WEST VIRGINIA INSURANCE COMMISSIONER LOSES OCC PREEMPTION SUIT.In a direct challenge to state regulation of insurance, the Fourth U.S. Circuit Court of Appeals ruled Nov. 19 the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. did not exceed its statutory authority when it issued an advisory opinion saying the federal Gramm-Leach-Bliley Act The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338 (November 12, 1999), is an Act of the United States Congress which repealed the Glass-Steagall Act, opening up competition preempted West Virginia's consumer-protection statute governing the sale of insurance in banks.
In West Virginia Insurance Commissioner Jane L. Cline et al. v. Comptroller of the Currency Comptroller of the Currency
A government official, appointed by the President of the United States, who keeps control over all national banks, and receives reports from the banks at least quarterly, to be published in newspapers. John D. Hawke et al. (01-2100), the majority of a three-judge panel voted to dismiss Cline's petition to the court to review the OCC OCC
See: Options Clearing Corporation
See Options Clearing Corporation (OCC). preemption preemption
U.S. policy that allowed the first settlers, or squatters, on public land to buy the land they had improved. Since improved land, coveted by speculators, was often priced too high for squatters to buy at auction, temporary preemptive laws allowed them to acquire opinion issued Oct. 3, 2001.
The dismissal, however, came in an unpublished decision, so it is not binding precedent in the Fourth Circuit.
Circuit Judge Robert B. King dissented, saying the court lacked jurisdiction to review an advisory opinion of the OCC because it did not carry "the force of law" but was only "informal agency guidance" so the "case or controversy mandate of Article III of the Constitution" was not met.
But Circuit Judges Roger L. Gregory and J. Michael Luttig J. Michael Luttig (born in Tyler, Texas, June 13, 1954) is an American lawyer and a former federal judge. Education and early work
Luttig graduated from Washington and Lee University in 1976. said Section 304 of the GLBA GLBA Gramm-Leach-Bliley Act of 1999 (Financial Modernization Act of 1999)
GLBA Gay and Lesbian Business Association
GLBA Great Lakes Booksellers Association
GLBA Glacier Bay National Park and Preserve gave the court jurisdiction "where there is a regulatory conflict between a state insurance regulator and a federal regulator, including the preemption of a state law."
The OCC opinion came in response to a request from the West Virginia Bankers Association for a determination whether eight provisions of the West Virginia Sales Consumer Protection Act applied to national banks or were preempted by Section 104 of the GLBA.
In addition to declaring the McCarran-Ferguson Act remains the law of the United States The law of the United States was originally largely derived from the common law of the system of English law, which was in force at the time of the Revolutionary War. However, the supreme law of the land is the United States Constitution and, under the Constitution's Supremacy , Section 104 provides: "in accordance with the legal standards for preemption set forth in the decision of the Supreme Court of the United States Supreme Court of the United States
Final court of appeal in the U.S. judicial system and final interpreter of the Constitution of the United States. The Supreme Court was created by the Constitutional Convention of 1787 as the head of a federal court system, though it was in Barnett Bank of Marion County N.A. v. Nelson, 517 U.S. 25 (1996), no State may, by statute, regulation, order, interpretation or other action prevent or significantly interfere with the ability of a depository institution Depository institution
A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. , or an affiliate thereof, to engage ... in any insurance sale, solicitation, or cross-marketing activity."
Arguing OCC had erred in its interpretation of the "significant interference" standard set forth in Barnett, the Independent Insurance Agents and Brokers of America and the National Association of Professional Insurance Agents intervened on behalf of Cline, joined by the National Association of Independent Insurers and National Association of Insurance Commissioners The National Association of Insurance Commissioners (NAIC) is an Internal Revenue Code Section 501(c)(3) non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. .
Gregory, who wrote the opinion in which Luttig concurred, said Cline and the insurers "are correct in their assertion that the GLBA does not give the OCC express power of interpretation." But he added "an administrative agency's authority need not be expressly delegated by Congress."
He noted GLBA's Section 104(d)(2)(c)(1) was titled "OCC Deference.
"Had Congress not anticipated OCC action interpreting the GLBA, there would be no need for an 'OCC Deference' provision of the GLBA," he wrote.
"Therefore, we find that the OCC has implicit interpretive authority under the GLBA."
He said Section 92 of the National Bank Act provides OCC with "explicit authority to regulate the sale of insurance by national banks located in small towns" and the GLBA expands that authority to nationwide sale of insurance by national banks.
He then ruled the GLBA gives OCC "implicit interpretive authority" to determine if provisions in the state's law "are disruptive to bank operations, increase bank operating costs, and substantively affect a bank's ability to solicit and sell insurance products."
Although OCC was "entitled to some deference" under the GLBA, he found the GLBA "does not provide guidance as to what level of deference is appropriate" and determined OCC's interpretations were entitled to respect to the extent they met the standard for persuasiveness outlined by the Supreme Court in Skidmore v. Swift & Co., 323 U.S. 134.
After reviewing the "thoroughness of the OCC's consideration, the validity of its reasoning, and its consistency with earlier and later pronouncements," he found OCC's preemption letter met the Skidmore standard for persuasiveness.
King disagreed with Gregory that OCC has authority to act unilaterally in interpreting or implementing GLBA.
"To the extent that the OCC possesses any power under GLBA, it shares that power with other federal banking agencies," he wrote.
"GLBA was not designed to expand the power of national banks to issue insurance, but rather its purpose was to remove the traditional barriers among the banking, insurance and securities industries. Therefore, the OCC does not possess, nor does it claim, a role in implementing GLBA."
If national banks rely on OCC's preemption opinion, King warns, "such reliance would result from a mistaken legal conclusion regarding the OCC's authority, and it does not create Article III jurisdiction."
NAII NAII National Association of Independent Insurers Counsel Mike Koziol called the ruling "disappointing" and said the court had incorrectly applied the Barnett standard for preemption.
"This ruling presents a threat to functional regulation of insurance by the states and could disrupt regulatory activity and consumer protections in other states that have similar laws," he said.
Although the decision is unpublished, "it nevertheless sends a clear signal as to how the Fourth Circuit at least will interpret such disputes in the future," said Joyce Kraeger, attorney for the Alliance and PIA pi·a
The pia mater.
pial adj. .
She said "the petitioners may seek a rehearing rehearing n. conducting a hearing again based on the motion of one of the parties to a lawsuit, petition or criminal prosecution, usually by the court or agency which originally heard the matter. before the full Fourth Circuit, or possibly seek review by the U.S. Supreme Court."