On Friday, the U.S. Court of Appeals for the Fifth Circuit ordered the tolling of compliance deadlines for the Consumer Financial Protection Bureau’s (CFPB or Bureau) Small Business Lending Data Collection final rule under Section 1071 of the Dodd-Frank Act (the 1071 Rule). As we previously reported here, the CFPB had asked the appeals court for a pause last Monday to allow the new administration time to consider its position on the 1071 Rule. The CFPB also conveyed that it did not object to the plaintiff trade associations’ earlier motion to toll compliance deadlines, a change-of-position that led to Friday’s order.

Although the Fifth Circuit’s order “only” applies to the plaintiff trade associations litigating the case (one of which we represent), counsel to the CFPB has confirmed its view that tolling applies to all the lender members of those trade associations too. We would also expect the new CFPB to apply tolling to lenders covered by the 1071 Rule that are not members of one of the trade associations.

The Fifth Circuit’s order does not, however, specify how long tolling will last. Specifically, it did not order tolling for 90 days, which the CFPB had agreed to. Nor does the order toll deadlines until resolution of the appeal. The order simply says that deadlines are tolled “pending further order,” and that the court may modify the order “at any time, as circumstances may warrant.”

Nor is the order clear on when the tolling period began: on Friday, or on the date last year when the appeal was taken originally? The plaintiffs’ motion for a stay and tolling, filed October 30, 2024, asked for tolling to begin on the date the appeal was taken. Because Friday’s order “GRANTED” that motion, some believe that tolling began on that date, but we do not believe the order is clear on the point. We hope the CFPB will soon reveal its own view of when the tolling period began.

Going forward, the Fifth Circuit may decide to wait for the CFPB to articulate the new administration’s position on the 1071 Rule, and specifically whether the agency will continue to defend the rule before the court. But the court could also, if it is so inclined, proceed to rule on the merits of the appeal. In sum, a range of possibilities is conceivable, and we will continue reporting on both this lawsuit as well as on developments at the CFPB itself.

Legislative Efforts to Repeal Section 1071

In parallel with the ongoing litigation, lawmakers have introduced legislation to repeal the federal law underlying the 1071 Rule. The identical bills, sponsored in the House by Representative Roger Williams (R-Texas) and in the Senate by Senator John Kennedy (R-La.), aim to eliminate the requirement under the Equal Credit Opportunity Act for financial institutions to collect and report data on small-business lending. The sponsors argue that Section 1071 imposes increased compliance costs on financial institutions, “potentially reducing access to credit for small businesses.” As discussed here, last year, Congress passed a Senate joint resolution sponsored by Senator Kennedy to overturn the CFPB’s rule implementing Section 1071, which received bipartisan support but was vetoed by former President Biden. The introduction of these bills indicates continued legislative efforts to address concerns about the rule’s impact on financial institutions and small businesses.