Casten, Vargas Urge OCC to Issue Preemption Determination for States’ Anti-ESG Laws
Washington, D.C — U.S. Congressmen Sean Casten (IL-06) and Juan Vargas (CA-52) sent a letter urging the Office of the Comptroller of the Currency (OCC) to issue a federal preemption determination for complying with certain anti-ESG laws in Republican-led states.
“We understand that the OCC is aware of conflicting state laws that affect national banks,” wrote Congressmen Casten and Vargas. “...we urge the OCC to take swift action to clarify the application of federal preemption standards over fair access laws in states that have exceeded their authority, such as Florida and Tennessee.”
Under the National Bank Act, the OCC has exclusive visitorial powers over national banks, which includes the right to inspect books and records.
Florida’s fair access law prohibits national banks from denying financial services based on political and religious reasons, a company's business sector, or a “social credit score.” Tennessee has enacted a similar law, and at least eight other states are considering fair access measures. These laws grossly misrepresent valid risk-management practices financial institutions use and compel banks to lend to high-risk industries, which is antithetical to free-market capitalism. Under Florida’s law, national banks are required to sign written attestations on their compliance, and Florida’s Chief Financial Officer is authorized to request documentation and other information in order to assess their compliance with the law. This undermines the OCC’s exclusive visitorial authority.
It is imperative that the OCC acts to uphold the integrity of the dual banking system. The OCC can issue a preemption determination when state regulators overstep their authority by attempting to conduct administrative oversight of nationally-chartered banks.
A copy of the letter can be found here. Text of the letter can be found below.
Dear Acting Comptroller Hsu and Acting Senior Deputy Comptroller Dowd,
We are writing to express our concerns about the scope of recent “fair access” state laws that force banks to serve certain high-risk industries and ignore key risks, and we urge you to take action to uphold the integrity of our dual banking system. We call on the Office of the Comptroller of the Currency (OCC) to defend the agency’s exclusive visitorial authority over national banks and federal savings associations (FSAs) by swiftly issuing a preemption determination for these types of fair access laws in states that have exceeded their authority.
Under the National Bank Act, Congress granted exclusive visitorial powers over national banks to the OCC, which includes the right to inspect books and records. In 2009, the Supreme Court held that state attorneys general may not exercise visitorial powers over national banks, which includes “any form of administrative oversight” that allows them to “inspect books and records on demand.” The Supreme Court clarified that states are not prohibited from seeking to enforce state laws against national banks through litigation. However, this enforcement authority does not extend to administrative demands for information outside of judicial proceedings. Congress later codified this decision in the Dodd-Frank Act, which clarified and distinguished the regulatory and enforcement responsibilities for consumer financial protection laws between federal and state authorities.
In 2023 and 2024, Florida enacted HB 3 and HB 989, which include fair access provisions that make it an “unsafe and unsound” practice for national banks to deny or cancel services for political and religious reasons or otherwise discriminate against fossil fuel and firearm companies. As a result, banks are compelled to conduct business with certain high-risk industries, which contradicts the principles of free-market capitalism. Furthermore, fair access laws interfere with banks’ ability to assess long-term risks, potentially leading to systemic risks within the financial system.
Under these Florida laws, banks are required to provide written attestations of their compliance with the new standard under the penalty of perjury. Additionally, Florida’s Chief Financial Officer (CFO) has the authority to request “any related documents, reports, records or other [necessary] information” from banks to verify their compliance with the law. If the CFO determines that an attestation submitted is materially false, they are required to report the determination to Florida’s Attorney General, who may then bring civil or administrative action. This authority to compel information from national banks outside of court proceedings conflicts with the OCC’s exclusive visitorial powers, which Congress and the Supreme Court have reaffirmed.
In 2024, Tennessee enacted HB 2100, which imposes similar fair access requirements on national banks. Tennessee’s law also authorizes customers who are refused services to request an explanation of the specific reasons for the denial, and banks are required to provide a detailed report explaining the decision. In addition to Florida and Tennessee, at least eight other states are considering fair access legislation, including Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, and South Dakota. As more states enact fair access statutes, national banks could become subject to multiple and varying fair access requirements in different states.
We understand that the OCC is aware of conflicting state laws that affect national banks. In a 2023 letter to bank CEOs, the OCC expressed concern regarding fair access state laws, stating that the agency is carefully monitoring the proliferation of competing and potentially inconsistent requirements. The OCC specifically acknowledged that “attestation or reporting requirements for national banks may be inconsistent with the OCC’s visitorial authority under federal law.”
Given this position and previous statement, we urge the OCC to take swift action to clarify the application of federal preemption standards over fair access laws in states that have exceeded their authority, such as Florida and Tennessee. We request that you provide a written update by January 17, 2025.
Thank you for your attention to this important matter.
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