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November 15, 1995

RICHARD RILEY, Secretary of the United States Department of Education, Defendant.

The opinion of the court was delivered by: SPORKIN

 This matter comes before the Court on cross-motions for summary judgment. Plaintiff, Student Loan Marketing Association ("Sallie Mae"), challenges a provision of the Omnibus Budget Reconciliation Act of 1993 (the "Budget Act") which imposes an annual fee on student loans which Sallie Mae acquires in the secondary market. *fn1" The annual fee is equal to 0.30 percent (30 basis points) of the principal amount of each loan Sallie Mae "holds." Plaintiff seeks a declaratory judgment that the statutory provision is unconstitutional on its face as an uncompensated taking of private property and a denial of equal protection in violation of the Fifth Amendment. Plaintiff also asks this Court to declare that the Secretary of Education has acted arbitrarily and capriciously in interpreting the provision to require payment of the fee on loans which Sallie Mae transfers to a separate trust as part of a privatization transaction.

 Defendant moves the Court to dismiss the claim for lack of jurisdiction and failure to state a claim. In the alternative, Defendant seeks summary judgment declaring that the statutory provision imposing fees on loans which Sallie Mae "holds" is constitutional, and affirming the decision of the Secretary.


 This case has its roots in the Higher Education Act of 1965 ("HEA") which, as amended, created the Guaranteed Student Loan Program *fn2" to increase the availability of financial assistance to students seeking a college education. In 1992, Congress changed the name of the program to the Federal Family Education Loan ("FFEL") Program. Pub. L. No. 102-325, Title IV, § 411(a)(1), 106 Stat. 510.

 Under the FFEL Program, financial institutions make low-interest loans to students or their families, which are guaranteed by state or non-profit guaranty agencies that are reinsured by the United States, through the Department of Education ("DOE"). Section 431 of the HEA creates a student loan insurance fund for making payments in connection with the default of loans insured by the Secretary of Education under the Program. 20 U.S.C. § 1081.

 In 1972, Congress created Sallie Mae to enhance financial support for federally-guaranteed student loans. 20 U.S.C. § 1087-2. Sallie Mae's charter restricts the authorized activities in which it may engage. 20 U.S.C. § 1087-2(d). It further defines the types of obligations Plaintiff may incur, *fn3" and subjects the entire enterprise to general oversight by the Department of Education and general financial oversight by the Department of Treasury. See 20 U.S.C. § 1087-2(r).

 Sallie Mae is controlled by a Board of Directors of 21 members. Seven members are appointed by the President of the United States, with 14 members being elected by Sallie Mae shareholders. *fn4" The President appoints the Chairman of the Corporation from among the 21 board members. 21 U.S.C. § 1087-2(c)(1).

 Sallie Mae's status as a government-sponsored enterprise ("GSE") has given it a number of advantages that affect its costs and profitability: (1) Sallie Mae received start-up financing through the Federal Financing Bank with a Department of Education guarantee; this allowed Sallie Mae to borrow at a lower interest rate than otherwise would have been available; (2) Sallie Mae's capital/debt ratio requirements are significantly lower than those of commercial banks and other financial institutions participating in the FFEL Program; *fn5" this increased Sallie Mae's liquidity; (3) the extensive links between Sallie Mae and the federal government have created a market perception that the government would use federal funds to prevent a default of Sallie Mae debt; (4) Sallie Mae's debt offerings are exempt from SEC registration requirements, and its federal charter exempts it from state and local taxes. *fn6"

 As part of a privatization initiative, Sallie Mae has begun implementing an asset-backed securitization program. At oral argument, Plaintiff's counsel indicated that the program contemplates the securitization of approximately $ 2 billion in loans out of a portfolio of approximately $ 32 billion. The type of transaction proposed has been described as follows:

"[Securitization] is a technique whereby income-producing assets, in most cases, illiquid, are pooled and converted into capital market instruments. In a typical financing, a sponsor transfers a pool of assets to a limited purpose entity, which in turn issues non-redeemable debt obligations or equity securities with debt-like characteristics.... Payment on the securities depends primarily on the cash flows generated by the pooled assets." SEC Exclusion From the Definition of Investment Company Act for Structured Financings, 17 C.F.R. § 270 (1992).

 Under the terms of the proposed transaction, Sallie Mae will sell student loans to a wholly-owned subsidiary. The subsidiary will in turn establish a trust, organized for the dual purposes of financing the purchase of and holding the loans. The trust will finance 95 percent of the purchase price with the sale of debt securities to institutional investors. The remaining five percent of the capitalization will be in the form of equity certificates; four percent will be sold to institutional investors and one percent will be held by Sallie Mae as partial consideration for the transfer of the loans.

 Sallie Mae would receive compensation for the sale of the loans in several forms: 1) the one percent equity interest referenced above; 2) a cash payment approximately equal to the principal and accrued interest on the loans sold; 3) deferred purchase price payments equal to the cash flows of the trusts after certain costs; and 4) a residual interest in the trust upon its termination. In addition, Sallie Mae or one of its subsidiaries would continue to service the portfolio and receive a payment for that service.

 On August 10, 1993, as part of its Omnibus Budget Reconciliation Act of 1993, *fn7" Congress enacted § 439(h)(7), the provision at issue in this case. This provision requires Sallie Mae to pay the Secretary of Education an offset fee on a monthly basis. The fee is calculated on an annual basis in an amount equal to 0.30 percent of the principal amount of each loan made, insured or guaranteed under the FFEL Program that Sallie Mae holds and that are acquired on or after August 10, 1993. 20 U.S.C. § 1087-2(h)(7)(A). No comparable fee is imposed on any other participant in the secondary market for student loans or the FFEL Program. The provision further requires that the Secretary of Education deposit the fees paid by Sallie Mae in the student loan insurance fund established under the HEA. 20 U.S.C. § 1081.

 Following enactment of § 439(h)(7), representatives of Sallie Mae and the DOE had several discussions and exchanged letters regarding the applicability of the offset fee to funds transferred to a trust for purposes of securitization. Of particular importance to this action are two letters from DOE to Sallie Mae. The first letter, dated January 13, 1995, was written by DOE's Acting General Counsel and advised Sallie Mae that the agency took the position that student loans transferred to a business trust for purposes of securitization would be subject to the offset fee. In a second letter, dated March 16, 1995, DOE's Deputy General Counsel informed Sallie Mae of the agency's continued adherence to the view that Sal lie Mae would be deemed to "hold" loans transferred to a trust for securitization for purposes of the offset fee provision.

 On April 9, 1995, representatives of Sallie Mae's Board of Directors met with Defendant Richard Riley, Secretary of Education. At this meeting, the Secretary said he would not reverse the Department's stated position. Sallie Mae indicated that it was prepared to litigate the matter. Shortly thereafter, Sallie Mae filed this action.


 Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." If a "motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e).

 In the first instance, the moving party must provide sufficient factual support that it is entitled to judgment as a matter of law by "identifying . . . portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any.'" Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). "A party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion." Id.






 The threshold question is whether this Court has subject matter jurisdiction over Plaintiff's "takings claim." Defendant hinges its jurisdictional argument on the claim that the availability of compensation under the Tucker Act precludes the award of declaratory relief. Specifically, Defendant maintains that a request for declaratory relief for an unconstitutional taking of private property is inappropriate where the government has provided an adequate process for obtaining compensation. *fn8" Defendant claims that the government has provided an adequate process for obtaining compensation in this case: an action for damages under the Tucker Act, 28 U.S.C. § 1491(a)(1). Finally, Defendant argues that -- since declaratory relief is inappropriate and the damages sought here exceed $ 10,000 -- this Court should decline jurisdiction in favor of the Court of Federal Claims. Defendant notes that the law of the D.C. Circuit is currently in flux over whether United States District Courts have jurisdiction over takings claims for compensation in excess of $ 10,000. *fn9"

 The Defendant goes too far in suggesting that declaratory relief is never appropriate where the Plaintiff could seek compensation for an otherwise proper taking. It is true that declaratory judgment actions may not be appropriate in cases involving threatened seizures of real or other tangible property. See Preseault v. ICC, 494 U.S. 1, 108 L. Ed. 2d 1, 110 S. Ct. 914 (1990) (precluding declaratory judgment actions if the property owner has not yet brought an action in the Court of Federal Claims for just compensation where the taking involved reversionary interests in land). However, where the threatened injury is a statutorily-mandated seizure of money, there is authority which makes clear that declaratory relief is available. See, e.g., Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S. 602, 124 L. Ed. 2d 539, 113 S. Ct. 2264 (1993); Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 89 ...

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