Order Granting In-Part and Denying In-Part Plaintiffs' Motion for Preliminary Injunction

Now before the Court is Plaintiffs’ Motion for Preliminary Injunction filed by the threePlaintiffs—Texas Bankers Association, Rio Bank, McAllen, Texas, and American BankersAssociation (collectively “Plaintiffs”). (Dkt. No. 13). This action arises in response to the “SmallBusiness Lending Rule Under the Equal Opportunity Act (Regulation B)” (“the Final Rule”) issuedby Defendant Consumer Financial Protection Bureau (“the Bureau”). See 88 Fed. Reg. 35,150(May 31, 2023). The Final Rule requires covered financial institutions to collect and report to theBureau data on applications for credit for small businesses. Id.

However, in 2022, the Fifth Circuit held that the Bureau’s funding structure isunconstitutional. See Cmty. Fin. Servs. Ass'n of Am., Ltd. v. CFPB, 51 F.4th 616, 623 (5th Cir.2022), cert. granted, 215 L. Ed. 2d 104, 143 S. Ct. 978 (2023). That court did so because Congressfunded the Bureau directly from the Federal Reserve, which is funding that contradicts theConstitution’s Appropriations Clause. Id. at 638-42. As a result, in Community Financial, the FifthCircuit also held that a rule promulgated by the Bureau is invalid when it harms a plaintiff throughits improper use of unappropriated funds to engage in rulemaking. Id. at 643. The Bureau appealedthe Fifth Circuit’s decision. See CFPB v. Cmty. Fin. Servs. Ass'n of Am., Ltd., 215 L. Ed. 2d 104,1 / 17 143 S. Ct. 978 (2023) (granting the Bureau’s petition for a writ of certiorari to the United StatesCourt of Appeals for the Fifth Circuit).

Plaintiffs—a private bank and two trade associations—bring this action on behalf of themselves or their members. Plaintiffs challenge the Final Rule’s validity and ask the Court to enjoin it nationwide until the Supreme Court resolves the constitutionality of the Bureau’s funding structure in Community Financial. After considering the Motion, the Memorandum in Support of the Motion (Dkt. No. 13, Exh. 1), the responsive briefing (Dkt. No. 16), the reply (Dkt No. 17), and the relevant law, the Court is of the opinion that the Motion should be GRANTED IN-PART and DENIED IN-PART for the following reasons.

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