Professor Anthony Sabino, J.D., Analyzes the Recent Federal Court Decision on Corporate Transparency

https://www.law.com/nationallawjournal/2025/02/18/corporate-transparency-act-up…

By Alyssa Aquino
Amid fast-moving litigation over requirements for businesses to identify their owners, the Maine
federal court upheld the Corporate Transparency Act, saying federal lawmakers could mandate
the disclosures under the Constitution’s Commerce Clause.
Judge Stacey Neumann of the U.S. District Court for the District of Maine found that lawmakers
appropriately used their broad authority over interstate commerce to enact the CTA, as the law
necessarily regulates economic activity.
“The existence of a corporate entity is ‘in any sense of the phrase, economic activity,’” the judge
said on Feb. 14. “The mere existence of a corporate entity—even one engaging in no commercial
transactions with no assets to its name—has concrete economic value.”
In so ruling, Neumann granted the U.S. Department of the Treasury summary judgment over a
challenge to the CTA, a statute that has been under numerous legal attacks and seen courts around
the country splitting on its constitutionality. Federal judges in Oregon and Virginia have
signaled that they find the law constitutional. Federal courts in Texas and Alabama have found
otherwise.
Boyle is represented by attorneys from the Maine boutique law firm, Marcus Clegg. One of his
attorneys, Daniel Rosenthal, told the National Law Journal that his team has not yet decided
whether they would appeal Neumann’s decision to the First Circuit.
The CTA has been under intense legal scrutiny since its passage during the pandemic, which was
part of an effort from lawmakers to crack down on shell companies set up for money laundering
or fraud. If allowed to go into effect, the CTA would require potentially millions of businesses to
disclose their “beneficial owners” for a nationwide registry.
The Supreme Court has also briefly waded in the battle to pause an injunction order from Texas
U.S. District Judge Amos Bazzant III, which temporarily barred the federal government from
enforcing the law.
That order, however, only covered one injunction. The law currently remains on hold based on a
separate, nationwide injunction, from U.S. District Judge Jeremy Kernodle. Following the
change in administrations, federal attorneys have said they planned on appealing Kernodle's
order.
Neumann acknowledged the rapidly evolving legal background in her Feb. 14 order, including
while reviewing whether Maine businessman, Boyle, had standing to challenge the law.
Although the Treasury cannot currently enforce the law’s reporting requirements, Boyle can still
pursue his case, as there is a credible threat of prosecution in the future, the judge said.
Treasury didn’t respond to a Tuesday request for comment.
Anthony Sabino, a law professor at St. John’s University, told the National Law Journal that he
was “very surprised” by Neumann’s ruling.
“The law has been dissected at length and in excruciating detail by southern district court judges,
who have said the law is unconstitutional,” Sabino said. But the upshot is “[the law] will
eventually make its way up to the Supreme Court—the sooner, the better,” he said.
Sabino predicted that the justices would ultimately strike down the CTA, even though they
previously removed Bazzant’s block. While the decision to stay the injunction omitted the
justices’ legal reasoning, Sabino felt that a dissent from Justice Kentanji Brown Jackson and a
concurrence from Justice Samuel Alito provided clues as to why the high court acted.
“Justice Gorsuch made it very plain he’s concerned with district court judges imposing
nationwide injunctions,” he said. “Justice Jackson… seemed more concerned with district court
judges binding others throughout the nation. That’s why I think they took this action, that is
completely separate and apart from the CTA.”