On June 1, the U.S. District Court for the Northern District of Illinois entered a permanent injunction preventing the state from enforcing the Illinois Interchange Fee Prohibition Act’s (IFPA) interchange fee limitation against national banks, federal savings associations, and out-of-state state banks subject to the Riegle-Neal Interstate Banking and Branching Efficiency Act. The court also extended the injunction to payment card networks, holding that the interchange fee limitation is “so tied up in the national banks’ powers that the preemptive effect must run to the Payment Card Networks” to render complete relief. The ruling followed the 7th Circuit’s May 8 order vacating the court’s February 2026 decision (previously covered by InfoBytes here) and remanding the case to assess the impact of the OCC’s April 2026 interim final rule amending 12 C.F.R. § 7.4002 and interim final order purporting to preempt the IFPA (previously covered by InfoBytes here).

On remand, the court conducted its own independent preemption analysis under the Barnett Bank “prevents or significantly interferes” standard, reaffirmed in Cantero v. Bank of America, as applied to the OCC’s rewritten regulation. The court found that the amended rule — which expanded national banks’ authority to obtain non-interest charges and fees “directly or indirectly, through intermediaries, partners, payment networks, interchanges, or other third parties” — fundamentally changed the regulatory landscape that had informed the February ruling. Where the court had previously found that the “thrust” of § 7.4002 was “not to protect fees centrally established by a third-party company,” it concluded that “is very clearly what the new iteration of the rule sets out to do.” Given what the court described as the OCC’s “reconceptualized articulation” of national bank powers, the court held that the IFPA now “impose[s] an undue burden on the performance of the banks’ functions” and is thus invalid as to national banks, federal savings associations, and out-of-state state banks.

The court separately found the OCC’s interim final order unpersuasive, concluding it “does not add much to the conversation” beyond the interim final rule given what the court characterized as procedural and substantive shortcomings, while noting the court lacked authority to invalidate the order under the APA because the OCC is not a party to the case. Among other deficiencies, the court observed that the order was signed by the First Deputy Comptroller rather than the Comptroller as required by 12 U.S.C. §§ 25b(b)(1)(B) and 25b(b)(6), lacked substantial evidence on the record as required by § 25b(c), and offered justifications that did little to establish why third-party fee-setting is critical to national banks’ exercise of federal powers.

The opinion notes that the preemption analysis for the interchange fee limitation as applied to other entities — such as federal credit unions — remained unchanged from the February ruling, and that the court’s prior permanent injunction against the IFPA’s data usage limitation also remained in full effect. The court also noted that in the early hours of June 1, the Illinois General Assembly passed SB3645, which, if signed by the governor, would push the IFPA’s effective date to July 1, 2027. The case is expected to return to the 7th Circuit for further proceedings.