Colorado "Opt-Out" Litigation – Petition For Rehearing En Banc And Amicus Briefs In Support

As we previously reported, on November 10, 2025 the Tenth Circuit rendered its 2-1 decision in National Association of Industrial Bankers v. Weiser. It held that a loan is "made" for purposes of the opt-out provision in Section 525 of DIDMCA in both the state where the bank is located and the borrower's state, meaning that Colorado's usury limits will apply to interstate loans made to Colorado residents by out-of-state state-chartered depository institutions. This ruling will not affect national banks' exportation rights under Section 85 of the National Bank Act and the Supreme Court's Marquette decision, leaving state banks at a competitive disadvantage. Ballard Spahr held a webinar on December 16 to discuss the latest developments in this litigation and the likely ramifications of the Tenth Circuit decision if it is left undisturbed.

The plaintiff banking associations filed a Petition for Rehearing En Banc on December 9, 2016. They argued that the majority ruling creates a circuit split with the decision in Jessup v. Pulaski Bank, 327 F.3d 682 (8th Cir. 2003) concerning where loans by state banks are "made" for purposes of federal interest-rate preemption. In Jessup, the Eighth Circuit interpreted a statute passed as part of the Gramm-Leach-Bliley Act. That statute (12 U.S.C. § 1831u(f)) permitted Arkansas-chartered state banks to charge the same interest rates permitted by the home state of any non-Arkansas bank with an Arkansas branch, preempting the low Arkansas interest rate cap. The statute contained a carve-out from preemption for "any loan made in any state other than [Arkansas]." 12 U.S.C. § 1831u(f)(2). The Eighth Circuit held that, for purposes of this statute, "a loan is made at the location of the branch that approves the loan, extends credit, and disburses the funds." Jessup, 327 F.3d at 685.

The Petition for Rehearing also argued that the majority improperly applied a presumption against preemption, which ignored the express preemption provision in Section 521 of DIDMCA. Finally, the Petition argued that the majority incorrectly decided an issue of exceptional importance that is critical to consumer lending in the United States, and deprives all state banks in the 48 non-opt-out states of the interest-rate parity with national banks that Congress created in DIDMCA.

On December 16, 2025, four amicus briefs were filed in support of the Petition for Rehearing. Ballard Spahr filed a brief for the American Bankers Association, Bank Policy Institute, and 52 State Bankers Associations; the FDIC and OCC each filed an amicus brief; and an amicus brief was filed by Utah and 19 other States.

The Ballard Spahr amicus brief for the bank trade groups first argued that the majority erred by relying on a Black's Law Dictionary definition of "made" as including "executed." We pointed out that just three months before enactment of DIDMCA, the same Congress (the 96th Congress) passed an amendment to the National Housing Act that preempted state usury laws but allowed states to override preemption as to certain FHA loans "made or executed" in such State. 12 U.S.C. § 1735f-7 (emphasis added). Its choice three months later to use only the term "made" in Section 525, without also saying "or executed," is significant. The Supreme Court has emphasized that differences in language convey differences in meaning, and that is particularly true when the different language appears in two statutes passed by the same Congress that relate to the same subject – here, preemption of state usury laws and potential overrides of preemption. Also, numerous Supreme Court precedents hold that the use of the word "or" between two words in a statute reflects Congress's understanding that the words have different meanings.

Our amicus brief also argued that the legislative history of DIDMCA shows that Congress was focused entirely on creating interest rate parity between state and national banks in the same state in connection with intrastate lending, and there was no discussion of interest rates charged on interstate loans by out-of-state state banks. Indeed, the lack of any such discussion is hardly surprising, because state bank credit card and other interstate lending did not take off until after enactment of DIDMCA in 1980. Finally, we argued that determining where a borrower is located whenever credit is extended in a credit card or online transaction will create an unworkable morass, particularly when borrowers travel from opt-out states to non-opt-out states or vice versa.

The FDIC amicus brief in support of rehearing en banc is particularly notable because it previously filed amicus briefs in support of Colorado at both the District Court level and again in the Tenth Circuit. However, after President Trump took office (but before the Tenth Circuit's decision), the FDIC withdrew its amicus brief. The new FDIC amicus brief in support of rehearing argues that Colorado's opt-out only limits the interest rates that can be charged by Colorado state-chartered banks, and cannot apply to out-of-state state banks. This position is fully consistent with an amicus brief the FDIC filed in 1992 in the First Circuit Court of Appeals in Greenwood Trust Company v. Massachusetts, where Alan Kaplinsky and Burt Rublin argued successfully for Greenwood Trust. In its amicus brief in Greenwood Trust, the FDIC argued that "Section 525 [of DIDMCA] clearly does not confer on states that elect to opt out of Section 521 extraterritorial authority to apply their own lending laws to loans made in other states by banks chartered in other states, merely because the borrower happens to be a resident."

The FDIC's new amicus brief in the Tenth Circuit argues that the panel decision "has radically altered the interest rate parity approach established by Congress in Section 521 of [DIDMCA]. In doing so, the majority's opinion imposes significant financial and operational burdens on state-chartered institutions that do not apply to national banks." The FDIC brief also asserts that "[t]his is a question of exceptional importance to state-chartered banks," and allowing the majority ruling to stand "may encourage more states to opt out, resulting in the opt-out exception swallowing the general rule of parity and threatening the ability of state-chartered banks to offer loans to consumers in other states and the integrity of the dual banking system."

The OCC amicus brief argues that the panel's decision:

[F]undamentally alters the application of this federal interest-rate [parity] framework for state banks. Such an outcome would inject uncertainty into the framework, undermine the benefits that Congress has sought to provide to state banks in DIDMCA, and create significant challenges for state banks that wish to lend across state lines. This outcome would also advantage national banks over state banks, which is inconsistent with Congress's expressly codified competitive-equity goals. As a result, the panel decision threatens to diminish the vibrancy of the dual banking system and to harm consumers by reducing their access to credit across the country. For these reasons, the panel decision involves a question of exceptional importance...

Without the clarity and certainty that this interest-rate framework provides, interstate lending would be significantly more difficult to administer. In some cases, it may be commercially unfeasible, leading to a reduction in available credit.

The amicus brief filed by Utah and 19 other States argues that the majority's ruling is erroneous because it:

Effectively allows one state – like Colorado here- to impose its interest rate regulations on every other state-chartered bank across the nation that loans money to a Colorado resident. That's wrong and if allowed to stand will interfere with state objectives to preserve equality and competition between state and federally-chartered institutions, preserve the dual banking system, and protect the interests of shareholders, depositors, and customers of the financial institutions in these states.

Colorado's response to the Petition for Rehearing is due on January 21, 2026. Amicus briefs in support of Colorado will be due one week after Colorado's brief.

Rehearing requires the affirmative vote of at least 7 of the 12 active (i.e., non-senior) Judges on the Court, and is therefore very uncommon. As we discussed in our prior blog post, the District Court's injunction against enforcement of the Colorado opt-out statute will remain in effect notwithstanding the Tenth Circuit's decision at least until after the Petition for Rehearing is decided, and likely until an anticipated cert petition by either side is decided.

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