Hi @joe_greene,
This can also be adjusted in the the permissions area of Canvas (the "Users - view list" permission specifically), but that too appears to take away group options. As for why that's the case, I can only speculate that since groups can reveal roster information as well, it was decided that all of that sort of thing needed to be controlled in one area.
On the FERPA front... From what I know, viewing a class roster is fine under FERPA as long as you're not having multiple course sections combined together in Canvas but not officially crosslisted in your SIS. Even in that scenario, is seems most institutions generally accept combining multiple sections of the same course, but may draw the line at HIST-101 and MATH-352 being combined together, for example. Also in a similar vein, courses that use discussions will almost always basically reveal course rosters because students will see the names of everyone who makes a post.
-Chris
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