[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Rules and Regulations]
[Pages 6253-6259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00972]
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DEPARTMENT OF EDUCATION
34 CFR Part 668
RIN 1840-AD22
[Docket ID ED-2015-OPE-0103]
Student Assistance General Provisions
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final rule with request for comments.
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SUMMARY: The Secretary amends the Student Assistance General Provisions
regulations governing participation in the student financial assistance
programs authorized under Title IV of the Higher Education Act of 1965,
as amended (title IV, HEA programs). The amended regulations update the
Department's hearing procedures for actions to establish liability
against an institution of higher education, and establish procedural
rules governing recovery proceedings under the Department's borrower
defense regulations.
DATES: Effective date: These regulations are effective January 19,
2017.
Comment due date: We will accept comments on or before March 20,
2017. We may consider the comments received and may conduct additional
rulemaking based on the comments.
ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments submitted by fax or by email or those submitted after
the comment period. To ensure that we do not receive duplicate copies,
please submit your comments only once. In addition, please include the
Docket ID at the top of your comments.
If you are submitting comments electronically, we strongly
encourage you to submit any comments or attachments in Microsoft Word
format. If you must submit a comment in Portable Document Format (PDF),
we strongly encourage you to convert the PDF to print-to-PDF format or
to use some other commonly used searchable text format. Please do not
submit the PDF in a scanned format. Using a print-to-PDF format allows
the U.S. Department of Education (the Department) to electronically
search and copy certain portions of your submissions.
[[Page 6254]]
Federal eRulemaking Portal: Go to www.regulations.gov to
submit your comments electronically. Information on using
Regulations.gov, including instructions for accessing agency documents,
submitting comments, and viewing the docket, is available on the site
under ``Help.''
Postal Mail, Commercial Delivery, or Hand Delivery: The
Department strongly encourages commenters to submit their comments
electronically. However, if you mail or deliver your comments about
these regulations, address them to Jean-Didier Gaina, U.S. Department
of Education, 400 Maryland Ave. SW., Room 6W232B, Washington, DC 20202.
Privacy Note: The Department's policy is to make all comments
received from members of the public available for public viewing in
their entirety on the Federal eRulemaking Portal at
www.regulations.gov. Therefore, commenters should be careful to
include in their comments only information that they wish to make
publicly available.
FOR FURTHER INFORMATION CONTACT: Annmarie Weisman, U.S. Department of
Education, 400 Maryland Avenue SW., Room 6W425, Washington, DC 20202-
6244. Telephone: (202) 453-6712 or by email: [email protected].
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION:
Invitation To Comment
As discussed below, these regulations do not establish substantive
policy, but instead establish procedures that must be followed. As
procedural regulations, there is no requirement for a comment period.
Although these regulations are final regulations, we are interested in
whether you think we should make any changes in these regulations and
thus we are inviting your comments. We will consider these comments in
determining whether to revise the regulations. To ensure that your
comments have maximum effect, we urge you to identify clearly the
specific section or sections of the regulations that each of your
comments addresses and to arrange your comments in the same order as
the regulations. See ADDRESSES for instructions on how to submit
comments.
We invite you to assist us in complying with the specific
requirements of Executive Orders 12866 and 13563 and their overall
requirements of reducing regulatory burden that might result from these
regulations. Please let us know of any further ways we could reduce
potential costs or increase potential benefits while preserving the
effective and efficient administration of the Department's programs and
activities.
During and after the comment period, you may inspect all public
comments about these regulations by accessing Regulations.gov. You may
also inspect the comments in person in room 6W245, 400 Maryland Avenue
SW., Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m.,
Eastern time, Monday through Friday of each week except Federal
holidays. If you want to schedule time to inspect comments, please
contact the person listed under FOR FURTHER INFORMATION CONTACT.
Assistance to Individuals With Disabilities in Reviewing the Rulemaking
Record
On request, we will supply an appropriate accommodation or
auxiliary aid to an individual with a disability who needs assistance
to review the comments or other documents in the public rulemaking
record for these regulations. If you want to schedule an appointment
for this type of accommodation or auxiliary aid, please contact the
person listed under FOR FURTHER INFORMATION CONTACT.
Background
On November 1, 2016, the Department of Education promulgated new
regulations governing the William D. Ford Federal Direct Loan Program
to establish a new Federal standard and a process for determining
whether a borrower has a defense to repayment on a loan based on an act
or omission of a school (the borrower defense regulations). If the
Department determines that a borrower is eligible for relief under the
borrower defense regulations, it has the authority to recover losses
stemming from such borrower relief from the institution whose conduct
gave rise to the borrower defense. These regulations establish the
procedural rules that would govern such borrower defense and
institutional recovery proceedings, and are designed to ensure that
institutions are afforded a full and fair opportunity to defend
themselves in such proceedings.
These regulations amend the Department's existing regulations
governing proceedings to assess a fine, limitation, suspension, or
termination against an institution by adding procedures for a recovery
proceeding under the borrower defense regulations. Such a proceeding
may be used when pursuing an action under either the Department's new
borrower defense regulation at 34 CFR 685.222 or its precursor at 34
CFR 685.206. These regulations are designed to balance important
interests by ensuring that institutions are protected by due process of
law prior to the imposition of any monetary liability under the
borrower defense regulations, while also ensuring that determinations
of the validity of borrower defense claims asserted against
institutions are resolved fairly, efficiently, and expeditiously for
all parties. In addition, these regulations clarify and update the
procedural provisions more broadly applicable to fine, limitation,
suspension, and termination proceedings.
Under the borrower defense regulations at 34 CFR 685.222, effective
July 1, 2017, the applicable process for filing and reviewing claims
will depend on whether a borrower's application is considered by the
Department as an individual claim or if the Department identifies the
application as factually similar to other applications such that the
Department identifies a group of borrowers (potentially including
borrowers who have not submitted applications) with similar claims. The
process will also depend on whether the relevant institution is
``open'' or ``closed'', as those terms are described in the
regulations. See 34 CFR 685.222(g)through(h).
The Department has the authority to pursue claims for recovery for
losses that the Department has already incurred in granting individual
borrower relief, either as stand-alone actions or in combination with
group proceedings where those individual claims presented the same
facts and circumstances as the group claims. In those instances, the
determination of the validity of the individual's discharge claim does
not depend on the hearing official's decision, and the Department does
not rescind a discharge already granted to an individual if the
Department does not succeed in proving the validity of that claim in
this proceeding.
Beginning July 1, 2017, the Department will use these procedural
regulations both to determine the validity of borrower claims the
Department asserts on behalf of borrowers in group claims against
``open'' institutions, and to hold the institutions liable for losses
on those claims in accordance with 34 CFR 685.222(h). In these
instances, the hearing official determines the validity of the borrower
claims and, correspondingly, whether relief will be granted to these
group borrowers. Borrowers may opt out of the group process. When the
Department seeks to recover for losses for claims approved
[[Page 6255]]
under current authority and before July 1, 2017, the Department will
use the procedures in these regulations to pursue recovery from the
institution. As with any other proceedings to recover on claims already
approved, the outcome of a proceeding brought to recover for claims
already approved prior to July 1, 2017 will not affect relief already
granted to borrowers, but only the accountability of the institution.
At its discretion, the Department may also use these regulations to
bring actions against ``closed'' institutions, as defined in 34 CFR
685.222(g), in order to establish an institution's liability for
damages due to the Department as a result of individual or group
borrower defense relief.
The Department bears the burden of proof in any recovery action
against an institution for all claims the Department asserts. The
Department must therefore prove the merit of the claims it asserts for
members of the group. A hearing official will determine the merit of
the claims, the relief for members of the group, and the liability of
the institution. The Department must also prove in the hearing process
the merit of claims it asserts for losses on discharges it has already
approved as individual claims, although, as previously indicated,
individual discharges already granted by the Department will not be
affected if the Department is not successful in proving the claim in
this proceeding against the institution.
These regulations are only applicable to actions initiated by the
Department to fine an institution, to limit, suspend, or terminate the
eligibility of an institution or servicer, or to recover from an
institution for losses from borrower defense claims, and do not
encompass the process by which the Department evaluates individual
borrower claims or claims for which the Department does not seek to
obtain a recovery. That process is set forth in the borrower defense
regulations at 34 CFR 685.222(e). In addition, the Department plans to
issue a borrower guide before the borrower defense regulations go into
effect to ensure borrowers understand the application process and
criteria for seeking debt relief.
Waiver of Proposed Rulemaking, Negotiated Rulemaking, and Delayed
Effective Date
Under the Administrative Procedure Act (5 U.S.C. 553), the
Department generally offers interested parties the opportunity to
comment on proposed regulations. These regulations only govern the
procedures for initiating an action against an institution and the
hearing rules applicable to such a proceeding. As such, these
regulations make procedural changes only and do not establish
substantive policy. The regulations are therefore rules of agency
practice and procedure, and exempt from notice and comment rulemaking
under 5 U.S.C. 553(b)(A). However, the Department is providing a 60-day
comment period and invites interested persons to participate in this
rulemaking by submitting written comments. The Department may consider
the comments received and may conduct additional rulemaking based on
the comments.
The APA also generally requires that regulations be published at
least 30 days before their effective date, unless the agency has good
cause to implement its regulations sooner (5 U.S.C. 553(d)(3)). Again,
because these final regulations are merely rules of agency practice and
procedure, there is good cause to make them effective on the day they
are published. For the same reasons, the Secretary has determined,
under section 492(b)(2) of the HEA, 20 U.S.C. 1098a(b)(2), that these
regulations should not be subject to negotiated rulemaking.
Executive Orders 12866 and 13563
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether
this regulatory action is ``significant'' and, therefore, subject to
the requirements of the Executive order and subject to review by the
Office of Management and Budget (OMB). Section 3(f) of Executive Order
12866 defines a ``significant regulatory action'' as an action likely
to result in a rule that may--
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local, or
tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule);
(2) Create serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in the
Executive order.
This final regulatory action is not a significant regulatory action
subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed these regulations under Executive Order
13563, which supplements and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, Executive Order
13563 requires that an agency--
(1) Propose or adopt regulations only on a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and taking into
account--among other things and to the extent practicable--the costs of
cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or provide
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' The Office of
Information and Regulatory Affairs of OMB has emphasized that these
techniques may include ``identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.''
We are issuing these final regulations only on a reasoned
determination that their benefits justify their costs. In choosing
among alternative regulatory approaches, we selected those approaches
that maximize net benefits. Based on the analysis that follows, the
Department believes that these final regulations are consistent with
the principles in Executive Order 13563.
We also have determined that this regulatory action does not unduly
interfere with State, local, and tribal governments in the exercise of
their governmental functions.
In accordance with both Executive orders, the Department has
assessed the potential costs and benefits, both quantitative and
qualitative, of this regulatory action. The potential costs associated
with this regulatory action
[[Page 6256]]
are those resulting from statutory requirements and those we have
determined as necessary for administering the Department's programs and
activities. There are no costs additional to those described under
Regulatory Impact Analysis in the notice of final regulations for the
borrower defense regulations published in the Federal Register on
November 1, 2016 (81 FR 75926). These regulations will benefit
institutions by ensuring that, in any action to fine an institution, to
limit, suspend, or terminate the eligibility of an institution to
participate in the title IV, HEA programs, or to determine the validity
of claims against the institution, there are established procedures
that provide both due process as well as an efficient process for the
timely resolution of claims.
Clarity of the Regulations
Executive Order 12866 and the Presidential memorandum ``Plain
Language in Government Writing'' require each agency to write
regulations that are easy to understand.
The Secretary invites comments on how to make these regulations
easier to understand, including answers to questions such as the
following:
Are the requirements in the regulations clearly stated?
Do the regulations contain technical terms or other
wording that interferes with their clarity?
Does the format of the regulations (grouping and order of
sections, use of headings, paragraphing, etc.) aid or reduce their
clarity?
Would the regulations be easier to understand if we
divided them into more (but shorter) sections? (A ``section'' is
preceded by the symbol ``Sec. '' and a numbered heading; for example,
Sec. 668.81.)
Could the description of the regulations in the
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in
making the regulations easier to understand? If so, how?
What else could we do to make the regulations easier to
understand?
To send any comments that concern how the Department could make
these regulations easier to understand, see the instructions in the
ADDRESSES section.
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have a
significant economic impact on a substantial number of small entities.
The small entities that are affected by these regulations are small
postsecondary institutions. These regulations do not have a significant
economic impact on these entities because all substantive rules that
govern determinations of liability have already been established in the
Department's borrower defense regulations promulgated November 1, 2016.
Paperwork Reduction Act of 1995
The Paperwork Reduction Act of 1995 does not require you to respond
to a collection of information unless it displays a valid OMB control
number. We display the valid OMB control number assigned to a
collection of information in final regulations at the end of the
affected section of the regulations.
Intergovernmental Review
This program is not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
Assessment of Educational Impact
The Secretary particularly requests comments on whether these
regulations require transmission of information that any other agency
or authority of the United States gathers or makes available.
Accessible Format: Individuals with disabilities can obtain this
document in an accessible format (e.g., braille, large print,
audiotape, or compact disc) on request to the program contact person
listed under FOR FURTHER INFORMATION CONTACT.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. Free
Internet access to the official edition of the Federal Register and the
Code of Federal Regulations is available via the Federal Digital System
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You may also access documents of the Department published in the
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www.federalregister.gov. Specifically, through the advanced search
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by the Department.
(Catalog of Federal Domestic Assistance Number: 84.268, Federal
Direct Student Loans)
List of Subjects in 34 CFR Part 668
Administrative practice and procedure, Aliens, Colleges and
universities, Consumer protection, Grant programs--education, Loan
programs--education, Reporting and recordkeeping requirements,
Selective Service System, Student aid, Vocational education.
Dated: January 11, 2017.
John B. King, Jr.,
Secretary of Education.
For the reasons discussed, the Secretary amends part 668 of title
34 of the Code of Federal Regulations as follows:
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS
0
1. The authority citation for part 668 continues to read as follows:
Authority: 20 U.S.C. 1001-1003, 1070a, 1070g, 1085, 1087b,
1087d, 1087e, 1088, 1091, 1092, 1094, 1099c, 1099c-1, 1221e-3, and
3474, unless otherwise noted.
0
2. Section 668.81 is amended by:
0
A. Adding paragraph (a)(5).
0
B. Adding paragraphs (e) through (g).
0
C. Revising the authority citation.
The additions and revision read as follows:
Sec. 668.81 Scope and special definitions.
(a) * * *
(5) The determination of--
(i) Borrower defense to repayment claims that are brought by the
Department against an institution under Sec. 685.206 or Sec. 685.222;
and
(ii) Liability of an institution to the Secretary for losses to the
Secretary arising from these claims.
* * * * *
(e) The proceedings described in this subpart provide the
institution's sole opportunity for a hearing on the existence and
amount of the debt that is required by applicable law prior to the
Department collecting the debt from any available funds, including but
not limited to offsetting the debt or any liability against funds to be
provided to an institution pursuant to any Title IV, HEA program in
which that institution participates.
(f) Nothing contained in this subpart limits the right of the
Department to gather information, including by subpoena, or conduct any
examination, audit, program review, investigation, or other review
authorized by other applicable law.
(g) Unless directed by a court of competent jurisdiction, the
hearing official, or the Secretary for good cause, if a collateral
attack is brought in any court concerning all or any part of any
proceeding under this subpart, the challenged proceeding shall continue
without regard to the pendency of that court proceeding. No default or
other failure to timely act as directed in a proceeding authorized by
this subpart shall be excused based on the pendency of such court
proceeding.
[[Page 6257]]
(Authority: 20 U.S.C. 1094)
Sec. 668.83 [Amended]
0
3. In Sec. 668.83(f)(1), remove ``Sec. 668.90(c)'' and add, in its
place, ``Sec. 668.91(c)''.
0
4. In Sec. 668.84 revise paragraphs (b)(3) and (b)(4) to read as
follows:
Sec. 668.84 Fine proceedings.
* * * * *
(b) * * *
(3) If the institution or servicer requests a hearing by the time
specified in paragraph (b)(1)(iii) of this section, the designated
department official transmits the request for hearing and response to
the Office of Hearings and Appeals, which sets the date and the place.
The date is at least 15 days after the designated department official
receives the request.
(4) A hearing official conducts a hearing in accordance with Sec.
668.89.
* * * * *
0
5. Section 668.85 is amended by:
0
A. In paragraph (b)(1)(iii), removing ``Sec. 668.90(b)(2)'' and
adding, in its place, ``Sec. 668.91(b)(2)''.
0
B. Revising paragraph (b)(3).
0
C. In paragraph (b)(4), removing ``Sec. 668.88'' and adding, in its
place, ``Sec. 668.89''.
The revision reads as follows:
Sec. 668.85 Suspension proceedings.
* * * * *
(b) * * *
(3) If the institution or servicer requests a hearing by the time
specified in paragraph (b)(1)(iii) of this section, the designated
department official transmits the request for hearing and response to
the Office of Hearings and Appeals, which sets the date and the place.
The date is at least 15 days after the designated department official
receives the request. The suspension does not take place until the
requested hearing is held.
* * * * *
0
6. Section 668.86 is amended by:
0
A. In paragraph (a)(3), removing ``Sec. Sec. 668.93 and 668.94'' and
adding, in its place, ``Sec. Sec. 668.94 and 668.95''.
0
B. Revising paragraphs (b)(3) and (b)(4).
The revisions read as follows:
Sec. 668.86 Limitation or termination proceedings.
* * * * *
(b) * * *
(3) If the institution or servicer requests a hearing by the time
specified in paragraph (b)(1)(iii) of this section, the designated
department official transmits the request for hearing and response to
the Office of Hearings and Appeals, which sets the date and place. The
date is at least 15 days after the designated department official
receives the request. The limitation or termination does not take place
until after the requested hearing is held.
(4) A hearing official conducts a hearing in accordance with Sec.
668.89.
* * * * *
Sec. Sec. 668.87 through 668.98 [Redesignated as Sec. Sec. 668.88
through 668.99]
0
7. Redesignate Sec. Sec. 668.87 through 668.98 as Sec. Sec. 668.88
through 668.99.
0
8. Add Sec. 668.87 to read as follows:
Sec. 668.87 Borrower defense and recovery proceedings.
(a) Procedures. (1) A designated department official begins a
borrower defense and recovery proceeding against an institution by
sending the institution a notice by certified mail, return receipt
requested. This notice--
(i) Informs the institution of the Secretary's intent--
(A) To determine the validity of borrower defense claims on behalf
of a group under Sec. 685.222(h), to demonstrate the validity of
borrower defense claims already approved, or both, as applicable; and
(B) To recover from the institution by offset, by claim on a letter
of credit or other protection provided by the institution, or
otherwise, for losses on account of borrower defense claims asserted on
behalf of the group and borrower defense claims already approved, as
applicable;
(ii) Includes a statement of facts and law sufficient to show that
the Department is entitled to grant any borrower defense relief
asserted within the statement, and recover for the amount of losses to
the Secretary caused by the granting of such relief;
(iii) Specifies the date on which the Secretary intends to take
action to recover the amount of losses arising from the granting of
such relief, which date will be at least 20 days from mailing of the
notice of intent and informs the institution that the Secretary will
not take action to recover the amount of such loss on the date
specified if the designated department official receives, by that date,
a written response from the institution indicating why the Secretary
should not recover. The notice shall also inform the institution that
if it wishes to request a hearing pursuant to this subpart, the
institution must include such a request with its written response; and
(iv) Informs the institution whether the designated Department
official intends to proceed with--
(A) A single action; or
(B) An action in two phases--
(1) The determination whether the institution's act or omission
gave rise to valid borrower defense claims; and
(2) The determination of the amount of borrower defense relief.
(2) Although the hearing official shall have the discretion to
bifurcate proceedings with, or without, a motion of either party, any
decision by the designated department official to bifurcate the
proceeding in accordance with paragraph (a)(1)(iv)(B) of this section
may only be modified on motion with good cause shown.
(3) A hearing official conducts a hearing in accordance with Sec.
668.89.
(b) Effect of a response by the institution. (1) If the institution
submits a written response, but does not therein request a hearing, the
designated department official, after considering that material,
notifies the institution whether the Secretary will take the proposed
recovery action for borrower defense claims and, if so, the date of
such action and the amount of losses.
(2) If the institution submits a response and requests a hearing by
the time specified in the notice under paragraph (a)(1)(iii) of this
section, the designated department official may, in that official's
sole discretion, withdraw the notice or transmit the response and
request for hearing to the Office of Hearings and Appeals, which sets
the date and the place for the hearing. The date of the hearing is at
least 15 days after the designated department official receives the
request. No liability shall be imposed on the institution prior to the
hearing.
(c) Limitations on participation. The parties in any borrower
defense and recovery proceeding are the Department and the
institution(s) against which the Department seeks to recover losses
caused to the Department as a result of borrower defense relief.
Borrowers are not permitted to intervene or appear in this proceeding,
either on their own behalf or on behalf of any purported group, except
as witnesses put forth by either party. However, nothing in this
section limits the rights available to borrowers under other
regulations, including 34 CFR 685.206 and 685.222.
(d) Effect on the borrower. No proceeding under this subpart
imposes liability on any borrower who has already obtained a discharge
in an individual proceeding under 34 CFR 685.206(c) or 34 CFR
685.222(e). A borrower defense and recovery proceeding may determine
whether and how much relief is due to, and whether and how much of a
loan remains owing by, a borrower participating in a group
[[Page 6258]]
process proceeding as defined in 34 CFR 685.222(f) through (h).
(Authority: 20 U.S.C. 1087a et seq., 1094)
0
9. Revise newly redesignated Sec. 668.88 to read as follows:
Sec. 668.88 Prehearing conference and motion practice.
(a) A hearing official may convene a prehearing conference if he or
she thinks that the conference would be useful, or if the conference is
requested by--
(1) The designated department official who brought a proceeding
against an institution or third-party servicer under this subpart; or
(2) The institution or servicer, as applicable.
(b) The purpose of a prehearing conference is to allow the parties
to settle or narrow the dispute.
(c) If the hearing official, the designated department official,
and the institution, or servicer, as applicable, agree, a prehearing
conference may consist of--
(1) A conference telephone call;
(2) An informal meeting; or
(3) The submission and exchange of written material.
(d) A non-dispositive motion shall be made, if at all, consistent
with any procedures set forth by the hearing official. In the absence
of such procedures, non-dispositive motions shall be permitted, and
responses to such motions shall be permitted though not required.
(e)(1) A party may make a motion for summary disposition asserting
that the undisputed facts, admissions, affidavits, stipulations,
documentary evidence, matters as to which official notice may be taken,
and any other evidentiary materials properly submitted in connection
with a motion for summary disposition establish that--
(i) There is no genuine issue as to any material fact; and
(ii) The moving party is entitled to a decision in its favor as a
matter of law.
(2) A motion for summary disposition must be accompanied by a
statement of the material facts as to which the moving party contends
there is no genuine issue. Such motion must be supported by evidence
that the moving party contends support his or her position. The motion
must be accompanied by a brief containing the points and authorities
supporting the motion.
Any party may oppose such a motion by filing a response setting forth
those material facts as to which he or she contends a genuine dispute
exists. Such response must be supported by evidence of the same type as
may be submitted in support of a motion for summary disposition and a
brief containing the points and authorities in support of the
contention that summary disposition would be inappropriate.
(f) A motion under consideration by the Secretary or the hearing
official shall not stay proceedings before the hearing official unless
the Secretary or the hearing official, as appropriate, so orders.
(Authority: 20 U.S.C. 1094)
0
10. Revise newly redesignated Sec. 668.89 to read as follows:
Sec. 668.89 Hearing.
(a) A hearing is an orderly presentation of arguments and evidence
conducted by a hearing official. At the discretion of the hearing
official, any right to a hearing may be satisfied by one or more of the
following: Summary disposition pursuant to Sec. 668.88(e), with or
without oral argument; an oral evidentiary hearing conducted in person,
by telephone, by video conference, or any combination thereof; or a
review limited to written evidence.
(b)(1) Notwithstanding any provision to the contrary, the hearing
official sets the procedures to be used in the hearing, and may take
steps to expedite the proceeding as appropriate.
(2) The formal rules of evidence and procedures applicable to
proceedings in a court of law are not applicable. However, discussions
of settlement between the parties or the terms of settlement offers are
not admissible to prove the validity or invalidity of any claim or
defense.
(3)(i) The proponent of any factual proposition has the burden of
proof with respect thereto.
(ii) The designated department official has the burden of
persuasion in any fine, suspension, limitation, or termination
proceeding under this subpart.
(iii) The designated department official has the burden of
persuasion in a borrower defense and recovery action; however, for a
borrower defense claim based on a substantial misrepresentation under
Sec. 682.222(d), the designated department official has the burden of
persuasion regarding the substantial misrepresentation, and the
institution has the burden of persuasion in establishing any offsetting
value of the education under Sec. 685.222(i)(2)(i).
(4) Discovery, as provided for under the Federal Rules of Civil
Procedure, is not permitted.
(5) The hearing official accepts only evidence that is relevant and
material to the proceeding and is not unduly repetitious.
(6) The hearing official may restrict the number of witnesses or
exclude witnesses to avoid undue delay or presentation of cumulative
evidence. Any witness permitted to appear may do so via telephonic,
video, or other means, with the approval of the hearing official.
(7) Either party may call qualified expert witnesses. Each party
will be limited to calling three expert witnesses, as a matter of
right, including any rebuttal or surrebuttal witnesses. Additional
expert witnesses shall be allowed only by order of the hearing
official, granted only upon a showing of good cause.
(i) At a date set by the hearing official, each party shall serve
the other with any report prepared by each of its expert witnesses.
Each party shall serve the other party with a list of any rebuttal
expert witnesses and a rebuttal report prepared by each such witness
not later than 60 days after the deadline for service of expert
reports, unless another date is set by the hearing official. A rebuttal
report shall be limited to rebuttal of matters set forth in the expert
report for which it is offered in rebuttal. If material outside the
scope of fair rebuttal is presented, a party may file a motion not
later than five days after the deadline for service of rebuttal
reports, seeking appropriate relief with the hearing official,
including striking all or part of the report, leave to submit a
surrebuttal report by the party's own experts, or leave to call a
surrebuttal witness and to submit a surrebuttal report by that witness.
(ii) No party may call an expert witness at the hearing unless the
party has listed the expert and has provided reports as required by
this section.
(iii) Each report shall be signed by the expert and contain a
complete statement of all opinions to be expressed and the basis and
reasons therefor; the data, materials, or other information considered
by the witness in forming the opinions; any exhibits to be used as a
summary of or support for the opinions; the qualifications of the
witness, including a list of all publications authored or co-authored
by the witness within the preceding ten years; the compensation to be
paid for the study and testimony; and a listing of any other cases in
which the witness has testified or sought to testify as an expert at
trial or hearing, or by deposition, within the preceding four years. A
rebuttal or surrebuttal report need not include any information already
included in the initial report of the witness.
(8)(i) Except as provided in paragraph (b)(8)(ii) of this section,
if an institution
[[Page 6259]]
has been required through compulsory process under section 490A of the
HEA or other applicable law to submit to the United States or to the
Department material regarding an express or an implied representation,
the institution cannot thereafter, in any proceeding under this subpart
in which it is alleged that the representation was false, erroneous, or
misleading, and for any purpose relating to the defense of such
allegation, introduce into the record, either directly or indirectly
through references contained in documents or oral testimony, any
material of any type that was required to be but was not timely
submitted in response to that compulsory process.
(ii) The hearing official shall, upon motion at any stage, exclude
all material that was required to be but was not timely submitted in
response to a compulsory process described in paragraph (b)(8)(i) of
this section, or any reference to such material, unless the institution
demonstrates, and the hearing official finds, that by the exercise of
due diligence the material could not have been timely submitted in
response to the compulsory process, and the institution notified the
Department or such other party that issued the order to produce, of the
existence of the material immediately upon its discovery. The hearing
official shall specify with particularity the evidence relied upon.
(9) When issues not raised in the notice of proposed action are
tried without objection at the hearing, they will be treated in all
respects as if they had been raised in the notice of proposed action,
and no formal amendments are required.
(c) The hearing official makes a transcribed record of the
proceeding and makes a copy of the record available to the designated
Department official and to the institution or servicer.
(Authority: 20 U.S.C. 1094)
0
11. Newly redesignated Sec. 668.91 is amended by:
0
A. Redesignating paragraph (a)(2) as paragraph (a)(2)(i).
0
B. In newly redesignated paragraph (a)(2)(i) adding ``or recovery''
after ``fine, limitation, suspension, or termination''.
0
C. Adding paragraph (a)(2)(ii).
0
D. Removing the second sentence in paragraph (a)(4).
0
E. Adding paragraph (c)(2)(x).
The additions read as follows:
Sec. 668.91 Initial and final decisions.
(a) * * *
(2)(i) * * *
(ii) In a borrower defense and recovery proceeding conducted in two
phases under Sec. 668.87(a)(1)(iv)(B), the hearing official's initial
decision determines whether the institution is liable for the act or
omission described in the notice of intent to recover, and the hearing
official issues an initial decision on liability only.
* * * * *
(c) * * *
(2) * * *
(x) In a borrower defense and recovery proceeding conducted in two
phases under Sec. 668.87(a)(1)(iv)(B), if a party appeals an initial
decision of the hearing official in the first phase, the Secretary may
affirm, modify, or reverse the initial decision, or may remand the case
to the hearing official for further proceedings consistent with the
Secretary's decision.
* * * * *
Sec. 668.96 [Amended]
0
12. Newly redesignated Sec. 668.96 is amended by:
0
A. In paragraph (a) removing the word ``The'' and adding, in its place,
the words ``In an action to fine an institution or servicer, or to
limit, suspend, or terminate the participation of an institution or the
eligibility of a servicer, the''.
0
B. In paragraph (b), after the words ``The corrective action'', adding
the words ``under paragraph (a) of this section''.
0
C. In paragraph (c), after the word ``decision'', adding the words ``in
any action under this subpart''.
Sec. 668.99 [Amended]
0
13. In newly redesignated paragraph (c) of Sec. 668.99, remove ``Sec.
668.91(a)(4)'' and add, in its place, ``Sec. 668.92(a)(4)''.
[FR Doc. 2017-00972 Filed 1-18-17; 8:45 am]
BILLING CODE 4000-01-P