Staying Compliant in a Changing Landscape: I-9 Audit Best Practices for Employers
Ensuring compliance with Form I-9 requirements has never been more critical. With shifting immigration policies, heightened enforcement priorities, and the introduction of new executive orders, employers face increasing challenges in verifying employment eligibility accurately and lawfully. Mistakes in completing or maintaining I-9 forms can result in hefty fines, legal penalties, and reputational damage.
Employers should take swift action now to conduct I-9 audits given the Trump Administration’s immediate actions to change or influence U.S. immigration policies, to remove undocumented aliens from the U.S., and recent efforts to change programs governing who has authorization to remain or work in the U.S. Several of the Day One Executive Orders remind employers and immigrants that faithful execution of immigration laws of the U.S. is of utmost importance to the administration.
Also, the far-reaching Protecting The American People Against Invasion Executive Order revokes Biden-era immigration enforcement priorities, announces the obligation that anyone without immigration status registers with the U.S. government, and seeks to limit the use of parole and temporary protected status, among other immigration initiatives.
From an employer’s perspective, an individual lacking U.S. work authorization may include an individual who:
Crossed the border undetected and did not present documents at the time of hire,
Was asked for proof of identity and employment verification documentation and subsequently presented fake documents to secure employment, or
Initially entered lawfully or changed status lawfully, but overstayed their lawful status and work authorization lapsed, or
Was admitted to the U.S. under a lawful program or status administered under the previous administration, but that program was terminated, and work authorization has lapsed, but they have continued working.
Another Day One Executive Order Securing Our Borders – The White House indicates in Section 2 that the Trump administration will remove promptly all aliens who enter or remain in violation of Federal law, and Section 2(e) indicates the administration will pursue criminal charges against illegal aliens who violate the immigration laws; and against those who facilitate their unlawful presence. The executive order also instructs the Secretary of Homeland Security to take all appropriate action to terminate categorical parole programs including the parole program for Cubans, Haitians, Nicaraguans, and Venezuelans.
Based on a notice published in the Federal Register on March 25, 2025, the above-referenced temporary parolees whose parole has not already expired by April 24, 2025, will have status (and therefore work authorization) terminated as of that date. Similarly, those who have previously been granted Temporary Protected Status through the 2023 TPS designation for Venezuela are now in limbo following publication on February 5, 2025, of a Federal Register Notice ending the 2023 TPS designation for Venezuela. Although this action is being challenged in federal court, the employment authorization documents issued under that designation are set to expire on April 2, 2025.
With programs ending, enforcement priorities changing, and lawsuits determining the future of certain work authorization, it’s increasingly difficult for the most well-meaning employer to know whether their I-9s have been completed correctly.
Employers likely are familiar with the I-9 requirements, but based on the increased emphasis on enforcement, it’s worth reminding employers that by signing the I-9, employers are attesting under penalty of perjury the following:
That they have examined the documentation presented by the employee, and
The documentation appears to be genuine and to relate to the employee named,
To the best of their knowledge, the employee is authorized to work in the United States,
That the information they enter in Section 2 is complete, true, and correct to the best of their knowledge, and
That they are aware that they may face civil or criminal penalties provided by law and may be subject to criminal prosecution for knowingly and willfully making false statements or knowingly accepting false documentation when completing Form I-9.
Current instructions for the I-9 may be accessed here: Instructions for Form I-9, Employment Eligibility Verification.
As a reminder, it is unlawful for an employer to hire, recruit, or refer for a fee a foreign national knowing they are unauthorized to work in the U.S., and it is unlawful for a person or company to continue to employ a foreign national in the U.S. knowing they are(or have become) unauthorized to work in the U.S. Audits of I-9 Forms are one way for employers to see how well their teams are tracking expiration dates and maintaining records. Note that penalties for I-9 violations have been adjusted for inflation. Here is a representative selection of penalties:
Penalty
Legal Reference
New penalty as adjusted by the final rule
Civil Penalties for I-9 paperwork violations
8 CFR 274a.10(b)(2)
$288-$2,861
Civil penalties for knowingly hiring, recruiting, referral, or retention of unauthorized aliens—Penalty for first offense (per unauthorized alien)
8 CFR 274a.10(b)(1)(ii)(A)
$716–$5,724 (first order)
Penalty for second offense (per unauthorized alien)
8 CFR 274a.10(b)(1)(ii)(B)
$5,724–$14,308
Penalty for third or subsequent offense (per unauthorized alien)
8 CFR 274a.10(b)(1)(ii)(C)
$8,586-$28,619
Document fraud (first offense)
8 CFR 270.3(b)(1)(ii)(A)
$590-$4730
Immediately Minimize Risk Through Preventative Measures.
Employers may minimize risk and fines or penalties by regularly conducting I-9 audits. Please see specific recommendations below.
Conduct Regular Self-Audits. Establish a cadence for scheduled self-audits either by the company or outside counsel.
Doing so ensures that employers are aware of any risk lurking within their I-9s in case the government were to issue a Notice of Inspection
A self-audit increases an employer’s odds of identifying and mitigating mistakes before they become an issue.
Remember, it is unlawful to continue to employ a foreign worker in the United States knowing they are (or have become) an unauthorized alien with respect to employment.
Monitor Updates. Prior to each self-audit, familiarize yourself with any updates to the Handbook for Employers M-274. For example, on March 26, 2025, USCIS announced that Section 7.4.2 of the M-274 Handbook was updated to reflect a DHS final rule automatically extending the duration of status and any employment authorization granted under 8 CFR C.F.R. 274a.12(c)(3)(i)(B) or (C) for an F-1 student who is the beneficiary of an H-1B petition requesting a change of status.
Does the person who conducts your I-9 inspections, know of this change? How do the appropriate resources on your team find out about changes to ensure compliance?
Does your team have the tools needed to perform their job? Do they have access to outside counsel?
Attend Training. USCIS offers Employment Eligibility Webinars. Take advantage of same. See Employment Eligibility Webinars | USCIS. If you have outside Counsel, have them conduct a training for your team whenever you have a change in your team who handles I-9s.
Roster of Employees. Ensure you have a complete and updated roster of employees, including former employees who left less than 1 year ago.
Retention Schedule. Ensure you are not maintaining I-9s for any longer than needed- once an employee leaves, calculate when you may stop retaining the I-9. It must be maintained for three years after the date of hire, or one year after the date employment ends, whichever is later.
Remain Diligent. Ensure signatures aren’t missed and sections aren’t blank. Do not back date documents. Know who to go to if you have questions.
Federal Regulators Continue Crypto Rationalization
Following President Trump’s Executive Order on Digital Assets, which instructed agencies to streamline and rationalize regulation of the digital asset space in a way that is technology-neutral, federal agencies have been responding. Below we summarize recent activities by the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC) and Commodity Futures Trading Commission (CFTC).
On March 7, 2025, the OCC, which supervises national banks, issued Interpretive Letter 1183 regarding Certain Crypto-Asset Activities for national banks. IL 1183 withdraws several previous interpretive letters that limited national banks’ ability to engage in various crypto-asset activities. Instead, the OCC sought to “ensure that bank activities will be treated consistently, regardless of the underlying technology.”
On March 28, the FDIC took similar action and issued Financial Institution Letter 7-2025 to establish a process for banks engaging in crypto-related assets. FIL 7-2025 replaces prior guidance, FIL 16-2022, and affirms that FDIC-supervised institutions may engage in permissible activities, including activities involving new and emerging technologies such as crypto-assets and digital assets, provided that they adequately manage the associated risks. In contrast to FIL-16-2022, which established a prior notification requirement specific to crypto-related activities, FIL 7-2025 clarifies that FDIC-supervised institutions may engage in certain permissible crypto-related activities without receiving prior FDIC approval.
Also on March 28, the CFTC staff announced the withdrawal of its prior staff advisory entitled Review of Risks Associated With Expansion of DCO Clearing of Digital Assets. In withdrawing the prior guidance, the CFTC staff noted that its regulatory treatment of digital asset derivatives does not vary from its treatment of other products. Instead, the staff conducts its supervision of clearing activities and oversight of compliance with the Commodity Exchange Act and Commission regulations regardless of the specific commodity underlying relevant contracts.
The SEC Effectively Ends Climate Disclosure Requirements Under Trump Administration
On Thursday, March 27, 2025, the U.S. Securities and Exchange Commission announced via letter to the U.S. Court of Appeals for the Eighth Circuit that SEC attorneys would no longer defend its climate change disclosure rules. These disclosure obligations were established by the SEC’s “Enhancement and Standardization of Climate-Related Disclosures for Investors” Rule, adopted by the Commission on March 6, 2024.
According to the SEC’s current acting chair, Mark Uyeda, the disclosure requirements are “costly and unnecessarily intrusive.”
Disclosure Rule Background
The Disclosure Rule targeted material risks that companies face related to climate change and how those companies are managing that risk. The Disclosure Rule required companies to disclose certain climate-related information in their registration statements and annual reports including:
Climate-related risks that have or may impact business strategy, results of operation, or financial condition;
Actions to mitigate or adapt to material climate-related risks;
Management’s role in assessing and managing material climate-related risks;
Processes used by the company to assess or manage these risks;
Any targets or goals that have materially affected or are likely to affect the company’s business; and
Financial statement effects of severe weather events and other natural conditions, including costs and losses.
Following multiple petitions seeking review of the final Rule, the SEC stayed the Disclosure Rule pending judicial review before the Eight Circuit. In February, Uyeda provided some indication that its position was changing when he directed staff to notify the court not to schedule the case for argument to provide the Commission time to deliberate and determine appropriate next steps. The reason cited for the notice was “changed circumstances.” As such, the March 27 announcement is not all that surprising.
Impact of SEC Announcement
While the SEC has not officially repealed the Disclosure Rule, by no longer defending the Rule, the SEC will allow the stay to continue indefinitely and/or allow the Eighth Circuit to remand the rule to the SEC. This sequence of events indeed creates “changed circumstances,” as it means the SEC will likely take no further action to effectuate a new Rule. As a result, the March 27, 2025, announcement by the SEC effectively terminates the Disclosure Rule.
What Does this Development Mean for You?
While the SEC’s announcement means that public companies operating in the United States are not required to make publicly available disclosures concerning greenhouse gas emissions and climate-change risks and impacts, the impact of this action may be quite limited in reality. Many U.S. companies already report climate-related risks voluntarily in response to investor demand and this action has done nothing to change the requirements imposed by individual states like California or elsewhere around the globe. And, despite this limited reprieve, companies should consider potential changes to SEC rules under future administrations. While the “pendulum” of regulatory focus has swung wide under the Trump administration, there is a strong possibility that there will be a reciprocal swing in the future. As a result, companies should consider maintaining documentation of climate-related risks and management strategies should a similar rule be promulgated.
These events are developing rapidly and will continue to move at a fast pace.
Weekly Bankruptcy Alert March 31, 2025 (For the Week Ending March 30, 2025)
Covering reported business bankruptcy filings in Massachusetts, Maine, New Hampshire, and Rhode Island, and Chapter 11 bankruptcy filings in New York and Delaware listing assets of more than $1 million.
Chapter 11
Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate
GO Lab Madison, LLC(Madison, ME)
Miscellaneous Durable Goods Merchant Wholesalers
Wilmington(DE)
$1,000,001to$10 Million
$100,000,001to$500 Million
3/25/25
GO Lab, Inc.(Madison, ME)
Not Disclosed
Wilmington(DE)
$500,001to$1 Million
$10,000,001to$50 Million
3/25/25
BLH TopCo LLC2(Addison, TX)
Restaurants and Other Eating Places
Wilmington(DE)
$1,000,001to$10 Million
$50,000,001to$100 Million
3/26/25
236 West E&P LLC(New York, NY)
Not Disclosed
Manhattan(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
3/28/25
KTRV LLC(Wilmington, DE)
Coal Mining
Wilmington(DE)
$50,000,001to$100 Million
$50,000,001to$100 Million
3/30/25
Heritage Coal & Natural Resources, LLC(Meyersdale, PA)
Coal Mining
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
3/30/25
CTN Holdings, Inc.(San Francisco, CA)
Other Financial Investment Activities
Wilmington(DE)
$50,000,001to$100 Million
$100,000,001to$500 Million
3/30/25
Catona Climate Solutions, LLC(San Francisco, CA)
Other Financial Investment Activities
Wilmington(DE)
$10,000,001to$50 Million
$10,000,001to$50 Million
3/30/25
Chapter 7
Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate
59 Indian Lane, LLC(Boston, MA)
Not Disclosed
Boston(MA)
$500,000,001to$1 Billion
$0to$50,000
3/25/25
OG Tile and Flooring Inc.(Everett, MA)
Not Disclosed
Boston(MA)
$0to$50,000
$50,001to$100,000
3/26/25
1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
2Additional affiliate filings include: BLH HoldCo LLC, BLH Acquisition Co., LLC, BLH Restaurant Franchises LLC and BLH White Marsh LLC.
Hillsborough County, FL Sales Tax Increase June 1, 2025
The Florida Department of Revenue announced today that the temporary sales tax reduction in Hillsborough County, Florida will expire on May 31, 2025.
As outlined in our initial article, the 2024 legislature temporarily suspended the Hillsborough County surtaxes in order to return a portion of previously enacted and later ruled unconstitutional transportation surtax. That legislation resulted in a 1% reduction to the Hillsborough County surtaxes (6.5%).
Starting June 1, 2025, dealers of tangible personal property, admissions, and taxable services should collect a combined rate of 7.5%. For commercial rental periods occurring on or after June 1, 2025, dealers should collect a combined rate of 3.5%.
The TIP is available at the following website:
https://floridarevenue.com/taxes/tips/Documents/TIP_25A01-02.pdf
The length of the suspension is based on several factors, including the balance of the proceeds available for the suspension, which the Department has determined will last through May 31, 2025.
Louisiana Voters Overwhelmingly Reject Governor Landry’s Constitutional Amendments
On March 29, 2025, four constitutional amendments were on the ballot for Louisiana voters’ consideration. Constitutional Amendment No. 2, (CA No. 2) which passed the Louisiana legislature during the November 2024 special fiscal session as House Bill No. 7, included changes to personal income tax rates, governmental spending caps, education funding, and teacher pay raises. Also included were amendments to the Constitution that would allow local taxing authorities to exempt or reduce the assessment rate of parish property taxes on business inventory located in their parishes. However, despite strong support from the Governor and his administration, the voters of Louisiana rejected that amendment by over 60% of the ballots cast.
As CA No. 2 was an important component of the Governor’s modernization of Louisiana’s taxation system and would have provided the legislature with more flexibility in collecting and distributing revenue, it is likely that more work will have to be done during the upcoming regular fiscal session scheduled to begin on April 14 with a conclusion date of June 12.
One important component of CA No. 2 was the ability of local taxing jurisdictions to lower the assessment rate of business inventory or exempt it altogether. Under current law, local taxing jurisdictions do not have the authority to do either, and the legislature retains the sole authority to make those determinations. Because the legislature repealed the credit for property taxes paid on business inventory (the repeal of which was not tied to the passage of CA No. 2), that credit will still sunset with no apparent relief from the current local taxes levied on business inventory.
As noted above, with the upcoming fiscal session beginning soon, legislators have until the close of business on April 4 to file “general subject” bills that do not address fiscal matters. Legislators have until April 23 to file bills with a fiscal impact. It is highly likely that legislation will be proposed to address some of the issues that CA No. 2 would have amended.
As noted above, with the upcoming fiscal session beginning soon, legislators have until the close of business on April 4th to file “general subject” bills that do not address fiscal matters.
APHIS Evaluates Petitions Reviewed under 2012 Process, Will Use Process Consistent with USDA Biotechnology Regulations Going Forward
The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) announced on March 27, 2025, that it will no longer use the process it outlined in 2012 for reviewing petitions seeking a determination that a modified plant should not be subject to the regulations for the introduction of organisms altered or produced through genetic engineering (modified organisms) that are plant pests or that there is reason to believe are plant pests. On March 6, 2012, APHIS announced that it would publish two separate Federal Register notices for petitions for which it prepares an environmental assessment. 77 Fed. Reg. 13258. The first notice would announce the availability of the petition, and the second notice would announce the availability of APHIS’ decision-making documents, providing two opportunities for public comment. According to APHIS’ March 2025 announcement, at the time, APHIS anticipated that enabling earlier public engagement on the petition would help scope the subsequent analyses, including whether the petition raised substantive new issues. After evaluating the 34 petitions reviewed under the 2012 process, APHIS states that it “found that the first comment period has not yielded comments that significantly impacted the scoping for APHIS’ evaluation.” Given this experience, APHIS will institute the following process consistent with USDA’s biotechnology regulations:
Once APHIS deems a petition to be complete, it will publish a Federal Register notice that will begin a 60-day comment period on the petition and APHIS’ draft evaluation documents; and
After the comment period closes, APHIS will review the comments and any other relevant information it receives during the comment period, complete its evaluation documents, and make a final determination. APHIS will either approve or deny the petition and publish a Federal Register notice announcing the regulatory status of the modified plant and the availability of the regulatory determination and final supporting documents.
USCIS Announces Completion of FY 2026 H-1B Registration Process: Filing Period Begins April 1, 2025
The U.S. Citizenship and Immigration Services (USCIS) announced today that the H-1B registration process for Fiscal Year (FY) 2026 has been successfully completed. Following a computer-generated, random selection of H-1B petitions submitted during the FY 2026 initial registration period, USCIS determined it has received sufficient electronic registrations for unique beneficiaries and has notified all prospective petitioners. The H-1B program continues to play a critical role in allowing U.S. employers to attract highly skilled talent from around the world to meet their workforce needs and drive innovation.
For those whose registrations were selected in this year’s lottery, USCIS has confirmed that the filing period for H-1B cap-subject petitions will officially open on April 1, 2025. Selected petitioners may submit their H-1B petitions, provided they meet all eligibility requirements and include the necessary supporting documentation.
Key Reminders for H-1B Petition Filings:
Compliance with USCIS Requirements: To help avoid delays or denials, petitioners must ensure that all documents are complete, accurate, and submitted to the correct filing location or online in compliance with USCIS guidelines. Petitioners must submit evidence of the beneficiary’s valid passport or travel document used at the time of registration to identify the beneficiary.
Timely Filing: Petitions must be filed within the designated filing period, at least 90 days, as late submissions will not be accepted.
As the filing period begins, we encourage petitioners to remain proactive and organized to facilitate a smooth petition submission process. For registrants who were not selected in this year’s lottery, we understand the challenges this outcome may present. Employers and prospective employees may want to explore alternative visa pathways or other strategies to achieve their hiring and professional goals. As the FY 2026 H-1B process progresses, USCIS may hold additional lotteries if the agency determines that it has not received enough petitions to meet the annual H-1B cap.
Trump Administration Launches Comprehensive Review of Clean Water Act Definition for “Waters of the United States” (WOTUS)
On March 24, 2025, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (the “Army Corps”) (collectively the “Agencies”) announced a comprehensive stakeholder engagement process to revise the definition of “waters of the United States” (WOTUS), a phrase that defines the geographic scope of regulatory jurisdiction under the Clean Water Act (CWA). In a formal notice published in the Federal Register, the Agencies stated that they intend to use stakeholder feedback from this process to “inform future administrative actions” on the WOTUS definition, including rulemaking.
This initiative follows decades of WOTUS litigation and shifting WOTUS rules promulgated by the Agencies during the Obama, Biden, and Trump administrations, and it responds to ongoing challenges in implementing the Supreme Court’s landmark decision in Sackett v. EPA, issued in 2023, which significantly narrowed federal jurisdiction over wetlands.
The Sackett Decision and Ongoing Regulatory Challenges
The Sackett case was a dispute over wetlands, but the Supreme Court’s holding is also relevant to other water bodies:
As to wetlands, Sackett held that CWA jurisdiction covers “only those wetlands with a continuous surface connection to bodies that are [WOTUS] in their own right, so that they are indistinguishable from those waters.” The Court rejected EPA’s position that jurisdiction extended to wetlands that are “separated from [WOTUS] by dry lands.”
As to streams, lakes, and other water bodies, Sackett held that CWA jurisdiction covers only those waters that are “relatively permanent, standing or continuously flowing.”
Scope of “Relatively Permanent” Waters: To date, the Supreme Court has not clearly defined “relatively permanent” waters. This category includes certain streams and other water conveyances. In Sackett, the Court held that jurisdiction is not cut off by “temporary interruptions in surface connection” that “may sometimes occur because of phenomena like low tides or dry spells.” Sackett also adopted Justice Scalia’s plurality opinion from Rapanos v. United States, issued in 2006. In that opinion, the plurality confirmed that “intermittent” and “ephemeral” streams do not fall within the scope of CWA jurisdiction. Besides saying CWA jurisdiction could potentially extend to a hypothetical “seasonal river” that flowed continuously for 290 days per year, the plurality declined to spell out “exactly when the drying-up of a streambed is continuous and frequent enough” to cut off jurisdiction.
Jurisdiction over Ditches: The Rapanos plurality also analyzed the contentious issue of CWA jurisdiction over ditches. The Agencies have historically treated ditches as a type of jurisdictional “tributary” unless exempted by regulation, but the Rapanos plurality suggested that most ditches are not jurisdictional because the CWA defines ditches as “point sources” rather than “navigable waters” and because ditches typically convey “intermittent” flow. Sackett’s majority opinion did not directly analyze CWA jurisdiction over ditches, but a concurring opinion in Sackett stated that a roadside ditch at issue in that case was not a jurisdictional “tributary”—because the ditch “is not, has never been, and cannot reasonably be made a highway of interstate or foreign commerce.”
The 2023 “Conforming Rule” and Agency Interpretations: In 2023, the Biden administration adopted a rule that attempted to conform the regulatory definition of WOTUS to Sackett (the “2023 Conforming Rule”). In the 2023 Conforming Rule, the Agencies took a minimalistic approach to the task at hand: they removed language that was clearly inconsistent with Sackett, but did not attempt to clarify the meaning of “continuous surface connection” or “relatively permanent” waters.
In part because the 2023 Conforming Rule left room for interpretation by the Agencies, the WOTUS definition remains controversial. In the March 24 notice, the Agencies noted stakeholder concerns that the Conforming Rule does not “adequately comply with the Sackett decision” on its face. The Agencies also noted concerns about how the Agencies have interpreted and applied to 2023 Conforming Rule in particular cases, raising questions such as: which features are “connected to” waters that are “relatively permanent” WOTUS; which waters as “relatively permanent” in the first place; how to implement the “continuous surface connection” requirement; and “which ditches are properly considered to be [WOTUS].”
These concerns have sometimes played out in court, where the Agencies have argued that ditches and channels with “intermittent” flow can still be WOTUS after Sackett. At least one district court has agreed, holding that a channel conveying only “intermittent” flow was jurisdictional because it conveyed flow “continuously during certain times of the year.” As a result of the 2023 Conforming Rule’s ambiguity and the continuing WOTUS litigation, the regulated community continues to face significant uncertainty.
March 12 Announcement and Policy Memo on “Abutting” Wetlands: The March 24 notice follows a March 12 announcement by EPA Administrator Zeldin of the WOTUS stakeholder engagement effort. The March 12 announcement included an unpublished preview of the March 24 notice. As part of the announcement, EPA also issued a new policy memorandum discussing “abutting” wetlands. The memo provides guidance on how to distinguish non-jurisdictional wetlands that are near but separated from jurisdictional waters by a berm, a dike, uplands, or a similar feature, from jurisdictional wetlands (which “directly abut” and have a “continuous surface connection” to jurisdictional waters).
Comprehensive Stakeholder Engagement Strategy
The Agencies will conduct a multi-pronged approach to gather input on the WOTUS definition through listening sessions and written comments, as follows:
Listening sessions: Six targeted listening sessions will be held in April and May 2025. Two sessions will be open to all stakeholders, and one session held for each of the following: industry and agricultural stakeholders; States; environmental and conservation groups; and Tribes. Oral comments will be accepted on a first-come, first-serve basis.
Written comments: Comments are due by April 23, 2025, and can be submitted through the Federal eRulemaking Portal, via email, or by mail or hand delivery.
Specific topics for input: The Agencies are seeking stakeholder input on key WOTUS implementation issues that impact a wide range of private and public stakeholders, including:
The geographic scope of “relatively permanent” waters;
The meaning of “continuous surface connection” and related issues, including the Sackett court’s statement that ‘temporary interruptions in surface connection may sometimes occur because of phenomena like low tides or dry spells’”; and
How to determine the jurisdictional status of ditches and related issues, including whether the Agencies should consider factors such as flow regime (“e.g., relatively permanent status or perennial or intermittent flow regimes”), physical features, “excavation in aquatic resources versus uplands,” “type or use of the ditch (e.g., irrigation and drainage), or “biological indicators like the presence of fish.”
Implications for the Regulated Community
This initiative represents a critical opportunity for stakeholders in the regulated community to influence the future interpretation of WOTUS by the Agencies and the courts. The Trump Administration and the Agencies have emphasized their commitment prioritizing “practical implementation approaches” and seeking to provide durability, stability, and more efficient regulatory processes. This suggests that the Agencies will be especially receptive to comments from the regulated community.
After reviewing the full Federal Register notice, stakeholders impacted by WOTUS issues should consider submitting comments. In the past, many WOTUS commenters have provided detailed descriptions of their own properties, operations, infrastructure, and projects, along with examples of particular local waters. These kinds of comments can help the Agencies better understand how the WOTUS definition impacts different stakeholders “on the ground.” The most effective comments will also include arguments explaining how particular waters fit within the Sackett-Rapanos legal framework discussed above.
Europe: UK Sanctions Regulator Highlights Compliance Failures
On 13 February 2025, the UK’s Office of Financial Sanctions Implementation (OFSI) published an assessment of suspected sanctions breaches involving UK financial services firms since February 2022. It highlights three areas of concern:
Compliance
OFSI has identified several common issues that contribute to non-compliance by UK financial institutions:
Improper maintenance of frozen assets, particularly in relation to debits from accounts held by sanctioned persons (DPs);
Breaches of specific and general OFSI license conditions;
Inaccurate ownership assessments; and
Inaccurate UK nexus assessments.
Russian DPs and Enablers
Professional and non-professional enablers have been increasingly providing the following services on behalf of Russian DPs:
Maintaining the lifestyles and assets of DPs;
Attempting to front on behalf of DPs to claim ownership of frozen assets; and
Employing increasingly sophisticated measures to evade UK financial sanctions prohibitions, particularly through the exploitation of crypto-assets.
Indicators of enablers might include:
Individuals associated with DPs receiving funds of significant value;
Regular payments between companies controlled or owned by DPs;
New individuals making payments formerly made by a DP;
Discrepancies in name spellings or transliterations (esp. from Cyrillic);
Recently obtained non-Russian citizenships; and
Frequent name changes.
Intermediary Countries
Suspected breaches of UK financial sanctions prohibitions by Russian DPs often involve intermediary jurisdictions including Austria, British Virgin Islands, the Cayman Islands, Cyprus, Guernsey, Isle of Man, Luxembourg, Switzerland, Turkey, and United Arab Emirates. The assessment includes a non-exhaustive list of suspicious activities that the OFSI has observed in several of these countries.
Conclusion
Financial institutions need to adopt a proactive approach to avoid their services being exploited as instruments of evasions and in turn avoid financial and reputational repercussions of non-compliance.
For further information, please see our corresponding alert.
Involved With a Delaware Corporation? Three Major Changes to Know
On March 25, 2025, Delaware Governor Matt Meyer signed Senate Bill 21 into law, effecting significant changes to the General Corporation Law of the State of Delaware (DGCL), the statutory law governing Delaware corporations. With over two-thirds of Fortune 500 companies domiciled in Delaware, it continues to be the preferred state of incorporation for businesses drawn to its modern statutory law, renowned Court of Chancery, and developed case law.
Consequently, below are three major takeaways for businesses incorporated in Delaware or individuals involved with a Delaware corporation—as a director, officer, or stockholder—here are three major takeaways:
1. Procedural Safe Harbor Cleansing Related Party Transactions
Under Delaware corporate law, related party transactions involving a fiduciary, such as where a director of a corporation stands on both sides of a transaction, are potentially subject to the entire fairness standard of review. This onerous standard of reviewing a fiduciary’s actions in certain conflicted transactions places the burden on the fiduciary to prove that the self-dealing transaction was fair—both in terms of the process (fair dealing) and substantive (fair price)—given corporate law theory that the fiduciary’s interests may not be aligned with maximizing stockholder value.
Senate Bill 21 establishes a safe harbor pursuant to Section 144 of DGCL for these conflicted transactions (other than take-private transactions) if the transaction is approved by either:
A majority of the disinterested members of the board or
A majority of the votes are cast by the disinterested stockholders—in each case, subject to certain additional requirements. Consequently, if transactional planners and corporations follow the new procedural safe harbor when entering certain related party transactions, they greatly minimize the likelihood of a successful challenge of any breach of fiduciary duty claim against the corporation’s board.
2. Limiting Who Qualifies as a Controlling Stockholder
Prior to the enactment of Senate Bill 21, whether a stockholder was a “controlling stockholder” and was therefore subject to certain rules under Delaware corporate law, was not set forth in DGCL. Rather, Delaware case law helped transactional planners to determine if a stockholder would be treated as such.
Senate Bill 21 codifies the definition of this term in Section 144 of DGCL. Under the revised Section 144, a “controlling stockholder” is a stockholder who:
Controls a majority in voting power of the outstanding stock entitled to vote generally in the election of directors;
Has the right to control the election of directors who control the board; or
Has the functional equivalent of majority control by possessing at least one-third in stockholder voting power and power to exercise managerial authority over the business of the corporation. This update provides transactional planners and corporations with clear guidelines over who qualifies as a controlling stockholder.
3. Narrowing Stockholder Information Rights
Over the past years, many Delaware corporations have been subject to an increasing number of “Section 220 demands” and related litigation that is often expensive for corporations to handle. Section 220 of DGCL provides stockholders with a statutory right to inspect a corporation’s books and records if the stockholder satisfies certain requirements.
Senate Bill 21 amends Section 220 of DGCL by narrowing what books and records of a corporation the stockholder is generally entitled to review after satisfying certain requirements. Specifically, the term “books and records,” as defined in Section 220 of DGCL, is now limited to certain organizational and financial documents of the corporation, including its annual financial statements for the preceding three years, board minutes, stockholder communication, and other formal corporate documents. Additionally, a stockholder’s demand must describe with “reasonable particularity” its purpose and requested books and records, and such books and records must be “specifically related” to the proper purpose.
In summary, Senate Bill 21’s amendments to DGCL give transactional planners and corporations additional clarity over cleansing conflicted transactions, who qualifies as a controlling stockholder, and the books and records a stockholder may access under Section 220.
“No Robo Bosses Act” Proposed in California to Limit Use of AI Systems in Employment Decisions
A new bill in California, SB 7, proposed by State Senator Jerry McNerney, seeks to limit and regulate the use of artificial intelligence (AI) decision making in hiring, promotion, discipline, or termination decisions. Also known as the “No Robo Bosses Act,” SB 7 applies a broad definition of “automated decision system,” or “ADS,” as: any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decision making and materially impacts natural persons. An automated decision system does not include a spam email filter, firewall, antivirus, software, identity and access management tools, calculator, database, dataset, or other compilation of data.
Specifically, SB 7 would:
Require employers to provide a plain-language, standalone notice to employees, contractors, and applicants that the employer is using ADS in employment-related decisions at least 30 days before the introduction of the ADS (or by February 1, 2026, if the ADS is already in use).
Require employers to maintain a list of all ADS in use and include that list in the notice to employees, contractors, and applicants.
Prohibit employers from relying primarily on ADS for hiring, promotion, discipline, or termination decisions.
Prohibit employers from using ADS that prevents compliance with or violates the law or regulations, obtains or infers a protected status, conducts predictive behavior analysis, predicts or takes action against a worker for exercising legal rights, or uses individualized worker data to inform compensation.
Allow workers to access the data collected and correct errors.
Allow workers to appeal an employment-related decision for which ADS was used, and require an employer to have a human reviewer.
Create enforcement provisions against discharging, discriminating, or retaliating against workers for exercising their rights under SB 7.
Similar to SB 7, the California Civil Rights Council has proposed regulations that would protect employees from discrimination, harassment, and retaliation related to an employer’s use of ADS. The Civil Rights Council identifies several examples, such as predictive assessments that measure skills or personality trainings and tools that screen resumes or direct advertising, that may discriminate against employees, contractors, or applicants based on a protected class. The proposed rule and SB 7 would work in tandem, if both are passed through their respective government bodies.
The bill is still in the beginning stages. It is set for its first committee hearing — Senate Labor, Public employment, and Retirement Committee — on April 9, 2025. How the bill may transform before (and if) it becomes law is still unknown, but because of the potential reach of this bill and the possibility other states may emulate it, SB 7 is one to watch.