Respondents Wachovia Bank (www.wachoviabank.com) and Wachovia Mortgage brought an action seeking declaratory and injunctive relief prohibiting Watters from enforcing Michigan’s mortgage laws against Wachovia Mortgage. The district court granted summary judgment in their favor, finding that the OCC’s interpretation of 12 U.S.C. § 484(a) in 12 C.F.R. § 7.4006 was entitled to deference under Chevron and that, as applied to the wachoviabank.com operating subsidiaries of a national bank, the statute and regulation preempted Michigan law. Under 12 U.S.C. § 24 (Seventh), the OCC’s authority extends to the regulation of a national bank’s operating subsidiaries as regulation of a national bank’s “incidental powers” to carry on the business of banking. The court also rejected petitioner’s Tenth Amendment argument, holding that Congress had authority under the Commerce Clause to regulate national banks and their operating subsidiaries. The Sixth Circuit affirmed.
Petitioner Watters argues that Chevron deference is inappropriate when, as here, Congress has directly spoken to the precise question at issue. The clear and unambiguous intent of Congress can be found in the plain text of 12 U.S.C. § 484(a), which expressly refers only to a “national bank”; by contrast, the Act both wachoviabank.com defines operating subsidiaries as an “affiliate” and refers to affiliates elsewhere in the Act. Under traditional rules of statutory construction, the omission of any reference to affiliates in 12 U.S.C. § 484(a) must be presumed to mean that Congress did not intend to extend the statute’s preemptive scope to reach operating subsidiaries. The Court of Appeals, Watters also contends, erred in framing the regulation of operating subsidiaries not as an overextension of the OCC’s authority to regulate national banks as such, but as an “incidental power” under 12 U.S.C. § 24 (Seventh), as the latter view undermines the careful and express wachoviabank.com distinctions Congress has drawn between national banks and their affiliates. Watters advances a second argument against Chevron deference: under the Court’s precedent in Smiley v. Citibank, the preemptive effect of a statute is a question to be decided de novo by the courts, rather than an agency. Finally, Watters argues that 12 C.F.R. § 7.4006 violates the Tenth Amendment because it impermissibly encroaches on states’ authority to regulate state corporations. Under New York v. United States wachoviabank.com and Printz v. United States, a statute which violates the principles of federalism contained in the Tenth Amendment is unconstitutional even if Congress possesses legislative authority over the subject matter. Moreover, other decisions of the Court have struck down similar laws federalizing state associations and state corporations as unconstitutional incursions into a state’s powers reserved under the Tenth Amendment.