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66860 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and RegulationsWReier-Aviles on DSKGBLS3C1PROD with RULES2would have no choice but to pass thatcost on to students.Discussion: We do not agree that§ 600.9 of these final regulations willresult in an unfunded mandate by theFederal Government, since many Stateswill already be compliant and optionsare available that should permit otherStates to come into compliance withonly minimal changes in procedures orrequirements if they want to provideacceptable State authorizations forinstitutions. The regulations alsoinclude a process for an institution torequest additional time to becomecompliant. Furthermore, if a State isunwilling to become compliant with§ 600.9, there is no requirement that itdo so. We also do not agree that Stateswill see coming into compliance with§ 600.9 as a revenue-generatingopportunity, since any required changesare likely to be minimal.Changes: None.ImplementationComment: Some commenters believedthat the proposed regulations areambiguous in meaning and applicationor are vague in identifying which Statepolicies are sufficient. For example, oneState higher education official suggestedthat proposed § 600.9 should beamended to differentiate amongauthorities to operate arising fromadministrative authorization of privateinstitutions from legislation and fromconstitutional provisions assigningresponsibility to operate publicinstitutions. The commenter believedthat proposed § 600.9 obfuscated thevarious means of establishing Stateauthorization and the fundamental rolesof State legislatures and Stateconstitutions and recommended thatthese means of authorization and rolesof State entities should be clarified.Several commenters questioned whatauthorizing an institution to offerpostsecondary programs entails. A fewcommenters pointed out that there is awide array of State approval methodsand many institutions were foundedbefore the creation of State licensingagencies. An association representingState higher education officials urgedthat ample discretionary authorityexplicitly be left to the States. Onecommenter indicated that proposed§ 600.9 failed to address when morethan one State entity is responsible fora portion of the oversight in Stateswhere dual or multiple certifications arerequired. Another commenter believedthat proposed § 600.9 did notadequately address the affect aninstitution’s compliance with proposed§ 600.9 would have if one of twodifferent State approvals lapsed andboth were necessary to be authorized tooperate in the State or if the State ceasedto have a process for handlingcomplaints but the institutionscontinued to be licensed to offerpostsecondary education. Somecommenters asked whether specificState regulatory frameworks would meetthe provisions of the proposedregulations. For example, onecommenter believed that, under Statelaw and practice in the commenter’sState, the private institutions in theState already met the requirements inproposed § 600.9 that the commenterbelieved included: (1) The institutionbeing authorized by a State through acharter, license, approval, or otherdocument issued by an appropriateState government agency or State entity;(2) the institution being authorizedspecifically as an educationalinstitution, not merely as a business oran eleemosynary organization; (3) theinstitution’s authorization being subjectto adverse action by the State; and (4)the State having a process to review andappropriately act on complaintsconcerning an institution. Thecommenter noted that all postsecondaryinstitutions in the State must eitherhave a ‘‘universal charter’’ awarded bythe legislature or be approved to offerpostsecondary programs. Thecommenter noted that these institutionsare authorized as educationalinstitutions, not as businesses. Inanother example, a commenter fromanother State believed that current lawin the commenter’s State addresses andcovers many of the requirementsoutlined in proposed § 600.9. Thecommenter noted that many of the Statelaws are enforced by the State’sAttorney General and attempt to protectindividuals from fraud and abuse in theState’s system of higher education.However, the commenter believed thatit remained unclear whether the Statewould be required to create an oversightboard for independent institutions likethe commenter’s institution or would besubject to State licensure requirementsvia the State licensure agency. Thecommenter believed that either optionwould erode the autonomy of thecommenter’s institution and add layersof bureaucracy to address issuescurrently covered by State and Federallaws.One commenter suggested thatproposed § 600.9(a)(1) be amended toprovide that authorization may be basedon other documents issued by anappropriate State government agencyand delete the reference to ‘‘state entity.’’The commenter believed that thedocuments would affirm or convey theVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2authority to the institution to operateeducational programs beyond secondaryeducation by duly enacted Statelegislation establishing an institutionand defining its mission to provide sucheducational programs or by dulyadopted State constitutional provisionsassigning authority to operateinstitutions offering such educationalprograms.Some commenters questionedwhether there were any factors that aState may not consider when grantinglegal authorization. One commenterrequested confirmation that under theproposed regulations authorization doesnot typically include State regulation ofan institution’s operations nor does itinclude continual oversight. A fewcommenters expressed concernregarding the involvement of the Statesin authorization and that a State’s rolemay extend into defining, for example,curriculum, teaching methods, subjectmatter content, faculty qualifications,and learning outcomes. One commenterwas concerned that proposed § 600.9would create fiscal constraints on aninstitution due to, for example,additional reporting requirements orwould impose homogeneity uponinstitutions that would compromisetheir unique missions. One commenterstated that the Department does nothave the authority to review issues ofacademic freedom or curriculumcontent.One commenter wanted assurancesthat the Department does not intend touse the proposed regulations tostrengthen State oversight of collegesbeyond current practices. Onecommenter was concerned that Statescould exercise greater and moreintrusive oversight of private colleges.One commenter suggested that theDepartment grandfather all institutionscurrently operating under a State’sregulatory authority without adetermination of its adequacy. Anotherindicated that private colleges anduniversities operating under a Stateapprovedcharter issued prior to 1972are already subject to State regulation,even as they are exempt from Statelicensing. One commenter believed thatthe Department should accept Statelaws and regulations that can bereasonably interpreted as meeting theregulatory requirements.Discussion: We agree with thecommenters who were concerned thatproposed § 600.9 may be viewed asambiguous in describing a minimalstandard for establishing State legalauthorization. We agree, in principle,with the State higher education officialwho suggested that proposed § 600.9should be amended to differentiate the
Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66861types of State authorizations forinstitutions to operate, but not basedupon whether the source of theauthorization is administrative orlegislative. We believe the distinctionfor purposes of Federal programs iswhether the legal entities arespecifically established under Staterequirements as educational institutionsor instead are established as business ornonprofit charitable organizations thatmay operate without being specificallyestablished as educational institutions.We believe this clarification addressesthe concerns of whether specific States’requirements were compliant with§ 600.9 as provided in these finalregulations.We continue to view Stateauthorization to offer postsecondaryeducational programs as a substantiverequirement where the State takes anactive role in authorizing an institutionto offer postsecondary education. Thisview means that a State may choose anumber of ways to authorize aninstitution either as an educationalinstitution or as a business or nonprofitcharitable organization without specificauthorization by the State to offerpostsecondary educational programs.These legal means include provisions ofa State’s constitution or law, Statecharter, or articles of incorporation thatname the institution as established tooffer postsecondary education. Inaddition, such an institution also maybe subject to approval or licensure byState boards or State agencies thatlicense or approve the institution tooffer postsecondary education. If a legalentity is established by a State as abusiness or a nonprofit charitableorganization and not specifically as aneducational institution, it may besubject to approval or licensure by Stateboards or State agencies that license orapprove the institution to offerpostsecondary education. The key issueis whether the legal authorization theinstitution receives through these meansis for the purpose of offeringpostsecondary education in the State.In some instances, as one commenternoted, a State may have multiple Stateentities that must authorize aninstitution to offer postsecondaryprograms. In this circumstance, tocomply with § 600.9, we would expectthat the institution would demonstratethat it was authorized to offerpostsecondary programs by all of therelevant State entities that conferredsuch authorizations to that type ofinstitution.We do not believe it is relevant thatan institution may have beenestablished prior to any State oversight.We are concerned that institutionscurrently be authorized by a State tooffer postsecondary education, althoughwe recognize that a State’s currentapproval for an institution may be basedon historical facts. We therefore do notbelieve it is necessary to grandfatherinstitutions currently operating under aState’s regulations or statutes nor are wemaking any determination of theadequacy of a State’s methods ofauthorizing postsecondary educationapart from meeting the basic provisionsof § 600.9 in these final regulations. If aprivate college or university is operatingunder a State-approved charterspecifically authorizing the institutionby name to offer postsecondaryeducation in the State, a State mayexempt an institution from any furtherState licensure process. Therequirement to be named specifically ina State action also applies if theinstitution is exempt from Statelicensure based upon another condition,such as its accreditation by a nationallyrecognized accrediting agency or yearsin operation.Further, these regulations only requirechanges where a State does not have anyauthorizing mechanisms for institutionsother than an approval to operate as abusiness entity, or does not have amechanism to review complaintsagainst institutions. We anticipate thatmany States already meet theserequirements, and will have time tomake any necessary adjustments to meetthe needs of the institutions.With regard to the commenters whowere concerned with the potential scopeof a State’s authority, we note that theDepartment does not limit a State’soversight of institutions, and only setsminimum requirements for institutionsto show they are legally authorized bya State to provide educational programsabove the secondary level. Theseregulations neither increase nor limit aState’s authority to authorize, approve,or license institutions operating in theState to offer postsecondary education.Further, nothing in these finalregulations limits a State’s authority torevoke the authorization, approval, orlicense of such institutions. Section600.9 ensures that an institutionqualifies for Federal programs based onits authorization by the State to offerpostsecondary education.Changes: We are amending proposed§ 600.9 to distinguish the type of Stateapprovals that are acceptable for aninstitution to demonstrate that it isauthorized by the State to offereducational programs beyond thesecondary level.An institution is legally authorized bythe State if the State establishes theinstitution by name as an educationalinstitution through a charter, statute,constitutional provision, or other actionto operate educational programs beyondsecondary education, includingprograms leading to a degree orcertificate. If, in addition, the State hasan applicable State approval orlicensure process, the institution mustalso comply with that process to beconsidered legally authorized. However,an institution created by the State maybe exempted by name from any Stateapproval or licensure requirementsbased on the institution’s accreditationby an accrediting agency recognized bythe Secretary or based upon theinstitution being in operation for at least20 years.If the legal entity is established by aState as a business or a nonprofitcharitable organization and notspecifically as an educationalinstitution, the State must have aseparate procedure to approve or licensethe entity by name to operate programsbeyond secondary education, includingprograms leading to a degree orcertificate. For an institution authorizedunder these circumstances, the Statemay not exempt the entity from theState’s approval or licensurerequirements based on accreditation,years in operation, or other comparableexemption.The following chart and examplesillustrate the basic principles ofamended § 600.9:WReier-Aviles on DSKGBLS3C1PROD with RULES2VerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2
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