5th Circuit Vacates Stay on CTA's Reporting Requirements
The U.S. Court of Appeals for the 5th Circuit on Dec. 26 vacated its stay of an injunction on the Corporate Transparency Act's (CTA's) beneficial ownership information reporting requirements. After staying the injunction on the grounds that the government would likely succeed in defending the CTA's constitutionality (see 2412240020), the court reversed course "to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments" (Texas Top Cop Shop v. Merrick Garland, 5th Cir. # 24-40792).
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As part of its initial decision to stay the injunction, the appellate court granted an expedited briefing schedule for the substantive challenge. The sped-up schedule remained in place.
A Texas court first enjoined the reporting requirements after finding the law intrudes on individual states' rights under the Ninth and Tenth amendments, compels speech and harms the right of association under the First Amendment, and violates the Fourth Amendment by "compelling disclosure of private information" (see 2412240020).
The 5th Circuit initially reversed the injunction after finding that the challenge would likely fail, given that reporting requirements squarely fall within over a century of U.S. Supreme Court jurisprudence regarding Congress' power under the commerce clause. The businesses challenging the act dropped their bid for en banc review of the stay order after the appellate court reversed course.