.

Mark helps clients achieve their business goals through a variety of corporate transactions.

Mark advises clients on broad range of securities transactions, including initial public offerings, follow-on offerings, high yield debt offerings, Rule 144A and Regulation S offerings, private placements, and de-SPAC transactions. He also assists clients with mergers and acquisitions, finance transactions, corporate governance, and ongoing compliance with periodic reporting requirements. 

Education

  • Harvard Law School (J.D., 2020)
  • Yonsei University (B.A., Economics, 2015)

Bar Admissions

  • New York
  • Minnesota

Languages

  • Japanese
  • Chinese (Conversational)
  • Korean (Conversational)

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Client Alert

SEC Fundamentally Alters the Shareholder Proposal Process for Upcoming Proxy Season

December 1, 2025

The SEC’s Division of Corporation Finance recently issued a statement (the “Statement”) that, for the current proxy season, it will not respond to no-action requests for, and express no views on, companies’ exclusion of shareholder proposals under Rule 14a-8. The one exception is that it will respond to requests for exclusion under Rule 14a-8(i)(1), which is the basis for excluding proposals that are improper under state law.  The Division’s stated rationales for this process change are current resource and timing considerations following the lengthy government shutdown, the large volume of registration statements and other filings requiring prompt Staff attention, and the extensive body of guidance from the Commission and the Staff available to both companies and proponents.  However, the Statement also signals the Commission’s skepticism of the value of the no-action letter process, and learnings from this proxy season will inform future reform of the Commission’s shareholder proposal regulations. We do not expect the current process to become the status quo. However, the Statement is a harbinger of the shareholder proposal framework to come, with less agency involvement and resources committed to the no-action letter process and increasing deference to issuers on what types of proposals may be included in company proxy statements and under what circumstances.  What procedures must a company now follow if it intends to exclude a shareholder proposal? As in prior seasons, companies that intend to exclude shareholder proposals from their proxy materials still must notify the Commission and proponents no later than 80 calendar days before filing a definitive proxy statement. Unlike past proxy seasons, however, this requirement is informational only. Rule 14a-8(j) provides that the company must file its reasons and simultaneously provide the proponent with a copy of its submission.  The notification may consist of a brief statement of the basis for exclusion and, at the company’s option, the new unqualified representation discussed below. [1] Alternatively, the notification may resemble no-action letter requests from prior proxy seasons, which provide more fulsome explanations of the bases for exclusion. In this uncertain environment, we expect that companies will prepare and provide more fulsome explanations in order to preempt litigation and negative attention that may arise from their decision to exclude shareholder proposals. Whereas in the past, most notifications were drafted for the Staff using technical jargon and a heavy reliance on precedents, we expect companies to be drafting notifications with a broader audience in mind, including their institutional and retail investor bases, as well as proxy advisors and, potentially, the media. Plain English arguments, more cautious use of tenuous and hypothetical bases for exclusion and shorter letters may win the day in these circumstances. Notices submitted pursuant to Rule 14a-8(j) must continue to be submitted to the Division Staff using the online Shareholder Proposal Form. Will a company receive a response on its notification from the Division?  Absent a new, unqualified representation by the company, as discussed below, the Division Staff will not respond to a no-action letter request. The Statement clarifies that there is no requirement that companies seek the Staff’s views regarding their intended exclusion of a proposal, and no response from the Staff is required. However, if a company wishes to receive the Staff’s response for any proposal that it intends to exclude pursuant to a basis other than Rule 14a-8(i)(1), the company or its counsel must include, as part of its notification, an unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions. In those situations, the Staff will respond with a letter indicating that, based solely on the company’s or counsel’s representation, the Division will not object if the company omits the proposal from its proxy materials. The reasonability standard appears to be very flexible. In footnote (3) to the Statement, the Staff noted that the absence of a prior response indicating that the Staff agreed that there was some basis to exclude a particular type of proposal does not mean that companies cannot form a reasonable basis to exclude that proposal. Likewise, the Division further noted that a prior Staff response indicating that the Staff was unable to concur with a company’s view that a proposal may be excluded does not mean that companies cannot form a reasonable basis to exclude the same or a similar proposal. [2]  In providing its response, the Division will not evaluate the adequacy of the representation or express a view on the basis or bases the company intends to rely on in excluding the proposal. Accordingly, a company’s notification should be limited to the information required by Rule 14a-8(j), as well as an unqualified representation that the company has a reasonable basis to exclude the proposal (along with any further explanations that the company desires to communicate to the other constituencies, as noted above). What weight will the Division’s response carry? The Statement implies that the Division’s “no objection” response will carry the same, or close to the same, weight as past no-action responses, [3] but how much weight would the response carry in litigation? The Division is careful to point out that prior Staff responses to Rule 14a-8 no-action requests are not binding and reflect only informal Staff views.[4] Furthermore, the response is to be issued without an evaluation of the underlying proposal, based solely on the company’s unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8; reasonability is a lower threshold, compared to prior practice.  Under these circumstances, it is quite possible that a court may attribute little or no weight to the Division’s response, if the exclusion of a proposal were to be litigated.  What recourse will be available to shareholder proponents who disagree with a company’s position? In a scathing response to the Statement, Commissioner Caroline Crenshaw took issue with the Division’s issuance of a “no objection” response in every instance, as long as a company is willing to make its unqualified representation. [5] In the absence of further recourse at the Commission, shareholder proponents may become more willing to negotiate with companies.  While companies may have less incentive to negotiate in this environment, they are still likely to be drawn to the table for issues that have broader support across their investor and customer base.  If negotiations fail, the parties will need to weigh their prospects (and their pocketbooks) for challenging the exclusion of a proposal in litigation.  As noted in the Statement, the Staff’s views are non-binding, and only a court can adjudicate whether a company can exclude a shareholder proposal submitted under Rule 14a-8 from its proxy statement. [6]  With the Commission out of the picture, companies will be responsible for determining whether there is a defensible basis for exclusion, increasing the likelihood that disputes will be settled in court.  However, litigation likely will remain unusual, since it may drag on for years with significant legal fees.  Furthermore, shareholders have historically had a low rate of success when litigating the exclusion of proposals in court, as cases were often dismissed on procedural grounds. This trend may change as shareholders become more sophisticated at challenging exclusions in court, and a wider variety of proposals are litigated in multiple forums. Shareholder proponents may increasingly rely on alternative strategies to influence boards of directors, such as the threat of “vote no” campaigns against some or all directors, opposition to say-on-pay resolutions, or proxy contests. Shareholders may also turn to “floor resolutions” made at annual meetings, to present an issue and raise awareness and discussion with management, the board and annual meeting attendees. Why will the Commission continue to review requests to exclude proposals that are improper under Rule 14a-8(i)(1)? The Division has determined that there is not a sufficient body of applicable guidance for companies and proponents to rely on for no-action requests related to Rule 14a-8(i)(1), which permits exclusions of proposals that are improper under state law.  Categories of proposals that have been excluded on this basis include: Proposals that purport to be binding on the board when state law gives the board exclusive authority. Examples include the board’s ability to declare dividends, hire or fire specific executives, enter or exit specific lines of business, approve or reject an M&A transaction, or redeem poison pills or implement takeover defenses. Proposals that conflict with the company’s charter or state corporate statutes. Proposals that are improper subjects under state law because they are ultra vires. These would include proposals asking the company to undertake actions outside its business purpose, as defined in its charter, or proposals mandating illegal conduct. In an October 9, 2025 keynote speech at the John L. Weinberg Center for Corporate Governance, Commission Chairman Paul Atkins questioned whether shareholders have a fundamental right to bring precatory proposals under Delaware law.  He encouraged Delaware to clarify this issue, and he stated that the Commission would honor the state’s position. [7]  By making an exception for no-action requests based on the proposal’s propriety under state law, the Division is signaling its interest in receiving no-action requests that challenge the legality of precatory proposals under Delaware law. In fact, Chairman Atkins indicated in his speech that, if a company were to obtain an opinion of counsel that precatory proposals are not a proper subject for shareholder action under Delaware state law, then he would have “high confidence that the SEC Staff will honor that position,” potentially setting up a showdown in Delaware Chancery Court. Will we see companies relying on novel or historically less successful bases for exclusion? Despite the flexibility offered by the Division, we expect companies to remain cognizant of existing precedent in preparing their notifications of exclusion under Rule 14a-8(j), especially if the proposal otherwise would receive broad support among the company’s investors, and if the notification were to include the unqualified representation.  On the other hand, it is possible that this could be the season of the novel shareholder proposal, when proponents lean into companies’ discomfort with excluding a proposal with little or no precedent, and thus (arguably) no reasonable basis for exclusion, especially when there is no Commission process for addressing novel proposals.  Will no-action correspondence continue to be publicly available? Yes, the Division expects to make all correspondence available promptly on the Commission’s website.  For what period of time is the  Statement effective? The  Statement applies to the current proxy season (October 1, 2025 through September 30, 2026) as well as no-action requests received before October 1, 2025 to which the Division has not yet responded. Companies that have already submitted a request relying on a basis for exclusion other than Rule 14a-8(i)(1) and that wish to receive a response from the Division should submit a notice that includes the representation described above. In those cases, the time of the initial submission will apply for purposes of the 80-day requirement in Rule 14a-8(j). Does the Statement establish a new status quo? We do not expect the current process to become the status quo. However, the Statement is a harbinger of the shareholder proposal framework to come, with less agency involvement and resources committed to the no-action letter process and increasing deference to issuers on what types of proposals may be included in company proxy statements and under what circumstances.  Shareholder proposal modernization originally was included in the Commission's Spring 2025 Unified Agenda for potential rulemaking, with an anticipated timing of as early as April 2026, though new rules would not likely take effect until the 2027 proxy season. That timeline is likely to be delayed in light of the government shutdown and Staffing shortages at the Commission. [1] In a November 25, 2025 virtual meeting with members of the Society for Governance (the “Society Meeting”), Division Chief Counsel Michael Seaman stated that the Staff would accept notices of any length, so long as they complied with Rule 14a(8)(j).  [2] In the Society Meeting, Division Chief Counsel Michael Seaman explained that the Staff used the term “reasonable” for situations that are “close to the line”.  He explained that, where excludability is a close call (i.e., both parties can make reasonable arguments), in his view, the company should still be able to make the representation.  Last year, the Staff responded favorably in 55% of no-action requests, but, he noted that does not mean that the other companies could not have made the reasonability representation.  And, he further noted that, in the case of proposals involving new or emerging subject matters, where there may not be any relevant guidance, in his view, companies may still be able to reach a conclusion that there is a reasonable basis for exclusion. [3] In the Society Meeting, Division Director Jim Moloney discussed how, in his view, the Division’s responses are “one step shy” of a true no-action letter. [4] In footnotes (3) and (4) to the Statement, the Division is careful to point out that prior Staff responses to Rule 14a-8 no-action requests are not binding and reflect only informal Staff views. Furthermore, Staff responses to no-action requests and Rule 14a-8(j) notifications are not binding on the Commission or other Divisions and Offices and do not preclude the Commission from taking enforcement action in appropriate circumstances. [5] Per Commissioner Crenshaw:  “It is one thing to announce that the Division is not in the business of issuing no-action letters due to resource constraints. It is another thing entirely to pronounce—tell us what you want us to say and we’ll bless it. Indeed, the Division will “not object” even if it would have disagreed with the company’s analysis had it substantively reviewed the submission. And, the Division will apparently “not object” even if the representations are unreasonable on their face or contain misrepresentations or omissions. Why should the Division “not object” when a submission is clearly objectionable? Today’s missive will give the false impression that the Division is “not objecting” to a company’s position because it agrees with the grounds of the submission; when in fact the Division is “not objecting” because Staff have been ordered to rubber stamp those submissions irrespective of their content.” [6] See Statement of Informal Procedures for The Rendering of Staff Advice With Respect to Shareholder Proposals, Release No. 34-12599 (July 7, 1976) [41 FR 29989 (July 20, 1976)].  [7] From Chairman Atkins’ speech:  “Pulling all of this together, if there is no fundamental right under Delaware law for a company’s shareholders to vote on precatory proposals—and the company has not created that right through its governing documents—then one could make an argument that a precatory shareholder proposal submitted to a Delaware company is excludable under paragraph (i)(1) of Rule 14a-8.  If a company makes this argument and seeks the SEC Staff’s views, and the company obtains an opinion of counsel that the proposal is not a “proper subject” for shareholder action under Delaware law, this argument should prevail, at least for that company.  I have high confidence that the SEC Staff will honor this position.”

Blog Post

SEC Announces Reduction in Securities Registration Fees for Public Companies

September 17, 2025

Firm Highlights

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SEC Proposes Expansion of Investment Adviser Performance-Based Compensation Rule

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

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The Supreme Court Update - October 8, 2026

On September 29, 2026, the Supreme Court granted certiorari in one case: Department of Homeland Security v. D.V.D., No. 26-426: This case concerns the Trump Administration’s “third-country removal” procedures, where immigrants are deported to countries not listed in the removal orders. In granting certiorari, the Court granted the Government’s application to stay a lower court decision halting the practice, which will allow third-country removals to continue pending resolution of the case. The issues presented are: (1) Whether the district court had jurisdiction over respondents’ claims; (2) whether the district court had authority to enter class-wide declaratory relief and APA vacatur under 8 U.S.C. § 1252(f)(1); (3) whether the Government’s guidance on third-country removals is unlawful under 8 U.S.C. § 1231(b), the due process clause, or FARRA/CAT and its implementing regulations; and (4) such other questions that the Government determines are appropriate for the proper disposition of the case. On October 1, 2026, the Court granted certiorari in three additional cases: Rhoney v. Barbosa da Cunha, No. 26-104: Immigration officials detained Ricardo Aparecido Barbosa da Cunha—a Brazilian citizen who had lived in the United States for approximately twenty years after entering without inspection—and denied him a bond hearing under 8 U.S.C. § 1225(b)(2)(A). The Second Circuit held that his detention was instead governed by § 1226(a), which permits release on bond, because § 1225(b)(2)(A)’s mandatory-detention requirement applies only to noncitizens apprehended while entering the country or shortly thereafter. The question presented is: Whether 8 U.S.C. § 1225(b)(2)(A) mandates the detention pending removal proceedings of aliens who, like Barbosa da Cunha, are present in the United States without having been admitted. Missionaries of St. John the Baptist, Inc. v. Frederic, No. 25-113: A Catholic religious organization sought to build a shrine to the Virgin Mary on land the organization owned adjacent to its church in Park Hills, Kentucky. Local zoning restrictions prohibited the proposed construction. The question presented is: Whether a land-use regulation that prohibits a religious institution from building a religious structure on its own property constitutes a “substantial burden” on religious exercise under the Substantial Burden Provision of the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc(a). Marschner v. Marschner, No. 25-1349: Under the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), a veteran’s longevity-based retirement pay can be divided in a divorce, but retirement pay based on disability and retirement pay that was waived to receive disability pay are indivisible. The question presented is: Does the USFSPA require state courts to refuse enforcement of indemnification provisions in a divorce settlement agreement?

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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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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.