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The Use of AI for Autonomous Medical Decision-Making: Does Utah’s AI Prescription Renewal Pilot Program Go Too Far?

June 29, 2026 – Dorsey Health Law

by Alissa Smith and Courtney Camenzind

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This year, Utah commenced a contract with Doctronic to pilot a medication renewal program where Doctronic’s AI system autonomously authorizes refills for certain routine medications. The contract arranged for a partnership between the Utah Office of Artificial Intelligence Policy (Office) and the Utah Department of Professional Licensing (DOPL), who agreed to refrain from regulatory enforcement during the 12-month term of the pilot program. The implementation of this type of AI pilot program in the state was made possible by the Utah Artificial Intelligence Policy Act (UAIP) which was passed in 2024. The UAIP established the Office and tasked it with creating a mechanism for companies to apply with the Office to receive 12 months of regulatory mitigation while developing a proposed AI system. This regulatory “sandbox” allows Doctronic to test its medication renewal program without professional licensing or scope-of-practice enforcement concerns. Doctronic’s program is the first state-approved AI tool that is legally permitted to participate in autonomous medical decision-making for prescription renewals.

In late April, the Utah Medical Licensing Board (Medical Board) released a letter responding to the launch of the new statewide pilot program. The Medical Board criticized the state for failing to include the Medical Board in the decision-making process prior to executing the Doctronic contract, and called on the state to immediately suspend the Doctronic program. While the DOPL creates and executes professional regulations in the state, the Medical Board serves in an advisory capacity regarding practice and licensing standards in Utah. The Medical Board’s letter expressed concern that it was not given the opportunity to opine on the Doctronic pilot program despite the Medical Board’s expertise and advisory role.

The Doctronic AI Prescription Renewal Tool

During the course of the pilot program, patients who choose to participate will access a cloud-based web application and create a free member account which will verify their identity to have their prescription refilled. Patients must then submit photographic evidence of their current medication (prescription label or pill bottle showing medication name, dosage, and prescriber information). After identifying the patient and the prescription, the AI system will perform a secondary verification using Surescripts—a national health information network. The AI tool will then gather a medication-focused medical history from the patient and available data. Finally, the AI tool will determine if prescription renewal is appropriate and if so, will send the prescription refill order to the patient’s preferred pharmacy.

The pilot program has 3 phases. Under phase one, for the first 250 patients, all AI-generated renewal decisions will undergo review by licensed physicians prior to the renewal being submitted to the pharmacy. During phase two, AI-generated renewal decisions for the next 1,000 patients will be retrospectively reviewed by licensed physicians. During the final phase, the pilot will have a structured sampling approach to quality oversight with: (i) 5-10% of all renewals reviewed monthly; (ii) quarterly analysis of escalated cases; and (iii) annual review of performance metrics and clinical outcomes.

The contracted-for mitigation includes the state forgoing any enforcement action for unlawfully practicing a regulated profession, such as the practice of medicine, without a license.

State Laws

While Utah’s AI prescription renewal pilot program is the first of its type, its implementation reflects a nationwide legislative push to increase the use of AI technology and AI decision-making in healthcare. As of early June, over 280 bills across 44 states have been introduced this year focusing on the use of AI in health care. Eleven of these bills address autonomous clinical decision-making by AI platforms. After its Utah contract, Doctronic has confirmed it is in active discussions to implement similar “sandbox” programs with Texas, Arizona, and Wyoming. Additionally, there are several other large AI platforms on the market that are involved in, or seeking to become involved in, government sanctioned healthcare technology programs.

Federal Law  

The use of AI in health care is also the subject of legal initiatives at the federal level. The Trump administration has issued several executive orders (EOs) meant to promote and steer the use and development of AI technologies. The 2025 “Removing Barriers to American Leadership in Artificial Intelligence” EO is notable as it directs the Assistant to the President for Science and Technology to revoke all policies, directives, regulations, orders, and other actions taken pursuant to the revoked Executive Order 14110 (Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence) in order to achieve the EO’s purported goals of encouraging development and innovation in the AI sector. Another similar and notable EO is the “Promoting Advanced Artificial Intelligence Innovation and Security” EO, which establishes a legal framework allowing AI developers to collaborate with the federal government to ensure secure AI innovation and to accelerate the deployment of the developers’ AI technologies. While this second EO primarily focuses on the development of AI tools for military use and national security, these and other AI-focused EOs from the Trump administration evidence a general desire to focus on developing and improving AI tools.

In addition to many EOs, the introduction of federal legislation such as the Healthy Technology Act of 2025 demonstrates a shift towards AI decision-making in health care even at the Federal level. The Healthy Technology Act of 2025, was proposed to amend the Federal Food, Drug, and Cosmetic Act (FDCA) to clarify that artificial intelligence and machine learning technologies can qualify as a practitioner eligible to prescribe drugs if a) authorized by the law of the State involved; and b) approved, cleared, or authorized by the Food and Drug Administration. Under the FDCA certain drugs can only be dispensed pursuant to a prescription issued by a legally recognized “practitioner.”  While the bill would not automatically allow AI systems to prescribe nationwide, it would allow AI systems to qualify as a “practitioner” when approved under state law. If the Healthy Technology Act were passed, Utah’s regulatory sandbox is the exact type of state-level program contemplated by the law—although, it is notable that proponents and opponents of the Utah pilot program currently disagree on whether the AI system should be considered the practitioner issuing judgment or a renewal assistant acting pursuant to delegated authority under a supervising practitioner’s license. Where states characterize an AI tool as a practitioner, the Healthy Technology Act (or similar legislation) would create a federal pathway recognizing that AI systems can be approved and recognized as prescribing practitioners, eliminating any question as to whether a prescription initiated by a state-and FDA-approved AI technology is a valid prescription under federal law. Alternatively, in states not introducing frameworks for AI systems to operate as a “practitioner,” the proposed Healthy Technology Act would have no effect.

It is unclear whether Doctronic’s AI system being utilized in the Utah pilot program is operating as a “helper” or the “practitioner”. On the one hand, the tool may be characterized as a “helper” to the practitioner and not the practitioner themselves. The fact that Utah uses the named prescriber’s license number when authorizing the renewal is evidence of this “helper” characterization.  Using the “helper” characterization potentially takes advantage of a regulatory loophole allowing the Utah program to avoid the question of whether—without redefining a practitioner under the FDCA—AI tools acting independently can generate a lawful prescription. On the other hand, the Doctronic contract seems to characterize the AI tool as a practitioner by saying that the AI program itself may “authorize” a renewal. The ability of states to avoid culpability for having AI tools operate as practitioners by recharacterizing the tool as a helper rather than the practitioner may have explained, in part, why the Healthy Technology Act has stalled and no similar legislation has been presented. The Act was introduced and referred to the House Committee on Energy and Commerce on the same day in January 2025 but has since had no further actions.

Benefits to Autonomous AI Prescribing

By utilizing AI in healthcare, both state and federal governments hope to decrease administrative burden, reduce employee burnout, and improve patient satisfaction. The stated goals of the Utah program are to improve medication adherence, address refill delays, improve healthcare access in underserved communities, and minimize practitioner time spent on routine refill requests.

Criticisms of Autonomous AI Prescribing

Despite the potential positive benefits of AI prescribing tools, clinicians, patients, and healthcare organizations raise significant concerns about the technology. The Medical Board cited concerns such as the AI tool’s inability to reassess patients and apply clinical judgment to safely adjust doses, monitor for side effects, or ensure continued efficacy based on the assessment findings.

Opponents note that when patients are responsible for entering their information into an AI platform, the patient could make a mistake.  Additionally, patients may exclude information they don’t know is important. AI models will analyze and make decisions based on the data they receive, even if it is incorrect or incomplete and will not challenge discrepancies between a narrative and a physical presentation like a human practitioner can during a patient visit. Opponents argue that human providers are likely to have better outcomes than AI when an informed medical opinion requires both accurate patient data and assessment of the patient’s physical presentation. The critics’ argument is that a human provider can collect more accurate and complete data from a patient because they have the benefit of being able to compare what the patient is saying with the clinical picture the provider is seeing or has previously seen; allowing the provider to challenge inconsistencies—catching prescription errors or inefficiencies sooner, more often, or without needing an adverse event to alert the patient or others to an error.

Other concerns include inadequate safety protocols (regulatory and within the AI itself), privacy concerns, fewer opportunities for a clinician to lay eyes on their patients as AI takes on a larger role, and scope creep—a phenomenon where, once the initial AI is reviewed and approved, the technology company can implement updates that don’t face the same level of regulatory scrutiny and thus, the technology company may expand the AI’s scope beyond medication renewals.

One of the most prominent legal concerns with AI autonomous clinical decision-making is professional liability. The following are just some of the critical questions that arise when analyzing professional liability implications when AI tools exercise autonomous medication renewal decisions:

  • Who will be responsible if there is an erroneous prescription renewal? AI developer, prescribing practitioner, the pharmacy, the state?
  • As AI become more autonomous, will hospitals need to credential it? Must it be incorporated into privileging processes?
  • How does peer review apply?
  • Do existing corporate practice laws create obstacles?
  • Does the reliance on AI establish a new standard of care? In other words, could failure to use AI eventually become evidence of negligence?

Whether the numerous concerns about AI will dampen the adoption of autonomous AI decision-making in healthcare remains to be seen. Instead, the concerns may drive developers, regulators, and proponents to creating stronger safeguards, oversight mechanisms, and regulatory frameworks, in response.

What is clear is that AI developers are moving AI tools beyond those that simply perform administrative functions and into tasks traditionally reserved for licensed healthcare professionals. As states continue to experiment with regulation and legislative bodies consider expanding AI’s role in clinical care, healthcare organizations should closely monitor developments involving liability, scope-of-practice requirements, privacy protections, and standards of care. The answers to these questions and concerns may ultimately determine how AI is used in healthcare, the extent to which patients and providers are willing to trust healthcare AI programs, and whether organizations choose to incorporate AI programs into their clinical practices.

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Dorsey & Whitney Partner Michael W. Droke Releases Fourth Edition of Cooperative Business Law: A Practical Guide with Enhanced Insights for Today's Cooperatives

Industry-leading reference updated with practical tips and current cooperative law developments Dorsey & Whitney LLP is pleased to announce the publication of the fourth edition of Cooperative Business Law: A Practical Guide to the Special Laws Governing Cooperatives, authored by Dorsey Partner Michael W. Droke. Drawing on more than 20 years of direct experience as outside general counsel to major agricultural and food industry cooperatives, Droke has updated this essential resource with new practical tips, real-world guidance, and insights into emerging cooperative law issues that matter to cooperative leaders and their advisors. Since its initial publication, this comprehensive guide has become the standard reference for attorneys, executives, and cooperative governance professionals navigating the unique legal landscape of cooperative organizations. The new fourth edition builds on that foundation by incorporating practical lessons learned from recent cooperative transactions, governance challenges, and regulatory developments. "I am grateful for Dorsey's continued support of this work and for the opportunity to contribute to the cooperative community," said Droke. "Over the past 20 years, I've had the privilege of serving as outside general counsel to some of the nation's most successful cooperatives. The practical insights gained from that work inform every page of this edition. I wanted to create a resource that helps cooperative leaders and their legal advisors tackle real business challenges with confidence." The Fourth Edition features: Practical tips and real-world case examples drawn from decades of cooperative practice Guidance on cooperative formation, governance, member rights, and voting structures Current analysis of antitrust and Capper-Volstead Act issues affecting modern cooperatives Insights into financing, mergers and acquisitions, and corporate restructuring for cooperatives Member relations strategies and dispute resolution approaches specific to cooperative structures About Michael W. Droke Michael W. Droke is a Partner at Dorsey & Whitney LLP and Firmwide Co-Chair of the Food, Beverage & Agriculture practice group. He serves as outside primary counsel for numerous cooperatives, providing comprehensive legal guidance on all aspects of cooperative operations, governance, member relations, corporate restructuring, financing, and mergers and acquisitions. His representative clients include National Co+op Grocers, Darigold, the Northwest Dairy Association, Organic Family Farms Cooperative, Chelan Fruit Cooperative, and Sacramento Natural Foods Co-op. A former business executive who brings a dual perspective to his practice, Droke combines legal expertise with practical business acumen. He has served as an outside board member and general counsel for major cooperatives and maintains deep involvement in the cooperative community through regular presentations and participation in industry organizations including NCBA CLUSA, the National Society of Accountants for Cooperatives, and the National Council of Farmer Cooperatives. About Dorsey & Whitney's Cooperative Law Practice Dorsey & Whitney's Cooperative Law practice group is a recognized national leader in cooperative law with more than 45 years of experience serving agricultural cooperatives, rural electric cooperatives, purchasing cooperatives, consumer cooperatives, worker cooperatives, and cooperative start-ups across the nation. The practice includes 20 dedicated lawyers who advise cooperatives and other agriculture-related organizations on formation and organization, voting rights and governance, antitrust and Capper-Volstead Act compliance, tax issues, project development and finance, mergers and acquisitions, real estate, labor and employment, environmental compliance, and all other aspects of cooperative business operations. Cooperative Business Law: A Practical Guide to the Special Laws Governing Cooperatives, Fourth Edition, is available from major book retailers and online booksellers.

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EPA Limits Title V Re-Litigation of NSR Permits

Overview On September 25, 2026, the U.S. Environmental Protection Agency (“EPA”) published a final rule that significantly limits the ability of third parties to use the Clean Air Act (“CAA”) Title V permitting process to revisit New Source Review (“NSR”) permitting decisions years after those decisions were made. The rule establishes that NSR permitting determinations generally must be challenged during the original permitting proceeding, thereby providing regulated sources with greater permitting certainty and finality for major capital projects. Published in the Federal Register titled Clarifying the Scope of “Applicable Requirements” Under State Operating Permit Programs and the Federal Operating Permit Program (Docket ID No. EPA-HQ-OAR-2023-0401), the rule amends 40 C.F.R. Parts 70 and 71 to codify EPA’s interpretation regarding when requirements established under other CAA programs may be reviewed, modified, or implemented through the Title V operating permit program. The rule becomes effective 30 days after publication. The rule addresses two principal issues: (1) the relationship between NSR preconstruction permitting and Title V operating permits, and (2) the treatment of the General Duty Clause under CAA section 112(r)(1). Most significantly, the rule provides greater certainty for sources navigating the NSR permitting process. EPA’s amendments are intended to ensure that NSR permitting decisions made through an approved public process are generally not revisited later through Title V permit proceedings. The rule responds to a circuit split between the U.S. Courts of Appeals for the Fifth and Tenth Circuits. In Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), the Fifth Circuit upheld EPA’s interpretation, concluding that it was consistent with the text, structure, and purpose of Title V. In contrast, the Tenth Circuit reached the opposite conclusion in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), finding that the then-existing regulatory definition of “applicable requirement” did not support EPA’s position. By amending the regulatory language on which the Tenth Circuit relied and codifying the interpretation approved by the Fifth Circuit, EPA has established a nationwide framework governing the interaction between NSR and Title V. NSR and Title V: EPA Establishes a Uniform Nationwide Framework At the core of the rule is EPA’s effort to define the respective roles of NSR and Title V. The rule codifies the approach EPA has applied since 2017: once a source obtains an NSR permit under an EPA-approved permitting program, and that permit was issued following public notice with an opportunity for comment and judicial review, the permit establishes the NSR-related “applicable requirements” of the State Implementation Plan (“SIP”) or Federal Implementation Plan (“FIP”) for Title V purposes. 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The final rule instead clarifies that the General Duty Clause need not—and should not—be incorporated into Title V permits as an applicable requirement. Practical Implications for Regulated Sources Greater Finality for NSR Permits  For projects requiring PSD, nonattainment NSR, or minor NSR permits, the permitting process becomes the primary forum for resolving disputes regarding applicability determinations, emissions calculations, control technology requirements, offsets, and permit conditions. Once an NSR permit is issued through a qualifying public process, regulated sources should face substantially reduced risk that those same issues will be challenged years later through Title V permit proceedings. Reduced Risk of Collateral Permit Challenges Stakeholders have sometimes sought to use Title V permit issuance, renewal, revision, or citizen-petition proceedings to challenge underlying NSR determinations. The final rule makes clear that Title V is not the appropriate vehicle for challenging whether an applicable requirement was correctly established in the first instance. This should reduce the risk of permit delays and uncertainty associated with collateral challenges to previously issued NSR permits. The rule does not, however, eliminate all Title V challenges relating to an NSR permit. Challenges concerning the Title V permit itself—including whether it appropriately incorporates applicable requirements or contains adequate compliance provisions—remain possible. Increased Importance of the Initial NSR Proceeding Because Title V generally will not provide a second opportunity to challenge the substantive validity of an NSR determination, the administrative record developed during the NSR process becomes increasingly important. Permit applicants should ensure that applicability analyses, emissions calculations, control technology evaluations, modeling demonstrations, and supporting technical documentation are thoroughly developed during the original permitting proceeding. For significant projects, applicants may therefore have an additional incentive to identify and resolve potential permitting issues before the NSR permit is issued rather than assuming that unresolved issues can be addressed during a subsequent Title V proceeding. Potential Incentive for Broader Public Participation EPA also notes that permitting authorities may choose to provide public notice and an opportunity for comment for a broader range of NSR permits because permits issued through a qualifying public process receive the benefit of the finality framework established by the rule. Some permitting authorities may conclude that greater public participation at the NSR stage is preferable to uncertainty during subsequent Title V proceedings. Conclusion The final rule is principally a permitting-certainty measure. For sources that obtain NSR permits through a public process, EPA has substantially limited the ability of third parties to revisit underlying NSR determinations through the Title V program. As a result, regulated entities should benefit from greater finality regarding key permitting decisions, reduced risk of collateral permit challenges, and increased certainty when planning and implementing capital projects.

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The Supreme Court Update - October 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?

Regulatory Affairs Partner Randy Dann Joins Dorsey

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Regulatory Affairs Partner Randy Dann Joins Dorsey

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The Supreme Court Update - October 14, 2026

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Energy Law: Month in Review - September 2026

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

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SEC Proposes Expansion of Investment Adviser Performance-Based Compensation Rule

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

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

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

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Dorsey Recognized in Inaugural 2026 IAM/WTR Copyright 1000

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