In Van Loon v. Dep’t of the Treasury, the Fifth Circuit addressed the Treasury Department’s authority to regulate “property” under the International Emergency Economic Powers Act. After a detailed explanation of the blockchain technology involved, the Court held that certain “immutable smart contracts” do not qualify as “property” under IEEPA. The Court emphasized that “property” must be capable of being owned, and since the immutable smart contracts are unchangeable and unremovable, they cannot be owned or controlled by any entity, including their creators.

The Court further clarified that even under the Treasury’s own regulatory definitions, the immutable smart contracts do not fit within the scope of “property.” The court noted that these smart contracts are neither contracts nor services, as they do not involve any human effort or control once they are deployed. No. 23-50669 (Nov. 26, 2024).

In Willis v. Barry Graham Oil Service, L.L.C., the Fifth Circuit read the relevant contract provisions differently than the district court.

The district court concluded that Barry Graham Oil Service did not fall within the defense, indemnification, and insurance provisions of the Master Services Contract (MSC) between Shamrock Management and Fieldwood Energy. Specifically, it found that Graham was not covered by the MSC’s indemnity provisions because it was not part of the “Third Party Contractor Group” defined in the contract.

The Fifth Circuit held that Graham was covered under the MSC’s indemnity provisions. The MSC required Shamrock to “release, indemnify, protect, defend, and hold harmless such other Third Party Contractor(s) (and any such Third Party Contractor Group),” from claims arising from injuries to Shamrock’s employees.

Therefore, Graham, as part of Kilgore Marine Services’ Third Party Contractor Group, was entitled to indemnification. The contractual trigger for these obligations—cross indemnification “substantially similar” to Shamrock’s—was satisfied, obligating Shamrock to defend and indemnify Graham. No. 23-30609, Nov. 20, 2024.

In State of Texas v. U.S. Dep’t of Homeland Security, the Fifth Circuit addressed a challenge by Texas to a federal plan to cut razor wire installed by Texas at a border crossing. A 2-1 opinion ordered entry of a preliminary injunction against the planned wire-cutting.

The panel majority held the Administrative Procedure Act “clearly waives the United States’ sovereign immunity for Texas’s common law claims,” allowing Texas to seek injunctive relief against federal agencies and officers. In particular, Texas’s claims sought non-monetary relief and were based on the destruction of its property, which falls under the definition of “agency action” in the APA.

The majority also held that Texas showed a strong likelihood of success on its state law trespass-to-chattels claim–the concertina wire is state property, and Texas had shown that the federal agents’ actions were not justified by any exigency or statutory authority. As a result, the court granted Texas’s request for a preliminary injunction, enjoining federal agents from damaging or interfering with Texas’s concertina wire fence.

A dissent argued that Texas did not show the alleged “wire-cutting policy” constituted final agency action, which is a prerequisite for judicial review under the Administrative Procedure Act (APA). It also concluded that Texas’s state law claims were barred by intergovernmental immunity, as applying Texas tort law to federal agents would improperly control federal operations. No. 23-50869 (Nov. 27, 2024).