Amicus Curiae Brief — Barnett Bank of Marion Cty., NA v. Nelson
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InN THE NOV ¥ 1995
Supreme Court of the United States
OCTOBER TERM, 199 nn
BARNETT BANK OF MARION Counrry, N.A..,
Petitioner,
Vv.
Tom GALLAGHER, INSURANCE COMMISSIONER
OF THE STATE OF FLORIDA, ef al.,
Respondents.
On Writ of Certiorari to the
United States Court of Appeals
for the Eleventh Circuit
BRIEF IN SUPPORT OF PETITIONER AND SEEKING
REVERSAL FILED BY AMICI CURIAE CONSUMER
BANKERS ASSOCIATION, AMERICA’S COMMUNITY
BANKERS, ARKANSAS BANKERS ASSOCIATION,
GEORGIA BANKERS ASSOCIATION, MASSACHUSETTS
BANKERS ASSOCIATION, MICHIGAN BANKERS
ASSOCIATION, NEW MEXICO BANKERS ASSOCIATION,
OHIO BANKERS ASSOCIATION, PENNSYLVANIA
BANKERS ASSOCIATION, TENNESSEE BANKERS
ASSOCIATION, VERMONT BANKERS ASSOCIATION,
WESTERN INDEPENDENT BANKERS, CHASE
MANHATTAN CORPORATION, CHEMICAL BANKING
CORPORATION, FIRST INTERSTATE BANCORP,
KEYCORP, SHAWMUT NATIONAL CORPORATION,
AND WELLS FARGO & COMPANY
DAVID W. RODERER *
Eric L. HIRSCHHORN
DONN C. MEINDERTSMA
WILLIAM B.F. STEINMAN
WINSTON & STRAWN
1400 L Street, N.W.
Washington, D.C. 20005-3502
(202) 371-5700
Counsel for Amici Curiae
November 1995 * Counsel of Record
(Additional Counsel Listed on Inside Cover)
WILeon - Eras Printing Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001
Of Counsel:
MARCIA Z. SULLIVAN
CONSUMER BANKERS ASSOCIATION
1000 Wilson Boulevard
Suite 3012
Arlington, Virginia 22209
PHILIP GASTEYER
AMERICA’S COMMUNITY BANKERS
900 19th Street, N.W., Suite 400
Washington, D.C. 20006
ARKANSAS BANKERS ASSOCIATION
The Carvill Building
1220 W. Third Street
Little Rock, Arkansas 72201
GEORGIA BANKERS ASSOCIATION
60 Hurt Plaza, Suite 1050
Atlanta, Georgia 30303
MASSACHUSETTS BANKERS
ASSOCIATION
73 Tremont Street, Suite 306
Boston, Massachusetts 02108
DONALD HEIKKINEN
MICHIGAN BANKERS ASSOCIATION
222 North Washington Square
Suite 3209
Lansing, Michigan 48933
JOHN W. ANDERSON
NEW MEXICO BANKERS
ASSOCIATION
P.O. Box 90880
Albuquerque, New Mexico 87109
JEFFREY D. QUAYLE
OHIO BANKERS ASSOCIATION
27 West Broad, Suite 1001
Columbus, Ohio 43215
Louise A. RYND
PENNSYLVANIA BANKERS
ASSOCIATION
P.O. Box 152
Harrisburg, Pennsylvania 17108
TimoTuy L. AMos
TENNESSEE BANKERS
ASSOCIATION
210 Venture Circle
Nashville, Tennessee $7228
VERMONT BANKERS ASSOCIATION
29 Main Street
Montpelier, Vermont 05601
WESTERN INDEPENDENT BANKERS
100 Spear Street
Suite 1505
San Francisco, California 94105
JULIUS L. LOESER
First INTERSTATE BANCORP
633 West 5th Street, Suite 700
Los Angeles, California 90071
DENNIS W. TOIVONEN
CHASE MANHATTAN
CORPORATION
2 Chase Plaza, 10th Floor
New York, New York 10081
ARTHUR T. GUJA
CHEMICAL BANKING
CORPORATION
270 Park Avenue, 41st Floor
New York, New York 10017
WILLIAM BLAKE
KEYCoRP
127 Public Square
Law Group, Second Floor
Cleveland, Ohio 44114
J. MICHAEL SHEPHERD
SHAWMUT NATIONAL
CORPORATION
1 Federal Street, OF 0905
Boston, MA 02211
JOHN D. WRIGHT
WELLS Farco & COMPANY
111 Sutter Street, 20th Floor
San Francisco, CA 94136
TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................-.-cccccceceeeeseeees
INTEREST OF THE AMICI CURIAE.........................
SUMMARY OF ARGUMENT .0.00000000..0....ccccccccccsecceeeeeee
EEE EE
I. THE McCARRAN-FERGUSON ACT WAS
II.
NOT INTENDED TO RESTRICT THE POW-
ERS OF NATIONAL BANKS .....W...
A. The Activities Of National Banks, Including
Their Sales Of Insurance, Are Regulated By
A Pervasive Federal Statutory Scheme ..........
B. Florida May Not Interfere With The Au-
thorized Operations Of National Banks Un-
less Authorized By Coneress To Do So ..........
C. The General Language Of The McCarran-
Ferguson Act Is Not Directed At National
Bank Powers, Including The Specific Power
To Sell Insurance Granted By Section 92........
EVEN IF McCARRAN-FERGUSON APPLIES
TO NATIONAL BANKS, SECTION 92 “SPE-
CIFICALLY RELATES” TO THE BUSINESS
OF INSURANCE WITHIN THE MEAN-
ING OF SECTION 2(b) OF McCARRAN-
FERGUSON AND ACCORDINGLY IS PRE-
SERVED BY McCARRAN-FERGUSON ..........
EE pibiinimsinnenitivenes
10
16
21
26
ii
TABLE OF AUTHORITIES
CASES Page
Cook County Nat’l Bank v. United States, 107 U.S.
a ae ee 8, 18
Davis v. Elmira Sav. Bank, 161 U.S. 275 (1896) .... 12
Deitrick v. Greaney, 309 U.S. 190 (1940) x
Easton v. Iowa, 188 U.S. 220 (1908)... 10, 11
Farmers’ & Mechanics’ Nat’l Bank v. Dearing, 91
ee, Be I ee ersincsrennsennenienstiptinnniancinmamianimnen 13-14
Fidelity Federal Sav. & Loan Ass’n v. De La Cuesta,
of) })lUll Res ee 20-21
First Nat'l Bank of Eastern Ark. v. Taylor, 907
F.2d 775 (8th Cir.), cert. denied, 498 U.S. 972
TLE eI LATE Sa 20
First Nat'l Bank v. California, 262 U.S. 366
STAIR AEN SCE A AER VISE 10
First Nat'l Bank v. Missouri, 263 U.S. 640 (1924). 12
First Nat'l Bank v. Fellows ex rel. Union Trust
NO OE ys Sa 9
Franklin Nat'l Bank v. New York, 347 U.S. 373
C—O 14, 20
Guthrie v. Harkness, 199 U.S. 148 (1905) —.............. 11
McClellan v. Chipman, 164 U.S. 347 (1896) —....... 12
McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316
zz en ee 7
Missouri ex rel. Burnes Nat'l Bank v. Duncan, 265
I I Oe 14-15, 16
Morales v. Trans World Airlines, 504 U.S. 374
OO ————————————————————— passim
Morton v. Mancari, 417 U.S. 5385 (1974) ................ 18
NationsBank of North Carolina, N.A. v. Variable
Annuity Life Ins. Co., 115 8. Ct. 810 (1995) —..... 8,9
New York State Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 115 S. Ct. 1671
9 22
Norman v. B. & O. R.R. Co., 294 U.S. 240 (1985) .. 71-8
Osborn v. Bank of United States, 22 US. (9
Winemt.) THB (RGBE) nnnnncncnnoccnccccccceccsncsccscscsecsnscseees 7
Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1869) _.... 17
Prudential Ins. Co. v. Benjamin, 328 U.S. 408
ee ee 17
iii
TABLE OF AUTHORITIES—Continued
Page
Radzanower v. Touche Ross & Co., 426 U.S. 148
IIT setctrisanteinsitiiesiiicsseiiite 18-20
Ramapo Bank v. Camp, 425 F.2d 333 (3d Cir.),
cert. denied, 400 U.S. 828 (1970) —........ 14
Rice v. Santa Fe Elevator Corp., 331 U.S. 218
ge TAS RR LE 2° A 21
Shaw v. Delta Air Lines, 463 U.S. 85 (1983) ve 22
United Serv. Automobile Ass'n v. Muir, 792 F.2d
356 (3d Cir. 1986), cert. denied, 479 U.S. 1031
EER . 20, 22
United States v. United Continental Tuna Corp.,
tlt ES A al ETE 19
United States v. Corbett, 215 U.S. 233 (1909)... x
United States v. South-Eastern Underwriters Ass’n,
a RR ae 17, 24
United States v. Weitzel, 246 U.S. 583 (1918)... &
CONSTITUTIONAL PROVISION
OSS GS eee 17
STATUTES
Ee -
TITTLE aa a COS ~
12 U.S.C. § 14 (1994) 00... aaa See 9
oe 8
ES ee 8
12 U.S.C. § 24 (Seventh) ........... sithtibengiteshiiedintpesen 9
TTT TL I LA 14
iE TR) LE 8-9
ES 8,14
SS ae eae See aan Fen 8,13
13 U.S.C. $6 GI-OT (1GB4) nnn. cnnncccccccccecccccceceeee 9
ET EES 2 I ON 7
ETS POR RE 18
EE EE SS Sa ene 14
a passim
EN ee en ee 11-12, 14
I a ere 9, 20
ES AEN Oe ee ae 18
12 U.S.C. § 161 (1994) ........... si - : 9
iv
TABLE OF AUTHORITIES—Continued
Page
re Ce i cectencieneeirccnnccincinmmnmeniapamytion 9
12 U.S.C. $8 181-200 (1904) ..................................--... 8
12 U.S.C. $§ 301-308 (1904) ...................................-. 9
I erent 9
EO 9
12 U.S.C. $§ 481-482 (1994) nnn nee eeeenenenenee 9
TE TEE 11
12 U.S.C. § 1818 (1994) spunea 9
TE EL A 17
i} & ) ° — FREESE essere passim
Act of Sept. 7, 1916, ch. 461, 39 Stat. 752 9
Currency Act of 1863, Act of Feb. 25, 1863, ch. 58,
I iniicntrccnieecintrntneitriiihinntarintineatiimatetie 6,8
Depository Institutions Deregulation and Monetary
Control Act of 1980, Pub. L. No. 96-221, § 708,
ft re 20
Fla. Stat. Ann. § 626.988(1) (West 1984 & Supp.
Se ee ee = 16
Fla. Stat. Ann. § 626.988(2) (West 1984 & Supp.
0 REE ee eee or ee a ee «Se 6, 16
McCarran-Ferguson Act, Act of Mar. 9, 1945, ch.
BD, Sa BI BD ccecctecntcnictencnesittciitccnialineintiteniemendl passim
McFadden Act, Act of Feb. 25, 1927, ch. 191, § 7, 44
SS a ee eee 13, 20
National Bank Act, Act of June 3, 1864, ch. 106,
ree re Stee SPENT. Dea 6,8
MISCELLANEOUS
ES I re 10
58 Cong. Rec. 11153 (1916) —............ 18
OU Ee 24
ae 25
91 Cong. Rec. 1085-94 (1945) 25
91 Cong. Rec. 1487 (1945) _...... Sa a eee 17, 23
Black’s Law Dictionary 1286 (6th ed. 1990) _........ 24
H.R. Rep. No. 213, 79th Cong., Ist Sess. 1 (1945)
oe 25
OCC Letter No. 475 (Mar. 22, 1989), reprinted in
[1989-1990 Transfer Binder] Fed. Banking L.
SS ee 21
v
TABLE OF AUTHORITIES—Continued
OCC Letter No. 623 (May 10, 1993), reprinted in
(1998-1994 Transfer Binder] Fed. Banking L.
Rep. (CCH) {| 83,505 :
S. Rep. No. 481, 64th Cong., Ist Sess. 8 (1916) ......
S. Rep. No. 538, 64th Cong., 1st Sess. 7 (1916)
(conference report) .
Page
or
18
In THE
Supreme Court of the United States
OcTOBER TERM, 1995
No. 94-1837
BARNETT BANK OF MARION COUNTY, N.A.,
Petitioner,
v.
Tom GALLAGHER, INSURANCE COMMISSIONER
OF THE STATE OF FLORIDA, e¢7 al.,
Respondents.
On Writ of Certiorari to the
United States Court of Appeals
for the Eleventh Circuit
BRIEF IN SUPPORT OF PETITIONER AND SEEKING
REVERSAL FILED BY AMICI CURIAE CONSUMER
BANKERS ASSOCIATION, AMERICA’S COMMUNITY
BANKERS, ARKANSAS BANKERS ASSOCIATION,
GEORGIA BANKERS ASSOCIATION, MASSACHUSETTS
BANKERS ASSOCIATION, MICHIGAN BANKERS
ASSOCIATION, NEW MEXICO BANKERS ASSOCIATION,
OHIO BANKERS ASSOCIATION, PENNSYLVANIA
BANKERS ASSOCIATION, TENNESSEE BANKERS
ASSOCIATION, VERMONT BANKERS ASSOCIATION,
WESTERN INDEPENDENT BANKERS, CHASE
MANHATTAN CORPORATION, CHEMICAL BANKING
CORPORATION, FIRST INTERSTATE BANCORP,
KEYCORP, SHAWMUT NATIONAL CORPORATION,
AND WELLS FARGO & COMPANY
Pursuant to Rule 37.3 of the Rules of this Court,
amici curiae file this brief in support of Petitioner, Barnett
Bank of Marion County, N.A., seeking reversal of the
2
judgment of the Court of Appeals for the Eleventh Cir-
cuit. All parties have consented to the filing of this brief
and their written consents have been filed with the Clerk.
Florida law purports to prohibit certain national banks
from selling insurance. In addition to its anticompetitive
effect, the Florida statute at issue contravenes express
statutory authorization in the National Bank Act for na-
tional banks, including the Petitioner, to sell insurance. Be-
cause the Florida law directly conflicts with the National
Bank Act, the Florida law would be invalid under tradi-
tional preemption analysis. The general language of the
McCarran-Ferguson Act, which allows states to regulate
the “business of insurance” except where Congress spe-
cifically provides otherwise, does not vitiate the preemp-
tive force of the express authorization in the National
Bank Act. For these reasons, the judgment of the court
of appeals that Florida may prohibit a national bank from
selling insurance should be reversed.
INTEREST OF THE AMICI CURIAE
Amici have a direct interest in ensuring that national
banks are permitted to continue to engage in sales of in-
surance to the full extent authorized by federal law. Amici
are national, regional, and state banking associations whose
members include banks and savings associations through-
out the United States. Amici also include financial insti-
tutions that engage—directly or through affiliated institu-
tions—in the sale of insurance products.
Three national and regional associations join this brief
on behalf of their members. Consumer Bankers Associa-
tion, America’s Community Bankers, and Western Inde-
pendent Bankers represent nearly 3000 banks and savings
associations of all sizes that engage in diverse insurance
activities as authorized by Congress. These associat.ons
and their members have a direct interest in preserving
such activities from restrictive and anticompetitive state
laws. Laws of the states in which other members of these
3
associations operate preclude those members from con-
ducting congressionally authorized insurance activities by
prohibiting licensure of such activities. Descriptions of
these associations follow:
The Consumer Bankers Association (CBA) was
founded in 1919 to provide a progressive voice for the
retail banking community. CBA represents over 750 fed-
erally insured banks and thrift institutions that hold more
than eighty percent of all consumer deposits and more
than seventy percent of all consumer credit held by fed-
erally insured depository institutions in the United States.
America’s Community Bankers (ACB) is the national
trade association for over 1800 savings and community
financial institutions, serving communities in every state.
Members are federally and state chartered, stock and mu-
tual in ownership, and FDIC-insured. The industry mem-
bers that ACB represents have more than $1 trillion in
assets, 270,000 employees, and 16,000 offices. Many of
ACB’s member banks have long provided the public with
insurance products and services through related entities
under a variety of corporate structures.
Western Independent Bankers (WIB) is the only re-
gional multistate banking association in the United States.
Its members consist of 250 independent community banks
located in Alaska, Arizona, California, Hawaii, Idaho,
Montana, Nevada, Oregon, Utah, Washington, and Wyom-
ing, as well as American Samoa and Guam. WIB’s mem-
bers account for more than $34 billion in banking assets.
Nine statewide banking associations also join in this
brief. Each state represented by these associations has
enacted legislation purporting to prohibit or severely
circumscribe the ability of banks, including national banks,
to market insurance products. Each state association is
described below:
Arkansas Bankers Association has represented Arkansas
banks and bank holding companies for 104 years. The
4
primary objective of the Association is to provide a forum
for the financial community to address issues of state and
national importance to the business of banking so as to
promote a positive banking environment for member banks
and customers.
Georgia Bankers Association (GBA) is the statewide
association representing commercial banks in the State
of Georgia. GBA’s members collectively account for vir-
tually all of the banking assets in the state.
Massachusetts Bankers Association is a statewide as-
sociation representing 192 banks and savings associa-
tions in the Commonwealth of Massachusetts. Its members
account for $150 billion in banking assets.
Michigan Bankers Association has represented Michigan
commercial banks and bank holding companies for over
100 years. It represents approximately 200 commercial
banks in Michigan, which collectively account for vir-
tually all of the banking assets in the state.
New Mexico Bankers Association is the principal state
trade association for the banking community in New
Mexico. Its membership consists of sixty-nine banks and
Savings institutions, which collectively account for over
ninety percent of banking assets in New Mexico.
Ohio Bankers Association is the principal state trade
association representing 235 commercial banks in Ohio.
Its members range in size from small community banks
to large regional institutions.
Pennsylvania Bankers Association (PBA) is the trade
association representing approximately 250 commercial
and savings banks in the Commonwealth of Pennsylvania.
PBA’s members hold ninety-nine percent of the com-
mercial banking assets in Pennsylvania.
Tennessee Bankers Association (TBA) is the principal
trade association for commercial banks, savings banks,
savings associations, and trust companies in Tennessee.
5
All 249 state and federally chartered banks and trust com-
panies in Tennessee, plus all twenty-seven state and fed-
erally chartered savings institutions in the state, are mem-
bers of TBA.
Vermont Bankers Association (VBA) represents
twenty-eight commercial banks and savings associations in
Vermont. VBA provides legislative, regulatory and edu-
cational services to its members.
In addition to the above-named banking associations,
Chase Manhattan Corporation, Chemical Banking Corpo-
ration, First Interstate Bancorp, KeyCorp, Shawmut Na-
tional Corporation, and Wells Fargo & Company join in
this brief as amici. These institutions have a direct inter-
est in exercising the full range of powers granted to
national banks by Congress.
Chase Manhattan Corporation is headquartered in New
York, New York and operates two subsidiary banks with
304 consumer branches in three eastern states. It has
total assets of $118.8 billion.
Chemical Banking Corporation is headquartered in New
York, New York and operates seven subsidiary banks with
458 branches in seven eastern states. It has total assets
of $187.9 billion.
First Interstate Bancorp is headquartered in Los
Angeles, California and operates fourteen subsidiary banks
with 1167 branches in thirteen western states. It has total
assets of $56.9 billion.
KeyCorp operates 15 commercial bank subsidiaries in
fourteen states, with more than 1400 branch and affiliate
Offices in twenty-five states.
Shawmut National Corporation is headquartered in
Boston, Massachusetts and operates five subsidiary banks
with 364 branches in six states. It has total assets of
$34 billion.
Wells Fargo & Company is headquarted in San Fran-
cisco, California and operates two banking subsidiaries
6
with 861 branches in two states. It has total assets of
$51 billion.
SUMMARY OF ARGUMENT
In 1864 Congress enacted the National Bank Act,’ es-
tablishing our modern national banking system. Among
other things, the National Bank Act created a federal reg-
ulatory structure for national banks. The act authorizes
and directs the Comptroller of the Currency to charter and
supervise the affairs of the national banks. The congres-
sional design for the governance of the national banking
system, which has been refined by numerous enactments
over the years, delineates with care the limited role that
the states may play with regard to such associations. This
Court consistently has held that the states may neither
frustrate the National Bank Act nor impair the functioning
of national banks.
In 1916 the Congress specifically authorized national
banks located in small communities to sell insurance. 12
U.S.C. § 92° (“Section 92”). Section 92 expressly pro-
vides that the Comptroller of the Currency is to prescribe
rules and regulations governing sales of insurance by na-
tional banks.
The State of Florida has enacted a statute that pur-
ports to prohibit certain national banks empowered by
Section 92 to sell insurance—including the Petitioner—
from doing so. Fla. Stat. Ann. § 626.988(2)(West 1984
& Supp. 1995). Florida’s attempt to prohibit national
banks from exercising such authority squarely conflicts
with Section 92.
Florida seeks to avoid the preemptive effect of Section
92 by invoking Section 2(b) of the McCarran-Ferguson
Act (“McCarran-Ferguson”), 15 U.S.C. § 1012(b), which
1 Act of June 3, 1864, ch. 106, 13 Stat. 99. This statute reenacted
and amended the Currency Act of 1863, Act of Feb. 25, 1863,
ch. 58, 12 Stat. 665.
2 All citations herein to the United States Code are to the 1994
edition unless otherwise noted.
7
Florida asserts deprives Section 92 of preemptive force.
The court of appeals erroneously accepted Florida’s argu-
ment. Pet. App. la-16a. The history of the federal bank-
ing system, the text of its underlying statutory scheme, and
the language, history, and purpose of McCarran-Ferguson
demonstrate that Congress did not intend McCarran-
Ferguson to diminish federal authority, or enhance state
authority, over the activities of national banks.
Nothing about McFarran-Ferguson evinces a congres-
sional purpose to alter the carefully crafted balance of
authority between federal and state governments under
the national banking scheme. Rather, Congress carefully
fashioned the two-pronged test of Section 2(b) of
McCarran-Ferguson to ensure that federal statutes ex-
pressly affecting insurance, such as Section 92, would re-
main unimpaired. Section 92 explicitly authorizes national
banks to sell insurance. Accordingly, that law “specific-
ally relates to the business of insurance” and is not subject
to McCarran-Ferguson. The need to maintain the in-
tegrity and competitiveness of the national banking sys-
tem, as well as to harmonize the congressional policy de-
tailed in Section 92 with the limited congressional purpose
reflected in McCarran-Ferguson, require that the decision
of the court of appeals be reversed.
ARGUMENT
I. THE MeCARRAN-FERGUSON ACT WAS NOT IN-
TENDED TO RESTRICT THE POWERS OF NA-
TIONAL BANKS.
A. The Activities Of National Banks, Including Their
Sales Of Insurance, Are Regulated By A Pervasive
Federal Statutory Scheme.
National banks are creatures of federal law. Osborn v.
Bank of United States, 22 U.S. (9 Wheat.) 738, 823
(1824). Congress possesses broad constitutional powers
to charter banks, McCulloch v. Maryland, 17 U.S. (4
Wheat.) 316, 407 (1819), and to maintain a national
banking system, Norman v. B. & O. R.R. Co., 294 US.
240, 303 (1935). Congress devised the modern national
banking system during the Civil War to provide a national
currency and a federal banking system separate from
the previous state-dominated system. See Act of Feb.
25, 1863, ch. 58, 12 Stat. 665; Act of June 3, 1864, ch.
106, 13 Stat. 99 (collectively referred to herein as the
National Bank Act). As an essential element of the Na-
tional Bank Act, Congress fashioned a federal framework
to regulate the chartering and supervision of national
banks. Congress placed the Comptroller of the Currency
at the helm of that scheme. See, e.g., 12 U.S.C. § 1.
“The National Bank Act constitutes ‘by itself a com-
plete system for the establishment and government of Na-
tional Banks.’” Deitrick v. Greaney, 309 U.S. 190, 194
(1940) (quoting Cook County Nat'l Bank v. United States,
107 U.S. 445, 448 (1883)). National banks are organized
under federal law, 12 U.S.C. §§ 21-23, which empowers
them to conduct their corporate affairs, e.g., 12 U.S.C.
§§ 24, 29 (power to hold real property); see generally
NationsBank of North Carolina, N.A. v. Variable Annuity
Life Ins. Ca., 115 S. Ct. 810 (1995) (“NationsBank’”).
Inter alia, federal law sets the number and qualifications
for directors, 12 U.S.C. §§ 71-78, determines the extent
to which national banks may engage in branching, 12
U.S.C § 36, and establishes dissolution and receivership
requirements, 12 U.S.C. §§ 181-200.
The Comptroller, who is appointed by the President
and confirmed by the Senate, 12 U.S.C. § 2, supervises
the activities of national banks. NationsBank, 115 S. Ct.
at 813; United States v. Weitzel, 246 U.S. 533, 540
(1918); United States v. Corbett, 215 U.S. 233, 240
( 1909) (referring to the Comptroller's “comprehensive
powers” over “the operations of national banks”). The
Comptroller has plenary power, unimpeded by state laws,
to charter national banks. After assessing a national bank
association’s financial condition, including whether the
association’s capital is sufficient, the Comptroller may
the association to commence business. 12 U.S.C.
§§ 26-28; see generally 12 U.S.C. §§ 51-67 (provisions
governing national bank capital, stock, and stockholders).
Each national bank must submit to the Comptroller
reports concerning its condition, the dividends declared
or paid, and the condition of the bank’s affiliates. 12
U.S.C. §§ 161, 164. The Comptroller has general rule-
making power to regulate national bank activities, 12
U.S.C. § 93a, may set limitations and conditions on the
making of certain loans by national banks, 12 U.S.C.
§ 371(a), appoints examiners to examine the affairs of
national banks, 12 U.S.C. §$§ 481-482, may appoint and
discharge conservators, 12 U.S.C. §§ 201-209, may ap
prove national bank association consolidations, 12 U.S.C.
§ 215(a), and may impose regulatory sanctions and civil
penalties for violations of banking laws or regulations,
12 U.S.C. § 1818. The Comptroller reports annually to
Congress on these activities. 12 U.S.C. § 14.
In addition to their general powers to conduct the busi-
ness of banking and incidental activities, see 12 U.S.C.
§ 24 (Seventh); NationsBank, 115 S. Ct. 810, national
banks may engage in various banking and related activi-
ties specifically determined by Congress to be appropri-
ate. Congress has constitutional authority to grant na-
tional banks any powers, including trust and agency
that are “appropriate or relevant to the banking
business.” First Nat'l Bank v. Fellows ex rel. Union
Trust Co., 244 U.S. 416, 4,9 (1917).
Congress in 1916 expanded national bank powers by
enacting Section 92, which authorizes national banks lo-
cated in small towns to sell insurance and empowers the
Comptroller to regulate this activity. Act of Sept. 7, 1916,
ch. 461, 39 Stat. 752, 753. Section 92 provides:
In addition to the powers now vested by law in
national banking associations organized under the
laws of the United States any such association lo-
cated and doing business in any place the population
;
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ment of any premium on insurance
through its agency by its principal: And provided
application for insurance.
12 U.S.C. § 92. A central purpose of Section 92 was to
“enlarge” national bank powers, providing such institu-
tions “with additional sources of revenue and plac{ing]
them in a position where they could compete with local
state bank and trust companies.” Letter from J. Skelton
Williams, Comptroller of the Currency, to Sen. Robert
L. Owen (June 8, 1916), reprinted in 53 Cong. Rec.
11001 (1916).
B. Florida May Not Interfere With The Authorized
Operations Of National Banks Unless Authorized
By Congress To Do So.
National banks operate outside the sphere of state reg-
ulation of the business of banking. The national banking
system is to be “ ‘independent, so far as powers conferred
are concerned, of state legislation which, if permitted to
be applicable, might impose limitations and restrictions as
various and as numerous as the States.’” First Nat'l Bank
v. California, 262 U.S. 366, 369 (1923) (quoting Easton
v. lowa, 188 U.S. 220, 229 (1903)).
11
This Court long has recognized that where the federal
regulatory mechanism deals with activities of national
banks, the states may not circumscribe those activities
even in areas that normally might be considered matters
of state concern. In Easton v. lowa this Court held that
because the National Bank Act established a mechanism
to address the insolvency of a national bank, Iowa could
not enforce a law penalizing a national bank’s officers for
accepting deposits during a period of insolvency.
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Easton, 188 U.S. at 238.
A further illustration of the limited state power over
national bank operations is the fact that state banking
Officials explicitly are precluded from reviewing national
bank records except in narrowly restricted circumstances.
See 12 U.S.C. § 484(b) (permitting state examinations
only to ensure compliance with applicable state unclaimed
property or escheat laws, and then only if the state has
reasonable cause to believe that those laws have been
violated); see also Guthrie v. Harkness, 199 U.S. 148,
159 (1905) (“It was the intention that this statute [Rev.
Stat. § 5241] should contain a full code of provisions upon
the subject, and that no state law or enactment should
undertake to exercise the right of visitation over a na-
tional corporation.”); 12 U.S.C. §92a(c) (state bank-
ing authorities may review Comptroller’s reports of ex-
12
amination of national banks insofar as the reports relate
to the trust department of the bank but are not authorized
by this provision to examine the books, records, or assets
of the bank itself).
In general, state attempts to regulate national banks
must fail when the state law conflicts with federal law,
frustrates the congressional purpose underlying the fed-
eral banking statutes, or impairs the efficiency of national
Davis v. Elmira Sav. Bank, 161 U.S. 275, 283 (1896).
“General and undiscriminating” state laws are applicable
to national banks, as to other busineses, so long as those
laws do not impair the exercise by national banks of the
powers Congress has entrusted to them. /d. at 290; First
Nat'l Bank v. Missouri, 263 US. 640, 656 (1924);
McClellan v. Chipman, 164 U.S. 347, 357 (1896).
business they are empowered to conduct, a state cannot
limit the ability of national banks to exercise that power
unless Congress expressly has authorized the state to do so.
On a few narrow and explicit occasions, Congress has
done just that.
13
Branch banking is a notable example, particularly be-
cause at the same time the Senate considered Section
that enacted Section 92 also contained a provision
to permit national banks to establish branches.
S. Rep. No. 481, 64th Cong., Ist Sess. 8 (1916).
floor debate the Senate agreed to an amendment
that would prohibit such branching “in any State whose
Statutes do not specifically authorize branches for banks
having State charters.” 53 Cong. Rec. 11153 (1916).
Moments later the Senate took up the provision that
ultimately became Section 92. Jd. The lone issue dis-
cussed about the insurance sale provision was whether
the threshold population figure should be 3000, as the
Comptroller and the Senate Banking and Currency Com-
i recommended, or 5000, as requested by Sena-
of Minnesota. Jd. The latter figure was
d. Thus the Senate, fresh from debate on
imposing state law limitations on branch banking, con-
sidered Section 92 with not a single senator suggesting
that this new power to act as insurance agent should be
subject to state law restrictions. Although the branch
banking provision was dropped in conference, S. Rep.
No. 533, 64th Cong., Ist Sess. 7 (1916) (conference re-
port), the state law limitation on branching was included
the McFadden Act authorized national banks to
establish branches eleven years later. Act of Feb. 25,
1927, ch. 191, § 7, 44 Stat. 1225, 1228 (current version
at 12 U.S.C. § 36).
Congress in other instances has authorized state law
limitation on national bank powers. For example, Con-
gress has provided that state laws limiting interest rates
apply to national banks located in those states. 12 U.S.C.
§ 85; see generally Farmers’ & Mechanics’ Nat'l Bank vy.
Dearing, 91 U.S. 29 (1875) (discussing forerunners of
12 U.S.C. § 85). Congress intended some of these pro-
r
14
visions to ensure that national banks enjoy the same
benefits that have been conferred by state legislatures on
state banks. E.g., 12 U.S.C. § 29 (providing that in cer-
tain circumstances, national banks may hold property for
as long as a state-chartered bank would be permitted to
do so under state law). Congress likewise has authorized
national banks to act “as trustee, executor, administrator,
[or] registrar of stocks and bonds,” so long as such au-
thorization is “not in contravention of State or local law.”
12 U.S.C. § 92a; see also, e.g., 12 U.S.C. § 24 (Eighth)
(permitting charitable contributions by national banks
unless state law prohibits such contributions by state
banking institutions); 12 U.S.C. §90 (permitting na-
tional banks to give security for deposits by states or
political subdivisions to the extent authorized by state
law).
In short, where Congress intends to permit state law to
circumscribe federally created banking powers, Congress
does so expressly and should not lightly be presumed to
do so by implication. See Franklin Nat'l Bank v. New
York, 347 U.S. 373, 378 & n.7 (1954). In Franklin,
this Court held that New York could not prohibit a na-
tional bank from using the term “savings” in its name
because national banks had the right to receive deposits
and pay interest on customers’ savings. Although the
state law presented no direct conflict (because the Na-
tional Bank Act does not expressly empower national
banks to use “savings” in their names), the Court found
no congressional intent to subject a “phase of national
banking to local restrictions” by implication where Con-
gress had done so “by express limitation in several other
instances.” Jd. at 378; see also Ramapo Bank v. Camp,
425 F.2d 333, 344 (3d Cir.) (because National Bank
Act provision on bank relocations contains no express
grant of power to states, contrary state law preempted),
cert. denied, 400 U.S. 828 (1970). Except as Congress
has otherwise provided, “the State cannot lay hold of its
general control of administration to deprive national
15
banks of their power to compete that Congress is author-
ized to sustain.” Missouri ex rel. Burnes Nat'l Bank v.
Duncan, 265 U.S. 17, 24 (1924) (Holmes, J.).
Congress did not subject the “phase of national bank-
ing” at issue here—insurance agency activity—to “local
restrictions.” Section 92 accords the states no power
over national banks. Congress explicitly acknowledged
banks acting as agents for state-licensed insurance com-
panies.* Congress kept in the hands of the Comptroller,
and out of the hands of the states, authority over the
en activities of the national banks them-
selves.
In granting national banks the power to act as insur-
ance agents, Congress could have permitted banks to
exercise that power only where in accord with state law.
Congress also could have provided that national banks
may act as insurance agents subject to “such rules and reg-
ulations as the State insurance authorities may prescribe.”
Or Congress might have provided that national banks
may act as general insurance agents to the “same extent
as state-chartered banks” or only if such activity were
“not in contravention of State law.”
Congress did not select any of these options. Section
92 does not contemplate any state role in determining
whether national banks may sell insurance. Congress
chose to retain federal supremacy over the power of
*“(A national banking] association located and doing business
in any place the population of which does not exceed five thousand
- . » May, under such rules and regulations as may be prescribed
by the Comptroller of the Currency, act as the agent for any fire,
life, or other insurance company authorized by the authoriites of
the State in which said bank is located to do business in said
State.” 12 U.S.C. § 92.
16
national banks to act as insurance agents and reposed in
the Comptroller authority to prescribe any necessary rules.
The Florida antiaffiliation law provides that “[nJjo
insurance agent . . . who is associated with . . . a finan-
cial institution shall engage in insurance agency activities.”
Fla. Stat. Ann. § 626.988(2) (quoted in full at page 5
of Petition). The Florida law by its terms imposes this
restriction upon national banks as well as state chartered
institutions. Jd. § 626.988(1)(a) (see Pet. at 4-5). Flor-
ida singles out banks, including national banks and affili-
ated persons, banning them from the insurance market-
place despite the express language of Section 92.‘ Flor-
ida’s law thus seeks to do precisely what Justice Holmes
described as forbidden—‘“to deprive national banks of
their power to compete.” See Missouri ex rel. Rurnes
Nat'l Bank, 265 U.S. at 24.
C. The General Language Of The McCarran-Ferguson
Act Is Not Directed At National Bank Powers,
Including The Specific Power To Sell Insurance
Granted By Section 92.
Mc-Carran-Ferguson was not intended to restrict na-
tional bank insurance activities authorized by federal law.
Neither its text nor its legislative history contains any
reference to banking.
Until 1944 many believed that the issuance of insur-
ance contracts was not a transaction in “commerce.” In
that year this Court held that Congress has power under
4That the Florida statute is riddled with exceptions—i.e., it
exempts from the restriction banks that are not subsidiaries or
affiliates of a bank holding company and are located in a city having
less than 5000 residents, as well as “grandfathered” banks engaged
in insurance sales prior to enactment, Fla. Stat. Ann. § 626.988 (1)
—demonstrates that the law’s true purpose is to protect the income
of independent insurance agents. See generally Brief of American
Bankers Association et al. as Amici Curiae, Point II; Brief of
Florida Bankers Association as Amicus Curiae, passim.
17
the Commerce Clause, U.S. Const. art. 1, § 8, cl. 3, to
regulate insurance activity and had exercised that power
permissibly in enacting the Sherman Act. United States v.
South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944).
In the eyes of Congress, South-Eastern Underwriters
threatened long-standing state regulation and taxation of
the business of insurance in two ways. First, federal laws
enacted under Commerce Clause authority could, by im-
plication, be applied to supersede state regulation of
insurance. Second, even in the absence of legislation
under the Commerce Clause, the “dormant” commerce
power might be construed to restrict state regulation of
insurance activity. Prudential Ins. Co. v. Benjamin, 328
U.S. 408, 429 (1946).°
McCarran-Ferguson states that it was enacted so that
“silence on the part of the Congress shall not be construed
to impose any barrier to the regulation or taxation” of
the insurance business by the state. 15 U.S.C. § 1011
(emphasis added). In the words of Senator O’Mahoney,
which were confirmed by Senator Ferguson, what Con-
gress sought to assure was that “no existing law and no
future law should, by mere implication, be applied to the
business of insurance” simply because the law might relate
to commerce. 91 Cong. Rec. 1487 (1945) (emphasis
added). To this end, Section 2(b) of McCarran-Ferguson
provides that a federal law may only preempt state in-
surance laws if the federal enactment “specifically relates
to the business of insurance.” 15 U.S.C. § 1012(b).
® Before South-Eastern Underwriters, “negative implication from
the commerce clause was held not to place any limitation” on state
insurance regulation, Benjamin, 328 U.S. at 414, and the Supreme
Court routinely had upheld state regulation of the insurance ac-
tivities of out-of-state companies, e.g., Paul v. Virginia, 75 U.S.
(8 Wall.) 168 (1869).
18
Accepted principles of statutory construction, as applied
by this Court to the federal banking laws, confirm this
conclusion:
[A] statute dealing with a narrow, precise, and spe-
cific subject is not submerged by a later enacted
statute covering a more generalized spectrum. “Where
there is no clear intention otherwise, a specific statute
will not be controlled or nullified by a general one,
regardless of the priority of enactment.”
Radzanower v. Touche Ross & Co., 426 U.S. 148, 153
(1976) (quoting Morton v. Mancari, 417 U.S. 535,
550-51 (1974)) (footnote omitted); see also Cook
County Nat'l Bank, 107 U.S. at 448, 451 (describing
National Bank Act as “a complete system for the estab-
lishment and government of national banks” and stating
that as a specific, comprehensive statute on a particular
subject, the National Bank Act prevails over a general—
though in that instance an earlier-enacted—statute).
In Radzanower an action was brought against a na-
tional bank for alleged violations of the Securities Ex-
change Act of 1934. The bank was headquartered in
Boston but the action was brought in the Southern District
of New York. The district court dismissed the action
because the special venue provision of the National Bank
Act then in force, 12 U.S.C. § 94 (1970), required that a
lawsuit against a national bank be brought in the district
where the home office of the bank was located. The court
of appeals affirmed. In this Court the plaintiff-petitioner
claimed that the applicable venue provision was not that
of the National Bank Act but that of the Securities Ex-
change Act of 1934. The latter provision permitted a
securities fraud action to be brought in any district where
the violation occurred or where the defendant might be
found.
Writing for the Court, Justice Stewart first noted that
12 U.S.C. § 94 evidenced a specific intent by Congress to
19
limit the courts in which a national bank could be sued.
Radzanower, 426 U.S. at 152. Invoking the rule of stat-
utory construction that the specific overrules the general,
even where the general law is the later-enacted of the two,
id. at 153, as well as the “ ‘cardinal principle . . . that
repeals by implication are not favored,’” id. at 154 (quot-
ing United States v. United Continental Tuna Corp., 425
U.S. 164, 168 (1976) (footnote omitted)), the Court
held that the national bank venue provision prevailed.
The Court also noted that “[t])he legislative history of
the Securities Acts does not indicate that Congress con-
sidered banks as likely defendants in actions brought
under those acts.” Id. at 155 n.11.
Radzanower is analogous to this case. The Court
there noted that “[w]hen Congress enacted the narrow
venue provisions of the National Bank Act, it was
focusing on the particularized problems of national
banks.” Jd. at 153. Seventy years later in the Securities
Exchange Act, Congress “enacted a general venue provi-
sion applicable to the broad universe of potential defend-
ants.” Id. at 153-54. So too here: When Congress en-
acted Section 92 in 1916, it focused on the particularized
issue of national bank sales of insurance and the public
policies favoring such activity. Decades later Congress
included in McCarran-Ferguson a general provision di-
rected to state regulation of the business of insurance,
saying nothing in the statute or legislative history about
national banks.
Radzanower found no “clear intention” on the part of
Congress in enacting the general securities fraud venue
provision to effect a “pro tanto repeal” of the specific
banking venue provision. /d. at 154 (noting that repeals
by implication are not favored). The Court’s observation
that the Securities Act “was enacted primarily to halt
securities fraud, not to regulate banks,” id. at 157, applies
with equal vigor here: McCarran-Ferguson was intended
to preserve existing state regulation of the business of
20
insurance as against implied congressional intrusion, not
to regulate banks or, for that matter, even to override
express federal statutes relating to the business of insur-
ance. See First Nat'l Bank of Eastern Ark. v. Taylor,
907 F.2d 775 (8th Cir.), cert. denied, 498 U.S. 972
(1990) (holding that McCarran-Ferguson was “not directed
at the activities of national banks”); see also United
Serv. Automobile Ass'n v. Muir, 792 F.2d 356, 364
(3d Cir. 1986) (state antiaffiliation law not within scope
of McCarran-Ferguson because, inter alia, “banks are
not entities within the insurance industry”), cert. denied,
479 U.S. 1031 (1987). As with the securities acts, the
text and legislative history of McCarran-Ferguson contain
no reference to banks. See Radzanower, 426 U.S. at 155
n.11.
Section 92 expressly authorizes the Comptroller to over-
see sales of insurance by national banks and to prescribe
“rules and regulations” to govern national banks acting
as insurance agents.° Unlike the McFadden Act and
the other provisions noted above, Section 92 does not con-
template any state-law limitations on such activities.
Florida’s law directly conflicts with the statutory power
specifically bestowed by Section 92: Florida has attempted
absolutely to prohibit Petitioner, which is a national bank,
from exercising its Section 92 right to sell insurance. Un-
der traditional preemption analysis, Florida’s law would
fall because it interferes with the congressional scheme.
E.g., Franklin Nat'l Bank, 347 U.S. at 378-79 (power im-
plicit under the federal banking laws for banks to use
word “savings” in advertising preempts New York law
prohibiting use of that term); Fidelity Federal Sav. &
Loan Ass'n v. De La Cuesta, 458 U.S. 141 (1982) (Cali-
®* The enactment of Section 92 in 1916 marked one of the first
congressional grants of rulemaking authority to the Comptroller.
More than sixty years would pass before Congress explicitly
granted the Comptroller broad rulemaking powers. Depository
Institutions Deregulation and Monetary Control Act of 1980, Pub.
L. No. 96-221, § 708, 94 Stat. 182, 188 (codified as amended at 12
~U.S.C. § 98a).
21
fornia law prohibiting due-on-sale clause in loan instru-
ments preempted by federal law permitting same); see also
Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230
(1947) (state law preempted where federal law “touch[es]
a field in which the federal interest is so dominant that
the federal system will be assumed to preclude enforcement
of state laws on the same subject”). Nothing in the text,
legislative history, or purpose of McCarran-Ferguson al-
ters this conclusion.”
II. EVEN IF McCARRAN-FERGUSON APPLIES TO
NATIONAL BANKS, SECTION 92 “SPECIFICALLY
RELATES” TO THE BUSINESS OF INSURANCE
WITHIN THE MEANING OF SECTION 2(b) OF
McCARRAN-FERGUSON AND ACCORDINGLY IS
PRESERVED BY McCARRAN-FERGUSON.
Even if McCarran-Ferguson applies to national banks,
Section 2(b) does not save the Florida statute from pre-
emption by Section 92. Section 2(b) provides:
No Act of Congress shall be construed to invalidate,
impair, or supersede any law enacted by any State
for the purpose of regulating the business of insur-
7 Because the Florida law flatly prohibits bank participation in
insurance sales, this case presents only the issue whether a state
may deny a national bank or its employees a license to engage in
insurance activities. The Court need not address the extent, if any,
to which states may require national banks to conform to insur-
ance regulations that otherwise apply to licensed insurance agents.
Should such issues arise, the Comptroller has the express authority
under Section 92 to deal with them. Indeed, the Comptroller long
has encouraged national banks to comply with state insurance
licensing laws that neither discriminate against nor stand as an
obstacle to national banks. He has issued opinion letters asserting
that national banking laws preempt state licensing requirements
in only those narrow circumstances. See OCC Letter No. 475
(March 22, 1989), reprinted in [1989-1990 Transfer Binder] Fed.
Banking L. Rep. (CCH) { 83,012; OCC Letter No. 623 (May 10,
1993), reprinted in [19938-1994 Transfer winter) Fed. Banking L.
Rep. (CCH) { 83,505.
22
ance . . . unless such Act specifically relates to the
business of insurance.
15 U.S.C. § 1012(b) (emphasis added). The language,
history, and purpose of Section 2(b) compel the conclu-
sion that Section 92 cat relates” to the business
of insurance.®
When read in conjunction with Section 2(b), Section
92 is seen to preempt the conflicting Florida law because
Section 92 explicitly authorizes insurance sales by national
banks and therefore “specifically relates to the business
of insurance.” In ordinary parlance, “specifically relates”
means no more than that the law refers in some explicit
sense to or has a connection with that subject. “The or-
dinary meaning of [‘relating to’] is a broad one—‘to stand
in some relation; to have bearing or concern; to pertain;
refer; to bring into association with.’” Morales v. Trans
World Airlines, 504 U.S. 374, 383 (1992) (quoting
Black’s Law Dictionary); see also New York State Con-
ference of Blue Cross & Blue Shield Plans v. Travelers
Ins. Co., 115 S. Ct. 1671, 1677 (1995) (“in the normal
sense of the phrase,” the term “relates to” means “has a
connection with or reference to”) (quoting Shaw v. Delta
Air Lines, 463 U.S. 85, 96-97 (1983) (internal quota-
tion marks omitted) ). Thus the plain meaning of Section
2(b) is that federal law preempts state insurance regula-
§ Because Section 92 specifically relates to the business of insur-
ance and therefore preempts the Florida antiaffiliation statute, this
Court need not determine whether the Florida statute was “en-
acted for the purpose of regulating the business of insurance” under
the first prong of Section 2(b). Should the Court reach that is-
sue, however, the first prong does not shield the Florida statute from
preemption. The Florida statute was enacted to regulate the con-
duct of banks, not to regulate the business of insurance. See United
Service Automobile Ass’n v. Muir, 792 F.2d at 364 (holding that
“affiliation between insurers and banks has no integral connection
to the relationship between insured and the insurer’); see also
Brief of American Bankers Association et al. as Amici Curiae,
Point II; Brief of Florida Bankers Association as Amicus Curiae,
passim.
23
tion if the federal provision bears an express relation to
the business of insurance.
Senator Ferguson, the Senate sponsor of McCarran-
Ferguson, confirmed this conclusion during floor debate
on the legislation. The purpose of the “specifically re-
lates to” provision, he explained, was to assure that fed-
eral legislation be accorded preemptive force only if it
does more than relate generally to interstate commerce:
What we have in mind is that the insurance business,
being interstate commerce, if we merely enact a law
relating to interstate commerce, or if there is a law
now on the statute books relating in some way to
interstate commerce, it would not apply to insurance.
We wanted to be sure that the Congress, in its
wisdom, would act specifically with reference to
insurance in enacting the law.
91 Cong. Rec. 1487 (1945) (emphasis added).
Section 92 speaks directly and unambiguously to the
business of insurance, and its relation to that business is
not “by mere implication.” Id. (colloquy between Sens.
O’Mahoney and Ferguson). Among other things, it states
that certain national banks may “act as the agent for any
fire, life or other insurance company .. . by soliciting
and selling insurance” and precludes national banks from
guaranteeing the “payment of any premium on insurance
policies.” 12 U.S.C. § 92 (emphasis added). Indeed, the
stated purpose of Section 92 is to permit national banks to
engage in the sale of insurance. The congressional con-
cern underlying McCarran-Ferguson—that federal law not
be construed by mere implication to override state insur-
ance law—has no application to this case.
Further demonstrating that “specifically relates to”
carries no more than its obvious meaning (i.e., refers to
in a specific manner), Congress provided elsewhere in
Section 2(b) that state laws are shielded from preemp-
tion only where such laws have the purpose to “regulat[e]”
—and not simply relate to—the business of insurance. 15
U.S.C. § 1012(b) (emphasis added); see Morales, 504
24
U.S. at 383-84 (distinguishing between “relating to” and
“regulate”). “Regulate” means “[t]o fix, establish, or con-
trol; . . . to direct by rule or restriction; to subject to
governing principles or laws.” Black’s Law Dictionary
1286 (6th ed. 1990). Congress did not limit the category
of preemptive federal statutes to those that regulate the
business of insurance, however. The contrasting termi-
nology used deliberately by Congress to distinguish be-
tween the two prongs of Section 2(b), cannot be dis-
missed as easily as the Respondents suggest.
The court of appeals contended that Section 92 does
not specifically relate to the business of insurance because
Congress enacted the provision before this Court’s de-
cision in South-Eastern Underwriters, at a time when
Congress did not believe that it had power to “regulate”
the business of insurance. Pet. App. 15a. Given Con-
gress’ choice not to use the term “regulate” to describe
the federal laws that preempt state insurance regulation,
however, this conclusion is erroneous. See Morales, 504
U.S. at 385-86 (holding that when Congress uses the
word “relate” it conveys a different—and far broader—
meaning than “regulate” ).
Moreover, given that when McCarran-Ferguson was
enacted there were no existing federal laws that evidenced
an intent to “regulate” the business of insurance, the court
of appeals’ novel interpretation of the phrase “relates to”
as meaning “regulates” makes no sense. E.g., South-
Eastern Underwriters, 322 U.S. at 544 (noting that before
1944 “Congress had at no time attempted to control the
insurance business”). Congress had not “regu-
lated” insurance prior to 1945, McCarran-Ferguson was
intended to retain the preemptive effect not only of fu-
ture acts of Congress but of federal statutes then in force.
91 Cong. Rec. 479 (1945) (colloquy between Sens. Mur-
dock and Ferguson). “Specifically relates” thus means
nothing more than that a law expressly relates to insur-
ance. Section 92 passes this test.
for the purpose of regulating the business of insurance
. . . unless such Act specifically so provides.” 91
Cong. Rec. 488 (1945) (Senate) (emphasis added); id.
1085-94 (House). Had Congress enacted that language,
” state law. H.R. Rep. No. 213, 79th Cong., Ist
Sess. 1 (1945) (conference report) (emphasis added).
Congress agreed to, and President Roosevelt approved,
the conference version. Act of March 9, 1945, ch. 20,
59 Stat. 34. Thus Congress expressly considered and re-
jected the very formulation that the court of appeals has
imposed in the decision under review.
ae 0 See a oe oe eee anes
to insurance activities, then, see Morales, 504 U.S.
383-84, it will preempt conflicting state laws that iain
insurance. Section 92 fits comfortably within the type of
federal law that specifically relates to the business of in-
surance and accordingly is preserved by the second prong
of McCarran-Ferguson’s Section 2(b).
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