On August 26, 2024, Chief Judge Randy Crane in the E.D. Texas granted summary judgment to the CFPB, denied summary judgment to the trade groups and upheld the CFPB’s 1071 Rule (small business loan data collection rule).
On August 2, 2024, the Farm Credit Intervenors (three organizations who long ago intervened as plaintiffs in order to take advantage of a preliminary injunction against the CFPB granted to the original plaintiffs based on the Fifth Circuit’s opinion in CFSA v. CFPB) filed a motion to amend their complaint in intervention. On that same date, the Farm Credit Intervenors filed a motion for judgment on the pleadings. Both the amended complaint and the motion for judgment on the pleadings argued that the 1071 Rule is invalid because the development and promulgation of the Rule was unlawfully funded from the Federal Reserve Board because there was no “combined earnings of the Federal Reserve System” after September 2022 and the CFPB must, under the Dodd-Frank Act, be funded out of such “combined earnings.”
As a result of the fact that these motions were still pending before the district court, none of the plaintiffs had the right to appeal the judgment against them to the United States Court of Appeals for the Fifth Circuit. However, on September 13, the Farm Credit Intervenors dismissed without prejudice their pending motions to amend the complaint and for judgment on the pleadings with respect to the CFPB funding issue. As a result of that development, we can expect that the plaintiffs will very soon file a notice of appeal to the Fifth Circuit with respect to the judgment against them pertaining to the 1071 Rule.
As a result of the Farm Credit Intervenors withdrawing their motions, we are not aware of any instance where a challenge has been made to a CFPB regulation based on the claim that the CFPB has been unlawfully funded after September, 2022. In the meantime, there are five CFPB enforcement matters in which the unlawful funding issue has already been raised, including two cases that have been fully briefed.