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Labor Strategies for Managing Today's Workforce

Recent Developments in Federal Whistleblower Programs and Rules

October 1, 2025

by Nicholas J. Pappas and Julia R. More

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The U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) have announced several changes to their whistleblower programs and rules, reflecting the federal government’s continued focus on encouraging individuals to report corporate misconduct. Specifically, on May 12, 2025, DOJ expanded its whistleblower program to prioritize additional “high impact” subject areas. On September 9, 2024, during the Biden administration, the SEC announced settled charges against seven public companies for Rule 21F-17(a) violations in connection with employment-related agreements that impeded whistleblowers from reporting potential misconduct to the SEC.

As federal agencies strengthen protections for whistleblowers, employers likewise face evolving challenges. These developments not only increase the likelihood of internal concerns being brought to the attention of federal authorities but also raise the stakes for organizations that fail to comply with whistleblower protections.

In this article, we examine changes in whistleblower programs and enforcement trends, including key updates to federal policies and notable enforcement actions. We also discuss the practical implications for employers navigating this complex web of legal requirements and heightened scrutiny. Finally, we offer actionable strategies to help organizations foster a culture of compliance, respond effectively to whistleblower reports, and reduce the risk of costly investigations or penalties. By understanding these new risks and proactively addressing them, employers can better protect their interests while supporting a transparent and ethical workplace.

DOJ’s Whistleblower Program Expands

 During the early months of the second Trump administration, the DOJ Criminal Division announced changes to the Division’s corporate and white-collar enforcement policies and priorities aimed at bringing the Division’s priorities in line with those of the new Trump administration. The head of the Criminal Division, Matthew R. Galeotti, announced those changes in a speech on May 12, 2025. Remarks at SIFMA’s Anti-Money Laundering and Financial Crimes Conference, Matthew R. Galeotti, 12 May 2025, available here. On the same day, Galeotti issued a memorandum that laid out changes to the Criminal Division. DOJ Criminal Division Memorandum: Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime, Matthew R. Galeotti, 12 May 2025, available here.

In the memorandum, Galeotti announced that the Criminal Division will prioritize investigating and prosecuting corporate crime in ten “high-impact” areas. To further underscore the Division’s focus on these priority areas, Galeotti simultaneously announced an expansion of the Criminal Division’s Corporate Whistleblower Awards Pilot Program (“CWAPP”) to encompass these areas.

As background, the Biden administration established the CWAPP in August 2024 to encourage individuals with knowledge of specific categories of white-collar crime to come forward in exchange for potential financial compensation provided the information enables the DOJ to recover more than $1 million dollars in civil or criminal forfeiture. DOJ Press Release: Corporate Whistleblower Awards Pilot Program, available here. The potential financial compensation for DOJ whistleblowers is substantial: whistleblowers may receive up to 30 percent of the first $100 million in net proceeds forfeited, and up to 5 percent of any net proceeds forfeited between $100 million and $500 million. CWAPP does include a safe harbor provision whereby companies that voluntarily self-report within 120 days of receiving an internal whistleblower report may be eligible for a presumption of a declination under the Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy. DOJ Press Release: Temporary Amendment to the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, available here.

In the memorandum, Galeotti announced that the CWAPP would be expanded to encompass violations committed by or through companies that reflect the Trump administration’s broader enforcement priorities, including:

  1. “Violations by corporations related to international cartels or transnational criminal organizations, including money laundering, narcotics, Controlled Substances Act, and other violations;”
  2. “Violations by corporations of federal immigration law;”
  3. “Violations by corporations involving material support of terrorism;”
  4. “Corporate sanctions offenses;”
  5. “Trade, tariff, and customs fraud by corporations;” and
  6. “Corporate procurement fraud.”

Employers should take particular note of the inclusion of immigration law violations as among the administration’s enforcement priorities now eligible for CWAPP awards. This change marks a significant departure from the prior administration’s priorities. Potential corporate violations of immigration law may include knowingly employing unauthorized workers, misuse of or circumvention of visa programs, failure to properly maintain I-9 Forms for all employees, or immigration fraud.

Traditionally, the Department of Homeland Security enforced corporate violations of immigration law through the Immigration and Customs Enforcement agency and its worksite enforcement program. Expanding the DOJ Criminal Division’s CWAPP to cover violations of federal immigration law—effectively placing immigration law violations in the same category as traditional white-collar crimes like money laundering and material support of terrorism—may reflect a shift towards increased criminal enforcement of these violations through the DOJ. At a minimum, whistleblowers will now have financial incentive through the CWAPP to bring information related to possible federal immigration law violations to the DOJ.

To mitigate the risk of whistleblower activity and enforcement related to violations of federal immigration law, employers should thoroughly assess any vulnerabilities in their immigration policies, practices, and procedures. This should include a close examination of hiring and sponsorship practices, I-9 Form procedures, and third-party staffing contracts. Employers should also establish robust and confidential reporting channels through which employers encourage employees to report any concerns regarding immigration compliance.

SEC Rule 21F-17(a)

In 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Congress established the SEC’s whistleblower program to incentivize whistleblowers to report information about possible federal securities laws violations. Pub. L. No. 111-203, 124 Stat. 1376 (2010). Dodd-Frank authorizes the SEC to provide monetary awards to eligible individuals who come forward with information that leads to enforcement actions in which over $1 million in sanctions is ordered. Awards range between ten to thirty percent of the money collected. In 2024, the SEC granted over $255 million in whistleblower awards, underscoring the program’s robustness. SEC Office of the Whistleblower Annual Report to Congress for Fiscal Year 2024, available here.

Dodd-Frank and the Sarbanes-Oxley Act, Pub. L. No. 107-204, 116 Stat. 745 (2002), afford whistleblowers certain legal protections. After Dodd-Frank, the SEC implemented rules enabling the SEC to take legal action against employers who have retaliated against whistleblowers. The SEC also promulgated a rule that prohibits any person from taking any action to “impede an individual from communicating directly with the Commission staff about a possible securities law violation.” SEC enforcement actions based on Rule 21F-17(a) “impeding” violations have recently played a more prominent role in the SEC’s enforcement strategy.

During the Biden administration, there was an uptick in enforcement actions against companies for Rule 21F-17(a) violations based on employee agreements. For example, on September 9, 2024, the SEC announced settled charges against seven public companies for violations of Rule 21F-17(a) in connection with employment, separation, and other agreements that impeded whistleblowers from reporting potential misconduct to the SEC. SEC Press Release: SEC Charges Seven Public Companies with Violations of Whistleblower Protection Rule, 9 Sept. 2024, available here. More recently, on January 16, 2025, the SEC announced settled charges against an investment advisory firm for, in part, violating Rule 21F-17(a) by requiring departing employees in separation agreements to state that they had not filed a complaint with any governmental agency. Two Sigma Investments, LP, and Two Sigma Advisers, LP, Securities Exchange Act Release No. 102207 (Jan. 16, 2025), available here. The SEC found that this requirement could, in effect, identify whistleblowers and prohibit them from receiving post-separation payments and benefits, thereby constituting illegal impeding activity.

Employers should remain aware and monitor the extent to which the SEC continues to focus on Rule 21F-17(a) enforcement actions during the current Trump administration. During the first Trump administration, the SEC did not prioritize Rule 21F-17(a) enforcement actions based on language in employer agreements that might potentially impede reporting. The SEC instead focused its enforcement efforts on cases where individuals were actively impeded from reporting information to the SEC by company actions. For example, on November 4, 2019, the SEC filed suit against a company alleging, among other things, that the company “took actions to impede individuals from communicating directly with SEC staff about possible securities violations, including by enforcing and threatening to enforce confidentiality agreements with respect to such communications.” Amended Complaint at ¶ 11, United States Securities and Exchange Commission v. Collector’s Coffee, Inc. (d/b/a Collectors Café), and Mykalai Kntilai, 697 F. Supp. 3d 138 (S.D.N.Y. 2023) No. 1:19-cv-04355, available here.

While the SEC has not yet announced settled charges based on Rule 21F-17(a) under the current Trump administration, in April the SEC issued a press release publicizing a $6 million whistleblower award, signaling a continued commitment to the program. SEC Press Release: SEC Awards $6 Million to Joint Whistleblowers, 21 April 2025, available here. Further, in the past month the SEC announced five additional whistleblower awards. Whistleblower Award Proceeding File No. 2025-45, 28 Aug. 2025, available here; Whistleblower Award Proceeding File No. 2025-47, 2 Sept. 2025, available here; Whistleblower Award Proceeding File No. 2025-48, 2 Sept. 2025, available here; Whistleblower Award Proceeding File No. 2025-49, 3 Sept. 2025, available here; Whistleblower Award Proceeding File No. 2025-51, 4 Sept. 2025, available here.

To mitigate the risk of Rule 21F-17(a) enforcement actions, employers should review all employee-related procedures, policies, and agreements to eliminate any language that reasonably could be interpreted to impede reporting to the SEC. This includes compliance manuals, ethics codes, training manuals, non-disclosure agreements, confidentiality agreements, contractor and consulting agreements, and separation agreements. For example, the SEC charged a Rule 21F-17(a) violation where a company’s compliance manual prohibited employees from initiating contact with any regulator without prior approval from the company’s legal or compliance department. Guggenheim Securities, LLC, Securities Exchange Act Release No. 92237 (June 23, 2021), available here. In another enforcement action, the SEC charged a Rule 21F-17(a) violation where a company entered into severance agreements that required departing employees to forgo any monetary recovery in connection with filing a charge or complaint with any applicable governmental administrative agency. Gaia, Inc. and Paul C. Tarell, Jr., CPA, Securities Exchange Act Release No. 97548 (May 23, 2023), available here.

Additionally, if an employee, or other individual, raises concerns about securities law violations, employers should avoid taking actions against the employee, or individual, that could be seen as impeding their ability to report to the SEC, including limiting their access to company systems. David Hansen, Securities Exchange Act Release No. 94703 (April 12, 2022), available here (charging a Rule 21F-17(a) violation where a company co-founder removed an employee’s access to company computer systems after the employee raised concerns that the company was overstating its number of paying customers).

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Reprinted with permission from the October 1st, 2025 edition of the New York Law Journal © 2025 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com

 

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EPA Limits Title V Re-Litigation of NSR Permits

Overview On September 25, 2026, the U.S. Environmental Protection Agency (“EPA”) published a final rule that significantly limits the ability of third parties to use the Clean Air Act (“CAA”) Title V permitting process to revisit New Source Review (“NSR”) permitting decisions years after those decisions were made. The rule establishes that NSR permitting determinations generally must be challenged during the original permitting proceeding, thereby providing regulated sources with greater permitting certainty and finality for major capital projects. Published in the Federal Register titled Clarifying the Scope of “Applicable Requirements” Under State Operating Permit Programs and the Federal Operating Permit Program (Docket ID No. EPA-HQ-OAR-2023-0401), the rule amends 40 C.F.R. Parts 70 and 71 to codify EPA’s interpretation regarding when requirements established under other CAA programs may be reviewed, modified, or implemented through the Title V operating permit program. The rule becomes effective 30 days after publication. The rule addresses two principal issues: (1) the relationship between NSR preconstruction permitting and Title V operating permits, and (2) the treatment of the General Duty Clause under CAA section 112(r)(1). Most significantly, the rule provides greater certainty for sources navigating the NSR permitting process. EPA’s amendments are intended to ensure that NSR permitting decisions made through an approved public process are generally not revisited later through Title V permit proceedings. The rule responds to a circuit split between the U.S. Courts of Appeals for the Fifth and Tenth Circuits. In Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), the Fifth Circuit upheld EPA’s interpretation, concluding that it was consistent with the text, structure, and purpose of Title V. In contrast, the Tenth Circuit reached the opposite conclusion in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), finding that the then-existing regulatory definition of “applicable requirement” did not support EPA’s position. By amending the regulatory language on which the Tenth Circuit relied and codifying the interpretation approved by the Fifth Circuit, EPA has established a nationwide framework governing the interaction between NSR and Title V. NSR and Title V: EPA Establishes a Uniform Nationwide Framework At the core of the rule is EPA’s effort to define the respective roles of NSR and Title V. The rule codifies the approach EPA has applied since 2017: once a source obtains an NSR permit under an EPA-approved permitting program, and that permit was issued following public notice with an opportunity for comment and judicial review, the permit establishes the NSR-related “applicable requirements” of the State Implementation Plan (“SIP”) or Federal Implementation Plan (“FIP”) for Title V purposes. Under this framework, Title V is not a vehicle for re-examining underlying NSR permitting decisions. EPA does not intend to use the Title V process to revisit applicability determinations, emissions calculations, control technology determinations, permit conditions, or other issues resolved through the NSR permitting process. This principle applies regardless of the stage of the Title V proceeding; whether the NSR permit was issued pursuant to a SIP or FIP; the type of NSR issue involved; or whether the NSR permit is incorporated into Title V sequentially or concurrently. Limited Exceptions EPA recognizes several circumstances in which NSR issues may still be reviewed through the Title V program: No NSR permit was issued at all; The permit was issued without public notice and an opportunity for comment and judicial review; or The issue involves substantive overlap between Title V and NSR requirements, such as the adequacy of monitoring provisions. As a result, the rule does not insulate unpermitted projects or foreclose review of matters that independently arise under Title V. Key Regulatory Amendments The rule revises the definition of “applicable requirement” in 40 C.F.R. §§ 70.2 and 71.2. Paragraph (1): Where an NSR permit is issued with public notice and an opportunity for comment and judicial review, the permit establishes and defines the applicable SIP or FIP requirements for Title V purposes. Paragraph (2): All NSR permit terms, including terms contained in minor NSR permits, constitute applicable requirements that must be incorporated into Title V permits. Paragraph (4): CAA section 112(r)(1) (the General Duty Clause) is expressly excluded from the definition of “applicable requirement,” while section 112(r)(7) Risk Management Program requirements remain included. EPA also amended 40 C.F.R. §§ 70.8 and 70.12 to clarify that alleged defects in requirements established outside the Title V process generally do not provide a basis for EPA objection to a Title V permit or for a Title V citizen petition. General Duty Clause Exclusion The rule also codifies EPA’s longstanding position that the General Duty Clause in CAA section 112(r)(1) is not an “applicable requirement” for Title V purposes. EPA points to several considerations supporting that conclusion, including the distinction between the General Duty Clause and Title V permit terms, the provision’s origins in the Occupational Safety and Health Act’s general duty clause, and the different enforcement structures applicable to the General Duty Clause and Title V permit requirements. Importantly, excluding section 112(r)(1) from the definition of “applicable requirement” does not eliminate EPA’s authority to enforce the General Duty Clause independently of the Title V program. The final rule instead clarifies that the General Duty Clause need not—and should not—be incorporated into Title V permits as an applicable requirement. Practical Implications for Regulated Sources Greater Finality for NSR Permits  For projects requiring PSD, nonattainment NSR, or minor NSR permits, the permitting process becomes the primary forum for resolving disputes regarding applicability determinations, emissions calculations, control technology requirements, offsets, and permit conditions. Once an NSR permit is issued through a qualifying public process, regulated sources should face substantially reduced risk that those same issues will be challenged years later through Title V permit proceedings. Reduced Risk of Collateral Permit Challenges Stakeholders have sometimes sought to use Title V permit issuance, renewal, revision, or citizen-petition proceedings to challenge underlying NSR determinations. The final rule makes clear that Title V is not the appropriate vehicle for challenging whether an applicable requirement was correctly established in the first instance. This should reduce the risk of permit delays and uncertainty associated with collateral challenges to previously issued NSR permits. The rule does not, however, eliminate all Title V challenges relating to an NSR permit. Challenges concerning the Title V permit itself—including whether it appropriately incorporates applicable requirements or contains adequate compliance provisions—remain possible. Increased Importance of the Initial NSR Proceeding Because Title V generally will not provide a second opportunity to challenge the substantive validity of an NSR determination, the administrative record developed during the NSR process becomes increasingly important. Permit applicants should ensure that applicability analyses, emissions calculations, control technology evaluations, modeling demonstrations, and supporting technical documentation are thoroughly developed during the original permitting proceeding. For significant projects, applicants may therefore have an additional incentive to identify and resolve potential permitting issues before the NSR permit is issued rather than assuming that unresolved issues can be addressed during a subsequent Title V proceeding. Potential Incentive for Broader Public Participation EPA also notes that permitting authorities may choose to provide public notice and an opportunity for comment for a broader range of NSR permits because permits issued through a qualifying public process receive the benefit of the finality framework established by the rule. Some permitting authorities may conclude that greater public participation at the NSR stage is preferable to uncertainty during subsequent Title V proceedings. Conclusion The final rule is principally a permitting-certainty measure. For sources that obtain NSR permits through a public process, EPA has substantially limited the ability of third parties to revisit underlying NSR determinations through the Title V program. As a result, regulated entities should benefit from greater finality regarding key permitting decisions, reduced risk of collateral permit challenges, and increased certainty when planning and implementing capital projects.

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SEC Proposes Expansion of Investment Adviser Performance-Based Compensation Rule

On September 30, 2026, the Securities and Exchange Commission (the “SEC”) proposed amendments to Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which provides an exemption from the general prohibition under Section 205(a)(1) of the Advisers Act on registered investment advisers receiving performance-based compensation (the “Proposal”) so long as performance-based compensation is limited to “qualified clients”.1 Most notably for private fund sponsors, the Proposal would expand the definition of “qualified client” to include any investors that satisfy the “accredited investor” definition under Regulation D. The Proposal may also have implications for private fund managers that rely on exemptions from investment adviser registration under state law because certain state-level investment adviser registration exemptions incorporate or otherwise reference the federal qualified client definition. Expansion of the Qualified Client Definition Under the current Rule 205-3, an investor generally may qualify as a qualified client if, among other alternatives, the investor has at least $1.4 million under management with the adviser or has a net worth exceeding $2.7 million. These thresholds are higher than the financial thresholds applicable to many accredited investors under Regulation D. As a result, an investor may currently qualify as an accredited investor for purposes of investing in a private offering without qualifying as a qualified client for purposes of paying performance-based compensation. The Proposal would expand the qualified client definition to include any natural person or legal entity investor that satisfies the accredited investor definition under Regulation D. The Proposal would also remove the assets under management and net worth thresholds under the current Rule 205-3 qualified client test. For private funds relying on Section 3(c)(1) of the Investment Company Act of 1940, this change could reduce the need to apply a separate qualified client standard to investors that already qualify as accredited investors. Dorsey Observations and Next Steps If adopted as proposed, the expanded qualified client definition could be particularly significant for private fund managers. Most private fund offerings are already limited to accredited investors under Regulation D. However, the Proposal could expand the pool of prospective investors available to emerging private fund managers while reducing the regulatory burden associated with complying with Rule 205-3. The Proposal could also benefit advisers operating below the SEC registration threshold that rely on a state private fund adviser exemption. A number of states have adopted exemptions modeled on the North American Securities Administrators Association (“NASAA”) private fund adviser exemption, which may condition relief for advisers to certain funds relying on Section 3(c)(1) on each beneficial owner satisfying the federal qualified client definition. However, state requirements vary, and any effect of the Proposal would depend on the text of the applicable state exemption and how it incorporates Rule 205-3. Many emerging private fund managers may have a larger network of accredited investor relationships than qualified client relationships during the early stages of their investment advisory business. Currently, under Rule 205-3, private fund managers may receive performance-based compensation from investors who do not satisfy the qualified client definition if those investors were admitted to their private funds prior to registration with the SEC. Following registration with the SEC, however, managers may continue to permit investors that are not qualified clients to invest in future private funds but may not receive performance-based compensation from those investors with respect to such investments. In addition, because the net worth and assets under management thresholds for qualified client status are adjusted for inflation every five years, the pool of qualified client investors may diminish over time as previously eligible investors no longer satisfy the applicable thresholds. The Proposal could provide the dual benefit of greater flexibility for private fund managers to establish and maintain relationships with accredited investors as their businesses scale and they become registered with the SEC, and greater flexibility for certain accredited investors to participate in investment strategies that historically have been restricted to much larger institutional investors. Unless and until the Proposal is adopted, investment advisers should continue to comply with the existing qualified client requirements. If the Proposal is adopted, private fund sponsors should consider whether corresponding changes are appropriate for their subscription documents, investor questionnaires, and other offering materials. Advisers that are state-registered or rely on a state-level exemption should also consult the laws and regulations of each relevant jurisdiction before changing investor eligibility standards or performance-based compensation practices, because adoption of the federal amendments may not automatically modify state requirements. Comments on the Proposal will be due 60 days after publication in the Federal Register. 1 Investment Adviser Performance-Based Compensation Modernization, Investment Advisers Act Release No. IA-7022 (Sept. 30, 2026), available at https://www.sec.gov/rules-regulations/2026/09/s7-2026-28#33-11443proposed.

Attorney John Cooney Returns to Dorsey in the Finance & Restructuring Group in Minneapolis

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The Supreme Court Update - October 14, 2026

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The Supreme Court Update - October 8, 2026

On September 29, 2026, the Supreme Court granted certiorari in one case: Department of Homeland Security v. D.V.D., No. 26-426: This case concerns the Trump Administration’s “third-country removal” procedures, where immigrants are deported to countries not listed in the removal orders. In granting certiorari, the Court granted the Government’s application to stay a lower court decision halting the practice, which will allow third-country removals to continue pending resolution of the case. The issues presented are: (1) Whether the district court had jurisdiction over respondents’ claims; (2) whether the district court had authority to enter class-wide declaratory relief and APA vacatur under 8 U.S.C. § 1252(f)(1); (3) whether the Government’s guidance on third-country removals is unlawful under 8 U.S.C. § 1231(b), the due process clause, or FARRA/CAT and its implementing regulations; and (4) such other questions that the Government determines are appropriate for the proper disposition of the case. On October 1, 2026, the Court granted certiorari in three additional cases: Rhoney v. Barbosa da Cunha, No. 26-104: Immigration officials detained Ricardo Aparecido Barbosa da Cunha—a Brazilian citizen who had lived in the United States for approximately twenty years after entering without inspection—and denied him a bond hearing under 8 U.S.C. § 1225(b)(2)(A). The Second Circuit held that his detention was instead governed by § 1226(a), which permits release on bond, because § 1225(b)(2)(A)’s mandatory-detention requirement applies only to noncitizens apprehended while entering the country or shortly thereafter. The question presented is: Whether 8 U.S.C. § 1225(b)(2)(A) mandates the detention pending removal proceedings of aliens who, like Barbosa da Cunha, are present in the United States without having been admitted. Missionaries of St. John the Baptist, Inc. v. Frederic, No. 25-113: A Catholic religious organization sought to build a shrine to the Virgin Mary on land the organization owned adjacent to its church in Park Hills, Kentucky. Local zoning restrictions prohibited the proposed construction. The question presented is: Whether a land-use regulation that prohibits a religious institution from building a religious structure on its own property constitutes a “substantial burden” on religious exercise under the Substantial Burden Provision of the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc(a). Marschner v. Marschner, No. 25-1349: Under the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), a veteran’s longevity-based retirement pay can be divided in a divorce, but retirement pay based on disability and retirement pay that was waived to receive disability pay are indivisible. The question presented is: Does the USFSPA require state courts to refuse enforcement of indemnification provisions in a divorce settlement agreement?

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Energy Law: Month in Review - September 2026

Welcome to Dorsey’s Energy Law: Month in Review. We provide this update to our clients to identify significant developments in the previous month. Please reach out to any of the authors, listed above, to discuss these issues. Regulatory Developments Massachusetts Ratchets Up State and Local Regulation of AI Data Centers In early September, Governor Maura Healey of Massachusetts signed an executive order requiring that artificial intelligence data centers secure the approval of local communities as a precondition to proceeding with a given project. According to the terms of the order, data center developers will need to secure a “community benefits agreement” as a precondition to receiving permits from numerous state agencies, including the Department of Environmental Protection, the Energy Facilities Siting Board, and the Massachusetts Environmental Policy Act Office. Beyond requiring community benefits agreements, the order also mandates that developers mitigate utility costs to consumers, prohibits the use of nondisclosure agreements, and requires various state agencies to develop measures to limit data center impacts on the environment. North Carolina Regulators Decline Approval of Duke Energy Gas Turbine On September 18, 2026, North Carolina Utilities Commission (NCUC) denied Duke Energy’s application for a certificate of public convenience and necessity required to construct a gas-fueled combustion turbine at its Smith Energy Complex in North Carolina. The NCUC objected strongly to the $584 million price tag and noted that Duke appeared to be constructing the facility “based on anticipated data center customer additions.” The NCUC rejected that anticipated growth as “insufficiently reliable for the Commission to act at this point.” In rejecting Duke’s application, the NCUC also noted that Duke had signed the White House Ratepayer Protection Pledge, in which it represented that it would not shift data center costs to consumers. The NCUC observed that the record did not demonstrate how Duke “intends to adhere to its commitments under the Ratepayer Protection Pledge with regard to the Proposed Facility.” Notably, commission staff had actually supported the construction of the turbine, citing concerns about Duke’s reserve margins. The NCUC noted that it “understands the Public Staff’s expressed concerns,” but those concerns were outweighed by the NCUC’s reservations, including questions of demand. Department of Energy Approves Funds for Grid Improvement The U.S. Department of Energy (DOE) recently announced that it would fund 31 grid-improvement projects in 26 states. The funding initiative is part of the DOE’s “SPARK” initiative. The funding will include $1.9 billion in federal funding from DOE and $3.35 billion in recipient cost-sharing funding. The funds will go to projects designed to improve grid reliability and lower electricity costs. Recipients plan to reconductor over 1,500 miles of transmission lines and will deploy grid-enhancing technologies across approximately 21,000 miles. DOE stated that this initiative will make available over 23 additional gigawatts of electricity. Texas Moderates Rules Governing Data Center Interconnection The Texas Public Utility Commission adopted new regulations governing large-load interconnections. The rules impose a flat study fee of $100,000 for all proposed interconnections, which departs from the initial proposal to impose study fees using a tiered system based on project size. Additionally, the final rule eliminates the PUC’s previous proposal to impose a non-refundable interconnection fee of $50,000 per MW of contracted peak demand. The final rule also moderates the initially proposed regulations governing Electric Reliability Council of Texas (ERCOT) notifications for large-load customers’ non-utilized capacity. The proposed rules would have required notifying ERCOT within 30 days of missing a scheduled energization milestone by six months. The final rules, however, do not require informing ERCOT unless a scheduled energization milestone is missed by 24 months. FERC Denies TransAlta 202(c) Cost-Recovery Plan The Federal Energy Regulatory Commission (FERC) recently rejected TransAlta’s plan to recover $19.9 million in expenses stemming from a DOE order in which DOE prohibited TransAlta from retiring its coal-powered Centralia power plant. TransAlta had previously intended to retire the facility at the end of 2025. TransAlta’s cost recovery plan proposed spending an additional $23 million on repairs to continue operating the unit. FERC’s main objection had to do with geographic scope. TransAlta’s recovery plan called for recovering costs from California Independent System Operator (CAISO) and the Southwest Power Pool (SPP), but the DOE’s order requiring operation of the plant was designed to ensure reliability in the Northwest assessment area (Montana, Oregon, Washington, and parts of northern California and northern Idaho). Accordingly, FERC was unwilling to allow cost recovery from CAISO and SPP when the order that precipitated the additional costs only related to the Northwest assessment area. FERC informed TransAlta that it would only approve cost recovery from load-serving entities in the Northwest assessment area. FERC’s decision comes amid a rush of DOE emergency orders requiring the continued operation of coal-fired generating units. Litigation Appeals Court Upholds Washington Hydropower Plant With Caveats In a September 21, 2026, opinion, the Washington Court of Appeals largely upheld a Clean Water Act water quality certification by the Washington Department of Ecology for the Goldendale Energy Storage Project, a proposed pumped-water storage hydropower system adjacent to, but off-stream from, the Columbia River. A nonprofit (Columbia Riverkeeper) and the Confederated Tribes and Bands of the Yakama Nation appealed the certification, contending that it failed to impose necessary conditions and monitoring requirements to protect the water quality of the Columbia River. Most saliently, the plaintiffs argued that the project had the potential to leak 100 acre-feet of water per year into tributaries of the Columbia River. The Court of Appeals broadly rejected plaintiffs’ challenge to the state’s conclusion that “the project was designed not to leak.” That said, the Court of Appeals did reverse on one narrow issue. Specifically, the court determined that the state’s conclusion that “leakage from the project’s tunnels would be monitored and reported” was not supported by the evidence because the certification “does not explicitly require monitoring and reporting to determine whether there is any leakage.” Accordingly, the court remanded the matter to the state to impose monitoring and reporting requirements but otherwise affirmed the certification. Legislative Developments California Legislates Restrictions on Data Center Energy Use and Grid Costs On September 21, 2026, California Governor Gavin Newsom signed seven bills broadly regulating data centers in the state. SB 1168 directed the California Public Utilities Commission to assess the energy used by data centers. It also requires the PUC to pass costs of transmission and distribution upgrades and load increases on to data centers, rather than customers. SB 886 and SB 887 compel data centers to pay for infrastructure upgrade and generation costs, and wildfire mitigation costs, in addition to imposing environmental review. The statutes additionally increase local oversight of data centers. AB 1577 imposes a monthly reporting requirement that requires data centers to supply energy consumption and efficiency data to the California Energy Commission. AB 2383 contains incentives for data centers to use onsite clean energy generation. Finally, AB 2469 and AB 2619 require data center developments to assess water supply and develop a water scarcity plan. The statutes also mandate statewide water reporting as a precondition to obtaining and renewing business licenses.

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Dorsey & Whitney LLP is pleased to announce its recognition in the inaugural edition of the Copyright 1000: The World’s Leading Copyright Professionals, published by IAM and World Trademark Review (WTR). Nine Dorsey attorneys were individually recognized, and the Firm’s Denver, Minneapolis, New York, Salt Lake City, and Seattle offices were recognized in the firm rankings. The following Dorsey attorneys were recognized in the inaugural guide: Lindsey Sadler Gregory Tamkin Charlene Krogh Evan Everist Jeffrey Cadwell Fara Sunderji Bruce Ewing Catherine Parrish Lake J. Michael Keyes The Copyright 1000 is the first dedicated ranking focused solely on the world’s leading copyright practitioners. The guide identifies leading copyright firms and practitioners across key jurisdictions worldwide. Dorsey’s intellectual property attorneys advise clients on a wide range of copyright matters, including protection, enforcement, licensing, litigation, transactions, and issues involving emerging technologies and digital content. The inaugural Copyright 1000 rankings are published by IAM and WTR.

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