[Federal Register Volume 65, Number 10 (Friday, January 14, 2000)]
[Notices]
[Pages 2455-2456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-968]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket No. 00-01]
Notice of Request for Preemption Opinion
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Notice and request for comments.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
publishing for comment a written request for our opinion on whether a
Pennsylvania statute regulating auctioneers applies to a national bank
that uses an auction format to market and sell certificates of deposit
(CDs) over the Internet. The purpose of this notice is to afford
interested persons an opportunity to submit comments before the OCC
issues a final opinion responding to this request.
DATES: Comments must be received on or before February 14, 2000.
ADDRESSES: You may submit comments electronically to
regs.comments@occ.treas.gov or by mail to Docket No. 00-01,
Communications Division, Third Floor, Office of the Comptroller of the
Currency, 250 E St., SW, Washington, DC 20219. Comments will be
available for inspection and photocopying at that address.
FOR FURTHER INFORMATION CONTACT: Mark Tenhundfeld, Assistant Director,
Legislative and Regulatory Activities Division, (202) 874-5090.
SUPPLEMENTARY INFORMATION: A national bank headquartered in
Pennsylvania (the Bank) uses an auction format to market and sell CDs
over the Internet, an activity referred to in this Notice as the
``online deposit program.'' A Pennsylvania statute requires that
auctioneers be licensed and subjects them to examination and inspection
by the state. The Bank has submitted a written request for the OCC's
opinion on whether Federal law preempts the application of the
Pennsylvania statute to the Bank's online deposit program.
Section 114 of the Riegle-Neal Interstate Banking and Branching
[[Page 2456]]
Efficiency Act of 1994 \1\ requires the OCC to publish notice in the
Federal Register before issuing a final written opinion about the
preemptive effect of Federal law in four specified areas: community
reinvestment, consumer protection, fair lending, or the establishment
of interstate branches. It is not clear that the Pennsylvania statute
under review falls within one of the four areas covered by section 114.
The Bank's written submission does not address this issue.
Nevertheless, in light of the novelty of the preemption question
presented by the Bank--the applicability of state law to national banks
that provide traditional financial services through electronic means--
comments from interested parties will aid the OCC in considering the
Bank's request. Therefore, we have concluded that it is appropriate to
publish a notice and request comment on the Bank's request. We will
also publish any final written opinion responding to the request in the
Federal Register.
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\1\ Pub. L. 103-328, sec. 114, 108 Stat. 2338, 2366-68 (1994),
codified at 12 U.S.C. 43. This publication requirement is subject to
certain exceptions that are described in section 114(c) of the
statute.
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The Bank's Online Deposit Program
The Bank is headquartered in Pennsylvania and has branches in four
other states. The Bank's Internet website permits visitors to link to a
site (the Auction Site) on which the Bank offers potential customers
the opportunity to purchase CDs that it issues and that are priced
through an online auction process, which the Bank describes as follows.
The Bank periodically posts on the Auction Site a notice of an
online auction of CDs offered by the Bank. Each auction has a starting
and ending time and identifies the dollar amount, the term, the
quantity, and the maximum annual percentage yield (APY) of the CDs
offered. For example, an auction might contain 100 CDs, each with a
face amount of $10,000, a term of six months, and a maximum APY of 8%.
In this case, the 100 bids with the lowest APY equal to or below 8%
will be selected as the winning bidders. The winning bidders are
required to complete an application to purchase a CD at their
respective bid prices, pursuant to terms and conditions that the Bank
has established for the online deposit program and that are posted on
the Auction Site.\2\
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\2\ The Bank's request to the OCC contains additional
information about its online deposit program, including eligibility
requirements for CD purchasers and the mechanics of the bidding
process, that is not pertinent to the preemption issue. The Bank
represents that it maintains the confidentiality of information
provided by participants in the online deposit program in accordance
with its privacy policy, which is posted on the Auction Site.
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The Pennsylvania Auction Statute
The Pennsylvania auction statute is codified at 63 Pa. Stat.
Sec. 734 et seq. (1998). It governs the licensing and regulation of
persons--``auctioneers''--engaged in the sale of property at auction.
The Pennsylvania statute defines an ``auction'' as
the offer to sell property to the members of an audience
congregated for the purpose of making bids for the purchase of
property in an effort by the auctioneer or apprentice auctioneer to
advance the amount of the bids to obtain the highest or most
favorable offer.\3\
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\3\ 63 Pa. Stat. at Sec. 734.2.
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Auctioneers must be licensed by the State Board of Auctioneer
Examiners \4\ and are required to keep detailed records of sales of
property at auction.\5\ Pennsylvania auctioneers are subject to
examination by the state.\6\ An auctioneer who fails to obtain a
license is subject to civil and criminal penalties.\7\ The Pennsylvania
statute permits either individuals or corporations to be auctioneers,
and the Bank believes that a corporation that employs an individual
auctioneer may have to be licensed both as an auctioneer and as an
auction company.
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\4\ Id. at Sec. 734.3.
\5\ Id. at Sec. 734.16.
\6\ Id. at Sec. 734.20.
\7\ Id. at Sec. 734.29.
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Issues Presented by the Bank
The Bank asserts that Federal law authorizes it to conduct the
online deposit program, that the licensing, recordkeeping, and
examination requirements in the Pennsylvania auction statute
impermissibly condition and burden the exercise of this Federal
authority, and that the Pennsylvania statute is therefore preempted.
The Bank relies on the express authority provided by 12 U.S.C.
24(Seventh) to ``receive deposits,'' on the incidental powers clause of
12 U.S.C. 24(Seventh), and on the OCC's regulation at 12 CFR 7.1019,
which authorizes national banks to perform, provide, or deliver through
electronic means any authorized product or service.
The Bank also cites a line of national bank preemption cases
decided by the U.S. Supreme Court and culminating in the Court's
decision in Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25
(1996), in support of its position that a state may not regulate an
activity that a national bank is Federally authorized to conduct. The
Bank notes that its use of the online Auction Site may constitute the
promotion and advertising of its deposit products and that the Supreme
Court has specifically held that a state law purporting to limit or
restrict national bank advertising is preempted.\8\ In addition, the
Bank relies on prior OCC interpretive letters opining that state laws
purporting to apply licensing requirements to national banks' Federally
authorized activities are preempted.\9\ Finally, the Bank asserts that
application of the Pennsylvania statute to its online auction
activities is preempted because the national bank visitorial powers
statute, 12 U.S.C. 484, vests the OCC with exclusive authority to
examine and supervise national banks.
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\8\ See Franklin Nat'l Bank v. New York, 347 U.S. 373 (1954).
\9\ See, e.g., OCC Interpretive Letter No. 749 (Sept. 13, 1996)
(opining that state law requiring licensing of national banks'
annuities sales activities is preempted); OCC Interpretive Letter
No. 628 (July 19, 1993) (opining that state securities board
regulation requiring a national bank providing trust services to
register as an investment adviser is preempted).
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Request for Comments
The OCC solicits comment on whether Federal law preempts the
Pennsylvania auction statute as it would apply to the Bank's online
deposit program.
Dated: January 4, 2000.
John D. Hawke, Jr.,
Comptroller of the Currency.
[FR Doc. 00-968 Filed 1-13-00; 8:45 am]
BILLING CODE 4810-33-P
