June 6, 1997
Peter J. Liska, Esquire
Dear Mr. Liska:
You have asked whether federal credit unions (FCUs) must comply
with provisions of the Massachusetts' Electronic Branches and
Electronic Fund Transfers statute which set forth the licensing
and procedural requirements for electronic banking in the state
of Massachusetts. MASS. GEN. LAWS ANN., ch. 167B (West 1994).
We conclude that some of the provisions are preempted and others
are not.
Since NCUA does not regulate in the area of electronic branching,
FCUs are subject to state law unless the law precludes them from
serving their members effectively. The provisions of chapter
167B which limit the ability of FCUs to establish ATMs in Massachusetts
are preempted by federal law. The preempted provisions are those
that: require approval by the Massachusetts Commissioner to establish
the branch; require approval by the Commissioner as to the location
of the branch; limit the services an FCU may provide; and require
notification and approval by the Commissioner to terminate the
branch. These provisions affect the ability of an FCU to branch
freely across state lines and serve its members effectively.
We have no legal objection to the registration requirements, the
filing fee requirements and any provisions relating to security
which are designed to protect the health, safety and welfare of
the Massachusetts residents.
Enclosed are copies of letters providing some additional discussion
of federal preemption and similar state law provisions that we
have considered. A letter dated June 11, 1992, from Hattie M.
Ulan to you, discusses the standards for preemption in the context
of an Iowa credit card statute that requires FCUs, whose principal
place of business is not in Iowa, to register, file copies of
their credit agreements and pay an annual fee to the State Superintendent.
We concluded that these provisions are valid exercises of a state's
powers. In a letter from Richard Schulman to Ralph Shulansky,
Mr. Peter Liska
dated March 15, 1994, we reviewed a Connecticut statute that prohibited
FCUs, whose main offices are outside Connecticut, from establishing
ATMs in Connecticut. We concluded in that case that "by
limiting the ability of out-of-state FCUs to establish and maintain
ATMs in Connecticut, Section 36-193 of the Connecticut General
Statutes frustrates the objectives of Congress and is a nullity
with respect to FCUs."
Sincerely,
Sheila A. Albin
GC/MFR:bhs
Enclosures
cc: Layne L. Bumgardner, Region I Director
766 Shrewsbury Avenue
Associate General Counsel
SSIC 3600
97-0331