[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Proposed Rules]
[Pages 34466-34485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16143]



[[Page 34465]]

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Part IV





Department of Education





_______________________________________________________________________



34 CFR Part 602



The Secretary's Recognition of Accrediting Agencies; Proposed Rule

  Federal Register / Vol. 64, No. 122 / Friday, June 25, 1999 / 
Proposed Rules  

[[Page 34466]]



DEPARTMENT OF EDUCATION

34 CFR Part 602

RIN 1840-AC80


The Secretary's Recognition of Accrediting Agencies

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Secretary proposes to amend the regulations governing the 
Secretary's recognition of accrediting agencies to implement provisions 
added to the Higher Education Act of 1965, as amended (HEA), by the 
Higher Education Amendments of 1998. The Secretary recognizes 
accrediting agencies to assure that those agencies are, for HEA and 
other Federal purposes, reliable authorities regarding the quality of 
education or training offered by the institutions or programs they 
accredit.

DATES: We must receive your comments on or before August 24, 1999.

ADDRESSES: Address all comments about these proposed regulations to 
Karen W. Kershenstein, U.S. Department of Education, 400 Maryland 
Avenue, SW., room 3915, ROB-3, Washington, DC 20202-5244. If you prefer 
to send your comments through the Internet, use the following address: 
[email protected]
    If you want to comment on the information collection requirements 
in these proposed regulations, you must send your comments to the 
Office of Management and Budget at the address listed in the Paperwork 
Reduction Act section of this preamble. You may also send a copy of 
these comments to the Department representative named in this section.

FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein. Telephone: 
(202) 708-7417. If you use a telecommunications device for the deaf 
(TDD), you may call the Federal Information Relay Service (FIRS) at 1-
800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:

Invitation to Comment:

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations.
    We also invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the 
accrediting agency recognition process.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in room 3915, ROB-3, 7th and 
D Streets, 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.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call FIRS at 1-800-
877-8339.

Negotiated Rulemaking Process

    Section 492 of the HEA requires that, before publishing any 
proposed regulations to implement programs under Title IV of the Act, 
the Secretary obtain public involvement in the development of the 
proposed regulations. After obtaining advice and recommendations, the 
Secretary must conduct a negotiated rulemaking process to develop the 
proposed regulations. All published proposed regulations must conform 
to agreements resulting from the negotiated rulemaking process unless 
the Secretary reopens the negotiated rulemaking process or provides a 
written explanation to the participants in that process why the 
Secretary has decided to depart from the agreements.
    To obtain public involvement in the development of the proposed 
regulations, we published a notice in the Federal Register (63 FR 
59922, November 6, 1998) requesting advice and recommendations from 
interested parties concerning what regulations were necessary to 
implement Title IV of the HEA. We also invited advice and 
recommendations concerning which regulated issues should be subjected 
to a negotiated rulemaking process. We further requested advice and 
recommendations concerning ways to prioritize the numerous issues in 
Title IV, in order to meet statutory deadlines. Additionally, we 
requested advice and recommendations concerning how to conduct the 
negotiated rulemaking process, given the time available and the number 
of regulations that needed to be developed.
    In addition to soliciting written comments, we held three public 
hearings and several informal meetings to give interested parties an 
opportunity to share advice and recommendations with the Department. 
The hearings were held in Washington, DC, Chicago, and Los Angeles, and 
we posted transcripts of those hearings to the Department's Information 
for Financial Aid Professionals web site (http://www.ifap.ed.gov).
    We then published a second notice in the Federal Register (63 FR 
71206, December 23, 1998) to announce the Department's intention to 
establish four negotiated rulemaking committees to draft proposed 
regulations implementing Title IV of the HEA. The notice announced the 
organizations or groups believed to represent the interests that should 
participate in the negotiated rulemaking process and announced that the 
Department would select participants for the process from nominees of 
those organizations or groups. We requested nominations for additional 
participants from anyone who believed that the organizations or groups 
listed did not adequately represent the list of interests outlined in 
section 492 of the HEA. Once the four committees were established, each 
negotiating committee met to develop proposed regulations for several 
days each month, from January through May.
    The proposed regulations contained in this notice of proposed 
rulemaking (NPRM) reflect the final consensus of the negotiating 
committee, which was made up of the following members:

American Association of Collegiate Registrars and Admissions Officers.
American Association of Community Colleges.
American Association of Cosmetology Schools.
American Association of State Colleges and Universities.
American Council on Education.
Association of American Universities.
Association of Jesuit Colleges and Universities.
Career College Association.
Council for Higher Education Accreditation.

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Council of Recognized National Accrediting Agencies, consisting of the 
Accrediting Bureau of Health Education Schools, the Accrediting 
Commission of Career Schools and Colleges of Technology, the 
Accrediting Council for Continuing Education and Training, the 
Accrediting Council of Independent Colleges and Schools, the Council on 
Occupational Education, the Distance Education and Training Council, 
and the National Accrediting Commission of Cosmetology Arts & Sciences.
Council of Regional Accrediting Commissions, consisting of the 
Commission on Higher Education of the Middle States Association of 
Colleges and Schools, the Commission on Institutions of Higher 
Education and the Commission on Technical and Career Institutions of 
the New England Association of Schools and Colleges, the Commission on 
Institutions of Higher Education of the North Central Association of 
Colleges and Schools, the Commission on Colleges of the Northwest 
Association of Schools and Colleges, the Commission on Colleges of the 
Southern Association of Colleges and Schools, and the Accrediting 
Commission for Senior Colleges and Universities and the Accrediting 
Commission for Community and Junior Colleges of the Western Association 
of Schools and Colleges.
Education Finance Council.
Legal Services Counsel (a coalition).
National Association for Equal Opportunity in Higher Education.
National Association of College and University Business Officers.
National Association of Independent Colleges and Universities.
National Association of State Student Grant and Aid Programs/National 
Council of Higher Education Loan Programs (a coalition).
National Association of State Universities and Land-Grant Colleges.
National Association of Student Financial Aid Administrators.
National Direct Student Loan Coalition.
National Women's Law Center.
State Higher Education Executive Officers Association.
The College Board.
The College Fund/United Negro College Fund.
United States Department of Education.
United States Student Association.
US Public Interest Research Group.

    Under committee protocols, consensus meant that there was no 
dissent by any member of the committee. Thus, the proposed regulations 
in this document have been agreed to by each of the organizations and 
groups listed as members of the committee.
    To expedite its work, the negotiating committee established an 
accreditation subcommittee, which was made up of the following members, 
in addition to any members of the full committee:

Accrediting Association of Bible Colleges.
Accrediting Commission of Career Schools and Colleges of Technology.
Association of Specialized and Professional Accreditors.
Commission on Higher Education of the Middle States Association of 
Colleges and Schools.
Commission on Colleges of the Southern Association of Colleges and 
Schools.

    The subcommittee made recommendations to the full negotiating 
committee, which in turn reached final consensus on the proposed 
regulations in this document.

Changes From Existing Regulations

    The following discussion reflects proposed changes to the existing 
regulations governing the Secretary's recognition of accrediting 
agencies. Some of the proposed changes incorporate provisions contained 
in the Higher Education Amendments of 1998, the most significant of 
which concern the standards accrediting agencies must have, the 
timeframe for agencies to come into compliance with the criteria for 
recognition, and distance education. Other proposed changes are the 
result of discussion and subsequent consensus among negotiators about 
how to improve the current regulations by clarifying existing 
regulatory language and eliminating redundancies. All of the changes 
are discussed in the order in which they appear in the proposed 
regulations.
    Please note that the proposed regulations differ organizationally 
from the current regulations because we have rewritten them to comply 
with Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``Plain Language in Government Writing.'' For your convenience, 
the Appendix contains a distribution table listing the sections 
contained in the current regulations and where they may be found in the 
proposed regulations.

Subpart A--General (Secs. 602.1 Through 602.3)

    Subpart A of the current regulations contains basic information 
describing the purpose of the regulations and the definitions that 
apply. It also contains some requirements agencies must meet if they 
wish to be recognized. Subpart A of the proposed regulations contains 
only the basic information about the purpose of the regulations and the 
definitions that apply. The only significant changes proposed in 
subpart A relate to some of the definitions contained in Sec. 602.3. 
These are discussed in the next section.
Section 602.3  What Definitions Apply to This Part?
    Most of the definitions in the proposed regulations are the same as 
the ones in the current regulations. Substantive changes are proposed 
for two definitions, however, and the proposed regulations contain 
three new definitions.
    Adverse accrediting action. The proposed regulations exclude 
probation and show cause from the type of action currently included in 
the term ``adverse action.'' Like Sec. 602.26(c) of the current 
regulations, Sec. 602.20 of the proposed regulations requires 
recognized agencies to take adverse action within a specified timeframe 
if their review of an institution or program indicates that it is not 
in compliance with agency standards. Including interim actions such as 
probation and show cause as ``adverse actions'' permits noncompliant 
institutions and programs to retain accreditation or preaccreditation 
well beyond the maximum timeframes the regulations prescribe. Under the 
proposed regulations, failure to achieve compliance within the 
prescribed timeframe would result in denial, withdrawal, suspension, 
revocation, or termination of accreditation or preaccreditation unless 
the agency extends the timeframe for good cause.
    Branch campus. Section 496(c)(3) of the HEA requires an 
institutional accrediting agency whose accreditation enables the 
institutions it accredits to establish eligibility to participate in 
Title IV, HEA programs to conduct a site visit within six months to 
each branch campus an institution establishes. While the 1998 
amendments did not change the requirement for site visits within six 
months of the establishment of a branch campus, the House-Senate 
Conference Report noted that the definition of the term ``should not be 
so broad as to be overly burdensome on agencies and institutions.''
    The current regulations define ``branch campus'' to include ``any 
location of an institution, other than the main campus, at which the 
institution offers at least 50 percent of an educational program.'' A 
significant number of locations met this definition. Consequently, 
agencies had to conduct a site visit within six months of the

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establishment of each of these locations, even if the institution had a 
proven track record in establishing additional locations that met or 
exceeded the agency's standards. This proved to be burdensome and 
costly to both agencies and institutions. In addition, this portion of 
the definition of ``branch campus'' diverged from the definition of the 
same term in the institutional eligibility regulations contained in 34 
CFR part 600.
    The proposed regulations change the definition of ``branch campus'' 
used in 34 CFR part 602 to conform to the definition of the term in 34 
CFR part 600 and require agencies to conduct site visits to additional 
locations that offer at least 50 percent of an educational program 
under certain circumstances. The specific circumstances are discussed 
under Sec. 602.22.
    Distance education. The current regulations do not use this term. 
In the accreditation section of the 1998 amendments, however, there are 
two references to distance education. The first, found in section 
496(a)(4) of the HEA, requires that an agency consistently apply and 
enforce standards that ensure that the courses or programs offered by 
an institution, ``including distance education courses or programs,'' 
are of sufficient quality to achieve, for the duration of the 
accreditation period, the stated objective for which they are offered. 
The second, found in section 496(n)(3) of the HEA, refers to the scope 
of recognition the Secretary grants to an agency and states, ``If the 
agency or association reviews institutions offering distance education 
courses or programs and the Secretary determines that the agency or 
association meets the requirements of this section, then the agency 
shall be recognized and the scope of recognition shall include the 
accreditation of institutions offering distance education courses or 
programs.''
    The proposed regulations adopt the same definition of ``distance 
education'' as is used in establishing the Distance Education 
Demonstration Programs in section 488 of the Higher Education 
Amendments of 1998. The negotiating committee considered whether use of 
the term ``courses'' in the statutory definition could be misread to 
exclude programs offered through distance education. The committee 
concluded, however, that a fair reading of ``courses'' includes 
programs and is not limited to individual courses. The Secretary agrees 
with this interpretation.
    Scope of recognition. The proposed regulations define a new term, 
``scope of recognition.'' The definition would include the description 
contained in Sec. 602.13(e) of the current regulations about the 
Secretary's recognition decision. The definition would also address the 
provision contained in section 496(n)(3) of the Higher Education 
Amendments of 1998 by adding the agency's accrediting activities 
related to distance education to the list of items to be referenced by 
the Secretary in the scope of recognition awarded to an agency. The 
proposed definition also states that the Secretary may place a 
limitation on the scope of an agency's recognition for Title IV, HEA 
purposes.
    Senior Department official. Not used in the current regulations, 
this term is defined in the proposed regulations as ``the senior 
official in the Department of Education who reports directly to the 
Secretary regarding accrediting agency recognition.'' The current 
regulations use another term, ``designated Department official,'' but 
in various places this term has meant the Assistant Secretary for 
Postsecondary Education or, more recently, the Chief Operating Officer; 
in others, it has meant a member of that individual's staff to whom he 
or she has delegated certain responsibilities. The use of the term 
``designated Department official'' to describe different individuals in 
the Department has caused some confusion in the current regulations. 
For this reason, the proposed regulations do not use the term at all. 
Rather, they establish the responsibilities of Department staff, the 
National Advisory Committee on Institutional Quality and Integrity, and 
the senior Department official in different stages of the recognition 
process. Subparts C and D of the proposed regulations describe the 
specific circumstances under which the senior Department official makes 
recommendations regarding an agency's recognition.

Subpart B--The Criteria for Recognition (Secs. 602.10 Through 602.28)

    With a few exceptions, subpart B of the proposed regulations 
follows prior law in establishing the criteria for recognition. 
However, the criteria have been grouped into several subheadings to 
improve readability. A discussion of each group follows.
Basic Eligibility Requirements (Secs. 602.10 through 602.13)
    The proposed regulations group under this heading the recognition 
requirements found in Secs. 602.1(b), 602.20, and 602.22 of the current 
regulations. If an agency seeking initial recognition fails to meet one 
or more of these basic eligibility requirements, Sec. 602.31 of the 
proposed regulations authorizes Department staff to recommend to the 
agency that it withdraw its application for recognition.
    Section 602.12 of the proposed regulations changes current 
requirements related to accrediting experience so that the requirements 
apply only to agencies seeking either initial recognition or an 
expansion of their scope of recognition. A recognized agency, by virtue 
of the fact that the Secretary has recognized it, has already 
demonstrated its compliance with these requirements and need not be 
burdened with demonstrating it again if it seeks continued recognition. 
A new agency, on the other hand, needs to demonstrate that it has 
accrediting experience in order to be recognized. Similarly, an agency 
that seeks to expand its scope of recognition needs to demonstrate its 
experience in the area for which it seeks the expansion.
    The proposed regulations also specify the amount of experience 
required for initial recognition. Specifically, they require a new 
agency to have conducted accrediting activities, including making 
accrediting decisions, for at least two years prior to seeking 
recognition.
    In conjunction with the issue of accrediting experience, the 
Secretary notes that 1998 amendments replace the phrase ``accrediting 
agency approval'' with ``accrediting agency recognition'' and generally 
refer to agencies as ``recognized'' rather than ``approved.'' The 
Secretary believes these changes simply clarify that the Secretary does 
not ``approve'' agencies; i.e., grant them permission to operate, 
conduct accrediting activities, and make accrediting decisions. Rather, 
the Secretary ``recognizes'' them for having demonstrated, as a result 
of their accrediting experience, that they are in fact reliable 
authorities regarding the quality of education or training provided by 
the institutions or programs they accredit.
Organizational and Administrative Requirements (Secs. 602.14 and 
602.15)
    Included under this heading are Secs. 602.3 and 602.21 of the 
current regulations. There are no significant changes to either of 
these sections in the proposed regulations, although some requirements 
are either combined to eliminate redundancy or reworded for clarity. 
For example, the current regulations require agencies to have adequate 
administrative staff to carry out their accrediting responsibilities 
effectively and to manage their finances effectively; they also require 
agencies to have adequate financial resources to carry out their 
accrediting responsibilities. These requirements are

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combined and simplified in the proposed regulations to state that 
agencies must have adequate administrative staff and financial 
resources to carry out their accrediting responsibilities.
    In another instance, the current regulations require agencies to 
have ``competent and knowledgeable individuals, qualified by experience 
and training, responsible for on-site evaluation, policy-making, and 
decision-making regarding accreditation and preaccreditation status.'' 
This provision implements the statutory requirement contained in 
section 496(c)(1) of the HEA that agencies must ensure ``that 
accreditation team members are well-trained and knowledgeable with 
respect to their responsibilities.'' However, agencies have not always 
understood the language in the current regulations to mean that those 
involved in the accreditation process must be well-trained in agency 
standards, policies, and procedures. Consequently, the proposed 
regulations restate the requirement explicitly by calling for agencies 
to have ``competent and knowledgeable individuals, qualified by 
education and experience in their own right and trained by the agency 
on its standards, policies, and procedures, to conduct its on-site 
evaluations, establish its policies, and make its accrediting 
decisions.''
Required Standards and Their Application (Secs. 602.16 Through 602.21)
    Included under this heading are all of Secs. 602.24 and 602.26 of 
the current regulations and some sections in Sec. 602.23. The 
significant changes in this group of criteria are discussed in the 
description of each proposed section that follows.
Section 602.16  Accreditation and Preaccreditation Standards
    The proposed regulations revise and reorder the list of required 
accreditation standards found in Sec. 602.26(b) of the current 
regulations to conform to the list found in section 496(a)(5) of the 
1998 amendments. Specifically, the proposed regulations require 
agencies to have accreditation standards that effectively address the 
quality of an institution or program in the following areas: (1) 
Success with respect to student achievement in relation to the 
institution's mission, including, as appropriate, consideration of 
course completion, State licensing examination, and job placement 
rates; (2) curricula; (3) faculty; (4) facilities, equipment, and 
supplies; (5) fiscal and administrative capacity as appropriate to the 
specified scale of operations; (6) student support services; (7) 
recruiting and admissions practices, academic calendars, catalogs, 
publications, grading, and advertising; (8) measures of program length 
and the objectives of the degrees or credentials offered; (9) the 
record of student complaints received by, or available to, the agency; 
and (10) the institution's record of compliance with its program 
responsibilities under Title IV of the Act, based on the most recent 
student loan default rate data provided by the Secretary, the results 
of financial or compliance audits, program reviews, and any other 
information the Secretary may provide to the agency.
    The significant changes the proposed regulations make to the list 
of required accreditation standards include the placement of success 
with respect to student achievement first rather than ninth, the 
elimination of the standard related to tuition and fees, the inclusion 
of default rates in the standard related to institutions' compliance 
with their Title IV responsibilities rather than in a separate 
standard, and the combination of the two standards that dealt with 
aspects of program length into a single standard.
    In light of the statute's placement of success with respect to 
student achievement as the first of the required standards, the 
Secretary believes some discussion of the issue is warranted in this 
NPRM. Section 496(a) of the HEA requires the Secretary to establish the 
criteria for recognition and states that those criteria must include 
``an appropriate measure or measures of student achievement.'' The 
Secretary believes that the standards specified in Sec. 602.26(b)(9) of 
the current regulations and Sec. 602.16(a)(1)(i) of the proposed 
regulations, which require agencies to have a standard that effectively 
addresses the success of an institution or program with respect to 
student achievement, fulfill this statutory requirement.
    The Secretary believes that any determination by an accrediting 
agency that an institution or program it accredits provides quality 
education or training must be based, in part, on an assessment of the 
achievement of students enrolled in the institution or program, because 
the true success of an institution or program is measured by the 
success of its students. The Secretary further believes that success 
with respect to student achievement, a measure of educational outcomes, 
is an important indicator of educational quality, on a par with or even 
surpassing the more traditional focus on educational ``inputs.''
    In concluding this discussion of the required accreditation 
standard related to success with respect to student achievement, the 
Secretary wishes to reiterate the comments made on this issue in the 
appendix to the 1994 regulations:

    An accrediting agency's standard for assessing this area should 
generally address the success of an institution or program in 
meeting its educational objectives, as measured by the achievement 
of its students. Typically under this standard, an agency should 
require the institution or program to document and assess the 
educational achievement of students in verifiable and consistent 
ways, such as student grades, grade point averages, theses or 
portfolios, the results of admissions tests for graduate or 
professional school or other standardized tests, transfer rates to 
institutions offering higher level programs, job placement rates, 
completion rates, results of licensing examinations, evaluations by 
employers, follow-up studies of alumni, and other recognized 
measures of educational outcomes. The agency should also typically 
require the institution or program to use effectively the 
information obtained in this manner to improve student achievement 
with respect to the degrees or certificates offered. Finally, the 
agency should typically monitor in a systematic way the 
institution's or program's performance with respect to student 
achievement, including, as appropriate, completion rates, job 
placement rates, and pass rates on State licensing examinations, or 
other appropriate measures of occupational competency, to determine 
if performance is consistent with both the institution's or 
program's mission and objectives and any measures the agency may 
have for institutions' or programs' performance with respect to 
student achievement. For programs that provide vocational education, 
agencies should establish quantitative standards for completion 
rates, job placement rates, and pass rates on State licensing 
examinations.
Section 602.17  Application of Standards in Reaching an Accrediting 
Decision
    There are no significant changes to this section of the proposed 
regulations, which basically repeats Secs. 602.24(b)(1) and 
602.24(b)(2) of the current regulations.
Section 602.18  Ensuring Consistency in Decision-Making
    There are no significant changes to this section of the proposed 
regulations, which basically repeats Secs. 602.23(b)(3), 602.23(b)(4), 
and 602.26(d) of the current regulations.
Section 602.19  Monitoring and Reevaluation of Accredited Institutions 
and Programs
    There are no significant changes to this section of the proposed 
regulations, which basically repeats Secs. 602.24(b)(4)

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and 602.24(b)(5) of the current regulations. However, the Secretary 
wishes to emphasize that accrediting agencies have a responsibility to 
monitor institutions and programs throughout their accreditation period 
to ensure that educational quality is maintained. While an agency may 
determine the policies and procedures it will use to monitor its 
institutions and programs, those procedures must provide for prompt and 
appropriate action by the agency whenever it receives substantial, 
credible evidence from any reliable source that indicates a systemic 
problem with an accredited institution or program that calls into 
question the ability of the institution or program to meet the agency's 
standards. Furthermore, the Secretary expects those policies and 
procedures to provide an agency with unambiguous authority to act if 
educational quality is at issue, even if the matters are being reviewed 
by other bodies, including courts. It is unacceptable for an agency to 
have as its policy that it will not look into, and take appropriate 
action based upon, information that comes to its attention through 
pending third-party litigation.
Section 602.20  Enforcement of standards
    There are no significant changes to this section of the proposed 
regulations, which basically repeats Sec. 602.26(c) of the current 
regulations.
Section 602.21  Review of Standards
    The Secretary's criteria for the recognition of accrediting 
agencies have long required agencies to maintain a systematic program 
of review of their accrediting standards. The present statement of the 
requirement is contained in Sec. 602.23(b)(5) and (b)(6) of the current 
regulations and emphasizes the need for agencies to carry out a program 
of review that ensures their standards are valid and reliable 
indicators of educational quality and relevant to the needs of 
students. The current regulations do not, however, define ``validity'' 
and ``reliability,'' and various technical interpretations exist for 
these terms that, when applied in the context of accrediting agency 
standards, are frequently misunderstood. Non-Federal negotiators 
expressed concern that because ``valid'' and ``reliable'' have 
established meanings in the field of statistics, the current 
regulations arguably imply that a systematic program of review must 
inevitably, or even usually, take the form of an extensive statistical 
analysis. Another problem with the current regulations is that they 
imply a well-defined conclusion to an agency's systematic program of 
review, at which point the agency can state with certainty that all of 
its standards are valid and reliable, when in fact a good systematic 
program of review is ongoing.
    The proposed regulations include two significant changes to address 
these concerns. First, they avoid altogether the use of the terms 
``valid'' and ``reliable'' in describing the requirements for a 
systematic program of review. Instead, the proposed regulations require 
agencies to maintain a systematic program of review that demonstrates 
their standards are adequate to evaluate the quality of education or 
training provided by the institutions and programs they accredit and 
relevant to the needs of students. Second, while the proposed 
regulations leave agencies free to determine the procedures they will 
follow in evaluating their standards, they require agencies to ensure 
that their program of review is comprehensive, occurs at regular 
intervals or on an ongoing basis, examines each standard and the 
standards as a whole, involves all of the relevant constituencies in 
the review, and affords those constituencies a meaningful opportunity 
to provide input into the review.
    In proposing to eliminate the word ``reliable'' from this section, 
the Secretary notes that sections 496(a) and 496(c) of the HEA use the 
word ``reliable'' in describing agencies that may qualify for 
recognition. Accordingly, the Secretary has incorporated this concept 
into Sec. 602.16(a)(i) of the proposed regulations, which describes as 
``reliable'' an agency that has standards that effectively address each 
of the areas the statute requires agencies to address. The Secretary 
views Sec. 602.16(a)(i) as a crucial provision of the proposed 
regulations and as accurately conveying the substance of the word 
``reliable'' as used in the statute. Because the concept of reliability 
is already incorporated in Sec. 602.16(a)(i) and because, as previously 
stated, it has had misleading connotations when used in the context of 
an agency's review of its standards, the word ``reliable'' has been 
deleted from Sec. 602.21.
    The proposed terminology for Sec. 602.21 strikes a balance between 
overly prescriptive regulation of agency standards and processes and a 
requirement that looks only to the agency's review process and not to 
the substance of the standards. As proposed, Sec. 602.21 places a 
burden on agencies to demonstrate that their standards are adequate to 
evaluate quality and relevant to the needs of students. At the same 
time, the proposed section would eliminate any implication that the 
program of review must take the form of a statistical analysis.
    One other feature of the proposed review process is a requirement 
that if an agency determines at any point in its systematic program of 
review that it needs to make changes to its standards, it would have to 
initiate action within 12 months to make the changes and would have to 
complete that action within a reasonable period of time. This feature 
reflects the 1998 amendment to the HEA that sets a general deadline of 
12 months for agencies to remedy identified areas of noncompliance.
    The proposed procedures for making changes to an agency's standards 
also provide a more focused description of the notice an agency must 
provide about its proposed changes and ensure the opportunity for 
timely input by any person wishing to participate in the process.
Required Operating Policies and Procedures (Secs. 602.22 Through 
602.28)
    Included under this heading are Secs. 602.4, 602.25. 602.27, 
602.28, 602.29, and 602.30 of the current regulations. The proposed 
regulations contain several significant changes, as discussed in the 
following sections.
Site Visits to Additional Locations
    As discussed previously under Sec. 602.3, the definition of 
``branch campus'' in the current regulations is quite broad. This 
results in a significant burden being placed on agencies by requiring 
them to conduct a site visit within six months to each branch campus an 
institution established. It also places a significant burden, 
particularly in terms of costs, on institutions that established large 
numbers of sites that met the broad definition of branch campus.
    The negotiating committee discussed at length how to modify the 
site visit requirement to ease the burden on agencies and institutions 
and still provide adequate protections to the Department and, 
ultimately, the students who attend the institutions. The consensus 
that was reached is reflected in these proposed regulations. 
Specifically, the proposed regulations redefine branch campus to match 
the narrow definition in the institutional eligibility regulations in 
34 CFR part 600, and current site visit requirements would remain 
applicable to all locations that meet this definition. However, the 
proposed regulations provide relief from the burden of the current 
requirements for site visits to other newly-established

[[Page 34471]]

locations that offer 50 percent or more of an educational program by 
making them subject to evaluation under an agency's substantive change 
policies. Specifically, the proposed regulations require agencies to 
have a substantive change policy that addresses the establishment by an 
institution of these types of additional locations and that includes an 
analysis of the effect of the additional location or locations on the 
overall fiscal and administrative capacity of the institution.
    Under the proposed regulations, an agency's substantive change 
policy would have to require the agency to conduct a site visit within 
six months to an additional location offering 50 percent or more of an 
educational program if any of three conditions is met. First, the 
agency would have to conduct a site visit to each additional location 
if the institution has a total of three or fewer additional locations. 
The proposed regulations contain this requirement because of the need 
for an agency to monitor an institution very closely as it begins to 
operate more than just the main campus; the need for such close 
monitoring diminishes once the institution has gained experience in 
establishing effective systems for the administration of multiple 
sites.
    The proposed regulations also require an agency to conduct a site 
visit within six months of the establishment of an additional location 
if the agency has any serious concerns about the institution; e.g., if 
the institution has been placed on warning, probation, or show cause by 
the agency or is subject to some type of limitation on its 
accreditation. Finally, the proposed regulations require a site visit 
within six months to an additional location if the institution has 
failed to demonstrate that it has either the administrative and fiscal 
capacity to operate the additional locations it has already established 
or a proven record of effective educational oversight of additional 
locations.
    Beyond these situations that require agencies to conduct site 
visits to each additional location an institution seeks to establish, 
the proposed regulations give agencies flexibility in deciding when to 
conduct site visits to additional locations. Specifically, they require 
agencies to have an effective mechanism for conducting additional site 
visits at reasonable intervals to those institutions that operate more 
than three additional locations. They also require agencies to have an 
effective mechanism, which may include site visits, for ensuring that 
institutions that experience rapid growth in the number of additional 
locations maintain educational quality.
    The negotiating committee believed the proposed approach to the 
site visit requirement provided relief from the burden some agencies, 
particularly those that accredit State institutions, have experienced 
as a result of the requirement in the current regulations. Yet they 
also believed this approach retained a reasonable degree of protection 
by requiring site visits if circumstances warrant them.
Substantive Change
    Except for the provisions related to site visits to additional 
locations that were discussed in the previous section, Sec. 602.22 of 
the proposed regulations basically repeats Sec. 602.25 of the current 
regulations. However, there are a few changes. For example, under the 
proposed regulations, agencies' substantive change policies would no 
longer need to address changes from credit to clock hours or a 
substantial increase in the length of a program. The former requirement 
was deleted because few, if any, institutions ever changed from credit 
to clock hours, while the latter was deleted because it duplicated 
another requirement.
Unannounced Inspections
    The Higher Education Amendments of 1998 changed the requirement 
contained in Sec. 602.24(b)(3) of the current regulations that agencies 
must conduct unannounced inspections of institutions that provide 
vocational education, making it optional rather than mandatory. 
Accordingly, Sec. 602.23(f) of the proposed regulations permits an 
agency to establish any additional operating procedures it deems 
appropriate, including unannounced inspections, but it does not require 
the agency to conduct unannounced inspections.
Change in Ownership
    While there has been no significant change to this provision in the 
proposed accreditation regulations, the Secretary wishes to clarify 
that it is the agency's definition of what constitutes a change in 
control, not the Department's definition, that would govern this 
section of the regulations. In conjunction with the statutory 
requirement for standards that address Title IV compliance, however, 
agencies whose accreditation enables the institutions they accredit to 
establish eligibility to participate in Title IV programs would need to 
take due note in their definition of ``change in control'' of those 
instances that are covered by the Department's definition of the term.
Teach-Out Agreements
    The proposed regulations address two particular concerns with the 
current regulations. First, the regulations appear to require agencies 
to intercede in situations in which the agencies have no control 
because the institution has already closed. Second, they appear to 
imply that agencies can only approve teach-out agreements if the teach-
out institution is geographically close to the closed institution and 
offers a program that is compatible in program structure and scheduling 
to that offered by the closed institution.
    The proposed regulations clarify that the role of the accrediting 
agency is to ensure that the teach-out institution has the necessary 
experience, resources, and support services to provide an educational 
program that is of acceptable quality, is reasonably similar in 
content, structure, and scheduling to that provided by the closed 
institution, and can provide students access to the program and 
services without requiring them to move or travel substantial 
distances.
    The proposed regulations also require an agency to work with the 
Department and the appropriate State agency, to the extent feasible, to 
ensure that students are given reasonable opportunities to complete 
their education without additional charge.
Notification of Accrediting Decisions
    Section 602.26 of the proposed regulations basically repeats 
Sec. 602.29 of the current regulations, with one addition. The proposed 
regulations require an agency to provide the appropriate State 
licensing or authorizing agency and the appropriate accrediting 
agencies written notice of any final adverse decision at the same time 
it notifies the institution or program of the decision and to provide 
notice to the public within 24 hours of notifying the institution or 
program of the decision.
    The proposed regulations mirror section 496(a)(7) of the statute in 
requiring agencies to report only final adverse decisions. However, the 
Secretary wishes to encourage all agencies to share information with 
the Secretary on adverse decisions that are still appealable within the 
agency if the information would help preserve the integrity of the 
Title IV, HEA programs. The Secretary believes that sharing this type 
of information is consistent with section 487(a)(15) of the HEA, which 
requires an institution that participates in the Title IV, HEA programs 
to acknowledge in its Program Participation Agreement the authority of

[[Page 34472]]

the Secretary, guarantee agencies, lenders, accrediting agencies, the 
Secretary of Veterans Affairs, and State licensing and authorizing 
agencies to share with each other any information pertaining to the 
institution's eligibility to participate in the Title IV, HEA programs. 
The Secretary notes that many agencies already share this information 
and hopes that more will do so, particularly in those instances in 
which students could be harmed if the information were not shared with 
the Secretary.

Subpart C--The Recognition Process (Secs. 602.30 Through 602.36)

    This subpart basically contains the recognition procedures found in 
subpart C of the current regulations. The significant changes that are 
proposed for the recognition process are discussed in the following 
sections.
Application and Review by Department Staff (Secs. 602.30 and 602.31)
    The proposed regulations basically repeat Secs. 602.10 and 602.11 
of the current regulations. There are, however, three significant 
changes proposed for the review of an agency's application by 
Department staff.
    First, the proposed regulations amend the procedures Department 
staff follows in reviewing an agency's application for initial 
recognition to allow staff to return the application if the agency 
fails to meet one or more of the basic eligibility requirements 
contained in Secs. 602.10 through 602.13. Under the proposed 
procedures, staff would provide the agency with an explanation of the 
deficiencies resulting in its decision to return the agency's 
application and would recommend that the agency withdraw its 
application and reapply if it can demonstrate that it has corrected the 
deficiencies.
    The second change in the proposed regulations concerns the 
submission of written comments by third parties and codifies the 
Department's current practice. Specifically, proposed Sec. 602.31(b), 
(e), and(i) clarify that Department staff will consider, and forward to 
the Advisory Committee for consideration, only those written third-
party comments received by the deadline the Department establishes in 
the Federal Register notice.
    The third change concerns the provision in Sec. 602.11(g) of the 
current regulations that requires Department staff to send its analysis 
of an agency's application to the agency at least 45 days before the 
Advisory Committee meeting and allows the agency the right to request 
that the Advisory Committee defer action on its application if 
Department staff fails to meet the 45-day deadline. There have been 
instances in recent years in which staff has been unable to meet the 
deadline, not through any fault of its own but rather because it was 
unable to complete its work due to an agency's failure to submit a 
required report by the deadline the Secretary established. Under 
Sec. 602.31 of the proposed regulations, the agency would forfeit its 
right to request a deferral in those situations in which the 
Department's inability to meet the deadline was due to the agency's 
failure to respond in a timely manner to departmental requests.
Review by the National Advisory Committee on Institutional Quality and 
Integrity (Secs. 602.32 and 602.33)
    Included under this heading is Sec. 602.12 of the current 
regulations and that portion of Sec. 602.13(b) that deals with an 
appeal of the Advisory Committee's recommendation. The proposed 
regulations include three significant changes from the current 
regulations, two of which address what has been called the ``12-month 
rule.'' The third clarifies the role of the senior Department official 
in forwarding the Advisory Committee's recommendations to the 
Secretary.
The ``12-Month Rule''
    The 1998 amendments require the Secretary to limit, suspend, or 
terminate an agency's recognition, after notice and opportunity for a 
hearing, if the Secretary determines that an accrediting agency has 
failed to perform effectively with respect to the criteria for 
recognition or is otherwise not in compliance with the criteria. 
Alternatively, the Secretary may require the agency to bring itself 
into compliance within a timeframe the Secretary specifies, but the 
timeframe may not exceed 12 months. The 1998 amendments also specify 
that the Secretary must, after notice and opportunity for a hearing, 
limit, suspend, or terminate the agency's recognition if the agency 
fails to bring itself into compliance within the timeframe specified by 
the Secretary unless the Secretary extends the timeframe for good 
cause.
    The proposed regulations make two changes to the Advisory 
Committee's procedures to reflect this ``12-month rule.'' First, if the 
Advisory Committee, as part of its review of a recognized agency for 
continued recognition, determines that the agency fails to meet the 
criteria for recognition or is ineffective in its performance with 
respect to the criteria, Sec. 602.32(b) of the proposed regulations 
calls for the Advisory Committee to take one of two actions. The 
Advisory Committee would have to recommend either (1) denial of 
recognition or (2) deferral of a decision on recognition for a period 
not to exceed 12 months, during which period the agency would have to 
come into compliance or face a limitation, suspension, or termination 
action at the conclusion of the specified timeframe.
    Second, the proposed regulations delete Sec. 602.12(c)(2) of the 
current regulations, which allows the Advisory Committee to recommend 
recognition even if the agency fails to comply with all of the criteria 
for recognition.
The Role of the Senior Department Official
    It has been Department practice, except in cases of contested 
appeals of Advisory Committee recommendations, for the senior 
Department official to transmit the Advisory Committee's 
recommendations to the Secretary along with his or her own 
recommendations and comments on the Advisory Committee's 
recommendations. The language found in Secs. 602.32(d) and 602.34(b) of 
the proposed regulations reflects this practice.
Review and Decision by the Secretary (Secs. 602.34 Through 602.36)
    Included under this heading are Sec. 602.15 of the current 
regulations and that portion of Sec. 602.13 that deals with the 
Secretary's decision. The only significant change proposed concerns the 
``12-month rule.'' Under the proposed regulations, if the Secretary, as 
part of the review of a recognized agency for continued recognition, 
determines that the agency fails to meet the criteria for recognition 
or is otherwise not effective in its performance with respect to those 
criteria, the Secretary may either deny recognition or defer a decision 
on recognition for a period not to exceed 12 months. During the 12-
month period, the agency would have to come into compliance or face a 
limitation, suspension, or termination action at the conclusion of the 
specified period. The proposed regulations allow the Secretary to 
extend the timeframe for the agency to come into compliance upon 
application by the agency for good cause shown.
    The negotiating committee carefully considered whether the 
regulations should define ``good cause.'' In the end, the committee 
concluded that it was best not to define this term. Instead, the burden 
rests with an agency that has failed to meet the statutory deadline to 
demonstrate that good cause exists for

[[Page 34473]]

the Secretary to grant a request for an extension of time.
    Section 602.35 of the proposed regulations, which describes the 
information that is included in the Secretary's recognition decision, 
differs from Sec. 602.13(e) of the current regulations, which defines 
the scope of recognition the Secretary grants to an agency, and should 
be read in conjunction with the proposed addition regarding distance 
education in Sec. 602.3 of a definition of ``scope of recognition.''

Subpart D--Limitation, Suspension, or Termination of Recognition 
(Secs. 602.40 Through 602.45)

    Included in this subpart is Sec. 602.14 of the current regulations. 
The significant changes deal with the ``12-month rule'' and the hearing 
procedures. They are discussed in the next section.
Limitation, Suspension, and Termination Procedures (Secs. 602.40 
Through 602.43)
    As previously mentioned, the 1998 amendments require the Secretary 
to limit, suspend, or terminate an agency's recognition, if after 
notice and opportunity for a hearing the Secretary determines that the 
agency has failed to effectively apply the criteria for recognition or 
is otherwise not in compliance with the criteria. Alternatively, the 
Secretary may require the agency to bring itself into compliance within 
a timeframe the Secretary specifies, but the timeframe may not exceed 
12 months unless the Secretary extends the timeframe for good cause 
shown.
    As previously discussed, Secs. 602.32 through 602.36 of the 
proposed regulations implement the ``12-month rule'' in those instances 
in which an agency's noncompliance with the criteria for recognition 
comes to the Department's attention as a result of a regularly 
scheduled review of the agency for continued recognition. Sections 
602.40 through 602.43 of the proposed regulations implement the ``12-
month rule'' if the Department learns of an agency's noncompliance at 
any point during a previously granted period of recognition. In these 
latter instances, the proposed regulations permit, but do not require, 
the Secretary to provide a noncompliant agency up to 12 months to 
achieve compliance. They also permit the Secretary to extend the 
timeframe for achieving compliance on the basis of good cause shown.
    The proposed regulations carry over the hearing procedures for a 
limitation, suspension, or termination of recognition action contained 
in Sec. 602.14 of the current regulations with only one change. While 
the current procedures allow for the hearing to be held before either 
the full Advisory Committee or a subcommittee, the proposed regulations 
allow a hearing only before a subcommittee of the Advisory Committee. 
The principal reason for the proposed change is one of timing; i.e., to 
conform to the ``12-month rule.'' As the full Advisory Committee meets 
only twice a year, waiting to hold the hearing at one of those meetings 
could mean a delay of almost six months in bringing closure to the 
issue. Accordingly, the proposed regulations would limit the hearing to 
a subcommittee, which can be convened much more quickly.
Appeal Rights and Procedures (Secs. 602.44 and 602.45)
    There are no significant changes to these sections of the proposed 
regulations, which basically repeat Sec. 602.14(f) of the current 
regulations.

Subpart E--Department Responsibilities (Sec. 602.50)

    There are no significant changes to this section of the proposed 
regulations, which basically repeats Sec. 602.5 of the current 
regulations.

Other Changes

    To comply with some terminology changes to the HEA resulting from 
the Higher Education Amendments of 1998, the proposed regulations 
contain some other changes. First, they would replace the State 
Postsecondary Review entities with State licensing or authorizing 
agencies. Second, they would consistently use the term ``standards'' 
rather than ``criteria'' or ``standards and criteria'' to refer to 
requirements institutions or programs must meet in order to become 
accredited or preaccredited by an agency.
    Finally, the proposed regulations have been written in ``plain 
language.'' Further discussion of this change is in the Executive Order 
12866 section under the heading ``Clarity of the Regulations.''

General Comments on the Recognition Process

    The Secretary acknowledges that the application for recognition 
constitutes a significant burden on agencies that seek recognition. For 
this reason, the Secretary is considering ways to reduce the burden. 
One approach under consideration is to allow a recognized agency 
applying for continued recognition to provide a simple statement of 
assurance, along with some supporting documentation, that it continues 
to meet each of the criteria for recognition. The supporting 
documentation might include a complete set of the agency's standards, 
policies, procedures, and by-laws.
    Another approach under consideration is to have Department staff 
conduct a site visit to agency headquarters for the purpose of 
determining, through reviews of agency files and interviews with agency 
staff, any significant changes that might affect the agency's ability 
to meet certain requirements for recognition. The Secretary estimates 
that at least two-thirds of the requirements in the proposed 
regulations might be amenable to this type of approach, and the 
resultant savings in time, effort, and cost to prepare an application 
for recognition would be significant.
    Still another approach under consideration is to identify other 
sections of the regulations, similar to Sec. 602.12 of the proposed 
regulations, that recognized agencies would not need to address in 
their application for continued recognition.
    The Secretary invites comments on these approaches and suggestions 
for alternative methods for reducing the burden of the application 
process on agencies without adversely affecting the Secretary's ability 
to conduct a thorough evaluation of the agency.

Executive Order 12866

1. Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action.
    The potential costs associated with these proposed regulations are 
those resulting from statutory requirements and those we have 
determined to be necessary for a determination that an accrediting 
agency that seeks recognition is in fact a reliable authority regarding 
the quality of education or training provided by the institutions or 
programs it accredits. Elsewhere in this SUPPLEMENTARY INFORMATION 
section we identify and explain burdens specifically associated with 
information collection requirements. See the heading ``Paperwork 
Reduction Act of 1995.''
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this regulatory action, we have determined that the 
benefits justify the costs. We have also determined that this 
regulatory action would not unduly interfere with State, local, and 
tribal governments in the exercise of their governmental functions.
    We note that, as these proposed regulations were subject to 
negotiated rulemaking, the costs and benefits of the

[[Page 34474]]

various requirements were discussed thoroughly by negotiators. The 
resultant consensus reached on a particular requirement generally 
reflected agreement on the best possible approach to that requirement 
in terms of cost and benefit. Elsewhere in this preamble we discuss the 
potential costs and benefits of the various requirements in the 
proposed regulations under the heading ``Regulatory Flexibility Act 
Certification.''

2. Clarity of the Regulations

    Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``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 proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, tables, etc.) aid or 
reduce clarity?
     Would the proposed 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. 602.16 Accreditation and preaccreditation standards.)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These proposed regulations will affect accrediting agencies 
that apply for Secretarial recognition and the institutions they 
accredit or that house the programs they accredit. The proposed 
regulations reduce the burden on both agencies and institutions by 
eliminating the requirement that agencies conduct unannounced 
inspections of institutions that offer vocational education and by 
greatly reducing the number of site visits agencies must make if 
institutions establish additional locations. The proposed regulations 
impose the minimum requirements needed to ensure the proper 
implementation of the Secretary's statutory mandate to recognize only 
those accrediting agencies that are reliable authorities regarding the 
quality of education or training provided by the institutions or 
programs they accredit.

Paperwork Reduction Act of 1995

    Sections 602.16, 602.24, 602.26, 602.27, and 602.30 contain 
information collection requirements. In addition, Secs. 602.15(b) and 
602.23(a) contain specific record retention requirements, and 
Secs. 602.23(e) and 602.28(e) contain third party disclosure 
requirements. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the Department of Education has submitted a copy of these 
sections to the Office of Management and Budget (OMB) for its review.
    These proposed regulations contain significant information 
collection requirements for accrediting agencies applying for 
recognition by the Secretary, as well as additional requirements for 
recognized agencies during their recognition period. The Department 
needs and uses the information collected to determine whether an agency 
seeking recognition by the Secretary meets the requirements for 
recognition and whether, if the agency is recognized, it continues to 
operate in compliance with the requirements for recognition throughout 
its recognition period.
Collection of Information: The Secretary's Recognition of Accrediting 
Agencies
    Each accrediting agency that seeks initial or continued recognition 
is required by Sec. 602.30 to submit an application for recognition 
demonstrating how it meets each of the criteria for recognition. We 
estimate that it takes an agency approximately 80 hours to complete its 
application, including time for reviewing instructions, searching 
existing data bases, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Thus, the total 
burden on the 61 agencies recognized under the current regulations to 
submit an application for continued recognition would be 4,880 hours. 
As agencies must submit an application for recognition only once every 
five years, this represents a total annual burden of 976 hours.
    We also estimate that the burden on an agency to provide to the 
Department on an annual basis the various documents and reports 
required under Secs. 602.26 and 602.27 would be one hour. Thus, the 
total annual reporting requirement for the 61 recognized agencies would 
be 61 hours.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the ADDRESSES section of this preamble.
    We consider your comments on this proposed collection of 
information in--
     Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed 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 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

[[Page 34475]]

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
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To use the PDF, you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the PDF, call the U.S. Government Printing 
Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, 
area at (202) 512-1530.

    Note: 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 on GPO Access at: http://
www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number does not apply)

List of Subjects in 34 CFR Part 602

    Colleges and universities, Education, Reporting and recordkeeping 
requirements.

    Dated: June 16, 1999.
Richard W. Riley,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend title 34 of the Code of Federal Regulations by revising part 
602 to read as follows:

PART 602--THE SECRETARY'S RECOGNITION OF ACCREDITING AGENCIES

Subpart A--General

Sec.
602.1  Why does the Secretary recognize accrediting agencies?
602.2  How do I know which agencies the Secretary recognizes?
602.3  What definitions apply to this part?

Subpart B--The Criteria for Recognition

Basic Eligibility Requirements

602.10  Link to Federal programs.
602.11  Geographic scope of accrediting activities.
602.12  Accrediting experience.
602.13  Acceptance of the agency by others.

Organizational and Administrative Requirements

602.14  Purpose and organization.
602.15  Administrative and fiscal responsibilities.

Required Standards and Their Application

602.16  Accreditation and preaccreditation standards.
602.17  Application of standards in reaching an accrediting 
decision.
602.18  Ensuring consistency in decision-making.
602.19  Monitoring and reevaluation of accredited institutions and 
programs.
602.20  Enforcement of standards.
602.21  Review of standards.

Required Operating Policies and Procedures

602.22  Substantive change.
602.23  Operating procedures all agencies must have.
602.24  Additional procedures certain institutional accreditors must 
have.
602.25  Due process.
602.26  Notification of accrediting decisions.
602.27  Other information an agency must provide the Department.
602.28  Regard for decisions of States and other accrediting 
agencies.

Subpart C--The Recognition Process

Application and Review by Department Staff

602.30  How does an agency apply for recognition?
602.31  How does Department staff review an agency's application?

Review by the National Advisory Committee on Institutional Quality and 
Integrity

602.32  What is the role of the Advisory Committee and the senior 
Department official in the review of an agency's application?
602.33  How may an agency appeal a recommendation of the Advisory 
Committee?

Review and Decision by the Secretary

602.34  What does the Secretary consider when making a recognition 
decision?
602.35  What information does the Secretary's recognition decision 
include?
602.36  May an agency appeal the Secretary's final recognition 
decision?

Subpart D--Limitation, Suspension, or Termination of Recognition

Limitation, Suspension, and Termination Procedures

602.40  How may the Secretary limit, suspend, or terminate an 
agency's recognition?
602.41  What are the notice procedures?
602.42  What are the response and hearing procedures?
602.43  How is a decision on limitation, suspension, or termination 
of recognition reached?

Appeal Rights and Procedures

602.44  How may an agency appeal the subcommittee's recommendation?
602.45 May an agency appeal the Secretary's final decision to limit, 
suspend, or terminate its recognition?

Subpart E--Department Responsibilities

602.50  What information does the Department share with a recognized 
agency about its accredited institutions and programs?

    Authority: 20 U.S.C. 1099b, unless otherwise noted.

Subpart A--General


Sec. 602.1  Why does the Secretary recognize accrediting agencies?

    (a) The Secretary recognizes accrediting agencies to ensure that 
these agencies are, for the purposes of the Higher Education Act of 
1965, as amended (HEA), or for other Federal purposes, reliable 
authorities regarding the quality of education or training offered by 
the institutions or programs they accredit.
    (b) The Secretary lists an agency as a nationally recognized 
accrediting agency if the agency meets the criteria for recognition 
listed in subpart B of this part.

(Authority: 20 U.S.C. 1099b)


Sec. 602.2  How do I know which agencies the Secretary recognizes?

    (a) Periodically, the Secretary publishes a list of recognized 
agencies in the Federal Register, together with each agency's scope of 
recognition. You may obtain a copy of the list from the Department at 
any time. The list is also available on the Department's web site.
    (b) If the Secretary denies continued recognition to a previously 
recognized agency, or if the Secretary limits, suspends, or terminates 
the agency's recognition before the end of its recognition period, the 
Secretary publishes a notice of that action in the Federal Register. 
The Secretary also makes the reasons for the action available to the 
public, on request.

(Authority: 20 U.S.C. 1099b)


Sec. 602.3  What definitions apply to this part?

    The following definitions apply to this part:
    Accreditation means the status of public recognition that an 
accrediting agency grants to an educational insti- tution or program 
that meets the agency's standards and requirements.
    Accrediting agency or agency means a legal entity, or that part of 
a legal entity, that conducts accrediting activities through voluntary, 
non-Federal peer review and makes decisions concerning the 
accreditation or preaccreditation status of institutions, programs, or 
both.
    Act means the Higher Education Act of 1965, as amended.
    Adverse accrediting action or adverse action means the denial, 
withdrawal, suspension, revocation, or termination of accreditation or 
preaccreditation, or any comparable accrediting action an agency may 
take against an institution or program.
    Advisory Committee means the National Advisory Committee on 
Institutional Quality and Integrity.

[[Page 34476]]

    Branch campus means a location of an institution that meets the 
definition of branch campus in 34 CFR 600.2.
    Distance education means an educational process that is 
characterized by the separation, in time or place, between instructor 
and student. The term includes courses offered principally through the 
use of--
    (1) Television, audio, or computer transmission, such as open 
broadcast, closed circuit, cable, microwave, or satellite transmission;
    (2) Audio or computer conferencing;
    (3) Video cassettes or disks; or
    (4) Correspondence.
    Final accrediting action means a final determination by an 
accrediting agency regarding the accreditation or preaccreditation 
status of an institution or program. A final accrediting action is not 
appealable within the agency.
    Institution of higher education or institution means an educational 
institution that qualifies, or may qualify, as an eligible institution 
under 34 CFR part 600.
    Institutional accrediting agency means an agency that accredits 
institutions of higher education.
    Nationally recognized accrediting agency, nationally recognized 
agency, or recognized agency means an accrediting agency that the 
Secretary recognizes under this part.
    Preaccreditation means the status of public recognition that an 
accrediting agency grants to an institution or program for a limited 
period of time that signifies the agency has determined that the 
institution or program is progressing towards accreditation and is 
likely to attain accreditation before the expiration of that limited 
period of time.
    Program means a postsecondary educational program offered by an 
institution of higher education that leads to an academic or 
professional degree, certificate, or other recognized educational 
credential.
    Programmatic accrediting agency means an agency that accredits 
specific educational programs that prepare students for entry into a 
profession, occupation, or vocation.
    Representative of the public means a person who is not--
    (1) An employee, member of the governing board, owner, or 
shareholder of, or consultant to, an institution or program that either 
is accredited or preaccredited by the agency or has applied for 
accreditation or preaccreditation;
    (2) A member of any trade association or membership organization 
related to, affiliated with, or associated with the agency; or
    (3) A spouse, parent, child, or sibling of an individual identified 
in paragraph (1) or (2) of this definition.
    Scope of recognition or scope means the range of accrediting 
activities for which the Secretary recognizes an agency. The Secretary 
may place a limitation on the scope of an agency's recognition for 
Title IV, HEA purposes. The Secretary's designation of scope defines 
the recognition granted according to--
    (1) Geographic area of accrediting activities;
    (2) Types of degrees and certificates covered;
    (3) Types of institutions and programs covered;
    (4) Types of preaccreditation status covered, if any; and
    (5) Coverage of accrediting activities related to distance 
education, if any.
    Secretary means the Secretary of the U.S. Department of Education 
or any official or employee of the Department acting for the Secretary 
under a delegation of authority.
    Senior Department official means the senior official in the U.S. 
Department of Education who reports directly to the Secretary regarding 
accrediting agency recognition.
    State means a State of the Union, American Samoa, the Commonwealth 
of Puerto Rico, the District of Columbia, Guam, the United States 
Virgin Islands, the Commonwealth of the Northern Mariana Islands, the 
Republic of the Marshall Islands, the Federated States of Micronesia, 
and the Republic of Palau. The latter three are also known as the 
Freely Associated States.
    Teach-out agreement means a written agreement between institutions 
that provides for the equitable treatment of students if one of those 
institutions stops offering an educational program before all students 
enrolled in that program have completed the program.

(Authority: 20 U.S.C. 1099b)

Subpart B--The Criteria for Recognition

Basic Eligibility Requirements


Sec. 602.10  Link to Federal programs.

    The agency must demonstrate that--
    (a) If the agency accredits institutions of higher education, its 
accreditation is a required element in enabling at least one of those 
institutions to establish eligibility to participate in HEA programs; 
or
    (b) If the agency accredits institutions of higher education or 
higher education programs, or both, its accreditation is a required 
element in enabling at least one of those entities to establish 
eligibility to participate in non-HEA Federal programs.

(Authority: 20 U.S.C. 1099b)


Sec. 602.11  Geographic scope of accrediting activities.

    The agency must demonstrate that its accrediting activities cover--
    (a) A State, if the agency is part of a State government;
    (b) A region of the United States that includes at least three 
States that are reasonably close to one another; or
    (c) The United States.

(Authority: 20 U.S.C. 1099b)


Sec. 602.12  Accrediting experience.

    (a) An agency seeking initial recognition must demonstrate that it 
has--
    (1) Granted accreditation or preaccreditation--
    (i) To one or more institutions if it is requesting recognition as 
an institutional accrediting agency and to one or more programs if it 
is requesting recognition as a programmatic accrediting agency;
    (ii) That covers the range of the specific degrees, certificates, 
institutions, and programs for which it seeks recognition; and
    (iii) In the geographic area for which it seeks recognition; and
    (2) Conducted accrediting activities, including deciding whether to 
grant or deny accreditation or preaccreditation, for at least two years 
prior to seeking recognition.
    (b) A recognized agency seeking an expansion of its scope of 
recognition must demonstrate that it has granted accreditation or 
preaccreditation covering the range of the specific degrees, 
certificates, institutions, and programs for which it seeks the 
expansion of scope.

(Authority: 20 U.S.C. 1099b)


Sec. 602.13  Acceptance of the agency by others.

    The agency must demonstrate that its standards, policies, 
procedures, and decisions to grant or deny accreditation are widely 
accepted in the United States by--
    (a) Educators and educational institutions; and
    (b) Licensing bodies, practitioners, and employers in the 
professional or vocational fields for which the educational 
institutions or programs within the agency's jurisdiction prepare their 
students.

(Authority: 20 U.S.C. 1099b)

[[Page 34477]]

Organizational and Administrative Requirements


Sec. 602.14  Purpose and organization.

    (a) The Secretary recognizes only the following four categories of 
agencies:

------------------------------------------------------------------------
 The Secretary recognizes * *                  that * * *
--------------*---------------------------------------------------------
(1) An accrediting agency....  (i) Has a voluntary membership of
                                institutions of higher education;
                               (ii) Has as a principal purpose the
                                accrediting of institutions of higher
                                education and that accreditation is a
                                required element in enabling those
                                institutions to participate in HEA
                                programs; and
                               (iii) Satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section.
(2) An accrediting agency....  (i) Has a voluntary membership; and
                               (ii) Has as its principal purpose the
                                accrediting of higher education
                                programs, or higher education programs
                                and institutions of higher education,
                                and that accreditation is a required
                                element in enabling those entities to
                                participate in non-HEA Federal programs.
(3) An accrediting agency....  For purposes of determining eligibility
                                for Title IV, HEA programs--
                               (i) Either has a voluntary membership of
                                individuals participating in a
                                profession or has as its principal
                                purpose the accrediting of programs
                                within institutions that are accredited
                                by a nationally recognized accrediting
                                agency; and
                               (ii) Either satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section or obtains a waiver
                                of those requirements under paragraphs
                                (d) and (e) of this section.
(4) A State agency...........  (i) Has as a principal purpose the
                                accrediting of institutions of higher
                                education, higher education programs, or
                                both; and
                               (ii) The Secretary listed as a nationally
                                recognized accrediting agency on or
                                before October 1, 1991 and has
                                recognized continuously since that date.
------------------------------------------------------------------------

    (b) For purposes of this section, the term separate and independent 
means that--
    (1) The members of the agency's decision-making body--who decide 
the accreditation or preaccreditation status of institutions or 
programs, establish the agency's accreditation policies, or both--are 
not elected or selected by the board or chief executive officer of any 
related, associated, or affiliated trade association or membership 
organization;
    (2) At least one member of the agency's decision-making body is a 
representative of the public, and at least one-seventh of that body 
consists of representatives of the public;
    (3) The agency has established and implemented guide lines for each 
member of the decision-making body to avoid conflicts of interest in 
making decisions;
    (4) The agency's dues are paid separately from any dues paid to any 
related, associated, or affiliated trade association or membership 
organization; and
    (5) The agency develops and determines its own budget, with no 
review by or consultation with any other entity or organization.
    (c) The Secretary considers that any joint use of personnel, 
services, equipment, or facilities by an agency and a related, 
associated, or affiliated trade association or membership organization 
does not violate the ``separate and independent'' requirements in 
paragraph (b) of this section if--
    (1) The agency pays the fair market value for its proportionate 
share of the joint use; and
    (2) The joint use does not compromise the independence and 
confidentiality of the accreditation process.
    (d) For purposes of paragraph (a)(3) of this section, the Secretary 
may waive the ``separate and independent'' requirements in paragraph 
(b) of this section if the agency demonstrates that--
    (1) The Secretary listed the agency as a nationally recognized 
agency on or before October 1, 1991 and has recognized it continuously 
since that date;
    (2) The related, associated, or affiliated trade association or 
membership organization plays no role in making or ratifying either the 
accrediting or policy decisions of the agency;
    (3) The agency has sufficient budgetary and administrative autonomy 
to carry out its accrediting functions independently; and
    (4) The agency provides to the related, associated, or affiliated 
trade association or membership organization only information it makes 
available to the public.
    (e) An agency seeking a waiver of the ``separate and independent'' 
requirements under paragraph (d) of this section must apply for the 
waiver each time the agency seeks recognition or continued recognition.

(Authority: 20 U.S.C. 1099b)


Sec. 602.15  Administrative and fiscal responsibilities.

    The agency must have the administrative and fiscal capability to 
carry out its accreditation activities in light of its requested scope 
of recognition. The agency meets this requirement if the agency 
demonstrates that--
    (a) The agency has--
    (1) Adequate administrative staff and financial resources to carry 
out its accrediting responsibilities;
    (2) Competent and knowledgeable individuals, qualified by education 
and experience in their own right and trained by the agency on its 
standards, policies, and procedures, to conduct its on-site 
evaluations, establish its policies, and make its accrediting and 
preaccrediting decisions;
    (3) Academic and administrative personnel on its evaluation, 
policy, and decision-making bodies, if the agency accredits 
institutions;
    (4) Educators and practitioners on its evaluation, policy, and 
decision-making bodies, if the agency accredits programs;
    (5) Representatives of the public on all decision-making bodies; 
and
    (6) Clear and effective controls against conflicts of interest, or 
the appearance of conflicts of interest, by the agency's--
    (i) Board members;
    (ii) Commissioners;
    (iii) Evaluation team members;
    (iv) Consultants;
    (v) Administrative staff; and
    (vi) Other agency representatives; and
    (b) The agency maintains complete and accurate records of--

[[Page 34478]]

    (1) Its last two full accreditation or preaccreditation reviews of 
each institution or program, including on-site evaluation team reports, 
the institution's or program's responses to on-site reports, periodic 
review reports, any reports of special reviews conducted by the agency 
between regular reviews, and a copy of the institution's or program's 
most recent self-study; and
    (2) All decisions regarding the accreditation and preaccreditation 
of any institution or program, including all correspondence that is 
significantly related to those decisions.

(Authority: 20 U.S.C. 1099b)

Required Standards and Their Application


Sec. 602.16  Accreditation and preaccreditation standards.

    (a) The agency must demonstrate that it has standards for 
accreditation, and preaccreditation, if offered, that are sufficiently 
rigorous to ensure that the agency is a reliable authority regarding 
the quality of the education or training provided by the institutions 
or programs it accredits. The agency meets this requirement if--
    (1) The agency's accreditation standards effectively address the 
quality of the institution or program in the following areas:
    (i) Success with respect to student achievement in relation to the 
institution's mission, including, as appropriate, consideration of 
course completion, State licensing examination, and job placement 
rates.
    (ii) Curricula.
    (iii) Faculty.
    (iv) Facilities, equipment, and supplies.
    (v) Fiscal and administrative capacity as appropriate to the 
specified scale of operations.
    (vi) Student support services.
    (vii) Recruiting and admissions practices, academic calendars, 
catalogs, publications, grading, and advertising.
    (viii) Measures of program length and the objectives of the degrees 
or credentials offered.
    (ix) Record of student complaints received by, or available to, the 
agency.
    (x) Record of compliance with the institution's program 
responsibilities under Title IV of the Act, based on the most recent 
student loan default rate data provided by the Secretary, the results 
of financial or compliance audits, program reviews, and any other 
information that the Secretary may provide to the agency; and
    (2) The agency's preaccreditation standards, if offered, are 
appropriately related to the agency's accreditation standards and do 
not permit the institution or program to hold preaccreditation status 
for more than five years.
    (b) If the agency only accredits programs and does not serve as an 
institutional accrediting agency for any of those programs, its 
accreditation standards must address the areas in paragraph (a)(1) of 
this section in terms of the type and level of the program rather than 
in terms of the institution.
    (c) If none of the institutions an agency accredits participates in 
any Title IV, HEA program, or if the agency only accredits programs 
within institutions that are accredited by a nationally recognized 
institutional accrediting agency, the agency is not required to have 
the accreditation standards described in paragraphs (a)(1)(viii) and 
(a)(1)(x) of this section.
    (d) An agency that has established and applies the standards in 
paragraph (a) of this section may establish any additional 
accreditation standards it deems appropriate.

(Authority: 20 U.S.C. 1099b)


Sec. 602.17  Application of standards in reaching an accrediting 
decision.

    The agency must have effective mechanisms for evaluating an 
institution's or program's compliance with the agency's standards 
before reaching a decision to accredit or preaccredit the institution 
or program. The agency meets this requirement if the agency 
demonstrates that it--
    (a) Evaluates whether an institution or program--
    (1) Maintains clearly specified educational objectives that are 
consistent with its mission and appropriate in light of the degrees or 
certificates awarded;
    (2) Is successful in achieving its stated objectives; and
    (3) Maintains degree and certificate requirements that at least 
conform to commonly accepted standards;
    (b) Requires the institution or program to prepare, following 
guidance provided by the agency, an in-depth self-study that includes 
the assessment of educational quality and the institution's or 
program's continuing efforts to improve educational quality;
    (c) Conducts at least one on-site review of the institution or 
program during which it obtains sufficient information to determine if 
the institution or program complies with the agency's standards;
    (d) Allows the institution or program the opportunity to respond in 
writing to the report of the on-site review;
    (e) Conducts its own analysis of the self-study and supporting 
documentation furnished by the institution or program, the report of 
the on-site review, the institution's or program's response to the 
report, and any other appropriate information from other sources to 
determine whether the institution or program complies with the agency's 
standards; and
    (f) Provides the institution or program with a detailed written 
report that assesses--
    (1) The institution's or program's compliance with the agency's 
standards, including areas needing improvement; and
    (2) The institution's or program's performance with respect to 
student achievement.

(Authority: 20 U.S.C. 1099b)


Sec. 602.18  Ensuring consistency in decision-making.

    The agency must consistently apply and enforce its standards to 
ensure that the education or training offered by an institution or 
program, including any offered through distance education, is of 
sufficient quality to achieve its stated objective for the duration of 
any accreditation or preaccreditation period granted by the agency. The 
agency meets this requirement if the agency--
    (a) Has effective controls against the inconsistent application of 
the agency's standards;
    (b) Bases decisions regarding accreditation and preaccreditation on 
the agency's published standards; and
    (c) Has a reasonable basis for determining that the information the 
agency relies on for making accrediting decisions is accurate.

(Authority: 20 U.S.C. 1099b)


Sec. 602.19  Monitoring and reevaluation of accredited institutions and 
programs.

    (a) The agency must reevaluate, at regularly established intervals, 
the institutions or programs it has accredited or preaccredited.
    (b) The agency must monitor institutions or programs throughout 
their accreditation or preaccreditation period to ensure that they 
remain in compliance with the agency's standards. This includes 
conducting special evaluations or site visits, as necessary.

(Authority: 20 U.S.C. 1099b)


Sec. 602.20  Enforcement of standards.

    (a) If the agency's review of an institution or program under any 
standard indicates that the institution or program is not in compliance 
with that standard, the agency must--
    (1) Immediately initiate adverse action against the institution or 
program; or

[[Page 34479]]

    (2) Require the institution or program to take appropriate action 
to bring itself into compliance with the agency's standards within a 
time period that must not exceed--
    (i) Twelve months, if the program, or the longest program offered 
by the institution, is less than one year in length;
    (ii) Eighteen months, if the program, or the longest program 
offered by the institution, is at least one year, but less than two 
years, in length; or
    (iii) Two years, if the program, or the longest program offered by 
the institution, is at least two years in length.
    (b) If the institution or program does not bring itself into 
compliance within the specified period, the agency must take immediate 
adverse action unless the agency, for good cause, extends the period 
for achieving compliance.

(Authority: 20 U.S.C. 1099b)


Sec. 602.21  Review of standards.

    (a) The agency must maintain a systematic program of review that 
demonstrates that its standards are adequate to evaluate the quality of 
the education or training provided by the institutions and programs it 
accredits and relevant to the needs of students.
    (b) The agency determines the specific procedures it follows in 
evaluating its standards, but the agency must ensure that its program 
of review--
    (1) Is comprehensive;
    (2) Occurs at regular, yet reasonable, intervals or on an ongoing 
basis;
    (3) Examines each of the agency's standards and the standards as a 
whole; and
    (4) Involves all of the agency's relevant constituencies in the 
review and affords them a meaningful opportunity to provide input into 
the review.
    (c) If the agency determines, at any point during its systematic 
program of review, that it needs to make changes to its standards, the 
agency must initiate action within 12 months to make the changes and 
must complete that action within a reasonable period of time. Before 
finalizing any changes to its standards, the agency must--
    (1) Provide notice to all of the agency's relevant constituencies 
of the changes the agency proposes to make;
    (2) Give the constituencies and other interested parties adequate 
opportunity to comment on the proposed changes; and
    (3) Take into account any comments on the proposed changes 
submitted timely by the relevant constituencies and by other interested 
parties.

(Authority: 20 U.S.C. 1099b)

Required Operating Policies and Procedures


Sec. 602.22  Substantive change.

    (a) If the agency accredits institutions, it must maintain adequate 
substantive change policies that ensure that any substantive change to 
the educational mission, program, or programs of an institution after 
the agency has accredited or preaccredited the institution does not 
adversely affect the capacity of the institution to continue to meet 
the agency's standards. The agency meets this requirement if--
    (1) The agency requires the institution to obtain the agency's 
approval of the substantive change before the agency includes the 
change in the scope of accreditation or preaccreditation it previously 
granted to the institution; and
    (2) The agency's definition of substantive change includes at least 
the following types of change:
    (i) Any change in the established mission or objectives of the 
institution.
    (ii) Any change in the legal status, form of control, or ownership 
of the institution.
    (iii) The addition of courses or programs that represent a 
significant departure, in either content or method of delivery, from 
those that were offered when the agency last evaluated the institution.
    (iv) The addition of courses or programs at a degree or credential 
level above that which is included in the institution's current 
accreditation or preaccreditation.
    (v) A change from clock hours to credit hours.
    (vi) A substantial increase in the number of clock or credit hours 
awarded for successful completion of a program.
    (vii) The establishment of an additional location geographically 
apart from the main campus at which the institution offers at least 50 
percent of an educational program.
    (b) The agency may determine the procedures it uses to grant prior 
approval of the substantive change. Except as provided in paragraph (c) 
of this section, these may, but need not, require a visit by the 
agency.
    (c) If the agency's accreditation of an institution enables the 
institution to seek eligibility to participate in Title IV, HEA 
programs, the agency's procedures for the approval of an additional 
location described in paragraph (a)(2)(vii) of this section must 
determine if the institution has the fiscal and administrative capacity 
to operate the additional location. In addition, the agency's 
procedures must include--
    (1) A visit, within six months, to each additional location the 
institution establishes, if the institution--
    (i) Has a total of three or fewer additional locations;
    (ii) Has not demonstrated, to the agency's satisfaction, that it 
has a proven record of effective educational oversight of additional 
locations; or
    (iii) Has been placed on warning, probation, or show cause by the 
agency or is subject to some limitation by the agency on its 
accreditation or preaccreditation status;
    (2) An effective mechanism for conducting, at reasonable intervals, 
visits to additional locations of institutions that operate more than 
three additional locations; and
    (3) An effective mechanism, which may, at the agency's discretion, 
include visits to additional locations, for ensuring that accredited 
and preaccredited institutions that experience rapid growth in the 
number of additional locations maintain educational quality.
    (d) The purpose of the visits described in paragraph (c) of this 
section is to verify that the additional location has the personnel, 
facilities, and resources it claimed to have in its application to the 
agency for approval of the additional location.

(Authority: 20 U.S.C. 1099b)


Sec. 602.23  Operating procedures all agencies must have.

    (a) The agency must maintain and make available to the public, upon 
request, written materials describing--
    (1) Each type of accreditation and preaccreditation it grants;
    (2) The procedures that institutions or programs must follow in 
applying for accreditation or preaccreditation;
    (3) The standards and procedures it uses to determine whether to 
grant, reaffirm, reinstate, restrict, deny, revoke, terminate, or take 
any other action related to each type of accreditation and 
preaccreditation that the agency grants;
    (4) The institutions and programs that the agency currently 
accredits or preaccredits and, for each institution and program, the 
year the agency will next review or reconsider it for accreditation or 
preaccreditation; and
    (5) The names, academic and professional qualifications, and 
relevant employment and organizational affiliations of--
    (i) The members of the agency's policy and decision-making bodies; 
and
    (ii) The agency's principal administrative staff.
    (b) In providing public notice that an institution or program 
subject to its jurisdiction is being considered for

[[Page 34480]]

accreditation or preaccreditation, the agency must provide an 
opportunity for third-party comment concerning the institution's or 
program's qualifications for accreditation or preaccreditation. At the 
agency's discretion, third-party comment may be received either in 
writing or at a public hearing, or both.
    (c) The accrediting agency must--
    (1) Review in a timely, fair, and equitable manner any complaint it 
receives against an accredited institution or program that is related 
to the agency's standards or procedures;
    (2) Take follow-up action, as necessary, including enforcement 
action, if necessary, based on the results of its review; and
    (3) Review in a timely, fair, and equitable manner, and apply 
unbiased judgment to, any complaints against itself and take follow-up 
action, as appropriate, based on the results of its review.
    (d) If an institution or program elects to make a public disclosure 
of its accreditation or preaccreditation status, the agency must ensure 
that the institution or program discloses that status accurately, 
including the specific academic or instructional programs covered by 
that status and the name, address, and telephone number of the agency.
    (e) The accrediting agency must provide for the public correction 
of incorrect or misleading information an accredited or preaccredited 
institution or program releases about--
    (1) The accreditation or preaccreditation status of the institution 
or program;
    (2) The contents of reports of on-site reviews; and
    (3) The agency's accrediting or preaccrediting actions with respect 
to the institution or program.
    (f) The agency may establish any additional operating procedures it 
deems appropriate. At the agency's discretion, these may include 
unannounced inspections.

(Authority: 20 U.S.C. 1099b)


Sec. 602.24  Additional procedures certain institutional accreditors 
must have.

    If the agency is an institutional accrediting agency and its 
accreditation or preaccreditation enables those institutions to obtain 
eligibility to participate in Title IV, HEA programs, the agency must 
demonstrate that it has established and uses all of the following 
procedures:
    (a) Branch campus. (1) The agency must require the institution to 
notify the agency if it plans to establish a branch campus and to 
submit a business plan for the branch campus that describes--
    (i) The educational program to be offered at the branch campus;
    (ii) The projected revenues and expenditures and cash flow at the 
branch campus; and
    (iii) The operation, management, and physical resources at the 
branch campus.
    (2) The agency may extend accreditation to the branch campus only 
after it evaluates the business plan and takes whatever other actions 
it deems necessary to determine that the branch campus has sufficient 
educational, financial, operational, management, and physical resources 
to meet the agency's standards.
    (3) The agency must undertake a site visit to the branch campus as 
soon as practicable, but no later than six months after the 
establishment of that campus.
    (b) Change in ownership. The agency must undertake a site visit to 
an institution that has undergone a change of ownership that resulted 
in a change of control as soon as practicable, but no later than six 
months after the change of ownership.
    (c) Teach-out agreements. (1) The agency must require an 
institution it accredits or preaccredits that enters into a teach-out 
agreement with another institution to submit that teach-out agreement 
to the agency for approval.
    (2) The agency may approve the teach-out agreement only if the 
agreement is between institutions that are accredited or preaccredited 
by a nationally recognized accrediting agency, is consistent with 
applicable standards and regulations, and provides for the equitable 
treatment of students by ensuring that--
    (i) The teach-out institution has the necessary experience, 
resources, and support services to provide an educational program that 
is of acceptable quality and reasonably similar in content, structure, 
and scheduling to that provided by the closed institution; and
    (ii) The teach-out institution demonstrates that it can provide 
students access to the program and services without requiring them to 
move or travel substantial distances.
    (3) If an institution the agency accredits or preaccredits closes, 
the agency must work with the Department and the appropriate State 
agency, to the extent feasible, to ensure that students are given 
reasonable opportunities to complete their education without additional 
charge.

(Authority: 20 U.S.C. 1099b)


Sec. 602.25  Due process.

    The agency must demonstrate that the procedures it uses throughout 
the accrediting process satisfy due process. The agency meets this 
requirement if the agency does the following:
    (a) The agency uses procedures that afford an institution or 
program a reasonable period of time to comply with the agency's 
requests for information and documents.
    (b) The agency notifies the institution or program in writing of 
any adverse accrediting action or an action to place the institution or 
program on probation or show cause. The notice describes the basis for 
the action.
    (c) The agency permits the institution or program the opportunity 
to appeal an adverse action and the right to be represented by counsel 
during that appeal. If the agency allows institutions or programs the 
right to appeal other types of actions, the agency has the discretion 
to limit the appeal to a written appeal.
    (d) The agency notifies the institution or program in writing of 
the result of its appeal and the basis for that result.

(Authority: 20 U.S.C. 1099b)


Sec. 602.26  Notification of accrediting decisions.

    The agency must demonstrate that it has established and follows 
written procedures requiring it to provide written notice of its 
accrediting decisions to the Secretary, the appropriate State licensing 
or authorizing agency, the appropriate accrediting agencies, and the 
public. The agency meets this requirement if the agency, following its 
written procedures--
    (a) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
the appropriate accrediting agencies, and the public no later than 30 
days after it makes the decision:
    (1) A decision to award initial accreditation or preaccreditation 
to an institution or program.
    (2) A decision to renew an institution's or program's accreditation 
or preaccreditation;
    (b) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
and the appropriate accrediting agencies at the same time it notifies 
the institution or program of the decision, but no later than 30 days 
after it reaches the decision:
    (1) A final decision to place an institution or program on 
probation or an equivalent status.
    (2) A final decision to deny, withdraw, suspend, revoke, or 
terminate

[[Page 34481]]

the accreditation or preaccreditation of an institution or program;
    (c) Provides written notice to the public of the decisions listed 
in paragraphs (b)(1) and (b)(2) of this section within 24 hours of its 
notice to the institution or program;
    (d) For any decision listed in paragraph (b)(2) of this section, 
makes available to the Secretary, the appropriate State licensing or 
authorizing agency, and the public upon request, no later than 60 days 
after the decision, a brief statement summarizing the reasons for the 
agency's decision and the comments, if any, that the affected 
institution or program may wish to make with regard to that decision; 
and
    (e) Notifies the Secretary, the appropriate State licensing or 
authorizing agency, the appropriate accrediting agencies, and, upon 
request, the public if an accredited or preaccredited institution or 
program--
    (1) Decides to withdraw voluntarily from accreditation or 
preaccreditation, within 30 days of receiving notification from the 
institution or program that it is withdrawing voluntarily from 
accreditation or preaccreditation; or
    (2) Lets its accreditation or preaccreditation lapse, within 30 
days of the date on which accreditation or preaccreditation lapses.

(Authority: 20 U.S.C. 1099b)


Sec. 602.27  Other information an agency must provide the Department.

    The agency must submit to the Department--
    (a) A copy of any annual report it prepares;
    (b) A copy, updated annually, of its directory of accredited and 
preaccredited institutions and programs;
    (c) A summary of the agency's major accrediting activities during 
the previous year (an annual data summary), if requested by the 
Secretary to carry out the Secretary's responsibilities related to this 
part;
    (d) Any proposed change in the agency's policies, procedures, or 
accreditation or preaccreditation standards that might alter its--
    (1) Scope of recognition; or
    (2) Compliance with the criteria for recognition;
    (e) The name of any institution or program it accredits that the 
agency has reason to believe is failing to meet its Title IV, HEA 
program responsibilities or is engaged in fraud or abuse, along with 
the agency's reasons for concern about the institution or program; and
    (f) If the Secretary requests, information that may bear upon an 
accredited or preaccredited institution's compliance with its Title IV, 
HEA program responsibilities, including the eligibility of the 
institution or program to participate in Title IV, HEA programs. The 
Secretary may ask for this information to assist the Department in 
resolving problems with the institution's participation in the Title 
IV, HEA programs.

(Authority: 20 U.S.C. 1099b)


Sec. 602.28  Regard for decisions of States and other accrediting 
agencies.

    (a) If the agency is an institutional accrediting agency, it may 
not accredit or preaccredit institutions that lack legal authorization 
under applicable State law to provide a program of education beyond the 
secondary level.
    (b) Except as provided in paragraph (c) of this section, the agency 
may not grant initial or renewed accreditation or preaccreditation to 
an institution, or a program offered by an institution, if the agency 
knows, or has reasonable cause to know, that the institution is the 
subject of--
    (1) A pending or final action brought by a State agency to suspend, 
revoke, withdraw, or terminate the institution's legal authority to 
provide postsecondary education in the State;
    (2) A decision by a recognized agency to deny accreditation or 
preaccreditation;
    (3) A pending or final action brought by a recognized accrediting 
agency to suspend, revoke, withdraw, or terminate the institution's 
accreditation or preaccreditation; or
    (4) Probation or an equivalent status imposed by a recognized 
agency.
    (c) The agency may grant accreditation or preaccreditation to an 
institution or program described in paragraph (b) of this section only 
if it provides to the Secretary, within 30 days of its action, a 
thorough and reasonable explanation, consistent with its standards, why 
the action of the other body does not preclude the agency's grant of 
accreditation or preaccreditation.
    (d) If the agency learns that an institution it accredits or 
preaccredits, or an institution that offers a program it accredits or 
preaccredits, is the subject of an adverse action by another recognized 
accrediting agency or has been placed on probation or an equivalent 
status by another recognized agency, the agency must promptly review 
its accreditation or preaccreditation of the institution or program to 
determine if it should also take adverse action or place the 
institution or program on probation or show cause.
    (e) The agency must, upon request, share with other appropriate 
recognized accrediting agencies and recognized State approval agencies 
information about the accreditation or preaccreditation status of an 
institution or program and any adverse actions it has taken against an 
accredited or preaccredited institution or program.

(Authority: 20 U.S.C. 1099b)

Subpart C--The Recognition Process

Application and Review by Department Staff


Sec. 602.30  How does an agency apply for recognition?

    (a) An accrediting agency seeking initial or continued recognition 
must submit a written application to the Secretary. The application 
must consist of--
    (1) A statement of the agency's requested scope of recognition;
    (2) Evidence that the agency complies with the criteria for 
recognition listed in subpart B of this part; and
    (3) Supporting documentation.
    (b) By submitting an application for recognition, the agency 
authorizes Department staff to observe its site visits and decision 
meetings and to gain access to agency records, personnel, and 
facilities on an announced or unannounced basis.
    (c) The Secretary does not make available to the public any 
confidential agency materials a Department employee reviews during the 
evaluation of either the agency's application for recognition or the 
agency's compliance with the criteria for recognition.

(Authority: 20 U.S.C. 1099b)


Sec. 602.31  How does Department staff review an agency's application?

    (a) Upon receipt of an agency's application for either initial or 
continued recognition, Department staff--
    (1) Establishes a schedule for the review of the agency by 
Department staff, the National Advisory Committee on Institutional 
Quality and Integrity, and the Secretary;
    (2) Publishes a notice of the agency's application in the Federal 
Register, inviting the public to comment on the agency's compliance 
with the criteria for recognition and establishing a deadline for 
receipt of public comment; and
    (3) Provides State licensing or authorizing agencies, all currently 
recognized accrediting agencies, and other appropriate organizations 
with copies of the Federal Register notice.
    (b) Department staff analyzes the agency's application to determine

[[Page 34482]]

whether the agency satisfies the criteria for recognition, taking into 
account all available relevant information concerning the compliance of 
the agency with those criteria and any deficiencies in the agency's 
performance with respect to the criteria. The analysis in cludes--
    (1) Site visits, on an announced or unannounced basis, to the 
agency and, at the Secretary's discretion, to some of the institutions 
or programs it accredits or preaccredits;
    (2) Review of the public comments and other third-party information 
the Department staff receives by the established deadline, as well as 
any other information Department staff assembles for purposes of 
evaluating the agency under this part; and
    (3) Review of complaints or legal actions involving the agency.
    (c) Department staff's evaluation may also include a review of 
information directly related to institutions or programs accredited or 
preaccredited by the agency relative to their compliance with the 
agency's standards, the effectiveness of the standards, and the 
agency's application of those standards.
    (d) If, at any point in its evaluation of an agency seeking initial 
recognition, Department staff determines that the agency fails to 
demonstrate substantial compliance with the basic eligibility 
requirements in Secs. 602.10 through 602.13, the staff--
    (1) Returns the agency's application and provides the agency with 
an explanation of the deficiencies that caused staff to take that 
action; and
    (2) Recommends that the agency withdraw its application and reapply 
when the agency can demonstrate compliance.
    (e) Except with respect to an application that is withdrawn under 
paragraph (d) of this section, when Department staff completes its 
evaluation of the agency, the staff--
    (1) Prepares a written analysis of the agency, which includes a 
recognition recommendation;
    (2) Sends the analysis and all supporting documentation, including 
all third-party comments the Department received by the established 
deadline, to the agency no later than 45 days before the Advisory 
Committee meeting; and
    (3) Invites the agency to provide a written response to the staff 
analysis and third-party comments, specifying a deadline for the 
response that is at least two weeks before the Advisory Committee 
meeting.
    (f) If Department staff fails to provide the agency with the 
materials described in paragraph (e)(2) of this section at least 45 
days before the Advisory Committee meeting, the agency may request that 
the Advisory Committee defer acting on the application at that meeting. 
If Department staff's failure to send the materials at least 45 days 
before the Advisory Committee meeting is due to the failure of the 
agency to submit reports or other information the Secretary requested 
by the deadline the Secretary established, the agency forfeits its 
right to request a deferral.
    (g) Department staff reviews any response to the staff analysis 
that the agency submits. If necessary, Department staff prepares an 
addendum to the staff analysis and provides the agency with a copy.
    (h) Before the Advisory Committee meeting, Department staff 
provides the Advisory Committee with the following information:
    (1) The agency's application for recognition and supporting 
documentation.
    (2) The Department staff analysis of the agency.
    (3) Any written third-party comments the Department received about 
the agency on or before the established deadline.
    (4) Any agency response to either the Department staff analysis or 
third-party comments.
    (5) Any addendum to the Department staff analysis.
    (6) Any other information Department staff relied on in developing 
its analysis.
    (i) At least 30 days before the Advisory Committee meeting, the 
Department publishes a notice of the meeting in the Federal Register 
inviting interested parties, including those who submitted third-party 
comments concerning the agency's compliance with the criteria for 
recognition, to make oral presentations before the Advisory Committee.

(Authority: 20 U.S.C. 1099b)

Review by the National Advisory Committee on Institutional Quality 
and Integrity


Sec. 602.32  What is the role of the Advisory Committee and the senior 
Department official in the review of an agency's application?

    (a) The Advisory Committee considers an agency's application for 
recognition at a public meeting and invites Department staff, the 
agency, and other interested parties to make oral presentations at the 
meeting. A transcript is made of each Advisory Committee meeting.
    (b) When it concludes its review, the Advisory Committee recommends 
that the Secretary either approve or deny recognition or that the 
Secretary defer a decision on the agency's application for recognition.
    (1)(i) The Advisory Committee recommends approval of recognition if 
the agency complies with the criteria for recognition listed in subpart 
B of this part and if the agency is effective in its performance with 
respect to those criteria.
    (ii) If the Advisory Committee recommends approval, the Advisory 
Committee also recommends a recognition period and a scope of 
recognition.
    (iii) If the recommended scope or period of recognition is less 
than that requested by the agency, the Advisory Committee explains its 
reasons for recommending the lesser scope or recognition period.
    (2)(i) If the agency fails to comply with the criteria for 
recognition in subpart B of this part, or if the agency is not 
effective in its performance with respect to those criteria, the 
Advisory Committee recommends denial of recognition, unless the 
Advisory Committee concludes that a deferral under paragraph (b)(3) of 
this section is warranted.
    (ii) If the Advisory Committee recommends denial, the Advisory 
Committee specifies the reasons for its recommendation, including all 
criteria the agency fails to meet and all areas in which the agency 
fails to perform effectively.
    (3)(i) The Advisory Committee may recommend deferral of a decision 
on recognition if it concludes that the agency's deficiencies do not 
warrant immediate loss of recognition and if it concludes that the 
agency will demonstrate or achieve compliance with the criteria for 
recognition and effective performance with respect to those criteria 
before the expiration of the deferral period.
    (ii) In its deferral recommendation, the Advisory Committee states 
the bases for its conclusions, specifies any criteria for recognition 
the agency fails to meet, and identifies any areas in which the agency 
fails to perform effectively with respect to the criteria.
    (iii) The Advisory Committee also recommends a deferral period, 
which may not exceed 12 months, either alone or in combination with any 
expiring deferral period in which similar deficiencies in compliance or 
performance were cited by the Secretary.
    (c) At the conclusion of its meeting, the Advisory Committee 
forwards its recommendations to the Secretary through the senior 
Department official.
    (d) For any Advisory Committee recommendation not appealed under

[[Page 34483]]

Sec. 602.33, the senior Department official includes with the Advisory 
Committee materials forwarded to the Secretary a memorandum containing 
the senior Department official's recommendations regarding the actions 
proposed by the Advisory Committee.

(Authority: 20 U.S.C. 1099b and 1145)


Sec. 602.33  How may an agency appeal a recommendation of the Advisory 
Committee?

    (a) Either the agency or the senior Department official may appeal 
the Advisory Committee's recommendation. If a party wishes to appeal, 
that party must--
    (1) Notify the Secretary and the other party in writing of its 
intent to appeal the recommendation no later than 10 days after the 
Advisory Committee meeting;
    (2) Submit its appeal in writing to the Secretary no later than 30 
days after the Advisory Committee meeting; and
    (3) Provide the other party with a copy of the appeal at the same 
time it submits the appeal to the Secretary.
    (b) The non-appealing party may file a written response to the 
appeal. If that party wishes to do so, it must--
    (1) Submit its response to the Secretary no later than 30 days 
after receiving its copy of the appeal; and
    (2) Provide the appealing party with a copy of its response at the 
same time it submits its response to the Secretary.
    (c) Neither the agency nor the senior Department official may 
include any new evidence in its submission; i.e., evidence it did not 
previously submit to the Advisory Committee.

(Authority: 20 U.S.C. 1099b and 1145)

Review and Decision by the Secretary


Sec. 602.34  What does the Secretary consider when making a recognition 
decision?

    The Secretary makes the decision regarding recognition of an agency 
based on the entire record of the agency's application, including the 
following:
    (a) The Advisory Committee's recommendation.
    (b) The senior Department official's recommendation, if any.
    (c) The agency's application and supporting documentation.
    (d) The Department staff analysis of the agency.
    (e) All written third-party comments forwarded by Department staff 
to the Advisory Committee for consideration at the meeting.
    (f) Any agency response to the Department staff analysis and third-
party comments.
    (g) Any addendum to the Department staff analysis.
    (h) All oral presentations at the Advisory Committee meeting.
    (i) Any materials submitted by the parties, within the established 
timeframes, in an appeal taken in accordance with Sec. 602.33.

(Authority: 20 U.S.C. 1099b)


Sec. 602.35  What information does the Secretary's recognition decision 
include?

    (a) The Secretary notifies the agency in writing of the Secretary's 
decision regarding the agency's application for recognition.
    (b) The Secretary either approves or denies recognition or defers a 
decision on the agency's application for recognition.
    (1)(i) The Secretary approves recognition if the agency complies 
with the criteria for recognition listed in subpart B of this part and 
if the agency is effective in its performance with respect to those 
criteria.
    (ii) If the Secretary approves recognition, the Secretary's 
recognition decision defines the scope of recognition and the 
recognition period.
    (iii) If the scope or period of recognition is less than that 
requested by the agency, the Secretary explains the reasons for 
approving a lesser scope or recognition period.
    (2)(i) If the agency fails to comply with the criteria for 
recognition in subpart B of this part, or if the agency is not 
effective in its performance with respect to those criteria, the 
Secretary denies recognition, unless the Secretary concludes that a 
deferral under paragraph (b)(3) of this section is warranted.
    (ii) If the Secretary denies recognition, the Secretary specifies 
the reasons for this decision, including all criteria the agency fails 
to meet and all areas in which the agency fails to perform effectively.
    (3)(i) The Secretary may defer a decision on recognition if the 
Secretary concludes that the agency's deficiencies do not warrant 
immediate loss of recognition and if the Secretary concludes that the 
agency will demonstrate or achieve compliance with the criteria for 
recognition and effective performance with respect to those criteria 
before the expiration of the deferral period.
    (ii) In the deferral decision, the Secretary states the bases for 
the Secretary's conclusions, specifies any criteria for recognition the 
agency fails to meet, and identifies any areas in which the agency 
fails to perform effectively with respect to the criteria.
    (iii) The Secretary also establishes a deferral period, which does 
not exceed 12 months, either alone or in combination with any expiring 
deferral period in which similar deficiencies in compliance or 
performance were cited by the Secretary, except that the Secretary may 
grant an extension of an expiring deferral period at the request of the 
agency for good cause shown.
    (c) The recognition period may not exceed five years.
    (d) If the Secretary does not reach a final decision on an agency's 
application for continued recognition before the expiration of its 
recognition period, the Secretary automatically extends the recognition 
period until the final decision is reached.

(Authority: 20 U.S.C. 1099b)


Sec. 602.36  May an agency appeal the Secretary's final recognition 
decision?

    An agency may appeal the Secretary's decision under this part in 
the Federal courts as a final decision in accordance with applicable 
Federal law.

(Authority: 20 U.S.C. 1099b)

Subpart D--Limitation, Suspension, or Termination of Recognition

Limitation, Suspension, and Termination Procedures


Sec. 602.40  How may the Secretary limit, suspend, or terminate an 
agency's recognition?

    (a) If the Secretary determines, after notice and an opportunity 
for a hearing, that a recognized agency does not comply with the 
criteria for recognition in subpart B of this part or that the agency 
is not effective in its performance with respect to those criteria, the 
Secretary--
    (1) Limits, suspends, or terminates the agency's recognition; or
    (2) Requires the agency to take appropriate action to bring itself 
into compliance with the criteria and achieve effectiveness within a 
timeframe that may not exceed 12 months.
    (b) If, at the conclusion of the timeframe specified in paragraph 
(a)(2) of this section, the Secretary determines, after notice and an 
opportunity for a hearing, that the agency has failed to bring itself 
into compliance or has failed to achieve effectiveness, the Secretary 
limits, suspends, or terminates recognition, unless the Secretary 
extends the timeframe, on request by the agency for good cause shown.

(Authority: 20 U.S.C. 1099b)


Sec. 602.41  What are the notice procedures?

    (a) Department staff initiates an action to limit, suspend, or 
terminate an agency's recognition by notifying the agency in writing of 
the Secretary's

[[Page 34484]]

intent to limit, suspend, or terminate recognition. The notice--
    (1) Describes the specific action the Secretary seeks to take 
against the agency and the reasons for that action, including the 
criteria with which the agency has failed to comply;
    (2) Specifies the effective date of the action; and (3) Informs the 
agency of its right to respond to the notice and request a hearing.
    (b) Department staff may send the notice described in paragraph (a) 
of this section at any time the staff concludes that the agency fails 
to comply with the criteria for recognition in subpart B of this part 
or is not effective in its performance with respect to those criteria.

(Authority: 20 U.S.C. 1099b)


Sec. 602.42  What are the response and hearing procedures?

    (a) If the agency wishes either to respond to the notice or request 
a hearing, or both, it must do so in writing no later than 30 days 
after it receives the notice of the Secretary's intent to limit, 
suspend, or terminate recognition.
    (1) The agency's submission must identify the issues and facts in 
dispute and the agency's position on them.
    (2) If neither a response nor a request for a hearing is filed by 
the deadline, the notice of intent becomes a final decision by the 
Secretary.
    (b)(1) After receiving the agency's response and hearing request, 
if any, the Secretary chooses a subcommittee composed of five members 
of the Advisory Committee to adjudicate the matter and notifies the 
agency of the subcommittee's membership.
    (2) The agency may challenge membership of the subcommittee on 
grounds of conflict of interest on the part of one or more members and, 
if the agency's challenge is successful, the Secretary will replace the 
member or members challenged.
    (c) After the subcommittee has been selected, Department staff 
sends the members of the subcommittee copies of the notice to limit, 
suspend, or terminate recognition, along with the agency's response, if 
any.
    (d)(1) If a hearing is requested, it is held in Washington, DC, at 
a date and time set by Department staff.
    (2) A transcript is made of the hearing.
    (3) Except as provided in paragraph (e) of this section, the 
subcommittee allows Department staff, the agency, and any interested 
party to make an oral or written presentation, which may include the 
introduction of written and oral evidence.
    (e) On agreement by Department staff and the agency, the 
subcommittee review may be based solely on the written materials 
submitted.

(Authority: 20 U.S.C. 1099b)


Sec. 602.43  How is a decision on limitation, suspension, or 
termination of recognition reached?

    (a) After consideration of the notice of intent to limit, suspend, 
or terminate recognition, the agency's response, if any, and all 
submissions and presentations made at the hearing, if any, the 
subcommittee issues a written opinion and sends it to the Secretary, 
with copies to the agency and the senior Department official. The 
opinion includes--
    (1) Findings of fact, based on consideration of all the evidence, 
presentations, and submissions before the subcommittee;
    (2) A recommendation as to whether a limitation, suspension, or 
termination of the agency's recognition is warranted; and
    (3) The reasons supporting the subcommittee's recommendation.
    (b) Unless the subcommittee's recommendation is appealed under 
Sec. 602.44, the Secretary issues a final decision on whether to limit, 
suspend, or terminate the agency's recognition. The Secretary bases the 
decision on consideration of the full record before the subcommittee 
and the subcommittee's opinion.

(Authority: 20 U.S.C. 1099b)

Appeal Rights and Procedures


Sec. 602.44  How may an agency appeal the subcommittee's 
recommendation?

    (a) Either the agency or the senior Department official may appeal 
the subcommittee's recommendation. If a party wishes to appeal, that 
party must--
    (1) Notify the Secretary and the other party in writing of its 
intent to appeal the recommendation no later than 10 days after receipt 
of the recommendation;
    (2) Submit its appeal to the Secretary in writing no later than 30 
days after receipt of the recommendation; and
    (3) Provide the other party with a copy of the appeal at the same 
time it submits the appeal to the Secretary.
    (b) The non-appealing party may file a written response to the 
appeal. If that party wishes to do so, it must--
    (1) Submit its response to the Secretary no later than 30 days 
after receiving its copy of the appeal; and
    (2) Provide the appealing party with a copy of its response at the 
same time it submits its response to the Secretary.
    (c) Neither the agency nor the senior Department official may 
include any new evidence in its submission, i.e., evidence it did not 
previously submit to the subcommittee.
    (d) If the subcommittee's recommendation is appealed, the Secretary 
renders a final decision after taking into account that recommendation 
and the parties' written submissions on appeal, as well as the entire 
record before the subcommittee and the subcommittee's opinion.

(Authority: 20 U.S.C. 1099b)


Sec. 602.45  May an agency appeal the Secretary's final decision to 
limit, suspend, or terminate its recognition?

    An agency may appeal the Secretary's final decision limiting, 
suspending, or terminating its recognition to the Federal courts as a 
final decision in accordance with applicable Federal law.

(Authority: 20 U.S.C. 1099b)

Subpart E--Department Responsibilities


Sec. 602.50  What information does the Department share with a 
recognized agency about its accredited institutions and programs?

    (a) If the Department takes an action against an institution or 
program accredited by the agency, it notifies the agency no later than 
10 days after taking that action.
    (b) If another Federal agency or a State agency notifies the 
Department that it has taken an action against an institution or 
program accredited by the agency, the Department notifies the agency as 
soon as possible but no later than 10 days after receiving the written 
notice from the other Government agency.

(Authority: 20 U.S.C. 1099b)

Appendix--Distribution Table Showing The Reorganization of The 
Current Regulations

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

    The following table shows where each section of the current 
regulations is found in the proposed regulations.

------------------------------------------------------------------------
   Section in current regulations      Location in proposed regulations
------------------------------------------------------------------------
Sec.  602.1.........................  Secs.  602.1 and 602.10.
Sec.  602.2.........................  Sec.  602.3.
Sec.  602.3.........................  Sec.  602.14.
Sec.  602.4.........................  Secs.  602.26 and 602.27.
Sec.  602.5.........................  Sec.  602.50.
Sec.  602.10........................  Sec.  602.30.
Sec.  602.11........................  Sec.  602.31.
Sec.  602.12........................  Secs.  602.32 and 602.33.
Sec.  602.13........................  Secs.  602.3, 602.34, and 602.35.

[[Page 34485]]

 
Sec.  602.14........................  Secs.  602.40 through 602.44.
Sec.  602.15........................  Secs.  602.36 and 602.45.
Sec.  602.16........................  Sec.  602.2.
                  Sec.  602.20......  Sec.  602.11.
Sec.  602.21........................  Sec.  602.15.
Sec.  602.22........................  Secs.  602.12 and 602.13.
Sec.  602.23........................  Secs.  602.18, 602.21, and 602.23.
Sec.  602.24........................  Secs.  602.17, 602.19, and 602.23.
Sec.  602.25........................  Sec.  602.22.
Sec.  602.26........................  Secs.  602.16, 602.18, and 602.20.
Sec.  602.27........................  Secs.  602.23 and 602.24.
Sec.  602.28........................  Sec.  602.25.
Sec.  602.29........................  Sec.  602.26.
Sec.  602.30........................  Sec.  602.28.
------------------------------------------------------------------------

[FR Doc. 99-16143 Filed 6-24-99; 8:45 am]
BILLING CODE 4000-01-P