Sir John Daniel, who has led the British government’s efforts to encourage online learning and open educational resources, once made what is perhaps the most incisive comment about the condition of higher education regulation in the United States. A few months after announcing the end of an effort to create a U.S. Open University  modeled on the pioneering Open University he headed in the U.K., Sir John made the following statement to governors of the 50 states: "When I brought the OU to America I thought I would be dealing with one country," he said. "I was mistaken."
As Sir John, and everyone else who seeks to offer postsecondary education in the U.S., soon discovers, America is indeed a nation of states, and the regulation of education is uniquely a prerogative of the 50 states (not to mention the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Native American reservations and assorted islands in the Pacific). The U.S. Constitution’s "Reserved Powers Clause"  provides, in paraphrase, that all powers not expressly delegated to the national government are reserved "to the States and the people, respectively."
Education, at all levels, has since the earliest days of the Republic been considered one of those "reserved powers," its oversight and control jealously guarded by the States, and for the most part that separation of powers has been respected by the Congress and the Federal Government. Although in recent years there has been a steady increase in Federal involvement in education (ironically reaching a new high-water mark during the Republican administration of George W. Bush with the enactment of a Federal law, No Child Left Behind), control of higher education remains very much a state prerogative.
As a result, every state has its own rules and requirements for the chartering, authorization and oversight of institutions of higher education. And that oversight has been notable for its inconsistency across jurisdictions: states such as New York have long exercised very close control over every aspect of institutional operations for both public and independent colleges and universities, while other states have had a history of minimal regulation.
This regulatory patchwork has always been a matter of some concern, particularly as institutions expanded through the establishment of branch campuses located in different states. But it has been the advent of the Internet, and the explosive growth of online learning in the U.S., that has dramatically brought to the fore the importance -- and arguably the perverse impact -- of 50-plus different regulatory schemes for the supervision of higher education.
Not that this problem had not been predicted: a quarter century ago, well before the Internet was even born, the leadership of the organizations representing state regulators and regional accrediting commissions met to consider the implications of a new medium for the delivery of postsecondary education across state lines: television and televised courses. A handful of state regulators had even at that early time asserted that institutions seeking to enroll students residing in their jurisdictions would need their authorization to do so, in addition to the primary authority granted by their home states.
In a project jointly funded by the federal government and private foundations, Project ALLTEL,  Assessing Long Distance Learning via Telecommunications, the accreditors and state regulators agreed that the inconsistencies in cross-boundary regulation were not in the best interests of both students and the general welfare, and sought mechanisms to minimize bureaucratic disruption and duplication.
It was assumed, naively as it turned out, that as the technologies for distributing higher education services matured the barriers would fall in the face of interstate cooperation and the acceptance of "home" State recognition as sufficient regulatory oversight. I was a part of that project, and in commenting on its outcome I wrote confidently that we in the U.S. were on the verge of a new era of interstate cooperation in the regulation and oversight of postsecondary education.
That was in 1985. How wrong I was. Today, as online learning has become pervasive and millions of American students are enrolled in online courses and programs, the states have grown further apart and even more insular in their regulation of the field. About every five years over the past couple of decades, my firm has published a survey of state regulation of cross-border post-secondary education.  A very disturbing trend has emerged: Each time we have conducted our survey we have found more states seeking to exercise unilateral oversight of online learning offered within their boundaries, regardless of the location of the offering institution.
In our most recent, just-completed, survey, we have identified a half-dozen states that view the sole act of enrolling students residing in their states in online post-secondary programs as sufficient "presence" to require the offering institution to seek its state authorization, with another dozen having such low "presence" thresholds as to de facto require out-of-State institutions offering online courses to seek such approvals.
This has represented a continuing and increasingly urgent problem for online providers of higher education, and several of the larger online institutions have found it necessary to go through a review and registration process in a majority of States. In some States these are costly and administratively burdensome exercises, which in effect limit the ability of many institutions to grow their online programs appropriately and offer viable alternatives to overwhelmed traditional campuses. In some cases the state rules are overtly protectionist: a number of States require institutions not only to prove the quality of their online programs, but also to show that there is an unmet need within the state, something local institutions are almost always prepared to contest.
At least as serious, each state is free to establish academic standards and requirements; a worst-case example has arisen where one state requires 126 semester credits for a bachelor's degree, versus the almost universally accepted 120. Other states have content requirements, particularly in fields such as teacher education, and a few states flatly refuse to recognize online credentials for certain professional licensure purposes.
The saving grace -- until now -- has been the unwillingness (or incapacity) of many state regulators to enforce their domestic laws against out-of-state institutions, particularly if the number of enrollees in a given state might be small, and therefore not worth the effort. As of July 1, 2011, that will all change. The U.S. secretary of education, Arne Duncan, has issued regulations  that will require each college and university that participates in the federal student loan and grant programs -- which means just about every degree-granting institution -- to demonstrate, as a condition of continued receipt of those funds, that it has secured the approval of every state in which it enrolls students, to the extent such approval is required by the state.
While it is still a minority of states that require an institution enrolling students in purely online programs with no other "presence" to seek formal authorization, the Federal government has taken the discretion away from the states in enforcing their own regulatory schemes. Further, more states have thresholds for "presence" that are so low as to make it very easy for an institution to inadvertently put itself in a position where it is subject to regulation.
For example, several states view "local advertising" as constituting sufficient presence. That would be unexceptional, except for the fact that many Internet placements include "pop-ups" that appear on local media websites -- without the express knowledge of the institutions that have contracted for such services.
Adding to the importance of this issue is the question of international competition: while American institutions now find themselves inextricably bound to the vagaries of complex state regulation, foreign institutions offering online programs have no such impediment, since they do not participate in the federal student grant and loan programs and therefore are not subject to the sanctions the new rule provides.
The final irony is that at the same time that the Obama administration has the aim of increasing the proportion of Americans with at least two years of college by 50 percent in 10 years, its Department of Education has promulgated a rule that elevates the state-by-state fragmentation of higher education regulation in the United states into what could well be an existential issue for many institutions offering quality online programs.
Yet perhaps there is a bright side. A number of organizations that have long advocated for online learning, such as the WICHE Cooperative for Educational Technologies (formerly the Western Cooperative for Educational Telecommunications) and the Presidents Forum, organized by Excelsior College, are working closely with state-based organizations such as the State Higher Education Executive Officers association, WICHE and the National Council of State Legislatures, to help institutions cope with this new and more restrictive environment. After 25 years of stagnation, there is now serious talk of the States joining with each other to establish common standards, requirements and processes for the review and approval of online postsecondary education.
There are “inflection points,” when circumstances conspire to allow changes that have long been resisted. And there are “teachable moments,” affording leaders an opportunity to make those changes happen. I believe the promulgation of the new Federal rule regarding state authorization of inter-state online learning affords Secretary Duncan, working together with state and higher education leaders, an opportunity to finally put into motion the process that can lead to achieving the goal of Project ALLTEL that was articulated 25 years ago, to develop a common mechanism for inter-State cooperation in the regulation of cross-border online learning.
In 1985 there was no urgency. Telecommunicated learning occurred via television and video cassette; there was no Internet, no online industry. The moment passed.
No one can doubt that the urgency is now upon us. Much is at stake. The opportunity exists to seize the moment, to allow those who seek to offer high quality online learning the vision of an America that is indeed “one country.” Or, we can continue to erect more and higher virtual fences. The choice is ours.
Michael B. Goldstein is co-leader of the higher education practice at the Washington, D.C., law firm of Dow Lohnes.