[Federal Register Volume 64, Number 202 (Wednesday, October 20, 1999)]
[Rules and Regulations]
[Pages 56612-56626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27313]



[[Page 56611]]

_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



34 CFR Part 602



The Secretary's Recognition of Accrediting Agencies; Final Rule

  Federal Register / Vol. 64, No. 202 / Wednesday, October 20, 1999 / 
Rules and Regulations  

[[Page 56612]]



DEPARTMENT OF EDUCATION

34 CFR Part 602

RIN 1845-AA09


The Secretary's Recognition of Accrediting Agencies

AGENCY: Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends 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: These regulations are effective July 1, 2000.

FOR FURTHER INFORMATION CONTACT: Karen W. Kershenstein, U.S. Department 
of Education, 400 Maryland Avenue, SW., room 3012, ROB-3, Washington, 
DC 20202-5244. 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: The regulations in this document were 
developed through the use of negotiated rulemaking. Section 492 of the 
Higher Education Act 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 proposed regulations must conform to agreements 
resulting from the negotiated rulemaking process unless the Secretary 
reopens that process or explains any departure from the agreements to 
the negotiated rulemaking participants.
    These regulations were published in proposed form in the Federal 
Register on June 25, 1999 (64 FR 34466) in conformance with the 
consensus of the negotiated rulemaking committee. Under the committee's 
protocols, consensus meant that no member of the committee dissented 
from the agreed-upon language. The Secretary invited comments on the 
proposed regulations by August 24, 1999, and several comments were 
received. An analysis of the comments and of the changes in the 
proposed regulations follows.
    In the preamble to the notice of proposed rulemaking (NPRM), we 
discussed the changes we proposed to improve the accrediting agency 
recognition process. The major changes included the following:
     Revising and reordering the standards accrediting agencies 
must have.
     Providing a maximum timeframe for agencies to come into 
compliance with the criteria for recognition (called the ``12-month 
rule'').
     Including distance education in the scope of an agency's 
recognition.
    Other proposed changes included in the NPRM were the result of 
discussion and subsequent consensus among negotiators about how to 
improve the current regulations by clarifying existing regulatory 
language and eliminating redundancies.
    These final regulations contain several changes resulting from the 
26 public comments we received. Most of the changes are clarifications 
of the regulatory language rather than substantive changes.
    We discuss substantive changes under the sections of the 
regulations to which they pertain. We discuss major issues according to 
subject, with appropriate sections of the regulations referenced in 
parentheses. Generally, we do not address technical and other minor 
changes in the proposed regulations, and do not respond to comments 
suggesting changes that the Secretary is not authorized by law to make, 
e.g., requiring accrediting agencies to conduct unannounced 
inspections. Finally, we do not address comments directed at our 
processes, such as a comment that the regulations should be revised to 
say that we will evaluate the consistency of an accrediting agency's 
application of standards on the basis of ``actual fact.''

Analysis of Comments and Changes

Required Accreditation Standards (Sec. 602.16)

    Comments: One commenter believed that the regulations needed to 
include a definition of ``effectively,'' which appears in 602.16(a)(1). 
This commenter suggested that the definition state that ``input demands 
cannot override student learning.'' Another commenter asked what data, 
factors, or other elements we will use to determine if an agency's 
standards effectively address each area for which the agency is 
required to have a standard.
    Discussion: We disagree with the alternative language suggested by 
the first commenter. ``Student learning'' is extremely important, but 
it is difficult to assess comprehensively. Furthermore, success with 
respect to student achievement is only one of the areas for which 
Congress has mandated that agencies have standards.
    While we appreciate the desire for some type of benchmark in the 
regulations by which to measure the effectiveness of an agency's 
standards, we believe the issue is quite complex, and any attempt to 
define the issue thoroughly would be over-regulation at best. Aspects 
of effectiveness are found in the agency's standards themselves, in the 
agency's efforts to conduct a systematic program of review that 
demonstrates that its standards are adequate to evaluate educational 
quality and relevant to the education and training needs of students, 
and in the agency's application of its standards, policies, and 
procedures. As desirable as it might be to try to define 
``effectiveness'' in a manner that encompasses and quantifies all of 
these perspectives, we believe a more reasoned approach is one of 
seeking patterns of evidence that, taken collectively, demonstrate 
effectiveness.
    Change: None.

Success With Respect to Student Achievement (Sec. 602.16(a)(1))

    Comments: While several commenters expressed satisfaction with our 
overall approach to the requirement that agencies have a standard that 
assesses success with respect to student achievement, one commenter 
expressed concern that the regulations failed to make student 
achievement the ``touchstone'' of accreditation. To remedy this 
situation, the commenter suggested that this section include a 
statement that an accrediting agency will not be considered to be a 
reliable authority regarding educational quality if it denies 
accreditation to an institution because the institution does not adhere 
to the agency's input standards even though the institution achieves 
success with respect to student achievement in relation to its mission. 
Another commenter felt the regulations needed to make it clear that 
agencies are not required to measure success with respect to student 
achievement using a particular assessment strategy.
    Discussion: As we explained previously, we believe requiring 
success with respect to student achievement to

[[Page 56613]]

override all other areas for which Congress requires agencies to have 
standards would conflict with the intent of Congress. We agree that 
agencies should be permitted flexibility in selecting strategies for 
measuring success with respect to student achievement. We recognize 
that assessing success with respect to student achievement is a 
complex, multi-dimensional problem. For this reason, we discussed in 
the preamble to the NPRM a number of measures that an agency could use, 
or could require its institutions or programs to use, in the assessment 
of student achievement. The key, we believe, is the measurement of 
success with respect to student achievement in relation to 
institutional mission. Different institutional missions may dictate 
different measures, and agencies should be free to choose the measure 
or measures they believe to be best suited to the types of institutions 
or programs they accredit, provided they can demonstrate that those 
measures are effective.
    Change: None.

The ``12-Month'' Rule (Secs. 602.32 and 602.35)

    Comments: We received numerous comments about these sections of the 
regulations that deal with the provision in the 1998 Amendments to the 
HEA requiring the Secretary to limit, suspend, or terminate the 
recognition of an agency if the agency either does not meet the 
criteria for recognition or is ineffective in its performance with 
respect to the criteria. Alternatively, the statute permits the 
Secretary to grant an agency a period of no more than 12 months during 
which it must come into compliance or demonstrate effectiveness in its 
performance. If it fails to do so within the specified timeframe, then 
the statute requires the Secretary to limit, suspend, or terminate the 
agency's recognition.
    Many commenters felt the regulations needed to specify when the 12-
month period begins. They also felt that it should begin on the date of 
the Secretary's decision.
    One commenter felt that the regulations needed to define what 
constitutes good cause. The commenter felt that the regulations should 
make it clear that the Secretary is expected to grant extensions only 
for demonstrable exigency and lack of fault and that extensions of the 
timeframe should be rare and brief.
    Many commenters raised questions about how we will review agencies 
under this provision. In particular, they questioned how some of our 
previous citations of agencies as being ``in need of strengthening'' 
compliance will be handled under the 12-month rule.
    Finally, several commenters expressed the opinion that the 
regulations should give the National Advisory Committee or the 
Secretary some latitude in implementing the 12-month rule, either for 
the benefit of agencies that are trying to improve their processes or 
to allow agencies to continue to be recognized despite their 
noncompliance with some of the criteria.
    One commenter thought the regulations needed to make it clear that 
recognized agencies maintain their status as recognized agencies even 
if they are under a deferral or until a decision on their application 
for continued recognition has been reached.
    Discussion: We understand and appreciate the many concerns that 
commenters, most of whom were affiliated with recognized accrediting 
agencies, expressed about this new, statutorily mandated provision. We 
note that some of the concerns are directed toward process, i.e., how 
we will implement this provision, rather than toward the provision 
itself, and we generally do not address process in the regulations.
    With regard to the issue of when the 12-month period begins, we 
note that some of the commenters appear to assume that the Secretary 
must always give agencies 12 months to correct whatever problem caused 
the Secretary to decide to defer a decision on the agency's application 
for recognition. That is incorrect. Nevertheless, we believe it would 
be useful for the regulations to establish clearly that whatever 
deferral period the Secretary grants, that period begins on the date of 
the Secretary's deferral decision.
    On the issue of defining good cause in the regulations, we note 
that negotiators carefully considered whether the regulations should 
define ``good cause'' and in the end 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 the Secretary to grant a request for an extension of time.
    With regard to the call for greater flexibility to continue to 
recognize agencies that are not in full compliance, no change can be 
made because the statute does not allow for greater flexibility.
    Finally, the proposed regulations were intended to convey that a 
recognized agency maintains its status as a recognized agency even if 
action on its continued recognition has been deferred or a decision on 
recognition has not been reached. Deferral is not a final decision.
    Changes: We have changed 602.35(b)(3)(iii) to state that the 
deferral period begins on the date of the Secretary's decision. We have 
also changed 602.35(d) to clarify that recognition of a recognized 
agency continues until the Secretary reaches a final decision to 
approve or deny recognition.

Distance Education and Scope of Recognition (Sec. 602.3)

    Comments: Several commenters expressed concerns about the inclusion 
of distance education in the scope of an agency's recognition. Most of 
their comments focused on whether agencies would have to go through a 
separate review process before distance education would be included in 
their scope of recognition, although one commenter asked why distance 
education, which the commenter described as ``just one particular type 
of instructional methodology,'' should be included in an agency's scope 
of recognition.
    Discussion: The 1998 amendments to the Higher Education Act clearly 
require us to evaluate distance education accrediting activities as 
part of the recognition process and to include distance education as a 
component in determining the scope of an agency's recognition. We do 
not envision implementing this provision by requiring agencies to go 
through a separate review process to have distance education included 
in their scope. Rather, we will observe and evaluate, as part of our 
regular review of an agency for initial or continued recognition, the 
agency's compliance with the criteria for recognition, including the 
agency's compliance in accrediting distance education programs and 
institutions.
    Change: None.

Section 602.3 Definitions

Adverse action
    Comments: One commenter felt that show cause and probation should 
be considered adverse actions to allow accrediting agencies to work 
more effectively with institutions that need more time to improve. In 
raising this issue, the commenter noted that students are the ones who 
are hurt most if schools have to close if they lose their 
accreditation. Another commenter, however, supported the change we 
proposed that excludes show cause and probation from the term ``adverse 
action.''
    Discussion: We continue to believe that including interim actions 
such as

[[Page 56614]]

probation and show cause as adverse actions would permit a noncompliant 
institution or program to retain accreditation or preaccreditation well 
beyond the maximum timeframes the regulations prescribe. It would also 
put students at risk because the quality of education provided by the 
institution or program might suffer as a result of the institution's or 
program's noncompliance with the agency's standards. We believe that 
the provision in 602.20(b), allowing an agency to extend the timeframe 
for coming into compliance for good cause, gives the agency the 
flexibility it needs on a case-by-case basis to deal with situations in 
which the agency believes there is justification for giving the 
institution or program more time.
    Change: None.

Representative of the public

    Comment: One commenter expressed concern that the proposed 
definition does not state that a student may serve as a representative 
of the public.
    Discussion: We continue to believe, as we stated in the preamble to 
the final regulations previously amending this part 602, published 
April 29, 1994 (59 FR 22250) (the 1994 regulations), that it is useful 
for agencies to include students and members of their families as 
representatives of the public. The students are the consumers in this 
context. However, the definition we proposed in the NPRM, which is the 
same as the definition in the 1994 regulations, does not preclude 
selection of students or their family members for this purpose. 
Therefore, there is no need to change the definition.
    Change: None.

Vocational Education

    Comment: One commenter requested that we add a definition of 
``vocational education'' to 602.3, noting that we mentioned the term in 
the discussion of success with respect to student achievement in the 
preamble to the NPRM.
    Discussion: The term is not used in the regulations. Therefore, 
there is no need to define it.
    Change: None.

Section 602.14 Purpose and Organization

    Comments: One commenter suggested that recognized agencies be 
exempt from demonstrating compliance with this section when they apply 
for continued recognition if they were found to be in compliance the 
last time they were reviewed and their structure has not changed since 
then. Another commenter believed that the provisions related to the 
waiver of the ``separate and independent'' requirement nullify the 
availability of the waiver and are not consistent with the statute.
    Discussion: We believe the suggestion that recognized agencies not 
be required to demonstrate compliance with 602.14 when they apply for 
continued recognition has merit. However, we do not think a regulatory 
change is needed to implement it. We expect to develop new guidelines 
for agencies on how to submit petitions for recognition under these 
regulations, and we will implement this suggestion in those materials.
    With respect to the waiver of the ``separate and independent'' 
requirement, we disagree with the commenter's conclusion that the 
regulations are inconsistent with the statute and nullify the 
availability of the waiver. We note that the regulations on this point 
remain unchanged from those issued in 1994.
    Change: None.

Section 602.15 Administrative and Fiscal Responsibilities

    Comment: One commenter suggested that the composition of on-site 
evaluation teams should be reconsidered but offered no specific 
suggestions for change.
    Discussion: Even though the commenter provided no specific 
suggestions, we reconsidered the proposed language in 602.15(a)(3) and 
(4) governing the composition of an agency's evaluation, policy, and 
decision-making bodies. We found that the language allowed an agency 
that accredited a single-purpose institution, such as a freestanding 
law school, to satisfy the regulations by simply having educators, 
i.e., academic and administrative personnel, on these bodies and not 
any practitioners. While we know that most agencies that accredit 
single-purpose institutions include practitioners on their evaluation 
teams, we felt it was important that the regulations require this 
practice.
    Change: We have modified 602.15(a)(4) to require an agency to have 
educators and practitioners on its evaluation, policy, and decision-
making bodies if it accredits programs or single-purpose institutions 
that prepare students for a specific profession.

Section 602.19 Monitoring and Reevaluation of Accredited Institutions 
and Programs

    Comment: Two commenters expressed concern about the discussion in 
the preamble of the NPRM about agencies' responsibilities for 
monitoring accredited institutions and programs throughout the 
accreditation period. Specifically, they objected to the statement that 
an agency's monitoring procedures must provide for prompt and 
appropriate action by an agency whenever it receives substantial, 
credible evidence from any reliable source, including the courts, that 
indicates a systemic problem that calls into question the ability of an 
institution or program to meet the agency's standards. They also 
objected to the statement in the preamble that we find it unacceptable 
for an agency to have as its policy that it will not look at, or take 
appropriate action based upon, information that comes to its attention 
through pending third-party litigation. The commenters felt that our 
position would place the agency in the middle of the litigation.
    Discussion: The comments are directed to preamble, rather than 
regulatory, language, so there is no need to make any changes to the 
regulations. Agencies, under the regulations, have a responsibility to 
monitor institutions and programs throughout their accreditation period 
to ensure that educational quality is maintained and to take 
appropriate action whenever they receive substantial, credible evidence 
from any reliable source that calls into question the quality of the 
education or training provided by the institution or program. That 
obligation applies with respect to information the agency obtains as a 
result of litigation, just as it applies to information obtained from 
other sources.
    Change: None.

Section 602.21 Review of Standards

    Comments: Most commenters liked the proposed regulations, which 
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. Two commenters, 
however, preferred the language in the 1994 regulations, which required 
agencies to maintain a systematic program of review that demonstrated 
their standards were valid and reliable indicators of educational 
quality. One commenter thought the phrase ``relevant to the needs of 
students'' in the proposed regulations should be replaced by the phrase 
from the 1994 regulations, ``relevant to the education and training 
needs of students,'' which the commenter believed was more appropriate. 
Finally, one commenter stated that an agency's standards should not be 
deemed adequate to evaluate the quality of education or relevant to the

[[Page 56615]]

needs of students if they resulted in the denial of accreditation to 
schools that achieve student success in learning.
    Discussion: The issue of the validation of standards through the 
systematic review of an agency's standards was discussed at length 
during negotiated rulemaking. The ultimate consensus that was reached 
reflects negotiators' belief that the language in the proposed 
regulations strikes a balance between overly prescriptive regulation of 
agencies' standards and processes and a requirement that looks only at 
an agency's review process and not at the substance of the standards. 
It also avoids some of the problems encountered with the language in 
the 1994 regulations that uses the terms ``validity'' and 
``reliability,'' the interpretations of which, when applied in the 
context of agencies' standards, were often misunderstood and misused.
    We believe the comment about the need for agencies to demonstrate 
that their standards are relevant to the education and training needs 
of students, not simply the needs of students, has merit. However, we 
disagree that an agency's standards should not be deemed adequate to 
evaluate the quality of education or relevant to the needs of students 
if its standards resulted in the denial of accreditation to schools 
that achieve student success in learning. Demonstrating success with 
respect to student achievement is certainly necessary to establishing 
the adequacy of an agency's standards. By itself, however, such a 
demonstration is by no means sufficient to ensure the adequacy of those 
standards.
    Change: We have changed 602.21(a) to require agencies to maintain a 
systematic program of review that demonstrates their standards are 
relevant to the education and training needs of students.

Section 602.21(c) Process for Changing Standards

    Comment: Several commenters raised concerns that the proposed 
regulations require an agency to provide notice about proposed changes 
to standards only to its relevant constituencies but not to other 
interested parties. One commenter felt regional accreditors should be 
required to notify all institutions in their region, while specialized 
accreditors should be required to provide notice to all institutions 
that provide education in the field. Another commenter felt the 
regulations should require agencies to give institutions opportunity 
and adequate time to respond, with the knowledge that their comments 
will be considered. Finally, one commenter felt the requirement for 
agencies to complete an action to change a standard ``within a 
reasonable period of time'' after a problem is found was too vague. The 
commenter suggested as an alternative that agencies could demonstrate 
that they have a formal process that allows changes to the standards to 
occur in a systematic manner.
    Discussion: During negotiated rulemaking, accreditors readily 
acknowledged their responsibility to notify persons they knew to be 
interested, but expressed concern about the burden and cost of 
providing timely and effective notice to a large number of entities to 
see if they might have an interest in commenting on proposed changes to 
their standards. The language negotiators agreed upon was an attempt to 
find a reasonable solution to the problem. Based on the comments we 
received, we have reconsidered the matter. We believe the concept of 
requiring a regional accreditor to notify all institutions in its 
region of proposed changes to its standards has some merit, but that it 
imposes a greater burden than necessary to address the concern. A more 
reasonable approach, we believe, is to require an accrediting agency to 
provide notice of proposed changes to its standards to all parties who 
have made their interest known to the agency. This will ensure that all 
who want notice will get it.
    With regard to the comment that the regulations should require 
agencies to give institutions opportunity and adequate time to respond, 
we believe the regulations, by stating that agencies must give 
``adequate opportunity to comment on the proposed changes,'' already do 
this.
    Finally, we do not believe the phrase ``within a reasonable period 
of time'' is too vague. Rather, we believe it provides a degree of 
flexibility to agencies in establishing schedules for meetings, within 
a reasonable range.
    Change: We have added the phrase ``and other parties who have made 
their interest known to the agency'' to 602.21(c)(1).

Section 602.22(a)(vii) Substantive Change Procedures for Additional 
Locations

    Comments: Most commenters welcomed the changes to the requirement 
for mandatory site visits to new sites within 6 months. One commenter, 
however, wanted us to remove the requirement for a site visit to any 
additional locations a school establishes.
    Discussion: We continue to believe that there is need for an 
accrediting agency to monitor an institution very closely as it begins 
to operate more than just the main campus. While the need for that 
close monitoring may diminish once the institution has gained 
experience in establishing effective systems for the administration of 
multiple sites, we do not believe that, in general, the addition of a 
single additional site is sufficient for an institution to be able to 
demonstrate that it has in place effective mechanisms to administer 
multiple sites.
    Change: None.

Section 602.24(b) Change in Ownership

    Comment: One commenter stated that the proposed regulations did not 
address a problem that existed with the 1994 regulations, namely that 
an agency cannot conduct a site visit unless it is notified of the 
change in ownership. The commenter suggested requiring agencies to 
conduct the site visit within 6 months following the change, or 
notification of the change, whichever comes later.
    Discussion: The regulations require an agency's definition of 
substantive change to include any change in the legal status, form of 
control, or ownership of the institution. The agency's procedures for 
handling substantive change must also require an institution to obtain 
the agency's approval before the change is included in its scope of 
accreditation of the institution. Thus, the situation the commenter 
describes represents a failure by the school to follow the agency's 
required procedures and should be dealt with by the agency. No 
regulatory change is needed. Obviously, an agency can only conduct a 
site visit if it knows about the change in ownership, and we would not 
regard the agency as being in violation of the criteria for recognition 
if it failed to conduct a visit within 6 months of the change solely 
because it was not informed of the change at the time it occurred.
    Change: None.

Section 602.24(c)(ii) Teach-outs

    Comment: One commenter noted that the location of the closing 
institution may not be very near other institutions that offer similar 
programs and suggested that the regulations require the teach-out 
institution to be as geographically proximate to the closing 
institution as possible.
    Discussion: We believe that this provision in the regulations must 
balance the goal of achieving the most geographically proximate teach-
out with

[[Page 56616]]

the goal of ensuring, to the extent possible, that a teach-out is 
offered. Sometimes there is no institution that is as close to the 
closing institution as we might wish. In other instances, the most 
geographically proximate institution does not want to provide the 
teach-out, but another institution is willing to do so even if it is 
not as close to the closing institution.
    We believe the regulations contain the flexibility necessary to 
best protect students. They address the proximity issue by requiring 
the teach-out institution to demonstrate that it can provide students 
access to the program without requiring them to move or travel 
substantial distances.
    Change: None.

Section 602.26 Notification of Accrediting Decisions

    Comments: One commenter stated that the 24-hour rule for notifying 
the public of final decisions to place an institution or program on 
probation or an equivalent status or to deny, withdraw, suspend, 
revoke, or terminate the accreditation or preaccreditation of an 
institution or program was unclear. The commenter asked whether this 
provision meant notifying the public in general, for example, by 
posting the notice to the agency's web site, or whether it meant 
telling anyone who happened to call the agency to inquire about the 
institution or program.
    Another commenter suggested that guaranty agencies be included in 
the notification.
    Discussion: With respect to the first commenter, we believe the 
principal issue here is providing effective notice to the public. We 
believe one way to do this is to post the information to the agency's 
web site within 24 hours of notifying the institution or program, but 
there may be other ways. The agency should have the flexibility to 
decide the approach that suits it best. Certainly the agency should 
give the information out to anyone who happens to call the agency 
inquiring about the institution or program after the 24-hour timeframe.
    We agree with the commenter who suggested that guaranty agencies 
should receive notification about accrediting decisions. However, an 
accrediting agency may not know which guaranty agencies service a 
particular institution. Accordingly, the Department will establish a 
process for forwarding this information, upon receipt, to guaranty 
agencies.
    Change: None.

Section 602.33 Appeal of an Advisory Committee Recommendation

    Comments: One commenter thought that the 10-day timeframe for an 
agency to file its intent to appeal an Advisory Committee 
recommendation was too short. The commenter also questioned whether the 
10-day timeframe meant 10 calendar days or 10 business days.
    Discussion: We do not believe the 10-day timeframe to file an 
intent to appeal an Advisory Committee recommendation is too short. An 
agency knows the Advisory Committee's recommendation as soon as it is 
made, and it need only submit a simple declaration of intent to appeal, 
without any documentation, to meet the 10-day requirement. The 
regulations permit the agency 30 days to submit the actual appeal, 
along with any supporting documentation that agency may wish the 
Secretary to consider.
    On the issue of whether the timeframe refers to calendar or 
business days, we note that all timeframes specified in these 
regulations follow the same convention as in the previous regulations; 
namely, they refer to calendar days, not business days.
    Change: None.

Section 602.42 Appeal of the Subcommittee's Recommendation

    Comments: One commenter thought that the selection of a 
subcommittee of the Advisory Committee to conduct a hearing on whether 
an agency's recognition should be limited, suspended, or terminated 
should be done randomly.
    Discussion: With regard to the composition of the subcommittee, the 
principal issue is the availability of members to serve. The 
subcommittee is only convened if Department staff has concluded that an 
agency fails to comply with the criteria for recognition or is 
ineffective with respect to those criteria, either of which is a very 
serious situation and must be dealt with as quickly as possible. 
Requiring that subcommittee members be selected on a completely random 
basis, or even on a rotating basis, could jeopardize the Department's 
ability to convene the subcommittee quickly.
    Change: None.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order, we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with these final 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.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, we have determined that 
the benefits of the regulations justify the costs.
    We have also determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.
    We discussed the potential costs and benefits of these final 
regulations in the preamble to the NPRM under the headings: Changes 
From Existing Regulations (64 FR 34467-34473), Paperwork Reduction Act 
of 1995 (64 FR 34474), and Regulatory Flexibility Act Certification (64 
FR 34474).

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 does not require accrediting 
agencies to respond to a collection of information unless it displays a 
valid Office of Management and Budget (OMB) control number. We display 
the valid OMB control number assigned to the collection of information 
in these final regulations at the end of the affected sections of the 
regulations.

Assessment of Educational Impact

    In the NPRM we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Based on the response to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Electronic Access to This Document

    You may view this document in text or Adobe Portable Document 
Format (PDF) on the Internet at the following sites:

http://ocfo.ed.gov/fedreg.htm
http://ifap.ed.gov/csb____html/fedlreg.htm
http://www.ed.gov/legislation/HEA/rulemaking/

To use the PDF, you must have the Adobe Acrobat Reader Program with 
Search, which is available free at the first of the previous sites. If 
you have questions about using the PDF, call the

[[Page 56617]]

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: October 4, 1999.
Richard W. Riley,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary amends 
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 institution 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.
    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

[[Page 56618]]

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)

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;

[[Page 56619]]

 
                               (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 or single-
purpose institutions that prepare students for a specific profession;
    (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--
    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

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


[[Page 56620]]


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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

(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
    (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

[[Page 56621]]

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 educational or training 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, 
and other parties who have made their interest known to the agency, 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 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

[[Page 56622]]

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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

    (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 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;

[[Page 56623]]

    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

    (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.

(Approved by the Office of Management and Budget under control 
number 1845-0003)

(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 56624]]

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 includes--
    (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 as a single deferral period 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 56625]]

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 
begins on the date of the Secretary's decision.
    (iv) The deferral period may not exceed 12 months, either as a 
single deferral period 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 to approve or 
deny 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).

[[Page 56626]]

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 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)
[FR Doc. 99-27313 Filed 10-19-99; 8:45 am]
BILLING CODE 4000-01-P