378 F. Supp. 3d 271
S.D. Ill.2019Background
- Plaintiff Maria T. Vullo, in her official capacity as New York Superintendent of Financial Services (DFS), sued the OCC and Comptroller Otting challenging OCC's July 31, 2018 decision to accept special-purpose national bank (SPNB) charter applications from non‑depository fintech companies and seeking to invalidate the OCC regulation (12 C.F.R. § 5.20(e)(1)) to the extent it authorizes such charters.
- DFS alleges the decision will preempt New York regulation of non‑bank fintech firms, harm consumers, and reduce DFS revenues from regulated entities, thereby injuring state sovereign and quasi‑sovereign interests.
- OCC moved to dismiss for lack of subject‑matter jurisdiction (standing, ripeness, timeliness) and for failure to state a claim, arguing the NBA’s phrase "business of banking" is ambiguous and OCC’s interpretation is entitled to Chevron deference and that no Tenth Amendment violation is pleaded.
- The court found DFS has standing and the dispute is both constitutionally and prudentially ripe given OCC’s finalized materials and announced decision to accept fintech charter applications; the court rejected OCC’s timeliness/statute‑of‑limitations defense at this stage.
- On the merits, the court held the NBA’s phrase "business of banking" unambiguously requires deposit‑receiving as a prerequisite for issuance of a national bank charter, so OCC’s interpretation (authorizing non‑depository SPNB charters under §5.20(e)(1)) fails as a matter of law; Counts I and II (APA claims) survived. The Tenth Amendment claim (Count III) was dismissed for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / Ripeness | DFS: OCC’s announced decision and outreach create a substantial risk of preemption and economic harm to the State now; state has special solicitude. | OCC: No concrete or imminent injury; no applications granted; claims unripe. | Court: DFS has standing and claims are ripe (constitutional and prudential ripeness satisfied). |
| Timeliness / Statute of Limitations | DFS: Claims accrued with July 31, 2018 decision; reopening/intermediate‑action doctrines apply; not time‑barred. | OCC: Facial challenge to 2003 rule is time‑barred by 28 U.S.C. § 2401(a). | Court: Declined to dismiss on timeliness; OCC bears burden and reopening doctrine likely applies; §2401(a) not jurisdictional here. |
| APA / Scope of OCC Authority ("business of banking") | DFS: "Business of banking" has historically required deposit‑receiving; OCC exceeded statutory authority by permitting non‑depository SPNB charters. | OCC: Phrase ambiguous; reasonable agency interpretation entitled to Chevron deference allowing non‑depository charters. | Court: "Business of banking" unambiguously includes receiving deposits; Chevron step one ends the inquiry; Counts I & II survive. |
| Tenth Amendment | DFS: OCC’s action preempts state law without clear congressional authorization; violates Tenth Amendment. | OCC: Even if preemption concerns exist, Congress delegated federal authority over national banks; OCC action not beyond federal power. | Court: Dismissed Count III — allegation that Congress failed to speak clearly does not state a Tenth Amendment violation (no categorical excess of federal power alleged). |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (standing requires concrete and particularized injury)
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (threatened injury must be certainly impending or present substantial risk)
- Massachusetts v. EPA, 549 U.S. 497 (states entitled to special solicitude in standing analysis)
- Chevron U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (agency statutory interpretation framework)
- NationsBank of N.C. v. Variable Annuity Life Ins. Co., 513 U.S. 251 (deference to OCC on outer limits of "business of banking")
- Utility Air Regulatory Group v. EPA, 573 U.S. 302 (courts skeptical of agencies discovering major regulatory powers in long‑extant statutes)
- Watters v. Wachovia Bank, N.A., 550 U.S. 1 (context of dual banking system and federal preemption)
- Bond v. United States, 564 U.S. 211 (Tenth Amendment rights and justiciability)