remarked that facts are stubborn things that don't yield to passions or inclinations and the undisputed facts in this case show that the secretary erred in two ways first and excluding consideration of something called  taken out of the title for program with cash paid by poor students excluded that out of this calculation of the ninety ten percent is for the school secondly we believe the secretary error in not providing the same relief to this college that he provided to another school called gibson's u t and barbara college in both cases the facts show that the secretary erred and moving to the first point we do challenge the secretary's application of the regulation and his interpretation of the statute statute in question was adopted by congress in one thousand nine hundred two that statute was originally called the eighty five fifteen rule now called the nine hundred ten rule the purpose of that statute was to require for profit or proprietary schools to demonstrate they of congress's follows to attract students who will pay for their programs with funds other than title for each e a a phones the intent of congress was to limit title for each year program eligibility to those schools able to attract students who would pay with private funds and then the court when on said this students would be more cautious than spending their own funds in federal funds they would only attend his situations offering high quality education and training so in this case we have poor students who obviously can't afford apparently can't afford to take a full program to take the time out of a working schedule and take at least twelve credit hours a semester so they're taking one course at a time they're taking it on saturdays they're paint cash it's undisputed that that's what they were doing in the courses they were taking were not independent courses or programs the government's argued in the street that we're talking about it you know which will program that's not what we're talking about we're talking about individual courses like business  one taken out of the title for eligible program offered by this school such as accounting for example of an searches to green accounting so you know if you just referred to taking the course that was taken out of the program correct and as i understand commissioner would take issue with your interpretations that you fear that with mission a focus on his students who are actually dissipating in the eligible program as opposed to simply taking one course of the program when they're not involved in the program itself if i'm understanding that question why doesn't the statutory language give rise to at least a reasonable interpretation of the statute along those lines in the regulation well the statute says and this is the section that it was in back in two thousand and six twenty u s c section one thousand to be one after it says that a school of proprietary school most had at least ten percent of its revenues from sources that are not derived from funds provided  so the references to revenues were talking about schools revenues come from to which and i think that was the obvious intent of congress the secretary decided to only look at torsion revenue paid by students enroll in an entire program as opposed to being enroll in a course or to understand the regulation says that and i understand that the secretary has some leeway here to interpret the statute i just think the interpretation is inconsistent with the intent and the intent is what i just read to you out of the that's not what the court said in the ponce it case but now and and when we look at the evidence of intent that's in the record that we have in our priests for example from different members of congress the idea was that a school had a good enough education that it could attract students who would pay with veterans and it was a variable reenlistment bonus program and the court found the supreme court found that the regulation passed by the v a in that case was inconsistent with the statute the purpose of the statute was to encourage soldiers veterans members of different services with special skills to reenroll early the secretary wrote a regulation that said ok if you reenroll of a time when your skills are special but later on we decide you're not special by the time you start to reenroll you won't get the bonus and the supreme court in that case said that undermines the certainty it doesn't allow us to achieve before result intended by the congress and we have the same thing here when we only look at revenue from programs and we don't look at revenue from courses that are part of programs then we exclude student cash like we did in this case and we lose some schools like we did in this case for the last international junior college a school in puerto rico at the mid lee economically depressed area were some people are only going to be able to take one course at a time go to school on a saturday and pay cash why should the secretary be able to write a regulation that excludes good schools that are doing exactly what congress one of them to do that's my question to you so i think it's inconsistent with  kind of congress i think that rule should be overturned it does so in a similar you can see revenues can be understood to be something other than any source of income oh absolutely thought and tuition is a good proxy for revenue correct that's what we're talking about but then you say any monies taken for anybody taking any course at the countess tuition any course that's part of a program already approved by the secretary for title for  e and just so i follow the logic of that once you concede that why is it unreasonable to cut it so differently and then say that actually you've got to be a student who's taking that course as part of the unrolled program they enrolled in the program that's getting the aid because it that that sort of interpretation falls harshly unfairly on schools that serve poor people that are in poor areas because i didn't want to then send it i mean that policy consequence it obviously also has the potential benefit of further proving that the program that's being aided with federal dollars is a competitive one it does have that consequence that's a competing consequence but i'm really asking a question about why is an unreasonable interpretation of the statute once you concede that revenues can intuition and then once you concede that tuition has to be considered in light of the title for program as opposed to any money for any class no matter what i guess i'm having trouble understanding what makes it unreasonable to draw the line about what is to wishing for a title for program in the way the secretary drew it it seems that there's just  ambiguity on that question generally under several feet but the agency resolve it well we have the intent of congress the way which is that we want to reward schools that offer education that attracts cash things that's right so we have a school that has a title for program for people who have actually involved in the program that he's cool might have an incentive to gain rule by having a few kids take some classes and pay for even though the program wouldn't be worth anything whereas if the task is you have to be involved in a program that's a pretty good path that it's a viable program even without that that's a test that excludes consideration of students who can't take an entire program in one term that can't make that commitment are going to take one  have a situation where the school has title for eligible programs that can school prize of let's say ten different courses and you require a student who's going to take one course to enroll in it there isn't roman paperwork here you keep a transcript and you gather up credits and so these are credible courses that eventually can be added up and turned into a diploma or degree that's the evidence in this case from the statement of the officers of the school and rebutted in their declarations in front of the administrative judge the secretary and later th so i don't think it's either or and i think the secretary's choice is too narrow i think it defeats but the intent of congress in the case of schools like this that serve a poor population where they're going to have a part of their population taking a course of time out of that program and paying cash found the school failed the ninety ten test in fiscal two thousand and five but he refused to extend to this school the same relief that he extended to another school called it's important beauty college and he exercised that relief in the shell permit the institution to correct or cured administrative counting recordkeeping error if here is not part of a pattern here and there's no evidence of fraud or misconduct now in the gifts and barbara case you have small school roughly one hundred ninety two thousand in total revenue they had three thousand eight hundred fifty of revenue that went over the ninety percent portion the secretary found that that was a small amount that was one important point to him secondly the secretary found that there was no evidence of any fraud or any other errors regulatory errors and third the secretary found that that small school had attempted to make sure the evidence on that point is actually inaccurate both the secretary  state that this school actually made a donation of money during the fiscal year in which it went over ninety percent the clickable year but if you read the ail jay's opinion the ministry was judge opinion on page two footnote two of that for the school the fiscal year issue where they failed ninety ten was fiscal two thousand and two so you actually had corrective action occurring two and a half years later so i just want to clear that up because that is a missed leading premise and the record misleading premise adopted by the secretary lead of the district court that it was necessary to have corrective action within the fiscal year in which you failed nine to ten and that it actually happened in that case it did not happen now if you look at international quickly you have a range according to the district court of excess over ninety percent between eighty six hundred and sixty one thousand and the case of the six hundred s only one third of one percent of their total title for revenue which are spread around two million one hundred thousand in the case of sixty one thousand the upper end of that range that's two and a half percent the thirty eight fifty ipsum barber was over was two percent of their total revenue so comparable amounts of revenue bigger but percentages were comparable ok so in the first factor we say that exactly the same these two schools are alike on the second factor the secretary of the district court attempt to say there's fraud or the pattern of errors excuse me and what they point to is heightened cash monitoring being imposed on the school and secondly  on the first point there was a letter sent to the school in may of two thousand and six when their fiscal two thousand and five audit came out and that letter said because your audit shows your over ninety percent were putting you on h c m two so the h c m two was not an independent error it was part of that same thing and then secondly they talked about laid off it's there were forty four percent of all schools all colleges across the america that were late in funneling or audit in that time period and no action was taken against them so we would posit that shows that that's not a fraud point and finally the corrective action the school got back into the puerto rico grant program in two thousand and six it was in that program before two thousand and five it had compliant nine hundred ten scores then it got back into program in two thousand inserts they had compliance scores here afterwards and the owner made a loan of over a million dollars what more could this school possibly have done to correct the basis for why it was over ninety percent and yet the secretary refused to grant the same i submit to you that he won lee curtis each one of those points the first point that he made was that he said that that there was evidence to show that the students who were taking the saturday only classes were in the old in classes that could beat title for eligible grounds and that they were taking courses that were merely a part title or eligible programs there is no evidence to support that in the record in fact counsel conceded when he was given the opportunity he was given some three extra months to try to find evidence to show that these students were unrolled and these thoughts i buy side with other title or eligible students he could not do so he also said that gibson berber corrected an error but did something very similar to what international junior college did which is again incorrect gibson barber in fact the owner  school in order to get the school and compliance with the length was approximately three thousand dollars short of meeting the ten percent of the ninety percent ninety ten percent calculation and so he made a donation in the here in which he knew the school was going to fail i'm sorry it was she she knew that the school was going to feel needed and she later but didn't the donation come after the year one that's true your honor but she tension really took the corrective action in order to make the school come into compliance what schools are supposed to do under the ninety ten requirement is track there ninety two and the avenues throughout their fiscal year so they know whether they're meeting the ninety two more all throughout the year and that's just shifting funds from one year another well the secretary found that as a threshold matter he considered it to be an error that what is the minimum as and that it was also a record keeping her and or an accounting error and he also said that he didn't consider as a matter of law the ninety ten rule to be something that would be normally able to corrected or cured but that in this case his equitable powers of allowed him to find that it was such a small amount the school had a good history with the department there were no patterns related to this or any other regulatory violations and so he made in his own area thora d the decision to forgive the liability or to consider it not warranted where is with international junior college the school's owner also made a loan that he made a loan long after the school failed to meet the ninety ten requirement and the crucial difference that the secretary held wise between the two schools was that along with me the international junior colleges case to keep the school of float in subsequent years so that was the critical difference he said that the door was not even open for international to ensure the facts of the case where he supplied the extraordinary relief decision in this case hinged on the correctness of all three of those decisions or is our finding that any one of them was correct enough without your honor all three of them  correct let's assume only one of them or two with a more correct what should we done do should we remain and to see if the agency would make the same decision if it knew that only two to three distinctions were correct or should we read the asian agency decision is saying that you that gibson dunn was an extreme unusual case and you need all three of these factors to apply well first of all he said the only way that you could enter the door was this warnings was to meet the threshold test of the record was or a record keeping or accounting  or that could be cured or corrected potentially and in a way that would negate the liability to find a finding that would require the skills of the money back and he said that in gibson barbour that there was and that was the threshold before you got to any other factors he did find that there were two other factors and he said i don't need to apply these to other factors to international scase and but i will discuss them anyway and what's something what is the rush error that what the secretary said was that the school contentiously took action specifically to cure the nine to ten shortfall and then he went on to say that he there was evidence to show that the owners pacifically made the loan and in order to cure the violation how could it why would why should it be different from not while i'm worth reading well i can only go by what the decisions is but he also found two other pieces crucial pieces of evidence that were heard of this extraordinary really found at six sixty eight thirteen d and that was that the amount had to be de minimus and in order to be considered to minimize one has to know how much he meant w the secretary said that he was going to use his powers to say that this rule had made a correction and apparently the school had determined that it was that's correct and he said that i'm doing this as an extraordinary remedy under these circumstances a good school no other history of violations and contrary to international junior which failed to see minutes of it audits and audited financial statements timely and because about that's where the nine to ten calculation is found and so the department never had any kind of didn't have a school coming forward like in gibson barber middling it had a shortfall in fact the school basically filed its audit slate that that's why this your honor and then and the audit itself brought attention to the person who was resolving the audit at the department and it showed that the school had falsely claim that it met the ninety ten requirement because it rounded down its percentage to ninety percent which is kind of like the pregnancy roll here either pregnant or you're not so it was taking an even lesser stop the school had already already had it so much as a patient and the department continued the participation so it could try to unravel and figure out the facts as to what was going on with this rounding up and rounding down so it took the extraordinary step of sending someone to puerto rico on site to the school to go through the books and did a sampling of the cash paying students just a mere sampling and found that the school had filled the one hundred ten requirement by a goodly percentage and as soon as the analyst found that the school how the bill to me the you know what even if you don't know and at that point was really never the government's burden to have to go to puerto rico and has the books it was international's responsibility to account for its see i'd have to think about exactly where that regulation would be but the secretary has discretion to place us all on a different method of payment if it has concerns and in this case  the government the department had concerns the school had lost its eligibility some years ago to participate in the loan programs due to its high rate default rate which means students were defaulting on their loan repayments that was of concern to the government it was also the late our debt which two in a row which is a very very serious violation and results in germination of schools liability standing alone and that was another point that mr hope made that he said that the department let schools get away with this all the time well in fact the department has taken many their applications for certification have been denied oftentimes you'll see that it's due to late audits and in fact that was the number one ground in this particular letters  put the well put on it for another reason oh you know this well you're you're absolutely correct they were put on it for that reason and that was to give the department time to figure out what was going on in the school round wrongfully rounded down to ninety percent the department had to go they said to puerto rico look at the books and try to figure out what was going on and when we look at that rate s did not get such a letter and they seem to letter no they never got one right there for now they were not in compliance with ninety ten that's correct so that's what's they trying to figure out is the fact that they got an e c m to write or make them different from gibson barbour or not i mean you just both are out of compliance with ninety ten one gets a letter and one doesn't but the reason you get a letter is because you're out of compliance with ninety ten doesn't seem like a great way to distinguish the two cases as seems potentially arbitrary that one got the letter and the other didn't so we're trying to figure out is there some reason gibson barber though not implies ninety ten didn't get the letter but international though also out of compliance ninety tend to get the letter as if there was that might explain why the secretary thought it was so significant that international got the law right there is a huge thousand dollars we'd like to try to correct this problem making a loan to the school for that purpose and under those circumstances even though the underlying administrative judge found the school in the eligible to participate the secretary said i'm going to use my political powers to say this is a school that's a been a good school has had a history of being a good school it had a shortfall the owner attempted to correct this what he considered to be a record keeping her and so therefore the school never was put on each team to hear we had school that never notified the department and soul several months after it it was supposed to and it didn't say it failed it said we met the ninety ten those reasons are laid out in great detail and then the school asked for reconsideration but it didn't come forward with evidence as it was invited to show how the department's evidence was wrong in fact it concede it that it failed the ninety ten ratio by ninety three some percent and so is all it did was say we're period to where we lost eligibility several it there were three proposals and none of them were found to be adequate by the department and so the department wrote a second letter explaining all the reasons why it was rejecting the school's offers to make part of the payments have another company come in and take over this goal and the department invited that others all to file an outlook ation the school number minutes first the regulation in question you were asking about is thirty four c a four six sixty eight got one six two it's part of the secretary's cash management regulations it's very broadly written and says that whenever a secretary feels or some reason to convert a school from what's called advance funding to heighten cash monitoring level two he can do it the reasons are going to fight in the letters and so you've already alluded to the may eighth letter which  thousand and six the reason was because the school was determined to be over ninety percent counsel for the government keeps referring to my client as manipulating that the number well that was the auditor and then a manipulator they thought you could round the down they were wrong but it was ninety point two three i think in a round that it down to ninety percent once they were informed they were wrong with a letter from the secretary they asked their order go back and check the cash receipts which led to the auditor saying ok there's some vishal cash receipts and he included those cursors that are now the subject of dispute and it was clear that we were under at that point under eighty nine point seven four percent with the cursor or saturday course payments included so that's what happened and then the government their auditor michael foale who went down there and he looked at fifty five of the largest cash payment student files and out of those fifty five you found thirty four there were only saturday tenders and by the way there are a lot of people going to school on saturday some were just these one course of the time people and some of them were students enrolled in a program because some of these courses were offered that they were taking on saturdays so that's why out of the fifty five largest cash files night michael foale found thirty four that were just salary students but l fourteen sixty four to j fourteen sixty six i believe where he looked at those cursed us and then ok and then you'll also find in the record declarations from the former president of the school room from my climate  is here former vice chairman of the board and also from another individual raphael de cordova who was a professor at the school he talks about these are the courses and how they're part of the title for programs but back to the corrective action you correctly not that alone is not tuition revenue which is what the administrative law judge said so you know if you could consider it still not jewish and revenue it doesn't really correct a correction would be coming up with more money from a source other than title four for tuition that's what happen here the school got back into the puerto rico grant program it's in the record our fiscal two thousand and six financial statement is in the record it shows the school really entered that grant program and what happened is those grant dollars supplanted some of the federal dollars so because students were getting puerto rico grants up to about six hundred a student per per term per year they were borrowing or taking less excuse me from the federal government they were getting smaller pell grants and that's why the schools percentage for fiscal zero six came back under ninety percent was eight point nine eight so this corrected the problem whereas if some barber didn't all they did was neck alone and later two years later forgave the loan and that doesn't really add to wish and revenue which just money from an owner right but this is money that students got because the school got back into the grant program that was completely ignored by the secretary and by the district court but it is in the record space and if you need me i'll send a letter and give you all the places in the record where we raise that below in the administrati proceedings and in front of the district court been totally ignored so that's the real corrective action here and as far as this whole thing about to heighten cash monitoring you know the answer there it was imposed simply because in ninety ten laid off it's yes there were too late or th we're not saying that laid out a sort of good thing but i cited in my brief to report issued i believe in two thousand and ten that found that during this time period two thousand and four to two thousand and eight over three thousand institutions across america were late in their office the oh i can criticize the secretary for doing nothing about it so it's a little hollow for the secretary to commute here and tell you an important distinction between gibson barber and international international had to lay thoughts when during that