This essay criticizes OCC v. Spitzer (S.D.N.Y. 2005), a recent federal court decision dealing with the application of state laws to national banks. The court upheld a regulation issued by the Office of the Comptroller of the Currency ("OCC"), the federal agency that supervises national banks. The OCC's regulation preempts the authority of state officials to file suit in state or federal courts to enforce state laws against national banks. The OCC's regulation asserts that any decision about whether to enforce state laws against national banks is a matter "within the OCC's exclusive purview."
Based on the OCC's regulation, the court barred New York Attorney General Eliot Spitzer from using judicial process to enforce New York's fair lending laws against national banks. The court concluded that the OCC's regulation was entitled to deference under the "Chevron doctrine," in part because the National Bank Act did not "unambiguously" prohibit the OCC from adopting the regulation. I contend that the court's decision is erroneous and should be reversed. The OCC's regulation is inconsistent with the plain language of the National Bank Act, which recognizes that "the courts of justice" possess enforcement authority over national banks. Until the OCC issued its regulation in 2004, state officials had successfully filed suits in state and federal courts for more than a century to enforce state laws against national banks. Accordingly, the OCC's regulation infringes upon the states' sovereign authority to enforce their laws without any clear indication that Congress intended such a result. In addition, the OCC was motivated by a powerful self-interest when it adopted the regulation. The regulation was one of a series of preemption rules issued by the OCC in 2004. Those rules were designed to shield national banks from the application of state laws, a result that encouraged large, multistate banks to operate under national charters, thereby increasing the OCC's assessment revenues and budgetary resources.
In two recent court decisions - Gonzalez v. Oregon (U.S. Sup. Ct. 2006) and American Bar Association v. Federal Trade Commission (D.C. Cir. 2005) - the courts refused to grant Chevron deference to agency regulations after finding that the regulations exceeded the authority granted to the agencies by Congress. Both courts declared that ambiguity or silence in a federal statute is not sufficient to demonstrate an implicit delegation of rulemaking power, particularly when an agency seeks to expand its jurisdiction or to intrude upon an area traditionally regulated by the states. Both decisions indicate the emergence of a new precondition for judicial deference - a precondition I call "Chevron step 2.1." This step requires a reviewing court to examine the text and structure of the governing statute to determine whether it reveals a congressional intent to delegate the full extent of the rulemaking power claimed by the agency. I contend that proper application of "Chevron step 2.1" would mandate a reversal of OCC v. Spitzer. In addition, I suggest that "Chevron step 2.1" is needed to preserve what I believe is the most important principle of administrative law. That principle, as declared by the Supreme Court in 1977, provides that the rulemaking authority of an administrative agency "is not the power to make law" but, rather, is only "the power to carry into effect the will of Congress as expressed in the [governing] statute."
GW Paper Series
GWU Law School Public Law Research Paper No. 191
Arthur E. Wilmarth Jr., OCC v. Spitzer: An Erroneous Application of Chevron that Should be Reversed, BNA'S BANKING REPORT, 86 Bureau of Nat'l Affairs, Washington, DC, February 20, 2006 at 379.