Yesterday we were supposed to have a hearing on the preliminary injunction in the Texas Blockchain Council v. Department of Energy case. But, as often happens in litigation, things change quickly. Tuesday the judge entered an order canceling today’s hearing based on the parties reaching an “agreement-in-principle” on the overall dispute. This agreement must be finalized and filed by Friday, March 1st.

Speculation time.

What could this mean? One element of the standard for a Temporary Restraining Order (TRO), and a preliminary injunction, is that the party requesting it has to show that they are “likely to succeed on the merits.” This means that the judge has to believe that, not only is success possible, but more likely than not. Here, the judge already agreed that “that Plaintiffs are likely to succeed in showing that the facts alleged by Defendants to support an emergency request fall far short of justifying such an action.” And that the Government’s action was arbitrary, capricious, or abused their discretion.

Losing the TRO, while not dispositive, is a big red flag. The Government does not like to lose, and once it has lost on this metric, it’s very likely that they already know they will lose on the following motions: the preliminary injunction and the permanent injunction.

One problem there is discovery. As part of the process of proving the case, the Plaintiffs get to request internal communications and other materials that might show an abuse of discretion or undue influence. The Energy Information Administration has only used emergency data collection authority in a handful of actual emergencies, such as an emergency survey in response to the 2021 Colonial Pipeline Cyberattack.

Given the context of Senator Warren and the Biden Administration’s continued attacks on Bitcoin and Bitcoin mining, is there any reason to believe that there aren’t unflattering emails or communications showing undue influence between those offices and the EIA? What else could have caused a historically cautious and respected agency to suddenly put out such slipshod work as the EIA-862, which was then rubber stamped by the President’s own Office of Management and Budget in clear technical violation of their internal standards?

It is not like this kind of undue influence hasn’t happened before… look at Custodia Bank’s lawsuit, for instance, where “perhaps the most stunning fact that would never have seen the light of day but for discovery is this: in the wake of FTX’s collapse and a mysterious briefing to Vice-Chair Barr concerning Custodia’s membership and master account applications, Board staff edited and rewrote key parts of an internal Kansas City Fed memo … Discovery reveals that the Board was deeply intertwined in the outcome of Custodia’s master account request. That level of involvement is not consistent with the notion of unfettered Reserve Bank discretion.” Page 54 of Custodia’s December 22, 2023 Brief for Judgment as a Matter of Law.

While we await more information, it seems clear that any voluntary concession by the Government here reveals some combination of realization that they exhibited either manifest incompetence, or that discovery would bear out significant undue influence on the process.

This is a guest post by Colin Crossman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.