FSA Deviations Issued Following Revocation of EO 11246
A letter issued by director of the U.S. General Services Administration (GSA) on February 15 marked a significant shift in federal procurement practices. The Civilian Agency Acquisition Council (CAAC) Letter authorizes federal agencies to deviate from certain provisions of the Federal Acquisition Regulations (FAR) and procurement practices that were mandated under Executive Order (EO) 11246, which was revoked by President Trump’s EO 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”)
Per the CAAC Letter, federal contractors and subcontractors are relieved from maintaining affirmative action plans and complying with the related clauses under FAR Subpart 22.8, which outlined Equal Opportunity provisions.
Specifically, the CAAC Letter details the following changes:
Revocation of Clauses Previously Used to Implement Rescinded EO 11246: Several FAR clauses that were previously used should now be excluded from new contracts. These include:
FAR 52.222-21, Prohibition of Segregated Facilities
FAR 52.222-22, Previous Contracts and Compliance Reports
FAR 52.222-23, Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity for Construction
FAR 52.222-24, Pre-award On-Site Equal Opportunity Compliance Evaluation
FAR 52.222-25, Affirmative Action Compliance
FAR 52.222-26, Equal Opportunity
FAR 52.222-27, Affirmative Action Compliance Requirements for Construction
FAR 52.222-29, Notification of Visa Denial
Impact on the System for Award Management (SAM): Contractors will no longer be required to comply with SAM representation requirements.
“Gender Identity” Clause Changes: Pursuant to EO 14168 (“Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”), the term “gender identity” has been removed from FAR 22.801 and related clauses in FAR part 52.
While the changes announced in the CAAC Letter may reduce the regulatory burden on federal contractors, contractors must remain vigilant. Notably, the letter emphasizes that federal contractors are still bound by existing civil rights and non-discrimination laws in the United States, including Title VII of the Civil Rights Act. Even though the recent EOs modify federal contracting policies, contractors cannot rely on compliance with the EOs to defend against violating such anti-discrimination laws.
Federal contractors must stay apprised to how entities are responding to the CAAC Letter. Some federal entities are attempting to add clauses referencing anti-discrimination laws and the False Claims Act (FCA). For example, the Army and Air Force Exchange Service (AAFES) has posted contract terms that require contractors to certify that they do not operate programs in violation of federal anti-discrimination laws, explicitly referencing the False Claims Act. It is unclear whether this contractual term would survive a legal challenge, so contractors should remain vigilant when reviewing this language.
As always, federal contractors should pay close attention to their contractual obligations and ensure they are up to date on the latest procurement requirements. Employers should consult legal counsel before taking action with regard to this whirlwind of changes in federal mandates.
The Impact of AI Regulations on Insurtech
Insurtech is steeped in artificial intelligence (AI), leveraging the technology to improve insurance marketing, sales, underwriting, claims processing, fraud detection and more. Insurtech companies are likely only scratching the surface of what is possible in these areas. In parallel, the regulation of AI is expected to create additional legal considerations at each step of the design, deployment and operation of AI systems working in these contexts.
Legal Considerations and AI Exposure
As with data privacy regulations, the answer to the question “Which AI laws apply?” is highly fact-specific and often dependent on the model’s exposure or data input. Applicable laws tend to trigger based on the types of data or location of the individuals whose data is leveraged in training the models rather than the location of the designer or deployer. As a result, unless a model’s use is strictly narrowed to a single jurisdiction, there is likely to be exposure to several overlapping regulations (in addition to data privacy concerns) impacting the design and deployment of an Insurtech AI model.
Managing Regulatory Risk in AI Design
Given this complexity, the breadth of an Insurtech AI model’s exposure can be an important threshold design consideration. Companies should adequately assess the level of risk from the perspective of limiting unnecessary regulatory oversight or creating the potential for regulatory liabilities, such as penalties or fines. For instance, an Insurtech company leveraging AI should consider if the model in question is intended to be used for domestic insurance matters only and if there is value in leveraging data related to international data subjects. Taking steps to ensure that the model has no exposure to international data subjects can limit the application of extraterritorial, international laws governing AI and minimize the potential risk of leveraging an AI solution. On the other hand, if exposure to the broadest possible data is desirable from an operations standpoint, for instance, to augment training data, companies need to be aware of the legal ramifications of such decisions before making them.
Recent State-Level AI Legislation
In 2024, several U.S. states passed AI laws governing the technology’s use, several of which can impact Insurtech developers and deployers. Notably, state-level AI bills are not uniform. These laws range from comprehensive regulatory frameworks, such as Colorado’s Artificial Intelligence Act, to narrower disclosure-based laws such as California’s AB 2013, which will require AI developers to publicly post documentation detailing their model’s training data. Several additional bills relating to AI regulation are already pending in 2025, including:
Massachusetts’ HD 3750: Would require health insurers to disclose the AI use including, but not limited to, in the claims review process and submit annual reports regarding training sets as well as an attestation regarding bias minimization.
Virginia’s HB 2094: Known as the High-Risk Artificial Intelligence Developer and Deployer Act, would require the implementation of a risk management policy and program for “high-risk artificial intelligence systems,” defined to include “any artificial intelligence system that is specifically intended to autonomously make, or be a substantial factor in making, a consequential decision (subject to certain exceptions).
Illinois’ HB 3506: Among other things, this bill would require developers to publish risk assessment reports every 90 days and to complete annual third-party audits.
The Growing Importance of Compliance
With the federal government’s evident step back in pursuing an overarching AI regulation, businesses can expect state authorities to take the lead in AI regulation and enforcement. Given the broad and often consequential use of AI in the Insurtech context, and the expectation that this use will only increase over time given its utility, businesses in this space are advised to keep a close watch on current and pending AI laws to ensure compliance. Non-compliance can raise exposure not only to state regulators tasked with enforcing these regulations but also potentially to direct consumer lawsuits. As noted in our prior advisory, being well-positioned for compliance is also imperative for the market from a transactional perspective.
The Insurtech space is growing in parallel with the expanding patchwork of U.S. AI regulations. Prudent growth in the industry requires awareness of the associated legal dynamics, including emerging regulatory concepts across the nation.
CNIPA Rejects 63 Attempts to Maliciously Register DeepSeek Trademarks
On February 24, 2025, China’s National Intellectual Property Administration (CNIPA) announced that it rejected 63 trademark applications attempting to maliciously register DeepSeek and graphic. CNIPA stated that, “some agencies are suspected of providing illegal services, with obvious intentions of ‘riding the wave’ and seeking improper benefits. CNIPA resolutely cracked down on such malicious applications.”
China has previously rejected en masse applications and ex-officio cancelled trademarks that have been maliciously applied for and registered, respectively. For example, in 2022, CNIPA cancelled trademarks for Olympic mascots and athletes for “infringing on the personality rights and other legitimate rights and interests of others, has caused significant adverse social impact, and damaged the good image of China’s strict protection of intellectual property rights.” CNIPA rejected 429 trademark applications, including those for Eileen Gu (谷爱凌 and homonyms). CNIPA also cancelled, ex-officio, 43 trademarks, 20 of which were for Eileen Gu.
The original announcement and full list of rejected applications is available here (Chinese only).
The Future of NEPA Implementation Without CEQ Regulations
On February 19, 2025, the Council on Environmental Quality (“CEQ”) announced an Interim Final Rule rescinding its longstanding regulations implementing the National Environmental Policy Act (“NEPA”) and issued a new Memorandum on the Implementation of NEPA (“Guidance”) to all federal departments and agencies. President Trump directed both actions in his January 20, 2025 Unleashing American Energy Executive Order (“EO 14154”).
The Interim Final Rule, to be published in the Federal Register on February 25, 2025, removes all existing CEQ regulations implementing NEPA from the Code of Federal Regulations, many of which have been in place since 1978.
The Guidance implements the President’s direction in EO 14154 to “expedite and simplify the permitting process” and strives to minimize potential delays and confusion associated with the removal of CEQ’s regulatory framework for consistent NEPA implementation across agencies. The Guidance “encourages” agencies to use the CEQ regulations issued during the first Trump Administration (the “2020 Rule”) as “an initial framework” while agencies revise or establish agency-specific NEPA implementing procedures over the next year, as directed by EO 14154. Until those changes are complete, the Guidance directs agencies to follow existing practices and procedures, with adjustments for consistency with the NEPA statute, EO 14154, and the Guidance. Further, the Guidance directs agencies to “consider voluntarily relying” on CEQ regulations for ongoing NEPA reviews and lawsuits on NEPA reviews completed while the regulations were still in effect.
The Guidance expressly states that “[a]gencies should not delay pending or ongoing NEPA analyses while undertaking these revisions.” Despite this explicit instruction, the dismantling of a regulatory structure that stood for nearly five decades may cause at least short-term NEPA review delays.
Background
NEPA applies to a broad range of actions with a federal nexus, including federal permit applications, federal land management decisions, highway construction, and other federally funded projects. Through the NEPA process, federal agencies must evaluate the environmental and related social and economic effects of their proposed actions. The NEPA statute and regulations remained largely unchanged from the 1970’s until recent revisions to the CEQ regulations made during the Trump and Biden Administrations in 2020, 2022, and 2024, and statutory amendments to NEPA made by the Fiscal Responsibility Act in 2023.
Over the decades, courts have developed a robust body of caselaw on the NEPA statute and CEQ regulations. In the last several months, however, two court cases questioned CEQ’s underlying authority to issue binding regulations. In November 2024, a D.C. Circuit panel found the CEQ regulations exceeded CEQ’s authority in Marin Audubon Society v. Federal Aviation Administration, although a majority of the court in denying rehearing indicated that portion of the court’s decision was non-binding dicta. More recently, the District of North Dakota vacated Biden’s 2024 Phase II regulations on the grounds that CEQ lacked rulemaking authority in Iowa v. CEQ.
The Interim Final Rule
The Interim Final Rule rescinds all of CEQ’s NEPA regulations and is expected to be published in the Federal Register on February 25, 2025. The Interim Final Rule does not take a position on CEQ’s prior interpretations of NEPA’s procedural requirements, and CEQ avoided a definitive statement on whether it lacks authority to maintain the NEPA regulations. The Interim Final Rule will be effective 45 days after publication.
CEQ issued this as an “interim final rule,” avoiding the typically required notice and comment rulemaking process. CEQ states that this procedural mechanism was appropriate both because the rule is “procedural” and because there was “good cause” for doing so. Although the Interim Final Rule will be effective April 11, CEQ is allowing a “voluntary” 30-day public comment period, and CEQ committed to “consider[ing] and respond[ing] to comments before finalizing” the Interim Final Rule. This is a procedural process that is vulnerable to litigation under the Administrative Procedure Act.
The Guidance
The Guidance directs agencies to establish or revise their NEPA implementing procedures by February 19, 2026, providing at least 30 days but no more than 60 days for public comment on proposed regulations, to the extent public comment is required. The Guidance offers certain recommendations for agencies as they promulgate and revise their own NEPA implementing procedures, including:
developing clear procedures for reviewing project sponsor-prepared environmental assessments (“EAs”) and environmental impact statements (“EISs”);
ensuring procedures comply with statutory deadlines (two years for EISs and one year for EAs);
limiting alternatives analyzed to those that are “technically and economically feasible” and “meet the purpose and need for the proposed action”;
limiting analyzed effects to those that are “reasonably foreseeable,” regardless of whether those effects can be characterized as “cumulative”;
considering the establishment of “thresholds” for Federal funding that would not constitute a “major Federal action” triggering NEPA review; and
eliminating environmental justice analyses from NEPA reviews, except to any extent otherwise required by law.
The Guidance includes additional recommendations to help promote consistency and predictability in the absence of governmentwide CEQ regulations. The Guidance specifies additional elements that agencies should, at a minimum, include in their procedures. It also requires agencies to consult with CEQ in developing or revising their NEPA procedures. Over the next year, CEQ will host monthly meetings of the Federal Agency NEPA Contacts and NEPA Implementation Working Group required by EO 14154 to share additional guidance and provide assistance to agencies as they work to develop or revise their NEPA procedures.
In the meantime, the Guidance recommends that agencies continue to follow their existing NEPA practices and procedures and voluntarily rely on the CEQ regulations for projects currently undergoing NEPA review and legal challenges.
Implications
The intent of the Interim Final Rule and Guidance, consistent with EO 14154, is to expedite critical project approvals. However, the uncertainty caused by such wholesale changes may have the opposite effect, at least in the near term. These significant changes—in many cases to longstanding regulatory requirements—risk creating confusion at the agency level, which could lead to delays in NEPA reviews. This is especially true in the short-term, where CEQ’s NEPA regulations have been rescinded but agencies have not yet implemented new or revised NEPA regulations of their own. Additionally, inevitable litigation—on the Interim Final Rule itself, on CEQ’s rulemaking authority, or on the agency-specific regulations developed through this process—will further add to uncertainty and confusion. There is a risk that projects may benefit from a potentially faster NEPA review, only to face increased litigation risk after project approval. Moving forward, it will be critically important for project proponents and other stakeholders to engage with relevant permitting agencies and participate actively in the development of agency-specific NEPA implementing procedures.
EPA Reopens, Extends Comment Periods for Proposed PFAS Rule and Notices
On February 21, 2025, the U.S. Environmental Protection Agency (EPA) extended the comment deadline for the January 17, 2025, proposed rule to clarify the timeframe for when companies must first notify a customer that one of its mixtures or trade name products contains a per- or polyfluoroalkyl substance (PFAS) listed on the Toxics Release Inventory (TRI). 90 Fed. Reg. 10043. As reported in our January 22, 2025, blog item, the Biden EPA proposed the rule in response to questions from industry regarding the effective date of supplier notifications for PFAS added to the TRI pursuant to the National Defense Authorization Act for Fiscal Year 2020 (NDAA). Stakeholders questioned whether the supplier notification requirements for such PFAS begin on January 1, when the PFAS are added to the statutory TRI chemical list, or upon EPA completing a rulemaking to include the added PFAS in the Code of Federal Regulations. EPA has reopened the comment period to allow interested parties additional time to review and analyze thoroughly how the proposed rule may impact parties potentially subject to it. Comments are due March 24, 2025.
EPA published a separate notice on February 21, 2025, extending the comment period on the following notices:
Draft National Recommended Ambient Water Quality Criteria for the Protection of Human Health for Perfluorooctanoic Acid, Perfluorooctane Sulfonic Acid, and Perfluorobutane Sulfonic Acid, 89 Fed. Reg. 105041. EPA announced the availability of draft Clean Water Act (CWA) national recommended ambient water quality criteria (AWQC) for the protection of human health for three PFAS for a 60-day public comment period. EPA states that it developed these draft PFAS national recommended human health criteria (HHC) to reflect the latest scientific information, consistent with current EPA guidance, methods, and longstanding practice. Comments are due April 25, 2025.
Draft Sewage Sludge Risk Assessment for Perfluorooctanoic Acid (PFOA) and Perfluorooctane Sulfonic Acid (PFOS), 90 Fed. Reg. 3859. As reported in our January 14, 2025, blog item, according to EPA, the findings show that there may be human health risks associated with exposure to PFOA or PFOS with all three methods of using or disposing of sewage sludge — land application of biosolids, surface disposal in landfills, or incineration. Comments are due April 16, 2025.
90 Fed. Reg. 10078. EPA states in each Federal Register notice that comments previously submitted need not be resubmitted as they are already incorporated into the public record and will be considered in the final action as appropriate. Where appropriate, EPA may consider further extending the comment periods.
Compliance Still Matters: The Future of FCPA Enforcement
Shifts in Enforcement
On January 20, President Trump issued an Executive Order designating certain international cartels as Foreign Terrorist Organizations (FTOs) or Specially Designated Global Terrorists (SDGTs). As stated in the order, it is now U.S. policy “to ensure the total elimination of these organizations’ presence in the United States and their ability to threaten the territory, safety, and security, of the United States through their extraterritorial command-and-control structures.”
On February 5, Attorney General Pamela Bondi issued fourteen memos on new enforcement priorities. Notably, the “Total Elimination of Cartels and Transnational Criminal Organizations” memo (the “Directive”) directs the DOJ to eliminate cartels and transnational criminal organizations (TCOs). The Directive requires the DOJ’s FCPA Unit to “prioritize investigations related to foreign bribery that facilitates the criminal operations of cartels and [TCOs],” shifting “focus away from investigations and cases that do not involve such a connection.” The Directive references examples, including “bribery of foreign officials to facilitate human smuggling and the trafficking of narcotics and firearms.”
On February 10, President Trump issued an Executive Order that: (1) pauses enforcement of the FCPA for an 180-day period; (2) directs the DOJ to issue revised guidance around FCPA enforcement, consistent with the administration’s national security and foreign affairs interests; (3) calls for the DOJ to review all open and pending FCPA investigations and enforcement actions, taking appropriate action as aligned with the order’s objectives; as well as (4) contemplates the DOJ reviewing prior enforcement actions to determine if “remedial measures” are appropriate.
Together, these actions demonstrate a profound shift in FCPA enforcement by moving away from traditional corporate corruption within otherwise legitimate industries to organized criminal syndicates. Companies are no doubt questioning the implications of these recent developments. Below we examine case studies of what these new enforcement areas may look like and offer advice for how companies can prepare for these enforcement shifts.
Case Studies
The shift in enforcement priorities on cartels and TCOs can be interpreted broadly, which may impact how companies evaluate their operations, especially those companies with activities in jurisdictions with heightened risks of cartel and TCO influence.
Lafarge
In October 2022, Lafarge S.A., a French multinational cement company, pleaded guilty in the United States to charges of conspiring to provide material support to designated foreign terrorist organizations, specifically ISIS and the al-Nusrah Front. From 2013 to 2014, Lafarge’s Syrian subsidiary made payments totaling approximately $5.92 million to these groups to maintain operations at its cement plant in Jalabiya, Syria. These payments were intended to secure protection for employees, ensure continued plant operations, and gain a competitive advantage in the Syrian cement market. As part of the plea agreement, Lafarge agreed to pay $778 million in fines and forfeitures. This case marked the first instance of a corporation being charged and pleading guilty in the U.S. to providing material support to foreign terrorist organizations.
According to then Deputy Attorney General Lisa Monaco, the case sent a “clear message to all companies, but especially those operating in high-risk environments, to invest in robust compliance programs, pay vigilant attention to national security compliance risks, and conduct careful due diligence in mergers and acquisitions.”
Chiquita
In March 2007, Chiquita Brands International, a major U.S. banana producer, pleaded guilty to charges of engaging in transactions with a designated terrorist organization. The company admitted to paying over $1.7 million between 1997 and 2004 to the United Self-Defense Forces of Colombia (AUC), a paramilitary group recognized by the U.S. government as a terrorist organization since 2001. These payments were purportedly made to protect Chiquita’s employees and operations in Colombia’s volatile regions.
Despite the AUC’s designation as a terrorist organization, Chiquita continued the payments, rationalizing them as necessary for employee safety. Internal documents revealed that company executives were aware of the legal and ethical implications but proceeded with the payments, describing them as the “cost of doing business in Colombia.” As part of a plea agreement with the DOJ, Chiquita consented to a $25 million fine and five years of corporate probation. According to then U.S. Attorney Jeffrey A. Taylor, “[f]unding a terrorist organization can never be treated as a cost of doing business…American businesses must take note that payments to terrorists are of a whole different category. They are crimes. But like adjustments that American businesses made to the passage of the [FCPA] decades ago, American businesses, as good corporate citizens, will find ways to conform their conduct to the requirements of the law and still remain competitive.”
Although the Lafarge and Chiquita cases turned on violations of anti-terrorism laws, they underscore the significant challenges multinational corporations face when operating in high-risk jurisdictions, especially those companies with complex global supply chains, third party engagements, and/or local government interaction in these regions. Further investment in compliance under these circumstances is advisable given the heightened risks these companies may face.
What Should Companies Keep In Mind?
The Directive and related Executive Orders should not be interpreted as a repeal of the FCPA or FEPA, nor a nullification of the importance of compliance. Both the FCPA and FEPA remain valid and fully in force despite the 180-day enforcement pause, meaning that companies subject to the FCPA are still required to comply with the statute’s provisions. Maintaining robust, well-resourced, and effective compliance programs is not only essential but also expected, regardless of shifting enforcement priorities.
Companies should consider the following issues as they navigate this shift:
Voluntary Self-Disclosure. The Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure policy remains in place. This policy lays out the benefits – ranging from reduced criminal or monetary penalties to non-prosecution or deferred prosecution agreements – of self-reporting, assuming the standards for voluntary self-disclosure are met. The DOJ’s Whistleblower Pilot Program also remains intact; companies should continue to ensure that internal whistleblower programs are adequately staffed and complaints timely addressed.
Foreign Legal Frameworks. Many countries, including the U.K. and France, have enacted anti-bribery laws that have a broad reach and continue to rigorously enforce those laws. As the U.S. shifts its FCPA enforcement focus, especially towards non-U.S. companies, foreign regulators may increase scrutiny on U.S. entities. Additionally, the U.S. remains obligated under the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which requires signatories to criminalize bribery involving foreign government officials, potentially causing friction with the administration’s new enforcement directives.
Broader Discretion for United States Attorney’s Offices’ (USAOs). The Directive authorizes USAOs to pursue FCPA cases involving cartels or TCOs with just 24-hours of notice to the DOJ’s FCPA Unit, removing the requirement to first obtain approval from the DOJ’s Criminal Division’s Fraud Section. This arguably grants USAOs more discretion and flexibility to pursue FCPA cases linked to cartels and TCOs, which could result in increased FCPA enforcement activity following the initial 180-day pause.
Current Open and Pending FCPA Matters. There is no indication that ongoing or pending FCPA investigations and enforcement actions will be immediately closed. Rather the February 10 Executive Order instructs an internal review of current FCPA investigations and enforcement actions in light of shifting priorities. Regardless, companies under investigation by the DOJ for potential FCPA violations should not assume dismissal is a foregone conclusion.
Statute of Limitations. The FCPA’s anti-bribery provisions carry a five-year statute of limitations, while the accounting provisions have a six-year limit. These periods can be extended while DOJ seeks foreign evidence under Mutual Legal Assistance Treaty requests. Recent, ongoing, or future violations could still be fair game under the current administration, regardless of refocused enforcement priorities, as well as the next administration.
SEC Enforcement. While many may anticipate that the SEC will follow suit, announcing similar priority shifts to FCPA enforcement as the DOJ, the SEC, at present, appears to be business as usual enforcing FCPA violations. In other words, issuers falling under the SEC’s jurisdiction should continue to be mindful of their obligations under the FCPA.
Compliance Program Assessment. Companies should continue to evaluate their risk profiles by assessing their industry sector, where they operate, the extent of third-party engagements, interactions with government officials, the current regulatory landscape, and other emerging risks they may face. Under forthcoming guidance, companies may need to conduct a more targeted assessment of their activities in higher-risk markets for cartel and TCO involvement, considering specific business activities and interactions that could expose the company to heightened risks associated with cartels and TCOs. As a result, companies may identify potential gaps in their compliance programs, leading them to, for instance, improve financial oversight, refocus on employee training and internal communications, revise third party due diligence processes and contractual terms and conditions, and/or enhance internal controls around suppliers, vendors, local partners, and other third parties.
Takeaways
Effective and robust compliance programs help to mitigate not only bribery and corruption risks, but also money laundering, sanctions issues, human rights violations, and financial fraud risks. Duties of loyalty and oversight responsibilities for boards of directors require implementing a range of internal compliance controls, including effective reporting channels, to assess company risks. Compliance frameworks help promote fairness across a company’s operations, including through, for instance, employee incentive programs that encourage ethical behavior. Further, comprehensive compliance measures facilitate the management of third-party engagement risks through diligent vetting, ongoing monitoring, and stringent payment controls.
Compliance is not only good business, it is insurance in the event of enforcement. The DOJ has consistently given credit to companies with robust compliance programs when considering enforcement resolutions, monetary penalties, and post-resolution compliance obligations. Companies with strong compliance programs are better positioned to negotiate favorable outcomes in the event enforcement actions arise, making proactive investment in compliance crucial.
Compliance still matters. While the recent shift in enforcement priorities is important, it is not a repeal of the FCPA or FEPA, nor is it a license to stop investing in compliance. Well-designed, effective compliance programs expedite efficient responses to new enforcement trends. Companies should continue to ensure their compliance programs align with the DOJ’s Evaluation of Corporate Compliance Program guidance and consider using the 180-pause to reassess the effectiveness of their compliance programs and cultures as recent directives and orders usher in FCPA enforcement shifts.
Key Court Ruling on DEIA Programs – What You Should Know
On February 21, 2025, the United States District Court for the District of Maryland enjoined the Trump administration from implementing two recently issued executive orders targeting diversity, equity, inclusion, and accessibility (“DEI” or “DEIA”) programs. These executive orders, Ending Radical and Wasteful Government DEI Programs and Preferencing and Ending Illegal Discrimination and Restoring Merit-Based Opportunity, sought to eliminate DEIA activities and programs within the federal government, recipients of federal contracts and grants, the private sector, and educational institutions.
Published on January 20 and 21, 2025, among other things, these executive orders (1) directed executive agencies to terminate “equity-related” grants and contracts; (2) directed all executive agencies to include within every federal contract or grant award a certification, enforceable through the False Claims Act, that the recipient of federal funding does not operate any programs promoting DEIA in violation of federal anti-discrimination laws; (3) directing the Attorney General to encourage the private sector to end illegal discrimination and preferences, including DEIA, and to identify potential civil compliance investigation targets (the “Challenged Provisions”).
On February 3, 2025, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, the Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore, Maryland (collectively, the “Plaintiffs”), filed suit seeking a preliminary and permanent injunction enjoining the government from enforcing the Orders. The Plaintiffs also sought a declaration that the Challenged Provisions are unlawful and unconstitutional.
Scope and Implications of the Preliminary Injunction
In its February 21st memorandum opinion granting Plaintiffs’ request for a preliminary injunction (with a single, narrow exception), the Court found the Challenged Provisions violate the First and Fifth Amendments to the United States Constitution in that they: are unconstitutional content-based and viewpoint-discriminatory restrictions on protected speech (First Amendment); and (2) deny Plaintiffs protection under the Fifth Amendment right to Due Process. Key to the Court’s decision was its finding that the Orders fail to define key terms, including “DEI,” “DEIA,” “equity,” “equity-related,” “promoting DEI,” “illegal DEI,” “illegal DEI and DEIA policies,” and “illegal discrimination or preferences,” or to identify the types of programs or policies the administration considers “illegal.”
The preliminary injunction is broad in scope, prohibiting the administration from:
pausing, freezing, impeding, blocking, canceling, or terminating any awards, contracts or obligations, or changing the terms thereof, on the basis of a Challenged Provision;
requiring any grantee or contractor to make any “certification” or other representation pursuant to a Challenged Provision; or
bringing any False Claims Act enforcement action, or other enforcement action, pursuant to any Challenged Provision.
The Court did not enjoin that part of the Challenged Provisions directing the Attorney General to submit a report containing recommendations for enforcing federal civil rights laws, and to identify potential civil compliance investigations.
Notably, as a preliminary injunction, the injunction will be in place during the entirety of the litigation until lifted by the Court. Additionally, the injunction is nationwide in scope and is not limited to the Plaintiff parties. That said, the injunction does not limit enforcement of other executive orders, some of which also threaten termination of federal contracts and grants and require certification.
What’s Next?
The administration will likely appeal the Court’s decision to the United States Court of Appeals for the Fourth Circuit. The party losing that appeal will likely appeal the decision to the United States Supreme Court. This means that, unless the 4th Circuit orders the District Court to lift the injunction while the litigation proceeds (which is not likely), the injunction will remain in place for the time it takes for a final decision to be reached.
Because the injunction does not prohibit this aspect of the Challenged Provisions, the Attorney General is expected to submit a report that includes the identification of potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, state and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars. As per the applicable Executive Order, the Attorney General’s report must be submitted by May 21, 2025.
What Should You Do?
Organizations, including private companies, federal contractors, foundations, associations, and institutions of higher education, should continue to review their existing policies and programs to confirm compliance with current law. In particular, organizations should ensure that all activities and programs:
Are broadly inclusive and open to all;
Do not include targets or goals (even those that are aspirational) based on race, gender, or any other protected characteristic;
Do not tie compensation or other rewards to the achievement of DEIA objectives or goals;
Do not provide benefits or awards (scholarships, mentoring programs, and the like) based on protected characteristics;
Do not require organizations to consider diverse groups of candidates for hiring or promotion; and
Do not require board membership to meet specific diversity goals.
Given the increased legal risk to DEIA programs and activities, organizations should consider conducting this review in concert with their legal counsel, under the umbrella of attorney-client privilege. Following this review and consistent with their risk tolerance, culture, and values, organizations should consider re-framing their DEIA programs and activities as necessary to comply with current statutory, regulatory, and judicial requirements. With this review and re-framing (if necessary or desirable), organizations can help reduce legal risk while remaining consistent with their organizational culture and values.
Exception to Refugee Ban: Addressing Egregious Actions of South Africa
President Donald Trump issued Executive Order (EO) 14204, “Addressing Egregious Actions of the Republic of South Africa,” on Feb. 7, 2025, creating an exception to the refugee ban, driven by concerns over South Africa’s racially discriminatory property confiscation practices.
EO 14204 follows the enactment of South Africa’s Expropriation Act 13 of 2024, enabling the government to seize agricultural property owned by ethnic minority Afrikaners without compensation.
Key Provisions
Suspension of Aid and Assistance: The EO mandates that the United States shall not provide aid or assistance to South Africa as long as the country continues its “unjust and immoral practices.” This includes halting foreign aid and assistance delivered by all executive departments and agencies.
Promotion of Afrikaner Refugee Resettlement: The EO emphasizes the resettlement of Afrikaner refugees who are victims of government-sponsored race-based discrimination. The Department of State (DOS) and the Department of Homeland Security (DHS) are directed to prioritize humanitarian relief, including admission and resettlement through the United States Refugee Admissions Program (USRAP).
Humanitarian Considerations: The EO directs the DOS and DHS to take appropriate steps to prioritize humanitarian relief for Afrikaners in South Africa who are victims of unjust racial discrimination. This includes submitting a plan to the president through the assistant to the president and Homeland Security advisor.
By suspending aid and promoting the resettlement of Afrikaner refugees, the EO aims to address deemed human rights violations, representing the U.S. government’s stance against perceived discriminatory practices in South Africa. The suspension of processing refugee applications under the USRAP, except on a case-by-case basis, outlined in EO 14163, “Realigning the United States Refugee Admissions Program” as well as the suspension of other humanitarian programs, indeed adds a layer of complexity to the situation.
Risk Bearing Entity Requirements: New Jersey and New York
This blog reviews the regulatory requirements that apply to risk bearing entities (RBE) in New Jersey and New York. New Jersey and New York demonstrate distinct approaches to the registration and regulation of RBEs and provider network activities. This blog is part of Foley & Lardner’s RBE Series (see our Introduction posted November 18, 2024).
A variety of RBE reimbursement models that incorporate financial risk can trigger a requirement for Organized Delivery System (ODS) licensure in New Jersey and/or Independent Practice Association approval requirements in New York. Specifically, as generally noted in our Introduction, these models could include traditional or global capitation structures (e.g., financial responsibility for health care services delivered), bundles and episodic structures or other alternative payment models (e.g., financial responsibility for health care services for health conditions or treatments), shared savings, gain sharing, and other upside or downside risk structures (e.g., financial responsibility for total cost of care or achievement of medical loss ratios).
New Jersey
New Jersey classifies an organization that contracts with a carrier to provide, or arrange to provide, health care services or benefits under the carrier’s benefits plans as an ODS.[1] A “carrier” includes insurers, hospital service corporations, medical service corporations, health service corporations, and health maintenance organizations. An ODS often convenes licensed health care providers into a provider network to support its contracts with carriers. An ODS is either certified or licensed depending on whether it assumes financial risk from a carrier. An ODS that assumes financial risk must be licensed. Otherwise, an ODS that will not be compensated on the assumption of financial risk (such as a provider network of licensed health care providers utilizing fee-for-service reimbursement), or is determined to assume de minimus risk, must be certified.[2]
An ODS may include preferred provider organizations, physician hospital organizations, or independent practice associations.[3] However, organizations that only contract to provide pharmaceutical services, case management services, or employee assistance plan services may not require a license or certification. In addition, ODSs are defined to exclude licensed health care facilities and providers.[4]
To apply for ODS licensure or certification, an organization must submit an application to the New Jersey Department of Banking and Insurance on prescribed forms together with copies of organizational documents, standard contract forms, and with respect to licensure applications only, financial information.[5] Unlike a certified ODS, a licensed ODS must comply with risk-based capital, liquidity, minimum net worth, and minimum statutory deposit requirements; and meet other financial standards and ongoing reporting and disclosure obligations commonly applicable to state-licensed insurance companies.[6]
Whether certified or licensed, an ODS must meet minimum standards to perform functions under contracts with carriers.[7] The standards are similar to those carriers would have to comply with if performing such function themselves.
New York
New York classifies an organization that convenes licensed health care providers into a provider network for the provision of health care services through contracts with “managed care organizations” (MCO) and/or workers compensation preferred provider organizations or their participants as an Independent Practice Association (IPA).[8] MCOs include a health maintenance organization or other person or entity arranging, providing, or offering comprehensive health service plans to individuals or groups.
Prior to corporate formation or operation, IPAs must receive approval from the New York State Department of Health (Department of Health). The Department of Health requires the submission of certain information, such as contact, organizational, and operational information of the proposed IPA. A checklist of the IPA formation requirements is found here.[9] Notably, the certificate of incorporation or articles of organizations of the IPA must include “Independent Practice Association” or “IPA” in its name, contain express powers and purposes permitting provider network activities, and include prescribed authorizing language and prohibited activities, and related sign-offs from the New York State Departments of Education and Financial Services.[10] Further, some IPA requirements that are specific to MCO engagements are shouldered by MCOs.[11]
An IPA that intends to engage in risk-sharing in New York must demonstrate to the Department of Health and the Department of Financial Services (which houses the Superintendent of Insurance) that the IPA is financially responsible and capable to assume risk. The review of whether the IPA is financially responsible and capable includes an evaluation of proposed risk sharing and insurance, stoploss, reserves, or other arrangements to satisfy obligations to MCOs, participating provider, and enrollees.[12] Risk-sharing means “the contractual assumption of liability by the health care provider or IPA by means of a capitation arrangement or other mechanism whereby the provider or IPA assumes financial risk from the MCO for the delivery of specified health care services to enrollees of the MCO”.
Conclusion
New Jersey ODS licensure or certification and New York IPA approval requirements have become increasingly important as RBEs have moved beyond their early beginnings as a means for independent physician practices to band together to negotiate access to payor contracts. They have now become major players in network development and supporting delegated payor functions.
The regulatory frameworks for RBE operations differ from state to state, and their applicability can vary based on specific offerings, services, and relationships of RBEs. We recommend careful review of RBE operations and relationships against applicable requirements of operating states.
Awareness of these requirements is crucial for RBEs, as well as downstream and upstream contracting entities that may be indirectly subject to regulations. For example, the terms of provider agreements of an ODS must meet specific requirements in New Jersey,[13] and MCOs in New York are not permitted to contract with an IPA that has not been approved by the New York State Departments of Health, Education, and Financial Services.[14]
[1] N.J. Stat. § 17:48H-1.
[2] N.J. Stat. § 17:48H-1; N.J. Admin. Code § 11:22-4.3(c).
[3] See N.J. Stat. § 17:48H-1.
[4] See N.J. Admin. Code § 11:22-4.2.
[5] N.J. Stat. §§ 17:48H-2, 17:48H-3, 17:48H-11, 17:48H-12; N.J. Admin. Code §§ 11:22-4.4, 11:22-4.5.
[6] See, e.g.,N.J. Admin. Code §§ 11:22-4.8, 11:22-4.9.
[7] N.J. § 17:48H-33 (certified and licensed ODS are subject to carrier standards in N.J. Stat. § 26:2S-1 et seq.)
[8] 10 NYCRR § 98-1.2.
[9] https://www.health.ny.gov/health_care/managed_care/hmoipa/ipa_formation_requirements.htm (last accessed Jan. 12, 2025).
[10] 10 NYCRR § 98-1.5(b)(6)(vii).
[11] See, e.g., 10 NYCRR § 98-1.18.
[12] 10 NYCRR ss. 98.1-2, 98.1-4.
[13] See N.J. Admin. Code §§ 11:24B-5.1-11:24B-5.7.
[14] See 10 NYCRR § 98-1.5(b)(6)(vii).
An Executive Branch for the People, by the People: What the New Administration’s Executive Orders Mean for an Independent CPSC
While independent regulatory agencies, like the Consumer Product Safety Commission (CPSC or the Commission), have typically considered themselves exempt from executive orders, recent events indicate the CPSC is likely not free from the Trump Administration’s push for an Executive Branch for the people, by the people. Statements from acting Commission leadership seemingly indicate a willingness to work with President Trump, though the CPSC has taken only limited actions to implement the many directives ordered by the President to date. Stakeholders in the consumer products industry should be forewarned that their dealings with the Commission and its anticipated regulatory agenda could soon change, though they should continue to take steps to prepare for the implementation of key new rules until the Commission provides further guidance.
An Executive Branch for the People, by the People
In the Consumer Product Safety Act (CPSA), Congress established the CPSC and directed the Commission to operate with independence “to protect the public against unreasonable risks of injuries and deaths associated with consumer products.” Yet, the Trump Administration’s recent actions first, attempting to dismantle two other independent agencies, the U.S. Agency for International Development (USAID) and Consumer Financial Protection Bureau (CFPB), and subsequently issuing a yet unnumbered executive order, entitled “Ensuring Accountability for All Agencies,” make clear that the new administration will seek to make independent agencies less independent. Indeed, the February 18, 2025 Executive Order criticizes the very existence of independent regulatory agencies and laments the lack of “sufficient accountability to the President, and through him, to the American people.” The Order seeks to give the President broad oversight over independent agencies, requiring submission of major regulations to the White House Office of Management and Budget (OMB) for review. Further, the Order seeks to require independent agencies to hire a White House liaison and bars such agencies from taking legal positions that differ from any taken by the President or Attorney General. Such directives create an inherent risk of conflict with the CPSC’s stated mission and congressionally mandated independence in the CPSA. That said, recent communications from new Commission leadership indicate a potential willingness to cooperate—at least for the time being—either through express agreement or by trying to lay low.
On January 21, 2025, the day after President Trump took office and issued a flurry of new executive orders, as is customary when the political party of the President changes, Alex Hoehn-Saric, a 2021 Biden appointee, stepped down as Chair of the Commission. The Commission then announced Peter Feldman, a 2018 Trump appointee, as the acting chair the following day. Acting Chair Feldman has since issued three statements: The first statement, issued on January 22, 2025, announced promotions and appointments among key senior staff. The second statement, issued on January 24, 2025, announced the termination of all diversity, equity and inclusion (DEI) programs and activities, in line with Executive Order No. 14148, which revoked a series of prior Executive Orders implementing DEI initiatives, and Executive Order No. 14151, “Ending Radical and Wasteful Government DEI Programs and Preferences,” among other executive orders. See President Trump’s “Rescission” Executive Order (Jan. 21, 2025). The third statement, issued on February 4, 2025, “applaud[ed] President Trump’s bold action to revoke the de minimis privilege for all imports from China,”[1] stating the Commission “has long been concerned about the enforcement challenges when Chinese firms, with little or no U.S. presence, distribute consumer products under the de minimis provision,” signaling the CPSC’s support of Executive Order No. 14195 and Executive Order No. 14200, ordered February 1, 2025 and February 5, 2025 respectively.
Notably, despite its prior availability, the CPSC’s Operating Plan for Fiscal Year 2025, which laid out the Commission’s intended direction and priorities, including its DEI programs and regulatory priorities, is no longer available on its website as part of the Commission’s overall website content review pursuant to recent Executive Orders.
Other Potentially Relevant Orders
On January 20, 2025, and in the days since, President Trump signed a flurry of other executive orders, which could be of relevance to a less independent CPSC. Among them are the following three Orders:
On January 20, 2025, President Trump issued an Order that called for a “regulatory freeze” and had three main directives instructing federal agencies: (1) not to propose or issue any new rules “until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule”; (2) immediately withdraw any new rules sent but not yet published in the Federal Register so that they can be reviewed and approved per the first directive; and (3) “consider” a 60 day postponement for the effective date of any rules that have been published in the Federal Register or have not taken effect and further “consider” opening a comment period for any such rules.
Also on January 20, 2025, President Trump signed Executive Order 14192, “Unleashing Prosperity Through Deregulation,” which launches a “massive 10-to-1 deregulation initiative” requiring agencies to “identify at least 10 existing rules, regulations, or guidance documents to be repealed” whenever they issue a new rule, regulation, or guidance.
On February 11, 2015, President Trump issued an Order implementing his “Department of Government Efficiency” (DOGE) workforce optimization initiative. Among other things, the Order directs an approximately 75% reduction in staff (indicating that for every one staffer hired, four must be eliminated). The Order also directs Agency Heads to, within 30 days, submit “a report that identifies any statutes that establish the agency, or subcomponents of the agency, as statutorily required entities . . . and whether the agency or any of its subcomponents should be eliminated or consolidated.” Notably, the Order excludes public safety functions, which would seem to speak directly to the CPSC’s stated mission, although that same argument could be made about the Federal Emergency Management Agency (FEMA), which has drawn President Trump’s recent attention (and criticism).
While the CPSC’s relatively small size and budget should not place it high on the list for the same deregulation initiatives and staff cuts as other agencies, there is no telling what might happen in the coming months.
Next Steps
Though we do not anticipate the CPSC’s regulatory agenda as it relates to new e-filing requirements for certificates of compliance, e-bikes, and certain infant products to change at this time, based on the CPSC’s continued focus on and discussion of these initiatives at this year’s International Consumer Product Health and Safety Organization (ICPHSO) Annual Symposium, it is anticipated that the Commission will reconsider the remainder of its regulatory agenda and priorities.
Stakeholders should continue preparations for the implementation of the new e-filing requirements for certificates of compliance which go into effect July 8, 2026 for products not imported into a Free Trade Zone (FTZ), and July 8, 2027 for products imported into an FTZ until the CPSC provides contrary guidance or otherwise indicates a delay or freeze to this regulation.
The CPSC’s responses to Executive Orders and the Trump Administration’s directives are rapidly evolving. With this continued uncertainty, stakeholders should continue monitoring for updates from the Commission. Stakeholders should also continue their preparations for the implementation of major regulations until the CPSC issues further guidance.
[1] The referenced “de minimis privilege” refers to the current exemption under the Tariff Act (19 U.S.C. § 1321) for certain shipments valued below $800, which permits the importation of such shipments without filing otherwise required paperwork concerning the product and exempts such products from inspection at U.S. points of entry. The de minimis shipment exemption is limited to shipments with an aggregate value less than $800 per day by a single importer, and is generally taken advantage of by international e-commerce retailers.
Supreme Court Says Alabama’s Exhaustion of State Processes Rule Unlawfully Blocked Due Process Claims
On February 21, 2025, the Supreme Court of the United States ruled that an Alabama rule requiring claimants to first exhaust the state administrative appeals process before bringing due process claims over delays in their appeals of unemployment compensation claims unlawfully immunizes state officials from due process claims brought under 42 U.S.C. § 1983.
Quick Hits
The Supreme Court ruled that Alabama’s requirement to exhaust administrative processes before pursuing federal due process claims in state court unlawfully immunized state officials from claims for delays in unemployment insurance claims.
Justice Brett Kavanaugh emphasized that the exhaustion rule created a “catch-22” situation, preventing claimants from seeking relief in state court while waiting on state processes.
The decision may pave the way for increased access to state courts for plaintiffs challenging administrative delays.
While holding that the workers may proceed with their federal due process claims under Section 1983, the opinion noted that the Court took “no position” on the merits of their claims.
In a 5–4 opinion in Williams v. Reed, the Supreme Court sided with a group of unemployed Alabama workers, reviving their civil rights claims under 42 U.S.C. § 1983 against state officials that alleged “extreme delays” in their unemployment insurance claims. The Court held that Alabama’s exhaustion of administrative processes requirement “in effect immunizes state officials from those kinds of Section 1983 suits for injunctive relief.”
Under Alabama’s unemployment compensation scheme, any person seeking benefits must file an application with the Alabama Department of Labor. If denied, the person must seek a hearing before the department’s Hearings and Appeals Division, and then the department’s Board of Appeals. The law includes an exhaustion requirement that prohibits state courts from hearing any appeals from these decisions until they are final, and after all administrative remedies have been exhausted.
The workers filed suit in state court alleging that the delays in the administrative appeals process violated their procedural due process rights and the Social Security Act, but the Supreme Court of Alabama dismissed their claims. The Alabama high court ruled that it lacked subject matter jurisdiction to hear the appeal because the workers had failed to exhaust their state administrative remedies.
The state argued that such an exhaustion requirement is a “neutral rule of judicial administration” and that the Alabama Supreme Court had properly applied it to preclude the Section 1983 claims.
The Supreme Court of the United States majority agreed with the workers that “Alabama cannot maintain such an immunity rule,” whereby those challenging delays in administrative processes under Section 1983 must first exhaust those administrative processes. The Court found such a rule “in effect immunizes state officials from those kinds of §1983 suits for injunctive relief” and is therefore preempted.
“[T]hat ruling [by the Alabama Supreme Court] created a catch-22: Because the claimants cannot sue until they complete the administrative process, they can never sue under §1983 to obtain an order expediting the administrative process,” Justice Brett Kavanaugh wrote in the majority opinion. “This Court’s precedents do not permit States to immunize state officials from §1983 suits in that way.”
Justice Kavanaugh noted that the Court has previously explained that states have “‘no authority to override’ Congress’s ‘decision to subject state’ officials ‘to liability for violations of federal rights,’ and states may not immunize “state officials from a ‘particular species’ of federal claims, even if that immunity is “cloaked in jurisdictional garb.”
The Court further rejected the state’s argument that the workers could have sought a writ of mandamus to compel state officials to act more quickly, finding that the availability of such relief goes more to the merits of their due process claims.
Justice Clarence Thomas wrote a dissenting opinion, which was joined in part by three other justices, arguing that states “have unfettered discretion over whether to provide a forum for §1983 claims in their courts.” Justice Thomas argued that Supreme Court precedents find that such state exhaustion requirements are preempted only when they disfavor federal law, which was not the situation in the present case. Justice Thomas said the majority’s view that “petitioners will never be able to advance to state court” is a “theory of futility” that was “both forfeited and meritless.
Perhaps tellingly, the majority opinion stated in a footnote that it took no position on the actual merits of the workers’ claims and observed that a plaintiff who asserts an unexhausted due process claim will “usually lose” because such claims are “complete only when the State fails to provide Due Process.”
Next Steps
The Supreme Court ruling could increase plaintiffs’ ability to challenge state administrative agencies for due process concerns. Business groups had argued that the Alabama Supreme Court decision could frustrate the efficient handling of federal Section 1983 claims and “invite claim splitting and duplicative litigation.” While states have discretion to control subject matter jurisdiction in state courts, the Supreme Court’s ruling suggests that states cannot indefinitely delay processes to avoid due process claims over such delays.
Nevertheless, the merits of the workers claims will now be decided by the Alabama state courts, with a possible roadmap for dismissal on the merits contained in a key footnote of the majority’s opinion.
FCC One-To-One Consent Rule Set-Back
The Eleventh Circuit granted a reprieve to businesses worried the FCC’s “one-to-one” update to the TCPA Rule. As we wrote in December, the update was set to go into effect at the end of January, and according to the FCC would “close the lead generator loophole.” Specifically, it would have prohibited “generic consent.” Namely where people agree to be called by “affiliates,” “partners” or third parties. That prohibition would have been true even if those entities were specifically identified elsewhere. It would also have required consent from the individual to be called at a specific phone number, by a specific company, even though this is already required under TCPA.
Shortly before the effective date, an industry group challenged the change, saying that the FCC was essentially expanding the TCPA’s prior express consent requirement with its “one-to-one” rule. The group had two concerns. First, that the FCC was restricting consent to only one seller at a time. Second, that consent must be associated with the interaction that prompted consent. Both of these, the group argued, essentially added to the TCPA’s definition of prior express consent.
The Eleventh Circuit agreed. It relied on the Supreme Court’s Loper decision to contradict the FCC’s interpretation of the TCPA. The court concluded that the FCC had gone beyond the plain meaning of the phrase prior express consent. Although this decision is currently only binding with the Eleventh Circuit, the FCC postponed the change by a year (until January 26, 2026).
Putting it into Practice: We will be monitoring to see if the FCC withdraws or pares back its modification to the TCPA Rule prior to January of next year and whether other circuits follow the Eleventh Circuit’s ruling.
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