The OCC has issued final rules implementing the preemption provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The final rules issued on July 20 implement several provisions of the Dodd-Frank Act, and also include changes to facilitate the transfer of certain regulatory functions from the OTS and revisions to the OCC’s rules on visitorial powers. The Dodd-Frank Act codifies the legal standard for preemption set forth in a landmark 1996 U.S. Supreme Court decision and changes the preemption standards applicable to federal savings associations to conform to those applicable to national banks. Accordingly, the final rules apply to federal thrifts the same preemption standard as applies to national banks and eliminate preemption for operating subsidiaries of national banks and operating subsidiaries of federal savings associations. OCC rules that preempted state laws that “obstruct, impair, or condition” a national bank’s powers have been removed because the OCC said that language was a source of misunderstanding and confusion about the OCC’s preemption powers. Finally, the OCC’s visitorial powers rule was amended to recognize the ability of state attorneys general to bring enforcement actions in court to enforce applicable laws against national banks and federal thrifts. The final rules became effective on July 21.
Nutter Notes: The final rules note that the OCC has reconsidered its position concerning preemption determinations that relied on the “obstructs, impairs, or conditions” standard under the old OCC preemption rule. The OCC said that, to the extent that an existing preemption determination relies exclusively on the phrase “obstructs, impairs, or conditions” as the basis for the determination, the validity of the determination would need to be reexamined to ascertain whether it is consistent with the preemption analysis required by the Dodd-Frank Act. The final rules also clarify the definition of “visitorial powers” to include direct investigations of national banks, such as through requests for documents or testimony directed to a bank to ascertain the bank’s compliance with law. The definition does not include collecting information from other sources, or from the bank through actions that do not constitute visitations, or as otherwise authorized under federal law.