## Facts

- Bank One, a national bank headquartered in Utah with no Iowa branches, installed ATMs at 24 retail locations in Iowa, including 11 in Sears stores.
- Iowa’s Electronic Funds Transfer Act (Iowa Code ch. 527) imposed conditions and restrictions on ATM ownership, placement, and operation that limited out-of-state banks’ ability to deploy ATMs in Iowa.
- The Iowa Superintendent of Banking ordered Sears to stop operating certain Bank One ATMs for alleged violations of the Iowa statute.
- Sears required Bank One to remove the ATMs; Bank One complied and placed the machines in storage.
- Bank One sued a state official in federal court seeking declaratory and injunctive relief, arguing the Iowa restrictions were preempted by § 36 of the National Bank Act as amended in 1996 (excluding ATMs from the definition of “branch”).
- The Office of the Comptroller of the Currency issued an interpretive position concluding the Iowa restrictions were preempted.
- The district court denied a preliminary injunction; Bank One appealed.

## Issues

1. Whether Iowa statutory provisions restricting out-of-state national banks’ ATM operations are preempted by § 36 of the National Bank Act, as amended to exclude ATMs from “branch” status.
2. Whether the court of appeals could treat an appeal from denial of a preliminary injunction as warranting direction to enter a permanent injunction where the dispute presented only legal questions on a complete record.

## Decision

- The court of appeals reversed the denial of injunctive relief.
- It held that the challenged Iowa provisions were preempted because they conflicted with Congress’s post-1996 scheme permitting national banks to operate ATMs without state geographic or prior-approval type constraints.
- The court gave substantial weight to the OCC’s interpretation supporting preemption.
- Because the parties disputed only legal questions and no material facts remained, the court treated the case as suitable for permanent relief.
- The case was remanded with instructions to enter a permanent injunction prohibiting enforcement of the preempted Iowa provisions against Bank One.

## Legal Principles

- Under conflict preemption, state law is invalid where it stands as an obstacle to Congress’s objectives in federal banking legislation.
- After Congress amended 12 U.S.C. § 36(j) to exclude ATMs from the definition of a national bank “branch,” states may not impose ATM restrictions that replicate branch-style geographic or approval barriers for national banks.
- Reasonable OCC interpretations of national bank powers and preemption under the National Bank Act warrant substantial judicial deference.
- When the record is complete and the dispute turns only on legal questions, an appellate court may direct entry of permanent injunctive relief despite the case arising from a preliminary-injunction ruling.

## Conclusion

The Eighth Circuit held that Iowa’s ATM restrictions, as applied to an out-of-state national bank, conflicted with the National Bank Act’s post-1996 treatment of ATMs and were preempted; it reversed and ordered entry of a permanent injunction against enforcement of the offending provisions.


Bank One, Utah, N.A. v. Guttau, 190 F.3d 844 (8th Cir. 1999)