State and Tribal Government Sovereignty Protection Act of 2016

Summary: State and Tribal Government Sovereignty Protection Act of 2016 This bill establishes a moratorium period during which the Consumer Financial Protection Bureau (CFPB) may not issue or enforce any rule or regulation governing payday loans, vehicle title loans, or other similar loans.  The Consumer Financial Protection Act of 2010 is amended to prohibit the CFPB from issuing any final rule or regulation to regulate payday loans, vehicle title loans, or other similar loans, unless it first: (1) consults with appropriate state, tribal, and local officials in each jurisdiction that may be affected by the rule; (2) conducts specified studies; and (3) issues a public report regarding study findings. The CPFB shall grant a five-year waiver from such a rule or regulation if a state or federally recognized Indian tribe requests one. The waiver may be renewed at the expiration of each five-year waiver period.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State and Tribal Government 
Sovereignty Protection Act of 2016''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The people of the States created the national 
        government when they delegated to it those enumerated 
        governmental powers relating to matters beyond the competence 
        of the individual States. All other sovereign powers, save 
        those expressly prohibited the States by the Constitution, are 
        reserved to the States or the people.
            (2) In most areas of governmental concern, the States 
        uniquely possess the constitutional authority, the resources, 
        and the competence to discern the sentiments of the people and 
        to govern accordingly.
            (3) Our constitutional system encourages a healthy 
        diversity in the public policies adopted by the people of the 
        several States according to their own conditions, needs, and 
        desires. Individual States and communities are free to 
        experiment with a variety of approaches to public issues. One-
        size-fits-all approaches to public policy problems can inhibit 
        the creation of effective solutions to problems.
            (4) Federal action limiting the policymaking discretion of 
        the States should be taken only where constitutional and 
        statutory authority for the action is clear and certain and the 
        national activity is necessitated by the presence of a problem 
        of national scope.
            (5) Federal agencies must recognize the distinction between 
        problems of national scope (which may justify Federal action) 
        and problems that are merely common to the States (which will 
        not justify Federal action because individual States, acting 
        individually or together, can effectively deal with them).
            (6) On March 26, 2015, the Bureau of Consumer Financial 
        Protection released an outline of proposals under consideration 
        for potential rulemakings for ``payday, vehicle title, and 
        similar loans''.
            (7) The Bureau acknowledged that ``markets for payday, 
        vehicle title, and similar loans are regulated by a variety of 
        state laws, as well as some tribal and municipal laws''. The 
        Bureau specifically acknowledged that ``Some jurisdictions have 
        imposed usury limits that prohibit lenders from offering high-
        cost credit. In other jurisdictions, certain products are 
        specifically authorized by state laws, often crafted as 
        exceptions to general state credit regulation, including 
        consumer loan laws and general usury limits. Some of the states 
        authorizing these products have sought to regulate loan 
        structures and lender practices in a variety of ways, including 
        limiting permissible costs, restricting reborrowing in certain 
        circumstances, or setting a maximum ratio for the amount of 
        debt on such loans to gross monthly income. States, tribes, and 
        local governments also impose a variety of licensure 
        requirements on lenders engaged in payday and vehicle title 
        lending.''. This variation in State, local, and tribal law 
        suggests a healthy, dynamic, legal environment in which the 
        democratically elected representatives in each jurisdiction 
        respond appropriately to the particular conditions, needs, and 
        desires of their constituents.
            (8) Notwithstanding the foregoing, the Director of the 
        Bureau seeks to ``establish a federal floor for consumer 
        protection for covered loans'', thus substituting the 
        Director's own judgment for that of State, tribal, and local 
        governments.
            (9) The Bureau made no showing that any State or tribal 
        government lacks the legal authority to enact laws or 
        regulations that are substantially similar to the Bureau's 
        outline of proposals.
            (10) The Bureau made no showing that any State or tribal 
        government is incapable of protecting its citizens from 
        potential risks associated with using payday, vehicle title, 
        and similar loans.
            (11) The Bureau's proposals, if implemented, would be an 
        unwarranted infringement of State and tribal sovereignty and a 
        violation of fundamental federalist principles designed to 
        secure the liberty of the American people.

SEC. 3. MORATORIUM.

    (a) Prohibition on Payday Loans, Vehicle Title Loans, and Other 
Similar Loan Regulations.--The Bureau of Consumer Financial Protection 
may not issue or enforce any rule or regulation with respect to payday 
loans, vehicle title loans, or other similar loans during the 24-month 
period beginning on the date of enactment of this Act.
    (b) Payday Loan.--For purposes of this section the term ``payday 
loan'' means a loan described under section 1024(a)(1)(E) of the 
Consumer Financial Protection Act of 2010 (12 U.S.C. 5514(a)(1)(E)).

SEC. 4. PROTECTING STATE AND TRIBAL GOVERNMENT SOVEREIGNTY.

    Section 1022(b) of the Consumer Financial Protection Act of 2010 
(12 U.S.C. 5512(b)) is amended by adding at the end the following:
            ``(5) Protecting state and tribal government sovereignty 
        with respect to payday loans, vehicle title loans, and other 
        similar loans.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, the Bureau may not issue any final 
                rule or regulation to regulate payday loans, vehicle 
                title loans, or other similar loans, unless the Bureau 
                first--
                            ``(i) consults with appropriate State, 
                        tribal, and local officials in each 
                        jurisdiction that may be affected by the rule 
                        regarding the effect of the rule on State, 
                        tribal, or local sovereignty, laws, 
                        regulations, and citizens;
                            ``(ii) carries out a study that--
                                    ``(I) examines the Bureau's 
                                constitutional and statutory authority 
                                to preempt State, tribal, and local 
                                laws and regulations;
                                    ``(II) examines the effect the rule 
                                or regulation will have on the laws and 
                                regulations of individual States, 
                                federally recognized Indian tribes, and 
                                municipalities; and
                                    ``(III) identifies alternative 
                                proposals to mitigate potential risks 
                                associated with using payday loans, 
                                vehicle title loans, and other similar 
                                loans without infringing upon State and 
                                tribal sovereignty or preempting State 
                                and tribal laws and regulations; and
                            ``(iii) issues a public report that--
                                    ``(I) contains all findings and 
                                determinations made by the Bureau in 
                                carrying out such study;
                                    ``(II) addresses all comments and 
                                advice received during consultation 
                                with State, tribal, and local 
                                officials;
                                    ``(III) lists each State, tribal, 
                                or local law and regulation (or any 
                                portion thereof) the Bureau proposes to 
                                preempt by rule or regulation;
                                    ``(IV) identifies by name any State 
                                or federally recognized Indian tribe 
                                that lacks the legal authority to enact 
                                laws or regulations that are 
                                substantially similar to the rule or 
                                regulation, and states the basis for 
                                why the Bureau has determined that the 
                                State or federally recognized Indian 
                                tribe lacks such authority; and
                                    ``(V) identifies by name any State 
                                or federally recognized Indian tribe 
                                the Director believes is incapable of 
                                protecting its citizens from potential 
                                risks associated with using payday 
                                loans, vehicle title loans, and other 
                                similar loans, and states the basis for 
                                why the Bureau has determined that the 
                                State or federally recognized Indian 
                                tribe is incapable of such protection.
                    ``(B) Waiver for state and tribal governments.--
                            ``(i) In general.--With respect to a final 
                        rule or regulation issued by the Bureau to 
                        regulate payday loans, vehicle title loans, or 
                        other similar loans, if a State or a federally 
                        recognized Indian tribe requests, in writing, 
                        for the Bureau to provide the State or tribe 
                        with a waiver from such rule or regulation, the 
                        Director shall grant a 5-year waiver to such 
                        State or tribe, during which such rule or 
                        regulation shall not apply within such State or 
                        land held in trust for the benefit of such 
                        federally recognized Indian tribe.
                            ``(ii) Right to renew waiver.--A State or 
                        federally recognized Indian tribe granted a 
                        waiver under clause (i) shall have the right to 
                        renew such waiver at the end of each 5-year 
                        waiver period.''.