[00:00:04] Speaker 01: The first argued case this morning is number 18-12-13, Ashford University against the Secretary of Veterans Affairs, Mr. Okawa. [00:00:18] Speaker 03: May it please the Court, Kwaku Okawa for the petitioner, Ashford University. [00:00:24] Speaker 02: The Department's actions in this case... There's a jurisdictional issue here, which... Yes, Your Honor. [00:00:29] Speaker 02: ...oddly hasn't been briefed by the parties, and that is whether the [00:00:34] Speaker 02: Agency action here is final agency action given the fact that there are various levels of review within the Agency through the level of the secretary Which haven't been exhausted yet? [00:00:49] Speaker 02: How is it whether this is an adjudication or? [00:00:53] Speaker 02: rulemaking Either way, there's a finality requirement [00:00:58] Speaker 02: And how is it that we can possibly review this at this stage in the proceedings when these other steps within the agency have not been taken? [00:01:08] Speaker 03: So the court has held that, this court has held that Section 502 grants authority to conduct a pre-enforcement review of rules. [00:01:16] Speaker 02: Oh, sure. [00:01:17] Speaker 02: It's not a pre-enforcement review, but like, in a rulemaking situation, if you have notice of proposed rulemaking, you can't go to court to review that. [00:01:24] Speaker 02: You've got to wait until the agency [00:01:28] Speaker 02: acts finally on the rule. [00:01:30] Speaker 02: And here, even if you view this as a rule, and I think it was a big question as to whether it is, the agency hasn't finally acted on it. [00:01:40] Speaker 02: The Secretary could say, no, no, that's not right. [00:01:45] Speaker 02: Your determination here is incorrect. [00:01:48] Speaker 02: I have a different view of the statute. [00:01:51] Speaker 02: Why don't we have to wait for a decision of the Secretary before we can do anything, before we can review this? [00:01:58] Speaker 03: There's no separate decision of the secretary to come. [00:02:02] Speaker 02: The letter talks about whole procedure within the agency for review. [00:02:10] Speaker 03: That's right. [00:02:11] Speaker 03: And so let's talk about what that procedure is. [00:02:14] Speaker 03: There is a procedure whereby, first, the director of the regional office makes a decision. [00:02:20] Speaker 03: In making that decision, the director exercises delegated authority of the secretary. [00:02:26] Speaker 03: You can find that delegation in 38 CFR 4211A6. [00:02:32] Speaker 03: So it's an action of the secretary, the letter. [00:02:36] Speaker 03: then the committee process that's described is not some separate review of the rule or the determination about whether there's been a violation. [00:02:47] Speaker 03: What it is is a group of people who get together and they provide recommendations to the director about what the sanction ought to be. [00:02:55] Speaker 03: So everything that is to be done about what interpretation of main campus applies to control what the Arizona state approving agency can do, that's done. [00:03:07] Speaker 03: And that's among other reasons. [00:03:10] Speaker 02: I'm not sure that I understand why that's the case. [00:03:14] Speaker 02: the committee have the authority to determine whether there's been a violation as opposed to just the question of what the sanctions should be. [00:03:22] Speaker 03: That's stated in the, it's 38 CFR 21.4211E1, which describes the duties and responsibilities of the committee. [00:03:35] Speaker 03: And it says that the function of the Committee on Educational Allowances is to make recommendations to the director of the VA Regional Processing Office, who's the person who issued the letter, in connection with specific cases. [00:03:48] Speaker 03: So it makes recommendations about the kinds of [00:03:51] Speaker 03: sanctions that are described in the letter. [00:03:53] Speaker 02: But I don't see that that's limited to sanctions. [00:03:57] Speaker 02: Why don't they make a determination as to whether there's been a violation here as well? [00:04:01] Speaker 03: This is a board that has no authority to make legal determinations. [00:04:06] Speaker 03: They can make determinations as to the fact going to the sanctions. [00:04:10] Speaker 03: Actually, I think the letter is fairly clear about that. [00:04:15] Speaker 03: So on page three of the appendix, the director says if [00:04:20] Speaker 03: if there's no remedy of this deficiency that I've already found, I'm going to first make a suspension. [00:04:28] Speaker 03: So that's before it goes to the committee. [00:04:30] Speaker 03: I will suspend payment of educational assistance and suspend approval of new enrollments and re-enrollments in your online programs. [00:04:37] Speaker 03: Nothing to do with the committee. [00:04:39] Speaker 03: Then the committee comes into play, and the committee will assist me in making a determination as to whether educational assistance should be discontinued for all individuals enrolled in your online courses, [00:04:50] Speaker 03: And if appropriate, and it goes on to describe other sanctions that may be imposed. [00:04:55] Speaker 02: So it talks about review by the director, education service and the director of education service, who's a superior officer within the agency, right? [00:05:06] Speaker 03: I don't know the answer to that, whether it's superior to the Regional Director. [00:05:10] Speaker 02: Well, you would think so, but, and so it says that the, it's after your request to review by such decision by the Director of Educational Services pursuant to 21-42-16. [00:05:23] Speaker 02: Doesn't that director have the authority to determine whether there's been a violation? [00:05:29] Speaker 03: Well, that's, I believe, a review of the decision that the committee has just assisted the director in making. [00:05:39] Speaker 03: So again, not the suspension. [00:05:41] Speaker 04: Right, but the way the regulation is structured, it really strongly suggests that the director of education service, I mean, it says it right in 4216B, has the authority to affirm, reverse, or remand the original decision. [00:05:59] Speaker 04: So, I mean, this is clearly a review structure in place here where what this VA regional processing office director says, does, wants to do isn't the final word inside the VA. [00:06:15] Speaker 04: It's this other person, the director of education service. [00:06:18] Speaker 03: That may be. [00:06:19] Speaker 03: So we've stepped back because I think there are two points to be made here. [00:06:22] Speaker 03: One about final agency action and the other about ripeness, which is actually where I think this sort of falls. [00:06:32] Speaker 03: So final agency action, once there's a rule that's been revealed and revealed in the form of an interest. [00:06:40] Speaker 02: Once there's a rule that's been adopted by the agency, just the fact that some lower level official [00:06:46] Speaker 02: has announced a rule that's subject to review within the agency doesn't make a final agency act. [00:06:53] Speaker 02: Let's assume that there is in fact a review procedure within the agency to determine whether there's been a violation and that the superior officers within the agency have the ability to make a determination that this letter's view of the statute is correct or not correct. [00:07:14] Speaker 02: isn't it the case that if there is such review within the agency there's no final agency action and we lack jurisdiction? [00:07:21] Speaker 03: If it's already been applied [00:07:23] Speaker 03: to the party, right? [00:07:25] Speaker 03: So I take the court's point. [00:07:28] Speaker 03: Certainly, if there were an interpretive rule, the agency says, henceforth, we're going to think about these kinds of problems, what unreasonable means within the meaning of the statute in the following way. [00:07:39] Speaker 03: But it's been applied to no one. [00:07:40] Speaker 03: Ordinarily, that doesn't give rise to final agency action or immediate review until application. [00:07:46] Speaker 03: Well, here is the application. [00:07:46] Speaker 02: There isn't any final agency action until the suspension has occurred. [00:07:53] Speaker 02: That doesn't happen under this letter until further procedures are followed. [00:08:00] Speaker 03: If that were how final agency applies in this context, there would be two consequences, which would be quite severe. [00:08:07] Speaker 03: And I think this goes to the ripeness point. [00:08:09] Speaker 03: The question of ripeness is whether issues fit for review, which are fundamentally legal. [00:08:15] Speaker 03: These are. [00:08:16] Speaker 03: And also the hardship visited on the parties. [00:08:19] Speaker 03: We would be in the situation of a suspension will fall on 60 days. [00:08:22] Speaker 03: The committee comes later. [00:08:24] Speaker 03: So there's no place to go for review. [00:08:26] Speaker 03: And the government says there may be no place for Ashford to get review ever. [00:08:33] Speaker 02: That can't be right. [00:08:35] Speaker 02: I think that can't be right. [00:08:37] Speaker 02: That's a ridiculous position. [00:08:38] Speaker 03: But the point is that there's no clear path other than the 502 path for Ashford to get review of a determination. [00:08:46] Speaker 02: That's not true. [00:08:47] Speaker 02: The statute 511 provides for review of decisions of the secretary. [00:08:55] Speaker 02: This is a decision relating to benefits. [00:09:01] Speaker 02: Under the statute, this goes from this initial decision to the Board of Veterans' Appeals up to the Veterans Court and up to us. [00:09:10] Speaker 03: Avenue of review is available to you and there are always two avenues of review available when there's a when there's a rule that is later applied when it's first announced and this is true not just in the 502 context but think of under the Hobbs Act or any of the other special agency review statutes the rule comes out you you know or it's revealed sometimes in a letter sometimes informally and properly and the parties affected [00:09:35] Speaker 03: those suffering a legal wrong or suffering or who are aggrieved by the agency action in the language of 5 U.S.A. [00:09:43] Speaker 03: 702 have a right to review. [00:09:46] Speaker 03: When that rule is then applied later on, even if after the 60 day period. [00:09:51] Speaker 02: It's not a question of application. [00:09:53] Speaker 02: It's a question of whether the rule is a rule and whether this is the agency's view of what the law is or whether that could be changed by further proceedings within the agency. [00:10:04] Speaker 03: But it's the applications, the initiation of an enforcement action. [00:10:08] Speaker 03: And let me point to Justice Kagan's decision and her plurality in Kaiser v. Wilkie just in June. [00:10:15] Speaker 03: She says, an enforcement action must rely on a legislative rule. [00:10:19] Speaker 03: which, to be valid, must go through notice and comment. [00:10:22] Speaker 03: So here we have an enforcement action. [00:10:24] Speaker 03: The government completely agrees. [00:10:25] Speaker 02: It seems to me you're shifting to the question of whether this is a reviewable rule or an enforcement action, which I don't mean to take up all of your time on the finality issue. [00:10:35] Speaker 02: It's a concern. [00:10:36] Speaker 03: I understand the court's concern. [00:10:38] Speaker 03: I'm actually trying to address it by pointing to what Justice Kagan is saying here. [00:10:44] Speaker 03: When there's going to be an enforcement action, [00:10:47] Speaker 03: The first question is, where did the rule come from that's being enforced? [00:10:51] Speaker 03: So if there's an enforcement action, there has to be an action legislative in character. [00:10:55] Speaker 03: It has to come from Congress, or it has to come from the agency within its legislative power. [00:11:00] Speaker 03: If they're starting an enforcement action, they can't point to the place where they said, here's the rule. [00:11:04] Speaker 03: People have to follow it. [00:11:06] Speaker 02: That's the nature of the- I don't understand that position. [00:11:08] Speaker 02: I mean, under Bell Aerospace and various other decisions, the fact that in the course of an adjudication, [00:11:15] Speaker 02: there is an announcement of a principle or a governing principle. [00:11:20] Speaker 02: That doesn't make it a rule. [00:11:22] Speaker 02: It's still an adjudication. [00:11:23] Speaker 02: And why isn't that the situation here? [00:11:26] Speaker 03: It depends on the character of what the agency sets. [00:11:30] Speaker 03: So let's take, again, unreasonableness. [00:11:33] Speaker 03: What the agency says is, we look at the following circumstances. [00:11:37] Speaker 03: We give more weight to this and this. [00:11:38] Speaker 03: And we actually think that, as a broad matter, [00:11:42] Speaker 03: In general terms, when you see prices this far above cost, it's going to give rise to a violation. [00:11:49] Speaker 03: If they said instead, henceforth, all prices 27% above cost. [00:11:56] Speaker 03: are violations of the unreasonableness requirement. [00:11:59] Speaker 03: That would be a rule. [00:12:00] Speaker 03: And so you have what Judge Edwards says in the Safari Club case. [00:12:04] Speaker 03: An agency can't escape the rulemaking requirements of 553 by proceeding through adjudication. [00:12:10] Speaker 03: Wyman Gordon says the same thing. [00:12:11] Speaker 03: And I think Justice Kagan is pointing to the same understanding. [00:12:14] Speaker 02: Yeah, but it's not the case that just because in the course of an adjudication, there is a rule that's announced, that becomes a rule as opposed to an adjudication. [00:12:27] Speaker 02: That's what Bell Aerospace says, that's what other cases say too. [00:12:32] Speaker 03: Right, if you're thinking about must the adjudication procedures be followed, must the rulemaking procedures be followed. [00:12:38] Speaker 02: It's not impermissible to announce a principle in the course of an adjudication. [00:12:42] Speaker 02: That happens all the time. [00:12:44] Speaker 02: That doesn't turn the adjudication [00:12:46] Speaker 02: into a rulemaking or require that they proceed by rulemaking instead of adjudication that agencies have discretion as to which path to follow. [00:12:56] Speaker 03: They have discretion about which path to follow, but if they do something that has the character of a rule, they have to follow the rulemaking requirements. [00:13:04] Speaker 04: And that's Wyman Goodwin saying... So is it your position that in any adjudication if [00:13:13] Speaker 04: The adjudicating body has to confront a novel legal issue. [00:13:17] Speaker 04: It's always a rule, whatever they do. [00:13:20] Speaker 03: No. [00:13:22] Speaker 03: So we're limited here to enforcement actions. [00:13:25] Speaker 03: The enforcement character, one, that's defined. [00:13:28] Speaker 03: Two, if the nature of the legal interpretation is separable from the facts. [00:13:36] Speaker 03: And three, if it's necessary to the initiation of the enforcement action, all of those are clearly met here. [00:13:42] Speaker 04: And that goes again to a- But to me, it seems like any time where in an adjudicatory process, [00:13:49] Speaker 04: The agency, the board, the actor has to. [00:13:53] Speaker 04: Confront a novel legal issue and then has to make a call on that question in terms of applying the law to the facts of the case. [00:14:02] Speaker 04: No, no, your view that that's a rule and not an adjudication and I don't understand why that's right. [00:14:08] Speaker 03: So if I come back to my second point, there's a legal interpretation separate from the facts. [00:14:14] Speaker 03: We completely agree with Your Honor and with the government that a mere application of law to fact is not a rule. [00:14:22] Speaker 03: It's when they say, here's what main campus means. [00:14:27] Speaker 03: We got this interpretation from this other regulation. [00:14:29] Speaker 03: Here's where it's defined. [00:14:31] Speaker 03: We're porting it over these two regulations. [00:14:32] Speaker 02: That happens all the time in adjudications. [00:14:36] Speaker 02: I mean, even your coalition case that you rely on recognizes that you can have law that is announced in the course of adjudication and doesn't create an obligation to engage in rulemaking. [00:14:53] Speaker 03: quite a different circumstance where they say, we know there's no order because there's been no adjudication. [00:15:01] Speaker 03: We're saying, OK, there's no order here for a very different reason. [00:15:06] Speaker 03: There's clearly not an order because it's not a final disposition. [00:15:10] Speaker 03: A final disposition is part of the APA's definition of what an order is. [00:15:15] Speaker 02: What has happened here, by the way, within the agency, [00:15:19] Speaker 02: I mean, is this just sitting there? [00:15:21] Speaker 02: This letter was issued and nothing has happened? [00:15:25] Speaker 03: And this has been staged by voluntary agreement of the parties pending the court's determination. [00:15:33] Speaker 03: Why? [00:15:35] Speaker 03: The government was willing to grant a stay, and my client was willing to accept that while we litigated the issue. [00:15:41] Speaker 02: So you both agreed not to proceed to final judgment. [00:15:44] Speaker 03: Well, we agreed to litigate the case. [00:15:47] Speaker 03: Again, I think that speaks to, here's what's happened. [00:15:52] Speaker 03: They're settled on what they think a main campus means. [00:15:57] Speaker 03: I see I'm over my time, and I would like to reserve a minute or two. [00:16:00] Speaker 01: We've exhausted on this issue, but I want to be sure that you have a chance to, assuming that it's all properly before us, that you have a chance to raise the merits. [00:16:10] Speaker 01: So let's start again with 10 minutes or so. [00:16:13] Speaker 01: Is there anything else you need to tell us about the substance? [00:16:17] Speaker 03: Well, so, yes, about going to the substance. [00:16:23] Speaker 03: Again, I think the key point here on substance, really, there are two. [00:16:28] Speaker 03: The court's jurisdiction runs to actions to which 553 refers or 552A1. [00:16:37] Speaker 03: And am I speaking to the point that you had in mind, or do you want me to all the way pass jurisdiction into the merits themselves? [00:16:48] Speaker 03: I just want to be clear and make sure I'm answering the question. [00:16:52] Speaker 03: I'm concerned about jurisdiction. [00:16:53] Speaker 03: You're concerned about jurisdiction? [00:16:55] Speaker 03: Then let me start there. [00:16:58] Speaker 03: On jurisdiction, it's much the same conversation that we've been having. [00:17:03] Speaker 03: 553 applies to interpretations of law that are given the force and effect of law by an agency. [00:17:12] Speaker 03: And there's pretty much no clearer example of giving force and effect of law to an interpretation than saying you must follow it or else sanctions come. [00:17:22] Speaker 02: It doesn't report to address people, entities other than Ashford in this case, right? [00:17:32] Speaker 03: Right, so two points, and if I can point to the D.C. [00:17:36] Speaker 03: Circuit's decision in Appalachian power, right? [00:17:38] Speaker 03: So this, this, you must follow it, or Alice character, is legislative. [00:17:43] Speaker 03: It is enforcing in nature. [00:17:45] Speaker 03: As to whether it applies, you know, we say it applies only to Ashford, [00:17:50] Speaker 03: to the state of Arizona, a sovereign state, to the 7,000 veterans at Ashford, and to anyone eligible for GI Bill benefits who may be thinking about applying to Ashford. [00:18:00] Speaker 03: I think that's plenty of people to make it generally applicable. [00:18:04] Speaker 03: But even if it's a rule of particular applicability, the APA's definition of rule reaches that. [00:18:11] Speaker 03: Clearly, it's in the text. [00:18:13] Speaker 03: And the DC Circuit has said, right, that was added to make sure that rules speaking to specific name parties [00:18:19] Speaker 03: were rules and treated as rules. [00:18:22] Speaker 03: And there are a whole host of rules in the APA that are addressed to name parties. [00:18:28] Speaker 03: One that's recently been in the headlines is the government's designation of Huawei on the entity list. [00:18:36] Speaker 03: In shorthand, that means that no US suppliers can send products of Huawei overseas. [00:18:42] Speaker 03: That was done by [00:18:42] Speaker 03: rulemaking. [00:18:44] Speaker 03: It's in the Federal Register. [00:18:45] Speaker 03: It applies to Huawei and subsidiaries. [00:18:47] Speaker 02: The agency can proceed that way if it wants to. [00:18:50] Speaker 03: And IRS revenue ruling is a rule of particular applicability. [00:18:57] Speaker 03: The D.C. [00:18:59] Speaker 03: Circuit's decision in the National Wildlife Federation versus Costco. [00:19:03] Speaker 03: as a particular parcel of land that's designated for Dredgenville purposes. [00:19:08] Speaker 03: So there are a host of these. [00:19:10] Speaker 04: Is there some particular magic language in this letter that in your view converted it from being an order into a rule? [00:19:20] Speaker 03: So we think it's clearly not in order, because it's not a final disposition under a national language of the APA 550-4. [00:19:26] Speaker 02: Not a final disposition. [00:19:27] Speaker 02: There we go. [00:19:28] Speaker 04: That runs you into a different problem that we were talking about for 15 minutes. [00:19:35] Speaker 04: So I mean, I'm trying to locate what your theory really is here. [00:19:39] Speaker 04: I mean, to me, it looks like an adjudication here. [00:19:44] Speaker 04: But you're saying no, because it invoked [00:19:50] Speaker 04: the definition that comes from a certain regulation, the main campus, that that automatically turned this letter into a rule? [00:19:59] Speaker 04: I mean, if they hadn't made reference to that regulation, then in your view, it would have been just an order? [00:20:06] Speaker 03: If they had relied on a pre-existing statement of law, [00:20:10] Speaker 03: one that if they had made this, if they had said the day before they sent this letter, henceforth the interpretation of main campus in 42583 shall be, that would clearly be [00:20:24] Speaker 03: an interpretive or legislative rule. [00:20:26] Speaker 03: The issue here is that they just mashed it into the letter that begins the enforcement action. [00:20:30] Speaker 04: Well, what if the letter just said, well, we're just going to take a look at a lot of different indicia as to where the main campus is for Ashford. [00:20:38] Speaker 04: And we see a lot of different institutions and agencies describe the main campus as being in San Diego, California, not in Arizona. [00:20:49] Speaker 04: And so taking all that into account, we conclude that yes, in fact, [00:20:54] Speaker 04: the way Ashford's been representing itself to different institutions and agencies that its main campus is, in fact, in California. [00:21:03] Speaker 04: Would that have been a rule? [00:21:06] Speaker 03: So I think one of the, and I'm going to come right back to your question. [00:21:09] Speaker 04: Oh, I would love to answer now. [00:21:10] Speaker 04: Is that a rule? [00:21:12] Speaker 03: In this context, it's a rule, yes. [00:21:14] Speaker 04: That would be also a rule. [00:21:16] Speaker 03: Well, here's why. [00:21:19] Speaker 03: The issue that's happening here is that what Congress gives to the state approving agency the authority to make determinations about approvals. [00:21:30] Speaker 03: And according to, and this is 3672A, according to the state approving agency's policies and practices. [00:21:38] Speaker 03: So what's happening here is that they're saying, aha, we've got an interpretation that's law. [00:21:46] Speaker 03: that the state has to fall. [00:21:48] Speaker 03: So they're clawing away. [00:21:50] Speaker 03: It has this effect of shifting jurisdiction from one decision-making agency to another. [00:21:54] Speaker 02: It seems to me that under your theory, there wouldn't be anything left that could be resolved in adjudication if it involved a legal issue. [00:22:04] Speaker 03: I may have gotten sort of tangled here. [00:22:06] Speaker 03: What I mean to say, and our fundamental position is, is if there's an interpretation separable from the facts. [00:22:13] Speaker 03: So what I wanted to focus on is the shift of authority that happens in this letter. [00:22:21] Speaker 03: And I think that's important to its law-making character. [00:22:25] Speaker 03: As a general matter, let me flip back and reverse what I just said to what I said earlier in the argument, which is that if it's application of law to fact, [00:22:34] Speaker 03: We don't think that's a rule. [00:22:36] Speaker 03: But the question always is going to be where the rule come from that's now being enforced. [00:22:44] Speaker 01: OK. [00:22:45] Speaker 01: Thank you. [00:22:46] Speaker 01: Let's hear from the government. [00:22:59] Speaker 05: Good morning, Your Honors. [00:23:01] Speaker 05: May I please support perhaps I should start with finality? [00:23:04] Speaker 02: Yeah, I mean you do agree that we have to have final agency action for us to review it, right? [00:23:09] Speaker 05: Right, Your Honor. [00:23:10] Speaker 05: And our position that this is a step in the adjudication, perhaps clouded a little bit, our thinking on finality. [00:23:18] Speaker 05: On page 35 of our brief and a footnote, we do point out that the adjudication here is not final. [00:23:25] Speaker 05: And we agree with the court's interpretation of the CFR sections that were just discussed, that there is the possibility of a hearing [00:23:33] Speaker 05: following this letter and then ultimately the director for education making a different decision if he disagreed with this letter so the director's decision would be final agency action by delegation from the secretary that's my understanding yes your honor [00:23:50] Speaker 02: But there would be a right of review in the Board of Veterans' appeals, wouldn't there? [00:23:55] Speaker 05: Yes, Your Honor. [00:23:56] Speaker 05: We are unaware of any institution that has done something similarly. [00:24:00] Speaker 05: We definitely understand that a student could bring a challenge before the regional office and the Board and the Veterans Court based on a denial of their benefits for attending Ashford. [00:24:12] Speaker 05: As we point out in our brief, there's no need for this court to reach the issue of whether Ashford could challenge the adjudication. [00:24:20] Speaker 02: But surely they'd have a right to a judicial review, right? [00:24:23] Speaker 02: It can't be that they don't have a right to a judicial review. [00:24:25] Speaker 05: And there's a possibility of a district court for APA purposes. [00:24:29] Speaker 02: The point we were trying to make... [00:24:32] Speaker 02: these closely related questions of the authority of the secretary to go to district court when it provided... I would expect them to argue that, Your Honor. [00:24:42] Speaker 02: When it provided a detailed procedure for review of the secretary's decisions relating to benefits. [00:24:48] Speaker 05: No, I would expect them to argue that, Your Honor. [00:24:51] Speaker 05: I don't expect that it would work, Your Honor. [00:24:54] Speaker 01: We need to know, when you say there's a possibility of the district court, what is the government's view of [00:25:01] Speaker 01: I think 511 precludes that. [00:25:03] Speaker 01: An undisputed, indisputable, straightforward path that should have been, should be taken. [00:25:10] Speaker 01: You didn't discuss that in your briefs. [00:25:13] Speaker 01: You seemed to think that this was an acceptable path. [00:25:18] Speaker 05: Well, no, we asked for dismissal because we don't believe that this is a rule that falls under 502. [00:25:22] Speaker 05: That's why I was trying to explain that part. [00:25:24] Speaker 01: But not as a matter of being premature, but as being unappealable. [00:25:30] Speaker 05: Yeah, because it's a part of an adjudication, Your Honor. [00:25:32] Speaker 05: 502 does not cover this type of step in an adjudication. [00:25:38] Speaker 01: But that's really my question, are you saying that this situation, this concern is not amenable to judicial review any place? [00:25:51] Speaker 05: No, what we said in our brief is that a student could certainly challenge this. [00:25:56] Speaker 02: Ashford has to have a right to judicial review. [00:25:59] Speaker 02: Come on. [00:25:59] Speaker 02: I mean, the statute easily gives them the right to judicial review following the path from the Secretary to the Board of Veterans' Appeals to the Veterans Court up to us. [00:26:10] Speaker 02: Isn't it pretty clear that that's what the statute contemplated? [00:26:13] Speaker 05: Well, the reason why we didn't commit to Ashford having that sort of review through that process, Your Honor, is because the benefits here, the veterans' benefits, are not for Ashford. [00:26:25] Speaker 05: Ashford is not the veteran. [00:26:26] Speaker 05: They are a third party who's collecting. [00:26:28] Speaker 02: Yeah, but our decision in Bates makes clear that this review process isn't to be cabined in that kind of technical way. [00:26:37] Speaker 02: You know, this is a law that affects the provision of benefits. [00:26:40] Speaker 02: It affects Ashford. [00:26:42] Speaker 02: They have standing. [00:26:43] Speaker 05: And Your Honor, I understand your position, Your Honor. [00:26:45] Speaker 05: I have to admit that I'm unfamiliar with Bates. [00:26:48] Speaker 05: But this case doesn't yet implicate, as we point out in page 35 of our brief, whether or not Ashford could bring this under 511 and go through the board and the Veterans Court. [00:26:58] Speaker 05: Because I think- Well, I'm not so sure. [00:27:00] Speaker 02: Because I think if there's not a past judicial review, [00:27:03] Speaker 02: then maybe one looks with more sympathy at the route they've tried to follow. [00:27:08] Speaker 02: There's got to be an appropriate avenue for them to seek judicial review. [00:27:13] Speaker 05: May I suggest the route that they should have taken, Your Honor? [00:27:15] Speaker 05: And that would be to propose a rule under 502. [00:27:18] Speaker 05: Come on. [00:27:19] Speaker 02: Come on. [00:27:20] Speaker 02: They don't have to propose a rule to get judicial review. [00:27:23] Speaker 02: I understand the position that this letter itself is only an interim step in the process. [00:27:30] Speaker 02: If there was a final decision on defunding, that has to be subject to judicial review. [00:27:36] Speaker 02: And they have to be able to go someplace, whether it's the district court or to the Veterans Court, on up to us to get that review. [00:27:45] Speaker 02: And it would seem as though under the statute, the path is to go to the BVA and then to the Veterans Court and then up to us. [00:27:54] Speaker 02: But you can't just say, oh, well, maybe they don't have a right to judicial review. [00:27:57] Speaker 02: That doesn't make any sense. [00:27:59] Speaker 05: Well, Your Honor, again, I understand your position, but it's not an issue that the parties explored because this isn't a final agency action yet. [00:28:07] Speaker 05: And I understand that you say that perhaps you would look more sympathetically at something they took. [00:28:13] Speaker 02: It doesn't help your position to waffle about this. [00:28:16] Speaker 05: I understand that, Your Honor, but this is not an issue that we have vetted with the VA and understanding of what a third party would have, what kind of rights they would have under 511. [00:28:27] Speaker 05: I apologize, but I cannot give a definitive answer on that today. [00:28:30] Speaker 05: If the court would like us to file a supplemental answer to that, we could. [00:28:35] Speaker 05: But it's not information I have in my fingertips right now. [00:28:41] Speaker 05: Regarding jurisdiction in general, the jurisdictional argument we did raise in the brief here, Your Honors. [00:28:51] Speaker 05: I agree with the court's questioning that what Ashford position would do here is basically make any statement made in an adjudication susceptible to 502 review. [00:29:02] Speaker 05: There is no distinction between what the regional director did in this letter and what a regional office does on a daily basis when determining service connection for disability payments. [00:29:14] Speaker 05: What we have here, Your Honor, is a letter that is mandatory. [00:29:19] Speaker 05: under the statute 38 USC 3690 that is required to be given to the SAA and the school at the start of this process. [00:29:32] Speaker 05: So the first question of whether there was a rule in here is the idea in general that this letter can be set. [00:29:39] Speaker 05: There is a statutory basis for it. [00:29:41] Speaker 05: There's no new rule announced in this. [00:29:43] Speaker 05: It is part of an adjudicatory step. [00:29:47] Speaker 05: Regarding the main campus question, again, Your Honors, this isn't applying a regulation to the facts of this particular case. [00:29:56] Speaker 05: There is nothing in this letter that is announcing a broad principle that applies to every school across the nation. [00:30:02] Speaker 05: This is a letter by a regional office that is one of four in the United States. [00:30:08] Speaker 05: It applies only to the SAA, Ashford, and the students. [00:30:12] Speaker 04: So you're saying that if another similar fact pattern arises, the director could [00:30:17] Speaker 04: freely choose a different understanding of the term main campus? [00:30:21] Speaker 05: Theoretically, yes. [00:30:23] Speaker 05: Yes, Your Honor. [00:30:25] Speaker 05: The question really here, Your Honor, is, as you point out, what's the magic language in this letter that transformed it into a rule? [00:30:33] Speaker 05: And Ashford hasn't pointed that out in his briefing and hasn't done it today. [00:30:36] Speaker 05: They allege a change in the law, an amendment to the law, but there is none in this letter. [00:30:42] Speaker 05: There is solely application of the regulations to the facts. [00:30:48] Speaker 04: What if there was no regulation defining main campus to borrow from? [00:30:54] Speaker 04: And the director simply said, from this point forward, this is my conception of main campus that I'll be applying to this case and all future cases relating to whether to stop payment on educational benefits. [00:31:13] Speaker 04: And it's a four-factor test. [00:31:14] Speaker 04: The first two factors are the most important ones. [00:31:17] Speaker 04: And here's the test. [00:31:18] Speaker 05: Yeah, but Your Honor, that would be a lot closer to the application power case than the other cases cited by petitioner, which established a ground rule for going forward that must apply. [00:31:31] Speaker 04: So why wouldn't that be a rule? [00:31:33] Speaker 04: I'm just asking you. [00:31:34] Speaker 04: That could be a rule, Your Honor, in that scenario. [00:31:36] Speaker 04: It could be. [00:31:36] Speaker 04: I mean, why not? [00:31:39] Speaker 04: I mean, why wouldn't it be a rule? [00:31:42] Speaker 05: It depends on the authority of the regional office and the scope of it. [00:31:46] Speaker 05: He would have authority over only a portion of the United States, not the entirety of it. [00:31:54] Speaker 02: So it sounds like a rule, Your Honor. [00:31:56] Speaker 02: Agencies make law in adjudication, right? [00:32:00] Speaker 02: Correct. [00:32:00] Speaker 02: The fact that you make law in adjudication, that you interpret statutes, you interpret regulations, doesn't turn the adjudication into a rule. [00:32:10] Speaker 05: That is correct. [00:32:11] Speaker 05: If you look at what happened in the Snyder case that it cited, [00:32:14] Speaker 05: by Ashford in that situation you had a presidential general counsel opinion that was binding going forth that was issued that was found to be a rule the NLRB Wyman Gordon case you had the board announcing that from 30 days hence forward there would be these specific requirements for subpoena enforcement without reaching a decision in the particular case correct and these totally forward-looking correct your honor [00:32:42] Speaker 05: as opposed to this letter, which is looking at what happened. [00:32:45] Speaker 05: This is going back in a retrospective view of Arizona's approval of Ashford and the Secretary's ability to suspend payments based on that prior action. [00:33:00] Speaker 05: not actions going forward. [00:33:02] Speaker 05: So there's a retrospective. [00:33:03] Speaker 01: So the agency then would decide that a particular issue that has arisen is significant, then what would they do? [00:33:12] Speaker 01: They'd have to put it through the notice and comment procedure, would they not? [00:33:17] Speaker 01: And assuming that that happens, then none of these other issues arise. [00:33:22] Speaker 01: Is that right? [00:33:23] Speaker 01: Then this judicial review [00:33:25] Speaker 01: because it is an official position. [00:33:28] Speaker 01: But that sounds sufficiently, I don't want to say arbitrary, loose that when you have the particular party to which it applies to say, since that wasn't done, get out of court, you have no recourse. [00:33:50] Speaker 05: Well, those are the cases, Your Honor, where a rule is announced and applied and without notice in rulemaking procedures and potentially as arbitrary and capricious in and of itself. [00:34:03] Speaker 01: They've applied the rule that they have to this party who says you got it wrong. [00:34:09] Speaker 01: They want the opportunity to challenge what the agency did. [00:34:14] Speaker 01: From that viewpoint, don't they have a final agency action? [00:34:19] Speaker 05: They have an adjudicated final agency action when they have the ultimate order coming on that case. [00:34:24] Speaker 05: What the agency has done in your hypothetical, Your Honor, I think, and please correct me if I'm misunderstanding, is announce not something that's applicable nationwide, but announce something that they're applying against this individual in particular. [00:34:40] Speaker 05: That is a step in the adjudication. [00:34:43] Speaker 05: That is applied. [00:34:43] Speaker 05: It happens every day in RO adjudications. [00:34:46] Speaker 05: You could have two different RO adjudicators looking at the amount that an individual can, a veteran can move their knee, both moving at 45 degrees, but getting different [00:34:58] Speaker 05: ratings under the existing schedule. [00:35:02] Speaker 05: I think that in that scenario, it's very clear. [00:35:04] Speaker 05: This court has pointed out that this is an adjudicative matter. [00:35:07] Speaker 05: It's not an issue of rulemaking by those RO adjudicators regarding the knee schedule. [00:35:15] Speaker 05: This is the same idea here. [00:35:17] Speaker 05: We have the regional director looking specifically at these facts, Your Honor, where Ashford announces they have their main campus. [00:35:27] Speaker 05: where Ashford is accredited as a university and saying, we don't believe that that's Arizona. [00:35:33] Speaker 05: It should be California. [00:35:35] Speaker 05: Explain to us or take corrective action in 60 days. [00:35:38] Speaker 05: This is entirely every step in here adjudication. [00:35:42] Speaker 05: None of it is rulemaking that applies to a different online university. [00:35:48] Speaker 04: Whether this is rulemaking or this is an order, an adjudication, is it the government's view that you have to go all the way through until you get a decision from the Director of Education Service under 4216? [00:36:02] Speaker 04: And only then can you have a review on whether it's an order or a rulemaking. [00:36:13] Speaker 05: I don't see how anything in this letter could be reviewed at this point, Your Honor. [00:36:18] Speaker 05: Could there have been something else that was written in this letter that could trigger a rule and be 502? [00:36:23] Speaker 02: I think the question is, do they have to wait until there's final agency action here? [00:36:30] Speaker 05: Yes, Your Honor, because it is not finalist agency action. [00:36:34] Speaker 05: It can be reviewed by the committee. [00:36:35] Speaker 05: We disagree with Ashford's readings of the CFR sections, and it can be reversed by the director. [00:36:43] Speaker 04: Now, whether or not... I'm exploring this with you because I didn't read your red brief is really advancing this particular argument that we can't even... [00:36:53] Speaker 04: They can't even come into court and question whether this is a rulemaking until they get review from the final officer inside the agency that can make a ruling on this, which would be the one in 1416. [00:37:05] Speaker 04: Right. [00:37:05] Speaker 05: And, Your Honor, I apologize, but I think perhaps our looking at this solely in the rubric that this has to be an adjudication, it can't be a rule, perhaps made a little myopic about the potential for it being a rule, and if it is a rule, whether there is a final [00:37:22] Speaker 05: rule here. [00:37:24] Speaker 05: In no way or shape or form do we think that this is a rule that's announced in this. [00:37:27] Speaker 05: So therefore, we did not argue that any rule would be not final yet. [00:37:34] Speaker 05: We did point out that the adjudication is not final. [00:37:37] Speaker 05: That's the only thing that we did note in our brief on page 35. [00:37:39] Speaker 05: If the court has no further questions, we respectfully request the court dismiss the petition or deny it. [00:37:49] Speaker 01: Thank you. [00:37:50] Speaker 01: Thank you. [00:37:53] Speaker 01: So we have three minutes for rebuttal. [00:38:01] Speaker 03: If I may, I think the key language that reveals the rulemaking character of this letter is the term main campus is defined in 38 CFR 21-4266A3. [00:38:19] Speaker 03: That's the transplantation of a regulatory interpretation adopted after notice and comment for one provision and its transplantation to another. [00:38:31] Speaker 03: And using that, [00:38:34] Speaker 03: as a basis to say that my client is subject to enforcement actions and a suspension. [00:38:39] Speaker 03: Again, I think, you know, and then the sort of extreme consequences of the government's position begin to come to light. [00:38:47] Speaker 03: They start to turn the screws of enforcement. [00:38:51] Speaker 03: And I say, but there's no final agency action. [00:38:53] Speaker 02: So in our recent in-bank decision in Procopia, we should have said, oh, this is really a rule, and it's not proper to do this in adjudication. [00:39:02] Speaker 03: I'm not familiar with Procopia. [00:39:05] Speaker 03: I apologize. [00:39:07] Speaker 03: But I think, again, it's the enforcement character that really drives this conversation. [00:39:14] Speaker 03: And then there's the arbitrariness, too, of what's happening here. [00:39:18] Speaker 03: The government's position is, well, maybe as to Ashford, [00:39:22] Speaker 03: main campus means this and maybe as to someone else it means that and yet I take his point if you have what you have is an RO adjudication and there are two people in the United States and they have similar knee injuries that is a fully fact-bound kind of consideration but [00:39:41] Speaker 03: The rules have to apply the same to everyone. [00:39:43] Speaker 03: And what they're doing is saying, yes, we'll hear the interpretation of this regulation applies to Ashford. [00:39:48] Speaker 03: Maybe, maybe not applies to other people. [00:39:51] Speaker 03: And we're going to drive an enforcement action through it. [00:39:54] Speaker 03: I just think that's an awfully extreme position for the government to say, there's no review of that. [00:40:00] Speaker 03: We'll continue the suspensions in effect. [00:40:02] Speaker 03: We'll have the process go on. [00:40:04] Speaker 02: I don't think they're now saying there's no review. [00:40:08] Speaker 03: I think they said maybe they'd be willing to write a letter, and I don't know what position they'll take in the letter. [00:40:13] Speaker 03: I think Mr. Grimaldi didn't take a position on that here today. [00:40:17] Speaker 03: What I'm saying, not even no final review. [00:40:21] Speaker 03: They're not quite sure what position they're going to take there. [00:40:24] Speaker 03: But as to review now, as the consequences roll forward for my client, [00:40:29] Speaker 03: No review. [00:40:30] Speaker 03: And that's an awfully extreme position, especially when what's happened here is, and again, I'll come back to Justice Kagan. [00:40:37] Speaker 03: If you're going to initiate an enforcement action, it's got to be on the basis of legislative rule, of a legislative rule that goes through notice and comment. [00:40:45] Speaker 03: If there are no further questions. [00:40:48] Speaker 01: Okay. [00:40:49] Speaker 01: Thank you. [00:40:49] Speaker 01: Thank you both. [00:40:50] Speaker 01: Case is taken under submission.