Banking and Finance Law Daily Wrap Up, PREEMPTION—D. Ore.: OCC seeks dismissal or transfer of 10-state mortgage escrow preemption suit, (Oct 8, 2026)
The agency says the complaint fails to identify any national bank that has stopped—or imminently plans to stop—paying state-required escrow interest because of the challenged actions.
The Office of the Comptroller of the Currency asked the U.S. District Court for the District of Oregon to dismiss a lawsuit by Oregon and nine other states challenging the agency’s mortgage-escrow Powers Rule and related preemption determination, or alternatively transfer the case to the District of Columbia. In its motion to dismiss, the OCC argued that the states lack Article III standing and that their claims are unripe because the asserted injuries depend on speculative future decisions by national banks. The states seek to have both agency actions declared unlawful and vacated (State of Oregon v. Office of the Comptroller of the Currency, No. 3:26-cv-1672-SI (D. Ore. Oct. 5, 2026)).
The challenged actions address state laws requiring interest on escrowed funds and, in some cases, restricting related fees (see Banking and Finance Law Daily, Aug. 12, 2026). The Powers Rule codified national banks’ authority to establish and maintain real-estate escrow accounts and treated terms involving investment, fees, interest, and other compensation as discretionary business decisions. In a separate determination, the OCC concluded that 14 state interest-on-escrow laws, if applicable, would prevent or significantly interfere with national banks’ powers by limiting decisions about escrow interest, other compensation, or fees.
The OCC’s motion said the complaint does not identify any national bank that has stopped, or imminently intends to stop, paying interest required by a plaintiff state because of the challenged actions. Neither action prevents a bank from choosing to pay state-required interest, the OCC added, so any asserted injury depends on banks’ future choices. The agency separately argued that New York, Connecticut, and Vermont cannot establish traceability or redressability because the Second Circuit held those laws were preempted in Cantero v. Bank of America., N.A. According to the OCC, vacating the OCC’s actions would not redress those states’ claimed injuries because Second Circuit precedent would remain independently binding.
Although it said venue may be proper for Oregon but not the other nine states, the OCC alternatively asked for transfer under 28 U.S.C. § 1404(a). It argued the suit could have been brought in the District of Columbia because the defendants reside there and the challenged actions occurred there. The agency also accused New York, Connecticut, and Vermont of forum shopping in Oregon to avoid Cantero II and contends that their choice of forum should receive no deference.
In addition to its standing argument, the OCC said the Powers Rule and preemption determination rested on distinct legal authorities: the rule codified national-bank powers, while the determination addressed whether state laws prevent or significantly interfere with those powers. Because the Powers Rule contained no preemption analysis and concluded that no state law was preempted, the OCC argues that the Barnett Bank standard and Dodd-Frank preemption procedures did not govern the rule’s promulgation. The agency asked for dismissal of the entire complaint and separately seeks dismissal of the claim challenging the Powers Rule for failure to state a claim.
Attorneys: Brian Simmonds Marshall, Oregon Department of Justice, for State of Oregon. Ashley Wilcox Walker, Office of the General Counsel, for Office of the Comptroller of the Currency.
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