UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


INDEP INS AGCT AMER

v.

HAWKE, JOHN D. JR.


99-5158a

D.C. Cir. 2000


*	*	*


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


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


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-


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


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




__________

n 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.,


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


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




__________

n 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-




__________

n 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.




__________

n 3 There is a pending motion by appellees to strike supplemental 
exhibits of amici curiae. That motion is hereby denied.