law.” Am. Biosci. Inc. v.
Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001). In such circumstances, the district court “is to
determine whether or not as a matter of law the evidence in the administrative record permitted
the agency to make the decision it did.” Sierra Club v. Mainella, 459 F. Supp. 2d 76, 90 (D.D.C.
2006) (quoting Occidental Eng’g Co. v. INS, 753 F.2d 766, 769 (9th Cir. 1985)). Accordingly,
the Court’s review “is normally confined to the administrative record,” Amfac Resorts, L.L.C. v.
U.S. Dep’t of the Interior, 143 F. Supp. 2d 7, 10 (D.D.C. 2001), except within a “narrow set of
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exceptions,” where a court may consult extra-record evidence due to “gross procedural
deficiencies—such as where the administrative record itself is so deficient as to preclude
effective review,” Hill Dermaceuticals, Inc. v. FDA, 709 F.3d 44, 47 (D.C. Cir. 2013).
B. Analysis
Defendants assert two threshold challenges to Plaintiffs’ APA claims. First, they assert
that the ABA does not have a cause of action because its interests do not fall within the “zone of
interests” protected by the PSLF statute. The Court concludes that the zone-of-interests test does
not bar the ABA’s claims. Second, Defendants assert that Plaintiffs do not have a cause of
action because the Department’s actions at issue are not final agency actions subject to judicial
review. The Court concludes that the letters sent to the Individual Plaintiffs determining that
their employment did not qualify for the PSLF Program—and thus that their loan payments made
while working for those employers did not count toward the total needed for loan forgiveness—
are final agency actions. Therefore, the Individual Plaintiffs may assert causes of action
challenging them under the APA. On the other hand, the Department’s letters to the ABA
concerning its status as a qualifying “public service organization” under the PSLF regulation are
not final agency actions. Therefore, the ABA may not assert APA claims directed at those
letters.
Turning to the merits of the Individual Plaintiffs’ APA claims, the Court concludes that
the Department changed the standards by which it assessed whether non-501(c)(3) not-for-profit
organizations qualified as public service organizations under the PSLF Program. Moreover,
these changes were arbitrary and capricious because, in adopting the new standards, the
Department failed to display awareness of its changed position, provide a reasoned analysis for
that decision, and take into account the serious reliance interests affected. Because summary
judgment is appropriate in favor of Quintero-Millan, Burkhart, and Voigt on Count I on that
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basis, the Court need not reach their other challenges under the APA, or their argument that the
Department violated their due process rights under the Fifth Amendment.
On the other hand, the Court concludes that summary judgment is appropriate in
Defendants’ favor on Rudert’s APA claims. It does so because it cannot conclude that the
Department based its determination that his employment failed to qualify for the PSLF Program
on a new interpretation of the PSLF regulation, and for other reasons explained below. Finally,
the Court concludes that the ABA and Rudert’s due process claims under the Fifth Amendment
fail, as well. As a result, summary judgment is appropriate in Defendants’ favor as to all causes
of action brought by the ABA and Rudert.
1. Whether the ABA’s Injuries Fall Within the Zone of Interests of the
PSLF Statute
Defendants assert that the ABA’s alleged injuries do not fall within the zone of interests
of the PSLF statute and regulation,2 which are “intended to provide student debt relief to
borrowers,” not public service organizations. Dfs.’ Opp. at 21. The Court disagrees, especially
given how this test is typically applied in the APA context.
The “zone-of-interests limitation” is a “requirement of general application” for “all
statutorily created causes of action.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572
U.S. 118, 129 (2014) (quoting Bennett v. Spear, 520 U.S. 154, 163 (1997)). The test, which “is
not meant to be especially demanding,” “denies a right of review if the plaintiff’s interests are so
2
Although Defendants allege that the ABA’s claims fall outside the zone of interests of both the
PSLF statute and regulation, Defendants cite to no authority indicating that the zone-of-interests
doctrine applies to agency regulations. The Supreme Court instructs that the doctrine applies to
“all statutorily created causes of action” based on the presumption that Congress “‘legislat[es]
against the background of’ the zone-of-interests limitation . . . .” Lexmark Int’l, Inc., 572 U.S. at
129 (quoting Bennett, 520 U.S. at 163) (emphasis added). But Defendants can point to no
similar instruction that the zone-of-interests doctrine applies equally to a regulation promulgated
by an agency. Accordingly, the Court concludes that it need only assess whether the ABA’s
alleged injuries fall within the zone of interests of the PSLF statute.
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marginally related to or inconsistent with the purposes implicit in the statute that it cannot
reasonably be assumed that Congress intended to permit the suit.” Clarke v. Sec. Indus. Ass’n,
479 U.S. 388, 399 (1987). “[T]here need be no indication of congressional purpose to benefit the
would-be plaintiff” for a court to conclude that the plaintiff falls within a statute’s zone of
interests. Clarke, 479 U.S. at 400.
The zone-of-interests standard “is particularly generous as applied to plaintiffs who bring
suit under the APA, in light of the need to ‘preserv[e] the flexibility of the APA’s omnibus
judicial-review provision, which permits suit for violations of numerous statutes of varying
character that do not themselves include causes of action for judicial review.’” Otay Mesa Prop.,
L.P. v. U.S. Dep’t of the Interior, 144 F. Supp. 3d 35, 58 (D.D.C. 2015) (quoting Lexmark Int’l,
572 U.S. at 130); see also Mendoza v. Perez, 754 F.3d 1002, 1016 (D.C. Cir. 2014) (“[W]e apply
the zone-of-interests test in a manner consistent with ‘Congress’s evident intent when enacting
the APA to make agency action presumptively reviewable.’” (quoting Match–E–Be–Nash–She–
Wish Band of Pottawatomi Indians v. Patchak, 567 U.S. 209, 225 (2012))). In cases where the
plaintiff asserts a cause of action under the APA, the “relevant zone of interest” is “defined by a
substantive statute, not by the APA.” Am. Inst. of Certified Pub. Accountants v. IRS, Civ. No.
15-5256, 2018 WL 3893768, at *4 (D.C. Cir. Aug. 14, 2018) (collecting cases).
The Court concludes that the ABA’s asserted interests in this action are not “so
marginally related to or inconsistent with the purposes implicit in the [PSLF] statute that it
cannot reasonably be assumed that Congress intended to permit the suit.” Clarke, 479 U.S. at
399. Although the statute provides a direct benefit in the form of loan forgiveness to individual
“borrower[s],” see 20 U.S.C. § 1087e(m)(1), it also promotes the interests of public service
employers by providing significant financial subsidies to the borrowers they hire on the
16
condition they remain employed in public service. By design, then, the PSLF statute facilitates a
public service organization’s recruitment of employees by decreasing their employees’ long-term
debt burden. This debt relief reduces pressure on public service organizations to raise salaries.
See Pls.’ MSJ Br., Ex. D ¶ 6. Thus, the PSLF statute allows public service organizations to
attract and retain desirable employees and, as a result, such organizations have a significant
interest in their employees’ eligibility under the PSLF Program. See id., Ex. A ¶¶ 25, 26.
Consequently, the harms asserted by the ABA—including the negative impact on its ability to
retain skilled employees and provide high-quality legal services, id.—“arguably fall[] within the
zone of interests protected . . . by the [PSLF statute],” Mendoza, 754 F.3d at 1016 (quoting
Bennett, 520 U.S. at 162).
Defendants argue that the ABA falls outside of the zone of interests of the PSLF statute
because its purpose is “to encourage individuals to enter and continue in full-time public service
employment.” Dfs.’ MSJ Br. at 21 (emphasis added) (quoting 34 C.F.R. § 685.219(a)). The
PSLF statute, Defendants argue, “does not mention public service organizations” and so “[a]ny
benefit or harm” incurred by the ABA is only “incidental to the benefit incurred by the individual
borrowers that the ABA employs.” Id. at 21–22.
Defendants construe the PSLF statute too narrowly, at least for the purpose of applying
the zone-of-interests test. To satisfy the test, a plaintiff need only show that its interests in the
agency action “in practice can be expected to police the interests that the statute protects.”
Amgen, Inc. v. Smith, 357 F.3d 103, 109 (D.C. Cir. 2004) (quoting Mova Pharm. Corp. v.
Shalala, 140 F.3d 1060, 1075 (D.C. Cir. 1998)). Here, the ABA’s interests in its own status as a
qualifying public service organization under the PSLF Program fall squarely in line with the
interests of the Individual Plaintiffs, whom Defendants concede may bring suit. Dfs.’ MSJ Br. at
17
21–22. The ABA is motivated by its interests in increasing recruitment and lowering labor costs,
which are entirely consistent with those interests more directly advanced by the PSLF statute.
See Amgen, 357 F.3d at 109 (“Parties motivated by purely commercial interests routinely satisfy
the zone of interests test under this court’s precedents.”). For these reasons, the Court holds that
the ABA’s alleged injuries fall within PSLF statute’s zone of interests.
2. Whether Plaintiffs’ APA Claims Challenge Final Agency Action
Next, the Court must determine whether Plaintiffs’ APA claims challenge final agency
action, such that they are cognizable under that statute. 5 U.S.C. § 704. The Individual Plaintiffs
assert that the Department’s letters informing them that their employment, and therefore their
loan payments, did not qualify for the PSLF Program were final agency actions.3 The ABA
argues that the letters sent to it concerning its status as a “public service organization” were final
agency actions as well. See AR 190–93. The parties dedicated a substantial portion of their
briefing and argument to this issue, underscoring its centrality to their dispute. See Dfs.’ MSJ
Br. at 13–20; Pls.’ MSJ Br. at 14–20; Oral Arg. Tr. at 4:12–33:12.
“Where there is no final agency action, a plaintiff has no cause of action under the APA.”
Aracely, R. v. Nielsen, 319 F. Supp. 3d 110, 138 (D.D.C. 2018). “Thus, although the absence of
final agency action would not cost [the Court its] jurisdiction,” it would cost Plaintiffs their
“APA cause[s] of action.” Trudeau v. FTC, 456 F.3d 178, 188–89 (D.C. Cir. 2006); see also
Reliable Automatic Sprinkler Co., Inc. v. Consumer Prod. Safety Comm’n, 324 F. 3d 726, 731
(D.C. Cir. 2003). The finality inquiry is governed by the two-prong test set forth in Bennett v.
Spear, which states that to be final, agency action must (1) “mark the consummation of the
3
The “denial letters” received by the Individual Plaintiffs are: (1) the October 12, 2016 letter to
Burkhart, AR 214–15; (2) the November 19, 2016 letter to Quintero-Millan, AR 237–39; (3) the
April 19, 2016 and April 21, 2016 letters to Rudert, AR 277–79, 282–83; and (4) the December
10, 2014 letter to Voigt, AR 335–36.
18
agency’s decisionmaking process” and (2) be an action “by which rights or obligations have
determined, or from which legal consequences will flow.” 520 U.S. at 177–78 (internal citations
and quotation marks omitted). The Supreme Court has instructed lower courts to “apply the
finality requirement in a ‘flexible’ and ‘pragmatic’ way.” Ciba-Geigy Corp. v. EPA, 801 F.2d
430, 435 (D.C. Cir. 1986) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149–50 (1967)).
a. Consummation of the Department’s Decisionmaking Process
The Individual Plaintiffs
Under the first prong of the Bennett test, a final agency action “must mark the
consummation of the agency’s decisionmaking process” and “must not be of a merely tentative
or interlocutory nature.” Bennett, 520 U.S. at 177–78 (internal citations and quotation marks
omitted).
When considering the first Bennett prong, the D.C. Circuit has looked to the relevant
language of the challenged agency decision. See Holistic Candlers & Consumers Ass’n v. FDA,
664 F.3d 940, 944 (D.C. Cir. 2012). The language of the denial letters demonstrates that they
marked the Department’s final determination that the Individual Plaintiffs’ respective
employment, and their payments made during that employment, did not qualify for the PSLF
Program.4 The letters sent to Burkhart and Rudert unambiguously stated that the Department
“reversed [their] previously approved employment period[s] under the PSLF program because
[their employers] do[] not provide a qualifying service.” AR 214, 282. Likewise, the
Department’s letter to Voigt flatly asserted that it had “determined that AILA is not a qualifying
employer for PSLF purposes.” AR 336. In the letter to Quintero-Millan, the Department stated
that, based on its review of her ECFs, her employment “[d]oes [n]ot [q]ualify” and that she “may
4
Because the Department’s letters to the ABA fail to satisfy the second prong of the Bennett test,
as discussed below, the Court need not address them here.
19
not participate in employment and payment tracking for PSLF.” AR 237–38. This definitive
language supports the conclusion that, upon sending the denial letters to the Individual Plaintiffs,
the Department had completed its determination that their employment and the loan payments at
issue did not qualify.
In arguing that the denial letters were not final, Defendants point to the allegedly less-
than-definitive language in Quintero-Millan’s letter, which stated that her “employer does not
appear to qualify for PSLF” and invited her to “reapply if [she could] provide additional
information to show that [her] employment qualifies.” AR 237. But this language does not
undermine the conclusion that her denial letter was a final agency action. First, other language in
the letter was far more categorical about the Department’s determination. The Department
identified her “eligibility status” to be, simply, “Organization Does Not Qualify.” Id. The letter
suggested other possible eligibility statuses—for example, “Under Review” or “Missing
Information”—each of which would have suggested a lack of finality. AR 237–38 (edits to
capitalization). But according to Quintero-Millan’s letter, neither of those applied to her.
Second, even to the extent that the language cited by Defendants suggested that the Department
might reconsider its decision, “[t]he mere possibility that an agency might reconsider in light of
‘informal discussion’ and invited contentions of inaccuracy does not suffice to make an
otherwise final agency action nonfinal.” Sackett v. EPA, 566 U.S. 120, 127 (2012).
As part of the first Bennett prong, courts also look to “the way in which the agency
subsequently treats the challenged action.” Sw. Airlines Co. v. U.S. Dep’t of Transp., 832 F.3d
270, 275 (D.C. Cir. 2016) (collecting cases). The record on this point is particularly clear that
the denial letters reflect final agency action. After the Department issued the denial letters, the
Individual Plaintiffs did not receive any additional communication from the Department
20
suggesting that the letters were tentative or interlocutory. Moreover, the ABA challenged the
Department’s basis for the denial letters issued to Quintero-Millan and Burkhart, but the
Department reaffirmed its conclusion. AR 192–93. And when Rudert followed up with
FedLoan Servicing after receiving his letter, a representative there simply informed him that “the
Department of Education made the determination” and that “there was no appeal process put in
place.” AR 285. To date, and even after the filing of this lawsuit, the ineligibility
determinations reflected in the Individual Plaintiffs’ denial letters have apparently remained
unchanged for periods ranging from 27 to 50 months. Pls.’ MSJ Br., Ex. B ¶ 12; id., Ex. C ¶ 18;
id., Ex. D ¶ 10; id., Ex. E ¶ 13. Simply put, there is no indication in the record that these letters
do not “represent[] the culmination of [the Department’s] consideration of an issue.”
Soundboard Ass’n v. FTC, 888 F.3d 1261, 1267 (D.C. Cir. 2018).
Defendants contend that the Individual Plaintiffs’ denial letters are “interlocutory and
subject to change” because “the Department does not make a final determination on eligibility
for PSLF until the borrower files her application . . . after making 120 qualifying payments.”
Dfs.’ MSJ Br. at 15–16. But this argument conflates separate determinations that the
Department undertakes in connection with the PSLF Program. Certainly, the Department
considers an application to determine a borrower’s ultimate eligibility for debt relief only after
she has submitted 120 qualifying loan payments. AR 153. But along the way, according to the
Department, upon receiving an ECF it “verif[ies] that [the borrower’s] employer qualifies as a
public service organization” and “notif[ies] [the borrower] in writing of the number of qualifying
payments . . . made while employed in qualifying public service.” AR 155. Through this
process, the Department “determine[s]” the eligibility of loan payments made during a
borrower’s employment with a particular organization. See AR 143–44. And, if the loan
21
payments are approved as eligible, the Department will “request the transfer of all federally-held
loans” to FedLoan Servicing from the borrower’s original loan servicer and “track the number of
PSLF qualifying payments” going forward. AR 144. That the Individual Plaintiffs have not
submitted applications for loan forgiveness does not undercut the conclusion that, at the very
least, the denial letters reflect the end of the Department’s decisionmaking process concerning
whether a borrower’s employer qualifies as a public service organization, and whether the loan
payments at issue count toward the 120 monthly payments required.
Courts have also looked to other agency materials to evaluate whether an action marked
the consummation of an agency’s decisionmaking. See Holistic Candlers, 664 F.3d at 944
(consulting an FDA manual). In this case, language describing the ECF Process in the
Department’s guidance documents further underscores, in important ways, the conclusion that
the denial letters marked the end of an agency process for the Individual Plaintiffs. For example,
the Department’s “Dear Borrower” letter—which was sent to all borrowers interested in the
PSLF Program, such as the Individual Plaintiffs, see AR 142—instructed borrowers that, when
submitting their final application for loan forgiveness, they “do not have to re-submit [ECFs]”
that have “already been validated by the Department,” AR 153. In the same letter, the
Department informed them that it “will review” an application for loan forgiveness along with
any ECFs “not previously validated by the Department” in order to “determine if [a borrower]
fulfilled all of the requirements to be eligible for PSLF.” Id. (emphasis added). Therefore, the
Department’s own language confirms that when it “validates” a borrower’s employment and loan
payments made during her time there, its determination marks the consummation of a process
that is not revisited. At that point, “for all practical purposes [the Department] ‘has ruled
definitively’” on whether the payments count toward the 120 required by the PSLF statute. U.S.
22
Army Corps of Eng’rs v. Hawkes Co., Inc., 136 S. Ct. 1807, 1814 (2016) (quoting Sackett, 566
U.S. at 131 (Ginsburg, J., concurring)).
In considering whether an agency action marks the consummation of a decisionmaking
process, the D.C. Circuit has also instructed courts to look to “whether the impact of the [agency
action] is sufficiently ‘final’ to warrant review in the context of the particular case.” Citizens
Ass’n of Georgetown v. FAA, 896 F.3d 425, 431 (D.C. Cir. 2018) (emphasis added) (quoting
Friedman v. FAA, 841 F.3d 537, 542 (D.C. Cir. 2016)). Here, the denial letters have impacted
the Individual Plaintiffs’ careers and finances in a significant way that underscores their finality,
and warrants review at this time.5 After receiving the denial letter, Quintero-Millan interviewed
for a director position at ProBAR, but then declined to pursue the position because she “could
not work at ProBAR if [her] employment would not qualify for loan forgiveness.” Pls.’ MSJ Br.,
Ex. E ¶ 19. Burkhart submits that, with the demands of a family and his “growing educational
debt,” the Department’s decision caused him “great concern about [his] ability to meet [his]
student loan obligations, and to doubt [his] decision to devote [his] career to public service.” Id.,
Ex. D ¶ 12. If he had received the denial letter earlier, he affirms that he “would not have
accepted the position at the ABA.” Id., Ex. D ¶ 6. Voigt asserts that the Department’s decision
made it “exceedingly difficult to plan [her] finances responsibly,” which led her to delay
5
In addressing whether the denial letters had “an immediate or significant practical effect” on
the Individual Plaintiffs, the Court may consider factual assertions in declarations attached to
their motion papers. See Pharm. Research & Manufacturers of Am. v. U.S. Dep’t of Health &
Human Servs., 138 F. Supp. 3d 31, 45–46 (D.D.C. 2015) (looking to “sworn declarations” of
regulated entities to assess whether an agency action had “an immediate and significant burden”
for purposes of determining finality); Nat’l Min. Ass’n v. Jackson, 880 F. Supp. 2d 119, 130–31
(D.D.C. 2012) (reviewing declarations to assess “the practical effect of [the] ostensibly non-
binding [regulation]” (quoting Nat’l Ass’n of Home Builders v. Norton, 415 F.3d 8, 15 (D.C. Cir.
2005))), rev’d on other grounds sub nom. Nat’l Min. Ass’n v. McCarthy, 758 F.3d 243, 252
(D.C. Cir. 2014).
23
purchasing a home and refinancing her loans. Id., Ex. C ¶ 19. And Rudert contends that the
denial letter impacted his “decisions in employment, housing, marriage, and financial planning.”
Id., Ex. B ¶ 16. Had he received his denial letter while employed at VVA, he submits that he
“would have left and found a job that did qualify.” Id., Ex. B ¶ 14.
Defendants argue that the denial letters did not have “an immediate or significant
practical effect” on the Individual Plaintiffs because their “eligibility for PSLF had not yet been
finally determined.” Dfs.’ MSJ Br. at 17 n.6. This is nonsense. In the face of growing debt
burdens, the Individual Plaintiffs structured their careers and long-term financial plans around
their eligibility for the PSLF Program. The Department’s determinations quite obviously had an
“immediate” and “significant” impact on their ability to plan their careers and finances, despite
the fact that they have not had (and may never have) the opportunity to submit an application for
loan forgiveness. To hold otherwise would be incompatible with the Court’s obligation to apply
the finality requirement in a “flexible” and “pragmatic” manner. Ciba-Geigy, 801 F.2d at 435
(quoting Abbott Labs., 387 U.S. at 149–50).
Finally, Defendants contend that the Department’s statements in the Federal Register
during the PSLF negotiated rulemaking process demonstrate that the denial letters “fall well
short of being the ‘consummation’ of the agency’s decision-making process.” Dfs.’ MSJ Br. at
14. Of course, these statements are of quite limited value to the Court, insofar as they are not the
“governing statutes and regulations [that] structure [an agency’s] decisionmaking processes.”
Soundboard, 888 F.3d at 1267; see also Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533,
539 (D.C. Cir. 1986) (“Publication in the Federal Register does not suggest that the matter
published was meant to be a regulation.”). Nonetheless, even on their own terms, they
demonstrate nothing of the sort urged by Defendants.
24
Defendants largely rest their argument on part of the proposed rulemaking record. 73
Fed. Reg. at 37,705; AR 14. And admittedly, at that time the Department “considered . . . but
decided not to adopt” the recommendation that it “provid[e] for annual borrower submission and
Departmental review and retention of the form . . . that would be certified by the borrower’s
employer.” 73 Fed. Reg. at 37,705; AR 14; see also Dfs.’ MSJ Br. at 15; Oral Arg. Tr. at 20:4–
21:17. But the problem for Defendants is that during the final rulemaking process, the
Department largely reversed course. At that point, it decided to establish an annual employment-
certification form, which led it to develop the ECF Process. 73 Fed. Reg. at 63,241–42; AR 45–
46. More specifically, the Department stated that it would develop a form for borrowers that
would “include an employer certification section and instructions regarding supporting
documentation that the Department will need to determine the borrower’s eligibility for the
forgiveness benefit.” 73 Fed. Reg. at 63,241–42; AR 45–46. Significantly, the Department
represented that borrowers would be able to use the form to collect employment certifications at
the close of the 120-month qualifying period, but also at other intermittent times as well. 73 Fed.
Reg. at 63,242; AR 46. The Department did note that it “expect[ed] the borrower to collect and
retain the necessary records that support the borrower’s eligibility for this benefit.” 73 Fed. Reg.
at 63,242; AR 46. But in the end, the Department’s statements in the Federal Register do not
undermine the conclusion that the denial letters represented the consummation of the
Department’s process in determining whether the Individual Plaintiffs’ employment—and loan
payments made during that employment—qualified under the PSLF Program.
For the reasons described above, the Court concludes that the denial letters sent to the
Individual Plaintiffs satisfy the first prong of the Bennett test.
25
b. Determination of Plaintiffs’ Rights and Obligations
The Individual Plaintiffs
The second prong of the Bennett inquiry is satisfied if the agency action is “one by which
‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.’”
Bennett, 520 U.S. at 177 (quoting Port of Boston Marine Terminal Ass’n v. Rederiaktiebolaget
Transatlantic, 400 U.S. 62, 71 (1970)). In other words, the second prong focuses on “whether
the result of that process is one that will directly affect the parties.” Franklin v. Massachusetts,
505 U.S. 788, 797 (1992).
When the “definitiveness” of an agency decision satisfies the first Bennett prong, the
D.C. Circuit has recognized that the same evidence may “also lead[] inexorably to the conclusion
that [a plaintiff’s] ‘rights . . . have been determined.’” Safari Club Int’l v. Jewell, 842 F.3d 1280,
1289 (D.C. Cir. 2016) (omission in original) (quoting Bennett, 520 U.S. at 178); see also U.S.
Army Corps of Eng’rs, 136 S. Ct. at 1814 (“The definitive nature of [the agency action] also
gives rise to direct and appreciable legal consequences, thereby satisfying the second prong of
Bennett.” (internal quotation marks omitted)). And for reasons already explained, such is the
case here for the Individual Plaintiffs, whose rights under the PSLF statute to have their loan
payments count toward loan forgiveness were determined in the denial letters. See 20 U.S.C.
§ 1087e(m).
Defendants contend that the denial letters “fall well short of determining rights or
obligations” because the letters only provide “provisional guidance” to the Individual Plaintiffs.
Dfs.’ MSJ Br. at 17. In support of their position, Defendants cite to the language contained in
the denial letter to Quintero-Millan, addressed in the Court’s analysis of Bennett’s first prong,
stating that the Department will “only determine” whether the borrowers have “fulfilled all of the
requirements to be eligible for PSLF” after submitting a final loan forgiveness application. Id. at
26
17–18 (citing AR 195). And again, Defendants note that the letters state that the borrower’s
“employer does not appear to qualify for PSLF.” Id. at 18. But for all the reasons already
explained, the denial letters were not provisional. At a minimum, the letters determined the
rights of the Individual Plaintiffs to have the payments at issue count toward the 120 such
payments needed. Additionally, in the cases of Burkhart and Voigt, who as of May 2017
continued to work for employers that the Department concluded did not qualify as “public
service organizations,” the letters effectively determined their eligibility to participate in the
PSLF Program unless they changed jobs.
The ABA
Unlike the Individual Plaintiffs’ denial letters, however, the Department’s letters to the
ABA are not actions by which a party’s “rights or obligations have been determined” or from
which “legal consequences will flow.” Bennett, 520 U.S. at 178.
In its June 2016 letter, the Department informed the ABA that it had “determined that the
ABA does not qualify as a public service organization for [. . .] PSLF purposes” because it failed
to demonstrate that its “primary purpose” was to provide “public interest law services.” AR
190–91. In December 2016, the Department confirmed that determination. AR 192–93.
Though these letters appear similar to those sent to the Individual Plaintiffs, they cannot satisfy
the second prong of the Bennett test.
Under the PSLF statute, the Department has an obligation to provide loan forgiveness
only to eligible borrowers. See 20 U.S.C. 1087e(m). The system by which it does so requires
that borrowers collect and submit ECFs covering 120 valid loan payments, which the
Department approves or denies as they are received. Accordingly, the Department’s letters to the
ABA—which do not constitute a determination on the eligibility of payments made by a
27
particular borrower—cannot be said to determine rights or obligations under the statute. As an
employer, the ABA has no such rights or obligations, since it has no possible claim to loan
forgiveness. And indeed, there is no procedure set out in 34 C.F.R. § 685.219 or the
Department’s guidance by which an employer can seek to validate whether it meets the definition
of a “public service organization” in a manner similar to the process available for borrowers to
track the number of eligible payments they have completed. See 34 C.F.R. § 685.219; AR 168–
80.
For the same reasons, legal consequences do not flow from the Department’s letters to
the ABA. When considering the issue of legal consequences, the D.C. Circuit has looked to “the
actual legal effect (or lack thereof) of the agency action in question on regulated entities.” Nat’l
Min. Ass’n, 758 F.3d at 252. “[I]f the practical effect of the agency action is not a certain change
in the legal obligations of a party, the action is non-final for the purpose of judicial review.”
Nat’l Ass’n of Home Builders, 415 F.3d at 15. Although the letters to the ABA describe separate
eligibility determinations rendered by the Department, as well as the basis for those decisions,
the letters themselves do not carry the same legal consequences for any particular borrower, like
the letters sent to the Individual Plaintiffs. Nor do the letters carry legal consequences for the
ABA. Because the ABA has no legal obligations or rights under the PSLF statute, the
Department’s letters cannot have changed them. And the ABA’s extensive account of “serious
recruiting and retention problems due to the revocation of its status as a PSLF-eligible employer”
does not alter this conclusion. Pls.’ Reply at 9. Practical effects alone, significant as they may
be, do not meet the ABA’s burden under Bennett’s second prong. See Ctr. for Auto Safety v.
Nat’l Highway Traffic Safety Admin., 452 F.3d 798, 811 (D.C. Cir. 2006) (“The flaw in
appellants’ [finality] argument is that the ‘consequences’ to which they allude are practical, not
28
legal.”). Therefore, these letters are not final agency actions and are unreviewable under the
APA. For this reason, the Court will enter judgment for Defendants on Counts I, II, III, and IV
of the ABA’s claims.
* * *
For the foregoing reasons, the Court concludes that the Department’s denial letters sent to
the Individual Plaintiffs were final agency actions, and the letters it sent to the ABA were not.
Consequently, the Court will proceed to consider the Individual Plaintiffs’ claims that the
Department’s determinations reflected in those letters violated the APA.
3. The Individual Plaintiffs’ APA Claims
a. Whether the Department Changed its Practices
The Individual Plaintiffs allege, in Count I, that Defendants violated the APA when the
Department changed its practices “without notice or explanation,” Pls.’ MSJ Br. at 29, by
adopting a set of new “interpretations of statutory and regulatory terms defining the types of
employment that qualify for the PSLF program.” Pls.’ Reply at 8; see also id. at 30–31. The
Department relied upon these new interpretations, the Individual Plaintiffs argue, when it issued
the denial letters to them and reversed its earlier determinations that their employment with the
ABA, AILA, and VVA qualified. Pls.’ MSJ Br. at 29–33. In fact, the various APA claims they
bring are all predicated on their contention that the Department changed its interpretation of the
PSLF regulation in certain ways, thereby rendering their employment and related payments
ineligible under the PSLF Program. For their part, Defendants deny that any change took place,
maintaining that the Department’s denial letters were only “individualized, non-final
determinations” that should not be read as “the agency’s generally applicable policy in
administering the PSLF.” Dfs.’ MSJ Br. at 28–29. Therefore, the first step in evaluating the
29
Individual Plaintiffs’ APA claims is determining whether the Department did in fact change its
practices by applying a new interpretation of the PSLF regulation to the Individual Plaintiffs.6
To determine whether an agency has changed its practices in the face of its insistence
“that nothing [has] changed,” courts independently review the administrative record. Am. Wild
Horse Preservation Campaign v. Perdue, 873 F.3d 914, 924–25 (D.C. Cir. 2017). But the record
need not necessarily reflect formal documentation of a change for the Court to conclude that one
has occurred. Aracely, 319 F. Supp. 3d at 141 (concluding upon review of the record that
“Plaintiffs’ evidence of an unwritten . . . policy . . . outweigh[ed] Defendants’ self-serving
declaration to the contrary.”). Indeed, another court in this district determined, over an agency’s
objections, that an agency changed its practices even where the plaintiffs “failed to cite any
statute, regulation, policy memoranda, or any other document memorializing the [change] they
challenge.” R.I.L—R v. Johnson, 80 F. Supp. 3d 164, 184 (D.D.C. 2015). Therefore, the Court
6
Throughout the briefing, the parties reference two distinct sets of agency actions: (1) the
issuance of the denial letters and (2) the alleged adoption of new standards by which the
Department determined whether non-501(c)(3) not-for-profit organizations qualified as public
service organizations under the PSLF Program. Compare Pls.’ MSJ Br. at 15-16 (arguing that
the Department’s “eligibility denials” are final agency actions) with id. at 25-26 (arguing that the
standards reflect the Department’s “changed interpretations” of the PSLF regulation). However,
the parties only address the finality of the denial letters, and not the finality of the Department’s
decision to adopt the purportedly-new standards on which the letters were based. While
Defendants argue that the denial letters, and other letters in response to ECF submissions, should
not be considered final, they contend that the three contested standards reflect the Department’s
“consistent and unchanged” interpretation of the PSLF regulation. Dfs.’ MSJ Br. at 30. And
although Defendants suggested at oral argument, for the first time, that these standards may not
reflect final agency action, that suggestion was made only in furtherance of their argument that
the denial letters were not final. See Oral Arg. Tr. at 27:15–28:16. Therefore, for the same
reasons that the denial letters are final—and in light of Defendants’ position that the Department
applied the standards at issue to determine that the Individual Plaintiffs’ employment did not
qualify under the PSLF Program, Dfs.’ MSJ Br. at 27—the Court concludes that it may review
the Department’s adoption of the standards as final agency action, as well, see Aracely, 319 F.
Supp. 3d at 139 (reviewing cases in which an unwritten agency policy, applied through
individual determinations, is determined “to be judicially reviewable as a final action”).
30
will independently review the evidence in the record to determine whether the Department in fact
changed its practices by applying a new interpretation of the PSLF regulation. In doing so, the
Court will also consider—for reasons explained in Section III—extra-record evidence submitted
by Plaintiffs.
The Individual Plaintiffs allege that the Department changed its interpretation of the
PSLF regulation by adopting new, heightened standards governing whether non-501(c)(3) not-
for-profit organizations qualify as public service organizations for purposes of the PSLF
Program.7 They identify three newly-adopted standards the Court will refer to as the “Primary
Purpose” standard, the “School-like Setting” standard, and the “Outright Provision of Services”
standard. See Pls.’ MSJ Br. at 31–33. The Court considers whether the evidence supports their
claim that each reflects a change to how the Department interpreted and applied the PSLF
regulation below.
The “Primary Purpose” Standard
The Individual Plaintiffs allege that, sometime between 2015 and 2016, the Department
adopted the Primary Purpose standard as part of its determination as to whether non-501(c)(3)
not-for-profit organizations that provide “public interest law services” qualify as “public service
organizations” under the PSLF regulation. Id. at 31–32; id., Ex. A ¶¶ 24, 31–36. Under this
standard, for her loan payments to qualify, a borrower must demonstrate that the “primary
purpose” of her non-501(c)(3) not-for-profit employer is to provide qualifying public services.
See id., Ex. A ¶ 31; AR 190–91. As Defendants’ concede, the Department relied on this
7
The Court notes that these standards appear to have no bearing on the eligibility of borrowers
who are not employed at non-501(c)(3) not-for-profit organizations, such as Federal, State and
local government employees, uniformed members of the U.S. Armed Forces or the National
Guard, employees of 501(c)(3) not-for-profits, or those who are otherwise eligible for the PSLF
Program. See 34 C.F.R. § 685.219(b); Oral Arg. Tr. at 24:2–10.
31
reasoning when it sent denial letters to ABA employees in 2016, Dfs.’ MSJ Br. at 27, which
includes the denial letters challenged by Quintero-Millan and Burkhart, see AR 214–15, 237–39.
The Individual Plaintiffs contend that, by adopting the standard, the Department “reversed [its]
past practice without notice or explanation.” Pls.’ MSJ Br. at 29. Defendants, by contrast,
contend that the Department had always applied this reasoning in evaluating whether
employment at particular organizations qualified for the PSLF Program, and that the letters
approving ECFs submitted by Burkhart prior to his 2016 denial letter resulted from a “mistake”
or “contractor’s error.” Dfs.’ MSJ Br. at 9; Dfs.’ Reply at 17–18.
The evidence supports the Individual Plaintiffs’ claim that the Department changed how
it interpreted and applied the PSLF regulation by adopting the Primary Purpose standard at some
point before it began issuing denial letters to ABA employees like Quintero-Millan and Burkhart.
The Department’s handling of Burkhart’s case is, at a minimum, consistent with such a change.
As discussed above, despite the ABA’s apparent failure to meet this standard, the Department
approved his employment there on at least four occasions before reversing course. Pls.’ MSJ
Br., Ex. D ¶¶ 7–8. In addition, according to the ABA, several of its other employees received
letters confirming that their employment there had qualified as well. Id., Ex. A ¶ 22. But the
record is also notable for what it lacks: any evidence as to whether the Department applied the
Primary Purpose standard—or even sought information about any employer’s primary purpose—
prior to sending letters to the ABA’s employees denying their eligibility in 2015.8 Id., Ex. A
¶ 24. The earliest specific reference to the Primary Purpose standard in the record appears to be
8
At oral argument, the Court invited Defendants to point to any evidence in the record, or to
submit additional evidence, showing that it had applied the Primary Purpose and School-like
Setting standards prior to 2015 or 2014, respectively. Oral Arg. Tr. 49:25–51:17. Defendants
did not do so.
32
in the Department’s June 2016 letter to the ABA. See AR 190–91 (describing how the
Department had not received documentation demonstrating “that the primary purpose of the
ABA is to provide ‘public interest law services’”).
The extra-record evidence—which consists of internal Department and FedLoan
Servicing email traffic—addresses this point directly. And it demonstrates that the Department
changed how it interpreted the PSLF regulation by adopting the Primary Purpose standard and
applying it to borrowers generally. In February 2017, a FedLoan Servicing employee emailed
Foss to express “concern[]” as to whether his recent instruction that an “organization’s ‘primary
purpose’ [had] to be to provide one of the qualifying services” was “directly conflicting with
how we have been evaluating certain [public health] organizations” based on guidance Foss had
offered several years earlier.9 Pls.’ Supp. Br., Ex. B. The employee referenced a prior case in
which FedLoan Servicing and the Department, in applying that guidance, had jointly agreed to
approve an employer even though its primary purpose did not involve a qualifying service. Id.
In response, Foss instructed the employee to “do a retraction” of the employer’s eligibility status.
Id. Foss then requested that the employee “comb through those organizations that [they had]
approved” and “provide [the Department] a list, like [the employee had] done for public
education and public interest legal services.” Id. (emphasis added).
Not long afterward, in June 2017, that same FedLoan Servicing employee described to a
co-worker how, a “few months ago,” the Department “introduced a new concept in the review,
‘primary purpose.’” Pls.’ 2d Supp. Br., Ex. E. As a result, the Department was reevaluating
ECFs that FedLoan Servicing had previously approved based on earlier Department guidance.
9
In 2014, Foss had sent Voigt the Department’s explanation as to why it changed its position on
whether her employment at AILA qualified for the PSLF Program. See AR 334.
33
Id. In fact, the employee recounted, FedLoan Servicing had provided the Department a
spreadsheet of organizations that it had approved pursuant to the prior guidance, but the
Department “still ha[d] not provided follow-up” on it. Id. The next month, FedLoan Servicing
updated its “Employment Certification Form Manual” to reflect that “[a]s of February 23, 2017,
[the Department] advised [that] a private not-for-profit (non-501(c)(3)) organization should be
evaluated based on [its] ‘primary purpose.’” Id., Ex. C.
This extra-record evidence shows that the Department’s adoption of the Primary Purpose
standard represented a change to how it interpreted and applied the PSLF regulation. To be sure,
this evidence postdates the denial letters sent to Quintero-Millan and Burkhart, and some of it
appears to concern the standard’s application to public health organizations specifically.
Nonetheless, it shows a Department employee referencing an earlier implementation of the
Primary Purpose standard with regard to “public interest legal services” employers. Pls.’ Supp.
Br., Ex. B. That implementation apparently required the Department to request a list of such
employers that had been approved beforehand so that they could be reconsidered. Id. And it
does not appear that the manual used by FedLoan Servicing to apply the PSLF regulation
included the Primary Purpose standard until as late as 2017. Pls.’ 2d Supp. Br., Ex. E. Indeed,
following the commencement of this action, the Department added the Primary Purpose standard
to its on-line description of the PSLF Program’s qualifications. See Pls.’ Reply at 18 n.6;
Federal Student Aid: Public Service Loan Forgiveness, https://studentaid.ed.gov/sa/repay-
loans/forgiveness-cancellation/public-service#qualify (last visited Feb. 21, 2019). This evidence
simply does not comport with Defendants’ contention that the prior letters sent to Burkhart and
other ABA employees confirming that their employment qualified for the PSLF Program were
34
the result of individualized mistakes or errors in applying a standard that had always been in
place.
In total, this evidence makes abundantly clear that, at some point before sending the
denial letters to Quintero-Millan and Burkhart in 2016, the Department changed its practices by
adopting the Primary Purpose standard. Through this change, the Department modified the
requirements by which a non-501(c)(3) not-for-profit organization may qualify as a public
service organization by adding the condition that organizations that serve multiple purposes must
show that their primary one is to provide a qualifying public service. Regardless of whether
adding such a requirement was “a reasonable decision” and “consistent with the intent of the
statute,” as Defendants contend, Dfs.’ MSJ Br. at 27, the Department’s adoption of the Primary
Purpose standard constituted a change to how it interpreted and applied the PSLF regulation.
And as explained in more detail below, that change, at the least, required it to meet the minimum
requirements for reasoned decisionmaking under the APA. See Ark Initiative v. Tidwell, 816
F.3d 119, 128 (D.C. Cir. 2016) (“Where an agency changes a policy or practice, it ‘is obligated
to supply a reasoned analysis for the change.’” (quoting Motor Vehicle Mfrs. Ass’n of the U.S.,
Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
The “School-Like Setting” Standard
According to the Individual Plaintiffs, the Department also changed its practices by
adopting the School-like Setting standard, and then relied upon that standard in sending Voigt
her denial letter in December 2014. Pls.’ MSJ Br. at 32; AR 335–36. Under the School-like
Setting standard, a public education organization under consideration for PSLF eligibility is
required to demonstrate that it provides qualifying services “in a school or a school-like setting.”
AR 336. Over two years beforehand, when the Department determined that Voigt’s employer,
35
AILA, qualified as “an eligible public service organization” under 34 C.F.R. § 685.219(b),
AR 337, the Individual Plaintiffs contend this standard “did not exist,”10 Pls.’ MSJ Br. at 32. As
with the Primary Purpose standard, the Department does not contest that the School-like Setting
standard provided the underlying rationale for its ultimate determination that Voigt’s
employment at AILA did not qualify as an organization that provides public education services.
Dfs.’ MSJ Br. at 27. But the Department submits that it has “consistently applied” its
interpretation of “public education” services since the initial promulgation of the PSLF
regulation. Dfs.’ Reply at 15–16.
The evidence, however, shows that the Department changed how it interpreted and
applied the PSLF regulation by adopting this new standard. Once again, there is evidence in the
record consistent with such a change—for example, at first, the Department told Voigt that her
employment at AILA “[met] the definition of public service organization” under the regulation,
only to then reverse course, AR 337—but it does not directly address the point. And, as it did
with the Primary Purpose standard, the Department added the School-like Setting standard to an
updated version of its ECF instruction sheet following the commencement of this suit. Pls.’ MSJ
Br. at 10–11 n.4; see Public Service Loan Forgiveness (PSLF): Employment Certification Form
at 3, https://studentaid.ed.gov/sa/sites/default/files/public-service-employment-certification-
form.pdf (last visited Feb. 21, 2019). However, the record does not contain any evidence, one
way or the other, as to whether the Department applied the School-like Setting standard to any
10
In its June 2012 confirmation that Voigt’s employment was eligible, the Department did not
specify whether AILA qualified as an organization that provided “public interest law services” or
“public education services.” See AR 337. Defendants contend that, at that time, the Department
had mistakenly determined that AILA qualified as “a not-for-profit organization that provided
public interest law services.” Dfs.’ MSJ Br. at 10. Plaintiffs do not challenge the Department’s
determination that AILA was not a qualifying public service organization on that basis. See Pls.’
Reply at 30.
36
particular borrower’s employment, or even inquired into the setting in which an organization
provided education services, before its December 2014 denial letter to Voigt. See supra note 8.
The extra-record evidence, however, decimates Defendants’ position in Voigt’s case. In
August 2014, Foss emailed a FedLoan Servicing employee, excitedly announcing that
Department had finally “settled . . . on a definition of public education!” Pls.’ Supp. Br., Ex. C.
Foss then went on to describe how the new definition would require a qualifying organization to
“provide educational enrichment or support directly to students or their families in a school or a
school-like setting.” Id. This email, unrebutted by the Department, is all-but-conclusive
evidence that it introduced the School-like Setting standard over two years after it informed
Voigt in June 2012 that her employment at AILA qualified, and a few months before it reversed
itself in her case. And even accepting Defendants’ contention—for which there is no
contemporaneous evidence—that the Department did not assess Voigt’s employment as
potentially providing public education services (as opposed to public interest law services) prior
to issuing its June 2012 letter, the extra-record evidence shows that the Department adopted this
new standard years after its promulgation of the PSLF regulation. See id. Moreover, as noted
above, the extra-record evidence indicates that, after it adopted this new standard, the
Department was forced to retract letters that had previously confirmed borrowers’ eligibility
based on their employment with organizations that provided “public education and public
interest legal services.” Id., Ex. B (emphasis added).
Based on this evidence, the Court concludes that the Department changed how it
interpreted and applied the PSLF regulation by adopting the School-like Setting standard, and
then applied that new standard to Voigt’s case. Through this change, the Department added the
condition that qualifying organizations must provide public education services directly to
37
students or their families in a school or a school-like setting.11 That requirement appears
nowhere in the text of the regulation itself, which does not define the term “public education.”
See 34 C.F.R. § 685.219(b). And while such a reading of the regulation may be reasonable, as
explained in more detail below, the Department was obligated, at a minimum, to meet the APA’s
requirements for reasoned decisionmaking when it changed its practices to adopt the standard.
The “Outright Provision of Services” Standard
Finally, the Individual Plaintiffs argue that the Department changed its practices by
adopting the Outright Provision of Services standard when considering whether an organization
provides a “public service for individuals with disabilities and the elderly” under 34 C.F.R. §
685.219(b). Pls.’ MSJ Br. at 32–33. Under this purported standard, an organization that
“[p]rovides . . . public services,” 34 C.F.R. § 685.219(b), must “provide the services outright,”
Pls.’ MSJ Br. at 33 (emphasis added) (quoting AR 331). The Department relied on this new
rationale, according to the Individual Plaintiffs, when it issued the April 2016 denial letter to
Rudert on the basis that VVA only “facilitate[d] the provision of disability-related services” and
did not “provide the services outright.”12 Id. at 32–33 (quoting AR 331).
Unlike the Individual Plaintiffs’ claims about the Primary Purpose and School-like
Setting standards, however, their claim that the Outright Provision of Services standard
11
The Court notes that the extra-record evidence, by reflecting the adoption and application of
both the Primary Purpose standard and the School-like Setting standard to borrowers in an
across-the-board fashion, further underscores the finality of the denial letters sent to Quintero-
Millan, Burkhart, and Voigt. See supra Section II(B)(2).
12
The Department appears to have also determined that VVA did not meet the regulatory
requirements to provide “public interest law services” because it was not “funded in whole or in
part by a local, State, Federal, or Tribal government” as set out in 34 C.F.R. § 685.219(b). See
AR 330–31. Rudert does not challenge the Department’s determination as to this alternative
basis for eligibility.
38
represented a change to the Department’s interpretation of the PSLF regulation is unsupported by
the evidence. The only reference to this alleged standard in the record is in an August 2016 letter
from the Department to a congresswoman who had inquired about Rudert’s denial. AR 330–31.
And unlike with the other standards, there is no extra-record evidence that shows a discrete shift
how the Department’s interpreted and applied the PSLF regulation. Indeed, the purported
Outright Provision of Services standard appears only to reflect a straightforward application of
the regulation to Rudert’s case, rather than a new interpretation, given that its plain language
mandates that a qualifying organization “[p]rovide[]” particular public services. 34 C.F.R.
§ 685.219(b). Without additional supporting evidence, the Individual Plaintiffs’ argument that
Rudert’s denial represents a change in the Department’s practices following the promulgation of
the PSLF regulation is unpersuasive. At bottom, the Court cannot conclude, “as a factual
matter,” that the Department “changed its past position . . . .” United Student Aid Funds, Inc. v.
King, 200 F. Supp. 3d 163, 170 (D.D.C. 2016).
b. The Individual Plaintiffs’ Procedural APA Claim (Count I)
In Count I, the Individual Plaintiffs assert, among other things, that because the
Department changed its interpretations of the PSLF regulation by adopting the Primary Purpose
and School-like Setting standards, it must—but did not—adhere to certain minimal procedural
requirements under the APA. The Court agrees. The Department argues, for various reasons,
that the Primary Purpose and School-like Setting standards are “reasonable” and “consistent with
the intent of the statute.” Dfs.’ MSJ Br. at 25–28. Maybe so. But its refusal to concede that it
39
changed its practices when it adopted the standards effectively precluded it from satisfying the
APA’s basic procedural requirements when it did so.13
The APA requires that a court “hold unlawful and set aside agency action” that is
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2). Under this standard, courts do not “substitute [their] judgment for that of the agency,”
but review the action to determine whether the agency “examine[d] the relevant data and
articulat[d] a satisfactory explanation for its action[,] including a ‘rational connection between
the facts found and the choice made.’” Mingo Logan Coal Co. v. EPA, 829 F.3d 710, 719 (D.C.
Cir. 2016) (quoting State Farm Mut. Auto. Ins., 463 U.S. at 43). “One of the core tenets of
reasoned decisionmaking . . . is that ‘an agency changing its course . . . is obligated to supply a
reasoned analysis for the change.” Jicarilla Apache Nation v. U.S. Dep’t. of the Interior, 613
F.3d 1112, 1119 (D.C. Cir. 2010) (second omission in original) (quoting State Farm Mut. Auto
Ins., 463 U.S. at 42); see Judulang v. Holder, 565 U.S. 42, 45 (2011) (“When an administrative
agency sets policy, it must provide a reasoned explanation for its action.”). And although “an
agency ‘is free to alter its past rulings and practices even in an adjudicatory setting,’” Dilmon v.
13
Although the parties agree that the Primary Purpose and School-like Setting standards
represent the Department’s interpretation of its own regulations, they do not squarely address in
their briefing the type of agency action by which the Department adopted the standards. See
Nat’l Min. Ass’n, 758 F.3d at 251 (“The APA divides agency action . . . into three boxes:
legislative rules, interpretive rules, and general statements of policy.”). At times, Plaintiffs
suggest that the Department’s adoption of the standards constituted a legislative rulemaking,
which would require the Department to undergo formal notice-and-comment procedures. Pls.’
MSJ Br. at 11, 30 n.15; see 5 U.S.C. § 553. Defendants, by contrast, skirt the issue by taking the
position that the Department applied the standards consistently since the promulgation of the
PSLF regulation and therefore did not engage in any agency action subject to the APA. Dfs.’
MSJ Br. at 30. Given the Court’s conclusion that the Department engaged in arbitrary and
capricious action by departing from its past practices without meeting the basic procedural
requirements of the APA—and ruling in favor of Quintero-Millan, Burkhart, and Voigt on that
basis—it need not determine the specific type of agency action the Department undertook in
adopting the Primary Purpose and School-like Setting standards.
40
Nat’l Transp. Safety Bd., 588 F.3d 1085, 1090 (D.C. Cir. 2009) (quoting Airmark Corp. v. FAA,
758 F.2d 685, 691–92 (D.C. Cir. 1985), it is required “to ‘display awareness that it is changing
position’ and [may not] ‘depart from a prior policy sub silentio or simply disregard rules that are
still on the books,’” id. (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009));
see also Lone Mountain Processing, Inc. v. Sec’y of Labor, 709 F.3d 1161, 1164 (D.C. Cir.
2013) (“[A]n agency changing its course must supply a reasoned analysis indicating that prior
policies and standards are being deliberately changed, not casually ignored.” (quoting Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970))). Further, when an agency
changes a policy, “serious reliance interests must be taken into account.” Mingo Logan Coal,
829 F.3d at 719 (quoting Fox Television Stations, 556 U.S. at 515). Consequently, “where the
agency has failed to provide even [a] minimal level of analysis, its action is arbitrary and
capricious and . . . cannot carry the force of law.” Encino Motorcars, LLC v. Navarro, 136 S. Ct.
2117, 2125 (2016)
Therefore, by adopting new standards that modified the criteria by which borrowers’
employment qualified for the PSLF Program, the Department was required to “display
awareness” of its changing position, provide reasoned analysis for that decision, and take into
account any serious reliance interests affected. Id. As explained in more detail below, the
Department failed to satisfy these requirements as to Quintero-Millan, Burkhart, and Voigt.
There is no indication in the record that, prior to issuing the denial letters to Quintero-
Millan and Burkhart, the Department acknowledged that it changed its practices by adopting the
Primary Purpose standard, provided a reasoned analysis for such a change, or demonstrated that
it had considered the substantial reliance interests at stake. Nor did the Department meet these
minimum requirements in the denial letters themselves. Indeed, the Department did not even
41
reference the Primary Purpose standard as the basis for its decision in the denial letters issued to
Quintero-Millan and Burkhart, although it now asserts that it relied on it when evaluating the
eligibility of ABA employees at that time. See Dfs.’ MSJ Br. at 27. And to this day, the
Department has not acknowledged that it changed its practices in this regard. Therefore,
Quintero-Millan and Burkhart were provided none of the process required by the APA, and the
Department concedes as much. See id. at 30 (arguing that no process was required because the
Department’s interpretation of the PSLF regulation remained unchanged). Accordingly, the
Department acted arbitrarily and capriciously when it adopted the Primary Purpose standard
without the minimum requirements of reasoned decisionmaking and determined that Quintero-
Millan and Burkhart’s employment did not qualify on that basis. Summary judgment is thus
warranted in their favor, and against Defendants, on Count I.
Likewise, the Department failed to provide Voigt with the required minimum process
under the APA when it denied that her employment qualified for the PSLF program by applying
the School-like Setting standard. In her December 2014 denial letter, the Department mentioned
the relevant standard by informing her that it “considers ‘public education services’ to be
services that provide educational enrichment or support directly to students or their families in a
school or school-like setting.” AR 336. But the Department failed to acknowledge that it had
adopted this standard just a few months beforehand, failed to explain its reasoning for the change
to its practices, and failed to show that it had considered the relevant reliance interests.14 And
14
Even if the Department had not yet settled on an interpretation of the term “public education
services” before it adopted the School-like Setting standard in 2014, its application of that
standard from that point forward would still be arbitrary and capricious for lack of any reasoned
explanation. See Kirwa v. U.S. Dep’t of Defense, 285 F. Supp. 3d 21, 39 (D.D.C. 2017)
(“Whether [an agency] is taking an initial agency action or changing a longstanding policy, or
practice, it must still provide a reasoned explanation for its action.”).
42
there is no indication in the record that it met these minimum procedural requirements through
any other means, such as a public notice to borrowers, prior to issuing the denial letter to Voigt.
Therefore, the Department acted arbitrarily and capriciously when it adopted the School-like
Setting standard without meeting the requirements of reasoned decisionmaking and, on that
basis, determined that Voigt’s employment did not qualify. For this reason, summary judgment
is warranted in Voigt’s favor, and against Defendants, on Count I as well.
In contrast, because the record does not support the conclusion that the Department
changed its interpretation of the PSLF regulation by adopting the purported Outright Provision of
Services standard, the Court cannot conclude that it violated the APA’s procedural requirements
when it determined that Rudert’s employment at the VVA did not qualify. See Select Specialty
Hosp.-Bloomington, Inc. v. Sebelius, 774 F. Supp. 2d 332, 344–45 (D.D.C. 2011) (denying
similar APA procedural claims because the plaintiffs “d[id] not show that the [agency] actually
changed [its] interpretation of the regulation”). Although the Individual Plaintiffs contend that
the Department “articulate[d] a new standard” when it issued its denial letter to Rudert, Pls.’
MSJ Br. at 33, they fail to provide clear evidence that any such change occurred. Accordingly,
Rudert has not carried his burden of persuading the Court that the Department’s application of
the Outright Provision of Services standard required it to satisfy any procedural requirements at
all. Therefore, summary judgment must be granted for Defendants, and against Rudert, on
Count I.
Quintero-Millan, Burkhart, and Voigt also allege that the Department’s new standards
violated the APA because the Department failed to satisfy the APA’s notice requirements,
“failed to comport with the PSLF program’s authorizing statute . . . [and] applied regulatory
changes in an impermissibly retroactive manner.” Pls.’ MSJ Br. at 1. Additionally, they allege
43
that the Department’s reliance on those standards violated “due process under the Fifth
Amendment.” Id. However, because the Court’s conclusion that the Department violated the
APA’s most basic procedural requirements disposes of their motions for summary judgment, the
Court need not reach these additional claims. See Spirit of the Sage Council v. Norton, 294
F. Supp. 2d 67, 90 (D.D.C. 2003) (“Given that it appears clear that the [agency rule] was adopted
‘without observance of the procedure required by law,’ 5 U.S.C. § 706(2)(D), the Court need not
reach the question of whether the [rule] is, as a substantive matter, ‘arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.’”), vacated in part, 411 F.3d 225
(D.C. Cir. 2005).
c. Rudert’s Remaining APA Claims (Counts II–IV)
Having determined that Defendants are entitled to summary judgment on Rudert’s
procedural APA claim, the Court turns to his remaining APA claims—namely, that the
Department failed to follow APA notice requirements when it adopted the purported Outright
Provision of Services standard, that it unlawfully imposed retroactive consequences in applying
the standard to Rudert, and that the standard is contrary to the PSLF statute and regulation. The
Court concludes that Defendants are entitled to summary judgment on each of these claims.15
First, Defendants are entitled to summary judgment on Rudert’s claim in Count II that the
Department failed to follow APA notice requirements. The statute requires that agencies publish
in the federal register all “substantive rules of general applicability adopted as authorized by law,
and statements of general policy or interpretations of general applicability formulated and
adopted by the agency.” 5 U.S.C. § 552(a)(1)(D). The requirement to publish in advance
15
In Plaintiffs’ reply brief, Rudert also argues—for the first time—that the Department erred
when it concluded, as a factual matter, that VVA did not directly provide a “public service for
individuals with disabilities.” Pls.’ Reply at 28–29. The Court considers this argument forfeited.
See Abdullah v. Obama, 753 F.3d 193, 199 (D.C. Cir. 2014).
44
applies only to “substantive rules” and not to “interpretive rules, general statements of policy, or
rules of agency organization, procedure, or practice.” Stuart-James Co. v. SEC, 857 F.2d 796,
800 (D.C. Cir. 1988). Because the Court cannot conclude on this record that Rudert’s denial
letter was based on any sort of newly-adopted rule or policy change—much less a new
substantive rule—Defendants are entitled to summary judgment.
Second, Defendants are also entitled to summary judgment on Rudert’s claim in Count III
that the Department imposed retroactive consequences on him by relying on a new standard to
revoke the eligibility status of his employment and past loan payments. “[A] retroactive rule
forbidden by the APA is one which ‘alter[s] the past legal consequences of past actions.’”
Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585, 588 (D.C. Cir. 2001) (quoting Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204, 219 (1988) (Scalia, J. concurring)) (alterations in
original). “To determine whether a rule is impermissibly retroactive, [the Court must] first look
to see whether it affects a substantive change from the agency’s prior regulation or practice.”
Ne. Hosp Corp. v. Sebelius, 657 F.3d 1, 14 (D.C. Cir. 2011) (quoting Nat’l Min. Ass’n v. Dep’t of
Labor, 292 F.3d 849, 860 (D.C. Cir. 2002)). And again, as set forth in Section II(B)(3)(a), the
record does not support Rudert’s claim that the Department applied or relied upon a new rule or
interpretation when it determined that his employment at VVA did not qualify under the PSLF
Program. Moreover, although the Department previously confirmed to Rudert that his
employment was eligible, an agency’s attempt to correct a “mistake in interpreting and applying
its own recently promulgated regulations” does not necessarily trigger the APA’s prohibition on
retroactive rules. Alvarado Parkway Inst., Inc. v. Mendez, 789 F. Supp. 1190, 1201 (D.D.C.
1992). Therefore, the Court cannot conclude that the Department took impermissible retroactive
action.
45
Third, Defendants are entitled to summary judgment on Rudert’s claim in Count IV that
the purported Outright Provision of Services standard is substantively inconsistent with the plain
language of the statute and the PSLF regulation. Even assuming for the sake of argument that
this standard reflected an interpretation of the regulation, it is not plainly inconsistent with it.
Indeed, “as a general rule, [the Court] defers to the [an agency’s interpretation] ‘unless [its]
interpretation is plainly erroneous or inconsistent with the regulation.’” Decker v. Nw. Envtl.
Def. Ctr., 568 U.S. 597, 613 (2013) (citations omitted) (quoting Chase Bank USA, N.A. v.
McCoy, 562 U.S. 195, 208 (2011)). Here, the PSLF regulation requires that a qualifying
organization “provide[] . . . public services.” 34 C.F.R. § 685.219(b). Although, as Rudert
points out, the regulation does not contain the term “outright,” Pls.’ MSJ Br. at 33, the inclusion
of that qualifier does not suggest that the Department’s purported interpretation is “plainly
erroneous” or that the Department acted outside the scope of the regulation. And even without
applying a deferential standard, such an interpretation would be reasonable on its face. Further,
Plaintiffs concede that they do not challenge the regulation as inconsistent with the statute, see
Pls.’ Reply at 18 n.5, and so the alleged interpretation would be consistent with the statute for the
same reasons. And in any event, to repeat, Rudert has not demonstrated that the Department’s
determination of his employment eligibility reflected a new interpretation of the PSLF regulation
at all, rather than simply an application of the regulation to his individual case. Therefore, the
Court must enter summary judgment for Defendants on Rudert’s substantive APA claim.
4. The ABA’s and Rudert’s Fifth Amendment Due Process Claims
(Count V)
In Count V, the ABA and Rudert assert that the Department violated their due process
rights under the Fifth Amendment when it “retroactively revoked [the ABA’s] status as a PSLF-
eligible employer, thus compromising its ability to attract and retain employees” and “purged
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[Rudert’s] prior years of certified PSLF-work and loan payments without notice.” Compl.
¶¶ 219–20. To bring a claim under the Due Process Clause, a plaintiff must show (1)
“deprivation of a protected liberty or property interest,” (2) “by the government,” (3) “without
the process that is ‘due’ under the Fifth Amendment.” NB ex rel. Peacock v. District of
Columbia, 794 F.3d 31, 41 (D.C. Cir. 2015).
Therefore, the Court first determines if either the ABA or Rudert has a property interest
“that triggers Fifth Amendment due process protection.” C&E Servs., Inc. of Wash. v. D.C.
Water & Sewer Auth., 310 F.3d 197, 200 (D.C. Cir. 2002) (quoting Reeve Aleutian Airways, Inc.
v. United States, 982 F.2d 594, 598 (D.C. Cir. 1993)). “[T]he existence of a property interest is
determined by reference to ‘existing rules or understandings that stem from an independent
source such as state law.’” Ralls Corp. v. Comm. on Foreign Inv. in the U.S., 758 F.3d 296, 315
(D.C. Cir. 2014) (quoting Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998)). To
demonstrate a protected property interest in a benefit, a plaintiff “clearly must have more than an
abstract need or desire for it. He must have more than a unilateral expectation of it. He must,
instead, have a legitimate claim of entitlement to it.” Bd. of Regents of State Colls. v. Roth, 408
U.S. 564, 577 (1972).
The Court agrees with Defendants that the ABA has no protected property interest in its
status as a qualifying organization that provides public interest law services. The ABA’s
qualification under the PSLF regulation is understandably important to the ABA because of the
second-order effects of that determination on its employees and recruitment. But as explained in
Section II(B)(2)(b), the PSLF statute does not create any property rights for the ABA. The PSLF
statute grants an entitlement to debt relief for borrowers determined to be eligible, but it creates
no legitimate claim of entitlement to a property interest protected by the Fifth Amendment on the
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ABA’s part. See 20 U.S.C. § 1087e(m). Accordingly, Defendants are entitled to summary
judgment on the ABA’s claim under the Fifth Amendment’s Due Process Clause.
In addition, the statute only creates rights for those borrowers who are entitled to benefits
under the PSLF Program. As discussed above, the Department determined that Rudert’s
employment with VVA did not qualify because VVA does not provide public services for
individuals with disabilities outright, in light of the PSLF regulation’s requirement that the
organization “provide[] . . . public services.” 34 C.F.R. § 685.219(b). Therefore, Rudert has not
demonstrated that he is entitled to a property interest protected by the Fifth Amendment. For this
reason, Defendants are entitled to summary judgment on this claim as well.
Plaintiffs’ Motions for Extra-Record Review
Plaintiffs have also filed two motions for extra-record review. Pls.’ Supp. Br.; Pls.’ 2d
Supp. Br. For the reasons explained below, and as reflected in the analysis in Section
II(B)(3)(a), the Court will grant both motions.
A. Legal Standard
It is “black-letter administrative law that in an APA case, a reviewing court ‘should have
before it neither more nor less information than did the agency when it made its decision.’” Hill
Dermaceuticals, 709 F.3d at 47 (quoting Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d
788, 792 (D.C. Cir. 1984)). And the agency enjoys a “presumption” that it has properly
compiled the entire record of materials that it considered, either directly or indirectly, in making
its decision. See, e.g., Maritel, Inc. v. Collins, 422 F. Supp. 2d 188, 196 (D.D.C. 2006). The
D.C. Circuit has observed that this rule against extra-record evidence “exerts its maximum force
when the substantive soundness of the agency’s decision is under scrutiny.” Esch v. Yeutter, 876
F.2d 976, 991 (D.C. Cir. 1989). On the other hand, when “the procedural validity of the
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[agency’s] action also remains in serious question[,] . . . it may sometimes be appropriate to
resort to extra-record information to enable judicial review to become effective.” Id.
Although the exceptions to this rule “are quite narrow and rarely invoked,” CTS Corp. v.
EPA, 759 F.3d 52, 64 (D.C. Cir. 2014), in Esch the D.C. Circuit set forth eight circumstances in
which a court might consider extra-record evidence. Since then, it has appeared to substantially
narrow the circumstances under which extra record review is appropriate, as Judge Mehta
explained in detail in United Student Aid Funds v. DeVos, 237 F. Supp. 3d 1, 4 (D.D.C. 2017)
(collecting cases). The Court need not review all those cases here. It suffices to say that
“although the number of situations in which extra-record evidence may be considered has
dwindled over time, the D.C. Circuit has consistently stated that where the district court cannot
determine from the administrative record whether the agency complied with its procedural
obligations, the district court may consider extra-record evidence.” Id.
B. Analysis
During and after briefing on the parties’ motions for summary judgment, Plaintiffs twice
moved the Court to allow for extra-record review of documents that they allege “provide
irrefutable evidence of the Department’s changed interpretations of the relevant statutory and
regulatory terms at issue in this case.”16 Pls.’ 2d Supp. Br., Mot. Plaintiffs urge the Court to
make an exception to the “default rule” in APA cases here, because they “challenge gross
procedural deficiencies” in that the current record precludes judicial review as to whether the
16
Plaintiffs assert that they obtained the documents submitted as extra-record evidence through
two public records requests made pursuant to the Pennsylvania Right-to-Know Act, 65 P.S. §
67.101, et seq., and directed to the Pennsylvania Higher Education Assistance Agency, which
does business as FedLoan Servicing, as well as through a FOIA request by Voigt litigated in
Voigt v. U.S. Dep’t of Educ., No. 17-790 (D.D.C.) (Complaint filed Apr. 28, 2017). Pls.’ Supp.
Br., Ex. A ¶¶ 3–5; Pls.’ 2d Supp. Br., Ex. A ¶¶ 6–9. Defendants do not contest the authenticity
of these documents.
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Department adopted the Primary Purpose and School-like Setting standards as new
interpretations of the PSLF regulation following its promulgation. Pls.’ Supp. Br. at 3–4.
The Court agrees that this is the rare APA case in which consideration of Plaintiffs’
proffered extra-record evidence is permissible. First, it is the procedural—as opposed to
substantive—validity of the Department’s actions that are primarily at issue, so the usual rule
prohibiting extra-record evidence applies with less potency. As the D.C. Circuit recently
reaffirmed, “district courts may consult extra-record evidence when ‘the procedural validity of
the [agency’s] action . . . remains in serious question.’” Hill Dermaceuticals, 709 F.3d at 47
(alterations in original) (quoting Esch, 876 F.2d at 991).
Second, the “administrative record itself is so deficient as to preclude effective review” as
to whether the Department changed its interpretation of the PSLF regulation when it adopted the
Primary Purpose and School-like Setting standards. Id. Defendants argue that this lack of
evidence in the record supports their contention that no such change occurred. See, e.g., Dfs.’
MSJ Br. at 24. But there is also no evidence supporting their own assertion that the
Department’s practices have “been consistent and unchanged” all along, id. at 30, even after the
Court requested Defendants to direct it to any such evidence. See supra note 8. Certainly, the
Department’s reversals of its decisions relating to the Individual Plaintiffs and the ABA’s other
employees are consistent with such a change. But these handful of individual cases hardly
provide an adequate record for the Court to evaluate Plaintiffs’ claims. The extra-record
evidence offered by Plaintiffs is the only direct evidence relevant to the question of whether the
Department changed its interpretations of the PSLF regulation in the ways claimed by Plaintiffs.
For all the reasons explained in Section II(B)(3)(a), the extra-record evidence at issue here
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“shed[s] light on an issue not addressed by the administrative record itself,” and may therefore be
considered. Nat’l Min. Ass’n v. Jackson, 856 F. Supp. 2d 150, 158 (D.D.C. 2012).
In United Student Aid Funds, Judge Mehta recently reached the same conclusion in a
highly similar circumstance. In that case, the administrative record was “silent” on “two factual
issues central to resolving whether [a] Dear Colleague Letter announced a ‘new rule’ in a manner
that satisfie[d] the APA.” 237 F. Supp. 3d 1, 5 (D.D.C. 2017). Like here, the question in that
case was whether an agency action “constituted [a] type of change in position” that triggered
procedural obligations under the APA. Id. In that case, the court held that the relevant lack of
evidence in the record on the agency’s alleged change was a “‘gross procedural deficiency’ that
preclude[d] effective review of [the plaintiff’s] APA claims and thus warrant[ed] admission of
extra-record evidence.” Id. at 6 (quoting Hill Dermaceuticals, 709 F.3d at 47). Such is the case
here.
Defendants advance several arguments urging the Court not to consider the extra-record
evidence, but none of them are persuasive.
First, Defendants argue that the extra-record evidence should not be considered because
the documents at issue were not “before the agency” at the time of the decisions at issue. Defs.’
Opp. to Supp. at 4. But extra-record review of documents not before the agency is precisely
what the exceptions to the general rule in APA cases permit. See, e.g., Univ. of Colo. Health at
Mem’l Hosp. v. Burwell, 151 F. Supp. 3d 1, 13 (D.D.C. 2015) (“[A] party may seek to
supplement the record with ‘extra-judicial evidence that was not initially before the agency’ but
[which] the party ‘believes should nonetheless be included in the administrative record.’”
(alteration in original) (quoting WildEarth Guardians v. Salazar, 670 F. Supp. 2d 1, 5 n.4
(D.D.C. 2009))).
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Second, Defendants assert that the extra-record evidence is irrelevant, for a variety of
reasons—either because it postdates the agency actions at issue, or it relates to FedLoan
Servicing (as opposed to Department) employees, or it concerns individual borrowers or
employers not at issue in this case. Defs.’ Opp. to 2d Supp. at 4. None of these arguments
withstand scrutiny. The extra-record evidence is highly probative as to whether the Department
changed its interpretation of the PSLF regulation by introducing the Primary Purpose and
School-like Setting standards. The evidence concerning Voigt’s claim makes the point the most
clearly. As described in Section II(B)(3)(a), one email depicts a Department employee
announcing in August 2014 that the Department had “settled” on a “definition of public
education” that required such services to be provided “in a school or school-like setting.” See
Pls.’ Supp. Br., Ex. C. He did so only after the Department told Voigt in June 2012 that her
employment at AILA qualified, but well before the Department sent her a denial letter in
December 2014. And although the email does not concern Voigt’s case specifically, that is part
of the point—it demonstrates that the Department adopted a new standard for “public education
services” and then applied that standard across the board, to the borrower reflected in the email
as well as others, like Voigt.
As for Quintero-Millan and Burkhart, the extra-record evidence does indeed postdate
their denial letters. And to be sure, in some cases the evidence reflects communications from
FedLoan Servicing employees, as opposed to the Department’s—a distinction that in this context
hardly makes a difference given the integrated way in which ECFs are processed. See AR 143,
160–61 (guidance instructing that all ECF submissions for non-501(c)(3) not-for-profit
organizations be escalated to the Department). But in any event, the most important of these
emails reflects a Department employee discussing an earlier effort to implement the Primary
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Purpose standard to “public interest legal services” organizations. Pls.’ Supp. Br., Ex. B. And at
that time, the Department apparently tasked FedLoan Servicing employees with compiling a list
of ECFs that had to be reevaluated based on its introduction of this new standard. Id. This is
highly relevant evidence—notwithstanding the date of the communication itself, and that it
concerned processing of another borrower’s ECF—that the Department had previously
introduced the Primary Purpose standard as a general, broadly-applicable interpretation of the
PSLF regulation that required a reevaluation of prior determinations, contrary to its position
here.
Accordingly, the Court will grant Plaintiffs’ Motion to Allow for Extra-Record Review
and Supplemental Motion to Allow for Extra-Record Review, and, as reflected above, has
considered the extra-record evidence submitted by Plaintiffs in its evaluation of their claims.
Remedy
Under 5 U.S.C. § 706(2), courts must “hold unlawful and set aside agency action” that it
determines to be arbitrary and capricious. “When a reviewing court determines that agency
regulations are unlawful, the ordinary result is that rules are vacated—not that their application
to individual petitioners is proscribed.” Harmon v. Thornburgh, 878 F.2d 484, 495 n.21 (D.C.
Cir. 1989); see Fertilizer Inst. v. EPA, 935 F.2d 1303, 1313 (D.C. Cir. 1991).
Although the Court has wide discretion to apply an appropriate remedy in APA cases, it
sees no reason not to apply this usual remedy to the Primary Purpose and School-like Setting
standards. For their part, Defendants do not provide any particular reason why the Court should
not vacate these standards until the procedural deficiencies identified above are corrected.
Therefore, the Court will vacate the Primary Purpose and School-like Setting standards, as well
as remand the denial letters sent to Quintero-Millan, AR 237–39, Burkhart, AR 214–15, and
Voigt, AR 335–36, to the Department for further consideration consistent with this Opinion.
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Conclusion
For all of the above reasons, the Court will, in a separate Order, grant in part and deny in
part Plaintiffs’ Motion for Summary Judgment, ECF No. 17; grant in part and deny in part
Defendants’ Cross-Motion for Summary Judgment, ECF No. 22; and grant Plaintiffs’ Motion to
Allow for Extra-Record Review, ECF No. 24, and Supplemental Motion to Allow for Extra-
Record Review, ECF No. 35.
/s/ Timothy J. Kelly
TIMOTHY J. KELLY
United States District Judge
Date: February 22, 2019
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