Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices 23977

1Ohio Rev. Code Ann. § 4517.

2 12 U.S.C. 24 (Seventh) and 12 U.S.C. 24 (Tenth).

Form/schedule Recordkeeping Learning about the law or the form

Preparing, copying, assembling and sending the form

to the IRS

Schedule N (5471) ............................. 8 hr., 22 min .................................... 2 hr., 28 min .................................... 2 hr., 43 min.

Schedule O (5471) ............................. 10 hr., 45 min .................................. 24 min .............................................. 35 min.

Frequency of Response: Annually.

Estimated Total Reporting/

Recordkeeping Burden: 6,665,205 hours.

OMB Number: 1545–0954.

Form Number: IRS Form 1120–ND.

Type of Review: Extension.

Title: Return for Nuclear

Decommissioning Funds and Certain

Related Persons.

Description: A nuclear utility files

Form 1120–ND to report the income and

taxes of a fund set up by the public

utility to provide cash for dismantling of

the nuclear power plant. The IRS uses

Form 1120–ND to determine if the fund

income taxes are correctly computed

and if a person related to the fund or the

nuclear utility must pay taxes on selfdealing.

Respondents: Business or other forprofit.

Estimated Number of Respondents/

Recordkeepers: 100.

Estimated Burden Hours Per

Respondent/Recordkeeper:

Recordkeeping—23 hr., 12 min.

Learning about the law or the form—3

hr., 7 min.

Preparing the form—5 hr., 30 min.

Copying, assembling, and sending the

form to the IRS—32 min.

Frequency of Response: Annually.

Estimated Total Reporting/

Recordkeeping Burden: 3,235 hours.

OMB Number: 1545–1038.

Form Number: IRS Form 8703.

Type of Review: Extension.

Title: Annual Certification of a

Residential Rental Project.

Description: Operators of qualified

residential projects will use to certify

annually that their projects meet the

requirements of Internal Revenue Code

(IRC) section 142(d). Operators are

required to file this certification under

section 142(d)(7).

Respondents: Business or other forprofit.

Estimated Number of Respondents/

Recordkeepers: 6,000.

Estimated Burden Hours Per

Respondent/Recordkeeper:

Recordkeeping—3 hr., 49 min.

Learning about the law or the form—1

hr., 17 min.

Preparing and sending the form to the

IRS—1 hr., 24 min.

Frequency of Response: Annually.

Estimated Total Reporting/

Recordkeeping Burden: 39,180 hours.

OMB Number: 1545–1189.

Form Number: IRS Form 8819.

Type of Review: Extension.

Title: Dollar Election Under Section

985.

Description: Form 8819 is filed by

U.S. and foreign businesses to elect the

U.S. dollar as their functional currency

or as the functional currency of their

controlled entities. The IRS uses Form

8819 to determine if the election is

properly made.

Respondents: Business or other forprofit.

Estimated Number of Respondents/

Recordkeepers: 1,500.

Estimated Burden Hours Per

Respondent/Recordkeeper:

Recordkeeping—2 hr., 52 min.

Learning about the law or the form—1

hr., 17 min.

Preparing and sending the form to the

IRS—1 hr., 23 min.

Frequency of Response: On occasion.

Estimated Total Reporting/

Recordkeeping Burden: 8,340 hours.

Clearance Officer: Garrick Shear,

Internal Revenue Service, Room 5244,

1111 Constitution Avenue, NW.,

Washington, DC 20224.

OMB Reviewer: Alexander T. Hunt

(202) 395–7860, Office of Management

and Budget, Room 10202, New

Executive Office Building, Washington,

DC 20503.

Lois K. Holland,

Departmental Reports, Management Officer.

[FR Doc. 01–11822 Filed 5–9–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

[Docket No. 01–09]

Preemption Opinion

AGENCY: Office of the Comptroller of the

Currency, Treasury.

ACTION: Notice.

SUMMARY: The Office of the Comptroller

of the Currency (OCC) is publishing its

response to a written request for the

OCC’s opinion of whether Federal law

would preempt certain provisions of

Ohio law that limit the ability of

national banks to engage in the business

of leasing automobiles. The OCC has

determined that the state law

provisions, as applied, would be

preempted under Federal law.

FOR FURTHER INFORMATION CONTACT:

MaryAnn Nash, Senior Attorney, or

Mark Tenhundfeld, Assistant Director,

Legislative and Regulatory Activities

Division, (202) 874–5090.

SUPPLEMENTARY INFORMATION: The

request for a preemption opinion was

submitted by two national banks that

engage in the business of motor vehicle

leasing in Ohio (collectively, the

Requester). As part of that business, the

Requester disposes of vehicles that

come off lease at the end of the lease

term or as a result of early termination

or the lessor’s default. The Requester

seeks to sell these vehicles directly to

the public in order to obtain the highest

price.

On November 12, 1993, the Registrar

of the Ohio Bureau of Motor Vehicles

(OBMV) issued a memorandum

concluding that section 4517 of the

Ohio Revised Code 1 prohibits the

public sale of reclaimed leased vehicles.

The memorandum interpreted Ohio law

to permit direct sales to the public in

the case of repossessed vehicles, but

then concluded that vehicles reclaimed

from a lessor for non-payment were not

considered repossessed vehicles. As a

result of this interpretation, reclaimed

leased vehicles can only be sold at

wholesale to persons licensed under

section 4517 as ‘‘dealers.’’

The Requester has asked for the OCC’s

opinion on whether the National Bank

Act would preempt section 4517 as

interpreted by the OBMV. The National

Bank Act authorizes national banks to

engage in leasing activities consistent

with the provisions of 12 CFR 23.2 The

Requester asserts that this authority

includes the authority to dispose of

reclaimed or off-lease vehicles in the

manner that is economically most

beneficial. The Requester further asserts

that the OBMV’s construction of Ohio

23978 Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices

3 12 U.S.C. 43.

4The Banks state that selling reclaimed

automobiles directly to the public nets the Banks

on average $1500 more per vehicle than selling the

vehicles at wholesale auctions, that is auctions in

which only automobile dealers participate. Arguing

in support of the Banks’ position, one commenter

suggested that this differential is supported by an

analysis of prices in the November 2000 edition of

the Black Book National Auto Research Official

Used Car Market Guide Monthly.

5The OBMV memorandum appears to interpret

section 4517 of the Ohio Revised Code. That section

generally provides that no person shall—

Engage in the business of offering for sale,

displaying for sale, or selling at retail or wholesale

used motor vehicles or assume to engage in that

business, unless the person is licensed as a dealer

under sections 4517.01 to 4517.45 of the Revised

Code, or is a salesperson licensed under those

sections and employed by a licensed used motor

vehicle dealer or licensed new motor vehicle

dealer.’’

Ohio Rev. Code Ann. § 4517.02(A)(2)(Anderson

1999).

The law provides an exception for ‘‘mortgagees

selling at retail only those motor vehicles that have

come into their possession by a default in the terms

of the mortgage contract.’’ Ohio Rev. Code Ann.

§ 4517.02(A)(2)(Anderson 1999). Ohio law provides

no similar exception for reclaimed leased vehicles.

6 65 FR 63916 (October 25, 2000) (the Notice). As

stated in the Notice, section 114 of the Riegle-Neal

Interstate Banking and Branching Efficiency Act of

1994 (Pub. L. 103–328, sec. 114, 108 Stat. 2338,

2366–68 (1994), codified at 12 U.S.C. 43) requires

the OCC to publish notice in the Federal Register

before issuing a final written opinion about the

preemptive effect of Federal law in the areas of

community reinvestment, consumer protection, fair

lending, and the establishment of interstate

branches. The OCC decided to publish the notice

and invite comments on the issues raised in your

letter without making a determination as to whether

section 114 applies to your request.

7 Your letter does not indicate on which source

of authority the Banks rely in conducting the

leasing activities in question.

law impairs its ability to exercise its

Federally authorized power.

Section 114 of the Riegle-Neal

Interstate Banking and Branching

Efficiency Act of 1994 generally requires

the OCC to publish notice in the Federal

Register requests for preemption

opinions in one of the four specified

areas: community reinvestment,

consumer protection, fair lending, or the

establishment of intrastate branches.3

Section 114 also requires the OCC to

publish any final opinion letter in

which the OCC concludes that federal

law preempts a state law in one of these

four areas. Without expressly

determining whether section 114

applied to this request, the OCC

published a Notice of Request for

Preemption Determination dated

October 16, 2000. The OCC is

publishing its response to the request as

an appendix to this notice.

As is explained in greater detail in the

response, the OCC agrees that national

banks, as part of their authority to

engage in the business of leasing

automobiles under 12 U.S.C. 24

(Seventh) and 12 U.S.C. 24 (Tenth) may

sell reclaimed or off-lease vehicles in

the manner that is most economically

beneficial. The OCC further agrees that

the Ohio law, as interpreted by the

OBMV, would be preempted, because it

would frustrate the ability of national

banks to operate their leasing businesses

in an economically efficient manner

consistent with safe and sound banking

principles.

Dated: May 2, 2001.

John D. Hawke, Jr.,

Comptroller of the Currency.

Appendix

May 3, 2001.

Thomas A. Plant, Senior Vice President,

Assistant General Counsel, National City

Bank, 1900 East Ninth Street, Cleveland,

Ohio 44114–3484.

Re: Request for Preemption Determination

Dear Mr. Plant:

This responds to your letter dated

September 14, 2000, filed on behalf of

National City Bank, Cleveland, Ohio and

National City Bank of Indiana, Indianapolis,

Indiana (the Banks). The Banks are whollyowned subsidiaries of National City

Corporation, a financial holding company

headquartered in Cleveland, Ohio. In that

letter, you request our opinion on whether

Federal law would preempt certain

provisions of Ohio law that limit the manner

in which reclaimed leased vehicles may be

sold. For the reasons discussed below, it is

our opinion that Federal law would preempt

those provisions.

Background

The Banks are engaged in the business of

leasing automobiles. As part of the leasing

business, the Banks dispose of vehicles that

come off lease at the end of the lease term

or as a result of early termination or the

lessor’s default. The Banks want to dispose

of these vehicles in the manner they believe

will result in the highest sales price in order

to avoid or limit the losses taken on returned

vehicles. The Banks assert that selling

reclaimed automobiles directly to the public

at auction typically yields the best price.4

On November 12, 1993, the Ohio Bureau of

Motor Vehicles (the OBMV) issued a

memorandum that effectively prohibited the

public sale of reclaimed leased vehicles. The

OBMV interpreted Ohio law to permit direct

sales to the public only in the case of

repossessed vehicles.5 The memorandum

specifically states that leased vehicles

reclaimed from the lessor for non-payment

are not considered repossessed vehicles.

Since the issuance of that memorandum, the

Banks have been required to sell their

reclaimed or off-lease vehicles only at

wholesale auctions to dealers licensed under

Ohio law.

The Banks assert that the OBMV’s

construction of the Ohio law to prohibit

public sales of reclaimed lease vehicles

impairs their ability to exercise their leasing

authority. The Banks have asked the OCC for

its opinion on whether the National Bank Act

preempts chapter 4517 of the Ohio Revised

Code as interpreted by the OBMV.

On October 25, 2000, the OCC published

a notice of your request in the Federal

Register (Notice),6 inviting interested parties

to comment on whether federal law preempts

the Ohio law. The OCC received seven

comments in response to the Notice. Six

commenters opined that Federal law

preempts the type of state law in question.

One commenter asserted that it does not.

Each of the commenters who thought that

federal law preempts the Ohio law cited the

authority of national banks under 12 U.S.C.

24 (Seventh) to engage in leasing activities

and noted that Federal law preempts state

laws that purport to restrict an activity that

is authorized by Federal law. Several

commenters offered factual support for the

assertion that selling reclaimed vehicles

directly to the public generally yields a

higher price.

The Ohio Department of Public Safety

(OPDS) filed the only comment letter

asserting that Federal law does not preempt

the Ohio law. In that letter, the ODPS argued

that there is no basis for preemption because

the Ohio statute in question does not conflict

with Federal law.

Analysis

Permissibility of the activity

It is well established that national banks

are authorized to engage in the business of

leasing automobiles. M&M Leasing

Corporation v. Seattle First National Bank,

563 F. 2d 1377 (9th Cir. 1977). In M&M

Leasing, the court determined that personal

property leasing was a permissible activity

for national banks because it was the

functional equivalent of lending, an express

power under the National Bank Act, 12

U.S.C. 24 (Seventh). Id. at 1382. In 1987,

Congress specifically authorized national

banks to lease personal property. 12 U.S.C.

24 (Tenth).7 See also 12 CFR Part 23 (OCC

regulation authorizing leasing for national

banks and establishing requirements

applicable to leasing activities conducted

pursuant to 12 U.S.C. 24 (Seventh) and 12

U.S.C. 24 (Tenth)).

The authority to engage in the business of

leasing includes the authority to dispose of

leased property at the end of the lease. Courts

have long recognized the ability of national

banks to engage in the component activities

of a permissible business. See Franklin Nat’l.

Bank v. New York, 347 U.S. 373 (1954)

(national banks may advertise bank services);

Auten v. United States Nat’l. Bank, 174 U.S.

125 (1899) (national bank may borrow

money); Arnold Tours, Inc. v. Camp, 472

F.2d 427 (1st Cir. 1972) (activity is

permissible if it is convenient or useful to the

business of banking). In these cases, the

courts’ holdings relied on whether the

activity in question was ‘‘useful’’ to national

banks in exercising their express powers.

In the situation you present, clearly the

ability to dispose of reclaimed lease property

is useful to banks engaging in leasing

activities. Without the ability to dispose of

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