Small Business Lending Under the Equal Credit Opportunity Act (Regulation B); Extension of Compliance Dates

<RULE> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1002</CFR> <DEPDOC>[Docket No. CFPB-2024-0018]</DEPDOC> <RIN>RIN 3170-AA09</RIN> <SUBJECT>Small Business Lending Under the Equal Credit Opportunity Act (Regulation B); Extension of Compliance Dates</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Interim final rule with request for public comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> In light of court orders in ongoing litigation, the Consumer Financial Protection Bureau (CFPB or Bureau) is amending Regulation B to extend the compliance dates set forth in its 2023 small business lending rule and to make other date-related conforming adjustments. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This interim final rule is effective August 2, 2024. Comments must be received on or before August 2, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by Docket No. CFPB-2024-0018 or RIN 3170-AA09, by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. A brief summary of this document will be available at <E T="03">https://www.regulations.gov/docket/CFPB-2024-0018.</E> • <E T="03">Email: 2024-IFR-SBLcompliancedates@cfpb.gov.</E> Include Docket No. CFPB-2024-0018 or RIN 3170-AA09 in the subject line of the message. • <E T="03">Mail/Hand Delivery/Courier:</E> Comment Intake—Small Business Lending Compliance Dates, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. <E T="03">Instructions:</E> The CFPB encourages the early submission of comments. All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to <E T="03">https://www.regulations.gov.</E> All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> George Karithanom, Regulatory Implementation and Guidance Program Analyst, Office of Regulations, at 202-435-7700 or <E T="03">https://reginquiries.consumerfinance.gov/.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Section 1071 of that Act  <SU>1</SU> <FTREF/> amended the Equal Credit Opportunity Act (ECOA)  <SU>2</SU> <FTREF/> to require that financial institutions collect and report to the CFPB certain data regarding applications for credit for women-owned, minority-owned, and small businesses. Section 1071's statutory purposes are to (1) facilitate enforcement of fair lending laws, and (2) enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses. <FTNT> <SU>1</SU>  Public Law 111-203, tit. X, section 1071, 124 Stat. 1376, 2056 (2010), codified at ECOA section 704B, 15 U.S.C. 1691c-2. </FTNT> <FTNT> <SU>2</SU>  15 U.S.C. 1691 <E T="03">et seq.</E> </FTNT> Section 1071 directs the CFPB to prescribe such rules and issue such guidance as may be necessary to carry out, enforce, and compile data pursuant to section 1071. On March 30, 2023, the CFPB issued a final rule to implement section 1071 by adding subpart B to Regulation B (2023 final rule). The 2023 final rule was published in the <E T="04">Federal Register</E> on May 31, 2023. <SU>3</SU> <FTREF/> Further details about section 1071 and this rulemaking can be found in the preamble to the 2023 final rule. <FTNT> <SU>3</SU>  88 FR 35150 (May 31, 2023). </FTNT> Subsequently, some lenders filed challenges to the 2023 final rule in the United States District Court for the Southern District of Texas. <SU>4</SU> <FTREF/> On July 31, 2023, the court issued an order  <SU>5</SU> <FTREF/> that preliminarily enjoined the CFPB from implementing and enforcing the 2023 final rule against plaintiffs and their members pending the Supreme Court's reversal of <E T="03">Community Financial Services Association of America, Ltd.</E> v. <E T="03">CFPB,</E> 51 F.4th 616 (5th Cir. 2022), <E T="03">cert. granted,</E> 143 S. Ct. 978 (2023) ( <E T="03">CFSA</E> ), a trial on the merits, or until further court order. The court's order also stayed all deadlines for compliance with the requirements of the 2023 final rule for plaintiffs and their members pending the outcome of the Supreme Court case. The Texas court ordered that, in the event of a reversal in the Supreme Court case, the CFPB extend plaintiffs' and their members' deadlines for compliance with the 2023 final rule to compensate for the period stayed. Following motions to intervene by a number of other parties, on October 26, 2023, the Texas court extended the terms of its order to all covered financial institutions ( <E T="03">i.e.,</E> issued a nationwide stay). <SU>6</SU> <FTREF/> <FTNT> <SU>4</SU>   <E T="03">Texas Bankers Ass'n</E> v. <E T="03">CFPB,</E> No. 7:23-cv-00144 (S.D. Tex.). </FTNT> <FTNT> <SU>5</SU>  Order Granting-in-Part and Denying-in-Part Pls.' Mot. for Prelim. Injunction, <E T="03">Texas Bankers Ass'n,</E> No. 7:23-cv-00144 (S.D. Tex. July 31, 2023), ECF No. 25, <E T="03">https://files.consumerfinance.gov/f/documents/cfpb_pi_order_texas_bankers.pdf.</E> </FTNT> <FTNT> <SU>6</SU>  Order Granting Intervenors' Mots. For Prelim. Injunction, <E T="03">Texas Bankers Ass'n,</E> No. 7:23-cv-00144 (S.D. Tex. Oct. 26, 2023), ECF No. 69, <E T="03">https://files.consumerfinance.gov/f/documents/cfpb_pi_second_order_texas_bankers.pdf.</E> </FTNT> On May 16, 2024, the Supreme Court reversed the Fifth Circuit's ruling in <E T="03">CFSA.</E> <SU>7</SU> <FTREF/> <FTNT> <SU>7</SU>   <E T="03">CFPB</E> v. <E T="03">Cmty. Fin. Servs. Ass'n of Am., Ltd.,</E> 601 U.S. 416 (2024). </FTNT> <HD SOURCE="HD2">Summary of the Interim Final Rule</HD> In this interim final rule, the CFPB is extending the compliance dates set forth in the 2023 final rule and making conforming adjustments. Consistent with existing court orders, the compliance dates are being extended 290 days to compensate for the period the rule was stayed (July 31, 2023 to May 16, 2024). Thus, covered financial institutions must begin collecting data as follows: <GPOTABLE COLS="4" OPTS="L2,i1" CDEF="s75,r40,r40,r40"> <TTITLE>Table 1—Compliance Dates and Filing Deadlines</TTITLE> <CHED H="1">Compliance tier</CHED> <CHED H="1"> Original compliance date </CHED> <CHED H="1">New compliance date</CHED> <CHED H="1">First filing deadline</CHED> <ROW> <ENT I="01">Highest volume lenders</ENT> <ENT>October 1, 2024</ENT> <ENT>July 18, 2025</ENT> <ENT>June 1, 2026.</ENT> </ROW> <ROW> <ENT I="01">Moderate volume lenders</ENT> <ENT>April 1, 2025</ENT> <ENT>January 16, 2026</ENT> <ENT>June 1, 2027.</ENT> </ROW> <ROW> <ENT I="01">Smallest volume lenders</ENT> <ENT>January 1, 2026</ENT> <ENT>October 18, 2026</ENT> <ENT>June 1, 2027.</ENT> </ROW> </GPOTABLE> Covered financial institutions are permitted to continue using their small business originations from 2022 and 2023 to determine their compliance tier, or they may use their originations from 2023 and 2024. Covered financial institutions are permitted to begin collecting protected demographic data required under the 2023 final rule 12 months before their new compliance date, in order to test their procedures and systems. As illustrated above, the deadline for submitting small business lending data will remain June 1 following the calendar year for which data are collected. Finally, the CFPB is updating its grace period policy statement to reflect the revised compliance dates. The CFPB seeks comment on this interim final rule. <HD SOURCE="HD1">II. Legal Authority</HD> The CFPB adopted the 2023 final rule pursuant to its authority under section 1071, which directs the CFPB to adopt rules governing the collection and reporting of small business lending data. Some aspects of the 2023 final rule were also adopted under the CFPB's more general rulemaking authorities in ECOA. The CFPB's legal authorities are discussed in detail in the 2023 final rule. <SU>8</SU> <FTREF/> <FTNT> <SU>8</SU>   <E T="03">See, e.g.,</E> 88 FR 35150, 35173-74 (May 31, 2023). </FTNT> The CFPB is adopting this interim final rule to extend the 2023 final rule's compliance dates. ECOA section 704B(g)(1) grants the CFPB general rulemaking authority for section 1071. <HD SOURCE="HD1">III. Administrative Procedure Act</HD> The Administrative Procedure Act (APA) does not require notice and opportunity for public comment if an agency for good cause finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. <SU>9</SU> <FTREF/> The CFPB finds that prior notice and public comment are unnecessary because this interim final rule implements a court's order to extend the 2023 final rule's compliance dates and makes other date-related conforming adjustments. 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