concurring:
I concur in the judgment of ,the court. Because the Congress did not in the Higher Education Act speak unambiguously to the precise question here at issue, and because the construction of the Act now advanced by the Department of Education is an afterthought and hence cannot support an administrative decision based upon another ground, the judgment of the district court must be affirmed. For the same reasons, however, we need not and should not purport authoritatively to construe the Act today.
The Department argues to this court that a school may not challenge its disqualification from the Federal Family Education Loan program on the ground that its student loan default rate has been miscalculated due to errors made by lenders in servicing the loans. As the court notes, however, there is “scant evidence that the Secretary or responsible policymakers at DOE— rather than the attorneys who have litigated this case — subscribe to this reading of the statutory language.” Ct.Op. at 164 n. 10. Indeed, the scant evidence is all contra.
In his decision letters to the schools the Secretary clearly proceeded from the premise that improper servicing is indeed a permissible ground for appeal. For example, in a decision letter written to Phillips College even after the commencement of this litigation the Secretary said that the study that the College had submitted in order to substantiate its claim that its default rate was fatally high only because of servicing errors was “fundamentally flawed” in its methodology and therefore did “not support [the] school’s claim of improper servicing.” [JA 358], In that letter the Secretary also noted that the Department did “not have any information indicating that the guarantee agencies mentioned in [the school’s] appeal have paid default claims on loans to [its] students that were not serviced in accordance with the regulatory requirements.” Clearly the Secretary believed that such information would be relevant to his ruling upon the school's claim. That position is flatly inconsistent, however, with the argument that the Department’s counsel now advances to this court, viz. that improper servicing is not a permissible ground for appeal.
Of course, were we able to determine under Chevron Step I that the Congress specifically intended in the Act to bar servicing errors as a ground for appeal, then the Department’s inconstancy would be of no moment. An agency order compelled by the one true reading of a statute cannot be arbitrary and capricious. See H. Friendly, Chenery Revisited: Reflections on Reversal and Remand of Administrative Orders, 1969 Duke L.J. 199, 210 (1969). The Act is not unambiguous, however, as is shown in the opinion of the court, above at page 164, note 10.
The Department now urges us to uphold the Secretary’s action under Chevron Step II upon the basis of an interpretation of the Act clearly not contemplated by the Secretary. In this circumstance, we do well to recall what Judge Silberman noted elsewhere: “Courts have rejected as inadequate agency counsel’s articulation of a statutory interpretation when that interpretation has been inconsistent with a prior administrative construction ... [; or] when1 the .record evidence before the court demonstrates no link between counsel’s interpretation and administrative practice ...; or when agency counsel’s interpretation is revealed as no more than a ‘current litigating position.’ ” Church of Scientology of Cal. v. I.R.S., 792 F.2d 153, 165 (D.C.Cir. 1986) (Silberman, J. concurring) (citations omitted). The first two conditions clearly obtain here and the third may as well.
Because the Secretary did not rely upon the interpretation of the Act now being *169advanced, counsel’s new interpretation cannot ward off the claim that the Secretary’s action was arbitrary and capricious. “[A]n order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.” SEC v. Chenery Corp., 318 U.S. 80, 88, 95, 63 S.Ct. 454, 459-60, 462, 87 L.Ed. 626 (1943).
For the foregoing reasons, we cannot sustain the Secretary’s appeal from the decisions of the district court. I therefore concur in my colleagues’ determination that those decisions must be affirmed, and express no opinion, because it is unnecessary to do so in order to decide this case, upon the question whether improper servicing is a valid ground of objection to a school’s exclusion from the FFEL program. The Department’s lawyers advance a serious argument that, having imposed prophylactic measures upon the lenders and guarantee agencies, the Secretary may, in calculating the cohort default rate, rely upon the data they produce. If that is indeed the Secretary’s position, then he should be free to adhere to that position first in some future administrative proceeding and to defend it in court, unhampered by a premature decision to the contrary.