On January 23, 2025, in the Texas Top Cop Shop case, the U.S. Supreme Court granted the application of the U.S. Secretary of the Treasury to terminate the nationwide preliminary injunction (also known as universal injunctive relief) that had temporarily stopped FINCEN from enforcing its Beneficial Ownership Interest (BOI) reporting requirements under the Corporate Transparency Act (CTA) that was passed by Congress in 2021. This is purely a procedural ruling that goes to whether a U.S. District Court may enter an 11th-hour order stopping the enforcement of an Act of Congress.
The ruling does not go to the underlying merits of the contest of the statute (namely, whether the CTA is a lawful exercise of Congress’ powers under the Commerce Clause of the U.S. Constitution). In English, the Court is basically saying that the CTA will go forward as if no preliminary injunction had been entered ― meaning that the FINCEN reporting requirements are now back in effect ― and the Supreme Court will later take up the case, if at all, in the ordinary course of appeals from the U.S. Fifth Circuit.
The text of the order is short and follows a common form for such orders, which is to say that the order does not give any inkling of the Justices’ reasoning behind the order. More on that below, but for the time being the order reads simply:
“The application for stay presented to JUSTICE ALITO and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24–cv–478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought. Should certiorari be denied, this stay shall terminate automatically. In the event certiorari is granted, the stay shall terminate upon the sending down of the judgment of this Court.”
Simple order, simple result. Just to keep things interesting, however, we are provided with a couple of tea leaves by Justices Gorsuch and Jackson:
“JUSTICE GORSUCH, concurring in the grant of stay. I agree with the Court that the government is entitled to a stay of the district court’s universal injunction. I would, however, go a step further and, as the government suggests, take this case now to resolve definitively the question whether a district court may issue universal injunctive relief.”
JUSTICE JACKSON, dissenting from the grant of stay. However likely the Government’s success on the merits may be, in my view, emergency relief is not appropriate because the applicant has failed to demonstrate sufficient exigency to justify our intervention. * * * First, the Fifth Circuit has expedited its consideration of the Government’s appeal. Second, the Government deferred implementation on its own accord—setting an enforcement date of nearly four years after Congress enacted the law—despite the fact that the harms it now says warrant our involvement were likely to occur during that period. The Government has provided no indication that injury of a more serious or significant nature would result if the Act’s implementation is further delayed while the litigation proceeds in the lower courts. I would therefore deny the application and permit the appellate process to run its course.”
To understand all this, one must appreciate that there are fundamentally two major issues before the Supreme Court. One of these issues is substantive, being the issue of whether the CTA is a permissible exercise by Congress of its powers under the Commerce Clause. Here, the Court is telling us that this particular issue can wait for resolution until much later, probably at least a year and maybe several, after the issue has percolated its way up through the lower courts in the usual course for such statutory challenges.
The other issue is the more immediate: Whether a U.S. District Court can issue an 11th-hour nationwide preliminary injunction that stops an Act of Congress which, as here, creates an absolute mess for both those trying to enforce the statute and those trying to comply with it. The Supreme Court struggled with this issue last year in a case known as Labrador v. Poe (April 15, 2024), which you can read here. In Labrador, there were at least three factions of the Supreme Court which took very different views of universal injunctive relief (and maybe a fourth view, as Justice Kagan did not express her view in a written opinion).
At least for the moment, a majority of Justices are telling us that such nationwide preliminary injunctions are disfavored and should not be issued by the lower courts, by way of staying the preliminary injunction issued against the enforcement of the CTA. As an aside, I think that this ruling will also take care of similar preliminary injunctions issued by other courts against the enforcement of the CTA, such as in Smith v. U.S. Dept. of the Treasury, 2025 WL 41924 (E.D.Tx., Jan. 7, 2025), although the Treasury Department may have to ask for a rehearing or appeal that order to the U.S. Fifth Circuit (which should immediately nullify the injunction as a matter of course after the Supreme Court’s ruling in Texas Top Cop Shop).
The bottom line is that the preliminary injunctions against the enforcement of the CTA have failed at the Supreme Court level, which means that the path is now clear for the Treasury Department to enforce the CTA by way of the FINCEN BOI reporting requirements. So, what does that mean? The national guru of all things CTA and BOI (if not LLC law generally), being Tom Rutledge of Stoll Keenon Ogden in Louisville, Kentucky, writes me:
“This decision of the Supreme Court ‘changes the shape of the table,’ but it is going to take time to fully determine how. Outstanding questions include its effect on the nationwide injunction issued in the Smith case and when and whether FinCEN will issue guidance on filing deadlines for companies pre-existing January 1, 2024. There is as well the long-anticipated decision of the 11th Circuit in National Small Business United.”
As far as FINCEN goes, my guess is that the FINCEN website will very shortly be updated to indicate that the BOI reports that should have been filed by January 1, 2025, will now be due on some future date, being anywhere from two weeks to 30 days out. If I were in charge on this process, I would probably set the time out 60 days, to March 31, 2025, to give Treasury’s attorneys time to get rid of the nationwide injunctions entered in other cases, and also so that filers who thought that they would never have to file can get their stuff together.
Another issue goes to what the Trump Administration might do in regard to the BOI reporting requirement. While the CTA is an Act of Congress that would have to be repealed (and it was originally passed with veto-proof majorities), the implementation of the CTA by Treasury can theoretically be delayed by executive action. Will this happen? On the one hand are folks who look at the BOI filing are more the unnecessary government regulation that the Trump Administration likes to be seen as fighting. On the other hand are the folks who point out that the first Trump Administration sent a letter to Congress supporting the passage of the CTA. The bottom line here is that nobody has any idea what the Trump Administration might do with regard to BOI reporting.
Where does all this leave everyone? In the absence of some action by the Trump Administration, everybody had better be prepared to make their BOI reports pretty quickly now.
Stay tuned.