UPDATE

On February 19, the White House unveiled an interim final rule (IFR) to rescind all National Environmental Policy Act (NEPA) implementing regulations that the Council on Environmental Quality (CEQ) has promulgated since 1977. The IFR takes effect immediately and bypasses the usual public notice and comment process for rulemakings by invoking the “good cause” exception in the Administrative Procedures Act (APA)[1], although its publication in the Federal Register will trigger a 30-day public comment period.

Observers have long expected that the new administration would revisit the NEPA rules. The first Trump administration promulgated the first significant overhaul of CEQ’s NEPA regulations since they were initially codified in 1978. However, the full and formal repeal of CEQ’s NEPA regulations is both remarkable and somewhat predictable in the wake of Marin Audubon v. Federal Aviation Administration, No. 23-1067 (D.C. Cir. 2024), which jolted the environmental legal world by holding that CEQ never had the authority to promulgate NEPA regulations in the first place, and the second Trump administration’s “day one” orders to streamline environmental reviews for certain energy projects and revoke President Carter’s 1977 EO issued that originally directed CEQ to issue NEPA regulations. A subsequent decision in Iowa v. Council on Envtl. Quality, 1:24-cv-089 (D.N.D. Feb. 3, 2025) followed the lead of Marin Audubon in vacating the Biden administration’s Phase 2 NEPA rule based on CEQ’s lack of regulatory authority, and also limited the types of actions CEQ can take to set policy and priorities for other federal agencies in implementing NEPA. These events constituted the bulk of the Trump administration’s justification for the IFR.

Accompanying the IFR is a February 19, 2025 memorandum to all federal agencies directing them to do the following:

• Revise or establish new NEPA implementation procedures consistent with the “Unleashing American Energy” executive order.

• Not delay pending NEPA analyses while those NEPA procedures are being updated.

• “Consider voluntarily relying on [the soon-to-be-rescinded] regulations in completing ongoing NEPA reviews or defending against” legal challenges.

Troutman Insights:

While this action follows naturally from the developments described in our February 6 alert, it introduces new regulatory uncertainty and an obvious litigation target.

• NEPA Reviews: As we noted previously, federal agencies currently are in limbo regarding what regulations, if any, govern their statutorily mandated NEPA reviews. The Trump administration’s suggestion that agencies “voluntarily” continue to follow the old (and presumptively invalid) regulations for existing NEPA reviews and litigation appears to be a recognition that some guidance is needed while a new regulatory regime is being formulated. However, the voluntary nature of this directive could result in inconsistent approaches across agencies.

• Litigation: It is possible that environmental groups will challenge the IFR as an inappropriate use of the APA “good cause” exception (which is typically reserved for emergencies) and seek an injunction requiring the White House to release any modifications to existing CEQ rules as a proposed rule. A drawn-out legal challenge could further unsettle the legal landscape for agencies and project proponents. Moreover, plaintiffs challenging existing and forthcoming permitting decisions will no doubt capitalize on this uncertainty to add an array of alternative NEPA claims to their complaints. Unless and until courts have settled on a new “doctrine” for how to handle such claims, every NEPA lawsuit could be a white-knuckle ride.

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[1] 5 U.S.C. § 553(b)(B).

Background

Port Arthur Community Action Network (PACAN) v. Texas Commission on Environmental Quality et al. (Tex. Feb. 14, 2025) presented the Texas Supreme Court with a unique opportunity to provide defined guideposts to understand just what is “best available control technology” or “BACT” for the purposes of Texas air permitting.

The Texas Supreme Court had jurisdiction when asked a certified question by the U.S. Fifth Circuit Court of Appeals, which was hearing an appeal about the permitting of a proposed natural gas liquefaction plant in Port Arthur, TX. After the Texas Commission on Environmental Quality (TCEQ) granted the facility an air permit, its issuance was challenged by PACAN. PACAN argued that the air permit issued by TCEQ did not employ BACT, arguing another similar facility had been permitted with lower emission limits.

The Fifth Circuit presented a certified question of Texas law to the Texas Supreme Court asking whether the phrase “has proven to be operational” as used in Texas’ BACT definition: (i) requires an air pollution control method to be operating in a permit already issued by TCEQ or (ii) refers to methods the TCEQ deems to be capable of operating? The Texas Supreme Court provided its interpretation of BACT for Texas law and concluded that the Fifth Circuit’s question was not entirely on point! Instead, the court concluded the phrase does not suggest either of the two understandings in the certified question.

The court concluded that nothing in the BACT definition indicates that a pollution control technology’s capability of operating in the future has anything to do with the analysis. Instead, BACT is a technology that has already been proven, through experience and research, to be operational, obtainable, and capable of reducing emissions. The Texas Supreme Court rejected the certified question’s suggestion that BACT might include methods TCEQ deems to be capable of operating in the future.

The Texas Supreme Court also rejected the other view posed in the certified question — that the BACT inquiry turns on whether a proposed pollution control method is currently operating under a TCEQ permit. The court indicated the issuance of similar permits may be relevant to whether a pollution control method has proven to be operational — but this does not support the notion that a pollution control method is not BACT unless it has previously been permitted by TCEQ.

So how did the Texas Supreme Court reach its conclusions and what does Texas BACT mean?

Texas BACT

The Texas Supreme Court used a literal common-sense approach to interpret the relevant provisions of the Texas Clean Air Act (TCAA) and attendant regulations. To guide its analysis, the court looked initially at the TCAA’s language regarding under what circumstances the TCEQ “shall grant” an air emissions permit and then to the TCEQ’s regulatory definition of BACT.

In the TCAA, the legislature provided guideposts to understand the BACT construct. Under the TCAA, the TCEQ “shall grant” an air emissions permit if, among other things, it determines the proposed facility in question “will use at least the best available control technology, considering the technical practicability and economic reasonableness” of emissions reduction (emphasis added). The court used the statutory language as a springboard for its analyses, noting that the Texas legislature’s language is of key analytical focus, regardless of any implementing regulations.

TCEQ regulations define BACT as a “control method . . . that through experience and research, has proven to be operational, obtainable, and capable” of emissions reduction, and which is “considered technically practical and economically reasonable . . . .” (emphasis added). As an initial matter, the court pointed out that any BACT analysis must consider statutory requirements of practicability and economic reasonableness. Thus, what is the “best” control technology for a given facility must consider those factors.

The court analyzed the meaning of key wording in the relevant statutory and regulatory provisions. An important step was to consider the meaning of the concept of “available” as used in “best available control technology.” The court did so and ascribed a plain meaning to the term. That is, “available” technology must actually be currently available, regardless of whether previously permitted and regardless of whether potentially available in the future.

The court also reviewed the TCEQ’s regulatory BACT definition and understood it to more fully outline the contours of BACT as used in the TCAA. The court said the regulatory BACT definition in essence clarified the statutory text’s “everyday meaning.” The court concluded that where the rule stated the control technology must be “operational,” “obtainable,” and capable of emissions reduction or elimination, that it was clarifying the meaning of the statutory mandates that the control technology be “technically practicable,” “economically reasonable,” and “best available.”

Further, the court reviewed other specific wording in the TCEQ’s BACT definition. The regulatory definition states that to be the “best,” the control technology “through experience and research has proven to be operational and obtainable.” Accordingly, the court reasoned BACT must be currently in use, available and has been demonstrated through experience and research to reduce or eliminate emissions. The court concluded that because the definition requires proof through experience and research, BACT cannot consider future capabilities. It looks to technology that “has already been proven.” Texas BACT must be based on real-world experience and not methods an agency may deem prospectively capable.

Finally, the court turned to the important question of whether technology permitted for emissions control at a given facility would be determinative of BACT for a subsequent permit application of a like facility. The court concluded that while it may be highly relevant, it cannot be determinative, focusing on the TCEQ’s statutory mandate to issue an air emissions permit where, among other things, the facility “will use at least the best available control technology.”

Because a permit must be issued where “at least” BACT is utilized, it is possible that emissions limitations could exceed BACT. For that reason, previously permitted control technology should not determine applicable BACT standards at a subsequently permitted facility.

Conclusions and Takeaways

The Texas Supreme Court concluded the Fifth Circuit’s question of law required a more nuanced analysis. The concept of “proven to be operational” can neither be tied to a previously issued permit, and in all events, cannot be technology the TCEQ deems to be capable of operating in the future. For purposes of Texas law, touchstones for BACT include:

• “Available” means available now, regardless of whether permitted at another site;

• The control technology “has proven to be operational, obtainable, and capable” of emissions reduction, means it must have proven to have been demonstrated in the real world, not a technology the TCEQ believes may operate in the future;

• BACT need not have been permitted before;

• BACT at a previously permitted site is relevant, but not determinative of BACT at a subsequent like site;

• And of course, BACT must be economically reasonable and technically practicable.

The Texas Supreme Court’s decision should allow for heightened site-specific flexibility in permitting decisions and also mitigate the likelihood that little-used control technologies could be proposed for use at a facility, whether by agency personnel or protesters in a contested permit challenge. Control technologies used at previously permitted facilities will be relevant to the BACT inquiry, but not determinative.

State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.

State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.

Contact our State AG Team at StateAG@troutman.com.

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Troutman Pepper Locke Spotlight

State Regulators Step Up: Responding to the CFPB’s New Leadership

By James Kim, Stephen Piepgrass, Chris Willis, Jesse Silverman, and Lane Page

In this special joint edition of the Consumer Finance Podcast and the Regulatory Oversight Podcast, host Chris Willis is joined by colleagues Stephen Piepgrass, James Kim, Jesse Silverman, and Lane Page to discuss the ongoing changes at the Consumer Financial Protection Bureau (CFPB) and predict how state regulators and legislatures will react to fill the void. This episode explores the anticipated responses from state attorneys general, financial service regulators, and legislatures, and offers strategic insights for industry players to navigate this complex regulatory environment. Tune in to understand the proactive measures your organization can take to stay compliant and ahead of potential state enforcement actions.

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State AG Updates

Vermont AG Clark Secures $2.7M Judgment Against Mental Health Counselor

By Troutman Pepper Locke State Attorneys General Team

On February 4, a Vermont Superior Court judge entered a $2,733,989.47 judgment against Phoenix Counseling & Wellness, PLC (Phoenix), and the company’s owner for alleged violations of the Vermont False Claims Act (VFCA). Vermont Attorney General (AG) Charity Clark and her office’s Medicaid Fraud and Residential Abuse Unit (MFRAU) received complaints regarding the quality of care and maintenance of patient treatment records by Phoenix.

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DOJ and 18 States Reach False Claims Act Settlement with QOL

By Troutman Pepper Locke State Attorneys General Team, Michael S. Lowe, and Amy Pritchard Williams

The U.S. Department of Justice (DOJ) and 18 state attorneys general (AG) announced a settlement with Boston-based QOL Medical, LLC (QOL) and its CEO, Frederick Cooper, to resolve allegations that the company provided unlawful kickbacks to health care providers. Under the terms of the settlement, QOL and Cooper agreed to pay $47 million to resolve allegations that QOL manipulated health care providers into prescribing a drug called Sucraid — an FDA-approved therapy for a rare genetic disorder, Congenital Sucrase-Isomaltase Deficiency (CSID). Regulators alleged that QOL and Cooper violated the Anti-Kickback Statute and federal and state False Claims Acts.

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AG of the Week

Dave Sunday, Pennsylvania

Dave Sunday was elected as Pennsylvania’s attorney general (AG) in November 2024, taking office in January 2025. Before running for AG, Sunday served as a prosecutor with the York County District Attorney’s office. Prior to being sworn in as the elected district attorney, he held the position of chief deputy prosecutor of litigation. In that capacity, Sunday supervised major crime cases and the felony narcotics unit. Additionally, he served as the legal advisor to the district attorney’s Drug Task Force and the York County Quick Response (SWAT) team.

Sunday is a career litigator and has personally tried approximately 50 felony jury trials to verdict, including the successful prosecutions of more than 10 of the most high-profile York County murders in recent memory. In 2013, Sunday was appointed as a special assistant U.S. attorney for the Middle District of Pennsylvania, where he assisted in prosecuting gang, illegal gun, and drug cases. During this time, he led the prosecution of Operation Sunrise, a large-scale multijurisdictional arrest and prosecution of more than 100 members and affiliates of the “Latin Kings,” a violent criminal gang operating in York County.

Beyond trial work, Sunday is the immediate past president of the York County Bar Association and serves on the board of the York County Children’s Advocacy Center. He also chairs the Education and Training Committee of the Pennsylvania District Attorney’s Association (PDAA) and was elected by his colleagues to the board of directors for the PDAA and the Pennsylvania District Attorney’s Institute. Nationally, Sunday serves on the American Conservative Union’s prosecutor advisory board and has spoken across the U.S. on effective public safety initiatives.

After high school, Sunday joined the Navy as an enlisted recruit and was deployed to the Persian Gulf, where he participated in Operation Desert Strike. He was also deployed to South America and conducted numerous counter-narcotics operations in the Caribbean. He then received his undergraduate degree in finance from Penn State University in 2002 and graduated from Widener Law School in 2007.

Pennsylvania AG in the News:

• On February 13, Sunday joined a multistate coalition in a letter to the U.S. Senate asking for passage of the HALT Fentanyl Act.

• On February 11, Sunday issued an advisory warning Pennsylvanians about a trending cyber scam.

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Upcoming AG Events

• March: AGA | Women’s Empowerment Summit | Del Mar, CA
• March: RAGA | Spring Golf Retreat | Pinehurst, NC
• April: NAAG | AG Symposium | Nashville, TN

For more on upcoming AG Events, click here.

On February 5, U.S. Attorney General (AG) Pam Bondi issued 14 memoranda to Department of Justice (DOJ) employees framing the DOJ’s current policies and enforcement priorities. These shifting enforcement priorities are aligned with the flurry of executive orders signed by President Donald J. Trump in recent weeks.

For example, consistent with Trump’s executive order calling for the total elimination of certain designated cartels and transnational criminal organizations (TCOs), the DOJ’s shifting priorities include a “fundamental change in mindset and approach” with a focus on enforcement priorities and resources on eliminating the threats of cartels and TCOs. Additionally, following Trump’s executive order requiring agencies to encourage the end of diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) programs, the DOJ’s priorities also now focus on enforcement efforts to end such programs in both the private sector and educational institutions. Other areas with a change in focus include increased immigration enforcement and limited environmental enforcement priorities.

This alert summarizes the DOJ’s key changes in priorities and discusses considerations for companies during this evolving time.

Pause and Shifting Focus of FCPA Enforcement

As we recently explained in detail here, Bondi directed the DOJ to shift focus of U.S. Foreign Corrupt Practices Act (FCPA) investigations to prioritize those related to cartels and other TCOs, and “away from investigations and cases that do not involve such a connection.” The memorandum also suspended the requirement for U.S. attorneys’ offices to obtain approval from the Criminal Division to initiate cases related to TCOs under the Foreign Extortion Prevention Act (FEPA). Five days after Bondi’s memorandum, Trump signed an executive order directing Bondi to pause the initiation of new investigations and enforcement actions, and review pre-existing and in-process actions, until the DOJ issues revised FCPA enforcement guidance, “that promotes American competitiveness and efficient use of federal law enforcement resources.” This anticipated revised enforcement guidance will set the stage for the direction of FCPA enforcement moving forward. Keep in mind, the U.S. Securities and Exchange Commission (SEC) has its own enforcement authority under the FCPA, with both agencies often bringing parallel enforcement actions for FCPA violations.

Ending Diversity, Equity, Inclusion, and Accessibility Programs

In another memorandum, Bondi announced that the DOJ’s Civil Rights Division will gear enforcement efforts toward the elimination of DEI and DEIA programs in the private sector and in educational institutions that receive federal funds, on the asserted basis that such programs involve illegal race or sex-based discrimination. To further these enforcement efforts, by March 1, Bondi directed the DOJ’s Civil Rights Division and Office of Legal Policy to jointly submit a report containing recommendations for enforcing federal civil rights laws to end DEIA in the private sector. Consistent with Trump’s executive order, the report must, among other things, identify “key sectors of concern” and the “most egregious . . . practitioners in each sector.” The report must also include a specific plan to deter DEIA programs in the private sector, including proposals for both criminal investigations and up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion. In addition, the memorandum signals that the DOJ’s Civil Rights Division will investigate and pursue enforcement actions against educational institutions with DEIA programs that receive federal funds.

The DOJ will also end its internal DEIA policies and practices. Bondi rescinded all DOJ materials that encouraged or permitted race or sex-based preferences as a method of compliance with federal civil rights laws and plans to issue updated guidance on employment, procurement, contracting, and other DOJ decisions. Bondi directed all DOJ components to thoroughly evaluate, among other things, consent decrees, settlement agreements, and litigation positions that might favor DEIA efforts.

Increased Enforcement of Federal Immigration Laws

The DOJ’s charging priorities aim to use all available criminal statutes to enforce federal immigration laws and prioritize pursuing charges relating to criminal immigration-related violations. This includes not only charges related to illegal entry, but also charges for unlawful employment or other efforts that aid in violations of federal immigration law. The DOJ will similarly pursue enforcement actions against state and local jurisdictions and officials that fail to comply with federal immigration laws and directives or facilitate violations of federal immigration laws.

Limiting Prosecutions Under the Foreign Agents Registration Act and Environmental Laws

Bondi instructed that prosecutions under the Foreign Agents Registration Act (FARA) and related laws are to “be limited to instances of alleged conduct similar to more traditional espionage by foreign government actors.” Bondi disbanded the Foreign Influence Task Force and National Security Division’s Corporate Enforcement Unit. For now, the Counterintelligence and Export Control Section, including the FARA Unit, is directed to focus on civil enforcement, regulatory initiatives, and public guidance.

Bondi also rescinded prior DOJ guidance that prioritized enforcement of certain environmental laws and focused on environmental justice.

New Priorities For Money Laundering Investigations and Asset Forfeiture

Bondi also directed the DOJ Criminal Division’s Money Laundering and Asset Recovery Section to “prioritize investigations, prosecutions, and asset forfeiture actions that target activities of cartels and TCOs.” Calling for the dissolution of the Russia-focused Task Force KleptoCapture and the Criminal Division’s Kleptocracy Asset Recovery Initiative, resources previously devoted to those Russia-focused efforts are to be “committed to the total elimination of cartels and TCOs.” The U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) and other financial regulators have enforcement authority with respect to financial institutions’ compliance with Bank Secrecy Act (BSA) and anti-money laundering requirements.

Key Considerations for Companies

While much of the DOJ’s guidance is still forthcoming, companies should start evaluating their existing compliance programs and policies and procedures with an eye toward DOJ’s new priorities.

• With respect to FCPA enforcement, companies should consider the detailed implications and guidance provided here, and continue to uphold strong anti-bribery and anti-corruption policies.

• As Bondi is already considering potential criminal and civil enforcement actions related to DEIA policies, companies must begin reviewing their DEIA policies and programs to ensure they are consistent with federal law and DOJ guidance and that any certifications made to the government about their DEIA policies are accurate.

• Companies under a consent decree or settlement agreement should review closely to determine if any requirements might be DEIA focused and consider how the DOJ’s new policies might affect those requirements.

• It is imperative that companies examine their hiring and employment policies and practices to ensure compliance with all federal immigration laws, including Form I-9 policies and necessary recordkeeping policies.

• As the DOJ focuses its efforts on eliminating cartels and TCOs, companies that operate in areas with the strong presence of cartels or TCOs, particularly Mexico and Latin America, must examine and be cautious with their interactions and business practices in those countries. These companies should examine and ensure they have strong compliance programs in place to avoid the risk of investigation and enforcement. With the new administration’s focus on eliminating cartels and TCOs, financial institutions should also ensure they maintain robust and effective anti-money laundering programs.

Troutman Pepper Locke is monitoring the administration and the DOJ’s evolving priorities and guidance closely. If you have questions on how these priorities impact your business or wish to begin evaluating your existing compliance programs and policies and procedures, please do not hesitate to contact a member of our White Collar Litigation and Government Investigations team.

There are many reasons why a company might be experiencing financial distress, including overwhelming debt, cash flow problems, substantial litigation claims, and/or economic downturn. Companies sometimes use Chapter 11 as a vehicle to address these issues, especially since Chapter 11 allows the company to reorganize and continue as a going concern. However, Chapter 11 is an expensive process and may not be the best option for a financially distressed company.

This article discusses alternatives to Chapter 11 and how these alternatives may affect creditors. To access this article and read other insights from our Creditor’s Rights Toolkit, please click here.

On February 10, President Donald J. Trump signed an executive order and accompanying fact sheet directing U.S. Attorney General (AG) Pam Bondi to pause the initiation of new investigations and enforcement actions, and to review pre-existing and in-process actions, under the U.S. Foreign Corrupt Practices Act (FCPA) until she issues revised FCPA enforcement guidance. This directive aims to promote strategic commercial advantages for the U.S. over international competitors.

The executive order was issued only five days after Bondi issued a memorandum directing the U.S. Department of Justice (DOJ) Criminal Division’s FCPA Unit to prioritize investigations related to cartels and other transnational criminal organizations (TCOs), and to “shift focus away from investigations and cases that do not involve such a connection.” This was part of the administration’s policy of seeking the “total elimination” of these TCOs. The memorandum also suspended the requirement for U.S. attorneys’ offices to obtain approval from the Criminal Division to initiate cases related to TCOs under the Foreign Extortion Prevention Act (FEPA), which could lead to less predictable enforcement in the highly sensitive area of targeting foreign government officials for corrupt activity.

These FCPA enforcement shifts come along with a number of other changes at DOJ, including Bondi’s dissolution of the Russia-focused Task Force KleptoCapture and the Criminal Division’s Kleptocracy Asset Recovery Initiative, with “resources currently devoted to those efforts [to] be committed to the total elimination of Cartels and TCOs.” The National Security Division’s Corporate Enforcement Unit has also been disbanded, and prosecutions under the Foreign Agents Registration Act (FARA) and related laws are to “be limited to instances of alleged conduct similar to more traditional espionage by foreign government actors.” While these developments could change the landscape in criminal enforcement of export controls, sanctions, FARA, and other national security areas, the real impacts remain to be seen.

The US Foreign Corrupt Practices Act

The FCPA has two main components: the anti-bribery provisions and the accounting provisions. The anti-bribery provisions make it unlawful to offer, provide, or promise to provide money or anything of value directly or indirectly to a foreign government official for the purpose of obtaining or retaining business, influencing an official act or decision, or securing an improper advantage. The accounting provisions require publicly traded companies to maintain accurate and complete books and records and implement internal controls to provide reasonable assurance that transactions are executed and recorded properly.

The DOJ and the U.S. Securities and Exchange Commission (SEC) each have their own enforcement authorities under the FCPA, with both agencies often bringing parallel enforcement actions for FCPA violations.

The Executive Order

Below are the key provisions of Trump’s executive order:

• Pause on New Investigations and Enforcement Actions: The executive order instructs the AG to cease the initiation of any new FCPA investigations or enforcement actions for 180 days, with the possibility of an extension. During this period, the DOJ is to review existing guidelines and policies governing FCPA enforcement.

• Review of Existing Actions: The DOJ will conduct a detailed review of all current and past FCPA investigations and enforcement actions to ensure that these actions are within proper bounds and do not impede the president’s foreign policy prerogatives.

• Revised Guidelines: The AG will issue updated guidelines or policies to promote the president’s authority to conduct foreign affairs, prioritize American interests, and ensure efficient use of federal law enforcement resources. Future FCPA actions will require specific authorization from the AG.

• Potential Remedial Measures: The AG is authorized to take remedial measures regarding past FCPA actions deemed inappropriate and may recommend further actions to the president if necessary.

Implications for Corporate Compliance

While the executive order signals a potential reduction in FCPA enforcement, companies should not interpret this as a green light to relax their compliance programs. The legal framework of the FCPA remains unchanged, and only Congress has the authority to amend the statute. Moreover, the FCPA’s anti-bribery provisions have a five-year statute of limitations, meaning that past violations can still be prosecuted, and future violations will likely outlive the current administration. Additionally, the SEC, which also has enforcement authority under the FCPA, has not signaled changes to its enforcement plans.

Importantly, the same conduct that implicates the FCPA often implicates other U.S. criminal statutes, such as the Racketeer Influenced and Corrupt Organizations Act (or, RICO), the Travel Act, and other laws regarding campaign finance, wire fraud, and anti-money laundering. Additionally, U.S. companies that do business abroad could also be subject to foreign anti-corruption laws, such as India’s Prevention of Corruption Act and the UK’s Bribery Act 2010. Finally, U.S. companies that receive federal funds, such as defense contractors and pharmaceutical and medical device companies, could face False Claims Act actions, including whistleblower qui tams, premised on violations of the FCPA.

Guidance for Companies

1. Maintain Robust Compliance Programs: Companies should continue to uphold strong anti-bribery and anti-corruption policies. The DOJ’s pause on new investigations does not change the legal obligations under the FCPA, and the SEC’s civil enforcement authority remains intact.

2. Issue Guidance and Reminders to Internal Stakeholders: It is likely that internal stakeholders have followed the news regarding the executive order. Proactively issue communications to internal stakeholders about the executive order’s impact on company compliance and reiterate that employees should continue to adhere to existing policies. Consider providing updated training to re-emphasize these points.

3. Monitor Developments: Stay informed about any new guidelines or policies issued by the DOJ. Also stay vigilant for any new guidance or response from the SEC regarding FCPA civil enforcement. These updates will provide clarity on the future direction of FCPA enforcement and may impact how companies approach compliance.

4. Evaluate Risk Exposure: Companies currently under investigation or with active deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) should assess their risk exposure. The DOJ’s review of existing actions may offer opportunities to seek closure or modification of ongoing matters.

5. Consider Non-FCPA Domestic Laws and International Enforcement: The enforcement priorities of other international bodies, such as the UK’s Serious Fraud Office, remain unchanged. Additionally, there are a myriad of domestic laws apart from the FCPA that target bribery and corruption. Companies must continue to comply with applicable anti-corruption laws.

6. Prepare for Potential Legislative Changes: The executive order may prompt legislative efforts to amend the FCPA. Companies should be prepared for potential changes in the law that could affect their compliance obligations.

If you are currently under investigation for an alleged violation of the FCPA or have questions on how the executive order will impact your business, please do not hesitate to contact a member of Troutman Pepper Locke’s White Collar Litigation and Government Investigations practice.

On January 31, the attorney general (AG) for the state of Tennessee and the attorney general for the Commonwealth of Virginia announced that they had reached an agreement in principle with the National Collegiate Athletics Association (NCAA) to settle a year-long lawsuit over the NCAA’s policy that prohibits name, image, and likeness (NIL) discussions with prospective and transfer student-athletes. Following a series of posts by the NCAA on X in January 2024, the policy, colloquially known as the NIL-recruiting ban, saw almost immediate enforcement action, with both Florida State University and the University of Florida receiving notices from the NCAA. Both enforcement actions involved allegations of violations of the NIL-recruiting ban.

Following reports that the University of Tennessee might be the next target for enforcement action, the AG of Tennessee, along with the AG of Virginia, filed the instant suit. The case, State of Tennessee et al. v. National Collegiate Athletic Association, 3:23-cv-33, alleges that the NIL-recruiting ban represents an unlawful restraint on trade in violation of Section 1 of the Sherman Antitrust Act. In particular, it alleges that the ban requires both prospective and transfer students to enroll at an institution before they can even explore NIL opportunities (or lack thereof) that may be available to them at that institution. To highlight the strain the ban places on the marketplace, the plaintiffs likened the ban to prohibiting a coach in search of a job at new institution from discussing or negotiating salary until they have already chosen the institution at which they will coach.

Along with the filing of the complaint, plaintiffs also moved for a preliminary injunction, seeking to enjoin the NCAA from enforcing the NIL-recruiting ban during the pendency of the litigation. The court ultimately granted the requested injunction, holding that plaintiffs were likely to succeed on the merits of their antitrust claims and that they would suffer irreparable harm in the event an injunction was not granted.

The opinion granting the injunction represents a significant perspective on NIL in collegiate sports. U.S. District Judge Clifton L. Corker stated that the NIL-recruiting ban would likely harm competition because it inhibits a prospective or transfer athlete’s ability to adequately assess their value. Moreover, because the window of recruitment opportunity is small, the prospective athletes are irreparably harmed by this inability to fully and candidly assess their value in the marketplace. Following the grant of the preliminary injunction, the NCAA agreed to pause enforcement of the NIL-recruiting ban.

In a status report to the court on January 31, the parties announced that they had reached a settlement in principle and that a term sheet had been signed. The status report also previewed that the settlement will include a request for a permanent injunction, and the parties will finalize and submit the settlement to the court by March 17.

Significantly, this case represents yet another NCAA settlement where its rules have been challenged as anticompetitive. Notably, the well-publicized House settlement is set to take effect later this year should it be approved by the District Court in the Northern District of California. It appears that in seeking to settle both cases, the NCAA is willing to voluntarily strip itself of certain powers or shed the challenged policies.

The Tennessee settlement, however, is not without some risk. As an initial matter, the landscape of nationwide injunctions is ripe for challenge. This risk is complicated by the fact that some states maintain NIL laws that mirror the NIL-recruiting ban that — should the settlement be finalized — the NCAA would be enjoined from enforcing. Kentucky, for example, prohibits activities intended to induce a student to enroll or transfer by promising NIL opportunities. Should the NIL-recruiting ban be enjoined by the instant settlement, efforts by institutions to discuss NIL opportunities with prospects and transfers may still run afoul of similar state laws.

While the true impact of the settlement remains to be seen, it nonetheless represents another significant example of a successful challenge of NCAA policies under the Sherman Antitrust Act.

This article was originally published in the Consumer Financial Services Law Monitor on February 7, 2025 and republished in insideARM on February 12, 2025.

On February 6 2025, the Consumer Financial Protection Bureau (CFPB or Bureau) requested and was granted a 90-day stay in the litigation involving trade associations Cornerstone Credit Union League (Cornerstone) and the Consumer Data Industry Association (CDIA). This case, which challenges the CFPB’s Final Rule on the prohibition of medical debt information in consumer reports, has been temporarily halted as the Bureau undergoes significant leadership changes.

As discussed here, on January 7, 2025, the plaintiff trade associations filed a complaint against the CFPB, challenging the Final Rule issued by the Bureau. The rule, titled “Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V),” amends Regulation V, which implements the Fair Credit Reporting Act (FCRA), to eliminate the exception that previously allowed lenders to use certain medical information in making lending decisions. The rule also prohibits consumer reporting agencies from including medical debt information on consumer reports and credit scores sent to lenders. The plaintiffs argued that the rule exceeded the CFPB’s statutory authority and is arbitrary and capricious.

On February 6, 2025, the U.S. District Court for the Eastern District of Texas granted the CFPB’s unopposed motion to stay the proceedings. The court’s order sets the following schedule:

• 90-Day Stay of the Rule’s Effective Date: The effective date of the Final Rule is stayed until June 15, 2025.

• 90-Day Stay of Litigation: All deadlines in the case are stayed until May 7, 2025.

• Rescheduling of Preliminary Injunction Hearing: The hearing on the plaintiffs’ motion for a preliminary injunction is rescheduled to May 12, 2025.

This stay comes in the wake of significant changes at the CFPB, including the removal of Director Rohit Chopra and the appointment of Treasury Secretary Scott Bessent as Acting Director.

Troutman Pepper Locke’s Take

The CFPB’s request for a stay in this case aligns with its broader strategy to pause litigation and enforcement actions amid the leadership transition. As discussed here, the CFPB filed an “Emergency Notice” in the U.S. Court of Appeals for the Fifth Circuit, pausing the litigation challenging the Small Business Lending Data Collection final rule under Section 1071 of the Dodd-Frank Act. The Bureau has instructed its counsel not to make any appearances in litigation except to seek a pause in proceedings. This directive is part of a broader halt on most CFPB activities, as the agency reassesses its priorities and strategies under Acting Director Bessent.

State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.

State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.

Contact our State AG Team at StateAG@troutman.com.

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Troutman Pepper Locke Spotlight

Balancing Law and Public Service: Insights From AG Formella

By Stephen C. Piepgrass and Chuck Slemp

In this episode of Regulatory Oversight, Chuck Slemp is joined by New Hampshire Attorney General (AG) John Formella to discuss his journey to becoming New Hampshire’s AG. Formella highlights his career in private practice, his role as legal counsel to Governor Chris Sununu, and his eventual appointment as AG in 2021. As the new president of the National Association of Attorneys General (NAAG), Formella outlines his initiative to combat substance abuse and drug trafficking, emphasizing bipartisan collaboration and support for law enforcement. He also addresses emerging issues such as elder abuse, data privacy, civil rights, and mental health.

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Regulatory Updates

New York Issues Proposed Regulations About Overdraft Fees

By Troutman Pepper Locke State Attorneys General Team and Dascher Pasco

Given the future uncertainty of the Consumer Financial Protection Bureau’s (CFPB) efforts to regulate bank overdraft fees, New York’s Department of Financial Services (DFS) has stepped in to fill a perceived gap. The DFS announced proposed regulations to tackle what it perceives as unfair overdraft fees. The proposed regulations will “ensure consumers will no longer be burdened with overdraft fees for minor transactions and require banks to provide timely notifications to consumers about overdraft fees to improve transparency.

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AG of the Week

Marty Jackley, South Dakota

Marty Jackley was raised in Sturgis and graduated from the South Dakota School of Mines with a bachelor’s degree in electrical engineering, with honors. After receiving his law degree from the University of South Dakota, he served as a clerk for then Chief U.S. District Judge Richard Battey. Jackley then joined the law firm of Gunderson, Palmer, Nelson and Ashmore, and also served as a special assistant AG prosecuting controlled substance felonies.

In 2006, Jackley was appointed and unanimously confirmed by the U.S. Senate as a U.S. attorney for South Dakota.

From 2009 to 2019, Jackley served as South Dakota’s AG. In 2015, he served as a chairman of NAAG and as a past chairman of the Conference of Western Attorneys General (CWAG). In 2016, he received the National Attorney General of the Year award from his fellow AGs. After serving 10 years as AG, Jackley returned to the law firm of Gunderson, Palmer, Nelson and Ashmore as a senior partner. He also served as state’s attorney for both Jones and Haakon counties, and as a special prosecutor for the Sisseton Wahpeton Oyate during this time. In 2022, Jackley was elected for a fourth term as the South Dakota AG. For the 2023 – 2024 year, he is serving as chairman to the Attorney General Alliance (AGA). Jackley was elected as vice chairman of NAAG in 2024.

South Dakota AG in the News:

• On February 11, Jackley announced that two government accountability bills he proposed were approved by the Senate Judiciary Committee.

• On February 7, Jackley warned the public about the discovery in Eastern South Dakota of marijuana that appears to have been laced with opioids, possibly including fentanyl.

• Jackley and Dakota State University (DSU) announced a request for proposals for the SecureSD: Cybersecurity for Municipalities and Counties Initiative that would strengthen the cybersecurity defenses of South Dakota’s local governments.

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Upcoming AG Events

• February: DAGA | Los Angeles Policy Conference | Los Angeles, CA
• February: RAGA | Victory Fund Ski Retreat | Big Sky, MT
• March: AGA | Women’s Empowerment Summit | Del Mar, CA

For more on upcoming AG Events, click here.