Opinion ID: 76988
Heading Depth: 3
Heading Rank: 4

Heading: The Georgia Act

Text: The next question is whether the Georgia Act falls within the above preemptive scope of § 27(a). The Act contains a severability provision, and thus we proceed section-by-section through the Act.24 Obviously, § 27(a) expressly preempts certain state legislation. For example, if Georgia had enacted legislation that said “out-of-state banks cannot charge interest rates on any loan greater than Georgia’s 16% cap,” we would have no difficulty determining that such state legislation was expressly preempted by § 27(a). On the other hand, as discussed above, Georgia can regulate a variety of 23 The dissent states that “[p]reemption would be a meaningless doctrine if states could effectively rewrite federal statutes by adding conditions or limitations.” In this case, the Georgia Act does not add a condition or limitation to a federal statute. Instead, as explained herein, the Georgia Act regulates conduct outside the scope of § 27(a). Rather than making preemption the all-powerful force the dissent suggests, we limit federal preemption of the state’s regulation of state banks to what it is intended – preemptive only within the scope of § 27(a). 24 The severability provision provides: “If any provision of this chapter or the application of such provision is found by a court of competent jurisdiction in the United States to be invalid or is found to be superseded by federal law, then the remaining provisions of this chapter shall not be affected, and this chapter shall continue to apply to any other person or circumstance.” Ga. Code Ann. § 16-17-10. 31 collateral activities associated with loans. If Georgia had enacted legislation that precluded felons convicted of fraud from being licensed fiscal agents in loan transactions in Georgia or precluded banks (including out-of-state banks) from employing such felons in Georgia as third-party vendors or service providers to handle loan funds, we would have no difficulty determining that such state legislation was not preempted by § 27(a). None of the parties dispute Georgia’s ability to regulate agency arrangements between in-state felons and out-of-state banks. Likewise, no one disputes Georgia’s ability to regulate in-state businesses, such as the local payday stores in this case. Therefore, the first question is whether the Act, and in particular § 16-17- 2(b)(4), is a prohibited interest-rate limitation on loans between Bankwest and its borrowers or a permitted agency regulation on when non-bank payday stores operating in Georgia may properly serve as agents for out-of-state banks.25 25 In expanding the plain language of § 27(a), the dissent uses these two theories: that restricting an in-state agent is a way “of getting at the principal” and that Georgia may not indirectly restrict the authority that § 27(a) gives out-of-state banks by directly restricting the actions of in-state agents. In our view, these theories implicitly recognize that the Georgia Act does not directly encroach upon the authority granted by § 27(a). They also support our conclusion that the plain language of § 27(a) does not reach the conduct regulated by the Georgia Act. Indeed, the language of § 27(a) says nothing about the loan procurement or collection practices by agents and nothing about agents, much less in-state, non-bank agents of out-of-state banks. Instead, § 27(a) directly restricts only interest-rate limitations and cannot be so expanded to cause indirect preemption of the agency agreement between in-state entities, such as payday stores, and out-of-state banks. 32