On October 29, the OCC announced that it had sent a letter to California Air Resources Board (CARB) Chair Lauren Sanchez asking CARB to exempt national banks and federal savings associations from two state climate disclosure laws or otherwise clarify that they need not comply with them. The laws at issue are the Climate Corporate Data Accountability Act (SB 253) and the Greenhouse Gases: Climate-Related Financial Risk law (SB 261). SB 253 requires entities that do business in California with total annual revenues above $1 billion to disclose Scope 1, 2, and 3 greenhouse gas emissions annually, and SB 261 requires such entities with revenues above $500 million to publish a climate-related financial risk report every two years. The OCC noted that CARB has deferred further action on SB 261 pending litigation challenging that law but continues to implement SB 253 through regulations.

The OCC argued that applying the laws to federally chartered banks would: (i) conflict with OCC regulation and safety and soundness by requiring disclosures “without any assessment of risk to the bank” and would require banks to devote significant resources to comply with the laws; (ii) impose undue burden, especially on smaller less risky, and less complex banks, including banks that even the OCC’s rescinded principles on managing climate-related financial risk would have scoped out, because the revenue thresholds are not appropriately calibrated to bank size, risk, and complexity; (iii) jeopardize customer trust that banks protect customer confidentiality because the laws would require banks to collect and disclose detailed data about their customers’ emissions and financial standing; and (iv) raise concerns under the Supremacy Clause. On that last point, the letter stated that federal law preempts state laws that “prevent or significantly interfere” with a federally chartered bank’s exercise of its powers, citing Barnett Bank v. Nelson and 12 U.S.C. § 1465. It also stated that the OCC’s “exclusive visitorial authority” under 12 U.S.C. § 484 generally bars states from requiring these banks to produce information.

The OCC said that applying the laws to these banks “may well run afoul” of this framework, and that it will evaluate CARB’s implementation to determine whether further action is needed. According to the letter, an exemption would align with CARB’s efforts to tailor its rules by industry, reduce the laws’ exposure to further litigation, promote certainty for regulated entities, and help preserve Californians’ access to banking services.