Fair Housing for All

Andrew M. CUOMO, in his Official Capacity as Attorney General for the State of New York, Petitioner,

v.
THE CLEARING HOUSE ASSOCIATION, L.L.C. and Office of the Comptroller of the Currency, Respondents.
No. 08-453.
October 3, 2008.

On Petition for a Writ of Certiorari to the United States Court of Appeals for the Second Circuit

Petition for a Writ of Certiorari

...12 U.S.C. § 484(a), a provision of the National Bank Act, prohibits the exercise of "visitorial powers" as to national banks, except where those powers are authorized by federal law, vested in the courts of justice, or exercised by Congress or a House or committee thereof. The Office of the Comptroller of the Currency has issued a regulation (12 C.ER. § 7.4000) interpreting § 484(a) to preempt state enforcement of state laws against national banks, even when the state laws are not substantively preempted. The questions presented are:

1. Whether 12 C.ER. § 7.4000 is entitled to judicial deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

2. Whether 12 C.F.R. § 7.4000 is invalid because it is inconsistent with the authoritative construction of the National Bank Act by this Court in First National Bank in St. Louis v. Missouri, 263 U.S. 640 (1924).

...The opinion of the court of appeals (Pet. App. 1a-62a) is reported at 510 F.3d 105. The opinions of the district court (Pet. App. 63a-117a, 118a-142a) are reported at 396 F. Supp. 2d 383 and 394 F. Supp. 2d 620.

...This case presents the question of whether deference is owed under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), to a regulation of the Office of the Comptroller of the Currency ("OCC") interpreting a federal statute to deprive the States of authority to enforce their own nonpreempted state laws against national banks. A provision of the National Bank Act ("NBA"), 12 U.S.C. § 484, enacted in 1864, generally operates to restrict the exercise of "visitorial powers" over national banks to the banks' primary regulator, the OCC. In 2004, the OCC, by regulation, for the first time interpreted that statute to deprive States of their authority to enforce state laws against national banks. The regulation, 12 C.F.R. § 7.4000, did so by expansively interpreting the statutory term "visitorial powers" well beyond its historical meaning to cover virtually all state enforcement, even of generally applicable state laws that are not substantively preempted. The regulation thus prohibits States from bringing even the same kinds of judicial actions against national banks that can be brought by a private party.

Until OCC promulgated its amended "visitorial powers" regulation in 2004, there was no doubt that States could judicially enforce their nonpreempted laws against national banks. This Court so held in First National Bank in St. Louis v. Missouri, 263 U.S. 640 (1924) (" St. Louis"), as have numerous other federal and state courts. After the issuance of the regulation, OCC took affirmative steps to prevent States from enforcing their nonpreempted laws against national banks, including instructing national banks not to speak to state attorney general offices and initiating the present lawsuit to terminate the New York Attorney General's investigation into evidence that some national banks are engaged in discriminatory mortgage lending within the State.

Pursuant to the 2004 regulation, a federal district court enjoined the New York Attorney General from taking any actions to enforce state fair-lending laws against national banks. The Second Circuit affirmed, giving deference to the regulation under Chevron. That holding warrants this Court's review, both because it conflicts with the Court's decision in St. Louis, and because it allows the OCC by regulatory fiat to alter drastically the historic balance of federal and state authority as to national banks.

...In April 2005, the Office of the New York Attorney General began investigating a number of state and national banks for racial and ethnic discrimination in their residential real-estate lending based on data showing a significantly higher percentage of high-interest home mortgage loans issued by those banks to African-American and Hispanic borrowers than to white borrowers. Racial and ethnic discrimination in the extension of credit violates the New York Human Rights Law (N.Y. Executive Law § 296-a), as well as other state and federal laws.

On the basis of these disparities, the Attorney General sent "letters of inquiry" to the lenders, including several national banks and their operating subsidiaries, requesting that the lenders voluntarily produce more information. Shortly after this, OCC and the Clearing House Association (a consortium of national banks) filed separate actions in the United States District Court for the Southern District of New York, invoking that court's jurisdiction under 28 U.S.C. §§ 1331 (general federal question jurisdiction) and 1345 (suits where federal agency is plaintiff). Relying on 12 C.F.R. § 7.4000, the federal suits sought to enjoin the Attorney General's investigative and enforcement efforts with respect to the national banks. OCC and the Clearing House took the position that "any efforts" by the Attorney General to investigate or enforce provisions of state or federal fair-lending law against national banks or their operating subsidiaries were an unlawful exercise of visitorial powers. See Pet. App. 4a. The Attorney General counterclaimed, seeking to have the regulation set aside under the Administrative Procedure Act as arbitrary, capricious, and contrary to law. See Pet. App. 5a.

...The statutory interpretation announced in the OCC regulation and endorsed by the Second Circuit works a major alteration of the balance of power between the federal and state governments. The resulting regime deprives States of the power to enforce against national banks state antidiscrimination laws and other laws of general applicability that have not been preempted as applied to those banks.The concern of the New York Attorney General in this case, by contrast, is to investigate racial discrimination in the terms of mortgages issued in New York, in contemplation of a possible judicial action to enforce a state antidiscrimination law that applies equally to all actors within the State.[FN11] Such enforcement of generally applicable laws has never been encompassed by the term "visitorial powers."[FN12] Accordingly, § 484(a) certainly contains no clear statement of congressional intent to prohibit the Attorney General from enforcing nonpreempted New York antidiscrimination laws against national banks.

...The practical effect of accepting OCC's construction of § 484 is to eradicate all government enforcement of state laws as to national banks.[FN13] It is no answer that the Comptroller is able to enforce such laws, because OCC is not designed or equipped to enforce States' consumer protection laws against national banks, has no record of doing so, and has shown no intention of changing its traditional indifference.

FN11. This Court's decision in Watters, 127 S. Ct. 1559, held that the Comptroller's exclusive visitorial authority applies not only to national banks, but also to their operating subsidiaries. In that case, the Court ruled that the NBA preempted a state administrative enforcement regime based on registration and licensing requirements. Watters, in contrast to this case, did not involve judicial enforcement of generally applicable laws.

FN12. Moreover, if such judicial enforcement were thought to be an exercise of visitorial powers, which it is not, there would nevertheless be the further hurdle of overcoming the exception in § 484(a) for such powers "vested in the courts of justice."

FN13. While private enforcement remains theoretically available, it is unrealistic to suppose that private parties can fully vindicate the interests protected by these state laws.