On April 9, 2025, the President issued Executive Order 14629, a sweeping initiative to rebuild the United States’ commercial shipbuilding industry, revitalize its maritime workforce, and reclaim its role as a global leader in maritime logistics and security. This order carries significant implications for shipbuilders, cargo operators, port authorities, marine investors, and maritime contractors.

Issued in the wake of mounting concerns over U.S. dependence on foreign shipbuilders—particularly China—the order calls for an all-of-government strategy to reclaim control over America’s maritime future. Here’s a detailed look at what the Executive Order entails and how it’s expected to impact the sector:

Maritime Action Plan (Sec. 3)

A centerpiece of the Order is the creation of a Maritime Action Plan (MAP), to be developed within 210 days by the Assistant to the President for National Security Affairs, in coordination with Cabinet-level departments (Defense, Commerce, Transportation, Homeland Security, Labor, State, Education) and other agencies. The MAP is designed to become the federal government’s maritime playbook—aligning funding, legislation, regulatory reform, and workforce initiatives under one coordinated strategy. The Office of Management and Budget will lead the fiscal and legislative alignment, while the MAP itself will incorporate actions outlined in 18 specific sections of the Order.

Reviving the Industrial Heart of U.S. Maritime (Sec. 4)

The Order begins by tackling the Maritime Industrial Base, which it acknowledges has suffered from decades of disinvestment. Federal agencies, led by the Department of Defense, are directed to explore use of Defense Production Act authorities and Office of Strategic Capital tools to incentivize investment in shipyards, marine repair, port infrastructure, and supply chains.

The goal is to catalyze both public and private capital to rebuild the physical and workforce infrastructure required to make U.S. shipbuilding economically viable again. Agencies must prioritize projects based on taxpayer return-on-investment, commercial and military value, and long-term workforce benefits.

Responding to China’s Dominance in Shipbuilding (Sec. 5)

One of the most pointed sections of the Order directly addresses China’s aggressive targeting of global shipbuilding and logistics sectors. The U.S. Trade Representative is empowered to advance its Section 301 investigation and potentially impose tariffs or other trade actions on PRC-linked cargo equipment, particularly cranes and handling devices.

These measures reflect growing bipartisan concern that China’s subsidized shipbuilding poses both an economic and national security threat—especially at strategic ports. Legal and compliance implications for maritime importers and logistics clients will be significant.

Closing Loopholes in U.S. Port Fee Collections (Sec. 6)

For years, cargo routed through Canadian or Mexican ports has offered a backdoor around the Harbor Maintenance Fee. This Order closes that loophole. The Department of Homeland Security is instructed to require that all foreign cargo entering the U.S.—whether directly or via land borders—be subject to full Customs and Border Protection (CBP) processing and applicable fees. If cargo is not “substantially transformed” before entering from Canada or Mexico, it will face not only full HMF charges but also an added 10% service fee to offset enforcement costs.

Turning to Allies for Maritime Investment and Trade Alignment (Secs. 7 & 8)

Recognizing that rebuilding U.S. maritime capacity can’t be done in isolation, the Order calls for coordinated engagement with allies and partners. The Departments of State and Commerce, along with the Trade Representative, are tasked with aligning global trade policies related to the maritime sector—including coordinated tariffs or parallel enforcement efforts.

Simultaneously, the Department of Commerce is directed to explore investment incentives for allied shipbuilders willing to open facilities or fund upgrades in the United States—particularly those that bolster U.S. shipyard capacity.

Creating a Sustainable Funding Engine: The Maritime Security Trust Fund (Sec. 9)

One of the more transformative proposals involves the creation of a Maritime Security Trust Fund, administered through the Office of Management and Budget and supported by the Department of Transportation. This dedicated funding source would provide stable, long-term capital for the programs under the MAP—reducing reliance on annual budget negotiations and increasing predictability for industry partners. The fund could be sourced from existing tariff revenues, penalties, fees, or future maritime excise tax reforms.

A New Investment Program for U.S. Shipbuilding (Sec. 10)

The Order directs the Department of Transportation to propose a new shipbuilding incentives program, one that offers greater flexibility than current initiatives like the Small Shipyard Grant Program or Title XI Federal Ship Financing. Potential support mechanisms include capital improvement grants, vessel construction loans, and guarantees that comply with the Federal Credit Reform Act. This is designed to create a reliable financing environment for commercial shipyards and repair facilities ready to modernize or scale operations.

Establishing Maritime Prosperity Zones (Sec. 11)

To draw new capital to historically overlooked areas, the administration proposes the establishment of Maritime Prosperity Zones—tax-advantaged investment areas modeled on the Opportunity Zones created in 2017. These would include non-coastal and inland regions, such as the Great Lakes and Mississippi River corridors, which have untapped industrial potential. The Departments of Commerce, Treasury, Transportation, and Homeland Security will jointly develop the plan.

Reinforcing U.S. Cargo Shipping and Preference Laws (Sec. 12)

The Department of Transportation is charged with preparing a full inventory of federal programs, cargo preference laws, and tax/regulatory tools that can be used to grow domestic shipping. This includes programs like the Maritime Security Program, Tanker Security Program, and various maritime academy supports.

It also calls for a review of cargo preference waiver processes to ensure more U.S.-flagged and built vessels are being used in federal shipping contracts, especially in military logistics.

Modernizing Mariner Training and Expanding Educational Pipelines (Sec. 13)

Executive Order 14269 calls for a comprehensive review and reform of the nation’s mariner training and credentialing systems.

Within 90 days, a coalition of federal agencies—including the Departments of State, Defense, Labor, Transportation, Education, and Homeland Security—is required to deliver a coordinated report with recommendations to address workforce challenges in the maritime sector. These recommendations will focus on aligning educational institutions, technical training programs, and credentialing pathways with the anticipated national demand.

Reviving the U.S. Merchant Marine Academy (Sec. 14)

The United States Merchant Marine Academy (USMMA) is slated for urgent upgrades. Within 30 days, the Department of Transportation must begin deferred maintenance projects and finalize a long-term facilities master plan, followed by a five-year capital improvement plan in coordination with the Department of Government Efficiency. These steps are framed as essential to ensure the U.S. maintains a world-class maritime education institution.

Streamlining Ship Procurement and Deregulating Bottlenecks (Secs. 15 & 16)

A recurring complaint from U.S. shipbuilders is procurement complexity and regulatory drag. The Order addresses this by requiring the Departments of Defense, Commerce, Homeland Security, and the National Science Foundation to propose reforms that:

  • Reduce design and review delays
  • Encourage modular shipbuilding
  • Rely more on commercial acquisition practices and broad industry standards

Concurrently, agencies must conduct internal reviews to identify deregulatory opportunities, aligned with Executive Order 14192, to eliminate red tape that blocks innovation or raises costs unnecessarily.

Reinforcing Strategic Capacity: Fleet and Arctic Readiness (Secs. 17 – 21)

To ensure maritime readiness in times of crisis and position the U.S. as a global leader in strategic waterways, the Executive Order outlines several initiatives designed to expand and reinforce the operational fleet.

Growing the U.S.-Flagged Fleet (Section 17)

The Department of Transportation, in coordination with the Department of Defense, is required to propose a legislative framework that increases the number of U.S.-flagged commercial vessels available for international trade. The goal is to ensure sufficient tonnage and cargo capacity under the U.S. flag that can be rapidly mobilized during national emergencies.

  • Incentives under consideration include:
  • Subsidies to encourage construction of militarily useful commercial ships;
  • Expanded financial support for modifications that make commercial vessels deployable for defense purposes;
  • Policies that boost the number of U.S.-built, crewed, and flagged vessels participating in global trade.

Securing Arctic Waterways (Section 18)

With Arctic shipping routes becoming more navigable due to climate change, the Departments of Defense, Transportation, and Homeland Security, along with the U.S. Coast Guard, are instructed to develop a national Arctic Maritime Strategy. This strategy will define the vision, goals, and risk posture necessary to secure these high-stakes transit lanes and support future economic activity in the region.

Shipbuilding Capacity Review (Section 19)

The Order mandates a review of federal shipbuilding for the Army, Navy, and Coast Guard, to identify ways to:

  • Increase competition among domestic shipbuilders;
  • Reduce systemic cost overruns and production delays;
  • Expand participation in subsurface, surface, and unmanned vessel programs.

Separate, prioritized recommendations for each branch must be submitted to the President within 45 days.

Inactive Reserve Fleet Assessment (Section 21)

Finally, to guarantee strategic readiness, the Department of Defense must review and issue guidance on the maintenance, mobilization, and funding structure of the U.S. inactive reserve fleet. This review will inform future MAP decisions to ensure that reserve vessels are prepared for activation in times of conflict or disaster.

Closing Observations

Executive Order 14269 is perhaps the most ambitious federal directive aimed at rebuilding American maritime capacity since World War II. It addresses infrastructure, policy, law, workforce, and trade in a single integrated blueprint.

It also creates opportunities—particularly in financing, infrastructure modernization, ship procurement, and cargo law compliance—for companies operating across the shipping, port operations, defense contracting, and educational sectors.

Industry stakeholders should begin preparing for rapid federal engagement, new funding pathways, and heightened enforcement of trade and cargo preference laws.

On April 16, 2025, Senator Schwertner moved to suspend the Texas Senate’s regular order of business to take up and consider Committee Substituted Senate Bill 30 (“CSSB 30”). This motion prevailed by a vote of 20 Yeas and 11 Nays. During this session, 5 different Senators proposed 6 total amendments to CCSB 30. Senator Schwertner’s 2 amendments were the only 2 adopted of the 6.[1] A summary of Senator Schwertner’s 2 amendments are as follows.

Floor Amendment No. 1:

  1. First, this Amendment revises CSSB 30’s definition for “mental or emotional pain or anguish.” CCSB 30 defined “mental or emotional pain or anguish” as “grievous and debilitating angst, distress, torment, or emotional suffering or turmoil that causes a substantial disruption in a person’s daily routine.” This Amendment replaces the evidentiary requirement of showing “a substantial disruption in a person’s daily routine,” though in accordance with Texas Supreme Court precedent, with “a substantial disruption in a person’s life.”
  2. Second, this Amendment provides for a differing evidentiary standard for “physical pain and suffering” in cases of sexual assault or abuse.
  3. Third, this Amendment adds licensed professional counselors and psychologists to the inclusive list of who constitutes a provider under this subchapter.
  4. Fourth, this Amendment adds a provision that establishes that the Texas Rules of Evidence shall continue to govern questions of admissibility in any action under this subchapter, except for evidence that is rendered admissible as a matter of law under Section 41.107, namely:
    • All statements or invoices from health care providers for services related to the injury in the lawsuit.
    • Any letter of protection connected to the lawsuit.
    • Any written agreement for refunds, rebates, or payments to anyone involved in the claim (e.g., payor, injured person, attorney, etc.).
    • If the injured individual was referred to a health care provider for services by the injured individual’s attorney and the provider will provide testimony that is presented to the trier of fact in the action, then (1) an anonymized list of persons referred by the attorney to the provider in the preceding two years; (2) the date and amount of each payment made to the provider in the preceding two years by or at the direction of the attorney; (3) if applicable, each person anonymously described under Subparagraph (1) on whose behalf a payment described by Subparagraph (2) was made; and (4) other aspects of any financial relationship between the attorney and the provider.
    • Treatment guidelines and drug formularies approved by the Workers’ Compensation Division of the Texas Department of Insurance as evidence relating to the necessity of health care services provided to the injured individual.

Floor Amendment No. 2: This Amendment allows for the amount of health care costs to be adjudicated based upon the May 1, 2025 Medicare fee schedule as adjusted by the CPI between May 1, 2025 and the date on which the service was provided to the induvial or the date the trial commences, depending on which section of the bill is appropriate. This Amendment seeks to allow the limit on evidence for medical expenses that exceed 300% of the Medicare fee schedule to account for inflation in the context of future medical expenses.

After accepting Senator Schwertner’s amendments, the Senate took a vote and passed Amended CSSB 30 by the following vote: Yeas 20 and Nays 11.

[1] Senator Johnson, Senator West, Senator Gutierrez, and Senator Eckhardt each proposed amendments to CSSB 30 on April 16. In general, these amendments sought to challenge: the disclosure and admissibility requirements for medical referrals by legal practitioners arguing that the prejudicial value of the same would outweigh any probative value; the constitutionality of limiting non-economic damages; and limiting the categories of non-economic damages on a jury verdict. The Senate denied each amendment in a vote of 20 Nays and 11 Yeas.

Though House Bill 4806 has not seen substantial movement since its introduction on March 13,[1] its identical counterpart, Senate Bill 30, is steadily progressing through the Texas Senate. Most recently, on April 14, 2025, Senator Schwertner distributed a substituted Senate Bill 30 to the committee on State Affairs, containing 9 substantial changes to Senate Bill 30. Ultimately, the committee did not voice any objections to the substitutions, and the committee adopted the substitutions. That same day, the committee considered Senate Bill 30, as substituted, at a public hearing, a vote was taken, and Senate Bill 30, as substituted, passed through the committee — 9 ayes, 1 nay, and 1 absent. Senate Bill 30, as substituted, is now on the intent calendar awaiting consideration and vote by the Texas Senate.

Senator Schwertner’s 9 primary revisions to the Bill are summarized and copied in pertinent part below.

Change One: The substitute amends language to prohibit from controverting bills already paid or amounts that do not exceed 300% of the Medicare fee scheduled for each service provided.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 18.0011. AFFIDAVIT OF HEALTH CARE FACILITY OR PROVIDER.

(a) A party may not controvert the reasonableness of the charges for health care services stated in an affidavit served under Section 18.001 if, as to each health care service provided by the health care facility or provider:

1) The affidavit states one of the following amounts as the reasonable charge for the service:

A. The amounts received from all sources by the facility or provider to pay for the service provided to the person whose injury or death is the subject of the action; or

B. An amount that does not exceed 150 percent of the median amount paid by nongovernmental third-party payors to health care facilities or providers for the same type of service provided to the person whose injury or death is the subject of the action during the month in which the service was provided, as drawn from the Texas All Payor Claims Database established under Subchapter I, Chapter 38, Insurance Code, for the geozip . . . ; and

2) The affidavit is accompanied by an invoice for the service that would comply with the clean claim requirements of Chapter 1301, Insurance Code.		Sec. 18.0011. AFFIDAVIT OF HEALTH CARE FACILITY OR PROVIDER.

(a) A party may not controvert the reasonableness of the charges for health care services stated in an affidavit served under Section 18.001 if, as to each health care service provided by the health care facility or provider to the person whose injury or death is the subject of the action:

1) The affidavit states one of the following amounts as the reasonable charge for the service:

A. The amounts received from all sources by the facility or provider to pay for the service; or

B. If Paragraph (A) does not apply, an amount that, on the date the service was provided, does not exceed 300 percent of the Medicare fee schedule for the service; and

2) The affidavit is accompanied by an invoice for the service that would comply with the clean claim requirements of Chapter 1301, Insurance Code.

Change Two: The substitute further clarifies that the trial court must exclude testimony from the facility or provider in accordance with section 18.0011 unless they indicate a subsequent intention to testify or the party appears at trial.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 18.0011. AFFIDAVIT OF HEALTH CARE FACILITY OR PROVIDER.

(b) If an affidavit of a health care facility or provider served under Section 18.001 complies with Subsection (a) and includes a statement that the facility or provider does not intend to appear at trial to testify regarding the reasonableness of the facility’s or provider’s charges or the necessity for the facility’s or provider’s services, then:

1) A party may not seek to obtain through any pretrial discovery procedure information from the facility or provider about the reasonableness of the facility ’s or provider ’s charges or the necessity for the facility’s or provider’s services; and

2) The trial court shall exclude trial testimony by the facility or provider regarding the reasonableness of the facility ’s or provider ’s charges or the necessity for the facility ’s or provider ’s services unless:

A. The court finds there is good cause to allow the testimony;

B. The testimony will not unfairly surprise or unfairly prejudice any party to the action; and

C. A party opposing admission of the testimony into evidence is given a reasonable opportunity to conduct discovery and present evidence relevant to the testimony to be offered by the facility or provider.		Sec. 18.0011. AFFIDAVIT OF HEALTH CARE FACILITY OR PROVIDER.

(b) If an affidavit of a health care facility or provider served under Section 18.001 complies with Subsection (a) and includes a statement that the facility or provider does not intend to appear at trial to testify regarding the reasonableness of the facility’s or provider’s charges or the necessity for the facility’s or provider’s services, then:

1) A party may not seek to obtain through any pretrial discovery procedure information from the facility or provider about the reasonableness of the facility ’s or provider ’s charges or the necessity for the facility’s or provider’s services; and

2) The trial court shall exclude trial testimony by the facility or provider regarding the reasonableness of the facility’s or provider’s charges or the necessity for the facility’s or provider’s services unless:

A. After the affidavit is served, the facility or provider states an intention to testify at trial or appears at trial to testify;

B. The court finds there is good cause to allow the testimony;

C. The testimony will not unfairly surprise or unfairly prejudice any party to the action; and

D. A party opposing admission of the testimony into evidence is given a reasonable opportunity to conduct discovery and present evidence relevant to the testimony to be offered by the facility or provider.

Change Three: The substitute clarifies that the definitions of “mental or emotional pain or anguish” and “physical pain and suffering” maintain the inclusion of disfigurement, physical impairment, loss of consortium, loss of companionship and society, and loss of enjoyment in life.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
(11-a) “Mental or emotional pain or anguish” means grievous and debilitating angst, distress, torment, or emotional suffering or turmoil that:

A. Causes a substantial disruption in a person’s daily routine; and

B. Arises from loss of consortium, loss of companionship and society, loss of enjoyment of life, or a similar mental or emotional injury.
 
(12) “Noneconomic damages” means damages awarded for the purpose of compensating a claimant for nonpecuniary losses for physical pain and suffering, mental or emotional pain or anguish, and [loss of consortium, disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life,] injury to reputation [and all other nonpecuniary losses of any kind other than exemplary damages]. The term does not include economic or exemplary damages.

(14) “Physical pain and suffering” means a painful or distressing sensation associated with an injury or damage to a part of a person’s body that:

A. Is consciously felt;

B. Is significant in magnitude; and

C. Arises from an observable injury or impairment or is shown to exist through objectively verifiable medical evaluation or testing.		(11-a) “Mental or emotional pain or anguish” means grievous and debilitating angst, distress, torment, or emotional suffering or turmoil that causes a substantial disruption in a person ’s daily routine. The term includes mental or emotional pain or anguish arising from loss of consortium, loss of companionship and society, loss of enjoyment of life, disfigurement, and physical impairment.
 
(12) Removed.

(14) A “Physical pain and suffering” means a painful or distressing sensation associated with an injury or damage to a part of a person’s body that:

A. Is consciously felt;

B. Is significant in magnitude; and

C. Arises from an observable injury, disfigurement, or impairment or is shown to exist through objectively verifiable medical evaluation or testing.

Change Four: The substitute intends to close the “incurred” loophole and prevent artificially inflated medical bills from influencing damage awards and limits the admissible evidence of healthcare expenses to the amount paid or the amounts that do not exceed 300% of the Medicare fee scheduled for the service.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.104. LIMITATIONS ON AMOUNT OF RECOVERY.

(a) In addition to any other limitation provided by law, the economic damages that may be awarded to a claimant for health care services provided in the past to an injured individual are limited to the sum of:

1) Amounts third-party payors paid to providers for health care services provided to the injured individual;

2) Amounts paid by the injured individual or paid on behalf of the injured individual by non-third-party payors to providers for health care services provided to the injured individual, but not to purchase an account receivable, if paid without a formal or informal agreement for the provider to refund, rebate, or remit money to the payor, injured individual, claimant, or claimant ’s attorney or anyone associated with the payor, injured individual, claimant, or claimant ’s attorney; and

3) If Subdivisions (1) and (2) do not apply, an amount that does not exceed 150 percent of the median amount paid by nongovernmental third-party payors to health care providers for the same types of services provided to the injured individual during the month in which the services were provided, as drawn from the database for the geozip . . .

(b) In addition to any other limitation provided by law, economic damages awarded for health care expenses that in reasonable probability can be expected to be incurred by the injured individual in the future because of the injury-causing event shall be limited to the reasonable value of necessary services, determined in the manner provided by Subsection (a)(3) for determination of past health care expenses, except that the determination must use data from the database for the month preceding the date the trial commenced.		Sec. 41.104. ADMISSIBLE EVIDENCE OF HEALTH CARE EXPENSES.

(a) In addition to any other limitation provided by law, the evidence that may be offered to prove the amount of the economic damages that may be awarded to a claimant for health care services provided in the past to an injured individual is limited to evidence of:

1) Amounts third-party payors paid to providers for health care services provided to the injured individual;

2) Amounts paid by the injured individual or paid on behalf of the injured individual by non-third-party payors to providers for health care services provided to the injured individual, but not to purchase an account receivable or as a loan, if paid without a formal or informal agreement for the provider to refund, rebate, or remit money to the payor, injured individual, claimant, or claimant ’s attorney or anyone associated with the payor, injured individual, claimant, or claimant ’s attorney; and

3) If Subdivisions (1) and (2) do not apply, amounts that, on the date each service was provided to the injured individual, do not exceed 300 percent of the Medicare fee schedule for the service.

(b) In addition to any other limitation provided by law, the evidence that may be offered to prove the amount of economic damages that may be awarded to a claimant for health care services that in reasonable probability can be expected to be provided to the injured individual in the future because of the injury-causing event shall be limited to evidence of the amounts of the reasonable value of necessary services, except that the amounts may not exceed 300 percent of the Medicare fee schedule applicable to each service as of the date the trial commenced.

Change Five: The substitute strikes the requirement that a failure to use available health insurance be considered a failure to mitigate damages.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.104. LIMITATIONS ON AMOUNT OF RECOVERY.

(d) The failure of the injured individual to use available health benefit coverage shall be considered a failure to mitigate damages.		Stricken.

Change Six: The substitute clarifies that the information disclosed pertaining to a claimant that was referred to a provider by their attorney shall be admissible into evidence, rather than all medical records obtained during discovery.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.107. MATTERS ADMISSIBLE INTO EVIDENCE.

In an action to which this subchapter applies, the following matters are admissible into evidence by any party:

A. A document or information provided, disclosed, or obtained under Section 41.105(a) or (b);

B. An injured individual ’s health care expenses incurred as a result of the injury-causing event, regardless of whether the claimant seeks to recover health care expenses in the action;

C. Evidence of health benefit plan coverage that is available to the injured individual to pay for past or future health care services; and

D. Treatment guidelines and drug formularies approved by the Workers’ Compensation Division of the Texas Department of Insurance as evidence relating to the necessity of health care services provided to the injured individual.		Sec. 41.107. MATTERS ADMISSIBLE INTO EVIDENCE.

In an action to which this subchapter applies, the following matters are admissible into evidence by any party:

A. A document or information provided by the claimant under Section 41.105(a);

B. If the injured individual was referred to a health care provider for services by the injured individual’s attorney and the provider will provide testimony that is presented to the trier of fact in the action, the information disclosed by the claimant under Section 41.105(b)(3)(C); and

C. Treatment guidelines and drug formularies approved by the Workers’ Compensation Division of the Texas Department of Insurance as evidence relating to the necessity of health care services provided to the injured individual.

Change Seven: The substitute strikes the provision that required a unanimous jury verdict for non-economic damages.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.151. STANDARDS FOR RECOVERY OF CERTAIN NONECONOMIC DAMAGES.

a) Damages for physical pain and suffering or for mental or emotional pain or anguish may be awarded only if the trier of fact is unanimous in finding the amount of money that will fairly and reasonably compensate the claimant for those injuries.		Stricken.

Change Eight: The substitute strikes the provision making it a reversible error for the court to allow for the characterization of an award as a valuation of life.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.151. STANDARDS FOR RECOVERY OF CERTAIN NONECONOMIC DAMAGES.

(c) In an action to which this chapter applies, it is reversible error for a court to allow an attorney, witness, or other person through argument, the introduction of evidence, or otherwise to:

1) State or suggest that the trier of fact should determine the amount of damages to award to a claimant for physical pain and suffering or mental or emotional pain or anguish by referring to objects, values, or repeating metrics having no rational connection to the facts of the case; or

2) Characterize an award of damages for physical pain and suffering or mental or emotional pain or anguish as establishing a valuation of human life.		Sec. 41.151. STANDARDS FOR RECOVERY OF CERTAIN NONECONOMIC DAMAGES.

(b) In an action to which this chapter applies, it is reversible error for a court to allow an attorney, witness, or other person through argument, the introduction of evidence, or otherwise to state or suggest that the trier of fact should determine the amount of damages to award to a claimant for physical pain and suffering or mental or emotional pain or anguish by referring to objects, values, units of time, or other matters having no rational connection to the facts of the case.

Change Nine: The substitute strikes the provision that allowed for remittitur upon a jury’s award of noneconomic damages past a certain threshold.

ORIGINAL SENATE BILL 30SENATE BILL 30 AS SUBSTITUTED
Sec. 41.153. MOTION TO REMIT NONECONOMIC DAMAGES IN CERTAIN ACTIONS.

(a) Except in an action in which another law limits recovery of noneconomic damages, in a trial to a jury in a personal injury or wrongful death action, a trial court shall state the legal and factual support for the amount of noneconomic damages awarded to a claimant in a judgment if a defendant requests remittitur of noneconomic damages awarded to the claimant and the award exceeds:

1) $1 million for past and future mental or emotional pain or anguish in a wrongful death action;

2) For past and future damages for physical pain and suffering in a personal injury action, the lesser of:

A. Three times the amount awarded for past and future health care expenses; or

B. $100,000 per year for each year of the claimant ’s life expectancy;

3) $1 million for past and future mental or emotional pain or anguish in a personal injury action arising from an event primarily causing emotional injury to a claimant; or

4) $250,000 for past and future mental or emotional pain or anguish in a personal injury action arising from an event primarily causing bodily injury to the claimant.

(b) In a statement of legal support for the amount of noneconomic damages awarded in the judgment, the court shall include references to judgments rendered in this state and affirmed on appeal of comparable amounts awarded under comparable facts.		Stricken.

[1] House Bill 4806 was read for the first time in the House and referred to the Judiciary & Civil Jurisprudence Committee on April 3.

On March 13, 2025, the Texas House of Representatives introduced House Bill 4806, authored by Representative Greg Bonnen, to limit the recovery of damages in civil actions. Lieutenant Governor Dan Patrick announced that Senate Bill 30 — an identical companion bill to House Bill 4806 authored by Senator Charles Schwertner — is part of his second round of top 40 priority bills for the 89th regular legislative session.[1] The most notable developments in this Bill are as follows:

1. It modifies the procedure for challenging the necessity and reasonableness of a plaintiff’s medical services and expenses. Plaintiffs rely on Section 18.001 affidavits to establish the necessity and reasonableness of their medical expenses and services. In response, defendants currently contest these affidavits through a Section 18.001 controverting affidavit. House Bill 4806 proposes requiring a defendant to instead issue a notice of intent to controvert the reasonableness of the charged amounts and the necessity of services.

Furthermore, this Bill would impose a more substantial impact on such opposition. Specifically, this notice would render a plaintiff’s Section 18.001 affidavit completely ineffective, except for authentication purposes. Lastly, this Bill would prohibit a defendant from challenging the reasonableness of medical expenses in Section 18.001 affidavits when such expenses are supported by the same equation used to calculate the “past medical expenses cap” discussed in subpart 3 herein.[2]

2. It defines certain noneconomic damages. Aligning with Texas case law, this Bill clarifies that future damages are not merely “damages that are incurred after the date of the judgment” but rather “damages that, in reasonable probability, can be expected to be incurred after the date of the judgment.” This Bill’s definition of “future loss of earnings” similarly incorporates this statutory expectation of reasonable probability.

Additionally, under House Bill 4806, “future loss of earnings” would no longer include loss of income, wages, or earning capacity. This Bill’s proposed revisions regarding the definition of key damage terms do not end there. House Bill 4806 statutorily defines what constitutes “mental or emotional pain or anguish”[3] and “physical pain and suffering.”[4]

3. It adds two new subchapters to Chapter 41, Section 8 that limit a plaintiff’s recovery for medical expenses, and mandate often-disputed disclosures. This new subchapter would provide for a “past medical expenses cap,” namely: a plaintiff’s recovery of damages for past healthcare services would be limited to the sum of all amounts paid by third-party payors,[5] the plaintiff, and any other non-third-party payors. If no medical expenses have been paid or the foregoing is otherwise not applicable, then an award of past medical expenses would be capped at “150 percent of the median amount paid by nongovernmental third-party payors to health care providers for the same types of services provided to the injured individual during the month in which the services were provided as drawn from the database for the geozip: (A) in which the services were provided, if the services were provided in this state; or (B) in which The University of Texas Health Science Center at Houston is located, if the services were provided outside of this state.” Notably, House Bill 4806 would also ensure that should an injured individual fail to use available health benefits, a court is to deem it a failure to mitigate damages. Similarly, this new subchapter includes a “future medical expenses cap” that mirrors the “150 percent of the median amount” catchall applicable for the “past medical expenses cap.” Finally, the Bill proposes a new subchapter, which would require the disclosure of, among other things, plaintiff’s: (1) letters of protection with health care providers; (2) lists of medical providers treating the subject injuries; (3) medical authorizations; (4) lists of potential third-party payors for the disputed health care services; and (5) sources of any referrals for health care services. As to the referral disclosure requirement, should the plaintiff’s attorney be the referring party, the plaintiff must also disclose the below. The admissibility of each is specifically protected by the Bill.

  1. An anonymized list of persons referred by the attorney to the provider in the preceding two years;
  2. The date and amount of each payment made to the provider in the preceding two years by or at the direction of the attorney;
  3. If applicable, each person anonymously described under Subparagraph (a) on whose behalf a payment described by Subparagraph (b) was made; and
  4. Other aspects of any financial relationship between the attorney and the provider.

4. It introduces several measures to curb excessive noneconomic damage awards. First, House Bill 4806 would require a unanimous jury decision—rather than the current 10-out-of-12 standard—to award damages for physical pain and suffering or for mental or emotional pain or anguish. Second, complementing the Bill’s newly added definitions discussed in subpart 2 herein, the Bill codifies Texas case law and proposes that all awards for physical pain and suffering and mental or emotional pain or anguish: (1) “must be based on evidence of the nature, duration, and severity of the injury and reflect a rational connection, grounded in the evidence, between the injury suffered and the dollar amount necessary to provide fair and reasonable compensation to a claimant;” (2) “may not be used to penalize or punish a defendant, make an example to others, or serve a social good;” and (3) “may not include amounts that are properly considered economic losses, such as lost earnings caused by physical impairment or medical expenses incurred for emotional or psychological care.” Third, House Bill 4806 specifically prohibits anchoring and attempts to establish a valuation of human life. Fourth, under the Bill, a plaintiff’s recovery of noneconomic damages would be limited to past and future physical pain and suffering, mental or emotional pain or anguish, and injury to reputation. Lastly, the Bill grants a personal injury defendant the ability to require that a trial court state the legal and factual basis for a noneconomic damages award—including references to judgments rendered in the state and affirmed on appeal with comparable amounts and facts—if the award exceeds:

  1. $1 million for past and future mental or emotional pain or anguish in a wrongful death action;
  2. For past and future damages for physical pain and suffering in a personal injury action, the lesser of:
    • three times the amount awarded for past and future health care expenses; or
    • $100,000 per year for each year of the claimant’s life expectancy;”
  3. $1 million for past and future mental or emotional pain or anguish in a personal injury action arising from an event primarily causing emotional injury to a claimant; or
  4. $250,000 for past and future mental or emotional pain or anguish in a personal injury action arising from an event primarily causing bodily injury to the claimant.

5. It limits the calculation of prejudgment interest. House Bill 4806 calls for prejudgment interest to not only be limited to awards for economic losses, but it also provides that the operative date for calculations shall be the date that the plaintiff’s health care expenses were actually paid, or such other economic losses were actually suffered.

[1] https://www.ltgov.texas.gov/2025/03/13/lt-gov-dan-patrick-announces-second-round-of-top-40-priority-bills-for-the-2025-legislative-session/.

[2] House Bill 4806 would require the concession of the reasonableness of medical expenses if: (1) “the affidavit states one of the following amounts as the reasonable charge for the service: (a) the amounts received from all sources by the facility or provider to pay for the service provided to the person whose injury or death is the subject of the action; or (b) an amount that does not exceed 150 percent of the median amount paid by nongovernmental third-party payors to health care facilities or providers for the same type of service provided to the person whose injury or death is the subject of the action during the month in which the service was provided, as drawn from the Texas All Payor Claims Database established under Subchapter I, Chapter 38, Insurance Code, for the geozip: (i) in which the service was provided, if the service was provided in this state; or (ii) Ain which The University of Texas Health Science Center at Houston is located, if the service was provided outside of this state; and (2) the affidavit is accompanied by an invoice for the service that would comply with the clean claim requirements of Chapter 1301, Insurance Code.” Additionally, in the foregoing scenario, if the provider produces a statement that he or she does not intend to appear at trial for purposes of testifying as to the necessity and reasonableness of the health care services and expenses, then discovery and trial testimony of this nature from the provider would be prohibited absent a showing of good cause and lack of unfair surprise.

[3] House Bill 4806 defines “mental or emotional pain or anguish” as follows: “grievous and debilitating angst, distress, torment, or emotional suffering or turmoil that: (a) causes a substantial disruption in a person ’s daily routine; and (b) arises from loss of consortium, loss of companionship and society, loss of enjoyment of life, or a similar mental or emotional injury.”

[4] House Bill 4806 defines “physical pain and suffering” as follows: “painful or distressing sensation associated with an injury or damage to a part of a person ’s body that: A) is consciously felt; (B) is significant in magnitude; and (C)arises from an observable injury or impairment or is shown to exist through objectively verifiable medical evaluation or testing.”

[5] House Bill 4806 explains that “third-party payors” include insurance companies, employer-provided plans, a health maintenance organization, Medicare, Medicaid, and workers’ compensation insurance.

Deposing Corporate Representatives? You Might Get More Time Than You Think

In complex litigation, the strategic use of discovery tools is not just beneficial – it’s imperative. Every litigator knows that a well-executed deposition can be a game-changer by uncovering key admissions, streamlining discovery, and exposing weaknesses in an organization defendant’s case.

Among the various deposition tools available to litigators in federal court, Rule 30(b)(6) serves a distinct role in shaping the testimony of organizations. A “30(b)(6) deposition” allows a party to depose an organization and requires it to designate one or more representatives to “speak for the entity.”[1]

It’s not a secret that an organization may designate multiple representatives, but the broader litigation implications, particularly, the time restraints associated with taking the deposition, are often overlooked.

More Witnesses, More Time? Yes – But with Limits.

Under Rule 30(a)(2)(A)(i) of the Federal Rules of Civil Procedure, each side is entitled to ten depositions before requiring court approval for additional depositions.[2] However, when an organization designates multiple 30(b)(6) witnesses, those individual depositions still count as one for the purposes of the ten-deposition limit.

So, does this mean each designee gets a full seven-hour deposition under Rule 30(d)(1)?

The answer, for the most part, is yes – but courts have discretion to impose reasonable time limits. A 2000 Advisory Committee Note to Rule 30(d)(1) clarifies:

“For purposes of this durational limit, the deposition of each person designated under Rule 30(b)(6) should be considered a separate deposition.”

This interpretation has been consistently cited by district courts across multiple circuits, reinforcing that each designee is generally entitled to a full seven-hour deposition. Courts in the First,[3] Second,[4] Third,[5] Fourth,[6] Fifth,[7] Sixth,[8] Seventh,[9] Ninth,[10] Tenth,[11] and Eleventh Circuits[12] have acknowledged and applied this guidance, often permitting deposition time for multiple designees in excess of the 7-hour presumption.

This means that in many cases, if an organization designates three representatives, you could be looking at 21 hours of deposition time. But before you start planning an all-nighter with the court reporter, take note:

Courts Can – and Do – Cap Time Limits.

While courts don’t issue carte blanche orders for seemingly endless depositions, 30(b)(6) depositions involving multiple designees often exceed the presumptive 7-hour limit.

For example, in Smith v. Smith,[13] an organization designated four different representatives. Instead of allowing the full 28 hours pursuant to a strict reading of Rule 30(d)(1), the court limited the four depositions to 14 hours total, citing the scope of the topics and potential for redundancy.

Similarly, in Buie v. D.C.,[14] the Court permitted a cumulative 18 hours for 30(b)(6) depositions – not necessarily based on the number of representatives, but in light of the topics sought by the noticing party and the understanding that multiple persons would be acting as the corporate representative.[15]

Despite consistent guidance from courts, noticed parties frequently argue that the seven-hour presumptive limit should apply collectively to all.[16] These arguments, however, have been largely unsuccessful. As the Buie Court noted:

“Although the Advisory Committee notes are not binding on the Court, they explain the intent behind the rules and ‘are nearly universally accorded great weight in interpreting federal rules.’”[17]

Conversely, in In re Rembrandt Technologies,[18] the court rejected a party’s argument that each 30(b)(6) designee should be treated as a separate deponent with a full seven-hour allowance per person. The court reasoned:

A blanket rule permitting a seven-hour deposition of each designated deponent is unfair because it rewards broader deposition notices and penalizes corporate defendants who regularly maintain business information in silos and who therefore must either designate multiple individuals to respond or spend time, energy, money and other resources preparing a single individual to respond and unduly burdensome (because of the manifest increased cost and disruption of preparing more than one person to respond to a deposition notice).

Despite this critique, the court ultimately permitted a total of ten (10) hours to depose five 30(b)(6) designees.[19]

While Rembrandt reflects one court’s rationale, it remains a minority view. Most courts reject a strict numerical cap and instead assess time limits based on the scope of the deposition notice, the number of designees, and the complexity of the issues involved.[20]

The variances between circuit courts – while not stark – are critical in shaping arguments. Even 25 years later, the Advisory Committee notes remain the prevailing authority, despite repeated attempts to impose a strict seven-hour time limit in the 30(b)(6) context.

By staying informed on the evolving applications of Rule 30(b)(6), litigators can ensure they extract the most from 30(b)(6) depositions while effectively managing court-imposed constraints. Whether you’re conducting a 30(b)(6) deposition or defending one, understanding the nuances of deposition duration and designee limitations can help you strategically maximize – or reasonably limit – important testimony.

[1] FRCP 30(b)(6).

[2] See FRCP 30(a)(2)(A)(i).

[3] Proa v. NRT Mid-Atl., Inc., No. CV AMD-05-2157, 2008 WL 11363286 at *11 (D. Md. June 20, 2008).

[4] Oakley v. MSG Networks, Inc., No. 17-CV-6903 (RJS), 2024 WL 5056111 at *3 (S.D.N.Y. Dec. 10, 2024) (Denying party’s motion to limit 30(b)(6) deposition to seven hours.).

[5] Handy v. Delaware River Surgical Suites, LLC, No. 2:19-CV-1028-JHS, 2024 WL 1539604 at *fn.1 (E.D. Pa. Feb. 21, 2024).

[6] Oppenheimer v. Scarafile, No. CV 2:19-3590-RMG, 2021 WL 5902738 at *1 (D.S.C. July 30, 2021).

[7] Payne v. Raytheon Techs. Corp., No. 3:22-CV-2675-BN, 2024 WL 5012054 at *2 (N.D. Tex. Dec. 6, 2024).

[8] ChampionX, LLC v. Resonance Sys., Inc., No. 3:21-CV-288-TAV-JEM, 2024 WL 1743101 (E.D. Tenn. Jan. 12, 2024).

[9] PeopleFlo Mfg., Inc. v. Sundyne, LLC, No. 20 CV 3642, 2022 WL 7102662 at *fn.4 (N.D. Ill. Oct. 12, 2022).

[10] Unknown Party v. Arizona Bd. of Regents, No. CV-18-01623-PHX-DWL, 2021 WL 2291380 (D. Ariz. June 4, 2021).

[11] M.G. through Garcia v. Armijo, No. 1:22-CV-0325 MIS/DLM, 2024 WL 168270 (D.N.M. Jan. 16, 2024).

[12] United States ex rel. Bibby v. Mortg. Invs. Corp., No. 1:12-CV-4020-AT, 2017 WL 8222659 (N.D. Ga. Oct. 12, 2017), report and recommendation adopted, No. 1:12-CV-4020-AT, 2017 WL 8221392 (N.D. Ga. Oct. 13, 2017).

[13] Smith v. Smith, No. 19-10330, 2020 WL 1933820 (E.D. Mich. Apr. 22, 2020).

[14] Buie v. D.C., 327 F.R.D. 1 (D.D.C. 2018).

[15] Id.

[16] See e.g., Smith v. Smith, No. 19-10330, 2020 WL 1933820 (E.D. Mich. Apr. 22, 2020).

[17] Buie v. D.C., 327 F.R.D. 1 (D.D.C. 2018).

[18] In Re Rembrandt Techs., No. 09-CV-00691-WDM-KLM, 2009 WL 1258761 at *14 (D. Colo. May 4, 2009).

[19] Id.

[20] See e.g., Oakley v. MSG Networks, Inc., No. 17-CV-6903 (RJS), 2024 WL 5056111 at *3 (S.D.N.Y. Dec. 10, 2024) (Denying party’s motion to limit 30(b)(6) deposition to seven hours.).

On March 12, 2025, the U.S. Environmental Protection Agency (“EPA”) announced its deregulatory agenda.[1] Although most of the 31 actions identified by the EPA will require formal notice and comment rulemaking, with litigation ensuing, Wednesday’s announcement makes good on the Trump Administration’s promises to roll back environmental regulation.[2]

Of particular significance to the chemical manufacturing and oil and gas industries in Louisiana and Texas, the following regulations, among others, are listed for reconsideration:

  • Clean Power Plan 2.0
  • New Source Performance Standards (“NSPS”) OOOOb and OOOOc[3]
  • Mercury and Air Toxics Standards (“MATS”)[4]
  • Greenhouse Gas Reporting Program[5]
  • PM2.5 National Ambient Air Quality Standard (“PM2.5 NAAQS”)[6]
  • Certain National Emissions Standards for Hazardous Air Pollutants (“NESHAP”)[7]
  • Regional Haze[8]
  • Good Neighbor Plan[9]
  • Risk Management Plan (“RMP”)[10]
  • Implementation of Exceptional Events[11]

These major rulemakings will take time, and at this stage, the scope of reconsideration and the specific regulatory requirements included is uncertain. The Kean Miller environmental regulatory team is closely following all actions.

[1] “EPA Launches Biggest Deregulatory Action in U.S. History” available at: https://www.epa.gov/newsreleases/epa-launches-biggest-deregulatory-action-us-history.

[2] See Executive Orders, “Unleashing American Energy”, “Declaring a National Energy Emergency”, “Putting America First in International Environmental Agreements”, and others available at:  www.whitehouse.gov.

[3] 40 C.F.R. Part 60, Subpart OOOOb (Standards of Performance for Crude Oil and Natural Gas facilities for Which Construction, Modification or Reconstruction Commenced After December 6, 2022); 40 C.F.R. Part 60, Subpart OOOOc (Emissions Guidelines for Greenhouse Gas Emissions From Existing Crude Oil and Natural Gas Facilities).

[4] 40 C.F.R. Part 63, Subpart UUUUU.

[5] 40 C.F.R. Part 98.

[6]  See https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm (2024 rulemaking setting the primary annual PM2.5 standard to 9.0 micrograms per cubic meter).

[7] EPA has identified at least the following NESHAP for reconsideration: 40 C.F.R. Part 63 Subpart FFFFF (Integrated Iron and Steel Manufacturing), 40 C.F.R. Part 63 Subpart XXXX (Rubber Tire Manufacturing), 40 C.F.R. Part 63 Subparts F, G, H, I (Synthetic Organic Chemical Manufacturing Industry “SOCMI” including HON), 40 C.F.R. Part 63 Subpart O (Ethylene Oxide Emissions Standards for Sterilization Facilities), 40 C.F.R. Part 63 Subpart AAAAA (Lime Manufacturing Plants), 40 C.F.R. Subpart 63 Subpart L (Coke Ovens), 40 C.F.R. 63 Subpart QQQ (Copper Smelting) 40 C.F.R. 63 Subpart RRRRR (taconite ore processing).  

[8] 40 C.F.R. Sec. 51.308.

[9] 88 Fed. Reg. 49295 (July 31, 2023) and 88 Fed. Reg. 67102 (Sept. 29, 2023) (interim final actions to stay FIPs for certain states)

[10] 40 C.F.R. Part 68.

[11] See e.g., “Treatment of Data Influenced by Exceptional Events” (81 FR 68216; October 3, 2016) and https://www.epa.gov/air-quality-analysis/treatment-air-quality-monitoring-data-influenced-exceptional-events.

In M&A transactions, the seller makes representations and warranties to the buyer regarding the business being sold, its ownership, assets, operations, and liabilities.  The seller typically indemnifies the buyer from losses incurred post-closing resulting from inaccuracies in those representations and warranties.  This contractual structure is used by the parties to allocate certain known and unknown business risks between the buyer and seller.  However, negotiation of these representations and warranties and the indemnity structure in the acquisition agreement can be a contentious and lengthy process.  Buyers usually prefer broad indemnity from the seller for such post-closing losses, and sellers prefer to give a limited indemnity which is targeted to specific risks identified in the seller’s business.

Representation and warranty insurance (R&W insurance) is often an option which can help buyers and sellers avoid contentious negotiation of risk allocation by shifting some of the risks of an acquisition to an insurer.

R&W insurance provides coverage for indemnification claims a buyer may have for losses resulting from breaches of a seller’s representations and warranties in the acquisition agreement. The use of R&W insurance in M&A transactions has increased in recent years due to efficiencies in the insurance market, including lower premiums, better terms, and lower minimum transaction value.

R&W insurance policies can insure either the buyer or the seller in the transaction. Buy-side policies are the most common form of R&W insurance in private M&A transactions.

The viability of using R&W insurance in an M&A transaction depends largely on the size of the deal.  Due to pricing constraints like premium costs and professional fees and expenses, R&W insurance may be cost prohibitive for deals valued less than $20 million.  However, deals with transaction values between $10 million and $20 million are sometimes insured due to increased demand by buyers and sellers.

R&W insurance can benefit both the buyer and the seller in M&A transactions.

For the Seller, R&W insurance can (1) reduce the seller’s risk of liability for breaches of its representations and warranties by lowering or eliminating the seller’s indemnity obligations; (2) provide the seller with a cleaner exit from the business by reducing or eliminating the amount of proceeds held back by the buyer or placed in escrow; and (3) allow the seller to give the more extensive representations and warranties the buyer will want in the acquisition agreement, without as many “materiality” and “knowledge” qualifiers, leading to a quicker resolution of the form of acquisition agreement and thus an expedited closing.

For the Buyer, R&W insurance can (1) supplement or sometimes replace the indemnification protection provided by the seller by providing additional coverage beyond the liability cap and/or survival period in the acquisition agreement; (2) provide a secure source of recovery for losses resulting from breaches of the seller’s representations and warranties, particularly when recovery from the seller may be difficult; (3) allow the buyer to make a more attractive bid to the seller with no (or limited) escrow or holdback required, since the buyer will rely on the insurance for indemnification protection; and (4) preserve key relationships by mitigating the need for a buyer to pursue claims against sellers who will be working for the buyer post-closing.

The insurer will charge a premium for issuing the policy, generally ranging between 2% and 4% of the coverage amount.  The policy coverage amount is typically a dollar amount equal to 10% of the transaction value.  There will be a deductible amount under the policy that is excluded from coverage (the “retention”), generally set at 1% of the transaction value.  So, if an M&A transaction value is $50 million, the policy coverage amount will be around $5 million, the policy premium will likely be around $100,000 – $200,000, and the retention will likely be around $500,000.

The cost of R&W insurance (including the premium) is often split 50/50 between the seller and the buyer; however, this can vary depending on the leverage of the parties in the negotiation of the acquisition agreement.

R&W insurance policies generally do not cover losses resulting from:  (1) breaches of covenants; (2) purchase price adjustments; (3) contingent claims based on future events; and (4) matters that are known to the insured’s deal team before the inception of the policy (including all matters disclosed on schedules to the acquisition agreement and all matters discovered in due diligence).  Other exclusions will likely apply under the policy, based on the results of the buyer’s and the insurer’s due diligence of the seller’s business.

The insurer will typically conduct its own due diligence of the seller’s business during the underwriting process, focusing on areas or issues that could lead to material liabilities.  This process can add some additional time to close the transaction; however, efficiencies are often realized by repeat relationships between buyers, their advisors, and the insurance underwriters who have worked together on previous transactions and have developed a working understanding of each other’s processes.

Sellers and buyers should consult their advisors (attorneys, investment bank or broker) early in the process of an M&A transaction, preferably as early as in the letter of intent/term sheet stage, to determine if R&W insurance is a viable option for the transaction, as both parties may derive significant benefit from purchasing R&W insurance for the transaction.

On the first day of his second term in office, President Trump issued an Executive Order titled “Unleashing American Energy.” This Order contains several provisions intended to encourage American energy production and remove barriers that “have impeded the development” of energy and natural resources.

The Order states that it is “in the national interest to unleash America’s affordable and reliable energy and natural resources.”[1] Therefore, the policy of the United States will be “to encourage energy exploration and production on Federal lands and waters, including on the Outer Continental Shelf,”[2] ensure that abundant and reliable energy “is readily accessible in every State and territory of the Nation,”[3] ensure “that all regulatory requirements related to energy are grounded in clearly applicable law,”[4] to promote consumer choice,[5] and to ensure that the global effects of a rule, regulation, or action shall, whenever evaluated, be reported separately from its domestic costs and benefits…”[6]

In practice, this Order calls for a substantial deregulation of the energy industry. It expressly calls for eliminating the “electric vehicle mandate”[7] and abolishing regulations on household appliances designed to push consumers toward appliances with lower energy consumption.[8] The thrust of the Order is that American success will be achieved not by limiting our energy consumption, but by producing enough energy to provide for American needs however high they may be or become. Importantly, the Order calls for an immediate review by federal agency heads of “all existing regulations [broadly defined] to identify those agency actions that impose an undue burden on the identification, development, or use of domestic energy resources.”[9] Once such a review is complete, agency heads are directed to implement action plans to suspend, revise, or rescind all regulations identified as unduly burdensome.[10]

The Order also revokes twelve prior Executive Orders related to energy and environmental regulation issued by President Biden, which addressed climate change and environmental justice.[11] The Order also revokes Executive Order 11991 of May 24, 1977,[12] related to the protection and enhancement of environmental quality, and takes direct steps to “expedite and simplify the permitting process”[13] and “prioritize efficiency and certainty over any other objectives…”[14] Additionally, all activities and operations associated with the American Climate Corps, established in September 2023, are shut down,[15] and the Working Group on the Social Cost of Greenhouse Gases is disbanded.[16] The Order directs the Chairman of the Council on Environmental Quality to provide guidance on implementing the National Environmental Policy Act in a way less burdensome to business by simplifying and expediting the permitting process. Any industry projects deemed “essential for the nation’s economy or national security” are to receive expedited action on permits, including emergency approvals granted when appropriate.[17] In all permitted matters, agencies are directed to “adhere to only the relevant legislated requirements for environmental considerations[,] and any considerations beyond these requirements are eliminated.”[18] Thus, agencies have been told to not allow considerations beyond those specified in legislation to serve as a reason for blocking any industrial project related to energy production.

Overall, the Order loosens regulations on the energy industry and emphasizes energy production. The changes ordered will make regulatory compliance less burdensome for both upstream and downstream energy suppliers and is the first step in enacting the President’s vision and energy policy for the United States.

[1] Executive Order, “Unleashing American Energy,” Jan. 20, 2025, §1.

[2] §2(a).

[3] §2(c).

[4] §2(d).

[5] §2(e).

[6] §2(g).

[7] §2(e).

[8] §2(f).

[9] §3(a).

[10] §3(b).

[11] §4(a).

[12] §5.

[13] §5(b).

[14] §5(c).

[15] §4(b).

[16] §6(b).

[17] §5(b) and (d).

[18] §6(a).

A pair of recent decisions from the US Supreme Court and the Fifth Circuit Court of Appeals signals a trend by the judiciary to closely scrutinize agency rulings where, in the past, courts have traditionally maintained a laissez-faire approach.

In Ohio v. EPA, the Supreme Court ruled that an agency action qualifies as arbitrary or capricious if it is not “reasonable and reasonably explained”.[1] The decision was 5-4, with Justice Gorsuch writing for the majority and Justice Barrett writing the dissent. In the dissent, Justice Barrett explained that the Court did not conclude that the EPA’s actions were substantively unreasonable. Rather, the primary basis for the Court’s decision is the argument that EPA failed to provide a “satisfactory explanation for its action” and a “reasoned response” to comments. Justice Barrett noted that the Court should, as it has most often done in the past, “uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.”[2] Thus, under Justice Barrett’s view, a reasonable result can save a poorly-explained decision from an Administrative Procedure Act challenge; Justice Gorsuch and the majority rejected this conclusion.

Likewise, a day prior to the Supreme Court’s ruling in Ohio v. EPA, the Fifth Circuit issued its opinion in National Association of Manufacturers v. SEC and held that the SEC had acted arbitrarily and capriciously in two ways: 1) the agency failed to adequately explain its decision to disregard its prior factual finding; and 2) the agency failed to provide a reasonable explanation regarding the significance of certain risks at issue in the matter.[3] The panel’s criticism focused on the agency’s rationale and its decision-making process, rather than the final resulting rule.

In each of the decisions, the courts cite FCC v. Prometheus Radio Project,[4] which had reformulated the arbitrary and capricious inquiry. In that case the Supreme Court ruled that “[a] court simply ensures that the agency has acted within a zone of reasonableness, and in particular, has reasonably considered the relevant issues and reasonably explained the decision.”[5] Per this language, the agency’s decision-making process, along with its final determination, will be scrutinized by the courts if a rulemaking is challenged.

Thus, it appears the “zone of reasonableness” test has usurped previous iterations of the arbitrary and capricious analysis. Combined with the overturning of Chevron deference also announced by the Court last year,[6] the likely overall effect of this new precedent will be greater scrutiny over agency action and a more restricted scope for permissible agency action.

[1] Ohio v. Env’t Prot. Agency, 603 U.S. 279, 292 (2024) (quoting FCC v. Prometheus Radio Project, 592 U.S. 414, 423 (2021)).

[2] Id. at 311 (Barrett, J., dissenting) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).

[3] Nat’l Ass’n of Manufacturers v. United States Sec. & Exch. Comm’n, 105 F.4th 802, 811 (5th Cir. 2024).

[4] Fed. Commc’ns Comm’n v. Prometheus Radio Project, 592 U.S. 414 (2021).

[5] Id. at 423.

[6] See Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).

As a business owner, one of the most important decisions of your business career is the decision to sell your business, and once you make the decision to sell, it can be a long and complicated process. To maximize the value of your business and to minimize obstacles and delays in getting to closing, you should carefully prepare your company for sale and prepare for the challenges which arise in each stage of the sale process.  This article includes suggestions for making those preparations, as well as how to manage the multiple stages of the sale process, all with the aim of achieving a successful closing.

Assemble Your Deal Team

You should assemble a team to manage your sale efforts as early as possible. Your deal team should include:

(1) your company management team of key executives to engage and work with your professional advisors, perform due diligence, and negotiate the transaction documents;

(2) legal counsel to draft and negotiate the transaction documents, coordinate the signing and closing of the transaction, and work with the management team in the due diligence process;

(3) an investment bank, broker, or other financial advisor to identify potential buyers and market the business, value the company, manage the sale process, and prepare the marketing materials and organize the due diligence process; and

(4) accountants (and tax advisor) to assist in preparing your company’s financial statements and financial projections and advise you on your (and your company’s) tax liability related to the transaction.

You should choose legal, financial, and tax advisors who have significant experience with mergers & acquisitions (M&A) transactions.  It is not wise to assume that your company’s general legal counsel and CPA have the expertise necessary to guide you through all of the legal, financial, and tax issues that will arise during the sale process.

Find Your Buyer & Value Your Business

Obviously, finding not only a buyer, but the right buyer, is essential to a successful transaction.  An investment banker, broker, or other financial advisor can assist in identifying potential buyers and marketing your company to maximize the purchase price.  This may include an auction in which multiple potential buyers are invited to bid on your company.  Even if you have already identified a willing and suitable buyer, you should still consider engaging an investment bank or other financial advisor to determine an accurate and realistic value for your company, so that you can negotiate an acceptable purchase price with a buyer.

Your company’s potential buyers will generally come in one of two forms:  (1) “strategic buyers”, which are operating companies which are usually competitors, suppliers, or customers of your company; or (2) “financial buyers”, which are generally private equity firms or venture capital firms looking to purchase your company as an investment.

Each type of buyer has pros and cons, and your financial and legal advisors can help you select a suitable buyer based on your preferences.  For instance, a financial buyer’s offer often includes a requirement that the seller stockholders “roll over” a portion of their existing equity in the target company by exchanging that equity portion for one or more classes of equity in the buyer entity or the buyer’s parent company.  The equity received by the sellers in the rollover can constitute a significant portion of the overall consideration paid to the sellers, which means less cash is paid to the sellers at closing.

Due Diligence & Confidentiality

Before a potential buyer is willing to make an offer to purchase your company, the buyer will want to conduct due diligence of your company in order to gather information and identify issues that are relevant to the acquisition.  Before sharing any of your company’s proprietary or sensitive information, you should require each potential buyer to sign a confidentiality agreement at the outset of discussions to ensure each potential buyer maintains the confidentiality of the negotiations as well as any due diligence information.  You should look to your legal counsel to prepare a proper confidentiality agreement that you can use with each potential buyer.

Also, you should conduct your own due diligence of your company to ensure there are no problems that could delay or otherwise adversely affect the sale, including any corporate, regulatory, or third-party consents that may be required for the sale.  Your legal and financial advisors can guide you in your diligence efforts to help you discover any issues or problems during this stage, so that you have time to either cure any problems or develop negotiating strategies to deal with them.

Letter of Intent

A letter of intent (sometimes referred to as an LOI, memorandum of understanding (MOU), or term sheet) is a letter agreement which is usually entered into early in the sale process, setting forth the parties’ initial understanding of key terms of the deal.  The LOI helps the parties identify deal breakers early in the deal process before the parties incur significant costs.  An LOI is generally not intended to create a legally binding commitment to close the transaction on the terms set out in the LOI, but the parties often include certain binding provisions in the LOI like exclusivity commitments, expense sharing, and confidentiality covenants.

The seller typically wants the LOI to be as detailed as possible because once the LOI has been signed, and especially if the buyer is given exclusivity in the LOI, the leverage in the negotiations shifts to the buyer.  Usually, the letter of intent is drafted by the buyer’s counsel, but the seller should negotiate the LOI carefully with the help of its legal and financial advisors.

A seller should resist earnouts, claw-backs, holdbacks, and large escrows at the LOI stage (and during negotiation of the definitive transaction documents), all of which are commonly proposed by buyers.  In the LOI, a seller should negotiate and include acceptable liability caps, deductibles, and survival periods for seller’s representations and warranties, as well as a narrow set of “fundamental” representation and warranty categories, all of which will be incorporated into the purchase agreement.  If economically feasible for the transaction, a seller should push the buyer to agree at the LOI stage to purchase representation and warranty insurance.

Deal Structure

At the LOI stage, the parties are not always prepared to commit to a transaction structure, but it is wise to select a transaction structure which is advantageous to the seller in the LOI if possible.  Selecting the best structure is critical to the success of your transaction. The three legal structures most commonly used to sell a business are:  (1) asset sale; (2) stock sale; and (3) merger.  Choosing which structure to use involves many factors, and buyers and sellers often have competing interests.

In an asset sale, the buyer acquires specific assets and liabilities of the target company as described in the asset purchase agreement. After the deal closes, the buyer and seller maintain their corporate structures, and the seller retains those assets and liabilities not purchased by the buyer.  Asset sales are often disadvantageous to sellers because the seller is left with known and unknown liabilities not assumed by the buyer, and the seller usually receives better tax treatment when selling stock.  Also, asset acquisitions are typically more complicated and time-consuming than stock acquisitions because of the formalities of assigning specific assets, and the numerous third-party consents which are often required.

In a stock sale, the buyer acquires the target company’s stock directly from the selling stockholders, thus the buyer indirectly acquires all of the target company’s assets, rights, and liabilities.  Sellers often prefer to sell stock since they are not left with any contingent liabilities. In addition, sellers typically receive better tax treatment when selling stock as opposed to assets.

A merger is a stock acquisition in which two companies combine into one legal entity. The surviving entity assumes all assets, rights, and liabilities of the non-surviving entity.  Mergers sometimes require less than unanimous consent from the target company’s stockholders while still allowing the buyer to obtain 100% of the stock, which provides an advantage over a stock acquisition (where usually all of the stockholders must agree to sell).  A merger is therefore a good choice for buyers that want to acquire a going concern that has many stockholders, especially when some of them may be opposed to selling their stock.  However, the corporate laws of most states provide that dissenting stockholders to a merger can petition the court to force the buyer to pay them “fair value” for their shares. This process often adds additional time, complexity, and expense to a merger.

Definitive Agreements, Continued Due Diligence, and Closing

Once you have a signed LOI, the buyer’s counsel usually provides proposed drafts of the purchase agreement and other important transaction documents.  The purchase agreement is the primary transaction document, and it describes what is being sold, details the sale process, and lays out the liabilities and obligations of the parties.  The purchase agreement is usually heavily negotiated over 1-2 months and sometimes longer, depending on the complexity of the transaction and the parties’ respective willingness to compromise.

While the parties are negotiating the purchase agreement and other transaction documents, the buyer continues its due diligence of the target company.  The buyer may use certain information it discovers in the due diligence process to negotiate contractual protections (such as indemnification) in the purchase agreement or to adjust the purchase price.

There is often a period of time between signing the purchase agreement and closing. This may be for legal or practical reasons. For example, the parties may need to obtain regulatory and/or third-party consents for the transaction, but they may not want to pursue such consents until they have a signed purchase agreement.

Purchase agreements for M&A transactions are usually lengthy and complex documents.  Your legal counsel can help you understand your rights and obligations under the purchase agreement and help you negotiate a fair and reasonable agreement so that you can minimize your liability and hold on to your sale proceeds.