Whoa! Lots of misinformation here.
Let's first hop into the time machine and go back to 1984. Ping had a new, competely legal, U-groove design in its Eye 2 irons and wedges. They were a medium-sized hit in the retail market, and they had a modest tour-player staff including Bob Gilder and Ken Green. While the USGA had looked at, and approved, the original Ping Eye 2, Ping decided on its own to make a minor, conservative-appearing modification to the design; they "radiused" the groove edges, to soften the square grooves a bit. (Complaints of sharp square grooves shredding soft balatas were common in those days. Karsten Solheim, sensitive to his retail customers' wishes, sought to alleviate the problem.)
But without intending to do so, Ping had crated a big problem. The newly "radiused" grooves resulted in an unintended condition -- the space between the grooves was now reduced to illegality under a rather obscure formulation on the part of the USGA. How the USGA was alerted to this issue is a bit of a mystery to me -- it might be revealed in old court records, I don't know. (Rumors, not much worth worrying about now, held that other old-school manufacturers like Wilson, Spalding, MacGregor or Hogan had complained. I have no knowledge to substantiate that.)
In any case, the USGA felt that it was constrained to enforce its rules. "Close" is just not acceptable in golf. Even if, as the USGA suspected, the changed Ping design wasn't a measurable advantage over other designs. The USGA had its measurements. The Ping clubs didn't measure up. Moreover, the USGA contended, if only Ping had submitted samples for apporval, all problems about having put large numbers of the Ping Eye 2's into the retail marketplace could all have been avoided. Ping made the design change on its own without asking.
Ping had its own arguments. Ping contended that the only way that the USGA could reach its obscure formulation of an illegality was to have constructed and arbitrary 30 degree angle as a marker from which to meaure groove widths and to achieve any maesurement of what was known as the "land to groove " ratio.
This was the status quo as the two sides faced off in litigation. Ping felt that it could not back down and leave its thousands of retial buyers of Eye 2's hanging. The USGA thought that it could be the end of its authority if it lost in litigation over something as basic as golf club regulations.
Karsten Solheim had many quirky ideas, about engineering, design, and manufacturing. He was a genius in many respects. But one of his quirkiest ideas was who to select as counsel in the Eye 2 litigation. Karsten selected a personal injury lawyer from Rhode Island, Leonard Decof. It was (in my personal opinion) a fateful decision. Decof outraged many from the outset of the Eye 2 litigation. He named as defendants the individual Executive officers of the USGA, and the R&A. He had a process server serve a summons and Complaint on Michael Bonalleck at a Walker Cup dinner in the United States. The Executives feared for their personal assets, as Ping alleged treble damages (millions, is what Ping claimed) under the Sherman Anti-Trust Act.
Ultimately, the two sides were able to settle the case before the start of trial. I have been informed by our fellow GCAer Tom Paul, that he has it on good authority, that despite all of the ingrained acrimony (much of it emanting from Decof) Karsten's son John, who was by then moving into Ping's leadership, and Frank Thomas, the USGA Technical Director, were able to deal on a level of mutual respect. A compromise was reached, in which the Eye 2 design was changed to be conforming for all the future, and alll old-production clubs were grandfathered for all time.
In the meantime, the PGA tour, Inc., under the leadership of Deane Beman, took its own action. It sought to ban the Eye 2 as well as all other U-grovve designs from tour play. Ping, already embroiled with the USGA (and not yet settled), sued the Tour. The case was captioned "Bob Gilder, et al, v. PGA Tour, Inc., et al." A major part of Ping's argument was that equipment that was banned on Tour would be devastated in the retail marketplace. The Tour argued that it had the power, like any professional sports league, to enact its own rules. The Tour litigation went pretty far; to the eve of trial. In the meantime, there was a major evidentiary hearing in the U.S. District Court in Phoenix. And a ruling from the 9th U.S. Circuit Court of Appeals for Ping on an important preliminary ruling. Ping was winning a lot of the pre-trial battles, essentially, and the Tour was getting a bit scared. On the eve of its trial date with Gilder, et al, the Tour settled. The Tour agreed to simply be bound by whatever the USGA ruled on equipment.
What is of immense interest now, for the first time in 20 years, is that there was a provision buried in the Tour's Settlement Agreement, that would allow it to essentially override a USGA equipment provision if it were shown to be necessary for the Tour, as decided by a panel of pre-selected individuals. It is that provision that has now come to the world's attention.
It has all been an unfortunate black eye for the USGA this year. The conventinal wisdom is that the USGA's groove-regulation rollout has been incompetent. There is much popular confusion about thow the groove rule actually works. Then last fall, Callaway submitted some prototype wedges with a still-proprietary design that conformed to the new groove rules in all technical respects, but which was so successfu in producing old-style spin, that the USGA ruled the protos as being non-confomring, and immediately amended the specification to make sure that they would remain illegal. That affair apparently p.o.'d the Callaway designers and their star talent, Phil Mickelson, enough to prompt Phil to pull out some of his old collegiate-era Ping L wedges and put them into play at Riviera earlier this year. And, wherein Scott McCarron helped Phil's p.r. stunt by calling the act one of "cheating," which was wrong in every way, and which got much additional ink for the story. Phil promptly got his apology from McCarron and then announced that he wouldn't use the Ping whlle the USGA worked things out, an oh by the way the USGA's groove rule was ridiculous and oh yes Phil wanted to show his respect for all of the other tour players who were so good to the Mickelsons this time last year when Amy got her breast cancer diagnosis. Uhhuh.
So here we are. With the USGA again taking the lead role in doing everyone's dirty work in regulating equipment, and taking all kinds of crap no matter what it does. Currently, this is a problem only for the Tour. But of course, other tournaments, outside of the Tour, are looking to the USGA. The Masters, the USGA's-own U.S. Open, and the PGA Championship would all like to have a ruling on the Eye 2 usage issue.
In the meantime, I do not think much of the controversy, since only a handful of guys, all of them Ping staffers or former Eye 2 players, are even using the old Eye 2's. It is just not that big of a deal, I think. If the USGA technical people and rules saff didn't anticipate this, it is because they might rightly have observed, long ago, that "only a handful of guys will even bother with them..." They'd have been right!