Cantero v. Bank of America, N. A.

P R E L I M I N A R Y P R I N T
Volume 602 U. S. Part 1
Pages 205–221
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
May 30, 2024
REBECCA A. WOMELDORF
reporter of decisions
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TERM, 2023
205
Syllabus
CANTERO et al., individually and on behalf of
all
others similarly situated v. BANK OF
AMERICA, N. A.
certiorari to the united states court of appeals for
the second circuit
No. 22–529. Argued February 27, 2024—Decided May 30, 2024
The United States maintains a dual system of banking. Banks with fed-
eral charters—called national banks—are subject primarily to federal
oversight and regulation. Banks with state charters are subject to ad-
ditional state oversight and regulation. As relevant here, the National
Bank Act expressly grants national banks the power to administer home
mortgage loans. 12 U. S. C. § 371(a). When national banks make home
mortgage loans, they often offer escrow accounts designed to protect
both the bank and the borrower. Escrow accounts ensure the availabil-
ity of funds to pay the insurance premium and property taxes on the
borrower's behalf. Escrow accounts operated by national banks are ex-
tensively regulated by the Real Estate Settlement Procedures Act of
1974. RESPA was designed to protect borrowers from “certain abu-
sive practices” that were being carried on by national banks. § 2601(a).
But RESPA does not mandate that national banks pay interest to
borrowers on the balances of their escrow accounts. New York state
law is different. It provides that a bank “shall” pay borrowers “inter-
est” on the balance held in an escrow account maintained in connection
with a mortgage on certain real estate. N. Y. Gen. Oblig. Law Ann.
§ 5–601.
In this case, petitioner Alex Cantero and petitioners Saul Hymes and
Ilana Harwayne-Gidansky obtained home mortgage loans from Bank of
America, a national bank chartered under the National Bank Act. Both
contracts required the borrowers to make monthly deposits into escrow
accounts. Bank of America did not pay interest on the balances held in
either escrow account, but informed the borrowers that the New York
interest-on-escrow law was preempted by the National Bank Act. The
borrowers brought putative class-action suits in Federal District Court.
The District Court concluded that nothing in the National Bank Act or
other federal law preempted the New York law. The Second Circuit
reversed, holding that because the New York law “would exert control
over” national banks' power “to create and fund escrow accounts,” the
law was preempted.

206 CANTERO
v. BANK OF AMERICA, N. A.
Syllabus
Held: The Second Circuit failed to analyze whether New York's interest-
on-escrow
law is preempted as applied to national banks in a manner
consistent with Dodd-Frank and Barnett Bank. Pp. 213–221.
(a) Congress has instructed courts how to analyze federal preemption
of state laws regulating national banks in the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010. Dodd-Frank ruled out
field preemption. Instead, Dodd-Frank provides that the National
Bank Act preempts a state law “only if ” the state law (i) discriminates
against national banks as compared to state banks; or (ii) “prevents or
signifcantly interferes with the exercise by the national bank of its pow-
ers,” as determined “in accordance with the legal standard for preemp-
tion” in the Court's decision in Barnett Bank of Marion Cty., N. A. v.
Nelson, 517 U. S. 25. §§ 25b(b)(1)(A), (B). Because the New York law
does not discriminate against national banks, the preemption question
must be analyzed under Dodd-Frank's “prevents or signifcantly in-
terferes” preemption standard “in accordance with” Barnett Bank.
Pp. 213–219.
(1) In Barnett Bank, a dispute arose because a national bank
wanted to sell insurance in a Florida small town, but the State prohib-
ited most banks from selling insurance. The Court held the Florida law
preempted because it signifcantly interfered with the national bank's
ability to sell insurance—a federally authorized power. Importantly,
Barnett Bank made clear that a non-discriminatory state banking law
can be preempted even if it is possible for the national bank to comply
with both federal and state law. 517 U. S., at 31. The Court reasoned
that “normally Congress would not want States to forbid, or to impair
signifcantly, the exercise of a power that Congress explicitly granted.”
Id., at 33. But the Court added that its ruling did not “deprive States
of the power to regulate national banks, where (unlike here) doing so
does not prevent or signifcantly interfere with the national bank's exer-
cise of its powers.” Ibid. Pp. 214–215.
(2) Barnett Bank did not purport to establish a clear line to demar-
cate when a state law “signifcantly interfere[s]” with a national bank's
ability to exercise its powers. 517 U. S., at 33. Instead, the Court ana-
lyzed its precedents on that issue, looking to prior cases where the state
law was preempted and where the state law was not preempted. Given
Dodd-Frank's direction to identify signifcant interference “in accord-
ance with” Barnett Bank, courts addressing preemption questions in
this context must do the same and likewise take account of those prior
decisions. § 25b(b)(1)(B). The paradigmatic example of signifcant in-
terference identifed by Barnett Bank occurred in Franklin National
Bank of Franklin Square v. New York, 347 U. S. 373, where a New York
law prohibiting most banks “from using the word `saving ' or `savings'
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as: 602 U. S. 205 (2024)
207
Syllabus
in their advertising or business” was held preempted because it inter-
fered
with the national bank's statutory power “to receive savings de-
posits.” Id., at 374, 378–379. The Court in Franklin found the New
York law preempted—even though it did not bar national banks from
receiving (or even advertising) savings deposits—because the New York
law interfered with the banks' ability to advertise “using the commonly
understood description which Congress has specifcally selected.” Id.,
at 378. Barnett Bank also pointed to a second example of signifcant
interference—Fidelity Federal Savings & Loan Association v. De la
Cuesta, 458 U. S. 141—where the state law similarly limited a federally
authorized power. For purposes of applying Dodd-Frank's preemption
standard, Franklin, Fidelity, and Barnett Bank together illustrate the
kinds of state laws that signifcantly interfere with the exercise of a
national bank power and thus are preempted. Pp. 215–217.
(3) The primary example of a case identifed in Barnett Bank where
state law was not preempted is Anderson National Bank v. Luckett,
321 U. S. 233. There, a Kentucky law required banks to turn over aban-
doned deposits to the State. The Anderson Court held that the Ken-
tucky law did not interfere with national banks' federal power to collect
deposits because that power includes the inseparable “obligation to pay”
deposits to those “entitled to demand payment.” Id., at 248–249. An-
derson distinguished a similar California law at issue in First National
Bank of San Jose v. California, 262 U. S. 366, where the Court had
found the state law to be preempted, and its reasons for differentiating
the California law help demonstrate when a state law regulating na-
tional banks crosses the line from permissible to preempted. In con-
trast to the Kentucky law in Anderson, the California law in First Na-
tional Bank of San Jose allowed the State to claim dormant deposits
without proof of abandonment. The Court noted that California's law
could therefore cause customers to “hesitate” before depositing funds at
the bank—and thus interfere with the “effciency” of the national bank
in receiving deposits. 262 U. S., at 369–370. Barnett Bank also cited
two other examples of state laws that were not preempted, both of
which regulated banks in “their daily course of business.” See Na-
tional Bank v. Commonwealth, 9 Wall. 353; McClellan v. Chipman, 164
U. S. 347. Pp. 217–219.
(b) The Court's precedents applying Barnett Bank furnish content
to the signifcant-interference test—and therefore also to Dodd-Frank's
preemption standard incorporating Barnett Bank. A court applying
that standard must make a practical assessment of the nature and de-
gree of the interference caused by a state law. If the state law's inter-
ference with national bank powers is more akin to the interference in
cases like Franklin, Fidelity, First National Bank of San Jose, and
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208 CANTERO
v. BANK OF AMERICA, N. A.
Syllabus
Barnett Bank, then the state law is preempted. But if the state law's
i
nterference with national bank powers is more akin to the interference
in cases like Anderson, National Bank, and McClellan, then the state
law is not preempted. In this case, the Second Circuit did not conduct
the kind of nuanced comparative analysis required by Barnett Bank,
but instead distilled a categorical test that would preempt virtually all
state laws that regulate national banks. Congress expressly incorpo-
rated Barnett Bank into Dodd-Frank, and Barnett Bank did not draw
a bright preemption line. The Court of Appeals must conduct a preemp-
tion analysis in a manner consistent with that standard. Pp. 219–221.
49 F. 4th 121, vacated and remanded.
Kavanaugh, J., delivered the opinion for a unanimous Court.
Jonathan E. Taylor argued the cause for petitioners.
With him on the briefs were Deepak Gupta, Gregory A.
Beck, Hassan Zavareei, Anna C. Haac, Jonathan M. Streis-
feld, Mark C. Rifkin, and Matthew M. Guiney.
Deputy Solicitor General Stewart argued the cause for the
United States as amicus curiae supporting vacatur. With
him on the brief were Solicitor General Prelogar, Principal
Deputy Assistant Attorney General Boynton, Charles L.
McCloud, Gerard Sinzdak, and Urja Mittal.
Lisa S. Blatt argued the cause for respondent. With her
on the brief were Enu Mainigi, Sarah M. Harris, Aaron Z.
Roper, Mark W. Mosier, and Kendall T. Burchard.*
*Briefs of amici curiae urging reversal were fled for the State of New
York et al. by Letitia James, Attorney General of New York, Barbara D.
Underwood, Solicitor General, Andrea Oser, Deputy Solicitor General, and
Sarah L. Rosenbluth, Assistant Solicitor General, by Brenna Bird, Attor-
ney General of Iowa, and Eric H. Wessan, Solicitor General, and by the
Attorneys General for their respective jurisdictions as follows: Treg Tay-
lor of Alaska, Kris Mayes of Arizona, Rob Bonta of California, Philip J.
Weiser of Colorado, William Tong of Connecticut, Kathleen Jennings of
Delaware, Brian L. Schwalb of the District of Columbia, Christopher M.
Carr of Georgia, Anne E. Lopez of Hawaii, Kwame Raoul of Illinois, Theo-
dore E. Rokita of Indiana, Kris Kobach of Kansas, Aaron M. Frey of
Maine, Anthony G. Brown of Maryland, Andrea Joy Campbell of Massa-
chusetts, Dana Nessel of Michigan, Keith Ellison of Minnesota, Austin
Knudsen of Montana, Michael T. Hilgers of Nebraska, Aaron D. Ford of
Nevada, Matthew J. Platkin of New Jersey, Joshua H. Stein of North
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as: 602 U. S. 205 (2024)
209
Opinion of the Court
Justice Kavanaugh delivered the opinion of the Court.
F
ederal law extensively regulates national banks such as
Bank of America and expressly preempts some (but not all)
state laws that regulate national banks. This case concerns
the standard for determining when state laws that regulate
nati ona l banks are preempted. As relevant here, the
Dodd-Frank Act of 2010 expressly incorporated the standard
that this Court articulated in Barnett Bank of Marion
County, N. A. v. Nelson, 517 U. S. 25 (1996). 12 U. S. C.
§ 25b(b)(1)(B). That standard asks whether a state law “pre-
vents or signifcantly interferes with the exercise by the na-
tional bank of its powers.” Ibid. Because the Court of Ap-
peals in this case did not apply that standard in a manner
consistent with Dodd-Frank and Barnett Bank, we vacate
and remand.
I
A
The United States maintains a dual system of banking,
made up of parallel federal and state banking systems.
Carolina, Gentner Drummond of Oklahoma, Ellen F. Rosenblum of Ore-
gon, Michelle A. Henry of Pennsylvania, Peter F. Neronha of Rhode Is-
land, Marty J. Jackley of South Dakota, Ken Paxton of Texas, Sean D.
Reyes of Utah, Charity R. Clark of Vermont, Robert W. Ferguson of
Washington, and Bridget Hill of Wyoming; for the Conference of State
Bank Supervisors et al. by Stefan L. Jouret and Arthur E. Wilmarth, Jr.;
for the Constitutional Accountability Center by Elizabeth B. Wydra and
Brianne J. Gorod; for Flagstar Plaintiffs by Steve W. Berman, Thomas E.
Loeser, Kevin K. Green, and Peter B. Fredman; and for Public Citizen
et al. by Adina H. Rosenbaum and Allison M. Zieve.
Briefs of amici curiae urging affrmance were fled for the Bank Policy
Institute et al. by H. Rodgin Cohen, Matthew A. Schwartz, and Thomas
Pinder; for the Chamber of Commerce of the United States of America by
Shay Dvoretzky, Parker Rider-Longmaid, Jonathan D. Urick, and Tyler
S. Badgley; for Flagstar Bank, N. A., by Jonathan Y. Ellis, Brian D.
Schmalzbach, and Thomas M. Hefferon; for Former Comptrollers of the
Currency et al. by William M. Jay; for the Washington Legal Foundation
by John M. Masslon II and Cory L. Andrews; for Dori K. Bailey by Louis
Orbach; and for Joseph R. Mason by Anton Metlitsky and Jenya Godina.
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210 CANTERO
v. BANK OF AMERICA, N. A.
Opinion of the Court
That dual system allows privately owned banks to choose
whether
to obtain a charter from the Federal Government
or from a state government.
Banks with federal charters, called national banks, are
subject primarily to federal oversight and regulation. And
banks with state charters, called state banks, are subject to
additional state oversight and regulation. Those two bank-
ing systems co-exist and compete.
The national banking system began in 1863 when Treasury
Secretary (later Chief Justice) Salmon Chase proposed, Con-
gress passed, and President Lincoln signed the National
Bank Act. 12 Stat. 665; 13 Stat. 99. When a bank obtains
a federal charter under the National Bank Act, the national
bank gains various enumerated and incidental powers. 12
U. S. C. § 24. The National Bank Act expressly affords na-
tional banks the powers that they need to organize and
operate—for example, the powers to “make contracts,” to
“sue and be sued,” and to “elect or appoint” a “board of direc-
tors.” Ibid. The Act also provides national banks with
banking-specifc powers. As relevant here, the Act ex-
pressly supplies national banks with the power to “make,
arrange, purchase or sell loans or extensions of credit se-
cured by liens on interests in real estate”—in other words,
to administer home mortgage loans. § 371(a). The Act also
expressly authorizes national banks to exercise “all such inci-
dental powers as shall be necessary to carry on the business
of banking.” § 24.
When national banks make home mortgage loans, they
often offer escrow accounts. Mortgage-escrow accounts are
designed to protect both the bank and the borrower. When
the borrower makes a mortgage payment, the borrower puts
money into an escrow account operated by the bank; the
bank then uses the funds in escrow to pay the borrower's
insurance premium and property taxes on the borrower's be-
half. That arrangement helps the borrower by simplifying
expenses and budgeting. Instead of having to pay large

Cite
as: 602 U. S. 205 (2024)
211
Opinion of the Court
lump-sum insurance and tax payments once or twice a year,
the
borrower can instead make small payments throughout
the year. And the arrangement also assists the bank by en-
suring that the borrower's insurance and tax bills are timely
paid, thus protecting the loan collateral (the home) against
tax foreclosure or uninsured damage.
In light of those benefts to both sides, the vast majority of
home mortgages come with escrow accounts. Indeed, many
federal agencies and programs require them. The Federal
Housing Administration and the Department of Agriculture's
Rural Housing Service, for example, mandate escrow ac-
counts for mortgages that they administer or insure.
In the 1970s, Congress found that some national banks
were engaging in “certain abusive practices” and that “sig-
nifcant reforms” were necessary to protect borrowers. 12
U. S. C. § 2601(a). To that end, Congress passed and Presi-
dent Ford signed the Real Estate Settlement Procedures Act
of 1974, or RESPA. Among other things, RESPA exten-
sively regulates national banks' operation of escrow ac-
counts. RESPA frst sets out the general terms for national
banks that operate escrow accounts. For example, RESPA
requires national banks to “promptly retur[n] to the bor-
rower” any funds left over after the loan is paid, § 2605(g),
and to provide borrowers with notifcations and account
statements, §§ 2609(b), (c). RESPA also contains a specifc
safeguard for borrowers: It caps the amount that national
banks can require borrowers to deposit into escrow accounts.
§ 2609(a). But as relevant to this case, RESPA (unlike New
York law, as we will discuss) does not mandate that national
banks pay interest to borrowers on the balances of their es-
crow accounts.
1
1
Another federal law, the Truth in Lending Act, also addresses national
banks' operation of mortgage-escrow accounts. The Truth in Lending Act
requires national banks to operate escrow accounts for certain mortgages.
82 Stat. 146, 15 U. S. C. § 1639d. For those mandatory escrow accounts,
the national bank must “pay interest” to the borrower “in the manner as
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212 CANTERO
v. BANK OF AMERICA, N. A.
Opinion of the Court
B
Bank
of America is a national bank chartered under the
National Bank Act. Bank of America offers mortgage loans
to homeowners, among other services.
In 2010, Alex Cantero obtained a home mortgage loan from
Bank of America to purchase a house in Queens Village, New
York. In 2016, Saul Hymes and Ilana Harwayne-Gidansky
similarly obtained a home mortgage loan from Bank of
America to buy a house in East Setauket, New York. Both
mortgage contracts required the borrowers to make monthly
deposits into escrow accounts, which Bank of America used
to pay the borrowers' property taxes and insurance premi-
ums when those taxes and premiums came due.
Under New York law, when a bank “maintains an escrow
account pursuant to any agreement executed in connection
with a mortgage” on certain real estate, the bank “shall” pay
borrowers “interest at a rate of not less than two per centum
per year” on the balance. N. Y. Gen. Oblig. Law Ann. § 5–
601 (West 2022). But Bank of America did not pay interest
on the money in Cantero's escrow account or Hymes and
Harwayne-Gidansky's escrow account. Bank of America no-
tifed the borrowers that the New York law was preempted
by the National Bank Act. Both plaintiffs brought putative
class-action suits against Bank of America in the U. S. Dis-
trict Court for the Eastern District of New York, alleging
that Bank of America violated New York law by failing to
pay them interest on the balances in their escrow accounts.
The District Court decided the two cases together. The
court agreed with the plaintiffs that New York law required
Bank of America to pay interest on the escrow account bal-
ances. The court ruled that the New York interest-on-
escrow law applied to national banks such as Bank of
America, concluding that nothing in the National Bank Act
prescribed by [an] applicable State or Federal law.” § 1639d(g)(3). All
parties agree that § 1639d does not apply to the mortgages in this case.
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as: 602 U. S. 205 (2024)
213
Opinion of the Court
or other federal law preempted the New York law. Hymes
v
. Bank of America, N. A., 408 F. Supp. 3d 171, 198 (EDNY
2019).
The U. S. Court of Appeals for the Second Circuit re-
versed, holding that the New York interest-on-escrow law
was preempted as applied to national banks. Relying pri-
marily on “an unbroken line of case law since McCulloch [v.
Maryland, 4 Wheat. 316 (1819)],” the Court of Appeals held
that federal law preempts any state law that “purports to
exercise control over a federally granted banking power,”
regardless of “the magnitude of its effects.” 49 F. 4th 121,
131 (2022). Because the New York interest-on-escrow law
“would exert control over” national banks' power “to create
and fund escrow accounts,” the court concluded that the law
was preempted. Id., at 134.
This Court granted certiorari. 601 U. S. ––– (2023).
II
Congress has instructed courts how to analyze federal pre-
emption of state laws regulating national banks. In the
wake of the 2008 fnancial crisis, Congress passed and Presi-
dent Obama signed the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010. Pub. L. 111–203, 124
Stat. 1376. Among other things, Dodd-Frank established
the controlling legal standard for when a “State consumer
fnancial law,” like New York's interest-on-escrow law, is pre-
empted with respect to national banks. 12 U. S. C. § 25b.
To beg i n, Dodd-Frank r u led out field preempti on.
§ 25b(b)(4) (federal banking law “does not occupy the feld in
any area of State law”). As a result, we know that not all
state laws regulating national banks are preempted.
Instead, Dodd-Frank provided, as relevant here, that the
National Bank Act preempts a state law “only if ” the state
law (i) discriminates against national banks as compared to
state banks; or (ii) “prevents or signifcantly interferes with
the exercise by the national bank of its powers,” as deter-
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214 CANTERO
v. BANK OF AMERICA, N. A.
Opinion of the Court
mined “in accordance with the legal standard for preemption
i
n the decision of the Supreme Court of the United States
in Barnett Bank of Marion County, N. A. v. Nelson, Flor-
ida Insurance Commissioner, et al., 517 U.S. 25 (1996).”
§§ 25b(b)(1)(A), (B).
New York's interest-on-escrow law does not discriminate
against national banks. The question of whether New
York's interest-on-escrow law is preempted therefore must
be analyzed under Dodd-Frank's “prevents or signifcantly
interferes” preemption standard. To guide judicial applica-
tion of that preemption standard, Dodd-Frank expressly
incorporates this Court's decision in Barnett Bank. The
preemption question here therefore must be decided “in
accordance with” Barnett Bank, as Dodd-Frank directs.
§ 25b(b)(1)(B).
2
A
In Barnett Bank, a Florida law prohibited most banks
from selling insurance. Barnett Bank of Marion Cty., N. A.
v. Nelson, 517 U. S. 25, 29 (1996). A dispute arose because
federal law authorized national banks to sell insurance in
small towns, and a national bank wanted to sell insurance in
a small Florida town. Id., at 28–29.
This Court held that the Florida law was preempted be-
cause the law signifcantly interfered with the national
bank's ability to exercise a power—selling insurance—
authorized by federal law. Id., at 33–35. Importantly,
Barnett Bank made clear that a non-discriminatory state
banking law can be preempted even if it is possible for the
national bank to comply with both federal and state law—
2
Cantero's mor tgage agreement (unlike Hymes and Har wayne-
Gidansky's mor tgage agreement) was sig ned af ter Dodd-Frank was
enacted but before Dodd-Frank became effective. Because we conclude
that Dodd-Frank adopted Barnett Bank, and because Barnett Bank was
also the governing preemption standard before Dodd-Frank, the timing of
Cantero's mortgage agreement does not affect the preemption analysis
here.
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as: 602 U. S. 205 (2024)
215
Opinion of the Court
there, by declining to sell insurance. Id., at 31. The Court
emphasi
zed that federal law's “grants of both enumerated
and incidental `powers' to national banks” are “grants of au-
thority not normally limited by, but rather ordinarily pre-
empting, contrary state law.” Id., at 32. Congress had af-
forded national banks a “broad, not a limited,” power to sell
insurance—a power “without relevant qualifcation.” Ibid.
The Court reasoned that “normally Congress would not want
States to forbid, or to impair signifcantly, the exercise of a
power that Congress explicitly granted.” Id., at 33. Be-
cause federal law “explicitly grant[ed] a national bank an au-
thorization, permission, or power” with “no indication that
Congress intended to subject that power to local restriction,”
the Court concluded that state law could not limit national
banks' ability to sell insurance. Id., at 34–35 (internal quo-
tation marks omitted); see id., at 37. But the Court added
that its ruling did not “deprive States of the power to regu-
late national banks, where (unlike here) doing so does not
prevent or signifcantly interfere with the national bank's ex-
ercise of its powers.” Id., at 33.
In shor t, Bar ne t t Bank decided that the non-
discriminatory Florida law at issue there signifcantly inter-
fered with the bank's exercise of its powers, and thus was
preempted.
B
But Barnett Bank did not purport to establish a clear line
to demarcate when a state law “signifcantly interfere[s] with
the national bank's exercise of its powers.” Ibid. Instead,
the Court analyzed the Court's precedents on that issue.
Specifcally, to determine whether the Florida law was pre-
empted, Barnett Bank looked to prior cases of this Court
where the state law was preempted, as well as several cases
where the state law was not preempted. Given Dodd-
Frank's direction to identify signifcant interference “in ac-
cordance with” Barnett Bank, courts addressing preemption
questions in this context must do as Barnett Bank did and

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216 CANTERO
v. BANK OF AMERICA, N. A.
Opinion of the Court
likewise take account of those prior decisions of this Court
and
similar precedents. § 25b(b)(1)(B).
The paradigmatic example of signifcant interference iden-
tifed by Barnett Bank occurred in Franklin National Bank
of Franklin Square v. New York, 347 U. S. 373 (1954). The
New York law at issue in Franklin prohibited most banks
“from using the word `saving ' or `savings' in their advertis-
ing or business.” Id., at 374. The Franklin Court con-
cluded that the law was preempted because it interfered
with the national bank's statutory power “to receive savings
deposits.” Id., at 374, 378–379. Importantly, the New
York law did not bar national banks from receiving savings
deposits, “or even” from “advertising that fact.” Id., at 378.
Nonetheless, the Court determined that the New York law
signifcantly interfered with the banks' power because the
banks could not advertise effectively “using the commonly
understood description which Congress has specifcally se-
lected” to describe their activities: receiving savings depos-
its. Ibid. Federal law gave national banks the power not
only “to engage in a business,” but also “to let the public
know about it”—and state law could not interfere with the
national bank's ability to do so effciently. Id., at 377–378.
In Barnett Bank, the Court compared the Florida insur-
ance law at issue there to the New York savings-deposit law
at issue in Franklin, and the Court concluded that the two
state laws were “quite similar.” 517 U. S., at 33. Because
the Florida law interfered with the national bank's power in
a way similar to the New York law in Franklin, the Florida
law was preempted.
Barnett Bank also pointed to a second example of signif-
cant interference—Fidelity Federal Savings & Loan Associ-
ation v. De la Cuesta, 458 U. S. 141 (1982). In Fidelity, fed-
eral law allowed, but did “not compel, federal savings and
loans to include due-on-sale clauses in their contracts.” Id.,
at 155. But California law “limited” that right to circum-
stances where the federal savings and loan association could

Cite
as: 602 U. S. 205 (2024)
217
Opinion of the Court
make a showing that enforcing the due-on-sale clause was
reasonably
necessary. Id., at 154–155; see also id., at 149.
The federal savings and loan association could readily comply
with both the state and federal laws. Id., at 155. Still, the
Court ruled that the California law was preempted because
the savings and loan could not exercise a due-on-sale clause
“solely at its option.” Ibid. (internal quotation marks
omitted). The California law thus interfered with “the fex-
ibility given” to the savings and loan by federal law. Ibid.
(internal quotation marks omitted).
For purposes of applying Dodd-Frank's preemption stand-
ard, Franklin, Fidelity, and Barnett Bank together illus-
trate the kinds of state laws that significantly interfere
with the exercise of a national bank power and thus are
preempted.
C
Of course, not all state laws regulating national banks are
preempted. As relevant here, Dodd-Frank preempts a state
law “only if ” it “prevents or signifcantly interferes with”
national bank powers. § 25b(b)(1)(B). To determine the
kinds of state-law interference that are not “signifcant” and
that are therefore not preempted, Barnett Bank again
scoured this Court's precedents.
First, Barnett Bank cited Anderson National Bank v.
Luckett, 321 U. S. 233 (1944), as the primary example of a
case where state law was not preempted. There, Kentucky
law required banks to turn over abandoned deposits to the
State. Id., at 236. The Anderson Court stated that the
Kentucky law did “not infringe or interfere with any author-
ized function of the bank.” Id., at 249. Even though
national banks possess a federal power to collect deposits,
“an inseparable incident” of that power is the “obligation to
pay” the deposits “to the persons entitled to demand pay-
ment according to the law of the state where it does busi-
ness.” Id., at 248–249. And Kentucky law simply allowed
the State to “demand payment of the accounts in the same
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Opinion of the Court
way and to the same extent that the depositors could” after
the
depositors abandoned the account. Id., at 249. There-
fore, the Anderson Court concluded, Kentucky law did not
“infringe the national banking laws or impose an undue bur-
den on the performance of the banks' functions.” Id., at 248;
see also id., at 249.
Anderson distinguished a seemingly similar California law
at issue in an earlier case, First National Bank of San Jose
v. California, 262 U. S. 366 (1923), where the Court had
found the state law to be preempted.
In First National Bank of San Jose, the California law
allowed the State to claim deposits that went “ `unclaimed
for more than twenty years.' ” Ibid. Unlike Kentucky's law,
however, California did not require proof that the account
was abandoned. Rather, the California law “attempt[ed] to
qualify in an unusual way agreements between national
banks and their customers.” Id., at 370. Therefore, the
Court noted, the California law could cause customers to
“hesitate” before depositing funds at the bank—and thus in-
terfere with the “effciency” of the national bank in receiving
deposits. Id., at 369–370.
Anderson's reasons for differentiating the California law
at issue in First National Bank of San Jose help demon-
strate when a state law regulating national banks crosses
the line from permissible to preempted. In contrast to the
California law in First National Bank of San Jose, the Ken-
tucky law in Anderson demanded proof that the accounts
were abandoned—and thus its rule was “as old as the com-
mon law itself.” 321 U. S., at 251. So the Kentucky law
could produce no such deterrent effect—and it could apply
to national banks. Id., at 252.
Barnett Bank also cited two other examples of state laws
that could apply to national banks. In National Bank v.
Commonwealth, 9 Wall. 353 (1870), the Court determined
that a Kentucky tax law was not preempted. The Kentucky
law at issue there taxed the shareholders of all banks (includ-
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219
Opinion of the Court
ing national banks) on their shares of bank stock. Id., at
360.
The Court explained that national banks are “ex-
empted from State legislation, so far as that legislation may
interfere with, or impair their effciency in performing the
functions” that federal law authorizes them to perform. Id.,
at 362. But national banks are not “wholly withdrawn from
the operation of State legislation”; rather, they remain sub-
ject to state law governing “their daily course of business”
such as generally applicable state contract, property, and
debt-collection laws. Id., at 361–362. Because the Ken-
tucky tax “in no manner hinder[ed]” the national bank's
banking operations, and produced “no greater interference
with the functions of the bank than any other” law governing
businesses, the law was not preempted. Id., at 362–363.
For similar reasons, the Court in McClellan v. Chipman,
164 U. S. 347 (1896), another example cited by Barnett Bank,
concluded that a generally applicable Massachusetts contract
law was not preempted as applied to national banks. 164
U. S., at 357–358, 361. The Court noted that a generally ap-
plicable contract law like Massachusetts's could be said to act
as “a restraint upon the power of a national bank within the
State to make such contracts.” Id., at 358. But even so,
such state laws could apply to national banks as long as the
state laws did not “in any way impai[r] the effciency of na-
tional banks or frustrat[e] the purpose for which they were
created.” Ibid.
III
In sum, Barnett Bank examined this Court's precedents
to determine whether a state law regulating national banks
falls on the permissible or preempted side of the signifcant-
interference line. Those precedents furnish content to Bar-
nett Bank's signifcant-interference test—and therefore also
to Dodd-Frank's preemption standard incorporating Bar-
nett Bank.
A court applying that Barnett Bank standard must make
a practical assessment of the nature and degree of the inter-

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Opinion of the Court
ference caused by a state law. If the state law prevents or
sig
nifcantly interferes with the national bank's exercise of
its powers, the law is preempted. If the state law does not
prevent or signifcantly interfere with the national bank's ex-
ercise of its powers, the law is not preempted. In assessing
the signifcance of a state law's interference, courts may con-
sider the interference caused by the state laws in Barnett
Bank, Franklin, Anderson, and the other precedents on
which Barnett Bank relied. If the state law's interference
with national bank powers is more akin to the interference
in cases like Franklin, Fidelity, First National Bank of San
Jose, and Barnett Bank itself, then the state law is pre-
empted. If the state law's interference with national bank
powers is more akin to the interference in cases like Ander-
son, National Bank v. Commonwealth, and McClellan, then
the state law is not preempted.
3
In analyzing the New York interest-on-escrow law at issue
here, the Court of Appeals did not conduct that kind of nu-
anced comparative analysis. Instead, the Court of Appeals
relied on a line of cases going back to McCulloch v. Mary-
land to distill a categorical test that would preempt virtually
3
In Barnett Bank and each of the earlier precedents, the Court reached
its conclusions about the nature and degree of the state laws' alleged inter-
ference with the national banks' exercise of their powers based on the text
and structure of the laws, comparison to other precedents, and common
sense. See, e.g., Barnett Bank of Marion Cty., N. A. v. Nelson, 517 U. S.
25, 33–35 (1996) (comparing Florida law at issue to New York law in
Franklin); Franklin National Bank of Franklin Square v. New York, 347
U. S. 373, 378 (1954) (concluding that New York law interfered with ability
to use “a particular label” that federal law “specifcally selected”); First
National Bank of San Jose v. California, 262 U. S. 366, 370 (1923) (reason-
ing that customers “might well hesitate” to subject their deposits to “un-
usual” California law); Anderson National Bank v. Luckett, 321 U. S. 233,
247–248 (1944) (determining that no “word in the national banking laws . . .
expressly or by implication conficts with the provisions of the Kentucky
statutes”); id., at 249–252 (comparing the likely effect of the Kentucky
law to the likely effect of the California law in First National Bank of
San Jose).

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all state laws that regulate national banks, at least other
than
generally applicable state laws such as contract or prop-
erty laws. Bank of America supports the Court of Appeals'
approach. By contrast, the plaintiffs would yank the pre-
emption standard to the opposite extreme, and would pre-
empt virtually no non-discriminatory state laws that apply
to both state and national banks.
We appreciate the desire by both parties for a clearer pre-
emption line one way or the other. But Congress expressly
incorporated Barnett Bank into the U. S. Code. And in de-
termining whether the Florida law at issue there was pre-
empted, Barnett Bank did not draw a bright line. Instead,
Barnett Bank sought to carefully account for and navigate
this Court's prior bank preemption cases. Applying those
precedents, Barnett Bank ruled that some (but not all) non-
discriminatory state laws that regulate national banks are
preempted. Under Dodd-Frank, as relevant here, courts
may fnd a state law preempted “only if,” “in accordance with
the legal standard” from Barnett Bank, the law “prevents or
signifcantly interferes with the exercise by the national
bank of its powers.” § 25b(b)(1)(B).
Because the Court of Appeals did not analyze preemption
in a manner consistent with Dodd-Frank and Barnett Bank,
we vacate the judgment of the Court of Appeals and re-
mand the case for further proceedings consistent with this
opinion.
4
It is so ordered.
4
During the course of the litigation, the parties have raised two other
issues that the Court of Appeals did not address and that it may address
as appropriate on remand: frst, the signifcance here (if any) of the pre-
emption rules of the Offce of the Comptroller of the Currency; and second,
the relevance here (if any) of the Dodd-Frank provision that preempts
state consumer fnancial laws if a federal law “other than title 62 of the
Revised Statutes” preempts the state law, 12 U. S. C. § 25b(b)(1)(C).

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Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
None