Twenty states and the District of Columbia sued the Treasury Department and FinCEN on October 27 over the agency's decision to exempt most companies from beneficial ownership reporting, and over its plan to delete the information it already holds. The complaint, captioned State of Oregon v. Bessent, was filed in the United States District Court for the District of Oregon in Eugene. The case number is 6:26-cv-2359-MTK.
The plaintiffs are Oregon, Illinois, Arizona, California, Colorado, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, Washington, and Wisconsin, plus the District of Columbia. The defendants are Treasury Secretary Scott Bessent, the Treasury Department, Acting FinCEN Director Jenna Casanova, FinCEN, Attorney General Todd Blanche, and Homeland Security Secretary Markwayne Mullin.
The suit is the most direct challenge yet to a rollback that FinCEN completed in August. The agency's final rule, issued on August 11 and published on August 14, made permanent the exemptions it had first offered in an interim rule in March 2025. Domestic companies no longer have to report their beneficial owners. U.S. persons who own foreign companies registered in the United States no longer have to be identified. The only reporting companies left are foreign-formed entities, and they report only their non-U.S. beneficial owners.
FinCEN said the exemption covers more than 99.9 percent of the entities that the Corporate Transparency Act originally reached. The agency also said it would purge the ownership information it had already collected about U.S. persons, with a deadline of February 10, 2027. That deadline is what turns a routine administrative law case into a race.
The rule exempts almost every company
The Corporate Transparency Act passed in 2021 over a veto. Congress framed it as a response to shell companies that hide their owners from banks, tax authorities, and law enforcement. The statute required companies formed in the United States to identify their beneficial owners to FinCEN, and it allowed the agency to grant limited additional exemptions.
FinCEN's August rule used that exemption authority to remove the domestic reporting requirement entirely. The agency said the burden on small businesses outweighed the benefit, and it described the change as a simplification rather than a repeal. Treasury Secretary Bessent has defended the rule as eliminating burdensome reporting without compromising national security.
The plaintiffs reject that characterization. Their complaint says the executive branch cannot repeal a law by rulemaking. They argue that Congress included domestic companies in the statute, enacted a sense of Congress confirming that intent, and listed twenty-three specific exemptions. In their reading, the catch-all authority to add limited exemptions does not permit the agency to exempt the entire category Congress created.
The complaint attacks four pieces
The complaint separates the rule into four parts and challenges each one. The first is the Domestic Company Exemption. The second is the U.S. Persons Exemption, which removes the requirement that foreign entities identify their U.S. owners. The third is the FinCEN Identifier Freeze, which stops requiring individuals who hold FinCEN identifiers to keep them current. The fourth is the Data Purge.
The first two claims are brought under the Administrative Procedure Act. The plaintiffs say the final rule exceeds statutory authority, is contrary to law, and is arbitrary and capricious. A third claim challenges written concurrences by the Justice and Homeland Security departments, which the plaintiffs say are part of the same action. The fourth and fifth claims challenge the March 2025 interim rule on the same grounds.
The structure matters because the relief is not limited to the final rule. The complaint asks the court to declare unlawful and vacate the final rule, the written concurrences, and the interim rule. It also asks for an injunction against the Data Purge, including a stay under 5 U.S.C. section 705, which allows a court to postpone the effective date of agency action while review is pending.
The retention clause is the sharpest claim
The strongest allegation is not about the exemption. It is about the deletion. The Corporate Transparency Act requires FinCEN to retain beneficial ownership information for not fewer than five years after the date on which the reporting company terminates. The plaintiffs argue that a company does not terminate merely because FinCEN decides to exempt it. If that is right, the agency's plan to delete the data of exempted companies before the five-year window runs violates the statute the rule is supposed to implement.
The complaint adds a second statutory hook. Beneficial ownership reports are records of the federal government, the plaintiffs say, and the Federal Records Act prohibits their destruction without an approved disposition schedule from the National Archives and Records Administration. The complaint says no such schedule exists. That claim does not depend on the meaning of the Corporate Transparency Act. It would apply even if the exemption were lawful.
Those two arguments give the court a way to stop the purge without deciding the larger question of whether FinCEN can exempt domestic companies. A judge who is unsure about the scope of the exemption can still conclude that the agency cannot delete records that Congress told it to keep. That is why the purge deadline, not the rule's effective date, is the pressure point.
The purge turns a rule challenge into a deadline
FinCEN's rule describes a single sweep on or about February 10, 2027. The complaint says that language indicates the purge is imminent and will occur on or before that date. The plaintiffs argue that once the data is gone, no court order can restore it. Companies cannot be forced to refile information they no longer have, and individuals who reported years ago may not be able to reconstruct what they submitted.
That is the irreparable harm argument. The plaintiffs are not asking the court to preserve a database for its own sake. They are asking it to preserve the evidence and the records that the statute requires the agency to hold. If the court waits until the merits are resolved, the relief may be worthless. The request for a stay under section 705 is designed to prevent that outcome.
The timing also affects the states' own enforcement. Several states have their own beneficial ownership or corporate transparency laws, and they use the federal database as a cross-check. If the federal records are deleted, a state regulator investigating a shell company may have no record to compare against. The complaint says the deletion would impair state tax administration, consumer protection, and anti-fraud work.
What the registry was for
The registry was never a public database. Banks and law enforcement could access it under specified conditions, and state regulators could use it for their own purposes. The idea was to give investigators a starting point that did not depend on a subpoena to a bank or a foreign registry.
The rollback changes that flow. A bank that opens an account for a domestic company will still collect ownership information under its own customer due diligence rules. But the bank will not have a federal record to check against. Law enforcement will have to go to the company, the bank, or a state registry. For a shell company with no real operations, those paths may lead nowhere.
The plaintiffs also argue that the purge will destroy records that could be evidence of unsolved crimes. That claim is difficult to verify from the outside. The complaint does not identify specific investigations. It relies on the general proposition that ownership records are useful to law enforcement and that deleting them removes a tool.
The government's case is that the burden of the registry exceeded its value, and that the exemptions are a lawful exercise of the authority Congress gave the agency. The complaint will have to overcome that argument on the merits. The purge deadline gives the plaintiffs a second route, but it does not guarantee they win.
What a win after the purge would be worth
If the court vacates the rule, the immediate effect is to restore the reporting requirement for domestic companies. That does not mean the old database comes back. Companies that never filed under the exemption would have to file. Companies whose data was deleted would have to file again, assuming they still have the records. The administrative cost of rebuilding the registry would fall on the same small businesses the rule was meant to relieve.
That is the practical weakness in the plaintiffs' position. A court can restore a legal requirement more easily than it can restore a database. The complaint asks the court to stop the deletion precisely because the plaintiffs know that. The case is as much about timing as it is about statutory interpretation.
The complaint also asks the court to order the agency to preserve the records while the case proceeds. That request is narrower than vacatur and easier to grant. A preservation order would not decide the merits, but it would keep the evidence alive long enough for the court to decide whether the purge was lawful.
The larger question is whether Congress's retention requirement binds the agency even when the agency has decided that the underlying reporting requirement should not apply. The statute says what it says. The government will argue that the retention duty attaches only to information the agency still has a reason to keep. The court will have to decide whether the five-year clause is a floor or a default.
For now, the registry is still online, the purge is still scheduled, and the case is in its first week. The plaintiffs have asked for a stay. The government has not yet responded. The next filing will show whether the court treats the February date as a reason to act quickly or as a fact to weigh at the end.
Primary sources
- Complaint in State of Oregon v. Bessent, No. 6:26-cv-2359-MTK (D. Or. filed Oct. 27, 2026), including the causes of action and prayer for relief. oag.ca.gov
- California Attorney General, press release on the multistate suit, October 27, 2026. oag.ca.gov
- ABA Banking Journal, report on the suit and the FinCEN rules. bankingjournal.aba.com
- AML Intelligence, report on the coalition and the rollback. amlintelligence.com
- Troutman Pepper Locke, analysis of FinCEN's final rule ending beneficial ownership reporting for U.S. companies, August 2026. troutman.com