Update on the Bare Minimum Rule (previously 150% Rule) 

Litigation and Regulatory Update 

Through a novel and desperate approach, the Biden Department of Education late last year attempted to nullify the lawsuit brought by Cortiva Institute and the Coalition for Career Schools in the Northern District of Texas (360 Degree Education v. U.S. Department of Education, No. 4:24-cv-00508). This new policy approach adopted by the Department relates to the state authorization rules as they apply to state statutes and specifically to the Texas laws governing massage therapy programs. 

It is instructive in considering how future Democratic administrations may approach lawsuits challenging an expansive use of authority to regulate schools in the for-profit sector. Perhaps more immediately important, it serves as an example of how critics of for-profit schools may try to achieve policy and legal victories in the states during the Trump administration’s control of the federal regulatory apparatus. 
 
The Texas Statute – Tex. Occ. Code Ann. § 455.205(b)

For more than 20 years, the state statutes governing massage therapy programs in Texas have included a provision that prohibits Texas massage schools from requiring students to complete more hours than the number of hours required for licensure under those statutes (currently set at 500 hours). 
 
Pursuant to this provision, Texas authorities have historically required Texas massage schools to notify their students that the students are not required to complete more than 500 hours in their massage therapy course in order to be licensed. Schools must then get an acknowledgment to that effect signed by each student. Under this interpretation of the Texas statute, although schools cannot require students to complete more than 500 hours, schools are able to offer a program that is more than 500 hours and students can voluntarily choose to participate in that program. Cortiva’s program is 600 hours.
 
The Department’s Rejected Interpretation of the Texas Statute 

Earlier in the case, the Biden Department of Education for the first time adopted a novel interpretation of the Texas statute, interpreting it as prohibiting massage therapy programs in Texas from being longer than the state minimum of 500 hours. The Department argued that there could be no harm to Cortiva from applying the new Bare Minimum Rule at the federal level to limit their massage therapy program to 500 hours because the Texas statute already prohibited Cortiva from offering a massage therapy program in excess of 500 hours. However, the District Court considered and rejected this argument in its Order granting the plaintiffs’ requested preliminary injunction.
 
The Department’s New Interpretation of the State Authorization Regulations

Undeterred, the Department then filed a Motion to Dismiss arguing that Cortiva Institute lacks standing because Cortiva’s 600-hour massage therapy program is not actually approved by Texas authorities as required under the Department’s state authorization regulations. The term “state authorization” usually refers to the statutory requirement found in 20 U.S.C. § 1099a that institutions be authorized by their state and the corresponding regulatory requirement found at 34 C.F.R. § 600.9 (entitled “State authorization”) that an educational institution to be authorized by a State to participate in Title IV programsfirs.
 
However, in its Motion to Dismiss, the Department argued that the state authorization regulations require Cortiva’s massage therapy program to be authorized by the State (not just Cortiva as an institution). The Department then cited emails it had obtained from an employee of the Texas Division of Licensing and Regulation suggesting that Texas does not approve massage therapy programs above 500 hours. The Department thus concluded that because Cortiva’s 600-hour massage therapy program cannot be approved by Texas, it does not satisfy the state authorization regulations and is therefore not eligible for Title IV funding. Such an interpretation would not only disqualify Cortiva as a plaintiff, it could threaten the viability of the institution itself. 
 
In response, the District Court concluded that if the Department’s interpretation of the law indicated that Cortiva’s program was no longer eligible to participate in Title IV programs, the Department should take administrative action based upon that new interpretation to remove Cortiva’s participation in Title IV programs. The Department subsequently initiated an administrative proceeding against Cortiva, and it appears that the Department has either initiated or threatened proceedings against other similarly situated institutions with massage therapy programs in Texas. 
 
CECU is very concerned about this obvious example of political retaliation that occurred at the end of the Biden administration, and we are working to ensure that any such excessive and unlawful executive actions are withdrawn and discontinued during the Trump administration. We believe the new Department of Education should reverse course, disavow the punitive legal interpretation adopted for purposes of the lawsuit, and return to the established interpretation and practice that had previously been in place. 
 
Why the Department’s novel interpretation is incorrect

The new approach adopted by the Department is problematic for several reasons. First, the new interpretation ignores the statutory and regulatory definitions of state authorization that are focused on authorization of institutions and instead purports to require state authorization of programs, an approach that has only tenuous support in the Department’s regulations and no support in the statute. Second, the Department’s new approach to state authorization allows, and we believe requires, the Department to second-guess the relevant state authorities. In the case of Cortiva, the Department has ignored the fact that Cortiva’s most recent application to Texas authorities for approval of their 600-hour massage therapy program was ultimately approved. It is worth noting that the logical extension of this new interpretation would require the Department to seek recoupment of all Title IV aid previously disbursed to students in Texas massage therapy programs that exceeded 600 hours. We believe this would have been the likely intent had there not been a change in presidential administrations, which is another reason why this litigation and the surrounding regulatory and legislative actions relating to the 150% rule are so important.
 
What’s next?

The litigation continues, and the overall fate of the rule remains in question. The Trump administration will likely take a different view of the Bare Minimum Rule and the subsequent lawsuit than did the Biden administration. It could decide to drop the government’s defense of the lawsuit and have the Department of Education review the Bare Minimum Rule to make a determination about the future of the regulation itself. The problems with the Bare Minimum Rule could ultimately be resolved via a new negotiated rulemaking process, a legislative remedy passed by Congress, or a resolution of the lawsuit via a settlement nullifying the Bare Minimum Rule and preventing its implementation, thereby returning the 150% Rule to permanent status. All of these actions are possible, and we are optimistic that the ultimate outcome will indeed be a reinstatement of the 150% Rule. 
 
Congressman Lloyd Smucker (R-PA) has led the way on the legislative side. His bill in support of returning to the 150% rule has a much better chance of passing during this Congress due to the partisan makeup of the 119th Congress. Likewise, the Trump Department of Education, when Secretary-designate McMahon and her appointees are confirmed, is likely to have a different perspective on this issue than their predecessors, who routinely weaponized the tools at the disposal of the Department to carry out their political agenda. With a new group of policy experts and higher education leaders who have a greater appreciation for the rule of law and the role of private career schools, we believe the Department will take a more fair look at the issue.
 
Thus, prospects for a satisfactory resolution to this matter are greatly improved in all three branches of government. We will continue to update schools about the latest actions in Congress and the administration, as well as in the courts. We are in a very solid position and would again like to thank all those who contributed to the lawsuit, especially Cortiva and the Coalition of Career Schools. The litigation resulted in a delay in the implementation of the Biden regulations, allowing for a change in political climate that greatly changed the dynamics of the issue to the benefit of schools and students at these important programs.