The Office of the Comptroller of the Currency (OCC) has responded to the multistate lawsuit challenging its recent actions concerning mortgage escrow accounts with a motion that presents a merits argument as well as three distinct procedural paths: dismissal, transfer, or, potentially, a pause while the Supreme Court considers related preemption issues.

First, the OCC asks the U.S. District Court for the District of Oregon to dismiss the case. It argues that the ten plaintiff states lack standing, that their claims are not ripe, and that, if the case proceeds, the states have failed to state a viable Administrative Procedure Act (APA) claim concerning the OCC’s escrow powers rule. A dismissal on those grounds would end the litigation in the district court without a ruling requiring the OCC to defend its actions on the merits.

Second, the OCC asks, in the alternative, for transfer to the U.S. District Court for the District of Columbia. Transfer would not resolve the states’ challenge. It would move the case to the forum where the OCC is headquartered, where the challenged decisions were made, and where the administrative record was generated. The states’ claims would remain pending, but before a different court.

Third, although the OCC’s motion does not itself seek a stay, the Supreme Court’s pending consideration of related interest-on-escrow preemption cases creates a possible third procedural development: the district court could pause the litigation while the Supreme Court decides whether to grant review or issues guidance affecting the governing legal standard. A stay would preserve the case rather than dismissing or transferring it but would delay consideration of the states’ claims.

The OCC filed its motion to dismiss or, alternatively, to transfer on October 5 in the U.S. District Court for the District of Oregon. The case is particularly significant because it challenges two related actions the OCC took in May: a rule codifying the authority of national banks to establish and maintain real estate escrow accounts and to determine the terms and conditions of those accounts, including whether and to what extent to pay interest; and a separate preemption determination concluding that specified state interest-on-escrow laws are preempted by federal law.

The ten plaintiff states, Oregon, New York, California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Rhode Island, and Vermont, filed suit in August seeking to invalidate both actions. The states contend, among other things, that the OCC exceeded its statutory authority and improperly applied the National Bank Act’s preemption standard after the Supreme Court’s 2024 decision in Cantero v. Bank of America, N.A.

The OCC’s Standing and Ripeness Argument

The OCC’s first argument may be the most consequential procedurally. It contends that the states have not alleged an actual or imminent injury sufficient to establish Article III standing.

According to the OCC, the states have not alleged that a single national bank has actually stopped paying interest required by one of the states’ laws as a result of either OCC action. Nor, the OCC says, have they alleged that any national bank intends imminently to do so.

The OCC’s escrow powers rule does not require a national bank to stop paying interest on escrow balances. Instead, it recognizes the bank’s federal authority to make business judgments concerning the terms and conditions of escrow accounts, including whether and to what extent interest or other compensation will be paid.

Similarly, the OCC’s preemption determination establishes that specified state laws are preempted, but does not itself require any particular national bank to change the terms of an existing escrow program.

The OCC therefore characterizes the states’ alleged injury as speculative. The states, in the OCC’s view, are effectively asking the court to intervene now because a national bank might someday exercise the discretion recognized by the OCC in a manner inconsistent with a state’s interest-on-escrow law.

The motion invokes the Supreme Court’s recent standing and ripeness decisions, including its August 2026 decision in Trump v. California, for the proposition that federal courts should not adjudicate disputes dependent on a chain of contingent future events.

The OCC argues that precisely such a chain exists here: a national bank would first have to decide to exercise its federally recognized discretion; the bank would then have to decide not to pay interest required by state law; and the resulting dispute would have to be attributable to the OCC’s actions rather than to the preexisting federal statutory framework.

The OCC says that is not enough to establish an injury-in-fact.

If the court accepts this argument, the result would be dismissal, not transfer. The court would conclude that the states have not presented a justiciable controversy, and the case would end without a merits ruling on the OCC’s escrow powers rule or preemption determination.

The States Cannot Rely on Harm to Their Residents, OCC Says

The motion also attacks what appears to be an alternative theory of injury: that state interest-on-escrow laws benefit residents by requiring mortgage lenders to pay interest on escrow balances.

The OCC argues that this amounts to an impermissible attempt by the states to assert parens patriae standing against the federal government.

That argument could prove important beyond this particular case. If accepted, it would make it substantially more difficult for states to challenge federal financial-services regulations merely by alleging that those regulations could cause economic harm to residents of the state.

The OCC points to Ninth Circuit precedent holding that states generally cannot sue the federal government as parens patriae on behalf of their citizens.

The Cantero II Problem for New York, Connecticut, and Vermont

The motion reserves a particularly sharp attack for three of the plaintiff states: New York, Connecticut, and Vermont.

Those states are located in the Second Circuit, which in May 2026 decided Cantero v. Bank of America, N.A. for a second time following the Supreme Court’s 2024 remand. The Second Circuit again concluded that the National Bank Act preempts New York’s interest-on-escrow law.

The OCC argues that Cantero II creates an independent problem of both traceability and redressability.

The Second Circuit decided Cantero II on May 5—before the OCC issued its final escrow powers rule and preemption determination. Thus, according to the OCC, the New York interest-on-escrow law was already preempted in the Second Circuit before the challenged OCC actions took effect.

Consequently, if a New York national bank declines to pay interest required by New York law, the resulting legal position cannot fairly be attributed to the OCC’s actions. The bank would be operating under binding Second Circuit precedent that independently holds the state law preempted.

The same problem, the OCC argues, defeats redressability. Even if the Oregon district court were to invalidate the OCC’s rule and preemption determination, New York, Connecticut, and Vermont would still be bound by Second Circuit precedent.

In other words, the Oregon district court could not give those states what they really want unless Cantero II itself ceased to be binding law—and a district court in Oregon plainly has no power to accomplish that.

The OCC consequently accuses the Second Circuit states of engaging in “blatant forum shopping.” That accusation is likely to be one of the more contentious aspects of the litigation.

If the court agrees that the states lack traceability or redressability, the consequence again would be dismissal. Transfer would become relevant only if the court finds that the case is properly justiciable but should be litigated elsewhere.

The OCC’s Venue Argument: Why Oregon?

The OCC’s second major argument is that Oregon is the wrong place to litigate the case.

The agency argues that, at a minimum, venue is questionable for nine of the ten states. Oregon is the only plaintiff that resides in the District of Oregon. The OCC and Comptroller Jonathan Gould are headquartered in Washington, D.C., and all of the challenged decision-making occurred there.

The OCC relies heavily on the text of 28 U.S.C. § 1391 and argues that the other plaintiff states cannot simply piggyback on Oregon’s presence in the case.

The motion recognizes that there is Ninth Circuit authority, including a 1991 decision citing Third Circuit precedent, that has permitted venue in cases involving multiple plaintiffs where one plaintiff independently establishes venue. But the OCC argues that this line of authority is based on an outdated policy approach and cannot survive modern Supreme Court textualism.

That argument is ambitious. It asks the district court not simply to apply existing Ninth Circuit precedent, but to conclude that the statutory text has displaced or undermined the reasoning underlying that precedent.

Even if the court rejects that argument, however, the OCC has a fallback position that is likely to receive serious consideration: transfer to the District of Columbia under 28 U.S.C. § 1404(a).

Why the OCC Wants the Case in Washington

The transfer argument is straightforward. The OCC is headquartered in Washington, D.C. The challenged decisions were made there. The administrative record was generated there. The federal officials responsible for the decisions are located there. And the case principally concerns federal law and federal agency decision-making rather than uniquely Oregon law. The OCC therefore argues that the District of Columbia is the natural forum.

The motion also contends that the states’ choice of Oregon deserves little deference because the operative facts did not occur there and because the Second Circuit states appear to have selected Oregon precisely because they face unfavorable precedent at home.

The OCC’s characterization is blunt: allowing New York, Connecticut, and Vermont to litigate in Oregon would permit them to circumvent binding Second Circuit precedent. That argument may have particular resonance because the Ninth Circuit itself has cautioned against forum shopping. The OCC cites cases in which courts have reduced or eliminated the normal deference given to a plaintiff’s choice of forum where the choice appears motivated by an effort to avoid unfavorable law.

The OCC also points to docket statistics showing that, during the twelve-month period ending June 30, 2026, the median time from filing to disposition of a civil case was 7.1 months in the District of Columbia compared with 9.4 months in the District of Oregon.

Thus, the OCC says, virtually every relevant factor favors Washington, DC as the appropriate venue.

A transfer would have a materially different effect from dismissal. The states’ claims would not disappear, and the OCC’s rules would not be upheld or invalidated merely because the case moved. Instead, the District of Columbia court would take over the litigation and decide the pending motions or otherwise manage the case. The transfer could, however, affect the litigation’s pace, the court’s approach to the administrative record, and the practical significance of the states’ forum-selection strategy.

And Then There Is A Merits Argument

The OCC’s final argument addresses Count One of the states’ complaint, which challenges the escrow powers rule itself.

The states contend that the OCC created a new national-bank power for the purpose of preempting state law and that the agency improperly relied on the Barnett Bank standard as incorporated into Dodd-Frank.

The OCC responds that this misunderstands what it did. According to the agency, the two May actions were based on different statutory authorities and served different purposes.

The preemption determination was issued under the OCC’s authority to determine whether state consumer financial laws are preempted under 12 U.S.C. § 25b. The escrow powers rule, by contrast, was issued under the National Bank Act provisions authorizing national banks to exercise specified banking powers and the OCC to issue regulations concerning those powers.

The OCC emphasizes that the powers rule did not itself conduct a preemption analysis. Rather, it codified what the agency characterizes as longstanding national-bank authority to establish and maintain escrow accounts and to determine their terms and conditions.

The OCC argues that the states are improperly attempting to import the requirements governing a formal § 25b preemption determination into a regulation defining the scope of a national bank’s federally authorized powers.

The agency also makes an intriguing alternative argument: even if preemption was one of the motivations for adopting the powers rule, that would not mean the OCC lacked statutory authority to issue it. In other words, the OCC says there is nothing inherently unlawful about an agency exercising an otherwise valid rulemaking authority in a manner that has preemptive consequences.

The Larger Preemption Battle

The Oregon litigation is occurring against an unusually important backdrop.

The Supreme Court’s 2024 decision in Cantero rejected the Second Circuit’s categorical approach to National Bank Act preemption and instructed courts to undertake a practical assessment of the nature and degree of a state law’s interference with national-bank powers.

Since then, the circuits have divided again. The Second Circuit held in Cantero II that New York’s interest-on-escrow requirement is preempted, while the First Circuit reached the opposite conclusion with respect to Rhode Island’s law in Conti. The Ninth Circuit, meanwhile, has continued to adhere to its pre-Cantero precedent concerning California’s law in Kivett.

The Supreme Court now has petitions arising from those cases before it. That makes the timing of the Oregon case particularly interesting. The plaintiff states are challenging the OCC’s rules precisely as the Supreme Court is considering whether to revisit the underlying interest-on-escrow preemption issue.

Indeed, the Court took the unusual procedural step on October 5 of requesting the views of the Solicitor General on the pending certiorari petitions. The OCC’s motion expressly calls attention to that development.

This creates the possibility that the Oregon litigation could be overtaken, or at least substantially affected, by Supreme Court action before the district court reaches the merits.

If the Court grants review in one or more of the pending cases, the central question presented by the Oregon litigation could be clarified by the Supreme Court before the Oregon district court has to decide whether the OCC correctly applied federal preemption principles.

That possibility makes the OCC’s procedural arguments particularly significant.

What Happens Next?

The immediate question is how Judge Michael Simon will sequence the alternatives presented by the OCC’s motion.

The first possibility is dismissal. If the court concludes that the states lack standing, that their claims are unripe, or that particular states cannot establish traceability or redressability, the case could end without any ruling on the validity of the OCC’s actions. Dismissal would be the most complete victory for the OCC in this proceeding, although the states could seek to amend their complaint or appeal, depending on the basis for the ruling.

The second possibility is transfer. If the court finds that the states have presented a justiciable controversy but agrees that Oregon is an improper or inconvenient forum, it could transfer the case to the District of Columbia. Transfer would preserve the challenge and shift responsibility for resolving it to another district court; it would not itself decide whether the OCC acted lawfully.

The third possibility is that the case remains in Oregon and proceeds toward a merits ruling. The court eventually would have to confront whether the OCC had authority to codify national-bank escrow powers in the manner it did, whether the agency properly exercised its authority under Dodd-Frank to determine that state interest-on-escrow laws are preempted, and whether the OCC’s analysis is consistent with the Supreme Court’s instructions in Cantero.

There is also a fourth procedural possibility: a stay. The district court, or one of the parties, could ask the court to pause the litigation while the Supreme Court considers the pending interest-on-escrow cases. A stay would neither dismiss the states’ claims nor transfer them to another court. Instead, it would preserve the case in its current forum while postponing further proceedings until the Supreme Court’s actions clarify the governing law or otherwise affect the need for district-court review.

A stay may ultimately be the most sensible course. The Supreme Court’s treatment of Cantero, Conti, and Kivett could materially alter the legal landscape before the Oregon court has to decide the merits of the OCC’s actions. The OCC’s motion does not itself seek a stay, but the Supreme Court’s October 5 request for the Solicitor General’s views makes the timing of the Oregon litigation considerably more complicated.

Bottom Line

The OCC’s filing should be understood as a motion with distinct alternatives, not as a single request for a merits ruling.

The primary request is dismissal. If granted, the case would end in the district court without a decision on whether the OCC’s escrow powers rule or preemption determination is lawful. The OCC’s alternative request is transfer to the District of Columbia. If granted, the states’ challenge would continue, but in the forum where the OCC made the challenged decisions and maintains its headquarters. A stay is not expressly requested in the motion, but it remains a possible case-management response if the district court concludes that Supreme Court action could materially affect the dispute.

Those outcomes would carry different consequences. Dismissal would terminate the present case, subject to any amendment or appeal. Transfer would relocate the litigation without resolving the merits. A stay would preserve the litigation while delaying it. Only if the court denies dismissal and transfer, and does not stay the case, would the Oregon court proceed directly toward deciding whether the OCC exceeded its statutory authority or improperly applied federal preemption principles.

The most interesting argument may be the one directed at New York, Connecticut, and Vermont. The OCC contends that these states are attempting to use an Oregon lawsuit to obtain relief that would effectively circumvent binding Second Circuit precedent holding that New York’s interest-on-escrow law is preempted. If that argument succeeds, it could provide an important judicial check on the growing practice of multistate challenges to federal financial-services regulations in jurisdictions perceived to be more favorable to the states.

More broadly, however, the ultimate significance of this litigation may depend less on Judge Simon’s immediate procedural ruling than on what the Supreme Court does with the pending interest-on-escrow cases. The Court’s next move could determine whether the OCC’s new rules become the subject of a direct APA merits ruling in Oregon, are litigated in Washington, or remain temporarily unresolved while the Supreme Court addresses the broader National Bank Act preemption dispute.

Several of these questions might be answered and the due dates of further briefs may be set at a court status and scheduling conference to be held on October 14 at 9 am, PT.