The CFPB has filed a response to the motion filed by four consumer advocacy group seeking leave to file an amicus brief opposing the motion of two trade groups for reconsideration of the Texas federal court’s June 12 order denying a stay of the compliance date for the CFPB’s final payday/auto title/high-rate installment loan rule (Payday Rule).  The CFPB previously filed a response in support of the trade groups’ motion for reconsideration.  The same advocacy groups had filed an amicus brief opposing the joint motion filed by the CFPB and two trade groups seeking a stay of the compliance date.

The joint motion sought the stay of the compliance date pursuant to Section 10(d) of the Administrative Procedure Act, 5 U.S.C. Section 705.  In their initial amicus brief, the advocacy groups argued that a stay of the compliance date while also staying the litigation was inconsistent with the purpose of Section 705 to stay agency action in order to maintain the status quo during judicial review.  In its response in support of the motion for reconsideration, the CFPB has argued that the court can properly use its authority under Section 705 to stay the Payday Rule’s compliance date while also staying the litigation because Section 705 contains no “‘active litigation’ requirement.”

In addition to renewing their argument that the trade groups have not satisfied the four factors used to assess requests for Section 705 stays, the advocacy groups devoted most of their proposed new amicus brief to their argument that a stay of the compliance date under Section 705 is not appropriate where the litigation is stayed.  Section 705 allows a court reviewing an agency’s action to postpone the effective date of such action “to the extent necessary to prevent irreparable injury… pending conclusion of the review proceedings.”

While taking no position on the motion filed by the advocacy groups to for leave to file another amicus brief, the CFPB again rejects the advocacy groups’ position that Section 705 cannot be invoked to stay the Payday Rule’s compliance date if the trade groups’ lawsuit has been stayed.  It argues that nothing in Section 705 “suggests that [the] provision can only be invoked in circumstances where litigation is certain to result in a final judgment on the merits, rather than being resolved by settlement or other means.”

The CFPB also rejects the advocacy groups’ position that the trade groups have not satisfied the four factors used to assess requests for Section 705 stays.  The advocacy groups had asserted that the trade groups were highly unlikely to succeed on the merits of their claims about the evidence on which the Payday Rule’s finding of unfairness and abusiveness is based because, in issuing the Payday Rule, the CFPB considered and rejected those arguments.  The CFPB states that the fact that it was previously aware of such concerns about the evidence underpinning the Payday Rule “is hardly dispositive of the merits of Plaintiffs’ claims, let alone whether they made the preliminary showing of a substantial case on the merits.”