OCC Issues Interpretive Letter on Preemption Standards

The Office of the Comptroller of the Currency issued an interpretive letter last Friday that sets out how it interprets the preemption standards and requirements in the Dodd-Frank Act and describes its framework for compliance.

Section 25b of the Dodd-Frank Act provides several means by which state consumer financial laws are preempted, including if the OCC “on a case-by-case basis” or a court makes a determination that a state law is preempted because it “prevents or significantly interferes with the exercise by the national bank of its powers”—the standard set forth in the 1996 Supreme Court decision in Barnett Bank v. Nelson.

The interpretive letter describes when the procedural requirements of section 25b apply, including when the OCC is required to consult with the Consumer Financial Protection Bureau. The letter also sets forth the legal standard for the OCC to issue a preemption determination and the level of deference that the OCC concludes is accorded to its preemption determinations.