I 

114TH CONGRESS 

2D SESSION H. R. 4737 

To protect State and Tribal sovereignty from unwarranted infringement by 

an independent agency of the Federal Government by requiring the 

Bureau of Consumer Financial Protection to justify certain proposals 

to preempt State and Tribal law, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 14, 2016 

Mr. MULVANEY introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To protect State and Tribal sovereignty from unwarranted 

infringement by an independent agency of the Federal 

Government by requiring the Bureau of Consumer Financial Protection to justify certain proposals to preempt 

State and Tribal law, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘State and Tribal Gov5 ernment Sovereignty Protection Act of 2016’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) The people of the States created the na2 tional government when they delegated to it those 

3 enumerated governmental powers relating to matters 

4 beyond the competence of the individual States. All 

5 other sovereign powers, save those expressly prohib6 ited the States by the Constitution, are reserved to 

7 the States or the people. 

8 (2) In most areas of governmental concern, the 

9 States uniquely possess the constitutional authority, 

10 the resources, and the competence to discern the 

11 sentiments of the people and to govern accordingly. 

12 (3) Our constitutional system encourages a 

13 healthy diversity in the public policies adopted by 

14 the people of the several States according to their 

15 own conditions, needs, and desires. Individual States 

16 and communities are free to experiment with a vari17 ety of approaches to public issues. One-size-fits-all 

18 approaches to public policy problems can inhibit the 

19 creation of effective solutions to problems. 

20 (4) Federal action limiting the policymaking 

21 discretion of the States should be taken only where 

22 constitutional and statutory authority for the action 

23 is clear and certain and the national activity is ne24 cessitated by the presence of a problem of national 

25 scope. 


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1 (5) Federal agencies must recognize the distinc2 tion between problems of national scope (which may 

3 justify Federal action) and problems that are merely 

4 common to the States (which will not justify Federal 

5 action because individual States, acting individually 

6 or together, can effectively deal with them). 

7 (6) On March 26, 2015, the Bureau of Con8 sumer Financial Protection released an outline of 

9 proposals under consideration for potential 

10 rulemakings for ‘‘payday, vehicle title, and similar 

11 loans’’. 

12 (7) The Bureau acknowledged that ‘‘markets 

13 for payday, vehicle title, and similar loans are regu14 lated by a variety of state laws, as well as some trib15 al and municipal laws’’. The Bureau specifically ac16 knowledged that ‘‘Some jurisdictions have imposed 

17 usury limits that prohibit lenders from offering high18 cost credit. In other jurisdictions, certain products 

19 are specifically authorized by state laws, often craft20 ed as exceptions to general state credit regulation, 

21 including consumer loan laws and general usury lim22 its. Some of the states authorizing these products 

23 have sought to regulate loan structures and lender 

24 practices in a variety of ways, including limiting per25 missible costs, restricting reborrowing in certain cirVerDate Sep 11 2014 20:23 Mar 15, 2016 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4737.IH H4737

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1 cumstances, or setting a maximum ratio for the 

2 amount of debt on such loans to gross monthly in3 come. States, tribes, and local governments also im4 pose a variety of licensure requirements on lenders 

5 engaged in payday and vehicle title lending.’’. This 

6 variation in State, local, and tribal law suggests a 

7 healthy, dynamic, legal environment in which the 

8 democratically elected representatives in each juris9 diction respond appropriately to the particular condi10 tions, needs, and desires of their constituents. 

11 (8) Notwithstanding the foregoing, the Director 

12 of the Bureau seeks to ‘‘establish a federal floor for 

13 consumer protection for covered loans’’, thus sub14 stituting the Director’s own judgment for that of 

15 State, tribal, and local governments. 

16 (9) The Bureau made no showing that any 

17 State or tribal government lacks the legal authority 

18 to enact laws or regulations that are substantially 

19 similar to the Bureau’s outline of proposals. 

20 (10) The Bureau made no showing that any 

21 State or tribal government is incapable of protecting 

22 its citizens from potential risks associated with using 

23 payday, vehicle title, and similar loans. 

24 (11) The Bureau’s proposals, if implemented, 

25 would be an unwarranted infringement of State and 


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1 tribal sovereignty and a violation of fundamental 

2 federalist principles designed to secure the liberty of 

3 the American people. 

4 SEC. 3. MORATORIUM. 

5 (a) PROHIBITION ON PAYDAY LOANS, VEHICLE

6 TITLE LOANS, AND OTHER SIMILAR LOAN REGULA7 TIONS.—The Bureau of Consumer Financial Protection 

8 may not issue or enforce any rule or regulation with re9 spect to payday loans, vehicle title loans, or other similar 

10 loans during the 24-month period beginning on the date 

11 of enactment of this Act. 

12 (b) PAYDAY LOAN.—For purposes of this section the 

13 term ‘‘payday loan’’ means a loan described under section 

14 1024(a)(1)(E) of the Consumer Financial Protection Act 

15 of 2010 (12 U.S.C. 5514(a)(1)(E)). 

16 SEC. 4. PROTECTING STATE AND TRIBAL GOVERNMENT 

17 SOVEREIGNTY. 

18 Section 1022(b) of the Consumer Financial Protec19 tion Act of 2010 (12 U.S.C. 5512(b)) is amended by add20 ing at the end the following: 

21 ‘‘(5) PROTECTING STATE AND TRIBAL GOVERN22 MENT SOVEREIGNTY WITH RESPECT TO PAYDAY

23 LOANS, VEHICLE TITLE LOANS, AND OTHER SIMILAR

24 LOANS.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding any 

2 other provision of law, the Bureau may not 

3 issue any final rule or regulation to regulate 

4 payday loans, vehicle title loans, or other simi5 lar loans, unless the Bureau first— 

6 ‘‘(i) consults with appropriate State, 

7 tribal, and local officials in each jurisdic8 tion that may be affected by the rule re9 garding the effect of the rule on State, 

10 tribal, or local sovereignty, laws, regula11 tions, and citizens; 

12 ‘‘(ii) carries out a study that— 

13 ‘‘(I) examines the Bureau’s con14 stitutional and statutory authority to 

15 preempt State, tribal, and local laws 

16 and regulations; 

17 ‘‘(II) examines the effect the rule 

18 or regulation will have on the laws 

19 and regulations of individual States, 

20 federally recognized Indian tribes, and 

21 municipalities; and 

22 ‘‘(III) identifies alternative pro23 posals to mitigate potential risks asso24 ciated with using payday loans, vehicle 

25 title loans, and other similar loans 


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1 without infringing upon State and 

2 tribal sovereignty or preempting State 

3 and tribal laws and regulations; and 

4 ‘‘(iii) issues a public report that— 

5 ‘‘(I) contains all findings and de6 terminations made by the Bureau in 

7 carrying out such study; 

8 ‘‘(II) addresses all comments and 

9 advice received during consultation 

10 with State, tribal, and local officials; 

11 ‘‘(III) lists each State, tribal, or 

12 local law and regulation (or any por13 tion thereof) the Bureau proposes to 

14 preempt by rule or regulation; 

15 ‘‘(IV) identifies by name any 

16 State or federally recognized Indian 

17 tribe that lacks the legal authority to 

18 enact laws or regulations that are 

19 substantially similar to the rule or 

20 regulation, and states the basis for 

21 why the Bureau has determined that 

22 the State or federally recognized In23 dian tribe lacks such authority; and 

24 ‘‘(V) identifies by name any 

25 State or federally recognized Indian 


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1 tribe the Director believes is incapable 

2 of protecting its citizens from poten3 tial risks associated with using payday 

4 loans, vehicle title loans, and other 

5 similar loans, and states the basis for 

6 why the Bureau has determined that 

7 the State or federally recognized In8 dian tribe is incapable of such protec9 tion. 

10 ‘‘(B) WAIVER FOR STATE AND TRIBAL

11 GOVERNMENTS.— 

12 ‘‘(i) IN GENERAL.—With respect to a 

13 final rule or regulation issued by the Bu14 reau to regulate payday loans, vehicle title 

15 loans, or other similar loans, if a State or 

16 a federally recognized Indian tribe re17 quests, in writing, for the Bureau to pro18 vide the State or tribe with a waiver from 

19 such rule or regulation, the Director shall 

20 grant a 5-year waiver to such State or 

21 tribe, during which such rule or regulation 

22 shall not apply within such State or land 

23 held in trust for the benefit of such feder24 ally recognized Indian tribe. 


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1 ‘‘(ii) RIGHT TO RENEW WAIVER.—A 

2 State or federally recognized Indian tribe 

3 granted a waiver under clause (i) shall 

4 have the right to renew such waiver at the 

5 end of each 5-year waiver period.’’. 

Æ 


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