Court Opinion

ID: 9466374
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:13:54.024782+00
Date Added: 2024-06-11T17:39:41.898904
License: Public Domain

NEWMAN, Circuit Judge,
dissenting:
This is the first case to decide the lawfulness of a rule promulgated by the Federal Trade Commission under its newly confirmed authority to use the rulemaking power to protect American consumers from unfair and deceptive trade practices. In 1975 Congress settled the long-standing question of whether the Federal Trade Commission has substantive rule-making authority by enacting § 202(a) of the Mag-nuson-Moss Warranty — Federal Trade Commission Improvement Act, Pub.L.No. 93-637, 88 Stat. 2183, 2193, codified at 15 U.S.C. § 57a (1976). This legislation made explicit the Commission’s substantive rule-making authority with respect to unfair or deceptive acts or practices. Cf. National Petroleum Refiners Ass’n. v. Federal Trade *671Commission, 157 U.S.App.D.C. 83, 482 F.2d 672 (D.C.Cir.1973), cert. denied, 415 U.S. 951, 94 S.Ct. 1475, 39 L.Ed.2d 567 (1974) (upholding FTC authority to promulgate substantive rules under § 6(g) of the Federal Trade Commission Act, 15 U.S.C. § 46(g) (1976)). The Court invalidates the Rule for Proprietary Vocational and Home Study Schools, 16 C.F.R. part 438 (1979), concluding that the Rule violates procedural and substantive requirements of MagnusonMoss in four respects. These concern the definition of deceptive practices, the pro rata refund remedy, the job-placement disclosure remedy, and the preemption provision. The Court also concludes that the Rule survives all the other- challenges mounted by the petitioners. Believing that the Rule is in all respects a lawful response to documented unfair and deceptive practices found by the Commission to exist in the proprietary vocational school field, I dissent.
1. Definition of Deceptive Practices
The majority concludes that the Rule is procedurally defective for failure to define unfair or deceptive acts or practices as required by 15 U.S.C. § 57a(a)(l)(B) (1976). This provision authorizes the Commission to prescribe
(B) rules which define with specificity acts or practices which are unfair or deceptive acts or practices in affecting commerce (within the meaning of section 45(a)(1) of this title). Rules under this subparagraph may include requirements prescribed for the purpose of preventing such acts or practices.
The structure of the Vocational School Rule is undisputed: the Rule imposes upon the schools several affirmative requirements and defines as a deceptive practice a school’s failure to observe each of these requirements. The majority believes that Congress expected more from the Commission than the definition of a deceptive practice in terms of a failure to comply with affirmative requirements. Apparently the majority believes the Rule is procedurally defective because the Commission did not first define each deceptive practice and then follow with a separately stated affirmative requirement to remedy each practice. In the circumstances of this case, I find the Rule entirely lawful as a matter of procedure. My conclusion is based on a consideration of the statute and the Commission’s rule-making experience that informed Congressional enactment of the statute.
The statute contemplates a two-step approach: the mandatory definition of an unfair or deceptive practice and the permitted remedying of it. But the terms of the statute do not require that the definition and the remedy always be independently stated. Such a requirement would be an empty formalism in the many situations where the definitional and remedial aspects of a deceptive practice coincide. An obvious example occurs whenever the Commission determines that consumers in a particular field are being misled because certain data is not disclosed to them. In such situations, the deceptive practice is the failure to disclose the pertinent data, and the obvious remedy is a requirement that the data be disclosed. The definition of the deceptive practice and the remedy for it are opposite sides of the same coin. When this happens, the statute should not be read to prevent the Commission from defining as a deceptive practice the failure to observe the required remedy. No purpose would be served by insisting that the Commission first define as a deceptive practice the failure to disclose the pertinent data and then specify as a remedy the obligation to disclose the data.1
However, some remedies are adopted not because their absence is itself unfair or deceptive but only because they are an appropriate response to some unfair or deceptive practice that is occurring in the pertinent industry. The failure to observe that sort of remedy is not what the statute permits the Commission to condemn as an *672unfair or deceptive practice, and the Commission therefore cannot adopt a rule that calls such a failure an unfair or deceptive practice. In those situations where the failure to comply with a remedy is not itself unfair or deceptive, the statute requires that the unfair or deceptive practice be defined independently of the remedy.2
This analysis of the statute, permitting a deceptive practice to be defined in terms of a failure to observe a required remedy, but only when the failure itself is properly found to be unfair or deceptive, draws support from the legislative history of Magnu-son-Moss. This history indicates that the wording of § 57a(a)(l)(B) was designed to give the Commission flexibility, not to create two independent requirements. The provisions for FTC rule-making in the House of Representatives version of the bill, which substantially became the enacted version, simply authorized the definition of unfair or deceptive practices, without specifically authorizing remedies. H.R. 7917, 93d Cong., 2d Sess. § 202(a), 120 Cong.Rec. 31743 (1974). The Conference report makes clear that the second sentence of § 57a(a)(l)(B) was added “for the purpose of clarifying what was perhaps a technical deficiency in the House rule-making provision.” S.Rep.No.93-1408, 93d Cong., 2d Sess. 31 (1974), reprinted in [1974] U.S.Code Cong. & Admin.News, pp. 7702, 7755, 7763. Thus, in drafting its version of Magnuson-Moss, the House apparently believed that the first sentence of § 57a(a)(l)(B) already included authority to prescribe remedies. It is ironic that the conferees’ decision to add language confirming the Commission’s broad authority should become a basis for invalidating the way in which the Commission has exercised that authority.
Furthermore, Congress did not require a specific definition of unfair or deceptive practices in order to prevent the Commission from defining them in terms of required remedies. Congress required specific definitions of such practices so that a rule would “reasonably and fairly inform those within its ambit of the obligation to be met and the activity to be avoided.” H.R.Rep. No.93-1107, 93d Cong., 2d Sess. 46 (1974), reprinted in [1974] U.S.Code Cong. & Admin.News, pp. 7702, 7727. There can be no doubt that the provisions of the Vocational School Rule are extremely specific in informing the schools of “the obligation to be met.” Indeed, the schools complain that several requirements are too precise.
The Commission’s experience with trade regulation rules under its general rule-making authority as exercised prior to Magnu-son-Moss further supports the Commission’s approach to the structural requirements of its rule-making authority. When the Commission began issuing trade regulation rules in 1962, it initially attacked specific deceptive practices that could be precisely defined in terms of what was occurring in the market place. The use of “cut size” dimensions unaccompanied by dimensions of the finished product was found misleading as to sleeping bags and tablecloths. 16 C.F.R. parts 400, 404 (1979). The designation “automatic” was found misleading as to sewing machines. 16 C.F.R. part 401 (1979). The designation “leakproof” was found misleading as to batteries. 16 C.F.R. part 403 (1979). In each case, the remedy *673that the Commission codified in a rule was a simple prohibition of the use of the misleading term. As the Commission moved on to areas of trade where the nature of the deception was more complex, it soon found that simple prohibition of the practices occurring in the market place was not always possible. A variety of deceptive techniques could be generally described, but precision was achieved only by establishing rules that imposed affirmative requirements.
These rules were of two basic types. The first type combatted misleading statements by defining as a deceptive practice the failure to use specified designations. See, e. g., the rule on leather content of belts. 16 C.F.R. part 405 (1979). In these cases the Commission began to include in a rule only the remedy (always defining the deceptive practice as a failure to comply with the remedy) and to place in a statement of basis and purpose a description of the prevalent practices that occasioned the rule. See, e. g., rule on glass fiber fabrics, 16 C.F.R. part 413 (1979); rule on radio transistors, 16 C.F.R. part 414 (1979); rule on extension ladders, 16 C.F.R. part 418 (1979).
The Octane Rule, upheld in National Petroleum Refiners Ass’n v. Federal Trade Commission, supra, was a classic example of this first type of rule, combining substantive and remedial aspects of a deceptive practice into a single structure. The Rule specified that octane ratings must be displayed at gas station pumps, and it defined as a deceptive practice the failure to do so. 36 Fed.Reg. 23871 (1971), reprinted in National Petroleum Refiners Ass’n, supra, 157 U.S.App.D.C. at 85, n.1, 482 F.2d at 674, n.1. A description of the misleading situation confronting consumers who purchase gasoline either in the absence of octane ratings or in the presence of misleading octane claims was detailed in a Statement of Base [sic] and Purpose. 36 Fed.Reg. at 23871.
A second type of rule promulgated by the Commission in the pre-Magnuson-Moss era combatted misleading statements by identifying as an unfair practice the failure to provide consumers with a means of avoiding the consequence of the deception. The most notable example was the rule on door-to-door sales. 16 C.F.R. part 429 (1979). That rule required those who make any door-to-door sales to permit purchasers to cancel their purchases within a “cooling-off” period of three business days and required that each purchaser receive a notice informing him of his cancellation rights. The rule defined failure to give the required notice of the “cooling-off” period and the cancellation rights as a deceptive practice.
The legislative history of Magnuson-Moss makes clear that Congress was fully aware of the evolution of the Commission’s approach to trade regulation rules, see H.R. Rep.No.93 — 1107, supra, at 32-33, [1974] U.S. Code Cong. & Admin.News, p. 7715, and gives no indication that Congress wished to change the Commission’s approach of defining a deceptive practice in terms of a failure to observe an affirmative requirement. The Octane Rule was specifically noted in the House Report. Id. at 33, [1974] U.S. Code Cong. & Admin.News, at p. 7715. The Conference Report went further: it cited the Octane Rule as an example of the authority the Commission was to continue to exercise under Magnuson-Moss. S.Rep.No. 93-1408, supra, at 31, [1974] U.S.Code Cong. & Admin.News, p. 7764.
In enacting Magnuson-Moss, Congress sought to confirm the Commission’s authority to use rule-making to combat deceptive trade practices. There is no basis for concluding that it sought to alter the structural requirements of the rules themselves. To protect those subject to Commission rule-making from unfair or arbitrary actions by the Commission, Congress expanded the hearing rights of affected businesses during the course of the rule-making proceedings. 15 U.S.C. § 57a(b), (c). In addition, Congress required that the Commission’s rule must be supported by substantial evidence, and provided that a reviewing court could overturn any rule that was not so supported. Id. § 57a(e)(3)(A). Congress preferred such real procedural protections to the artificial protection, imposed by the majority, which requires the Commission to engage in formalistic verbal recitations.
*674Analysis of the Vocational School Rule demonstrates why it fully satisfies the definitional requirement of § 57a(a)(l)(B). Essentially the Rule imposes four affirmative requirements, and defines as an unfair or deceptive practice the failure to comply with each of them. The four requirements are: (1) schools must disclose the number and percentage of enrolled students in each course who graduated; (2) schools that make express claims concerning availability of jobs or earnings to be achieved must disclose the number, percentage, and salary ranges of recent graduates known to have found jobs; (3) schools must afford students a fourteen-day “cooling-off” period in which enrollment contracts may be can-celled and must inform students of their cancellation rights and how to exercise them; (4) schools must refund to any student who withdraws before completing a course a part of the tuition proportional to the unfinished part of the course.
Initially, it may be observed that the rule literally complies with § 57a(a)(l)(B). The Rule does define several unfair or deceptive practices and does so with specificity. While the Rule defines these practices in terms of the required remedy, that approach, for all the reasons previously stated, is valid since as to each provision of the Rule, the definitional and remedial aspects of each deceptive practice coincide. The first two provisions fit the previously mentioned pattern represented by the Octane Rule. The Commission has found that the absence of graduation and job-placement data is seriously misleading to potential students in at least two respects. First, it denies students information needed to make an informed choice as to whether and where to spend their money for vocational education. Second, it leaves unrebutted the misleading claims that some schools are making concerning their graduation and job-placement rates. The Commission has fully explained these considerations in its Statement of Basis and Purpose (SBP) accompanying the Rule. 43 Fed.Reg. 60796, 60805-OS (1978). Having found that the absence of graduation and job-placement data is substantively misleading, the Commission took the obvious remedial step of requiring their disclosure. The Rule coalesces these substantive and remedial aspects by defining as a deceptive practice the failure to disclose the graduation and job-placement data. No useful purpose would be served, certainly none required by Congress, by forcing the Commission to put in one provision of the Rule a definition that failure to disclose the data is a deceptive practice and in another provision of the Rule a remedy that requires disclosure of the data.
The cancellation and refund provisions of the Rule are subject to similar analysis. The Commission found that many schools are making false and misleading claims not only concerning graduation rates and job-placement success but also concerning a student’s experience while attending classes. The SBP notes the prevalence of “exaggerated or false statements concerning a school’s equipment and facilities,” “the quality of instruction provided,” and “the availability of part-time employment opportunities during the course.” SBP § B(3)(b)(l), 43 Fed.Reg. at 60799. The Commission concluded that it is unfair not to afford students an opportunity to escape the financial consequences of the deceptions to which they had been subjected. Having surveyed existing cancellation and refund practices, the Commission found that though these practices were not themselves unfair or deceptive, SBP § C(6)(a), 43 Fed. Reg. at 60809, such practices resulted “in large financial losses and attendant harsh consequences for students.” SBP § B(6)(c), Fed.Reg. at 60801. The Commission therefore specified that it is unfair not to permit students to cancel their contracts entirely after a “cooling-off” period and also unfair not to permit them to cancel their contracts partially during a course and receive a pro rata refund. Following the structure of the door-to-door sales rule, the Commission defined as an unfair practice the failure to observe the Commission’s cancellation and refund requirements. Again, as a matter of procedure, there is no point in demanding that the Commission first define as an unfair practice the failure to afford these *675cancellation and refund opportunities and then include in the Rule a second provision requiring these opportunities.
While the refund provision can be satisfactorily analyzed as another instance where the definitional and remedial aspects of an unfair or deceptive practice coincide, the Commission has invited further procedural objection to the refund provision by acknowledging that the refund provision is essentially remedial,3 thereby recognizing that the unfair practice which it remedies is not simply the failure to observe the mandated refund requirement.4 In the Commission’s view the refund provision is a remedy for various unfair or deceptive practices, some of which are defined in the Rule and some of which are described in the SBP. For example, the Commission cites as a deceptive practice remedied by the refund provision a school’s failure to disclose job-placement and earnings data. SBP § C(6)(a), 43 Fed.Reg. at 60809. The difficulty with that analysis is that the misleading nature of job-placement claims will not become apparent to many students until after graduation, when a refund provision will not be an effective remedy. To the extent that the refund provision is a remedy, it primarily remedies deceptive practices likely to be discovered by students while still in school, such as false or misleading claims concerning the school itself. While such deceptive claims are fully described in the SBP, a further question arises whether the Commission can adopt a refund provision to remedy deceptive practices that are described in the SBP, instead of defined in the Rule itself.
There is no doubt that § 57a(a)(l)(B) authorizes the Commission to include in a rule requirements “prescribed for the purpose of preventing such acts or practices,” referring to acts or practices defined in the rule itself. But it should not be hastily concluded that remedial requirements can be adopted to prevent only deceptive practices defined in the body of the rule. To read the statute in that fashion would frequently propel the Commission into a more extensive regulation of trade practices than it thought necessary. For example, in this case the Commission has defined as a deceptive practice, in the Rule, the failure to disclose graduation and job-placement data but has placed in the SBP the various deceptive practices it discovered concerning false and misleading claims made about the schools themselves. If the Commission were required to place in the Rule all of these false and misleading claims and define them as deceptive practices, a wide variety of conduct could readily be found to violate the Rule, instead of being subjected to individualized adjudication under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (1976). So long as deceptive practices are sufficiently defined, and documented with substantial evidence, I see no reason why the statute should be read to force their placement in the Rule, with consequent expanded regulation, instead of in the SBP.5
*676Thus, I am satisfied that the refund provision is procedurally valid either because the failure to provide refunds is itself properly defined as an unfair practice, or because the refund provision bears a sufficiently remedial relationship to the deceptive practices that are defined in the Rule or are adequately set forth in the SBP.
All of these considerations persuade me that the entire Vocational School Rule procedurally complies with § 57a(a)(l)(B). Of course, the Rule’s procedural compliance is no assurance of substantive validity, i. e., that the Rule is supported by “substantial evidence in the rulemaking record . as a whole,” as required by § 57a(e)(3)(A), and not otherwise unlawful. Of the several affirmative requirements in the Rule, the majority finds only two — the refund provision and the disclosure of job-placement statistics — to be substantively deficient. I now turn to these two requirements.
2. The Refund Provision
The pro rata refund provision, which the majority invalidates, serves primarily the same remedial purpose as the “cooling-off” and cancellation provision, which the majority upholds. The “cooling-off” remedy provides the student an opportunity to undo the financial commitment that has been made, at least in some instances, in reliance on a school’s deceptive claims. Similarly, the refund provision permits the student to undo, at least on a pro rata basis, the financial commitment he was, in some instances, wrongfully induced to make.
The refund provision, like the “cooling-off” period, also serves an entirely legitimate preventive purpose of deterring the schools from using deceptive practices. It does so by lessening the incentive for vocational schools to add to their enrollment students who have been lured by deceptive claims. These students will find out that claims about the school are not true and will therefore claim their refunds. The schools are deterred from making such claims because they know that a pro rata refund will prevent them from making some of their anticipated profits. In some instances the deterrent effect is enhanced because some of the schools will not always be able to recoup a proportionate share of fixed costs. The “cooling-off” provision has the same effect, because a school obliged to make total refunds to students who cancel during the 14-day “cooling-off” period will forgo profits and sometimes lose money to the extent that the school has incurred additional expenses, such as extra teachers, in the expectation of increased enrollment. Realizing the risk of forgoing profits and even losing money if students either cancel and obtain total refunds during the “cooling-off” period or withdraw and obtain pro rata refunds thereafter, schools are thereby dissuaded from using deceptive practices to enroll students who will later learn the truth and rightfully demand return of all or a portion of their tuition.
Despite the obvious remedial and preventive purposes achieved by the refund provision, the majority invalidates it for what appear to be two possibly related reasons. First, the majority points out that the refund provision applies to all schools covered by the Rule, whether or not they have engaged in the specific deceptive practices that occasioned the need for the refund remedy. The refund provision is also available to all students, regardless of why they choose to withdraw. Of course, the same observations are true of the “cooling-off” period and cancellation remedies, which the majority upholds. But the more fundamental answer is that the requirements of substantive rules, like all exercises of power that is essentially legislative in nature, frequently cover more instances than those that prompted the requirement.
The objection of universality has a history as old as regulation itself. The complaint of universal application has usually been the last and least successful legal argument of a regulated industry. Cf. Buck v. Bell, 274 U.S. 200, 208, 47 S.Ct. 584, 585, 71 L.Ed. 1000 (1927), in which Justice Holmes described the converse objection of underinclusiveness as “the usual last resort of constitutional arguments.” Rejecting an attack on a rule of the Interstate Commerce Commission obliging all carriers to observe *677requirements with respect to assigning cars at coal mines, Justice Brandéis observed that “in establishing a rule of general application, it is not a condition of its validity that there be adduced evidence of its appropriateness in respect to every railroad to which it will be applicable. . . . [T]he Commission, like other legislators, may reason from the particular to the general.” The Assigned Car Cases, 274 U.S. 564, 583, 47 S.Ct. 727, 734, 71 L.Ed. 1204 (1927). See also United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972); Pacific Coast European Conference v. Federal Maritime Commission, 126 U.S.App.D.C. 230, 235, 376 F.2d 785, 790 (D.C.Cir. 1967) (“[T]he essence of rule-making is generality of application”).
The complaint here is not simply that the Commission has reasoned from the particular to the general in concluding that a widespread condition exists. The more pointed objection seems to be that the Commission has imposed a remedial requirement upon a class not all of whose members have been shown to have acted improperly. When remedies are imposed upon a class that includes one or more identifiable subclasses to whom a remedy has not been shown to be appropriate, courts have not hesitated to intervene. E. g., United States v. Nova Scotia Food Products Corp., 568 F.2d 240 (2d Cir. 1977) (application of fish-processing rule inadequately justified as to one species of fish). But the majority has cited no instance where a remedy applicable to all members of an appropriately defined class has been invalidated because a few members of the class have not taken the action that prompted the class-wide remedy. There is no need to speculate whether a case justifying court intervention in such circumstances might arise, because in one very important respect the refund remedy challenged in this case applies to every school covered by the Rule: the refund provision has been adopted by the Commission to deter all the schools from engaging in deceptive practices in the future. As the District of Columbia Circuit observed with respect to another agency, “[T]he Commission in rule-making is not confined to the redress of demonstrated evils as distinct from the prevention of potential ones.” Pacific Coast European Conference v. Federal Maritime Commission, supra, 126 U.S.App.D.C. at 235, 376 F.2d at 790.
Nor can the universality objection prevail because the refund provision applies not only to all of the schools covered by the Rule but also to all of the students, regardless of their reason for seeking refunds. Agencies exercising substantive rule-making authority to prevent improper conduct are not required to tailor their remedies so precisely as to insure that none but the wronged can ever benefit from them. All sorts of regulations improve the lot of many persons who did not specifically suffer because of the practices that occasioned the regulation. The Congress that enacted Magnuson-Moss was well aware, for example, of the Commission’s rule on door-to-door sales, permitting consumers to cancel any contract within three days, regardless of whether the salesman had committed a deception and regardless of the consumer’s reason for cancelling.
The basic point, however, is that the availability of the refund always serves the purpose of deterring deceptive practices, and its preventive effect is not lessened simply becáuse it is sometimes claimed by students who have not been deceived into enrolling. Moreover, if circumstances should arise where the refund remedy is unnecessary for a particular school, the Act authorizes an application for exemption. 15 U.S.C. § 57a(g). The exempting power has long been recognized as an answer to complaints about the universal application of a regulation. The Assigned Car Cases, supra, 274 U.S. at 581, 47 S.Ct. 727; The New England Divisions Case, 261 U.S. 184, 199, 204, 43 S.Ct. 270, 67 L.Ed. 605 (1923); National Nutritional Foods Ass’n v. Food and Drug Administration, 504 F.2d 761, 784 (2d Cir. 1974), cert. denied, 420 U.S. 946, 95 S.Ct. 1326, 43 L.Ed.3d 424 (1975).
Of course, the Commission’s authority to include in a rule a remedy for the purpose of deterring deceptive practices is not without limits. All power has its limits, and the *678Commission’s remedial power is no exception. The outer limits of that power are reached when its exercise ceases to have a remedial effect and instead operates solely or even primarily as a penalty. The Commission, in my view, is entitled to adopt refund requirements to deter deceptive practices so long as the refund requirement serves a bona fide remedial purpose, such as making the consumer whole or permitting the consumer to rescind a contract. The Commission could not require the schools to refund double a student’s tuition. That technique would significantly deter the schools from enrolling deceived students who might later seek refunds, but such a provision would provide the students with a bonus, not a remedy. However, the pro rata refund is well within the bounds of a remedial power. From the student’s standpoint, the refund is not a bonus; in fact, it will not even make him whole in those instances where the portion of the course he was misled into attending is worth less than the portion of the tuition that is not refunded.
When the majority invalidates the refund provision because it applies to every withdrawing student from every school “regardless of cause” (p. 664), it effectively removes this remedy from the rule-making process and relegates it to the more cumbersome and less effective adjudication process, where “cause” must be determined on a case-by-case basis. Congress enacted Magnuson-Moss to give the Commission the authority to combat deceptive practices with industry-wide requirements. The use of such power is hardly a sufficient reason for invalidating it.
Secondly, the majority invalidates the refund provision on the further substantive ground that even if the Commission has power to promulgate it, the record lacks substantial evidence from which a rational connection can be made between pro rata refunds and the prevention of deceptive enrollment practices. If the majority means only that there is no rational connection between the refund remedy and those schools that have not engaged in deceptive practices, the criticism would simply be another version of the primary attack on the industry-wide scope of the Rule. But the majority may mean either that the refund remedy is not rationally related even to those schools that have engaged in deceptive practices, or that the remedy is not rationally connected to the prevention of deceptive practices by all the schools. Since the Commission, having found deceptive practices prevalent in the industry, is entitled to adopt a remedy that will help to prevent deceptive practices by all schools covered by the Rule, the issue arises whether the refund remedy is rationally connected to this objective of prevention.
The statutory provision for holding unlawful any rule promulgated under Magnuson-Moss that is not supported by “substantial evidence,” 15 U.S.C. § 57a(e)(3)(A), does not require, as the majority seems to imply, evidence of how a remedy will function in practice. If such evidence were required, no new remedy could ever be adopted. Indeed, it would be doubtful if old remedies shown to be successful in some fields could be adopted in other fields where they had never before been used. But the substantial evidence standard has never required a demonstration of the efficacy of a remedy. Determinations about the appropriateness of remedies are essentially legislative decisions, to be distinguished from adjudicatory decisions concerning the existence of wrongful conduct. The Supreme Court has recognized that rule-making procedures require agencies to make “factual determinations ... of a judgmental or predictive nature . . . [for which] complete factual support in the record . is not possible or required . . . .” Federal Communications Commission v. National Citizens Committee for Broadcasting, 436 U.S. 775, 813-14, 98 S.Ct. 2096, 2121-2122, 56 L.Ed.2d 697 (1978). See Society of the Plastics Industry, Inc. v. Occupational Safety & Health Administration, 509 F.2d 1301 (2d Cir.) cert. denied, 421 U.S. 992, 95 S.Ct. 1998, 44 L.Ed.2d 482 (1975); Associated Industries of New York State, Inc. v. United States Department of Labor, 487 F.2d 342 (2d Cir. 1973).
*679The Commission has fully articulated a “rational connection between the facts found and the choice made,” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962). The Commission has stated in the SBP that it adopted the refund remedy “to alter the incentive structure for obtaining vocational school enrollments.” SBP § C(6)(a), 43 Fed.Reg. at 60809. The Commission seeks to impact the schools’ incentive structure only to the limited extent that such an approach will deter the schools from engaging in deceptive practices. While the quoted fragment of language from the SBP could be interpreted to refer to changes in incentives with respect to enrollments generally, the context in which the language appears makes clear that the Commission asserts only the limited authority to alter incentives for enrolling deceived students. The SBP states:
The pro rata refund provision of the rule adopted by the Commission is designed to alter the incentive structure for obtaining vocational school enrollments. No longer will schools be able to derive any significant financial benefit from engaging in unfair or deceptive enrollment practices. By equating the student’s financial obligation with the length of his or her stay in the course, schools will be financially motivated to enroll only students with a genuine interest in the course. The use of deception to enroll students will no longer result in the creation of a large financial obligation to the school in the event of withdrawal.

Ibid.

This statement may stray a bit far in suggesting that schools will be discouraged from enrolling students without “a genuine interest in the course.” Whether the student is serious or frivolous would seem to have little connection to whether he has been deceptively enrolled. But the overall thrust of the quoted paragraph makes plain that the primary focus is on deterring enrollment of the deceived student. Whether or not the refund provision will prove to be an effective way of deterring deceptive practices, it is clearly a rational way. I find nothing in Magnuson-Moss to indicate that Congress, in authorizing the Commission to adopt requirements “for the purpose of preventing” deceptive practices, § 57a(a)(l)(B), prohibited the Commission from imposing requirements that not only provide a remedy for the students but also serve the purpose of reducing the incentive for the schools to lure the students in the first place. Altering the incentive of regulated entities to act in accordance with an agency objective was noted with approval by the Supreme Court in United States v. Allegheny-Ludlum Steel Corp., supra, 406 U.S. at 752, 92 S.Ct. 1941.
Not only has the Commission articulated a rational basis for the refund provision, it has also carefully weighed the objections to the remedy and concluded as a matter of policy that the benefits outweigh any disadvantages. SBP § C(6), 43 Fed.Reg. at 60809-10. 1 do not know if the Commission is correct in forecasting that the refund provision will reduce the incidence of deceptive practices. But I am satisfied that Congress gave the Commission ample authority to make that judgment, and the Commission has adequately supported the decision it has reached.
3. Disclosure of Job-Placement Statistics
The majority condemns only that part of the disclosure remedy concerning disclosure of job-placement statistics. This portion of the remedy is said to require misleading information and to be arbitrary and capricious. In my view, the job-placement disclosure requirement survives both of these alleged shortcomings.
The charge that the disclosure requirement itself mandates misleading information is plausible, but rests on a needlessly rigid interpretation of the Rule. The majority considers misleading the job-placement percentage required to be disclosed by any school that makes job-placement claims. The Rule requires that this percentage reflect, for any course, the ratio of graduates known to have found jobs within four months of graduation to the total number of graduates. 16 C.F.R. § 438.3(b), *680(c). That known placement rate, as the petitioners contend, may be lower than the actual placement rate because the school may be unable to contact some graduates who did obtain jobs. Furthermore, the petitioners contend, the required placement rate is based on the total number of graduates rather than the total number of job-seekers, which may be considerably less.
I can readily agree that any remedy requiring the distribution of misleading information would be contrary to the Federal Trade Commission Act, but I find no such violation here. The Commission faced a difficult choice in selecting the ratio that fairly indicates a school’s job-placement success. It considered alternatives and for sufficient reasons rejected them. SBP § C(4)(b), 43 Fed.Reg. at 60807. If it had succumbed to the industry’s suggestion that the base include only graduates who had been contacted, the resulting placement rate would have been falsely inflated, since it can be presumed that employed graduates are more likely than unemployed graduates to respond to school inquiries. Exclusion from the base of those not seeking jobs also risked false inflation of the placement rate because some of those not available for employment may have become so by reason of their initial inability to find a job.
Faced with the reality that no single percentage could give a complete picture of the job-placement rate, the Commission opted for a percentage that reports one very significant and entirely truthful fact: the portion of the graduates known to have jobs within four months of graduation. I see no reason to prohibit the Commission from requiring the disclosure of that statistic. The most useful statistic, of course, would be the actual placement rate. But, unless the school has contacted and received responses from all its graduates, the actual rate is not knowable. The unavailability of the actual placement rate should not preclude the Commission from requiring disclosure of the known placement rate.6
Ironically, the majority provides eloquent testimony on the need for the very remedy it has invalidated. The majority refers to one instance where the Commission’s Rule requires a school to report, truthfully, that the known job-placement rate is 5.8%, whereas what the majority calls “the true employment success rate of those who responded” was 54%. There are two reasons why it is highly misleading to call this 54% a “true employment success rate.” First, as the majority acknowledges, but as schools rarely do, this rate is based only on those who responded to the school’s inquiry. The majority’s example is a television servicing school that had 2,270 graduates, of whom only 929 responded to the job-placement inquiry. (McGraw-Hill Brief at 9-10). Neither the majority, the school, nor prospective students who may read the school’s advertisement have any reason to think that the placement rate for the more than half of the graduates who did not respond is anywhere near as high as for those who did.
Secondly, as the majority fails to acknowledge, the 54% success percentage is not based on all the 929 graduates who responded, but only on the 244 of these (26%) who reported that they were seeking full- or part-time jobs. Again, neither the majority, nor the school, nor prospective students have any way of knowing how many of the 685 students not seeking jobs dropped out of the labor market because of the difficulty of finding a job or because-the course left them woefully unprepared to handle one.
*681The fact remains that the known placement rate of the school’s graduates is 5.8%. It is also true that of the 929 who responded, 132 or 14% obtained jobs. It is also true that of the 244 respondents still seeking jobs, 132 or 54% obtained jobs.7 But anyone who reads the majority’s opinion and signs up for this course thinking he or she has a 54% chance of finding work will be sadly disappointed. I see no reason to fault the Commission for thinking that when the school reports the 54% figure and fails to report the two important qualifications that reduce that rate to a true known placement rate of 5.8%, it is misleading prospective students.
More troublesome is the Rule’s apparent prohibition of the simultaneous disclosure of any other data, even data reasonably necessary to put the required job-placement statistic into perspective. The known placement rate is a truthful representation of fact, but it could be misleading if it were mistaken by a prospective student as a representation of the actual placement rate. The Commission recognized this risk and has permitted the schools to. state in the required disclosure statement that not all of a school’s students took a course to obtain jobs, that the school was unable to reach some graduates, to see if they got jobs, and that, as a result, the placement percentage might be understated. The majority criticizes this caveat as “anemic,” a description not entirely undeserved if it is so, as the majority contends, that the school may not show how many students did not respond or were not seeking jobs.
The assumption that data on these items may not appear on the required disclosure statement draws support from the text of the Rule. The Rule not only specifies the percentage that must be disclosed, it also states that the “format” of the required notice must conform to examples set forth in appendices to the Rule, and it further provides that the required notice “shall contain no other information or representations.” 16 C.F.R. § 438.3(e).
I would not construe these provisions of the Rule to prohibit the schools from including in the disclosure statement any truthful data reasonably necessary to make the required disclosure of the known job-placement percentage not misleading. The Rule properly sets forth the wording to be used for the required notices and specifies that no other information or representations may appear on the disclosure statement nor may any other materials be included in the envelope in which the required statement is mailed. These provisions insure that the information required to be furnished is made available in readable form, see SBP § C(9), 43 Fed.Reg. at 60812, and not hidden in a welter of other pamphlets. But those benign purposes should not be relied upon to give the Rule a rigid interpretation that would prohibit the inclusion of factually accurate data necessary to avoid a misleading impression that the disclosure statement might otherwise have.
For example, when the Rule says the schools may include the caveat that modifies the significance of the known placement rate, it should be interpreted to permit a school to state what percent of the graduates were not contacted- or did not respond and what percent of the graduates did not take the course to get a job. The wording of the permitted caveat states that the school could not reach “some” of the graduates to see if they got jobs and that “not all” of the students took the course to get a job. If the school has truthful data, there is no reason to interpret the prohibition against disclosing “other information” so rigidly as to prevent the school from replacing the words “some” and “not all” with the actual numbers or percentages. *682That would leave the known job-placement ratio to be disclosed as the percentage the Rule requires, i. e., with only graduates responding and known to have jobs in the numerator and all graduates, including those who enrolled without any intention of seeking jobs, in the denominator. But if the school has the data to put the required percentage in perspective, it should not be barred from doing so. There is no reason to interpret the prohibition on “other information” in a way that forces the required disclosure to be arguably misleading and therefore possibly unlawful. That prohibition can still serve to keep off the disclosure statement and out of the transmittal envelope all information on other topics, while permitting the vague words of the caveat to be quantified.
Thus construed, the required job-placement disclosure is neither misleading nor arbitrary and capricious.
4. The Preemption Provision
The majority also concludes that the preemption provision of the rule, 16 C.F.R. § 438.9, exceeds the power Congress granted to the Commission in the Magnuson-Moss Act. The Commission contends that the validity of the preemption provision is not ripe for adjudication. This may be true for a challenge to the provision as applied. A challenge of that sort should await adjudication in the context of an alleged conflict with some specific state law or regulation. Cf. Lee Optical, Inc. v. Board of Examiners in Optometry, Civ. No. 77-0326-T (W.D. Okl. Feb. 5, 1979) (adjudicating and upholding the preemptive effect of the Commission’s rule on ophthalmic goods, 16 C.F.R. part 456 (1979), upon a specific statute). But as the majority points out, a facial challenge to the provision is appropriate for adjudication now, because it does not involve consideration of any specific state statute.
Having reached the issue of facial validity, however, I would conclude that the Commission had validly exercised its power under the Magnuson-Moss Act. I agree with the majority that Congress did not intend the Commission’s rules to have any greater preemptive effect than that which results from a conflict between these rules and state enactments. The Commission also agrees and has explicitly disclaimed any greater power. (Commission’s Brief at 116). The language of the provision states that the Rule “preempts any provision of any state law, rule, or regulation which is inconsistent with or otherwise frustrates the purpose of the provisions of this trade regulation rule.” This simply paraphrases the test for preemption that has been established by the Supreme Court. See Colorado Anti-Discrimination Commission v. Continental Air Lines, Inc., 372 U.S. 714, 722, 83 S.Ct. 1022, 1026, 10 L.Ed.2d 84 (1963) (“To hold that a state statute identical in purpose with a federal statute is invalid under the Supremacy Clause, we must be able to conclude that the purpose of the federal statute would to some extent be frustrated by the state statute.”); Davis v. Elmira Savings Bank, 161 U.S. 275, 283, 16 S.Ct. 502, 503, 40 L.Ed. 700 (1896) (state law violates Supremacy Clause when it “frustrates the purpose of the national legislation”); accord, Nash v. Florida Industrial Commission, 389 U.S. 235, 240, 88 S.Ct. 362, 19 L.Ed.2d 438 (1967) (quoting Davis).
The majority seizes upon the word “purpose” in the preemption provision of the Rule to inflate the scope of the provision beyond what the Commission intends. In the majority’s view, the provision would preempt any state law that conflicts not only with the Rule and its operation but also with the reasons for adopting the Rule. For example, the majority fears that the refund remedy would preempt not only conflicting state refund laws, but also any laws concerning the schools’ incentive structure, which the refund provision was designed to affect. Since the Commission does not claim such a broad interpretation and the Supreme Court preemption cases do not authorize such a broad reading, there is no reason for the majority to read the rule so broadly and thereby find it invalid. The Rule is properly understood to mean that a state law would frustrate the purpose of the Rule if it provided for a lesser refund or *683“cooling-off” period,8 not if it attempted to regulate vocational school abuses in some unrelated way. As the Court has said, “The test of whether both federal and state regulations may operate, or the state regulation must give way, is whether both regulations can be enforced without impairing the federal superintendence of the field, not whether they are aimed at similar or different objectives.” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). This was the test that was clearly intended by the Rule, and it does not exceed the Commission’s power.
Contrary to the majority’s suggestion, a preemption provision limited as this one is to displacement of conflicting state laws is not rendered unnecessary by the existence of the Supremacy Clause. To begin with, the provision makes clear that this preemptive effect is intended, rather than leaving the question of Commission intent open for subsequent litigation. More importantly, the preemption provision adopted by the Commission actually reduces the natural scope of preemption in certain circumstances, such as those where the Commission determines that the state regulation offers consumers more protection than the Rule does. Invalidating the entire provision risks increasing the impact of the federal rule on state legislation, since even state laws that are stronger than the federal requirements might be preempted under the Supremacy Clause in the absence of the Commission’s modest provision.
5. Conclusion
Congress enacted the Magnuson-Moss Act to empower the Commission to take vigorous action on behalf of American consumers to protect them against deceptive trade practices. The Commission spent four years investigating and documenting extensive deceptive practices in the field of proprietary vocational and home study schools. The petitioners’ major assault on the Rule that resulted from that investigation is that it ushers in a new era of N.R.A.-type industry-wide codes. That fear is not groundless. Whether codes of the type exemplified by the Rule challenged in this case are a sound way to protect consumers from misleading trade practices and whether the resulting burden of regulation is worth the benefits are policy issues for the Congress. When Congress gives an agency substantive rule-making authority, it accords it a large measure of legislative power. It is the responsibility of Congress to determine how wisely that power is being used.9 Our task-is to determine only whether it is being used lawfully. In my judgment the Rule challenged in this case is entirely lawful.

. The same analysis applies to Commission remedies that prohibit specified conduct. The Commission need not separately define as a deceptive practice conduct such as the making of a particular misleading claim and also specify as a remedy that the claim may not be made.

. The majority contends that support for its view that a deceptive practice must always be defined independently of a remedy is found in the Act’s provision concerning the content of a statement of basis and purpose. That statement is required to describe “the prevalence of the acts or practices treated by the rule.” 15 U.S.C. § 57a(d)(l)(A). In the majority’s view, a failure to observe a newly imposed requirement could not itself be a defined deceptive practice because it was not previously “prevalent.” In my view, the Commission adequately documents the prevalence of a deceptive practice when its record demonstrates the widespread existence of circumstances under which failure to make a disclosure is deceptive to consumers. What is prevalent is the absence of certain data, under circumstances where the data is needed to avoid deception. In other contexts, what are prevalent are the various false and misleading claims, not defined in a rule, but described in a statement of basis and purpose, and remedied by the affirmative requirements imposed by a rule. Perhaps that is why § 57a(d)(l)(A) refers to the prevalence of practices “treated” by a rule, rather than defined by a rule.

. The Commission states that it has “predicated the requirements of Section 438.4 [the refund provision] on its ability to prevent and remedy practices violative of Section 5 of the FTC Act pursuant to Section 18 of the FTC Act, which empowers the Commission to adopt trade regulation rules which include requirements designed to prevent occurrences of acts or practices that have been defined as unfair or deceptive under Section 5.” SBP § C(6)(a), 43 Fed.Reg. at 60809.

. In this respect the Commission’s approach is somewhat anomalous. It has not designated the refund provision in the Rule as a requirement for preventing unfair or deceptive practices, as permitted by § 57a(a)(l)(B), preferring to define as an unfair or deceptive practice the failure to observe the refund requirement. But then in its SBP the Commission discusses the refund provision as a remedy for other unfair or deceptive practices.

. A possible objection to permitting remedies in the Rule to be linked to deceptive practices in the SBP is that § 57a(e)(5)(C) insulates the contents of an SBP from judicial review. But that insulation should not apply, and the Commission does not claim otherwise, to review the sufficiency of deceptive practices placed in the SBP rather than in the body of the Rule itself. Congress wanted courts to review the substance of any deceptive practice that was the predicate for a remedial requirement, regardless of where the deceptive practice was printed.

. The Commission faced a somewhat similar problem in deciding whether and how to require disclosure of octane ratings.. Industry sources contended that required disclosure of an octane rating would be misleading because the public would mistakenly tend to believe that this rating was the key indicator of gasoline quality to the exclusion of all other factors. The Commission reckoned with this objection, but decided nonetheless that the absence of octane ratings was deceptive. 36 Fed.Reg. 23877 (1971). Then, when the Commission decided to require disclosure of octane ratings, it faced industry contentions that no one of the three available rating systems was entirely accurate. In that situation, the Commission did not even select the one it thought was the best available; instead it invented a new rating system, based on an average of two of the existing systems. Id. at 23882-83.

. As the majority reports, a rate as high as 80% can be derived if the denominator includes only those who responded and only those seeking jobs and the numerator includes not only those who found employment but also those who became self-employed. In addition to the problems discussed in the text, the 80% figure, as well as all the other percentages, are flawed by the inclusion in the numerator of those employed only part-time. Surely it is misleading to claim that a graduate is “employed” if his TV servicing averages less than one hour a week.

. A state law providing equivalent or greater protection to consumers either would be held not “inconsistent” with the Commission’s Rule or would be a likely candidate for exemption by the Commission.

. At least one body of Congress is ready to assert significant legislative oversight over the Commission’s rule-making authority. On November 27, 1979, the House of Representatives passed H.R. 2313, 96th Cong., 1st Sess. (1979), subjecting all trade regulation rules to legislative veto. 125 Cong.Rec. HI 1,205-06 (daily ed. Nov. 27, 1979).