Court Opinion

ID: 9637921
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:26:25.758042+00
Date Added: 2024-06-11T18:10:01.915762
License: Public Domain

POLLOCK, J.,
dissenting.
This appeal poses the question whether a national bank located in South Dakota may impose a late charge on a credit-card customer who resides in New Jersey, if South Dakota permits the charge, but New Jersey does not. More specifically, the appeal focuses on whether the definition of “interest” in the National Bank Act (NBA), 12 U.S.C.A § 85 (section 85), includes late charges, and, if so, whether that statute preempts the New Jersey Retail Installment Sales Act of 1960, N.J.S.A 17:16C-1 to -94 (RISA).
In a class-action complaint brought on behalf of himself and other Citibank credit cardholders, petitioner, Marc Sherman, asserts that the RISA precludes defendant, Citibank (South Dakota), NA (Citibank), a national banking association located in South Dakota, from imposing late charges on cardholders located in New Jersey. The Law Division granted Citibank’s motion to dismiss the complaint with prejudice. The Appellate Division affirmed. 272 N.J.Super. 435, 640 A.2d 325. The majority reverses. I dissent.
-I-
Because the appeal arises from the grant of Citibank’s motion to dismiss, I accept as true all facts alleged in the complaint. See Bozza v. Vornado, Inc., 42 N.J. 355, 357-58, 200 A.2d 777 (1964). Sherman alleges that in 1989 Citibank sent to him at his New Jersey residence an application, Visa card, and Card Member Agreement. The record, however, does not include copies of these instruments. According to the complaint, the annual percentage-rate finance charge (periodic interest) is 19.8 percent. In addition, *73a cardholder who does not make the minimum payment within twenty-five days of the due date is subject to a fixed late-payment fee regardless of the amount of the outstanding balance or delinquent payment. Twice Sherman was late in making his monthly payment. Each time, Citibank imposed a late charge.
Sherman claims that the late charges violate various provisions of New Jersey’s Consumer Fraud Act, N.J.S.A 56:8-2 and -19, and of the RISA, N.J.S.A 17:16C-50 and -54. The Fraud Act prohibits undisclosed late charges, and the RISA prohibits delinquency charges on revolving credit accounts. He also claims that the late fees constitute a common-law breach of contract and conversion. All claims depend on whether Citibank may impose late charges as interest.
The initial .task is to determine the meaning of “interest” in section 85. That section permits national banks to charge borrowers “interest at the rate allowed by the laws of the State ... where the bank is located.” 12 U.S.C.A § 85. South Dakota, the state where Citibank is located, defines “interest” to include late charges: “Interest is the compensation allowed by law for the use, or forbearance, or detention of money or its equivalent, including without limitation ... charges for unanticipated late payments, and any other charges, direct or indirect, as an incident to or as a condition of the extension of credit.” S.D. Codified Laws Ann. § 54-3-1 (1995). Citibank claims that as a South Dakota bank it may impose late charges on defaulting customers whether those customers are located in South Dakota, New Jersey, or anywhere else.
Sherman, however, relies on the RISA, which permits credit-card issuers to charge periodic interest, but not late fees: “No retail seller, sales finance company, or holder shall charge, ... directly or indirectly, any further or other amount for costs, charges, insurance premiums, examination, appraisal service, brokerage, commission, expense, interest, discount, fees, fines, penalties or other things of value in connection with ... retail charge accounts____” N.J.S.A 17:160-50. He claims that “interest” in *74section 85 refers to periodic interest, but not to late charges. Consequently, he denies that the RISA conflicts with the NBA.
-II-
Initially dividing the majority and the dissent is the meaning of the word “interest” as used in the NBA. Both agree that “interest” includes periodic interest, the amount paid for the use of money calculated as a percentage of the sum due for a stated period, typically one year. That definition, however, is not exhaustive. The meaning of the word becomes indeterminate at the margins. Webster’s Dictionary, for example, accords “interest” seven definitions, six with subparts. Definition 3(a) defines “interest” as “the price paid for borrowing money generally expressed as a percentage of the amount borrowed paid in one year____” Webster’s Third New International Dictionary (1976). The use of the adverb “generally” suggests the existence of other definitions. So construed, accepted usage recognizes that “interest” may include charges other than periodic interest. Consistent with that construction, the Supreme Court of California recently concluded that dictionary definitions of “interest” “then current in American legal usage” at the time of the passage of the NBA are broad enough to include late charges. Smiley v. Citibank (South Dakota) N.A, 11 Cal.4th 138, 44 Cal.Rptr.2d 441, 450-51, 900 P.2d 690, 699-700 (1995).
More relevant than the meaning that lexicographers assign to statutory terms is the meaning assigned by the Legislature. To bridge the gap between dictionary definitions and legislative intent, the California Supreme Court apparently assumed that Congress consulted the dictionaries cited in Smiley. Dictionaries, however, are not essential to the judicial search for the meaning of statutory terms. Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.1945). To illustrate, when deciding that “interest” in the NBA includes late charges, the Colorado Supreme Court recently concluded “that the common dictionary definitions are not sufficiently *75precise to settle the question before us.” Copeland v. MBNA America, N.A., 907 P.2d 87, 91 (1995).
Absent an express statutory definition, courts may glean the meaning of legislative language from sources such as statutory history, purpose, and structure. In ascertaining the meaning of a statutory term, a court’s task is not to create its own definition, but to ascertain the definition intended by the Legislature. E.g., Norfolk & Western Ry. Co. v. American Train Dispatchers Ass’n, 499 U.S. 117, 128, 111 S.Ct. 1156, 1163, 113 L.Ed.2d 95, 106-07 (1991); Roig v. Kelsey, 135 N.J. 500, 515, 641 A.2d 248 (1994). The NBA does not expressly define “interest.” Nor does a fair reading of the legislative history of the statute disclose the intended meaning of that term. Accordingly, I search elsewhere for the word’s meaning in the NBA.
The early history of national banking sheds some light on congressional intent in the NBA Before enacting the NBA, Congress twice had tried unsuccessfully to create a Bank of the United States. Each time, however, states’-rights advocates defeated attempts to renew the Bank’s charter. See John J. Knox, A History of Banking in the United States 35-48, 51-71 (1900) (discussing creation and dissolution of Bank of the United States and Second Bank of the United States); Bray Hammond, Banks and Politics in America 197-226, 369-450 (1957) (same). Then, in 1864, responding to the economic turmoil created by the Civil War, Congress adopted the NBA Among other things, the NBA re-established a system of national banks. See Knox, supra, at 91-111 (discussing NBA); Hammond, supra, at 718-34 (same). To overcome local prejudice in favor of state banks, Congress included section 85. By mandating interest-rate parity in section 85, Congress sought to provide a level playing field for national banks throughout the United States. See KnOx, supra, at 235-69. Athough helpful, the history of the NBA is not dispositive of the meaning of interest in the NBA Copeland, supra, at 91.
*76The United States Supreme Court first construed section 85 in Tiffany v. National Bank of Missouri, 85 U.S. (18 Wall.) 409, 21 L.Ed. 862 (1873). The plaintiff, Tiffany, challenged the legality of the ten-percent interest rate charged to Missouri borrowers by the defendant, National Bank of Missouri. Missouri’s usury laws limited to eight percent the interest rate that state-chartered banks could charge, but allowed non-bank lenders to charge interest at a rate of ten percent. Id. at 411, 21 L.Ed. at 863. Reasoning that section 85 permitted the defendant national bank to charge interest at a “rate allowed by the laws of [Missouri],” the Court held that the bank could charge the highest interest rate that could be charged by any lender in that state. Id. at 411-13, 21 L.Ed. at 863-64. In so holding, the Court required states to treat national banks as a “most favored lender.” Id. at 413, 21 L.Ed. at 864. Although the Court acknowledged that its holding might disadvantage state-chartered banks, it relied on the overriding congressional intent to create a strong national banking system immune from unfriendly state legislation. Id. at 412-13, 21 L.Ed. at 863-64. “National banks,” the Court declared, are “national favorites.” Id. at 413, 21 L.Ed. at 864.
Over a century later, the Court revisited section 85 in Marquette National Bank v. First of Omaha Service Corp., 439 U.S. 299, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978). The plaintiff, Marquette National Bank of Minnesota (Marquette), challenged the interest rate charged by a Nebraska national bank to Minnesota credit cardholders. Minnesota law prohibited banks in that state from charging more than twelve-percent on credit-card balances, but allowed them to charge an- annual fee up to $15. Id. at 302-03, 99 S.Ct. at 542-43, 58 L.Ed.2d at 538. Nebraska law, however, allowed banks to charge up to eighteen percent on outstanding credit-card balances below $1,000. Id. at 302, 99 S.Ct. at 542, 58 L.Ed.2d at 538. First National Bank of Omaha (Omaha Bank), a national bank chartered in Nebraska, charged eighteen percent interest on outstanding balances of Minnesota credit cardholders. See id. at 304, 99 S.Ct. at 543, 58 L.Ed.2d at 539. Marquette claimed it was losing customers to Omaha Bank because “Mar*77quette was forced by the low rate of interest permissible under Minnesota law to charge a $10 annual fee for the use of its credit cards.” Ibid.
The Court determined that although the cardholders lived and made credit-card purchases in Minnesota, Omaha Bank was “located” in Nebraska. Id. at 310-13, 99 S.Ct. at 546-48, 58 L.Ed.2d at 543-45. Consequently, Omaha Bank could charge the favorable Nebraska rate to its customers in Minnesota. Id. at 313-14, 99 S.Ct. at 548, 58 L.Ed.2d at 545. As in Tiffany, supra, 85 U.S. at 412-13, 21 L.Ed. at 863-64, the Court noted the clear congressional intent to favor national banks, even at the expense of state banks. Marquette Nat’l Bank, supra, 439 U.S. at 314-18, 99 S.Ct. at 548-50, 58 L.Ed.2d at 545-48.
Although Tiffany and Marquette discussed permissible rates of interest under section 85, they did not define “interest.” Recent federal decisions, however, illuminate the meaning of interest in section 85. See Greenwood Trust Co. v. Massachusetts, 971 F.2d 818 (1st Cir.1992), cert. denied, 506 U.S. 1052, 113 S.Ct. 974, 122 L.Ed.2d 129 (1993); Tikkanen v. Citibank (South Dakota), N.A., 801 F.Supp. 270 (D.Minn.1992).
Greenwood Trust involved a federally-insured state bank chartered in Delaware that issued credit cards throughout the United States, including Massachusetts. 971 F.2d at 821. The bank, Greenwood Trust Company, imposed late charges on its delinquent credit-card customers. Delaware law, like South Dakota law, characterizes late charges,as. “interest.” Id. at 829. The state claimed that Massachusetts’ consumer-protection law, like the RISA, prohibited late charges. Id. at 821. Greenwood Trust argued, however, that by reference to the law of Delaware, the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA) authorized it to charge late fees as interest.
Section 521 of the DIDA grants the same protection to federally-insured state banks that section 85 of the NBA provides to national banks. Section 521 provides that any federally-insured state bank may,
*78notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where such State bank ... is located or at the rate allowed by the laws of the State ... where the bank is located, whichever may be the greater____
[ 12 U.S.C.A. § 1831d(a)]
The United States Court of Appeals for the First Circuit ruled that under section 521 Greenwood Trust could charge its Massachusetts cardholders the highest interest rate allowed by Delaware law. Greenwood Trust, supra, 971 F.2d at 827. The court determined that both Delaware’s express statutory provision, Del. Code Ann. tit. 5, § 950 (1994), and federal common law support a broad definition of “interest” that includes late fees. 971 F.2d at 829-30 (citing American Timber & Trading Co. v. First Nat’l Bank, 690 F.2d 781, 787-88 (9th Cir.1982) (compensating balance requirement); Fisher v. First Nat’l Bank, 548 F.2d 255, 258-61 (8th Cir.1977) (cash-advance fee); Panos v. Smith, 116 F.2d 445, 446-47 (6th Cir.1940) (mortgage, taxes, and recording fees); Cronkleton v. Hall, 66 F.2d 384, 387 (8th Cir.) (bonus or commission), cert. denied, 290 U.S. 685, 54 S.Ct. 121, 78 L.Ed. 590 (1933); Nelson v. Citibank (South Dakota) N.A., 794 F.Supp. 312, 318 (D.Minn.1992) (late fees)). Thus, the court concluded that for purposes of section 521, “interest” includes late fees, and that Greenwood Trust could “export” those charges authorized by Delaware law to Massachusetts. Greenwood Trust, supra, 971 F.2d at 831.
The vast majority of state and federal courts have followed Greenwood Trust. E.g., Ament v. PNC Nat’l Bank, 849 F.Supp. 1015 (W.D.Pa.1994); Watson v. First Union Nat’l Bank, 837 F.Supp. 146 (D.S.C.1993); Goehl v. Mellon Bank, 825 F.Supp. 1239 (E.D.Pa.1993); Smiley, supra, 44 Cal.Rptr.2d at 453, 900 P.2d at 702; Stoorman v. Greenwood Trust Co., 888 P.2d 289 (Colo.Ct.App.), rehearing denied, (May 26, 1994), cert. granted (Jan. 30, 1995); Copeland, supra, 907 P.2d 87; Hunter v. Green*79wood Trust Co., 272 N.J.Super. 526, 640 A.2d 855 (App.Div.1994); Sherman, supra, 272 N.J.Super. 435, 640 A.2d 325.
Tikkanen, supra, 801 F.Supp. 270, reached the same conclusion under section 85 as Greenwood Trust had reached under section 521. In Tikkanen, which is virtually identical to this appeal, the plaintiff argued that section 85’s definition of interest was restrict ed to numerical periodic interest rates and did not include late-payment charges authorized by South Dakota, the defendant national bank’s home state. 801 F.Supp. at 277. The federal district court held, however, that interest under section 85 was not limited to percentage-rate charges and could include fixed late fees. Id. at 276-78. Although the court did not announce a federal definition of interest that included late fees, it held that if a national bank’s home state defines interest to include such fees, then the bank may “export” those fees under section 85. Id. at 279.
Rejecting the Greenwood Trust and Tikkanen line of cases, lower courts in Pennsylvania have held that “interest” does not include late-payment fees. Mazaika v. Bank One, Columbus, N.A., 439 Pa.Super. 95, 653 A.2d 640 (1994), appeal granted, 540 Pa. 638, 659 A.2d 557 (1995); Gadon v. Chase Manhattan Bank, 439 Pa.Super. 210, 653 A.2d 697 (Pa.Super.1995) (following Mazaika). One United States District Court has reached a similar conclusion. Copeland v. MBNA America, N.A, 820 F.Supp. 537 (D.Colo.1993) (denying federal jurisdiction based on complete preemption defense because “ordinary meaning” of interest does not encompass late fees).
In Mazaika, supra, 653 A.2d at 646, a Pennsylvania intermediate appellate court stated that “[i]t would appear beyond peradventure that the plain and ordinary meaning of the term ‘interest’ or ‘interest rate’ does not include late fees, ... or the like which are not levied on a percentage basis.” I find, however, that the meaning of “interest” and “rate of interest” are not as plain as the Mazaika court found them. As the OCC has concluded, infra at 82-83, 668 A.2d at 1059-1060, interest could include all charges for *80the “use or forbearance of money,” including late fees. See Brown v. Hiatts, 82 U.S. (15 Wall.) 177, 185, 21 L.Ed. 128, 131 (1872).
-III-
The modem history of banking has been one of expanding regulation. Banks are subject to regulation by multiple federal agencies. The Comptroller of the Currency, 12 U.S.C.A § 1; the Federal Housing Finance Board, 12 U.S.C.A § 422a; the National Credit Union Administration, 12 U.S.C.A § 1752a; the Federal Deposit Insurance Corporation, 12 U.S.C.A § 1811; the Office of Thrift Supervision, 12 U.S.C.A § 1462a; and the Board of Governors of the Federal Reserve System, 12 U.S.C.A § 248, all regulate various aspects of banking. In addition, banks often are subject to dual regulation by state banking authorities.
With banking, as with other heavily-regulated commercial activities, Congress has recognized that it cannot maintain an efficient regulatory system through constant recourse to the legislative process. See Kenneth C. Davis & Richard J. Pierce, Jr., Administrative Law Treatise § 3.1 (3d ed. 1994) (“It is impossible to draft a statute with sufficient precision and foresight to resolve each of the hundreds of issues that are likely to arise during the life of the statute.”); Cass R. Sunstein, Law and Administration after Chevron, 90 Colum.L.Rev. 2071, 2088 (1990) (“Congress is unable to amend every statute to account for ... changes____”). Consequently, it has authorized administrative agencies to implement specific congressional objectives. When Congress delegates authority to an administrative agency, the judicial role is not to pass on the wisdom of an agency’s decision, but to assure that the agency has not abused its delegated authority. Davis & Pierce, supra, at § 3.3; Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke L.J. 511, 516; Richard J. Pierce, Jr., Chevron & Its Aftermath: Judicial Review of Agency Interpretations of Statutory Provisions, 41 Vand.L.Rev. *81301, 307-08 (1988); Kenneth W. Starr, Judicial Review in the Post-Chevron Era, 3 Yale J. on Reg. 283, 300-04 (1986).
Absent clear indicia of legislative intent, courts often look for guidance to the administrative agency entrusted with the regulation of matters covered by a statute. NationsBank of North Carolina, N.A v. Variable Annuity Life Ins. Co., 513 U.S.-, -, 115 S.Ct. 810, 813-14, 130 L.Ed.2d 740, 748 (1995); Chevron, U.S.A, Inc. v. NRDC, 467 U.S. 837, 842-44, 104 S.Ct. 2778, 278183, 81 L.Ed.2d 694, 702-03 (1984); Blum v. Bacon, 457 U.S. 132, 141, 102 S.Ct. 2355, 2361, 72 L.Ed.2d 728, 736 (1982); Lammers v. Board of Educ., 134 N.J. 264, 274, 633 A.2d 526 (1993); Metromedia, Inc. v. Director, Div. of Taxation, 97 N.J. 313, 327, 478 A.2d 742 (1984). In NationsBank of North Carolina, N.A., supra, 513 U.S. at-, 115 S.Ct. at 813, 130 L.Ed.2d at 747, the United States Supreme Court recently reiterated:
“ ‘It is settled that courts should give great weight to any reasonable construction of a regulatory statute adopted by the agency charged with enforcement of that statute. The Comptroller of the Currency is charged with the enforcement of the banking laws to an extent that warrants the invocation of this principle with respect to his deliberative conclusions as to the meaning of these laws.’ ” Clarke v. Securities Industry Ass’n, 479 U.S. 388, 403-404, 107 S.Ct. 750, 759, 93 L.Ed.2d 757 (1987) (quoting Investment Company Institute v. Camp, 401 U.S. 617, 626-627, 91 S.Ct. 1091, 1097, 28 L.Ed.2d 367 (1971)).
In Chevron, the United States Supreme Court developed a two-part test for determining whether deference to an agency interpretation of a statute is appropriate. First, the statute that the agency purports to interpret must be unclear. 467 U.S. at 842-43, 104 S.Ct. at 2781-82, 81 L.Ed.2d at 703. When Congress has not defined an important statutory term, courts fairly can presume that Congress intended the agency to provide a definition. Id. at 843-44, 104 S.Ct. at 2782, 81 L.Ed.2d at 703; see also Davis & Pierce, supra, at § 3.3 (discussing Chevron and presumption of congressional delegation); Scalia, supra, at 516-17 (same).
In 1864, Congress may not have contemplated specifically that banks would issue credit cards or even that interest would include late fees. Even so, I believe that Congress intended to delegate to the OCC the authority to implement the goals of the NBA Aso likely, Congress intended that in meeting those goals the *82OCC would adapt to the changing needs of banks and their customers. That adaptation foreseeably includes administrative changes in the definition of “interest.” In brief, I believe that federal banking regulators are in a better position than state courts to define the meaning of “interest” in the NBA. That conclusion, in my opinion, also represents sound public policy. On a matter so essential to the national economy as the meaning of “interest” in federal banking legislation, the nation is better served by judicial deference to the judgment of Congress and the banking regulators.
The second part of the Chevron test directs courts to defer to reasonable agency interpretations. 467 U.S. at 844-45, 104 S.Ct. at 2782-83, 81 L.Ed.2d at 704; see also Davis & Pierce, supra, at § 3.3; Scalia, supra, at 516-18. Implicit in the notion of reasonableness is discretion in choosing among alternatives. In defining “interest” to include late charges, the OCC has made a reasonable choice among possible definitions of interest. Of course, if Congress should disagree with the agency’s interpretation, it retains the authority to redefine the term. See, e.g., CFTC v. Schor, 478 U.S. 833, 845-46, 106 S.Ct. 3245, 3254, 92 L.Ed.2d 675, 689 (1986) (suggesting that Congress’s failure to overrule agency supports conclusion that agency definition comports with congressional intent).
The OCC consistently has determined that late-payment and certain other non-periodic fees are interest for purposes of section 85 of the NBA. In a recent interpretive letter, 'the agency concluded that a federal definition of “interest” under section 85 includes late fees. Letter by Julie L. Williams, Chief Counsel (Feb. 17, 1995), 1995 WL 419824 (O.C.C.). Earlier letters, although relying on the law of the national bank’s home state, reached the same conclusion. See Letter by William P. Bowden, Jr., Chief Counsel (Feb. 4, 1992), 1992 WL 136390 (O.C.C.) at *9-*11 (concluding that state law determines fees material to definition of interest) (the Bowden Letter); Letter by Robert B. Serino, Deputy Chief Counsel, Office of the Comptroller of Currency [1988-89 Transfer Binder] Fed.Banking L.Rep. (CCH) ¶ 85,676 at *8378,063 (Aug. 11, 1988) (same) (the Serino Letter); Letter by Charles F. Byrd, Assistant Director, Legal Advisory Services (May 5, 1986), 1986 WL 143937 (O.C.C.) at *3 (concluding that state law determines maximum interest rate). But see Letter from Peter Liebesman, Assistant Director, Bank Operations and Assets Division (Feb. 26, 1993), 1993 WL 501557 (O.C.C.) at *9 (suggesting in dicta that late fees are not material to definition of interest absent state law conclusion to contrary). In sum, the OCC consistently has concluded that if a state allows any lender to charge interest in the form of late-payment fees, a national bank located in that state may charge those fees to its out-of-state borrowers.
To confirm that interest, for purposes of the NBA, includes late fees, the OCC recently promulgated proposed Interpretive Ruling § 7.4001 for inclusion in the Code of Federal Regulations. 60 Fed.Reg. 11924, 11940 (1995) (to be codified at 12 C.F.R. 7.4001) (proposed March 3,1995). The proposed ruling states:
The word “interest” as used in 12 U.S.C. § 85 includes any payment compensating a creditor or prospective creditor for any extension of credit, the making available of a line of credit, or any default or breach by a borrower of a condition upon which credit was extended. It includes, among other things, ... numerical periodic rates, late fees, not sufficient funds fees, overlimit fees, annual fees, cash advance fees, and membership fees.
If adopted, the proposed ruling would further evidence the OCC’s conviction that late fees are interest. The majority’s cavalier dismissal of the proposed ruling, ante at 57-58, 668 A.2d at 1046-1047, fails to consider the ruling’s significance.
The agency’s definition of “interest,” as expressed in its interpretive letters, is clear. The judicial task is to determine whether that interpretation is reasonable. NationsBank, supra, 513 U.S. at-, 115 S.Ct. at 813, 130 L.Ed.2d at 748; Chevron, supra, 467 U.S. at 843-44, 104 S.Ct. at 2782-83, 81 L.Ed.2d at 704. In its February 17, 1995, interpretive letter, supra, the OCC documented early federal case law that defined “interest” as the “compensation allowed by law, or fixed by the parties, for the use or forbearance of money, or as damages for its detention.” Brown, supra, 82 U.S. (15 Wall.) at 185, 21 L.Ed. at 131. The letter then *84concludes that late-payment fees, which legitimately compensate lenders for increased lending costs and risks associated with delinquent borrowers, are interest.
The OCC’s conclusion is reasonable. It permits a national bank to charge any fees related to the use of money, if those charges are authorized by the bank’s home state. That concept of parity comports with the NBA’s goal of preventing discrimination against national banks. No principled reason confines the NBA to periodic interest rates.
Contrary to the protestations of the majority, ante at 57-60, 668 A.2d at 1046-1048, the evolution of the OCC’s analysis does not render its opinion unworthy of judicial deference. Chevron counsels that an agency’s change in a policy determination is not necessarily entitled to less respect because of the change. See 467 U.S. at 868-64, 104 S.Ct. at 2792, 81 L.Ed.2d at 715-16; Scalia, supra, at 517-19 (discussing Chevron’s rejection of. consistency requirement); Starr, supra, at 297-98 (same). Although the agency’s analysis may have evolved over time, the analytical path has consistently led to the conclusion that national banks may export late fees. Late charges, moreover, are sufficiently close to the essence of “interest” to justify the OCC’s decision to include them within the meaning of the word. The prototypical definition of “interest” as periodic interest is broad enough to encompass late charges. See generally Lawrence M. Solan, Judicial Decisions and Linguistic Analysis: Is There a Linguist in the Court?, 73 WaskU.L.Q. 1069 (1995) (discussing definitional and prototypical interpretations of statutory language). I accept the conclusion of the banking regulators that interest for purposes of the NBA may include late charges and other fees charged by lenders in connection with a loan.
-IV-
-A-
Having determined that section 85’s definition of “interest” includes late fees, the next question is whether that definition *85preempts the RISA’s prohibition against the imposition of such fees. More specifically, the question is whether Congress intended that the NBA, as interpreted by the OCC, should preempt state law.
Congress may preempt a state law by expressly stating that it so intends, e.g., Cipollone v. Liggett Group, Inc., 505 U.S. 504, 515-16, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407, 422-23 (1992); by occupying an entire field of regulation, e.g., Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447, 1459 (1947); or by enacting a federal statute that conflicts with a state law, e.g., Hillsborough County, Fla. v. Automated Medical Laboratories, Inc., 471 U.S. 707, 713, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714, 721 (1985); Maryland v. Louisiana, 451 U.S. 725, 747, 101 S.Ct. 2114, 2129, 68 L.Ed.2d 576, 596 (1981).
Section 85 does not contain an express preemption clause. Given the dual regulation of banking by state and federal regulators, Congress may not have occupied completely the field of banking regulation. The question becomes whether section 85’s definition of “interest,” which permits national banks to impose late fees, conflicts with the RISA’s prohibition of such fees.
My analysis begins with the Supremacy Clause of the United States Constitution:
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the • Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
[U.S. Const., art. VI, cl 2.]
Ever since Gibbons v. Ogden, the Supremacy Clause has mandated preemption of state laws that “interfere with, or are contrary to the laws of Congress____” 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824). Notwithstanding the supremacy of federal law, the United States Supreme Court has “never assumed lightly that Congress has derogated state regulation, but instead [has] addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law.” New York *86Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S.-,-, 115 S.Ct. 1671, 1676, 131 L.Ed.2d 695, 704 (1995); see Maryland, supra, 451 U.S. at 747, 101 S.Ct. at 2129, 68 L.Ed.2d at 595; Rice, supra, 331 U.S. at 230, 67 S.Ct. at 1152, 91 L.Ed. at 1459. The Court, however, has found conflict to be preemptive when “compliance with both federal and state [laws] is a physical impossibility.” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217-18, 10 L.Ed.2d 248, 257 (1963). It likewise has recognized preemption of state law when that law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581, 587 (1941). Preemption is not foreclosed, however, merely because a federal statute displaces a traditional subject of state regulation. See Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664, 675 (1982); Greenwood Trust, supra, 971 F.2d at 828. To constrict unduly a federal statute to avoid interference with a state law would subvert the Supremacy Clause.
Against that background, the question recurs whether section 85, which permits a national bank to impose a late fee, and the RISA, which prohibits such a fee, are in conflict. In one sense, to state the question is to answer it. When state law prohibits an act that federal law permits, the conflict is apparent. True, section 85 does not mandate that national banks must charge late fees. The problem arises only when the national bank seeks to impose a late fee. By foregoing late fees, Citibank could avoid the conflict. That analysis, however, begs the question.
As with ascertaining the meaning of “interest,” I find guidance on the question of preemption in the rulings of the OCC. In her February 17, 1995, letter, supra, OCC Chief Counsel Julie Williams ruled:
[W]e reaffirm our previous conclusion that “interest” permitted under section 85 may be charged without reference to whether all or part of it is permissible under the laws of the state where the customer resides. If the law of the state where the *87customer resides is different from the law of the state in which the bank is located, the former law has no effect on what the bank may charge as “interest.”
Accord the Bowden Letter, supra; the Serino Letter, supra; see also Letter by Douglas H. Jones, Deputy General Counsel, FDIC No. 92-47, Fed. Banking L.Rep. (CCH) ¶ 81,534 at 55,730-31 (July 8, 1992) (reaching same conclusion under section 521); Letter by Douglas H. Jones, Deputy General Counsel, FDIC No. 93-27, Fed. Banking L.Rep. (CCH) ¶ 81, 635 at 55, 838-39 (July 12, 1993) (same).
Admittedly, an agency statement according a preemptive effect to a statute is not as persuasive as an express statutory clause. Given the pervasive role that Congress has entrusted to federal banking regulators, however, I would respect consistent regulatory rulings on preemption. City of New York v. FCC, 486 U.S. 57, 64, 108 S.Ct. 1637, 1642, 100 L.Ed.2d 48, 57 (1988) (“[I]f the agency’s choice to pre-empt ‘represents a reasonable accommodation of conflicting policies that were committed to the agency’s care ..., we should not disturb it unless it appears ... that the accommodation is not one that Congress would have sanctioned.’ ”) (quoting U.S. v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908, 915 (1961)).
Federal supremacy in the regulation of credit-card interest charges also makes sense. In many respects, credit cards have replaced the national currency. Residents of one state regularly make credit-card purchases from mail-order retailers in other states. Similarly, they use credit cards to charge meals, lodging, transportation, and other expenses when traveling throughout the nation and the world. Credit cardholders, moreover, can change their state of residence. Given the mobility of credit cardholders and transactions, federal regulation incorporating a bank’s home-state’s law is reasonable. The majority recognizes as much. It writes: “The theory of the NBA, as applied by federal and state courts, is that the borrower’s state usury laws can be discarded because the customer either taking out a loan or using her ‘lender credit card’ partakes in a transaction in the national lender’s home state.” Ante at 68, 668 A.2d at 1052.
*88-B-
Close analysis of New Jersey law, moreover, reveals that the RISA impermissibly interferes with the congressional goal of preventing states from discriminating against national banks. Tiffany, supra, 85 U.S. at 412-13, 21 L.Ed. at 863-64. Although the RISA prohibits certain lenders from imposing late fees on delinquent borrowers, various statutory provisions expressly authorize other lenders to charge such fees. For example, N.J.S.A 17:13-104(b) expressly authorizes credit unions to charge late fees: “A credit union may charge late fees ... not to exceed 20% of the principal balance and interest outstanding----” Similarly, N.J.S.A 17:16C-42(b), A.1995, c. 43, § 1, as recently amended, provides that “[t]he holder of any retail charge account may collect a delinquency or collection charge in an amount not to exceed $10____” Moreover, N.J.S.A 17:9A-59.7 authorizes banks to charge late fees on advance loans. Thus, some New Jersey lenders are authorized expressly to charge late fees.
In 1981, the New Jersey Legislature enacted the State Bank Parity Act (the Parity Act), N.J.S.A 17:13B-1 to -2, which is modelled after section 85. The Parity Act provides: “Notwithstanding any ... statute to the contrary, any bank, savings bank, savings and loan association or credit union may charge a rate of interest ... permitted to any other lender by the laws of this State....” N.J.SA 17:13B-2.
If late fees are interest under the Parity Act, then any New Jersey bank may charge them. On that premise, the RISA would prohibit only national and out-of-state banks, such as Citibank, from charging late fees. That result would discriminate against out-of-state national banks that lend money to New Jersey borrowers. A state law that discriminates against out-of-state national banks conflicts directly with Congress’s goals, and, therefore, is preempted.
The possibility of that conflict raises the question whether late fees are “interest” for purposes of the Parity Act. Title 17, which governs financial institutions, does not expressly define the term. *89The relevant New Jersey statutes send inconsistent signals on the question whether the definition of interest excludes late fees. For example, N.J.S.A 17:13-104(b), the same provision that authorizes credit unions to charge late fees, also authorizes credit unions to charge interest. Similarly, holders of retail charge accounts may charge interest under N.J.S.A 17:16C^0 and late fees under N.J.S.A 17:16C-42. Furthermore, N.J.S.A 17:9A-59.6 discusses interest rates on advance loans, and N.J.S.A 17:9A-59.7 authorizes late fees on those loans.
Although New Jersey statutes apparently distinguish annual interest and late fees, I cannot ignore the Legislature’s unequivocal statement that it enacted the Parity Act as a corollary to section 85. The Assembly Banking and Insurance Committee Statement that accompanied the Parity Act declared that the Act
would give state chartered banks, savings banks, savings and loan associations, and credit unions the same “most-favored-lender” authority that national banks presently enjoy. By the provision of 12 U.S.C. [§] 85, national banks may take interest at the rate allowed by the laws of any state____ The [OCC], who supervises national banks, has interpreted this to mean that national banks may charge interest not only at the rate permitted by state law to banking institutions, but also at the rate for a similar type of loan made by any licensed lender____ This legislation, therefore, provides [similar] parity to state-chartered institutions.
In the Parity Act, the Legislature intended to grant state banking institutions the same benefits that national banks enjoy under the NBA as construed by the OCC. Under the Parity Act, therefore, state banks, like national banks, may charge late fees as interest.
The New Jersey Department of Banking has concluded that because late fees are interest under the NBA they are interest for the purposes of the Parity Act. See Letter from Francis P. Carr, Assistant Commissioner, Department of Banking (Oct. 14, 1994). Although informally expressed, the assistant commissioner’s letter is the department’s only expression of its understanding of the meaning of interest in the Parity Act. Both the state and federal legislative schemes rely on regulation by administrative agencies. Because the Legislature has entrusted the department with the regulation of state banks, the department’s interpretations of state *90banking laws are entitled to judicial deference. Lammers, supra, 134 N.J. at 274, 633 A.2d 526.
Admittedly, the Legislature has not drawn distinct lines; it could have expressed its intent more definitively. We are remitted to finding the Legislature’s intent in a statutory mosaic. The majority sees one picture. I see another.
I conclude that the definition of interest in the Parity Act includes late fees. Under the Parity Act, because credit unions and retailers may charge late fees, “any bank, savings bank, [or] savings and loan association” chartered in New Jersey also may charge such fees.
Because state-chartered banks may charge late fees to New Jersey customers, a state law, such as the RISA that prohibits out-of-state national banks from charging such fees would constitute impermissible discrimination in violation of the Supremacy Clause. In sum, I would hold that the NBA conflicts with, and thus preempts, the RISA
-V-
Interestingly, the majority concludes that in the future out-of-state national banks may impose limited late-payment fees on New Jersey cardholders. The Court so concludes because the 1995 amendment to N.J.S.A. 17:16C-42, L.1995, c. 43, § 1, extends the right to charge late fees of up to $10 to holders of retail charge accounts. For me, however, the source of a national bank’s authority to impose late fees is not the RISA hut the NBA. By declaring that the RISA determines the amount of the late fee that a national bank may charge, the majority has inverted the Supremacy Clause so that state law trumps federal law. The need for uniform regulation of national banks, not misplaced notions of federalism, should prevail.
Ultimately dividing the majority and dissent are differing perceptions of the roles of Congress, federal banking regulators, and state courts in regulating national banks. The majority takes a *91position reminiscent of states’-rights advocates who opposed federal regulation of interstate commerce and of national banks. Banking, however, is integral to the national economy. Credit cards and other innovations such as electronic money transfers have converted consumer lending from a local to a national activity. In that context, the need for federal control is paramount. Until such time as Congress explicitly determines whether interest includes late charges, I would defer to the judgment of the OCC.
-VI-
My colleague, Justice O’Hem, reaches the same result as do I, but through a different analysis. He proceeds from the major premise that the NBA expresses a general congressional intent, apart from the terms of the statute, that states must not favor state banks over national banks. Post at 92, 668 A.2d at 1064. His minor premise is that New Jersey law permits lenders to impose late charges as interest. Id. at 94, 668 A.2d at 1065-1066. From this, he concludes that by permitting New Jersey banks, but not national banks, to impose such charges, New Jersey law violates the NBA
My problem with his analysis is with its divination of congressional intent apart from the terms of the statute. For me, the reason that the NBA frumps RISA is that section 85 expressly permits national banks to charge “interest at the rate allowed by the laws of the State ... where the bank is located.” “Interest,” as previously explained, includes late charges. Close examination of the authorities cited by Justice O’Hem reveals that they rely not on metaphysical notions of congressional intent, but on the specific words of the statute. Post at 98-94, 668 A.2d at 1065-1066. I also find misplaced his concern that Congress did not intend states to “export” their “consumer protection attitudes” to other states. Id. at 96, 668 A.2d at 1067.
The mischief hides in the term “export.” When a South Dakota national bank charges interest, including late fees, as allowed by *92that state to a borrower in New Jersey, the charge is legal because the NBA expressly allows it, not because South Dakota is “exporting” its interest rate to New Jersey. The authority for the imposition of the charge is not South Dakota law, but the NBA. Congress has defined the standard to measure the allowable rate of interest; that standard is interest as allowed by the national bank’s home state. As Citibank’s home state, South Dakota merely provides the point of reference. Only in a metaphorical sense is South Dakota “exporting” its rate of interest. In reality, a national bank may impose interest as allowed by its home state because Congress has so ordained.
For the preceding reasons, I respectfully dissent.
GARIBALDI, J., joins in this dissent.