California’s Kids’ Social Media Law Wrangling Continues, and Maryland Too!
The Ninth Circuit continued the pause on California’s SB 976 (Protecting Our Kids from Social Media Addiction Act) as of late January 2025. The law was signed by Governor Newsom in September 2024, and challenged by NetChoice shortly thereafter.
A federal judge first enjoined the law until February 1, 2025. The case continued in the courts, and most recently the Ninth Circuit blocked the law until April of 2025. At that time, it will examine substantively whether the law infringes free speech rights. This delay will impact the AG’s drafting of rules for the law.
This is not NetChoice’s first attempt to stop kid-focused social media laws. It took similar steps in Utah in 2024, and has challenged similar laws in Arkansas, Ohio, Mississippi, Texas, and most recently, as of Maryland’s similar Age Appropriate Design Code Act.
Putting it into Practice: These decisions are a reminder that the social media laws being passed at a state level are continuing to be challenged. We will be continuing to monitor them for further developments.
James O’Reilly also contributed to this article.
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False Claims Act Exposure in Focus: President Trump Signs Executive Order Targeting DEI Programs
On January 21, 2025, President Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “EO”), which aims to eliminate diversity, equity, and inclusion (DEI) policies and programs across the federal government and within companies that do business with the federal government.
Importantly, the EO revokes Executive Order 11246, which, since 1965, has mandated affirmative action in employment from government contractors and required implementation of affirmative action programs.[i]
Federal contractors and grant recipients have until April 21, 2025 (90 days from the issuance of the EO) to comply with the EO’s provisions.
Below, we summarize the False Claims Act (FCA) implications of the EO.[ii] Briefly stated, federal contractors and grant recipients, including certain health care organizations, should pay close attention to the EO’s required certifications since they directly tie to potential FCA liability premised on false certification of compliance with the federal anti-discrimination laws.
Key Provisions of the EO
Directs that federal contractors “shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.”
Instructs the Director of the Office of Management and Budget to (1) review and revise, as appropriate, all governmentwide processes, directives, and guidance; (2) remove references to DEI and diversity, equity, inclusion, and accessibility (DEIA) from federal acquisition, contracting, grants, and financial assistance procedures; and (3) terminate all “diversity,” “equity,” and analogous mandates, requirements, programs, or activities, as appropriate.
Directs the head of each agency to include “in every contract or grant award” a (1) “term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the FCA]” and (2) “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
Instructs the Attorney General, within 120 days of the EO (by May 21, 2025), in consultation with other agency heads, to submit a report containing a “proposed strategic enforcement plan” that outlines, among other things, “the most egregious and discriminatory DEI practitioners in each sector of concern” and “specific steps or measures to deter DEI programs or principles … that constitute illegal discrimination or preferences.”
Pertinent FCA Background
Unlike other federal laws that are enforceable only by the federal government, the FCA is unique in that it also allows private whistleblowers, known as relators, to file qui tam actions on behalf of the government in exchange for a share of the recovery (ranging between 15 and 30 percent of the recovery). The FCA imposes mandatory per-claim statutory penalties that are adjusted annually (currently ranging from $13,946 to $27,894 for each false claim) as well as treble damages.
There are a variety of actionable theories under the FCA beyond the scenario where a company bills the government for products or services that were never provided. One such theory, known as “false certification,” occurs when a party certifies compliance with a required contractual provision, statute, regulation, or governmental program in connection with the submission of a claim.
In false certification cases, noncompliance with applicable legal requirements must be “material” to the government’s payment decision. Materiality is often a contested, focal issue in FCA cases. The U.S. Supreme Court clarified in Universal Health Services, Inc. v. U.S. ex rel. Escobar that the materiality standard is “rigorous” and “demanding” because the FCA is not “a vehicle for punishing garden-variety breaches of contract or regulatory violations.”[iii]
FCA Implications
The mandates set forth in the EO will require a clause in all contracts and grant awards with the federal government where the contractor or grant recipient certifies that it does not have any programs promoting DEI that violate any applicable federal anti-discrimination laws and acknowledges that such compliance is material to the government’s payment decision.
With the new certification and materiality requirements, whistleblowers are likely to be further incentivized to bring FCA actions on the belief that it may be easier to prove a violation. It is unclear how that will play out in the courts. For example, while the EO will require that contracts and grant awards contain a clause stating that compliance with the federal anti-discrimination laws is “material” to the government’s payment decision, that does not end the materiality inquiry. The U.S. Supreme Court in Escobar noted how “the Government’s decision to expressly identify a provision as a condition of payment is relevant, but not automatically dispositive.”[iv]
Additionally, it remains to be seen how uniformly courts will apply the “rigorous” and “demanding” materiality standard in FCA cases predicated on DEI programs while adhering to Escobar’s direction that “the False Claims Act is not a means of imposing treble damages and other penalties for insignificant regulatory or contractual violations.”[v] Indeed, federal contractors, particularly certain health care organizations, that submit many claims to the federal government could face billions of dollars in potential exposure—largely due to the FCA’s per-claim penalties—stemming from a particular program that was indisputably lawful prior to the second Trump administration and unrelated to the nature of the contracted items or services.
While it is not clear precisely which specific DEI/DEIA programs or initiatives would be prohibited, the Trump administration’s position is clear that contractors or grant recipients found to have submitted requests for payment while maintaining unlawful DEI programs could be subject to significant FCA liability.
Best Practices for Mitigating FCA Risk
DEI and DEIA initiatives, including policies, programs, and plans, should be promptly and carefully evaluated to determine whether they may violate federal anti-discrimination laws, as federal contractors and grant recipients will need to certify compliance with those laws. Remedial measures should be promptly implemented, as appropriate, to the extent any initiatives are likely to violate federal anti-discrimination laws.
Companies should monitor agency publications for guidance on which initiatives remain permissible under the EO. Courts are also expected to play an important role in clarifying the reach of the anti-discrimination laws, especially following the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, where it held that “agency interpretations of statutes—like agency interpretations of the Constitution—are not entitled to deference.”[vi] This is especially true here, where the new EO interpretation of DEI activities as unlawful is a radical shift from the Biden administration’s position as expressed in both guidance and regulations.
Documentation of compliance with anti-discrimination laws is essential. Records reflecting policy reviews, trainings, and remedial program changes, as appropriate, will be critical in the event of a government investigation or whistleblower claim.
Because the FCA’s anti-retaliation provisions prohibit adverse employment actions against employees for engaging in protected activity, which could include investigating perceived violations of the FCA stemming from unlawful DEI programs, anti-retaliation compliance protocols and training programs to address this heightened whistleblower risk are recommended.
While the EO is not binding on private-sector organizations that do not contract or do business with the federal government, the EO is still valuable insofar as it shows the Trump administration’s view that various DEI programs and policies may be considered illegal under the anti-discrimination laws.
Private-sector organizations should promptly review any DEI/DEIA plans, programs, and policies, as well as their affirmative action programs, to determine whether they contain any aspects that could be deemed unlawful under Title VII of the Civil Rights Act of 1964 or any other federal, state, or local civil rights law, and consider whether to take any action to modify such plans, programs, or policies, including the names of such plans, programs, or policies.
ENDNOTES
[i] Exec. Order 11246, 3 C.F.R. § 339 (1964–1965).
[ii] Members of our labor and employment team have prepared an employment law-focused analysis of the EO in this blog post.
[iii] See 579 U.S. 176, 194 (2016). More information on materiality and how courts have grappled with Escobar over the years is available in our prior blog post.
[iv] Id. at 178.
[v] Id. at 196.
[vi] See 603 U.S. 369, 392 (2024).
Employment Law This Week – How Will Trump’s Federal Changes Impact Employers? [Podcast, Video]
This week, we examine how the loss of a quorum at the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC), along with the rollback of affirmative action requirements for federal contractors, are creating significant hurdles for employers.
How Will Trump’s Federal Changes Impact Employers?
The regulatory environment for employers is undergoing significant changes. President Trump’s removal of an NLRB member, the NLRB’s general counsel, and two EEOC commissioners has left those agencies without a quorum, delaying decisions and creating uncertainty for employers. Meanwhile, the repeal of Executive Order 11246 has ended affirmative action requirements for federal contractors and grantees.
In this week’s episode, Epstein Becker Green attorneys Erin E. Schaefer and Courtney McFate provide clarity amid these shifts. Employers should prepare for procedural delays from both agencies and reassess their compliance obligations under Title VII of the Civil Rights Act of 1964 and state or municipal contracts in light of reduced affirmative action requirements.
Navigating Joint Employment: A Renewed Push to Implement a More Employer-Friendly Standard
With a Republican-controlled Congress and White House, business lobbyists are seizing the opportunity to push for permanent clarity on the issue of joint employment. The International Franchise Association (IFA) is advocating for legislation that would establish a narrow standard, requiring an employer to have “direct” control over a worker’s terms of employment to be deemed a joint employer.
The Save Local Business Act is at the forefront of this effort. The proposed legislation seeks to define joint employment under both the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA). The law—if enacted—would specify that a company is only considered a joint employer if it exercises “direct, actual, and immediate” control over significant aspects of employment. This approach would reduce liability for parent companies including franchisors of all kinds and gig-economy platforms like rideshare applications.
Historically, the standard for joint employment has fluctuated between presidential administrations, creating regulatory uncertainty for businesses. Under the first Trump administration, the Department of Labor (DOL) and the National Labor Relations Board (NLRB) implemented rules limiting joint employer liability. However, the Biden administration reversed these policies, favoring a broader interpretation that considered indirect or unexercised control as factors for applying the standard. This broader approach was struck down by federal courts in early 2024, leaving the regulatory landscape in limbo.
Business groups argue that the lack of a consistent joint employer standard hinders growth and complicates compliance. The constant shifts in policy make it difficult for businesses to structure their operations and workforce relationships.
The Save Local Business Act represents an attempt to bring stability to this volatile area of labor law. If passed, it would provide companies with a clearer framework and limit their exposure to potential joint employment claims. However, opposition from labor groups and Democratic lawmakers could make its passage difficult. Critics argue that a narrower standard would allow large corporations to avoid responsibility for wage violations and unfair labor practices by subcontractors and franchisees.
For businesses, this ongoing debate underscores the importance of staying informed about employment law developments. As the legal landscape shifts, consulting with experienced employment law counsel is essential to mitigate potential liabilities and ensure compliance with evolving regulations.
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 perfluoroalkyl and polyfluoroalkyl substances (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.”
Executive Order 14173: What Federal Contractors Need to Know [Podcast]
In this podcast, shareholders Scott Kelly (Birmingham) and Lauren Hicks (Indianapolis/Atlanta) discuss the implications of President Donald Trump’s Executive Order 14173, which aims to end illegal discrimination and restore merit-based opportunities. Lauren and Scott delve into the executive order’s impact on federal contractors and subcontractors, particularly the revocation of Executive Order 11246, which mandated affirmative action and non-discrimination obligations. They also explore the potential future actions of the Office of Federal Contract Compliance Programs (OFCCP) and the broader ramifications of the executive order.
Trump Administration Rolling Back Consideration of Environmental Justice in Federal Decision-Making
President Donald Trump issued a flurry of executive orders (EOs) in his first hours and days in office. The numerous EOs cover a range of topics, many of which impact environmental regulation and related areas. While many of President Trump’s EOs will be—and already are—facing litigation challenges, and others will require congressional approval prior to full implementation, the EOs nevertheless signal the intention and direction of the Trump administration in the environmental law realm and beyond. One key area at the center of these policy changes is the dismantling of environmental justice (EJ) initiatives and related policymaking. The Trump administration is widely gutting consideration of EJ in federal decision-making, primarily through EO: Ending Illegal Discrimination and Restoring Merit-Based Opportunity and EO: Initial Rescissions of Harmful Executive Orders and Actions, as well as through rescinding a swath of prior EOs, including:
EO 13985: Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.
EO 13990: Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis.
EO 14008: Tackling the Climate Crisis at Home and Abroad.
EO 14091: Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.
EO 14096: Revitalizing Our Nation’s Commitment to Environmental Justice for All.
EO 14052: Implementation of the Infrastructure Investment and Jobs Act.
EO 14082: Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022.
History of Pursuing EJ
EJ has been defined as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations and policies.”1 In 1994, President Bill Clinton issued EO 12898, which was the first time federal agencies were directed to develop strategies for implementing EJ. Clinton’s EO has long been seen as the backbone of modern EJ policymaking in the United States. On 20 January 2025, President Trump revoked Clinton’s EO as part of an overall directive under EO: Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which has a stated purpose of protecting Americans from discrimination by ending the use of diversity, equity, and inclusion (DEI) policies and programs. In repealing the Clinton-era mandate, President Trump said the policies violate federal civil rights laws and “deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”
Biden’s EJ Legacy Dismantled
President Joe Biden and his administration enacted unprecedented and sweeping EJ policy reforms, including an expansion of President Clinton’s EO. This expansion established the “Justice40 Initiative” aimed at ensuring that marginalized or disadvantaged communities received at least 40% of federal benefits relating to the environment, housing, economic development, and other areas. Additionally, the expansion required federal agencies to develop equity action plans to detail their efforts to advance DEI to the agencies’ internal and external activities. On his first day back in office, President Trump rescinded a swath of Biden administration EOs aimed at promoting federal EJ programs. These include: EO 13985, EO 13990, EO 14008, EO 14091, EO 14096, EO 14052, and EO 14082. Some key highlights of these now-rescinded EOs are:
EO 13985 is President Biden’s day-one initiative establishing government-wide initiatives to advance racial equity and support for underserved communities in federal policies and programs.
EO 14008 established the Justice40 Initiative and created the White House Environmental Justice Advisory Council and the White House Interagency Environmental Justice Advisory Council. It also required the Council on Environmental Quality to create the Climate & Economic Justice Screening Tool to spatially define “disadvantaged communities” based on various climate, public health, transportation, and energy justice indicators.
EO 14091 directed federal agencies to undertake additional efforts to advance EO 13985 and required federal agencies to assemble agency equity teams led by a senior official to support equity training and leadership development for staff.
EO 14096 focused on incorporating EJ into the decision-making of all executive branch agencies and established the White House Office of Environmental Justice, which is responsible for coordinating EJ efforts across the federal government.
Key Takeaways
As expected, President Trump’s return to the White House is substantially shifting the federal government’s approach to EJ. While additional future federal efforts to roll back Biden-era EJ initiatives are likely, the focus on EJ by many states will continue. Importantly, states’ EJ laws will not be immediately impacted by the actions of the Trump administration; instead, we expect the rollback of EJ at the federal level will likely encourage many states to more aggressively enact and enforce EJ standards and policies. Indeed, the regulated community should prepare for “blue state”-led regulators and attorney generals to pursue a vigorous counter-response to the Trump administration’s policies, which may include heightened enforcement actions, new state and local EJ rules, and added staffing for state environmental agencies. The firm has assembled a task force that is closely watching EJ developments under the new administration, including impacts at the state level, and is ready to work with clients to understand how these and other changes may impact their businesses.
Footnotes
1 https://www.epa.gov/environmentaljustice.
Analyzing President Trump’s “Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government” Executive Order
On January 20, 2025, President Trump issued an Executive Order titled, “Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government” (the “EO”). The EO declares that “[i]t is the policy of the United States to recognize two sexes, male and female.” The EO explicitly rejects “gender ideology,” which, according to the EO, includes the notion “that males can identify as and thus become women and vice versa” and “it is possible for a person to be born in the wrong sexed body.”
Key Provisions of the Executive Order
Aside from declaring that the United States will only recognize two sexes—male and female—the other key points in this EO are as follows:
Definition of Sex. The EO defines the term “sex” as a person’s “immutable biological classification as male or female.” This specifically excludes the concept of “gender identity,” which the EO deems subjective.
Sex-Based Distinctions on Federal Policies. Federal agencies are required to use the term “sex,” not “gender,” in all their policies and official documents in enforcing sex-based distinctions.
Government-Issued Identification Documents. Government-issued identification—such as passports, visas, and federal employment records—must reflect the holder’s biological sex as defined in the EO. This reverses the Biden administration’s policy permitting Americans applying for a passport to use “X,” along with the option for male or female, as a gender marker. Andrea Lucas, acting Chair of the Equal Employment Opportunity Commission (“EEOC”) announced in a recent press release that she has “[e]nded the use of the ‘X’ gender marker” for those filing charges of discrimination (“Press Release”).
“Privacy in Intimate Spaces” Designated for Women. The EO mandates that single-sex spaces designated for women, including women’s prisons and rape shelters, are designated by biological sex and not by gender identity.
Investigation and Litigation to Enforce Sex-Based Rights. The EO directs the Attorney General, Secretary of Labor, and EEOC to “prioritize investigations and litigation to enforce the rights and freedoms identified” in the EO. In the Press Release issued by Ms. Lucas, she also announced that one of her priorities for investigations and litigations “is to defend the biological and binary reality of sex and related rights, including women’s rights to single-sex spaces at work.”
Rescission of Prior EEOC Guidance on Workplace Harassment. The EO explicitly rescinds certain guidance issued by the prior administration related to transgender individuals and gender identity based claims. This rollback includes the EEOC’s guidance on workplace harassment—which contains numerous references to gender identity harassment and discrimination—and other policies directed at LGBTQI+ individuals.
Limitation on the Scope of the Supreme Court’s Decision in Bostock v. Clayton County. The EO directs the Attorney General to immediately issue guidance narrowing the interpretation of the Supreme Court’s decision in Bostock v. Clayton County—holding that “sex discrimination” under Title VII of the Civil Rights Act includes discrimination on the basis of sexual orientation and gender identity.
Implications for Private Employers
Employers should anticipate and address questions from employees, especially from LGBTQI+ employees and allies, regarding any policy changes. Employers with policies prohibiting discrimination, harassment, and retaliation on the basis of gender, gender identity, and gender expression can reassure their employees of the company’s commitment to a safe and inclusive workplace.
Given the EEOC’s stated priority to create “single-sex spaces at work,” employers may find themselves facing conflicting obligations under federal and state law. Employers should stay informed on the developments at the federal level. Such developments might include, for example, litigation instituted by the new EEOC over restroom access and biological sex—which Ms. Lucas indicated could be a priority. Employers must also remain mindful of their obligations under state laws that explicitly prohibit discrimination, harassment, and/or retaliation on the basis of gender identity and sexual orientation.
Employers should anticipate changes to the EEOC “Know Your Rights: Workplace Discrimination is Illegal” poster, which covered employers are required to post on premises. The poster is undergoing revision pursuant to the EO.
Employers should expect changes in reporting options for identification forms that include the sex of their employees. For example, it is possible that, in light of the EO, certain government forms may no longer permit employers to include non-binary or similar gender identity information of their employees.
What’s Next?
President Trump’s EO mandates that each agency report on their implementation progress within 120 days. For now, little is known about how agencies will comply with the EO. Although we expect various agencies to begin releasing administrative guidance comporting with the EO in the coming months. Given that some of the EO’s directives may be in conflict with established legal precedent, litigation challenging the EO is possible.
EEOC Acting Chair Issues Statement Announcing Commission’s Plans to Remove Gender Ideology and Return to Misson of “Protecting Women in the Workplace”
On 28 January 2025, the Acting Chair of the Equal Employment Opportunity Commission (EEOC or Commission), Andrea Lucas (Acting Chair Lucas) issued a statement announcing that the Commission is returning to its “mission of protecting women from sexual harassment and sex-based discrimination in the workplace by rolling back the Biden administration’s gender identity agenda.”
This statement followed President Trump’s issuance of Executive Order 14168 (EO 14168), which, among other things, directs federal agencies to enforce “the freedom to express the binary nature of sex and the right to single-sex spaces in the workplace” and remove all existing statements, policies, forms, communications, or messages promoting gender ideology. EO 14168 states that the federal government shall recognize only two sexes—male and female.
Acting Chair Lucas has already taken several actions to enforce the terms of EO 14168.
First, one day after President Trump issued EO 14168, she announced several priorities for the EEOC’s compliance, investigations, and litigation—one being to “defend the biological and binary reality of sex and related rights, including women’s rights to single sex spaces at work.”1
Acting Chair Lucas has also removed materials promoting gender ideology from the EEOC’s internal and external websites and documents. This review remains ongoing. She also began a content review of the EEOC’s “Know Your Rights” poster, which all covered employers are required to post in their workplaces, removed the display of EEOC employees’ pronouns in internal and external communications, and removed the “X” and “Mx.” gender markers from the Commission’s charge and related forms and intake process.
Acting Chair Lucas has indicated that she cannot unilaterally remove or modify certain gender identity-related documents, as doing so requires a majority vote of the full Commission. And notably, after President Trump’s unprecedented termination of two sitting Democratic EEOC commissioners on 27 January 2025, the EEOC lacks a voting quorum with only two of its five members in place—Acting Chair Lucas and Democratic Commissioner Kalpana Kotagal.
These documents include the Commission’s “Enforcement Guidance on Harassment in the Workplace” (issued by a 3-2 vote in 2024) (Harassment Guidance), which EO 14168 specifically requested be rescinded, as well as the EEOC Strategic Plan 2022-2026 (issued by a 3-2 vote in 2023), and the EEOC Strategic Enforcement Plan Fiscal Years 2024-2028 (issued by a 3-2 vote in 2023). Acting Chair Lucas voted against each of these documents. She has been particularly vocal about her opposition to portions of the Harassment Guidance that state that harassing conduct under Title VII includes “denial or access to a bathroom or other sex-segregated facility consistent with [an] individual’s gender identity” and “repeated and intentional use of a name or pronoun inconsistent with [an] individual’s known gender identity.”
Looking Ahead
While Acting Chair Lucas has made clear the Commission’s priority to enforce the “binary reality of sex,” including by removing guidance and references to “gender identity,” this new priority may be in tension with current federal law. Indeed, in Bostock v. Clayton County,2 the US Supreme Court held that Title VII prohibits discrimination and harassment based on gender identity and sexual orientation. It is certainly possible that the Supreme Court could revisit this ruling and reach a different conclusion—as its makeup has changed since the Bostock decision. However, unless and until the court does so or Congress amends Title VII, employment discrimination against transgender and gender nonconforming individuals remains illegal under federal law.
Additionally, more than half of the states in the United States have laws explicitly prohibiting, or have interpreted other laws to prohibit, discrimination and harassment based on sexual orientation and gender identity. These laws remain in effect.
We are likely to see an increase in workplace disputes on this issue in the future—including disputes involving “single sex spaces” in the workplace, such as bathrooms and locker rooms—which the court specifically avoided discussing in Bostock, but are addressed at the state and local level. For example, guidance from the California Civil Rights Department provides that “[a]ll employees have a right to safe and appropriate restroom and locker room facilities . . . [which] includes the right to use a restroom or locker room that corresponds to the employee’s gender identity, regardless of the employee’s sex assigned at birth.”3 Additionally, according to published guidance, the New York City Human Rights Law requires that employers permit employees “to use single-gender facilities, such as restrooms or locker rooms, and to participate in single-gender programs, that most closely align with their gender, regardless of their gender expression, sex assigned at birth, anatomy, medical history, or the sex or gender indicated on their identification.”4
Employers may also see an increase in challenges to gender-identity-related policies and practices—including policies that permit or require employees to designate or use pronouns in communications to comply with state or local law,5 as well as an increase in religious accommodation requests related to such policies.6 Given the current conflicting legal landscape, employers should consider a review of any such policies with counsel to ensure compliance with applicable law. Moreover, with the change in federal guidance, states and municipalities may adopt additional regulations addressing gender identity protections in the workplace. Despite the shift in enforcement priorities, employers should continue to implement anti-discrimination, anti-harassment, and equal opportunity policies as well as conduct workplace trainings consistent with applicable law; and monitor developments at the state and federal level. Employers should also continue to emphasize workplace respect, civility, and anti-bullying expectations generally for their workforce.
There are likely to be many more developments in the coming days and weeks.
Footnotes
1 See, EEOC Press Release, President Appoints Andrea R. Lucas EEOC Acting Chair, January 21, 2025, https://www.eeoc.gov/newsroom/president-appoints-andrea-r-lucas-eeoc-acting-chair.
2 590 U.S. 644 (2020).
3 See California Civil Rights Department, Fact Sheet on The Rights of Employees Who Are Transgender or Gender Nonconforming, November 2022, https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2022/11/The-Rights-of-Employees-who-are-Transgender-or-Gender-Nonconforming-Fact-Sheet_ENG.pdf.
4 See NYC Commission on Human Rights Legal Enforcement Guidance on Discrimination on the Basis of Gender Identity or Expression: Local Law No. 3 (2002); N.Y.C. Admin. Code § 8-102, (last updated February 15, 2019), https://www.nyc.gov/assets/cchr/downloads/pdf/publications/2019.2.15%20Gender%20Guidance-February%202019%20FINAL.pdf.
5 According to published guidance, the New York City Human Rights Law “requires employers and covered entities to use the name, pronouns, and title (e.g., Ms./Mrs./Mx.) with which a person self-identifies, regardless of the person’s sex assigned at birth, anatomy, gender, medical history, appearance, or the sex indicated on the person’s identification.” See id.
6 It is important to note that following the US Supreme Court decision in Groff v. DeJoy, 600 U.S. 447 (2023), there is a heightened threshold for determining undue hardship for religious accommodation requests. See K&L Gates Legal Alert, US Supreme Court Unanimously Adopts Heightened “Undue Hardship” Standard in Title VII Religious Accommodation Analysis, June 30,2023, https://www.klgates.com/US-Supreme-Court-Unanimously-Adopts-Heightened-Undue-Hardship-Standard-in-Title-Vii-Religious-Accommodation-Analysis-6-30-2023.
Trump Administration Imposes Tariffs on China Imports; Proposes and Then Pauses Tariffs on Mexico and Canada Imports
Go-To Guide
President Donald Trump has imposed new tariffs on imports from China, effective Feb. 4, 2025, adding a 10% tariff on Chinese goods in addition to existing duties.
Shipments under $800, known as “de minimis” shipments, will no longer be duty-free if they originate from China.
Duty drawback refunds for importers and exporters will not be allowed on the additional 10% tariffs.
Companies are advised to review supply chains and confirm the origin, classification, and valuation of imported products, as well as revisit purchase agreements and incoterms (international commercial terms) to manage tariff responsibilities.
China has announced tariffs on certain U.S. imported products in retaliation for the U.S. tariffs.
President Trump had proposed an additional 25% tariff on goods from Mexico and Canada, also in addition to existing duties. However, on Feb. 3, 2025, after discussions with the Mexican and Canadian leaders, both proposals have been paused for 30 days.
Canada had already announced its retaliation with a 25% tariff on certain U.S. exports and was offering an exclusion process, while retaliation plans from Mexico had not yet been announced.
The dynamic nature of trade policy developments under the Trump administration, including the use of tariffs (as well as pauses or potential exclusions yet to be announced), require agility and flexibility in managing supply chain decisions.
On Feb. 1, 2025, President Trump imposed an additional 10% tariff on products of China imported into the United States, effective Feb. 4, 2025. Products in transit as of Feb. 1, 2025, are exempt from the new tariffs so long as they arrive in the United States by March 7, 2025, at 10:01 a.m. These tariffs are in addition to the general duties for imported merchandise and the Section 301 duties already imposed on most products of China. In retaliation, China has imposed a 15% tariff on liquified natural gas and coal and 10% on crude oil, farm equipment, and certain “large engine” autos. China’s countermeasures are set to take effect Feb. 10.
Pursuant to the International Emergency Economic Powers Act (IEEPA), National Emergencies Act (50 U.S.C. 1601 et seq.), Section 604 of the Trade Act of 1974 (19 U.S.C. 2483), and 3 U.S.C. 301, and referencing the “influx of synthetic opioids” from China, President Trump imposed the supplemental duties in an executive order1 that included all goods from China. Unlike under the first Trump administration, to date, no exclusion process has been announced that would enable importers to apply for specific exclusions to the additional tariffs.
Takeaways from the executive order:
Imports into the United States under $800, known as “low value” or “de minimis” shipments under 19 U.S.C. 1321, will no longer be duty free, but are included in the additional duties if the country of origin is China.
Duty drawback, which enables importers and exporters to recover already paid duties, will not be allowed on the 10% tariffs.
For shipments going to a foreign trade zone (FTZ), the date of arrival of shipments into the FTZ will be the date that determines any owing duty when the merchandise enters the commerce of the United States. This callout for FTZs obviates one of the major benefits of using an FTZ.
Should China retaliate against the United States in response to this action, the Trump administration announced it may increase or expand in scope the duties imposed under the executive order.
To qualify for the “in transit” exception, goods must be “in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. on Feb. 1, 2025, and arrive in the United States by March 7, 2025.
The executive order is silent as to the status of the Section 301 exclusions still in place, so those exclusion orders may remain valid. All current exclusions expire in May 2025.
Companies importing into the United States, whether U.S. or multinational companies, should consider increasing visibility into their supply chains. Importers may wish to review each imported product and confirm its country of origin, classification, and valuation. For example, even if a purchase agreement states a certain country of origin, U.S. companies should consider confirming the bill of materials and production steps to ensure the product is in fact manufactured there and not merely assembled in that country.
In addition, U.S. importers should consider reviewing incoterms on all purchase orders to determine which party is responsible for the tariffs. Note that tariffs are assessed based on the date of entry of goods into the United States and not the purchase order date. If negotiating a master purchase agreement, importers may wish to add language so that the purchase price does not include the additional duties.
There are numerous duty-mitigation strategies importers can consider to potentially blunt the impact of increased costs, including the use of “first sale” in a multi-tier transaction. Imported merchandise may have been the subject of more than one sale, with the middleman buyer adding an amount for profit and expenses to the price paid by the U.S. importer at entry. For example, merchandise may be manufactured in China, sold to a middleman in Hong Kong, and then sold to a buyer/importer in the United States. Under certain circumstances, importers may declare the value of the goods on the “first” or earlier sale, rather than on the last one, thereby reducing the declared value of the goods upon which duty payments are based. In addition, importers may consider taking legal deductions from the declared value, such as foreign inland and international freight.
1 See executive order dated Feb. 1, 2025, Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China.
More Shake-Up of NLRB: President Trump Appoints New NLRB Acting General Counsel
On February 3, 2025, President Donald Trump appointed William B. Cowen as the new acting general counsel of the National Labor Relations Board (NLRB), according to a statement from the NLRB. The move comes days after President Trump discharged Acting General Counsel Jessica Rutter, who served for less than a week after President Trump discharged former General Counsel Jennifer Abruzzo and removed NLRB Member Gwynne Wilcox.
Quick Hits
President Trump appointed William B. Cowen as acting general counsel of the NLRB.
The appointment comes after President Trump, in the past week, discharged former NLRB General Counsel Jennifer Abruzzo and her replacement, NLRB Acting General Counsel Jessica Rutter. President Trump also removed NLRB Member Gwynne Wilcox.
The NLRB said that field offices will continue to process unfair labor practice and representation cases.
Acting General Counsel Cowen has served as the Regional Director for the NLRB’s Los Angeles Region Office (Region 21) since 2016 and previously served as an NLRB member from January 22, 2002, to November 22, 2002, after having been appointed by the then-President George W. Bush, according to the statement from the NLRB.
The statement did not indicate who President Trump will formally appoint to fill the general counsel position. The appointment must also be confirmed by the U.S. Senate.
On February 1, 2025, President Trump discharged former Acting General Counsel Rutter, who was elevated to acting general counsel after President Trump discharged former General Counsel Abruzzo on January 27, 2025. Rutter had previously served as Deputy General Counsel under Abruzzo.
The same day as Rutter’s discharge, the NLRB issued a notice to the public that the NLRB Office of the General Counsel’s field offices will continue to process unfair labor practice (ULP) cases and representation cases as normal, pursuant to the National Labor Relations Act (NLRA), applicable regulations, and case law.
However, President Trump’s removal of Member Wilcox leaves the NLRB without a quorum to hear cases. The Board has only two sitting members: Republican appointee Marvin Kaplan, whom President Trump named the NLRB chair on his first day in office, and Democratic appointee David Prouty, whose term is set to end in August 2026.
The changes at the NLRB come as President Trump has also removed Democratic U.S. Equal Employment Opportunity Commission (EEOC) Commissioners Charlotte A. Burrows and Jocelyn Samuels and discharged EEOC General Counsel Karla Gilbride.
Next Steps
The NLRB shake-up has created some uncertainty. While the agency has said field offices will continue to hear ULP cases and representation cases, the Board lacks a quorum to hear challenges. Meanwhile, former NLRB Member Wilcox has said that she is exploring legal options to challenge her removal, which is likely to lead to a lengthy court case that could ultimately land before the Supreme Court of the United States.
Under the Trump administration, more policy changes at the NLRB are expected, but they could take time to implement as a new general counsel must be confirmed and new NLRB members appointed.
REBO Quarterly: 2024 in Retrospect
STATE-LEVEL REAL ESTATE BENEFICIAL RESTRICTIONS ON OWNERSHIP
2024 was a busy year for legislatures throughout the United States on the topic of limitations and restrictions on ownership of real property assets. Last year, state legislators introduced over 75 bills in 29 states throughout the country that affect the beneficial ownership of real property. Legislative proposals affecting beneficial ownership generally fell into three categories: restricting ownership of agricultural land by foreign persons or entities; restricting ownership of any real property near critical infrastructure by foreign persons or entities; and restricting ownership of agricultural land by corporate entities.
The most common ownership bills specifically targeted individuals, entities, and governments from certain countries designated as “foreign countries of concern.” These “foreign countries of concern” most often included the People’s Republic of China, Iran, Russia, North Korea, and Venezuela.
While the majority of bills introduced pertain to foreign ownership, certain states have also explored restricting domestic corporate ownership of real property. Growing interest in enacting corporate farming laws has the potential to trigger unintended consequences that the commercial real estate industry must be aware of when acquiring tracts of land, particularly when acquired for development in rural or semi-rural areas. In addition, corporate ownership provisions may be intertwined within larger foreign ownership legislative proposals, necessitating a careful analysis of all bills affecting beneficial ownership of land.
Successfully Enacted State Beneficial Ownership Bills
Of the successful bills prohibiting certain parties from owning land, the definition of those subject to restriction varies by state. The majority of bills passed in 2024 prohibit “foreign adversary” citizens, governments, and business entities as defined in 15 C.F.R. § 7.4, a list generated by the secretary of the Department of Commerce, which currently lists the People’s Republic of China, Cuba, Iran, North Korea, Russia, and Venezuela. Others prohibit adversaries designated by the secretary of state as a Country of Particular Concern,1 or countries subject to international traffic in arms regulations under 22 C.F.R. § 126.1.2 Some seek to define adversaries as those parties on sanctions lists maintained by the Office of Foreign Assets Control,3 while others directly name a list of countries.4
States also diverge in the exemption provisions they include in law. Louisiana and Indiana exempt legal permanent residents from their foreign ownership laws. Louisiana’s HB 238 also contains a provision not found in other bills passed this year that exempts religious, educational, charitable, or scientific corporations. Oklahoma, Tennessee, Nebraska, and Kansas bills exempt from their ownership laws business entities that have a national security agreement with the Committee on Foreign Investment in the United States (CFIUS). Georgia, Mississippi, and South Dakota bills stipulate that foreign ownership prohibitions do not apply to business entities leasing land for agricultural research and development purposes. Indiana specifies that its prohibition law does not apply to agricultural land that has not been used for farming within the last five years, unless it is recognized by the US Farm Service Agency as farmland.
Proposed foreign ownership bills around the country differ in their treatment of existing real property owned by prohibited foreign parties. The most common treatment of the bills that were successful in 2024 was to direct any prohibited parties to divest of their ownership interest within a certain timeframe of the bill’s effective date, typically one or two years.5 Some bills specify that their provisions only apply after the bill’s effective date or a future date.6 In rare circumstances, a bill will apply retroactively; Idaho’s HB 496 was signed into law in March 2024 but applied retroactively to April 2023.
The following 15 bills impacting beneficial ownership of land were approved by state legislatures in 2024:
Georgia SB 420
Introduced on 29 January and signed into law on 30 April, the bill adds a new section to the code that provides that no nonresident alien shall acquire directly or indirectly any possessory interest in agricultural land or land within 10 miles of any military installation. In this case, “nonresident alien” is defined narrowly to mean a noncitizen of the United States who also is an agent of a foreign government designated as a foreign adversary and has been absent from the United States for six out of the preceding 12 months. The prohibition also applies to business entities domiciled in a foreign adversary or domiciled in the United States but with 25% ownership by a foreign adversary.
Idaho HB 496
HB 496 was introduced on 7 February and signed by the governor on 12 March. It amends existing foreign ownership restrictions to exempt federally recognized Indian tribes from the definition of “foreign government.” It also adds forest lands to the kinds of property that foreign governments and state-controlled enterprises are prohibited from acquiring.
Indiana HB 1183
Introduced on 9 January and signed into law on 15 March, the bill, in addition to prohibiting citizens or business entities controlled by a foreign adversary (which includes the People’s Republic of China, Cuba, Iran, North Korea, Russia, and Venezuela) from acquiring agricultural land in the state, also specifically prohibits the acquisition of mineral rights, water rights, or riparian rights on agricultural land.
Iowa SF 2204
Introduced on 1 February and signed into law on 9 April, the bill tightens existing Iowa statutes restricting foreign persons and business entities from acquiring agricultural land suitable for use in farming. The act amends Iowa code by eliminating a provision in law that suspends certain registration requirements, thereby restoring its requirements. SF 2204 also expands the information required to be completed in a registration form to include the identity of the foreign person or authorized representative; the identity of any parent corporation, subsidiary, or person acting as an intermediary; the purpose for holding the agricultural land; and a listing of any other interest in agricultural land held by the registrant that exceeds 250 acres.
Iowa SF 574
SF 574 was introduced on 24 April 2023, and carried over into 2024, where it was signed by the governor on 1 May. The bill created the “Major Economic Growth Attraction Program.” As part of multiple provisions relating to economic development, the law authorizes the Iowa Economic Development Authority board to give an exemption to the existing restrictions in law on agricultural land holdings for a foreign business if it meets certain requirements. These requirements include a business locating the project on a site larger than 250 acres and a business making a qualifying investment in the proposed project of over US$1 billion.
Kansas SB 172
SB 172 was introduced on 7 February and passed by the Kansas Legislature on 30 April. However, Kansas Governor Laura Kelly (D) vetoed the bill. The bill would have prohibited foreign principals from acquiring any interest in nonresidential real property within 100 miles of any military installation. Given the wide restriction range and the position of McConnell Air Force Base in Wichita near the center of the state, the bill would have applied to most areas of the state. Democrats largely opposed the legislation, and critics of the bill voiced concern that language in the bill allowing seizure of private property without guaranteed compensation would be unconstitutional. In her veto message, Governor Kelly wrote:
“While I agree that it is important for our state to implement stronger protections against foreign adversaries, this legislation contains multiple provisions that are likely unconstitutional and cause unintended consequences…the retroactive nature of this legislation raises further serious constitutional concerns.”
The bill ultimately was not reconsidered by legislators and did not become law.
Louisiana HB 238
HB 238 was introduced on 27 February and was signed into law on 3 June. The bill restricts foreign adversaries or corporations in which a foreign adversary has a controlling interest from owning, acquiring, leasing, or otherwise obtaining any interest in agricultural land. The law defines “foreign adversary” as the People’s Republic of China (and Hong Kong), Iran, Cuba, North Korea, Russia, and Venezuela.
Mississippi SB 2519
Introduced on 16 February and signed by the governor on 15 April, the bill prohibits ownership of majority part or a majority interest in forest or agricultural land by a nonresident alien. “Majority part” or “majority interest” means an interest of 50% or more in the aggregate held by nonresident aliens. “Nonresident alien” is defined as an individual or business entity domiciled in the People’s Republic of China, Cuba, Iran, North Korea, Russia, or Venezuela, or an entity domiciled in the United States but majority owned by a foreign adversary entity. In addition, the bill specifies that land classified as industrial or residential but is otherwise used as forest or agricultural land shall be subject to the act.
Nebraska LB 1301
Introduced on 16 January at the request of the governor, LB 1301 was signed on 16 April. The bill amends existing law to prohibit nonresident aliens, foreign corporations, and foreign governments from purchasing, acquiring title to, or taking any leasehold interest extending for a period for more than five years (or any other greater interest less than a fee interest) in any real estate in the state by descent, devise, purchase, or otherwise. The law also prohibits restricted entities from purchasing, acquiring, holding title to, or being a lessor or lessee of real estate for the purpose of erecting manufacturing or industrial establishments, with certain exemptions.
Nebraska LB 1120
Separately, LB 1120, which was introduced on 10 January and also signed into law on 16 April, requires that upon a conveyance of real property located in whole or in part within a restricted area (i.e., within a certain radius of critical infrastructure or a military installation), the purchaser must complete and sign an affidavit stating it is not affiliated with any foreign government or nongovernment person determined to be a foreign adversary pursuant to 15 C.F.R. § 7.4. Specifically, the bill targets those individuals and entities from the People’s Republic of China, Cuba, Iran, North Korea, Russia, and Venezuela.
Oklahoma SB 1705
Introduced on 5 February and approved by the governor on 31 May, the bill amends the exiting foreign ownership law to prohibit foreign government adversaries and foreign government enterprises from acquiring land in the state. The law defines a “foreign government enterprise” to mean a business entity or state-backed investment fund in which a foreign government adversary holds a controlling interest.
South Dakota HB 1231
HB 1231 was introduced on 31 January and signed by the governor on 3 March. Prior to passage, South Dakota prohibited aliens and foreign governments from acquiring agricultural lands exceeding 160 acres. HB 1231 prohibits foreign entities from owning, leasing, or holding an easement on agricultural land in the state unless the lease is exclusively for agricultural research purposes and encumbers no more than 320 acres, or the lease is exclusively for contract feeding of livestock.
Tennessee HB 2553
HB 2553 was introduced on 31 January and was signed into law on 21 May. The bill replaces the prior definitions of individuals and entities restricted in their real property ownership and expands upon land ownership restrictions through the creation of two separate prohibitions: one that restricts a prohibited foreign-party-controlled business from acquiring an interest in public or private land and another that restricts a prohibited foreign party from acquiring an interest in agricultural land (regardless of whether the party intends to use it for nonfarming purposes). Additionally, HB 2553 creates the Office of Agricultural Intelligence within the Tennessee Department of Agriculture to enforce the new law.
Utah HB 516
Introduced on 8 February and signed into law on 21 March, the bill modifies the definition of a “restricted foreign entity” to prevent entities owned or majority controlled by the following governments from obtaining any interest in real property in the state: the People’s Republic of China, Iran, North Korea, or Russia.
Wyoming SF 77
SF 77 was introduced on 6 February and signed by the governor on 14 March. The bill allows the governor and the Wyoming Office of Homeland Security to designate critical infrastructure zones and requires county clerks to report each transaction involving property within a five-mile radius of the designated zones. The law also authorizes the attorney general to take any action necessary to determine the identity of any party reported by the county clerks.
Corporate Ownership Spotlight
While the majority of bills introduced in the states regarding beneficial ownership of land focused on limiting foreign actors, at least five bills proposed changes that would reduce the ability of business entities to acquire real property. Nebraska’s LB 1301 and Iowa’s SF 2204, detailed above, both made changes to existing statutes that restrict corporate entities from engaging in farming in those states. In addition, two bills in California and one in Virginia took aim at investment funds acquiring land or water rights.
California Assembly Bill 1205
As originally introduced, the bill required the State Water Resources Control Board to conduct a study and report to the legislature on the existence of speculation or profiteering by an investment fund in the sale, transfer, or lease of an interest in any surface water right or groundwater right previously put to beneficial use on agricultural lands. The measure was amended in August 2024 to remove all study provisions and instead renames and makes changes to the unrelated California Promise Program.
California SB 1153
SB 1153 would have prohibited a hedge fund from purchasing, acquiring, leasing, or holding a controlling interest in agricultural land within the state. The bill would have required the California Department of Food and Agriculture to compile an annual report containing, among other information, the total amount of agricultural land that is under hedge fund ownership, how that land is being put to use, and any legislative, regulatory, or administrative policy recommendations in light of the information from the annual report. The bill did not receive a hearing before the end of the legislative session.
Virginia SB 693
SB 693 was introduced on 19 January but did not receive a hearing before the legislative session concluded. The bill would have restricted any partnership, corporation, or real estate investment trust that manages funds pooled from investors, is a fiduciary to such investors, and has US$50 million or more in net value or assets under management on any day during a taxable year from acquiring any interest in residential land in the state.
Ongoing Rulemaking and Court Challenges
In addition to the aforementioned bills that were signed into law in 2024, certain other bills that were passed in 2023 continue to be active in 2024 and 2025. Specifically, in Florida, bills related to the foreign ownership of real property in the state continue to make headlines. Florida Statute § 692.202–.205, which were signed into law in 2023, create a three-pronged approach to restricting foreign ownership of real property assets in the state.7 The first prong prohibits the foreign ownership of agricultural land in the state with few exceptions. The second prong prohibits foreign ownership of any real property within a certain radius of critical infrastructure or military installations within the state. Lastly, the third prong prohibits Chinese ownership (at the individual, entity, or government level) of any real property within the state. The statute also creates a registration regime for all real property assets held by foreign principals prior to 1 July 2023. Administrative rules and regulations regarding the first prong of the statute were finalized as of 4 April 2024. Final rules surrounding the third prong of the laws were published in late January by the Florida Department of Commerce and will become effective 6 February 2025. In addition to the rule promulgation, the third prong of the statute is also currently being challenged in the Eleventh Circuit Court of Appeals. We continue to actively monitor these developments.
In Arkansas, SB 383 was enacted in 2023. The proposal prohibited foreign investments through two separate restrictions: a restriction on foreign-party-controlled businesses from acquiring interest in land, and a restriction on prohibited foreign parties from acquiring any interest in agricultural land. In November 2024, Jones Eagle—a digital asset mining company owned by a Chinese-born naturalized US citizen—filed a lawsuit requesting a preliminary injunction against the law. On 9 December, the presiding federal judge granted the injunction, which prevents enforcement of the law against the company until further orders from the court. The plaintiff argues that the federal government retains exclusive authority over foreign affairs, and that the Arkansas law violates this foreign affairs preemption. The court found that Jones Eagle was likely to prevail on the question, noting that the Arkansas law “go[es] so far as to target specific foreign countries for economic restrictions and conflict with the express foreign policy of the federal government as represented by the FIRRMA and ITAR regimes.”8 The case is pending in the Eighth Circuit Court of Appeals. We will continue to actively monitor these developments and their effect on recent and upcoming legislation regarding foreign ownership of real property.
FEDERAL-LEVEL RESTRICTIONS ON BENEFICIAL OWNERSHIP OF REAL ESTATE
Like state legislatures, there was a strong focus on foreign investment in agricultural land in Congress in 2024. Unlike state legislatures, Congress has not yet implemented restrictive or prohibitive measures addressing foreign or corporate ownership of real property.
Though largely a Republican effort, a few bills were bipartisan: H.R. 7678, the Protecting Against Foreign Adversary Investments Act sponsored by then-Representative Elissa Slotkin (D-MI-7), would have required CFIUS’s approval of certain real estate sales to foreign entities of concern and required a report to Congress assessing the feasibility of divestiture of real estate owned by foreign entities of concern.
Members of Congress also introduced several bills building on the Agricultural Foreign Investment Disclosure Act (AFIDA) and CFIUS authorities by (i) expanding AFIDA reporting mandates or increasing penalties for nondisclosure or both, and (ii) extending CFIUS jurisdiction over broader categories of land. There were also bills that would create new stand-alone prohibitions on purchases of US land by certain foreign persons.
A provision of proposed bill H.R. 7476 to counter Chinese influence would have required the United States Department of Agriculture (USDA) to prohibit the purchase of agricultural land by companies owned in full or in part by the People’s Republic of China. S. 3666 would have required data sharing between the USDA and CFIUS, while S. 4443 would have directed the director of national intelligence to complete a study on the threat posed to the United States by foreign investment in agricultural land. Most recently, Senator Mike Braun (R-IN) and Representative Dan Newhouse (R-WA-4) introduced companion bills requiring the USDA to notify CFIUS of each covered transaction it has reason to believe may pose a risk to national security.
In addition to stand-alone legislation, elements of some of the above bills were included in annual budget appropriations omnibus packages. On 4 March 2024, the federal Fiscal Year 2024 Agriculture Appropriations bill was signed into law by President Joe Biden as part of the Consolidated Appropriations Act, 2024. The package included a section addressing foreign ownership of agricultural land: it required the secretary of agriculture to be included as a member of CFIUS on a case-by-case basis with respect to covered transactions involving agricultural land, biotechnology, or the agricultural industry. The bill also directed the USDA to notify CFIUS of any agricultural land transaction that it has reason to believe may pose a risk to national security, particularly on transactions by the governments of the People’s Republic of China, North Korea, Russia, and Iran.
2025 FORECAST
Federal Level
The Farm Bill is a five-year package of bills that governs a broad range of agricultural programs covering commodities, conservation, nutrition, rural development, forestry, energy, and more. The last time a Farm Bill was passed into law was the Agriculture Improvement Act of 2018, which was passed on 20 December 2018 and expired on 30 September 2023. Facing a stalemate on negotiations of a new Farm Bill in late 2023 and early 2024, members of Congress agreed to pass a one-year extension of the 2018 Farm Bill to continue authorizations until the end of the fiscal year (September 2024) and the end of the crop year (December 2024).
However, Senate and House negotiations on a new Farm Bill did not sufficiently progress in 2024, so agriculture leaders again passed a one-year extension on 21 December 2024 to continue authorizations until September 2025. While there is strong commitment from Republican Congressional leadership to finalize the bill this year, success will depend on many factors, including on how quickly the House and Senate can address other policy priorities.
Both the Senate Democratic and the House Republican agriculture leaders have released draft Farm Bill proposals for a new five-year authorization. Both parties and chambers seem to agree on the need to address foreign ownership of agricultural land. The Senate Democratic and the House Republican proposals include provisions to the following:
Establish a minimum civil penalty if a person has failed to submit a report or has knowingly submitted a report under AFIDA with incomplete, false, or misleading information.
Direct outreach programs to increase public awareness and provide education regarding AFIDA reporting requirements.
Require the USDA to designate a chief of operations within the department to monitor compliance of AFIDA.
Mandate establishment of an online filing system for AFIDA reports.
In addition, the federal House Agriculture Committee has six incoming Republicans this year—five of them newcomers to Congress—who will want to make their mark on agricultural policy in the new legislative session. Newcomer Mark Messmer (R-IN-8) previously sponsored and passed a bill in 2022 in Indiana to cap the amount of agricultural land any foreign business entity can acquire in the state. In addition, Rep. Newhouse, who has prioritized addressing foreign ownership of agricultural land in the past two years, joins the House Agriculture Committee this year. We expect to see legislation from Rep. Newhouse in this area.
State Level
With respect to the outlook in the states, 46 states meet annually, while four states (Nevada, North Dakota, Texas, and Montana) meet only during odd-numbered years. With the additional four states convening this year, we expect to see a very active year for legislative proposals affecting beneficial ownership of real property.
New Jersey and Virginia are the only states where bills from the 2024 legislative session carry over into the 2025 session, which means that all legislative proposals that were not signed into law in 2024 in the other 48 states are considered to have died and must be re-introduced in 2025.
Already as of 29 January, at least 57 bills affecting beneficial ownership have been pre-filed or introduced in 22 different states. The majority of these bills so far are aimed at preventing foreign entities from acquiring agricultural land.
Footnotes
1 Oklahoma Senate Bill (SB) 1705.
2 Tennessee House Bill (HB) 2553.
3 Nebraska Legislature Bill (LB) 1301.
4 Utah HB 516, South Dakota HB 1231.
5 Tennessee HB 2553; Kansas SB 172; Mississippi SB 2519; Utah HB 516.
6 Louisiana HB 238; Wyoming Senate File (SF) 77.
7 Marisa N. Bocci, Kari L. Larson & Douglas Stanford, Real Estate Beneficial Ownership Regulatory Alert: Florida Restricts Real Estate Ownership by Individuals and Entities From “Countries of Concern”, K&L Gates HUB (Sept. 11, 2023).
8 Jones Eagle LLC v. Ward, 4:24-cv-00990-KGB (E.D. Ark. Dec. 9, 2024).