CONFERENCE OF STATE BANK SUPERVISORS v. OFFICE OF THE COMPTROLLER OF THE CURRENCY et al

Filing 19

MEMORANDUM OPINION regarding the 9 Defendants' Motion to Dismiss. Signed by Judge Dabney L. Friedrich on April 30, 2018.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

CONFERENCE OF STATE BANK
SUPERVISORS,
Plaintiff,
v.

Civil Action No. 17-0763 (DLF)

OFFICE OF THE COMPTROLLER OF
THE CURRENCY, et al.,
Defendants.

MEMORANDUM OPINION
Before the Court is the Defendants’ Motion to Dismiss. Dkt. 9. For the reasons that
follow, the Court will grant the motion.
I. BACKGROUND
In this action, the Conference of State Bank Supervisors (CSBS) challenges the purported
Nonbank Charter Decision of the Office of the Comptroller of the Currency and the Comptroller1
(collectively, the OCC). CSBS is a nationwide organization of state banking and financial
services regulators from all fifty U.S. states, the District of Columbia, Guam, Puerto Rico, the
U.S. Virgin Islands, and American Samoa. Compl. ¶ 13, Dkt. 1. The OCC is a bureau of the
U.S. Department of the Treasury and functions as the primary supervisor of banks with national
charters. Id. ¶ 16; see also 12 U.S.C. §§ 1, 26–27 (establishing the OCC and empowering it to
grant national bank charters to entities that carry on “the business of banking”).
1

This case was originally brought against Thomas J. Curry in his official capacity as
Comptroller of the Currency. When the current Comptroller, Joseph M. Otting, was sworn in on
November 27, 2017, Otting was automatically substituted as a defendant pursuant to Rule 25(d)
of the Federal Rules of Civil Procedure.

Financial regulation in the United States is shared between federal and state governments.
Compl. ¶ 27. As a general matter, a bank may choose to pursue a state or national charter, and
the bank will then be regulated primarily by the corresponding authority. Id. ¶ 21. Through the
challenged Nonbank Charter Decision, the OCC allegedly decided to move forward with a
process for considering national bank charter applications from companies that provide bank-like
services but do not accept deposits, which have historically been regulated by the states. See id.
¶¶ 1, 3, 5, 26. Such firms have experienced “explosive growth” in recent years. Id. ¶ 4. Many
of them are financial technology companies, or Fintechs, that provide technology-driven
financial services. Id. ¶¶ 2–4. For example, a Fintech might develop new ways to provide
traditional services like payment processing, or a Fintech might develop cutting-edge services
like crowd funding and digital currencies. Id. ¶ 2. The OCC estimates that there are now more
than 4,000 Fintechs in the United States and the United Kingdom, fueled by worldwide
investment that has increased from $1.8 billion to $24 billion in the last five years. Id. ¶ 4.
The National Bank Act governs any decision to grant national bank charters to Fintechs
or other firms that do not accept deposits. Under the Act, “the Comptroller shall examine into
the condition” of charter applicants and determine whether each applicant’s condition “entitle[s]
it to engage in the business of banking.” 12 U.S.C. § 26. If a charter applicant “is lawfully
entitled to commence the business of banking,” the OCC shall issue a national charter. Id. § 27.
Also, the OCC is authorized to prescribe rules and regulations to carry out its chartering
responsibilities. Id. § 93a. National charters apply a uniform set of requirements to national
charter recipients and exempt recipients from uneven state regulatory landscapes. Compl. ¶ 23.
Historically, the OCC has granted national charters only to banks that receive deposits or other
special purpose banks specifically authorized by statute. See 12 U.S.C. § 27; 12 U.S.C.

2

§ 1841(c)(2)(D), (F) (authorizing trust banks, banker’s banks, and credit card banks); Compl.
¶¶ 38–46. Indeed, CSBS does not allege that a single national charter has been granted to an
entity that does not receive deposits, and the OCC confirms the same. See Defs.’ Mem. at 14,
Dkt. 9-2.
In 2003, the OCC promulgated a rule interpreting its chartering authority to include the
power to charter a special purpose bank that limits its activities to “any . . . activities within the
business of banking,” provided that the special purpose bank conducts “at least one of the
following three core banking functions: Receiving deposits; paying checks; or lending money.”
12 C.F.R. § 5.20(e)(1); see Rules, Policies, and Procedures for Corporate Activities; Bank
Activities and Operations; Real Estate Lending and Appraisals, 68 Fed. Reg. 70122 (Dec. 17,
2003); Compl. ¶ 55. Under the rule, the OCC could charter a special purpose bank that does not
receive deposits, so long as the bank pays checks or lends money. That may open the door
(assuming other requirements are met) for a Fintech that does not accept deposits to acquire a
national charter.
That particular aspect of the 2003 rule lay dormant for more than a decade. But in March
2016, the OCC announced through a white paper that it had begun to study the regulatory
impacts of innovations in financial technology. Compl. ¶ 47 (citing Office of the Comptroller of
the Currency, Supporting Responsible Innovation in the Federal Banking System: An OCC
Perspective (Mar. 2016), www.occ.gov/publications/publications-by-type/other-publicationsreports/pub-responsible-innovation-banking-system-occ-perspective.pdf). In a December 2016
speech, then-Comptroller Curry said that “the OCC will move forward with chartering financial
technology companies that offer bank products and services and meet our high standards and
chartering requirements.” Thomas J. Curry, Special Purpose National Bank Charters for Fintech

3

Companies (Dec. 2, 2016), Dkt. 1-2 at 4 (emphasis in remarks as published on the OCC’s
website). According to Curry, “I have asked staff to develop and implement a formal agency
policy for evaluating applications for fintech charters. The policy, informed by the comments we
receive on our [forthcoming] white paper, will articulate specific criteria for approval as well as
issues that we should consider and conditions that should be met before granting such charters.”
Id. at 6.
Soon after, the OCC published a white paper that outlined general “baseline” supervisory
requirements for charter holders. Office of the Comptroller of the Currency, Exploring Special
Purpose National Bank Charters for Fintech Companies (Dec. 2016), Dkt. 1-3; see also Compl.
¶ 56–57. This white paper solicited public feedback, and many parties registered objections.
Compl. ¶¶ 58–66. CSBS itself raised a variety of concerns relating to the lawfulness and
wisdom of granting national charters to Fintechs. Letter from CSBS to Comptroller Curry (Jan.
13, 2017), Dkt. 1-4; see also Compl. ¶ 65. The OCC published a response to these concerns on
March 15, 2017. Office of the Comptroller of the Currency, OCC Summary of Comments and
Explanatory Statement: Special Purpose National Bank Charters for Financial Technology
Companies (2017), Dkt. 1-6.
On the same day, the OCC published a draft supplement to the Comptroller’s Licensing
Manual. See Office of the Comptroller of the Currency, Evaluating Charter Applications from
Financial Technology Companies (Mar. 2017), Dkt 1-5; see also Compl. ¶ 67. The draft
supplement pointed to 12 C.F.R. § 5.20(e)(1) to suggest that Fintechs that do not take deposits
eventually may be allowed to apply for national charters if the OCC finalizes the language in the
draft. Compl. ¶¶ 67–68. In addition, the draft supplement invited public feedback. Id. ¶ 74.
Many parties again registered concerns and objections. Id. ¶¶ 74–75.

4

The OCC did not respond to these concerns and did not change the draft status of the
supplement between March 15 and April 26, 2017, see id. ¶ 76, on which date CSBS filed this
challenge to the OCC’s purported decision to move forward with chartering national banks that
do not accept deposits, i.e., the Nonbank Charter Decision, see id. at 31, ¶ 12. CSBS asserts five
claims: (1) the OCC does not have statutory authority for the Nonbank Charter Decision; (2) the
OCC does not have statutory authority for a corresponding regulation; (3) the Nonbank Charter
Decision failed to follow the appropriate rulemaking procedures; (4) the Nonbank Charter
Decision was arbitrary and capricious; and (5) the Nonbank Charter Decision violated the Tenth
Amendment. See id. ¶¶ 99–121.
Since CSBS filed its complaint, a number of developments have occurred. The OCC has
undergone two leadership changes along with the changing presidential administrations, so Curry
is no longer Comptroller: he was succeeded in May 2017 by Acting Comptroller Keith A.
Noreika, who was then succeeded by the current Senate-confirmed Comptroller Joseph M.
Otting. The OCC’s new leadership suggested that, even if a Fintech attempted to apply, the
OCC may not accept the application. In July 2017, for example, Acting Comptroller Noreika
stated:
[A]t this point the OCC has not determined whether it will actually accept or act
upon applications from nondepository fintech companies for special purpose
national bank charters that rely upon [12 C.F.R. 5.20(e)(1)]. And, to be clear, we
have not received, nor are we evaluating, any such applications from nondepository
fintech companies. The OCC will continue to hold discussions with interested
companies while we evaluate our options. These meetings have been very
informative and provide insight into the financial landscape and the companies
providing traditional banking services as they continue to evolve.
Keith A. Noreika, Public Remarks before the Exchequer Club (July 19, 2017), Dkt. 9-3 at 10.
Also in the time since the complaint was filed, a similar lawsuit was filed against the OCC in the
Southern District of New York by Maria Vullo, Superintendent of the New York State
5

Department of Financial Services. Vullo v. OCC, No. 17-cv-3574, 2017 WL 6512245 (S.D.N.Y.
Dec. 12, 2017). The Southern District recently dismissed that case, concluding that the plaintiff
lacked standing and that the dispute was not ripe. Id. at *8–10.
The OCC now moves to dismiss this action under Rules 12(b)(1) and 12(b)(6) of the
Federal Rules of Civil Procedure. Dkt. 9.
II. LEGAL STANDARD
The U.S. Constitution limits the federal courts to deciding cases or controversies, U.S.
Const. art. III, § 2, and it is “presumed that a cause lies outside this limited jurisdiction,”
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); Attias v. Carefirst, Inc., 865 F.3d
620, 625 (D.C. Cir. 2017). To present a justiciable case or controversy, the party invoking
federal jurisdiction must demonstrate standing and ripeness, among other requirements.
Kokkonen, 511 U.S. at 377; Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992); Pub. Citizen,
Inc. v. NHTSA, 489 F.3d 1279, 1289 (D.C. Cir. 2007).
A motion to dismiss for lack of standing proceeds under Rule 12(b)(1) because “the
defect of standing is a defect in subject matter jurisdiction.” Haase v. Sessions, 835 F.2d 902,
906 (D.C. Cir. 1987). Similarly, motions to dismiss on ripeness grounds consistently proceed
under Rule 12(b)(1) because “[t]he question of ripeness goes to . . . subject matter jurisdiction.”
Exxon Mobil Corp. v. FERC, 501 F.3d 204, 207 (D.C. Cir. 2007) (quoting Duke City Lumber Co.
v. Butz, 539 F.2d 220, 221 n.2 (D.C. Cir. 1976)); see also Venetian Casino Resort, LLC v. EEOC,
409 F.3d 359, 366 (D.C. Cir. 2005); Beach TV Props., Inc. v. Solomon, 254 F. Supp. 3d 118, 131
(D.D.C. 2017); Matthew A. Goldstein, PLLC v. U.S. Dep’t of State, 153 F. Supp. 3d 319, 330

6

(D.D.C. 2016), aff’d, 851 F.3d 1 (D.C. Cir. 2017); Belmont Abbey Coll. v. Sebelius, 878 F. Supp.
2d 25, 32 (D.D.C. 2012).2
When evaluating a Rule 12(b)(1) motion, “the court must treat the plaintiff’s factual
allegations as true and afford the plaintiff the benefit of all inferences that can be derived from
the facts alleged.” Jeong Seon Han v. Lynch, 223 F. Supp. 3d 95, 103 (D.D.C. 2016) (quotation
marks and citation omitted). The court, however, “must scrutinize the plaintiff’s allegations
more closely when considering a motion to dismiss pursuant to Rule 12(b)(1) than it would
under a motion to dismiss pursuant to Rule 12(b)(6).” Schmidt v. U.S. Capitol Police Bd., 826 F.
Supp. 2d 59, 65 (D.D.C. 2011). Also, unlike the Rule 12(b)(6) context, a court may consider
documents outside the pleadings to evaluate whether it has jurisdiction; for example, the court
may consider the complaint supplemented by undisputed facts evidenced by the record. See
Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005); Venetian Casino,
409 F.3d at 366; Herbert v. Nat’l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992). If the court
determines that it lacks jurisdiction, the court must dismiss the action. U.S. Const. art. III, § 2;
Fed. R. Civ. P. 12(b)(1), 12(h)(3).

It is true that “not every justiciability concern is one of subject matter jurisdiction” and “the
D.C. Circuit recently clarified that certain justiciability questions are governed by Rule 12(b)(6),
rather than Rule 12(b)(1), while at the same time acknowledging that it ‘has not always been
consistent in maintaining’ the ‘distinction between a claim that is not justiciable and a claim over
which the court lacks subject matter jurisdiction.’” Goldstein, 153 F. Supp. 3d at 331 n.9
(alterations omitted) (quoting Sierra Club v. Jackson, 648 F.3d 848, 853 (D.C. Cir. 2011)).
2

Therefore, even though numerous ripeness cases proceed under Rule 12(b)(1), it is possible that
a motion to dismiss a claim that is prudentially unripe, but not constitutionally unripe, should
proceed under Rule 12(b)(6). See id.; Horne v. U.S. Dep’t of Agric., 569 U.S. 513, 526 (2013)
(noting that prudential ripeness “is not, strictly speaking, jurisdictional”). Regardless, the Court
need not resolve the issue at this time because the defendants moved to dismiss under both rules,
see Dkt. 9, and an analysis under Rule 12(b)(6) would not change the Court’s ripeness
conclusion.
7

III. ANALYSIS
A.

Standing

The doctrine of standing limits federal courts to “the traditional role of Anglo-American
courts, which is to redress or prevent actual or imminently threatened injury to persons caused by
private or official violation of law.” Summers v. Earth Island Inst., 555 U.S. 488, 492 (2009).
To establish constitutional standing, a plaintiff must demonstrate a concrete injury-in-fact that is
fairly traceable to the defendant’s action and capable of being redressed by a favorable judicial
decision. Id. at 493. Absent an actual or imminently threatened injury, the court may not “step[]
where the Constitution forb[ids] it to tread” by addressing the merits. Hancock v. Urban
Outfitters, Inc., 830 F.3d 511, 513 (D.C. Cir. 2016).
An organization like CSBS “can have standing on its own behalf . . . or on behalf of its
members.” Abigail All. for Better Access to Developmental Drugs v. Eschenbach, 469 F.3d 129,
132 (D.C. Cir. 2006) (internal citations omitted). The former —“organizational standing”—
requires an organization to show that the organization itself was injured. Equal Rights Ctr. v.
Post Properties, Inc., 633 F.3d 1136, 1138 (D.C. Cir. 2011) (internal quotations omitted). The
latter—“associational standing”—allows an organization to sue on behalf of its members to
protect their interests. Common Purpose USA, Inc. v. Obama, 227 F. Supp. 3d 21, 26–27
(D.D.C. 2016).
CSBS seeks entry into the federal courts through the latter path. To establish
associational standing, CSBS must show that (1) “its members would otherwise have standing to
sue in their own right”; (2) “the interests it seeks to protect are germane to the organization’s
purpose”; and (3) “neither the claim asserted nor the relief requested requires the participation of
individual members in the lawsuit.” United Food & Commercial Workers Union Local 751 v.

8

Brown Grp., 517 U.S. 544, 553 (1996) (quotation marks omitted); see Sierra Club v. EPA, 292
F.3d 895, 898 (D.C. Cir. 2002) (applying test).
CSBS’s members do not have standing to sue in their own right. Standing’s “irreducible
constitutional minimum” contains three requirements. Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 102–03 (1998). First, a plaintiff must plead an injury that is “concrete,
particularized, and actual or imminent.” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409
(2013). “Although imminence is concededly a somewhat elastic concept, it cannot be stretched
beyond its purpose, which is to ensure that the alleged injury is not too speculative for Article III
purposes.” Id. (internal quotations omitted). “Second, there must be causation—a fairly
traceable connection between the plaintiff’s injury and the complained-of conduct of the
defendant.” Steel Co., 523 U.S. at 103. “And third, there must be redressability—a likelihood
that the requested relief will redress the alleged injury.” Id. “This triad of injury in fact,
causation and redressability constitutes the core of Article III’s case-or-controversy requirement,
and the party invoking federal jurisdiction bears the burden of establishing its existence.” Id. at
103–04 (quoting Lujan, 504 U.S. at 560).
The Court only needs to reach the first requirement—injury in fact—to resolve this case.
The U.S. Supreme Court has “repeatedly reiterated that threatened injury must be certainly
impending to constitute injury in fact, and that allegations of possible future injury are not
sufficient.” Clapper, 568 U.S. at 409 (internal quotation marks and citation omitted). And it has
rejected standards that would allow for possible future injuries or future injuries with merely an
“objectively reasonable likelihood” of occurring. Id. (rejecting Second Circuit test using that
language). In a limited set of cases, the U.S. Supreme Court has “found standing based on a
‘substantial risk’ that the harm will occur, which may prompt plaintiffs to reasonably incur costs

9

to mitigate or avoid that harm.” Clapper, 568 U.S. at 414 n.5; see Susan B. Anthony List v.
Driehaus, 134 S. Ct. 2334, 2341 (2014). The “substantial risk” test does not replace the
“certainly impending” test, but rather provides an alternate standard that looks for costs incurred
“to mitigate or avoid that harm.” Clapper, 568 U.S. at 414 n.5; see Attias, 865 F.3d at 625–27.
Although the two tests may involve similar inquires, they remain separate tests. See Attias, 865
F.3d at 626–27; id. at 627 (“Under our precedent, the proper way to analyze an increased-risk-ofharm claim is to consider the ultimate alleged harm . . . as the concrete and particularized injury
and then to determine whether the increased risk of such harm makes injury to an individual
citizen sufficiently imminent for standing purposes.” (internal quotation marks omitted)). Under
either standard, “standing is ‘substantially more difficult to establish’ where the parties invoking
federal jurisdiction are not ‘the object of the government action or inaction’ they challenge.”
Pub. Citizen, Inc., 489 F.3d at 1289–90 (quoting Lujan, 504 U.S. at 562).
CSBS fails to plead an injury that is “certainly impending” or that exposes its members to
a “substantial risk.” The complaint identifies several potential injuries:
•

“The Nonbank Charter Decision triggers significant risks to traditional areas of
state concern . . . .” Compl. ¶ 92.

•

“The Nonbank Charter Decision threatens to disrupt this system” of dual bank
enforcement.” Id. ¶ 93.

•

“[C]ompanies facing or at risk of state enforcement actions could escape state
enforcement authority by obtaining a national charter.” Id. ¶ 94.

•

“[T]he OCC’s actions impede the states’ ability to continue their existing
regulation of financial services companies within their borders . . . . This also
creates difficulties for the states in detecting unlicensed activity within their
borders.” Id.

10

•

“[O]ne reason that nonbank companies may seek a special purpose national
charter from the OCC would be to avoid compliance with existing state laws.”
Id. ¶ 95.

•

The decision “threatens to preempt state sovereign interests.” Id. ¶ 96.

This list is filled with speculative and conclusive language like “significant risks”; “threatens to
disrupt”; “could escape”; and “may seek.” The Court accepts as true the complaint’s factual
assertions, including that the OCC’s chartering of a Fintech would diminish a state’s “ability to
continue [its] existing regulation” and will make it marginally more difficult to detect
“unlicensed activity.” And regulatory interference with a state is indeed a concrete and
particularized injury. See Alaska v. U.S. Dep’t of Transp., 868 F.2d 441 (D.C. Cir. 1989).
But each of those harms is contingent on whether the OCC charters a Fintech. As the
Southern District of New York explained when reaching the same conclusion with respect to
similar alleged harms, “none of [the] alleged injuries will actually occur if the OCC never . . .
[charters] a [F]intech.” Vullo, 2017 WL 6512245, at *7–8. Several contingent and speculative
events must occur before the OCC charters a Fintech: (1) the OCC must decide to finalize a
procedure for handling those applications; (2) a Fintech company must choose to apply for a
charter; (3) the particular Fintech must substantively satisfy regulatory requirements; and (4) the
OCC must decide to grant the charter to the particular Fintech. When the complaint was filed,
not even the first step—finalized procedures—had occurred. See Wheaton Coll. v. Sebelius, 703
F.3d 551, 552 (D.C. Cir. 2012) (“[S]tanding is assessed at the time of filing.”). The draft
supplement was a draft “issue[d] for public comment” and it “explain[ed] how the OCC would
evaluate applications from fintech companies” in an “envisioned application process.” Office of
the Comptroller of the Currency, Summary of Comments and Explanatory Statement: Special
Purpose National Bank Charters for Financial Technology Companies (Mar. 2017), Dkt. 1-6 at

11

3–4, 17 (emphasis added). And the second step—a Fintech’s electing to apply—had not
occurred, let alone the third or fourth. In fact, an aspiring Fintech that does not accept deposits
plausibly could have attempted to apply for a charter anytime since the 2003 regulations took
effect. And yet in the almost fifteen years between those regulations and the complaint, the OCC
posits—and CSBS does not plead otherwise—that not one Fintech of the type described by the
complaint has attempted to apply for a national charter. See Defs.’ Mem. at 14.
This chain of speculative events that must take place before a CSBS member is injured
fails to clear the bar posed by either the “certainly impending” test or the “substantial risk” test.
The possibility of future injury is too attenuated and uncertain to be “certainly impending.” And
CSBS does not allege in more than a conclusory fashion that its members suffer an injury from a
“substantial risk” of harm, and CSBS certainly does not allege that any such risk “may prompt
[its members] to reasonably incur costs to mitigate or avoid that harm.” Clapper, 568 U.S. at
414 n.5. Indeed, CSBS does not point to any expenditures or any other efforts taken by a
member state to mitigate or avoid the alleged harm. See Compl. ¶¶ 92–96. Furthermore, the
present case is unlike the U.S. Supreme Court’s recent application of the “substantial risk” test in
Susan B. Anthony List, 134 S. Ct. 2334. That case dealt with pre-enforcement review of a state
statute prohibiting false statements during elections, not speculative infringement upon state
regulations. Id. at 2347. Moreover, the injury in that case was much less attenuated; the Court
noted that the applicable commission likely “handle[d] about 20 to 80 false statement complaints
per year.” Id. at 2345 (quotation marks omitted). If the OCC had received 20 to 80 Fintech
charter applications, then CSBS would have a much stronger argument for standing. But not a
single Fintech has ever applied for a charter. Because it is not “certainly impending” that this

12

chain of events will take place and the present situation does not expose CSBS to a “substantial
risk” of harm, CSBS fails to establish injury in fact.
To resist this conclusion, CSBS seeks refuge in several cases that allow states to show
regulatory injuries. Pl.’s Opp’n at 21–24, Dkt. 14. Ultimately, this effort is not persuasive
because it cannot cure CSBS’s lack of an imminent injury. CSBS argues that a state may sue the
federal government when it alleges “a judicially cognizable interest in the preservation of its own
sovereignty, and a diminishment of that sovereignty by the alleged [federal] interference.”
Bowen v. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 51 n.17 (1986) (internal
quotations marks omitted). Indeed, the D.C. Circuit has allowed states to challenge the
“preemptive effect” of federal law. Alaska, 868 F.2d at 443 n.1, 444. Other circuits have
reached similar conclusions. See Texas v. EEOC, 827 F.3d 372, 378, 379 (5th Cir. 2016),
withdrawn on other grounds, 838 F.3d 511 (5th Cir. 2016); Wyoming ex rel. Crank v. United
States, 539 F.3d 1236 (10th Cir. 2008); Ohio ex rel. Celebrezze v. U.S. Dep’t of Transp., 766
F.2d 228 (6th Cir. 1985).
Unlike the state in Alaska, however, CSBS does not allege federal preemption. That is,
CSBS does not assert that any state law has been preempted by the OCC’s preliminary activities
respecting Fintech charters. CSBS also does not allege that any Fintech can freely ignore state
law because of the OCC’s statements. Nor does it argue that any particular state will face
increased regulatory costs and is an object of the regulatory action. See Texas, 827 F.3d at 378–
80 (allowing Texas to challenge EPA guidance because Texas was an object of the guidance and
was forced to incur significant costs or change its policies). Finally, there is no direct conflict
between federal and state laws as in Wyoming. See 539 F.3d 1236 (10th Cir. 2008) (challenging

13

interpretation of federal law that Wyoming residents could be prosecuted for gun ownership after
they had used a state process to expunge their state criminal records).
The OCC’s national bank chartering program does not conflict with state law until a
charter has been issued. The Court thus agrees with the Southern District of New York that
“[a]ny allegation of preemption at this point relies on speculation about the OCC’s future
actions.” Vullo, 2017 WL 6512245, at *7–8. There is no doubt that if the OCC were to charter a
Fintech, then that national charter would preempt conflicting state laws—even the OCC
concedes as much. Defs.’ Reply, at 14, Dkt. 15. At that point, the impacted state surely may
allege an injury in fact. Alaska, 868 F.2d at 443 n.1, 444. But no such charter has been issued.
And, as above, CSBS has failed to allege that the OCC will issue a charter imminently or that the
OCC’s preliminary activities expose its members to a substantial risk of harm.
Nor does the “special solicitude” afforded to states confer standing on CSBS. See
Massachusetts v. EPA, 549 U.S. 497, 518–20 (2007). In Massachusetts, the U.S. Supreme Court
took pains to identify an injury in fact: environmental changes had “already inflicted significant
harms,” including “rising seas” that “ha[d] already begun to swallow Massachusetts’ coastal
land” and harmed the state as a landowner. Id. at 521–22. Indeed, the “special solicitude
[described in Massachusetts v. EPA] does not eliminate the state petitioner’s obligation to
establish a concrete injury, as [the Court’s] opinion amply indicates.” Del. Dep’t of Natural Res.
& Envtl. Control v. FERC, 558 F.3d 575, 579 n.6 (D.C. Cir. 2009). Massachusetts had already
suffered an injury, but CSBS’s members have not.
Even if the OCC were sufficiently likely to issue a charter to some particular Fintech, the
complaint would remain inadequate for another reason. CSBS raises standing on behalf of its
members. To do so, CSBS must plead an imminent injury to some particular member.

14

Summers, 555 U.S. at 499. “In part because of the difficulty of verifying the facts upon which
such probabilistic standing depends,” a plaintiff organization must “identify members who have
suffered the requisite harm—surely not a difficult task here, when so many . . . are alleged to
have been harmed.” Summers, 555 U.S. at 499 (emphasis added). “When a petitioner claims
associational standing, it is not enough to aver that unidentified members have been injured.
Rather the petitioner must specifically ‘identify members who have suffered the requisite
harm.’” Chamber of Commerce v. EPA, 642 F.3d 192, 199 (D.C. Cir. 2011) (quoting Summers,
555 U.S. at 499). And at least three courts in this district have required an associational plaintiff
to identify an injured member by name at the motion to dismiss stage. See Western Wood
Preservers Inst. v. McHugh, 925 F. Supp. 2d 63, 69–70 (D.D.C. 2013); Californians for
Renewable Energy v. U.S. Dep’t of Energy, 860 F. Supp. 2d 44, 48 (D.D.C. 2012); Common
Cause v. Biden, 909 F. Supp. 2d 9, 21 n.6 (D.D.C. 2012); see also Am. Ass’n of Cosmetology
Schs. v. Devos, 258 F. Supp. 3d 50, 66–69 (D.D.C. 2017) (describing disagreements among
lower courts as to whether a plaintiff association must identify the injured member by name or
identify the member to some lesser degree).
CSBS fails to identify in its complaint which particular member of the organization has
been harmed. Nor do any of the briefs remedy this concern. Compare Pl.’s Opp’n at 7–8 n.1,
with Defs.’ Reply at 10 n.1. In this way, the complaint runs afoul of the baseline requirement to
identify a particular member of the organization that was injured. As in Summers, identifying a
particular member is “surely not a difficult task” when the harms are alleged to apply to nearly
every member of the organization. 555 U.S. at 499. And here the identification requirement
serves an important gatekeeping role. It highlights the challenge of determining whether any
particular state will be injured before a particular Fintech, if any, receives a charter. A national

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charter could injure Indiana without injuring Alaska, or vice versa. As it stands, the complaint
does not equip the Court to decide which state to consider when evaluating standing, what role
the CSBS member has in that state’s regulatory system, or whether there are any Fintech
companies within that state that are likely to receive a national charter. And the identification
requirement ensures that the Court considers the likelihood of injury to individual members of
the organization, thus preventing the organization from gaining standing by combining several
alleged injuries that are inadequate separately.
In conclusion, a plaintiff must demonstrate that it has standing to survive a Rule 12(b)(1)
motion. Lujan, 504 U.S. at 561. CSBS does not carry its burden because it fails to plead an
injury in fact and it does not identify an injured member.
B.

Ripeness

In addition, this dispute is not constitutionally or prudentially ripe for determination.
“Ripeness is a justiciability doctrine designed ‘to prevent the courts, through avoidance of
premature adjudication, from entangling themselves in abstract disagreements over
administrative policies, and also to protect the agencies from judicial interference until an
administrative decision has been formalized and its effects felt in a concrete way by the
challenging parties.’” Nat’l Park Hospitality Ass’n v. U.S. Dep’t of Interior, 538 U.S. 803, 807–
08 (2003) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 148–149 (1967)).
Constitutional ripeness is “subsumed” by standing’s injury-in-fact requirement. Am. Petroleum
Inst. v. EPA, 683 F.3d 382, 386 (D.C. Cir. 2012). This case is constitutionally unripe because the
CSBS has not established injury in fact, as explained in Section III.A.
This case is also prudentially unripe. As a preliminary matter, CSBS argues that the
Court should not apply the prudential ripeness doctrine because the U.S. Supreme Court “cast
doubt” on the doctrine in Susan B. Anthony List, 134 S. Ct. 2334. Pl.’s Opp’n at 19. The
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prudential ripeness doctrine is indeed in tension with the “virtual unflagging” obligation of a
federal court to hear cases within its jurisdiction. Lexmark Int’l, Inc. v. Static Control
Components, Inc., 134 S. Ct. 1377, 1386 (2014). Even so, the U.S. Supreme Court applied the
doctrine in Susan B. Anthony List and explicitly declined to decide whether prudential ripeness
was still good law. 134 S. Ct. at 2347. The D.C. Circuit continues to apply the prudential
ripeness doctrine. See Perry Capital LLC v. Mnuchin, 864 F.3d 591, 632–33 (D.C. Cir. 2017).
The prudential ripeness doctrine asks whether a federal court “should decide a case.”
Am. Petroleum Inst., 683 F.3d at 386 (emphasis added). Even if a case is “constitutionally ripe,”
there may also be “prudential reasons for refusing to exercise jurisdiction.” Nat’l Park
Hospitality Ass’n, 538 U.S. at 808; Goldstein, 153 F. Supp. 3d at 337 (stating that prudential
ripeness “may provide an independent basis for a court not to exercise its jurisdiction” (quotation
marks omitted)). The prudential ripeness doctrine asks two questions: (1) whether the issues are
fit for judicial decision; and (2) whether “withholding a decision will cause ‘hardship to the
parties.’” Am. Petroleum Inst., 683 F.3d at 387 (quoting Abbott Labs. v. Gardner, 387 U.S. 136,
149 (1967)).
The first question protects “the agency’s interest in crystallizing its policy before that
policy is subjected to judicial review and the court’s interests in avoiding unnecessary
adjudication and in deciding issues in a concrete setting.” Wyo. Outdoor Council v. U.S. Forest
Serv., 165 F.3d 43, 49 (D.C. Cir. 1999) (internal quotation mark omitted). The fitness of an issue
“depends on whether it is purely legal, whether consideration of the issue would benefit from a
more concrete setting, and whether the agency’s action is sufficiently final.” Atl. States Legal
Found. v. EPA, 325 F.3d 281, 284 (D.C. Cir. 2003) (internal quotation marks omitted).

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This dispute would benefit from a more concrete setting and additional percolation. In
particular, this dispute will be sharpened if the OCC charters a particular Fintech—or decides to
do so imminently. CSBS admits that Fintechs “encompass any of a very broad array of
technology-driven financial services providers . . . that range from start-up ventures to wellestablished conglomerates.” Compl. ¶ 2. The term can include an “almost unimaginably wide
variety of services, from the traditional (e.g., payment processing) to the more cutting edge (e.g.,
crowd funding and digital currencies, such as bitcoins).” Id. To address whether the OCC can
issue Fintech charters may require the Court to imagine the “unimaginably wide” range of
possible Fintechs, and to draw distinctions between them. Courts are ill-equipped to
prospectively draw lines as to which hypothetical Fintechs, if any, may be chartered. While a
court could readily consider the legality of awarding a charter to a particular Fintech, the current
dispute does not present that question.
Moreover, CSBS asks the Court to review the agency’s procedures. But, as discussed in
Section III.A, any procedures that may lead to issuing a Fintech charter have not yet been
finalized. Based on the record before the Court, the OCC’s supplement to the chartering manual
remains in draft form, awaiting subsequent updates. See Office of the Comptroller of the
Currency, Evaluating Charter Applications from Financial Technology Companies (Mar. 2017),
Dkt 1-5; see also Compl. ¶¶ 67, 76. And there are many other procedural hurdles to overcome
before a charter could be granted. See Defs.’ Mem. at 12–13 (explaining briefly some chartering
procedures, such as application, public comment, analysis, and a conditional approval process,
which are set forth in 12 C.F.R. Part 5). Any procedural review at this point would be
piecemeal, potentially involving a new legal challenge every time the OCC takes a step towards
a result disfavored by a trade organization. In light of the recent leadership changes at the OCC,

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it is particularly speculative to guess whether the OCC will continue down paths considered by a
previous Comptroller. The OCC may pursue similar ends through different regulatory means, or
the OCC may choose not to move forward with a national charter program for Fintechs. Indeed,
then-Acting Comptroller Noreika stated in July 2017 that “the OCC has not determined whether
it will actually accept or act upon applications from nondepository fintech companies” and the
OCC “will continue to hold discussions with interested companies while we evaluate our
options.” Keith A. Noreika, Public Remarks before the Exchequer Club (July 19, 2017), Dkt. 93 at 10; see also Wheaton Coll., 703 F.3d at 552 (assessing ripeness based in part on events that
occurred after the filing of the complaint). As a result, the agency’s actions are not yet
sufficiently settled to be fit for review.
In addition, while purely legal issues are “presumptively reviewable,” even “purely legal
issues may be unfit for review.” Nat’l Ass’n of Home Builders v. U.S. Army Corps of Eng’rs,
417 F.3d 1272, 1282 (D.C. Cir. 2005) (quotation omitted). This dispute presents legal issues that
are unfit for review. In particular, the dispute involves the interpretation of statutes entrusted to
the OCC, and both parties brief the issue of Chevron deference. And for that reason “[i]t is more
consistent with the conservation of judicial resources to make that deference-bound review after
the agency has finalized its application of the relevant statutory text.” Am. Petroleum Inst., 683
F.3d at 389 (emphasis added). If the OCC elects to adopt and apply a regulatory scheme to a
particular Fintech charter, then the agency action will become sufficiently settled and courts will
have a more concrete setting to resolve the legal disputes. In these ways, the dispute is not yet fit
for judicial decision. See Am. Petroleum Inst., 683 F.3d at 387.
The second question asked by the prudential ripeness doctrine is whether withholding a
decision will cause hardship to the parties. See id. While the D.C. Circuit “has frequently

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suggested that hardship is not a sine qua non of ripeness,” Teva Pharms. USA, Inc. v. Sebelius,
595 F.3d 1303, 1310 (D.C. Cir. 2010) (collecting cases), it remains a consideration. The
“institutional interests in the deferral of review” are outweighed when the hardship caused by
deferral would be “immediate and significant.” Am. Petroleum Inst., 683 F.3d at 389. CSBS
makes no attempt to offer a reason why delay would cause it hardship, let alone that any hardship
would be “immediate and significant.” Id. Instead, CSBS argues that it need not provide any
reasons. See Pl.’s Opp’n at 20–21 (“[A]bsent institutional interests favoring postponement of
review, a petitioner need not show that delay would impose individual hardship to show
ripeness.” (quoting Sabre, Inc. v. U.S. Dep’t of Transp., 429 F.3d 1113, 119–20 (D.C. Cir.
2005)). This argument is not persuasive when considered against the hardship to the OCC if
each minor step towards a potential agency policy were litigated one-by-one as the policy
becomes more settled.
For these reasons, the prudential ripeness doctrine counsels in favor of allowing time to
sharpen this dispute before deciding it. Indeed, there may ultimately be no case to decide at all if
the OCC does not charter a Fintech. Therefore, even if CSBS had successfully alleged an injury
in fact, this case is prudentially unripe. See Vullo, 2017 WL 6512245, at *8–10 (reaching same
conclusion under similar Second Circuit precedent).
CONCLUSION
For the foregoing reasons, the Court grants the Defendants’ Motion to Dismiss. Dkt. 9.
A separate order consistent with this decision accompanies this memorandum opinion.

________________________
DABNEY L. FRIEDRICH
United States District Judge
Date: April 30, 2018
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