OCC urges California regulator to exempt banks from climate disclosure laws

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OCC urges climate law exemption

Highlights

OCC urges California Air Resources Board to exempt national banks and federal savings associations from two state climate disclosure laws, citing regulatory conflicts.
OCC warns that applying these laws to federally chartered banks could reduce competition, raise prices, and restrict Californians' access to financial services.
OCC asserts that the laws may violate the Supremacy Clause and longstanding federal preemption principles within the dual banking system.

Regulatory objections to California rules

According to Office of the Comptroller of the Currency, the agency has submitted a letter to the California Air Resources Board urging it to clarify that national banks and federal savings associations are not required to comply with the two California climate disclosure laws.

The OCC says the laws would conflict with its own regulations and with safety and soundness standards for banks. It argues the requirements would place an undue burden on lenders, particularly smaller banks, while also harming California customers and disrupting customer relationships.

The agency also says the laws raise constitutional issues, including under the Supremacy Clause. In its view, applying the state measures to federally chartered banks may conflict with the long-established legal framework for preemption and visitation within the dual banking system created by Congress more than 150 years ago.

Potential impact on competition and access

The OCC says the effect of applying the laws to federally chartered banks is likely to reduce competition, increase prices and limit Californians' access to financial services. It adds that those pressures would hurt residents and Main Street businesses that depend on banking services.

The letter also reflects the agency's broader position that banks should be able to conduct the business of banking and provide fair access to financial services without what it considers improper interference from state laws. The OCC says it will continue to monitor state law developments across the country and take action where appropriate.

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