[Federal Register Volume 61, Number 25 (Tuesday, February 6, 1996)]
[Pages 4515-4516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2387]


[Docket No. 96-01]

Preemption Determination

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice and request for comments.


SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
publishing for comment a written request for OCC reconsideration of its 
prior determination that Federal law preempts the application of a New 
Jersey law that requires all depositories in the State which offer 
regular checking accounts to offer low-cost or consumer checking 
accounts. It is intended to provide interested persons with an 
opportunity to provide comments on the preemption request prior to the 
OCC's issuance of a final opinion letter responding to the request.

DATES: Comments should be submitted on or before April 8, 1996.

ADDRESSES: Comments should be sent to the Communications Division, 250 
E Street, SW., Third Floor, Washington, DC 20219. Attention: Docket No. 
96-01. Comments will be available for inspection and photocopying at 
the same location. Appointments for inspection of comments can be made 
by calling (202) 874-4700. In addition, comments may be sent by 
facsimile transmission to FAX number 202-874-5274 or by electronic mail 
to [email protected]

FOR FURTHER INFORMATION CONTACT: Susan L. Blankenheimer, Senior 
Attorney, Bank Activities and Structure Division (202) 874-5300.



    Section 114 of the Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994 (section 114), Pub. L. 103-328 (12 U.S.C. 43), 
generally requires the OCC to publish in the Federal Register a 
descriptive notice of certain requests that the OCC receives for 
preemption determinations. The OCC must publish this notice before it 
issues any opinion letter or interpretive rule concluding that Federal 
law preempts the application to a national bank of a State law in the 
areas of community reinvestment, consumer protection, fair lending, or 
the establishment of intrastate branches (the four designated areas). 
The OCC must give interested persons at least 30 days to submit written 
comments, and must consider the comments in developing the final 
opinion letter or interpretive rule. The OCC must publish in the 
Federal Register any final opinion letter or interpretive rule that 
concludes that Federal law preempts State law in any one of the four 
designated areas.
    Section 114 also provides certain exceptions to the Federal 
Register publication requirement, however. Notice or comment is not 
required where the opinion letter or interpretive rule: (1) addresses 
an issue essentially identical to one previously resolved by the courts 
or on which the agency has previously issued an opinion letter or 
interpretive rule; (2) responds to a request that contains no 
significant legal basis on which to make a preemption determination; or 
(3) is prepared for use in judicial proceedings, by Congress, or for 
intragovernmental use.
    While it is not clear that the standards of section 114 require 
that the OCC apply the section 114 notice procedures to this request 
for reconsideration, the OCC has elected to do so because of the 
concern raised during Congressional consideration of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act of 1994 about the 
particular OCC preemption opinion at issue. See H.R. CONF. REP. NO. 
103-651, 103d Cong., 2d Sess. 53-54 (1994).

Specific Request for OCC Preemption Determination

    On November 13, 1995, the State of New Jersey Department of Banking 
(Department) requested that the OCC reconsider whether New Jersey's 
Consumer Checking Account Act (NJCCAA), codified at N.J.Stat. Ann. 
section 17:16N-1 et seq., is preempted by Federal law. In a 1992 letter 
to the Department, the OCC concluded that the NJCCAA and its 
implementing regulation, N.J. Admin. Code section 3:1-19.4, are 
preempted by Federal law and that national banks doing business in New 
Jersey are not required to comply with any of the provisions of the 
NJCCAA or its implementing regulation. See Interpretive Letter No. 572 
(January 15, 1992), reprinted in [1991-1992 Transfer Binder] Fed. 
Banking L. Rep. (CCH) para. 83,342.
    The NJCCAA requires every depository institution that maintains 
regular checking accounts in New Jersey to make available to consumers 
a New Jersey Consumer Checking Account at all offices of that 
institution where regular checking accounts are offered or available. 
N.J. Stat. Ann. section 17:16N-3.a.1 The NJCCAA does not require a 
depository institution to offer a New Jersey Consumer Checking Account 
at a cost below its actual cost of providing the account. The NJCCAA's 
implementing regulation sets forth procedures for closing or refusing 
to open a New Jersey Consumer Checking Account if a depository 
institution's fees and revenues derived from the account are less than 
its costs. N.J. Admin. Code section 3:1-19.4.

     1 The term depository institution is defined to include 
national banks doing business in New Jersey. Id. at section 2.

    The principal features of a New Jersey Consumer Checking Account, 
as set forth in the regulation (N.J. Admin. Code Sec. 3:1-19.2(a)), 
include the following:
    1. The initial deposit amount necessary to open the account is 
$50.00 and the minimum balance necessary to maintain the account is 
    2. The customer may make at least eight free withdrawals from the 
account by check within a periodic cycle (for each transaction in 
excess of this number, the regulation imposes a maximum charge of 
    3. The customer may make an unlimited number of free deposits and 
withdrawals using deposit and withdrawal slips;
    4. The amount that may be charged per periodic cycle for 
maintaining the account may not exceed $3.00 per periodic cycle; and
    5. A customer may not be charged for printing checks an amount 
greater than that charged for regular checking account holders. In 
addition, the depository institution may charge fees for automated 
teller machine (ATM) usage and banking services if the fees are the 
same as those for regular checking account holders for the same 
    The NJCCAA further provides, in general, that a depository 
institution may not discriminate against the holder of a New Jersey 
Consumer Checking Account by furnishing fewer mail or electronic 
banking services, or assessing higher fees, compared to the services 
furnished to or fees assessed against regular checking account holders. 
NJCCAA section 3.f. Section 3.h of the NJCCAA and section 3:1-19.4(a) 
of the regulation set forth the limited conditions (including fraud and 
a record of unpaid checks) under which a depository institution may 
close or refuse to open a New Jersey Consumer Checking Account for a 
    The NJCCAA also prohibits a depository institution from requiring 
that a holder of a New Jersey Consumer 

[[Page 4516]]
Checking Account have another account or a credit card at that or any 
other depository institution as a condition to opening or maintaining 
the New Jersey Consumer Checking Account. NJCCAA section 3.i. Section 5 
of the NJCCAA prescribes requirements for providing public notice of 
the availability and features of a depository institution's New Jersey 
Consumer Checking Account. Section 6 of the NJCCAA provides a private 
right of action for violations of the NJCCAA, including injunctive 
relief, and monetary damages. Finally, section 7 of the NJCCAA gives 
the New Jersey Commissioner of Banking administrative enforcement 
powers over institutions which fail to comply with the NJCCAA or any of 
the Commissioner's regulations or orders thereunder. These powers 
include the authority to issue a cease and desist order and assess a 
civil money penalty.
    The purpose of the Bank Enterprise Act is to provide Federally 
insured depository institutions (including national banks) with an 
incentive (e.g., a reduced Federal deposit insurance rate for deposits 
attributable to lifeline accounts) to offer lifeline accounts,2 
and to make loans and provide other financial assistance in distressed 
communities. The term lifeline account is defined in section 232 of the 
BEA (12 U.S.C. 1834) as a transaction account which meets certain 
minimum requirements. The BEA does not, however, require depository 
institutions to offer these lifeline accounts; that decision is left to 
individual depository institutions.

    \2\ Appropriations are required, however, to implement this and 
other provisions of the BEA. Funds for the BEA have not yet been 
appropriated, and the only funding that has been made available to 
date is for a program based on the BEA that is administered by the 
Administrator of the Community Development Financial Institutions 
Fund (Administrator). See Appropriations Act for FY 1995, Pub. L. 
No. 104-19, 109 Stat. 237 (July 27, 1995). The Administrator is 
precluded by law, however, from using the amount of the deposit 
insurance assessment as an incentive to participate in the program. 
Riegle Community Development and Regulatory Improvement Act of 1994, 
Pub. L. No. 103-325, section 114, 108 Stat. 2179 (Sept. 23, 1994) 
(12 U.S.C. 4713).

    The Interpretive Letter No. 572 noted that the factors established 
in section 232 of the BEA (12 U.S.C. 1834) for the purpose of 
determining whether a transaction account qualifies as a lifeline 
account eligible for reduced Federal deposit insurance assessment rate 
are virtually identical to those listed in the NJCCAA for the purpose 
of determining whether an account qualifies as a New Jersey Consumer 
Checking Account. The Letter concluded, among other things, that since 
the NJCCAA requires Federally insured depository institutions doing 
business in New Jersey to offer lifeline accounts, the NJCCAA is in 
direct conflict with a Federal statute, the BEA, set forth in Title II, 
Subtitle C of the Federal Deposit Insurance Corporation Improvement Act 
of 1991, Pub. L. No. 102-242, 105 Stat. 2236 (FDICIA), (12 U.S.C. 
1834), which expressly makes the offering of such accounts voluntary. 
Although Interpretive Letter No. 572 recognized that both Congress and 
the New Jersey legislature saw the benefits of widespread use of 
lifeline accounts, it concluded that under Federal preemption 
principles, the State's method must yield in the face of a directly 
contrary Federal treatment of this issue.
    The Department's position is that the BEA does not preempt the 
NJCCAA, since the two laws are not in conflict. The Department states 
that the philosophy of the NJCCAA, to provide basic checking services 
to those in need of them, is consistent with that of the BEA. The 
Department asserts that it is unlikely that Congress intended to 
preclude individual states from requiring depository institutions to 
provide basic checking services to those in need. The Department also 
states that Interpretive Letter No. 572 did not fully consider 
applicable case law in the area of preemption, citing for example, the 
case of Best v. United States National Bank of Oregon, 303 Or. 557, 739 
P. 2d 554 (1987).

Request for Comments

    The OCC requests comments on all aspects of the request for 
reconsideration of OCC's prior determination that the application of 
New Jersey law to national banks is preempted by Federal law. Comments 
should be submitted to the docket number and address indicated in the 
ADDRESSES paragraph of this document. The OCC will carefully consider 
any comments received and publish its final determination in response 
to the request.

    Dated: January 22, 1996.
 Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 96-2387 Filed 2-5-96; 8:45 am]