Opinion ID: 779054
Heading Depth: 3
Heading Rank: 1

Heading: Preemption of Section 704.080

Text: 24 Federal law preempts state law where Congress' intent to preempt is explicitly stated in the statute's language.... Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977). Federal regulations have no less preemptive effect than federal statutes. Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). 25 In 1997, the OTS issued 12 C.F.R. § 557.11, which asserted its authority under HOLA to promulgate regulations that preempt state laws affecting federal savings associations. The regulation provides: 26 OTS hereby occupies the entire field of federal savings associations' deposit-related regulations. OTS intends to give federal savings associations maximum flexibility to exercise deposit-related powers according to a uniform federal scheme of regulation. Federal savings associations may exercise deposit-related powers as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise effect deposit activities, except to the extent provided in § 557.13. 27 The OTS then goes on to give some examples of state laws that are preempted by Section 557.11, including state laws purporting to impose requirements governing abandoned or dormant accounts, checking accounts, disclosure requirements, funds availability, savings account orders of withdrawal, and service charges and fees. 12 C.F.R. § 557.12. The OTS regulations also provide that certain types of state law are not preempted, if they only incidentally affect deposit-related activities or are otherwise consistent with the purposes of Section 557.11; these include state contract and commercial law, tort law and criminal law. 12 C.F.R. § 557.13. 28 We agree that plaintiffs' claim under California Civil Procedure Code § 704.080 is preempted by these regulations. This state law, which exempts Social Security and SSI benefits from any enforcement action, would impose requirements governing checking accounts because it would prohibit the use of certain deposits to the accounts to clear overdrafts and mandate the type of disclosures a bank must make regarding account and deposit transactions. It would also impose requirements regarding funds availability by prohibiting federal savings associations from treating certain benefits as available to clear overdrafts and pay fees. Finally, it would impose requirements governing service charges and fees, because it would prohibit the bank from deducting overdraft fees from directly deposited benefits. By imposing requirements governing checking accounts, funds availability and service charges and fees, Section 704.080 falls within the specific categories of laws that are preempted under Section 557.12.