Gibson Dunn is proud to launch an Immigration Task Force, which will bring together the firm’s expertise in humanitarian immigration law, employment law, appellate and constitutional law, and administrative law and policy.
One primary goal of the Immigration Task Force will be to provide our clients with timely, thoughtful updates on immigration developments, including newly issued executive orders, court decisions, and other developments across both the business and humanitarian immigration sectors.
This work will, of course, dovetail with our robust pro bono immigration practice, which has long stood for the belief that lawyers have a responsibility to promote safety, freedom, and justice for those seeking refuge from persecution, safety from physical and sexual violence, and the chance to build a better life. In the past, that practice has included representing Dreamers at the Supreme Court, mobilizing firmwide efforts to assist Afghans seeking safety from the Taliban, and assisting vulnerable child migrants obtain legal status. You can learn more about our pro bono immigration practice here.
We are closely monitoring developments in the area and will prepare regular updates to help our clients, nonprofit partners, and our larger community navigate a rapidly evolving landscape. The first of these updates appears below.
Should you have any questions about developments in this space, including how changes might impact your workforce or your community, please do not hesitate to reach out to any member of our Immigration Task Force, listed below.
Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)
Naima L. Farrell – Partner, Labor & Employment Practice Group,
Washington, D.C. (+1 202.887.3559, nfarrell@gibsondunn.com)
Nancy Hart – Partner, Litigation Practice Group,
New York (+1 212.351.3897, nhart@gibsondunn.com)
Katie Marquart – Partner & Chair, Pro Bono Practice Group,
Los Angeles (+1 213.229.7475, kmarquart@gibsondunn.com)
Laura Raposo – Associate General Counsel, Gibson Dunn,
New York (+1 212.351.5341, lraposo@gibsondunn.com)
Matthew S. Rozen – Partner, Appellate & Constitutional Law Practice Group,
Washington, D.C. (+1 202.887.3596, mrozen@gibsondunn.com)
Ariana Sañudo – Associate, Pro Bono Practice Group,
Los Angeles (+1 213.229.7137, asanudo@gibsondunn.com)
Betty X. Yang – Partner & Co-Chair, Trials Practice Group,
Dallas (+1 214.698.3226, byang@gibsondunn.com)
Immigration Updates: One Week After Inauguration
Immigration and border security, which were central themes of Donald Trump’s 2024 presidential campaign, have been clear priorities during the first days of his new administration.[1] Within hours of taking office, President Trump signed numerous executive orders (EOs) and other similar documents addressing various aspects of immigration enforcement and border security.[2] EOs—official documents through which the President directs and manages the federal government’s operations—have become a frequently-used tool enabling presidents to change government policy in the early days of a new administration with immediate effect. Several of President Trump’s day-one EOs will have far-reaching implications for immigrants in the United States, refugees seeking safety in the United States, mixed-status families across the country.
Although the EOs issued so far do not directly address non-immigrant employment-based visas (like H1-Bs), some provisions may be relevant to the visa process generally or have other indirect effects on non-immigrants with employment-based visas. For example, certain EOs seem to impose enforcement cooperation requirements on individuals or companies who interact with noncitizens; others impose broad new requirements on all aliens seeking to enter the country, even nonimmigrants on temporary visas. The impact of many of those orders will only be magnified by other EOs, new agency rules, and legislative actions anticipated for the coming weeks and months
While the immigration enforcement landscape is rapidly evolving, this Client Alert provides an overview of certain noteworthy recent developments. Section I analyzes recent EOs (1) restricting U.S. citizenship; (2) imposing changes to border enforcement; (3) increasing immigration detention and removal of noncitizens; and (4) suspending refugee admissions. Section II provides an overview of recent guidance and directives issued by federal agencies that oversee and interact with the immigration system under President Trump. Section III details the Laken Riley Act, a measure increasing immigration detention that is soon expected to be signed into law. Finally, Section IV provides an update regarding a court challenge to the Deferred Action for Childhood Arrivals (DACA) program.
I. Executive Orders
1. Citizenship
“Protecting the Meaning and Value of American Citizenship”[3]
This EO declares that an individual born in the United States is not a citizen if, at the time of their birth, (1) their mother is “unlawfully present” or (2) their mother’s presence is “lawful but temporary,” if in either circumstances their father is not a U.S. citizen or lawful permanent resident. The EO applies to any child born after thirty days from its issuance on January 20, 2025.[4] The EO posits that the Citizenship Clause of the Fourteenth Amendment to the U.S. Constitution (“Citizenship Clause”) was not meant to extend “universally to everyone born” in the United States, and that it has “always excluded from birthright citizenship persons who were born in the United States but not ‘subject to the jurisdiction thereof.’”[5] The EO then asserts that “[a]mong the categories of individuals born in the United States and not subject to the jurisdiction thereof” are the two described above.
This reading of the Citizenship Clause is contrary to longstanding legal, social, and historical precedent on the issue; the Constitution has long been interpreted in law and policy to guarantee citizenship to those born on American soil regardless of race, creed or class.[6] By way of background, the Citizenship Clause was born out of the Reconstruction Era following the Civil War and the end of slavery, guaranteeing the citizenship of all persons born in the United States.[7] This guarantee was clarified in United States v. Wong Kim Ark, a landmark 1898 Supreme Court case that confirmed the Citizenship Clause extended to children born in the United States to noncitizen parents – the exact population targeted by this EO.[8] Wong Kim Ark excluded children born in the United States to foreign diplomats from the Citizenship Clause, establishing the paradigmatic class of persons “not subject to the jurisdiction” of the United States.[9] Individuals who are “not fully subject to the sovereign authority of the United States,” better understood as those that “enjoy[] common law immunity from local law,” would be excluded from the automatic guarantees of the Citizenship Clause.[10]
This longstanding interpretation of the Citizenship Clause has not been without its opponents. Several (unsuccessful) legislative efforts at narrowing the “subject to the jurisdiction” requirement have been made over the years.[11] The issue of birthright citizenship has not been directly taken up by the Supreme Court in the past 125 years, but conservative judges on lower appellate courts have indirectly opined on the issue.[12] Further, there is a body of legal scholars who have long argued that the Citizenship Clause’s guarantee of birthright citizenship lacks legitimacy.[13]
On January 20, the same day the EO was issued, the American Civil Liberties Union (ACLU) and other immigration nonprofits filed a lawsuit against the Trump Administration, arguing that the order violates the Citizenship Clause and other statutory provisions.[14] Relying on Supreme Court precedent, the ACLU seeks an injunction against the order, asking for the continued protection of “America’s most fundamental promise.”[15] The following day, on January 21, eighteen states similarly filed suit against the Trump Administration.[16] That complaint details the longstanding history of the right of citizenship to all persons born in the United States, arguing that there are no other exceptions in the Citizenship Clause besides limited exclusions to those “not fully subject to United States law.”[17] The complaint also alleges that President Trump acted outside of his authority because a president’s power to set immigration policy does not extend to the actions detailed in the order.[18] On the same day, four additional states brought a separate lawsuit in a different jurisdiction.[19] In establishing that the EO will cause “immediate and irreparable harm,” the complaint discloses that in 2022, approximately 153,000 children were born in the United States to two undocumented parents.[20] Both suits are seeking a preliminary injunction to block the order before it is implemented. Last week, other immigrants-rights organizations also filed similar suits seeking an injunction against the order.[21]
On January 23, a federal judge in Seattle, Washington presiding over the four-state suit granted a temporary restraining order against the implantation of order, calling it “blatantly unconstitutional.”[22] The order will remain in effect for fourteen days and applies nationally.
Notably, other EOs issued on the same day are based on the premise that this category of individuals – noncitizens, including those born on United States soil – are, in fact, subject to the jurisdiction of the United States. For example, one other EO issued the same day requires noncitizens to register and present their fingerprints to the U.S. government[23]; another subjects them to the death penalty for qualifying offenses.[24]
2. Border Enforcement
In his inaugural address, President Trump stated that the U.S. government “fails to protect our magnificent, law-abiding American citizens but provides sanctuary and protection for dangerous criminals, many from prisons and mental institutions, that have illegally entered our country from all over the world.”[25] He went on to say that “all illegal entry will immediately be halted, and we will begin the process of returning millions and millions of criminal aliens back to the places from which they came.”[26] Immediately following his inauguration, President Trump issued several presidential actions with stated goals of repelling “invasions” of migrants at the country’s borders, expanding funding and power for border security, and increasing militarization at the southern border space overlap significantly and provide related, similar, or identical directives. Certain pertinent directives are outlined below.
“Declaring a National Emergency at the Southern Border of the United States; “Clarifying the Military’s Role in Protecting the Territorial Integrity of the United States”
Invoking Sections 201 and 301 of the National Emergencies Act (50 U.S.C. 1601 et seq.), the first of these presidential actions is a proclamation that “declare[s] that a national emergency exists at the southern border of the United States [27] This proclamation reinstated the national emergency President Trump declared in his first term and rescinded the Biden Administration EO that terminated that earlier emergency.[28] In February 2019, President Trump declared a national emergency at the southern border as a way to direct the construction of a border wall.[29] That declaration faced legal challenges on the basis that using the National Emergencies Act without a true emergency was a contravention of Congress’s will.[30] Because crossings at the southern border have fallen dramatically in the last year,[31] similar challenges are likely here, although historically presidents have received substantial deference in the definitions of national emergencies.
The emergency declaration and a second EO, “Clarifying the Military’s Role in Protecting the Territorial Integrity of the United States,” direct an expansion of the military’s role in border enforcement. The national emergency declaration (1) directs the Secretary of Defense to order members of the U.S. military to support the Secretary of Homeland Security’s efforts at the southern border, including by providing detention space and transportation and logistical support; (2) directs the Secretaries of Defense and Homeland Security to construct additional physical barriers along the southern border; and (3) directs the Secretaries of Defense and Homeland Security, in consultation with the Attorney General, to prioritize the impedance and denial of unauthorized entry at the southern border.[32] The proclamation directs the U.S. military that 10 U.S.C. Section 12302 (the Ready Reserve provision) and 10 U.S.C. Section 2808 (the emergency military construction provision), are both in effect.[33]
Further, it is notable that this proclamation does not mandate the construction of a “border wall,” but rather “additional physical barriers” at the border. During the first Trump administration, Congress passed a funding bill specifically to construct a 55-mile-long border wall;[34] no such legislation is currently in effect.
In the “Clarifying the Military’s Role” EO, President Trump ordered that, within 10 days of its effective date, the Secretary of Defense will assign U.S. Northern Command[35] “the mission to seal the borders and maintain the sovereignty, territorial integrity, and security of the United States by repelling forms of invasion including unlawful mass migration, narcotics trafficking, human smuggling and trafficking, and other criminal activities.”[36] The EO further directs that several requirements be added to the Contingency Planning Guidance and Guidance for the Employment of the Force, including (1) a requirement to “seal the borders . . . by repelling forms of invasion, including unlawful mass migration”; (2) a requirement “to provide steady-state southern border security”; and (3) “[c]ontinuous assessments of all available options” to further the purpose of the order.[37]
Active-duty military had already been used in support functions at the border during previous administrations, including during the Biden administration,[38] but this executive order appears to contemplate expanding the military’s presence and role in border security in a way, and to a degree, not previously seen. On January 22, the Department of Defense (DOD) announced a deployment of 1,500 troops to the southern border, in addition to the 2,500 troops already at the borders.[39] DOD anticipates executing additional missions to the border, following an internal Customs and Border Protection announcement to dispatch around 10,000 troops.[40] DOD also announced that it will provide airlift support for the deportation of over 5,000 individuals detained by CBP in California and Texas.[41]
During the first Trump administration, the Department of Justice’s (DOJ) Office of Legal Counsel (OLC) issued an opinion concluding that DHS’s request that DOD perform various duties to support Customs & Border Protection at the southern border was permitted.[42] The OLC opinion found that several specific requests for DOD to support DHS efforts at the border[43] did not violate the Posse Comitatus Act, which “generally prohibits the use of the military to engage in civilian law enforcement activities,” or DOD regulations.[44] It is unclear whether the OLC will sanction additional activities resulting from these new orders, which appear to be broader on their face than that at issue during the first Trump administration.
“Securing Our Borders”
The stated goal of the EO titled “Securing Our Borders”[45] is to “marshal all available resources and authorities to stop [an] unprecedented flood of illegal aliens into the United States.” This EO provides less detailed operational guidance than others, and it includes some elements discussed elsewhere in this alert (and outlined in other overlapping orders)—notably directing the Secretary of Defense and the Secretary of Homeland Security to build “temporary and permanent physical barriers” on the border (though as noted above, not explicitly to build a “wall” along the entire border); and directing those secretaries to “deploy sufficient personnel along the southern border of the United States to ensure complete operational control.”[46] The “Securing Our Borders” EO does include several additional directions. It (1) commands the Secretary of Homeland Security to detain individuals violating immigration laws “to the fullest extent permitted by law,” including the prompt removal of aliens who enter or remain in the United States in violation of federal law and by terminating “the practice commonly known as ‘catch-and-release,’” where individuals in immigration detention may be released on bond as they await immigration court proceedings; (2) orders enforcement actions against those who are in the United States unlawfully and those who “facilitate their unlawful presence in the United States”; and (3) requires migrants and asylum-seekers to “remain in Mexico” as they await adjudication of their cases.[47]
The latter of these steps was accomplished through rescinding a Biden-era EO and revamping the first Trump administration’s Migrant Protection Protocols (‘MPP’),[48] a program that went into effect in January 2019 and resulted in sending nearly 70,000 migrants back to Mexico in its first wave (creating massive logistical issues and exacerbating human rights violations and violence at the border).[49] The reinstatement of MPP will again require border officials to instruct migrants seeking asylum to wait in Mexico for their hearings in immigration court. MPP requires the cooperation of the government of Mexico; on January 22, Mexico’s president Claudia Sheinbaum stated that Mexico had not agreed to accept non-Mexican migrants.[50] She clarified that Mexico was prepared to offer some forms of humanitarian aid to migrants of other nationalities as well as voluntary repatriation.
Finally, this EO includes a requirement of full cooperation with immigration enforcement – presumably including by companies and their representatives. While it is presently unclear how and to what extent this EO will be implemented in the corporate sphere, it appears to open the door to require companies to participate in enforcement actions against noncitizens by the federal government.
“Guaranteeing the States Protection Against Invasion”
In this far-reaching proclamation, President Trump “determined that the current situation at the southern border qualifies as an invasion under Article IV, Section 4 of the Constitution” and “suspend[ed] the physical entry of aliens involved in an invasion into the United States across the southern border until I determine that the invasion has concluded.”[51] This proclamation disallows migrants from “invoking provisions of the [Immigrant and Nationality Act] that would permit their continued presence in the United States.”[52]
President Trump grounds his authority for this proclamation in Article IV of the Constitution, which guarantees that the federal government will protect the States from “invasion,” and the president’s Article II power over foreign affairs (as well as section 212(f) of the Immigration and Nationality Act, which allows a president to “suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.”[53] Thus, the combination of these powers, according to the proclamation, allows President Trump to declare that there is an active “invasion” against the states at the southern border, and gives him the “ability to prevent the physical entry of aliens involved in an invasion into the United States, and to rapidly repatriate them to an alternative location.”[54]
Notably, the President seems to recognize in the proclamation that many of the directives in this (and other) orders arguably conflict with the language of the INA, setting up a direct conflict between statutes and the President’s constitutional authority. The President noted that Congress “created a complex and comprehensive Federal scheme” in the INA. He argued that “[i]n routine circumstances, this complex and comprehensive scheme can protect the national sovereignty of the United States by facilitating the admission of individuals whose presence serves the a national interest and preventing the admission of those who do not,” but that “screening under those provisions can be wholly ineffective in the border environment” and “[t]he sheer number of aliens entering the United States has overwhelmed the system and rendered many of the INA’s provisions ineffective.” While “[t]he INA provides the President with certain emergency tools,” the statute “does not, however, occupy the Federal Government’s field of authority to protect the sovereignty of the United States, particularly in times of emergency when entire provisions of the INA are rendered ineffective by operational constraints, such as when there is an ongoing invasion into the United States.” These robust assertions of inherent constitutional authority to override provisions of statute are reminiscent of earlier debates about the scope of the President’s authority vis-à-vis Congress in foreign affairs and as Commander in Chief.[55]
President Trump previously relied on section 212(f) in his first term to ban travelers from seven predominantly Muslim countries from entering the United States—this faced numerous court challenges, but the Supreme Court ultimately upheld his ban.[56] While he has not yet issued another “travel ban,” he has signed an EO requiring the “enhance[d] vetting and screening of illegal aliens.”[57] It is possible that this could presage an upcoming travel ban for individuals from certain countries to be issued in the near future.
More broadly, this proclamation relies on sections 212(f) and 215(a) of the INA to require noncitizens who enter the country to provide sufficient and verifiable documentation of medical and criminal history “as to enable fulfillment of the requirements of sections 212(a)(1)-(3) of the INA” before being granted such permission.[58] President Trump reasoned that “the Federal Government currently lacks an effective operational capacity to screen all illegal aliens crossing the southern border for communicable diseases of public-health concern” and “[a]s a result, innumerable aliens potentially carrying communicable diseases of public health significance illegally cross the southern border and enter communities across the United States.”[59] Notwithstanding the rationale outlined in the preamble, however, the proclamation is not limited to noncitizens entering through the southern border and may therefore impose additional medical and criminal background check requirements on those entering the United States even on non-immigrant visas and via different ports of entry. This may result in processing delays for noncitizen travel to the United States.
This provision may connect back to President Trump’s first term where he sought to limit entry and remove migrants under 42 U.S.C. §§ 265 and 268 (Title 42) during the COVID-19 pandemic.[60] Relying on the rationale that crowded ports of entry could lead to the spread of COVID-19 and the entrance of migrants into the country could have exacerbated the pandemic, the Trump Administration recommended that Title 42 be invoked and enforced to disallow migrants from entering the country and remove those without legal status, suspending migrants’ right to seek asylum at this time.[61] The decision to prohibit entry under Title 42 continued under President Biden[62]; under both administrations, it was criticized as both ineffective from a public health perspective and counterproductive from a border security perspective.[63] Nevertheless, this proclamation seeks to continue to appeal to public health concerns in deciding to impose additional burdens on those seeking to enter the United States.
Later on the same day he issued the EOs and proclamations, President Trump’s administration started the process of implementing these directives. Within hours of his inauguration, for example, U.S. border authorities shut down the CBP One mobile application.[64] CBP One is a Biden-era program that allowed migrants to submit advance information and schedule appointments to seek lawful entry into the United States, allowing them to assert claims for asylum or other forms of relief authorized under international and national law at designated ports of entry.[65] Prior to June 2023, the program granted appointments to 1,000 migrants per day and, since then, 1,450 migrants were granted appointments daily.[66] On January 20, 2025, however, a notice on the CBP website stated that the application is no longer available and that existing appointments made through the application have been cancelled.[67] In practice, the shutdown of the CBP One system has effectively shut off asylum access at the southern border entirely, including for families who have been waiting for months for their chance to get to safety in the United States.
In response, the ACLU, which has been litigating a case since the Biden administration (Las Americas Immigrant Advocacy et al. v. U.S. Dep’t of Homeland Sec. et al.) moved for an emergency status conference to address the abrupt cancellation of the CBP One mobile application and program.[68] The original suit challenged the Biden administration’s mandatory usage of the CBP One app to apply for asylum, alleging that it was violating 8 U.S.C. § 1158(a)(1) which provides any noncitizen who arrives in the United States the right to seek asylum, whether or not they enter through a designated point of entry.[69] However, now with the complete elimination of the CBP One app and the suspension of entry through the border altogether, the ACLU argues in its motion for an emergency hearing that “the right to seek asylum at the border no longer exists, no matter how great the danger faced by migrants, including families with children.”[70] It also argues that such a result is a further violation of 8 U.S.C. § 1158(a)(1) because now no one can seek asylum at the border, through the app or otherwise.
3. Detention and Removal of Noncitizens, and Other Enforcement Actions
“Protecting the American People Against Invasion”
Similar to other orders described in this alert, this order’s preamble recites claims of danger to native-born U.S. citizens by “criminal aliens” and of the ills of continued strain on government resources posed by noncitizens’ presence in the country.[71] This sweeping order contains numerous provisions that will impact the logistical and legal frameworks for processing and evaluating migrants’ claims for immigration relief. Certain of the key sections of this EO are outlined here:
- Section 2: This section includes a policy statement that immigration laws should be enforced against “all inadmissible and removable aliens, particularly those aliens who threaten the safety or security of the American people” and that “it is the policy of the United States to achieve the total and efficient enforcement of those laws.”[72]
- Section 4: This section calls on DHS to set enforcement priorities—presumably in recognition of the fact that the government lacks the resources to carry out the policies outlined in Section 2.[73] In fact, the Supreme Court recognized in United States v. Texas (2023) that “the Executive Branch does not possess the resources necessary to arrest or remove all of the noncitizens covered by” arrest and removal statutes, and “[f]or the last 27 years . . . all five Presidential administrations have determined that resource constraints necessitated prioritization in making immigration arrests.”[74]
- Section 6: This section directs the Secretary of Homeland Security and the Attorney General to create Homeland Security Task Forces (HSTFs), comprised of representatives from various law enforcement agencies, in all States nationwide.[75] The purpose of these task forces is to address crimes associated with immigration and execute immigration laws. The announcement of these task forces follows models used in other areas by other agencies, and, as discussed further in Section II below, DOJ has instructed that FBI Joint Terrorism Task Forces will be used to fill this mandate until the HSTFs are established.[77] Companies who employ noncitizens or individuals with temporary work authorization may want to consider preparing for enforcement actions by these task forces (such as workplace raids), including by establishing action plans, points of contact, and trainings for management-level employees.
- Sections 7 and 8: These sections impose requirements that certain noncitizens register their presence with the U.S. government or risk prioritized enforcement actions against them or the levying of fines and penalties.[78] This is arguably analogous to the post-9/11 National Security Entry Exit Registration System program which, for many years, also required registration of certain people present in the United States, mostly those from Muslim and Arab-majority nations.[79] That program was ended in 2016 following findings of its ineffectual nature and unlawful racial profiling.[80] A registration requirement that applies to all noncitizens without regard to nationality may avoid such concerns.
- Section 9: This section requires the increased usage of expedited removal procedures whereby certain noncitizens are quickly removed from the country without ever seeing a judge or being permitted to raise claims for relief in a court.[81] Before this EO, expedited removal was only available to individuals who crossed a land border if they were apprehended within 14 days of their arrival in the country within 100 miles of the border; now, this is available anywhere in the country against any undocumented individual who cannot prove they have been in the United States for at least two years before apprehension.[82] On January 22, 2025, an immigrant advocacy group called Make the Road New York filed a lawsuit claiming that this expansion of expedited removal violates the Fifth Amendment’s Due Process Clause, the INA, and the Administrative Procedure Act.[83]
- Section 10: This section reflects the stated policy of the Trump administration that all migrants be detained pending resolution of their removal proceedings (although, as reflected elsewhere, this is currently an impossibility based on existing detention facility capacity).[84]
- Section 11: This section expands the use of the 287(g) program, named for the section of the INA that allows DHS to enter into written agreements with state or local law enforcement agencies to deputize selected law enforcement officers to perform functions of federal immigration agents.[85] This program existed before the Trump administration; as of December 2024, ICE had 287(g) agreements with 135 state or local law enforcement agencies across 21 states, but we can expect those numbers to increase.[86]
- Section 16: Indirectly, this section calls for limiting grants of humanitarian parole, Temporary Protected Status (TPS), and employment authorization to existing statutory requirements.[87] From context, this appears to be based on the assumption that the Biden administration did not comply with statutory requirements when granting these forms of relief to noncitizens.[88] It is unclear how this will be specifically enforced in practice; however, it does signal the Trump administration’s general intent to restrict the usage of these mechanisms.
- Section 17: This section seems to broadly curtail the disbursement of all federal funds to so-called “sanctuary jurisdictions” (a nonlegal term generally referring to a policy that limits the extent to which a local or state government will share information with federal immigration law officers).[89] During the first Trump administration, following a similar order, then-Attorney General Jeff Sessions narrowed the funds at issue to DOJ and DHS funds only, rather than all federal funds.[90] It remains to be seen whether a similar narrowing will take place here.
- Section 19: In addition to the enforcement tactics directly targeted against immigrants in the United States, the order seeks to remove resources that support those individuals via ancillary resource curtailing. For example, this section directs DHS and the Office of Management and Budget (OMB) to review/audit funding to non-government organizations supporting or providing services to noncitizens and pause distribution of further funds to those organizations until the review is complete.[91]
- Section 20: Relatedly, this section requires the OMB to take action to stop agencies from making public benefits available to noncitizens who are not authorized by statute to receive them.[92]
“Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists”
This order declares a national emergency to deal with the “extraordinary threat to the national security, foreign policy, and economy of the United States” that drug cartels and other similar organizations pose.[93] Although the order does not itself designate these organizations as terrorist organizations, it “creates a process” to designate cartels and other organized criminal organizations, such as Tren de Aragua and MS-13, as terrorist organizations.[94] Foreign Terrorist Organization (FTO) status and Specially Designated Global Terrorist (SDGT) status have serious consequences. Among other things, FTO and SDGT members are not admissible to the United States, persons subject to U.S. jurisdiction face criminal liability for knowingly providing FTOs “material support or resources,” and there are certain private rights of action against FTOs.[95]
The order does not specify the intended consequences of the terrorist designations in the immigration context, but such designations could present an obstacle for asylum-seekers and others who enter the United States through the southern border, as individuals often pay money to a cartel at some point in their journey to the United States, because cartels have cornered the migrant-smuggling market. Anyone who pays a designated organization, even just to secure their own safe passage to the United States, may be found to have “engaged in terrorist activity” by providing “material support” (including money) to a “terrorist organization,” thereby making them inadmissible to the United States.[96]
“Restoring the Death Penalty and Protecting Public Safety”
This EO requires the Attorney General to “seek the death penalty regardless of other factors” for every federal capital crime involving a “capital crime committed by an alien illegally present in this country.”[97] The Attorney General is also directed to take all necessary actions to encourage state attorneys general and district attorneys to pursue the death penalty with the same intensity.[98]
4. Refugee Admissions
“Realigning The United States Refugee Admissions Program”
The US Refugee Admissions Program (USRAP) is a program managed by the Department of State, Department of Homeland Security, and Department of Health and Human Services by which refugees registered with the United Nations High Commissioner for Refugees (UNHCR) are resettled in the United States.[99] The number of refugees admitted each year through USRAP is decided by the President in consultation with Congress.[100] In the 2024 fiscal year, around 100,000 refugees resettled in the United States, the most in nearly three decades. A hallmark of the refugee admissions process is the extensive vetting that these individuals receive before being approved to relocate to the United States – they can enter the country only after receiving a referral from a government agency or U.S.-based NGO and passing serious security screenings.
EO’s purpose section states: “The United States lacks the ability to absorb large numbers of migrants, and in particular, refugees, into its communities in a manner that does not compromise the availability of resources for Americans, that protects their safety and security, and that ensures the appropriate assimilation of refugees.”[101] The order therefore “direct[s] that entry into the United States of refugees under the [United States Refugee Admissions Program (USRAP)] be suspended” beginning at 12:01am EST on January 27, 2025.[102] The order provides for very limited, small-scale exceptions, whereby “the Secretary of State and the Secretary of Homeland Security may jointly determine to admit aliens to the United States as refugees on a case-by-case basis, in their discretion, but only so long as they determine that the entry of such aliens as refugees is in the national interest and does not pose a threat to the security or welfare of the United States.”[103] The order also requires the Secretary of Homeland Security to suspend decisions on applications for refugee status until the program is resumed.[104]
The EO also directs the Secretary of Homeland Security to “examine existing law to determine the extent to which, consistent with applicable law, state and local jurisdictions may have greater involvement in the process of determining the placement or resettlement of refugees in their jurisdictions, and shall devise a proposal to lawfully promote such involvement.”[105] It also requires the Secretary of Homeland Security and the Secretary of State to, within 90 days of the order, “submit a report to the President through the Homeland Security Advisor regarding whether resumption of entry of refugees into the United States under the USRAP would be in the interests of the United States, in light of the policies outlined in section 2 of this order.”[106] It further requires additional reports of the same nature “every 90 days thereafter until [President Trump] determine[s] that resumption of the USRAP is in the interests of the United States.”[107]
II. Agency Guidance
1. Department of Homeland Security
In the first week of the administration, President Trump’s Acting Department of Homeland Security Secretary Benjamine Huffman issued two notable directives.
The first rescinds the Biden-era Sensitive Locations Memorandum, a policy of that administration’s DHS instructing Immigrations and Customs Enforcement and Border Patrol agents to not arrest undocumented individuals at or near various sensitive locations where people access “essential services” or engage in “essential activities” – including schools, places of worship, healthcare facilities, shelters, and public demonstrations.[108] The now-defunct policy was first adopted in 2011 and later expanded in 2021 by the Biden Administration. Currently, organizations who operate or facilitate attendance at these sorts of locations (including schools and hospitals) should be prepared for the strong possibility of increased enforcement activity. It is unclear whether an earlier version of sensitive location guidance will be reinstated or whether DHS will have free rein to engage in enforcement activity regardless of location. Note that various state and local governments (including the so-called “sanctuary jurisdictions” mentioned above) may provide their own versions of sensitive location protection.
The other DHS directive implements one of the EO’s mandates to rescind categorical eligibility for humanitarian parole for nationals of certain countries, requiring case-by-case assessment for all humanitarian parole applications (which is already the case for the vast majority of those applications).[110] The order specifically ends categorical parole for Cubans, Haitians, Nicaraguans, and Venezuelans.[111] It is not clear whether parole will be revoked for current parolees.
2. Immigration and Customs Enforcement
The guidance supersedes a 2021 Biden Administration memorandum that limited immigration enforcement actions in or near courthouses, on the basis that such actions have “a chilling effect on individuals’ willingness to come to court or work cooperatively with law enforcement.”[113] The new guidance authorizes enforcement actions in or near courthouses when agents “have credible information that leads them to believe the targeted alien(s) is or will be present at a specific location, and where such action is not precluded by laws imposed by the jurisdiction.” [114] However, the guidance instructs that agents “should generally avoid enforcement actions in or near courthouses . . that are wholly dedicated to non-criminal procedures.” Though ICE is meant to “target[]” individuals with these enforcement actions, they may sweep in “[o]ther aliens encountered . . . such as family members or friends accompanying the target alien to court appearances or serving as a witness in a proceeding.” [115]
3. Department of Justice
On January 21, 2025, Acting Deputy Attorney General Emil Bove sent a memorandum to all DOJ employees regarding interim policy changes impacting immigration enforcement. Section II of this memorandum specifically references cooperation with state and local law enforcement in support of enforcing President Trump’s immigration priorities, including directing the Organized Crime Drug Enforcement Task Force and Project Safe Neighborhoods program to establish “national initiatives to provide focused resources and attention to immigration-related prosecutions at the federal, state, and local levels.”[116] The memorandum additionally directs the FBI’s Joint Terrorism Task Force to coordinate with DHS and state and local law enforcement regarding President Trump’s immigration priorities until the announced Homeland Security Task Forces (addressed above) are in place. This coordination will include the circulation of identifying information and biometric data in order to identify noncitizens present illegally in the U.S.[117]
Though the memorandum asserts that the “Supremacy Clause and other authorities require state and local actors to comply with” the President’s immigration orders and forbid obstructing them,[118] the ultimate impact of these directives will depend on the degree of cooperation states afford DOJ, as well as if and how DOJ pursues coercive action against uncooperative states. Such actions may include criminal prosecution by the U.S. Attorney’s Offices and civil investigations by the Sanctuary Cities Enforcement Working Group within the DOJ’s Civil Division. During President Trump’s first term, DOJ sent letters to jurisdictions with sanctuary city policies indicating that they may be in violation of 8 U.S.C. 1373, which bars states and localities from prohibiting the sharing of immigration status information with INS.[119] If the new administration pursues coercive action, it may face legal challenges, given the Tenth Amendment anti-commandeering principle, to attempts to compel state and local governments to carry out federal law enforcement.[120] In the first Trump Administration, the Department of Justice attempted to circumvent this limiting principle by barring sanctuary cities from its annual grant program for local law enforcement, with mixed results in the courts.[121]
III. The Laken Riley Act
Laken Riley Act would amend the INA to require mandatory detention of any undocumented individual who “is charged with, is arrested for, is convicted of, admits having committed, or admits committing acts which constitute the essential elements of” theft or related crimes, including burglary, larceny, or shoplifting.[123] An amendment offered by Senator John Cornyn of Texas and approved in the Senate expanded this list to also include “assault of a law enforcement officer offense, or any crime that results in death or serious bodily injury to another person.”[124] The bill also provides for state attorneys general to be able to sue the Secretary of Homeland Security for failure to enforce provisions of the INA related to the inspection, apprehension, and detention of immigrants.
The House passed the original version of the bill on January 7, 2025, and the Senate passed their version of the bill on January 21, 2025.[125][126]
The Act would require a massive expansion of resources at ICE. The latest ICE estimate indicates that the agency would need 110,000 additional detention beds, 10,000 additional removal personnel, and 7,000 additional attorneys and support personnel for immigration proceedings.[127] ICE estimates that the bill will cost approximately $27 billion in the first year. Absent additional funding to meet these expanded resource needs, ICE has indicated it may have to release thousands of immigrants currently being detained, including some who have been deemed to be public safety threats.[128]
Various groups have raised due process concerns with the Act’s detention provisions and standing concerns with the Act’s state attorneys general provisions, suggesting that the Act may face legal challenges.[129]
IV. Texas v. United States
On Friday, January 17, 2025, the Fifth Circuit affirmed a 2023 district court ruling in Texas v. United States that held parts of the Biden Administration’s 2022 Deferred Action for Childhood Arrivals (DACA) rule are unlawful—but the Circuit’s order contains significant limitations that will allow DACA to continue in most of the country.[130]
The DACA policy was started by the Obama Administration with a 2012 memorandum. The policy allows persons with generally good records and proof of educational attainment, attendance, or military service, to seek deferred action, a practice in which the government elects not to seek removal of certain individuals.[131] The policy also permits participants to obtain work authorization.[132] The first Trump Administration purported to rescind the policy, but in 2020, the Supreme Court held in Department of Homeland Security, et al. v. Regents of the University of California, et al. that the rescission was unlawful.[133] Gibson Dunn represented six individual DACA recipients in obtaining and defending on appeal the first nationwide preliminary injunction halting the termination of DACA. The late Gibson Dunn partner Ted Olson represented DACA recipients, businesses, and nonprofits challenging the policy in presenting oral argument before the Supreme Court.
In 2021, following the Regents decision, a Texas district court enjoined the DACA policy as operated through the 2012 DACA memorandum.[134] In 2022, the Department of Homeland Security engaged in formal rulemaking and issued a Final Rule that continued the DACA policy,[135] and the Fifth Circuit ordered the Texas district court to revisit its ruling in light of the Final Rule.[136] The district court again found the DACA policy substantively unlawful and enjoined the DACA policy nationwide.[137]
On appeal of the nationwide injunction, the Fifth Circuit affirmed that the Final Rule is substantively unlawful, but limited its ruling, allowing the DACA policy to remain in effect everywhere except Texas and preserving the “deferred action” component of the rule that allows federal officials to deem DACA recipients a low priority for removal and to decide not to remove them.[138] The order also allows current DACA recipients (even in Texas) to renew their DACA status while the case remains on appeal, in anticipation of a potential petition for certiorari that could bring the DACA policy back before the Supreme Court.[139]
In parallel with the Texas lawsuit, in May 2024, the Biden Administration issued a separate final rule that for the first time permits DACA recipients to purchase healthcare plans through Affordable Care Act (ACA) exchanges.[140] DACA recipients had previously been barred from accessing those exchanges as a result of regulations promulgated when the DACA policy was first adopted.[141] Seventeen states challenged the regulation in the District of North Dakota, and Gibson Dunn has moved to intervene on behalf of DACA recipients, to defend the rule.[142] In December, the district court granted a preliminary injunction and stay of the rule that continues to block DACA recipients in the nineteen states challenging the regulation from accessing the ACA exchanges.[143] The rule remains in effect in the remaining thirty one states. An appeal from the preliminary injunction and stay is currently pending before the Eighth Circuit Court of Appeals.
[1] “Seal the border and stop the migrant invasion” and “Carry out the largest deportation operation in American history” were the first and second of President Trump’s “20 Core Promises to Make America Great Again.” See Agenda 47, DonaldJTrump.com (last accessed Jan. 21, 2025), available at https://www.donaldjtrump.com/platform. And “Make America Safe Again” along with seven action items related to immigration and border security, is the first of four priorities listed on the White House website. See The Trump-Vance Administration Priorities, White House (last accessed Jan. 21, 2025), available at https://www.whitehouse.gov/issues/.
[2] Lexie Schapitl & Franco Ordoñez, Trump Signs Executive Actions on Jan. 6, TikTok, Immigration and More, NPR (Jan. 20, 2025), https://www.npr.org/2025/01/20/g-s1-43698/trump-inauguration-executive-orders-2025-day-1; see also Initial Rescissions of Harmful Executive Orders and Actions, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/initial-rescissions-of-harmful-executive-orders-and-actions/.
[3] https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-meaning-and-value-of-american-citizenship/
[4] Id.
[5] Id.
[6] Complaint at 78, State of New Jersey et al. v. Donald J. Trump, No. 1:25-cv-10139 (D. Mass. filed Jan. 21, 2025).
[7] Citizenship Clause, U.S. Const. amend. XIV § 1.
[8] 169 U.S. 649 (1898).
[9] Id.
[10] Complaint at 84, State of New Jersey et al. v. Donald J. Trump, No. 1:25-cv-10139 (D. Mass. filed Jan. 21, 2025).
[11] H.R. 1940, § 2(b); Sandra L. Rierson, From Dred Scott to Anchor Babies: White Supremacy and the Contemporary Assault on Birthright Citizenship, 38 Georgetown Imm. L. J. 1, 46 (2023).
[12] U.S. v. Abbot, (W.D. Tex., 2024) (Ho, J., concurring),.
[13] See, e.g., John C. Eastman, Born In The U.S.A.? Rethinking Birthright Citizenship In The Wake Of 9/11, 42 Univ. Richmond L.R. 955, 964 (2008).
[14] Id.
[15] Id. at 1.
[16] The eighteen states include the following: New Jersey, Massachusetts, California, Colorado, Connecticut, Delaware, Hawai’i, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Rhode Island, Vermont, Wisconsin, as well as Washington, D.C. and the City and County of San Francisco. Complaint, State of New Jersey et al. v. Donald J. Trump, No. 1:25-cv-10139 (D. Mass. filed Jan. 21, 2025).
[17] Id. at 78-94.
[18] Id. at 95-105.
[19] These four states include Washington, Arizona, Illinois and Oregon. Complaint, State of Washington et al. v. Donald J. Trump, No. 2:25-cv-00127 (W.D. Wash. filed Jan. 21, 2025).
[20] Id. at 3
[21] See e.g., Complaint, Casa, Inc. et al., v. Donald J. Trump, No. 8:25 (D. Md. filed Jan. 21, 2025).
[22] Order, State of Washington et al. v. Donald J. Trump, No. 2:25-cv-00127 (W.D. Wash. filed Jan. 21, 2025).
[23] Securing Our Borders, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/securing-our-borders/
[24] Restoring the Death Penalty and Protecting Public Safety, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/restoring-the-death-penalty-and-protecting-public-safety/
[25] Donald J. Trump, The Inaugural Address (Jan. 20, 2025), available at https://www.whitehouse.gov/remarks/2025/01/the-inaugural-address/.
[26] Id.
[27] Proclamation, “Declaring A National Emergency at the Southern Border of the United States” (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-emergency-at-the-southern-border-of-the-united-states/.
[28] Id.
[29] Proclamation No. 9844, 84 Fed. Reg. 4949 (Feb. 15, 2019).
[30] Border Wall Emergency Declaration Litigation, Brennan Ctr. (Oct. 16, 2020), available at https://www.brennancenter.org/our-work/court-cases/border-wall-emergency-declaration-litigation (collecting cases).
[31] John Gramlich, Migrant encounters at U.S.-Mexico border have fallen sharply in 2024, Pew Rsch. Ctr. (Oct. 1, 2024), available at https://www.pewresearch.org/short-reads/2024/10/01/migrant-encounters-at-u-s-mexico-border-have-fallen-sharply-in-2024/.
[32] Proclamation, “Declaring A National Emergency at the Southern Border of the United States” (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-emergency-at-the-southern-border-of-the-united-states/.
[33] Id.
[34] H.R.J. Res. 31, 116th Cong. (Feb. 15, 2019).
[35] The U.S. Northern Command is responsible for “provid[ing] command and control of Department of Defense homeland defense efforts and to coordinate defense support of civil authorities.” Our Story, U.S. N. Command, available at https://www.northcom.mil/About/ (last visited Jan. 24, 2025).
[36] Exec. Or., “Clarifying the Military’s Role in Protecting the Territorial Integrity of the United States” (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/clarifying-the-militarys-role-in-protecting-the-territorial-integrity-of-the-united-states/
[37] Id.
[38] Fact Sheet: The Biden-Harris Administration Takes New Actions to Increase Border Enforcement and Accelerate Processing for Work Authorizations, While Continuing to Call on Congress to Act, Dep’t of Homeland Sec. (Sept. 20, 2023), available at https://www.dhs.gov/archive/news/2023/09/20/fact-sheet-biden-harris-administration-takes-new-actions-increase-border (“The Department of Defense is providing additional military personnel – on top of the 2,500 steady state National Guard personnel – to support the Department of Homeland Security (DHS).”).
[39] Matthew Olay, DOD Orders 1,500 Troops, Additional Assets to Southern Border, Dep’t of Def. (Jan. 22, 2025), available at https://www.defense.gov/News/News-Stories/Article/Article/4037935/dod-orders-1500-troops-additional-assets-to-southern-border/.
[40] Camilo Montoya-Galvez, Trump administration weighs sending 10,000 troops to border, using bases to hold migrants, CBS News (Jan. 22, 2025), https://www.cbsnews.com/news/trump-troops-us-mexico-border/
[41] Id.; Olay, supra note 38.
[42] Military Support for Customs and Border Protection Along the Southern Border Under the Posse Comitatus Act, 45 Op. O.L.C. 1–3, 13 (2021) (slip op.).
[43] Id. at 2 (“[T]he rail-support duty would have military personnel assist CBP personnel responsible for inspecting unoccupied, unlocked vehicles being transported across the southern border in bulk on rail cars. The seal-check duty would involve visually verifying whether commercial cargo trucks and containers have intact and unbroken seal tags, which CBP requires for trucks and containers passing through ports of entry. The port-of-entry and checkpoint observers would monitor the output of CBP’s electronic systems that automatically collect and process data, such as license-plate information, about individuals and vehicles passing through a port of entry or U.S. Border Patrol checkpoint, and display an alert message if the system identifies a concern.”).
[44] Id. at 2–3.
[45] Securing Our Borders, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/securing-our-borders.
[46] Id.
[47] Id.
[48] Initial Rescissions of Harmful Executive Orders and Actions, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/initial-rescissions-of-harmful-executive-orders-and-actions.
[49] Trump revives ‘remain in Mexico’ policy as part of anti-immigration crackdown, Guardian (Jan. 21, 2025), https://www.theguardian.com/us-news/2025/jan/21/trump-remain-in-mexico-program.
[50] Mexico has not agreed to accept non-Mexican US asylum seekers, says president, Reuters (Jan. 22, 2024), https://www.reuters.com/world/americas/mexico-has-not-agreed-accept-non-mexican-us-asylum-seekers-says-president-2025-01-22.
[51] Guaranteeing the States Protection Against Invasion, White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/guaranteeing-the-states-protection-against-invasion
[52] Id.
[53] Id.; 8 U.S.C. § 1182(f).
[54] Id.
[55] See, e.g., Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635, 644 (1952) (Jackson, J., concurring) (“Presidential powers are not fixed but fluctuate, depending upon their disjunction or conjunction with those of Congress… That military powers of the Commander-in-Chief were not to supersede representative government of internal affairs seems obvious from the Constitution and from elementary American history.”); Zivotofsky ex rel. Zivotofsky v. Kerry, 576 U.S. 1, 17 (2015) (“…. Congress has an important role in other aspects of foreign policy, and the President may be bound by any number of laws Congress enacts. In this way ambition counters ambition, ensuring that the democratic will of the people is observed and respected in foreign affairs as in the domestic realm”).
[56] Trump v. Hawaii, 585 U.S. 667, 683–84 (2018).
[57] Protecting the United States from Foreign Terrorists and Other National Security and Public Safety Threats, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-united-states-from-foreign-terrorists-and-othernational-security-and-public-safety-threats/
[58] Guaranteeing the States Protection Against Invasion, White House (Jan. 20, 2025), available: https://www.whitehouse.gov/presidential-actions/2025/01/guaranteeing-the-states-protection-against-invasion/
[59] Id.
[60] Remarks by President Trump, Vice President Pence, and Members of the Coronavirus Task Force in Press Briefing, The Trump White House Archives (Mar. 20, 2020), available at https://trumpwhitehouse.archives.gov/briefings-statements/remarks-president-trump-vice-president-pence-members-c-oronavirus-task-force-press-briefing/; Order Suspending Introduction of Certain Persons from Countries Where a Communicable Disease Exists, Ctr. Disease Control (Mar. 20, 2020), https://immpolicytracking.org/policies/covid-19-cdc-order-authorizes-border-patrol-expulsion-of-all-persons-arriving-by-land-from-mexico-or-canada-without-valid-documents-under-42-usc-265-public-health-act/#/tab-policy-documents.
[61] 85 Fed. Reg. 59, 17060 (Mar. 26, 2020).
[62] 86 Fed. Reg. 148, 42828 (Aug. 5, 2021); see also 86 C.F.R. § 9942 (2021).
[63] Michael Ulrich & Sondra Crosby, Title 42, asylum, and politicizing public health, 7 Lancet Reg. Health Am. 1 (March 2022); Public Health and Former CDC Experts Warn Against Renewed Misuse of Title 42 Public Health Authority, Physicians for Human Rights (Jan. 17, 2025), available at https://phr.org/news/public-health-and-former-cdc-experts-warn-against-renewed-misuse-of-title-42-public-health-authority/.
[64] CBP One Mobile Application, U.S. Cust. & B. Protection (Jan. 20, 2025), https://www.cbp.gov/about/mobile-apps-directory/cbpone.
[65] Id.
[66] Press Release, CBP One™ Appointments Increased to 1,450 Per Day, U.S. Cust. & B. Protection (June 30, 2023), https://www.cbp.gov/newsroom/national-media-release/cbp-one-appointments-increased-1450-day.
[67] CBP One Mobile Application, U.S. Cust. & B. Protection (Jan. 20, 2025), https://www.cbp.gov/about/mobile-apps-directory/cbpone; Rebecca Santana, Elliot Spagat & Gisela Salomon, Trump seeks to remake border security but his efforts will face challenges, Associated Press (Jan. 20, 2025, 6:44 PM), https://apnews.com/article/trump-deportation-immigration-homan-asylum-inauguration-ac10480dc636b758ab3c435b974aeb19.
[68] Motion for Emergency Status Conference and for Leave to File Supplemental Briefing in Light of President Trump’s January 20 Action Ending CBP One, Las Americas Immigrant Advocacy et al. v. U.S. Dep’t of Homeland Sec. et al., No. 1:24-cv-01702-RC (Jan. 20, 2025), https://www.aclu.org/cases/las-americas-immigrant-advocacy-center-v-u-s-department-of-homeland-security?document=Motion-for-Emergency-Status-Conference
[69] Complaint, Las Americas Immigrant Advocacy et al. v. U.S. Dep’t of Homeland Sec. et al., No. 1:24-cv-01702-RC (June 12, 2024), https://www.aclu.org/cases/las-americas-immigrant-advocacy-center-v-u-s-department-of-homeland-security?document=Complaint
[70] See Motion for Emergency Status Conference and for Leave to File Supplemental Briefing in Light of President Trump’s January 20 Action Ending CBP One at 2, Las Americas Immigrant Advocacy et al. v. U.S. Dep’t of Homeland Sec. et al., No. 1:24-cv-01702-RC (Jan. 20, 2025).
[71] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[72] Id.
[73] Id.
[74] United States v. Texas, 599 U.S. 670, 680 (2023).
[75] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[76] Id.
[77] Josh Gerstein and Dasha Burns, Trump DOJ Gears Up for Immigration Enforcement, Politico (Jan. 22, 2025), available at https://www.politico.com/news/2025/01/22/donald-trump-justice-department-immigration-005783.
[78] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[79] Removal of Regulations Relating to Special Registration for Certain Nonimmigrants, 81 Fed. Reg. 94231 (Dec. 23, 2016), available at https://www.federalregister.gov/documents/2016/12/23/2016-30885/removal-of-regulations-relating-to-special-registration-process-for-certain-nonimmigrants.
[80] Id.; see also Christ Rickerd, Homeland Security Suspends Ineffective, Discriminatory Immigration Program, ACLU (May 6, 2011), available at https://www.aclu.org/news/immigrants-rights/homeland-security-suspends-ineffective-discriminatory-immigration-program.
[81] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/; see also 8 U.S.C. § 1225(b)(1)(A).
[82] Designating Aliens for Expedited Removal, 90 Fed. Reg. 8139 (Jan. 24, 2025), available at https://www.federalregister.gov/documents/2025/01/24/2025-01720/designating-aliens-for-expedited-removal#:~:text=SUMMARY%3A,fullest%20extent%20authorized%20by%20Congress.
[83] Make the Road New York v. Huffman et al., D.D.C. No. 1:25-cv-00190 (Jan. 22, 2025).
[84] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[85] Id.
[86] The 287(g) Program: An Overview, American Immigration Council (Jan. 20, 2025), available at https://www.americanimmigrationcouncil.org/research/287g-program-immigration.
[87] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[88] Id.
[89] Id.
[90] Implementation of Executive Order 13768, “Enhancing Public Safety in the Interior of the United States,” Office of the Attorney General (May 22, 2017), available at https://www.justice.gov/opa/press-release/file/968146/dl?inline=.
[91] Protecting the American People Against Invasion, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/.
[92] Id.
[93] Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/designating-cartels-and-other-organizations-as-foreign-terrorist-organizations-and-specially-designated-global-terrorists/.
[94] Id.
[95] See, e.g., Robbie Gamer & Jack Detsch, So You Want to Sanction a Terrorist Group, Foreign Policy: Situation Report (Jan. 18, 2024).
[96] See 8 U.S.C. Section 1182(a)(3)(B).
[97] Restoring the Death Penalty and Protecting Public Safety, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/restoring-the-death-penalty-and-protecting-public-safety/.
[98] Id.
[99] Refugee Admissions, U.S. Department of State 2021-2025 Archived Content (last accessed Jan. 22, 2025), available at https://2021-2025.state.gov/refugee-admissions/.
[100] Id.
[101] Realigning the United States Refugee Admissions Program, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/realigning-the-united-states-refugee-admissions-program/.
[102] Id.
[103] Id.
[104] Id.
[105] Id.
[106] Section 2 of the order reads: “It is the policy of the United States to ensure that public safety and national security are paramount considerations in the administration of the USRAP, and to admit only those refugees who can fully and appropriately assimilate into the United States and to ensure that the United States preserves taxpayer resources for its citizens. It is also the policy of the United States that, to the extent permitted by law and as practicable, State and local jurisdictions be granted a role in the process of determining the placement or settlement in their jurisdictions of aliens eligible to be admitted to the United States as refugees.”
[107] Id.
[108] Statement from a DHS Spokesperson on Directives Expanding Law Enforcement and Ending the Abuse of Humanitarian Parole, U.S. Dep’t of Homeland Sec. (Jan. 21, 2025), available at https://www.dhs.gov/news/2025/01/21/statement-dhs-spokesperson-directives-expanding-law-enforcement-and-ending-abuse.
[109] John Morton, Enforcement Actions at or Focused on Sensitive Locations, U.S. Dep’t of Homeland Sec. (Oct. 24, 2011), available at https://www.ice.gov/doclib/ero-outreach/pdf/10029.2-policy.pdf; Alejandro N. Mayorkas, Guidelines for Enforcement Actions in or Near Protected Areas, U.S. Dep’t of Homeland Sec. (Oct. 27, 2021), available at https://www.dhs.gov/sites/default/files/publications/21_1027_opa_guidelines-enforcement-actions-in-near-protected-areas.pdf.
[110] Securing Our Borders, White House (Jan. 20, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/01/securing-our-borders/.
[111] Id.
[112] Caleb Vitello, Interim Guidance: Civil Immigration Enforcement Actions in or near Courthouses, U.S. Immigr. & Customs Enf’t (Jan. 21, 2025), accessible at https://www.ice.gov/doclib/foia/policy/11072.3_CivilImmEnfActionsCourthouses_01.21.2025.pdf)
[113] DHS Announces New Guidance to Limit ICE and CBP Civil Enforcement Actions in or Near Courthouse, Dep’t of Homeland Sec. (Apr. 27, 2021), accessible at https://www.dhs.gov/archive/news/2021/04/27/dhs-announces-new-guidance-limit-ice-and-cbp-civil-enforcement-actions-or-near)
[114] Caleb Vitello, Interim Guidance: Civil Immigration Enforcement Actions in or near Courthouses, U.S. Immigr. & Customs Enf’t (Jan. 21, 2025), accessible at https://www.ice.gov/doclib/foia/policy/11072.3_CivilImmEnfActionsCourthouses_01.21.2025.pdf)
[115] Id.
[116] Emil Bove, Interim Policy Changes Regarding Charging, Sentencing, and Immigration Enforcement, U.S. Dep’t of Just. (Jan. 21, 2025), available at https://www.documentcloud.org/documents/25501154-doj-all-staff-memo-jan-21/.
[117] Id.
[118] Id.
[119] Justice Department Sends Letters to 29 Jurisdictions Regarding Their Compliance with 8 U.S.C. 1373, U.S. Dep’t of Just. (Nov. 15, 2017), available at https://www.justice.gov/opa/pr/justice-department-sends-letters-29-jurisdictions-regarding-their-compliance-8-usc-1373.
[120] See, e.g., Printz v. United States, 521 U.S. 898 (1997) (federal government could not require states to implement/operationalize federal background check requirement for handgun purchases); New York v. United States, 505 U.S. 144 (1992) (federal government could not require states to either take control of radioactive waste or enact legislation to deal with it).
[121] Compare City of Chicago v. Barr, 961 F.3d 882 (7th Cir. 2020) (striking down such conditions) with State v. Dep’t of Just., 951 F.3d 84 (2d Cir. 2020) (upholding them).
[122] Detention Management, U.S. Immigr. & Customs Enf’t, available at https://www.ice.gov/detain/detention-management.
[123] Laken Riley Act, S. 5, 119th Cong. (2025).
[124] S. Amdt. 8 to Laken Riley Act, S. 5, 119th Cong. (2025).
[126] Erin Doherty, House passes Laken Riley Act, sending bill to Trump’s desk, Axios (Jan. 22, 2025), available at https://www.axios.com/2025/01/22/house-laken-riley-act-congress-trump.
[127] Ximena Bustillo, ICE estimates it would need $26.9 billion to enforce GOP deportation bill, NPR (Jan. 16, 2025), available at https://www.npr.org/2025/01/16/nx-s1-5262921/laken-riley-act-deportation-ice.
[129] See Vote NO on S. 5, the Lake Riley Act, ACLU (Jan. 9, 2025), available at https://www.aclu.org/documents/aclu-letter-to-senators-urging-no-vote-on-s-5-the-laken-riley-act; Patrick Gaspard, The Senate Must Fix the Laken Riley Act Before Voting on It, Ctr. Am. Progress (Jan. 15, 2025), available at https://www.americanprogress.org/article/the-senate-must-fix-the-laken-riley-act-before-voting-on-it/.
[130] Texas v. United States, 2025 WL 227244, at *15 (5th Cir. Jan. 17, 2025).
[131] Memorandum from Janet Napolitano, Sec’y, DHS, to David Aguilar, Acting Comm’r, U.S. Customs and Border Prot., et al. (June 15, 2012), https://www.dhs.gov/xlibrary/assets/s1-exercising-prosecutorial-discretion-individuals-who-came-to-us-as-children.pdf.
[132] Id.
[133] DHS v. Regents of the Univ. of Cal., 591 U.S. 1, 35-36 (2020).
[134] Texas v. United States, 549 F. Supp. 3d 572, 624 (S.D. Tex. 2021)
[135] Deferred Action for Childhood Arrivals, 87 Fed. Reg. 53,152 (Aug. 30, 2022) (to be codified at 8 C.F.R. pts 106, 236, and 274a).
[136] Texas v. United States, 50 F.4th 498, 508 (5th Cir. 2022).
[137] Texas v. United States, 691 F. Supp 3d 763, 796 (S.D. Tex. 2023).
[138] Texas v. United States, 2025 WL 227244, at *15 (5th Cir. Jan. 17, 2025).
[139] Id. at *19.
[140] Clarifying the Eligibility of Deferred Action for Childhood Arrivals and Certain Other Noncitizens for a Qualified Health Program through an Exchange, Advance Payments of the Premium Tax Credit, Cost-Sharing Reductions, and a Basic Health Program, 89 Fed. Reg. 39392, 39395 (May 8, 2024).
[141] See id. at 39394.
[142] Motion to Intervene, Kansas v. United States, No. 24-150 (D.N.D. Sept. 20, 2024), ECF No. 49.
[143] See Kansas v. United States, 2024 WL 5220178, at *10 (D.N.D. Dec. 9, 2024).
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After months of speculation regarding the possible contours of the United States’ international trade policies under a second Trump administration, the President’s unprecedented flurry of initial executive actions was light on actual, immediate changes to U.S. trade policy.
As detailed below, with few exceptions, the actions have essentially set the stage for (and in some cases set up the legal structure for) future moves without yet implementing policy changes.
Five Key Themes
Despite the absence of formal policy changes, taken as a whole, the executive actions (which include policy memoranda, scores of legally binding executive orders (E.O.s), as well as press and formal statements) set out some broad themes that will likely guide President Trump and his administration as he pursues his trade agenda. While many of these themes were present in his first term (and others echo former presidents, including the early twentieth century’s William McKinley), the actions taken so far indicate that his second term team is more sophisticated, knowledgeable of the federal bureaucracy, and capable of acting on these themes quickly and sustainably than was the team in place during the previous Trump administration.
First, as he indicated during the campaign, President Trump continues to see trade as a “zero sum game,” turning away from decades of broad bipartisan recognition of the benefits to the United States of free trade governed by U.S legislation and trade agreements intended to protect U.S. interests from unfair trade practices. By focusing on the trade deficit as an irrefutable indication of American weakness (and foreign powers’ strength) and making broad statements to business elite that if they do not develop manufacturing in the United States they will face tariffs and other consequences, the Trump team has indicated little desire to find a middle ground on trade issues. President Trump’s broader distrust of the multilateral trading system suggests the United States’ block against the World Trade Organization’s Appellate Body – which has been in place since Trump’s first term and has left the WTO essentially rudderless – is unlikely to be resolved in the near future. Indeed, the President has asked for a review of all existing U.S. trade agreements, including the World Trade Organization Agreement on Government Procurement.
Second, the President will leverage trade for other policy goals far removed from trade. While U.S. legislation has always made this the case with sanctions and export controls (which have clear national security goals often unrelated to trade), the Trump team has indicated a willingness to threaten countries with trade-related consequences if they do not invest in border security (Canada), increase defense spending (NATO states), comply with his immigration policies (Mexico and Colombia), and to potentially extract other geopolitical concessions (such as those involving Denmark/Greenland and Panama). While this novel use of trade measures was apparent in his first term, President Trump now seems set to move even more forcefully and broadly in this regard during his second administration.
Third, the President appears to be gearing up for aggressive trade enforcement to make up for what he deems insufficient trade enforcement by the Biden administration. His use of the pejorative description of “loopholes“ in describing current export controls provisions and his direction to his Executive branch to address such shortcomings indicates a potentially uniquely muscular approach that his trade-related senior staff – including Trade and Manufacturing Senior Counselor Peter Navarro, Commerce Secretary-nominee Howard Ludnick, Treasury Secretary-nominee Scott Bessent, and U.S. Trade Representative-nominee Jamieson Greer – have supported in their public statements and testimony. The President has also indicated that his administration will pursue very aggressive efforts in applying the antidumping and countervailing duty statutes, the most broadly applied U.S. “unfair trade” provisions.
Fourth, and related to aggressive enforcement, in many trade-related statements, the administration has spoken of a goal of expanding how the United States should “encourage” third country compliance with U.S. trade controls (such as export controls and sanctions). This suggests a return to a key feature of President Trump’s first term – the use of unilateral trade measures directed against allies and competitors alike – and an imminent expansion of the United States’ extraterritorial trade enforcement. Extraterritorial trade measures have always been both a critical force multiplier in furthering U.S. policy (such as secondary sanctions) while simultaneously being a source of increasing friction between the United States and other countries. Unlike in the President’s first term, potential target countries have been preparing – in some cases for more than a year – to respond to these efforts and potentially institute retaliatory measures. However, as in his first term, President Trump appears as yet unconcerned about any reprisals.
Fifth, President Trump appears set on using essentially unchecked executive authorities to pursue most of his trade agenda rather than rely on or wait for legislation. In his first term President Trump primarily relied on a mix of existing statutory authorities that allowed limited congressional oversight (such as using legislation undergirding U.S. sanctions to quickly impose tariffs) alongside more traditional tools (such as the longstanding Section 301 and 232 trade statutes which require often lengthy investigations prior to the imposition of tariffs). In this second Trump administration, however, it appears that the administration will rely more heavily on executive tools. Given the Republican control of Congress, President Trump may not receive significant initial congressional pushback regarding any concerns that he may be overstepping his authority. However, this approach is highly likely to result in immediate litigation that could result in judicially imposed limitations on these authorities (as aggrieved parties seek redress in the courts) and may well prompt congressional efforts to amend these authorities if the Republicans lose one or both houses of Congress in the 2026 midterm elections.
Top Takeaways from the “Week One” Executive Trade Actions
Please refer to Gibson Dunn’s “Executive Order Tracker” for a complete and current listing of all the E.O.s issued by the Trump White House in the initial days of his second term, as well as Gibson Dunn’s Regulatory Outlook for International Trade Following the 2024 Election which details the firm’s broader post-election assessment of where Trump trade policy might be headed.
The list below contains a short description and categorization of executive trade actions as well as links to more in-depth analyses Gibson Dunn has undertaken on several individual executive actions.
I. Tariffs (and More): Not Yet Announced, But Major Changes Are Likely Given the Broad Trade Review Ordered
Possible U.S. tariffs have been a core issue as a second Trump Presidency loomed. Despite candidate Trump’s indications that tariffs would be a “day one” event, as of the publication date of this alert there has been no change to U.S. tariffs. However, we note that this situation could change at any time, and President Trump has continued to threaten potential tariffs against China, the EU, Canada, Mexico, Colombia and others, indicating he may seek to impose (or at least announce) some tariffs as early as February 1, 2025.
Through week one, however, Trump’s main tariff-related measures were contained in his “America First Trade Policy” memorandum issued on January 20, 2025, in which he directed parts of the Executive branch, including the Departments of State, Treasury, Commerce and Defense, the U.S. Trade Representative, and various other offices and agencies, to review numerous aspects of the U.S. trade landscape for economic, national security and others risks, and by April 1, 2025, to report back with any findings and recommendations for remedial action. The Policy notes that such proposals could include tariffs but also a host of other possible approaches. Importantly this memorandum contains no legally binding changes to trade policy.
The memorandum is very broad, but key sections of the memorandum require investigations of many trade-related issues, including the following:
- The “causes of our country’s large United States annual trade deficit,” and (ominously) a recommendation of “appropriate measures, such as a global supplemental tariff”;
- Foreign unfair trade practices and currency manipulation;
- All existing U.S. trade agreements (including the United States-Mexico-Canada Agreement (USMCA)), as well as views on opportunities for new bilateral trade agreements;
- A deep dive on various aspects of the economic and trade relationship with China;
- Unlawful migration and fentanyl flows from Canada, Mexico, and the PRC;
- A “full economic and security review of the United States’ industrial and manufacturing base”;
- The U.S. import treatment of steel and aluminum;
- The feasibility of and recommendations for implementing an “External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues”; and
- The policies and regulations concerning the application of antidumping and countervailing duty (AD/CVD) laws.
In addition, the memorandum also calls for a wholesale reassessment of other major trade regulatory programs such as U.S. export controls, the rules covering U.S. outbound investment into China, and the recently announced rules regarding imports of “connected vehicles.”
II. Rescissions and Rule Moratorium
President Trump rescinded more than 70 E.O.s issued by previous administrations – including some that had been in place for decades. He also declared a moratorium, pending further review by his appointees, on the issuance, proposal, or publication of any new regulatory rules. Finally, he directed agencies to consider postponing for 60 days the effective date for any rules that have been published in the Federal Register or otherwise issued which have not taken effect.
While the freezing of such rules is not unusual for a new administration, the breadth of President Trump’s order (and our assessment that, due to vast policy differences between President Biden and President Trump, many such rules could in fact be radically altered) makes this an impactful (even if on its face technical) legally binding order. As noted below, several of the rescission orders and rule moratoria have significant trade implications.
III. Broad Review Ordered, but Near-Term Uncertainty in Applicability of Certain U.S. Export Controls
President Trump’s America First Trade Policy memorandum describes trade policy as “a critical component to national security” that will be used to enhance the “industrial and technological advantages” of the United States, defend the United States’s “economic and national security,” and benefit “American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.” As part of this effort, the U.S. Secretaries of State and Commerce, in conjunction with other agency heads, are directed to “review the United States export control system and advise on modifications in light of developments involving strategic adversaries or geopolitical rivals as well as all other relevant national security and global considerations.”
What the Trump administration’s effort will ultimately entail is uncertain. As a core question, it is unclear whether President Trump will continue the prior administration’s aggressive use of export controls to limit the abilities of geopolitical rivals to obtain access to and develop their own ability to manufacture technologies that are core to different emerging technologies such as the training of AI frontier models and quantum computing.
The memorandum specifically requires recommendations to “maintain, obtain, and enhance” the United States’ “technological edge” and to “identify and eliminate loopholes in existing export controls.” These efforts are likely to focus on emerging technologies that pose a threat to national security, such as advanced semiconductors, quantum computing, connected devices, and other next generation technologies already under review by the Emerging Technology Division of the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and partner agencies.
In its final weeks in office, the Biden administration issued a significant number of export controls-focused regulations imposing wide-ranging restrictions on advanced chips, connected vehicles, artificial intelligence (AI) diffusion, and related emerging technologies. Though many of these regulations were accompanied by delayed compliance dates, the extensive obligations they impose – including worldwide, quota-metered, licensing requirements on the export of computing power and on the frontier AI models that are trained using this computing power – raised concerns across various industries and prompted questions concerning implementation.
Questions remain as to whether these individual regulations will be amended, repealed, or postponed considering Trump’s rescission of various Biden E.O.s and the issuance of the rule moratorium.
Significantly, despite President Trump’s recission of President Biden’s E.O. 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” and call for review of any actions thereunder, the Biden team’s Framework for Artificial Intelligence Diffusion regulations draw upon multiple additional authorities, including the Export Control Reform Act of 2018. Consequently, the mere recission of E.O. 14110 is unlikely to singlehandedly spell the end of the proposed AI diffusion controls.
Moreover, the express policy drivers for the AI Diffusion Rule appear aligned with President Trump’s mandate to eliminate his perceived “loopholes” in U.S. export controls that may have enabled geopolitical rivals of the United States to obtain access to the computing power required to train AI models and his mandate to ensure that the United States maintains the technological edge in frontier AI model training. Indeed, although Trump rescinded E.O. 14110, he also issued his own E.O. calling for several agencies to develop within 180 days a plan to “sustain and enhance America’s global AI dominance.”
What is even less clear, especially given President Trump’s willingness (and perhaps preference) to act unilaterally, is whether the Trump Administration will take steps to maintain the bespoke coalition of countries (core among them the Netherlands, Japan, and South Korea) that the Biden Administration created and which has been used to develop uniform controls on technologies that are foundational to the next generation of developments in frontier AI model training, quantum computing, and synthetic biology.
As the confirmation of President Trump’s political appointees progresses, we will gain a clearer picture of what the administration will prioritize in terms of export controls and related national security risks. We assess that a focus on addressing emerging technologies that pose national security risks will likely be a throughline from the previous administration. While President Trump will impose his own stamp on new and pending regulations, many of the geopolitical risks that shaped U.S. national security and technology policy during Trump’s first administration and Biden’s remain the same.
IV. Temporary Reprieve for TikTok
Reversing his hardline stance toward the popular social media company during his first term, President Trump directed the Attorney General not to take any action for 75 days to enforce the Protecting Americans from Foreign Adversary Controlled Applications Act (Pub. L. 118-50, div. H) which effectively banned the app in the United States on January 19, 2025, in order for his administration to confer with relevant stakeholders. The first Trump administration E.O. banning TikTok was being challenged in U.S. courts at the time it was rescinded by the Biden administration in 2021.
Even so, and indicative of the uncertainty with which some in the business community have greeted some of the president’s pronouncements, despite the reprieve, as of the date of the memorandum, the availability of the TikTok app remains limited.
V. Economic Sanctions
Even as President Trump has stated his desire to use sanctions sparingly (and in one of his initial actions he even cancelled a sanctions program related to the West Bank), some of his initial actions and statements – including his Treasury nominee’s speaking of expanding sanctions on Russia during his confirmation hearings and President Trump’s threatening additional sanctions on Russian president Putin if he did not agree to negotiate an end to his war on Ukraine – suggest a likely continuation of his record-setting use of sanctions during his first term.
a. Potential (Re-)authorization of Sanctions Targeting the International Criminal Court
President Trump rescinded E.O. 14022, which had previously terminated E.O. 13928’s national emergency with respect to the International Criminal Court (ICC) and corresponding authorization of sanctions targeting the ICC’s personnel or persons determined to have provided material support to certain of its operations. Importantly, no new sanctions were announced.
While it is unclear whether the rescission of E.O. 14022 equates to the reinstatement of E.O. 13928 – given the likely legal necessity that President Trump would have to redeclare the “national emergency” with respect to the Court, which is a prerequisite for such sanctions – additional action is likely necessary to reinstitute such sanctions. While the absence of a newly promulgated emergency may be the basis for litigation if sanctions were to emerge now, not only could President Trump reissue an emergency with the stroke of a pen, but also the direction of travel against the ICC is clear. This direction is supported by a Congress that has its own ICC sanctions bill that has passed the House and is awaiting Senate action – and which threatens the use of the very aggressive George W. Bush-era anti-ICC law, “Hague Invasion Act.” The Trump administration is clearly no friend of the ICC and in the absence of any alteration in the Court’s policies and actions, we fully expect sanctions measures to be imposed against the Court and/or its various components, offices, and personnel.
b. Reinstatement of Cuba’s Designation as a State Sponsor of Terrorism
On January 20, President Trump reinstated Cuba’s designation as a State Sponsor of Terrorism (SST). The Biden administration had rescinded Cuba’s designation as an SST less than a week earlier, pursuant to a Vatican-brokered agreement with the Cuban government. Given the first Trump administration’s hawkish economic policy with respect to Cuba (the United States designated Cuba as an SST in the final days of the first Trump administration, on January 12, 2021), the reinstating of Cuba’s SST designation was broadly anticipated.
This action, coupled with the appointment of Senator Marco Rubio as Secretary of State, also presages further restrictive measures targeting Cuba. As of this writing, the Treasury Department, Office of Foreign Assets Control’s (OFAC’s) May 2024 amendments to the Cuban Assets Control Regulations remain in effect (as do many aspects of President Obama’s broader easing of Cuba-related sanctions from his second term). The new Trump administration may seek to roll back these and other accommodations toward Cuba. This includes President Biden’s suspension of Title III of the Helms-Burton Act, which provides for private rights of action against parties deemed to be trafficking in formerly-U.S.- person owned property in Cuba that was nationalized under Castro. During his first term, President Trump had revoked the suspension of that title, which had been in place under every administration since the act was passed in 1996 and led to a spate of lawsuits. President Biden’s suspension meant that no new cases could be filed under Title III. This is likely to change under the new administration.
Additionally, the Cuba Restricted List, initially implemented during the first Trump administration through National Security Presidential Memorandum 5 and later revoked by President Biden shortly before leaving office, may soon be reinstated.
c. Call for Addition of Drug Cartels to Terrorism Sanctions Lists
On January 20, President Trump signed an Executive Order paving the way for the designation of certain international cartels as Foreign Terrorist Organizations (FTO) and Specially Designated Global Terrorists (SDGT). The order does not create any new blocked persons. Rather, it directs the Secretary of State to “take all appropriate action” to identify cartels and other organizations described in the order within 14 days. The order further directs the Attorney General and Secretary of Homeland Security to make “operational preparations” to implement any related invocations of the Alien Enemies Act, which is a controversial wartime power of the president to restrain and remove nonnaturalized persons within the United States who are “natives, citizens, denizens, or subjects of” a hostile nation. Whether a president could use such powers during peacetime is virtually certain to raise judicial challenge.
The United States currently maintains the Counter Narcotics Trafficking Sanctions Program and regularly designates cartels, their members, and affiliates under various related authorities. Indeed, all the largest cartels thought most likely to be the focus of this order are already sanctioned under these (and/or other) sanctions authorities maintained by OFAC. Designating cartels and their affiliates as SDGTs would not alter their sanctioned status.
Adding the FTO designation would impose certain additional risks. Specifically, designation as an FTO (1) renders representatives and members of the FTO, if they are not a U.S. citizen or U.S. national, inadmissible to the United States; (2) exposes persons subject to U.S. jurisdiction to criminal liability for knowingly providing “material support or resources” to the FTO; and (3) provides for certain private rights of action. This E.O., therefore, is indicative of the President’s desire to use sanctions as a tool in furtherance of his immigration policy and in support of his border-related national emergency. Some have already indicated that an FTO designation could implicate U.S. business interests in Mexico due to how integrated some of the cartels are into that country’s formal economy.
d. Potential Redesignation of Ansarallah as an FTO
On January 22, President Trump also issued an Executive Order that will put in motion the process to re-designate Ansarallah (also known as the Houthis) as an FTO by March 8, 2025. Under the order, an FTO designation would take place at any point within a 15-day period (February 22 to March 8) that is set to follow a 30-day information-gathering period (January 23 to February 21). Following Ansarallah’s designation as an FTO, the order further directs the Secretary of State and the Administrator of USAID to terminate any projects, grants, or contracts they identify as having involved entities that either made payments to Ansarallah and its affiliates or that “criticized international efforts to counter Ansar Allah while failing to document Ansar Allah’s abuses sufficiently.”
As noted in Gibson Dunn’s 2023 Year-End Sanctions and Export Controls Update, the Biden administration had previously designated Ansarallah as an SDGT—and de-listed the group as an FTO – principally due to concerns about the impact of the designation on humanitarian projects in Yemen. Like the potential upcoming FTO designation, Ansarallah’s designation as an SDGT came with a 30-day delay. However, unlike in the case of Ansarallah’s SDGT designation, OFAC has not yet issued general licenses or guidance that might provide NGOs comfort to continue providing lawful humanitarian assistance to the Yemeni people that may involve Ansarallah. Given that an FTO designation carries more onerous restrictions than the SDGT designation, including possible criminal liability for parties that provide “material support” to such a group, there is a substantial risk that designating the Houthis as an FTO may once again deter humanitarian organizations from providing critical aid to the country.
VI. Pause of Foreign Aid
President Trump issued an Executive Order establishing a 90-day pause in U.S. foreign assistance pending “assessment of programmatic efficiencies and consistency with United State foreign policy.” The policy applies to new obligations and disbursements of development assistance funds to foreign countries and implementing NGOs, international organizations, and contractors. While it includes important carve outs for emergency food provisioning, the E.O. authorizes the Department of State, in consultation with the Office of Management and Budget (OMB), to issue guidelines for department and agency heads to review their respective foreign aid programs.
Practically, the pause is designed principally to review existing foreign aid programs (which does not necessarily imply their elimination and/or wind-down). Still, the purpose of the policy freeze outlined in section 1 of the E.O. strongly suggests a shift toward a reconsidering of, and potentially an elimination or limiting of, certain foreign aid programs. The U.S. government currently maintains foreign aid programs related to over 200 countries, valued in total at USD $68 billion, a substantial part of which is allocated to Ukraine.
VII. Possible Expansion of Outbound Investment Regime
The America First Trade Policy memorandum also calls for a review of the recently implemented program regulating outbound U.S. investments involving Chinese persons operating in certain high-tech sectors and activities effective as of January 2, 2025. Specifically, the memorandum calls for a review of E.O. 14105, which provided the basis for the program as well as the final implementing rule. Our previous client alert provided a detailed overview of this new regulatory regime.
Likely responding to congressional interest in legislation expanding the types of industries subject to the program’s control (and in line with the President’s clear preference to take control of the policy narrative by undertaking executive actions rather than being subjected to congressional mandates), the America First Trade Policy memorandum mandates the Department of the Treasury to assess whether the current controls in the outbound investment regulations are sufficient to address national security interests, and to make recommendations for any further modification by April 1, 2025.
The new outbound investment regime has already created significant compliance challenges as companies and financial institutions grapple with ways to implement and adjust policies, procedures, and corporate agreements to comply with the new rules and account for shifting legal and commercial risk profiles and appetites. It is likely these compliance concerns will multiply post-April 2025.
The Gibson Dunn team is closely following these developments and will be publishing more analysis as the situation develops. In the meantime, Gibson Dunn lawyers stand ready to answer any questions as companies and organizations navigate the new policy environment.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. For additional information about how we may assist you, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s International Trade practice group:
United States:
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Vanessa Ludwig – Frankfurt (+49 69 247 411 531, vludwig@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Gibson Dunn is available to help clients understand what these and other expected policy changes will mean for them and how to navigate the shifting regulatory environment.
Within hours of his return to the Oval Office, President Donald Trump issued a flurry of executive actions to change how the federal workforce operates during his administration.
First, President Trump issued an executive order, “Restoring Accountability to Policy-Influencing Positions Within the Federal Workforce,” that aims to increase the effective oversight and streamline the removal and replacement of certain federal employees who hold “positions of a confidential, policy-determining, policy-making, or policy-advocating character.” Generally, non-exempt civil service employees have procedural tools available to challenge and appeal their removal. Monday’s order reinstates President Trump’s October 2020 executive order that sought to exempt certain federal employees from those civil service protections by designating them under “Schedule F,” a new classification for agency personnel in policy-making positions. Former President Joe Biden rescinded the 2020 “Schedule F” executive order shortly after taking office. And in April 2024, the Office of Personnel Management published a final rule explaining, among other things, that career civil servant protections are not lost by an involuntary move from a competitive service to excepted service position. The April 2024 rule also interpreted the phrases indicating excepted service positions—i.e., “confidential, policy-determining, policy-making, or policy-advocating”—as applying only to noncareer political appointees, not “career employees.” Departing from the prior administration’s approach, Monday’s order instructs the Director of the Office of Personnel Management to “amend the Civil Service Regulations to rescind all changes made by the final rule of April 9, 2024.”
Monday’s order also amends the 2020 reclassification order in several ways—most noticeably, the order now refers to the newly excepted class of employees as “Schedule Policy/Career” rather than “Schedule F.” Despite this change in terminology, the substance remains largely the same. Monday’s order targets “cases of career Federal employees resisting and undermining the policies and directives of their executive leadership.” By excepting Schedule Policy/Career employees from those protections, Monday’s order seeks to make employees in “policy-influencing positions” directly “accountable to the President.”
It is currently unclear which federal positions will fall under the new classification. The new order requires the Director of the Office of Personnel Management to “promptly recommend to the President which positions should be placed in Schedule Policy/Career,” and updates on that front should be available shortly.
The new order has already been challenged in court. This week, the National Treasury Employees Union challenged the order in the United States District Court for the District of Columbia. The suit claims that, in issuing the order, the President exceeded his statutory authority to prescribe rules for competitive service positions, infringed upon federal employees’ procedural due process rights, and violated the Administrative Procedure Act.
Second, President Trump issued an executive order seeking to reform the federal hiring process. The order, “Reforming the Federal Hiring Process and Restoring Merit to Government Service,” directs the Assistant to the President for Domestic Policy within the next 120 days to “develop and send to agency heads a Federal Hiring Plan that brings to the Federal workforce only highly skilled Americans dedicated to the furtherance of American ideals, values, and interests.” In developing that Federal Hiring Plan, the Assistant to the President for Domestic Policy must consult with the Director of the Office of Management and Budget, the Director of the Office of Personnel Management, and the Administrator of the Department of Government Efficiency. Among other directives, the Federal Hiring Plan must: “prevent the hiring of individuals based on their race, sex, or religion, and prevent the hiring of individuals who are unwilling to defend the Constitution or to faithfully serve the Executive Branch”; “integrate modern technology to support the recruitment and selection process”; and “decrease government-wide time-to-hire to under 80 days.”
Notably, the executive order requires the Federal Hiring Plan to “include specific agency plans to improve the allocation of Senior Executive Service positions” in various agencies. Senior Executive Service (SES) employees serve just below presidential appointees within federal agencies. There are a limited number of SES positions in the federal government, and the executive order seeks to evaluate how the allocation of those positions “will best facilitate democratic leadership, as required by law, within each agency.”
Third, President Trump issued a memorandum focused on “Restoring Accountability for Career Senior Executives.” The memorandum begins by emphasizing that the “President’s power to remove subordinates is a core part of the Executive power” and “because SES officials wield significant governmental authority, they must serve at the pleasure of the President.” The memorandum directs, among other things, the Director of the Office of Personnel Management, in coordination with the Director of the Office of Management and Budget, “to issue SES Performance Plans that agencies must adopt.” And consistent with the executive order described above, the memorandum directs “[e]ach agency head,” to the extent permitted by the relevant statute, to “reassign agency SES members to ensure their knowledge, skills, abilities, and mission assignments are optimally aligned to implement [the administration’s] agenda.” Reports indicate that some agencies started reassigning senior career officials this week.
The memorandum also significantly changes Executive Resources Boards and Performance Review Boards within agencies. Under 5 U.S.C. § 3393(b), agencies must establish Executive Resources Boards to conduct merit-based hiring for career SES officials. And under 5 C.F.R. § 430.311, agencies must establish Performance Review Boards “to make recommendations to the appointing authority on the performance of its senior executives.” President Trump’s memorandum directs “[e]ach agency head” to “terminate its existing Executive Resources Board (ERB), institute a new or interim ERB, and assign senior noncareer officials to chair and serve on the board as a majority alongside career members.” Similarly, the memorandum directs “[e]ach agency head” to “terminate its existing Performance Review Board membership and re-constitute membership with individuals committed to full enforcement of SES performance evaluations that promote and assure an SES of the highest caliber.”
Fourth, President Trump issued a memorandum establishing a hiring freeze on federal civilian employees. The freeze excludes “positions related to immigration enforcement, national security, or public safety.” And the “the Director of the Office of Personnel Management (OPM) may grant exemptions from this freeze where those exemptions are otherwise necessary.” No such exemption applied to law students who expected to begin working for the Department of Justice later this year. Citing the federal hiring freeze, the Department of Justice recently rescinded the employment offers of students hired under the Attorney General’s Honors Program.
Within 90 days, “the Director of the Office of Management and Budget (OMB), in consultation with the Director of OPM and the Administrator of the United States DOGE Service (USDS),” must submit “a plan to reduce the size of the Federal Government’s workforce through efficiency improvements and attrition.” The freeze will expire for most departments once OMB submits its plan. However, the freeze will “remain in effect for the IRS until the Secretary of the Treasury, in consultation with the Director of OMB and the Administrator of USDS, determines that it is in the national interest to lift the freeze.”
Notably, the memorandum explains that “[c]ontracting outside the Federal Government to circumvent the intent of this memorandum is prohibited.”
Fifth, President Trump issued a memorandum directing federal departments and agencies “to terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis.” The memorandum explains that “department and agency heads shall make exemptions they deem necessary.” And the memorandum recognizes that the directive to return to work in-person must be “implemented consistent with applicable law.”
Finally, President Trump issued an executive order “Establishing and Implementing the President’s ‘Department of Government Efficiency’“ also known as “DOGE.” The executive order renames the United States Digital Service, which had previously provided consultation services to federal agencies on information technology, to the United States DOGE Service. DOGE will be part of the Executive Office of the President, unlike its predecessor which was housed in the Office of Management and Budget. As contemplated in some of the executive actions described above, DOGE will assist the administration in evaluating federal workforce issues and “modernizing Federal technology and software to maximize governmental efficiency and productivity.” The order requires each executive agency to establish a “DOGE Team of at least four employees, which may include Special Government Employees, hired or assigned within thirty days of the date of this Order.” DOGE Teams—typically comprised of “one DOGE Team Lead, one engineer, one human resources specialist, and one attorney”—will assist agency heads in increasing government efficiency. In the past week, several lawsuits have been filed challenging the lawfulness of DOGE.
Gibson Dunn continues to monitor developments in this area. Government contractors, federal grant recipients, and other private sector employers should consider reviewing their programs and contacts with federal employees to ensure compliance with evolving legal requirements. Gibson Dunn is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Public Policy, Administrative Law & Regulatory, Energy Regulation & Litigation, Labor & Employment, or Government Contracts practice groups, or the following in Washington, D.C.:
Michael D. Bopp – Co-Chair, Public Policy Practice Group,
(+1 202.955.8256, mbopp@gibsondunn.com)
Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
(+1 202.955.8515, sdelery@gibsondunn.com)
Matt Gregory – Partner, Administrative Law & Regulatory Practice Group,
(+1 202.887.3635, mgregory@gibsondunn.com)
Andrew G.I. Kilberg – Partner, Administrative Law & Regulatory Practice Group,
(+1 202.887.3759, akilberg@gibsondunn.com)
Tory Lauterbach – Partner, Energy Regulation & Litigation Practice Group,
(+1 202.955.8519, tlauterbach@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Gibson Dunn understands that the flurry of executive orders and other announcements from the White House during President Trump’s opening days is difficult to follow. To assist, we have taken on the assignment of cataloging and digesting each order as it is announced.
The Executive Order Tracker includes the executive orders and other significant announcements made by the Trump Administration to date. The list includes a summary of each order and announcement as well as information on the agencies involved and subject matters covered. It also includes links to more in-depth analyses Gibson Dunn has prepared on a number of the executive orders.
The Tracker will be updated promptly upon the issuance of new announcements and orders.
If you have questions about any of the executive orders, please do not hesitate to reach out to the Gibson Dunn lawyer with whom you usually work or the team below.
Please click on the link below to view Gibson Dunn’s complete Executive Order Tracker:
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the Executive Orders. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Public Policy, Administrative Law & Regulatory, or Energy Regulation & Litigation practice groups, or the following in Washington, D.C.:
Michael D. Bopp – Co-Chair, Public Policy Practice Group,
(+1 202.955.8256, mbopp@gibsondunn.com)
Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
(+1 202.955.8515, sdelery@gibsondunn.com)
Andrew G.I. Kilberg – Partner, Administrative Law & Regulatory Practice Group,
(+1 202.887.3759, akilberg@gibsondunn.com)
Tory Lauterbach – Partner, Energy Regulation & Litigation Practice Group,
(+1 202.955.8519, tlauterbach@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
From the Derivatives Practice Group: This week, the CFTC announced that Commissioner Caroline D. Pham was unanimously elected as CFTC Acting Chairman and SEC Acting Chairman Uyeda announced the formation of a crypto task force.
New Developments
- Acting Chairman Pham Announces CFTC Leadership Changes. On January 22, Acting Chairman Pham announced the following CFTC leadership changes: Acting Chief of Staff: Harry Jung; Acting General Counsel: Meghan Tente; Acting Director of the Office of Public Affairs: Taylor Foy; Acting Director of the Office of Legislative and Intergovernmental Affairs: Nicholas Elliot; Acting Director of the Division of Market Oversight: Amanda Olear; Acting Director of the Division of Clearing and Risk: Richard Haynes; Acting Director of the Market Participants Division: Tom Smith; Acting Director of the Division of Enforcement: Brian Young; Acting Director of the Office of International Affairs: Mauricio Melara. [NEW]
- SEC Acting Chairman Uyeda Announces Formation of New Crypto Task Force. On January 21, SEC Acting Chairman Uyeda launched a crypto task force that, according to the SEC, is dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Commissioner Hester Peirce will lead the task force. Richard Gabbert, Senior Advisor to the Acting Chairman, and Taylor Asher, Senior Policy Advisor to the Acting Chairman, will serve as the task force’s Chief of Staff and Chief Policy Advisor, respectively. The SEC said that the task force will collaborate with SEC staff and the public to set the SEC on a sensible regulatory path that respects the bounds of the law and that the task force’s focus will be to help the SEC draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously. The Sec indicated that the task force will operate within the statutory framework provided by Congress, coordinate the provision of technical assistance to Congress as it makes changes to that framework, and coordinate with federal departments and agencies, including the CFTC, and state and international counterparts. [NEW]
- CFTC Names Caroline D. Pham Acting Chairman. On January 20, the CFTC announced the members of the Commission have unanimously elected Commissioner Caroline D. Pham as Acting Chairman, effective January 20, 2025. Acting Chairman Pham was nominated to be a CFTC Commissioner on January 12, 2022 and unanimously confirmed by the U.S. Senate on March 28, 2022, for a term beginning on April 14, 2022 and expiring on April 13, 2027. She succeeds Rostin Behnam, who served as Chairman since January 4, 2022 and will remain a Commissioner until his departure on February 7, 2025. On January 21, Acting Chairman Pham made the following statement: “I’m humbled and grateful to be entrusted by President Trump to lead the CFTC as we approach a significant milestone in our history with tremendous opportunities ahead. For the past half century, the CFTC has proudly served our mission to promote market integrity and liquidity in the commodity derivatives markets that are critical to the real economy and global trade—ensuring American growers, producers, merchants and other commercial end-users can mitigate risks to their business and support strong U.S. economic growth. As the CFTC celebrates our 50th anniversary, we must also refocus and change direction with new leadership to fulfill our statutory mandate to promote responsible innovation and fair competition in our markets that have continually evolved over the decades. It’s time for the CFTC to get back to the basics. I’m honored to work alongside our dedicated CFTC staff, and I thank former Chairman Behnam and my fellow Commissioners for their service.” [NEW]
- CFTC and the Bank of England Comment on Report on Initial Margin Transparency and Responsiveness in Centrally Cleared Markets. On January 15, the Basel Committee on Banking Supervision (“BCBS”), the Bank for International Settlements’ Committee on Payments and Market Infrastructures (“CPMI”) and the International Organization of Securities Commissions (“IOSCO”) published the final report Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals and the accompanying cover note Consultation feedback and updated proposals. This report is the culmination of work undertaken by BCBS, CPMI, and IOSCO, co-chaired by the Bank of England and the Commodity Futures Trading Commission.
- CFTC Announces Review of Nadex Sports Contract Submissions. On January 14, the CFTC notified the North American Derivatives Exchange, Inc. (“Nadex”) d/b/a Crypto.com it will initiate a review of the two sports contracts that were self-certified and submitted to the CFTC on Dec. 19, 2024. As described in the submissions, the contracts are cash-settled, binary contracts. The CFTC determined the contracts may involve an activity enumerated in CFTC Regulation 40.11(a) and section 5c(c)(5)(C) of the Commodity Exchange Act. As required under CFTC Regulation 40.11(c)(1), the CFTC has requested that Nadex suspend any listing and trading of the two sports contracts during the review period.
- CFTC Announces Departure of Clearing and Risk Director Clark Hutchison. On January 15, the CFTC announced Division of Clearing and Risk Director Clark Hutchison will depart the agency Jan. 15. Mr. Hutchison has served as director since July 2019.
- CFTC Staff Issues Advisory Regarding the Compliance Date for Certain DCO Reporting Requirements. On January 10, the CFTC’s Division of Clearing and Risk (“DCR”) announced it issued a staff advisory regarding the compliance date for certain daily reporting requirements for registered derivatives clearing organizations (“DCOs”). The requirements were amended in August 2023. The compliance date for the amended requirements is February 10, 2025. According to the advisory, DCR will not expect any DCO to comply with the amended requirements until December 1, 2025, so long as the DCO continues to comply with the previous version of the requirements.
- CFTC Announces Departure of Enforcement Director Ian McGinley. On January 10, the CFTC announced that Division of Enforcement Director Ian McGinley will depart the agency on January 17, 2025. Mr. McGinley has served as Director of Enforcement since February 2023.
- Chairman Rostin Behnam Announces Departure from CFTC. On January 7, Chairman Rostin Behnam announced that he will be stepping down from his position as Chairman on January 20 and that his final day at the CFTC will be Friday, February 7.
New Developments Outside the U.S.
- New Governance Structure for Transition to T+1 Settlement Cycle Kicks Off. On January 22, the European Securities and Markets Authority (“ESMA”), the EU’s financial markets regulator and supervisor, the European Commission (“EC”) and the European Central bank (“ECB”) launched a new governance structure to support the transition to the T+1 settlement cycle in the European Union. Following ESMA’s report with recommendations on the shortening of the settlement cycle, the new governance structure has been designed to oversee and manage the operational, regulatory and technological aspects of this transition. Given the high level of interconnectedness within the EU capital market, a coordinated approach across the EU, involving authorities, market participants, financial market infrastructures and investors, is desirable. ESMA said that the key elements of the new governance model include an Industry Committee, composed of senior leaders and representatives from market players, several technical workstreams, operating under the Industry Committee, focusing on the technological operational adaptations needed in the areas concerned by the transition to T+1 (i.e. trading, matching, clearing, settlement, securities financing, funding and FX, asset management, corporate events, settlement efficiency), and two more general workstreams that will review the scope and the legal and regulatory aspects of these adaptations, and a Coordination Committee, chaired by ESMA and with representation from the EC, the ECB, ESMA and the chair of the Industry Committee, intended to ensure coordination between the authorities and the industry, advising on challenges that may arise during the transition. Additionally, ESMA said that the Commission is currently considering the merits of a legislative change mandating a potential transition to a shorter settlement cycle. [NEW]
- ESMA and the EC Publish Guidance on Non-MiCA Compliant ARTs and EMTs (Stablecoins). On January 17, ESMA published a statement reinforcing the position related to the offer of ARTs and EMTs (also known as stablecoins) in the EU under Market in Crypto Assets regulation (MiCA). The statement provides guidance on how and under which timeline CASPs are expected to comply with the requirements of Titles III and IV of MiCA, as clarified in the EC Q&A. In particular, National Competent Authorities are expected to ensure compliance by crypto assets services providers (“CASPs”) regarding non-compliant ARTs or EMTs as soon as possible, and no later than the end of Q1 2025. ESMA indicated that the statement is intended to facilitate coordinated actions at the national level and avoid potential disruptions. The EC has also delivered a Q&A, intended to provide guidance on the obligations contained in titles III and IV of MiCA and how these obligations should apply to CASPs. The Q&A clarifies that certain crypto-asset services may constitute an offer to the public or an admission to trading in the EU and should therefore comply with titles III and IV of MiCA. [NEW]
- The EBA and ESMA Analyze Recent Developments in Crypto-Assets. On January 16, ESMA and the European Banking Authority (“EBA”) published a Joint Report on recent developments in crypto-assets, analyzing decentralized finance (“DeFi”) and crypto lending, borrowing and staking. This publication is the EBA and ESMA’s contribution to the European Commission’s report to the European Parliament and Council under Article 142 of the Markets in Crypto-Assets Regulation. EBA and ESMA find that DeFi remains a niche phenomenon, with value locked in DeFi protocols representing 4% of all crypto-asset market value at the global level. The report also sets out that EU adoption of DeFi, while above the global average, is lower than other developed economies (e.g. the US, South Korea).
- BCBS, CPMI and IOSCO Publish Reports on Margin in Cleared and Non-cleared Markets. On January 15, BCBS, CPMI and IOSCO published three final reports on initial and variation margin in centrally cleared and non-centrally cleared markets. The three reports reflect feedback received further to the publication of consultation reports last year. BCBS, CPMI and IOSCO published the final report on transparency and responsiveness of initial margin in centrally cleared markets, setting out 10 final policy proposals relevant to central counterparties (“CCPs”) and clearing members. ISDA and the Institute of International Finance (IIF) submitted a joint response during the consultation. CPMI and IOSCO published the final report on streamlining variation margin in centrally cleared markets, setting out eight examples of effective practices for CCPs’ variation margin processes. ISDA and the IIF submitted a joint response during the consultation. BCBS and IOSCO published the final report on streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets, setting out eight recommendations. ISDA and the IIF submitted a joint response during the consultation. In relation to the BCBS, CPMI and IOSCO report on initial margin transparency and responsiveness in centrally cleared markets, the Bank of England and the CFTC have also published a joint statement expressing support for the findings and policy proposals. [NEW]
- EU Funds Continue to Reduce Costs. On January 14, ESMA published its seventh market report on the costs and performance of EU retail investment products, showing a decline in the costs of investing in key financial products. This report aims at facilitating increased participation of retail investors in capital markets by providing consistent EU-wide information on cost and performance of retail investment products.
New Industry-Led Developments
- ISDA Publishes Equity Definitions VE, Version 2.0. On January 21, ISDA published version 2.0 of the ISDA Equity Derivatives Definitions (Versionable Edition) on the MyLibrary platform. This publication includes, among other updates, provisions that can be used for documenting transactions with time-weighted average price or volume-weighted average price features, futures price valuation in respect of share transactions and benchmark provisions in respect of an index. [NEW]
- ISDA and GFXD Respond to FCA on Future of SI Regime. On January 10, ISDA and the Global Foreign Exchange Division (“GFXD”) of the Global Financial Markets Association (“GFMA”) responded to questions from the UK Financial Conduct Authority (“FCA”) on the future of the systematic internalizer (“SI”) regime. In the response, ISDA and GFXD support the proposal that firms are no longer required to identify themselves as SIs for derivatives trading and provide input on the consequences of this requirement falling away. ISDA and GFXD do not believe there will be any impact for reporting, best execution or on market structure.
The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, and Karin Thrasher.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:
Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)
Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)
Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)
Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)
Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)
Adam Lapidus – New York (212.351.3869, alapidus@gibsondunn.com )
Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)
William R. Hallatt , Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )
David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)
Marc Aaron Takagaki , New York (212.351.4028, mtakagaki@gibsondunn.com )
Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)
Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Recently proposed regulations provide that, for taxable years beginning after December 31, 2026, the definition of “covered employees” will be expanded to include a company’s next five highest compensated employees for each taxable year in addition to those employees that already fall into such definition, regardless of whether they are officers of the company.
Last amended in 2017, Section 162(m) of the Internal Revenue Code generally prohibits publicly held corporations from taking income tax deductions for annual compensation in excess of $1 million paid to the company’s “covered employees.” Currently, “covered employees” include a company’s principal executive officer, principal financial officer, and three other most highly compensated executive officers determined based on total compensation required to be disclosed pursuant to Item 402 of Regulation S-K (thus, typically, the company’s “named executive officers” as disclosed in the company’s Form 10-K or annual proxy statement for the year). If a person is designated as a “covered employee” after December 31, 2016, the person remains a “covered employee” in perpetuity.
On January 14, 2025, the Internal Revenue Service and Treasury Department issued proposed regulations to implement statutory changes to Section 162(m) enacted by the American Rescue Plan Act of 2021. In implementing these changes, the proposed regulations provide that, for taxable years beginning after December 31, 2026, the definition of “covered employees” will be expanded to include the next five highest compensated employees for each taxable year, regardless of whether they are officers of the company. These additional highly compensated employees may change from year to year and will not remain “covered employees” in perpetuity.
- The proposed regulations clarify a few points in determining who qualifies as one of the next five highest compensated employees who make up these additional “covered employees.” Specifically, companies will need to consider all of their common law employees and officers, as well as employees and officers of any member of the company’s affiliated group. Employees for this purpose also include employees of related management entities or professional employer organizations who perform substantially all of their services during the taxable year for the publicly held corporation or members of its affiliated group.
- In ranking employees to determine who is the most highly compensated, companies must look at compensation that would be deductible in that tax year but for the application of Section 162(m). As a result, compensation that may be granted in 2025 or 2026 but that is includible in income and deductible by the company in 2027 will be counted for purposes of determining who is an additional “covered employee” for the 2027 tax year. This may have an immediate impact on companies’ annual compensation planning and how they account for tax for financial statement purposes.
- The five highest compensated employees for a given taxable year may include individuals who were already among the company’s covered employees by virtue of previously being a named executive officer for a prior taxable year.
The proposed regulations include several examples that provide guidance with respect to application of these changes.
In anticipation of the changes to Section 162(m), companies may wish to review their employee population (including employees of their affiliated group) and begin to track compensation to determine how these changes may affect the company’s group of “covered employees” for purposes of Section 162(m). Special attention should be given to particularly large cash or equity awards that may vest or become payable in or after 2027.
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these issues. To learn more about these developments, please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Executive Compensation and Employee Benefits practice group, or the authors:
Sean C. Feller – Los Angeles (+1 310.551.8746, sfeller@gibsondunn.com)
Krista Hanvey – Dallas (+1 214.698.3425, khanvey@gibsondunn.com)
Kate Napalkova – New York (+1 212.351.4048, enapalkova@gibsondunn.com)
Alli Balick – Los Angeles (+1 213.229.7685, abalick@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
The U.S. Supreme Court has stayed a recent district court order that preliminarily enjoined enforcement of the Corporate Transparency Act (CTA). While a separate district court ruling staying the effectiveness of the CTA’s beneficial ownership interest reporting rule (Reporting Rule) nationwide remains in effect, that stay could soon be lifted to conform with the Supreme Court’s decision. This means that the Reporting Rule could soon become enforceable once again while the Fifth Circuit and other courts evaluate its constitutionality. In the meantime, FinCEN has acknowledged that the Reporting Rule currently remains unenforceable notwithstanding the Supreme Court’s decision.
Entities that believe they may be subject to the CTA and its associated Reporting Rule should closely monitor these issues, and consult with their CTA advisors as necessary, to understand their obligations now that the Reporting Rule may soon become effective again. Entities may be required to file Beneficial Ownership Information reports on short notice.
For additional background information, please refer to our Client Alerts issued on December 5, December 9, December 16, December 24, and December 27, 2024.
On December 3, Judge Mazzant of the U.S. District Court for the Eastern District of Texas ruled that the CTA was likely unconstitutional.[1] The court issued a nationwide preliminary injunction against enforcement of the CTA and postponed the effective date of the Reporting Rule that set filing deadlines for compliance. The government appealed and briefly obtained a stay of the district court’s order from a Fifth Circuit motions panel, but the Fifth Circuit merits panel that will hear the government’s appeal in March reinstated the district court’s order, making the CTA unenforceable once again.
The government then filed an emergency application in the Supreme Court asking the Court to stay the district court’s order in full—in other words, to put on hold the district court’s nationwide preliminary injunction against CTA enforcement and its postponement of the Reporting Rule’s effective date.[2]
On January 23, 2025, the Supreme Court granted the government’s application in full, staying the district court’s order “pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of [any] petition for a writ of certiorari.”[3] The Court’s decision was 8–1. While the Court did not provide a written opinion, Justice Gorsuch filed a concurrence noting that he would take the case now to decide the propriety of “universal” injunctions. Justice Jackson dissented, noting her view that the government had not shown that the Court’s intervention was necessary at this time, without expressing any view on the merits.
What the Latest Order Means for Entities Subject to the CTA
Now that the Supreme Court has stayed the district court’s order, the CTA will be enforceable while the case is appealed to the Fifth Circuit (and, potentially, to the Supreme Court). The government’s reply brief in the Supreme Court indicated that if the Supreme Court stayed the district court’s order, FinCEN “would again briefly extend the [reporting] deadline in light of the injunction’s having been in effect,” similar to how FinCEN responded after the Fifth Circuit’s motions panel briefly reinstated the CTA in December.[4] Companies should monitor FinCEN’s announcements closely for additional guidance now that the Supreme Court has granted the stay.
Notably, the Supreme Court’s order operates to stay only the order issued by the Northern District of Texas in the Texas Top Cop Shop case, No. 4:24–cv–478 (E.D. Tex.).[5] All other lower court orders remain in effect, for now. Importantly, on January 7, a different district court in Texas enjoined enforcement of the CTA as applied to the plaintiffs in that case and stayed the effective date of the Reporting Rule universally.[6] The order in that case, Smith v. U.S. Department of the Treasury, remains in effect. So for now, the Reporting Rule technically remains stayed. But given the Supreme Court’s recent order staying the Top Cop Shop order, the government could obtain a similar stay of the district court’s order in Smith if the government requests that relief (or if the district court stays its order unilaterally) in light of the Supreme Court’s decision. On January 24, FinCEN posted an update recognizing that a “separate nationwide order issued by a different federal judge” in the Smith case remains in effect, and noting that “[r]eporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force.”[7]
In the meantime, it remains to be seen whether the government will take a new position on the CTA under the new Trump Administration. Although the Department of Justice typically defends the constitutionality of statutes enacted by Congress, it is possible the new Administration will change positions and decline to enforce the CTA or take further steps to defend it.
Entities that believe they may be subject to the CTA and its associated Reporting Rule should closely monitor these issues, and consult with their CTA advisors as necessary, to understand their obligations now that the Reporting Rule may soon become effective again. Entities may be required to file Beneficial Ownership Information reports on short notice.
[1] Texas Top Cop Shop, Inc. et al. v. Garland et al., No. 4:24-CV-478, Dkt. 30 (E.D. Tex. Dec. 3, 2024).
[2] Application, Henry v. Top Cop Shop, Inc., No. 24A653 (U.S. Supreme Court Dec. 31, 2024).
[3] Order, Henry v. Top Cop Shop, Inc., No. 24A653 (U.S. Supreme Court Jan. 23, 2025).
[4] Reply at 15, Henry v. Top Cop Shop, Inc., No. 24A653 (U.S. Supreme Court Jan. 13, 2025).
[5] See Order, Henry v. Top Cop Shop, Inc., supra (“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”).
[6] Smith v. U.S. Dep’t of Treasury, No. 6:24-cv-00336-JDK, Dkt. 30 at 33–34 (E.D. Tex. Jan. 7, 2025).
[7] https://fincen.gov/boi (Jan. 24, 2025).
Gibson Dunn has deep experience with issues relating to the Bank Secrecy Act, the Corporate Transparency Act, other AML and sanctions laws and regulations, and challenges to Congressional statutes and administrative regulations.
For assistance navigating white collar or regulatory enforcement issues, please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any leader or member of the firm’s Anti-Money Laundering, Administrative Law & Regulatory, Investment Funds, Real Estate, or White Collar Defense & Investigations practice groups.
Please also feel free to contact any of the following practice group leaders and members and key CTA contacts:
Anti-Money Laundering:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
M. Kendall Day – Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)
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Ella Capone – Washington, D.C. (+1 202.887.3511, ecapone@gibsondunn.com)
Sam Raymond – New York (+1 212.351.2499, sraymond@gibsondunn.com)
Administrative Law and Regulatory:
Stuart F. Delery – Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)
Eugene Scalia – Washington, D.C. (+1 202.955.8673, dforrester@gibsondunn.com)
Helgi C. Walker – Washington, D.C. (+1 202.887.3599, hwalker@gibsondunn.com)
Matt Gregory – Washington, D.C. (+1 202.887.3635, mgregory@gibsondunn.com)
Investment Funds:
Kevin Bettsteller – Los Angeles (+1 310.552.8566, kbettsteller@gibsondunn.com)
Shannon Errico – New York (+1 212.351.2448, serrico@gibsondunn.com)
Greg Merz – Washington, D.C. (+1 202.887.3637, gmerz@gibsondunn.com)
Real Estate:
Eric M. Feuerstein – New York (+1 212.351.2323, efeuerstein@gibsondunn.com)
Jesse Sharf – Los Angeles (+1 310.552.8512, jsharf@gibsondunn.com)
Lesley V. Davis – Orange County (+1 949.451.3848, ldavis@gibsondunn.com)
Anna Korbakis – Orange County (+1 949.451.3808, akorbakis@gibsondunn.com)
White Collar Defense and Investigations:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
Winston Y. Chan – San Francisco (+1 415.393.8362, wchan@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
F. Joseph Warin – Washington, D.C. (+1 202.887.3609, fwarin@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
With President Trump signing twenty-six executive orders (“EOs”) on day one of his second term, several focusing squarely on the domestic energy sector and many more focusing on areas such as the environment and trade that will significantly impact domestic energy production, the U.S. energy industry is busy untangling what the second Trump presidency will mean for it.
From tariffs to tax credits and beyond, much could change for energy companies in the near future. Here are ten regulatory and policy issues energy industry experts will be monitoring in the early days of President Trump’s second administration.
1. DOE Grants and Loans
The energy industry will be watching to see to what extent the Trump administration will continue to fund clean energy programs through Department of Energy (DOE) grant or loan programs after President Trump issued an EO calling on the federal government to “immediately pause the disbursement of funds appropriated” through the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) on day one of his second term. The BIL and the IRA allocated billions to these programs, and the Biden administration awarded approximately 99% of the funds available for fiscal year 2024 or earlier, 90% of which has been legally obligated to awardees under contractual commitments, which would presumably make those amounts harder to refuse to disburse. Significant funds still remain available under those statutes for future fiscal years, although it is unclear how the Trump administration ultimately will decide to administer the awarding of those funds, if at all. Areas that have received significant grant and loan awards from the DOE that could be affected by executive action rolling back DOE funding include battery storage, biofuels, hydrogen, advanced nuclear, carbon management technologies (such as carbon sequestration), advanced technology vehicles (including electric vehicles), grid modernization, solar, wind, and critical minerals.
Republican legislators have indicated that the loan programs may be targeted for cost-cutting measures, and President Trump has stated that he will “rescind all unspent funds” from the IRA. However, Chris Wright, President Trump’s nominee for Secretary of the DOE, has experience working with DOE resources from his involvement with a company developing a small modular reactor project at the Idaho National Lab. Although Wright acknowledged in his confirmation hearing the need to address issues raised in a recent investigator general DOE loan program report, which suggested pausing DOE loan issuances until the Loan Program Office can ensure that contracting officers and their representatives are complying with conflict of interest regulations and enforcing conflict of interest contractual obligations, he emphasized during his confirmation hearing the importance of DOE investments in accelerating the development of new energy technologies to address climate change.
However, based on President Trump’s statements that he believes the Impoundment Control Act is unconstitutional and an EO that he issued directing all agencies to pause disbursement of appropriated funds made available through the IRA and BIL, current and would-be grant and loan awardees and recipients will be watching to see if the Trump administration takes further steps to halt already-awarded or obligated funding, modify funding conditions for already-awarded DOE grants and loans, or restart funding disbursements under new or revised regulatory standards. As our firm’s previous exploration of the proposed Department of Government Efficiency (DOGE) explained, any such moves will face significant legal challenges, including arguments that President Trump cannot bar the DOE from spending previously allocated money unless Congress repeals the Impoundment Control Act.
2. Regulatory Streamlining of Permitting Processes
All regions of the U.S. face challenges from insufficient energy infrastructure due to aging energy delivery systems, growing electricity demand, and changing energy sourcing and market dynamics. These challenges exist both for electricity transmission and pipeline modernization and expansion initiatives. Efforts to modernize this infrastructure currently face significant federal, state, and local permitting hurdles, where for example the federal environmental reviews for electricity transmission take on average 4.3 years to complete. Attempts to modernize and expand pipeline infrastructure face similar hurdles that are magnified by issues related to evaluation of and plans to address greenhouse gas emissions. President Trump took action to reduce permitting timelines during his previous term and stated that he would again streamline permitting processes, and the energy industry will certainly be watching to see whether he fulfills this pledge.
Like President Trump, the Republican Party generally supports permitting reform, as do President Trump’s nominees for the DOE, Department of the Interior, and Environmental Protection Agency (EPA). For example, Chris Wright, the nominee for Secretary of Energy, stated that he is “a hundred percent committed to growing our electricity grid and our energy production and removing those barriers that are standing in the way” of that goal. Similarly, Doug Burgum, the nominee for Secretary of the Interior and President Trump’s planned “Energy Czar,” stated that “it takes too long in our country” to build transmission lines and pipelines and emphasized the need for efficient energy transportation networks. Likewise, Lee Zeldin, the nominee for EPA Administrator, highlighted permitting reform as one of his priorities and stated that he “would look forward to doing [his] part to make sure that the EPA is not holding up any opportunities to be able to pursue sound applications” for infrastructure.
Given the widespread support among the Republican Party and Trump administration for permitting reform, as well as the bipartisan support for reform, the energy industry will be watching to see if the administration crafts rules to ease the federal permitting process not only for pipelines but also for electric transmission lines and if the administration is able to pressure Congress into passing permitting reform legislation.
3. IRA Tax Credits
President Trump did not announce any changes to IRA tax credits on his first day in office, but has criticized electric vehicle and offshore wind tax credits in the past. (The IRA made certain credits wholly or partially refundable (so-called direct payments), but the appropriation for these refunds was not made through the Inflation Reduction Act and so these refunds would apparently fall outside the scope of President Trump’s executive order pausing disbursement of IRA funds.) Bipartisan support for IRA tax credits, combined with estimates that red states have received more than half of announced clean energy projects supported by the IRA, may lead to IRA tax credits being left largely undisturbed by President Trump and legislators. Some of the richer IRA credits may also provide significant subsidies to the biogas and fossil fuel industries, such as the hydrogen production credit, the sustainable aviation fuel credit, and the technology-neutral investment and production tax credits. It is notable that in August of 2024 eighteen Republican legislators wrote House Majority Leader Mike Johnson to encourage him to ensure that IRA tax credits are protected from any legislation to repeal other portions of the IRA. Additionally, a senior tax policy advisor in the Senate stated publicly in May of 2024 that full repeal of IRA tax incentives was unlikely no matter the outcome of the 2024 general election. However, because several critical provisions in the signature tax legislation of President Trump’s first term (the Tax Cuts and Jobs Act, or TCJA) either have begun to sunset or are scheduled to sunset at the end of this year, tax reform is expected to be a major Congressional priority in 2025. Simply extending the TCJA would itself cost trillions; as a result, the coming debates may place many tax issues up for discussion. Nonetheless, because IRA tax credits are core to the economic feasibility of many planned energy projects, energy industry stakeholders will be watching carefully to see if the U.S. Congress or the Trump administration takes any steps to limit the availability of IRA tax credits.
4. Nuclear
The energy industry will be watching to see how President Trump will support the development of domestic nuclear facilities and whether such support will include significant financial backing to bolster nuclear project development, including small modular nuclear reactors and more conventional large nuclear facilities, because nuclear facilities traditionally have much longer lead times and greater front-end capital requirements for completion of permitting and construction as compared to other energy generation projects, such as natural gas and solar. The U.S., the world’s largest producer of nuclear energy, relies on nuclear energy for about one-fifth of its electricity. As a source of baseload energy, nuclear energy compliments other carbon-free energy sources and could help the grid maintain reliability and lower carbon emissions. However, the U.S. nuclear fleet is aging, with an average reactor age of about 42 years.
Republicans generally view nuclear power favorably. Additionally, one of President Trump’s January 20 EOs also specifically directed heads of agencies to identify actions that impose an undue burden on the development of nuclear energy resources. However, while President Trump seems to support small nuclear reactors, he has expressed hesitancy towards large nuclear plants due to permitting obstacles and overspending. Moreover, permitting reform alone may not be enough to facilitate new nuclear development, where the biggest challenge often is a dearth of financing to provide funding through the development phase to get nuclear plants to market. Observers thus will be watching to see if and how the Trump administration and allies in Congress will take further steps to champion funding opportunities for development and deployment of new nuclear power plants.
President Trump’s nominees to lead the DOE and EPA have made pro-nuclear statements. Chris Wright, who is nominated for Secretary of Energy and served with the board of a small modular reactor company, said that he “absolutely” thinks that there is an “enabling role DOE can play to help launch nuclear energy” and that nuclear “should be a huge part of America’s future energy source,” but that “that won’t happen without action within the legislature of the [U.S.], with action from the [DOE] and our incoming administration.” Similarly, Lee Zeldin, nominated for EPA Administrator, stated during his confirmation hearing that he agrees that nuclear power should be part of the energy mix.
Given the Republican Party’s and Trump administration’s stated support for nuclear energy and bipartisan support recently expressed for government action to facilitate data center expansion, which could be supported through development of additional nuclear baseload power, the energy industry will be watching to see whether the Trump administration or Congress crafts policies to support nuclear energy, including permitting reform and funding to support development and deployment of new nuclear plants.
5. Climate & Emissions
On the first day of his second term, President Trump rolled back many of President Biden’s climate-related EOs. President Trump also issued new EOs impacting U.S. climate policies, including withdrawing from the Paris Agreement, replacing environmental impact statements that prevented oil and gas leasing in Alaska, and directing federal agencies to pause disbursement of funds appropriated through the IRA and BIL, revise their environmental analyses, and review existing agency actions that burden domestic energy resource development.
Some of President Trump’s nominees have taken nuanced approaches to climate change in their confirmation hearings, with both his nominee for Secretary of Energy, Chris Wright, and nominee for Secretary of the Interior, Doug Burgum, acknowledging that climate change is real and, in the case of Mr. Wright, worth addressing through technological innovation. However, both nominees were supportive of using fossil fuels as part of the approach to climate change. Mr. Wright also stated that natural gas has been the “biggest driver of reducing America’s greenhouse gas emissions” and Mr. Burgum stated that there is technology to “eliminate harmful emissions” from fossil fuels, suggesting that both nominees are bullish on the future of fossil fuels. While climate-related diplomacy appears poised to mirror approaches from President Trump’s first term, assuming Mr. Wright and Mr. Burgum are confirmed, industry observers will be watching them and other new energy officials for indications regarding how the new administration will approach domestically-driven climate initiatives.
6. Data Centers & Load Growth
As of the date of publication of this alert, President Trump has not yet released any EOs substantively addressing data centers. However, on the first day of his second term, President Trump did issue an EO rolling back one of President Biden’s EOs on the use of artificial intelligence (AI) that addressed AI safety and a second EO requiring agency heads to review any actions taken pursuant to that EO. Despite this rollback, President Trump has acknowledged the importance and energy needs of AI, stating that the U.S. must “more than double up” for its energy capacity for its AI capabilities to remain globally competitive and suggesting that he will prioritize measures that would support the speedy development of energy for AI. On January 23, 2025, President Trump vocalized support for co-locating data centers and power generation facilities via “behind-the-meter” off-grid arrangements and stated he would work to fast-track regulatory approvals to get generation of all fuel types built to serve data centers. President Trump’s nominees have also emphasized the importance of AI and the electricity needed to support it. Chris Wright, nominated for Secretary of Energy, stated that building a new AI industry in the U.S. will require more energy. Likewise, Doug Burgum, nominated for Secretary of the Interior, similarly underscored the importance of electricity for AI and the need to reform electricity facility permitting processes in order to develop enough energy for the AI industry. President Trump also championed news from several large tech companies announcing $500 billion in investments in AI infrastructure, including data centers.
Both Presidents Trump and Biden have recognized the importance of supporting the development of AI and data centers and the energy facilities that support them. The growth of data centers and support for AI infrastructure could prove a consensus issue that presents opportunities for collaboration across the aisle within Congress and with state leaders. Over the coming months, energy industry observers will be watching for additional changes President Trump makes to previous AI-related EOs as well as new executive, agency, and legislative actions meant to encourage the development of AI and data centers and the electric facilities that support them.
7. Offshore and Onshore Energy Development
On the first day of his second term, President Trump signed an EO stating that it is the policy of the U.S. “to encourage energy exploration and production on Federal lands and waters, including on the Outer Continental Shelf, in order to meet the needs of our citizens and solidify the [U.S.] as a global energy leader long into the future,” but did not set specific policy priorities or directives in the offshore energy arena. On the same day, President Trump signed an EO that withdrew all areas of the outer continental shelf from wind energy leasing and directed agency leaders to pause the issuance of new or renewal permits, approvals, leases, rights of way, and loans pending completion of a comprehensive review of federal wind permitting and leasing practices. Although that EO stated that nothing in it affected the rights of the existing leases in those withdrawn areas, it also directed agencies to conduct reviews of the necessity of “terminating or amending any existing wind energy lease, identifying any legal bases for such removal, and submit a report with recommendations to the President.” Although the withdrawal of lease areas in that EO focused on offshore leasing, the leasing and permitting pause applies to both offshore and onshore leases.
This EO did not come as a surprise, given that President Trump recently expressed negative views of offshore wind, that President Trump has listed “end[ing] leasing to massive wind farms” as one of his presidential priorities, and that Doug Burgum, President Trump’s nominee for Secretary of the Interior, committed to working quickly to issue leases for oil and gas production but would not commit to continuing leases for offshore wind projects that are already underway. However, what remains to be seen is what concrete action the Trump administration may take to support offshore drilling and production, whether the Trump administration will attempt to terminate or modify existing wind energy leases based on the recommendations of his agencies, and whether the Trump administration is successful in taking such actions, both of which are likely targets of legal challenges.
President Trump’s views on offshore wind contrast with his bullish views on oil and gas. Trump has consistently expressed a desire to increase oil drilling on public lands, offer tax breaks to oil, gas, and coal producers, and expedite the approval of natural gas pipelines, all of which are consistent with his statement in his 2025 inaugural address that, “We will drill, baby, drill.” To that end, President Trump declared a “national energy emergency” in a day one EO focused primarily on supporting the production of fossil fuels. That order declared that “the United States’ insufficient energy production, transportation, refining, and generation constitutes an unusual and extraordinary threat to our Nation’s economy, national security, and foreign policy” and ordered energy-related agency heads to focus on the “identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.” Notably, the EO declaring a national energy emergency excludes wind and solar power from its definition of “energy,” again signaling a shift in focus toward fossil fuels and nuclear energy.
The Trump administration has also set its focus on resources located in Alaska’s protected federal lands. President Trump’s EO titled “Unleashing Alaska’s Extraordinary Resource Potential,” which garnered support from Alaska Gov. Mike Dunleavy, calls for modifications to the federal government offices and policies that oversee Alaska’s resource development industry. The order revokes President Biden’s actions that halted oil and gas exploration in the Arctic National Wildlife Refuge. President Trump previously led a move to allow oil and gas exploration in the refuge during his first term, only for it to be reversed by President Biden. The Alaska-focused EO could open up to 28 million acres of federal Alaska lands to oil and gas development, but it remains to be seen how the industry will react and the extent of development that will result.
Notwithstanding the political interest in development of oil and gas reserves in Alaska, the oil and gas industry will be the ultimate testing ground for these new policies. Alaska’s North Slope is located far from Asian and lower 48 state markets for the sale of oil and gas. The refuge also has no current infrastructure, like pipelines, to transport oil and gas. Several major oil companies have exited Alaska and the number of well-funded major companies likely to bid in federal lease sales has reduced. Energy market watchers thus will be monitoring activities in Alaska to see whether and how energy companies are moving to take advantage of new resource development opportunities.
8. Liquefied Natural Gas
President Trump reversed the Biden administration’s pause on liquefied natural gas (LNG) permits on day one of his second term by rolling back President Biden’s EO that paused granting LNG export authorizations and issuing an EO directing the Secretary of Energy to “restart reviews of applications for approvals of liquified natural gas export projects,” which the Acting Secretary did the following day. Further supporting LNG, President Trump also issued another EO (as discussed above) stating that the policy of the U.S. is to “prioritize the development of Alaska’s [LNG] potential” and directing various agencies to revoke or revise regulations from the Biden administration that are inconsistent with this new policy.
President Trump expressed support for LNG on the campaign trail, highlighting his ability to secure environmental approvals for previously stalled LNG plants. Likewise, President Trump’s nominees have also emphasized the importance of LNG. President Trump’s pick for the Secretary of Energy, a former executive of a fracking service company, Chris Wright, noted in his opening statement that the U.S. must “expand energy production including commercial nuclear and liquefied natural gas” to compete globally and expressed his support for the development of an LNG export terminal on the Pennsylvania coast near Philadelphia. Doug Burgum, nominated for Secretary of the Interior, also noted the importance of LNG exports allowing Germany to reopen their base load power plants after the Russo-Ukrainian War began.
Given the pro-LNG statements by President Trump and his nominees, the energy industry will be watching for further executive and agency actions that may attempt to dismantle President Biden’s LNG-related policies and that seek to support the development of additional LNG facilities.
9. Tariffs and Retaliatory Taxes
President Trump stated in his inaugural address that the U.S. would “tariff and tax foreign countries to enrich [U.S.] citizens.” He also issued an EO the same day calling on agencies to establish “an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.” Prior to his inauguration, President Trump stated that, in addition to the tariffs he planned to put on China, he would be putting “very serious tariffs” on Mexico and Canada, two of the United States’ other largest trading partners, but he has not put those tariffs into place at the time of the publication of this alert.
With respect to retaliatory taxes, President Trump announced a study of (and a request for protective options to address) foreign countries’ current or proposed taxes that are extraterritorial or disproportionately affect American companies, likely aimed at the novel taxes contemplated by the OECD’s framework for reducing tax base erosion and profit shifting by multinational enterprises. In another executive order, President Trump raised the possibility of applying Section 891 of the Internal Revenue Code (which can double the U.S. tax rate with respect to foreign countries that themselves impose discriminatory or extraterritorial taxes on U.S. persons).
Many predict that tariffs like the ones President Trump has proposed will increase the cost of goods around the world, including the U.S. Tariffs are especially likely to impact the U.S. energy industry, which relies on other countries for raw materials needed for energy infrastructure, such as China for lithium batteries. Additionally, countries may retaliate: some countries that have been threatened with U.S. tariffs, such as Canada, have already threatened to cut energy supply to the U.S. if President Trump imposes tariffs on them. As a result, energy industry observers will be watching for which countries and what goods may become subject to any tariffs that President Trump imposes and what impact that may have on energy markets and energy equipment manufacturing.
10. Hydrogen Energy
Hydrogen energy, which has benefited significantly from recent DOE actions establishing “hydrogen hubs” for project development and DOE grant and loan opportunities under the Biden administration, is likely to continue to develop as an emerging source of domestic energy, although the federal funding for it is closely tied to DOE programs and laws that President Trump has strongly criticized. It would be reasonable to expect the Trump administration to have a friendlier approach to blue hydrogen sourced from hydrocarbons than the Biden administration did, but because the DOE’s hydrogen hub and other hydrogen funding initiatives were established under the IRA and BIL umbrellas (see discussion above), some hydrogen funding and development opportunities could be pared back alongside funding for other technologies. What is clear is that the January 20, 2025, EO halting the disbursement of IRA and BIL funds does not distinguish between funding streams for different technologies. Thus, hydrogen is, at least as of now, equally impacted by that EO as any other technology that received recent funding commitments from DOE.
President Trump’s campaign focused on supporting domestic energy production, and he has already issued EOs meant to support the energy industry and improve the speed of permitting for energy-related projects, which may extend to hydrogen, although President Trump has rarely addressed the hydrogen energy industry in particular. Although President Trump has made largely negative comments about hydrogen cars, that is only one very small subset of the hydrogen energy industry at large. President Trump’s nominees also have not said much on the record regarding hydrogen energy. When Chris Wright, nominee for the Secretary of Energy, was asked whether he and the Trump administration would “ensure that federal support for hydrogen development does not disadvantage blue hydrogen projects,” he stated that it was “too early” for him to discuss the “trade-offs between different technologies.” Although there is reason to think that hydrogen energy may find support from the Trump administration and its officials, it is too early to say what form that support might take or how it might depart from the Biden administration’s approach to encouraging the same technology.
Mechanisms for Change
President Trump has a number of avenues available to him to change the rules and policies developed during the Biden administration, including the EOs that he issued on the first day of his second term; urging Congress to repeal legislation, create new legislation, or utilize the Congressional Review Act; and other methods which are discussed in a client alert previously published by Gibson Dunn.
Gibson Dunn attorneys are available to discuss how President Trump’s policies may affect the energy industry and how to navigate the presidential transition. If you have any questions, please reach out to your attorney contacts at Gibson Dunn or one of the authors of this article.
Gibson Dunn lawyers are available to assist in addressing any questions you may have about these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Energy Regulation & Litigation, Tax, Cleantech, Oil and Gas, or Power and Renewables practice groups, or the following members of the firm’s Energy/Tax Credits team:
Energy Regulation and Litigation:
William R. Hollaway – Washington, D.C. (+1 202.955.8592, whollaway@gibsondunn.com)
Tory Lauterbach – Washington, D.C. (+1 202.955.8519, tlauterbach@gibsondunn.com)
Tax:
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Matt Donnelly – Washington, D.C. (+1 202.887.3567, mjdonnelly@gibsondunn.com)
Eric B. Sloan – New York/Washington, D.C. (+1 212.351.2340, esloan@gibsondunn.com)
Cleantech:
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Daniel S. Alterbaum – New York (+1 212.351.4084, dalterbaum@gibsondunn.com)
Adam Whitehouse – Houston (+1 346.718.6696, awhitehouse@gibsondunn.com)
Oil and Gas:
Michael P. Darden – Houston (+1 346.718.6789, mpdarden@gibsondunn.com)
Rahul D. Vashi – Houston (+1 346.718.6659, rvashi@gibsondunn.com)
Power and Renewables:
Peter J. Hanlon – New York (+1 212.351.2425, phanlon@gibsondunn.com)
Nicholas H. Politan, Jr. – New York (+1 212.351.2616, npolitan@gibsondunn.com)
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Last year witnessed significant developments in False Claims Act enforcement, including a record-breaking number of new FCA cases. In this update, we cover recent developments in FCA jurisprudence, summarize significant enforcement activity, and analyze the most notable legislative, policy, and caselaw developments from the second half of calendar year 2024, picking up where our mid-year 2024 update left off.
Last year, the Department of Justice (DOJ) and qui tam relators smashed 2023’s all-time record for the number of newly filed False Claims Act (FCA) cases. While monetary recoveries from FCA cases in 2024 remained largely in line with trends over the last decade, 2024’s figure was still the highest in three years, coming in just shy of $3 billion. As in previous years, the lion’s share of this figure (approximately $2.2 billion) came from qui tam suits filed by private relators where DOJ subsequently intervened.
Another noteworthy 2024 development threatens to derail this enforcement train. In September 2024, a Florida federal court ruled the FCA’s qui tam provisions unconstitutional under the Appointments Clause. Ordinarily, that decision, in United States ex rel. Zafirov v. Florida Medical Associates, LLC, would seem unlikely to survive the Eleventh Circuit’s scrutiny, given the other cases previously holding that qui tam suits are constitutional. But Zafirov tracks statements by three Supreme Court Justices last year that they had questions about the constitutionality of the qui tam provision. Regardless of the outcome of that case, the robust pace of current enforcement efforts—both DOJ- and relator-led—is likely to continue for the foreseeable future. In this update, we cover both the Zafirov decision and other recent developments in FCA jurisprudence, and consider their implications for companies facing FCA matters that have progressed to litigation.
Last year’s record statistics also serve as a reminder that, while DOJ’s FCA enforcement priorities can shift after a presidential administration transition, it takes far more than a change in the political climate to slow FCA enforcement. In this update, we share our insights on how the second Trump Administration DOJ may distinguish its FCA enforcement efforts from those of the Biden Administration (and the first Trump Administration). And we also assess how relator-led cases are likely to continue to expand potential enforcement theories, forcing DOJ to crystallize its enforcement priorities via its intervention decisions.
This update also summarizes significant enforcement activity and analyzes the most notable legislative, policy, and caselaw developments from the second half of calendar year 2024, picking up where our last update left off. You can find all of Gibson Dunn’s publications regarding the FCA on our website, including a detailed discussion of how the FCA operates, industry-specific presentations, and practical guidance for companies seeking to navigate FCA enforcement.
I. FCA ENFORCEMENT ACTIVITY
A. NEW FCA ACTIVITY
In 2024, FCA enforcement reached staggering new heights—higher, even, than the then-record-setting number of new FCA cases in 2023. The government and qui tam relators filed 1,402 new cases in 2024, representing an additional 190 additional cases (a jump of about 16%) beyond 2023’s previous record total of 1,212 total new cases.
Of these new cases, relators initiated a record 979 qui tam actions in FY 2024—a 37% increase over the prior year, and a number far in excess of the prior record of 757 actions brought in 2013. The 979 new qui tam cases exceed the total number of FCA actions (both qui tam and non-qui tam) brought in all years except 2023.
The government, meanwhile, initiated 423 FCA matters in FY 2024. This is the second-highest number since 1986 (surpassed only by last year’s total of 505) and reflects DOJ’s continued investment in identifying leads for FCA enforcement without the assistance of relators.
For companies trying to anticipate developments in FCA enforcement under the second Trump Administration, FY 2024’s record number of new FCA actions highlights an important reality: regardless of the extent to which overall enforcement priorities evolve in the next four years, the sheer number of pending FCA cases will inevitably shape enforcement dynamics in the near term while these cases wend their way through the investigative and judicial processes. Further, DOJ’s intervention decisions in qui tam cases filed during the prior administration will go a long way toward revealing enforcement priorities going forward.
Number of FCA New Matters, Including Qui Tam Actions
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Source: DOJ “Fraud Statistics – Overview” (Jan. 15, 2025).
B. TOTAL RECOVERY AMOUNTS
In FY 2024, settlements and judgments under the FCA resulted in over $2.9 billion in recoveries, a figure just slightly above last year’s recovery of $2.7 billion. FY 2024’s total is broadly in line with yearly totals dating back to 2017, suggesting that 2021’s all-time record of $5.7 billion may be an outlier.
Notably, the government’s already sizeable recoveries in FY 2024 do not include two large settlements DOJ announced after the close of its 2024 fiscal year. In mid-October 2024, DOJ announced a $425 million settlement with a pharmaceutical company and a $428 million settlement with a defense contractor; the latter, according to DOJ, is the second largest government procurement-related recovery in FCA history. Together, these two settlements already bring FY 2025’s running total to over $850 million, suggesting that FY 2025 could surpass FY 2024 and mark the fourth straight year of increasing recoveries.
Settlements or Judgments in Cases Where the Government Declined Intervention as a Percentage of Total FCA Recoveries
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Source: DOJ “Fraud Statistics – Overview” (Jan. 15, 2025).
C. FCA RECOVERIES BY INDUSTRY
In keeping with prior years, most recoveries under the FCA in 2024 came from the health care sector, which saw approximately $1.7 billion in settlements and judgments. That figure represents a slight decrease from last year—and is in fact the lowest amount since 2009.
On the other hand, settlements and judgments in DOJ’s “Other” category (i.e., non-health care, non-defense) tripled from $370 million in FY 2023 to approximately $1.15 billion in FY 2024. Major recoveries in this area included a $38.2 million settlement agreement with a city government regarding its receipt of federal Department of Housing and Urban Development grant funds.
FCA Recoveries by Industry
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Source: DOJ “Fraud Statistics – Health and Human Services”; “Fraud Statistics – Department of Defense”; “Fraud Statistics – Other (Non-HHS and Non-DoD)” (Jan. 15, 2025).
II. NOTEWORTHY DOJ ENFORCEMENT ACTIVITY DURING THE SECOND HALF OF 2024
A. HEALTH CARE AND LIFE SCIENCES INDUSTRIES
- On July 1, two home health agencies and their parent entity agreed to pay approximately $4.5 million to resolve allegations that they provided illegal kickbacks to providers in exchange for Medicare referrals, in violation of the Anti-Kickback Statute (AKS) and the FCA. The government claimed that the agencies provided kickbacks in the form of lease payments, wellness health services, sports tickets, and meals. DOJ awarded the agencies an unspecified amount of credit for self-disclosure and cooperation with the government’s investigation, including in the form of assistance in determining the government’s alleged losses.[1]
- On July 10, a pharmacy chain and three subsidiaries agreed to settle claims that they violated the FCA by improperly reporting rebates received by drug manufacturers as service fees to the Centers for Medicare and Medicaid Services (CMS). As part of the settlement, the pharmacy and one of its subsidiaries will pay $101 million to the federal government. Further, the pharmacy’s other two subsidiaries will grant the United States an allowed, unsubordinated, general unsecured claim of $20 million in the pharmacy’s bankruptcy case in the District of New Jersey. The settlements resolved a qui tam suit brought by a former employee.[2]
- On July 10, a health care provider and twelve affiliated skilled nursing facilities agreed to pay $21.3 million to resolve allegations that they submitted false claims for rehabilitation therapy services. The government alleged that the provider created a quota system that incentivized employees to bill Medicare for therapy services that were “unreasonable, unnecessary, unskilled, or that simply did not occur as billed.” The government further alleged that the provider submitted false claims to Medicaid by using an inflated reimbursement rate that relied on data inaccurately reflecting the type and degree of care needed by the patients. The settlement resolved a qui tam lawsuit brought by two former employees of the company. In connection with the settlement, the provider entered into a five-year corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires an independent review organization to assess annually the medical necessity and appropriateness of therapy services billed to Medicare.[3]
- On July 11, a pharmacy chain and 10 subsidiaries agreed to settle allegations that they violated the FCA by knowingly dispensing unlawful prescriptions for opioids. According to the government, the prescriptions lacked a legitimate medical purpose, were not issued in the usual course of professional practice, were not for a medically accepted indication, or were medically unnecessary or otherwise invalid. As part of the settlement, the government will be paid $7.5 million and have an allowed, unsubordinated, general unsecured claim of $401.8 million in the pharmacy’s bankruptcy case in the District of New Jersey. The settlement resolves claims brought in a qui tam suit by former pharmacy employees. In conjunction with the settlement, the pharmacy chain entered into a Memorandum of Agreement (MOA) with the Drug Enforcement Administration (DEA), which includes employee training requirements and imposes certain recording-keeping obligations on the pharmacy for five years. The pharmacy chain also entered into a CIA with HHS-OIG that requires an independent review organization to determine whether prescription drugs are properly prescribed, dispensed, and billed.[4]
- On July 12, a provider of biopharmaceutical research services agreed to pay $5.38 million to settle allegations that it violated the FCA and the AKS. The government alleged that the company paid commissions to independent marketers in exchange for recommending the company’s services, and then submitted reimbursement claims for those services to Medicare and Medicaid. The government also alleged that the company continued to pay commissions to independent marketers even after learning that such payments violated the AKS. The settlement resolved a qui tam suit brought by two co-founders of a former independent marketer for the company. The company separately agreed to pay $147,851 to individual states for reimbursement claims paid by state Medicaid programs.[5]
- On July 18, a hospice center and its affiliates agreed to pay more than $19.4 million to resolve FCA claims premised on the alleged knowing submission of false claims for hospice services for patients who were not terminally ill or were otherwise ineligible for hospice care. The settlement also resolved nine qui tam lawsuits brought by current and former employees.[6]
- On July 18, a kidney dialysis provider agreed to pay over $34.4 million to resolve allegations that it improperly induced referrals to a former subsidiary that provided pharmacy services to dialysis patients. The government also alleged that the provider paid purported kickbacks to physicians to induce referrals to the company’s dialysis centers. This settlement resolved a qui tam suit brought by a former Chief Operating Officer of the provider.[7]
- On August 1, a Florida county agreed to pay $3.5 million to settle FCA allegations of fraudulent billing by the county’s Emergency Medical Service department. Specifically, the government alleged that over a seven-year period, the county billed federal health care programs for emergency medicine and transportation services performed by technicians who lacked appropriate certifications. The settlement also resolves a qui tam suit brought by the medical director of the county’s Emergency Medical Service.[8]
- On August 12, a Texas medical group and its founder and CEO agreed to pay a total of $8.9 million to settle allegations that they submitted false claims to Medicare by offering and providing illegal remuneration to physicians to induce referrals to their surgical centers, in violation of the AKS. The settlement resolves claims brought in a qui tam suit by a radiologist.[9]
- On August 20, a home health care and hospice provider and its subsidiaries agreed to pay approximately $3.8 million to resolve claims that the provider knowingly submitted false Medicare claims for patients who were ineligible for home health care or hospice benefits, for services that were unreasonable or not medically necessary, for services performed by untrained staff, or for services that were never performed. The settlement also resolved two additional qui tam suits brought by a former travel nurse, former managers, and former directors.[10]
- On August 26, a Missouri-based company specializing in durable medical equipment agreed to pay $13.5 million to resolve allegations that the company violated the FCA when it knowingly submitted claims based on patient evaluations that were unlawfully authored, completed, or signed by company employees rather than qualified medical professionals. The settlement agreement resolves three qui tam suits brought by employees or former employees. In agreeing to the settlement amount, the government considered the company’s self-disclosure of several overpayments and its cooperation with the government’s investigation.[11]
- On August 27, a Montana health care system agreed to pay $10.8 million to resolve allegations that it submitted false claims related to services performed by an oncologist. Over a five-year period, the health care system allegedly submitted false claims for the oncologist’s services that it knew or should have known were coded at a higher level than what was performed or did not meet requirements to constitute separate identifiable services. Additionally, the government alleged that the oncologist’s salary was inconsistent with fair market value because it was calculated in reliance on the alleged false documentation and certifications regarding the oncologist’s services. The health care system received an unspecified amount of credit for undertaking an internal investigation, voluntarily self-disclosing the doctor’s misconduct, significantly cooperating with the government (including by providing documents it was not legally required to produce and making relevant individuals available for interviews), and enhancing its corporate compliance program. The settlement agreement specifies that $9,988,970.15 of the settlement is restitution, amounting to just under a 1.1x multiplier if the restitution amount specified in the resolution is treated as a proxy for single damages.[12]
- On September 4, a generic pharmaceutical manufacturer agreed to pay $25 million to settle allegations under the FCA that it conspired to fix the price of a generic drug. According to the government, the company violated the AKS by making and receiving payments in connection with arrangements with other pharmaceutical manufacturers on price, supply, and customer allocation. The company previously entered into a $30 million deferred prosecution agreement with DOJ to resolve criminal antitrust charges stemming from the same conduct. DOJ’s press release makes clear that the FCA settlement amount “is in addition to the criminal penalty paid by the company,” meaning the government did not offset one amount against the other.[13]
- On September 13, a major U.S. pharmacy retailer and its parent holding company agreed to pay $106.8 million to resolve allegations that the pharmacy violated the FCA and related state statutes by billing government health care programs for prescriptions that were never dispensed to patients. The government alleged that over an eleven-year period, the pharmacy restocked and resold prescriptions to beneficiaries that had initially been filled for other beneficiaries who failed to pick up the prescriptions. The pharmacy obtained a very favorable settlement, including credit for self-disclosure of certain conduct, cooperation, and remediation of its electronic pharmacy management system, as well as credit for $66 million that it had already refunded to the government.[14]
- On September 16, a surgery center and its affiliates agreed to pay approximately $12.76 million to resolve alleged FCA violations stemming from improper financial relationships between the surgery center and two physician groups. The government alleged that the surgery center made improper financial contributions to the physician groups in violation of the FCA, AKS, and Stark Law, by funding athletic trainers’ salaries in exchange for referrals by the trainers to the center. As part of the settlement, approximately $12.76 million will be paid to the federal government, and South Dakota, Iowa, and Nebraska will collectively receive approximately $1.37 million. The government acknowledged that the surgery center took significant steps entitling it to credit for cooperating with the government.[15]
- On September 18, a provider agreed to pay $60 million to resolve allegations that it made payments to third-party insurance agents in return for referrals of Medicare Advantage beneficiaries, in violation of the AKS and the FCA. The government claimed that the provider’s conduct caused the submission of false claims to Medicare Advantage organizations and in turn to the federal government. The settlement resolves a qui tam lawsuit.[16]
- On September 26, a health care company that owns and operates inpatient behavioral-health facilities in multiple states agreed to pay $19.85 million to resolve allegations that it submitted false claims to government health care programs. According to the government, the company submitted claims for unreasonable and medically unnecessary behavioral health services, including improperly admitting and failing to discharge patients who either never required or no longer needed inpatient care. Further, the government alleged the company knowingly failed in its training, supervision, and scheduling of staff, resulting in significant harm to patients, and failed to meet regulatory obligations for developing plans for assessments, treatment, and discharge and to provide required patient therapy. The federal government will receive around $16.66 million of the recovery, while Florida, Georgia, Michigan, and Nevada will collectively receive $3.18 million. The settlement resolves qui tam suits brought by former employees of the health care company.[17]
- On September 30, two Brooklyn-based licensed home-care service agencies agreed to pay $3.9 million to the United States and $5.85 million to New York State to resolve allegations that the companies used Medicaid payments to pay the wages and benefits of its home health aides, violating the federal FCA and New York State’s FCA by claiming that they paid the minimum wages required under New York state law.[18]
- On September 30, a behavioral health organization in Massachusetts agreed to pay at least $5.5 million and up to $6.5 million to resolve allegations that it violated the federal FCA and the Massachusetts False Claims Act. The settlement resolved allegations that the company provided free sober housing to substance use recovery patients enrolled in Medicare and Medicaid to induce these patients to participate in its program, in violation of the federal and Massachusetts Anti-Kickback Statutes. The allegations underlying the settlement agreement stemmed from a qui tam suit brought by the president of a company with whom the behavioral health organization contracted for patient housing.[19]
- On October 2, a toxicology laboratory agreed to pay $27 million to resolve claims that it billed federal health care programs for medically unnecessary urine tests and provided physicians with free items in exchange for testing referrals. The United States will receive $18.2 million of the settlement amount. The remainder will be paid to affected states, including Maryland, Illinois, Minnesota, Virginia, Georgia, and Colorado. This settlement resolves a qui tam suit.[20] As part of the settlement, the laboratory entered a five-year CIA with HHS-OIG that mandates engagement of an independent review organization to ensure that claims submitted to Medicaid or Medicare for reimbursement are properly coded, submitted, and reimbursed, and that the items and services involved are medically necessary. The CIA also mandates the appointment of a compliance officer with prescribed oversight responsibilities, and the creation of an anonymous whistleblower program for reporting potential violations.[21]
- On October 3, a Medicaid call center operator agreed to pay $11.36 million to resolve allegations that it violated the FCA by fraudulently reporting call center performance metrics. The Company faced up to $26 million in FCA liability due to the conduct of two employees who, from 2018 to 2023, allegedly submitted fabricated call center performance metrics and adjusted invoices to the South Carolina Department of Health and Human Services. In entering into the settlement, the government took into consideration the call center operator’s voluntary disclosure and remedial action.[22]
- On October 4, a medical center agreed to pay $14.2 million to settle FCA allegations that it violated Medicare regulations and the Stark Law, which prohibits physician self-referrals. The government alleged that the medical center submitted claims for Medicare reimbursement that did not include a “PN” modifier indicating that the services were provided at a non-excepted off-campus outpatient facility. Further, according to the government, the medical center maintained agreements that created financial relationships between the hospital and physician-owners who referred Medicare beneficiaries to the hospital in violation of the Stark Law. The medical center self-reported the alleged conduct to DOJ. As part of its disclosure, the medical center provided an independent third-party expert’s analysis of the financial impact of the omitted “PN” modifiers and disclosed the existence of its various agreements related to physical referrals. The settlement agreement credits the medical center for its voluntary self-disclosure and subsequent cooperation with investigators. Of the total settlement amount, $9.46 million (approximately 66%) constituted restitution.[23]
- On October 10, a generic pharmaceutical manufacturer agreed to pay $25 million to settle allegations under the FCA that the company conspired to fix prices and allocate markets for two generic drugs. This settlement constituted one part of a larger resolution with the company totaling $450 million. The government specifically alleged that the company violated the AKS by making and receiving payments in connection with arrangements with other pharmaceutical manufacturers on price, supply, and customer allocation. The company previously entered into a deferred prosecution agreement with DOJ to resolve criminal antitrust charges stemming from the same conduct. This was the second FCA resolution in as many months in which the Eastern District of Pennsylvania U.S. Attorney’s Office settled on an antitrust-related theory. As part of the broader $450 million settlement, the company agreed to pay $425 million to resolve allegations that it paid kickbacks via two co-pay assistance foundations in violation of the AKS and the FCA.[24]
- On November 1, a supplier of compound prescription ingredients agreed to pay $21.75 million to resolve allegations that it violated the FCA by falsely inflating its Average Wholesale Prices (AWPs) for certain ingredients used to fill prescriptions reimbursed by the TRICARE program. The government alleged “spreads” of hundreds (and in one case, thousands) of dollars as between reported AWP and the price at which the supplier bought and sold the ingredients. The government claimed that the supplier used these spreads to induce pharmacy customers to purchase the ingredients from the supplier given the profit potential that the spreads created for the pharmacies. This settlement resolves the qui tam suit underlying the settlement.[25]
- On November 1, a pharmaceutical manufacturer and its CEO agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the FCA, by offering kickbacks. The government alleged that the manufacturer distributed breath test kits to health care providers to give to patients and then paid a laboratory to analyze and report the results to the manufacturer, which results the manufacturer then allegedly disseminated to its sales force. The federal portion of the recovery amounts to approximately $43.6 million, while the remainder constitutes a recovery for state Medicaid programs. The allegations resolved by the settlement agreement were, in part, originally raised in a qui tam suit brought by former employees of the manufacturer.[26] In connection with the settlement, the manufacturer and its CEO entered into a CIA with HHS-OIG, which requires the establishment of a compliance program, the engagement of an independent review organization, and the development and implementation of a centralized annual risk assessment and internal review process.[27]
- On November 7, a Kentucky-based laboratory agreed to pay $6.5 million to resolve allegations that it submitted false claims for payment to Medicare for urine drug testing and for its proprietary test for chronic pain. The government alleged that the laboratory submitted multiple claims for the testing for the same patient, on the same date of service, using the same urine sample. The settlement agreement further states that the laboratory submitted claims for testing for chronic pain for patients without any individualized determination of medical necessity by the ordering provider.[28] In connection with the settlement, the company also entered into a five-year CIA with HHS-OIG. The CIA requires that the company engage an independent review organization to ensure that claims submitted to Medicaid for reimbursement are properly coded, submitted, and reimbursed, and that the items and services involved are medically necessary. The CIA also mandates the appointment of a compliance officer with prescribed oversight responsibilities, and the creation of an anonymous whistleblower program for reporting potential violations.[29]
- On November 12, a hospital network agreed to pay $23 million to resolve allegations that it falsely coded certain evaluation and management claims submitted to federal Medicare and TRICARE programs. Specifically, the government alleged that the hospital network automatically used a certain code every time a provider checked a patient’s set of vital signs more times than the total number of hours the patient was in the emergency room. The government alleged that the automatic use of this code did not appropriately reflect the utilization of hospital resources and therefore violated Medicare billing requirements. The settlement resolved a qui tam suit.[30]
- On November 21, a California hospital agreed to pay $10.25 million to resolve FCA allegations of a kickback and self-referral scheme to increase hospital admissions. The hospital allegedly paid a bonus to physicians based on the number of patients they admitted, and then submitted knowingly false claims to Medicare and Medi-Cal (California’s Medicaid program) for medically unnecessary hospital admissions. The settlement agreement also resolved allegations that the hospital knowingly admitted patients when it knew inpatient care was not medically necessary and submitted claims that included false diagnosis codes. Under the settlement, the hospital paid approximately $9.5 million to the federal government, of which nearly $4.8 million was restitution; and approximately $730,000 to the State of California. The settlement resolved a qui tam suit.[31] In connection with the settlement, the hospital entered into a five-year CIA with HHS-OIG that requires the implementation of a risk assessment and internal review process and an annual review by an independent review organization to assess the necessity and appropriateness of Medicare claim submissions and systems to track arrangements with referral sources.[32]
- On December 11, a management consulting firm agreed to pay over $323 million to settle allegations under the FCA for allegedly providing advice to a pharmaceutical company that caused the submission of false and fraudulent claims to federal health care programs for medically unnecessary prescriptions of opioids, as well as allegedly failing to disclose to the U.S. Food and Drug Administration (FDA) conflicts of interest arising from the firm’s concurrent work for the pharmaceutical company and the FDA. Alongside the civil settlement, the management consulting firm entered into a five-year CIA with HHS-OIG focused on risk assessment and quality control. This is the first CIA that the HHS-OIG has entered into with a management consulting firm. The firm also entered into a parallel criminal resolution.[33]
- On December 20, a health insurance provider and its affiliate agreed to pay $98 million to settle an FCA case related to Medicare Part C. Under Medicare Part C, CMS reimburses health insurance providers for certain plans based partly on the “risk score” of the beneficiaries, which in turn is based on demographic and diagnosis information. The government alleged that the provider in this case had created a wholly owned subsidiary to retrospectively search medical records and query physicians for information to support additional diagnoses that would increase beneficiaries’ risk scores for purposes of Medicare Part C reimbursement. The beneficiaries’ medical records allegedly did not support the additional diagnoses or higher risk scores. Under the settlement agreement, the provider will make guaranteed payments of $34.5 million and contingent payments of up to $63.5 million based on its ability to pay. In connection with the settlement, the provider entered into a five-year Corporate Integrity Agreement with HHS-OIG. The CIA requires that the provider hire an independent review organization to review annually a sample of the provider’s patients’ medical records as well as associated internal controls to ensure appropriate risk adjustment payments. The settlement resolves a qui tam suit brought by a former employee of another insurance provider.[34]
- On December 20, sixteen cardiology practices agreed to pay a total of nearly $17.8 million to resolve claims that they overbilled Medicare for diagnostic radiopharmaceuticals used for cancer detection and treatment. The government alleged that over a period of at least a year and for some providers, more than ten years, the cardiology practices overinflated the acquisition costs of radiopharmaceuticals based on their actual costs, in contravention of Medicare Part B guidance. The settlements ranged in value from $50,000 for one of the practices to $6.75 million for another of the practices. These settlements resolve qui tam The qui tam suits stemmed from data mining practices that originally identified hundreds of defendants.[35] One of the cardiology practices entered into a CIA with HHS-OIG, which requires the engagement of an independent review agency to review the practice’s fee-for service Medicare claims to confirm medical necessity, appropriate documentation, and proper coding.[36]
- On December 20, a pharmacy agreed to pay approximately $8.2 million to resolve allegations that it violated the FCA by billing for COVID-19 tests that were not actually provided to Medicare beneficiaries. The investigation arose out of a demonstration project CMS conducted whereby Medicare Part B providers could secure reimbursement for up to eight over-the-counter COVID-19 tests per Medicare Part B beneficiary. The government claimed that the pharmacy billed for tests without shipping the tests to beneficiaries.[37]
- On December 23, a regional health insurance provider agreed to pay $15.23 million to resolve allegations that it provided gift cards to administrative service providers to induce the referral and enrollment of Medicare beneficiaries into the insurer’s Medicare Advantage plan, in violation of the AKS and the FCA. The settlement agreement was accompanied by a CIA with HHS-OIG, which required that the insurer to institute a compliance program and put in place processes to avoid marketing arrangements that violate AKS and engage an independent organization to annually review these procedures.[38]
- On December 23, a regional grocery store chain headquartered in Virginia agreed to pay approximately $8 million to resolve allegations that store pharmacies dispensed controlled substances, including opioids, that were medically unnecessary, lacked a legitimate medical purpose or medically accepted indication, and/or were not dispensed pursuant to valid prescriptions. The civil settlement includes the resolution of claims brought under the qui tam of the FCA.[39]
- On December 26, a California-based medical center and laboratory, along with the physician-owner and an executive, agreed to pay $15 million to resolve allegations that they submitted false claims to Medicare and Medi-Cal by paying kickbacks to Medicare and Medi-Cal beneficiaries and third-party clinics for patient referrals and referring those same patients to the lab, in violation of the Stark Law, AKS, and FCA. The allegations underlying the settlement agreement stemmed from a qui tam suit brought by four former employees and managers of the medical center and lab.[40]
B. GOVERNMENT CONTRACTING AND PROCUREMENT
- On July 31, a biotech company agreed to pay $5 million to settle allegations under the FCA that its subsidiary fraudulently overcharged federal agencies for scientific and technical laboratory supplies. The government specifically alleged that the subsidiary violated “Most Favored Customer Pricing” provisions and other pricing terms in contracts with the Department of Defense, Department of Veterans Affairs (VA), and National Institutes of Health. The company acquired the subsidiary in 2017; however, the subsidiary’s conduct covered by the agreement allegedly occurred between 2008 and 2017. The settlement resolved a qui tam suit brought by a former company employee.[41]
- On October 16, a defense contractor agreed to pay $428 million to settle allegations that the company violated the FCA by knowingly failing to provide truthful certified cost and pricing data during negotiations on numerous government contracts, in violation of the Truth in Negotiations Act. The company received credit in the settlement for its cooperation and remediation efforts. The company also entered into a parallel $147 million criminal resolution with DOJ.[42]
- On November 5, a federal government contractor for protective security guard services agreed to pay $52 million to settle allegations that the company violated the FCA by knowingly causing entities that it controlled to fraudulently obtain U.S. Department of Homeland Security set-aside contracts reserved for small businesses. The settlement further resolved allegations that the arrangements with the purported small businesses violated the Anti-Kickback Act, which prohibits kickbacks in exchange for favorable treatment in connection with government procurement efforts. The allegations underlying the settlement agreement stemmed from a qui tam suit brought by the CEO and President of another government contractor.[43]
- On November 19, two technology companies agreed to pay $2.3 million and $2.05 million, respectively, to resolve FCA allegations premised on a scheme to submit non-competitive contract bids. DOJ alleged that one company gave the other company advantageous pricing to sell products to the Army, and then the first company submitted its own direct bids to create the illusion of competition. The allegations against one of the companies were the subject of a qui tam suit.[44]
- On December 19, an international development contractor agreed to pay approximately $3.1 million to resolve allegations that it submitted fraudulent claims for payment to the U.S. Agency for International Development (USAID). Specifically, the government claimed that the contractor billed USAID for charges fraudulently submitted to the contractor by its own subcontractor, without the contractor detecting the issue. DOJ credited the company for taking “a number of significant steps” in the course of the investigation.[45]
- On December 31, an information technology and professional services contractor headquartered in Newport News, Virginia, agreed to pay $2.63 million to resolve claims under the FCA that it misrepresented to the General Services Administration that it was eligible for certain small business set-aside contracts. The government alleged that the company attempted to qualify for the set-asides (which had eligibility criteria based on average revenue) by novating a contract to another company and then misrepresenting that the two companies were unrelated. The government alleged that the companies were in fact linked because, among other reasons, the owners of each company were married, and the two companies shared executives.[46]
C. CUSTOMS, FINANCIAL INDUSTRY, AND MISCELLANEOUS FEDERAL FUNDING
- On August 7, a Texas-based company agreed to pay $2.05 million—of which $1.02 million is restitution—to resolve allegations that the company improperly obtained Post 9/11 GI Bill funding through its operation of vocational schools. The government alleged that the company enrolled VA-supported veterans in courses where more than 85% of the students had at least some of their costs paid by the school or the VA; this allegedly violated the 85/15 rule, which was meant to ensure that veterans were enrolled in quality courses by weeding out those programs which depend on federal funds to remain afloat.[47]
- On August 8, two Wisconsin-based companies and their two principals agreed to pay a total of $10.2 million to settle allegations that they failed to pay millions in customs duties on goods imported from China. The government alleged that for five years, the companies engaged in an undervaluation scheme by providing falsified invoices to their customs broker (with the actual prices of imported goods typically reduced by 70%), who then unknowingly submitted these false invoices to customs officials. The settlement resolves a related qui tam suit brought by a former employee. DOJ’s announcement of the resolution explains that $4.2 million of the total settlement amount was paid to U.S. Customs and Border Protection before the DOJ settlement; this may help explain why the relator’s share was quite low compared to the full $10.2 million.[48]
- On August 9, a women’s apparel company agreed to pay $7.6 million to resolve allegations that it underpaid customs duties over a seven-year period by falsely representing to customs officials the true value of its apparel imports. Specifically, the government alleged that the company failed to include the value of certain fabric and garment trims in the value of the imports, failed to report discrepancies it discovered on customs forms, and made additional errors in classifying textiles and providing port of entry codes. The government noted the apparel company’s voluntary and timely disclosure of relevant evidence and the company’s efforts to prevent future issues through training and compliance measures. The settlement resolves a qui tam suit.[49]
- On August 26, a California city agreed to pay $38.2 million to resolve allegations that it knowingly misrepresented its compliance with certain federal housing development grant requirements by failing to follow federal accessibility laws when building and rehabilitating affordable multifamily properties and failing to make its affordable multifamily housing program accessible to people with disabilities. The allegations underlying the settlement agreement stemmed from a qui tam suit brought by a city resident.[50]
- On September 18, a Missouri-based former mortgage lender agreed to pay $2.4 million to resolve allegations that it violated the FCA and the Financial Institutions Reform, Recovery, and Enforcement Act by knowingly underwriting Home Equity Conversion Mortgages (HECM) insured by the Department of Housing and Urban Development’s Federal Housing Administration (FHA) that did not meet program eligibility requirements. The FHA offers the HECM as a reverse mortgage program specifically for senior homeowners aged 62 and older. The government alleged that the mortgage lender knowingly violated underwriting requirements by allowing inexperienced temporary staff to underwrite FHA-insured loans; the government also asserted that the lender submitted loans for FHA insurance with underwriter signatures that were falsified or affixed before all the documentation the underwriter should have reviewed was complete.[51]
D. PAYCHECK PROTECTION PROGRAM (PPP) RESOLUTIONS
After entering into a large PPP-related settlement in May 2024 (as covered in our Mid-Year 2024 FCA Update), DOJ secured a number of smaller settlements resolving FCA allegations related to PPP eligibility criteria in the second half of 2024.
- On July 17, a GPS manufacturer agreed to pay $2.6 million to settle FCA allegations that it made false certifications regarding its ties to the People’s Republic of China, rendering it in fact ineligible for the PPP loan it received and later had forgiven.[52]
- On August 8, a New Jersey non-profit health system agreed to pay $3.15 million to settle FCA claims that it was affiliated with a larger health care system and thus was ineligible for a PPP loan.[53]
- On August 8, a California-based company operating a network of dental offices in Southern California, along with its founders and former owners, agreed to pay $6.3 million to resolve FCA allegations that they misrepresented their affiliations—and, thus, the network’s size—when applying for PPP loans.[54]
- On September 17, a Florida-based consulting company specializing in travel and tourism agreed to pay approximately $2.28 million to settle FCA claims that it obtained a PPP loan without filing a required registration statement under the Foreign Agents Registration Act (FARA).[55]
- On October 22, a California agricultural association and its chief executive officer agreed to pay approximately $5.66 million to resolve FCA allegations that the association was not eligible for the PPP loan that it obtained because the association was government owned.[56]
- On December 13, a Wisconsin-based subsidiary of a Swiss machinery cutting and software company agreed to pay $2.3 million to resolve FCA allegations that the company’s affiliation with its Swiss parent made it too large—in terms of employee headcount—to obtain a PPP loan.[57]
III. LEGISLATIVE AND POLICY DEVELOPMENTS
A. FEDERAL POLICY AND LEGISLATIVE DEVELOPMENTS
1. Issues to Watch During the New Administration
Combating fraud on the government fisc has historically had bipartisan appeal. Typically, when the White House changes hands between political parties, the pace of FCA enforcement may change at the margins but rarely changes by an order of magnitude. What often does change is the relative balance of enforcement priorities within the FCA sphere—the policy agenda that is set by appointed officials and that forms the framework in which career DOJ attorneys perform the day-to-day work of investigating and litigating cases. More often than not, companies trying to discern a new administration’s enforcement agenda in early days are left to rely on the pronouncements of newly appointed officials.
Given President Trump’s status as the only modern U.S. president to serve non-consecutive terms, however, FCA developments during his first term provide a natural starting place for highlighting areas to watch over the next four years. Chief among these are cybersecurity, sub-regulatory guidance, and voluntary dismissal of qui tam cases.
In October 2021, DOJ announced the Civil Cyber-Fraud Initiative, which has since been a key focus of FCA actions pursued for the last four years.[58] The Initiative was emblematic of the Biden Administration’s emphasis on cybersecurity issues as part of its broader National Cybersecurity Strategy. Under the Initiative, DOJ pursued FCA recoveries from companies for alleged fraudulent noncompliance with cybersecurity requirements, entering into a number of settlements and filing its first lawsuit against a federal contractor under the Initiative this past August. At this juncture, it is not entirely clear whether the Trump Administration will continue with the Initiative or otherwise focus on cybersecurity cases. However, cybersecurity tends to be a bi-partisan issue, with major developments in this area occurring in each of the last three administrations, including President Trump’s first term. Relators also are likely to continue filing qui tam complaints in this area, automatically triggering investigations of their allegations. Moreover, given recent high-profile cybersecurity attacks against U.S. interests—including President Trump’s presidential campaign[59] and at least one major federal contractor[60]—there is a good chance that cybersecurity enforcement will continue to be an area of focus.
On the other hand, premising FCA liability on sub-regulatory guidance may lose favor under the new Trump Administration, if the past is any guide. It was under the first Trump Administration that DOJ issued the Brand Memo, which stated that agency “[g]uidance documents” without notice-and-comment rulemaking could not “create binding requirements that do not already exist by statute or regulation.”[61] DOJ guidance later that same year stated that DOJ “should not treat a party’s noncompliance with a guidance document as itself a violation of applicable statutes or regulations.”[62]
Early in the Biden Administration, this policy was reversed—with then-Attorney General Merrick Garland stating that guidance “may be entitled to deference or otherwise carry persuasive weight with respect to the meaning of the applicable legal requirements” in a particular case.[63] Given the second Trump Administration’s apparent focus on decreasing the reach of the administrative state, we expect that DOJ will again explore ways of limiting the use of sub-regulatory guidance to impose legal requirements on which FCA liability can be predicated.
Despite this shift, however, this administration is likely to use the FCA—as past administrations have—to enforce aspects of its policy agenda. In a notable early sign of this, President Trump’s January 21, 2025 Executive Order rescinding affirmative action obligations for federal government contractors requires that federal contracts and grants include a clause requiring contractors to agree that compliance “with applicable Federal anti-discrimination laws” is a term “material to the government’s payment decisions” for purposes of the FCA.[64]
It remains an open question whether DOJ under the second Trump Administration will place as much relative emphasis on voluntary dismissal of qui tam cases as DOJ did during Trump’s first term (after the release of the Granston Memo).[65] After the Granston Memo, voluntary dismissals spiked for the remainder of President Trump’s first term but immediately declined again when President Biden took office.
In outcome-oriented terms, one way to view voluntary dismissal under 31 U.S.C. § 3730(c)(2)(A) is as a business-friendly step that prioritizes the government’s view of a qui tam case’s prospects over the views of an incentivized relator. Voluntary dismissal by DOJ also could provide an answer to the concern expressed by Justices Thomas, Kavanaugh, and Barrett regarding the constitutionality of allowing unappointed relators to prosecute FCA cases in the government’s name. Indeed, voluntary dismissal permits DOJ to police unscrupulous relators and avoid a perception that it is letting itself be weaponized by private citizens. By the same token, voluntary dismissal also can help ensure that DOJ resources are appropriately conserved for the cases that most merit the government’s involvement—including cases without qui tam relators at all. Time will tell whether DOJ under the second Trump Administration uses its voluntary dismissal authority more frequently than has been the case over the last four years. But even that data point, by itself, is likely to be a poor predictor of DOJ’s overall level of aggressiveness when it comes to pursuing FCA cases, and more an indicator of how much stock it places in the available alternatives for doing so.
2. Anticipated Nominee to Head DOJ’s Civil Division
President Trump is expected to nominate Brett Shumate to serve as the Assistant Attorney General for the Civil Division. Shumate served as the Deputy Assistant Attorney General for the Civil Division’s Federal Programs Branch during the first Trump Administration. As the branch of the Civil Division that focuses “primarily o[n] defending suits that challenge actions of Government agencies and officers in which the plaintiffs seek injunctive or declaratory relief,” Federal Programs was a focal point of DOJ activity in the first Trump Administration. The appointment of a former Federal Program DAAG to run the entire Civil Division suggests that the administration is anticipating having to again devote significant resources to defending government actions in response to challenges.
3. Continued Emphasis on Cooperation and Remediation
The second half of 2024 witnessed a notable increase in the number of settlements that state that DOJ had credited settling parties for voluntary self-disclosures, remediation efforts, and/or cooperation with the government’s investigation. These factors are all relevant under the DOJ’s Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters.[66] Notably, while the frequency with which DOJ called out the fact of cooperation credit increased, details of exactly what steps earned the credit—and, critically, how much credit relative to the government’s claimed losses—remained few and far between.
In some instances, DOJ specified that it awarded “full credit” under its guidelines for voluntary disclosure in FCA cases. For instance, when a Northern Virginia hospital system agreed to pay $2.37 million to settle FCA allegations that it submitted claims for reimbursement to Medicaid that included documentation regarding sterilization and hysterectomy procedures that had been improperly modified, DOJ stated that the hospital system received “full credit” for disclosing the misconduct after undertaking an internal investigation, as well as for cooperating and taking “remedial actions.”[67]
DOJ policy caps cooperation credit so that the government does not receive “less than full compensation for the losses caused by the defendant’s misconduct (including the government’s damages, lost interest, costs of investigation, and relator share).”[68] In practice, that means a damages multiple above 1x—but how much above depends on the facts and circumstances. Without more details of the government’s claimed losses, the precise calculations and considerations are difficult to determine from the outside. It remains to be seen whether DOJ will introduce more transparency regarding its cooperation credit calculations into settlement agreements, of the sort that has become routine in criminal resolutions such as deferred prosecution agreements.
4. Administrative False Claims Act
In the final weeks of his term, President Biden signed into law a bill that authorized—with little fanfare—the Administrative False Claims Act (AFCA). The provisions establishing the AFCA were buried within defense spending legislation,[69] after attempts by Senator Chuck Grassley to pass the AFCA as a stand-alone bill failed in 2023 due to lack of House support.[70] The AFCA expands and replaces the Program Fraud Civil Remedies Act of 1986 (PFCRA), which provided an administrative remedy for false claims and statements with liability of less than $150,000.[71] As an administrative tool, the PFCRA allowed agencies to pursue small claims before an Administrative Law Judge (ALJ)—proceedings which lack the usual safeguards available to defendants charged in federal court, including the right to a trial by jury. The AFCA now authorizes agencies to challenge claims valued at up to $1 million before an ALJ and extends to false statements made even in the absence of a claim for payment. Agencies can seek civil penalties of up to $5,000 per claim, in addition to damages of up to twice the value of the claim. This significantly increases agencies’ ability to pursue and settle false claims allegations outside the federal judicial process.
The constitutionality of the AFCA may prove open to challenge. Last year, in SEC v. Jarkesy, the SEC attempted to impose civil penalties against an investment advisor for violating antifraud provisions in the federal securities laws.[72] The SEC elected to pursue an administrative remedy and adjudicate the matter before one of its ALJs, rather than in federal court where Jarkesy could have demanded a jury trial.[73] On appeal, the Supreme Court held that this violated the Seventh Amendment because the SEC’s claim against Jarkesy was “legal in nature,” which triggered the Seventh Amendment’s guarantee of a right to trial by jury.[74] Notably, the Supreme Court justified its decision, in part, by reasoning that the civil penalties sought were plainly punitive and therefore were the sort of common law remedy that could only be enforced in a court of law.[75] The SEC argued that the “public rights exception” should apply, which allows Congress to assign matters for decision to an agency when the issue historically could have been determined without judicial involvement.[76] But the Supreme Court disagreed, finding that the securities fraud action resembled a traditional legal claim modeled on common law fraud, which must be adjudicated by an Article III court.[77]
Although this ruling was limited to securities fraud, the similarities between the action brought in Jarkesy and those authorized under the AFCA cannot be ignored. Insofar as the AFCA is derivative of the FCA, it draws on common-law fraud and imposes remedies that are punitive in nature.[78] It remains to be seen whether defendants in AFCA actions are able to challenge the statute’s constitutionality using Jarkesy as a jumping-off point.
5. HHS-OIG Skilled Nursing Facilities and Nursing Facilities Compliance Program Guidance
One year after HHS-OIG’s release of its General Compliance Program Guidance, on November 20, 2024, HHS-OIG issued new industry segment-specific compliance program guidance for Skilled Nursing Facilities and Nursing Facilities (“Nursing Facility Guidance”).[79] The Nursing Facility Guidance has not been supplemented since 2008. In this iteration, HHS-OIG offers a deep dive on several compliance issues that could open nursing facilities to potential FCA liability. For example, the guidance cautions that sub-standard quality of care resulting from a lack of patient activities, staffing shortages, and poor medication management could lead to FCA violations.
This emphasis on quality of care as a vehicle for FCA enforcement actions underscores that regulators continue to take a more expansive view of what might qualify as an FCA violation under a “worthless services” theory—that is, the idea that the government receives nothing of value if it pays for services that are falsely represented as meeting relevant certification requirements. The Nursing Facility Guidance also details how AKS violations, referral relationships, more nuanced errors in Medicare and Medicaid billing, and data submission to managed plans can lead to the submission of false claims, signaling that the agency may continue to pursue aggressive FCA theories in these areas moving forward.
B. STATE LEGISLATIVE DEVELOPMENTS
There were no major developments with respect to state FCA legislation in the second half of 2024. HHS-OIG provides an incentive for states to enact false claims statutes in keeping with the federal FCA. If HHS OIG approves a state’s FCA, the state receives an increase of 10 percentage points in its share of any recoveries in cases involving Medicaid. The lists of “approved” state false claims statutes remains at 23 following the approval of Connecticut’s statute in February 2024; six states remain on the “not approved” list.[80] The other 21 states have either not enacted a state analogue or have not submitted their statutes for approval.
IV. CASE LAW DEVELOPMENTS
A. Federal District Court Holds That the Qui Tam Provisions Violate Article II of the Constitution
In September 2024, the Middle District of Florida held that the FCA’s qui tam provisions are unconstitutional because they violate the Appointments Clause. United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 2024 WL 4349242, at *1, *4 (M.D. Fla. Sept. 30, 2024). The issue arose from a qui tam suit filed by Clarissa Zafirov, who sued her employer and other defendants for violating the FCA by allegedly misrepresenting patients’ medical conditions to Medicare. Id. at *3. The government declined to intervene, and Zafirov continued litigating the action for five years. Id. at *4. Defendants moved for judgment on the pleadings, arguing that the FCA’s qui tam provisions violate Article II’s Appointments Clause, Take Care Clause, and Vesting Clause. Id. As to the Appointments Clause, defendants contended that the qui tam provisions violated the Appointments Clause because a relator is an improperly appointed officer of the United States. Id.
The Appointments Clause creates two different paths for appointment—one for “principal officers” and the other for “inferior officers.” Id. at *5. The appointment of inferior officers can be vested “in the President alone, in the Courts of Law, or in the Heads of Departments,” while principal officers that must be confirmed by the Senate. Id. (quotation omitted). An individual is considered an “officer of the United States” if she “exercis[es] significant authority pursuant to the laws of the United States,” and “occup[ies] a continuing position established by law.” Id. at *6 (quotations omitted).
In Zafirov, the court determined that FCA relators exercise “significant authority” because they possess civil enforcement authority on behalf of the United States through their “power to initiate an enforcement action in the name of the United States to vindicate a public right.” Id. (quotation omitted). The Court emphasized relators’ power to litigate appeals in FCA cases that can create binding precedent on the government. Id. at *7. As the Court noted, relators have the ability to initiate an action and litigate it in a way that binds the federal government while choosing “which defendants to sue,” “which theories to raise, which motions to file, and which evidence to obtain.” Id. at 11. The Court pointed to these as relators’ “powers.” Id. at 11. Lastly, the Court found that relators receive emoluments because they may receive a portion of the proceeds if their claims are successful. Id.
The court evaluated whether Article II included an exception for FCA relators to hold executive powers without complying with the process outlined in the Appointments Clause, but concluded that no such exception existed. Id. at *18. Because Zafirov was not appointed through the process outlined in the Appointments Clause, the court concluded that her lawsuit must be dismissed because “in Appointments Clause cases, invalidation is the remedy, which follows directly from the government actor’s lack of authority to take the challenged action in the first place.” Id. at 19 (internal quotation marks omitted). The United States promptly noticed an appeal to the Eleventh Circuit, where the case remains pending.
The Zafirov case has garnered much attention, not least of all for its apparent attempt to advance similar arguments that appeared in Justice Thomas’s dissenting opinion in United States ex rel. Polansky v. Executive Health Resources, Inc., 143 S. Ct. 1720 (2023). Those arguments were notable when they were published, both for their content and because they had not previously appeared in the majority opinions Justice Thomas has written on FCA issues in recent years (including Escobar, in which DOJ had declined to intervene). The arguments also gained support from Justices Kavanaugh and Barrett, who stated in a concurrence that the arguments were “substantial” and “should [be] consider[ed] . . . in an appropriate case.” Id. at 1737. (We covered the Polansky decision in more detail in Gibson Dunn’s 2023 Mid-Year False Claims Act Update.)
Those statements by Justices Thomas, Kavanaugh, and Barrett could mean that the Supreme Court will address the constitutionality of the qui tam provisions sooner than might otherwise be expected. On the other hand, a Supreme Court opinion on the constitutionality of the FCA’s qui tam provisions would arguably be the most significant decision by the Court on an FCA issue in the statute’s modern history, and other FCA issues that are highly consequential have taken years to find their way to the Court. (It took over two decades, for example, for the implied false certification theory to journey from a one-off Court of Federal Claims decision about the false “withholding of . . . information critical to the decision to pay” to the Supreme Court’s seminal decision on materiality in Escobar in 2016. See Ab-Tech Constr., Inc. v. United States, 31 Fed. Cl. 429 (1994).)
Regardless of the time horizon, we are likely to see continued momentum in efforts by qui tam relators to pursue cases—a reality foreshadowed by the record number of qui tam cases initiated in FY 2024, after the Polansky opinions were published. And defendants attempting to persuade courts to be skeptical of the qui tam provisions’ constitutionality will have to contend with longstanding precedents at the circuit level which hold that the provisions do not violate the Appointments Clause. See, e.g., Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 757 (5th Cir. 2001) (upholding the provisions on the grounds that relators do not meet “the constitutional definition of an ‘officer,’” which “encompasses, at a minimum, a continuing and formalized relationship of employment with the United States Government”); United States ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1041 (6th Cir. 1994) (similar).
B. The Second Circuit Adopts the “One-Purpose” Test for Pleading AKS Violations
In December 2024, the Second Circuit issued an opinion in United States ex rel. Camburn v. Novartis Pharms. Corp. that adopted the “at-least-one-purpose” rule for pleading the inducement element of an AKS-based FCA case. According to the Second Circuit, “a plaintiff adequately pleads an [AKS] violation when she states with the requisite particularity that at least one purpose of the alleged scheme was to induce fraudulent conduct.” 124 F.4th 129, 133 (2d Cir. 2024).
In Camburn, a former sales representative brought a qui tam lawsuit against the company alleging that it used speaker programs for its multiple sclerosis drug, Gilenya, as a vehicle to improperly remunerate physicians. Id. at 134. He alleged that Novartis orchestrated “sham” speaker events and engaged in other improper activities, all to incentivize physicians to improperly prescribe Gilenya. Id. at 135. The government declined to intervene. Id.
Camburn’s initial complaint was dismissed for failing to plead fraud with particularity under Rule 9(b). Id. Over successive amendments, Camburn incorporated testimony from 21 confidential witnesses spanning 21 states, supplementing his claims with additional factual allegations. Id. Nevertheless, the district court dismissed his Third Amended Complaint with prejudice, concluding that Camburn failed to adequately allege the existence of an AKS violation as a predicate for FCA liability. Id. Specifically, the court found that Camburn’s allegations lacked the requisite detail to support an inference that the company’s conduct was intended to induce fraudulent claims. Id.
The Second Circuit, however, partially reversed, concluding that Camburn’s specific allegations related to three categories of factual allegations—including dates, locations, and individuals involved—gave rise to a strong inference that one purpose of the conduct was to induce fraudulent claims, which was all that was needed to allege an AKS violation. Id. at 136-40. The court expressly rejected the notion that an FCA relator needs to allege “a cause-and-effect relationship (a quid pro quo) between the payments and the physicians’ prescribing habits” to plead an AKS violation. Id. at 137. With this ruling, the Second Circuit joined the First, Third, Fourth, Fifth, Seventh, Ninth, and Tenth Circuits in applying the “one-purpose” rule to the AKS. See Guilfoile v. Shields, 913 F.3d 178 (1st Cir. 2019); United States v. Greber, 760 F.2d 68 (3d Cir. 1985); United States v. Mallory, 988 F.3d 730 (4th Cir. 2021); United States v. Davis, 132 F.3d 1092 (5th Cir. 1998); United States v. Borrasi, 639 F.3d 774 (7th Cir. 2011); United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. McClatchey, 217 F.3d 823 (10th Cir. 2000).
Importantly, the question of what it means for false claims to “result[] from a violation” of the AKS, 42 U.S.C. § 1320a-7b(g) was not before the court. It remains to be seen whether the Second Circuit will adopt the stricter “but-for” causation standard advanced by the Sixth and Eighth Circuits, or the Third Circuit’s looser standard under which only some causal connection between kickback and false claim is required.
C. The Fifth Circuit Denies Relator a Share of Settlement Proceeds After Settlement with the Government
In a July opinion, the Fifth Circuit addressed whether a relator is entitled to a share of FCA settlement proceeds when the settlement does not resolve any of the claims brought by the relator. United States ex rel. Conyers, 108 F.4th 351 (5th Cir. 2024). The court concluded that a relator is entitled only to a share of the proceeds from the settlement of the specific claims they initiated, not from settlement of additional claims introduced by the government. Id. at 359.
The case originated when Bud Conyers filed a qui tam lawsuit alleging that a military contractor had violated the FCA. Id. at 353-54. The government intervened in the suit and added its own claims against the contractor that were focused on the alleged conduct of three employees and thus were distinct from Conyers’s original allegations. Id. at 354-55.
The parties eventually settled, with the contractor agreeing to pay approximately $13.7 million to resolve the government’s claims related to the three individuals, and with the agreement expressly reserving all other claims. Id. at 355. Conyers’ estate (the relator by then had passed away) sought a share of the settlement proceeds, arguing entitlement under the FCA. Id. The district court awarded Conyers’s estate approximately $1.1 million, finding some factual overlap between Conyers’s allegations and the government’s settled claims. Id.
On appeal, however, the Fifth Circuit reversed this decision, holding that under 31 U.S.C. § 3730(d)(1), a relator’s right to a share of the settlement proceeds is limited to the settlement of the specific claims that the relator brought. Id. at 356-61. The court stated that allowing relators to recover from settlements of claims they did not initiate would be inconsistent with the text of the FCA, which frames the relator’s share in a settlement scenario in terms of “claim[s].” Id. at 359. The court also invoked caselaw in the “alternate remedy” context which has held that that provision of the FCA only permits a relator to recover to the extent their claims “overlap[]” with the government’s claims. Id. at 358. The court further relied on the FCA’s purpose and structure as reflected in the reduction in a relator’s share that automatically comes with DOJ intervention, reasoning that it would run contrary to that framework to increase a relator’s share when the government opts not to pursue the claims the relator brings. Id. at 358-59.
Notably, the Fifth Circuit declined to decide whether Conyers would have been entitled to a share of the settlement proceeds if his claims had “factually overlapped” with those of the government, holding that the district court erred in determining there was sufficient overlap to merit that outcome even under such a standard. Id. at 359-60. At the core of the reversal decision was the fact that the three individuals whose conduct formed the basis of the settlement had never been mentioned in Conyers’s complaint. Id. at 359. Given that, one potential implication of the Conyers decision is an increased focus by relators on naming as many individuals as possible when making initial allegations, to maximize the chances that whatever claims-in-intervention the government may later bring bear a substantial enough relationship to the relator’s claims to justify the awarding of a relator’s share.
D. The Ninth Circuit Overrules Its Own Precedents on the First-to-File Bar, Holding the Bar Is Not Jurisdictional
The FCA’s first-to-file bar prevents anyone but the government from “interven[ing in] or bringing a related action based on the facts underlying [a] pending [FCA] action.” 31 U.S.C. § 3730(b)(5). In Stein v. Kaiser Found. Health Plan, Inc., the Ninth Circuit overturned its own precedents and held that the FCA’s first-to-file rule is not jurisdictional. 115 F.4th 1244, 1247 (9th Cir. 2024).
The district court had dismissed the case under the first-to-file bar because of its relation to already-pending actions against the same or other related entities. Id. at 1245. On appeal, a three-judge panel upheld the decision, but the full Ninth Circuit reversed after an en banc rehearing. Id. Citing recent Supreme Court decisions, the court ruled that a statutory bar is jurisdictional only if Congress explicitly says so. Id. at 1246 (citing Santos-Zacaria v. Garland, 598 U.S. 411, 416 (2023) (quoting Boechler, P.C. v. Comm’r, 596 U.S. 199, 203 (2022))). Because Section 3730(b)(5) does not use the term “jurisdiction” or include any other textual clue that points to jurisdiction, the court held that the FCA’s first-to-file rule is not jurisdictional. Id.
In so ruling, the Ninth Circuit joined five other circuits which had previously held that the FCA’s first-to-file rule is not jurisdictional. See United States ex rel. Bryant v. Cmty. Health Sys., Inc., 24 F.4th 1024, 1036 (6th Cir. 2022); In re Plavix Mktg., Sales Pracs. & Prods. Liab. Litig. (No. II), 974 F.3d 228, 232 (3d Cir. 2020); United States v. Millenium Lab’ys, Inc., 923 F.3d 240, 248-51 (1st Cir. 2019); United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85-86 (2d Cir. 2017) (per curiam); United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 119-21 (D.C. Cir. 2015).
The decision in Stein has at least three procedural implications. First, FCA defendants in the Ninth Circuit seeking to dismiss an FCA complaint based on the first-to-file rule can no longer make a Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, under which plaintiffs bear the burden of persuasion on the question of jurisdiction. Instead, defendants are left to rely on a Fed. R. Civ. P. 12(b)(6) motion to dismiss, which requires the moving party to show that the first-to-file bar requires dismissal of the FCA action. Second, before Stein, as an issue of subject-matter jurisdiction, a first-to-file challenge could be raised any time, and even sua sponte by the court. After Stein, defendants must raise the first-to-file challenge before the close of trial or risk waiving the defense altogether. Third, because the first-to-file rule is no longer considered jurisdictional after Stein, plaintiffs may have more flexibility to amend their complaints in response to a first-to-file pleading defense.
E. The Ninth Circuit Clarifies the Applicable Framework for FCA Retaliation Claims
The FCA prohibits retaliation against employees who report potential FCA violations. See 31 U.S.C. § 3730(h)(1). To prove retaliation under the FCA, an employee must have been engaging in protected conduct, the employer must have known that the employee was engaging in protected conduct, and the employer must have discriminated against the employee because of the protected conduct. In Mooney v. Fife, the Ninth Circuit (1) ruled that the McDonnell Douglas burden-shifting framework applies to FCA retaliation claims, and (2) clarified the “protected conduct” and “notice” requirements of a prima facie FCA retaliation claim. 118 F.4th 1081, 1090 (9th Cir. 2024).
The plaintiff in Mooney filed an FCA retaliation claim, alleging he was fired for reporting billing irregularities to his superiors, and claiming his employer used the confidentiality clause in his employment contract as a pretext for his termination. Id. at 1088. The district court rejected these claims and granted summary judgement for the defendant. Id. It concluded that the plaintiff’s reporting of irregularities could not have put his employer on notice of potentially protected conduct because the plaintiff’s job consisted of helping his employer ensure compliance with the law in the first instance. Id.
The Ninth Circuit reversed, concluding that the plaintiff had satisfied the three elements of a prima facie FCA retaliation claim, and noting that there were genuine issues of material fact as to plaintiff’s alleged pretextual firing. Id. at 1096-98. The Ninth Circuit joined a cohort of circuit courts that apply the McDonnell Douglas burden-shifting framework to FCA retaliation claims. Under this framework, once the employee has established a prima facie case of FCA retaliation, the burden shifts to the employer to produce a legitimate, non-retaliatory reason for the employee’s termination. Mooney, 118 F.4th at 1089. If the employer produces such a reason, the burden shifts back to the employee to show that the employer’s reason was pretextual. For purposes of pretext, it is irrelevant whether the employer’s proffered reason was objectively false; the only requirement is that the employer honestly believed the reasons for its actions, even if those reasons are foolish or trivial or even baseless. Id. at 1097 (citing Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1063 (9th Cir. 2002)).
The Ninth Circuit also clarified the “protected conduct” and “notice” elements of an FCA retaliation claim. Regarding the “protected conduct” element, the Ninth Circuit stated that the applicable test, which contains both a subjective and an objective component, “does not set a high bar.” Mooney, 118 F.4th at 1092. The court narrowed the requirements applicable to both components. For the subjective component, the court noted that “the employee need not know for certain that the employer has committed fraud,” while for the objective component, the court noted that the only requirement is that “a reasonable employee in the same or similar circumstances might believe, that the employer is possibly committing fraud against the government.” Mooney, 118 F.4th at 1092 (citing Moore, 275 F.3d at 845). The Ninth Circuit also held that Hopper’s “investigating” requirement does not apply when the plaintiff alleges that he was discharged because of other efforts to stop one or more FCA violations. Id. at 1091. As to the “notice” requirement, the court refused to adopt a heightened pleading standard for employees with compliance duties. Id. at 1096. The Ninth Circuit reasoned that if compliance employees “were to have no protection from retaliation” under the FCA, “then fear of that retaliation could intimidate and discourage employees in such positions from trying to stop fraudulent billing practices.” Id. Instead, the court held that the “notice” element of an FCA retaliation claim only requires the employer to be aware of an employee’s efforts to stop one or more FCA violations. Id. (citing 31 U.S.C. § 3730(h)(1)).
F. The Third and Eleventh Circuits Apply the Public Disclosure Bar
1. The Third Circuit Finds the Bar Satisfied by Information in CMS’s Physician Payments Database
In United States ex rel. Stebbins v. Maraposa Surgical, Inc., 2024 WL 4947274, (3d Cir. Dec. 3, 2024), the Third Circuit Court of Appeals affirmed a district court’s dismissal of a qui tam action based on the public disclosure bar. In that case, a relator alleged that a medical office in Pennsylvania had violated the FCA by submitting reimbursement claims for arteriograms (medical imaging of arteries to identify and assess blockages) performed in its office. The relator claimed that because arteriograms could only be performed by a state licensed ambulatory surgery center, which the medical office was not, the medical office had fraudulently submitted reimbursements for its services.
After the medical center moved to dismiss the relator’s claims under Fed. R. Civ. P. 12(b)(6), the district court granted the motion. The relator appealed, and the Third Circuit affirmed, reasoning that because (1) the medical office’s reimbursement requests were publicly available on CMS’s payment database, (2) the medical office was not listed on the state’s online database of licensed ambulatory surgery centers, and (3) the state published the regulations on which the relator based his claims, the “essential elements” of the relator’s claims were “previously disclosed in publicly available databases.” Id. at *3. Because the relator was not a “original source of the information,” the Third Circuit determined that “anyone could [have] file[d] the same suit,” and, thus, the public disclosure bar applied. Id. at *2-3.
This case stands as another notable example of a court eschewing a narrow reading of the three relevant source categories listed in the public disclosure bar’s statutory language, in favor of an approach that broadly views information in public internet sources as disclosures sufficient to trigger the bar. The decision also avoids creating perverse incentives for providers to not report physician remuneration to CMS (if they feared that qui tam relators could use that public information to bring AKS allegations).
2. The Eleventh Circuit Rejects Relator’s Argument that His Legal Experience Made Him an “Original Source” Sufficient to Overcome the Public Disclosure Bar
In August, the Eleventh Circuit affirmed a district court’s dismissal of a qui tam action on the ground that the relator’s claims were barred by the FCA’s public disclosure provision. United States ex rel. Jacobs v. JP Morgan Chase Bank, N.A., 113 F.4th 1294 (11th Cir. 2024). There, the relator, a foreclosure attorney, alleged that JP Morgan Chase had violated the FCA by forging mortgage loan promissory notes and submitting false reimbursement claims to government-sponsored entities for loan servicing costs. JP Morgan Chase moved to dismiss the relator’s amended complaint, which the district court granted, concluding that the public disclosure bar precluded the relator’s claims.
The relator appealed, and the Eleventh Circuit affirmed. The Eleventh Circuit concluded that the public disclosure provision barred the relator’s suit because there were three online blogs that (1) were published before the relator initiated this suit, (2) met the FCA’s definition of “news media” because the blogs were “publicly available websites . . . intended to disseminate information,” and (3) contained substantially similar information to the relator’s claims. Id. at 1301-02. In reaching this determination, the Eleventh Circuit rejected the relator’s argument that his “experience from law practice” was enough to qualify him as an independent source of information. Id. at 1303. Because the relator did not provide any independent information to corroborate his claims, the Eleventh Circuit affirmed the dismissal of the qui tam action under the public disclosure bar.
V. CONCLUSION
We will monitor these developments, along with other FCA legislative activity, settlements, and jurisprudence throughout the year and report back in our 2025 False Claims Act Mid-Year Update.
[1] Press Release, U.S. Dep’t of Justice, Home Health Providers to Pay $4.5M to Resolve Alleged False Claims Act Liability for Providing Kickbacks to Assisted Living Facilities and Doctors (July 1, 2024), https://www.justice.gov/opa/pr/home-health-providers-pay-45m-resolve-alleged-false-claims-act-liability-providing-kickbacks.
[2] See Press Release, U.S. Atty’s Office for the Northern Dist. of Ohio, Rite Aid Corporation and Elixir Insurance Company Agree to Pay $101M to Resolve Allegations of Falsely Reporting Rebates (July 10, 2024), https://www.justice.gov/usao-ndoh/pr/rite-aid-corporation-and-elixir-insurance-company-agree-pay-101m-resolve-allegations.
[3] See Press Release, U.S. Atty’s Office for the Northern Dist. of N.Y., The Grand Health Care System and Twelve Affiliated Skilled Nursing Facilities to Pay $21.3 Million for Allegedly Providing and Billing for Fraudulent Rehabilitation Therapy Services (July 10, 2024), https://www.justice.gov/usao-ndny/pr/grand-health-care-system-and-twelve-affiliated-skilled-nursing-facilities-pay-213.
[4] See Press Release, U.S. Atty’s Office for the Northern Dist. of Ohio, Rite Aid Corporation and Affiliates Agree to Settle False Claims Act and Controlled Substance Act Allegations Related to Opioid Dispensing (July 11, 2024), https://www.justice.gov/usao-ndoh/pr/rite-aid-corporation-and-affiliates-agree-settle-false-claims-act-and-controlled; See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Rite Aid Corporation and Affiliates Agree to Settle False Claims Act and Controlled Substance Act Allegations Related to Opioid Dispensing (July 10, 2024),
[5] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Cal., Admera Health Agrees to Pay over $5 Million to Settle False Claims Act Allegations of Kickbacks to Third Party Marketers (July 24, 2024), https://www.justice.gov/usao-edca/pr/admera-health-agrees-pay-over-5-million-settle-false-claims-act-allegations-kickbacks.
See Press Release, U.S. Atty’s Office for the Western Dist. of Ky., Kindred and Related Entities Agree to Pay $19.428M to Settle Federal and State False Claims Act Lawsuits Alleging Ineligible Claims for Hospice Patients (July 18, 2024), https://www.justice.gov/usao-wdky/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims.
[7] See Press Release, U.S. Atty’s Office for the Dist. of Colo., DaVita to Pay Over $34M to Resolve Allegations of Illegal Kickbacks (July 18, 2024), https://www.justice.gov/usao-co/pr/davita-pay-over-34m-resolve-allegations-illegal-kickbacks.
[8] See Press Release, U.S. Atty’s Office for the Northern Dist. of Fl., Escambia County Pays $3.5 Million To Settle FCA Lawsuit (Aug. 1, 2024), https://www.justice.gov/usao-ndfl/pr/escambia-county-pays-35-million-settle-fca-lawsuit.
[9] See Press Release, U.S. Atty’s Office for the Southern Dist. Of Tex., NIRP and founder to pay nearly $9M to resolve alleged kickback referral violations (Aug. 20, 2024), https://www.justice.gov/usao-sdtx/pr/nirp-and-founder-pay-nearly-9m-resolve-alleged-kickback-referral-violations.
[10] See Press Release, U.S. Atty’s Office for the Western Dist. of Ky., Nationwide Home Healthcare and Hospice Provider to Pay $3.85M to Resolve False Claims Act Allegations (Aug. 20, 2024), https://www.justice.gov/opa/pr/nationwide-home-healthcare-and-hospice-provider-pay-385m-resolve-false-claims-act.
[11] See Press Release, United Seating and Mobility, LLC, D/B/A Numotion, Agrees to Pay $13,500,000 to Resolve Alleged False Claims for Custom Wheelchairs (Aug. 26, 2024), https://www.justice.gov/usao-az/pr/united-seating-and-mobility-llc-dba-numotion-agrees-pay-13500000-resolve-alleged-false.
[12] See Press Release, U.S. Atty’s Office for Dist. of Mo., U.S. Attorney Jesse Laslovich announces $10.8 million civil settlement with St. Peter’s Health over False Claims Act misconduct (Aug. 27, 2024), https://www.justice.gov/usao-mt/pr/us-attorney-jesse-laslovich-announces-108-million-civil-settlement-st-peters-health-over.
[13] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Pa., Pharmaceutical Company Pays $25 Million to Resolve Alleged False Claims Act Liability for Price-Fixing of Generic Drug (Sept. 4, 2024), https://www.justice.gov/usao-edpa/pr/pharmaceutical-company-pays-25-million-resolve-alleged-false-claims-act-liability.
[14] See Press Release, U.S. Atty’s Office for the Middle Dist. of Fl., Walgreens Agrees to Pay $106.8M to Resolve Allegations It Billed the Government for Prescriptions Never Dispensed (Sept. 13, 2024), https://www.justice.gov/usao-mdfl/pr/walgreens-agrees-pay-1068m-resolve-allegations-it-billed-government-prescriptions.
[15] See Press Release, U.S. Atty’s Office for the Dist. of S. Dakota, Surgical Hospital Agrees to Pay More Than $12.7M to Resolve Alleged False Claims Act Violations (Sept. 16, 2024), https://www.justice.gov/usao-sd/pr/south-dakota-surgical-hospital-agrees-pay-more-127m-resolve-alleged-false-claims-act.
[16] Press Release, U.S. Dep’t of Justice, Oak Street Health Agrees to Pay $60M to Resolve Alleged False Claims Act Liability for Paying Kickbacks to Insurance Agents in Medicare Advantage Patient Recruitment Scheme (Sept. 18, 2024), https://www.justice.gov/opa/pr/oak-street-health-agrees-pay-60m-resolve-alleged-false-claims-act-liability-paying-kickbacks.
[17] See Press Release, U.S. Atty’s Office for the Middle Dist. of Fl., Acadia Healthcare Company Inc. to Pay $19.85M to Settle Allegations Relating to Medically Unnecessary Inpatient Behavioral Health Services (Sept. 26, 2024), https://www.justice.gov/usao-mdfl/pr/acadia-healthcare-company-inc-pay-1985m-settle-allegations-relating-medically
[18] See Press Release, U.S. Atty’s Office for the East. Dist. of New York, Brooklyn-Based Home Health Care Agencies Settle Fraud Claims for $9.75 Million and Agree to Pay $7.5 Million in Wages and Benefits to Underpaid Aides (Sept. 30, 2024), https://www.justice.gov/usao-edny/pr/brooklyn-based-home-health-care-agencies-settle-fraud-claims-975-million-and-agree-pay.
[19] See Press Release, U.S. Atty’s Office for the Dist. of Mass., Brookline Hospital to Pay Up To $6.5 Million to Resolve False Claims Act Liability Concerning Kickback Allegations (Oct. 1, 2024), https://www.justice.gov/usao-ma/pr/brookline-hospital-pay-65-million-resolve-false-claims-act-liability-concerning-kickback.
[20] See Press Release, U.S. Atty’s Office for the Dist. of Colo., Precision Toxicology Agrees to Pay $27M to Resolve Allegations of Unnecessary Drug Testing and Illegal Remuneration to Physicians (Oct. 2, 2024), https://www.justice.gov/opa/pr/precision-toxicology-agrees-pay-27m-resolve-allegations-unnecessary-drug-testing-and-illegal.
[21] See Corporate Integrity Agreement Between the Office of Inspector General of The Department of Health and Human Services And Precision Toxicology, LLC D/B/A Precision Diagnostics, HHS-OIG (Oct. 22 2024), https://oig.hhs.gov/documents/cias/10036/Precision_Toxicology_LLC_DBA_Precision_Diagnostics_08222024.pdf.
[22] See Press Release, U.S. Atty’s Office for the Dist. of S.C., Operator of South Carolina Medicaid Call Center Agrees to Pay $11.3 Million to Resolve False Claims Act Liability; Two Former Employees Plead Guilty to Wire Fraud (Oct. 3, 2024), https://www.justice.gov/usao-sc/pr/operator-south-carolina-medicaid-call-center-agrees-pay-113-million-resolve-false-claims.
[23] See Press Release, U.S. Atty’s Office for the Northern Dist. of Tex, North Texas Medical Center Pays $14.2 Million to Resolve Potential False Claims Act Liability for Self-Reported Violations of Medicare Regs, Stark Law (Nov. 4, 2024), https://www.justice.gov/usao-ndtx/pr/north-texas-medical-center-pays-142-million-resolve-potential-false-claims-act.
[24] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Pa., Generic Pharmaceutical Company Pays $25 Million to Resolve False Claims Act Liability for Price-Fixing of Generic Drugs (Oct. 10, 2024), https://www.justice.gov/usao-edpa/pr/generic-pharmaceutical-company-pays-25-million-resolve-false-claims-act-liability; See Press Release, U.S. Atty’s Office for the Dist. of Mass., Teva Pharmaceuticals Agrees to Pay $425 Million to Resolve Kickback Allegations (Oct. 10, 2024), https://www.justice.gov/usao-ma/pr/teva-pharmaceuticals-agrees-pay-425-million-resolve-kickback-allegations.
[25] Press Release, U.S. Dep’t of Justice, Compound Ingredient Supplier Medisca Inc., to Pay $21.75M to Resolve Allegations of False and Inflated Average Wholesale Prices for Ingredients Used in Compounded Prescriptions (Nov. 1, 2024), https://www.justice.gov/opa/pr/compound-ingredient-supplier-medisca-inc-pay-2175m-resolve-allegations-false-and-inflated.
[26] See Press Release, U.S. Atty’s Office for the Dist. of Mass., QOL Medical and Its CEO Agree To Pay $47 Million for Allegedly Paying Kickbacks To Induce Claims for QOL’s Drug Sucraid (Nov. 15, 2024), https://www.justice.gov/usao-ma/pr/qol-medical-and-its-ceo-agree-pay-47-million-allegedly-paying-kickbacks-induce-claims.
[27] See Corporate Integrity Agreement Between the Office of Inspector General of The Department of Health and Human Services And QOl Medical, LLC, and Frederick E. Cooper, HHS-OIG (Nov. 1, 2024),
https://oig.hhs.gov/documents/cias/10135/QOL_Medical_LLC_and_Frederick_E_Cooper_11012024.pdf.
[28] See Press Release, U.S. Atty’s Office for the Dist. of Mass., Ethos Laboratories Agrees to Pay $6.5 Million to Resolve Allegations of Fraudulent Billing (Nov. 8, 2024), https://www.justice.gov/usao-ma/pr/ethos-laboratories-agrees-pay-65-million-resolve-allegations-fraudulent-billing.
[29] See Corporate Integrity Agreement Between the Office of Inspector General of The Department of Health and Human Services And Ethnos Holding Corp., D/B/A Ethos Laboratories, HHS-OIG (Nov. 1, 2024),
https://oig.hhs.gov/fraud/cia/agreements/Ethos_Holding_Corp_DBA_Ethos_Laboratories_11012024.pdf.
[30] See Press Release, U.S. Atty’s Office for the Dist. of Colo., UCHealth Agrees to Pay $23M to Resolve Allegations of Fraudulent Billing for Emergency Department Visits (Nov. 12, 2024), https://www.justice.gov/usao-co/pr/uchealth-agrees-pay-23m-resolve-allegations-fraudulent-billing-emergency-department.
[31] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Cal., Oroville Hospital to Pay $10.25 Million to Resolve Allegations of Kickbacks and False Billing (Dec. 12, 2024), https://www.justice.gov/usao-edca/pr/oroville-hospital-pay-1025-million-resolve-allegations-kickbacks-and-false-billing.
[32] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, California Hospital to Pay $10.25M to Resolve False Claims Allegations (Dec. 12, 2024),
https://www.justice.gov/opa/pr/california-hospital-pay-1025m-resolve-false-claims-allegations.
[33] See Press Release, U.S. Atty’s Office for the Dist. of Mass., Justice Department Announces Resolution of Criminal and Civil Investigations into McKinsey & Company’s Work with Purdue Pharma L.P.; Former McKinsey Senior Partner Charged with Obstruction of Justice (Dec. 13, 2024), https://www.justice.gov/usao-ma/pr/justice-department-announces-resolution-criminal-and-civil-investigations-mckinsey.
[34] See Press Release, U.S. Atty’s Office for the Western Dist. of N.Y., Medicare Advantage provider Independent Health to Pay up to $98m to Settle False Claims Act Suit (Dec. 20, 2024), https://www.justice.gov/usao-wdny/pr/medicare-advantage-provider-independent-health-pay-98m-settle-false-claims-act-suit.
[35] See Press Release, U.S. Atty’s Office for the Western Dist. of Ky., Sixteen Cardiology Practices to Pay a Total of $17.7M to Resolve False Claims Act Allegations Concerning Inflated Medicare Reimbursements (Dec. 20, 2024), https://www.justice.gov/usao-wdky/pr/sixteen-cardiology-practices-pay-total-177m-resolve-false-claims-act-allegations-0; Relator’s Complaint Under the False Claims Act, Walia et al. v. Michael et al., 1:18-cv-00510 (D.D.C. Mar. 5, 2018), ECF No. 1.
[36] See Integrity Agreement Between the Office of Inspector General of the Department Of Health and Human Services and Heart Clinic of Paris, P.A. and Dr. Arjumand Hashmi, HHS-OIG (Dec. 20, 2024), /https://oig.hhs.gov/documents/cias/10155/Heart_Clinic_of_Paris_PA_and_Dr_Arjumand_Hashmi_12202024.pdf.
[37] Press Release, U.S. Dep’t of Justice, Rapid Health Agrees to Pay $8.2M for Allegedly Billing Medicare for Over-the-Counter COVID-19 Tests That Were Not Provided to Beneficiaries (Dec. 20, 2024), https://www.justice.gov/opa/pr/rapid-health-agrees-pay-82m-allegedly-billing-medicare-over-counter-covid-19-tests-were-not
[38] See https://shorturl.at/yJsgI.
[39] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Tenn., Food City Agrees To Pay Over $8 Million To Settle False Claims Act Allegations Related To Opioid Dispensing (Dec. 23, 2024), https://www.justice.gov/usao-edtn/pr/food-city-agrees-pay-over-8-million-settle-false-claims-act-allegations-related-opioid.
[40] See Press Release, Southern California-Based Clinics, Laboratory, and Owners to Pay $15 Million to Settle Allegations of False Claims Arising from Kickbacks and Self-Referrals (Dec. 26, 2024), https://www.justice.gov/usao-cdca/pr/southern-california-based-clinics-laboratory-and-owners-pay-15-million-false-claims.
[41] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Pa., Avantor, Inc. Agrees to Pay $5.325 Million to Resolve Allegations of False Claims for Overcharging Federal Agencies and Allegations of DEA Violations and Lack of Compliance as to Listed Chemicals (July 31, 2024), https://www.justice.gov/usao-edpa/pr/avantor-inc-agrees-pay-5325-million-resolve-allegations-false-claims-overcharging.
[42] See Press Release, U.S. Atty’s Office for the Dist. of Mass., Raytheon Agrees to Pay Over $950 Million in Connection with Defective Pricing, Foreign Bribery and Export Control Schemes (Oct. 16, 2024), https://www.justice.gov/usao-ma/pr/raytheon-agrees-pay-over-950-million-connection-defective-pricing-foreign-bribery-and.
[43] See Press Release, U.S. Atty’s Office for the Dist. of Md., Paragon Systems Agrees to Pay $52M to Resolve False Claims Act Allegations Concerning Fraudulently Obtained Small Business Contracts and Kickbacks (Nov. 12, 2024), https://www.justice.gov/usao-md/pr/paragon-systems-agrees-pay-52m-resolve-false-claims-act-allegations-concerning.
[44] Press Release, U.S. Dep’t of Justice, Dell and Iron Bow Agree to Pay $4.3M to Resolve False Claims Act Allegations Relating to Submitting Non-Competitive Bids to the Army (Nov. 19, 2024), https://www.justice.gov/opa/pr/dell-and-iron-bow-agree-pay-43m-resolve-false-claims-act-allegations-relating-submitting-non.
[45] Press Release, U.S. Dep’t of Justice, Chemonics International Inc. to Pay $3.1M to Resolve Allegations of Fraudulent Billing Under Global Health Supply Chain Contract (Dec. 19, 2024), https://www.justice.gov/opa/pr/chemonics-international-inc-pay-31m-resolve-allegations-fraudulent-billing-under-global.
[46] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Ill., Virginia contractor to pay over $2.6M to settle allegations of falsely obtaining small business contracts (Jan. 7, 2025), https://www.justice.gov/usao-edva/pr/virginia-contractor-pay-over-26m-settle-allegations-falsely-obtaining-small-business.
[47] See Press Release, U.S. Department of Justice Office of Public Affairs, Five Point Enterprises Agrees to Pay the United States Over $2M for Submitting False Claims to VA for Post-9/11 GI Bill Education Benefits (Aug. 8, 2024), https://www.justice.gov/opa/pr/five-point-enterprises-agrees-pay-united-states-over-2m-submitting-false-claims-va-post-911.
[48] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Wisc., Two Brookfield, Wisconsin-Based Companies and Their Owners Pay Over $10 Million to Resolve Allegations that They Evaded Customs Duties, (August 8, 2024), https://www.justice.gov/usao-edwi/pr/two-brookfield-wisconsin-based-companies-and-their-owners-pay-over-10-million-resolve.
[49] See Press Release, U.S. Atty’s Office for the Southern Dist. of Fl., U.S. Attorney Lapointe Announces $7.6 Million Settlement of Civil False Claims Act Lawsuit Against Womenswear Company for Underpaying Customs Duties on Imported Women’s Apparel (Aug. 9, 2024), https://www.justice.gov/usao-sdfl/pr/us-attorney-lapointe-announces-76-million-settlement-civil-false-claims-act-lawsuit.
[50] See Press Release, U.S. Atty’s Office for the Central Dist. of Ca., City of Los Angeles Agrees to Pay $38.2 Million to Resolve False Claims Act Suit for Alleged Misuse of HUD Grant Funds (Aug. 26, 2024), https://www.justice.gov/usao-cdca/pr/city-los-angeles-agrees-pay-382-million-resolve-false-claims-act-suit-alleged-misuse.
[51] See Press Release, U.S. Atty’s Office for the Dist. of D.C., James B. Nutter & Company to Pay $2.4M for Allegedly Causing False Claims for Federal Mortgage Insurance (Sept. 23, 2024), https://www.justice.gov/usao-dc/pr/james-b-nutter-company-pay-24m-allegedly-causing-false-claims-federal-mortgage-insurance.
[52] https://www.justice.gov/opa/pr/gps-manufacturer-agrees-pay-26m-settle-false-claims-act-allegations-relating-improper.
[53] See Press Release, U.S. Atty’s Office for the Dist. of N.J., Atlantic County Health System Settles Matter Alleging It Received Improper Paycheck Protection Program Loan (Aug. 14, 2024), https://www.justice.gov/usao-nj/pr/atlantic-county-health-system-settles-matter-alleging-it-received-improper-paycheck.
[54] See Press Release, Brentwood-Based Dental Offices Company and Former Owners Pay $6.3 Million to Resolve False Claims Act Allegations Related to COVID Relief (Aug. 8, 2024), https://www.justice.gov/usao-cdca/pr/brentwood-based-dental-offices-company-and-former-owners-pay-63-million-resolve-false.
[55] See Press Release, U.S. Atty’s Office for the Middle Dist. of Fl., Travel Tourism Company Pays More Than $2 Million To Resolve Civil Claims Regarding Funds Obtained Under The Paycheck Protection Program (Sept. 17, 2024), https://www.justice.gov/usao-mdfl/pr/travel-tourism-company-pays-2-2-million-resolve-civil-claims-regarding-funds-obtained.
[56] See Press Release, U.S. Atty’s Office for the Southern Dist. of Ca., Del Mar Fairgrounds Agrees to Pay $5.6 Million to Settle Allegations Over Pandemic-Related Loan (Oct. 22, 2024), https://www.justice.gov/usao-sdca/pr/del-mar-fairgrounds-agrees-pay-56-million-settle-allegations-over-pandemic-related.
[57] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Wisc., Oak Creek company to pay over $2.3 million to resolve allegations it submitted false claims to obtain a Paycheck Protection Program Loan (Dec. 13, 2024), https://www.justice.gov/usao-edwi/pr/oak-creek-company-pay-over-23-million-resolve-allegations-it-submitted-false-claims.
[58] Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Deputy Attorney General Lisa O. Monaco Announces New Civil Cyber-Fraud Initiative (Oct. 6, 2021), https://www.justice.gov/opa/pr/deputy-attorney-general-lisa-o-monaco-announces-new-civil-cyber-fraud-initiative?utm_medium=email&utm_source=govdelivery.
[59] See Press Release, U.S. Dep’t of Justice, Three IRGC Cyber Actors Indicted for ‘Hack-and-Leak’ Operation Designed to Influence the 2024 U.S. Presidential Election (Sept. 27, 2024), https://www.justice.gov/opa/pr/three-irgc-cyber-actors-indicted-hack-and-leak-operation-designed-influence-2024-us.
[60] See Jonathan Greig, Major USAID contractor Chemonics says 263,000 affected by 2023 data breach, The Record (Dec. 5, 2024), https://therecord.media/chemonics-data-breach-usaid-contractor.
[61] U.S. Dep’t of Justice, Memorandum from Rachel Brand, Associate Attorney General (Nov. 16,
2017), https://www.justice.gov/opa/press-release/file/1012271/download.
[62] U.S. Dep’t of Justice, Justice Manual § 1-20.100 (Dec. 2018), https://web.archive.org/web/20190327044939/https://www.justice.gov/jm/1-20000-limitation-use-guidance-documents-litigation.
[63] See U.S. Dep’t of Justice, Memorandum from Merrick Garland, Attorney General (July 1, 2021), https://www.justice.gov/opa/file/1557606/dl?inline=.
[64] https://www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity/.
[65] See U.S. Dep’t of Justice, Memorandum from Michael D. Granston, Director, Commercial
Litigation Branch, Fraud Section (Jan. 10, 2018),
https://drive.google.com/file/d/1PjNaQyopCs_KDWy8RL0QPAEIPTnv31ph/view.
[66] U.S. Dep’t of Justice, Justice Manual § 4-4.112 (Apr. 2018), https://www.justice.gov/jm/jm-4-4000-commercial-litigation.
[67] See Press Release, U.S. Atty’s Office for the Eastern Dist. of Va., Virginia hospital system agrees to $2.37M False Claims settlement (Nov. 15, 2024), https://www.justice.gov/usao-edva/pr/virginia-hospital-system-agrees-237m-false-claims-settlement.
[68] Id.
[69] H.R. 5009, 118th Cong. § 5203 (2024) (enacted) (to be codified at 31 U.S.C. §§ 3801–12) (hereinafter AFCA).
[70] Administrative False Claims Act of 2023, S.R. 659, 118th Cong. (2023).
[71] AFCA § 5203(c).
[72] SEC v. Jarkesy, 603 U.S. 109 (2024).
[73] Id. at 109.
[74] Id. at 122–23.
[75] Id. at 123–25.
[76] Id. at 127.
[77] Id. at 134.
[78] See Universal Health Servs. v. United States ex rel. Escobar, 579 U.S. 176 (2016).
[79] See Office of Inspector General., U.S. Dep’t of Health & Hum. Servs., Nursing Facility Industry Segment-Specific Compliance Program Guidance (Nov. 2024) (hereinafter NF-ISPG), https://oig.hhs.gov/documents/compliance/10038/nursing-facility-icpg.pdf.
[80] State False Claims Act Reviews, Office of Inspector General, U.S. Dept’s of Health & Hum. Servs., https://oig.hhs.gov/fraud/state-false-claims-act-reviews/ (last visited Jan. 21, 2025).
Gibson Dunn lawyers regularly counsel clients on the False Claims Act issues and are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s False Claims Act/Qui Tam Defense practice group:
Washington, D.C.
Jonathan M. Phillips – Co-Chair (+1 202.887.3546, jphillips@gibsondunn.com)
Stuart F. Delery (+1 202.955.8515,sdelery@gibsondunn.com)
F. Joseph Warin (+1 202.887.3609, fwarin@gibsondunn.com)
Jake M. Shields (+1 202.955.8201, jmshields@gibsondunn.com)
Gustav W. Eyler (+1 202.955.8610, geyler@gibsondunn.com)
Lindsay M. Paulin (+1 202.887.3701, lpaulin@gibsondunn.com)
Geoffrey M. Sigler (+1 202.887.3752, gsigler@gibsondunn.com)
Joseph D. West (+1 202.955.8658, jwest@gibsondunn.com)
San Francisco
Winston Y. Chan – Co-Chair (+1 415.393.8362, wchan@gibsondunn.com)
Charles J. Stevens (+1 415.393.8391, cstevens@gibsondunn.com)
New York
Reed Brodsky (+1 212.351.5334, rbrodsky@gibsondunn.com)
Mylan Denerstein (+1 212.351.3850, mdenerstein@gibsondunn.com)
Denver
John D.W. Partridge (+1 303.298.5931, jpartridge@gibsondunn.com)
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Monica K. Loseman (+1 303.298.5784, mloseman@gibsondunn.com)
Dallas
Andrew LeGrand (+1 214.698.3405, alegrand@gibsondunn.com)
Los Angeles
James L. Zelenay Jr. (+1 213.229.7449, jzelenay@gibsondunn.com)
Nicola T. Hanna (+1 213.229.7269, nhanna@gibsondunn.com)
Jeremy S. Smith (+1 213.229.7973, jssmith@gibsondunn.com)
Deborah L. Stein (+1 213.229.7164, dstein@gibsondunn.com)
Dhananjay S. Manthripragada (+1 213.229.7366, dmanthripragada@gibsondunn.com)
Palo Alto
Benjamin Wagner (+1 650.849.5395, bwagner@gibsondunn.com)
*Molly O’Neil, an associate in the Palo Alto office, is not admitted to practice law.
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
We discuss the U.S. regulatory and enforcement landscape for crypto and digital assets, including:
- What we can expect from DOJ, SEC, CFTC, FinCEN, and state regulators;
- Recent criminal and civil enforcement actions against individuals and entities (and why they still matter); and
- Other changes that may flow from the new Administration’s crypto policy.
MCLE CREDIT INFORMATION:
This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit.
Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact CLE@gibsondunn.com to request the MCLE form.
Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour in the General Category.
California attorneys may claim “self-study” credit for viewing the archived version of this webcast. No certificate of attendance is required for California “self-study” credit.
PANELISTS:
Stephanie L. Brooker, a partner in Gibson Dunn’s Washington D.C. office, is Co-Chair of the firm’s White Collar Defense and Investigations, Anti-Money Laundering, and Financial Institutions Practice Groups. During her approximately 25 years in legal practice, Stephanie has been consistently recognized as a leading practitioner in the areas of anti-money laundering compliance and enforcement defense and white collar criminal defense. Prior to joining the firm, Stephanie served as a prosecutor at the U.S. Department of Justice. As a DOJ prosecutor, Stephanie served as the Chief of the Asset Forfeiture and Money Laundering Section in the U.S. Attorney’s Office for the District of Columbia, investigated a broad range of white collar and other federal criminal matters, tried 32 criminal trials, and briefed and argued criminal appeals. Stephanie also served as the Director of the Enforcement Division and Chief of Staff at the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the lead U.S. anti-money regulator and enforcement agency. Stephanie is admitted to practice in the District of Columbia.
Jeffrey L. Steiner is a partner in Gibson Dunn’s Washington, D.C. office, where he is Chair of the firm’s Derivatives Practice Group and Co-Chair of the firm’s Financial Regulatory practice group. Jeffrey is also the Co-Chair to the firm’s Fintech and Digital Assets Practice Group and a member of the firm’s Financial Institutions, Energy and Public Policy Practice Groups. Jeffrey advises a range of clients, including commercial end-users, financial institutions, dealers, hedge funds, private equity funds, clearinghouses, industry groups and trade associations on regulatory, legislative, enforcement and transactional matters related to OTC and listed derivatives, commodities and securities. Jeffrey also advises a range of clients on issues related to digital assets, cryptocurrencies and distributed ledger technology, including analyzing and advising on regulatory and enforcement matters relating to their application and use. He regularly works with clients on structuring products involving the use of digital assets and the application of blockchain technology, including digital token issuances and cryptocurrency trading. He also analyzes the cross-border impacts relating to clients’ use of digital currencies and blockchain technology. Jeffrey is admitted to practice in the District of Columbia and Maryland.
Sara K. Weed is a partner in Gibson Dunn’s Washington, D.C. office and Co-Chair of the Fintech and Digital Assets Practice Group. Sara’s fintech’s practice spans both regulatory and transactional advice for a range of clients, including traditional financial institutions, non-bank financial services companies and technology companies. Sara’s outstanding achievements in private practice have been recognized by various organizations. Most recently, Sara was recognized as a leading lawyer in the 2025 edition of Chambers and Partners Fintech in the category USA: Nationwide – Fintech Legal: Payments and Lending, with clients describing her as “a very commercially-minded attorney with deep expertise and experience in navigating regulatory issues and relationships in the fintech space.”
Prior to working in private practice, Sara held various roles in the financial services industry, including serving as in-house counsel to IBM’s financial services group and as a policy counsel with a national financial services research organization. She also served as director and counsel with the North Carolina Office of the Commissioner of Banks, where she oversaw supervision of non-bank mortgage lenders and brokers, money services businesses, and consumer finance companies. Sara is admitted to practice in the District of Columbia, Georgia, and North Carolina.
Osman Nawaz is a partner in Gibson Dunn’s New York office, and a member of the firm’s Securities Enforcement and White Collar Defense and Investigations Practice Groups. He advises clients on internal and government investigations and enforcement actions, as well as follow-on civil litigation and regulatory and compliance-related issues.
Prior to joining Gibson Dunn, Os concluded a 14-year career with the U.S. Securities & Exchange Commission (SEC). During his time with the SEC, he worked in the agency’s New York Office, serving through multiple administrations and in roles ranging from staff attorney to Assistant Regional Director. Most recently, he was a Senior Officer in the agency’s Division of Enforcement and in national leadership where he led Enforcement’s Complex Financial Instruments Unit, a specialty group focused on complex products and trading involving sophisticated market participants’ structuring, sale, trading and valuation of derivatives, asset-backed securities, and other instruments. Os oversaw high-profile investigations and litigations and professional staff located in seven different offices including the agency’s headquarters in Washington, D.C. He is admitted to practice in the States of New York and Colorado.
Sam Raymond, an experienced investigator and trial lawyer, is Of Counsel in Gibson Dunn’s New York office and a member of the White Collar Defense and Investigations, Litigation, Anti-Money Laundering, Fintech and Digital Assets, and National Security Groups. As a former federal prosecutor, Sam has a broad-based government enforcement and investigations practice, with a specific focus on investigations and counseling related to anti-money laundering, the Bank Secrecy Act, and sanctions.
Prior to joining Gibson Dunn, Sam was an Assistant United States Attorney in the U.S. Attorney’s Office for the Southern District of New York from 2017 to 2024. In that role, Sam tried multiple cases to verdict and prosecuted a broad range of federal criminal violations. He was a member of the team that prosecuted executives at FTX and Alameda Research, including as a member of the trial team in United States v. Bankman-Fried, and was the lead prosecutor in the FTX case on issues related to asset seizure and forfeiture. Sam was also a member of the DOJ team that brought criminal charges against the senior leadership of Hamas for their roles in planning, supporting and perpetrating the October 7 terrorist attacks on Israel. He was a lead prosecutor in one of the first cases ever charging individuals with violations of the Bank Secrecy Act, in a pathbreaking prosecution of executives at a cryptocurrency exchange. Sam is admitted to practice in the State of New York and before the U.S. District Courts for the Southern and Eastern Districts of New York and the U.S. Court of Appeals for the Second Circuit.
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
The final rule marks a significant transition in the regulatory oversight of the carbon capture and sequestration industry within West Virginia.
On January 17, 2025, the United States Environmental Protection Agency (EPA) signed a final rule giving the State of West Virginia primary enforcement authority (or “primacy”) over Class VI underground injection wells, which are used by the carbon capture and sequestration (CCS) industry to permanently sequester captured carbon in underground geological formations, within the state.[1] The approval process for the state of West Viginia lasted less than a year; West Virginia submitted its application for Class VI primacy on May 1, 2024 and received approval from the EPA just eight months later. [2] This marks a significant transition in the regulatory oversight of the CCS industry within the state of West Virginia, as the primary regulatory body for the CCS industry in the state shifts from the EPA to the West Virginia Department of Environmental Protection (WVDEP).[3] Granting primacy over Class VI wells to the WVDEP empowers the state to manage its own CCS projects and leverage state-level expertise to speed the permitting process.[4] This will likely lead to accelerated growth of the CCS industry within the state of West Virginia. West Virginia now joins Louisiana, North Dakota and Wyoming among states with Class VI primacy.
Class VI Wells, Primacy and Federal Incentives
Class VI underground injection wells are specifically designed for the permanent geological sequestration of carbon dioxide, playing a crucial role in CCS technologies aimed at mitigating climate change.[5] Geological sequestration involves injecting captured carbon dioxide into underground rock formations, such as in deep saline formations, at depths and pressures high enough to keep the carbon dioxide in a supercritical fluid phase, which allows more carbon dioxide to be sequestered and is less likely to lead to the carbon dioxide escaping into the atmosphere or migrating into other underground formations.[6] Class VI wells are distinct from other injection wells in that they are exclusively dedicated to long-term storage of carbon dioxide that is either captured directly from the ambient atmosphere (in direct air capture CCS projects) or from industrial emissions or other anthropogenic sources (in point source CCS projects).
Federal income tax credits are available for the capture and utilization or sequestration of qualified carbon oxides (see our previous alert here). Significantly greater credits are awarded for “secure” geological sequestration of carbon oxides, and Class VI wells generally satisfy IRS and Treasury requirements for such secure sequestration. The Inflation Reduction Act of 2022 (IRA) further enhanced the economic benefit of these credits by making it easier to monetize them, extending the benefit of new direct payment (see our previous client alert here) and transferability (see our previous client alert here) rules to these credits. Qualifying point-source CCS projects may also unlock other federal income tax credits made available under the IRA, such as the new hydrogen production credit (see our previous client alert here) and the technology-neutral investment tax credit and production tax credits (see our previous client alert here). Additional federal funding for CCS projects was also made available under the Infrastructure Investment and Jobs Act.[7]
Class VI wells are subject to stringent regulations under the Safe Drinking Water Act’s Underground Injection Control (UIC) program. Under the Act, the EPA is responsible for developing UIC requirements for injection wells of all classes that are intended to protect underground sources of drinking water, among other objectives. Any state, territory, or tribe can obtain primary enforcement authority over a given class of injection wells by adopting injection well requirements that are at least as stringent as the EPA’s requirements and subsequently applying to the EPA for primary enforcement authority over that class of injection well.[8] If the EPA approves the primacy application, the state, territory, or tribe will then implement and manage the permitting and compliance processes for the applicable class of injection well. However, if a state, territory, or tribe does not adopt its own injection well requirements or apply for enforcement authority over a given class of wells, then the EPA will remain responsible for implementing and enforcing the UIC requirements for that class of wells
Permitting Backlog at the EPA Driving Interest in Class VI Primacy
Many states have been granted primacy by the EPA over multiple classes of injection wells, particularly Class II injection wells, which can be utilized for CCS projects utilizing captured carbon for enhanced oil recovery projects.[9] However, prior to West Virginia, only three other states (North Dakota, Wyoming and Louisana) had successfully applied for primacy over Class VI wells. As a result, the EPA retains oversight over nearly all Class VI well permit applications in the US.
The EPA’s process for granting a Class VI well permit is rigorous and requires applicants to provide extensive (and expensive) data and modeling to show that the Class VI well will protect drinking water and prevent the escape or migration of carbon dioxide.[10] Although the EPA currently estimates that the Class VI permitting process for new permits will take about 24 months from start to finish, some Class VI permits have been awaiting approval from the EPA since 2021.[11]
The EPA has also issued very few Class VI permits, leading to a backlog of pending permit applications. As of January 3, 2025, the EPA has only issued eight active Class VI permits, four were approved on December 30, 2024, for projects in California.[12] While, as of April 2024, North Dakota and Wyoming have granted eleven permits since receiving primacy over Class VI wells from the EPA.[13] Additionally, the EPA is nearing final approval for one CCS project in Texas covering three wells. [14] However, as of January 3, 2025, there were 57 permit applications covering 163 wells at some point in the EPA’s permitting process, and most applications are not close to approval, as shown in the attached CHART. (As of 1/3/2025. Source: The United States Environmental Protection Agency.)
Currently, there are two CCS projects, covering three wells, under review in West Virginia. Now that the state of West Virginia has obtained primacy over Class VI wells, all pending permits before the EPA will be transferred to the WVDEP for review, and the WVDEP will have oversight of all future Class VI well applications in the state of West Virginia. Many CCS industry participants have welcomed the switch to the review process under the WVDEP, which is expected to be more efficient and to take a shorter period of time than the EPA’s process. This belief is supported by the Class VI permit process in North Dakota, which has produced eight Class VI permits since North Dakota obtained Class VI primacy in 2018 (compared to the twelve (including inactive permits issued) Class VI well permits issued by the EPA nationwide since the UIC program was implemented in 2010).[15]
Class VI Requirements Adopted by West Virginia
After facing public comment and EPA scrutiny, West Virginia’s application was revised to address concerns over adequate staffing, environmental justice, and protecting drinking water, groundwater, and surface water. On August 17th, 2023, the EPA released guidance on addressing environmental justice in Class VI permitting and encouraged states seeking primacy to incorporate this guidance. WVDEP incorporated that guidance in their application for primacy and specifically addressed the following five themes: identifying communities impacted by environmental justice concerns using a tool developed by the EPA, implementing a public participation process, conducting assessments for projects in communities impacted by environmental justice concerns, ensuring the transparency of the permitting process, and minimizing adverse effects to drinking water sources. Additionally, under WVDEP’s program, well owners or operators are required to conduct an environmental justice review as part of the permitting process. The EPA required West Virginia to demonstrate in their plan the adequacy of their staff in technical areas such as site characterization, well construction, and risk analysis.[16]
Furthermore, the EPA found that WVDEP’s program complies with the necessary federal statutes, including 40 CFR Parts 124, 144, 145, and 146.
The WVDEP program differs from the federal minimum requirements in the following ways:
- The federal regulations allow UIC permit terms of up to ten years, WVDEP permits are for a duration of five years.
- WVDEP’s program requires new Class I wells which inject hazardous waste to comply with location standards similar to those in the Hazardous Waste Management Act.
- Due to West Virginia regulations, the program prohibits injection of hazardous waste into Class IV wells.[17]
Additional States Seeking Class VI Primacy
West Virginia is the fourth state to receive primacy over Class VI wells, joining North Dakota (2018), Wyoming (2020), and Louisiana (2023, see our previous client alert here).[18] Primacy applications from Texas, submitted by the Railroad Commission of Texas on December 19, 2022, and Arizona, submitted by the Arizona Department of Environmental Quality on February 16, 2024, are under review by the EPA.[19] While Texas and Arizona are likely next in line to receive primacy, timing is unpredictable. West Virginia received primacy less than a year after submitting its application, while Texas is still awaiting primacy more than two years after submitting its application.[20] Despite the unpredictable timing, successful applications by the first four states have prompted a recent increase in the number of states seeking Class VI primacy, with Mississippi, Oklahoma, Utah, Alabama, Colorado, and Alaska all in various stages of pre-application activity.[21]
States seeking Class VI primacy should pay close attention to West Virginia’s application for guidance on how to approach the primacy application process, especially since West Virginia received approval for its primacy application significantly faster than most other applicant states.
Impacts of the New Administration
The new Trump Administration immediately issued certain Executive Orders that could impact the primacy application process and the CCS industry in general. One of President Trump’s Executive Orders, titled “Ending Radical and Wasteful Government DEI Programs and Preferencing” terminates certain environmental justice programs, which have been a required component of applications for primacy over Class VI wells. Another Executive Order issued by President Trump, titled “Unleashing American Energy,” pauses the disbursement of funds appropriated under the Inflation Reduction Act pending further review by certain federal agencies. It is not clear at this time what impact these and other Executive Orders will have on the CCS industry or the Class VI primacy process, but Gibson Dunn is actively monitoring these developments.
[1] View here.
[2] View here.
[3] Id.
[4] https://carbonherald.com/west-virginia-gets-green-light-to-permit-class-vi-well-projects/.
[5] Class VI – Wells used for Geologic Sequestration of Carbon Dioxide | US EPA
[6] Sequestration of Supercritical CO2 in Deep Sedimentary Geological Formations”, Negative Emissions Technologies and Reliable Sequestration: A Consensus Study Report of The National Academies of Sciences, Engineering, and Medicine, pg. 320.
[7] FECM Infrastructure Factsheet.pdf (energy.gov).
[8] Primary Enforcement Authority for the Underground Injection Control Program | US EPA.
[9] The Underground Injection Control program consists of six classes of injection wells. Each well class is based on the type and depth of the injection activity, and the potential for that injection activity to result in endangerment of an underground source of drinking water (USDW). Class I wells are used to inject hazardous and non-hazardous wastes into deep, isolated rock formations. Class II wells are used exclusively to inject fluids associated with oil and natural gas production. Class III wells are used to inject fluids to dissolve and extract minerals. Class IV wells are shallow wells used to inject hazardous or radioactive wastes into or above a geologic formation that contains a USDW. Class V wells are used to inject non-hazardous fluids underground. Class VI wells are wells used for injection of carbon dioxide into underground subsurface rock formations for long-term storage, or geologic sequestration.
[11] View here.
[13] View here.
[14] View here.
[15] View here ; https://www.globalccsinstitute.com/news-media/latest-news/californias-first-class-vi-well-permits-approved-by-u-s-epa/; View here.
[16] View the proposed final rule here.
[17] View WVDEP’s Program Description here.
[19] CO2 Storage (texas.gov); Proposed Arizona Underground Injection Control Primacy Program | US EPA
[20] Federal Register: West Virginia Underground Injection Control (UIC) Program; Class VI Primacy.
Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have about these developments. To learn more, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Oil and Gas, Tax, Environmental Litigation and Mass Tort, Cleantech, Energy Regulation and Litigation, or Power and Renewables practice groups:
Oil and Gas:
Michael P. Darden – Houston (+1 346.718.6789, mpdarden@gibsondunn.com)
Rahul D. Vashi – Houston (+1 346.718.6659, rvashi@gibsondunn.com)
Graham Valenta – Houston (+1 346.718.6646, gvalenta@gibsondunn.com)
Tax:
Michael Q. Cannon – Dallas (+1 214.698.3232, mcannon@gibsondunn.com)
Matt Donnelly – Washington, D.C. (+1 202.887.3567, mjdonnelly@gibsondunn.com)
Environmental Litigation and Mass Tort:
Stacie B. Fletcher – Washington, D.C. (+1 202.887.3627, sfletcher@gibsondunn.com)
David Fotouhi – Washington, D.C. (+1 202.955.8502, dfotouhi@gibsondunn.com)
Rachel Levick – Washington, D.C. (+1 202.887.3574, rlevick@gibsondunn.com)
Cleantech:
John T. Gaffney – New York (+1 212.351.2626, jgaffney@gibsondunn.com)
Daniel S. Alterbaum – New York (+1 212.351.4084, dalterbaum@gibsondunn.com)
Adam Whitehouse – Houston (+1 346.718.6696, awhitehouse@gibsondunn.com)
Energy Regulation and Litigation:
William R. Hollaway – Washington, D.C. (+1 202.955.8592, whollaway@gibsondunn.com)
Tory Lauterbach – Washington, D.C. (+1 202.955.8519, tlauterbach@gibsondunn.com)
Power and Renewables:
Peter J. Hanlon – New York (+1 212.351.2425, phanlon@gibsondunn.com)
Nicholas H. Politan, Jr. – New York (+1 212.351.2616, npolitan@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Gibson Dunn has deep expertise related to controlled substances laws, with partners across practice groups having served in leading enforcement and regulatory government roles. We are available to help clients understand the new proposed rule and consider how to respond to it.
On January 17, 2025, the Drug Enforcement Administration (DEA) announced a new proposed rule that would provide limited pathways for telemedicine prescriptions of certain controlled substances, marking a shift away from the broad flexibilities granted during the COVID-19 public health emergency. The proposed rule comes nearly two years after the DEA first proposed a new telemedicine regime. The proposed rule would establish a special registration pathway for telemedicine prescribing and impose additional restrictions and requirements on telemedicine practitioners. The rule is likely to be of significant concern to prescribers, patients, and healthcare systems. Comments to the proposed rule, which are essential to any potential challenge to an eventual final rule, currently must be submitted to the DEA by March 18, 2025. However, President Trump announced a regulatory freeze shortly after taking office, and it is unclear how the freeze will impact the timing of the proposed rule or whether it moves forward. Unless DEA promulgates a new rule, a temporary COVID-era rule remains in effect until the end of 2025.[1]
Statutory Background. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, 21 U.S.C. § 801 et seq., generally prohibits the “delivery, distribution, or dispensing of a controlled substance” via telemedicine without a valid prescription.[2] The Act requires healthcare providers in most instances to conduct an in-person examination of a patient before issuing a controlled substance prescription via telemedicine. The Act also directed the Drug Enforcement Administration (DEA) to promulgate regulations allowing certain providers to issue telemedicine-based prescriptions if they obtained “special registrations.”[3] But DEA ignored that mandate for over sixteen years, including even after Congress again instructed DEA to promulgate a rule allowing special registrations in the SUPPORT Act of 2018, 21 U.S.C.§ 301 et seq.
Pandemic Flexibilities and the Proposed Rule. In response to the COVID-19 public-health crisis in March 2020, DEA granted temporary exceptions to the Ryan Haight Act and its implementing regulations to facilitate access to telemedical care.[4] Those exceptions authorized providers to prescribe Schedules II–V controlled substances via telemedicine for the duration of the declared public-health emergency, even without an initial in-person visit.[5] The exceptions also allowed the interstate provision of telemedicine services, regardless of the prescribing practitioner’s state of registration.[6]
In March 2023, DEA, jointly with the Department of Health and Human Services (HHS), published a proposed rule to regulate telemedicine prescriptions after the public health emergency expired.[7] The rule would have permanently allowed practitioners to prescribe certain drugs by telemedicine, but it also would have imposed more restrictive limitations, conditions, and requirements than the flexibilities in effect during the public health emergency.[8] For example, the proposed rule would have limited telemedicine prescriptions without an in-person examination to 30-day supplies of drugs and would have imposed onerous recordkeeping and other administrative requirements on providers.[9] DEA and HHS received more than 38,000 predominantly negative public comments on the proposed rule within the first 30 days after its publication.[10] In light of this public response, DEA and HHS delayed promulgating a final rule and issued three temporary rules extending the COVID-19-era policies.[11]
The New Proposed Rule. On January 17, 2025, DEA issued a new notice of proposed rulemaking to fulfill its obligations under the Ryan Haight Act.[12] The proposed rule would establish a three-part “Special Registration” framework, under which registered providers could prescribe controlled substances through telemedicine without first conducting an in-person examination. It also proposes to impose new recordkeeping, disclosures, and prescription-labeling requirements on telemedicine practitioners.
The proposed three-part Special Registration framework would operate as follows:
- (1) Telemedicine Prescribing Registration. Qualifying clinician practitioners could prescribe Schedule III – V controlled substances via telemedicine.[13] “Physicians and board-certified mid-level practitioners” would be eligible for this registration category if they could “demonstrate that they have a legitimate need” for a special registration, e., they “anticipate that they will be treating patients for whom” requiring in-person examinations prior to prescribing Schedule III – V controlled substances could “impose significant burdens on bona fide practitioner-patient relationships.”[14] Practitioners “may” qualify if they treat patients that face “significant challenges” to attending an in-person examination, such as those who live in severe weather conditions or remote areas or have communicable diseases.[15] The proposed rule includes special registration provisions for Schedule III – V drugs approved by the Food and Drug Administration to treat opioid use disorder (OUD) (currently only buprenorphine), which would allow special registered clinicians to prescribe an initial six-month supply without an in-person appointment.[16]
- (2) Advanced Telemedicine Prescribing Registration. Qualifying clinician practitioners could prescribe Schedule II controlled substances via telemedicine, in addition to Schedules III – V, if they “demonstrate that they have a legitimate need” for a special registration and that they are engaged in the treatment of “particularly vulnerable patient populations,” a term that the proposed rule does not define.[17] Only certain specialists, such as psychiatrists, hospice or palliative care physicians, physicians at long term care facilities, pediatricians, or neurologists, or board-certified mid-level practitioners, may qualify for an Advanced Telemedicine Prescribing Registration.[18] These special registrations would be reserved for the “most compelling use cases” to ensure that Schedule II prescribing through telemedicine is used only when necessary.[19]
- (3) Telemedicine Platform Registration. “Covered online telemedicine platforms” (essentially online pharmacies) could dispense Schedules II – V controlled substances via telemedicine if they have a “legitimate need.”[20] They must attest that they “anticipate providing necessary services” to introduce or facilitate connections between patients and clinician practitioners via telemedicine for diagnosing and prescribing those substances; are compliant with state and federal regulations; can provide oversight over clinician practitioners’ prescribing practices; and can take measures to “prioritize patient safety and prevent diversion, abuse, or misuse of controlled substances.”[21]
In conjunction with the new special registration provisions, the proposed rule would impose many new administrative burdens on registrants. Clinician and platform special registrants, for instance, would need to apply for an ancillary State Telemedicine Registration for every state in which they intend to issue telemedicine prescriptions for controlled substances to patients.[22] Applicants also would need to fill out a Form 224, pay $888 per special registration, and renew their status every three years.[23] Clinician special registrants would need to establish and maintain patient and telemedicine prescription records at a designated “special registered location,” which would serve as DEA’s point of contact for telemedicine inquiries.[24] They would also need to maintain certain telemedicine encounter records for a minimum of two years from the date of each telemedicine encounter.[25] And, for each special-registration prescription clinicians issue, providers would need to run a Prescription Drug Monitoring Program check and list their special registration numbers on the prescription.[26]
Why It Matters. Healthcare providers may have serious concerns about the proposed rule’s impact, if finalized, on their ability to provide quality care to patients, compared to pandemic-era flexibilities:
- The Special Registration framework’s “legitimate need” requirement would significantly limit existing access to telemedicine prescriptions.
- The proposed rule would make it especially difficult for patients to receive Schedule II controlled substance prescriptions through telemedicine.
- The proposed rule would require clinicians to keep the “average number” of prescriptions they issue for Schedule II drugs through their special registration authorization at “less than 50 percent of the total number of Schedule II prescriptions” they issue in a calendar month, through telemedicine or otherwise.[27] This would reduce providers’ ability to treat first-time patients via telemedicine in emergent situations.
The proposed rule inflicts onerous new recordkeeping requirements, as discussed above.
- The proposed rule also would impose significant geographic restrictions on telemedicine prescriptions by requiring special registrants to apply for a separate State Telemedicine Registration for each state in which they seek to prescribe prescriptions to patients.
- Online telemedicine platforms would be required to maintain records, including of patients’ identities and providers’ medical credentials.
- Pharmacies would be required to submit monthly reports to DEA that contain aggregate data for special-registration prescriptions.
Providers should analyze the proposed rule’s potential effect on their operations and consider submitting comments to DEA. Submission of comments is critical to ensuring that the DEA is able to consider relevant viewpoints in preparing any final rule and to preparing for any potential challenge to a final rule.
[1] See Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, 89 Fed. Reg. 91,253, https://tinyurl.com/y93su2bt.
[2] Id. § 309, 122 Stat. 4820, 4820 (21 U.S.C. § 829(e)); https://www.congress.gov/bill/110th-congress/house-bill/6353.
[3] 21 U.S.C. § 831(h).
[4] DEA, Dear Registrant (Mar. 25, 2020), https://tinyurl.com/vxv2xwae; DEA, Dear Registration (Mar. 31, 2020), https://tinyurl.com/475wr3n9.
[5] Id.
[6] DEA, Dear Registrant (Mar. 25, 2020), https://tinyurl.com/vxv2xwae.
[7] Telemedicine Prescribing of Controlled Substances When the Practitioner and the Patient Have Not Had a Prior In-Person Medical Evaluation, 88 Fed. Reg. 12,875 (Mar. 1, 2023) (to be codified at 21 CFR pts. 1300, 1304, 1306).
[8] See generally id.
[9] Id. at 12,882.
[10] Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, 88 Fed. Reg. 30,037, 30,037 (May 10, 2023) (codified at 21 CFR pt. 1307) (effective through November 11, 2024).
[11] See Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, 88 Fed. Reg. 30037 (November 19, 2024) (codified at 42 CFR pt. 1307) (effective through December 31, 2025).
[12] Special Registrations for Telemedicine and Limited State Telemedicine Registrations, 90 Fed. Reg. 6541 (Jan. 17, 2025) (to be codified at 21 CFR pts. 1300, 1301, 1304, 1306).
[13] Id. at 6549.
[14] Id.
[15] Id.
[16] Id. at 6555. Separately, DEA and HHS announced a final rule that allows patients to receive an initial six-month supply of buprenorphine, the only Schedule III-V narcotic drug FDA has approved to treat opioid-use disorder, following a phone or video call with a healthcare provider. After the initial six-month supply, practitioners can prescribe buprenorphine via other forms of telemedicine or an in-person visit.
[17] Id.
[18] Id. at 6549–50.
[19] Id. at 6549.
[20] Id. at 6550.
[21] Id.
[22] Id. at 6550–52.
[23] For platform special registrants, the fee is $888 per special registration and for each state in which a State Telemedicine Registration is sought. Clinician special registrants must only pay the $888 special registration fee and $50 for each state in which they seek a State Telemedicine Registration. Id.
[24] Id. at 6552.
[25] Id. at 6558.
[26] Id. at 6554, 6557.
[27] Id. at 6556.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s FDA and Health Care or Administrative Law and Regulatory practice groups, or the following practice leaders and authors:
Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)
Jonathan C. Bond – Washington, D.C. (+1 202.887.3704, jbond@gibsondunn.com)
Katlin McKelvie – Washington, D.C. (+1 202.955.8526, kmckelvie@gibsondunn.com)
John D. W. Partridge – Denver (+1 303.298.5931, jpartridge@gibsondunn.com)
Jonathan M. Phillips – Washington, D.C. (+1 202.887.3546, jphillips@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
On January 10, 2025, the Federal Trade Commission announced its annual update of thresholds for pre-merger notifications of certain M&A transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).[1]
Pursuant to the statute, the HSR Act’s jurisdictional thresholds are updated annually to account for changes in the gross national product. The new thresholds will take effect on February 21, 2025, 30 days after publication in the Federal Register, which happened earlier today, and apply to transactions that close on or after that date.[2]
The size-of-transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will increase by $6.9 million, from $119.5 million in 2024 to $126.4 million for 2025.
| Original Threshold | 2024 Threshold | 2025 Threshold |
| $10 million | $23.9 million | $25.3 million |
| $50 million | $119.5 million | $126.4 million |
| $100 million | $239 million | $252.9 million |
| $110 million | $262.9 million | $278.2 million |
| $200 million | $478 million | $505.8 million |
| $500 million | $1.195 billion | $1.264 billion |
| $1 billion | $2.39 billion | $2.529 billion |
.
The HSR filing fees have been revised pursuant to the 2023 Consolidated Appropriations Act. The new filing fees, which will also take effect on February 21, 2025, will be:
| Fee | Size of Transaction |
| $30,000 | Valued at less than $179.4 million |
| $105,000 | Valued at $179.4 million or more but less than $555.5 million |
| $265,000 | Valued at $555.5 million or more but less than $1.111 billion |
| $425,000 | Valued at $1.111 billion or more but less than $2.222 billion |
| $850,000 | Valued at $2.222 billion or more but less than $5.555 billion |
| $2,390,000 | $5.555 billion or more |
.
The 2025 thresholds triggering prohibitions on certain interlocking directorates on corporate boards of directors are $51,380,000 for Section 8(a)(l) (size of corporation) and $5,138,000 for Section 8(a)(2)(A) (competitive sales). The Section 8 thresholds take effect today, January 22, 2025.
[1] FTC Announces 2025 Update of Size of Transaction Thresholds for Premerger Notification Filings, Press Releases, FTC (Jan. 10, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-announces-2025-update-size-transaction-thresholds-premerger-notification-filings
[2] Revised Jurisdictional Thresholds for Section 7A of the Clayton Act, 90 Fed. Reg. 7697, 7697–98 (Jan. 22, 2025), https://www.federalregister.gov/documents/2025/01/22/2025-01518/revised-jurisdictional-thresholds-for-section-7a-of-the-clayton-act
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the new HSR size of transaction thresholds, or HSR and antitrust/competition regulations and rulemaking more generally. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Antitrust and Competition, Mergers and Acquisitions, or Private Equity practice groups:
Antitrust and Competition:
Rachel S. Brass – San Francisco (+1 415.393.8293, rbrass@gibsondunn.com)
Jamie E. France – Washington, D.C. (+1 202.955.8218, jfrance@gibsondunn.com)
Sophia A. Hansell – Washington, D.C. (+1 202.887.3625, shansell@gibsondunn.com)
Kristen C. Limarzi – Washington, D.C. (+1 202.887.3518, klimarzi@gibsondunn.com)
Joshua Lipton – Washington, D.C. (+1 202.955.8226, jlipton@gibsondunn.com)
Michael J. Perry – Washinton, D.C. (+1 202.887.3558, mjperry@gibsondunn.com)
Cynthia Richman – Washington, D.C. (+1 202.955.8234, crichman@gibsondunn.com)
Stephen Weissman – Washington, D.C. (+1 202.955.8678, sweissman@gibsondunn.com)
Mergers and Acquisitions:
Robert B. Little – Dallas (+1 214.698.3260, rlittle@gibsondunn.com)
Saee Muzumdar – New York (+1 212.351.3966, smuzumdar@gibsondunn.com)
George Sampas – New York (+1 212.351.6300, gsampas@gibsondunn.com)
Private Equity:
Richard J. Birns – New York (+1 212.351.4032, rbirns@gibsondunn.com)
Ari Lanin – Los Angeles (+1 310.552.8581, alanin@gibsondunn.com)
Michael Piazza – Houston (+1 346.718.6670, mpiazza@gibsondunn.com)
John M. Pollack – New York (+1 212.351.3903, jpollack@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Gibson Dunn’s DEI Task Force is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.
On January 21, 2025, President Trump rescinded Executive Order 11246, which had imposed affirmative action obligations on federal contractors in addition to non-discrimination requirements. E.O. 11246—adopted in 1965 by President Lyndon Johnson—was enforced by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). Contractors may continue to comply with the prior requirements for up to 90 days. The Order directs the OFCCP to “immediately cease” “[h]olding Federal contractors and subcontractors responsible for taking “affirmative action.” The Order will presumably have the effect of terminating ongoing and future compliance investigations based upon the now-rescinded E.O. 11246, although the status of those proceedings is not addressed directly.
In place of the prior affirmative action requirements, federal contracts and grants now will be required to include a clause requiring the contractor or grant recipient to agree that compliance “with applicable Federal anti-discrimination laws” is a term “material to the government’s payment decisions” for purposes of the False Claims Act, 31 U.S.C. § 3729 et seq., as well as certify that that the contractor or grant recipient “does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” This requirement does not appear to impose any substantive obligation beyond those contained in federal statutes such as Title VII and the Americans with Disabilities Act. These additions appear calculated to strengthen the ability of the government—and of individual whistleblowers, or “relators”— to use the False Claims Act to enforce non-discrimination requirements. President Trump’s executive order does not indicate that OFCCP will have a role in enforcing the new non-discrimination clause.
President Trump also directed agency heads within 120 days to submit to the White House proposed “strategic enforcement plan[s]” “containing recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” Agency submissions are instructed to include, among other things, “up to nine” large companies or non-profits for “potential civil compliance investigations,” as well as “[l]itigation that would be potentially appropriate for Federal lawsuits, intervention, or statements of interest.”
President Trump also directed the Attorney General and Education Secretary to issue joint guidance “regarding the measures and practices required to comply with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).”
Gibson Dunn continues to monitor developments in this area. Government contractors, federal grant recipients, and other private sector employers should consider reviewing their diversity programs and training to ensure compliance with evolving legal requirements. Our DEI Task Force is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s DEI Task Force, Labor and Employment, or Government Contracts practice groups, or the following authors and practice leaders:
Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group
Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group
Los Angeles (+1 213-229-7107, ksmith@gibsondunn.com)
Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group
New York (+1 212-351-3850, mdenerstein@gibsondunn.com)
Dhananjay S. Manthripragada – Partner & Co-Chair, Government Contracts Group
Los Angeles/Washington, D.C. (+1 213.229.7366, dmanthripragada@gibsondunn.com)
Lindsay M. Paulin – Partner & Co-Chair, Government Contracts Group
Washington, D.C. (+1 202.887.3701, lpaulin@gibsondunn.com)
Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer
Washington, D.C. (+1 202-955-8503, zswilliams@gibsondunn.com)
Molly T. Senger – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8571, msenger@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
To help organizations assess their preparedness for the 119th Congress, Gibson Dunn offers insights into Congress’s likely investigative priorities and practical guidance on congressional committees.
With Republicans taking control of the U.S. Senate, the party now holds the majority in both chambers and Republican committee chairs will control the investigative agenda in the 119th Congress. We expect that Republicans will investigate a variety of topics, including: wasteful government spending (working with the Department of Government Efficiency); university responses to antisemitism; environmental, social, and corporate governance (ESG) efforts; Big Tech; China-related issues; the high cost of healthcare; the role of diversity, equity, and inclusion (DEI) programs; COVID origins; and debanking. Other focal points likely will include border security and cryptocurrency. With President Trump in the White House, Congress is less likely to focus investigations on the executive branch and allocate more of its resources to examining the private sector and causes perceived to be aligned with the left. Despite sharp partisan divides, there may be areas for bipartisan cooperation, particularly regarding cybersecurity threats, artificial intelligence, and investigations relating to China.
Unlike executive branch investigations, congressional probes can unfold quickly and attract immediate media attention, often requiring swift, strategic responses. Companies, universities, other organizations, and individuals facing potential investigations must be prepared to navigate not only the substantive issues raised but also the unique norms and procedures governing congressional investigations, as well as the public and media scrutiny that often accompanies these inquiries.
To help organizations assess their preparedness for the 119th Congress, Gibson Dunn offers insights into Congress’s likely investigative priorities and practical guidance on congressional committees. This includes a review of Congress’s legal authority, common defenses, and best practices for managing requests for information. As the new Congress begins, now is the time for organizations and individuals to plan for the possibility of congressional scrutiny and ensure they are ready to respond to the challenges ahead.
I. Lay of the Land in the 119th Congress (House)
As we explained in prior alerts for the 116th, 117th, and 118th Congresses, the House adopts rules at the beginning of each Congress. After re-electing Speaker Mike Johnson (R-LA-4), the House adopted its rules package for the 119th Congress on January 3, 2025. Although the rules package does not add any new investigative tools, it maintains the House’s expansive investigative authorities, including the majority’s ability to issue subpoenas without consulting members of the minority and deposition powers that allow staff to conduct depositions without members present.
Investigative Priorities: We expect several investigative priorities to continue over from the last Congress. For example, Big Tech—the most investigated industry during the 118th Congress—is likely to face continued scrutiny on multiple levels. We also expect increased investigative activity related to alleged censorship of conservative viewpoints on social media platforms and in the media. Similarly, healthcare companies, specifically pharmaceutical companies and pharmacy benefit managers, are likely to face continued scrutiny in the 119th Congress.
The Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party has been renewed for the 119th Congress.[1] In the last Congress, the Select Committee pursued a number of investigations, generally on a bipartisan basis, and advanced legislative measures designed to counteract the Chinese Communist Party’s (CCP) influence. The Select Committee has focused on areas such as research security,[2] TikTok data collection and influence,[3] banning certain CCP-influenced drone manufacturers,[4] protecting Taiwan against possible invasion,[5] and introducing legislation to combat the CCP’s role in the fentanyl crisis[6] and the use of forced labor and Uyghur labor,[7] among others. The Select Committee is poised to continue its focus on the CCP’s impact on the supply chain, U.S. capital flows to Chinese corporations, and technological decoupling.
Notably, the House Rules package broadens the Select Committee’s investigative jurisdiction for the 119th Congress. The Select Committee’s expanded jurisdiction now consists of “policy recommendations on countering the economic, technological, security, and ideological threats of the Chinese Communist Party to the United States and allies and partners of the United States,”[8] a seemingly broader and more pointed focus than its jurisdiction in the 118th Congress, which was “to investigate and submit policy recommendations on the status of the Chinese Communist Party’s economic, technological, and security progress and its competition with the United States.”[9] Chairman John Moolenaar (R-MI-2), who succeeded Mike Gallagher (R-WI-8) in April 2024, has expressed optimism that the Select Committee will continue its bipartisan work into the 119th Congress.
Committee Leadership Changes and Priorities: While we expect many investigative priorities from the last Congress to carry forward, companies should be aware of new leadership at several key committee and subcommittee posts, as well as the creation of the new Subcommittee on Delivering on Government Efficiency, which may portend new investigative priorities.
The Committee on Energy and Commerce will be led by new Chairman Brett Guthrie (R-KY-2), a longtime member of the Committee who also previously chaired the Subcommittees on Health and Oversight and Investigations. Guthrie has expressed interest in broadband spectrum, privacy, artificial intelligence, and addressing Big Tech’s perceived role in censorship. Additionally, new Health Subcommittee Chairman Buddy Carter (R-GA-1), a former pharmacist, announced[10] plans to prioritize reducing drug prices and likely will focus his Subcommittee’s attention on pharmacy benefit managers, a topic about which he has been outspoken. Similarly, Chairman Gary Palmer (R-AL-6), plans to target the healthcare industry in his new role atop the Oversight and Investigations Subcommittee.[11]
The Committee on Oversight and Government Reform (previously the Committee on Oversight and Accountability) will again be led by Chairman James Comer (R-KY-1). Chairman Comer announced that Rep. Marjorie Taylor Greene (R-GA-14) will chair the new Subcommittee on Delivering on Government Efficiency (the “DOGE Subcommittee”). It is expected that the DOGE Subcommittee will work closely with President Trump’s Department of Government Efficiency (DOGE). DOGE’s mission is to reduce the deficit, streamline the federal workforce, and curtail the administrative state. DOGE itself will not have the power to reduce spending or cut programs—that authority rests with Congress. Thus, we expect the DOGE Subcommittee and DOGE to work together, with the DOGE Subcommittee using its investigative powers to augment DOGE’s recommendations to Congress.[12] We discuss DOGE’s potential structure and implications in further detail in another client alert.
The Committee on the Judiciary will again be led by Chairman Jim Jordan (R-OH-4), while Rep. Jefferson Van Drew (R-NJ-2) will lead the Subcommittee on Oversight. Notably, House leadership chose not to renew the Committee’s Select Subcommittee on the Weaponization of the Federal Government in the 119th Congress, though we anticipate the full committee to continue investigating alleged weaponization of the government and suppression of conservative speech.
Lastly, the Committee on Education and Workforce’s new Chairman Tim Walberg (R-MI-5), will likely continue to focus in part on how colleges and universities respond to antisemitism on campus—an investigative focal point of the 118th Congress.
II. Lay of the Land in the 119th Congress (Senate)
Senate committees soon will begin to organize and to publish their rules. We anticipate a relatively slow start to Senate investigations in the 119th Congress while the Senate focuses on the confirmation of President Trump’s cabinet nominees. That said, we may see early investigative and oversight activity from some Republicans who launched investigations from their ranking member positions last Congress, and, as the Congress gets underway, we expect Senate Republicans to aggressively pursue investigations on various topics.
Key committees to watch: While all Senate committees have investigative jurisdiction and authorities, we focus on four that we expect to be active: the Commerce, Science, and Transportation Committee; the Judiciary Committee; the Homeland Security and Governmental Affairs Committee; and the Permanent Subcommittee on Investigations.
As Chairman of the Senate Commerce, Science, and Transportation Committee, Ted Cruz (R-TX) is likely to expand the investigative agenda he developed during the 118th Congress. During the 118th Congress, he investigated National Science Foundation grants for research projects allegedly pursuing DEI agendas and large technology companies’ recommendation algorithms for allegedly suppressing speech. Just this past November, then-Ranking Member Cruz opened an investigation into foreign influence on AI.[13] We anticipate Chairman Cruz will continue to show interest in these topics and likely expand into others.
Senator Chuck Grassley (R-IA), always an active investigator, will once again chair the Senate Judiciary Committee, a position he held from 2015 to 2019. Last Congress, he used his position as Ranking Member of the Senate Committee on the Budget—a committee not usually associated with investigations—to pursue inquiries into private equity firms and banks. Back atop a more conventional investigative committee, we anticipate he will continue ongoing investigations as well as look into the Biden Department of Justice’s special counsel investigation and charges against President Trump. We also expect him to investigate how antitrust laws apply to the purported monopolization of the tech sector and to conduct oversight to support President Trump’s immigration policy agenda. Given his strong relationship with the whistleblower community, we expect Chairman Grassley to continue working with whistleblowers on investigations involving government contracting and other issues.
Senator Rand Paul (R-KY) will chair the Senate Homeland Security and Governmental Affairs Committee (HSGAC). Chairman Paul has one of the strongest voices in Congress against government waste, fraud, and abuse, publishing an annual “Festivus” Report on government waste.[14] We except he will work closely with DOGE to highlight government waste through oversight and support legislation to effectuate DOGE’s goals. He also has publicly promised to hold hearings to investigate the origins of COVID-19.[15]
The Senate Permanent Subcommittee on Investigations (PSI), a HSGAC subcommittee, has some of the broadest investigative authorities and jurisdiction in the Senate. Its jurisdiction has expanded over time and today includes including oversight all government agencies, organized crime and other criminal activities, national security, energy, and labor issues.[16] Chaired by Senator Richard Blumenthal (D-CT) during the 118th Congress, PSI was very active, holding investigative hearings on multiple topics, including Saudi Arabian investment in the United States, aircraft manufacturing safety, and the semiconductor industry. The new PSI chairman, Senator Ron Johnson (R-WI), is more likely to investigate COVID-19 origins, vaccine efficacy, and how to eliminate waste, fraud, and abuse in the federal government.
Senator Bill Cassidy (R-LA), a gastroenterologist, will be taking over as Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and we expect he will wield his investigative authorities aggressively. Senator Cassidy is likely to focus on healthcare issues such as prescription drug costs and unexpected medical bills; student loan debt; cybersecurity in the healthcare ecosystem; and lowering the cost of higher education. During the 118th Congress, Senator Cassidy demonstrated his interest in investigations, seeking information from UnitedHealth Group regarding a data breach of its subsidiary, Change Healthcare. He also began an investigation into the government’s 340B Drug Pricing Program.
Potential Changes to Subpoena and Deposition Authority: We will be closely watching whether Senate Republicans strengthen their investigative arsenal, particularly when it comes to subpoena and deposition authority. On the House side, the chamber’s rules allow committee chairs to issue subpoenas unilaterally—although specific committee rules may require giving notice to the ranking member or other procedures. In the Senate, there has been a longstanding hesitation on whether to grant committee chairs unilateral subpoena authority. We will see if any Senate chairs take a more aggressive approach to committee rules in the 119th Congress.
It is also important to keep a close watch on Senate deposition authority. In the last Congress, nine Senate bodies included deposition provisions in their rules: (1) Judiciary; (2) HSGAC; (3) PSI; (4) Aging; (5) Agriculture, Nutrition, and Forestry; (6) Commerce, Science, and Transportation; (7) Ethics; (8) Foreign Relations; and (9) Intelligence. Staff is expressly authorized to take depositions in each of these committees other than the Intelligence Committee. Note that Senate rules do not provide committees with authority to compel deposition testimony. Instead, the Senate may grant that power to certain committees through a Senate resolution. Hence, the Senate’s committee funding resolution for the 118th Congress granted the Judiciary Committee, HSGAC, and PSI the ability to subpoena witnesses for depositions.[17] While other committees may maintain deposition authority through their rules, any deposition testimony would be on a voluntary basis.[18]
III. Unique Features of Congressional Investigations
Congressional investigations are unlike more familiar executive branch investigations in several respects. First, there are often complex motivations at work. Committee chairs may want to advance their political agenda, heighten their public profile, develop support for a legislative proposal, expose alleged criminal wrongdoing or unethical practices, pressure a company to take certain actions, or respond to public outcry. Recognizing these underlying objectives and evaluating the political context surrounding an inquiry can therefore be a key component of developing an effective response strategy.
Second, Congress’s power to investigate is broad—as broad as its legislative authority—which can often make investigations unpredictable. The “power of inquiry” is inherent in Congress’s authority to “enact and appropriate under the Constitution.”[19] And while Congress’s investigatory power is not a limitless power to probe any private affair or to conduct law enforcement investigations, but rather must further a valid legislative purpose,[20] the term “legislative purpose” is understood broadly to include gathering information not only for the purpose of legislating, but also for overseeing governmental matters and informing the public about the workings of government.[21]
Finally, unlike the relatively controlled environment of a courtroom or a confidential investigation, congressional investigations often unfold through public letters and subpoenas and before television cameras in hearing rooms. Targets must coordinate their legal, political, and communications strategies to respond effectively.
IV. Investigatory Tools of Congressional Committees
Congress has a broad range of investigatory tools at its disposal, which enable it to gather information, ensure compliance with legal and regulatory standards, and inform legislative and policy agendas. Although many of Congress’s tools present opportunities for targets to comply voluntarily, it does have the ability to issue subpoenas for documents and testimony. It is essential for subjects of congressional oversight to understand both the scope and the limitations of these investigatory powers in order to respond effectively.
- Requests for Information: Any member of Congress may request information from an individual or entity, including through documents, briefings, or other formats.[22] Absent the issuance of a subpoena, responding to such requests is voluntary as a legal matter (although of course there may be public or political pressure to respond). As such, recipients of such requests should carefully consider the merits of different degrees of engagement.
- Interviews: Interviews also are voluntary, led by committee staff, and occur in private (in person or remotely). They tend to be less formal than depositions and are sometimes transcribed. Committee staff may take copious notes and rely on interview testimony in subsequent hearings or public reports. Although interviews are typically not conducted under oath, false statements to congressional staff can be criminally punishable as a felony under 18 U.S.C. § 1001.
- Depositions: Depositions can be compulsory, transcribed, and taken under oath. As such, depositions tend to be more formal than interviews and are similar to those in traditional litigation. The number of committees with authority to conduct staff depositions has increased significantly over the last few years, and a member no longer needs to be present in a House committee deposition.
- Hearings: While both depositions and interviews allow committees to acquire information quickly and (at least in many circumstances) confidentially,[23] testimony at hearings, unless on a sensitive topic, is conducted in a public session led by the members themselves (or, on occasion, committee counsel).[24] Hearings can either occur at the end of a lengthy staff investigation or take place more rapidly, often in response to an event that has garnered public and congressional concern. Most akin to a trial in litigation (though without many of the procedural protections or the evidentiary rules applicable in judicial proceedings), hearings are often high profile and require significant preparation to navigate successfully.
- Executive Branch Referral: Congress also has the power to refer its investigatory findings to the executive branch for criminal prosecution. After a referral from Congress, the Department of Justice may charge an individual or entity with making false statements to Congress, obstruction of justice, or destruction of evidence. Importantly, while Congress may make a referral, the executive branch retains the discretion to prosecute, or not.
Subpoena Power
As noted, Congress will usually seek voluntary compliance with its requests for information or testimony as an initial matter. If requests for voluntary compliance are met with resistance, however, or if time is of the essence, Congress may compel disclosure of information or testimony by issuing a subpoena.[25] Like Congress’s power of inquiry generally, there is no explicit constitutional provision granting Congress the right to issue subpoenas.[26] But the Supreme Court has recognized that the issuance of subpoenas is “a legitimate use by Congress of its power to investigate” and its use is protected from judicial interference in some respects by the Speech or Debate Clause.[27] Congressional subpoenas are subject to few legal challenges,[28] and “there is virtually no pre-enforcement review of a congressional subpoena” in most circumstances.[29]
The authority to issue subpoenas is initially governed by the rules of the House and Senate, which delegate further rulemaking to each committee.[30] While every standing committee in the House and Senate has the authority to issue subpoenas, the specific requirements for issuing a subpoena vary by committee. These rules are still being developed by the committees of the 119th Congress and can take many forms. For example, in the 118th Congress, most House committee chairs were authorized to issue subpoenas unilaterally if they provided notice to the ranking member. Other chairs, however, required approval of the ranking member, or, upon the ranking member’s objection, required a vote of the majority of the committee in order to issue a subpoena.
Contempt of Congress
Failure to comply with a subpoena can result in one of three enforcement avenues: a criminal contempt referral, a civil contempt action, or exercise of Congress’s inherent contempt power.
- Statutory Criminal Contempt Power: Congress possesses statutory authority to certify recalcitrant witnesses for criminal contempt prosecutions in federal court. In 1857, Congress enacted this criminal contempt statute as a supplement to its inherent authority.[31] Under the statute, a person who refuses to comply with a subpoena is guilty of a misdemeanor and subject to a fine and imprisonment.[32] “Importantly, while Congress initiates an action under the criminal contempt statute, the Executive Branch prosecutes.”[33] This relieves Congress of the burdens associated with its inherent contempt authority. The statute simply requires the House or Senate to certify a contempt finding to the Department of Justice. Thereafter, the statute provides that it is the “duty” of the “appropriate United States attorney” to prosecute the matter,[34] although the Department of Justice maintains that it always retains discretion not to prosecute and often declines to do so. Although Congress rarely uses its criminal contempt authority, the House Democratic majority, following January 6, 2021, employed it against a flurry of Trump administration officials, including Attorney General Bill Barr, Secretary of Commerce Wilbur Ross, Secretary of Homeland Security Chad Wolff, political adviser Steve Bannon, and White House Chief of Staff Mark Meadows. The Department of Justice prosecuted Bannon for defying a subpoena from the Select January 6 Committee. A jury found him guilty, and the D.C. Circuit upheld his conviction.[35] In September 2024, the Senate unanimously voted to find Ralph de la Torre, the CEO of a bankrupt hospital operator, Steward Health Care, in contempt of the Senate and to certify the report of his contempt to the U.S. Attorney for prosecution. This was the first time the Senate had held someone in criminal contempt since 1971.[36]
- Civil Enforcement Authority: Congress may seek civil enforcement of its subpoenas, which is often referred to as civil contempt. The Senate’s civil enforcement power is expressly codified.[37] This statute authorizes the Senate to seek enforcement of legislative subpoenas in a U.S. District Court. In contrast, the House does not have a civil contempt statute, but federal district judges have held that it may pursue a civil contempt action “by passing a resolution creating a special investigatory panel with the power to seek judicial orders or by granting the power to seek such orders to a standing committee.”[38]
- Inherent Contempt Power: The first, and least relied upon, form of compulsion is Congress’s inherent contempt power. The inherent contempt power has not been used by either body since 1935.[39] Much like the subpoena power itself, the inherent contempt power is not specifically authorized in the Constitution, but the Supreme Court has recognized its existence and legitimacy.[40] To exercise this power, the House or Senate must pass a resolution and then conduct a full trial or evidentiary proceeding, followed by debate and (if contempt is found to have been committed) imposition of punishment.[41] As is apparent in this description, the inherent contempt authority is cumbersome and inefficient, and it is potentially fraught with political peril for legislators.[42]
V. Defenses to Congressional Inquiries
While potential defenses to congressional investigations are limited, they are important to understand. The principal defenses are as follows:
Legislative Purpose
Because the Constitution grants Congress the power to investigate as a means of informing its legislative responsibilities, a congressional investigation must have a “valid legislative purpose,” that is, it must be “related to, and in furtherance of, a legitimate task of Congress.” The Supreme Court provided guideposts on legislative purpose defenses in Trump v. Mazars.[43] In Mazars, the Court announced what it called a “balanced approach” to govern future interbranch disputes, laying out a somewhat more rigorous set of guideposts that it viewed as protecting Congress’s ability to investigate the president while also mitigating the risk of improper congressional inquiry. The Court’s language emphasized that legislative purpose must serve as a limiting principle with respect to Congress’s subpoena power. Accordingly, to demonstrate a valid legislative purpose, Congress must, in effect, show its work and adequately describe the nexus between the records sought and the legislation the committee is considering.
Courts recently evaluating legislative purpose have largely followed Mazars while ultimately showing deference to committees.[44] Based on current information, the last time this defense was successfully argued was in 1880.[45]
Committee Jurisdiction and Procedural Defenses
Committees are created by the Senate and House. They have no independent authority beyond their delegations. Each committee creates its own rules based on Senate or House delegation, and the committee is then bound by those rules. These rules provide procedural protections to targets of congressional investigations. If a committee fails to follow its rules and violates the rights of witnesses in the process, the violation is cognizable in court and can be used as an effective defense against contempt.[46] In addition, the subject matter of an inquiry must also be within the scope of jurisdiction clearly delegated to the committee by Congress.
As an example of the potential importance of rule violations in the authorization of subpoenas, we note the Senate Judiciary Committee’s attempt to authorize subpoenas against Harlan Crow and Leonard Leo in November 2023. There, the Committee majority committed three rule violations. First, the Committee majority violated the Senate’s “Two-Hour Rule,” which prohibits committees from conducting business after two hours have elapsed from when the Senate convenes on a given day.[47] While the Senate convened at 10 AM that day, the Committee’s vote did not conclude until 12:02 PM. Second, the Committee violated Senate Judiciary Committee Rule IV, which requires that a matter may be brought to a vote without further debate only if at least one of the votes to end debate is “cast by the minority.”[48] No Republican senators voted to bring the matter to a vote. Third, the Committee violated Senate Judiciary Committee Rule III, which requires that at least “[n]ine Members of the Committee, including at least two Members of the minority,” be present in order to transact business. No Republican members of the Committee were present during the vote. Although the significance of these rule violations were never litigated, the Committee majority’s procedural missteps provided a strong potential defense if the Committee attempted to enforce the subpoenas, which it never did.
Constitutional Defenses
Constitutional defenses under the First, Fourth, and Fifth Amendments may be available in certain circumstances. While few of these challenges are ever litigated, these defenses should be carefully evaluated by the subject of a congressional investigation.
The First Amendment protects petitioning, lobbying, association, and speech on matters of public concern, and it prohibits government officials from taking retaliatory actions on account of protected speech. When an investigative target invokes a First Amendment defense, a court must engage in a “balancing” of “competing private and public interests at stake in the particular circumstances shown.”[49] The “critical element” in the balancing test is the “existence of, and the weight to be ascribed to, the interest of the Congress in demanding disclosures from an unwilling witness.”[50] A First Amendment defense has succeeded in cases where committees have used their powers to investigate political ideas with which they disagree – though not since the 1950s.[51]
The First Amendment also constrains judicially compelled production of information in certain circumstances.[52] Accordingly, it is clear that the First Amendment limits congressional subpoenas in some circumstances. Moreover, targets of congressional investigations sometimes contend that the investigation itself constitutes impermissible retaliation in violation because it was allegedly initiated and pursued because of the target’s exercise of First Amendment rights. It is an open question whether retaliatory motives can be inferred from committees’ and members’ public statements regarding the nature and purpose of an investigation.[53]
The Fourth Amendment protects individuals from subpoenas that are overly broad and that lack congruence and proportionality to the scope of the investigation.[54] Supreme Court dicta suggest the Fourth Amendment can be a valid defense in certain circumstances related to the issuance of congressional subpoenas.[55] Nevertheless, no court has relied on it to reverse a contempt conviction.[56]
The Fifth Amendment’s privilege against self-incrimination is available to witnesses—but not entities—who appear before Congress.[57] The right generally applies only to testimony, and not to the production of documents,[58] unless those documents satisfy a limited exception for “testimonial communications.”[59] Congress can circumvent this defense by granting transactional immunity to an individual invoking the Fifth Amendment privilege.[60] This allows a witness to testify without the threat of a subsequent criminal prosecution based on the testimony provided.
Attorney-Client Privilege & Work Product Defenses
Although the House and the Senate have taken the position that they are not required to recognize the attorney-client privilege, in practice, they generally do. Moreover, no court has ruled that the attorney-client privilege does not apply to congressional investigations. In Mazars, the Court stated that recipients of congressional subpoenas retain both “common law and constitutional privileges with respect to certain materials, such as attorney-client communications and governmental communications protected by executive privilege.”[61] While the Court’s treatment of common law privileges in Mazars is arguably dicta, both the executive branch and private litigants can be expected to take the position that Congress is obligated to observe common law privileges in the same way that courts and grand juries must observe them. Recent court decisions have followed the Mazars language on attorney-client privilege. For instance, while the district court in Eastman v. Thompson rejected the plaintiff’s broad attorney-client privilege claims over an entire cache of documents requested by the government, it permitted the plaintiff leave to reassert privilege claims in the context of specific documents, concluding that “[t]he party must assert the privilege as to each record sought to allow the court to rule with specificity.”[62]
The work product doctrine protects documents prepared in anticipation of litigation. Accordingly, it is not clear whether or in what circumstances the doctrine applies to congressional investigations. The question is whether such investigations are the type of “adversarial proceeding” required to satisfy the “anticipation of litigation” requirement.[63]
VI. Top Mistakes and How to Prepare
Successfully navigating a congressional investigation requires mastery of the facts at issue, careful consideration of collateral political events, and closely-coordinated crisis communications.
Here are some of the more common mistakes we have observed:
- Facts: Failure to identify and verify the key facts at issue;
- Message: Failure to communicate a clear and compelling narrative;
- Context: Failure to understand and adapt to underlying dynamics driving the investigation;
- Concern: Failure to timely recognize the attention and resources required to respond;
- Legal: Failure to preserve privilege and assess collateral consequences;
- Rules: Failure to understand the rules of each committee, which can vary significantly; and
- Big Picture: Failure to consider how an adverse outcome can negatively impact numerous other legal and business objectives.
The consequences of inadequate preparation can be disastrous on numerous fronts. A keen understanding of how congressional investigations differ from traditional litigation and executive branch or state agency investigations is therefore vital to effective preparation. The most successful subjects of investigations are those that both seek advice from experienced counsel and employ multidisciplinary teams with expertise in government affairs, media relations, e-discovery, and the key legal and procedural issues.
The 119th Congress is poised to continue a robust and wide-ranging slate of investigations, driven by Republican priorities in both the House and Senate. While investigations into Big Tech, healthcare, government efficiency, and Chinese influence remain central, the new leadership and shifting committee structures will likely introduce additional areas of focus, such as the role of DEI programs, ESG efforts, and border security. Organizations, companies, and universities must remain vigilant, prepared not only for the substantive policy scrutiny these investigations may bring but also for the public attention and political dynamics that often accompany congressional probes. With the heightened scrutiny of both media and public opinion, navigating congressional investigations requires careful, proactive preparation. Gibson Dunn lawyers have extensive experience in both running congressional investigations and defending targets of and witnesses in such investigations. If you or your company become the subject of a congressional inquiry, or if you are concerned that such an inquiry may be likely, please feel free to contact us for assistance.
[1] See H.R. Res. 5, 119th Cong, § 4(a) (2025).
[2] See Report Summary: How American Taxpayers and Universities Fund the CCP’s Advanced Military and Technological Research. The Select Committee on the Chinese Communist Party (Sept. 24, 2024), https://selectcommitteeontheccp.house.gov/media/videos/report-summary-how-american-taxpayers-and-universities-fund-ccps-advanced-military-and.
[3] See Letters to CEOs of TikTok, Apple & Google Following DC Circuit Court Decision. The Select Committee on the Chinese Communist Party (Dec. 13, 2024), https://selectcommitteeontheccp.house.gov/media/letters/letters-ceos-tiktok-apple-google-following-dc-circuit-court-decision.
[4] See Press Release, Moolenaar, Krishnamoorthi: Commerce’s Move to Restrict PRC Drones Enhances National Security (Jan. 3, 2025), https://selectcommitteeontheccp.house.gov/media/press-releases/moolenaar-krishnamoorthi-commerces-move-restrict-prc-drones-enhances-national.
[5] See Ten For Taiwan: Policy Recommendations to Preserve Peace and Stability in the Taiwan Strait. The Select Committee on the Chinese Communist Party (May 24, 2023), (https://docs.house.gov/meetings/ZS/ZS00/20230524/116035/HRPT-118-2.pdf.
[6] See Fentanyl Policy Working Group Unveils Bipartisan Legislation. The Select Committee on the Chinese Communist Party (Dec. 17, 2024), https://selectcommitteeontheccp.house.gov/media/press-releases/fentanyl-policy-working-group-unveils-bipartisan-legislation.
[7] See generally The Select Committee on the CCP: Uyghur Genocide, https://selectcommitteeontheccp.house.gov/issues/uyghur-genocide.
[8] H.R. Res. 5, 119th Cong, § 4(a)(2) (2025) (emphasis added).
[9] H.R. Res. 11, 118th Cong, § 1(b)(2) (2023) (emphasis added).
[10] See Press Release, Rep. Buddy Carter, Carter Selected to Chair Energy and Commerce Subcommittee on Health (Dec. 20, 2024), http://buddycarter.house.gov/news/documentsingle.aspx?DocumentID=15295.
[11] See @RepGaryPalmer, X (Dec. 20, 2024, 6:04 PM), http://x.com/USRepGaryPalmer/status/1870243948234518704.
[12] See also Theodore Schleifer and Madeleine Ngo, Inside Elon Musk’s Plan for DOGE to Slash Government Costs, The New York Times (Jan. 12, 2025), https://www.nytimes.com/2025/01/12/us/politics/elon-musk-doge-government-trump.html.
[13] Letter from The Hon. Ted Cruz, Ranking Member, S. Comm. on Commerce, Science & Transp. to the Hon. Merrick Garland, Atty Gen., U.S. Dep’t of Justice (Nov. 21, 2024), https://www.commerce.senate.gov/services/files/55267EFF-11A8-4BD6-BE1E-61452A3C48E3.
[14] See e.g., Press Release, Dr. Paul Releases 2024 ‘Festivus’ Report on Government Waste (Dec. 23, 2024), https://www.hsgac.senate.gov/media/reps/dr-paul-releases-2024-festivus-report-on-government-waste/.
[15] John Wilkerson, Rand Paul plans to investigate Covid-19 origins from his new perch leading a key committee, STAT News (Nov. 22, 2024), https://www.statnews.com/2024/11/22/rand-paul-senate-investigation-covid-19-origin-lab-leak-theory-anthony-fauci-nih/.
[16] S. Res. 59, 118th Cong. §§ 12(e)(1)(A)–(G).
[17] S. Res. 59, 118th Cong. §§ 12(e)(3)(E), 13(e) (2023).
[18] See Authority and Rules of Senate Committees, 2023–2024 (118th Congress), https://www.govinfo.gov/content/pkg/CDOC-118sdoc4/pdf/CDOC-118sdoc4.pdf.
[19] Barenblatt v. United States, 360 U.S. 109, 111 (1957).
[20] See Wilkinson v. United States, 365 U.S. 399, 408-09 (1961); Watkins v. United States, 354 U.S. 178, 199-201 (1957).
[21] Michael D. Bopp, Gustav W. Eyler, & Scott M. Richardson, Trouble Ahead, Trouble Behind: Executive Branch Enforcement of Congressional Investigations, 25 Corn. J. of Law & Pub. Policy 453, 456-57 (2015).
[22] Id.
[23] Bopp, supra note 11, at 457.
[24] Id. at 456-57.
[25] Id. at 457.
[26] Id.
[27] Eastland v. U.S. Servicemen’s Fund, 421 U.S. 491, 504 (1975).
[28] Bopp, supra note 11, at 458.
[29] Id. at 459. The principal exception to this general rule arises when a congressional subpoena is directed to a custodian of records owned by a third party. In those circumstances, the Speech or Debate Clause does not bar judicial challenges brought by the third party seeking to enjoin the custodian from complying with the subpoena, and courts have reviewed the validity of the subpoena. See, e.g., Trump v. Mazars, 140 S. Ct. 2019 (2020); Bean LLC v. John Doe Bank, 291 F. Supp. 3d 34 (D.D.C. 2018). It also could be argued that a subpoena is subject to pre-enforcement challenge if it lacks a valid legislative purpose. The idea is that the Speech or Debate Clause might not preclude a preemptive litigation challenge to such a subpoena on the rationale that a subpoena lacking any valid legislative purpose is not a legislative act at all. In Trump v. Committee on Ways & Means, the district court explained that “in the context of investigations, and in particular cases involving congressional efforts to gather information, . . . Speech or Debate Clause immunity is available only when those efforts are undertaken for a legitimate legislative purpose, that is, to gather information ‘concerning a subject “on which legislation could be had.”’” 415 F. Supp. 3d 38, 45-46 (D.D.C. 2019) (quoting McSurely v. McClellan, 553 F.2d 1277, 1284-85 (D.C. Cir. 1976) (en banc), in turn quoting Eastland, 421 U.S. at 506). The argument faces the challenges discussed earlier in that we have not seen a successful challenge based on legislative purpose in nearly a century and a half.
[30] Bopp, supra note 11, at 458.
[31] Id. at 461.
[32] See 2 U.S.C. §§ 192 and 194.
[33] Bopp, supra note 11, at 462.
[34] See 2 U.S.C. § 194.
[35] United States v. Bannon, 101 F.4th 16, 18 (D.C. Cir. 2024).
[36] 170 Cong. Rec. S6405-02 (daily ed. Sept. 25, 2024); S. Res. 837 (118th Cong.).
[37] See 2 U.S.C. §§ 288b(b), 288d.
[38] Bopp, supra note 11, at 465. A panel of the U.S. Court of Appeals for the D.C. Circuit ruled in August 2020 that the House may not seek civil enforcement of a subpoena absent statutory authority. Committee on the Judiciary of the United States House of Representatives v. McGahn, 973 F.3d 121 (D.C. Cir. 2020). That decision was vacated when the D.C. Circuit decided to rehear the case en banc, but the case then settled without a final judicial resolution, thereby leaving the question unresolved in the D.C. Circuit.
[39] See Congress’s Contempt Power and the Enforcement of Congressional Subpoenas: Law, History, Practice, and Procedure, Congressional Research Service (May 12, 2017), at 12.
[40] Bopp, supra note 11, at 460 (citing Anderson v. Dunn, 19 U.S. 204, 228 (1821)).
[41] Id.
[42] Id. at 466.
[43] Trump v. Mazars, 140 S. Ct. 2019 (2020).
[44] See Committee on Ways and Means, U.S. House of Representatives v. U.S. Dep’t of Treasury (D.C. Cir. 2022) (upholding the subpoena as valid, the court found a valid legislative purpose in the requests: the Presidential Audit Program); Bragg v. Jordan (S.D.N.Y. 2023) (holding that the subpoena had a valid legislative purpose, the court accepted Defendant’s argument that subpoenas related to federal funding and possible legislative reforms to insulate current and former presidents from state prosecutions had valid legislative purposes); Eastman v. Thompson (C.D. Cal. 2022) (finding a valid legislative purpose, the court held that “the issues surrounding the 2020 election and the January 6th attacks [are] clearly ‘subjects on which legislation could be had,’ [and that] there are numerous legislative measures that could relate to [Plaintiff’s] communications.”).
[45] See Kilbourn v. Thompson, 103 U.S. 168 (1880) (overturning a contempt conviction on the ground that the House lacked a legislative purpose, because the investigation was deemed judicial rather than legislative in character).
[46] See Liveright v. United States, 347 F.2d 473 (D.C. Cir. 1965) (holding a subpoena was invalid where a subcommittee’s rules required the whole subcommittee to issue subpoena, but the subpoena was issued only by the Chair, without consulting the rest of the subcommittee); Shelton v. United States, 327 F.2d 601 (D.C. Cir. 1963) (finding a subpoena invalid where committee rules permitted a chairman to delegate “ministerial responsibility” but did not authorize delegation of discretionary function of calling witnesses “it deem[ed] advisable”; “[s]ince the Subcommittee did not authorize the issuance of the subpoena to Shelton, the subpoena was invalid”).
[47] See Senate Rule XXVI(5)(a).
[48] Committee Rule IV.
[49] Barenblatt, 360 U.S. at 126.
[50] Id. at 126–27.
[51] See Rumely v. United States, 345 U.S. 41 (1953) (relying at least in part on the First Amendment in that the Court imposed a heightened level of scrutiny in assessing the jurisdictional question because of substantial doubts about the constitutionality of the inquiry under the First Amendment); United States v. Peck, 154 F. Supp. 603 (D.D.C. 1957) (granting motion for acquittal for contempt conviction where committee asked for names of fellow Communists and defendant refused to answer on First Amendment grounds). However, in Republican Nat’l Comm. v. Pelosi, Chairman Bennie Thompson (D-MS) of the January 6th Select Committee issued a subpoena to Salesforce.com, ordering the company to produce documents and to testify at a Select Committee deposition about, inter alia, the Republican National Committee’s (RNC) use of the platform. 602 F. Supp. 3d 1, 12–15 (D.D.C. 2022), vacated, No. 22-5123, 2022 WL 4349778 (D.C. Cir. Sept. 16, 2022). The RNC sued Speaker Nancy Pelosi (D-CA), the Select Committee, and each member of the Select Committee to challenge the subpoena, arguing in part that the subpoena violated the First Amendment. Id. at 15. The district court rejected the RNC’s First Amendment objections to the subpoena, id. at 35, but the DC Circuit granted an injunction pending appeal, meaning that the DC Circuit found a likelihood of success on appeal, see Republican Nat’l Comm v. Pelosi, No. 22-5123 (May 25, 2022). The Select Committee withdrew the subpoena, mooting the case. Republican Nat’l Comm. v. Pelosi, No. 22-5123, 2022 WL 4349778, at *1 (D.C. Cir. Sept. 16, 2022). Thus, while there was ultimately no decision made on the merits, this may be viewed as a case in which the First Amendment defense was ultimately successful.
[52] See, e.g., Perry v. Schwarzenegger, 591 F.3d 1147, 1173 (9th Cir. 2009).
[53] See Hartman v. Moore, 547 U.S. 250, 260 (2006) (“Evidence of the motive and the [adverse action are] sufficient for a circumstantial demonstration that the one caused the other.”); Nieves v. Bartlett, 139 S. Ct. 1715, 1727 (2019) (demonstrating that motive may be inferred when individuals “otherwise similarly situated” but “not engaged in the same sort of protected speech” are not subject to the same adverse action).
[54] McPhaul v. United States, 364 U.S. 372 (1960).
[55] Watkins, 354 U.S. at 188.
[56] Id.
[57] See Quinn v. United States, 349 U.S. 155, 163 (1955).
[58] See Fisher v. United States, 425 U.S. 391, 409 (1976).
[59] See United States v. Doe, 465 U.S. 605, 611 (1984).
[60] See 18 U.S.C. § 6002; Kastigar v. United States, 406 U.S. 441 (1972).
[61] See Mazars, 140 S. Ct. at 2032.
[62] See Eastman v. Thompson, 594 F. Supp. 3d 1156, 1175 (C.D. Cal. 2022).
[63] See In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 924 (8th Cir. 1997).
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Congressional Investigations or Public Policy practice groups, or the following authors:
Michael D. Bopp – Chair, Congressional Investigations Practice Group,
Washington, D.C. (+1 202.955.8256, mbopp@gibsondunn.com)
Barry H. Berke – Co-Chair, Litigation Practice Group,
New York (+1 212.351.3860, bberke@gibsondunn.com)
Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)
Thomas G. Hungar – Partner, Appellate & Constitutional Law Practice Group,
Washington, D.C. (+1 202-887-3784, thungar@gibsondunn.com)
Amanda H. Neely – Of Counsel, Public Policy Practice Group,
Washington, D.C. (+1 202.777.9566, aneely@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Our 2024 Annual Report provides an overview of the exceptional results we achieved during the year, the many successes we attained for our clients, and the awards and accolades we received. It recognizes our impressive new partners, shines a spotlight on several of our practice groups and offices, and shares our outstanding Pro Bono and Diversity efforts. It also pays fitting tribute to our late partner and friend — and legal giant — Ted Olson. You can read the 2024 Annual Report here.
Guidance for Employers Navigating the New Guidelines.
Overview
On January 16, 2025, the U.S. Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ) jointly issued Antitrust Guidelines for Business Activities Affecting Workers (2025 Guidelines or Guidelines) that reflect a marked departure from prior practice and applicable precedent alike.[1] The 2025 Guidelines, which replace the 2016 Antitrust Guidance for Human Resource Professionals (2016 Guidelines),[2] are a targeted effort to reframe the law on the intersection between antitrust laws and workers.[3]
The 2025 Guidelines are significantly more expansive than the 2016 Guidelines. Like the DOJ and FTC enforcement activity and statement of interest filings in recent years, they reflect a proscriptive, rather than descriptive, approach to antitrust law and labor markets. They repeal long-established safe harbors for conducting aggregated, anonymized market surveys about wages and benefits, adopt a restrictive view of non-competes like the one put forth by the FTC in its currently stayed Non-Compete Rule, and otherwise seek to do through guidance what the administration was unable to accomplish in rulemaking.[4] The new Guidelines reflect not just an aggressive stance toward labor market enforcement, but a final attempt to cause a sea change in well-established business practices. The fate of these 2025 Guidelines and its effect on DOJ and FTC enforcement activities will be a decision for the new Trump Administration and the courts.
While in force, however, they attempt to—and do—create uncertainty for employers.
Information Sharing
The 2025 Guidelines retract the so-called “safe harbor” guidance from the 2016 Guidelines, which advised that labor-market information could be shared if it (1) was managed through a neutral third party; (2) was limited to relatively old data; (3) was comprised of aggregated data; and (4) contained enough data sources that information could not be attributed to any specific competitor.[5] Instead, the 2025 Guidelines emphasize that sharing through third-parties and algorithms may be unlawful even when companies do not strictly adhere to third-party recommendations[6]—as DOJ has recently argued in private litigation.[7] The Guidelines also caution that information-sharing agreements may be unlawful even if participants retain discretion on compensation or are sharing as part of a legitimate business transaction, such as a joint venture or other collaborative activity.[8]
Further, the 2025 Guidelines assert that information exchanges may provide evidence of the existence of a wage-fixing conspiracy, which could be a per se violation of the antitrust laws with criminal implications.[9]
Although the 2025 Guidelines memorialize the DOJ’s and FTC’s desire to take an aggressive approach to the sharing of information with competitors “about terms and conditions of employment,” such as wage information, they fail to offer concrete, actionable guidance to replace the prior information-sharing safe harbors contained in the 2016 Guidelines.[10] Instead, the 2025 Guidelines simply conclude that the sharing of competitively sensitive employee/employment-related information may constitute an antitrust violation if the information exchange has, or is likely to have, an anticompetitive effect (even if that effect was not intended).[11] For this reason, if you are interested in wage-related benchmarking, you should consult with counsel to adopt best practices and understand potential risk.
Independent Contractors
The 2025 Guidelines also emphasize that antitrust laws apply to agreements impacting independent contractors and to “platform businesses” that use technology platforms “to match workers who provide labor with consumers seeking their services.”[12] In particular, the 2025 Guidelines note that agreements between competing platforms to “fix the compensation of independent contractors offering their services via the platforms” could constitute a per se criminal antitrust violation.[13]
Non-Compete Agreements
Under the 2025 Guidelines, “[n]on-compete clauses that restrict workers from switching jobs or starting a competing business,” such as those often contained in employment agreements, “can violate the antitrust laws.”[14] This guideline aligns with the FTC’s Non-Compete Rule.[15] That Rule is currently unenforceable nationwide because a team led by Gibson Dunn attorneys persuaded a federal district court to set it aside.[16] You can read more about Gibson Dunn’s work obtaining that result here and here. The FTC appealed the decision to the U.S. Court of Appeals for the Fifth Circuit, filing its opening brief on January 2, 2025.[17]
The Guidelines also state that the Agencies will continue to “investigate and take action against non-competes and other restraints on worker mobility that limit competition,” and the FTC will retain the authority to address non-compete clauses through case-by-case enforcement actions, including in the context of merger review.[18]
Attacks on Standard Deal and Employment Terms
The 2025 Guidelines explain that any employment terms that “impede worker mobility or otherwise undermine competition” may violate antitrust laws.[19] The “restrictive conditions” identified by the Guidelines include:[20]
- Non-solicitation employment terms that prohibit a worker from soliciting the clients or customers of their former employer, depending on the facts and circumstances. Notably, the Guidelines also assert agreements that prohibit two or more entities from hiring or soliciting one another’s workers can be per se unlawful, condemning even arrangements “to request permission from the other company before trying to hire an employee”[21] “regardless of whether it actually harms workers.”[22]
- Non-disclosure agreements that are “drafted so broadly as to prohibit disclosure of any information that is ‘usable in’ or ‘relates to’ and industry.”[23]
- Training repayment agreement provisions that require a person to repay costs of training when they leave their employer.
- Exit fees and liquidated damages provisions that require a worker to pay a penalty for leaving their employer.
False Earnings Claims
According to the 2025 Guidelines, “[t]he Agencies also may investigate and take action against business that make false or misleading claims about potential” wages that workers may earn.[24] Although the Agencies’ position applies to all businesses, it appears to be largely focused on workers in the gig economy. In the Agencies’ view, “[w]hen workers are lured to [ ] businesses by false earnings promises, honest businesses are less able to fairly compete for those workers.”[25]
Criminal Enforcement
The 2025 Guidelines indicate that criminal investigation and prosecution of wage-fixing and no-poach agreements continue to be one of DOJ’s antitrust enforcement priorities.[26] Like the 2016 Guidelines, which first announced that naked no-poach and wage-fixing agreements would be investigated and prosecuted as potentially criminal antitrust violations,[27] the 2025 Guidelines confirm the Agencies’ broad view of conduct that may create criminal risk.[28]
Like the 2016, Guidelines, the 2025 Guidelines prohibit wage fixing agreements. That includes asserting agreement to “align, stabilize, or other coordinate [] wages” can constitute a criminal violation, even if there is no agreement on a specific wage.[29]
The 2025 Guidelines reiterate that no-poach agreements can give rise to criminal risk.[30] And, as noted above, the Guidelines assert such agreements may be criminal even when they do not harm workers.[31]
Takeaways
The 2025 Guidelines articulate an expansive view of labor-market conduct that may violate the antitrust laws and signal an aggressive enforcement agenda. It remains to be seen, however, how much these Guidelines accurately signal future enforcement priorities for the new administration. Andrew Ferguson, a current FTC Commissioner and President Trump’s nominee to become FTC Chair, issued a strong dissent noting that “the Biden-Harris FTC announcing its views on how to comply with the antitrust laws in the future is a senseless waste of Commission resources.”[32] The 2025 Guidelines also assert positions that remain either contrary to long-standing precedent, untested in court, or demonstrably unsuccessful in recent enforcement actions. DOJ, for example, has suffered a series of trial losses and dismissals in no-poach cases over the last four years without a single trial verdict in its favor, yet these Guidelines expand—rather than retract—the scope of agreements that may have antitrust implications. Whether the 2025 Guidelines will result in successful enforcement actions, and whether the incoming administration will allow the new Guidelines to remain in place, will be an open question. In fact, the 2025 Guidelines may be withdrawn by the FTC by a majority vote without a notice and comment period. DOJ would need to separately withdraw the Guidelines to nullify them for purposes of DOJ as well.
It would be a mistake, however, to dismiss the 2025 Guidelines wholesale. The prior Trump administration pursued an aggressive labor market enforcement agenda, including bringing several criminal prosecutions for wage fixing and no-poach agreements, and the incoming FTC Chair Ferguson has said that “[t]he Commission is wise to focus its resources on protecting competition in labor markets.”[33]
The Guidelines emphasize that these labor-related issues also are subject to state AG enforcement and/or may signal further enforcement from state AGs on these issues. In addition, the Guidelines may embolden the private plaintiffs’ bar to test new theories of civil antitrust liability, leading to an uptick in civil private litigation.[34]
Given the breadth of the 2025 Guidelines when compared to the 2016 Guidelines—and continued activity by state AGs and private plaintiffs in this area—employers should carefully consider the Agencies’ new guidance and how it may apply to their current business activities and increased scrutiny thereof. The Guidelines may embolden government and plaintiffs to test new theories of liability. Companies should assess and audit their hiring, employment, and compensation policies and practices, including their use of benchmarking in these areas. Companies looking to include restraints on employee mobility in M&A or other deal transactions, to engage in benchmarking, or to otherwise continue various labor-facing practices also are wise to seek counsel during this period of uncertainty.
The following Gibson Dunn lawyers prepared this client alert: Rachel Brass, Caeli Higney, Melanie Katsur, Julian Kleinbrodt, Kristen Limarzi, Cynthia Richman, Jeremy Robison, and Katherine Warren Martin.
Gibson Dunn lawyers have extensive experience with the issues addressed above and stand ready to work with you to minimize risks associated with the 2025 Guidelines. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Antitrust and Competition, Labor and Employment, or Mergers and Acquisitions practice groups.
[1] Antitrust Guidelines for Business Activities Affecting Workers (2025) (“2025 Guidelines” or “Guidelines”), available at https://www.ftc.gov/legal-library/browse/ftc-doj-antitrust-guidelines-business-activities-affecting-workers (FTC Website) and https://www.justice.gov/atr/media/1384596/dl?inline (DOJ Website).
[2] Antitrust Guidance for Human Resource Professionals (2016) (“2016 Guidelines”), available at https://www.justice.gov/atr/file/903511/dl?inline.
[3] See DOJ Press Release: Justice Department and Federal Trade Commission Issue Antitrust Guidelines on Business Practices that Impact Workers (Jan. 16, 2025), available at https://www.justice.gov/opa/pr/justice-department-and-federal-trade-commission-issue-antitrust-guidelines-business.
[4] Gibson Dunn Client Alert: Gibson Dunn Secures Nationwide Relief from Federal Trade Commission’s Non-Compete Rule (Aug. 20, 2024).
[5] 2016 Guidelines at 5.
[6] 2025 Guidelines at 6.
[7] See, e.g., Duffy v. Yardi Sys., Inc., 2024 WL 4980771, at *5 (W.D. Wash. Dec. 4, 2024); See DOJ Press Release: Justice Department Sues Six Large Landlords for Algorithmic Pricing Scheme that Harms Millions of American Renters (Jan. 7, 2025), available at https://www.justice.gov/opa/pr/justice-department-sues-six-large-landlords-algorithmic-pricing-scheme-harms-millions.
[8] 2025 Guidelines at 7.
[9] Id. at 6.
[10] Id.
[11] Id.
[12] Id. at 10.
[13] Id.
[14] Id. at 7.
[15] Gibson Dunn Client Alert: FTC Issues Final Rule Barring Employee Non-Compete Agreements (April 24, 2024).
[16] Ryan LLC v. FTC, No. 3:24-CV-00986-E, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024).
[17] Ryan LLC v. FTC, No. 24-10951 (5th Cir. Jan. 2, 2025), ECF No. 41 (FTC’s opening brief). It is uncertain, however, whether the incoming administration will pursue this appeal.
[18] 2025 Guidelines at 7-8.
[19] Id. at 9.
[20] Id.
[21] Id. at 4.
[22] Id. at 6.
[23] Id. at 9.
[24] Id. at 11.
[25] Id.
[26] Id. at 4.
[27] 2016 Guidelines at 4.
[28] 2025 Guidelines at 4.
[29] Id.
[30] Id. “In this context, the term ‘no-poach’ agreement refers to the types of market-allocation agreements that affect employees’ attempts to get other jobs, such as an agreement between two competitors not to try to hire or solicit each other’s employees, or an agreement to request permission from the other company before trying to hire an employee. These no-poach agreements are different than, for example, agreements between an employer and its workers that prevent the workers from soliciting clients or vendors at a future employer or for a future competing business.” Id. n.11.
[31] Id. at 5-6.
[32] https://www.ftc.gov/system/files/ftc_gov/pdf/at-guidelines-for-business-activities-affecting-workers-ferguson-holyoak-dissent.pdf
[33] https://www.ftc.gov/system/files/ftc_gov/pdf/guardian-ferguson-dissenting-statement-final.pdf
[34] The Guidelines also seek to promote more reporting of potential violations, reflecting the Agencies’ efforts in recent years to facilitate online reporting. See 2025 Guidelines at 12. Similarly, in an effort to promote reporting of potential antitrust violations, on January 14, 2025, DOJ and the Department of Labor, Occupational Safety and Health Administration jointly issued a statement “affirm[ing] that corporate non-disclosure agreements (NDAs) that deter individuals from reporting antitrust crimes undermine the goals of whistleblower protection laws. . . .” See https://www.justice.gov/opa/pr/justice-department-and-osha-issue-statement-non-disclosure-agreements-deter-reporting. In addition, the statement cautions that “using NDAs to obstruct or impede an investigation may also constitute separate federal criminal violations.” Id.
Gibson Dunn lawyers have extensive experience with the issues addressed above and stand ready to work with you to minimize risks associated with the 2025 Guidelines. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Antitrust and Competition or Labor and Employment practice groups
Antitrust and Competition:
Rachel S. Brass – Co-Chair, San Francisco (+1 415.393.8293, rbrass@gibsondunn.com)
Kristen C. Limarzi – Co-Chair, Washington, D.C. (+1 202.887.3518, klimarzi@gibsondunn.com)
Cynthia Richman – Co-Chair, Washington, D.C. (+1 202.955.8234, crichman@gibsondunn.com)
Caeli A. Higney – San Francisco (+1 415.393.8248, chigney@gibsondunn.com)
Melanie L. Katsur – Washington, D.C. (+1 202.887.3636, mkatsur@gibsondunn.com)
Julian W. Kleinbrodt – San Francisco (+1 415.393.8382, jkleinbrodt@gibsondunn.com)
Jeremy Robison – Washington, D.C. (+1 202.955.8518, wrobison@gibsondunn.com)
Labor and Employment:
Jason C. Schwartz – Co-Chair, Washington, D.C. (+1 202.955.8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Co-Chair, Los Angeles (+1 213.229.7107, ksmith@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Gibson Dunn’s DEI Task Force is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.
In his inaugural address yesterday, President Trump vowed to “forge a society that is colorblind and merit based,” and stated he would “end the government policy of trying to socially engineer race and gender into every aspect of public and private life.” Later in the day, he issued two executive orders that could affect race- and gender-related practices by government contractors and other private sector corporations.
The first order, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” defines “sex” as “an individual’s immutable biological classification as either male or female” and directs federal agencies to “enforce laws governing sex-based rights, protections, opportunities, and accommodations to protect men and women as biologically distinct sexes.” There are at least two potential implications for private sector corporations.
First, the order directs federal agencies to “prioritize investigations and litigation to enforce . . .the freedom to express the binary nature of sex and the right to single-sex spaces in workplaces and federally funded entities covered by the Civil Rights Act of 1964.” Although the scope of this directive is not yet clear, it could lead to enforcement actions against private employers if they do not provide “single-sex spaces” such as bathrooms or if they take disciplinary action against employees for “express[ing] the binary nature of sex.”
Second, the order also affects government grant recipients. Although it does not restrict grantees’ use of their own funds, it directs agencies to ensure that “grant funds do not promote gender ideology.” It defines “gender ideology” as follows:
“Gender ideology” replaces the biological category of sex with an ever-shifting concept of self-assessed gender identity, permitting the false claim that males can identify as and thus become women and vice versa, and requiring all institutions of society to regard this false claim as true. Gender ideology includes the idea that there is a vast spectrum of genders that are disconnected from one’s sex. Gender ideology is internally inconsistent, in that it diminishes sex as an identifiable or useful category but nevertheless maintains that it is possible for a person to be born in the wrong sexed body.
The second order, “Ending Radical And Wasteful Government DEI Programs And Preferencing,” directs the termination of all “DEI” programs, policies, and activities in the federal government. It has two provisions potentially affecting government contractors.
First, the order directs the termination of “equity-related” grants or contracts. Contractors or grantees performing “equity-related” work should expect their contracts or grants to end. Relatedly, it directs agencies to provide the Director of OMB with a list of all “Federal contractors who have provided DEI training or DEI training materials to agency or department employees; and . . . Federal grantees who received Federal funding to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021.” Presumably any contracts or grants on these lists will be terminated when possible for the government to do so.
Second, the order directs the termination of “all DEI or DEIA performance requirements for employees, contractors, or grantees.” Thus, any contractor whose contract includes such requirements should expect that they will no longer be enforced.
Gibson Dunn continues to monitor developments in this area. Additional executive action, especially with respect to government contractors, is anticipated. Government contractors and other private sector employers should consider reviewing their diversity programs and training to ensure compliance with evolving legal requirements. Our DEI Task Force is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s DEI Task Force, Labor and Employment, or Government Contracts practice groups, or the following authors and practice leaders:
Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group
Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group
Los Angeles (+1 213-229-7107, ksmith@gibsondunn.com)
Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group
New York (+1 212-351-3850, mdenerstein@gibsondunn.com)
Blaine H. Evanson – Partner, Appellate & Constitutional Law Group
Orange County (+1 949-451-3805, bevanson@gibsondunn.com)
Dhananjay S. Manthripragada – Partner & Co-Chair, Government Contracts Group
Los Angeles/Washington, D.C. (+1 213.229.7366, dmanthripragada@gibsondunn.com)
Lindsay M. Paulin – Partner & Co-Chair, Government Contracts Group
Washington, D.C. (+1 202.887.3701, lpaulin@gibsondunn.com)
Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer
Washington, D.C. (+1 202-955-8503, zswilliams@gibsondunn.com)
Molly T. Senger – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8571, msenger@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
From the Derivatives Practice Group: This week, the CFTC initiated review of certain sports-related events contracts. This week, the CFTC initiated review of certain sports-related events contracts.
New Developments
- CFTC and the Bank of England Comment on Report on Initial Margin Transparency and Responsiveness in Centrally Cleared Markets. On January 15, the Basel Committee on Banking Supervision (“BCBS”), the Bank for International Settlements’ Committee on Payments and Market Infrastructures (“CPMI”) and the International Organization of Securities Commissions (“IOSCO”) published the final report Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals and the accompanying cover note Consultation feedback and updated proposals. This report is the culmination of work undertaken by BCBS, CPMI, and IOSCO, co-chaired by the Bank of England and the Commodity Futures Trading Commission. [NEW]
- CFTC Announces Review of Nadex Sports Contract Submissions. On January 14, the CFTC notified the North American Derivatives Exchange, Inc. (“Nadex”) d/b/a Crypto.com it will initiate a review of the two sports contracts that were self-certified and submitted to the CFTC on Dec. 19, 2024. As described in the submissions, the contracts are cash-settled, binary contracts. The CFTC determined the contracts may involve an activity enumerated in CFTC Regulation 40.11(a) and section 5c(c)(5)(C) of the Commodity Exchange Act. As required under CFTC Regulation 40.11(c)(1), the CFTC has requested that Nadex suspend any listing and trading of the two sports contracts during the review period. [NEW]
- CFTC Announces Departure of Clearing and Risk Director Clark Hutchison. On January 15, the CFTC announced Division of Clearing and Risk Director Clark Hutchison will depart the agency Jan. 15. Mr. Hutchison has served as director since July 2019. [NEW]
- CFTC Staff Issues Advisory Regarding the Compliance Date for Certain DCO Reporting Requirements. On January 10, the CFTC’s Division of Clearing and Risk (“DCR”) announced it issued a staff advisory regarding the compliance date for certain daily reporting requirements for registered derivatives clearing organizations (“DCOs”). The requirements were amended in August 2023. The compliance date for the amended requirements is February 10, 2025. According to the advisory, DCR will not expect any DCO to comply with the amended requirements until December 1, 2025, so long as the DCO continues to comply with the previous version of the requirements.
- CFTC Announces Departure of Enforcement Director Ian McGinley. On January 10, the CFTC announced that Division of Enforcement Director Ian McGinley will depart the agency on January 17, 2025. Mr. McGinley has served as Director of Enforcement since February 2023.
- Chairman Rostin Behnam Announces Departure from CFTC. On January 7, Chairman Rostin Behnam announced that he will be stepping down from his position as Chairman on January 20 and that his final day at the CFTC will be Friday, February 7.
New Developments Outside the U.S.
- The EBA and ESMA Analyze Recent Developments in Crypto-Assets. On January 16, ESMA and the European Banking Authority (“EBA”) published a Joint Report on recent developments in crypto-assets, analyzing decentralized finance (“DeFi”) and crypto lending, borrowing and staking. This publication is the EBA and ESMA’s contribution to the European Commission’s report to the European Parliament and Council under Article 142 of the Markets in Crypto-Assets Regulation. EBA and ESMA find that DeFi remains a niche phenomenon, with value locked in DeFi protocols representing 4% of all crypto-asset market value at the global level. The report also sets out that EU adoption of DeFi, while above the global average, is lower than other developed economies (e.g. the US, South Korea). [NEW]
- EU Funds Continue to Reduce Costs. . On January 14, ESMA published its seventh market report on the costs and performance of EU retail investment products, showing a decline in the costs of investing in key financial products. This report aims at facilitating increased participation of retail investors in capital markets by providing consistent EU-wide information on cost and performance of retail investment products. [NEW]
- ESMA Launches Selection of the Consolidated Tape Provider for Bonds. On January 3, ESMA announced the launch of the first selection procedure for the Consolidated Tape Provider (“CTP”) for bonds. Entities interested to apply are encouraged to register and submit their requests to participate in the selection procedure by February 7, 2025. The CTP aims to enhance market transparency and efficiency by consolidating trade data from various trading venues into a single and continuous electronic stream. This consolidated view of market activity is intended to help market participants to access accurate and timely information and make better-informed decisions, leading to more efficient price discovery and trading.
New Industry-Led Developments
- ISDA and GFXD Respond to FCA on Future of SI Regime. On January 10, ISDA and the Global Foreign Exchange Division (“GFXD”) of the Global Financial Markets Association (“GFMA”) responded to questions from the UK Financial Conduct Authority (“FCA”) on the future of the systematic internalizer (“SI”) regime. In the response, ISDA and GFXD support the proposal that firms are no longer required to identify themselves as SIs for derivatives trading and provide input on the consequences of this requirement falling away. ISDA and GFXD do not believe there will be any impact for reporting, best execution or on market structure. [NEW]
The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, and Karin Thrasher.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:
Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)
Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)
Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)
Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)
Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)
Adam Lapidus – New York (212.351.3869, alapidus@gibsondunn.com )
Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)
William R. Hallatt , Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )
David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)
Marc Aaron Takagaki , New York (212.351.4028, mtakagaki@gibsondunn.com )
Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)
Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.
Class actions remain an active and evolving area of litigation, and we expect that trend to continue in 2025.
This update previews several important issues for class-action practitioners in the year ahead, including significant circuit splits, a noteworthy petition before the Supreme Court regarding Rule 23’s “ascertainability” requirement, and developments in mass arbitration.
I. Circuit Splits to Watch in 2025
Class action-related issues continue to percolate through the federal courts of appeals, with several circuit splits that deepened in 2024 growing potentially ripe for Supreme Court review. This section highlights circuit splits on standing in class actions, personal jurisdiction, and standards for expert evidence at the class-certification phase.
A. Standing in Class Actions
Courts continue to grapple with how Article III standing principles affect class actions. As summarized in the Fifth Circuit’s recent decision in Chavez v. Plan Benefit Services, Inc., 108 F.4th 297 (5th Cir. 2024), the courts of appeals have taken varying approaches to implementing Article III requirements in class actions, including: (1) the “standing” approach, and (2) the “class certification” approach. Id. at 308-11.
Under the “standing” approach—adopted by the Second, Seventh, and Eleventh Circuits—named plaintiffs must establish Article III standing for themselves and absent class members before courts can proceed to a Rule 23 certification analysis. Chavez, 108 F.4th at 309-11. Although the specific approach varies somewhat by circuit, it generally requires class representatives to show they have the “same interest[s] and “same injur[ies]” as the putative class. Id. at 311.
By contrast, under the “class certification” approach—adopted by the First, Third, Fourth, Sixth, and Tenth Circuits—courts include these standing questions as part of “the Rule 23 inquiry.” Id. at 312. According to the Fifth Circuit, courts following this approach do so to separate Article III’s standing requirements with Rule 23’s requirements, and thus focus on “the relationship between the class representative and the passive class members.” Id. at 309.
There remain important questions about how to square these approaches with the Supreme Court’s insistence that Article III principles apply equally in class actions. As the Fifth Circuit observed, the Supreme Court has “caution[ed] against dispensing standing ‘in gross’ in a class-action context”—and emphasized that plaintiffs must always “demonstrate standing for each claim that they press and for each form of relief that they seek.” Id. at 307 (quoting TransUnion, LLC v. Ramirez, 594 U.S. 413, 431 (2021)); see also TransUnion, 594 U.S. at 431 (“Every class member must have Article III standing in order to recover individual damages.”). But it seems we will have to wait before there is more clarity on this issue: although the defendants in Chavez filed a petition for a writ of certiorari, the Supreme Court denied the petition in December. So at least for now, the split will persist—though it may only be a matter of time before the Supreme Court provides guidance.
B. Personal Jurisdiction in FLSA Collective Actions
We previously addressed a circuit split on the issue of personal jurisdiction in collective actions under the Fair Labor Standards Act (FLSA), specifically regarding whether out-of-state plaintiffs can join an FLSA action filed in a state where the defendant is not subject to general personal jurisdiction. This circuit split stems from competing interpretations of the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court, 582 U.S. 255 (2017), which addressed personal jurisdiction in mass actions, but did not explicitly address FLSA collective actions.
Since the Supreme Court decided Bristol-Myers Squibb, the Third, Sixth, and Eighth Circuits have held that the jurisdictional analysis in Bristol-Myers Squibb, which requires a “claim-by-claim personal jurisdiction analysis” in mass actions, also applies to FLSA collective actions. Fischer v. Fed. Express Corp., 42 F.4th 366, 375 (3d Cir. 2022); Canaday v. Anthem Cos., Inc., 9 F.4th 392, 397 (6th Cir. 2021); Vallone v. CJS Sols. Grp., LLC, 9 F.4th 861, 865 (8th Cir. 2021). By contrast, only the First Circuit has declined to follow that line of decisions and instead has held that courts need not have personal jurisdiction over every opt-in plaintiff in FLSA cases. See Waters v. Day & Zimmerman NPS, Inc., 23 F.4th 84, 93 (1st Cir. 2022).
The First Circuit’s decision is the clear outlier among the circuits, with the momentum in favor of the majority approach adopted by more and more circuits. For example, this past year, in Vanegas v. Signet Builders, Inc., 113 F.4th 718 (7th Cir. 2024), the Seventh Circuit joined the majority of circuits in holding that opt-in plaintiffs must each satisfy personal jurisdiction requirements to participate in FLSA collective actions. Id. at 724. The court explained that an FLSA collective action is like a mass action because it is a “consolidation of individual cases, brought by individual plaintiffs.” Id. at 725.
While it remains unsettled whether the same rule applies to absent class members in Rule 23 class actions, the growing agreement among the circuits suggests that companies should expect their home jurisdictions to be the preferred venue for plaintiffs filing nationwide collective actions—meaning jurisdictional defenses will remain an important consideration when defending such actions in other forums.
C. Standards for Expert Evidence at Class Certification
Parties often rely on expert evidence when litigating class-certification motions, and one important question that practitioners routinely confront is to what extent the admissibility of such expert evidence should affect the class-certification analysis. We earlier previewed a developing circuit split on the intersection between Daubert admissibility analysis and class certification. On one side of the split, the Third, Fifth, and Seventh Circuits require a full Daubert analysis and a finding that expert evidence is admissible before it can support class certification. In re Blood Reagents Antitrust Litig., , 186-88 (3d Cir. 2015); Prantil v. Arkema Inc., 986 F.3d 570, 575-76 (5th Cir. 2021); Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010). On the other side of the split, the Eighth Circuit has applied a more flexible approach for examining expert evidence regarding class certification. In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 611-14 (8th Cir. 2011).
This circuit split is poised to persist into 2025, with no clear consensus emerging. The Sixth and Ninth Circuits entered the fray this past year, with the Sixth Circuit joining the majority and the Ninth Circuit apparently siding with the minority:
- In In re Nissan North America, Inc. Litigation, 122 F.4th 239 (6th Cir. 2024), the Sixth Circuit reasoned that “[i]f expert testimony is insufficiently reliable to satisfy Daubert, it cannot prove that the Rule 23(a) prerequisites have been met in fact through acceptable evidentiary proof.” at 253 (internal quotation marks omitted); see In re Nissan N. Am., Inc. Litig., 122 F.4th 239, 253 (6th Cir. 2024) (“[t]he Supreme Court requires parties to ‘satisfy through evidentiary proof’ that they ‘in fact’ meet the elements” of Rule 23). The Sixth Circuit therefore held that where expert evidence is “material to class certification,” it must satisfy Daubert. Nissan, 122 F.4th at 253.
- By contrast, the Ninth Circuit recently held that plaintiffs may rely on evidence that is not admissible to support class certification and that a district court need conduct only a “limited” Daubert analysis at the class-certification stage, even if an expert’s model is not “fully developed.” Lytle v. Nutramax Labs., Inc., 99 F.4th 557, 570-71, 576-77 (9th Cir. 2024). The Ninth Circuit based its holding on the “temporal focus of the class certification inquiry,” reasoning that “class action plaintiffs are not required to actually prove their case” at class certification, but rather “must show that they will be able to prove their case through common proof at trial.” at 570. Notably, the holding in Lytle appears at odds with Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651 (9th Cir. 2022) (en banc), in which the Ninth Circuit held en banc that plaintiffs “may use any admissible evidence” to satisfy their burden at class certification (id. at 665 (emphasis added)) and that defendants “may challenge the reliability of an expert’s evidence under Daubert” when opposing class certification (id. at 665 n.7).
The defendants in Lytle petitioned for a writ of certiorari, asking the Supreme Court to rule on whether a district court may rely on inadmissible expert evidence to certify a class under Rule 23. As argued in the petition, the less stringent approach described in Lytle is particularly dangerous because it “allows putative class counsel to choose what evidentiary standard applies,” and “expert testimony that is less developed receives less scrutiny.” Nutramax Labs., Inc. v. Lytle, No. 24-576, 2024 WL 4904592, at *15 (U.S. Nov. 21, 2024). The petition remains pending.
The Supreme Court previously expressed doubt that Daubert was not applicable to expert testimony at the class-certification stage. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 354 (2011). Until the Supreme Court provides clarification, parties and practitioners should carefully consider their approach to relying on and opposing expert evidence at the class-certification stage, particularly in jurisdictions like the Eighth or Ninth Circuits (or those that have yet to address the role of Daubert at class certification). Given the possibility for Supreme Court review, litigants should ensure that their own expert evidence satisfies Daubert, consider mounting Daubert challenges to opposing expert evidence to preserve claims of error, and ask courts to make clear findings regarding admissibility of expert evidence to best position their cases for review in the event the Supreme Court decides this issue.
II. Ascertainability at the Supreme Court
The Supreme Court continues to receive cert petitions that raise interesting and recurring issues in the class-action space. There is one such petition pending on an oft-litigated issue: whether Rule 23 embodies an “ascertainability requirement” that obliges plaintiffs to offer “objective criteria” by which class members are “readily identifiable” in reference to objective criteria. As discussed in last year’s article, courts have taken different approaches to ascertainability, with no clear consensus among the circuits.
The pending cert petition seeks review of the Fourth Circuit’s decision in Career Counseling, Inc. v. AmeriFactors Financial Group, LLC, 91 F.4th 202 (4th Cir. 2024), which reaffirmed that Rule 23 contains an ascertainability requirement. The case involves a putative class action alleging that a company sent unsolicited fax advertisements to 59,000 recipients in violation of the Telephone Consumer Protection Act (TCPA). The district court denied class certification, holding that the putative class failed to satisfy Rule 23’s implicit threshold requirement of ascertainability. Id. at 207. Specifically, the district court reasoned that the individuals eligible for class membership were not “readily identifiable” because only those who received the advertisements through “stand-alone” fax machines (rather than online fax services) could maintain a TCPA claim, and there was no way to readily identify those with stand-alone fax machines. Id. In affirming the denial of class certification, the Fourth Circuit rejected the plaintiffs’ argument that there is no implicit ascertainability requirement under Rule 23. Id. at 209.
The plaintiffs filed a cert petition that asks the Supreme Court to settle whether “administrative feasibility” stands as a distinct prerequisite to class certification, or instead sits as one of several prudential factors for courts to consider in their Rule 23(b)(3) superiority analysis. See Career Counseling v. Amerifactors Fin. Grp., No. 24-86, 2024 WL 3569079, at *11 (U.S. July 19, 2024). This is the latest of several cert petitions to have raised this question in the past few years; although the Supreme Court has not taken the question up yet, this is certainly an issue that many are eagerly watching.
III. Continued Judicial Scrutiny of Dispute-Resolution Agreements and Evolving Strategies to Manage Mass Arbitration Risk
Mass arbitration is becoming one of the largest legal threats to companies, with a sophisticated plaintiff’s bar implementing novel strategies to take advantage of arbitration agreements to exert settlement pressure on defendants. We see no signs of this trend slowing in 2025, and companies have responded to this threat with dispute-resolution provisions that encourage the efficient resolution of individual disputes—all the while disincentivizing plaintiff’s attorneys from initiating “mass arbitration” campaigns that benefit no one other than themselves.
Courts have begun to review these efforts to curb the risk of exploitative mass arbitration. In Heckman v. Live Nation Entertainment, Inc., 120 F.4th 670 (9th Cir. 2024), the court has declined to enforce an arbitration agreement based on its conclusion that the arbitration provider’s rules were “internally inconsistent, poorly drafted, and riddled with typos,” and that “counsel struggled to explain the Rules at oral argument.” Id. at 677-78.
The court determined that defendants’ “market dominance” in the ticket services industries supported a finding that the contract was adhesive, further supporting a finding of unconscionability. Id. at 682. The court also ruled that a provision permitting unilateral modification of the terms without prior notice rendered the clause “procedurally unconscionable” under California law. Id. at 682-83.
As to substantive unconscionability, the court expressed three concerns. First, the defendant’s “bellwether” process—which would bind future claimants to a single arbitrator’s ruling on the validity of the delegation clause in both bellwether and non-bellwether cases—effectively deprived the non-bellwether claimants of their right to be heard or otherwise participate in proceedings that could affect their rights. Id. at 684-85. Second, the arbitration rules also restricted discovery and the evidence that could be presented. Id. at 685-86. And third, the claimants were bound by what the court viewed as a functionally “asymmetrical” appeal provision, leaving them without a right to appeal any denial of injunctive relief. Id. at 686.
Heckman did not reach several types of clauses that have been used to address “mass arbitration” abuses such as pre-dispute informal dispute resolution clauses, individualized arbitration demand requirements, cost-splitting provisions, and fee-shifting for frivolous claims. And courts already have upheld “batching” clauses post-Heckman. See, e.g., Kohler v. Whaleco, Inc., 2024 WL 4887538, at *9 (S.D. Cal. Nov. 25, 2024) (post-Heckman decision holding that batching provision in arbitration agreement did not make delegation clause unconscionable). Given the rapidly evolving case law and differing approaches to the review of arbitration provisions, companies should analyze their clauses on a regular basis.
Gibson Dunn attorneys are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Class Actions, Litigation, or Appellate and Constitutional Law practice groups, or any of the following lawyers:
Theodore J. Boutrous, Jr. – Los Angeles (+1 213.229.7000, tboutrous@gibsondunn.com)
Christopher Chorba – Co-Chair, Class Actions Practice Group, Los Angeles
(+1 213.229.7396, cchorba@gibsondunn.com)
Theane Evangelis – Co-Chair, Litigation Practice Group, Los Angeles
(+1 213.229.7726, tevangelis@gibsondunn.com)
Lauren R. Goldman – Co-Chair, Technology Litigation Practice Group, New York
(+1 212.351.2375, lgoldman@gibsondunn.com)
Kahn A. Scolnick – Co-Chair, Class Actions Practice Group, Los Angeles
(+1 213.229.7656, kscolnick@gibsondunn.com)
Bradley J. Hamburger – Los Angeles (+1 213.229.7658, bhamburger@gibsondunn.com)
Michael Holecek – Los Angeles (+1 213.229.7018, mholecek@gibsondunn.com)
Lauren M. Blas – Los Angeles (+1 213.229.7503, lblas@gibsondunn.com)
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