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| ## Comptroller of the Currency                                        |
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| > Administrator of National Banks                                     |
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Washington, DC 20219

#### Interpretive Letter #1005

June 10, 2004 **September 2004**

Fred H. Miller

President

National Conference of Commissioners on Uniform State Laws

211 E. Ontario Street, Suite 1300

Chicago, IL 60611

Lance Liebman

Director

American Law Institute

Executive Office

Philadelphia, PA 19104

Dear Messrs. Miller and Liebman:

I am writing in response to your letter of May 12, 2004, concerning the
impact of recently adopted OCC regulations concerning preemption of
state laws [^1] on provisions of the Uniform Commercial Code (UCC),
which has been sponsored by NCCUSL and the ALI.[^2] There has been some
misunderstanding of the scope of the rules, and I welcome the
opportunity to address your questions.

First, the rule only preempts the types and features of state laws
pertaining to making loans and taking deposits that are specifically
listed in the regulation. These are state laws for which substantial
precedent existed, prior to our adoption of the preemption rules,
recognizing the interference they pose to the ability of Federally
chartered institutions to operate under uniform Federal standards. The
rule does not operate to preempt other types of State laws -- laws that
do not appear on the lists in the regulation. Second, for all other
types of laws, the OCC may determine, on a case-by-case basis, in the
same manner and employing the same judicially-recognized standards of
preemption that we applied to preemption issues prior to adoption of
these regulations, whether such non-listed state laws are preempted
under such standards, which are summarized by the "obstruct, impair, or
condition" phrasing used in the rule. Finally, again with respect to
deposit taking and lending, the rule lists types of state laws that
generally *do apply* to national banks and provides, further, that state
laws in addition to those listed also apply if the OCC determines that
they only incidentally affect a national bank\'s exercise of its Federal
powers or are \"otherwise consistent\" with those powers. In the
preamble to the final rule, we explained that state laws that "establish
the legal infrastructure that makes practicable the conduct of \[the
banking\] business\"[^3] would not be preempted.

You have described the UCC as providing \"the basic legal infrastructure
for sales and leases of goods, negotiable instruments and bank deposits
and check collection, commercial funds transfers, letters of credit,
documents of title, investment securities and personal property secured
transactions, including loans.\" You have asked us to confirm your
conclusion that:

> the UCC is a body of state law that does not obstruct, impair, or
> condition the ability of national banks to exercise fully the powers
> granted by federal law. Rather those powers are implemented and
> supported by the UCC, which provides a uniform law of general
> applicability on which parties rely in their daily commercial
> transactions.

We agree. Accordingly, such provisions would not be preempted under the
OCC\'s preemption rules nor under the judicially-developed standards of
preemption that would be applicable to the preemption analysis of laws
not specifically listed in our regulations.

I hope this letter is responsive to your concerns.

Sincerely,

/s/ Julie L. Williams

Julie L. Williams

First Senior Deputy Comptroller and Chief Counsel

[^1]: 69 Fed. Reg. 1904 (January 13, 2004) (the preemption rule) (adding
    new §§ 7.4007 (deposit taking), 7.4008 (non-real estate lending),
    and 7.4009 (other Federally authorized activities of national banks)
    and revising § 34.4 (real estate lending)). 

[^2]: Your letter asks us to address the UCC sponsored by NCCUSL and the
    ALI, which has been the law in every state for some 50 years. We are
    not undertaking to address non-uniform provisions that individual
    states may adopt and elect to include in the body of their state
    commercial code.

[^3]: 69 Fed. Reg. at 1913.