On February 12, the U.S. District Court for the Middle District of Florida granted summary judgment to the CFPB, upholding its Residential Property Assessed Clean Energy (PACE) Financing rule against a trade group’s challenge under the APA. As previously covered by InfoBytes, the group — representing the residential PACE industry — sued the Bureau, citing concerns that the rule would adversely affect small businesses and alleging the rule exceeded the Bureau’s authority under Section 307 of the EGRRCPA, violated the Tenth Amendment, and failed to comply with procedural rulemaking requirements.

The court concluded that PACE financing meets TILA’s definition of “credit,” rejecting arguments that PACE assessments are taxes not subject to federal regulation and finding that Section 307 did not restrict application of other TILA provisions. It determined that the CFPB reasonably accounted for PACE’s “unique” characteristics, such as repayment through property tax bills and involvement of local governments, when applying ability-to-repay requirements. The court also found the Bureau acted “within the zone of reasonableness” in relying on a report it created analyzing PACE transaction data that the CFPB had received from PACE companies and other sources, despite acknowledged data limitations. The court further held that the alleged noncompliance with small business review panel requirements under the Regulatory Flexibility Act was not subject to judicial review and that neither abridgment of taxing power nor “anticommandeering” concerns barred regulation of PACE financing as consumer credit under generally applicable federal lending standards. The ruling resolved the litigation on the merits ahead of the rule’s March 1 effective date.