source: Caselaw Access Project

author: Justice Powell Justice Stevens,

license: Public Domain

text:
    LANDRETH TIMBER CO. v. LANDRETH et al.
    No. 83-1961.
    Argued March 26, 1985
    Decided May 28, 1985

      Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, White, Marshall, Blackmun, Rehnquist, and O’Con-nor, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 697.

      James L. Quarles III argued the cause for petitioner. With him on the briefs were Russell B. Stevenson, Jr., and William F. Lee.

      James A. Smith, Jr., argued the cause for respondents. With him on the briefs were Guy P. Michelson, Patricia H. Char, and Richard D. Vogt.

        Solicitor General Lee, Deputy Solicitor General Claiborne, Daniel L. Goelzer, Paul Gonson, Jacob H. Stillman, and Rosalind C. Cohen filed a brief for the Securities and Exchange Commission as amicus curiae urging reversal.

        Stephen M. Shapiro and Barbara A. Reeves filed a brief for Advance Ross Corp. as amicus curiae urging affirmance.

   Justice Powell

delivered the opinion of the Court.

This case presents the question whether the sale of all of the stock of a company is a securities transaction subject to the antifraud provisions of the federal securities laws (the Acts).

I

Respondents Ivan K. Landreth and his sons owned all of the outstanding stock of a lumber business they operated in Tonasket, Washington. The Landreth family offered their stock for sale through both Washington and out-of-state brokers. Before a purchaser was found, the company’s sawmill was heavily damaged by fire. Despite the fire, the brokers continued to offer the stock for sale. Potential purchasers were advised of the damage, but were told that the mill would be completely rebuilt and modernized.

Samuel Dennis, a Massachusetts tax attorney, received a letter offering the stock for sale. On the basis of the letter’s representations concerning the rebuilding plans, the predicted productivity of the mill, existing contracts, and expected profits, Dennis became interested in acquiring the stock. He talked to John Bolten, a former client who had retired to Florida, about joining him in investigating the offer. After having an audit and an inspection of the mill conducted, a stock purchase agreement was negotiated, with Dennis the purchaser of all of the common stock in the lumber company. Ivan Landreth agreed to stay on as a consultant for some time to help with the daily operations of the mill. Pursuant to the terms of the stock purchase agreement, Dennis assigned the stock he purchased to B & D Co., a corporation formed for the sole purpose of acquiring the lumber company stock. B & D then merged with the lumber company, forming petitioner Landreth Timber Co. Dennis and Bolten then acquired all of petitioner’s Class A stock, representing 85% of the equity, and six other investors together owned the Class B stock, representing the remaining 15% of the equity.

After the acquisition was completed, the mill did not live up to the purchasers’ expectations. Rebuilding costs exceeded earlier estimates, and new components turned out to be incompatible with existing equipment. Eventually, petitioner sold the mill at a loss and went into receivership. Petitioner then filed this suit seeking rescission of the sale of stock and $2,500,000 in damages, alleging that respondents had widely offered and then sold their stock without registering it as required by the Securities Act of 1933, 15 U. S. C. § 77a et seq. (1933 Act). Petitioner also alleged that respondents had negligently or intentionally made misrepresentations and had failed to state material facts as to the worth and prospects of the lumber company, all in violation of the Securities Exchange Act of 1934, 15 U. S. C. §78a et seq. (1934 Act).

Respondents moved for summary judgment on the ground that the transaction was not covered by the Acts because under the so-called “sale of business” doctrine, petitioner had not purchased a “security” within the meaning of those Acts. The District Court granted respondents’ motion and dismissed the complaint for want of federal jurisdiction. It acknowledged that the federal statutes include “stock” as one of the instruments constituting a “security,” and that the stock at issue possessed all of the characteristics of conventional stock. Nonetheless, it joined what it termed the “growing majority” of courts that had held that the federal securities laws do not apply to the sale of 100% of the stock of a closely held corporation. App. to Pet. for Cert. 13a. Relying on United Housing Foundation, Inc. v. Forman, 421 U. S. 837 (1975), and SEC v. W. J. Howey Co., 328 U. S. 293 (1946), the District Court ruled that the stock could not be considered a “security” unless the purchaser had entered into the transaction with the anticipation of earning profits derived from the efforts of others. Finding that managerial control of the business had passed into the hands of the purchasers, and thus that the transaction was a commercial venture rather than a typical investment, the District Court dismissed the complaint.

The United States Court of Appeals for the Ninth Circuit affirmed the District Court’s application of the sale of business doctrine. 731 F. 2d 1348 (1984). It agreed that it was bound by United Housing Foundation, Inc. v. Forman, supra, and SEC v. W. J. Howey Co., supra, to determine in every case whether the economic realities of the transaction indicated that the Acts applied. Because the Courts of Appeals are divided over the applicability of the federal securities laws when a business is sold by the transfer of 100% of its stock, we granted certiorari. 469 U. S. 1016 (1984). We now reverse.

II

It is axiomatic that “[t]he starting point in every case involving construction of a statute is the language itself.” Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 756 (1975) (Powell, J., concurring); accord, Teamsters v. Daniel, 439 U. S. 551, 558 (1979). Section 2(1) of the 1933 Act, 48 Stat. 74, as amended and as set forth in 15 U. S. C. § 77b(1), defines a “security” as including

“any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, ... or, in general, any interest or instrument commonly known as a ‘security,’ or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.”

As we have observed in the past, this definition is quite broad, Marine Bank v. Weaver, 455 U. S. 551, 556 (1982), and includes both instruments whose names alone carry well-settled meaning, as well as instruments of “more variable character [that] were necessarily designated by more descriptive terms,” such as “investment contract” and “instrument commonly known as a ‘security.’” SEC v. C. M. Joiner Leasing Corp., 320 U. S. 344, 351 (1943). The face of the definition shows that “stock” is considered to be a “security” within the meaning of the Acts. As we observed in United Housing Foundation, Inc. v. Forman, supra, most instruments bearing such a traditional title are likely to be covered by the definition. Id., at 850.

As we also recognized in Forman, the fact that instruments bear the label “stock” is not of itself sufficient to invoke the coverage of the Acts. Rather, we concluded that we must also determine whether those instruments possess “some of the significant characteristics typically associated with” stock, id., at 851, recognizing that when an instrument is both called “stock” and bears stock’s usual characteristics, “a purchaser justifiably [may] assume that the federal securities laws apply,” id., at 850. We identified those characteristics usually associated with common stock as (i) the right to receive dividends contingent upon an apportionment of profits; (ii) negotiability; (iii) the ability to be pledged or hypothecated; (iv) the conferring of voting rights in proportion to the number of shares owned; and (v) the capacity to appreciate in value. Id., at 851.

Under the facts of Forman, we concluded that the instruments at issue there were not “securities” within the meaning of the Acts. That case involved the sale of shares of stock entitling the purchaser to lease an apartment in a housing cooperative. The stock bore none of the characteristics listed above that are usually associated with traditional stock. Moreover, we concluded that under the circumstances, there was no likelihood that the purchasers had been misled by use of the word “stock” into thinking that the federal securities laws governed their purchases. The purchasers had intended to acquire low-cost subsidized living space for their personal use; no one was likely to have believed that he was purchasing investment securities. Ibid.

In contrast, it is undisputed that the stock involved here possesses all of the characteristics we identified in Forman as traditionally associated with common stock. Indeed, the District Court so found. App. to Pet. for Cert. 13a. Moreover, unlike in Forman, the context of the transaction involved here — the sale of stock in a corporation — is typical of the kind of context to which the Acts normally apply. It is thus much more likely here than in Forman that an investor would believe he was covered by the federal securities laws. Under the circumstances of this case, the plain meaning of the statutory definition mandates that the stock be treated as “securities” subject to the coverage of the Acts.

Reading the securities laws to apply to the sale of stock at issue here comports with Congress’ remedial purpose in enacting the legislation to protect investors by “compelling full and fair disclosure relative to the issuance of ‘the many types of instruments that in our commercial world fall within the ordinary concept of a security.’” SEC v. W. J. Howey Co., 328 U. S., at 299 (quoting H. R. Rep. No. 85, 73d Cong., 1st Sess., 11 (1933)). Although we recognize that Congress did not intend to provide a comprehensive federal remedy for all fraud, Marine Bank v. Weaver, supra, at 556, we think it would improperly narrow Congress’ broad definition of “security” to hold that the traditional stock at issue here falls outside the Acts’ coverage.

I — ( I — I

Under other circumstances, we might consider the statutory analysis outlined above to be a sufficient answer compelling judgment for petitioner. Respondents urge, however, that language in our previous opinions, including Forman, requires that we look beyond the label “stock” and the characteristics of the instruments involved to determine whether application of the Acts is mandated by the economic substance of the transaction. ' Moreover, the Court of Appeals rejected the view that the plain meaning of the definition would be sufficient to hold this stock covered, because it saw “no principled way,” 731 F. 2d, at 1353, to justify treating notes, bonds, and other of the definitional categories differently. We address these concerns in turn.

A

It is fair to say that our cases have not been entirely clear on the proper method of analysis for determining when an instrument is a “security.” This Court has decided a number of cases in which it looked to the economic substance of the transaction, rather than just to its form, to determine whether the Acts applied. In SEC v. C. M. Joiner Leasing Corp., for example, the Court considered whether the 1933 Act applied to the sale of leasehold interests in land near a proposed oil well drilling. In holding that the leasehold interests were “securities,” the Court noted that “the reach of the Act does not stop with the obvious and commonplace.” 320 U. S., at 351. Rather, it ruled that unusual devices such as the leaseholds would also be covered “if it be proved as matter of fact that they were widely offered or dealt in under terms or courses of dealing which established their character in commerce as ‘investment contracts,’ or as ‘any interest or instrument commonly known as a ‘security.’” Ibid.

SEC v. W. J. Howey Co., supra, further elucidated the Joiner Court’s suggestion that an unusual instrument could be considered a “security” if the circumstances of the transaction so dictated. At issue in that case was an offering of units of a citrus grove development coupled with a contract for cultivating and marketing the fruit and remitting the proceeds to the investors. The Court held that the offering constituted an “investment contract” within the meaning of the 1933 Act because, looking at the economic realities, the transaction “involve[d] an investment of money in a common enterprise with profits to come solely from the efforts of others.” 328 U. S., at 301.

This so-called “Howey test” formed the basis for the second part of our decision in Forman, on which respondents primarily rely. As discussed above, see Part II, supra, the first part of our decision in Forman concluded that the instruments at issue, while they bore the traditional label “stock,” were not “securities” because they possessed none of the usual characteristics of stock. We then went on to address the argument that the instruments were “investment contracts.” Applying the Howey test, we concluded that the instruments likewise were not “securities” by virtue of being “investment contracts” because the economic realities of the transaction showed that the purchasers had parted with their money not for the purpose of reaping profits from the efforts of others, but for the purpose of purchasing a commodity for personal consumption. 421 U. S., at 858.

Respondents contend that Forman and the cases on which it was based require us to reject the view that the shares of stock at issue here may be considered “securities” because of their name and characteristics. Instead, they argue that our cases require us in every instance to look to the economic substance of the transaction to determine whether the Howey test has been met. According to respondents, it is clear that petitioner sought not to earn profits from the efforts of others, but to buy a company that it could manage and control. Petitioner was not a passive investor of the kind Congress intended the Acts to protect, but an active entrepreneur, who sought to “use or consume” the business purchased just as the purchasers in Forman sought to use the apartments they acquired after purchasing shares of stock. Thus, respondents urge that the Acts do not apply.

We disagree with respondents’ interpretation of our cases. First, it is important to understand the contexts within which these cases were decided. All of the cases on which respondents rely involved unusual instruments not easily characterized as “securities.” See n. 4, supra. Thus, if the Acts were to apply in those cases at all, it would have to have been because the economic reality underlying the transactions indicated that the instruments were actually of a type that falls within the usual concept of a security. In the case at bar, in contrast, the instrument involved is traditional stock, plainly within the statutory definition. There is no need here, as there was in the prior cases, to look beyond the characteristics of the instrument to determine whether the Acts apply.

Contrary to respondents’ implication, the Court has never foreclosed the possibility that stock could be found to be a “security” simply because it is what it purports to be. In SEC v. C. M. Joiner Leasing Corp., 320 U. S. 344 (1943), the Court noted: “[W]e do nothing to the words of the Act; we merely accept them. ... In some cases, [proving that the documents were securities] might be done by proving the document itself, which on its face would be a note, a bond, or a share of stock.” Id., at 355. Nor does Forman require a different result. Respondents are correct that in Forman we eschewed a “literal” approach that would invoke the Acts’ coverage simply because the instrument carried the label “stock.” Forman does not, however, eliminate the Court’s ability to hold that an instrument is covered when its characteristics bear out the label. See supra, at 686-687.

Second, we would note that the Howey economic reality test was designed to determine whether a particular instrument is an “investment contract,” not whether it fits within any of the examples listed in the statutory definition of “security.” Our cases are consistent with this view. Teamsters v. Daniel, 439 U. S., at 558 (appropriate to turn to the Howey test to “determine whether a particular financial relationship constitutes an investment contract”); United Housing Foundation, Inc. v. Forman, 421 U. S. 837 (1975); see supra, at 689. Moreover, applying the Howey test to traditional stock and all other types of instruments listed in the statutory definition would make the Acts’ enumeration of many types of instruments superfluous. Golden v. GaraFalo, 678 F. 2d 1139, 1144 (CA2 1982). See Tcherepnin v. Knight, 389 U. S. 332, 343 (1967).

Finally, we cannot agree with respondents that the Acts were intended to cover only “passive investors” and not privately negotiated transactions involving the transfer of control to “entrepreneurs.” The 1934 Act contains several provisions specifically governing tender offers, disclosure of transactions by corporate officers and principal stockholders, and the recovery of short-swing profits gained by such persons. See, e. g., 1934 Act, §§ 14, 16, 15 U. S. C. §§ 78n, 78p. Eliminating from the definition of “security” instruments involved in transactions where control passed to the purchaser would contravene the purposes of these provisions. Accord, Daily v. Morgan, 701 F. 2d 496, 503 (CA5 1983). Furthermore, although §4(2) of the 1933 Act, 15 U. S. C. §77d(2), exempts transactions not involving any public offering from the Act’s registration provisions, there is no comparable exemption from the antifraud provisions. Thus, the structure and language of the Acts refute respondents’ position.

B

We now turn to the Court of Appeals’ concern that treating stock as a specific category of “security” provable by its characteristics means that other categories listed in the statutory definition, such as notes, must be treated the same way. Although we do not decide whether coverage of notes or other instruments may be provable by their name and characteristics, we do point out several reasons why we think stock may be distinguishable from most if not all of the other categories listed in the Acts’ definition.

Instruments that bear both the name and all of the usual characteristics of stock seem to us to be the clearest case for coverage by the plain language of the definition. First, traditional stock “represents to many people, both trained and untrained in business matters, the paradigm of a security.” Daily v. Morgan, sUpra, at 500. Thus persons trading in traditional stock likely have a high expectation that their activities are governed by the Acts. Second, as we made clear in Forman, “stock” is relatively easy to identify because it lends itself to consistent definition. See supra, at 686. Unlike some instruments, therefore, traditional stock is more susceptible of a plain meaning approach.

Professor Loss has agreed that stock is different from the other categories of instruments. He observes that it “goes against the grain” to apply the Howey test for determining whether an instrument is an “investment contract” to traditional stock. L. Loss, Fundamentals of Securities Regulation 211-212 (1988). As Professor Loss explains:

“It is one thing to say that the typical cooperative apartment dweller has bought a home, not a security; or that not every installment purchase ‘note’ is a security; or that a person who charges a restaurant meal by signing his credit card slip is not selling a security even though his signature is an ‘evidence of indebtedness.’ But stock (except for the residential wrinkle) is so quintessential a security as to foreclose further analysis.” Id., at 212 (emphasis in original).

We recognize that in SEC v. C. M. Joiner Leasing Corp., 320 U. S. 344 (1943), the Court equated “notes” and “bonds” with “stock” as categories listed in the statutory definition that were standardized enough to rest on their names. Id., at 355. Nonetheless, in Forman, we characterized Joiner’s, language as dictum. 421 U. S., at 850. As we recently suggested in a different context in Securities Industry Assn. v. Board of Governors, FRS, 468 U. S. 137 (1984), “note” may now be viewed as a relatively broad term that encompasses instruments with widely varying characteristics, depending on whether issued in a consumer context, as commercial paper, or in some other investment context. See id., at 149-153. We here expressly leave until another day the question whether “notes” or “bonds” or some other category of instrument listed in the definition might be shown “by proving [only] the document itself.” SEC v. C. M. Joiner Leasing Corp., supra, at 355. We hold only that “stock” may be viewed as being in a category by itself for purposes of interpreting the scope of the Acts’ definition of “security.”

H-1 <1

We also perceive strong policy reasons for not employing the sale of business doctrine under the circumstances of this case. By respondents’ own admission, application of the doctrine depends in each case on whether control has passed to the purchaser. It may be argued that on the facts of this case, the doctrine is easily applied, since the transfer of 100% of a corporation’s stock normally transfers control. We think even that assertion is open to some question, however, as Dennis and Bolten had no intention of running the sawmill themselves. Ivan Landreth apparently stayed on to manage the daily affairs of the business. Some commentators who support the sale of business doctrine believe that a purchaser who has the ability to exert control but chooses not to do so may deserve the Acts’ protection if he is simply a passive investor not engaged in the daily management of the business. Easley, Recent Developments in the Sale-of-Business Doctrine: Toward a Transactional Context-Based Analysis for Federal Securities Jurisdiction, 39 Bus. Law. 929, 971-972 (1984); Seldin, When Stock is Not a Security: The “Sale of Business” Doctrine Under the Federal Securities Laws, 37 Bus. Law. 637, 679 (1982). In this case, the District Court was required to undertake extensive fact-finding, and even requested supplemental facts and memo-randa on the issue of control, before it was able to decide the case. App. to Pet. for Cert. 13a.

More importantly, however, if applied to this case, the sale of business doctrine would also have to be applied to cases in which less than 100% of a company’s stock was sold. This inevitably would lead to difficult questions of line-drawing. The Acts’ coverage would in every case depend not only on the percentage of stock transferred, but also on such factors as the number of purchasers and what provisions for voting and veto rights were agreed upon by the parties. As we explain more fully in Gould v. Ruefenacht, post, at 704-706, decided today as a companion to this case, coverage by the Acts would in most cases be unknown and unknowable to the parties at the time the stock was sold. These uncertainties attending the applicability of the Acts would hardly be in the best interests of either party to a transaction. Cf. Marine Bank v. Weaver, 455 U. S., at 559, n. 9 (rejecting the argument that the certificate of deposit at issue there was transformed, chameleon-like, into a “security” once it was pledged). Respondents argue that adopting petitioner’s approach will increase the workload of the federal courts by converting state and common-law fraud claims into federal claims. We find more daunting, however, the prospect that parties to a transaction may never know whether they are covered by the Acts until they engage in extended discovery and litigation over a concept as often elusive as the passage of control. Accord, Golden v. Garafalo, 678 F. 2d, at 1145-1146.

V

In sum, we conclude that the stock at issue here is a “security” within the definition of the Acts, and that the sale of business doctrine does not apply. The judgment of the United States Court of Appeals for the Ninth Circuit is therefore

Reversed.

Justice Stevens,

dissenting.

In my opinion, Congress did not intend the antifraud provisions of the federal securities laws to apply to every transaction in a security described in § 2(1) of the 1933 Act:

“The term ‘security’ means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, . . . investment contract, voting-trust certificate, ... or, in general, any interest or instrument commonly known as a ‘security.’” 15 U. S. C. §77b(1).

See also ante, at 686, n. 1. Congress presumably adopted this sweeping definition “to prevent the financial community from evading regulation by inventing new types of financial instruments rather than to prevent the courts from interpreting the Act in light of its purposes.” Sutter v. Groen, 687 F. 2d 197, 201 (CA7 1982). Moreover, the “broad statutory definition is preceded ... by the statement that the terms mentioned are not to be considered securities if ‘the context otherwise requires . . . Marine Bank v. Weaver, 455 U. S. 551, 556 (1982).

The legislative history of the 1933 and 1934 Securities Acts makes clear that Congress was primarily concerned with transactions in securities that are traded in a public market. In United Housing Foundation, Inc. v. Forman, 421 U. S. 837 (1975), the Court observed:

“The primary purpose of the Acts of 1933 and 1934 was to eliminate serious abuses in a largely unregulated securities market. The focus of the Acts is on the capital market of the enterprise system: the sale of securities to raise capital for profit-making purposes, the exchanges on which securities are traded, and the need for regulation to prevent fraud and protect the interest of investors. Because securities transactions are economic in character Congress intended the application of these statutes to turn on the economic realities underlying a transaction, and not on the name appended thereto.” Id., at 849.

I believe that Congress wanted to protect investors who do not have access to inside information and who are not in a position to protect themselves from fraud by obtaining appropriate contractual warranties.

At some level of analysis, the policy of Congress must provide the basis for placing limits on the coverage of the Securities Acts. The economic realities of a transaction may determine whether “unusual instruments” fall within the scope of the Acts, ante, at 690, and whether an ordinary commercial “note” is covered, ante, at 693-694. The negotiation of an individual mortgage note, for example, surely would not be covered by the Acts, although a note is literally a “security” under the definition. Cf. Chemical Bank v. Arthur Andersen & Co., 726 F. 2d 930, 937 (CA2), cert. denied, 469 U. S. 884 (1984). The marketing to the public of a large portfolio of mortgage loans, however, might well be. See Sanders v. John Nuveen & Co., 463 F. 2d 1075, 1079-1080 (CA7), cert. denied, 409 U. S. 1009 (1972).

I believe that the characteristics of the entire transaction are as relevant in determining whether a transaction in “stock” is covered by the Acts as they are in transactions involving “notes,” “investment contracts,” or the more hybrid securities. Providing regulations for the trading of publicly listed stock — whether on an exchange or in the over-the-counter market — was the heart of Congress’ legislative program, and even private sales of such securities are surely covered by the Acts. I am not persuaded, however, that Congress intended to cover negotiated transactions involving the sale of control of a business whose securities have never been offered or sold in any public market. In the latter cases, it is only a matter of interest to the parties whether the transaction takes the form of a sale of stock or a sale of assets, and the decision usually hinges on matters that are irrelevant to the federal securities laws such as tax liabilities, the assignability of Government licenses or other intangible assets, and the allocation of the accrued or unknown liabilities of the going concern. If Congress had intended to provide a remedy for every fraud in the sale of a going concern or its assets, it would not have permitted the parties to bargain over the availability of federal jurisdiction.

In short, I would hold that the antifraud provisions of the federal securities laws are inapplicable unless the transaction involves (i) the sale of a security that is traded in a public market; or (ii) an investor who is not in a position to negotiate appropriate contractual warranties and to insist on access to inside information before consummating the transaction. Of course, until the precise contours of such a standard could be marked out in a series of litigated proceedings, some uncertainty in the coverage of the statutes would be unavoidable. Nevertheless, I am persuaded that the interests in certainty and predictability that are associated with a simple “bright-line” rule are not strong enough to “justify expanding liability to reach substantive evils far outside the scope of the legislature’s concern.” Sutter v. Groen, 687 F. 2d, at 202.

Both of these cases involved a sale of stock in a closely held corporation. In each case the transaction was preceded by comprehensive negotiations between the buyer and seller. There is no suggestion that the buyers were unable to obtain appropriate warranties or to insist on the exchange and independent evaluation of relevant financial information before entering into the transactions. I do not believe Congress intended the federal securities laws to govern the private sale of a substantial ownership interest in these operating businesses simply because the transactions were structured as sales of stock instead of assets.

I would affirm the judgment of the Court of Appeals in No. 88-1961 and reverse the judgment in No. 84-165.

       We have repeatedly ruled that the definitions of “security” in § 3(a)(10) of the 1934 Act and § 2(1) of the 1933 Act are virtually identical and will be treated as such in our decisions dealing with the scope of the term. Marine Bank v. Weaver, 456 U. S. 551, 555, n. 3 (1982); United Housing Foundation, Inc. v. Forman, 421 U. S. 837, 847, n. 12 (1975).

       Although we did not so specify in Forman, we wish to make clear here that these characteristics are those usually associated with common stock, the kind of stock often at issue in cases involving the sale of a business. Various types of preferred stock may have different characteristics and still be covered by the Acts.

       Professor Loss suggests that the statutory analysis is sufficient. L. Loss, Fundamentals of Securities Regulation 212 (1983). See infra, at 693-694.

       Respondents also rely on Tcherepnin v. Knight, 389 U. S. 332 (1967), and Marine Bank v. Weaver, 455 U. S. 551 (1982), as support for their argument that we have mandated in every case a determination of whether the economic realities of a transaction call for the application of the Acts. It is sufficient to note here that these cases, like the other cases on which respondents rely, involved unusual instruments that did not fit squarely within one of the enumerated specific kinds of securities listed in the definition. Tcherepnin involved withdrawable capital shares in a state savings and loan association, and Weaver involved a certificate of deposit and a privately negotiated profit-sharing agreement. See Marine Bank v. Weaver, supra, at 557, n. 5, for an explanation of why the certificate of deposit involved there did not fit within the definition’s category “certificate of deposit, for a security.”

       In support of their contention that the Court has mandated use of the Howey test whenever it determines whether an instrument is a “security,” respondents quote our statement in Teamsters v. Daniel, 439 U. S. 551, 558, n. 11 (1979), that the Howey test “‘embodies the essential attributes that run through all of the Court’s decisions defining a security’ ” (quoting Forman, 421 U. S., at 852). We do not read this bit of dicta as broadly as respondents do. We made the statement in Forman in reference to the purchasers’ argument that if the instruments at issue were not “stock” and were not “investment contracts,” at least they were “instrument[s] commonly known as a ‘security’ ” within the statutory definition. We stated, as part of our analysis of whether the instruments were “investment contracts,” that we perceived “no distinction, for present purposes, between an ‘investment contract’ and an ‘instrument commonly known as a “security.” ’ ” Ibid, (emphasis added). This was not to say that the Howey test applied to any case in which an instrument was alleged to be a security, but only that once the label “stock” did not hold true, we perceived no reason to analyze the case differently whether we viewed the instruments as “investment contracts” or as falling within another similarly general category of the definition — an “instrument commonly known as a ‘security.’” Under either of these general categories, the Howey test would apply.

       In criticizing the sale of business doctrine, Professor Loss agrees. He considers that the doctrine “comes dangerously close to the heresy of saying that the fraud provisions do not apply to private transactions; for nobody, apparently, has had the temerity to argue that the sale of a -publicly owned business for stock of the acquiring corporation that is distributed to the shareholders of the selling corporation as a liquidating dividend does not involve a security.” L. Loss, Fundamentals of Securities Regulation 212 (1983) (emphasis in original) (footnote omitted).

       Justice Stevens dissents on the ground that Congress did not intend the antifraud provisions of the federal securities laws to apply to “the private sale of a substantial ownership interest in [a business] simply because the transactio[n] w[as] structured as [a] sal[e] of stock instead of assets.” Post, at 700. Justice Stevens, of course, is correct in saying that it is clear from the legislative history of the 1933 and 1934 Acts that Congress was concerned primarily with transactions “in securities . . . traded in a public market.” Post, at 698. United Housing Foundation, Inc. v. Forman, 421 U. S., at 849. It also is true that there is no indication in the legislative history that Congress considered the type of transactions involved in this case and in Gould v. Ruefenacht, post, p. 701.
      The history is simply silent — as it is with respect to other transactions to which these Acts have been applied by the Securities and Exchange Commission and judicial interpretation over the half century since this legislation was adopted. One only need mention the expansive interpretation of § 10(b) of the 1934 Act and Rule 10b-5 adopted by the Commission. What the Court said in Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723 (1975), is relevant:
      “When we deal with private actions under Rule 10b-5, we deal with a judicial oak which has grown from little more than a legislative acorn. Such growth may be quite consistent with the congressional enactment and with the role of the federal judiciary in interpreting it, see J. I. Case Co. v Borak, [377 U. S. 426 (1964)], but it would be disingenuous to suggest that either Congress in 1934 or the Securities and Exchange Commission in 1942 foreordained the present state of the law with respect to Rule 10b-5. It is therefore proper that we consider, in addition to the factors already discussed, what may be described as policy considerations when we come to flesh out the portions of the law with respect to which neither the congressional enactment nor the administrative regulations offer conclusive guidance.” Id., at 737.
      See also Ernst & Ernst v. Hochfelder, 425 U. S. 185, 196-197 (1976).
      In this case, unlike with respect to the interpretation of § 10(b) in Blue Chip Stamps, we have the plain language of § 2(1) of the 1933 Act in support of our interpretation. In Forman, supra, we recognized that the term “stock” is to be read in accordance with the common understanding of its meaning, including the characteristics identified in Forman. See supra, at 686. In addition, as stated in Blue Chip Stamps, supra, it is proper for a court to consider — as we do today — policy considerations in construing terms in these Acts.

      [This opinion applies also to No. 84-165, Gould v. Ruefenacht et al., post, p. 701.]

       Cf. Milnarik v. M-S Commodities, Inc., 457 F. 2d 274, 275-276 (CA7) (Stevens, J., for the court) (“we do not believe every conceivable arrangement that would fit a dictionary definition of an investment contract was intended to be included within the statutory definition of a security”), cert. denied, 409 U. S. 887 (1972).

       In final analysis, the Court relies on its own evaluation of the relevant “policy considerations.” See ante, at 694-697, and especially n. 7. While I agree that policy considerations are relevant in construing the Securities Acts, I would prefer to rely principally on the policies of Congress as reflected in the legislative history. If extrinsic considerations are to be given effect, I would place a far different evaluation on the weight of the conflicting policies, because I strongly believe that this Court should presume that federal legislation is not intended to displace state authority unless Congress has plainly indicated an intent to do so. See, e. g., Bennett v. New Jersey, 470 U. S. 632, 654-666, n. 16 (1985) (Stevens, J., dissenting); Garcia v. United States, 469 U. S. 70, 89-90 (1984) (Stevens, J., dissenting); Michigan v. Long, 463 U. S. 1032, 1067 (1983) (Stevens, J., dissenting); United States v. Altobella, 442 F. 2d 310, 316 (CA7 1971) (Stevens, J., for the court). Cf. Minnesota v. Clover Leaf Creamery Co., 449 U. S. 456, 477 (1981) (Stevens, J., dissenting).

       Indeed, in No. 83-1961, the parties entered into a lengthy Stock Purchase Agreement containing extensive warranties and other protections for the purchasers. App. 206-263.


author: Justice Powell

text:
    GOULD v. RUEFENACHT et al.
    No. 84-165.
    Argued March 26, 1985
    Decided May 28, 1985

      Powell, J., delivered the opinion of the Court, in which BURGER, C. J., and Brennan, White, Marshall, Blackmun, Rehnquist, and O’Con-nor, JJ., joined. Stevens, J., filed a dissenting opinion, ante, p. 697.

      Robert C. Epstein argued the cause for petitioner. With him on the brief were Dean A. Gaver and Joseph J. Fleisch-man. Robert J. Kelly filed a brief for O’Halloran, as respondent under this Court’s Rule 19.6, urging reversal.

      Peter S. Pearlman argued the cause for respondent Ruefe-nacht. With him on the brief was Jeffrey W. Herrmann.

      Daniel L. Goelzer argued the cause for the Securities and Exchange Commission as amicus curiae urging affirmance. With him on the brief were Solicitor General Lee, Deputy Solicitor General Claiborne, Paul Gonson, Jacob H. Still-man, and Rosalind C. Cohen.

   Justice Powell

delivered the opinion of the Court.

This case presents the question whether the sale of 50% of the stock of a company is a securities transaction subject to the antifraud provisions of the federal securities laws (the Acts).

I

In 1980, respondent Ruefenacht (hereafter respondent) purchased 2,500 shares of the stock of Continental Import & Export, Inc., an importer of wine and spirits, from Joachim Birkle. Birkle was Continental’s president and had owned 100% of the company’s stock prior to the time of the sale. The 2,500 shares, for which respondent paid $250,000, represented 50% of Continental’s outstanding stock.

According to respondent, he purchased the stock in reliance on financial documents and oral representations made by Birkle; Christopher O’Halloran, a certified public accountant; and petitioner Gould, Continental’s corporate counsel. Part of the consideration for the deal was a promise by respondent that he would participate in the firm’s management. The record reveals that he helped solicit contracts for the firm, participated in some hiring decisions, signed a banking resolution so that he could endorse corporate checks in Birkle’s absence, and engaged in other more minor pursuits. All the while, however, respondent remained a full-time employee of another corporation, and his actions on behalf of Continental were at all times subject to Birkle’s veto.

After respondent paid $120,000 of the stock’s purchase price, he began to doubt the accuracy of some of the representations made to him by Birkle and others. Respondent subsequently filed this suit, alleging violations of §§ 12(2) and 17(a) of the Securities Act of 1933 (1933 Act), 15 U. S. C. §§77£(2), 77q. He also alleged violations of § 10(b) of the Securities Exchange Act of 1934 (1934 Act), 15 U. S. C. §78j(b), and Rule 10b-5, 17 CFR §240.10b-5 (1984). The District Court granted summary judgment for the defendants, concluding that the stock respondent purchased was not a “security” within the meaning of § 3(a)(10) of the 1934 Act, 15 U. S. C. § 78c(a)(10), and §2(1) of the 1933 Act, 15 U. S. C. §77b(1). Finding that respondent intended to manage Continental jointly with Birkle, the court concluded that the sale of business doctrine prevented application of the Acts.

The United States Court of Appeals for the Third Circuit reversed. Ruefenacht v. O’Halloran, 737 F. 2d 320 (1984). It ruled that the plain language of the Acts’ definitions of “security” included the stock at issue here, and it disagreed with the District Court’s conclusion that the sale of business doctrine must be applied in every case to determine whether an instrument is a “security” within the meaning of the Acts. Because the Courts of Appeals are divided over the applicability of the sale of business doctrine to sales of stock arguably transferring control of a closely held business, we granted certiorari. 469 U. S. 1016 (1984). For the reasons stated in our decision announced today in Landreth Timber Co. v. Landreth, ante, p. 681, we now affirm.

HH HH

In Landreth, we held that where an instrument bears the label “stock” and possesses all of the characteristics typically associated with stock, see United Housing Foundation, Inc. v. Forman, 421 U. S. 837, 851 (1975), a court will not be required to look beyond the character of the instrument to the economic substance of the transaction to determine whether the stock is a “security” within the meaning of the Acts. The instruments respondent purchased were called “stock,” and the District Court ruled that they possessed all of the characteristics listed by Forman that are usually associated with traditional stock. App. 50a. As we noted in Landreth, ante, at 687, the sale of stock in a corporation is typical of the kind of transaction to which the Acts by their terms apply. We conclude that the stock purchased by respondent is a “security” within the meaning of the Acts, and that the sale of business doctrine does not apply.

I — I HH HH

Aside from the language of the Acts and the characteristics of the instruments, there are sound policy reasons for rejecting the sale of business doctrine as a rule of decision in cases involving the sale of traditional stock in a closely held corporation. As petitioner acknowledges, see Brief for Petitioner 27, application of the doctrine depends primarily in each case on whether control has passed to the purchaser. See, e. g., Sutter v. Groen, 687 F. 2d 197, 203 (CA7 1982); King v. Winkler, 673 F. 2d 342, 345 (CA11 1982); Frederiksen v. Poloway, 637 F. 2d 1147, 1148 (CA7), cert. denied, 451 U. S. 1017 (1981). Control, in turn, may not be determined simply by ascertaining what percentage of the company’s stock has been purchased. To be sure, in many cases, acquisition of more than 50% of the voting stock of a corporation effects a transfer of operational control. In other cases, however, even the ownership of more than 50% may not result in effective control. In still other cases, defacto operational control may be obtained by the acquisition of less than 50%. These seemingly inconsistent results stem from the fact that actual control may also depend on such variables as voting rights, veto rights, or requirements for a super-majority vote on issues pertinent to company management, such as may be required by state law or the company’s certificate of incorporation or its bylaws. See Golden v. Garafalo, 678 F. 2d 1139, 1146 (CA2 1982) (“In ‘economic reality,’ considerably less than 100%, and often less than 50%, of outstanding shares may be a controlling block which, when sold to a single holder, effectively transfers the power to manage the business”); King v. Winkler, supra, at 346 (application of the sale of business doctrine “is not [merely] a function of numbers”). Whether control has passed with the stock may also depend on how involved in management the purchaser intends to be, see Landreth, ante, at 695-696. Therefore, under respondent’s theory, the Acts’ applicability to a sale of stock such as that involved here would rarely be certain at the time of the transaction. Accord, Hazen, Taking Stock of Stock and the Sale of Closely Held Corporations, 61 N. C. L. Rev. 393, 406 (1983). Rather, it would depend on findings of fact made by a court — often only after extensive discovery and litigation.

Application of the sale of business doctrine also would lead to arbitrary distinctions between transactions covered by the Acts and those that are not. Because applicability of the Acts would depend on factors other than the type and characteristics of the instrument involved, a corporation’s stock could be determined to be a security as to the seller, but not as to the purchaser, or as to some purchasers but not others. Likewise, if the same purchaser bought small amounts of stock through several different transactions, it is possible that the Acts would apply as to some of the transactions, but not as to the one that gave him “control.” See Ruefenacht v. O’Halloran, 737 F. 2d, at 335. Such distinctions make little sense in view of the Acts’ purpose to protect investors. Moreover, the parties’ inability to determine at the time of the transaction whether the Acts apply neither serves the Acts’ protective purpose nor permits the purchaser to compensate for the added risk of no protection when negotiating the transaction.

IV

We conclude that the stock at issue here is a “security,” and that the sale of business doctrine does not apply. The judgment of the United States Court of Appeals for the Third Circuit is therefore

Affirmed.

[For dissenting opinion of Justice Stevens, see ante, p. 697.]

       The complaint named as defendants O’Halloran, Birkle, and Continental, as well as petitioner Gould. Birkle and Continental defaulted for failure to appear. O’Halloran is a respondent under this Court’s Rule 19.6 and filed a brief urging that the decision of the Court of Appeals be reversed.

       For example, although the sale of all of a corporation’s stock to a single buyer by a single seller would likely not constitute the sale of a security under the sale of business doctrine as to either party, the same sale to a single buyer by several sellers, none of whom exercised control, would probably be considered to be a securities transaction as to the sellers, but not as to the buyer. See Ruefenacht v. O’Halloran, 737 F. 2d 320, 335, and n. 36 (CA3 1984); McGrath v. Zenith Radio Corp., 651 F. 2d 458, 467-468, n. 5 (CA7), cert. denied, 454 U. S. 835 (1981); Seldin, When Stock is Not a Security, 37 Bus. Law. 637, 679 (1982).


author: Justice Marshall

text:
    HILLSBOROUGH COUNTY, FLORIDA, et al. v. AUTOMATED MEDICAL LABORATORIES, INC.
    No. 83-1925.
    Argued April 16, 1985
    Decided June 3, 1985

      MARSHALL, J., delivered the opinion for a unanimous Court.

      Emetine C. Acton argued the cause for appellants. With her on the briefs was Joe Horn Mount.

      Paul J. Larkin, Jr., argued the cause pro hac vice for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Lee, Acting Assistant Attorney General Willard, Deputy Solicitor General Geller, and Margaret E. Clark.

      Larry A. Stumpf argued the cause for appellee. With him on the brief was Victoria L. Baden.

      Richard Landfield argued the cause for the American Blood Resources Association et al. as amici curiae urging affirmance. With him on the brief was William W. Becker.

         Benjamin W. Heineman, Jr., filed a brief for the National Association of Counties et al. as amici curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for the American Blood Commission by Michael H. Cardozo; and for Grocery Manufacturers of America, Inc., by Peter Barton Hutt.

   Justice Marshall

delivered the opinion of the Court.

The question presented is whether the federal regulations governing the collection of blood plasma from paid donors pre-empt certain local ordinances.

t — I

Appellee Automated Medical Laboratories, Inc., is a Florida corporation that operates, through subsidiaries, eight blood plasma centers in the United States. One of the centers, Tampa Plasma Corporation (TPC), is located in Hillsborough County, Florida. Appellee’s plasma centers collect blood plasma from donors by employing a procedure called plasmapheresis. Under this procedure, whole blood removed from the donor is separated into plasma and other components, and “at least the red blood cells are returned to the donor,” 21 CFR § 606.3(e) (1984). Appellee sells the plasma to pharmaceutical manufacturers.

Vendors of blood products, such as TPC, are subject to federal supervision. Under § 351(a) of the Public Health Service Act, 58 Stat. 702, as amended, 42 U. S. C. § 262(a), such vendors must be licensed by the Secretary of Health and Human Services (HHS). Licenses are issued only on a showing that the vendor’s establishment and blood products meet certain safety, purity, and potency standards established by the Secretary. 42 U. S. C. § 262(d). HHS is authorized to inspect such establishments for compliance. § 262(c).

Pursuant to § 351 of the Act, the Food and Drug Administration (FDA), as the designee of the Secretary, has established standards for the collection of plasma. 21 CFR §§640.60-640.76 (1984). The regulations require that a licensed physician determine the suitability of a donor before the first donation and thereafter at subsequent intervals of no longer than one year. § 640.63(b)(1). A physician must also inform the donor of the hazards of the procedure and obtain the donor’s consent, §640.61, and must be on the premises when the procedure is performed, §640.62. In addition, the regulations establish minimum standards for donor eligibility, §§640.63(c)-(d), specify procedures that must be followed in performing plasmapheresis, § 640.65, and impose labeling requirements, §640.70.

In 1980, Hillsborough County adopted Ordinances 80-11 and 80-12. Ordinance 80-11 imposes a $225 license fee on plasmapheresis centers within the county. It also requires such centers to allow the County Health Department “reasonable and continuing access” to their premises for inspection purposes, and to furnish information deemed relevant by the Department. See App. 21-23.

Ordinance 80-12 establishes a countywide identification system, which requires all potential donors to obtain from the County Health Department an identification card, valid for six months, that may be used only at the plasmapheresis center specified on the card. The ordinance incorporates by reference the FDA’s blood plasma regulations, but also imposes donor testing and recordkeeping requirements beyond those contained in the federal regulations. Specifically, the ordinance requires that donors be tested for hepatitis prior to registration, that they donate at only one center, and that they be given a breath analysis for alcohol content before each plasma donation. See id., at 24-31.

The county has promulgated regulations to implement Ordinance 80-12. The regulations set the fee for the issuance of an identification card to a blood donor at $2. They also establish that plasma centers must pay the county a fee of $1 for each plasmapheresis procedure performed. See id., at 32-34.

In December 1981, appellee filed suit in the United States District Court for the Middle District of Florida, challenging the constitutionality of the ordinances and their implementing regulations. Appellee argued primarily that the ordinances violated the Supremacy Clause, the Commerce Clause, and the Fourteenth Amendment’s Equal Protection Clause. Ap-pellee sought a declaration that the ordinances were unlawful and a permanent injunction against their enforcement. Id., at 5-20.

In November 1982, following a bench trial, the District Court upheld all portions of the local ordinances and regulations except the requirement that donors be subject to a breath-analysis test. Id., at 40-46. The court rejected the Supremacy Clause challenge, discerning no evidence of federal intent to pre-empt the whole field of plasmapheresis regulation and finding no conflict between the Hillsborough County ordinances and the federal regulations.

In addition, the District Court rejected the claim that the ordinances violate the Equal Protection Clause because they regulate only centers that pay donors for plasma, and not centers in which volunteers donate whole blood. The court identified a rational basis for the distinction: paid donors sell plasma more frequently than volunteers donate whole blood, and paid donors have a higher rate of hepatitis than do volunteer donors.

Finally, the District Court found that, with one exception, the ordinances do not impermissibly burden interstate commerce. It concluded that the breath-analysis requirement would impose a large burden on plasma centers by forcing them to purchase fairly expensive testing equipment, and was not shown to achieve any purpose not adequately served by the subjective evaluations of sobriety already required by the federal regulations.

Automated Medical Laboratories appealed to the Court of Appeals for the Eleventh Circuit, which affirmed in part and reversed in part. 722 F. 2d 1526 (1984). The Court of Appeals held that the FDA’s blood plasma regulations pre-empt all provisions of the county’s ordinances and regulations. The court acknowledged the absence of an express indication of congressional intent to pre-empt. Relying on the pervasiveness of the FDA’s regulations and on the dominance of the federal interest in plasma regulation, however, it found an implicit intent to pre-empt state and local laws on that subject. In addition, the court found a serious danger of conflict between the FDA regulations and the Hillsborough County ordinances, reasoning that “[i]f the County scheme remains in effect, the national blood policy of promoting uniformity and guaranteeing a continued supply of healthy donors will be adversely affected.” Id., at 1533.

The Court of Appeals thus affirmed, albeit on other grounds, the District Court’s invalidation of the breath-analysis requirement. It reversed the District Court’s judgment upholding the remaining requirements of the Hillsborough County ordinances and regulations. In view of its decision, the court did not reach the Commerce Clause and Equal Protection challenges to the county’s scheme. Ibid.

Hillsborough County and the County Health Department appealed to this Court pursuant to 28 U. S. C. § 1254(2). We noted probable jurisdiction, 469 U. S. 1156 (1984), and we now reverse.

I — I I — I

It is a familiar and well-established principle that the Supremacy Clause, U. S. Const., Art. VI, cl. 2, invalidates state laws that “interfere with, or are contrary to,” federal law. Gibbons v. Ogden, 9 Wheat. 1, 211 (1824) (Marshall, C. J.). Under the Supremacy Clause, federal law may supersede state law in several different ways. First, when acting within constitutional limits, Congress is empowered to pre-empt state law by so stating in express terms. Jones v. Rath Packing Co., 430 U. S. 519, 525 (1977). In the absence of express pre-emptive language, Congress’ intent to preempt 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. Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). Pre-emption of a whole field also will be inferred where the field is one in which “the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.” Ibid.; see Hines v. Davidowitz, 312 U. S. 52 (1941).

Even where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises when “compliance with both federal and state regulations is a physical impossibility,” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 142-143 (1963), or when state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v. Davidowitz, supra, at 67. See generally Capital Cities Cable, Inc. v. Crisp, 467 U. S. 691, 698-699 (1984).

We have held repeatedly that state laws can be pre-empted by federal regulations as well as by federal statutes. See, e. g., Capital Cities Cable, Inc. v. Crisp, supra, at 699; Fidelity Federal Savings & Loan Assn. v. De la Cuesta, 458 U. S. 141, 153-154 (1982); United States v. Shimer, 367 U. S. 374, 381-383 (1961). Also, for the purposes of the Supremacy Clause, the constitutionality of local ordinances is analyzed in the same way as that of statewide laws. See, e. g., City of Burbank v. Lockheed Air Terminal, Inc., 411 U. S. 624 (1973).

I — i HH

In arguing that the Hillsborough County ordinances and regulations are pre-empted, appellee faces an uphill battle. The first hurdle that appellee must overcome is the FDA’s statement, when it promulgated the plasmapheresis regulations in 1973, that it did not intend its regulations to be exclusive. In response to comments expressing concern that the regulations governing the licensing of plasmaphere-sis facilities “would pre-empt State and local laws governing plasmapheresis,” the FDA explained in a statement accompanying the regulations that “[t]hese regulations are not intended to usurp the powers of State or local authorities to regulate plasmapheresis procedures in their localities.” 38 Fed. Reg. 19365 (1973).

The question 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. See supra, at 712-713. In this case, appellee concedes that neither Congress nor the FDA expressly preempted state and local regulation of plasmapheresis. Thus, if the county ordinances challenged here are to fail they must do so either because Congress or the FDA implicitly pre-empted the whole field of plasmapheresis regulation, or because particular provisions in the local ordinances conflict with the federal scheme. According to appellee, two separate factors support the inference of a federal intent to pre-empt the whole field: the pervasiveness of the FDA’s regulations and the dominance of the federal interest in this area. Appellee also argues that the challenged ordinances reduce the number of plasma donors, and that this effect conflicts with the congressional goal of ensuring an adequate supply of plasma.

The FDA’s statement is dispositive on the question of implicit intent to pre-empt unless either the agency’s position is inconsistent with clearly expressed congressional intent, see Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-845 (1984), or subsequent developments reveal a change in that position. Given appel-lee’s first argument for implicit pre-emption — that the comprehensiveness of the FDA’s regulations evinces an intent to pre-empt — any pre-emptive effect must result from the change since 1973 in the comprehensiveness of the federal regulations. To prevail on its second argument for implicit pre-emption — the dominance of the federal interest in plas-mapheresis regulation — appellee must show either that this interest became more compelling since 1973, or that, in 1973, the FDA seriously underestimated the federal interest in plasmapheresis regulation.

The second obstacle in appellee’s path is the presumption that state or local regulation of matters related to health and safety is not invalidated under the Supremacy Clause. Through the challenged ordinances, Hillsborough County has attempted to protect the health of its plasma donors by preventing them from donating too frequently. See Brief for Appellants 12. It also has attempted to ensure the quality of the plasma collected so as to protect, in turn, the recipients of such plasma. “Where . . . the field that Congress is said to have pre-empted has been traditionally occupied by the States ‘we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’” Jones v. Rath Packing Co., 430 U. S., at 525 (quoting Rice v. Santa Fe Elevator Corp., 331 U. S., at 230) (citations omitted). Cf. Kassel v. Consolidated Freightways Corp., 450 U. S. 662, 670 (1981) (deference to state regulation of safety under the dormant Commerce Clause); id., at 681, n. 1 (Brennan, J., concurring in judgment) (same); id., at 691 (Rehnquist, J., dissenting) (same). Of course, the same principles apply where, as here, the field is said to have been pre-empted by an agency, acting pursuant to congressional delegation. Appellee must thus present a showing of implicit pre-emption of the whole field, or of a conflict between a particular local provision and the federal scheme, that is strong enough to overcome the presumption that state and local regulation of health and safety matters can constitutionally coexist with federal regulation.

HH <

Given the clear indication of the FDA’s intention not to preempt and the deference with which we must review the challenged ordinances, we conclude that these ordinances are not pre-empted by the federal scheme.

A

We reject the argument that an intent to pre-empt may be inferred from the comprehensiveness of the FDA’s regulations at issue here. As we have pointed out, given the FDA’s 1973 statement, the relevant inquiry is whether a finding of pre-emption is justified by the increase, since 1973, in the comprehensiveness of the federal regulations. Admittedly, these regulations have been broadened over the years. When they were adopted in 1973, these regulations covered only plasma to be used in injections. In 1976, the regulations were expanded to cover also plasma to be used for the manufacture of “noninjectable” products. 41 Fed. Reg. 10762 (1976). The original regulations also were amended to “clarify and strengthen the existing Source Plasma (Human) regulations in light of FDA inspectional and other regulatory experience.” Ibid.; see also 39 Fed. Reg. 26161 (1974) (first proposing the amendments).

The FDA has not indicated that the new regulations affected its disavowal in 1973 of any intent to pre-empt state and local regulation, and the fact that the federal scheme was expanded to reach other uses of plasma does not cast doubt on the continued validity of that disavowal. Indeed, even in the absence of the 1973 statement, the comprehensiveness of the FDA’s regulations would not justify pre-emption. In New York Dept. of Social Services v. Dublino, 413 U. S. 405 (1973), the Court stated that “[t]he subjects of modern social and regulatory legislation often by their very nature require intricate and complex responses from the Congress, but without Congress necessarily intending its enactment as the exclusive means of meeting the problem.” Id., at 415. There, in upholding state work-incentive provisions against a pre-emption challenge, the Court noted that the federal provisions “had to be sufficiently comprehensive to authorize and govern programs in States which had no . . . requirements of their own as well as cooperatively in States with such requirements.” Ibid. But merely because the federal provisions were sufficiently comprehensive to meet the need identified by Congress did not mean that States and localities were barred from identifying additional needs or imposing further requirements in the field. See also De Canas v. Bica, 424 U. S. 351, 359-360 (1976).

We are even more reluctant to infer pre-emption from the comprehensiveness of regulations than from the comprehensiveness of statutes. As a result of their specialized functions, agencies normally deal with problems in far more detail than does Congress. To infer pre-emption 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. Such a rule, of course, would be inconsistent with the federal-state balance embodied in our Supremacy Clause jurisprudence. See Jones v. Rath Packing Co., 430 U. S., at 525.

Moreover, because agencies normally address problems in a detailed manner and can speak through a variety of means, including regulations, preambles, interpretive statements, and responses to comments, we can expect that they will make their intentions clear if they intend for their regulations to be exclusive. Thus, if an agency does not speak to the question of pre-emption, we will pause before saying that the mere volume and complexity of its regulations indicate that the agency did in fact intend to pre-empt. Given the presumption that state and local regulation related to matters of health and safety can normally coexist with federal regulations, we will seldom infer, solely from the comprehensiveness of federal regulations, an intent to pre-empt in its entirety a field related to health and safety.

Appellee also relies on the promulgation of the National Blood Policy by the Department of Health, Education, and Welfare (HEW), as an indication that the federal regulatory scheme is now comprehensive enough to justify complete preemption. See Brief for Appellee 25-26. Such reliance is misplaced.

The National Blood Policy was established in 1974 as “a pluralistic and evolutionary approach to the solution of blood collection and distribution problems.” 39 Fed. Reg. 32702 (1974). The policy contains no regulations; instead, it is a broad statement of goals and a call for cooperation between the Federal Government and the private sector:

“These policies are intended to achieve certain goals but do not detail methods of implementation. In developing the most effective and suitable means of reaching these goals, the Secretary will involve, as appropriate, all relevant public and private sectors and Federal Government agencies in a cooperative effort to provide the best attainable blood services.” Id., at 32703.

The National Blood Policy indicates that federal regulation will be employed only as a last resort: “[I]f the private sector is unable to make satisfactory progress toward implementing these policies, a legislative and/or regulatory approach would have to be considered.” Ibid. The adoption of this policy simply does not support the claim that the federal regulations have grown so comprehensive since 1973 as to justify the inference of complete pre-emption.

B

Appellee’s second argument for pre-emption of the whole field of plasmapheresis regulation is that an intent to preempt can be inferred from the dominant federal interest in this field. We are unpersuaded by the argument. Undoubtedly, every subject that merits congressional legislation is, by definition, a subject of national concern. That cannot mean, however, that every federal statute ousts all related state law. Neither does the Supremacy Clause require us to rank congressional enactments in order of “importance” and hold that, for those at the top of the scale, federal regulation must be exclusive.

Instead, we must look for special features warranting preemption. Our case law provides us with clear standards to guide our inquiry in this area. For example, in the seminal case of Hines v. Davidowitz, 312 U. S. 52 (1941), the Court inferred an intent to pre-empt from the dominance of the federal interest in foreign affairs because “the supremacy of the national power in the general field of foreign affairs ... is made clear by the Constitution,” id., at 62, and the regulation of that field is “intimately blended and intertwined with responsibilities of the national government,” id., at 66; see also Zschernig v. Miller, 389 U. S. 429, 440-441 (1968). Needless to say, those factors are absent here. Rather, as we have stated, the regulation of health and safety matters is primarily, and historically, a matter of local concern. See Rice v. Santa Fe Elevator Corp., 331 U. S., at 230.

There is also no merit in appellee’s reliance on the National Blood Policy as an indication of the dominance of the federal interest in this area. Nothing in that policy takes plasma regulation out of the health-and-safety category and converts it into an area of overriding national concern.

C

Appellee’s final argument is that even if the regulations are not comprehensive enough and the federal interest is not dominant enough to pre-empt the entire field of plasmaphere-sis regulation, the Hillsborough County ordinances must be struck down because they conflict with the federal scheme. Appellee argues principally that the challenged ordinances impose on plasma centers and donors requirements more stringent than those imposed by the federal regulations, and therefore that they present a serious obstacle to the federal goal of ensuring an “adequate supply of plasma.” Tr. of Oral Arg. 24; see Brief for Appellee 30; 37 Fed. Reg. 17420 (1972). We find this concern too speculative to support pre-emption.

Appellee claims that “[t]he evidence at trial indicated that enforcement of the County ordinances would result in an increase in direct costs of plasma production by $1.50 per litre, and a total increase in production costs (including direct and indirect costs) of $7 per litre of plasma, an increase of approximately 15% in the total cost of production.” Brief for Appellee 30. Appellee argues that these increased financial burdens would reduce the number of plasma centers. In addition, appellee claims, the county requirements would reduce the number of donors who only occasionally sell their plasma because such donors would be deterred by the identification-card requirement. Id., at 30-31.

On the basis of the record before it, the District Court rejected each of appellee’s factual assertions. The District Court found that appellee’s cost-of-compliance estimates “were clouded with speculation.” App. 42. It also found that appellee had presented no facts to support its conclusion that “the vendor population would decrease by twenty-five percent.” Ibid. These findings of fact can be set aside only if they are clearly erroneous, Fed. Rule Civ. Proc. 52(a); see Anderson v. Bessemer City, 470 U. S. 564 (1985), and hence come to us with a strong presumption of validity.

More importantly, even if the Hillsborough County ordinances had, in fact, reduced the supply of plasma in that county, it would not necessarily follow that they interfere with the federal goal of maintaining an adequate supply of plasma. Undoubtedly, overly restrictive local legislation could threaten the national plasma supply. Neither Congress nor the FDA, however, has struck a particular balance between safety and quantity; as we have noted, the regulations, which contemplated additional state and local requirements, merely establish minimum safety standards. See 38 Fed. Reg. 19365 (1973); supra, at 710-711. Moreover, the record in this case does not indicate what supply the Federal Government considers “adequate,” and we have no reason to believe that any reduction in the quantity of plasma donated would make that supply “inadequate.”

Finally, the FDA possesses the authority to promulgate regulations pre-empting local legislation that imperils the supply of plasma and can do so with relative ease. See swpra, at 713. Moreover, the agency can be expected to monitor, on a continuing basis, the effects on the federal program of local requirements. Thus, since the agency has not suggested that the county ordinances interfere with federal goals, we are reluctant in the absence of strong evidence to find a threat to the federal goal of ensuring sufficient plasma.

Our analysis would be somewhat different had Congress not delegated to the FDA the administration of the federal program. Congress, unlike an agency, normally does not follow, years after the enactment of federal legislation, the effects of external factors on the goals that the federal legislation sought to promote. Moreover, it is more difficult for Congress to make its intentions known — for example by amending a statute — than it is for an agency to amend its regulations or to otherwise indicate its position.

In summary, given the findings of the District Court, the lack of any evidence in the record of a threat to the “adequacy” of the plasma supply, and the significance that we attach to the lack of a statement by the FDA, we conclude that the Hillsborough County requirements do not imperil the federal goal of ensuring sufficient plasma.

Appellee also argues that the county ordinances conflict with the federal regulations because they prevent individuals with hepatitis from donating their plasma. See supra, at 710. Such plasma is used for the production of hepatitis vaccines, and the federal regulations provide for its collection pursuant to special authorization and under carefully controlled conditions. 21 CFR § 610.41 (1984). To the extent that the Hillsborough County ordinances preclude individuals with hepatitis from donating their plasma, the ordinances are said to stand in the way of the accomplishment of the federal goal of combating hepatitis.

In order to collect plasma from individuals with hepatitis, however, a plasma center must obtain from the FDA, pursuant to §640.75, an exemption from the good-health requirements of § 640.63(c). The record does not indicate that appellee has received the required exemption. As a result, appellee could not collect plasma from individuals with hepatitis even in the absence of the county ordinances. Thus, appellee lacks standing to challenge the ordinances on this ground.

V

We hold that Hillsborough County Ordinances 80-11 and 80-12, and their implementing regulations, are not preempted by the scheme for federal regulation of plasmaphere-sis. The judgment of the Court of Appeals for the Eleventh Circuit is therefore reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

       For the purposes of § 1254(2), local ordinances are treated in the same manner as state statutes. See, e. g., New Orleans v. Dukes, 427 U. S. 297, 301 (1976) (per curiam); Doran v. Salem Inn, Inc., 422 U. S. 922, 927, n. 2 (1975).

       Appellee does not argue that pre-emption can be inferred from the comprehensiveness of the federal statutes governing plasmapheresis.

       Nor do the amendments to the 1973 regulations indicate that the FDA was departing from its earlier statement; most of the changes are technical and provide no basis for inferring an intent that federal regulation be exclusive.

       It follows that the FDA’s 1973 statement did not underestimate the federal interest in plasmapheresis regulation.

       Two of the amici argue that the county ordinances interfere with the federal interest in uniform plasma standards. There is no merit to that argument. The federal interest at stake here is to ensure minimum standards, not uniform standards. Indeed, the FDA’s 1973 statement makes clear that additional, nonconflicting requirements do not interfere with federal goals, and we have found no reason to doubt the continued validity of that statement. See supra, at 714.

       Since the ordinances incorporate the FDA’s regulations, see supra, at 710, they may in fact also provide for the type of exemptions authorized by 21 CFR § 640.75 (1984). If the ordinances were interpreted that way there would be, of course, no conflict.