looking at Judge Mazzant’s order, which stayed implementation of the statute in question provides some insight into what he found objectionable:

Legislative ingenuity, dispatched to meet today’s problems, is not measured by any other standard than our written Constitution. Modern problems may well warrant modern solutions, but modernity does not grant Congress a roving license to legislate outside the boundaries of our timeless, written Constitution. See, e.g., Louisiana v. Biden, 55 F.4th 1017, 1032 (5th Cir. 2022) (“The Constitution is not abrogated[, even] in a pandemic.”). The Constitution must stand firm. //

At its most rudimentary level, the CTA regulates companies that are registered to do business under a State’s laws and requires those companies to report their ownership, including detailed, personal information about their owners, to the Federal Government on pain of severe penalties. Though seemingly benign, this federal mandate marks a drastic two-fold departure from history. First, it represents a Federal attempt to monitor companies created under state law—a matter our federalist system has left almost exclusively to the several States. Second, the CTA ends a feature of corporate formation as designed by various States—anonymity. For good reason, Plaintiffs fear this flanking, quasi Orwellian statute and its implications on our dual system of government. As a result, Plaintiffs contend that the CTA violates the promises our constitution makes to the People and the States. Despite attempting to reconcile the CTA with the Constitution at every turn, the Government is unable to provide the Court with any tenable theory that the CTA falls within Congress’s power. And even in the face of the deference the Court must give Congress, the CTA appears likely unconstitutional. Accordingly, the CTA and its Implementing Regulations must be enjoined. //

the record before the Court contains sufficient facts to indicate the CTA and the Reporting Rule may violate the Constitution…Absent injunctive relief, come January 2, 2025, Plaintiffs would have disclosed the information they seek to keep private under the First and Fourth Amendments and surrendered to a law that they contend exceeds Congress’s powers. That damage “cannot be undone by monetary relief.” That harm is irreparable. //

The court also held that the CTA was not valid under the commerce clause because “[t]he CTA does not regulate channels of, or instrumentalities in, commerce,” only formation of corporations and reporting about them. And, “[t]he CTA does not regulate an activity—it creates one.” //

Christopher B | January 1, 2025 at 10:42 am
As a board member of a non-profit that would be impacted by this, I’m happy to see the injunction back. We have some folks on our board who have to deal with this in a professional capacity, and their opinion is generally that FinCen and other TLAs want a way to get at this information without having to obtain a warrant since it largely exists in various databases but not under their control.