Publications Archives

Gibson Dunn reached the $3 billion revenue milestone in 2023, marking its 28th consecutive year of growth, driven by strong performances in litigation, transactions, and regulatory work, with notable hires and global expansions, as reported by The American Lawyer and The Global Legal Post. Chair and Managing Partner Barbara Becker provides insights on key investments made in certain practice areas and expansion efforts.

Read the full articles on The American Lawyer [PDF] and The Global Legal Post.

Theane Evangelis was featured on NBC Nightly News with Lester Holt discussing the Grants Pass Supreme Court Case.

Watch the full segment on NBC Nightly News.

Hillary Holmes sat down with ION Analytics to discuss the evolution of the energy industry, key trends in M&A, and the importance of advancing women in leadership.

Read the full interview on ION Analytics.

In an interview with Law360, Cassandra Gaedt-Sheckter discusses guiding companies through the complex and rapidly evolving regulatory environment for AI, balancing innovation with compliance in Europe and the U.S.

Read the full interview on Law360 [PDF].

Speaking with Practical Law: The Journal, Andrew Lance reflects on the challenges faced by the commercial real estate market in the past year, noting the obstacles that have impacted activity. Looking ahead, he remains hopeful for an improved outlook, with expectations of a market rebound despite ongoing uncertainties.

Read the full article in Practical Law: The Journal (subscription required).

Gregg Costa and George Hazel discuss their transition to private practice, re-engaging with trial work, and launching a podcast with Bloomberg Law.

Read the full article on Bloomberg Law (subscription required).

Michael Celio spoke with The American Lawyer on Gibson Dunn’s move to downtown Palo Alto, highlighting the firm’s focus on in-person collaboration and proximity to clients in the post-pandemic work environment.

Read the full feature in The American Lawyer [PDF].

Hillary Holmes spoke with Lawdragon about her role in expanding Gibson Dunn’s oil and gas practice, emphasizing innovation, collaboration, and tailored strategies in a rapidly evolving energy sector.

Read the full feature on Lawdragon [PDF].

In an episode of TRAilblazing, Eric Sloan discusses the role and growth of TRAs in diverse transactions, including the use of Up-C structures in IPOs.

Listen to the full episode on Apple Podcasts.

Madalyn Miller joined the Another Fine Mezz Podcast by GlobalCapital to discuss aviation ABS, growth in the sector, and work-life balance.

Listen to the full episode on GlobalCapital.

On March 20, 2025, President Donald J. Trump signed an Executive Order on Immediate Measures to Increase American Mineral Production (Executive Order). The Executive Order targets key areas of mineral production in the U.S., including project permitting, land use and accelerating private and public capital investments.

Mineral Production Industry in the United States

The United States is a significant player in the global mineral production industry, contributing to the extraction and processing of a wide array of minerals essential for various sectors, including technology, energy, construction, transportation, manufacturing and defense. The U.S. boasts a diverse mineral portfolio, including coal, copper, gold, iron ore and rare earth elements, among others. The country’s mineral production is supported by a robust infrastructure, advanced technology and a regulatory framework that ensures sustainable and environmentally responsible mining practices.

At the same time, the U.S. currently relies heavily on imports of certain minerals, with at least 15 critical minerals identified in the U.S. Geological Survey’s (USGS) 2024 Mineral Commodities Summary Report as entirely net import reliant, and an additional 35 having a net import reliance greater than 50%.

In recent years, the U.S. has focused on increasing the domestic production of critical minerals to reduce dependency on foreign sources, particularly for minerals essential to high-tech industries and national security. This strategic shift is driven by the growing demand for minerals used in renewable energy technologies, electric vehicles, other clean technologies and advanced electronics.

As stated in Section 1 of the Executive Order, the U.S. was once the world’s largest producer of minerals, but federal regulatory hurdles have eroded the country’s mineral production. The Executive Order aims to address some of the obstacles to, and introduce measures to facilitate, the growth of mineral production in the U.S.

Critical Minerals

While various regulatory bodies and policy makers have issued differing definitions and lists of critical minerals, the Executive Order specifically applies to:

50 minerals, elements, substances or materials designated as critical by the Secretary of the Interior, acting through the Director of USGS, in the 2022 Final List of Critical Minerals, including aluminum, antimony, cobalt, graphite, lithium, magnesium, manganese, nickel, palladium, platinum, titanium, zinc and various other rare earth minerals;
additional minerals specifically named in the Executive Order, including uranium, copper, potash and gold; and
any other element, compound or material as may be determined by the Chair of the National Energy Dominance Council (NEDC) established by President Trump on February 14, 2025 and currently chaired by Interior Secretary Doug Bergum.

These minerals play different roles in the U.S. energy and national security infrastructure. For instance:

Copper is the second most widely used material in weapons platforms. As the copper industry warns of a looming supply gap, the inability to source copper could cause weapon system production delays and disruptions for the Department of Defense. Copper is also heavily used in renewable energy technologies and in the development of data centers, with industry specialists estimating that between 330,000 tons and 420,000 tons of copper will be used in data centers by 2030.[1]
Uranium, a mineral that the U.S. has more recently imported from Russia, as well as Kazakhstan, Uzbekistan, Canada and Australia, will be critical for the development of nuclear power.
Potash has historically been imported from other countries (including Canada, Russia, Belarus and China) and is used heavily in the production of fertilizers.
The domestic production of antimony, a mineral used in missiles and munitions as well as semiconductors, declined following the closure of the Stibnite Gold Mine in 1997; China subsequently banned antimony exports to the U.S. in 2024.

Measures to Increase Domestic Mineral Production

The Executive Order targets several key areas of mineral mining, processing, refining and smelting that could give a boost to the industry by streamlining permitting processes, granting land and mobilizing capital.

Identification of Priority Projects and Streamlining Permitting. The Executive Order introduces a range of measures to expedite the permitting process for priority projects and address regulatory bottlenecks.
- The Executive Order directs the head of each executive department and agency involved in the mineral production permitting process and the Chair of the NEDC to identify priority mineral production projects currently under review that can be approved immediately and take steps to issue approvals and permits to such priority projects.
- Additionally, the Chair of the NEDC and relevant agencies are directed to submit to the Executive Director of the Permitting Council mineral production projects to be considered as transparency projects on the Permitting Dashboard. The Executive Director of the Permitting Council is directed to publish selected projects and establish schedules for expedited review.
- Finally, the Chair of the NEDC and relevant agencies are directed to solicit industry feedback on regulatory bottlenecks and other recommended strategies to expedite mineral production in the U.S.
Land Use for Mineral Projects. The Executive Order introduces measures to designate federal lands with known mineral deposits and reserves for mineral production and lease such lands to private investors.
- The Executive Order directs the Secretary of the Interior to identify and provide to the Assistants to the President for Economic Policy and for National Security Affairs a list of all federal lands known to hold mineral deposits and reserves. Such areas are to be designated primarily for mineral production and mining related purposes by the Secretary of the Interior, and land use plans under the Federal Land Policy and Management Act must be amended for such areas to provide for mineral production and ancillary uses.
- The Secretaries of Defense, the Interior, Agriculture and Energy are further directed to identify federal lands managed by their respective agencies that may be suitable for leasing or development pursuant to 10 U.S.C. 2667 (Leases of Non-Excess Property of Military Departments and Defense Agencies) or 42 U.S.C. 7256 (Leases with Public Agencies and Private Organizations), or any other applicable authorities, for the construction and operation of private commercial mineral production facilities and to provide a list of such lands to the Assistants to the President for Economic Policy and for National Security Affairs, and to the Chair of the NEDC. The Secretaries of Defense and Energy will be authorized to lease such lands to private investors as authorized by 10 U.S.C. 2667 or 42 U.S.C. 7256(a), or using any other authority they deem appropriate, to advance the installation of commercial mineral production facilities either through new construction or modification of existing structures.
- Additionally, the Secretaries of Defense, Energy and Agriculture, the Administrator of the Small Business Administration and the heads of certain other agencies are directed to ensure that private parties that enter into leasing or other commercial agreements to develop mineral production can utilize as many favorable terms and conditions as are available under public assistance programs for such purposes.
Acceleration of Private and Public Capital Investment. The Executive Order introduces measures to mobilize both public funds and private capital toward mineral production.
- The Executive Order directs the Secretary of Defense to utilize the National Security Capital Forum as a platform to match private capital with commercially viable domestic mineral production projects.
- The Executive Order delegates certain authorities of the President under sections 301, 302 and 303 of the Defense Production Act (DPA) (50 U.S.C. 4533) to create and expand domestic industrial base capabilities essential to the national defense to the Secretary of Defense and to the Chief Executive Officer (CEO) of the United States International Development Finance Corporation (DFC) who may use such authorities for domestic production and facilitation of strategic resources to advance domestic mineral production in the U.S. It is anticipated that the Secretary of Defense (through the Department of Defense investment authorities (including DPA) and the Department of Defense Office of Strategic Capital) and the CEO of the DFC will use this authority to establish a mineral production fund for domestic investments executed by the DFC.
- The Executive Order directs: (i) the President of the Export-Import Bank to release recommended program guidance for the use of mineral and mineral production financing tools authorized under the Supply Chain Resiliency Initiative to secure United States offtake of global raw mineral feedstock for domestic minerals processing, as well as under the Make More in America Initiative to support domestic mineral production; (ii) the Assistant Secretary of Defense for Industrial Base Policy to convene buyers of minerals and work towards an announced request for bids to supply critical minerals; and (iii) the Administrator of the Small Business Administration to prepare recommendations for legislation to enhance private-public capital activities to support financings to domestic small businesses engaged in mineral production.
- Finally, in order to ease the administrative burden for recipients of government loans, loan guarantees, grants or equity investments or producers under offtake arrangements with relevant agencies, the Executive Order rescinds the requirement to submit disclosures required by Regulation S-K part 1300 to such agencies.

Next Steps

The Executive Order has introduced a wide range of measures that can streamline the permitting process for mineral production and help mobilize government funds and private capital to boost the mineral exploration, mining, processing, refining and smelting industries in the United States. As the Executive Order provides for aggressive deadlines for various agencies to implement these measures, we expect mineral producers will move quickly to utilize the new opportunities created by the Executive Order, including seeking faster permitting for priority projects and easier access to land for mineral production.

In the meantime, mineral producers should consider engaging in discussions with relevant agencies to take advantage of these new opportunities: (i) ensure that development projects that are currently under review are designated as priority projects and offered fast-track permitting; (ii) secure land designated for mineral production in order to develop new mineral production projects; and (iii) secure other public and private sources of funding for new mineral production projects, including government loans and working capital, DPA funding and DFC and Export-Import Bank financing.

[1] On February 25, 2025, President Trump signed another Executive Order to address the threat to national security from imports of copper, directing the Secretary of Commerce to initiate an investigation to determine the effects on national security of imports of copper and, in consultation with the Secretaries of Defense, the Interior and Energy and with the heads of other relevant agencies, to evaluate the national security risks associated with copper import dependency.

The following Gibson Dunn lawyers prepared this update: Eric Scarazzo, George Sampas, Daniel Alterbaum, John Gaffney, Nick Politan, William R. Hollaway, Ph.D., Tory Lauterbach, Lauren Traina, and Vlad Zinovyev.

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 Mergers and Acquisitions, Cleantech, Power and Renewables, or Energy Regulation and Litigation practice groups, or the following:

Mergers and Acquisitions:
George Sampas – New York (+1 212.351.6300, gsampas@gibsondunn.com)

Cleantech:
John T. Gaffney – New York (+1 212.351.2626, jgaffney@gibsondunn.com)
Eric Scarazzo – New York (+1 212.351.2389, escarazzo@gibsondunn.com)
Daniel S. Alterbaum – New York (+1 212.351.4084, dalterbaum@gibsondunn.com)

Power and Renewables:
Peter J. Hanlon – New York (+1 212.351.2425, phanlon@gibsondunn.com)
Nick Politan – New York (+1 212.351.2616, npolitan@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)

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.

Sneed v. AcelRx Pharms., Inc., No. 21-CV-04353-BLF, 2024 WL 2059121
(N.D. Cal. May 7, 2024).

Case Highlights

On May 7, 2024, a federal district court dismissed securities fraud claims brought against a pharmaceutical company related to a marketing slogan used to promote the company’s drug. At issue in Sneed v. AcelRx Pharms., Inc. (“Sneed”)[1], was AcelRx Pharmaceuticals, Inc.’s (“AcelRx”) marketing slogan, “Tongue and Done,” used to promote its FDA-approved drug DSUVIA, an opioid painkiller. AcelRx had presented the “Tongue and Done” slogan on its website, among other places, to highlight the ease of administering DSUVIA (i.e., sublingually) compared to other opioid painkillers, which are administered either orally (which requires a patient’s ability to swallow) or via intravenous injection.

In February 2021, AcelRx received a warning letter from the FDA stating that the “Tongue and Done” slogan contained “false or misleading claims and representations about the risks and efficacy of DSUVIA” and thus violated the Federal Food, Drug, and Cosmetic Act (FDCA). After AcelRx disclosed the warning letter, the company’s stock dropped about 9%. The plaintiff then sued under federal securities laws alleging that, in using the slogan, the company made a misleading statement to investors because it omitted material information regarding DSUVIA’s safety, including information about dosing, administration, and limitations on its use. The plaintiff claimed that the allegedly misleading slogan subjected AcelRX to a foreseeable and increased risk of regulatory investigations or enforcement actions for misbranding violations under the FDCA.

In response, the defendants argued, among other things, that AcelRx specifically disclosed information about DSUVIA’s safety and dosing information, as well as the risk of a receiving an FDA warning letter in its SEC filings. The defendants further argued that the slogan was targeted at medical professionals, not investors, and, as such, no reasonable investor would have relied on the slogan when making their investment decision. Despite acknowledging that the company’s disclosures “weaken” plaintiff’s allegations, the court found that the plaintiff had alleged the statement was misleading. However, the court granted defendants’ motion to dismiss the complaint because it found that plaintiff did not plead that the statement was made with fraudulent intent.

Key Takeaways

Sneed highlights the risk that even marketing materials—or any other kind of publicly-available material, even if not specifically targeted at investors—may form the basis of a warning letter and ultimately, a securities fraud claim. Sneed also illustrates the interplay between federal securities laws and other regulatory regimes, highlighting the risk that alleged violations of other statutes may be levered by plaintiffs’ lawyers to plead securities law violations, particularly where the alleged violations involve statements to non-investor market constituents. Pharmaceutical and biotechnology companies, thus, would benefit from involving securities litigation counsel when developing marketing materials or other public disclosures, even if not directed to investors, to minimize legal exposure under the federal securities laws.

[1] Sneed v. AcelRx Pharms., Inc., No. 21-CV-04353-BLF, 2024 WL 2059121 (N.D. Cal. May 7, 2024).

This newsletter has been prepared by the Life Sciences and Securities Litigation teams of Gibson Dunn. For further information, please contact the Gibson Dunn lawyer with whom you usually work, or any of us by email:

Life Sciences:

Ryan Murr – Partner, San Francisco (rmurr@gibsondunn.com)

Branden Berns – Partner, San Francisco (bberns@gibsondunn.com)

Securities Litigation:

Jessica Valenzuela – Partner, Palo Alto (jvalenzuela@gibsondunn.com)

Jeff Lombard – Of Counsel, Palo Alto (jlombard@gibsondunn.com)

Brian Lutz – Partner, San Francisco (blutz@gibsondunn.com)

Craig Varnen – Partner, Los Angeles (cvarnen@gibsondunn.com)

Monica Loseman – Partner, Denver, New York (mloseman@gibsondunn.com)

Gibson Dunn associates Zaneta Kim and Shri Dayanandan also contributed to this update.

Matthew Axelrod, who served as Assistant Secretary for Export Enforcement at the U.S. Commerce Department under President Biden, told The Wall Street Journal that aggressive export controls, particularly those targeting China, are expected to continue under a second Trump administration. While he anticipates some regulatory simplifications, Axelrod emphasized bipartisan support for restricting China’s access to U.S. military technologies and predicted significant corporate export enforcement actions in 2025.

Read the full article in The Wall Street Journal (subscription required).

From the Derivatives Practice Group: The SEC’s Division of Corporation Finance released a statement on certain proof-of-work mining activities, on which Commissioner Crenshaw issued a cautionary statement.

New Developments

CFTC Staff Issues Interpretation Regarding Financial Reporting Requirements for Japanese Nonbank Swap Dealers. On March 20, the CFTC’s Market Participants Division issued an interpretation concerning financial reporting obligations for nonbank swap dealers subject to regulation by the Financial Services Agency of Japan (“Japanese nonbank SDs”). On July 18, 2024, the CFTC issued a comparability determination and related comparability order granting substituted compliance in connection with the CFTC’s capital and financial reporting requirements to Japanese nonbank SDs, subject to certain conditions in the order (“Japanese Comparability Order”). One of the conditions in the Japanese Comparability Order, condition 9, requires each Japanese nonbank SD to file a copy of its home regulator Annual Business Report with the CFTC and the National Futures Association (NFA). The staff interpretation clarifies that Japanese nonbank SDs may satisfy condition 9 of the Japanese Comparability Order by filing with the CFTC and the NFA certain enumerated schedules of the Annual Business Report (In Scope Schedules), subject to the translation, U.S. dollar conversion, and deadline requirements of condition 9. The interpretation was issued in response to a request from the Securities Industry and Financial Markets Association on behalf of its Japanese nonbank SD members that rely on the Japanese Comparability Order. [NEW]
SEC’s Division of Corporation Finance Releases Statement on Certain Proof-of-Work Mining Activities. On March 20, the SEC’s Division of Corporation Finance (“Corp Fin”) released a statement providing its views on certain activities on proof-of-work networks known as “mining.” Specifically, the statement addressed the mining of crypto assets that are intrinsically linked to the programmatic functioning of a public, permissionless network, and are used to participate in and/or earned for participating in such network’s consensus mechanism or otherwise used to maintain and/or earned for maintaining the technological operation and security of such network. Corp Fin said that participants in “Mining Activities” (as defined in the statement) do not need to register transactions with the SEC under the Securities Act or fall within one of the Securities Act’s exemptions from registration in connection with these Mining Activities. Commissioner Crenshaw released a related statement, noting that Corp Fin’s statement delivers “neither progress nor clarity” and suffers from issues of flawed logic and limited and imprecise application. Commissioner Crenshaw said that Corp Fin’s statement “leaves us exactly where we started,” because it does not obviate the need for a facts and circumstances application under the investment contract test set forth in SEC v. W.J. Howey Co., 328 U.S. 293 (1946). [NEW]
CFTC’s Office of Customer Education and Outreach Releases New Advisory on Fraud Using Generative AI. On March 19, the CFTC’s Office of Customer Education and Outreach (the “OCEO”) released a customer advisory that says generative artificial intelligence is making it increasingly easier for fraudsters to create convincing scams. The OCEO advisory describes how fraudsters use AI to create fraudulent identifications with phony photos and videos that can appear very real if one is not familiar with the advances of AI technology. The fraudsters also are using AI to forge government or financial documents. An FBI public service announcement also warns the public about how criminals are using AI to commit fraud and how the technology is being used in relationship investment scams. [NEW]
CFTC Staff Withdraws Advisory on Swap Execution Facility Registration Requirement. On March 13, the CFTC Division of Market Oversight (“DMO”) announced it is withdrawing CFTC Letter No. 21-19, Staff Advisory Swap Execution Facility (“SEF”) Registration Requirement, effective immediately. As stated in the withdrawal letter, DMO determined to withdraw the advisory since it has created uncertainty regarding whether certain entities are required to register as SEFs.
Acting Chairman Caroline D. Pham Delivers Keynote Address at FIA BOCA50. On March 11, Acting Chairman Caroline D. Pham announced a new 30-day compliance and remediation initiative or enforcement sprint. This initiative involves review of the CFTC’s currently open investigations and enforcement matters regarding compliance violations, such as recordkeeping, reporting or other compliance violations without customer harm or market abuse. The CFTC will seek to expeditiously resolve these matters in the next 30 days to conserve the CFTC’s resources and free up Division of Enforcement staff to pursue fraudsters and scammers and seek recoveries for victims, whether through disgorgement, restitution, or other measures.
SEC Crypto Task Force to Host Roundtable on Security Status. On March 3, the SEC announced that its Crypto Task Force will host a series of roundtables to discuss key areas of interest in the regulation of crypto assets. The “Spring Sprint Toward Crypto Clarity” series will begin on March 21 with its inaugural roundtable, “How We Got Here and How We Get Out – Defining Security Status.” The SEC indicated that initial roundtable on March 21 is open to the public, will be held from 1 p.m. to 5 p.m. at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C and that the primary discussion will be streamed live on SEC.gov, and a recording will be posted at a later date. The SEC also noted that information regarding the agenda and roundtable speakers will be posted on the Crypto Task Force webpage.

New Developments Outside the U.S.

ESMA Extends the Tiering and Recognition of the Three UK-Based CCPs. On March 17, ESMA announced its decision to temporarily extend the application of the recognition decisions under Article 25 of the European Market Infrastructure Regulation (“EMIR”) for three central counterparties (“CCPs”) established in the United Kingdom (“UK”). On January 30, 2025, the European Commission adopted a new equivalence decision in respect of the regulatory framework applicable to CCPs in the UK. Subsequently, ESMA has prolonged the tiering determination decisions and recognition decisions for the three recognized UK CCPs – ICE Clear Europe Ltd, LCH Ltd (as Tier 2) and LME Clear Ltd (as Tier 1) – that were adopted by ESMA on September 25, 2020, to align with the expiry date of the new equivalence decision. The application of the tiering determination decisions and recognition decisions is temporarily extended until 30 June 2028. [NEW]
ESMA and Bank of England Conclude a Revised MoU in Respect of UK-Based CCPs Under EMIR. On March 17, ESMA and the Bank of England (“BoE”) signed a revised Memorandum of Understanding (“MoU”) on cooperation and information exchange concerning the three CCPs established in the UK (ICE Clear Europe Ltd, LCH Ltd and LME Clear Ltd) which have been recognized by ESMA under EMIR. ESMA said that, according to EMIR, one of the conditions for recognition of a third-country CCP (TC-CCP) by ESMA is the establishment of cooperation arrangements between ESMA and the relevant third-country authority. ESMA noted that the revised MoU follows the amendments introduced by EMIR 3 on the requirements concerning the content of such cooperation arrangements, in particular, cooperation in respect of systemically important TC-CCPs (Tier 2 TC-CCPs), and replaces the earlier version that ESMA and the BoE concluded in 2020. [NEW]
UK Drops Proposals to Publicize Enforcement Investigations if Public Interest Test is Met. On March 11, the UK Financial Conduct Authority (“FCA”) wrote to the Treasury Select Committee and House of Lords Financial Services Regulation Committee about its proposals to increase the transparency of enforcement investigations. The FCA indicated that, given continued industry concern over its proposals to publicize an investigation into a regulated firm carrying out authorized activity, where a public interest test is met, the FCA will not proceed with this. Instead, it will stick to its existing exceptional circumstances test to determine if it should publicize investigations into regulated firms. The FCA noted that it will take forward the following proposals and aim to publish a policy statement in the first half of this year: (i) Reactively confirming investigations announced by others; (ii) Public notifications that focus on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter; and (iii) Publishing greater detail of issues under investigation on an anonymous basis. ISDA said that the FCA’s proposal, which would have given it the ability to publicly name firms at the start of an investigation, caused concern across the industry. In their February 17 response to the proposal, ISDA and the Association for Financial Markets in Europe (“AFME”) highlighted concerns that the proposals would be harmful to UK competitiveness and growth and suggested a broader interpretation of the existing exceptional circumstances test could be used to meet the FCA’s objectives. This was the second consultation ISDA and AFME responded to on this subject. The first response, submitted on April 30, 2024, is available here. [NEW]
ESMA Clarifies the Treatment of Settlement Fails with Respect to the CSDR Penalty Mechanism. On March 14, ESMA published a statement on the treatment of settlement fails with respect to the Central Securities Depositories Regulation (“CSDR”) penalty mechanism, following the major incident that affected TARGET Services (T2S and T2) last month. ESMA clarifies in the statement that National Competent Authorities (“NCAs”) do not expect Central Securities Depositories to apply cash penalties in relation to settlement failures for the days of February 27 and 28, 2025. As specified in an existing CSDR Q&A, cash penalties should not be applied in situations where settlement cannot be performed for reasons that are independent from the involved participants. [NEW]
The ESAs Acknowledge the European Commission’s Amendments to the Technical Standard on Subcontracting Under the Digital Operational Resilience Act. On March 7, the European Supervisory Authorities (EBA, EIOPA and ESMA – the “ESAs”) issued an opinion on the European Commission’s (“EC”) rejection of the draft Regulatory Technical Standard (“RTS”) on subcontracting. The EC indicated that it rejected the original draft RTS on subcontracting, which specified further elements that financial entities must determine and assess when subcontracting ICT services that support critical or important functions under the Digital Operational Resilience Act (“DORA”), on the grounds that certain elements exceeded the powers given to the ESAs by DORA. The opinion acknowledges the assessment performed by the EC and opines that the amendments proposed ensure that the draft RTS is in line with the mandate set out under DORA. The ESAs said that, for this reason, they do not recommend further amendments to the RTS in addition to the ones proposed by the EC. The ESAs encouraged the EC to finalize the adoption of the RTS without further delay as submitted to the ESAs.

New Industry-Led Developments

IOSCO Launches New Alerts Portal to Help Combat Retail Investment Fraud. On March 20, IOSCO announced the launch of the International Securities & Commodities Alerts Network (“I-SCAN”). IOSCO said that I-SCAN is a unique global warning system where any investor, online platform provider, bank or institution can check if a suspicious activity has been flagged for a particular company by financial regulators, which will submit alerts directly to I-SCAN, worldwide. According to IOSCO, I-SCAN forms part of IOSCO’s Roadmap for Retail Investor Online Safety, an initiative which was launched in November last year. [NEW]
ISDA Expands SwapsInfo to Include European CDS Trading Activity. On March 13, ISDA announced that it has expanded its SwapsInfo derivatives database and website to include European credit default swaps (“CDS”) trading activity, creating a more comprehensive picture of derivatives trading in the EU, UK and US. The new data includes EU and UK index and single-name CDS traded notional and trade count, based on transactions publicly reported by 18 European approved publication arrangements and trading venues.
ISDA Submits Paper to ESMA on OTC Derivatives Identifier for MIFIR Transparency. On March 11, ISDA submitted a paper to ESMA setting out its view on how the delegated act specifying the identifying reference data to be used for over-the-counter (“OTC”) derivatives transparency under the Markets in Financial Instruments Regulation (“MIFIR”) should be implemented. The delegated act leaves room for interpretation by ESMA on which unique identifier should be used, creating a risk that the International Securities Identification Number may be retained in some form. The ISDA paper makes the case for the use of the unique product identifier (“UPI”), maintaining its position that this will create more effective transparency and a more attractive consolidated tape, as well as reducing cost and complexity, and aligning with the increasing international consensus on using the UPI as the basis for OTC derivatives identification.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, and Karin Thrasher.

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)

Gibson Dunn’s Immigration 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 recent weeks, several federal agencies responsible for overseeing different aspects of the immigration system have issued or proposed new rules and guidance impacting noncitizens, as well as their families, communities, and employers. This update outlines four of those developments: a new Department of Homeland Security (DHS) rule requiring registration of certain noncitizens and criminal penalties for willful failure to comply; a new proposed DHS rule around the use of social media to vet noncitizens in a variety of common immigration postures; a new proposed Department of Health and Human Services (HHS) around access to the Affordable Care Act marketplace for DACA holders; and a potential new “Gold Card” path to permanent residence.

1. New DHS Rules

DHS recently announced two new rules that seek to expand its ability to monitor noncitizens present in, or seeking admission to, the United States. These include (1) the implementation of a decades-old, little-used registration requirement for noncitizens; and (2) the implementation of new social media information collection and review for certain noncitizens.

Registration Requirements for Certain Noncitizens

On March 12, 2025, DHS announced an interim final rule, effective April 11, 2025, that would—for the first time in decades—enforce the registration requirements of the Immigration and Nationality Act (INA) against certain noncitizens. These requirements include submitting a recently updated registration form online and being fingerprinted.[1] Noncitizens who follow such registration requirements will be issued a certificate or receipt card that they must carry with them at all times.[2]

The interim final rule implements a portion of Executive Order 14159 (titled “Protecting the American People Against Invasion”).[3] In the Executive Order, President Trump directed the Secretary of Homeland Security to enforce the INA’s registration requirements, which date back to the Alien Registration Act of 1940.[4] Notably, these requirements are applicable only for certain noncitizens, namely those who have not applied for a visa, submitted one of several specific forms for immigration relief, or been issued one of several types of identity, visa, entry, or lawful status documents.[5]

Noncitizens who are required to register but willfully fail to do so (or to provide proof of registration when requested by law enforcement) could face civil and criminal penalties.[6]

History

The Alien Registration Act of 1940, also known as the Smith Act,[7] mandated in Title III that all noncitizens (i) aged 14 or older (ii) who had not previously been registered or fingerprinted and (iii) who remained in the United States for thirty or more days were required to apply for registration and be fingerprinted before the end of the thirty day-period.[8 The registration requirements of the Smith Act were announced during a series of radio public service announcements, the first of which included Attorney General Robert Jackson announcing it as an “inventory” of immigrants, which was described as “essential to our national defense.”[9]

In 1952, Congress enacted the INA, incorporating the requirements of the Alien Registration Act into the statute.[10] Further, the INA included a provision that required all registrants to carry the “certificate of alien registration or an alien registration receipt card” “at all times” or risk criminal liability.[11]

While the law has been on the books for decades, its enforcement historically has been inconsistent, and the requirement had generally fallen out of use.[12] Today, noncitizens who enter the United States via a lawful entry method would have already been “registered” in the sense that they have undergone pre-entry vetting and identification confirmation—in other words, the relevant federal agencies already have the “registration” information they need.[13] And for noncitizens who enter the country without inspection, until now, there was no mechanism by which they could comply with the Act’s requirements.[14]

Current Enforcement

DHS’s interim final rule established Form G-325R (“Biometric Information (Registration)”) as a general registration form which can be submitted online.[15] This new general registration form is “available to all aliens regardless of their status”[16] in order to “[e]nsure that all previously unregistered aliens in the United States”[17] follow the registration requirements.

These requirements do not apply to several categories of noncitizens, namely those who have (i) applied to the Department of State for a visa, (ii) submitted one of the documents listed under 8 C.F.R. § 264.1(a),[18] or (iii) been issued one of the documents listed under 8 C.F.R. § 264.1(b).[19] Noncitizens who do not currently appear to need to register under the registration requirements include, among others:

Lawful permanent residents;
Noncitizens who were issued a Form I-94 or I-94W, even if the period of admission has expired;
Noncitizens issued an employment authorization document;
Noncitizens who have applied for lawful permanent residence and been fingerprinted, even if the applications were denied; and
All noncitizens in the U.S. who were issued immigrant or nonimmigrant visas before their last date of arrival.

The requirements for certain categories of noncitizens remain unclear. For example, individuals who have applied for asylum and are awaiting adjudication do not fall within the specific list of exempted individuals identified here but are generally already subject to biometrics collection and otherwise seem to meet the exemption criteria.

Additionally, the interim final rule provides that “every registered alien 18 years of age and over must at all times carry and have in their personal possession any certificate of alien registration or alien registration receipt card” and “[n]oncompliance is a misdemeanor punishable by a fine of up to $5,000 or imprisonment for not more than thirty days, or both.”[20] This means that immigrants who are registered—including those with lawful immigration status—could be criminally prosecuted for failing to carry proof of that registration with them at all times.

Social Media Screening

On March 5, 2025, DHS issued a Notice of Proposed Rulemaking (NPRM) “Generic Clearance for the Collection of Social Media Identifier(s) on Immigration Forms”) that would require applicants for several forms of immigration relief and benefits to provide identifier information (“handles”) for social media platforms on which they have had a presence in the last five years.[21]

This requirement is applicable to noncitizens in a wide variety of legal postures, from those seeking entry to the United States for the first time to those who have been here for decades and are applying to obtain their citizenship: N-400 (Application for Naturalization), I-131 (Application for Travel Documents, Parole Documents, and Arrival/Departure Records), I-192 (Application for Advance Permission to Enter as Nonimmigrant), I-485 (Application to Register Permanent Residence or Adjust Status), I-589 (Application for Asylum and for Withholding of Removal), I-590, I-730 (Refugee/Asylee Relative Petition), I-751 (Petition to Remove Conditions on Residence), and I-829 (Petition by Investor to Remove Conditions on Permanent Residence Status).

The stated purpose of this NPRM is to collect all necessary screening information for immigration benefit decisions and to ensure “uniform vetting standards” for national security and public safety risks,[22] as called for by Executive Order 14161 (“Protecting the United States from Foreign Terrorists and Other National Security and Public Safety Threats”).[23]

2. HHS Proposed Final Rule on Affordable Care Act Access for DACA Recipients

On March 19, 2025, HHS announced a NPRM to rescind a recent Biden Administration regulation that, since November 2024, has permitted recipients of relief under the Deferred Action for Childhood Arrivals (DACA) policy to purchase health insurance through the marketplaces established by the Affordable Care Act (ACA).[24] Estimates vary regarding the number of affected individuals, but reflect that approximately 11,000 DACA recipients would lose their current enrollment to the ACA marketplaces.[25]

Enacted in 2010, the ACA established “Marketplaces” in each state where citizens and “lawfully present” noncitizens may purchase health insurance, made accessible through tax subsidies.[26] States may choose to run their own exchange or participate in the Federal Exchange.[27] Upon passage, HHS issued regulations that defined the term “lawfully present” broadly to include, among other groups, all recipients of “deferred action”—an exercise of prosecutorial discretion by DHS to defer taking removal action against an individual.[28]

Two years later, in June 2012, DHS announced the DACA policy, which allows noncitizens who came to the U.S. as children to apply for deferred action, providing temporary protection from deportation and work authorization.[29] As of September 30, 2024, there are over 530,000 active DACA recipients in the United States.[30] Because of court orders in pending litigation, no new DACA applications have been processed since July 2021, though current DACA recipients can still renew their status and work authorization.[31]

When DACA was first implemented, HHS amended the definition of “lawfully present” to exclude DACA recipients for the purpose of the ACA, thus excluding them from the ACA Marketplaces.[32] On May 8, 2024, however, a Biden Administration final amended the definition of “lawfully present”—effective November 1, 2024—to include DACA recipients, on the ground that there was no reason to treat DACA recipients differently than other persons with “deferred action” status.[33] That final rule is currently subject to litigation in the District of North Dakota and has been enjoined and stayed in nineteen states.[34] Gibson Dunn, together with the National Immigration Law Center, is currently representing DACA recipients and CASA, a membership-based immigrant rights organization, as intervenors in that litigation in defending the May 2024 final rule. Due to the limited nature of the injunction and stay, the final rule remains in effect in other states, and around 11,000 DACA recipients have purchased Marketplace plans.[35]

This recent NPRM would revise the ACA Marketplace regulations to again bar DACA recipients from the ACA Marketplaces.[36] Comments on the regulation are due on April 11, 2025.

3. Announcement of the Potential Revocation of EB-5 Visa in favor of a “Gold Card”

The Executive Branch has also announced plans to offer a Gold Card, which, after application and payment of a fee of $5,000,000, would offer privileges granted by existing Permanent Resident Cards (Green Cards) and a path to U.S. citizenship.[37] President Trump and U.S. Secretary of Commerce Howard Lutnick described the proposed visa program in remarks to reporters in the Oval Office on February 25, 2025.[38] The Gold Card, according to President Trump, could be paid for directly by vetted individuals or on behalf of individuals by companies seeking to hire top job candidates.[39]

“Golden visas” offering legal status and a path to citizenship have grown in popularity in recent decades, with European countries such as Spain, Portugal, and Greece all offering a form of a golden visa to individuals who invest a minimum amount of money in the country.[40]

The United States currently offers a visa under the EB-5 Immigrant Investor Program authorized under Section 203(b)(5) of the Immigration and Nationality Act (the INA),[41] that functions somewhat similarly to a golden visa in that it offers individuals who make certain investments in the country a path to lawful permanent residence.

Specifically, under the INA, EB-5 Visas are available to qualified immigrants seeking to enter the United States for the purpose of engaging in a for-profit organization formed in the United States (1) in which the visa applicant invested (after November 29, 1990), or is actively in the process of investing, $1,050,000 (subject to adjustment) and (2) that will create full-time employment for at least 10 individuals lawfully authorized to be employed in the United States (other than the applicant’s spouse and children).[42] Of the visas made available under the EB-5 Program each year, 20 percent are reserved for investors in rural areas, 10 percent for investors in designated high unemployment areas, and 2 percent for investors in infrastructure projects, each with a reduced investment requirement of $800,000.[43] Under the INA, investments may be made in an organization managed directly by the investor or in qualified regional center programs in which qualified immigrants pool their investments.[44] Notably, the INA expressly authorizes visas under the regional center program through September 30, 2027.[45] Secretary Lutnick, however, stated that the EB-5 Program “was full of nonsense make believe and fraud” and would be replaced by the Gold Card program.[46]

Compared to EB-5 Visas, the proposed Gold Card would shift visa requirements away from the above investment criteria focused on job creation, especially in rural and high unemployment areas, in favor of a simplified flat fee paid to the U.S. Government. At a cost of $5,000,000, the proposed Gold Card would also come at a significantly higher price to visa applicants, and unlike investments made under the EB-5 Program, fees paid for the proposed Gold Card would not offer visa applicants the opportunity to generate returns directly on the cost of the visa.

President Trump and Secretary Lutnick have not detailed plans for terminating the existing EB-5 Program, nor have plans for implementing a Gold Card program been provided. Although the EB-5 program was created by statute,[47] President Trump has stated his belief that Congressional action will not be required to create the Gold Card program.[48] A new visa program adopted without legislation likely would face legal challenges.

[1] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793 (Mar. 12, 2025).

[2] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11794 (Mar. 12, 2025).

[3] See Alien Registration Requirement, U.S. Citizenship and Immigration Services, available at https://www.uscis.gov/alienregistration (last visited Mar. 18, 2025); Exec. Order No. 14159, 90 Fed. Reg. 8443 (Jan. 29, 2025), § 7.

[4] See Exec. Order No. 14159, 90 Fed. Reg. 8443 (Jan. 29, 2025), § 7; Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11793 (Mar. 12, 2025).

[5] See Alien Registration Requirement, U.S. Citizenship and Immigration Services, available at https://www.uscis.gov/alienregistration (last visited Mar. 18, 2025).

[6] See Alien Registration Requirement, U.S. Citizenship and Immigration Services, available at https://www.uscis.gov/alienregistration (last visited Mar. 18, 2025) (“It is the legal obligation of all unregistered aliens (or previously registered aliens who turn 14 years old) who are in the United States for 30 days or longer to comply with these requirements. Failure to comply may result in criminal and civil penalties, up to and including misdemeanor prosecution, the imposition of fines, and incarceration.”); Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11794 (Mar. 12, 2025) (“An alien’s willful failure or refusal to apply to register or to be fingerprinted is punishable by a fine of up to $5,000 or imprisonment for up to six months, or both.”).

[7] See Public Law 76-670, 54 Stat. 670.

[8] See Public Law 76-670, 54 Stat. 670, tit. III.

[9] See Elizabeth Burnes & Marisa Louie, The A-Files: Finding Your Immigrant Ancestors, 45 Prologue Mag. 1 (Spring 2013), in NATIONAL Archives, https://www.archives.gov/publications/prologue/2013/spring/a-files.

[10] See 8 U.S.C. §§ 1301 et seq.

[11] See 8 U.S.C. § 1304(e) (noting that anyone who failed to carry such a certificate or receipt card “shall be guilty of a misdemeanor and shall upon conviction for each offense be fined not to exceed $100 or be imprisoned not more than thirty days, or both”).

[12] See Tim Sullivan, Immigration Officials Say Everyone Living in the US Illegally Must Register. What Does That Mean?, Eyewitness News ABC 7 (Mar. 3, 2025), https://abc7ny.com/post/immigration-officials-say-everyone-living-us-illegally-register-what-does-mean/15957638/ (noting that “[a]cross the decades, . . . scholars say the registration requirement has rarely been enforced”).

[13] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11794 (Mar. 12, 2025) (listing the forms “that satisfy registration requirements”).

[14] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11795 (Mar. 12, 2025) (noting that under current regulations, “[a]liens who entered without inspection and have not otherwise been encountered by DHS lack a designated registration form”).

[15] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11795 (Mar. 12, 2025).

[16] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11795–96 (Mar. 12, 2025).

[17] See Exec. Order No. 14159, 90 Fed. Reg. 8443 (Jan. 29, 2025), § 7.

[18] DHS regulations identify the following forms as applicable registration forms: I-67, I-94, I-95, I-181, I-485, I-590, I-687, I-691, I-698, I-700, and I-817. See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11794–95 (Mar. 12, 2025).

[19] DHS regulations identify the following forms as constituting evidence of registration: I-94, I-95, I-184, I-185, I-186, I-221, I-221S, I-551, I-766, I-862, and I-863. See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11795 (Mar. 12, 2025).

[20] See Alien Registration Form and Evidence of Registration, 90 Fed. Reg. 11793, 11795–96 n.7 (Mar. 12, 2025).

[21] See Agency Information Collection Activities; New Collection: Generic Clearance for the Collection of Social Media Identifier(s) on Immigration Forms, 90 Fed. Reg. 11324 (Mar. 5, 2025).

[22] See Agency Information Collection Activities; New Collection: Generic Clearance for the Collection of Social Media Identifier(s) on Immigration Forms, 90 Fed. Reg. 11324 (Mar. 5, 2025).

[23] See Exec. Order No. 14161, 90 Fed. Reg. 8451 (Jan. 30, 2025), § 2.

[24] Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability, 90 Fed. Reg. 12942 (March 19, 2025)

[25] Id. at 13000.

[26] Patient Protection and Affordable Care Act, P.L. 111-148, as amended.

[27] Affordable Choices of Health Benefit Plans, 42 U.S.C. §§18031 et seq.

[28] Pre-Existing Condition Insurance Plan Program, 75 Fed. Reg. 45014 (July 30, 2010); Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans, 77 Fed. Reg. 18310 (March 27, 2012); Consideration of Deferred Action for Childhood Arrivals (DACA), U.S. Citizenship and Immigration Services, https://www.uscis.gov/DACA.

[29] Consideration of Deferred Action for Childhood Arrivals (DACA), U.S. Citizenship and Immigration Services, https://www.uscis.gov/DACA.

[30] Count of Active DACA recipients, U.S. Citizenship and Immigration Services https://www.uscis.gov/tools/reports-and-studies/immigration-and-citizenship-data

[31] Consideration of Deferred Action for Childhood Arrivals (DACA), U.S. Citizenship and Immigration Services, https://www.uscis.gov/DACA.

[32] Pre-Existing Condition Insurance Plan Program, 77 Fed. Reg. 52614 (Aug. 30, 2012).

[33] Clarifying the Eligibility of Deferred Action for Childhood Arrivals (DACA) Recipients and Certain Other Noncitizens for a Qualified Health Plan through an Exchange, Advance Payments of the Premium Tax Credit, Cost-Sharing Reduction, and a Basic Health Program, 89 Fed. Reg. 39392 (May 8, 2024).

[34] Kansas v. United States, 2024 WL 5220178, at *10 (D.N.D. Dec. 9, 2024).

[35] Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability, 90 Fed. Reg. 12942, 13000 (March 19, 2025)

[36] Id.

[37] Remarks: Donald Trump Signs Executive Orders in the Oval Office, Roll Call (Feb. 25, 2025), available at https://rollcall.com/factbase/trump/transcript/donald-trump-remarks-executive-orders-white-house-february-25-2025/.

[38] Id.

[39] Id.

[40] Jonathan Wolfe, How Trump’s ‘Gold Card’ Plan Echoes the Golden Visas Programs in Europe, the New York Times (Feb. 26, 2025), available at https://www.nytimes.com/2025/02/26/nyregion/trump-gold-card-visa-europe.html.

[41] 8 U.S.C. § 1153(b)(5) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title8-section1153&num=0&edition=prelim

[42] Id.

[43] Id.

[44] Id.

[45] Id.

[46] Remarks: Donald Trump Signs Executive Orders in the Oval Office, Roll Call (Feb. 25, 2025), available at https://rollcall.com/factbase/trump/transcript/donald-trump-remarks-executive-orders-white-house-february-25-2025/.

[47] See e.g., Dep’t of State v. Munoz, 602 U.S. 899 (2024) (“over no conceivable subject [visa decisions] is the legislative power of Congress more complete.”) (quoting Oceanic Navigation Co. v. Stranahan, 214 U. S. 320 (1909); Fiallo v. Bell, 430 U.S. 787 (1977).

[48] Remarks: Donald Trump Signs Executive Orders in the Oval Office, Roll Call (Feb. 25, 2025), available at https://rollcall.com/factbase/trump/transcript/donald-trump-remarks-executive-orders-white-house-february-25-2025/.

The following Gibson Dunn lawyers prepared this update: Stuart Delery, Nancy Hart, Matt Rozen, Laura Raposo, Ariana Sañudo, Carolyn Ye, Alex Prezioso, Heather Skrabak, and Matt Weiner.

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, the authors, any leader or member of the firm’s Pro Bono, Public Policy, Administrative Law & Regulatory, Appellate & Constitutional Law, or Labor & Employment practice groups, or the following members of the firm’s Immigration Task Force:

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,
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)

Gibson Dunn’s Workplace DEI Task Force aims to help our clients navigate the evolving legal and policy landscape following recent Executive Branch actions and the Supreme Court’s decision in SFFA v. Harvard. Prior issues of our DEI Task Force Update can be found in our DEI Resource Center. Should you have questions about developments in this space or about your own DEI programs, please do not hesitate to reach out to any member of our DEI Task Force or the authors of this Update (listed below).

Key Developments:

On March 19, the Equal Employment Opportunity Commission (EEOC) issued guidance entitled “What You Should Know About DEI-Related Discrimination at Work,” which includes eleven questions and corresponding answers addressing the process for asserting a discrimination claim and the scope of protections under Title VII of the Civil Rights Act of 1964 (Title VII) as they relate to DEI programs. The EEOC and the Department of Justice (DOJ) also released a joint one-page technical assistance document entitled “What To Do If You Experience Discrimination Related to DEI at Work,” which provides examples of “DEI-related discrimination” under Title VII and directs employees who “suspect [they] have experienced DEI-related discrimination” to “contact the EEOC promptly.” As described in an EEOC press release, these documents are designed “[t]o help educate the public about how well-established civil rights rules apply to employment policies, programs, and practices—including those labeled or framed as ‘DEI.’”

The guidance broadly defines potentially unlawful DEI initiatives as, among other things, programs that involve “[a]ccess to or exclusion from training (including training characterized as leadership development programs)”; “[a]ccess to mentoring, sponsorship, or workplace networking / networks”; “[i]nternships (including internships labeled as ‘fellowships’ or ‘summer associate’ programs)”; and “[s]election for interviews, including placement or exclusion from a candidate ‘slate’ or pool.” The guidance also addresses the unlawful “segregation” of employees, noting that employers may not “separate workers into groups based on” protected characteristics “when administering DEI or any trainings [or] workplace programming,” even if the separate groups “receive the same programming content or amount of employer resources.” The guidance further notes that “unlawful segregation can include limiting membership in workplace groups, such as Employee Resource Groups (ERG), Business Resource Groups (BRGs), or other employee affinity groups, to certain protected groups.” The guidance also provides that employers may not “justify taking an employment action based on race, sex, or another protected characteristic because the employer has a business necessity or interest in ‘diversity,’ including preferences or requests by the employer’s clients or customers.” Finally, the guidance suggests that DEI-related trainings “may” create a hostile work environment if there is evidence that the “training was discriminatory in content, application, or context.”

For more information about this guidance, please see our March 20 client alert, available here.

On March 19, the Trump Administration announced that it would suspend approximately $175 million in federal funding for the University of Pennsylvania. It made the announcement via a post on social media site X in which it embedded a Fox Business clip that was sourced to an unnamed White House official. In the post on X, the White House stated that the decision was based on Penn’s “policies forcing women to compete with men in sports.” The announcement came after the Education Department’s Office for Civil Rights opened an investigation into the University’s swimming program following President’s Trump’s executive order (EO) banning transgender athletes from women’s sports. A spokesperson from the University said the school had not received notification of this action.

On March 17, Acting EEOC Chair Andrea Lucas sent letters to 20 law firms requesting information about their DEI practices and programs. In the letters, Lucas cites publicly available information about the firms’ hiring practices and diversity initiatives and states that she is “concerned” that those “programs, policies, and practices” may be unlawful under Title VII of the Civil Rights Act. The letters make the same 37 requests for information from each target firm from 2019 to the present, including requests for information about their hiring and promotion processes, diversity goals, application and selection criteria for fellowship programs, and participation in diversity internship programs. Among other information, the requests also seek the name, sex, race, GPA, and contact information for all applicants for legal positions at the firm at any level, any lawyers selected for particular programs, and all lawyers considered for elevation to partner. The requests also ask firms to list the clients that have “diversity requirements,” and instances in which the firms provided demographic information to clients. In a press release issued the same day as the letters, Acting Chair Lucas states: “The EEOC is prepared to root out discrimination anywhere it may rear its head, including in our nation’s elite law firms.”

On March 14, a panel of the U.S. Court of Appeals for the Fourth Circuit issued a unanimous ruling temporarily staying the preliminary injunction in Nat’l Ass’n of Diversity Officers in Higher Educ., et al., v. Donald J. Trump, et al., No. 1:25-cv-00333-ABA (D. Md. 2025). The stay decision permits the implementation and enforcement of key aspects of two recent Executive Orders signed by President Trump: EO 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”) and EO 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”). The preliminary injunction stayed by this decision had blocked enforcement of EO 14173’s requirement that federal contractors and grant recipients certify they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and “agree that [their] compliance in all respects with all applicable federal anti-discrimination laws is material” for purposes of the False Claims Act. It had also enjoined the federal government from freezing or terminating existing “equity-related” contracts and grants under EO 14151.

While the Fourth Circuit stay order itself is relatively short, all three judges on the panel—Chief Judge Diaz, Judge Harris, and Judge Rushing—wrote concurring opinions elaborating on their reasoning. Chief Judge Diaz wrote that “despite the vitriol being heaped on DEI,” those working on such efforts “deserve praise, not opprobrium,” for “when this country embraces true diversity, it acknowledges and respects the social identity of its people. When it fosters true equity, it opens opportunities and ensures a level playing field for all.” Judge Harris explained that she understood the EOs to be “distinctly limited in scope” to address only “conduct that violates existing federal anti-discrimination laws,” and that any agency action beyond that scope may be unconstitutional. Her reasoning leaves open room for as-applied constitutional challenges to the EOs, which plaintiffs may seize on once enforcement of the EOs resumes. Judge Rushing wrote that the other judges’ “view on whether certain Executive action is good policy” is an “impermissible consideration” in fulfilling the court’s “duty to adjudicate cases and controversies according to the law.” Judge Rushing also raised questions about the plaintiffs’ standing and ripeness, noting that the plaintiffs have not challenged any specific agency action or decision.

On March 14, the U.S. Department of Education’s Office for Civil Rights (OCR) announced an investigation into 45 universities for potential violations of Title VI of the Civil Rights Act of 1964 over their partnership with “The Ph.D. Project,” a nonprofit organization that helps students with insight and networking opportunities related to pursuing a Ph.D. Additionally, OCR is also investigating six universities “for allegedly awarding impermissible race-based scholarships” and one university “for allegedly administering a program that segregates students on the basis of race.” The investigations followed a February 14 Dear Colleague Letter OCR sent nationwide reminding schools of their “obligations to end the use of racial preferences and stereotypes in education programs and activities.” The full list of universities under investigation is available here.

On March 14, Texas Attorney General Ken Paxton sent a letter in response to an inquiry from Colonel Freeman Martin, Director of the Texas Department of Public Safety, regarding the “[v]alidity of district court orders directing state agencies to amend a person’s biological ‘sex’ designation on state identification documents.” In the letter, Paxton writes that district courts in Texas lack jurisdiction to issue these orders, reasoning that the “‘judicial power’ endowed to district courts” does not justify “ex parte orders directing state agencies to amend a person’s biological sex” on birth certificates and driver’s licenses. On this basis, Paxton concludes that these district court orders are void and instructs that “prior ‘corrections’ should be reversed” immediately.

On March 6, President Trump issued an executive order titled “Addressing Risks from Perkins Coie LLP,” which, among other things, requires the Chair of the EEOC to “review the policies of representative large, influential, or industry leading law firms for consistency with Title VII of the Civil Rights Act of 1964, including whether large law firms: reserve certain positions, such as summer associate spots, for individuals of preferred races; promote individuals on a discriminatory basis; permit client access on a discriminatory basis; or provide access to events, trainings, or travel on a discriminatory basis.” Additionally, the EO directs the Attorney General to work with the EEOC Chair and with State Attorneys General as appropriate to investigate practices of “large law firms . . . who do business with federal entities for compliance with race-based and sex-based non-discrimination laws and take any additional actions the Attorney General deems appropriate in light of the evidence uncovered.” The letters from the Acting Chair of the EEOC to 20 law firms appear to be in response to these directives. The first section of the EO stated that Perkins Coie “racially discriminates against its own attorneys and staff, and against applicants.” The EO mandates the suspension of security clearances for the firm’s employees, a review of government contracts involving the firm and government contractors that work with the firm, and restrictions on access to government buildings and communications with government officials by the firm.

In response, on March 11, Perkins Coie filed a lawsuit and a motion for a temporary restraining order (TRO) challenging certain provisions of the EO, arguing that the order was an unconstitutional attempt to punish the firm for its legal representation and support of diversity and inclusion initiatives. The case is Perkins Coie LLP v. U.S. Department of Justice et al., No. 1:25-cv-00716 (D.D.C. 2025). On March 12, 2025, the United States District Court for the District of Columbia granted the TRO halting the enforcement of certain provisions of the EO. The court described the EO as “viewpoint discrimination” and warned that it would have a “chilling harm of blizzard proportions” on the legal profession if allowed to stand. The motion for a TRO filed by Perkins Coie did not seek to block section 4 of the EO, which directs the EEOC to review the DEI practices of large law firms. Accordingly, the court’s ruling did not address that provision.

On March 14, the White House issued a similar executive order aimed at the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, which among other things said that the firm had “discriminate[d] against its own employees on the basis of race and other categories prohibited by civil rights law.” It noted that “Paul Weiss, along with nearly every other large, influential, or industry leading law firm, makes decisions around ‘targets’ based on race and sex.” On March 20, President Trump announced that he is withdrawing the EO after Paul Weiss “agree[d] that the bedrock principle of American Justice is that it must be fair and nonpartisan,” “affirm[ed] its commitment to merit-based hiring, promotion, and retention” and stated it “will not adopt, use, or pursue any DEI policies,” agreed to “conduct a comprehensive audit of all its employment practices,” and promised to “dedicate the equivalent of $40 million in pro bono legal services . . . to support the [Trump] Administration’s initiatives.”

On March 6, the Dean of the Georgetown University Law Center, William Treanor, wrote in response to a March 3 letter from Interim U.S. Attorney for the District of Columbia, Edward Martin. In his letter, Interim U.S. Attorney Martin asks Dean Treanor whether he has “eliminated all DEI from [the] school and its curriculum” and whether he would “move swiftly to remove it” if “DEI is found in your courses or teaching in [any way].” The letter additionally informs the law school that the United States Attorney’s Office for the District of Columbia will not consider any applicant from a school teaching and utilizing DEI for any employment, fellowship program, or internship.

Dean Treanor’s response asserts that Martin’s letter “challenges Georgetown’s ability to define its mission as an educational institution” in violation of the First Amendment, which “guarantees that the government cannot direct what Georgetown and its faculty teach and how to teach it.” Dean Treanor notes the current Administration has itself affirmed this “bedrock principle of constitutional law,” asserting that the Department of Education has confirmed “that it cannot restrict First Amendment rights and that it is statutorily prohibited from ‘exercising control over the content of school curricula.’” In closing, Dean Treanor asked the U.S. Attorney’s office to confirm that any Georgetown-affiliated candidates for employment with the office will receive full and fair consideration.

Media Coverage and Commentary:

Below is a selection of recent media coverage and commentary on these issues:

Reuters, “Exclusive: Proxy Adviser Glass Lewis Sticks with Diversity Guidance, Will Flag Risk” (March 4): Ross Kerber of Reuters reports that proxy adviser Glass Lewis will continue to consider boardroom diversity when making voting recommendations. Kerber reports, however, that now when recommending against a board candidate for a reason related to diversity, Glass Lewis will also note “information that could support an alternative vote by the client.” This change follows last month’s announcement by Institutional Shareholder Services that it would no longer consider diversity when making boardroom voting recommendations. Kerber writes that, in an email to clients seen by Reuters, Glass Lewis reaffirmed its 2025 benchmark guidelines for U.S. companies, which recommend that shareholders vote against certain directors at large U.S. companies when their boards lack gender, racial, or LGBTQ diversity.
New York Times, “Trans Workers Describe a ‘Betrayal’ by an Agency Meant to Protect Them” (March 5): The New York Times’ Jessica Silver-Greenberg reports on the recent actions by the EEOC to dismiss cases involving transgender and nonbinary workers. The article highlights the case of Asher Lucas, who was fired from the restaurant Culver’s after complaining about harassment due to his transgender identity. The EEOC initially sued Culver’s for unlawful employment practices but has since moved to dismiss the case, citing “President Trump’s executive order asserting that there are only two sexes, male and female.” Citing to the same EO, the EEOC has also moved to dismiss six other lawsuits against various companies, including a pizzeria at Chicago O’Hare International Airport and a hotel franchise in western New York, which were accused of creating hostile work environments for transgender and nonbinary employees and retaliating against them when they complained. According to the authors, the EEOC’s reversal marks a significant departure from its previous stance on protecting LGBTQ workers, as emphasized in its 2023 strategic plan, and is in tension with the Supreme Court’s decision in Bostock v. Clayton County that Title VII prohibits discrimination against gay and transgender employees.
Wall Street Journal, “Trump’s Employment Bias Fighter Has DEI in Her Crosshairs” (March 6): The Wall Street Journal’s Richard Vanderford reports that Andrea Lucas, the acting chair of the EEOC, intends to “take on the bias she sees in [DEI] programs.” Vanderford reports that Lucas stated in a recent interview that considering a worker’s race, ethnicity, or sex when offering opportunities is illegal, regardless of intent. He reports that Lucas also stated that employers should not assume “that they’re off the hook” for “discrimination in a past administration.” Vanderford writes that Lucas’s approach to DEI “could help accelerate a corporate flight from DEI already under way.” He notes, however, that Lucas said businesses need not move away from “merit-focused decision-making,” highlighting, for example, training or mentoring for first-generation college graduates done in a race-blind manner. Vanderford also reports that, under Lucas, the EEOC is “launching a crackdown on what it calls Anti-American bias in the workplace,” aiming to “protect American workers who might not be hired because of the perception that foreign-born workers have a better work ethic.”
Reuters, “US Retailers Publicly Scrap Some ‘DEI’ Initiatives While Quietly Supporting Others” (March 6): Nicholas P. Brown and Arriana McLymore from Reuters report that while many U.S. retailers have publicly discontinued DEI programs, several are maintaining certain DEI efforts. Brown and McLymore report on several companies that have informed advocacy groups that they will continue to support some LGBTQ+ and racial justice events, and to support resource groups for underrepresented employees. The article quotes Gibson Dunn’s Jason Schwartz, who says companies are “trying to thread the needle—stay true to corporate values, satisfy various stakeholders, but reduce legal risk.” Companies “are essentially picking their battles or trying to avoid battles altogether,” says Schwartz, who notes that the programs companies are most likely to retain are the ones tied to customer and employee relationships. Yet some stakeholders, the authors write, are not satisfied with these changes. Brown and McLymore report that Twin Cities Pride refused a sponsorship from Target “because the company would not specify how it would continue to support LGBTQ+ shoppers and employees.”
The Atlantic, “Colleges Have No Idea How to Comply With Trump’s Orders” (March 10): Rose Horowitch of The Atlantic reports that the Trump Administration’s guidance on DEI has sent universities into a state of “chaos.” She writes that schools’ “first challenge” is determining the meaning of “DEI,” and their second challenge is determining the scope of corrective action to take, if any. She notes that there has been a recent “flurry of nomenclature modifications,” with universities replacing “diversity, equity, and inclusion” and related terms on their websites with, for example, “equal access and equal opportunity” or “Inclusive Excellence,” in an effort to “try to get out of the target zone.” Indeed, Horowitch notes that the cost of getting caught in the administration’s crosshairs is high, citing the recent cancellation of $400 million in federal grants and contracts for Columbia University in connection with the school’s allegedly insufficient efforts to combat antisemitism. Additionally, Horowitch describes the situation faced by “public universities in red states,” which she notes have “little choice but to go beyond cosmetic changes” in response to local political pressure.
Newsweek, “Nearly Half of Companies Surveyed Say They Will Maintain DEI Effort in 2025” (March 14): Newsweek’s Aman Kidwai reports on a recent survey of corporate leaders, including general counsel, HR and diversity officers, by law firm Littler Mendelson P.C. that found that “49 percent of C-suite leaders are not considering new or further rollbacks of DEI programs after the Trump administration’s executive orders, and that only 8 percent are seriously considering changes.” Kidwai quotes a report on the study stating that “approximately three-quarters” of those surveyed said that “employee expectations for ongoing [DEI] commitments” played a role in their decision to continue their DEI initiatives, suggesting that DEI “remains an important talent retention and recruitment strategy for many employers even as the environment around those efforts becomes more hostile.” Kidwai also cites to a survey by Gravity Research, showing that while the percentage of Fortune 100 companies mentioning DEI in earnings calls dropped from 43% in 2023, to 31% in 2024, there was also a 59% rise in neutral, related terms such as “belonging” or “diverse perspectives,” indicating that these conversations may be continuing but in different terms.

Case Updates:

Below is a list of updates in new and pending cases:

1. Contracting claims under Section 1981, the U.S. Constitution, and other statutes:

American Alliance for Equal Rights v. Southwest Airlines Co., No. 24-cv-01209 (N.D. Tex. 2024): On May 20, 2024, American Alliance for Equal Rights (AAER) filed a complaint against Southwest Airlines, alleging that the company’s ¡Lánzate! Travel Award Program, which awards free flights to students who “identify direct or parental ties to a specific country” of Hispanic origin, unlawfully discriminates based on race. AAER seeks a declaratory judgment that the program violates Section 1981 and Title VI, a temporary restraining order barring Southwest from closing the next application period (set to open in March 2025), and a permanent injunction barring enforcement of the program’s ethnic eligibility criteria. On August 22, 2024, Southwest moved to dismiss, arguing that the case was moot because the company had signed a covenant with AAER that eliminated the challenged provisions from future program application cycles. On December 6, 2024, the court granted in part and denied in part Southwest’s motion to dismiss. The court concluded that Southwest’s covenant to eliminate the program rendered moot any claims for declaratory or injunctive relief. However, the court held that it had jurisdiction over the plaintiff’s claims for one cent in nominal damages and allowed those claims to proceed. The court rejected Southwest’s argument that Southwest mooted those claims through an “unsuccessful tender of one cent to [AAER].” On February 7, 2025, Southwest Airlines answered the complaint, denying allegations of discrimination.
- Latest update: On March 3, 2025, AAER filed a motion for summary judgment, arguing that there was no genuine dispute of material fact on three relevant questions: (1) whether ¡Lánzate! involved contracts; (2) whether ¡Lánzate! intentionally discriminated against non-Hispanics; and (3) whether that ethnic discrimination harmed one of AAER’s members by preventing them from competing for ¡Lánzate! in 2024.

2. Employment discrimination and related claims:

Winter v. Jones, No. 4:25-cv-00299 (E.D. Mo. 2025): On March 10, 2025, a class action complaint was filed in federal district court in Missouri against Defendants Edward D. Jones & Co., The Jones Financial Companies, and EDJ Holding Company. The lawsuit alleges that the defendants employ a racially discriminatory compensation policy, in which financial advisors are paid extra if they transfer assets to “women and/or diverse” advisors rather than to heterosexual, white male advisors, which in turn affects the performance ratings of the transferor advisors. The lawsuit further alleges the defendants employ racially discriminatory criteria in their hiring, firing, and promotion practices, in which non-white financial advisors are favored over white advisors. The complaint requests injunctive relief enjoining the defendants’ alleged race-based employment policies.
- Latest update: The docket reflects that the defendants have waived service of process. Their Rule 12 motion or answer is due May 10, 2025.
Martin v. Sedgwick Claims Management Services, Inc., No. 2:25-cv-02275 (W.D. Tenn. 2025): On March 11, 2025, a former employee of Sedgwick Claims Management Services, Inc., filed a complaint against the company alleging race discrimination and sexual harassment, as well as retaliation for complaints made regarding such discrimination. The plaintiff’s compliant asserts that he was subjected to a hostile work environment and discriminatory practices because he is Caucasian and heterosexual. In part, he alleges that Sedgwick’s DEI training materials were offensive and discriminatory towards white, heterosexual males. The plaintiff claims that after he complained about the discriminatory DEI content and sexual harassment by his supervisor, he faced retaliation, including being falsely accused of recording conversations with management, which led to his termination on March 25, 2024. He asserts that Sedgwick failed to conduct a meaningful investigation into his complaints and that his discharge was pretextual.
- Latest update: Sedgwick was served on March 13, 2025. Its answer is due on April 4, 2025.
EEOC v. Battleground Restaurants, No. 1:24-cv-00792 (M.D.N.C. 2024): On September 25, 2024, the EEOC filed a lawsuit against a sports bar chain, Battleground Restaurants, in federal district court in North Carolina. The lawsuit alleges that the chain refused to hire men for its front-of-house positions, such as server or bartender jobs, in violation of Title VII. On November 25, 2024, Battleground Restaurants moved to dismiss or strike an improperly named defendant. Battleground Restaurants argued that the EEOC’s pattern or practice claims are “insufficiently pled, conclusory, and not plausible on their face,” and that the EEOC failed to conduct a “reasonable investigation” or give “adequate notice” to Battleground Restaurants. On February 24, 2025, the court denied the defendant’s motion to dismiss, finding the EEOC complied with notice requirements, plausibly alleged a pattern or practice of disparate sex discrimination, and can properly include Battleground Restaurants as a defendant.
- Latest update: On March 10, 2024, the defendants answered the complaint, denying the large majority of the plaintiff’s allegations, and asserted numerous defenses, including that the plaintiff failed to identify any male applicant who was not hired for a front-of house position due to their sex, and that the defendants hired the best applicants without regard to their sex.
De Piero v. Pennsylvania State University, No. 2:23-cv-02281-WB (E.D. Pa. 2023): A white male professor sued his employer, Penn State University, claiming that university-mandated DEI trainings, discussions with coworkers and supervisors about race and privilege in the classroom, and comments from coworkers about his “white privilege” created a hostile work environment that led him to quit his job. He claimed that after he reported this alleged harassment and published an opinion piece objecting to the impact of DEI concepts in the classroom, the university retaliated against him by investigating him for bullying and aggressive behavior towards his colleagues. The plaintiff alleged harassment, retaliation, and constructive discharge in violation of Title VI, Title VII, Section 1981, Section 1983, the First Amendment, and Pennsylvania civil rights laws. On October 21, 2024, the defendants moved for summary judgment on the plaintiff’s hostile work environment claims. The defendants argue the plaintiff cannot show that he experienced discrimination based on his race because he was not required to attend any of the meetings about which he complains. Defendants also argue that the plaintiff cannot show respondeat superior liability for Penn State, and that his claim for punitive damages fails as a matter of law. On November 27, 2024, the plaintiff filed a response to the defendant’s motion for summary judgment arguing that the university “maintain[ed] a hostile environment based on pervasive racial dogma and race essentialism.” The plaintiff described various incidents that he claimed met the standard for “severe and pervasive harassment,” and also denied his voluntary participation in the events and discussions at issue provided defendants with an affirmative defense.
- Latest update: On March 6, 2025, the court granted the defendant’s motion for summary judgment and dismissed the plaintiff’s hostile work environment claims. The court found the “severe or pervasive” elements of the hostile work environment claim dispositive. In particular, the court found that the behaviors complained of by the plaintiff, including “campus wide emails” pertaining to racial injustice, “being invited to review scholarly materials,” and “conversations about harassment levied by and against [the plaintiff],” could not reasonably be found to rise to the level of severe harassment. As to the “pervasive” conduct prong, the court explained that of the 12 incidents in the complaint, no “racist comment” was directed at the plaintiff and “only a few” involved actions that were directed at the plaintiff at all. The court concluded that this pattern of behavior could not reasonably be found to rise to the level of “pervasive.”
Gerber v. Ohio Northern Univ., No. 2023-1107-CVH (Ohio. Ct. Common Pleas Hardin Cty. 2024): On June 30, 2023, a law professor sued his former employer, Ohio Northern University, for terminating his employment after an internal investigation determined that he bullied and harassed other faculty members. On January 23, 2024, the plaintiff, now represented by America First Legal, filed an amended complaint. The plaintiff claims that his firing was actually in retaliation for his vocal and public opposition to the university’s stated DEI principles and race-conscious hiring, which he believed were illegal. The plaintiff alleged that the investigation and his termination breached his employment contract, violated Ohio civil rights statutes, and constituted various torts, including defamation, false light, conversion, infliction of emotional distress, and wrongful termination in violation of public policy. On February 20, 2024, the defendants filed a motion for partial dismissal, arguing that the plaintiff’s termination was not against public policy because he was not an at-will employee, that all claims against university employees in their individual capacities should be dismissed, and that the plaintiff did not allege facts sufficient to support claims of breach, defamation, false light, or intentional infliction of emotional distress.
- Latest update: On February 14, 2025, the plaintiff filed a motion for leave to move for partial summary judgment. The plaintiff argued there was no genuine dispute of material fact as to whether the university had breached his employment contract. On February 27, 2025, the court denied the defendant’s motion, finding that the “factual allegations are not so clear that [the d]efendants are entitled to individual dismissals.” On February 28, 2025, the court also denied the plaintiff’s motion for leave to seek partial summary judgment, finding the defendants were entitled to demonstrate there was “adequate cause” for terminating plaintiff’s employment.
Grande v. Hartford Board of Education et al., 3:24-cv-00010-JAM (D. Ct. 2024): On January 3, 2024, John Grande, a white male physical education teacher in the Hartford school district, filed suit against the Hartford School Board after allegedly being forced to attend mandatory DEI trainings. He claimed that he objected to the content of a mandatory professional development session focused on race and privilege, stating that he felt “white-shamed” after expressing his political disagreement with the training’s purposes and goals, and that he was thereafter subjected to a retaliatory investigation and was wrongfully threatened with termination. He claimed the school’s actions constitute retaliation and compelled speech in violation of the First Amendment. On February 5, 2025, the defendants filed a motion for summary judgment, arguing that the plaintiff’s objections to the trainings were made in the course of his official duties as a District employee and therefore were not protected by the First Amendment. They further argued that the District’s interest in effectively administering its professional development sessions outweighed the plaintiff’s speech interests.
- Latest update: On March 5, 2025, the plaintiff filed an opposition to the defendant’s motion for summary judgment. The plaintiff argued that summary judgment is improper because material facts, such as whether the plaintiff was speaking as a private citizen about a matter of public concern and the nature of plaintiff’s statements, are in dispute. The plaintiff also argued that he sufficiently pled a First Amendment retaliation claim against the defendants.

3. Challenges to statutes, agency rules, and regulatory decisions:

Moe et al. v. Yost et al., No. 24AP-483 (Ohio App. Ct. Mar. 18, 2025): In March 2024, families of minor transgender adolescents in Ohio filed suit to challenge House Bill 68, which had banned gender-affirming pharmaceutical medical care for transgender adolescents. The state trial court found the law constitutional.
- Latest update: On March 18, 2025, the Ohio Tenth District Court of Appeals reversed, holding that the ban on gender affirming care violated the “constitutional freedom to choose health care” under the state’s Health Care Freedom Amendment, and that the law violated the “fundamental right” of parents “to seek medical care for their children.”
Chicago Women in Trades v. President Donald J. Trump, et al., No. 1:25-cv-02005 (N.D. Ill. 2025): On February 26, 2025, Chicago Women in Trades (CWIT), a non-profit organization, sued President Trump, challenging EO 14151 and EO 14173. CWIT alleges that, because of the orders, its federal grant funding was frozen and although the funding was restored following a temporary restraining order issued in another proceeding, “CWIT’s grants remain under threat of termination.” CWIT claims that these EOs violate principles of separation of powers, the First and Fifth Amendments, and the Spending Clause of the U.S. Constitution.
- Latest update: On March 5, 2025, CWIT filed a motion for preliminary injunction to enjoin the defendants from enforcing and carrying out EOs 14151 and 14173. CWIT argues that the EOs violate the First and Fifth Amendments, Separation of Powers, and the Spending Clause.
National Association of Diversity Officers in Higher Education, et al., v. Donald J. Trump, et al., 25-cv-333 (D. Md. 2025): On February 3, the Mayor and City Council of Baltimore, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and the Restaurant Opportunities Centers United filed a complaint in the District of Maryland challenging two recent DEI-related EOs. The complaint raises six constitutional claims, including claims alleging that the orders violate the First Amendment, Fourteenth Amendment, Spending Clause, and separation of powers. The complaint sought a declaratory judgment that EO 14151 and EO 14173 are unconstitutional, as well as a preliminary injunction enjoining enforcement of these executive orders. On February 13, the plaintiffs filed a motion for a temporary restraining order, or, in the alternative, a preliminary injunction. On February 21, the district court preliminarily enjoined enforcement of key aspects of the orders.
- Latest update: On March 10, 2025, the district court clarified that the injunction applies to all federal agencies. On March 14, 2024, a panel of the U.S. Court of Appeals for the Fourth Circuit temporarily stayed the preliminary injunction. Please see the Key Development summary above for additional detail.
Young Americans for Freedom et al. v. U.S. Department of Education et al., No. 3:24-cv-00163-PDW-ARS (D.N.D. 2024): On August 27, 2024, the University of North Dakota Chapter of Young Americans for Freedom (YAF) sued the U.S. Department of Education (DOE) over its McNair Post-Baccalaureate Achievement Program, a research and graduate studies grant program that supports incoming graduate students who are either low-income, first-generation college students or “member[s] of a group that is underrepresented in graduate education.” YAF alleges that the McNair program violates the Equal Protection Clause by restricting admission based on race. YAF requests, among other things, a preliminary injunction enjoining the DOE from enforcing all race-based qualifications for the McNair program. On September 4, 2024, YAF filed a motion for preliminary injunction, requesting that the court prevent the DOE from enforcing the racial and ethnic qualifications of the McNair program, and requiring the DOE to notify all participating institutions of higher education that they cannot impose or rely upon such classifications. On December 31, 2024, the court denied the plaintiff’s preliminary injunction motion and dismissed the case without prejudice for lack of subject matter jurisdiction, ruling that there was no Article III standing because the McNair Program is not exclusively administered by the Department of Education. On January 24, 2025, the plaintiffs filed a motion to alter or amend the judgment arguing that the court should have allowed the plaintiffs to amend their complaint instead of dismissing the case outright.
- Latest update: On March 10, 2025, the Department of Education filed an opposition to the plaintiffs’ motion for reconsideration, arguing that the plaintiffs’ motion should be denied because they failed to identify “manifest error of fact or law” in the court’s decision or demonstrate exceptional circumstances warranting relief.
Nat’l Urban League et al., v. President Donald J. Trump, et al., No. 1:25-cv-00471 (D.D.C. 2025): On February 19, 2025, the National Urban League, National Fair Housing Alliance, and AIDS Foundation of Chicago sued President Donald Trump challenging EO 14151, EO 14168, EO 14173, and related agency actions, as ultra vires and in violation of the First and Fifth Amendments and the Administrative Procedure Act. The plaintiffs allege that these orders penalize them for expressing viewpoints in support of diversity, equity, inclusion, and accessibility, and transgender people. They also claim that, because of these orders, they are at risk of losing federal funding. The complaint seeks a declaratory judgment holding that the EOs at issue are unconstitutional, as well as a preliminary injunction enjoining enforcement of these EOs. On February 28, the plaintiffs filed a motion for a preliminary injunction.
- Latest update: On March 5, 2025, Do No Harm, a non-profit organization, filed a motion to intervene as defendant, arguing that the plaintiffs’ challenge to the EOs directly threatens their mission of “ensuring that medicine is driven by scientific evidence rather than ideology and that professional opportunities are allocated based on merit” and its ability to protect its members from discrimination and other harms. On March 10, the plaintiffs filed their opposition to Do No Harm’s motion to intervene, arguing that Do No Harm lacks a legally protected interest in the case, lacks Article III standing, and has failed to rebut the presumption that the defendants adequately represent its interests. On March 12, 2025, the court denied Do Not Harm’s motion to intervene without prejudice. The court found that Do Not Harm may not intervene as a matter of right, as it has not shown that the government will inadequately represent Do Not Harm’s interests. On March 17, 2025, the plaintiffs filed a reply in support of their motion for a preliminary injunction, arguing their claims meet standing requirements. The plaintiffs claim they are likely to succeed on the merits of their Fifth Amendment claim because the defendants have failed to explain numerous key terms that form the basis for plaintiffs’ vagueness challenge. The plaintiffs further claim they are likely to succeed on the merits of their First Amendment claim because the EOs allegedly have seven provisions that violate the First Amendment.
State of California et al. v. U.S. Department of Education et al., No. 1:25-cv-10548 (D. Mass. 2025): On March 6, 2025, the states of California, Massachusetts, New Jersey, Colorado, Illinois, Maryland, New York, and Wisconsin (collectively, “the plaintiff states”) sued the U.S. Department of Education, alleging that it “arbitrarily” terminated previously awarded grants authorized by Congress under the Teacher Quality Partnership (TQP) and Supporting Effective Educator Development (SEED) programs. The plaintiff States argue that the termination of the grants violates the Administrative Procedure Act (APA) and seek declaratory and injunctive relief to vacate and set aside the termination of all previously awarded grants under the TQP and SEED programs.
- Latest update: On March 6, the plaintiff States filed a motion for a temporary restraining order to enjoin the defendants from “implementing, giving effect to, maintaining, or reinstating under a different name the termination of any previously-awarded TQP and SEED grants.” The plaintiff States argued that the “abrupt and immediate” termination of the programs threatens “imminent and irreparable” harm. The motion highlighted the programs’ purpose to address a critical shortage of highly qualified and licensed K-12 teachers. The court granted the plaintiff States’ TRO request on March 10, 2025, finding that plaintiff States are likely to succeed on the merits of their claims that terminating the programs was arbitrary and capricious and adequately demonstrated that they would be irreparably harmed if temporary relief were not granted, and that the balance of the equities weighs heavily in favor of granting the TRO. The TRO requires the Department of Education to immediately restore the grants to the pre-existing status quo and enjoins it from implementing, maintaining, or reinstating the terminations. On March 17, 2025, the defendants filed a memorandum in opposition to the plaintiffs’ motion for a preliminary injunction, arguing that plaintiffs have not shown they are likely to succeed on the merits nor have they suffered any irreparable harm. The defendants claim they would be the ones suffering irreparable harm if the plaintiffs’ preliminary injunction is granted because government funds would be spent that cannot be recouped. The defendants also claim the court lacks jurisdiction to review the Department of Education’s decisions on how to allocate funds because the APA does not permit judicial review of “agency action” that “is committed to agency discretion by law.”

4. Title VI Discrimination:

Do No Harm v. American Chemical Society, No. 1:25-cv-0638 (D.D.C. 2025): On March 5, 2025, Do No Harm filed a suit against The American Chemical Society (ACS) in the U.S. District Court for the District of Columbia. The complaint alleges that ACS operates a program for Black, Hispanic, and indigenous applicants (“the ACS Scholars Program”) that excludes white and Asian applicants, thereby violating federal anti-discrimination laws. Do No Harm argues that the program’s racial criteria are not narrowly tailored to serve a compelling interest and that the ACS, as a recipient of federal financial assistance, is subject to Title VI’s prohibition against racial discrimination. Do No Harm seeks declaratory and injunctive relief, as well as nominal damages.
- Latest update: The docket does not yet reflect that the defendant has been served.

Legislative Updates:

On February 21, seven Republican members of the West Virginia House introduced House Bill 2795, which would withhold state funds from private entities that contravene “substantial public policies” of the state. The law would penalize a wide range of activities, including “[p]roviding any form of funds, financial aid, or benefits to an employee seeking to obtain an abortion” or gender-reassignment surgery; offering, requiring, hosting, or allowing trainings where any representative “states that there are more than two genders”; permitting “biological men to enter into any women’s restroom in a facility leased or owned by the private entity”; and, similarly, permitting “biological women to enter into any men’s restroom.” Related to DEI, the bill would withhold funds from private entities “[o]ffering, requiring, hosting, conducting, or allowing any [DEI] training session, class, program, seminar, speech, presentation, or similar meeting” or a training where a representative “makes a negative statement about a particular race, ethnicity, color, ancestry, or nationality”; considering race in employment decisions; requiring employees to engage in DEI programs; employing individuals “whose duties include” DEI programming; having policies designed to “influence the composition of its workforce” or any other policy implemented “on the basis of race, sex, ancestry, color, or national origin, except as required by federal law”; and from taking adverse actions based on an “employee’s political, social, or religious beliefs.” The law would withhold funds from any entity that promotes theories of “unconscious or implicit bias, cultural appropriation, allyship, transgenderism, microaggressions, microinvalidation, group marginalization, systemic oppression, structural racism or inequity, social justice, intersectionality, neopronouns, inclusive language, heteronormativity, gender identity or theory, privileged status based on race, color, ancestry, ethnicity, national origin, or sex.” The bill provides that the state Attorney General may enforce these limitations and directs the Attorney General to set up an anonymous whistleblower system. It also provides a private right of action to employees required to participate in any prohibited activity.

On February 20, Representative Don McLaughlin (R) of the Texas House of Representatives introduced House Bill 3075, which would withhold state funding from public and private entities engaged in “restricted ideological programs.” A “restricted ideological programs” is one that “supports, promotes, or is aligned with” any of the following: “initiatives, theories or policies that seek to alter social institutions through identity-based conflict”; advocacy related to “redistribution of resources based on perceived societal inequalities”; equity initiatives seeking “equal outcomes rather than equal opportunities based on demographic factors”; “nonbiological” definitions of gender and “policies supporting gender transition”; assertions that “gender identity is independent of biological sex”; theories assigning “privilege, oppression, or identity based primary on racial categorization”; and policies that prioritize “demographic representation over merit-based evaluation.” The bill provides for a civil penalty “not to exceed the amount of state money that the entity has received” if an entity “knowingly misrepresents” its activities to receive state funds. The bill also establishes a State Funding Integrity Review Division, which it directs to review all state-funded grants, contracts, and awards and to develop a “vetting process.” The bill does not apply retroactively to contracts entered into or renewed before the law’s effective date.

The following Gibson Dunn attorneys assisted in preparing this client update: Jason Schwartz, Mylan Denerstein, Zakiyyah Salim-Williams, Cynthia Chen McTernan, Zoë Klein, Cate McCaffrey, José Madrid, Jenna Voronov, Emma Eisendrath, Kristen Durkan, Simon Moskovitz, Teddy Okechukwu, Beshoy Shokralla, Heather Skrabak, Maryum Asenuga, Angelle Henderson, Kameron Mitchell, Lauren Meyer, Chelsea Clayton, Maya Jeyendran, Albert Le, Allonna Nordhavn, Felicia Reyes, Godard Solomon, Laura Wang, and Ashley Wilson.

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)

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)

We are pleased to provide you with Gibson Dunn’s ESG update covering the following key developments during February 2025. Please click on the links below for further details.

I. GLOBAL

2025 proxy voting updates reflect a less prescriptive approach to director diversity

Institutional Shareholder Services (ISS), Glass Lewis, and institutional investors State Street, BlackRock, and Vanguard released updates to their proxy voting policies for 2025 with implications for how investors intend to analyze director diversity.

ISS announced that it will no longer consider board gender and racial/ethnic diversity in its vote recommendations for the election of directors at U.S. companies in light of developments relating to diversity, equity, and inclusion practices. Instead, ISS will evaluate director vote recommendations based on other criteria in their Benchmark and Specialty and voting guidelines, such as independence, accountability, and responsiveness.
Glass Lewis issued a Supplemental Statement on Diversity Considerations at U.S. Companies (the Supplemental Statement) that modifies its approach to board diversity effective March 10, 2025. Glass Lewis will continue to apply existing policies, including its diversity expectations for boards (generally expecting 30% gender diversity and at least one director from an underrepresented community) and its expectation that companies disclose individual or aggregate demographic information for directors. The Supplemental Statement emphasizes, however, that existing policies are based on market practice and “operate on a ‘comply or explain’ basis,” so for companies that do not meet these expectations, Glass Lewis will consider any company disclosures relating to “rationale or context regarding the composition of [companies’] boards,” including any disclosure related to challenges resulting from the “US legal and policy environment.” Moving forward, the Supplemental Statement indicates that when recommending votes against a director related to diversity, Glass Lewis will offer clients two recommendations: “one that applies [the] Benchmark Policy approach as articulated in [the] 2025 Benchmark Policy Guidelines for the US Market, and one that does not consider gender or underrepresented community diversity as part of the recommendation.”
State Street’s policy removes numerical diversity targets and does not indicate that State Street may take negative voting action on board diversity, instead stating that “nominating committees are best placed to determining the most effective board composition and we encourage companies to ensure that there are sufficient levels of diverse experiences and perspectives represented in the boardroom.”
BlackRock’s policy removes numerical diversity targets and expectations relating to disclosure of the board’s approach to diversity, but BlackRock may still vote against the nominating committee members of S&P 500 companies if they are an outlier relative to “market norms,” noting that 98% of S&P 500 firms have 30% or greater diversity.
Vanguard’s revised policy softens its approach to board diversity but continues to highlight the need for a “sufficient breadth of skills, experience, perspective, and personal characteristics (such as age, gender, and/or race/ethnicity) resulting in cognitive diversity” and seeks disclosure of both the “range of skills, background, and experience” of each board member as well as “an understanding of the directors’ personal characteristics to enable shareholders to understand the breadth of a board’s composition.” Vanguard also may vote against a nominating committee chair if board composition or related disclosure is inconsistent with market norms.

II. UNITED KINGDOM

UK Government publishes National Biodiversity Strategy and Action Plan for 2030

On February 26, 2025, the UK Government published the National Biodiversity Strategy and Action Plan for 2030—the “Blueprint for Halting and Reversing Biodiversity Loss”—in support of its commitment to the UN COP15 biodiversity framework. The framework commits the UK to achieving all 23 of the Kunming-Montreal Global Biodiversity Framework targets.

Financial Conduct Authority (FCA) publishes update on extending sustainability disclosure requirements (SDR) to portfolio managers

On February 14, 2025, the FCA updated its webpage for Consultation Paper CP24/8 on extending the SDR and investment labelling regime to portfolio management. The FCA has announced it no longer intends to publish a policy statement in Q2 2025. The FCA acknowledged that the consultation feedback from CP24/8 highlighted that it is taking longer than expected for some asset managers to comply with the SDR and labelling regime, and the potential impact of this on portfolio managers. This consultation follows the publication of Consultation Paper CP22/20 and corresponding Policy Statement PS23/16 on SDR and investment labels, which introduced a package of measures for fund managers. The FCA indicated it will continue to reflect on the feedback received and will provide further information in due course.

UK Emissions Trading Scheme (UK ETS) updates

On February 12, 2025, the UK Government launched a consultation on extending the UK ETS beyond the end of Phase I at midnight on December 31, 2030. The consultation proposes options and seeks views on extension into a second phase and the length of such extension, and whether to allow banking of emissions allowances between the two phases. The consultation closes on April 9, 2025.

On February 5, 2025, the UK Government published the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 together with the explanatory memorandum. The Order, which came into force on March 3, 2025, amends legislation that gives effect to the UK ETS. The Order amends the start of the second allocation period for stationary installations from 2026 to 2027, making 2026 a standalone year, and provides for the calculation of free allocation in 2026. In addition, the Order introduces three technical and operational amendments to the scheme regarding data publication (requiring the UK ETS authority to publish full details of transactions between accounts in the registry after a three-year delay to promote transparency), data sharing (by adding limited exceptions to the prohibition on disclosure of UK ETS data to support the development and implementation of related policies and statutory functions of the Climate Change Committee), and extending the ultra-small emitter eligibility criteria so that installations with low emission levels that started operations between January 2, 2021 and January 1, 2024 can apply to be classed as ultra-small emitters during the period 2026 through 2030.

Financial Reporting Council (FRC) announces UK Stewardship Code (Code) signatories ahead of consultation closure

On February 11, 2025, the FRC announced there are now 297 signatories to the Code, representing £52.3 trillion in assets under management, including 199 asset managers, 77 asset owners, and 21 service providers. The FRC’s consultation, which closed on February 19, 2025, was launched on November 1, 2024 to review proposals to amend the Code with a focus on streamlining reporting requirements and reducing the burden on signatories. As reported in our November 2024 ESG Update, the key proposals include: (i) a revised definition of stewardship that emphasizes the need to create long-term sustainable value for clients and beneficiaries as a key outcome of good stewardship; (ii) a reordered and streamlined reporting process, including a new process for FRC evaluations that will focus on activities and outcomes rather than ongoing policies; (iii) two sets of Principles, one for asset owners and asset managers, and the other for service providers; and (iv) new guidance to support effective implementation and help signatories with the transition to the new reporting arrangements. Following the consultation, the FRC plans to publish an updated Code that will come into effect in 2026. Submission of reports in 2025 should continue to be in accordance with the 2020 Code.

FRC publishes final report on recommendations for the sustainability assurance market

On February 5, 2025, the FRC published its findings from the market study into the assurance of sustainability reporting—“Assurance of Sustainability Reporting Market Study: Final Report.” The report builds on the FRC’s Emerging Findings report published on October 15, 2024. The FRC has recommended three key actions to support the market’s development: (a) to establish a clear UK policy framework for sustainability assurance that aligns with international frameworks where appropriate; (b) to create a unified regulatory consolidating standard setting, oversight, enforcement, and market monitoring; and (c) to improve quality of available information on sustainability assurance.

UK Government relaunches mission-led Net Zero Council (Council)

On February 5, 2025, the UK Government relaunched the Council, in support of the Clean Energy Superpower Mission—with a plan to help sectors accelerate to net zero. The Council’s main functions will be to provide expert input on government net zero strategies, to drive decarbonization through convening and supporting senior leaders of high emitting businesses, and to engage the public by acting in their capacity as communicators to the wider business community and advocators for climate action. This initiative aligns with the Plan for Change to create jobs and economic opportunities.

FRC publishes thematic review of climate-related financial disclosures by AIM and large private companies

On January 21, 2025, the FRC published its thematic review of climate-related financial disclosures by AIM and large private companies. The review analyzes the first cycle of filings by in-scope entities under the mandatory reporting requirements under the Companies Act 2006. The thematic review concluded that preparers had endeavored to meet reporting requirements; however, there was inconsistent quality of reporting among the sample size (20 UK companies). The publication summarizes examples of good practice and indicates areas that preparers can improve on as reporting against these requirements matures in subsequent years.

III. EUROPE

First Omnibus Simplification Package (Omnibus Package) proposes to scale back sustainability reporting and due diligence obligations

On February 26, 2025, the European Commission presented the Omnibus Package, which proposes significant amendments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). For a detailed analysis, please see our Client Alert.

EU Commission proposes to simplify investment regulations to boost public and private investment

As part of the Omnibus Package, the European Commission also proposed simplifying the InvestEU Programme Regulation and the European Fund for Strategic Investments Regulation to reduce administrative burdens for businesses and citizens while enhancing competitiveness (Omnibus II), among other changes. The suggested amendments include reducing the frequency and scope of certain reports and exempting small final recipients, such as small and medium enterprises (SMEs), from specific rules. These measures are expected to save approximately EUR 350 million, with a particular benefit for SMEs. In addition, the proposal aims to boost investment capacity by around EUR 50 billion through a EUR 2.5 billion increase in the EU guarantee and the combined use of resources from three legacy programs. This is expected to drive growth and innovation in key sectors such as clean tech, digitalization, and sustainable infrastructure.

EU Commission launches “Clean Industry Deal”

On February 26, 2025, the European Commission published its proposal for the “Clean Industrial Deal” to accelerate decarbonization and boost clean technology industries. Among other things, the proposal includes a newly launched Action Plan on Affordable Energy to lower energy costs for industries, businesses, and households, while promoting the transition to a low-carbon economy. Furthermore, the Commission aims to increase demand for EU-made clean products by introducing sustainability, resilience, and “made in Europe” criteria in public and private procurements as part of the new Industrial Decarbonisation Accelerator Act. The Clean Industrial Deal also strives to increase access to financing by proposing an Industrial Decarbonisation Bank with a EUR 100 billion funding target and the adoption of a new Clean Industrial Deal State Aid Framework.

EU will introduce new recycling rules for fashion brands and cut down food waste

Following the initial proposal to revise the EU’s Waste Framework Directive in July 2023, EU lawmakers finally reached a provisional agreement for an updated directive on February 19, 2025. The amended rules aim to reduce textile waste by asking companies to establish extended producer responsibility schemes that will ultimately require textile producers and fashion brands to pay for the collection and recycling of their clothing. The new law will apply to both EU companies and non-EU companies who place products on the EU market. In addition, EU lawmakers also agreed to introduce binding food waste reduction targets that need to be reached by December 31, 2030: 10% in food processing and manufacturing and 30% per capita in retail, restaurants, food services, and households. As a next step, the EU Parliament and the Council will need to formally adopt and endorse the agreement.

EU Platform on Sustainable Finance (PSF) proposes to reduce EU taxonomy reporting burden

On February 5, 2025, the PSF, which advises the EU Commission on the development of sustainable finance policies, published its recommendations for reducing the EU Taxonomy reporting burden. The proposal aims to simplify compliance, improve data transparency, and ease administrative challenges for businesses while still maintaining sustainability goals. PSF suggested, in part, introducing a materiality principle applicable to all entities, defining clear guidelines for the use of estimates within the taxonomy framework, and refining the “do no significant harm” (DNSH) assessment. The latter was already taken up by the EU Commission in its Omnibus Package, which explicitly seeks to simplify the DNSH criteria.

CSRD transposition

No countries transposed the CSRD in February. In light of the Omnibus Package, we expect that further implementation will be paused until the proposed directives are adopted by the EU Parliament and the Council. Furthermore, it should be taken into account that potential amendments to the CSRD would need to be transposed into national law as well. An overview of the current transposition status of CSRD into national laws can be found here.

IV. NORTH AMERICA

Science Based Targets initiative (SBTi) releases draft of new standard

On March 18, 2025, SBTi released the initial draft of its revised Corporate Net-Zero Standard to solicit feedback from businesses and other stakeholders. The revision’s goal is to align with the latest climate science and “ensure that th[e] standard continues to enable companies to set and deliver ambitious, science-based targets consistent with achieving net-zero emissions at the global level by 2050.” Among other changes, the revised standard includes the following: (i) separation of Scope 1 and Scope 2 targets (including to encourage low-carbon electricity targets), (ii) additional flexibility in setting Scope 3 targets (including options to set targets for green procurement and revenue generation, rather than emissions reductions, and a focus on emissions-intensive activities), (iii) opportunities to use carbon removal for unabated and residual emissions, (iv) a process to track and report progress against targets, and (v) streamlined requirements for medium-sized companies in developing markets and SMEs. The consultation period is open until June 1, 2025.

Senate bill and letters from U.S. state officials and federal lawmakers regarding impacts of CSRD and CSDDD on U.S. businesses

On March 12, 2025, U.S. Senator Bill Hagerty introduced the draft Prevent Regulatory Overreach from Turning Essential Companies into Targets Act (Protect USA Act), a bill aimed at safeguarding U.S. businesses from the extraterritorial enforcement of foreign sustainability due diligence regulations. The draft bill would prohibit companies in strategic industries, particularly those involved in natural resource extraction and industrial production, from complying with foreign sustainability frameworks that exceed U.S. legal requirements, including, notably, foreign subsidiaries of U.S.-based companies. While the proposed bill explicitly refers to the CSDDD, which imposes extensive environmental and social due diligence obligations on companies operating or doing business in the EU, the wording of the bill suggests that other foreign sustainability regulations, such as the CSRD, could also be covered. It also proposes to penalize persons who take adverse actions against entities integral to the national interests of the United States related to a foreign sustainability due diligence regulation, creating a private right of action against any person who violates this prohibition. Because the bill has been introduced in the Senate, it will likely require approval by 60 Senators to overcome a potential filibuster.

Twenty-one state officials sent a letter to President Trump on February 25, 2025, asking the United States Trade Representative to investigate CSRD, CSDDD, and related directives under Section 301 of the Trade Act of 1974 and “consider the impact of these directives as part of any overarching trade initiatives” with the EU. The state officials claim that EU sustainability directives are overreaching and burdensome to U.S. economic interests. Similarly, in a letter dated February 26, 2025, Senate Banking Committee Chairman Tim Scott and four other Republican lawmakers urged the U.S. Department of Treasury and National Economic Council to “support European calls to indefinitely pause CSDDD,” find that its “extraterritorial application is untenable and detrimental to global productivity,” that civil liability under CSDDD should be removed, and clarify that “U.S. companies are not bound by net zero transition plans akin to those imposed on EU firms.”

U.S. Environmental Protection Agency (EPA) set to reconsider 2009 endangerment finding on greenhouse gases

As part of his executive order titled “Unleashing American Energy,” President Trump directed the Administrator of the EPA to submit recommendations “on the legality and continuing applicability of” the EPA’s 2009 endangerment finding. The endangerment finding declared that greenhouse gases pose a threat to public health and welfare and serve as the basis for EPA greenhouse gas regulations under the Clean Air Act. On March 12, 2025, part of a larger EPA announcement of the “greatest and most consequential day of deregulation in U.S. history,” new EPA administrator Lee Zeldin has recommended reconsideration of the endangerment finding and the regulations that rely on the finding, signaling the potential deregulation of greenhouse gas emissions at the federal level.

For further details on the EPA’s deregulatory actions and the effect on the regulatory environment for light- and heavy-duty motor vehicles and off-road engines, see our recent Client Alert.

Texas judge upholds Biden Administration Labor Department ESG fiduciary rule

In a memorandum opinion and order issued on February 14, 2025, the U.S. District Court for the Northern District of Texas held that the U.S. Department of Labor’s rule allowing fiduciaries to consider ESG and other collateral factors as a tiebreaker when deciding between competing investment options does not violate the Employment Retirement Income Security Act of 1974 (ERISA). This rule was finalized by the Biden Administration’s Labor Department in 2022 and overturned 2020 guidance from the Trump Administration that restricted the consideration of non-pecuniary factors such as ESG in investment decisions. Specifically, the court found that the rule is still valid under the Loper Bright ruling, which reversed Chevron deference, because the rule “does not permit a fiduciary to act for other interests than the beneficiaries’ or for other purposes than the beneficiaries’ financial benefit.”

Litigation related to freeze on distribution of federal funds

Under the “Unleashing American Energy” executive order, President Trump also directed the federal government to halt the disbursement of funds appropriated through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. In response, Pennsylvania Governor Josh Shapiro, along with Pennsylvania agencies such as the Pennsylvania Department of Environmental Protection, filed a lawsuit on February 13, 2025 claiming that federal agencies are unlawfully restricting these agencies from accessing Congressionally-appropriated federal funds in violation of Constitutional separation of powers.

Separately, in response to a January 27 memorandum from the U.S. Office of Management and Budget that instituted a near-total federal funding freeze, 22 states, the District of Columbia, and the governor of Kentucky sought and were granted a temporary restraining order blocking the federal funding freeze, which was extended indefinitely through a preliminary injunction on March 6, 2025.

Coalition of 22 state attorneys general challenge New York’s Climate Change Superfund Act

On February 11, 2025, 22 state attorneys general filed a lawsuit challenging New York’s Climate Change Superfund Act (Superfund Act). The Superfund Act, described in our December 2024 ESG Update, was signed into law last December and imposes strict liability on fossil fuel companies for greenhouse gas emissions, requiring these companies to contribute a total of $75 billion to a climate resilience fund through 2050. The lawsuit argues that the Superfund Act violates the federal constitution, the New York constitution, and federal law. Specifically, among other claims, the suit alleges that the Superfund Act violates the Supremacy Clause of the U.S. Constitution because it is preempted by the Clean Air Act and violates the dormant Commerce Clause of the U.S. Constitution because it targets energy producers headquartered in other states by imposing “clearly excessive penalties.”

Vermont passed a similar law in May 2024 that has also been the subject of litigation. In that case, plaintiffs allege similar claims, including that the state law is preempted by the federal Clean Air Act.

District court dismisses two claims in California’s climate disclosure law legislation

As covered in our January 2024 ESG Update, in Chamber of Commerce v. California Air Resource Board, the U.S. Chamber of Commerce, California Chamber of Commerce, and other business and trade organizations are challenging California’s Senate Bill No. 253 (SB 253) and Senate Bill No. 261 (SB 261), which require greenhouse gas emissions reporting and climate-related risk reporting for large companies doing business in California. On February 3, 2025, the U.S. District Court for the Central District of California granted California’s motion to dismiss two of the plaintiffs’ three claims relating to the Supremacy Clause and the Dormant Commerce Clause of the U.S. Constitution.

The Court dismissed both claims as they relate to SB 253 without prejudice, holding that there were no justiciable claims because SB 253 does not impose requirements on plaintiffs or the companies they represent but instead directs the California Air Resources Board to adopt implementing regulations. As to SB 261, the first dismissed claim centered around whether the laws are invalid extraterritorial regulations under the Dormant Commerce Clause. The court did not find SB 261 to be discriminatory as to out-of-state competitors and dismissed this claim without prejudice. The second dismissed claim argued that the laws were preempted by the federal Clean Air Act under the Supremacy Clause. The Court dismissed this claim with prejudice, holding that plaintiffs did not identify a federal law or Constitutional provision that preempts SB 261’s disclosure requirement or supports the assertion that, by requiring disclosure, SB 261 regulated emissions and should be preempted.

The sole remaining claim alleges that the laws violated the First Amendment of the federal Constitution. On February 25, plaintiffs requested a preliminary injunction based on this remaining claim.

Introduction of new state-level climate laws

Several states, including Colorado, Illinois, Maine, New Jersey, and New York have introduced new climate disclosure bills that generally would require companies with more than $1 billion in annual revenues to report their Scopes 1, 2, and 3 greenhouse gas emissions, similar to California’s SB 253. New York has also introduced a bill requiring disclosure of climate-related financial risk, similar to California’s SB 261. In addition, California and Illinois have each introduced bills that would create a private course of action for individuals and businesses harmed by climate disasters, allowing them to bring suit against a “responsible party,” which is generally an entity engaging in misleading practices in connection with fossil fuel products (for purposes of California’s law) or an entity that emitted a product with total greenhouse gas emissions of at least one billion metric tons of carbon dioxide (for purposes of Illinois’s law). Each of these bills has been assigned to a committee and thus has yet to be voted upon by the respective state legislatures.

In case you missed it…

The Gibson Dunn Workplace DEI Task Force has published its updates for February summarizing the latest key developments, media coverage, case updates, and legislation related to diversity, equity, and inclusion, including dedicated alerts describing:

a lawsuit filed by the State of Missouri against Starbucks alleging that Starbucks is violating state and federal anti-discrimination laws;
potential DEI directive enforcement insights from an Office of Personnel Management memorandum; and
the injunction against significant aspects of anti-DEI executive orders.

More information on executive orders and other announcements from the White House is available in our White House Executive Order Tracker. A collection of our analyses of the legal and industry impacts from the presidential transition is available here.

V. APAC

Hong Kong Monetary Authority shares ESG-related insights on 2025/26 Budget and issues guidance on climate-related risk management

On February 27, 2025, the Hong Kong Monetary Authority (HKMA) shared its insights on the upcoming 2025/26 fiscal budget where it highlighted plans for new government bond issuances aimed at raising funds for green infrastructure and other sustainable finance initiatives. In the same month, the HKMA also issued the Adoption Practice Guide on Greentech in the Banking Sector, which requires banks to integrate climate risk factors into their credit and market risk models, enhance internal controls, and improve the disclosure of climate-related financial risks. These initiatives are part of the Hong Kong Government’s broader effort to integrate fiscal policy with sustainability objectives, driving the transition toward a resilient, low-carbon economy.

Hong Kong Mandatory Provident Fund Schemes Authority tightens ESG disclosure standards for pension fund managers

On February 24, 2025, the Hong Kong Mandatory Provident Fund Schemes Authority (MPFA) introduced stricter ESG disclosure rules for 12 major Hong Kong pension fund managers. The new guidelines require managers to clearly detail their ESG investment strategies and risk management processes in their communications, consistently measure ESG factors, and report ESG achievements in their annual governance reports. According to the MPFA, these changes affect 47 ESG-related funds managing assets worth HK$36.6 billion (~US$4.71 billion).

China releases framework for sovereign green bonds

On February 20, 2025, China’s Ministry of Finance introduced a framework for sovereign green bonds, enabling offshore issuance and global investment in China’s green initiatives. Funds raised will support eligible green projects in the central fiscal budget, targeting climate change mitigation, pollution control, resource protection, and biodiversity preservation. The initiative seeks to expand high-quality green bond offerings and attract international capital to bolster China’s low-carbon development.

China accelerates reform to market-based renewable energy pricing

On February 10, 2025, China announced a significant reform to its renewable power pricing system. The National Development and Reform Commission and the National Energy Administration issued a joint notice to transition from a fixed pricing system to a market-based pricing system. This reform focuses on three key aspects: allowing market forces to determine pricing, establishing a sustainable pricing and settlement mechanism, and adopting differentiated policies for existing and new projects. The new policy aims to accelerate the construction of a modern power system and ensure the sustainable development of renewable energy.

Hong Kong sets 2025 priorities for sustainable finance

On February 6, 2025, the Green and Sustainable Finance Cross-Agency Steering Group, established by the Hong Kong financial regulators, published its three priorities to advance sustainable finance in Hong Kong. These include enhancing sustainability disclosure by supporting ISSB Standards and developing an assurance framework, strengthening Hong Kong’s role as a sustainable finance hub by expanding the Hong Kong Taxonomy and advancing carbon trading, and leveraging data and technology through the launch of the Hong Kong Green Fintech Map and improvements to public sustainability data tools.

New Zealand Parliament debates “anti‑ESG” bill

On or around February 4, 2025, a controversial Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill was introduced in the New Zealand Parliament seeking to prevent registered banks from refusing to provide banking services on ESG grounds. The bill specifies that a bank must not withdraw or refuse to provide services “except for commercial reasons” and creates an offense that provides for fines of up to NZ$500,000 for each offense.

The following Gibson Dunn lawyers prepared this update: Lauren Assaf-Holmes, Susy Bullock, Carla Baum, Alexa Bussmann, Mitasha Chandok, Becky Chung, Mellissa Duru, Ferdinand Fromholzer, Michelle Kirschner, Julia Lapitskaya, Vanessa Ludwig, Babette Milz, Johannes Reul, Meghan Sherley, Helena Silewicz*, and QX Toh.

Gibson Dunn 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, the authors, or any leader or member of the firm’s ESG: Risk, Litigation, and Reporting practice group:

ESG: Risk, Litigation, and Reporting Leaders and Members:
Susy Bullock – London (+44 20 7071 4283, sbullock@gibsondunn.com)
Perlette M. Jura – Los Angeles (+1 213.229.7121, pjura@gibsondunn.com)
Ronald Kirk – Dallas (+1 214.698.3295, rkirk@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
Michael K. Murphy – Washington, D.C. (+1 202.955.8238, mmurphy@gibsondunn.com)
Robert Spano – London/Paris (+33 1 56 43 13 00, rspano@gibsondunn.com)

*Helena Silewicz is a trainee solicitor in London and not admitted to practice law.

Sitting down with The Wall Street Journal, Scott Greenberg discussed the growing frequency of liability management exercises (LMEs), noting that what was once a rare and controversial event—occurring only once or twice a year—has become much more common.

Read the full article in The Wall Street Journal (subscription required).

Featured in a three-part series by Delaware Business Court Insider on Delaware Senate Bill 21, Jason Mendro breaks down the bill’s significance, noting that while it brings much-needed clarity to corporate law, it is also sparking debate. He emphasizes that clear legal boundaries benefit all parties involved, regardless of their stance on the issue.

Read Part 1, Part 2, and Part 3 in the Delaware Business Court Insider [PDFs].

On March 19, 2025, the staff of the U.S. Securities and Exchange Commission (the SEC Staff) updated its Marketing Compliance Frequently Asked Questions with respect to the Advisers Act Marketing Rule[1] (the Marketing Rule) to issue new interpretive guidance (the FAQ) significantly easing requirements with respect to the presentation of gross and net investment performance.

In particular, the SEC Staff indicated that (i) it is no longer necessary to show net performance on an investment-by-investment basis, and (ii) certain other “portfolio characteristics” do not need to be presented on both a gross and net basis; in each case so long as certain parameters are met.

(i) Net Performance Need not be Shown at the Investment Level (with Certain Caveats):

Following the adoption of the Marketing Rule and a subsequent FAQ in which the SEC Staff indicated that net performance is required to be presented for individual investments or groups of investments extracted from a single portfolio (collectively, Extracted Performance) where gross performance is shown, sponsors have struggled to comply with this requirement, frustrated by the fact that fees and expenses are primarily charged at the fund (not investment) level. The SEC Staff’s new guidance reverses this position, permitting sponsors to present performance information the way that many did prior to the Marketing Rule’s adoption, with Extracted Performance displayed only on a gross basis, provided it is displayed alongside fund-level gross and net returns. The following parameters must be met when displaying Extracted Performance on a gross but not net basis:

1. The Extracted Performance must be clearly identified as gross performance.
2. The Extracted Performance must be accompanied by the total portfolio’s gross and net performance.
3. Gross and net performance of the total portfolio must be presented with at least equal prominence to, and in a manner designed to facilitate comparison with, the Extracted Performance .
4. Gross and net performance of the total portfolio must be calculated over a period that includes the entire period over which the Extracted Performance is calculated.

We note that the requirement to show net performance with equal prominence to gross performance still applies to the performance of groups of investments extracted from multiple portfolios that is considered “hypothetical performance” (i.e., any performance results that were not actually achieved), as well as targeted and projected returns.

The FAQ raises the question of how sponsors should handle individual investment performance in case studies designed to spotlight certain investments on one page of a pitchbook or quarterly report, or investment-level performance of pre-fund investments (which may have been structured as single asset vehicles), which sponsors may wish to aggregate with other pre-fund investments to show how such investments would have performed had they been part of a hypothetical fund/investment program.

While a more conservative reading of the Marketing Rule and the FAQ would suggest that fund-level gross and net performance should be included on the same page as any case study showcasing an investment’s individual gross performance, footnote 6 of the FAQ helpfully clarifies: “In the staff’s view, the gross and net performance of the total portfolio does not need to be presented on the same page of the advertisement as the extracted performance, provided that the presentation facilitates comparison between the gross and net performance of the total portfolio and the extracted performance. For example, in the staff’s view, presenting the gross and net performance of the total portfolio prior to the extracted performance in the advertisement could also facilitate such comparisons and help ensure they are presented with at least equal prominence to the performance of the extract.” This guidance gives sponsors actionable steps with which they can comply, and suggests that organizing a private placement memorandum or pitchbook with the full track record first, followed by individual case studies, will likely be acceptable under the current guidance. However, sponsors must continue to be mindful of the Marketing Rule’s general “fair and balanced” requirement whenever individual investment returns are presented.

As it relates to investments made prior to the commencement of an actual fund, if a sponsor shows any such investments in a series, the Marketing Rule generally requires that they show all related investments (in other words, no highlighting only home runs), and in the absence of a fund to show “fund-level” performance, our view is that it likely remains necessary to show investment-level net performance (including applicable fees, which should be footnoted to highlight that they may not be comparable to those charged by the fund).

If a sponsor seeks to aggregate performance from pre-fund investments into a hypothetical fund, such performance should be clearly labeled as hypothetical and counsel should be consulted to draft appropriate disclosure regarding all calculations and assumptions made, discuss the presentation of investment-level and “fund”-level returns, and to confirm that all relevant performance has been included.

(ii) “Portfolio Characteristics” Need not Show Net Performance (with Certain Caveats):

In addition, the SEC Staff stated in an FAQ titled “Portfolio or Investment Characteristics” that certain presentations of gross “portfolio characteristics” (e.g., yield, coupon rate, contribution to return, volatility, sector or geographic returns, attribution analyses, the Sharpe ratio, the Sortino ratio, and other similar metrics)[2] do not need to be accompanied by a net equivalent, so long as:

1. The gross characteristic is clearly identified as being calculated without the deduction of fees and expenses.
2. The characteristic is accompanied by a presentation of the total portfolio’s gross and net performance consistent with the requirements of the Marketing Rule.
3. The total portfolio’s gross and net performance is presented with at least equal prominence to, and in a manner designed to facilitate comparison with, the gross characteristic; and
4. The gross and net performance of the total portfolio is calculated over a period that includes the entire period over which the characteristic is calculated.

Sponsors utilizing such metrics should consult with counsel to determine appropriate footnotes but no longer need to attempt (sometimes impossible) calculations in an effort to generate a “net performance” number associated with them.

We note that the recent FAQ did not withdraw the SEC Staff’s previous February 6, 2024 FAQ guidance on showing net unlevered performance, described in our prior client alert on the subject. In that FAQ, the SEC Staff advised, among other things, that private fund sponsors that wish to exclude the impact of subscription credit facilities when showing a gross internal rate of return in their performance track records must also exclude such impact when showing the corresponding net internal rate of return.

[1] Rule 206(4)-1 under the Investment Advisers Act of 1940, as amended.

[2] The SEC Staff clarified in FN 8 of the FAQ that this list does not include “total return, time-weighted return, return on investment (RoI), internal rate of return (IRR), multiple on invested capital (MOIC), or Total Value to Paid in Capital (TVPI), regardless of how such metrics are labelled in the advertisement.”

The following Gibson Dunn lawyers prepared this update: Kevin Bettsteller, Greg Merz, and Shannon Errico.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding the issues and considerations discussed above. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Investment Funds practice group, or the authors:

Investment Funds Contacts:
Kevin Bettsteller – Century City (+1 310.552.8566, kbettsteller@gibsondunn.com)
Albert S. Cho – Hong Kong (+852 2214 3811, acho@gibsondunn.com)
Candice S. Choh – Los Angeles (+1 310.552.8658, cchoh@gibsondunn.com)
Shannon Errico – New York (+1 212.351.2448, serrico@gibsondunn.com)
John Fadely – Singapore (+65 6507 3688, jfadely@gibsondunn.com)
A.J. Frey – Washington, D.C./New York (+1 202.887.3793, afrey@gibsondunn.com)
Shukie Grossman – New York (+1 212.351.2369, sgrossman@gibsondunn.com)
James M. Hays – Houston (+1 346.718.6642, jhays@gibsondunn.com)
Kira Idoko – New York (+1 212.351.3951, kidoko@gibsondunn.com)
Gregory Merz – Washington, D.C. (+1 202.887.3637, gmerz@gibsondunn.com)
Eve Mrozek – New York (+1 212.351.4053, emrozek@gibsondunn.com)
Roger D. Singer – New York (+1 212.351.3888, rsinger@gibsondunn.com)
Edward D. Sopher – New York (+1 212.351.3918, esopher@gibsondunn.com)
C. William Thomas, Jr. – Washington, D.C. (+1 202.887.3735, wthomas@gibsondunn.com)
Kate Timmerman – New York (+1 212.351.2628, ktimmerman@gibsondunn.com)