United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 21, 2000 Decided May 16, 2000
No. 99-5158
Independent Insurance Agents of America, Inc., et al.,
Appellees
v.
John D. Hawke, Jr., Comptroller of the Currency,
and the Office of the Comptroller of the Currency,
Appellants
Appeal from the United States District Court
for the District of Columbia
(No. 98cv00562)
Douglas B. Jordan, Special Counsel, U.S. Department of
Treasury, argued the cause for appellants. With him on the
briefs were Robert B. Serino, Deputy Chief Counsel, L.
Robert Griffin, Director, Horace G. Sneed, Assistant Di-
rector, and F. Thomas Eck, IV, Senior Trial Attorney.
Chrys D. Lemon, John J. Gill and Michael F. Crotty were
on the brief for amici curiae American Bankers Association
and Association of Banks in Insurance.
Scott A. Sinder argued the cause and was on the brief for
appellees.
Before: Sentelle, Henderson and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Sentelle.
Circuit Judge Henderson concurs in the result.
Sentelle, Circuit Judge: In 1864, Congress granted na-
tional banks the power to "exercise ... all such incidental
powers as shall be necessary to carry on the business of
banking." Act of June 3, 1864, ch. 106, s 8, 13 Stat. 99, 101
(codified at 12 U.S.C. s 24 (Seventh) (1994)). Fifty-two years
later, Congress enlarged that grant by conferring the power
to act as general insurance agents to national banks located in
towns with a population not in excess of five thousand. See
Act of Sept. 7, 1916, ch. 461, 39 Stat. 752, 753-54 (codified at
12 U.S.C. s 92 (1994)). In 1999, Congress further enlarged
bank powers by allowing financial subsidiaries of "well capi-
talized and well managed" national banks to engage in a wide
variety of insurance activities both as an agent and broker.
Gramm-Leach-Bliley Act, Pub. L. No. 106-102, ss 103(a),
121, 113 Stat. 1338, 1342-50, 1373-81 (1999).
The Officer of the Comptroller of the Currency ("Comptrol-
ler" or "OCC"), defendant-appellant here, determined in 1997
that all national banks may sell as agent general casualty
insurance to protect against the risk of crop loss, under sole
authority of the original 1864 grant of power. Appellees,
Independent Insurance Agents of America, Inc., National
Association of Professional Insurance Agents, Inc., National
Association of Life Underwriters, National Association of
Mutual Insurance Companies, and Crop Insurance Research
Bureau (collectively "IIAA"), filed suit in the district court
claiming that this interpretation was incorrect as a matter of
law. The district court agreed and granted summary judg-
ment for appellees in an order signed March 23, 1999. See
Independent Ins. Agents of Am., Inc. v. Hawke, 43 F. Supp.
2d 21 (D.D.C. 1999). The Comptroller appeals, joined by two
associations representing banking interests as amici curiae.
We affirm.
I. Background
A. History
National banks, being creatures of statute, possess only
those powers conferred upon them by Congress. See Texas
& Pac. Ry. Co. v. Pottorff, 291 U.S. 245, 253 (1934); First
Nat'l Bank of Charlotte v. National Exch. Bank of Baltimore,
92 U.S. 122, 128 (1875). The National Bank Act of 1864, Act
of June 3, 1864, ch. 106, 13 Stat. 99 (codified as amended in
scattered sections of 12 U.S.C.), as amended, provides for the
chartering of national banks. As part of this statutory re-
gime, 12 U.S.C. s 24 (Seventh) confers the following powers
upon national banks:
[National banks shall have the power] [t]o exercise ...
all such incidental powers as shall be necessary to carry
on the business of banking; by discounting and negotiat-
ing promissory notes, drafts, bills of exchange, and other
evidences of debt; by receiving deposits; by buying and
selling exchange, coin, and bullion; by loaning money on
personal security; and by obtaining, issuing, and circulat-
ing notes....
12 U.S.C. s 24 (Seventh) (1994). The most pertinent phrase
to this case is "all such incidental powers as shall be neces-
sary to carry on the business of banking"; the following
enumeration of powers is only illustrative and the Comptrol-
ler may authorize additional activities if encompassed by a
reasonable interpretation s 24 (Seventh). See NationsBank
v. Variable Annuity Life Ins. Co., 513 U.S. 251, 258 n.2 (1995)
("VALIC"); American Ins. Ass'n v. Clarke, 865 F.2d 278,
281-82 (D.C. Cir. 1988).
The Comptroller's authority to confer "all such incidental
powers as shall be necessary to carry on the business of
banking" has been interpreted to mean powers "convenient or
useful in connection with the performance of one of the bank's
established activities pursuant to its express powers...."
Arnold Tours, Inc. v. Camp, 472 F.2d 427, 432 (1st Cir. 1972).
Whether a particular banking device's nomenclature harkens
to traditional banking activities is not dispositive. Instead,
the "powers of national banks must be construed so as to
permit the use of new ways of conducting the very old
business of banking." M&M Leasing Corp. v. Seattle First
National Bank, 563 F.2d 1377, 1382 (9th Cir. 1977).
For example, in M&M Leasing, the Ninth Circuit upheld
the Comptroller's determination that national banks may
"lease" personal property when the transaction is functionally
identical to a secured loan. See id. at 1380, 1383. Similarly,
in American Insurance Association, we held that national
banks may offer "municipal bond insurance" which was actu-
ally the functional equivalent of a standby letter of credit, a
traditional banking device. See 865 F.2d at 281-84.
In Independent Bankers Ass'n of America v. Heimann,
613 F.2d 1164 (D.C. Cir. 1980), we recognized the right of
national banks to offer "credit life insurance." That product
names the bank as beneficiary, not the bank customer, and is
a principal form of security for consumer loans. We noted
that "[u]nlike other forms of insurance coverage ... credit
life insurance is a limited special type of coverage written to
protect loans." Id. at 1170. Because credit life insurance is
"essential where ordinary loans on personal security are
involved" and does not "involve the operations of a general
life insurance business," we approved of the activity. Id.; see
also First Nat'l Bank of Eastern Arkansas v. Taylor, 907
F.2d 775 (8th Cir. 1990) (upholding authority of banks to sell
"debt cancellation contracts" to extinguish loan debts in the
event of death).
Even in light of the interpretations of s 24 (Seventh)
upheld in the above cases, however, when the OCC has
undertaken to authorize national banks to sell general forms
of insurance it has run into trouble. In 1916, Comptroller
John Skelton Williams asked Congress to augment the pow-
ers of national banks to offer insurance. In his view, national
banks located in "country towns and villages" were in need of
additional sources of revenue and should be allowed to more
fully compete with state chartered banks. Citing s 24 (Sev-
enth), the Comptroller noted a hurdle to his goal: "National
banks are not given either expressly nor by necessary impli-
cation the power to act as agents for insurance compa-
nies...." To resolve this situation, the Comptroller asked
Congress to grant insurance agency power to national banks,
but only those located in small towns. In his view, "it would
be unwise and therefore undesirable to confer this privilege
generally upon banks in large cities where the legitimate
business of banking affords ample scope for the energies of
trained and expert bankers." 53 Cong. Rec. 11,001 (1916).
Congress acted on the Comptroller's request. It passed an
amendment to the Federal Reserve Act, Act of Sept. 7, 1916,
ch. 461, 39 Stat. 752 (codified at 12 U.S.C. s 92 (1994)), which
provides:
In addition to the powers now vested by law in the
national banking associations organized under the law of
the United States any such association located and doing
business in any place the population of which does not
exceed five thousand inhabitants ... may, under such
rules and regulations as may be prescribed by the Comp-
troller of the Currency, act as the agent for any fire, life,
or other insurance company authorized by the authorities
of the State in which said bank is located to do business
in said State, by soliciting and selling insurance and
collecting premiums on policies issued by such compa-
ny....
12 U.S.C. s 92. Briefly put, this statute authorizes only
those national banks located in towns of 5,000 or less to sell
insurance as an agent.
In light of this statutory framework, both the Fifth and
Second Circuits have rejected attempts by the Comptroller to
authorize all national banks to sell insurance, purportedly
under the authority of the incidental powers clause of s 24
(Seventh). See Saxon v. Georgia Ass'n of Indep. Ins. Agents,
Inc., 399 F.2d 1010 (5th Cir. 1968); American Land Title
Ass'n v. Clarke, 968 F.2d 150 (2d Cir. 1992) ("ALTA").1
In Saxon, the Comptroller decided, without further con-
gressional authorization, that " '[i]ncidental to the powers
vested in them under 12 U.S.C. Section[ ] 24 ..., National
Banks have the authority to act as agent in the issuance of
insurance which is incident to banking transactions.' " Sax-
on, 399 F.2d at 1012 (quoting O.C.C. Ruling No. 7110). The
ruling was not limited to locales of less than 5,000 persons. A
group of insurance agents brought a declaratory judgment
action asking the court to hold the Comptroller's ruling
unlawful. On appellate review, the Fifth Circuit held that
s 24 (Seventh) could not confer general insurance powers
when considered in conjunction with the implications of s 92.
See id. at 1013-16. Judge Thornberry's concurrence shed
light on the basic dilemma: "From an economic standpoint, it
may be unfortunate that this Court is interfering with the
expansion of national banks ..., but the banks should look to
Congress, not the Comptroller." Id. at 1021 (Thornberry, J.,
concurring specially).
The scenario was similar in the Second Circuit ALTA case.
There, the OCC issued an interpretative letter in 1986 allow-
ing any national bank to act as agent in the general sale of
title insurance. See ALTA, 968 F.2d at 151. Relying on this
interpretation, the Comptroller authorized a national bank to
sell title insurance as agent to borrowers and lenders in
connection with real estate loans made by the bank. The
Comptroller attempted to distinguish Saxon on the grounds
that title insurance, unlike the broader range of activities
__________
1 Two other circuits have embraced the same reading of national
banking statutes as Saxon and ALTA without discussion. See
Commissioner v. Morris Trust, 367 F.2d 794, 795 (4th Cir. 1966)
("[A] national bank is prohibited from operating an insurance
department except in towns having a population of not more than
5000 inhabitants."); First Sec. Bank of Utah, N.A. v. Commission-
er, 436 F.2d 1192, 1195-96 (10th Cir. 1971) (citing Saxon and
Morris Trust), aff'd, 405 U.S. 394 (1972). The Supreme Court has
recognized this case law, but has had no occasion to pass on the
issue. See VALIC, 513 U.S. at 260-61; Commissioner v. First Sec.
Bank of Utah, N.A., 405 U.S. 394, 401-02 (1972).
authorized in Saxon, was essential to a bank's ability to
provide financing. The Second Circuit rejected this interpre-
tation, noting that the Saxon court did not look to the nature
of the insurance activity authorized. See id. at 155-57.
Rather, the ALTA court recognized that s 92 applies to "any
... insurance company," and that "a title insurance company
is surely an insurance company." Id. at 156 (internal quota-
tion marks omitted). The court held that even if s 24
(Seventh) could be read to encompass the general sale of title
insurance, s 92 precluded such a reading.
B. The Present Controversy
The facts of this case are a rerun of those in Saxon and
ALTA. Though the OCC is surely familiar with its past
defeats, it seems determined to repeat them.
On December 29, 1997, the OCC issued a letter ruling that
"a national bank may offer, as agent, multiple peril crop
insurance and hail/fire insurance (collectively, 'crop insur-
ance')...." (footnotes omitted). The product insures against
"unavoidable losses on crops, including losses due to drought,
excess moisture, insects, disease, flood, hail, wind and frost."
If a farmer's average yield drops below the insured level, the
insurance company pays the difference directly to the farmer.
The Comptroller ruled that the sale of crop insurance was
within the "business of banking" for three reasons: (1) crop
insurance is similar to credit-related insurance which banks
may offer and is a "logical outgrowth" of the bank's power to
make loans because it assists banks in making recovery from
borrowers; (2) crop insurance is something that benefits
farmers and banks by protecting against risks; and (3) the
risks are similar to those already borne by national banks in
the sale of insurance authorized under 12 U.S.C. s 92 or
elsewhere. The Comptroller further concluded that even if
the sale of crop insurance was not part of the business of
banking, it was "incidental" to that business. In a footnote,
the agency stated that the prior circuit decisions in Saxon
and ALTA were not applicable because those decisions were
only concerned with "broad forms" of insurance.
The district court rejected the Comptroller's interpretation.
Citing Saxon and ALTA approvingly, and relying on the
interpretative cannons of giving each provision of a statute
meaning and expressio unius est exclusio alterius, the court
reasoned that s 92 was "intended to remedy what Congress
saw to be the limited powers of section 24 (Seventh)" and
thus compelled the conclusion that all national banks did not
have general insurance powers. IIAA, 43 F. Supp. 2d at 24.
The court rejected the suggestion that "crop insurance" is
actually a credit-related product, like the credit-life insurance
approved in Heimann. See id. at 25-26. Unlike the product
in Heimann, payable to the bank, crop insurance protects
farmers and does not guarantee repayment to lenders like a
traditional security device.
II. Analysis
When interpreting the meaning of a federal statute admin-
istered by a single agency, we engage in the two-step inquiry
of Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984).
At the first step, we inquire into whether Congress has
directly spoken to the precise question at issue. If it has, we
must give effect to that express intent. When performing
this first step, we employ traditional tools of statutory con-
struction. See id. at 843 n.9; INS v. Cardoza-Fonseca, 480
U.S. 421, 446 (1987). If the statute before us is silent or
ambiguous on the precise issue, we proceed to the second
step, where we will defer to the agency's interpretation of the
statute if it is reasonable and consistent with the statute's
purpose. See, e.g., Nuclear Info. Resource Serv. v. Nuclear
Regulatory Comm'n, 969 F.2d 1169, 1173 (D.C. Cir. 1992) (en
banc).2
__________
2 In Christensen v. Harris County, ___ S. Ct. ____, 2000 WL
504578 (U.S. May 1, 2000), decided after oral argument in this case,
the Supreme Court held that agency interpretations voiced in
opinion letters "do not warrant Chevron-style deference." Id. at *6.
Instead, they are "entitled to respect" under Skidmore v. Swift &
Co., 323 U.S. 134, 140 (1944), "but only to the extent that those
interpretations have the 'power to persuade.' " Christensen at *6
(quoting Arabian American Oil Co., 499 U.S. 244, 256-58 (1991)).
In this case, our inquiry is whether the "all such incidental
powers" language of s 24 (Seventh) includes the power of
banks to sell crop insurance. While the word "incidental"
may be a poster child for ambiguity, we find that it is not
ambiguous in the context of general insurance activities. A
broad statute when passed "may have a range of plausible
meanings," but subsequent acts can narrow those meanings
"where the scope of the earlier statute is broad but the
subsequent statutes more specifically address the topic at
hand." FDA v. Brown & Williamson Tobacco Corp., 120
S. Ct. 1291, 1306 (2000); see also G.A. Endlich, A Commen-
tary on the Interpretation of Statutes s 399 (1888) ("[T]he
special mention of one thing indicates that it was not intended
to be covered by a general provision which would otherwise
include it."). Just so here. Because s 92 expressly grants
national banks located in small towns the general power to
sell insurance as agent, reading s 24 (Seventh) to authorize
the sale of insurance by all national banks transgresses both
common sense and two traditional rules of statutory interpre-
tation: the presumption against surplusage and expressio
unius est exclusio alterius.
A broad reading of s 24 (Seventh) to allow the general sale
of insurance by national banks would render at least two
other related statutes meaningless, in violation of the "end-
lessly reiterated principle of statutory construction ... that
all words in a statute are to be assigned meaning, and that
nothing therein is to be construed as surplusage." Qi-Zhuo
v. Meissner, 70 F.3d 136, 139 (D.C. Cir. 1995); see also
Halverson v. Slater, 129 F.3d 180, 185 (D.C. Cir. 1997)
("Congress cannot be presumed to do a futile thing."). Why
would Congress have passed s 92 to confer insurance authori-
__________
All parties in this case assumed that the normal Chevron framework
applied to the Comptroller's interpretation of s 24 (Seventh) con-
tained in a letter. See Independent Ins. Agents of Am., Inc. v.
Ludwig, 997 F.2d 958 (D.C. Cir. 1993) (applying Chevron step two
to a Comptroller letter). We frame part of our analysis in terms of
whether the Comptroller's decision is "reasonable," infra at 12-13,
and our conclusions are equally applicable under the less-deferential
standard of Skidmore as under Chevron step two.
ty to some national banks if all national banks already had
that power pursuant to s 24 (Seventh)? It would have been
completely useless. See ALTA, 968 F.2d at 155. Likewise,
the Gramm-Leach-Bliley Act authorizes financial subsidiaries
established by "well capitalized and well managed" national
banks to "[i]nsur[e] ... against loss, harm, damage, illness,
disability, or death" as agent or broker. Pub. L. No. 106-102,
ss 103(a) (listing activities that financial holding companies
may engage in), 121 (authorizing financial subsidiaries of
national banks to engage in some of these activities), 113 Stat.
1338, 1343, 1373-74. If national banks could already sell
insurance under s 24 (Seventh), Congress would have no
reason to pass a statute limiting that power to financial
subsidiaries of only "well capitalized and well managed" na-
tional banks.
In addition to the canon of avoiding surplusage, expressio
unius est exclusio alterius also points to the conclusion that
Congress did not intend for all national banks to have insur-
ance powers under s 24 (Seventh). See Ethyl Corp. v. EPA,
51 F.3d 1053, 1061 (D.C. Cir. 1995) ("mention of one thing
implies the exclusion of another thing") (quoting American
Methyl Corp. v. EPA, 749 F.2d 827, 835-36 (D.C. Cir. 1984)).
In context, because s 92 only confers the authority to sell
insurance on banks in smaller locales, and because national
banks only have the powers granted to them by statute, s 92
strongly confirms the view that the more general grant in
s 24 (Seventh) did not include broad insurance powers. See
ALTA, 968 F.2d at 155-56; Saxon, 399 F.2d at 1013-14.
The Comptroller argues that the expressio unius maxim
cannot preclude an otherwise reasonable agency interpreta-
tion. This is not entirely correct. True, we have rejected the
canon in some administrative law cases, but only where the
logic of the maxim-that the special mention of one thing
indicates an intent for another thing not be included else-
where-simply did not hold up in the statutory context. See
Texas Rural Legal Aid, Inc. v. Legal Servs. Corp., 940 F.2d
685, 694 (D.C. Cir. 1991); Clinchfield Coal Co. v. FMSHRC,
895 F.2d 773, 779 (D.C. Cir. 1990); Cheney R.R. Co. v. ICC,
902 F.2d 66, 68-69 (D.C. Cir. 1990). As we have noted, if
there are other reasonable explanations for an omission in a
statute, expressio unius may not be a useful tool. See
Clinchfield, 895 F.2d at 779; see also Carter v. Director,
Office of Workers' Compensation Programs, 751 F.2d 1398,
1401-02 (D.C. Cir. 1985). But, where the context shows that
the "draftsmen's mention of one thing, like a grant of authori-
ty, does really necessarily, or at least reasonably, imply the
preclusion of alternatives," the canon is a useful aid. Shook v.
District of Columbia Finan. Responsibility and Management
Assistance Auth., 132 F.3d 775, 782 (D.C. Cir. 1998); see also
Halverson, 129 F.3d at 185-87; Michigan Citizens for an
Indep. Press v. Thornburgh, 868 F.2d 1285, 1292-93 (D.C.
Cir.), aff'd by an equally divided court, 493 U.S. 38 (1989).
In this case, the two canons upon which we rely inarguably
compel our holding that s 24 (Seventh) unambiguously does
not authorize national banks to engage in the general sale of
insurance as "incidental" to "the business of banking." The
Supreme Court employed reasoning identical to ours in Texas
& Pacific Railway Co. v. Pottorff, 291 U.S. 245 (1934).
There, the Court considered whether a national bank has the
incidental power under s 24 (Seventh) to pledge its assets to
secure a private deposit. The Court found no evidence that
such a pledge was in any way incidental to banking, and
furthermore reasoned that if this power was authorized, there
would have been no need to later alter 12 U.S.C. s 1290 to
provide a limited power to pledge. See id. at 257-59. The
pre-Chevron vintage of Pottorff is irrelevant; the High Court
had already made clear by that time that interpretations of
the Comptroller merit deference. See First Nat'l Bank in St.
Louis v. Missouri, 263 U.S. 640, 658-59 (1924).
Even in light of the inherent ambiguity of the "incidental"
phrase of s 24 (Seventh), we nonetheless do not find that the
statute is ambiguous here within the meaning of Chevron.
To the contrary, the instant case and Pottorff both suggest
that the cannons of avoiding surplusage and expressio unius
are at their zenith when they apply in tandem. Cf. Halver-
son, 129 F.3d at 184-86; Endlich, supra, at s 399. Under
the first step of Chevron, we hold that Congress has not
authorized the Comptroller to permit the sale of crop insur-
ance solely under the authority of s 24 (Seventh).
To the extent any ambiguity remains on the issue, we
conclude that the Comptroller's interpretation of s 24 (Sev-
enth) is not reasonable. Crop insurance is a general form of
property or casualty insurance protecting farmers against
many potential disasters. It falls squarely within the types of
insurance held unauthorized in Saxon and ALTA. Unlike the
special credit-life product which we approved in Heimann,
the beneficiary of crop insurance is the farmer-insured, not
the bank. If the sale of crop insurance is "incidental" to
banking under s 24 (Seventh), there would no way of distin-
guishing other general forms of insurance. Agriculturalists
undoubtedly rely on banks to obtain loans, but so do other
individual and corporate borrowers who may also wish to
purchase property or casualty insurance to protect their
interests. Nothing about "crop insurance" leads to a conclu-
sion that it can be treated differently than other general
forms of insurance under national banking laws just because
its coverage is limited to farmers.
The OCC supports its interpretation on the grounds that
the sale of crop insurance involves risks similar to those
already assumed by banks, would benefit customers, and
would be a "logical outgrowth" of current bank activities.
The Comptroller cites as support, for example, the experience
of national banks in small locales in selling all types of
insurance under 12 U.S.C. s 92. However, that activity is
statutorily authorized. While the sale of crop insurance may
be a "logical outgrowth" that national banks could apply their
prior experience to, that alone cannot constitute legal authori-
zation. If it did, national banks would be able to constantly
expand their field of operations on an incremental basis
without congressional action. First would be the authority to
sell crop insurance, followed by whatever insurance against
business risks of a bank customer is the next "logical out-
growth." There would be no logical stopping point. Section
24 (Seventh) cannot bear the weight the Comptroller propos-
es to place on it under its test. The Comptroller may of
course authorize activities under s 24 (Seventh) "within rea-
sonable bounds," but today's interpretation is not within such
bounds. VALIC, 513 U.S. at 258 n.2.
III. Conclusion3
In the end, this case may have little practical effect.
National banks have the power to sell insurance, including
crop insurance, if they meet the requirements of the Gramm-
Leach-Bliley Act. However, they do not have the power to
sell crop insurance solely under the authority of 12 U.S.C.
s 24 (Seventh). The judgment of the district court is
Affirmed.
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3 There is a pending motion by appellees to strike supplemental
exhibits of amici curiae. That motion is hereby denied.