.

Client Alert

The Supreme Court Update - June 23, 2025

June 23, 2025

by Ian Blodger, Jessica M. Leano, and Brock Huebner

Download as a PDF

Share this page

On June 20, 2025, the Supreme Court of the United States issued six decisions:

Diamond Alternative Energy, LLC v. Environmental Protection Agency, No. 24-7: This case addresses fuel producers’ Article III standing to challenge the Environmental Protection Agency’s (“EPA”) approval of California regulations requiring automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles. Fuel producers sued the EPA in the D.C. Circuit, arguing the EPA lacked authority to approve the regulations. California and other states adopting the regulations intervened to defend the EPA’s approval, arguing the fuel producers lacked standing. The D.C. Circuit held the fuel producers lacked standing because they failed to establish that automakers would likely respond to invalidation of the regulations by producing fewer electric vehicles and more gasoline-powered vehicles. In a 7-2 opinion authored by Justice Kavanaugh, the Court reversed the D.C. Circuit and held that the fuel producers have standing. Article III standing requires plaintiffs to show three elements: injury in fact, causation, and redressability. The fuel producers’ injury in fact and causation are “straightforward and undisputed,” as decreased purchases of gasoline and other liquid fuels constitute monetary injury caused by the California regulations. The fuel producers also satisfy redressability, as even minimal additional revenue would satisfy this requirement and invalidating the regulations would likely result in more revenue from fuel sales. Justices Sotomayor and Jackson filed dissenting opinions.

View the Court's decision.

Esteras v. United States, No. 23-7483: This case clarifies the factors that courts may look to when considering whether to revoke a term of supervised release. Under federal sentencing statutes, a court must consider ten factors when imposing a criminal sentence. 18 U.S.C. § 3553. Eight of those ten factors must be considered if a court imposes or revokes supervised release. 18 U.S.C. § 3583(c), (e). In this case, petitioner Edgardo Esteras was arrested and charged with domestic violence and other crimes while on supervised release. The district court revoked supervised release and imposed a 24-month reimprisonment sentence based on the court’s determination that the revocation sentence would “promote respect for the law.” This factor is included in § 3553(a)(2)(A), but is not among the eight factors in § 3583(c) or (e). In a decision authored by Justice Barrett (joined in full by Chief Justice Roberts and Justices Thomas, Kagan, and Kavanaugh, and in part by Justices Sotomayor and Jackson), the Supreme Court held that courts may only consider the eight factors enumerated in § 3583(e) when deciding whether to revoke a sentence of supervised release, interpreting the exclusion of the “promote respect for the law” factor from Sections 3583(c) and (e) as evidencing Congress’s intent that courts should not consider that factor’s focus on retribution vis-à-vis the defendant’s underlying criminal offense in the supervised release context. Justice Sotomayor (joined by Justice Jackson) and Justice Jackson each filed opinions concurring in part and concurring in the judgment. Justice Alito (joined by Justice Gorsuch) dissented.

View the Court's decision.

Food and Drug Administration v. R.J. Reynolds Vapor Co., No. 23-1187: This case considers the proper judicial forum to challenge the Food and Drug Administration’s (“FDA”) denial of an application to market a new tobacco product under the Family Smoking Prevention and Tobacco Control Act (“TCA”). The TCA allows “any person adversely affected” by an FDA denial order to seek judicial review either in the D.C. Circuit or “the circuit in which such person resides or has their principal place of business.” 21 U.S.C. § 387l(a)(1). After R.J. Reynolds Vapor Co.’s application for an e-cigarette product was denied, it did not seek review in the D.C. Circuit or in the Fourth Circuit, the North Carolina-based company’s home forum. Instead, it joined with a Texas-based retailer and Mississippi-based trade association to sue in the Fifth Circuit. The FDA sought to dismiss or transfer the lawsuit, arguing that only the manufacturer applicant itself—R.J. Reynolds Vapor—qualified as the party “adversely affected.” The Fifth Circuit denied the motion and retained jurisdiction. In a 7-2 decision authored by Justice Barrett, the Supreme Court affirmed the Fifth Circuit and held that retailers who would sell the product qualify as “adversely affected” parties for purposes of TCA judicial review. The Court’s reasoning relied on Administrative Procedure Act precedents and the TCA’s text to adopt the broad definition of “adversely affected.” Justice Jackson (joined by Justice Sotomayor) dissented, arguing the TCA’s text and purpose limited the “adversely affected” language to manufacturers.

View the Court's decision.

Fuld v. Palestine Liberation Organization, No. 24-20: This case addresses whether the exercise of personal jurisdiction over the Palestine Liberation Organization (“PLO”) and Palestine Authority (“PA”) under the Promoting Security and Justice for Victims of Terrorism Act (“PSJVTA”) violates the Fifth Amendment’s Due Process Clause. Two lawsuits were filed against the PLO and PA in federal district courts under the Anti-Terrorism Act of 1990 (“ATA”), which creates a federal civil damages action for U.S. nationals injured or killed “by reason of an act of international terrorism.” The PSJVTA names the PA and PLO specifically and provides that they shall be deemed to have consented to personal jurisdiction in ATA cases involving two factual predicates: the PA’s and PLO’s (1) practice of paying salaries to terrorists in Israeli prisons and to families of deceased terrorists, and (2) activities on U.S. soil. The district courts found evidence that the PA and PLO had engaged in conduct sufficient to satisfy at least the payments prong, but held that an exercise of jurisdiction under either factual predicate was unconstitutional. The Second Circuit consolidated the cases and affirmed, holding that the PSJVTA could not, consistent with due process, establish personal jurisdiction over the PLO or PA. In a 9-0 decision authored by Chief Justice Roberts, the Court reversed the Second Circuit, finding that the PSJVTA’s personal jurisdiction provision does not violate the Fifth Amendment’s Due Process Clause because it reasonably ties the assertion of jurisdiction over the PLO and PA to conduct involving the United States and implicating sensitive foreign policy matters within the prerogative of the political branches. Justice Thomas filed an opinion concurring in the judgment, joined in part by Justice Gorsuch.

View the Court's decision.

McLaughlin Chiropractic Associates v. McKesson Corp., No. 23-1226: This case addresses whether federal courts are required to follow a federal agency’s legal interpretation under the Hobbs Administrative Orders Review Act (“Hobbs Act”). In this case, McLaughlin Chiropractic Associates filed a class action lawsuit against McKesson Corporation, claiming McKesson’s unsolicited online fax advertisements violated the Telephone Consumer Protection Act (“TCPA”). After a class was certified, the Federal Communications Commission (“FCC”) issued a separate agency order that held that online faxes are not governed by the TCPA in the same manner as physical faxes are. Under Ninth Circuit precedent that required agency orders to be challenged exclusively in the courts of appeals in pre-enforcement suits under the Hobbs Act’s procedures, the district court in the class action determined the FCC’s order to be a binding interpretation of the TCPA, and granted summary judgment and decertified the class as to the online fax recipients. The Ninth Circuit affirmed. In a 6-3 decision authored by Justice Kavanaugh, the Supreme Court reversed, and held that the Hobbs Act’s pre-enforcement review procedures did not preclude parties in subsequent proceedings from challenging an agency’s legal interpretations. Instead, for agency determinations governed by the Hobbs Act, district courts must independently determine a law’s meaning, “under ordinary principles of statutory interpretation, affording appropriate respect to the agency's interpretation.” Justice Kagan (joined by Justices Sotomayor and Jackson) dissented, arguing that the majority’s holding “prevents the Hobbs Act from functioning as Congress wanted—by allowing regulated parties to end-run the Act’s pre-enforcement judicial review scheme, and thereby undermine the stability and efficacy of administrative programs.”

View the Court's decision.

Stanley v. City of Sanford, Florida, No. 23-997: This case evaluates whether Title I of the Americans with Disabilities Act (“ADA”) reaches discrimination against retirees. Title I prohibits discrimination against “qualified individual[s].” 42 U.S.C. § 12112(a). A qualified individual is someone “who, with or without reasonable accommodation, can perform the essential functions of the employment position that [she] holds or desires.” Petitioner began working as a firefighter for the City of Sanford at a time when the City offered health insurance until age 65 for two categories of retirees: those who retired with 25 years of service, and those who retired earlier because of a disability. The City later changed its policy to continue to pay for health insurance up to age 65 for retirees with 25 years of service but to pay just 24 months of insurance for those who retired earlier due to disability. Petitioner developed a disability that forced her to retire before 25 years of service and claimed the City violated the ADA by providing different health-insurance benefits to those who retire earlier due to disability. The district court dismissed the ADA claim, finding the alleged discrimination occurred after she was retired and was no longer a “qualified individual.” The Eleventh Circuit affirmed the district court, and the Supreme Court affirmed the Eleventh Circuit. The Supreme Court held that to prevail under § 12112(a), a plaintiff must plead and prove that she held or desired a job and could perform its essential functions with or without reasonable accommodation at the time of the employer’s alleged act of disability-based discrimination. The definition of “reasonable accommodation” makes sense for current employees or applicants but not retirees, and § 12112(b)’s examples of discrimination aim to protect job holders and seekers, not retirees. Justice Gorsuch delivered the opinion with respect to Parts I and II, joined by Chief Justice Roberts and Justices Thomas, Alito, Kagan, Kavanaugh, and Barrett; and with respect to Part III, joined by Justices Alito, Sotomayor, and Kagan. Justice Thomas filed a concurrence, joined by Justice Barrett. Justice Sotomayor filed a concurrence in part and dissent in part. Justice Jackson filed a dissent, joined in part by Justice Sotomayor.

View the Court's decision.

Today, the Court granted certiorari in one case:

Landor v. Louisiana Department of Corrections and Public Safety, No. 23-1197: This case involves Damon Landor, a devout Rastafarian inmate who had his dreadlocks forcibly shaved by prison officials while incarcerated in a Louisiana prison. After Landor was released, he sued the prison officials, seeking compensatory and punitive damages for alleged violations of the Religious Land Use and Institutionalized Persons Act of 2000 (“RLUIPA”). The Fifth Circuit affirmed the dismissal of Landor’s lawsuit, holding that only the State itself, not individual defendants can be liable for RLUIPA violations. The question presented is: Whether an individual may sue a government official in his individual capacity for damages for violations of the RLUIPA.

Firm Highlights

News

Dorsey’s London Corporate Practice and Partners Earn Chambers UK 2027 Rankings

Insights

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?

The image shows classic stone columns and steps, which often represent government buildings, courthouses, or legal institutions.

Insights

The Supreme Court Update - October 14, 2026

Insights

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.

Insights

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.

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

News

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

News

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.

Insights

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.

Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise

News

Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise

Regulatory Affairs Partner Randy Dann Joins Dorsey

News

Regulatory Affairs Partner Randy Dann Joins Dorsey