Administrative Law Report - March 2025, Vol. 5

Welcome to your monthly rundown of all things administrative law, where we highlight all the happenings you may have missed.

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Financial Services/Securities:

• Federal Judge Upholds CFPB’s Small Business Lending Data Rule, Rejecting Merchant Cash Advance Industry Challenge: In Revenue Based Finance Coalition v. CFPB, U.S. Magistrate recommended upholding the CFPB’s small business lending data collection rule, rejecting a challenge by a merchant cash advance trade group. In a 24-page opinion, Sanchez found the CFPB did not exceed its authority by including merchant cash advance lenders and that the rule was neither arbitrary nor capricious. The judge dismissed claims that merchant cash advances should not be regulated as credit transactions, affirming that an “extension of credit” includes all forms of credit. He also rejected the argument that the CFPB’s funding structure was unconstitutional, noting that the Supreme Court had already dismissed that claim. The rule, mandated under the Dodd-Frank Act, requires lenders to collect and report demographic data on small-business loan applicants to support fair lending enforcement. Notably, Sanchez cited the Supreme Court’s recent Loper Bright decision, which overturned Chevron deference, in concluding that the CFPB acted within its statutory authority.

Overall Agency Regulations:  

• Trump Issues Deregulation Initiative/Enforcement Discretion Executive Order Incorporating Recent Supreme Court Administrative Law Decisions: On Feb. 19, President Trump issued an Executive Order (EO) entitled “Ensuring Lawful Governance and Implementing the President’s Department of Government Efficiency Deregulatory Initiative.” This EO has two purposes: (1) to focus limited enforcement resources on regulations “squarely” authorized by constitutional federal statutes and (2) to commence de-construction of the “overbearing and burdensome” administrative state.

With respect to deconstructing the administrative state, the EO requires recission of unlawful regulations, including those that undermine the national interest. The EO identifies six categories of such regulations- those that exceed the Federal Government’s authority, those based upon unlawful delegation by Congress, those not based upon best reading of the statute, those that impose significant costs upon private parties that are not outweighed by public benefits and finally, those that harm the national interest and impose undue burdens on small business and impede private enterprise and entrepreneurship. A report identifying these regulations is due by Apr. 19.

With respect to the enforcement discretion, the EO requires Agencies to de-prioritize enforcement actions that are not based on the best reading of the statute and those that go beyond the federal government’s constitutional authority. Enforcement proceedings that do not comply with the constitution, laws or administrative policy are subject to termination on a case-by-case basis.

• Federal Court Halts Enforcement of Executive Orders on DEI Programs, Government Seeks Emergency Stay: On Feb. 21, the United States District Court for the District of Maryland issued a preliminary injunction (the “Order”) pausing Executive Orders 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing, and Exec. Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (together the “Executive Orders”), which directed Executive Agencies to remove “illegal DEI programs” within each Agency and federal contractors.  On March 10, 2025, the Court further clarified the Order. The Court clarified that the Order applies to all Defendants, i, e, all Executive Branch agencies, departments, and commission, including their heads, officers, agents, and subdivisions, other than President Trump (the “Defendants”). The Order prohibits the Defendants from: (1) pausing, freezing, blocking, impeding, canceling, or terminating any award, contract, or obligation on the basis of the Executive Orders; (2) requiring any grantee or contractor to make certification directed by the Executive Orders; or (3) bringing any False Claims Act enforcement, or other enforcement action, under the Executive Orders. The Government filed with the Fourth Circuit an Emergency Stay Motion to lift the preliminary injunction pending resolution of the Government’s appeal.

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