Legal News for Thurs 11/7 - Trump Admin Will Scale Back CFPB and EPA Rules, Giuliani Faces Court over Defying Orders, R&D Expensing is Broken

Minimum Competence

This Day in Legal History: FDR Wins Fourth Term

On November 7, 1944, Franklin D. Roosevelt won an unprecedented fourth term as President of the United States, solidifying his role as a defining leader during one of the nation's most challenging periods. First elected in 1932, Roosevelt took office at the height of the Great Depression and implemented the New Deal to revive the struggling economy. By the time of his fourth election, the U.S. was fully engaged in World War II, and Roosevelt's leadership was seen as essential to the Allied victory effort.

Roosevelt's extended presidency was unprecedented, breaking the tradition set by George Washington, who had voluntarily stepped down after two terms. This decision was widely respected and had shaped a long-standing convention against extended presidential terms. However, in the face of ongoing economic and wartime crises, the American public continued to support Roosevelt, viewing his experience and policies as critical to both domestic stability and success in the war.

Following Roosevelt's death in 1945, concerns about the concentration of executive power led to a renewed call for term limits. In 1947, Congress passed the 22nd Amendment, which formally restricted presidents to two terms. The amendment was ratified in 1951, ensuring that no future president could serve more than two elected terms, thus establishing a constitutional limit that balanced continuity with the democratic value of regular leadership change. Roosevelt’s historic fourth term not only marked a unique era in American leadership but also reshaped the structure of presidential power in the United States.

With a new Trump administration expected in January, the Consumer Financial Protection Bureau (CFPB) is likely to roll back numerous Biden-era regulations. Trump is expected to remove current CFPB Director Rohit Chopra, leading to a reduction in the agency’s focus on ambitious rulemaking. Instead, the CFPB will likely concentrate on traditional oversight and enforcement, targeting only major infractions. Most regulations established under Chopra, such as credit card late fee caps and demographic data collection for small business loans, face potential repeal or weakening, especially as many are already tied up in legal challenges. The CFPB and trade groups may agree to pause these litigations while the agency revisits the contested rules.

One regulation with bipartisan support that may endure is the recent open banking rule, which allows consumers to securely share financial data with fintech firms and other banks. Although it faces legal challenges, this rule could survive due to broader Republican interest in data privacy and open banking. Under Trump’s leadership, the CFPB is also unlikely to continue issuing informal guidance and circulars affecting sectors like "buy now, pay later" services without formal rulemaking.

Trump Team Set to Roll Back Chopra’s Credit Card, Banking Rules

A second Trump administration may significantly reshape U.S. water regulations, particularly targeting Biden-era protections. Expected changes include repealing or revising key EPA rules under the Clean Water Act and rolling back protections for wetlands, PFAS substances, and state oversight over water pollution. Legal experts predict that Trump’s team could rely on the Heritage Foundation’s Project 2025, which suggests undoing the Waters of the U.S. (WOTUS) rule, limiting state veto power under Section 401, and revisiting PFAS regulations. The Biden administration’s updated WOTUS rule, developed in response to a 2023 Supreme Court ruling, is already under legal challenge and may be replaced with Trump’s previous rule, potentially narrowing federal jurisdiction over wetlands.

Additionally, Biden’s Lead and Copper Rule Improvements (LCRI), mandating lead pipe removal by 2027, could be at risk. The administration is also likely to limit federal involvement in water regulation, possibly expanding state control over Section 404 permitting, which governs dredge-and-fill activities in waters. While some states support stricter PFAS standards due to health risks, budget constraints could hinder state-led water protection initiatives if federal support declines. However, rolling back PFAS drinking water standards, finalized this year, could be complex due to the regulatory and public health controversies involved.

Biden Clean Water Rules Vulnerable in New Trump Administration

Rudy Giuliani is set to appear in a Manhattan court following accusations that he ignored a court order to surrender property, including his luxury Manhattan apartment, to two Georgia election workers, Ruby Freeman and her daughter Wandrea “Shaye” Moss. A U.S. judge had mandated that Giuliani turn over assets by Oct. 29 to partially satisfy a $148 million judgment awarded to the pair after a jury found he defamed them by falsely accusing them of election interference in 2020. Despite Giuliani’s claims of cooperation, Freeman and Moss’s lawyer argued he has delayed the process, noting that Giuliani’s apartment has been largely emptied. Judge Lewis Liman denied Giuliani's request to participate in a Florida radio broadcast instead of attending court and has scheduled an in-person hearing to assess compliance with the property handover.

The court action follows Giuliani’s Chapter 11 bankruptcy filing, which a judge dismissed after determining Giuliani withheld financial information, leaving him vulnerable to creditors. Giuliani, who has been disbarred in New York and faces criminal charges for his role in efforts to overturn the 2020 election, plans to attend the hearing, with his lawyer asserting that Freeman and Moss, not Giuliani, are responsible for delays in the asset transfer process.

Giuliani to appear in court as election workers demand his property | Reuters

In my column for Bloomberg this week, I argue that the U.S. urgently needs to reform its R&D tax policies to better support innovation. Historically, Section 174 of the tax code allowed businesses to immediately deduct research and development expenses, offering a cash flow benefit that encouraged reinvestment in further R&D. However, the 2017 Tax Cuts and Jobs Act (TCJA) changed this by mandating that companies amortize these expenses over five years starting in 2022. This shift has significantly reduced the immediate value of R&D tax benefits, leading to a substantial drop in R&D investment.

The change has also raised effective tax rates for companies focused on innovation, particularly in critical sectors like technology and pharmaceuticals, thus weakening the U.S. competitive edge. Meanwhile, other nations, such as the UK and China, have implemented more generous R&D incentives, putting the U.S. at a disadvantage globally.

To address this, I propose restoring immediate expensing under Section 174 and introducing a "patent box" system, which would apply a reduced tax rate to profits derived from intellectual property. This approach could both increase R&D investment and encourage domestic commercialization of innovations. By combining immediate expensing with sector-specific patent box incentives, we could reinvigorate U.S. innovation and enhance our competitiveness on the world stage.

R&D Tax Expensing Is Broken, But Changing Some Rules Can Fix It

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