Janice A. Oser, Esq.

It wasn’t front-page news for the editors of the New York Times when the Supreme Court recently struck down a federal regulation standing in the way of any state seeking to enforce its laws against national banks (“Justices Rule That States Can Press Bank Cases,” by John Schwartz, June 30, 2009). National banks are chartered, or licensed, by the federal government under the National Bank Act, as distinguished from state banks, which are licensed by state governments.

The story ran on the front page of the Times’ Business section, and who’s to say that the editors of the Times don’t know their business? Certainly not this writer. But to “Court watchers,” a term used here as extending beyond law professors and the like to anyone who likes to follow the Court’s more important rulings as reported in the press, one fact about the Court’s decision was Big News.

Namely, the fact that this particular 5-4 decision was not, as has been usual in recent years, a decision by the five conservative Justices prevailing over the four liberal ones. The “5” in this 5-4 decision were the four liberal Justices joined by Justice Antonin Scalia, a stalwart of the Court’s conservative wing. Justice Scalia, in fact, wrote the opinion.

The rule that the Court struck down was a regulation issued by the Office of the Comptroller of the Currency. The OCC regulates national banks, and its regulation implemented a provision of the National Bank Act that was interpreted in the regulation so as to bar states from enforcing state laws against national banks. The Court held that the Comptroller’s regulation purporting to pre-empt, take precedence over, state law enforcement against national banks is not a reasonable interpretation of the National Bank Act.

The case arose out of letters sent by the then Attorney General of New York, Eliot Spitzer, to numerous national banks, requesting information about their lending practices, which he suspected to be racially discriminatory. In the letters, he warned the banks of the potential illegality of their acts. The OCC and a banking trade group consisting of several national banks sued unsuccessfully to block the information request.

In his opinion, Justice Scalia distinguished between supervisory powers granted by Congress to the OCC with respect to national banks, on the one hand, from the power to enforce the law, on the other, and he wrote that in seeking the information, the attorney general was acting in the role of “sovereign law enforcer.”

One commentator was reported in the Times article as saying that the decision upholds “the theme of federalism” (read: “state sovereignty,” or “states” rights”) that has figured in several recent Supreme Court decisions. This might explain the “Big News,” that is, the unusual grouping of Justice Scalia with the four liberal Justices in the 5-4 decision.

Justice Scalia has usually weighed in on the side of the conservative justices in 5-4 decisions upholding a state’s sovereignty since the beginning of what some have called the “Rehnquist Revolution.” The term refers a series of decisions during the term of the late Chief Justice William Rehnquist upholding the states’ “sovereign immunity,” based on the 11th Amendment, from lawsuits of various sorts.

One such decision barred lawsuits against states by state employees claiming age bias. Linda Greenhouse wrote in the New York Times of January 12, 2000, “Continuing its march in the direction of states’ rights, the Supreme Court ruled today that Congress lacked the authority to bind state governments to the federal law that bars discrimination against older workers.”

But the twists and turns of the Court’s holdings on state sovereignty, or some of them, are a tale for another day.