Dodd-Frank Act, including among other things revisions to the OCC's rules
on preemption and visitorial powers.
The final rule is available at:
http://www.occ.treas.gov/news-issuances/news-releases/2011/nr-occ-2011-95a
.pdf
The final rule is substantially the same as the OCC's proposed rule (see
our prior update, below), except that it: (1) provides additional changes
to the visitorial powers provisions; and (2) provides clarification
regarding the applicability of state law to federal savings associations.
PREEMPTION
After extensive analysis of the legislative history, the OCC concluded
"that the Dodd-Frank Act does not create a new, stand-alone 'prevents or
significantly interferes' preemption standard, but rather, incorporates
the conflict preemption legal standard and the reasoning that supports it
in the Supreme Court's Barnett decision."
In addition, the OCC noted that the "prevents or significantly interferes"
phrase cannot be "a new, stand-alone standard, divorced from the reasoning
of the decision without ignoring the language that precedes it, which
directs that the legal standard be the standard for preemption 'in the
decision' of the Court. That standard is conflict preemption, as supported
by the reasoning of the decision, which includes, but is not bounded by,
the 'prevent or significantly interfere' formulation."
Accordingly, although the OCC notes that the "obstruct, impair or
condition" phrase in its 2004 preemption rule was intended to have the
same effect as the Supreme Court's decision in Barnett, the OCC indicates
it is deleting the phrase "obstruct, impair or condition" from its
preemption rule.
In addition, the OCC added that "[t]o the extent that an existing
preemption precedent is exclusively reliant on the phrase 'obstructs,
impairs, or conditions' as the basis for a preemption determination, we
believe that validity of the precedent would need to be reexamined to
ascertain whether the determination is consistent with the Barnett
conflict preemption analysis." However, the OCC also noted that it "has
not identified any OCC-issued preemption precedent that rested only on the
'obstruct, impair, or condition' formulation."
VISITORIAL POWERS
In response to comments, the OCC revised the definition of visitorial
powers at § 7.4000(a)(2)(iv) to include "[i]nvestigating or enforcing
compliance with any applicable Federal or state laws concerning those
activities."
The OCC noted that the change "was intended to include direct
investigations of national banks such as through requests for documents or
testimony directed to the bank to ascertain the bank's compliance with law
through mechanisms not otherwise authorized under the rule," but that the
change "would not include collecting information from other sources or
from the bank through actions that do not constitute visitations or as
authorized under Federal law."
Also in response to comments, the OCC changed the language of the final
rule to simply use the term "applicable law" in § 7.4000(a)(3). The OCC
noted that this language "is an exception from a prohibition of certain
visitorial actions by an attorney general (or other chief state law
enforcement officer), not an authorization," and "[i]n the case of both
non-preempted state law and Federal law, the law in question still must
provide authority for the attorney general to enforce and seek relief as
authorized under that applicable law."
FEDERAL SAVINGS BANKS
The final rule adds new provisions to reflect that federal savings banks
and their subsidiaries are subject to the same laws and legal standards as
are applicable to national banks and their subsidiaries regarding the
preemption of state law, and that federal savings banks and their
subsidiaries to the same visitorial powers that apply to national banks
and their subsidiaries.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
NOTICE: We do not send unsolicited emails. If you received this email in
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____________________________________________________________
Subject: FYI: OCC Issues NPRM on Dodd-Frank Preemption Rule
Changes, OTS Transfer/Integration, Other Issues
Date: Sun, 29 May 2011 14:22:41 -0500
From: rwutscher@mtwllp.com
To: rwutscher@mtwllp.com
CC: socaloffice@mtwllp.com, dcoffice@mtwllp.com,
chicagooffice@mtwllp.com
The Office of the Comptroller of the Currency issued the attached notice
of proposed rulemaking, in order to implement several provisions of the
Dodd-Frank Act, including:
(a) Changes to national bank preemption and the OCC's visitorial
authority, as referenced in the OCC's May 12, 2011 responding to
Congressional inquiry (attached); and
(b) Implementing the transfer of functions from the Office of Thrift
Supervision, effective July 21, 2011, including assessment rules and
related payment schedules, rules related to OCC organization, the
availability and release of information, and post-employment restrictions
for senior examiners; and
(c) Implementing a moratorium on changes in control of credit card banks
and trust banks, and revisions to federal branch and agency rules
regarding deposit insurance coverage.
The OCC's proposed preemption and visitorial powers rules would:
(1) "Eliminate any ambiguity concerning the preemption standards in OCC
regulations" by removing language from existing OCC rules that provide
that state laws that "obstruct, impair or condition" a national bank's
powers are preempted, and replacing this standard with that which was
articulated in the whole of decision of the Supreme Court of the United
States in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insurance
Commissioner, et al., 517 U.S. 25 (1996) (copy attached), and indicating
that "the phrase 'prevent or significantly interfere' is one exemplary
formulation of conflict preemption," but that this phrase "is not the only
formulation; it is not set apart from the others; and it is not presented
as a test different from the others; rather, it is part of the whole of
the Court's reasoning in its decision," and that "the analysis may not
simply stop and isolate those terms from the rest of the decision," and
that "it is necessary to take into account the whole of the conflict
preemption analysis in the Supreme Court's decision"
(2) Eliminate preemption for national bank and federal thrift operating
subsidiaries; and
(3) Recognize the ability of state attorneys general to bring enforcement
actions in court to enforce non-preempted state laws against national
banks.
As part of the integration of the OTS functions into the OCC, the OCC also
indicated that it plans to issue an Interim Final Rule with a request for
comments, effective on the transfer date, that republishes those OTS
regulations the OCC has the authority to promulgate and enforce as of the
transfer date, renumbered and issued as new OCC rules, with nomenclature
and other technical amendments to reflect OCC supervision of Federal
thrifts. The OCC further indicated it will consider more comprehensive
substantive amendments to these regulations, as appropriate, after the
transfer date.
The proposed rule has been published in the Federal Register, and comments
are due by June 27, 2011.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
http://www.mtwllp.com
NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.
Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com
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