In January 23, 2025, the U.S. Supreme Court issued an order in McHenry v. Texas Top Cop Shop, Inc.[1] and granted a stay of the preliminary injunction issued by the federal district court, thereby eliminating that injunction’s impediment to enforcement of the reporting requirements of the Corporate Transparency Act (“CTA”) by the Financial Crimes Enforcement Network (“FinCEN”) while the litigation as to the CTA’s constitutionality proceeds.[2]
The Court’s order reads thus:
[A]pplication [No. 24A653] for stay presented to Justice Alito and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24-cv-478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought. Should certiorari be denied, this stay shall terminate automatically.[3]
In his concurring opinion, Justice Gorsuch wrote, “I agree with the Court that the government is entitled to a stay of the district court’s universal injunction. I would, however, go a step further and, as the government suggests, take this case now to resolve definitively the question whether a district court may issue universal injunctive relief.”[4] Justice Jackson, dissenting from the granting of the stay, wrote:
However likely the Government’s success on the merits may be, in my view, emergency relief is not appropriate because the applicant has failed to demonstrate sufficient exigency to justify our intervention. I see no need for this Court to step in now for at least two reasons. First, the Fifth Circuit has expedited its consideration of the Government’s appeal. Second, the Government deferred implementation on its own accord—setting an enforcement date of nearly four years after Congress enacted the law—despite the fact that the harms it now says warrant our involvement were likely to occur during that period. The Government has provided no indication that injury of a more serious or significant nature would result if the Act’s implementation is further delayed while the litigation proceeds in the lower courts. I would therefore deny the application and permit the appellate process to run its course.[5]
However, while the application for stay to the Supreme Court was pending, a second decision in the same federal district court was issued—and in that case, Smith v. Department of the Treasury,[6] a different injunction was imposed. That case is discussed below, but as of this writing, and notwithstanding certain published reports to the contrary,[7] enforcement of the CTA’s Reporting Rules[8] continues to be stayed by the separate preliminary injunction issued in Smith.[9] At this juncture, that is about all we know, which means that there remains significant uncertainty.
