On May 28, the U.S. District Court for the Middle District of Florida received a complaint from a trade organization representing the residential Property Assessed Clean Energy (PACE) industry. The complaint challenged the CFPB’s Final PACE Rule, asserting that its implementation would adversely affect small companies and the PACE industry. The plaintiff contended the CFPB exceeded its statutory authority by applying the entirety of TILA, along with provisions from RESPA and the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) to PACE financing transactions.
This action, according to the plaintiff, contradicted Congress’ directive under Section 307 of the EGRRCPA, which only authorized the CFPB to adapt TILA’s ability-to-repay requirements for PACE financing. As previously covered by InfoBytes, the CFPB issued its Residential PACE Financing (Regulation Z) final rule to prescribe ability-to-repay rules for PACE financing and to apply the civil liability provisions of TILA for violations. The plaintiff argued the Final PACE Rule unlawfully expanded the CFPB’s jurisdiction by imposing TILA’s comprehensive consumer credit requirements on PACE transactions, which are unique tax assessments authorized by state and local governments.
The plaintiff claimed the rule infringes upon states’ sovereign taxing authority in violation of the Tenth Amendment. The plaintiff also alleged the CFPB failed to adhere to necessary rulemaking procedures in violation of the APA. The plaintiff sought declaratory and injunctive relief, requesting the court to set aside the Final PACE Rule and declare it unconstitutional.
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