The Fifth Circuit Court of Appeals has issued a stay that blocks for many financial institutions the implementation of a CFPB rule that requires the institutions to report information contained in loan applications submitted by women-owned, minority-owned and LGBTQI+-owned small businesses.

However, the stay only applies to plaintiffs and intervenors in the case. Those include, among others, members of the American Bankers Association, the Independent Community Bankers of America, and America’s Credit Unions.

In March, 2023, the CFPB finalized the small business reporting rule, informally known as the “Section 1071 Rule.” It refers to the Section of Dodd-Frank that creates the reporting requirement.

Financial institutions that originated at least 100 covered small business loans in each of the two preceding calendar years are subject to the rule. The compliance dates for the rule, which vary based on small business lending volume, are July 18, 2025, January 16, 2026 and October 18, 2026.

The plaintiffs filed suit in the U.S. District Court for the Southern District of Texas, arguing that, among other things, that the bureau exceeded its statutory authority and relied on inaccurate data to estimate implementation costs.

The district court issued a summary judgment in favor of the CFPB. The plaintiffs appealed and asked for a stay pending appeal and for the appeals court to toll compliance deadlines.

“A new President was inaugurated January 20, 2025,” the appeals court said. “This case had already been set to be orally argued on February 3, 2025. The morning of oral argument, CFPB notified the court that ‘[c]ounsel for the CFPB has been instructed’ by new leadership ‘not to make any appearances in litigation except to seek a pause in proceedings.’”

When both sides appeared for oral arguments, only the bankers addressed the merits. The CFPB did not oppose the plaintiffs’ motion for a stay pending appeal in part to stay compliance obligations and to toll compliance dates for 90 days to “give the Acting Director time to consider the issues.”

However, the appeals court granted the bankers’ request to toll the compliance deadlines for the plaintiffs and intervenors until the appeal is resolved.

The rule is under attack on another front. On Capitol Hill, House Republicans are pushing legislation introduced by House Small Business Committee Chairman Rep. Roger Williams, R-Texas.

That bill, H.R. 976 simply would repeal the rule altogether.

While the House and Senate previously voted to override the rule under the Congressional Review Act, President Biden vetoed the legislation. The House voted to override the veto, but the Senate did not.

While legislation under the Congressional Review Act is not subject to a filibuster in the Senate, a bill to repeal section 1071 would be subject to a filibuster, so 60 votes may be needed there to repeal the rule.