TABLE OF CONTENTS
INTEREST OF AMICI CURIAE ............................................................................................. 1
INTRODUCTION AND SUMMARY OF ARGUMENT ................................................ 2
ARGUMENT ................................................................................................................................ 4
A.
B.
The District Court’s Decision Conflicts with Federalism Principles
Inherent in Our Nation's Systems of Financial Regulation and Corporate
Governance.................................................................................................... 4
1.
National Banks Are Not Immune from State Regulation ...................... 4
2.
The District Court’s Decision Conflicts with the States’
Long-Established Authority to Regulate State-Chartered
Corporations .................................................................................................... 11
The District Court Should Not Have Deferred to § 7.4006,
Because That Rule Conflicts with Congressional Intent and Invades the
States’ Sovereign Authority to Regulate State-Chartered Corporations .... 13
1.
2.
Congress Has Not Preempted, or Authorized the OCC to Preempt,
State Regulation of Operating Subsidiaries............................................. 13
a.
Section 484(a) Does Not Apply to “Affiliates” of
National Banks.................................................................................... 13
b.
Sections 24(Seventh) and 24a Do Not Preempt the
State’s Authority to Regulate Operating Subsidiaries .............. 21
12 C.F.R. § 7.4006 Is Not Entitled to Judicial Deference ................... 24
i
a.
Section 7.4006 Conflicts with Unambiguous
Congressional Intent .......................................................................... 24
b.
Section 7.4006 Violates Fundamental Tenets of
Corporate Law and Invades the States’ Sovereign
Power to Regulate State-Chartered Corporations ...................... 26
CONCLUSION .......................................................................................................................... 30
ii
TABLE OF AUTHORITIES
Cases
American Land Title Ass'n v. Clarke,
968 F.2d 150 (2d Cir. 1992).............................................................................23, 25
Anderson National Bank v. Luckett,
321 U.S. 233 (1944) ................................................................................................. 6
Atherton v. FDIC,
519 U.S. 213 (1997) ............................................................................................. 5, 9
Bank of America v. City and County of San Francisco,
309 F.3d 551 (9th Cir. 2002), cert. denied, 538 U.S. 1069 (2003) .......................... 8
Barnett Bank of Marion County, N.A. v. Nelson,
517 U.S. 25 (1996) ................................................................................................... 5
Board of Governors v. Dimension Financial Corp.,
474 U.S. 361 (1986) .....................................................................................18, 24, 25
Board of Governors v. Inv. Co. Inst., 450 U.S. 46 (1981).................................17, 21
Beneficial National Bank v. Anderson,
539 U.S. 1 (2003) ..................................................................................................... 4
Business Roundtable v. SEC,
990 F.2d 406 (D.C. Cir. 1990) ............................................................................... 12
Chicago Title & Trust Co. v. 4136 Wilcox Bldg. Corp.,
302 U.S. 120 (1937) ............................................................................................... 28
Chicago v. Environmental Defense Fund,
511 U.S. 328 (1994) .........................................................................................15, 16
Clarke v. Sec. Indus. Ass'n,
iii
479 U.S. 388 (1988) ............................................................................................... 22
CTS Corp. v. Dynamics Corp. of America,
481 U.S. 69 (1987) ...........................................................................................11, 27
Dole Food Co. v. Patrickson,
538 U.S. 468 (2003) ............................................................................................... 26
FDA v. Brown & Williamson Tobacco Corp.,
529 U.S. 120 (2000) ............................................................................................... 24
First Nat'l Bank of Logan v. Walker Bank & Trust Co.,
385 U.S. 252 (1966) ............................................................................................... 28
First National Bank in St. Louis v. Missouri,
263 U.S. 640 (1924) .......................................................................................6, 9, 10
First Union National Bank v. Burke,
48 F. Supp. 2d 132 (D. Conn. 1999) .................................................................. 9, 10
Guthrie v. Harkness,
199 U.S. 148 (1905) ........................................................................................... 9, 10
Hopkins Federal Savings & Loan Ass'n v. Cleary,
296 U.S. 315 (1935) ............................................................................................... 28
Indep. Ins. Agents of Am. v. Hawke,
211 F.3d 638 (D.C. Cir. 2000) .............................................................17, 23, 24, 25
Lewis v. BT Investment Managers, Inc.,
447 U.S. 27 (1980) ................................................................................................. 12
Lewis v. Fidelity & Deposit Co.,
292 U.S. 559 (1934) ................................................................................................. 6
Marquette National Bank v. First of Omaha Serv. Corp.,
439 U.S. 299 (1978) ........................................................................................... 4, 22
McClellan v. Chipman,
164 U.S. 347 (1896) ................................................................................................. 6
iv
Medtronic, Inc. v. Lohr,
518 U.S. 470 (1996) ................................................................................................. 8
Minnesota v. Fleet Mortgage Corp.,
181 F. Supp. 2d 995 (D. Minn. 2001) .................................................................... 20
N.Y. State Conference of Blue Cross & Blue Shield Plans v.
Travelers Ins. Co.,
514 U.S. 645, 654-56 (1995) ................................................................................... 8
National Bank v. Commonwealth,
76 U.S (9 Wall.) 353 (1870) .................................................................................... 5
National State Bank v. Long,
630 F.2d 981 (3d Cir. 1980).........................................................................8, 10, 13
NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co.,
513 U.S. 251 (1995) ............................................................................................... 22
Old Stone Bank v. Michaelson,
439 F. Supp. 252 (D.R.I. 1977).............................................................................. 13
Perdue v. Crocker National Bank,
702 P.2d 503 (Cal. 1985), appeal dismissed, 475 U.S. 1001 (1986) ................ 8, 23
Santa Fe Industries, Inc. v. Green,
430 U.S. 462 (1977) ............................................................................................... 12
Sec. Indus. Ass'n v. Board of Governors,
468 U.S. 137 (1984) .........................................................................................17, 18
Sec. Indus. Ass'n v. Board of Governors,
839 F.2d 47, 54-62 (2d Cir.), cert. denied, 486 U.S. 1059 (1988) ........................ 19
Solid Waste Agency of Northern Cook County v. U.S. Army Corp.
of Engineers,
531 U.S. 159 (2001) ............................................................................................... 29
Solomon v. Gilmore,
v
731 A.2d 280, 284 (Conn. 1999) ....................................................................... 1, 13
Union Brokerage Co. v. Jensen,
322 U.S. 202 (1944) ............................................................................................... 11
United Companies Lending Corp. v. Sargeant,
20 F. Supp. 2d 192 (D. Mass. 1998) ...................................................................... 13
United States v. Bestfoods,
524 U.S. 51 (1998) ................................................................................................. 26
United States v. Locke,
529 U.S. 89 (2000) ............................................................................................... 8, 9
University of Great Falls v. NLRB,
278 F.3d 1335 (D.C. Cir. 2002) ............................................................................. 29
Video Trax, Inc. v. NationsBank, N.A.,
33 F. Supp. 2d 1041(S.D. Fla. 1998),
aff'd, 205 F.3d 1358 (11th Cir.), cert. denied, 531 U.S. 822 (2000) ................. 8, 22
Statutes, Regulations and Legislative Materials
12 U.S.C. §§ 21-24 & 26 .............................................................................14, 15, 21
12 U.S.C. §§ 24 (Seventh) ……………………………………………… 21, 22, 23
12 U.S.C. § 24a ………………………………………………………….. 21, 23, 24
12 U.S.C. §36(f)(1)(A) ............................................................................................... 7
12 U.S.C. § 52 ………………………………………………………. 18, 19, 25, 27
12 U.S.C. §§ 161(c) & 481 ……………………………………… 15, 18, 19, 23, 25
12 U.S.C. § 221a ………………………………………………….14-20, 23, 25, 27
12 U.S.C. §§ 371c & 371c-1 …………………………………………………16, 17
12 U.S.C. § 484(a) ............................................................................................passim
vi
12 U.S.C. §§ 1813 ..............................................................................................20, 21
15 U.S.C. § 41 note ……………………………………………………………… 19
15 U.S.C. § 41(a)(2) ................................................................................................. 20
15 U.S.C. § 45(a)(2) ................................................................................................. 20
15 U.S.C. § 6701(d)(2)(A) ......................................................................................... 6
12 C.F.R. § 5.34 ……………………………………………………………2, 23, 27
12 C.F.R. § 7.4006 ………………………………………………………….. passim
H.R. Rep. No. 103-651 (1994) ................................................................................... 7
H.R. Rep. No. 106-74, pt. 1 (1999).......................................................................... 20
H.R. Rep. No. 106-434 (1999) ............................................................................. 6, 20
S. Rep. No. 73-77 (1933) .............................................................................18, 19, 27
S. Rep. No. 106-44 (1999) ....................................................................................... 24
140 Cong. Rec. S12786 (dailey ed. Sept. 13, 1994) ................................................ 10
66 Fed. Reg. 34784 (2001) ...................................................................................... 27
Miscellaneous
Arthur E. Wilmarth, Jr., The OCC’s Preemption Rules Exceed the
Agency’s Authority and Present a Serious Threat to the Dual Banking
System and Consumer Protection, 23 Annual Review of Banking &
Financial Law 225, 237-73 (2004) …………………………………….. 5, 7, 10, 24
vii
INTEREST OF AMICI CURIAE
This brief is submitted by the Attorneys General of 40 amici states, who are
responsible for enforcing state laws regulating mortgage lenders and other
providers of financial services. Amicus Conference of State Bank Supervisors is
the professional association of state officials who regulate state-chartered banks
and other state-licensed providers of financial services across the nation. Amici
submit this brief in support of Appellant John P. Burke, Banking Commissioner of
the State of Connecticut (the “Commissioner”). Connecticut’s statutes authorize
the Commissioner to license and regulate nonbank mortgage lenders in order to
“protect consumers” from “unscrupulous lending practices.” Solomon v. Gilmore,
731 A.2d 280, 284 (Conn. 1999). Connecticut’s statutes are similar to the
mortgage lending laws of many other states.
In the decision below, the District Court held that federal law preempted the
Commissioner’s authority to regulate a state-chartered nonbank mortgage lender
that is an operating subsidiary of a national bank. The decision below is of great
concern to amici, because it undermines core principles of federalism that are
embodied in our nation’s systems of financial regulation and corporate governance.
INTRODUCTION AND SUMMARY OF ARGUMENT
Appellee Wachovia Mortgage Corporation (“Wachovia Mortgage”) is a
state-chartered nonbank corporation, organized under North Carolina law, that
makes first and secondary mortgage loans to residents of Connecticut and other
states. Prior to January 1, 2003, Wachovia Mortgage was a holding company
affiliate of Appellee Wachovia Bank, N.A. (“Wachovia Bank”). During the same
time period, Wachovia Mortgage obtained licenses from the Commissioner and
acknowledged its duty to comply with Connecticut’s laws governing nonbank
mortgage lenders. On January 1, 2003, Wachovia Mortgage became a whollyowned operating subsidiary of Wachovia Bank,1 and Wachovia Mortgage
thereafter claimed that it was no longer required to follow Connecticut’s mortgage
lending regulations. Appellees pursued that claim by filing a lawsuit against the
Commissioner.
The District Court held that federal law preempts six Connecticut statutes,
which authorize the Commissioner to license and regulate Wachovia Mortgage.
The District Court relied primarily on 12 C.F.R. § 7.4006, a regulation adopted in
1
Under regulations adopted by the Office of the Comptroller of the
Currency (“OCC”), a subsidiary of a national bank qualifies as an “operating
subsidiary” if (i) the subsidiary engages in “activities that are permissible for a
national bank to engage in directly”, and (ii) the parent bank “controls” the
subsidiary. 12 C.F.R. § 5.34(e)(1) & (2).
2
2001 by the OCC. Section 7.4006 purports to extend 12 U.S.C. § 484(a) -- a
statute limiting the exercise of “visitorial powers” over “national banks” -- to the
operating subsidiaries of national banks. The District Court concluded that (i)
“Congress ... has not addressed the manner in which state law should apply to a
national bank operating subsidiary,” and (ii) § 7.4006 is a “reasonable
interpretation of the National Bank Act.” Joint Appendix (“J.A.”) 106, 108.
The District Court should not have deferred to § 7.4006. The OCC’s
regulation conflicts with Congress’ clearly-expressed intent and violates federalism
principles underlying our nation’s systems of financial regulation and corporate
governance. The unambiguous terms of § 484(a) and related federal statutes
demonstrate that the limitation on “visitorial powers” under § 484(a) applies only
to national banks and does not extend to operating subsidiaries and other
“affiliates” of national banks. The decision below also contravenes the
unmistakable purposes of Congress to separate national banks from their
“affiliates” and to preserve the states’ authority to regulate state-chartered
providers of financial services.
3
ARGUMENT
A.
The District Court’s Decision Conflicts with Federalism Principles
Inherent in Our Nation’s Systems of Financial Regulation and
Corporate Governance
1.
National Banks Are Not Immune from State Regulation
The District Court concluded that 12 U.S.C. § 484(a) “evidences a broad
intent to preempt state law as to national banks.” J.A. 93. In support of that
conclusion, the District Court cited Beneficial National Bank v. Anderson, 539
U.S. 1, 10 (2003), and Marquette National Bank v. First of Omaha Serv. Corp.,
439 U.S. 299, 314-15 (1978). J.A. 90. However, those decisions considered only
the narrow question of whether state usury laws apply to national banks. In
Beneficial, the Supreme Court determined that 12 U.S.C. §§ 85 & 86 provide “an
exclusive federal cause of action for usury against national banks.” 539 U.S. at 9.
Previously, in Marquette, the Court held that the state usury laws do not govern
national banks, because § 85 specifies the maximum interest rates allowed on loans
by national banks. 439 U.S. at 308, 318-19. Thus, Beneficial and Marquette
determined that usury is a specific area in which Congress has expressly preempted
the application of state laws to national banks.
4
In contrast to the special case of usury laws, the courts have repeatedly
upheld the states’ general authority to regulate national banks.2 In 1997, the
Supreme Court declared, as a general principle, that “federally chartered banks are
subject to state law.” Atherton v. FDIC, 519 U.S. 213, 222 (1997). As support for
that principle, the Court cited decisions reaching back to an 1870 case, where the
Court held that national banks
... are subject to the laws of the State, and are governed in their daily
course of business far more by the laws of the State than of the nation.
All their contracts are governed and construed by State laws. Their
acquisition and transfer of property, their right to collect their debts,
and their liability to be sued for debts, are all based on State law. It is
only when State law incapacitates the [national] banks from
discharging their duties to the federal government that it becomes
unconstitutional.
Id. at 222-23 (quoting National Bank v. Commonwealth, 76 U.S (9 Wall.) 353, 362
(1870)).
As the District Court noted (J.A. 93), the Supreme Court also held in 1996
that states have “the power to regulate national banks, where ... doing so does not
prevent or significantly interfere with the national bank’s exercise of its powers.”
Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 33 (1996). In 1999,
Congress determined that the “prevent or significantly interfere with” test is the
See Arthur E. Wilmarth, Jr., “The OCC’s Preemption Rules Exceed the
Agency’s Authority and Present a Serious Threat to the Dual Banking System and
2
5
controlling standard for evaluating preemption claims under Barnett Bank. See 15
U.S.C. § 6701(d)(2)(A); H.R. Rep. No. 106-434, at 156-57 (1999) (Conf. Rep.),
reprinted in 1999 U.S.C.C.A.N. 245, 251. Barnett Bank is consistent with previous
decisions holding that “national banks are subject to state laws unless those laws
infringe the national banking laws or impose an undue burden on the performance
of the banks’ functions.” Anderson National Bank v. Luckett, 321 U.S. 233, 248
(1944).3
Congress endorsed the general application of state laws to national banks
when it passed the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, 108 Stat. 2338 (“Riegle-Neal Act”). The Riegle-Neal Act provides that
interstate branches of national banks must comply with state law in four broadlydefined areas -- community reinvestment, consumer protection, fair lending and
intrastate branching -- unless federal law preempts the application of state law to
Consumer Protection,” 23 Annual Review of Banking & Financial Law 225, 23773 (2004).
3
Accord, e.g., Lewis v. Fidelity & Deposit Co., 292 U.S. 559, 564-66
(1934) (explaining that Congress has followed a “policy of equalization” between
national and state banks, based on the application of many aspects of state law to
national banks); First Nat’l Bank in St. Louis v. Missouri, 263 U.S. 640, 656
(1924) (affirming that “the operation of general state laws upon the dealings and
contracts of national banks” is the “rule”, while preemption is an “exception” that
applies only when state laws “expressly conflict with the laws of the United States
or frustrate the purpose for which national banks were created, or impair their
6
national banks. 12 U.S.C. §36(f)(1)(A).4 In reviewing the terms of § 36(f), the
conference report on the Riegle-Neal Act confirmed the states’ longstanding
authority to regulate national banks that conduct business within their borders:
States have a strong interest in the activities and operations of
depository institutions doing business within their jurisdictions,
regardless of the type of charter an institution holds. In particular,
States have a legitimate interest in protecting the rights of their
consumers, businesses and communities....
Under well-established judicial principles, national banks are
subject to State law in many significant respects.... Courts generally
use a rule of construction that avoids finding a conflict between the
Federal and State law where possible. The [Riegle-Neal Act] does
not change these judicially established principles.
H.R. Rep. No. 103-651 (Conf. Rep.), at 53 (1994) (emphasis added), reprinted in
1994 U.S.C.C.A.N. 2068, 2074. By referring to “judicially established principles”
under which “national banks are subject to State law in many significant respects,”
the Riegle-Neal conferees expressed their obvious agreement with the decisions in
Commonwealth, McClellan, Lewis, and Luckett, cited above.
Until recently, most courts have applied a presumption in favor of applying
state laws to the activities of national banks unless preemption is mandated in a
efficiency to discharge the duties imposed upon them by the law of the United
States”); McClellan v. Chipman, 164 U.S. 347, 357 (1896) (same).
4
In adopting the Riegle-Neal Act, members of Congress explained that the
application of state laws to interstate branches of national banks was necessary to
preserve the vitality of the nation’s dual banking system. See Wilmarth, supra note
2, at 269-70 & n.166.
7
particular area -- such as usury -- by “the clear and manifest purpose of Congress.”
National State Bank v. Long, 630 F.2d 981, 985 (3d Cir. 1980); accord, Video
Trax, Inc. v. NationsBank, N.A., 33 F. Supp. 2d 1041, 1048 (S.D. Fla. 1998), aff’d,
205 F.3d 1358 (11th Cir.) (per curiam), cert. denied, 531 U.S. 822 (2000); Perdue
v. Crocker National Bank, 702 P.2d 503, 519-23 (Cal. 1985), appeal dism’d, 475
U.S. 1001 (1986). The foregoing presumption is consistent with the general
presumption against preemption that the Supreme Court has applied in fields of
traditional state regulation. E.g., Medtronic, Inc. v. Lohr, 518 U.S. 470, 475, 48485 (1996); N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers
Ins. Co., 514 U.S. 645, 654-56 (1995).
In Bank of America v. City and County of San Francisco, 309 F.3d 551, 559
(9th Cir. 2002), cert. denied, 538 U.S. 1069 (2003), the Ninth Circuit refused to
apply a “presumption against preemption” when it struck down local ordinances
that prohibited national banks from imposing surcharges on individuals who used
the banks’ automated teller machines. The Ninth Circuit’s rejection of a
presumption against preemption was clearly erroneous, because it conflicted with
the Supreme Court precedents and congressional views discussed above.5
5
In holding that a presumption against preemption was inapplicable, the
Ninth Circuit relied primarily on United States v. Locke, 529 U.S. 89 (2000). See
Bank of America, 309 F.3d at 558-59. Locke, however, did not deal with a state
law regulating national banks. Instead, Locke invalidated state laws that imposed
8
In upholding the OCC’s claim of preemption in § 7.4006, the District Court
relied primarily on 12 U.S.C. § 484(a). J.A. 93, 100. Under § 484(a), “[n]o
national bank shall be subject to any visitorial powers except as authorized by
Federal law, vested in the courts of justice” or exercised under congressional
authority. “Visitorial powers” include the right to examine a corporation’s books
and records and the power to enforce legal rules that bind the corporation. E.g.,
Guthrie v. Harkness, 199 U.S. 148, 159 (1905); First Union National Bank v.
Burke, 48 F. Supp. 2d 132, 144 (D. Conn. 1999).
As shown by the plain language of § 484(a), the “courts of justice” are
authorized to exercise “visitorial powers” over national banks. Based on that
language in § 484(a) and its statutory antecedents, state officials and private parties
have obtained judicial remedies in federal and state courts to enforce state laws
restrictions on oil tankers operating in navigable waterways. The Supreme Court
refused to apply an “‘assumption’ of non-preemption” in Locke because the
challenged state laws interfered with “national and international maritime
commerce,” an area in which Congress had shown a clear desire to establish a
“uniformity of regulation.” 529 U.S. at 108. By contrast, in Atherton, after
reviewing the long tradition of state regulation of banks (including national banks),
the Supreme Court concluded that federal policy did not require “uniformity” of
regulatory treatment for federally-chartered banks. Accordingly, the Court refused
in Atherton to adopt a federal common-law rule that would displace state law. 519
U.S. at 219-26. Similarly, as discussed supra in note 3, the Supreme Court held in
St. Louis and McClellan that the general application of state law to national banks
is the “rule”, while preemption is the “exception”.
9
against national banks.6 In contrast, except as provided in § 484(b), §484 does not
allow state officials to examine national banks or to impose administrative
remedies (e.g., cease-and-desist orders and civil money penalties) against national
banks.7
The District Court noted that § 484(a) refers only to the exercise of visitorial
powers over a “national bank”, and that § 484(a) “does not speak expressly to
subsidiaries of national banks.” J.A. 101-02 (emphasis added). The District Court
therefore recognized that 12 C.F.R. § 7.4006 is “the crux of the current
controversy,” because § 7.4006 is the “relevant conflicting [OCC] regulation” that
purports to extend the preemptive effect of § 484(a) from national banks to their
operating subsidiaries. J.A. 95, 99.
6
E.g., St. Louis, 263 U.S. at 659-61; Burke, 48 F. Supp. 2d at 145-46, 14849, 150-51. See also Guthrie v. Harkness, 199 U.S. at 159 (holding that, under the
predecessor of § 484, national banks were “liable to control in the courts of
justice,” and “the statute did not intend in withholding visitorial powers to take
away the right to proceed in courts of justice to enforce . . . recognized rights”);
Wilmarth, supra note 2, at 329-32 (discussing cases interpreting the “vested in the
courts of justice” clause).
7
See Long, 630 F.2d at 987-89; Burke, 48 F. Supp. 2d at 143-50; 140 Cong.
Rec. S 12786 (daily ed. Sept. 13, 1994) (colloquy between Sen. D’Amato and Sen.
Riegle, explaining that 12 U.S.C. § 36(f)(1)(B) prevents state officials from
examining or taking administrative enforcement measures against interstate
branches of national banks).
10
2.
The District Court’s Decision Conflicts with the States’ LongEstablished Authority to Regulate State-Chartered Corporations
Based on § 7.4006, the OCC claims that state-chartered operating
subsidiaries of national banks are immune from state oversight. See J.A. 97, 108.
In deferring to the OCC’s claim, the District Court ignored the longstanding
authority of each state (i) to exercise comprehensive supervision over the
corporations it charters, and (ii) to license and regulate companies chartered by
other states that transact business within its borders. With regard to locallychartered companies, the Supreme Court has declared that:
No principle of corporation law and practice is more firmly
established than a State’s authority to regulate domestic
corporations....
It is thus an accepted part of the business landscape in this
country for States to create corporations, to prescribe their powers,
and to define the rights that are acquired by purchasing their shares.
CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 89, 91 (1987).
With regard to foreign corporations, the Supreme Court has affirmed that
each state “is legitimately concerned with safeguarding the interests of its own
people in business dealings with corporations not of its own chartering but who do
business within its borders.” Union Brokerage Co. v. Jensen, 322 U.S. 202, 208
(1944). Each state may therefore require foreign corporations to comply with
licensing requirements and other regulations enacted “for the purpose of insuring
the public safety and convenience.” Id. at 211 (internal quotation marks and
11
citation omitted). The courts have further noted that Congress has refrained from
adopting a “federal corporate law” that would “overturn or at least impinge
severely on the tradition of state regulation of corporate law.” Business
Roundtable v. SEC, 990 F.2d 406, 412 (D.C. Cir. 1990); see also Santa Fe
Industries, Inc. v. Green, 430 U.S. 462, 478-79 (1977).
In the specific field of financial services, courts have frequently upheld the
states’ authority to regulate banks and nonbanks for the purpose of protecting their
economy and their citizens from abusive practices. In 1980, the Supreme Court
declared:
We readily accept the submission that, both as a matter of history and
as a matter of present commercial reality, banking and related
financial activities are of profound local concern.... [S]ound financial
institutions and honest financial practices are essential to the health of
any State’s economy and to the well-being of its people. Thus, it is
not surprising that ever since the early days of our Republic, the States
have chartered banks and have actively regulated their activities.
Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 38 (1980).
In BT Investment, the Supreme Court also observed that 12 U.S.C. § 1846
reserves to the states a “general power to enact regulations” applicable to bank
holding companies and their banking and nonbanking subsidiaries, provided such
“state legislation ... operates within the boundaries marked by the Commerce
Clause.” Id. at 48-49; see also Old Stone Bank v. Michaelson, 439 F. Supp. 252,
256 (D.R.I. 1977) (“It has long been recognized that a state may regulate banking
12
to protect the public welfare in the exercise of its police powers”). In the field of
mortgage lending, courts have upheld state laws prohibiting lenders from engaging
in fraud, predatory lending, redlining and other unconscionable practices. E.g.,
Long, 630 F.2d at 985-87; United Companies Lending Corp. v. Sargeant, 20 F.
Supp. 2d 192, 200-04 (D. Mass. 1998); Solomon v. Gilmore, 731 A.2d 280, 283-89
(Conn. 1999).
The District Court acknowledged that “there is no explicit evidence of
Congressional intent to preempt state regulation of [operating subsidiaries].”
J.A. 102. As demonstrated below in Part B, that finding should have resulted in
summary judgment for the Commissioner. Given the lack of any evidence that
Congress contemplated preemption, the District Court should not have deferred to
a federal agency regulation that abrogates the states’ longstanding authority to
regulate state-chartered providers of financial services.
B.
The District Court Should Not Have Deferred to § 7.4006, Because That
Rule Conflicts with Congressional Intent and Invades the States’
Sovereign Authority to Regulate State-Chartered Corporations
1.
Congress Has Not Preempted, or Authorized the OCC to
Preempt, State Regulation of Operating Subsidiaries
a.
Section 484(a) Does Not Apply to “Affiliates” of National
Banks
The District Court concluded that it was “reasonable” for the OCC to adopt a
rule -- § 7.4006 -- that extends the limitation on “visitorial powers” under 12
13
U.S.C. § 484(a) to operating subsidiaries of national banks. J.A. 108-12. That
conclusion is clearly erroneous, because § 484(a) applies only to “national banks”
and operating subsidiaries cannot qualify for treatment as “national banks.” The
term “national bank,” as used in § 484(a), is governed by the definitions contained
in 12 U.S.C. §§ 221 & 221a(a). As those statutes and related federal laws make
clear, a “national bank” is a financial institution that (i) files articles of association
and an organization certificate with the OCC, pursuant to 12 U.S.C. §§ 21-24 &
26; (ii) receives from the OCC a certificate of authority to carry on the “business of
banking,” pursuant to §§ 24 & 27; and (iii) is eligible to become a member of the
Federal Reserve System (“FRS”), pursuant to § 282. Operating subsidiaries do not
qualify as “national banks” under §§ 221 and 221a(a), because they are chartered
as nonbank corporations under state law, they do not receive certificates of
authority to conduct the “business of banking” from the OCC, and they cannot
become members of the FRS. Accordingly, operating subsidiaries are not entitled
to any immunity from state supervision that “national banks” may enjoy under §
484(a).
The foregoing analysis is confirmed by § 221a(b), which defines “affiliate”
to include “any corporation” that controls or is controlled by a national bank.
Under the OCC’s regulations, an operating subsidiary must be controlled by its
14
parent national bank. See supra note 1. Therefore, an operating subsidiary is
unquestionably an “affiliate” of its parent bank under § 221a(b).
The separate legal status of “affiliates” is confirmed by 12 U.S.C. §§ 161(c)
& 481. Under §§ 161(c) and 481, the OCC may obtain reports from, and examine,
“affiliates” of a national bank to the extent “necessary to disclose fully the relations
between such bank and such affiliates” and “the effect of such relations upon the
affairs of such bank.” In contrast to §§ 161(c) and 481, Congress did not include
the term “affiliates” in § 484. The only reasonable conclusion is that § 484’s
limitation on visitorial powers applies only to “national banks” and does not extend
to their “affiliates,” including their operating subsidiaries. See Chicago v.
Environmental Defense Fund, 511 U.S. 328, 338 (1994) (“[I]t is generally
presumed that Congress acts intentionally and purposely when it includes
particular language in one section of a statue but omits it in another”) (internal
quotation marks and citation omitted).
In addition, §§ 161(c) and 481 do not impose any limitation on the authority
of state officials to exercise visitorial powers over “affiliates” of national banks.
The absence in those statutes of any restriction on state authority is highly
significant, because the OCC’s nonexclusive right to examine “affiliates” under
§ 481 is undoubtedly a “visitorial power.” See supra note 10. Taken together,
§§ 161(c), 481 and 484 show that Congress has not preempted the authority of
15
state officials to regulate state-chartered corporations that are “affiliates” of
national banks.
Despite the unambiguous terms of § 221a(b), the District Court held that
operating subsidiaries are not “affiliates.” J.A. 102-05. In reaching that
conclusion, the District Court relied heavily on 12 U.S.C. §§ 371c & 371c-1,
which regulate certain transactions between national banks and their “affiliates.”
As the District Court noted, operating subsidiaries are exempted from “affiliate”
status for purposes of both §§ 371c & 371c-1. Read in context, however, §§ 371c
& 371c-1 demonstrate that operating subsidiaries are “affiliates” for every other
purpose. Each section exempts operating subsidiaries from “affiliate” status only
“[f]or the purpose of this section”, and each section authorizes the Federal Reserve
Board to cancel that exemption in a particular case. 12 U.S.C. §§371c(b)(2)(A) &
371c-1(d)(1) (emphasis added). There would be no reason for Congress to exempt
operating subsidiaries from “affiliate” status specially for purposes of §§371c and
371c-1, unless Congress understood that operating subsidiaries are generally
treated as “affiliates” under § 221a(b).
In Sec. Indus. Ass’n v. Bd. of Governors, 468 U.S. 137 (1984), the Supreme
Court held that commercial paper must be treated as “notes” and “securities” for
purposes of the Banking Act of 1933 (popularly known as the “Glass-Steagall”
Act). In reaching that conclusion, the Court observed that (i) commercial paper is a
16
debt instrument that falls within the “ordinary meaning” of the statutory terms
“notes” and “securities,” and (ii) the Banking Act of 1933 did not contain any
provision exempting commercial paper, in contrast to the special exemptions for
commercial paper contained in other contemporaneous statutes. 468 U.S. at 14952. Following the same reasoning, the District Court’s approach must be rejected,
because it ignores the literal definition of “affiliate” in § 221a(b) and fails to
account for the special exemptions for operating subsidiaries contained in §§ 371c
& 371c-1. Indeed, the District Court’s view that operating subsidiaries are not
“affiliates” for any purpose effectively reduces those special exemptions to
“meaningless ... surplusage.” Indep. Ins. Agents of Am. v. Hawke, 211 F.3d 638,
643-44 (D.C. Cir. 2000); see also Bd. of Governors v. Inv. Co. Inst., 450 U.S. 46,
58-59 n.24 (1981) (rejecting a proposed interpretation of the Banking Act of 1933
that would cause a provision dealing with “affiliates” to become “meaningless”).
Section 221a(b) and other key statutes dealing with bank “affiliates” were
enacted as part of the Banking Act of 1933. The District Court concluded that the
1933 Act was “directed at bank-related firms engaged in what Congress considered
to be non-commercial bank functions ..., not at operating subsidiaries conducting
the ‘business of banking.’” J.A. 104. That conclusion is plainly erroneous for two
reasons. First, as shown above, operating subsidiaries satisfy the literal definition
of affiliate under § 221a(b). The alleged “purpose” of a statute cannot be used to
17
alter “the plain language of the statute itself.” Bd. of Governors v. Dimension Fin.
Corp., 474 U.S. 361, 369-70 (1986); accord, SIA v. Bd. of Governors, 468 U.S. at
153 (“[W]e cannot endorse the Board’s departure from the literal meaning of the
Act”).
Second, as shown in the Commissioner’s Brief, at 19-21, the legislative
history of the Glass-Steagall Act shows that Congress intended to treat all
companies controlled by national banks as “affiliates.” Congress expected that the
definition of “affiliate” in § 221a(b) would be applied strictly in accordance with
its terms.8 In addition, Congress wanted “[t]o separate as far as possible national ...
banks from affiliates of all kinds,” and “[t]o install a satisfactory examination of
affiliates”. S. Rep. No. 73-77, at 10 (1933) (emphasis added).
To accomplish these goals, Congress enacted three statutes -- 12 U.S.C.
§§ 52, 161(c) & 481. Section 52 requires national banks to separate their stock
from the stock of any affiliates.9 Sections 161(c) & 481 authorize the OCC to
The definition of “affiliate” in § 221a(b) was enacted as § 2(b) of the
1933 Act. 48 Stat. 162. The Senate committee report declared that § 2 “[d]efines
the language used in the [Act] and undertakes to make the meaning definite.” S.
Rep. No. 73-77, at 13 (1933) (emphasis added). Senator Bulkley confirmed that
“the word ‘affiliate,’ as used in [the Act], is defined in section 2.” 75 Cong. Rec.
9914 (1932).
8
9
The final paragraph of 12 U.S.C. § 52 was enacted by § 18 of the 1933
Act, 48 Stat. 192. The only affiliates exempted from § 52 are companies owning
18
obtain reports from, and examine, all affiliates of national banks. While Congress
imposed additional restrictions on securities affiliates of national banks in 1933
(and repealed those restrictions in 1999),10 Congress clearly intended that the
requirements of §§ 52, 161(c) and 481 would apply to all “affiliates” as defined in
§ 221a(b).
Section 133(a) of GLBA confirms that operating subsidiaries cannot be
treated as “national banks.” Under § 133(a), the Federal Trade Commission
(“FTC”) may exercise its enforcement authority under the Federal Trade
Commission Act against any “person” affiliated with a bank or savings association,
as long as that “person ... is not itself a bank or savings association.”11 In
Minnesota v. Fleet Mortgage Corp., 181 F. Supp. 2d 995 (D. Minn. 2001), the
court determined that an operating subsidiary of a national bank is not “itself a
the premises of national banks as of June 16, 1934. See S. Rep. No. 73-77, at 16
(1933).
See, e.g, Sec. Indus. Ass’n v. Bd. of Governors, 839 F.2d 47, 54-62 (2d
Cir.) (describing the restrictions imposed on securities affiliates under § 20 of the
1933 Act), cert. denied, 486 U.S. 1059 (1988). In 1999, Congress repealed § 20
of the 1933 Act. See Gramm-Leach-Bliley Act (“GLBA”), § 101, 113 Stat. 1341.
10
11
133 Stat. 1383, 15 U.S.C.A. § 41 note. Congress adopted § 133(a) to
clarify the FTC’s enforcement authority with regard to nondepository affiliates of
banks and savings associations, because the FTC Act exempts “banks” and
“savings and loan institutions” from the FTC’s jurisdiction. See 15 U.S.C. §
45(a)(2); H.R. Rep. No. 106-74, at 137 (1999) (pt. 1); H.R. Rep. No. 106-434, at
161-62 (1999) (Conf. Rep.), reprinted in 1999 U.S.C.C.A.N. 245, 256-57.
19
bank” for purposes of § 133(a). The court concluded that § 133(a), which
incorporates the definition of “bank” in 12 U.S.C. § 1813, is “unambiguous” and
“simply does not include subsidiaries of banks.” Id. at 1000. The court also found
that an operating subsidiary “fits precisely into the category of entities described in
the language of § 133 as an entity controlled by a bank that is not itself a bank
according to the prescribed definition.” Id. (emphasis added). Accordingly, the
court held that (i) the OCC did not have “exclusive jurisdiction” to enforce laws
applicable to the mortgage lending subsidiary, and (ii) the subsidiary was subject to
the shared enforcement authority of the FTC and state officials under an FTC
regulation. Id. at 997-1002.
The definitions of “bank” and “affiliate” in 12 U.S.C. § 1813, the statute
construed in Fleet Mortgage, are substantially similar to the definitions of the same
terms in §§ 221 & 221a.12 Therefore, Fleet Mortgage strongly supports the view
that an operating subsidiary is an “affiliate” and cannot be treated as a “national
bank” for purposes of §§ 221, 221a and 484(a).
Compare 12 U.S.C. §§ 1813(a)(1)(A) (defining “bank”) & 1813(w)(6)
(incorporating the definition of “affiliate” from ‘ 1841(k)), with id. §§ 221 &
221a(a) & (b).
12
20
b.
Sections 24(Seventh) and 24a Do Not Preempt the State’s
Authority to Regulate Operating Subsidiaries
The District Court concluded that 12 U.S.C. §§ 24(Seventh) and 24a provide
“implicit” support for 12 C.F.R. § 7.4006. J.A. 93-95, 107-08. To the contrary,
§ 24 (Seventh) and § 24a do not express any congressional purpose to bar the states
from regulating operating subsidiaries. Under § 24(Seventh), a “national banking
association” has authority “[t]o exercise . . . all such incidental powers as shall be
necessary to carry on the business of banking.” Like § 484(a), § 24(Seventh)
refers only to national banks and does not grant any explicit authority or immunity
to “affiliates.” As the Supreme Court has observed, § 24(Seventh) “by its terms
applies only to banks,” while “[o]rganizations affiliated with banks . . . are dealt
with by other sections of the [1933] Act.” Bd. of Governors v. ICI, 450 U.S. at 5859 n.24.
The District Court noted that three Supreme Court decisions have not
questioned the authority of national banks to establish operating subsidiaries. J.A.
107. In two of those decisions, the Supreme Court upheld OCC interpretations of
federal statutes that did not raise any preemption issues. NationsBank of N.C., N.A.
v. Variable Annuity Life Ins. Co., 513 U.S. 251, 254-55 (1995); Clarke v. Sec.
Indus. Ass’n, 479 U.S. 388, 391-92 (1988). In the third decision, which concluded
that 12 U.S.C. § 85 did preempt state law with regard to a national bank, the Court
declined to decide whether the preemptive impact of § 85 extended to the bank’s
21
operating subsidiary. Marquette, 439 U.S. at 307-08. Thus, none of the three
decisions supports the OCC’s preemption claim set forth in § 7.4006.
While § 24(Seventh) may allow national banks to establish operating
subsidiaries, it contains no language preempting the authority of states to regulate
such entities. In fact, the first proviso cautions that “[e]xcept as hereinafter
provided or otherwise permitted by law, nothing herein contained shall authorize
the purchase by the [national bank] for its own account of any shares of stock of
any corporation” (emphasis added). Thus, national banks do not have power under
§ 24(Seventh) to make investments in subsidiaries in violation of applicable “law”
-- a term whose plain meaning encompasses state law -- unless the bank can point
to a specific enabling grant of authority under a federal statute. See Video Trax, 33
F. Supp. 2d at 1047-49, 1058 (§ 24(Seventh) does not displace state laws through
field preemption; preemption occurs only if state laws conflict with a specific
power granted to national banks); Perdue, 702 P.2d at 520-23 (same). Unlike
other types of subsidiaries, operating subsidiaries do not derive their authority from
any specific statutory grant.13 Accordingly, the first proviso of § 24(Seventh)
13
The second, fourth and fifth provisos of § 24 (Seventh) authorize
national banks to invest in subsidiaries that (i) conduct a “safe-deposit business,”
(ii) provide agricultural credit, and (iii) operate as “banker’s banks.” National
banks may invest in “bank service companies” under 12 U.S.C. §§ 1861-67. In
contrast, under the OCC’s regulations, the term “operating subsidiary” does not
22
provides additional evidence that Congress has not preempted state regulation of
operating subsidiaries.
Under established canons of statutory construction, the general grant of
“incidental powers” to national banks under § 24(Seventh) must be construed in
harmony with §§ 221a(b), 161(c) and 481, which specifically govern “affiliates.”
See American Land Title Ass’n v. Clarke, 968 F.2d 150, 157 (2d Cir. 1992) (the
general grant of “incidental powers” under § 24(Seventh) must be interpreted in
light of 12 U.S.C. § 92, which imposes specific limitations on the insurance
activities of national banks), cert. denied, 508 U.S. 971 (1993); IIAA v. Hawke, 211
F.3d at 643-45 (same). As shown above, §§ 221a(b), 161(c) and 481 demonstrate
that Congress has not preempted the states’ authority to supervise state-chartered
“affiliates” of national banks.
Section 24a, enacted in 1999 as part of GLBA, permits national banks to
establish “financial subsidiaries” that may engage in certain activities (e.g.,
securities underwriting and dealing) that are not lawful for their parent banks.
Under § 24a(g)(3), the term “financial subsidiary” does not include a subsidiary
that “engages solely in activities that national banks are permitted to engage in
directly and are conducted subject to the same terms and conditions that govern the
include “a subsidiary in which the bank’s investment is made pursuant to specific
authorization in a statute.” 12 C.F.R. § 5.34(e)(2)(i).
23
conduct of such activities by national banks.” Thus, § 24a(g)(3) exempts operating
subsidiaries from federal statutory mandates (e.g., capital requirements, managerial
ratings, and community reinvestment standards) that apply to financial subsidiaries
under § 24a(a)-(f). Section 24a(g)(3) is not a power-granting provision, and it does
not express any congressional purpose to bar the states from regulating operating
subsidiaries. See S. Rep. No. 106-44, at 8 (1999) (“Nothing in this legislation is
intended to affect any authority of national banks to engage in bank permissible
activities through subsidiary corporations”); Wilmarth, supra note 2, at 342-43.
2.
12 C.F.R. § 7.4006 Is Not Entitled to Judicial Deference
a.
Section 7.4006 Conflicts with Unambiguous Congressional
Intent
Under the “first step” of the Chevron doctrine, a reviewing court must reject
an agency interpretation that would “alter the clearly expressed intent of
Congress.” Dimension, 474 U.S. at 368. “In determining whether Congress has
specifically addressed the question at issue, a reviewing court should not confine
itself to examining a particular statutory provision in isolation. The meaning -- or
ambiguity -- of certain words or phrases may only become evident when placed in
context.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33
(2000).
24
When § 484(a) is read in context with the statutes governing “affiliates” of
national banks, it becomes clear that Congress has not preempted the authority of
states to regulate operating subsidiaries of national banks. As previously shown,
§§ 221a(b), 52, 161(c) and 481 demonstrate Congress’ intent to separate national
banks from their “affiliates” (including their operating subsidiaries) and to
establish a distinct regulatory scheme for “affiliates.” A comparison of §§ 161(c),
481 and 484(a) shows that (i) state officials must file lawsuits instead of
administrative complaints to enforce state laws against national banks, but (ii)
Congress has not restricted the authority of state officials to regulate statechartered “affiliates” (including operating subsidiaries) of national banks.
Section 7.4006 is therefore invalid, because it contradicts the unambiguous
statutory definitions of “national bank” and “affiliate” and also violates the clear
intent of Congress. ALTA v. Clarke, 968 F.2d at 155-57; IIAA v. Hawke, 211 F.3d
at 643-45. In Dimension, 474 U.S. at 368-75, the Supreme Court struck down a
regulation that attempted to redefine “bank” in a way that conflicted with the
governing statute’s plain language. Section 7.4006 should be overruled for the
same reason.
25
b.
Section 7.4006 Violates Fundamental Tenets of Corporate
Law and Invades the States’ Sovereign Power to Regulate
State-Chartered Corporations
The legal separation between a subsidiary and its parent corporation is a
“general principle of corporate law deeply ingrained in our economic and legal
systems.” United States v. Bestfoods, 524 U.S. 51, 61 (1998) (citation and internal
quotation marks omitted); accord, Dole Food Co. v. Patrickson, 538 U.S. 468, 474
(2003) (“[a] basic tenet of American corporate law is that the corporation and its
shareholders are distinct entities”). Federal courts have consistently interpreted
federal statutes in a manner that upholds corporate separation and other
longstanding principles of state corporate law, absent clear evidence that Congress
intended a different result.14
As shown above, Congress has not authorized the OCC to disregard the
separate corporate existence of national banks and their operating subsidiaries. In
E.g., Dole Food Co., 538 U.S. at 475-76 (refusing to conclude that, “as a
categorical matter, all subsidiaries are the same as the parent corporation,”
because “[t]he text of the [relevant statute] gives no indication that Congress
intended us to depart from the general rules regarding corporate formalities”);
Bestfoods, 524 U.S. at 62 (rejecting a proposed reading of a pollution control
statute (“CERCLA”) that would impose automatic liability on a parent corporation
for the acts of its subsidiary, because “nothing in CERCLA purports to reject this
bedrock principle [of corporate separation], and against this venerable common
law backdrop, the congressional silence is audible”); CTS Corp., 481 U.S. at 85,
86 (refusing to construe a federal statute to “pre-empt a variety of state corporate
laws of hitherto unquestioned validity,” because the “longstanding prevalence of
14
26
fact, the National Bank Act requires a strict separation between national banks and
their affiliates. Under 12 U.S.C. § 52, each national bank must separate its own
stock from the stock of any affiliate. Sections 52, 161(c), 221a, 481 and other
provisions of the 1933 Act were enacted “[t]o separate as far as possible national ...
banks from affiliates of all kinds.” S. Rep. No. 73-77, at 10 (1933). Sections 2127, 221a & 282 establish that operating subsidiaries are “affiliates” and cannot be
treated as “national banks.” Accordingly, the OCC cannot claim any congressional
mandate for its claim, embodied in § 7.4006, that operating subsidiaries are “in
essence, incorporated departments or divisions of the [parent] bank.” 66 F.R.
34784, 34788 (2001).
As indicated by 12 C.F.R. § 5.34(e), Wachovia Bank could have conducted
all of Appellees’ mortgage lending activities under its charter as a national bank.
However, Appellees chose to establish Wachovia Mortgage as an operating
subsidiary to take advantage of the legal protections provided by the subsidiary’s
state corporate charter.15 Having made that choice, Appellees are in no position --
state regulation in this area suggests that, if Congress had intended to pre-empt all
[such] state laws . . . it would have said so explicitly”).
15
In an amicus brief filed in the District Court, four bank trade associations
explained that national banks “establish[] operating subsidiaries as a vehicle to
limit the portion of their capital exposed by their mortgage operations .... This
protects the assets backing up the bank’s entire deposit base ... from being
exposed to claims arising from the mortgage lending activities, as they would be if
27
even with the OCC’s encouragement – to disregard the state-law duties that apply
to Wachovia Mortgage by virtue of its charter. See First Nat’l Bank of Logan v.
Walker Bank & Trust Co., 385 U.S. 252, 261 (1966) (the Comptroller of the
Currency may not “pick and choose what portion of the law binds him”).
Based on § 7.4006, the OCC has claimed exclusive authority to regulate
state-chartered operating subsidiaries of national banks. Section 7.4006 unlawfully
invades sovereign state interests protected by the Tenth Amendment, because it
attempts to transform state-chartered corporations into creatures of federal law
without the chartering states’ permission.16 In an analogous case, the Supreme
Court refused to defer to an agency’s interpretation of federal law, because the
agency’s position created “significant constitutional and federalism questions” by
those activities were conducted directly in the bank.” J.A. 74 (Amicus Brief of
American Bankers Ass’n et al., at 14).
Hopkins Federal Savings & Loan Ass’n v. Cleary, 296 U.S. 315 (1935),
held that a federal statute violated the Tenth Amendment by allowing statechartered savings institutions to convert to federal charters without state
permission. The Supreme Court declared that “[h]ow [state-chartered]
corporations shall be formed, how maintained and supervised, and how and when
dissolved, are matters of governmental policy, which it would be an intrusion for
another government to regulate by statute or decision,” except as authorized by
the federal Constitution. Id. at 337 (emphasis added). See also Chicago Title &
Trust Co. v. 4136 Wilcox Bldg. Corp., 302 U.S. 120 (1937) (§ 77B of the federal
Bankruptcy Act did not allow shareholders to file a bankruptcy petition on behalf
of a corporation whose charter had expired under state law, because any such
filing would be “an intrusion by the Federal Government on the powers of the
[chartering] State” in contravention of the Tenth Amendment).
16
28
“permitting federal encroachment upon a traditional state power” without any
“clear indication that Congress intended that result.” Solid Waste Agency of
Northern Cook County v. U.S. Army Corp. of Engineers, 531 U.S. 159, 174, 172
(2001); see also Univ. of Great Falls v. NLRB, 278 F.3d 1335, 1340-41 (D.C. Cir.
2002) (because “the constitutional avoidance canon of statutory interpretation
trumps Chevron deference”, the court declined to defer to an agency interpretation
that raised serious constitutional questions and was not supported by any
“affirmative intention of Congress clearly expressed”). Under the same reasoning,
the District Court should not have deferred to § 7.4006 in this case.
29
CONCLUSION
Amici respectfully urge this Court to reverse the decision below.
Respectfully submitted,
Of Counsel:
Counsel of Record :
Arthur E. Wilmarth, Jr.
D.C. Bar No. 225474
Professor of Law
Law School
720 - 20th Street, N.W.
Washington, DC 20052
Telephone: (202) 994-6386
________________________
William L. Brauch
Assistant Attorney General
Director-Consumer Protection Div.
1305 E. Walnut Street
Des Moines, IA 50319
Telephone: (515) 281-8772
Fax: (202) 994-9446
Fax: (515)281-6771
e-mail: bbrauch@ag.state.ia.usAmici
Curiae:
GREG RENKES
Attorney General of Alaska
Post Office Box 110300
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Juneau, AK 99811-0300
MIKE BEEBE
Attorney General of Arkansas
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31
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Copy mailed to:
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Dykema Gossett
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35