By Sydney M. Wright

Introduction

Louisiana’s Direct Action Statute had long been a unique feature of the state’s insurance and tort law.^[1] The Statute granted tort victims the unusual ability to sue a tortfeasor’s insurer directly, a feature found in only a few states nationwide.^[2]This ability had been central to Louisiana’s distinct litigation landscape, giving plaintiffs access to insurance proceeds in a way that was unavailable in most other jurisdictions.^[3] Louisiana courts have consistently characterized the right of a tort victim to directly sue a tortfeasor’s insurer as procedural rather than substantive.^[4] That classification has had enormous consequences for whether changes to the statute apply retroactively.^[5]

In 2024, the Louisiana Legislature amended the statute to eliminate most direct actions against insurers, leaving only limited exceptions.^[6] Almost immediately, litigants challenged whether those limitations applied to suits filed before the amendment’s effective date of August 1, 2024.^[7] Since then, federal and state courts have split on the application.[8] Some courts have found the amendment is purely procedural, and thus retroactive and applicable to suits filed before the effective date.^[9] Others have concluded that once a plaintiff invokes the statute by filing suit, the right becomes a vested property right that cannot be retroactively stripped away without violating due process.^[10] This disagreement illustrates how a single statutory change can produce wide-ranging uncertainty when courts differ on a statute’s proper characterization. Accordingly, the question remains whether the amendments to Louisiana’s Direct Action Statute apply retroactively or prospectively.

I. Legislative Background

Prior to 2024, Louisiana’s Direct Action Statute, Louisiana Revised Statute § 22:1269, expressly authorized an injured person to bring a lawsuit “within the terms and limits of the policy” against a liability insurer.^[11] The statute allowed “[t]he injured person or his survivors or heirs” to bring suit directly “against the insurer alone, or against both the insured and insurer jointly and in solido.”^[12] In addition to this general authorization, plaintiffs could bring suit against the insurer alone if certain exceptions applied.^[13]

Act 275 of the 2024 Regular Session significantly narrowed this right.^[14] Although Act 275 introduced a number of revisions, the most significant revision removed plaintiffs’ general ability to bring a direct action against an insurer.^[15] Effective August 1, 2024, the amended version of the statute no longer contains language broadly permitting a direct action against the insurer.^[16] The legislature carved out only a handful of exceptions for when an injured person has a direct action: (1) “the insured files for bankruptcy” or “is insolvent”; (2) service on the insured fails or the insured refuses to defend; (3) the claim involves parent-child or spousal torts; (4) “the insurer is an uninsured motorist carrier”; (5) “[t]he insured is deceased”; or, (6) “the insurer denies coverage” or defends “under a reservation of rights.”^[17]

This shift represents a dramatic contraction of the statute’s scope. In short, what was once a broadly available avenue—allowing plaintiffs to reach insurers directly in most tort cases—is now a limited remedy available only in specifically defined situations.[18] The sharp narrowing of Louisiana’s Direct Action Statute triggered the current split, as courts must grapple with whether the new limitations should apply retroactively to cases filed before the effective date.

A. Louisiana’s Retroactivity Framework

Under Louisiana Civil Code article 6, “In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary.”^[19] Substantive laws either create or alter rules, rights, or duties, while procedural laws govern the method for enforcing those rights.^[20] When applying legislative enactments, courts must consider the “constitutional implications under the due process and contract clauses of both the United States and Louisiana Constitutions.”[21] Even when “the Legislature has expressed its intent to give a substantive law retroactive effect, the law may not be applied retroactively if it would impair contractual obligations or disturb vested rights,” a restriction rooted in constitutional protections.[22]

Thus, the key question is whether the 2024 amendment is substantive—changing existing rights—or procedural—merely regulating enforcement. This distinction, while technical in form, is outcome-determinative in practice, as it dictates whether plaintiffs who filed suit before August 1, 2024 can maintain claims against insurers that are already defendants in their cases.^[23]

B. History of the Classification of Louisiana’s Direct Action Statute

Even before the recent amendments to Louisiana’s Direct Action Statute, there was once a divide of whether the statute itself was procedural or substantive. In 1950, the Louisiana Supreme Court held that the Direct Action Statute had been consistently treated “as conferring substantive rights.”^[24] From then until roughly 2013, both federal and state courts held the same—“[T]he injured plaintiff acquires a valid right against the tortfeasor’s insurer under the [D]irect [A]ction [S]tatute, [and] that right is substantive in nature.”^[25] It was not until the Louisiana Supreme Court’s ruling in Soileau v. Smith True Value and Rental that courts began to consistently hold that the Direct Action Statute was procedural.[26]

In Soileau v. Smith True Value and Rental, the Court held that “[t]he Direct Action Statute does not create an independent cause of action against the insurer, it merely grants a procedural right of action against the insurer where the plaintiff has a substantive cause of action against the insured.”^[27] The Court traced this principle to earlier cases, emphasizing that the substantive cause of action arises from delictual or contractual fault, not from the statute itself.^[28] Since that holding, courts have used the Supreme Court’s language to find that the Direct Action Statute is procedural.^[29] If the analysis stops there, then the Direct Action Statute is procedural, and it therefore applies retroactively.[30] This retroactive application would allow courts to dismiss insurers from suits, regardless of whether the plaintiffs filed suit before or after the effective date.[31] Thus, the central issue dividing courts is whether the analysis ends there or whether due process demands an additional step.

II. The Courts Divided

Courts are currently divided over whether the amendment to the Direct Action Statute applies retroactively or, more specifically, whether the amendment applies retroactively to suits filed before the effective date on August 1, 2024. One side follows the United States District Court for the Eastern District of Louisiana’s holding in Howard v. J&B Hauling, LLC.^[32] In that case, the plaintiff filed suit in 2022 and amended the complaint to add the defendant’s insurer in June 2024, shortly before the amendment to the Direct Action Statute took effect.^[33] The original trial continued past August 1, 2024—the effective date of the amendment—and the insurer moved to dismiss, arguing that the amendment barred direct actions absent a coverage defense.^[34]The court found that the amendment to the Direct Action Statute created “new procedural law, not substantive law” because the amendment “removed the right of an insured’s direct action claim against insurers, save for certain, narrow exceptions, among other changes to the procedural right to sue insurers when a cause of action exists against the insured . . .”^[35] Therefore, the court found that “[b]ecause the amended Direct Action Statute reflects procedural law, it applies retroactively” since there is no legislative expression prohibiting retroactive application.^[36] Thus, concluding that the amendment applied retroactively, the court in Howard granted the insurer’s motion to dismiss.^[37]

In the other line of cases, courts have held that if a plaintiff filed a direct action before the effective date of the amendment, the plaintiff retained the procedural right granted by the Direct Action Statute because it became a vested property right.^[38] For example, in Tridico v. Allianz Underwriters Ins. Co., the United States District Court for the Middle District of Louisiana addressed whether the amended Direct Action Statute applied retroactively and dismissed the defendant insurer from plaintiff’s suit filed on November 16, 2023.^[39] The court reasoned that “[t]he Direct Action Statute facilitates a remedy for an injured third-party against the insurer of the insured tortfeasor.”[40] “Therefore, ‘a plaintiff’s right under the Direct Action [S]tatute is vested only when the plaintiff files suit, as it is at that moment that a plaintiff invokes his or her remedy conferred by the Direct Action [S]tatute.’”[41] Thus, the Tridico court held that because plaintiff exercised its procedural right on November 16, 2023—before the amendment took effect—the statute could not retroactively divest the plaintiff of that right.^[42]

Conclusion

The amendments to Louisiana’s Direct Action Statute mark a dramatic shift in the state’s approach to insurance litigation. What was once a broadly available avenue to sue insurers directly has now narrowed to a limited set of circumstances. This contraction forces courts to revisit the long-debated classification of the statute as either procedural or substantive to determine whether the 2024 amendment should apply to cases filed before the effective date.

The resulting decisions reflect two competing views. On one hand, courts like the United States District Court for the Eastern District of Louisiana in Howard v. J&B Hauling have emphasized the procedural character of the statute and concluded that, as procedural law, the amendment applies retroactively.[43] On the other hand, cases such as Tridico v. Allianz Underwriters Ins. Co. have reasoned that once a plaintiff files a direct action, the plaintiff gains a vested right to maintain that claim, and the legislature cannot retroactively divest that right without violating constitutional protections.[44]

As these cases demonstrate, Louisiana law remains unsettled on the retroactive reach of Act 275. The split turns on whether courts treat the statute as a procedural mechanism subject to retroactivity or recognize a vested interest that insulates pre-amendment filings from dismissal. Until the Louisiana Supreme Court or the legislature provides definitive guidance, this divide will continue to shape litigation strategy and outcomes in Direct Action cases across the state.

[1] Louisiana’s Direct Action Statute, codified in the Revised Statutes in 1950, was part of “a long developmental process which began with the passage of Act 253 of 1918.” John Schwab II, The Louisiana Direct Action Statute, 22 La. L. Rev. 243, 244 n. 1 (1961).

[2] La. Rev. Stat. § 22:1269 (2023); Marion Leydier, Nicholas F. Menillo & William D. Torchiana, Snapshot: insurance claims and coverage in USA,Sullivan & Cromwell LLP (Apr. 23, 2025), https://www.lexology.com/library/detail.aspx?g=93e6bf00-86c5-4e88-bb9c-672c6da5ee96 [https://perma.cc/S73J-Y4JX].

[3] Leydier, supra note 2.

[4] See Soileau v. Smith True Value & Rental, 144 So. 3d 771, 780 (La. 2013) (citing Descant v. Adm’rs of Tulane Educ. Fund, 639 So. 2d 246, 249 (La. 1994)) (“The Direct Action Statute does not create an independent cause of action against the insurer, it merely grants a procedural right of action against the insurer where the plaintiff has a substantive cause of action against the insured.”).

[5] See Howard v. J&B Hauling, LLC, 2024 WL 4647820, at *4 (E.D. La. Sep. 26, 2024) (citing Soileau, 144 So. 3d 771 to find that the Direct Action Statute applies retroactively).

[6] Act No. 275, 2024 La. Acts.

[7] See, e.g., Baker v. Amazon Logistics, Inc., 751 F. Supp. 3d 666 (E.D. La. 2024) (opposing plaintiff’s motion to amend its complaint to add defendant’s insurer one day before Act 275’s effective date, arguing the amended Direct Action Statute applied retroactively and foreclosed naming an insurer directly).

[8] See Howard, 2024 WL 4647820; Rogers v. Griffin, 410 So. 3d 890 (La. Ct. App. 5th 2024).

[9] See Howard, 2024 WL 4647820, at *11.

[10] See Rogers, 410 So. 3d 890; Tridico v. Allianz Underwriters Ins. Co., 2025 U.S. Dist. LEXIS 80616 (M.D. La. Apr. 22, 2025).

[11] La. Rev. Stat. § 22:1269(B)(1) (2023).

[12] Id.

[13] Id. § 22:1269(B)(1)(a)–(f).

[14] Act No. 275, 2024 La. Acts.

[15] Id.

[16] La. Rev. Stat. § 22:1269(B)(1) (2024).

[17] Id. § 22:1269(B)(1)(a)–(g).

[18] Id.

[19] La. Civ. Code art. 6.

[20] Blow v. OneBeacon Am. Ins. Co., 193 So. 3d 244, 254 (La. Ct. App. 4th 2016) (citing St. Paul Fire & Marine Ins. Co. v. Smith, 609 So. 2d 809, 817 (La. 1992)); Keith v. U.S. Fid. & Guar. Co., 694 So. 2d 180, 183 (La. 1997).

[21] Blow, 193 So. 3d at 254.

[22] Id.

[23] See Howard v. J&B Hauling, LLC, 2024 WL 4647820, at *10 (E.D. La. Sep. 26, 2024).

[24] West v. Monroe, 46 So. 2d 122, 123 (La. 1950).

[25] McAvery v. Lee, 260 F.3d 359, 369 (5th Cir. 2001); see also Auster Oil & Gas, Inc. v. Stream, 891 F.2d 570 (5th Cir. 1990); Cushing v. Md. Cas. Co., 198 F.2d 536 (5th Cir 1952); Lewis v. Mfrs. Cas. Ins. Co., 107 F. Supp. 465 (W.D. La. 1952).

[26] Soileau v. Smith True Value & Rental, 144 So. 3d 771, 780 (La. 2013).

[27] Id. (emphasis added).

[28] Id. at 775–76 (citing Green v. Auto Club Grp. Ins. Co., 24 So. 3d 182, 184 (La. 2009)).

[29] See, e.g., Baker v. Amazon Logistics, Inc., 751 F. Supp. 3d 666, 672 (E.D. La. 2024) (citing Soileau, 144 So. 3d at 780); Rogers v. Griffin, 410 So. 3d 890, 895 (La. Ct. App. 5th 2024) (citing Soileau, 144 So. 3d at 780).

[30] La. Civ. Code art. 6; Howard v. J&B Hauling, LLC, 2024 WL 4647820, at *10–11 (E.D. La. Sep. 26, 2024).

[31] Howard, 2024 WL 4647820, at *10–11.

[32] Id.

[33] Id. at *2.

[34] Id.

[35] Id. at *4. (citing Act No. 275, 2024 La. Acts).

[36] Howard, 2024 WL 4647820, at *4.

[37] Id.

[38] See Tridico v. Allianz Underwriters Ins. Co., 2025 U.S. Dist. LEXIS 80616 (M.D. La. Apr. 22, 2025); Baker v. Amazon Logistics, Inc., 751 F. Supp. 3d 666 (E.D. La. 2024); Smith v. Fortenberry, 2024 WL 4462332 (E.D. La. Oct. 10, 2024); Rogers v. Griffin, 410 So. 3d 890 (La. Ct. App. 5th 2024); Dolese v. Kok Transp. LLC, 2025 U.S. Dist. LEXIS 169367 (W.D. La. Aug. 8, 2025).

[39] Tridico, 2025 U.S. Dist. LEXIS 80616, at *19–20.

[40] Id. at *20. (quoting Taylor v. Elsesser, 2025 U.S. Dist. LEXIS 25030, at *11 (E.D. La. Feb. 12, 2025)).

[41] Id. (quoting Taylor, 2025 U.S. Dist. LEXIS 25030, at *11).

[42] Id.; see also Baker, 751 F. Supp. 3d 666 (finding plaintiff’s right vested on July 31, 2024—one day before the amendment took effect); Rogers, 410 So. 3d 890; Hurel v. Nat’l Fire & Marine Ins. Co., (La. Ct. App. 4th 2025).

[43] Howard v. J&B Hauling, LLC, 2024 WL 4647820 (E.D. La. Sep. 26, 2024).

[44] Tridico, 2025 U.S. Dist. LEXIS 80616, at *20.

By John Paul Bourgeois

Introduction

What energy source accounts for the second largest percentage of electricity production in Louisiana after natural gas? Many might think the answer is coal, wind, solar, or several other energy sources. In fact, nuclear energy is the answer, and by a significant margin.[1] In 2021, nuclear energy generated 17.6% of Louisiana’s net electricity.[2]Although this percentage is a significant portion of Louisiana’s electric energy grid, nuclear energy production in the state only comes from two nuclear plants, each built around 40 years ago.[3] The lack of new nuclear plants in the state illustrates the recent concern over nuclear energy generation. Construction of new nuclear plants declined in the later years of the twentieth century due to concerns over safety and extremely high costs.[4] Furthermore, the safety concerns increased regulation, which led to construction delays, further driving up costs.[5] Overall, the nuclear power generation industry, at best, stagnated and, at worst, floundered.[6]

Considering this relative decline in new nuclear projects, some may believe the nuclear energy industry has simply reached its ceiling. Others, however, still see a future for nuclear energy production.[7] The reason for renewed interest in nuclear energy is small modular reactors (SMRs).[8] SMRs produce significantly less energy per reactor than traditional nuclear reactors.[9] Despite this disadvantage, analysts believe that SMRs have advantages over traditional nuclear reactors because they are smaller, easier to deploy, and potentially cheaper.[10] As of July 2025, reports identified 127 separate SMR designs worldwide.[11] Despite this progress in theoretical development, only a few SMRs are currently built and functioning, and none of them are in the United States.[12]

The reasons for the lack of development on SMRs are complex. One major reason for the lack of SMRs is extensive regulation concerning their development and construction.[13] Some entities, including several states, assert that over‑regulation limits development of the industry.[14] For example, a pending lawsuit by Texas, Utah, and Last Energy—which Louisiana  later joined—asserts that the Nuclear Regulatory Commission (NRC) does not have the authority to license SMRs and certain other types of reactors.[15] In addition, during the 2025 regular session, the Louisiana Legislature passed multiple laws addressing the regulation of nuclear energy.[16] The issue is whether reduced regulation of the industry, either by expediting federal licensing or shifting control to the states, will allow for the development of SMRs in Louisiana and across the United States.

I. History of Nuclear Regulation 

Historically, the United States federal government regulates nuclear energy.[17] In the 1940s, Congress created the Atomic Energy Commission (AEC), which oversaw the nuclear industry.[18] Subsequent years saw the rise of nuclear energy production, and Congress took further action to cement the AEC as the chief nuclear energy regulator.[19]Congress later abolished the AEC due to complaints about overly stringent regulations.[20] A new agency, the NRC, took control of nuclear power regulation during the 1970s.[21] The NRC remains in charge of the majority of nuclear energy regulation, including licensing requirements for new plants and license renewals for existing plants.[22]

Although the NRC maintains control over most nuclear energy regulation, states also have a role.[23] For example, under the Atomic Energy Act of 1954, the NRC may shift control over certain aspects of its nuclear regulatory authority to the states.[24] When a state gains this status, it becomes an “Agreement State.”[25] Louisiana and 38 other states are currently Agreement States, so each state has limited authority over nuclear energy regulation.[26] Despite the predominant federal control, Louisiana and other states have reignited a push for greater state control as SMR technology advances.[27]

II. 2025 Louisiana Nuclear Regulatory Developments

During the 2025 legislative session, the Louisiana Legislature passed three laws that are particularly relevant to Louisiana’s nuclear regulation.[28] Furthermore, earlier this year Louisiana joined a lawsuit seeking to shift licensing authority of SMRs and certain other small reactors from the NRC to the states.[29] The remainder of this blog discusses each law and the lawsuit, as well as their practical effects.

First, the Louisiana Legislature passed Senate Bill 127—also known as Act No. 179 (SB 127).[30] Louisiana’s SB 127 amends and reenacts Louisiana Revised Statutes § 30:2014.5, which governs expedited permit programs.[31] The amendment authorizes the Secretary of the Louisiana Department of Conservation and Energy to create an expedited permitting program for nuclear power generation.[32] The bill allows electric public utilities to submit applications for expedited permits to the Secretary, and the utility must certify that it intends to construct an SMR.[33] In addition, the utility must state that the application is consistent with a letter of collaboration with the federal government, and the Secretary shall indicate that the permit issuance is in accordance with the federal permitting program.[34] Essentially, the law tries to stimulate development of SMRs in Louisiana by expediting the permitting program, effectively reducing regulatory delays.[35]

Second, the Louisiana Legislature passed House Resolution 212 (HR 212), which directs the Louisiana Department of Energy and Natural Resources (LDENR) to consider whether advanced nuclear energy use is a potential path forward for Louisiana.[36] HR 212 notes recent advancements in nuclear technology, as well as the fact that other states have updated their own nuclear programs.[37] HR 212 also states factors that LDENR should consider in its evaluation, including industrial uses, environmental impacts, safety criteria, local and state tax impacts, and job creation.[38] Overall, this law focuses less on the regulatory system and more on the feasibility of advanced nuclear energy use in Louisiana, which reflects the uncertainty surrounding SMR’s economic and technological viability.[39]

Finally, Louisiana House Bill 692 (HB 692) prioritizes the security of clean, reliable, and affordable energy.[40]HB 692 defines terms relating to clean energy and notably designates “energy generated by nuclear reactors” and “energy generated using natural gas” as green energy.[41] The bill also sets requirements for energy sources, mandating that they must be affordable, dispatchable, and reliable.[42] All sources other than advanced nuclear generation must deliver cost savings to customers, relative to certain other energy sources.[43] Interestingly, HB 692 encourages use of domestically produced fuel sources, but provides an exception for nuclear resources and generation.[44]

In conclusion, these three bills illustrate several points about the current situation regarding nuclear energy production and use in Louisiana. Clearly, these laws demonstrate Louisiana’s intent to be a leader in the development of SMRs in the United States. In contrast, these laws also show the uncertainty regarding this technology and its economic feasibility. The subsequent section will analyze the implications of these laws and compare them to different regulatory systems, both in different jurisdictions and different industries, to better understand the path forward for Louisiana’s nuclear industry.

III. Comparison to Other Regulatory Regimes and Concerns for SMRs

Louisiana can look at regulatory systems in other jurisdictions and industries to navigate the complexities of advanced nuclear technology. Issues include federal versus state control and other various challenges that come with regulating new and expensive technology. In addition, the success of advanced nuclear power generation may depend on the availability of subsidies and benefits, as is common with other energy sources.[45] For example, subsidies or tax credits are often available for carbon capture and sequestration (CCS) projects, as well as for renewable energy, solar, and wind projects.[46]

The push for state influence over nuclear regulation mimics other regulatory systems, such as CCS regulation. Several states, including Louisiana, have primacy over permit applications to build Class VI carbon capture injection wells.[47] The grant of primacy gives LDENR—rather than the Federal Environmental Protection Agency (EPA)—control over CCS permitting and other regulation.[48] Although Louisiana now has primary enforcement authority for Class VI wells, the Safe Water Drinking Act’s underground injection control program requires that Louisiana’s Class VI well requirements match or exceed the EPA’s requirements.[49] This stipulation allows Louisiana’s CCS regulations to avoid preemption by federal law.

Preemption is a concern when any regulated industry shifts control from the federal government to states. The United States Constitution provides that federal laws “shall be the supreme Law of the Land” and take precedence over state laws.[50] The issue of preemption helps explain why CCS regulations in Louisiana must meet the minimum requirements set by the EPA, and a similar system is likely if the NRC cedes federal control over SMR licensing. Therefore, states will need to meet or exceed federal requirements, but states can still reduce regulatory delays by making permit decisions quicker than the NRC.[51] Furthermore, expediting the permit process aligns with current federal policy, as President Trump issued four executive orders in May 2025 designed to promote modernized nuclear energy by reducing licensing delays and increasing research.[52]

Moreover, Louisiana can look to other states and countries as examples of jurisdictions pushing advanced nuclear energy. To illustrate, in 2021, 53.5% of Illinois’s electricity generation came from nuclear power, and 53.8% of South Carolina’s electricity generation came from nuclear power.[53] This energy production, however, comes from traditional nuclear reactors, as no SMRs are currently operational in the United States.[54] To accelerate advanced nuclear generation in the United States, ten states formed the Advanced Nuclear First Mover Initiative.[55] This initiative seeks to reduce costs and licensing delays for advanced nuclear power.[56] Indiana, a member of the initiative, introduced several bills in 2025 seeking to balance utility and ratepayer costs and address siting concerns.[57]  On the international level, China and Russia each have one SMR in operation.[58]

Additionally, Louisiana has substantial opportunities to not only improve its own grid reliability and expand its electric power generation capabilities, but also to have local corporations secure lucrative commercial contracts for nuclear power.[59] For example, Google partnered with Kairos Power, an advanced reactor developer with a novel design, to purchase Kairos Power’s nuclear energy from SMRs currently under construction in Tennessee.[60] These opportunities demonstrate the potential to grow Louisiana’s economy by providing power to large corporations and creating jobs.[61] Louisiana ranks 50th in state economic growth rates over the past five years.[62] The Louisiana Legislature recognizes the potential for job creation in HR 212, which directs LDENR to consider job creation as one of the relevant factors for examining the feasibility of developing advanced nuclear power generation in Louisiana.[63]

If Louisiana expands its nuclear energy generation capabilities via SMR development, companies can bring additional jobs to the state, while also increasing revenue through an agreement like that of Kairos Power and Google. Louisiana can use its new nuclear power generation to simultaneously provide support to the Louisiana electric grid and boost the Louisiana economy. Notably, this approach also avoids eliminating jobs in other sectors of the Louisiana energy industry.

Although SMRs have huge potential to support the grid and help the Louisiana economy flourish, questions persist regarding the state of SMR technology and the economic viability of SMRs.[64] SMRs have extremely high costs, as does traditional nuclear energy.[65] The significant regulatory hurdles and delays in licensing also exemplify the concerns about the safety and feasibility of the technology itself.[66] Louisiana’s HR 212 also highlights these concerns, as it directs LDENR to examine the feasibility of advanced nuclear power generation in Louisiana.[67]

The federal government and Louisiana have several options to reduce the high cost of SMRs. Some of these options are evident in the design of the SMRs themselves. For example, some commentators believe SMRs are cheaper than traditional nuclear reactors due to their small size.[68] Although SMRs are very expensive to build, financing and shorter construction times help make them cost‑competitive with traditional nuclear energy.[69] SMR construction is often faster than traditional nuclear plant construction, so investors would begin recovering initial capital costs earlier.[70]Additionally, SMRs are smaller than traditional reactors and thus require significantly less upfront capital cost.[71] The combination of these factors may allow companies to more easily secure funding for SMRs.[72]

Aside from the cost benefits of SMRs, Louisiana and the federal government can offer other financial incentives, such as tax credits or subsidies for companies producing nuclear energy via SMRs. In fact, the federal government has a history of providing financial incentives on energy projects.[73] The federal government provides various tax credits for CCS, residential clean energy, and industrial‑level renewable electricity production.[74] Similar credits for advanced nuclear power generation would encourage companies, investors, and states to invest in these projects because the tax credits would cover a portion of the costs. Likewise, the Louisiana Legislature’s decision in HB 692 to classify nuclear energy as “green energy” might allow nuclear energy to qualify for additional tax credits or subsidies, further reducing costs.[75] These methods for cost reduction could help make SMRs a reality in the United States.

Conclusion

In conclusion, the regulation of SMRs has significant hurdles, as evidenced by the total lack of SMRs in operation in the United States.[76] Despite these challenges, Louisiana could benefit both economically and socially if the state becomes a leader in SMR development. Louisiana can become a leader in this industry by expediting the licensing period or shifting control to the state, as the Louisiana Legislature and state lawsuits are attempting to do.[77] Furthermore, traditional nuclear reactors shut down increasingly often.[78] New traditional reactors are not sufficiently replacing the electricity generation of the retiring reactors, although both of Louisiana’s existing reactors extended their licenses by 20 years.[79] Nonetheless, after a two decade plateau, United States electricity consumption started rising again, highlighting the need for additional generation capabilities.[80] Louisiana could benefit from working to overcome the challenges presented by SMR regulation, as the Louisiana Legislature already started to do during the 2025 legislative session.[81]

[1] See State Electricity Generation Fuel Shares, NEI, https://www.nei.org/resources/statistics/state-electricity-generation-fuel-shares [https://perma.cc/CDQ8-T9SH] (updated Aug. 2022).

[2] Id. The other shares of Louisiana electricity generation are 64.8% natural gas, 8.0% coal, 4.2% biomass/other, 4.0% petroleum, 1.2% hydro, and 0.2% solar.

[3] River Bend Station, entergy, https://www.entergy.com/nuclear/river-bend [https://perma.cc/NTX3-BKN2] (last visited Oct. 6, 2025); Waterford 3 Steam Electric Station, entergy, https://www.entergy.com/nuclear/waterford-3 [https://perma.cc/E49X-W3SX] (last visited Oct. 6, 2025).

[4] Phillip Rossetti, Low-Energy Fridays: Why Aren’t We Using More Nuclear Energy?, RStreet (Oct. 23, 2023),https://www.rstreet.org/commentary/low-energy-fridays-why-arent-we-using-more-nuclear-energy/.  [https://perma.cc/32VC-RRJR]; see World Nuclear Power Reactors 1951-2025, World Nuclear Indus. Status Rep. (May 19, 2025), https://www.worldnuclearreport.org/reactors.html#tab=iso [https://perma.cc/5WU2-PBP8].

[5] Rossetti, supra note 4. For example, the Three Mile Island crisis in the late 1970s, during which a nuclear reactor core partially melted, led to the evacuation of nearly 150,000 people. After the incident, the Nuclear Regulatory Commission began requiring additional safety inspectors and more stringent licensing requirements. J. Samuel Walker & Thomas R. Wellock, A Short History of Nuclear Regul. 1946–2009, 53–57 (2010).

[6] Rossetti, supra note 4.

[7] See generally Robin Gaster, Small Modular Reactors: A Realist Approach to the Future of Nuclear Power, Info. Tech. & Innovation Found. (Apr. 2025), https://www2.itif.org/2025-small-modular-reactors.pdf [https://perma.cc/LF35-AWFE] (indicating small modular reactors could be the future of nuclear power generation).

[8] Id. SMRs are a form of advanced nuclear reactor that produce up to roughly one-third of a traditional reactor. Joanne Liou, What are Small Modular Reactors (SMRs)?, Int’l Atomic Energy Ass’n (Sep. 13, 2023), https://www.iaea.org/newscenter/news/what-are-small-modular-reactors-smrs [https://perma.cc/WM6C-X2J2].

[9] Liou, supra note 8.

[10] Id. SMRs can also make the grid more reliable by reducing reliance on individual units or reactors since multiple SMRs can support rural areas, reducing the need for extensive transmission infrastructure.

[11] There are now 127 different SMR designs, finds NEA report, World Nuclear News (July 23, 2025), https://www.world-nuclear-news.org/articles/there-are-now-127-different-smr-designs-finds-nea-report [https://perma.cc/TA7T-E2PC].

[12] Liou, supra note 8.

[13] See, e.g., Francisco “A.J.” Camacho, NRC lawsuit could hand states power over advanced reactors, EnergyWire (July 23, 2025, 6:30 AM), https://www.eenews.net/articles/nrc-lawsuit-could-hand-states-power-over-advanced-reactors/ [https://perma.cc/J9RB-3XZ2] (explaining suit seeking greater state control of regulation of advanced reactors due to federal delays). Notably, this case is currently stayed, as the parties sought to seek alternative solutions following President Trump’s nuclear-related executive orders.

[14] Id.

[15] Id.

[16] Benn Vincent et al., Energy & Environmental Highlights of the 2025 Louisiana Legislative Session, Kean Miller (July 30, 2025), https://www.louisianalawblog.com/energy/energy-environmental-highlights-of-the-2025-louisiana-legislative-session/ [https://perma.cc/CK7T-GBFK].

[17] History, U.S. Nuclear Regul. Comm’n, https://www.nrc.gov/about-nrc/history.html [https://perma.cc/3CAR-PDP4] (last updated Feb. 20, 2025).

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] See, e.g., Agreement State Program, U.S. Nuclear Regul. Comm’n, https://www.nrc.gov/about-nrc/state-tribal/agreement-states.html [https://perma.cc/3Z2X-GK3P] (last updated Mar. 7, 2024).

[24] Atomic Energy Act of 1954, 42 U.S.C. § 2021 (2024); Agreement State Program, supra note 23. Most of this authority is the regulation of nuclear byproducts and source materials.

[25] Agreement State Program, supra note 23.

[26] Agreement States, U.S. Nuclear Regul. Comm’n, https://www.nrc.gov/agreement-states.html [https://perma.cc/2AYF-JFHU] (last updated Sep. 12, 2025).

[27] See, e.g., H.R. 212, 2025 Leg., Reg. Sess. (La. 2025); H.B. 692, 2025 Leg., Reg. Sess. (La. 2025), Act No. 462; S. 127, 2025 Leg., Reg. Sess. (La. 2025), Act No. 111; Texas v. U.S. Nuclear Regul. Comm’n, No. 24-CV-00507 (filed Dec. 30, 2024).

[28] See generally Vincent, supra note 16 (detailing relevant nuclear laws from the 2025 legislative session).

[29] Camacho, supra note 13.

[30] Id.

[31] S. 127, 2025 Leg., Reg. Sess. (La. 2025), Act No. 111.

[32] See id.

[33] See id. § 2014.5(B).

[34] See id. § 2014.5(B)(1)(b).

[35] See generally id. § 2014.5(B)(1)(b).

[36] H.R. 212, 2025 Leg., Reg. Sess. (La. 2025).

[37] Id.

[38] Id.

[39] See generally id. (noting issues to examine regarding feasibility of nuclear energy in Louisiana).

[40] H.B. 692, 2025 Leg., Reg. Sess. (La. 2025), Act No. 462.

[41] Id. § 1502(D). This law defines “green energy” as “any energy generated by utilizing those energy sources listed in 42 U.S.C. 15852(b) or hydrocarbons which, when combusted for the purpose of electricity generation meet the National Ambient Air Quality Standards set by the United States Environmental Protection Agency under the authority of the Clean Air Act.” Vincent, supra note 16.

[42] La. H.B. 692 § 1502(B).

[43] Id. § 1502(B)(3).

[44] Id. § 1502(B)(1)–(3).

[45] See, e.g., Credit for Carbon Oxide Sequestration, IRS, https://www.irs.gov/credits-deductions/credit-for-carbon-oxide-sequestration [https://perma.cc/2X7Y-LSUB] (last updated May 29, 2025); Residential Clean Energy Credit, IRS, https://www.irs.gov/credits-deductions/residential-clean-energy-credit [https://perma.cc/BM7P-3DRK] (last updated July 3, 2025); Renewable Electricity Production Tax Credit Information, U.S. Env’t Prot. Agency, https://www.epa.gov/lmop/renewable-electricity-production-tax-credit-information [https://perma.cc/XBB7-KJ75] (last updated Dec. 10, 2024).

[46] See, e.g., Credit for Carbon Oxide Sequestration, supra note 45; Residential Clean Energy Credit, supra note 45; Renewable Electricity Production Tax Credit Information, supra note 45.

[47] The State of Louisiana Is Granted Primacy Over Class VI Wells, Gibson Dunn (Jan. 8, 2024), https://www.gibsondunn.com/the-state-of-louisiana-is-granted-primacy-over-class-vi-wells/ [https://perma.cc/RDV7-CYBT].

[48] Id.

[49] Id.

[50] U.S. Const. art. VI, cl. 1.

[51] It is worth noting here that President Trump’s executive orders regarding nuclear energy also seeks to reduce regulatory delays on the federal level. See Michael Goff, 9 Key Takeaways from President Trump’s Executive Orders on Nuclear Energy, U.S. Dep’t of Energy (June 10, 2025), https://www.energy.gov/ne/articles/9-key-takeaways-president-trumps-executive-orders-nuclear-energy [https://perma.cc/XPX3-5PS8].

[52] Id.

[53] State Electricity Generation Fuel Shares, supra note 1.

[54] Small modular reactors, Int’l Atomic Energy Ass’n, https://www.iaea.org/topics/small-modular-reactors [https://perma.cc/JKE7-XBWD] (last visited Sep. 9, 2025); Small Modular Reactor (SMR) Global Tracker, World Nuclear Ass’n, https://world-nuclear.org/information-library/current-and-future-generation/small-modular-reactor-smr-global-tracker [https://perma.cc/LS96-QKJG] (last updated July 29, 2025).

[55] John Siciliano, US states start project to cut costs, speed permitting for advanced nuclear units, S&P Global (Feb. 6, 2025), https://www.spglobal.com/commodity-insights/en/news-research/latest-news/electric-power/020625-us-states-start-project-to-cut-costs-speed-permitting-for-advanced-nuclear-units [https://perma.cc/7NZN-DJ5R].

[56] Id.

[57] Id. Regarding the siting concerns, one Indiana county passed a moratorium on all forms of energy generation.

[58] See Small Modular Reactor (SMR) Global Tracker, supra note 54.

[59] See, e.g., Michael Terrell, New nuclear clean energy agreement with Kairos Power, Google (Oct. 14, 2025), https://blog.google/outreach-initiatives/sustainability/google-kairos-power-nuclear-energy-agreement/ [https://perma.cc/25F4-LW3G].

[60] Id. Google plans to purchase this energy to support AI technologies. See also Kairos Power, https://kairospower.com [https://perma.cc/6VVA-RMQR] (2025).

[61] See generally Terrell, supra note 59.

[62] See generally Louisiana – State Economic Profile, IBISWorld, https://www.ibisworld.com/united-states/economic-profiles/louisiana/ [https://perma.cc/83D9-XYKH] (last visited Sep. 8, 2025) (providing an analysis of the Louisiana economy).

[63] H.R. 212, 2025 Leg., Reg. Sess. (La. 2025).

[64] See generally Camacho, supra note 13 (explaining suit seeking state regulation of advanced reactors).

[65] See David Dalton, Generation IV / Economic Modelling Compares Costs Of SMR To Conventional PWR, NUCNET (Oct. 15, 2020), https://www.nucnet.org/news/economic-modelling-compares-costs-of-smr-to-conventional-pwr-10-4-2020 [https://perma.cc/85BQ-58BM].

[66] See generally Siciliano, supra note 55 (explaining concerns and state attempts to reduce hurdles).

[67] La. H.R. 212.

[68] See Dalton, supra note 65.

[69] Ján Mykhalchyk Hradický, Faster, Cheaper, Smarter? The Promise and Pitfalls of Small Modular Reactors, GlobSec (Feb. 6, 2025), https://www.globsec.org/what-we-do/commentaries/faster-cheaper-smarter-promise-and-pitfalls-small-modular-reactors [https://perma.cc/FT7Y-RUEP].

[70] Id.

[71] Id. Also, significantly more interest accumulates on traditional nuclear projects because of higher initial costs and longer construction times.

[72] See generally id. (explaining the challenges of securing funding for advanced nuclear projects).

[73] See, e.g., Credit for Carbon Oxide Sequestration, supra note 45; Residential Clean Energy Credit, supra note 45; Renewable Electricity Production Tax Credit Information, supra note 45.

[74] See, e.g., Credit for Carbon Oxide Sequestration, supra note 45; Residential Clean Energy Credit, supra note 45; Renewable Electricity Production Tax Credit Information, supra note 45.

[75] See generally H.B. 692 § 1502(B), 2025 Leg., Reg. Sess. (La. 2025), Act No. 462 (stating Louisiana’s decision to classify nuclear energy as green energy).

[76] See Small modular reactors, supra note 54; Small Modular Reactor (SMR) Global Tracker, supra note 54; see also Hradický, supra note 69.

[77] See, e.g., S. 127, 2025 Leg., Reg. Sess. (La. 2025), Act No. 111; Camacho, supra note 13.

[78] U.S. nuclear electricity generation continues to decline as more reactors retire, eia: U.S. Energy Info. Admin (Apr. 8, 2022), https://www.eia.gov/todayinenergy/detail.php?id=51978 [https://perma.cc/75HB-LE54].

[79] The licenses now expire in 2044 and 2045. See id.; River Bend Station, supra note 3; Waterford 3 Steam Electric Station, supra note 3. Despite these extensions, Louisiana must continue to plan for future electricity generation needs.

[80] Mark Shipper & Tyler Hodge, After more than a decade of little change, U.S. electricity consumption is rising again, eia: U.S. Energy Info. Admin (May 13, 2025), https://www.eia.gov/todayinenergy/detail.php?id=65264 [https://perma.cc/SWG8-JGHW].

[81] See generally La. H.B. 692, 2025 Leg., Reg. Sess. (La. 2025), Act No. 462; H.R. 212, 2025 Leg., Reg. Sess. (La. 2025); La. S. 127 (explaining Louisiana’s attempts to address challenges of SMR generation).

By John C. Witherington 

Introduction

On March 26, 2024, shortly after 1:00 a.m. EDT, the container ship M/V DALI (Dali) headed out of the Baltimore Harbor down the Patapsco River on its way to its destination in Sri Lanka.[1] Twenty four minutes later, at 1:24 a.m. EDT, the Daliexperienced a power failure.[2] Three minutes later, at 1:27 a.m. EDT, the vessel allided with a pylon of the Francis Scott Key Bridge, administering a level of force equivelant to a rocket launch.[3] The federal government classified this bridge as “fracture critical,” meaning that if one part of the bridge collapsed, the rest would likely follow.[4] After being struck, nearly all of the bridge crumbled into the water in an instant.[5] Six people did not have time to evacuate the bridge and perished because of the collapse.[6] The extent of the damage remains uncertain because of its impact on numerous parties and its reach across a geographically wide area.[7] Demolition of the bridge began in July 2025, and the new bridge is not expected to be completed until 2028.[8]

I. Background

The Francis Scott Key Bridge has been an economic engine for the Baltimore area since it opened in March 1977.[9] “The fallen bridge was one of three highway routes traversing the Baltimore Harbor.”[10] On average, the bridge handled around 31,000 cars per day, equating to 11.3 million cars per year.[11] The roadway that crossed the bridge, Interstate-695, was an important alternate route for oversized vehicles that could not fit in the Baltimore Harbor tunnel.[12] It was also the alternate route for vehicles hauling hazardous materials that could not travel through the tunnel because of safety concerns.[13]

The Port of Baltimore is the seventeenth largest port in the United States, and there are around 15,000 workers who directly rely on port operations for employment.[14] According to the office of Maryland Governor Wes Moore, over 140,000 jobs are linked to port activity.[15] In 2023, the Port of Baltimore handled 847,158 cars and light trucks, marking its thirteenth year as the leading port in the United States for importing automobiles.[16]

The cost of rebuilding the bridge could be economically devastating. Though experts can only estimate, the collapse could cost insurers billions of dollars in claims, with one expert estimating up to $4 billion in losses on the high end.[17] According to Morningstar DBRS’s managing director for global insurance ratings, Marcos Alvarez, “insured losses could total between $2 billion and $4 billion” depending on the length of the blockage and the nature of business interruption in the port.[18] Even if damages are on the low end—$2 billion—“the economic disruption and pain experienced by businesses and individuals in Maryland and the Baltimore area will be widespread and likely take years to fully comprehend and compensate those affected.”[19] If experts are correct in their high-end $4 billion assessment, this tragedy would become a record loss for shipping insurance.[20]

Fortunately for the owners of the Dali, a piece of legislation from 1851 may shield them from having to pay $4 billion.[21] Under the Limitation Act of 1851, vessel owners who face a complaint of an incident involving their vessel can file a complaint-in-limitation in an appropriate court.[22] Once filed in the appropriate court, their liability may be capped at to the post-accident value of the ship plus the pending freight.[23] The Dali’s owners did exactly that, attempting to limit their liability to a mere $43.7 million.[24] After a vessel owner files such a complaint, claimants bring claims against the owners in a concursus proceeding.[25] The concursus enjoins all pending suits and compels claimants to file their claims in a single federal forum.[26]Once the claims are joined, the claimants must prove that the vessel owners were negligent or that the vessel was unseaworthy, and that negligence or unseaworthiness caused the wreck.[27] Therefore, determining fault is the initial inquiry. The owners are exonerated if there was no fault.[28] Alternatively, if the claimants prove causative fault because of negligence or unseaworthiness of the vessel, the court must next determine whether the negligence or unseaworthiness occurred with the owners’ “privity or knowledge.”[29] The second step reverses the burden of proof, and the owners have to prove that the negligence or unseaworthiness occurred without their “privity or knowledge.”[30] If the court finds that the owners did have “privity or knowledge” of the causal acts, the owners will not enjoy the benefits of the Limitation Act.[31] If the owners lacked “privity or knowledge” of the causal acts, the owners will be entitled to limit their liability, which would shield them from full liability for the damage their vessel caused.[32]

On October 24, 2024, the United States Department of Justice filed a joint notice of settlement that dismissed its claims against the Dali’s owners.[33] The settlement “resolve[d] the U.S. government’s claim for environmental cleanup and response costs and other damages under the Rivers and Harbors Act, Oil Pollution Act and general maritime law.”[34]  The Oil Pollution Act displaces the Limitation Act, but the government’s claims under § 408 of the Rivers and Harbors Act are subject to limitation under the majority interpretation of the Limitation Act, and therefore, probably subject to limitation.[35] This settlement does not cover the cost of rebuilding the Francis Scott Key Bridge, which the state of Maryland maintained and for which it is still seeking compensation.[36] In addition, the settlement does not encompass the claims for personal injury and death brought by the deceased parties’ representatives.[37] As of August 4, 2025, the limitation proceeding is still ongoing as the Dali’s owners attempt to limit all other claims filed against them in the concursus proceeding.[38] The first trial date is set for June 1, 2026.[39]

This Blog argues that the Limitation Act needs to provide a larger monetary pool for plaintiffs to draw on if a vessel owner’s liability is limited.  This monetary pool would be funded by the increased financial liability imposed on the vessel owners and their insurers involved in these incidents. The Francis Scott Key Bridge collapse is a tragedy that provides a much-needed catalyst for legislative reform.  The collapse could cause up to $4 billion worth of damage, and the Dali’s owners may only be liable for $43.7 million worth of damage under the Limitation Act.[40] Still, $43.7 million is much less than the presumed insurance coverage of $3.1 billion provided by Protection and Indemnity (P&Ilubs.[41] Even if the owners are liable for more under the new methodology, they will likely be covered by the large P&I insurance clubs.

II. Analysis

The Limitation of Liability Act was enacted in the 19th century to protect vessel owners, but its framework no longer fits the realities of today’s modern shipping industry.[42] By tying liability to the post-accident value of a ship, the Act often leaves injured parties with far less compensation than what is needed to address their losses. A more practical and equitable approach would be to reform the Act by adopting a formula that multiplies a ship’s weight by a set dollar amount, similar to existing liability schemes in maritime and environmental law.

A. The Limitation Act Needs a Substantive Revision

The Limitation Act’s pool of money can be much smaller than what is needed to remedy aggrieved parties following a vessel accident, with one example being the Conception boat fire that killed 34 people where the owners tried to limit liability to $0 because the vessel sunk and was a “complete loss.”[43] The original reasons behind the Limitation Act are no longer appropriate in today’s well-established shipping industry.[44] The amount of marine insurance vessel owners purchase is usually enough to cover a higher monetary ceiling, and if owners do not buy enough insurance initially, they can do so later.[45]Assessing the value of the ship after it is involved in a collision—because the ship is valued post-voyage under the Limitation Act—creates a problem for plaintiffs seeking monetary compensation.[46] The vessel’s value would likely be depleted after a wreck. The proposed solution involves multiplying the weight of the ship by a dollar amount, the way the loss of life and personal injury parts of the Limitation Act do.[47]

B. The Formula

A dollar amount multiplied by the weight of the ship in tons would increase the monetary pool available for plaintiffs and may be easier for courts to apply than finding the value of a vessel after it has been involved in an accident. This formula is already seen in the Limitation Act for personal injury and wrongful death claims, along with other statutes regarding limitation of liability for non-maritime related incidents.[48] A helpful framework is the Oil Pollution Act of 1990’s limit on liability.[49] In this statute, the first step is to identify the type of vessel or facility involved in the accident.[50] Out of the vessels identified in the Oil Pollution Act, a tanker vessel is held to the highest amount of monetary liability, being potentially liable for $3,000 or $1,900 per gross ton of the tanker, depending on the type of tanker.[51] A tanker vessel is analogous to a container vessel, as they both carry massive amounts of cargo or oil, are very hard to slow down, and can cause mass damage when colliding with objects.[52]An amendment to the Limitation Act should  categorize the type of ship involved and the weight of that ship, identify the relevant dollar amount pertaining to liability, and multiply the two numbers. This formula would also take care of the “pending freight” analysis because it converts the freight’s weight into tonnage.[53] Though it may be hard to frequently weigh a container vessel, or weigh a vessel after a wreck, this question of fact could be determined at trial.[54]

C. The Application

Applying the proposed theory to the Baltimore bridge collapse, the court would need to classify the Dali’s ship type and determine its weight at impact. The Dali was a Neo-Panamax vessel.[55] These vessels are among the largest vessels in the world.[56]  According to the ship’s size, the court could classify the Dali as a Neo-Panamax ship because it could fit through the newly expanded Panama Canal.[57]  The court should classify Neo-Panamax ships as ones that should be exposed to the highest level of liability because of the vessels’ size and potential to cause damage. This classification would be similar to the largest tanker in the Oil Pollution Act. The owners of these types of vessels should be responsible for the highest category of liability, $3,000. After courts determine that the vessel fits in the $3,000 category, the court’s analysis would move to the weight of the Dali. There is speculation as to the weight of the Dali at impact, but an article presumes that the Dali weighed around 195,000 metric tons when fully loaded.[58] Applying the aforementioned formula, $3,000 multiplied by 195,000 comes out to $585,000,000.[59] This amount would increase the pool of money that claimants would be entitled to by over 1,300% and would still be well under the presumed insurance coverage of $3.1 billion that P&I clubs cover.[60]

Conclusion

In light of the devastation caused by the Francis Scott Key Bridge collapse, it is clear that the Limitation Act of 1851 is ill-suited to address the scale of modern maritime incidents. The Act’s antiquated liability cap, based on the post-casualty value of a vessel and pending freight, severely undercuts the compensation available to victims and impacted parties. While the intent behind the Limitation Act was to protect fledgling shipping ventures from financial ruin, today’s maritime operations involve billion-dollar corporations with access to extensive insurance coverage and sophisticated risk management. Allowing such entities to limit liability to just a fraction of the damage they cause is not only unjust, but also erodes public confidence in maritime law and in the broader legal system’s ability to ensure accountability.

A reformed Limitation Act should incorporate a standardized, scalable formula for determining liability, reflecting the true risk posed by massive commercial vessels like the Dali. Multiplying a vessel’s weight by a fixed dollar amount based on its category, as proposed in this Blog, would provide a more equitable and predictable basis for compensating victims. Such a reform would preserve the Limitation Act’s core purpose of limiting runaway liability, while ensuring that the monetary pool available to injured parties is commensurate with the scale of harm caused. The Baltimore tragedy offers an urgent and highly visible opportunity for lawmakers to modernize this outdated statute and better align maritime liability with today’s commercial and social realities.

[1] Lisa Shumaker, Baltimore bridge collapse: What happened and what’s next?, Reuters, https://www.reuters.com/world/us/why-did-baltimore-bridge-collapse-what-do-we-know-about-ship-2024-03-26/ [https://perma.cc/7L6W-TL5F] (updated Apr. 15, 2024).

[2] Id.

[3] Pylons are the critical load-bearing components of cable-supported bridges responsible for transmitting the loads from the cables to the bridge foundation. Id.; see also Aitish Bhatia & Francesca Paris, Force of Ship Impact Was on the Scale of a Rocket Launch, The N.Y. Times (Mar. 28, 2024), https://www.nytimes.com/interactive/2024/ 03/28/upshot/baltimore-bridge-ship-force.html [https://perma.cc/N6ZU-MR7U] (discussing the force it would have taken to stop the Dali).

[4] Brad Brooks, Collapse highlights need to protect critical foundations, Reuters, https://www.reuters.com/world/u s/baltimore-bridge-collapse-highlights-need-protect-critical-foundations-2024-03-28/ [https://perma.cc/F4U7-DJJV] (updated Mar. 28, 2024).

[5] Shumaker, supra note 1.

[6] Id.

[7] See generally Sinead Cruise, Jonathan Saul & Carolyn Cohn, Insurers could face losses of up to $4 billion after Baltimore bridge tragedy, analyst says, Reuters, https://www.reuters.com/business/insurers-brace-multi-billion-dollar-losses-after-baltimore-ship-tragedy-2024-03-27/ [https://perma.cc/8HUM-LK5H] (updated Mar. 28, 2024); see also Jana Byron, The Baltimore bridge collapse: a $4 billion question, Lockton (July 9, 2024), https://global.lockton.com/news-insights/the-baltimore-bridge-collapse-a-4-billion-question [https://perma.cc/S5H3-2S4L].

[8] Maryland Transportation Authority, Demolition Set to Begin as Maryland Transportation Authority Shares Key Bridge Rebuild Update (June 26, 2025), reproduced in Key Bridge Rebuild Press Releases (on file with MDTA).

[9] See Zephan Matteson, Matt Cohen & Andrew Mollenauer,  Baltimore has averted economic crisis one year after Key Bridge collapse, Cap. News Serv. (Mar. 31, 2025), https://marylandmatters.org/2025/03/31/baltimore-averted-economic-crisis-one-year-after-key-bridge-collapse/; see also Christopher Beranito,  Francis Scott Key Bridge History: See 1970’s Construction Photos, Md. Dep’t of Transp. (Mar. 19, 2025), https://mdta.maryland.gov/keybridgenews#:~:text= Construction%20on%20the%20Francis%20Scott,is%2010.9%20miles%20in%20length [https://perma.cc/5WNM-KNYX] (last visited Sep. 5, 2025).

[10] Shumaker, supra note 1.

[11] Id.

[12] Chloe Demrovsky, The Economic Impact Of The Baltimore Bridge Collapse Will Linger, Contributing To Inflation, Forbes, https://www.forbes.com/sites/chloedemrovsky/2024/03/26/the-economic-impact-of-the-baltimore-bridge-collapse-will-linger-contributing-to-inflation/ [https://perma.cc/83NG-7JHS] (updated Mar. 27, 2024, 11:36 AM).

[13] Id.

[14] Shumaker, supra note 1.

[15] Press Release, The Office of Governor Wes Moore, Governor Moore Announces New Port of Baltimore Cargo Records (Feb. 23, 2024) (on file with author).

[16] Id.

[17] Cruise, supra note 7; see also Byron, supra note 7.

[18] Cruise, supra note 7.

[19] Id.

[20] Id.

[21] 46 U.S.C. §§ 30521–30.

[22] Dominic Dewey, Is Limitation of Liability an Illusion? Examining the Numbers and Current Trends of the Limitation Act Today, 23 Loy. Mar. L.J. 59, 65 (2024).

[23] The post-accident value of the ship and pending freight will be expanded on throughout this Blog. Id.

[24] Petition for Exoneration from or Limitation of Liab., In re the Petition of Grace Ocean Priv. Ltd. et al. for Exoneration from or Limitation of Liab., 1:24CV00941 (filed Apr. 1, 2024).

[25] Dewey, supra note 23, at 63.

[26] Id.

[27] Craig H. Allen, Limitation of Liability, 31 J. Mar. L. & Com. 263, 265–66 (2000).

[28] Exoneration occurs when the plaintiff-in-limitation is not at fault for the purported claim. When the claimants cannot prove fault by either negligence or unseaworthiness, the owner is exonerated and owes no liability. The court does not reach the question of the plaintiff-in-limitations “privity or knowledge” when the plaintiff-in-limitation is exonerated. See generally Bryan L. Adkins et al., Cong. Rsch. Serv., LSB11155, The Baltimore Bridge Collapse and the Limitation of Liability Act of 1851 (2024).

[29] Allen, supra note 28.

[30] Id.

[31] See generally Adkins, supra note 29.

[32] See generally 46 U.S.C. §§ 30521–30530.

[33] Proposed Settlement Order at 1, In re Grace Ocean Priv. Ltd., 24-CV-00941 (D. Md. Oct. 24, 2024).

[34] Linda Chiem, DOJ Reaches $102M Deal In Baltimore Bridge Collapse Suit, Law360 (Oct. 24, 2024), https://www.law360.com/articles/2251457.

[35] The Oil Pollution Act “displacing” the Limitation Act means that claims brought under the Oil Pollution Act would not be subject to limitation under the Limitation Act due to the Oil Pollution Act having its own internal limitation scheme. James Coleman et al., Oil in the Sea III: Inputs, Fates, and Effects Appendix K. Regulatory Framework (Nat’l Acad. of Scis. 2003), https://www.ncbi.nlm.nih.gov/books/NBK220699/ [https://perma.cc/HX27-6ABW]; see also In re Am. River Transp. Co., 800 F.3d 428, 437 (8th Cir. 2015) (stating “[t]he in rem remedy inherently limits recovery for violations of § 408 [of the River and Harbors Act] to the value of the property, which is consistent with the Limitation Act’s standard limiting a vessel owner’s liability to the value of the ship and its freight”).

[36] Chiem, supra note 35.

[37] Id.

[38] See In re Grace Ocean Priv. Ltd., No. 24‑CV‑00941 (D. Md. Apr. 1, 2024).

[39] See Scott Maucione, First trial involving Key Bridge collapse in Baltimore to start in June 2026, WYPR News (Nov. 8, 2024, 10:29 AM), https://www.wypr.org/wypr-news/2024-11-08/first-trial-involving-key-bridge-collapse-in-baltimore-to-start-in-june-2026 [https://perma.cc/PJ2W-6RD8].

[40] Petition, In re Grace Ocean Private Ltd., No. 24-CV-00941 (Apr. 1, 2024); see also Cruise, supra note 7; see also Byron, supra note 7.

[41] P&I clubs are protection and indemnity clubs that insure and reinsure vessels. There are about a dozen P&I clubs that insure around 90% of the world’s oceangoing tonnage. Adam Tooze, Baltimore Insurance Claims & the Logic of Big Ships, Chartbook Newsl. (Mar. 30, 2024), https://adamtooze.substack.com/p/top-links-395-baltimore-insurance [https://perma.cc/QD5F-VX8Z].

[42] Dewey, supra note 23 at 62.

[43] See generally Edhat Staff, Conception Boat Owner Files Lawsuit to Limit Liability, EDHAT (Sep. 6, 2019, 5:58 AM), https://www.edhat.com/news/conception-boat-owner-files-lawsuit-to-limit-liability/ [https://perma.cc/E4LZ-GFA9]; see also Brian Melley, Boat owners seek to head off lawsuits after 34 die in fire, Associated Press (Sep. 5, 2019, 11:56 P.M.), https://apnews.com/article/d33314e1e77447cba3ca4f820e441370.

[44] The “reasoning” behind the Limitation Act was to promote investment in the shipping industry. See Dewey, supra note 23, at 62–63.

[45] Richard C. Reilly & Thomas Shumaker, What Does the Titanic Have To Do With the Francis Scott Key Bridge Collapse?, NYSBA (July 10, 2024), https://nysba.org/what-does-the-titanic-have-to-do-with-the-francis-scott-key-bridge- [https://perma.cc/LD25-KXRB] (stating that P&I clubs collectively buy reinsurance covering up to “$3.1 billion per ship”); see also Karen Shipman, Is the Limitation of Liability Act Going to Sink with the Deepwater Horizon?, Kean Miller: La. L. Blog (Jan. 3, 2011), https://www.louisianalawblog.com/admiralty-and-maritime/is-the-limitation-of-liability-act-going-to-sink-with-the-deepwater-horizon/ [https://perma.cc/EUB6-PY4G] (stating that “[t]he arguments against the Limitation Act being that the public policy behind the Limitation Act is antiquated and unnecessary because vessel owners today can readily procure liability insurance to protect themselves from damage claims caused by a vessel’s alleged unseaworthiness or negligence”).

[46] 46 U.S.C. § 30523.

[47] Id. § 30524.

[48] See id. § 30524(b).

[49] See 33 U.S.C. § 2704.

[50] See id. § 2704(a)(1)–(4).

[51] See id. § 2704(a)(1)(A)–(B).

[52] See generally Bhatia, supra note 3 (discussing the force it would have taken to stop the Dali).

[53] An alternative approach to “pending freight” would be to disregard it and take the sole weight of the ship without freight.

[54] The “lightweight” of a ship is the weight of the hull, machinery, and equipment on board. This measure is the weight of the ship without any cargo and should be fairly constant for most ships. The “deadweight” of a ship is the weight of cargo, fuel, and consumables stored on ship. The “deadweight” will fluctuate, and the final weight could be a question of fact at trial. In the formula proposed, the tonnage will be determined at the time the ship left port and embarked on the voyage that resulted in the wreck. Tonnage Measurements of Ships, S.S. Mut. (Aug. 9, 2010), https://www.steamshipm utual.com/publications/articles/articles/tonnage#:~:text=’Lightweight%20Ton’%20is%20the%20unit,the%20scrap%20value%20of%20ships [https://perma.cc/7PSL-3RPZ].

[55] Containership Size: The Panamax, DHL, https://www.dhl.com/content/dam/dhl/global/dhl-global-forw arding/documents/pdf/glo-dgf-cargo-sizes-infographic.pdf [https://perma.cc/3YR6-YB2X] (last visited Oct. 3, 2024).

[56] Container Ship: Definition, Types, and Design, inbound logistics (May 2023), https://www.inboundlogis tics.com/articles/container-ship/ [https://perma.cc/6MD9-5T5G].

[57] Id.; see also Jamie Rock, Addressing the M/V Dali Incident: Infrastructure, Trade and the Future of U.S. Maritime Policy, marinelink (Jan. 23, 2025), https://www.marinelink.com/news/addressing-mv-dali-incident-521457 [https://perma.cc/64VG-AUVX].

[58] See generally Bhatia, supra note 3 (speculating that the Dali weighed 195,000 metric tons).

[59] Id.

[60] P&I clubs are protection and indemnity clubs that insure and reinsure vessels. There are about a dozen P&I clubs that insure around 90% of the worlds oceangoing tonnage. Tooze, supra note 42.

By Christopher Quina

Introduction

Check fraud is hardly a new problem, but the modern version of “check washing” has become an increasingly frequent flashpoint between financial institutions.[1] These disputes often center on whether a fraudulent item should be classified as altered or counterfeit under the Uniform Commercial Code (UCC).[2] The stakes are high: that single classification determines which bank will bear the loss when funds are irretrievably withdrawn after a successful scam.[3]The rise of sophisticated chemical washing techniques, coupled with the ease of opening fraudulent accounts at large institutions, has created a fertile ground for disputes between payor and depository banks, with both sides pointing to UCC warranty rules and liability provisions to avoid taking the hit.[4] Because these disputes often turn on minute factual differences and nuanced statutory interpretations, even seasoned banking professionals can find themselves uncertain about how a court might rule.[5]

In many recent scenarios, a community bank’s customer writes a legitimate check—often for a routine bill payment—that is intercepted, chemically altered, and deposited at a larger bank by the fraudster.[6] Once the funds clear, the criminal withdraws the money immediately, leaving the original payee unpaid and the drawer’s account debited.[7]The payor bank then demands reimbursement from the depository bank, alleging a breach of the UCC presentment warranties.[8]  In response, the depository bank argues that the check was not altered at all, but instead was a counterfeit one for which the payor bank bears responsibility.[9] This Blog examines the mechanics of check washing scams, the legal framework that governs liability allocation, and the preventive steps that both financial institutions and customers can take to mitigate the risk.

I. Anatomy of a Check Washing Scheme

Check washing is a type of fraud in which criminals alter the details of a genuine check to redirect funds to their own account.[10] The process typically begins with theft; fraudsters steal checks from residential mailboxes, business mail drops, or blue United States Postal Service (USPS) collection boxes.[11] Mail theft remains one of the most common entry points for such scams, with thieves often targeting envelopes that appear to contain bill payments or business checks.[12] Once in possession of the check, the fraudster uses common household chemicals—such as acetone, bleach, or rubbing alcohol—to remove the payee and amount while leaving the original signature intact.[13] This “washing” process transforms the check into a blank signed instrument on which the criminal can insert a new payee and any amount they choose.[14] In many cases, a modest payment is converted into a check for thousands of dollars payable to the fraudster or a recruited “money mule.”[15]

The fraudster then deposits the altered check, often into an account opened at a large bank using false identification or through the cooperation of an accomplice.[16] Deposits may occur via teller, ATM, or mobile check capture, depending on the fraudster’s comfort level and the bank’s detection systems.[17] In many instances, the deposit itself appears routine and attracts no immediate attention.[18] Once the item clears, the funds are withdrawn in cash or transferred to other accounts before the fraud is detected.[19] In many cases, the speed of this process leaves little opportunity for either bank to place a hold or reverse the transaction once the funds are in motion.[20]

Victims—both individual and business customers—typically discover the fraud only when the intended payee reports nonpayment or when they review their account statements and notice the fraudulent transaction.[21] The payor typically reports the suspected fraud to the payor bank, which then investigates the transaction.[22] At that point, the money is usually not recoverable, prompting the payor bank to seek recovery from the depository bank on the theory that the check was altered and therefore breached the UCC presentment warranties.[23] By the time these disputes surface, the trail of evidence is often cold, making it even more difficult to prove exactly how the fraud occurred and which party should bear the loss.[24]

II. The Legal Framework: Altered vs. Counterfeit

Classifying a fraudulent check as either “altered” or “counterfeit” under the UCC dictates which bank absorbs the loss.[25] The distinction traces back to the 1762 English case Price v. Neal, where the Court of King’s Bench held that the drawee—now, payor—bank bears the loss for paying a check with a forged drawer’s signature, because it is in the best position to know its customer’s signature.[26] The UCC incorporates this principle by assigning liability for forged or counterfeit checks to the payor bank, and liability for altered checks to the depository bank, under the rationale that the depository institution is better positioned to detect alterations before accepting the item.[27]

An altered check, under the UCC, must be an original, genuine check that has been physically modified, such as by changing the payee or amount.[28] By contrast, a counterfeit check is one that the fraudster fabricates or substitutes for the original, including situations where the fraudster creates a duplicate from an image of a genuine check and prints it on blank check stock.[29]

This distinction was pivotal in Provident Savings Bank, F.S.B. v. Focus Bank, where the U.S. District Court for the Eastern District of Missouri analyzed whether a fraudulent check was “altered” or “counterfeit” under Missouri’s version of the UCC.[30] In that case, a fraudster obtained an image of a legitimate check, digitally manipulated it to change the payee and amount, and then printed it on commercially available blank check stock.[31] Although the printed item appeared to contain the original drawer’s genuine signature, it was in reality an unauthorized reproduction.[32] Under Missouri’s UCC, an alteration occurs when a genuine instrument is physically modified—such as by changing the payee name or amount directly on the original check—whereas a counterfeit check is a fabricated or substituted instrument that replaces the original altogether.[33] The court emphasized that a counterfeit is not limited to crude forgeries but can include sophisticated reproductions that are “identical in every respect” to the original except for undetectable changes because such an item is not the original instrument at all.[34] Applying this reasoning, the court held that the fraudulent check at issue was counterfeit, not altered, because it did not involve the physical modification of the original paper check; rather, the original was replaced by an entirely new document bearing a forged signature and unauthorized content.[35] As a result, the loss allocation rules placed liability on the payor bank, not the depository bank, even though the counterfeit was visually indistinguishable from the genuine check and would likely pass ordinary inspection.[36] This interpretation emphasizes how courts focus on the origin of the physical instrument—whether it is the original paper or a substituted reproduction—when applying UCC presentment warranty provisions, a distinction that can decisively shift which bank bears the financial loss.[37]

For community banks caught in these disputes, the altered vs. counterfeit distinction can be frustratingly fact-specific, especially in cases involving chemically washed checks.[38] A physically washed original check fits the definition of altered, placing the loss on the depository bank.[39] By contrast, if the original is replaced with a duplicate or substituted check—even if it looks identical—the law treats it as counterfeit, shifting liability to the payor bank.[40]

III. Prevention and Risk Mitigation

Addressing check fraud requires a multi-pronged approach that targets vulnerabilities from various angles.[41]This section outlines three key strategies for prevention and mitigation. First, it examines customer-facing strategies that empower consumers and businesses to reduce their personal risk by adopting secure payment and mailing practices. Next, it discusses bank-to-bank communication, highlighting the critical importance of rapid detection and adherence to strict legal deadlines to minimize losses once fraud occurs. Finally, it explores institutional safeguards, detailing the technological and physical security measures that banks can implement to detect and deter fraudulent activity at scale.

A. Customer-Facing Strategies

Both consumers and businesses can take proactive steps to reduce their risk of becoming victims of check washing fraud.[42] The simplest and most effective way is to avoid mailing paper checks altogether, opting instead for secure electronic payment methods such as ACH transfers, online bill pay, or mobile payment services.[43] When checks are necessary, writing them with indelible black gel ink can make chemical washing more difficult, as certain inks resist the solvents typically used in the process.[44] Customers should also avoid leaving mail in residential boxes overnight, and instead use USPS letter slots or mail checks directly from a post office.[45]

Businesses that must issue checks should consider adopting positive pay services, which require the bank to match each presented check against a list of issued checks by number, date, and amount before honoring it.[46] These services significantly reduce the risk of both altered and counterfeit items being paid, though they are not universally used due to high costs and administrative requirements.[47]

B. Bank-to-Bank Communication

Prompt detection and communication are critical in minimizing losses once fraud arises.[48] Banks should train front-line staff to examine payee and amount fields for irregularities and to compare signatures and check stock against known exemplars.[49] If a fraudulent check is discovered after presentment, immediate notice to the other bank is essential, as the UCC’s “midnight deadline” for returns is strictly enforced and missing it can result in automatic liability for the payor bank.[50] Under UCC § 4-302, a payor bank that receives a demand item becomes accountable for the amount of the item if it retains the item beyond midnight of the banking day of receipt without settling.[51] The bank is also accountable if it fails to pay, return, or send a notice of dishonor before its midnight deadline.[52] This deadline—midnight of the next banking day after receipt—is a bright-line rule.[53] Missing it, even by minutes, generally results in strict liability, regardless of whether the bank could have otherwise challenged the item on alteration or counterfeit grounds.[54] This deadline makes rapid fraud detection and immediate interbank communication critical once a bank identifies a suspect item.[55]

C. Institutional Safeguards

On the institutional level, banks should invest in fraud detection technology capable of analyzing check images for signs of alteration or duplication.[56] This technology can include software that detects pixel inconsistencies from digital manipulation, as well as machine learning models trained on known counterfeit patterns.[57] Additionally, using check stock with multiple embedded security features, such as watermarks, microprinting, and chemical sensitivity, can make both alteration and counterfeiting more difficult.[58]

Conclusion

The altered vs. counterfeit classification in check fraud disputes is not a mere semantic distinction—it determines which bank bears the financial loss when funds vanish after a scam.[59] As cases like Provident Savings Bank v. Focus Bank illustrate, this determination hinges on whether the fraudulent item is the original instrument physically modified, or an entirely new creation masquerading as the original.[60] For banks, understanding and applying this distinction consistently is critical not only for litigation strategy but also for internal fraud prevention protocols.[61]

For consumers and businesses, the message is clear: reduce reliance on paper checks, adopt secure mailing and writing practices, and monitor accounts vigilantly.[62] For financial institutions, the combination of customer education, enhanced detection technology, and adherence to UCC timelines remains the best defense.[63] In an era where criminals can “wash” a check in minutes and move funds in seconds, both sides must act quickly—and knowledge of the altered vs. counterfeit framework can mean the difference between recovering a loss and absorbing it entirely.[64]

While check fraud remains a costly problem, its future is more complicated as consumers are steadily reducing their use of paper checks. [65] In 2024, only 6% of bill payments were made by check, a 12-percentage-point drop from 2020, with most of that share shifting to electronic transfers and card payments.[66] As fewer checks circulate, the absolute number of altered or counterfeit disputes may shrink—but the relative severity of each incident could increase, given that checks are now disproportionately used for higher-value transactions.[67]

Looking ahead, courts and lawmakers may face pressure to refine the altered vs. counterfeit framework to address hybrid fraud schemes that combine physical alterations with digital reproductions.[68] Advances in printing, scanning, and artificial intelligence could blur the line between alteration and counterfeiting even further, making the physical-paper test less effective.[69] Possible reforms include clarifying definitions in the UCC, creating evidentiary presumptions based on image analysis, or adopting new presentment warranties that account for digital check creation. In the meantime, the altered vs. counterfeit distinction will remain a pivotal, but potentially evolving, fault line in allocating liability between banks.[70] Ultimately, the institutions that adapt the fastest in both legal strategy and fraud prevention will be in the best position to avoid costly disputes and maintain customer trust as the speed of fraud continues to outpace the speed of traditional detection.[71]

[1] See generally Sydney P. Boots, Counterfeit vs. Altered Checks, Davenport, Evans, Hurwitz & Smith, LLP (Feb. 2, 2023), https://dehs.com/counterfeit-vs-altered-checks/ [https://perma.cc/VD7Y-FLJA]; see Check Fraud, Off. of the Comptroller of the Currency, https://www.occ.gov/topics/consumers-and-communities/consumer-protection/fraud-resources/check-fraud.html [https://perma.cc/4V96-8ZR5] (last visited Aug. 12, 2025) (defining “check washing” as a type of fraud in which criminals alter the details of a genuine check to redirect funds to their own account).

[2] Id.; U.C.C. § 3-407(a) (defining “alteration” as an “unauthorized change in an instrument that [modifies] the obligation of a party, or [] an unauthorized addition . . . to an incomplete instrument relating to [that] obligation”).

[3] Boots, supra note 1.

[4] Id.

[5] See generally Jim Hitchcock, Check fraud in America: a persistent challenge for banks amid evolving threats, A.B.A. Banking J. (Nov. 2, 2023), https://bankingjournal.aba.com/2023/11/check-fraud-in-america-a-persistent-challenge-for-banks-amid-evolving-threats/[https://perma.cc/N6SS-2PV6].

[6] Understanding Check Washing and How to Prevent It, AbbyBank (Aug. 30, 2024), https://www.abbybank.com/re source-center/newsroom/blog/understanding-check-washing-and-how-to-prevent-it [https://perma.cc/87GK-V5N6].

[7] Id.

[8] See generally Boots, supra note 1; U.C.C. § 3-417. The UCC’s presentment warranties require the depository bank, when presenting a check for payment, to warrant that it is entitled to enforce the item. The bank must also warrant that the check has not been altered, that the drawer’s signature is authorized, and, for remotely created items, that the issuance was authorized. If any of these warranties are breached, the payor bank may recover the amount paid along with related expenses and interest.

[9] See generally Boots, supra note 1.

[10] Check Fraud, Off. of the Comptroller of the Currency, https://www.occ.gov/topics/consumers-and-communities/consumer-protection/fraud-resources/check-fraud.html [https://perma.cc/4V96-8ZR5] (last visited Aug. 12, 2025).

[11] DeNicola, supra note 8.

[12] Mail Theft-Related Check Fraud Is on the Rise, FBI Internet Crime Complaint Ctr. (Jan. 27, 2025), https://www.ic3.gov/PSA/2025/PSA250127 [https://perma.cc/CRY7-N3TZ].

[13] Hari Ravichandran, What Is Check Washing? How Can You Protect Yourself?, Identity Guard (Aug. 3, 2023), https://www.identityguard.com/news/check-washing [https://perma.cc/YQ3U-TLFB].

[14] Check Fraud, supra note 10.

[15] DeNicola, supra note 8; see also Money Mules, FBI, https://www.fbi.gov/how-we-can-help-you/scams-and-safety/common-frauds-and-scams/money-mules#  [https://perma.cc/V5MK-AQX6] (last visited Aug. 12, 2025) (defining a “money mule” as a person who transfers or moves illegally acquired money on behalf of another, thereby helping criminals launder proceeds from fraud or other crimes while making it harder for law enforcement to trace the funds).

[16] DeNicola, supra note 8.

[17] Id.

[18] Id.

[19] Id.

[20] See generally U.C.C. § 4-302.

[21] Ravichandran, supra note 13.

[22] See generally id.

[23] See generally Boots, supra note 1.

[24] See generally Ravichandran, supra note 13; see generally U.C.C. § 4-208.

[25] Boots, supra note 1.

[26] Id. (citing Price v. Neal (1762) 97 Eng. Rep. 871 KB).

[27] Boots, supra note 1.

[28] Wachovia Bank, N.A. v. Foster Bancshares, Inc., 457 F.3d 619, 620 (7th Cir. 2006); U.C.C. § 3-418(c).

[29] Provident Sav. Bank, F.S.B. v. Focus Bank, 548 F. Supp. 3d 862, 868 (E.D. Mo. 2021) (citing Wachovia Bank, 457 F.3d at 622).

[30] Provident Sav. Bank, 548 F. Supp. 3d at 864.

[31] Id. at 865.

[32] Id. at 865–66.

[33] Id. at 867 (citing Mo. Rev. Stat. § 400.3-407(a)–(b)).

[34] Provident Sav. Bank, 548 F. Supp. 3d at 867–68.

[35] Id. at 868.

[36] Id. at 868–69.

[37] Id. at 869.

[38] See generally Hitchcock, supra note 5.

[39] Boots, supra note 1.

[40] Id.

[41] See generally Ravichandran, supra note 13.

[42] Check Fraud, supra note 10.

[43] Ravichandran, supra note 13; What Is an ACH Transaction?, Consumer Fin. Prot. Bureau (May 14, 2024), https://www.consumerfinance.gov/ask-cfpb/what-is-an-ach-transaction-en-1065/ [https://perma.cc/CF2S-5UQ4] (defining an ACH transaction as an electronic money transfer made between banks and credit unions across the Automated Clearing House network, used for various payments including direct deposit, bill payments, and transfers initiated through online services).

[44] Check Fraud, supra note 10.

[45] Id.

[46] Understanding Check Washing and How to Prevent It, supra note 6.

[47] Id.; Positive Pay System Definition and Benefits for FIs and Business Accounts, Advanced Fraud Sols. (Sep. 17, 2024), https://advancedfraudsolutions.com/insights/positive-pay-for-fis-and-businesses-defend-against-deposit-fraud / [https://perma.cc/675P-BV2A].

[48] See generally Check Fraud, supra note 10.

[49] Your Check Fraud Training Investigation Checklist, Advanced Fraud Sols. (Jan. 16, 2024), https://advancedfraudsolutions.com/insights/check-fraud/your-check-fraud-training-investigation-list/ [https://perma.cc/7KPB-WMBD].

[50] Id.; U.C.C. § 4-302.

[51] Your Check Fraud Training Investigation Checklist, supra note 48.

[52] Id.

[53] Id.; Provident Sav. Bank, F.S.B. v. Focus Bank, 548 F. Supp. 3d 862, 866 (E.D. Mo. 2021); see also Cent. Bank & Tr. Co. v. First Nw. Bank, 332 F. Supp. 1166, 1169 (E.D. Mo. 1971).

[54] U.C.C. § 4-302; Provident Sav. Bank, 548 F. Supp. 3d at 866; see also Cent. Bank & Tr. Co., 332 F. Supp. at 1169.

[55] See generally Provident Sav. Bank, 548 F. Supp. 3d at 866; see generally Cent. Bank & Tr. Co., 332 F. Supp. at 1169.

[56] See generally Understanding Check Washing and How to Prevent It, supra note 6.

[57] See generally U.S. Dep’t of the Treasury, Treasury Announces Enhanced Fraud Detection Processes, Including Machine Learning AI, Prevented and Recovered Over $4 Billion in Fiscal Year 2024 (Oct. 17, 2024), https://home.treasury.gov/news/press-releases/jy2650[https://perma.cc/DRZ7-C4UM].

[58] Understanding Check Washing and How to Prevent It, supra note 6.

[59] See generally Boots, supra note 1.

[60] See generally Provident Sav. Bank, F.S.B. v. Focus Bank, 548 F. Supp. 3d 862 (E.D. Mo. 2021).

[61] See generally Boots, supra note 1.

[62] Understanding Check Washing and How to Prevent It, supra note 6.

[63] Id.

[64] See generally Boots, supra note 1; Ravichandran, supra note 13.

[65] By the Numbers: Decline in Consumers’ Use of Paper Checks, Fed. Rsrv. Bank of Atlanta (June 2, 2025), https://www.atlantafed.org/blogs/take-on-payments/2025/06/02/by-the-numbers-decline-in-consumers-use-of-paper-checks[https://perma.cc/LA73-6M3V].

[66] Id.

[67] Id.; Claire Greene & Joanna Stavins, U.S. Consumers’ Use of Personal Checks: Evidence from a Diary Survey, Fed. Rsrv. Bank of Atlanta, Research Data Report No. 24-2, Aug. 2024, https://www.atlantafed.org/-/media/documents/banking/consumer-payments/research-data-reports/2020/02/13/us-consumers-use-of-personal-checks-evidence-from-a-diary-survey/rdr2001.pdf [https://perma.cc/JZH4-H9NJ].

[68] See generally Boots, supra note 1.

[69] See generally M. Scott Jones, Back with a Vengeance: The Challenges of Check Fraud, A.B.A. Banking J., (Mar. 15, 2023), https://bankingjournal.aba.com/2023/03/back-with-a-vengeance-the-challenges-of-check-fraud/ [https://perma.cc/5S8K-HN3S].

[70] Id.

[71] See generally Your Check Fraud Training Investigation Checklist, supra note 48.

By Zachary Smith

Introduction

Louisiana is fondly known as the Sportsman’s Paradise.[1] This Paradise is beloved for many reasons, but for hunters and anglers, the reason is the rich natural resources and diverse landscapes that make Louisiana especially appealing.[2] After a recent Supreme Court case, Sackett v. Environmental Protection Agency, however, this natural beauty and economic draw is in severe danger.[3] It is not just Louisiana that is in trouble, though; it is estimated that approximately 200 million acres nationwide remain unprotected as a result of this case.[4] This case leaves wetlands across the nation—roughly the same land area as that of Texas and Louisiana combined—in immediate jeopardy.[5] This amount of land seems almost unfathomable, but it is now left completely vulnerable and without federal protection.[6] Without any protection, wetland loss will go unchecked leading to incalculable effects on wildlife, a significant decrease in water quality, a severe downturn in industries that rely on non-polluted water such as fishing, and potential rampant flooding.[7]

I. Background

In 2023, the United States Supreme Court rendered a decision that significantly narrowed the scope of the term, waters of the United States (WOTUS).[8] This term is significant because it governs whether the Clean Water Act (CWA) protects certain waters and wetlands.[9]  The overarching objective of the CWA is “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.”[10]  Congress has amended the CWA numerous times to meet changing needs, but the Act has never deviated from its primary goals.[11] Before Sackett, the CWA protected wetlands that had a continuous surface connection to WOTUS, as well as wetlands that were part of a significant nexus with WOTUS.[12] The new WOTUS standard now only protects wetlands with a continuous surface connection to a WOTUS, meaning the wetland’s surface water must be indistinguishable from that of the WOTUS.[13] One study asserts that roughly 63 percent of wetlands previously protected under the CWA are now unprotected.[14]

Three entities are tasked with enforcing and overseeing the CWA and its efforts: the Environmental Protection Agency (EPA), the United States Army Corps of Engineers (Corps), and state organizations and governments.[15] While the Corps and state entities have important roles, the EPA is the central entity that oversees the Act’s enforcement and implementation.[16] The post-Sackett standard, as implemented by the EPA, contains significant gaps in practical application, often leaving courts to make discretionary decisions without clear guidance from the Sackett ruling.[17] One of the most prominent debates surrounding the Sackett ruling was whether the definition laid forth in the majority was contrary to the CWA’s statutory authority because the definition confused the terms “adjoining” and “adjacent” and allowed, incorrectly, only adjoining wetlands to be protected[18]Other open questions included how man-made barriers affect the test, whether a temporary disconnection of water precludes protection, and many other questions that the Court refused to answer in its ruling.[19]

The EPA, in an attempt to clarify the confusion left in the wake of Sackett, recently issued a memorandum outlining how the agency plans to enforce the new WOTUS definition.[20] In doing so, the EPA only muddied the waters further and brought life to the fears and opinions expressed by Justice Kavanaugh in his Sackett concurrence.[21] The agency effectively substituted the definition of “adjacent” wetlands for that of “adjoining” wetlands, significantly narrowing the protections for wetlands.[22]Specifically, the EPA excluded any adjacent wetlands that lack a continuous surface connection to a jurisdictional water because of objects such as berms, levees, dikes, and any wetlands that have only an intermittent hydrological connection.[23] Both are prevalent in Louisiana.

II. Problems Ahead for Louisiana

The narrowed definition of WOTUS has substantially lessened the scope of CWA protection of wetlands nationwide.[24]The lack of state programs to supplement or supersede the removed CWA protections exposes these wetlands to the threat of pollution and damage.[25] Through its Sackett decision, the Court endangered the wetland ecosystems, the states in which the wetlands reside, and even the citizens of those states.[26] Wetland pollution and damage are more likely to occur now that wetlands are unprotected in many of the states that relied on the broad scope of WOTUS to provide protections, rather than implementing their own state laws.[27] If these wetlands remain unregulated from pollution, development, and other activities, the consequences could be catastrophic.[28] Wetlands are a non-renewable resource; if they are not protected now, rampant flooding, insurance spikes, incalculable effects on wildlife, infrastructure failure, and even death are all possible.[29]

The new WOTUS standards and EPA enforcement guidelines are especially impactful in Louisiana due to the state’s geography and terrain.[30] Additionally, Louisiana has no statewide program to protect wetlands; the state is totally reliant on the WOTUS definition to protect its wetlands.[31] This gap is problematic because Louisiana is home to 15 percent of freshwater wetlands and 40 percent of salt marshes remaining in the United States.[32] With a sizeable economic output from wetlands—and water being the state’s most abundant natural resource—Louisiana feels the effects of unprotected wetlands more than other states.[33] Despite their importance, wetlands are quickly disappearing and their replenishment is near impossible.[34] Thus, wetland protection is key to the state’s interest. Only the Louisiana Coastal Zone, which makes up a fraction of Louisiana’s wetlands, enjoys some limited protections.[35] Therefore, reform measures are urgently needed to protect Louisiana’s wetlands. This post proposes two solutions to remedy the lack of protections available for Louisiana’s wetlands in the wake of Sackett.

III. The Congressional Approach

The first proposed solution is for the United States Congress to amend the Clean Water Act. In this amendment, Congress should clarify which waters the Act is meant to protect. Congress should institute the adjacent wetlands standard used in enforcement procedures and agency practice for decades.[36] This standard was outlined succinctly by Justice Kavanaugh in his Sackett concurrence.[37] As defined by Justice Kavanaugh, the adjacent wetlands standard means, “a wetland is ‘adjacent’ to a covered water (i) if the wetland is  adjoining—that is, contiguous to or bordering—a covered  water—or (ii) if the wetland is separated from a covered water only by a man-made dike or barrier, natural river berm, beach dune, or the like.”[38] By adopting Kavanaugh’s definition, Congress would empower the CWA to define which wetlands it protects, rather than leaving this decision to the Supreme Court. It would also enable the protection of many wetlands that are currently unprotected, while addressing key concerns raised by the Sackett majority, such as preventing the definition from being overly extended to cover distant, unrelated wetlands.[39] Another positive aspect of this solution would be taking the power to change the definition out of the hands of the EPA, which has tampered with the definition of WOTUS incessantly for years.[40] As different presidential administrations came into office, they would instruct the EPA to amend the interpretation of WOTUS to fit their needs, leading to a definitional back-and-forth across decades and presidencies.[41] This back-and-forth continues to happen as President Trump’s EPA seeks to provide a “clear and simplified” definition by amending the Biden Administration’s definition.[42] The Biden Administration amended the definition after President Trump changed it in his first term through the notice and comment process and publication in the Federal Register.[43] In amending the WOTUS rule from President Trump’s first term, President Biden sought to put more of the regulatory power over bodies of water back into the hands of the federal government, rather than in the hands of the state governments to whom President Trump had vested much of the power.[44] If Congress were to take action and clarify the definition, it would remove much of the EPA’s discretion in determining how to enforce WOTUS protections and would solidify that wetlands have more defined protection that does not waver with changing governance and executive action.

IV. The Louisiana Approach

The second proposed solution is divided into two routes. First, the Louisiana legislature should draft a bill that proposes an entirely new system that protects wetlands statewide. With no current statewide protections, new state legislation would allow for protection from future changes in the WOTUS definition and enable Louisiana to regulate its waters as it sees fit. This new system should include the adjacent wetlands standard and provide an exception for wetlands deemed of significant importance, which would allow the legislature the freedom to act in what it considers to be the state’s best interest. This solution has the potential to be time-consuming, given the necessities of research and planning involved in the creation of such a system; however, it is the most thorough option as the state legislature would narrowly tailor the system to fit the state’s needs.

Second, if a new system cannot be agreed upon or completed promptly, an alternative solution is for the Louisiana state legislature to expand the Louisiana Coastal Zone to protect other, more inland, wetlands now that inland wetlands lack CWA protection post-Sackett. Although this solution is not perfect and would require adjustments to cover all wetlands, it offers the legislature a faster way to address the issue as compared to the previous approach.

Conclusion

Ultimately, both of these solutions would provide much-needed protection to Louisiana’s wetlands, which lost coverage under the narrowed definition of WOTUS in Sackett. While both solutions would be ideal for solidifying protection, even the implementation of just one is a substantial step in the right direction. Without any action, Louisiana’s wetlands are at risk of damage, at best, or, at worst, permanent and catastrophic destruction.[45]

[1] See Louisiana, Cong. Sportsmen’s found., https://congressionalsportsmen.org/state-profile/louisiana/ [https://perma.cc/RV3Z-5TYG] (last visited July 13, 2025).

[2] See id.

[3] See Sackett v. Env’t Prot. Agency, 598 U.S. 651 (2023).

[4] See, e.g., Delaney Dryfoos, Louisiana’s inland, non-tidal wetlands are most at risk to lose protections from weakened Clean Water Act, The Lens(Oct. 18, 2023), https://thelensnola.org/2023/10/18/louisianas-inland-non-tidal-wetlands-are-most-at-risk-to-lose-protections-from-weakened-clean-water-act/ [https://perma.cc/YMH7-4FYW].

[5] E.g., Michael Dot Scott, Louisiana’s Six Largest Land Owners, 97.3 The Dawg, https://973 thedawg.com/louisianas-six-largest-land-owners/ [https://perma.cc/WUX6-S4JS] (updated Jan. 26, 2024); e.g., How Big is Texas? You Won’t Believe How Huge It Is!, Texas Proud (July 10, 2022), https://texasproud.com/how-big-is-texas-its-h uge/#:~:text=Texas%20is%20the%20second%2Dlargest,square%20miles%20or%20171%2C902%2C080%20acres [https://perma.cc/6LNK-GE26].

[6] See, e.g., Harry Vorhoff, Waters of the United States: Sackett v. EPA Briefing, Governor’s Off. of Coastal Activities (June 14, 2023), https://coastal.la.gov/wp-content/uploads/2023/06/HARRY-WOTUS-Briefing.pdf [https://perma.cc/42WN-2G6L].

[7] See James M. McElfish, Jr., What Comes Next for Clean Water? Six Consequences of Sackett v. EPA, Env’t Law Inst. (May 26, 2023), https://www.eli.org/vibrant-environment-blog/what-comes-next-clean-water-six-consequences -sackett-v-epa [https://perma.cc/6FQM-D7WS]; see also Hannah Druckenmiller, Wetland Conservation is Worth the Cost, Resources (Apr. 18, 2022), https://www.resources.org/common-resources/wetland-conservation-is-worth-the-cost/ [https://perma.cc/Z3CT-2NZV]; e.g., Haley Gentry, The Fallout of Clean Water Act Administration in a Post- Sackett Regulatory Landscape, Tulane Inst. on Water Res. L. & Pol’y 1, 12 (2023), https://www.tulanewat er.org/_files/ugd/32079b_2dd358f90e7b4dc19abe83ca5d193fe8.pdf [https://perma.cc/E7EM-LJ6M].

[8] E.g., Gentry, supra note 7.

[9] Federal Water Pollution Control Act, 33 U.S.C. § 1251 (2002), https://www.epa.gov/sites/default/files/2017-08/documents/federal-water-pollution-control-act-508full.pdf [https://perma.cc/SZ6A-567B]; see Sackett v. Env’t Prot. Agency, 598 U.S. 651 (2023)

[10] 33 U.S.C. § 101.

[11] See, e.g., 50th Anniversary of the Clean Water Act, U.S. Env’t Prot. Agency, https://www.epa.gov/ system/files/documents/2022-10/CWA50%20Fact%20Sheet_101722.pdf [https://perma.cc/P2NN-J4VP] (last visited Aug. 11, 2025); see generally Environment and Natural Resources Division, The Clean Water Act, U.S. Dep’t of Just., https://www.justice.gov/enrd/water [https://perma.cc/4DZZ-EC7P] (updated May 29, 2025) (breaking down a number of different CWA evolutions since its enactment in 1972).

[12] E.g., Brigit Rollins, Waters of the United States: Timeline of Definitions, The Nat’l Agric. L. Ctr., https://na tionalaglawcenter.org/wp-content/uploads//assets/articles/WOTUS-Timeline-23.pdf [https://perma.cc/67VT-YDPC] (updated Sep. 26, 2023).

[13] See, e.g., Vorhoff, supra note 6.

[14] E.g., Gentry, supra note 7.

[15] See Federal Water Pollution Control Act, 33 U.S.C. § 1251–1252 (2002), https://www.epa.gov/sites/default/ files/2017-08/documents/federal-water-pollution-control-act-508full.pdf [https://perma.cc/SZ6A-567B]; see, e.g., Clean Water Act, The Nat’l Agric. L. Ctr., https://nationalaglawcenter.org/overview/cw/ [https://perma.cc/RT5A-9MLF] (last visited Aug. 11, 2025).

[16] See, e.g., Clean Water Act, supra note 15.

[17] See Sackett v. Env’t Prot. Agency, 598 U.S. 651, 716 (2023) (Kavanaugh, J., concurring).

[18] See, e.g., Vorhoff, supra note 6; see Sackett, 598 U.S. at 716 (Kavanaugh, J., concurring).

[19] E.g., Sheila M. Olmstead & Matt Fleck, The Future of the Waters of the United States after Sackett v. US Environmental Protection Agency, Resources (Aug. 18, 2023), https://www.resources.org/common-resources/the-f uture-of-the-waters-of-the-united-states-after-sackett-v-us-environmental-protection-agency/ [https://perma.cc/4PLT-X9MD].

[20] See generally Memorandum to The Field Between The U.S. Department of The Army, U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency Concerning the Proper Implementation Of “Continuous Surface Connection” Under the Definition of “Waters of the United States” Under the Clean Water Act, U.S. Env’t Prot. Agency (Mar. 12, 2025), https://www.epa.gov/system/files/documents/2025-03/2025cscguidance.pdf [https://perma.cc/TV97-2XE4].

[21] See generally id.; Sackett, 598 U.S. at 725–28 (Kavanaugh, J. concurring).

[22] See generally Memorandum to the Field, supra note 20.

[23] See, e.g., id.

[24] E.g., Gentry, supra note 7.

[25] See, e.g., Dryfoos, supra note 4.

[26] See, e.g., id.

[27] See, e.g., id.

[28] See Druckenmiller, supra note 7.

[29] See McElfish, supra note 7; see also Druckenmiller, supra note 7; e.g., Gentry, supra note 7.

[30] See Office of Coastal Management, A Coastal User’s Guide to the Louisiana Coastal Resources Program, La. Dep’t of Nat. Res. I-1, II-1, https://data.dnr.la.gov/LCP/LCPHANDBOOK/FinalUsersGuide.pdf [https://perma.cc/4C4H-HW8W] (revised Jan. 2015).

[31] E.g., id.

[32] See Sarah Burt et al., State Wetland Program Evaluation: Phase III, Env’t L. Inst. 1, 119 (Mar. 2007), https://www.eli.org/sites/default/files/eli-pubs/d17_05.pdf [https://perma.cc/WU9G-J4ZC].

[33] E.g., Office of Coastal Management, supra note 30.

[34] See id.

[35] E.g., id.

[36] Sackett v. Env’t Prot. Agency, 598 U.S. 651, 717–18 (2023) (Kavanaugh, J. concurring).

[37] Id. (Kavanaugh, J. concurring).

[38] Id. (Kavanaugh, J. concurring).

[39] Id. at 667 (citing U.S. Army Corps of Eng’rs v. Hawkes Co., 578 U.S. 590, 596 (2016)).

[40] See, e.g., Steve P. Mulligan, Evolution of the Meaning of “Waters of the United States” in the Clean Water Act, Cong. Rsch. Serv. 1, 24 (Mar. 5, 2019), https://crsreports.congress.gov/product/pdf/R/R44585 [https://perma.cc/2UWK-CEN8].

[41] See, e.g., id.

[42] Administrator Zeldin Announces EPA Will Revise Waters of the United States Rule, U.S. Env’t Prot. Agency, https://www.epa.gov/newsreleases/administrator-zeldin-announces-epa-will-revise-waters-united-states-rule [https://perma.cc/53JD-BE4T] (last updated Mar. 12, 2025).

[43] See, e.g., Rollins, supra note 12.

[44] See, e.g., id.

[45] See, e.g., Dryfoos, supra note 4.