Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices 23979

8See also OCC Interpretive Letter No. 866 (Oct.

8, 1999) (opining that state law requirements that

preclude national banks from soliciting trust

business from customers located in states other than

where the bank’s main office is located would be

preempted); OCC Interpretive Letter No. 749 (Sept.

13, 1996) (opining that state law requiring national

banks to be licensed by the state to sell annuities

would be preempted); OCC Interpretive Letter 644

(March 24, 1994) (opining that state registration and

fee requirements imposed on mortgage lenders

would be preempted).

reclaimed leased property, the banks could

not conduct the leasing business. Thus, the

issue presented by your letter is whether

Federal law preempts a state law that

restricts an essential aspect or component of

an activity expressly authorized for a

national bank.

Preemptive effect of Federal law

When the federal government acts within

the sphere of authority conferred upon it by

the Constitution, the Supreme Court has held

that Federal law is paramount over, and thus

preempts, state law. U.S. Const. art. VI, cl. 2

(the Supremacy Clause); Cohen v. Virginia,

19 U.S. (6 Wheat.) 264, 414 (1821) (Marshall,

C.J.). Federal authority over national banks

stems from several constitutional sources,

including the Necessary and Proper Clause

and the Commerce Clause of the United

States Constitution. U.S. Const. art. I, § 8,

cl.3, cl. 18; McCulloch v. Maryland, 17 U.S.

(4 Wheat.) 316, 409 (1819).

The United States Supreme Court has

identified several bases for Federal

preemption of state law. First, Congress may

enact a statute that preempts state law. E.g.,

Jones v. Rath Packing Co., 430 U.S. 519

(1977). Second, a Federal statute may create

a scheme of Federal regulation ‘‘so pervasive

as to make reasonable the inference that

Congress left no room for the States to

supplement it.’’ Rice v. Norman Williams

Co., 458 U.S. 654, 659 (1982). Third, the state

law may conflict with a Federal law. See,

e.g., Franklin National Bank, supra; Davis v.

Elmira Savings Bank, 161 U.S. 275 (1896).

In elaborating on the concept of conflict,

the Supreme Court has recognized that

conflict may exist even where compliance

with both Federal and state law is possible.

The Barnett court recognized that—

Federal law may be in ‘‘irreconcilable

conflict’’ with state law. Rice v. Norman

Williams Co., 458 U.S. 654, 659 (1982).

Compliance with both statutes, for example,

may be a ‘‘physical impossibility,’’ Florida

Lime & Avocado Growers, Inc. v. Paul, 373

U.S. 132, 142–143 (1963); or, the state law

may ‘‘stan[d] as an obstacle to the

accomplishment and execution of the full

purposes and objectives of Congress.’’ Hines

v. Davidowitz, 312 U.S. 52, 67 (1941).

Barnett Bank v. Nelson, 517 U.S. 25, 31

(1996) (emphasis added).

The Supreme Court has recognized that

state law generally should not limit powers

granted by Congress—

In using the word ‘‘powers,’’ the statute

chooses a legal concept that, in the context

of national bank legislation, has a history.

That history is one of interpreting grants of

both enumerated and incidental ‘‘powers’’ to

national banks as grants of authority not

normally limited by, but rather ordinarily

preempting, contrary state law.

Barnett, 517 U.S. at 32. See also Bank One

v. Guttau, 190 F.3d 844, 847 (8th Cir.1999).

In determining whether a state law stands

as an obstacle to a national bank’s exercise

of a Federally authorized power, the

Supreme Court has evaluated whether a state

statute interferes with the ability of a national

bank to exercise that power. The Barnett

Court stated that—

In defining the pre-emptive scope of

statutes and regulations granting a power to

national banks, these cases [i.e., national

bank preemption cases] take the view that

normally Congress would not want States to

forbid, or to impair significantly, the exercise

of a power that Congress explicitly granted.

To say this is not to deprive States of the

power to regulate national banks, where

* * * doing so does not prevent or

significantly interfere with the national

bank’s exercise of its powers.

Barnett, 517 U.S. at 33.

The Court has held that Federal law

preempts not only state laws that purport to

prohibit a national bank from engaging in an

activity permissible under Federal law but

also state laws that condition the exercise by

a national bank of a Federally authorized

activity.

[W]here Congress has not expressly

conditioned the grant of ‘power’ upon a grant

of state permission, the Court has ordinarily

found that no such condition applies. In

Franklin Nat. Bank, the Court made this

point explicit. It held that Congress did not

intend to subject national banks’ power to

local restrictions because the federal powergranting statute there in question contained

‘no indication that Congress[so] intended

* * * as it has done by express language in

several other instances.’

Barnett, 517 U.S. at 34 (citations omitted;

emphasis in original).

Thus, a conflict between state law and

Federal law need not be complete in order for

Federal law to have preemptive effect. If a

state law places limits on an unrestricted

grant of authority under Federal law, the

state law will be preempted.8

Application to Ohio law

In disposing of reclaimed property,

national banks, like any other businesses,

will endeavor to maximize their recovery on

the property by disposing of it in the manner

that will bring the highest return. In the case

of national banks, the ordinary motivation to

maximize return and minimize loss is

reinforced by the legal obligation to operate

in a safe and sound manner. National banks

that engage in the business of automobile

leasing are required by regulation to liquidate

or re-lease such property as soon as

practicable. 12 CFR 23.4(c). This requirement

is contained in a section of the OCC’s

regulations designed ensure that national

banks limit their exposure by conducting

their leasing businesses in a safe and sound

manner. See 12 CFR Part 23. A state law that

prohibits a bank from disposing of off-lease

property in the way that is most

economically beneficial not only limits the

bank’s exercise of its Federally authorized

power, but also increases the bank’s loss

exposure in a manner that is inconsistent

with safe and sound banking principles.

While the Ohio law, as interpreted by the

OBMV, does not prohibit a national bank

from disposing of reclaimed vehicles, it does

restrict national banks from disposing of

leased vehicles in one of the usual and

customary ways of doing so, namely, selling

directly to the public. You have represented

that the Banks’ experience indicates that

selling reclaimed vehicles directly to the

public is the best way to recover vehicle

costs. The OBMV has interpreted Ohio law

to prohibit lessors from selling reclaimed

vehicles at non-dealer auctions.

In our opinion, to the extent it is

interpreted and applied in this manner, Ohio

law frustrates the Banks’ ability to operate

their leasing businesses in an economically

efficient manner consistent with safe and

sound banking principles. Applying the

standards set forth in Barnett, the state law

significantly interferes with the Banks’

exercise of their Federal powers. Therefore,

it is our opinion that Federal law preempts

the Ohio statute as interpreted by the OBMV.

Our conclusions are based on the facts and

representations made in your letter. Any

material change in facts or circumstances

could affect the conclusions stated in this

letter.

Sincerely,

Julie L. Williams,

First Senior Deputy Comptroller and Chief

Counsel.

[FR Doc. 01–11744 Filed 5–9–01; 8:45 am]

BILLING CODE 4810–33–P

DEPARTMENT OF VETERANS

AFFAIRS

Advisory Committee on Prosthetics

and Special-Disabilities Programs;

Notice of Meeting

The Department of Veterans Affairs

(VA) gives notice under Public Law 92–

463 that a meeting of the Advisory

Committee on Prosthetics and SpecialDisabilities Programs will be held

Tuesday and Wednesday, May 22–23,

2001, at VA Headquarters, Room 230,

810 Vermont Avenue, NW.,

Washington, DC. The May 22 session

will convene at 8 a.m. and adjourn at 4

p.m. and the May 23 session will

convene at 8 a.m. and adjourn at 12

noon. The purpose of the Committee is

to advise the Department on its

prosthetic programs designed to provide

state-of-the-art prosthetics and the

associated rehabilitation research,

development, and evaluation of such

technology. The Committee also advises

the Department on special disability

programs which are defined as any

program administered by the Secretary

to serve veterans with spinal cord

injury, blindness or vision impairment,

loss of or loss of use of extremities,

deafness or hearing impairment, or

23980 Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices

other serious incapacities in terms of

daily life functions.

On the morning of May 22, the

Committee will hold a joint meeting

with the Veterans’ Advisory Committee

on Rehabilitation to discuss mutual

issues and concerns. Both Committees

will also receive a briefing on the

current status of the rehabilitation bed

issue by the Chief Consultant of the

Rehabilitation Strategic Healthcare

Group. At the conclusion of the joint

meeting, the Advisory Committee on

Prosthetics and Special-Disabilities

Programs will receive briefings by the

National Program Directors of the

Special-Disabilities Programs regarding

the status of their activities over the last

six months. In the afternoon, a briefing

concerning the current status of VA’s

Capacity Report will be presented by the

newly appointed Clinical Coordinator or

her designee. On the morning of May

23, the Committee will continue to

receive briefings by the National

Program Directors of the special

disability programs, i.e., spinal cord

injury, blind rehabilitation, audiology

and speech pathology, and prosthetics.

The meeting is open to the public. For

those wishing to attend, please contact

Ms. Kathy Pessagno, Veterans Health

Administration (113), Department of

Veterans Affairs, 810 Vermont Avenue,

NW., Washington, DC 20420, at (202)

273–8512, prior to the meeting.

Dated: May 2, 2001.

By Direction of the Secretary.

Ventris C. Gibson,

Committee Management Officer.

[FR Doc. 01–11746 Filed 5–9–01; 8:45 am]

BILLING CODE 8320–01–M