Legal Seminar, Denver, CO

Student Loan Servicing: Field Preemption: “Uniquely Federal Interest” • The HEA provides ED with the authority to enter into contracts for the servicing of Direct Loans. (20 USC 1087f(b)(2)).

• The Notice does not point to any authority for assertion that Direct Loan servicing contracts implicate a uniquely federal interest.

• Instead, the Notice relies exclusively on Boyle v. United Technologies Corp., 487 U.S. 500 (1988)

• The Notice attempts to stretch the military contractor defense in Boyle to cover Direct Loan servicers contracting with ED and thereby establish what amounts to field preemption

For Discussion Purposes Only

Student Loan Servicing: Field Preemption: Contracting Determinations • The Notice cites to cases in which state licensure was preempted because it enabled states to improperly review or qualify a federal determination as to the responsibility or fitness of federal contractors or licensees. – Sperry v. Florida , 373 U.S. 379 (1963); Leslie Miller Inc. v. Arkansas , 352 U.S. 187 (1956); Gartrell Const. Inc. v. Aubry , 940 F.2d 437 (9 th Cir. 1991) • But states are licensing the activity of student loan servicing and do not alter the criteria under which ED makes contracting decisions, as in Leslie Miller and Gartrell. • More akin to state restrictions on the supply and sale of consumer goods as applied to federal contractors. – North Dakota v. United States , 495 U.S. 423 (1990); Penn Dairies, Inc. v. Milk Control Comm’n. , 318 U.S. 261 (1942).

For Discussion Purposes Only