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President Trump Applies 10% Tariff on All Imports, With Higher Reciprocal Tariff Rates for Imports from Many Countries

April 4, 2025

by T. Augustine Lo, Dave Townsend, and Lawrence Ward

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On April 2, 2025, President Trump announced a new 10% global “reciprocal” tariff on U.S. imports from all countries, with higher tariff rates for a large number of countries that range from 11 to 50% ad valorem (the “Reciprocal Tariffs”), citing his authority under the International Emergency Economic Powers Act (“IEEPA”). As explained below, although the Reciprocal Tariffs apply broadly, there are some carve-outs, and there will be varying impacts on companies and supply chains. In addition to these Reciprocal Tariffs, the Trump Administration imposed new tariffs on automobiles, automotive parts, aluminum containers of beer, and empty beer cans, and ended the de minimis exemption that generally allows low-value parcels with Chinese-origin and Hong Kong-origin goods to enter the United States without import duties.

Summary of Tariffs

President Trump issued an executive order (“EO”) on Wednesday, April 2, imposing a 10% Reciprocal Tariff on imports into the United States from all countries, effective on April 5, 2025. Effective April 9, 2025, the EO increases the tariff to higher individualized rates for the goods of 82 countries and customs territories. The EO claims non-reciprocal trade barriers in those countries justify the Reciprocal Tariffs. The individualized Reciprocal Tariff rates appear in Annex I to the EO.

The EO excludes several categories of goods from the new Reciprocal Tariffs.

  • Significantly, the EO does not change the tariffs on goods that qualify for preferential treatment under the U.S.-Mexico-Canada Agreement (“USMCA”). Those USMCA-originating goods remain eligible for preferential USMCA rates, but are subject to the earlier issued executive orders relating to fentanyl and border crossings. We described those earlier executive ordersin a previous eUpdate.
  • Goods subject to tariffs or investigation under Section 232 are not subject to the Reciprocal Tariffs, as follows:
    • The Reciprocal Tariffs do not apply to imports of aluminum, aluminum derivative articles, steel, and steel derivative articles, that are subject to Section 232 duties, including the recent expansion of those duties on March 12, 2025. Automobiles and automotive parts became subject to 25% Section 232 duties on April 3, 2025, as announced in a Presidential Proclamation.
    • As of April 5, 2025, aluminum containers of beer and empty aluminum cans are subject to Section 232 tariffs as derivative aluminum articles, but are not subject to the Reciprocal Tariffs.
    • Copper and lumber articles, which are the subject of pending Section 232 investigations, are not subject to the Reciprocal Tariffs.
    • The Reciprocal Tariffs do not apply to articles that become subject to Section 232 tariffs at a later date.
  • Certain other enumerated goods, including pharmaceuticals, semiconductors, certain critical minerals, and energy and energy products are excluded from the new tariffs. These goods are listed in Annex II to the EO. These exemptions indicate the importance of foreign suppliers for these critical goods for the U.S. economy and defense sector. Some have advocated for tariffs on foreign imports coupled with tax incentives to stimulate domestic production of these goods.
  • Goods from countries that are ineligible for the most favored nation rate, such as goods originating from Russia and Belarus, which are already subject to higher duty rates.
  • Goods that are exempt from regulation under IEEPA, such as donations of food, medicine, and clothing for humanitarian purposes; information and informational materials; and baggage for personal use.

Status of Chinese Origin Goods and De Minimis Entry

Under the EO, Chinese-origin goods will be subject to the initial 10% Reciprocal Tariff on April 5, 2025, which will increase to a 34% Reciprocal Tariff on April 9, 2025. The EO applies this Reciprocal Tariff to Hong Kong and Macau origin goods. The Reciprocal Tariff comes on top of the IEEPA-based tariff that President Trump previously imposed on goods from China, which started at 10% in February 2025 and increased to 20% in March 2025.

Besides the Reciprocal Tariffs, the U.S. Government previously imposed tariffs under Section 301 of the Tariff Act of 1974 (“Section 301”) on Chinese-origin goods citing certain Chinese trade policies and practices, which began in 2018. These Section 301 tariffs have varying rates at 7.5%, 25%, or higher rates recently imposed under President Biden, depending on their classification under the Harmonized Tariff Schedule of the United States (“HTSUS”). The United States also has subjected or threatened to subject other Chinese origin goods to import tariffs under other trade laws, such as antidumping duties, countervailing duties, safeguard duties, and other Section 301 investigations. Beginning on April 9, 2025 and subject to the exclusions noted above, many Chinese-origin goods will be subject to a combined 54% IEEPA-based tariffs plus the Section 301 tariff and any applicable antidumping or countervailing duties.

The same day, President Trump issued a separate executive order to terminate the de minimis exemption for low-value imports from China and Hong Kong. This exemption has allowed importers to avoid a formal declaration of merchandise to U.S. Customs and Border Protection (“CBP”) and payment of most import duties if the total value of imports is limited to $800 or less per day. President Trump previously ordered an end to de minimis entry for parcels containing Chinese and Hong Kong origin goods in February 2025, but issued a pause after widespread reports of disruptions to handling of small parcels. President Trump required that the U.S. Secretary of Commerce certify that CBP could administer the processing and collection of tariffs on these parcels before terminating the exemption, which now has occurred. As part of this termination of de minimis treatment, the United States will collect all applicable tariffs to shipments valued under $800 per day if they contain goods of China or Hong Kong, starting on May 2, 2025. For mail parcels sent to the United States through the postal service from either China or Hong Kong, the applicable duties on parcels valued at $800 or less will be either a 30% flat tariff, or a flat tariff of $25 on parcels beginning on May 2, 2025, and increased to $50 per parcel starting on June 1, 2025.

Exclusion for U.S. Content

The EO allows U.S. importers to exclude from the dutiable value any U.S. content in the imported goods, provided that the goods contain at least 20% U.S.-origin content. Under the EO, U.S. content means the value of components produced in the United States, or those substantially transformed in the United States. The EO authorizes CBP to collect information to implement this exclusion, and it remains to be seen what documentary evidence CBP will require, and the scope of exclusions that CBP will allow. Importers should prepare documentary support if they intend to claim this exclusion for U.S.-origin content. U.S. law already allows complete or partial duty exemptions for certain goods with U.S. origin content under Chapter 98 of the HTSUS. This U.S. content exemption under the EO could operate alongside those existing provisions and may be broader in scope.

Legal Basis for EO and Potential Future Action

President Trump issued the EO citing his authority under IEEPA. As we explained in a recent eUpdate, President Trump first used IEEPA to impose tariffs on goods from China in February and March, and on certain goods from Canada and Mexico in March. By citing IEEPA, President Trump has issued tariffs, and modifications to the tariffs, quickly without prior investigative work through executive agencies or public notice and comment that are customary for tariff actions imposed under U.S. trade laws. The EO claims to make President Trump the final arbiter as to whether the Reciprocal Tariffs will be modified, increased, or withdrawn. It remains to be seen whether the latest invocation of IEEPA to impose Reciprocal Tariffs may prompt Congressional action or whether there will be other challenges to that assertion of tariff authority.

IEEPA allows the President to prohibit or regulate trade with a foreign country as a result of an emergency whose origin is in whole or in part outside of the United States. Under the EO, President Trump declared a national emergency with respect to a variety of alleged foreign trade barriers and practices. In particular, the EO identifies “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits” as the basis for a national emergency. The EO identifies a wide range of foreign trade barriers relating to not just tariffs, but also licensing restrictions; failures in customs facilitation; technical barriers to trade; inadequate intellectual property protections; discrimination against U.S. commerce; tax policies; and currency practices, among other barriers. Many of these alleged restrictions are outlined in the annual National Trade Estimate (“NTE”) authored by the Office of the United States Trade Representative (“USTR”). The 2025 NTE was released at the end of March 2025.

The EO also expressly invites foreign countries to withdraw or eliminate their alleged unfair barriers to U.S. commerce, which would permit a modification or potential withdrawal of their Reciprocal Tariff rate. The EO states that the new Reciprocal Tariffs “shall apply until such time as I determine that the underlying conditions described above are satisfied, resolved, or mitigated.” Conversely, the EO also allows President Trump to increase the Reciprocal Tariffs if a country retaliates against the United States. Accordingly, the new tariffs may be revised or increased based on how foreign countries react. In particular, it seems possible that the Reciprocal Tariffs will result in significant retaliation against U.S. exports, in which case an escalating trade war is likely. Alternatively, the Reciprocal Tariffs may be reduced or even eliminated if the White House is convinced that a foreign trading partner has eliminated key barriers to trade.

Compliance Considerations

With U.S. tariffs drastically increasing on most goods from nearly all foreign sources, companies who import merchandise into the United States should review how they declare merchandise to CBP, including their HTSUS classification, country-of-origin, and value. In particular, the Reciprocal Tariff rates create large differences based on the origin of merchandise. Companies will, accordingly, want to carefully consider the relevant rules of origin, and whether they are correctly declaring origin to CBP. Likewise, companies may achieve duty savings if they uncover and correct any over-declaration of the value of merchandise to CBP. Finally, for companies that rely on the de minimis exemption to import merchandise into the United States, they will need to consider the changes made with respect to parcels from China and Hong Kong.

Dorsey & Whitney has attorneys who focus on helping businesses consider strategic and compliance issues related to tariffs. Please contact one of the authors below for further information.

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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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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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Dorsey Recognized in Inaugural 2026 IAM/WTR Copyright 1000

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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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.

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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.