State Autonomy in Preemption Doctrine

This account of the Roberts Court’s preemption cases leaves out one anomalous decision—the Court’s decision in Cuomo v. Clearing House Assn,[1] holding that the NBA does not preempt the power of the New York attorney general to enforce New York’s own banking regulations against nationally chartered banks. Under my account, the NBA is an example of commercial regulation the preemptive force of which ought to be broadly construed for the sake of a national market. The Court took such a position in Watters but apparently abandoned this stance in Clearing House, refusing to extend Chevron deference to the Office of Comptroller of the Currency (OCC) and invalidating the OCC’s regulation[2] preempting state officials from “prosecuting enforcement actions” against national banks. The Clearing House Court held that this regulation was not a reasonable interpretation of the NBA’s ban on state visitorial powers over nationally chartered banks, which provides that “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.”[3] Remarkably, the Court found that the OCC’s regulation was unreasonable even though the OCC was entitled to Chevron deference because the phrase “visitorial powers” was ambiguous.

What could explain this striking departure from Watters? The critical point is the undisputed validity of the underlying state laws that the New York attorney general was attempting to enforce. By construing the NBA’s reference to “visitorial powers” to preempt such ordinary state enforcement of its own legislation, the OCC was essentially claiming that a federal agency could exercise an exclusive prerogative to enforce state law, in a dramatic departure from the theory of dual federalism under which each level of government controls the implementation of its own laws. The Clearing House majority found it to be a “bizarre” conclusion that “the State may not enforce its valid, non-pre-empted laws against national banks.” According to the Court, “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.”[4]

One can regard the proposition that each sovereign is presumptively entitled to enforce its own legislation as an aspect of state autonomy analogous to the principle of federal supremacy barring states from taking control of the enforcement of federal law. Clearing House is the flip side of Buckman v. Plaintiff’s Legal Committee,131 in which the Court held that states had no general power to use their tort law to police fraud against federal agencies. The plaintiffs in Buckman had brought a state-law tort action against the Buckman Company alleging that they had procured FDA approval of a bone screw by misleading the FDA into believing that the screw’s anticipated use would be for “long bones” in the arms and legs rather than the spinal column. In rejecting the idea that a private party’s submissions to a federal agency could be the basis for a state tort claim, Buckman stated that “[p]olicing fraud against federal agencies is hardly ‘a field which the States have traditionally occupied’ ” and that the FDA was quite capable of taking care of itself through “a variety of enforcement options that allow it to make a measured response to suspected fraud upon the Administration.”[5] [6] Additional state tort remedies for allegedly fraudulent submissions to the FDA would just disrupt the balanced federal scheme by giving manufacturers “an incentive to submit a deluge of information that the Administration neither wants nor needs, resulting in additional burdens on the FDA’s evaluation of an application.”[7] Buckman’s theory that federal agency proceedings are not a proper subject for state courts to control through tort law was not rooted in any detail of statutory text. It was, instead, rooted in the basic principle of federal supremacy—that federal officials presumptively control the implementation of federal law absent some specific grant of power to the states to participate in the federal scheme. Clearing House provides an analogous (albeit weaker) principle of state autonomy: states cannot be barred from enforcing their own valid state laws absent some clear statement from Congress. This principle cuts across the distinction between commercial and regulatory matters. The Clearing House Court expressed no doubt whatsoever about the idea that federal banking law presumptively preempts state laws regulating nationally chartered banks. The “bizarre” idea rejected in Clearing House is the notion that a federal agency could declare that state laws could be valid regulations of nationally chartered banks but that state officials could play no role whatsoever in enforcing such laws.

  • [1] 129 S. Ct. 2710 (2009).
  • [2] 12 C.F.R. § 7.4000 (2011).
  • [3] 12 U.S.C. § 484 (2010).
  • [4] Clearing House, 129 S. Ct. at 2718.
  • [5] 531 U.S. 341 (2001).
  • [6] Buckman, 531 U.S. at 349.
  • [7] Id. at 351.
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