Photo: Carol M. Highsmith / Library of Congress (public domain)
Twenty-one US states and the District of Columbia sued the Trump administration on Tuesday, asking a federal court to overturn a rule that exempted most American companies from reporting who really owns them — a rollback the states say effectively repealed an anti-corruption law passed by Congress.
The lawsuit, filed in the US District Court for the District of Oregon, targets an August rule from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) that exempted US companies and individuals from filing beneficial ownership information under the 2021 Corporate Transparency Act. The states argue the rule gutted a law designed to stop shell companies from hiding illicit money.
What the states are challenging
The Corporate Transparency Act, passed in 2021, required corporations, limited liability companies and similar entities to report identifying information about their owners to FinCEN. The database was meant to help police and prosecutors trace illicit money, recover stolen assets and uncover bribes hidden behind anonymous companies.
According to the states, FinCEN first exempted 99.9 percent of businesses from the reporting requirements in an interim rule on March 26, 2025, and then made those exemptions permanent in a final rule on August 14. The states also say FinCEN committed to deleting, by February 10, 2027, ownership information previously reported by US companies and people who are no longer required to report.
"The executive branch cannot repeal a law by rulemaking. That fundamental principle resolves this case," the lawsuit says, according to Reuters.
Who sued — and who was sued
The coalition of mostly Democratic-led states includes the attorneys general of California, New York, Massachusetts, Rhode Island and Maine, among others. The suit names Treasury Secretary Scott Bessent, the Department of the Treasury and FinCEN as defendants, and also lists the heads of the Justice and Homeland Security departments.
The states allege the rule violates the Administrative Procedure Act, the separation of powers and the constitutional duty to take care that the laws are faithfully executed. They are asking the court to declare the rule unlawful, vacate it, and bar FinCEN from carrying out the planned purge of previously reported data.
What the administration says
The Treasury Department did not respond to a request for comment on the lawsuit, Reuters reported. When the rule was finalized in August, Bessent cast it as "eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security."
The case is part of a broader push by the administration to curtail anti-corruption efforts, the states argue — and it is now the latest court fight over how far an administration can go in rewriting, through rulemaking, a statute Congress enacted. The rule remains in effect unless and until a court blocks it, and no ruling on the states' challenge has yet been issued.
Sources: Reuters (Tuesday filing, Oregon court, 21 states plus D.C., August final rule, 99.9 percent exemption figure, "cannot repeal a law by rulemaking" quote, Bessent statement, Treasury no comment, Justice and Homeland Security defendants); New England Signal, citing the Rhode Island attorney general's office (March 26, 2025 interim rule, August 14 final rule, February 10, 2027 data-deletion date, constitutional and Administrative Procedure Act claims, requested relief). The states' claims are allegations in a pending lawsuit, not findings by a court.