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Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools

United States Court of Appeals, District of Columbia Circuit

April 21, 2017

Consumer Financial Protection Bureau, Appellant
v.
Accrediting Council For Independent Colleges And Schools, Appellee

          Argued February 2, 2017

         Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01838)

          Lawrence DeMille-Wagman, Senior Litigation Counsel, Consumer Financial Protection Bureau, argued the cause for appellant. With him on the briefs was John R. Coleman, Deputy General Counsel.

          Allyson B. Baker argued the cause for appellee Accrediting Council For Independent Colleges and Schools. With her on the brief were Andrew Hernacki, Benjamin E. Horowitz, Kimberly Culp Cloyd, and Kenneth J. Ingram.

          Andrew J. Pincus, Ori Lev, Stephen C.N. Lilley, Matthew A. Waring, Kathryn Comerford Todd, and Steven P. Lehotsky were on the brief for amicus curiae The Chamber of Commerce of the United States of America in support of appellee.

          Michael C. Gartner was on the brief for amicus curiae Accrediting Council for Continuing Education & Training, Inc. ("ACCET"), et al. in support of appellee.

          Before: Henderson and Wilkins, Circuit Judges, and Sentelle, Senior Circuit Judge.

          OPINION

          Sentelle Senior Circuit Judge.

         The Consumer Financial Protection Bureau ("CFPB" or the "Bureau") issued a civil investigative demand to the Accrediting Council for Independent Colleges and Schools ("ACICS"), a non-profit organization that accredits for-profit colleges. The civil investigative demand's "Notification of Purpose" stated that the CFPB sought information relating to "unlawful acts and practices in connection with accrediting for-profit colleges." When ACICS refused to comply, the CFPB filed a petition to enforce the civil investigative demand. The district court denied the petition. Because the civil investigative demand did not comply with the governing statute, see 12 U.S.C. § 5562(c)(2), we affirm.

         I.

         While the Department of Education does not accredit for-profit colleges, the Secretary of Education recognizes national accrediting agencies that set accreditation standards for those for-profit institutions. See Prof'l Massage Training Ctr., Inc. v. Accreditation All. of Career Schs. & Colls., 781 F.3d 161, 171 (4th Cir. 2015); Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1044 (11th Cir. 2015); see also 20 U.S.C. § 1099b; 34 C.F.R. §§ 602.1-602.50. Indeed, the term "[a]ccredited" is defined in the Department's regulations as "[t]he status of public recognition that a nationally recognized accrediting agency grants to an institution or educational program that meets the agency's established requirements." 34 C.F.R. § 600.2; see also id. § 602.3. Recognized accrediting agencies are intended to be "reliable authorities regarding the quality of education or training offered by the institutions or programs they accredit." Id. § 602.1(a); see also 20 U.S.C. §§ 1001(c), 1099b(a). Importantly, students at accredited for-profit colleges are eligible to receive federal student aid funding. See 20 U.S.C. § 1002(b)(1)(D); 34 C.F.R. § 600.5(a)(6); Career Educ., Inc. v. Dep't of Educ., 6 F.3d 817, 817-18 (D.C. Cir. 1993); see also Urquilla-Diaz, 780 F.3d at 1043-44.

         ACICS is a non-profit organization that accredits for-profit colleges in the United States. A council consisting of fifteen commissioners carries out the organization's accreditation functions, while the organization's president, who also serves as the Chief Executive Officer, oversees the day-to-day operations. The Secretary has recognized ACICS as a national accreditor since 1956, although the Secretary withdrew ACICS's status as a recognized accreditor in 2016.

         The most important aspect of ACICS's accreditation process is the "peer review" component, which involves volunteer evaluators from ACICS member institutions and non-member institutions reviewing other institutions. The confidential accreditation process includes a self-evaluation by the institution, an on-site visit, a review of the institution's operations, and a written report from the evaluators. After determining whether the institution complies with ACICS's accrediting standards, the council makes a final accrediting decision. Relevant to this litigation, ACICS asserts that, as an accrediting agency, it plays no role in the student loan process.

         The CFPB has investigated for-profit colleges for deceptive practices in connection with their student-lending activities. See, e.g., CFPB v. Corinthian Colls., Inc., No. 1:14-cv-7194, 2015 WL 10854380 (N.D. Ill. Oct. 27, 2015); CFPB v. ITT Educ. Servs., Inc., No. 1:14-cv-292, 2015 WL 1013508 (S.D. Ind. Mar. 6, 2015). On August 25, 2015, the CFPB issued a civil ...


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