Recently, U.S. Department of Education (Department) Secretary Arne Duncan issued a decision in an administrative appeal that could have important ramifications for institutions of higher education. In the Matter of Tarleton State University, the Secretary not only established a fairly severe method of calculating potential penalties for noncompliance with the Clery Act, but may have reestablished a method for calculating all fines for regulatory infractions that was seemingly abolished a decade ago.
To recap, Tarleton State University (Tarleton), a public institution of higher education in Texas, conducted an audit of its Clery Act campus crime reporting for 2005 (Report). In the process, it discovered a number of deficiencies in the Report: Tarleton failed to provide notice of three forcible sex offenses, one robbery, 16 burglaries, and two drug violations that occurred on campus. So, in a May 17, 2007 amendment, Tarleton revised the Report. In 2008, the Department conducted a program review of Tarleton’s Clery Act reporting and, as in the June 2009 Final Program Review Determination (FPRD), the Department discovered four additional burglaries, six drug law arrests and two drug law referrals that were not included in the amended Report. Although Tarleton corrected the Report to reflect these new crimes (as directed in the Program Review Report), the Department’s Administrative Actions and Appeals Division (AAAD) to consider possible avers actions under Subpart G.
On October 6, 2009, the Department issued a Notice of Intent to Fine Tarleton $137,500 for the violations verified in the FPRD. The proposed fine included: $27,500.00 for each of three forcible sex offenses that were not reported originally but were correctly reported in the amended filing; $27,500.00 for the group of offenses not in the original Report but in the amended Report and $27,500.00 for the group of offenses uncovered by the program review team. At the hearing to contest the fine, the administrative law judge (ALJ) diminished the fine to one instance of the statutory maximum penalty of $27,500. Importantly, ALJ Canellos determined not only that the Department failed to carry out any analysis of the appropriateness of the fine sufficient to justify the amount, but he also seemed to hold that Tarleton only committed one violation — the filing of incorrect report – and reduced the fine to one instance of the statutory maximum fine:
Another aspect of this fine action that is implicated is what is the maximum permissible fine in this case? . . . . One corollary to the rules regarding punishment is that you may not have unreasonable multiplicity of charges so as to enhance the authorized punishment. This issue is raised because of the method FSA chose to lump together certain erroneous reporting, while at the same time, chose to separate out other reporting during the same time period and in the same report. Arguably, since the alleged violation is the improper filing of a single report, the maximum permissible fine should be $27,500.00. Does the fact that the report is wrong in a number of ways allow for the maximum fine to be $27,500.00 multiplied by the number of incorrect entries? Or, do the multiple errors allow for the imposition of a fine on the higher side of the punishment for a single violation? To put the question in context, what would have been the maximum permissible fine had Tarleton not filed a Clery Act report at all? Further, even though I recognize that other additional punishments could be assessed, what would the maximum permissible fine have been if it were established that Tarleton had failed to submit its Clery Act report, intentionally?
Hearing Decision, at 4.
On appeal, after noting that “the imposition of a monetary penalty if an appropriate way to enforce the goals of the Clery Act,” Appeal, at 3, the Secretary clearly answered this question:
In re Bnai Arugath Habosem (Bnai), Secretary Richard W. Riley interpreted the HEA [Higher Education Act] by that “multiple violations of the same prohibition” constituted a single violation. In Bnai, the institution made Pell grant payments to 58 students who, ultimately, were ineligible for Pell grant funding. On the basis of those fact, Secretary Riley concluded that each ineligible student who received a Pell grant disbursement should be counted in the calculation of “each violation” of the statutory provision; thus rendering Bnai subject to a fine for each ineligible student.
I agree with Secretary Riley. The statutory meaning of “each violation” is best understood in light of a common sense interpretation of the words “each violation.” Moreover, the standard is particularly fitting for a case where the imposition of a single fine — in light of repeated crime reporting failure across a wide range of categories of crime — provides the wrong incentive for promoting exacting compliance with the Clery Act’s crime reporting requirement.
Appeal, at 4-5. The Secretary then held that the Department’s reasoning for imposing the fines for the violent crimes was reasonable, and reversed the ALJ’s decision; the Secretary upheld a fine amount of $110,000 imposed by the Department — for the four unreported violent crimes — but remanded the case for a determination of the total fine for the 70 non-violent crimes that want unreported. As a result, the parties settled on July 25, 2012 for $123,500.
The implications of this decision may be very dramatic. First, notice is out on Clery Act compliance — a failure to report a single crime may support a fine of $27,500. More importantly, the decision that a single misstep is “a violation” of the HEA may have a dramatic effect on program reviews. Indeed, typically, a “pattern and practice” was a “violation”, even if it led to multiple compliance errors. We will have to see how the Department uses this rule in the future. Perhaps return to Title IV violations or disbursement to ineligible students – both of which are typically the result of a bad policies followed consistently — may become even more expensive for institutions.