## Facts

- Federal student-aid eligibility under Title IV depends, in part, on an institution’s accreditation by a Secretary-recognized accrediting agency under the Higher Education Act and implementing regulations (34 C.F.R. pt. 602).
- The Accrediting Council for Independent Colleges and Schools (ACICS) was a national accreditor for many for-profit institutions, including Corinthian Colleges and ITT Technical Institute.
- Investigations and litigation alleged that certain ACICS-accredited institutions engaged in placement-rate fraud and improper recruiting practices during the relevant period.
- During ACICS’s recognition review, Department staff assessed both (i) concerns tied to specific “problem schools” and (ii) whether ACICS’s standards and enforcement practices satisfied federal recognition criteria.
- ACICS submitted extensive materials addressing compliance, including about 36,000 pages responding to the Department’s “Part II” inquiries about standards, monitoring, and enforcement.
- Department staff concluded ACICS was noncompliant with multiple recognition criteria; NACIQI recommended denial of continued recognition.
- A Senior Department Official denied renewal of recognition, and the Secretary (December 12, 2016) affirmed, finding ACICS failed to show compliance with multiple regulatory criteria (including student achievement, monitoring/enforcement, and reporting of fraud).
- ACICS sued under the Administrative Procedure Act (APA), and both sides filed cross-motions for summary judgment.

## Issues

1. Whether the Secretary’s denial of continued recognition was arbitrary and capricious under APA § 706(2).
2. Whether the agency unlawfully failed to consider significant portions of ACICS’s evidentiary submissions, including the Part II materials.
3. Whether the appropriate remedy, if error existed, was vacatur or remand without vacatur.

## Decision

- The court granted in part and denied in part both parties’ motions for summary judgment.
- The court held the Secretary’s decision was arbitrary and capricious in significant part because it did not adequately show consideration of important evidence (including ACICS’s Part II submission) and lacked sufficient explanation for several findings of noncompliance.
- The court remanded the matter to the Secretary for further proceedings consistent with the opinion.
- The court declined to vacate the denial, ordering remand without vacatur due to the combination of decisionmaking defects and the potential disruption vacatur could cause for institutions and Title IV administration.

## Legal Principles

- Under the APA, an agency must consider relevant evidence, address important aspects of the problem, and provide a reasoned explanation that connects the record to the conclusions reached.
- Reliance on staff conclusions that did not fully analyze a regulated entity’s substantial evidentiary submission can render the final agency action arbitrary and capricious when the decision does not otherwise demonstrate meaningful consideration of that evidence.
- An agency may consider historical failures when evaluating present compliance, but it must explain how past conduct supports a current noncompliance finding, particularly where the party claims remedial changes.
- When setting aside agency action, a court may remand without vacatur after weighing (i) the seriousness of the agency’s errors and (ii) the disruptive consequences of vacating the action.

## Conclusion

The court required the Department to reexamine and better explain its denial of ACICS’s continued recognition, finding that key noncompliance determinations did not adequately account for ACICS’s record submissions or provide sufficient reasoning, and it preserved the denial during remand to avoid disruption to the federal student-aid system.


Accrediting Council for Indep. Colls. & Schs. v. DeVos, 303 F. Supp. 3d 77 (D.D.C. 2018)