On November 10, the CFPB and Acting Director Mark Paoletta filed a cross-motion for summary judgment in opposition to the plaintiffs’ summary judgment motion in the U.S. District Court for the District of Columbia. The motion defends the Bureau’s April 22 final rule amending Regulation B, which implements the ECOA (covered by InfoBytes here), against a challenge brought by fair lending organizations and consultancies (covered here). The plaintiffs’ September 29 motion challenged the rule’s disparate-impact, discouragement, and special purpose credit program (SPCP) provisions, the rulemaking process, and former Acting Director Russell Vought’s authority to sign the rule.

The Bureau first contended that the “single, best meaning” of the ECOA’s prohibition on credit discrimination is that it reaches only disparate treatment, because the statute’s “on the basis of” and “because” language lacks the effects-based text the Supreme Court relied on in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. If the court finds the textual question close, the Bureau argued, the constitutional avoidance canon applies, because broad disparate-impact liability would raise “serious questions” under the Fifth Amendment’s equal protection guarantee by pushing parties to make decisions based on protected characteristics such as race or sex. The Bureau also preserved the argument that Griggs v. Duke Power Co. should be overruled if the court reads it to require disparate-impact liability under the ECOA. On discouragement, the Bureau relied on Section 1691b(a) of the ECOA, which authorizes adjustments that “in the judgment of the Bureau are necessary or proper” to effectuate the statute’s purposes and “to prevent circumvention or evasion thereof.” The Bureau noted that the ECOA does not directly prohibit discouraging prospective applicants and that, under Loper Bright Enterprises v. Raimondo, the court’s role is to ensure reasoned decisionmaking within that delegation. On that basis, the Bureau argued it reasonably limited the prohibition to oral or written statements that the creditor “knows or should know” would cause a reasonable person to believe the creditor would deny, or grant on less favorable terms, a credit application on a prohibited basis, rather than routine practices such as branch location or advertising.

On for-profit SPCPs, the Bureau invoked Section 1691b(a) and the ECOA’s authorization to prescribe program “standards,” citing two developments: 50 years of antidiscrimination law that had “substantially reshaped credit markets” since 1976, and later Supreme Court decisions highlighting the “legal infirmity” of laws that enable discrimination based on suspect classifications. Finding no evidence that consumers “would effectively be denied credit” because of race, color, national origin, or sex absent such programs, the Bureau argued it reasonably barred those characteristics as eligibility criteria and imposed new evidentiary requirements on programs using other prohibited bases. The Bureau also defended its qualitative cost-benefit analysis, its Regulatory Flexibility Act certification, and its 32-day comment period. Finally, the Bureau argued that the Federal Vacancies Reform Act authorized Vought’s service because a removed officer is “otherwise unable to perform the functions and duties of the office.” The plaintiffs’ opposition and reply are due December 22, and the defendants’ reply is due January 12, 2027.