Trade group loses bid to block PACE rules

A federal judge has defeated a trade group's bid to stop tighter lending rules for clean energy loans, overriding protests that the move would hike costs and diminish demand. 

The ruling on summary judgment this week by U.S. District Judge Tom Barber, in favor of the government, means administrators with the Property Assessed Clean Energy (PACE) program will have to follow the same regulations mortgage lenders adhere to. The program allows homeowners to pay for improvements like storm hardening and solar panels via future property tax assessments. 

The rules promulgated by the Consumer Financial Protection Bureau will go into effect March 1. The Building Resilient Infrastructure and Developing Greater Equity (BRIDGE) trade group previously argued that PACE administrators would incur significant costs in hiring experts and upgrading technology to adhere to new compliance standards. Those changes, they said, could result in significant funding reductions. 

Lawmakers have sought to add protections for the loans since 2017, and the CFPB issued a final rule in early 2025, applying certain provisions like the Truth in Lending Act to PACE loans. BRIDGE sued the bureau last year, arguing it exceeded its authority, and the Trump administration moved to defend the rules originally pushed forward by Capitol Hill Republicans.

A Florida federal court rejected BRIDGE's push for a preliminary injunction last November, a ruling the trade group appealed. 

Neither attorneys for BRIDGE nor the CFPB responded to requests for comment Friday. 

Why the judge sided with feds

Under the program, a PACE administrator forwards funds to contractors for home improvement projects, and the homeowner repays through a tax assessment against the property in a 5-to-30 year term. The loan, a super-priority lien, is underwritten based on the property's characteristics and equity, rather than a borrower's credit score.

Homeowners don't have to pay upfront, out-of-pocket costs, and PACE administrators provide them written estimates and disclosures. The CFPB, in determining that PACE financing is credit, will enforce additional lending regulations on those originators, which means they'll also have to be licensed. 

In a lengthy legal analysis, Barber sided with feds on four arguments, chiefly that the loans are considered consumer credit, and that the bureau did consider PACE loans' unique characteristics in developing its rule.

The Administrative Procedures Act complaint also challenged the regulator's reliance on a 2023 report, which found PACE borrowers had a slightly higher delinquency rate than those that didn't take out the loans. While plaintiffs argued the report was flawed, Judge Barber wrote that the CFPB's analysis was reasonable, not arbitrary or capricious. 

Thursday's ruling also rejected a 10th Amendment challenge that the new rule abridged states' rights, concerning the program's property tax assessments. Barber also said he lacked the authority to review an argument over the bureau's failure to convene a small business review.

While the judge declared a final judgment and to close the Florida case, BRIDGE's appeal to the preliminary injunction ruling remains pending in the 11th Circuit Court of Appeals.

Nineteen states and Washington, D.C. have statutes allowing for PACE programs, although only a few states have active programs. Existing programs in California and Florida also already have some enhanced borrower protections.