Ford Motor Company and Ford Motor Credit Company, and Theamerican Road Insurance Company and Ford Lifeinsurance Company, and First Nationwidefinancial Corporation Andfirst Nationwide Bank v. Insurance Commissioner of the Commonwealth of Pennsylvania.appeal of Pennsylvania Association of Independent Insuranceagents, Ulrich, John M., Jr., Professional Insurance Agentsassociation of Pennsylvania, Maryland and Delaware, Inc.,leach, Charles P., Jr., Pennsylvania Association of Lifeunderwriters and Alexander, Harold E., (interveningdefendants) in 88-1339.united Services Automobile Association, a Texas Reciprocalinterinsurance Exchange, Usaa Casualty Insurance Company, Atexas Stock Insurance Company, Usaa Life Insurance Company,a Texas Stock Insurance Company, and Usaa Annuity and Lifeinsurance Comapany, a Texas Stock Insurance, v. Muir, William J., Iii, Acting Insurance Commissioner of Thecommonwealth of Pennsylvania.appeal of Pennsylvania Association of Independent Insuranceagents, John Ulrich, Jr., Professional Insurance Agentsassociation of Pennsylvania, Maryland and Delaware, Inc.;charles P. Leach, Jr.,; Pennsylvania Association of Lifeunderwriters; and Harold E. Alexander, in 88-5077.united Services Automobile Association, a Texas Reciprocalinterinsurance Exchange, Usaa Casualty Insurance Company, Atexas Stock Insurance Company, Usaa Life Insurance Company,a Texas Stock Insurance Company, and Usaa Annuity and Lifeinsurance Company, a Texas Stock Insurance, v. Muir, William J., Iii, Acting Insurance Commissioner of Thecommonwealth of Pennsylvania,pennsylvania Association of Independent Insurance Agents,john Ulrich, Jr., Professional Insurance Agents Associationof Pennsylvania, Maryland and Delaware, Inc.; Charles P.leach, Jr.,; Pennsylvania Association of Life Underwriters;and Harold E. Alexander, Intervenors.appeal of Constance Foster, in 88-5078.united Services Automobile Association, a Texas Reciprocalinterinsurance Exchange, Usaa Casualty Insurance Company, Atexas Stock Insurance Company, Usaa Life Insurance Company,a Texas Stock Insurance Company, and Usaa Annuity and Lifeinsurance Company, a Texas Stock Insurance, v. Muir, William J., Iii, Acting Insurance Commissioner of Thecommonwealth of Pennsylvania,pennsylvania Association of Independent Insurance Agents,john Ulrich, Jr., Professional Insurance Agents Associationof Pennsylvania, Maryland and Delaware, Inc.; Charles P.leach, Jr.; Pennsylvania Association of Life Underwriters;and Harold E. Alexander, Plaintiffs/intervenors.appeal of United Services Automobile Association, Usaacasualty Insurance Company, Usaa Life Insurancecompany, and Usaa Annuity and Lifeinsurance Company, in 88-5121, 874 F.2d 926 (3d Cir. 1989)

On these appeals we are revisited by significant questions concerning the appropriate applications of the doctrines of abstention and preemption, and of the dormant commerce clause of the United States Constitution. Although all such cases present issues that require delicate balancing, these cases are particularly sensitive because they concern both a federal scheme designed to assist the nation's failing savings and loans companies and the important state interest in regulating the state insurance industry. Upon our review of the contentions raised on these appeals, we conclude: (1) that the principles of Younger do not require abstention in these cases; (2) that Pennsylvania's statute that precludes companies that sell insurance in Pennsylvania from affiliation with savings and loan institutions is preempted to the extent that the state statute is applicable to companies authorized pursuant to federal legislation to purchase failing thrifts and (3) the state statute is not preempted in its application to other than failing thrifts and, in that application, does not violate the Commerce Clause. In our view, that statute neither discriminates impermissibly in favor of in-state residents, nor presents a burden on interstate commerce and, it therefore, does not present harm precluded by the Commerce Clause. Accordingly, we will affirm the decisions of the district courts in these cases in part and reverse in part.

These appeals are taken from the judgments of district courts in two declaratory actions that were filed to determine the constitutionality of Sec. 641 of the Insurance Department Act of 1921, as amended, P.L. 1148 (1987), codified at 40 Pa.Stat.Ann. (Purdon 1987 Supp.).¹  Although the cases are wholly separate and were filed independently, they were consolidated for the purposes of appeal because of the commonality of the underlying facts and the significant identity of the issues presented for review. The facts of neither case are in dispute. For the purposes of this discussion, we review the facts and procedural histories of each case briefly:

A. Pennsylvania Ass'n of Independent Insurance Agents v. Ford Motor Co. ("Ford")

In December 1985, Ford Motor Company ("Ford") acquired the First Nationwide Financial Corporation ("FNFC") which is a California based savings and loan holding company. Ford also acquired FNFC's subsidiary, First Nationwide Savings which Ford renamed First Nationwide Bank ("FNB"). At that time, FNB had offices located in California, New York, Florida and Hawaii.

In June 1986 Ford, through its new subsidiaries FNFC and FNB, arranged to purchase two Ohio based savings and loan companies, ("S & L's") that were failing and had been placed into receivership with the Federal Savings and Loan Insurance Corporation ("FSLIC"). FSLIC had solicited applications for the purchase of these S & L's pursuant to federal statutory guidelines designed to limit liability exposure for these failed companies which were federally insured. See 12 U.S.C. § 1730a (1982).²  The failing Ohio S & L's were merged with FNB to create a larger national savings and loan entity. Subsequently, in February 1987, Ford requested and was granted permission by the Federal Home Loan Bank Board to open two additional branches of the newly constituted FNB. One of these new branches was in Pennsylvania.

Among the numerous subsidiary companies that are owned and controlled by Ford are the American Road Insurance Company ("American Road"), which is a wholly owned subsidiary of Ford, and the Ford Life Insurance Company ("Ford Life"), which is wholly owned by American Road. Both of these companies are licensed to sell insurance in Pennsylvania and have been engaged in that business for over twenty years. Ford's simultaneous ownership of these insurance companies and FNB, however, placed it in violation of Sec. 641 of the Pennsylvania insurance act.

Accordingly, in June 1987, three months after FNB's Pennsylvania branch office was opened, Ford filed a complaint in the United States district court for declaratory relief from Pennsylvania's enforcement of that statute which, Ford alleged, was unconstitutional on several grounds. Ford claimed, inter alia that, to the extent that the statute placed a restriction upon its ownership of a savings and loan institution, it was preempted by 12 U.S.C. § 1730a(m) (1987). Additionally, Ford contended that Sec. 641 was constitutionally infirm because it was violative of the dormant commerce clause of the United States Constitution. The Insurance Commissioner of the State of Pennsylvania ("Insurance Commissioner" or "the Commissioner") filed a reply challenging the merits of the contentions raised by Ford. The Commissioner was joined by the appellants in this case, the Pennsylvania Association of Independent Insurance Agents ("Insurance Agents") who had successfully petitioned the district court for leave to intervene. Together with that motion to intervene, the Insurance Agents also filed a motion to dismiss Ford's complaint in which it petitioned the district court to abstain from adjudication of the complaint pursuant to the Younger doctrine of abstention.³  Prior to intervening in the case, the Insurance Agents had filed a complaint with the Insurance Commissioner initiating an administrative proceeding that sought the revocation of American Road's and Ford Life's insurance licenses because those companies were in violation of Sec. 641. Subsequent to the insurance agents' intervention in this case, Ford filed a motion in the district court seeking an injunction of the state administrative proceedings.

Ford also filed a motion for summary judgement on three grounds: it contended that the statute was unconstitutional as a violation of the equal protection clause, that federal legislation preempted the entire field concerning the acquisition and ownership of savings and loans and that federal legislation that specifically addressed the acquisition of failing savings and loan institutions preempted Sec. 641.

The district court concluded that neither of the first two contentions raised by Ford for summary judgement were meritorious. It concluded, however, that the language and legislative history of Sec. 1730a(m) evinced Congress's clear intent to preempt state laws that hindered the acquisition of failing S & L's and determined, accordingly, that Sec. 641 had been preempted. Because its decision rested on preemption grounds, the district court also held that abstention was improper. The insurance agents challenge each of the district court's conclusions on this appeal.⁴ 

B. Foster v. United Services Automobile Ass'n ("USAA")

The United Services Automobile Association ("USAA") is a group of four Texas based insurance companies that are engaged in the insurance business nationwide. It is licensed to sell insurance in Pennsylvania and has been doing so for a number of years. In 1983, USAA was granted permission by the Federal Home Loan Bank Board and FSLIC to create the USAA Federal Savings Bank in Texas. In accordance with all applicable federal regulations, USAA organized and capitalized that bank, which then began doing business in Texas.⁵  During the following year, the Pennsylvania Insurance Commissioner notified USAA that its simultaneous ownership of the Texas bank and continued sale of insurance policies in Pennsylvania, violated Sec. 641. It advised USAA that pursuant to Sec. 641, it must either cease the sale of insurance in Pennsylvania or divest itself entirely from ownership in the Texas bank. USAA filed a complaint in the district court seeking declaratory relief from enforcement of the statute, which it challenged as unconstitutional on its face and as preempted by federal regulation. Subsequent to that complaint, the insurance department commenced state administrative proceedings for the revocation of USAA's license to sell insurance in Pennsylvania and, in light of those proceedings, filed a motion for dismissal in the district court on abstention grounds. USAA cross-filed a motion for summary judgment on the grounds that Sec. 641 was preempted by Sec. 1730a.

The district court concluded that abstention was appropriate under each of three types of abstention: Younger, Pullman⁶  and Burford.⁷  We reversed that decision and held that abstention by the district court under any of these theory was improper. See United Services Automobile Ass'n v. Muir, 792 F.2d 356 (3d Cir. 1986), cert. denied, sub nom. Grode v. United Services Automobile Ass'n, 479 U.S. 1031, 107 S. Ct. 875, 93 L. Ed. 2d 830 (1987) ("USAA I "). Accordingly, we remanded this matter to the district court for hearing.

On remand, the Insurance Commissioner again petitioned the district court to abstain. The Commissioner limited this request to Younger abstention and contended that this Court's decision in USAA I had been overruled by intercedent precedent of the Supreme Court in the case Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc., 477 U.S. 619, 106 S. Ct. 2718, 91 L. Ed. 2d 512 (1986) ("Dayton Schools "). The Commissioner argued that USAA I had held that Younger abstention was inappropriate only because of this Court's view that the State administrative proceedings were an inadequate forum for the constitutional claims raised. The Commissioner argued that that conclusion was no longer valid in light of Dayton Schools and, accordingly, that abstention pursuant to Younger was appropriate.

The district court agreed that USAA I had been overruled by Dayton Schools regarding the issue of Younger abstention. It concluded, however, that because of the potential for irreparable harm to USAA, abstention was nonetheless improper. In light of that conclusion, the district court evaluated the merits of the constitutional claims presented. It concluded that USAA's claim that Sec. 641 was preempted by Sec. 1730a was without merit, but determined that Sec. 641 was unconstitutional as a violation of the Commerce Clause.

On this appeal, the Insurance Commissioner and the Insurance Agents challenge the district court's decision not to abstain and its determination that Sec. 641 is unconstitutional. USAA cross-appeals from the decision of the district court that enforcement of Sec. 641 against it is not preempted by the federal regulatory scheme.

Although the analyses of the district courts regarding this issue arise from different circumstances, the threshold concern of both is whether abstention pursuant to Younger was warranted. That doctrine of abstention, characterized as one of equitable restraint, instructs us that due deference must be paid to state proceedings initiated to resolve controversies that raise significant state issues when federal court intervention is sought.⁸  Deference to state proceedings pursuant to Younger, however, is not absolute. The appropriate focus of a court's inquiry when the question of Younger abstention is raised, therefore, is whether the state proceeding provides an adequate forum for the resolution of the federal claims that have been asserted, see Dayton Schools, 477 U.S. at 627, 106 S. Ct. at 2723 (Younger principle is applicable to "state administrative proceedings in which important state interests are vindicated, so long as in the course of those proceedings the federal plaintiff would have a full and fair opportunity to litigate his constitutional claim");⁹  and whether deference to the state proceeding will present a significant and immediate potential for irreparable harm to the federal interests asserted. See Wooley v. Maynard, 430 U.S. 705, 712, 97 S. Ct. 1428, 1434, 51 L. Ed. 2d 752 (1977) (Younger abstention improper where federal intervention "necessary in order to afford adequate protection of constitutional rights"); Kugler v. Helfant, 421 U.S. 117, 124-25, 95 S. Ct. 1524, 1530-31, 44 L. Ed. 2d 15 reh'g denied, 421 U.S. 1017, 95 S. Ct. 2425, 44 L. Ed. 2d 686 (1975).

In the present cases, we are persuaded that Pennsylvania maintains the significant interest in the regulation of its insurance industry sufficient to support abstention under this doctrine. In light of the Supreme Court's decision in Dayton Schools, we are also persuaded that the scheme for administrative adjudication and judicial review of the claims presented is adequate for Younger purposes.

A. Abstention And The Adequacy of State Administrative Proceedings

In USAA I, this Court held that "administrative proceedings suffice for Younger purposes only when they 'are adequate to vindicate federal claims.' " USAA I, 792 F.2d at 365. See also Williams v. Red Bank Bd. of Education, 662 F.2d 1008 (3d Cir. 1981). In that light, we concluded that because the Insurance Commission proceeding did not provide a forum for the adjudication of the constitutional claims, abstention was inappropriate. See Middlesex Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S. Ct. 2515, 2521, 73 L. Ed. 2d 116 (1982) (Younger abstention not available where there is no "adequate opportunity [in the state proceedings] to raise the constitutional claims.").

Subsequent to our decision in USAA I, the Supreme Court held that state administrative proceedings that do not provide an opportunity for the resolution of the claimant's constitutional contention, are adequate for Younger abstention if the state's judicial review of the administrative proceeding provides opportunity for de novo hearing of the constitutional claim. Dayton Schools, 477 U.S. at 629, 106 S. Ct. at 2724. Cf. Watts v. Burkhart, 854 F.2d 839 (6th Cir. 1988) (the fact that the state agency would not consider the constitutional claims raised did not preclude Younger abstention where the constitutional claims could be presented on review in the state court); Christ the King Regional High School v. Calvert, 815 F.2d 219 (2d Cir.) (same), cert. denied --- U.S. ----, 108 S. Ct. 102, 98 L. Ed. 2d 63 (1987). Accordingly, we hold now that, to the extent that our decision in USAA I concluded that Younger abstention is inappropriate in cases where the administrative proceeding itself does not provide a forum for the adjudication of constitutional claims--without regard to the opportunity that exists to pursue those claims on judicial review--it has been overruled by Dayton Schools.

In the present cases, this conclusion necessarily results in the determination that the Pennsylvania administrative proceeding in question is sufficient for purposes of Younger abstention. The Pennsylvania statutes concerning administrative law and procedure clearly provide for adequate judicial review of state administrative determinations. The statute expressly provides that

[a]ny person aggrieved by an adjudication of a Commonwealth agency who has a direct interest in such adjudication shall have the right to appeal therefrom to the court vested with jurisdiction of such appeals ...

2 Pa. Cons.Stat.Ann. Sec. 702 (Purdon 1988). Significantly, the statute provides further that

[a] party who proceeded before a Commonwealth agency under the terms of a particular statute shall not be precluded from questioning the validity of the statute in the appeal, but such party may not raise upon appeal any other question not raised before the agency (notwithstanding the fact that the agency may not be competent to resolve such question) unless allowed by the court upon due cause shown.

2 Pa. Cons.Stat.Ann. Sec. 703(a) (Purdon 1988) (emphasis added). We read these provisions of the Pennsylvania law to permit the assertion of the unconstitutionality of a statute on judicial review of an administrative proceeding in which that statute has been applied and, in light of Dayton Schools, conclude that the administrative proceedings in this case are sufficient for application of Younger principles.

Our inquiry into the propriety of Younger abstention for the present cases, however, is not terminated here. The district courts in these cases relied on reasons apart from the adequacy of the state proceedings to support their decisions that Younger abstention was improper and, on one of these alternate grounds, we affirm their conclusions.

B. Abstention and "Our Federalism"

In Ford, the district court's decision not to abstain was predicated upon its view that Sec. 641 had been preempted by federal legislation enacted to provide for the acquisition of failing savings and loans. Relying upon this Court's decision in Kentucky West Virginia Gas Co. v. Pennsylvania Public Utility Comm'n, 791 F.2d 1111 (3d Cir. 1986) ("Kentucky West "), the district court held that because the supremacy clause was implicated, abstention in favor of the state proceeding was improper. See Ford Motor Co. v. Insurance Commissioner of Pennsylvania, 672 F. Supp. 841, 849-50 (E.D. Pa. 1987). The district court stated that "dispositive [of its decision] is a line of cases from the Courts of Appeals for the Third, Eighth, Ninth and Eleventh Circuits that hold that there can be no important state interest that the federal court should defer to in enforcing a state law that has been preempted by federal law." Id. at 849.¹⁰ 

In this case, as in Kentucky West, we note that there is no absolute rule prohibiting the application of Younger abstention doctrine whenever the Supremacy Clause is invoked. See Kentucky West, 791 F.2d at 1117 (" [i]t would ... be an overstatement to suggest that Younger abstention is never appropriate when the question presented is one of preemption.") The presence of a claim of preemption in such cases, however, requires review of the state interest to be served by abstention, in tandem with the federal interest that is asserted to have usurped the state law. In performing that inquiry, this Court and other appellate courts have "concluded that the notion of 'comity' embodied by the Younger doctrine is 'not strained when a federal court cuts off state proceedings that entrench upon the federal domain.' " Id. (quoting Middle South Energy, Inc. v. Arkansas Public Service Comm'n, 772 F.2d 404, 417 (8th Cir. 1985), cert. denied, 474 U.S. 1102, 106 S. Ct. 884, 88 L. Ed. 2d 919 (1986)). Cf. Champion Int'l Corp. v. Brown, 731 F.2d 1406, 1409 (9th Cir. 1984) ("Montana has no cognizable state interest in enforcing those age discrimination laws that are preempted by federal law"). In the present cases, we see no beneficial purpose, as contemplated by the Younger doctrine, that would be served by the district court's abstention in favor of Pennsylvania's enforcement of Sec. 641. Although Pennsylvania's interest in the regulation of its insurance industry is significant, there exists a countervailing significant federal interest in insuring the unhindered enforcement of federal law. Balancing these interests in the present cases, we are persuaded that the scales weigh decidedly in favor of federal intervention so that the federal courts could determine the extent to which Sec. 641 had been preempted.

As a preface to our holding on this issue, we note our view that the intent of Sec. 641 is not ambiguous. That section was designed clearly to proscribe affiliations between all state licensed insurance companies and any savings and loans institutions. Accordingly, no detailed factual proceedings are necessary to determine the statute's applicability to Pennsylvania licensed insurance companies that purchase savings and loan institutions pursuant to Sec. 1730a. See Wisconsin v. Constantineau, 400 U.S. 433, 439, 91 S. Ct. 507, 511, 27 L. Ed. 2d 515 (1971) (" [w]here there is no ambiguity in the state statute, the federal court should not abstain but should proceed to decide the federal constitutional claim"); cf. Aluminum Co. of America v. Utilities Comm'n of North Carolina, 713 F.2d 1024, 1030 (4th Cir. 1983) (abstention is inappropriate where conflict between challenged state action and federal law is "readily discernible from the pleadings") cert. denied, 465 U.S. 1052, 104 S. Ct. 1326, 79 L. Ed. 2d 722 (1984). Moreover, on the records of these cases, we can discern no construction of the state statute that would limit its application such that review of the federal constitutional claims would be unnecessary.¹¹  "In cases involving a facial challenge to a statute, the pivotal question in determining whether abstention is appropriate is whether the statute is 'fairly subject to an interpretation which will render unnecessary or substantially modify the federal constitutional question.' " City of Houston, Texas v. Hill, 482 U.S. 451, 107 S. Ct. 2502, 2513, 96 L. Ed. 2d 398 (1987) (quoting Harman v. Forssenius, 380 U.S. 528, 534-35, 85 S. Ct. 1177, 1181-82, 14 L. Ed. 2d 50 (1965)) (other citations omitted). When the possibility for such an interpretation is not apparent, however, the district court's decision to exercise its jurisdiction does not constitute error. Moreover, where the core of the controversy itself is the federal constitutional claims, and the state proceedings are initiated for enforcement rather than interpretation of the state statute, we do not conclude that the exercise of federal jurisdiction is intrusive.

In our view, the principles of comity and federalism upon which the Younger doctrine is predicated, are not undermined by federal intervention in these cases, which would forestall the state proceedings in order to determine whether enforcement of the state statute conflicts with an important federal scheme. Cf. Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 107 S. Ct. 1519, 1526, 95 L. Ed. 2d 1 (1987) (Younger abstention warranted when "civil proceedings are pending, if the State's interests in the proceeding are so important that exercise of the federal judicial power would disregard the comity between the States and the National Government.") (emphasis added). Federal intervention in these cases does not intrude upon the principles of our federalism given the nature of the state proceedings at issue and the significance of the federal claims asserted. Accordingly, we conclude in both of the present cases, that the challenge to Sec. 641 on the grounds that it is preempted, together with the significant federal interest that is implicated, counsel in favor of the district courts' decisions not to abstain.¹²  We will, therefore, affirm the decisions of the district courts not to abstain.¹³ III. Preemption

Both Ford and USAA contend that Sec. 641 has been completely displaced by federal legislation and is therefore invalid under the Supremacy Clause of the Constitution. See U.S. Const. art VI, cl. 2.¹⁴  They argue that Congress has preempted the field of regulation regarding savings and loan institutions and, thus, that Sec. 641 has been superceded by the federal scheme. To the extent that Sec. 641 applies to the acquisition of failing thrifts we are convinced that it has been preempted by federal law. We are unpersuaded, however, as were the district courts, that Congress intended to preempt entirely the states' authority to impose regulations upon savings and loan institutions that operate within the state's borders, or, as in the present case, to impose regulations upon other financial institutions that seek affiliations with savings and loans.

In reaching this conclusion, we are guided by the Supreme Court's instruction that preemption analysis should be "tempered by the conviction that the proper approach is to reconcile 'the operation of both statutory schemes with one another rather than holding one completely ousted.' " Merrill Lynch v. Ware, 414 U.S. 117, 127, 94 S. Ct. 383, 389, 38 L. Ed. 2d 348 (1973). Cf. Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S. Ct. 1210, 1217, 10 L. Ed. 2d 248 reh. denied, 374 U.S. 858, 83 S. Ct. 1861, 10 L. Ed. 2d 1082 (1963) ("federal regulation of a field of commerce should not be deemed pre-emptive of state regulatory power in the absence of persuasive reasons--either that the nature of the regulated subject matter permits no other conclusion, or that Congress has unmistakenly so ordained"). In light of this presumption in favor of the validity of state regulation, and because there is no clear indication that federal legislation is intended exclusively to provide for every aspect of the regulation of savings and loan institutions, we conclude that, apart from its application to savings and loan companies acquired pursuant to Sec. 1730a(m), Sec. 641's proscription of affiliations between insurance companies and savings and loan institutions has not been preempted.

A. Section 641 is Pre-empted Regarding the Acquisition of Failing Thrifts

"The question [of] whether the regulation of an entire field has been reserved by the Federal Government is, essentially, a question of ascertaining the intent underlying the federal scheme." Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 713, 105 S. Ct. 2371, 2375, 85 L. Ed. 2d 714 (1985) (citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 67 S. Ct. 1146, 91 L. Ed. 1447 (1947); California Savings and Loan Ass'n v. Guerra, 479 U.S. 272, 281, 107 S. Ct. 683, 689, 93 L. Ed. 2d 613 (1987) (" [i]n determining whether a state statute is pre-empted by federal law and therefore invalid under the Supremacy Clause of the Constitution, our sole task is to ascertain the intent of Congress.") Significantly, we note that Congress may decide not to displace state law entirely and, consequently, "may ... pre-empt state law to the extent that the state law actually conflicts with federal law. Such a conflict arises when compliance with both state and federal law is impossible." Michigan Canners & Freezers Ass'n., Inc. v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461, 469, 104 S. Ct. 2518, 2523, 81 L. Ed. 2d 399 (1984) (citing Florida Lime & Avocado Growers v. Paul, 373 U.S. at 142-43, 83 S. Ct. at 1217-18). A conflict arises also where the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581 (1941); see also Hillsborough County, 471 U.S. at 713, 105 S. Ct. at 2375.

In the present cases, we have no difficulty discerning Congress' intent from the language and legislative history of Sec. 1730a(m) which, in our view, clearly provides that Sec. 641 is preempted to the extent that it applies to Ford's acquisition of failing savings and loans.

In pertinent part, Sec. 1730a(m) provides that " [n]otwithstanding any provision of the laws or constitutions of any State or any provision of Federal law ... [FSLIC] upon its determination that severe financial conditions exist which threaten the stability of a significant number of insured institutions ... may authorize any company to acquire control of said insured institution." 12 U.S.C. § 1730a(m) (Supp.1987) (emphasis added). This language amply demonstrates Congress' intent to preempt all other legislation that might inhibit the purchase of a failing thrift by a FSLIC approved buyer. Although that language, by itself, is sufficient to support our conclusion, Congress has left an even more explicit statement of its intent. In the conference report on the reenactment of 1730a(m), Congress expressly noted that with regard to the circumstances presented by one of these cases

[e]xcept as [limited by other sections of the federal statute] section 408(m) (A) (i) preempts other provisions of Federal and State law that would have the effect of preventing a company from acquiring a failing thrift institution. Thus, for example if a life insurance company invested in or acquired a thrift institution under section 408(m) [enacted and codified as 1730a(m) ], that section would preempt any state law that would prevent the company from continuing to engage in the life insurance business because of that investment or acquisition ...

H.R.Rep. No. 261, 100th Cong., 1st Sess., Cong.Rec. H 6857, H 6895 (daily ed. July 31, 1987) (emphasis added), U.S.Code Cong. & Admin.News 1987, p. 489. This legislative history provides unmistakable guidance to us for the disposition of this issue. See United States v. Bd. of Comm'rs of Sheffield, 435 U.S. 110, 134, 98 S. Ct. 965, 980, 55 L. Ed. 2d 148 (1978) ("the legislative background of [a] reenactment is conclusive.... [w]hen a Congress that reenacts a statute voices its approval of an administrative or other interpretation thereof, Congress is treated as having adopted that interpretation and this Court is bound thereby"). We hold that Congress's intent to preclude any impediment to the acquisition of failing thrifts is clear. In the present cases, therefore, we conclude that Sec. 641 is preempted with regard to Ford's purchase of the Ohio thrifts and the authorized branch offices of those thrifts opened in Colorado and Pennsylvania.

We reach the latter part of this holding in light of the factual finding by the district court that an essential aspect of Ford's agreement with FSLIC to purchase the Ohio thrifts was the authorization that Ford received to open the branch offices of the thrift. Ford, 672 F. Supp. at 843. Specifically, the district court found that, "under the authority of 12 U.S.C. § 1730a(m), the Bank Board granted to FNB the right to open branches in Pennsylvania and [Colorado]." Id. The district court took note of the Bank Board finding that

"the Acquisition and Merger [of FNB and the Ohio thrifts] are of very substantial benefit to the FSLIC in a measure sufficient to constitute a compelling factor in determining to make an award of branching rights in Pennsylvania and Colorado to^B "

Id. (quoting Bank Board resolution approving acquisition of Ohio thrifts) (emphasis added). The district court concluded that "FNB would not have acquired the Ohio savings and loan associations if it did not get the right to open branches in these two states in return." Id. We do not find that determination to be clearly erroneous. We are compelled by it, and the rationale underlying Sec. 1730a(m), to preclude application of Sec. 641 to the Pennsylvania or Colorado branches of the thrift. In our view, application of Sec. 641 to these branches would frustrate the intent of the federal legislation just as would the application of the state statute directly to the purchase of the Ohio thrifts themselves. Accordingly, Sec. 641 is preempted as to these authorized branches as well as the Ohio thrifts and enforcement by Pennsylvania of Sec. 641 as to Ford's ownership of these thrifts is precluded.

We do not reach a similar conclusion concerning thrifts acquired or capitalized outside of the purview of Sec. 1730a(m). The legislative intent to preempt the application of Sec. 641 beyond cases involving the acquisition of failing thrifts is not evident, and accordingly, as to those cases, Sec. 641 has not been preempted.

B. Federal Regulations That Concern The Savings and Loan Industry, Although Comprehensive, Do Not Evidence Congress's Intent to Displace State Regulation Entirely and Do Not Pre-empt Sec. 641

In these cases, USAA and Ford argue that the regulatory scheme that Congress enacted for the savings and loan industry was intended to occupy that field exclusively. They contend that the federal scheme was intended to regulate more than just the operations of savings and loan institutions, but also to regulate every aspect "regarding the organization, ownership, incorporation, and operation of federal savings banks." Appellee (USAA) Brief at 21. See also, Appellee (Ford) Brief at 24 (" [section] 641 is preempted as applied ... because it frustrates federal purposes and 'stands as an obstacle' to the broad and pervasive federal regulatory scheme governing the ownership and control of federal S & L's"). They assert that the comprehensiveness of the federal regulatory scheme, together with the significant federal interest in the regulation of savings and loan institutions, evinces congressional intent to preclude supplemental state regulation. We do not agree.

In cases such as these, where Congress has not expressly preempted a state's statute, its "intent to pre-empt all state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress 'left no room' for supplementary state regulation." Hillsborough County, 471 U.S. at 714, 105 S. Ct. at 2375. See also Guerra, 479 U.S. at 280, 107 S. Ct. at 689 (congressional intent to preempt may be inferred where the scheme of federal regulation is "sufficiently comprehensive to make reasonable the inference that Congress 'left no room' for supplemental state regulation").

In both cases, the district courts acknowledged the comprehensiveness of the federal regulatory scheme. See USAA, 680 F. Supp. at 716; Ford, 672 F. Supp. at 846. Both district courts, however, concluded that the intent of the federal scheme was to regulate the operation of federally insured thrifts. Accordingly, each court concluded that the federal regulations did not preclude supplemental state regulations which, as in these cases, imposed a restriction upon the affiliations that the thrift could have and were designed more to regulate the insurance industry rather than to control the operation of the savings and loan industry. Our review of the federal regulatory scheme leads us to a similar conclusion.

We reiterate that our conclusion on this issue is informed by the Supreme Court's instruction that "federal regulation of a field of commerce should not be deemed pre-emptive of state regulatory power in the absence of persuasive reasons--either that the nature of the regulated subject matter permits no other conclusion, or that Congress has unmistakenly so ordained." Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. at 142, 83 S. Ct. at 1217. We are unconvinced that the federal banking regulatory scheme permits no conclusion other than that Congress intended to occupy the field exclusively.

Initially we note that the comprehensive nature of the federal regulatory scheme, by itself, is not sufficient to support a conclusion that Congress intended to preempt all state regulation. See Hillsborough, 471 U.S. at 717, 105 S. Ct. at 2377 (" [t]o infer preemption whenever an agency deals with a problem comprehensively is virtually tantamount to saying that whenever a federal agency decides to step into a field, its regulations will be exclusive"). Indeed, precisely because the regulatory scheme at issue in these cases is so detailed, we interpret the absence of clear preemptive language as indicative that Congress did not intend to displace state law entirely. We note, as has the Supreme Court, that "because agencies normally address problems in a detailed manner and can speak through a variety of means ... we can expect that they will make their intentions clear if they intend for their regulations to be exclusive." Id.

Moreover, the regulations at issue in the present cases provide explicitly for preemption of state law on two issues, see 12 C.F.R. Sec. 590 (1988) ("Preemption of State Lending Restrictions) (expressly preempting state usury laws and state due on sale laws), but no where indicate that all state regulation is preempted. Indeed, in one section, the regulations clearly demonstrate Congress' recognition that the federal scheme might be supplemented by state regulation. Section 555.17(b) precludes officers or directors of savings and loan associations from referring insurance business generated by members of the S & L to insurance companies with which the officers or directors are affiliated.¹⁵  Such referrals would constitute a usurpation of the S & L's corporate opportunity to engage in the insurance business. Significantly, however, Sec. 555.17 is limited by specific exceptions enumerated elsewhere in the section. One of those exceptions provides that

[n]o corporate opportunity for a Federal association to enter the insurance business is deemed to have existed

....

[w]hile a specific State statute or regulation precluded Federal association service corporations ... from engaging in the insurance business

12 C.F.R. Sec. 555.17(c) (iii) (1988) (emphasis added).

Appellees correctly assert that the circumstance provided for in Sec. 555.17 is not at issue in these cases. In our view, however, the existence of this provision provides compelling evidence that Congress did not envision that all state regulations would be in conflict with the federal regulatory scheme. Moreover, the subject matter of Sec. 555.17(c) (iii) is particularly significant because it demonstrates Congress's specific awareness of the existence of state statutes such as Sec. 641. In that light, we cannot conclude that, by these regulations, "Congress 'left no room' for supplementary state regulation." Hillsborough County, 471 U.S. at 713, 105 S. Ct. at 2373. Accordingly, we also cannot conclude that Congress intended exclusively to occupy this field of regulation.

Upon their conclusions that abstention was not warranted and that Sec. 641 was not wholly preempted, the district courts reviewed Ford's and USAA's claim that Sec. 641 was invalid as a violation of the dormant Commerce Clause. See U.S. Const. art. I., Sec. 8, cl. 3.¹⁶  On that claim, however, the courts concluded that to the extent that Sec. 641 was not preempted, it was nonetheless constitutionally infirm because it imposed an excessive burden upon interstate commerce.

The courts determined that Sec. 641's proscription of affiliations between Pennsylvania insurance companies and financial institutions--whether or not located in Pennsylvania--indirectly regulated interstate commerce. Accordingly, the district courts held that resolution of the constitutional validity of Sec. 641 turned upon application of the Supreme Court's holding in Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S. Ct. 844, 25 L. Ed. 2d 174 (1970). In Pike, the Supreme Court stated that

[w]here the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits

Id. at 142, 90 S. Ct. at 847.

In the present cases, the district courts concluded in light of Pike that, although the imposition on interstate commerce that resulted from the enforcement of Sec. 641 is incidental, that burden is still "excessive" because the benefits to Pennsylvania are not sufficiently realized by Sec. 641 to support the burden upon interstate commerce. For that reason, the district courts struck Sec. 641 as unconstitutional. In arriving at this balance between the significance of the state interest in precluding the affiliations between insurers and banking institutions, and the effect of that regulation upon interstate commerce, however, the district courts erred. Because that statute regulated indiscriminately--affording no preference to in-state interests over others--we cannot conclude that it presented a burden to interstate commerce and, in that light, we hold that it did not violate the Commerce Clause.

Indiscriminate Regulation Of Commerce Does Not Necessarily Burden "Interstate Commerce"

The Insurance Commissioner asserts that Sec. 641 effects three important state goals: "to protect the insurance industry from ... unfair concentration; ... to protect consumers from coercive "tie-ins" and other forms of subtle pressure tactics by lending institutions; and ... to protect the ability of the insurance examiners to monitor adequately the insurance industry." USAA, 680 F. Supp. at 720. The district courts did not question the legitimacy of these goals, but concluded that "the adverse effects of affiliation are not present where the affiliated bank is outside the jurisdiction, or are readily prevented in ways less burdensome than is prescribed in Section 641(b)." Id.

Resolution of the issue of applicability of the Commerce Clause to these cases is dependent upon the level of scrutiny that is applied to review the Pennsylvania statute. As we have previously noted, three standards of review are applied in performing dormant Commerce Clause inquiry:

1) state actions that purposefully or arbitrarily discriminate against interstate commerce or undermine uniformity in areas of particular federal importance are given heightened scrutiny; 2) legislation in areas of peculiarly strong state interest is subject to very deferential review; and 3) the remaining cases are governed by a balancing rule, under which state law is invalid only if the incidental burden on interstate commerce is clearly excessive in relation to the putative local benefits.

Norfolk Southern Corp. v. Oberly, 822 F.2d 388, 398-99 (3d Cir. 1987). Under the highest level of scrutiny "the burden falls upon the State to demonstrate both that the statute 'serves a legitimate local purpose,' and that this purpose could not be served as well by available nondiscriminatory means." Maine v. Taylor, 477 U.S. 131, 138, 106 S. Ct. 2440, 2448, 91 L. Ed. 2d 110 (1986) (quoting Hughes v. Oklahoma, 441 U.S. 322, 336, 99 S. Ct. 1727, 1736, 60 L. Ed. 2d 250 (1979)). "In practice, such heightened scrutiny is applied with considerable rigor and turns out to be 'a virtually per se rule of invalidity.' " Norfolk Southern Corp., 822 F.2d at 400 (quoting Philadelphia v. New Jersey, 437 U.S. 617, 624, 98 S. Ct. 2531, 2535, 57 L. Ed. 2d 475 (1978)).

In the present cases, heightened scrutiny of Sec. 641 is not warranted because that provision does not discriminate in the manner that it regulates. As we have held " [h]eightened scrutiny is the standard of review for 'simple economic protectionism.' ... [this] category of protectionism includes those state measures that discriminate on their face against out-of-state interests or in favor of in-state interests." Norfolk, 822 F.2d at 400 (citing Philadelphia, 437 U.S. 617, 98 S. Ct. 2531, 57 L. Ed. 2d 475 (1978); Hughes; South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 104 S. Ct. 2237, 81 L. Ed. 2d 71 (1984)). The state statute at issue, however, is not the "simple economic protectionism" that the Commerce Clause precludes. Accordingly, because heightened scrutiny is not applicable, Sec. 641 must be upheld if the incidental burden that it imposes upon interstate commerce is not "clearly excessive in relation to the putative local benefits." Pike, 397 U.S. at 142, 90 S. Ct. at 847. See also, Minnesota v. Clover Leaf Creamery, Co., 449 U.S. 456, 471, 101 S. Ct. 715, 727, 66 L. Ed. 2d 659 reh. denied, 450 U.S. 1027, 101 S. Ct. 1735, 68 L. Ed. 2d 222 (1981).¹⁷ 

As we have previously noted in performing that inquiry, " [t]he 'incidental burden on interstate commerce' appropriately considered in Commerce Clause balancing is the degree to which the state action incidentally discriminates against interstate commerce relative to intrastate commerce. It is a comparative measure." Norfolk Southern, 822 F.2d at 406 (emphasis added). In our view, "the Commerce Clause is concerned with protectionism and the need for uniformity ... legislation will not be invalidated under the Pike test in the absence of discriminatory burdens on interstate commerce." Id.

The Supreme Court's decision in Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 98 S. Ct. 2207, 57 L. Ed. 2d 91, reh. denied sub nom., Shell Oil Co. v. Governor of Maryland, 439 U.S. 884, 99 S. Ct. 232, 58 L. Ed. 2d 200 (1978), provides useful instruction. In Exxon, the Court addressed a Maryland statute that precluded companies that refined petroleum from owning retail service stations within Maryland. The proscription applied to in-state owners of oil refineries as well as to out of state refineries, and because no competitive advantage to local interest was discernible, the court upheld the constitutionality of the statute. In reaching its conclusion, the Court noted that the state act "create [d] no barriers whatsoever against interstate independent dealers; it [did] not prohibit the flow of interstate goods, place added costs upon them, or distinguish between in-state and out-of-state companies in the retail market." Exxon, 437 U.S. at 126, 98 S. Ct. at 2214. The Court concluded that "the absence of any of these factors fully distinguishes this case from those in which a State has been found to have discriminated against interstate commerce." Id. (emphasis added). It held that

[w]hile the refiners will no longer enjoy their same status in the Maryland market, in-state independent dealers will have no competitive advantage over out-of-state dealers. The fact that the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce.

437 U.S. at 126, 98 S. Ct. at 2214 (emphasis added). See also CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88, 107 S. Ct. 1637, 1649, 95 L. Ed. 2d 67 (1987) (" [b]ecause nothing in the Indiana Act imposes a greater burden on out-of-state [entities] than it does on similarly situated Indiana [entities], we reject the contention that the Act discriminates against interstate commerce").

This Court has similarly concluded that

[w]here the "burden" on out-of-state interests is no different from that placed on competing in-state interests ... it is a burden on commerce rather than a burden on interstate commerce. In such cases, nothing in Commerce Clause jurisprudence entitles out-of state interests to more strict judicial review than that to which the in-state interests are entitled

Norfolk Southern, 822 F.2d at 406 (emphasis in original). We are persuaded that this same conclusion is applicable to the present cases. Section 641 places no discriminatory burdens on interstate insurers. It does not add increased costs to them or otherwise distinguish between in-state insurers and out-of-state insurers in the insurance market. Indeed, as the district court in USAA found, USAA "could not make ... [the] argument [that Sec. 641 discriminates against interstate commerce in favor of local business] because Section 641(b) treats all insurance companies and all savings and loans alike,whether or not they are based in Pennsylvania." See USAA, 680 F. Supp. at 719 n. 6. For these reasons, we conclude that the Commerce Clause has not been violated.¹⁸ 

The district courts, in reaching the conclusions that the Commerce Clause invalidates Sec. 641, appear to have been most persuaded by the significant economic effect that enforcement of Sec. 641 will have upon Ford and USAA. Indeed, the district court in USAA concluded that " [i]f the Insurance Department enforces Section 641(b) against USAA, USAA will be forced to abandon its insurance business in Pennsylvania or relinquish its interest in the Texas bank. If USAA opts to allow its insurance license to be revoked, this revocation could result in devastating economic consequences." USAA, 680 F. Supp. at 721. On this point, the district court quoted this Court's opinion in USAA I in which we concluded, in our holding that Pullman abstention was inappropriate, that USAA would suffer "devastating economic consequences" if its license to sell insurance in Pennsylvania was revoked. See id. (quoting USAA I, 792 F.2d at 363).

We are not unaware, nor are we insensitive to this "burden" that results from the enforcement of the state provision. We cannot say, however, that the dormant Commerce Clause is the proper remedy. Both Ford and USAA appear to have adopted corporate strategies that seek to expand their corporate bases by the acquisition of other companies. That strategy is their own choosing and we express no value judgments concerning it. In making those choices, however, the companies must expect that they will be required to comply with all applicable state as well as federal regulations. They cannot hope to invoke the Constitution at every turn to circumvent state regulation and insure unrestricted expansion and protection of their opportunity to obtain the greatest margin of profit.

On this point we are again guided by Exxon. In that case, the Supreme Court noted arguments that, as the result of the state divestiture regulation, some oil refiners would stop selling in Maryland. See Exxon, 437 U.S. at 127, 98 S. Ct. at 2215. The Court also recognized that the result of that occurrence might be that Maryland consumers would be deprived of some special services that had previously been provided by the affiliated retail stations. Id. Although it assumed, arguendo, the accuracy of these contentions, the Court nonetheless concluded that the protections of the Commerce Clause had not been triggered. Significantly, it concluded that even if those refiners chose to withdraw entirely from the Maryland market "there [was] no reason to assume that their share of the entire supply [would] not be promptly replaced by other interstate refiners.... interstate commerce is not subjected to an impermissible burden simply because an otherwise valid regulation causes some business to shift from one interstate supplier to another." Exxon, 437 U.S. at 127, 98 S. Ct. at 2215. Similarly, in the present cases, the district courts, holdings give us no reason to conclude that interstate commerce will be adversely affected by enforcement of Sec. 641. There is no reason for us to assume that USAA's or Ford's share of the insurance products sold in Pennsylvania will not be promptly replaced by other interstate insurers. Accordingly, we cannot conclude that Sec. 641 places an impermissible burden upon interstate commerce.

The district courts distinguish Exxon on the grounds that the statute at issue in that case "did not have the practical effect of indirectly regulating the refiners' ownership of other entities outside the state." USAA, 680 F. Supp. at 722. In that light, the courts concluded that "unlike [Sec. 641], the Maryland statute in the Exxon case did not reach beyond the borders of the state," id. and, because Sec. 641 precluded Pennsylvania insurers from affiliations with S & L's wherever located, its affect upon interstate commerce was different from that involved in Exxon. We believe that this narrow reading of Exxon is in error.

We do not view the Court's decision in Exxon as predicated upon the conclusion that the state statute did not regulate beyond the Maryland borders. Indeed, we note that Justice Blackmun's dissent departs from the Court majority precisely because of the recognition that the Maryland statute had the actual effect of precluding many out-of-state businesses from participating in the retail market in Maryland. See Exxon, 437 U.S. at 138, 98 S. Ct. at 2220 (" [o]f the class of enterprises excluded entirely from participation in the retail gasoline market, 95% were out-of-state firms.") (Blackmun, J., concurring and dissenting). In our view, the focus of the majority opinion was the manner by which the statute regulated. The Court concluded that the fact that the statute regulated indiscriminately compelled the conclusion that the Commerce Clause had not been violated.¹⁹ 

As the Supreme Court has noted, " [t]he Commerce Clause [does not] protect [ ] the particular structure or method of operation in a retail market.... the Clause protects the interstate market, not the particular interstate firms, from prohibitive or burdensome regulations." Exxon, 437 U.S. at 127, 98 S. Ct. at 2215 (emphasis added) (citation omitted). Thus, although Sec. 641 may provide somewhat of a boon to independent insurance agents who sell insurance in Pennsylvania, that boon is no less available to independent agents who are based outside of the state as it is to such agents for whom Pennsylvania is home. To the extent that the regulation infringes upon the commercial association rights of lending institutions outside of Pennsylvania, it infringes upon those same rights of lending institutions within Pennsylvania. In that light, even if Sec. 641 is viewed as "protectionist" of the economic interests of unaffiliated insurers, because it does not afford that protection only to local agents, it is not violative of the Commerce Clause.²⁰ 

In light of the foregoing, we reach the following conclusions in these cases: In Ford, we will affirm the decision of the district court not to abstain. We will also affirm the district court's decision that Sec. 641 was inapplicable to Ford's acquisition of the two failing Ohio S & L's under the provisions of 12 U.S.C. § 1730a(m) (1982), and the branches authorized in connection with that acquisition, because the state statute has been preempted by the federal law concerning the emergency acquisition of failing thrifts. We will also affirm the district court's conclusion that Sec. 641 is not preempted by federal law in its application to circumstances other than those provided by Sec. 1730a(m). We will reverse, however, the district court's judgment that Sec. 641 is violative of the dormant Commerce Clause.

In USAA, we will affirm the decision of the district court not to abstain, although we will not affirm the rationale upon which it relied. We will also affirm the holding of the district court that Sec. 641 is not preempted by federal law in its application to USAA's establishment of a Texas savings and loan company. We will reverse, however, the district court's judgment that Sec. 641 is violative of the dormant commerce clause and we will remand this matter to the district court for its determination of the viability of USAA's claim that the state statute is otherwise inapplicable to it. See supra, n. 11.

All parties in these cases will bear their own costs.