On October 5, the OCC filed a motion in the U.S. District Court for the District of Oregon to dismiss a lawsuit brought by 10 states challenging its interest-on-escrow rule and related preemption determination or, alternatively, to transfer the case to the District of Columbia. As previously covered by InfoBytes, the states contend the OCC exceeded its authority in issuing the two May actions, which address national bank discretion over interest on mortgage escrow accounts and the preemption of state laws requiring such interest.

The OCC argued that the states lack standing and their claims are unripe because they do not allege that any national bank has stopped, or imminently plans to stop, paying interest required by state law. The OCC also argued that the states’ asserted harm to borrowers rests on an impermissible parens patriae theory. It further contended that New York, Connecticut, and Vermont cannot show traceability or redressability because a May 5 decision by the U.S. Court of Appeals of the 2nd Circuit (covered by InfoBytes here), which predates the OCC’s actions, already held that the National Bank Act preempts New York’s interest-on-escrow law, and according to the OCC, would bind those states regardless of the outcome.

On venue, the OCC argued that venue is questionable for every state except Oregon and that the case should be transferred to the District of Columbia, where the agency is headquartered and made the challenged decisions. The motion characterized the participation of New York, Connecticut and Vermont as “blatant forum shopping” aimed at avoiding the 2nd Circuit’s precedent. Additionally, the OCC argued that the states’ claim that it exceeded its authority in issuing the rule fails because the rule codifies existing national bank powers and contains no preemption analysis subject to the Dodd-Frank Act’s requirements. The motion also noted that on October 5, the U.S. Supreme Court called for the solicitor general’s views on pending certiorari petitions asking whether the National Bank Act preempts state interest-on-escrow laws.