Legal Issues in the E-Learning Business Navigating the

Legal Issues in the E-Learning Business Navigating the Regulatory Landscape Copyright Dow, Lohnes & Albertson, pllc, 2001. This work is the intellectual property of the author. Permission is granted for this material to be shared for non-commercial, educational purposes, provided that this copyright statement appears on the reproduced materials and notice is given that the copying is by permission of the author. To disseminate otherwise or to republish requires written permission from the author.

Michael B. Goldstein mgoldstein@dowlohnes. com

Presented in Cooperation with the

Conflicting Premises • Higher education is a hyper-regulated industry. – “Gatekeepers” protect • learners, • the public, and • incumbent institutions. • The Internet is anarchic – Open access encourages innovation and competition

The Gatekeepers • Government agencies. – States – Federal government – Other governments • Accrediting organizations • Professional organizations

“I thought when I brought the Open University to the U. S. I would be dealing with one country. ” Sir John Daniel former Vice Chancellor British Open University

“I was mistaken. ” Sir John Daniel, addressing the National Governors Association February, 2000

“The Congress shall have Power. . . to regulate Commerce with foreign Nations, and among the several States. . . ” Constitution Article I, Section 8

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the People. ” Constitution Tenth Amendment

The Inherent Power of a State to Regulate Institutions

State Regulation of e-Learning • 14 states reported “no specific policy. • 23 require authorization of foreign programs. • 13 have policies that specifically address technology-mediated learning. • 21 say “physical presence” is a key issue.

“…an institution has physical presence in Colorado if it delivers, or plans to deliver, instruction in Colorado, and receives assistance from any other organization within the state in delivering the instruction, such as, but not limited to, a cable television company or a television broadcast station that carries instruction sponsored by the institution. ” Policies of the Colorado Commission on Higher Education, Sec. 2. 04. 02

The term “to operate” includes “offering courses in person, by correspondence or electronic media, at any Washington location for degree credit, including electronic courses transmitted into the State of Washington. ” Washington Admin. Code, Sec. 250 -61 -050

No institution may offer “postsecondary education leading to a postsecondary degree or certificate to Georgia residents from a location outside this state by correspondence or any telecommunications or electronic media technology unless issued a current [Georgia] certificate of authority. ” Georgia Code, Sec. 20 -3 -250 -7

Presence: We Know It When We See It • Physical campus/classrooms • Aggregation of learners • Retail marketing (student-by-student) • Services provided by an in-state entity • In-state recruiters/ marketing staff • “Virtual” presence/ web-centric • Learners at home or at work • Wholesale marketing (business-to-business) • No in-state services • Media marketing.

How Can a State Regulate a “Foreign” e-Learning Institution • Legal jurisdiction – Is the institution within the “reach” of the state’s enforcement authority? • Practical implementation – Can an institution be stopped from enrolling and instructing students? – Can students be stopped from enrolling in the institution? – Can the credential not be recognized?

Accreditors at the Gates • • “Voluntary” organizations Created by the institutions or the professions • Relied on by state and federal governments as arbiters of “quality. ”

Nature of Accreditors • Private associations • Therefore, non-governmental – Even if relied upon by governments • Therefore, not Constitutionally obligated to afford due process – Can agree to due process procedures in return for status

How Accreditors Can Control e-Learning • Impose limitations on scope – Program approval – Geographic approval – Number of learners to be served

“Core Values” of Regional Accreditation • Institutional autonomy. • Collegiality and shared governance. • Intellectual and academic authority of faculty. • The value of the degree. • General Education. • Site-based education and a community of learning.

Challenges to Core Values • Institutional autonomy • Collegiality and shared governance • Intellectual authority of faculty • Consortial arrangements • Dispersion of students and faculty • Commercial courseware, disaggregation of faculty responsibilities

• Degree (A. A. , B. A. , • Alternative etc) credentials (MSCNE, etc. ) • General Education • Emphasis on “training” and “vocationalism” • Site-based education and community of learning • The insignificance of “place”

Can Accreditors be Unlawfully Anticompetitive? • Antitrust laws clearly apply to private organizations such as accrediting agencies. • Justice Department sees higher education as an active field for antitrust inquiry. • Knorr-Pennington exemption.

Professional Licensure • Control over the ability to use the credential • Standards limit licensure to -– graduates of “approved” institutions. – graduates of specific types of programs. • “Residency” requirements. • “Domestic product” rules. • Historic exclusion of “correspondence” credentials.

Federal Role: Access to Subsidy • Title IV Student Financial Assistance programs written in the 60 s, the era of “Sunrise Semester. ” • Deep-rooted mistrust of correspondence study. • Standards are entirely processbased…counting noses. • Fear of “frauderrorandabuse. ”

Key Federal Issue: Who Gets the Money. . .

…and Where and How is it Used Assuring the integrity of the institution – “ 50 percent” rule • There is a “real” school. • Assuring the intensity and duration of instruction. – “ 12 hour” rule • Where something is going on – “ 30 week” rule • for a reasonable period of time.

Incentive Compensation Rule “An institution. . . will not provide, nor contract with any entity that provides, any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments. . . to any persons or entities engaged in any student recruiting. . . activities. ” 34 CFR § 668. 14(b)(22)

HR 1992: The Internet Equity and Education Act of 2001 • Elimination of 50% rule and • Elimination of 12 hour rule – but only for some incumbent institutions. • Narrowing of prohibition against incentive compensation – No longer would apply to revenue sharing arrangements with vendors/contractors – But still prohibit individual bonuses based on success in securing enrollments

Transnational Regulation of e-Learning • Every nation has the right to regulate the delivery of education within its borders. • The First Amendment is not a universal legal standard. • Protecting against “cultural imperialism. ” • Protecting domestic institutions. • Protecting revenues.

Treaties or Trade Agreements? • Education now included among “services” to be negotiated in international trade agreements. • but treaties and trade agreements are reciprocal -- and the Federal government doesn’t control education approval in the U. S. • NCITE -- National Committee for International Trade In Education

The regulations that govern much of education today * * * are focused on supporting the welfare of the educational institution, not the individual learner. They were written for an earlier model, the factory model of education in which the teacher is the center of all instruction and all learners must advance at the same rate, despite their varying needs or abilities. Report, National Commission on Web-Based Education

We are entering the 21 st Century with antiquated regulations of educational policy * * *. It is as if we tried to manage the interstate highway system with the rules of the horse and buggy era. * * * It is clear that a radical rethinking of the relevant body of regulation and law is in order. Otherwise the Internet will remain more a province of auctions and games, than a place for genuine learning. Web Commission Report

Who should regulate…? • State-by-state (current status). • Ad hoc reciprocity between states. • Recognition of accreditation status (either within regions or through inter-regional accreditation agreements. ) • Creation of a super-accreditor for e-learning. • Interstate agreements (regional or national). • Federal pre-emption. • International treaties/trade agreements. • Laissez faire…or caveat emptor.

…and what is to be regulated? • Institutions or • Content (courseware) or • Professions or • Distribution (Internet).

“We are trying to perfect the Pony Express while the telegraph wires are being strung. ” Gordon K. Davies Director, State Council for Higher Education in Virginia 1982

Michael B. Goldstein Dow, Lohnes & Albertson, pllc 1200 New Hampshire Ave. , NW Washington, DC 20036 mgoldstein@dowlohnes. com 202. 776. 2569 Fax 202. 776. 4569 www. dowlohnes. com

Michael B. Goldstein is a member of the Washington, D. C. firm of Dow, Lohnes & Albertson, pllc, where he heads the firms educational institutions practice. Mr. Goldstein has been involved in the structuring and implementation of many elearning ventures, including several for-profit/non-profit hybrids, and he advises a wide array of public, non-profit and for-profit institutions in the development of e-learning activities. Prior to joining DL&A, Mr. Goldstein was an Associate Vice Chancellor at the University of Illinois. Chicago and before that was Assistant City Administrator and Director of University Relations in the Office of the Mayor of the City of New York. He holds a B. A. from Cornell University, a J. D. from New York University, and he was a Loeb Fellow at the Graduate School of Design at Harvard University.