.

Client Alert

OSHA’s COVID-19 Vaccination or Weekly Testing Mandate: Legal Status and Employer Next Steps

November 8, 2021

by Jillian Kornblatt and Jack Sullivan

Download as a PDF

Share this page

Employers with 100 or more employees should continue to develop policies requiring workers either to be fully vaccinated against COVID-19 or to submit to weekly testing and other safety requirements, in the expectation that the long-anticipated federal safety rules released last week survive the court challenges filed immediately after their release.  While at least one federal court temporarily suspended the new Occupational Safety and Health Administration (“OSHA”) Emergency Temporary Standard (“ETS”) that set the vaccine-or-test mandate, employers cannot assume that the ETS will be defeated and so should take steps now to comply by the January 4, 2022 deadline.

(This article focuses on the OSHA ETS, which generally applies across all industries and workplaces, EXCEPT that health care facilities which are subject to the new CMS COVID-19 vaccine mandate are required to comply with the CMS COVID-19 vaccine mandate instead of the OSHA ETS. Dorsey provided an analysis of the new CMS COVID-19 Vaccine Mandate Rules for healthcare facilities on our Health Law Blog.) 

BACKGROUND

On November 4, 2021, OSHA issued its ETS for employers with 100 or more employees.  The ETS had been expected for weeks and is estimated to apply to 84 million American workers.  Under the rules, employers must ensure that their workers are fully vaccinated against COVID 19—defined to mean that two weeks have passed since the employee received the second of a two-shot vaccine regimen or since the employee received a single-dose vaccine—no later than January 4, 2022, or must require unvaccinated employees to take and provide proof of a negative COVID-19 test at least once every seven days, also beginning January 4, 2022.

The ETS requires that employers comply with several additional requirements—including creating a roster of employees’ vaccination status and requiring face coverings—by December 5, 2021.

ETS COVERAGE

The ETS applies to all employers with a total of 100 or more employees, company-wide, at any time the ETS is in effect.  Temporary and seasonal employees are counted as “employees” for purposes of ETS coverage, but independent contractors are not. The ETS does not apply to healthcare providers covered by the new CMS rules or any federal contractor and subcontractor workplace that is not subject to the FAR Council’s separate vaccine mandate.

Depending on their circumstances, remote employees may not be subject to the requirements.  Under the rules, employees who would otherwise be covered but “do not report to a workplace where … coworkers or customers are present” are not subject to the testing or masking requirements, unless those employees enter a workplace with other employees.  Similarly, employees who work exclusively outdoors are not subject to the requirements.

State OSHA departments may choose to adopt more rigorous safety measures than those required by the ETS, including additional testing requirements.

EFFECTIVE DATE AND TIMELINE

As an interim final rule, the ETS goes into effect immediately and will remain in effect for six months (until May 5, 2022).  Under the Occupational Safety and Health Act (“OSH Act”), the ETS is considered the proposal for a permanent standard and will expire on May 5, 2022 unless a permanent standard is enacted by that date.  The public comment period for the permanent standard will remain open until December 5, 2021.

ETS REQUIREMENTS

  A. Vaccination Requirements

The ETS contains several additional requirements applying to all employers with 100 or more employees:

  1. Determine Employees’ Vaccination Status. Employers must determine the vaccination status of each employee, obtain proof of vaccination from vaccinated employees, maintain records of each employee’s vaccination, and maintain a roster of each employee’s vaccination status.  These records are considered “medical records” under OSHA regulations, and therefore “must not be disclosed except as required or authorized by this section or other federal law.”
  2. Provide Paid Time Off for Vaccination and Recovery. Employers must provide employees reasonable paid time off to obtain “each primary vaccination dose,” as well as reasonable paid time off and paid sick leave to recover from each such dose.  OSHA is accepting comments as to whether this requirement will extend to booster doses.

  B. Testing and Face-Covering Requirements for Unvaccinated Employees

The ETS contains provisions governing testing and facial-covering requirements for employees who are not fully vaccinated.  Broadly speaking, unvaccinated employees must be subjected to regular testing, and must wear face coverings in the workplace.

Specifically, the ETS mandates the following with regard to unvaccinated employees:

  1. Weekly Testing Requirements. Unvaccinated employees who report to the workplace at least once a week must be tested for COVID-19 at least once a week.  Unvaccinated employees who are away from the workplace for a week or longer must be tested within seven days of returning to work.  Employers have the discretion to pay all, some, or none of the costs associated with testing, unless otherwise required by state or local law or a collective bargaining agreement.  The employer must collect and maintain a record of each test result. The test results are employee medical records and must be maintained for the entire period the ETS is in effect.
    Compliant tests include: “proctored over-the-counter tests, point of care tests, and tests where specimen collection and processing is either done or observed by an employer.”  Unvaccinated employees must present proof of a negative test result in order to report for work.  If employees refuse to submit to testing in accordance with these requirements, they are not permitted to enter the workplace until they present a negative test result.
  2. Face Covering Requirements. Employers must ensure that unvaccinated employees wear face coverings over their mouth and nose when indoors or while occupying a vehicle with another person for work-related purposes, except under certain limited circumstances. The ETS defines “face covering” as two or more layers of fabric, secured to the head with straps or ties, covering the nose and mouth, and solid with no slits or holes.
    Face coverings must be worn unless: (i) the employee is alone in a room with floor to ceiling walls with the door closed; (ii) for a “limited time” while the employee is eating or drinking; (iii) when the employee is wearing a respirator or face mask; or (iv) if the employer can show that wearing a face covering is not feasible or causes a greater hazard (including circumstances where the work requires the employee’s mouth to be uncovered).
    The ETS does not require employers to pay for face coverings but notes that payment may be required by other laws or collective bargaining agreements.

  C. COVID-19 Diagnosis Requirements

  1. Require Employee Notification of COVID-19. Employers must require employees to promptly provide notice when they receive a positive COVID-19 test or are diagnosed with COVID-19.
  2. Remove Employees with COVID-19 From the Workplace. Employers must immediately remove any employee who receives a positive COVID-19 test or is diagnosed with COVID-19 from the workplace, regardless of vaccination status.  Such employees must be kept out of the workplace until they meet the CDC’s return to work criteria, or receive a recommendation from a healthcare provider allowing a return to the workplace.
    Employers are not required to provide paid time off to any employee who is removed from the workplace due to a positive test, unless required by a collective bargaining agreement or by law.  However, state or local law may contain such a requirement depending on where the employee is located.  Employees may also have the right to use paid sick leave if provided by policy, bargaining agreement, or law.

  D. Notification Requirements

  1. ETS and Policy Information. Employers must provide each employee with information about the ETS and workplace policies and procedures established to implement and enforce the ETS, as well as vaccine efficacy, safety, and the benefits of being vaccinated (by providing CDC materials available here), protections against retaliation and discrimination, and information about the laws providing for criminal penalties for knowingly providing false statements or documentation.  Such literature must be offered in a language and at a literacy level the employee understands.

  E. Recordkeeping and Reporting Requirements

The ETS contains the following recordkeeping and reporting requirements for employers:

  1. Fatalities. Employers must report work-related COVID-19 fatalities to OSHA within eight hours of learning that they occurred, and must report work-related COVID-19 hospitalizations within twenty-four hours of learning of the hospitalization.
  2. Record Access. Employers must make certain records available for examination and copying by employees or employee representative.
  3. OSHA Inspection of Records. Employers must provide a copy of their written COVID-19 policy requiring vaccination or requiring vaccination and testing records within four hours of a request from OSHA.
    Any other written records required by the ETS must be produced to OSHA by the end of the next business day following the request.

OSHA’S AUTHORITY TO ISSUE THE ETS AND CURRENT LEGAL CHALLENGES TO IT

In response to a “grave danger” to employees, OSHA has authority to forego its normal rulemaking process and implement an ETS that remains in place up to six months, by which time OSHA must replace the ETS with a permanent standard adopted via OSHA’s normal rulemaking process.

The ETS states that it is intended to “preempt inconsistent state and local requirements relating to these issues, including requirements that ban or limit employers’ authority to require vaccination, face covering, or testing, regardless of the number of employees.”  It therefore applies to employers in states with laws prohibiting vaccine mandates.

One day after OSHA released the ETS, the U.S. Court of Appeals for the Fifth Circuit issued an order staying OSHA’s implementation and enforcement of the ETS while arguments were heard in fast-moving lawsuit challenging the ETS. A coalition of state governments filed a separate lawsuit in the Eighth Circuit and other cases are pending in other courts.  While the lawsuits cast uncertainty over the ETS, legal precedent provides insight into how courts might rule in the current cases.

OSHA’s use of its ETS authority is infrequent, but not unprecedented, and prior decisions indicate that ETSes.  As just one example, in 1978, OSHA issued an ETS to regulate workers exposure to acrylonitrile (“AN”). Vistron Corp. v. OSHA, 6 OSHC 1483, 1483 (6th Cir. Mar. 28, 1978). The Sixth Circuit Court of Appeals upheld the ETS not only because there were studies demonstrating that AN caused cancer in rats, but also because “another study by DuPont demonstrate[ed] an excess of cancer cases among workers exposed to AN at a DuPont textile fibers plant.” Id. at 1484. Because human beings were exhibiting increased rates of cancer after exposure to AN, the court held that OSHA satisfied its burden of showing that the ETS was “necessary to protect workers” from a “grave danger.” Id.  Other cases are in line with the Vistron case and indicate that if there is sufficient evidence of permanent or fatal consequences to employees from exposure, an ETS will be upheld.  See Fla. Peach Growers Ass’n v. United States Dep’t of Labor, 489 F.2d 120, 132 (5th Cir. 1974) (“We reject any suggestion that deaths must occur before health and safety standards may be adopted.  Nevertheless, the danger of incurable, permanent, or fatal consequences to workers, as opposed to easily curable and fleeting effects on their health, becomes important in the consideration of the necessity for emergency measures to meet a grave danger.”); see also Dry Color Mfrs’ Ass’n v. Dep’t of Labor, 486 F.2d 98, 104 (3d Cir. 1973) (“OSHA need not wait until workers have actually been harmed to issue an emergency temporary standard. . . .  However, while the [OSH Act] does not require an absolute certainty as to the deleterious effect of a substance on man, an emergency temporary standard must be supported by evidence that shows more than some possibility that a substance may cause cancer in man.”).

KEY TAKEAWAYS FOR EMPLOYER PLANNING AND IMPLEMENTATION

While the ETS is stayed by the Fifth Circuit’s order and is the subject of other lawsuits (with more expected), because the ETS will likely take effect before such challenges are fully decided and is reasonably likely to be upheld when they are, covered employers should begin developing and implementing policies including a vaccination or testing requirement compliant with the ETS to be enforced no later than January 4, 2022.

Covered employers should also work with employment counsel to ensure that all policies comply with the ETS and well as other federal, state, and local law, including paid sick leave requirements and laws governing disability and religious accommodation, including the Americans with Disabilities Act and Title VII of the Civil Rights Act of 1964 and similar state and local laws.

DORSEY WEBINAR: OSHA’S COVID-19 “VACCINE OR TESTING” REQUIREMENT: UNDERSTANDING THE NEW RULE AND HOW TO NAVIGATE IT

Dorsey attorneys will be presenting a webinar on Thursday, November 11, 2021 at 10:00 am CT where they will discuss best practices to navigate and comply with the COVID-19 “vaccination or testing” rule and other requirements of OSHA’s emergency temporary standard (“ETS”). For more information about the webinar or to register, click here.

 

Firm Highlights

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

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

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.

Dorsey Recognized in Chambers UK 2027

News

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

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

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.

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?

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.

Regulatory Affairs Partner Randy Dann Joins Dorsey

News

Regulatory Affairs Partner Randy Dann Joins Dorsey

Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise

News

Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise