Conference of State Bank Sup'rs v. Conover, 82-1303
| Citation | 710 F.2d 878 |
| Decision Date | 07 July 1983 |
| Docket Number | No. 82-1303,82-1303 |
| Parties | CONFERENCE OF STATE BANK SUPERVISORS, Appellant, v. C. Todd CONOVER, Comptroller of the Currency of the United States. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeal from the United States District Court for the District of Columbia (D.C.Civil Action No. 81-01591).
Arthur E. Wilmarth, Jr., Washington, D.C., with whom James F. Bell and John A. Buchman, Washington, D.C., were on the brief, for appellant.
Dina R. Lassow, Atty., U.S. Dept. of Justice, with whom Stanley S. Harris, U.S. Atty., Anthony J. Steinmeyer, Atty., U.S. Dept. of Justice, Ronald R. Glancz and L Robert Griffin, Attys., Office of the Comptroller of the Currency, Washington, D.C., were on the brief, for appellee.
Arnold M. Lerman, David R. Johnson and Daniel M. Drory, Washington, D.C., were on the brief for American Nat. Trust and Sav. Ass'n, et al., amici curiae urging affirmance.
Before ROBINSON, Chief Judge, WILKEY, Circuit Judge, and MacKINNON, Senior Circuit Judge.
Opinion for the Court PER CURIAM.
Appellant Conference of State Bank Supervisors (the Conference) sought a declaratory judgment that regulations promulgated by the Comptroller of the Currency (the Comptroller) establishing the terms on which national banks may offer or purchase adjustable-rate mortgages (ARMs) are invalid to the extent they purport to preempt inconsistent state laws. The district court granted the Comptroller's motion for summary judgment on the ground that the challenged regulations fall within the scope of powers granted by Congress under two different acts. The Conference appeals and we affirm.
The essential feature of an adjustable-rate mortgage is that the interest rate may be adjusted periodically to reflect changes in prevailing rates. The Comptroller's regulations at issue here provide that all national banks may offer or purchase ARMs subject to various conditions relating to the permissible amount of each increase in interest, the frequency of increases, the maximum overall interest increase, and other matters. Adjustable-Rate Mortgages, 46 Fed.Reg. 18,932 (1981) () (JA 37-39). 1 The Comptroller described the regulations as intended to "encourage national bank participation in the residential mortgage market by facilitating the development of new mortgage instruments ...." Id. at 18,93 4, col. 1 (JA 28).
A number of states, however, have established restrictions on ARMs that conflict with the Comptroller's regulations in various respects. Believing that these state restrictions have the effect of discouraging national banks from offering ARMs, the Comptroller determined that his regulations should override inconsistent state law. Id. at 18,942, col. 2 (JA 36). The regulations provide generally that national banks may offer ARMs without regard to any limitations imposed by state law. In addition, the regulations preempt state laws that prohibit the charging of interest on interest and prepayment fees and that impair the enforceability of due-on-sale clauses. 2
The Conference is an association composed of state government officials who are responsible for regulating state banks. It brought a prompt declaratory judgment action challenging the Comptroller's authority to preempt inconsistent state laws. Since it was undisputed that the banking laws conflict with the Comptroller's regulations, the only question upon which issue was joined was "whether these regulations are within the scope of the Comptroller's powers granted by Congress." 3 Conference of State Bank Supervisors v. Lord, 532 F.Supp. 694, 696 (D.D.C.1982) (JA 58). The court considered the question on cross-motions for summary judgment and the parties' written oppositions thereto.
The court accepted both alternative bases offered by the Comptroller as conferring the requisite rulemaking authority. First, the Comptroller relied on the rule-making power conferred by 12 U.S.C. Sec. 371(g), which was enacted as part of the Housing and Community Development Act of 1974, Pub.L. No. 93-383, 88 Stat. 633 (1974). Section 371(g) provided:
Loans made pursuant to this section shall be subject to such conditions and limitations as the Comptroller of the Currency may prescribe by rule or regulation. 4
Viewing the purpose of the Act as the authorization of wider real estate lending powers for national banks, see H.R.Rep. No. 1114, 93d Cong., 2d Sess. 44 (1974), the court reasoned that since ARMs are "real estate" loans within the meaning of 12 U.S.C. Sec. 371(a), and the challenged regulations establish "conditions and limitations" on such loans, the Comptroller was authorized to issue the regulations under section 371(g).
Second, the court held that the Comptroller had an independent statutory basis for issuing the regulations under 12 U.S.C. Sec. 93a, which was enacted as section 708 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), Pub.L. No. 96-221, 94 Stat. 132 (1980). Section 93a provides:
Except to the extent that authority to issue such rules and regulations has been expressly and exclusively granted to another regulatory agency, the Comptroller of the Currency is authorized to prescribe rules and regulations to carry out the responsibilities of the office, except that the authority conferred by this section does not apply to section 36 of this title [i.e., the McFadden Act, which makes the power of national banks to branch subject to state law] or to securities activities of the National Banks under the Act commonly known as the "Glass-Steagall Act."
The court reasoned that the Comptroller's responsibility to ensure the safety and soundness of the national banking system under 12 U.S.C. Sec. 481, and to carry out those provisions of federal banking law that authorize national banks to offer real estate loans, provided him with the broad authority to issue the challenged regulations.
Not surprisingly, the Conference challenges both alleged bases of the Comptroller's authority. Before reaching these questions of statutory intent, however, we consider the effect of the Supreme Court's recent decision in Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). Our conclusion follows inexorably from the reasoning of the majority in Fidelity.
Fidelity upheld the preemptive effect of a Federal Home Loan Bank Board regulation which permitted federal savings and loan associations to enforce due-on-sale clauses of mortgages notwithstanding inconsistent state laws. Although Fidelity is factually similar to the instant appeal, appellant seeks to distinguish the case on two grounds: (1) that the decision does not dispose of appellant's contention that courts must apply "strict scrutiny" when reviewing preemption claims, and (2) that Fidelity is inapposite because of the dual nature of the American banking system.
The preemption doctrine requires us to examine congressional intent, which may be express or implied. The Supremacy Clause is triggered " 'whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose.' " Id. 102 S.Ct. at 3022 (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977)). Neither party disputes these fundamental principles, but appellant insists that a "presumption against federal administrative preemption of state law" should apply. Brief for Appellant at 1 (emphasis added). The Conference describes this putative "presumption" as entailing the application of "a strict standard of scrutiny which requires persuasive evidence of an express or implied congressional intent contemplating preemption of state law." Appellant's Reply Brief at 14 (emphasis added). Appellant's argument is voiced sometimes as a "presumption" that can only be overcome by more "persuasive evidence," and other times as a requirement that the statute conferring rulemaking power must contain a specific grant of "preemptive authority." See Brief for Appellant at 12-13, 27-33, 49. Neither is convincing.
Appellant's assertion that a presumption runs against preemption cannot be supported, even in cases where preemption is accomplished through regulation. As amici have demonstrated, see Brief for Amici Curiae at 12-14, the authorities upon which appellant relies to support this proposition are cases that construe the relevant state and federal laws to determine whether there actually is a conflict between them. See, e.g., Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981); Ray v. Atlantic Richfield Co., 435 U.S. 151, 98 S.Ct. 988, 55 L.Ed.2d 179 (1978). In the construction of such laws, courts indulge a rule of construction (not a presumption) which avoids finding a conflict if at all possible. But here the conflict is undisputed. See Brief for Appellant at 6 (). Consequently, the "presumption" inquiry is not relevant here, for the only question before us is whether admittedly conflicting regulations are valid.
Appellant at times also contends that a regulation--however valid in other respects--cannot preempt state law unless there is "persuasive evidence" that Congress specifically intended to grant regulatory authority to preempt. But the Supreme Court ruled adversely upon the requirement for a special inquiry in Fidelity. In upholding the Federal Home Loan Bank Board's preemptive regulation, the Court considered the showing of congressional intent that must be made in order to find preemptive effect in a federal statute or regulation. The California Court of Appeals determined that Congress had not expressed an intent to...
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