Opinion ID: 725553
Heading Depth: 3
Heading Rank: 3

Heading: the validity of the secretary's interpretation

Text: 21 One of the HEA's express purposes was to stabilize the GSL program by cutting the significant losses to the U.S. Treasury due to the costs and occurrences of defaults in the program. H.R.Rep. No. 383, 99th Cong., 2nd Sess. 4, reprinted in 1986 U.S.C.C.A.N. 2606. To this end, Congress directed the Secretary to establish minimum uniform due diligence requirements for loan collection, 20 U.S.C. § 1078, and authorized the Secretary to prescribe such regulations as may be necessary to carry out the purposes of the GSL program. 20 U.S.C. § 1082(a)(1). Because Congress has delegated to the Secretary its authority to implement the provisions of the HEA, the Secretary 22 is uniquely qualified to determine whether a particular form of state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,' ... and therefore, whether it should be preempted. Medtronic, Inc. v. Lora Lohr, --- U.S. ----, ----, 116 S.Ct. 2240, 2255, 135 L.Ed.2d 700 (1996) (citation omitted). 23 The Secretary's implementation of congressional intent is not arbitrary, capricious, or manifestly contrary to statute. The Secretary's regulations and interpretation ensure that loan collectors will be governed by one uniform standard for pre-litigation loan collection. If student loan guarantors were exposed to liability under fifty different sets of statutes, regulations and case law, conducting diligent pre-litigation collection activity could be an extremely uncertain and risky enterprise. Exposure to liability under state law would provide a significant disincentive to pursue loan collection, and the cost advantages gained by concentrating GSL loan collection in a centrally-administered system would be lost. Preemption does deprive some defaulters of the ability to receive damages under state law; however, the congressional purpose in enacting the HEA was not to make it easier for defaulters to get money from loan collectors, but to protect the millions of students who would suffer irremediable loss if Congress had to shut down the GSL program. 24 Subsequent developments in the GSL program have shown the full force of the government's commitment to stabilize the GSL program by strengthening loan collection activity. In 1992, Congress amended § 1082(a)(1) to make its stated purpose even more explicit in the law-the Secretary's power to prescribe necessary regulations now expressly includ[es] regulations applicable to third party servicers. Then, after years of hemorraghing, see, Stopping Loan Defaults, Wash. Post, at A22 (quoting the Secretary), in 1993 the government credited tougher collection methods as a main reason for a rapid decline in loan defaults. Student Loan Defaults Down Due to Collection Methods, Portland Oregonian, July 20, 1993, at A6; see also College Loan Defaults are Down, Chicago Tribune, July 20, 1993, at 8. Collection rates have continued to improve as the government has taken even stronger collection measures against defaulters. Stopping Loan Defaults, Wash. Post, at A22. Clearly, maximizing the potential liability of loan collectors has not been a significant purpose behind GSL reform. 25 Upholding the Secretary's interpretation of congressional intent and the GSL regulations is not inconsistent with our holding in Keams v. Tempe Technical Institute, Inc., 39 F.3d 222 (9th Cir.1994). The issue in Keams was whether the HEA preempted state tort suits against accrediting agencies. The Secretary's regulations with respect to accreditors were far more limited in scope than those governing loan collectors; the accreditor regulations merely provided a procedure for determining whether to place an accrediting agency on the approved list. Id. at 226. The Secretary had not been charged with establishing minimum standards for how accrediting agencies conduct their activity, and the Secretary had not issued any interpretation stating that the accreditor regulations preempt state law. Accordingly, we reasoned that state lawsuits could assist the Secretary in evaluating particular accrediting agencies, which would be operating under state law standards. Because state law did not stand  'as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress' , it was not preempted by the HEA. Id. (quoting California v. ARC America Corp., 490 U.S. 93, 101, 109 S.Ct. 1661, 1665, 104 L.Ed.2d 86 (1989)). 26 The present case concerns a different set of circumstances. Here, Congress has explicitly authorized the Secretary to prescribe such regulations as may be necessary to establish a uniform national standard for debt collection activity. 20 U.S.C. § 1082(a)(1). Consistent with the congressional charge, the Secretary has issued a regulatory framework for pre-litigation loan collection and has explained why recognizing liability under inconsistent state law would thwart the congressional intention implemented in [the GSL] regulations. 55 Fed.Reg. at 40121. Because the Secretary's regulations and interpretation are reasonable and not inconsistent with the statute, we defer to the Secretary's policy determinations. 27 The Supreme Court's recent Medtronic holding also does not preclude preemption. See --- U.S. at ----, 116 S.Ct. at 2257 (statutory and regulatory language at issue in Medtronic do not preclude general state requirements from ever being preempted). Like the GSL regulations, the FDA regulations were issued in accordance with the congressional grant of authority under the relevant statute. See id. at ----, 116 S.Ct. at 2255. In contrast, however, the FDA regulations expressly state that they do  'not preempt State or local requirements that are equal to, or substantially identical to, requirements imposed by or under the act.'  Id. at ----, 116 S.Ct. at 2256 (citing 21 C.F.R. § 808.1(d)(2)(1995)). The FDA regulations also expressly provide that the coordinate statute does not preempt State unfair trade practices law. Id. at ----, 116 S.Ct. at 2257. 28 The interests addressed by the FDA regulations differ substantially from those of the GSL regulations. The GSL regulations concern a federal student loan program which requires uniformly administered collection standards in order to remain viable. In contrast, the FDA regulations touch upon purely private interests: the liability of manufacturers for defects in privately-produced goods.