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Cuomo v. Clearing House Association

June 29, 2009

ANDREW M. CUOMO, ATTORNEY GENERAL OF NEW YORK, PETITIONER
v.
THE CLEARING HOUSE ASSOCIATION, L. L. C., ET AL.



On Writ Of Certiorari To The United States Court Of Appeals For The Second Circuit Court Below: 510 F. 3d 105

SYLLABUS BY THE COURT

OCTOBER TERM, 2008

Argued April 28, 2009

To determine whether various national banks had violated New York's fair-lending laws, the State's Attorney General, whose successor in office is the petitioner here, sent them letters in 2005 requesting "in lieu of subpoena" that they provide certain nonpublic information about their lending practices. Respondents, the federal Office of the Comptroller of the Currency (Comptroller or OCC) and a banking trade group, brought suit to enjoin the information request, claiming that the Comptroller's regulation promulgated under the National Bank Act (NBA) prohibits that form of state law enforcement against national banks. The District Court entered an injunction prohibiting the Attorney General from enforcing state fair-lending laws through demands for records or judicial proceedings. The Second Circuit affirmed.

Held: The Comptroller's regulation purporting to pre-empt state law enforcement is not a reasonable interpretation of the NBA. Pp. 2-15.

(a) Evidence from the time of the NBA's enactment, this Court's cases, and application of normal construction principles make clear that the NBA does not prohibit ordinary enforcement of state law. Pp. 2-11.

(i) The NBA provides: "No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts ... , or ... directed by Congress." 12 U. S. C. §484(a). Among other things, the Comptroller's regulation implementing §484(a) forbids States to "exercise visitorial powers with respect to national banks, such as conducting examinations, inspecting or requiring the production of books or records," or, as here pertinent, "prosecuting enforcement actions" "except in limited circumstances authorized by federal law." 12 CFR §7.4000(a)(1). There is some ambiguity in the NBA's term "visitorial powers," and the Comptroller can give authoritative meaning to the term within the bounds of that uncertainty. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. However, the presence of some uncertainty does not expand Chevron deference to cover virtually any interpretation of the NBA. Pp. 2-3.

(ii) When the NBA was enacted in 1864, scholars and courts understood "visitation" to refer to the sovereign's supervisory power over the manner in which corporations conducted business, see, e.g., Guthrie v. Harkness, 199 U. S. 148, 157. That power allowed the States to use the prerogative writs to exercise control if a corporation abused its lawful power, acted adversely to the public, or created a nuisance. Pp. 3-4.

(iii) This Court's consistent teaching, both before and after the NBA's enactment, is that a sovereign's "visitorial powers" and its power to enforce the law are two different things. See, e.g., Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 676, 681; Guthrie, supra, at 159, 157; First Nat. Bank in St. Louis v. Missouri, 263 U. S. 640, 660. Watters v. Wachovia Bank, N. A., 550 U. S. 1, 21, distinguished. And contrary to the Comptroller's regulation, the NBA pre-empts only the former. Pp. 4-7.

(iv) The regulation's consequences also cast its validity into doubt: Even the OCC acknowledges that the NBA leaves in place some state substantive laws affecting banks, yet the Comptroller's rule says that the State may not enforce its valid, non-pre-empted laws against national banks. "To demonstrate the binding quality of a statute but deny the power of enforcement involves a fallacy made apparent by the mere statement of the proposition, for such power is essentially inherent in the very conception of law." St. Louis, supra, at 660. In contrast, channeling state attorneys general into judicial law-enforcement proceedings (rather than allowing them to exercise "visitorial" oversight) would preserve a regime of exclusive administrative oversight by the Comptroller while honoring in fact rather than merely in theory Congress's decision not to pre-empt substantive state law. This reading is also suggested by §484(a)'s otherwise inexplicable reservation of state powers "vested in the courts of justice." And on a pragmatic level, the difference between visitation and law enforcement is clear: If a State chooses to pursue enforcement of its laws in court, its targets are protected by discovery and procedural rules. Pp. 7-9.

(b) The Comptroller's interpretation of the regulation demonstrates its own flaw: the Comptroller is forced to limit the regulation's sweep in areas such as contract enforcement and debt collection, but those exceptions rest upon neither the regulation's nor the NBA's text. Pp. 9-11.

(c) The dissent's objections are addressed and rejected. Pp. 11-13.

(d) Under the foregoing principles, the Comptroller reasonably interpreted the NBA's "visitorial powers" term to include "conducting examinations [and] inspecting or requiring the production of books or records of national banks," when the State conducts those activities as supervisor of corporations. When, however, a state attorney general brings suit to enforce state law against a national bank, he is not acting in the role of sovereign-as-supervisor, but rather sovereign-as-law-enforcer. Because such a lawsuit is not an exercise of "visitorial powers," the Comptroller erred by extending that term to include "prosecuting enforcement actions" in state courts. In this case, the Attorney General's threatened action was not the bringing of a civil suit, or the obtaining of a judicial search warrant based on probable cause, but the issuance of subpoena on his own authority if his request for information was not voluntarily honored. That is not the exercise of the law enforcement power "vested in the courts of justice," which the NBA exempts from the ban on the exercise of supervisory power. Accordingly, the injunction below is affirmed as applied to the Attorney General's threatened issuance of executive subpoenas, but vacated insofar as it prohibits the Attorney General from bringing judicial enforcement actions. Pp. 13-15.

The opinion of the court was delivered by: Justice Scalia

Opinion of the Court

557 U. S. ____ (2009)

In 2005, Eliot Spitzer, Attorney General for the State of New York, sent letters to several national banks making a request "in lieu of subpoena" that they provide certain non-public information about their lending practices. He sought this information to determine whether the banks had violated the State's fair-lending laws. Spitzer's successor in office, Andrew Cuomo, is the petitioner here. Respondents, the federal Office of the Comptroller of the Currency ("Comptroller" or "OCC") and the Clearing House Association, a banking trade group, brought suit to enjoin the information request, claiming that the Comptroller's regulation promulgated under the National Bank Act prohibits that form of state law enforcement against national banks.

The United States District Court for the Southern District of New York entered an injunction in favor of respondents, prohibiting the attorney general from enforcing state fair-lending laws through demands for records or judicial proceedings. The United States Court of Appeals for the Second Circuit affirmed. 510 F. 3d 105 (2007). We granted certiorari. 555 U. S. ___ (2009). The question presented is whether the Comptroller's regulation purporting to pre-empt state law enforcement can be upheld as a reasonable interpretation of the National Bank Act.

I.

Section 484(a) of Title 12, U. S. C., a provision of the National Bank Act, 13 Stat. 99, reads as follows:

"No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts of justice or such as shall be, or have been exercised or directed by Congress or by either House thereof or by any committee of Congress or of either House duly authorized."

The Comptroller, charged with administering the National Bank Act, adopted, through notice-and-comment rulemaking, the regulation at issue here designed to implement the statutory provision. Its principal provisions read as follows:

"§7.4000 Visitorial powers.

"(a) General rule. (1) Only the OCC or an authorized representative of the OCC may exercise visitorial powers with respect to national banks, except as provided in paragraph (b) of this section. State officials may not exercise visitorial powers with respect to national banks, such as conducting examinations, inspecting or requiring the production of books or records of national banks, or prosecuting enforcement actions, except in limited circumstances authorized by federal law. However, production of a bank's records (other than non-public OCC information under 12 CFR part 4, subpart C) may be required under normal judicial procedures.

"(2) For purposes of this section, visitorial powers include:

"(i) Examination of a bank;

"(ii) Inspection of a bank's books and records;

"(iii) Regulation and supervision of activities authorized or permitted pursuant to federal banking law; and

"(iv) Enforcing compliance with any applicable federal or state laws concerning those activities." 12 CFR §7.4000 (2009).

By its clear text, this regulation prohibits the States from "prosecuting enforcement actions" except in "limited circumstances authorized by federal law."

Under the familiar Chevron framework, we defer to an agency's reasonable interpretation of a statute it is charged with administering. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). There is necessarily some ambiguity as to the meaning of the statutory term "visitorial powers," especially since we are working in an era when the prerogative writs -- through which visitorial powers were traditionally enforced -- are not in vogue. The Comptroller can give authoritative meaning to the statute within the bounds of that uncertainty. But the presence of some uncertainty does not expand Chevron deference to cover virtually any interpretation of the National Bank Act. We can discern the outer limits of the term "visitorial powers" even through the clouded lens of history. They do not include, as the Comptroller's expansive regulation would provide, ordinary enforcement of the law. Evidence from the time of the statute's enactment, a long line of our own cases, and application of normal principles of construction to the National Bank Act make that clear.

A.

Historically, the sovereign's right of visitation over corporations paralleled the right of the church to supervise its institutions and the right of the founder of a charitable institution "to see that [his] property [was] rightly employed," 1 W. Blackstone, Commentaries on the Laws of England 469 (1765). By extension of this principle, "[t]he king [was] by law the visitor of all civil corporations," ibid. A visitor could inspect and control the visited institution at will.

When the National Bank Act was enacted in 1864, "visitation" was accordingly understood as "[t]he act of examining into the affairs of a corporation" by "the government itself." 2 J. Bouvier, A Law Dictionary 790 (15th ed. 1883). Lower courts understood "visitation" to mean "the act of a superior or superintending officer, who visits a corporation to examine into its manner of conducting business, and enforce an observance of its laws and regulations." First Nat. Bank of Youngstown v. Hughes, 6 F. 737, 740 (CC ND Ohio 1881). A State was the "visitor" of all companies incorporated in the State, simply by virtue of the State's role as ...


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