On Friday, the U.S. Court of Appeals for the Sixth Circuit considered whether federal law preempts application of the Ohio Mortgage Broker Act to agents who sell mortgage products for State Farm Bank in State Farm Bank FSB v. Reardon. Yes, the court concluded. While the court agreed with the federal Office of Thrift Supervision, it did not show any deference to the OTS' conclusion. As the court explained in a footnote:
The approach we take today (i.e., answering the preemption question without consideration of the OTS Opinion and the level of deference it should be afforded) is consistent with the Supreme Court’s approach in Watters v. Wachovia Bank, N.A., 127 S.Ct. 1559, 1572 (2007). In Watters, the Court determined that federal banking law preempted the application of a Michigan licensing and registration law to subsidiaries of a national bank. Id. The Court reached its conclusion without devoting any discussion to whether the Office of the Comptroller of the Currency’s (“OCC”) interpretation of the National Banking Act was entitled to Chevron deference. Id. The Court’s failure to discuss the OCC’s interpretation of the Act is especially significant because the lower courts who addressed the issue had decided the case based on Chevron deference to the OCC’s interpretation of the applicable statute.
Whether the Court reached the proper result on the preemption question, it certainly handled the Chevron question properly. Whether a federal statute (or regulatory scheme) preempts state law is a question that should be answered by courts, not agencies, in the first instance, and courts should not presume that preemption questions have been delegated to federal agencies without an explicit delegation of such authority in federal law. In my view, this is essentially the sort of jurisdictional question that should not be subject to Chevron deference.