United States District Court, Southern District of New York
August 29, 2003
MARISOL DE LA MOTA, FROEBEL CHUNGATA, AND OREN DORON, INDIVIDUALLY AND ON BEHALF OF A CLASS OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS, -AGAINST- THE UNITED STATES DEPARTMENT OF EDUCATION; DR. RODERICK R. PAIGE, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE UNITED STATES DEPARTMENT OF EDUCATION; NEW YORK LAW SCHOOL AND RUTGERS &MDASH; THE STATE UNIVERSITY OF NEW JERSEY, DEFENDANTS
The opinion of the court was delivered by: Loretta Preska, District Judge
MEMORANDUM AND ORDER
Plaintiffs Marisol De La Mota ("De La Mota"), Froebel Chungata ("Chungata"), and Oron Doron ("Doron") (collectively, the "plaintiffs") bring this Amended Complaint (the "Complaint" or "Compl."), individually and on behalf of a class of all others similarly situated, against defendants United States Department of Education ("DOE") and Dr. Roderick R. Paige, in his official capacity as Secretary of the DOE (together, the "government defendants"), New York Law School ("NYLS") and Rutgers — The State University of New Jersey ("Rutgers") (collectively, the "defendants"), arising out of the defendants' termination of federal student loan cancellation benefits, in violation of 20 U.S.C. § 1087ee(a)(2)(I) of the Higher Education Act ("HEA") and [ Page 2]
34 C.F.R. § 674.56(b). The government defendants moved to dismiss the Complaint as against them or, in the alternative, for summary judgment on those claims. By memorandum and order dated August 12, 2003, I granted in part and denied in part the government defendants' motion to dismiss. For the reasons stated herein, the government defendants' motion for summary judgment on the remaining claims is granted.
The facts of this case are recited in the August 12, 2003 decision, familiarity with which is assumed. Any additional facts necessary to this decision are set forth below.
Scope of Review This Court's scope of review under the APA is limited by the language of the APA itself. Section 706 of the APA provides, in relevant part:
The reviewing court shall —
(2) hold unlawful and set aside agency
action, findings, and conclusions found to
(A) arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance
with the law. . . .
5 U.S.C. § 706. See also Supreme Oil Co. v. Metropolitan Transp. Auth., 157 F.3d 148
, 151 (2d Cir. 1998) ("Under the APA, a federal [ Page 3]
court may set aside an agency's findings, conclusions or actions only if they are `arbitrary, capricious, an abuse of discretion, [or] otherwise not in accordance with the law. . . .'"
Furthermore, review under the APA is confined to the administrative record. See Natural Res. Def. Council, Inc. v. Muszynski, 268 F.3d 91, 97 (2d Cir. 2001) (review under the APA is "narrow" and "limited to examining the administrative record"); see also Roberts v. Morton, 549 F.2d 158, 160 (10th Cir. 1976) (additional evidence outside the administrative record not considered when reviewing agency decision under the APA).
II. DOE's Interpretation of the HEA
It is undisputed that Congress, by enacting the HEA, delegated to the Secretary of the DOE the authority to administer the Perkins Loan Program and promulgate regulations for its implementation. See 20 U.S.C. § 1221e-3. Consistent with that authority, the DOE issued regulations (the "Regulations") governing the administration of the Perkins Loan Program, including the circumstances under which loan cancellation is appropriate See 34 C.F.R. § 674.56(b)(1). In drafting its Regulations, the DOE adopted 1087ee(a)(2)(I) of the HEA and incorporated it into 34 C.F. 674.56(b).
Because the DOE was, therefore, interpreting its own Regulations in evaluating plaintiffs' requests for loan [ Page 4]
cancellation, its interpretation is given some degree of deference "unless plainly erroneous or inconsistent with the regulation." Taylor v. Vermont Dep't of Educ., 313 F.3d 768, 780 (2d Cir. 2002); see also Auer v. Robbins, 519 U.S. 452, 261 (1997); Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 413-13 (1945).*fn1 That the DOE's interpretation of its Regulations was not pursuant to formal notice and comment procedures does not deprive it of the deference such interpretations are otherwise due. see Barnhart v. Walton, 535 U.S. 212, 221 (2002) ("[T]he fact that the Agency previously reached its interpretation through means less formal than `notice and comment' rulemaking does not automatically deprive that interpretation of the judicial deference that is otherwise due."). Thus, during oral argument held on August 21, 2003, counsel agreed that the core question on summary judgment is whether the DOE's interpretation of those Regulations is consistent with the language of the HEA. [ Page 5]
Neither the HEA nor the Regulations define the meaning of "providing services" as it is used in the HEA and the Regulations. However, to the limited extent reflected in the record, the DOE has made consistent application of "providing services," viz., insisting that services be provided "exclusively" and "directly" to high-risk, low-income children and their families. see Taylor, 313 F.3d at 779-80 ("To the extent that there is ambiguity [in a regulation] . . . [the DOE's] consistent interpretation of its regulations is to be given controlling weight unless plainly erroneous or inconsistent with the regulation.").
The DOE's Student Financial Aid Handbook for 2001-2002 (the "Handbook") provides, in pertinent part, that "[t]o receive loan cancellation for being employed at a child or family services agency, a borrower must be providing services only to high-risk children who are from low-income communities." (Ex. E to the Declaration of Brian Smith, hereafter "Smith Decl.," at 5-58). This requirement has been included in the DOE's Handbook since at least the 1996-1997 edition. (Ex. F to the Smith Decl.). The language of the Handbook certainly accords with the application of the Regulations to plaintiffs' loans.
Consistent with the language in the Handbook, the Ombudsman, in his October 25, 2001 letter to De La Mota, found that Federal Perkins Loan cancellation was inappropriate because De La Mota [ Page 6]
did not provide services directly and exclusively to high-risk children from low-income communities. (Ex. B to the Declaration of Joyce De Moss, hereafter "De Moss Decl."). The Ombudsman's decision rested upon, inter alia, the language of the HEA and the language contained in the 2000-2001 Handbook, which was identical to the language in the 2001-2002 Handbook. (Id.).
Lastly, Brian Smith, a Program Specialist in the Policy Development Division ("PDD") of the DOE, determined that loan cancellation was appropriate only when a borrower provided services directly and exclusively to high-risk children from low-income communities. (Exs. B, D to the Smith Decl.). His interpretation relied primarily on the language of the HEA and the Regulations as well as on the guidance provided by the Handbook. (Id.).
Thus, the reading of "exclusively" and "directly" into the HEA and the Regulations is not an isolated interpretation but rather a consistent pattern of interpretation by several entities within the DOE vested with authority to interpret the Regulations. Giving even the minimal amount of deference due to the DOE's interpretation of its Regulations, the DOE's consistent requirement that services be both exclusive and direct is not plainly erroneous or inconsistent with the Regulations or the HEA. [ Page 7]
With regard to plaintiff De La Mota, she herself admits, in her letter to the Office of the Ombudsman at DOE, that she does not work directly with high-risk children from low-income communities. (Ex. A to the De Moss Decl.) ("Anybody who works in the capacity of an attorney for the benefit of children [does] not work directly with the children."). Furthermore, based on the job description provided to the Ombudsman, the Ombudsman determined that De La Mota did not meet the criteria specified in the Regulations because, inter alia, she was providing services to the City of New York, not directly to high-risk children. In light of the DOE's interpretation of its Regulations, the denial of loan cancellation benefits to De La Mota was not arbitrary or capricious.
Although there is no administrative record with regard to plaintiff Chungata, the denial of loan cancellation benefits to him was not arbitrary or capricious for the same reasons as for plaintiff De La Mota, because both plaintiffs performed the same function within ACS.
With regard to plaintiff Doron, Smith determined that, based on the job description from his supervisor that Doron provided to Rutgers, Doron did not provide services directly to high-risk children. (Ex. D to the Smith Decl.). In Smith's email to Doron, Smith stated that, "[s]uccessful prosecution of child abuse or neglect case[s] may assist other employees of ACS to [ Page 8]
provide services to high-risk children, but you yourself do not provide such services." (Id). As with De La Mota, in light of the DOE's consistent interpretation of its Regulations, the denial of loan cancellation benefits to Doron was also not arbitrary or capricious.
Plaintiffs' counsel argued quite persuasively at oral argument that DOE's interpretation may hinder Perkins Loan cancellation for many lawyers who do the type of service that these plaintiffs do. However, the legislative history of the statute reveals that Congress established the Child and Family Service Cancellation for Federal Perkins Loans "to apply to employees working in Head Start programs, child care and child development programs, and programs providing health, mental health and psychological services, as well as social services to this population." H.Rep. No. 102-447 at 66 (1992), 1992 WL 40807, at *66. That Congress apparently intended this loan cancellation program to apply primarily to professionals other than lawyers is a complaint whose remedy lies with Congress and not in the Court's substituting its judgment for that of the legislature.
In sum, the DOE's interpretation was neither "plainly erroneous" nor "inconsistent with the regulation," see Taylor, 313 F.3d at 780, and the agency action with regard to plaintiffs was not arbitrary, capricious, an abuse of discretion, or [ Page 9]
otherwise not in acordance with the law, see 5 U.S.C. § 706. Therefore, the government defendants are entitled to summary judgment on the remaining claims.
For the foregoing reasons, the government defendants' motion for summary judgment (docket entry no. 18) is granted.
Counsel for the remaining parties shall confer and inform the Court no later than September 15, 2003 as to how they wish to proceed.