What to Do if Your Federal Contract was Wrongfully Terminated by the Government
Government contracts often include a termination for convenience clause, generally allowing federal agencies to cancel agreements when it serves the government’s interest. While this power is fairly broad, it is not absolute — and when misused, contractors may have legal recourse. Several court cases highlight situations where termination for convenience was found to be an abuse of discretion or bad faith.
For government contractors, understanding these legal precedents can help identify improper terminations and explore possible remedies.
When Termination for Convenience Becomes Abuse of Discretion
Government Cannot Use Termination to Correct Procurement Mistakes
Case: Krygoski Constr. Co. v. United States, 94 F.3d 1537 (Fed. Cir. 1996)
Issue: The government mistakenly awarded a contract under a small business set-aside and later terminated it for convenience to fix the error.
Ruling: The court held that termination for convenience cannot be used to correct government procurement mistakes if it results in bad faith or an abuse of discretion.
Takeaway: The government cannot cancel contracts simply to undo its own errors in the bidding process.
Termination Cannot Be Used to Escape a Bad Bargain
Case: Torncello v. United States, 681 F.2d 756 (Ct. Cl. 1982)
Issue: The government terminated a contract for convenience after finding a cheaper option elsewhere.
Ruling: The court found that the government cannot use termination for convenience to walk away from an unfavorable deal.
Takeaway: Agencies cannot cancel contracts just to get a better price.
Using Termination to Favor Another Contractor May Be Unlawful
Case: TigerSwan, Inc. v. United States, 110 Fed. Cl. 336 (2013)
Issue: The plaintiff argued that the contract was terminated as a pretext to award it to another contractor.
Ruling: The court held that if termination is used to intentionally circumvent contractor rights or favor a competitor, it may constitute an abuse of discretion.
Takeaway: The government cannot manipulate contract terminations to steer awards toward preferred vendors.
Termination in Bad Faith Can Be Challenged
Case: Salsbury Indus. v. United States, 905 F.2d 1518 (Fed. Cir. 1990)
Issue: The contractor alleged bad faith in the termination decision.
Ruling: While the government generally has broad discretion, a termination in bad faith can be deemed wrongful.
Takeaway: Contractors must prove bad faith, but if successful, the termination can be overturned.
Arbitrary or Capricious Terminations Can Be Contested
Case: Caldwell & Santmyer, Inc. v. Glickman, 55 F.3d 1578 (Fed. Cir. 1995)
Issue: The contractor argued that the termination was arbitrary and not in the government’s best interest.
Ruling: The court stated that terminations for convenience must have a rational basis and cannot be arbitrary.
Takeaway: If a contractor can prove a lack of reasonable justification, they may challenge the termination.
Key Legal Principles from These Cases
Bad Faith or Pretextual Termination
The government cannot terminate a contract for convenience to avoid obligations or favor another contractor.
Arbitrary or Capricious Terminations
If a termination lacks a rational basis or is done without reasonable justification, it may be an abuse of discretion.
No Escape from a Bad Deal
The government cannot terminate a contract just because it finds a better option later.
What Can Government Contractors Do?
If a contractor believes a termination for convenience was wrongful, they may have legal remedies, including:
Claim Breach of Contract Damages
Typically, a contractor is only entitled to termination settlement costs (e.g., costs incurred before termination, reasonable profit on completed work, etc.). However, if the termination was arbitrary, capricious, or in bad faith, it may be treated as a breach of contract, allowing the contractor to seek lost profits.
Seek Contract Reinstatement
In rare cases, a court may reinstate a contract if performance is still possible.
Request an Equitable Adjustment
If part of the contract is reinstated or re-awarded, the contractor may be able to recover increased costs due to the termination and subsequent reinstatement.
Recover Attorneys’ Fees and Costs
If the contractor proves wrongful termination, they might, in limited circumstances, be entitled to legal cost reimbursement under the Equal Access to Justice Act.
Does the Sovereign Acts Doctrine Apply?
The Sovereign Acts Doctrine can shield the federal government from liability when its actions are taken in a public and general capacity (e.g., certain new legislation or wartime measures). However, if contract terminations are targeted at specific contracts rather than simply as a result of broad governmental actions, the doctrine may not apply.
So far, the Trump administration’s termination of federal contracts, although fairly widespread, has been targeted at specific types of contracts with specific agencies. As such, the government may have a difficult time establishing that its actions were not targeted at particular contracts.
Final Thoughts: Protecting Your Rights as a Government Contractor
While the government has fairly broad discretion to terminate contracts for convenience, that power is not unlimited. If termination appears pretextual, arbitrary, or in bad faith, contractors should:
Review past legal precedents
Assess with counsel whether the termination lacks a rational basis
Gather evidence to support a potential challenge
Pursue legal remedies to recover losses
By understanding their rights and legal options, government contractors may be able to protect themselves from wrongful terminations and seek just compensation.
New EDPB Statement on Agre Assurance: What You Need to Know
On 11 February 2024, the European Data Protection Board (EDPB) adopted a new statement on age assurance. This statement, while not legally binding, will guide the enforcement of age-gating methods across the EU. Age assurance refers to the methods used to determine an individual’s age or age range with varying levels of confidence or certainty.
The EDPB’s statement addresses several online scenarios where age verification is crucial. These include situations where legal age requirements exist for purchasing products, using services that could pose risks to children, or engaging in legal activities. It also emphasizes the responsibility to protect children by ensuring that services are designed and provided in an age-appropriate manner.
Platforms publishing notably adult content and which may be mandated under local laws to implement age control methods will need to take this guidance into consideration.
Implementation Requirements
Perform and document a risk-based assessment explaining the necessity of age assurance for your service and identifying specific risks. The age verification system should collect only the minimum age-related data necessary, typically just determining if a user is above or below the relevant age threshold. The chosen method must not enable tracking, profiling, or identification beyond what’s necessary for age verification.
Technical Requirements
Implement privacy-enhancing technologies that favor user-held data and secure local processing. Ensure multiple verification methods are available to prevent discrimination against users without access to certain tools. Consider a “no-log” policy where age verification data is not retained after the process.
Required Documentation
Conduct a Data Protection Impact Assessment (DPIA) before implementing any age assurance system. Develop clear policies documenting your age assurance governance framework, including roles and responsibilities, data protection measures, and compliance monitoring procedures.
Josefine Beil contributed to this article
GIFTED DISMISSAL: Judge Dismisses TCPA Claim Based on Argument Made by the Plaintiff
I have an interesting update regarding Mark Dobronski, an individual who has put himself on the plaintiff-end of numerous TCPA lawsuits. On a motion for summary judgment, he recently saw five out of the six claims he had made against the defendant thrown out. Dobronski v. Fortis Payment Systems, LLC, No. 23-cv-12391, 2025 WL 486667, *1 (E.D. Mich. Feb. 13, 2025) (order granting in part and denying in part motion for summary judgment). Unsurprisingly, all of the plaintiff’s claims in this case were related to telemarketing communications. Id.
For a quick procedural backdrop here, the motion for summary judgment was referred to a magistrate judge, who issued a report and recommendation. Magistrate judges are judges appointed by district court judges, to help them in certain types of cases—such as discovery disputes and dispositive motions.
After a magistrate judge issues a report and recommendation, parties generally have an opportunity to file objections to that report and recommendation before the district judge issues the final decision at the trial court level. Here, the district judge was doing just that—reviewing the parties’ objections to the magistrate judge’s report and recommendation.
In this action, the plaintiff filed four TCPA-related claims. Id. The magistrate judge recommended dismissal of two out of those four TCPA-related claims. Id. The defendant did not object to the non-dismissal of the remaining two TCPA claims. Id. Amazingly, the district judge dismissed one of those claims anyway, dismissing five out of the plaintiff’s six total claims. Id. at *3-4.
But, how did the district court decide on its own to dismiss one of those claims without an objection by the defendant?
In the plaintiff’s objection to the dismissal of one of his state law claims, the plaintiff pointed to the magistrate judge’s analysis of one of his TCPA claims and effectively said, because that TCPA count survived, the analogous state law claim should also survive the motion for summary judgment. See id at *4.
The district judge took a closer look at that TCPA Claim—for failure to honor a Do-Not-Call (“DNC”) request—and found the exact opposite. See id. Not only should the analogous state law claim still be dismissed, but the TCPA claim actually must go too—as the plaintiff failed to present any evidence that the defendant received a request not to call the plaintiff. Id.
The surviving claim on this action was for a traditional TCPA DNC violation. Id. at *2. Still, it is pretty surprising to see an extra claim thrown out by a district judge, where the defendant did not even object to the magistrate judge’s ruling on that claim.
It can seem straightforward. But in many actions such as this one, alleging multiple types of violations, plaintiffs can sometimes let required parts of their claims slip through the cracks. That is what happened here. And although defense counsel should have raised the issue of whether they received the DNC request on their own in their motion for summary judgment, the district court effectively gifted them a dismissal.
Best practice—do not rely on any court to do that for you!
DUMBEST SCHEME EVER?: FCC Proposes $4.5MM Penalty on Carrier Telnyx LLC After Bad Guys Pose as the FCC…
In In the Matter of Telnyx LLC, File No.: EB-TCD-24-00037170, NAL/Acct. No.: 202432170009, FRN: 0018998724 (Feb 4, 2025 released) the FCC stated the Commission’s “staff and their family members, among others, were targeted with calls containing artificial and prerecorded voice messages that purported to be from a fictitious FCC ‘Fraud Prevention Team’ as part of a government imposter scam aimed at fraudulently extracting payments of large amounts of money by intimidating recipients of the calls.”
So, they targeted FCC employees–the primary federal regulator of robocalls– with fake fraud prevention robocalls. I mean, the chutzpah.
Per the order, “[t]he FCC has no such “Fraud Prevention Team” and the FCC was not responsible for these calls.” But when they were answered the called party was threatened with prosecution unless they– you guessed it– bought some gift cards:
” One recipient of an Imposter Call reported that they were ultimately connected to someone who “demand[ed] that [they] pay the FCC $1000 in Google gift cards to avoid jail time for [their] crimes against the state.”
Unsurprisingly the Commission was pissed and wanted blood, or the money equivalent of blood.
Being unable to determine who the real bad guys were they took out their fury upon the carrier that apparently permitted the calls to get connected– Telnyx LLC. In the FCC’s words the company failed “to take affirmative, effective measures to prevent malicious actors from using its network to originate illegal voice traffic.”
Now what’s interesting is that Telnyx apparently signed up MarioCop on February 6, 2024, and the calls went out that same day. Telnyx then stopped the traffic immediately. But that did not save it from penalty. The FCC was pissed Telnyx let these guys on the network to begin with.
And when you dig down into this there are red flags everywhere to be seen:
The company address provided by MarioCop was the address of a Sheraton hotel in Canada.
The email address domain used by MarioCop (@mariocop123.com) is not a real domain associated with any known business.
The IP address for the MarioCop Account was from Edinburgh, Scotland and was not affiliated with the physical Toronto address; and, perhaps most tellingly:
MarioCop paid Telnyx in Bitcoin and the Bitcoin transaction ID and wallet address the MarioCop Accounts used to pay Telnyx were anonymized and could not be traced.
They paid in Bitcoin????????????????
Just unreal.
Obviously pretty serious lapses in the KYC process here. And the FCC proposes to hit Telnyx with a $4.5MM penalty as a result.
Gumble Grumble: $1.5MM Deere Credit Services TCPA Class Action Settlement Meets with Final Approval–NCLC Slated To Receive More Cash
No matter how many times I raise the issue, it seems, TCPA defense counsel are still not getting the message.
DO NOT APPOINT NCLC AS CY PRES RECIPIENT IN TCPA CLASS ACTION SETTLEMENTS.
The NCLC famously advocates before the FCC and Congress for broader and more expansive TCPA coverage–leading to TCPA lawsuits–and then accepts money from resulting TCPA settlements. Yet they tell folks they are advocating on behalf of “low income clients” never mentioning that their funded by the TCPA plaintiff’s bar.
Disgusting.
I have mentioned this issue several times on TCPAWorld and yet the latest TCPA settlement to receive approval, once again, has NCLC listed as a cy pres recipient.
In Cornelius v. Deere Credit 2025 WL 502089 (S.D. Ga Feb. 13, 2025) the court granted final approval to a $1.5MM TCPA class action settlement involving prerecorded servicing calls to wrong numbers.
The class was: “all persons throughout the United States (1) to whom Deere Credi Services, Inc. placed a call, (2) directed to a number assigned to a cellular telephone service, but not assigned to a Deere Credit Services, Inc. customer or accountholder, (3) in connection with which Deere Credit Services, Inc. used an artificial or prerecorded voice, (4) from February 2, 2020 through June 25, 2024.”
The plaintiff’s lawyers– the Wolf and Mr. Number One teamed up for this one–walked with $500k.
And the National Consumer Law Center is the cy pres designee. (That means they will get any left over money from the class if checks aren’t cashed, etc.– can often be tens or hundreds of thousands of dollars, although will likely be less in this smaller settlement.)
If you’re a TCPA class action defense counsel that uses NCLC as a cy pres recipient in a TCPA class action settlement expect to be called out BY NAME when I cover the settlement. That’s how we’re going to handle these things from now on.
And you should really be appointing R.E.A.C.H. as the cy pres in these cases folks–R.E.A.C.H. has stopped way more robocalls than NCLC and works hard to educate and advocate for compliance with the folks in the industry that causes the most preventable robocalls. No better organization than R.E.A.C.H. to receive cy pres dollars– but better to give it to ANYONE else over NCLC.
Recent Federal Developments for February 14, 2025
TSCA/FIFRA/TRI
EPA Releases Final Risk Evaluation For DINP, Finding Unreasonable Risk Of Injury To Human Health When Workers Are Exposed Under Four Conditions Of Use (COU): On January 14, 2025, EPA released the final risk evaluation for diisononyl phthalate (DINP) conducted under the Toxic Substances Control Act (TSCA). EPA states that it has determined that DINP presents an unreasonable risk of injury to human health because workers could be exposed to high concentrations of DINP in mist when spraying adhesive, sealant, paint, and coating products that contain DINP. According to EPA, DINP can cause developmental toxicity and harm the liver and can cause cancer at higher rates of exposure. EPA notes that DINP can also harm the developing male reproductive system, known as “phthalate syndrome,” and that it is including DINP in its cumulative risk analysis for six phthalates that demonstrate effects consistent with phthalate syndrome. EPA released this draft risk analysis on January 6, 2025. For more information and our commentary, please read the full memorandum.
EPA Proposes Risk Management Rule To Protect Workers From Inhalation Exposure To PV29: On January 14, 2025, EPA issued a proposed rule to address the unreasonable risk of injury to human health presented by Color Index (C.I.) Pigment Violet 29 (PV29) under its COUs as documented in EPA’s January 2021 risk evaluation and September 2022 revised risk determination. 90 Fed. Reg. 3107. The proposed rule states that TSCA requires that EPA address by rule any unreasonable risk of injury to health or the environment identified in a TSCA risk evaluation and apply requirements to the extent necessary so the chemical no longer presents unreasonable risk. To address the identified unreasonable risk, EPA proposes requirements to protect workers during manufacturing and processing, certain industrial and commercial uses of PV29, and disposal, while also allowing for a reasonable transition period prior to enforcement of said requirements. Comments are due February 28, 2025. For more information, please read our January 27, 2025, memorandum.
EPA Releases Draft Scope Document For Vinyl Chloride TSCA Risk Evaluation: On January 16, 2025, EPA announced the availability of and requested public comment on the draft scope of the risk evaluation to be conducted under TSCA for vinyl chloride. 90 Fed. Reg. 4738. EPA notes that under TSCA, the scope documents must include the COUs, hazards, exposures, and the potentially exposed or susceptible subpopulations (PESS) that EPA expects to consider in conducting its risk evaluation. EPA states that the purpose of risk evaluations under TSCA is to determine whether a chemical substance presents an unreasonable risk of injury to health or the environment under the COUs, including unreasonable risk to PESS identified as relevant to the risk evaluation by EPA, and without consideration of costs or non-risk factors. Comments are due March 3, 2025. More information is available in our January 28, 2025, memorandum.
EPA Releases Compliance Guidance For Workplace Chemical Protection Requirements In TSCA Risk Management Rules: On January 16, 2025, EPA released a compliance guide to assist the regulated community in complying with Workplace Chemical Protection Program (WCPP) requirements for chemicals regulated under Section 6 of TSCA. EPA states that a WCPP “is a chemical protection program designed to address unreasonable risk posed by chemical exposure to persons in occupational settings.” The compliance guide provides an overview of typical WCPP requirements that the regulated community may be subject to as part of a TSCA Section 6(a) rulemaking. As reported in our previous memoranda, in 2024, EPA issued final risk management rules with WCPP requirements for methylene chloride, perchloroethylene, trichloroethylene (TCE), and carbon tetrachloride.
According to EPA, the compliance guide is intended for owners and operators of businesses that manufacture (including import) or process, distribute in commerce, use, or dispose of a chemical regulated under TSCA Section 6 that is subject to the WCPP in EPA rules. EPA notes that the guide will also be of interest to people who may be exposed to these regulated chemicals in the workplace. The guide broadly addresses the requirements of a typical WCPP, including:
EPA TSCA occupational exposure limits (Existing Chemical Exposure Limits (ECEL) or EPA Short-Term Exposure Limits (EPA STEL)) designated under TSCA;
ECEL action levels;
Occupational exposure monitoring;
Regulated areas;
Direct dermal contact controls (DDCC);
Respirators;
Personal protective equipment (PPE);
Exposure control plans;
Recordkeeping; and
Downstream notifications.
EPA states that while the compliance guide “provides useful information to consider when implementing a WCPP, the regulated community should also consult the WCPP provisions within the applicable risk management rule.” Individual compliance guides for rules may also provide additional chemical-specific guidance. EPA has issued guides for methylene chloride, TCE, and for the use of perchloroethylene in dry cleaning (also available in Korean and Spanish) and energized electrical cleaning.
EPA Releases New MyPest Tracking System: On January 17, 2025, EPA released its new MyPest tracking system to provide transparency and visibility into the real-time status of pesticide submissions. MyPest is a web-based system that tracks a registrant’s pesticide applications and products after submission via EPA’s Central Data Exchange (CDX). MyPest allows users to view and communicate with the Office of Pesticide Programs (OPP) regarding their pesticide products and pending applications. Pursuant to the requirements in the Pesticide Registration Improvement Act of 2022 (PRIA 5), MyPest seeks to provide accurate, up-to-date information about pesticide applications that are with EPA’s OPP for review. The MyPest application is available at https://oppt.my.site.com/mypestapp/s/. More information on MyPest is available in our January 27, 2025, blog item.
EPA Proposes To Clarify Supplier Notification Requirements For TRI-Listed PFAS: EPA proposed on January 17, 2025, 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. 5795. The National Defense Authorization Act for Fiscal Year 2020 (NDAA) adds certain PFAS automatically to the TRI beginning January 1 of the year following specific triggering events. According to EPA’s January 16, 2025, press release, EPA is proposing the rule in response to questions from industry regarding the effective date of supplier notifications for PFAS added to the TRI pursuant to the 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 states that the proposed rule would clarify that the supplier notification requirement for these PFAS starts immediately when they are added to the TRI (January 1) by explicitly defining PFAS added to the TRI by the NDAA as TRI chemicals. EPA notes that as TRI chemicals, they are immediately covered by the TRI regulation’s supplier notification provision, as well as all other TRI reporting requirements. Supplier notifications must begin with the first shipment of the calendar year in which the chemical addition to the TRI is effective. Comments are due February 18, 2025.
EPA Updates TSCA Inventory: On January 17, 2025, EPA announced the release of the latest TSCA Inventory. The TSCA Inventory lists all existing chemical substances manufactured, processed, or imported in the United States under TSCA that do not otherwise qualify for an exemption or exclusion. EPA states that “[t]his biannual update to the public TSCA Inventory is part of EPA’s regular posting of non-confidential TSCA Inventory data.” EPA plans the next regular update of the TSCA Inventory for summer 2025. According to EPA, the TSCA Inventory currently contains 86,847 chemicals, of which 42,495 are active (currently known to be in use) in U.S. commerce. Other updates to the TSCA Inventory include commercial activity data and regulatory flags (e.g., significant new use rules (SNUR)).
Biden EPA Filed Notice Of Appeal Of Ruling That Typical Levels Of Drinking Water Fluoridation Present An Unreasonable Risk To Health: As reported in our September 30, 2024, blog item, the U.S. District Court for the Northern District of California ruled in September 2024 that the plaintiffs established by a preponderance of the evidence that the levels of fluoride typical in drinking water in the United States pose an unreasonable risk of injury to the health of the public. Food & Water Watch v. EPA (No. 3:17-cv-02162-EMC). On January 17, 2025, the Biden EPA filed a notice of appeal in the U.S. Court of Appeals for the Ninth Circuit. Food & Water Watch v. EPA (No. 25-384). Now that President Trump’s nominee for EPA Administrator, Lee Zeldin, has been confirmed, it remains to be seen how the Trump EPA will proceed. A mediation conference is scheduled for February 26, 2025.
GAO Recommends EPA’s New Chemicals Program Develop A Systematic Process To Manage And Assess Performance Better: The U.S. Government Accountability Office (GAO) publicly released a report entitled “New Chemicals Program: EPA Needs a Systematic Process to Better Manage and Assess Performance” on January 22, 2025. GAO states that it was asked to review EPA’s implementation of its TSCA New Chemicals Program. The report summarizes the perspectives of selected manufacturers on EPA’s review process and evaluates the extent to which EPA follows key practices for managing and assessing the program. GAO identified a random, nongeneralizable sample of premanufacture notices (PMN) submitted to EPA from October 2021 to April 2024 and interviewed 19 manufacturers that submitted these notices. GAO also compared EPA’s management and assessment activities to key practices it developed based on federal laws, federal guidance, and prior GAO work.
EPA Delays Effective Date Of TCE Risk Management Rule: On January 28, 2025, EPA issued a final rule delaying the effective date of four rules, including the December 17, 2024, final risk management rule for TCE issued under TSCA Section 6(a), until March 21, 2025. 90 Fed. Reg. 8254. EPA states that it is delaying the effective dates of the rules in response to President Trump’s January 20, 2025, memorandum entitled “Regulatory Freeze Pending Review.” The memorandum directed the heads of executive departments and agencies to consider postponing for 60 days from the date of the memorandum the effective date for any rules published in the Federal Register that had not yet taken effect for the purpose of reviewing any questions of fact, law, and policy that the rules may raise. According to EPA, 13 petitions for review of the final TCE rule were filed in various federal appellate courts. On January 13, 2025, the Fifth Circuit Court of Appeals granted a petitioner’s motion to stay temporarily the TCE rule’s effective date. The petitions were then consolidated by the Judicial Panel for Multidistrict Litigation and transferred to the Third Circuit Court of Appeals. The Third Circuit issued a January 16, 2025, order leaving the temporary stay of the effective date in place pending briefing on whether the temporary stay of the effective date should remain in effect. EPA notes that because of the court decisions, the TCE rule never went into effect and is therefore also covered by the terms of the Regulatory Freeze Pending Review memorandum. As reported in our January 24, 2025, blog item, Representatives Diana Harshbarger (R-TN) and Mariannette Miller-Meeks (R-IA) introduced a resolution (H.J. Res. 27) expressing congressional disapproval of EPA’s final TCE rule. The joint resolution is an attempt to use the Congressional Review Act (CRA) to overturn the rule. More information on the final TCE rule is available in our January 13, 2025, memorandum.
EPA Extends Comment Period On Draft TSCA Risk Evaluation For 1,3-Butadiene: EPA announced on January 31, 2025, that it is extending the public comment period on the draft risk evaluation for 1,3-butadiene under TSCA. 90 Fed. Reg. 8798. Comments that were due February 3, 2025, are now due March 5, 2025. EPA states in its announcement that to give the peer reviewers on the Science Advisory Committee on Chemicals (SACC) time to review any additional comments received, it is in the process of rescheduling the February 4, 2025, virtual preparatory meeting and the February 25-28, 2025, peer review meeting for the draft risk evaluation. EPA will announce the new dates for these meetings once they have been selected.
EPA Postpones Addition Of Nine PFAS To TRI For Reporting Year 2025: On February 5, 2025, EPA delayed until March 21, 2025, the effective date of a January 2025 rule adding nine PFAS to the list of chemicals subject to toxic chemical release reporting under the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Pollution Prevention Act (PPA). 90 Fed. Reg. 9010. As reported in our January 13, 2025, blog item, the January rule updates the regulations to identify nine PFAS that must be reported pursuant to the NDAA. The PFAS added to the TRI are:
Ammonium perfluorodecanoate (PFDA NH4) (Chemical Abstracts Service Registry Number® (CAS RN®) 3108-42-7);
Sodium perfluorodecanoate (PFDA-Na) (CAS RN 3830-45-3);
Perfluoro-3-methoxypropanoic acid (CAS RN 377-73-1);
6:2 Fluorotelomer sulfonate acid (CAS RN 27619-97-2);
6:2 Fluorotelomer sulfonate anion (CAS RN 425670-75-3);
6:2 Fluorotelomer sulfonate potassium salt (CAS RN 59587-38-1);
6:2 Fluorotelomer sulfonate ammonium salt (CAS RN 59587-39-2);
6:2 Fluorotelomer sulfonate sodium salt (CAS RN 27619-94-9); and
Acetic acid, [(γ-ω-perfluoro-C8-10-alkyl)thio] derivs., Bu esters (CAS RN 3030471-22-5).
In the February 5, 2025, notice, EPA states that it is delaying the effective date of the rule in response to President Trump’s January 20, 2025, memorandum entitled “Regulatory Freeze Pending Review.” The memorandum directed the heads of executive departments and agencies to consider postponing for 60 days from the date of the memorandum the effective date for any rules published in the Federal Register that had not yet taken effect for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.
Community And Environmental Groups File TSCA Section 21 Petition Seeking The Phase Out Of Hydrogen Fluoride In Domestic Oil Refining: The Natural Resources Defense Council (NRDC) announced on February 11, 2025, that community and environmental groups submitted a petition under TSCA Section 21 to EPA to prohibit the use of hydrogen fluoride in domestic oil refining “to eliminate the extreme and unreasonable risks this use presents to public health and the environment.” Brought by NRDC, Clean Air Council (CAC), and Communities for a Better Environment (CBE), the petition states that EPA must issue a TSCA Section 6(a) rule prohibiting the use of hydrogen fluoride in domestic oil refining to eliminate unreasonable risks to public health and the environment. According to the petition, “TSCA requires EPA to issue such a rule because this petition identifies (1) a ‘chemical substance’ ([hydrogen fluoride]) that presents, (2) under one or more ‘conditions of use’ (the use of HF for alkylation at U.S. refineries, and the rail and truck transportation needed to supply HF to those refineries), (3) an unreasonable risk to health or the environment.” The petition notes that hydrogen fluoride can take different forms and that anhydrous hydrogen fluoride tends to form hydrofluoric acid when it mixes with water. As reported in our November 13, 2019, blog item, in 2019, EPA denied a similar TSCA Section 21 petition to prohibit the use of hydrofluoric acid in manufacturing processes at oil refineries. TSCA requires EPA to grant or deny the petition within 90 days from the day the petition is filed. If EPA grants the petition, EPA must promptly commence an appropriate proceeding. If EPA denies the petition, EPA must publish the reasons for denial in the Federal Register.
Deadline For Filing Annual Pesticide Production Reports Is March 1, 2025: The March 1, 2025, deadline for all establishments, foreign and domestic, that produce pesticides, devices, or active ingredients to file their annual production for the 2024 reporting year is fast approaching. Pursuant to Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 7(c)(1) (7 U.S.C. § 136e(c)(1)), “Any producer operating an establishment registered under [Section 7] shall inform the Administrator within 30 days after it is registered of the types and amounts of pesticides and, if applicable, active ingredients used in producing pesticides” and this information “shall be kept current and submitted to the Administrator annually as required.” More information is available in our February 3, 2025, blog item.
RCRA/CERCLA/CWA/CAA/PHMSA/SDWA
EPA Amends National VOC Emission Standards For Aerosol Coatings: On January 17, 2025, EPA amended the National Volatile Organic Compound (VOC) Emission Standards for Aerosol Coatings. 90 Fed. Reg. 5697. EPA states that the regulation employs a relative reactivity-based approach to control aerosol coating products’ contribution to ozone formation by encouraging the use of less reactive VOC ingredients in formulations. In the final rule, EPA updates the coating category product-weighted reactivity (PWR) limits, adding new compounds and reactivity factors, updating existing reactivity factors, revising the rule’s default reactivity factor, amending thresholds for VOC regulated by the rule, amending reporting requirements, updating test methods to reflect more recent versions, adding a new compliance date, and making clarifying edits. The effective date of the final rule is January 17, 2025. The incorporation by reference of certain material listed in the rule is approved by the Director of the Federal Register as of January 17, 2025. The incorporation by reference of certain other material listed in this rule was approved by the Director of the Federal Register as of March 24, 2008.
EPA Proposes To Promulgate New Methods And Update Tables Of Approved Methods For The CWA: EPA proposed on January 21, 2025, to promulgate new methods and update the tables of approved methods for the Clean Water Act (CWA). 90 Fed. Reg. 6967. EPA proposes to add new EPA methods for PFAS and polychlorinated biphenyl (PCB) congeners, and add methods previously published by voluntary consensus bodies that industries and municipalities would use for reporting under EPA’s National Pollutant Discharge Elimination System (NPDES) permit program. EPA also proposes to withdraw the seven Aroclor (PCB mixtures) parameters. In addition, EPA proposes to simplify the sampling requirements for two VOCs, and make a series of minor corrections to existing tables of approved methods. The proposed rule does not mandate when a parameter must be monitored or establish a discharge limit. Comments are due February 20, 2025.
EPA Proposes New Area Source Category To Address Chemical Manufacturing Process Units Using Ethylene Oxide: EPA proposed on January 22, 2025, to establish a new area source category to address chemical manufacturing process units (CMPU) using ethylene oxide (EtO). 90 Fed. Reg. 7942. EPA proposes to list EtO in table 1 to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for Chemical Manufacturing Area Sources (CMAS NESHAP) and to add EtO-specific requirements to the CMAS NESHAP. EPA also proposes to add a fenceline monitoring program for EtO. In addition, EPA proposes new requirements for pressure vessels and pressure relief devices (PRD). EPA states that this proposal also presents the results of its technology review of the CMAS NESHAP as required under the Clean Air Act (CAA). As part of this technology review, EPA proposes to add new leak detection and repair (LDAR) requirements to the CMAS NESHAP for equipment leaks in organic hazardous air pollutant (HAP) service and heat exchange systems. EPA also proposes performance testing once every five years and to add provisions for electronic reporting. According to the notice, EPA estimates that the proposed amendments to the CMAS NESHAP, excluding the proposed EtO emission standards, would reduce HAP emissions from emission sources by approximately 158 tons per year (tpy). Additionally, the proposed EtO emission standards are expected to reduce EtO emissions by approximately 4.6 tpy. Comments are due March 24, 2025. EPA notes that under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives comments on or before February 21, 2025.
FDA
FDA Revokes Authorization For FD&C Red No. 3: On January 16, 2025, the U.S. Food and Drug Administration (FDA) announced the revocation of authorization to use FD&C Red No. 3 based on the Delaney Clause of the Federal Food, Drug, and Cosmetic Act (FFDCA). 90 Fed. Reg. 4628. According to FDA’s January 15, 2025, announcement, FDA’s action is in response to a Color Additive Petition filed by the Center for Science in the Public Interest, et al., in 2022, which required FDA to review whether the Delaney Clause applied to this food additive. Manufacturers who use FD&C Red No. 3 in food and ingested drugs will have until January 15, 2027, or January 18, 2028, respectively, to reformulate their products. According to the Federal Register notice, either electronic or written objections and requests for a hearing on the order must be submitted by February 18, 2025.
NANOTECHNOLOGY
OECD Tour de Table Includes Information On U.S. And International Developments On The Safety Of Manufactured Nanomaterials: The Organisation for Economic Co-operation and Development (OECD) has published the Developments in Delegations on the Safety of Manufactured Nanomaterials and Advanced Materials between July 2023 and June 2024 — Tour de Table (Tour de Table). The Tour de Table lists U.S. and international developments on the human health and environmental safety of nanomaterials. More information is available in our February 7 and February 14, 2025, blog items.
PUBLIC POLICY AND REGULATION
TSCA In The Spotlight: TSCA Is Focus Of First Energy & Commerce Hearing Of 119th Congress; GAO Issues Report On New Chemicals Program: In a development no one could have predicted several weeks ago, the first hearing of the 119th Congress in the House Committee on Energy and Commerce (E&C) focused on TSCA and amendments to TSCA that were enacted more than eight years ago. The E&C Subcommittee on Environment (Subcommittee) hearing on January 22, 2025, “A Decade Later: Assessing the Legacy and Impact of the Frank R. Lautenberg Chemical Safety for the 21st Century Act,” featured four witnesses and robust and enthusiastic attendance by the Subcommittee members. (Attendance exceeded the Subcommittee roster because Representative Diana Harshbarger (R-TN) waived onto the Subcommittee to participate in the hearing, where she made news by announcing her intent to introduce a CRA resolution.)
Minutes before the E&C hearing, GAO released the report “New Chemicals Program: EPA Needs a Systematic Process to Better Manage and Assess Performance.” The report echoes a 2023 report by the EPA Office of Inspector General, “The EPA Lacks Complete Guidance for the New Chemicals Program to Ensure Consistency and Transparency in Decisions” (23-P-0026). GAO found that EPA’s New Chemicals Division (NCD) “does not follow most key practices for managing and assessing the results of the New Chemicals Program.” More information is available in our January 24, 2025, blog item and in our item in the TSCA section above.
Senate Confirms Zeldin As EPA Administrator; Nomination Hearing Highlights: The Senate Committee on Environment and Public Works (EPW) on January 23, 2025, advanced the nomination of Lee Zeldin to the full Senate for a vote to confirm him as the next Administrator of EPA. The 11-8 vote to advance the nomination was largely along party lines, with Senator Mark Kelly (D-AZ) as the only Democrat to vote in favor of advancing Zeldin’s nomination. On January 29, 2025, the Senate confirmed Zeldin as EPA Administrator by a vote of 56-42. More information on the nomination hearing is available in our January 23, 2025, blog item.
EPA Administrator Zeldin Announces Five Pillar Initiative To Guide EPA; What Does It Mean For OCSPP?: EPA Administrator Lee Zeldin on February 4, 2025, announced the “Powering the Great American Comeback Initiative” (PGAC Initiative). It consists of five pillars and is intended to serve as a roadmap to guide EPA’s actions under Administrator Zeldin.
The five pillars are:
Clean Air, Land, and Water for Every American;
Restore American Energy Dominance;
Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership;
Make the United States the Artificial Intelligence Capital of the World; and
Protecting and Bringing Back American Auto Jobs.
Administrator Zeldin explained Pillar 3 by stating, “Any business that wants to invest in America should be able to do so without having to face years-long, uncertain, and costly permitting processes that deter them from doing business in our country in the first place.” [Emphasis added.] We agree and would urge Administrator Zeldin to consider the years-long new chemical approval process under TSCA. For more information, please read our February 7, 2025, blog.
“Unleashing Prosperity Through Deregulation” — How Effective Will It Be In Practice?: President Trump, on January 31, 2025, issued Executive Order 14192, “Unleashing Prosperity Through Deregulation.” This has been referred to as President Trump’s “ten-to-one deregulation initiative” that he spoke about when he was campaigning. If this initiative seems familiar, it may be because you remember Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” issued on February 3, 2017, by President Trump in his first term. That Executive Order called for a two-to-one repeal of regulations. It remains to be seen how many significant regulations will be targeted for repeal and eventually be repealed by the Trump Administration. It will be interesting to watch how businesses in highly regulated industries, including the chemical manufacturing industry, could benefit or be challenged by these potential regulatory actions. More information is available in our February 12, 2025, blog.
What Can Happen When Federal Career Employees Are Told “You’re Fired!”: Among the less-noticed, less-reported implications of “firing” federal employees for whatever reason (or no reason) is the process under current law and regulations that applies to reducing or eliminating programs and positions within the U.S. government. Known as a reduction in force (RIF), these procedures are arcane, complicated, and could have many unintended impacts even if imposed to attain targeted reductions in specific parts or programs of the federal workforce. The Executive Order issued on February 11, 2025, designed to implement “workforce optimization” (Implementing The President’s “Department of Government Efficiency” Workforce Optimization Initiative), has stated that to reduce the workforce, RIF procedures will be followed.
The RIF procedures are found in the Workforce Reshaping Operations Handbook, 119 pages long, not including an Appendix of 107 pages. This manual from the U.S. Office of Personnel Management (OPM) outlines how and what happens to a federal employee who has their position eliminated due to budget cuts or management decisions to stop a program activity. More information on the RIF issue is available in our February 13, 2025, blog.
LEGISLATIVE
CRA Resolutions Would Overturn Recent EPA Rules: On January 22, 2025, Representatives Diana Harshbarger (R-TN) and Mariannette Miller-Meeks (R-IA) introduced H.J. Res. 27, a resolution expressing congressional disapproval of EPA’s rule on TCE. This joint resolution is an attempt to use the CRA to overturn EPA’s recent TCE rule issued under TSCA. Senator John Kennedy (R-LA) introduced a similar resolution (S.J. Res. 19) on February 13, 2025. More information on H.J. Res. 27 is available in our January 24, 2025, blog item, and more information on EPA’s final TCE rule is available in our January 13, 2025, memorandum. On February 12, 2025, Representative Andrew S. Clyde (R-GA) introduced a resolution (H.J. Res. 46) to overturn EPA’s recent decabromodiphenyl ether (decaBDE) and phenol, isopropylated phosphate (3:1) (PIP (3:1)) rule. More information on EPA’s final rule is available in our November 13, 2024, memorandum.
House Bill Would Repeal Superfund Tax: On January 22, 2025, Representatives Beth Van Duyne (R-TX), Carol Miller (R-WV), Darin LaHood (R-IL), and Mike Carey (R-OH) introduced the Chemical Tax Repeal Act (H.R. 640). According to Van Duyne’s January 23, 2025, press release, the bill would repeal the Biden-era Superfund Tax “targeting chemical manufacturers with $15 billion in taxes on materials essential in the production of household goods.”
MISCELLANEOUS
President Trump Issues Memorandum Implementing Regulatory Freeze Pending Review: On January 20, 2025, President Trump issued a memorandum entitled “Regulatory Freeze Pending Review” that directs agencies to take the following steps:
Do not propose or issue any rule in any manner, including by sending a rule to the Office of the Federal Register, until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule;
Immediately withdraw any rules that have been sent to the Office of the Federal Register but not published in the Federal Register so that they can be reviewed and approved; and
Consistent with applicable law, consider postponing for 60 days from the date of this memorandum the effective date for any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.
USPS Issues New Mailing Standards For Hazardous Materials Outer Packaging And Nonregulated Toxic Materials: On January 27, 2025, the U.S. Postal Service (USPS) amended Publication 52, Hazardous, Restricted, and Perishable Mail, by adding new Section 131 to require specific outer packaging when mailing most hazardous materials (HAZMAT) or dangerous goods (DG), to remove quantity restrictions for nonregulated toxic materials, and to remove the telephone number requirement from the lithium battery mark. The amendment was effective January 27, 2025, and applicable beginning January 19, 2025.
MPCA Recommends Exempting Until 2032 Intentionally Added PFAS In Electronic Or Other Internal Components Within The 11 Product Categories Prohibiting PFAS In 2025: The Minnesota Pollution Control Agency (MPCA) has posted a January 2025 report to the legislature regarding recommendations for products containing lead, cadmium, and PFAS. During the previous legislative session, the legislature directed MPCA to support a report by January 31, 2025, with legislative recommendations related to the following chemicals and products:
The use of intentionally added PFAS in electronic or other internal components of upholstered furniture in the 2025 prohibition under Minnesota Statutes, Section 116.943;
The use of lead and cadmium in internal electronic components of keys fobs in the prohibition under Minnesota Statutes, Section 325E.3892;
The use of lead in pens or mechanical pencils included in the prohibition under Minnesota Statutes, Section 325E.3892; and
The use of intentionally added PFAS in firefighting foam used in fire suppression systems installed in airport hangers in the prohibitions under Minnesota Statutes, Section 325F.072.
The MPCA report recommends that the legislature grant an exemption until 2032 for the use of intentionally added PFAS in electronic or other internal components in the 11 product categories that prohibit intentionally added PFAS in 2025. MPCA notes that internal components pose less threat of direct human exposure and that products within the 11 categories often use similar electronic or other internal components as products outside these categories. MPCA states that there are currently limited available alternatives to PFAS for many electronic or other internal component applications and an exemption will allow manufacturers time to find, develop, test, and implement PFAS-free safer alternatives. According to MPCA, an exemption “will give manufacturers of products within the 11 categories the same amount of time provided to manufacturers of products outside these categories (until 2032) to find and implement PFAS-free electronic or other internal components.”
Texas Federal Court Pauses CFPB Rule Banning Medical Debt from Credit Reports
On February 6, a judge for the United District Court for the Eastern District of Texas issued a 90-day stay on the CFPB’s final rule prohibiting the inclusion of medical debt in consumer credit reports, delaying the rule’s effective date from March 17 to June 15.
The CFPB’s rule (which we previously discussed here and here) seeks to prohibit consumer reporting agencies from including these unpaid medical bills in credit reports and prohibit lenders from considering medical debt when making credit decisions. The pause follows a legal challenge (previously discussed here) from industry trade associations, contending that the rule exceeds the CFPB’s authority under the Fair Credit Reporting Act (FCRA).
Putting It Into Practice: The 90-day delay temporarily halts implementation of the CFPB’s rule, however its future remains uncertain under new CFPB leadership. The rule would have been effective 60 days after publication in the Federal Register. However, the Bureau’s first Acting Director, Scott Bessent “suspend[ed] the effective dates of all final rules that have been issued or published but that have not yet become effective. Any formal changes to the rules would require adherence to the Administrative Procedure Act (APA) through formal notice-and-comment rulemaking. The rule is also subject to a challenge under the Congressional Review Act. Consumer reporting agencies should continue to monitor these developments closely, as the litigation could lead to further delays or a potential invalidation of the rule.
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Trump Administration Announces New Picks for the CFPB and OCC
On February 12, the Trump administration announced Jonathan McKernan as the Director of the CFPB and Jonathan Gould as the Comptroller of the Currency. McKernan and Gould will replace Acting Directors Russell Vought and Rodney Hood, who were appointed to head the CFPB and the OCC, respectively, on an interim basis.
McKernan, a lawyer, spent several years in private practice before joining the staff of Senator Bob Corker, and then held other policy advisor roles at the Treasury Department and the Federal Housing Finance Agency before becoming Counsel to Senator Pat Toomey on the Senate Banking Committee.
President Biden nominated McKernan to serve as a Republican member on the FDIC’s Board in 2022. McKernan has made a number of speeches as FDIC Director which may signal his potential approach as CFPB Director. Among his positions, he stated that regulators “should avoid the temptation to pile on yet more prescriptive regulation or otherwise push responsible risk taking out of the banking system.” He has also opposed the FDIC’s final rule implementing the Community Reinvestment Act, criticizing the length and complexity of the rule, as well as whether regulators had the authority to prescribe certain aspects of the rule.
Gould was previously chief legal officer at the crypto firm Bitfury and, before that, was senior deputy comptroller and chief counsel at the OCC. His appointment is in line with the Trump administration’s crypto friendly approach.
Putting It Into Practice: Changes at the Bureau are happening by the hour. Acting Director Vought expanded an existing stop-work order at the CFPB, suspending all supervision and examination activities in addition to rulemaking and enforcement. The agency’s next scheduled funding request was canceled, with Vought citing that its current funding amount was sufficient. CFPB headquarters have also been closed and Vought terminated dozens of employees who were still in their probationary period. The continued broadsides against the CFPB means that McKernan will inherit a severely weakened Bureau. With rulemaking, enforcement, and supervision at the Bureau halted, providers of consumer financial products and services should closely monitor the activity of state-level regulators, who may become more active in response to a weakened CFPB (previously discussed here).
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Blockchain+ Bi-Weekly; Highlights of the Last Few Weeks in Web3 Law: February 14, 2025
The first weeks of February have been eventful for digital asset regulation, with major policy shifts, legal battles and legislative initiatives shaping the future of Web3. The SEC’s formation of a dedicated crypto rulemaking task force, Coinbase’s latest legal maneuvering, the CFTC’s scrutiny of sports-related prediction markets, and Senate hearings on stablecoins signal an evolving regulatory landscape. Key developments include renewed scrutiny over bank relationships with crypto firms and the SEC’s shifting stance on spot crypto ETFs. As the U.S. government reassesses its approach to digital asset oversight, key figures in Congress, and the SEC have signaled a strong desire for reforms and meaningful legislation. However, significant hurdles remain—not least of which is the relatively short window Congress has to pass legislation before the election cycle takes over.
These developments and a few other brief notes are discussed below.
SEC Forms Crypto Rulemaking Task Force: January 21, 2025
Background: On his first day as acting SEC Chair, Mark Uyeda announced that the SEC has “launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets.” Commissioner Peirce has been tapped to lead the task force, which according to SEC press release, “will collaborate with Commission staff and the public to set the SEC on a sensible regulatory path that respects the bounds of the law.” Further, its focus will be “to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks and deploy enforcement resources judiciously.” The task force has since solicited comments by e-mailing [email protected] and setting up a meeting request form here.
Analysis: Commissioner Peirce’s Token Safe Harbor Proposal 2.0 from 2021 remains one of the most well-structured and thoughtful regulatory approaches to digital assets from any regulator, making her an ideal choice to lead this task force. While it is unclear how this initiative will interplay with the Third Circuit’s recent rulemaking ruling, it seems increasingly likely that some form of crypto regulation will emerge from the SEC in the coming months or years. The challenge ahead is significant—defining ‘decentralization,’ ensuring oversight to prevent fraud and abuse and fostering innovation without stifling legitimate actors is a delicate balance. If anyone is equipped to navigate this, it’s Commissioner Peirce.
Coinbase Files Petition for Permission to Appeal at Second Circuit: January 21, 2025
Background: The lower court in the SEC v. Coinbase matter previously stayed the matter and granted permission for Coinbase to ask the Second Circuit to hear its interlocutory appeal of matters decided on its Motion for Judgment on the Pleadings. The Second Circuit still has to agree to hear the matter, and in its opening brief, Coinbase implores the appellate court to weigh in on whether digital asset transactions in secondary markets are investment contract transactions.
Analysis: Amicus filed by the Blockchain Association and the Chamber of Commerce also encouraged the appellate court to take up this issue. Newly appointed Chair of the Senate Finance Services Digital Asset Subcommittee, Senator Lummis, also weighed in, asking for the Second Circuit to take up the issue. Administrations come and go, but case law is enduring, so this is still a very important case and will set legal precedent for years to come. The “ecosystem theory” provided by the SEC and endorsed by the lower court makes no sense. Bitcoin, Ether and other assets that the SEC had admitted are not securities have gigantic “ecosystems,” and it also makes no sense as to how an “ecosystem” can register with the SEC. Strong appellate case law on these issues would alleviate the need to rush into expansive legislation that could have unknown externalities (including benefitting incumbents to the detriment of new entries), even if they do provide a level of clarity.
Joint Press Conference Held on Bipartisan Roadmap to Digital Asset Legislation: February 4, 2025
Background: “Crypto and AI Czar” David Sacks held a press conference with Senate Banking Chair Tim Scott, House Financial Services Chair French Hill, House Agriculture Chair Glenn “GT” Thompson and Senate Agriculture Chair John Boozman to discuss the previously issued Executive Order titled Strengthening American Leadership in Digital Financial Technology and how the Executive and Legislative branches planned to work together in establishing a clear framework for U.S. digital assets and their issuers.
Analysis: The main takeaway seemed to be that stablecoin legislation is on the immediate horizon, which is discussed below as well as related to Senator Hagerty’s GENIUS Act being released the same day as the press conference. It also appears that FIT 21 (passed through the House last year) will be the starting point for a market structure bill, but as I have previously covered, there are still significant hurdles to overcome to make that market structure bill fit for purpose. There was recognition by all the speakers that digital assets are going to be foundational in financial services for the foreseeable future, so creating a framework to ensure U.S. dominance in the sector will be crucial in maintaining the current dominance of American financial markets.
CFTC and SEC Announce Digital Asset Agendas: February 4, 2025
Background: In a statement titled “The Journey Begins,” Commissioner Peirce put forward her plans as the leader of the newly formed SEC Crypto Task Force. While at the CFTC, Acting Chair Pham announced a plan to “Refocus on Fraud and Helping Victims, Stop Regulation by Enforcement” and various task force realignments at the agency. Both seem intent to remain focused on bringing actions against fraudsters or bad actors while removing enforcement focus from good actors who are attempting to abide within the bounds of commodities and securities laws when applied to blockchain-enabled cryptographic technologies.
Analysis: Commissioner Peirce’s statement is especially well done. “In this country, people generally have a right to make decisions for themselves, but the counterpart to that wonderful American liberty is the equally wonderful American expectation that people must decide for themselves, not look to Mama Government to tell them what to do or not to do, nor to bail them out when they do something that turns out badly.” The Digital Chamber, Blockchain Association and others have already announced organized working groups to assist the agencies in reaching sound policies that protect against fraud while preserving American freedoms and innovations. There seems to be renewed hope that a sensible and transparent framework for operating a digital asset company in the United States is feasible in the next few years.
Congress Holds Hearings on Debanking (Chokepoint 2.0): February 5-6, 2025
Background: The Senate Banking Committee held a hearing titled Investigating the Real Impacts of Debanking in America on February 5, followed shortly thereafter by a House Financial Services Committee hearing titled Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs on February 6. While both had an aim at determining the scope of debanking and potential solutions to legally operating individuals and companies being refused banking services, the House’s hearing focused especially on digital assets and had testimony from Coinbase head of legal Paul Grewal and NYU Professor Austin Campbell, both of whom emphasized the disproportionate impact debanking has had on digital asset participants.
Analysis: Directly before the Senate’s hearing, Senator Cramer (R-ND) reintroduced his Fair Access to Banking Act, which would require banks to provide impartial and risk-based explanations for granting or refusing lending or other banking services. The FDIC also released 175 documents related to its supervision of banks that engaged in, or sought to engage in, crypto-related activities before the hearings (previously withheld despite FOIA requests/litigation over those requests; also, read this bench slap transcript in that FOIA action if you are ever having a bad day and need a pick-me-up). This was a great section of the think pieces referenced below about the effect debanking can have on ordinary people and the need for access to DeFi for people that want more control over their own finances.
CFTC Investigates Sports-Related Prediction Market Contracts (February 9, 2025)
Background: The CFTC has opened an inquiry into the legality of sports-related prediction market contracts, reinforcing its oversight of event contracts under the Commodity Exchange Act. In a February 9 statement, the agency confirmed it is reviewing the regulatory status of these products and assessing whether they constitute unlawful gaming or derivatives trading. In response, Robinhood preemptively delisted its prediction contracts, citing regulatory uncertainty. However, Kalshi and Crypto.com kept their markets active through and past the Super Bowl, arguing they fall within existing CFTC exemptions.
Analysis: The CFTC’s scrutiny signals a potential crackdown on sports-related event contracts, an area that has long existed in a regulatory gray zone. Until last year’s case between Kalshi and the CFTC, the agency took the position that betting contracts generally are binary options that are subject to the agency’s regulation and oversight. Further, it remains unclear how these fit within the framework of the two federal statutes that explicitly address sports betting, the Wire Act and the Unlawful Internet Gambling Enforcement Act, particularly if the Department of Justice adjusts its interpretation of those laws.
Briefly Noted:
Polsinelli Releases Tech Transaction and Data Privacy Report: The Polsinelli annual Tech Transactions and Data Privacy Report is out, which breaks down the information companies should stay informed on regarding tech and data privacy legal issues for 2025, including a breakdown of Web3 topics to pay attention to.
SEC Pauses Certain Investigations and Cases. On February 11, the SEC and Binance filed a joint motion to stay the agency’s lawsuit against Binance for 60 days. The rationale was that the SEC’s joint task force is working on regulations that may “impact and facilitate the potential resolution of this case. Additionally, it appears that the SEC has sent a number of close-out letters in recent weeks, formally closing investigations into certain other crypto companies.
Senate Stablecoin Bill Introduced: Senate Banking Committee member Bill Hagerty (R-TN) has introduced a bipartisan Senate stablecoin bill (Senator Gillibrand (D-NY) is a co-sponsor) as a companion to the House bill passed through their financial services committee last year. The House also dropped a discussion draft bill. Bills like this for discrete digital asset issues combined with knowledgeable people in administrative leadership roles make total sense.
SEC Scores Win on Major Question Defense Against Kraken: The SEC successfully struck Kraken’s Major Question defense (but since there doesn’t need to be discovery on the issue, left open the ability for Kraken to assert again later) but failed to get due process and fair notice defenses tossed.
Senate Confirms Treasury Secretary: Scott Bessent has been confirmed as the new Treasury secretary, replacing Janet Yellen. He is viewed as “pro-crypto,” so one can hope for some common sense rulemaking around digital asset tax reporting and compliance during his tenure.
SAB 121 Repealed: The Controversial SEC Staff Accounting Bulletin 121 (SAB 121), which essentially foreclosed publicly traded banks from taking custody of digital assets for their customers by requiring digital assets be listed as liabilities on the banks’ balance sheets, has been withdrawn. This comes after both the House and Senate passed a bipartisan resolution to withdraw the rule, which was vetoed by President Biden.
Tornado Cash Sanctions Lifted: It looks like the U.S. government will likely not be appealing the decision that overturned the OFAC sanctions of Tornado Cash, and there is no en banc review, so it is heading back to the District Court for either a nationwide vacatur or a more limited ruling. This does not, however, eliminate sanctions against the legal persons who allegedly performed bad acts using Tornado Cash, and wallets believed to be associated with North Korea remain on OFAC’s blacklist.
KuCoin Enters Plea Deal: Kucoin agreed to pay $300 million in unlicensed money transmission penalties, and its founders entered deferred prosecution agreements related to operating a digital asset exchange without proper money transmission licenses.
Conclusion:
As regulatory and legislative efforts accelerate, 2025 is shaping up to be a pivotal year for the digital asset industry. The formation of the SEC Crypto Task Force, bipartisan movement on stablecoin and market structure legislation, and ongoing legal challenges against regulatory overreach indicate that the framework governing digital assets is evolving in ways that could significantly impact the industry’s trajectory.
ROSES ARE RED, THE COURT HAD ITS SAY: Online Fax Services Get No TCPA
Greetings TCPAWorld!
Happy Valentine’s Day! Whether you’re celebrating with loved ones or enjoying the discounted chocolate tomorrow, one thing’s for sure—online fax providers won’t feel the love from this latest ruling. In a significant ruling highlighting the collision between aging telecommunications laws and modern technology, a Colorado federal court dropped an important ruling on the online fax industry that needs to be on your radar. In Astro Companies, LLC v. WestFax Inc., the Court tackled a deceptively simple question: Is an online fax service the same as a traditional fax machine under the law? See ASTRO Co. v. Westfax Inc., Civil Action No. 1:23-cv-02328-SKC-CYC, 2025 U.S. Dist. LEXIS 25629 (D. Colo. Feb. 12, 2025).
Here’s the deal. Astro Companies, an online fax provider, sued WestFax and others for allegedly bombarding their system with junk faxes. Astro claimed this violated the TCPA. But, of course, there was a catch—the TCPA explicitly protects “telephone facsimile machines,” and the court had to decide if Astro’s cloud-based service qualified.
The Court’s answer? A resounding no.
Judge S. Kato Crews dove deep into the statutory language, focusing on how the TCPA defines a “telephone facsimile machine.” While the law allows faxes to be sent from various devices (including computers), it only protects faxes received by actual fax machines. The Court noted in Career Counseling, Inc. v. AmeriFactors Fin. Grp., L.L.C., 91 F.4th 202 (4th Cir. 2024) that the law was meant to protect equipment “well understood to be a traditional fax machine.”
But this wasn’t just a case of statutory interpretation—it was a complete rejection of Astro’s legal theory. The Court didn’t just rule against Astro; it dismissed the entire case with prejudice, shutting down any attempt to refile the same claims.
What makes this ruling particularly interesting is how the Court distinguished between a machine and a service. The Judge pointed out that while Astro’s servers could print faxes, it still wasn’t enough. Black’s Law Dictionary defines a machine as “a device or apparatus consisting of fixed and moving parts that work together to perform some function.” Astro’s cloud-based service, despite its printing capabilities, didn’t fit this definition.
So what’s next? Astro tried to argue that its service still counted under the TCPA because its servers “had the capacity to print.” But the Court made clear that capacity alone isn’t enough—the TCPA requires an actual telephone facsimile machine, not just a system that can eventually print a fax if someone decides to. Astro leaned heavily on Lyngaas v. Curaden AG, 992 F.3d 412 (6th Cir. 2021), but the Court saw a fundamental problem. In Lyngass, the case involved whether a computer receiving an eFax could qualify as a telephone facsimile machine. But Astro wasn’t just a recipient—it was an online fax provider acting as an intermediary. That distinction alone made Lyngaas inapplicable.
Furthermore, the Court supported the FCC’s interpretation, significantly weakening Astro’s case. In In re Amerifactors Fin. Grp., L.L.C., 34 FCC Rcd. 11950 (2019), the FCC explained that “a fax received by an online fax service as an electronic message is effectively an email.” Unlike traditional fax machines that automatically print incoming messages (using up paper and ink), online fax services allow users to manage messages like emails—blocking, deleting, or storing them indefinitely.
This distinction highlights the core reason Congress enacted the TCPA. As noted in the 1991 House Committee Report, the law was concerned with two specific problems: 1) shifting the cost of unwanted advertisements to the recipient (through wasted paper and ink), and 2) tying up fax lines, preventing businesses from receiving legitimate communications. H.R. Rep. No. 102-317, at 10 (1991). Neither of those concerns applies to online fax services, where nothing is automatically printed, and no business lines are blocked.
The takeaway? Consider this ruling a tough love letter from the court—if your service functions more like an email inbox than a fax machine, don’t expect the TCPA to be your Valentine.
As always,
Keep it legal, keep it smart, and stay ahead of the game.
Talk soon!
IN HOT WATER: Louisiana Crawfish Company Sued Over Early-Morning Text Messages
Hi TCPAWorld! The Dame here with an interesting lawsuit against a company from my home state of Louisiana. And I’ll start by admitting that, despite my family being in the seafood industry for five generations, I had no idea you could order live crawfish online and have them delivered straight to your door. This company named Louisiana Crawfish Company does just that. And a few discount offers via text—allegedly sent a little too early—have now landed this company in a federal class action lawsuit.
The lawsuit, filed in the Central District of California by plaintiff Mason Ibarra (“Plaintiff”), accuses Louisiana Crawfish Company of violating the TCPA by sending at least 10 unsolicited marketing texts before 8 AM. According to the complaint, texts were sent as early as 6:40 AM, 7:01 AM, and 7:30 AM—times the TCPA clearly prohibits for telemarketing communications. Plaintiff is seeking statutory damages of $500 per text, or $1,500 per text if the violations are deemed willful, along with an injunction to prevent further messages.
Under the TCPA, businesses can’t make telemarketing calls or texts before 8 AM or after 9 PM (local time for the recipient).
However, my reading of the TCPA is that call time restrictions only restricts “telephone solicitations” to these call time hours—which means calls made with consent or an established business relationship with the recipient are not subject to these restrictions. And Plaintiff does not allege that these texts were nonconsensual. Plaintiff only alleges that he “never signed any type of authorization permitting or allowing Defendant to send them telephone solicitations before 8 am or after 9 pm.”
Either way, an easy mistake to avoid. And honestly, even the biggest of companies get caught up in these time call restriction cases.
You can read the entire complaint here: Mason Ibarra v Louisiana Crawfish Company Complaint.
Love to Litigate: Serial Plaintiff Brings Another TCPA Complaint
Hey TCPAWorld!
Roses are red. Violets are blue. Here comes Salaiz bringing another TCPA suit.
This Valentine’s Day, we’re covering a complaint filed against PEOPLE’S LEGAL GROUP INC., a Wyoming-based law firm offering consumer legal services.
In SALAIZ v. PEOPLE’S LEGAL GROUP INC., No. 3:25-CV-00038-DB (W.D. Tex. Feb. 12, 2025), Salaiz (“Plaintiff”) alleges that even though Plaintiff has been listed on the National Do-Not-Call Registry (“DNCR”) for over 30 days, People’s Legal Group Inc., (“Defendant”) through the use of an ATDS, delivered at least two unsolicited calls to Plaintiff’s residential number on November 8, 2024. Plaintiff alleges to have heard the following when answering both calls:
“This is an important reminder from Daisy Young please listen to the following message from telephone number 888-803-7025 hi it’s Daisy Young I know we’ve uh reached out previously about getting some financial help but based on your previous profile we are offering you an amount of nineteen thousand dollars in your case possibly more if you could give me a call back today thank you please call telephone number 888-803-7025 that’s telephone number 888-803-7025.”
Id. at ¶ 26. After calling the Defendant’s alleged number to probe further into its identify, Plaintiff was sent a retainer agreement with Defendant’s name on it, along with a follow-up text that reads:
“Hi Erik this is Lee with Peoples Legal Group. Here is my contact info 949-777-9583 please save this is your contacts.”
Id. at ¶ ¶ 43-44. Due to these allegations, Plaintiff filed a Complaint in the Western District of Texas asserting Defendant violated the ATDS provisions 47 U.S.C. § 227(b)(1)(A)(iii) and 47 U.S.C. § 227(b)(1)(B) when Defendant called Plaintiff’s residential phone through the use of an artificial or prerecorded voice. Plaintiff further alleges violations of DNC provisions, 47 U.S.C. 227(c)(5) and 47 C.F.R. § 64.1200(c)(2), by delivering telemarketing calls to Plaintiff, while Plaintiff was listed on the DNCR. Lastly, Plaintiff claims multiple violations of the Texas Business and Commerce Code § 305.053 which grants a private right of action for individuals receiving unsolicited telemarketing calls in violation of state law, and § 302.101 for an alleged failure to obtain a Telephone Solicitation Registration Certificate prior to making the calls.
Plaintiff seeks to represent the following two classes:
TCPA Class. All persons in the United States who: (1) from the last 4 years to present (2) Defendant called and/or any entity making calls on behalf of Defendant (3) whose telephone numbers were registered on the Federal Do Not Call registry for more than 30 days at the time.
Texas Subclass. All persons in Texas who: (1) from the last 4 years to present (2) Defendant called any entity making calls on behalf of Defendant (3) whose telephone numbers were registered on the Federal Do Not Call registry for more than 30 days at the time.
Id. at ¶ 62. Repeat litigators are constantly on the hunt for TCPA violations. Tighten up your TCPA compliance so your company’s name isn’t on the next complaint we review.