On November 3, the U.S. District Court for the Southern District of Florida denied a motion to enjoin a final rule issued by the CFPB that applies TILA protections and other federal regulations to residential PACE financing. As previously covered by InfoBytes, a trade organization representing the residential PACE industry challenged the CFPB’s Final PACE Rule, asserting that its implementation would adversely affect small companies and the PACE industry.

Congress passed the EGRPRA requiring the CFPB to promulgate a rule applying the ability-to-repay protections and civil liability provision of TILA to PACE financing, and required the CFPB to consider the uniqueness of PACE financing. When the CFPB did issue the rulemaking, it purportedly changed a regulatory exception to clarify that only involuntary tax liens are excluded from the definition of credit; as a result, PACE loans are considered “credit” when they meet TILA’s credit definition as voluntary tax liens and assessments.

In the present case, the plaintiff argued the rule exceeded the CFPB’s statutory authority, infringed on states’ sovereign taxing powers under the Tenth Amendment, and was arbitrary and capricious. The court found that the plaintiff had not demonstrated a substantial likelihood of success on the merits or irreparable injury should relief not be granted, emphasizing the complex issues raised could be addressed at the summary judgment stage. The district court also noted in a footnote that the plaintiff’s argument that the final rule violated the Tenth Amendment was also unlikely to succeed. The court set an expedited briefing schedule and intends to resolve the case without a preliminary injunction.