Fair Lend Ruling
Fair Lend Ruling
Fair Lend Ruling
Plaintiffs,
v. 2:24-CV-025-Z-BR
Defendants.
Before the Court is Plaintiffs’ Motion for a Preliminary Injunction (“Motion”) (ECF No. 19),
filed February 9, 2024. Defendants filed their response (“Response”) (ECF No. 66), on March 8, 2024.
Having reviewed the briefing and relevant law, the Court GRANTS Plaintiffs’ Motion. Defendants are
hereby ENJOINED from enforcing the regulations published at 89 Fed. Reg. 6574 (Feb. 1, 2024)
(to be codified at 12 C.F.R. Sections 25, 228, and 345) against Plaintiffs pending the resolution of this
lawsuit. The effective date of April 1, 2024, along with all other implementation dates, are hereby
EXTENDED, day for day, for each day this injunction remains in place.
BACKGROUND
The Community Reinvestment Act of 1977 (“CRA”) was enacted to address “redlining” —
the practice of refusing credit in neighborhoods “deemed too risky.” ECF No. 4 at 3. Historically,
these neighborhoods were “predominantly minority and inner city.” ECF No. 20 at 9; R. MARSICO,
DEMOCRATIZING CAPITAL: THE HISTORY, LAW AND REFORM OF THE COMMUNITY REINVESTMENT ACT
11 (2005). The CRA requires federal banking agencies (“FBAs”) to assess an institution’s record “of
meeting the credit needs of its entire community, including low- and moderate-income” neighborhoods.
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12 U.S.C. § 2903(a)(1). And it requires separate evaluations for each metropolitan area where an
institution maintains one or more branch offices. Id. § 2906(b)(1)(B). Those evaluations, in turn,
By most measures, the CRA achieved its goals: “For more than 45 years, banks have extended
ECF No. 20 at 10. In 2022 alone, “banks provided more than $227 billion in capital to low- and
moderate-income individuals and businesses.” Id. And they provided “an additional $151 billion in
community development loans.” Id.; see also Federal Financial Institutions Examination Council,
Federal Bank Regulatory Agencies Release 2022 Lending Data, Dec. 20, 2023.
ECF No. 20 at 7; see 89 Fed. Reg. 6574 (to be codified at 12 C.F.R. §§ 25, 228, and 345).
Spanning 649 triple-column pages, those regulations (“Final Rules”) are “by far the longest rulemaking”
the Federal Deposit Insurance Corporation (“FDIC”) has ever issued.3 ECF No. 20 at 11. They establish,
inter alia, four new performance tests — two of which are relevant here. ECF Nos. 20 at 5–6; 67 at 14.
1
The CRA was predicated on Congress’s finding that regulated financial institutions have an “affirmative obligation
to help meet the credit needs of the local communities in which they are chartered.” 12 U.S.C. § 2901(a)(3).
2
Some commentators nevertheless argue that the CRA did not go far enough. See Kim Vu-Dinh, Black Livelihoods
Matter: Access to Credit as a Civil Right and Striving for a More Perfect Capitalism Through Inclusive Economics,
22 HOUS. BUS. & TAX L. J. 1, 28 (2021) (“The Community Reinvestment Act . . . was created in 1977 in order to
remediate the longstanding practice of redlining but is characterized as ‘toothless.’ It was intended to hold banks
accountable for the effects of their historic disinvestment in the neighborhoods in which communities of color lived
and owned businesses. However, the standards to which banks are held under the CRA are vague at best.”); see also
Erika George et al., Reckoning: A Dialogue About Racism, Antiracists, and Business & Human Rights,
30 WASH. INT’L L. J. 171, 254 n.257 (2021) (“While technically outlawed in 1977 with the Community Reinvestment
Act of 1977, studies indicate that redlining continues to affect housing opportunities and even health outcomes.”).
3
According to FDIC Director Jonathan McKernan — who dissented when the FDIC voted in favor of the Final Rules
— “[t]he approximately 60,000 words of rule text (including appendices), which contains more than 40 benchmarks
and 20 metrics, are enough to preclude anyone from comprehending the rule as a whole.” ECF No. 20 at 11.
“More problematically,” he continued, “big chunks of the rule remain unfinished works in progress.” Id.
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The first test — the Retail Lending Test — uses retail lending assessment areas (“RLAAs”) and
outside retail lending assessment areas (“ORLAs”) to evaluate a bank’s retail lending. ECF No. 67
at 14–15. An RLAA “consists of any metropolitan statistical area or the combined non-metropolitan
statistical areas of a state” in which a bank “originated at least 150 closed-end home mortgage loans” or
“400 small business loans in each of the two preceding calendar years.” ECF No. 20 at 12; see also
89 Fed. Reg. 6574, 6577. Likewise, an ORLA “is the nationwide area outside” a bank’s Facility
Based Assessment Areas (“FBAAs”) and RLAAs “where it made any other CRA-relevant loans.”
ECF No. 20 at 12; see also 89 Fed. Reg. 6574, 6577 (“Evaluation in these areas is designed to facilitate
a comprehensive evaluation of a bank’s retail lending to low- and moderate-income individuals . . . .”).
In other words, neither RLAAs nor ORLAs have any connection whatsoever to “a bank’s physical,
The second test — the Retail Services and Products Test — requires the FBAs to assess the
availability and usage of a bank’s deposit products and “whether [those] . . . deposit products offer low-
cost features.” ECF No. 67 at 16. As for digital services, the Final Rules require the FBAs to consider
“[t]he number of checking and savings accounts opened each calendar year during the evaluation period
digitally and through other delivery systems in low-, moderate-, middle-, and upper-income census
tracts” and the accounts active at year-end. Id. at 17; 89 Fed. Reg. 6574, 7121.
Plaintiffs argue the Final Rules run afoul of the CRA by analyzing banks (1) outside the
geographies where they operate physical facilities and accept deposits; and (2) on deposit products —
not how they meet the credit needs of the community. ECF No. 20 at 8. Defendants respond that
(1) the CRA “requires the FBAs to assess a bank in its ‘entire community,’ which includes all
geographic areas where the bank serves customers,” and (2) Plaintiffs fail to demonstrate irreparable
injury, or that the “balance of equities and the public interest” support their Motion. ECF No. 67 at 48.
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STANDARDS
A preliminary injunction may be issued if the movant shows: (1) a substantial likelihood
of prevailing on the merits; (2) a substantial threat of irreparable injury if the injunction is not
granted; (3) the threatened injury outweighs any harm that will result to the non-movant if the
injunction is granted; and (4) the injunction will not disserve the public interest. Robinson v.
Ardoin, 86 F.4th 574, 587 (5th Cir. 2023); Air Prod. & Chemicals, Inc. v. Gen. Servs. Admin.,
The first two factors are most critical, and the latter two merge when the government is an
opposing party. Valentine v. Collier, 956 F.3d 797, 801 (5th Cir. 2020); Nken v. Holder, 556 U.S.
418, 435 (2009). That said, no factor has a “fixed quantitative value.” Mock v. Garland, 5 F.4th
563, 587 (5th Cir. 2023). On the contrary, “a sliding scale is utilized, which takes into account the
intensity of each in a given calculus.” Id. “This requires a delicate balancing of the probabilities of
ultimate success at final hearing with the consequences of immediate irreparable injury that
possibly could flow from the denial of preliminary relief.” Med-Cert Home Care, LLC v. Azar,
365 F. Supp. 3d 742, 749 (N.D. Tex. 2019) (internal marks omitted). In sum, “[t]he decision to
grant or deny a preliminary injunction lies within the sound discretion of the trial court[.]”
White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir. 1989); Cottonwood Fin. Ltd. v. Cash Store Fin.
ANALYSIS
Standing is a threshold question this Court must address before addressing the merits.
People for the Ethical Treatment of Animals, Inc. v. U.S. Dep’t of Agric., 7 F. Supp. 3d 1, 7 (D.D.C.
2013) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102 (1998)). Under the doctrine
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of associational standing, an association may bring suit on behalf of its members when (1) those
members would otherwise have standing to sue; (2) the interests it seeks to protect are germane to
the organization’s purpose; and (3) neither the claim asserted nor the relief requested requires the
participation of individual members. Hancock Cnty. Bd. of Sup’rs v. Ruhr, 487 F. Appx. 189, 195
(5th Cir. 2012) (citing Ass’n of Am. Physicians & Surgeons, Inc. v. Tex. Med. Bd., 627 F.3d 547,
Here, Defendants aver that Plaintiffs lack standing for two reasons: (1) they have not
identified by name at least one member with standing in their own right; and (2) they do not assert
that the challenged activity affects all members of their associations. 4 ECF No. 67 at 40.
555 U.S. 488 (2009). But Summers does not hinge on the anonymity of the declarant. 5 Id. at 495.
Instead, the Supreme Court denied standing because the plaintiffs failed “to allege that any
particular . . . sale or other project claimed to be unlawfully subject to the regulations [would]
impede a specific and concrete plan.” Id. (emphasis in original). Nor has the Supreme Court
adopted a “naming requirement” — such as the one proposed by Defendants — in the wake of
Summers. See, e.g., Students for Fair Admissions, Inc. v. Harvard, 600 U.S. 181, 200–201 (2023)
(holding that an organization had standing “when it filed suit” where it “identified” individual
4
Here, Defendants take issue with Plaintiffs’ use of anonymous declarations and statements. See ECF No. 67 at 41
(“Plaintiffs submitted unsworn statements from three anonymous bankers purporting to be members of one or more
of the plaintiff associations.”).
5
The Tenth Circuit recognized that “[a]nonymity was not even an issue before the Supreme Court in Summers.”
Speech First, Inc., 92 F.4th at 949. “Although one might read language in that opinion to require that only persons
identified by their legal names can have standing, that was clearly not the intent of the Court.” Id. “The opinion
provided no hint, much less an emphatic statement, that it was abrogating decades of precedent.” Id.
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Defendants also misstate and misapply Funeral Consumers All., Inc. v. Serv. Corp. Int’l,
695 F.3d 330, 344 (5th Cir. 2012). There, the Fifth Circuit explained an organization lacks standing
“if it fails to adequately ‘allege . . . there is a threat of . . . injury to any individual member of the
association’ and thus ‘fail[s] to identify even one individual’ member with standing.” Id. (quoting
Nat’l Treasury Employees Union v. U.S. Dep’t of Treasury, 25 F.3d 237, 242 (5th Cir.1994)).
But nothing in Funeral Consumers addressed — or even purported to address — the sufficiency
In sum, the proffered Supreme Court and Fifth Circuit precedents do not support
Defendants’ “identify-by-name” requirement. See Hancock Cnty. Bd. of Sup’rs, 487 F. Appx. at
195 (affirming use of anonymous declarations); Speech First, Inc. v. Fenves, 979 F.3d 319, 335
(5th Cir. 2020), as revised (Oct. 30, 2020) (holding same); Blanchard v. Bergeron, 489 U.S. 87
(1989). Other Circuits have reached the same conclusion. See, e.g., Speech First, Inc. v. Shrum, 92
F.4th 947, 949 (10th Cir. 2024) (“Longstanding and well-established doctrine in the federal courts
establishes that anonymous persons may have standing to bring claims.”). Other District Courts in
Texas hold the same. See, e.g., Chamber of Com. of U.S. of Am. v. Consumer Fin. Prot. Bureau,
No. 6:22-CV-00381, 2023 WL 5835951, at *6 (E.D. Tex. Sept. 8, 2023) (“[D]efendants argue that
no plaintiff has shown that an ‘identified member’ suffers harm because some plaintiffs have used
pseudonyms . . . . That argument fails.”); id. (finding that anonymous declarations “credibly show
Defendants’ second objection — that Plaintiffs “do not assert that the challenged activity
affects all members of their associations”— is no more successful. That is because “the presence
of one party with standing is sufficient to satisfy Article III’s case-or-controversy requirement.”
Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th 869, 880 (5th Cir. 2022);
6
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Nuziard v. Minority Bus. Dev. Agency, No. 4:23-CV-0278-P, 2023 WL 3869323, at *3 (N.D. Tex.
June 5, 2023). And here, the Texas Bankers Association “has 20 members with over $10 billion in
assets” — and those banks with less than $10 billion “may [nevertheless] be assessed under these
A. The FBAs’ reading of “entire community” clashes with the text of the CRA.
Plaintiffs first argue that the Final Rules violate the CRA’s instruction to assess banks
based only on their performances within their communities. ECF No. 20 at 17. In their view,
a bank’s community is “the geograph[y] in which [it has] a physical presence and accept[s]
deposits.” Id. at 8; see also id. at 17 (“[T]he CRA focuses on lending in the particular, defined,
and limited geographic areas in which a bank’s deposit-taking facilities are located.”); id. at 17
(“The [a]gencies have always required bank examiners to focus on bank-designated ‘assessment
areas,’ which are ‘geographies in which the bank has its main office, its branches, and its deposit-
Defendants respond that the CRA “take[s] an expansive view in assessing a bank’s
performance[.]” ECF No. 67 at 21. That “expansive” view, in turn, is predicated on the CRA’s
usage of the phrase “entire community.” Id. (emphasis added); see also 12 U.S.C. § 2903(a)(1).
Accordingly, Defendants claim authority to articulate — via the Final Rules — “that a bank’s
‘entire community’ includes both the geographic areas where a bank maintains deposit-taking
facilities and other geographic areas where a bank conducts retail lending.” ECF No. 67 at 21–22
(emphasis added). Such authority is necessary, per Defendants, because “federal agencies are
expected to update rules” in response to changes. Id. at 26. And here, those changes include how
Because this is a question of statutory interpretation, the Court begins with the text.
United States v. Lauderdale Cnty., Miss., 914 F.3d 960, 961 (5th Cir. 2019). When a statute
includes an explicit definition, the Court follows that definition — even if it varies from a term’s
ordinary meaning. Digital Realty Tr., Inc. v. Somers, 583 U.S. 149, 160 (2018). Here, all parties
agree the CRA does not define “community.” See ECF No. 20 at 16 (“Congress did not itself
define the word ‘community[.]’”); see also ECF No. 67 at 30 (“The FBAs’ Final Rule appl[ies]
the undefined term ‘entire community’”). Thus, this Court “begin[s] with the assumption that the
words were meant to express their ordinary meaning.” United States v. Kaluza, 780 F.3d 647, 659
(5th Cir. 2015); United States v. Boeing Co., 617 F. Supp. 3d 502, 508 (N.D. Tex. 2022).
12 U.S.C. § 2903(a)(1).
That the word “community” necessarily involves a limited geographic area is indisputable.
Webster’s Third New International Dictionary defines “community” as “the people living in a
THIRD NEW INTERNATIONAL DICTIONARY (2002). And even today, “community” is defined in
nearly identical ways: “the people with common interests living in a particular area” and a
BLACK’S LAW DICTIONARY (11th ed. 2019) (“A neighborhood, vicinity, or locality.”).
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The remaining question — and the question that divides the Parties — is whether a bank’s
community is defined in relation to (1) a bank’s physical location, or (2) where a bank serves its
customers. See ECF No. 20 at 7 (“The statute . . . imposes obligations on banks with respect to
credit needs of the communities in which they have a physical presence and accept deposits.”);
see also ECF No. 67 at 31 (“[T]he Final Rule is focused on . . . geographic areas where a bank
First, Defendants lean hard on the word “entire” in the phrase “entire community.”
See ECF No. 67 at 22 (“Plaintiffs fail to meet their heavy burden . . . because their theory ignores
that the term ‘entire’ modifies ‘community.’”). True, “[t]he word ‘entire,’ . . . should not be read
out of [the statute].” Stewart v. Metro. Lloyds Ins. Co. of Tex., 855 F. Appx. 198, 201 (5th Cir.
2021). But it does not have the effect Defendants attribute to it. In modifying “community,” the
word “entire” merely clarifies that the whole community must be served — it does not change
what a “community” is. If a statutory “community” is created around every individual customer
with whom a bank does business — regardless of whether that customer is within the geography
of the bank’s physical presence — the term becomes meaningless and the statute ineffectual.
“Congressional findings and statement of purpose” section — that “regulated financial institutions
have [a] continuing and affirmative obligation to help meet the credit needs of the local
communities in which they are chartered.” 12 U.S.C. § 2901(a)(3). And Section 2901(b) repeats
that language. See id. § 2901(b) (“It is the purpose of this chapter to require each appropriate . . .
agency to . . . encourage such institutions to help meet the credit needs of the local communities
in which they are chartered[.]”). Defendants disregard these examples because “a statement of
congressional findings is a rather thin reed upon which to base a requirement neither expressed
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nor fairly implied from the Act’s operative sections.” Nat’l Org. for Women, Inc. v. Scheidler, 510
U.S. 249, 250 (1994) (emphasis added). Defendants’ argument would prevail if Plaintiffs’ reading
of “community” was “neither expressed nor fairly implied” elsewhere in the CRA. But Plaintiffs’
For starters, Section 2903 — the same section on which Defendants ground their “entire
community” argument — provides that the FBAs “may consider as a factor capital investment,
loan participation, and other ventures undertaken by the institution” provided these activities “help
meet the credit needs of local communities in which such institutions and credit unions are
chartered.” 12 U.S.C. § 2903(b) (emphasis added). And “local” is ordinarily defined as: (1) “not
general or widespread” and (2) “primarily serving the needs of a particular limited district, often a
INTERNATIONAL DICTIONARY (1981). Moreover, Section 2906 directs the FBAs to separately
address “each metropolitan area in which a regulated depository institution maintains one or more
These sections underscore the CRA’s focus on geographic areas surrounding a bank’s
physical facilities. Otherwise, Congress’s repeated focus on “local communities,” “low- and
inexplicable. See A. SCALIA & B. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS
167 (2012) (“[T]he whole-text canon . . . calls on the judicial interpreter to consider the entire text,
in view of its structure and of the physical and logical relation of its many parts[.]”); K Mart Corp.
v. Cartier, Inc., 486 U.S. 281, 291 (1988) (explaining that courts must look to “the language and
Finally, and perhaps most persuasively, Section 2902(4) undermines Defendants’ reading.
It expressly states:
12 U.S.C. § 2902(4).
In other words, if a bank primarily serves customers not clustered near its physical facility
— e.g., military personnel stationed across the globe — then it can “define its ‘entire community’”
pursuant to wherever its customers happen to be. But not otherwise. See Baptist Mem’l Hosp. -
Golden Triangle, Inc. v. Azar, 956 F.3d 689, 694 (5th Cir. 2020) (“[T]he canon of Expressio Unius
Est Exclusio Alterius . . . provides that ‘expressing one item of [an] associated group or series
specific statutory provision’s exclusivity must consider the provision as ‘viewed in the context of
the overall statutory scheme.’” Janvey v. Democratic Senatorial Campaign Comm., 793 F. Supp.
2d 825, 845 (N.D. Tex. 2011) (quoting Christensen v. Harris County, 529 U.S. 576, 583 (2000)).
But “the context of the overall statutory scheme” — for all the reasons discussed supra — serves
Next, Defendants turn to a tool disfavored by textualists: legislative history. See, e.g.,
Thomas v. Reeves, 961 F.3d 800, 819 (5th Cir. 2020) (“Scouring legislative detritus prone to
contrivance is more likely to yield confusion than precision.”) (citing Zedner v. United States, 547
U.S. 489, 511 (2006) (Scalia, J., concurring) (“[T]he use of legislative history is illegitimate and
ill-advised in the interpretation of any statute.”). Here, Defendants cite (1) preliminary drafts of
the CRA, (2) a series of edits made to those drafts prior to the CRA’s finalization, and
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(3) legislators’ discussions memorialized in the Congressional Record. ECF No. 67 at 24–26.
From these suspect sources, Defendants divine that the FBAs may analyze banks “where they
But “legislative history is not the law.” Epic Sys. Corp. v. Lewis, 584 U.S. 497, 523 (2018);
see also Wooden v. United States, 595 U.S. 360, 381 (2022) (Barrett, J., concurring) (explaining
that “the problems with legislative history are well rehearsed”); A. SCALIA & B. GARNER, supra
46 (2012) (“In the interpretation of legislation, we aspire to be ‘a nation of laws, not of men.’
This means . . . giving no effect to lawmakers’ unenacted desires.”). And whatever value legislative
history may have generally, there is none when the statutory text is clear. See Adkins v. Silverman,
899 F.3d 395, 403 (5th Cir. 2018) (“[T]he Supreme Court has stated repeatedly that where a
statute’s text is clear, courts should not resort to legislative history.”) (citing BedRoc Ltd., LLC v.
United States, 541 U.S. 176, 186 (2004)). Because “[t]he text here is not ambiguous,” this Court
declines to “introduce ambiguity through the use of legislative history.” Adkins, 899 F.3d at 403.
B. The CRA does not authorize the FBAs to assess deposit products.
Plaintiffs next argue that the Final Rules err in authorizing the FBAs to assess deposit
products. ECF No. 20 at 22. They aver that “Congress knew the difference between ‘credit’ and
‘deposit’ activities” — and nevertheless instructed the FBAs only to “assess the institution’s record
of meeting the credit needs of its entire community.” Id. (quoting 12 U.S.C. § 2903(b)(1)).
“That focus on credit makes sense,” according to Plaintiffs, “as Congress was concerned about the
mismatch between banks accepting deposits from low- and moderate-income borrowers but not
serving those borrowers with their credit products.” ECF No. 20 at 22. In light of the foregoing,
Plaintiffs conclude that Defendants have impermissibly “enlarge[d] the authority granted” by the
Defendants respond with two arguments: (1) the CRA does not state that only certain
factors may be considered in evaluating whether a bank is “meeting the credit needs of its entire
community;” and (2) the FBAs have reasonably explained why evaluating deposit activities is
appropriate in determining whether a bank is “meeting the credit needs of its entire community.”
ECF No. 67 at 34–37. In their view, Plaintiffs “have provided no basis for construing the phrase
‘meeting the credit needs of its entire community’ to allow for consideration only of factors that
Plaintiffs have selected.” Id. at 36–37. And in any event, “the FBAs described in great detail why
This question is resolved via the statutory provisions already addressed. In review,
institutions shall “help meet the credit needs of the local communities in which they are chartered.”
12 U.S.C. § 2901. The FBAs shall “assess the institution’s record of meeting the credit needs of
its entire community, including low- and moderate-income neighborhoods.” Id. § 2903(a)(1).
They may consider as a factor “capital investment, loan participation, and other ventures
undertaken by the institution” provided that these activities “help meet the credit needs of local
well the institution met “community credit needs.” Id. § 2906(2). The pattern is obvious: not a
single foregoing provision — nor any other CRA provision — authorizes the FBAs to assess
deposit products.
Nevertheless, Defendants aver that the phrase “credit needs” is sufficiently broad to
encompass “what is requisite, desirable, or useful in connection with credit.” ECF No. 67 at 34.
They argue that “[t]here is a sufficient nexus between deposit products and the provision of credit
deposit accounts responsive to the needs of low- and moderate-income individuals, families, or
households.” Id. at 37. And they explicate that nexus throughout the Final Rule:
[D]eposit products are important for supporting the credit needs of low- and
moderate-income individuals, families, or households because they increase credit
access by helping individuals improve their financial stability and build wealth
through deposit accounts.
[D]eposit products can help consumers qualify for loans by facilitating consumers’
savings so that they can post collateral and to pay transactions costs . . . . [and] may
also assist consumers in improving their credit scores . . . . Data from consumers’
use of deposit accounts are also sometimes included in credit evaluations as
“alternative data.”
Id.
But Defendants miss the mark. The question is not whether the FBAs “have articulated a
rational relationship” between deposit products and the ability to access credit. ECF No. 67 at 34.
It is not whether “a sufficient nexus” exists. Id. at 37. Nor is it whether the FBAs’ evaluation of
deposit products is a good idea. The question is whether Congress authorized the FBAs to do so.
Congress expressly stated that “the convenience and needs of communities include the
need for credit services as well as deposit services.” 12 U.S.C. § 2901(a)(2) (emphasis added).
It did not forget about them. Yet in every operative provision, Congress specified that only credit
need be considered. See, e.g., 12 U.S.C. §§ 2903(a)(1); 2903(b); 2906(2)(A)–(D). Hence, the
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inescapable conclusion is “that Congress considered the unnamed possibility and meant to say no
to it.” Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003); Gulf Fishermens Ass’n v. Nat’l
Marine Fisheries Serv., 968 F.3d 454, 466 (5th Cir. 2020). Whatever weight is assigned the FBAs’
alleged “nexuses,” it cannot “overcome the clear contrary indications of the statute[.]” S.E.C. v.
Under the Major Questions Doctrine, courts “expect Congress to speak clearly if it wishes
to assign to an agency decisions of vast economic and political significance.” Util. Air Regul. Grp.
v. E.P.A., 573 U.S. 302, 324 (2014); W. Virginia v. E.P.A., 597 U.S. 697, 716 (2022).
Stated differently, an agency must “point to clear congressional authorization” when “the history
and the breadth of the authority that the agency has asserted, and the economic and political
significance of that assertion, provide a reason to hesitate before concluding that Congress meant
to confer such authority.” W. Virginia, 597 U.S. at 721 (citing Food & Drug Admin. v. Brown &
Here, the “breadth of authority” that Defendants assert is substantial. See United States v.
Philadelphia Nat. Bank, 374 U.S. 321, 329 (1963) (recognizing that the “power of federal bank
examiners” is “perhaps the most effective weapon of federal regulation”). Never before have the
FBAs claimed authority to assess banks wherever they conduct retail lending. ECF No. 73 at 16.
On the contrary, they have — since 1978 — limited themselves to areas surrounding deposit-
taking facilities. Id. at 16–17; 43 Fed. Reg. 47144, 47144 (Oct. 12, 1978); Interagency Questions
Moreover, Congress could have passed legislation to alter or expand the CRA’s terms.
As Plaintiffs note, the Community Reinvestment Modernization Act — introduced four times in
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nine years — “would have shifted assessment areas from those areas surrounding deposit-taking
facilities to areas where banks make loans.” ECF No. 73 at 17. It never passed. Thus, the fact that
“Congress considered and rejected bills that would have granted the [FBAs] such jurisdiction”
undercuts their assertion of authority. Brown & Williamson Tobacco Corp., 529 U.S. at 144.
The foregoing — taken together — provide a powerful basis for applying the Major Questions
Next, Plaintiffs argue that the Final Rules “are of such scale and complexity that banks
must take immediate steps” to comply. ECF No. 20 at 25. And those steps, they argue, require
“substantial costs that will be unrecoverable even if the [Rules] are struck[.]” Id. at 26. In support,
Plaintiffs cite the Office of the Comptroller of the Currency’s (“OCC”) “estimate[] [of] the initial
compliance burden in the first 12 months” as $91.8 million. 6 Id. at 24. They point to
“complicated[,] time-consuming system overhauls and database updates” and the need to “conduct
program planning,” upgrade “vendor relationships, [and] hire more IT.” Id. And they underscore
the FBAs’ estimate that banks “will expend between . . . 105,500 and 235,000 hours in reporting,
recordkeeping, and disclosures.” Id. at 25. Defendants aver that Plaintiffs have not proved
“irreparable harm” because the alleged compliance costs (1) are not contextualized alongside the
banks’ overall finances; and (2) are too vague and speculative to satisfy “concreteness” standards.
6
This figure has been recontextualized. See ECF No. 70 (Defendants’ Notice of Supplemental Rulemaking). The OCC
now clarifies that “[w]ere the [Rule] to require full compliance within the first 12 months of the transition period,
the OCC estimates that expenditures to comply with mandates during those twelve months would not exceed
approximately $91.8 million (approximately $7.9 million associated with increased data collection, recordkeeping or
reporting; $82 million for large banks to collect, maintain, and report annually geographic data on deposits; and $1.9
million for banks’ strategic plan submissions).” Community Reinvestment Act; Supplemental Rule, https://www.fdic
.gov/news/press-releases/2024/pr24018a.pdf.
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First, compliance costs. Defendants aver that Plaintiffs “have failed to provide necessary
context for their asserted compliance burdens ‘in relation to the overall financial situation’ of their
members.” Id. at 43 (quoting Nat’l Council of Agric. Emps. v. U.S. Dep’t of Lab., No. CV 22-3569
(RC), 2023 WL 2043149, at *7 (D.D.C. Feb. 16, 2023). In their view, “Plaintiffs must compare
those costs to affected banks’ overall economic positions, by considering, for example, banks’ total
noninterest expenses” to “demonstrate that any asserted compliance costs are more than de
True, compliance costs must be “more than de minimis.” Louisiana v. Biden, 55 F.4th 1017,
1035 (5th Cir. 2022); Second Amend. Found., Inc. v. Bureau of Alcohol, Tobacco, Firearms &
Explosives, No. 3:21-CV-0116-B, 2023 WL 7490149, at *14 (N.D. Tex. Nov. 13, 2023).
But under Fifth Circuit precedent, “nonrecoverable costs of complying with a putatively invalid
regulation typically constitute irreparable harm.” Rest. L. Ctr. v. U.S. Dep’t of Lab., 66 F.4th 593,
597 (5th Cir. 2023); see also Louisiana, 55 F.4th at 1034 (“[C]omplying with a regulation later
held invalid almost always produces the irreparable harm of nonrecoverable compliance costs.”).
Moreover, the “key inquiry” here is “not so much the magnitude but the irreparability.”
Rest. L. Ctr., 66 F.4th at 597. Indeed, “[e]ven purely economic costs may count as irreparable harm
‘where they cannot be recovered in the ordinary course of litigation.’” Id. (quoting Wis. Gas Co.
v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985)). And Plaintiffs’ compliance costs — as pled — fall
into the standard “nonrecoverable costs” category recognized repeatedly by the Fifth Circuit.
See, e.g., ECF No. 21 at 9 (Declaration of Texas Bankers Association) (“To comply with the
[Rules], TBA members have begun incurring nonrecoverable compliance costs, including
building out new information technology capabilities in order to geocode their deposits and
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track new metrics adopted by the [Rules].”); id. at 15 (Declaration of Jason Harrison)
(“Despite a 2-year applicability period for most of the provisions in the [Rules], the [Rules’] new,
burdensome metrics and data collection requirements will require some affected members to begin
incurring compliance costs long before Plaintiffs could obtain a final judgment . . . . The
implementation task here will be even more expensive and daunting because banks may need to
implement both Section 1071 regulations and the amended CRA regulations on overlapping
banks must begin implementation immediately due to the complexity and extensive change-
management processes that will be required to comply with the [Rules]. Banks must take steps now
to determine whether they will have Retail Lending Assessment Areas” or “Outside Lending
Assessment Areas,” and “then calculate whether their CRA performance will be adequate under
the [Rules’] performance metrics.”); id. at 30 (Declaration of Thomas Quaadman) (“Members thus
have already begun to take the necessary steps to understand the voluminous requirements, prepare
their budgets for implementation, and make decisions about whether they will hire new in-house
technical personnel or outside vendors to assist with implementation.”); id. at 37–38 (Declaration
of Kelly Hall) (“As acknowledged by the Agencies, even setting aside the technical changes that
will need to be made to comply with the data collection, maintenance, and reporting requirements,
some of our members will need to hire new CRA compliance personnel going forward because of
the enormous complexity of the [Rules] and the increased size and number of assessment areas.”);
report that, to meet the January 1, 2026 implementation deadline, they have begun or will need
to immediately begin undertaking rigorous efforts to understand and comply with the [Rules],
initiate change-management processes, and make changes to their overall business strategy.
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All of these efforts will result in the banks incurring nonrecoverable compliance costs.”);
id. at 51 (Declaration of Independent Bankers Association of Texas) (“IBAT member banks have
already begun their efforts to determine whether they will need to make changes to their CRA
compliance efforts with regard to accounting for the new Facility-Based Assessment Areas, Retail
Lending Assessment Areas, and/or Outside Retail Lending Areas. These determinations will be
necessary prior to the implementation of the rule for a bank to evaluate whether its CRA
performance will be adequate under the [Rules]” . . . . “ The costs incurred by banks in making
these determinations is ongoing and will increase as we approach the effective date for
implementation of the rule. IBAT member banks do not expect that these costs will be recoverable
even if the [Rules] are struck down due to sovereign immunity and other considerations.”).
that Plaintiffs “have failed to meet their burden of establishing imminent nonrecoverable
compliance costs stemming from activities to prepare for the Final Rule.” ECF No. 67 at 48.
Such activities, per Defendants, “are vague, unsupported, and contrary to the language in the Final
Rule.” Id. Specifically, they argue that (1) “the [Final Rule’s] actual regulatory text is marked by
none of the extreme urgency Plaintiffs claim they now face;” (2) “the preamble indicates that
implementation guidance and tools are forthcoming from the FBAs with respect to data collection,
maintenance and reporting for large banks;” (3) “while declarants raise vague, alarmist assertions
about immense complexity necessitating immediate action with respect to new RLAAs, no
declarant specifies a single RLAA that any of Plaintiffs’ member banks anticipate it will need to
delineate;” and (4) “conclusory statements of multiple declarants that a large bank will need to
‘build out new CRA infrastructure’ . . . contradict the text of the Final Rule.” Id. at 46–47.
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But Defendants misconstrue both Plaintiffs’ claims and the precedent that supports them.
First — as described supra — the Fifth Circuit has long held that “complying with a regulation
later held invalid almost always produces the irreparable harm of nonrecoverable compliance
costs.” Louisiana, 55 F.4th at 1034. Second, that the Rule is not marked by urgency is plainly false.
The text itself provides that “this final rule will be effective on April 1, 2024” — with an
operational start date of January 1, 2026, and reporting requirements kicking in a year later.
89 Fed. Reg. 6574, 7107. Given the scope of Plaintiffs’ operations and the changes required by the
Final Rule, the necessity of swift action is obvious. Third, Plaintiffs’ assertions are neither “vague”
nor “alarmist.” On the contrary, they have pled sufficiently clear harms that will be — and are
currently being — incurred. See, e.g., ECF No. 21 at 9 (Declaration of Texas Bankers Association)
(“TBA members have begun . . . building out new information technology capabilities in order
to geocode their deposits and track new metrics adopted by the [Rules].”); id. at 22 (Declaration
of American Bankers Association) (“Intermediate and Large banks must begin implementation
Nor is there any force to the objection that “no declarant specifies a single RLAA that
any of Plaintiffs’ member banks anticipate it will need to delineate.” ECF No. 67 at 47.
That is because a core difficulty here — as pled by Plaintiffs — is determining where RLAAs will
be and how to manage them in accordance with the Final Rules. See ECF No. 21 at 22 (Declaration
of American Bankers Association) (“Banks must take steps now to determine whether they will
have Retail Lending Assessment Areas” or “Outside Lending Assessment Areas,” and “then
calculate whether their CRA performance will be adequate under the [Rules’] performance
metrics.”). Same too with Defendants’ objection that Plaintiffs’ “conclusory statements that a large
bank will need to ‘build out new CRA infrastructure’ . . . contradict the text of the Final Rule.”
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ECF No. 67 at 46–47. That is because “what the Rule requires by its text” may differ from “what
the Rule requires in effect.” Plaintiffs best understand their businesses and unique operational
needs and are therefore best-situated to determine what feasible compliance will require.
IV. Plaintiffs demonstrate that the balance of equities and the public interest
support injunctive relief.
The final two elements necessary to support a grant of injunctive relief — the balance of
equities (the difference in harm to the respective parties) and the public interest — “merge” when
the government is a party. VanDerStok v. BlackHawk Mfg. Grp. Inc., 639 F. Supp. 3d 722, 730
(N.D. Tex. 2022) (citing Nken, 556 U.S. at 435). In this assessment, the Court weighs “the
competing claims of injury and . . . consider[s] the effect on each party of the granting or
withholding of the requested relief,” while also considering the public consequences of granting
injunctive relief. VanDerStok, 639 F. Supp. 3d at 730 (citing Winter v. Natural Resources Defense
Here, Plaintiffs note that the CRA is working well: “Over 98% of banks achieved an
Outstanding or Satisfactory rating in their most recent assessment and there is no evidence that a
few months’ delay will have a material impact of any kind.” ECF No. 20 at 26. And they point out
that FBAs make “no finding — and present no evidence — that the Final Rules will result in a
single additional CRA loan, much less enough additional CRA lending to offset the Final Rules’
substantial compliance costs.” Id. at 27. On the contrary, Plaintiffs’ evidence suggests just the
opposite: “When asked ‘the CRA was revised to create Retail Lending Assessment Areas for large
banks. Do you think your bank will reduce lending in those areas to avoid triggering an RLAA.’
28.2% of respondents replied they will reduce lending[.]” ECF No. 21 at 44 (Declaration of
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Defendants respond that [t]he balance of equities and the public interest . . . weigh against
enjoining the entire rule because many aspects of the Final Rule are indisputably beneficial.”
ECF No. 67 at 48. And they offer three reasons in support: (1) “the balance of harms with respect
to the component of the Retail Services and Products Test focused on deposits tips against
Plaintiffs because any claimed harm is illusory;” (2) “while the provisions Plaintiffs cite in support
of their Motion apply almost exclusively to large banks, the Rule provides significant regulatory
relief and lower compliance costs by increasing the asset-size thresholds that determine which
performance tests apply to an institution;” and (3) “Plaintiffs’ request to enjoin the entire Rule
would unnecessarily delay other . . . reforms that Plaintiffs do not challenge, and which have been
widely supported by members of the industry, including large institutions.” Id. at 48–50. In sum,
“the significant positive benefits of the Final Rule” weigh against the requested relief.
But Defendants’ handful of pled benefits do not override Plaintiffs’ strong warrant for a
preliminary injunction. See Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct.
2485, 2490 (2021) (“[O]ur system does not permit agencies to act unlawfully even in pursuit of
desirable ends.”). First, the Court has already addressed whether Plaintiffs’ harms are “illusory.”
See supra Part III. They are not. And the Texas Bankers Association affirmed in its declaration
“that it has 20 members with assets over $10 billion and that other banks will inevitably be harmed
by [the Retail Service and Products Test] provisions”— rendering Defendants’ objection
untenable. ECF No. 73 at 28 n.18; see also ECF No. 21 at 8 (“TBA has 56 members that are ‘large
banks’ with assets of at least $2 billion; of these, 20 have assets over $10 billion.”).
Second, Defendants offer no persuasive support for their claim that “the Final Rule
provides significant regulatory relief and lower . . . costs.” ECF No. 67 at 48. Nor could they,
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as the 649 triple-column pages comprising the Final Rules offer none either. And even if they had,
Defendants offer no quantification as to how those benefits compare to Plaintiffs’ harms. Such a
showing is insufficient in light of Plaintiffs’ pleadings. Furthermore, Defendants’ third objection — that
Plaintiffs’ sought relief would unnecessarily delay other reforms — fails for similar reasons as their
first two. Id. at 49. As Plaintiffs note, “if delaying possibly salutary provisions were sufficient
reason to deny injunctive relief, few claims would ever warrant” such relief. ECF No. 73 at 28.
In any event, as noted above, this Court found that Plaintiffs satisfied factors one and two
with ease: (1) a substantial likelihood of success on the merits; and (2) a threat of irreparable injury.
See supra Part I–II. And “there is generally no public interest in the perpetuation of unlawful
agency action[.]” R.J. Reynolds Vapor Co. v. Food & Drug Admin., 65 F.4th 182, 195 (5th Cir.
2023). “To the contrary, there is a substantial public interest ‘in having governmental agencies
abide by the federal laws that govern their existence and operations.’” Texas v. United States, 40
F.4th 205, 229 (5th Cir. 2022) (quoting Washington v. Reno, 35 F.3d 1093, 1103 (6th Cir. 1994)).
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion. Defendants are hereby
ENJOINED from enforcing the regulations published at 89 Fed. Reg. 6574 (Feb. 1, 2024)
(to be codified at 12 C.F.R. Sections 25, 228, and 345) against Plaintiffs pending the resolution of this
lawsuit. The effective date of April 1, 2024, along with all other implementation dates, are hereby
EXTENDED, day for day, for each day this injunction remains in place.
SO ORDERED.
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