The government’s brief argues for the reversal of the district court’s preliminary injunction against the Corporate Transparency Act (CTA), asserting that the district court erred in its legal conclusions and in granting nationwide relief. The government contends that Congress acted within its enumerated powers when enacting the CTA and that the balance of equities favors the government. Here’s a detailed look at the government’s arguments, along with the cited legal authorities:

Likelihood of Success on the Merits:

Commerce Clause: The government argues that the CTA falls within Congress’s power under the Commerce Clause, noting that Congress can regulate not only interstate commerce directly, but also “purely local activity as part of a broader regulatory scheme”. They state the CTA regulates “a core economic activity: the ownership and operation of a business”.
- They argue the CTA is a “critical component of a broader regulatory scheme to combat financial crimes” such as money laundering, terrorist financing, and tax evasion citing 18 U.S.C. §§ 1956, 1957; 18 U.S.C. § 2339C; 26 U.S.C. § 7201.
- The government argues that because the CTA regulates businesses who have “affirmatively indicated an intent to conduct commercial transactions,” the statute falls well within Congress’s authority citing McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 421 (1819); United States v. Comstock, 560 U.S. 126, 133-34 (2010); United States v. Darby, 312 U.S. 100, 121 (1941).
- The government notes that the district court recognized that “it is rational for Congress to believe that registered entities, in their natural state of anonymous existence, and whatever operations they may carry out, would substantially impact interstate commerce”, but argues that the court improperly substituted its judgment for Congress’s.
- They cite Gonzales v. Raich, 545 U.S. 1, 16-17 (2005) to support the idea that Congress can regulate activities that may not themselves be commerce but serve a broader regulatory scheme and Wickard v. Filburn, 317 U.S. 111, 124 (1942) to support the idea that Congress’s power is not confined to regulating interstate commerce itself.
- They distinguish the CTA from laws struck down in United States v. Lopez, 514 U.S. 549 (1995) and United States v. Morrison, 529 U.S. 598 (2000), noting those laws had no connection to commerce and also from the individual mandate in NFIB v. Sebelius, 567 U.S. 519 (2012), where the Court’s concern was Congress compelling economic activity by regulating inactivity.
Necessary and Proper Clause: The government argues that the CTA is necessary and proper to execute Congress’s powers. They argue that Congress has broad authority to enact laws that are “ ’convenient, or useful’ or ’conducive’, to the authority’s ’beneficial exercise’ ” citing United States v. Comstock, 560 U.S. 126, 133-34 (2010) and McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819)
- They state that the CTA is “rationally related to the implementation of a constitutionally enumerated power” and “effectuates concededly legitimate prohibitions on harmful forms of economic activity”, and that "the reporting requirements enable investigators to trace the flow of illicit funds".
Taxing Power: The government argues that the CTA is also necessary and proper to Congress’s power to “lay and collect taxes” citing U.S. Const. art. I, § 8, cl. 1, arguing the law facilitates tax collection by preventing tax evasion, citing § 6402(3), 134 Stat. at 4604; § 6402(8)(C), 134 Stat. at 4605; 31 U.S.C. § 5336(c)(5)(B) and Helvering v. Mitchell, 303 U.S. 391, 399 (1938) and Sonzinsky v. United States, 300 U.S. 506, 513 (1937).
- The brief argues that the district court incorrectly concluded that Congress’s taxing power is limited only to regulations generating revenue, citing Farhy v. Comm’r, 100 F.4th 223, 228 (D.C. Cir. 2024).
Foreign Affairs and Foreign Commerce Powers: The brief asserts that the CTA aids the enforcement of prohibitions designed to advance U.S. foreign policy objectives and protect national security interests, and to regulate commerce with foreign nations U.S. Const. art. I, § 8, cl. 3.
- They cite Kennedy v. Mendoza-Martinez, 372 U.S. 144, 160 (1963) and Ullmann v. United States, 350 U.S. 422, 436 (1956) to support the idea that Congress has broad power under the Necessary and Proper Clause to enact legislation for the regulation of foreign affairs and national security policy
- The government cites § 6402(3), 134 Stat. at 4604, § 6402(5)(E), 134 Stat. at 4604; 87 Fed. Reg. at 59,499, 59,506; and Fin. Action Task Force, Anti-Money Laundering and Counter-Terrorist Financing Measures: United States Mutual Evaluation Report 226 (Dec. 2016) to support the need for the reporting requirements to bring the U.S. into compliance with international anti-money laundering standards.
Rejection of Facial Challenge: The government argues that the district court’s facial challenge analysis was incorrect, citing United States v. Salerno, 481 U.S. 739, 745 (1987) and Washington State Grange v. Washington State Republican Party, 552 U.S. 442, 449 (2009). They argue that a facial challenge requires showing that "no set of circumstances exists under which the law would be valid," and that the district court failed to follow this test.
- The government says the district court "hypothesized a corporation that engages in no commerce whatsoever and used that theoretical entity to hold the CTA facially invalid" and that the court ignored that the law validly applies to the plaintiffs themselves.
- They note that courts have "never required Congress to legislate with scientific exactitude” citing Gonzales v. Raich, 545 U.S. 1, 17 (2005).

Equitable Factors Favoring the Government:

The government argues that the district court’s order threatens significant and irreparable harm to the government and public, citing Nken v. Holder, 556 U.S. 418, 435 (2009), especially given that the CTA is a “bipartisan effort by Congress to target financial crime and protect national security”.
- They assert that the “strong ’presumption of constitutionality which attaches to every Act of Congress’ ” should be given weight citing Bowen v. Kendrick, 483 U.S. 1304, 1304 (1987) and Walters v. National Ass’n of Radiation Survivors, 468 U.S. 1323, 1324 (1984).
- The government provides examples of how shell companies are used for illegal purposes and notes FinCEN’s conclusion that “a lack of uniform beneficial ownership information reporting requirements . . . hinders the ability of . . . law enforcement to swiftly investigate . . . entities created and used to hide ownership for illicit purposes,” citing 87 Fed. Reg. at 59,498.
The government states the plaintiffs’ alleged compliance costs are minimal and do not outweigh the substantial harms imposed on the United States when an act of Congress is enjoined, citing Restaurant Law Ctr. v. U.S. Dep’t of Labor, 66 F.4th 593, 600 (5th Cir. 2023) and Louisiana v. Biden, 55 F.4th 1017, 1035 (5th Cir. 2022).

Improper Nationwide Relief:

The government notes that the plaintiffs did not seek nationwide relief, but the district court granted it anyway.
- The government cites Deanda v. Becerra, 96 F.4th 750, 768 (5th Cir. 2024) and Braidwood Mgmt., Inc. v. Becerra, 104 F.4th 930, 952 (5th Cir. 2024), cert. granted, No. 24-316, 2025 WL 65913 (U.S. Jan. 10, 2025) to argue that granting nationwide vacatur when the plaintiff neither brought an APA claim nor sought vacatur of a regulation is an abuse of discretion.
- The government argues that the district court’s order, which enjoined the CTA itself, was improper citing Whole Woman’s Health v. Jackson, 595 U.S. 30, 44 (2021) and California v. Texas, 593 U.S. 659, 672 (2021) to support that courts cannot "enjoin challenged ‘laws themselves.’ "
The government states that relief should be limited to the parties and that Article III only authorizes courts to entertain suits by plaintiffs who have suffered a concrete injury, citing Gill v. Whitford, 585 U.S. 48, 66 (2018) and Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 319 (1999).
- The government notes that, at most, “injunctive relief may be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs,” citing Califano v. Yamasaki, 442 U.S. 682, 702 (1979).
- They further note that “courts of equity” historically “did not provide relief beyond the parties to the case” citing Trump v. Hawaii, 585 U.S. 667, 717 (2018) and also reference 5 U.S.C. § 705 and 5 U.S.C. § 702, arguing they require courts to decline to enter nationwide relief where other remedies would fully redress plaintiffs’ injuries.
The government says that nationwide relief creates well-catalogued legal and practical problems by circumventing the rules governing class actions and enabling forum shopping, citing DHS v. New York, 140 S. Ct. 599, 601 (2020) and Arizona v. Biden, 40 F.4th 375, 395-98 (6th Cir. 2022).
- The government also cites Labrador v. Poe ex rel. Poe, 144 S. Ct. 921, 927 (2024) and Texas v. United States, 599 U.S. 670, 702-04 (2023) to underscore the impropriety of universal injunctions.
The government argues that the district court’s injunction was improper because it went beyond the ordinary practice of granting only necessary relief to the parties in the case, by encompassing foreign persons, and disregarding other pending challenges to the CTA, citing Louisiana v. Becerra, 20 F.4th at 263.
The brief argues that granting relief to all members of the NFIB is also improper citing FDA v. Alliance for Hippocratic Med., 602 U.S. 367, 401-02 (2024), and that restricting the scope of relief also promotes longstanding equitable principles that a party has one opportunity for relief and that the effect of any judgment should be bidirectional.

In summary, the government’s brief argues that the district court erred by concluding that the CTA is unconstitutional and by issuing a nationwide preliminary injunction. The government contends that the CTA is a valid exercise of Congress’s enumerated powers, that the balance of equities favors the government, and that the district court exceeded its authority by granting nationwide relief. They cite numerous cases, statutes, regulations, and other authorities to support these contentions.

Prepared with assistance from the NotebookLM.

You can read the brief at https://www.taxnotes.com/research/federal/court-documents/court-petitions-and-briefs/government-urges-court-reverse-transparency-act-injunction/7r16q