Government Notches Win for Corporate Transparency Act in Maine

A federal judge in Maine ruled that the Corporate Transparency Act is justified under the commerce clause, citing Congressional findings that millions of newly formed corporate entities every year impact interstate commerce.

The law imposed new reporting requirements for corporate entities to disclose their beneficial ownership information to a nonpublic database. Congress gave a rational basis for concluding that the sheer number of corporate entities formed every year could impact interstate commerce, the US District Court for the District of Maine said, granting summary judgment to the government Feb. 14.

Congress found that more than two million entities are formed every year, most of which don’t disclose their beneficial ownership information, and that money launderers utilize complex corporate structures to escape detection.

“Though surely not every one of the 2 million corporate entities formed each year is used for illicit purposes, the fact that so many corporate entities exist anonymously stymies government enforcement efforts,” Judge Stacey D. Neumann said.

Given the “massive role corporate entities play in the modern economy,” the mere existence of corporate entities substantially affects interstate commerce and allows Congress to regulate them based on the commerce clause, the judge added.

Neumann rejected the plaintiff’s argument that the law regulates economic inactivity rather than activity because it covers future actions.

“To be sure, Congress lacks the power to ‘compel’ commerce, but the CTA does no such thing,” Neumann said. The law “regulates extant activity through traditional information-gathering,” she added.

The CTA has been hotly litigated since its passage. Multiple judges have enjoined its enforcement, but the US Supreme Court allowed the government to enforce the law starting last week.

How the law will be enforced remains unclear in a new Trump Administration. Trump vetoed the law in his first term, but government attorneys for the administration have defended the law as a legitimate enforcement measure.

The plaintiff is represented by Marcus Clegg.

The case is Boyle v. Bessent, D. Me., No. 2:24-cv-00081, 2/14/25.