State Regulation of Federal Contractors: Three Puzzles of Procurement Preemption
UC Irvine Law Review, Volume 11 (November 2020 Forthcoming)
48 Pages Posted: 18 Nov 2020 Last revised: 2 Dec 2020
Date Written: October 27, 2020
This Article unpacks three doctrinal puzzles at the intersection of federalism and federal contracting, using student loan law as its anchoring case study. Currently, more than $1 trillion of federal student loan debt is serviced by private financial institutions under contract with the Department of Education. These loan servicers have allegedly engaged in systemic consumer abuses but are seldom held accountable by the federal government. To bridge the accountability gap, several states have recently passed “Student Borrower Bills of Rights.” These state laws include provisions to regulate the student loan servicing industry, including the Department’s federal contractors. States undoubtedly have legitimate interests to protect their residents, communities, and local economies against industry malfeasance. The overarching question, however, is whether federal law prohibits states from performing this remedial function.
This Article offers a fresh look at three doctrinal puzzles at the heart of that debate. The first puzzle is whether the federal government’s constitutional immunity extends to shield federal contractors from generally applicable state laws. The second puzzle is whether federal procurement laws preempt state licensing of federal contractors. The third puzzle is whether federal contracts that expressly incorporate state law can save state law from preemption. Individually and collectively, how these puzzles are resolved may have far-reaching implications—not only for the future of student loan law, but more generally for federalism and federal contracting.
Keywords: Supremacy Clause, Preemption, Intergovernmental Immunity, Federalism, Federal Contractors, Procurement, Student Loan
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