On August 11, the Oregon Department of Justice filed an opposition to lender trade groups’ motion for a preliminary injunction in the U.S. District Court for the District of Oregon, arguing that the state validly exercised its express right under Section 525 of DIDMCA to opt out of federal interest-rate exportation provisions by enacting House Bill 4116 (previously covered by InfoBytes here). Oregon contended that the plaintiffs’ Supremacy Clause claim fails because Section 525’s opt-out language covering “loans made in such State” differs from Section 521’s reference to “the State … where the bank is located,” meaning the opt-out is not limited to the bank’s home state and allows affected states to fully reassert their traditional authority over interest rates on loans made to in-state borrowers. The state further argued that the plaintiffs’ dormant Commerce Clause challenge to Section 1(3)(b) of HB 4116 fails because the provision, which subjects certain consumer finance loans of $50,000 or less to Oregon residents to the state’s 36 percent APR cap, does not regulate commerce occurring wholly outside Oregon.

Oregon also argued that the plaintiffs failed to demonstrate irreparable harm, noting that the typical enforcement timeline from referral to issuance of an initial administrative order ranges from nine months to one-and-a-half years, and that no consumer-finance-related enforcement actions are currently pending or contemplated. The state maintained that the equities and public interest weigh strongly against enjoining a validly enacted law designed to protect Oregonians from “predatory high-interest lending.” The state additionally opposed the plaintiffs’ request to consolidate the preliminary injunction hearing with a trial on the merits, arguing that consolidation at this early stage would “severely prejudice” the state’s ability to fully present its defense given that the plaintiffs had spent years developing their arguments in related litigation in the 10th Circuit (covered here). Should the court grant any injunction, Oregon urged it to narrowly tailor relief to the plaintiffs’ own members and to only the specific statutory provisions found unconstitutional.