On Thursday, the Supreme Court agreed to reinstate federal anti-money laundering laws at the request of the federal government as a legal challenge continues in a lower court.
The emergency stay of the court temporarily halts an injunction issued by a federal judge that had blocked the Corporate Transparency Act, which would have required millions of businesses to divulge personal information about owners.
Justice Ketanji Brown Jackson dissented.
The Justice Department of the Biden era asked the high court to intervene late last month, and it issued its decision just three days after the inauguration of President Trump. Trump’s Justice Department didn’t withdraw the application but Trump was against the new law during his first White House tenure.
The CTA, which will be passed as part of the annual Defense Bill in early 2021 would require that millions of small-business owners turn over their personal information to the Financial Crimes Enforcement Network (FCEN), which aims to combat money laundering and other crimes.
Business and anti-regulatory interests have been focusing on the dispute to delay the deadline.
The case is now being sent back to the 5th U.S. The 5th Circuit Court of Appeals will now weigh in on the Justice Department’s defense of law as a valid use of Congress’s constitutional authority over interstate trade. The order of the justices paves the way for officials in the interim to implement the disclosure requirements, which were set to take effect this month.
Jackson, the sole justice appointed by former President Biden, was the only one to publicly dissented, stating that the government had not shown “sufficient urgency” and noting that the 5th Circuit heard the government’s case on a fast-track schedule.
Jackson wrote: “The Government deferred the implementation of the law on its own, setting an enforcement date nearly four years after Congress passed the law. This is even though it believes that harms that warrant our involvement would have occurred during this period.”
The Government has not indicated that a greater or more significant injury would occur if the Act was implemented further while litigation continues in lower courts. “I would deny the request and allow the appeals process to take its course,” she added.
The Justice Department stated that the suspension of the deadline would result in irreparable damage.
The government filed a Supreme Court application stating that the act “prevents the government from carrying out a duly passed Act of Congress”, hinders efforts to protect national security and prevent financial crimes, undermines the United States’ abilities to pressure other countries to improve anti-money laundering systems, and severely disrupts ongoing implementation of Act.”
The Supreme Court rejected Prelogar’s alternative suggestion to move the case into the Justices’ regular docket to comment more broadly on the federal district judges’ power to block laws across the country.
The “universal injunctions”, a trend that has become increasingly common, are used to undermine laws and regulations enacted by both Democratic presidents and Republican ones. Taking up this issue could have had major legal implications for future administrations.
Justice Neil Gorsuch said that he would have entertained the question. Justice Gorsuch was Trump’s initial appointee and had previously expressed concern over such injunctions.
“I agree that the District Court’s injunction is a universal one. I also agree with the Court. “I would go further, and as suggested by the government, I would take this case to definitively resolve the question of whether a district judge can issue universal injunctive remedies,” Gorsuch wrote, in a short, written concurrence.
A firearms dealer, a dairy farm, an IT company, its owner, the National Federation of Independent Business, and the Libertarian Party of Mississippi challenged the Corporate Transparency Act, saying it exceeded the authority of Congress.
The government’s request for emergency relief came after a series of whiplash rulings by the conservative 5th Circuit. This circuit eventually upheld a federal district court’s decision blocking the new law, until the full appeal of the government is decided.
Plaintiffs in their Supreme Court filings highlighted the political background of Trump’s taking office. In his last days as president, Trump vetoed a defense bill that contained the new corporate disclosure requirements, which led to the first time Congress overrode a veto.
“A more plausible explanation for the new urgency of the issue is that the incoming government might delay the deadline. This would only be possible if the deadline has not yet passed. The plaintiffs’ lawyers wrote that the mandate must be implemented.
The bell can’t be unrung once existing companies are forced to reveal their beneficial owners.
The Biden administration’s emergency application also received significant outside opposition from business groups like the National Small Business Association, the National Association of Wholesaler-Distributors, and the National Retail Federation.
More than a dozen Republican Members of Congress, including Advancing American Freedom (a conservative political advocacy organization founded by former Vice-President Mike Pence), also voiced opposition.
In a brief for friends of the court, 25 Republican attorneys general from across the country wrote: “Make no mistake – this stay application is an aggressive attempt to gain vast power over American small business (and others).”
