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Client Alert

The Court of Federal Claims and the Trump Administration’s Contract and Grant Terminations: A Primer for Federal Grantees and Contractors

November 18, 2025

by Alex Hontos, Eric Weisenburger, Chris DeLong, and Matthew Gillespie

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The Trump Administration’s unprecedented terminations of federal contracts and grants have affected organizations seeking options and remedies. Universities, academic research institutions, federal contractors, and state and local governments have been particularly impacted. But seeking judicial redress is not straight-forward; courts considering such challenges have identified jurisdictional problems when seeking relief from a federal district court under the Administrative Procedure Act. Enter the United States Court of Federal Claims.

This briefing paper introduces Dorsey clients to the Court of Federal Claims, a specialized and lesser-known federal court that will be increasingly important and relevant as the battle over federal grants and contracts continues through the Second Trump Administration. 

What is the Court of Federal Claims?

The Court of Federal Claims (“COFC”)—in its current form—was created by the Federal Courts Administration Act of 1992.[1]  But the COFC’s history long precedes its current iteration.  In 1855, Congress created the Court of Claims to “relieve the pressure on Congress” to handle “private bills,” meaning claims against the federal government, which were then the responsibility of Congress. The Court of Claims lacked authority to render final judgments, however, and instead merely made recommendations to Congress.[2]

In 1863, during the height of the Civil War, the Court of Claims’ recommendations regarding claims against the government became too voluminous for Congress to handle, so Congress empowered the Court of Claims to issue final judgments against the United States.[3] The Court of Claims’ jurisdiction was refined a few decades later through the Tucker Act in 1887,[4] which remains the statutory basis for the Court of Federal Claims today.[5] The Court of Claims’ remit was refined again in 1925 by Act of Congress that reorganized the Court of Claims into a trial division and appellate division.[6]  The Federal Courts Improvement Act of 1982 abolished the Court of Claims, folded its appellate division into the newly created United States Court of Appeals for the Federal Circuit, and established the United States Claims Court.[7]  In 1992, the Federal Courts Administration Act renamed the United States Claims Court to the United States Court of Federal Claims.[8] 

The COFC is an “Article I court,” referring to Article I of the United States Constitution which governs the legislative branch.[9]  As an Article I court, the COFC is a “legislative” court that hears cases only under specific circumstances delineated by statute (discussed below).[10]  COFC judges are appointed by the President, with the consent of the Senate, for a fifteen-year term.[11]  There are sixteen active COFC judgeships.[12]  Currently, there are also five active senior judges and no vacancies. Among the judges, ten were appointed by President Trump, five by President Biden, and one by President Obama.[13] Judgments of the COFC are appealable to the Federal Circuit, which is an “Article III court.”[14] 

Sovereign Immunity and COFC Jurisdiction

As an Article I court, the COFC is not a court of general jurisdiction like federal district courts. Instead, the COFC can hear only those matters within its statutory grant of jurisdiction.  And there is only one defendant for lawsuits brought in the COFC: the United States.[15] 

Sovereign immunity generally bars claims against the United States.  The Tucker Act, however, resolves this bar for certain claims.[16]  In passing the Tucker Act, Congress waived sovereign immunity with respect to certain money-damage actions and prescribed the jurisdictional boundaries of the COFC.[17]  The Tucker Act provides, in relevant part:

(a)(1) The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort . . .

(2) To provide an entire remedy and to complete the relief afforded by the judgment, the court may, as an incident of and collateral to any such judgment, issue orders directing restoration to office or position, placement in appropriate duty or retirement status, and correction of applicable records, and such orders may be issued to any appropriate official of the United States . . . .[18]

Thus, the Tucker Act provides the COFC jurisdiction to hear “actions pursuant to contracts with the United States, actions to recover illegal exactions of money by the United States, and actions brought pursuant to money-mandating statutes, regulations, executive orders, or constitutional provisions.”[19]   But “the Court of Federal Claims’ limited jurisdiction does not include tort claims, criminal-law claims, or non-money-mandating constitutional provisions.”[20]   

Important in the context of recent litigation, the Federal Circuit has held the COFC, as an Article I court, “lacks the general federal question jurisdiction of the district courts, which would allow it to review the agency’s actions and to grant relief pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701-706 (1994).”[21]  And when a “plaintiff has another suit for or in respect to [a] claim pending against the United States” in another court, the Court of Federal Claims “has no jurisdiction over [that] claim” while the other suit is pending.[22] 

Cases in the COFC do not follow the Federal Rules of Civil Procedure (“FRCP”).  Instead, the COFC has its own rules,[23] which in some instances differ from the FRCP.  For example, because the only defendant in the COFC is the United States, COFC Rule 4 does not detail the process for a “Summons” like FRCP 4 but rather addresses “Serving a Complaint on the United States.”[24]

Statute of Limitations

The general statute of limitations for monetary claims against the federal government is six years.[25] But certain claims have other potential time-bars.  For example, some contract claims are governed by the Contract Disputes Act and must first be submitted to and adjudicated by a contracting officer, whose decisions generally must be challenged in the COFC within one year.[26]  As another example, bid protest actions based on ambiguities or errors identified in the government’s solicitation (rather than errors in the evaluation-and-award process) generally must be brought before the deadline to submit offers in response to the solicitation.[27]

Permissible Remedies at COFC

The COFC’s principal remedy is a money judgment—think damages associated with a breach of contract.[28] “The United States Court of Federal Claims does not have general authority to issue injunctive relief.”[29]  Despite COFC’s lack of “general authority” to grant equitable relief, however, the COFC has limited authority to issue equitable relief “as an incident of and collateral to any such [money] judgment.”[30] For example, COFC can order the government to correct its records.[31] 

Litigation in the COFC

For administrative challenges leading up to a COFC action, the federal agency whose decisions or actions gave rise to the claim is often represented by their own agency’s counsel.  Once the action is filed in the COFC, however, the Department of Justice (“DOJ”) steps in to represent the agency. Each case and set of facts is different, but new counsel coming into the case can be beneficial for informal resolution between the parties because DOJ attorneys will often take a fresh look at the issues in dispute.  The DOJ section that represents the United States at the COFC—the “National Courts Section” of the Civil Division—has historically had a reputation as pragmatic and apolitical.  Further, because DOJ represents the United States in litigation, DOJ gets to settle a case or dispute, even over the objection of the agency. 

In addition, funds to settle claims and lawsuits at COFC can come from a different funding source than, for example, the funding supporting the contract or grant in dispute.  Instead, the United States Judgment Fund “pays court judgments and compromise settlements of lawsuits against the [federal] government.”[32]

Examples of Tucker Act Cases at COFC

The COFC, and its predecessor courts, have heard a wide variety of cases brought under the Tucker Act in the nearly 140 years since its passage.  Some relatively recent and significant examples have shaped the scope of the COFC’s jurisdiction to hear grant and contract claims. While the bulk of the COFC’s cases involve contracts governed by the Contract Disputes Act—a law that does not cover terminated federal grants or even all contracts with the United States—there are numerous examples of non-CDA contract disputes that have resulted in recovery against the United States for breach.

First, in Thermalon Industries, Ltd. v. United States, the COFC held that federal grants qualify as the type of contract for which a plaintiff can sue for wrongful termination in the COFC.[33]  There, the COFC explained that the National Science Foundation (“NSF”) awarded a grant to Thermalon and, after work began, the NSF audited Thermalon’s invoices and disallowed certain costs Thermalon submitted.[34]  Thermalon stopped work and the NSF terminated the grant.[35] Thermalon sought relief from the NSF, which the NSF denied, so Thermalon filed suit in the COFC.[36]  The NSF moved to dismiss, arguing the Tucker Act did not confer jurisdiction because Thermalon’s grant was not a contract.[37] The COFC denied the motion to dismiss, reasoning that the Tucker Act covers more than just “situations that involve the government ‘stepping off the throne and engaging in [the] purchase and sale of goods’ in the market place.”[38]  Ultimately, the COFC determined that “contracts enforceable under the Tucker Act result only if there is a mutual intent to contract, including an offer, acceptance, and consideration,” and that “the government always has the choice when designing a grant scheme to select a scheme that does or does not involve contracts.”[39]  Since Thermalon, the law is clear that instruments with the United States that have the traditional indicia of contracts are contracts for purposes of COFC jurisdiction.[40] 

Second, in the “Winstar” cases, the COFC held (and the Supreme Court affirmed) that even the United States’ exercise of a sovereign power can support a breach-of-contract claim.  In those cases, financial institutions sued in the COFC for breaches of contracts that had promised regulatory relief.[41] The financial institution plaintiffs had agreed to purchase savings-and-loan institutions during an industry crisis in the 1980s in exchange for, among other things, reduced regulatory burdens, such as lower reserve requirements.[42]  The contracts provided that if those regulatory benefits were reversed, the United States would owe damages.[43]  Years after the contracts were signed, Congress enacted legislation that prohibited some of the very incentives the financial institutions had contracted to obtain. The COFC awarded the financial institutions damages for breach of contract.[44]  The Federal Circuit (en banc) and United States Supreme Court affirmed the damages awards, explaining that although the federal government cannot agree in a contract that it will not exercise a sovereign power (such as enacting legislation), it can agree that it will pay costs caused by exercising that power, and the COFC has jurisdiction to hear such cases.[45]  Following this decision, more than 100 separate—but similar—cases were filed in the COFC, the last of which was finally resolved in 2015.[46]

Third, in a line of cases known as the “Spent Nuclear Fuel” cases, the COFC maintained plaintiffs’ right to seek monetary relief when forced to incur costs based on an agency’s failure to meet contractual obligations.  In these cases, electric utilities brought claims for breaches of contracts in which the utilities agreed to dispose of spent nuclear fuel (“SNF”) produced at the utilities’ power plants.[47]  Congress enacted the Nuclear Waste Policy Act of 1982, in which the federal government recognized that it must provide for “permanent disposal of high-level radioactive waste,” and that the “generators and owners” of the waste must have the primary responsibility to pay for disposal of it and for the interim costs of storage pending disposal.[48]  The Act mandated that the utilities contract with the Department of Energy (“DOE”) and required disposal of waste to begin no later than January 31, 1998.[49] But in 1994, DOE announced the repository to dispose of SNF would not be available until 2010 and that DOE had no obligation to provide for disposal by the deadline.[50] 

The utilities brought actions for judicial review of DOE’s decision in the D.C. Circuit, which held DOE did have an obligation to begin disposing of the waste by the January 31, 1998 deadline.[51]  Nevertheless, DOE informed certain utilities that it would not accept waste by the deadline, so the utilities went back to the D.C. Circuit seeking writs of mandamus to force DOE to comply with the deadline.[52]  But the D.C. Circuit held instead that the utilities could pursue contractual remedies—sue for damages caused by the breach of the contracts with DOE.[53]  The utilities then filed breach-of-contract actions against DOE in the COFC seeking money damages for the costs to be incurred with extended storage of SNF and alleged an unconstitutional taking of property (the interim storage facilities) by failing to dispose of SNF.[54]  The government moved to dismiss on the ground that the utilities had failed to exhaust administrative remedies required by the contract when filing contractual claims.[55]  The utilities moved for partial summary judgment on the issue of liability for their breach-of-contract claims.  Id. The COFC denied the government’s motion to dismiss because there was no applicable administrative dispute process for specific breach claims.[56] The court also granted partial summary judgment for the utilities on liability, explaining that it was undisputed that DOE had failed to begin accepting, transporting, and disposing of the SNF.[57]  The Federal Circuit affirmed.[58] 

Fourth, the COFC hears breaches of settlement agreements.  As one example, a former employee of the United States Office of Personnel Management (“OPM”) alleged OPM violated confidentiality provisions in his settlement agreement and brought a claim for money damages.[59]  The COFC concluded it had jurisdiction over such claims under the Tucker Act, but dismissed the claim because it had already been litigated before the Merit Systems Protection Board.[60]  The Federal Circuit affirmed that the Tucker Act conferred the COFC jurisdiction over this breach claim and reversed dismissal under the doctrine of res judicata.[61] 

New Questions Over the Scope of APA Jurisdiction and Remedies in Recent Actions

Under the Second Trump Administration, federal district courts have faced a deluge of new lawsuits from states and organizations seeking injunctions to pause terminations of grants, contracts, or other federal programs.  To date, these challenges have often been brought as statutory causes of action under the Administrative Procedure Act (“APA”).[62]  Some district courts have granted interim injunctive relief from which the Administration has often sought relief from the circuit courts of appeal and even the Supreme Court. For example, multiple states brought an action under the APA in federal district court seeking an injunction preventing the Department of Education from “terminating various education-related grants” and “requir[ing] the Government to pay out past-due grant obligations and to continue paying obligations as they accrue.”[63]  The district court granted preliminary injunctive relief, which was not stayed, and the Administration sought emergency relief from the Supreme Court.  In a relatively short order on the Administration’s request, the Supreme Court granted a stay of the injunction, ruling that the government was likely to succeed in its defense against the claims because the claims were, in essence, seeking “‘to enforce a contractual obligation to pay money,’” which is a claim in the remit of the Court of Federal Claims.[64] 

Since the Supreme Court’s order in Department of Education, courts have expressed increased skepticism over the scope of APA jurisdiction when reviewing challenges to grants and contracts.  In a recent example, the D.C. federal district court heard a challenge from a union and associations of scientists and academics over termination of NSF grants designed “to support underrepresented groups in STEM [Science, Technology, Engineering, and Math] fields.”[65] NSF terminated those grants following issuance of subregulatory guidance entitled “Statement of NSF Priorities” in April 2025,[66] as part of a sweeping termination of approximately 1,600 similar grants totaling over $1 billion.[67] The plaintiffs challenged termination of the grants on several bases, one of which was an APA challenge to NSF’s termination of the grants that sought injunctive relief from the court ordering NSF to reinstate the grants at issue.[68]  Relying in part of the Department of Education decision, the federal district court determined that it lacks jurisdiction to hear those APA claims, despite that the claims “do[] not overtly seek monetary relief, nor expressly invoke contractual claims,” because the rights at issue “stem from the cancelled grant agreements and [plaintiffs] seek specific performance of those agreements.”[69] 

In a similar challenge, the Supreme Court cast doubt on a grantee’s ability to obtain monetary relief or grant reinstatement through an APA challenge.  In National Institutes of Health v. American Public Health Association, a plurality of the Supreme Court explained that the APA does not allow federal district courts to adjudicate claims based on terminations of research-related grants or to order relief that amounted to an obligation to pay money damages based on such grants.[70]  In that case, the plaintiffs brought an APA action in federal district court to challenge agency-issued guidance that resulted in the National Institutes of Health terminating hundreds of grants. 

The Supreme Court’s recent emergency orders in Department of Education and National Institutes of Health are proving to be a hurdle—though not an impossible one—when seeking relief in the federal district courts.  Though the APA path may still be available in certain fact patterns, organizational leaders should understand that there are other options—including the Court of Federal Claims—to seek redress for wrongs wrought by the decisions of policy makers in Washington, D.C.

Dorsey’s government-contracts team has appeared in many Court of Federal Claims matters and advises organizations assessing federal grant or contract terminations, seeking termination and settlement costs from federal agencies, pursuing administrative appeals, or litigating those disputes in the federal district courts or Court of Federal Claims.


[1] Pub. L. No. 102-572, 106 Stat. 4506.

[2] See Glidden Co. v. Zdanok, 370 U.S. 530, 552 (1962) (superseded by statute on other grounds).

[3] See id. at 553.

[4] 24 Stat. 505 (1887).

[5] See Glidden, 370 U.S. at 556; see also 28 U.S.C. § 1491.

[6] See Pub. L. No. 68-451, 43 Stat. 964.

[7] See Pub. L. No. 97-164, 96 Stat. 25.

[8] See Pub. L. No. 102-572, 106 Stat. 4506.

[9] See, e.g., Indus. for the Blind, Inc. v. United States, 120 Fed. Cl. 132, 135 (2015).

[10] See Courts: A Brief Overview, Federal Judicial Center, https://www.fjc.gov/history/courts/courts-brief-overview.

[11] See 28 U.S.C. §§ 171-172.

[12] See 28 U.S.C. § 171.

[13] See Judges, United States Court of Federal Claims, https://www.uscfc.uscourts.gov/judges.

[14] See Seaboard Lumber Co. v. United States, 903 F.2d 1560 (Fed. Cir. 1990).

[15] See Double Lion Uchet Express Tr. v. United States, 149 Fed. Cl. 415, 420 (2020) (“[I]n the Court of Federal Claims, ‘the only proper defendant . . . is the United States, not its officers, nor any other individual.’” (quoting Stephenson v. United States, 58 Fed. Cl. 186, 190 (2003))).

[16] See 28 U.S.C. § 1491.

[17] See United States v. Testan, 424 U.S. 392, 399-400 (1976) (describing the Tucker Act’s waiver of sovereign immunity for certain claims against the United States).

[18] 28 U.S.C. § 1491(a).  The COFC also has jurisdiction to hear bid protests, 28 U.S.C. § 1491(b), which are challenges to the federal government’s procurement decisions.  Dorsey has extensive expertise and experience in representing and advising organizations on myriad federal procurement issues.

[19] Roth v. United States, 378 F.3d 1371, 1384 (Fed. Cir. 2004). 

[20] Chisum v. United States, No. 2025-1562, 2025 U.S. App. LEXIS 25967, 2025 WL 2836408, at *6 (Fed. Cir. Oct. 7, 2025).

[21] Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir. 1997).

[22] United States v. Tohono O’odham Nation, 563 U.S. 307, 311 (2011); see also 28 U.S.C. § 1500.

[23] Rules of the Unites States Court of Federal Claims (2024), available at https://www.uscfc.uscourts.gov/sites/cfc/files/rcfc_complete.pdf.

[24] Compare Fed. R. Civ. P. 4 with Ct. Fed. Cl. R. 4.

[25] See 28 U.S.C. § 2501 (“Every claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues.”).

[26] See 41 U.S.C. §§ 7103-7104. 

[27] See generally Blue & Gold, Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007).

[28] See 28 U.S.C. § 1491(a)(2). 

[29] Sergent’s Mech. Sys. v. United States, 157 Fed. Cl. 41, 46 (2021) (citing Richardson v. Morris, 409 U.S. 464, 465 (1973) (“[T]he [Tucker] Act has long been construed as authorizing only actions for money judgments and not suits for equitable relief against the United States.”)).

[30] 28 U.S.C. § 1491(a)(2). 

[31] Id.

[32] Judgment Fund, Bureau of the Fiscal Service,  https://fiscal.treasury.gov/judgment-fund/; see also 31 U.S.C. § 1304.

[33] 34 Fed. Cl. 411 (1995). 

[34] Id. at 414.

[35] Id. 

[36] Id.

[37] Id. 

[38] Id. at 417 (quoting Kania v. United States, 650 F.2d 264 (Ct. Cl. 1981)). 

[39] Thermalon, 34 Fed. Cl. at 421. 

[40] Hometown Fin., Inc. v. United States, 409 F.3d 1360, 1364 (Fed. Cir. 2005) (identifying “(1) mutuality of intent to contract; (2) offer and acceptance; (3) consideration; and (4) a government representative having actual authority to bind the United States”).

[41] See, e.g., United States v. Winstar Corp., 518 U.S. 839 (1996). 

[42] See id. 

[43] See id. 

[44] See Winstar Corp. v. United States, 21 Cl. Ct. 112 (1990). 

[45] See Winstar, 518 U.S. at 881.

[46] Timothy Curry & Lynn Shibut, The Cost of the Savings and Loan Crisis: Truth and Consequences, 13 No. 2 FDIC Banking Review 26, 33 (2000).

[47] See Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000).

[48] See id. at 1337 (citing 42 U.S.C. §§ 10131(a)(4)). 

[49] Id.

[50] See id. at 1338. 

[51] See Indiana Michigan Power Co. v. Dep’t of Energy, 88 F.3d 1272 (D.C. Cir. 1996). 

[52] See Northern States Power Co. v. Dep’t of Energy, 128 F.3d 754, 760 (D.C. Cir. 1997). 

[53] Id. 

[54] See Maine Yankee Atomic Power, 225 F.3d at 1337. 

[55] See Yankee Atomic Elec. Co. v. United States, 42 Fed. Cl. 223, 225 (1999). 

[56] Id. at 235.

[57] See id.  

[58] Maine Yankee Atomic Power, 225 F.3d at 1337.

[59] See Cunningham v. United States, 748 F.3d 1172 (Fed. Cir. 2014). 

[60] See  Cunningham v. United States, 108 Fed. Cl. 208, 221 (2012).

[61] Cunningham, 748 F.3d at 1174.

[62] See 5 USC § 551 et seq.

[63] See Dep’t of Education v. California, et al., 604 U.S. 650, 650 (2025). 

[64] Id. at 651.

[65] Am. Ass’n of Physics Tchrs., Inc. v. Nat’l Sci. Found., No. 25-cv-1923, 4, 2025 U.S. Dist. LEXIS 176901, at *7 (D.D.C. Sept. 10, 2025).

[66] Id. at *2.

[67] Id. at *2-3. 

[68] See id. at *3. 

[69] Id. at *7. 

[70] 606 U.S. __, __, 145 S. Ct. 2658 (2025).

Firm Highlights

News

Dorsey & Whitney Advises Beijing Xunzhong on Two Consecutive H Share Placings Raising HK$418.5 Million

International law firm Dorsey & Whitney LLP acted as Hong Kong legal advisors to Beijing Xunzhong Communication Technology Co., Ltd. (“Xunzhong”) as to Hong Kong law in connection with two consecutive placings of new H shares under general mandate (the “First Placing” and the “Second Placing”, respectively, and together, the “Placings”). Xunzhong’s H shares are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 2597). Winbull Securities International (Hong Kong) Limited acted as sole overall coordinator and placing agent on both Placings. The First Placing of 11,190,000 new H shares at HK$28.20 each was completed on September 17, 2026, followed by the Second Placing of 3,550,000 new H shares at HK$29.00 each on October 30, 2026. The Placings raised approximately HK$315.56 million and HK$102.95 million in gross proceeds, respectively, or approximately HK$418.51 million in aggregate (approximately HK$415.96 million in aggregate net proceeds). Both Placings were conducted under the same general mandate granted by shareholders at Xunzhong’s 2025 annual general meeting, and each was completed within one week of the signing of its placing agreement. Completing placings in consecutive months is relatively uncommon in the Hong Kong market, and doing so called on the technical depth of Dorsey’s Hong Kong Capital Markets team. Working closely with Xunzhong to understand its business needs and prepare the transaction documents, the team addressed in quick succession the remaining capacity under the general mandate, disclosure of the use of proceeds and the maintenance of Xunzhong’s public float, enabling both Placings to be completed seamlessly. “We are pleased to have advised Xunzhong on both Placings,” said Rachel Han, Partner and Co-Head of Dorsey’s Asia Capital Markets practice. “We appreciate the trust placed in our team and the close collaboration among all parties involved. We look forward to supporting Xunzhong as it continues to execute its growth strategy and pursue future capital markets opportunities.” Xunzhong is principally engaged in cloud-based communications services and enterprise digitalization services in the PRC. As disclosed in its announcements, the net proceeds of the First Placing are allocated to developing Xunzhong’s new computing power operation services business, while those of the Second Placing will be used to integrate model-as-a-service (MaaS) and AI agent capabilities into its existing cloud communications platform-as-a-service (PaaS) platform and software-as-a-service (SaaS) products. Approximately 55% of the net proceeds of the Second Placing will be used for computing power equipment upgrades for the MaaS system, approximately 35% for MaaS, PaaS and SaaS platform upgrades, and approximately 10% for working capital and general corporate purposes. With a single MaaS platform and shared computing power supporting its PaaS and SaaS offerings, Xunzhong intends for its MaaS, PaaS and SaaS capabilities to complement and reinforce one another, and to address customer needs from multiple angles, from embedding AI in customer communications and business workflows to maintaining stable performance at scale and keeping customer data within controlled environments. Partner and Co-Head of Dorsey’s Asia Capital Markets practice Rachel Han and Of Counsel in the Capital Markets and Corporate Compliance group Carlton Ng, along with Associate Kristy Ting, led the Dorsey Hong Kong Capital Markets & Corporate Compliance group in advising Xunzhong on both Placings.

Insights

The Methane Regulatory Pendulum Swings Again: EPA Proposes Sweeping Changes to Federal Standards for the Oil and Natural Gas Sector

Few environmental regulations better illustrate Washington’s regulatory “ping-pong” than EPA’s methane standards for the oil and natural gas sector. Over the last decade, successive administrations have repeatedly expanded, narrowed, rescinded, reinstated, and revised federal methane requirements, leaving industry to navigate a shifting compliance landscape with each change in administration. EPA’s October 27, 2026 proposal to reconsider significant portions of the 2024 oil and natural gas New Source Performance Standards (“NSPS”) and Emission Guidelines (“EG”) under Subparts OOOOb and OOOOc represents the latest swing of the regulatory pendulum. If finalized, the proposal would substantially reduce compliance obligations in several areas, particularly with respect to lower-producing wells, associated gas flaring, equipment and control-device standards, and the Super Emitter Program. EPA estimates that the proposal would result in approximately $45 billion in savings, while preserving what the agency considers appropriate methane emission controls. EPA’s proposal was published in the Federal Register on October 29, 2026. Comments must be received on or before December 16, 2026.  Significantly, EPA is not using this rulemaking to reconsider its general authority to regulate methane emissions from the oil and natural gas sector. Rather, the agency is addressing specific requirements adopted in the 2024 methane rule, while broader questions concerning greenhouse gas regulation are being addressed in separate proceedings. The present proposal therefore focuses on the appropriate design and scope of particular methane regulations, rather than resolving the threshold question of whether methane may be regulated under the Clean Air Act at all. I.    EPA Proposes to Eliminate the Super Emitter Program Among the proposal’s most consequential changes is the complete elimination of the Super Emitter Program. Adopted in 2024, the program created a regulatory framework under which EPA-certified third parties could identify large methane releases using approved remote-sensing technologies. Upon receiving a qualifying notification from EPA, owners and operators were required to investigate the reported emissions event, report findings to EPA, and take corrective action where necessary. EPA now proposes to repeal the Super Emitter Program in its entirety. The agency questions the program’s legal and policy foundations, including the role of third parties in identifying emissions events and triggering regulatory obligations. EPA also questions whether the program is necessary or effective given other requirements applicable to regulated sources and whether its expected emissions reductions justify its costs and implementation challenges. Because the program was incorporated into both the NSPS applicable to new, modified, and reconstructed sources and the EG applicable to existing sources, its removal would affect federal requirements as well as the presumptive requirements that States otherwise would be expected to address in Clean Air Act § 111(d) plans. Importantly, EPA’s proposed repeal does not prevent States from developing and implementing their own Super Emitter Program based on the existing requirements, which several states are already doing.  II.    EPA Reconsiders Associated Gas Requirements Another centerpiece of EPA’s proposal is its reconsideration of the 2024 rule’s restrictions on flaring associated gas from oil wells. The 2024 rule determined that the best system of emission reduction (“BSER”) generally required operators to capture and beneficially use associated gas by routing it to a sales line, using it onsite, or reinjecting it, rather than routinely flaring it. Although EPA provided certain transition periods and compliance flexibilities, particularly for wells facing infrastructure constraints, the rule ultimately established a framework strongly favoring capture and utilization over flaring. Since promulgation, EPA has received significant feedback regarding gathering-system limitations, gas quality issues, and other practical barriers operators face in securing outlets for associated gas. In response, EPA proposes to replace the existing capture-focused approach with a substantially more flexible standard. EPA argues that the 2024 rule relied too heavily on the availability of third-party gathering and processing infrastructure that is often beyond an operator’s control, raising questions regarding achievability and cost-effectiveness. Under the proposal, BSER would be based on routing associated gas to a flare or other control device capable of achieving at least a 95 percent reduction in methane and volatile organic compound (“VOC”) emissions. Operators could continue to capture gas for sale, use it onsite, or reinject it where feasible, but those practices would no longer be required. EPA also proposes that if a portion of associated gas is routed to sales or used for another purpose, the remaining portion must comply with the 95 percent standard. For example, if a company can route 40 percent of its associated gas to a sales line, the company would need to route the other 60 percent to a control device with a 95 percent reduction, or to a flare. EPA is also soliciting comment on less sweeping alternatives that would preserve the basic structure of the 2024 associated-gas program, while providing additional compliance flexibility. In particular, EPA requests comment on whether it should retain the current capture-and-sales framework but expand the circumstances under which temporary flaring is permitted or extend the duration of temporary flaring allowances where operators face infrastructure constraints. EPA appears to recognize that gathering-system availability, processing constraints, and other third-party factors can affect an operator's ability to route gas to sales, even where the operator ultimately intends to comply with the capture requirements. These requests for comment suggest that EPA is considering whether targeted revisions to the existing framework could address implementation concerns without fully abandoning the 2024 rule's underlying preference for gas capture and beneficial use. III.    EPA’s Reconsideration of the “No Identifiable Emissions” Standard EPA's proposal would substantially revise the 2024 rule’s “no identifiable emissions” (“NIE”) requirements applicable to certain covers and closed vent systems (“CVS”) associated with storage tanks. Under the existing rule, covered equipment generally must operate without identifiable emissions, creating a compliance framework that focuses heavily on the absence of observable emissions rather than solely on equipment design or overall control effectiveness. Since promulgation, industry has argued that the standard effectively functions as a zero-emissions requirement that may be difficult to satisfy under all operating conditions, even where equipment and vapor control systems are properly designed, maintained, and operated. Moreover, EPA stated in the preamble to the 2024 rule that any identified emissions would constitute a deviation of the emissions limitation, resulting in a framework under which the observation of emissions could itself establish noncompliance. EPA now proposes to separate the requirements into distinct design and operational components and to fundamentally alter how compliance with the operational NIE requirement is evaluated. EPA proposes to distinguish between deviations of the design requirements and deviations of the operational NIE requirements. Under the proposed approach, failure to repair an identified emission or defect within 24 hours would constitute a deviation of the design requirement, although not necessarily an underlying violation. Separately, operators could demonstrate compliance with the operational NIE requirement by making repairs as soon as practicable, with an initial repair attempt within five days and final repair within 30 days, or by qualifying for the existing delay-of-repair provisions. A deviation of the operational requirement would occur if the applicable repair deadlines are not met and the delay-of-repair provisions do not apply. The proposal also establishes a new framework for addressing recurring or “chronic” emissions events. After the third emissions event or defect from the same cover or CVS within a year, the owner or operator would be required to conduct an investigative analysis within 10 days to determine whether the underlying cause relates to equipment design, operation, maintenance, or prior repair efforts. The results of that investigation would have important compliance implications. If recurring emissions are attributable to a design flaw, EPA would treat the issue as a deviation of the design requirements. If the emissions result from inadequate prior repairs, the deviation would be attributed to the repair requirements. If operations, maintenance, or other site practices are responsible, the deviation would be classified under the operational requirements. EPA would also require implementation of corrective measures identified through the analysis, including design modifications within 90 days and operational or maintenance-related corrective actions within 30 days. Taken together, these revisions would shift the NIE standard away from a framework in which the mere presence of emissions may establish noncompliance and toward one that focuses on whether operators identify emissions, complete timely repairs, investigate recurring problems, and address the root causes of repeated emissions events. IV.    Solicitation of Comment on “Legally and Practicably Enforceable” Standard EPA is also soliciting comment on the definition of “legally and practicably enforceable” (“LPE”), which industry has identified as one of the more problematic existing requirements. Under the 2024 rule, EPA adopted an interpretation of LPE that many commenters argued effectively disqualifies numerous state regulatory programs, permits, and other federally enforceable mechanisms from serving as the basis for remaining below applicable Subpart OOOOb storage tank thresholds. In particular, stakeholders have asserted that the current LPE framework makes it difficult for state air permitting programs and other state regulatory requirements to satisfy EPA's criteria, thereby causing more storage tanks and other emission units to remain subject to Subpart OOOOb requirements than would otherwise be the case. EPA now requests comment on whether its current interpretation of LPE is overly restrictive and whether alternative approaches would better account for the manner in which state permitting and regulatory programs are administered and enforced. The request is significant because a broader interpretation of LPE could allow a wider range of federally enforceable state permits and regulatory requirements to satisfy exemption criteria under OOOOb, potentially reducing the number of storage tanks and other sources subject to direct NSPS regulation. As a result, the LPE issue has implications that extend beyond compliance mechanics and could materially affect the scope of sources regulated under the federal methane program. V.    Revised Requirements for Marginal Wells EPA is also proposing significant revisions to the treatment of lower-producing wells under Subparts OOOOb and OOOOc. The agency notes that marginal wells constitute a substantial portion of the nation’s producing well inventory but account for a relatively small share of overall production. At the same time, EPA discusses studies estimating that marginal wells contribute a disproportionate share of methane emissions from oil and natural gas production. The agency is evaluating whether the 2024 rule appropriately accounts for the operational characteristics, emissions profiles, and compliance costs associated with these wells. To address those concerns, EPA is proposing two alternative approaches to well-site subcategorization. Under the first option, EPA would distinguish between marginal and non-marginal well sites. EPA proposes to define a marginal well as a well that produced no more than 15 barrels of oil equivalent (“BOE”) per day over the prior 12-month period and a marginal well site as a site consisting exclusively of marginal wells with total site-wide production of no more than 15 BOE per day over the same period. EPA is also soliciting comment on whether marginal wells should be further subdivided based on production levels, including a potential distinction between sites producing 6 BOE per day or less and sites producing more than 6 BOE but no more than 15 BOE per day, which could result in additional regulatory flexibility for the lowest-producing wells. Under the second option, EPA would distinguish between conventional and unconventional well sites and tailor requirements based on that classification, including reduced requirements for conventional wells. The agency is seeking comment on which framework better reflects the operational and emissions characteristics of different well sites, as well as whether additional subcategories should be established within the marginal-well population and the extent to which compliance requirements should differ among categories. VI.    LDAR, Pneumatic Controllers, Control Device Monitoring, and Facility Modifications EPA's proposal also includes several targeted revisions to the 2024 rule's leak detection and repair (“LDAR”) requirements. Most notably, EPA proposes additional flexibility in the use of advanced monitoring technologies and seeks to move away from compliance frameworks that rely heavily on a single detection method. The agency is proposing changes intended to facilitate the use of multiple monitoring technologies, including optical gas imaging and other alternative detection approaches, and is seeking comment on whether technology-neutral compliance options can achieve equivalent emissions reductions at lower cost. EPA also proposes revisions for components and equipment that are particularly difficult to monitor using conventional LDAR methods, reflecting concerns that certain 2024 requirements may not be practical or cost-effective in the field. More broadly, EPA questions whether some of the monitoring frequencies adopted in 2024 appropriately balance compliance burdens and emissions-reduction benefits and seeks comment on additional opportunities to tailor LDAR obligations based on emissions risk and source characteristics. EPA also proposes technical revisions to requirements governing control devices and related equipment. These include changes addressing continuous pilot-flame requirements, flame-monitoring data deviations, control-device alerts, visible-emissions test conditions, temporary or backup control devices, temporary process controllers, and control-device categories. The agency’s stated objective is to provide additional compliance flexibility while maintaining appropriate emissions controls. The practical effect will depend on the final requirements and the equipment and circumstances to which each amendment applies. The proposal also addresses pneumatic controllers and equipment leaks at gas processing plants. For certain high-pressure process controllers at transmission compressor stations, EPA proposes a separate regulatory approach based on its reassessment of technical feasibility and cost. The proposal should not be read as establishing a general exemption for pneumatic controllers across the industry. EPA also proposes changes to other equipment-specific requirements, including requirements applicable to pumps, storage vessels, and equipment leaks at gas plants, in response to concerns raised following promulgation of the 2024 rule. Finally, EPA proposes changes to certain requirements governing liquids unloading and other well-site operations, as well as technical corrections and clarifications to the existing regulatory text. These provisions form part of EPA’s broader effort to address implementation concerns and reassess the costs and expected emissions reductions associated with selected requirements in the 2024 rule. Operators should evaluate the specific proposed amendments applicable to their facilities rather than assume that the proposal would provide across-the-board relief from existing monitoring, equipment, or control-device obligations. VII.    Implications for States and Future Congressional or Administrative Action EPA’s proposal would substantially revise several consequential elements of the 2024 methane rule, but it would not eliminate regulation of existing oil and natural gas sources under Clean Air Act § 111(d). As a result, states remain subject to the existing obligation to develop and submit plans for existing sources. If the proposed revisions are finalized, states currently developing those plans may need to reevaluate key program elements, including requirements relating to associated gas, well-site subcategories, the Super Emitter Program, and other compliance obligations. The proposal does not itself extend the January 22, 2027 deadline for state-plan submissions established under the existing framework. The Congressional Review Act (“CRA”) remains a potential source of uncertainty. Depending on when EPA submits a final rule to Congress and the applicable congressional-session timing, a future Congress and President could seek to disapprove the rule under the CRA. A successful disapproval would invalidate the rule and generally restrict the agency from issuing a rule in substantially the same form absent subsequent statutory authorization. The CRA’s lookback provisions can affect the period during which a rule remains subject to congressional review, so the risk cannot be assessed solely by reference to the calendar year in which the rule is finalized. The timing of finalization and submission to Congress, together with the applicable congressional calendar, will determine the extent of that exposure. Finally, unlike the CRA, which can nullify a recently promulgated rule through legislative action, a future administration seeking to unwind this rule would generally need to proceed through a new notice-and-comment rulemaking. EPA would need to revisit the underlying BSER determinations, cost analyses, technical feasibility findings, and enforceability conclusions that support the final rule. Because this proposal is grounded heavily in findings regarding achievability, legal and practical enforceability, and cost-effectiveness, a future administration would need to develop a sufficient record supporting different conclusions before reinstating more stringent requirements. Consequently, the final rule may prove more durable than prior pendulum swings, even if it remains politically controversial.

Insights

Observations on the SEC’s 2027 Examination Priorities

The SEC’s Division of Examinations (the “Division”) recently announced its examination priorities (“Exam Priorities”) for fiscal year 2027.1 Although many of the Division’s core areas of focus remain consistent with fiscal year 2026, the 2027 Exam Priorities include notable changes and refinements, which we discuss below, along with other key 2027 examination priorities. Dorsey Observations Renewed focus on economic conflicts of interest. After certain economic-incentive topics received less emphasis in the 2026 Exam Priorities2, the Division has again expressly identified economic conflicts as an examination focus. The 2027 Exam Priorities indicate that the Division will prioritize reviewing advisers’ fiduciary obligations relating to economic conflicts of interest raised by fee rebates, fee and expense calculations, cash management, quid pro quo arrangements, and deposits and withdrawals. Greater emphasis on private-fund practices. Building on the private-fund items in the 2026 Exam Priorities, the 2027 Exam Priorities indicate that the Division will assess private-fund disclosures and controls relating to investment allocations, leverage, affiliated service providers, and fees and expenses. The Division also identified investments in private companies through special purpose vehicles (“SPVs”) and loans provided by private funds and business development companies (“BDCs”) as products the Division will scrutinize. Advisers, particularly private-fund advisers, should evaluate whether their disclosures and compliance programs address these areas. Expanded focus on AI-related cybersecurity risks. While the 2026 Exam Priorities focused on advisers’ use of and representations regarding artificial intelligence (“AI”), the 2027 Exam Priorities specifically highlight AI-enabled cybersecurity threats, including AI-generated phishing and synthetic or “deepfake” voice and video used for social engineering. The shift signals that registrants should consider whether their cybersecurity policies and controls adequately address these evolving threats. New focus on proxy advisory firms. The 2027 Exam Priorities state that the Division will examine advisers that rely on proxy advisory firms, including how those advisers evaluate the firms’ recommendations, assess the bases for those recommendations, identify potential conflicts of interest, and determine whether that reliance satisfies applicable legal obligations. Advisers that rely on proxy advisory firms may wish to consider whether their compliance programs address these areas. Updated focus on Regulation S-P and Regulation S-ID. The 2026 Exam Priorities stated that the Division would engage firms during examinations regarding their progress in preparing incident response programs ahead of the compliance dates for the amendments to Regulation S-P and would examine compliance with the amended rule after those dates. The 2027 Exam Priorities indicate that examinations will focus on whether firms have developed, implemented, and maintained reasonably designed policies and procedures addressing administrative, technical, and physical safeguards to protect customer information and that, in accordance with the amended rule, staff will evaluate response program policies and procedures for unauthorized access to or use of customer information, including customer notification procedures and oversight of service providers. With respect to Regulation S-ID, the 2027 Exam Priorities indicate that examiners will assess whether firms are updating their Identity Theft Prevention Program to address emerging risks, such as those related to AI and stolen credentials. Advisers may wish to consider whether their compliance programs address these areas, as applicable. Summary of Other 2027 Examination Priorities Beyond the developments discussed above, many of the Division’s core examination priorities remain consistent with fiscal year 2026. These include investment adviser fiduciary obligations and compliance programs, examinations of never-examined and recently registered advisers, and cybersecurity and operational resiliency. The Exam Priorities are not exhaustive, and examinations will vary based on each registrant’s business, activities and risks. Advisers should consider the 2027 Exam Priorities in reviewing their compliance programs and preparing for potential examinations, including by: Reviewing risk disclosures and controls. The Division states that, when examining advisers to private funds, it will assess whether investment-related risk disclosures are consistent with fiduciary standards and whether compliance policies, procedures, and controls are designed to address both fund-level and investment-level risks. Reviewing disclosures on allocations, leverage, and affiliated service providers. The 2027 Exam Priorities identify disclosures related to certain investments and allocations, the use of debt and fund-level lines of credit, and the use of affiliated service providers as examples. Confirming the accuracy of fee and expense calculations. The Division states that it will assess the accuracy of fee and expense calculations at both the fund and investment levels, and it identifies fee rebates, cash management, quid pro quo arrangements, deposits, and withdrawals as areas in which economic conflicts of interest may affect the impartiality of advice. Reviewing recommendations of illiquid or hard-to-trade products. The Division states that it will prioritize advisers that recommend products that are difficult to trade, have unusual features, or are illiquid, including loans provided by private funds or BDCs and investments in private companies through SPVs. Confirming that the compliance program is implemented and reviewed. The Division states that it will review compliance program components such as marketing, valuation, and custody, as appropriate, and will typically analyze the annual compliance review. It will also focus on compliance practices when advisers have started advising new asset classes or clients or grown through mergers or acquisitions. 1 SEC Division of Examinations 2027 Examination Priorities. 2 See Dorsey’s Client Alert on the SEC’s fiscal year 2026 exam priorities.

Event/Resource

Corporate Counsel Symposium 2026 Materials Hub

Materials Symposium Agenda Sessions 8:30 am - 9:30 am CT Session A: The Corporate Compass: Finding True North When Ethical Duties Conflict Philip Kaplan, Senior Legal Counsel, Howden Re Lucia Suljic, Vice President, Corporate Legal, Canon USA Nicole Stanton, Partner & Deputy General Counsel, Dorsey & Whitney LLP This panel addresses ethical obligations of in-house counsel, including balancing obligations and duties that may conflict with each other. How should a responsible in-house lawyer deal with those challenging situations? Rather than stick to an academic discussion, this panel will revolve around a series of practical scenarios that are designed to be realistic and timely, including situations where counsel is asked to represent both the company and an individual, how and when to disclose uncomfortable facts and inconvenient documents, issues involving changing firms and companies, and multijurisdictional practice. The panel will feature discussion from two experienced in-house lawyers and Dorsey’s Deputy General Counsel. Session B: Managing Rapid Regulatory Change in International Trade and Cross-Border Investment Nathan Brower, Executive Vice President, General Counsel, Nature’s Sunshine Greg Ogunsanya, Senior Vice President, General Counsel and Corporate Secretary, H.B. Fuller Kathryn Wood, Senior Vice President & General Counsel, DecoPac, Inc. Dave Townsend and Lawrence Ward, Dorsey & Whitney LLP This program is designed for attorneys advising on cross-border transactions, international trade, regulatory compliance, and corporate governance matters. Panelists will examine recent developments in U.S. trade and investment law and policy, as well as their impact on international collaborations, corporate compliance, and mergers and acquisitions. The discussion will explore how general counsel and in-house legal teams assess and manage evolving trade-related risks within their organizations. Particular focus will be given to developments during the first two years of the second Trump Administration, including changes in tariff policy, tariff refunds, export controls, economic sanctions, and national security reviews of foreign investment. Through a discussion of regulatory trends and practical case studies, attendees will gain a deeper understanding of the legal risks and compliance obligations associated with cross-border business activities, and hear about practical strategies for advising clients and managing compliance obligations in a rapidly changing trade and investment environment. 9:45 am - 10:45 am CT Session A: The Elon Musk Cases: What Tesla and Twitter Can Teach Your Board of Directors Loren Unterseher, Managing Partner, Oxbow Industries, LLC Shulamite White, Chief Legal Officer and Head of People, Motive Technologies Kirsten Schubert, Tom Swigert, and Jonathan Van Horn, Dorsey & Whitney LLP Recent cases involving Elon Musk and his businesses have had significant impact on principles governing board of directors’ fiduciary duties and corporate processes. This panel will examine recent litigation involving Elon Musk, Tesla, and Twitter, and its effects on the law governing the duties of directors and executives, including the executive compensation and director compensation processes, conflicts that may arise when a single executive has control over multiple businesses, and the ramifications of tweets or other public statements by an executive. Session B: All Eyes on DEI: Managing Diversity Efforts Amid Regulatory Scrutiny and Potential Litigation Maggie Dalton, Senior Commercial Attorney, Cargill; Board Co-Chair, Twin Cities Diversity in Practice Laura A. Vannelli, Legal Counsel, Mayo Clinic Susan Lorenc and Jack Sullivan, Dorsey & Whitney LLP The legal and regulatory landscape surrounding diversity, equity, and inclusion (DEI) initiatives has changed dramatically over the past two years. Law firms and legal departments are continuing to grapple with how to recruit, retain, and develop talent from a wide range of personal backgrounds, in a world where previously accepted recruiting and employment practices are facing increased scrutiny and litigation. This program will provide a practical overview of the current legal regime, including recent federal enforcement actions and litigation trends associated with DEI initiatives. Panelists will discuss practical ways in which organizations can pursue and retain legal talent and increase inclusion while minimizing legal, business, and reputational risk. 11:00 am - 12:00 pm CT Session A: Governance in an Age of Increasing Unpredictability James Chosy, Senior Executive Vice President and General Counsel, U.S. Bancorp Todd Hartman, Executive Vice President and Chief Legal and Risk Officer, Best Buy Co., Inc. Alan Rosselot, Associate General Counsel & Assistant Secretary, Delta Air Lines, Inc. Cam Hoang and Robert Rosenbaum, Dorsey & Whitney LLP More than ever, ensuring that boards are well-informed and forward-thinking is critical to a company’s success. Join our panel of corporate governance experts as they share their experiences advising boards through crisis and unpredictable events; capitalizing on, but also checking, disruptive technologies; and positioning the company to succeed in an environment of shifting government priorities. Session B: A Day in the Life of a Trademark, Copyright & Advertising Attorney: A Hypothetical Case Study Alexander Kim, Vice President and General Counsel, Binks Nate Whitaker, Chief Legal Officer and General Counsel, Crumbl Cathy Dahl and Tiffany Shimada, Dorsey & Whitney LLP What issues are companies facing daily while developing rights in intellectual property, protecting those rights, and staying in compliance with myriad potential issues related to advertising, social media, relationships with influencers, and environmental or governmental claims? This panel will feature two in-house counsel who are navigating these issues, utilizing a hypothetical case study, with the support of two Dorsey attorneys helping to develop a roadmap for meeting business objectives and minimizing the risk of claims. 12:00 pm - 1:15 pm CT Keynote Address Dr. Rebecca Heiss, Stress Physiologist Dr. Rebecca Heiss is a stress physiologist, author, and sought-after speaker who helps audiences transform fear and stress into fuel for greater performance and resilience. Her research has been recognized as “transformative” by the National Science Foundation, and she is the author of two books, Springboard and Instinct. Through her Fear(less) message, Rebecca inspires audiences with practical, science-based strategies to train our brains to work for us – not against us – and navigate change and uncertainty with greater confidence.

Insights

Minnesota Consumer-Fraud Enforcement: Disclaimers Won’t Cure Deception, and Penalties Can Add Up

Misleading advertising claims can lead to costly consequences. In State of Minnesota ex rel. Ellison v. Wall & Associates, Inc., No. A25-2064, 2026 WL 3118291 (Minn. App. Oct. 19, 2026), the Minnesota Court of Appeals recently affirmed a bench trial verdict against a tax-relief company and two executives for violations of the Minnesota Consumer Fraud Act (“MCFA”) and the Minnesota Deceptive Trade Practices Act (“MDTPA”). The decision, which affirmed a substantial restitution and civil penalty judgment, underscores the broad power of the Minnesota Attorney General to act against deceptive sales practices. The decision also offers practical lessons for businesses seeking to reduce liability risks in consumer-facing communications. Background Wall & Associates (“W&A”), a Virginia-based tax-relief company, marketed assistance to taxpayers seeking relief from outstanding federal and state tax liabilities, often with offers in compromise—agreements to settle tax liabilities for less than the amount owed. In its extensive advertising campaigns, W&A represented that its average client received a 90% reduction in their tax debt, that it was a local company with Minnesota offices, that it provided legal services, and that it would “Solve ALL Tax Problems.” In reality, W&A’s promises bore little resemblance to what many clients received. Most of W&A’s clients saw just a 9.5% reduction in federal tax debt and 1.2% in state tax debt. W&A had no permanent Minnesota offices. And W&A provided neither legal representation nor assistance with filing tax returns—those services required referrals to separate firms for an additional fee. All the while, W&A clients paid upfront and recurring fees, including during periods when W&A did no work on their cases. Minnesota Attorney General Keith Ellison sued W&A, its founder and owner Ernest Kenneth Wall, and its president and CEO Patrick Mark Yates, alleging violations of, among other laws, the MCFA and the MDTPA. Following a 12-day bench trial, the district court determined that W&A violated the MCFA and MDTPA through its false and embellished advertising. The district court also held Wall and Yates individually liable for those violations because they directed, participated in, and acquiesced in the violations. The district court ordered injunctive relief, $2.7 million in restitution (with Wall and Yates jointly and severally liable for $1.3 million), and civil penalties of $786,517 against W&A, $415,500 against Wall, and $207,750 against Yates. The district court also awarded over $2.5 million in attorneys’ fees and costs to the state. W&A, Wall, and Yates appealed to the Minnesota Court of Appeals, which affirmed the district court’s decision on October 19, 2026. Although W&A, Wall, and Yates challenged the judgment on numerous grounds, several highlights of the decision provide important takeaways for consumer-facing businesses. Individual Reliance Is Not Required for Statutory Liability W&A argued that Attorney General Ellison had to prove a causal nexus between each violation of the MCFA and MDTPA and the injury to a particular consumer to establish liability. In W&A’s view, this required proof that each injured consumer had personally relied on W&A’s false representation. The Court of Appeals rejected this argument based on the MCFA’s and MDTPA’s plain language, which requires no proof of actual deception or confusion by consumers. The Court of Appeals finally pointed to the Minnesota Supreme Court’s decision in State v. Minnesota School of Business, Inc., which held that when a defendant’s misrepresentations are directed at and affected “a broad group of consumers, proof of direct individual reliance is not required to establish a causal nexus between MCFA violations and the harm suffered by consumers.” 935 N.W.2d 124, 135 (Minn. 2019). The Court of Appeals affirmed, however, that a causal nexus is necessary to support an award of damages under the MCFA and MDTPA. In making that determination, district courts look to various factors, including whether the misrepresentations were “longstanding, pervasive, and widespread in communications directed to consumers,” whether the seller intended and understood that consumers would rely on the misrepresentations, and whether the information was of a kind on which consumers would typically rely. The Court of Appeals’ decision continues Minnesota School of Business’s broad interpretation of liability under the MCFA and the MDTPA. Coordinated marketing campaigns to a “broad group of consumers” may expose businesses to MCFA and MDTPA liability without customer-by-customer proof of injury. That said, a causal nexus remains an element of an MCFA and MDTPA claim, and businesses involved in litigation should build a clear record at trial and on appeal showing how each of the relevant factors bears on the causal-nexus inquiry. Contractual Disclaimers Are Not an Automatic Defense to a Misleading Pitch W&A next argued that disclaimers in its client contracts prevented consumers from claiming they had been misled by its advertising. Reiterating that individual reliance is not required under the MCFA and MDTPA, the Court of Appeals held that a contractual disclaimer does not necessarily defeat a claim based on a conflicting oral representation. And on the facts of this case, the Court of Appeals agreed with the district court that W&A’s contractual disclaimers were insufficient given the extensive misrepresentations by W&A and the unequal bargaining power between it and its customers. This holding confirms that contractual disclaimers are not a cure-all for misleading advertising or sales practices. Businesses should review the entire customer journey, including pre-contract representations, as those representations may survive a contractual disclaimer to the contrary. And if faced with litigation, businesses should build a strong record, both at trial and on appeal, showing why any disclaimer is effective in context. The State Has Broad Authority to Seek Restitution W&A also challenged Attorney General Ellison’s authority to seek restitution under the state’s parens patriae authority to protect residents’ collective interests, arguing that injury to only 228 Minnesotans did not affect a sufficiently substantial segment of the population. The Court of Appeals rejected a simple headcount approach, instead explaining that the state had a legitimate interest in protecting residents’ economic well-being as a whole. In any event, the Court of Appeals held that if restitution was not appropriate under the state’s parens patriae authority, then it would still be appropriate under the Attorney General’s enforcement powers under Minn. Stat. § 8.31. The decision reinforces that the broader and more sustained the deceptive advertising, the stronger the case for restitution to protect Minnesotans’ economic interests. Civil Penalties Accrue Per Violation, Not Per Defendant The Court of Appeals finally rejected W&A’s claim that the Attorney General’s enforcement powers under Minn. Stat. § 8.31 permit only civil penalties of up to $25,000 for each defendant. Rather, the Court of Appeals explained that penalties are limited to $25,000 per violation. Multiple violations can therefore produce substantially greater penalties. The Court of Appeals also rejected the argument that restitution made penalties unnecessary: repaying consumers does not eliminate the need to address gains from deceptive conduct and deter future violations. Final Takeaways Align every consumer-facing communication. Broad and extensive marketing campaigns can expose businesses to stronger enforcement standards under the MCFA and MDTPA, making it critical that consumer communications remain accurate and consistent from the first advertisement through the final sale. Plan for layered enforcement exposure. Penalties under the MCFA and MDTPA can add up quickly: W&A, Wall, and Yates ultimately faced more than $6 million in civil penalties, restitution, and attorneys’ fees. The decision continues a line of Minnesota cases recognizing the Attorney General’s broad consumer-protection authority. Details matter. Although the Attorney General’s enforcement power is broad, it is not boundless. As the Court of Appeals explained, issues of causation, the effectiveness of contractual disclaimers, and the availability of restitution and civil penalties all turn on the specific facts of the case. Effective advocacy at trial and on appeal is critical to developing the facts relevant to liability and damages.