Message from the General Counsel

So, here we are one year into The Foreseeable Future. In this direct communication to OGC’s clients, we’ve attempted to highlight key areas of concern, keep you apprised of new law, regulation and court decisions, identify trends in the law and generally give you – our clients – a few extra tools to face the daily onslaught and better interact with OGC.

Never ones to rest on our laurels, you will find this quarterly edition of The Foreseeable Future packed with more articles than usual and a couple new features. I hope you’ll enjoy our new “Spotlight on History” feature. Recently, we held the first-ever OGC Clean-up Day and as a result unearthed a few gems. Jim Phillips takes the role of storyteller to give you a glimpse of one of the things we found. In the future, we will give you a few more tidbits about the great history of UT System.

In this edition, you’ll also find a new feature entitled **Newsflash**. Things don’t always happen on a quarterly schedule and sometimes they are important enough that we need to get a quick word out as soon as possible. Rather than a more in-depth look at an issue, **Newsflash** is a quick hitter to alert you to a new law, regulation or court decision that may have immediate impact on campus operations.

So, there you have it. The Foreseeable Future – one year old and growing.

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Race-Restricted Educational Programs -- The Scrutiny Continues

by Esther L. Hajdar (General Law Section)

In July 2005, the U.S. Department of Justice (the Department ) informed Southern Illinois University (SIU) that it was investigating three of its fellowship programs and its minority hiring practices for possible violations of Title VII of the Civil Rights Act of 1964. A complaint from the Center for Equal Opportunity, a group advocating race-blind policies and programs, prompted the investigation.

The three programs under investigation (Bridge to the Doctorate, the Graduate Dean's Fellowship, and Proactive Recruitment of Multicultural Professionals for Tomorrow) are restricted to “members of an underrepresented minority group” or women who had overcome adversity. In addition, SIU had also stated on its web site and informed search committee members that certain faculty and administrative appointments were “targeted positions for women and minorities.”

In a November 4, 2005, letter, the Department informed SIU that it would sue SIU if it did not eliminate the three graduate fellowships that were allegedly discriminatory to whites, males and non-preferred minority groups. The Department also wrote that SIU might be in violation of the law "by recruiting and hiring only minorities and women for selected faculty positions." The Department and SIU then began discussions to settle the matter and avoid litigation. It presently appears that settlement is likely. SIU has agreed to open at least two of the questioned programs to all students regardless of race or gender. However, it is still not known whether the proposed consent decree would cover the Bridge to the Doctorate program, which is administered by a consortium of colleges and research organizations and is financially supported by the National Science Foundation.

The SIU case, of course, occurs against the back of Grutter and Gratz. On June 23, 2003, the U.S. Supreme Court held that the use of race as a factor in higher education admissions is permissible under the U.S. Constitution. Grutter v. Bollinger, 123 S.Ct. 2325 (2003); Gratz v. Bollinger, 123 S.Ct. 2411 (2003). The Supreme Court determined that the educational benefit derived from a diverse student body is a compelling governmental interest. However, the consideration of an applicant’s race in order to achieve a diverse student body must be very narrowly tailored. The Court approved of a “holistic” admission process that considered all the qualifications of an applicant of which race was only one factor of many. The Court disapproved of a process that relied on weighted factors and numerical scoring to determine admissions.  

Most colleges around the nation have opened minority programs up to other students in the face of pressure from advocacy groups and the Education Department's Office for Civil Rights, and in response to the Supreme Court's analysis in Grutter and Gratz, which made it harder for universities to legally justify operating race-exclusive programs.

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Community Colleges' Broad Authority to Assess Fees Affirmed by Texas Supreme Court

by Esther L. Hajdar (General Law Section)

The Texas Supreme Court recently affirmed a community college’s authority to assess a technology fee and student services fee. In Dallas County Community College District v. Bolton, --- S.W.3d ----, 2005 WL 3241846 (Tex. 2005), current and former students sued the Dallas County Community College District (District) alleging that the District did not have specific statutory authority to impose a technology fee and a student services fee. The students further alleged that the District failed to follow procedures required by statute prior to assessing the student services fee. The technology fee supported the purchase of technology related items for student use; the student services fee funded extracurricular activities. Both were mandatory fees. The trial court awarded the students a judgment of approximately $15 million. The District appealed the judgment to the court of appeals and then to the Texas Supreme Court.

The parties agreed that the District was authorized to charge fees under §130.123(c), Texas Education Code. The section provides that each junior college board “shall be authorized to fix and collect … fees from students and others for the occupancy, use, and/or availability of all or any of its property, buildings, structures, activities, operations, or facilities, of any nature, in such amounts and in such manner as may be determined by such board.” However, the students argued that other statutory provisions limited the District’s authority to assessing fees that were pledged to revenue bonds. The Texas Supreme Court rejected this interpretation. It held that “[a]lthough section 130.123(c) specifically authorizes junior colleges to set technology fees and in the language of this section allows junior colleges to pledge the fees to the payment of revenue bonds, it does not restrict the District from charging additional technology fees that are not pledged to revenue bonds.” The court determined that any other interpretation of the statute would be “at odds with the broad legislative grant of plenary authority to local public junior college boards.”

This opinion is noteworthy to all state public institutions because it acknowledges that governing boards, subject to statutes that regulate specific actions or set fees, exercise plenary authority over their operation. Additionally, it supports a broad interpretation of a governing board’s authority to establish fees under §55.16(a), Texas Education Code. Section 55.16(a) provides that “[e]ach board shall be authorized to fix and collect rentals, rates, and charges from students and others for the occupancy, services, use, and/or availability of all or any of its property, buildings, structures, activities, operations, or other facilities as provided by this section.” This language is substantially identical to the language found in §130.123(c), which was the basis of the community colleges’ authority to impose fees.

As to the student services fee, the students alleged that certain community colleges within the District failed to follow the requirement under §54.503(f), Texas Education Code, by not obtaining a majority vote of the students for certain fee increases greater than ten percent in one year. The Supreme Court sided with the District finding that the students were not entitled to a refund of the fees because the payments were voluntary and without duress. Among other things, the court determined that students had not sought a waiver of the fee and that they would not have been denied enrollment or credit for failing to pay the fee. The court held that “[p]ayment of the increased fee was not mandatory for any member of the Class; it was contingent on enrollment in a junior college in the Dallas County Community College District and selection of a certain number of credit hours for the semester.”

While the community college did not have a formal process in place for protesting the payment of a fee, a student who wants to protest a fee paid to a state university may file a written protest in accordance with §403.202, Texas Government Code.

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Twenty-Five Years After the Bayh-Dole Act

by BethLynn Maxwell (Intellectual Property Section)

Twenty-five years ago, Congress enacted the Patent and Trademark Law Amendments of 1980 (Public Law 96-517). Further amendments were included in Pubic Law 98-620 that was enacted into law in 1984. Commonly known as the Bayh-Dole Act in recognition of its two lead sponsors in the U.S. Senate, Birch Bayh (D-IN) and Bob Dole (R-KS), this act is probably the most inspired piece of legislation to be enacted in America over the past half-century. The Bayh-Dole Act had been credited with unlocking federally funded inventions and discoveries and providing platform technologies that have fueled our nation’s economic growth.

On a nation-wide basis, the Bayh-Dole Act has promoted a substantial increase in technology transfer – moving technology from the laboratory to the market place - from universities to industry, and ultimately to the public. Certainty of title to inventions made under federal funding is perhaps the most important incentive for commercialization.  Implementation of uniform patenting and licensing procedures, however, combined with the ability of universities to grant exclusive licenses, are also significant ingredients for success.  This combination of factors led to a tremendous introduction of new products through university technology transfer activities. The licensing of new technologies has led to the creation of new companies, thousands of jobs and educational opportunities and the development of entirely new industries.

A university owning the inventions it creates with Federal funding has another significant benefit -- it protects the right of scientists to continue to use and to build on a specific line of inquiry.  This is very important to research-focused institutions because of the way research is typically funded -- with multiple funding sources. Title to inventions to the university/institution is the only way to ensure that the institution will be able to accept funding from interested research partners in the future.

Congressional intent of Bayh-Dole Act was to:

• Increase American innovation
• Promote commercialization of inventions
• Encourage participation of small businesses

Major provisions of the Bayh-Dole Act:

• Inventions conceived or reduced to practice using federal funds are owned by the University – not the Federal Government
• Universities are encouraged to collaborate with commercial concerns to promote the utilization of inventions arising from federal funding
• Universities are expected to file patents on inventions they elect to own
• Universities are expected to give licensing preference to small businesses
• Manufacturing should be in the United States
• The government retains a non-exclusive license to practice the patent throughout the world

But, the Bayh-Dole Act is not without its critics; many of whom argue that it does little more than give industry carte blanche to acquire intellectual property rights on technologies supported by taxpayers, thereby giving away taxpayer rights to the inventions. They have also argued that the commingling of academia and commercial enterprises has turned the American university into a sort-of-school-corporation entity that stifles innovation in pursuit of licensing revenue -- which could lead to bias in scientific findings and undermine public trust. And, its critics also say that it slows and hampers research because data that would otherwise be openly shared, is now tied up in patent rights that prevent other researchers from making use of it.

In spite of its critics, most would agree the Bayh-Dole Act continues to be a national success story, representing a successful merger between government, universities, and industry.

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Universities and Environmental Law

by Jim Phillips (Business Law Section)

When people think about environmental law and its applications, the college and university setting is not necessarily the first thing that comes to mind. As the Environmental Protection Agency found during a round of inspections between 1994 and 2003 at sixteen New England colleges and universities, compliance with environmental regulations was apparently not the first thing that came to mind to university staff and administrators, either. Violations were noted primarily in hazardous waste management, spill prevention and storm water protection. Some air and toxic substance control issues were also found. Enforcement actions resulting from these inspections have led to penalties ranging from $300,000 to over $1 million and were heavily publicized in the press. See College and University Initiative Overview.

Unlike other universities around the country, The University of Texas System and its institutions have taken our environmental obligations to heart and have instituted strong systems to assure compliance. The Office of General Counsel and the Office of Risk Management support the Environmental Health and Safety Advisory Committee (EHSAC), which is made up of the EH&S Directors at the fifteen institutions, which serves as a forum on environmental issues.

As an example, to assist our institutions and to reduce costs by using our bargaining power, UT System manages several system-wide waste disposal contracts to assure proper storage, use and disposal of regulated waste streams. (For information on these contracts, contact Lance Zurawski in the Risk Management Office.) Hazardous waste, regulated by the EPA under the Resource Conservation and Recovery Act (RCRA) and the Texas Commission on Environmental Quality under the Texas Solid Waste Disposal Act, can be generated by numerous university activities, including research, medical care, chemistry labs and physical plant activities. There are strict container closure and labeling requirements, storage limits based on both time and quantity and intricate transportation and disposal requirements. Last year, over 940,000 pounds of hazardous waste was disposed of, at a cost in excess of $934,000. Medical waste is regulated by both the State Department of Health Services (pretreatment) and TCEQ (disposal). Last year, the System disposed of over 3 million pounds of medical waste at a cost in excess of $430,000. Radioactive waste disposal is regulated on the federal level by the Nuclear Regulatory Commission and by the TCEQ on the state level. Although the System disposed of only 917 pounds of radioactive waste last year, it cost over $188,000 to do so, more than $205/lb. Without the flexibility provided by the low-level radioactive waste storage facility operated by West Texas Operations, costs would be even higher.

There is significant incentive to properly dispose of waste streams. Proper characterization of waste is no small task and can require significant expertise. Without proper characterization, it is impossible to know which regulatory scheme may apply to any given container. The RCRA system is described as a “cradle to grave” regulatory scheme, and the waste generator is not able to transfer liability to a transporter, contractor or disposal facility. If we ship waste (or a contractor ships our waste) to a facility or site that later is named a Superfund site by EPA or the TCEQ under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), we can be held jointly and severally liable to reimburse EPA or TCEQ for all of the clean-up costs associated with the site, which can run tens of millions of dollars. We are currently participating as a “potentially responsible party” at a radioactive waste Superfund site because a couple of professors in the ‘80s shipped research waste without using the approved disposal contract. Although we shipped a de minimus amount of waste to the site, the EPA demanded immediate payment of $6.7 million, with future liability expected to exceed $15 million, based on the joint and several liability provisions of CERCLA. We are confident we will be able to settle the action for a reasonable amount, but only because there are a number of “deep pockets” who have stepped up to the plate and are willing to negotiate a de minimus settlement with us.

Waste disposal is only one environmental area in which the EH&S professionals must work with professors, researchers and students, with Physical Plant staff, and with OFPC. The federal and state Clean Water Acts require permitting and best management practices at construction sites to prevent pollution from stormwater. The Clean Water Act also requires us to pay close attention to what students may be pouring down drains in the chemistry labs. Operation of underground petroleum storage tanks requires permitting and leak prevention measures. Above-round storage of chemical and petroleum products creates spill prevention planning and reporting requirements, as well as construction of secondary containment. Lasers and radioactive devices used in medical and research activities must be permitted and operated in accordance with regulatory requirements.

The federal and state Clean Air Acts requires the permitting of boilers, power plants, paint shops and other sources of air contaminants, together with substantial recordkeeping and reporting responsibilities, especially for institutions in the Houston and Dallas “non-attainment” areas. Repairs and renovations of buildings can trigger inspection and reporting requirements if there is the possibility of asbestos-containing materials or lead paint being present. Building design and operations can create indoor air quality issues.

The complexity of our compliance effort is magnified by the complexity of our operations. Each of our campuses is, in effect, a self-contained city engaging in both cutting edge research using exotic equipment and materials and also providing basic services, such as drinking water, light, heat and indoor and outdoor air quality. One of our “cities” is in a very environmentally sensitive area, over the Edwards Aquifer, with protected endangered species on-site. Many of our activities have the potential to cause contamination to air, water and soil as well as endangering the health and safety of our faculty, staff, students and visitors. For all these reasons, the EPA decided a new focus and emphasis on university compliance was warranted.

Because of the professionalism and diligence of our EH&S staff, together with the support and cooperation of institution administration, faculty, staff and students, it is unlikely that UT System will face the same kind of embarrassment and sizeable financial penalties the New England colleges and universities faced. Many UT institutions are showing true environmental leadership, through extensive recycling and waste reduction programs, the development of environmental management systems, the use of environmental peer reviews, self-audits and sophisticated training and education efforts.

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Confidentiality of Student Health Information

by Jan Ferguson (Health Law Section)

Student health services at UT campuses are well-aware of the confidentiality of student health records under a variety of confidentiality statutes. At times, health care providers at the UT campuses feel constrained by their knowledge of HIPAA, FERPA, state laws and the special treatment of mental health records and substance abuse records. This heightened awareness and sensitivity can interfere with a common sense approach to good patient care.

The question I am going to attempt to answer in this article is: “May health care providers in a UT academic institution share information about a student with other health care providers in that academic institution?” My answer is “yes”. Decisions about what medical or mental health information should be shared among health care providers caring for a student should be made in accordance with good medical practice. In fact, certain information is so critical to good patient care that it must be shared. That information includes: any prescription medication the student has been prescribed and is currently taking, any laboratory results that require follow up and any history of violent behavior that may put the patient, other students or health care providers at risk for injury. I highlight these examples because the nature of this information, if not shared, exposes both the student/patient to the risk of medical complications and the health care providers to the risk of claims for medical negligence if such information is not known to all providers involved in the care of the student/patient.

The following is a survey of the statutes affecting the confidentiality of a student’s personal health information.

Applicability of FERPA to student health records:

A student’s medical record (whether a medical file, counseling file or alcohol and drug abuse file) is an education record under FERPA.

While the definition of “education record” excludes records maintained by a physician or psychologist for treatment of a student, it is only excluded if that record is only available to persons providing treatment. If a student health record is available to someone other than the persons providing treatment, it remains an education record and subject to FERPA. “Providing treatment” is not defined in FERPA; however it is reasonable to assume that this term should be broadly construed. If one looks to HIPAA for guidance, the definition of “health care” is quite broadly defined as including, but not limited to:

Preventative, diagnostic, therapeutic, rehabilitative, maintenance, or palliative care, and counseling, service, assessment, or procedure with respect to the physical or mental condition, or functional status, of an individual or that affects the structure or function of the body; and

Sale or dispensing of a drug, device, equipment, or other item in accordance with a prescription.

Therefore, if a student’s medical record is used for the sole purpose of providing medical or psychological care or counseling, the record is not considered an “education record” and subject to FERPA. If, however, a student’s medical record is used for purposes other than treatment, i.e. for submitting a bill to the student or for submitting a claim to an insurer, the record is no longer excluded from the definition of education record and FERPA applies.

An education record is specifically excluded from HIPAA; therefore, HIPAA does not apply to student medical records, counseling records or alcohol and drug abuse records. See 45 CFR §160.103, "Protected health information".

Disclosure of education records:

Generally, FERPA requires that an educational institution may not have a policy or practice of permitting the release of student’s education record without the written consent of the student. A student's education record may be disclosed to other school officials who have a legitimate educational interest, including the educational interests of the student for whom consent would otherwise be required. See 20 USCA §1232g(b)(1)(A).

Disclosure of patient records to other health care providers:

All of the statutes governing medical care, mental health or substance abuse contain a provision that allows for the sharing of a student’s health record with other health care providers participating in the diagnosis, evaluation, or treatment of the patient. See §159.004(7), Texas Occupations Code; §611.004(a)(7), Texas Health & Safety Code. With the exception of alcohol and drug abuse records pursuant to 42 CFR Part 2, § 2.12 (c) (3), these statutes do not limit the participating health care provider to someone within the same office, hospital or clinic as the primary health care provider.

Disclosure of education records to parents:

Generally, FERPA provides that a parent has the right to inspect and review the education records of their children. See 20 USCA §1232g(a)(1)(A), §1232g(b)(1)(H) and §1232g(i)(1). However, disclosure of a student’s medical, psychological or alcohol and drug records (see 42 USC §290dd-3 and §290ee-3, 42 CFR Part 2, §2.12(c)(3)) are protected from disclosure by the more restrictive state laws (see 20 USCA §1232g(i)(2); §159.002(a)-(b) and §159.004(7), Texas Occupations Code; §611.002(a)-(b) and §611.004(a)(7), Texas Health & Safety Code) protecting the confidentiality of a patient’s records.

Disclosure of identity of registered sex offenders:

Nothing prohibits an educational institution from disclosing information provided to the institution pursuant to federal statutes concerning registered sex offenders. See 20 USCA §1232g(b)(7)(A).

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Statutes of Limitation -- What Impact on System Actions?

by Kevin Brown (Claims & Bankruptcy Section)

Is it ever too late for UT System or its institutions to pursue a cause of action or a debt? Generally, limitations do not run against the state unless a statute specifically states otherwise. Brown v. Sneed, 14 S.W. 248 (Tex. 1890). This rule was partially codified in §16.061, Texas Civil Practice & Remedies Code, which protects the interests of the State by exempting it from the most common statutes of limitation. As state entities, the System and its institutions are covered by this statute. However, there may be limitations to this broad exemption.

When determining whether pursuit of a particular cause of action or debt is barred, your legal counsel should go through the following analysis, which assumes the System or an institution is the holder of the action/debt. Other actions, such as subrogation causes, may require a different analysis.

First, identify the time limitation that applies to the cause of action/debt you want to pursue. Depending on the action, a specific state or federal law could potentially take precedence over any general statute of limitation you may think is applicable. The Office of General Counsel is available to aid in determining whether there is a particular law that would override our sovereignty in a given situation.

Next, does the relevant limitations statute provide (either directly or indirectly, by definition) that it applies to the state? If not, the rule of the Brown case dictates that you are not bound by the limitation and you can pursue the claim. But, if the statute does limit state claims, does §16.061 (or another statute) specify that the state is not barred by that particular limitation? If so, you are still free to pursue the debt. If not, you may be out of luck. For example, in Tarrant County Hosp. Dist. v. GE Automotive Svcs, Inc., 156 S.W.3d 885 (Tex. App.– Ft. Worth, 2005), the court held that since the controlling limitation statute was §2.725, Texas Business & Commerce Code (TBCC), the state was barred, as §2.725 is not one of the limitations listed in §16.061 from which the state is exempt. Under the definitions used in the TBCC, the state was included as a “person” subject to its limitations.

While it is nice to be able to fall back on protections from limitations if necessary, timely action prior to the running of any limitation is always preferable and should increase the likelihood and amount of recovery. Prompt action increases the chance that funds are available to pay the debt, that the address you have is still good and that you have sufficient evidence to prove your cause of action.

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Resources from this e-Newsletter

• 41 CFR Part 60-1 (Federal Contract Compliance)
• 42 CFR Part 2, § 2.12 (c) (3)
• 45 CFR §160.103 (HIPAA)
• 20 USCA §1232g (FERPA)
• 42 USC §290dd-3
• 42 USC §290ee-3
• Bayh-Dole Act (Public Law 96-517 and Pubic Law 98-620)
• Brown v. Sneed, 14 S.W. 248 (Tex. 1890)
• Comprehensive Environmental Response, Compensation and Liability Act
• Dallas County Community College District v. Bolton, --- S.W.3d ----, 2005 WL 3241846 (Tex. 2005)
• Grutter v. Bollinger, 123 S.Ct. 2325 (2003)
• Gratz v. Bollinger, 123 S.Ct. 2411 (2003)
• Resource Conservation and Recovery Act
• Solid Waste Disposal Act (federal)
• Tarrant County Hosp. Dist. v. GE Automotive Svcs, Inc., 156 S.W.3d 885 (Tex. App.– Ft. Worth, 2005)
• Texas Business & Commerce Code
  • §2.725
• Texas Civil Practice & Remedies Code
  • §16.061
• Texas Solid Waste Disposal Act
• Texas Education Code
  • §54.503(f)
  • §55.16(a)
  • §130.123(c)
• Texas Government Code
  • §403.202
• Texas Health & Safety Code
  • §611.002(a)-(b)
  • §611.004(a)(7)
• Texas Occupations Code
  • §159.002(a)-(b)
  • §159.004(7)
• Texas Water Code
  • Chapter 26, Water Quality Control
• Title VII of the Civil Rights Act of 1964

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