Category: Constitutional Law

Texas Court Stays CAT Class Action, But Reporting Must Continue

On July 7, Judge Alan Albright of the US District Court for the Western District of Texas granted the Securities and Exchange Commission’s (SEC) motion to stay a class action by industry groups that challenges the constitutionality and tracking capabilities of the Consolidated Audit Trail (CAT). The stay extends through January 15, 2026, by which date the SEC must report the results of its ongoing internal review of CAT governance, cybersecurity and cost‑allocation.
In its motion, the SEC referenced its current consideration of CAT National Market System plan amendments by self-regulatory organizations (SROs) that would prohibit the reporting of personal customer information to CAT entirely and eliminate all personal customer information stored in CAT. Importantly, CAT reporting obligations remain in full force during the stay. Judge Albright’s order provides the SEC with time to complete its review but does not suspend the operation of CAT or alter compliance deadlines.
For additional background on CAT and the underlying litigation, see Katten’s prior Quick Reads posts here and here.

IRS Enters into Consent Decree Limiting Application of Johnson Amendment; New Position Allows Churches to Endorse Candidates in Certain Situations

On July 7, 2025, in National Religious Broadcasters, et al. v. Billy Long, Commissioner of the Internal Revenue Services, et al., Docket no: 6:24-cv-00311-JCB (E.D. Texas) (“NRB”), the IRS entered into a consent decree in which it agreed that the Johnson Amendment, which has long conditioned section 501(c)(3) tax exempt status on refraining from partisan political activity, cannot be applied to churches and other houses of worship in certain specific circumstances. 
Background
The Johnson Amendment is the portion of Internal Revenue Code section 501(c)(3) that requires charities, including churches, to refrain from endorsing or opposing candidates for public office as a condition of their tax-exempt status. The statute provides that such organizations may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” The amendment was sponsored by then-Senator Lyndon Johnson and became law in 1954. Since then, churches and religious organizations have been unable to endorse or support candidates for political office without risking the loss of their tax-exempt status. 
NRB
In NRB, the plaintiffs, a group of conservative religious organizations, argued that the Johnson amendment violated their First Amendment rights to freedom of speech and free exercise of religion, as well as due process, equal protection, and certain statutory rights, and asked the court to enjoin the IRS from enforcing the Johnson Amendment. 
In the consent decree, which would settle the litigation, the IRS agreed that the Johnson Amendment, “as properly interpreted” does not prevent a “house of worship” from speaking “to its congregation, through customary channels of communication on matters of faith in connection with religious services, concerning electoral politics viewed through the lens of religious faith.” 
What It Means
Although it appears to have been IRS practice for many years not to enforce the Johnson Amendment “against houses of worship for speech concerning electoral politics in the context of worship services,” the IRS has never before publicly agreed not to enforce the Johnson Amendment, nor has it issued any formal written guidance suggesting that the Johnson Amendment may run afoul of the Constitution. Thus, the IRS’s agreement to the language in the consent decree is a significant and consequential concession. 
Religious organizations may now consider scenarios where they communicate which candidates they endorse and urge their congregations to vote accordingly. Of course, these scenarios must be evaluated in light of the language in the consent decree, namely that the communications must occur through customary channels of communication, in connection with religious services, and through the lens of religious faith. But the fact that the IRS has sanctioned a path through which tax-exempt religious organizations may make electoral communications is a departure from longstanding past practice. 
Additionally, it is important to note that the IRS’s acquiescence in NRB is limited. Technically, the consent decree in NRB applies only to the plaintiffs in the case, although the IRS will likely apply the same rule to all similarly situated organizations. Still, the IRS has not issued formal administrative guidance stating its position and intention not to enforce the Johnson Amendment in the described circumstances. In addition, the consent decree is limited in scope and is not a license for religious organizations to begin functioning as campaign operations. Rather, the new exemption applies only if the plaintiffs engage in the speech specifically described by the IRS— namely, speech delivered through customary channels to congregations on matters of faith, in connection with religious services, that concerns electoral politics viewed through the lens of religious faith. 
Despite these limitations, the consent decree in NRB marks a significant change for the IRS and for the rights of religious organizations. Given the novelty and specificity of the IRS’s position, we recommend that churches, synagogues, and other religious organizations consult with counsel before breaching the wall that the Johnson Amendment had erected.
Esther Nies, a Summer Associate at Holtzman Vogel, contributed to this article.

Maryland Legislature Slashes Child Victims Act Damages Cap by More than 50%

In 2023, the Maryland General Assembly passed the Maryland Child Victims Act of 2023 (“CVA”) to expand claimants’ ability to file and seek damages for alleged child sexual abuse cases, following the trend initiated by other states like New York and New Jersey.
 The CVA was signed into law by Governor Wes Moore on April 11, 2023, and became effective October 1, 2023. The law removed the statute of limitation for claims of sexual abuse that occurred while the alleged victim was a minor. The CVA also placed high caps on non-economic damages from private defendants and monetary damages from public defendants.
The June 1, 2025 Amendment Drastically Reduces the Damages Cap
On April 22, 2025, Governor Moore signed an Amendment to the CVA that reduced damages for public and private defendants. The Amendment, which took effect on June 1, 2025, lowers the cap on noneconomic damages for CVA cases filed on or after June 1, 2025 in the following ways:

A single, private defendant is now liable for a maximum of $700,000, rather than the previous cap of $1.5 million, in total noneconomic damages to a single claimant arising from child sexual abuse claim(s).
Governmental liability is reduced under the Maryland Tort Claims Act and the Local Government Tort Claims Act. The total liability of state and local governments and governmental units, as well as county boards of education, has been reduced from $890,000 to $400,000 to a single claimant for any injuries arising from such claim(s).

The Amendment also changes the amount recoverable against a single defendant. References to an “incident or occurrence” of abuse is replaced by “claim or claims.” This means that claimants are barred from recovering more than the new damages cap from any single defendant, irrespective of whether the alleged abuse occurred in a single incident or over multiple instances.
Ultimately, the Amendment maintains, but reduces the disparity between, separate damages caps for claims against private parties versus those against public entities. The Amendment also attempts to ensure that the State retains the financial capacity to satisfy any damages awarded. In line with these objectives, the Amendment requires the Maryland Judiciary to make annual reports regarding CVA awards beginning on January 31, 2027. It is noteworthy that since the legislature intends to continue monitoring these cases, additional amendments may be forthcoming.
Baltimore City Imposes a Stay of All Child Victims Act Suits
Over 3,800 individuals filed lawsuits under Maryland’s CVA in April and May 2025 in advance of the effective date of the new damages cap. This influx of new CVA lawsuits puts a strain on the state court system in the manner experienced by other venues, such as New York City.
As a result, on June 2, 2025, the Circuit Court for Baltimore City became so overwhelmed with these claims—nearly 1,300 cases had been filed with the court—that it temporarily paused all CVA suits until further order. As of the date of this article, there has been no indication as to when this stay will be lifted. Nevertheless, the Administrative Order mandating the stay emphasized that the pause is temporary. 
Meanwhile, opponents of the Amendment plan to challenge its constitutionality.
Looking Forward
What is certain about Maryland’s amendments to the CVA is that the cap on noneconomic damages will provide meaningful relief to defendants facing claims filed after June 1, 2025—particularly those who, due to reliance on the prior statute of limitations, no longer have insurance coverage, records, or witnesses to defend against decades-old allegations.
Damages recoverable from private and public entities have been reduced by more than half. Notably, the new cap applies on a per-claimant basis, regardless of whether the claimant asserts a single claim or multiple claims against a defendant. 
In sum, private and public institutions may take more hits, but as a result of the Amendment, each will land with less force.
Taylor Justice, an Epstein Becker Green Summer Associate (not admitted to practice), contributed to the preparation of this article.

Supreme Court Upholds Texas Age-Verification Law, Raising LGBTQ+ Privacy Concerns

On June 27, 2025, the U.S. Supreme Court upheld a Texas law requiring pornography websites to verify users’ ages through government-issued ID. The 6–3 decision in Free Speech Coalition v. Paxton marks a significant shift in First Amendment jurisprudence and opens the door for expanded digital age-verification laws nationwide.
While framed as a child-protection measure, the Court’s ruling raises serious questions about adult privacy, free speech, and the disproportionate impact such laws may have on LGBTQ+ individuals – particularly minors and young adults who rely on the internet for community, health information, and identity development.
The Law and the Court’s Holding
Texas statute H.B. 1181 requires commercial websites hosting content that is at least one-third “sexual material harmful to minors” to implement age-verification systems before granting access. Users must upload a form of government ID or go through a third-party credentialing service. The law also mandates that sites display government-authored “health warnings” about pornography.
The Supreme Court upheld the law under intermediate scrutiny, with the majority opinion (authored by Justice Thomas) emphasizing the state’s “traditional power” to protect minors from sexually explicit content. The Court concluded that the law imposes only an “incidental burden” on adults’ speech and likened online ID checks to showing proof of age when entering a movie theater or liquor store.
In dissent, Justice Kagan criticized the majority for creating an exception to the First Amendment. She argued that the law is content-based and should have triggered strict scrutiny, especially given its chilling effect on lawful adult speech.
Privacy Risks of Mandatory Age Verification
Unlike in-person age checks, online verification often requires uploading sensitive personal data—such as driver’s license scans or facial recognition inputs—to websites or third-party services. This poses several risks, including:

Loss of anonymity: Users engaging in constitutionally protected speech (including viewing legal erotic or educational material) must now disclose their identity, or at least identifying data, to proceed.
Data exposure: Even when statutes prohibit long-term retention, there is no practical way for users to verify how their data is stored, shared, or secured. A breach or subpoena could expose sensitive browsing habits.
Chilling effect: The fear of being identified or tracked may deter people – particularly those in stigmatized communities – from accessing lawful content.

These risks are not hypothetical. Cybersecurity experts warn that databases of adult-content visitors are prime targets for hacking, blackmail, or misuse by data brokers. For LGBTQ+ users, who may not be “out” to family or employers, these risks are magnified.
Disproportionate Impact on LGBTQ+ Users
Age-verification laws like Texas’s may have particularly harsh effects on LGBTQ+ individuals, especially minors in unsupportive households. For many, the internet provides a rare lifeline—to peer communities, affirming content, sexual health education, or information about identity.
LGBTQ+ teens are statistically more likely to face bullying, isolation, and mental health challenges. Online platforms and forums can be critical sources of support. However, under an age-verification mandate:

Minors cannot legally access content deemed “harmful,” even if that content is affirming or educational.
Uploading an ID may be impossible or unsafe, especially for closeted teens.
Some laws may define LGBTQ+ content as “sexual” or “obscene” thus including non-explicit material under the vague standards of an age-verification mandate.

Some states (such as Florida’s 2023 “Don’t Say Gay” bill) have attempted to classify LGBTQ+ health or relationship content as inappropriate for youth, raising the concern that age-verification regimes will become a backdoor to censorship.
Practical Takeaways
For platforms and content hosts:

Assess whether your content may trigger age-verification requirements in any of the growing number of states enacting similar laws.
Consider implementing privacy-preserving verification solutions (such as anonymized age tokens or minimal-data processes).
Review vendor agreements and user disclosures for transparency and data minimization.

For compliance teams:

Monitor evolving legal developments – state-by-state requirements could vary widely and may conflict.
Treat age-verification data as high-risk PII. Establish and enforce strict retention, access, and deletion protocols.
Coordinate with product and legal teams to evaluate whether geoblocking, content filtering, or policy adjustments are appropriate.

For advocates and digital rights professionals:

Watch for overbroad applications that disproportionately affect marginalized users.
Consider litigation or legislative efforts to build in privacy safeguards, transparency, and carveouts for educational or identity-based content.
Continue educating the public – especially youth and LGBTQ+ users – on digital privacy tools and rights.

Looking Ahead
The Free Speech Coalition decision is likely to accelerate legislative momentum behind age-verification laws, with nearly two dozen states already proposing or passing similar statutes. However, as these laws spread, so do the stakes for adult privacy, youth access to critical information, and the future of anonymity in digital spaces.
Robust protections for children need not come at the expense of privacy, identity, or speech. As compliance professionals and policymakers adapt to this new terrain, the challenge will be clear: safeguard minors without silencing or exposing the very communities most in need of digital safety and expression.
This post was authored by William Ollayos, Summer Associate. William is not admitted to practice law.

CMS’s Rescission of 2022 EMTALA Guidance Presents New Considerations for Hospitals, Post-Dobbs

The Centers for Medicare & Medicaid Services (CMS) recently rescinded its July 2022 guidance titled “Reinforcement of EMTALA Obligations specific to Patients who are Pregnant or are Experiencing Pregnancy Loss” (“2022 Guidance”)[1] as well as the letter from the former Secretary of the U.S. Department of Health and Human Services (HHS) that accompanied the 2022 Guidance (the “Letter”).[2]
CMS noted that the 2022 Guidance and the Letter did not “reflect the policy of this Administration.”
The rescinded 2022 Guidance asserted that the federal Emergency Medical Treatment and Labor Act (EMTALA) preempts state law that conflicts with obligations created under EMTALA. More specifically, in the wake of the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization to overturn Roe v. Wade, a physician would be protected by EMTALA if a pregnant patient presented to the emergency department (ED) with an emergency medical condition (EMC) that required an abortion to stabilize the patient. In other words, the 2022 Guidance confirmed that EMTALA would preempt any state law that prohibits abortion in the case of an emergency.
CMS’s recent rescission announcement failed to provide additional clarity for hospitals or health care providers on this difficult topic, instead noting only that CMS will “work to rectify any perceived legal confusion and instability created by the former administrator’s actions.” Since the rescission took effect on May 29, 2025, many hospitals and health care providers have been wading through murky legal waters in an attempt to decipher what the rescission means and its impact on the assumed protection of providers that the former administration clarified through the 2022 Guidance. 
Background on EMTALA Requirements
In a July 2022 Insight on the 2022 Guidance, we summarized EMTALA requirements, focusing on two main pillars of the law: screening and stabilization.
Screening
For the screening requirement, a hospital must provide an appropriate medical screening examination (MSE) for any individual arriving at an ED requesting examination or treatment of a medical condition.[3] The ED must act within its capability and capacity to provide an MSE by a physician or qualified medical personnel (QMP) to determine whether an EMC exists, regardless of the individual’s insurance status. An EMC is defined by a condition that is, or is certain to become, an emergency without stabilizing treatment, including active labor for pregnant patients, but not pregnancy by itself. The definition includes a condition that manifests in severe pain or serious impairment to bodily functions or organs.[4] Ultimately, the determination of an EMC is left to the clinical judgment of the examining physician or QMP.
Stabilization
The obligation to stabilize is triggered upon a determination that an EMC exists, requiring the hospital to provide such medical treatment as is necessary to ensure, within reasonable medical probability, that no material deterioration of the EMC or the individual occurs.[5] The now-rescinded 2022 Guidance provided certainty for hospitals by confirming that if a physician determines that abortion constitutes the appropriate stabilizing treatment for an EMC, then both the physician and the hospital are obligated to provide such treatment, within their capabilities and capacity, notwithstanding any conflicting state law that may prohibit the procedure.
Timeline of Legal and Administrative Action Post-Dobbs
In its Dobbs decision, the Supreme Court overturned Roe v. Wade precedent regarding abortion rights—ruling that abortion is not a fundamental right protected by the U.S. Constitution and should be left to the states to regulate.[6] This meant that states could, and did, proceed to pass legislation that included abortion bans with limited exceptions.
Federal preemption is a legal doctrine rooted in the Supremacy Clause of the U.S. Constitution, which provides that federal law supersedes or displaces conflicting state or local laws. The federal EMTALA statute itself states that “[t]he provisions of this section do not preempt any State or local law requirement, except to the extent that the requirement directly conflicts with a requirement of this section” [emphasis added].[7] Unfortunately, some of the post-Dobbs state laws on reproductive care prohibiting abortion seemed in conflict with the EMTALA obligation to provide stabilization in the event of an EMC.
In an effort to clear up confusion regarding hospitals’ ability to provide a stabilizing abortion in the case of an EMC in states with near-total bans, the Biden administration released the 2022 Guidance, noting EMTALA preempted state law when abortion was necessary to stabilize a patient with an EMC. Following the release of the 2022 Guidance, the issue of abortion in emergency situations was litigated, notably in Texas and Idaho.
Texas
In Texas v. Becerra, Texas sued HHS, arguing that CMS exceeded its statutory authority and successfully sought an injunction preventing the 2022 Guidance from being enforced in Texas.[8] Texas had passed legislation prohibiting a person from knowingly performing, inducing, or attempting an abortion, with noted exceptions.[9] The U.S. Supreme Court eventually denied certiorari, letting stand the U.S. Court of Appeals for the Fifth Circuit’s ruling that EMTALA does not override the Texas abortion ban. This was further supported by CMS’s recent rescission, noting that pursuant to the preliminary injunction in Texas v. Becerra, HHS may not enforce the following interpretations contained in the 2022 Guidance (and the Letter):
(1) HHS may not enforce the Guidance and Letter’s interpretation that Texas abortion laws are preempted by EMTALA; and
(2) HHS may not enforce the Guidance and Letter’s interpretation of EMTALA—both as to when an abortion is required and EMTALA’s effect on state laws governing abortion—within the State of Texas or against the members of the American Association of ProLife Obstetricians and Gynecologists (AAPLOG) and the Christian Medical and Dental Association (CMDA).[10]
Idaho
In the cases of Moyle v. United States / Idaho v. United States, the U.S. Department of Justice sued Idaho over its state abortion law conflicting with EMTALA.[11] A federal district court granted the injunction, meaning that Idaho could not enforce its abortion ban in a medical emergency where EMTALA applies. Idaho filed an appeal, which initially led the U.S. Supreme Court to stay the injunction. Ultimately, however, the Supreme Court lifted the stay, finding that it had been improvidently granted.[12] Following the recent election, the Trump administration decided to drop the case, which was then dismissed by the Ninth Circuit, lifting the injunction.[13] However, another case brought by St. Luke’s Health System on the abortion ban was recently successful in reinstating the temporary restraining order on the enforcement of Idaho’s abortion ban, for now.[14]
Future Outlook: What Does the Rescission of the 2022 Guidance Mean for Providers?
In the aftermath of CMS’s recission of the 2022 Guidance, hospitals, health care providers, and the general public are left with the lingering confusion that existed after the Dobbs decision.[15] The real question here is, “What protections can a provider or hospital rely on if the stabilizing treatment for a pregnant woman experiencing an EMC is an abortion?”  
In its brief statement on the recission, the current administration focused on the enforcement of EMTALA to protect patients, stating it “will continue to enforce EMTALA, which protects all individuals who present to a hospital emergency department seeking examination or treatment, including for identified medical conditions that place the health of a pregnant woman or her unborn child in serious jeopardy.” This is not inconsistent with the 2022 Guidance, which also promoted enforcement of EMTALA. However, instead of only protecting the patient, the 2022 Guidance emphasized protection of the provider caught between an obligation under EMTALA and a more restrictive, conflicting state law.
What Hospitals Should Do Now
Considering the current uncertainty between the interaction of EMTALA and state laws, hospitals would be wise to do the following:

Educate providers and staff on general EMTALA requirements and state laws regarding reproductive care.
Educate providers on comprehensive documentation of medical decision-making by health care providers related to stabilization efforts. Given the reliance on physician judgment to define EMTALA obligations, documentation of patient status and medical decision-making may be increasingly important for hospitals to defend patient status and stabilization efforts.
Monitor administrative, regulatory, and legislative developments in regard to EMTALA and state law, and consult with counsel as needed.

Himani Gubbi and Ann W. Parks contributed to this article
ENDNOTES
[1] See CMS Statement on Emergency Medical Treatment and Labor Act, Centers for Medicare & Medicaid Services (Jun 3, 2025), https://www.cms.gov/newsroom/press-releases/cms-statement-emergency-medical-treatment-and-labor-act-emtala.
[2] See Memorandum from the Dep’t of Health & Hum. Serv.; Dir, Quality, Safety & Oversight Grp. and Surv. & Operations Grp. to the State Surv. Agency Dir. on Reinforcement of EMTALA Obligations Specific to Patients who are Pregnant or are Experiencing Pregnancy Loss (Jul. 11, 2022), https://www.cms.gov/files/document/qso-22-22-hospitals-rescinded-05292024.pdf (“July 2022 Memorandum”).
[3] 42 U.S.C. § 1395dd(a).
[4] 42 U.S.C. § 1395dd(e)(1).
[5] 42 U.S.C. § 1395dd(b).
[6] Dobbs v. Jackson Women’s Health Org., 142 S. Ct 2228 (2022).
[7] 42 U.S.C. § 1395dd(f).
[8] Texas v. Becerra, 89 F.4th 529 (5th Cir.), cert. denied, 145 S. Ct. 139 (2024).
[9] Tex. Health & Safety Code § 170A.002.
[10] See July 2022 Memorandum, supra note 2.
[11] United States v. Idaho, 623 F. Supp. 3d 1096 (D. Idaho 2022).
[12] Moyle v. United States, 144 S. Ct. 2015 (2024).
[13] United States v. Idaho, Nos. 23‑35440, 23‑35450, slip op. at 13 (9th Cir. Mar. 13, 2025).
[14] Order Granting TRO, St. Luke’s Health System, Ltd. v. Labrador, No. 1:25-cv-00015 (D. Idaho Mar. 4, 2025).
[15] Dobbs v. Jackson Women’s Health Org., 142 S. Ct 2228 (2022).

Texas Tax Update: Key Changes Enacted During the 89th Legislature

The final day has passed for Governor Abbott to veto legislation that was approved during Texas’ 89th Legislature Regular Session. While the governor has called a special session commencing July 21, he has not identified any tax bills for further consideration. This means we can likely close the book on the 2025 Legislative Session as it relates to tax laws, and there were several noteworthy tax bills signed into law.
Property Tax 
As was the case for the last regular legislative session in 2023, property tax relief was the focus of this session. Governor Abbott identified property tax relief as one of seven emergency items he wanted addressed during the session. And as a result, the Legislature delivered property tax relief, albeit on a much smaller scale than last session.
Of note, the legislature passed HJR 1, proposing a constitutional amendment allowing the legislature to exempt from property tax $125,000 of business personal property. Assuming Texans vote to approve this constitutional amendment on November 4, 2025, the exemption will be made law by HB 9, effective January 1, 2026. Importantly, it entitles some taxpayers to claim this $125,000 exemption multiple times under certain facts. Taxpayers can generally claim separate exemptions at each location the taxpayer owns or leases within a single taxing unit, which may give rise to planning opportunities. Property located within a taxing unit at locations the taxpayer does not own or lease is aggregated with the taxpayer’s other personal property located in the taxing unit and receives a single $125,000 exemption. 
Similarly, HB9 limits the ability of taxpayers who lease taxable personal property to others to claim multiple exemptions. Property owned by a taxpayer/lessor that is subject to a lease and located within in a single taxing unit must be aggregated, receiving a single $125,000 exemption. While the intent of this provision and the provision aggregating property located at locations not owned by the taxpayer is clear — to limit instances where multiple exemptions can be received by a taxpayer against a single taxing unit’s property tax — the provisions could lead to administrative complications. For instance, in taxing units that span multiple county appraisal districts (e.g., school districts), neighboring appraisal districts will be forced to coordinate to ensure the appraisal rolls properly aggregate property to ensure the correct number of exemptions are granted. 
Finally, HB 9 further limits the ability of taxpayers to claim multiple exemptions via related party rules that would prevent “related business entities” from each claiming an exemption for property located at a single location shared by the related entities. Such property located at a single location must be aggregated and share a single exemption.
HB 22, effective January 1, 2026, continues the theme of exempting personal property from taxation by exempting all intangible personal property. While this sounds generous, almost all intangible personal property is already exempt from taxation. Only certain intangibles owned by insurance companies and savings and loan institutions are currently subject to tax and will be exempted by the new law.
SB 1502, effective January 1, 2026, prohibits school districts from raising property tax rates due to a disaster under Tex. Tax Code § 26.042 for years where voters have already voted against a tax rate increase. As background, Tex. Tax Code § 26.042 allows school districts in disaster areas to temporarily raise tax rates above the vote-approved limit in response to certain disasters. SB 1502 takes away a school district’s ability to bypass voters if voters have already voted against a rate increase for the year at issue.
HB 3093, effective immediately, impacts how property tax rates are determined in the 14 Texas counties on the Gulf Coast when large taxpayers protest their appraised values. County tax rates are set based on the estimated tax revenue needed for the county. The estimate is based on the appraised value of all property in the county, including appraised value that may be under protest at the time the tax rate is set. This can lead to very large budget shortfalls when large taxpayers successfully reduce their appraised values after the rate is set. HB 3093 would exclude the contested value of a property from rate calculations if (1) the taxable value of the property in the prior year was one of the 20 highest taxable values in the appraisal district, and (2) the current year taxable value exceeds 125 percent of the value of the property that is not in dispute. This legislation is a response to property tax lawsuits filed by two tax payers which, according to Nueces County, led to a $30 million budget shortfall. 
HB 1392 provides that, beginning January 1, 2026, if a tax collector’s office is closed on the date tax payments are due, the due date is extended to the following business day. Under current law, the due date is extended if the due date falls on a holiday or weekend. HB 1392 expands the extension to cover any office closure, such as closure for inclement weather or faulty plumbing. 
Franchise Tax / Sales and Use Tax 
While property tax was the focus of the 89th Legislature, the Legislature passed a few significant franchise tax and sales tax laws. 
SB 2206, effective January 1, 2026, overhauls Texas’ research and development exemptions and credits. It completely repeals the sales and use tax exemption for R&D currently found in Tex. Tax Code § 151.3182.
In return, the new law offers a more generous franchise tax credit, providing a credit of 8.722 percent of the difference between current period qualified research expenses (“QREs”) and 50 percent of the average QREs for the prior three periods, while current law only allows a 5 percent credit of the difference between current period QREs and 50 percent of the average QREs for the prior three periods. The new law also indefinitely extends this franchise tax credit, which was set to expire at the end of 2026. 
SB 266, effective immediately, allows a taxpayer who was subject to a managed audit to bypass redetermination and file a lawsuit in court. This would allow taxpayers to avoid the extra time and expense of redetermination in instances where it is unlikely to produce a favorable outcome. 
SB 266 also changes the current requirement that taxpayers provide “contemporaneous” records in administrative and judicial proceedings by instead requiring that a taxpayers provide “sufficient” records. The new law does not define “sufficient,” which may lead to future controversies.
SB 1058, effective January 1, 2026, is a narrow franchise tax exclusion intended to lure stock exchanges to Texas. The new law excludes “transaction rebate payments” from a “registered securities market operator’s” total revenue. “Transaction rebate payments” are payments made to incentivize a broker or dealer to provide liquidity to the market.
Economic Development Incentives 
The only noteworthy incentives bill to pass is HB 2027, which grants the Brazoria County Commissioners Court authority to grant property tax abatements for property within the Port Freeport District. The new law is effective immediately.
More noteworthy are the bills that did not pass. For the second straight session, the Legislature opted not to pass bills (HB 2027 and SB 878) that sought to prevent municipalities and counties from offering property tax incentives under Local Government Code Chapters 380 and 381.
Likewise, the Legislature did not pass SB 2322 or HB 105, which were intended to address issues in the JETI Act, which is 2023 legislation that allows school districts to offer property tax incentives to lure certain types of developments, replacing the old Chapter 313 program. SB 2322 would have removed utility services projects, including dispatchable electric generation facilities, from the compelling factor test under the Tex. Gov’t. Code § 403.609(b) (part of the JETI Act). HB 105 would have done the same, as well as made two other significant changes. First, it would have created a classification of “priority projects,” which are projects that invest at least $750 million by the end of the first year of the incentive project. Priority project would have been excluded from the compelling factor test and the JETI Act jobs requirements. Second, it would have fundamentally changed how required wages are calculated, correcting unintended issues with the current formula that can create egregiously high wage requirements for certain projects. These bills were intended to fix some of the myriad issues identified under the JETI Act.
Finally, SB 1756 would have limited municipalities to only one hotel project under Texas Tax Code Chapter 351, but it failed to get out of committee. Each subsequent hotel project would have required separate approval from the Texas Legislature, but instead the current system survives, allowing municipalities authorized under Chapter 351 to enter into hotel project agreements with multiple hotel projects.

Supreme Court Decision Leaves ACA Preventive Services Mandate Intact

On the last day before the U.S. Supreme Court’s summer recess, the Court issued a decision that left in place the Affordable Care Act (“ACA”) mandate that requires non-grandfathered group health plans and issuers to cover, without cost sharing, all evidence-based items or services that have a rating of “A” or “B” in the current recommendations of the U.S. Preventive Services Task Force (“USPSTF”) when provided in-network.
Specifically, in Kennedy v. Braidwood Management, Inc., the Court addressed a challenge to the constitutionality of the USPSTF and, by extension, the requirement that health plans provide coverage consistent with its recommendations. The Court held that members of the USPSTF are inferior officers whose appointment is constitutionally valid when made by the Secretary of Health and Human Services. As a result of the Court’s decision, the ACA preventive services mandate will remain in place.
Takeaways for health plan sponsors? Recognizing the uncertainty created by the ongoing litigation, many health plan sponsors chose to sit tight and not make changes to their preventive services coverage while the Braidwood case proceeded through the courts. That course of action turned out to be prescient, given the Court’s decision ultimately left the ACA preventive services mandate intact for non-grandfathered group health plan sponsors and issuers. 

Supreme Court Limits Nationwide Injunctions, but Does Not Decide on Birthright Citizenship Challenge

In a closely watched decision issued on June 27, 2025, the Supreme Court of the United States ruled in Trump v. CASA, Inc., No. 24A884, that federal district courts lacked authority to issue universal (nationwide) injunctions blocking enforcement of federal policies. While the decision did not resolve the underlying constitutional challenge to President Trump’s executive order targeting birthright citizenship, it directly affects how policy will be litigated moving forward.
The decision restricts a growing trend of district courts halting immigration-related executive orders on a national scale, reinforcing the principle that injunctive relief must be limited to the actual parties before the court. Further guidance from the Trump administration is expected to follow, outlining new procedures restricting birthright citizenship to only biological children born to U.S. citizens or U.S. lawful permanent residents.
Quick Hits

On June 27, 2025, the Supreme Court ruled in Trump v. CASA, Inc. that federal district courts lack the authority to issue nationwide injunctions blocking federal policies, impacting how immigration-related executive orders are litigated.
The decision, which arose from challenges to President Trump’s Executive Order No. 14160, which restricts birthright citizenship to children born to U.S. citizens or lawful permanent residents, emphasized that injunctive relief must be limited to the actual parties before the court.
While the ruling did not address the constitutionality of the executive order itself, it significantly alters the landscape of immigration litigation by requiring plaintiffs seeking broad relief to pursue class action procedures rather than universal injunctions.

Background
The Supreme Court’s ruling arises from challenges to President Trump’s Executive Order No. 14160, which narrowed the scope of birthright citizenship. The order specifically bars children born in the United States from acquiring automatic citizenship if neither parent was a U.S. citizen or a lawful permanent resident. Children born to nonimmigrant visa holders, including but not limited to participants in the Visa Waiver Program, F-1 students, and B-1, B-2, H-1B, H-4, L-1, L-2, E-1, E-2, E-3, TN, and O-1 visa holders, would not be granted birthright citizenship under this Executive Order.
The plaintiffs, including individuals, organizations, and state governments, alleged that the order violated the Fourteenth Amendment’s Citizenship Clause and federal nationality laws. Multiple federal district courts issued sweeping injunctions preventing the government from enforcing the policy nationwide. The government appealed, contending that the universal injunctions exceeded the traditional equitable authority of the courts, and in a 6–3 decision authored by Justice Amy Coney Barrett, the Supreme Court agreed. Drawing on principles of equity rooted in the Judiciary Act of 1789, the Court emphasized that remedies granted by federal courts must align with those “traditionally accorded by courts of equity” at the time of the nation’s founding. The Court concluded that while universal injunctions may address systemic issues efficiently, such policy considerations cannot override the statutory limitations on judicial power. Although the Court’s ruling focused on the remedy, not the constitutionality of the Executive Order on birthright citizenship, it represents a substantial change in how recent immigration policy changes may be challenged in court.
Analysis and Impact
The Court did not rule on whether the executive order’s challenge to the interpretation of birthright citizenship violated the Citizenship Clause or the Nationality Act. Further, the decision defers to the lower courts as to whether to narrow their injunctions on this issue. However, this ruling has significant implications for ongoing and future immigration litigation, particularly cases involving constitutional challenges to executive immigration actions. The Court emphasized that plaintiffs seeking broad relief for groups of similarly situated individuals must do so through class action procedures, rather than through universal injunctions. For families directly affected by the executive order’s birthright citizenship restrictions, this means that only those who are parties to the litigation may receive injunctive relief. Others would need to file separate suits or seek to be included in a certified class action to halt enforcement.
Ultimately, the underlying issue restricting birthright citizenship by the executive order remains unresolved, and the federal courts must continue to address the constitutional merits of that issue in future proceedings.

U.S. Supreme Court Upholds Adult Entertainment Website Age Verification Law

On June 27, 2025, the U.S. Supreme Court upheld, in a 6-3 vote, H.B. 1181, a Texas law that requires certain commercial websites publishing sexually explicit content to verify that visitors are 18 years of age or older. H.B. 1181 applies to entities that publish or distribute material on a website, more than one-third of which is “sexual material harmful to minors,” as defined under the law. Nearly two dozen other states have passed legislation imposing materially similar age-verification requirements to access such content.
The Free Speech Coalition (“FSC”), an adult entertainment trade association group and petitioner in the case challenging the law, argued that H.B. 1181 unconstitutionally hinders adult viewers’ access to adult entertainment as covered free speech. The Court disagreed and upheld H.B. 1181. The Court held that the Texas law, which requires websites to verify users are 18 years of age or older to access sexual material harmful to minors, is subject to intermediate scrutiny under the First Amendment and survives that standard. This means the law is constitutional because it serves an important government interest (protecting minors from harmful content) and does not unduly restrict the free speech rights of adults. The Texas law requires users of such covered websites to verify their age by either (1) providing digital identification (i.e., information stored on a digital network that serves as proof of the individual’s identity) or (2) complying with a commercial age verification system that verifies age using either government-issued identification or transactional data. In its ruling, the Court held that “adults have no First Amendment right to avoid age verification.” In light of this ruling, age-verification requirements in other state and federal laws designed to protect children online may be more likely to be upheld.

Supreme Court Halts Nationwide Injunctions with Major Implications for Ongoing Litigation

On June 27, 2025, the U.S. Supreme Court held, in a 6-3 decision in Trump v. Casa, that federal courts lack the authority to issue nationwide injunctions under the Judiciary Act of 1789 (Judiciary Act). In doing so, the Court partially stayed the nationwide injunctions issued by three district courts against the enforcement of President Donald Trump’s Executive Order (EO) targeting birthright citizenship guaranteed by the 14th Amendment of the U.S. Constitution.
By eliminating the availability of nationwide injunctions, Casa introduces uncertainty to individuals and organizations subject to a growing number of Executive Orders that have been halted by nationwide injunctions. The fate of the underlying cases remains uncertain, as district courts must grapple with the Supreme Court ruling and examine whether each injunction is broader than necessary to provide relief to each named plaintiff with standing to sue.
Background
The Casa litigation arose from EO 14160, which sought to redefine the scope of birthright citizenship by declaring that individuals born in the U.S. to mothers who were either unlawfully or only temporarily present in the country, and whose fathers were neither citizens nor lawful permanent residents, were not entitled to citizenship. Individuals, organizations and states filed three separate suits to enjoin the enforcement of the EO. District courts in Maryland, Washington and Massachusetts granted the requested relief on a nationwide basis.1 The government appealed. On appeal the Government took the unexpected position of not appealing regarding the merits of the underlying EO, but rather only to seek partial stays of the district courts’ nationwide injunctions, arguing that such injunctions exceeded their authority under the Judiciary Act.
Writing for the majority, Justice Barrett sided with the government, holding that nationwide injunctions likely exceed the authority that Congress has given to federal courts. The Judiciary Act provides that federal courts have jurisdiction over “all suits … in equity.” As previously held by the Court, this encompasses only the sorts of equitable remedies “traditionally accorded by courts of equity” at the country’s inception.2 Nationwide injunctions, the court held, are not “sufficiently analogous” to any relief available in the High Court of Chancery in England or founding-era courts of equity in the United States.
Instead, the Court held that Article III of the U.S. Constitution limits courts to resolving specific cases and controversies and that any remedy must be no broader than required to provide the plaintiffs with “complete relief.” The Court distinguished that the principle of “complete relief” is not synonymous with “universal relief.” Complete relief operates as the ceiling, and under no circumstances can a court award relief beyond what is necessary to redress the specific plaintiffs’ injuries. As the Court explained in this case, prohibiting enforcement of the EO against the child of an individual pregnant plaintiff will give that plaintiff complete relief, as her child will not be denied citizenship. However, extending the injunction to cover everyone similarly situated would not render the plaintiff’s relief any more complete.
The Court granted the Government’s request for a partial stay of the injunctions, but only to the extent that the injunctions are broader than necessary to grant complete relief to each plaintiff who had standing to sue. Therefore, the injunctions remain in effect for the named plaintiffs who filed the lawsuit; however, the lower courts are instructed to expedite their review of how these injunctions may be narrowed to comply with the principles of equity.
What Remedies Are Still Available?
While Casa has created significant limitations for litigation challenging federal statutes and executive actions on a nationwide basis, several avenues remain available:

Complete Relief on Behalf of States: The Court recognized that the complete relief inquiry is more complicated for state respondents. In Casa, state plaintiffs argued that universal relief is necessary due to the administrative complications of individuals moving in and out of their borders. Siding with the states, the District of Massachusetts issued an injunction that did not purport to directly benefit nonparties. Instead, the lower court held that a nationwide injunction was necessary to provide the states themselves with complete relief. The government argued that there were still ways in which the injunction could have been narrowed, while still providing complete relief to the state respondents. The Court declined to address these arguments, directing the lower courts to determine whether a narrower injunction is warranted. If state respondents can successfully argue that limiting a nationwide injunction would not afford the states complete relief, some of the current nationwide injunctions could remain in place. However, the bar in achieving these injunctions is likely to be higher. Justice Alito also explained in his concurrence that while the courts allow states to assert the rights of a third party, the state itself must show that it would have Article III standing. He further cautioned that if lower courts allow states to assert third-party standing, the limits to injunctive relief could be undermined.
Rule 23(b)(2) Class Action: All the justices agreed that class actions under the Federal Rule of Civil Procedure may be used to obtain an injunction that protects a class of individuals, and perhaps even a nationwide class, against a particular government action. However, Rule 23(b)(2) class actions are not without their limits. To certify a class, plaintiffs must demonstrate numerosity, commonality, typicality, and adequacy of the named plaintiffs to represent the class, Rule 23(a), and that the party opposing the class has acted on grounds generally applicable to all class members, Rule 23(b)(2). These requirements limit the types of cases in which preliminary injunctive relief is available, as well as the expediency of obtaining injunctive relief, as courts review the evidence to establish a proposed class.
APA Vacatur: The Court noted that its holding does not resolve “the distinct question whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action.” Section 706 of the APA provides that federal courts shall “set aside” any agency action that violates the provisions of the APA. Historically, plaintiffs have utilized the APA to achieve a “universal vacatur,” staying regulations or other government actions from taking effect pending the outcome of litigation. The Court has recently questioned whether such universal vacatur under the APA is compatible with equitable remedies under Article III. See e.g. Biden v. Texas, 597 U.S. 785 (2022). It remains an open question on how lower courts and the Supreme Court may respond to this method for potentially obtaining nationwide relief in light of Casa.

Implications On Current Litigation
During the first 100 Days of the Trump Administration, district courts issued approximately 25 nationwide injunctions blocking EOs and other government actions related to, among other things, termination of probationary federal employees, federal funding, immigration, and diversity, equity, and inclusion (DEI) programs. The lower courts in each case will now be tasked with determining whether these injunctions can be narrowed to a smaller group or a specific geographic location without compromising the protections afforded to the named plaintiffs. Organizations that have benefited from one or more of the injunctions currently in place can no longer presume that these benefits will continue to be extended to them.
Just hours after the Casa decision was issued, groups challenging the constitutionality of the birthright citizenship EO issued several new lawsuits, switching their legal actions to class action complaints.[3] Organizations should actively monitor the potential class action lawsuits that may be filed and consult with legal counsel to determine the feasibility of joining these lawsuits.
Impact on Healthcare & Life Sciences Organizations
Healthcare & Life Sciences organizations should carefully review injunctions that directly and/or indirectly affect them, including those affecting the disbursement of federal funding, grants for biomedical research, and DEI programs. We expect that several of these injunctions will be amended and may no longer benefit unnamed parties. Organizations with operations across multiple states or jurisdictions in particular will need to evaluate whether injunctive relief is likely to be limited to a particular geographic location and be on the lookout for pending class actions.
Organizations may also benefit from consulting with their State Attorneys General and respective trade associations to assess whether a State or association challenge to an EO could effectively protect their organization’s rights. State governmental bodies and organizations are uniquely positioned to develop coordinated legal strategies in response to challenging Government actions that target a broad group of citizens or organizations. 
Footnotes 
[1] CASA, Inc. v. Trump, 763 F. Supp. 3d 723 (D. Md. 2025); Washington v. Trump, No. C25-0127-JCC, 2025 WL 350361 (W.D. Wash. Jan. 28, 2025); New Jersey v. Trump, No. CV 25-10139-LTS, 2025 WL 617583 (D. Mass. Feb. 26, 2025)
[2] See Casa at 3 (citing Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 319 (1999)).
[3] On July 2, 2025, Judge Randolph D. Moss of the U.S. District Court for the District of Columbia issued a summary judgment decision blocking President Trump’s “Invasion” Proclamation, which sought to foreclose pathways to legal migration and asylum applications for crossing the southern border. Judge Moss also granted the Plaintiff’s motion to certify the Rule 23(b)(2) class and held that implementing the Proclamation is “not in accordance with law” under Section 706 of the APA and therefore should be vacated. The Court also concluded that this case is one of the “rare cases” where injunctive relief is required and therefore issued a “narrowly tailor[ed]” injunction to prohibit the federal defendants from implementing the Proclamation, which will have the effect of a nationwide injunction. Undoubtedly, this decision will be appealed, but serves as a roadmap for plaintiffs seeking universal relief. See Refugee & Immigrant Ctr. for Educ. & Legal Servs. v. Noem, No. CV 25-306 (RDM), 2025 WL 823987 (D.D.C. Feb. 22, 2025).

Defending America’s Sovereignty Through FARA – Sun Case Exposes States’ Vulnerabilities

In 1938, as the world descended into a second world war and Europe’s new totalitarian states perfected the arts of propaganda and subversion, Congress passed the Foreign Agents Registration Act (FARA). While FARA did not seek to criminalize speaking or lobbying for a foreign power, it did mandate disclosure. Any person acting on behalf of a foreign entity was required to register and disclose this relationship with federal authorities. The theory behind FARA was elegantly constitutional: sunlight, not censorship, would preserve the republic.
More than eight decades later, the times, as well as the challenges of FARA enforcement, have changed. Foreign actors still seek to wield influence in the United States, but today, they’re looking to flex their muscles far beyond the nation’s capital.
Which brings us to Albany.
It was recently announced that Linda Sun, a former top aide to New York Governor Kathy Hochul, will stand trial in November for allegedly secretly acting as an agent of officials from the Chinese consulate in New York while serving in state government. Sun is accused of arranging diplomatic meetings, influencing state policy toward Taiwan, altering public messaging to suit Beijing’s preferences, and accepting lavish gifts for doing China’s bidding. And this was all done without disclosing her relationship with the foreign government alleged to have directed her.
This is, if proven, the quiet repurposing of American public power by a foreign adversary. And it signals something that demands our attention: state and local governments are now targets for foreign influence operations. The era in which foreign agents confined their ambitions to Washington, D.C., is over.
Foreign policy is constitutionally a federal prerogative, but power in America is decentralized. Governors influence trade missions. State legislatures pass resolutions expressing their views on global affairs. University systems oversee federally funded research important to America’s national security and economy. Municipal leaders weigh in on foreign conflicts with increasing frequency. China, ever aware of America’s vulnerabilities, has adjusted its tactics accordingly.
Beijing’s efforts to cultivate influence in American statehouses should surprise no one. The Chinese Communist Party’s “United Front” strategy has long emphasized elite capture, local partnerships, and narrative management. What is novel is the brazenness of the activity and its infiltration of high-level state executive offices. The Sun case, whatever its outcome, is a warning: in the absence of vigilance, state governments may become unwitting instruments of foreign powers.
This places a new burden on the Department of Justice—now under the leadership of Attorney General Pam Bondi—to thread a delicate constitutional needle. FARA is not a vehicle for punishing unpopular opinions or run-of-the-mill foreign engagements. The statute’s power lies in its restraint. It does not prohibit foreign-directed advocacy—it insists only that such advocacy be disclosed.
To that end, President Trump’s Department of Justice appears to be adopting a policy of precision: to prosecute only “espionage-adjacent” FARA violations—those involving deception, national security risk, or active concealment. This is a commonsense and constitutional approach, and it is one that avoids prosecution of mere technical violations, while preserving the integrity of the statute’s original purpose.
If the Sun prosecution is to serve as a model, let it be for this narrow but necessary application of FARA: when public officials operate in secret for foreign sovereigns while wielding American governmental authority, disclosure is not merely a bureaucratic requirement. Disclosure of such a relationship would obviously undermine the entire malicious plot. Thus, the true problem in such a case is not merely failure to file paperwork, but a larger espionage-like scheme. This appears to be exactly how Attorney General Bondi and the new Justice Department leadership will focus on these issues.FARA, as it is written, retains the tools to meet the moment—provided it is enforced with prudence, clarity, and constitutional fidelity. In the case of Linda Sun, the Department of Justice appears prepared to do just that. By focusing its prosecutorial power on high-level violations of FARA that compromise America’s national security, the Trump administration has an opportunity to uphold the legitimacy of this all-important law. 
In an age when foreign influence operations have grown more sophisticated, defending American sovereignty means guarding not only Washington, but Albany, Sacramento, Austin and every other seat of governmental authority. The vigilance of the federal government in this case may prove a model—not of federal overreach, but of federal power properly exercised.